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May 15, 2017 REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF NEUERLANrs 4:30 P.m_ May 15, 2017 1. MEETING The meeting was called to order at 4:30 p-m. by Mayor Pro Tem Albanese at the Nederland City Office Building, 207 N. 12t" Street, Nederland, Texas. See attached for quorum. The following statement was posted: "VII1125UANT TO SECTION 30_07, PENAL COBE (TRESPASS BY LICENSE HOLDER WITH AN OPENLY CARRIES HANCI.GIJN3, A PERSON LICENSEE> IJNLI.ER SUBCHAPTER H, CHAPTER 411, GOVERNMENT COBE (HANESGUN LICENSING LAW), MAY NOT ENTER THIS PROPERTY WITH A HANESGUN THAT IS CARR-IEC* OPENLY_" 2. INVOCATION ANES PLEE,GE OF ALLEGIANCE The invocation and the Pledge of Allegiance were led by Gay Ferguson, City Clerk. 3. CONSENT AGENDA - All consent agenda items listed are considered to be routine by the City Council and will be enacted by one motion. There will be no separate discussion of these items unless a councilmember so requests, in which event the item will be removed from the Consent Agenda and considered separately. A motion was made by Councilmember Neal and seconded by Councilmember Austin to approve the Consent Agenda Items a-d as presented. MOTION 4CARRIEC0_ Ayes: Mayor Pro Tem Albanese, Councilmembers Austin, Neal, and Belaire. Noes: None. Absent: Mayor Nugent. a. Minutes — April 24, 2017 regular meeting and April 10, 2017 special meeting b. Tax Assessor Collection Report - April 2017 c. Requests: ▪ Consider action authorizing the closure of Boston Avenue between Twin City Highway and 14tt' Street on Saturday, May 20t" for the Spring Market may event. • Consider action regarding a request from the Nederland Independent School C.istrict to utilize the Nederland Swimming Pool, IDoornbos Park, and the Nederland Recreation Center for end of the year parties. ▪ Consider a request from Torey Gomez to utilize the Nederland Swimming Pool for Hillcrest Intramural students swim day. • Consider action authorizing the closure of various City streets for the 3d Annual Kristin Raven Parks 1-Mile Fun/Run/Walk event. d. Payments: Schaumburg 8t Polk, Inc. - $9,952.00, Hot Mix Overlay project dill h. Minutes Continued, May 15, 2017 • Schaumburg & Polk, Inc. - $47,504.64, Concrete Sewer Line Evaluation project • UA Engineering, Inc. - $1,770.54, Wastewater Plant SWPPP Implementation Services • Action Civil Engineers, PLLC - $9,500.00, Nederland Avenue - Drainage project 4. REGULAR AGENDA a. Gay Ferguson, City Clerk, administered the Oath of Office to Talmadge C. Austin, Councilmember Ward I; and Don Albanese, Councilmember Ward III. b. A motion was made by Councilmember Neal and seconded by Councilmember Austin to keep Mayor Pro Tern Albanese as Mayor Pro Tempore in accordance with Section 3.06 of the City Charter. MOTION CARRIED. Ayes: Mayor Pro Tern Albanese, Councilmembers Austin, Neal, and Belaire. Noes: None. Absent: Mayor Nugent. c. A motion was made by Councilmember Austin and seconded by Councilmember Neal to accept Quarterly Investment Reports ending December 31, 2016 and March 31, 2017. MOTION CARRIED. Ayes: Mayor Pro Tern Albanese, Councilmembers Austin, Neal, and Belaire. Noes: None. Absent: Mayor Nugent. d. A motion was made by Councilmember Austin and seconded by Councilmember Belaire to approve a Neighborhood Empowerment Zone application for property located at 424 Atlanta. MOTION CARRIED. Ayes: Mayor Pro Tern Albanese, Councilmembers Austin, Neal, and Belaire. Noes: None. Absent: Mayor Nugent. e. A motion was made by Councilmember Belaire and seconded by Councilmember Neal to approve Resolution No. 2017-18, supporting Entergy Texas' application to amend its Certificate of Convenience and Necessity to construct the Montgomery County Power Station. MOTION CARRIED. Ayes: Mayor Pro Tern Albanese, Councilmembers Austin, Neal, and Belaire. Noes: None. Absent: Mayor Nugent. f. A motion was made by Councilmember Neal and seconded by Councilmember Austin to approve final payment and release of retainage on the Nederland Recreation Center Roof/Exterior Metal Repairs/Improvements project. MOTION CARRIED. Ayes: Mayor Pro Tern Albanese, Councilmembers Austin, Neal, and Belaire. Noes: None. Absent: Mayor Nugent. g. Bids: i. A motion as made by Councilmember Austin and seconded by Councilmember Neal to engage the RWL Group for consultant services relating to the bid for windstorm insurance. MOTION CARRIED. Ayes: Mayor Pro Tern Albanese, Councilmembers Austin, Neal, and Belaire. Minutes Continued, May 15, 2017 Noes: None. Absent: Mayor Nugent. ii. A motion as made by Councilmember Neal and seconded by Councilmember Austin to authorize the solicitation of proposals for Windstorm Insurance. MOTION CARRIED. Ayes: Mayor Pro Tern Albanese, Councilmember Austin, Neal, and Belaire. Noes: None. Absent: Mayor Nugent. iii. A motion was made by Councilmember Austin and seconded by Councilmember Neal to authorize the solicitation of bids for Hot Mix Overlay project. MOTION CARRIED. Ayes: Mayor Pro Tem Albanese, Councilmembers Austin, Neal, and Belaire. Noes: None. Absent: Mayor Nugent. iv. A motion was made by Councilmember Neal and seconded by Councilmember Austin to appoint an auditing firm to perform the City's audit for the fiscal year 2016-2017. MOTION CARRIED. Ayes: Mayor Pro Tern Albanese, Councilmember Austin, Neal, and Belaire. Noes: None. Absent: Mayor Nugent. h. Chris Duque, City Manager, said City Council approved an Interlocal Agreement between the City, Nederland Economic Development Corporation, and Jefferson County on February 8, 2016 in regards to the development at the Jack Brooks Airport property, The Landing. This proposed amended agreement limits the scope of the agreement terms to the property Glow Investment, Inc. which plans to develop. He recommended discussing in executive session prior to taking action on this amended agreement. 5. EXECUTIVE SESSION The regular meeting was recessed at 4:53 by Mayor Pro Tern Albanese for the purpose of conducting an Executive Session as authorized by Texas Government Code, Chapter 551.087 - Deliberation Regarding Economic Development Negotiations. 6. RECONVENE The regular meeting was reconvened at 5:12 by Mayor Pro Tern Albanese. A motion was made by Councilmember Belaire and seconded by Councilmember Neal to approve an amendment to the Interlocal Agreement between the City of Nederland, Nederland Economic Development Corporation, and Jefferson County regarding the funding of infrastructure improvements at the Jack Brooks Airport. MOTION CARRIED. Ayes: Mayor Pro Tern Albanese, Councilmembers Austin, Neal, and Belaire. Noes: None. Absent: Mayor Nugent. IIMIlb. Minutes Continued, May 15, 2017 7. COMMUNICATION: City Manager's Report: a. Miscellaneous • Next City Council meeting will be Monday, May 22nd • City Offices will be closed Monday, May 29th - Observance of Memorial Day • Parks will have a memorial program at 4:30 pm on May 29th • Monday, May 22nd Highland Park student (4th graders) will tour City Hall • Emergency repairs are underway at the swimming pool on awning poles. Pool will open Memorial Day weekend. 8. ADJOURN There being no further business a motion was made by Councilmember Neal and seconded by Councilmember Austin to adjourn the meeting at 5:14 p.m. MOTION CARRIED. Ayes: Mayor Pro Tern Albanese, Councilmembers Austin, Neal, and Belaire. Noes: None. Al :���Mayor Nugent. 2,9gPfk =�' ' 1,` } ,1n gip; Pon Mayor Pro Tern �' `7, 4••{ City of Nederland, Texas AEST: „i�-"'-\� dold Air wr dury 'i-OP cay Ferguso City Clerk City of Nederland, Texas I CITY OF NEDERLAND COUNCIL MEETING ATTENDANCE SHEET NAME TITLE PRESENT ABSENTEN V R.A. Nugent Mayor I TalmadgeAustin Council Member-Ward I Billy Neal Council Member-Ward II v Don Albanese Council Member-Ward III V Craig Belaire Council Member-Ward IV V Chris Duque City Manager v Gay Ferguson City Clerk V Jesse Branick City Attorney Cheryl Dowden Director of Finance Darrell Bush Police Chief v Gary Collins Fire Chief V Robert Woods Director of Public Works V Wheeler Building Official Victoria Klehn Librarian v Holly Guidry Human Resources Director V 1 / Joni Underwood Executive Secretary V Angela Fanette Parks Director 17 ilsreo-7,t C6 2 6-3 1 1• OJI-C. 'on Albanese, Mayor Pro Tem Ga Ferguson Clerk gl May 15, 2017 Date SON Cp `vTERRY WUENSCHEL ALLISON NATHAN GETZ �1, ,) TAX ASSESSOR-COLLECTOR i\ * CHIEF DEPUTY TEXAS STATE OF TEXAS COUNTY OF JEFFERSON I, Allison Nathan Getz, P.C.C., the Tax Assessor-Collector of Jefferson County, Texas and also,by contract or statute, the Tax Assessor-Collector for CITY OF NEDERLAND, affirm,under oath, that this amount $48,946.05, represents all taxes collected for CITY OF NEDERLAND during the month of April 2017. Allison Nathan Getz, P.C.C. JEFFERSON COUNTY COURTHOUSE•P.O. BOX 2112 •BEAUMONT,TEXAS 77704-2112 PHONE: (409)835-8516 • FAX: (409)835-8589 R.A."Dick"Nugent,Mayor D ` Don Albanese,Mayor Pro Tern /¢� �� Talmadge Austin,Councilmember Billy Neal,Counalmember 4Avh, 11111wCL „// ofNederland Craig Belaire,Councilmember U v`I Christopher Duque,City Manager P.O.Box 967 Nederland,Texas 77627•(409)723-1503 FAX(409)723-1550 -,r1J6111,AND.TFAAN t,nr Investment Report For the Quarter Ending December 31,2016 This report has been prepared in accordance with the Public Funds Investment Act(Section 2256.023, Government Code), which requires that a quarterly report be submitted to City Council detailing investment transactions and performance for the reporting period. Submitted b - investment Officers of the City of Nederland to — Chris W.ue, City Manager Cheryl Do ,e , Director of Finance "Programmed/or Progress City of Nederland Summary of Account Activity Total Portfolio - All Accounts For Quarter Ending December 31, 2016 Investments at Beginning of Period (10-1-16) $ 6,052,513.47 Purchases 6,291.97 Maturities 0.00 Investments at End of Period(12-31-16) $ 6,058,805.44 Maturity Summary at December 30, 2016 ■Less than 3 months ■3 to 9 months 09 to 12 months •Greater than 12 months A City of Nederland Summary of Account Activity Total Portfolio - All Accounts For Quarter Ending December 31, 2016 Balance Balance 10/01/2016 Purchases Maturities 12/31/2016 General Fund $ 4,371,400.04 $ 4,551.88 $ 4,375,951.92 Library Fund 32,403.88 23.32 32,427.20 Water& Sewer Fund 1,010,009.89 1,051.75 1,011,061.64 Solid Waste Fund 511,748.54 532.82 512,281.36 Police Narcotics Fund 47,476.65 49.48 47,526.13 Bond Redemption Fund 79,474.47 82.72 79,557.19 $ 6,052,513.47 $ 6,291.97 $ - $ 6,058,805.44 Fund Allocation at December 30, 2016 Solid Waste Fund Police 8.46% Narcotics Fund 0.78% Bond Redemption Fund 1.31% Water& Sewer Fund 16.69% General Fund 72.22% Library Fund 0.54% Investment Report Schedule Investments for the Quarter ended December 31,2016 CERTIFICATES OF DEPOSIT Interest Earned Certificate Purchase Maturity Days to Interest for Quarter ended Number Date Date be held Rate Face Amount December 31,2016 Held at December 31,2016 Library Special Fund 5713564135 07/04/2016 01/04/2017 185 0.05% $ 10,000.00 $ 1.25 Total Interest Earned on CDs for the quarter ended December 31,2016 $ 1.25 Total Certificates of Deposit held at December 31,2016 $ 10,000.00 Investment Report Schedule Investments for the Quarter ended December 31,2016 INVESTMENT POOL -TEXPOOL Average Days to Interest Market Interest Period Held Maturity Rate Principal Earned Book Value General Fund 10/01/16 12/31/16 1 0.4128% $4,371,400.04 4,551.88 $4,375,951.92 Water&Sewer 10/01/16 12/31/16 1 0.4128% 1,010,009.89 1,051.75 1,011,061.64 Bond Redemption Fund 10/01/16 12/31/16 1 0.4128% 79,474.47 82.72 79,557.19 Library Special 10/01/16 12/31/16 1 0.4128% 22,403.88 23.32 22,427.20 Solid Waste Fund 10/01/16 12/31/16 1 0.4128% 511,748.54 532.82 512,281.36 Police Narcotic Fund 10/01/16 12/31/16 1 0.4128% 47,476.65 49.48 47,526.13 Totals for TEXPOOL Investments $ 6,042,513.47 $ 6,291.97 $ 6,048,805.44 *Texpool is rated AAAm by Standard&Poor's,which is the highest rating a local government investment pool can achieve Investment Report Schedule Investments for the Quarter ended December 31,2016 INTEREST EARNED ON DEMAND DEPOSITS Interest Earned Average Quarter ended Days to Interest December 31, Period Held Maturity Rate 2016 Bond Redemption Fund 10/01/16 12/31/16 1 0.0888% $ 31.06 Capital Outlay Fund 10/01/16 12/31/16 1 0.0888% 313.72 Court Technology Fund 10/01/16 12/31/16 1 0.0888% 0.85 Equipment Replacement Funds 10/01/16 12/31/16 1 0.0888% 452.87 Fire Department Special Fund 10/01/16 12/31/16 1 0.0888% 52.47 General Fund 10/01/16 12/31/16 1 0.0888% 1,509.09 Library Special Fund 10/01/16 12/31/16 1 0.0888% 7.22 MCML Dispatch 10/01/16 12/31/16 1 0.0888% 99.74 Motel Occupancy Tax Fund 10/01/16 12/31/16 1 0.0888% 9.40 Parks&Recreation Special Fund 10/01/16 12/31/16 1 0.0888% 71.91 Police Narcotic Fund 10/01/16 12/31/16 1 0.0888% 23.05 Solid Waste Fund 10/01/16 12/31/16 1 0.0888% 443.74 Street Improvement Fund 10/01/16 12/31/16 1 0.0888% 632.82 SSES Fund 10/01/16 12/31/16 1 0.0888% 73.61 Water Plant Construction Fund 10/01/16 12/31/16 1 0.0888% 86.77 Wastewater Construction Fund 10/01/16 12/31/16 1 0.0888% 61.35 W&S Certificate Fund 10/01/16 12/31/16 1 0.0888% 32.85 Water&Sewer Fund 10/01/16 12/31/16 1 0.0888% 581.06 $ 4,483.58 Investment Report Schedule December 31, 2016 Interest Earnings for Quarter Ended December 31, 2016 Bond Redemption Fund $ 113.78 Capital Outlay Fund 313.72 Court Technology Fund 0.85 Equipment Replacement Funds 452.87 Fire Department Special Fund 52.47 General Fund 6,060.97 Library Special Fund 31.79 MCML Dispatch 99.74 Motel Occupancy Tax Fund 9.40 Parks& Recreation Special Fund 71.91 Police Narcotic Account 72.53 Public Safety Construction Fund 0.00 Solid Waste Fund 976.56 Street Improvement Fund 632.82 SSES Fund 73.61 Water Plant Construction Fund 86.77 Wastewater Construction Fund 61.35 W& S Certificate Fund 32.85 Water& Sewer Fund 1,632.81 $ 10,776.80 R.A."Dick"Nugent,Mayor / o Don Albanese,Mayor Pro Tem � \ Talmadge Austin,Councilmember �. �• Billy Neal,Councilmember low Cit of Nederland Craig J.Belaire,Councilmember ►,' Christopher Duque,City Manager „// P.O.Box 967•Nederland,Texas 77627•(409)723-1503 FAX(409)723-1550 Investment Report For the Quarter Ending March 31,2017 This report has been prepared in accordance with the Public Funds Investment Act(Section 2256.023,Government Code),which requires that a quarterly report be submitted to City Council detailing investment transactions and performance for the reporting period. Submitted by the nvestment Officers of the City of Nederland Chris P que,'City anager Cheryl D den, Director of Finance "Programmed for Progress�� City of Nederland Summary of Account Activity Total Portfolio - All Accounts For Quarter Ending March 31, 2017 Investments at Beginning of Period (1-1-17) $ 6,05 8,805.44 Purchases 8,560.81 Maturities 0.00 Investments at End of Period(3-31-17) $ 6,067,366.25 Maturity Summary at March 31, 2017 ■Less than 3 months ■3 to 9 months ❑9 to 12 months ■Greater than 12 months City of Nederland Summary of Account Activity Total Portfolio - All Accounts For Quarter Ending March 31, 2017 Balance Balance 01/01/2017 Purchases Maturities 03/31/2017 General Fund $ 4,375,951.92 $ 6,193.20 $ 4,382,145.12 Library Fund 32,427.20 31.78 32,458.98 Water& Sewer Fund 1,011,061.64 1,430.92 1,012,492.56 Solid Waste Fund 512,281.36 725.00 513,006.36 Police Narcotics Fund 47,526.13 67.28 47,593.41 Bond Redemption Fund 79,557.19 112.63 79,669.82 $ 6,058,805.44 $ 8,560.81 $ - $ 6,067,366.25 Fund Allocation at March 31, 2017 Solid Waste Fund 8.46% Police Narcotics Fund 0.7g6hd Redemption Fund 1.31% Water&Sewer Fund 16.69% General Fund 72.22% Library Fund 0.53% Investment Report Schedule Investments for the Quarter ended March 31,2017 CERTIFICATES OF DEPOSIT Interest Earned Certificate Purchase Maturity Days to Interest for Quarter ended Number Date Date be held Rate Face Amount March 31,2017 Held at March 31,2017 Library Special Fund 5713564135 01/04/2017 07/04/2017 185 0.05% $ 10,000.00 $ 1.23 Total Interest Earned on CDs for the quarter ended March 31,2017 $ 1.23 Total Certificates of Deposit held at March 31,2017 $ 10,000.00 Investment Report Schedule Investments for the Quarter ended March 31,2017 INVESTMENT POOL-TEXPOOL Average Days to Interest Market Interest Period Held Maturity Rate Principal Earned Book Value General Fund 01/01/17 03/31/17 1 0.5733% $4,375,951.92 6,193.20 $4,382,145.12 Water&Sewer 01/01/17 03/31/17 1 0.5733% 1,011,061.64 1,430.92 1,012,492.56 Bond Redemption Fund 01/01/17 03/31/17 1 0.5733% 79,557.19 112.63 79,669.82 Library Special 01/01/17 03/31/17 1 0.5733% 22,427.20 31.78 22,458.98 Solid Waste Fund 01/01/17 03/31/17 1 0.5733% 512,281.36 725.00 513,006.36 Police Narcotic Fund 01/01/17 03/31/17 1 0.5733% 47,526.13 67.28 47,593.41 Totals for TEXPOOL Investments $ 6,048,805.44 $ 8,560.81 $ 6,057,366.25 *Texpool is rated AAAm by Standard&Poor's,which is the highest rating a local government investment pool can achieve Investment Report Schedule Investments for the Quarter ended March 31,2017 INTEREST EARNED ON DEMAND DEPOSITS Average Interest Earned Days to Interest Quarter ended Period Held Maturity Rate March 31,2017 Bond Redemption Fund 01/01/17 03/31/17 1 0.0713% $ 24.31 Capital Outlay Fund 01/01/17 03/31/17 1 0.0713% 182.52 Court Technology Fund 01/01/17 03/31/17 1 0.0713% 0.78 Equipment Replacement Funds 01/01/17 03/31/17 1 0.0713% 333.40 Fire Department Special Fund 01/01/17 03/31/17 1 0.0713% 41.95 General Fund 01/01/17 03/31/17 1 0.0713% 1,885.52 Library Special Fund 01/01/17 03/31/17 1 0.0713% 5.19 MCML Dispatch 01/01/17 03/31/17 1 0.0713% 71.62 Motel Occupancy Tax Fund 01/01/17 03/31/17 1 0.0713% 8.39 Parks&Recreation Special Fund 01/01/17 03/31/17 1 0.0713% 49.86 Police Narcotic Fund 01/01/17 03/31/17 1 0.0713% 18.18 Solid Waste Fund 01/01/17 03/31/17 1 0.0713% 371.24 Street Improvement Fund 01/01/17 03/31/17 1 0.0713% 521.81 SSES Fund 01/01/17 03/31/17 1 0.0713% 58.10 Water Plant Construction Fund 01/01/17 03/31/17 1 0.0713% 68.48 Wastewater Construction Fund 01/01/17 03/31/17 1 0.0713% 37.81 W&S Certificate Fund 01/01/17 03/31/17 1 0.0713% 25.71 Water&Sewer Fund 01/01/17 03/31/17 1 0.0713% 508.02 $ 4,212.89 Investment Report Schedule March 31, 2017 Interest Earnings for Quarter Ended March 31, 2017 Bond Redemption Fund $ 136.94 Capital Outlay Fund 182.52 Court Technology Fund 0.78 Equipment Replacement Funds 333.40 Fire Department Special Fund 41.95 General Fund 8,078.72 Library Special Fund 38.20 MCML Dispatch 71.62 Motel Occupancy Tax Fund 8.39 Parks& Recreation Special Fund 49.86 Police Narcotic Account 85.46 Public Safety Construction Fund 0.00 Solid Waste Fund 1,096.24 Street Improvement Fund 521.81 SSES Fund 58.10 Water Plant Construction Fund 68.48 Wastewater Construction Fund 37.81 W & S Certificate Fund 25.71 Water& Sewer Fund 1,938.94 $ 12,774.93 RESOLUTION NO. 2017-08 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEDERLAND, TEXAS, IN SUPPORT OF A PROPOSAL BY ENTERGY TEXAS, INC. REGARDING THE APPLICATION OF ENTERGY TEXAS, INC. TO AMEND ITS CERTIFICATE OF CONVENIENCE AND NECESSITY TO CONSTRUCT MONTGOMERY COUNTY POWER STATION IN MONTGOMERY COUNTY IN PUBLIC UTILITY COMMISSION OF TEXAS DOCKET NO. 46416 WHEREAS,on October 7,2016,Entergy Texas,Inc.("Entergy")filed an Application to Amend its Certificate of Convenience and Necessity to Construct Montgomery County Power Station,a new gas-fired generation facility to be located near Willis, Texas with the Public Utility Commission of Texas ("Commission");and WHEREAS,Entergy's economic analyses estimate that the Montgomery County Power Station will provide a$1.7 billion net benefit to customers over 30 years;and WHEREAS,additional analyses indicate that the construction of the Montgomery County Power Station will provide significant economic impact to the State of Texas through the creation of new jobs and$1 billion in economic activity across the state;and WHEREAS,the City of Nederland intervened at the Commission as part of the Entergy Service Area Cities'Steering Committee in Docket No.46416 to review ETI's proposal;and WHEREAS, the City of Nederland is supportive of Entergy's application and finds that the construction of the Montgomery County Power Station is in the public interest. NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF NEDERLAND,TEXAS, THAT: Section 1. The statement and findings set out in the preamble to this resolution are hereby in all things approved and adopted. Section 2. The City of Nederland hereby reaffirms its support for the construction of the Montgomery County Power Station. Section 3. The meeting at which this resolution was approved was in all things conducted in strict compliance with the Open Meetings Act,Texas Government Code,Chapter 551. Section 4. This resolution shall become effective from and after its passage. PISSED AND APPROVED by the,Nederland City Council this the 15Th day of May,2017. i0 da -.P__ Don �ghes-e, t t-Nuyeill; Mayor City of Nederland,Texas ATTEST: Gay Fergu1on, City CI1rk APPROVED AS TO FORM AND LEGALITY: ir 34 - ick, City Attorney Wathen, DeShong Juneker Troy W.Domingue,CPA J. Pat O'Neill,lll,CPA Stanley"Chip"Majors,Jr.,CPA.CITP,COMA Michael W.Kiefer,CPA,CFE,CFF L.L.P Jane P. Bums,CPA,CDFA Certified Public Accountants May 8,2017 City of Nederland Christopher Duque,City Manager P.O.Box 967 Nederland,Texas 77627 The Objective and Scope of the Audit of the Financial Statements You have requested that we audit the financial statements of the City of Nederland (the "City"), which comprise governmental activities,each major fund and aggregate remaining fund information as of and for the year-ending September 30, 2017 which collectively comprise the basic financial statements. We are pleased to confirm our acceptance and our understanding of this audit engagement by means of this letter. Our audit will be conducted with the objective of our expressing an opinion on the financial statements. We further understand that the City will be submitting a Comprehensive Annual Financial Report to the GFOA. The Responsibilities of the Auditor We will conduct our audit in accordance with auditing standards generally accepted in the United States of America(GAAS)and"Government Auditing Standards"issued by the Comptroller General of the United States (GAS). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements,whether due to fraud or error.An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management,as well as evaluating the overall presentation of the financial statements. Because of the inherent limitations of an audit,together with the inherent limitations of internal control,an unavoidable risk that some material misstatements may not be detected exists, even though the audit is properly planned and performed in accordance with GAAS.Also,an audit is not designed to detect errors or fraud that are immaterial to the financial statements. In making our risk assessments, we consider internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.However,we will communicate to you in writing concerning any significant deficiencies or material weaknesses in internal control relevant to the audit of the financial statements that we have identified during the audit. 4140 Gladys Avenue,Suite 101 • Beaumont,TX 77706-3648 • Phone (409) 838-1605 • Fax(409) 838-3316 Members of the American Institute of Certified Public Accountants City of Nederland Page 2 May 8,2017 We will also communicate to City Council (a) any fraud involving senior management and fraud (whether caused by senior management or other employees) that causes a material misstatement of the financial statements that becomes known to us during the audit,and(b)any instances of noncompliance with laws and regulations that we become aware of during the audit(unless they are clearly inconsequential). The funds that you maintain are expected to be similar to the ones audited last year. Also, the federal financial assistance programs and awards that will be audited are expected to be similar to the ones audited last year. The component unit whose financial statements you have told us are to be included as part of the City's basic financial statements is the Nederland Economic Development Corporation. The Responsibilities of Management and Identification of the Applicable Financial Reporting Framework. Our audit will be conducted on the basis that management and when appropriate, those charged with governance,acknowledge and understand that they have responsibility: 1. For the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United'States of America; 2. To evaluate subsequent events through the date the financial statements are issued or available to be issued, and to disclose the date through which subsequent events were evaluated in the financial statements. Management also agrees that it will not evaluate subsequent events earlier than the date of the management representation letter referred to below. 3. For the design,implementation,and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; 4. To provide us with: (a) Access to all information of which management is aware that is relevant to the preparation and fair presentation of the financial,statements such as records,documentation,and other matters; (b) Additional information that we may request from management for the purpose of the audit; (c) Unrestricted access to persons within the entity from whom we determine it necessary to obtain audit evidence; As part of our audit process,we will request from management and when appropriate, those charged with governance, written confirmation concerning representations made to us in connection with the audit including among other items: 1. That management has fulfilled its responsibilities as set out in the terms of this letter;and 2. That it believes the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate,to the financial statements taken as a whole. Management is responsible for identifying and ensuring that the City complies with the laws and regulations applicable to its activities, and for informing us about all known material violations of such laws or regulations. In addition, management is responsible for the design and implementation of programs and controls to prevent and detect fraud or abuse, and for informing us about all known or suspected fraud or abuse affecting the entity involving management, employees who have significant roles in internal control, and others where the fraud or abuse could have a material effect on the financial statements or compliance. Management is also responsible for informing us of its knowledge of any allegations of fraud or abuse or suspected fraud or abuse affecting the entity received in communications from employees,former employees, analysts,regulators,short sellers,or others. -2- City of Nederland Page 3 May 8,2017 Management is responsible for the preparation of the supplementary information in accordance with accounting principles generally accepted in the United States of America. Management agrees to include the auditor's report on the supplementary information in any document that contains the supplementary information and that indicates that the auditor has reported on such supplementary information. Management also agrees to present the supplementary information with the audited financial statements or, if the supplementary information will not be presented with audited financial statements, to make the audited financial statements readily available to the intended users of the supplementary information no later than the date of issuance of the supplementary information and the auditor's report thereon. City Council is responsible for informing us of its views about the risks of fraud or abuse within the entity,and its knowledge of any fraud or abuse or suspected fraud or abuse affecting the entity. City of Nederland's Records and Assistanfe If circumstances arise relating to the condition of the City's records, the availability of appropriate audit evidence,or indications of a significant risk of material misstatement of the financial statements because of error, fraudulent financial reporting, or misappropriation of assets, which in our professional judgment, prevent us from completing the audit or forming an opinion,we retain the unilateral right to take any course of action permitted by professional standards, including declining to express an opinion, issue a report, or withdraw from the engagement. During the course of our engagement,we may accumulate records containing data that should be reflected in the City's books and records. The City will determine that all such data, if necessary, will be so reflected. Accordingly,the City will not expect us to maintain copies of such records in our possession. In connection with our audit,you have requested us to perform certain nonaudit services necessary for the preparation of the financial statements, including preparation of the exhibits, footnotes, schedules, and the government wide conversion.The independence standards of the"Government Auditing Standards" issued by the Comptroller General of the United States GAS require that the auditor maintain independence so that opinions, findings, conclusions,judgments, and recommendations will be impartial and viewed as impartial by reasonable and informed third parties. Before we agree to provide a nonaudit service to the City, we determine whether providing such a service would create a significant threat to our independence for GAS audit purposes,either by itself or in aggregate with other nonaudit services provided.A critical component of our determination is consideration of management's ability to effectively oversee the nonaudit service to be performed.The City has agreed that Cheryl Dowden,Director of Finance,possesses suitable skill,knowledge, or experience and that the individual understands the nonaudit services (preparation of the exhibits, footnotes, schedules, and the government wide conversion) to be performed sufficiently to oversee them. Accordingly,the management of the City agrees to the following: 1. The City has designated Cheryl Dowden, Director of Finance, a senior member of management, who possesses suitable skill,knowledge,and experience to oversee the services. 2. Cheryl Dowden,Director of Finance,will assume all management responsibilities for subject matter and scope of the nonaudit services (preparation of the exhibits, footnotes, schedules, and the government wide conversion). 3. The City will evaluate the adequacy and results of the services performed. 4. The City accepts responsibility for the results and ultimate use of the services. -3- City of Nederland Page 4 May 8,2017 GAS further requires we establish an understanding with the management and those charged with governance of the City of the objectives of the nonaudit service, the services to be performed, the entity's acceptance of its responsibilities, the auditor's responsibilities, and any limitations of the nonaudit service. We believe this letter documents that understanding. Other Relevant Information In accordance with Government Auditing Standards,a copy of our most recent peer review report is enclosed for your information. Fees.Costs,and Access to Workpapers Our fees for the audit services described above will not exceed$29,850 and are based upon the value of the services performed and the time required by the individuals assigned to the engagement. Our fee and completion of our work is based upon the following criteria: a. Anticipated cooperation from City personnel b. Timely responses to our inquiries c. Timely completion and delivery of client assistance requests d. Timely communication of all significant accounting and financial reporting matters e. The assumption that unexpected circumstances will not be encountered during the engagement The audit documentation for this engagement is the property of Wathen, DeShong & Juncker, L.L.P. and constitutes confidential information. However,pursuant to authority given by law or regulation,we may be requested to make certain audit documentation available to a federal agency providing direct or indirect funding,or the U.S.Government Accountability Office for purposes of a quality review of the audit,to resolve audit findings or to carry out oversight responsibilities. We will notify you of any such request. If requested, access to such audit documentation will be provided under the supervision of Wathen, DeShong&Juncker, L.L.P.personnel. Furthermore,upon request,we may provide copies of selected audit documentation to the aforementioned parties. These parties may intend, or decide, to distribute the copies or information contained therein to others,including other governmental agencies. The audit documentation for this engagement will be retained for a minimum of five years after the report release. If we are aware that a federal awarding agency,pass-through entity,or auditee is contesting an audit finding,we will contact the parties contesting the auditing finding for guidance prior to destroying the audit documentation. Claim Resolution The City of Nederland and Wathen, DeShong,and Juncker, L.L.P. agree that no claim arising out of services rendered pursuant to this agreement shall be filed more than two years after the date of the audit report issued by Wathen, DeShong, and Juncker, L.L.P. the date of this arrangement letter if no report has been issued.The City of Nederland waives any claim for punitive damages.Wathen,DeShong,and Juncker,L.L.P.'s liability for all claims,damages and costs of the City of Nederland arising from this engagement is limited to the amount of fees paid by the City of Nederland to Wathen, DeShong, and Juncker, L.L.P. for the services rendered under this arrangement letter. If any term or provision of this agreement is determined to be invalid or unenforceable, such term or provision will be deemed stricken and all other terms and provisions will remain in full force and effect. -4- City of Nederland Page 5 May 8,2017 Reporting We will issue a written report upon completion of our audit of the City of Nederland's financial statements. Our report will be addressed to the City Council of the City of Nederland.We cannot provide assurance that an unmodified opinion will be expressed. Circumstances may arise in which it is necessary for us to modify our opinion,add an emphasis-of-matter or other-matter paragraph(s),or withdraw from the engagement. In addition to our report on the City of Nederland's financial statements,we will also issue the following types of reports: • A report on the fairness of the presentation of the City of Nederland's schedule of expenditures of federal awards for the year ending September 30,2017. • Reports on internal control related to the financial statements. This report will describe the scope of testing of internal control and the results of our tests of internal controls. • A schedule of findings and questioned costs. This letter constitutes the complete and exclusive statement of agreement between Wathen, DeShong & Juncker, L.L.P. and the City of Nederland, superseding all proposals, oral or written, and all other communications,with respect to the terms of the engagement between the parties. We appreciate the opportunity to be of service to the City of Nederland and believe that this letter accurately summarizes the significant terms of our engagement. If you agree with the terms of our engagement as described in this letter,please sign the enclosed copy and return it to us. Very truly yours, ,1 ".ltd `L //� WATHEN,DeSHONG& UNCKER,L.L.P. �1 �,r�9 Certified Public Accountants at O'Neill,Engagement Partner RESPONSE: This letter correctly sets forth the understanding of the City of Nederland. By: ecif Title: 1\A akt V Y ` ,`CM Date: 11/44Q.1 Is; a onn -5- weaver {•� System Review Report To the Partners of Wathen, DeShong &Juncker, L.L.P. and the Peer Review Committee of the Texas Society of CPAs We have reviewed the system of quality control for the accounting and auditing practice of Wathen, DeShong & Juncker, L.L.P. (the firm) in effect for the year ended February 28, 2015. Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the American Institute of Certified Public Accountants. As part of our peer review, we considered reviews by regulatory entities, if applicable, in determining the nature,.end extent of our procedures. The firm is responsible for designing a system of quality control and complying with it to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Our responsibility is to express an opinion on the design of the system of quality control and the firm's compliance therewith based upon our review. The nature, objectives, scope, limitations of, and the procedures performed in a System Review are described in the standards at www.aicpa.orglprsummary. As required by the standards, engagements selected for review included engagements performed under Government Auditing Standards and audits of employee benefit plans. In our opinion, the system of quality control for the accounting and auditing practice of Wathen, DeShong & Juncker, L.L.P. in effect for the year ended February 28, 2015, has been suitably designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects.Firms can receive a rating of pass, pass with deficiency(ies) or fail. Wathen, DeShong & Juncker, L.L.P. has received a peer review rating of pass. Ne16144/41k1440tf,fr ,f WEAVER AND TIDWELL, L.L.P. Dallas, Texas June 4, 2015 AN INDEPENDENT MEMBER OF WEAVER AND TIDWELL,L.L.P. 12221 MERIT DRIVE.SUITE 1400.DALLAS,TX 75251 BAKER TILL?INTERNATIONAL CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS I': 972.490.1970 F: 972.702.8321 THE STATE OF TEXAS § COUNTY OF JEFFERSON § AMENDED INTERLOCAL AGREEMENT FOR CONSTRUCTION OF AIRPORT DEVELOPMENT INFRASTRUCTURE IMPROVEMENTS WHEREAS, on or about 2010, the City of Nederland (herein the "City"), with the consent of Jefferson County(herein the"County")and other entities,annexed property within the grounds of the Jack Brooks Regional Airport(herein the"Airport")managed and controlled by the County;and WHEREAS, the Parties to this Agreement, which consist of the City, the Nederland Economic Development Corporation (hereinafter called "NEDC") and the County, agree that it would be advantageous to all Parties to provide opportunities for the commercial development of certain portions of the City annexed portion of the Airport property as shown on the attached Exhibit A(Golden Square Master Plan)as Sites A, B, C-1,C-2, D-1, D-2, E, F, G and H(herein the"Property"), that the County is leasing and/or contemplating leasing to Glow Investment, Inc. ;and WHEREAS,the NEDC, tasked with assisting the economic development of the City, has agreed to provide certain infrastructure funding opportunities to expedite the completion of certain infrastructure improvements necessarily associated with the contemplated commercial development of the Property by Glow Investment,Inc.;and WHEREAS,the governing bodies of each party find that the subject of this agreement is necessary for the benefit of the public, and that each party has the legal authority to perform and to provide the governmental function or service which is the subject matter of this agreement; and WHEREAS,the governing bodies of each party find that the performance of this agreement is in the common interest of all parties. NOW THEREFORE,BE IT RESOLVED that the parties,pursuant to Chapter 791 of the Texas Government Code (Interlocal Cooperation Act) each acting through their respective governing bodies, hereby enter into this Amended Interlocal Agreement(herein the"Agreement"). I.RECITALS All the recitals and preambles hereinabove stated are found to be true and correct and are incorporated herein and made a part of this agreement. II.PURPOSE (a) The purpose of this agreement is to provide funding opportunities (herein the "NEDC Funding") for construction by the NEDC and/or Glow Development (a developer selected by the NEDC and the 1 County) of certain infrastructure improvements to the Property necessary to allow for the commercial development of that portion of the Airport Property immediately adjacent to the Highway 69 frontage road (herein the "Project"), and to allow for repayment of the NEDC Funding from income sources, not yet available to the County, but which income sources will be made available and/or created from completion of the Project. (b)The Property,consisting only of Sites A, B, C-1,C-2, D-1, D-2, E, F, G and H, and the location of the Project are as detailed in the development plat produced by Glow Investment, Inc., a copy of which is attached hereto as Exhibit"A". (c) It is understood that any other leases entered into by Jefferson County for lease of Airport Property adjacent to the Highway 69 frontage road with third parties other than Glow Investments are not bound by the terms of this Interlocal Agreement. III.Scope of Agreement (a) The Parties have been advised that until such time as certain infrastructure improvements (herein the"Infrastructure")to the Property have been completed,including(i)drainage improvements,(ii) potable water access improvements and(iii) sewer access improvements,the commercial development of the Property will be significantly delayed, if not precluded. The Parties have received estimates that the cost of completion of said Infrastructure and related improvements are estimated to be in the range of $1,000,000.00 to a high of$2,000,000.00. Glow Investment, Inc. (herein the "Developer") have advised that until commitments for the construction of such Infrastructure are completed, binding and enforceable tenant commitments(herein the"Tenant Commitments")cannot be finalized,or at best would be extremely limited. (b) The NEDC has agreed to provide funding(the"NEDC Funding"), in an amount NOT TO EXCEED$2,000,000.00,for completion by the Developer,Glow Investment, Inc., of construction of the Infrastructure, with the actual tender of said NEDC Funding being expressly subject to disclosure and production to the Parties, including the County,the NEDC and the City,of binding and enforceable Tenant Commitments for development and occupation of the Property, with said Tenant Commitments(whether produced by developers or otherwise) being in numbers, form and content (to include information as to total proposed tenant build out improvements and verification of funding)acceptable to the NEDC and the other Parties, in their sole discretion. Once the County and the NEDC verifies that the Developer, Glow Investment,Inc. is no longer authorized to terminate its ground lease obligations with the County related to the Property, and that said Developer is obligated to construct the leasehold and tenant improvements contemplated by the ground lease agreement(s) entered into between the County and the Developer,then (i) the NEDC will directly or through the Developer, commence construction of the Infrastructure improvement as soon as reasonably practicable and the City and County Engineering Departments,as well as the Airport, shall retain oversight authority and specifications approval to assure all Airport, City and County standards are met, and (ii) the NEDC will, at the option of the Developer, , either reimburse the Developer the actual costs incurred in completion of the Infrastructure improvements detailed herein or will pay same directly on behalf of the Developer, subject to the maximum limitation detailed herein. Payment/reimbursement by the NEDC will be subject only to (i) reasonable verification that the expense 2 being paid and/or reimbursed is related to the actual construction of the subject Infrastructure improvements detailed herein and(ii)to the extent any such improvements are to be maintained by the City,confirmation by the City that the Infrastructure improvements are constructed in compliance with City requirements otherwise applicable to similarly constructed improvements. (c) The County agrees to reimburse to the NEDC the NEDC Funding actually and finally advanced pursuant to this Agreement, with the repayment/reimbursement by the County being tendered through all net collections actually received by the County from the development of the Property,including particularly(i)all ground lease payments received by the County related to the Property, (ii) not less than fifty (50.0%) of all ad valorem tax payments received by the County on all real property leasehold improvements constructed on the Property and (iii) not less than fifty (50.0%) percent of all business personal property and inventory ad valorem tax payments received by the County from businesses and/or entities (herein the "Tenants") occupying any leasehold improvements constructed on the Property. Payments by the County to the NEDC of said funds shall be tendered within thirty (30) days of actual receipt of said funds by the County. Alternatively, the County, at its sole option, may authorize direct payment to the NEDC by the Developer and/or the Tenants, of the funds detailed hereinabove, with said direct payments to continue, at the option of the County, until the net aggregate NEDC Funding actually paid by the NEDC has been repaid in full. IV.TERM OF AGREEMENT The Effective Date of this Amended Agreement shall be ,2017,which agreement shall supersede and replace, in all respects,the Agreement entered into b tween the NEDC,City and the County effective as of January 25,2016 This Amended Agreement will be in effect for one year from the Effective Date hereof and will be considered automatically renewed for each succeeding year until the NEDC Funding contemplated herein has been repaid in full, as contemplated herein, by the County, whether through sources contemplated herein or from other sources. V.AMENDMENTS Amendments may be made to this Agreement upon the approval of the governing bodies of the City,the County and the NEDC. VI.WITHDRAWING FROM OR JOINING AGREEMENT A party may withdraw from this Agreement, following a vote of its governing body, provided it has notified the other parties hereto of such action in writing at least 60 days before the intended withdrawal date. Withdrawal shall not relieve the withdrawing party of any obligations incurred prior to the withdrawal. VII.TERMINATION 3 This Agreement may be dissolved at any time by the written consent of a majority of the parties, in the event of the dissolution of the Agreement, whether voluntary or involuntary or by operation of law. Notwithstanding the foregoing,in the event of said termination,to the extent all or any portion of the NEDC Funding contemplated by this Agreement has been completed prior to the date of termination, the repayment obligation of the County shall survive such termination and shall remain enforceable, in all respects,until such repayment has been completed or until such repayment obligation has been waived, in whole or in part, by the NEDC and approved by the City. VIII.CURRENT REVENUES Each party shall pay for the performances of services and/or funding required pursuant to this agreement from then current revenues. IX.DISCRIMINATION No one,on the grounds of race,creed,color,national origin,disability, age, or gender, shall be subject to discrimination in the performance of this Agreement. X.FORCE MAJEURE Neither Party shall be deemed in violation of this Agreement if it cannot perform any of the obligations hereunder by reason of strikes, boycotts, labor disputes, embargoes, act of God, acts of the public enemy,acts of superior governmental authority,riots,rebellion,sabotage,or other circumstances for which it is not responsible or which is not within its control. XI. MISCELLANEOUS PROVISIONS (a) Venue: Venue for any lawsuit involving this agreement shall be in Jefferson County, Texas. (b) Choice of Law: This Agreement is governed by the laws of the State of Texas (c) Entire Agreement: This Agreement constitutes the entire agreement between the NEDC, the City and the County,and all negotiations and all understandings between the Parties are merged herein. The terms and conditions of this agreement specifically replace and supersede any prior discussions,terms, documents, correspondence, conversations, or other written or oral understanding not contained herein or specifically adopted by reference. (d) Exhibits: All exhibits, if any,are attached and are incorporated into the agreement. (e) Partial Invalidity: If any term, provision, covenant, or condition of this agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable,the remainder of the provisions shall remain in full force and effect and shall in no way be affected, impaired,or invalidated. 4 (f) Survival: Any provisions which by their terms survive the termination of this agreement shall bind its legal representatives,heirs,and assigns as set forth herein. (g) Assignment: The Parties shall not assign,transfer,or encumber any right or interest in this agreement, in whole or in part,without prior written approval of the other Party. (h) Benefits: This agreement shall bind, and the benefits thereof shall inure to the respective parties hereto,their heirs, legal representative,executors,administrators,successors, and assigns. (i) Amendments: This agreement can be supplemented and/or amended only by a dated written document executed by both parties. (j) Gender: Words or any gender used in this agreement shall be held and constructed to include any other gender and words in the singular number shall be held to include the plural, and vice versa,unless the context requires otherwise. (k) Multiple Copies: This agreement may be executed in multiple counterparts each of which constitutes an original. (1) Article and Section Headings: The Article and Section headings contained herein are for convenience and reference and are not intended to define or limit the scope of any provision of this agreement. (m) Misspelled Words: Misspelling of one or more words in this agreement shall not void this agreement. Such misspelled words shall be read so as to have the meaning apparently intended by the parties. This agreement shall take effect upon execution by all signatories herein below. Jefferson Coun By A t Title Date City of Nederland By Lc e..,4 Title „Lti/lolR Date i / 5 Nederland .conomic Development rporation Bytr Title ip�de Date .5"- /7 - (7 6