Oct 12, 2023 CITY COUNCIL WORK SESSION

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SO NOW CALL THIS,

[ CITY OF BAYTOWN NOTICE OF MEETING CITY COUNCIL WORK SESSION THURSDAY, OCTOBER 12, 2023 5:30 P.M. COUNCIL CHAMBER, CITY HALL 2401 MARKET STREET, BAYTOWN, TEXAS 77520 AGENDA CALL TO ORDER AND ANNOUNCEMENT OF QUORUM ]

WE DO HAVE A QUORUM.

UH, WE FIRST

[1. CITIZEN COMMENT Notice is hereby given that in accordance with the Texas Open Meetings Act, Texas Government Code, Chapter 551, prohibits the City Council from discussing, deliberating, or considering, subjects for which public notice has not been given on the agenda. Issues that cannot be referred to the administration for action may be placed on the agenda of a future City Council Session.]

IS THERE ANYONE THAT HAS SIGNED UP TO SPEAK? OH, BEFORE YOU GET STARTED, MR. ISAAC, LET ME READ THIS REAL QUICK.

THE PURPOSE OF OF CITIZENS' COMMENT IS TO GIVE ALL INTEREST CITIZENS THE RIGHT TO EXPRESS THEIR VIEWS.

EVERYONE DESIRED TO SPEAK SHOULD HAVE EITHER SIGNED THE APPROPRIATE LIST IN THE FOYER OR EMAILED THE CITY CLERK PRIOR TO THE POSTED TIME OF THIS MEETING.

EACH CITIZEN SHALL GIVE HIS OR HIS AND HER NAME OR ADDRESS IN ORDER TO PROVIDE A PROPER RECORD OF THESE COMMENTS.

THE RULES ALLOW EACH PERSON ONE MINUTE TO SPEAK.

A CITIZEN MAY PASS HIS OR HER NAME, UH, TIME TO ANOTHER PERSON WHO HAS REQUESTED TO ADDRESS COUNCIL.

HOWEVER, NO CITIZEN'S REMARKS SHALL BE SHALL EXCEED.

THREE MINUTES IN TOTAL.

EITHER THE ONE MINUTE OR THE THREE MINUTES LIMIT MAY BE EXTENDED BY MAJORITY VOTE OF THE BAYTOWN CITY COUNCIL.

I ENCOURAGE EVERYONE TO BE AS BRIEF AND TO THE POINT AS POSSIBLE.

PLEASE KEEP IN MIND THAT THE CITY COUNCIL CANNOT DISCUSS OR DELIBERATE ON ITEMS FOR WHICH PUBLIC NOTICE HAS NOT BEEN GIVEN ON THIS AGENDA.

MR. ISAAC, MR. MAYOR AND COUNCIL, UH, THANK YOU FOR HAVING ME THIS EVENING.

I WOULD LIKE TO COMMENT THAT IN VERY NEAR FUTURE THERE WILL BE SOMEONE THAT WILL SIT IN THE DISTRICT FOUR SEAT TO REPLACE COUNCILWOMAN HEATHER BETTENCOURT HERE IN NOVEMBER.

AND I WOULD HOPE THAT THAT PERSON DOESN'T HAVE ANY LEGAL MATTERS THAT THEY'RE GOING THROUGH, UH, THAT THEY COULD, UH, UH, HAVE THEMSELVES PRESENT THEMSELVES TO THE VOTERS OF THE GENERAL PUBLIC.

THAT INCLUDES, LIKE TONIGHT'S DEBATE.

WE WON'T HAVE ONE OF THOSE CANDIDATES FOR THAT DEBATE.

UH, THAT INCLUDES THE INTERVIEW FOR MY OWN SHOW.

UH, THAT PERSON, ONE OF THE PEOPLE HAVEN'T BEEN PUBLIC AND THEY'RE GOING THROUGH LEGAL MATTERS.

I THINK IF SOMEONE'S GOING TO SERVE ON THIS CITY COUNCIL THAT THEY SHOULDN'T OWE ANY BACK TAXES ON THEIR BUSINESSES.

IF SOMEBODY WANTS TO SERVE ON THE CITY COUNCIL, THEY SHOULDN'T BE SUED BY THEIR HOA AND THAT THEY SHOULD BE ABLE TO SERVE HONORABLY.

WE SHOULD BE ABLE TO TRUST THEM IF THEY ARE TO SIT IN THE SEAT, MR. MAYOR.

AND SO I WOULD LIKE TO COMMENT TONIGHT THAT I HOPE THAT THE REPLACEMENT OF MS. HEATHER BETTENCOURT IS SOMEONE THAT WAS RESPONSIBLE AND FINANCIALLY TRANSPARENT AS SHE WAS.

MR. MAYOR, THANK YOU VERY MUCH FOR YOUR TIME.

THANKS SIR.

ALRIGHT, MOVE ON

[2. EXECUTIVE SESSION]

SO WE'LL NOW, UH, WE WILL NOW RECESS IT AND CONVENE IN EXECUTIVE SESSION PURSUANT TO TEXAS GOVERNMENT CODE SECTION 5 5 1 0.071 TO SEEK THE ADVICE OF THE CITY ATTORNEYS REGARDING PENDING OR CONTEMPLATED LITIGATION INVOLVING THE CITY OF BAYTOWN.

I ALMOST RIPPED MY ARM OFF HERE.

THERE'S TWO VERY SHARP EDGES HERE.

YEAH.

HEY, WELL, AT LEAST IT WAS THE SHARP.

OH MY GOSH.

YES.

THEY'RE VERY SHARP.

VERY SHARP.

TELL STORY ONE DAY ABOUT THIS.

SO I NOW RECONVENE OUR OPEN MEETING OF THE BAYTOWN CITY COUNCIL AND ANNOUNCE IN ACCORDANCE WITH SECTION 5 5 1 0.102, THE TEXAS GOVERNMENT CODE.

NO ACTION WAS TAKEN IN EXECUTIVE SESSION.

UH, LET'S SEE.

UH, OUR OTHER ITEM

[a. Discuss the City of Baytown FY22 Budget Amendment.]

THE CITY OF BAY TOWN'S, UH, FY 22 BUDGET AMENDMENT, MS. MCKENZIE.

SO GOOD EVENING AGAIN, COUNSEL.

UM, THIS IS THE BUDGET AMENDMENT.

IS IT ON THE SCREEN? NO.

OKAY.

UM, YOU SHOULD HAVE IT IN FRONT OF YOU.

THE, UH, IN YOUR PACKET, I BELIEVE IT'S THE BUDGET AMENDMENT FOR THE CLEANUP FOR FY 22 THAT GOES ALONG WITH THE AUDIT.

SO WE ARE TRYING TO DO SOMETHING DIFFERENT THIS YEAR.

SO WHEN WE PRESENT THE AUDIT, WE WANNA PRESENT THE, UM, I'M SORRY.

WE WANT TO, UM, PRESENT THE CLEANUP FOR THE END OF THE YEAR PRIOR TO THE AUDIT THAT'LL GO ALONG WITH THAT.

AND SO THE AUDITORS HAVE REVIEWED IT.

AND SO, UM, THIS IS JUST THE CLEANUP FOR THE END OF THE YEAR IF YOU HAVE ANY QUESTIONS.

SO IT IS A MOVEMENT BETWEEN FUNDS BETWEEN GENERAL FUND, IF YOU LOOK AT THE DETAILS.

LET'S SEE, SAYS YOU DO.

UM, WE MOVED MONEY FROM GENERAL FUND TO AQUATIC SANITATION AND THE INTERNAL SERVICE FUND AND THE MEDICAL BENEFITS FUND, UM, ON THE GOVERNMENTAL SIDE.

AND THEN WE ALSO MOVED FUNDS FROM, UH, GENERAL FUND TO AQUATICS.

WHAT AVENUE I DID SOMETHING.

YES.

AND THEN ON THE WATER AND SEWER SIDE, I'M TRYING TO GO TO THAT PAGE JUST SO YOU CAN SEE.

SO AS YOU CAN SEE, FOR AQUATICS, WE HAD TO ADJUST BY 1.5 MILLION.

AND THEN ALSO FOR THE WATER SEWER, WE HAD A FEW ADJUSTMENTS THERE, AND SANITATION WAS 221,000 AND GARAGE WAS 777,000, AND WAREHOUSE WAS 46,000.

SO I'M HAPPY TO ANSWER ANY QUESTIONS IF YOU HAVE ANY.

WAS THERE ANY QUESTIONS REGARDING ITEM THREE A? OKAY, NEXT ONE, MOVE ON TO ITEM THREE

[b. Receive the City of Baytown's Comprehensive Annual Financial Report and Single Audit Report for the fiscal year ending September 30, 2022.]

RECEIVE THE CITY OF BAY TOWN'S COMPREHENSIVE ANNUAL FISCAL FINANCIAL REPORT AND SINGLE AUDIT REPORT FOR THE FISCAL YEAR ENDING SEPTEMBER 30TH

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SO, UM, NOW WE'RE, NOW WE'RE PRESENTING THE, UM, AUDIT FOR, UH, FY 22.

AS YOU KNOW, UM, WE'RE PAST THE DEADLINE.

TYPICALLY, THE AUDIT IS DUE BY THE END OF MARCH.

UM, ROBERT BELL, UM, WITH BELL HARRIS IS HERE TO PRESENT OUR AUDIT FOR US.

AND THEN, UM, HE'S OPEN TO ANY QUESTIONS.

IF YOU HAVE ANY GOOD EVENING, IT'S A PLEASURE TO BE HERE.

WITH ME ALSO IS PARTNER STEPHANIE HARRIS, WHO'S WORKED ON THIS, THE CITY'S ENGAGEMENT FOR A NUMBER OF YEARS.

UM, IT HAS BEEN A, A, A LONG TOUGH BATTLE THIS YEAR WORKING ON THE CITY'S REPORT.

SO WE ARE SO THANKFUL THAT WE ARE UP HERE TONIGHT PRESENTING TO YOU YOUR FINAL REPORT.

THE, THE, THE GREAT NEWS IS, IS THAT THIS IS, WE ARE HAVE ISSUED A CLEAN UNMODIFIED REPORT, WHICH IS THE HIGHEST LEVEL OF ASSURANCE THAT WE CAN PROVIDE TO CITY COUNCIL.

THAT ALL THE DISCLOSURES REQUIRED BY GENERAL ACCEPTED ACCOUNTING PRINCIPLES ARE INCLUDED AND THE FINANCIAL STATEMENTS ARE MATERIALLY CORRECT.

SO THAT IS EXACTLY THE TYPE OF OPINION YOU WANT TO BE GETTING TONIGHT THAT ALLOWS YOU TO GO ON AND GET GOOD BOND RATINGS AND ALL THE OTHER GOOD THINGS THAT HAPPEN THAT COME ALONG WITH THAT CLEAN OPINION.

SO THAT IS GREAT NEWS TO HAVE.

BUT THE DIFFICULT PART OF IT IS THERE WAS A LOT OF BLOOD, SWEAT, AND TEARS SHARED, UH, TO GET US TO THIS POINT.

IT WAS QUITE, QUITE AN ENDEAVOR, UH, ON BOTH, BOTH THE AUDITORS WORKING ON THE ENGAGEMENT AS WELL AS MANAGEMENT THAT WORKED ON THE ENGAGEMENT.

SO IT WAS A, A TOUGH ROAD.

I HAVE PREPARED A QUICK, UH, LITTLE SUMMARY OF LITTLE COLOR SHEET HERE.

UH, JUST KIND OF SHOWS THE, THE HISTORY OF THE, OF THE CITY'S AUDIT ENGAGEMENT OVER THE LAST 10 YEARS.

TO KIND OF GIVE YOU AN IDEA OF TYPICALLY WHERE THE CITY HAS FALLEN AT.

UH, TYPICALLY IT HAS BEEN ONE OF THE FIRST REPORTS TO, TO COME OUT OF OUR OFFICE AS BEING ISSUED.

WE AUDIT ABOUT 40 CITIES, ABOUT 120 GOVERNMENTS.

AND SO THE CITY OF BAYTOWN HAS TYPICALLY BEEN ONE OF THE FIRST AUDITS THAT'S COME OUT.

AND THIS YEAR IT'S, IT'S IN ALL NEAR NEAR LAST PLACE.

SO AGAIN, QUITE A BIT OF CHANGE OVER THE LAST TWO YEARS.

ALSO, IT NOTES THE NUMBER OF AUDIT ADJUSTMENTS.

TYPICALLY IN ANY AUDIT, EVEN THE BEST CLIENTS THAT WE HAVE WILL TYPICALLY HAVE, UH, 10 OR SO AUDIT ADJUSTMENTS.

SO WE JUST KIND OF EXPECT THERE TO BE SOME BASELINE OF AUDITS, UH, AUDIT ADJUSTMENTS OUT THERE.

BUT, UH, THIS YEAR WE HAD, UH, QUITE, QUITE A NUMBER OF, UH, ADJUSTMENTS.

SO WE POSTED TO GET THE FINANCIAL STATEMENTS CORRECT, UM, 64 IN TOTAL, AND USING KIND OF A BASELINE NORM OF MAYBE ABOUT 20, THAT WOULD BE ABOUT 44 OVER WHAT WE CONSIDER TO BE NORMAL.

UM, THERE IS A REQUIRED AUDITOR DISCLOSURE LETTER.

IT'S A SEPARATELY STAPLED DOCUMENT.

TYPICALLY, THIS DOCUMENT WOULD BE ABOUT FIVE PAGES, SIX PAGES LONG, BUT IT IS PARTICULARLY THICK, PROBABLY ABOUT 20, 30 PAGES.

UH, THE REASON WHY IT IS SO THICK IS WE ARE REQUIRED TO TALK ABOUT THE AUDIT PROCESS AND MORE SPECIFICALLY, ALL OF THE CHANGES THAT WE HAD TO MAKE TO YOUR FINANCIAL DATA ONCE THE DATA WAS TURNED OVER TO US.

AND SO, UH, AGAIN, UNLESS YOU LOVE DEBITS AND CREDITS AND MOST PEOPLE DON'T, UH, THIS IS NOT GONNA MEAN A LOT TO YOU.

BUT IF YOU JUST FLIP THROUGH THE DOCUMENTS AND SEE THE MILLIONS OF DOLLARS OF ADJUSTMENTS THAT WERE BEING MADE TO CORRECT THE CITY'S INFORMATION, THEN YOU'LL KIND OF GET A, A A A A SCALE OR A FLAVOR FOR THE AMOUNT OF WORK THAT WAS REQUIRED TO GET YOU TO THE POINT TO WHERE YOU GOT A UNMODIFIED REPORT TO TODAY.

SO THE NEXT ITEM TO TALK ABOUT IS THE MANAGEMENT LETTER.

THE MANAGEMENT TALKS, THE LETTER TALKS ABOUT FINDINGS WE HAD DURING THE AUDIT PROCESS, AND I'LL JUST KEEP THESE REMARKS EXTREMELY BRIEF, BUT PRIMARY ONE IS ON TIMING.

A AS YOU CAN SEE, THAT, UM, THERE IS A NUMBER OF REASONS THE CITY HAS TO GET ITS REPORT TURNED IN ON TIME.

FIRST OF ALL, IT'S JUST GOOD CONTROL PROCESS THAT FOR CITY COUNCIL TO SEE THIS INFORMATION AS SOON AS IT BECOMES AVAILABLE.

UH, IN ADDITION TO THAT, YOU HAVE GRANTORS OUT THERE THAT ARE LOOKING FOR THE INFORMATION.

YOU HAVE CREDITORS OUT THERE LOOKING FOR THE INFORMATION.

SO THERE'S A NUMBER OF PEOPLE OUT THERE THAT NEED THE INFORMATION QUICKLY.

SO TIMING IS OBVIOUSLY A BIG THING.

ACCURACY, UH, NOT JUST WHEN THE AUDITORS COME OUT, BUT DURING THE YEAR, IF YOU ARE FLYING AN AIRPLANE AND YOUR ALTERNATOR IS NOT TELLING YOU THE CORRECT HEIGHT, THEN THERE IS A CHANCE YOU'RE GONNA START HITTING SOME TREETOPS.

AND SO THE ACCURACY OF YOUR FINANCIAL STATEMENT MATTERS THROUGHOUT THE YEAR THAT CITY COUNCIL MANAGEMENT IS GONNA BE MAKING DECISIONS BASED UPON THAT INFORMATION.

AND SO YOU NEED TO MAKE SURE THAT THAT IS INFORMATION IS ACCURATE AS YOU'RE, AS YOU'RE LOOKING AT IT.

UH, ONE PRIMARY AREA OF CONCERN

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THIS IS REALLY A CARRY OVER FROM THE PRIOR YEAR, BUT THERE, THE CITY ENCOUNTER ENCOUNTERED A NUMBER OF DIFFICULTIES IN RECONCILING ITS BANK ACCOUNTS ON A TIMELY BASIS AND HAS BEEN SPENDING AN EXTRAORDINARY AMOUNT OF EFFORT TO GET THAT SITUATION, UH, RESOLVED.

SO I KNOW THAT THEY'RE WORKING, WORKING VERY HARD, HARD AT THAT.

THAT KIND OF COVERS MY, MY REMARKS IN, IN, IN A BRIEF FORMAT, BUT I AM MORE THAN HAPPY TO GET INTO ANY OF THE DETAILS AS MUCH AS YOU WOULD LIKE FOR ME TO GET INTO.

UM, THAT BEING SAID, I JUST WANT TO THANK AGAIN, MANAGEMENT FOR ALL THEIR HARD WORK THEY DID THROUGHOUT THE ENGAGEMENT.

THEY STUCK WITH IT.

UH, AGAIN, IT WAS A, A TOUGH ASSIGNMENT AND SO I WANNA APPRECIATE ALL THE HELP THAT THEY GAVE US ALONG THE WAY.

ALRIGHT, THANK YOU.

ANY QUESTIONS? UH, COUNSEL, MR. MAYOR, I JUST WANT TO MAKE COMMENT IF YOU DON'T MIND.

YES.

UH, MR. BE, THANK YOU VERY MUCH.

I JUST WANT TO, AS YOU AND I HAVE SPOKEN OVER THE PAST AND AS I WAS JUST EXPLAINING TO THE COUNSEL, I'VE, UM, I, WE HAVE ASKED THAT WE'RE JUST OPEN AND HONEST WITH THINGS AND I I, I'M JUST GONNA TAKE A MINUTE TO, TO GO BACK TO THE MANAGEMENT LETTER AND SAY THAT WE DID HAVE A MATERIAL WEAKNESS FOR THE 22 AUDIT, UH, WITH UNDETECTED MISSTATEMENTS AND THAT THE TIMING OF THE AUDIT WAS, UH, AN ISSUE.

UH, AND THAT WILL BE RESOLVED GOING, UH, GOING FORWARD.

UM, AND THEN WE DO HAVE ONE PIECE THAT IS UNRESOLVED, UH, BASED OFF OF THE 21 AUDIT.

AND I JUST WANNA BE OPEN WITH EVERYBODY THAT THIS IS FROM THE FY 22 BUDGET.

THERE ARE THREE, UH, ISSUES THAT WE ARE ADDRESSING.

I DO APPRECIATE, UH, BELT HARRIS FOR, UH, BRINGING THOSE TO LIGHT AND THAT THEY WILL BE CORRECTED.

AND I JUST WANNA GO ON RECORD, UH, ADDRESSING THOSE PUBLICLY.

ALRIGHT.

THANK YOU MR. CITY MANAGER.

ALRIGHT, ANY OTHER QUESTIONS OR COMMENTS? IF NOT, THANK YOU MR. HARRIS, MR. MR. BELT AND MS. HARRIS.

AND SO NEXT WE HAVE, UH, NO OTHER ITEMS THAT THIS COUNCIL HAS POST OR THAT IS POSTED FOR THIS WORK SESSION.

SO THIS WORK SESSION WITH BAYTOWN CITY COUNCIL IS NOW ADJOURNED.

WE WILL RECONVENE AT SIX 30.