Climate, Water, Environment, and Parks Committee (CWEPC) Meeting Transcript – 12/2/2025 Title: ATXN-1 (24hr) Channel: 1 - ATXN-1 Recorded On: 12/2/2025 6:00:00AM Original Air Date: 12/2/2025 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. [9:33:56 AM] it is 933. I'll call this meeting of the climate, water, environment and parks committee to order. It is Tuesday, December 2nd. We are at Austin city hall and the boards and commissions room. There is a full quorum present. And I understand we have two speakers this morning. >> Yes we do. >> All right. Well, without further ado, let's get rolling. >> If I can have Marc may, followed by Paul Robbins. >> Okay. I'm a Marc. May I live in d5? I was here last, last month to talk about park [9:34:58 AM] funding. I wanted to to continue that conversation in light of what has gone on in the last month or so. So prop Q has failed in, you know, a response to this vote. Council chose to cut more than five. Million dollars from our parks budget. Rather than find other funding sources or reconsider past optional, costly projects. This is pretty frustrating because it almost at the same time you voted to cut park funding. Austin parks foundation showed us their latest irs filing that showed they actually continue to accumulate wealth and are now sitting on more than $23 million. While the city considered layoffs to Wright Wright of the budget, apf added two more highly paid employees and now spends more than $1 [9:35:59 AM] million on their top seven employees. Does it really take $1 million in annual salaries to figure out where to spend the acl? Check in our parks every year. Is this a wise use of public money? I'd say no. Simply don't understand how you all let apf continue to hoard cash. You seem to prefer funding cuts to asking apf and other nonprofits that benefit from our parks to do more. How could you not raise the daily maintenance fees charged to charge to acl? Why should voters trust your judgment with a future parks bond, when you can't seem to take the smallest, obvious steps to improve park funding? If I take a step back, I'm guessing that you think of yourselves as park people, water people, climate climate people. Since you're since you're part of this group. From my point of view, I, I believe [9:37:01 AM] being on the cw does not make you a parks person. Well crafted phrases on a campaign flier do not make you a park person. I believe it is how you vote that makes you a parks person. It's what you advocate for when it's hard and when people with influence don't want to spend money in parks. I think a parks person considers the impact on the general fund when voting for optional projects like a new tirz or concrete caps over I-35. This means actually recognizing that every dollar you choose to spend elsewhere throughout the year is a dollar that can't be spent on green spaces or parks, or to help us, you know, prepare for a warming world. A parks person sees the inherent value of green over gray. Please consider my comments and. [9:38:07 AM] >> Up next we have Paul Robbins. And we also have a request for one additional speaker, if that's okay. Okay. >> Council I'm Paul Robbins, I'm an environmental activist and consumer advocate. Most of you know that. I serve as vice chair of the resource management commission. I'm here to speak before your presentation on pending Texas gas service franchise negotiations. You have delegated the task of public review to the resource management commission. Our commission will likely be making a multifaceted set of recommendations at our January meeting. I am asking you to give us 30 minutes to make a [9:39:08 AM] formal presentation. When they are completed regarding the presentation that will be made this morning, our commission was not given advance notice of this. The presentation appears to frame the issues and solutions, in my opinion, to narrowly citizens. Austinites are anxious about affordability in Austin and the narrow framing of franchise issues will not help this. I will give you my personal observation that while the city cannot place specific rates in a franchise, I believe we have the right to place generic guidelines concerning collection of capital recovery fees, advanced review of proposed capital expenditures, Progressive rate structures, and assistance to low income [9:40:10 AM] ratepayers regarding the company's poorly performing energy conservation programs. It is true that the railroad commission regulates programs administered by gas utilities, but if the city ran its own programs funded by an increase in the franchise fee, these will likely be exempt from state regulation. Regarding the length of the franchise term. 25 years may indeed be the maximum, but as far as I know, it is legal to have it as low as one year. I'm the only person in the room who's actually worked on three rounds of franchise negotiations with a company or its previous owner, so I have some background in this. Again, I'm asking you to give the resource management [9:41:10 AM] commission a 30 minute briefing at a meeting after mid January. You all have to excuse my demeanor. I'm still recovering from an injury. I probably look like two cats drug me in, but I made it here. >> Thank you for being here. >> And then can we have kaiba white? >> Good morning. Thank you for the opportunity to speak on behalf of public citizen. I just want to say we're really excited about the progress that is being made on moving forward with putting solar on city buildings. This is a great opportunity for the city not only to lead on reducing emissions, set a good example for the community, but also to cut costs. And obviously that is of significant need at this [9:42:13 AM] time. The one thing that I would suggest perhaps making a bit of an alteration, at least from what we heard at the joint sustainability committee, was that staff was recommending setting a pretty high threshold for the size of building that they would go out for rfp or bid on in terms of getting installations. And the reasoning was just that those larger rooftops do get the best economy of scale. But that was not to say that staff was indicating that smaller installations would not still save money. And I would just suggest that given the, you know, outgoing kind of budget constraints that the city is going to have, we should be taking advantage of all opportunities to reduce operating costs. So even if there is, you know, somewhat less return on that investment for smaller facilities, it is still a return. And I would just suggest casting a very wide net when when offering up, [9:43:14 AM] putting out that rfp and allowing the market to respond. You will have some companies that definitely want to work on the bigger projects. There are other companies that don't have the capacity to work on those larger projects, but might be very interested in the smaller ones, and that's still an opportunity for the city to cut cost and also have more solar capacity. But overall, I'm really excited, as is the joint sustainability committee, about this progress and about the departments that have been working together to get to this point. So I encourage you all to move forward in an expedited manner. You know, today, and as those rfp results come in. Thank you. >> All right. We will now move to our items. We'll start with item number one, approval of the minutes from our October 22nd meeting. Is there a motion? Vice chair Ellis, seconded by councilmember Siegel. Without objection, the minutes are [9:44:15 AM] approved. Approved. We'll go to item number two, which is our meeting schedule for calendar year 2026. I will just point out that currently we set November 25th as a meeting. And as much as we all are thankful for being together, I don't think we want to meet the day before Thanksgiving. So I'm a propose that we move that to November the 10th. And with that, if there is a motion with the calendar with November 10th, I see by council member duchen, second by vice chair Ellis, and without objection that those dates will be approved. All right. That brings us to item number three, briefing on solar, on city facilities. And let's see, we have Zach palmer and who's joining you Zach. Crew whole crew Zach plus crew. [9:45:28 AM] >> All right I'm Zach palmer director of Austin climate action and resilience. And I'll let my co-speakers here each introduce themselves before we start. >> Good morning. Rohan climate project manager at Austin climate action and resilience. >> Good morning. I'm kit Johnson, City architect with facilities management. >> Good morning, Tim Harvey. I'm the director of customer renewable solutions Austin energy. >> All right thanks team. So we're really excited today to give you this update on our work on exploring solar on city facilities that we've been working on over the course of the last five months together. So first I'm going to cover an executive summary, then a little bit of background on our approach. Then my other speakers are going to cover options for adding solar. Our initial site screening, which we've been going through over the last few months, and then [9:46:29 AM] our request for proposal process that we are rapidly approaching here, and then schedule and next steps. So first the the resolution which brought us to this work, this was an item from council that was passed back in may. There are four parts to this resolution. The first one, the first part is what we're going to spend the most of the time explaining today is our assessment of sites and how we would go about maximizing solar additions to city facilities. The second point there was about. The concept of a revolving fund, which there was a parallel resolution that was passed during the budget process. We have a parallel process that's going going on right now to analyze and propose how we could actually create a revolving fund. We're likely going to get to the details of that in the coming months. The third item there [9:47:31 AM] was about a collaboration and sharing with other local governmental entities in the Austin area. We have held a call with as many other local governmental entities as we could in October, and shared all the information about this project and this program, the work that we're doing and offered our help and our information to them so they can pursue this, this type of project that they would like. So we feel like that's been a productive collaboration with our, our local neighbors. And then the fourth item on the agenda there was about worker protections. We are we are planning on including a worksite agreement as part of our rfp that we're going to be releasing. So we feel like we will properly address all the labor stipulations in our in our contract as we move forward. So, as you can see from the speakers up there, this has been a very collaborative team effort. My team has been the [9:48:32 AM] overall sort of project manager and coordinator on this. The facilities management team has been key in terms of sharing all of the detailed information about our sites, things like ages of roof, things like accessibility. And so we've cast a very wide net in looking at every single possible city facility that we could analyze here. Austin energy has really been key in terms of their subject matter expertise. They run a solar program, so it's been great to have their knowledge. On board in terms of analyzing all the detailed electrical service analysis for buildings, as well as in advising us about how we might finalize this rfp and get it out on the street next. Finance and procurement has been really essential to this discussion because we're talking about a potentially complicated contract with lots of sites with numerous bidders with a large dollar amount. So those [9:49:33 AM] staff have been participating in all of our meetings over the last five months and advising us on how to be most efficient and effective in this effort. And then finally, this project could not get to this point without the help of an outside consultant. They're not here today, but rocky mountain institute is a nonprofit based out of Colorado that's an expert in this kind of work. They advise the the city of San Antonio on a very similar project over the past couple of years. So they have been helping us and guiding us along the way in every step in this process. Okay, so the executive summary for where we are today, over the course of the last five months, we have analyzed over 250 city facilities for solar potential. We've narrowed it down to about 120 sites that we really think are feasible to add solar. And based on percentages that we that we're seeing in San Antonio, when they put a large number of sites out to the market to get [9:50:33 AM] proposals on solar, we think it's likely that we will likely have about 75 city facility sites picked up with a potential of 25mw ac in capacity. And just note that that's a large number. 25mw of solar is big. So we're really excited about that. We are not going to know the real details on how much this is going to cost and what the payback is going to be until we get our bids back in the coming months. But our initial financial modeling shows a potential positive net present value to the city. And once we get those bids back, we'll be having to make some important decisions about ownership models, debt and risk management and how we actually move forward. But the initial running of the numbers shows that this should be a positive to the city, and should pay back and save us money over the long term. The next point is that based on the uncertainty and changing [9:51:33 AM] guidance on federal tax credits, we have some very tight timelines to start construction on this project. And if we don't secure that, the 30% federal tax credit, it's possible that none of this is financially viable. So it's very essential that we move forward very quickly to get this project off the ground. And so finally, where we are basically right now is that we are planning to issue an rfp for addition of solar on these city facilities in the coming weeks. We're going to ask respondents to propose a solar portfolio that maximizes scale, cost effectiveness and community benefits to the city. Okay, so first things first. The federal landscape on solar has a really large impact on this industry and the financial feasibility of adding solar on facilities. So. The good news was, back in 2021, the [9:52:35 AM] inflation reduction act enabled direct pay. So the direct pay concept is basically that non-profits and governmental entities that don't pay federal tax credits, that don't pay federal taxes can submit essentially a tax return and receive the direct payment for the 30% tax credit that all for profit businesses have been receiving for multiple years, for solar, for solar projects. So that's a key benefit. And that's part of the reason why San Antonio and many other cities and non-profits have been ramping up the addition of solar in the last few years. Fast forward to 2025, though, when the one big beautiful bill act was passed, it essentially phases out the 30% tax credit for wind and solar over the course of the next few years. But there are two key provisions that allow us to [9:53:35 AM] access this credit. In the meantime, the one that we're looking to pursue is that our project would need to commence construction by July 4th of next year to access those tax credits. So the key thing here is there's called what's called a safe harbor provision, which means that if we spend 5% of the value of of all of the projects we're looking to implement, we would have four years to complete those projects and receive the full 30% tax credit. So time is of the essence to get this rfp out into the world, to get the bids back, to select a contractor and to essentially get us locked in so we can receive those that tax credit. Because if we don't receive the tax credit, like I said, it's likely that this is not economical and won't pay back. So this time is is key. Okay. So generally the process that [9:54:36 AM] we've been following on this project is sort of a three step process. This was laid out for us by by rocky mountain institute. And it's what we've been following. So the first step is really what we've been doing over the past five months. So that's assess. So we've been inventorying assessing all of our current city facilities for solar potential. We have giant spreadsheets with all the details on every single site and facility. The next step is engaging with all of our building owning departments to build their support, to add solar on these facilities. As you know, Austin facilities management directly manages many facilities, but but many of our facilities are managed by their own departments. So it was really key to build that connection and buy in and support from departments up front. And then finally, finally, we've been prioritizing the sites to maximize the benefit and scale, to make sure that we can receive the best return on [9:55:36 AM] investment. So then the next step is procure. This is where we are right now. We're going to be looking to issue this rfp for multiple sites to achieve the largest economy of scale that we can to get the best pricing in a most efficient and effective cost proposals back. Tim is going to explain more about this, but we're looking to explain we're looking to evaluate our proposals based on two different ownership models. One model is city owned, where we issue debt or use cash to purchase the solar outright and receive all the benefits. The other option is solar standard offer, which Tim is going to explain a lot more about. And then finally, after we've issued the rfp and we get the bids back, we will then have to select the winning proposals, identify the funding, get council approval on this contract, and then build the solar as soon as possible to leverage the tax credits. And then finally. It's really [9:56:38 AM] important with solar. To make sure that we have o&m built into this contract. Because these these systems tend to last 15, 20, 25 years. And so we're looking to sort of build payment and performance into this contract. So the solar fully lives out its life and fully pays back over time. So next Tim Harvey is going to explain a lot more details about solar, the types of solar and the business models. >> Thanks, Zach. So we're looking at three different types of solar here in the city, primarily rooftop I would say, but also canopy. So this would be in parking lots and offer shade parking as an additional shaded parking as an additional benefit. And then there's also some potential for ground mounted systems. So I want to [9:57:39 AM] go over the two different approaches that we're looking at. The first, as Zach mentioned, is the city ownership model. So one thing to consider here is that there are upfront costs to this model. We would have to procure o&m for this to make sure that these assets are achieving all they can through their useful life. The city would then save money on the electric bills for the facilities that they are interconnected behind. They would be interconnected behind the meter of those facilities. So then there would be a monthly savings on that bill as they get the value of solar credit on those bills. And then we need to consider here the risk is on the utility for the production. So that's why we would have the o&m. But if like a hailstorm came through and [9:58:39 AM] took out some systems or whatever, you have a certain amount of time that it takes to re-energize those systems and get them back online, and that would be some loss production. That would be a risk to us. The alternative model is the standard offer through the standard offer program. It would be a third party that owns the system, so they would come up with the capital investment. The city would not have an out of pocket investment upfront. The owner would also be handled by the third party, as Austin energy pays that third party directly for the energy that they produce, the third party would enter into lease agreements with Austin or with the city of Austin to basically lease out their rooftop and our rooftop and our parking lots, etcetera. Our spaces that would host these systems. So we would get [9:59:40 AM] a, you know, monthly or quarterly payment from the third party for the use of our property. And that's how we could benefit. And, and, you know, turn that into potentially a revolving fund. So with the standard offer, there's lower risk to the utility. There's no upfront capital investment for the utility and the energy that's procured through the standard offer then goes to build a community solar program that would that customers would have access to, that would enable them to get green energy supply to their loads. >> Can I ask a question about this one? Sorry to interrupt, but the when we're looking at the question of kind of who's paying for this? And it's all under the umbrella of the city, [10:00:42 AM] but understanding that if it's, let's say, a parks facility versus an Austin water facility or a transportation public works facility, right? These are funded differently. Is the idea that if it's an enterprise department, they're funding it through their funding sources, but if it's a general fund department, it's through their funding. Like is it going to be bifurcated in that manner assuming city ownership? >> Yes. Okay. Yes it would. So we're doing a lot of work with the departments and finance to parse out departments and which would own which and how they get paid for. But if it's solar standard offer, it would be paid for by a third party. So we wouldn't have to find the financing upfront cost. >> And is there any kind of have you all looked at or discussed a third option, where Austin energy owns all of them? And essentially it's like our own local generation where we [10:01:42 AM] are essentially the almost the third party and the standard offer. Right. Like there are Austin energy's panels, you're getting the value of putting it into the grid. And then we as a city are seeing some financial benefit. Is that. >> So like a power purchase agreement almost. >> But like yeah, I mean it could be ppa with with either a an external entity or they're there Austin energy's panels and it's almost like a ppa with yourself. >> We did look at that model. It wouldn't be conducive to the revolving fund kind of scenario. It could be that if we did a power purchase agreement, you know, with between Austin energy and a provider, that would be a no no capital investment scenario. And it could be that we could negotiate a different rate that is perhaps lower than the [10:02:43 AM] standard offer. But I think that the. That would be. Something that where Austin energy is taking the risk there and and again, it wouldn't really contribute to the financial benefit to the different facilities. >> When we've done community solar in the past, like on top of palmer, was that a ppa or is that. >> It. >> Was? Okay? >> Well, no, actually palmer is owned by Austin energy, but the other two community solar projects, la Loma and at the airport are rpas. >> Okay. >> Very good. >> All right. So as that kind of mentioned before, we wanted the idea is to get as many properties out there in the rfp as we can. So when we first started this process back in June, we pulled together the [10:03:44 AM] asset list that facility management has put together real estates, list of all of our properties, risk assessment. They have a list that we also look to. But the idea was to get as many in there as as we could and what we were looking for. We wanted to do the initial culling through these properties because one thing, part of the wisdom we gleaned from San Antonio's effort on this was to de-risk the rfp by looking at the properties ahead of time before we even put them out on the street. So what we did is we looked at these properties, we went through them, we looked for, you know, if they had a roof life of 20 years or more still left on the roof, we we looked at 10,000ft !S as our minimum. San Antonio is 15,000ft !S of area that we could put a solar array. We looked at, you know, shading on the property if we, you know, trees are going to be a problem or something like that. So we we wanted to go ahead and go [10:04:44 AM] through these. And so through that process, that's where we came up with this initial list of 250 properties. And at that point we, our rmi was brought in as we started working with them closely to further refine this list, we had this list of properties. And so we've been that's what we've been doing primarily these last few months is going through those with rmi, looking at through a microscope, and to really just make sure that these really were properties that we could put out in our rfp. So now we're down to around 120 properties that we're looking at. And we're still we've already met with a lot of the departments. And to see if these properties really are should be put in place, should be offered out in this rfp. And so we're wrapping that up. And then so we're on the threshold of, of putting a bow on this and putting it out in rfp so that the next step as you see the funnel getting smaller and smaller as it goes down, is really that this is where the market is going to decide what's going to come out of this list, which properties [10:05:46 AM] are really viable from the vendors perspective if these properties are really going to work? So that's where we're at now. >> Thank you. So. Based on the the list of sites that are going into the rfp, our best guess at where feasible and likely solar portfolio is going to land is at about 75 sites with 25mw of solar capacity. And you know, that little sun beside the solar panel is also an asterisk, asterisk of sorts. Because we don't know. We won't know what the actual portfolio is until we get bids back. But this is sort of our best guess based on the work that rmi has done and the the experience of San Antonio. And to give you an idea of the scale of this project, 25mw would be almost twice as large as San Antonio's project. It would be enough power for 3600 homes. It would [10:06:49 AM] represent about 13% of all customer sited solar energy in Austin energy's territory, and it's 1.3 times as much solar as Austin energy installed in fy 2025, which was a record year. So it is a substantial amount of solar that could be put onto the grid as part of this project. So where are we now? We are getting close to the finish line on issuing our request for proposals. We are working with procurement to develop materials and our our vision for this rfp is first to issue it in two phases to evaluate based on qualifications. First, to make sure that we are only receiving bids from companies that have a track record, that have the financial foundation to be able to do this kind of long term work and have experience with this type of project, [10:07:50 AM] especially in, in Austin, and finally, to receive proposals and pricing from those qualified vendors. We are seeking an optimized portfolio. So we're looking to balance multiple objectives. You know, we're not trying to maximize for scale or cost effectiveness to community benefits, but we're trying to get a portfolio that is optimized for these different criteria. So we want a portfolio that balances scale but is also cost effective and also brings benefits to our community. So we're really looking for all of the above. We are considering both city owned and solar standard offer models, and we're planning to accept bids as either approach or a combination of both, not both approaches won't work on every site. There are some sites where there are some intricacies, whether they are legal intricacies or other sort of factors that are affecting whether city owned or solar standard offer are viable on [10:08:50 AM] every site. So we're planning to accept either approach or a combination of both. Batteries is something that we did consider in this project, and we plan to include these as an option. We're not planning to require batteries. This is a we're working on a pretty aggressive timeline to take advantage of the solar tax credits. The battery tax credits have a longer runway, so there's less urgency to install batteries. But at the same time, this is a developing space. The economics of batteries are shifting very quickly, and we don't want to limit ourselves to innovative proposals or options that include batteries. If vendors determine that, that's the best path forward. So our door is open to batteries, we plan to include a multidisciplinary and inter-departmental review team that includes representation from the departments up here, as well as departmental asset owners, to get sort of a holistic review of the potential proposals that come [10:09:52 AM] through. And finally, as Zach mentioned earlier, we are planning to include a work site agreement, labor language agreed on by unions and Austin energy, and has been included in previous Austin energy rfps. So our schedule and next steps. We are here today at the council committee on climate, water, environment and parks to update you all on our approach, our process and talk about our rfp. And we plan to hit the streets with our rfp in the next in the next few weeks. Time really is of the essence, and we're planning on on issuing that as soon as possible. We have between January and March to really receive responses to our rfp review. Those responses, decide on an approach and a financial model, and identify a winning proposal or proposals. Receive approval from city management [10:10:53 AM] between March and April. Get on the council agenda in April and then get that construction started and get the project kicked off between April and may and June to take advantage of those tax credits that require us to start by July. So a very aggressive schedule, but a feasible one given, you know, all the departments at the table and the support from council and from management. >> All right. >> Are there any questions? Vice chair Ellis. >> Thank you. Chair is the list of 120 properties. Is that something that's public or something that we could take a look at? I'm just curious about which types of buildings seem to be most feasible that the city has access to. >> Yeah. We can we can share the list. Yeah. Okay. >> Yeah, I look forward to seeing that. Okay. And then as far as the scope, would there [10:11:54 AM] be consideration of timeline and approach? Obviously, you know, one group wouldn't be able to deploy all of this infrastructure immediately. What is there any strategy to the phasing or is that something that you just hope that these businesses will be able to provide through the rfp process, like which ones go first? Is it the bigger buildings or is it a little bit all over town? How would that scoping work? >> I think that we would leave that up to the developer to optimize their resources. So I think that would be something that they would propose. >> Okay. Sounds good. I'm specifically thinking about district eight only has one city owned publicly facing building, which is the Hampton branch library, and it is sometimes on the list for heating and cooling stations and extreme weather. And I'm curious about the resiliency of solar power on a building like this, knowing that this is a fairly small building, there's not much else around it as far as city infrastructure goes. [10:12:55 AM] And so I'm just curious how how this is going to affect southwest Austin and how we can best use it to our advantage if we're going through this process? I think it's a great one to go through. So I'm glad that we're doing the investigation, but I guess we'll wait to see what some of the bidders propose. And are you going to select like one company to do it all, or will it be like a top 2 or 3, or just see what information comes back? >> It could be multiple. It could be one. So the door is open to either option. >> Okay. Sounds good. Well, thanks. >> Councilmember Siegel. >> Just want to, you know, reiterate your last slide and say thank you for working on this so expeditiously, director Baumer and all of you. I think this is a great example of interdepartmental collaboration. So it's great to see, you know, three different agencies at the table. And I know we're working under this time pressure. So thank you so much for getting this together. And in particular figuring out a way to include the work site agreement, which is obviously really important for workers. Thanks. [10:13:57 AM] >> Marc duchen. >> Okay. I first of all, thank you. As councilmember Siegel pointed out to me, really encouraging example of a collaborative effort on your part. I have a couple sort of basic high level questions. One is just to help me understand, given the uncertainty around the tax credits, given what seems like a really compressed time frame, what is the likelihood that some or all of this is going to actually happen in the in the timeline that you guys have laid out, do you feel 95% confident that we're going to be able to get to 120 facilities in that time frame? Do we even have to get to all of them? And so another question built into that is the 5% start. Does that need to be at each 120 facility, or can that be just the aggregate of the program? >> I can answer the second question that. So for the treasury and irs purposes, each [10:14:57 AM] facility would be considered its own project. So we would have to start on each one. But once again commence construction is was in quotations on our slide. Because you don't actually need to have a stake in the ground. That 5% upfront investment is sufficient to indicate that we have started the project. >> Like as long as you pay the vendor the first 5%, they count that. Okay. Yeah. All right. So what about the first part of the question. Just give me like kind of a risk analysis on this. >> Well so we have as as long as we get that July 4th start, we have we're at a four year safe harbor. So that gives us four years to deliver those. And the way we've been thinking about this would be a master agreement. And then so each project would be independent. So hopefully we get to the 120 or however many and we get through this rfp process. But that would you know that's doable with four years. But that's one of the things we're going to be looking at when we look at the vendors is their ability to deliver the goods. [10:15:58 AM] And while we may go with more than one as well okay. >> All right. >> And we're operating under the assumption that we're going to meet these deadlines. I mean, we we've been putting so much time and energy. And we want. >> This to work and obviously we want it to be successful. But I just don't know the details. You guys know about the extent that certain triggers have to be met and the challenges, even around selecting the vendors, working with juggling potentially 4 or 5 a dozen vendors, I don't know, to make sure that you can get to each of those sites, cut the checks, and feel confident that that work is going to be produced the next four years. Regarding. So one of the things another high level question is you talked about trying to optimize this for scale, cost effectiveness and community benefit. And I wonder, does that create a problem or a challenge when trying to select which model to use the standard offer or the city owned model in terms of where the real priority is? Is it saving dollars or spending the dollars as efficiently as possible? Is [10:17:00 AM] it going to be ensuring that we do get to all 120 facilities? Is it going to be some other thing that, you know, the community benefit that probably started this whole conversation? How do you guys make that decision if there's not one overriding priority here? >> Yeah. So we've spent a lot of time discussing our evaluation criteria for our rfp and how it relates to the goals that you all have set out for us. And we think that we have a balance based on the points allocated to essentially require vendors to consider all of those different criteria and balance them. The way we're looking at evaluating the cost effectiveness of city owned versus the solar standard offer is using net present value over the the time frame of the contract. So we there is a little bit of comparing apples and Oranges, but we think that based on the way the evaluation criteria have been set out, that we have a path forward on [10:18:00 AM] that. And we've really leaned on the experience and the work that rmi has done in the past with other cities to optimize for those multiple objectives. >> Is there a reason that we didn't pilot out a single location to figure out how some of this could have led to better information to make that decision? Or do we have data from San Antonio and their project to help us with that process? >> We have some some sort of background insight from San Antonio. A lot of the work that has, you know, the procurement details are covered by an nda from rmi. So they haven't been able to go into, you know, all of the, the, the nitty gritty on that. But we do have some information from them. >> We don't have a stellar standard offer program though right. So we couldn't compare that. >> Yeah. Okay. >> Well speaking of that option and the decision between those two models, does using the city owned model create a working capital challenge for whoever is actually financing the [10:19:00 AM] project? If we did it ourselves? >> Yeah, I mean, that's the major consideration that, you know, it's millions of dollars in capital that we're. >> And who is who would be responsible for that? >> For enterprise departments, it would be the enterprise department for the general fund departments, it would be just central finance. So they're all they've been at the table and in these discussions with us about how much they might need to secure, >> Okay, is that based on the site or the department that's hosting the project? Is that how it's working? >> Yeah, it's based on the site. And then based on the proposals that come in, it would be on how big the solar installation is and then what the cost is of that installation. >> Okay. All right. Thank you very much. >> Thank you. I'm going to get some better information on the siting and the analysis. So y'all y'all started with the [10:20:01 AM] 250 and did the analysis of each one to get to this 120 ish potential. And I'm curious when you did that analysis, was it like let's look at the the area first. And if it's not 10,000ft !S, stop the analysis and move on. Or did you analyze all the factors and then say, oh, but it's not big enough. And so even though it has no trees around it and it's a new roof and everything else is good, but it's only 8000ft !S, we're not going to include it on the list. >> Yeah, we definitely have some of those that broke the rules, if you will. I mean, we were trying to initially just like, say, call these out and, and come up with a list of pass on to rmi. And part of our goal was to speed them up as well because we know the time frame we're working under. So but yeah, we've gone back and forth and back and forth many times on looking at these properties. Just see, you know, if they [10:21:02 AM] really are good candidates and are we being too strict. In fact, you know, we've gone back and and looked at several properties that we were a little too conservative on and we brought them back in to play just to get our list bigger. >> And then was rmi the final kind of arbiter who kind of said, you know, this really is either a good candidate or not, or did they kind of provide a like a ranking or scale? And then we decided where the cutoff was. >> But it's definitely been collaborative with them. I mean, we're gleaning quite a bit from their experience. This isn't their first rodeo. And so they've been great to work with. But but you know, we know some of the nuances of some of our facilities here and just, you know, just what the community is going to think about certain facilities if they're included or not included. So that's that's worked its way into the conversation as well. There's been a lot of discussion on should these properties be in or out, a lot of back and forth. >> I think I'll also add that when we say 10,000ft !S, it's not [10:22:04 AM] only the roof area of the building, we're also looking at parking lots in almost every single facility. So, I mean, while some facilities have been cut out as being too small, facilities are being cut out for lots of other reasons too. Like that facility is going to be sold or that facility has really old roof, or that facility is going to have a bunch of maintenance done. There have been there are a lot of reasons why some facilities like haven't been included, and it's not as straightforward as just the size. >> And the reason I'm asking this particular question is if there would be in your mind value in put aside all the factors you just mentioned, a building that is going to be sold or has a bad roof or whatever, but let's just say it is 5000ft !S, 7000ft !S, something that is smaller, that doesn't quite have that. You know, if we looked at maybe that's 20 facilities, I don't know, maybe it's five, so maybe it's not worth it. But essentially [10:23:04 AM] having like a second bundle that we put out and I imagine some of these. More kind of residential installers who have seen this huge surge going into the end of this year, but are going to see a big drop off because the residential rebate or tax credit is expiring. You know, maybe one of these companies says, you know what, 20 buildings that are more akin to a house or you know, that they're just more familiar with and maybe that's two megawatts worth, right? But that's still something of value. Would it, would it be worth kind of having your, your tier be rfp just to see what the market does? Food for thought you all have the data and maybe it doesn't make sense, but just interested in in having that. And then secondly kind of on what councilor Ellis was talking about would be one [10:24:07 AM] company or multiple companies. Are we in any way saying, you know, if you think that all you do is the mounted like parking lot, you come to us with those and that that's your offer, and then maybe someone else is just rooftop, right. And so we bundle those together. Is that are we thinking that might be how some of this comes to us or what? What's the thought on what these proposals will look like from a 120 versus maybe 50 here, 50 here. >> At least what you might want to chime in. It's not only that, like we're going to when we're looking at the you know, what responses we get back, we're going to be looking at what's the combination they put. You know, it may be one company that's they take them all on. They're going to do roofs. They're going to do, you know, parking lots or just like you said, there may be somebody that they just do roofs. And so we're we're going to look at [10:25:09 AM] all that in the mix. But also we're anticipating someone to come back and they're going to come with us. And this would be all city owned facilities like they're not considering the standard offer. And then, you know, another vendor may want to do exclusively standard offer. And then we're anticipating some coming with a mix. And so it's really hard to even answer that until we see what comes out there. I mean, our goal is just get as much out there as we can, and really it's the market that's going to dictate how many buildings are, you know, actually get completed. >> Well, I agree with that. >> I appreciate your work on this. You know, I think if there is, I think there's a desire for us to maximize this. I know that the conversations we've had that that's your desire as well. So if it's, you know, one entity that we think is really great to do 90 and we can kind of patch together the other 30, if 120 is kind of where we land or, you know, there's this other smaller group that helps us just however we can do it. This is our one shot really, unfortunately wish we had more [10:26:11 AM] opportunity, more time. But with urgency comes action hopefully. So I really appreciate the work y'all are doing on this. I'm so excited that we are going to be deploying solar here locally in a way that's not only going to be beneficial from environmental perspective, but it is going to save the city money. And that's just a win win that we can't ignore. So I really want to thank you all for the work you've been doing. It's it's clear that you've been working really hard and I look forward to seeing the results. And vice chair Ellis. >> I just want to double up on what you're saying because I agree with it about providing some flexibility. I've gotten a note that the Hampton branch library is 8400ft !S, and so I would hope that in order to make that facility pan out in something like this, that it would either be a smaller vendor or looking at doing the rooftop over the parking lot and things like that. I will also add that it is hopefully potentially slated to be getting expanded with some future bond money. And so I'm thinking of timeline. How do we make sure that a bid that's [10:27:12 AM] received before that expansion somehow, you know, is still allowing for as as we change and update and upgrade our city facilities, that we are not closing the door on. Some opportunities that I think would be really sad if we missed. >> I can I can jump in on that. So first of all, Hampton branch is on the list. >> Yay! >> And second, San Antonio built some additional flexibility and some options into their contract for additional facilities or expansions or unallocated solar capacity into their contract. So we're going to look at ways to incorporate flexibility into ours as well. >> That's great. And I do I know when kaiba spoke earlier, she was talking about some of the smaller businesses being able to bid on smaller projects, and I think that's a great way to get the foot in the door for some of the the groups, like the chair was saying, are used to doing residential and ready to expand into a more commercial style. I'm always looking for opportunities to get our smaller businesses, and especially local businesses, to be able to participate in government contracting and and [10:28:14 AM] these bids, because I think it's great experience for them. >> And it may not be 25mw, but we just got some panels on our roof. So come December 18th, we're going to be contributing to the grid here. So I know councilmember duchen has questions. >> Thank you. Chair. Sorry. One last question guys. Which was is it are we only going to really figure out what the impact to ratepayers is after we start to deploy this, or do you have any sense of what that impact me? I'm only thinking about the presentation we had from Austin energy last month about speakers and the impact and the necessity of reinvesting in that space, which I assume has more of a direct impact on ratepayers. So any sense at this stage or is it premature? >> No. So the standard offer rate is a new rate that Austin energy has come out with. We have we base that rate on [10:29:14 AM] Austin energy's avoided costs. So we are able to scale the standard offer program without negatively impacting ratepayers. So that's one of the beauties of of the design of that. >> What about the city owned option. >> So the city owned option, you know whether or not that impacts it wouldn't impact ratepayers from a electric bill perspective. If there was a negative impact to ratepayers, it would be because the systems did not perform. >> Got it. Okay. Thank you. >> All right. Well, we'll see you all soon. Up next is item number four. And that is a briefing on the scope and purpose of gas franchise agreements. And. Is it I'm going to go on okay I was going [10:30:15 AM] to thank you. I really was waffling back and forth on what to do with that Jay. All right. Maria Norton and Thomas Brocato and Rosalyn Warner and okay. Very good. And just as a little way of background to the committee, I asked for this briefing because we are going to be next year having a a renewal of our gas franchise agreement, something that happens about last. It was ten years ago when we did this. And so that's something that none of us have done before and wanted to kind of learn this process. What are we going to be discussing? What's at play here? And just to kind of get an overview of what's to come. So with that I will turn it over to you. >> Good morning. Maria Norton, city controller, and I'm joined with our outside counsel, Tom Thomas. Ricardo with Lloyd gosling. They are our outside counsel assisting the city staff with the franchise negotiation process. So today we'll be giving an overview of [10:31:16 AM] the scope and purpose of these franchise agreements. So franchise agreements essentially allow utilities to use a city's right of way. In return, the utility pays the municipality a fee, which is often based on gross revenues. These agreements help ensure cities are fairly compensated for the use of the public infrastructure. Under chapter 103 of the gas utility regulatory act, cities have the exclusive original jurisdiction over the gas utility rates and services within the boundaries. Cities can grant or deny franchises and impose charges for the right of way use. Importantly, franchise agreements cannot override the powers granted to the railroad commission. By law, both municipalities and the railroad commission are considered regulatory authorities. Even when a city has original jurisdiction, the railroad commission does have exclusive appellate authority, which means that basically, if a [10:32:17 AM] utility disagrees with the city's decision, let's say on rates, it can appeal to the railroad commission for review, while the appeal process may be less relevant to franchise contracts a utility has agreed to, it is intended to show that we do have limited authority. Next slide. So there are some there is some authority granted under Austin city charter, specifically article ten, that gives city council the power to grant these franchise agreements. The authority is exercised by ordinance and must follow specific procedures and limitations. No franchise can be granted for more than 25 years. This ensures that periodic review and accountability of these long term utility operations and every franchise ordinance must be read at least at three regular council meetings, and there must be at least 30 days between the first and the third third reading. And the ordinance does become effective [10:33:18 AM] 60 days after the final adoption. So this slide lists the city's current active gas franchise agreements. As you can see, the Texas gas service franchise agreements expires next year on October 15th, 2026. Based on the city charter timelines discussed in the previous slide and given council's limited non-budget meetings next summer, city staff is required to have a negotiated agreement with tgs to present at the may 7th council meeting to have a new agreement in place prior to the expiration of the existing contract, and I'll hand it over to Thomas. >> Good morning, council members. >> So what goes into a franchise agreement? Generally two things are addressed. The terms related to the right of way use and management, safety issues, things of that nature, and then the compensation that's paid to the city. And on this slide, I've kind of broken that down into some of the specific aspects of the right [10:34:19 AM] of way use and management. And I'll just go through a few of those quickly as shown on the on the slide. So normally the negotiation centers around, you know, the permitting requirements. What is the utility going to have to do with respect to city permitting in terms of placing their infrastructure into the right of way, or moving that infrastructure? What's that approval process going to look like? What's the timing around that permitting? You know, the plan requirements for utilities projects in the right of way. The utility, for example, may have a list of capital improvement projects that involve moving their infrastructure, adding infrastructure into the right of way. And some of those issues are addressed as well. Operational maintenance and engineering expectations. You know, these are terms that relate to, you know, requiring compliance with industry standards, requiring compliance [10:35:20 AM] with excavation and restoration expectations, again, so that the parties have an understanding of what's going what it's going to look like when the utility needs to put infrastructure or move infrastructure. What's the expectations when the city needs to widen the street, straighten a street? Do other types of repairs on the street in terms of getting utility to to move their infrastructure? How cost recovery is going to be done? Although I will say with respect to gas utility service as opposed to electric, it's a bit more straightforward since utility is entitled to cost recovery. And then there's typical language with respect to indemnification. If there's some sort of accident or litigation involving the right of way liability insurance requirements, things of that nature. And then typically there's language with respect to relocation, as I mentioned a moment ago, who's going to bear [10:36:21 AM] the cost? What's the timing with respect to that relocation, things of that nature. And then lastly, as I mentioned, the compensation is paid to the utility for the utility. Excuse me, to the city for utilities use of that right of way. So what are some things that are generally outside of franchise negotiation or franchise agreement. Typically ratemaking terms and conditions are handled in in a rate case that's filed before the railroad commission and also before the city. And just to give you an example of that, you're probably aware that tgs has a pending rate case at the railroad commission. Now, we reached a settlement of that case just a few weeks ago, and we filed a settlement agreement at the railroad commission again just a couple of weeks ago. That settlement does address various ratemaking aspects, various ratemaking [10:37:22 AM] issues, such as the overall revenue requirement, the contribution of native construction, low income assistance, tiered rates for residential customers, the amount of the customer charge, and the allocation of costs to the various classes, including provisions that mitigate or reduce the amount of allocation to the residential to residential customers. Something else that is typically outside of franchise agreement relates to conservation programs. As you're probably aware, in 2023, the legislature adopted hb 2263 that gave the railroad commission exclusive jurisdiction over conservation programs. That legislative change means that going forward, most of that discussion, most of the discussion related to conservation programs is going to occur over the railroad commission, as opposed to being included in a franchise agreement. Also, capital [10:38:22 AM] investment that's generally again addressed in a rate making proceeding. We did address some of those issues in the settlement that we just filed. Also under Texas law, you know, gas utilities are able to file annually what's called grip filings or gas reliability infrastructure program filings, which allow for recovery of capital investment without any contemporaneous substantive review. And so we always have to keep that in mind as well. And then terms governing the utilities provision of gas service to customers. Again, those specifics are generally addressed in a rate making proceeding as opposed to a franchise agreement. Happy to answer any questions that you all have about any of these issues or other things that are on your mind related to this. >> Council member. Nugent. >> First of all, thanks for the briefing and helping step through what we can and can't do. The requirements. I [10:39:23 AM] understand that the resource management commission has been also interested in this issue, and I know that they made some recommendations, things like around the rates, around low assistance income, are those things that can be actively part of the negotiation or they're reasons that for again, like you've highlighted some of the issues that are under the purview of the railroad commission, that, for instance, we can't negotiate on those items. >> And I'll also have Thomas chime in. But I mean, essentially, you can you can ask for anything in an agreement, but whether the company is going to agree to it or not, that's kind of where we're going to probably draw the line. So again, I don't want to speak for tgs, but they may not agree to some of those rate items in a franchise agreement because that's typically outside of the scope. It is possible to kind of tackle some of the low income pieces. Maybe we can look at different approaches, maybe try [10:40:24 AM] to. Right now we charge 5% franchise fees. So maybe we can look at upping that to 6% and allocating that additional percentage towards low income assistance, or maybe dedicating a portion of that 5% towards low income assistance. But then you would be drawing in from the general fund, which is where currently that revenue post. So you're going to have to weigh your benefits, pros and cons on that. >> And what would be the consequence of. What would be the consequence of failing to come to an agreement based on that negotiation in a certain time frame? >> Would you be able to share some insight on that? >> Yeah, I we need to come to terms. We need to reach an agreement. But we have lots of instances where cities and utilities reach an impasse. And typically we continue to hammer on the issues and try to come to an agreement. We generally [10:41:24 AM] in fact, more than that, we come to agreements. Normally, if we go beyond the term of the existing agreement, you know, that agreement will stay in place, will continue to operate under the existing agreement. But, you know, we've got until October 15th of next year. So we're hopeful and optimistic that we'll be able to come to terms before then. >> Okay. >> And really, given the timelines, we have to get an agreement in place that's approved by council 90 days before. And I think with the summer months it gets a little bit complicated. So may really seventh is the cutoff okay. >> And my understanding from we heard earlier is that they're looking to do a presentation in early to mid January with some of their conclusions. >> Yeah. We had requested from the RNC is that they proposed their recommendations to council sometime in January. So that way we have those three extra months to kind of reach an agreement with tgs and also incorporate those recommendations. >> Okay. But what I'm hearing you say is that it's [10:42:25 AM] potentially possible to work in some of the requests that they've made. Yep. Okay. Thank you. >> Yep. >> Councilor Siegel and councilor Allison. >> Thank you chair. Thanks, y'all. So is the proposed agreement 25 years? >> No, that's the maximum. The way that the current existing agreement is drafted is ten years with an additional ten year extension. So we can play around with that. I mean, I think our initial term was going to be the same ten years with an additional ten year extension if the city approves. But if council prefers a shorter timeline, we can work with that as well. >> Thank you. So I on I guess the fourth page of your presentation, you have the active gas franchise agreements. Could you explain a little bit about what are the four different providers? You know, what is their service area. You know, what is the work that each of them takes responsibility for? >> Yes. So Texas gas service is by far the largest. I think they have over 220,000 [10:43:27 AM] customers. The next Atmos energy is much smaller. So Texas gas kind of takes over most of Austin city limits. Atmos energy is more centered around the north portion of Austin, and that one has about, I want to say 10,000 customers. Then centerpoint, I want to say centerpoint is more south, okay, south. And I think theirs was about 1000 customers. And then C energy is much smaller. I want to say they're in the north east portion of Austin and it's just one community. >> What was tgs again? Sorry to interrupt. >> I think it was like 230,000 customers. >> So it's like well over 90, 95%. >> Yes. Yes, I think between yeah, Texas gas about 94 and then Atmos energy is an additional 4% and then the others are about a percent. >> And you know, just from the little research I've done, it seems like the tgs rates have been going up pretty steadily. How does that compare to the [10:44:29 AM] other providers? >> I'll have to. We can do some digging on that. I don't have that. >> I don't have it in front of me. But I can quickly put our hands on that information. >> I can share that with you. >> Yeah. And just so you're aware. So as opposed to electric utilities, gas utilities are not a legal monopoly, but they're largely a functional monopoly, meaning that, you know, it would be cost prohibitive and unwieldy to have multiple sets of pipes going through city streets, as you can imagine. And historically, gas service was not universal. You might have an urban area where a gas utility put some pipes in the ground, such as the city of Austin, and in the rural areas, there may not be gas service which exists even still today. And then you might have another entrant who would come in and say, okay, there's no gas service in this. Suburb or this more rural area, and so we'll serve. And that's how [10:45:29 AM] centerpoint and Atmos came to, to serve some customers that are in the city. As the city grew, Atmos or centerpoint were already operating. And so that's how they serve a small number of customers within the city limits of the city of Austin. But as you mentioned, the vast majority is tgs. >> Great. Thank you. And then, I mean, I think the big picture concern is, you know, how do we contain costs, you know, the escalation of these rates. It seems like the gas rates are going up far faster than our electric utility rates. It seems like the railroad commission is not a very favorable venue for us to try to keep rates down. Are there other strategies y'all have explored for cost containment? >> I mean, we we do always focus on some of those negotiated factors. In the rate cases. You know, we always try to focus on rates that help the residential customers, right, to get those lowered as much as [10:46:29 AM] possible and shift some of those cost savings to them. But I don't know if. >> Unfortunately, the legislature has been very accommodating and passing legislation in the last several sessions that make cost recovery more easily for gas utilities, more streamlined, has adopted pieces of legislation that allow them to increase their profit or return by collecting that return sooner, by eliminating what we call regulatory lag, which is the period between when they spend a dollar and when they're able to include it in rates. Having said all that, as we alluded to, you know, we just had the rate case. The company was asking for a $41.1 million annual increase. We were able to negotiate that down to 15 million. We were able to to also get the company to agree to allocation proposals that mitigated the impact specifically on residential customers. So we have had success there. But you're very [10:47:32 AM] correct. The rules and laws don't favor us as much as they did in the past. >> That's fair. Now chopping it from 41 million to 15. That's a good work. So thank you for that. I mean, I have researched a little bit. It seems like the msi at one point discussed the concept of municipalization. Is that legal in Texas? And if it is, has that ever been studied? >> I do think it's legal. I we the city has not studied it. I think that would involve a lot of additional costs and time to do that. But if council does want us to do that, we could explore that option. I just don't think we'll have the time until the next contract or the contract expires to get that done. It might be a multi-year process to get all the consultants onboarded and everything. >> That's fair. Thank you. >> Is there a cap on what franchise fees could be deliberated, or is it just [10:48:33 AM] really getting them to the table and agreeing to something? >> And just for y'all's reference, franchise fees are just a pass through. So the the company will charge them and then they just pass those through to the customers. But standard industry is about 5%. So we may try to raise it to 6% and see if the state is okay with it, but the state may deny it, I don't know. Okay. But 5% of the industry industry standard. >> Okay. >> I'm really interested in what kind of leverage we have, you know, being the city of Austin and being able to manage our other utilities and especially their rate cases. It's something that I know I heard a lot about. I'm sure anyone with folks that are on other gas services probably heard a lot too. But over the past year or two, folks were just dismayed at how high their bills got. I heard stories of them doubling, and a lot of it was the grip that you had mentioned in the presentation. And people were, you know, rightfully very frustrated. You know, we hear of something goes up by 15 or $20. And then here [10:49:33 AM] we have people that told me they were paying $200 for a gas bill. And a lot of it is the fees that aren't necessarily dependent on usage. So conserving gas wasn't necessarily bringing the bill down for them. Are there any other bits of advice that you have for us? As far as you know, we get to bless the franchise itself, but obviously have a lot of hoops to jump through to make sure we're in compliance with the rest of how this process works. >> I mean, I think what we can do is we can look at some of the recommendations that rmk provides, Wright, and see which portions we can try and incorporate into the franchise agreement and see that if tgs does agree to some of those terms, like I was mentioning low income assistance, that might be something that we can incorporate, whether it's keeping the 5% fee and then allocating some of that revenue towards low income assistance, or seeing if we can go above that 5% and maybe charge 6%, and then allocating that additional percentage towards [10:50:34 AM] the low income assistance process, that's something we can look at potentially, maybe some of those developer capital improvement costs. Again, those a lot of those things were already addressed in the rate case negotiations. But I mean we can we can attempt and see if we can put some of those in the franchise agreement. Just not sure how successful will be I. >> Appreciate that. Yeah. >> And is there any way that a franchise agreement can include information like public involvement? You know, we we're the ones kind of doing the public involvement for our constituents and they don't necessarily love when I say there's only so many mechanisms and levers that we can pull to be able to help them, I would really love to make sure that for folks that are providing this service and deciding what those rates are going to be, that there is an onus on them to sit down with their customers and to make sure that they're able to effectively answer the questions that we're getting. So I went to a neighborhood meeting a couple of months ago, and we had to [10:51:36 AM] work with our own city staff to provide a two pager that explained what is the process look like when city council says, we don't approve these rates? What does that mean? You know, they can come to a city council meeting and we can listen. But at the end of the day, if it ends up, you know, mediated through the railroad commission, that is something that's not customary for folks that are used to paying Austin energy bills and Austin water bills. Then they get a third bill that's not operating the same way with less public involvement. And, you know, some of it is just so that they can they can experience the benefit of talking directly to their customers and hearing what those impacts are on their family budgets and what it means to be able to pay those rates. And some of it is just that. I think if you want to be able to collaborate with your ratepayers, you need to sit down and talk to them and and hear them out. I don't know if that's something that is typically put in a franchise agreement, but I think public involvement with these other utilities that are not municipally owned are, in my experience, I think I only have [10:52:36 AM] 1 or 2 of those serving district eight residents. But the lack of public communication is something that we've struggled with because we're having to fill in the gap and we don't have all the control that we would like to have over the rates that are being paid. >> And I do know that, I mean, there are in the current contract, there are clauses regarding reporting. And I think also there's a clause in there where tgs staff does actually brief rmbc the rmbc on various conservation programs, so we possibly could include something about public engagement. I don't know if you have anything additional. >> Yeah, I was. >> Going to refer to the language you just mentioned in the existing agreement, but I think that's a great point. There are public utility and they should be responsive to the public. And I think it's, you know, people have questions. They get annual increases through grip. Their bills have gone up significantly, as you noted. And so yeah, this is something I think that we should bring to the table with our we can definitely bring to the table. >> That that would be gratefully helpful for us. I'm happy to host a meeting and [10:53:37 AM] have have people come and and to be able to talk to the ratepayers, but that the infrastructure costs versus the actual gas cost is something that has confused people. You know, I've got some constituents that may have just moved here from a different state and they're like, well, I thought Texas, you know, all the energy and and everything. But it's that's not what's driving the cost of their bill. And so I think that's a bitter pill to swallow for folks that are surprised by increases in bills that are going up, you know, two X all of a sudden it's really surprising for families. Thanks. >> Absolutely. >> I was wondering if you could touch on a little bit the limitations. Well, first off, the rail commission, do they have to approve the franchise agreement. No. Okay. >> There is a there's a referendum right after the city approves it, that potentially the public could. >> The railroad commission doesn't approve. >> It at all. >> But after the city approves it, there might be like a 60 [10:54:37 AM] day referendum, basically where the public can kind of. >> Correct it. It doesn't have to go to the. Railroad commission, it won't go to the railroad commission. >> And you talked about who has original jurisdiction over rates and what are those limitations that while railroad commission has ratemaking jurisdiction, you can either through contract. Necessarily waive that right. But essentially could could we in a franchise agreement say over the next ten years, you're not going to raise your rates more than 20%? >> We could. >> Request that. But I think that it's extremely unlikely that the utility would. >> Put aside the whether or not they'd agree to it is that outside of our power, within the agreement, like would that run afoul of the railroad commission's jurisdiction over ratemaking. >> If the you are able to get the utility to agree to that, [10:55:39 AM] which means there's no appeal, then? Yes. You know, you theoretically could. Have them agree to that, and that would be the the end of it. Yes. Again, I think that's highly unlikely. But yeah, you have original jurisdiction over rates and services and anything that you do can be appealed. But if it's not appealed, meaning it's been agreed to by the utility, then you're the final word on that. >> And what about for conservation programs? Could we put something in the franchise agreement about conservation programs. And would that be bound binding on the parties that they couldn't go separately to the commission after and say, well, no, we don't actually want to abide by that. >> You could as well, but you have more of a challenge there because of the statute that I mentioned that was adopted in the 2023 session, which gives the the railroad commission exclusive original jurisdiction over conservation programs. So [10:56:39 AM] that makes it perhaps even more challenging to get tgs to agree to it. But if they were to agree to it, I mean, the commission would still have authority over those programs and could approve them to the extent that they're seeking cost recovery. >> Yeah, well, I zoom out for a second. I think as you go into these discussions, if there if I can give you two north stars and I think you've heard some of it here, you know, obviously rates for customers, we want to try to keep rates at an affordable level. They have been growing and growing and growing at just a level that families cannot continue to afford. And and unfortunately, a lot of families are locked in. Right. They might want to switch to an electric range or an electric furnace, or I should say like a heat pump. But not only is it cost prohibitive, the cost of then rewiring everything, you know, some of these older homes, it's it's just impractical. It's not [10:57:41 AM] going to happen. And so they really are locked into this and and we have to do more, I think, to help protect families and customers in Austin from these skyrocketing costs. The second is around conservation. If we can do more to conserve, you know, we often are so focused on carbon dioxide, which is such a potent greenhouse gas. But methane is way worse. And the the more we can do to limit methane emissions that are occurring because of the usage of natural gas in our homes. I would like to see us really try to to push on that as hard as we can and do things, you know, try to be innovative and not just do it how it's always been done and not assume that Texas gas service is not going to say, yes, they might not. But, you know, to councilmember duchin's point, there is well, I know I don't think it's happened in your career. There is a world [10:58:41 AM] where you don't reach an agreement, and I don't think they want to reach that point either. I think that we can come to mutual agreement. But then within that, especially as we talk about affordability, one thing that I think really would be worth getting, I think, a better deal for customers, especially existing customers, is on cost recovery. You know, right now when someone wants to to get into Texas gas service, if, you know, let's say there are new development that cost. If it was Austin energy, they would have to pay for that power line to run to that new home or that new business. If it's a gas line. We all all Texas gas service customers pay for that. It's a socialized cost. Instead of that new development paying for that. And so when you were talking about customers being surprised at all this new cost, they're paying for the growth of the system for someone else. And that's not how we have treated [10:59:43 AM] utility expansion, whether it's water or electric utility expansion here in the city. And so if we could try to do more around cost recovery so that it's not being socialized amongst existing customers, I think that would be real benefit for our existing customers. >> And on that final point, just to let you know, developer incentives and developer cost is an issue that we did bring up in the rey case. We also brought it up in the 2024 rate case because they had a full case just a year ago as well, and had success in getting tgs to agree that they would not pay incentives to developers and that they would recover developer costs. Or sometimes it's referred to as contribution in aid of construction. And so that's something that I would expect that we would bring to the table as part of this negotiation as well, and hopefully have some success with it. >> Yeah. And I don't know if this is contained within that or not, but it always bothered me that when you are building a [11:00:45 AM] new home, you could basically have your gas dryer or gas range almost fully subsidized by the gas company. And equal incentives were not offered from Austin energy. Now they are. I'm really excited to see that we have those, but almost doing the opposite of what we normally think in terms of incentivizing having the gas company, not incentivize, whether it's a gas furnace or gas water heater, things like that, so that there's a more a level playing field when we when someone's building or just trying to make that decision for an appliance. All right. Councilmember duchen. >> Thank you. Sorry. One last question here. Also, I think mostly for Thomas, you made a point of emphasizing that it's kind of a pseudo monopoly because of the way the infrastructure works and sort of to build on some of the [11:01:46 AM] points that my colleagues brought up. If we had a. I want to use sort of Google fiber as an example, maybe as a parallel here, sort of compelled other telecoms here to build out both fiber as well as pricing in response, even though they have a small percentage of the market here in Austin relative to the existing telecoms. If we had a similar entity here, I'm not sure whether it's a public or private enough to that. It could at least pose some kind of credible, even if it just contested 5000 customers, perhaps. Would that make any difference here, given the economics you described? >> Well, we actually do see competition. Across the state with some new entrants. There are some smaller gas utilities who operate mostly in those areas of growth in the suburbs [11:02:47 AM] or in those etj areas. Universal see energy. And there's a couple of others as well. And so the the areas that we see competition are really where you have developments. A developer comes and says, we're going to build 150 homes. Gas utility a says, we can run pipe out there and it won't cost you gas. Utility B says we can run out pipe out there. And not only will it not cost you, but we'll pay you an incentive if you go with us. And so that's the issue that we were just talking about with councilmember alter was to try to keep the remaining customers from customers from subsidizing that competition from, you know, for keeping the utility from including those incentives in rates that other customers have to bear. And so that's really what we've we've seen. And so the approach we've taken has been to, you know, make sure [11:03:48 AM] that other customers don't have to pay for that. But as far as kind of that motivating the utility to do better, if you will, on their rates, we haven't seen that. >> Okay. Well, I think we've probably got some questions to develop and share with you all and maybe my colleagues too about what that what the different options then look like for creating some kind of, if not outright local competition, but the threat of that, what that looks like. >> I think it's fair to say we we haven't seen the benefits of competition, meaning lower prices that you would get from competition, but we've seen the cost associated with competition, meaning the marketing costs and incentives paid and that sort of thing. >> And that's what I'm worried from the city level also. Right. If we explore some of the ideas that we've talked about, that that would be cost prohibitive to develop parallel infrastructure or whatever that looks like. But then if that's [11:04:49 AM] the case, what other options, whether it's attracting outside customers to the to the new development or having again, some other again, I can only think of Google fiber as an example that created that, that spurred other local telecoms to respond to them in the same way that it could in the gas industry. So thank you. Sure. >> All right. Thank you all so much for helping us better understand what's coming in may. >> Thank you. Thanks. >> And with that, we will move on to our last item, item number five, the a briefing by Austin watershed protection potential 2026 bond. Well, I guess really it's a it's a memo briefing. If anyone has any questions this is the time to ask them. I do have one question. If no one else does, doesn't look like it. And okay, my question is really more administrative. If the the list that you provided a through ak, [11:05:53 AM] could you add a an additional column to that so that we can understand if that's in the stormwater resilience program or if that's in the stormwater and drainage partnership opportunities, where does that fall into the buckets of the bond ask. >> Yeah. Great question. Janet Spencer Austin watershed protection. So all of those projects are in the first bucket. So that's why there's no none of those are in the other buckets. The other buckets are more so available for when opportunities pop up. So partnerships we don't even know what those could be with developers yet or other projects. >> Okay. And I was wondering if either within these projects identified or within one of these other buckets we saw in the last bond program an issue as especially transportation bonds, that we had the money kind of for the roads, but not necessarily the drainage infrastructure associated with the roads. Is that addressed somewhere in one of these? [11:06:53 AM] >> Yeah. So when we're looking at the projects in order to do the projects, so road one specific, the drainage would fall under the cost of that project. And so I think it's maybe a little more in depth than that. Eric might want to speak to it to a little more in depth engineering. And I think that's why we're doing a really good job with cds, capital delivery services, this time to make sure projects are really ready and are far along in their design to really know what those drainage costs are, in my opinion, on all that Eric speak, I don't really want to separate those costs because if the transportation bond gets approved and not the drainage, how do we move forward with those projects? So the associated costs with projects should really be bundled together. So these are really just drainage for just that drainage and water quality benefit and erosion okay. >> Thank you vice chair. >> Quick question. Does this factor in 2016 mobility bond projects? I know that some of the reason those costs increased was specifically because our floodplain maps had changed. And there may have been some other, you know, non mapping issues where flood waters became more of an issue. [11:07:54 AM] Have those been factored into these numbers. >> So do you want to speak to the transportation piece? I can I can keep going if you want. >> Just on what I was saying before. She's right on the money there in terms of the way that we're costing the projects. With the watershed improvements included in the transportation project cost rather than the the watershed cost in terms of the 2016 bond and going back to past bond programs, we've, as cds have undertaken an effort there to align the scope of those projects with the funding that's available. There are some transportation projects, and again, this falls back into that sort of aspect of a at its core as a transportation project and figuring out how to fund the watershed improvements that are necessary. Some of those are partnership funding with the watershed protection department and working for through those issues of of closing the loop on those 16 projects and getting those built. >> Okay. >> Because I know there's been some phasing adjustments that have transpired over these new [11:08:55 AM] assessments that are being done through the departments. So would any of those end up being unstuck? I'm thinking specifically around west slaughter. You know, as you head out to 1826, I think that one, that's one that's been on pause. >> Yeah, there are some opportunities there. And again, like I mentioned, some of the drainage projects and the pieces that we're working on is some of the other funding that's available in watershed to unstick those projects. We're working in the process of working on a overall update on the 2016 bond in terms of where those projects are at and what we're able to do and what we're not able to do, and go back out and work with you all presented to the council members in the various boards and commissions, as well as the community. On an update on the 16 bond program in general. >> And so did these numbers factor in like if we were to get you all of these financial needs, would those projects move forward or would that be a separate, separate, completely separate. So those are not included in this. Memo okay I appreciate it. Thank you. [11:09:57 AM] >> Thank you chair, I'm curious along the lines of councilmember alter's request, is there a way or is this list the list that runs through ak already prioritized by need? >> They are not prioritized by need right? In the list you have, they are prioritized by the subproject number. We're going through a process with CPS to prioritize projects. >> Okay. So when will we have that. >> Yeah. The we're working on the initial staff recommendation for the bond program. And it'll be December January timeframe. We're about 90% there right now. But kind of working out the details with the departments okay. >> So we should get that fairly quickly. >> Pretty quickly. I don't want to commit commit to a hard, hard date. But like I said, mid-december before the break, early January after the holiday break, but it'll be in the next, you know, month, month and a half. >> Does that include any granularity on the other four [11:10:58 AM] buckets that you have shared with us here? The stormwater resilience et-cetera. >> It may include just how those would scale depending on how much funding is given. So those are you know, if we got the full amount then those would be fully funded. But we wouldn't want to fund only partnerships, no projects. So if we only get this much then the partnerships will be less as well. But we want to have some money available to take advantage of those opportunities. Again, we don't know what all those opportunities are. Those are really buckets so that we can take advantage when they pop up in the next six years or however long the bond cycle is. >> Okay, but we shouldn't expect the same level then of project breakdown based on those, because those are more opportunistic, is what I'm correct. Okay. All right. Thank you. >> All right. Well, I know councilmember Siegel is a lover of creeks. As he's told us before. It's clear district seven has some creek work to be done so you can lead the way on this one. Anyways, I appreciate that was probably an unnecessary aside, but I [11:11:59 AM] appreciate the the work y'all are doing. Look forward to having future discussions. And with that, if I know we have item six, if any future items as councilmember vela would say, you can come find me anytime, otherwise we will adjourn our meeting at 11:12 A.M. Thank you all very much.