* 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. ALRIGHT. ALRIGHT, [00:00:02] WELL THEN [ CITY OF BAYTOWN NOTICE OF MEETING BAYTOWN FINANCE COMMITTEE THURSDAY, FEBRUARY 12, 2026 4:00 P.M. BAYTOWN CONFERENCE ROOM, CITY HALL 2401 MARKET STREET, BAYTOWN, TEXAS 77520 AGENDA CALL TO ORDER AND ANNOUNCEMENT OF QUORUM] I WILL CALL THIS MEETING TO ORDER AT 4 0 4. WE DO HAVE A QUORUM. UH, THIS IS THE BAYTOWN FINANCE COMMITTEE. IT'S THURSDAY, FEBRUARY 12TH, 2026. AND WE ARE IN THE BAYTOWN CONFERENCE ROOM AT, UH, FIRST ITEM ON THE AGENDA IS CITIZEN COMMENTS. DO WE HAVE ANY CITIZENS WISHING TO MAKE COMMENT? OKAY. ALRIGHT, WE'LL MOVE ON TO ITEM [a. Consider the approval of minutes of the Finance Committee Meeting held July 24, 2025.] TWO A. CONSIDER THE APPROVAL OF MINUTES OF THE FINANCE COMMITTEE MEETING HELD JULY 24TH, 2025. APPROVE. SECOND, WE HAVE A MOTION. A SECOND. ALL IN FAVOR, PLEASE SAY AYE. AYE. ANY OPPOSED? THE MOTION CARRIES. ITEM THREE [a. Discuss General Obligation and Certificates of Obligations Debt.] A, DISCUSS GENERAL OBLIGATION AND CERTIFICATES OF OBLIGATION DEBT. OKAY. SO, UH, COMMITTEE TODAY WE'RE GONNA TALK ABOUT THE GL AND CO BOND ISSUANCE. WE'RE ALSO GONNA TALK ABOUT THE DEBT POLICY LATER AND THE UTILITY BILLING PRACTICES AND FUTURE MEETINGS. BUT BEFORE WE GET STARTED, UM, JASON'S GOING TO GIVE YEAH, I JUST WANT A LEAD. YEAH, WE, UM, FAVORITE CHART? YEAH. IT'S Y'ALLS FAVORITE CHART. WE WANT TO STAY CONSISTENT WITH OUR BRANDING ON THINGS THAT WE'VE TALKED ABOUT THAT WE, UH, AS WE GO THROUGH ALL OF OUR BUDGETING PROCESS, EVERYTHING SEEMS FAMILIAR AND OTHER THING SEEMS OUTTA PLACE. BUT, UM, WHEN WE LOOK AT THE BUDGET FORMULA AND WHAT YOU SEE UP HERE, A LOT OF YOUR POLICY DECISIONS THAT YOU'VE MADE SINCE WE'VE INTRODUCED THIS TO TRY TO RELATE IT TO EACH ONE OF THESE FUNCTIONS. YEP. YOU CAN SEE WHERE THE POLICY DECISIONS THAT YOU'VE MADE HAVE IMPACTED THE OVERALL BUDGET. AND SO WHEN WE LOOK AT OUR BUDGET FORMULA, UH, WE HAVE OUR BEGINNING FUND BALANCE. AND, UH, WE ARE FORTUNATE THAT IN FY 25 WE DID VERY WELL ON CONTROLLING OUR EXPENSES AND WE HAD SOME UNPLANNED REVENUE COME IN, UH, COME IN TO THE CITY. UM, THAT REVENUE AND, UH, CONTROLLING OF THE EXPENSES LED TO A SIGNIFICANT INCREASE IN OUR DAYS OF RESERVE. UH, WE WERE BUDGETING TO END, UH, FY 25 WITH 75 DAYS OR AROUND 75 DAYS, AND WE CAME IN AT 107 DAYS. AND THAT WAS BASED ON SOME OF THOSE DECISIONS Y'ALL MADE FOR THE FFY 25 BUDGET AND SOME CHANGES THAT WE MADE ALONG IN THE FY 25 BUDGET YEAR. SO THAT'S WHERE WE ARE STARTING IN OUR FORMULA. OTHER POLICY DECISIONS THAT Y'ALL MADE, UH, FOR FY 26 AND, AND UP TO THIS POINT HAVE BEEN WITH THE TAX RATE STAYING AT THE NO NEW REVENUE RATE. SO THE NO NEW REVENUE RATE, UM, HAS LED ALSO FOR US TO CHANGE SOME OTHER POLICY PIECES ALONG THE WAY AND WORK WITH OTHER PIECES IN THE FORMULA THAT WILL GET THERE. BUT AS WE MOVE INTO FY 27, UM, WE ARE BUILDING THE FUTURE BUDGET, UM, AT THE 69 CENT TAX RATE, WHICH WAS THE LAST DIRECTION THAT WE GOT FROM COUNCIL, UH, THAT UP TO FY 26 ADOPTION. WE WERE STAYING NO NEW REVENUE AND THEN GOING FORWARD, WE WERE TRYING TO STAY FLAT. SO THAT POLICY DECISION THAT Y'ALL GAVE DIRECTION ON IS THE ONE THAT WE ARE BUILDING THE FUTURE BUDGET ON. UM, THE REVENUE ACUTE IS REVENUE THAT'S OUTSIDE OF THE, UH, TAXES. UH, Y'ALL MADE POLICY DECISIONS ON PREVIOUS FEES, UH, AND, UH, EMS FEES, UM, GREEN CENTER FEES. THAT HAS INCREASED SOME OF THE REVENUE THAT WE SAW IN FY 25, WHICH LED TO HIGHER END OF DAYS. UM, AND THEN ONE THAT YOU'LL CONSIDER THIS YEAR IN FY 26 FOR FY 27 IS THE PLANNING AND DEVELOPMENT SERVICES PERMITTING FEES. SO THAT WILL BRING IN A LITTLE BIT MORE REVENUE FOR FY 27 AS WELL. AFTER WE GO INTO THE EXPENSES OF SECTIONS FIVE AND SIX, UM, POLICY DECISIONS THAT, THAT WERE ADOPTED BY THE COUNCIL FOR POLICE AND FIRE WERE 4.25% OF COST OF LIVING ALLOWANCES FOR BOTH POLICE AND FIRE. THAT EQUATES TO AN EXPENSE OF ROUGHLY $4.25 MILLION GOING INTO FY 27 BUDGET EXPENSES NON NON-RECURRING ONE TIME COST. RIGHT? SO AN EASY POLICY DECISION THAT Y'ALL WILL MAKE AND WE WILL KIND OF TALK ABOUT TODAY OR JUST AN AN EXAMPLE IN FRONT OF YOU RIGHT NOW IS Y'ALL'S POLICY FOR IN FUND BALANCE IS 90 DAYS. RIGHT? AND IF YOU HAVE 90 DAYS AND WE WANNA SPEND IT DOWN FROM 1 0 7 TO 90, THAT'S ROUGHLY $5 MILLION. SO THAT'LL BE A ONE TIME EXPENSE THAT WOULD OCCUR IN SECTION SIX UP HERE. UM, AND IT WOULD ULTIMATELY IMPACT THE END OF THE FORMULA, RIGHT? THE SUM OF THE FORMULA THAT WOULD TAKE IT DOWN TO 90 DAYS. IF YOU WANTED TO SPEND $10 MILLION AND TAKE IT DOWN TO 75 DAYS IN EFFORT IN HOPES THAT WE WOULD HAVE EXTRA REVENUE COME IN AND CONTROL OUR EXPENSES LIKE WE DID FOR FY 25, THAT WOULD GIVE US $10 MILLION THAT YOU COULD USE FOR A POLICY DECISION FOR THE FY 27 BUDGET. I WILL TELL YOU THAT 5 MILLION [00:05:01] AND 10 MILLION SEEM LIKE A LOT OF MONEY, BUT THAT IS ONE PROJECT THAT IS ONE PROJECT IN THE CITY OF BAYTOWN AND, UM, IT WILL BE SPENT LIKE THAT. SO WE JUST WANTED TO KIND OF GIVE YOU AN OVERVIEW OF THE BUDGET FORMULA THAT WE'VE BEEN USING. UH, GIVE YOU EXAMPLES OF SOME OF THE POLICY DECISIONS I'VE MADE IN THE PAST AND WE'LL MAKE GOING INTO THE BUILDING OF THE FY 27 BUDGET BEFORE WE START JUMPING IN TO SOME OF THE NUMBERS TODAY. HOPE IT'S HELPFUL. IT IS. CAN WE ASK SOME QUESTIONS ABOUT IT? YEAH, ABSOLUTELY. Y'ALL HAVE ANY QUESTIONS ON THAT? SO, SO JUST SO I'M AWARE, SO THE ADDED REVENUE WAS FROM FEES THAT WE APPROVED FOR THE, A MAJORITY OF IT WAS. SO YOU HAD, YOU HAD REVENUE THAT INCREASED FROM EMS FEES. Y'ALL MADE DECISIONS ON EMS FEES TO INCREASE THOSE. I BELIEVE THAT INCREASED LIKE A MILLION BUCKS, RIGHT? I WANNA SAY IT WAS AROUND A MILLION DOLLARS. DON'T QUOTE ME ON THAT, BUT I THINK IT WAS LIKE A MILLION SOMETHING. UH, PERMITTING FEES CAME IN A LITTLE BIT HIGHER THAN WE EXPECTED. I, I THINK THERE'S A LITTLE BIT MORE ACTIVITY ON PERMITTING THAN WE EXPECTED. INTEREST TRANSFERS IN WERE, WERE PART OF IT. I DON'T REMEMBER WHERE THOSE WERE FROM. OKAY. 3.6 MILLION WAS FROM, UH, CAPITAL REPLACEMENT. OKAY. THAT WAS A GREAT DEAL. AND THEN WE HAVE INTERESTED REALLY WELL OR BETTER THAN WE EXPECTED. UM, BUT OVERALL IT JUST, IT SUMMED UP TO GIVE US ALMOST AN EXTRA $10 MILLION. SO ON THE DAYS THE, THE FUND BALANCE ENDING MM-HMM . THE DAYS IN RESERVE, UM, HOW DOES THAT, I FEEL LIKE THAT THAT DOES AFFECT SOME OF OUR LIKE BOND RATINGS AND THINGS LIKE THAT. THAT'S WHY Y'ALL, THE POLICY DECISION Y'ALL GAVE WAS TO BE AT 90. OKAY. OKAY. THAT'S WHAT THEN THAT'S WHY I RECALL IT. IT, IT AFFECTS THAT WE YEP. WE WENT PRETTY, WE GOT DOWN A GOOD BIT BELOW THAT. WE WERE DOWN TO 50 SOMETHING SOMETHING. YEAH. SO WE'VE CONTROLLED EXPENSES TO GET BACK UP AND Y'ALL'S DIRECTION TO US BEFORE WE SPEND ANY EXTRA MONEY TO GET BACK TO 90 DAYS. AND THEN AFTER WE HIT 90 DAYS, WE WOULD HAVE THIS CONVERSATION TO SEE IF WE WANTED TO USE THAT FOR ONE TIME MONEY. OKAY. MY NEXT, OH, OKAY. UM, JUST TO ADD TO THE CONFUSION OF ALL THIS, SO LIKE WHEN WE WERE TALKING ABOUT THE ENDING FUND BALANCE, THAT ENDING DAYS, THE 90 DAYS THAT YOU SAW UP THERE, THAT WAS SHOWING IN PREPARATION FOR THE END OF FY 27. RIGHT? SO THAT 90 OR 75 DAYS, THAT WOULD BE SEPTEMBER 30TH, 2026. RIGHT? UM, SO THAT'S, OR I MEAN, OF 27, RIGHT? 26TH, NO, 27 BECAUSE IT WAS FY 27 FUND. YEAH. SEPTEMBER 30TH, 2027. SORRY, THAT, THAT OTHER ONE THAT YOU SAW UP THERE. BUT HERE, US SWITCHING FROM CERTIFICATES OBLIGATION TO GENERAL OBLIGATION, IT CHANGES THE WAY THAT WE HAVE TO PLAN FOR ALL OF OUR INFRASTRUCTURE PROJECTS AND THE WAY THAT WE OPERATE. SO WE HAD OUR BOND ELECTION IN 2025. OKAY. OUR BOND ELECTION THEN SAYS, HEY, WE CAN'T ISSUE ANY OF THE DEBT UNTIL, UH, AFTER THE AUDIT FINISHES, WHICH IS IN MARCH OF 2026. AFTER WE ISSUE THE DEBT, WE THEN HAVE TO GO OUT AND ACTUALLY ISSUE THE BOND OR, UH, FINISH THE AUDIT. WE HAVE TO GO OUT AND ISSUE THE, THE ACTUAL DEBT THAT'S GONNA TAKE PLACE OVER THE SUMMER, RIGHT? SO WE WOULD EXPECT THE MONEY TO COME IN AROUND JULY OR AUGUST. WELL, FY 26 IS BASICALLY OVER AT THAT POINT. SO THERE'S REALLY NO USE TO ACTUALLY PLAN THAT FOR THE FY 26 BUDGET. SO WE START PLANNING THAT FOR THE FY 27 BUDGET. OKAY? AND SO EVEN THOUGH THE BOND PASSED IN 2025, WE WOULDN'T TECHNICALLY USE IT UNTIL OCTOBER 1ST, 2026, WHICH IS FY 27 BUDGET AND BEYOND. WE WOULD THEN SPEND THE REST OF FY 27, UH, PLANNING FOR, UH, THE NEXT BOND ELECTION, WHICH WOULD HAPPEN IN FY 28, NOVEMBER OF 2027. THAT MONEY WOULD NOT BE AGAIN AVAILABLE UNTIL FY 29 AT THAT POINT. SO THIS SHIFT IN THE WAY THAT WE OPERATE REALLY PROLONGS SOME OF THE PROJECTS THAT WE HAVE NOW. NOW, IF YOU WERE TO SAY, HEY, THAT'S TOO LONG AND WE WANT TO GET STARTED IN FY 28, WE WOULD HAVE TO DO ANOTHER BOND ELECTION THIS NOVEMBER, WHICH I THINK IS TOO, TOO QUICK HONESTLY, UH, FOR EVERYBODY TO START PLANNING FOR THAT. UM, AND, BUT YOU'RE STILL GONNA HAVE A DELAY IN PREPARING ALL OF THAT. OKAY. I GUESS I, I MISUNDERSTOOD. I THOUGHT WE WERE GONNA TRY TO HAVE A BOND ALREADY AGAIN IN NOVEMBER, BUT IF Y'ALL GIVE THAT DIRECTION THAT'S NO, NO, NO, I'M OKAY WITH THAT. OKAY. I'M OKAY WITH THAT. QUESTIONS CONCERNS [00:10:01] ARE, ARE WE PREPARED? SORRY. YEAH, GO AHEAD. YEAH. UM, ARE WE PREPARED FOR, SINCE WE'RE NOW HOLDING OFF ANY OF THE OTHER INFRASTRUCTURE PROJECTS THAT WE HAD IN THE BOND, LIKE ARE WE, YOU KNOW, AT AT RISK OF MAYBE THOSE GOING DOWN OR SOMETHING HAPPENING THAT THERE ARE QUITE A FEW THINGS THAT THERESA AND JOE THAT WE'LL TALK TO YOU ABOUT THAT Y'ALL HAVE TO CONSIDER. A FEW THINGS HERE THAT Y'ALL, THAT THIS COMMITTEE NEEDS TO CONSIDER AND THERESA WILL JUMP INTO, UM, IS WHAT THE TAX RATE LOOKS LIKE. SAY YOU DON'T ISSUE DEBT FOR A WHILE, YOU'RE GONNA HAVE A HIGHER M AND O. UM, BUT IF YOU WANT TO LOWER THAT TO SAY YOUR, YOUR TAX RATE WILL LOWER BECAUSE YOU WON'T HAVE THE INS PORTION ANYMORE. MM-HMM . OKAY. AND THEN IF YOU ISSUE DEBT IN THE FUTURE, IT WILL RAISE THE TAXES BACK UP TO, TO DO THAT. OR IF YOU KEEP IT STEADY, YOU'RE GONNA HAVE EXTRA CASH AND THEN YOU HAVE TO D DETERMINE WHAT TO DO WITH THAT EXTRA CASH, UM, AND PAY THAT TOWARDS PROJECTS THAT YOU WANT OR DON'T WANT. AND ALSO TO YOUR QUESTION AS WELL AS THIS IS PROLONGED, YOU START, HAVE TO THINK ABOUT THAT EXTRA $10 MILLION. DO YOU WANT TO RESERVE THAT OR SPEND YOUR RESERVE DOWN SOME MORE TO FUND SOME OF THESE PROJECTS THAT HAVE TO BE DONE? AND WE DID HAVE THE CONVERSATION IN TERMS OF LOOKING AT THE TAX RATE GOING INTO 27 THAT WE MAY NEED TO HOLD THE LINE MM-HMM . SO WE HAVE THOSE CONVERSATIONS ALREADY. NO DECISIONS WERE MADE, OF COURSE, BUT WE HAVE THE, THOSE CONVERSATIONS THAT WE MAY NEED TO HOLD THE LINE FOR 27. OKAY. SO WITH THAT SAID, UH, WITH THAT SAID, UM, NEXT STEPS, WHAT WE'RE TRYING TO DO IS GET YOUR GUIDANCE ON WHAT WE SHOULD DO WITH THE BONDS THAT PASSED IN THE ELECTION FOR FY 26, BECAUSE WE'RE HOPING TO BRING TO YOU A NOTICE OF INTENT IN THE MARCH MEETING FOR THE DEBT. UM, AND THAT IS NOT, THIS IS NOT INDICATIVE OF THE WATER AND SEWER, BUT I'LL SHOW YOU THAT BECAUSE WE KNOW THAT WE'RE NOT ISSUING SEALS FOR WATER AND SEWER. I MEAN, UM, SENDING THOSE TO BOND ELECTION GEOS FOR THOSE. OKAY. SO NEXT STEPS WE ARE TRYING TO GET AN IDEA OF, OR WE WOULD LIKE TO KNOW HOW MUCH DEBT YOU WANT US TO ISSUE FOR FY 26. THE REASON THIS IS A QUESTION IS BECAUSE, UM, IN THE PROPOSITION B THAT PAS, THERE WAS A LIST OF ANNUAL RENEWAL ASPHALT STREETS AND THERE WAS AN AMOUNT OF $4 MILLION THAT WAS SEGREGATED OUT FOR EACH YEAR. AND SO THE QUESTION IS, SHOULD WE ISSUE ALL OF THAT DEBT AT ONCE WITH THE REMAINDER OF THE DEBT? BECAUSE THAT WOULD BE AROUND 18.7 MILLION VERSUS THE 34.7. NOW, UM, THE FINANCIAL ADVISOR AND BOND COUNSELOR ARE HERE TO SPEAK TO, IS IT MORE FEASIBLE TO GO AHEAD AND ISSUE ALL OF IT VERSUS, UM, TRYING TO REDUCE IT AND DO THE 4 MILLION? BECAUSE YOU WOULD HAVE TO CONSIDER WHEN ARE YOU GONNA DO THE 4 MILLION? IS IS MORE COST ISSUANCE COSTS TO DO THE 4 MILLION EACH AND EVERY YEAR? SO CIP COMMITTEE DISCUSSED THIS AND THEY WERE OKAY WITH, UM, THE PROPOSAL OF ISSUING ALL THE DEBT UP FRONT FOR THE ASPHALT STREETS BECAUSE WE KNOW THAT THEY CAN GET THAT ACCOMPLISHED. AND SO WE JUST WANNA MAKE SURE THAT YOU HAVE THAT SAME, UM, THOUGHT PROCESS AND GUIDANCE FOR US TO MOVE FORWARD. I DON'T HAVE ANY CONCERNS WITH ISSUING ALL OF IT UP FRONT. JUST HAVE THE ISSUANCE FEES HIT US ONCE SET OF ANNUALLY, HONOR, I'M OKAY WITH THAT. THE NEXT ONE IS, UM, JUST KIND OF WANTING TO GET AN IDEA OF WHAT YOU BELIEVE WE SHOULD DO WITH THE PROJECTS THAT DIDN'T PASS IN THE BOND ELECTION. UM, LIKE WHAT THE PHILOSOPHY IS ON THAT. DO YOU BELIEVE THAT? UM, YES. ON THE MONEY BECAUSE DO YOU BELIEVE THAT THESE PROJECTS STILL SHOULD BE FUNDED AND WE SHOULD FIND A WAY TO DO THAT? OR SHOULD WE WAIT FOR THE NEXT BOND ELECTION TO DO ANYTHING WITHIN THE PROJECT? WELL, I FEEL THAT THERE'S STILL MERIT TO THE PROJECTS, BUT I KNOW THAT WE'RE GOING AFTER SOME GRANTS, UM, THROUGH UH, HARRIS COUNTY FOR PARKS AND WHAT ELSE? UH, FOR STREETS. STREETS AND PARKS. SO I DON'T KNOW THE AMOUNTS, BUT THAT HOPEFULLY MIGHT CUT THAT DOWN FOR ME. I I WOULD ASK Y'ALL TO LOOK AT LIKE THE DOLLAR AMOUNTS HERE IS LIKE, ARE THESE, ARE THE AMOUNT OF MONEY STILL SOMETHING THAT Y'ALL WANT TO TRY TO TACKLE, UH, FOR THIS TYPE OF STUFF? OR DO Y'ALL WANT US TO MORE NARROWLY FOCUS THE DOLLAR AMOUNTS ON SMALLER PROJECTS? I DON'T THINK THE, IN [00:15:01] MY OPINION, I DON'T THINK IT WAS THE DOLLAR AMOUNT ITSELF THAT GOT VOTED DOWN. MM-HMM . I THINK IT WAS THE PROJECTS. THE PROJECTS THEMSELVES. OKAY. UM, AND SO IF YOU'RE ASKING ABOUT THE, THE DOLLAR AMOUNT, LIKE WE'RE GONNA, WE NEED TO, I MEAN, YES, WE NEED TO UPGRADE SOME OF OUR THOROUGHFARES, WE NEED DRAINAGE PROJECTS. UM, I THINK IT WAS SOME OF THE PROJECTS ON E AND F THAT SOURED SOME FOLKS ON EVERYTHING JUST FROM SOME OF THE FEEDBACK I'VE GOTTEN MM-HMM . UM, AND SO YEAH, I MEAN I THINK WE'RE STILL GONNA NEED TO SPEND THAT MONEY. I MEAN SURE. I THINK WE PROBABLY JUST THROUGH THE NEXT CYCLE, WE JUST REALLY HAVE TO LOOK AT WHAT'S INCLUDED A LITTLE BETTER, BUT, OR LEAVE SOME OFF AND LIKE WE'VE, THROUGH THE WHOLE PROCESS, WE TALKED ABOUT IT, PEOPLE HAVE DIFFERENT OPINIONS ON WHAT IS CRITICAL AND WHAT'S NOT CRITICAL. BUT, UM, NO, WE'RE, WE'RE GONNA NEED TO SPEND THE MONEY ON STREETS AND DRAIN A AND CA AND C. YES. I AGREE. QUESTION ON THAT RELATED TO THIS. UM, 'CAUSE I, I THINK EVERY SESSION LEGISLATION GETS FILED AND I CAN'T KEEP UP WITH WHAT'S CURRENT, BUT I KNOW LIKE IF A, IF A CO FAILS, NO, I'M SORRY. IF A GEO FAILS, WE CAN'T ISSUE A CO FOR THREE YEARS AND I THEY'VE TRIED TO EXTEND THAT TO FIVE OR YES SIR. BUT RIGHT NOW IT'S THREE YEARS. THREE YEARS. YES SIR. BUT WE CAN'T ISSUE A CO ON THESE FOR THE NEXT THREE YEARS IF A GO FAILS. IS THERE ANY LIMITATION ON HOW LONG BEFORE YOU CAN PUT IT ON ANOTHER THIS TIME? THERE WERE SOME, RIGHT NOW THERE WAS SOME LEGISLATION THAT WAS FILED THAT WOULD, WOULD PUT A TWO YEAR LIMITATION ON THAT, BUT IT DID NOT PASS. OKAY. LAST SESSION. AND I THINK ANOTHER THING JUST TO BE CLEAR ON IS THAT THE LIMITATION IS ON A NEW CO BEING ISSUED, IT WOULD NOT KEEP YOU, LIKE IF YOU HAD SURPLUS FUNDS FROM OLD COS OR SOMETHING LIKE THAT, THAT WERE OUT THERE, YOU WOULD STILL HAVE THE ABILITY TO USE SOME OF THAT REVENUE FROM AN OLD PROJECT. OKAY. UM, AND JUST THE, THE REASON I BRING THAT UP IS 'CAUSE THEY'RE, FROM A FEDERAL INCOME TAX STANDPOINT, YOU WANNA SPEND DOWN THOSE DOLLARS AS OPPOSED TO HAVING OLD DOLLARS SITTING OUT THERE FOR A REALLY LONG TIME. RIGHT. OKAY. SO I JUST KIND OF WANT CLARITY ON IF WE HAVE CASH AVAILABLE. I GUESS THE QUESTION IS, IF WE HAVE CASH AVAILABLE THAT COULD POTENTIALLY FUND SMALL PORTIONS OF THE PROJECTS THAT WERE LISTED IN THE ELECTION, ARE YOU OKAY WITH US PURSUING THAT UNTIL THE NEXT BOND ELECTION? SO I'M JUST TRYING TO MAKE SURE YOU'RE GOOD WITH US PURSUING PROJECTS WITH CASH IF POSSIBLE. ARE YOU WOULD PREFER US TO WAIT FOR THE NEXT GEO BOND ELECTION TO PURSUE THOSE PROJECTS THAT WERE LISTED PREVIOUSLY? I'M OKAY WITH YOU PURSUING CASH IN REGARDS TO A NC IF IT'S THOSE INFRASTRUCTURE PROJECTS THAT ARE NEEDED. I AGREE WITH THAT. I I WOULD REFER TO EW AND WHOEVER TO DETERMINE WHICH ONES WOULD BE NEEDED. SO YEAH, I'D BE OKAY WITH THAT. I GET THAT. ARE YOU CLEAR? NO, YOU WANNA FOLLOW UP? I I WAS JUST THINKING, YOU KNOW, THE, THE AVAILABLE, ANY AVAILABLE CASH STILL IS GONNA HAVE THE, UM, REQUIREMENTS OF THE BOND COMPANIES THAT WERE ISSUED AT THE TIME. AND I MEAN IF WE'RE FOCUSED ON USING EXCESS FUNDS, UH, SAVINGS, INTEREST, WHATEVER, UM, STILL HAVE TO USE IT WITHIN A CATEGORY. AND SO I THINK THE OVERALL QUESTION MIGHT BE, ARE YOU OKAY WITH MOVING DOWN THE PATH OF USING THOSE FUNDS FOR PROJECTS AS INTENDED IN GENERAL, UM, TO LOOK AT THE SPECIFICS, YOU KNOW, I DON'T KNOW HOW THAT WOULD WORK OUT, BUT I THINK WE'D HAVE TO HAVE MORE DISCUSSIONS ON ACTUAL USES. WE'RE GONNA COVER THAT IN A SECOND. YEAH, WE'RE GONNA COVER THAT IN A SECOND. THAT SPECIFIC QUESTION SUMMARY. MM-HMM . THAT'S A QUESTION. SO I KNOW WE WORDED THE BOND PACKAGE, IT WAS VERY GENERAL, RIGHT? SO SOME WERE MORE GENERAL THAN OTHERS. OH, OKAY. SOME WE GOT SPECIFIC ON, I THINK THE PARK ZONE WERE PRETTY SPECIFIC. OKAY. BUT I THINK A AND C WASN'T VERY SPECIFIC, WAS IT? SO PROPOSITION A WAS A MAJOR THOROUGHFARE, RIGHT? ONE. AND SO YOUR ABILITY TO ISSUE NEW COS FOR MAJOR THOROUGHFARES WOULD BE FORECLOSED UNDER THE FAILED PROPOSITION. A. SO ANY MAJOR THOROUGHFARE, ANY MAJOR THOROUGHFARE WORK PROPOSITION B PASSED. RIGHT. UM, AND IT WAS FOR NEIGHBORHOOD STREETS. SO YOU WOULD STILL HAVE THE ABILITY TO ISSUE COS FOR NEIGHBORHOOD STREETS IN THE FUTURE BECAUSE YOU DID NOT HAVE A FAILED ELECTION AS IT RELATED TO THOSE. ON, ON, ON THE OTHERS. THERE ARE SOME LIMITATIONS. WITH THAT SAID, I'M GONNA, I'M GONNA ASK A QUESTION THAT WASN'T PLANNED, BUT JONATHAN, THANK YOU FOR, FOR LIKE SAYING THAT, UM, DOES [00:20:01] COUNCIL EVEN WANT TO CONSIDER ISSUING COS FOR ANYTHING AND OUTSIDE OF WATER AND SEWER WHICH Y'ALL ALREADY AUTHORIZED OR DOES THE COMMITTEE WANT TO RECOMMEND ISSUING COS FOR STUFF THE, THE LAST DIRECTION WE GOT, WE STAY WITH GENERAL OBLIGATION BONDS AND THAT WE, THAT'S HOW WE'VE BEEN WORKING. WELL THE COS WOULD GO UNDER B. SO ANYTHING UNDER B SO IT DETER FOR ME IT WOULD BE WHAT OTHER PROJECTS WOULD WE PUT UNDER B SINCE THAT ONE WAS VAGUE. AND THEN I DON'T KNOW IF WE'D EVER NEED MORE MONEY FOR D UNLESS THERE WERE SOME MAJOR CHANGE ORDERS. BUT IF THE PREVIOUS BOND WAS ON NEIGHBORHOOD STREETS, WE DIDN'T HAVE MONEY LEFT OVER THOSE AT THAT ONE. I WOULD ONCE AGAIN DEFER TO ANY OF THE CRITICAL STREETS THAT NEED TO, LIKE WE NEED TO DO THIS ONE RIGHT NOW. SO I MAY ENTERTAIN IT. IT JUST DEPENDS. THERE'S SO MANY VARIABLES. OKAY. RIGHT NOW I'LL ENTERTAIN IT IF IT'S A MUST DO BUT NOT PLAN, LET'S NOT PLAN FOR COS. RIGHT. RIGHT. ALRIGHT. YEAH, I WOULD STICK WITH GOS. UM, SO THE NEXT [b. Discuss Debt Policy.] QUESTION KIND OF GOES INTO WHEN WE STARTED TALKING ABOUT THE DEBT POLICY A LITTLE BIT, BUT UM, WE JUST KIND OF HAD A GENERAL QUESTION ABOUT WHAT IS YOUR PHILOSOPHY ON ADDITIONAL FUNDS IF WE DON'T ISSUE DEBT. SO WHEN WE'RE TALKING ABOUT THE CONVERSATION, WE'RE TALKING ABOUT THE DEBT SERVICE RATE AND THE M AND O AND IF YOU DON'T ISSUE DEBT, WHAT HAPPENS TO THAT TAX RATE? AND SO OUR GREAT FINANCIAL ADVISOR PUT THIS TOGETHER AND THIS IS WHAT WE ARE REFERRING TO WHEN WE'RE LOOKING AT WHAT OUR CAPACITY IS TO ISSUE DEBT AND HOW THAT IMPACTS OUR TAX RATE. SO AS YOU CAN SEE OVER HERE RIGHT NOW, OUR CURRENT TAX RATE IS 0.26, RIGHT? FOR OUR M AND O AND BASED ON WHAT WE'RE PROPOSING FOR 26, THIS IS OUR CURRENT, UM, ACTUALLY THIS IS OUR CURRENT TAX RATE FOR, UH, THIS YEAR FOR 26 IS 0.27339. SO WITH THE, WHAT WE'RE PROPOSING FOR 27 BECAUSE OF THE ISSUANCE AND HOW OUR DEBT SCHEDULES ARE BEING MANAGED, OUR TAX RATE WILL PLAY STAY PRETTY STEADY. BUT AFTER 34 MILLION. YEAH, THAT'S WHAT IT SAYS. THAT'S THE FULL, OKAY, BECAUSE THIS, I'M JUST HIGHLIGHTING IT. THIS READ IS YES IF WE ISSUE THE FULL 34 MILLION, BUT SEE AS YOU CAN SEE HERE, WHEN WE GET TO 2028, EVEN WITH ISSUING WHAT WAS, UH, APPROVED OR RECOMMENDED IN THE FY 27 31 CIP PLAN THAT WAS SUBMITTED TO THE CIP COMMITTEE, THE TAX RATE DOES GO DOWN SLIGHTLY, WHICH MEANS THAT WE STILL HAVE CAPACITY THERE FOR MORE DEBT IF WE NEED IT. AND JOE COULD SPEAK MORE TO IT IF YOU HAVE QUESTIONS ABOUT, BUT THIS IS WHAT WE LOOK AT AND THEN YOU SEE WE HAVE ANOTHER DROP IN 2029. AND SO A SIGNIFICANT DROP. THE SIGNIFICANT DROP, YES. WHAT IS, SO JOE, THAT DROPS ROUGHLY 8 CENTS AND WHAT WILL WE HAVE TO ISSUE BETWEEN NOW AND 2029 TO STAY STABLE AT 27 CENTS? WELL THAT'S, THAT'S THE MILLION DOLLAR QUESTION. IF YOU LOOK IN THAT FAR LEFT HAND CORNER WITH THE 34 MILLION THAT WE'D BE ISSUING, I'M FRONT LOADING SOME DEBT THERE. SO WE'RE ISSUING JUST TO KEEP THE TAX RATE ARTIFICIALLY HIGH. RIGHT? RIGHT. AND EVEN THOUGH I'M DOING THAT, I COULD PUT MORE UP THERE TO TAKE THAT 22 UP A LITTLE BIT HIGHER. BUT, UH, THERE'S ONLY A FEW WAYS THAT WE CAN MANAGE YOUR TAX RATE WITH DEBT AND THAT WOULD BE ME TRYING TO ADD FRONT LOAD PAYMENTS. SO, UH, ADDING MORE TO THE FISCAL 28 YEARS SO IT DOESN'T FALL AS MUCH WITH THIS ISSUANCE. UM, YOU HAVE SOME CALLABLE BONDS, BUT IT'S GONNA BE VERY DIFFICULT TO UH, DO A REFUNDING TO MAKE A WHOLE LOT OF ECONOMIC SENSE BECAUSE WE'RE KIND OF COMING OUT OF A PERIOD WHERE WE HAD VERY LOW RATES. RIGHT? SO A LOT OF THE COUPONS ARE 3%, 4%. SO WE'RE, WE'VE GOT SOME FOUR TO 5%. AND WHAT WE COULD DO WITH, WITH SOMETHING LIKE THAT IS DO A REFUNDING THROUGH A PRIVATE PLACEMENT OR SOMETHING TO MINIMIZE OUR COSTS AND JUST TAKE SOME DEBT THAT WAS OUT HERE AND BRING IT UP TO HERE. NOW ONE OF THE OTHER THINGS THAT YOU MAY BE ABLE TO DO, WHICH MAY BE A LITTLE BIT MORE EFFICIENT BUT MAY HAVE SOME LEGAL HURDLES TO CLEAR, IS TO CALL BONDS BEFORE SETTING YOUR TAX RATE. RIGHT. THAT MAKES A DEBT A BOND THAT'S CALLABLE, MEANING YOU'VE REACHED YOUR OPTION, WHICH IS TYPICALLY EIGHT [00:25:01] TO 10 YEARS. YOU, IT'S BEEN OUTSTANDING LONG ENOUGH AND YOU'VE REACHED THE POINT WHERE YOU CAN REDEEM THAT, TELL THE BOND HOLDERS, I'M GONNA PAY THIS OFF NEXT YEAR AND MOVE IT UP. RIGHT. AND UH, SO WE'VE GOT A LIST OF YOUR CALLABLE MATURITIES. THAT'S ANOTHER WAY THAT YOU CAN MANAGE YOUR DEBT SERVICE TAX RATE THROUGH DEBT. BUT, UH, YOU KNOW, THAT'S SOMETHING WE'LL HAVE TO WORK WITH JONATHAN ON AND UH, JUST BE SURE THAT WE'RE GETTING OUR MILESTONES. I'M SO SORRY AND CHECK MARKS DONE. AND, AND THERE ARE SOME NEW, NEW LEGISLATION RELATED TO THAT PROCESS THAT WILL REQUIRE SOME VERY SPECIFIC VOTES BY COUNCIL IN ORDER TO DO. UM, AND SO THE NEXT ONE, WHICH YOU, YOU HAVE THIS IN FRONT OF YOU AGAIN IS THE PROJECTOR. OH, GO AHEAD. CAN I SAY SOMETHING JUST REAL QUICK? UM, AND THERESA, JOE, IF I'M SAYING THIS INCORRECTLY ON THIS SHEET THAT'S IN FRONT OF YOU RIGHT NOW, WHAT'S ON THE SCREEN? YOU'RE ISSUING $80 MILLION, ONLY 34 ACTUALLY IS PROPOSED RIGHT NOW, BUT ON THIS SHEET YOU'RE ISSUING $80 MILLION IN DEBT AND YOUR TAX RATE IS STILL GOING DOWN 9 CENTS. AND SO EVEN WITH $80 MILLION GOING OUT THE DOOR, YOU, YOU'VE DROPPED YOUR TAX RATE FOR ALMOST 10 CENTS. NOW WE HAVE TO REMEMBER WHAT THAT LOOKS LIKE FOR THE CITY, THAT IT'S NOT BENEFICIAL FOR THE CITY BECAUSE WE HAVE TO CONSIDER OUR IDAS AND HOW THAT IMPACTS THE IDAS. AND SO IF YOU, YOU HAVE CHOICES HERE, YOU CAN ISSUE A LOT OF DEBT. OKAY. TO KEEP, I MEAN 10 CENTS, I'M GONNA, I'M GONNA SAY THAT YOU'RE NORTH OF 200, CLOSE TO 300 MILLION LIKE WE TALKED ABOUT IN THE GEO BOND OBLIGATION TO KEEP IT STEADY, YOU'RE ISSUING AROUND 300 MILLION JUST TO KEEP IT STEADY. IF YOU WANT THE SAME AMOUNT OF REVENUE COMING IN FOR YOUR IDA AS TO OFFSET THAT, IF YOU DON'T WANT TO ISSUE THE DEBT, YOU HAVE TO ARTIFICIALLY KEEP YOUR TAX RATE HIGH. OKAY. AND ARTIFICIALLY KEEPING THE TAX RATE HIGH MEANS THAT YOU'RE GONNA KEEP IT AT 69 CENTS AND NOT LOWER IT, BUT YOU'RE NOT GONNA HAVE A PLANNED EXPENSE FOR IT. OKAY. AND THE PLANNED EXPENSE COULD, COULD THEN BE CHANGED TO, IT'S GOING TO A CIP PROJECT. UM, BUT THEN YOU, YOU ARE COMMITTING TO CASH FUNDING CIP PROJECTS AT AT THAT POINT. AND THAT CAN WORK AND CAN'T WORK BECAUSE YOU, THE PROJECTS THAT PW HAS PROBABLY CAN'T BE COVERED BY A ONE YEAR ARTIFICIAL TAX RATE BUMP. BUT YOU WOULD BE SAVING THAT 10, $15 MILLION SO THAT IT CAN GO TO A PROJECT THE NEXT YEAR. SURE. AND BUT THEN YOU'RE GONNA HAVE, YOU'RE GONNA HAVE QUESTIONS IN THE PUBLIC OF LIKE, WHY'D YOU KEEP THE TAX RATE 10 CENTS HIGHER IF YOU WEREN'T ACTUALLY SPENDING THAT MONEY? YOU WERE LIKE, WELL I AM, BUT IT'S TWO YEARS ON THE ROAD. THEN THE QUESTION, WHY DIDN'T YOU RAISE IT TWO YEARS ON THE ROAD THEN . AND SO, UM, WELL THEY'VE BEEN ASKING US THE CASH FUND UTILIZE, WELL I'M, I'M JUST GIVING Y'ALL THE FULL, THE FULL SCOPE OF THE DECISIONS THAT Y'ALL ARE GONNA BE CONSIDERING. NO, I APPRECIATE THAT. I JUST ALSO WANNA HIGHLIGHT, UM, WE HAVE OUR WATER AND SEWER DEBT AS WELL THAT WE WOULD, UH, BRING YOU IN MARCH OUTSIDE OF THE GEO BOND THAT WOULD, UM, THAT WE'RE PROPOSING FROM PWE AND THAT AMOUNT. 'CAUSE I CAN'T SEE THE COLORS UP THERE, , IT'S JUST HORRIBLE. UM, IT'S $57.8 MILLION FOR THE WATER AND SEWER. UM, THERE IT IS. OKAY. AND AS YOU CAN SEE AT THAT POINT, I'M TRYING TO SEE WHAT YEAR WE'RE ON. WE WOULDN'T NEED TO, WE, AT SOME POINT WE WOULD HAVE TO INCREASE RATES TO FUND OUR DEBT ISSUANCE 2030. IS THAT 2030? OKAY. 20 30, 29 REALLY? BUT TO PLAN FOR 2030 MM-HMM . I JUST WANT YOU TO BE AWARE OF THAT, THAT WE HAVE THAT, UM, THAT WE ARE MONITORING THAT AND LOOKING AT WHAT WE WOULD NEED TO DO. BUT WE ANTICIPATE THAT. LET'S GO BACK TO THIS. UM, SO ARE WE GOOD ON, DID WE GET THE, YOU GOT YOUR ANSWER ON THE ADDITIONAL FUNDS? OKAY. I JUST WANTED MAKE SURE YOU DID Y'ALL, Y'ALL CASH FUNDING? WE CASH FUNDING. THAT'S WHAT I THOUGHT. CRITICAL. OKAY. SO THE NEXT TOPIC, IF WE'RE GOOD AND WE DON'T HAVE ANY MORE QUESTIONS ABOUT THE QU VOC, ANY OTHER QUESTIONS? NO. UM, IS AT WHAT POINT WILL THE, THE COMMITTEE THAT'S GOING TO CONTINUE BE OVERSEEING THE BOND AT WHAT POINT, LIKE WHAT'S GONNA HAPPEN WITH THEM? BECAUSE I KNOW THEY WANTED TO STAY TOGETHER AND, AND HELP OVERSEE THE PROJECT. ARE THEY GONNA DO THAT EVEN THOUGH IT WAS ONLY [00:30:01] JUST A FEW PROJECTS THAT PASSED OR? SO GILBERT IS GONNA COME TALK TO Y'ALL AT THE WORK SESSION TONIGHT AND THEN COUNSEL WILL GIVE US A DIRECT, GET THE NEXT MEETING TO FORM THE OVERSIGHT COMMITTEE AND WE'LL HAVE TO, I THINK GRANT AND HIS TEAM WILL COME, WANT TO COME TALK TO YOU TO GIVE THEIR INPUT ON SUCH SMALL PROJECTS ON HOW THE OVERSIGHT COMMITTEE HAS WORKED IN THE PAST COMPARED TO HOW IT CAN EFFECTIVELY WORK IN THE FUTURE. UM, AND THEN Y'ALL CAN LISTEN TO STAFF AND THEN Y'ALL CAN LISTEN TO THE OVERSIGHT COMMITTEE CHAIR AND Y'ALL DETERMINE HOW Y'ALL WANT TO MOVE THAT FORWARD. THANK YOU. OKAY. OKAY. SO NOW ONTO THE DEBT POLICY. HOPEFULLY YOU GOT TO READ SOME OF IT. I'M SURE IT WAS A BORING READ, BUT WE ALREADY HAVE, UH, THE DEBT POLICY IN PLACE AND WE FEEL LIKE IT'S ADEQUATE AND IT FITS THE CITY'S NEEDS. UM, BUT WE DID REVIEW IT, THE FINANCIAL ADVISOR AND BOND COUNCIL AND WE KIND OF JUST WANT TO, UM, IMPROVE IT A LITTLE BIT, MAKE A FEW, UH, UH, IMPROVEMENTS TO IT. AND ONE OF IT IS WE JUST WANT TO KNOW LIKE WHAT YOUR PHILOSOPHY IS ON FUNDING TAX SUPPORTED PROJECTS IN THE FUTURE. IS IT STILL ONLY GEO BONDS? ARE YOU OPEN TO GENERAL FUND RESERVES AND SPECIAL FUND RESERVES? AND I BELIEVE YOU'VE ALREADY ANSWERED THE GENERAL FUND RESERVES QUESTION. SO WE KNOW THAT TO BE TRUE AND WHEN WE'RE THINKING ABOUT SPECIAL FUND RESERVES, WE ARE THINKING ABOUT LIKE HOT IF IT'S APPLICABLE OR MDD OR ANYTHING LIKE THAT. OR YOU ARE OPEN TO US BRINGING THOSE TYPE OF, UM, OPTIONS TO YOU IN THE FUTURE. I WOULD BE OKAY WITH THAT. I THINK OUR TRAJECTORY HAS BEEN JUST TO STAY WITH GOS, RIGHT? UM, FOR THE BIG INFRASTRUCTURE, YOU KNOW, BIG MAJOR PROJECTS. BUT IF THERE'S SOMETHING THAT WE CAN UTILIZE UNDER SPECIAL FUNDS, THEN I'D BE OKAY WITH THAT. THAT'D BE THE S DRAINAGE AND OTHER MM-HMM . OKAY. UM, THE NEXT ONE, AND I'LL SHOW YOU A SLIDE ON, UM, WHERE THIS IS COMING FROM. WE HAVE, UM, AS YOU KNOW, THE RULE IS TO SPEND DOWN, UM, THE, UH, BOND FUNDS WITHIN THREE YEARS. AND SOMETIMES THINGS HAPPEN, UM, LIKE WE MIGHT HAVE PROJECT SAVINGS OR A PROJECT IS REMOVED OR DELAYED, AND ALSO WE ARE EARNING, WHILE WE HAVE THOSE FUNDS IN OUR UH, AT OUR DISPOSAL, WE ARE ALSO, UH, EARNING INVESTMENT OF FUNDS. AND SO WHAT WE WANNA KNOW IS HOW DO YOU FEEL ABOUT THOSE ALICA FUNDS? OUR CURRENT PRACTICE RIGHT NOW IS WE ARE UTILIZING THOSE FUNDS TO FUND OTHER PROJECT NEEDS AND WE WANT TO MAKE SURE THAT YOU'RE IN COMPLIANT, UH, IN AGREEMENT WITH THAT. AND SO WHAT WE HAVE, JUST SO YOU CAN HAVE AN IDEA, I DIDN'T PUT IT IN THE UH, SHEET, BUT BASICALLY RIGHT NOW WE'RE TRACKING ALL OF OUR BOND FUNDS BY A PROJECT AND THIS ALLOWS US TO SEE WHAT WE HAVE AVAILABLE, WHAT WE HAVEN'T SPENT. AND THIS IS JUST ONE BOND EXAMPLE. THIS ONE IS, WE ARE WORKING ON THIS. THIS WILL BE SPENT, UH, SOON, BUT THIS IS JUST TO GIVE YOU AN IDEA OF WHERE, OH MY GOSH, IT'S GOING TOO FAST HERE. LEMME DO IT LIKE THIS. HOLD ON A SECOND. UM, OKAY, THERE WE GO. SO THIS IS JUST TO GIVE YOU AN IDEA OF WHAT HAPPENS. LIKE WE'LL HAVE OUR EXPENDITURES TO DATE AND WHAT'S OUR BALANCE IN CASH AND WHAT THE ENCUMBRANCES ARE. AND THEN FINANCE WORKS WITH PUBLIC WORKS ON THE DIFFERENT PROJECTS WHEN THINGS SHIFT AND CHANGE AND WHAT ENDS UP HAPPENING BASED ON INTEREST. WE ALSO TAKE IT INTO ACCOUNT OUR ARBITRAGE BECAUSE THERE ARE RULES ON US, UM, EARNING TOO MUCH MONEY IN INVESTMENTS ON A BOND, ON TAX EXEMPT BONDS. AND SO WE TRACK THAT, BUT THEN WE END UP SOMETIMES IN SOME INSTANCES HAVING FUNDS THAT ARE NOT ALLOCATED AND THERE ARE STILL OTHER PROJECT NEEDS AND WHAT'S HAPPENING NOW IN OUR CURRENT PRACTICES. WE USE THOSE FUNDS FOR OTHER PROJECT NEEDS THAT WE MAY HAVE THAT ARE SIMILAR IN NATURE AS BRENT SPOKE TO. AND WE JUST WANNA MAKE SURE THAT THAT PRACTICE IS STILL OKAY. WE JUST WANNA ENSURE THAT YOU'RE AWARE OF WHAT'S HAPPENING FOR FULL TRANSPARENCY OF WHAT WE'RE DOING WHEN THIS HAPPENS. YEAH, I'M OKAY WITH THE PRACTICE. I THINK I'D LIKE TO SEE IT AT LEAST COME TO COUNCIL JUST SO WE'RE AWARE OF WHAT, YOU KNOW, WHAT IS IT BEING USED ON, YOU KNOW, IF THESE ARE, UH, BONDS THAT WE HAD PREVIOUSLY, UH, APPROVED, JUST SO WE'RE AWARE OF HOW IT'S BEING REALLOCATED, ONE OF THE, UH, PROPOSALS THAT WE WILL BRING TO Y'ALL, UM, WITH THIS SO THAT THERE IS, UM, MORE CLARITY ON HOW THESE MONIES ARE SPENT. AND BRENT, IF YOU WANNA TALK ABOUT IT OR JUST TAG TEAM HERE, BUT THE, UM, AS WE MOVE THROUGH THIS PROCESS AND WE FIND PIECES THAT ARE UNALLOCATED FUNDS, THIS THE, BOTH THE FINANCE COMMITTEE AND THE CIP COMMITTEE WILL WORK IN TANDEM. OKAY. SO THE CIP COMMITTEE WILL WORK WITH STAFF ON SAYING, HEY, WE WANT THESE PROJECTS TO BE FOCUSED ON, UH, FOR ADDITIONAL MONEY. AND THE FINANCE COMMITTEE WILL GET AN [00:35:01] UPDATE ON UNALLOCATED FUNDS TO SAY, HEY, WE'RE GONNA MOVE THESE FUNDS. THEY MEET THE PARAMETERS. LIKE THIS ONE IS A, UH, INSTEAD OF WASTEWATER IT WOULD BE LIKE FACILITIES. Y'ALL NEED TO SEE THAT THE MONEY THAT'S THE 6 97 OR 1.1 MILLION IN THE BOTTOM RIGHT HAND CORNER THAT'S AVAILABLE IT Y'ALL NEED TO MAKE SURE OF COMPLIANCE THAT IT'S BEING TRANSFERRED TO ANOTHER WASTEWATER PROJECT BECAUSE THAT MEETS THE OBLIGATION THAT MEETS THE, THE BOND COVENANTS HERE. IT STAYS WITHIN THE PROJECTS THAT ARE THERE WASTEWATER. RIGHT. AND THAT WOULD BE THE SAME WITH ANY OF THOSE PIECES. AND AFTER BOTH COMMITTEES MAKE THEIR DECISION, THAT WOULD THEN BE TRANSFERRED INTO THE NEXT YEAR'S BUDGET PROCESS. OKAY. AND SO IN THAT BUDGET PROCESS, IT WOULD COME BACK TO THE FULL COUNCIL FOR APPROVAL AROUND THE SUMMERTIME AND THEN, THEN, AND ONLY THEN WOULD THAT MONEY BE TRANSFERRED TO ANOTHER PROJECT? IT WOULD NOT BE TRANSFERRED IN THE YEAR AND IT WOULDN'T JUST MOVE AROUND BACK AND FORTH IN THE YEAR ANYMORE. YOU WOULD ONLY SEE ONE MOVEMENT OF THAT MONEY, UH, IN, IN THAT ANNUAL TIMEFRAME AND THE COUNCIL WOULD GIVE THE FULL APPROVAL ON THAT DURING THE BUDGET APPROVAL PROCESS. OKAY. SOUNDS GOOD. YEP. AND JASON, IF YOU, UH, ONE OTHER THING I WOULD ADD JUST FOR UM, COMMITTEE MEMBERS BENEFIT IS THAT, YOU KNOW, WE'RE REALLY LOOKING AT HOW WE CAN LEVERAGE WHERE WE ARE WITH SOME OF THAT TO ACCOMPLISH, UM, SOME ADDITIONAL THINGS. AND SO WE'RE LOOKING AT, FOR EXAMPLE, GRANT OPPORTUNITIES WHEN WE'RE LOOKING AT PARTNERSHIP PROJECTS, BEING ABLE TO LEVERAGE WHAT WE HAVE IN RELATION TO THAT, WHAT THINGS ACCOMPLISHED WITHOUT HAVING TO WORRY ABOUT, YOU KNOW, WHERE THAT'S GONNA COME FROM IS REALLY SOMETHING THAT WE'RE LOOKING AT AS WELL. SO I WANTED TO GIVE YOU ALL THE BENEFIT THAT UM, WE'RE NOT JUST LOOKING RIGHT IN FRONT OF OUR BASE. THANK YOU. OKAY. UM, THE NEXT ON THE POLICY IS, UM, WITH THE REVIEW WE UM, HAD A FEW RECOMMENDATIONS REGARDING, UH, BALLOON PAYMENTS AND CAPITALIZED INTEREST. AND ALTHOUGH IT'S OUR PREFERENCE NOT TO EVER HAVE THAT IN OUR DEBT POLICY, WE WOULD LIKE TO HAVE SOME FLEXIBILITY IN CASES WHERE IT IS BENEFICIAL FOR THE CITY TO DO SO. AND SO WE WOULD JUST LIKE TO CHANGE SOME OF THE VERBIAGE TO SAY, ALTHOUGH THIS IS OUR PREFERENCE, UM, THERE IS FLEXIBILITY WITH THE BENEFIT TO THE CITY AND WE JUST WANNA MAKE SURE YOU GUYS ARE GOOD WITH THAT CHANGE WHEN WE BRING IT. OKAY. SOUNDS GOOD. AND THEN ANOTHER CHANGE THAT WE'RE GONNA MAKE, WE'RE JUST KIND OF GONNA UPDATE SOME OF THE DEFINITIONS, MAYBE ADD MORE TO IT SO THAT EVERYTHING'S VERY CLEAR. UM, AND OUTLINE FOR WHEN PEOPLE ARE READING THIS POLICY BECAUSE THE HOPE IS THAT WE WILL PUT IT, UH, ON OUR WEBSITE AS WELL. OKAY. [c. Discuss Utility Billing Practices.] UM, NEXT IS, UH, UTILITY BILLING PRACTICES. SO, UM, AS YOU REMEMBER, UM, AS YOU KNOW, WE BROUGHT THE, JAMIE BROUGHT THE CIT TEAM PRESENTATION TO THE COUNCIL, UM, BECAUSE THEY, SHE WORKED HEAVILY WITH, THEY WORKED HEAVILY WITH UTILITY BILLING AND THERE WERE TWO ITEMS THAT WE WANTED TO BRING TO THE FINANCE COMMITTEE TO GET SOME GUIDANCE ON OR HOW YOU WOULD LIKE US TO PROCEED. AND TWO OF THOSE ARE PRACTICES WITH OUR, ONE OF 'EM IS OUR WRITE OFF POLICY AND CURRENTLY WE DO A WRITE OFF POLICY. WE AT THE DISCRETION OF THE UTILITY BILLING MANAGER EVERY 18 MONTHS. UM, WE WRITE OFF UH, OLD DELINQUENT ACCOUNTS. NOW THAT'S NOT TO SAY THAT IF SOMEONE COMES BACK TO THE CITY AND THEY WOULD LIKE TO UM, CONNECT BACK TO THE CITY'S WATER THAT WE DO NOT RECOUP THOSE FUNDS BECAUSE WE DO THAT, WE ARE ABLE TO STILL DO THAT. UM, SO WE JUST WANNA MAKE SURE THAT UM, YOU ARE IN AGREEMENT THAT WE BELIEVE BECAUSE OF THE AMOUNT OF THE WRITE OFFS, THAT IT'S SOMETHING THAT PROBABLY COUNCIL SHOULD BE APPROVING EACH YEAR. NOT NECESSARILY EVERY SINGLE ACCOUNT, BUT MAYBE THE AMOUNT, BECAUSE SOMETIMES IT COULD BE UPWARD OF A MILLION OR MORE DOLLARS AND WE WOULD THINK THAT YOU GUYS SHOULD BE AWARE OF THAT JUST FOR FULL TRANSPARENCY. I WOULD ASSUME THAT'S COMMERCIAL IF IT'S A MILLION DOLLARS, A LOT OF IT. YEAH. SO, UM, OR WOULD YOU RATHER US STILL JUST BE ABLE TO DO IT AT OUR DISCRETION OR WOULD YOU LIKE IT TO GO TO COUNCIL? I WOULD LIKE TO SEE DO NOT PUT THAT ON US . SO BRING IT TO COUNCIL. OKAY. SO I MEAN WE, AND WE'VE TALKED ABOUT LIKE HOW TO COLLECT ON, I MEAN I THINK WE TALKED ABOUT IT WITH THE EMS THING RIGHT. ON HOW WE IMPROVE COLLECTIONS. SO LIKE IS THERE ANYTHING WE CAN DO TO HELP IMPROVE THIS? AND WE ARE STILL WORKING ON THAT OPTION, BUT IT'S DIFFICULT. OKAY. WE, WE ARE STILL LOOKING INTO THAT LOOSE DOWN LIKE EXACTLY HARD TO TRACK 'EM DOWN. THE RESIDENTIAL PART WITH THE GENTLEMAN THAT I SENT OVER MM-HMM . DID HE HAVE TO PAY THAT? I DUNNO THE LANDLORD, LANDLORD ONE. I DON'T, I DON'T [00:40:01] KNOW OFF THE TOP OF MY HEAD. MARCUS STUFF. YEAH, IT WAS OVER ON UM, SHILLING. I DON'T THINK HE HAD TO PAY. OKAY. BECAUSE I HAVEN'T FOLLOWED UP WITH HIM YET. HE, HE HAD TO COME BACK TO ME. SO EVICTION. YEAH, HE BROUGHT EVICTION PAPERS FROM THE COURTS SHOWING THAT HEY, I DID MY PART TO KICK HIM OUT BUT THAT HE WASN'T LEAVING. SO THAT HAPPENS. SO WE UH, ACCEPTED THOSE DOCUMENTS. THANK YOU. OKAY. SO THE NEXT ONE IS TYPICALLY A BIG, UH, CRITICISM THAT WE RECEIVE WHEN WE ARE TRYING TO UH, WORK WITH THE CITIZENS ON LEAK ADJUSTMENTS. AND SO WITH THE LEAK ADJUSTMENT, CURRENTLY OUR PRACTICE IS WE APPLY A LEAK ADJUSTMENT ONLY TO THE SEWER PORTION OF THEIR BILL INSTEAD OF THE WATER PORTION. AND SO WHAT WE WOULD LIKE TO PRESENT, WE WOULD LIKE TO RECOMMEND THAT WE DO IT TO BOTH WATER AND SEWER AND WE DID GET CLEARANCE FROM LEGAL ON WHETHER WE COULD WE COULD DO THIS OR NOT. JUST SO YOU KNOW. OKAY. SO THE IMPACT OF WHAT THAT WOULD LOOK LIKE, UM, CURRENTLY IN OUR CURRENT, UM, STATUS, SO LET'S SAY SOMEONE RECEIVED A BILL FOR 6,000 GALLONS, BUT THEIR AVERAGE BILL IS 2000 GALLONS AND WE DO OUR LEAK ADJUSTMENT BASED ON THE UM, SIX MONTH AVERAGE. THEIR CREDIT WOULD ONLY BE $30 AND 68 CENTS. AND THEN ON THE OTHER SIDE WE HAVE 12,000 GALLONS. THEIR AVERAGE IS 6,000 GALLONS AND THEIR CREDIT WOULD BE $48 AND 54 CENTS ON A $257 BILL. AND THE OTHER ONE IS $138 BILL. SO NOW THE NEW IMPACT, IF WE DID BOTH WATER AND SEWER WOULD BE A $62 CREDIT AND $110 CREDIT TO THE BILL THAT THEY HAVE. IF WE ARE ADDING BOTH WATER AND SEWER AND BASED ON JUST 25, WE HAD OVER, I WANT TO SAY IT WAS 250 LEAK ADJUSTMENTS THAT WE UH, GRANTED IN 25 AND IT EQUALED AROUND ABOUT $133,000 AND THAT WAS JUST THE SEWER PORTION. THE SEWER. SO YOU WOULD BE THINKING BASED ON THIS, THAT THAT COULD POTENTIALLY DOUBLE AND WE WOULD BE TALKING ABOUT $267,000. SO IT'S SOMETHING TO CONSIDER. WHAT DOES THIS, I'VE NEVER HAD TO DO THIS. SO WHAT DOES THIS PROCESS LOOK LIKE? I MEAN THEY JUST GET AN ABNORMALLY HIGH BILL AND THEY SAY I HAD A LEAK AND LIKE, AND WE JUST ADJUST IT DOWN. BUT I BELIEVE THEY HAVE TO BRING IN DOCUMENTATION THAT THEY HAD THE LEAK FIXED IN ORDER TO GET THE ADJUSTMENT. OKAY. BUT THEY HAD IT FIXED AND JUST BE THE, THEY HAD TO FILL MY SWIMMING POOL. NO , THEY HAD TO HAVE IT. I'LL HAVE SOME JUST SAYING THEORY. OKAY. SO I MEAN IF YOU'RE NOT PREPARED TO, YOU WANNA THINK IT OVER, BE PREPARED TO, BUT IF WE WERE TO GO THIS ROUTE, UM, LEGAL IS, UM, RECOMMENDING THAT WE BRING A ORDINANCE, WE UPDATE THE ORDINANCE TO INCLUDE THIS. WOULD Y'ALL LIKE US TO BRING IT TO A COUNCIL WORK SESSION INSTEAD OF JUST THE, TO TALK ABOUT IT? CAN I SAY SOMETHING? YES SIR. SURE. THE ADJUSTMENT, UH, FOR THE WATER AND SEWER IS ONLY FOR RESIDENTIAL BECAUSE COMMERCIAL, UH, DOESN'T HAVE A CAP ON THE SEWER PORTION SO THEY GET A LARGER, UH, ADJUSTMENT ON THE BUILDING. THANK YOU. THANK YOU MARCUS. YES, THANK YOU . SO WE CAN BRING IT BACK TO A WORK SESSION AND DISCUSSED FURTHER. YEAH, I'D LIKE TO SEE WHAT THAT LOOKS LIKE AND WHAT MAYBE OTHER CITIES ARE DOING TO MAKE THESE, I MEAN, DO OTHER CITIES OFFER THE SAME TYPE OF LEAK ADJUSTMENT OR JUST, I MEAN IT'S REAL WATER. WE HAD TO, WHAT'S THE PERCENTAGE OF RIGHT NOW? YOU KNOW, THIS HAPPENS AT, YOU KNOW HOW OFTEN SO YEAH. 250 LEAK ADJUSTMENTS. WE HAVE WHAT, 30,000 BILLS? CORRECT. SO YEAH. YEAH. SO 30,000 EACH MONTH AND ONLY 250. OBVIOUSLY A VERY SMALL PERCENTAGE THAT IT'S HAPPENING, BUT IT'S STILL, IT TURNS OUT TO BE A LOT OF MONEY THOUGH FOR A WATER AND SEWER. DO WE HAVE ANY THAT HAVE BEEN RECURRING THAT YES, ON THE, ON THE OLDER PART OF TOWN, THE, THE CUSTOMERS HAVE UH, OLDER PIPES IN THE HOUSE AND THINGS LIKE THIS. SO THEY MAY HAVE A LEAK IN THIS AREA AND THEN JUST SAY COUPLE MONTHS DOWN THE LINE OR THE FOLLOWING YEAR IT BREAKS AGAIN OR ANOTHER PORTION BREAKS. CORRECT. CORRECT. LIKE WHAT HAPPENS TO US? WE'RE FIXING A MAIN LINE . OKAY. [00:45:02] SO WE'LL BRING BACK THAT BACK TO YOU IN A WORK SESSION. AND THEN THE LAST TOPIC, WE [d. Discuss Future Meetings of the Finance Committee.] ALMOST MADE IT ON TIME HERE AND WE WANTED TO DISCUSS, UH, FUTURE MEETINGS. LIKE, UM, SINCE THINGS HAVE CHANGED WE WANNA MAKE SURE THAT, THAT WE ARE BRINGING TO YOU WHAT YOU WANNA DISCUSS AND WHAT YOU WANT TO KNOW ABOUT. UM, AND CURRENTLY OF COURSE WE'RE GONNA BRING YOU THE ANNUAL AUDIT AND THE AUDITORS WILL TALK TO YOU ABOUT THE MANAGEMENT LETTER AND THINGS OF THAT NATURE. BUT RIGHT NOW WITH THE QUARTERLY FINANCIAL REPORTS, WE HAVE A QUESTION BECAUSE BASED ON THE CHARTER, JASON HAS STARTED SENDING YOU THE MONTHLY FINANCIALS. UM, BUT NOW IT WILL BE BASICALLY LIKE A DUPLICATE IF WE SEND THE QUARTERLY, BECAUSE THE QUARTERLY WOULD BE DECEMBER, RIGHT? WILL BE YOUR MONTHLY DECEMBER OR UM, WHATEVER MONTH THAT LA OR SEPTEMBER. SO WHAT WE'RE PROPOSING IS TO POTENTIALLY LIKE MAYBE BRING YOU A QUARTERLY REPORT UPDATE TO TALK MORE IN DETAIL ABOUT WHAT'S HAPPENING IN THE FINANCIALS INSTEAD OF JUST THE REPORT. LIKE TALK MORE SPECIFICALLY ABOUT WHAT WE'RE SEEING, THE TRENDS AND THINGS OF THAT NATURE, IF THAT WOULD BE HELPFUL. THAT'S A GOOD, [a. Receive the City of Baytown Investment Policy] OKAY. AND THEN AS FAR AS POLICY GO, UM, IS THERE ANY OTHER POLICIES OUTSIDE OF THE ONES THAT ARE LISTED THAT YOU BELIEVE THAT YOU WOULD WANT TO SEE I BE MORE INVOLVED IN THAT YOU CAN THINK OF? NO. ANYTHING ON THE FORMULA Y'ALL WANT TO LOOK AT? I MEAN, I KNOW Y'ALL LOVE THE FORMULA, SO I THINK WE LOOK AT IT ALL THE TIME. SO I THINK I'M OKAY WITH THE FORMULA. I MEAN I WANT IT TO STAY AS WE REVIEW FUTURE MEETINGS, BUT, AND THEN OF COURSE WE'RE GOING TO CONTINUE TO BRING YOU THE BOND ISSUANCE, BUT I, WE DIDN'T KNOW IF THERE WAS ANYTHING ELSE THAT YOU MAY HAVE BEEN THINKING ABOUT THAT YOU WOULD WANT US TO BRING FOR YOUR CONSIDERATION. DID Y'ALL WANT A FUTURE MEETING ON LIKE THE TAX RATE PIECE AND ALL THE CLOSES AND MINUSES AND LIKE WHAT I WAS TALKING ABOUT, LIKE ISSUING TO FRANK HAD MADE A COMMENT, HE SENT ME A MESSAGE THAT WHEN I SAID THE 300 MILLION, IF WE DON'T HAVE ANY ACTUAL DEBT TO ISSUE, ONE THING THAT HAS TO BE CONSIDERED IS WE DO HAVE SSO IN THE FUTURE AND THEN DOES THE GENERAL FUND WANT TO TAKE ON A LARGE DEBT THAT IS SUBSIDIZING THE WATER SEWER FUND AND LIKE, DO Y'ALL WANNA GO THROUGH SCENARIOS LIKE THAT AS A FINANCE COMMITTEE SO THAT Y'ALL CAN MAKE RECOMMENDATIONS WHEN IT'S TIME FOR THE BUDGET, UH, FOR THE COUNCIL? THAT SOUNDS GOOD. THAT SOUNDS GOOD. YEAH. LIKE SEE THAT, I THINK THAT'S, YEAH, I MEAN WE TALK, START TALKING ABOUT THOSE NUMBERS FOR SSO LIKE I CAN'T HIGH ENOUGH. I MEAN IT'S SO, SO, UH, I THINK THAT'D BE A GOOD DISCUSSION. SEE WHAT, HOW THOSE SCENARIOS PLAY OUT IN ADDITION TO THAT THE, YOU KNOW, THE REST OF THE SYSTEM, YOU KNOW, IS STILL GONNA HAVE NEEDS, RIGHT? AND SO IF WE CAN ISOLATE THAT PART OF IT AND STILL BE ABLE TO HAVE RATING FOR PROJECTS, UH, EXPANSION, ET CETERA ON BOTH SIDES OF, OF THE UTILITY, THAT'D BE GREAT. JUST A QUICK THOUGHT. 'CAUSE WHEN JASON SAID THAT, I SAID THERE ARE THREE WAYS YOU COULD MANAGE YOUR DEBT. THERE'S A FOURTH . YOU HAVE SOME EXISTING COS OUTSTANDING THAT HAVE A PLEDGE OF BOTH TAXES AND S WHO ARE REVENUE AND SEWER REVENUE. AND IN ANY SINGLE YEAR THAT YOU WANTED, YOU COULD MOVE SOME THAT'S BEING PAID WITH WATER AND SEWER AND PAY IT WITH VALOR AND TAXES WITHOUT DOING ANYTHING ELSE THAT WOULD CHANGE YOUR DEBT STRUCTURE. OKAY. SO THAT'S FOUR WAYS THAT WE CAN MANAGE YOUR TAX RATE. OKAY. CAN I ASK A FOLLOW UP ON THAT? I'M ASSUMING THAT WOULD ONLY BE FOR THIS, I'M SORRY, FOR, FOR ONE YEAR. GO GO AHEAD AND ASK YOUR QUESTION. UM, THAT WOULD ONLY BE FOR THE CITY'S UM, ORDERS WHO DID NOT FOLLOW, NOT FOLLOW, THAT'S CORRECT. THAT'S CORRECT. YES, THAT'S CORRECT. BECAUSE THE CITY HAS A TAX PLEDGE ASSOCIATED WITH IT EVEN THOUGH IT'S PAID FROM REVENUES. OKAY. SO WE'LL BRING SOME, UH, CASE STUDIES FOR Y'ALL TO LOOK AT. OKAY. Y'ALL READY FOR SOME BIG DECISIONS? MM-HMM. I WAS GEEKING OUT OVER HERE WITH HER. WE SIGNED UP STUFF, SO I'M EXCITED. NO, . WELL THAT'S ALL WE HAVE UNLESS YOU HAVE ANY MORE QUESTIONS OR ANYTHING ELSE YOU WANT TO DISCUSS. GOOD. READ ALL THE REST OF THESE ITEMS. I DUNNO IF I 3D DISCUSSED DEBT, DEBT POLICY THREE C WAS DISCUSSED. UTILITY BILLING PRACTICES 3D WAS DISCUSSED. FUTURE MEETINGS OF THE FINANCE COMMITTEE AND WE RECEIVED THE CITY OF BAYTOWN INVESTMENT POLICY FOR [00:50:01] A, SO ALL ITEMS HAVE BEEN BEEN ADDRESSED. THIS MEETING'S NOW ADJOURNED. THANK YOU. * 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.