Denton County Commissioners Court Courthouse on the Square 110 West Hickory, Denton, Texas * * * * * Formal Agenda Minutes
Not Official Minutes.  For official minutes, please contact the County Clerk at 940-349-2012.

November 22, 2000

Be it remembered that Commissioners Court of Denton County, Texas, met on this the 22nd day of November, 2000 with Judge Kirk Wilson presiding over a telephone conference with Judge-elect Scott Armey and Commissioner Carter. Also present were the following: James Wells, Denton County Auditor; Tye DeBerry, Director of Economic Development for Denton County; Gary Machak, Managing Director, Dain Rauscher, Investment Services; Thomas Keever, Assistant District Attorney, Civil Division and deputy clerk for Commissioners Court, Kathleen Bransford.

Judge Wilson introduced the members of the court and explained that the following would be a telephone conference with representatives from Moody's Investors Service and Standard & Poor's Rating Service in New York City on the issuance of bonds or other debt instruments. Denton County would like to see a one tic upgrade of their present credit rating, Aa2 with Moody's.

Gary Machak explained that the purpose of the meeting with the bond rating companies is for them to be able to evaluate and compare the county's bond market to other counties across the nation. This can lead to a better bond rating which means a reduction of taxes for the citizens of Denton County. As growth occurs, the rating increases. He introduced Douglas Benton, Moody's representative on the telephone.

Judge Wilson introduced the court to Mr. Benton and informed him that this was a public, posted meeting with two members of the public in attendance: Dick Tedrow, Denton, Texas and Linda Hartman, Sanger, Texas. He asked Comm. Carter to begin the presentation.

Comm. Carter explained the Better Safer Roads Program, initiated in 1998 when 25 citizens were appointed at-large from Denton County, to study and propose a comprehensive road program that would incorporate within it the following criteria: safety, congestion relief and economic development opportunities. Once this committee had selected the roads, Commissioners Court adopted their recommendations and proposed 55 road projects for a total cost of 85.3 million dollars. A special bond election was held and overwhelmingly approved by 70% of the voters. This 83.5 million was leveraged against state, federal and local projects realizing 400 million dollars worth of road improvements. Today, it may leverage as much as 800 million dollars worth of road projects. (Refer to Section Two in manual prepared by Dain Rauscher Investment Services.)

Tye DeBerry, Director of Economic Development, noted the phenomenal growth of Denton County and its ability to attract companies of quality such as General Motors, Walmart, Boeing, Fannie Mae, etc. These Fortune 500 companies attract other quality companies along with the attraction of Denton County's low tax rate. The County's greatest asset is the Alliance Airport, the first and largest industrial airport in the world. The airport will be extending its runway within a few years to 11,000 feet. This extension will allow a fully loaded cargo plane to fly non-stop from here to anywhere in the world that Dallas Fort Wroth Airport (or any other airport in the United States) can now fly; another attraction for quality companies to locate to this County. Denton County's median income is over $52,000/year, ranking it fourth in the State of Texas and 93rd in the nation. (Refer to Section Three in the manual.)

James Wells, Denton County Auditor, explained that the bulk of the financial administration is credited to four officers: Budget, Purchasing, Treasurer and the County Auditor. Among these officers is a combined total of 70 years with Denton County representing longevity, stability and experience. A review of the Five-year Comparative Budget Analysis shows a continuing strong financial position at the end of each year. The decline in the Undesignated Fund Balance of approximately $3.8 million is offset by increases in the Fund Balance and in Special Revenue Funds, such as the Tobacco Settlement Fund of $4.8 million. Overall, the County's decline in available reserve funds is not as great as shown. There has been an actual decrease in delinquent taxes receivable even though the tax base has grown considerably. The actual uncollected has shrunk by about 20 percent. Investments for Denton County are conservative and the money is in three places: depository bank, Certificates of Deposit and statewide investment pools.
Douglas Benton, from Moody's, asked the County Auditor what he anticipates the fund balance for FY 2000 being?
James Wells answered approximately 8 million, same as FY 1999, and he does not foresee any significant changes for FY 2001. On page Two of the Manual, Section Four, the spending increase is a reflection of the growth of the county and of an increased demand for services. He pointed out that the Tax Revenue grew at a lesser percentage of the total General Fund Revenue in 1999 than it did in 1995. Expenditure growth over the last five years has been in new and expanded services through satellite offices, construction of new buildings, the addition of four courts, and jail expansion, all of which adds to Public Safety. On Page Three, the change in the Fund Balance is offset by using current funds for building construction, smaller projects between one-half and a million dollars, and computerization including preparation for Y2K. Page Four reflects the Tax Collection History. 98.5 percent is collected of current and delinquent tax levies contributing to a low tax rate, which has actually dropped 6 cents from 1993 to 2000. Page Five illustrates the Budgeted Revenue Summary in which 60% is collected in ad valorem taxes, a smaller percentage than five years ago and small for a county of this size. Page Six shows the Budgeted Expenditures with the bulk going to Public Safety and other mandated services. A twelve-year growth chart on Page Seven indicates an increase from 34 million to 88 million with a 70% population increase, which Mr. Wells stated is not a drastic spending curve.

Gary Machak, of Dain Rauscher Investment Services, informed the investors that Denton County is conservative in terms of repayment and will be able to issue more bonds in the future, if necessary. The chart on Page Two indicates that the electorate has supported bond issuance in the past. The Assumptions on Page Three show there is still 24 million to be issued out of the 1999 bond election and 1.85 million out of the 1991 bond election. For this current bond election, he hopes to sell on December 5, 2000 with a closing date of December 28, 2000. Mr. Machak pointed out that the interest rates in the county's analysis are high compared to market rates, allowing for a cushion. The taxable assessed valuation growth is 6 percent for six years and 3 percent thereafter: when, in fact, Denton County has grown 18 and one-half percent this year and approximately 16 and one-half percent the year before, allowing these bonds to be issued with no increase in the tax rate. Mr. Machak asked the investors for a confirmed rating by next week, reminding them that this county has demonstrated its leadership in low tax rates, keeping up with rapid growth, and aggressive management. As an example of innovation, the use of the State Infrastructure Bank Loan for State Highway 121 Bypass, which netted the county $10 million for zero cost and a low rate of 4.5 percent. He extolled the county on its excellent staff and attention to detail. He believes an upgrade in the rating would be appropriate.

Douglas Benton explained that all of this information goes before a committee who will confirm a rating as soon as they can. There are positive factors in the outlook presented by Denton County.

Judge Wilson thanked Mr. Benton and Moody's for the County's current rating but urged them to consider an upgrade.

A SECOND SIMILAR PRESENTATION WAS MADE TO STANDARD & POOR'S REPRESENTATIVES ANDREW GROSSMAN AND PETER MURPHY. ALSO INVOLVED IN THE PRESENTATION FOR THE COUNTY WAS MATT BOLES FROM DAIN RAUSCHER.

Comm. Carter noted that this was an abbreviated session as compared to when Judge Wilson, Comm. Krueger and himself met with them in New York eyeball to eyeball.
Judge Wilson said this was a more structured meeting and thanked the presenters for their input. He explained that the fund balance was questioned due to the county using those funds to defend their border with Tarrant County. Hopefully the county will get their money back when Denton County is the victor.
Mr. Machak urged the county to continue their trips to New York for presentation of this material, like an individual meeting personally with a loan officer as opposed to just a telephone call. The trip more than pays for itself.
Comm. Armey suggested a possible videotaping of the meeting in New York to be shared with the whole county.
Mr. Machak agreed that would be possible in a few years.
Linda Hartman, from the audience, asked if the investors ever come here?
Mr. Machak answered that they have been here but it is difficult for them to travel to every entity in the country for which they determine ratings.
Mr. Tedrow, from the audience, asked how the market affects the ratings.
Mr. Machak responded that the market outlook does enter into the selling of the bonds but not so much for the rating of the bonds. As the market declines, money goes to the bond market.
Comm. Armey reiterated the earlier point that the growth rate projections are low in comparison to the actual growth rate.
Comm. Carter added that the county has room to grow but the key is to how that growth is managed.
Comm. Armey asked Mr. Wells if there would be any debt retirement soon?
Mr. Wells said perhaps in 2003 there would be a drop-off in some road bonds.
Judge Wilson thanked everyone for their participation and asked for adjournment.
Comm. Carter moved to adjourn and Comm. Armey seconded with a 3-0-0 vote.

This set of minutes prepared by deputy clerk Kathleen Bransford and reviewed by County Clerk Cynthia Mitchell.