Arlington City Council Regular Meeting - August 13, 2024

The Arlington City Council met on August 13, 2024, at 2:30 p.m. (agenda noted 2:00 p.m.) in the City Hall Council Briefing Room. The meeting included a grocery industry update, detailed Fiscal Year 2025 budget discussions, appointments to boards and commissions, and resolutions on the proposed property tax rate and budget public hearings. Council gave direction to staff on the maximum tax rate and approved several resolutions.

Public Comments & Testimony

• One speaker, a mechanical engineer and former ARB member, requested to be nominated for a future TAD board appointment. He highlighted his background and experience, stating he is the youngest among ARB members and expressed a desire to serve the city.

Discussion Items

• Grocery Industry Update: Gary Huddleston, Grocery Industry Consultant for the Texas Retailers Association, presented on national grocery trends. Key statistics: average grocery profit margin is 1.6%; 62,000–64,000 stores in the U.S.; average store size 48,000–49,000 sq ft; average weekly sales $650,000; 44% of transactions use self-checkout. In Texas, Walmart leads market share (472 stores), followed by HEB and Kroger. In North Texas, Walmart, Kroger, and Tom Thumb are top three. Grocers use fuel centers, pharmacies, and restaurants to boost profits. Social benefits: SNAP (3.7 million participants in Texas, $600 million in sales) and WIC (800,000 participants, $64 million monthly). Annual sales tax collected per store: $320,000; statewide $8.3 billion. Councilmember Peel expressed concern about older grocery stores not reinvesting and the challenge of attracting young families to aging neighborhoods. He asked about mechanisms to incentivize store upgrades. Councilmember Boxall asked about mixed-use developments and grocery sales correlation. Councilmember Pham asked about local vs. corporate decision-making. The consultant noted that division-level headquarters (e.g., Kroger in Dallas, Tom Thumb in Arlington) are key for budget decisions.
• Fiscal Year 2025 Budget: City Manager Trey Yelverton and staff presented follow-up on budget topics including Tarrant Appraisal District (TAD) changes, compensation, health insurance, sister cities, municipal court, and the clean team initiative.
  • TAD Updates: Ethan Klos, Treasurer, reported that the TAD board has passed four propositions: (1) consider past dispute data in reappraisals, (2) freeze residential market values for FY26 (tax year 2025), (3) adopt a two-year reappraisal cycle (starting 2026–27), and (4) no new market value notices for two years. Homesteads with a 10% cap will still see appraised value increases; non-homesteads (rentals, second homes) will see a freeze. Seniors are already frozen. TAD’s budget increased 14% for FY25 (to implement new software); operational costs are down but software costs are $4 million annually. Councilmember Boxall asked about commercial hybrid appraisal methods. Councilmember Pham expressed concern about appraisers working from home during COVID and requested data on commercial property assessments. Councilmember Gonzalez asked about state parameters on TAD budget increases.
  • Compensation: Yelverton reviewed total compensation philosophy (base pay, stability pay, sick leave sellback, public safety step increases, training, wellness, insurance, retirement). For FY25, proposed 2% across-the-board salary adjustment (plus additional 2% for police, total 4% for police), costing $6.7 million citywide. Management professional pay ranges will increase 15% (M15–M20) to reflect market adjustments—no direct salary increases for incumbents unless below new range minimum. The city is currently 2.8% above market average but police are near market, fire are 6% above. Goal of 5% above market was discussed as aspirational; HR Director Yvonne McHaney noted that maintaining 100% of market plus benefits is competitive. Councilmember Hogg supported a longer-term strategy on step plan timing. Councilmember Gonzalez stressed not moving goalposts on the 5% target. Councilmember Boxall asked about efficiency sharing bonuses. Councilmember Odom-Wesley asked about exit interviews and morale. Councilmember Galante asked about step plans for all positions (only police and fire have step plans) and suggested adding a 10-year step between 5 and 15 years.
  • Health Insurance: Yvonne McHaney reported that after a competitive RFP, the city will switch from UHC to Blue Cross Blue Shield, saving 14.4% on medical and 27% on pharmacy. Dental, vision, life, and EAP plans will be enhanced. Total savings allow for improved benefits (embedded deductible, reduced copays, higher dental/vision limits) with no employee premium increase.
  • Sister Cities: Gus Garcia, Director of Economic Development, presented on the reinvigorated Sister Cities program. A 24-member board was appointed, new bylaws adopted, and a pipeline of potential cities (Canada, Mexico, Japan, South Korea, Morocco, Ecuador, New Zealand, Africa) is being evaluated using criteria (economic, educational, humanitarian, cultural). The program is an independent 501(c)(3) but the city acts as a liaison. Proposed budget includes $50,000 from the Convention and Event Services Fund (not general fund). Councilmember Peel expressed skepticism about ROI but was open to the $50,000 amount. Mayor Ross noted that the city previously spent about $28,500 (dues, stipend, travel) for Sister Cities. Councilmember Pham asked about the source of funds. Councilmember Boxall requested more data on city selection criteria. Councilmember Odom-Wesley noted that former Councilmember Sherry K. Hart is now Vice Chair of Sister Cities International, which could benefit Arlington. Council agreed to include $50,000 in the budget with restrictions on use (no salaries, no travel) and requested annual reporting on outcomes.
  • Municipal Court: Deputy City Manager Jennifer Wichmann and Judge Stuart Milner reviewed the decline in citations (from 150,000 in FY2012 to 46,000 in FY2023) and revenue (from $14 million to $5.6 million). Despite fewer citations, legal changes have increased the number of court actions per case (from 30 to 50). The court has reduced FTEs from 66 to 56 and dockets from 264 to 190 per month. Proposed additional cuts: $121,000–$122,000 by eliminating a vacant clerk position, reducing part-time judge budget, and adjusting bailiff hours. Councilmember Peel noted the court is a sunk cost; Councilmember Gonzalez emphasized traffic safety. Mayor Ross expressed frustration that the citation drop affects both safety and revenue.
  • Clean Team Initiative: Yelverton described a new $498,000 program to deploy four employees to roam major corridors (Cooper, Matlock, Bowen) to address blight (bandit signs, dead trees, broken curbs, etc.) through negotiation and work orders. This is the only significant new service enhancement in the budget. Additionally, the curbside leaf program will become permanent, and there are increased investments in median maintenance, green screens, and I-30/360 corridor cleanup. Councilmember Hunter expressed concern about code compliance effectiveness. Councilmember Odom-Wesley asked if the clean team has enough policy tools. Yelverton suggested starting with enforcement and then identifying any policy gaps.
  • Budget Balancing Options: Yelverton presented alternatives to the proposed one-cent tax increase ($4.1 million): (1) reduce compensation adjustments (e.g., 1% across-the-board instead of 2% saves ~$4.6 million), (2) eliminate the clean team, (3) delay raises, (4) move clean team to a utility fee (about $3.25/month per household). He also noted that a fee would capture tax-exempt entities (churches, schools) as ratepayers. Councilmember Gonzalez highlighted that the city has foregone $69.4 million in revenue through exemptions and has lowered the tax rate by 6 cents over eight years. Councilmember Boxall asked about potential mergers of departments (e.g., Office of Business Diversity, OSI, PDS) to save costs. Councilmember Peel asked about delaying four-man fire staffing (budgeted at $3.8 million). Councilmember Galante supported the one-cent increase. Councilmember Hogg suggested exploring fee-based alternatives. Councilmember Pham noted that property taxes are more equitable than a flat fee.

Key Outcomes

• Appointment: Approved Resolution 24-205 appointing Paul Corson to the Economic Development Corporation (term expires 12/15/2024) (9-0).
• Resolution 24-206 (Proposed Tax Rate): Passed 8-1 (Councilmember Piel opposed) to propose a property tax rate of $0.5998 per $100 valuation for FY2025, which is a one-cent increase over the current rate. This sets the maximum rate for future consideration.
• Resolution 24-207 (Public Hearing on Tax Rate): Passed 9-0 to call a public hearing on September 10, 2024, at 6:30 p.m. to discuss levying taxes above the no-new-revenue rate.
• Resolution 24-208 (Budget Public Hearing): Passed 9-0 to call a public hearing on the FY2025 operating budget on September 10, 2024, at 6:30 p.m.
• Direction on Tax Rate: Council directed staff to prepare the budget and tax rate resolutions based on a one-cent increase ($0.5998).
• Sister Cities Funding: Council generally agreed to include $50,000 from the Convention and Event Services Fund for the Sister Cities program, with restrictions on use (no salaries or travel) and annual reporting.
• Executive Session: The council recessed at 6:30 p.m., reconvened in executive session at 6:38 p.m. under Section 551.087 (Economic Development Negotiations), and adjourned at 7:08 p.m.