1 2 3 4 5 6 7 8 KERR COUNTY COMMISSIONERS COURT 9 Workshop 10 Monday, January 30, 2012 11 9:00 a.m. 12 Commissioners' Courtroom 13 Kerr County Courthouse 14 Kerrville, Texas 15 16 17 18 19 20 21 22 23 PRESENT: PAT TINLEY, Kerr County Judge H. A. "BUSTER" BALDWIN, Commissioner Pct. 1 24 GUY R. OVERBY, Commissioner Pct. 2 JONATHAN LETZ, Commissioner Pct. 3 25 BRUCE OEHLER, Commissioner Pct. 4 2 1 I N D E X January 30, 2012 2 PAGE 3 Review/discuss Kerr County Jail Facility expansion, 4 Hill Country Youth Exhibit Center renovations, and capital items list for proposed debt issue 3 5 --- Adjourned 74 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 1 On Monday, January 30, 2012, at 9:00 a.m., a workshop 2 of the Kerr County Commissioners Court was held in the 3 Commissioners' Courtroom, Kerr County Courthouse, Kerrville, 4 Texas, and the following proceedings were had in open court: 5 P R O C E E D I N G S 6 JUDGE TINLEY: Okay. Let me call to order this 7 Kerr County Commissioners Court workshop scheduled for this 8 date and time, Monday, January 30, 2012, at 9 a.m. It is 9 that time now. The agenda item for the workshop is review 10 and discuss Kerr County jail facility expansion, Hill Country 11 Youth Exhibit Center renovations, and capital items list for 12 proposed debt issue, which is a pretty broad subject. 13 Ms. Hargis, have you -- 14 SHERIFF HIERHOLZER: She just stepped out. 15 JUDGE TINLEY: I was wondering if she had prepared 16 a revised documentation of the items that we had discussed to 17 some degree here just the other day. 18 MS. MABRY: She has. 19 JUDGE TINLEY: We're happy to have with us today 20 Mr. Bob Henderson, our financial adviser from RBC Capital, 21 who is going to give us some guidance, hopefully, and where 22 we might go. And -- 23 COMMISSIONER BALDWIN: Mr. Henderson is going to 24 provide us with some guidance? 25 JUDGE TINLEY: Yep. 1-30-12 wk 4 1 MR. HENDERSON: That's a scary thought. 2 COMMISSIONER BALDWIN: God almighty. 3 JUDGE TINLEY: Okay. 4 COMMISSIONER LETZ: Who stapled this? It was 5 stapled right at the last meeting. 6 JUDGE TINLEY: Yeah. 7 COMMISSIONER OEHLER: Too many left-handers around 8 here. 9 JUDGE TINLEY: Yeah. Okay. Item Number 1, 10 gentlemen, is -- I think that's non-negotiable, correct? 11 COMMISSIONER LETZ: Correct. 12 COMMISSIONER OVERBY: Correct. 13 COMMISSIONER OEHLER: Correct. 14 JUDGE TINLEY: Item Number 2 is non-negotiable. 15 COMMISSIONER OVERBY: Correct. 16 JUDGE TINLEY: Item Number 3, that's a contingent, 17 assuming that -- only in the event we're successful in that 18 grant application. 19 COMMISSIONER OVERBY: That's correct. But, yeah, 20 we need to have it there. 21 JUDGE TINLEY: Yeah. In the whole scheme of 22 things, it's a rather insignificant sum, anyway. 23 COMMISSIONER OVERBY: Right. 24 JUDGE TINLEY: Item Number 4, of course, is the -- 25 one of the principal focuses of our capital program. Okay. 1-30-12 wk 5 1 That leaves us with a rather extensive list beyond that. 2 Anybody have any preference where they want to start? How 3 about the beginning, right? 4 COMMISSIONER LETZ: Well, to me, I think it would 5 be helpful to kind of get a number from Bob as to what we can 6 afford, and under a couple different scenarios, because -- 7 COMMISSIONER OVERBY: That's true. 8 COMMISSIONER LETZ: -- I think that's -- you know, 9 that's going to have -- weigh heavily onto my decision. 10 JUDGE TINLEY: Might be self-limiting, huh? 11 COMMISSIONER OVERBY: Right. 12 MR. HENDERSON: Well, good morning. 13 COMMISSIONER OEHLER: Oh, yes. Good morning. 14 MR. HENDERSON: So far. You know, actually, the -- 15 the numbers that Jeannie sent me -- which I'm just going to 16 jump right to the bottom line. Right, guys? 16,057,000. 17 You know, total of all the projects after Option 1 on the 18 jail is not as completely out of reach as -- as one might 19 think. You know, my basic premise would always be, you know, 20 cut expenses wherever you can. We want to talk about, when 21 we do this transaction, as we've talked about for years, 22 making sure that whatever it is that we do in this 23 transaction doesn't preclude the County from having the 24 financial latitude to address the other things that you're 25 going to have to address 3-5 years down the road, 8-10 years 1-30-12 wk 6 1 down the road, and 15 years down the road. 2 Having said that, your debt service for the current 3 fiscal year ending in '12 is $1,434,000. Any debt that we 4 go out and issue this year is not going to have any kind of 5 tax rate impact until the next year. The good news is that 6 your debt pays off entirely in 2016, which is a very short 7 period of time. Between the years 2013 and 2014, the debt 8 service drops about $250,000, so if we were to issue debt 9 this year, your first payment would be in the fiscal year 10 '13. Fiscal year '14, your debt service payment on your 11 existing debt's going to fall $250,000. A simple calculation 12 to get to where -- what Commissioner Letz was asking is you 13 take that $250,000 and you divide that by current interest 14 rates, which, with this County's bond ratings, would -- we 15 could be issuing debt for probably no more than 4 percent, 16 'cause it's a great time to be issuing debt. We're at the 17 lowest tax-exempt bond rates since 1967. $250,000, about 4 18 percent, is $10 million. So, we could, using capitalized 19 interest to get us past the 2013 fiscal year, we could go out 20 and issue $10 million and not have your debt service go up. 21 Now, there are a lot of other variables that we've 22 always talked about here. We've got a significant over-65 23 freeze on your tax values, and the unusual demographics of 24 this county are such that that bite gets bigger and bigger 25 every year. So, instead of being able to project growth in 1-30-12 wk 7 1 the net taxable value, we have to project growth offset by 2 the impact of the over-65 freeze, which may hold stable if 3 we're lucky, or, you know, at the very least, we want it to 4 mitigate, you know, the decline. We want growth in our 5 economic base to mitigate the decline in our tax base that's 6 a result of over-65 freeze. But, again, to quick line, we 7 could do $10 million relatively easily. 8 COMMISSIONER OEHLER: But for how long? 9 MR. HENDERSON: Sir? 10 COMMISSIONER OEHLER: For how long? 11 MR. HENDERSON: Oh, I'm talking about a 20-year 12 fixed rate transaction. 13 COMMISSIONER OEHLER: You're talking about a 14 20-year bond. 15 MR. HENDERSON: Yes, 20-year debt. Now, as we get 16 into the -- some of the details there, things like, for 17 example, the million dollars -- one of the things that I like 18 to look at -- and I want to be careful, 'cause Rusty's at my 19 back. 20 SHERIFF HIERHOLZER: Thank you. 21 MR. HENDERSON: But, you know, one of the items 22 here is a million dollars for -- for police units, for safety 23 units. And the issue with that is -- is that we've got to 24 look at the average useful life of those items. You know, 25 we're talking about spending -- buying four units every year 1-30-12 wk 8 1 for the next five years. We got to think about how long are 2 those units going to last? 'Cause we don't want to finance 3 those things over 20 years, and have to be replacing them in 4 seven or eight. 5 SHERIFF HIERHOLZER: I agree. 6 MR. HENDERSON: So, generally speaking, we're 7 talking about 20 years, but we do have to massage that a 8 little bit to make sure we're amortizing off the shorter 9 useful life items consistent with what their full useful life 10 is. But we could get to $10 million relatively easily. We 11 could get to -- to 13 or 14 million dollars without even 12 necessarily having to do extra cartwheels. 16 million 13 dollars, we're pressing in. If there's ways to find some 14 opportunities to cut, we ought to. But one of the things 15 that I want to encourage you, again and I'm being redundant 16 here, is we've got the show barn, or pieces of the show barn 17 in here. We've got a jail in here. We've got five years 18 worth of safety units in here. But let's make sure we're 19 giving thought to what you're going to need three to five 20 years down the road and eight to ten years down the road, 21 'cause I don't want anybody coming back and saying, "Well 22 gosh, if the Court and Henderson had thought back in 2012 23 about this, you know, it wouldn't be such a burden." 24 COMMISSIONER LETZ: Bob, what would the option -- I 25 think Commissioner Oehler and I -- Commissioner Oehler 1-30-12 wk 9 1 brought up to me, what about splitting it into a five-year 2 and another one? Basically, split this into two issues 3 because of that five-year useful life, and kind of give us a 4 little bit of protection. 5 MR. HENDERSON: I think we can. And one of the 6 things that this sheet did not anticipate or did not provide 7 information on is -- is timing. We had talked, Sheriff, 8 about maybe not needing this jail until, like, 2014. And 9 then we had talked about -- about, you know, a temporary 10 solution that might even stretch it beyond that. The single 11 biggest number here is the jail, and if we could put the jail 12 off -- and I don't know what your current timing needs, but 13 if we were on the same 2014 first impact of 2015 schedule 14 that we were on a year and a half ago, that takes a lot of 15 the pressure off. So -- so we do need to talk about when you 16 actually need these units so we can do exactly that, 17 Commissioner, break this thing into multiple transactions. 18 COMMISSIONER OEHLER: It seems to me that the jail 19 issue should be a public vote, and to sell bonds for that 20 separately, not trying to finance it through what -- what 21 we're talking about today. 22 MR. HENDERSON: That's a decision entirely up to 23 the Commissioners Court. I would say -- this is my standard 24 response to that. There are certain obligations that the 25 county government is -- is mandated to undertake by the state 1-30-12 wk 10 1 Constitution, and the general rule seems to be that this is a 2 mandated function of the county; that you, as elected 3 representatives, could go out and do what you have to do to 4 meet those mandated obligations. Those things include 5 providing courthouses, providing jails, providing for your 6 sheriff's department, your health department. These are 7 mandated things that you have to do. There are other things 8 that are not mandated; senior citizens' facilities, airports, 9 parks, libraries. To some extent, you know, roads and 10 bridges. I mean, they're -- you got a gray line. You've got 11 to have bridges that are safe, right. Sometimes, you know, 12 the useful life can be a discussion. So, as a result, you 13 know, I think what you see most counties doing is putting to 14 the public vote items that -- that are more discretionary in 15 nature; you know, again, parks and civic centers and 16 libraries and those sorts of things. 17 The problem that you have when you vote on a 18 mandated function such as a jail is, well, then, what do you 19 do if the vote fails? Because you're still mandated by the 20 -- by the Constitution to house prisoners. And you find 21 yourself going, "Well, gosh, if the voters said no, we still 22 have to house prisoners. Now we just are obligated by -- by 23 restrictions of the vote to house those prisoners out of 24 county at potentially greater cost." It just depends on, you 25 know, what the capacity is of our neighboring facilities. 1-30-12 wk 11 1 So, it's up to the Commissioners Court. My personal 2 recommendation would be that the Commissioners Court maintain 3 the latitude to make the most economical decision they can 4 make. If it's most economical to build a jail rather than 5 ship prisoners out of county, I would say build the jail 6 without putting it to a vote, because if you put it to a vote 7 and it fails, you're -- you're effectively hamstringing 8 yourself to do the less economical choice. But, again, 9 that's just up to the Commissioners Court. 10 COMMISSIONER BALDWIN: Yeah. Of course, we're 11 talking about a 96-bed jail here, when there's -- there's 12 another option to the program of $1 million, as opposed to 13 the eight. 14 MR. HENDERSON: And, again, those are things that I 15 leave the Court and -- and the Sheriff to decide. Obviously, 16 from a finance perspective, the less money we spend and the 17 longer we take to spend it, you know, the better off that we 18 are. Now, one -- one question that often comes up in these 19 conversations is a combination, Buster, of what you're saying 20 and what Bruce is saying when he asked me how long we're 21 going out. Well, you know, at 4 percent, we're talking 22 about, you know, 20-year debt. Right now, again, because 23 interest rates are so low, I'm -- I just sold last Thursday 24 $158 million worth of bonds for Lake Travis ISD. And -- 25 COMMISSIONER BALDWIN: For new football helmets or 1-30-12 wk 12 1 something? 2 MR. HENDERSON: No. No, new high schools, new 3 elementary -- they're still growing. But the discussion at 4 that time was, "How many years do we go out on this debt?" 5 Well, traditionally you go out 20 years, maybe 25 years. The 6 yield curve is so flat once you get beyond about 17 years 7 that it really doesn't cost you much additional interest to 8 go out longer. We ended up going out 30 years on the high 9 school and the other facilities, and the useful life of those 10 items, certainly, you know, exceed 30 years. The jail is a 11 different thing. When you're looking at a jail, it's not so 12 much how long the bricks and mortar are going to stand there, 13 because they're going to stand there for 30, 40, 50 years. 14 The question becomes, "What's the capacity of that jail?" We 15 don't want to finance over a 20-year period of time a 48-bed 16 jail if, in fact, 48 beds aren't going to last us more than 17 eight or ten years. 18 So -- so, when we get ready to size the jail, what 19 we're talking about, 48 beds or 96 beds or, you know, 130, 20 whatever the number is, I think we want to think in terms of 21 building enough beds that it can serve the capacity -- the 22 projected capacity of the county through the time that the 23 debt is paid off. Now, one of the things that we've -- I've 24 been doing this for 29 years, and one of the things that we 25 always look at when we're looking at jails is, okay, how old 1-30-12 wk 13 1 are the jails in the seven- or eight-county area? What's 2 your opportunity to bring in prisoners from -- from other 3 communities to -- to help you with the debt service until 4 your local prisoner population grows to the point that, you 5 know, you can't house -- can't house other county prisoners 6 because you've got your own prisoners to deal with? 7 COMMISSIONER LETZ: Bob, can you tell us about what 8 would happen if we did a five, 5.5 million issue, you know, 9 for five years? 10 MR. HENDERSON: For five years? 11 COMMISSIONER LETZ: Yeah. Is that possible? 12 MR. HENDERSON: I don't think so. 13 COMMISSIONER LETZ: Or seven -- how about for seven 14 years? 15 MR. HENDERSON: We -- the issue is that you've got 16 four more years of fairly substantial debt, 'cause your 17 existing debt doesn't pay off until 2016. So, you've got 18 basically about three or four years of $250,000 a year worth 19 of capacity without raising your taxes. And by going five 20 years, you're only dropping a million and a half at a time. 21 So, to do five and a half million over five years without a 22 tax rate increase is not going to happen. We might squeeze 23 it into seven years. Probably it would be tough to get it 24 done in seven years. But -- 25 COMMISSIONER LETZ: Can you go, like, eight years? 1-30-12 wk 14 1 I mean, we always talk about five, seven, ten. Is there -- 2 MR. HENDERSON: Well, here's the answer to that 3 question. I think Jeannie may have addressed this last week. 4 There are two different financing vehicles under the 5 Constitution that the County can -- can do without going to a 6 public vote. One is a tax note, and the County has done that 7 in the past. And with a tax note transaction, the limit is 8 seven years. Now, when you do a tax note transaction, 9 there's no notice of intent to issue. There's no -- no 10 public hearing requirements. There's no petition 11 opportunities and those sorts of things. If you go beyond 12 seven years, you're talking about a certificate of 13 obligation. And under the Certificate of Obligation Act of 14 '79, as amended, if you issue certificates of obligation, the 15 Commissioners Court has to post notice of intent on a 72-hour 16 agenda, pass a notice of intent, have a notice of intent 17 published in the local newspaper twice, the first publication 18 not being less than 30 days prior to the date that you come 19 back a second time and authorize the issuance of the 20 certificates. 21 COMMISSIONER OVERBY: Bob, is the tax note -- 22 anticipation note, the seven years max on that, is it also 23 limited to not to exceed $5 million? 24 MR. HENDERSON: No. 25 COMMISSIONER OVERBY: Is there a limit? It can go 1-30-12 wk 15 1 over 5 million, then? 2 MR. HENDERSON: There's no limit on the dollar 3 amount of the tax notes that you can issue. The $5 million 4 number, I'm guessing you probably are thinking about 5 arbitrage requirements, and Jeannie and I have talked about 6 that. 7 COMMISSIONER OVERBY: Okay. 8 MR. HENDERSON: And that's a federal tax law 9 issue -- here we go, Judge, practicing law without a license. 10 That's a federal tax law issue. If you issue more than $5 11 million in a calendar year, you're subject to arbitrage, 12 rebate calculations and filings. In this environment, you're 13 not going to earn any positive arbitrage. And let me, for 14 the audience, define what arbitrage is. Say if we go out and 15 issue debt today on a seven-year basis, we're probably not 16 paying more than 3 percent, maybe even 2 and a half percent 17 on a seven-year note. But if we take that $5 million -- to 18 use Commissioner Letz' number, if we take $5 million, and we 19 issue it at 3 and a half percent, or 2 and a half percent, 20 and we stick it in your depository bank, and we're earning 4 21 percent until such time as you spend the money on the items 22 that you're buying, whether it's police units or 23 what-have-you, that's positive arbitrage; you're earning more 24 money on the bonds than you're paying on the bonds. And 25 under the Tax Reform Act of '86, you have to calculate what 1-30-12 wk 16 1 the profit is and rebate it to the federal government. 2 Right now, there is no profit. Right now, 3 Jeannie's probably lucky to get three or four-tenths of one 4 percent. Probably only getting two-tenths of one percent on 5 your vested debt. So, even if we issue debt at 1 percent, 6 you're not making any positive arbitrage that has to be 7 refunded to the federal government. However, if you issue 8 more than $5 million in a calendar year, you still have to 9 make those calculations; you still have to hire an auditing 10 firm, an accountant to make those calculations, and you have 11 to proactively file those calculations with the federal 12 government to prove to them that you don't owe them money. 13 It's an administrative pain, and it will cost you a couple of 14 thousand dollars a year in extra accounting fees if we exceed 15 five million. But there's no limit. It's just -- you 16 either -- if you do less than five million, you don't have to 17 worry about it. If you do more than five million, you've got 18 to make those calculations and file them with the federal 19 government. 20 MS. HARGIS: But the County's previous notes that 21 we've done have all been under five million. 22 MR. HENDERSON: That's correct. 23 COMMISSIONER OVERBY: Thank you. 24 COMMISSIONER LETZ: Bob, if we went, say, five, 5.5 25 for seven years, then we would -- probably would have some 1-30-12 wk 17 1 latitude, then, in 2015, 2014 to look at doing another issue 2 for some of these other big-ticket items, and go out for 20 3 years or something like that. Because one of the things we 4 haven't talked about on the East Kerr County project is 5 there's a bunch of -- that could be another big bunch of 6 money -- 7 COMMISSIONER OVERBY: That's right. 8 COMMISSIONER LETZ: -- down the road. And the 9 jail. You know, if some of these we could push off three or 10 four years, and then do it for 20 years, to me, would be 11 preferable to doing it all right now. 12 MR. HENDERSON: It would be. The only -- the 13 only -- just to play devil's advocate, the only argument 14 against that is that right now, interest rates are very low, 15 and we don't know where interest rates are going to be three 16 or four, five years from now, so you have some interest rate 17 risk. One of the things that Judge Tinley and I talked about 18 with the Jeannie is, if you adopt your approach like that, 19 making sure that the $5 million transaction that we do now 20 is -- is callable, so that if we have to come back before we 21 pay off that five- or seven-year debt, that we can -- we 22 could do some refinancing around that. If we make that debt 23 callable, it's going to increase our interest rate a little 24 bit, you know, for the investors to give us that latitude, 25 but it won't be a tremendous amount. It will be the 1-30-12 wk 18 1 difference between 2.75 on interest rate, maybe 3 percent. 2 You know, cost us maybe a quarter of a point to have that 3 latitude. 4 COMMISSIONER LETZ: How I came up with five -- five 5 million is not just a number I pulled out -- if you take 6 the first four items, -- 7 COMMISSIONER OVERBY: Right. 8 COMMISSIONER LETZ: -- that's 2.8 million, and 9 basically you take half of the rest of it. I mean -- 10 COMMISSIONER OEHLER: That's what I'm doing right 11 now. 12 COMMISSIONER LETZ: It comes out to about five -- 13 five million, 5.3. 14 COMMISSIONER OEHLER: I'm looking at less than 15 that. I'm looking at three million, six; maybe four tops. 16 COMMISSIONER LETZ: I was doing half of the rest. 17 2.8 plus half of the balance of the list. Anyway -- 18 COMMISSIONER OEHLER: I was trying to get it down 19 where we could do it in five to seven years easily, with -- 20 you know, there are -- we've been buying a lot of stuff 21 pretty frequently, like cars and things. And I realize 22 they -- but we still have this figment of the imagination 23 that 100,000 miles on a vehicle is a worn-out vehicle. 24 That's not the case. 25 COMMISSIONER OVERBY: That's right. 1-30-12 wk 19 1 COMMISSIONER OEHLER: I'm driving one that's got a 2 lot more than that on it; runs just fine. Good maintenance, 3 and -- 4 MR. HENDERSON: I think we could do five and a half 5 in seven years. 6 COMMISSIONER OEHLER: Five and a half in seven 7 years? 8 MR. HENDERSON: In seven years. Five years is a 9 problem, because your old debt doesn't pay off till 2016. 10 But if we went out five years -- I mean seven years, to -- to 11 20 -- 12 COMMISSIONER OVERBY: '19. 13 MR. HENDERSON: -- 2018, 2019, I think we can do 14 five and a half. 15 COMMISSIONER OEHLER: Five and a half, you're 16 saying? 17 MR. HENDERSON: Plus or minus. Probably plus. 18 Six, maybe, because I think we can -- I think just in the 19 last three years, I think we can do 3.6, 4 million. So, if 20 we add, you know, a quarter of a million a year, let's say 21 five, five and a half million in seven years. Jeannie's 22 going to want much tighter calculations than that. This is 23 back-of-the-napkin. 24 COMMISSIONER OVERBY: Yeah. 25 JUDGE TINLEY: Kind of like an oil deal, huh? 1-30-12 wk 20 1 MR. HENDERSON: I wish I knew. 2 COMMISSIONER OEHLER: Okay. Well, here's the next 3 question, then. If we can do that in five -- in seven years, 4 how long would it be between now and the end of that seven 5 years that there could be a small issue made? Or would that 6 be possible? 7 MR. HENDERSON: Well, that's going to depend on how 8 much growth we have in terms of new tax base being added to 9 the rolls, versus how much tax base we lose because of the 10 over-65 freeze. Right now, it'll probably take us -- we'd 11 probably have to max out, you know, our -- if everything 12 stayed stable, we'd max -- probably be maxing out between 13 five and a half million in seven years, which means we 14 probably wouldn't have room to do another transaction till we 15 got closer to 2018. 16 COMMISSIONER LETZ: Till we got to 2016. 17 COMMISSIONER OEHLER: Till you get to 2016. There 18 would be -- there would be a possibility of doing another one 19 of these in three years? 20 MR. HENDERSON: Oh, yes, sir. 21 COMMISSIONER OEHLER: That's what I was getting at. 22 MR. HENDERSON: Yes, sir. By dropping it in on the 23 back side. 24 COMMISSIONER OEHLER: Dropping it on the back side. 25 MR. HENDERSON: Sheriff, how long do you think it 1-30-12 wk 21 1 will be before you need major bed space? 2 SHERIFF HIERHOLZER: Well, the -- and just real 3 quick, the architect did come Friday. We sat down and met 4 for most of Friday up until noon. He took all the 5 statistics, all the figures, everything with him over the 6 last 20 years, what we've had. And he said he could be here 7 on the 13th to come up with different proposals, and that's 8 going to be the best answer to that. Now, we're going to 9 have to have more bed space within seven years, whether it's 10 housing out of county -- Gillespie County spent right at 1.2 11 million in the last three-year period, okay? Or whether it's 12 trying to get by with a -- with a 48-bed addition to the 13 back, and then going on from there. That may help for four 14 or five years. A lot of it's going to depend on the courts, 15 okay? And a lot of it's going to depend on -- you know, 16 we've got a lot of outstanding warrants that -- that we just 17 don't do. 18 And it's kind of hard -- if you look at our 19 averages right now, and staying within the 20 -- the 80 20 percent and trying to keep able to classify, in 2011 -- and 21 the prior years to that, we were right at the same. I 22 shouldn't have over 26 females to be able to classify 23 properly. Average was 24. We were as high as 31 at times; 24 we had to switch around and do everything in the world. 25 We're at 27, 28 this morning. The males shouldn't be over 1-30-12 wk 22 1 127, and the average for the last several years has been 124. 2 We're right at three, and that's all I -- I'm -- you know, I 3 can't help -- there's nothing else I can do with that. When 4 I looked at, well, can we expand the outside work program 5 more? Unfortunately, by state requirements on who qualifies 6 and who doesn't and which ones I can use outside to be able 7 to give those more -- more credit for jail time to serve it, 8 I only had six last week that would even qualify to be able 9 to work outside. 10 COMMISSIONER OEHLER: Rusty, the law that sets all 11 those requirements and who qualifies or who does what, is 12 that -- is that regulated by the federal government or the 13 state? 14 SHERIFF HIERHOLZER: State. 15 COMMISSIONER OEHLER: So we could get -- so it 16 seems to me like there needs to be some new law at the state 17 level to get rid of some of these regulations and 18 requirements. 19 SHERIFF HIERHOLZER: Actually, what it is, is the 20 State Commission on Jail Standards, okay. One of the deals 21 for working outside trustees is they must be minimum 22 security, all right? The other requirement -- and the deal 23 is, we'll never get it changed -- is if you want to force an 24 inmate to work, like on the chain gangs -- there's nothing 25 illegal about chain gangs in Texas, but if you want to force 1-30-12 wk 23 1 them to work, they must be convicted, okay? You can't force 2 a pretrial detainee to work. All you can force him to do is 3 keep his cell clean. And so you can -- he can volunteer to 4 work, but you can't force him to. And those I don't think 5 you'll ever change. That's just part of the -- the, you 6 know, "presumed innocent until proven guilty" type deal. And 7 what you normally end up with, Bruce, is a lot of the ones 8 that are in there on misdemeanor charges are also on felony 9 charges. Just 'cause they're in there on a misdemeanor 10 doesn't mean they'll classify out as a minimum, 'cause they 11 may have prior felony convictions in the past. It's just -- 12 it's a catch-22. 13 COMMISSIONER OEHLER: Seems to me like we need to 14 work on getting some laws changed, because what's happened is 15 Jail Commission is forcing counties to build jails when they 16 still have 20 percent capacity, and that ain't right. 17 SHERIFF HIERHOLZER: Well, that's -- it is and it 18 isn't. I agree, okay? You know, I don't like -- 153 beds 19 should be about where I'm at. It's a standard. I can go 20 above the 153 as long as I can classify these people 21 appropriately, and classification is very important. You 22 don't want to put a 17-year-old first-time offender in with a 23 capital murder suspect. So, you do have requirements you're 24 going to have to meet, just because of society standards. I 25 can't change that. You can't change that. 1-30-12 wk 24 1 COMMISSIONER OEHLER: Yeah. 2 SHERIFF HIERHOLZER: And that's where we are. So, 3 I don't know how much of the laws you're ever going to get to 4 change. 5 COMMISSIONER OEHLER: Maybe not. It just seems a 6 little ridiculous and very expensive to take care of some of 7 these people that -- that don't need that good of care, in my 8 opinion. 9 SHERIFF HIERHOLZER: Well, I agree. But the other 10 thing is standards. The other thing is, if you look at 11 Sheriff Arpaio in Arizona, okay, that's a big push; put them 12 in tents, do this. The issue you have with him, okay, since 13 he took office in 1993, the county itself -- not the 14 insurance company, but the county -- has spent over 15 $50 million in lawsuit deductibles and settlements on their 16 part. That's not counting what the insurance... Our 17 deductible for lawsuits -- and a lot of it comes from 18 overcrowding or, you know, what they consider cruel and 19 unusual; you know, William Wayne Justice and all that kind of 20 stuff. But our deductible right now with the insurance 21 company is 10,000 per incident when we get sued. Sheriff 22 Arpaio's deductible in Arizona wanting to do the same thing 23 has gone to 5 million per incident. This county will pay a 24 whole lot more if you don't address it in those issues than 25 we will in addressing it the -- 1-30-12 wk 25 1 COMMISSIONER OEHLER: I'm not suggesting that, 2 because I know from what you're telling me it's not going to 3 work. And, you know, that's one side of the story a lot of 4 people don't hear -- 5 SHERIFF HIERHOLZER: Right. 6 COMMISSIONER OEHLER: -- about Arizona. But, you 7 know, I did suggest we might buy a bus, load some of them up, 8 and ship them out there. 9 SHERIFF HIERHOLZER: Wouldn't bother me. But, you 10 know, the whole -- and the thing is, we can house 11 out-of-county, all right? But the issue I have with that is 12 the same thing Fredericksburg's been doing. They paid over 13 1.2 million in the last three years. Now they're looking at 14 -- at building a jail. So, that 1.2 million just got thrown 15 out to another county, and that's our tax dollars going 16 somewhere else. That -- that doesn't help us with what's 17 going to be inevitable. So, you have those. I mean, I'll do 18 whatever this Court decides they want to do. The 48-bed 19 one -- and I'm not sure the figures -- it's going to depend 20 on what -- what we're looking at, and we really need to wait 21 and hear from the architect and what his true proposals are. 22 That could make it for four or five years; I don't doubt 23 that. Would it make it for 20? Not in my opinion. But it's 24 just -- it's -- we need to listen to what Mr. Gondeck comes 25 back with on options. They've done this more than we have. 1-30-12 wk 26 1 COMMISSIONER BALDWIN: I want to bring up a point 2 that I've been hearing a little bit about, people talking 3 about out on the street here of the issue of the tent city 4 like the guy does in Arizona, which I'm a big fan of. I 5 think -- I'd give anything in the world if we could. But if 6 you remember, this Court asked the State that question, you 7 know, "Can we have a tent city?" And I think my memory is 8 correct; they said something like, "Yes, you can have a tent 9 city," but you still have to cool it and air-condition it and 10 everything else, just like a brick-and-mortar building. And 11 you can only have it for three years; then you're going to 12 have to go back and build a brick-and-mortar building anyway. 13 SHERIFF HIERHOLZER: That's correct. If you look 14 at the jail standards, they call it temporary housing for 15 tents, but they have to have solid floor, running water, heat 16 and electricity and coolness and everything else along with 17 it, okay. So, you can save some money, and it is temporary; 18 they say three years use. It's, again, kind of like housing 19 out of county. What are you going to do? 20 COMMISSIONER BALDWIN: Till you go back and build a 21 brick-and-mortar building at that day's cost instead of doing 22 it now. 23 SHERIFF HIERHOLZER: Yeah. See, the problem is, if 24 you were -- when we -- and I'm not knocking this Court, but 25 when we first looked at this in 2005 -- and we've been able 1-30-12 wk 27 1 to survey; 96 beds in 2005 was estimated by our auditor then, 2 and the jail people, the architects back then, at $4.7 3 million. 96 beds today is estimated at $8 million. 4 COMMISSIONER BALDWIN: I think you're knocking this 5 Court. 6 SHERIFF HIERHOLZER: No. The whole issue -- 7 COMMISSIONER BALDWIN: It's the City's fault. 8 SHERIFF HIERHOLZER: And what I tried to get from 9 Mr. Gondeck is that 8 million, is that building a jail from 10 the ground up? We're not looking at building a jail from the 11 ground up. We have plenty of land out there. We have plenty 12 of space. This Court thought a long time ago, when we built 13 it, it's built to be expanded out the back. It's built so 14 you can expand it and limit the -- the staff that you have to 15 hire to go along with it. And I'm not sure that figure -- 16 we'll have to wait for him to come up and give us, you know, 17 what would really be an estimated figure. 18 COMMISSIONER BALDWIN: I'm concerned why Bob backed 19 all the way to the door. 20 COMMISSIONER OVERBY: Yeah. 21 MR. HENDERSON: I didn't want to block the view of 22 all these erstwhile citizens. 23 COMMISSIONER OVERBY: Bob, I've got a question for 24 you. Commissioner Letz -- Commissioner Letz brought up a 25 question that -- that focused in on the East Kerr County 1-30-12 wk 28 1 project. That's something that we're going to have 2 substantial here in a few years. We are, again, using the 3 Clean Water State Revolving Fund application, and that's a 4 70/30 grant that we're going to be taking advantage of. And, 5 again, number two on this list here is about a half a million 6 dollars that we're doing to do the design and engineering and 7 helping with some of the acquisition in that next phase of 8 this project. And with the application in, they'll be making 9 a decision on that at the end of February, and then that 10 phase, once it starts going forward, is looking at about 16 11 to 18 months before it's completed. We're talking about 12 potentially -- and, again, it's a timeline that we've 13 potentially started talking about requesting for construction 14 funding end of next year. If I'm not mistaken, 15 November-December is what we were targeting for next year -- 16 or this year. Excuse me, this year. 17 And so with that, the total project's $17 million. 18 The potential part, again, some of these funds and some of 19 these grants, we have received money back. We've done a good 20 job with that, so we're talking about $5.1 million on 30 21 percent of 17 million. We're putting up our first component 22 of this -- first 10 percent of this project, this half a 23 million, so that still leaves us with about a four and a half 24 million dollar possibility that we're going -- not 25 possibility; part that we're going to have to participate in 1-30-12 wk 29 1 on this grant. So, my question to you is, we do -- 2 design/engineering starts this year. Eighteen months, we're 3 talking probably -- if we get construction funding, we're 4 looking at '014. How would you -- I mean, we're talking 5 about doing some other additional debt in a three-year 6 period. Can we handle that? And how -- how would that be 7 structured? What would you recommend? 8 MR. HENDERSON: Well, the Water Development Board 9 is going to -- I don't want to say insist, but they're going 10 to strongly, strongly, strongly push for a certificate of 11 obligation issue, something with a tax security behind it. 12 However, we could do a combination tax and revenue 13 certificate of obligation. And -- and what we have to do to 14 understand what the impact of this $4.6 million is, is 15 understanding how many connections we're going to have out 16 there, what kind of revenues are going to be generated from 17 those connections. It should be self-supporting. Part of 18 the calculations that the State goes through when they're 19 trying to determine what that grant-to-loan ratio is, is what 20 we call a capital -- capital cost component. And what it's 21 supposed to do -- doesn't always work out that way, so I'm 22 hesitating -- or what do you call it? -- hedging my comments 23 here. But the way it's supposed to work is -- is that when 24 they assign the 70/30 grant-to-loan ratio, we should be able 25 to go out to those users, charge no more than the average 1-30-12 wk 30 1 of -- of peer group people that -- how much they're paying in 2 Comfort and how much they're paying in Fredericksburg and how 3 much they're paying in the city of Kerrville, and charge 4 enough money to meet the debt service on that $4.6 million. 5 So, it should, and probably will, have a -- a tax security 6 behind it, but it should not impact your ability to issue 7 tax-secured debt. 8 COMMISSIONER OVERBY: Okay. 9 MR. HENDERSON: But we do need to run those numbers 10 and confirm all of that. 11 COMMISSIONER LETZ: And there's also the 12 possibility on that, just for the audience, of we're still 13 looking at some EDAP funding, or funding that would increase 14 it to a 90/10. 15 COMMISSIONER OVERBY: Right. 16 COMMISSIONER LETZ: Which -- 17 COMMISSIONER OVERBY: Other funding. 18 COMMISSIONER LETZ: -- would greatly help. 19 MR. HENDERSON: Yes. And we've done -- I managed 20 to get 100 percent EDAP for the town of Combes down in the 21 valley. I did it for Hudspeth County too, but they have 22 since changed the rules to make 100 percent grants -- 23 COMMISSIONER LETZ: Pretty hard. 24 MR. HENDERSON: -- pretty hard. 25 COMMISSIONER OVERBY: Yeah, that would be great. 1-30-12 wk 31 1 Okay, thank you. 2 MR. HENDERSON: Mm-hmm. 3 JUDGE TINLEY: Bob, on the revenue financing on the 4 wastewater issue, wouldn't it be normal to expect, at least 5 on the front end, the first few years, that because of the 6 attrition and getting the sign-ups and so forth, getting 7 people online, that revenue is probably going to fall short 8 for the -- for the initial, oh, probably three -- three years 9 anyway? 10 MR. HENDERSON: I would think between the 11 construction period and the sign-up period, it probably would 12 be three years. But that -- that won't be a problem. The 13 way that we work these out with the Water Development Board 14 and the Texas Attorney General's office is that we can defer 15 principal during that initial three-year period to offset the 16 -- the anticipated lack of revenues. So, we'll structure it 17 like we would any revenue bond issue by a city, for example. 18 JUDGE TINLEY: Based on the anticipated revenue on 19 a realistic basis? 20 MR. HENDERSON: Yes. 21 JUDGE TINLEY: Okay. Okay, any more folks want to 22 take a shot at Bob here? 23 COMMISSIONER OEHLER: Well -- 24 MR. HENDERSON: Don't offer twice, Judge. 25 JUDGE TINLEY: Well, I see you're a glutton for 1-30-12 wk 32 1 punishment. You're going to have a seat there and just get 2 ready for some more, it appears. 3 MR. HENDERSON: Are you ready to excuse me? 4 JUDGE TINLEY: No, I didn't say that. Didn't say 5 that. But I noticed you didn't ask; you just sat down. 6 That's wonderful. 7 MR. HENDERSON: I enjoy your company. 8 JUDGE TINLEY: Thank you, sir. We appreciate you. 9 COMMISSIONER OEHLER: It looks to me like we have 10 stuff that we absolutely intend to do without any question, 11 in my opinion, and we have about 3.6 million. And then you 12 get into the other stuff, like the car issue with the 13 Sheriff, and you get into -- I mean, this even includes a 14 little bit for that, but not much. And some for Road and 15 Bridge, but not much. Not near what they had asked for. 16 COMMISSIONER OVERBY: Bruce, I got -- where is your 17 3.6? I got 2.825 on the first page. 18 COMMISSIONER OEHLER: I got 2.825, and then I have 19 -- I gave -- what I did was I put down 200,000 for Road and 20 Bridge and 400,000 for Sheriff's Department. And I nixed the 21 2.5 for digital tower -- or 1.5 actually, I'm sorry. And 22 then I added in the doors for the Juvenile Detention. 23 COMMISSIONER OVERBY: Yeah. 24 COMMISSIONER OEHLER: So, all that totals up to 722 25 on top of the 2.825. 1-30-12 wk 33 1 COMMISSIONER OVERBY: Okay. So, you do the 121 on 2 the Juvenile Detention? 3 COMMISSIONER OEHLER: Right. 4 COMMISSIONER OVERBY: All of it? Good. 5 COMMISSIONER OEHLER: Yeah, 122, because we're told 6 that's got to happen for security reasons. 7 COMMISSIONER OVERBY: Okay. 8 COMMISSIONER OEHLER: And then 35 -- 9 COMMISSIONER BALDWIN: Bruce, what was the figure 10 you added to the 2.285? 11 COMMISSIONER OEHLER: 2.825. It was 722. 12 COMMISSIONER OVERBY: Yeah. 13 COMMISSIONER OEHLER: And then 35 to resurface the 14 parking lot. That gets me to 3.6, approximately, I believe. 15 Close to 3.6. 16 COMMISSIONER LETZ: I did it, you know, a little 17 different, because I think that we need to go -- if we go 18 that lean, it's going to make the next one worse. 19 COMMISSIONER OEHLER: Yeah. Well, that's just what 20 I -- that's just what I was -- I threw it out there for a 21 starting point. I think that's the low -- I mean, that's the 22 low end. 23 COMMISSIONER LETZ: Right. 24 COMMISSIONER OEHLER: Is what I'm trying to say. 25 COMMISSIONER BALDWIN: Letz, you're referring to 1-30-12 wk 34 1 the cars? 2 COMMISSIONER LETZ: Well, no. What I did was 3 500,000 for Road and Bridge. I have a million for the 4 Sheriff, and that's kind of -- the Sheriff, depends on if you 5 can phase in the conversion. I.T., 500,000. And then 6 200,000 for the others, which -- 7 COMMISSIONER OEHLER: So that gets us up to five 8 point -- 9 COMMISSIONER LETZ: It's five point -- just over 10 five million. 11 SHERIFF HIERHOLZER: Bruce, the only thing I'd like 12 to say on the cars -- and we can go back to leasing the cars. 13 But when you're saying 100,000, this isn't based on 100,000 14 miles. This is based on between 120 and 150, and all of 15 these are patrol vehicles. Now, I don't -- you know, if we 16 go back to leasing cars each year, and where you get to where 17 you pay them off for a dollar, and take the whole million out 18 of there, that's fine. You know, but we're going to have to 19 be replacing those cars at about four years, whatever. It 20 comes down to just 'cause of mileage and 'cause they are 21 patrol vehicles. 22 COMMISSIONER OEHLER: Well, the other thing is, 23 you've gone up to $50,000 a vehicle instead of where it once 24 was not very long ago, at a whole lot less than that. 25 SHERIFF HIERHOLZER: I can't help the price of 1-30-12 wk 35 1 equipment, these cars and the radios. We're using extra 2 ones, last year's radios and that this year. I can't help 3 the cost. 4 COMMISSIONER OVERBY: Commissioner, what do you 5 have on Information Technology? What do you have? 6 COMMISSIONER LETZ: 500,000. 7 COMMISSIONER OVERBY: Half a million? 8 COMMISSIONER LETZ: And the -- the Sheriff, you 9 know, I would put in 500,000 for cars for him for this -- 10 this window. And then 500,000 for the -- to start the 11 upgrade on the towers. I don't know if it makes sense to do 12 that in a phase. 13 SHERIFF HIERHOLZER: I don't know -- I'd have to 14 get -- we'd have to check and see if you can do partial 15 upgrades towards, you know, the tower completion, or if, 16 because of the way it's done, it has to be done. The 500,000 17 for cars is fine if you want to do that. I don't -- there 18 may be an issue, you know, if we -- if we started back on 19 what we used to do, the, you know, payments for three years; 20 the last year it's a dollar, you know, and you make your 21 payments, and then you're kind of rotating them off. If you 22 stay on those certain payments, it's not near as -- as much 23 of a bite at one time. 24 COMMISSIONER LETZ: Well, this is -- 25 SHERIFF HIERHOLZER: But I don't know if this 1-30-12 wk 36 1 funding can be used to help make those capital payments on 2 those cars at one time. 3 COMMISSIONER LETZ: Well, but the 500,000 is a 4 three-year -- three- to four-year, as opposed to a five-year. 5 A shorter time. 6 SHERIFF HIERHOLZER: That would work. And if we 7 can reuse equipment, we'll reuse equipment. I'm not saying 8 that it couldn't come in a little bit lower than that, but -- 9 and the cost of equipment right now, that's what it's going 10 to be. 11 COMMISSIONER OEHLER: When is the absolute deadline 12 to go digital on the towers? 13 SHERIFF HIERHOLZER: There isn't. 14 COMMISSIONER OEHLER: There isn't? 15 SHERIFF HIERHOLZER: They backed off. 16 COMMISSIONER OEHLER: We can still operate for a 17 while on what we have? 18 SHERIFF HIERHOLZER: That's what we were saying. 19 COMMISSIONER OVERBY: Till 2015, isn't it? 20 SHERIFF HIERHOLZER: No. Originally it was 2015, 21 everybody had to be digital. And then the states finally 22 backed off on that. What they required was by the end of 23 this year -- end of last year, we all were required to go 24 narrow band. We have done that. That was the expense y'all 25 had. 1-30-12 wk 37 1 COMMISSIONER OEHLER: I thought we did that. 2 SHERIFF HIERHOLZER: The issue you have now, okay, 3 and over the next five years is we have a 12-year-old system 4 that is outdated; you're having a hard time even getting 5 parts for it, and I don't know that it will or won't last 6 four or five more years. 7 COMMISSIONER OEHLER: Well, doesn't that include 8 the console, if I'm not mistaken, in what you were talking 9 about earlier? It's not just tower upgrade, but it's new 10 consoles too? 11 SHERIFF HIERHOLZER: Right. But the consoles we 12 can -- we can update. The main -- the 1.5 million was all 13 the tower -- the infrastructure; the towers, the microwaves, 14 everything on the towers getting the four sites. It wasn't 15 anything to do with -- with vehicles or the car radios in the 16 vehicles. Or the -- or the console stuff, or the stuff we 17 have in dispatch. 18 COMMISSIONER OEHLER: So, I guess what I'm saying, 19 you could get by on your present tower system doing some 20 maintenance and stuff for possibly another four to five 21 years. 22 SHERIFF HIERHOLZER: We can get by easily with what 23 we have in the vehicles. And in the dispatch, I cannot tell 24 if we can get by with the microwave systems and the way it is 25 on the towers, which is the key to everything. 'Cause if 1-30-12 wk 38 1 they go down, we're done. And I just can't -- you know, I 2 can't sit here and say we can -- we can do that. 3 COMMISSIONER OEHLER: Well, you can say the very 4 same thing if we put up a brand new system; you can't 5 guarantee that they're going to work from one year to the 6 next. 7 SHERIFF HIERHOLZER: Well, this thing is, you know, 8 12 years old, okay. It's not GPS -- we are having more and 9 more issues. We take them down, bring them back up. We are 10 paying -- and I intend to continue this as long as they 11 will -- about 27,000 to 30,000 a year right now on 12 maintenance contract to try and help keep them going. And if 13 we can do that and it works, that's fine. But it's going to 14 have to be replaced. 15 COMMISSIONER OEHLER: All right, I've taken my 16 shots. Anybody else want to chime in? 17 COMMISSIONER BALDWIN: Yeah, I want to ask some 18 questions. You had 1.5 down for digital conversion, and if 19 we reduced that to 500,000, where would that -- where would 20 500,000 take you -- 21 SHERIFF HIERHOLZER: I'm not sure. 22 COMMISSIONER BALDWIN: -- in the overall picture? 23 SHERIFF HIERHOLZER: I'm not sure that we can even 24 do that, okay? That may be something -- if you want to 25 reduce it, take the whole thing out, and let's see if we can 1-30-12 wk 39 1 make it. Because I don't know that we can actually try 2 and -- and piecemeal upgrading those over the next few years 3 with the infrastructure off those towers. I don't think you 4 can -- you can fix the infrastructure on one tower and then 5 wait another year to do it on another tower. You know, the 6 two towers may not talk to each other then, which is what 7 they have to do, to make it simple. It may be a, you know, 8 full deal. We may just -- 9 COMMISSIONER LETZ: That would be an interesting 10 question, 'cause -- I mean, and the reason -- 11 SHERIFF HIERHOLZER: It would be. 12 COMMISSIONER LETZ: -- it seems odd to me is that 13 there are -- and we're a fortunate county, 'cause we have a 14 decent tax base, it appears, in the state. How does Edwards 15 County ever afford to do this? 16 SHERIFF HIERHOLZER: They don't have the 17 geographical terrain and that that we have. 18 COMMISSIONER LETZ: Or Val Verde County -- well, 19 they have Del Rio. 20 SHERIFF HIERHOLZER: We're one of the most unique 21 with our geographic area. If we could do it like the city of 22 Kerrville did with one tower, and just have the 11 square 23 miles and not that bad, it wouldn't cost us, you know, 24 200,000 to fix our radio system. But when you have -- for 25 the coverage, and you have to go to a four-tower simulcast 1-30-12 wk 40 1 system, that's when you have the issues, because, you know, 2 you got to have four towers linked together. You're paying 3 the rental on the towers; you're paying for all the 4 infrastructure so that they -- when you key up the mic, no 5 matter which one you are, within milliseconds it's breaking 6 so that you -- you have it. 7 In San Antonio, why you end up with it different 8 down there is they can divide it up to where they're in 9 sectors. In other words, if we tried that -- and we looked 10 at it when we went to this one. If I have an officer in 11 Ingram and he hollers for help or wants to talk to somebody, 12 if you don't have the simulcast in it, then the guy in Center 13 Point or in Kerrville can't hear him; he's on a different 14 channel, and you have to do it separate channels. And that's 15 the way Bexar County and S.A.P.D. can do it, because they 16 have such large departments that they work them in sectors. 17 They don't want to hear that radio traffic all across San 18 Antonio. Different ones work -- and that's what makes it 19 hard for our county, and I just can't tell you whether we can 20 make it or not. 21 COMMISSIONER OVERBY: Well, Commissioner Letz, your 22 figure you had there was just about 4.982. Is that what you 23 have? 24 COMMISSIONER LETZ: What I had was 5.025, but if we 25 take out 500,000 for the towers, it goes down to 4.525. 1-30-12 wk 41 1 COMMISSIONER OVERBY: Okay. 2 COMMISSIONER LETZ: And the other category, when I 3 looked back at that list, that might be a little bit short 4 there, because a few of those things you need to do. We just 5 need to look at that a little bit. 6 COMMISSIONER BALDWIN: Did you just say you want to 7 take out 500,000? Or leave it at 500,000? 8 COMMISSIONER LETZ: Take out the 500,000 for the 9 towers. 10 COMMISSIONER BALDWIN: And leave the million? 11 COMMISSIONER LETZ: Leave 500,000 for vehicles. 12 COMMISSIONER BALDWIN: Leave -- wait a minute. How 13 much do you want to leave for the digital conversion? 14 COMMISSIONER OEHLER: Nothing. 15 COMMISSIONER LETZ: Zero. 16 COMMISSIONER OEHLER: Because what he's saying is 17 we have to either do all or nothing. 18 COMMISSIONER OVERBY: That's right. 19 COMMISSIONER BALDWIN: Oh, I agree. And then what 20 did you do on the vehicles? 21 COMMISSIONER LETZ: Left 500,000. 22 COMMISSIONER BALDWIN: 500. 23 COMMISSIONER LETZ: Which ought to be enough to get 24 through four years. 25 JUDGE TINLEY: And I.T.? 1-30-12 wk 42 1 COMMISSIONER LETZ: 500,000. Same kind of logic 2 there. I mean, you got to replace computers, but you got 3 to -- 4 MR. TROLINGER: Did you change that to four years? 5 I had stepped out, I'm sorry. 6 COMMISSIONER LETZ: Three, four, something like 7 that. 8 MR. TROLINGER: Okay. 9 COMMISSIONER OEHLER: Is that all right, John? 10 MR. TROLINGER: Well, and obviously, we'll just 11 work year by year, but if we've got the capital and we know 12 what we can do for three or four years, it does help a little 13 bit. I feel that going out five years is extremely difficult 14 in I.T. as it is. 15 COMMISSIONER LETZ: I think -- the other thing I 16 think on I.T., John, is just a thing -- everyone I've talked 17 to talks more and more about iPad type machines, replacing a 18 lot. I don't know if that will work for us in areas, but 19 that's something -- you know, it seems that things are 20 changing real rapidly again in the whole -- that whole area. 21 MR. TROLINGER: Well, unfortunately, when we do go 22 to the wireless devices and have these in the courtroom, it 23 actually increases the cost, because in some cases, you know, 24 I've got a machine on my desktop that I'm connecting to 25 remotely, so I don't know that we're going to save any money. 1-30-12 wk 43 1 But definitely, we want to move with the technology, and I'm 2 strongly moving that direction already, even today, if we've 3 got the capability to, you know, make people work wirelessly. 4 But I agree. You know, you can't tell five years from now 5 where I.T.'s going to be at. And, you know, I hear you 6 talking about the 20-year issue, and there's really no way 7 you can put I.T. in a 20-year issue. 8 MR. HENDERSON: No, no, no. 9 MR. TROLINGER: We'll work with it. And, you know, 10 in the year-by-year budget, it's part of the operation and 11 maintenance. 12 SHERIFF HIERHOLZER: Gentlemen, do you want me to 13 ask the architect to look at five years, three years when 14 he's -- when he's -- while he's proposing these, or getting 15 ready to do these options on the jail? 16 COMMISSIONER LETZ: I think there's -- 17 SHERIFF HIERHOLZER: Or do you want to stay at 20? 18 COMMISSIONER LETZ: The way I look at it, there's 19 kind of a plan without something for the jail, but there's 20 still room for maybe close to a million or, you know, a 21 million. If there's something, you know, we decide to -- 22 this gets it down to 4.5 million. Bob said we can probably 23 get up to 5.5 for seven years. 24 MR. HENDERSON: Don't hold me to that. I'm back of 25 the napkin. 1-30-12 wk 44 1 COMMISSIONER LETZ: You said it; I wrote it down. 2 But, you know, I'd rather be under, and then if we have to -- 3 you know, it gives us a little flexibility on the next one. 4 Because there's -- 2016, when we come down to it, you start 5 working that in 2015, which is three years for the planning. 6 So, I don't know that -- I think we still want to do the 7 planning on the jail. I'd like to look at the options and 8 see where it is. 9 SHERIFF HIERHOLZER: But as far as -- as far as the 10 options go, okay, do you want me to -- to tell him to give us 11 options for 5, 10, 15, whatever he's supposed to do, or just 12 leave it? 13 JUDGE TINLEY: I would think that that would be 14 part of what he's going to do anyway. 15 SHERIFF HIERHOLZER: Just to make sure. 16 JUDGE TINLEY: Okay. 17 SHERIFF HIERHOLZER: I mean, since you're doing 18 this. 19 JUDGE TINLEY: That's been my expectations from day 20 one. 21 SHERIFF HIERHOLZER: Okay. 22 JUDGE TINLEY: Short-term, long-term, whatever. 23 SHERIFF HIERHOLZER: All right. 24 COMMISSIONER LETZ: So -- and at 4.5, you could put 25 as a placeholder 500,000 for a jail fix of some sort, or 1-30-12 wk 45 1 something to do out there. I mean, if you wanted to. But 2 it's -- I'll leave that up to the Auditor and Mr. Henderson 3 as to whether that makes sense or not. I think we have to 4 spend money at the jail at some point. But -- 5 MS. HARGIS: Let's talk about splitting it like Bob 6 talked about. Let's talk the items that are long-term, put 7 them in a long-term -- more of a long-term issue, reduce that 8 annual cost. You're talking the ag facility and stuff. And 9 then take the short-term stuff and put that in a shorter -- a 10 shorter note to keep from boxing us in. If you got a 20-year 11 life on that Ag Barn, you've had it out there since 1956. 12 You've got -- you know, the 450,000 is a bridge. Those are 13 all 20-year items. Then we could reduce that annual cost. 14 We could put a call date on there so we could pay them off 15 early, but then at least it's kind of like on the front end; 16 it helps us. Doesn't necessarily box you in if you have a 17 call date. And then when we get to 2016, we're talking four 18 years. We got '12 and '13 -- now we're in '12, so we got 19 '12-'13, '13-'14, '14-'15, '15-'16, so you got four years. 20 We don't have five. We got five years in here, so we can 21 back off one year easily on everything. So, that's something 22 to think about. Let's go short term on the cars and things 23 like that. Let's just do three years, maybe, of those. And 24 think about -- 25 COMMISSIONER LETZ: Can we do -- I mean, can we do 1-30-12 wk 46 1 two issues at once? Is that what you're saying? 2 MR. HENDERSON: Yes, we can. And they would have 3 to be in two separate issues, because -- well, they don't 4 have to be -- let me back up. If we're going to do a longer 5 term piece and we're going to go over seven years, then we 6 ought to just do one transaction of certificates of 7 obligation, but we can have multiple amortization tables. We 8 can do what Jeannie's talking about in terms of assigning the 9 useful life on items and structuring that portion of the debt 10 based on this useful life, then laying over the longer useful 11 life items, like the bridge and the jail. So, we may have -- 12 we'd have one transaction, one set of costs. It would go out 13 20 years, but we may have 30 percent of it paid off in five 14 or six years, and the 70 percent stretch out, you know, so we 15 can achieve what she's talking about doing in one 16 transaction. But it would be a certificate of obligation 17 that would give notice of intent and that sort of thing. 18 COMMISSIONER BALDWIN: That's an interesting way to 19 do it. 20 MR. HENDERSON: And we do that all the time with 21 schools. I mean, when we did Lake Travis ISD, $12 million of 22 that was short-term I.T. stuff that had -- we didn't want to 23 take 30 years to pay off I.T. stuff, so we structured it in 24 such a way that we could identify that we were paying off the 25 I.T. stuff in six or seven years, and the high school in 30 1-30-12 wk 47 1 years. 2 COMMISSIONER BALDWIN: How do you determine what is 3 a long-term and what is not a long-term? 4 MS. HARGIS: Well, you look at the asset. You 5 know, that -- 6 COMMISSIONER BALDWIN: You look at the asset? 7 MS. HARGIS: You look at the asset itself. I mean, 8 a bridge. You figure a bridge is going to have a 20-year 9 life. Center Point Wastewater Treatment facility, that's a 10 20-year life. Your ag facility, again, it's been out there 11 -- I can't say it's 20 years; it might be 10 years, but we've 12 done more than 20 years on this last go-round. But usually 13 your buildings and things that you -- of that nature that 14 have -- that I.R.S. puts a 20-year life on, if you look at 15 I.R.S. regs, a bridge, a wastewater treatment facility, those 16 all have anywhere from 15- to 20-year lives. That's kind of 17 what we go by, because that's really -- I mean, you're going 18 to have maintenance in between there, but you're not going to 19 replace it all in that length of time. You're probably not 20 going to replace the wastewater treatment thing in 20 years. 21 And it's a possibility that we might get that $450,000 back. 22 We don't know that. 23 COMMISSIONER OVERBY: That's right. 24 MS. HARGIS: We could get that back in the EDAP 25 grant, 'cause we have two grants going at one time. Because 1-30-12 wk 48 1 right now, we're kind of waiting to see what one grant does 2 before the other one comes in. 3 COMMISSIONER OVERBY: We don't need to plan on it. 4 If it comes back, that's just a bonus. 5 MS. HARGIS: If we don't need to use it -- 6 MR. HENDERSON: You can reduce your other debt. 7 COMMISSIONER OVERBY: That's right. 8 MS. HARGIS: Yeah. 9 COMMISSIONER BALDWIN: So, the first four items 10 would be long-term, and the rest -- and then the rest -- 11 MS. HARGIS: The rest of them are short-term, 12 right. 13 COMMISSIONER BALDWIN: The rest of it would be 14 short-term. That's pretty easy. 15 MS. HARGIS: And so you structure these issues -- 16 and he can -- you know, you can structure them any way you 17 want to do it, but you get rid of the major part of the 18 short-term debt in the same length of time, but at the same 19 time, then you -- you're still paying those others out, so 20 you don't take such a big hit all right now. If we didn't 21 have -- it's kind of what we did to ourselves on this other 22 one. We've got this 2016, so we don't want to do it again. 23 COMMISSIONER OVERBY: Right. 24 MS. HARGIS: So we've got to fix it so that, you 25 know, a couple of years later, those are gone. So, if you 1-30-12 wk 49 1 split it in half, you're only talking about two million, six 2 paid off, and you can probably do that between 2016 and 2018, 3 and -- and still have room for the other one. Keep in mind, 4 hopefully our values, with Fox Tank and maybe some other 5 manufacturing companies that may come in here in that length 6 of time, you can -- you know, with the sales tax -- we have 7 to give him the sales tax the first year, but if he's up and 8 running in this next year, then you can take that sales tax 9 that he's going to be making off that manufacturing, plus the 10 value of his property, put that towards the debt, dedicate 11 that towards debt service, rather than -- you know, my big 12 fear about going back to leasing -- and we can do that, but 13 that just raises our maintenance and operations. 14 COMMISSIONER OEHLER: That's right. 15 MS. HARGIS: And then on our M & O side, if we 16 build a jail, we're looking at our M & O side going up, 17 because we've got to hire personnel. So, we really have to 18 think through a lot of this as we go out. We have -- we're 19 going to have to learn to get a little bit more creative with 20 our instruments, which you really haven't had to do in the 21 past. And you put call dates in there so we don't box 22 ourselves in again, too. 23 COMMISSIONER BALDWIN: So, you would do your -- 24 would you address both of those issues with one single vote 25 of the Commissioners Court? 1-30-12 wk 50 1 MR. HENDERSON: Yes, sir. We'd have two meetings; 2 one to give notice of intent, then one to come back and sell 3 it, because we would do one transaction. If we're going to 4 go out seven years -- beyond seven years anyway, let's just 5 do one C.O. transaction and structure it as if we were doing 6 two separate transactions. 7 COMMISSIONER BALDWIN: Pretty interesting. 8 JUDGE TINLEY: Difference in interest costs would 9 probably be more than offset by issuance costs of doing two 10 transactions. 11 MR. HENDERSON: You don't need to pay me, the 12 lawyers, and everybody else twice. Let's just do one deal. 13 COMMISSIONER BALDWIN: Boy, isn't that the truth? 14 COMMISSIONER OEHLER: That we don't want to do 15 that. 16 COMMISSIONER OVERBY: I like that. 17 COMMISSIONER OEHLER: I can't believe he actually 18 came up with a plan that would cut himself out of additional. 19 MR. HENDERSON: I'll be back in four or five years 20 to do the jail deal. (Laughter.) I'm in this for the long 21 haul. 22 JUDGE TINLEY: Fram commercial. 23 MS. HARGIS: Then if we do the jail, whether it's 24 the short-term piece or the long-term piece, it's still going 25 to be a 20-year piece, so that would go into the long-term -- 1-30-12 wk 51 1 COMMISSIONER OVERBY: Right. 2 MS. HARGIS: So, again, if you had -- you can have 3 more than one call date. 4 MR. HENDERSON: Yes, you can. And -- but the other 5 thing I would say -- and we've talked a little bit, 6 Commissioner Overby, about the East Kerr County project, and 7 we want to do our homework on that and make sure we have a 8 firm understanding with the engineering of likely number of 9 connections and revenues and so forth. But I would also 10 encourage us to think about, aside from the East Kerr County 11 deal, what else is going to happen in 3 to 5 years down the 12 road, 8 to 10 years down the road, 15 to 20 years down the 13 road? We've talked a little bit about getting caught by not 14 having those -- our last issue with the call date before 15 2016. We talked about it at the time, and we were reasonably 16 comfortable that we weren't going to need another transaction 17 before we got there, and that's why we didn't pay the 18 interest rate penalty to have it callable. And, you know, 19 here we are in early 2012 going, "Gosh, you know, maybe it 20 would have been a good idea to make the interest rate -- to 21 make that callable." We're going to be able to work around 22 that fine, but -- but, you know, we really do want to be 23 realistic about, you know, our I.T. situation, and be 24 realistic about what we're likely to need three to five years 25 down the road in addition to those things that are on this 1-30-12 wk 52 1 list, plus the East Kerr County project. 2 COMMISSIONER OEHLER: It seems to me like that the 3 jail and the tower upgrades kind of go hand-in-hand. Those 4 are both long-term items that will last a long time. It's 5 not like you're going to have a reoccurring expense on it, 6 other than maintenance and operation. 7 MR. HENDERSON: Well, I'll leave that to the 8 Sheriff. 9 SHERIFF HIERHOLZER: I think you're right, Bruce. 10 MR. HENDERSON: The towers are going to have a long 11 term, but the technology attached to those towers may or may 12 not have a long term. 13 SHERIFF HIERHOLZER: Well, this one's lasted -- you 14 know, we're at 12 years now, okay. And so I think you would 15 have that with where it's going. We don't see anything else. 16 Of course, 12 years from now, who knows? But I personally 17 think the jail and the towers are long-term issues that -- 18 COMMISSIONER OEHLER: Well, they're long-term, and 19 they're not right now, in my opinion. I think that needs to 20 be down the road on another separate deal other than what 21 we're talking about now. But that's just me thinking. I 22 know we don't need to have two issues, but I don't believe we 23 ought to do that much right now, when we don't -- it will 24 take a while to plan what the jail needs to be, what our 25 person of interest tells us that the solution will be for a 1-30-12 wk 53 1 certain amount of time. But, anyway... 2 MR. HENDERSON: Well, based on the direction I'm 3 hearing this morning, Jeannie and I will get together and put 4 together a computer model that goes out at least six or seven 5 years with respect to the new issuance, and we'll -- we'll 6 model out this transaction with -- with a multi-amortization 7 schedule. We'll model out the -- the jail, and we can't do 8 that till after Gondeck gets back on the 13th, but model out 9 whatever those costs are, and putting that online in four or 10 five years. I'll get together with the Sheriff, and then 11 we'll get together with engineering and model out the East 12 Kerr County deal, try to put it all on one spreadsheet that 13 shows you all of those things. While we're doing that, you 14 all need to think about, you know, are you happy with the 15 parks? Are you happy with the courthouse? Are you happy 16 with flood control? Are you happy with other bridges? 17 'Cause you know that in 8 to 10 years -- of course, how do 18 you ask -- how do you ask what you -- how do you ask, "What 19 need do you have that you don't know about?" 20 COMMISSIONER OEHLER: Well, we're not going to do 21 anything else that I know of. Our off-system bridges, this 22 is the only one we're having to pay anything on, and pretty 23 well done by TexDOT. Except, you know, you've got your 24 Center Point bridge that you may or may not ever get done. 25 COMMISSIONER OVERBY: May not get funding. 1-30-12 wk 54 1 COMMISSIONER OEHLER: But the Cade Loop -- the 2 bridges that are being replaced and the bridges we have -- I 3 only know of one in my area; it's really not a bridge, more 4 of a crossing that needs to be fixed. But I don't foresee us 5 spending any more money on those projects like that. 6 COMMISSIONER LETZ: Well, you know, on those, I 7 mean, there's some that could come up. But even on those, 8 unless TexDOT really changes the funding, it's 90/10 at 9 worst; most of them, they fund 95. All we ever pay for is 10 the right-of-way, usually. This is a special deal because of 11 a -- negotiating a large multi-deal. 12 COMMISSIONER OEHLER: We got six for -- six free, 13 and we have to pay 350, which is in this proposal, for one. 14 COMMISSIONER LETZ: Right. 15 MR. HENDERSON: That's certainly -- you know, I 16 hesitate to use the word "optimistic," but Kerr County, for 17 example -- not Kerr County, Victoria County last year found 18 themselves going out and funding some bypass improvements 19 that was on TexDOT's approved list, but TexDOT was saying it 20 was going to take six to eight years to get it done. And -- 21 and they were having three or four traffic deaths a year out 22 there, and -- and Victoria County Commissioners Court got 23 together with the City, and they just decided to go ahead and 24 fund it now, because they didn't feel like they ought to wait 25 for TexDOT. So -- 1-30-12 wk 55 1 COMMISSIONER OEHLER: I don't -- I don't foresee 2 anything like that around here, do you? 3 COMMISSIONER LETZ: No. TexDOT's been pretty, you 4 know, aggressive. 5 COMMISSIONER OEHLER: They've been real good to us, 6 I will say. 7 MR. HENDERSON: Well, good. Good. 8 COMMISSIONER OVERBY: And we may also -- just 9 talking with Commissioner Letz, you know, we're going to have 10 some expense eventually in the airport in bringing down some 11 of these buildings out here, too. Some of the long-term 12 stuff out there, what the costs might be out there. I mean, 13 it's still kind of up in the air a little bit what that's 14 going to be. But -- 15 COMMISSIONER LETZ: Bob, how do we work in on that 16 the airport, where it's potentially revenue-generating 17 property? My understanding is it needs -- those cannot go on 18 the same issue, 'cause they wouldn't be tax-exempt. 19 MR. HENDERSON: Oh. Well, not necessarily. If 20 it's a governmental purpose and it's a public purpose, we can 21 do tax-exempt airport financing, and -- 22 COMMISSIONER LETZ: Public purpose. But running 23 into a private -- 24 MR. HENDERSON: Well, that's -- 25 COMMISSIONER OVERBY: That's the catch. 1-30-12 wk 56 1 MR. HENDERSON: That's the catch. Now, under the 2 tax law, there are airports, docks, and wharves exemptions, 3 and you can do some fixed-base operator type improvements on 4 a tax-exempt basis, as long as it's a service that's 5 available to the general public. Now, we've done that, for 6 example, at City of Weslaco; we did that for Aransas County. 7 On the other hand, I did one for -- for Harlingen, Cameron 8 County, where it was a -- you know, a rock wall -- corporate 9 thing where they were bringing in commercial airlines and 10 refurbishing those commercial airlines. That was a private 11 activity type transaction. So, it really just depends on 12 exactly what we're doing with the -- the improvements, who 13 the -- who the private operator is, and what type of service 14 that they're in. And we'll have to involve McCall, Parkhurst 15 and Horton tax attorneys to give us a specific analysis. 16 COMMISSIONER LETZ: Okay. 17 MR. HENDERSON: But we don't want to presume that 18 you can't do it tax-exempt. There are circumstances in which 19 you can do airport improvements tax-exempt. 20 COMMISSIONER LETZ: That wouldn't go under this one 21 either way. 22 COMMISSIONER OVERBY: No. 23 MR. HENDERSON: No, but it's something to have on 24 our long-term list. 25 COMMISSIONER OVERBY: Right. 1-30-12 wk 57 1 COMMISSIONER LETZ: Right. Bob, my last question 2 is, once we -- it sounds like on the 13th or thereabouts -- 3 or say by the end of February, we should have our ducks in a 4 row from the Court's standpoint, and have some Gondeck 5 information. If we can have all that finalized and give you 6 the go-ahead at our second meeting in February, when can we 7 start tearing down the hog barn? 8 MR. HENDERSON: We need -- we need probably 75 days 9 from the time you tell me to get after it to the time money's 10 in your bank, because we've got to have about 35 days for the 11 notice of intent period, and we got to sell the debt. And 12 we've got a Texas Attorney General's approval process that 13 takes three or four weeks, a week for Securities and Exchange 14 Commission to close. So, from late February, when you 15 definitely say go do this "X" amount of money, we need about 16 75 days to put money in the bank. Now, in the interim, you 17 could go ahead and start advertising for your demolition 18 contracts, get those bids in. Just don't execute them before 19 we put money in the bank. 20 COMMISSIONER OVERBY: Roughly end of June. 21 Mid-May, end of June is what you're talking about. 22 MR. HENDERSON: Well, no. All of March, all of 23 April. I'd say mid-June -- mid-May. 24 COMMISSIONER OEHLER: Has to be by the first of May 25 to get the payment in to TexDOT for that bridge -- middle of 1-30-12 wk 58 1 May. 2 COMMISSIONER OVERBY: May 1 -- 3 MR. HENDERSON: I would say May 15th. If we waited 4 till the end of February, we could have money in the bank by 5 May 15th. And I might be able to shave, you know, a couple 6 of weeks off of that -- one or two weeks off of that. The 7 biggest time consumption piece is going to be the timing of 8 having the Court meet to give notice of intent and getting 9 those in the newspaper, and then scheduling a regular meeting 10 30 days after that first publication. 11 COMMISSIONER LETZ: What if -- I mean, is there -- 12 then could we move this up to the 13th meeting, our first 13 meeting in February, just to get an extra two weeks? 'Cause 14 we are -- to get some other things, have a little bit of a -- 15 I mean, if we move it up to there, I think we could -- we 16 could probably settle on a number by then and be tweaking the 17 list. We can -- 18 MR. HENDERSON: Let me tell you that -- 19 COMMISSIONER LETZ: -- have a special meeting. 20 JUDGE TINLEY: -- when we give the notice of intent 21 to issue, that notice is going to include what we would call 22 a "not to exceed" number. And we could -- we could, today -- 23 well, it's not posted, but next week we could go ahead and 24 give notice of intent and say we're not going to exceed six 25 million dollars, or a million dollars, or whatever the number 1-30-12 wk 59 1 is. And after the 13th, or any time before we actually sell 2 the debt, you guys can refine that number and ultimately get 3 down to, you know, 4.6 or 5.3, or whatever the number is that 4 you come to. So, we don't necessarily have to wait until -- 5 until after the architect is done. But I think -- I think 6 that the Sheriff's point is good; that it's not -- we're not 7 waiting on the on architect just for numbers. We're also 8 waiting on capacity analysis and -- and that sort of thing. 9 That's going to impact our model for timing. 10 COMMISSIONER LETZ: I think I'd be in favor of 11 doing that at, say, six million or something, and then -- you 12 know, worst case, you throw it all out. I mean, but I think 13 we could -- I just think that time is a real issue. 14 Obviously, we have the bridge, the -- the Hill Country Youth 15 Exhibit Center. I mean, time is a real issue there. And I 16 think the -- the rest of it's not so much, but those two 17 things are very time-sensitive. 18 MR. HENDERSON: We could probably get a heads-up 19 from Wayne before the 13th, right? 20 SHERIFF HIERHOLZER: Probably. It's very likely 21 that we could get Mr. Gondeck to come up before the 13th. 22 That's just when y'all had set a meeting, so I asked him if 23 he could be here. He said yes, no problem. I could give him 24 a call, see what's the soonest he could get it done, if you 25 want to have another special meeting sooner. 1-30-12 wk 60 1 COMMISSIONER LETZ: I'd be in favor of that. 2 COMMISSIONER OEHLER: That's fine. Whatever we 3 need. 4 SHERIFF HIERHOLZER: I'll give him a holler today, 5 see if we can't -- 6 JUDGE TINLEY: Another thing on the TexDOT 7 requirement, we may be able to hedge some funds over there. 8 Now, -- 9 MS. HARGIS: Yeah. 10 JUDGE TINLEY: -- the Youth Exhibit Center may be 11 another issue. We probably -- probably couldn't cover that 12 by hedging. 13 MS. HARGIS: We signed that resolution in November. 14 Remember, I always have you sign the resolutions so that you 15 can use the funds in advance. And I think we had a pretty 16 big number in there. I want to go back and say it was, like, 17 10 million, so we have to go back and look. We've done them 18 every year, so I -- that would give us the capacity to pay 19 for the bridge. But we don't have to pay for the bridge till 20 June 1st. June 1st is when we have to pay for it. So, it 21 was originally May, but now they said the 1st of June. 22 JUDGE TINLEY: Advance funding requirement is now 23 June 1? 24 MS. HARGIS: Yeah. 25 JUDGE TINLEY: Okay. 1-30-12 wk 61 1 MS. HARGIS: So -- but I agree with the Judge. I 2 wouldn't want to go out and spend money on the ag until we 3 knew the issue was going to get sold, so forth and so on. 4 And -- and then once it's sold, then -- and we know it's 5 sold, then we're just waiting for funding; then I don't have 6 a problem. 7 COMMISSIONER LETZ: We'd go out for -- we could 8 get -- 9 MS. HARGIS: You can go out -- 10 COMMISSIONER LETZ: -- proposals. 11 MS. HARGIS: -- for proposals and all of that. 12 COMMISSIONER LETZ: You know, for both the 13 demolition and the other part. 14 MS. HARGIS: 'Cause that takes 30 days. So, if you 15 were doing that in the meantime, as soon as the money came 16 in, we'd be ready to go. 17 COMMISSIONER LETZ: So, really, not much of a 18 time -- okay. 19 MS. HARGIS: But I don't think you can take down in 20 April. 21 COMMISSIONER LETZ: No. April 15th. 22 JUDGE TINLEY: Sheriff, you're going to check with 23 Mr. Gondeck and see when the earliest date he might be 24 available to give us our options on the other, and talk about 25 some numbers there? 1-30-12 wk 62 1 SHERIFF HIERHOLZER: Yes, I'll do that, and I'll 2 get ahold of Jody and let you know what the soonest is, and 3 then if y'all can work a special meeting, or sometime right 4 around there. 5 JUDGE TINLEY: In the meantime, Ms. Hargis, you and 6 Bob are going to work together to try and delineate long-term 7 versus short-term. Basically, what you're doing is following 8 I.R.S. depreciation guidelines, what they establish as useful 9 life, taking the long end of it, probably, as opposed to 10 accelerated depreciation, and as a guideline? 11 MR. HENDERSON: As a guideline. 12 MS. HARGIS: Yes, as a guideline. But I do need to 13 know from -- from -- should I go back in here and look at a 14 four-year plan for all these people? Do you guys just want 15 to give me a number for each -- each one of these so we have 16 something to work on? I don't want to just divide it in 17 half, 'cause I don't know where you want me to divide it in 18 half. I mean, I've heard you throw around different numbers, 19 but I want to get a consensus. How much does Road and Bridge 20 get? Which one of these projects do you want me to cut? I 21 think that is kind of essential to me right now. Keep in 22 mind, if -- the other thing is, we can try to put these on 23 our maintenance side. It just depends on what our revenue 24 is, what our base is. 25 JUDGE TINLEY: Some of the smaller ones, you're 1-30-12 wk 63 1 talking about? 2 MS. HARGIS: Yeah. 3 COMMISSIONER LETZ: Okay. 4 JUDGE TINLEY: Well, let's see if we can't give you 5 some guidance. Essentially, what -- your question is as to 6 Road and Bridge? 7 MS. HARGIS: Yes -- well, let's start with the 8 parking lot facilities. Do you want me to leave those in or 9 take them out? 10 COMMISSIONER OEHLER: Take them out. 11 MS. HARGIS: Okay. 12 COMMISSIONER OEHLER: Well, for my part of it. 13 COMMISSIONER LETZ: Yeah, I'd take it out. 14 MS. HARGIS: Okay. 15 COMMISSIONER LETZ: Well, I say "out." How bad is 16 the J.D.C. parking lot? 17 MS. HARGIS: It's bad. 18 COMMISSIONER OEHLER: No, I wasn't talking about 19 taking the J.D.C. out. 20 COMMISSIONER LETZ: That one leave in, but I think 21 the Road and Bridge, take out. 22 MS. HARGIS: Okay. 23 COMMISSIONER OVERBY: 122 we're leaving in all for 24 the juvenile -- 25 COMMISSIONER OEHLER: Right. The door locks. 1-30-12 wk 64 1 COMMISSIONER OVERBY: They got to have that, the 2 locks. 3 MS. HARGIS: We're just talking about the parking 4 lot in front of the building. 5 COMMISSIONER LETZ: Locks are 72. 6 JUDGE TINLEY: And for the balance of Road and 7 Bridge -- 8 MS. HARGIS: Want to just give him an amount, and 9 then he chooses, comes back and tells you? 10 COMMISSIONER BALDWIN: That's the way I would want 11 to do it. 12 MS. HARGIS: So, what's the amount? 13 COMMISSIONER LETZ: 500,000. 14 COMMISSIONER OVERBY: Use it how he needs to. 15 COMMISSIONER OEHLER: 500 for what, Road and 16 Bridge? 17 COMMISSIONER OVERBY: Right. 18 COMMISSIONER OEHLER: Okay. 19 MS. HARGIS: I'll have him go back and give us 20 those, then. And the Sheriff's Department, if we're going 21 four years, we can cut that back? 22 COMMISSIONER LETZ: 500,000 for cars? 23 COMMISSIONER OEHLER: And the boiler. 24 MS. HARGIS: Leave the boiler in? 25 JUDGE TINLEY: Well, that's on maintenance. 1-30-12 wk 65 1 COMMISSIONER OEHLER: That's on maintenance. 2 SHERIFF HIERHOLZER: Actually, the boiler was part 3 of what Mr. Gondeck's going to give for those upgrades. 4 JUDGE TINLEY: On the upgrades. 5 SHERIFF HIERHOLZER: You know, like the shower 6 replacement, the steel ones and that. We had talked about 7 doing that too. 8 MS. HARGIS: So, just take that out for now, all 9 right. Then we're going to leave the 121 in, because that's 10 required. We need that. 11 COMMISSIONER LETZ: Wait, wait, wait. 121 -- 72 is 12 the locks. The other 47 is for vehicles. 13 COMMISSIONER OEHLER: For the parking lot? 14 COMMISSIONER LETZ: No, I'm looking at the list. 15 They have 47 for vehicles. 16 MS. HARGIS: His vehicles, he's got to have at 17 least one. 18 JUDGE TINLEY: That's actually 73 on the locks. 19 COMMISSIONER LETZ: 73 or 72 on the locks. So, 20 100,000 there? Up to 100,000? That would be one vehicle 21 plus the locks. 22 COMMISSIONER OVERBY: Yeah, that's good. 23 MS. HARGIS: Maintenance? 24 JUDGE TINLEY: Take the boiler out. That brings it 25 down to -- 1-30-12 wk 66 1 MS. HARGIS: Around 72, 73. 2 COMMISSIONER LETZ: I'd say half of it. 3 MS. HARGIS: Half of it? 4 JUDGE TINLEY: 40,000? 5 COMMISSIONER LETZ: Mm-hmm. Let him choose which 6 of the two things he needs. 7 MR. BOLLIER: I got a question. 8 COMMISSIONER LETZ: Sweeping machine should 9 probably be one of them. 10 MR. BOLLIER: If you take it down to 40,000, now, 11 don't forget, with the new ag barn -- I mean, with the new 12 barn, I did find out that a sweeper, the big -- will be right 13 at 15,000. 14 JUDGE TINLEY: Refurbished? 15 MR. BOLLIER: The refurbished. I found that out 16 last week. 17 COMMISSIONER LETZ: So, maintenance, 40. You have 18 enough money for that. 19 JUDGE TINLEY: I.T., 500. 20 COMMISSIONER BALDWIN: Yes. 21 COMMISSIONER OVERBY: Yes. 22 MS. HARGIS: I think that's going to be pretty 23 tight on him. 24 COMMISSIONER BALDWIN: Yes. 25 MS. HARGIS: 150 a year; that's four years. I 1-30-12 wk 67 1 think eight. 2 MR. TROLINGER: 718,000 is what I've got, roughly, 3 that I've calculated. 4 COMMISSIONER LETZ: How much? 5 MR. TROLINGER: 718. 6 MS. HARGIS: Let's make it 750. That way he has a 7 little bit of leeway there. We can always come back. What 8 are we going to do on -- we know we need that one constable 9 vehicle. 10 COMMISSIONER OEHLER: Yeah. 11 MS. HARGIS: Okay. I don't know what you want to 12 do about the others. 13 COMMISSIONER BALDWIN: I thought Information 14 Technology said 500,000, and I'm agreeing with him. 15 MS. HARGIS: No, he said 718. 16 COMMISSIONER BALDWIN: Why did I write 500,000? 17 COMMISSIONER LETZ: I said 500. 18 JUDGE TINLEY: You heard it at one time, as did I. 19 COMMISSIONER LETZ: It's called inflation. 20 COMMISSIONER BALDWIN: So, are we -- 21 COMMISSIONER OVERBY: That quick. 22 COMMISSIONER BALDWIN: Are we agreeing with 718? 23 JUDGE TINLEY: 750 is what we've got plugged in. 24 COMMISSIONER BALDWIN: 750. Are we agreeing with 25 that? 1-30-12 wk 68 1 JUDGE TINLEY: I've got no problem with it. 2 COMMISSIONER OVERBY: Okay. 3 COMMISSIONER LETZ: Then there's Environmental 4 Health and Animal Control. 5 COMMISSIONER OEHLER: Well -- 6 COMMISSIONER LETZ: Those are combined, 120,000. 7 COMMISSIONER OEHLER: You're saying Environmental 8 Health at 20? 9 COMMISSIONER LETZ: I'm saying those combined are a 10 hundred -- 130,000. 11 JUDGE TINLEY: 130. 12 COMMISSIONER OEHLER: Animal Control doesn't need 13 two more trucks, I don't believe. I mean, they were 14 projecting this on a five-year plan, and this whole thing 15 could be less than that. 16 COMMISSIONER LETZ: So, they need -- Ray, can you 17 make it four years with what you have? 18 (Mr. Garcia nodded.) 19 COMMISSIONER LETZ: Okay. 20 COMMISSIONER OEHLER: They all got new stuff not 21 long ago. 22 COMMISSIONER LETZ: Leave those out. 23 COMMISSIONER OEHLER: We just need to make it work. 24 JUDGE TINLEY: So, you're not allocating anything 25 for either one of those at this time? 1-30-12 wk 69 1 COMMISSIONER OEHLER: I would say no. 2 JUDGE TINLEY: Okay. 3 COMMISSIONER OVERBY: On Environmental and Animal? 4 COMMISSIONER LETZ: Right. 5 JUDGE TINLEY: Okay. 6 COMMISSIONER OVERBY: Okay. 7 MS. HARGIS: Okay. Okay, let's go over this, just 8 because I'm a little dense sometimes. Sometimes I hear good 9 and sometimes I don't, so I want to make sure we're all in 10 agreement. We can start on Page 1. We're going to leave in 11 the parking lot for the J.D.C. That's 30, and 500 for Road 12 and Bridge, so that would be a total of 530. Then on the 13 second page, we're going to leave in 500,000 for cars for the 14 Sheriff. Juvenile Probation, 100,000. Maintenance, 40,000. 15 JUDGE TINLEY: Actually, that's Juvenile Detention. 16 MS. HARGIS: Juvenile Detention, excuse me. 17 Juvenile Detention, 100,000. 18 JUDGE TINLEY: Yeah. 19 MS. HARGIS: 40,000 for Maintenance. I.T., 750. 20 Nothing for Environmental Health, nothing for Animal Control, 21 but 35,000 for the constable's vehicle. 22 JUDGE TINLEY: That's what I got. 23 COMMISSIONER LETZ: And if my math is right, that's 24 4,780,000. 25 COMMISSIONER BALDWIN: Four -- 1-30-12 wk 70 1 COMMISSIONER LETZ: She's adding them. I mean, 2 you're trusting me on that one. 3 COMMISSIONER OEHLER: That's Comfort math going on 4 over here. 5 COMMISSIONER OVERBY: 4.787. 6 COMMISSIONER BALDWIN: What about the new 7 courthouse in Comfort? 8 MS. HARGIS: Okay, that's a million, 955 for the 9 lower things. Just the smaller, so that would be what we 10 would put in the -- the accelerated area. 11 JUDGE TINLEY: Short-term. 12 COMMISSIONER OEHLER: Short-term. And then the 13 other in the longer term. 14 MS. HARGIS: And you've got 2.8 on the other. 15 COMMISSIONER LETZ: 2.825. Okay. 16 COMMISSIONER BALDWIN: What was the small? 17 MS. HARGIS: Four million, seven is what I got. 18 COMMISSIONER OEHLER: Four million, seven. Is 19 that -- 20 COMMISSIONER OVERBY: 4.78. 21 JUDGE TINLEY: Short-term portion, again, was 22 one-what? 23 COMMISSIONER LETZ: 955. 24 COMMISSIONER OVERBY: 1.955? 25 MS. HARGIS: I get 1.955, then 4,780,000. 1-30-12 wk 71 1 COMMISSIONER OVERBY: Right. 2 MS. HARGIS: So, we're right under the five -- 3 $5 million issue. 4 COMMISSIONER LETZ: Four, eight. 5 MS. HARGIS: Well, we have some costs of issuance 6 and things of that nature. 7 MR. HENDERSON: So, Commissioner Letz' number of 8 six would be fine. 9 MS. HARGIS: Yeah. 10 JUDGE TINLEY: That doesn't include the jail, 11 though. 12 MS. HARGIS: No. 13 MR. HENDERSON: Nothing on -- on either option of 14 the jail. 15 COMMISSIONER LETZ: But if we went up to -- on the 16 notice of up to six, that would give us some leeway for the 17 jail if we decide to put something in there. 18 MS. HARGIS: We could put that on the next agenda 19 with the amount left blank, and then once you hear from the 20 architect, we could fill in the number and go ahead and 21 authorize it to go out on the -- if we met next Monday, that 22 would give us kind of -- what, another three weeks? 23 COMMISSIONER LETZ: Yes, which would be helpful. 24 MR. HENDERSON: If we do this on February the 13th, 25 we're going to have -- we could have money in the bank by 1-30-12 wk 72 1 May 1. By the end of April, we could have money in the bank. 2 If we give notice of intent on -- 3 MS. HARGIS: Even if we did it by next Monday, we 4 would have it for sure by May 1. 5 COMMISSIONER LETZ: Probably late April. 6 COMMISSIONER OEHLER: Well, why don't we have 7 another special meeting next week? 8 COMMISSIONER LETZ: It's up to -- as long as 9 Gondeck -- 10 SHERIFF HIERHOLZER: I really need to talk to 11 Gondeck, 'cause one thing, he does a lot of commissioners 12 court meetings on Mondays. That's the hard day he was 13 looking at. If y'all can do it any day, then I can set up a 14 date for him. 15 JUDGE TINLEY: Find out when he can -- 16 SHERIFF HIERHOLZER: Do it? 17 JUDGE TINLEY: What would be the earliest he'd have 18 available for us. 19 SHERIFF HIERHOLZER: Okay. 20 JUDGE TINLEY: All of our options, short-term, 21 long-term, anything in between. 22 MS. HARGIS: Monday or Tuesday. 23 COMMISSIONER OEHLER: Yeah, Tuesday. There's 24 nothing magical about Mondays, except that's our normal, 25 regular meeting. 1-30-12 wk 73 1 SHERIFF HIERHOLZER: I'll find out and let you 2 know. 3 COMMISSIONER LETZ: Is there an airport meeting 4 next Tuesday? 5 MS. HARGIS: No, we won't have another airport 6 meeting -- this is a long month. We won't have another 7 airport meeting till after the 13th. That will be the third 8 Monday. 9 COMMISSIONER OVERBY: Yeah. 10 JUDGE TINLEY: Okay. 11 COMMISSIONER OVERBY: That's good. 12 JUDGE TINLEY: This would be a good break time. 13 Why don't we take about a 15-minute recess, and we'll come 14 back and see what else we got to do in the workshop portion. 15 (Recess taken from 10:27 a.m. to 10:45 a.m.) 16 - - - - - - - - - - 17 JUDGE TINLEY: Okay. Let's come back to order, if 18 we might. We were in our workshop agenda. Anything further 19 to offer in connection with our workshop agenda item to 20 review and discuss Kerr County Jail Facility expansion, Hill 21 Country Youth Exhibit Center renovations, and capital items 22 list for proposed debt issue? Any member of the Court have 23 anything further to offer in that respect? Did you have 24 something, Sheriff? 25 SHERIFF HIERHOLZER: I have asked the chief deputy 1-30-12 wk 74 1 to get ahold of Dailey Wells, who controls our radio system 2 and works on it now, and ask them, if we kept the same 3 system, what would we -- is there any way they can project a 4 ballpark figure on what we'd have to spend on it over the 5 next five to seven years to keep it up and running correctly. 6 He's trying to get some type of numbers from them on that. 7 And I did talk to Mr. Gondeck, and he can be here, as I told 8 you, Judge, between 9:30 and 10 o'clock on Tuesday. 9 JUDGE TINLEY: We're going to have a special 10 meeting at 10 o'clock next Tuesday, which is the -- 7th? 11 February the 7th. We're going to issue notice of that, with 12 the appropriate items on the agenda that we discussed 13 earlier. Anything else on the workshop agenda? Hearing 14 nothing further, I will adjourn the workshop agenda. 15 (Workshop was adjourned at 10:47 a.m.) 16 - - - - - - - - - - 17 18 19 20 21 22 23 24 25 1-30-12 wk 75 1 STATE OF TEXAS | 2 COUNTY OF KERR | 3 The above and foregoing is a true and complete 4 transcription of my stenotype notes taken in my capacity as 5 official reporter for the Commissioners Court of Kerr County, 6 Texas, at the time and place heretofore set forth. 7 DATED at Kerrville, Texas, this 1st day of February, 8 2012. 9 10 JANNETT PIEPER, Kerr County Clerk 11 BY: _________________________________ Kathy Banik, Deputy County Clerk 12 Certified Shorthand Reporter 13 14 15 16 17 18 19 20 21 22 23 24 25 1-30-12 wk