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UH, FINANCE MEETING[ CITY OF BAYTOWN NOTICE OF MEETING BAYTOWN FINANCE COMMITTEE TUESDAY, MAY 12, 2020 4:00 P.M. HULLUM CONFERENCE ROOM, CITY HALL 2401 MARKET STREET, BAYTOWN, TEXAS 77520 Due to the COVID 19 Disaster and CDC's recommendation regarding social distancing measures, the public will not be allowed to be physically present at this meeting. However, the meeting will be audible to members of the public and allow for two-way communications for those desiring to participate. To attend the meeting via telephonic means, please use the following toll-free number: 1-888-788-0099, Meeting ID: 890-9791-8728. Any person interested in speaking on any item on the agenda must submit his/her request via email to the Finance Department at elizabeth.donato@baytown.org. The request must include the speaker's name, address, and phone number that will be used to teleconference 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 at the following link: https://www.baytown.org/city-hall/city-clerk/agendas-minutes. After the meeting, a recording of this meeting will be made available to the public at the above-referenced website. For more information or questions concerning the teleconference, please contact the Office of the City Clerk at 281-420-6504. AGENDA CALL TO ORDER AND ANNOUNCEMENT OF QUORUM ]
FOR TUESDAY, MAY 12TH AT 4:02 PM FIRST, UH, ORDER OF BUSINESS IS APPROVED.SO I HAVE A MOTION FOR ITEM ONE A AND B, MOVE TO APPROVE ITEM ONE A AND B.
NEXT ITEM IS RECEIVE CITY BAY TOWN'S QUARTERLY FINANCIAL INVESTMENT REPORT FOR A QUARTER ENDING MARCH 31ST, 2020.
SO WHO GETS THAT TO, TO KICK IT OFF? UH, I WANT FIRST ENTRIES INTRODUCE YOU ALL TO VICTOR BROWNIES FINANCE DIRECTOR.
UM, AND BEFORE HE GIVES YOU THE REPORT, I'M JUST GONNA HAVE HIM KIND OF INTRODUCE HIMSELF A LITTLE BIT, UM, JUST 'CAUSE WE ARE WORKING WITH YOU ALL QUITE A BIT OVER THE NEXT FEW YEARS.
I WAS, UH, I WAS ABOVE A GUMPS ON SUNDAY AND I'VE FORGOTTEN, I HADN'T SEEN FOR GUMP FOR YEARS.
AND, UH, I, I LIKED ONE OF THE LINES FROM IT, WHICH IS, MY NAME IS FORT FORREST GUMP.
SO I'M VICTOR BROWNLEY USED, THEY CALL ME VICTOR BROWNLEY.
YOU CALL ME WHATEVER YOU LIKE.
I'M, I'M, I'M RELAXED, SO, OKAY.
AND BOY, ARE YOU REALLY FROM, BESIDES OSH? THERE YOU ARE.
UM, I'M FROM, I'M FROM NORTHERN IRELAND ORIGINALLY.
NOT TO BE CONFUSED WITH SOUTHERN PART.
YOU GO, WE, WE KNOW THE FEELING.
THEY GOT NICE GOLF COURSES TOO.
I WAS GONNA SAY, IF YOU LIKE GOLF PARTICULARLY YEAH.
AND IF YOU DON'T MIND RAIN PEOPLE SAY HOW, YOU KNOW, HOW OFTEN DOES IT RAIN THERE? 350 DAYS OUT THE YEAR.
SO LET'S, LET'S GET THIS ROLLING.
UM, I HAVEN'T A HUGE AMOUNT TO, TO SAY FOLKS, UM, BUT I GUESS THE GIST OF THE STORY IS, UH, EVERYTHING IS TRACKED RIGHT ABOUT WHERE WE ANTICIPATED IT WOULD HALFWAY THROUGH THE YEAR.
UM, OBVIOUSLY PROPERTY ON OUR IDA REVENUES WE GET UPFRONT, SO WE HAVE, WE HAVE ALL THAT IN THE BAG.
SO THAT'S LOOKING ABOUT WHERE YOU'D EXPECT IT TO BE.
WELL, IN JANUARY, UM, PROBABLY NOT LOOKING SO GOOD RIGHT NOW.
SO I THINK MY TAKEAWAY FROM THIS IS, YEAH, FIRST HALF OF THE YEAR, THAT'S FINE.
BUT, UH, THE STORY WILL BE TOLD, UH, PARTICULARLY WHEN WE GET THESE SEAL TAX FIGURES FOR, UM, THIS MONTH, PARTICULARLY ON NEXT.
SO WE HAVE MARCH IN, WE HAVE MARCH IN.
HOW IS THAT? UM, IN SOME WAYS NOT AS BAD AS WE SOLD.
BUT THEN AGAIN, IT REALLY ONLY KICKED IN HALFWAY THROUGH THE MONTH AND THEN EVERYBODY WENT OUT AND BOUGHT A TOYOTA MM-HMM
SO NEXT MONTH IS REALLY GOING TO TOILET PAPER.
WELL, NOT BAD, BUT NO, THAT'S, THAT'S THE TAKEAWAY IN, IN TERMS OF REVENUES, IN TERMS OF THE SPAN SITE, AGAIN, WE ARE ABOUT WHERE WE WOULD EXPECT TO BE.
UM, ONE OF THE THINGS FOR ME HERE IS YOU'RE VERY GOOD AT SPENDING THE MONEY YOU HAVE FOR CAPITAL VERY QUICKLY UPFRONT, WHICH CAN BE GOOD, CAN BE BAD TOO.
YOU WANT SAVE MONEY AND MAYBE BE MORE OF THAT LATER.
BUT EVERYTHING ELSE IS ABOUT, UH, WHERE WE EXPECTED IT TO BE.
SO WE, SO NEXT MONTH OF THE NEXT QUARTER, WE'RE REALLY GONNA SEE WHERE WE, WE STAND ON THAT.
AND WHAT'S PROJECTED FOR THE REST OF THE FISCAL YEAR.
I MEAN, THIS IS GONNA GO LONGER THAN JUST A COUPLE MONTHS.
WE'RE GONNA SEE IT FOUR MONTHS FROM NOW.
WE WILL, IS THERE ANY PROJECTIONS OUT THERE AS TO WHAT WE'RE GONNA BE LOOKING AT? CAN YOU, I MEAN, TELL US WHAT YOUR CRYSTAL BALL SAYS.
UM, THERE IS, UM, RIGHT NOW WE HAVE, UM, WE'VE ROLLED OUR SALES TAX PROJECTIONS, UH, LET'S SAY LIKE BEFORE WE GET FROM APRIL, WHICH WE'LL RECEIVE IN JUNE, UM, DOWN 50%.
UM, THAT'S WHAT WE, THAT'S WHAT WE, THAT'S WHAT WE PICKED IT AT RIGHT NOW.
AND I THINK THAT'S A, A PRETTY MIDLINE ESTIMATE.
I'VE BEEN IN CONTACT WITH THE CONTROLLER'S OFFICE, UM, TALKING TO THEM AGAIN.
UH, GUYS, THIS IS, THIS IS UNPRECEDENTED TERM.
THIS HERE, AND, AND THE ECONOMY WAS LITERALLY RUNNING AT A HUNDRED MILES AN HOUR AND IT HIT A BRICK WALL AND EVERYTHING STOPPED.
BRETT, AM I READING THIS RIGHT? THE MARCH RECEIPTS ARE DOWN 20%.
AM I LOOKING AT THAT RIGHT ON PAGE THREE? OH, UM, DODGE ACTUALLY THE, UH, THE JANUARY RECEIPT THAT YOU, THAT YOU GET IN MARCH WE'RE DOWN.
UM, AND IF YOU LOOK, IF YOU COMPARE IT HERE IN YEAR, THERE'S ALWAYS A
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DIP THAT I SUPPOSE THE, THE POST-CHRISTMAS DIP, IT'S DONE.WE HAD A, UH, WE HAD A $450,000 AUDIT ADJUSTMENT.
IN OTHER WORDS, ONE OF THE, UM, ONE OF THE TAXPAYERS HERE IN TOWN THAT THEY WON'T TELL YOU WHO, UM, UM, BASICALLY CALL IT BACK $450,000 PLUS ANOTHER 35.
AND THEY WON'T, THEY WON'T LET YOU KIND OF PARSE THAT OUT OVER TIME UNTIL IT EXCEEDS 500,000.
THEY CALL BACK, THEY CLAW THAT BACK.
IN OTHER WORDS, THERE WAS A TAXPAYER OUT THERE WHO PAID, WHO OVERPAID.
AND THEN, AND THEN THEY WERE ABLE TO GO BACK TO THE CONTROLLER AND SAY, OH, HEY LISTEN, WE, WE OVERPAID, WE NEED TO GET THAT MONEY BACK.
AND SO, AND SO THE CONTROLLER, UM, THEY DID SEND ME THE DOCUMENTATION ON IT.
I MEAN, OBVIOUSLY SOMEBODY IN THEIR SHOP OVER, OVER OVERSPEND NO, OVER, OVER OVERSPENT THE MONEY FOR TECHNICAL SALES TAX MM-HMM
AND THEN THEY CAME BACK AND SAID, HEY, LOOK, THAT REALLY WAS NOT, THESE REALLY WERE NOT TAXABLE ITEMS IN THE CONTROLLER'S OFFICE.
SAID, OKAY, THEY TAKE IT BACK.
LIKE I SAID, THEY TAKE IT ALL BACK IN ONE CHUNK.
UNLESS, LIKE I SAID, UNLESS IT EXCEEDS $500,000, THEN THEY'LL COME BACK TO US AND SAY, HEY, UM, YOU GOT A BIG ONE COMING.
UM, WE'LL LET YOU DO THIS IN LIKE THREE MONTHS.
OR, OR SOMETHING LIKE THAT THAT WE WERE JUST UNDER.
WE WERE JUST UNDER, UM, WHERE'S THE NUMBER THAT SHOWS THAT MARCH WASN'T THAT BAD? IN NO, IN HERE.
WE, WE ONLY GOT THE PRELIMINARY FIGURES, UM, LAST WEEK.
SO, SO THE LINE, SO IT WOULD SHOW, IT WOULD SHOW AS THE MAY LINE OUR MARCH NUMBERS.
I THINK WE'VE, WE'VE TALKED BEFORE, UM, YOU KNOW, AQUATICS, WE'LL HAVE TO SEE WHAT GOES ON HERE WITH THE SEASON AND THEN WE'LL BE MAKING THOSE DECISIONS HERE AND THEN FAIRLY NEAR FUTURE ON WHAT'S GONNA GO ON WITH THE PARK.
BUT, UM, WELL, WE'RE ONLY LOSING ONE MONTH.
OR IS IT A MONTH AND A HALF ON, ON AQUATICS NOT HAVING PEOPLE THERE? UH, WE DON'T KNOW YET.
WELL, I MEAN, WELL WE, WE'VE OPENED THE PARKS BEFORE, SO WE'RE LOSING ONE MONTH OF REVENUE FROM THEM.
IS IT ONE MONTH OR A MONTH AND A HALF? WE DON'T TYPICALLY OPEN UNTIL JUST BEFORE MEMORIAL ANYWAY.
SO, OH, WE HAVEN'T TECHNICALLY LOST ANYTHING YET.
UM, AND WE WILL BECAUSE BECAUSE THEY'RE NOT TRAINED, THE LIFEGUARDS AREN'T TRAINED, SO THERE'S NO WAY THEY COULD OPEN MEMORIAL DAY ANYWAYS, KEEP IN MIND, ONE PERMANENT SITUATION IS THAT THE SCHOOL DISTRICT HAS MOVED, ITS, ITS, UH, OPENING FOR SCHOOL TWO WEEKS EARLIER THAN THEY WERE BEFORE.
SO NOW THEY START ON THE 13TH OF, OF AUGUST AND WE LOSE OUR WORKFORCE.
WHAT ARE WE WAITING FOR THE GOVERNOR TO OPEN POOLS OR WATER PARKS OR WHAT'S THE NO, I'M VERY INTERESTED IN, IN THIS.
I'M NOT SURE THAT HE SUFFICIENTLY IN MY MIND ADDRESS THAT CATEGORY.
UH, WE PROBABLY WAIT TO SEE SOMETHING THAT WOULD IMPACT, AND I'M SURE THERE'S A LOT OF, UH, TYPHOON TEXAS OR WHATEVER IT'S CALLED.
AND, UH, AND SCH LITTER BOND AND ALL THE REST OF 'EM ARE VERY, VERY INTERESTED AND, AND FINDING OUT ABOUT THAT.
BUT, UH, YOU KNOW, I MIGHT, I THINK MAYBE WE, WE'LL BE CLOSE TO MIDDLE OF JUNE, I WOULD GUESS.
THE WAY THEY'RE FACING IN RIGHT NOW, I, I BELIEVE THE CDC IS, IS PUTTING TOGETHER GUIDANCE ON, ON WATER PARKS.
BASED ON, IT'S A LITTLE DIFFERENT ENVIRONMENT, SO YEAH.
UM, WE'LL SEE WHAT THEIR GUIDANCE IS, BUT WE KNOW THERE'LL BE SOME LOSS REVENUE, SO IT JUST DEPENDS ON HOW LATE WE OPEN.
IF WE OPEN TOO LATE, THEN WE'LL PROBABLY HAVE TO MAKE SOME DECISIONS BECAUSE THE FUND JUST DOESN'T HAVE ENOUGH TO SUSTAIN THAT BIG OF A LOSS.
SO, WE'LL, NEXT QUARTER WE'LL BE ABLE TO HAVE THAT.
WELL, IN THE MEANTIME, EVERYTHING'S FULL OF WATER AND WE'RE TREATING WATER.
AND WE HAVE, HAVE, WE DO HAVE SOME PART-TIME THAT'S ALREADY BEEN HIRED, SO WE WILL PROBABLY HAVE TO LOOK AT THAT AND SEE.
SO THE PART-TIME THAT'S BEEN HIRED SO FAR HAS BEEN DOING NON AQUATICS OPERATIONS.
SO I ASSUME WE'VE HAD TO KEEP UP.
THAT'S WHY OUR MEDIUMS LOOK SO BEAUTIFUL.
SO, YOU KNOW, DOES THAT BELONG AS AN AQUATICS EXPENSE? PROBABLY NOT.
SO WE WILL TAKE A LOOK AT THAT HERE.
EXCUSE ME, TO SEE WHAT WE WANT TO DO WITH THAT.
BUT, UM, YOU KNOW, WE DO HAVE EXPENSES, SOME OF THE CORONAVIRUS RELIEF THAT WE'LL BE ELIGIBLE FOR.
WOULD IT COVER LOSSES LIKE THIS? WE'RE STILL STRUGGLING TO IDENTIFY A, UH, RELEASE SUBSTANTIAL CORONAVIRUS RELIEF RIGHT NOW.
THERE ARE SOME GRANTS THAT WE'RE APPLYING FOR, BUT NOTHING THAT RIGHT NOW IS MATERIALIZED THAT WOULD COVER ANYTHING LIKE THIS.
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NOT THAT I KNOW OF.UNLESS YOU GUYS KNOW SOMETHING.
I GUESS I THOUGHT THE POINT OF, YOU KNOW, GOING INTO A STATE OF EMERGENCY IS SO WE COULD QUALIFY FOR FUTURE RULING IF, IF CONGRESS MAKES THAT AVAILABLE IN PACKAGE THREE, THE DEMOCRATS HAD PROPOSED PLACING MONEY IN FOR LOCAL, UH, FOR LOCAL GOVERNMENT AND THE REPUBLICANS THROUGH A WELL, THEY SAID THEY DIDN'T LIKE THAT, SO IT DID NOT, UH, MATERIALIZE, SAY PACKAGE THREE.
SO WE, WE MAY BE ABLE TO GET SOME OF OUR EXTRA UNBUDGETED EXPENSES BACK.
UM, I KNOW THEY'RE, THEY'RE LOOKING AT THAT RIGHT NOW, BUT IT WOULDN'T BE ANYTHING SUBSTANTIAL.
IT WOULDN'T MAKE A DENT IN THE BUDGET AT ALL.
UM, THE ONES LIKE AQUATICS ARE TOUGH BECAUSE IF, IF WE WERE A PRIVATE BUSINESS AS AN AQUATICS PARK, WE PROBABLY COULD HAVE GOTTEN SOME BENEFITS FROM THE LOSSES THAT WE HAVE.
AS A CITY, PROBABLY NOT, NOT GONNA BE ELIGIBLE.
SO HOW DO YOU FEEL ABOUT THAT BUDGET, THAT ADJUSTED BUDGET YOU PRESENTED US AT THE LAST MEETING? DO YOU STILL FEEL, OR DO YOU WELL, THE, THE MARCH SALES TAX IS HELPFUL TO SEE.
UM, I THINK WE'LL SEE WHAT HAPPENS WITH THE APRIL NUMBERS.
WE, I MEAN WE BROUGHT A VERY CONSERVATIVE ESTIMATE, SO SO YOU FEEL STILL IN STILL IN LINE? YEAH.
IT SHOULDN'T BE ANY WORSE THAN THAT.
SO BESIDES THAT, THAT'S THE AQUATICS BEYOND WHAT THE VICTOR COVERS IS REALLY THE BIGGEST ONE.
WE'VE KIND OF GOT OUR EARS PERKED UP A LITTLE BIT ON JUST THE, SEE WHAT'S GOING ON THERE.
IT'S STILL MOVING FORWARD ON CAPITAL PROJECTS.
ALL OF OUR CAPITAL PROJECTS ARE STILL AND BASED ON NUMBERS COMING IN THE NEXT COUPLE MONTHS, IS THERE ANYTHING ELSE WE NEED TO BE PREPARED FOR THAT WE WOULD NEED TO ADJUST SUCH AS WE FIND OUT WE, WE NEED TO CUT SOMETHING REAL QUICK.
SO WE DO AWAY WITH A RECYCLING PROGRAM FOR, SO NOTHING'S GONNA IMPACT US DRASTICALLY.
WE, WE'VE ALREADY, WE'VE ALREADY PUT A HOLD ON WHAT WE NEED TO PUT A HOLD ON.
SO, SO WE WE'RE PREPARED IN ADVANCE.
HOPEFULLY, HOPEFULLY IF THINGS GO A LITTLE BETTER, THERE'S MAYBE A COUPLE THINGS WE COULD BRING BACK.
YOU KNOW, THE ONE, THE PUBLIC WORKS, UM, REHAB PROJECT WOULD BE ONE THAT WOULD BE NICE TO DO THIS YEAR IF WE CAN.
UM, IT'S DESIGNED, IT'S READY, BUT IT'S KIND OF SITTING ON THE SHELF RIGHT NOW.
THAT'S PROBABLY THE ONE THAT WE'RE KIND OF LOOKING AT.
EVERYTHING ELSE WE PUT A PERMANENT HOLD ON.
SO WE BROUGHT YOU GUYS LAST TIME AND IT'LL, IT'LL, OKAY.
AS I TOLD YOU, BOB, I'M, I'M NOT AS WORRIED ABOUT, ODDLY ABOUT 2020 AS MUCH AS 2021.
UH, THAT IS ONE THAT I WOULD RECOMMEND SUPER CAUTION ON 2020, BECAUSE OF THE WAY WE'RE STRUCTURED AND THE WAY WE RECEIVE REVENUE, UH, WE WERE SOMEWHAT INSULATED BY JUST THE NATURE OF OUR PORTFOLIO OF REVENUE AND 21.
UH, THAT'S NOT NECESSARILY GOING TO REPLAY EXACTLY, ESPECIALLY IF WHAT WE THINK IS A SHARP DIP IN THE ECONOMY.
AND THAT, AND IF YOU BELIEVE IN A NIKE SWISH VERSUS A U TYPE RECOVERY, I'M, I'M KIND OF IN THE LATTER CAMP AND I BELIEVE THAT THERE ARE SOME SECTORS OF OUR ECONOMY THAT ARE NOT COMING BACK FROM THIS.
AND THERE'S GONNA BE JOBS THAT HAVE LOST THAT ARE NOT COMING BACK, UH, THAT WE'LL SEE A MORE PROLONGED RECOVERY OF, UH, WHAT'S TYPICAL IN A RECESSION IS 13 TO 18 MONTHS, UH, RECOVERY.
SO I, I WOULD KIND OF PLAN ON 21 BEING, WE'LL CALL IT A BUMMER YEAR, AS YOU KNOW, WE'RE, WE'RE, WE'RE GONNA PUSH THINGS ALONG TO SOME EXCITING NEW INITIATIVES AND IDEAS AND WE'RE GONNA, WE'RE A VERY BLESSED POSITION RIGHT NOW, BUT IT'S CAUTION, CAUTION TO BE SURE.
AND WE'LL HAVE TO KEEP AN EYE ON JUST GLUED TO OUR METRICS TO MAKE SURE IF WE SEE SOMETHING THAT'S REALLY GOING BAD, BAD, THAT WE CAN PULL A RIP CORD ON THAT.
AND THAT'S WHY I'M REALLY ENCOURAGING OUR DEPARTMENTS TO DO BEGINNING OF THE FISCAL YEAR IS DON'T SPEND YOUR CAPITAL IN OCTOBER, PLEASE DON'T, DON'T DO THAT.
UH, HOLD OFF A FEW, FEW MONTHS.
EVERY MONTH YOU HOLD OFF IN BUYING CAPITAL, YOU ACTUALLY BUY YOURSELF SOME INSURANCE.
MOST YOU BUY YOURSELF SOME INFLATION TOO.
MOST LIKELY WE'RE GONNA, UNLESS THINGS GET DRASTICALLY BETTER, WE'RE GONNA FORCE THAT THEY DO NOT SPEND THAT THEY DO NOT PURCHASE THEIR EQUIPMENT UNTIL THE BEGINNING OF THE CALENDAR YEAR.
JUST, JUST TO LET US GET THROUGH, I MEAN, IT SOUNDS LIKE IF WE HIT ANOTHER ISSUE IT COULD BE IN, YOU KNOW, OCTOBER, NOVEMBER, DECEMBER, I THINK ONCE WE GET, BUT ONCE WE GET PAST THAT, HOPEFULLY YOU'VE GOT A VACCINE.
HOPEFULLY THINGS HAVE SETTLED OUT SO WELL.
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CAPITAL EQUIPMENT OR CAPITAL PROJECTS? CAPITAL.ALRIGHT, I SEE WHAT YOU, BECAUSE IT ADDS UP.
WE HAVE SEVERAL MILLIONS OF DOLLARS A YEAR.
THOSE ARE THE ONES THAT OCTOBER 1ST, IT'S LIKE AFTER THE, THE CLOCK TICKS MIDNIGHT.
IT'S LIKE THEY'RE ON THE COMPUTER ORDERING VERY, VERY EXPENSIVE PIECES OF EQUIPMENT.
SOME OF OUR, SOME OF OUR EQUIPMENT, SOME OF OUR VEHICLES TAKE SIX TO 12 MONTHS.
SO THEY, YEAH, THEY ORDER RIGHT AWAY.
BUT SOMETIMES YOU HAVE TO FRONT THAT MONEY AND WE DON'T START SEEING PROPERTY TAX UNTIL JANUARY.
SO AN IDEA REVENUE WILL COME IN IN, IN LATE DECEMBER.
WHAT ELSE DO WE HAVE ON ON THAT? WE GOT THE INVESTMENT NEXT.
WELL BEFORE I GET INTO THE, THE PORTFOLIO, I THOUGHT GIVEN WHERE THE ECONOMY IS RIGHT NOW, WE PROBABLY WANNA TALK A LITTLE BIT JUST TO KIND OF KIND OF PREFACE SOME, THE REMARKS ABOUT WHAT WE HAVE GOING FORWARD AND WHAT WE'RE LOOKING AT.
UM, AS YOU GUYS KNOW, THE FEDERAL FUNDS RATE, UM, IN MARCH WENT FROM 1.25% DOWN TO BETWEEN ZERO AND TWO 5%.
UM, UNEMPLOYMENT RATE IN, IN MARCH WENT FROM 4.4% TO 14.74.
UM, THESE ARE THE KIND OF THINGS THAT ARE AFFECTING THE MARKETS AFFECT WHAT WE DO.
UM, THE FEDERAL FUND PROGRAMS THAT ARE IN PLACE RIGHT NOW ARE TO $2.3 TRILLION.
UM, THESE ARE THINGS THAT ARE SUPPORTING ALL ASPECTS OF THE ECONOMY, NOT COUNTING WHAT THE US TREASURY IS DOING ON ITS SIDE OF IT.
YOU KNOW, YOU'VE HEARD OF THE FED DOING THEIR PART AND THEN CONGRESS HAD TO COME BACK AND DO THEIR PART ONE, ONE IS STIMULUS AND WHICH COMES OUT OF THE GOVERNMENT.
AND ANOTHER ONE IS MONETARY POLICY, WHICH COMES OUT THE FEDERAL RESERVE.
AND SO THEY'RE BASICALLY THROWING A TON OF PUTTING INTO THIS MARKET AND IT'S HAVING AN EFFECT ON, ON WHAT WE SEE.
UM, UM, AND THEN OF COURSE THERE'S THE OIL ISSUE, WHICH OBVIOUSLY AFFECTS US HERE LOCALLY.
UH, THE 52 WEEK HIGH ON THE, UM, ON THE WTI CRUDE WAS RIGHT AT $65, 65 CENTS A BARREL.
AND THE MAY CONTRACT AT ONE POINT HAD HIT NEGATIVE $40 AND 32 CENTS FOR GOING UP AND SETTLING ON THE MAY CONTRACT ABOUT $9 AND SO ON.
I'M SURE Y'ALL ARE PROBABLY VERY AWARE OF THAT.
AND OF COURSE WITH HOW THAT AFFECTS OUR LOCAL ECONOMY AS WELL.
SO JUST GOT A LITTLE BIT OF A PREFACE THERE OF WHAT WE'RE LOOKING AT.
BUT OUR PORTFOLIO RIGHT NOW, UM, WE'RE IN GOOD SHAPE.
UM, WE HAVE, WE BOUGHT INTO NEXT YEAR AS FAR AS WE COULD GO.
UM, OUR PORTFOLIO IS SHORT AS RIGHT NOW.
UM, A LOT BECAUSE, UH, ANYBODY WHO'S, WHO'S LOOKING AT, UH, PORTFOLIO MANAGEMENT IS ALSO TELLING YOU THE CASH JUST CAME RIGHT NOW.
UM, THERE WAS A MAD RUSH INTO THE MONEY MARKET FUNDS, UH, IN THE MARKETS AND PEOPLE JUST WENT EMPTIED THOSE MONEY MARKET FUNDS OUT 'CAUSE THEY WEREN'T SURE WHAT WAS GONNA HAPPEN.
THAT'S WHY WHEN THE FEDERAL RESERVE RUSHED IN AND SHORED UP THOSE MONEY MARKET FUNDS WITH SOME OF THEIR, WITH SOME OF THE PROGRAMS THAT THEY HAVE AND BROUGHT A LITTLE MORE LIQUIDITY BACK TO THE MARKET.
THIS THIS IS NOT A CREDIT ISSUE, THIS IS A LIQUIDITY ISSUE.
AND IF, AND RIGHT NOW THE, THE, THE GOVERNMENT IS BUYING TIME FOR US TO TRY TO COME OUT TO COME BACK AND GET THE ECONOMY TO COME BACK OUT BEFORE WE START SEEING HOME FORECLOSURES BECAUSE OF THE UNEMPLOYMENT RATE BEFORE WE START SEEING THE SALES TAX NUMBERS STAYING DOWN FOR PROLONGED PERIODS OF TIME.
SO THESE ARE THE THINGS THAT WE'RE LOOKING AT.
BUT AGAIN, TAKING IT BACK TO OUR PORTFOLIO, UM, AGAIN, WE REMAIN WELL DIVERSIFIED.
UM, WE ARE HOLDING, UH, MOST OF WHAT, MOST OF WHAT WE INVEST IN, AND WE'VE TALKED ABOUT THIS BEFORE, SO I'M TRYING TO BO YOU WITH THIS.
BUT WHAT WE DO WITH THE PORTFOLIO IS WE INVEST TO MEET SPECIFIC LIABILITIES, INVEST TO MEET PAYROLL.
WE INVEST TO MEET TMR AS WE INVEST TO MEET DEBT SERVICE.
SO THESE ARE THE THINGS THAT ARE LITERALLY GOING TO, ONCE THEY MATURE, WE ALREADY HAVE A USE FOR THE MONEY, IT GETS PAID OUT.
BUT WE DO KEEP, WE DO KEEP A CUSHING BACK THERE.
UM, USUALLY IT'S FOR THINGS LIKE HURRICANES, UM, NOW IT'S GONNA BE FOR SOMETHING DIFFERENT.
UM, SO, BUT WE'RE UTILIZING THAT.
UM, THE, UH, THE YIELD ON, UM, OUR BENCHMARK, WHICH IS A 90 DAY TREASURY BILL, UM, IS NOW, UM, SIX BASIS POINTS.
BUT OUR PORTFOLIO IS YIELDING, UM, ONE POINT, UM, PROBABLY 1.17%, UM, AT THE END OF NEW OF MARCH.
SO, UM, I'LL TELL RIGHT NOW THOSE NUMBERS ARE GONNA COME DOWN BECAUSE YOU CAN'T, IT'S NOT, IT'S NOT ROLLING DOWN IT, IT'S JUST, THAT'S JUST, THAT'S JUST THE NATURE OF WHERE WE'RE AT.
BUT FOR RIGHT NOW, THE STUFF THAT WE HAVE INTO THIS YEAR, WE'RE FULLY INVESTED IN THIS YEAR, INVESTED INTO NEXT YEAR.
UH, RIGHT NOW THE, THE SAFE MONEY IS IN, UH, IN POOLS THAT ARE, THAT ARE COVERED WITH US TREASURIES, UH, REPO, UM, UH, US GOVERNMENT AGENCY DEBT, FANNIE MAE,
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FREDDIE MAC, YOU KNOW, PEOPLE LIKE THAT.UH, THE GOVERNMENT IS BACKING THEM.
UH, THE GOVERNMENT'S ALSO BACKING CERTAIN TYPES OF PAPER.
UM, THEY'RE BACKING COMMERCIAL PAPER, THEY'RE BACKING, I'M TRYING TO BACK, UM, UH, ETFS AND IN OTHER, IN OTHER TYPES OF, OF, OF HIGH YIELD DEBT.
OBVIOUSLY WE DON'T INVEST IN THOSE, BUT, UM, RIGHT NOW WE'RE, UM, WE'RE, WE'RE, WE'RE IN A GOOD POSITION.
UM, EVERYTHING THAT WE OWN IS, IS PAYING IN FULL.
SO WE'RE, WE'RE CONTINUING TO GO WITH THAT.
WE'RE WATCHING THIS VERY, VERY CLOSELY.
UM, I WATCH THE RATINGS ON ALL OF THE ITEMS THAT WE OWN AND IF IT LOOKS LIKE THERE'S A SNEE PROBLEM, WE'RE LOOK AT THIS UP.
SO THAT'S, UH, THAT'S PRETTY MUCH WHAT I HAVE RIGHT THERE.
QUESTION IT, IT'S PAYING OFF BECAUSE THIS HAS BEEN ONE OF MY COMPLAINTS.
YOU KNOW, YOU AND I HAVE TALKED ABOUT THIS HIGHER RISK AND HIGHER YIELD.
GOOD THING YOU DIDN'T LISTEN TO ME
NO, BUT, BUT YOUR POINT IS, WELL, I'LL TELL YOU.
AND, AND, AND, AND I THINK PART OF WHAT WE'RE REALLY LOOKING AT IS THE NOTION THAT THERE IS, THERE IS A TRADE OFF.
BUT I WILL TELL YOU, EVEN ON THE SAFEST OF ASSETS, THE GOVERNMENT HAD TO RUN IN AND BACKSTOP ALL IT.
'CAUSE DURING, DURING MARCH IN APRIL, I MEAN, I MEAN, YOU COULDN'T TURN ON THE TV NEWS WITHOUT SEEING WHERE PEOPLE WERE RUNNING IN IT AND GETTING, WELL, IT WAS, IT WAS A FIRE SALE AND THE GOVERNMENT KIND OF SAID, HEY, WAIT A MINUTE.
YOU KNOW, WE, THIS HAS TO WORK.
YOU CAN'T COME IN HERE AND START EMPTYING EVERYTHING OUT.
SO THEY SAID, LOOK, WE'RE GONNA BACKSTOP THIS.
WE'RE GONNA SAY, HEY LOOK, WE'RE GONNA BACKSTOP.
UM, EVEN THE SAFEST ASSETS OTHER THAN THE US TREASURY, WHICH THE US GOVERNMENT FULLY BACKED, EVEN THE AGENCY PAPER, THEY SAID, LOOK, WE'RE GONNA BACKSTOP THIS, THE MORTGAGE, WHAT CALL MBS MORTGAGE BACKED SECURITIES, THEY'RE GONNA COME BACK.
THEY SAID, NOW WE HAVEN'T SEEN ANYTHING LIKE THIS SINCE 2008.
AND I DON'T REMEMBER 2008, I DON'T REMEMBER IT WELL, AND THAT WAS, THAT WAS SCARY.
THE GOOD THING THAT THEY DID THIS TIME WAS THEY HAD THESE PROGRAMS ALREADY IN PLAY.
I MEAN THEY, THEY, THEY'VE DONE THIS BEFORE AND SO THEY KNEW WHAT WAS HAPPENING AND THEY PUSHED IN WITH BILLIONS OF DOLLARS RIGHT AWAY.
AND IT HAS REALLY BEEN ABLE TO KIND OF KEEP US FROM KIND OF FALLING OFF THAT CLIFF.
UM, BUT LIKE I SAID, AS FAR AS OUR PORTFOLIO GOES, I MEAN WE'RE, WE'RE IN GOOD SHAPE.
THERE'S, THERE'S, THERE'S NOT A NAME ON HERE THAT I HAVE ISSUES WITH.
AND AGAIN, WE WATCH THIS STUFF VERY CLOSELY AND WE DO STAY SHORT.
AND THIS IS BECAUSE IT'S KIND OF WHY, I MEAN, OBVIOUSLY NO ONE SAW THIS COMING.
NO ONE SAW PANDEMIC COMING FIVE MONTHS AGO.
BUT THIS IS WHY YOU DO THINGS LIKE STAY SHORTNESS IS WHY YOU DO STAY IN GOOD NAMES.
THIS IS WHY YOU CONCENTRATE THAT JUST TO MAKE SURE THAT IT DOESN'T HAPPEN.
AND WE WILL GO DOWN IN OUR YIELD.
IT'S PART OF, IT'S PART OF, YOU CAN'T GO, YOU CAN'T INVEST IN OUR MARKET.
THAT'S, THAT'S, THAT'S NOT, THAT HASN'T TAKEN YET HERE, BUT WE'RE GONNA GO, WE'RE GONNA GO DOWN SLOWLY AND HOPEFULLY AS THESE RATES STABILIZE, WE'LL BE ABLE TO COME DOWN INTO THE MARKET AND BE BETTER WITH, WITH A VERY CAREFUL ESTIMATE.
WERE, WERE YOU ON THE LAST CALL ON THE BOND? I WAS CALL, WHAT, WHAT, WHAT KIND OF WAS THE NEWS THERE FROM, FROM THAT CALL WITH THE, ARE YOU TALKING ABOUT THE, THE ONE THAT CITY PUTS ON THE ONE THE CITY PUTS ON? YEAH, I WAS, I WASN'T A PART OF IT.
UM, THEY WERE MOSTLY TALKING ABOUT, UH, A LOT OF WHAT THEY WERE TALKING ABOUT THE MUNICIPAL BOND INDEXES.
UM, I WOULD SAY RIGHT NOW THE MUNICIPAL BOND INDEXES RIGHT NOW ARE, ARE, UM, THEY'RE A LITTLE BIT OF A TOSS UP.
UM, WHAT'S IN HAPPENING RIGHT NOW IS THE, UM, THE RATINGS ON A LOT OF THIS PAPER.
UM, IT VERY, EVEN VERY HIGH RATED PAPER, LIKE AA RATED CITIES WE'RE A DOUBLE A RATED CITY.
UM, BUT PEOPLE WERE RUSHING TO TAKING THAT MONEY BACK, TAKING THOSE, UH, THE SECURITIES AGAIN.
THEY RAN IN AND THEY SOLD THEM.
AND IN ORDER TO SELL THOSE THINGS, THEY HAD TO PRICE THEM VERY CHEAP.
AND, UH, AND I MEAN, LITERALLY YOU WERE SEEING YIELDS ON PAPERWORK THAT YOU HAVEN'T SEEN IN, IN DECADES.
UM, PEOPLE HAVEN'T SEEN THE THING SINCE.
I MEAN, I DON'T KNOW IF YOU GUYS REMEMBER WHEN YOU, UH, DID A MORTGAGE ON YOUR HOUSE AND IT WAS 17, 18% WE MOVE.
YOU KNOW, UM, THESE ARE THE KIND OF, OF OF WEIRD WILD THINGS THAT WE HAVEN'T SEEN IN A LONG TIME.
UM, RIGHT NOW THE RATING AGENCIES ARE WATCHING MUNICIPALITIES VERY CLOSELY.
UM, REASON BEING IS THAT, UM, ESPECIALLY IF YOU ARE, UM, IF YOU'RE A SALES TAX STATE OR SALES TAX MAJORITY, SALES TAX FUND, MUNICIPALITY, UM, OR THESE SPECIAL DISTRICTS, UM, LIKE TRANSIT AUTHORITIES, YOU KNOW, NO ONE'S, NO ONE'S RIDING IF NO ONE'S RIDING THE RAILS, IF NO ONE'S ON THE TOLL ROADS, UM, YOU KNOW, THAT HURT, THAT HURTS YOUR ROAD BECAUSE THEY'RE WATCHING IT VERY CLOSELY.
UM, PROPERTY TAX IS SOMETHING THEY'RE GONNA WATCH REALLY CLOSELY.
AND THAT'S ONE OF THE THINGS THAT THEY KIND OF CONCENTRATED ON A LITTLE BIT WAS TO SAY, UM, WITH THE UNEMPLOYMENT NUMBERS WHERE THEY'RE AT, UM, THEY'RE GONNA BE WATCHING THIS BECAUSE, AND REMEMBER BACK IN 2008,
[00:25:01]
2009, YOU KNOW, THERE WERE LOT FORECLOSED HOMES.AND NOW WHILE A LOT OF THAT WILL BE PAID FOR BY THE MORTGAGE BANKS AND THEY'LL BACK THAT, THERE'S ALSO A LOT OF PEOPLE OUT THERE THAT, THAT DON'T NECESSARILY THEIR FUNDS BECAUSE THEY DON'T, THEY, THEY CAN JUST DO THAT.
SO THERE'S GONNA BE SOME OF THAT.
I THINK THE MAJORITY OF IT WILL BE COVERED.
UM, AND THERE'S SOME TALK RIGHT NOW THAT THE GOVERNMENT MAY COME IN AND ASSIST, UM, JUST HURT THAT COMMITTEE STATES YEAH.
RIGHT NOW WITH, UH, BASICALLY WITH THEIR DEBT.
UM, BECAUSE IF THE MUNICIPAL BOND MARKET FALL THAT THE GOVERNMENT CAN'T LET THE MUNICIPAL BOND FALL, IT, IT CAN'T, IT JUST LIKE THE MORTGAGE MARKET, IT CAN'T LET IT FALL DOWN.
DOES THAT HAVE AN INFLUENCE ON OUR PROJECT? IT IT DOES.
IT HAS A, HAS AN INFLUENCE BECAUSE OUR PROJECT, OUR HOTEL, THAT PROJECT IS REVENUE FUNDED.
RIGHT NOW HBS HAS GONE BACK AND LOOKING AT, UM, AT, AT, AT REVISING THAT, THAT STUDY.
UM, THEY'RE SAYING, WHAT ARE YOU GONNA BE ABLE TO GENERATE AS FAR AS YOUR REAL CASH? BECAUSE THAT'S WHAT WE'RE, THAT'S WHAT WE'RE BACKING THESE BONDS WITH.
WE'RE BACKING THESE BONDS WITH, WITH THE HOTEL REVENUES AND, AND ALSO, UH, TO SOME EXTENT HOTEL
SO WHERE'S THE HOTEL INDUSTRY GONNA BE TWO YEARS FROM NOW WHEN THEY GET THIS THING BUILT? WOW.
YOU KNOW WHAT, IF YOU HAVE THE ANSWER TO THAT, I WOULD BE SURE LOVE TO KNOW IT.
'CAUSE IT, IT'S GONNA BE HARD.
UM, I READ AN ARTICLE THE OTHER DAY OUT OF BLOOMBERG THAT MAJOR FLAGS, UM, UM, YOU KNOW, MARRIOTT, UM, RIGHT NOW THE, THE RATING AGENCIES ARE LOOKING AT THEM.
THEY'RE, THEY'RE RESTRUCTURING THEIR DEBT.
UM, AND IT'S BECAUSE YOU WERE AT 60, 70, 80% OCCUPANCY AND NOW YOU'RE DOWN TO 20, 30% OCCUPANCY OR LESS AND SOME, SO IT'S HARD TO DO IT.
THE RESORTS, THE CRUISE LINES, THE AIRLINES, YOU KNOW, THESE ARE, THESE ARE ALL PEOPLE THAT ARE SUFFERING AS A RESULT OF THAT.
SO, AND THEY ALL RELATE TO WHAT WE DO WITH THE HOTEL NOW.
IT'S GONNA BE A LITTLE BIT BETTER FOR US IN THAT WE'RE PROBABLY GONNA BE MORE BUSINESS CENTRIC AT THE HOTEL.
AND THEN AS, AND AS THINGS COME BACK AND THE SAME TO THE PLANTS, UM, YOU KNOW, I'M SURE YOUR, YOUR COMPANIES PROBABLY SEND PEOPLE INTO TOWN TO, TO GET SOME TRAINING AND THINGS LIKE THAT.
THOSE ARE THE KIND OF THINGS THAT ARE GONNA COME BACK TO US.
AND SO THEY FELT LIKE ON, ON, ON THE BLONDE SIDE AT LEAST.
UM, THE MARKETS RIGHT NOW, THEY DON'T REALLY HAVE A TASTE FOR.
UM, I'M GONNA CALL HIGH YIELD BONDS, WHICH ARE, WHICH ARE SUB INVESTMENT GRADE, WHICH A PORTION OF OUR, OF THE PRICING STRUCTURE THAT WE HAVE IN A HOTEL IS SET UP THAT WAY.
SO THE BOND MARKET REALLY DOESN'T HAVE A TASTE FOR THAT RIGHT NOW.
AND YOU'RE TOO, YOU COULD STILL DO IT, YOU CAN GO TO MARKET, BUT YOU'RE GONNA PAY AN AWFUL LOT OF MONEY TO DO IT.
AND SO STAYING WITHIN THE CONFINES OF OUR BUDGET ON OUR, ON OUR, ON OUR, ON OUR, UM, ON OUR CORRECTLY RATED DEBT, OR I SHOULD SAY I SHOULD SAY, OR UM, DOUBLE A DEBT, TRIPLE B DEBT, UM, THERE'S STILL, THERE'S STILL MARKET OUT FOR THAT DO THAT.
BUT RIGHT NOW, UM, THEY REALLY WANT TO SEE THINGS BACKED BY PROPERTY TAX.
IT'S, IT'S JUST A MORE SECURE, UM, IT'S JUST A MORE SECURE SET OF, AND THAT'S THAT REALLY THE, THE GIST OF WHAT THEY WERE SAYING.
UM, IT'S JUST, IT'S A WILD RIDE.
WE THINK THOUGH THE COMPLETION OF THE HVS STUDY THAT WE'RE PROBABLY READY TO MOVE INTO THAT MARKET AND TRY TO SELL THESE BARS AT TIMES.
UH, YES, IT'S GONNA COST MORE THAN IT WAS GOING TO BEFORE, BUT THERE WILL BE BUYERS IN FACT C SAID, YEAH, I COULD SELL, I COULD SELL THEM.
NOW THEY SAY THERE WAS, THIS WASN'T THE CASE BEFORE, BUT YEAH, I COULD SELL THAT TOMORROW.
IT'S JUST YOU'RE GONNA PAY FOUR.
I THINK WE'RE CAN SEE A, A BIG REBOUND ON THIS.
I I CAN GIVE YOU SOME INFORMATION AFTER GO.
THIS IS BOB THI THIS WHOLE UH, THING IS REALLY UH, VERY COMPLEX, BUT IT IS VERY SIMPLE AT THE SAME TIME.
AND THAT IS YOU GET SOME THERAPIES AND YOU GET A VACCINE AND THEN PEOPLE WILL GET OVER THEIR ANXIETY, THEIR FEAR.
TODAY THE MARKET CRASHED 450 POINTS.
WHY DID THEY CRASH FOUR 50 POINTS? WELL, WALL STREET JOURNAL SAYS IT'S AT, BLOOMBERG SAYS IT'S BECAUSE THEY'RE UNSURE, THEY'RE NERVOUS ABOUT THE REOPENING OF THE ECONOMY.
IF EVERYBODY WOULD JUST GO GET THAT CHIP, THE GENERAL BILL GATES FORMS EVERYTHING WE FILE, EVERYTHING WOULD BE GREAT.
YOU JUST GOTTA LISTEN TO BILL.
IS THAT IT? THAT'S ALL I HAVE.
ONE OTHER THING TO COVER BEFORE, BEFORE WE LEAVE, UH, FOR THE NEXT MEETING, NOT TO BE COVERED IN THIS MEETING, BUT FOR THE NEXT MEETING, UH, WE WANT TO LOOK AT, I KNOW Y'ALL ARE WORKING ON THE BUDGET AND WHAT WE'RE GONNA FINANCE, BUT WE WANT TO LOOK AT, UH, WHAT WE SAID WE WOULD DO LAST YEAR.
AND THAT'S LOOKING AT, FOR THOSE THAT ARE 65 AND OLDER TAX EXEMPTION, GIVE US SOME KIND OF REPORT ON HOW THIS'S GONNA AFFECT
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US AT 10,000 K INCREMENTS.SO WHAT 50,000 EXEMPTION WE DO RIGHT NOW? UM, 50,000 IS LOOKING AT INCREASING THAT, UH, GIVE US SOME INCREMENTS.
I'LL BE HAPPY TO WHY WE SEND IT TO YOU, THEN WE CAN DISCUSS IT, SEND IT TO US SO WE CAN DISCUSS IT.
WHEN, WHEN ARE Y'ALL GOING TO SEND THAT BUDGET OVER TO US? UH, COUNCIL? NOT TO YOUR CITY.
UH, SO RICK WILL PRESENT TO YOU ON JULY 9TH.
SO WE WON'T HAVE ANOTHER FINANCE MEETING BEFORE THEN.
SO IT WOULD BE THE TUESDAY YES.
IF YOU DID BEFORE THAT, WE WOULD'VE A MEETING.
SO IF WE CAN HAVE SOMETHING PREPARED OR SEND IT TO US, SO, AND THEN HAVE IT ON THE AGENDA SO WE CAN TALK ABOUT IT ON THE I'M SORRY.
IT'S THE MEETING AFTER THE, BECAUSE IT'S OUR SECOND MEETING OF THE MONTH.
WE CAN WAIT BEFORE IF YOU WANT.
WHY DON'T WE HAVE A SPECIAL MEETING? PERFECT.
I WAS GONNA OFFER THAT SO THAT WOULD BE EVEN BETTER SO WE CAN DISCUSS IT.
BECAUSE CAN WE ARRANGE FOR ONE? YEAH.
THEN, AND THE THING IS, UH, TALKING ABOUT BOB, AND I'VE TALKED TO HEATHER, I'VE TALKED TO, UH, TO CHARLES AS WELL.
UM, I THINK THE COUNCIL'S VERY, VERY AWARE OF THE, THE SITUATION WE'RE MOVING INTO.
IT'S NOT, THEY DON'T HAVE AN APPETITE TO GIVE THE FARM AWAY, BUT WE, WE NEED TO DO SOMETHING INCREMENTAL THAT SIGNALS TO PEOPLE THAT WE CONTINUE TO MARCH IN THAT DIRECTION OF, OF THAT KIND OF RELIEF.
WHAT I'M REALLY GRATEFUL FOR IS WE'RE TALKING ABOUT EXEMPTIONS INSTEAD OF RATE.
UH, 'CAUSE THAT'S, THAT'S WHERE YOU GET YOUR BANK FOR YOUR BUCK.
I, I CONTINUE TO ADVISE YOU TO DO THAT.
UH, AND I THINK YOU'VE GOT A VERY VULNERABLE, UH, PART OF THE POPULATION THAT COULD BENEFIT FROM, FROM THAT.
AND WE'LL, CERTAINLY IT'S NOT SOMETHING THAT WE'VE CONTEMPLATED YET IN THE BUDGET, BUT WE'LL GO BACK AND WELL, LET'S NOT TALK TOO MUCH ABOUT IT SINCE WE DON'T HAVE IT.
WE'RE NOT SUPPOSED IN TROUBLE.
WE'RE TALKING ABOUT THE NEXT DE MERIT AND WE DON'T HAVE A LAWYER, SO THAT'D BE GREAT.
EVERYTHING COVERED ON THE AGENDA, THEREFORE WE STAND ADJOURNED.