Kerrville City Council Place 1 member Roman Garcia and former councilmember George Baroody teamed up once again to challenge City Attorney Mike Hayes on his understanding of the law, this time objecting to the city’s handling of a clerical error regarding the city’s approved 2023 tax rate that will result in $4,000 in overpayments.
Resolution No. 2023-06, designed to correct the error, was passed by a split vote on first reading at council’s Jan. 10 regular meeting and was up for a second reading vote on Jan. 24.
At the Jan. 10 meeting, Garcia voted against the resolution on first reading, while Baroody took to the microphone to disagree with council, each using similar verbiage to demand that refunds be sent to taxpayers. The average refund per property owner would 56 cents.
Finance Director Julie Behrens previously provided a detailed explanation of how she had come to the conclusion that amending the previous ordinance declaring the tax rate would be the best choice, saying she had consulted with Kerr County Tax Assessor Bob Reeves and Texas Municipal League attorneys, as well as Hayes.
Behrens also explained that it would cost the City of Kerrville $9,000 to refund the total estimated overcharge of $4,000, adding that 56-cent checks rarely get cashed and that adjustments to offset the overpayments will be made to the 2024 tax rate.
When it was time for the citizen speaker portion for the agenda item, Baroody first provided a 13-page handout to council with his interpretation of the tax law and e-mail conversations with a host of city officials, a legal counsel representative for the City of Pearland, and a representative with the Texas Comptroller’s office, and then challenged the legality of the city’s decision to amend the original ordinance, saying the city missed a deadline to make the change.
Neither Baroody or Garcia are attorneys.
“I would like to give the city attorney and the tax assessor the opportunity to respond to those questions about the authority that we have,” Garcia said.
Hayes did respond, saying his response would not change.
“I’m happy to respond and my response won’t change from what I said last time,” Hayes said. “You (council) adopted a tax rate on time in September. This action before you is merely to correct a mistake. When I learned of this, I did the research and, as the speaker (Baroody) said, there is nothing in state law that addresses this, both from a requirement or a prohibition, and so I checked with TML (Texas Municipal League), I looked at the comptroller’s website multiple times and doubled my efforts into state law.”
Hayes said Behrens and Reeves also researched the law and the proper way to rectify the error.
“All of our research came to the same conclusion,” Hayes said. “This is a very unique situation and we’re just trying to make the best of a mistake.”
Garcia then asked Reeves to speak.
“As I’ve said, in correspondence with the finance department and what Mr. Hayes has commented, I use the term ‘uncharted territory.’ The (tax) code doesn’t address this. I also said in the last meeting I work for you and I will follow your instructions. I’m not a lawyer. I’m a tax collector.”
When it was Garcia’s time to speak, he said he was confused as to how “we got here” and said he didn’t feel comfortable voting on the ordinance to amend the tax rate “just because” there is nothing to address the issue in the tax code.
“Right now, what we’re doing is not in state law,” Garcia said.
“But there is no state law that covers this,” Mayor Judy Eychner said.
“You’re right, there isn’t, so why are we doing it,” Garcia responded.
Eychner said a solution needed to be put in place to correct the error, and the ordinance before them is how they have chosen to make the adjustment.
“I would ask to be in compliance with state law,” Garcia said. “If state law doesn’t say go ahead and do this, council because you have the authority to change your tax code after the deadline, we need to find out what is an alternate solution.”
Garcia then made a motion to deny the ordinance and ask staff to “come back to us and give us an option that does comply with the law.”
Garcia said the “second option” already discussed of mailing $4,000 refunds at a cost of $9,000 is still on the table.
Garcia’s motion died for a lack of a second, after which Place 2 Councilperson Kim Clarkson spoke.
“At our last meeting, I was surprised and also sad that a member of council (Garcia) said that the ordinance we were about to consider was a violation of state law,” Clarkson said. “Our attorney, Mike Hayes, who has been with the city for almost 20 years, specifically told us before council had discussion that he had consulted with TML legal counsel and he had reviewed state law and determined that our situation was unprecedented. That means there is nothing in existence and hasn’t been documented before.”
Clarkson said after the ordinance was passed on first reading, she met with Hayes.
“I asked him who he had spoken with at TML, because I also wanted to get some additional clarification from the person that he spoke to,” Clarkson said. “He gave me the name of the general counsel that he spoke to at TML, Bill Longley, and then I spoke to him.”
Clarkson said Longley confirmed he had spoken to Hayes.
“He (Longley) said he also did not know of any situation as unique as ours,” Clarkson said. “He likened our situation to a scrivener’s or clerical error. I asked how another council member might receive a conflicting answer from TML and was told that any attorney’s answers are conditioned on the specific questions that are asked and the context that is provided.”
Clarkson said that Longley explained that TML correspondence includes a statement saying that city officials should confer with “local legal counsel.”
After speaking with Longley and Hayes, Clarkson said she believed Garcia is incorrect in stating that Ordinance No. 2023-05 violates state statute.
“So, do we return $4,000 at the expense of $9,000 in the hopes that people will cash what is an average of 56-cent checks, or do we amend our tax rate to match what was collected through a clerical error and that tax rate will be adjusted in future years based on any amount that we over-collect,” Clarkson said.
Clarkson then made a motion to approve the ordinance. Place 4 Councilperson Brenda Hughes seconded the motion, which passed by a 4-1 vote, with Garcia voting against it.
This is not the first time Garcia and Baroody teamed up to oppose Hayes. The duo both objected with the same verbiage to oppose the May 2022 election date, saying the city was holding an “illegal” election.
Behrens introduced Resolution No. 06-2023 to council, explaining the process proposed to fund necessary infrastructure projects.
“We’re bringing to you tonight a followup from our workshop a couple of weeks ago, where we talked about the issuance of revenue bonds for several water and wastewater projects that were included in the master plan,” Behrens said.
Behrens said the resolution before council authorizes the city to engage with financial advisors and the bond council regarding the issuance of the bonds to fund the projects, as well as to reimburse any expenses incurred before bond proceeds would be collected.
“You’ll remember with Stuart’s (Public Works Director Stuart Baron) presentation, I think we had over $100 million in needs. The emergency stuff looked closer to $15 million,” Behrens said
Behrens said she, her staff and financial advisors took a close look at the five-year forecast in the water fund, which will not be enough to pay for the needed projects.
“But, we think we can get $10.5 to $12.5 million,” Behrens said. “So this resolution is written to say not to exceed $12.5 million, based on more research we need to do and some findings with what interest rates look like and some structuring with bonds and those type of things.”
Providing a timeline of how the process will proceed, Behrens said she expects to receive a rating from Standard & Poor’s by March 22.
She said pricing for the bonds would be conducted in April, with the closing of the bonds expected in May.
Council voted unanimously to approve the resolution, allowing Behrens to move forward with securing funds through revenue bonds to pay for the needed water and wastewater projects identified as “emergency” projects.
Ordinances, first reading
• Council unanimously approved Ordinance No. 2023-06, changing the zoning for properties in the 400 block of West Water Street from a Single Family Residential with Accessory Dwelling Unity Zoning District to a Residential Transition Zoning District. Addresses included are 402, 405, 406, 407, 409, 410, 411, 413, 414 and 415, comprising the makeup of the entire block;
• Ordinance No. 2023-07 was passed by a 5-0 vote to change the zoning on approximately 3.56 acres of land located at 3800 Loop 534 from a Medium Density Residential Zoning District to a Light Commercial Zoning District. Chris Cawthon, owner of C3 Aquatics explained that he will be constructing a pool at the location to conduct year-round swim lessons and water safety classes. He currently operates, he said, at the Center for Fitness;
• Council unanimously approved annexation of .08 acres of land located near the Lehman Drive and Lenard Lane intersection. This small piece of property is currently owned by Peterson Health.
Ordinances, second reading
• Garcia continued to oppose the City of Kerrville’s “Night Sky” ordinance on second reading, leaving council to approve Ordinance No. 2023-03 by a 4-1 vote;
• Garcia also continued to refuse approval of Ordinance No. 2023-05 closing, abandoning and vacating all right, title and interest in a public right-of-way, consisting of an unimproved, unopened portion of a West Water St. that exists between properties addressed as 620 and 704 Junction Highway. The small piece of property has not been used since the 1920s and was originally intended to be a city street. City Attorney Mike Hayes has explained that the vacating of the property will serve to facilitate a “property swap” that will allow the City of Kerrville to complete water and drainage projects in the area, as easements will be traded for unused property. Garcia and Baroody both have requested an appraisal, to which Hayes has said would be done prior to the conveyance of the land.
• Council unanimously approved a construction agreement with M&C Fonseca Construction Co., Inc. for the planned Water Street Main Replacement Project in the amount of $314,667.50;
• Council voted 5-0 to approve a construction agreement with M&C Fonseca Construction Co., Inc. for the Knapp Lift Station Force and Gravity Main Project in the amount of $4,895,585;
• With Place 3 Councilperson Joe Herring, Jr. recusing himself due to a conflict, council voted 4-0 to approve a professional services agreement with Hewitt Engineering for the design of the River Trail Downtown Extension project in the amount of $154,500.
Under the consent agenda, Garcia voted against Resolution No. 03-2023 expressing the City of Kerrville’s support for the proposed Upper Guadalupe River Center. The resolution, however, passed 4-1.
While the resolution simply states support for the project that has just begun a fundraising campaign, Garcia and Baroody echoed each other’s concerns regarding possible future financial liability to the city. Representatives for the project explained that no funds are being requested, saying the ordinance supporting the project will assist in their own fundraising efforts. (For more information on the project, see Page 1.)
With a single vote, council members unanimously approved the following consent agenda items:
• A resolution authorizing the acceptance of grant funding for the Office of the Governor and its SH-Bullet Resistant Shield Grant Program for funding to purchase ballistic shields for the Kerrville Police Department;
• Purchase of Ballistic Shields for the Kerrville Police Department in the amount of $76,581.64;
• Grant agreement with the Hal & Charlie Peterson Foundation in the amount of $106,002;
• Project funding agreement between the City of Kerrville Economic Improvement Corporation and the City of Kerrville for a concept feasibility study for an extension of the River Trail around Nimitz Lake and the corresponding professional services agreement between Hewitt Engineering and the City of Kerrville for the study in the amount of $182,800;
• An amendment to the agreement regarding water utility service to designated areas with Aqua Texas to be submitted to the Public Utility Commission, which will act to revise the City of Kerrville’s certificate of convenience and necessity for water service;
• Kerrville City Council workshop minutes from Jan. 10;
• Kerrville City Council regular meeting minutes from Jan. 10.
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