Audit and Finance Committee (AFC) Meeting Transcript – 3/26/2025 Title: ATXN-1 (24hr) Channel: 1 - ATXN-1 Recorded On: 3/26/2025 6:00:00AM Original Air Date: 3/26/2025 Transcript Generated by SnapStream ================================== Please note that the following transcript is for reference purposes and does not constitute the official record of actions taken during the meeting. For the official record of actions of the meeting, please refer to the Approved Minutes. [1:31:01 PM] it's 1:31 P.M. On March 26th, and I will call to order the meeting of the audit and finance committee of the Austin city council. We are meeting in the city council chamber chambers, located at city hall, which is 301 west second street in Austin, Texas. And we have a quorum of the committee present. First thing on the agenda that we'll take up will be citizens communication. And I will look for assistance. Diana proctor is here, and Ricardo shabani also. And it's my understanding those are the only two people that have signed up to speak. So if please come forward and tell us what you think. >> Hello. My name is Diana proctor. I have uncovered a pattern of city staff in the parks department choosing to violate the terms of city contracts, specifically the terms that protect the public interest. Having the effect of enriching both the trail conservancy nonprofit and the trail of lights nonprofit for [1:32:02 PM] trail of lights nonprofit for the year ending December 2023, the conservancy reported to the irs a loss of nearly half $1 million. Soon after, in March 2024, the conservancy presented a phase two expansion plan to the parks department, with no additional operations and maintenance responsibilities, the conservancy would, over a two year transition, receive the windfall of all city concession revenue in all four Zones of the park. Today, I asked the city manager to rescind the may 24th, 2024 part approval of phase two for the trail conservancy expansion request. The reserve fund is currently underfunded by $120,000. Violating the contract, I found one error a deficiency in the reserve fund. There may be many other deficiencies. Phase two should not advance until an independent review of the entire Poma is completed. To ensure contract compliance, the environmental commission on February 19th also [1:33:03 PM] commission on February 19th also recommended to council to delay the implementation of phase two of the trail conservancy Poma. I have the contract. The partnership terms, the initial implementation plan, a 2022 email from partnership manager Christine canuel confirms that the final target reserve fund would be at or near $487,000. You will not find that number in the Poma, but you will see her emailed spreadsheet and refer to three separate pages of the Poma to calculate the final target. Reserve fund $470,000. I have an email from this month, March 2025, wherein parks director Aguirre copying Christine. She says that the target reserve fund is $230,000. This is a misunderstanding of the Poma, which is proven by miss June 2022, emailed spreadsheet. The target reserve fund is now less than half of the projected amount required to protect the [1:34:03 PM] amount required to protect the park in the event of unforeseen circumstances, according to the contract. This will injure the financial security of lady bird town lake metropolitan park in perpetuity, as the conservancy's contract is for 25 years, plus options for 25 more. Please recommend that the city auditor perform a full audit of my phase two audit request, and you have received it in your email. Thank you so much. >> Thank you very much. >> Ricardo shabani. >> Good afternoon. Thank you for allowing me to speak to you here today about some awesome responsibilities that you have as our primary fiduciaries here at the city of Austin, especially our $5 billion proposed budget. That will be in in review here shortly. I want to speak to you a little bit [1:35:06 PM] to speak to you a little bit about why I'm here. It's kind of odd that I'm actually here for the first time. Mayor and councilman, and my background is analyzing forensic accounting. I served in the Obama administration. I served on the Clinton administration as a role in reviewing financial statements of big banks and the effects that they have on during the financial crisis of oh eight, during the Obama administration. I retired from all of that, but I still have a hobby of reviewing financial statements deeply. And so I took I've taken the opportunity to speak to you here before in regards to the financial reviews of some non-profits. I understand as a general consensus the city is looking for additional alternative financing programs to fund our non-profits, and while it is a great opportunity to be able to do it, it has to be done right. And as the old saying says, the buck stops here with the city council in determining which [1:36:06 PM] council in determining which nonprofits are or should be eligible to be partnered with the city, looking at the financials specifically in regards to one in particular, which has a an awesome responsibility of maintaining our parks, and that is the trails conservancy. So I dived into their financials, including their tax returns, information from the state comptroller's office, the department of comptroller accounts, and a number of other irs documents. I want to bring to your attention, specifically one, as you go forward with becoming partner or entering into partnerships with these nonprofits, one in particular caught my eye, and I've been able to study it now for about a year. In their own reporting of their 1990s, the trails conservancy reported a $500,500,000 loss, half a half $1 million. And while they may be trying to seek additional funding through nonprofit, through foundations and through [1:37:06 PM] through foundations and through some fundraising, through the concessions, I want to bring to your attention that a deeper look into this is that they're moving. And this is my study, and I would encourage the audit committee to look into deeply, and that is that they're moving money from restricted monies to unrestricted funds, including city money, including our taxpayer money. And so in that, I've completed a forensic accounting report on how those monies are being moved from one account to another so that they can sustain themselves. Leveraging is a highly useful tool if it's done right. We feel that because of the timing and all of the chaos that's going on in this organization, we ask for your consideration to look into it a little bit deeper. We have made this information available already. If you if you allow me for 15 more seconds. >> I'm your time is up. Would you state your name? For the record. >> My name is Ricardo cabana and I'm a citizen here in Austin. >> Great. Thank you very much. I appreciate you being here. >> Thank you. >> Members that will take us to item number one on the agenda, which is the approval of the minutes of the audit and finance [1:38:08 PM] minutes of the audit and finance committee meeting of February 19th, 2025 and the special called meeting of March 4th, 2025. Mayor pro tem Fuentes moves approval of the minutes is seconded by council member vela. Any discussion? Without objection, the minutes are approved with council member Ryan alter off the dais. Well, he told me he was going to be on an airplane. Looks like he is. I think he is. If I if I were you, I wouldn't occupy the bathroom the whole flight. Thank you. Did you vote? All right. He voted yes. So we. The minutes are approved. Without objection. Thank you. And thank you, council member, for being on virtually. That will take us to item number two which is the audit of water main maintenance and repair. And I will turn to our professional staff to kick us off and tell us what to think. And if I might say something, [1:39:20 PM] And if I might say something, members we don't. I normally don't do this, but I want to do this before this one only because I've had recently some people who, let's say I was disagreeing with about, oh, legislation or something, and they want to point out that some of the things that we might be doing, we don't need to do, if what we would do is repair our water mains or do a better job of maintenance on our water mains. So this comes this is a very timely audit presentation. And I know that there there are some facts in this that came out of this audit that might be helpful in any discussion about how the city of Austin is doing with regard to water main maintenance. So I just want to I want to highlight and underline it. So sorry for interrupting you. Please go ahead. >> No worries. Good afternoon everybody. My name is Sam sokolow, and I'm here with the [1:40:21 PM] sokolow, and I'm here with the office of the city auditor to present on an audit that our office recently conducted that I was the auditor in charge for on water main maintenance and replacement. The objective of this audit was, is the city identifying and addressing issues with its water mains effectively, and taking appropriate measures to minimize resulting disruptions. Before delving into what we learned in the audit, I think it will be helpful to provide a very high level and simplified overview of the water distribution process and how water mains fit in. So first, Austin water pumps its water from the Colorado river and treats it at its water treatment plant so that it's safe to drink. From there, treated water is transported via larger diameter pipes known as transmission mains, which feed into smaller diameter pipes known as distribution mains. Distribution mains connect to smaller pipes known as service lines, which stop at the water meters and connect to the pipes that ultimately deliver deliver water to customers at residences, businesses and other settings. Overall, there are roughly 4000 miles of water mains located underground in [1:41:22 PM] mains located underground in Austin water's purview, and as shown here, transmission and distribution mains were the focus of the audit. So this image here shows a water main break that happened in northwest Austin in September, as a result of a contractor accidentally striking a large diameter water main. As we can see from this image, water main breaks can cause a considerable amount of water loss and repairing them can contribute to disruptions. For example, repairs typically take several hours to complete, but in more rare and cumbersome cases they may take multiple days. They may also require the utility to temporarily close off a road to traffic, and to excavate a surface in order to access the main and repair it. It's also possible that repairs may warrant temporary water outages, so while instances like the one that I described in the last slide are rare, they do happen. It's also important to flag that the city has been losing increasing amounts of water over time. However, we did find that Austin water has been [1:42:22 PM] find that Austin water has been taking positive steps to identify and address issues with its water mains and to minimize resulting disruptions from them. For example, Austin water's water main failure rate has been generally decreasing over time, and the failure rate is below that of both industry average and optimized benchmarks. >> So I'm sorry to say that again. >> Yes. So the city's water main failure rate that has been generally decreasing over time. And the main failure rate, it's below that of both industry average and optimized benchmarks. Staff reported that a big driver in the decline in this rate was the renewing Austin program, which is the city's small diameter pipe replacement program. In addition, Austin water conducts and contracts out leak detection and condition assessment work, which helps the utility detect locations where water is already leaking, as well as pipes that may be at risk of breaking in the future. Austin water repair crews have also been approximately hitting their timeliness goals in terms of responding to their most urgently prioritized leak repairs. The utility also [1:43:24 PM] repairs. The utility also conducts active emergency monitoring, which helps them stay prepared to respond to particularly severe leaks as necessary. Austin water communicates with and supports customers dealing with water main breaks through mediums and resources, such as their customer portal, and providing customers with bottled water. Lastly, Austin water partners with the transportation public works department to facilitate permitting for road closures and to restore road quality following repairs that require pipes to be excavated. So, as I touched on in the last couple of slides, leak detection, condition assessment, and pipe replacement are key ways in which the utility identifies and addresses issues with their water mains. However, we found that Austin water has not formally and fully documented procedures related to planning and prioritizing large diameter leak detection and condition assessment projects and small diameter pipe replacement projects. It's important for utilities to document policies and procedures for key activities such as these to ensure reliable operation, ensure reliable operations, [1:44:26 PM] ensure reliable operations, foster continuous improvement, and maintain institutional knowledge. Accordingly, our recommendation to Austin water in this audit was for them to formally and fully document policies and procedures in these areas. We think that doing this will help ensure that the utility consistently focuses on their most at risk pipes. In these efforts. As a reminder, our audit focus specifically on water mains. But we did learn a bit about service lines in our work. For instance, Austin water has roughly 250,000 service line connections in the water distribution system. More importantly, however, we learned that unlike water mains, the failure rate for service lines is above average. In addition, we also learned that service lines that have broken more than once are much more likely to break again, and that there have been several instances in which Austin repair crews have gone back to the same customer to repair the same line over ten times. >> And describe again service lines so that people will know what you're talking about. >> Sure. I'll go back to the slide earlier. So distribution [1:45:27 PM] slide earlier. So distribution mains feed into service lines and then the service line connects to the water meter which connects to the pipe that actually delivers the water to people at homes, businesses and other places. >> I just want to get everybody to keep that in mind. >> Yeah. So going back to the issue of service lines, staff reported that a big driver of these issues is the presence of many pipes made out of a since discontinued material known as polybutylene, which is much more prone to breaking in comparison to the pipes made out of other materials. We have learned, though, that staff have been working to replace polybutylene service lines from the distribution system. Furthermore, service lines do present a challenge to Austin water, but we have learned that the utility has been taking steps to better assess and ultimately address this issue going forward. I'd like to thank Austin water for all their support and collaboration throughout the course of the audit, as well as all the fantastic work that they do in these areas and beyond. That's the end of my presentation. I'd [1:46:27 PM] the end of my presentation. I'd be happy to answer any questions. >> Members. Do you have any questions? Councilmember. I know when we talked. Excuse me the other day. First, thank you for your your work on this in the presentation. I know when we talked the other day, I had asked about what the optimized benchmarks mean, which you've referred to again, can you share what that means? >> Yes. So I'll go. I don't have the slide up again, but like basically the optimized value is based on academic research of American water works association. So the researchers who looked at that data determined that the 15 number represents an optimized water main failure rate. >> Okay. Next question. I noticed you had the photo of the break in northwest Austin, which is down the street from where I live, and the spice mobility project. How much of these these how much of the failures that you're seeing and the failure rate is connected to actually like active projects the city or other entities are doing in the. [1:47:29 PM] other entities are doing in the. Yeah, across the board as far as any bond or mobility or other upgrades the city is doing across the board, or they just aging pipes or some other factor that's going on. >> Yeah, I'd have to refer back to like, my notes for specific numbers on how often that happens. But from what I remember from the data that we reviewed in conversations with staff, it happens about 30 times a year where a contractor may accidentally strike a pipe, but usually it's not pipes that are like that large. As much of the breaks that we saw consisted of pipes of smaller diameters. >> Okay. And you mentioned that a lot of the breaks were happening at these two inch service lines. So I'm assuming that's not part of the universe of pipes that are breaking or accidentally getting broken during projects. >> It would be my understanding that that does happen for service lines, but that's not something that we specifically looked at. >> Do you know for the two inch lines, are they going to cause that in your chart? They [1:48:29 PM] that in your chart? They mentioned they connect to customer pipes. Do you know how that works for multi-family units? Does a two inch line directly go into a building. And then at that point that it's in the building, the individual pipes take over for customers? >> I'm not entirely sure about the technicalities of that, so I'd have to defer to Austin water on that specifically. >> Okay, I'd be curious to know what how that works for multifamily properties. If there's a way to get that information from you or Austin water at some point. >> Nodding their heads. >> Okay, that's all I've got. Thank you so much. >> Thank you. Any other questions? We appreciate the report. Thank you very much. Thank you. Members that will take us to item number three, which is the audit of extreme heat preparedness. Welcome. Thank you. [1:49:33 PM] Welcome. Thank you. >> Good afternoon. My name is Kendall byers and I was a team member on this project. Today I'll be presenting the results of our extreme heat preparedness audit. The objective for this audit was to determine if the city is adequately planning for extreme heat related risks on the city's infrastructure. Extreme heat poses a growing threat to people and infrastructure in cities around the world, including Austin. He is the number one weather related cause of death in the United States, and he impacts are projected to increase as temperatures rise. A 2024 study by the university of Texas projected that Austin's future climate will become even hotter and more extreme. We used a tool developed by the national oceanic and atmospheric administration, also known as noaa, to examine how the city is working to strengthen the heat resilience of its physical and natural infrastructure. We found [1:50:33 PM] natural infrastructure. We found that the city has developed a variety of goals, strategies and plans to help prepare for extreme heat. However, challenges evaluating progress, funding key activities and coordinating across departments impact the city's success. The city has developed several guiding documents and plans that include goals and strategies for heat resilience. The 2024 heat resilience playbook is the most direct plan for addressing extreme heat, but other citywide and departmental climate focused plans have components that help build heat resilience. We looked at how the city was moving forward on specific goals, like increasing the tree canopy, improving access to parks, and increasing energy efficiency. We saw that the city is making progress towards these goals. For example, one of the city's goals is to increase the tree canopy to at least 50% by 2050 based on results from the last assessment of the city's tree canopy done in 2022. The city's canopy cover was at 41%, and city staff noted they are nearing the 50% goal by 2050. However, we identified some [1:51:34 PM] However, we identified some challenges that may impact the city's ability to fully address extreme heat related risks. These challenges are centered around three main areas, which are evaluating progress, coordination, and funding. First, we found that existing plans often lack concrete implementation steps, measurable targets, and mechanisms for effective monitoring and evaluation. For example, the city's heat resilience playbook identifies various strategies to mitigate and adapt to the impacts of extreme heat. However, this playbook is aspirational. It doesn't have measurable targets or timelines for the identified strategies. Without clear, measurable targets and timelines, the city may not be able to effectively monitor or evaluate its extreme heat related efforts. Second, we identified a lack of clear coordination and ownership of heat resilience efforts. Although the city's office of climate action and resilience plays a coordinating role, it lacks the authority to mandate actions or assign clear [1:52:35 PM] actions or assign clear responsibilities. Inadequate coordination may slow progress on achieving identified goals and strategies, and may also make it difficult to coordinate across departments to address challenges timely. Third, we found funding to be a challenge. While some funding exists, it's not always explicitly tied to heat resilience, and it tends to fluctuate. City staff noted a comprehensive tree inventory is needed to gather data about existing trees and tree health, and according to staff, the city has not been able to perform this inventory due to a lack of funding. As such, the city is unable to make informed decisions and plans for managing public trees, which include planting, maintenance and proactive inspections. Without adequate funding, the city may not be able to effectively prepare for extreme heat related risks. These challenges with evaluation, coordination and funding are common among other cities as well. We looked at 11 cities, including Austin, to compare their approaches on extreme heat preparedness. We saw that most cities have specific heat plans or incorporate heat resilience [1:53:35 PM] incorporate heat resilience goals into existing climate plans. Some have dedicated heat offices or heat positions. We also saw that, similar to Austin, these cities are employing a variety of strategies to adapt to mitigate heat, such as increasing shade, implementing green solutions, and using cooling technologies. And like Austin, many are facing similar challenges with evaluation of progress, funding and coordination of heat resilience efforts. The recommendation from this audit is for the director of the office of climate action and resilience to work with the city manager and relevant departments to determine which actions from the heat resilience playbook. The city should prioritize and allocate funds. They should also assign responsibility for making progress on each priority, and link these priorities to measurable targets. We would like to thank the management and staff of the various departments we worked with to complete this work. This includes the office of climate action and resilience, Austin energy, Austin water, parks and recreation, transportation and public works development services, and watershed [1:54:36 PM] services, and watershed protection. This concludes my presentation, and we're happy to answer any questions you may have. >> Thank you. Members. You have questions? Yes, mayor pro tem. >> Thank you. Thank you for the presentation. Certainly, as we approach the summer months, the heat is on is top of mind and protection from it, not only for our residents, but also for city workers. Any assessment or findings related to how the city approaches workforce, environments and safety. >> For this particular audit, we were looking at the long term effects of heat, specifically on city's infrastructure, so we didn't look into the short term impacts of heat on workers. Our office has done some work in the past over more of the short term impacts of heat, such as cooling centers and homelessness assistance. >> Okay. And colleagues, I do want to highlight that we have an item on our agenda for tomorrow for the public hearing on the building codes. As part of our update, will be updating the air conditioning as a as a requirement for landlords and [1:55:38 PM] requirement for landlords and for property owners throughout our city. I think that's another way that we are ensuring the resilience of our community by ensuring that just like we have heat standards, that we also have air conditioning standards in our homes and facilities. Thank you for this presentation. There's a lot to unpack here. And one last question. When did we adopt the playbook, the heat resilience playbook. >> The playbook came out the summer of 2024. >> Okay. Thank you. >> The question. Yes. Councilmember duchen. >> So you mentioned you looked at 11, I assume, peer cities of various kinds. Who do you think was doing a great job in this space? >> All of these cities were identified as best practice cities. And one thing to keep in consideration is each city has their own unique microclimate, so they may be doing well in one area, but it might not translate well to over into Austin. Some cities that stood out with that have really comprehensive plans [1:56:39 PM] have really comprehensive plans was Phoenix and Miami. >> Was there anything specific otherwise in terms of programs? I mean, you mentioned the three sort of buckets of coordination, evaluation and funding, but anything any specific strategies you think you could apply from those cities that you that were apparently doing this? And I mean, certainly in Phoenix's case, I would assume that Miami's to have challenges with heat in the same capacity we do. >> Most of the cities that we spoke to were having challenges in the same areas. One thing that was different was Phoenix did have a different authority structure when it came to heat. They do have a dedicated heat office that covers all heat resilience efforts. >> And is that kind of a core recommendation? Because centralization was a was something that you brought up in a recommendation. Is that something you would advise for the city? >> Or would you like to take this just one moment? >> My name is Henry katumwa, and [1:57:40 PM] >> My name is Henry katumwa, and I was the auditor in charge. I think this is a question that the city should discuss, I think. If management can't, can't come and address that. But I think this is a city that is something that the city needs to discuss. If they want to take that route, if they have to take the route that we are doing, it will be up to the city. >> Okay, I appreciate that. Thank you so much. >> Councilmember vela. And appreciate. >> The presentation. >> And the thoughts in the comments. I was at a conference where the Phoenix's efforts were highlighted as becoming a heat ready city, and it was really impressive what they were doing and look forward to learning more about that. And again, potentially mimicking whatever has worked in other cities. And I did just want to quickly give a shout out. I mean, the tree canopy has been doing great. And again, Mario was devastating for it, but it has been remarkable [1:58:41 PM] it, but it has been remarkable to see the growth and the maintenance of Austin's beautiful tree scape over the, you know, last 20, 25 years. And I also got to give a shout out to council on the shade and the emphasis on parks in terms of shading. You know, what we do have again, thinking about climate readiness and heat resistance. That shade has been really critical. And I think virtually all the new parks that we're building have that infrastructure built into it. And now we're trying to go back and retrofit all of that. So those are great efforts and good to see them moving forward. Good thought to maybe we do need to kind of consolidate those efforts in office. Good discussions to have as we, you know, think about the budget and process going forward. Thanks. >> Thanks. Councilmember. Thank you very much. Do you have anything you want to add before we call mayor? Question. Oh, I'm sorry, council member alter. And I don't know necessarily for this witness or someone from city staff, but I was hoping to get a little more clarity on one of the recommendations around [1:59:42 PM] of the recommendations around having someone who not only does the coordinating, but is able to really assign tasks and give departments roles, and then the staff response, it mentioned that we're going to have an individual in each department who would be the point of contact, but I wanted to see if part of what staff is also planning on implementing is actually that authority to say, you know, Austin energy or watershed, you are going to be the lead on this particular. >> We lost the last part of your question, but I think we got the gist of it. Do you want to? Does somebody want to respond to that? Are you prepared to do that? >> Perfect. >> Good afternoon. Zach Baumer, the director of the office of climate action and resilience. Yes. In the management response, [2:00:42 PM] Yes. In the management response, we agreed with the recommendation. We are currently working on a project right now with chief of staff, chief of staff to the city manager, who is my boss and myself and a consultant called resilient cities catalyst. We're currently going through all climate resilience related plans and efforts and projects that have been laid out over the course of the last ten years. Looking through those, prioritizing and trying to come up with a very specific, prioritized list of projects and programs we're going to implement and move forward. So the heat resilience playbook is on that list. We're going through the process now of prioritizing actions in that plan. I think the initiative that the council member recalled is we have identified liaisons in all the major departments that are part of this work. And so as we identify, prioritize [2:01:43 PM] so as we identify, prioritize projects that are going to move forward and have funding, there will be a direct connection to an assigned department, a liaison and a director who's responsible for implementing those, those actions. So instead of being an aspirational playbook of things that we could implement, the hope is that we end up with a much more targeted, specific list of actions, projects, programs, things that are funded when they're going to be completed by, etc. >> Good. Thank you. >> Great. >> Thank you, I got you. Good. Okay. Thank you. Anything else on this item? I'm going to look at the city auditor and see if there's anything you want to add before we move to the next item. Okay. Very good. That will take us to item number four, which is an update regarding bills related to finance that are being considered in the Texas 89th legislative session. And. Carrie Rogers. >> Hi. Good afternoon, Carrie [2:02:45 PM] >> Hi. Good afternoon, Carrie Rogers. I'm pleased to serve as your intergovernmental relations officer for the city of Austin. We've got just a few slides here. If you could advance a couple of slides. So this is just a quick picture of where we are in terms of the number of bills that were filed when bill filing closed a couple of weeks back, of these 8900 bills that were filed, about 2400 of those are related to cities. They're either preempting cities or impacting cities in some form or another. So we've been quite busy the last day of legislative session sine die is June 2nd. Next slide please. These are a number of issues that are really impacting cities as a whole. It's not unique to the city of Austin. We have been working with our peer cities through organizations like html and other partner groups on legislation, either advancing some of these issues that would bring additional tools to the city, or fending off some of [2:03:46 PM] city, or fending off some of those preemption efforts. Next slide. As you all know, I think we all know the city of Austin has a pension reform bill that representative Bucy is carrying on behalf of the city, the Austin firefighters retirement fund has gotten a bill filed, carried by two other legislators and legislators. So we're in the process right now of working through those particular amendments or those bills, responding to questions from our legislative delegation, and expect to see a hearing sometime soon. Next slide. Specifically related to financial services for this committee here today, we wanted to highlight a number of bills that have been filed. And specifically, what I wanted to flag is a theme that we are seeing across the legislature, a body that often highlights their efforts to be, you know, fiscal stewards. And so what we have seen are a number of bills that [2:04:46 PM] seen are a number of bills that would restrict our hours and other local governmental entities, restrict our use of certificates of obligation, would restrict our ability to take on additional debt, would add various voter requirements, lowering the voter threshold for issuing geo bonds, CEOs, and anything related to debt restriction. There are a couple of bills you see up here at the top right that would actually cap city's expenditures to whatever their expenditures were last year, going up only by doing some sort of calculation with their population growth. And so I want to make sure. And then lastly, there's a bill up there regarding general fund transfers that is applicable to all cities that would limit the transfer of enterprise funds, such as Austin energy or others for doing a general fund transfer to our general revenue fund. What I will tell you is [2:05:47 PM] fund. What I will tell you is looking at these particular bills and understanding what the environment is overall related to financial impacts to the city and you all know, received the notification last week regarding the status of our federal earmarks out of Washington and the ongoing discussion and work around the executive orders and impacts to our grants. I think what we can expect is additional attention and impact to local government work in the financial realm. And so it's so important that we are, you know, mindful about the actions that we take. I think specifically with the legislature, one of these bills, they've really tried to target those debt restrictions because they were concerned about the kind of projects that cities were doing. And I think we've been able to go back and make a good case that we are using these things responsibly, that [2:06:48 PM] these things responsibly, that we have shorter maturity terms on our CEOs that we're using. But sometimes some of our peer cities take a different route. And so there's a little bit of blowback that may come to their partner cities like us. So we're working together. But just really wanted to emphasize that these are critical bills before the legislature right now. With that, mayor, I'm pleased to take any questions from you or the committee members. >> Members? You have any questions? Thank you. Appreciate it. >> Keep up the good work. >> It's a lot of work. Item number five is the discussion regarding creating a policy, setting the framework for a property tax rate. Elections and Lang if you come forward members, this is something we've all been kind of talking about and thinking our way through. As at least many of us have said, it's premature to indicate that we're going to do something, but it's not premature. It's frankly [2:07:50 PM] it's not premature. It's frankly mature and smart to start the process of asking, how do we address these important issues? And, and the fiscal situation that the city will find itself in this year. And so one of the things that we had asked for was that through this committee, we would have a have our professional staff provide us with some thoughts about a decision tree, if you will, or a framework or whatever the politically correct term for how we would go about thinking our way through this. And so we're pleased that you're here with us today, with this major step. So thank you. >> Thank you mayor. Thank you. Council members. I'm Carrie Lang, the director of the budget and organizational excellence office here in the city. And we're just going to, as the mayor said, talk through some of the considerations when we're thinking about a policy framework for tax rate elections. Next slide please. We will start with a discussion on [2:08:54 PM] will start with a discussion on what do we look at. What's the legal framework around tax rate elections. And as we look at that legal framework we know that the action must be taken to call for and approve a tax rate election at least 78 days prior to the election date. And so we're looking at that November election date as the ongoing election that would determine when we would call for when council would call for that election. In practice, that would mean that we would have that tax rate election finalized during a budget adoption. So if you're looking at this fiscal year, that's August 13th through 15th, and then we're thinking about like thinking through what tax rate elections can fund as part of this framework, it can fund all lawful municipal purposes. So we generally look at this as what the general fund impacts would be in the tax rate election and how we can fund those things. And then just noting, as my colleague just mentioned, there are several legislative draft laws that are out there that we have to [2:09:57 PM] out there that we have to consider because, as alleges in session, that may change some of the conversation on this framework going forward. And so we want to take a step back and think about and have a conversation about the general fund financial outlook. This five year forecast is based on our amended budget. We amended the budget in October of 2024. And when we look at our outlook over the next five years with the current 3.5% property revenue cap, the city is one heavily reliant on what is happening with our sales tax. And so we look at that overall conversation on what our revenue is doing. And when we look at our base cost drivers, you can see through this chart that we are balancing small deficit in the out years with those base cost drivers. And so what this what this shows us is if there's any desire to enhance services or do new services or programs, we don't have a lot of that flexibility with the current revenue structure against our [2:10:58 PM] revenue structure against our current expenditure growth. And then the other thing that we want to talk about is we look at the backdrop is where we are with the funds and the federal dollars from arpa, the American rescue plan act. And we received $188 million in 2021. That was spent that's obligated to spend over five years. And as we look at those funds and how those funds are starting to draw down, the staff has completely encumbered those dollars. As of the December 31st timeline that was required by the federal government and planning to fully expend those dollars through 2026. However, when we look at the services that may be ongoing, based on what we started during the arpa program, we'll be we're still analyzing that, analyzing the potential impact, and we'll be coming forth with a memo in the coming days or weeks to further explain what that looks like and how that will impact the cost drivers, or could impact the cost drivers for the city during our forecast period. [2:12:00 PM] our forecast period. >> Is it okay if I interrupt you there? Yes, sir. Is what you're saying when you say said that and you and I get that you're still doing the analysis and you're going to have a memo, is that memo going to include, for example, money that was spent out of the arpa, money that would be generally considered one time money, but that it was used for something that we like and might be an on might be considered an ongoing expense. >> Correct. >> And will it also include those things that were clearly one time expenditures that say a capital expenditure, say. And I'm just going to use an example whether this but like building to take in $1 million to put into permanent supportive housing. But that one time expenditure then creates some ongoing expense, such as maintenance of the facility, wraparound services for people that are in the facility, that kind of thing. >> Correct. We will show what the full allocation is for the [2:13:01 PM] the full allocation is for the that was originally or the newer allocations for the programs that were funded through arpa, where those programs have ended. So there are several that were one time in nature and project focused, and then those programs that could potentially cause for ongoing funding requests or resources. >> Great. Thank you. Sorry to interrupt. >> So when we're thinking about a tax rate election policy, there are some things that we think we should consider in that in that framework, one is the planning and frequency of the election that we that goes forward. How do we plan and potentially prepare for a tax rate election? What should be included in that? How do we how do we put together packaging that is a comprehensive tax rate election package? And then how do we sustain those investments that we have to make sure that it doesn't allow or force the general fund in an unsustainable place where we can't continue [2:14:03 PM] place where we can't continue those services after that election is potentially approved. So when we look at the planning and frequency recommendations, staff is recommending that we go with a holistic planning cycle, something that's focused on multiyear services demand and not not necessarily one time, but enhancements and enhancements across the general fund. So we're recommending a full, comprehensive look at the general fund and maybe not focusing on one specific area. This will result in those investments being completely evaluated during the budget process. So we want to first make sure that these potential enhancements or new services can not be covered with existing increases. So for example, we want to see if during the budget process we can add on the services if possible by reallocating or without doing a tax rate election. So we're recommending that it goes through the budget cycle. And then we want to make sure that as we're developing that we look [2:15:05 PM] as we're developing that we look at what things can't be funded and then make recommendations from a staff perspective on what we are recommending the council consider for that tax rate election. We are also recommending that if when we look at this policy, we think about not doing it any sooner than every four years. So no, frequently, no more frequently than a four year cycle one, we want to make sure we have enough time to plan for a full package. So looking at again holistically, what we're looking to include in that election, also to coordinate with other tax rate elections that may happen so that we don't make voter fatigue or introduce voter fatigue to our community. And then we would also recommend a policy that would allow us to have some flexibility in case of a financial emergency. When we think about the content of what we are recommending is included, definitely new or significantly [2:16:05 PM] definitely new or significantly expanded services in the potential election. And we're we're asking that the consideration be that we don't look at offsetting baseline cost drivers. So what that is doing is, is making some accountability on the city to say we're going to continue to manage and try to work efficiently with the resources that we have. And it also protects us so that if we already have those baseline cost drivers covered, if that election isn't approved, we're not making drastic cuts into the core services that the city is already doing, and we're committed to working on maintaining that that stability in the general fund and trying to really look at only focusing on new or significantly enhanced services for a potential election. So when we think about sustainability, one of the things that we're really looking at or recommending is having a mix of ongoing and one time [2:17:05 PM] mix of ongoing and one time expenditures. And so when we think about that mix, if we do a tax rate election with all ongoing expenditures in that first year, then we'd have to figure out how we would cover those natural cost drivers in years two through four and five. And so we're trying to we are recommending that we do a mix of those things, one, so we can pay for whatever those one time costs are that, that go with implementing a new program or service, but also to allow for sustainability and flexibility in the short term so that those increases can have a natural growth based on their natural cost drivers. And with that, any questions or discussion. >> Thank you. Really appreciate that. I'll open it up for questions. Councilmember duchen. >> Thank you so much for this and your work on this. I just have one question which is going back to your third slide. Mentioned that we've lost nearly [2:18:05 PM] Mentioned that we've lost nearly $161 million in property taxes as a result of the 3.5% cap. Can you explain or help me understand how you arrived at that number? >> That is, if we were able to go to the full 8% that we historically were able to go to before the 3.5% cap. >> And that's just for that one year, not representing all the years prior that we haven't gone to the correct a prior 8% cap. Got it. Okay. Thank you. >> I'm not sure I understood that answer as I understood this. What what this was was it was if you it's the delta between an 8% cap and a 3.5% cap over a period of time, not in just one year, but it would be over a period of time. And so the compounding would also play out. Compounding. It's not the. >> Yeah. >> It's how much do you have to buy. 25%. >> That's the amount in fy 25 we would have that's in one year. >> One year. So the 160 is a one year difference okay. If I misunderstood that okay I'm glad [2:19:05 PM] misunderstood that okay I'm glad you asked that question. Councilmember vela. And I'll come over here. >> And going off of that question and I've seen the chart, but what would be the kind of the average property tax revenue that we would again cap used to be 8%. Now it's 3.5% over the last 20 years. What about would we take per year? >> Great question. So we looked at the last five years. The previous five years before the cap, it was 7.3%. Previous ten years it was 6.5% previous 20 years it was 5.9%. >> So the 3.5% is really cutting our property tax revenue growth in half. And okay. And that's important to know. And again, we've been at that 3.5% cap. This is our fourth year under the cap. >> 2019 2019. So fifth year. [2:20:05 PM] >> 2019 2019. So fifth year. >> Fifth year under the cap. Honestly, it's mildly remarkable that we haven't had to bust that cap at this point. I mean, just given the growth of the city, given the challenges that we faced and looking forward, what immediately comes to mind again, you're talking about, you know, one time expenditures and like a new funding, kind of new or expanding programs, I think about our mental health response items and the item that I had in January, the amendment from that, that council member alter had over the budget last time. We're trying to really boost our mental health response. But I just, if I'm remembering correctly, the we added about one and a half, $1.6 million to the budget for six months of 24 over seven mental health response for this fiscal year, which I know we just issued that contract and all. But this coming budget cycle, that means we would need to have about, you know, $3.5 million or so if we [2:21:07 PM] know, $3.5 million or so if we want to just sustain our current effort right now. I just is that what we're looking at in terms of when we're looking at a tree? Are those the kinds of things that we want to fund with a tree or that we're considering funding? >> We'd have to fit in that framework. That's what she just said. >> As long as they fit in the recommended framework, and they are programs and services that the council would like to continue or expand, then yes. >> Well, I appreciate that very much. And I, you know, again, my, my, my sense right now and against the gut sense is that I'd rather get a tree. I appreciate the four year cycle. I don't want to be going to the voters every year, every other year to, you know, nitpick and voter fatigue and those kinds of things like that. But I think every four year cycle makes a lot of sense. And it feels like that, that that launch date for that cycle is coming up here sooner than than later. [2:22:09 PM] sooner than than later. >> Mayor pro tem followed by council member Ryan. >> Thank you. >> Sorry. I I'll get better about that. >> I know we all I still do. >> But by the end of by by the end of this term, I expect to be better. >> And thank you for the information. Like my colleague, councilmember Bella, I share the sentiments that, you know, we I'm very concerned about our our budgeting cycle that's upcoming, especially knowing that the history of our city has been more than 3.5%. It's been between 6 to 7% on average. And what is needed for our city to be able to maintain the investments as a growing city and meet the needs of our community. I'm concerned with this upcoming budget cycle in particular. And so when I think about this framework that staff is outlining for us, the policy that you all will be developing as a recommendation for how we might consider trees, when should we expect that policy recommendation to come forward? >> So we'll continue to craft based on feedback that we [2:23:09 PM] based on feedback that we receive from today, and probably in the next couple of months, we can come back to the audit and finance committee. Usually what we do with policy changes for that will impact the budget cycle. We bring those forth to the audit finance committee first, and then include those policy changes in the proposed budget. If there are changes that we need to make prior to the proposed budget, and I'll talk to law and have some discussion on whether or not we need to have that policy approved prior to then we can work on what that timeline is to get it in front of council prior to the budget. >> Okay. Because, you know, this budget cycle is less than five months away. It will be here before we know it. And certainly I know that we want to have a long term vision for this policy framework, but certainly want to recognize the immediate needs of our community. One of the areas that council has agreed on as an area that we want to increase our investments in is around homelessness. And when I think about the arpa dollars that were injected into our city, a good portion of that, a supermajority [2:24:10 PM] portion of that, a supermajority of that went into homelessness. And there's one item, mayor, that as you were mentioning your comments earlier that I thought of, that was a that we pulled arpa dollars for. It was funding the marshaling yard to serve as emergency shelter. We want to continue to provide emergency shelter in our community, and that is an investment that I want to ensure continues to move forward, knowing that that is one area that was one time. Using one time funds, you know, do we have that particular expense, that particular investment factored in to the five year outlook for moving forward? >> Well, we're still analyzing the full cost at the very moment. We don't have the marshaling yard in the forecast, as we're looking at all of the arpa dollars and arpa programs. Those are some of the things that we'll come back to council and say this. This could be the impact. In addition to the baseline cost drivers that we typically have in place for [2:25:11 PM] typically have in place for forecast. So we're looking at wage adjustments, insurance increases, things like that. Those are the typical increases that we have in the in the baseline cost drivers at this moment. >> And what about rapid rehousing? Rapid rehousing had about $42 million in arpa investments. Any kind of sneak peek preview you can share with us about the continuation of those funds? >> I will put me in a tough spot. Today. No, today we don't have I don't have that information. We are working really closely with the homeless strategy office to determine what that long term need is, and we'll have more detail in the coming weeks, but I don't have that information right now. >> Okay. And the reason, colleagues, why I'm highlighting these two areas within the homelessness issue area is because I do think as we lay out a policy framework for tax rate elections and what that might look like for us moving forward, there are going to be specific kind of subject areas where you might have to lean into a little bit more heavily. And so I still [2:26:12 PM] bit more heavily. And so I still want to not preclude that as an option for us. If there is an area that we want to increase our support. >> And councilmember, I will say our goal is to share all of this information in the next, like I said, few few days or weeks so that the council will have a full idea of the impact of arpa, the impact of federal federal grant changes, as well as our cost drivers. And what we're seeing early on with our with our forecast. So we want to have that complete conversation so you can make a full decision based on the information. >> Thank you. Thank you. Mayor pro tem council member alter. >> Thank you very much. I just want to pick up where mayor pro tem left off. I think one thing that as I read how you're proposing to craft this framework, I just I want to make sure that there is a lot of or as much flexibility preserved in that policy as possible. And, and, you know, the mayor pro tem [2:27:12 PM] and, you know, the mayor pro tem talked about rapid rehousing, right? Right. Now we have down market conditions. So if we decided, you know, we want to take advantage of those conditions where we can really get more bang for the buck instead of waiting for years in the future when maybe rents go back up. You know, we want to be able to be flexible and react to whatever will maximize the benefit to the public. And so I appreciate the four year cycle. I think some kind of natural cycle is appropriate, but I also am worried that we just accidentally get too rigid. And, you know, we we're going to have a discussion here in a second about our bond policies, right? We're not in compliance with those policies. And so we can always it's not like just because it's a policy that's exactly what we have to do. But that's kind of what's expected of us. And so, you know, I don't know how you came up with four years. Is that just kind of a natural election cycle, or what was the thinking of why four [2:28:12 PM] was the thinking of why four instead of 6 or 3? >> Well, we kind of looked at election cycle, but we also looked at what would be something that we could manage and sustain and thinking through the number of bond and, and even tax rate elections that may come to the community. How can we make sure that spread out in a way so we are not reaching voter fatigue? So that's one thing that we wanted to relook at, but also a level of accountability for staff and us as a city to say, okay, if we do a tax rate election, how can we balance it out so we can sustain it over a short term? So we aren't going back to the voters every single year asking for more money. So I think there's a way we can structure this to allow for that. And putting in some caveats in there. If there is something that's, you know, a financial emergency that we have to address, then we have those flexibilities. But focusing on having a plan around it and not coming forward every year with with a request. >> Sure. And I think just so long as we don't, you know, [2:29:14 PM] long as we don't, you know, emergency often we think of as like natural disaster and those are emergencies. But there are other you know, I think about the child care initiative, right. For a lot of families, being able to provide child care is an emergency. And so I just as we think about the language we're using in that flexibility, I just want to be able to preserve that. And also thinking about if we go to a six year bond cycle, that means in 2032, you know, potentially, however these line up, you could end up with a tree and a bond. And is that something we necessarily want to do? Because that's a lot to ask of voters. So just, you know, I recognize that you're trying to grapple with these things too. And I don't have all the answers. I just want to kind of flag some of the thoughts on that. I also want to, you know, if we are going for as council member mentioned, like let's say it's primarily around [2:30:15 PM] it's primarily around homelessness, but it doesn't make sense, I think you flagged we have more needs than just one department. Right. And so it doesn't make any sense to do one very narrow thing and then say min next year we'll do the rest of the budget because that's just poor planning and you don't want to do that to the voters. I get that. But I also want when we talk about comprehensive to not necessarily require that, you know, every department is necessarily included. Not because I don't want to leave a department out, but sometimes you have to have a priority, right. And it's maybe 2 or 3 things and that's it. And that's how we prioritize. So you know and this is the feedback moment. So I'm trying to give give what I've got I do have a couple questions specifically though. The five year forecast. Are you assuming some kind of inflation in there. >> We do assume what percentage inflation in the five year forecast in the in the debt? I [2:31:17 PM] forecast in the in the debt? I mean. >> The general assumption is based on the specific cost driver. Okay. >> So we look at specific cost drivers. And I should have just started out with that. When we look at your forecast and we get feedback from departments, we look at cost drivers from contractual increases. So there is some kind of inflation in those things. But we don't have a baseline percentage that we say this is these are the inflationary factors to look at. >> That makes sense. And so and that that forecast is limited to just general fund dollars and programs funded by general fund. >> So this particular forecast yes, this this chart that you see on on slide three is for the general fund. >> Okay. And I had one more question. But the mayor already asked about those ongoing expenses from one time capital costs. So I really appreciate what what you're doing here. And I, I guess the last thing, just in terms of the timing, if we if we limit this to the budget [2:32:20 PM] we limit this to the budget process, this is something that, you know, you look at the project, connect, how much time went into that child care initiative, how much time went into that? You know, the five week budget cycle is not near enough time to develop a tree with, you know, that we're going to then vote on in the budget. So how we hopefully can start as a committee to if this is something we want to do, think about what would go into that before we get to July and start talking to budget. I think that's really important. >> So when I said the budget process, I was not indicating the five weeks between the proposed budget and the approved budget. I'm saying the full budget process, when departments and staff start looking at crafting the budget. So we start December January to prepare for July through August, and so that it would start much earlier in our evaluation of what services, hearing what you all have to say [2:33:20 PM] hearing what you all have to say through council meetings or conversations through these committees to determine what kinds of things we would recommend going forward. >> That makes a lot more sense. Thank you very much. >> And I'll add to that, that that's why we're doing what we're doing right now and why there's been such a focus with this committee on this is so that it's not just that rigid period of time that we call the budget budget process. And as part of that, I'll just highlight, I think that whenever we have the, the tree election, one of the things that we're going to I think everybody probably agrees with me. One of the things that we're going to want to be able to say to the public is, here's what we're bringing you as fully cooked, and here's why. We looked at all of these different things, like comparing the, the, the delta between 8% and 3.5%. Why we [2:34:20 PM] between 8% and 3.5%. Why we looked at the questions I've asked earlier, things of that nature and why we even put together a framework. To your point about priorities. I completely understand what is what's being proposed here and recommended here, but we're clearly going to have priorities. Part of those priorities may very well be, as the mayor pro tem has pointed out, is because some of the money we've been using to address a priority goes away. And I want to I'm going to come back with a an ask on that. But but in addition to that, it was underfunded even then. And we know that. And so we need to address that. Things like mental health, there will be priorities. But but even the framework ought to help us be able to tell the voters, we got to this in a thoughtful way. So in fact, that's one of the and you all ought to think about this for the use of this [2:35:22 PM] this for the use of this committee. You know, we're going to have a joint meeting of the public health committee and the finance, the audit and finance committee, so that we can talk about one of those priorities to talk about how we address people living homeless. If there are other things like that that we ought to be talking about as we roll into that rigid budget process, time frame. Let's let's talk about that, because we may want to do something special in that regard. >> And if I could piggyback on that, I think one of the things that we owe it to the public to not only operate in our, our city, dare I use the word silo, but say how? What are taxpayers paying? Right? It's not just city taxes, it's school districts, it's health, it's hospital district, it's ACC, it's everything. How can we work together to best deliver for taxpayers and coordinate with other entities so that we can best deliver services in the most effective and efficient manner? [2:36:22 PM] manner? >> Sure. And. Part of talking to our taxpayers, if we're going to ask them for in a time of discussing affordability and recognizing what we have with issues related to affordability, we're going to have to show that we've walked it through a thoughtful process, and that's part of what we're attempting to do here. One of the other things I'll mention to you, and this is a question I would have the next time that you all provide us with that, or just if you could just provide it at some point, is we've all probably looked at I know I have the overlapping tax rates and how we compare in terms of overlapping tax rates, but I've not done is the next step, which is the overlapping tax burden. So that and if you could help us, help us with that if you do the math on it. So I'm not doing the math on it. But that would also be the kind of thing that we ought to get out to the public about how how that plays out and a couple of other [2:37:23 PM] plays out and a couple of other things that, as you're putting together this memo that I don't want to overburden the memo, but I think it'd be good for this committee and the whole council to also have is we focus on the 3.5% cap appropriately, and we focus on the delta between that and what was 8%? What would be what it would have been with 8%? One of the things that I would like is I would like you, if you can, to take the money we receive, the arpa money, we. Received, and I hope I ask this question clearly, what would our tax rate have needed to be in those years in order to produce that revenue that we had as a result of arpa, and that we utilized? Because I think that would also be important to the taxpayer to be able to show that part of the reason we were we stayed at 3.5% for those years [2:38:24 PM] stayed at 3.5% for those years is because effectively, we had a blank percent. It would be like we had had a blank percent. And I'm making up a number here, a 5% tax tax rate, because we had this additional money that we were able to spend. Is that that question making sense? >> It does. I think we'll take a look at that. Some challenges may be things like new properties coming on the road. >> Is going to be the next thing I brought up. >> There were so many. There are so many variables. We'll try to take a look at that. But I think the other piece of that is that we need to recognize is our reliance on sales tax. And in that same time frame, our sales tax revenue was astronomical and now has come back down. So it's all of those variables that have impacted our our ability to stay within that 3.5% over these years. >> Sure. Well help help us with that, because I think that that will be important to taxpayers when we talk to them about yes or no, if we go, if we decide [2:39:25 PM] or no, if we go, if we decide that at some point we're going to need a tax rate election, it will be important. But if some folks want us to have a tax rate election and we decide it's not the time to do it, it's going to be important as well. And there's no question that we had more money because of that. So help us figure out where that would have played, is what I'm asking. >> Work on something to respond. >> The other thing is that, and I bet, I bet it's, but I don't know how it's embedded in this. But the new build that's outside the 3.5%, I, you know, this council has has worked pretty hard over the last couple of years in order to get more new build out there. But if you could also give us the numbers that we have related to property taxes that have come online because of new build, that would be outside of the tax rate cap, that makes sense. >> Yes. [2:40:26 PM] >> Yes. >> All right. I think that I think otherwise everything that I was going to say has been covered by somebody. >> And are you describing over the years that arpa was in place the new the new value over 21 through present? >> Sure. That's a that's not a bad time. That's not a bad time frame to do that. I was actually thinking more of the cap. The rate cap. But either one of them works out to achieve roughly the same result. >> And if I may add one more thing to this awesome memo that's going to come to us. >> Y'all. >> Are writing. >> A. >> Memo for it. >> We are. It's right. You just give. >> Me a section by section here. >> That dude's up to about 280 pages now. >> But this dissertation is whether it's graphically or somehow showing just how inflation versus the 3.5% has grown. You know, I know, when looking at it last time around, had we done no new programs, [2:41:26 PM] had we done no new programs, just simply kept up with inflation, we still wouldn't have had enough money. So just showing how that has really ballooned over time on the compounding effect. And that conversation I think will be probably a little bit more appropriate in the forecast conversation and not necessarily the arpa dollars, but we'll we'll balance it out, make sure you all have all the information in the right way. >> That's good. Yeah. Councilmember. Councilmember duchen. >> And I think what what I'm hearing anyway, is that trying to get as close to an apples to apples comparison, you know, because there's been there's just so much dynamic change, budgetary change, legislative changes. Arpa, you know, trying to get to that, you know, that that apples to apples comparison. So we can quite honestly and legitimately go to the voters and say, you know, this is what we should have done or we would have gotten and now we're going to have to come back and ask you to, to pick up that that number. And I just it's a [2:42:27 PM] that number. And I just it's a good conversation. I really like where, where it's going. >> Thank you, councilmember duchen. >> Thank you. One last question from about numbers. I was just curious. I don't know, it may be in the September 24th, 2024 memo that's listed in the report on page four. But I'm curious if there's just a already a report or table that details how the full arpa dollars were spent over the time frame that we had the money up until now, and whether those programs were capital or maintenance or what the projected outcome for those dollars will be. >> Yes, the FSD financial services department, their accounting and reporting area, has worked on or completed reports out that's required by the federal government that discusses the programs that were funded. And so I'll have to check with with the team to see when the last report was completed. And make sure you all have access to a link to see [2:43:28 PM] have access to a link to see that. >> That'd be fantastic. Thank you so much. >> And I'll wrap this up. So we move on to the next item. But but it's caused me to think of something with regard to the budget coming forward. And I have two there's two thoughts that I wasn't thinking of until just now. So I hope they're complete thoughts. Thought number one is last year when you all brought us the budget, we talked in terms of a two year budget. And so and I know it's premature but but I'm going to I'm going to it's going to be important I think that these considerations that are all now being brought up and thoughts will be for, for you all to be able to show us in this budget the upcoming proposed budget, which ought to be roughly equivalent to the second year of [2:44:30 PM] equivalent to the second year of the budget we got last year. What's different? What's not in there? What? What and why? The changes might be there, right. Have that budget, that two year budget takes into account things like inflation. How did it take it into account last year, and where are we now on what is now going to be the budget in front of us? But it was the second year of last year's budget. Same with arpa, same with growth in needs. How we how we calculated that. So that I think that's going to be helpful to the council that the value of that two year budget may be in that. Right. So I mentioned that as well. And then. The other the other question that pops in my head is as we go forward on this, is in that budget that you're [2:45:31 PM] is in that budget that you're going to be bringing forward to us. While I understand you're going to want to bring in a balanced budget, right? You're going to. It's going to be important for us to have a clear understanding from these departments that you're talking to. That started back in December and January about what their needs are, so that even though you may be presenting or the manager's office presents and drops at our doorstep a balanced budget, we may know and we're going to want to know what's not in that budget, that with a with a tree or with with if we're if we were at 5%, what that would have been in that budget, that kind of so that what we don't get into is the council then having to say, okay, I want 5 million for this. [2:46:31 PM] okay, I want 5 million for this. No. If it's 6 million for this, ten, ten, ten, ten, you know, we start doing an auction on what ought to go into it. It's going to be I think we need the, the, the manager's budget to while be balanced. It needs to help us build into that process what you would do if you were at different tax rates. Does that make sense? Yes, because otherwise we'll be we'll do all this good work and then we'll start from a standing stop. >> And I think that is the plan as far as how the policy is built for us to create something so that we give you all staff provides through the city manager some options. So you're not trying to deal on on the dais on what could be included. >> I think that's important. Okay. Anything else? Anybody. Very good discussion. Thank you very, very much. We appreciate the your typical good work on this members that will take us to item number six, which is an update regarding bond programs and financing. And I see the director of our financial [2:47:33 PM] director of our financial services here. >> Good afternoon. Council members, Kim Olivares, director of financial services. So the presentation I'm going to give you today is actually largely an update, a refresh of one that was given to audit and finance previously. But as we are continuing to have conversations around a future bond program, various other capital needs, as well as also tree type of things, I wanted to make sure you have the latest and greatest on in terms of our bond program spending and just an overall look at our our bond, our geo debt. So I'm not going to go through this slide, but this is just a nice little reference page for the community. We use a lot of bureaucratic gobbledygook type of words. So trying to create a reference point for folks as we go through the slides today. So just a quick intro in terms of what geo debt [2:48:33 PM] intro in terms of what geo debt is. A lot of times when folks reference geo debt, they equate it to voter approved debt. Geo debt is more than just voter approved debt. It is all of the debt backed by the full faith and credit of the taxing authority of the city of Austin. So that includes public improvement bonds, which are voter approved. It includes certificates of obligation that are non voter approved and contractual obligations, public improvement bonds and certificates of obligation have pretty significant, significant similarities in their use. Contractual obligations are much shorter term form of debt that we utilize for equipment fleets, things like that. Also in prior legislative session, it expanded the ability for us to use that for cloud computing information technology needs, because the prices and cost of those have grown over the year years. We also have commercial paper, which is utilized by Austin energy and Austin water. I would think of it similar to like a line of credit that they're able [2:49:34 PM] line of credit that they're able to draw upon for short term financing, but they ultimately refinance the cp into longer term debt and that longer term debt being revenue bonds as one significant difference between revenue bonds and the pbs and cos is also the terms of the payback period for those bonds, our geo debt. We issue that for our our geo pbs and cos we issue with a payback period of 20 years, while revenue bonds are paid back over a 30 year time frame. So cip spending includes a vast variety of different funding sources. This chart gives you actuals plus our upcoming five years of capital spending. And it's broken out between Austin energy, Austin water aviation, those pbs and then other funding sources. So Austin energy and Austin water you with Austin energy. There is obviously some very significant expenditures in 2019. And here coming in 25 Austin water, [2:50:35 PM] coming in 25 Austin water, you're seeing growth in the coming years for them related to sustainable water infrastructure investments. Aviation for very good reason. We'll see significant increase in their spending in the coming years related to the expansion of the airport. The other section is largely and chiefly driven by the convention center expansion. So that's why as you roll into 2029, you see such a significant drop because the new facility will be open at that time, but aviation will still be actively engaged in its expansion. Just a little bit of history about our bond programs. So this goes back to 2006. That was in the in the new the new millennium. That was our first comprehensive bond program. Since then, we've had two additional comprehensive bond programs in 2012 and 2018. You'll also notice there are quite a few one off programs. So in 20 1013 was actually going [2:51:35 PM] in 20 1013 was actually going back to the voters for a proposition that failed in 2012, but then also 2016, 2020 and 22 are the additional off cycle bond programs that we've had. And I'll dig a little bit more into the impact of off cycle bond programs here in later in the presentation. So these next slides, we try and break it up. The those bond programs in their totality in two different ways first by category. So regardless of which year between 2006 and 2022, this is the breakdown you see of how the funding is allocated amongst various project types. By and large, the majority of it is associated with mobility and transportation projects. Affordable housing comes in at second and then between drainage, open space and parks improvements. That's kind of your next large scale investment. The this slide breaks it down by the actual bond program to also provide [2:52:35 PM] bond program to also provide insight into how much has been spent versus encumbered and which remains available. So spent is money out the door. Encumbrance means that. Yes, sir. >> Can I just jump in and ask a question real quick? The affordable housing, the $720 million, does that include the project connect the $300 million from the project connect? Or is this outside of that? >> The four. >> That 2020. >> 2020 so project. So the project connect funds are this are not included because that is part of a tree. It's not from the bond. >> Got it. So it's the affordable $720 million in affordable housing bonds does not include the $300 million in displacement funds. >> That bond no. >> 2016 was a mobility related separate from project connect. >> Okay. Got it. >> Thank you. Yeah. >> So encumbered funds mean that they are associated with a contract that has been let. So they are obligated to be spent associated with those contracts. While the balance is available [2:53:36 PM] While the balance is available in terms of not being spent or not being encumbered. But there may be allocations or future commitments already in mind for some of those funds. That's particularly the case with folks like for affordable housing. So now I'll dig into some greater specifics around our more recent bond programs starting with 2016. So this 2016 mobility bond, it was envisioned to be a an eight year bond cycle. But as you can see here, it is going to extend well beyond that eight year cycle. So we'll actually be reaching out into 2029 before it is fully spent out. Similarly, for 2018, we are we're looking at a approximately ten year period to finish out this comprehensive program. Now, that is the largest comprehensive program that the city has ever taken to the voters. And of course, includes a variety of different project types. In 2020, the additional mobility [2:54:39 PM] 2020, the additional mobility bond that was complement to the measures that were also taken to the voters relative to project connect, those those are anticipated to be paid out or spent down by 2030. It was supposed to be a, I believe, a 6 to 8 year program. And then finally our 2022 affordable housing bond. So they do a have a really clear approach of how they try to break out the spending plan year over year to make sure that the funding is available through the life of that program. Now, they with the dotted green line, the projected spending that that illustrates that very smooth kind of path. Now in this current year they did bring back to the hfc board for some additional funding to help support some additional program needs. So that's why you see the spending accelerated at a certain degree. Was there okay. [2:55:45 PM] okay. >> Thank you. So you were able you you highlighted that the affordable housing bond is going to be completed or depleted completely out before the six year spin cycle that we had initially planned for it. Is that correct? Correct. For the mobility bonds you mentioned on a couple of them, 2016, 2020, that they were envisioned as a 6 to 8 year bond cycle, but now they're ten years, some even a little bit more than that. What is the average bond cycle spend for mobility related bonds? >> So the I might turn for some of the specific specificity specific. Wow. Some of the specific components of the mobility bonds I would need. I would want to make sure that the transportation public works folks had an opportunity to respond to that in more detail. That being said, there have been quite a few mobility bond programs in recent years, so that accumulation of bond funding is pretty significant and therefore just takes longer [2:56:46 PM] and therefore just takes longer to carry out. In addition, there were certain projects related to the corridor program program, the corridor program projects that there were some delays there. Also, covid created a number of issues related to supply chain, labor availability, things like that. So there were kind of a perfect storm of various challenges. That being said, there have been a lot of mobility related bond propositions taken to the voters relative to the other types of projects and categories that we fund with our comprehensive plans in a little bit. Also talk about what our financial policies are around our bond programs and the timing and the sort that can, I think, could also contribute to this conversation. >> That that that will be great because I'm just trying to get an understanding of should we still consider our mobility bond life cycle to be between that 6 to 8 year lens, or if we should highlight different considerations? >> Yeah. So I think the six year spending plan is ideal regardless of project type [2:57:46 PM] regardless of project type relative to our overall bond program policies or financial policies. So ideally the slate of projects and or programs that are being put forth in a bond proposition are those that can be completed in that six year time frame, as opposed to it taking longer. >> And I apologize if this has been said, but one of the issues that has been described to me on the on the whole bond package, all of the bonds, but but those like the mobility is that a lot of that. One of the big problems was that there was $750 million went to the voters, but it hadn't been planned out yet on how it would all be spent and what those plans would require, so that what happened is the planning occurred on the backside. It was it was touted as one of the biggest bond elections in history as it relates to transportation. But the planning had to occur later, and that slowed things down as [2:58:47 PM] and that slowed things down as opposed to having a cycle where, you know, every six years you're going to do something. So you plan and prepare so that when they vote, then you can start doing it and you can get it out the door. >> All right. >> Can I add. >> To that real. >> Quick, just as anecdotally, like on that bond, people were being surveyed on projects in 2019 or so for stuff that was passed three years prior, before covid started to hit with delays. So there was a significant gap between covid and supply chain and other issues before we even got to even understanding what the scope of those projects were going to look like and getting them costed. >> Vela. And I also wanted to point out, and again, I'm not sure which tranches of money are coming from which bond cycle, but even within the mobility bonds, for example, my understanding is that we've pretty much burned through all the sidewalk money because our, you know, that we were ready to implement, that we were ready to [2:59:48 PM] implement, that we were ready to execute on. But a lot of the like, for example, the north Lamar corridor money or other different aspects have have. So even I think within the mobility bond, there's tranches that went out the door and got projects done, and then there's tranches that have just kind of sat there waiting for execution. >> Right. >> I think one of the things I do want to point out is with capital delivery services department and the efforts that they are making in preparation for a potential 2026 bond program is really upping our game around that planning and making sure that we the day once folks take the vote, whatever passes or not, that we are ready to move forward very quickly thereafter. So to help eliminate some of that, just kind of that lull following an actual vote. Yeah. So there are like I noted before, there are more than just public improvement bonds. The voter approved. There are also a variety of other bonds through cos and pefkos. Here is just an [3:00:49 PM] cos and pefkos. Here is just an overview of projects and programs with funding associated with the debt that's to be issued in the future. So the large the largest amount of that is related to public safety projects. And then followed by that is really the core service provision type of facilities. So really trying to utilize non voter approved debt in a very smart, strategic and impactful way relative to the requirements that we have from the state and locally. So really trying to focus those on a must have type of projects and programs. So the tax rate and general obligation debt first a breakdown of how our what what our tax rate is composed of. First, the operation and maintenance tax rate for fy 25 is $0.38 and the debt service is just over $0.09 for a grand total of just under [3:01:50 PM] for a grand total of just under $0.48. So that debt service tax rate is set annually. It is not something that we can set arbitrarily. It has to be set only at the amount that is, or the level necessary to fund all of our debt service payments. So we can't bring in large amounts of excess debt service revenue in anticipation of something future. It can only be what is absolutely necessary. So as we move forward though, because of authorized but unissued bonds that are geo bonds, whether voter approved or non voter approved, we are at a point where there is even with not even talking about a future bond election, the tax rate and the amount, how that impacts the typical taxpayer will go up. So you can see here over the next 4 or 5 years, you're seeing an increase of over $140 for the typical taxpayer, the way we define that typical taxpayer is a homeowner with a home that is, that has homestead exemption and taxable value of just over [3:02:51 PM] taxable value of just over $400,000. So what's driving that tax rate? About 1.9 billion in outstanding general obligation debt, as well as our our actually at 1.9 billion in outstanding unissued debt. And our and then there is also the existing debt on the on the bill. So we only issue our general obligation debt once per year. As you can see here from the 2006 to 2022 bond programs, just from those bond programs, we have nearly $1.4 billion of debt to be issued, and that is all voter approved debt, the remainder being related to the various non voter approved projects that are largely based with public safety and core service provision type of projects. Here's a historical look at our issuances per year. They have been fluctuating quite a bit over the last few years, [3:03:53 PM] a bit over the last few years, but still growing significantly now. I also understand that there can be confusion in the public about how how the whole debt appropriation and the sale process works, so I wanted to provide an overview of that here. Once, whenever the capital budget is approved through budget option, or there's an amendment to the capital budget, and that basically gives us the authority to spend towards a specific project or program as approved by council. With the capital budget, your funds are available over a multi-year period. So unlike the operating budget where it is a use it or lose it in a single fiscal year, your capital funds are available for until they're expended or for the life of the project. When we are utilizing debt, we also use a reimbursement resolution because we only issue that debt once a year. That reimbursement resolution gives us the ability to issue it at a later date, and also maintain that tax exempt status for the debt. Once we do sell it. Now, [3:04:53 PM] debt. Once we do sell it. Now, there are rules and requirements of how long you have from the date of the expenditure versus when you sell the debt. To maintain that tax exempt status. You can't wait like 1015 years. It's usually an 18 to 36 month time frame of when you have to issue the debt by and to front the cash needed to cover those expenses. We're actually just drawing from our investment pool. So when we do that general obligation debt sale every year, we're reimbursing ourselves, reimbursing that investment pool for the funds that we pulled out to cover the expenses initially. Now, the cip spending plan is very important in this process because that's how we're able to judge what how much we need to sell in any given year for our debt sale. So all the project managers across the city are regularly asked to keep their spending plans, which is basically when is cash going out the door? Keep those plans updated so that we can develop the bond sale schedule to make sure we are really on track with [3:05:54 PM] sure we are really on track with that reimbursement process. And then there's the annual bond sale. The actual bond sale process. We have already started it, so we are working through the cip plan development. In August, council will take action on the capital budget, also in combination with operating budget. And then we soon follow up to that action with reimbursement resolutions to support the capital appropriations that are backed by debt. Then in throughout in the meantime or at the same time, rather, we are developing that bond sale schedule starting in the spring. We are then developing over the summer. Our preliminary official statement, which is a document that goes out to potential investors to understand what is the debt for and our financial profile, our management and leadership profile, basically demonstrating our creditworthiness as an organization. And then council takes has to take action on the bond sales themselves. And the [3:06:55 PM] bond sales themselves. And the bond sale, in closing, actually doesn't occur until almost October time frame. So it is a very long process, which is why we only do it once a year. Because it is. It requires an extensive amount of work. Now, the use of those reimbursement resolutions is incredibly important for us. For one, maintaining compliance with all irs regulations. But it helps us with our cash management and also with lower interest costs on those on the debt. Once we do issue it. So final component of the presentation is talking about our financial policy and credit rating considerations. So council member Fuentes or mayor pro tem Fuentes I'm sorry. These these are the financial policies I was referencing a little bit earlier. So the timing of the general general obligation bond elections, you should not be you should not have one until you are at the point where you've got only two years of spending left in an existing bond program. That is why when we [3:07:55 PM] program. That is why when we show those spending curves for the existing bond programs, that is why we came back to council previously and were recommending not having another bond program election until 2026, so that we can get back in alignment with these policies. Also, the total amount of the of the bond program that we would take to the voters should not exceed what we can spend within a normal six year period. And finally, it is always our priority to fund capital expenditures with cash and or voter approved debt, non voter approved debt. We have very specific state laws that we have to follow around them, but we also have what I've noted up here are a variety of additional policy or components to help guide our use of that non voter approved debt, ensuring that we're using it when it's urgent or unanticipated. The real estate market generally creates a kind of an urgent or unanticipated type of situation, because the real estate market does not always line up well with voter approved bond programs. So that's why you've [3:08:56 PM] programs. So that's why you've seen generally a lot of just real estate deals that are co backed. So credit rating agencies, we have incredibly high credit ratings. We have triple-a from S&P and aa from both moody's and Fitch. With our current debt balance of 1.9 billion plus future debt issuances, that is something that they most absolutely take into account when doing our updated credit rating each year. We need to make sure that we're monitoring and managing those debt issuances. Also, in combination with efforts that we make around pension liabilities and opeb, because these are all components that the credit rating agencies look at when they are ultimately providing our our rating update each year. And sappi and Fitch in particular have made comments in our most recent sales regarding our, our debt plans and those schedules and the burdens that it creates on on the tax rate and the and the organization. So that's the end of my [3:09:56 PM] that's the end of my presentation. Any questions? >> Well done. Yes. Councilmember alter. >> I wanted to ask I'm going to go backwards order here. The policies I noticed one of the policies that you didn't include is the one on the 2% ratio of debt to value. And so I was curious, you know, you talked about when we're thinking about how large of a bond package to put to the voters, we want to make sure that it can be spent within a six year period. We also want to keep it under that 2% cap. Correct? >> We absolutely do. But one of the reasons I didn't highlight it is because it's not one that the credit rating agencies really look at. They are looking at the combination of just the overall debt liabilities or the liability impact related to not just debt, but pensions and opeb. So we generally focus a lot more on those kind of metrics as opposed to that 2%. But regardless, keeping it under the 2% is definitely a policy and priority as well. [3:10:56 PM] and priority as well. >> And I wanted to also better understand because if I was well, I'll say, even as knowing a few things I know about this, looking at the chart, the chart goes out to 20, 30 and beyond and 2030. Even on some of these, it's you're that 90% number, you're not fully spent out. I assume there's administrative costs somewhere that that's why there's that delta even though it's complete. But looking at the policy that says an estimated two years of authorized unissued bonds shall remain before an election will be held. And you said that that calculates out to 2026, but your chart goes to 2030. So how does that. >> So when we were making the original recommendation for 2026, that was even just a year or two years ago. And some of these spending plans have extended beyond that. We also recognize that there are the vast majority of the spending that remains is related to transportation and mobility. There's other programs and departments that perhaps are much closer or have to exhausting or have exhausted [3:11:56 PM] exhausting or have exhausted their funds. So we're trying to find a balance there in terms of overall organizational needs relative to where we're seeing the vast majority of spending remaining. >> And that's exactly one of the where I wanted to pick up, because I'm, as the mayor pro tem mentioned earlier, it seems like there's a vast difference in mobility, bonds and everybody else. And I think partly could be because of the planning element. Partly maybe it's something else. I don't I don't know, I wasn't here, but I'm wondering if there should be at least a consideration of should mobility bonds be thought of differently, or do we need to look at mobility bonds differently and fit them into a, you know, a different you know, which direction we're pulling? I think it's just worth asking because clearly a number of mobility bonds have not fit our policy model. And so something's got to give one way or the [3:12:57 PM] got to give one way or the other. In that same vein, the affordable housing bonds that councilmember vela mentioned, we have never had trouble getting out the door. Right? We just write a check and boom, we usually spend it too fast. And so is there. >> Anybody listening? He didn't really mean that. >> That's fair enough. But is there potentially a separate policy that needs to be made for economic development bonds, where we're not the ones who are undertaking the project like we would in a mobility bond, but where we're going to some third party and contracting with them for some kind of capital or service, it's just, you know, they seem inherently a little bit different. >> I think that's an excellent series of questions and, and a policy discussion that I would love to engage in with you all going forward. Yeah. Affordable housing bonds, the need or the supply and demand never match up. [3:13:57 PM] supply and demand never match up. Right. For Mandy will it will be would be quick to say the same, I believe. And just with the mobility bonds, there just has been a lot greater concentration on those in in recent in terms of how we handle our different categories of spending. Again, I think that is a really meaningful conversation that we could have, that staff can facilitate with you all to come up with a plan if so desired. >> So consider that and ask of the committee so that what you do is maybe come back to us with some analysis on that, based upon what the series of questions that he just asked. I mean, I think, I think we all have an instinctive thought about why one takes longer than the other, but but that, that that would be an important thing for us to, to figure out. So consider that to be an ask for an upcoming meeting. Sure. Can I add something. >> To that? >> And this may be a really. Out [3:14:58 PM] >> And this may be a really. Out there kind of question, but when you tell me and I think what I understood you when you when you tell us that that one of the things that the bond agencies look at is current debt balances and future debt issuance plans are key factors. And you've got all this. Let's just stick with mobility for a minute. You've got all this mobility, these mobility bonds that are sitting in the warehouse in my head. Right. They we've we've voted on them, but they haven't we haven't used them. So they're sitting in the warehouse and then we're talking about we'll go back and we'll have more. Right. We're going to have another bond election. And we'll add to that. Is that is that part of what they're considering? Yes. As part of so here's the here's the question. Has the city ever been in a situation where what it said [3:15:58 PM] situation where what it said was, all right, the statute of limitations is run on these bonds? We got X number. We had an election, $100 worth of bonds were approved. We've spent $50 of that $100. And now in order to get our fiscal house in order and to focus on priorities voters, we're going to ask you, if we can not do that, additional $50, have we ever done anything? And I don't know that, I think I think it's a good idea or whatever. I just when we are having this sort of discussion, I want to put something like that on the table, because that may be a way to put our fiscal house completely in order and get us into a policy, blame it on covid, blame it on whatever you want to blame it on. But going forward, here's the way we're going to do it. >> Historically, we have not gone through a D authorization process, but there is a process to for council and voter action [3:16:59 PM] to for council and voter action to authorize that debt, because the credit rating agencies certainly know what has been approved, but what has not been issued. And they actually ask us for what are their anticipated sales schedule for that and take that into account when doing our our rating for the sale at hand. So if there is a I can absolutely include in a future conversation, what does that process look like so that it can be considered for one way or. >> The other? Please do that, because I think that piggybacks a little bit on what. So thank you. Did you are you finished. >> One more simple question. And that's just it I don't know if this is in the budget. So you might already be doing this. And forgive me I missed that page. But when you that chart you had of the pip issuances by year, I'm just wondering whenever that is issued for the given year or even looking back a number of years, just some kind of breakdown of, you know, here's the $256 million. It was these 11 projects at this cost. >> Sure. [3:18:00 PM] >> Sure. >> We can provide that. >> Councilmember duchen. >> Thanks for all your work on this. My first question is if we can go back to slide 17. That's the one where you are have debt service and then you break it down by typical homeowner. There we go. I just want to make sure I understand what's going on here. That this Orange line and the numbers, the 306 29 for fiscal year 25 increasing out to 541 and four years that even without us not issuing a single other cent of bond dollars, that's what we can expect. Average homeowners that you described, $400,000 homestead exemption, etc. To be responsible for. >> It's for all of the authorized but unissued so it doesn't account for any future bond programs, the sort but anything that has already been approved, it covers all of that. [3:19:00 PM] approved, it covers all of that. >> As if to say, if we take no action, this is the this is the current expectation. And you'd be updating this assuming there was a 2026 or some future. Correct? Okay. Got it. Any. Can you any very simple summary of why it's increasing by my count like 37% in just four years. Is that a rush to spend the rest of the 1.4 billion. What's going on there? >> No, I mean, it's largely driven by those off cycle bond programs. If you look at going back to even even up to like to 20 or fiscal year 17, you see it stays relatively flat. If you were to go back further, that's when we were sticking with that cycle of every six years or so. And when we shifted out of that, that's when you see it start growing. The reason being is with if we stick to that six year time frame, the amount of debt that we're paying off any given year is often exceeds the [3:20:01 PM] given year is often exceeds the amount of additional debt we're being issued. So the tax rate would either stay flat or decrease slightly. So with all of these additional bond programs that we've had, and also just to make it clear, like incredibly grateful to the voters for their support for those programs, but it has created an increase in the in the a different slope on that line. >> So it's really from a large part veering from the customary six year omnibus bond package and going to specific bonds. And so they're they're hitting sort of concurrently all at the same time. Yes. Okay. So last question and others have pointed to this, that it looks like there's my words kind of a long tail. It's happening towards the end of the bond spending for most of those bonds. How does that connect to waiting for two years for bonds? And I'm assuming that's by sort of area of spending. I mean, I even saw that it looked like that 2012 [3:21:02 PM] that it looked like that 2012 bond still has some money to be spent. And that includes a lot of different areas of spending, from my recollection, transit and housing and other things. So how are you sort of making that calculation where it's okay to then reissue a new bond in that same category or a fresh bond, I should say, in that same category. >> So when, when we made the 2026 recommendation, that was based on the spending plans at that time, and these are the latest and greatest. So some of the programs and projects have extended out a little bit more. There's also a there we're able to dig into the details of these bond programs to understand if it's a certain project that is perhaps taking up the vast majority of remaining funding. So a single project, we wouldn't want that to be holding up an overall proposition and all the different programs and projects that go into it. So we tried to be nuanced in our recommendation to and cognizant of where there are kind of outliers that are [3:22:04 PM] are kind of outliers that are driving remaining spending versus an overall large scale program that has a ton of money left to, to spend. So it's there's a little bit of an art to it. But again, these are the updated graphs. So the spending curves have stretched out a little bit okay. >> So the two years is basically a guideline. Yes. And there's a lot of context that goes into making a judgment about whether to issue a new bond in the same category. Yes. Okay. Thank you so much. >> Thank you. Councilmember duchen. Councilmember vela. >> The again, looking at that, you know, the 1.3 billion, I think of unapproved but unissued. And looking at some of the other charts, it looks like about half of that total are the mobility bond projects. The 20 against 16 and 2018 or 2018 and 2020. And on a big one north Lamar corridor in my district. It's hard to. And let me ask [3:23:08 PM] It's hard to. And let me ask this as more of a question. It's really a thought, but with so much pending mobility, money still sitting there in the warehouse, is that a an area that we need to go back to in terms of the future bond issue? And again, I ask that as a big time mobility supporter. And but it's just with so many projects on the shelf, again, I know we need more sidewalk money. We're going to need to look at that. But that's not going to be a large amount. You know, that's going to be a relatively I think I mean, again, not in the you know, I can't remember what the number is that we can get out a year in terms of like the maximum number of money that we can spend as a city and our contractors and so on. There's a limit to that. The amount of sidewalks that we can build out. I think about our trails where we have kind of things that are ready to go, like we just need the money to, to build a bridge here or a bike Laine here or [3:24:10 PM] here or a bike Laine here or those kinds of connections. But in terms of major corridor reconstruction projects, I mean, again, I'm just speaking kind of honestly and openly hard to go back and get more money for more corridor projects when we still have a bunch of corridor projects that are sitting there on built. At this point, I don't know any thoughts on. >> So in terms of looking at our mobility bonds and hold that again, I think that's kind of goes back to councilmember tirz conversation or comments about a larger scale policy conversation about the how we allocate amongst all the different project category types. One of the things that is different for these last few bond cycle or bond programs, relative to if you look back at 2006, 2012, is that the contract with the voters had far more specificity around how much was being allocated to very specific projects or programs. So it creates a lot less flexibility if in terms of if we find that [3:25:11 PM] if in terms of if we find that we actually maybe could achieve more in terms of sidewalk investments versus some of the other categories, we're not necessarily able to move those funds around because we have to remain in compliance with those contracts with the voters. If there's desire to look at how we allocate the mobility bonds, there are processes not only for authorizations, there's processes for reallocation with council and voter action. I can include in the kind of future conversation. >> In my sense of that. Again, I wouldn't want to really de-authorize them, but for again, again, north Lamar is the project that I know best. The unanticipated drainage costs are really what is the big burden on the project. And so it may be a situation where we don't need more mobility funds. For north Lamar, what we need are some [3:26:11 PM] Lamar, what we need are some drainage funds for north Lamar. And again, I don't know if that's part of the holdup where, you know, those bonds have been authorized for mobility but not for drainage. But until we put in the subsurface drainage, we can't redo the street. So again, I'd say to the extent that those we need other funds that could, for example, jar loose some of the stuck mobility funds, that seems like a good idea, a possibility. But again, just looking at that backlog, it's and again, I say this as a big time mobility and transportation supporter, hard to go back and ask for more mobility funds when we've got half $1 billion just sitting there. >> Can I jump? >> Yeah. Mayor pro tem. >> Thank you. Guzman vela you bring up a good point, but I think what I get from your comments is that we need to do a deep dive on the mobility fund bonds itself, on the mobility funds, because there are a lot of projects that were funded in the last round that are just now moving in. Case in point, Ross road in my district that we just [3:27:11 PM] road in my district that we just authorized the actual construction funding a couple council meetings ago, and that was something that is being funded from the 2020 bond that is just now moving forward. You know, five years later there. To your point, earlier, the safe routes of school funding portion of the mobility bond has been depleted. And so there are portions of the overall mobility bond issue area that need funding. And there still great needs in our community. I have a number of substandard streets in my district that need the preliminary engineering report that need funding for the design and construction, so there's still a lot of needs to be out there. And I think T just speaks to the overall how much it cost for these infrastructure investments. So it's not as much as not moving forward on mobility bonds. It's just recognizing that we might need a different process, a different outlook on how we treat mobility bonds. But there's still just a lot of projects that need funding in. >> Our community. >> And I'll just add to this discussion, I think this is a good discussion to be having, but I'll add to that that, you [3:28:11 PM] but I'll add to that that, you know, sidewalks are easier to plan after the fact than some of these major projects would be. So you can get sidewalk money quicker out the door. One of the I think what the mayor pro tem says is make makes a lot of sense, which is do an analysis of all the mobility bonds that are in the warehouse and ask a multiple questions. One question is, have we waited so long now that that $100 that was passed isn't going to do anything anymore, right? Have have we waited because there's something else serving as a barrier. But if we so if we address that maybe in the next bond election, we can get that one out the door. You know, those kinds of things that it seems to me that we need to have a series of questions that that ask because, you know, and I hate to say it, but there may be things that that the statute of limitations, [3:29:13 PM] that the statute of limitations, to use an old lawyer phrase, is run on some of these things. We just can't do them anymore. >> Yeah. >> Councilmember. >> If I could piggyback on that, I think one of the things as part of looking at this, first and foremost, when we are talking about policies and learning lessons, to not be so prescriptive with a contract with the voters, we want to make it clear to the voters what we're going to do, but we also don't want to overly tie our hands. When you do need some flexibility, let's say for drainage dollars or to do some of the things you're talking about. And we limited ourselves. And so the voters get nothing because we were so prescriptive about what we said the money was going to be used for. I also think it's worth, as we both look backwards, but also looking forward to look at the other revenue sources that weren't either as prolific or even available ten or so years ago drainage, utility fee, street impact fees, things that could do some of that preliminary work, get it ready to go, so that then when we go to the voters, you're not waiting five [3:30:13 PM] voters, you're not waiting five years for these substandard streets. The engineering is done. It's ready to go. Same with some of the drainage work. So how can we better leverage those dollars, maybe free up some bond space or just, you know, better match our funding sources. So I think a lot sadly, lots to be done. But that's why you're the director of financial services now. >> Councilmember duchen. >> Yeah, I think there's something else I'll throw into the mix that I think might also be worth either understanding or, if possible, even measuring. And I know Carrie touched on it. I think in her presentation and comments, which is setting aside the dollars and the timelines, our actual capacity as a city with personnel and infrastructure to be able to spend these dollars and spend them in a timely and efficient way, which is getting to, I think, the conversation that [3:31:14 PM] think, the conversation that we're having right now and even understanding whether that varies between category of bond or or topic or subject matter, and whether that can also give us some clues about if we are planning on a bond where our capacity lies, to be able to spend those dollars effectively, or if it's sort of shared as part of a larger pool of just infrastructure that we can or can't tap into. But I'm wondering if there's a way to measure and understand that if that's cataloged anywhere. I know that that's come up in the conversations today and elsewhere, but I'd love to be able to quantify if there's a way to do that, what our capacity to actually spend the bond is. I feel like that would guide some of our conversation and policy also about where to go as far as projects and spending. >> There's a variety of different delivery methods that are available to us. Our typical low bids are our construction manager at risk and so on. So I think I would like to engage [3:32:16 PM] think I would like to engage with my colleagues over in cds to really kind of have a larger conversation or a more in-depth conversation about the capacity relative to our delivery methods and, and what might be most efficient and effective. >> Because I'm guessing that this is intricately linked to the mobility bond dollars being spent over time, or not being spent over time, as it were. But I'm also wondering how that applies to other categories of spending. And again, maybe gives us some opportunity to say we can't spend any mobility dollars if we passed a bond tomorrow until 2028, but we could spend in these ways if there was the capacity in the city to be able to do that. Between infrastructure, personnel, capacity, contractors, whatever the whatever, whatever the tools of measurement that we're looking at to understand what capacity actually looks like. >> Sure. >> Great members, anything else? Great discussion. Thank you. Run. All right. That'll take us to item number seven, which is [3:33:20 PM] to item number seven, which is identifying items to be discussed at future meetings. Members, we're going to have the tax the issues related to tree like we started today. That's going to be something we're going to do. We'll have a kind of a standing agenda item for that. We're going to need to have the annual report, the financial report and audit, the report from deloitte will be coming up. We'll have in April some discussion about the I-35 capping that those issues. There's an audit of personnel investigations that will be brought forth in April as well, and APD recruiting and hiring is something else that we'll bring forward. I'll mention one other thing, and I've mentioned this in a previous discussion, but I would like, as we go into the budget cycle for us to and I don't know whether I'm asking, I [3:34:22 PM] don't know whether I'm asking, I know I'm probably not asking for an audit, but I'm asking for some mechanism for reporting related to the amount of money that go to various nonprofits. And in those contracts with nonprofits that we have, which ones have performance measures. And if there's a way for us to look at performance measures, and I would say in those that do have performance measures, how we respond, what's the report on the performance measures as we go into this budget cycle? And those that don't have performance measures, do we have some form of analysis about the status of the contract and what we're getting for that? >> So that that's something that I think that we can handle through our special request process, at least to get you some preliminary information, which would kind of show you we did some work in 2018 and again in 2019 that that looked at a lot of maybe not all of those [3:35:22 PM] lot of maybe not all of those contracts. I think we have five departments and maybe more. A lot of departments partner with nonprofits, but but there are five that have the majority of those contracts that we've done some work in. I would say it's a lot of contracts and a lot of money. So we can kind of provide a summary of that and then talk about the, you know, what the best approach is to get you more information on the are there outcomes in those contracts and that kind of thing? >> I think particularly as we're doing the kind of analysis we're doing, everything from what's a tight budget look like to what's a tree look like, having information like that so we can make informed decisions would be helpful to us. Council member. >> Alter yeah, I'd love to coordinate on that because I've been thinking about this exact topic a lot and not both understanding the performance measures, but also having a clear set of facts of what these entities are delivering as part of that. Right. So what have [3:36:22 PM] of that. Right. So what have they given? What have they done? What are we expecting them to do going forward? Just a true understanding of what their role and what benefit they have brought as a partner in this process? >> That's good. Well said. Anything else anybody wants to talk about for future agendas? Yes. Councilmember duchen. >> I want to plan at least the kernel of an idea to maybe look at some ems stuff going forward. When I looked at the prior audits, thanks to Corey suggestion, I found reports going back over a decade like 2012, 2013, I think 2014 outcomes being in 2013, I'd be curious to start to look at two things related to ems. I'd like to visit with you all on. I think at some point that might be worthwhile to get the auditors to help us with. >> Okay. >> One, in relation to maybe using some data and machine learning to figure out, to look at trends in shifts and [3:37:24 PM] at trends in shifts and understand if it's possible at some point to be able to optimize how many people we've got and ambulances, etc, how many vehicles and personnel we've got on particular ships, looking at how shifts are trending in terms of call volume. And then I think the other one would just be trying to figure out if there is ways to prioritize resources so that we're not having to always send out the most expensive ems solutions for things that we might be able to instead send a different combination of vehicles and or personnel that could still address the problem, but may save us some money and energy. >> Good. >> Yeah. >> Thank you for raising that, councilmember. And I think there I mean, certainly we'll share on on my own behalf. There is certainly an interest on my end to rightsize our emergency response approach. So I think to [3:38:26 PM] response approach. So I think to the spirit of what you are getting there on the ems side, particularly interested on the mental health crises, you know, ensuring that we have an alternative response model to help with those situations. But overall, just taking a look at our public safety response and what might be the right size approach. >> Good. >> Thank you. We'll follow I'll follow up with you on that. >> Great. >> Thanks. Anything else? Really good meeting everybody. Without objection. Since that concludes all the items that are on the agenda for this audit and finance committee meeting. The. Without objection, we are adjourned at 3:39 P.M.