Jun 17, 2021 BAYTOWN FINANCE COMMITTEE

[00:00:03]

UM,

[ CITY OF BAYTOWN NOTICE OF MEETING BAYTOWN FINANCE COMMITTEE THURSDAY, JUNE 17, 2021 4:30 P.M. HULLUM CONFERENCE ROOM, CITY HALL 2401 MARKET STREET, BAYTOWN, TEXAS 77520 Due to the COVID 19 Disaster and the CDC's recommendation regarding social distancing measures, the public may not be allowed to be physically present at this meeting, as there is a limited amount of space when maintaining the required six feet of separation from others. For those members of the public that cannot or do not wish to be physically present at the meeting, they will be able to participate through two-way communications. For video conferencing, use the following website www.zoom.com, click on "join a meeting" on the top right corner, and input the following Meeting ID:833 9614 8137. For telephone conferencing please use the following toll-free number: 1-877-853-5247, Meeting ID:833 9614 8137 Any person who is participating through video/teleconferencing interested in speaking on any item on the agenda must submit their request via email to the Finance Administrative Assistant at Elizabeth.Donato@baytown.org. The request must include the speaker's name, address, and phone number that will be used if teleconferencing as well as the agenda item number. The request must be received prior to the posted time of the meeting. The agenda packet is accessible to the public in both HTML and PDF formats at the following link: https://www.baytown.org/city-hall/city-clerk/agendas-minutes. For more information or questions concerning the teleconference, please contact the Finance Department at (281) 420-6531. AGENDA CALL TO ORDER AND ANNOUNCEMENT OF QUORUM ]

I MAKE A MOTION.

I'LL SECOND IT.

AYE.

ALL IN FAVOR? A ITEM NUMBER TWO.

DISCUSS TO CONSIDER CONVENING RULES MORNING OR AFTERNOON.

I, UM, PROVIDED TO YOU IN YOUR PACKET.

UM, UM, DRAFT PROCEDURES.

THESE ARE SIMILAR TO WHAT WE DID.

UH, WITH THE CHART REVIEW COMMITTEE.

IT GOES OVER TO ENACTMENT.

THESE ARE JUST GUIDELINES THAT YOU FOLLOW FOR YOUR MEETING.

IT TALKS ABOUT A TWO, UM, MEETING BY, UM, THE STAFF, OR DESIGNEE.

UM, IT ALSO TALKS ABOUT ROBERT RULES, JUST LIKE COUNCIL THE VOTE.

AFFIRMATIVE THAT IS PRESENT.

MASK TALKS ABOUT THE RIGHT OF FLOOR THAT THE PRESIDING OFFICER WILL HAVE THE CONTROL OF THE MEETING.

SO THEY WILL RECOGNIZE PEOPLE, COUNSEL AND STAFF, AND ANY PUBLIC COUNSEL.

LET TALK ABOUT THE PRESIDING OFFICER IN ABSENCE.

THE PRESIDING OFFICE, ABSENT THE PRE THE CHAIR, THE VICE CHAIR WOULD TAKE OVER.

THIS IS TODAY ALL THE ORDER.

JUST THE SAME THING AS WE HAVE ON OUR COUNCIL AGENDA.

THE CONSERVATION ORDER IS AGAIN ASSIGNED TO THE DESIGN OFFICER.

SUFFICIENT OF CHAIR SHOULD, FOR SOME REASON THE CHAIR NEEDS ME.

THE VICE CHAIR CAN SIT IN.

BOTH ARE GONE.

THEN THE MEETINGS ON, 'CAUSE IT'S ONE.

SO, UM, MEETINGS WILL HOLD ON.

MEETINGS THAT THE CALL OF THE CHAIRMAN OR AT OTHER TIMES TALKS ABOUT THE AGENDA.

THE ORDER, THE AGENDA WILL BE SET.

ITEMS CAN BE SUBMITTED TO DIRECTOR OF FINANCE'S, BOARD MEETING BY ANY MEMBER, UH, IN THE BEST INTEREST OF YOU CAN TAKE THINGS OUT OF ORDER AND THE PROCEDURE SHOULD, UH, THE PUBLIC COME.

IT DOES BEEN INCLUDE.

AND SO THEN IT'S JUST KIND OF A, A CONDENSED VERSION.

'CAUSE IT'S MORE, UM, I GUESS INFORMAL SOMETIMES.

SO IT'S KIND OF INFORMAL RULES, BUT YOU DO HAVE THOSE CHANGES.

I THINK EVERYTHING, I HAVE NOTHING.

YEAH.

I LOOKED THROUGH IT AS WELL.

IT'S VERY, YEAH.

SIMILAR TO COUNCIL MEETINGS.

I DIDN'T REALLY HAVE ANY COMMENTS OR QUESTIONS.

I GUESS AS THE FINANCE COMMITTEE, WE JUST HAD NEVER HAD THIS IN PLACE BEFORE.

RIGHT.

IT'S BEEN MORE OF AN INFORMAL COMMITTEE.

BUT I UNDERSTAND YOU WANTED JUST SOME PROCEDURES JUST TO KEEP THINGS.

ALL IN FAVOR.

AYE.

TAXES.

NEXT WE HAVE DISCUSSIONS.

ITEM THREE A, DISCUSS THE TERMS OF OF THE FINANCE COMMITTEE.

THANKS, CHAIRMAN.

SO, UH, IF YOU REMEMBER WHEN WE INITIALLY TALKED ABOUT RULES PROCEDURE, WE ALSO TOUCHED ON, WE MET, TALKED THE FINANCE COMMITTEE.

AND, UH, KAREN AND I HAD GIVEN US SOME THOUGHT, UM, ONCE BEFORE, USE A DRAFT, A SUGGESTED TERMS OF REFERENCE.

UM, THIS, AND I CAN TELL YOU FROM EXPERIENCE ELSEWHERE, THIS IS A FAIRLY STANDARD FORMAT FOR FINANCE COMMITTEES IN OTHER, IN OTHER CITIES, IN SOME ORGANIZATIONS.

SO THAT IS BEFORE YOU, IT OBVIOUSLY ALLOWS, UM, FURTHER SCOPE BECAUSE NUMBER FOUR SAYS OTHER MATTERS AS DELEGATED TO THE COMMITTEE.

FIVE TO COUNCIL.

SO, UH, IT'S NOT FULLY DESCRIPTIVE IN THAT SENSE, BUT IT'S ALSO WORTH REMEMBERING THAT THE FINANCE COMMITTEE IS ONLY A SUBSET OF CITY COUNCIL.

SO THAT IS WHERE ALL THE DECISIONS, PARTICULARLY IN THE BUDGET ARE MADE.

AND THE RULE HERE IS, IS TO REVIEW AND TO CONSIDER, UH, SOME OF THE FINANCIAL DATA, ANTHONY'S RECOMMENDATIONS AND POLICIES.

BUT ULTIMATE AUTHORITY FOR DECISION MAKING, FINANCE ADDRESS FOR CITY COUNCIL.

FOR YOUR CONSIDERATIONS HERE.

[00:05:06]

AND WE'RE BASICALLY DOING THIS TO NORMALIZE THE COMMITTEE.

PRECISELY.

I I, I REALLY CAME FROM AN EARLY DISCUSSION WE HAD WITH, UH, THE CHAIRMAN.

I THINK WE, YOU THAT SORT.

BUT, UH, I THINK WE CONCLUDED THAT IT WOULD BE USEFUL JUST TO CODIFY OKAY.

WHAT THE REMIT IS.

SO THAT WILL HELP WITH THAT.

BUT I MEAN, AS KAREN MADE THE POINT, IT'S NOT MEANT TO OVERLY FORMALIZE OUR DISCUSSIONS.

'CAUSE I THINK HAVING CHANCE JUST TO CHAT TWO, BUT IT GIVES US A CLEAR READ AND, AND ALSO MAKES IT CLEAR THAT THIS IS NOT REPLACING THE ROLE OF COUNCIL ANYWAY WHEN IT COMES TO MAKING DECISION ABOUT YEAH, I MEAN ULTIMATELY I MAKING RECOMMENDATIONS TO THE REST OF THE COUNCIL.

SAME MOTION CHAIRMAN.

UH, COULD I AT, AT THIS POINT INTERJECT WITH ME AND SUGGEST WE, WE, WE RULE, UH, WE USE YOUR RULES OR PROCEDURE TO TAKE SOMETHING OUT OF ORDER? 'CAUSE I'M CONSCIOUS RANDY'S HERE, HE'S LAUGHED ON THE AGENDA.

I'VE GOT JOE MORROW HERE TO TALK TO US ABOUT THE CAPITAL INVESTMENT PROGRAM.

IT MIGHT MAKE SENSE TO TAKE RANDY'S ITEM ASSERTION.

IS EVERYONE OKAY WITH THAT? MM-HMM .

LET'S GO TO, WE'LL TAKE ITEM THREE C.

NEXT DISCUSS RENEWING THE CONTRACT OF THE CONVICTION OF THE TAXES AND PAYMENTS IN LIEU OF TAXES WITH MR. RANDALL V STRAW.

THANK YOU.

UH, DOES THAT MEAN I NEED TO CUT MY PRESENTATION DOWN? ABOUT AN HOUR AND A HALF.

, 30 MINUTES OR 30 SECONDS.

OKAY.

AS MUCH TIME AS YOU NEED TO COVER THE SUBJECT, MA'AM.

RIGHT.

UH, AND, AND, AND FOR THE BENEFIT OF THE COUNCIL MEMBER FINANCE COMMITTEE, UH, FOLKS, THE CURRENT CONTRACT BETWEEN MYSELF AND THE CITY WAS DONE FIVE YEARS AGO WITH ORIGINALLY FOR A TWO YEAR PRIMARY TERM WITH THREE ADDITIONAL YEARS THAT THE PARTIES SHOULD AGREE TO REVIEW.

WE'RE CURRENTLY IN THE LAST YEAR, UH, OR THE THIRD THE CONTRACT.

SO CONTRACT IS UP AS OF THE 30TH.

UH, UNDER THE TERMS OF THAT CONTRACT, WE CAN CONTINUE ON ON WHAT THE MONTH AGREEMENT, UH, OR MY REQUEST SUGGESTION IS, UH, CITY'S SATISFIED.

THAT'S JUST REVIEW THAT EXISTING CONTRACTOR AND RETURN .

I WOULD CERTAINLY LIKE T THE CITY, UH, IN THIS TAX EFFORTS.

UM, AND AGAIN, UM, I THINK FROM THE CITY'S PERSPECTIVE, OF COURSE I'M OBVIOUSLY BIASED, BUT I THINK THAT FROM THE CITY'S PERSPECTIVE, THE BEST OPTION FOR YOU IS SOMETHING TO DO.

CONTRACT WITH ME.

THERE ARE CERTAINLY OTHER FIRMS OUT THERE THAT DO THIS WORK.

I WON'T MENTION BY NAME.

EVERYBODY'S HEARD FIRMS REPRESENT HARRIS COUNTY, CITY, HOUSTON, UH, THAT DO THE SAME TYPE OF WORK.

UH, BUT I THINK FROM THE CITY'S PERSPECTIVE, I I CAN DO A BETTER JOB, UM, FOR A NUMBER OF REASONS.

UH, I HAVE A UNIQUE PERSPECTIVE OR POSITION AND RELATION.

CITY OF BAYTOWN.

FIRST OFF, YOU HIRE ONE OF THOSE OTHER, THE BIG FIRMS, THEY'RE JUST GONNA ADD THE CITY OF BAYTOWN ONTO THEIR EXISTING TAX LAWSUITS, COLLECT THEIR MONEY.

JUST JUST ONE OF THE CLIENTS.

CITY OF BAYTOWN IS MY BIGGEST NUMBER ONE MOST IMPORTANT CLIENT.

SO MUCH OF MY TIME IS DEDICATED TO TRYING TO WORK FOR THE CITY AND TAKE CARE OF THE DOGS.

SO I'M MUCH MORE HIGHLY MOTIVATED THAN THE BIGGER FIRM.

KEEP DOG HAPPY.

UM, I HAVE A LOCAL OFFICE HERE IN BAYTOWN FOR BOTH THE CITY AND FOR TAXPAYERS.

THEY COME IN, VISIT, VISIT, TALK, AND THEY DO A REGULAR BASIS.

UM, SIDE NOTE, UH, FOR THOSE INTERESTED IN SALES TAX AND SO FORTH, I LIVE IN BAYTOWN.

MOST MY STAFF LIVES IN BAYTOWN, OREGON AREA.

SO ANYTHING YOU PAY ME GETS BUILT BACK IN COMMUNITY FOR THE MOST PART BECAUSE WE SPEND OUR DOLLARS.

UM, UH, I ALSO FOR, SO AS WELL, WELL, I'VE ACTUALLY BEEN DOING THIS FOR THE CITY OF BAYTOWN FOR OVER 40 YEARS.

I WENT TO WORK FOR THE CITY OF BAYTOWN IN 1978,

[00:10:01]

AND THE CITY COLLECTED TAXES IN HOUSE IN THOSE DAYS OUTSIDE ATTORNEY CITY ATTORNEY'S OFFICE DID IT.

AND AS THE ASSISTANT, THAT WAS MY PRIMARY RESPONSIBILITY.

UH, AND AFTER I BECAME CITY ATTORNEY, WE CONTINUED CORRECT IT THROUGHOUT THE TIME I WAS HERE.

AFTER I LEFT CITY ATTORNEY AT THAT TIME, MR. RAMEZ, THEY DECIDED TO CONTRACT OUT THE TAX SERVICE.

I ENDED UP A CONTRACT.

SO FOR ABOUT A YEAR GAP IN THERE, I'VE BEEN CONTINUALLY DOING THIS FOR THE CITY FOR A LONG TIME.

I'M GONNA FIND ANYBODY'S COME, HAVE MORE EXPERIENCE IN THE CITY.

I'M MORE FAMILIAR WITH THE COMMUNITY NEEDS.

UM, THE OTHER THING I WOULD PRESENT TO YOU IS THERE'S GONNA TO CHANGE.

I BELIEVE I'M STILL EXCELLENT SERVICES TO THE CITY AND I BASE THAT ON THE NUMBER OF DOLLARS COLLECTED.

YOU CAN TALK TO A LOT OF FINANCE PEOPLE THAT DIFFERENT WAYS TO ANALYZE TAX COLLECTIONS.

BUT I'VE MAINTAINED FOR UNION YEARS THAT THE BOTTOM LINE, IT SHOULD COME ME DOLLARS, TAXES ARE WE COLLECTING FOR THE CITY.

I'VE GIVEN TO Y'ALL A COPY OF THE MOST RECENT QUARTERLY REPORT THAT I PRESENT TO THE CITY UNDER THE TERMS OF MY CONTRACT.

I GIVE A MONTHLY REPORT, UH, CITY ADMINISTRATION, FINANCE DIRECTOR, CITY ATTORNEY, CITY MANAGER, A QUARTERLY REPORT, WHICH, UH, IS RIGHT THERE, HAS SOME DATA ON IT, AND AN ANNUAL REPORT THAT ENCAPSULATE, UM, AND YOU HAVE A BUNCH OF INFORMATION IN THERE AND CHARTS AND UH, DOLLAR NUMBERS PER MONTH.

UH, BUT TO MAKE IT EASY, AND I'M STILL COLOR GRAPH, I NEED TO FIGURE OUT HOW WE DO THIS, UH, CHARLES DO THIS ON A, UH, COMPUTER SCREEN.

BUT THIS IS A GRAPH OF THE TIME PERIOD COVERED BY THE CURRENT CONTRACT.

UM, IN 2017, THAT'S ACTUALLY THE 20 16 20 17, UH, UNDER THE TERMS OF THE CONTRACT, EVERY YEAR THE FINANCE DIRECTOR AND I SUPPOSEDLY TALK IN THE BUDGET GOAL GETS SET FOR THE CITY.

AND I'M TOLD HOW MUCH I NEED TO COLLECT FOR THAT BUDGET YEAR.

AND THE CITY NEEDS THAT FOR BUDGETING PURPOSES.

UH, AND IT GIVES ME SOMETHING TO GO FOR.

AS YOU CAN SEE, THAT FIRST YEAR, YOU KNOW, JUST DID BARELY EXCEED IT.

I'M NOT HAPPY ABOUT THAT.

BUT I, I WILL POINT OUT, I BELIEVE THAT IS THE YEAR THAT THE SCHOOL TAX OFFICE HAD SOME COMPUTER ISSUES AND WE WERE LITERALLY OUTTA WORK FOR ABOUT TWO MONTHS.

SO WE HAD SOME ISSUES THAT YEAR ON THE COLLECTION ABILITIES THAT WERE, AND AS YOU CAN SEE, THE FOLLOWING YEARS WE'VE RECOVERED AND IT'S CONSISTENTLY BEEN EXCEEDING OVER $700,000 REGARDLESS OF WHAT THE BUDGET GOAL IS.

UH, SO THAT'S, FROM Y'ALL STANDPOINT, THAT'S JUST EXTRA MONEY COMING IN ABOVE WHAT YOU BUDGETED TO COLLECT.

UM, I'LL ALSO POINT OUT TO YOU THAT, THAT LAST CALL IN 2021, THAT'S HIS CURRENT BUDGET YEAR.

OCTOBER 1ST, 2020 TO SEPTEMBER 3RD, ONE YEAR.

SO THE GOAL I THINK IS 627,000.

UH, THAT COLLECTION IS JUST UNDER THAT, BUT THAT'S AS OF MARCH 31ST.

UH, AS OF MAY 31ST, UH, WE HAD COLLECTED FOR THE CITY ALREADY $773,000 IN SOME CHANGE.

UH, I WON THE JUNE NUMBERS FOR A COUPLE MORE WEEKS, BUT WE'LL PROBABLY EXCEED $800,000 IN COLLECTION FROM THE CITY BY END OF JUNE WHEN WE FILL HERE ABOUT THREE MONTHS TO GO IN THE BUDGET YEAR.

SO FROM A PERFORMANCE STANDPOINT, I BELIEVE I'M TAKING CARE OF THE CITY.

NEED TO DUMP YOUR BUDGET NEXT YEAR.

WE CAN TALK ABOUT THAT.

SO I, I MEAN, I'M NOT OPPOSED TO IT.

I, IN MY HEAD, WE'RE ALWAYS SHOOTING TO TRY AND GET SEVEN, 800,000 EVERY YEAR WHATEV WHATEVER YOU SET TO DO.

UM, WE'LL ALSO POINT OUT TO THE COMMITTEE MEMBERS, UH, AND IF Y'ALL KNOW ALL THIS STOPPING, UH, THESE NUMBERS THAT WE'RE TALKING ABOUT, THIS IS ONLY, UH, BASE TAXES IN THE ORIGINAL ASSESSMENT.

NONE OF THIS INCLUDES PENALTY OR INTEREST.

UH, 'CAUSE YOU KNOW, AND, AND WE'VE HAD DISCUSSIONS THROUGH YEARS, IT, IT'S HARD TO BUDGET OR PREDICT BECAUSE, UH, THAT CAN VARY WIDELY DEPENDING ON WHICH ACCOUNTS

[00:15:01]

THEY'RE, UH, BUT THE CITY IS GETTING ADDITIONAL MONEY, UH, FROM THESE EFFORTS ON TOP OF THESE BASE CAP TAXES.

FOR EXAMPLE, IN 20 19, 20 20 BUDGET YEAR, UM, THERE WAS $230,000 IN INTEREST THAT THE CITY RECEIVED ON TOP OF TAXES PLUS AN ADDITIONAL PENALTY AMOUNTS OF 133,000.

SO WE'RE TALKING, UH, ABOUT 360, 70,000 EXTRA MONEY ON TOP OF THE ACTUAL TAX COLLECTIONS.

UM, THE, UH, ITS CURRENT YEAR OF THE COMBINED PENALTY INCREASE IS ABOUT 290,000, WHICH AGAIN IS ON TOP OF THE 773 ACTUAL TAXES.

SO AGAIN, I DON'T WORRY ABOUT THAT.

WE DON'T MAKE THAT PART THE BUDGET GO.

I JUST FOCUS ON COLLECTING TAXES AND JUST MONEY, THE CITY POWER, WHATEVER FORM IT'S, UM, I WILL ALSO TO DIFFERENT EDUCATIONAL POINT MONTH THAT THE LONGSTANDING PRACTICE THAT THE CITY'S HAD IS, IS CURRENT BUDGET YEAR.

WE'RE IN 20 20, 21.

THE TAX BILLS WENT THE WEEK WENT FEBRUARY 1ST.

SO ANYTHING THAT HAD BEEN PAID BY FEBRUARY 1ST, IT GETS, AND IT'S INCLUDED ALL MY EFFORTS TO INCLUDE CURRENT YEAR TAXES.

AND, BUT FROM Y'ALL'S BUDGETING STANDPOINT AND MY GOAL, THE CITY TREATS THOSE AS CURRENT COLLECTION.

SEE, EVEN IF I COLLECT ON A 2020 TAX BILL, THIS MONTH'S DELINQUENT FOR THE PURPOSES OF OUR GOALS AND EVERYTHING, 2020 IS FOR ACCOUNT CURRENT COLLECTIONS.

NOT, I DON'T GET CREDIT FORM IN THIS NOT PART OF THE BUDGET OR ANYTHING.

NOW I STILL GET THE COLLECTION PENALTY BECAUSE THAT GOT ATTACHED, THAT GETS ATTACHED TO JULY 1ST.

I WAS LOW JULY 1ST.

UH, SO IF I COLLECT IT, I STILL MAY MAKE SOME MONEY OFF THAT ACCOUNT.

UH, BUT IT DOESN'T COUNT TOWARDS THE WHOLE THIS BUDGET YEAR.

UH, SO FAR AN EXAMPLE OF HOW THAT WORKS.

IN THE LAST YEAR'S, LAST YEAR BUDGET, YEAR 20 19, 20 20, THERE WAS ACTUALLY TOTAL OVER THOUSAND DOLLARS IN LIN TAXES.

CORRECT.

BUT ABOUT 463,000 OF THAT WAS ACTUALLY 2019 TAXES THAT CAME IN BEFORE SEPTEMBER 30TH.

SO AGAIN, FROM THE CITY'S PERSPECTIVE, IT COULD SERVE THOSE CURRENT COLLECTIONS 'CAUSE CURRENT BUDGET HERE.

AND EVEN THOUGH I MAY HAVE PARTICIPATED, IT CAUSED THEM TO GET PAID.

I DON'T GET CREDIT FOR THAT.

AND THAT NUMBER NOT INCLUDED IN THESE NUMBERS HERE.

SO I'M TRYING TO GET ACROSS YOU.

YOU'RE ACTUALLY GETTING MORE MONEY FOR MY EFFORTS THAN JUST ALL.

UM, SO ANYWAY, I, UH, I'M ANXIOUS TO TRY AND PLEASE THE CITY OF A 10.

IF THERE'S SOMETHING ELSE YOU WANT GET FROM ME IN THE WAY OF REPORTS OR WHATEVER.

AS FAR AS EFFORT, WE'RE, WE'RE ALWAYS OUT THERE TRYING.

I'M HAPPY TO PROVIDE IT.

I, I'D JUST LIKE TO CONTINUE TO SERVICE BAYTOWN TAX.

I WANNA EXTEND ANOTHER FIVE YEARS.

THAT WAS GREAT.

MY STAFF WOULD LOVE THAT.

THEY'VE R BEAT ME IN PROMISING NOT TO RETIRE BECAUSE THEY'D ALL WANT TO KEEP WORKING.

UH, AND, AND SO THEY WOULD LOVE IT TO THIS CONTRACT ALSO.

SO, OKAY.

BUT I'LL, I'LL, I'LL KEEP PLUGGING IN MY SEVENTIES, BUT OKAY, LET'S KEEP WORKING.

UM, THE ONLY THING I WOULD POINT OUT, AND I GUESS KAREN AND I TALK IN THE CURRENT CONTRACT, THERE IS A SECTION THAT HAS SOME PERCENTAGE COLLECTION GOALS THAT WE HAVE NOT TO DEAL WITH BECAUSE THEY'RE BASED ON THE, OF THE TOTAL AMOUNT OF OUTSTANDING TAXES.

UH, WE'VE NEVER BEEN ABLE TO COME UP WITH EFFECTIVELY CALCULATE THAT BECAUSE SCHOOL TAX SYSTEM DOES NOT BREAK.

NOW ACCOUNTS THAT WE'VE ALREADY GOT JUDGMENT ON ACCOUNTS WE'VE ALREADY CLOSED ON, ACCOUNTS ARE IN BANKRUPTCY, UH, ACCOUNTS ARE SUBJECT OVER 65 ABATEMENT.

ALL THOSE ARE NUMBERS THAT WE CANNOT DO

[00:20:01]

UH, SO MY POSITION IS IF WE'RE GONNA SET THOSE TYPE GOALS, WE NEED TO BE ABLE TO TAKE THOSE NUMBERS OUT TO GET THE TRUE PICTURE, UH, THE PERCENTAGE COLLECTION.

RIGHT? UH, BUT AGAIN, I MEAN, I, I HAVE ASKED THE SCHOOL OF TAX OFFICE TO PRESENT WHATEVER REPORTS THEY CAN DO ALONG THOSE LINES.

THEY TEND TO, THEY CAN'T DO IT.

I'M NOT GIVEN ACCESS TO THEIR REPORT SYSTEM, LIKE, AND TRY AND GENERATE MY OWN REPORTS, BUT THEY SAY THAT'S THEY CAN'T DO IT.

SO IT'S JUST INFORMATION THAT'S NOT AVAILABLE.

SO SINCE THAT IS A SECTION I DON'T THINK WE CAN COMPLY CHANGE.

I WOULD ASK IF WE, AND I'M HAPPY TO ANSWER YOUR QUESTION, THE BUDGET GOES SO MUCH LOWER.

SEEMS LIKE IT WAS AVERAGED OUT 17 EVEN IN 20 20, 20 21.

WHY WAS THE LOWER SO MUCH LOWER 18, 19? I DON'T KNOW THAT.

I THINK THAT PREDATES.

SO, UM, AND I DON'T RECOMMEND THAT I, UH, EVERY YEAR I TRY AND CONTACT THE, UH, FINANCE DEPARTMENT AND I USUALLY GO THROUGH PREP.

THAT'S KIND OF NICE CONTACT PERSON.

UH, I TRY AND CALL 'EM, ASK THE NUMBER AND SAY WHAT ARE WE GONNA TALK ABOUT THIS YEAR? UH, AS FAR AS SEEING THE GOAL AND THOSE TWO YEARS THEY CALL ME BACK AND SAID, WELL, WE'RE GONNA SET IT AT THIS.

SO I, I DON'T KNOW WHAT THE THINKING WAS OR WHY SAY IT DIDN'T SEE, IT DIDN'T CHANGE MY APPROACH TO TRYING TO COLLECT IT COULD HAVE BEEN A CHANGE IN HOW WE WERE CLASSIFYING THE REVENUES TOO.

JUST AN INTERNAL ACCOUNTING CHANGE.

IT'S JUST A CONJECTURE.

YOU HAD A NICE EXTRA BUDGET SURPLUS, MORE THAN USUAL.

AS YOU CAN SEE, WE'VE RECOVERED AND WE'VE GOT, THE BILL WAS BACK OVER 600,000.

I DUNNO WHAT WE GONNA DO ME THIS YEAR.

IN, I GET THE CONTRACTOR USED.

I WAS SAYING 800 A NICE TIP.

GIVE, GIMME A GOAL.

SO MY OTHER QUESTION WAS, IF MR. IF MR. STRONG'S CONTRACT AND HE DECIDES TO RETIRE, WHAT HAPPENS? I'D GIVE YOU A LOT OF ADVANCE WARNING ABOUT IT.

BUT IF, IF I WAS THINKING ABOUT RETIRING, I WOULDN'T BE COMING HERE ASKING TO REVIEW IT.

I MEAN, UH, CURRENTLY I LIKE WAY MY OFFICE IS RUNNING.

I'M COMFORTABLE WHAT I'M DOING, UH, MY MY MY TYPE OF RETIREMENT.

I'VE CUT BACK ON SOME OTHER THINGS.

OKAY.

UM, SO I THINK THE OUTSOURCING, YOU KNOW, THE CITY DECIDED UPON YEARS AGO HAS WORKED WELL THE CITY.

SO ONE, CONTINUE THAT KIND DIRECTION WITHIN MY PERSONAL COMMITMENT.

IF I DECIDED I I DIDN'T WANNA FULLY RETIRE AND SHUT DOWN THE OFFICE, I WOULD GIVE Y'ALL AS MUCH OF AN INFORM.

AGAIN, IT SOUNDS MY BABY.

I MEAN, I'VE BEEN TAKING CARE OF THE CITY IN SOME WAY FOR YEARS.

I'M NOT, I I WASN'T THINKING THAT YOU, I'M JUST THINKING WORST CASE SCENARIO NOW, IF I GOT RUN OVER BY AN 18 WHEELER NEXT WEEK, I'M SORRY, I CAN'T REMEMBER.

WE HAVE OF SERVICES THAT WE CONTRACT AND THE SAME WITH ANY OF THEM UP AND FIGURE OUT HOW TO FILL THE GAP SHORT TERM AND THEN FIGURE OUT THE LONG TERM.

OKAY.

I, AND I ACTUALLY COULD INCORPORATE A, A PLAN FOR THAT.

I HAVE AN IDEA OF HOW THAT'S GONNA WORK.

INCORPORATE THAT PLAN.

WHAT? OH, WELL, I MEAN, JUST FOR PLAN PURPOSE.

YEAH.

I WASN'T THINKING ABOUT PUTTING IN CONTRACT.

I, WELL LEMME JUST BE UPFRONT ABOUT, YOU KNOW, RE STRICKLAND.

GILLETTE DOES THE SAME THING WITH FIELD DISTRICT.

I WORKED WITH STEVE AND BRANDON ON REGULAR BASIS BECAUSE THEY'RE DOING THE SAME STUFF.

GOOD RELATIONSHIP WITH THAT.

[00:25:03]

SO I DO THINK THERE'S A DIFFERENCE BETWEEN, UH, OUR COLLECTIONS AND SCHOOL DISTRICTS.

WE HAVE, WE HAVE INDUSTRIAL DISTRICTS, WE HAVE BANKRUPTCIES, ALL THIS STUFF.

SCHOOL DISTRICT DOESN'T HAVE THOSE BANKRUPTCIES THAT ADOPT KIDS AND THE, THE INDUSTRIAL DISTRICTS AND THE PILOTS AND DIFFERENT THINGS.

SO IT WOULD BE A LITTLE DIFFERENT THAN WHAT THE SHIP DOES.

SO WHOEVER, I LIKE IT JUST LOOKING AT THE CHART AND UM, I DON'T EVEN REMEMBER 2020 WITH COVID.

THAT'S WHAT I WAS GONNA POINT OUT.

2020.

AND THEN I WAS EVEN GONNA LOOK AT 17 AND 18 HARVEY THE YEAR AFTER HARVEY TO SAY THAT THAT MUCH WAS COLLECTED A YEAR AFTER HARVEY.

UH, UH, THIS IMPRESSIVE, MY PHILOSOPHY IS KEEPING THE PIPELINE FULL.

YOU, YOU CONTINUE TO SEND OUT NOTICES, PRESS ALL LAWSUITS TO KEEP GOING.

IF YOU KEEP THAT PIPELINE OF ACTIVITY FULL, THE MONEY FOR THE CITY COMES OUT.

AND I WAS ASKING A PREVIOUS QUESTION BECAUSE I WOULD NEED TO SEE NOT BE AS SUCCESSFUL BECAUSE WE DIDN'T HAVE A PLAN IN PLACE ON IF WE DECIDE TO RETIRE OR SOMETHING ELSE.

WELL, WELL, I, I NO ONE KNOWS WAS HAPPEN TO ANY OF US.

UH, IF SOMETHING DID HAPPEN, WE OUT TAKE PROPOSALS FOR ANOTHER FIRM.

YOU KNOW, THERE WOULDN'T BE SOME TIMELINE.

MONEY'S STILL GONNA BE THERE.

THE TAXABLE PROPERTY STAYS OUT THERE.

THE TAXES ARE STILL OUT THERE.

IT'LL JUST BE A DELAY WHEN .

JUST A COUPLE QUESTIONS JUST TO MAKE SURE I WAS UNDERSTANDING EVERYTHING YOU WERE SAYING.

SO IF I WERE TO PAY MY PROPERTY TAXES TODAY MM-HMM .

IT'S LATE.

RIGHT? BUT WHAT YOU'RE SAYING IS FOR THIS REPORTING, IT'S NOT DELINQUENT BECAUSE IT'S CITY OF BAYTOWN.

IF IT'S A 2020 TAXES, THE FINANCE DEPARTMENT WOULD DEFINITELY, THAT IS A CURRENT, I I'M ASSUMING THAT'S STILL THE YEAH, AS FAR AS I CAN TELL FROM STILL PAY WITHIN THE BUDGET WHAT YOU IS TECHNICALLY LEGALLY DIS DUE BY THE 30 PERSON GUN WHEN THE FIRST EFFECT, TECHNICALLY IT'S THE LEGAL.

RIGHT.

OKAY.

YEAH.

AND REMEMBER ALL THIS DOESN'T COST THE CITY ANYTHING.

BY USING AN OUTSIDE ATTORNEY UNDER THE LAW, WE ATTACH A, WHICH ON THE COLLECTION PENALTY TO THE TAXPAYER'S BILL AN ADDITIONAL PENALTY THEY PAY STARTING JULY 1ST.

AND THAT'S THE MONEY THAT THE CITY USES TO PAY.

AND THAT'S WHY I WAS THINKING GO THROUGH THAT JULY 1ST BECAUSE YOU KNOW, ALL THESE 2020 TAXES RIGHT NOW, UH, THERE'S NO COLLECTION BILL.

BUT YEAH, SO I'M ALWAYS HAPPY OVER THE JULY 4TH WEEK.

IT'S NOT NECESSARILY BECAUSE THE MAJORITY BE OF, SO HOW OFTEN DO WE, UH, 'CAUSE I DON'T LIKE, YOU KNOW, BEEN A PART OF A TWO OR THREE FINANCE COMMITTEES.

HOW OFTEN DID YOU GIVE US SOME KIND OF REPORT LIKE THIS THAT'S ANNUAL OR, UH, I'VE ONLY BEEN COMING TO FINANCE COMMITTEE ANNUALLY TO TALK ABOUT THE RENEWAL.

IF YOU WOULD LIKE ME TO COME TO MORE OFTEN, I'M CERTAINLY HAPPY TO DO THAT.

UH, I'VE EVEN TALKED TO A PARENT, I FEEL BAD.

I FEEL LIKE I OUGHT TO SHOW MY PLACE TO CITY COUNCIL MEETINGS ONCE A YEAR JUST SO WE ALL REMEMBER WHO I'M AND MAKE SOME SORT OF REPORT CITY COUNCIL.

I HAVE NOT BEEN DOING THAT.

MAYBE DO THAT IN THE FUTURE SINCE WE HAVE SOME NEW YEAH, I MEAN, I THINK THE INFO YOU JUST PROVIDED, I GET A REGULAR UPDATE FROM BROWN'S OFFICE.

YEAH, THAT IS A COPY OF THE QUARTERLY REPORT.

MARCH 31ST.

UH, I'LL SEND SOMETHING SIMILAR FOR APRIL, MAY, JUNE.

ALSO A MONTHLY REPORT THAT SHOWS THAT THREE BY MONTH I THINK JUST SENT THAT OUT.

SO THIS IS JUST A, THE MONTHLY REPORT THAT I SAID I NEED THAT BACK.

BUT I I HAPPY TO MAKE YOU A COPY, BUT THAT'S, I MEAN,

[00:30:01]

I'M OUT THE LAST FEW DAYS I HAD SOME DIFFERENT INFORMATION ABOUT SHOWING ACTIVITY AND SO FORTH.

SO ASK FOR YOUR CONSIDERATION AND HOPE TO CONTINUE TO REPRESENT THE CITY.

YOU OTHER QUESTIONS? I, I MEAN AS FAR AS THE RENEWAL GOES, THAT'S JUST SOMETHING WE NEED TO DECIDE BY.

YOU SAID END OF SEPTEMBER IS WHEN THE CURRENT CURRENT CONTRACT EXPIRES? SEPTEMBER.

OKAY.

I WOULD HOPE THAT WE WOULD DECIDE, WELL BEFORE THIS IS SOMETHING THAT THE FINANCE RECOGNIZE YOU START WORKING WITH TRAINING CONTRACT.

AGAIN, MY PROPOSAL IS TO USE, FOR THE MOST PART, CURRENT CONTRACT.

AMEND IT TO, YEAH, IT'S A GREAT JOB.

FAR EXCEEDING TARGET FOR SET THE BAR .

OKAY, WELL WE'LL GO.

YOU KNOW, I WAS THINKING MORE ABOUT THIS AND TAX.

THAT'S WHAT I WAS THINKING.

YEAH.

I MEAN, SO MANY, SO MANY VALUES WENT DOWN WHO DIED.

THAT'S RIGHT.

THEY DIED.

ANYONE THAT FLOODED THEIR VALUE WENT DOWN.

SO, AND IT LIKE COVID, IT DIDN'T YQK, IT DIDN'T HAPPEN.

THE FLIP SIDE THOUGH IS DURING THOSE TIMES, LESS PEOPLE ARE GONNA BE ON TIMES.

THERE'S GONNA BE MORE THAN THOSE.

SO IT MAKES A LITTLE BIT OF SENSE THAT ACTUALLY DURING BAD TIMES THIS REPORT WOULD BE A LITTLE BIT HIGHER.

AND I HAVE NO EXPLANATION WHY LAST YEAR COLLECTION, I REALLY ANTICIPATED THIS LAST YEAR.

COVID GONNA BE TERRIBLE.

I HAD TALKED TO MY PEOPLE ABOUT BACK PART-TIME, SO FORTH.

I'LL NOW GO BACK TO ITEM THREE B, DISCUSS DEBT FUNDING OF CAPITAL INVESTMENT PROGRAM PRESENTATION BY HILLTOP SECURITIES.

SO HOW DO WE WANT TO THAT JOE GO FIRST, NICK, AND THEN WE'LL GO AFTER.

I JUST SO TO CLARIFY, SO JOE REPRESENTS HILLTOP.

HILLTOP ARE OUR FINANCIAL ADVISORS.

I WORK, UH, WITH JOE VERY, VERY CLOSELY.

HE HAS BEEN HELPING WITH US, UH, ON A NUMBER OF, UH, AREAS INCLUDING VENTURE CENTER PROJECT.

UH, ANYTIME YOU SEE THAT, JOE ESSENTIALLY HOLDS OUR HAND THROUGH THAT WHOLE PROCESS.

AND, UH, AS I SAY, I WORK VERY CLOSELY.

HE'S KIND OF AT MY RIGHT HAND WHEN WE MAKING BIG DECISIONS AROUND PARTICULARLY THE FUTURE PLANNING OF, UH, OF INVESTMENT.

SO THAT'S BY WAY BACKGROUND FOR YOUR REFERENCE.

'CAUSE HE'LL PROBABLY MENTION THAT.

UH, THE BIG LEGISLATION THIS YEAR RELATED TO THAT WAS, UM, POSSIBILITY 1869.

JUST A COPY OF THAT CHANGES THE USE.

GOOD TO BE HERE.

UH, I'M GONNA TALK A LITTLE BIT ABOUT CAPITAL IMPROVEMENT PLANNING, THE BUDGET PROCESS, PROCESS.

AND THEN A CAPITAL IMPROVEMENT PLAN TYPICALLY IS INCORPORATED INTO THE BUDGET, SPECIFICALLY THE NEXT YEAR'S CAPITAL PROJECTS THAT YOU WOULD BE UNDERTAKING OR TYPICALLY ADOPTED BUDGET.

AND THEN WE HAVE, OUTSIDE OF THAT FLUID, IT CONTINUES TO EVOLVE AND REALLY ARE ONLY LOCKING DOWN THE ONE YEAR BECOMES PART OF BUDGET.

AND OF COURSE THAT IS ALWAYS TO ACTUALLY ISSUE LOTS OF PROJECTS GOING IN AND OUT, ALL KINDS OF THINGS.

ENGINEERING,

[00:35:01]

SO, UM, ON PAGE TWO THAT I HAVE IN HERE, JUST A CAPITAL IMPROVEMENT PLAN.

WHAT IS, IT'S A THREE TO FIVE YEAR PLAN BECAUSE THAT'S, SOME CITIES WILL EVEN REACH OUT AND THROW SOME PROJECTS IN 10 YEARS JUST SO THAT THEY HAVE A LONGER HORIZON.

BUT, YOU KNOW, REALLY WHEN YOU GET DOWN TO IT, IT'S, UH, YOUR NEXT BUDGET CYCLE AND THEN MAYBE ONE OR TWO OTHERS THAT ARE THE ONES THAT YOU REALLY CONCENTRATING ON.

AND EVERYTHING ELSE IS KIND OF, THESE ARE THE BIGGER PROJECTS THAT YOU CAN TALK ABOUT THAT.

BUT THAT'S, THAT'S WHAT THE, THE PROCESS IS ON THE PROJECT SIDE.

AND, UH, THE ONLY AREAS WHERE WE TYPICALLY GO BEYOND UP TO 10 YEARS IS ON THE WATER SUPER SIDE.

UM, SO WHEN WE DO OUR RATE STUDIES, WE LIKE TO PROJECT OUT A LITTLE BIT FURTHER AND THOSE PROJECTS ARE A LITTLE MORE KNOWN.

THEY'RE REQUIRED REGULATORY WISE OR, YOU KNOW, JUST LOOKING AT ASSET MANAGEMENT STANDPOINT.

WE, WE KNOW WHEN THINGS NEED TO BE REPLACED.

SO WE CAN USUALLY BUILD THAT OUT FROM A 10 YEAR STANDPOINT.

BUT EVERYTHING OTHER GENERAL PROJECTS SURFACE, YOU SEE SOME REALLY LONG TERM PLANNING ON THE WATER SIDE, ESPECIALLY POPULATION CONTINUES TO HAPPEN.

UM, WE DIVIDE THE CAPITAL, IMPROVE BASIC STRAINS, RIGHT? TWO STRAND TOGETHER THE PROJECTS.

AND FOR THAT, A LOT OF TIMES, UH, PROJECTS ARE JUST ALL GROUPED TOGETHER, WHATEVER WISH LIST PUT OUT, AND THEN IT STARTS GETTING REPAIRED DOWN AND PRIORITIZED.

AND LOTS OF TIMES WE HAVE, UH, INPUT FROM COMMITTEE FINANCE.

C SOMEBODY IS REVIEWING THE PROJECT.

IT'S A, BUT THERE IS USUALLY SOME TYPE OF, UH, INPUT, UH, BEFORE IT REACHES COUNCIL.

SOMETIMES A LOT OF, UH, A LOT OF COMMUNITIES JUST KEEP EVERYTHING AT THE COUNCIL, UH, LEVEL AND, UH, REALLY IT STREAMLINES IT TO DO IT OTHERWISE OR EXTENDS IT.

THAT'S, THAT'S UP TO EACH CITY TO DECIDE.

UM, BUT THAT'S KIND OF WHERE YOU GO IS, IS GETTING, UH, ULTIMATELY IT'S UP TO THE COUNCIL TO DECIDE WHAT MAKES IS THE FIRST ONE, TWO OR THREE YEARS THAT ARE, ARE THE ONES THAT ARE MOST LIKELY TO BE FUNDED.

SO THE FINANCE SIDE YEAH.

IS WHAT IS LOOKED AT.

UH, YOU KNOW, KIND OF, IF YOU HAVE TWO TRACKS OF IT GOING, ONE GROUP MAY BE LOOKING AT THE PROJECT SIDE AND ANOTHER GROUP AT, UH, THE FINANCE SIDE NOT GONNA BE ABLE TO BE FUNDED WITH GREEN FUNDING, RIGHT? WELL THAT THERE'S CERTAIN, UH, SEGMENTS THAT, THAT WILL QUALIFY FOR GREEN WITHIN THE COMMUNITY CASH THAT YOU CAN CONTRIBUTE.

IS THAT GONNA BE OPERATING CASH OR IS IT GONNA BE FUND BALANCE? SO THERE'S TWO WAYS TO FUND, FUND WITH CASH.

AND THEN FINALLY THERE'S DEBT.

AND WHAT WE DO IS COME UP WITH THE SOURCES OF CASH THAT WE'RE GONNA HAVE FOR THE IMMEDIATE YEAR AND PROJECT OUT FOR FUTURE YEARS.

AND THEN COME UP WITH A MODEL THAT WILL SHOW US WHAT, WHAT KIND OF PROJECTS WE CAN, UH, YOU KNOW, FOR.

SO THEN, THEN COMES THE MARRIAGE WITH THE FINANCE MODEL AND THE PROJECT MODEL.

THAT'S WHERE IT REALLY GETS DOWN TO WHAT, WHAT CAN WE DO? AND THAT'S WHERE THE PRIORITIZATION AND COUNCIL DELIBERATIONS

[00:40:02]

UM, AND AGAIN, THEN ONCE THAT MARRIAGE HAPPENS UP TO THE COUNCIL FOR FINAL APPROVAL, THEN ONE OF THE THINGS THAT GUIDES CAPTAIN GROUP PLANS FROM THE MANAGEMENT AND WITH TEXAS, TEXAS LIMITS BY THE CONSTITUTION, THE CITY'S ABILITY TO BORROW OTHER STATES DON'T HAVE THAT STRONG LIMITATION.

KANSAS, FOR EXAMPLE, YOU CAN DO NOTES, RIGHT? WILL ISSUE A BUNCH OF PROJECT NOTES AND THEN INTO A OTHER STATES IT'S MORE IMPORTANT THAT A DEBT POLICY EXISTS, RIGHT? BECAUSE, UH, THEY HAVE SUCH FLEXIBILITY, THEY CAN MAYBE GO TO A BANK AND BORROW OR, UH, DO A NOTE WITH THE BANK.

AGAIN, IN TEXAS WE DON'T HAVE THAT FLEXIBILITY.

THEY REQUIRE SPECIFIC WAYS THAT THE CONSTITUTION ALLOWS.

AND STATE LAW ALLOWS MUNICIPALITIES TO ACCESS DEBT.

AND THAT HAS BECOME A POSITIVE FACTOR WITH THE RATING AGENCIES BECAUSE, UH, IT, IT DOES LIMIT, UH, ACCESS TO THE CAMPBELL MARKETS.

AND WHAT ALSO, UH, WE, WE FIND THE USE OF DEBT POLICIES TO BE MUCH MORE IMPORTANT OUTSIDE OF TEXAS.

'CAUSE WE ALREADY HAVE BY STATE LAW A FRAMEWORK RIGHT? FOR ISSUING DEBT.

BUT RATING AGENCIES STILL VIEW THAT AS A POSITIVE.

THEY ALWAYS LOOK AT CITIES THAT HAVE TAKEN A LOOK AND CONSIDERED, HOW ARE WE GOING TO USE DEBT THAT'S A CREDIT POSITIVE AND STRONGER.

UH, THEY, THEY VIEW THAT AS A STRONG MANAGEMENT.

IT ALSO, IF YOU HAVE A POLICY OR SOME TYPE OF GUIDANCE, IT ALSO PROVIDES BENEFIT TO STAFF BECAUSE AS THEY PROJECTS TO ISOLATE THOSE, THIS IS, THIS IS GONNA BE DONE ON A BUDGETARY BASIS WITHIN OUR FILE, NOT DEBT.

SO IT DOESN'T MAKE CUT.

AND THEN FINALLY, IF YOU DO HAVE A POLICY IN ORDER TO GO OUTSIDE OF THE POLICY, WHICH INEVITABLY WILL HAPPEN FROM TIME TO TIME, THERE BE A REASON TO DO SOMETHING OUTSIDE OF THE POLICY.

IT HAS TO BE SO POLICY, IT SERVES AS MANAGEMENT TOOL OF STAFF AND ALSO REQUIRES ANY ANOMALIES TO GO TO COUNSEL.

SO ONE OF THE BIG THINGS THAT A DEBT POLICY DOES IS STATE WHEN ARE WE GONNA USE THAT? AND A LOT OF TIMES THAT'S DETERMINED BY THE SIZE OR COST OF FINANCE IT YOU UNDERTAKE AS WELL AS THE, SO IF YOU WERE DOING STREET OVERLAY, UH, YOU MAY SAY, YOU KNOW WHAT, WE'RE JUST GOING TO TRY AND CASH FUND THIS 'CAUSE IT'S GOT A USEFUL LIFE IN 10 YEARS.

WE DON'T WANNA UNDERGO COST BORROW.

BUT IF IT'S THREE MILES OF THAT, THEN WE MAY OVER, WE DO IT, BUT WE'RE, WE'RE GONNA AMORTIZE IT OVER SEVEN YEARS.

YEAH.

SO JUST VARIOUS, UH, WAYS THAT, UH, WITHIN THE POLICY MAY DICTATE THINGS.

AND IT GETS DOWN TO WHAT, WHAT ARE WE GOING TO USE? WHAT INSTRUMENTS DEBT ARE AVAILABLE TO THE CITY? THERE'S THESE PURCHASE LEAST PURCHASE LOTS OF TAX.

HIGHER INTEREST RATE PURCHASE IS POPULAR BECAUSE ON PUBLICATION REQUIREMENTS, YOU DON'T HAVE TO GET, THEY CAN

[00:45:01]

AND UH, ONE OF THE THINGS THAT IS NO LONGER CONSIDERED INFRASTRUCTURE FOR A CITY IS A CITY HALL.

SO, UH, IMPROVEMENTS TO A CITY HALL ARE NO LONGER ELIGIBLE FOR, UH, FUNDING FROM, UH, CERTIFICATES OF OBLIGATION.

ONE THING THAT WE MOST LIKELY WE'LL SEE COMING FROM THAT, UH, BECAUSE SCHOOL DISTRICTS DID THIS THREE YEARS AGO, THEY STARTED, UH, DOING THESE PURCHASES FOR THE, THAT IS SOMETHING, YOU KNOW, SOMETIMES THE LEGISLATURE WILL ADD SOMETHING AND, UH, THE MARKETS WILL FIND WAYS TO GET DONE WHAT THEY NEED TO DO.

UM, REVENUE BONDS IS, UH, ANOTHER OPTION.

AND REVENUE BONDS NEED SOME TYPE OF USER FEE.

SO IF YOU DON'T HAVE ANYTHING THAT'S REDUCING ABUSE FEE, YOU'RE NOT GONNA BE ABLE TO.

UM, THE EXCEPTION TO THAT, I GUESS IS SALES TAX, BUT THAT'S REALLY NOT USER FEE BASED.

IT'S, UH, YOU KNOW, AN OPTION TO PURCHASE YOUR FEE.

IT'S NOT, YOU CONSIDER SOMETHING LIKE AN AB OR A TAX, WHICH IS WHY IT'S CONSIDERED A FULL THING.

CREDIT IS YOU HAVE SUCH CONTROL THAT YOU MONEY THE TAX, RIGHT? AND YOU CAN SET IT BASED ON YOUR VALUE TO PRODUCE THE AMOUNT OF DOLLARS THAT YOU WANT.

SO THAT'S THE STRENGTH OF THAT.

AS SOMETHING LIKE A SALES TAX, THERE IS A PASSIVE TAX.

YOU DON'T GET TO CHANGE THE RATE AT WHICH IT'S CORRECTED.

YOU DON'T GET TO FORCE PEOPLE TO BUY GOODS AND SERVICES IN YOUR TOWN.

IF I OWN PROPERTY, I DON'T HAVE A CHOICE.

UM, SO, YOU KNOW, REVENUE BONDS JUST HAVE A LITTLE BIT OF A DISTINCTION.

WHAT, WHAT WE CAN REALLY, WHEN CAN YOU REALLY ISSUE? YOU HAVE TO HAVE SOME TYPE OF, UH, FEE STRUCTURE.

AND THEN WITH GENERAL OBLIGATION BONDS, THOSE DO REQUIRE DIRECTION.

AND USUALLY THAT'S WHERE WE SEE IN A, IN A CAPITAL IMPROVEMENT PLAN PROCESS THAT CITIZENS COMMITTEE IS INVOLVED.

'CAUSE THAT'S WHEN THE CITIZENS COMMITTEE LOOKS AT YOUR PROJECTS AND WILL MAKE A RECOMMENDATION BACK TO COUNCIL THAT WE THINK THESE PROJECTS ARE WORTHY OF MOVING FORWARD WITH.

AND WE THINK, UM, WE SHOULD HOLD TO CONSIDER DOWN PROJECTS.

THEN BACK ON CERTIFICATES OF OBLIGATION, AGAIN, CERTIFICATES OF OBLIGATION, UH, BEGAN IN 1971 AS THE MARRIAGE IN A SENSE OF THE TWO TYPES OF DEBT, REVENUE AND GENERAL OBLIGATION.

IT'S WHAT WE CALL A DOUBLE BARREL CHARGE AS A BUDGET, SOME TYPE OF REVENUE STREAM ANDARY, TAXES, THE REVENUE STREAM HAVE A LIMITATION ON YOU CAN LIMIT THAT THOUSAND DOLLARS IN THE REVENUE STREAM CAN BE FOR BASICALLY ANY USER TYPE, UM, FEE.

UM, WE'VE DONE A CERTIFICATE OF OBLIGATION IN OUR REVENUE STREAM.

THIS THE SALE OF TRASH BAGS.

IT COULD BE, YOU KNOW, PARK FEES, IT COULD BE ANY FEE THAT YOU CORRECT CAN MEET THE STANDARDS OF THE LAW.

UM, MOST OFTEN WE SEE WARRANTS AND, UH, BECAUSE THAT'S A VERY EASY ONE TO GET.

AND THEN, UH, WE USUALLY LIMIT THAT, UH, TO EITHER SOMETHING LIKE 1000 OR 3000.

WHY WOULD WE LIMIT WE DO THAT, ESPECIALLY FOR A CITY LIKE BECAUSE YOUR, UH, REVENUE BOND SYSTEM, UH,

[00:50:01]

THAT WAS ONE OF THE BIG ARGUMENTS WITH, UH, HOUSE BILL 1869 IS DON'T TAKE THAT OPTION AWAY FROM THE, BECAUSE THAT IS CONSIDERED ONE INNOVATIONS OF CERTIFICATES OF OBLIGATION.

YOU CAN ISSUE FOR WATER AND SEWER BONDS FOR PROJECTS IS A BACKING OF TAXES TO GET YOU THE LOWEST INTEREST RATE POSSIBLE.

ELIMINATE THE NEED FOR A RESERVE FUND, WHICH REVENUE COSTS .

UM, SO YOU'RE, YOU'RE SIGNIFICANTLY LOWERING YOUR COST OF BORROWING AND THEN THE REVENUE STREAM, UH, THAT YOU'RE ABLE TO USE FOR YOUR WATER AND SEWER TO PAY IT BECAUSE YOU DON'T HAVE TO USE TAXES, RIGHT? CASH, SEWER, THEN, UH, YOU'RE ABLE TO CHARGE A LOWER RATE BECAUSE THAT CAPITAL COST, RIGHT? SO THERE'S, THERE'S GREAT EFFICIENCIES THAT CAN BE ACHIEVED WITH CERTIFICATES OF OBLIGATION.

AND FOR THE MOST PART, THE LAW.

I THINK THE CHALLENGES THAT 1869 POSSIBLY PROPOSED, UH, WOULD BE CITY BUILDINGS.

AND, UH, IF YOU WERE TO DO ANYTHING WITH THE WOULD BE SOMETHING THAT A LITTLE LEGAL THINGS.

THAT'S NOT MY, SO, UM, THEY, UH, THE, UH, THE OTHER OPTION, UH, IS ANY OTHER OBLIGATIONS PERMITTED BY TEXAS LAW IN THE FUTURE.

AND I THINK, YOU KNOW, AS, AS WITH EVERYTHING, WE'LL CONTINUE TO SEE THINGS INVOLVE.

THERE'S ONE THAT INSTRUMENT, UH, TAX NOTES THAT I DID MENTION, THE CITY COULD ALWAYS USE THOSE.

THEY'RE MOST COMMONLY USED IN PLACES, CERTIFICATES OF, UH, NOT CERTIFICATES, PLACE OF LISA PURCHASED.

THEY HAVE A LIMITATION OF SEVEN YEARS, RIGHT? AND UH, UH, SO THAT'S WHY THEY'RE NOT USED VERY FREQUENTLY A LOT OF TIMES TO CHOOSE FOR EQUIPMENT OR SHORT TERM PROJECTS, BUT THEY'RE VERY QUICK TO ISSUE.

AND I GUESS THAT'S THE LAST THING ON DEBT POLICY.

JUST TO GO BACK THROUGH THOSE PURCHASE DOESN'T REQUIRE PUBLICATION.

IT'S REVENUE BONDS, UH, DO NOT REQUIRE A PUBLICATION.

AND IT'S ALSO JUST A SIMPLE VOTE.

COUNCIL GENERAL OBLIGATION BONDS DO REQUIRE ELECTION IN ADVANCE.

IF YOU WERE GONNA MOVE TOWARDS THE ELECTION IN NOVEMBER, YOU WOULD NEED TO BE GETTING THE ELECTION, THE BUDGET PROCESS BECAUSE THERE'S A TIME, UH, TO, TO TO CONSIDER, SORRY, IT WOULD BE NOVEMBER THE NEXT YEAR, NOVEMBER 20, WE WOULD HAVE TO START.

AND, AND THEN CERTIFICATES OF OBLIGATION.

THOSE DO REQUIRE A PUBLICATION THAT YOU HAVE TO RUN FROM THE FIRST PUBLICATION, 45 DAYS LEFT TO EXPIRE COUNSEL TO APPROVE THEM.

AND DURING THAT TIME, IF A PETITION IS PRESENTED 5% REGISTERED BURDEN OF THE LAST ELECTION IN THE CITY, LAST CITYWIDE ELECTION, THEN YOU'RE REQUIRED TO HOLD IN ELECTION ON THE, ON THE GO ELECTION.

IF A, IF A MEASURE FAILS, YOU ARE NOT ALLOWED TO ISSUE A CO FOR THAT PROJECT.

THAT'S CORRECT.

THAT'S, THAT'S CORRECT.

YOU CAN'T CIRCUMVENT THE PROCESS BY TO SAY THAT'S EVEN POLITICAL POWERFUL TO DO THAT.

USUALLY WHEN A PROJECT IS NOT SUPPORT BY THE CITIZENS, THEY DON'T EXPECT TO PARTICIPATE.

THE COUNCIL WOULD FIND ANOTHER WAS DO SKI A CAT.

YEAH.

THAT'S WHY THE LEGISLATION WENT INTO COURT THAT HAPPENED.

JUST BE VERY CAREFUL.

THAT'S WHY YOU DON'T PERILOUS .

THAT'S WHY YOU DON'T ISSUE, I MEAN YOU DON'T SEEK GEOS FOR THINGS THAT YOU CAN'T AFFORD TO KNOW ABOUT CRITICAL INFRASTRUCTURE.

YEAH, IT WAS A ROAD PROJECT IN NEW SCENARIO.

I DON'T REMEMBER EXACTLY WHERE IT WAS AT, BUT IT FAILED.

STILL WENT FORWARD.

THAT'S WHAT LEGISLATION,

[00:55:04]

WE, I'VE BEEN DOING THIS ABOUT 30 YEARS AND HAD THREE PROJECTS THAT RECEIVED PETITION.

ONE FOR A GOLF COURSE, ONE WAS FOR A ROAD THAT WAS GONNA BE EXTENDED IN AN AREA WHERE THE PEOPLE DIDN'T WANT A ROAD, WANT THE TRAFFIC EVENTUALLY THE ROAD.

AND THE OTHER WAS FOR, UH, CONVERTING OF WHOLE HISTORIC HOUSE ENTITIES.

SO THE ONLY PETITIONS I'VE SEEN WERE THE PROJECTS LIKE THAT.

MOST OF THE TIME, YOU KNOW, THE PROJECTS THAT ARE BEING DONE WITH S AN OBLIGATION ARE JUST GENERAL PURPOSE.

UH, WE'RE TAKING CARE OF THE CITY'S .

YOU KNOW, I'M NOT AN ADVOCATE FOR EITHER ONE.

UH, WHETHER GENERAL OBLIGATION, CERTIFICATES OF OBLIGATION, GENERAL OBLIGATION BONDS, I THINK ARE GREAT THING TRADE.

SO WE DON'T SEE A COST DIFFERENCE, UH, IN AFFORDABILITY.

YEAH.

IS SOMETHING THAT WE LOOK AT AS WELL IN SOME COMMUNITIES WILL LIKE TO TRACK THE AMOUNT OF DEBT THAT THEY HAVE AND THERE'S SOME DEBT METRICS THAT WE CAN, UM, PUT TOGETHER POLICIES, DEBT POLICIES.

SOMETIMES WE'LL HAVE, WE WANNA TAKE A LOOK AT THESE.

UM, RATING AGENCIES ALSO PUT OUT, UH, MAINTENANCE TO WITHIN YOUR RATING CATEGORY ON CERTAIN DEBT METRICS AS WELL AS, AS OTHER METRICS THAT THEY USE THAT COMMUNITY INCOME TO, UH, FINANCIAL RATIOS, DEBT DEBT RATIOS.

SO, UH, THERE'S A LOT OF DIFFERENT, UH, WHEN YOU GET DOWN TO CRUNCHING NUMBERS, YOU CAN, YOU CAN DO THAT ALL DAY LONG.

AND, UH, I JUST DON'T KNOW IF YOU REMEMBER LAST YEAR FOR YOUR TIME, LAST YEAR AS PART OF THE BUDGET PROCESS.

THAT'S ONE OF THE PIECES OF INFORMATION THAT WE INCLUDED WAS OUR DEBT PER CAPITA JUST TO SHOW US AGAINST OUR BENCHMARK CITIES AND, AND ACTUALLY OUR DEBT PER CAPITA NO, COMPARED TO SIGNIFICANTLY.

AND THEN A FINAL THOUGHT ON, ON THAT WOULD BE THAT, UH, YOU KNOW, ANY PROJECT THAT YOU DO, THERE'S THE CAPITAL COST, BUT THERE'S ALSO GONNA BE THE OPERATING.

UM, THE NEXT PAGE, UH, IS KIND OF LIKE ONE STRAND OF, UH, FOR ONE TYPE OF PROJECT.

UH, THIS IS A, UH, LOOK AT CAPACITY, CAPACITY MODEL FOR GENERAL OBLIGATION TO WHAT YOU PAY WITH TAXES.

I DID NOT INCLUDE ANYTHING TO THE WATER SEWER.

TYPICALLY THAT'S SOMETHING THAT PUT TOGETHER AS, AS CLIENTS ARE THROUGH THINGS LIKE THIS.

UH, I THINK THE INTEREST, THIS WAS, I PUT THIS TOGETHER BACK IN EARLY MAY.

THAT WAS BEFORE WE STARTED GETTING, UH, ESTIMATES, IN LEAST RIGHT NOW I THINK HARRIS COUNTY HAS COME UP WITH A PRELIMINARY ESTIMATE THAT SHOULD, UH, WE DID NOT HAVE THAT WHEN WE PUT THIS TOGETHER.

IF YOU LOOK AT 21 TO 22, UH, WHAT WE DID IN THERE, IT'S A 240 MILLION AND UH, THAT WAS 4%.

BUT LOOK AT YOUR DEBT UP BY ABOUT 30,000 FROM 1540 TO 15 78, 200 40 MILLION.

IF YOU LOOK OVER TO THE FAR RIGHT AND LOOKED AT THAT PROJECTED IS TAX RATE, IT'S LIKE, WAIT A MINUTE, WE WENT UP BY TWO 40 MILLION OF DEBT WENT UP BY 30,000, BUT WE BASICALLY HAVE THE SAME X-RAY.

HOW DOES THAT HAPPEN? THAT HAPPENS, THAT IS KIND OF THE, SO, UH,

[01:00:02]

WE SHOWED, UH, NO IN 2022 YOU NEEDED SOMETHING.

THERE'S, THERE'S ALWAYS A WAY TO SCAN.

UM, IT JUST WOULD BE MAYBE A LITTLE MORE PRESSING HERE.

THERE'S A NUMBER OF DIFFERENT WAYS TO ADDRESS SOMETHING LIKE THAT BECAUSE WHEN YOU LOOK AND YOUR GROWTH KICKS IN, AND WE'RE PRESUMING WE DON'T HAVE, IT'S LIKE INITIAL YEAR IS USUALLY WHEN YOU HAVE, UH, THE CONSTRAINTS, RIGHT? ONCE YOU GET THROUGH THAT INITIAL YEAR, YOU'RE HOPING THAT THE LAW DOESN'T CONTINUE CONSTRAIN WHAT WE'RE SHOWING HERE.

AND THAT WOULD INDICATE THAT OVER THE NEXT FOUR YEARS OR FIVE YEAR PERIOD FROM NOW, THAT YOU WOULD'VE CAPACITY TO ISSUE JUST OVER A HUNDRED MILLION.

AND, UH, SO THAT'S, THAT'S KIND OF WHAT YOU'VE GOT IN PROJECT CAPACITY.

SO IF WE WERE EVEN A CIP NOW, RIGHT? AND WE'RE SITTING DOWN TO START LOOKING AT PROJECTS, THAT'S WHAT YOU WOULD, UH, HAVE IN FRONT OF YOU.

KIND OF HOW ARE WE GOING TO PRIORITIZE AND UNDERTAKE THIS TYPE OF CAPACITY.

SO THAT IS, UH, THAT IS WHAT WE HAVE FOR YOU RIGHT NOW JUST TO KIND OF GET, UH, THINGS GOING.

AND THE LAST PAGE IS JUST A REQUIRED TO PUT INTEREST RATES CHANGE.

THESE ARE JUST ASSUMPTIONS.

I MAY NOT BE ABLE TO DELIVER 2026 BONDS AND GROUPS, BUT TODAY YOU COULD DO UNDER TIPS.

SO IT'S, UH, IT'S CERTAINLY A VERY STRONG BOND AS A RESULT.

BUT IF YOU HAVE ANY QUESTIONS ON THAT OR ANYTHING, I GUESS THE TAKEAWAY THAT I WOULD HAVE FROM THAT IS YOU GUYS MAY WHAT CONSIDER AT AS PART OF YOUR CIP ADOPTION, THINKING OF SOME GUIDELINES TO PUT YOU FOR POLICY, UH, WE CAN GET YOU SOME EXAMPLES.

OTHER CITIES TEXAS HAVE DONE MAY SEE SOME THINGS YOU'D LIKE, IT MIGHT FIT YOUR, UH, SITUATION.

AND THAT'S, THAT'S REALLY JUST, YOU KNOW, AGAIN, A GUIDANCE TOOL.

YOUT BE, YOU DON'T WANT BE OVERLY RESTRICTIVE, BUT IF YOU PROVIDE SOME GUIDANCE, YOU KNOW, AND THAT'S, THAT'S THE POINT THAT I THINK MY TAKEAWAY FROM ALL OF THIS IS HE'S NOT TO HAMPER YOURSELVES, BUT TO REMEMBER ACTUALLY THIS WITH YOU.

YOU, YOU CAN FOR INSTANCE, JUST BECAUSE WE CAN PRESENT YOU A, A, A FUNDING PACKAGE THAT SHOWS YOU THAT AN ISSUE, A CERTIFICATE OF OBLIGATION FOR A NUMBER OF PROJECTS.