Blue Ribbon Panel Final Report TOWN OF
* TROPHY CLUB
100 Municipal Drive•Trophy Club,Texas 76262
Blue Ribbon Panel
Final
Executive Summary
September 3, 2013, Resolution 2013-16 was passed creating the Blue Ribbon Panel for the
purpose of studying the current governmental structure within the Town of Trophy Club and
providing recommendations to the Town Council. The Blue Ribbon Panel consisted of twelve
(12) citizens who currently do not serve as an elected official for the Town of Trophy Club or
Trophy Club Municipal Utility District No. 1.
Blue Ribbon Panel Members
James Como, Chair, served on Finance Subcommittee
Nicole Fontayne, Vice Chair, served on Governance Subcommittee
Sandra Millett, Panel Secretary
Patrick Arata, served on Governance Subcommittee
Ronald Bieker, served as Liaison to Trophy Club Municipal Utility District No. 1
Wesley Carlton, served on Finance Subcommittee
Mitchell Christoffer, served on Governance Subcommittee
Robert Duncan
Ronald Eddins, served as Liaison to TC MUD1 & Governance Subcommittee
Wanda Franklin, served on Finance Subcommittee
Timothy Gamache, served on Governance Subcommittee
Joe Henning, served on Governance Subcommittee
Robert Hillman, served as Liaison to TC MUD1
Recommendations from the Governance Subcommittee
1. Consent to a possible Trophy Club Municipal Utility District No. 1 Annexation of the PID
(short term)
2. Transfer the control of the Trophy Club Fire Department to the Town of Trophy Club
3. Continue to work toward a long term solution of consolidation with Trophy Club
Municipal Utility District No. 1 to become a full service Town
4. Other various organizational recommendations outlined in the Governance
Subcommittee Report
Recommendations from the Finance Subcommittee
1. Addressing a merger with Trophy Club Municipal Utility District No. 1 only when
necessary, i.e. only when Westlake has left Trophy Club Municipal Utility District No. 1
2. Remaining involved in the Westlake buyout process if it happens to help shape the best
and prudent scenario for Trophy Club
3. Considering annexation of the PID by Trophy Club Municipal Utility District No. 1
The following pages are the detailed reports from the Governance and Finance Subcommittees.
Blue Ribbon Governance Subcommittee
Blue Ribbon Panel Final Report Page 2 of 13
Report to Town Council
Introduction
The Trophy Club Blue Ribbon Panel was empanelled by the Trophy Club Town Council to
"investigate the optimal solution to the future Trophy Club Municipal Utility District No. 1 and
Town government structure by:
• Examining the current government structure in Trophy Club,
• Researching best practices for municipal government and
• Providing a recommendation to the Council regarding a local government consolidation.
In order to expedite its work the Blue Ribbon Panel divided into two subcommittees Finance
and Governance. The Finance Committee focused on the financial analysis of various scenarios,
while the Governance Committee investigated the organization and governance questions of
the government structure. This report encompasses the review and recommendations of the
Governance Committee.
Approach
The Governance Committee outlined inputs for study to ascertain the options and
recommendations to the Town Council. The elements included:
• Existing document review of Town and Trophy Club Municipal Utility District No. 1
contractual documents and past reports
• Observation of poor employee cooperation and coordination
o Interviews and Comments — Our goal was to talk with parties who could describe
and provide input on the impact of the current organizational and governance
structure. In addition, to the formal interviews listed below the committee received
input from Trophy Club Municipal Utility District No. 1 Board and Citizen Advisory
Board members via email and comments at our meetings. Mayor Connie White
addressed the full Blue Ribbon Panel; several Council members attended the
Governance Committee meetings on a fairly routine basis.
o Town Manager
o MUD District Manager
o Fire Chief
o Contractor/Developer
KEY ISSUES
Leadership
"Everything rises and falls on leadership" John Maxwell
Water is the primary resource required to sustain life. As such, it has been the source of conflict
throughout the ages. Wars have been fought for the right to control water. The current conflict
over governance of the water utility in Trophy Club is the 21st century iteration of this age old
battle.
Blue Ribbon Panel Final Report Page 3 of 13
At the same time citizens expect that its governing bodies will work together for the benefit of
all. The current conflict is very difficult and permeates every level of the two organizations. The
organizations have different cultures and strategic visions and goals which are not easily
reconciled. Therefore, our total local governance process does not function as efficiently or as
effectively as it should.
The conflict between the Town and Trophy Club Municipal Utility District No. 1 has been further
exacerbated by the Town of Westlake's desire to separate from Trophy Club Municipal Utility
District No. 1. The three way conflict now has the attention of state legislative officials, who
have convened meetings with the three jurisdictions.
Legal Issues
The only provision in the Local Government Code to affect the consolidation of Trophy Club
Municipal Utility District No. 1 in the current configuration, i.e., Trophy Club Municipal Utility
District No. 1 district boundaries crossing two separate municipal town limits; would be by
means of a Strategic Partnership Agreement in which all three governmental agencies would
have to agree to the terms of a proposed agreement in accordance with Section 791.026 of the
Texas Government Code and Section 43.076 of the Texas Water Code. There has been no
progress since the Town of Trophy Club introduced a proposed agreement in May 2013; and
there appears to be no effort on any agencies part to consider this strategy.
The committee recognizes that the political environment does not currently support the
concept of consolidation; therefore, the potential for annexation of the PID by the Trophy Club
Municipal Utility District No. 1 was explored.
The Governance Subcommittee requested an opinion from Patricia Adams, Trophy Club Town
Attorney regarding the following questions:
• Is there any law that will prevent the annexation of the PID into the Trophy Club
Municipal Utility District No. 1?
• Under what circumstances can the PID be annexed into the Trophy Club Municipal
Utility District No. 1?
Mrs. Adams response is included below in its entirety:
49.301, Water Code — owners of all of the tracts may petition the MUD board
requesting annexation. The petition requires landowners to assume any
outstanding and future authorized MUD bond debt, and authorizes MUD to levy
taxes on the tract. The MUD board makes findings of feasibility [and, subject to
consent of City pursuant to 54.016(a) and (d)], MUD adds the land by adoption of
an order. There is no MUD hearing or election required for annexation by the
MUD under this section. However, the petition could request the annexation to
be subject to conditions, including the future issuance of bonds to serve the
annexed area.
OR
Blue Ribbon Panel Final Report Page 4 of 13
49.302, Water Code - owners of less than all of the land proposed to be annexed
may petition the MUD board for annexation. This would require the signature of
owners of a majority in value of the tract as confirmed by the tax rolls to be
annexed or at least 50 owners if there are more than 50 owners of lots and parcels
comprising the tract. Under this section, a public hearing is required on the
petition and proposed annexation after publication of notice. If upon conclusion
of the hearing, the annexation is found by the MUD board to be feasible [and,
subject to consent of the Town pursuant to 54.016(a) and (d)], the MUD may
adopt an order adding the land to its boundaries. The MUD board is then required
to call an election within the District on the question of whether the annexed area
should assume its pro rata share of the outstanding MUD tax supported debt and
taxes. The MUD may also add another proposition as to whether the tract should
assume it's pro rata part of any future tax bonds and taxes previously authorized
but not yet issued. If the election is successful, then the tract shall bear its pro rata
share of the outstanding debt and taxes, and if the election included the additional
proposition, future MUD debt and taxes. In the order calling the election, the MUD
board may provide that the annexation is not final unless the election results
favorably to the assumption of the MUD's outstanding, and possibly future, bonds
and taxes.
AND
54.016, Water Code — Pursuant to subsection (a), no land within the corporate
limits of a city shall be included within a MUD unless the city grants its consent in
accordance with section 42.042, Local Government Code, and section 54.016 by
resolution or ordinance. A petition to the Town is required; and it must be
executed by the owners of a majority in value of the tract, or if there are more
than 50 owners, at least 50 owners of lots/parcels within the tract. The contents of
the petition are set out in this subsection. Pursuant to subsection (d), this same
requirement and process "shall apply whether the land is proposed to be included
in the district at the time of creation of a district or to be included by annexation
to a district." However, the remedies for failure or refusal of a city to grant
consent provided in subparagraphs (b) and (c), do not apply where the land to be
added is within the city's corporate limits. Subparagraph provides, in part, as
follows: "Under no circumstances shall land within the corporate limits of a city be
included in a district without the written consent, by ordinance or resolution, of the
city."
The election would be held "in the district, as enlarged by reason of the
annexation of the area". So, all voters residing within the area proposed to be
annexed by the MUD are permitted to vote, as well as the voters in the district
prior to the proposed annexation. A person who did not sign the petition, and who
does not want to be annexed must appear at the hearing to protest the
Blue Ribbon Panel Final Report Page 5 of 13
annexation. The Board has discretion not to include all of the land described in the
petition if at the hearing a deletion is found "necessary or desirable" by the board.
Sections 49.301, 49.302, and 54.016 do not provide authority for the proposition
that an addition of land by a district under those sections effectuate a transfer of
ownership of any municipal water or sewer facilities serving the added land.
Additionally, a transfer of ownership of infrastructure is not legally allowed when
there is outstanding bond debt for that infrastructure.
Governance (PID)
When the PID (Public Improvement District) was considered in 2007, an agreement with the
Town, the Developer, and the Trophy Club Municipal Utility District No. 1 was necessary to
secure Water and Wastewater service for PID customers. This was necessary because the
designated PID area was not within the Trophy Club Municipal Utility District No. 1 approved
boundary. The Town Council elected to create a PID, and seek water/wastewater services
rather than expanding the Trophy Club Municipal Utility District No. 1 boundary to include what
is now the PID. An agreement between the Town and the Trophy Club Municipal Utility District
No. 1 was accomplished and continues today.
The original agreement has worked well, but change is inevitable. Since the original agreement
is now approaching completion (2018), an opportunity exists to review, revise and extend the
PID agreement. With a NEW approach, there appears to be beneficial changes that can benefit
the PID residents and the Trophy Club Municipal Utility District No. 1, if a new Agreement can
be accomplished.
The original agreement stipulated that all PID residents would pay the same water and
wastewater rates as the rest of Trophy Club residents. It also agreed that the PID residents
would pay the same amount as other town residents for Fire/Emergency Services. However,
this fee is billed as an annual Assessment to each PID resident annually, not a tax. A tax for
water and wastewater service was not appropriate due to the PID not being a part of the
Trophy Club Municipal Utility District No. 1. It is important to note that taxes are deductible on
federal tax returns, while assessments are not.
Originally, to accomplish the request for services, the Trophy Club Municipal Utility District No.
1 required payment by the PID in the total amount of $4 million for access to water and
wastewater services from the Trophy Club Municipal Utility District No. 1. The $4 million dollar
Access Fee was calculated using the PID's proportionate amount of the associated debt of the
Trophy Club Municipal Utility District No. 1. This was later reduced to $3.26 million due to
payments made by the developer ($540K) on behalf of the PID and a $200K credit to the Trophy
Club Municipal Utility District No. 1 for participating in the increased capacity of the proposed
elevated water tower that now exists near Byron Nelson High School. The remaining $3.26
million was to be paid by each property owner in the PID by way of a one-time $2,300 access
fee. During the development of the PID, 10 lots were repurposed to accommodate drainage
and open space requirements reducing the total number of PID lots to 1,407. The resulting
Blue Ribbon Panel Final Report Page 6 of 13
amount due the MUD then became $3,236,100 (1,407 X $2,300). To date, 177 lots remain to be
sold/built (12.6%).
Economic Development
Trophy Club has experienced incredible growth over the past few years. This growth has put a
lot of pressure on both the Town and Trophy Club Municipal Utility District No. 1 as they
attempt to keep up with the design and construction demands. Streamlined processes better
serve the community, improve project success and ensure time and cost efficiencies.
When the town receives a development project plans are submitted for the Town and Trophy
Club Municipal Utility District No. 1 to review and approve. Part of this proposal includes
establishing a timeline for project completion. It is the responsibility of the town to ensure that
the critical path milestones are met and penalties and delays are not incurred.
The project process includes specification and design submissions. One of the local developers
who has been awarded Trophy Club contracts stated whereas a normal city project would be
estimated at 45 days to completion, they plan a 4-6 month estimate for Trophy Club. It appears
that this issue can be improved with the appropriate authority's and flexibility given the two
managers of each organization for planning and change order changes without having to take
decisions back to the respective elected bodies. Project management requires considerable
collaboration and cooperation between levels of review and ownership. If the review process
and project execution is not properly managed and delays ensue, the project gets delayed and
cost penalties are incurred.
Project changes and delays can be very costly in a project. When contractor or developer has an
issue with a project, they need a single contact that can give them a prompt response that will
not cause a delay in the project. During design reviews, it is essential that errors and/or changes
are caught and/or made at the earliest possible step in the process. The current arrangement
creates significant delay as the multiple entities structure of Town and Trophy Club Municipal
Utility District No. 1 require multiple meetings and approvals in order to provide the A/E with a
decisive answer. The committee supports the recent addition of a single engineering firm who
represents both Town and Trophy Club Municipal Utility District No. 1 and draws promptly from
appropriate authorities when collaboration and consensus is required.
Changes are the biggest nemesis to the design and construction process. Often times a
"correction" not discovered early, turn into a significant "change" further down line in the
review process. Changes are both costly and time consuming. Major changes can completely
derail a project or create budget over runs that can't be made up without additional budget
approvals, also causing delays. When there is not a sole owner of a project, the risk is much
higher that these impacts will occur. Communication is imperative between both organizations
for any future successful capital improvement project in Trophy Club.
At the same time, the economic development process is impacted by the necessity for the
Town to address issues outside of its control, but necessary to insure success. These issues
Blue Ribbon Panel Final Report Page 7 of 13
include: a very vibrant political climate in Trophy Club and wide variations in the quality of
developer submissions.
Organization
The Governance Subcommittee finds the dual reporting relationship of the Fire Chief, reporting
to the Town and Manager and District Manager ineffective. There are two administrative chains
of command. The Fire fighters are in the Trophy Club Municipal Utility District No. 1
organization and the EMS staff is in the Town. In addition, Fire Marshall duties that are
currently the responsibility of the Fire Chief, are appointed by and directed by the Town
Manager has posed an operational conflict when reviewing development plans as the Fire
Marshall, but answering to the Trophy Club Municipal Utility District No. 1 for fire operations.
This also requires the Fire Chief to prepare and submit two budget submissions in addition to
other duplicative administrative tasks. He indicates that approximately 90% of his time is
consumed in administrative tasks. The Town is ultimately responsible for public safety. The dual
reporting relationship only works due to Fire Chief Danny Thomas' extensive skill and
experience.
Other redundancies and efficiencies exist due to the current Trophy Club Municipal Utility
District No. 1/Town structure, which are acknowledged by both organizations. These include
Human Resources, Finance, Tax Assessment and others. Trophy Club Municipal Utility District
No. 1 Board members assert that this is due to unsatisfactory performance on the part of the
Town.
RECOMMENDATIONS
The following recommendations are respectfully submitted for Town Council's consideration:
1. Consent to a possible Trophy Club Municipal Utility District No. 1 Annexation of the
PID(Short Term).
2. Transfer the control of the Trophy Club Fire Department to the Town.
3. Continue to work toward a long term solution of consolidation with Trophy Club
Municipal Utility District No. 1 to become a full service Town.
4. Other various organizational recommendations outlined in this report.
Leadership
The Governance Committee believes it is essential for the leaders of the Town of Trophy Club
and the Municipal Utility District to dramatically improve the communication, culture and
issues related to the current conflict.
• The Town of Trophy Club Council and The Trophy Club Municipal Utility District No. 1
Board should set a tone of cooperation and collaboration by:
o Focusing on what is best for the citizens as a whole,
o Establishing common goals and performance metrics for the Town and the Trophy
Club Municipal Utility District No. 1 relating to collaboration,
o Keeping a keen focus on opportunities to unify the town rather than create
divisiveness,
Blue Ribbon Panel Final Report Page 8 of 13
o Develop a process to determine when to use alternative dispute resolution services,
such as a mediator or umpire when an impasse occurs,
o Actively engaging in alternative dispute resolution services when the process is
activated.
Governance and Organization
An important organizational change of note in this recommendation is that the Fire Department
should come under a single administrative chain of command, the Town.
Create a full service town with the utilities provided by one provider, the Town of Trophy Club.
All related changes should be in effect, where possible, by or before the start of the fiscal year
beginning October 1, 2014. Upon completion of these recommended changes it is intended
that all Trophy Club Residents will be treated equally regarding Water, Wastewater, and
Fire/Emergency Services rate provided by the Trophy Club Municipal Utility District No. 1.
Economic Development
It is the opinion of this committee that one of two things must take place for effective
economic development as it relates to project management; 1) establish a single point of
contact that has the knowledge and authority to give the appropriate answers to project
questions, or 2) establish an effective management structure that allows for quick decision
making at the lowest possible level. When there is dual ownership of a project and one or the
other has to go to a higher level; i.e. Trophy Club Municipal Utility District No. 1 Board or Town
Council, for approval, the A/E or construction process/s are delayed and incurs major cost
impacts.
The Trophy Club Municipal Utility District No. 1 and the Town of Trophy Club must come
together to make decisions that impact development. Single ownership of projects is
recommended and players of each discipline involved must recognize and respond to the need
for on-time readiness for design review and appropriate approvals. Architects, engineers,
construction companies, and residents should be able to trust Town and Trophy Club Municipal
Utility District No. 1 authorities to be prompt and effective in their decision making so that
financial hardships are not incurred. To do that, single ownership and management is
recommended to ensure that a streamlined process is implemented and maintained.
The Blue Ribbon Governance Subcommittee was honored to be given the task of exploring and
recommending to Town Council the governance structure of a future Trophy Club local
government. Our current situation is admittedly very complicated and we compliment both
organizations for making our town as efficient and productive that it is despite the
organizational shortcomings. It is our hope and desire that both elected bodies (Town Council
and Trophy Club Municipal Utility District No. 1) will consider our recommendations moving our
community forward to an even greater, more efficient local government in the future.
Blue Ribbon Panel Final Report Page 9 of 13
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In closing, the Blue Ribbon Panel thanks the Council for the opportunity to serve our town, the
foresight to invite citizenry into this process, and consideration of our recommendations. The
Blue Ribbon Panel has taken this task on with the best of intentions for the Trophy Club
community and its citizens. We look forward to seeing our town continue to grow and prosper
in the most efficient manner possible.
Respectfully submitted,
James Como, Chair Nicole Fontayne, Vice Chair
Blue Ribbon Panel Final Report Page 13 of 13