* This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting. [ CITY OF BAYTOWN NOTICE OF MEETING BAYTOWN FINANCE COMMITTEE TUESDAY, FEBRUARY 7, 2023 11:00 A.M. HULLUM CONFERENCE ROOM, CITY HALL 2401 MARKET STREET, BAYTOWN, TEXAS 77520 AGENDA CALL TO ORDER AND ANNOUNCEMENT OF QUORUM ] [00:00:20] ALL RIGHT. SO I CALL TO ORDER THE BAYTOWN FINANCE COMMITTEE MEETING. IT IS TUESDAY, FEBRUARY 7TH, 2023, 11:01 AM AND WE DO HAVE A QUORUM PRESENT ITEM, [a. Consider the approval of minutes of the Finance Committee meeting held December 8, 2022.] UH, ONE A IS CONSIDER THE APPROVAL OF MINUTES OF THE FINANCE COMMITTEE MEETING HELD DECEMBER 8TH, 2022. I DO HAVE ONE CORRECTION ON THE MINUTES. OKAY. UH, IT LISTS JACOB POWELL AS ABSENT, BUT THEN IT HAS COUNCIL MEMBER POWELL ADOPTING THE MINUTES. YEAH. SO I THINK I WAS HERE. HE WAS PRESENT AND CHARLES WAS ABSENT. OKAY. SO IF I COULD GET A MOTION TO APPROVE THE MINUTES WITH THAT AMENDMENT. MOVE TO APPROVE THE MINUTES AS AMENDED. IS THAT WHOLE MUST SECOND. ALL IN FAVOR? AYE. ALRIGHT. MOTION PASSES. UH, TWO A [a. Discuss FY23 Budget Amendments.] IS DISCUSS THE FISCAL YEAR 23 BUDGET AMENDMENTS. SO, CHAIR, BEFORE COMING OVER TO THE LISA TO TALK TO YOU, THIS, IF I CAN JUST GIVE YOU A LITTLE BIT OF BACKGROUND TO THAT. UM, THERESA AND I BOTH HAVE BEEN INCREASINGLY CONCERNED, UM, MAYBE OVERSTRETCHING, BUT WE FELT THAT WE COULD BE MORE OPEN AND TRANSPARENT WHEN WE ARE LOOKING AT OUR BUDGET YEAR ON YEAR. AND HISTORICALLY AND UNDERSTANDABLY AND QUITE REASONABLY, THE CITY HAS TRADITIONALLY BEEN CARRYING FORWARD UNUSED MONIES FROM PREVIOUS YEARS TO GO AGAINST, UM, PROJECT, PARTICULARLY PROJECTS THAT ARE ONGOING AND OUT STANDARD PRACTICE. BUT WE, WHAT WE HAVEN'T BEEN DOING IS CLEARLY AND OBVIOUSLY UPDATING THE BUDGET IN THE NEW YEAR TO REFLECT THAT REALITY. SO THIS IS THAT OPPORTUNITY TO, TO FIX THAT. AND GOING FORWARD YOU CAN EXPECT TO SEE MORE OF THAT. IT ALSO GIVES US THE OPPORTUNITY TO HAVE A, A PROCESS IN PLACE DURING THE YEAR TO MAKE ADJUSTMENTS AND AMENDMENTS AS WE GO ALONG. WHEN THINGS CHANGE AND WE HAVE YOUR PRIORITIES, YOU KNOW, MAY CHANGE OR SOME OTHER EVENT HAPPENS AND WE HAVE TO SPEND MONEY AND WE DON'T HAVE IT IN THE BUDGET, WE HAVE AN OPPORTUNITY TO COME BACK TO YOU AND GET AN AMENDMENT TO THE BUDGET. SO THAT'S THE BACKGROUND TO THIS. THIS IS WHAT I REGARD AS BEST PRACTICE. UH, AND WE'D LIKE TO, WE'D LIKE TO DO BETTER. GOOD. TOUCH FOUR REASON. SO AS FAR AS THE, WE CAN GO START WITH [a. Receive the City of Baytown's Quarterly Financial and Investment Reports for the Quarter Ending September 30, 2022.] THE GENERAL FUND. IS THAT THIS ONE? YES, MA'AM. SO IF YOU GO TO PAGE, I'M GONNA START AT PAGE THREE WHERE YOU HAVE ALL THE SUMMARIES OF THE DIFFERENT FUNDS. SO FOR GENERAL FUND, UM, WE'RE LOOKING TO ADJUST IT BY 907,294. THE DETAILS FOR THAT IS, UM, FOLLOWING WHERE THERE'S A LIST OF THE DEPARTMENTS THAT HAD, UH, ENCUMBRANCES OR POS THAT ROLLED FORWARD WHERE THEY HADN'T FINISHED THEIR PURCHASES FOR 2022. SO I HAVE TO ADMIT, I HAD TO ASK WHAT ENCUMBRANCES MEANT. OBJECTION. I DIDN'T KNOW WHAT THAT WORD WAS. AND SO IF I'M RIGHT, IT'S, Y'ALL HAD BUDGETED IT FOR LAST YEAR AND THEY DIDN'T SPEND IT. AND SO NOW WE'RE ROLLING IT OVER FOR THIS BUDGET YEAR. YES. SO BASICALLY THEY HAVE, UM, CREATED A PO FOR PURCHASE AND BASICALLY GOTTEN IT APPROVED, BUT THEN THEY DID NOT RECEIVE THE ITEM UNTIL 23. SO WE'RE ROLLING IT FORWARD BECAUSE WE'RE NOT PAYING THE INVOICE UNTIL 23. OKAY. I WAS GONNA SAY, IF WE CAN BE CLEAR ABOUT IT, AN ENCUMBRANCE SAYS A, A REASONABLE AND REALISTIC EXPECTATION THAT YOU WILL PAY MONEY FOR A GOOD OR SERVICE. THAT'S WHAT IT IS. IT'S NOT JUST, WE THINK WE MIGHT WANT TO SPEND THAT BECAUSE WE HAVE IT IN THE BUDGET, BUT THAT'S NOT WHAT IT IS. THIS IS WHERE WE HAVE A CONTRACT IN PLACE, OR WE HAVE A PURCHASE ORDER THAT WE'VE ISSUED, UH, FOR A PREDICTIVE PROJECT AND WE KNOW WE'RE GOING, WE'RE GOING TO DO, WE JUST HAVEN'T DONE IT YET. SO I JUST WANNA BE CLEAR ABOUT THAT HOUSE MEETING. SO IS THIS AN ALTERNATIVE? I MEAN, COULD WE ACCRUE IT IN LAST YEAR'S BUDGET? SO THERE ARE, I TRY WAS BORING THERE. UM, UP AT THIS EARLIER, THE DIFFERENCE BETWEEN THERE'S SPEND, THERE'S ACCRUALS AND THERE'S WHAT I CALL COMMITMENTS. WHAT YOU CALL IN THIS COMPANY CONFERENCES, THEY'RE NOT THE SAME THING. SO IT'S NOT AS GENERALLY [00:05:01] SPEAKING, AN ENCUMBRANCE IS A COMMITMENT THAT YOU CAN'T ACTUALLY ACCRUE, TECHNICALLY SPEAKING. OKAY. AND AN ACCOUNTING WAY. OKAY. SO WHAT CAN BE, I DON'T KNOW ALL THE TERMINOLOGY, WHAT CAN BE ACCRUED? SO IF YOU, IF YOU'VE ORDERED SOMETHING AND YOU HAVEN'T, SO IF YOU, SO BASICALLY WHEN YOU ACCRUE INVOICES, YOU'RE ACCRUING INVOICES THAT ARE FOR THE PRIOR YEAR, MEANING THAT YOU HAVE RECEIVED THE GOODS AND SERVICES IN THAT YEAR, IN THE PRIOR YEAR. GOTCHA. SO YOU CANNOT, THE INVOICE HASN'T COME IN YET, BUT YOU HAVEN'T YES, WE HAVEN'T PAID FOR. OR IT COULD BE SOMETHING WHERE, UM, YOU HAVEN'T, IT'S FOR A, UM, SERVICE THAT WE HAVEN'T PAID FOR. 'CAUSE NOT EVERYTHING IS A GOOD IN SERVICE. I MEAN, UH, SOMETHING YOU'RE TANGIBLE THAT YOU'RE GONNA ACTUALLY RECEIVE. BUT DID THEY PERFORM THE ACTIVITY IN THE PRIOR YEAR? AND WE PAID IT OUT IN THE NEW YEAR? SO THAT'S BASICALLY WHEN YOU ARE ACCRUING THE INVOICES. OKAY. SO THE PO IS A LITTLE DIFFERENT BECAUSE A LOT OF TIMES YOU ARE TRYING TO RECEIVE SOMETHING IN HAND AND SO YOU DIDN'T RECEIVE IT. UM, YOU RECEIVED IT THE PRIOR YEAR, BUT WE DIDN'T PAY IT OUT BECAUSE THE INVOICE CAME LATER FOR WHATEVER REASON IN THE NEW YEAR. I THINK THIS IS AN IMPORTANT POINT TO HIGHLIGHT WHEN Y'ALL PRESENT TO COUNCIL, AND I'M HAPPY TO DO IT OR VICTOR, BUT AT FIRST GLANCE, WHAT IT'S GOING TO APPEAR LIKE TO US IS, UM, Y'ALL BUDGETED MONEY AND YOU DIDN'T SPEND IT. AND SO NOW THERE'S ALL THIS LIKE FREE MONEY FLOATING AROUND AND WE'RE NOW DESIGNATING IT TO SOMEWHERE ELSE. SO IT'S A REALLY IMPORTANT POINT TO SAY THAT THIS MONEY'S ALREADY CONTRACTED OR SPENT, SO TO SPEAK. WE JUST HAVEN'T LY PAID THE BILL. YEAH. SO IN THE PAST, WHERE DID, I THINK BECAUSE RIGHT HERE THERE'S 907,000 THAT WE ALREADY KNEW WENT TO THESE SPECIFIC LINE ITEMS. SO IN THE PAST, WITHOUT DOING THIS, UM, BUDGET AMENDMENT, WHERE DID THAT $907,000 GO? IT WAS IN, INTO THE, THE, IT WOULD'VE BEEN IN THERE. IT JUST WASN'T REPORTED AS A, AS A, IT'S A TRUE ADJUSTMENT TO THE BUDGET. SO PEOPLE WOULD HAVE THEIR BUDGET AND THIS YEAR PLUS THEY'RE CARRIED OVER. THE ENCUMBRANCE WAS CARRIED OVER. OKAY. SHOWS UP IN THEIR BUDGET. THAT WAS THE NUMBER THEY PUT IN. IT JUST WASN'T REALLY BROKEN OUT. SO, AND, AND SO, SO I'M A BUDGET STUFF THAT WAS CARRIED OVER LAST YEAR OF MAY 20 LEDGE. THAT'S NOT THE LEDGER IN THE BUDGET THAT AGREED. AND THAT'S WHAT WE DOING. WE'RE FIXING IT. SO CALL IN. OKAY. UM, SO ONTO A PRODUCT, THE PRODUCTS AT 50 2004 78 FOR A BUILDING MAINTENANCE, UM, WATER RESTORE HAD 625,247. AND THERE'S IT WITH VARIOUS, UH, ITEMS LIKE SUPPLIES, MAINTENANCE CONTRACTS AND EQUIPMENT PURCHASES. UM, SANITATION HAD A SMALL AMOUNT OF $13,650. AND BEFORE I GO ON, I WOULD WANT TO ADD THAT WE MAY WANNA CONSIDER LIKE A POLICY OF HOW MUCH WE SHOULD BE ABLE TO ROLL OVER BECAUSE SOME, UM, ITEMS, DEPARTMENTS COULD POTENTIALLY FORESEE IF THEY'RE GOING TO RECEIVE THE GOOD OR NOT AND MAKE SURE THAT THEY BUDGET ACCORDINGLY SO WE COULD ADJUST THE POLICY SO THAT WE'RE NOT MOVING. IF YOU LOOK AT ONE OF THE SMALL AMOUNTS, LIKE 934 MM-HMM . UM, IN STORM WATER WE HAVE 448,620. AND THAT WAS FOR, UM, MOTOR VEHICLES AND STORM DRAIN MAINTENANCE. AND THEN WE HAD, UM, GARAGE OPERATIONS 5,200, $225. AND THEN WE HAVE OUR CIP OF COURSE THOSE, UM, ITEMS WILL ROLL. WE ARE JUST DISCLOSING HOW MUCH OF THAT WAS ACTUALLY INCOME. THIS IS FOR GENERAL FUND CIP, IT WAS 1 MILLION, A LITTLE OVER 1 MILLION. UM, AND THEN FOR THIS CIP WATER AND SEWER, THE REASON THERE IS A REDUCTION IS BECAUSE IT WAS IN THERE, IT WILL BE A DUPLICATE ALLOCATION IF WE DON'T REMOVE IT BECAUSE IT WAS A PART OF THE ENCUMBRANCE AND THEY ALSO INCLUDED IT IN THE BUDGET FOR FY 23. SO WE ARE JUST MAKING SURE THAT IT DOESN'T DUPLICATE IF WE HAD THAT AMOUNT. SO WE JUST, SO THAT THEY DON'T HAVE MORE MONEY THAN BACK. UM, AND THEN WE HAVE THE COMPONENT UNITS, UM, FOR BAA WOULD'VE BEEN 203,576. UM, SMALL ITEMS LIKE SPECIAL SERVICES, HEATING AND COOLING MACHINERY EQUIPMENT. AND THEN FIRE WAS 326,841. AND THEN WE HAVE FOR [00:10:01] 555 23. SO, UM, I DON'T KNOW IF YOU WANT ME TO GO THROUGH ALL OF THESE , I CAN SUMMARIZE THE SPECIAL REVENUE FUNDS TO BE, IT'S JUST A FURTHER BREAKDOWN. FOUR. YEAH, JUST FURTHER BREAKDOWN. JUST 4,049,600. SO LIKE FOR EXAMPLE, ON UNDER PARKS WHERE THERE'S A LOT THAT AREN'T BEING ADJUSTED, THAT MEANS THEY SPENT THEIR MONEY. OKAY. NOTHING'S ROLLING FORWARD. OKAY. ONE THING THAT I'M GONNA POINT OUT, UM, IS SINCE IN MY TIME HERE WE'VE TALKED ALL ABOUT THIS BEING A 200 AND SOMETHING MILLION DOLLARS ORGANIZATION, RIGHT? IT'S NOT IS THE $410 MILLION ORGANIZATION. SO IF YOU START CONSIDERING OTHER FACTORS, WE'RE ALMOST UP TO HALF A BILLION DOLLAR OF AN ORGANIZATION. SO IT'S, IT'S JUST IMPORTANT TO KNOW BECAUSE THAT'S A BIG DIFFERENCE BETWEEN A 200 MILLION ORGANIZATION AND ENGINEERING, A HALF A BILLION DOLLAR. UM, Y'ALL HAVE THIS REPORT PRESENTED TO COUNSEL THIS WEEK. IS IT SOMETHING Y'ALL PLAN ON DOING JUST AS ADJUSTMENTS HAPPEN OR ANNUALLY OR HOW OFTEN WOULD COUNSEL RECEIVE AN ADJUSTMENT REPORT? I WOULD EXPECT, SO I WOULD THIS TO BE AT LEAST TWO A YEAR. ONE NEAR THE END OF THE, THE FISCAL YEARS WHERE I, I'M PROBABLY TO COINCIDE WITH A BUNCH OF PROCESS WHERE YOU BASICALLY, YOU'RE TIDYING UP WHERE YOU ARE AT THAT POINT IN TIME AND THEN THIS, WHICH IS A TIDY UP POINT FROM ONE YEAR INTO THE NEXT. UM, THE OBVIOUS ONE, IF THERE WERE AN EMERGENCY OR SOMETHING PARTICULARLY THAT HAPPENS DURING THE YEAR, WE WOULD COME BACK TO YOU AND THAT WOULD BE A SPECIFIC BUDGET AMENDMENT FOR THAT, FOR THAT EMERGENCY. UM, SO AT LEAST TWO, IT COULD BE THREE OR FOUR TIMES A YEAR. THREE, I WOULD SAY AT LEAST TWO. UM, BECAUSE IT'S IMPORTANT TO KNOW THAT WHEN COUNCIL IS APPROVING CHANGE ORDERS, YOU'RE ESSENTIALLY KIND OF CHANGING THE BUDGET. SO WE COULD COME BACK AND CLEAN THAT UP TO SAY, OKAY, YOU'VE APPROVED THESE THINGS, SO ESSENTIALLY WITH THE NEW BUDGET AND YOU DON'T HAVE TO HAVE ALL THESE CHANGE ORDERS. YEAH, JUST MORE TRANSPARENCY. I MEAN, SO ANYTIME THAT WE SEE SOMETHING THAT WE DONE AND I THINK VICTOR WAS SCREWING IT UP, UM, SO THAT WE, IT'S JUST MORE DO YOU LIKE THE REPORT? LIKE DO YOU LIKE THE LEVEL OF DETAIL? DO YOU THINK YOU WOULD WANT MORE OR LESS? I DON'T THINK I NEED ANY MORE DETAIL. LET'S GET TO SEE WHAT WE'RE CARRYING OVER. UM, IT'S HARD. DO THE TRUE AMENDMENTS, THAT'S SOMETHING WE'VE TALKED ABOUT IN THE PAST. YEAH, I THINK, I THINK IT'S DEFINITELY A GOOD REPORT TO SEE. I'M NOT RIGHT. WE DID HAVE THIS CONVERSATION, I THINK IT WAS MAYBE BEFORE YOU HERE. I KNOW RICK TALKED ABOUT, I KNOW AT LEAST THE FOUR OF US DISCUSSED THAT, ABOUT THE NEED TO, TO DO THIS ON A REGULAR BASIS. THIS IS THE FIRST OPPORTUNITY TO DO THAT. OKAY. ANYTHING ELSE ON ITEM TWO A? SO IF YOU'RE OKAY, CHAIR ON, ON ON THIRD. I THERE WITH AGENDA. YOU WANT SAY SOMETHING? SURE. TALK ABOUT THE FINAL. SURE. GOOD LUCK. I'M JUST KIDDING. . ALL RIGHT, WE'LL MOVE TO, YAY. SO THE AGENDA, IT SAID DISCUSS THE FAILURE, 23 BUDGET AMENDMENTS, BUT IN THIS, AND NOW WE GOT THAT AGENDA ITEM WAS LIKE RED LINED INTO CONSIDER AN ORDINANCE. SO DO WE NEED TO, WAS THIS A DISCUSSION OR CONSIDERATION OF THIS WILL BE A IF ALLOWED THERE, ISN'T IT AN ORDINANCE TO YEAH. BUDGET. WELL, IT, IT'S A DISCUSSION HERE. SAY COUNCIL. IT'S JUST A DISCUSSION. OKAY. THAT'S WHAT I, YES. I DON'T KNOW. JUST WANNA MAKE SURE IF WE NEEDED TO TAKE ANY ACTION, HERE'S JUST A DISCUSSION. OKAY. WHAT'S THE AGENDA ITEM ON THURSDAY FOR IT? I THINK IT'S BEEN IN CONSENT. IT WAS BEEN POLICY IN, UM, OKAY. THAT'S RIGHT. I THINK IT'S CONSIDERED AN ORDINANCE. YEAH, AN ORDINANCE. PROPOSED ORDINANCE. YEAH. IT'S, UH, IT'S [00:15:01] DD? YES. OKAY. FOUR B. RECEIVE THE CITY OF BAY TOWN'S QUARTERLY FINANCIAL INVESTMENT REPORTS FOR THE QUARTER ENDING SEPTEMBER 30TH, 2022. OKAY. ON THE, UM, FINANCIAL REPORT, WE'VE TRIED TO ADD SOME MORE VISUAL SHOTS, UM, INSTEAD OF JUST THE, UM, TRADITIONAL, UM, BREAKOUT FOR THOSE WHO MAY BE VISUAL, WHO DON'T WANNA READ ALL OF THAT. . SO AT FIRST GLANCE WE BUDGETED OUR REVENUE AT, UH, 126000000.2 AND OUR TOTAL REVENUE ACTUALLY WAS 128 MILLION. AND THEN OUR EXPENSES WAS 136.9 MILLION BUDGETED AND TOTAL WAS 133.7 MILLION. AND SO THEN WE HAVE A GRAPH AT THE BOTTOM THAT ACTUALLY COMPARES IT TO OUR FUND BALANCE. SO BASICALLY WE'RE SHOWING THAT ON AVERAGE WE'RE PRETTY CLOSE ON WHAT WE'RE BRINGING IN AS REVENUE AND WHAT WE'RE SPENDING. AND THEN ON THE OTHER, UM, SNAPSHOTS WE HAVE BUDGET VERSUS ACTUAL ON REVENUE AND BUDGET VERSUS ACTUAL IN EXPENSES. LISA, CAN I ASK A QUESTION ABOUT PAGE ONE BEFORE WE MOVE ON? ISSUE? UH, ANY CONCERN ABOUT LIKE, EXPENSES OUTPACING REVENUE? IS THAT NORMAL? SO I, I A AND A LARGE PART OF THAT IS THE CONTRIBUTION TO THE CAPITAL PROGRAM. AND THAT'S FOR YOU TAKING POLICY DECISION TO SPEND DOWN BALANCES. SO THAT'S INCLUDED AS, AS AN EXPENSE. SO THE EXPENSE IS DEBT PAYMENTS, THE, UH, THE NO, THE EXPENSES WHERE YOU'RE ACTUALLY TRANSFERRING MONIES FROM THE GENERAL FUND TO FUND CASH AND HAVE, WHAT MAY BE HELPFUL FOR, FOR THIS COMMITTEE TO LOOK AT IS YOU CAN LOOK AT ONGOING REVENUE AND ONGOING MAINTENANCE AND OPERATIONS AND THEN BREAK THAT DOWN TO ONE-TIME EXPENSES, WHICH WOULD BE THE CAPITAL EXPENSES. THAT WAY TO ADDRESS YOUR POINT, YOU CAN SHOW, HEY, OUR PROJECTED REVENUE IS IN LINE WITH OUR PROJECTED EXPENSES. AND THEN ANY OF THE ONE-TIME EXPENSES, EITHER DRAWING OUT RESERVES OR OTHER SPECIAL FUNDING MECHANISMS, THOSE ARE HANDLED DIFFERENTLY, BUT THEY STILL ADD TO THE EXPENSE COLUMN, WHICH IS WHY THE EXPENSE COLUMN LOOKS HIGHER THAN A RIBBON. YEAH, IT WOULD BE A GOOD CALL OUT JUST BECAUSE AT FIRST GLANCE IT LOOKS LIKE WE'RE SPENDING MORE MONEY THAN WE'RE TAKING IN, WHICH ANYONE WOULD BE LIKE, THAT'S SCARY. RIGHT. SO, OKAY. SORRY. PAGE, OH, BY THE WAY, THE VISUALS DO LOOK REALLY GOOD. OKAY. SO ON THE OTHER PAGE WE JUST HAVE THE RATIOS OF HOW MUCH WE'RE SPENDING. MAJORITY OF OUR REVENUE IS SHOWING TO COME FROM THE IDAS, 51%. UM, AND THEN THE OTHER, UH, LARGER PERCENTAGE, 18% IS PROPERTY TAX. AND THEN AS FAR AS THE EXPENSES GO, UM, WE SPEND, THE MAJORITY OF OUR UM, ITEMS ARE PERSONNEL AND THE OTHER PERCENTAGES THAT COME IN AT 9% ARE MISCELLANEOUS AND THE COLOR, UH, PROFESSIONAL SERVICES. UM, IS IT WORTHY TO, TO EXPLAIN MISCELLANEOUS, UM, FOR IT BEING THE SECOND LARGEST EXPENSE AND IT'S JUST GENERIC, MISCELLANEOUS, IS IT WORTH, I CAN TELL YOU WHAT'S IN THAT. IS IT WORTH EXPLAINING WHAT'S IN THAT, LIKE IF IT WAS LIKE THE LOWEST ONE, I PROBABLY WOULDN'T HAVE ASKED, BUT SINCE IT'S THE SECOND HIGHEST THING WE SPEND MONEY ON, I'M JUST WONDERING WHAT, WHAT IS MISCELLANEOUS? OKAY. BREAK I, I'LL TELL YOU WHAT THE BIGGEST CHUNK OF IT IS. IS THE CONTRIBUTION TO CAP, LIKE THE TRANSFERS? YEAH, THAT'S WHAT'S IN, THERE'S THE TRANSFERS, BUT WE CAN BREAK THAT OUT. THE TRANSFERS IS, UM, FOR GENERAL FUND AND YOU KNOW, IT MAY, AND MAYBE THE GRAPH IS FINE AND SOMEONE ASKS AND Y'ALL JUST VERBALLY EXPLAIN AND THAT'S GOOD ENOUGH. UM, BECAUSE I IMAGINE IT WOULDN'T, MISCELLANEOUS MAY NOT ALWAYS BE THE SECOND HIGHEST BEEN RIGHT. YOU KNOW, JUST YOU, I'M THINKING YOU SHOULD CALL OUT. THIS WOULD HELP ANSWER THE PREVIOUS QUESTION. WE SHOULD CALL OUT 'CAUSE WE HAVE CAPITAL OUT THERE, WHICH I KNOW WHAT THAT IS. THAT'S NOT THE CIP CONTRIBUTION. I'M WONDERING GOING FORWARD WE SHOULD CALL OUT ON THIS CONTRIBUTION TO THE CIP OUT OF THE MISS THAT, 'CAUSE THAT'S WHERE IT IS. BUT IT SHOULD TRANSFER. YES. SAYING THAT'S A GOOD POINT. WHEN I THINK OF MISCELLANEOUS, [00:20:01] I'M THINKING LIKE PAPER CLIPS. YEAH, I KNOW, I KNOW. AND I'M LIKE, WOW, HOW ARE WE SEEING EXPENSIVE PAPER CLIPS. YEAH. ALL PLATED. THE NEXT ONE IS OUR SALES TAX RECEIPTS, UM, GRAPHIC AND OUR PROPERTY TAX COLLECTIONS SHOWING THAT, UM, YOU'RE SLIGHTLY DOWN ERROR . WELL, I'M NOT SURE, UH, BECAUSE I KNOW IT BREAKS IT OUT, UH, BETWEEN THE UM, GENERAL FUND AND THE DEBT SERVICE ON THE PROPERTY TAX. I'M JUST LOOKING AT THE GRAPH. UM, SO THEN THE NEXT, UM, PAGE IS OUR SCHEDULED BREAKDOWN OF THE DETAILS OF WHERE THOSE, UM, FIGURES COME FROM IN THE SNAPSHOT FOR OUR GENERAL FUNDS. SO OUR ACTUAL, UH, EXPENDITURES AT OUR REVENUE THAT WE HAD ON THE SNAPSHOT WAS 128 MILLION AND OUR EXPENDITURES ARE 133.6. SO THAT TIES. AND THEN WE HAVE OUR HOTEL OCCUPANCY TAX. UM, GENERAL, OUR ENDING FUND BALANCE ENDED THE $2.2 MILLION WITH THE REVENUE BEING 1.5, WHICH WAS, UH, SLIGHTLY LESS THAN LAST YEAR. AND WE SPENT LESS THAN LAST YEAR. WE ONLY SPENT 731,000. UM, PART OF WHAT WAS SPENT LAST YEAR, UH, FOR THE $5 MILLION WAS ON THE PROVISION CENTER. SO THAT'S WHAT THE MAJOR DIFFERENCES. AND THEN FOR WATER AND SEWERS, THIS IS ONE OF OUR OTHER LARGER FUNDS, WE ADDED MORE, UM, HIGHLIGHTS, SNAPSHOT OF THE BUDGETED REVENUE OF 46 MILLION. TOTAL REVENUE BROUGHT IN WAS 45.5. UM, IF YOU LOOK AT THE GRAPHIC, YOU CAN SEE THAT OUR REVENUE FOR WATER AND HAS BEEN, HAS WENT DOWN SINCE 2020. UM, ALSO THE GRAPHIC, UM, SHOWING THE COMPARISON BETWEEN, UM, REVENUES AND EXPENSES AND WORKING CAPITAL. WHAT'S OUR REASON FOR THE REVENUE GOING DOWN? DO WE NOW, UH, THERE IS, UM, SPECULATION THAT THERE COULD BE AN, UH, NEED TO INCREASE RATES. UM, THAT COULD BE PART OF IT. AND ALSO A PART OF JUST TRYING TO SPIN DOWN, IF YOU LOOK AT 21, WHEN IT DID ITS FIRST DROP, WE SPENT 54 A MILLION DOLLARS AND ONLY BROUGHT IN FOR, OKAY, I WILL TELL YOU THAT THIS WILL BE A BIG CONVERSATION FOR ME BRINGING TO THE COUNCIL FOR FY 24 BUDGET. YEAH. 'CAUSE IF YOU LOOK AT THE TOP, UH, RIGHT CORNER GRAPH SHOWS TOTAL REVENUE AND SHOWS WHERE WE ARE AT. UM, IT'S NOT SUSTAINABLE. HUH? IT'S NOT SUSTAINABLE. NO, NOT SUSTAINABLE WHATSOEVER. AND SO IT IS A BIG TALKING POINT. AND THEN WE CONSIDER THE SSO LITIGATION THAT NEEDS TO BE ADDRESSED. UM, IT'S SOMETHING THAT IS GONNA BE BE TALKING FOR. SO YOU THINK IT'S A COMBINATION OF MAINTENANCE NEEDS AND RATE HIKES FROM THE CITY OF HOUSTON THAT ARE CONTRIBUTING TO IT FOR REVENUE PURPOSES? YEAH, SO, SO WHY THE EXPENSES ARE OUTPACING THE REVENUE. UH, I JUST, I DON'T KNOW IF RATES HAVE BEEN PROPERLY ADDRESSED OVER THE YEARS TO MAKE, TO KEEP UP WITH GROWING EXPENSES. 'CAUSE THIS IS AN ENTERPRISE FUND. UM, YOU KNOW, THE EXPENSES THAT ARE GENERATED THROUGH THIS PIECE, UH, SHOULD REFLECT WHAT THE RATE BE FOR REVENUE SHOULD KNOW. WITH THAT SAID, IS THERE MANAGEMENT THAT NEEDS TO BE LOOKED AT WITH THIS? YES. RIGHT. YES. I WILL TELL YOU THAT FROM THE MANAGEMENT SIDE, WE, WE WILL LOOK AT IT AND SEE WHERE WE CAN BE MORE EFFICIENT. UM, ON THE OTHER SIDE OF THE, THE TABLE IS JUST THAT YOU ARE A GROWING COMMUNITY WITH, UM, A LOT OF EXPENSES OR EXPENSES THAT, THAT COME WITH GROWTH THAT WE HAVEN'T ADDRESSED RATES PROPERLY, EVEN THOUGH RATES, UH, WOULD CONSIDER HIGH TO SURROUNDING COMMUNITIES. IF I COULD OFFER SOMETHING AS WELL, UH, THIS GOES BACK SOME TIME, JASON, BUT IF YOU, IF YOU REMEMBER A COUPLE OF YEARS AGO, THE ISSUE CAME UP ABOUT THE, UH, THE DIFFERENTIAL AND WE CHARGE IN CITY AND OUT CITY, AND IF YOU REMEMBER, WE REDUCED THE OUT CITY CHARGE, WHICH AFFECTS THE 22 21 2 YEARS AGO. CORRECT. THAT'S WHEN AFFECTS THE 2022 FINANCIAL. SO THE REVENUE DIPPED, AND IF YOU REMEMBER WHEN YOU SET THE BUDGET, YOU PUT IT BACK [00:25:01] UP THIS LAST UHHUH 1.5. SO I WOULDN'T, I WOULD SEE THAT GOING, GOING UP. BUT THE POINT IS IT'LL MAYBE IT'LL MAYBE GET UP TO BACK, BACK UP TO IN 2021. BUT IT'S FLAT LINING REVENUES. SO, SO THE ISSUE STILL IS OVER TIME IS UNSUSTAINABLE, BUT WE ARE MAKING THAT CORRECTION. I'M JUST, HOW DO WE RECONCILE? BECAUSE YOU'RE NOT THE FIRST TO TELL US THAT WE HAVEN'T BEEN MANAGING OUR RATES PROPERLY. I MEAN, THIS HAS BEEN A SONG SA I THINK STAFF IS SANG FOR YEARS AND HOW DO WE RECONCILE THAT AND THE FACT THAT CITIZENS JUST THINK THEY PAY THE HIGHEST RATES, YOU KNOW, IN THE REGION AND WHY, WHY ARE, WHY ARE OUR RATES SO HIGH AND CONTINUING TO GROW, BUT X COMMUNITY ISN'T? AND I, I JUST THINK IF WE'RE GONNA MANAGE THIS, IF Y'ALL WANT THE ELECTED BODY TO MANAGE THIS THE WAY Y'ALL WANT, YOU HAVE TO GIVE US A NARRATIVE AND A LOGIC THAT WE CAN RELATE TO CITIZENS. THAT MAKES SENSE BECAUSE WE HAVEN'T RECEIVED THAT YET. AND I CAN'T GET ANYONE TO BUY INTO RAISING WATER RIGHTS. I MEAN, I HEAR MORE PEOPLE COMPLAIN ABOUT OUR WATER RATES THAN OUR PROPERTY TAX RATE. SO I DON'T KNOW HOW TO MANAGE THIS PROPERLY AND SATISFY, I GUESS THE CITIZEN PERSPECTIVE. WE DON'T HAVE, WE DON'T, WE DON'T HAVE THE RIGHT STORY. WE'RE NOT TELLING THE RIGHT NARRATIVE. I GUESS I CAN'T EVEN EXPLAIN WHY WE HAVE TO RAISE RATES. OKAY. WE'LL WORK ON THAT. UM, ON THE NEXT VISUAL, UM, I GUESS THAT ALLUDES TO IF THE NARRATIVE THAT WE NEED TO WORK ON, BECAUSE WHEN WE LOOK AT THE CELL OF WATER, IT'S 48% OF OUR REVENUE. THIS SERVICE IS 49%. UM, AND THEN AS FAR AS OUR EXPENSES GO IS THE SAME WHERE I BROKE IT OUT BY THE, UM, WASTEWATER TREATMENT AND WATER. SO OUR MAIN UM, 30 PER 33% IS OPERATING TRANSFERS THAT WE SEND OUT. UM, WHICH, UH, EQUATES TO $17 MILLION. AND THEN WE HAVE OUR, UH, MISCELLANEOUS, WHICH IS MISCELLANEOUS BE OUR TRANSFERS, HIS OPERATING TRANSFERS FOLLOW. OKAY. YES. I'M THE BREAKDOWN ON, SO WE HAVE TOTAL REVENUE OF 45.5, WHICH TIES TO THE HIGHLIGHTS IS EXPENDITURES IS 27.5 MILLION. UM, LEAVING US UPON 40. ACTUALLY THE GRAND TOTAL IS 46.9 MILLION. EVEN AS THE GRAND, UH, WORKING CAPITAL IS 6.7. AS FAR AS SANITATION, WE HAVE ABOVE IN 7.3 MILLION REVENUE. UM, EXPENDITURES IS 7.2. SO OUR ENDING WORKING CAPITAL IS 8 23 A THOUSAND. THE MAJORITY OF OUR, UH, EXPENDITURES ARE ON SERVICES RELATED TO STORM WATER. WE HAVE TOTAL REVENUE, 3.8 MILLION OPERATING, UH, EXPENSES, 1.7 MILLION. AND OUR TOTAL EXPENDITURES LEGAL, WHAT IS THE INTER FUND TRANSFER? THAT'S 33% THERE. WHAT ARE WE TRANSFERRING ON? THE STORM WATER? YEAH. THAT TRANSFER IS GOING OUT TO, UM, ACTUALLY GOES THE CIP. RIGHT? IS THE C OKAY. IS THE, UH, STORM WATER SSO IS THIS THIS SSOI IS IT OVER, IS IT IN THIS STORMWATER FUND OR IS IN THE, IS IT NO, THIS IS THE RAINFALL. RAINFALL, YEAH. [00:30:01] WELL EXPLAIN, EXPLAIN THAT TO ME MORE. SO THE SANITARY SEWER IS THE WATER PART OF THE WATER WASTEWATER. AND SO WATER WASTEWATER IS THE, THAT IS WHERE, IS WHAT'S BACKING UP? YES. IT'S BECAUSE WE GET HEAVY RAINFALL. YEAH. BUT IT GOES INTO THE, THE, THE SYSTEM WHERE YOU FLUSH YOUR TOILET, RIGHT? YEAH. AND SO IT'S GETTING INTO THAT SYSTEM WHICH IS OVERFLOWING AND HAVING DISCHARGES. WHEREAS THIS IS JUST THE, THE, THE RAIN WATER THAT ACTUALLY GOES INTO STORM WATER DRAINS THAT DRAIN TO THE BAY. OKAY. SO FIXING THE SSOI ISSUE WOULD COME FROM THE WATER SEWER FRONT. RIGHT. OKAY. ARE THERE ANY LIKE OPPORTUNITIES TO COST SHARE THERE WITH THE STORM WATER FUND? SINCE IT IS KIND OF RELATED? SO IF, IF YOU REMEMBER WHAT WE DID YEAR BEFORE LAST WAS TO, WAS TO ADD AN ADDITIONAL DOLLAR, HAVE A LEAVE TO THE FEE TO GIVE US ROOM TO ACTUALLY RAISE DEBT, WHICH WE HAVEN'T ISSUED THE DEBT YET, BUT WE HAVE AN AGREEMENT WITH HARRIS COUNTY FLOOD CONTROL FOR A NUMBER OF THIRD LARGE PROJECTS IN THE, THE WEST OF THE CITY. UM, AND THAT SHOULD HAVE A POSITIVE EFFECT OVER TIME AND . SO, SO WHAT I'M SAYING IS WE'RE DOING THAT AND THAT'S WHAT, THAT'S FUNDING ADDITION TO THE, THE FEES. WHERE WAS THE TRANSFER OF THAT? YOU WERE TALKING ABOUT THE 78%. IT'S 33%. IT WAS A LITTLE OVER A MILLION DOLLARS FROM THE STORMWATER. WHY? SAME 33 ON THE EXPENSE RATIO FRONT AT THE BOTTOM. OH, THAT, OKAY. AQUATIC THE AQUATICS TOTAL AVENUE WAS 3.9 MILLION. UM, TOTAL EXPENDITURES 3.8 WITH A CHANGE OF 42,000. THE REASON IT'S WORKING, THE CAPITAL IS NEGATIVE IS BECAUSE AQUATIC STILL OWE FUNDS. CORRECT. DO WE EXPECT TO BE WHOLE THIS BUDGET? HOW LONG DO THEY PAY IT BACK? UM, I THINK THAT'S A PHILOSOPHICAL QUESTION THAT COUNCIL HAS ADDRESS. IF THEY'RE ONLY MAKING, THEY'RE ONLY NETTING A THOUSAND DOLLARS A YEAR, DUNNO TAKE 5% FROM EACH EMPLOYEE WITH HIM. NO, I I THINK IT'S JUST A PHILOSOPHICAL QUESTION THAT WE HAVE TO ASK COUNSEL. IS IT WORTH JUST KEEPING IT ON THERE AND ADDRESSING A LITTLE BY LITTLE, UH, BUT UNDERSTAND THAT IT'S GONNA HAVE A NET NEGATIVE WORKING CAPITAL FOR EXTENDED PERIOD OF TIME. FORGETTING IS THE RIGHT TO USE RIGHT NOW. YEAH. SO IF YOU REMEMBER WHEN WE DID THE BUDGET THIS LAST YEAR, ORIGINALLY WE HAD ASSUMED, UH, 250,000 COMING FROM AQUATICS BACK TO GENERAL FUND TO START PAYING BACK ON THIS. BUT IT WAS OBVIOUS THAT THERE WASN'T THAT AMOUNT OF CASH IN THE FUND TO DO IT. SO THAT WASN'T INCLUDED IN THE BUDGET. UM, BUT YEAH, I SUGGEST THERE HAS TO BE A POLICY DECISION TEAM OF WHAT YOU DO. 'CAUSE HOW DO YOU GET MORE MONEY INTO THE FUND, MORE PEOPLE THROUGH THE DOORS OR CHARGE MORE AND HOPEFULLY YOU STILL GET THE SAME AMOUNT OF PEOPLE, BUT IF YOU CHARGE MORE, YOU GET LESS PEOPLE, YOU'RE NO BETTER OFF. YOU'RE GONNA, YOU'RE GONNA PLAN A DISCUSSION WITH COUNCIL ABOUT THIS. YEAH. DURING THE BUDGET, FY 24 BUDGET IS ON HOW WE WANT ADDRESS IT. HOW IS, UH, ATTENDANCE? ARE WE STILL STRUGGLING OR REVENUE ON THE DAY OF THE WEEK? RIGHT. THE UH, WEEKENDS WE, WE HAVE, UM, AN OVERCROWDING ISSUE WHICH LEADS TO A BAD CUSTOMER EXPERIENCE. YEAH. BECAUSE PEOPLE ARE WAITING IN LINE FOR AN HOUR IN, THAT'S WHERE WE GET THE, THE BIGGEST NEGATIVE FEEDBACK IS PEOPLE WAITING IN LINE TO GET IN. UH, REAL RULE OF THUMB IS IF YOU HAVE PEOPLE WAITING IN LINE, YOU NEED TO RATE YOUR RATES. UM, IT'S ONLY TYPICALLY ON THE WEEKEND. DURING THE WEEKDAYS IT'S FINE. DO WE CHARGE A DIFFERENT RATE ON THE WEEKENDS? UH, NO. NOT RIGHT NOW. WE WOULD, I THINK WE PROBABLY SHOULD. UH, INTERNALLY WE WOULD LIKE TO EXPLORE ALL THOSE DIFFERENT POSSIBILITIES. WE WERE TOLD IN THE PAST THAT THAT RATE INCREASE HAVE TO GO TO COUNSEL FOR THAT COUNCIL. WASN'T THAT WAS, I'VE NEVER HEARD THAT DISCUSSION WAS A LONG TIME AGO. I MEAN, I WOULD SAY I'D BE OPEN TO HAVING THE DISCUSSION IF WE GOT LINES, IF WE'VE GOT LINES ON THE WEEKENDS AND WE HAVE SOME POTENTIAL FOR REVENUE THERE. IF THE WEEK, YOU KNOW, DURING THE WEEKDAYS, IF THEY'RE FINE, I'D LEAVE AS IS. BUT SOUNDS LIKE THERE'S, IS PIRATE SPACE STILL SUCCESSFUL? IS IT MM-HMM [00:35:01] . OKAY. I I THINK THAT EVERYBODY WOULD CONSIDER IT SUCCESSFUL. UH, ONE OF THE BIG LURES OF PIRATE BAY IS THE, IS THE ENTRY POINT, UH, COMPARED TO SPLASH DOWN AND SORT BOND AND THINGS LIKE THAT. SO THERE IS SOME ELEMENTS OF THAT, BUT I, I THINK WE CAN STILL CAPTURE THAT BY ALLOWING PEOPLE TO CONTINUE TO BRING IN COOLERS AND BRING IN SNACKS AND THINGS LIKE THAT, THAT OTHERWISE JUST MODIFY THAT ONE THING WE'D BE IN FAVOR. EVENT. I THINK THERE'S PROBABLY ENOUGH SUBSTANCE TO HAVE A WHOLE PIRATES BAY DISCUSSION WITH COUNSEL. YES, I AGREE. OKAY. STREETS, STREETS, COLORADO. WE CALL IN $5.1 MILLION, UH, EXPENDITURES, TWO SIX LEAVING WITH A WORKING CAPITAL. AS FAR AS THE INVESTMENT REPORT GOES, UM, WE HAVE, UM, WE EARNED INTEREST OF $1.4 MILLION BECAUSE WE HAD MATURITY ON QUARTER AND OUR INTEREST WAS 330,960. SO THIS IS FOR THE ECONOMIC, THE ECONOMIC CYCLE. IT THE CYCLE. THAT'S ACTUALLY IN REGARD FOR OUR MONEY. I KNOW THAT Y'ALL, UM, ATTACHED THESE TO THE COUNCIL PACKET. WOULD YOU DO ME A FAVOR AND HAVE A PRINTED COPY AT EACH OF THE COUNCIL MEMBER'S DESKS ON THURSDAY SO THAT THEY CAN HAVE A HARD COPY AND JACOB, ANY OTHER QUESTIONS OR COMMENTS ON THE REPORT? NO, NO. UM, I DON'T HAVE ANY QUESTIONS. IT LOOKS GOOD. I THINK FORMAT, WE'VE MADE SOME GOOD CHANGES OVER THE LAST YEAR OR SO, SO I APPRECIATE THAT. I DO APPRECIATE THE EFFORTS TO SIMPLIFY THE DOCUMENT AND TRY TO MAKE IT MORE VISUALLY READABLE. SO THANK Y'ALL FOR THAT. AND I WOULD JUST SAY THAT'S WHERE PROGRESS, THERE'S MORE, I DIDN'T MENTION THIS AT THE BEGINNING OF THE MEETING, BUT LEAH IS, UH, TRANSFERRING OVER TO FINANCE, UH, LATER THIS MONTH, WHICH WILL BE GREAT FOR US. GOOD, BAD FOR FRANK, BUT IT'S OUR GAME FOR, FOR SURE. AND LEAH'S GONNA BE, UH, FOCUSING PARTICULARLY ON, ON MAKING THIS MORE ACCESSIBLE, WHICH LEADS US ON TO THE NEXT BIT, WHICH IS TO SHARE WITH YOU. WE'RE NOT GOING TO SHARE THIS WITH THE COUNCIL THIS THURSDAY 'CAUSE THIS IS REALLY WORKING PROGRESS. BUT IF YOU REMEMBER, WE'VE BEEN TALKING ABOUT HOW WE TRACK AND MONITOR AND UNDERSTAND WHAT'S HAPPENING ON THE CAPITAL SIDE. AND THIS IS THANKS TO LEAH STARTING TO, TO GET US FOCUSED ON THAT. AND THIS IS SPECIFICALLY THINKING ABOUT NEXT YEAR AND THINKING ABOUT APPETITE FOR, UH, FURTHER INVESTMENT IN CAPITAL AND HOW WE FUND IT. UM, OBVIOUSLY WE'RE GONNA BE TELLING YOU THAT TO DO WHAT THE GPS WE'RE GONNA HAVE TO BORROW MORE MONEY. UH, AND THIS JUST GIVES US A START INTO THAT DISCUSSION. DO YOU WANT TO YES. AND IF WE DISCUSS BEFORE I TRY TO SIMPLIFY THIS, UM, SO YOU CAN SEE THAT WE HAVE, WE CAN START WITH THE ADOPTED BUDGET. UM, WE CAN SEE THAT WE HAVE VARIOUS STABLE, UM, FUNDS FOR IN GENERAL, UH, FISCAL YEAR 21, 23. WE HAD LAST YEAR, UH, 199.4 MILLION CIP FUNDS. AND THIS YEAR, THIS YEAR WE HAVE 1 99 0.3 MILLION. BUT ALSO, UH, THE ADDITION FOR THIS, WE HAVE 16 MILLIONS. WE ADOPTED 16 MILLION FROM OUR GRANTS AND 25 MILLION FUNDED. UM, THIS IS A DIFFERENT OF 20% BETWEEN THE FISCAL YEARS. AND IF YOU CAN SEE, I JUST TRY TO EXPLAIN WHAT'S THE STRATEGIC PRIORITIES OF THE POLICY, RIGHT. AND HOW WE ARE GOING TO, UH, ADDRESS THE CIP PROJECTS DEVELOPING OUR CIP PLAN. AND ALSO WE CAN SEE, I TRY TO USE, UM, SIMPLIFY CONCEPTS LIKE YOU USE OR [00:40:01] YOU USE. SO FOR EU, UH, BALANCE IS A SPECIFIC, UM, THIS KIND OF, UH, EXPLANATION THAT ISSA GAVE US BEFORE. LIKE EVERYTHING THAT WE HAVE BEEN PLANNED OR WE, UH, HAVE AN APPEAL OR IN CONFERENCE OR WE AWARD THE CONTRACT, UM, WE SEND IT TO YOU. CONSIDER THAT USED. EXACTLY. EVERYTHING THAT WE HAVE IN THE BUDGET AND WE USE THAT IS NOT AVAILABLE ANYMORE. RIGHT. OKAY. SO THIS MEANS WE'VE, WE'VE USED 15.2% FROM THE 25 MILLIONS OF THIS. OKAY. ONLY FROM THE COS FROM THE ONLY, FROM THE CO ONLY FROM THIS YEAR CEO. OKAY. ONLY ISSUED IN AUGUST. EXACTLY. YEAH. UM, BUT NOT, SO THAT'S NOT THE ENTIRE CIP BUDGET, THAT'S JUST THE CO PORTION OF NO, JUST THE, THE CO PORTION. OKAY. WE CAN SEE THAT WE HAVE BEEN USED, UH, IN ALMOST ENTIRE, UH, THE DEBT ISSUE WITH PRIOR YEARS. RIGHT. WE JUST HAVE, UM, THE GREEN AREA. YOU CAN SEE THAT WE DON'T HAVE THE NEWS. THE GUARD ROAD CAR. RIGHT? THE GUARD ROAD, UM, 9.1 MILLIONS FOR GUARD ROAD, 9.6 MILLIONS FOR YOU. WE NEED ANION AND PAY STAR HAS 2.1. THIS IS WHAT WE HAVE PAINTED OUR OWN UNUSED YET IN OUR, UH, DEBT ISSUE PRIOR YEARS AND FROM THE OUR 25 MILLIONS THAT WE USED THIS YEAR, WE HAVE BEEN USED 2.7 AND WE HAVE AVAILABLE TO EXPLAIN TO OUR AWARD 21 POINT THAT'S BROKEN DOWN ON THE BACK. YES. YEAH. REMIND ME HOW WHEN WE ISSUE A CO WE HAVE THREE YEARS, FIVE YEARS TO COMPLETELY USE IT. WAS IT THREE? THREE? SO THAT COVID PROVIDES THOUSAND 19 COVID PROVIDES RELIEF FOR SOME OF THESE. IF YOU CAN SHOW THAT THERE'S A HARDSHIP ON WHY IT CAN'T BE SPENT, YOU CAN EXTEND IT. SO TECHNICALLY YES, THAT ONE'S OUT OF COMPLIANCE. WE HAVE AN EXTENSION, BUT WE HAVE EX WE HAVE THE ABILITY TO SHOW, UH, THE REGULATORS THAT THERE ARE UNUSUAL CIRCUMSTANCES THAT ALLOW US TO EXTEND THAT TO THIS PREVIOUS. IS THERE A, IS THAT A YOUR EXTENSION OR IS IT YOU HAVE TO CONTINUE TO USE IT AS SOON AS YOU CAN TYPE THING? I, I'M GONNA SOUND LIKE A SMART ALLY. IF THE BOND POLICE WERE TO COME IN AND ADDRESS THIS, THIS WITH US, THEN WE WOULD HAVE TO SHOW THEM THAT. BUT THERE'S NOTHING THAT WE ARE, THAT WE ARE AWARE OF THAT WE ACTUALLY TURN IN. IT'S JUST THAT WE TO HAVE WE TO HAVE THE DOCUMENTATION TO SHOW IT'S WHY IT'S NOT OKAY. UM, AND I DON'T WANNA SOUND LIKE A SMART M BUT THE IRS CAN ACTUALLY COME AND, AND NOT THE IRS UM, UH, FORGET THE WORDS, HUH? NO, NOT ARBITRAGE ON THE, THE UM, JUST THE REGULATORS. THEY CAN'T ACTUALLY COME AND SAY WHY HAVE YOU NOT USED THIS MONEY? LIKE THAT CAN LITERALLY HAPPEN. AND UH, BUT WE SET TO SHOW WHY IT'S BEEN CONSTANT. AND ALSO I WANT TO HIGHLIGHT IT THAT THESE THREE THREE CIP PROJECTS IS, IS WE HAVE THE GUARD ROAD, WE HAVE THE UTILITY ANNEXATION PHASE, AND WE ALREADY STARTED TO AWARD THE CONTRACTS FOR . UM, SO THIS SPECIFIC, UM, SPACE TO, UH, SPACE TO SPEND, RIGHT? THE YOU USE IS THAT WE ARE IN PROGRESS. WE ARE WORKING ON, SO THE, THE UNUSED FROM THE 19 CO AND THE 2020 CO ARE THESE THREE PROJECTS? YES. OKAY. WHICH ONE IS THE 19 ONE? UM, IF YOU DON'T KNOW, THAT'S OKAY. I CAN, I CAN, I CAN SEND YOU THE DETAILS. THAT'S OKAY. UM, AGAIN, THIS IS THE SPACE THAT WE HAVE FOR A ONE NEW CONTRACTS OR ANY CHANGE OF IN THE SCOPE OF WORK. YEAH. AND THINGS GET MORE EXPENSIVE EVERY YEAR. SO THE LONGER WE WAIT. YES. AND THAT'S HAPPENED FOR UTILITIES ANNEXATION PHASE TWO BECAUSE THE B CAME FOR DUPLICATED. RIGHT. WE HAVE NINE MILLIONS, BUT K FOR 21. SO WE ARE WORKING ON IT. YEAH. THIS WILL GROW INTO, LIKE, THIS IS IMPORTANT FOR THIS COMMITTEE AND FOR THE COUNCIL BECAUSE PART OF THE DISCUSSION LEADS TO WHAT AMOUNT DO Y'ALL FEEL COMFORTABLE ISSUING? DO Y'ALL SUGGEST ISSU OR WHAT ADVICE THIS COMMITTEE FILL IS BEST FOR COUNCIL TO HEAR ON THE NUMBER THAT YOU WOULD LIKE TO ISSUE FOR THE FY 23 ISSUANCE? AND THAT IS, HONESTLY, I, WE NEED THAT ANSWER TODAY. [00:45:01] UM, IN REALITY I NEED THAT ANSWER TODAY. UH, BUT I'M NOT EXPECTING TO PUT YOU ON THE, ON THE SPOT TO, TO TELL, TO TELL ME THAT. UM, I, I CAN ADVISE YOU TODAY. WELL, WE NEED KEN, WE NEED KEN PRESENT, I THINK, RIGHT? SO WE CAN HAVE ANOTHER FINANCE COMMITTEE MEETING SOON IF, IF Y'ALL WANT, IF THERE'S AN URGENCY. BUT WE NEED TO ONBOARD KEN. SO, NO, SO I WOULD SAY THIS IS, THERES, AND I HAVE BEEN WORKING ON THIS AND, AND, AND DOING THE ANALYSIS AND AS WE WERE JUST TALKING THIS MORNING, THERE'S SO MANY VARIABLES IN THE ALL INTERRELATE. SO THERE'S A RANGE OF SCENARIOS, BUT FROM LOOKING AT, UM, ASSESS VALUATIONS AND HOW THOSE HAVE BEEN TRENDING YEAR OVER YEAR AND THINKING ABOUT YOUR POLICY IN RESPECT OF PROPERTY TAX, AND OUR ASSUMPTION IS STILL IT WILL DECLINE YEAR OVER YEAR. UM, OVER THE NEXT FIVE YEARS. I'M LOOKING AT MAYBE UPWARDS OF A HUNDRED, 330 MILLION OF DEBT CAPACITY. THAT'S YOUR OVERALL ABILITY TO RAISE DEBT. YOU CAN'T DO IT ALL IN ONE YEAR. UH, AND ACTUALLY LOOKING AT NEXT YEAR, WE, WE, WE DID 25 MILLION IN THIS YEAR'S BUDGET AND I DON'T WANT TO PUSH IT, BUT RIGHT NOW I WOULD BE, I WOULD HAVE A PROBLEM WITH SUGGESTING YOU HAVE MORE THAN 15 ONE 5 MILLION AVAILABLE NEXT YEAR RIGHT NOW LOOKING AT THE FIGURES. AND WE'LL KNOW MORE AS WE GO THROUGH THE BUDGET PROCESS. UM, BUT THAT, SO I WOULD SUGGEST TO YOU THAT'S AN AMOUNT THAT IF YOU, AT SOME POINT WERE WILLING TO SAY YOU WOULD, YOU WOULD CONTEMPLATE DEPLOYING THAT NEXT YEAR. WE COULD START WORKING IN THAT. ANYTHING MORE THAN THAT? I'D BE TELLING YOU NOW. I HAVE PROBABLY GOING OVER THAT RIGHT NOW. RIGHT. I'M SORRY, WHAT? AND I APOLOGIZE, I'M NOT AT THE TABLE. I'M NOT FILLING THE VEST. SO LIMIT MY, UH, MY, MY, MY SPHERE OF INFLUENCE HERE. UM, BUT I THINK THAT IT'S VERY IMPORTANT THAT WE KIND OF START THIS CONVERSATION WITH THE, UH, WITH THE DEBT WITH KIND OF WHAT OUR, OUR TOLERANCE OR OUR, OR WHAT OUR GOAL WILL BE. 'CAUSE THERE'S GONNA HAVE TO BE A BACK AND FORTH VOLLEY OVER THE NEXT COUPLE MONTHS BETWEEN THE CI THE BETWEEN THE ADVICE FROM THE CIP COMMITTEE AND THE ADVICE FROM THIS COMMITTEE. UM, YOU KNOW, AS WE'RE KIND OF LOOKING AT, YOU KNOW, THE PROJECTS AND THE PRIORITIES AND THEN THE FUNDING LEVELS, UM, YOU KNOW, THERE MAY, IN FACT I WOULD, UH, BE WILLING TO BET THAT THERE'LL BE A LIST OF PROJECTS, YOU KNOW, BY CATEGORY THAT MAY NOT ALL BE FUNDED. AND SO WHAT'S QUOTE UNQUOTE THE LINE OF PROJECTS THAT'LL BE FUNDED. AND AS WE KIND OF GET THROUGH THAT BACK AND FORTH, UM, YOU KNOW, WE NEED TO ESTABLISH THE FUNDING, THE OVERALL FUNDING LEVELS, THE OVERALL PROJECT LIST AND MAKE SURE THAT THOSE TWO KIND OF COME TOGETHER. SO, UM, IN RESPONSE, UM, MADAM CHAIR, YOUR COMMENT ABOUT SPECIAL MEETING, I, I CERTAINLY THINK THAT WOULD BE HELPFUL AS WE KIND OF BEGIN THOSE CONVERSATIONS. I THINK, YOU KNOW, WE ALL KNOW BUDGET TIMES APPROACHING, SO IF WE NEED TO HAVE MORE FINANCE COMMITTEE MEETINGS THAN WE NORMALLY DO, THIS WOULD BE THE TIME. UM, I THINK UNDER THE NEW WAY THAT WE HAVE THE COMMITTEES FORM, NOW YOU'RE WANTING FROM US, YOU KNOW, WHAT ARE, WHAT IS OUR PREFERENCE FOR LOWERING THE TAX RATE? WHAT IS OUR PREFERENCE FOR DEBT ISSUANCE? AND THEN THE OTHER COMMITTEE, IT THEN SAYS, OKAY, WELL THIS MONEY, THE FINANCE COMMITTEE RECOMMENDS WE'RE PRIORITIZING THESE PROJECTS. RIGHT? OKAY. YES MA'AM. BECAUSE, UH, ON THE LARGER SCALE, THE DIFFERENT SCENARIOS THAT THAT FINANCE TEAM HAS ON YOUR DEBT SCHEDULE, IF WE JUST ARE KEEPING A STABLE TAX RATE FOR THE NEXT 10 YEARS, IT SEEMS WHAT THE DEBT SCHEDULE IS LOWER OR THE TAX RATE OVER THE NEXT 10 YEARS, IT CHANGES THE DEBT SCHEDULE AND SO ON. AND SO ONE, YOU'RE THINKING LONG TERM ON WHAT Y'ALL WANNA DO, BUT, OR ADVISING COUNSEL AND WHAT COUNSEL SHOULD DO. AND YOU'RE ALSO ADVISING THEM ON HOW MUCH DO WE WANT TO ISSUE THIS YEAR BASED OFF THE DEBT SCHEDULES FROM THE INVESTMENT, UM, UH, FROM OUR, UH, FINANCIAL ADVISORS. AND SO FROM, FROM THAT POINT OF VIEW, THAT'S GONNA DRIVE A LOT OF PIECES, BUT IT ALSO DRIVES HOW Y'ALL FEEL ABOUT IF WE'RE GONNA DESIGN SOMETHING THIS YEAR, ARE WE AUTOMATICALLY GONNA FUND IT WITH NEXT YEAR OR THE FOLLOWING YEAR? SO THOSE ARE SOME BIG POLICY QUESTIONS THAT WE NEED TO TALK TO THIS COMMITTEE ABOUT BECAUSE IT DRIVES THE CIP IN TOTALITY. 'CAUSE IF WE'RE ONLY GONNA LOOK AT ISSUING 15 MILLION, UM, THIS COMING YEAR, THEN I MEAN, YOU JUST SCRAPPED 60% OF THE PROJECTS ON THE CIP LIST. RIGHT? AND SO THAT'S A, THAT'S A, YOU HAVE SOME BIG POLICIES, QUESTIONS AT THAT POINT. ONE OTHER THING I'LL OFFER UP, UM, YOU MAY HAVE MENTIONED, UM, SOMETHING ABOUT THE ESCALATIONS THAT WE'RE SEEING EARLIER [00:50:01] MM-HMM . YOU KNOW, I, UH, WE'VE HAD CONVERSATIONS ABOUT THAT. WE'VE SEEN THAT IN OUR ESTIMATES. AND I THINK ONE OF THE THINGS THAT, YOU KNOW, WE'LL HAVE TO TAKE, TAKE ON IS LOOKING AT MAYBE SOME WAYS TO PROTECT OURSELVES. WHETHER IT'S, YOU KNOW, IT'S LIKE A CONSTRUCTION MANAGER AT RISK TYPE APPROACH, A DESIGN MORE USE OF DESIGN, BUILD SOME OF THESE NON-TRADITIONAL WAYS THAT WILL ALLOW US TO KIND OF, UH, SOLIDIFY OUR COSTS AND MAYBE CONTROL THAT A LITTLE BIT BETTER WHERE WE'RE NOT THE ONLY ONES TAKING ON THAT RISK. SO IT'S, UH, THERE'S A, THERE'S A LOT TO CONSIDER AS, AS WE MOVE FORWARD. FOR SURE. OKAY. DO Y'ALL HAVE ENOUGH DIRECTION TO, TO FORM AN AGENDA FOR THE NEXT MEETING? BE AROUND THIS? SO, OKAY. AND THEN IF WE COULD GET KEN ONBOARDED, THAT WOULD BE GREAT. I APOLOGIES BECAUSE I, I TRULY THOUGHT HE WAS INVITED TO THIS ONE. IT'S OKAY. I'M SORRY. ONE OTHER COMMENT. I THINK WE'RE GONNA TARGET A CIP COMMITTEE, UM, MEETING SOMETIME AROUND TWO WEEKS. SO AFTER THAT I THINK, UH, WE'RE GONNA DO ANOTHER MEETING OF THE FINANCE COMMITTEE. IF WE COULD MAKE THE CIP COMMITTEE OFFICIAL BEFORE THEY MEET, THAT'LL BE GREAT. JACOB, ANYTHING? UM, I FEEDBACK ON THIS. I LIKE THE, I LIKE HOW THIS LOOKS. I WOULD, UH, SEPARATE OF THIS, IT DOESN'T HAVE TO BE ON HERE, BUT I'D LIKE TO SEE GOING BACK, I DON'T KNOW, MAYBE 10, MAYBE MORE YEARS, JUST HISTORY OF ALL THE DIFFERENT COS AND, AND GENERAL OBLIGATION AS WELL. ALL THE DIFFERENT WE'VE HAD. I'D JUST LIKE TO SEE THAT. SO IN YOUR, UM, PACKET, I PUT WHAT'S OUTSTANDING SO FAR AS FAR OUR DEBT, UM, IT IS THE UNSPENT BOND PROCEEDS THAT'S NOT BASED ON ANY ENCUMBRANCES. THAT'S WHAT HASN'T ACTUALLY BEEN SPENT AND, UM, GONE OUT THE DOOR. AND THEN THIS IS ALL THE OUTSTANDING DEBT THAT THE CITY IS CURRENTLY PAYING ON RIGHT NOW. PAYING. OKAY. THIS ONE IS, YES, BUT YOU WANNA, YOU WANNA SEE HISTORICAL STUFF THAT'S ALREADY PAID OFF? YEAH. WELL, I MEAN THIS, THIS HAS AS FAR BACK AS I GUESS 2012. BUT THIS WOULD, IT WOULD ONLY BE ON HERE IF WE'RE STILL PAYING ON IT. YES. COULD JUST SEE. YEAH, ALL IF IT'S, YOU WANT SEE ALL OF IT, EVEN IF IT'S PAID, PAID OFF. JUST MAYBE AN ORDER BY A YEAR. HOW LONG? 10 YEARS? 10. YEAH. 10 YEARS. THE LAST 10 YEARS. UM, JASON, I HAD A QUESTION ON THIS PROJECT REPORT, I SEE THIS ALLEN BROOK, EDGEBROOK ELLE FOR 2.5 MILLION AND THEN WE HAVE THE AGENDA ITEM ON THURSDAY TO DO AN AMENDMENT TO THAT ONE WHERE WE'RE GONNA BE UTILIZING THOSE NORTH MAIN ROAD FUNDS, RIGHT? THAT IS SPECIFICALLY IS WHEN I SAY USE EVERYTHING WE HAVE, YOU HAVE AN AGENDA ITEM TO, SO DOES THIS 2.5 ONLY THE BUDGETED AMOUNT FROM THE DEBT WE ISSUED, DOES IT NOT INCLUDE WHAT WE'RE GOING TO AMEND THURSDAY? IT'S INCLUDED. IT IS INCLUDED IN THIS TWO IT'S PORTION. YEAH. HE PROPORTIONAL. OKAY. OKAY. ANY OTHER QUESTIONS? I'M GOOD. NO, YOU'RE GOOD. YOU GUYS HAD EVERYTHING YOU NEED FROM US. OKAY, LET'S COOL. WITH ALL ITEMS ON THE AGENDA HAVING BEEN ADDRESSED, THIS MEETING IS NOW ADJOURNED. IT IS 11:54 AM. * This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting.