The Council met at 4 p.m. Monday, July 17 for a special meeting with a presentation from the Texas Municipal Retirement System and to discuss recent actions taken by the DART Board of Directors and how the Town intends to communicate and promote Addison’s priorities regarding the Cotton Belt.
The room was packed for the first item on the agenda—filled mostly with retirees who were obviously interested in the presentation from Eric Davis, Deputy Executive Director of TRMS.
Davis’ presentation was quite similar to a presentation made to the Council last year but provided insight for the new Council members. Of the information provided, following are a few of the highlights:
The TMRS Investment return assumption is 6.75%. Employee account balances are guaranteed to grow at 5% annually with employer and employee funds lumped at retirement and annualized based on a 5% discount rate. TRMS is defined as a “hybrid” cash-balance defined benefit with the defined benefit part being the guaranteed 5%.
In addition to the 5% guarantee that is common to all TMRS member city plans, there are various other supplemental benefits and features within each city’s individual plan. The Addison TMRS basics include a 7% of salary employee contribution matched on a 2 to 1 basis from the city; 5 years vesting; survivor benefits; retirement at 20 years of service or age 60 with 5 years of service; restricted prior service credit; limited buy back provisions; military service credit; supplemental death benefit; updated service credits and occasional ad hoc COLA awards based on 70% CPI (which was last implemented in 2015).
Based on benefits and the 6.75% investment return, TMRS calculates actuarially Addison’s contribution requirement annually. Numbers for Addison as of 12/31/2016 were 96% funded ratio with an unfunded liability of $4.85M and a total value in Addison’s retirement account of $115.6M.
Most of the discussion revolved around COLAs (cost of living allowance) for retirees. Councilman Walden suggested people on Social Security get a cost of living increase every year, but Davis corrected him advising him that that assumption is not accurate. He also pointed out that TMRS and Social Security use different CPIs (consumer price index) to calculate COLAs. Primary concerns discussed included how best to adopt a COLA and what could Addison afford with respect to COLAs. Davis pointed out that adopting COLAs is strictly a local decision to be made by each member city based on affordability, employee compensation competitiveness, etc. He stated that the 2018 contribution rate would increase to 10.62, not including COLA.
At one point Councilman Hughes asked the numbers question: If we do a 70% ad hoc COLA, what would the cost be?
Davis estimated that with a 70% COLA for the next year, it would have to be funded with approximately $155,000 with a similar amount required to be paid for the following 14 years. This would put the total cost at approximately $2.3M, which of course would also increase the Town’s unfunded liability.
Council and staff are now entering into planning for the 2017/2018 budget. The COLA decision will be a key factor in the tabulation of costs. Add this to other areas of costs such as overall employee compensation, legal costs associated with resolving existing disputes, infrastructure costs like Midway Road and yet unknown infrastructure costs resulting from the outcome of the asset management report and this Council has some serious financial decisions facing them.
It seems very likely that any decision to implement the COLA could create a need for increasing the tax rate. If any of this concerns you, the taxpayer, perhaps this would be a good time for you to email your thoughts to the Mayor and Council members and weigh in on these future decisions.
DART Discussion Re the Cotton Belt
City Manager Wes Pierson summarized what has transpired at the last several DART Committee and Board meetings, bringing the Council up to date —much of this was reported in the last issue of Facts Matter. Pierson advised that as a result of recent actions of the new DART Board the suburban communities must unite because without their recognition, nothing will get done. He said the suburbs are resolute in getting the Cotton Belt but it is unclear whether Dallas will support the Cotton Belt. A mindset of compromise is needed he said. And, if there is going to be no Cotton Belt, we need to consider our options.
Pierson said that going forward there would be active communication with the staff and that he has assigned a staff person to attend all DART committee and board meetings. He has also engaged with other City Managers and will be meeting with Mayors and City Managers at the end of the month. He noted that co-operatively the suburbs must let DART know that we expect the services that they committed to in 1983. He said we have opportunities in August and September to make our presence known and what is most important to keep in mind is that September 8 is the deadline for applying for a RIF loan to fund the Cotton Belt.
Mayor Chow mentioned several meetings he has scheduled with the Mayors of Plano, Farmers Branch, Carrollton and Richardson. He said the City Managers and Mayors would try to get both the Cotton Belt and the D2 approved at the same time. Lori Ward asked if from those meetings would there be talking points that council members could use when discussing the issue with others and Chow said that was a good idea.
Dates when DART committee meetings or Board meetings are scheduled include: August 8, August 22, September 12 and September 26.
That’s All Fine, But….
After considerable back and forth discussion about the various meetings Jim Duffy boldly identified an elephant in the room. He said that having been involved with the Cotton Belt issue previously, his view today is that “We’re going to have a stalemate.” He said this not so much to be pessimistic, but more as a realist. “The community needs to decide, do we want to stay in DART?” he said. “If not, what are the consequences of a withdrawal?” And, he suggested, we need to survey our businesses to find out what their thoughts are—do they need the Cotton Belt for transportation for their employees? “We need to be in or out and if we’re in, we need to have the Cotton Belt,” he said.
Duffy explained that getting out is not his goal “I want them to give us the rail service they promised us,” he said. But, all that said, being realistic, Duffy simply doesn’t want us to wait until the last minute and find out nothing’s going to happen and then decide to get out. Instead, he suggests, begin now to investigate and plan for what all it would take and what it would involve if we did get out of DART.
Several citizens in attendance later commented that Duffy was absolutely right—the Town should plan now for that possibility rather than wait and see what happens. At least the options would then be known.
Regarding this issue, Hughes wanted it to go on the record that following the June 20th DART Board meeting a statement was sent to The Dallas Morning News expressing Addison’s position as follows:
Statement Regarding June 20 DART Vote
Addison joined in partnership with 12 other area cities in 1983 to pursue the development of a mass transit system that included the Cotton Belt line as an integral part of a transportation system to benefit all of North Texas. Our partnership has always been focused on doing what is in the best interest of the entire region and we continue to recognize the importance of regionalism. Unfortunately, today’s DART vote appears to indicate that the interests of the City of Dallas are more important than that spirit of regionalism that Addison has supported both conceptually and financially for more than three decades. While we remain hopeful that a win-win solution can be found that will allow the development of both D2 and the Cotton Belt, as a result of recent DART board actions, Addison plans to seriously assess its withdrawal as a DART member city.
The Dallas Morning News never printed the entire statement but in the newspaper’s June 21 follow-up story they did write, “Addison officials said in a statement that the Board’s vote ‘appears to indicate that the interests of the city of Dallas are more important than the spirit of regionalism that Addison has supported both conceptually and financially for more than three decades’.”
Hughes also said that on July 13 he attended the Regional Transportation Council (RTC) meeting where significant steps were taken regarding the support of the Cotton Belt. Hughes said RTC approved $100M for the Cotton Belt and $3M for the Cypress Waters Station, which would be a stop on the Cotton Belt line.
Hughes later brought up that citizens who have talked to him about this issue expressed that they want the Council to be visible. Hughes suggested that if something of importance was being discussed at a DART meeting that the Council wants addressed, “Maybe one of us could be excused [from the Council meeting] to attend the meeting and speak.” With further discussion it was decided that if such a situation existed—such as recent DART meetings that were on the same night as the Council’s meeting—that the Council meeting date could be moved to accommodate all Council members attending the DART meeting.
Summarizing Council’s Strategy
So, in summary, while nothing was voted on, it was noted that the City Manager has designated a staff member to attend all DART committee and board meetings that deal with Cotton Belt issues. The City Manager is coordinating meetings with other suburban City Managers and Mayors in an effort to collaborate their efforts in support of the Cotton Belt. Mayor Chow will participate in those meetings. When it appears necessary, an Addison Council meeting date will be changed to encourage all Council members to attend a DART meeting. Add to this a somewhat afterthought by Mayor Chow in which he noted that citizens are always welcome to attend the DART meetings and fill out a card to speak if they wish to.
Here’s What You Didn’t Hear
Despite the fact that it has now become quite clear that most of the decisions are discussed and made at DART Committee meetings, little was heard about Council members commitment to attend these important Committee meetings. Instead, most of the discussion revolved around encouraging all Council members to attend DART Board meetings. By that time, it’s likely that Board members decisions will have been made, influenced by what transpired at earlier Committee meetings.
Then there’s Councilman Duffy’s insight. Despite his warning that plans should begin now as to whether Addison will withdraw from DART, what that entails, and what the consequences would be—you heard no further discussion. Thus, whether this Council will act on Duffy’s suggestion or not, remains a question.
There’s also the question that Councilman Tom Braun asked about whether anyone [presumably he meant any Council member] is going to individually reach out to any DART Board member. That question fell on deaf ears—you heard no commitments there either.
And then there’s this…..
Facts Matter made an earlier suggestion that the Council might consider creating a Liaison group of knowledgeable former Mayors and Council members whose historical insights could lend valuable insight and support to any current efforts to move forward positively with the Cotton Belt. So when we saw that the issue was on the agenda for the July 17 meeting, we reached out to former Mayor Todd Meier to see if he would be open to such help.
Not only was Meier open to this support, he advised that he had already initiated a meeting with the City Manager Wes Pierson, Deputy City Manager Cheryl Delaney and Mayor Pro Tem Ivan Hughes and offered such assistance.
Let’s set politics aside for a moment. Here’s a man who for the past six years immersed himself in a variety of ways to get the Cotton Belt from not even being in the plans for 2035 to being discussed for 2022, then finally in an approved 20 year financial plan for 2022. This is a man who has been integrally involved in getting the issue down to the 5 yard line, who is now willing to help get it into the end zone by contributing whatever he can to help.
But you didn’t hear about that offer at Monday night’s Council meeting—did you? Nope. Not Ivan Hughes or Wes Pierson shared one moment of the meeting they had with Meier where he made that offer.
So, while it’s great this Council has finally decided to develop some strategy of how they’re going to approach getting this issue into the end zone, they better hope their strategy works because they’ve chosen to ignore some valuable history and relationship building that at least one significant player was willing to offer, let alone any additional support of other such past involved individuals from Addison or other suburban towns. Instead, this Council has chosen to go it alone.
Photo Courtesy Flickr/Tax Credits
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