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KERR COUNTY COMMISSIONERS COURT
Special Session
Thursday, February 3, 2005
11:00 a.m.
Commissioners' Courtroom
Kerr County Courthouse
Kerrville, Texas
PRESENT: PAT TINLEY, Kerr County Judge
H.A. "BUSTER" BALDWIN, Commissioner Pct. 1
WILLIAM "BILL" WILLIAMS, Commissioner Pct. 2
JONATHAN LETZ, Commissioner Pct. 3
DAVE NICHOLSON, Commissioner Pct. 4

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2
I N D E X
February 3, 2005
1.1 Order authorizing the Issuance, Sale and Delivery
of "Kerr County, Texas Certificates of Obligation,
Series 2005", providing for the future authorization
of the levy of an annual ad valorem tax to secure
the payment thereof; approving and authorizing the
execution of all instruments and procedures related
thereto including a Paying Agent/Registrar Agreement
and a Purchase Agreement; Approving the form of an
Official Statement; and providing for an immediate
effective date
1.2 Consider and discuss authorizing County Judge to
execute any and all necessary documents on behalf
of Kerr County to complete the purchase of the
Juvenile Detention Facility and issuance and sale
of Certificates of Obligation, delivery of funds
to existing bondholders, and obtaining any necessary
or required releases from bondholders, Trustee(s)
and/or others
--- Recessed until February 4, 2005, at 3 p.m.
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On Thursday, February 3, 2005, at 11:00 a.m., a special
meeting of the Kerr County Commissioners Court was held in the
Commissioners' Courtroom, Kerr County Courthouse, Kerrville,
Texas, and the following proceedings were had in open court:
P R O C E E D I N G S
JUDGE TINLEY: Let me call to order the
special Commissioners Court meeting scheduled for this time
and date, Thursday, February the 3rd, 2005, at 11 a.m., and
properly posted for such time and date. The meeting was
scheduled in anticipation that the Consent and Release
Agreement, draft of which was approved by the Court last
week, would be fully executed by all the other parties and
we'd have confirmation of that in-hand by Tuesday, that --
last Tuesday, that we could have gone into the marketplace
yesterday to get the certificates subscribed and priced,
and -- and that we could meet today and take the final
action. I am -- I am sad to report that we are still
waiting on the confirmation of all of the signatories. As
of this morning, it was reported to me that verbally it had
been confirmed that we had all but one, and that it was in
process. My response to our bond counsel and the financial
people that are assisting us in this transaction is that
I -- I wanted confirmation that -- that we can see, at least
by facsimile, that all of those signatures have, in fact,
been obtained before our financial people go into the
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marketplace to get the issue priced and subscribed, and
they're working on that now.
That being the case, obviously, we haven't
been in the marketplace, so we're not in a position to move
forward with the agenda items that we have here today for
the issuance for the Certificates of Obligation. My
proposal would be, because of the time frame they tell me
they're going to have this ready, would be that we recess
this meeting until 11 o'clock tomorrow morning, and
hopefully we can finalize it all then. That's the best I
can do for you, gentlemen. We just -- we don't have it
in-hand so that we can -- the financial people could not
move forward without those in-hand.
COMMISSIONER WILLIAMS: I think all 11 have
to be in place before we do.
JUDGE TINLEY: Mm-hmm.
COMMISSIONER LETZ: Judge, could we recess to
an earlier or later time?
COMMISSIONER BALDWIN: You just don't like
COMMISSIONER LETZ: Just don't like 11:00.
COMMISSIONER WILLIAMS: I'm available anytime
during the day. Let's see what the Commissioner needs.
COMMISSIONER NICHOLSON: I'm tied up between
1:30 and about 2:30 or 3:00.
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COMMISSIONER LETZ: I mean, is there a
question that they may not be ready until sometime tomorrow
morning?
JUDGE TINLEY: That's possible. They're
hopeful they can go into the marketplace this afternoon if
they get everything in-hand later on this morning, and we
get confirmation that we have all of the signatures that --
that we -- that we've got to have; that they can go into the
marketplace this afternoon, and that way it could be
finalized in the morning. However, it's possible that it
may be on into this afternoon before we can confirm that,
and they're not able to go into the marketplace until in the
morning, which would put us in the afternoon.
COMMISSIONER WILLIAMS: The afternoon, then.
Is afternoon better for you?
COMMISSIONER LETZ: What time will you be
free? 2:00? 2:30?
COMMISSIONER NICHOLSON: I'll be through by
about 2:30.
JUDGE TINLEY: Talking about 3 o'clock?
COMMISSIONER LETZ: 3 o'clock.
COMMISSIONER WILLIAMS: 3:00 works.
JUDGE TINLEY: Okay.
COMMISSIONER NICHOLSON: I've got a question,
maybe more than one. Maybe it takes the County Attorney to
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answer it, and maybe that could be done between now and
tomorrow. And the question is, what are the consequences of
not approving the Texas Certificates of Obligation? We'd be
out of the -- I assume one of the consequences is we'd shut
down the Juvenile Detention Facility, or the owners of it
would, and we'd be out of this business. The question is,
are there any other consequences to the County about not
following through on this deal? And the reason I'm
wondering that is because -- well, the background is, you'll
recall that when we had the opportunity to take over the
$5 million debt, I didn't want to do that, and I don't think
any of us did. When we made the $1.75 million offer, I
voted against that. When we made the $1.9 million deal, I
voted against that. And all those were because I didn't
think it was in the best interests of the taxpayers; that I
thought that it would be -- that operation of it would be a
continuing burden on the taxpayers.
Subsequent to that, the situation appears to
have deteriorated to me. Subsequent to that, based on
research done by two of our commissioners, some of the
assumptions that we made in trying to make up our mind
whether or not we wanted to own that appear to be -- be
incorrect; that the situation -- the financial situation was
even worse than we thought it was. So, that's the reason
I'm wanting to know what would happen -- what's the
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consequences to the County if we don't follow through and
don't make this deal?
COMMISSIONER WILLIAMS: Well, the financial
situation -- your comment about the financial situation
being even worse than we thought, you mean up until
September? Or from this point forward?
COMMISSIONER NICHOLSON: Well, I -- I thought
that -- again, looking at the problems that that facility
has encountered, it's essentially gone belly-up twice
because it couldn't meet its financial obligations, and I
thought one of the reasons that it went -- went south this
time was because the State changed the payments it made for
housing children. And it now appears that that did not have
an impact on the revenues of the facility; that at no time
did we charge -- did the facility charge as much as the
State allowed. So, if -- if our assumptions about what went
wrong are incorrect, then how can we expect to make changes
in the way it's managed in the future? To -- to prevent it
from --
COMMISSIONER WILLIAMS: Commissioner, I'd
submit to you that a lot of the answers to the questions,
yours and any other -- any that the rest of us have, will be
revealed in an audit, and I'm going to pursue that audit.
COMMISSIONER NICHOLSON: I'd like -- you gave
me a document that had 19 questions on that thing. I'd like
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to have the answers to those, but I'm not going to have them
COMMISSIONER WILLIAMS: No, we won't have
them by tomorrow, but that's going to tell us some of the
ills, and I suggest it's going to tell us some of the
management problems that they failed to address properly,
which should give us the ability to have a roadmap and go
forward. That's the way I see it, personally.
COMMISSIONER LETZ: Let me add something to
that also, and I -- and this is just a little bit more of a
historical perspective. Both times that it's gone belly-up,
management was a big key component of the issue. The first
time it was, and it appears, the more we've looked into the
-- some of the things this time, you know, there's some
things this last time as well on the management side. And
what I'm referring to -- well, the first time, I really
don't know what happened, but I know it was mismanaged by
the guy from Florida; I can't remember the guy's name any
more, thank goodness. But, anyway, there was a lot of
management problems that time. This time, the facility was
in the black from the first time the County took it over up
until 2001 or so.
COMMISSIONER WILLIAMS: Through 2002.
COMMISSIONER LETZ: Yeah, but -- well, it
started going -- it started -- it was -- you know, started
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-- anyway, whenever. It ran in the black for quite a period
of time, you know, eight years or so. Then some things
happened and it started going the other direction. You
know, I think the audit will answer a lot of that. And I
think it was a -- some decisions that were made in the
management, and some licenses, and kids that were attracted.
I mean, there's lots of things, and I don't think I
understand exactly, but it appears to me that the facility
could come very close to break even, slight loss. And, in
my opinion, the loss, if there is one, in the future will be
less, or certainly no more than we're going to have to add
in additional expenditures.
COMMISSIONER NICHOLSON: That --
COMMISSIONER LETZ: And that's --
COMMISSIONER NICHOLSON: That's my hope.
COMMISSIONER LETZ: And that's my hope too.
COMMISSIONER NICHOLSON: If we can come out
that good, that's good enough.
COMMISSIONER LETZ: That's good. And that's,
you know, where I have been the entire process. I mean,
the -- I think the second time there were some problems, my
perspective is that at first I thought it was the State's
fault. Now I think maybe it was more an internal management
problem, from what Commissioner Baldwin and Williams found
out. But I still think that if you look at the numbers
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going forward, it does come very close to breaking even.
And, like I say, I think it'll be -- the differential is no
more, hopefully; I think it will be less than not having a
facility in Kerr County for Kerr County youth, just in the
preadjudicated side. And if we can keep it for
post-adjudication as well --
COMMISSIONER WILLIAMS: I --
COMMISSIONER BALDWIN: Well, I --
COMMISSIONER WILLIAMS: Sorry, go ahead.
COMMISSIONER BALDWIN: -- have some comments
to make that are parallel to Number 4's comments. And I
don't know if you all have noticed or not, but I voted no
against this thing from day one, and will continue to do so.
And I want to let you know how I arrived at that no vote. I
used -- one of the things I did is I used a tool that I'm
sure that we all have used. I sat down with a piece of
paper and I wrote a column of positives and a column of
negatives, and the negatives outweighed the positives
probably six-to-one. And I just couldn't -- just -- it just
doesn't work for me. Now, at the top of that list, I feel
like that the public needs an explanation from somebody of
what truly happened with their money. What has caused the
County's credit to go bad? What has caused us -- since
September, we have put in probably in excess of $200,000 to
prop the thing up. You know, what has caused that? And I
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think -- I think the public -- the taxpayers that are paying
for this thing deserve an explanation.
And all we've heard so far is the State
changed their funding. Well, a couple of weeks ago I went
to Austin, and -- and Commissioner Williams was with me, and
we sat down with the -- one of the directors of the agency
and their lawyer and some other guy, and they explained to
us in detail that the State did not change the funding. The
funding had -- didn't -- didn't affect what happened to the
juvenile facility in any way. We also heard that Advocacy,
Inc. was a part of the downfall of the facility. I've been
around that group for a number of years. Back when I worked
for the House of Representatives, they -- they were real big
in the state, and they functioned mostly with state
hospitals, was their -- was their gig. They were in and out
of state hospitals all the time. And just recently, in the
last couple of years, they have started getting into
juvenile detention facilities and adult facilities and those
kinds of things.
Now, one of the -- one of the problems with
all of that is that, as they told Bill and I in Austin, that
Advocacy, Inc. approached Harris County, just like they did
us, and what Harris County said to them is, "The door is
open. Please come in and do what you need to do." They
came in and were gone within 48 hours. Did their report --
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found some things wrong, did the report, out the door, and
haven't seen them since. They were there 48 hours. They've
been here for, I think, maybe years now, plural. See, and
I -- I don't -- we don't like those agencies; I understand
that clearly. However, they have come -- they came into our
juvenile facility and they found some things wrong. I think
maybe some kind of abuse was a part of that as well. Well,
I'm -- I'm grateful for that. I'm glad that they came in
and found those problems. It's caused us to fix some
things. I don't see that as a bad thing. I see that as a
good thing.
Now -- and I understand they're still here,
because we had -- we had first told them, "No, you cannot
come into our facility; we don't want you in here," and
fought them. Well, I think it's a normal attitude if
somebody tells you, "No, you can't come in and take a peek
at anything," then they're really going to knock the door
down to get in. So, I think that we fought against them and
fought against them, and even hired attorneys to fight
against them, and -- and probably in our next set of bills,
there will be another bill for attorney fees in excess of
$6,000 from the firm out of Austin that was a part of that,
fighting against Advocacy, Inc., trying to keep them out of
our facility. Well, that -- that kind of stuff just doesn't
make sense to me. I think that we're purchasing a facility
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that is falling down. We were all out there recently at the
grand opening just recently, and -- and the way I understand
it, the pumps won't even pump the sewer out of the place. I
mean, we're buying a facility that appears to me it's
falling down around our ears.
Another area that we haven't resolved is this
salary issue. That is a huge issue to me. We have our --
the director at the juvenile facility has a salary of
$65,000 a year. Our Sheriff makes $58,000 a year. That's
around 7,000 bucks difference. Well, once we get this thing
done, you can rest assured that the Sheriff's going to be in
here wanting not -- not equal pay, but more pay. He runs a
large facility. The juvenile facility is a small facility.
Those kind of things, in my mind, need to be done, fixed,
and out of the way before we actually make a purchase, not
after we make a purchase. We're talking about spending
$2 million here. As soon as this thing is done and gone,
the Sheriff will be in here wanting $2 million to add 48
beds to his facility.
Now, I've been here long enough where I've
seen both of those issues come and go, and I can tell you
right now that the -- the public demands that we get bad
people off the streets and lock them up, protect their
property and their lives. So, when this jail issue hits, we
have never seen the public get riled up like they do over a
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jail issue. It gets -- it can get really ugly. And on top
of that, funding -- county funding -- not just us, but every
county across the state, funding is -- money's getting
tight. We have the over-65 freeze. There's a new bill
floating around Austin right now of putting caps on -- on
the appraisals, and just all kinds of little things
happening that is going to make -- we're not going to be --
we're not going to have the money that we've had in previous
years to throw around like that. So, I just think that we
need to be a little bit more careful.
Now, mother always said, "Don't present a
problem without a solution." And she's also the same mother
that said, "You can't be all here if you're not all there."
But I -- I have a solution. I think that we should
reconsider purchasing the juvenile facility, and get with
the Sheriff and see what his needs are. He's talking about
$2 million for a 48-bed expansion, and I think that, on that
same property that we already own where the jail sits,
there's plenty of room for a small preadjudicated juvenile
detention facility. And Commissioner Letz is correct, the
thing did operate in the -- in the black at one time, and
that's when it was a small preadjudicated facility. It
broke even, and at times actually made a little money. So,
if we could expand the jail at one time and build a small
preadjudicated facility out there on that same property, and
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do the bonds to where the people actually vote and approve
or disapprove, I think that that is the best route to go for
the taxpayers of Kerr County. I think that that whole bond
issue would be somewhere around $3 million, as opposed to --
we're fixing to spend four. And we know what we have. We
have a facility that can operate in the black, and we own
it. We know what we've built, and we'll know that we have a
building that's going to stand up and we can pump sewer out
of the -- out of the facility, et cetera and so forth.
That's all I have to say.
COMMISSIONER LETZ: You said a lot.
COMMISSIONER BALDWIN: It was a lot, wasn't
it?
COMMISSIONER LETZ: And I don't disagree with
a lot of what Commissioner Baldwin says. I think the
difference comes into, you know, how you proceed. I mean, I
think we, as a county, have been very fortunate for a number
of years to have a -- a facility that did break even or run
in the black, and we got used to having a detention facility
making money. That's not the norm in the state, and we
shouldn't really expect it. I think that's -- that's a key
component. We spend -- just look at our budget, how much we
spend at the Kerr County jail each year. And, you know,
that we should expect a juvenile facility to run in the
black when we let that -- that -- have a jail that runs in
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the -- huge, huge sums in the red, you know, that's not
reality. So, I think that, you know, it's somewhat
unreasonable to expect it to run in the black. That's why I
always say, you know, let's cut the losses as much as we
can. If it runs in the red, it runs in the red. There's
expenses of having a facility or not having a facility in
the county. I think it's clearly a preference from everyone
I've talked to to have a facility in the county.
I think Commissioner Baldwin has some good
ideas. I would question whether we could add onto the jail
and build a juvenile facility out there for $3 million. I
haven't looked at the numbers; maybe he has. But the
problem that I see right now that -- if we don't proceed
with where we're going, one, you know, we've run out of
time. We've been working on this for going on six months
now, and we have to make a decision. And I have to make a
decision, as each member of the Court does, and I think it's
best to proceed with the sale. I can almost -- and if we
don't, I can also say there's another down side to that that
no one has mentioned, which I suspect we will have
litigation, without question, from a number of parties if we
cancel this thing at this time, including all bondholders,
trustee -- and the trustee. And, you know, that litigation
has to be considered.
And I think it could easily -- you know, who
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knows how much that could run up into? Not that I'm going
to make a decision based on threatened litigation. We get
sued frequently and are always in lawsuits, it seems. But I
-- I still think it's the best way to proceed. I think that
the -- you know, there is -- the whole state funding or not
funding or funding cuts issue, in my mind, is almost a
positive. We can fix management issues locally. We can't
fix funding issues out of Austin locally. So, I think that
there is even a -- in my mind, a greater potential of it
coming close to breaking even and, you know, being able to
narrow the problems into more of the management side, from
what I can tell. But, anyway --
COMMISSIONER NICHOLSON: Mr. Emerson, could I
just -- before you got in here, we decided -- I think we
decided we were going to recess until 3 o'clock tomorrow for
some procedural reasons. And I raised a question about if,
tomorrow, we did not approve the certificates of obligation,
what would be the consequences to the County, aside from the
facility being shut down? Twenty-four hours is not much
time, but if you could think about that between now and
then --
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COMMISSIONER NICHOLSON: Yes. I don't know
MR. EMERSON: Are you talking about from a
legal perspective? Or --
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the County Attorney. And then it was just -- the audit
thing just keeps being at loose ends. One of the -- a
definition of insanity is doing the same thing twice and
expecting a different outcome, and it looks like we've done
the same thing twice already out there. And we need to --
to know what the situation is so we can cure that in the
future, so we won't make the same mistakes we made in the
past. And I don't have a good feeling that we're going to
get an audit that produces answers to the questions that
we've raised. Who am I looking for to give me answers to
those questions? Is it Tommy?
COMMISSIONER WILLIAMS: Well, first of all,
let me see if I can address that question, and then I want
to jump in on what Commissioner Letz said. First of all,
I've said it before and I'll continue to say it; an
independent audit of the years 2002, -3, and -4 is
necessary. It's necessary for a lot of reasons. It is
necessary primarily to answer the point that Commissioner
Baldwin made. I think the public deserves to know exactly
what took place in that facility and how $800,000-plus in
revenue, reserves, and cash flow have dissipated to the
point that the Commissioners Court had this bomb put on it
in September. And the only way those answers are going to
be forthcoming is to pose questions that -- those that have
already been posed and others that may come from that, and
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have an independent auditor take a look at that.
There will be an agenda item, I promise you,
on Monday, the 14th, to ask the Court to authorize the
independent auditor who is in the building now doing his
county-wide audit to examine in-depth those questions and
other questions for the years 2002 -3, and -4. Okay. From
that, we're going to get some -- we're going to get some
answers, and hopefully the public will get some of the
answers that Commissioners Baldwin and all of us believe the
public deserves to have. Also, it should provide for us
somewhat of a roadmap, and should provide for us some
answers to questions which seem to be out there ethereally
about what may have happened and what may not have happened.
I'll give you another example, following up
on the point that Commissioner Baldwin made in terms of
funding. There are a lot of things that happened that
reduce funding. Not only the allegation that the State
changed funding levels, but what happened to the grants that
came up. I know from an e-mail I got yesterday that $75,000
worth of grants that flow through the Governor's office
through AACOG to here were discontinued. Some of them were
eligible to have reestablished. Some of them may have
already been reestablished, but the fact of the matter is,
we lost $75,000 worth of cash flow in grants. Why? I don't
know the answer. You and I need to know the answer. The
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public needs to know the answer. That's a management thing.
I think there are a lot of things that are going to fall on
management in this facility, and it behooves us to make
certain that that happens. So, we'll have an opportunity to
determine whether you want to do an audit on Monday, 'cause
I promise you, it will be on the agenda.
Secondly, I think Commissioner Letz' points
are valid. I don't know if the train has left the station,
but there are a lot of reasons to suggest that we don't have
the alternative -- a major alternative other than to proceed
the way we're going to proceed. I think we have -- while we
took sight of or are cognizant of the expenses involved in
taking care of our kids elsewhere, those are ongoing
expenses. They are an obligation of Kerr County, just like
it's an obligation of Kerr County to take lawless people off
the streets and put them in our jail. I'm not certain that
building a preadjudicated facility on -- on the jail grounds
is the answer. We have a preadjudicated and a
postadjudicated facility, and we have both kinds of
juveniles who we must take care of. Pre, I think when they
come off the street and the Judge has to get to see them,
and whatever that sentence is that keeps them off the street
till they rehabilitate their lives sufficiently to be
released, that's our obligation. I'd like us to fulfill
that obligation here, not somewhere else. And I believe we
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have the opportunity now, through our current management, to
check the issues of the past, to develop the programs that
get us very close to black, if not black, and -- and to move
forward in taking care of our own youth.
Building problems, we'll address those
building problems. The one that we inherited from Recor, it
was built on the cheap. Everybody knows that. They did it
to get in the business real quick for profit motivation.
Okay, so that's the building we got. The building that we
built, we thought we'd built it better, but maybe we did,
maybe we didn't. But the County Attorney's going to
resolve, along with our management, the issues regarding
that building. So, we have a facility. I think the last
thing I need to say in support of what Commissioner Letz
said was, while we -- the threat of litigation is not a
reason to do or not to do something, I think we should not
overlook the possibility that if the bondholders don't get
some satisfaction from this thing, the way we had pledged to
do and negotiated and negotiated, honest-to-goodness
fashion, we'll be seeing them back in the courtroom again
another day, and so will the County Attorney. So, as far as
I'm concerned, I think we're on a path that brings us to a
solution that, over the longer haul -- not the immediate
haul, but the longer haul -- will be beneficial, and this
Court and subsequent Courts can look back and say, yeah,
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that was a good decision. Troublesome, problematic,
emotional, but over the long haul, good. And that's where I
am.
COMMISSIONER LETZ: See you at 3 o'clock?
COMMISSIONER BALDWIN: Yeah.
JUDGE TINLEY: Well, at this stage,
gentlemen, the Court has approved the Consent and Release
Agreement subject to the confirmation that's been signed by
the other parties, and that's where I stand, and that's
where we are. And --
MS. KAHANT: Could I speak to the Court? Is
that out of -- out of bounds?
JUDGE TINLEY: On this issue?
MS. KAHANT: Yes.
JUDGE TINLEY: Yes, ma'am. Come forward,
please, and identify yourself.
MS. KAHANT: My name is Carolyn Kahant.
COMMISSIONER WILLIAMS: Carolyn what?
MS. KAHANT: Carolyn Kahant. Does this work?
COMMISSIONER LETZ: Yes, it's on.
MS. KAHANT: I've been attending some of
these meetings and trying to follow this issue, and one
thing I did want to mention today is that I find it
difficult to understand how this audit was proposed over a
month ago, or maybe longer, and we are going ahead with the
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purchase and with -- which is going to involve raising some
taxes, and yet the audit still hasn't taken place. And it
was -- I understand February 14th, we're going to begin the
audit? Is that correct?
COMMISSIONER WILLIAMS: Authorize it.
MS. KAHANT: Authorize the audit. Well, it
seems like the audit and -- and some other investigation
should have taken place and needed to take place before the
purchase is done, not after. So, that's a point I wanted to
make. I don't think the taxpayers are understanding
everything that's going on with this. Maybe it's their own
fault, but I just think this -- and what I hear today is
that, "Well, we've gone this far; we can't go back now."
And I'm really pleased to hear two Commissioners bring up
the possibility, or the -- to say let's question what we're
doing before we go all the way over the cliff here. So I
understand the difficulty with -- the pledge has been made
to the bondholders, et cetera. But I'm very concerned, and
-- and I know that -- I'm with the group that has sent a
request to the Court, and signed by about eight or -- eight
of us or so, asking for this particular audit and two other
things to be done, and yet we didn't -- we don't hear
anything about that. And it just seems to me, and I think I
represent a lot of other people's -- citizens' feelings,
that this has been -- this is being done perhaps for reasons
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other than what we know or what are stated, and that it's
being pushed through, and there is a lot of questions that
are not answered. And you're going to say, "Well, we're
going to answer these questions," but the questions are
going to be answered after the fact. So, thank you for
listening to that.
JUDGE TINLEY:	Thank	you,	ma'	am.
COMMISSIONER	LETZ:	Judge,	I	want to make a
brief comment to -- is it Kahan?
MS. KAHANT: Kahant, with a T.
COMMISSIONER LETZ: Kahant. The comment she
made. That I think the audit issue is not something that,
you know, happened just a month ago. We've -- since this
first came up, I think this entire Court has been looking at
what -- what happened, and which is basically part of the
audit. And about a month ago or so, probably about the same
time that we received the letter from some citizens, and it
became apparent that the -- to some of the members of the
Court, anyway, that an audit was needed to look at the
facility internally. And we got to that after months and
months of looking at it -- I mean, ourselves looking at it.
So I think, you know, we've progressed in a -- you know, in
a reasonable fashion and a timely fashion as to figure out
what happened. And I think the audit is -- is key for a
couple of reasons. One, so everyone -- taxpayers, us,
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everyone -- knows what happened this time. And the other
part of it is, as Commissioner Nicholson said, so we don't
do it again.
Both proposals on the table, at least the one
that Commissioner Baldwin brought up and the one that we're
going forward with right now, have a juvenile facility in
Kerr County, which means, obviously, we have to manage it.
And so I think it is imperative that this audit be done so
we learn from mistakes, if mistakes were made. That's just
-- you know, so I think that it's -- you know, we are
progressing. It would -- as we could. It would be nice if
we could tell the bondholders at the start, you know, of
everything, "Let's put it on hold for six weeks," but I
don't think we have that luxury. And that's, you know --
COMMISSIONER BALDWIN: Let me say a couple
things. I -- six weeks, definitely not. What are we, 12
days before another note payment is due? Isn't that
February 15th? But when we first started talking about the
audit, I went to the auditors and, just as a friendly
question, asked them, you know, what would a -- what would a
full-blown audit cost if we hired somebody out of San
Antonio and they came out and did a full-blown audit? And
he said about $30,000, probably. That's a lot of money.
So, Commissioner Williams comes up with the bright idea of
possibly asking our outside auditors that are inside right
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now, to confuse everything even more, if they would -- if
they would expand their audit thinking some to take a little
bit broader look at it. And my memory says -- and I think,
if you look back through the minutes, you will see the
verbiage in there that says that the County Auditor is going
to approach them and see if they will do that, and what will
they charge us for it and how far will they go with it, et
cetera, et cetera. There's the hangup.
COMMISSIONER WILLIAMS: That's correct.
COMMISSIONER BALDWIN: What happened with
that?
COMMISSIONER WILLIAMS: Well, I'm not sure
where the County Auditor is in terms of responding to us,
but I can assure you there probably will be an answer on
Monday, 'cause the issue's going to be back out for
authorization for -- to expand the scope of the independent
auditor to include the years '02, '03, '04, and an in-depth
audit. You know, somewhere, somehow, somebody's bopped
around a number of $7,000, $8,000 over and above what we
normally paid for the independent auditor to do that. That
may or may not be the case, but we use that as a -- as a
base and see where the County Auditor comes in on Monday,
because he will have learned, I'm sure, before the day is
out it's going to be back on the agenda.
Anyhow, one other thing I want to respond to
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this lady. If there is -- if there is the information -- or
there is the assumption floating around out there that our
acquisition and issuance of $2 million of certificates of
obligation is going to increase the tax rate, that's
erroneous. It will not increase the tax rate. And the
reason for that is that the first coupon due on the new
issue will come due at such a time so as that current
debt -- a segment of our current debt will be released after
this year, and that debt is for the renovation of the
courthouse and the annex. Those were certificates of
obligation. They will be paid in full in the '05 budget,
and so the first coupon coming due on this new issue of
certificates of obligation for this particular thing will
come due at such a time so as to be amortized out of tax --
tax rate that's currently in place. So, there will not be
any additional tax rate to cover this debt.
MS. KAHANT: Well, why has it been reported
in the paper that -- in connection with this, that there
will be an increase in the ad valorem tax?
JUDGE TINLEY: You'll have to talk to the
people that write the newspaper; we can't answer that.
COMMISSIONER LETZ: I can -- but I can -- oh,
well, I want to make sure that you understand part of it,
though. And I -- I won't say I disagree with Commissioner
Williams. I think there's more to the story. What we're
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saying is true; there will not be a tax increase of the tax
rate. It also means that we will not be able to reduce
taxes by that amount, by that --
COMMISSIONER WILLIAMS: That's true.
COMMISSIONER LETZ: -- the differential tax.
We're replacing one tax with another tax, basically, so the
tax rate will stay the same in the future under the current
plan. However, it will dedicate a -- a portion of our total
tax rate to this facility, and that money will not be
available to go back to the taxpayers as lowering the tax
rate or for other county functions. So, yes, it's not going
to increase the tax rate, but --
MS. KAHANT: It's going to take taxes.
COMMISSIONER LETZ: But there is -- but the
tax is going to be dedicated. It means that it will not be
available for other courses, and there will be an ad valorem
tax for this 1.9 million, so it'll be built into our current
tax rate.
COMMISSIONER WILLIAMS: Let me -- one more of
those caveats. If the Sheriff -- if the Sheriff were to
come in and say, you know, "Guys, we need to do thus-and-so,
and here's the time frame," and some estimated --
COMMISSIONER BALDWIN: "When" the Sheriff.
COMMISSIONER WILLIAMS: Yeah, you're right.
COMMISSIONER BALDWIN: When.
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COMMISSIONER WILLIAMS: Not if. When. There
very well may be sufficient in what's being released from
the debt that will be paid this year even to cover that.
So, we'll see.
JUDGE TINLEY: Okay. Anything further before
I recess until 3 o'clock tomorrow afternoon? Hearing
nothing, we will stand in recess until 3 p.m. on February
the 4th. That's a Friday, tomorrow.
(Commissioners Court recessed at 11:40 a.m.)
STATE OF TEXAS ~
COUNTY OF KERR ~
The above and foregoing is a true and complete
transcription of my stenotype notes taken in my capacity as
County Clerk of the Commissioners Court of Kerr County,
Texas, at the time and place heretofore set forth.
DATED at Kerrville, Texas, this 4th day of February,
2005.
JANNETT PIEPER, Kerr County Clerk
BY. w
--1_---- ----------------
Kathy B nik, Deputy County Clerk
Certified Shorthand Reporter
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