Closed Caption Log, Council Meeting, 8/28/08

Note: Since these log files are derived from the Closed Captions created during the Channel 6 live cablecasts, there are occasional spelling and grammatical errors. These Closed Caption logs are not official records of Council Meetings and cannot be relied on for official purposes. For official minutes, please contact the City Clerk at 974-2210.

please rise for the inhave commission.

First of all, let me say thank for you the opportunity to do this. Shall we pray. Our heavenly father we thank you this morning that we have graciously watched over our lives and have provided direction in critical moments as well as in times of abundance. And we sincerely ask of you this morning that you grant your wisdom and a sense of direction to those who serve on this council and give them competent leadership as they discuss and review and determine the course of action needed to make this city a community of responsible citizenship. Guide their thoughts and their actions, because we make this prayer in the name of the one who came to save and to serve. Amen.

Thank you, major carter for all of the salvation army does. There being a quorum present, at this time I will call to order this meeting of the austin city council. It is thursday, august 28th, 2008, APPROXIMATELY , we are here in the council chambers in the city hall building at 301 west second street. Council, before I go through a handful of changes and corrections to this week's posted agenda and we will walk through what I perceive to be the -- the scheduling today, we try to take this opportunity to ask and/or announce if there are any potential upcoming items from council or issues that likely will be before the council here over the next meeting or two. Councilmember morrison?

Morrison: let's see. Good morning, I wanted to mention along with councilmember leffingwell we plan to work in the coming weeks on some issues around historic preservation. As you will recall, a couple of weeks ago, we had some citizens come in and talk about the need for a much more proactive program in the city if we really want to do a good job preserving our historic assets and communities and so I'm looking forward to working with councilmember leffingwell and the community to try to get that started.

Mayor Wynn: Mayor pro tem?

Yeah. In the coming item from council, there will be a motion to adjourn the meeting at 7:00 p.m. [Laughter]

Mayor Wynn: Okay. I anticipate that, yes. Further upcoming items from council? Then hearing none, I will read into the record our changes and corrections to this week's posted agenda. They are -- to note that 5 comes recommended by the water and wastewater commission and the water conservation implementation task force. As we should note that items 7 and 9 have been withdrawn. That will be part of our consent agenda. 13, we should strike the phrase a total of $3 million -- $3,116 and insert the -- 3 million $116, and insert the phrase not to exceed. On 65 councilmember shade is an additional co-sponsor and 67 councilmember morrison is an additional co-sponsor. 69, we should note that this -- that this waiver is regarding the event to be held september 21st, 2008, NOT SEPTEMBER 28th. [indiscernible], insert the planning commission recommendation, to grant multi-family resident moderate high density historic landmark neighborhood plan or mf 4 h-np combining district zoning. 104, we should strike the phrase conduct a public hearing and, and instead insert the phrase "approve second and third readings of an ordinance amending chapter 25-2 of the austin city code. " We should also strike the notation of the planning commission recommendation which had read "to grant vertical mixed use building, the district and to exclude certain tracts from the vertical mixed use overlay " and we should instead insert the notation that first reading was approved january 18th, 2008, WITH A VOTE OF 7-0. Going back a little bit, we should also note on item no. 66, An item from council, that councilmember cole is an additional co-sponsor. For our schedule today, here after we approve the consent agenda in a few minutes, we are likely to have a discussion item or two, the hope is that we will take 4 I anticipate will be pulled off the consent agenda, that is austin energy's proposed purchase power agreement regarding a biomass electric generating plant in east texas, we will take up that discussion item immediately after our consent agenda is approved, so here in the next 15 to 30 minutes probably. We then perhaps if we have a -- a measurable executive session agenda, we may go into executive session late in the morning, then come back at noon for our general citizen communication. This afternoon at some 00 , we are going to have discussion and possible action regarding bond sales. And sometime probably immediately after 3:00 p.m. We will technically adjourn the city council meeting and call to order the austin housing finance corporation board of directors meeting and take up that ahfc agenda, very limited agenda. 00, we will be reconvening the austin city council and take up all of our zoning matters. 30 We have our weekly break for live music and proclamations. Our musicians today are blues mafia, stay tuned for them. Then beginning shortly after music and proclamations we will take up a handful of potential public hearings. As mayor pro tem pointed out, we are all aware that a lot of folks, including colleagues and staff would like to -- to watch the democratic national convention, which happens to be scheduled tonight. And so we anticipate that the council frankly ending relatively early this evening. Certainly by our standards. Normally folks don't do that. Luckily the republican national convention is scheduled at a time when we won't have city council meetings, so there's no potential sort of -- of government, intergovernmental conflict there. But again we do anticipate there being relatively limited zoning cases and public hearings tonight. My understanding is most of the zoning cases that we will be taking up potentially will be those that have little, if any, contention and need for public hearings and discussion. So we anticipate being out of here early in the evening. So far, council, just a handful of items have been pulled off the consent agenda. 4, austin energy's purchase power agreement was pulled. 63, which regards a -- an issue with the -- with the pedernales electric co-op or peck, -- or pec, we will take that off, we do have executive session legal discussions about that item to be had first. And then similarly, I think 65, sponsored by also pulled by among others councilmember martinez, will be taken -- we will be taking that off the consent agenda as we wills have that legal discussion in closed session as well. That's regarding the issue of campaign finance enforcement of our campaign finance laws here in the city. So far council only items 4, 63, 65 have been pulled off the consent agenda. Any other items to be removed before I propose a consent agenda this morning? Hearing none, then, our consent agenda numerically will be to approve item 1, our minutes from last thursday's meeting. From austin energy we will be approving items 2 and 3. From our austin water utility, we will be approving items 5, per changes and correction. From our contract and land management department, approving items 6, we will be noting that item 7 is withdrawn. We will be approving item 8. And also noting that item 9 has been withdrawn. We will be approving items 10, 11, 12, 13 per changes and correction, 14, 15, 16, 17, 18, and 19. From our economic growth and redevelopment services department, approving items 20, 21, and 22. From our management services department, approving item 23, which -- which is changing modestly our city council meeting schedule. So we will be -- as parts of that, we will be canceling the -- the regularly scheduled meeting that was going to be held thursday, OCTOBER 9th, 2008, AND Essentially moving that back one week and conducting that same council meeting on THURSDAY, OCTOBER 16th, 2008. From our parks and recreation department, .. we will be approving items 24. From our police department, we will be approving item 25. From our public works department, approving item 26. And the number of items from our purchasing office as part of this consent agenda will be approving items 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, and 62. And if my daughter was at , she would say ready or not, here I come. She better be in school. [Laughter] as part of the consent agenda, we will also be approving item 64, which are our board and commission appointments. I will read into the record, they are to the austin community education consortium, bruce barrick is my nomination. To the austin music commission, councilmember martinez's nominated rich garza and councilmember shade has nominated brad stein. And to our mexican american cultural center advisory board, councilmember cole has nominated maria ramirez. That's our board and economics appointments board and commission nominations for appointments on item no. 65. Continuing on with our consent agenda, we will be approving item 66, per changes and correction. Item 67 per changes and correction. Item 68, 69, per changes and correction, 70, 71. We will be setting the public hearings by approving item 72, 73, 74, 75, 76, and 77. Council, that's our proposed consent agenda this morning. Motion made by councilmember martinez, seconded by councilmember leffingwell to approve the consent agenda as proposed. Before I ask for council comments, I think that we have a -- at least one citizen that would like to give us testimony on an item that is on our consent agenda. 13, is a construction contract that we're set to approve, but -- but before we vote on our consent agenda, I want to give john locamp a janse to give us testimony. Is mr. locamp here? Come forward, sir.

I in name is john locamp, thomas industrial coating, the apparent low bidder for east austin reservoir rebidding project opened on JULY 10th, DEBATE. I'm going to have to shorten this because I had nine minutes worth of stuff. We submitted a bill of $2,124,483, and the second lowest bidder, currently being recommended for award of the contract by the austin water authority offered to complete the identical work for a bid of 2,727,378. Which is 602,895 more, higher than our bid. And -- and we were told by the -- by the office of contract and land management that we -- that our bid was nonresponsive due to information that we provided regarding our past experience. We did notify them immediately, went through the protest and were denied the right for a right or denied a hearing for this. Before I go into the reasons why the council should reconsider even awarding that today. I want top say what thomas is, it's a large industrial painting contractor. We have completed 22, we have completed water storage tanks in 22 different states throughout the united states. We have [indiscernible] rated [indiscernible] according to news and review magazine. We have completed -- we have actually completed four separate reservoirs for our city since 2001. I personally managed each of these projected completed here in austin, received numerous praises from your staff at the austin water utility and their consultants due to our crew's workmanship and efficiency. We have proven ourselves to the city basically. My point is that we are qualified to do the recoating of the east austin reservoir. The following reasons are why -- first off spending $600,000 more on this project to a very minor technical issue that is unclear at best does not make sense in today's economy. We should think about what $600,000 could do for this community. Second it is our opinion that thomas industrial coatings did meet the four criteria items of the specifications. I would like to read those four criteria items to you right now. I'm going to shorten that and read the one that they denied, they said that we did not meet. Specifically, two -- this is the required for the specification. We had to submit two of the three projects to be submitted, must have been ground storage reservoirs at least five million gallons or larger. And it's very important that's all it says. Our denial letter basically came back to us and said two of the three projects must have been greater than five million gallons with lead abatement. Those three words were added for the denial letter that we were sent to. That was not in the specification. Further we were said it was non-responsive. Another sentence required that subcontractors must meet the same obligations post bid. I know for a fact that the second bidder there -- their [indiscernible] contractor as well as their welding contractor did not meet the obligations. However the office of contract and land management chose not to -- [buzzer sounding] or chose to ignore that or consider that okay. In closing by awarding this project to the second bidder the city council is stating that you are a willing to spend $600,000 more for the exact same results on this project. We made no deviations or exclusions from the specifications and have provided the service for the city in the past. Second, you are willing to spend $600,000 for a contractor without experience with austin water authority. Again, I remind you we completed four separate reservoirs including your 34 million-gallon reservoir at martin hill on the north side of town that one that looks like a domed stadium. Finally you are willing to overlook the possibility of interpretation from the specification by the low bidder, us in denying us a chance for a hearing. Simply put, $600,000 is a great deal of money. If you trusted us enough to complete the 34 million-gallon tank for the martin dale reservoir, I'm not sure that I understand why they won't trust us with the 11 million-gallon east austin reservoir project. I have further backup for this. Again, I want to emphasize the fact that -- that the specification required two of the three projects to be submitted must have been ground storage reservoirs of at least five million gallons or larger. It does not say with lead abatement. We did submit two projects. We submitted an 11 million-gallon tank from pennsylvania and a 34 million-gallon tank here in east austin. Thank you.

Mayor Wynn: Thank you, locamp, obviously council we see behind mr. Locamp in addition to assistant city manager garza, our department director and representatives that look like from the law department. So I guess that I would like to hear perhaps a staff interpretation or -- or discussion about some of the fact mr. locamp brought up.

Good morning, mayor and councilmember, I'm mike trimble, office for contract and land management. The solicitation that was referred to we did take several steps and follow our process with respect to the bid award and consideration. And I'm just going to go through quickly some of the highlights that kind of our processes went through this. We did receive a bid from thomas industrial. We did review the project experience requirements that were included that were received from our sponsor department or client department austin water utility. That project experience required experience -- the project experience required completion of two projects including two ground storage tanks, of 5 million gallons or more of potable storage water tanks. Through our analysis, it was not clear in the project experience that was submitted in section 400 that thomas industrial had this experience on both projects. It was clearly identified in one of the projects, but not a second project. We actually sent a letter to thomas industrial asking for clarification on which of the other two projects had the experience required. And they submitted additional information but they submitted information with regards to other projects. Not a clarification of the projects that were included with their bid project experience. And as you know, we cannot consider any additional project experience. We can only ask for the clarification of what was included in the bid submittal. Any other information would be considered an augmentation to the bid submittal package. That being said, we went back and reviewed the project experience. We had our consultant on the project. [Indiscernible] do a review of their project experience. They found through their opinion they did not have the project experience noted that the two projects of five million gallons or more. We also had our internal engineer in charge of quality assurance that works in the program management office do another review of it and they also found that they did not meet the project experience requirements as submitted in the bid. So again we felt like we took several steps to consider all of the project experience. Based on all of that review, we were left with no choice but to fine -- to find them nonresponsive, we had no choice but to find no grounds for the protest hearing. Let me say that the recommendation that you have in front of you is the lowest compliant responsive bid that we received for this project.

Mayor Wynn: I think you also talked about the -- about the issue of -- of subcontractors or I guess, you know, the rest of the team and I don't remember exactly the -- the issue that he raised. But -- but I guess perhaps comparing the subcontractors that might be utilized by his group compared to the ones by the -- by now what you call to be the -- the lowest compliant bid. Can you discuss that issue?

Well, it may need some assistance from -- from my head of contracts procurement to talk the details. But we did review the -- the compliant lowest bid and they were compliant with all of their requirements that we had in our bid submittal. Again through our process we went back and looked at not only the -- the bid that thomas industrial submitted by all of our other bids as well. They were compliant with all of their requirements as put out in our bid package. Specifically, the issue that was brought up, I might need some assistance to answer that specifically, but it didn't meet all of our requirements.

Then as I -- I thought locamp correctly. But he -- he said or implied that programs the original solicitation did not include this -- this lead abatement issue, but then by the time either, you know, he was protesting then that came to light?

Well, let me clarify that. Because on the project experience all -- I think all of the projects had to include lead abatement, three of the three projects. All of the projects had to include lead abatement. Then we ask for two of these three projects requiring completion of projects that involved ground storage tanks of five million gallons or greater. So the fact that the -- that the included lead abatement made sense because all of the projects required lead abatement. I think we also were seeking clarifications along those lines as well.

Mayor Wynn: Further questions of staff? Council? Comments? It's always -- it always can be frustrating when -- when it seems as though there's the potential for a -- for a lower responsive bid, but -- but we generally, you know, make our legal -- make our legal advice very important stuff. Further questions or comments regarding item no. 13, Our testimony by mr. Locamp? I don't believe we have other citizens signed up on items -- on the proposed consent agenda. So comments from council? We have a motion and a second on the table to approve consent agenda. Councilmember leffingwell?

Leffingwell: I just wanted to point out, another important improvement in our water conservation program. It doesn't cost us any money. What it does is the annual budget cap for rebates remains the same. Just about two million. But what this does is raise the limit for individual projects from $40,000 to $100,000 which is more in line with what austin energy does. They do $200,000 per project limit. And sets the -- the performance standards based on -- basically it's one dollar rebate per peak day gallon saved. You can save $40,000 in the present system if you have a cap. So we have a lot of industrial applications and I saw one recently where they have a very expensive system for reusing water in their manufacturing process for chips. They use a lot of water and this will encourage organizations like spansion that have water use in industrial operations to install that infrastructure and save water. I think it's a very important contribution. I thank the water utility for bringing it forward.

Mayor Wynn: Thank you, councilmember. Further comments on the consent agenda. Further comments, councilmember martinez? Mares thanks, mayor, i believe it's item 66. Let me verify. Item 67, I want to thank councilmember shade for co-sponsoring this item for me. This is a resolution asking the city manager and staff to come up with some recommendations as to how we make austin more friendly to the two wheeled folks who use scooters and bicycles and motorcycles. What I found initially what got me looking into this issue was I saw a scooter sitting out here in front of joe's. It was not in a parking space, really not causing any problems, we gave him a $15 ticket. When I looked into it, they need to park in a meter, take up an entire metered slot, pay money or face a $15 ticket. I really felt like we could be more receptive to the folks that are first of all being more environmentally consciousness, doing less damage to the roads and improving our traffic situation and suggestion by using scooters, bicycles and motorcycles. I just want the -- want us to try to work on some policies and ordinances that speak to those constituents that we make it more friendly as well as adding a safety component. Educating folks. There are folks out there on two wheeled motorized apparatus that had never, ever driven one. They are doing it. They are being forced into by economics. I really think we should be active in making -- proactive in making sure they understand the dangers and how to maneuver and operator scooters. I'm really looking forward to the final proposal coming forward. My staff is more than happy to work on this. They have done some background research out of the west coast and portland/seattle area. Talked to a lot of the business owners here in town that sell scooters. So I'm really looking forward to getting this in other words in place. -- This ordinance in place. Thanks, mayor.

Mayor Wynn: Thank you, councilmember. Further comments on our consent agenda? Councilmember morrison?

Just to follow-up on what councilmember martinez just said, I appreciate him bringing that forward. I think that a couple of things. It may also make sense to evaluate those safety improvements and parking improvements for scooters and all in some other areas of town. For instance I'm thinking the drag as well as south congress where we have lots of pedestrians activity. So I -- so I would appreciate if it's possible to add some kind of a valuation with that. Also, I would like to mention that we have a lot of work done over the past year. With the street as a matter task force regarding bicycle safety and I think that this actually was referenced in there, so it would probably make sense to look into some of the more particular recommendations there and i hope that we can move forward more broadly in the near future with those recommendations. Thank you.

Mayor Wynn: Again a motion and a second on the table approving the consent agenda as read. Further comments? Councilmember shade?

One other thing that we are looking at with this that I think is also on the table is the issue of incentives and we do have a very small not very well known incentive program right now. That's another thing that we're looking to enhance so that we can encourage more -- more people to perceive these kinds of alternatives to -- pursue these kinds of alternatives to transportation.

[Indiscernible] I want to add on to those comments because I forget to mention. As councilmember shade suggested, we do have an incentive program for electric scooters through austin energy. But I really think we could look at expanding this through public works for non-electric scooters, because we know that the damage to the roadways is significantly less than if you are riding a two wheeled schooler as opposed to a vehicle. Maybe public works can join in the incentive program as well. Because I think in the end it saves public works. ..

Mayor Wynn: Agreed. Further comments on our consent agenda? Hearing none, all those in favor please say aye.

Aye? Opposed. Motion passes on a vote of thank you all very much. Council, we will let the room clear of folks who -- who likely had an item on the consent agenda. And our discussion -- one and only discussion item this morning will be item 4, this is austin energy's proposed purchase power agreement with nacogdoches power llc, and would appreciate a staff presentation, I see mr. Roger duncan here. As an introduction to roger, those who are following this issue know that we had a -- we had, you know, a good testimony analysis last thursday here publicly. We had, you know, significant amount of -- of appropriate legal and other advice in closed session pursuant to state law. And we then posted a special called meeting of the city council for yesterday, which we conducted. And the -- in addition to some budget presentations, we went into closed session to once again get legal advice and other advice regarding austin energy's plan, including outside legal counsel that the city attorney had -- had graciously provided us. And we conducted and ended that closed session yesterday. And now we're back in open session. So with that I will welcome austin energy's general manager, roger duncan.

Thank you, mayor and council. As you said, we have -- we have negotiated the contract over the last week. The council specifically asked for outside council to join us in looking at that contract and what I would like to do today is first turn it over to the outside council to -- to answer many of the questions that were asked by council in terms of the safeguards that the -- that the city has in mitigating risk of this type of contract and then I will come back and go over some of the specific items that council asked to be included in that contract. So -- so I would like so tim unger, you can give your own qualifications, tim and your report.

Mayor Wynn: Thank you, project, welcome, mr. unger. In add to the council request last thursday that we do bring in some outside legal counsel, council also made additional requests of staff regarding safeguards as roger pointed out, sort of the belt and suspender approach to issues that -- that we already had and some that were brought up by -- by citizen testimony. Welcome, mr. unger.

Good morning, my tim is tim other than. I'm an attorney with a law firm of andrews and kirth. For those of you not familiar, it's a law firm of about 400 lawyers with offices in austin, houston, dallas, washington and new york city. I'm the co-head of the business transaction section of the firm. Among other practice groups, in the business transaction section, is the energy transaction practice group and I'm one of those attorneys. I've been with andrew and kirth for 34 years, working mostly on energy projects. For the last 25 years I have spent most of my time working on power projects. I'm very familiar with power purchase agreements and biomass projects as well. I have been asked to review the contract from a legal standpoint and so first let me take a couple of minutes to -- to summarize the agreement. The agreement is -- is a power purchase agreement for the supply of renewable energy capacity and ancillaries from a biomass fire powered production facility. The seller is nacogdoches power llc, a delaware limited liability company. Pursuant to the agreement austin energy will purchase the electric energy that you produced from renewables fuels, in capacity with renewable energy and all of the renewable energy credits and other environmental credits associated with the facility as well as all ancillary services provided by the -- by the facility. The facility itself is going to be about 100-megawatt bio mass fire plant located in nacogdoches, texas. It will consist a biomass bubbling fed boiler a steam turbine generator and a fuel handling system. The boiler will be quipped with a back house for particulate properly and a catalytic house for nox control. 20 Years from commercial operation or the giving of -- by austin energy of notice of termination following the expenditure of 3 billion under the contract by austin energy. The commercial operation date is scheduled for april of 2012. The fuel will be primarily wood waste, but it -- it excludes any [indiscernible] standing timber or old growth forest woods. The contract price is made up of -- of three charges, the first is a monthly capacity charge, which is equal to the capacity of the facility, multiplied by a fixed dollar amount per kilowatt month, which will be escalated at an agreed upon percentage each year. This payment will be adjustmented to take into account the availability of the facility. So if the facility isn't as available as expected, the charge will be reduced. In addition there's a monthly energy charge, which is designed to cover variable operation and maintenance expenses and a monthly fuel charge, which is equal to the cost of the fuel used by the facility. The agreement itself is in a customary legal form for transactions of this type and it has been designed specifically to deal with a number of risks that are associated with projects of this type. So let me just take another couple of minutes and run through those risks in the contractual mitigations that were put into the contract to deal with them. The first one is of course the facility never gets completed. If that were to happen, austin energy would make no payments and they would terminate the contract. So -- so there's no completion risk on austin energy. The second is that the facility is late in starting. First case if that were to happen, austin energy won't be paying for the plant until it starts up. Secondly, there's liquidated damages paid to austin energy of a thousand dollars a day for late start-up. And thirdly, if -- if the start-up is delayed for more than 180 days, for non-force majuer reasons austin can terminate the contract. If a force margin which means events beyond the contractor -- [indiscernible] the facility once it's up and running, if it doesn't have the availability expected, if that's the case then the capacity payments are reduced, so that austin energy does not suffer that risk. A fifth risk is that the facility will be inefficient. The contract provides that nacogdoches has agreed to a set efficiency for the facility and if the facility is inefficient and burns more fuel than guaranteed, austin energy doesn't pay for that fuel and nacogdoches bears that cost. The next risk is since this is a -- this contract provides for a pass through of fuel costs, there's not a profit in -- in that, but austin energy was still concerned about the possible escalation of fuel costs. So they negotiated a provision that provides that there will be a -- a benchmark collar in the agreement. And if the price of the fuel exceeds that collar, then they don't have to reimburse 100% of the costs. They reimburse 88% in nacogdoches -- and nacogdoches will suffer the 12% loss on recovery of -- of the cost of fuel in that event. If the price falls below the benchmark price, then austin energy shares in the savings, 88% of the savings. In addition, austin energy to protect themselves further, required that -- that they have the option to -- to assist with fuel procurement in the event that -- that they are not satisfied with the job that nacogdoches is doing. Next, in extreme cases, where the -- where the -- the wood price spikes way up, austin energy has the right not to schedule the plant, in which case they won't be paying for the fuel. Of course, they will still have to pay the -- the capacity payment. But they would be able to make an economic decision that it -- that made sense not to run the plant and just pay the capacity payment in that case. Finally, the contract provides that -- that austin energy can terminate the contract if the total amount paid under the contract gets to $2.3 million. Another concern is that the electricity produced by the facility will not qualify for renewable energy credits. Nacogdoches has agreed that they will only use fuel that under current law qualifies for -- for renewable energy credits that if -- that if the renewable energy credit is -- is standard is loosened, they will continue to comply with the stricter standard existing today. However, if the -- if the law is changed, such that the facility as is then currently operating can't comply with -- with the renewable energy credit requirements, austin -- I'm sorry, nacogdoches has agreed to -- to use their good faith efforts to -- to try to adjust the operation of the facility to take that into account. Another concern that -- that was that -- that there might be mismanagement of the timber resources in connecticut with the plant, so -- so the contract provides that nacogdoches will -- will agree to comply with texas forest service best management practices and will provide reports describing their compliance with those practices. In addition, the -- the fuel supply has been limited to -- to largely wood waste and as I said earlier, expressly forbids the use of -- of merchantable standing wood and old growth timber. Finally, with general -- the austin energy wanted to be sure that the plant was environmentally compliant so the contract provides that -- that nacogdoches will construct, operate and maintain the project in accordance with environmental laws and they agree to provide environmental reports to austin energy and in addition austin energy has the right to -- to monitor and inspect the plant to be sure that the compliant with -- that they are compliant with environmental laws.

Mayor Wynn: unger, remind me, austin energy has the right to make those reports public?

Yes, correct.

Thank you, mr. unger. Further questions? Of -- of our outside counsel? Councilmember cole?

We really appreciate you doing this work and coming on board in the process. Looking at this from an outside perspective. How long did you say that you had been in the energy business?

In power, 25 years.

Cole: Okay.

So I have looked at a lot of power contracts.

Cole: Good. Because I'm about to ask you about it. One concern that we've heard over and over again is this big number being thrown around, $2.3 billion. I need you to -- to explain to me why that is not truly an up front commitment.

Well, you don't have to pay the -- the money if the -- if the contractor performed. So if he doesn't perform, in accordance with the contract, you -- you don't have to pay. And of course that's a number, as I understand it, that's -- that would be paid over a period of 20 years. In fact there's other people -- austin energy would know this better than me, I don't think that they expect that the total cost to be lower than that. That's an outside number. If it got to that number, they would consider terminating the contract.

Cole: So this is a purchase power contract.

Correct.

Cole: When we say that we are buying power, we are buying that power off the grid. And if we don't buy that power, we don't have to pay for it. Is that right?

Well, the capacity -- if plant gets up and passes its start-up tests, if -- if it can run, then you have to pay a capacity payment. Austin energy will most likely, because it's got to pay a capacity payment, call for it to be operated. Because the -- the cost of energy is expected, the cost of just energy from biomass fuels is going to be lower than the cost of just energy from fossil fuels. So they would -- they would almost certainly run the plant.

Cole: Okay, I united you to explain the difference -- I need you to explain the difference between the capacity payments and the fuel charge 3 billion means.

Okay. 3 billion is the sum of -- of all of the payments that would be made under the contract. The capacity charge, the o and m charge, the variable o and m charge and the fuel charge. It's a sum of all three of those over the life of the contract.

Cole: Okay.

So you are not paying 3 billion in the first year, it's going to be paid out over a number of years.

Cole: Okay. You talked about the risk that we may have in the provisions that you put in the contract to guard against safeguards against those risks. One of the things that you talked about is you said that if the contract was not -- if they didn't complete the plant or the plant was untimely, i believe you said that we would get good called liquidated -- get something called liquidated damages. What does that mean?

It's the concern is if the -- if they are building the plant that austin energy's concern is that they will be depending on that plant to be on line by 2012, and so they won't make other arrangements for power and so if the plant is late, there's the risk to austin energy that they might have to pay more for power than they would had the plant been online. So to compensate them for that risk, the -- nacogdoches agreed to pay them a thousand dollars a day.

Cole: Do you see provisions like that typically in contracts?

Yes.

Cole: Okay. You also talked about the pass-through of fuel costs and you used the term called benchmark collar. I need you to explain that and what risks we are in for those pass through costs.

Well, on the one hand you are just paying the costs so there's no profit on it. On the other hand, austin energy was concerned that -- that fuel prices they also wants -- fuel prices go up, they wanted to ensure that nacogdoches had an incentive to -- to get a good price for the fuel. So one of the things they put in the contract that is -- is that there's a band around a benchmark price. So that if the fuel goes above that price, they won't reimburse the full cost of the fuel to -- to nacogdoches. Nacogdoches will -- will not get reimbursed for 12% of the excess. On the other hand, if -- if nacogdoches can get the price down, then austin energy will share in the savings.

Cole: Okay. I have one last question. It's based on your industry experience and the fact -- i want to know if this is like a standard type of contract that you have seen and if you are fairly confident in your professional opinion that the financial implications that we may make under this contract would be in line with what you have seen before.

Well, yeah, my expertise is in legal area, not in the economic area. But I can tell you that the form -- this is -- there's different types of forms of contracts that people use. But this is a -- a customary type of form that are used in long-term contracts where you have capacity payment and a -- and a fuel pass through o and m payment. So there's many contracts that are done this way. As to the -- as to the, you know, the financial analysis, that's really outside of my expertise. But from a legal standpoint, it's a customary form of contract and austin energy is -- has taken the type -- the kind of legal steps that -- that you would want them to take in protecting the interests of austin energy.

I guess -- I'm sorry. What I should have asked you is if the contract terms provide for financial relief if it is breached in any way that we can rely on?

Oh, yes, yes. Your remedy will be to -- to -- you can terminate the contract if they are in breach of the contract and they don't cure the breach. So -- so that's one of your remedies. The other one is that you would be able to -- to sue them for -- for what people call the cost of coverage. If they weren't performing under the contract, you gave them notice that they weren't performing and they failed to -- to fix that problem, then you could terminate the contract and sue them for your damages. Which would be the difference between what the cost of energy and capacity and ancillary services and [indiscernible] from another source versus why you had agreed to pay under this contract.

Cole: Thank you, I have no further questions, mayor.

Mayor Wynn: Further questions from -- for mr. Unger or -- councilmember shade? yeah, I'm curious, we discussed this a little bit yesterday. But one of the biggest concerns that -- that the public has raised has been the lack of a bidding process and -- and I'm just curious to know if you can clarify how -- how the electric utility's we've heard are not required to use the bidding process. If you could clarify that for me or maybe somebody else. [One moment please for change in captioners] 2001 and 2002 adopted that resolution so in a nutshell 252 simply does not apply to austin energy.

Mayor Wynn: It seems to me also there's the legal issue of whether municipal utility is required by state law to have a competitive bid situation. duncan could also talk to us about the logistic -- logistical challenge that -- that arises if we were to in our experience with that, if we were to, you know, simply do -- even though state law doesn't require us, but if we required a standard competitive bid dynamic for a ppa like this.

Yes, sir. The reason the state legislature made this provision and exempted electric utilities from purchases of electric power and utility decisions is because it is a very fast-moving, volatile industry. Portions of the industry where there are a number of competitors and the equipment is not so fast moving you can issue a bid and go through the full bid process. However, in many cases, and we've already experienced four cases in the last two years where we have gone out to bids and gone through the bid process and were able to do the contracts because the prices that the bidders gave us at the beginning of the process by the end of the process were no longer valid and they couldn't hold them.

Mayor Wynn: These were for renewable energy.

Two were wind and so we've had both type of contracts that could not survive the length of time of the bid process and being able to develop the contract. There are certain types of energy and certain types of technology that are not that volatile that we can go to bid on, but there are other types of agreements for purchase powers or fuels and technology that are too fast moving for the bid process.

Mayor Wynn: Also, so we unger about the legal assurance in the contract that -- the energy that we would purchase is in fact going to be renewable energy. The current definition of the renewable energy credits or recs as most of us talk about, if the state were to relax those standards, nacogdoches agrees to hold themselves contractually to today's standards, it would be proved to be higher. So obviously the reason -- there's two big reasons why we want to be legally assured that we are purchasing renewable energy. One is our operating philosophy and our idea that we want to grow our rerenewable energy portfolio. I think it's sort of a fundamental, you know, defining characteristic of our sort of consumer-driven approach to this utility. But -- but financially why we want to do that, of course, and there's two elements of this, is that austin energy, in my opinion, is very conservative, worst case scenario assumption regarding the cost of this power over 20 3 billion number over 20 years, in that number you are assuming that there are no investment tax credits at go to rerenewable energy power generation. Many of us just -- we know that the federal renewable energy tax credits will be renewed beginning early '09, but we didn't make that assumption. We wanted to use the knows conservative financial assumption possible. And so when the renewable energy tax credits get renewed and likely get renewed perhaps at a bigger number and certainly at a longer period of time than what has been the on again, off again two-year congress, so when that occurs, of course, that would be very profitable, additional profit, if you will, to the investor-owned taxable utility. In this case nacogdoches power. But in this agreement, when that happens, then that financial advantage flows to us as the ultimate consumer of electricity, correct?

That's correct. And assuming the production tax credits are passed, and i agree with you it's almost a certainty that they will be, just the production tax credits alone would probably lower the price of this contract by around 8%.

Mayor Wynn: And in addition to that there is -- there certainly is the potential of not only additional federal financial relief for those who produce and/or consume renewable energy, noncarbon based energy, there's talk of state financial incentives and even the concept of local. But regardless, if any additional essentially tax credits flow to this privately owned power plant, ultimately that financial advantage flows through us as the utility to our end consumer of this electricity.

That's correct. Specifically, the contract says that the benefits of all renewable energy tax credits, carbon credits, any other applicable clean energy incentives from the state or federal government shall pass directly or indirectly to austin energy.

Mayor Wynn: So I mean there's a very sound financial reason why in this contract we now have a belt and suspenders assuring that the electricity, if we purchase it, is in fact renewable because of the financial benefit that will flow as, in my opinion, more financial incentives are sent towards renewable energy in this country. And then lastly, there is moving elements to this, as we all know, but it is highly likely that there is going to be some type of buzz word in is carbon regime because they hate saying the word "tax," but ultimately carbon based electricity is going to be taxed. In either a cap and trade regime, a straight carbon tax, but this energy would not be subject to the anticipated federal action when it comes to a carbon regime, correct? Because it's renewable energy.

That's correct. Under any definition we've seen so far of biomass, this would meet that renewable energy credit.

Mayor Wynn: Right. Because as it is now, our base load at austin energy is about two-thirds carbon. About a third of our -- almost a third of our base load is the nuke. So that wouldn't be subject to a carbon tax, but everything else in our base -- virtually everything else would be. That is, the coal and all the natural gas.

Creek.

Mayor Wynn: So to the extent we can have either through green choice or not noncarbon based dispatchable base load that's renewable and not subject to carbon tax, then everybody benefits.

That's correct. And mayor, if you wish, there were a few other items that council had talked to us about that I can verify that are in the contract.

Mayor Wynn: Please do.

I apologize. We had wanted these to be in a full bell let point by the beginning of the presentation. unger presentation is available. It will be publicly available hopefully by the end of this presentation. In addition to perhaps repeat some things but to verify, we were asked that the fuel source and operation of the plant must meet texas renewable energy credit standards. And if those standards are weakened currently at sometime future in the state they must maintain the level of protectiveness at least as strong as today's standards. They cannot lessen their standards even if those standards were lessened in the future. If those standards were made stronger in the future, they have to make best faith efforts to comply with the new standards. To repeat what you said earlier, mayor, the benefits OF RE Cs RENEWABLE CREDITS And carbon credits and other incentives from local, state and federal governments shall pass directly or indirectly in total to the city of austin and austin energy, that's in the contract. Also in the contract, they have to comply with the texas forestry best management practices. They have to submit to an annual implementation and monitoring program that they are meeting those best practices and submit annually to the city of austin and austin energy a report detailing their compliance with the texas forest services VMPs AND WE'LL MAKE THIS Report available to the public electronically. In returns of other reporting, nacogdoches power shall annually provide to the city of austin and austin energy a report detailing plant compliance with all the state, air and water quality permits including their discharge monitoring report, their deviation reports and excess emissions report, their ppds discharge permits and any other compliance or enforcement issues with the texas commission on environmental quality or the related to their wastewater discharge permit and state and federal air permits. So all of these requests from the council were included in the contract.

Mayor Wynn: Thank you, roger. Further questions? We do have a handful of folks that want to give testimony. Mayor pro tem.

McCracken: Outside counsel --

Mayor Wynn: He was just walking out.

McCracken: That's why i was saying don't leave.

Mayor Wynn: Not so fast, mr. unger.

McCracken: And I just have one question to follow up on councilmember cole's quell. This is a contract to buy power from basically burning sawdust. If this array contract to buy power from burning coal or burning natural gas, would this be a novel or unique purchase power agreement in its legal forms?

No. You know, there wouldn't be RECs ASSOCIATED WITH IT, BUT The form of the power agreement would be -- could be very similar. There's different types of agreement, but it's a very customary one as like this where you have the capacity payment and the fuel pass-through. So I've seen gas contracts and coal fire power plant contracts with the same type of provisions in it.

McCracken: Thanks.

Mayor Wynn: Councilmember morrison.

Morrison: Sorry to hold you up. Just one question. The terms of the contract include one option that i hadn't really heard discussed before and that is that the finances, as you said, are that it goes for the shorter of 20 years or $2.3 billion. But then there's another 3 before 20 years. Could you walk through that scenario because I think that's a little bit new as an option.

If the contract goes for 20 years, if the amount paid by austin energy gets to 3 billion, then austin energy can give a notice and terminate the contract. If it's that time that likes the contract, it can let it run for the full 20 years.

Morrison: So we have a first option to go beyond 2 abandon 3 billion if we died that's a reasonable thing to do.

Right. Right.

Morrison: Thank you.

Mayor Wynn: Councilmember shade.

Shade: One other question we talked about yesterday and it may be roger's to answer, you referred to it as a gate keeper provision and I'd like for you to explain that as well. That was something that many people aren't aware of.

The electricity coming off this plant goes into the statewide electric grid and -- that ercot controls. In order for it to go into that grid it has to go through what is called a qualifying scheduling entity or q.s.c. , nacogdoches power is not. So all energy being scheduled into that grid has to come through us. And they build transition up to connector caught and that's it. So even if for any -- if we decided not to accept more energy from the plant, they still could not sell energy from that plant to other entities without going through a q.s.c., and that's us.

Shade: Thank you.

Mayor Wynn: Further comments or questions for duncan before we get testimony from citizens. Hearing none, we will go to our citizen speaker list. Let's see, our first speaker signed up is valerie davenport. Welcome back, ms. davenport. And is jeffrey wells here? Jeffrey, well. davenport, you will have up to six minutes and you will be followed by cyrus reed.

Hello again. As I stand before you, I feel a little like hillary clinton at the democratic national convention without barack obama as my presumed candidate. The reason is because michael bishop and american biorefining and energy, inc, loves renewable energy. He does not want to blighten the face of renewable energy nor does he want to discourage austin and this council and mayor in its very laudible fight to acquire renewable energy sources. However, he also does, and i also support doing the right thing correctly. And that is where there is a significant difference. obama may share many of senator clinton's goals and achievements, the things in this contract which we believe are improper, are -- must require us to contest it and ask again for bids. The reason for bids given by roger duncan was about the volatile nature of energy. Well, that may be true in other forms of renewable energy, in wind and even in other areas, but biomass from lumbering flash is a nonproduct. It is studied, it is renewable, it is always maintained. The price is relatively constant and the cost is relatively the same. It is not a volatile industry where that cost of that product would prevent sound bidding and negotiations. And without that sound bidding and negotiations, you end up with the problems that are now before the council. Yes, american biorefinery and energy, inc, objects to the fact that it was promised to be included in a bidding process and once denied that right to participate in those bids, even if it is accepted by statute, and I would unger about when he said about the -- or i think it may have been the city attorney, when he talked about the exceptions to the bidding, he gave two instances. One of those is that the -- there are two different things that he said and one I know didn't apply. I'm very concerned about the six-minute time limit and i would ask the council for a question. I'm a lawyer. Mr. unger is a lawyer. As he spoke, I had probably 10 questions that I think a lawyer who was knowledgeable about this issue would ask mr. unger. None of those questions were voiced by city council. If I go to those questions, I'll not be able to complete my presentation on behalf of american biorefinery. And my question is, is this council concerned with the true merits of this issue and would allow me to go into those matters even if they exceed my six minutes or should I return to representing my client and the presentation that was requested that I make today.

Mayor Wynn: davenport, you have two minutes and 33 seconds. I'll pause the clock, but we have very strict council rules.

Okay.

Mayor Wynn: If a councilmember has questions of you, they certainly are welcome to ask questions and oftentimes that dialogue continues past the stated time.

Okay.

Mayor Wynn: But I suggest you try to finish your testimony and of in the next two and a half minutes.

Let me talk what I was going to say and if council is interested in the questions that I would have for legal counsel, I will explain those and then possibly you can ask them yourselves. At that time. As you know, michael bishop and american biorefining and energy submitted a term sheet yesterday with regard to its proposal for the same project. In that term sheet, it showed that there would be over 20 57600 8 hundred million dollars savings to be located more at the sources of the flash. With another facility, the sources are mine and the to my client at the beginning of 2006, this council and austin energy has cost needlessly the -- the citizens of austin up to $950 million. And also it has not guaranteed that this be renewable energy, based on the comments I've heard, all it's done is saying if we can't give it to you in renewable energy, you don't have to pay for it. Well, that's not the right answer. The right answer is we can give it to you. And unless they can show and have shown that they have the rights to the flash by that mother facility, they have no idea whether they can give it to you. And councilmembers and mayor, I would submit to bishop has secured at least a million acres of flash in order to support this. [Buzzer sounding] and again, if the council -- if any member of the council would like me to discuss the legal issues that I think were raised, I'd be happy to do so.

Mayor Wynn: Thank you, davenport, and you are welcome also to hand us any information you may have which is a common practice here. davenport, council? Additional testimony may inspire more questions so please stand by, ms. davenport. Our next speaker is cyrus reed. Cyrus reed signed up wish to go address us. reed, you will have three minutes to be followed by paul robbins.

Thank you, mayor, council. My name is see reduce reed. I'm here representing sierra club, lone star chapter. I'm conservation director. I have a copy of a letter that was submitted yesterday that's kim kramer who is the correcter as well as myself. I want to start by thanking all of you because I think the contract that's before you today is much improved compared to the contract that was a week ago. And so I think what you see there is the benefits of doing things publicly. In particular, some of the risk factors that were talked about I think are better this week than they were a week ago and in particular the issues that we and others raised in terms of both the input side and the emissions and making sure that there is some reporting requirements from the applicant to austin energy to make sure that if we're getting this power it's being done using best management practices, which is obviously very important to the sierra club and membership in east texas as well as on the emission side making sure they are complying with wastewater and air permits so if we're going to buy this power it's as clean as it can possible be. I would ask austin energy make those reports public on their website so, again, if you do decided to this contract, the public has some assurance that things are being done correctly in terms of both the inputs and the emissions. That being said, sierra club cannot support this contract in its present form for two reasons. One of which really goes outside of what the city council [inaudible] and that has to do with the way the texas commission on environmental quality does their permitting process. We don't think the emission limit for nox is a particularly good one at .1 pounds for mmbtu, which is higher than some of the coal plants we were all protesting including the city of austin. We think if tceq had done their job properly, we could have had a lower limit, but that's sort of a issue outside city council. But the second issue really has to do with process and the feeling that I think a lot of citizens in austin have which is roger duncan and austin energy has been very public and said we're going to have a public discussion about how to meet our renewable energy goals, which all of us support. And there's a big question whether this particular biomass plant is the best way to get there. There's -- there needs to be discussion about how much base load we need, how much really peak load do we need and how do we get there. And so it's almost a philosophical opposition in that we think there should have been -- including competitive bidding, it should have been a much more public process, and I think you've seen just in one week with the public meeting that laura morrison's office called as well as the extra auditing you've done how much we can improve things using the public process. And so it's really just a hope that -- [buzzer sounding] it's the hope we don't do this in the future. That we have a much more public input on these decisions. If it's your will, you know, to do this contract, we don't really support it and we hope that the future will be done in a much more public way. So it's philosophical, we think we can get clean renewable power and we don't think this plan is the best way to get it.

Mayor Wynn: Welcome. Is karen hayden here? Welcome back. Paul, you have up to six minutes and you will be followed by skip.

I'd like to take my citizens communications time if I can, but I'm paul robbins, I have been a renewable energy advocate for 31 years. A main message I want to convey here is that there are a number of environmentalists in austin opposed to this project for several reasons. These reasons include lack of financial scrutiny given to this project. The lack of public information disseminated, and the deliberate manipulative -- the lack of public process. I'm going to read excerpts from a letter send to council yesterday from environmentalists. Dear mayor and city we are writing to express our concern about the proposed biomass plant in east texas. We strongly support renewable energy, but the lack of process and poor disclosure of information related to biomass -- to this biomass proposal has led to a public perception that the city council and the electric utility have not done their due diligence in negotiating the price. We ask that you defer the proposal contract and that you open consideration to strategies that might lower the cost of renewable energy. These strategies include solicitation of competitive bids, consideration of other technologies, and consideration of other financing options, including the city's possible ownership of renewable energy production facilities. This was signed by mary arnold, bill bunch of sos alliance, mark and melanie McAFEE, METS.

Reporter: Of environment texas, myself, robin schneider, bridge it shea, former austin city councilmember, mike sloan, bill spellman, a former a city councilmember. And mark isn ag's a. Sierra club reported on their letter to you. Karen hadden with the texas seed coalition also signed a similar letter and believes solar energy would be better suited to the needs because peak load, which solar energy deavers, is more expensive to the utility than base load. I've also am going to read a letter, an excerpt from a letter to austin energy by tom smith of public citizen. Quote, after a long and sleepless night, serious questions continue to haunt me and force public citizens to -- not to support the plant. A process like this where the community is given a take it or leave it deal without the time to discuss its merits creates the same kind of suspicion that people dread at a car dealership. A bad deal is looming when your car dealer says that you have to take this deal tonight because the guy on the other side of the curtain is negotiating on the same car. When the dealer tells you that, the best advice is to walk away. Not every environmentalist I've talked to is against this proposal, but the majority i have talked to either oppose it or want more information about it. And when angry ratepayers begin to punish the ones they think are responsible for this poorly thought out proposal, i stress that environmentalists, by and large, are not to blame. We tried to act responsibly and were ignored. Speaking solely for myself, i consider this proposal political plutonium. I will not go near it. I will warn anyone who will listen not to go near it. I am impassioned supporter of solar energy, but this deal is financially irresponsible and a ridiculous excuse for public process. I want to comment on the cost of the biomass plant as well. Some renewable energy sources will be higher than others and they might be justified for such things as greater reliability and environmental protection. But is the cost justified compared to other power plants of its kind. To answer this, I called a federal agency who monitors the cost of renewables in general. I was informed that a biomass plant built in $2,006 would be 8.1 cents per kilowatt hour. That's a national average. And consumer price index inflation at 3% would mean that in 2012 such a plant would be less than 10 cents per kilowatt hour. The miniscule amount of information we have about this plant is that right now today 6 cents per kilowatt hour. I want to comment that this is a no bid contract for purchase power and assumptions for how it will affect the average austin night's bill are not being made public. The cost of electricity for this plant is roughly 100 to 150% higher than the average cost of electricity in austin. The cost of fuel is not locked in so the costs could be higher. It represents over 10% of the utility's gross budget. [Buzzer sounding] for this fiscal year. To conclude, do what you will, but I will have no part of it. Do not blame me when things go wrong. Do not blame environmentalists when things go wrong.

Mayor Wynn: Thank you, mr. robbins. Our next speaker is skip cameron and james vonwulfski. cameron, you have up to three minutes if you need it.

He's out there raising his hand.

[Inaudible]

Mayor Wynn: I asked because our rules are quite clear you need to be present so I ask when people don't raise their hand or tell me they are present, I'm not going to give the speaker the time so thank you for clarifying that, james. You have up to six minutes if you need it. To be followed by janet giles.

Thank you, mayor, council, and austin energy, thank you for all the work you've done on this. The council is poised today to make a $2.3 billion mistake. Ae rejected all the bids they took in 2005 and promised to rebid, but they didn't. That it takes too long is really a lame excuse, folks. I don't accept that and I hope you don't. Council, ratepayers and taxpayers still have not seen the critical details. From what's been disclosed to this minute, np's proposal does not pass the smell test of reasonableness on environmental impact, sustainability and cost. I don't care whether they say they are going to abide by all of these rules of forest management and all that. The truth is you cannot put 100 megawatt plant in east texas and meet those requirements. It will fail. And I'm not the one saying that. It's people who know this industry well and have researched east texas biomass. To respond on the cost side on a couple of things said earlier, whether or not it will be paying a monthly energy charge which is called a capacity payment, as I understood it in their testimony, and o&m charge which is variable with inflation. If things don't go well, they will get a late payment of $1,000 a day. 100 Gigawatts is $352,000 a day. I don't think that's a fair late delivery charge. You ought to rethink that seriously. And the other thing is that if they get the rec credits duncan has said, 8%, that 2 cents off 4 cents per kilowatt hour at the plant before transmission costs, before administrative fees. Competitive bidding is at 8 cents, which is -- you have just heard is what the industry cost of operating these plants is. Pay attention to that. This is going to be much like an economic disaster that some of you may remember with the south texas nuke, just on a different shade. Even though -- np's presentation said they can use clean wood chips. I would like to know where these are going to come from. Under a take or pay contract, the generator is available to produce, the buyer miss pay even if the buyer chooses not to take all the power. If the generator is unavailable to produce or fails to produce by fault of the producer and through no fault of the buyer, then the buyer would not have to pavement these terms ought to be specifically spelled out in your contract. Do you know what these 57600 buy our cool aid now while the supplies last. For the good of this community, council, you must reject this proposal and open the bid process, do it fast, they can do it quicker, and provide full disclosure to council and the community on the result. Thank you very much. I'll take your questions.

Mayor Wynn: Thank you, mr. cameron. Questions for skip, council?

One of the other speakers was not able to come and I'm going to pass his testimony down.

Mayor Wynn: Our final speaker is janet giles. Welcome, janet. You will have three minutes.

Hello. It's actually janet gilles.

Mayor Wynn: I'm sorry. I've been very excited living in austin and having a green mayor and a green council and thinking that we're going to help lead the world into the future of renewable and sustainable energy. So I was completely shocked to find that we're going to come up with a wood burning plant because of some artificial deadline. It certainly won't be anything that everyone else can copy because there's not that much extra wood. One of the biggest ways to save energy which has been used in other nations is local agriculture. And I've gotten very involved in local -- local food and local agricultural issues, and our food supply for this country is going to be a big problem. It's based on cheap energy. Oil was $20 a barrel when bush got into office. It's now five or six times that and heading for more. So it isn't going to really make sense to grow our food in china and south america and even the midwest and ship it here. It's going to have to be grown locally. So I react with horror at the whole idea that mulch is a waste product. Another shortage that we're facing is water. And if you drive around texas, look at the ground, the farmland, it's -- there's no mulch. They tractor it up. They don't put mulch down. It's too expensive. It certainly should be used -- wood mulch should certainly be used to cover the ground and stop water evaporation because we're facing water shortages. This plant was a rush because of an artificial deadline and we should just sit back, 57600 farmers and we're not going to survive because we're going to have to grow our food locally. The shipping of food is a tiny blip on the screen where it made economic sense because energy was so cheap. And the end is in sight and we should be leading the way, not grabbing up the last of the wood before it's too late. We should be leading if way into a renewable and sustainable future. Thank you.

Mayor Wynn: Thank you, janet. 57600 that is a very critical difference. A take or pay contract is when they are ready to give us full 100 megawatts. The answer is we pay only for what we receive. We don't pay for the full 100 megawatts. Even to the point if they offered no megawatts, we would not pay for any energy whatsoever. These issues were addressed in the contract.

Mayor Wynn: And regarding the transmission issue, the only shut in and practical terms would be because of transmission congestion and our experience and everybody else is that congestion is in west texas and here's an opportunity for us finally to tap into renewable energy in the eastern part of the state where congestion and transmission has not been the issue. Further questions? Councilmember cole.

Cole: Mayor, I feel satisfied that we've spent a little extra time to evaluate this project and that we've determined that it is feasible and would be in the best interests of the city to move ahead in light of our renewable goals. So I would like to make a motion that we execute this contract.

Mayor Wynn: Motion by councilmember cole. To approve item number 4 as presented and posted including the execution of this purchase power agreement. Seconded by councilmember leffingwell. Further comments on the motion? I'll just say I too am quite satisfied and in part because of the competitive nature of our utility, you know, there's both state law and the real reason why we do have some of this discussion in closed session because of the competitive nature of -- the mostly deregulated electric utility industry cluster in texas. I have been satisfied regarding this ppa. Councilmember shade.

Shade: I want to applaud all the people who have been working on this and I just want to acknowledge we've gotten a lot of public input over the period. I'm happy that we did delay this a little bit. And I completing agree with robbins and reed's point that with more public input we do get a better product. I'm happy to hear that others that are in this industry that are interested in pursuing deals with austin have an open door to be able to do that. I'm satisfied with the outside counsel's assessment of the risk and mitigation that we need to to have more comfort. By separating the letter of intent I think we got a better product. We also did have support from our utility click and management commission all of which are made up of other citizens besides those in this room and sitting on this dais.

Mayor Wynn: Motion and second approving item 4. Mayor pro tem.

McCracken: Just to put some of these things into perspective, the green choice program when it started in 2000, it was at a time where it was clear that we needed to be looking at some diversification and also some -- moving toward more environmentally responsible power. At the time green choice was more expensive than co electricity from burning coal and natural gas and nuclear power plants and uranium. 7 cents a kilowatt hour. One of the reasons I know that I was one of the fortunate people who got in green choice in 2000 before the california market meltdown caused the private sector to rush in to buy green choice because right now our conventional electricity, which was cheaper than green choice in 2000, is now 3.6 cents a kilowatt hour. It is more than 100% more expensive than green choice if you got in on it in 2000. If you looked at green choice in 2000, you thought it was an expensive boutique electrical product. You look at it now and it is twice as expensive. Our folks at austin energy are looking at market trends. Just as we saw in 1999 in this city where the markets were going in electricity, we see this now. It's very obvious to everybody who looks at it what's happening to the cost of electricity in this country. And so we are, again, learning the lessons from the airline industry which is diversify your fuel mix and plan for the future. This obviously is not a long-term strategy. Our strategy for clean energy is not from burning sawdust. However, this does have some environmental superioritys, particularly as a mid-term solution. The ultimate vision, which a lot of folks in this room recognize and have been advocates and visionaries for, it allows for locally produced solar energy to feed into directed generation system, that requires big advances in energy storage. That is going to come. And austin energy in addition to being planning ahead for the mid-term with the biomass proposal, we need to also be planning ahead and leading the way on distributing generation and solar as a component of that. But we have a mid-term problem to solve. If you build your own power plant, 50 years, we get to buy this electricity for 20 years, it is carbon superior to coal or natural gas, which are our only two other options. So I am too supporting this after looking at all the information. In 20 years I am confident that with austin energy's leadership, we will have a robust and scalable, successful distributed generation system with solar at its core. Until we get to that point, we need to pick the best option in the mid-term and the best option, better than coal, better than nuclear and natural gas is this biomonths proposal as part of our diversified midterm strategy.

Mayor Wynn: Thank you mayor pro tem. Further comments on the motion? Councilmember morrison.

Morrison: This has no doubt been a challenging issue and I want to thank roger duncan and austin energy and all citizens who have been participating on short notice with not much time. Clearly the public process was not ideal. It was far from ideal. And I think it really gives us some guideness a and hindsight on how important the upcoming process is that austin energy is going to engage in and how many people are interested and how many people have things to offer to that discussion. I will be supporting this motion, somewhat lee luck at any timely, but I am contracted to know that we will have the opportunity for additionaout me with the additional reports made available by austin energy and we will look forward to the public's oversight of that. I wanted to thank everybody for all their work on this.

Mayor Wynn: Thank you, councilmember. Motion and second on the table approving item number 4 as presented. Further comment? Hearing none, all those in favor please say aye. Opposed? Motion passes on a vote of 7-0. Thank you all very much. That takes us to our noon general citizens communications. I believe we have a full slate of citizens who would like to give three minutes of testimony. Our first speaker is jim arnold. Welcome, sir. You can take either podium. Staff can happen if you have actually mark, if it takes you a few minutes to arnold, it will take him a couple minutes to load that up for you. I'll call you right back as soon as they are ready to go. Might help your -- be more efficient. Our next speaker nailah sankofa, signed up wish to go give testimony regarding african-american artists in austin. Not with us. How about carol torgrimson. Welcome. arnold's presentation, we'll hear from carol. Welcome. You'll have three minutes perhaps followed by travis hough.

Good afternoon. My name is carol torgrimson, a resident of long canyon which is a limited purpose neighborhood on rm 2222. I'm hear to talk about some development issues that have reached epidemic proportion in our area along 2222. There's been a recent surge in the number of application filed containing patently false information. This can range from specifying the wrong zoning on a subdivision application, even though there was a recent contingent zoning case resulting in rezoning of the property. In another instance, it might be the matter of citing the applicable zoning case of being one which expired without approval or listing a settlement agreement which is not applicable. In the most egregious case it's a -- having an applicant claiming to be an agent of the owner when they are an agent of the prospective developer and unknown to the important on his behalf the application is supposedly filed. In addition, there are cases where engineering letters contain glaring and obvious errors in this representation. All of these result in confusion to the public and extra work for staff who are now called upon to be detectives as well as reviewers. Filing an application is not meant to be a fishing expedition to see how much one can get away with or bamboozle city staff. It's supposed to be serious and gain approval. It's bottom an attempt to gain the system and get undeserved entitlements. During the review process, failure by some applicants to 57600 process we are very concerned that code violations are not getting -- are not getting enforced in a fashion which is a deterrent to others to do filing. We have had code violations filed two years ago which have still not been addressed. [Buzzer sounding] I would like to say in closing that we think your city staff is the best possible staff. We're not -- this is not in any w a criticism of staff it's the amount of workload created by people disregarding the land development code and not taking it seriously and disrespecting everyone involved.

Mayor Wynn: Thank you. Councilmember leffingwell.

Leffingwell: Next month the audit and finance committee will be laying out the work plan for the city auditor for next year. One of the proposed optional items is an audit of code enforcement. I intend to advocate very strongly that there is be one of the primary objectives, an audit of our code enforcement process so we can lay a database to talk about the kind of problems you suggested for next year.

Thank you.

Mayor Wynn: Carol, i think it would help us if you would be kind enough to leave your testimony. I see our department director and assistant city manager is here, law department is here and it might help us sort of to walk through that appropriate list you gave us. I do know that at times we have had elements of this discussion mostly with our city law department. smith can briefly talk about that for some, not all of the issues that you brought up, state law tends to put measurable parameters on local governments in so far as the amount of how much a fee can be, how much a fine can be, you know, what will be the prosecution process should violations occur. smith can talk to that briefly, but we've asked many of these questions before and at times on pieces of this, not all of it certainly, you know, we're constrained by the state, if i remember that correctly. Mr. smith.

Maybe, I think you have stated that correctly. Just very briefly without knowing more about which specific provisions of the land development code being enforced, it's hard to address what the appropriate action on the part of the city could be. Some things it would just be a denial of the permit. Some things it might constitute some kind of class c misdemeanor. But I think starting two, perhaps three years ago, the city began to listen to voices in the community and beef up code enforcement in general. And I don't know if you are familiar with that, that there was an examination of what code enforcement was being done. It was consolidated from various departments into the solid waste services department. And I have at least one lawyer who is dedicated solely to code enforcement. So --

he must be a very busy person.

She is a very busy person. But I would also be interested in seeing your written testimony so that we can look at it more closely.

I'd be happy to -- I'm afraid no one will be able to read the scribbles, but i would be happy to write this up and e-mail to staff. I have cases, I very hard cases for everything I've said today. I'd be happy to meet with anyone on your staff and present those cases and review them and show them where these errors have occurred and talk about where we see improvements could be made.

Thank you.

Mayor Wynn: Thank you much. Staff, are you ready for mr. arnold's presentation? Welcome back. Appreciate your patience. You have three minutes.

Thank you, mayor and council. I'm jim arnold. I'm the owner of the building that's shown in the photo. I'm going to flub through photos quickly because half the people were not on the dais when I made it a year ago. This has to do with an attack made on that and at the time of austin city limits. If we can go through and I'll tell you what you are looking at. The first is the front door -- we had a man who got drugged up and came over and basically went through the building and did a lot of damage. So I apologize to those who have seen this before. This is the front door and the way it was left afterwards. If we can flip to the next one. That's our front hallway. If you can't tell, it's filled with glass. There's a good deal of blood. In fact, we'll move to the next slide. That's some of the blood that he left there for us. Move to the next slide, that's blood on the elevator. Move to the nextno carrierringconnect 57600 attack was related to the acl event and also it's the truth 57600no carrierringconnect 57600 , which is where we are, pecan grove starts at barton springs and lamar and north and west, it's a small quadrant there. We're hoping one of these roving patrols, and i requested one of those roving patrols be assigned to pecan grove because there is no area more impacted than the pecan grove area. That's the story. Basically the good news is there's progress that's being made. You know, the jury is out as to whether or not we're doing everything that needs to be done in the way of security, but as I said, there is some progress. One of the good things that's come out of this. [Buzzer sounding] -- I've met the person who is going to speak next. marine corps member. Current applicant for the city police force. And he participated in the apprehension of this fellow who did the damage this past year and he can speak to that. Thank you very much and if there are any questions, I'll be happy to take some.

Mayor Wynn: Thank you and there's good to hear there's some progress. I have frequent enough meetings and interactions with the staff and the team that puts on acl, big deal for the city each year, very big deal for them. I've been impressed with their -- you know, the way they look at the festival. Each year they do a post-mortem and try to figure out what went wrong and what went right. I think they work closely with city staff to make sure logistics work. They got thrown a curve ball this year and cap metro is not going to be able to give them the shuttle service so many of us use going to and from the festival and I think they have a backup plan for that. This kind of testimony is important for us to hear and see as we always have those good conversations with the -- you know, the producing group to make sure it is as enjoyable as it can be not only for the people who listen to the music but just as importantly for all the neighbors. Thank you for your testimony.

Thank you. arnold pointed out, our next speaker is travis hough. Welcome. You will be followed by william schneider.

Anyway, I was there when it happened to help subdue the suspect and it was pretty -- it wasn't really that gruesome but the simple fact it was enough officers that needed to be there to make sure that everything went smoothly. Now, the geographical area arnold's office is at is approach for people leaving and going to the festival. It would be nice to have an officer, either patrol car either walking around making sure everything goes smoothly. This probably could have been precinct, however, the likelihood that it won't be as bad, I couldn't tell you. Anyway, I would like to see -- I'm glad he put more responses to what he needs and the needs also for the city and the further community overall. So it's kind of sad things happened, but I just happen to be on the ride along and happen to help the officers and it's a weird situation, but I don't regret doing it when I did because the suspect was intoxicated and even stated how he was taking acid. So sad thing, but people are going to do recreational drugs, they take them into public and go crazy. That's when, you know, the public really kind of gets, i don't know, it can get pretty bad. I would just like to take into arnold has presented to you all and hopefully everything runs a lot smoother this year versus last year. Another thing, if -- a lot of officers were there so what I'm trying to say if someone had -- I'm not saying terrorists or something like that, if something were to happen, all those officers this would be a really bad time for the officers because a lot of them in that one little area where the action took place. Different areas of town, that would be pretty bad. I think having more officers there would help out this year for the acl festival. Thank you very much for your time and nice talking to you.

Mayor Wynn: Thank you. William schneider signed up to give testimony. Welcome, mr. schneider. You will be have three minutes to be followed by tom egan. Z.

There is a medic alert bracelet. I do a lot of walking since i can't drive. And part of the problem is because people don't trim their trees. There's times that I even have to walk on the sidewalk because some of the trees -- i have to walk on the street because some of the trees are so low. I've even had a police officer stop me and I told him the reason why I was walking on the sidewalk. That's why I've come to see if you could -- I'm willing to pay additional taxes if you do something about those trees. I've seen a lot of them that need trimming that people don't do. And also people are the sidewalks when I'm walking, there's a bunch of dirt on the sidewalks. When I'm walking in the dirt it's hard to see and sometimes I have to walk on the road to get around them. I need something to do about those two problems. And also I've had problems with vehicles turning right on red lights. I know that's legal, but probably a couple months ago i had one vehicle hit me while i was crossing the road. He was turning right on the red light, but since he was turning right on the red light, he didn't see me. I had to be careful. But still you need to reverse that proposition so people wouldn't turn right on red lights. I had to see a or the peteic about my leg being hurt. I had surgery on it two or three months ago. And another problem I've had was my -- I used to be -- i vote regularly in every voting election, but my voting precinct used to be at westgate lanes bowling alley at 2701 west william cannon at the intersection of westgate and will 81 cannon. They changed it to manchaca road. I haven't voting since they changed my voting precinct and I even called a telephone number in the blue pages asking them whether I could change my precinct, but they wouldn't let me. So that -- that's my main condition. I want someone from you to address. Also about voting, you know, none of you -- I haven't voted since they changed my precinct, I haven't been voting at all, even the president of the united states coming up for election, i can't vote for any propositions or anything. So that's pretty much all i have to say.

Mayor Wynn: Thank you, mr. schneider. Assistant city manager garza just offered to have staff get your information to see how we could help. As part of our proposed budget, there is talk now of significantly upgrading funding for both sidewalk right-of-way maintenance mostly in the streets themselves, but hopefully we can find the dollars to continue to try to improve and/or maintain the rights-of-way. We hear that complaint a lot.

Thank you.

Mayor Wynn: Tom egan is our next speaker. You have three minutes to be followed by gus pena.

Thank you, mayor. I don't know the protocol here, but I have a page that i would like to pass out to council.

Mayor Wynn: I think councilmember leffingwell will gladly take that from you and pass it down.

And I've ran my remarks with a stop watch.

Mayor Wynn: So will we. [Laughter]

mayor wynn, members of the austin city council, I thank you for seeing me these three minutes. I will be brief and stay within that time frame. ON SUNDAY, SEPTEMBER 21st, Next month, the world community will variously honor piece with the annual international day of peace. The international day of peace was established in 1981 by the mains as an annual observance of global nonviolence and ceasefire. Every year people in all parts of the world honor peace in various ways then on SEPTEMBER 21st. In his statement issued to 57600no carrierringconnect 57600 frequently participates.

If you could be kind enough to leave your information with mess gentry, we will be sure to contact you as soon as we get that accomplished.

Thank you, I'm new to austin, relatively. Part of the year.

Welcome.

I'm a retired educator.

Good. Welcome to town. Thank you for the suggestion. Gus pena, welcome back, gus. You, too, will have three minutes to be followed by terry overton.

Good afternoon, mayor, councilmembers, gus pena, native east austin night and I -- I would like to commend the prior speaker on the peace and justice statement, very important. Something that's forgotten by everybody. Sometimes even by myself. Budget. Youth and senior citizens programs keep it fully funded. The summer job programs for the youth fully funded, increase funding for social service agencies that help the needy, the poor and the have-nots. The gap widens between the haves and have-nots. Poverty it's more prevalent out there. It's going to get worse next year. If the library system is to be closed one day, minimize the adverse impact that it will have for the customers, especially for the youth, who use computers for research and home work. They can play games, but that keeps them off the streets and occupied in the libraries. It will have an impact. I don't know. The statement has been made that -- that the -- that the funding that is saved by closing the library, we can hire more security guards. You have some good security guards, outstanding security guards. But you have some people who really abuse the power of being a security guard. When I got out of the marine corps in 74, after putting six years in. I was a security guard, also in the marine corps. I'm on public record. But the issue this, they are not cops. They are not supposed to touch the people unless the people are being violent or unruly. You do not stare at the customers in our culture. Down right disrespectful and inappropriate. assistant city manager, I've talked to assistant city manager and others regarding that inappropriate action that has to stop. You have good security guards over here, they have great interpersonal skills. Maybe they need to learn from these people here. If people will utilize as much energy as it was expended this week, I won't comment on what issue and work on the -- on the poor and needy and havenot issues, to work to bridge the gap between the have's and have nots, this will be a more beautiful city. More prosperous for the poor and havenots. I don't know. Lucio saw that. He was with me. He said dad I can't understand that. How they treat people. Getting together people, work together with each other. There's really no racial divide here. Just differences between some people who want to act like patrons, not good. Last item, mayor, councilmembers. I want to commend shirley and her staff at the city clerk's office, I have been very demanding and respectful at time. I wanted to say that I was not aware of the big workload that you all have. I appreciate all of the city workers, also, because I was a city worker with parks and recreation, also at municipal court as a bailiff. But thank you for you and your fellow employees for the work that you do for the city and us demanding citizens out there. Continue the march. [Buzzer sounding] and peace again. Thank you very much, have a good day.

Mayor Wynn: Thank you, mr. pena. We see that niella joined us. You, too, will have three minutes and you will be followed by terry. Thank you, greetings to the new councilmembers. Welcome, I can't wait to see what you all do, good luck. I'm here to speak to you all or remind you about an issue that I've come before you before. That is the art happens sans and scholars collective. That's a mouthful. It's a urabl word of people of the black skin. Art zahns and scholars of african descent, we are still in severe need for our collective. We are establishing a collective for art stanes of african descent to have affordable, live work space, preferably in east austin, you all have seen e-mails from me over the last several weeks about this, i have even spoken to some of you. But I am here because i think not only do I need to address you as an entire body, austin community, to know that these artisans and scholars are out here. What we are trying to achieve and what we are not yet reaching our goals or beginning goals, which is to -- to acquire a space. And we are the most under utilized, under supported artists in this community still. And as of two weeks ago we have lost four of most accomplished black artisans in our community. Not lost that they have gone into the ancestral realm, but they have left austin for better, greener pastures, that being deborah roberts, sholanda room ridge, cletus johnson and one of our newest members to the united states, not just to austin was -- was yao isifu from ghana, he just decided he couldn't make it here as an artist. He's phenomenal and he left. He's leaving this weekend. To return. So we're going to continue to loose our black artists. I don't know if you all are aware, but artists of all ethnicities make societies. If it were not for us, we will not have a lot of things in the society that we have and take for granted. In all aspects of our lives. We are the historians, we are the prophets, the ones who are the voices oftentimes. I wanted to address you assist a body again to say help us. [Buzzer sounding] and -- and do your role as city leaders to help us be who we need to be. And give what we need to give to our city. Thank you.

Mayor Wynn: Thank you. Our next speaker is terry overton. To be followed by hope i pronounce this correctly, chioma okoro. Sorry if I'm mispronouncing that. Welcome. You, too, will have three minutes.

Thank you and -- mayor and councilmembers. I'm glad to have this time to express myself. I don't know if it would be okay for me to turn in some of this.

Mayor Wynn: Yes, hands them to councilmember leffingwell, we will pass them down. Thank you.

My name is chioma okoro i have a concern about city of austin staff and its citizens. I have lived in austin since 1996. I have been very involved in this community as a health care provider, child care provider and a volunteer to the homeless. Among other groups. I'm divorced with four young children. My ex-husband physically and mentally abused both me and my children. I received very little in child support from my ex-husband and I am the owner of two [indiscernible] in austin here. 1152, 1154 [Indiscernible] road, 2200 rosewood avenue. I depend on these properties for income. But I have been unable to make any income on these properties in months. Because the electricity has been terminated and I have received [indiscernible] written notice of code enforcement violations. Since january of 2007, i have had increasing difficulty in communication with city of austin staff because of the communication difficulties, electricity -- electricity on my property has been terminated. I have received repeated notice from the city of austin code enforcement division to clean up my properties, even after i have done that several times. It's not enough for them. I -- I have been -- just trying to express myself to them. I have had people harass me and misuse their title to threaten, to try to intimidate me. I have shown photographs of the properties being cleaned up. My efforts have been ignored. I have received similar treatment from austin energy. I have attempted many times to work out a payment plan only to be told that I have no done enough. Because of the difficulties with austin energy, I have had to jump through many hoops just to get electricity and water in my apartments for my four young children. The bad communication I have really experienced includes prolonged and uncomfortable timing, harassment and misuse of titles and power, oppressive and malicious communication, falsification of information, manipulation and [indiscernible] getting result, deletion of important information. What I am asking this -- [buzzer sounding] -- that -- I'm just asking that the city of austin just treat its citizens with respect. I know that's -- that's communication involves just a couple of things that i found very, very different. Respect, honesty, non-judgmental attitude. I also ask that my electricity be reinstated on these properties that I have please that has been terminated for over a year. Thank you to all of you. Mayor wynn and all of the city members. Thank you.

Mayor Wynn: Thank you, ms. okoro. I appreciate the fact that you put your testimony in writing. That will give us and our staff the ability to have your address and your contact information. I do know that of course staff is here, including austin energy, jeff is identifying himself back there, so -- so I think jeff is prepared to get some more information from you and hopefully -- I know that austin energy and solid waste departments, all of us, you know, always want there to be as good of a city of communications and -- a set of communications and information flow as possible to all of our customers, i hope that they can work with you and find a way to resolve that.

Thank you.

Mayor Wynn: Thank you for your testimony. robbins, welcome back, sorry I had written myself some notes so --

it's okay.

Welcome, you have three minutes.

Council, I usually have a prepared speech. But immoved to -- to be extemporaneous, so you'll forgive me. How many -- council participation quiz. How many of you have ever heard of the sumican building? Sumican building. I see no hands up. Okay. How many of you have ever heard of the avante building maybe -- maybe one hand. Okay. The sumican building, we own these buildings, the city owns them. Sumican has been renamed town lake center, where austin energy resides. The avante building is water creek plast plaza where the water utility is. The reason I bring this up is because 20, maybe 23 years ago, these were considered very bad business deals. And councilmembers lost their seats over them. How does that go, those who do not learn the mistakes of hits are doomed to repeat it. These business osensively, the openers paid a higher price -- the owners paid a higher price than the buildings were estimated. That's when staff began a different method of appraising real estate because the city wanted to avoid being mistaken again. The city didn't want to be accused of paying more than the building was worth. How many of council show hands again, knows about the two canceled biomass contracts in the 1980 is's? I see no hands. A tragedy. But there were in fact two biomass contracts approved by council and then canceled. All of this happened during the mill lieu of a depression, the bust, the 1980 real estate fallout. Voters were of course angry and needed somebody to blame, blamed the people who voted for those buildings or were perceived to have voted for those buildings. Now, I'm not here to -- to threaten you with the wrath of voters and in fact i would like several of you to be reelected. I'm trying to tell you that -- [buzzer sounding] -- that -- that you need to pay attention. Thank you.

Mayor Wynn: Thank you, mr. robbins. Council, that concludes our citizen testify, today's general citizens communication, there being no more potential discussion items prior to a couple of items being taken up in closed session, then -- later in the afternoon we have some bond sales and ahfc meeting. Without objection, we will now go into closed session, 071 of the open records act to take up legal issues, potentially item 65 regarding -- regarding a posted item which relates to the enforcement of our campaign finance ordinance, 78, which relates 63, that's legal issues regarding -- regarding a franchise for the -- for the pedernales electric cooperative or pec, 79, legal issues concerning the lawsuit, daryl smelling et al versus the city of austin et al. 80, legal issues concerning a -- a -- a cause number also related to a lawsuit, the heir to the estate of kevin brown versus michael olsen. We were posted for but will 114, which I think was on an addendum, a potential discussion regarding austin energy's generation resource plan, that was related to 4, approved earlier, so we will not be taking up that in closed session. We are now in closed session. I anticipate us taking a couple of hours. Really the only potential action items that we have relate to a couple of these items. We then have bond sales and ahfc meeting that I suspect can happen in relative short order, so I don't anticipate the council coming back out of closed session until sometime after shortly after we are now in closed session. Thank you.

For legal matters, item 65, which is also a potential action item, item 78 which relates to item 63, an action item, council took up legal items 79 and 80, where he did not and will not take up the addendum posted executive session item 114 related to austin energy. Council, if you remember in executive session we did take up item 78 regarding a -- a potential municipal franchise issue for the pedernales electric cooperative or pec. We are posted for a related 63, I want to welcome a brief staff deborah thomas.

Thank you, mayor, council, I'm deborah thomas with the city of austin law department, council, this 63 is the approval of a franchise agreement with the pedernales electric co-op. The franchise has expired and we have been in negotiations with the co-op to renew the -- the -- to renew the franchise, the terms generally the terms are -- are the franchise fee will be 2% of the gross revenues as was in the prior franchise, some of the standard terms include indemnification and -- if there's any problem in the right-of-way as a result of pec activities, they have agreed to relocate their facilities at their sole cost if there is reconstruction or relocation of right-of-way, they will, of course, be complying with city regulations regarding street cut and that sort of a thing. The term will be from 2006 when the prior ordinance expired until 2018. There's also a right to purchase provision. The city would be able to purchase the facilities at 5 times the appraised value within the last five years of the -- of the ordinance effective -- effective period. What we're asking today is if you would approve the franchise ordinance on first reading. The charter requires that the council consider this as three separate regular meetings. If council does consider it and approve it today on first reading, we will be back on september 25th and then october 16th with second and third readings. I'm available for any questions that you may have.

Mayor Wynn: Thank you, thomas, questions for staff, council? Comments? We had good legal advice in closed session. I will entertain a motion on item no. 63. Motion by councilmember leffingwell, seconded by councilmember martinez to 63 as posted, first reading only. Further comments? Hearing none, all those in favor please say aye.

Aye.

Wynn: Opposed? Motion passes on a vote of 7-0. Also, council, in closed session we took up legal -- legal issues regarding item 65, this is broadly described as enforcement issues regarding city campaign finance law. I would appreciate a brief staff presentation. Or perhaps not. So -- so -- so well, we have as part of our backup, we have -- we have -- we have proposed revisions posted. We've had good legal discussions about those. It's a -- you know, it's a relatively complicated matter. A bunch of good legal advice. I will -- I'll welcome any introductory comments by the councilmembers or questions of staff. Or a motion -- councilmember leffingwell?

Mayor, this -- the backup ordinance is -- is marked up. That's the document that we are going to talk about today. But the -- the whole purpose of these amendments is to -- to enforce the city of austin's campaign laws. To address some items that allow for ways around the city's campaign laws and finally to provide for a definite enforcement mechanism. I was shocked some months ago to learn that we couldn't enforce our own campaign laws. And so we're at the point now where we have to make these amendments to make those things effective. That -- that's the purpose of the amendments and -- and I'm ready to make a motion. If there's no one signed up to speak. I will make a motion to approve the ordinance amendments as in the backup on first and second reading.

Mayor Wynn: Motion by councilmember leffingwell, seconded by councilmember martinez to approve item no. 65 As posted on first and second reading only. Councilmember shade? Shade,.

I just -- I just wanted to reiterate the importance of doing this coming straight off of the campaign cycle. Not too far from a new one. We need to work quickly so that candidate packets can be ready when we start the next cycle. This is something discussed over time and I'm just really glad to be working with my colleagues to get this thing done.

Mayor?

Mayor Wynn: Yes, councilmember?

I am be brief. Obviously i, too, was very concerned not only that we couldn't enforce our campaign finance laws. That quite frankly during the last election cycle some folks just thumbed their noses at them. Clearly we're in violation but we have no ability to enforce any of it. That's what we're trying to do is make sure not only that we have campaign finance ordinance that -- that speaks to the values of austin, and the -- cleans up the loophole language but at the same time gives the city attorney the ability to enforce that ordinance. And I just want to thank the council for the dialogue that took place. [Alarm sounding] it's time to leave the building.

Leffingwell: I call the question.

Mayor Wynn: We have a motion and a second on the table. Further comments? Hearing none, all those in favor please say aye.

Aye.

Wynn: Opposed? Motion passes on a vote of -- item 65 passes on a first and second reading on a vote of 7-0. At this time we will recess this meeting of the austin city council. [Alarm sounding] shades, shades, shade,.

Shade:, There being a quorum present, at this time I call back to order this austin city council meeting. 05 , we have been in recess about 10 minutes because of our smoke and fire alarms. I will point out that we have not quite successfully concluded our negotiations with the fire union, firefighters union. [Laughter] see we have just -- council, remember we had just approved posted items 63 and 65. 00 possible action on bond sales. Our -- I see our bond staff is here with us. And would appreciate a -- a financial presentation on our posted items 81, 82 and 83. Welcome.

Good afternoon, mayor and council. My name is chris allen, I'm with public financial management. I'm here to discuss items number 81, 82, 83 and record into the record the bids for the sale of these three debt issuances. You should have in front of you a presentation or flip chart that we put together outlining the particulars about the bonds. Page 2 is a listing of all three issues, we went into the market, we went into the market with 76,045,000 public improvement bond, which is your voter authorized bond. 10,700,000 Of the certificates of obligation 7 million public property contractual obligations. Page 3 is a listing of all of the players on these bond transactions. You will see in the audience jeff leshell your bond ATTORNEY with McCal.. And of course the city, we did do a competitive sale dictated by your financial policies. I will point out that we did go to the rating agencies as we normally do and we did get your ratings affirmed, so congratulations on that. Page 4 is a market update. Basically what this market tells you is that it was very quiet in the market today. The -- the rates were -- were flat to slightly higher. But on page -- on page 5, excuse me, you'll see a chart of rates that -- that indicate that we have actually seen declining rates over the last several weeks, this was a real good time to enter the market. Page 6 is a listing of some of the issues that were in the market. Alongside you there was quite a bit of texas issuance this week with a lot of school districts. had given their subsidy approval and a lot of school districts came to market this week. Page 7 is the actual good results. You will notice there the maturity schedule to these three issues. But at the bottom of those you will notice that each of these received a very, very good interest rate. You will notice that the public improvement bonds received a tick of 4.57%. The -- the certificates of obligation received a tick of 4.40%. And the -- the contractual obligations 3.02%. This was right on top of or through the tip people a scale that was on -- triple a scale that was on page 5. Again, just to kind of point out, we've got page 8 is the last page there shows the results of the competitive sales. You will notice there that you received 9, 8 and 10 bid on each of these respectively. That -- that shows that the city of austin has been real well received as always in the market. With that I would like to -- to recommend approval.

Mayor Wynn: Thank you, chris, questions for mr. Allen? Council? Comments? I will just say with -- although these numbers are always large and there's such little debate ultimately announced about this, it's because we have such stringent financial parameters and -- and policies and then -- so before these potential sales even begin to materialize, they all meet those policies and they come forward of course as we see from our consultants how well they -- they do. So hearing no comments or questions on this posted bond sale items 81, 82, and 83, I will entertain a motion. Motion by councilmember cole.

Second.

Seconded by the mayor pro tem to approve all three items as presented. Further comments?

Mayor, I just note that all of -- although they are big numbers, they are not as big as the numbers we have already dealt with today. [Laughter]

thank you.

Mayor Wynn: By the way, just almost lost in that quick translation earlier was the fact that the city of austin's -- bond rating remains triple a rated.

Yes, sir.

I believe to be the only major city in texas that continues to have triple a bond rating.

You are one of few.

Mayor Wynn: That's right. newman would like to speak to that.

Could I speak to that, mayor?

Mayor Wynn: Yes, mr. Newman.

When chris talked earlier about the ratings presentations, leslie, tammie, jeff, greg canale all participated in those presentations. It takes a lot to prepare for them. They ask us a lot of questions. Economic times are very hard right now. A lot of these come under scrutiny. These folks did an excellent job for you. The fact that this council has put into place those financial policies mayor that you mentioned earlier and you abide by those and stick to those is a main stay for these ratings. Particularly the fact that you maintain reserve funds and 0 fund emergency fund to keep you up and propped up, if you would. That's a big plus. Cash is king with those people. So you have just done an excellent job. It's also in your sale, if you notice those good numbers, when you look at a triple a rated insured bond, versus double a or triple pure a, you sell better than they do. You sell better than triple a insured by 20 to 22 basis points. It's that good credit that does it for you. Congratulations on a good sale.

Mayor Wynn: Thank you, mr. newman. Again we have a motion and a second on the table with these three posted bond sales, 81, 82, 83. Further comments? Hearing none, all those in favor please say aye.

Aye.

Wynn: Opposed? Motion passes on a vote of 7-0. Thank you all very much. Congratulations. Council, just for information purposes, because of the fire alarm going off earlier, I'm told that when they reset that station it may briefly trigger the alarm again. The worst news is that they have to turn the air handling system off and so we will be without air conditioning for some period of time while they re-- sort of reboot the system. .. you might want to make yourself your comfortable. Okay. So at this time, I will recess this meeting of the austin city council and call to order this meeting of the of the austin housing finance corporation board of directors meeting. We have a relatively brief agenda for that. Welcome, ms. margaret shaw.

Good afternoon, my name is margaret shaw, the treasurer of the austin housing finance corps. It's a pleasure to be here today. Three items, the first two i would like to offer on consent. The first one being approval of our board meeting minutes FROM AUGUST 7th, 2008. The second item is an administrative item appointing anthony snipes as the director of the board of three non-profits, which are the non-profit general partner owners of three housing tax credit programs that the austin housing finance corporation owns. So with that I would like to offer these two items on consent.

We should quickly approve snipes knows that we are doing it. [Laughter] so motion by the board member cole, seconded by board member morrison to approve the --

mayor, you actually have speakers on those two items, just once each.

Mayor Wynn: Thank you very much. Again, we have a motion and a second on the table approving the consent agenda. But before we vote we would like to take citizen testimony of course. Find that on my system. Let's see, our first speaker 1, technically approval of the previous board meeting. Niala signed up wishing to give us testimony. Her stance was noted as neutral. Niala sancofa actually addressed us during citizens communication, wanted to give us testimony on item 1 and -- and pat johnson has signed up to give us testimony on afhc item no. 2. Welcome mr. johnson.

Board, a couple of months ago I spoke to this board about the issues that we were having with the management level employees of austin housing finance corporation. These people work for you. shaw, before that was paul hilgers again I'm not going to bring up any city employees names because I'm afraid they will get fired, but they do talk to me with issues -- about issues we have in city government. The first thing that I'm going to show y'all here, okay. One of the main issues that we are having over at the frontera is handicap ramps remain under water. People [indiscernible] their equipment. Handicap ramps under water. The contractor was requested to repair these. Those just ignore them because we don't have any leadership over there in that office to force them to do anything. Next issue, here it is, perfect example, quality workmanship. Holding water in the center of the cul de sac. That's the highest point of the road. Again, contractor negligence, staff not being -- making them repair it. They are trying to stick it to us the taxpayer to fix their shoddy work. Next issue the storm water facility. Now, councilmember -- councilmember leffingwell, you know all too well about environmental issues. They put the wrong size rock in the pond, the punch out sheet said they had to replace it and put the right size rock in the pond and they refused to do that. All of this sediment going out from the drain because of faulty workmanship by the developers. Here's a problem that's been for a good five months, but you don't see them again, the management team of the austin housing finance corporation, this is their development that the taxpayers bought this land. Expect people to walk and break a leg at night right there. Here's another section, a private example. This is on -- on vela [indiscernible], again because the substructure was not put in correctly because the contractor at the time, keystone contractors, put so much water on that base it did not pull density scores. You all probably don't understand that language. But because there was a lack of inspection and lack of oversight, because click smart housing, expedited inspections, just as well may not be any inspections. This is the drainage ditch by the pond. That's the bridge right there where montana goes over it, all of that sediment [buzzer sounding] on top of that concrete floor is there because the contractor again did not follow the rules and put the right type of rock at the entrance of the bridge. Here's another prime example. Structure cracks all the way down the street. Riverside meadows, a centex development, a smart housing development. Again staff cannot get the developer to make repairs. And because of that issue, the previous councils, we got have a higher bond up there because -- like the bond right now is maybe 5% on a project that's 5 million. So what happens they got such a low bond we cannot make the repairs and come out ahead because of the bond money. So we need to make at least a 10% bond on the total structure price and require two year warranty on the infrastructure whereas now we have one.

Mayor Wynn: Please conclude, mr. johnson.

Again, this is structure cracks, over in [indiscernible] all right. Now, this is a good one here. We talk about the McMANSIONS ORDINANCE. shaw and them, how did you all get AROUND the McMansions ordinance of building a house larger than the property. There's a whole bunch of little two story houses over there. I don't know how that's handicapped accessible. All right, so the issue here is real simple. It's lack of responsibility. To the board and to the taxpayers. And to those home property owners that live out here in these developments. The smart housing incentive benefits the developers and taxpayers -- loyalty to taxpayers. [Indiscernible] margaret shaw is no different than paul hilgers when it comes to loyalty to taxpayers and disabled. I ask what is anthony snipes going to bring --

Mayor Wynn: Your time is over, please conclude.

I will. snipes is going to be appointed to this board, what positive efforts is he going to bring here that hasn't been brought here in the past. We have got to this leadership, these issues have got to be corrected.

Mayor Wynn: Thank you, mr. johnson, I'm sure mr. Snipes gladly meet with you and would appreciate your input.

[Indiscernible]

Mayor Wynn: He would recognize that. He would -- I'm since sheer sheer -- I'm sincere when i say that he would appreciate your comments. A motion and a second on the table approving the ahfc consent agenda, items one and two. Further comments? Hearing none, all those in favor please say aye.

Aye.

Wynn: Opposed? Motion passes on a vote of 7-0. [One moment please for change in captioners] developers voluntarily to participate and incorporate affordability through mixed use, transit oriented developments, that are proposed and on the way. Today we're going to seek board approval on a new program to buy down rents using our local resources. Some of the key traits that i want to highlight for folks is where it does not differ from the existing programs that we have. Which is the application -- the review of applications would be first done by staff. They would also be seen by the housing bond review committee who can always make a recommendation to approve, oppose or be neutral. Then it would come toward to this board and seek citizen approval. The financing that would be provided as well as the performance would be secured through a deferred forgivable loan which matures at the end of the 40 years. The affordable housing would be incorporated into that structure for a 40-year term. The requirements are also ensured through a restrictive covenant so it gives us a land use requirement as well. The new features for the market rate apartments are to limit our buy-down program to just 10% of total units and to the best ability we would mirror the unit mix in the development. For instance, we wouldn't believe the affordable units to only be the studios, we would mix studios, one bread room, two bedroom, whatever was available in that project. We would buy down from 80% of median family income to 50%. Our target income for a single person is less than $40,000. And for a four-person family, that translates into about 35,550. Another item is we would recommend that we have a per application per project limit of no more than $2 million and we would not subsidize more than $60,000 per unit. Cdc had a slightly lower amount for that of $1 million and 40,000 per unit. And last but not least, we would limit these applications only to high opportunity areas. As you know, many in the community are concerned about being able to disburse our affordability throughout the city. The commission has come forward with a terrific solution which is an opportunity map, and we have a map here I would like to show you all. A group out of ohio state university does this for metropolitan areas around the country and they map where there are the best opportunities for employment, education, health care, transportation and a variety of different factors. Where our buy-down program would be used is in the very high opportunity areas. So in those core areas of austin that you see here shaded brown where it's very difficult for us and our affordable housing partners to develop a fully affordable project due to land cost and other cost associated. We would limit this program location-wise to high opportunity areas. Last but not least, going back to our slide is affordable housing, as y'all have heard me say on many occasions, like market rate real estate development depends on opportunity, timing and the availability of the financing. This tool is one more tool in our toolbox so we can take advantage of students as they come along and we're prepared to partner with our private sector developers in order to incorporate and integrate affordability throughout our community. This program is not intended to be a primary creation