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TUESDAY, AUGUST 2ND, 2022.[Budget and Fiscal Affairs]
I CALL THIS MEETING TO ORDER.AND MAYOR PRO TEM DAVE MARTIN.
AND I'D LIKE TO WELCOME COUNCIL MEMBERS IN ATTENDANCE.
WE HAVE COUNCIL MEMBER AMY PECK FROM DISTRICT A, STAFF FROM COUNCIL MEMBER ABBY CAYMAN'S, OFFICE DISTRICT C STAFF STAFF FROM COUNCIL MEMBER MARY NAN HUFFMAN, DISTRICT G AND STAFF FROM VICE CHAIR ED POLLARD, DISTRICT J AND STAFF FROM MICHAEL KNOX AT LARGE, POSITION FOUR.
AND LETITIA PLUMMER AT LARGE POSITION.
I'M SORRY, MIKE KNOX, POSITION ONE, LETITIA PLUMMER POSITION FOUR.
SO WE HAVE ONE SPEAK, ONE PUBLIC SPEAKER SIGNED UP AT THIS POINT.
AND AT THIS TIME, I'D LIKE TO WELCOME CONTROLLER CHRISTOPHER BROWN AND DIRECTOR WILL JONES TO PROVIDE THE MONTHLY FINANCIAL REPORT.
UH, GOOD MORNING, MR. CHAIRMAN.
UH, MEMBERS, I'M PLEASED TO PRESENT THE MONTHLY FINANCIAL REPORT FOR THE PERIOD ENDING JUNE 30TH IN THE GENERAL FUND, THE CONTROLLER'S OFFICE IS PROJECTING AN ENDING FUND BALANCE OF 339.9 MILLION FOR FY 22.
UH, THIS IS 5 MILLION LOWER THAN THE PROJECTION OF THE FI FINANCE DEPARTMENT.
BASED ON OUR CURRENT PROJECTIONS, THE FUND BALANCE WILL BE APPROXIMATELY 173.1 MILLION ABOVE THE CITY'S TARGET OF HOLDING SEVEN POINT A HALF PERCENT IN RESERVES.
OUR REVENUE PROJECTIONS INCREASED BY APPROXIMATELY 18.5 MILLION FROM THE MAY, 2022 REPORT AS FOLLOWING.
INDUSTRIAL ASSESSMENTS INCREASED BY 1.9 MILLION, UH, AND THAT WAS DUE TO HIGHER COLLECTIONS FOR THE FISCAL YEAR.
SALES TAX INCREASED BY 13 MILLION DUE TO HIGHER EXPECTED COLLECTIONS THROUGH MAY, 2022.
THE FINAL COLLECTION ESTIMATES ARE, UH, APPROXIMATELY 75.6 MILLION, AN INCREASE OF SIX AND A HALF PERCENT COMPARED, UH, TO JUNE, 2021.
SO THIS IS GOOD NEWS, BUT WE DO EXPECT, UH, DECLINING YEAR OVER YEAR GROWTH GOING FORWARD.
AND THAT'S MAINLY DUE TO, UM, INFLATION AND INCREASING INTEREST RATES, UH, WHICH MAY PUSH US INTO RECESSION NEXT YEAR.
OTHER TAXES INCREASED BY 1.6 MILLION DUE TO HIGHER COLLECTION OF MIXED BEVERAGE TAX.
ELECTRICITY FRANCHISE TAX INCREASED BY 900,000, AND THAT WAS DUE TO HIGHER COLLECTIONS.
TELEPHONE FRANCHISE TAX DECREASED BY 900,000, AND THAT WAS PRIMARILY DUE TO THE DECLINE IN USAGE OF LANDLINE PHONES.
GAS FRANCHISE TAX INCREASED BY 262,000 DUE TO A SLIGHTLY HIGHER COLLECTION FOR THE FISCAL YEAR LICENSES AND PERMITS INCREASED BY 376,000 DUE TO HIGHER COLLECTIONS FOR THE FISCAL YEAR.
CHARGES FOR SERVICES INCREASED BY 1.5 MILLION, MAINLY DUE TO AN INCREASE IN AMBULANCE FEES.
DIRECT INTER FUND REVENUES DECREASED BY 1.4 MILLION DUE TO LOWER THAN ANTICIPATED POLICE SERVICES.
MUNICIPAL COURTS FINES AND FORFEITS INCREASED BY 407,000, MAINLY DUE TO AN INCREASE IN NON-TRAFFIC FINES.
INTEREST INCOME INCREASED BY 258,000 DUE TO HIGHER INTEREST INCOME EARNED ON BANK DEPOSITS AND INVESTMENTS IN OUR GENERAL FUND EXPENDITURES.
EXPENDITURES ESTIMATES DECREASED BY 5.3 MILLION FROM THE MAY, 2022 REPORT AS FOLLOWS.
SAVINGS FROM PERSONNEL SUPPLIES AND SERVICES RESULTED IN A DECREASE IN PROJECTED EXPENDITURES BY 25.6 MILLION.
IN ADDITION, SAVINGS REALIZED FROM THE RENEWED SERVICE AGREEMENT BY THE JOINT PROCESSING CENTER TOTALED APPROXIMATELY 1.2 MILLION.
THE SAVINGS FROM PERSONNEL SUPPLIES AND SERVICES WERE OFFSET BY AN INCREASE IN THE STORMWATER ACTION TEAM SWAT TRANSFER OF 20 MILLION.
IN ADDITION, THE LIMITED PURPOSE ANNEXATION LPA TRANSFER INCREASED BY 1.5 MILLION, AND THAT WAS DUE TO THE INCREASE IN SALES TAX COLLECTIONS.
MOVING ON TO OUR ENTERPRISE FUNDS IN THE AVIATION OPERATING FUND, THE TOTAL OPERATING REVENUES INCREASED BY 24.5 MILLION, AND THIS INCREASE WAS MAINLY ATTRIBUTABLE TO AN INCREASE IN PARKING AND CONCESSION REVENUES OF APPROXIMATELY 25.2 MILLION LANDING AREA REVENUE OF APPROXIMATELY 1.1 MILLION AND OTHER REVENUES OF 1 MILLION.
THIS INCREASE WAS OFFSET BY A DECREASE OF 2.9 MILLION IN HANGAR AND GROUND RENTAL FEES.
THE TOTAL OPERATING EXPENSES DECREASED BY 1.8 MILLION DUE TO LOWER THAN EXPECTED HEADCOUNT AND LOWER SPENDING ON SUPPLY SERVICES AND EQUIPMENT PURCHASES.
TOTAL TRANSFER FROM REVENUE FUND TO THE RENEWAL AND REPLACEMENT FUND INCREASED BY 17 MILLION AND TRANSFERS TO THE AIRPORT IMPROVEMENT FUND INCREASED BY 8.9 MILLION IN THE CONVENTION ENTERTAINMENT FACILITIES OPERATING FUND.
TOTAL OPERATING REVENUES INCREASED BY 1.4 MILLION DUE TO AN INCREASE IN PARKING REVENUE.
NON-OPERATING REVENUES INCREASED BY 926,000 DUE TO HIGHER THAN ANTICIPATED HOTEL OCCUPANCY.
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OPERATING TRANSFERS INCREASED BY 2.8 MILLION.UH, THIS INCREASE WAS MAINLY ATTRIBUTABLE TO AN INCREASE IN TRANSFERS OF 2.7 MILLION TO HOUSTON FIRST CORPORATION, AND THAT WAS DUE TO HIGHER HOTEL OCCUPANCY TAX COLLECTIONS DURING THE YEAR.
AND IN THE COMBINED UTILITY SYSTEM, TOTAL OPERATING REVENUES DECREASED BY 1.3 MILLION.
UH, THIS IS ATTRIBUTABLE TO A DECREASE IN WATER SALES BY 12.9 MILLION.
OFFSET BY AN INCREASE IN SEWER CHARGES OF 4 MILLION PENALTIES OF 5.7 MILLION AND OTHER REVENUES OF 1.9 MILLION.
OPERATING EXPENSES DECREASED BY 27.4 MILLION.
THIS DECREASE WAS MAINLY ATTRIBUTABLE TO A DECREASE IN PERSONNEL OF 3.5 MILLION ELECTRICITY AND GAS OF 4.9 MILLION CONTRACTS AND OTHER PAYMENTS OF 23.1 MILLION AND NON-CAPITAL EQUIPMENT OF 1.2 MILLION.
THESE DECREASES ARE OFFSET BY AN INCREASE IN SUPPLIES OF 5.3 MILLION.
UH, THE OPERATING TRANSFERS DECREASED BY 23.8 MILLION DUE TO A DECREASE IN EQUIPMENT ACQUISITION BY 14.7 MILLION IN TRANSFERS TO STORMWATER BY 9.1 MILLION.
TOTAL REVENUES DECREASED BY 9.1 MILLION, AND THAT WAS MAINLY DUE TO LESS TRANSFERS FROM THE COMBINED UTILITY SYSTEM IN THE DEDICATED DRAINAGE AND STREET RENEWAL FUND.
UH, THE A VALOREM TOTAL REVENUES DECREASED BY 80,000 WHILE TOTAL EXPENDITURES INCREASED BY 4.1 MILLION IN THE DRAINAGE CHARGE.
TOTAL REVENUES INCREASED BY 125,000 DUE TO HIGHER INTEREST INCOME WHILE TOTAL EXPENDITURES DECREASED 4.7 MILLION.
AND IN THE METRO FUND, TOTAL REVENUES DECREASED BY 355,000 DUE TO DECREASED TRANSFERS IN WHILE TOTAL EXPENDITURES DECREASED BY 5.6 MILLION.
IF YOU LOOK AT OUR COMMERCIAL PAPER AND BONDS, ALL OF OUR VARIABLE RATE IS BELOW THE 5%.
AND MR. CHAIRMAN, I'LL MOVE ON TO THE INVESTMENT REPORT AND SWAP REPORT.
AS OF JUNE 30TH, THE CITY HAD $5.2 BILLION INVESTED IN OUR GENERAL INVESTMENT POOL.
UH, THE CHARACTER OF THIS POOL IS OUT OF A SHORT TERM BOND FUND THAT HOLDS INVESTMENTS OF VERY HIGH CREDIT QUALITY FITCH RATINGS.
REVIEWED THIS POOL AND ASSIGNED THE POOL ITS HIGHEST RATINGS THAT OF AAA.
OUR, UH, INVESTMENTS ARE 110 MILLION HIGHER THAN LAST YEAR, AND THIS IS PRIMARILY ATTRIBUTABLE TO THE COMMERCIAL PAPER ISSUANCE AND INCREASE IN REVENUE FROM AVIATION UPTOWN TURS RECEIPTS IN THE SPECIAL REVENUE FUND AND COMMERCIAL PAPER ISSUANCE IN THE GENERAL FUND.
AS OF JUNE 30TH, THE GENERAL INVESTMENT POOL WAS YIELDING 1.075%, WHICH IS UP FROM 0.772% IN THE PRIOR QUARTER.
UH, WE HAVE A DETAILED LIST OF ALL THE SECURITIES, UH, IN OUR REPORT, AND I WILL THEN MOVE ON TO THE SWAP REPORT.
UH, THE CITY HAD POSITIVE RECEIPTS FOR NINE MONTHS OF JUNE 30TH, 2022 FROM ITS SWAPS OF $8,025,474 AND 20 CENTS.
UH, THE FAIR VALUE FOR THE SWAPS AS OF JUNE 30TH, UH, 2222 WAS NEGATIVE 133 MILLION, AND THAT'S APPROXIMATELY 54 MILLION LESS THAN LAST QUARTER.
AND I WOULD LIKE TO JUST ADD THAT, YOU KNOW, ALTHOUGH INTEREST RATES ARE RISING AND THAT IS COSTING THE CITY AND, UH, INTEREST INCOME AND, AND OTHER, UM, INFLATIONARY TYPE, UH, PURCHASES, UH, FOR THESE SWAP TRANSACTIONS, IT'S ACTUALLY FINALLY MOVING THAT NEGATIVE FAIR VALUE DOWN.
AND WE ARE WORKING WITH OUR, UH, FINANCIAL ADVISORS AND THE FINANCE WORKING GROUP, UH, TO POSSIBLY EXIT OUT OF THESE.
SHOULD, UH, THE MARKET ALLOW THAT OPPORTUNITY.
AND I BELIEVE, UH, FINANCE AND LEGAL MIGHT BE BRINGING AN ORDINANCE TO YOU AT SOME POINT THAT WOULD ALLOW US THE ABILITY, UH, TO EXIT OUT OF, UH, ONE OR MAYBE BOTH OF THOSE AGAIN, SHOULD THE MARKET CONTINUE IN OUR FAVOR IN THE FUTURE.
AND THIS CONCLUDES MY, CONCLUDES MY REPORT.
AND IT'S GOOD TO HEAR YOUR LAST COMMENTS.
AS I'VE BEEN LOOKING AT THAT FOR QUITE A NUMBER OF MONTHS AS THE NEGATIVE FIGURE CONTINUES TO RISE AND, UM, GO IN THE WRONG DIRECTION.
UH, LIKE TO WELCOME COUNCIL MEMBER CHAIRMAN DAVID ROBINSON AND COUNCIL MEMBER SALLY ALCORN TO THE HORSESHOE AND IS ALSO, UH, VICE MAYOR PRO TEM MARTHA CASTEX TATUM STAFF FROM DISTRICT K OFFICE FOR THE FIRST TIME.
THANK YOU MAYOR PRO TIM, AND COUNCIL, GOOD TO BE HERE.
UH, WE ACTUALLY HAVE A LOT TO COVER TODAY, SO I'LL TRY AND SUMMARIZE THIS BEST I CAN.
UM, SO THIS IS THE 12 PLUS ZERO FINANCIAL REPORT FOR THE PERIOD ENDING JUNE 30TH, 2022.
PROJECTIONS ARE BASED ON 12 MONTHS OF ACTUAL RESULTS.
HOWEVER, INVOICES FOR GOODS AND SERVICES PROVIDED IN FISCAL YEAR 2022 WILL CONTINUE TO COME IN.
SO EVEN THOUGH WE ARE REPORTING ON THE YEAR END, UM, THE, THE FISCAL YEAR IS STILL OPEN FOR 22.
UM, SO THERE WILL STILL BE SOME MOVEMENT WITH ACTUALS AS WE, UH, UNTIL THE FINALIZATION OF THE ANNUAL FINANCIAL REPORT.
UM, SO I JUST WANNA POINT THAT OUT.
SO NEXT MONTH WE'LL BEGIN PRESENTING THE MONTHLY FINANCIAL REPORT FOR FISCAL YEAR 2023.
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THE TIME OF THE FY 23 ADOPTED BUDGET, THE BEGINNING FUND BALANCE WAS ESTIMATED TO BE 312 MILLION.IN THIS 12 PLUS ZERO FINANCIAL REPORT, WE ARE CURRENTLY PROJECTING THAT BALANCE WILL BE 345 MILLION, AN INCREASE OF 33 MILLION.
SO ON ON THE GENERAL FUND, OUR REVENUE PROJECTION IS 105.6 MILLION HIGHER THAN THE ADOPTED BUDGET, AND 13.6 MILLION HIGHER THAN THE THE LAST MONTH'S REPORT.
THE VARIANCE IS PRIMARILY DUE TO, UM, 11.2 MILLION INCREASE IN SALES TAX TO REFLECT HIGHER SALES TAX RECEIPTS THAN PROJECTED, UH, 1.8 MILLION INCREASE IN CHARGES FOR SERVICES AND 1.7 MILLION INCREASE IN OTHER TAXES.
UM, WE ALSO HAVE SOME OTHER, UH, CHANGES, 569,000 IN INCREASE IN MUNICIPAL COURT FINES AND FORFEITS 387,000 INCREASE IN OTHER FINES AND FORFEITS, UH, 304,000 INCREASE IN SALE OF CAPITAL ASSETS AND 269,000 INCREASE IN INTEREST.
UM, THAT WAS OFFSET WITH 1.4 MILLION DECREASE IN DIRECT ENTER FUNDS SERVICES AND 725,000 DECREASE IN MISCELLANEOUS OTHER.
UM, AND ON OUR EXPENDITURE SIDE, OUR EXPENDITURE PROJECTION IS 28 MILLION HIGHER THAN THE ADOPTED BUDGET AND 5.3 MILLION LOWER THAN LAST MONTH'S REPORT.
THE VARIANCE FROM PRIOR MONTH'S PROJECTION IS PRIMARILY DUE TO A 25.6 MILLION DECREASE IN VARIOUS DEPARTMENTS TO REFLECT YEAR END SAVINGS AND PERSONNEL SUPPLIES AND SERVICES.
UM, 1.2 MILLION, UH, DECREASE IN POLICE DEPARTMENT FOR SAVINGS IN THE JOINT PROCESSING CENTER, AND A 20 MILLION INCREASE IN GENERAL GOVERNMENT TO REFLECT A TRANSFER TO THE STORM WATER ACTION TEAM PROGRAM.
UH, 1.5 MILLION INCREASE IN GENERAL GOVERNMENT FOR LIMITED PURPOSE ANNEXATION PAYMENTS DUE TO HIGHER SALES TAX PROJECTION.
AND WE'RE CURRENTLY PROJECTING THE ENDING FUND BALANCE OF 345 MILLION, WHICH IS 77.7 MILLION HIGHER THAN THE ADOPTED BUDGET, AND 15.5% OF ESTIMATED EXPENDITURES, LESS DEBT SERVICE AND PAY AS YOU GO.
THE FUND BALANCE IS 178.1 MILLION ABOVE THE TARGETED 7.5% OF EXPENDITURES EXCLUDING DEBT SERVICE.
AND I AGREE WITH THE CONTROLLERS ON THE ENTERPRISE FUNDS.
SO I'LL MOVE ON TO THE SPECIAL FUNDS.
SO I'LL TOUCH ON THOSE THAT HAD A PRETTY HIGH IMPACT THIS MONTH SINCE WE HAVE A, A LOT OF CHANGES.
SO IN THE, THE HEALTH BENEFITS FUNDS REVENUES DECREASED BY 1.1 MILLION DUE TO PLAN TIER CHANGES IN LOWER ENROLLMENT EXPENDITURES, DECREASED BY 1.2 MILLION, PRIMARILY DUE TO LOWER ENROLLMENT ON THE PROPERTY AND CASUALTY FUND.
REVENUES AND EXPENDITURES DECREASED BY 10.7 MILLION, PRIMARILY DUE TO LOWER THAN ANTICIPATED COST FOR LEGAL SERVICES AND INSURANCE PREMIUMS. THE WORKERS' COMPENSATION FUND, OPERATING REVENUE, REVENUES AND EXPENDITURES DECREASED BY 1.3 MILLION, PRIMARILY DUE TO LOWER THAN ANTICIPATED CLAIMS. UM, IN THE AUTO DEALERS SPECIAL REVENUE FUND REVENUES INCREASED BY 4.8 MILLION DUE TO HIGHER THAN ANTICIPATED SALE OF IMPOUND VEHICLES AND MISCELLANEOUS REVENUE FOR TOWING FEES IN THE BUILDING.
INSPECTION FUND REVENUES INCREASE BY 3.8 MILLION DUE TO HIGHER THAN ANTICIPATED PERMIT AND CONSTRUCTION ACTIVITIES AND EXPENDITURES DECREASED BY 9.8 MILLION DUE TO LOWER CAPITAL BUILDING IMPROVEMENT, AS WELL AS PERSONNEL SAVINGS.
AND THE OPERATING TRANSFERS OUT INCREASED BY 6.7 MILLION DUE TO HIGHER TRANSFER TO CAPITAL PROJECTS.
UM, AND THE HOUSTON EMERGENCY CENTER FUND REVENUES DECREASED BY 2.3 MILLION DUE TO A LOWER THAN ANTICIPATED REIMBURSEMENT FOR, FOR 9 1 1 STAFF.
AND EXPENDITURES DECREASED BY 2.5 MILLION DUE TO PERSONNEL SAVINGS.
UM, AND THE PARK HOUSTON SPECIAL FUND EXPENDITURES DECREASED BY 1.3 MILLION, PRIMARILY DUE TO SAVINGS AND PERSONNEL SUPPLIES AND SERVICES.
AND IN THE RECYCLING, UH, THE RECYCLING FUND REVENUES INCREASED BY 2.2 MILLION DUE TO HIGHER THAN ANTICIPATED RECYCLING REVENUES RELATED TO THE CURRENT MARKET.
COMMODITIES EXPENDITURES DECREASED BY 1.8 MILLION, PRIMARILY DUE TO LOWER REFUSE DISPOSAL.
SO MOVING ON TO, UH, JUST A UPDATE ON THE HOUSTON ECONOMY.
UH, FOR ENERGY, THE AVERAGE ALL PRICE OF $114 84 CENTS FOR THE MONTH OF JUNE, 2022 WAS 4.8% HIGHER THAN PRIOR MONTH'S AVERAGE PRICE OF $109 AND 55 CENTS.
COMPARING TO THE SAME PERIOD LAST YEAR, THE PRICE HAS INCREASED BY 60.9%.
UM, LOOKING AT EMPLOYMENT, ACCORDING TO THE BUREAU OF LABOR STATISTICS, THE THE TOTAL NON-FARM EMPLOYMENT IN THE HOUSTON METRO AREA, UM, STOOD AT 3.23 MILLION IN MAY, 2022.
AND THAT'S UP APPROXIMATELY 1% COMPARED TO PRIOR MONTHS.
AND WHEN COMPARED TO THE SAME PERIOD LAST YEAR.
UM, NON-FARM EMPLOYMENT IS UP 6.1% AND THE PRELIMINARY UNEMPLOYMENT RATE FOR THE MONTH OF MAY WAS 4.3% COMPARED TO PRIOR MONTH AT 4.1%.
AND MOVING ON TO HOME SALES, THE LATEST REPORT, UH, PREPARED BY HAR, UH, FOR THE MONTH OF JUNE, 2022, SHOWS A TOTAL SINGLE FAMILY HOME SALES
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OF 9,000 7 2 8 WERE 8.6% LOWER, UH, COMPARED TO JUNE, 2021.AND THE MEDIAN PRICE ROSE BY 13.2% TO 355,000.
AND THE AVERAGE PRICE INCREASED BY 11% TO 436,000.
AND FINALLY, I DID WANNA SHARE, UM, THAT I AM EXCITED TO ANNOUNCE THE LAUNCH OF THE OPEN BUDGET PHASE ONE OF THE OPEN FINANCE INITIATIVE.
UH, THE OPEN BUDGET PORTAL PROVIDES DETAILED INFORMATION ABOUT THE CITY OF HOUSTON'S FINANCES.
YOU CAN VISUALIZE THE ALLOCATION OF THESE FUNDS OR YOU CAN EXPLORE THE RAW DATA.
UH, THIS PORTAL CAN BE FOUND AT OPEN FINANCE DOT HOUSTON TX.GOV.
AND I DO WANT TO THANK, UH, DIRECTOR KENT AND THE FP AND A TEAM IN FINANCE, UH, FOR ALL THE WORK WE DID TRYING TO GET, UM, THIS FIRST PHASE UP AND RUNNING.
SO IT IS, UM, IT IS AVAILABLE FOR CITIZENS AND EVERYONE TO HAVE ACCESS TO ALL OF THAT DATA ON OUR BUDGET.
SO THAT IS THE PHASE ONE OF THE OPEN FINANCE.
PHASE TWO WILL THEN BEGIN WITH THE OPEN CHECKBOOK AND FOLLOW, I MEAN, OPEN PAYROLL, THEN FOLLOWED BY OPEN CHECKBOOK.
AND, UM, THAT WAS, UM, THE OPEN FINANCE, OPEN PAYROLL.
OPEN CHECKBOOK IS SOMETHING THAT CONTROL OF BROWN AND I OFFERED IN AN AMENDMENT IN, WAS IT 2020 OR 19? I THINK IT WAS 19.
SO, UH, IT'S BEEN A LONG TIME COMING, SO THANKS.
I KNOW THERE WAS A LOT OF WORK THAT HAD TO GO INTO IT, BUT, YOU KNOW, WE'VE BEEN TALKING ABOUT THIS FOR A NUMBER OF YEARS, AND I REMEMBER VIVIDLY WHEN YOU PRESENTED THE INFORMATION THAT LOS ANGELES WAS USING AT THAT TIME TO CREATE THIS OPEN FINANCE PORTAL AND HAVE THE ABILITY FOR CITIZENS TO TAKE A LOOK AT OUR FINANCES AND SEE EXACTLY WHAT IT LOOKS LIKE.
SO, UM, NOT ONLY CONGRATULATIONS TO THE CITY, BUT CONGRATULATIONS TO CONTROLLER BROWN WHO WAS ON TOP OF THIS, UH, BACK IN 2019 WHEN WE HAD THE OPPORTUNITY TO CO-AUTHOR THAT AMENDMENT TO THE CITY OF HOUSTON BUDGET PROCESS.
UM, COUPLE OF COUNCIL MEMBERS IN QUEUE, COUNCIL MEMBER SALLY ALCORN, THANK YOU CHAIR, AND THANK YOU FOR THE PRESENTATIONS.
UH, WILL ON ON ROMAN AND FOUR DASH NINE, THE MAINTENANCE RENEWAL AND REPLACEMENT FUND, WHICH WE'RE SUPPOSED TO KEEP AT A CERTAIN LEVEL IN ORDER TO ADDRESS OUR DEFERRED MAINTENANCE AND ALL OF THE THINGS ASSOCIATED WITH OUR FACILITIES.
WE HAD IN OUR ADOPTED BUDGET, WE WERE SUPPOSED TO BE TRANSFERRING IN 31.5 MILLION.
WE ENDED UP TRANSFERRING IN 24.6 MILLION.
SO THAT'S ALMOST $7 MILLION UNDER, DO YOU KNOW WHERE FROM WHAT DEPARTMENT DIDN'T TRANSFER IN? I MEAN, WHAT WAS THE ISSUE THERE THAT WE WEREN'T KIND OF FULFILLING WHAT WE HAD, UH, MEANT TO DO? YEAH, SO WE, WELL, THAT TRANSFER GOES TO, UH, BOTH GSD AND PARK.
SO THEY, THEY'RE BOTH OF THOSE DEPARTMENTS ARE OWNERS OF THAT FUND.
AND THE, THE TRANSFER DOES COME FROM THE GENERAL FUND.
UM, SO THE, THE TOTAL AMOUNT SHOULD BE TRANSFERRED, UM, THE YEAR.
WELL, IN YOUR, IN YOUR SUMMARY COMMENTS EARLIER JUST SAID, DUE TO LACK OF TRANSFERS FROM OTHERS, IT WAS VERY VAGUE.
YOU DON'T HAVE TO KNOW RIGHT NOW.
YEAH, BUT I, I'D LIKE TO KNOW KIND OF WHAT ABOUT THAT $7 MILLION, WHY WE'RE, WHY WE'RE PUTTING LESS IN THERE THAN WE SHOULD.
YEAH, AND ACTUALLY I REMEMBER IT'S NOT, SO THAT'S IN THE PARKS FUND.
SO THE GENERAL FUND IS, IS GONNA TRANSFER THE ENTIRE AMOUNT.
UM, SO THAT ADDITIONAL 7 MILLION THAT WE ADDED TO THE BUDGET WILL BE TRANSFERRED IN THE PARKS.
THEY ALSO HAD OTHER CONTRIBUTORS, I WANNA SAY IT WAS 500,000 FROM ONE OF THE FOUNDATIONS THAT WAS GOING TO, TO TRANSFER MONEY TO THE PARKS FUND.
SO OUTSIDE OF THE GENERAL FUND TRANSFER.
SO WHEN I, WHEN I WAS TALKING ABOUT THAT, IT, IT HAS NOTHING TO DO WITH THE GENERAL FUND TRANSFER.
SO IS THIS THE 7 MILLION? THAT'S JUST 500,000.
SO THE 7 MILLION THAT KIND OF WE ADOPTED, THAT WE SET ASIDE WILL BE COMING ABSOLUTELY.
LIKE IN COMING MONTHS OR, YEAH, YEAH, IF IT HASN'T OPENED, IT JUST HASN'T MOVED YET.
UM, AND I JUST WANTED TO POINT OUT BOTH IN THE, UM, IN THE BUILDING INSPECTION FUND AND IN THE, IN THE, UH, PLANNING SPECIAL REVENUE FUND, BOTH AT PERMITTING, YOU KNOW, WE'RE WAY UP IN REVENUES AND, AND DOWN IN EXPENSES BECAUSE WE'RE, YOU KNOW, WE'VE GOT A BUNCH OF HOLES THERE AND THAT, THAT'S JUST A CYCLE.
WE'VE GOT A REMEDY AT SOME POINT.
AND THANK YOU FOR THE PRESENTATION.
UM, CONTROLLER, YOU MENTIONED, UM, THE INCREASE IN INTEREST RATES.
CAN YOU TALK A LITTLE BIT MORE ABOUT THAT AND WHAT THAT MEANS NOW THAT WE'VE STARTED A NEW FISCAL YEAR AND WHAT THE SHORT TERM INTEREST RATE INCREASES MIGHT, UM, WHAT THE IMPACT MIGHT HAVE ON OUR BUDGET? SURE.
I MEAN, YOU, YOU ALL THAT ARE, YOU KNOW, FOLLOWING THE NEWS, IF YOU WATCH CNBC, IT'S ALMOST EVERY DAY THAT THEY TALK ABOUT, UH, YOU KNOW, RISING INTEREST RATES, INFLATION, UM, YOU KNOW, IT'S TWO PARTS.
UH, AS WE SEE INTEREST RATES RISE AND AN INFLATIONARY ENVIRONMENT, WE TEND TO SEE COST OF GOODS INCREASE.
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THAT, YOU KNOW, AT THE GROCERY STORE AND SHOPPING CENTERS AND THINGS LIKE THAT WHERE YOU PURCHASE, BUT THE CITY IS NO DIFFERENT.UM, YOU KNOW, THE FUEL THAT WE PURCHASE, UH, THE SUPPLIES AND SERVICES OR THE SUPPLIES THAT WE PURCHASE, ALL THOSE COSTS ARE INCREASING SPECIFICALLY ON INTEREST RATES.
UM, WHEN WE ISSUE DEBT, UH, WE, UH, ISSUE THAT AT A CERTAIN INTEREST RATE, AND THAT IS A, YOU KNOW, MARKET RATE, UH, SPECIFIC AT THE TIME OF ISSUANCE.
SO, UM, YOU KNOW, AS THE FED, UH, WHICH THEY RECENTLY INCREASED BY 75 BASIS POINTS, UH, THAT WAS THE SECOND INCREASE, UH, 75 BASIS INCREASE.
UM, YOU KNOW, WE HAVEN'T SEEN THOSE KIND OF INTEREST RATE INCREASES SINCE, UH, THE VOLCKER YEARS IN, UH, 19, UH, LATE SEVENTIES AND EARLY EIGHTIES.
UM, SO IT'S GONNA INCREASE OUR, OUR COST OF ISSUANCE, UH, FOR OUR, OUR BASICALLY OUR DEBT SERVICE WHEN WE ISSUE THOSE BONDS.
UM, YOU KNOW, THAT'S DEPENDENT ON HOW MUCH WE ISSUE.
UM, I KNOW FINANCE, UH, AND, UH, UH, DIRECTOR JONES WILL, UH, ATTEST THAT, YOU KNOW, NORMALLY WE DO A, A TAX REVENUE ANTICIPATION NOTE, A TRANS TRANSACTION, BUT BECAUSE OF THE, UH, HIGH AMOUNT OF, UH, FEDERAL MONEY THAT WE'VE RECEIVED, I THINK THAT TRANS TRANSACTION WILL BE SIGNIFICANTLY LESS.
SO UNTIL WE KNOW, UH, HOW MUCH DEBT WE'RE ACTUALLY ISSUING, I CAN'T QUANTIFY A DOLLAR AMOUNT, BUT WHAT I CAN TELL YOU FROM A, YOU KNOW, A PERCENTAGE BASIS ON, UH, THE INTEREST RATES, I MEAN, YOU KNOW, YOU'RE GONNA SEE A 30, 40%, UH, MAYBE MORE IF THE FED CONTINUES TO INCREASE, UH, OVERALL AS A PERCENTAGE OF THE BUDGET, IT, IT'S NOT SUBSTANTIAL.
AND WE HAVE DONE A, A, A VERY AGGRESSIVE OVER THE LAST, YOU KNOW, 12 YEARS THAT I'VE ACTUALLY BEEN IN THE CONTROLLER'S OFFICE, NOT THE WHOLE TIME AS A CONTROLLER, BUT WE'VE REFINANCED OVER A BILLION DOLLARS OF, OF, UH, SAVINGS AND DEBT.
SO WE ARE, UH, WELL AHEAD OF THE GAME IN THE SENSE THAT WE REFINANCED JUST AS YOU WOULD REFINANCE YOUR HOME MORTGAGE WHEN RATES WERE REALLY LOW.
AND SO WE WERE GONNA SEE, I WOULD PUT US UP AGAINST ANY CITY IN THE COUNTRY, PROBABLY THE LARGEST, UH, DOLLAR SAVINGS FROM THOSE REFINANCINGS.
AND GOOD THAT WE DID THAT THEN, BECAUSE NOW, UH, RATES ARE RISING, WE MAY NOT HAVE AS MANY OPPORTUNITIES.
HOPE I ANSWERED YOUR QUESTION.
IF YOU HAVE ANY ADDITIONAL, YOU CAN EMAIL ME AND I'LL GET THOSE IN WRITING.
SO BEFORE WE GO BACK TO COUNCIL MEMBER SALLY ALCORN, A COUPLE QUESTIONS.
THIS, SO THIS THEORETICALLY CLOSES OUT FISCAL YEAR 20 21, 20 22.
SO I'LL READ SOME HIGHLIGHTS FROM THE LETTER.
UM, GENERAL FUND INCREASE OF 6.5% SALES TAX REVENUE, UH, AVIATION OPERATING FUND REVENUES, INCREASE EXPENSES, DECREASE CONVENTION AND ENTERTAINMENT REVENUES INCREASE, REVENUES INCREASE BY 926001.4 MILLION.
COMBINED UTILITY SYSTEM REVENUES DECREASED BY ONE THREE EXPENSES DECREASED BY 27.4.
NON-REVENUE OPERATING REVENUE INCREASED BY 46.5.
SO WHEN YOU ADD IN UNDER THE CU S THE COMBINED UTILITY SYSTEM, WHICH IS WATER AND WASTEWATER, AND I'M GETTING MULTITUDES OF CALLS EVERY DAY ON HIGH WATER BILLS BECAUSE WE'RE EXPERIENCING SIGNIFICANT DROUGHT, PROBABLY SOMETHING WE HAVEN'T SEEN SINCE 2011.
SO YOU ADD IN 46.5 ON THE PLUS SIDE, UH, ONE, UH, EXPENSES DECREASED BY 27.4, YOU GET $75 MILLION IN EITHER INCREASE IN REVENUE AND DECREASE IN EXPENSES.
AND WE HAD THE WATER RATE INCREASE.
SO I'M STRUGGLING A LITTLE BIT ON THE CALLS I'M RECEIVING ABOUT WATER WEIGHT INCREASES.
AND YET YOU LOOK AT THE REPORTS AND REVENUE LOOKS PRETTY GOOD, AND OPERATING EXPENSES HAS A SIGNIFICANT DEDUCTION TO IT.
SO THOSE TWO THINGS AREN'T CORRELATING IN MY MIND.
THEY DON'T GO WELL TOGETHER BECAUSE WE PASSED IT BASED UPON, UM, EPA AND THE CONSENT DECREE.
SO I READ THIS LITTLE SNIPPET OF THE REPORT AND SAY, WE GOT SOME PRETTY GOOD REVENUE IF YOU TAKE IN THE REVENUE AND THE EXPENSE REDUCTIONS TO HEAD TOWARDS THE EPA.
ANY COMMENTS? I HAVE A GENERAL COMMENT AND THAT I CONCUR MY OFFICE, ALTHOUGH, YOU KNOW, WE ARE CITYWIDE, WE'RE, YOU KNOW, WE'RE NOT A COUNCIL OFFICE.
I CAME FROM A COUNCIL OFFICE, SO WE STILL TAKE CONSTITUENT, UH, SERVICES SERIOUSLY.
WE GET A LOT OF CALLS, UH, AND INCREASINGLY, UH, MORE RECENTLY, UH, TO THE EXACT POINT THAT YOU'RE, UH, MAKING, UM, THAT THESE WATER BILLS.
AND, AND WE'RE SEEING SOME PEOPLE THAT HAVE JUST OUTTA THE BLUE, UH, EIGHT, 10 TIMES THEIR NORMAL WATER BILL AND, UH, YOU KNOW, WE'RE SENDING THOSE, UH, ON UP AND TRYING TO GET RESOLUTION.
A LOT OF TIMES THE RESOLUTION IS WELL FILE A LEAK ADJUSTMENT, BUT, YOU KNOW, THAT'S ONLY FOR A PORTION OF THAT BILL AND IT DOESN'T SOLVE THE PROBLEM.
SO I, I TEND TO THINK WHENEVER, AND THIS IS JUST FROM A FINANCIAL PERSPECTIVE, WHENEVER YOU HAVE A 10% MONTH OVER MONTH INCREASE IN WATER WITH NO, UH, ADDITIONAL USAGE, IT'S, THERE'S
[00:25:01]
GOTTA BE SOME KIND OF, UH, SYSTEM ERROR.SO I WOULD JUST SAY, AND, AND, UH, MR. CHAIRMAN, YOU KNOW, WOULD CONCUR AND ENCOURAGE, UH, PUBLIC WORKS, UH, TO LOOK INTO THESE, BECAUSE AGAIN, ANYBODY THAT'S HAVING TO PAY A 10 X INCREASE IN THEIR WATER BILL, UH, THAT'S A PROBLEM.
SO WHAT'S INTERESTING, UH, UH, ABOUT THAT IS LEAK ADJUSTMENTS, YOU CAN ONLY FILE FOR A LEAK ADJUSTMENT ONE TIME A YEAR.
AND IF YOU LOOK AT WHAT WE HAVE GOING ON RIGHT NOW, WE TAKE A, A REALLY LASER FOCUS TO GENERAL FUND.
WHAT ABOUT ENTERPRISE FUND AVIATION REVENUES INCREASE EXPENSES, DECREASES, CUS REVENUES INCREASES, EXPENSES DECREASE, BUT YET WE DON'T, MY OPINION, WE DON'T TAKE A LASER FOCUS TO ENTERPRISE FUNDS WHEN IT'S JUST AS SIGNIFICANT TO THE CITY OF HOUSTON AS THE GENERAL FUND.
AND I DON'T KNOW IF THAT REQUIRES A THEORETICAL CHANGE TO THE WAY WE DO THINGS IN THE CITY OF HOUSTON GENERAL FUND AND, AND ENTERPRISE FUND.
BUT ALL THE QUESTIONS I'M GETTING RIGHT NOW ARE RELATED TO THINGS IN THE ENTERPRISE FUND WATER RATES, WHAT ARE WE DOING WITH EPA VERDICT? AND YET YOU LOOK AT THE LITTLE BIT OF THE SNAPSHOT THAT'S IN THE CONTROLLER'S MEMO WHERE YOU HAVE OPERATING REVENUES INCREASES BY A SIGNIFICANT AMOUNT, EXPENSES DECREASE INTO THE TUNE OF AN EXTRA $75 MILLION AND COMPOUND THAT WITH THE WATER RATE INCREASE CREASE THAT WE HAVE.
UM, I'M, I'M STRUGGLING, I'M JUST PERSONALLY, I'M JUST STRUGGLING WITH IT A LITTLE BIT AND, UH, AND HOW WE WE DO THINGS AND MAKE SURE THAT WE HAVE THE ABILITY WITH, UM, MY OPINION, A LUMEN RECESSION WITH INFLATED PRICES AND DECREASE ON DEMAND.
I THINK YOU'RE GONNA SEE BECAUSE OF HIGH PRICES, UH, AND MOVING FORWARD, I WAS GLAD TO SEE YOUR REPORT ON THE SWAPS, UH, 133 NEGATIVE POSITION IN THE SWAP.
SO, UH, BUT IT'S $54 MILLION LAST BECAUSE, UM, ALL A SWAP IS, IS A HEDGE STRATEGY.
YOU KNOW, INFL INTEREST RATES RISE, WE PUT IN SOMETHING YEARS AGO THAT GIVES US THE ABILITY TO GUARD AGAINST THAT.
AND, BUT I'M GLAD WE'RE TALKING ABOUT EXITING THE SWAP MARKET, BUT COUNCIL MEMBERS, ANY COMMENTS ON THAT? I'D BE WELCOME TO HEAR IT.
UM, BUT, AND I'M STRUGGLING A LITTLE BIT ON THE, UH, ON THE WATER STUFF AND EPA AND SOME OF THE THINGS LIKE THAT, AND WE HAVE TO REALLY DO A, A REALLY HARD LOOK AT THAT AS WELL.
AND I WAS GONNA SAY IF I REALLY YES.
MAYOR
UM, SO I DO WANT TO JUST MAKE YOU AWARE WHEN, WHEN YOU SEE LIKE SOME OF THOSE SAVINGS ON THE EXPENDITURE SIDE, AND WHEN YOU FACTOR IN THE REVENUE, UH, JUST KEEP IN MIND THAT THE, UH, THE, THE WATER RATES AND THE INCREASE THAT, THAT CAME FROM THE WATER RATES, IT'S MEANT TO, UM, REBUILD SOME OF THE INFRASTRUCTURE OVER TIME.
SO YOU, YOU MAY SEE SAVINGS NOW, BUT THAT IS STILL EARMARKED FOR, UM, INVESTMENTS AND INFRASTRUCTURE LATER.
SO IT'S NOT LIKE THE SAVINGS IS JUST, UM, YOU KNOW, GOING RIGHT BACK TO THE FUND BALANCE.
IT, IT'S, IT'S EARMARKED FOR INVESTMENTS.
AND THAT WAS THE WHOLE PURPOSE OF, YOU KNOW, HAVING THE, THE WATER RATE INCREASE.
UM, AND I WILL DEFER TO, UH, DIRECTOR HADDOCK, BUT I KNOW THERE ARE OPTIONS WHEN IT COMES TO, UH, CITIZENS AND, UM, THEIR WATER BILLS.
AND I'M NOT SURE ABOUT THE, YOU KNOW, SOME OF THE CASES YOU GUYS ARE HEARING ABOUT, BUT IF IT'S AN EXTREME, UH, YOU KNOW, INCREASE THERE, THERE HAS TO BE, LIKE YOU GUYS SAID, SOME REASON FOR THAT, UM, FOR, I WOULD THINK FOR THE NORMAL CITIZEN, THEY'RE NOT SEEING, YOU KNOW, A HUNDRED PERCENT INCREASE.
BUT, YOU KNOW, I DON'T, I DON'T KNOW ALL THOSE DETAILS, BUT I WOULD, YOU KNOW, REACH OUT TO DIRECTOR HADDOCK JUST TO, TO, YOU KNOW YEAH.
GET MORE INFORMATION ON WHAT OPTIONS ARE AVAILABLE.
BUT I DID WANT TO BE CLEAR THAT WHEN YOU LOOK AT THE CUS FUND AND YOU SEE SAVINGS NOW THAT IS STILL EARMARKED FOR INVESTMENTS INTO THE INFRASTRUCTURE.
UH, BUT, BUT THE, THE NUMBER ONE VOLUME OF CALLS IN THE SUBJECT MATTER RIGHT NOW IS WATER RATES.
AND I THINK IT'S A MULTITUDE OF THINGS.
YOU KNOW, THE, THE, THE HEAT, THE DROUGHT, THINGS OF THAT NATURE HAS JUST PUTTING A LOT OF PRESSURE.
UH, INFLATION IS A LOT IN PRESENT.
IF YOU DON'T THINK SO, YOU'RE CRAZY.
SO, UM, I THINK A COMBINATION OF ALL THOSE FACTORS AND PEOPLE LOOK AT THEIR PAYCHECKS AND LOOK AT THEIR BILLS THAT ARE COMING IN, AND IT'S A LITTLE BIT OF A STRUGGLE.
AND, UM, AND THAT'S WHAT THE NUMBER ONE, WE GET PROBABLY FOUR OUT FIVE CALLS IT'S RELATED TO, TO WATER BILLS AND SOME OF THE THINGS THAT WE SEE COUNCIL MEMBER SALLY ALCORN, THANK YOU MAYOR POAM.
AND, AND TO YOUR POINT ON THE CUS, IT, IT DOES LOOK FROM WHAT OUR ADOPTED BUDGET OF BRINGING IN $1.1 BILLION IN REVENUE, WE BROUGHT IN $1.3 BILLION.
SO AN EXTRA COUPLE, YOU KNOW, $170 MILLION, THE TRANSFER OUT TO THE CAPITAL OUTLAYS IS AT 70 MILLION.
BUT AN EVEN, SO I'M ASSUMING THAT THAT
[00:30:01]
TRANSFER OUT TO CAPITAL OUTLAY IS GONNA GROW, CORRECT? A LOT.SO, 'CAUSE THE, LIKE OVER THE NEXT RIGHT.
'CAUSE THE REVENUE'S COMING IN FIRST 'CAUSE THE RATES ALREADY INCREASED.
BUT AS TIME GOES ON, YOU'LL, YOU'LL DEFINITELY NOTICE, ESPECIALLY IN THE UPCOMING BUDGET WHERE THAT THAT TRANSFER TO CAPITAL PROJECTS IS GOING TO INCREASE 'CAUSE THEY NEED THAT REVENUE TO PAY FOR THE INFRASTRUCTURE, RIGHT? SO WE WOULD DEFINITELY SEE THAT CHANGE COMING.
AND, UH, AND ON A MUCH SMALLER NUMBER, UM, IN THE D-D-S-R-F, THE, THE $4 MILLION KIND OF DECREASE IN WHAT WE EXPECTED TO GET IN, UM, IN REVENUES AND THE DRAINAGE CHARGE.
IN YOUR SUMMARY, IT SAYS BECAUSE OF LOWER THAN ANTICIPATED, I GUESS JUDGMENTS, CLAIMS AND JUDGMENTS, WHAT, WHAT DOES THAT MEAN? LIKE, PEOPLE THAT ARE FIGHTING THEIR BILL, THEY, WE ENDED UP AGREEING WITH THEM, OR HOW DID WE END UP $4 MILLION LESS IN THAT? WE'VE BEEN PRETTY STEADY ABOUT A HUNDRED, 304 MILLION AND NOW WE'RE AT A HUNDRED MILLION ON THE DRAINAGE CHARGE.
AND IT'S NOT LIKE, I DON'T THINK PEOPLE ARE LESSENING THE AMOUNT OF IMPERVIOUS COVER THEY HAVE OUT THERE.
I PROBABLY HAVE TO GET TO WITH PUBLIC WORKS JUST TO GET MORE THAT'S FINE.
INFORMATION ON OKAY, THAT'S FINE.
AND GOOD NEWS ON THE RECYCLING, WE'RE FINALLY MAKING A LITTLE MONEY THERE.
YEAH, ACTUALLY IT'S REALLY GOOD NEWS, UM, BECAUSE OF THE COMMODITY MARKET, UM, IS ACTUALLY REDUCING OUR EXPENDITURES AND INCREASING OUR REVENUE.
SO WITH THE CONTRACT WE HAVE, UM, AS THE COMMODITIES GO UP, UM, WE SHARE IN SOME OF THAT REVENUE WITH THE VENDOR AND IT ALSO DECREASES OUR REFUSE.
SO THIS IS A, A BIG TURNAROUND FROM WHERE WE WERE.
AND ONE FINAL POINT, UH, AGAIN, THE, THE DECREASE IN HEALTH BENEFITS, REVENUES AND EXPENDITURES IS KIND OF A BIT A PATTERN MM-HMM
BUT I NOTICED DURING BUDGET TIME WE WERE STILL BUDGETING, YOU KNOW, WAY UP.
WE ALWAYS HAVE A BIG SURPLUS IN THAT HEALTH BENEFITS FUND THAT WE JUST PUT RIGHT BACK TO THE DEPARTMENTS.
YOU KNOW, IF WE'RE GONNA COLLECT THAT MONEY FOR HEALTH BENEFITS REASONS, I'D LIKE, I'D RATHER SEE IF THERE'S A SURPLUS IN THERE THAT PUT ASIDE FOR, UH, LONG-TERM LIABILITIES HAVING TO DO WITH HEALTH BEND.
THANK YOU CHAIRMAN OF TTI, COUNCIL MEMBER DAVID ROBINSON.
YEAH, I, I'M, UH, HEARING THE COMMENTS RELATED TO THE WATER BILLS AND, UH, WOULD REMIND COUNCIL THAT IT'S NOT TOO LONG AGO THAT WE HAD AN UPDATE AND, UH, A MATTER BEFORE THE COMMITTEE THAT WAS TALKING ABOUT THE PROCESS WITH WHICH, UH, CITIZENS CAN CONTEST, UM, WATER BILLS THAT LOOK WAY OUTTA WHACK.
AND WHAT WE'RE SEEING TODAY, I THINK IS APPROPRIATELY ASSESSED AS THE RESULT OF A COMBINATION OF INFLATION CHANGES TO THE WATER RATES AS WELL AS TO, UM, THE HEAT AND THE DRYNESS THAT WE'VE BEEN EXPERIENCING.
SO I'M TRYING TO GET A WORD WITH, UH, DIRECTOR HADDOCK TO SEE IF SHE HAS ANY SPECIFIC RESPONSE AT THIS POINT, BUT I THINK IT, IT MAY WARRANT AN UPDATE FOR THE TTI COMMITTEE.
SO I THINK, UH, IF COUNSEL CONCURS, UH, MR. CHAIR, I THINK WE'LL, WE'LL TRY TO BRING THAT FORWARD SOMETIME SOON.
I HAVE A COUPLE QUESTIONS THAT COME FROM THE PUBLIC, SO I'LL, I'LL GO AHEAD AND, AND ASK HIM.
UH, WE HAVE ONE PUBLIC SPEAKER, MR. DOUG SMITH, BUT, UH, HE SENT ME SOME QUESTIONS AND, UH, I, UM, A LOT OF TIMES HE ASKS, HE ASKS THE QUESTIONS WITHOUT THE ABILITY TO GET THE ANSWERS BECAUSE THE QUESTIONS NEED TO COME THROUGH US TO YOU TO TWO GENTLEMEN.
SO I'LL ASK THREE OF HIS FOUR QUESTIONS.
WE HAVE A ONE POINT, ALMOST $1.3 BILLION PROPERTY TAX CALCULATION.
THIS CALCULATION DOES NOT INCLUDE PROPERTY TAXES PAID TO THE TURS OR THREE 80 AGREEMENTS, EVEN THOUGH THE CITY COLLECTS THIS.
SO HIS QUESTION WAS, WERE THE TURS AND THREE 80, UH, AGREEMENTS BY PASS OF THE CAP, AND IS IT LEGAL? SO I'LL ATTEMPT TO ANSWER IT AS WELL.
WE DON'T DO ANYTHING ILLEGAL IN THE CITY OF HOUSTON, FIRST OF ALL.
BUT IS IT A WAY TO BYPASS THE CAP? UH, I HAVE A CHURCH IN MY AREA, AND I LOOK AT IT AS A WAY FOR US TO USE REVENUE THAT WE WOULD'VE NEVER RECEIVED TO TOWARDS INFRASTRUCTURE PROJECTS.
SO I'VE HAD THIS ARGUMENT WITH SENATOR PAUL BETTENCOURT, WHO IS THE ANTIT TURS SENATOR.
MANY TIMES WITHOUT THE TURS, WE DON'T HAVE THE ABILITY TO DO THE A HUNDRED AND WHAT MILLION DOLLAR PROJECT NOW FOR NORTH PARK EXPANSION IN KINGWOOD A HUNDRED MILLION DOLLAR PROJECT BECAUSE THAT REVENUE IS COMING FROM THE TAX INCREMENT REINVESTMENT ZONE.
SO IT GIVES THE CITIZENS THAT LIVE IN THE AREA THAT MAKE UP THE BOARD THE ABILITY TO TELL THE CITY WHAT DO THEY THINK PROJECT WISE IS IN THE BEST INTEREST OF THE AREA THAT THEY REPRESENT ON THE BOARD AND THEY LIVE IN.
AND THEN YOU ATTACK IT IN THAT FRAME.
SO I'M A FAN OF TAX INCREMENT REINVESTMENT ZONES BECAUSE WITHOUT THEM, WE DON'T HAVE THE ABILITY TO DO THIS HUGE INFRASTRUCTURE PROJECT WOULD EFFECTS THAT AFFECTS SAFETY AS WELL AS MOBILITY IN THE AREA THAT I REPRESENT.
SO, UH, ANY YOU TWO GENTLEMEN EVEN HAVE A COMMENT ON THAT? YEAH, I MEAN, JUST TO ADD IT IS, UM, IT'S INCLUDED IN THE CHARTER LANGUAGE THAT YOU RIGHT EXCLUDE, UH, THE, THE TS INCREMENT.
SO THAT IS TO GO INTO A SEPARATE FUND.
SO, UM, ON, ON THE QUESTION OF IS IT LEGAL? IT IT, IS IT ACTUALLY IN THE LANGUAGE OF
[00:35:01]
THE CHARTER THAT WE SHOULD EXCLUDE IT? SO I JUST WANTED TO BE CLEAR ON THAT.AND DOES IT BY CAP PAP BYPASS THE CAP? NO, I MEAN IT, A PART OF THE PROP CALCULATION, IT, WE FOLLOW THAT LANGUAGE BY EXCLUDING THE, THE T INCREMENT.
UM, AND SO THE, WHAT WE RECEIVE IS NET OF THE T INCREMENT, WHICH IS THE LANGUAGE IN THE PROPERTY TAX CAP.
AND ONE OF THE QUESTIONS RELATED TOTS, DO WE HAVE A LISTING OF TURS AND THE DEBT FOR EACH OF THOSE TURS THAT WE HAVE? UM, I WOULD HAVE TO CHECK.
I WOULD THINK A, A LIST LIKE THAT EXISTS AND THEN, UH, DOUG WAS ON THE TOURIST BANDWAGON, I GUESS MM-HMM
AND IT WAS, UH, AFFORDABLE HOUSING, AND CORRECT ME IF I'M WRONG, WE HAVE TWO TYPES OF T PETITION AND NON PETITION BY CHARTER, I GUESS, OR BY DESIGN.
SOME OF THEM PAY UNTIL THE AFFORDABLE HOUSING BUCKET AND SOME OF 'EM DO NOT.
SO WHAT'S THE DIFFERENCE BETWEEN ONES THAT PAY INTO AFFORDABLE HOUSING AND ONES THAT DON'T PAY 'EM TO AFFORDABLE HOUSING? I MAY HAVE TO GET BACK TO YOU ON THAT.
I DO KNOW IT IS GOVERNED BY STATE LAW, UM, THE REQUIREMENTS FOR THE AFFORDABLE HOUSING, UH, CONTRIBUTION FROM THE, SO THAT THAT IS ACCURATE.
UM, I'M NOT SURE EXACTLY WHAT THE CRITERIA IS FOR ONE TO BE INCLUDED OR EXCLUDED.
UM, BUT IT IS GOVERNED BY STATE LAW AND ALL OF THET MEETINGS ARE OPEN TO THE PUBLIC.
SO I KNOW YOU HAD A QUESTION ON WEST CHASE'S THREE 80 AGREEMENT.
I INVITE YOU TO GO TO WEST CHASE'S TURS MEETING MR. SMITH AND, AND ASK THAT QUESTION DIRECTLY OF THEIR BOARD AND SEE EXACTLY WHAT THEY DO.
UH, COUNCIL MEMBER DAVID ROBINSON, ARE YOU STILL IN THE QUEUE? NO.
SO, UM, THAT COMPLETES, UH, WHAT WE HAVE FROM YOU GENTLEMEN.
WE HAVE ONE PUBLIC SPEAKER, MR. SMITH.
NOW THEY'RE LEAVING, SO, OKAY.
UM, REGARDING, UH, WELL FIRST OF ALL REGARDING WATER RATES, UH, WE DON'T CONTROL ELECTRIC RATES, BUT I JUST HAD TO RENEW MY ELECTRIC, UH, WITH, UH, POWER TO CHOOSE AND GET READY FOR EVERYBODY TO PROBABLY MAYBE HAVE THEIR ELECTRIC RATES DOUBLE, UH, OR DAMN CLOSE TO IT.
UH, I COULDN'T FIND ANYTHING THAT MADE ANY SENSE.
SO THIS WHAT YOU WERE TALKING ABOUT EARLIER, REGARDING WESTCHASE, MY QUESTION HAS NOTHING TO DO WITH WESTCHASE AND THE BOARD.
YES, THE THREE 80, BUT THEIR THREE 80 AUDIT SHOWS INCOME OR, UH, REIMBURSEMENT REVENUES OF 6.5 MILLION, WHICH WOULD BE MONEY COMING FROM THE CITY REIMBURSEMENT.
AND THE CITY SENT ME, THE FINANCE DEPARTMENT SENT ME A REPORT SAYING THAT THEY TRANSFERRED 500,000 TO THAT, UH, THREE 80 AGREEMENT.
SO THE THREE 80 TRANSFERS GOES TO THE DEVELOPER.
SO HOW A THREE 80 AGREEMENT WORKS IS, CORRECT ME IF I'M WRONG, COUNCIL MEMBERS IS A DEVELOPER'S DOING A PROJECT AND THEY DO INFRASTRUCTURE RELATED AT THEIR EXPENSE WITH THE ABILITY TO SUBMIT PAYMENT OR RECEIPTS BACK TO THE CITY FOR REIMBURSEMENT ONCE THEY GET TO A PROFITABILITY STANDPOINT, I THINK IN THE, IN THE TAX INCREMENTS.
SO IT'S THE DEVELOPER'S EXPENSE FOR INFRASTRUCTURE THAT SHOULD BE THE CITIES THAT THEY GET REIMBURSED FOR AFTER THE DEVELOPMENT HAS BEEN COMPLETE.
I THINK, I KNOW MR. ICKEN IS ON VACATION THIS WEEK ONCE THE INCREMENT GOES TO A POSITIVE FIGURE.
IT'S ALWAYS, AND IT'S ALWAYS, TYPICALLY IT'S UPFRONT, IT IS COSTS INVESTED, UM, IN THE CIVIL, IN THE PUBLIC REALM.
SO IT'S GONNA BE DRAINAGE ROADS, IT'S GONNA BE OTHER THINGS THAT THE CITY WOULD LIKE, BUT THAT'S THE MM-HMM
THE NATURE OF THE DEAL THAT'S CUT.
SO, AND, AND YOU'RE LOOKING AT THE EXPENSE OF X MILLION IN THE REIMBURSEMENT FOR 500,000.
I'M GOING TO MAKE AN ASSUMPTION IS BECAUSE THEY HAVEN'T REACHED THE POSITIVE INCREMENTAL INCREASE.
AND ONCE THEY DO, THEY'LL START GETTING REIMBURSEMENT FROM THE, UH, TAX INCREMENT REINVESTMENT ZONE OR THE WEST CHASE DISTRICT FOR THE THREE 80 AGREEMENT.
SO YOU SPEND 3 MILLION ON INFRASTRUCTURE SLOWLY, BUT SURELY YOU'LL GET REPAID FOR THAT IF YOU REACH A POSITIVE ON THE INCREMENTAL INCREASE.
IF YOU DON'T, YOU DON'T RECEIVE ANY MONEY.
BACK AND CHAIR, JUST ONE LAST DETAIL.
I THINK THAT THERE IS A TERM ASSOCIATED WITH THAT.
SO THE TIMEFRAME IS PART, IT'S A CRITICAL PART OF THE DEAL.
[00:40:01]
THE, THAT IS, UH, YOU KNOW, SCHEDULED FOR REIMBURSEMENT AND THE WORK FOR WHEN IT IS DONE, RIGHT.SO IN YOUR QUESTION, WAS 6.5 REIMBURSABLE BECAUSE OF INFRASTRUCTURE? NO, THAT'S WHAT THIS TAKE OUT.
WAIT, LET ME, I'M READING IT RIGHT HERE.
AUDIT SHOWS REIMBURSEMENT REVENUES OF 6.5, RIGHT.
SO THAT'S EXACTLY WHAT WE'RE TALKING ABOUT.
6.5 WAS THE EXPENSE TO DO INFRASTRUCTURE RELATED TO THIS PROJECT IN THE THREE 80 AGREEMENT.
BUT BECAUSE THEY HAVEN'T REACHED THE INCREMENTAL POSITIVE YET, THEY'VE ONLY RECEIVED 544 BACK ON THE 6.5.
SO I'M ASSUMING IF THEY REACH POSITIVE, THEY'LL GET THEIR $6 MILLION BACK THAT THEY OUTLAID, UH, TO BUILD THE ROADS AND THE INFRASTRUCTURE RELATED TO THAT IN A TAX BREAK IN A, IN A TAX BREAK.
SO ASSISTANT PACKAGES SHALL HAVE A MAXIMUM TURN OF 10 YEARS.
CHAPTER THREE 80 PROGRAM LOANS SHALL BE RECOURSE LENDING SECURED BY THE DEED OR TRUST OF TRUST OR APPROPRIATE COLLATERAL OR NON-RECOURSE LENDING SECURED BY THE DEED OF TRUST OR APPROPRIATE COLLATERAL.
THREE 80 PROGRAM GRANTS SHALL BE STRUCTURED AS PERFORMANCE-BASED GRANTS, WHICH REQUIRE REPAYMENT IF REQUIRED PERFORMANCE LEVELS ARE NOT MET.
UM, A COUPLE OF QUE FIRST OF ALL, I HAD A QUESTION THAT WASN'T ADDRESSED, UH, IN, UH, ONE OF THE PAGES.
IT TALKED ABOUT ANNEXATIONS IN 2021.
WHAT ANNEXATIONS WERE THERE? UH, THAT WAS NOT ANSWERED? NOT SURE.
I'M SURE WE CAN GET BACK WITH YOU ON THAT.
I, THERE WEREN'T, I I THINK THERE WAS A, I THINK ANNEXATIONS, WHEN PEOPLE HEAR ANNEXATIONS, THEY THINK, YEAH, THANK YOU.
IT, IT CAN, HAS TO DO WITH VERY SMALL PIECES OF PROPERTY, SOMETIMES AT THE PERIPHERY OF THE EXTRATERRITORIAL JURISDICTION, YET SOMETIMES WITHIN THE CITY OF HOUSTON.
SO THEY CAN BE, UM, TINY PIECES OF PROPERTY THAT ARE ANNEXED FOR THE PURPOSE OF, OF DEVELOPER RELATED INTEREST IN, AT THE OUTSKIRTS OF OUR CITY.
UM, THEY'RE LITTLE, I, YOU KNOW, WE'RE NOT, WE'RE NOT ANNEXING KINGWOOD ANYMORE.
WHEN YOU HEAR ANNEXATION, YOU THINK OF WHAT HAPPENED IN THE, IN THE HISTORY OF HOUSTON.
BUT THESE ARE ADDITIONS AND EXCEPTIONS THAT ARE ADJUSTED TO, UH, TYPICALLY THE MUDS, THE MUNICIPAL UTILITY DISTRICTS THAT ARE AT THE EDGE OF OUR CITIES AND THAT COMES BEFORE US IN THE FORM OF REGULAR ORDINANCES THAT WE VOTE ON.
THEY'RE, THEY'RE REGULAR OCCURRENCES.
FOR MOST PEOPLE, THEY, YOU'RE RIGHT, THEY THINK OF ANNEXATION AS CHUNK OF POPULATION, BUT THERE WAS A STATE LAW THAT WAS PASSED BY MY FRIEND DAN HUBERTY THAT OUTLAWED THAT UNLESS THERE IS A CONSENT OF THE VOTERS THAT LIVE IN THE ANNEXED AREA, PROPOSED ANNEX AREA.
BUT I THINK CHAIRMAN ROBINSON IS RIGHT.
I THINK IT'S A LOT OF THE MUDS AND THE LITTLE BITTY PIECES OF LAND THAT WE HAD.
I'M NOT SURE THE ANSWER THE FINANCE DIRECTOR GAVE REGARDING THE TOUR'S, CONTRIBUTIONS TO AFFORDABLE HOUSING.
UH, AND, UH, CAN WE GET A LIST, UH, BECAUSE I, I WAS TOLD EARLIER, I MEAN, A MONTH OR SO AGO THAT, UH, UPTOWN TOURS DEFINITELY CONTRIBUTED TO HOUSING AND IT DOESN'T SHOW IN THE REPORT THAT I SENT YOU.
CAN WE GET A LIST FROM HIM ON THAT? AND ALSO HIS ANSWER TO, UH, THE AMOUNT OF OUTSTANDING DEBT, UH, FOR TOURS.
UH, ACTUALLY I SENT THESE, I SENT THESE QUESTIONS TO HIM AND I'M DISAPPOINTED THAT HE DIDN'T HAVE ANSWERS TODAY.
BUT CAN WE GET A LIST OF ALL OF THE OUTSTANDING DEBT, UH, BY TOURS? UH, AT THIS POINT I'LL ASK.
I MEAN THAT THE OUTSTANDING DEBT DOES BECOME AN OBLIGATION TO THE CITY IF SOMETHING DOES HAPPEN TO THAT TAX INCREMENT REINVESTMENT ZONE.
SO THAT OBLIGATION DOES NOT GO AWAY.
IF YOU COULD, IF YOU COULD OBTAIN THAT, WE APPROACHED THIS SIX MONTHS AGO WITH OUR TOURS WHEN WE WERE LOOKING TO BORROW MONEY AND, UH, WE HAD THE ABILITY OKAY.
SO THAT, THAT CAN BE PERFORMED.
IT'S NOT MY ROLE AND RESPONSIBILITY, BUT I WILL CHECK WITH, UH, DIRECTOR JONES AND HE'S PRETTY GOOD WITH HIS RELEASE OF MATERIAL AND INFORMATION, SO THANKS.
ANY OTHER COMMENTS, QUESTIONS, COUNCIL MEMBERS? ALL RIGHT.
UM, MS. DIGE FROM, UH, VICE MAYOR PRO TEM, MARTHA CASTEX, TATUM'S OFFICE.
AND I WANTED TO CONVEY ON BEHALF OF VICE MAYOR PRO TEM CASTEX TATUM, THAT, UH, GOING BACK TO THE TS BUDGETS, UM, THIS MONTH WITH, UM, THE FOUR PER WEEK, UM, PER OUR ECONOMIC DEVELOPMENT SCHEDULE, THAT WE WILL, UM, REVIEW THE BUDGETS OF THE TAXES.
AND THAT MEETING WILL BE THE NEXT, THAT'S IN THE NEXT
[00:45:01]
ECONOMIC DEVELOPMENT MEETING, THE SCHEDULE? UM, YES.WELL, WE DID REVIEW THE SCHEDULE.
IT'LL BE ON TOMORROW'S AGENDA IS WHAT YOU'RE SAYING.
SO DID GET THAT, DOUG? NO, I DIDN'T.
YOU CAN, UM, REVIEW ON THE WEBSITE OF THE T THE, UH, PROPOSED PROPOSED BUDGETS.
WE, WE WILL BE REVIEWING THIS, THE BUDGETS FOR THE TSIS, UM, UH, 2023 BUDGET UPCOMING, AND ALSO FOR OUR NEXT ECONOMIC DEVELOPMENT COMMITTEE.
I'LL CONTACT YOU TO GET ON THE AGENDA OR NOT ON THE AGENDA TO GET A NOTICE WHEN THAT'S GONNA HAPPEN.
AND WE'LL BE DOING FOUR PER MONTH.
HOPEFULLY LAKE HOUSTON'S IN THAT.
SO BEFORE WE ADJOURN, PLEASE NOTE THAT THE NEXT REGULARLY SCHEDULED BUDGET AND FISCAL AFFAIRS COMMITTEE MEETING WILL BE ON AUGUST 30TH, 2022 AT 10:00 AM THERE ARE NO OTHER QUESTIONS OR COMMENTS.