[Budget and Fiscal Affairs on January 31, 2023.]
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I AM MAYOR PRO TEM.DAVE MARTIN, CHAIR OF THE CITY OF HOUSTON, BUDGET AND FISCAL AFFAIRS COMMITTEE, AND I'D LIKE TO CALL THIS MEETING TO ORDER AND WELCOME ALL COUNCIL MEMBERS IN ATTENDANCE.
COUNCIL MEMBER ROBERT GALLEGOS AND STAFF FROM COUNCIL MEMBER AMY PECK'S, OFFICE DISTRICT A ABBY CAYMAN'S, OFFICE, DISTRICT C CARLOS CISNEROS, OFFICE, DISTRICT H CAROLYN EVANS SHABAZZ'S, DISTRICT D DAVID ROBINSON, POSITION TWO AT LARGE, LETICIA PLUMMER, POSITION FOUR AT LARGE.
AND I'D LIKE TO WELCOME CHIEF SAMUEL PENAN, WHO IS ALSO IN THE AUDIENCE.
MORNING CHIEF COUNCIL MEMBERS AS NORMAL.
PLEASE HOLD YOUR QUESTIONS UNTIL THE END OF THE PRESENTATION.
AT THIS TIME, I'D LIKE TO WELCOME CONTROLLER CHRISTOPHER BROWN AND DIRECTOR WILL JONES TO PROVIDE THE MONTHLY FINANCIAL REPORT.
DO YOU WANNA I'LL GRAB ONE OR STAND AND COUNCIL MEMBER SALLY ALCORN.
CAN YOU HEAR ME? YEAH, THERE WE GO.
UM, GOOD MORNING, UH, COUNCIL MEMBERS STAFF.
I'M PLEASED TO PRESENT THE MONTHLY FINANCIAL REPORT FOR THE PERIOD ENDING DECEMBER 31ST, 2022.
THE CONTROLLER'S OFFICE IS PROJECTING AN ENDING FUND BALANCE OF 283.6 MILLION FOR FY 23.
THIS IS 38 MILLION LOWER THAN THE PROJECTION OF THE FINANCE DEPARTMENT.
BASED ON OUR CURRENT PROJECTIONS, THE FUND BALANCE WILL BE APPROXIMATELY 108.9 MILLION ABOVE THE CITY'S TARGET OF HOLDING 7.5% IN RESERVES.
OUR REVENUE PROJECTIONS INCREASED BY 2.2 MILLION FROM THE NOVEMBER, 2022 REPORT AND AS FOLLOWS, MIS MIXED BEVERAGE TAX INCREASED 700,000 AND THAT WAS DUE TO HIGHER TAX RECEIPTS.
UH, DIRECT INTER FUNDS SERVICES INCREASED BY 1.5 MILLION DUE TO POLICE SERVICES PROVIDED TO THE HOUSTON AIRPORT SYSTEM ON EXPENDITURES.
OUR EXPENDITURE ESTIMATES INCREASED BY 18.4 MILLION FROM THE NOVEMBER 24 REPORT, I'M SORRY, NOVEMBER, 2022 REPORT.
AND THESE WERE PRIMARILY DUE TO THE FOLLOWING.
CITY COUNCIL INCREASED BY 3.3 MILLION DUE TO PRIOR YEAR ROLLOVER ALLOCATIONS.
FINANCE DEPARTMENT INCREASED BY 2 MILLION DUE TO HIGHER PERSONNEL COSTS.
POLICE INCREASED BY 1.6 MILLION DUE TO ADDITIONAL COSTS FOR SERVICES PROVIDED AT THE HOUSTON AIRPORT SYSTEM.
SOLID WASTE INCREASED BY 2.9 MILLION.
UH, THAT WAS DUE TO ADDITIONAL PERSONNEL COST AND CODE ENFORCEMENT TEAM COST RELATED TO ILLEGAL DUMPING.
GENERAL GOVERNMENT INCREASED BY 5.3 MILLION DUE TO THE RAFINO STORMWATER DETENTION PROJECT IN THE ENTERPRISE FUNDS.
UH, THE CHANGES FOR THE ENTERPRISE FUNDS ARE AS FOLLOWS.
UH, COMBINED UTILITY SYSTEM OPERATING REVENUES INCREASED BY 97.3 MILLION, AND THAT WAS DUE TO HIGH WATER CONSUMPTION, UH, WHICH WAS ATTRIBUTED TO DROUGHT CONDITIONS IN THE FIRST QUARTER OF FY 23 AND ALSO AN INCREASE IN THE NUMBER OF CUSTOMER ACCOUNTS.
NON-OPERATING REVENUES INCREASED BY 43 MILLION DUE TO HIGHER THAN ANTICIPATED IMPACT FEE REVENUES FROM INCREASED BUILDING DEVELOPMENT ACTIVITIES, OPERATING EXPENSES INCREASED BY 36.1 MILLION AS A RESULT OF INCREASED EMERGENCY REPAIRS AND HIGHER CHEMICAL COSTS.
NON-OPERATING EXPENSES DECREASED BY 59.2 MILLION DUE TO LOWER SYSTEM DEBT TRANSFERS AND CAPITAL EQUIPMENT COSTS.
IN THE STORMWATER FUND, THE STORMWATER OPERATING REVENUES DECREASED BY 325,000, AND THAT WAS DUE TO LOWER SPECIAL PROJECT COSTS THEN WERE BUDGETED.
OPERATING EXPENSES DECREASED BY 1.7 MILLION DUE TO DELAYS IN FILLING VACANT POSITIONS AND THE DEDICATED DRAINAGE AND STREET RENEWAL.
UH, METRO FUNDS OPERATING REVENUES DECREASED BY 1.8 MILLION, AND THAT WAS DUE TO THE TRANSFER OF THE MOBILITY PERMITTING GROUP FROM THE D-D-S-R-F TO METRO FUND TO THE BUILDING INSPECTION SPECIAL REVENUE FUND OPERATING EXPENSES DECREASED BY 2.9 MILLION TO THE TRANSFER OF THE MODI MOBILITY PERMITTING GROUP, AS WELL AS DELAYS IN FILLING VACANT POSITIONS.
OUR REVENUE AND EXPENDITURE PROJECTIONS FOR AVIATING OPERATING FUND, AVIATION OPERATING FUND AND THE CONVENTION AND ENTERTAINMENT OPERATING FUND REMAIN UNCHANGED FOR THE COMPARED TO THE NOVEMBER 22 REPORT.
UH, MOVING ON, IF YOU LOOK AT OUR COMMERCIAL PAPER AND BONDS, ALL OF OUR VARIABLE RATE DEBT IS BELOW THE 20% THRESHOLD.
AND AS THIS IS A QUARTERLY REPORT, I WILL MOVE ON MR. CHAIRMAN TO THE QUARTERLY INVESTMENT REPORT.
AS OF DECEMBER 31ST, 2022, THE CITY HAD 5.07 BILLION INVESTED IN OUR GENERAL INVESTMENT POOL.
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
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ASSIGNED THE POOL ITS HIGHEST RATING THAT OF AAA INVESTMENTS ARE 58 MILLION HIGHER THAN LAST YEAR.AND THIS IS PRIMARILY ATTRIBUTABLE TO COMMERCIAL PAPER ISSUANCE AND REIMBURSEMENT OF THE AMERICAN RESCUE PLAN ACT FROM AVIATION.
AS OF DECEMBER 31ST, 2022, THE GENERAL INVESTMENT POOL WAS YIELDING 1.787%, WHICH IS UP FROM THE 1.379% YIELD IN THE PRIOR QUARTER.
AND FINALLY, OUR QUARTERLY SWAP REPORT ALONG WITH THE INVESTMENT REPORT, WE INCLUDE THE QUARTERLY SWAP REPORT AS REQUIRED BY THE CITY'S SWAP POLICY.
THE WRITTEN SWAP REPORT THAT APPEARS IN THE MOFA OFFERS A COMPREHENSIVE DESCRIPTION OF OUR TWO SWAPS.
THE CITY HAD POSITIVE RECEIPTS FOR THE FISCAL YEAR ENDING DECEMBER 31ST, 2022 FROM ITS SWAPS OF $497,256 AND 93 CENTS.
AND THE FAIR VALUE OF THE SWAPS AS OF DECEMBER 31ST WAS NEGATIVE 99 MILLION, WHICH IS APPROXIMATELY 14 MILLION, UH, LESS THAN LAST QUARTER.
SO THAT CONTINUES TO TREND IN THE RIGHT DIRECTION.
UH, AND THIS CONCLUDES MY REPORT.
THANK YOU, CONTROLLER BROWN, UH, FINANCE DIRECTOR WILL JONES.
THIS IS THE SIX PLUS SIX FINANCIAL REPORT FOR THE PERIOD ENDING DECEMBER 31ST, 2022.
PROJECTIONS ARE BASED ON SIX MONTHS OF ACTUALS AND SIX MONTHS OF PROJECTIONS IN THE GENERAL FUND.
REVENUE PROJECTION IS 6 MILLION LOWER THAN THE ADOPTED BUDGET AND 2.5 MILLION HIGHER THAN PRIOR MONTHS.
AND THAT VARIANCE IS PRIMARILY DUE TO 1.5 MILLION INCREASE IN DIRECT INNER FUND SERVICES DUE TO HIGHER THAN ANTICIPATED REIMBURSEMENT FOR POLICE AIRPORT SERVICES.
AND 935,000 INCREASE IN CHARGES FOR SERVICES DUE TO HIGHER THAN ANTICIPATED AMBULANCE FEES.
NOW ON OUR EXPENDITURE PROJECTION, IT'S 20.9 MILLION HIGHER THAN THE ADOPTED BUDGET AND 18.4 MILLION HIGHER THAN PRIOR MONTHS PROJECTION.
AND THE VARIANCE IS PRIMARILY DUE TO, UH, 5.3 MILLION IN GENERAL GOVERNMENT.
AND THAT'S FOR THE REINO STORM WATER DETENTION PROJECT, WHICH WAS APPROVED BY COUNCIL PEOPLE LAST MONTH.
UH, 3.3 MILLION INCREASE IN THE CITY COUNCIL TO REFLECT THE UNUTILIZED COUNCIL, UH, COUNCIL DISTRICT SERVICE FUND, 2.9 MILLION IN SOLID WASTE FOR, UH, PRIMARILY FOR TEMP SERVICES.
UM, 1.8 MILLION IN PARKS, UH, FOR THE 50 50 PARKS INITIATIVE AND 1.5 MILLION IN FINANCE DEPARTMENT FOR, UH, PROCUREMENT RESTRUCTURE.
AND 1.5 MILLION IN POLICE, UH, TO REFLECT OVERTIME THAT'S REIMBURSED BY THE AIRPORT.
AND THEN ANOTHER 1.1 MILLION INCREASE IN HOUSTON HEALTH DEPARTMENT FOR THE, UH, TRANSFORMATIVE HEALTH INITIATIVE.
AND AGAIN, THAT WAS APPROVED BY COUNCIL, UH, LAST MONTH.
UM, MOVING ON TO THE FUND BALANCE, WE'RE CURRENTLY PROJECTING THE END IN FUND BALANCE OF 321.6 MILLION, WHICH IS 16 MILLION LOWER THAN PRIOR MONTHS, AND 13.8% OF EXPENDITURES LESS DEBT SERVICE.
THE FUND BALANCE IS 147 MILLION ABOVE THE TARGET AT 7.5%.
SO I AGREE WITH THE CONTROLLERS ON THE ENTERPRISE FUND.
SO I'LL MOVE ON TO OTHER FUNDS.
UH, STARTING WITH THE WORKERS' COMP FUND, THE REVENUES AND EXPENDITURES DECREASED BY 966,000 DUE TO PERSONNEL SAVINGS.
AND THE BUILDING INSPECTION FUND REVENUES INCREASED BY 1.4 MILLION, PRIMARILY DUE TO THE MOBILITY PERMITS.
REVENUES BEING TRANSFERRED FROM THE D-D-S-R-F METRO FUND AND EXPENDITURES DECREASED BY 2.4 MILLION DUE TO PERSONNEL SAVINGS AND THE HEALTH SPECIAL REVENUE FUND INCREASED BY 1 MILLION.
AND AGAIN, THAT'S FOR THE, UH, TRANSFORMATIVE HEALTH INITIATIVE.
UH, SO MOVING ON, UH, BECAUSE IT'S A QUARTERLY REPORT, HAVE A FEW ECONOMIC UPDATES ON THE ECONOMY.
AND WHEN YOU LOOK AT, UH, ENERGY, THE AVERAGE OIL PRICE OF $76 44 CENTS FOR THE MONTH OF DECEMBER WAS 9.4% LOWER THAN PRIOR MONTH'S AVERAGE PRICE OF 84.37.
SO COMPARING FROM THE SAME PERIOD LAST YEAR, THE PRICE HAS INCREASED BY 6.6% AND THE AVERAGE OIL RATE COUNT OF 623 FOR THE MONTH OF DECEMBER WAS 0.3% HIGHER.
UH, LOOKING AT EMPLOYMENT, ACCORDING TO THE BUREAU OF LABOR STATISTICS, THE PRELIM PRELIMINARY TOTAL NON-FARM, UH, EMPLOYMENT FOR THE HOUSTON METROPOLITAN AREA STOOD AT 3.3 MILLION IN NOVEMBER.
AND THAT'S UP APPROXIMATELY 0.5% COMPARED TO PRIOR MONTH.
AND WHEN COMPARED TO THE SAME PERIOD LAST YEAR, NON FORMM EMPLOY NON-FARM EMPLOYMENT IS UP 5.7%.
AND THE PRELIMINARY UNEMPLOYMENT RATE FOR THE MONTH OF NOVEMBER WAS, UH, 4% COMPARED TO PRIOR MONTHS AT 4.1%.
SO IN NOVEMBER, 2021, THE UNEMPLOYMENT RATE STOOD AT 5.1%.
SO MOVING ON TO HOME SALES, UH, THE LATEST REPORT FROM THE HOUSTON ASSOCIATION OF REALTORS FOR THE MONTH OF DECEMBER SHOWS TOTAL SINGLE FAMILY HOME SALES OF 6,003 SEVEN 6,378 OR 32.6% LOWER COMPARED TO DECEMBER, 2021 OF 9,467.
AND THAT DID MARK THE NINTH, UH, CONSECUTIVE NEGATIVE SALES, UH, FOR THE MONTH OF, UH, THROUGH 2022.
AND THE STEEPEST DECLINE, UH, THE MEDIAN PRICE ROSE BY 3.8% TO 330,000, AND THE AVERAGE PRICE INCREASED BY 5.1% TO 409,000.
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UM, SO BASICALLY LOOKING AT THE, THE IMPACT OF THE INTEREST RATES, WE ARE SEEING AN IMPACT ON THE SLOWING DOWN OF THE HOME SALES.SO I THINK WE WENT FROM, UM, ABOUT WHAT IS IT NINE, WE'RE AT 9% OR SO COMPARED TO, UH, WHAT 3% WHERE WE WERE LAST YEAR.
SO IT MAKES A PRETTY BIG DIFFERENCE IN, IN THE HOME SALE.
SO, UM, AND THAT CONCLUDES MY REPORT.
WE HAVE BEEN JOINED BY VICE CHAIR EDWARD POLLARD FROM DISTRICT J, AND COUNCIL MEMBER CAROLYN, EVAN SHABAZZ FROM DISTRICT D, AND ALSO STAFF FROM TARSHA JACKSON, DISTRICT B.
AND WE'LL GO TO QUESTIONS FROM COUNCIL MEMBERS.
WE HAVE ONE PUBLIC SPEAKER, MR. DUCK SMITH, THAT SIGNED UP TO SPEAK.
FIRST QUESTION FROM COUNCIL MEMBER SALLY ALCORN.
THANK YOU CHAIR, AND THANKS FOR THE REPORT.
UH, YOU MENTIONED, UM, THE INTEREST RATE AND HOW IT'S IMPACTING HOME SALES.
JUST WONDERED IF EITHER ONE OF YOU WANTED TO OPINE.
I GUESS WE'RE LOOKING AT A POSSIBLE INCREASE TOMORROW WHEN, UM, TOMORROW AND HOW THAT HAS A, ANY SHORT TERM OR LONG TERM EFFECTS ON THE CITY'S SITUATION CONTROLLER.
YEAH, SO, UM, THE, THE FED MEETING, UM, IT'S EITHER A HALF A PERCENT OR A QUARTER OF A PERCENT 50 OR 25 BASIS POINTS.
I THINK OVERALL THE MARKET IS EXPECTING 25 BASIS POINTS.
I THINK IF WE DO SEE A 50 BASIS POINTS, HALF A PERCENT, UH, INCREASE, UM, YOU KNOW, IT'LL HAVE SOME EFFECTS ON US FOR OUR, OUR BORROWING COSTS.
UM, I DO BELIEVE, AND WE JUST HAD OUR QUARTERLY INVESTMENT, UH, COMMITTEE MEETING.
AND IN THAT, UH, AS EVIDENCED BY THE REPORT TODAY IN THAT MEETING, WE TALKED, UH, AT LENGTH ABOUT, UH, THIS DISCUSSION.
I KNOW DIRECTOR JONES WAS ON THAT CALL.
UH, WE DO FEEL LIKE, UH, THE FED IS NEARING, UH, THE END OF THE RATE HIKE CYCLE.
UM, AS YOU ALL SEE IN THE NEWS, UH, INFLATION IS STARTING TO MODERATE STILL WELL ABOVE THE 2%, UH, TARGET THAT THE FED IS TARGETING.
BUT, UH, IT'S STARTING TO, UH, SLOW AND, AND EVEN, UH, REDUCE, UH, THE OVERALL INFL INFLATION RATES.
SO, UM, YOU KNOW, ANYTIME THE FED RAISES RATES, IT AFFECTS US.
UM, BUT WE HOPE THAT WE ARE NEARING TOWARDS THE END AND AT SOME POINT THEY WILL HAVE TO.
AND WE BELIEVE, UH, PROBABLY, UM, MID NEXT YEAR, UH, CALENDAR YEAR 24 OR SO, SOMEWHERE AROUND, UH, MAY, JUNE, UH, OF NEXT YEAR, UH, WE MIGHT EVEN SEE A, A RATE HIKE, UH, DECREASE.
AND, AND THAT'S AGAIN, DEPENDING ON HOW THE OVERALL ECONOMY, UH, FARES.
IF WE SEE A RECESSION, THEY MAY HAVE TO, UH, CUT RATES, BUT OVERALL RATE HIKES ARE, ARE NOT NECESSARILY GOOD FOR US.
IT DOES BENEFIT, AS YOU SAW IN OUR INVESTMENT FUND.
UH, THE RATES, UH, THAT WE'RE SEEING ARE AN INCREASE, BUT IT DOESN'T, IT DOESN'T OFFSET THE OVERALL COSTS.
AND, AND I WAS GONNA ASK YOU ABOUT THE $58 MILLION HIGHER, UM, INVESTMENT.
I GUESS YOU SAID $58 MILLION DUE TO SOME COMMERCIAL PAYMENT REIMBURSEMENT OF ARPA.
WHAT FROM THE AVIATION? CAN YOU EXPLAIN WHAT THAT MEANS? YEAH, SURE.
WE'RE JUST SEEING, UH, MORE CASH FLOW INTO THE FUND.
OBVIOUSLY WE'VE GOT A LOT IN THE FEDERAL DOLLARS, UM, AND USUALLY AROUND THIS TIME OF YEAR WE, WE SEE AN INFLUX OF TAX, UH, REVENUE FROM PROPER.
BUT DID THE AIRPORT REIMBURSE THAT? WHAT, WHAT'S REIMBURSEMENT OF ARPA? UH, I BELIEVE THAT INITIALLY, UH, THE AIRPORT, UM, RECEIVED FUNDING FROM ARPA BUT THEN ENDED UP REIMBURSING THE GENERAL FUND BECAUSE THEY GOT ADDITIONAL FEDERAL FUNDING.
UH, WE CAN REFER THAT DIRECTLY TO AIRPORT OR MAYBE DIRECTLY TO, YEAH, WE CAN REFER TO AIRPORT, BUT IT, IT WOULDN'T HAVE COME FROM THE GENERAL, THEY WOULDN'T HAVE REIMBURSE THE GENERAL FUND? I DON'T THINK SO.
BUT, BUT WE'LL FIND OUT FROM AIRPORT.
UM, THE, WELL THE LAST THING I WANTED TO SAY WAS THE SINGLE AUDIT REPORT THAT WAS JUST SENT ON THE GRANT FUNDED GRANT FUNDING.
I MEAN, DID EVERYBODY GET THAT? I DON'T KNOW IF YOU, MCCONNELL JONES, I GUESS SENDS IT OUT ON VERY INTERESTING, YOU KNOW, TO LOOK AT THAT, ALL THE GRANTS THAT EVERY SINGLE DEPARTMENT GETS AND HOW MUCH WE'RE SPENDING AND I DON'T KNOW.
YEAH, WELL, JUST THE HIGHLIGHT FROM THAT IS THAT WE DID HAVE ZERO FINDINGS, NO FINDINGS.
WHICH IS, I ACTUALLY WAS READING THE BACK AND I WAS LIKE, OH NO, THESE WERE FINDINGS FROM LAST, YEAH, THIS YEAR THERE WERE NO FINDINGS.
WE'RE VERY PROUD OF ZERO FINDINGS.
I'M VERY PROUD OF THE TEAM FOR THE HEART WORK ON THAT.
AND I'LL, I'LL JUST ADD, IF WE DO TWO YEARS OF NO FINDINGS, WE CAN REDUCE THE OVERALL TESTING, WHICH WE'VE, UH, BEEN TRYING TO DO FOR QUITE SOME TIME.
UM, SO THAT WOULD ACTUALLY ALLOW US TO, UH, PUT OUT THAT AUDIT MAYBE A LITTLE BIT FASTER.
COUNCIL MEMBER ROBERT GALLEGOS.
UH, MAYOR PRO TEM, UH, D DIRECTOR IN REGARD, UH, CONTROLLER, UH, IN REGARDS TO YOUR REPORT, YOU HAD MENTIONED, AND I'M JUST CONFIRMING YOU SAID IT WAS A 2.9 MILLION INCREASE IN SOLID WASTE, AND IF SO, COULD YOU ELABORATE? UM, YES, ELABORATE ON THAT IF YOU WANT.
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YEAH, SO THAT WAS DUE TO ADDITIONAL PERSONNEL COSTS AND, UM, CODE ENFORCEMENT TEAM COSTS RELATED TO ILLEGAL DUMPING.AND I THINK, UH, DIRECTOR JONES SAID HE HAD SOME ADDITIONAL COMMENTS.
SO, UH, AGAIN, WE, WE ARE TRYING TO, AS WE KICK UP ON, UH, CRACKING DOWN ON ILLEGAL DUMPING, WE HAVE IN, UH, APPROVED FUNDING FOR SOLID WASTE TO HIRE, UH, CODE ENFORCEMENT OFFICERS TO START CRACKING DOWN ON THAT AND ALSO SOME TEMP PERSONNEL SERVICES TO ASSIST WITH, UH, TRASH PICKUP.
YEAH, THAT, THAT, THAT'S WHAT I WAS GONNA ASK.
'CAUSE I, I UNDERSTAND THAT, UH, WE'RE GOING TO HAVE A CONTRACTOR BASICALLY GOING OUT AND HELPING AND PICKING UP TRASH AS WELL, UM, UH, ON THE ROADSIDES AND WHAT HAVE YOU.
SO IS THAT ALREADY INCLUDED IN THIS OR YEAH, THAT'S IN THE PROJECTION.
SO, AND SOMETHING WILL BE COMING TO COUNCIL SOON ON THAT AS WELL.
JUST ONE MORE QUESTION ABOUT THE D-D-S-R-F MOVING THE MOBILITY PERMITTING.
LIKE CAN YOU EXPLAIN WHAT, WHAT WE DID THERE? IS THAT TRAFFIC? I MEAN, WHAT, WHAT IS THAT? YEAH, SO THAT, THAT THAT FUNCTION, UM, FROM TALKING TO THE HOUSTON PUBLIC WORKS, IT WAS BETTER SUITED TO BE IN THE BUILDING INSPECTION FUND.
SO IT WAS THE, THE PERMITS, UM, AND I'LL HAVE TO GET IT SPECIFICS ON WHAT EXACTLY THE MOBILITY PERMIT TEAM DOES, BUT, UH, IT'S BETTER SUITED IN THE, UM, THE BUILDING INSPECTION.
UH, SO IT'S 'CAUSE THEY, THE REVENUE AND THE EXPENSES TIED TO THAT.
SO IT'S NOT INTERFERING WITH ANYTHING RELATED TO, TO METRO FUNDING OR ANYTHING LIKE THAT.
SO IT, THAT'S WHY IT WAS BETTER SUITED, UH, TO BE MOVED TO THE BUILDING INSPECTION FUND.
'CAUSE IT REALLY HAS, UH, NO RELATION TO, UH, YOU KNOW, THE METRO FUNDING THAT THAT'S IN THERE.
AND, AND, AND ONE MORE THING AND OUR CIP PLANNING OR I KNOW A LOT OF THE, THE COST OF THESE PROJECTS SINCE THEY WERE PLANNED HAVE, HAVE GONE UP DUE TO INFLATION.
I MEAN, HOW, HOW, HOW IS THAT BEING HANDLED? I MEAN, ARE WE, ARE WE LOOKING AT THAT, SO THIS YEAR WHEN WE BRING THE CIP, WE'RE SOME PROJECTS MIGHT BE PUSHED OR TAKE A LONGER DURATION OR HOW, HOW'S THAT GONNA WORK POTENTIALLY? 'CAUSE IT WILL COST MORE FOR PROJECTS ALREADY ON THE CIP.
UM, AND AGAIN, ESPECIALLY ON THE GENERAL FUND SIDE, WE ARE LIMITED, UH, WITH THE REVENUE CAP.
SO THERE WILL BE SOME DECISIONS WE MAY HAVE TO MAKE ON, UM, BEING ABLE TO CONTINUE FUNDING EXISTING PROJECTS AND MAY NOT HAVE ENOUGH ROOM TO ADD, UM, NEW PROJECTS TO THE CIP BECAUSE OF THAT.
AND I'M SURE YOU'LL SEE THAT IN THE, UH, THE ENTERPRISE FUNDS AS WELL.
IT'S JUST GONNA COST MORE TO DO EXISTING PROJECTS.
SO WE'LL HAVE TO MAKE DECISIONS ON DO WE HAVE THE ABILITY TO ADD MORE PROJECTS WHEN THINGS ARE COSTING US MORE JUST FOR WHAT WE ALREADY HAVE PROGRAMMED.
SO WE HAVE NO OTHER COUNCIL MEMBERS IN QI HAVE A COUPLE OF FOLLOW UP QUESTIONS REGARDING, I'M SORRY.
COUNCIL MEMBER GALLEGOS, GO AHEAD.
UH, IN, IN LINE WITH, UH, COUNCIL MEMBER ALCORN'S QUESTION, I, I KNOW THAT AFTER HURRICANE HARVEY, UM, MANY OF OUR CITY FACILITIES WERE DAMAGED DUE TO HURRICANE HARVEY, AND I KNOW THAT SOME OF OUR CIP PROJECTS WERE BEING DELAYED, SO MONIES COULD BE USED TO HELP RESTORE THESE FACILITIES.
UH, BUT NOW WITH THE, THE WAY THE ECONOMY IS AND WHAT HAVE YOU, I MEAN, WHERE, WHERE ARE WE AT IN, IN REGARDS TO THOSE CIP PROJECTS THAT WERE BASICALLY DELAYED? I MEAN, ARE ARE, ARE THEY GONNA BE COMING BACK ON BOARD NOW IN REGARDS TO FUNDING? YEAH.
'CAUSE I THINK WE STILL HAVE SOME IMPACT OF HARVEY AND THE CIP.
UM, AND LIKE I SAID EARLIER, WITH THE COST, UH, OF, UH, MATERIALS BEING HIGHER, UH, THERE ARE STILL MAY BE SOME PROJECTS THAT WE MAY NOT BE ABLE TO ADD BECAUSE OF THAT.
SO HARVEY, THE HARVEY EFFECT IS STILL IN PLAY ON THE CIP, BUT NOW WE HAVE TO DEAL WITH THE, THE HIGHER COST.
SO SOME PROJECTS STILL MAY, MAY BE DELAYED JUST BECAUSE OF THAT.
SO A QUESTION, UH, COUNCIL MEMBER ALCO TALKED ABOUT INTEREST RATES AND, UH, I THINK THEIR EXPECTATIONS ARE HALF A POINT THIS WEEK AND THEN, UM, COUPLE OF MONTHS DOWN THE ROAD, ANOTHER HALF POINT.
UM, EVERY QUARTER, CONTROLLER BROWN AND I TALK ABOUT THE CONTROLLER SWAP PROGRAMS, AND IT'S A HEDGE STRATEGY THAT WE USE AGAINST TO COMPENSATE FOR RISING INTEREST RATES.
AND IT, ALTHOUGH IT HAS A, WAS IT A $99 MILLION NEGATIVE FAIR VALUE, AS INTEREST RATES CONTINUE TO RISE, YOU'LL SEE THE BENEFIT THAT'LL COME INTO PLAY WITH THE SPOT PROGRAM.
UM, THE SECOND THING THAT, THE THING THAT BOTHERS ME MORE THAN THAT IS AS WE SEE OUR BONDS MOVING TO REFINANCE, YOU'RE AT A PRETTY GOOD RATE RIGHT NOW.
AND IF WE GO TO THE MARKET WITH TWO ADDITIONAL, UH, MAYBE A POINT INCREASE ON THE INTEREST RATE, WE'LL SEE THE DETRIMENT TO OUR, OUR BOND PROGRAM WITH THAT.
SO WE HAVE TO REALLY LOOK AT THAT A LITTLE BIT MORE CLOSELY.
AND I KNOW CONTROLLER, YOU'RE ON TOP OF THE EVERY MONTH, EVERY QUARTER WE TALK ABOUT THE SWAPS.
AND I KNOW YOU'RE ON TOP OF BOTH OF THOSE, THE INTEREST RATES ON THE SWAPS AS WELL AS THE, THE REFINANCING PROGRAM.
ANY, ANY COMMENTS, UH, RELATED TO THAT? WELL, YEAH, SO THE SWAPS CONTINUE TO, UH, MOVE IN OUR FAVOR, RIGHT? 'CAUSE THE WAY WE STRUCTURED THEM, THE RATES, UM, ARE MOVING UP.
SO IT'S A, AS YOU MENTIONED, AN INTEREST RATE HEDGE.
UH, WE NEED TO SEE THE RATES BASICALLY RISE, UH, TO CONTINUE TO SEE THAT NEGATIVE FAIR VALUE
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GO TO ZERO.WE HAVE BEEN WORKING WITH OUR INVESTMENT GROUP, OUR FINANCIAL ADVISOR, UH, AND OTHERS FINANCE DEPARTMENT, UH, TO LOOK AT THE OPPORTUNITY TO EXIT OUT OF THAT.
UM, THE SWAPS HAVE PERFORMED AS DE AS DESIGNED.
THE CHALLENGE THOUGH IS, UH, WHEN YOU GET INTO THE SITUATION WHERE YOU HAVE A NEGATIVE FAIR VALUE, IT POTENTIALLY PUTS A UNDUE FINANCIAL LIABILITY ON THE CITY.
UH, SO WHEREAS WE'VE SEEN A, A POSITIVE CASH FLOW OVER THE YEARS OF HAVING ALL OF THESE SWAPS, UM, YOU KNOW, WE, WE HAVE A NEGATIVE FAIR VALUE.
IT'S A COMPLICATED, UM, FORMULA, BUT, UH, WE ARE MONITORING THEM.
I THINK THEY'RE, THEY'RE, UM, MOVING IN THE RIGHT DIRECTION AND IF WE GET THE OPPORTUNITY, WE WILL EXIT OUT.
AND, UM, ON THE, UH, EXPENSE SIDE, UH, COUNCIL MEMBER GALLEGOS TALKED ABOUT SOLID WASTE INCREASE OF $2.9 MILLION.
YOU KNOW, WE'VE SEEN A DRAMATIC INCREASE ON, UM, THE NUMBER OF FOLKS THAT ARE DRIVING OUR SOLID WASTE VEHICLES FROM THE OUTSIDE WORLD.
UH, TRANSPORTATION COMPANIES ARE PAYING A LOT MORE TODAY THAN THEY DID SIX MONTHS AGO.
THUS WE HAVE TO SORT OF MOVE ALONG WITH THAT GOING CONCERN THAT WE HAVE A PROBLEM WITH.
AND THEN WITH THE ILLEGAL DUMPING, UM, ALSO NOTICE, UH, MR. JONES A 2 MILLION INCREASE IN THE FINANCE DEPARTMENT.
CAN YOU LEND A LITTLE COLOR TO THAT
SO, UM, ONE OF THE, THE FIRST THINGS THAT THE MAYOR TASK ME AND THE, THE NEW CPO WITH IS THE KIND OF RESTRUCTURING THE PROCUREMENT.
AND SO WE'RE LOOKING AT, UH, DRASTICALLY DECREASING THE TIME IT TAKES TO PROCURE SERVICES HERE IN THE CITY, UM, AND BE ON TOP OF ALL OF THE, THE FEDERAL REQUIREMENTS TO NEW FEDERAL PROCUREMENTS AND, AND GET THAT TIME DOWN.
UM, SO THAT, THAT IS ALL TIED TO, UH, RESTRUCTURING THE PROCUREMENT TEAM.
THANK YOU AND NO OTHER COUNCIL MEMBERS IN QUEUE.
BUT MY LAST COMMENT WILL BE AS COUNCIL MEMBER GALLEGOS AND I EXIT HALFWAY THROUGH THE FISCAL YEAR.
UH, THE GOOD NEWS IS IF YOU, THE CONTROLLER PROJECTS 109 MILLION OVER THE 15%.
DIRECTOR JONES PROJECTS 147 MILLION OVER THE 15%.
SO 147 AND A HALF MILLION DOLLARS OVER THE, UM, THE PROJECTED 15% THAT REQUIRED, WHICH IS A SEVEN POINT A HALF, I'M SORRY, IT WAS AT 15.
IT WAS AT 13.8 THIS MONTH, LAST MONTH.
IT WAS A LITTLE BIT HIGHER THAN THAT.
BUT WHAT THAT DOES FOR US IS IT GIVES US THE ABILITY TO, UH, LOOK AT FUND BALANCE, UH, A LITTLE BIT CLOSELY.
I HEARD THE MAYOR TALK ABOUT, UH, WHEN THERE WAS A CONCERN ABOUT USING SOME MONEY AND FUND BALANCE TO SOME OF THE PROJECTS THAT WERE, UH, DISCUSSED LAST WEEK AT COUNCIL, I THINK IT WOULD BEHOOVE US TO REALLY LOOK CLOSELY AT THAT.
UM, BUT WITH AN EYE ON MY OPINION, FISCAL YEAR 25, WHICH IS GONNA BE A REAL PROBLEM BECAUSE OF THE DEVIATION OF MONEY FROM THE, WE DIDN'T USE GENERAL FUND DOLLARS, WE USE FEDERAL DOLLARS.
SO THAT'S WHY THE GROWTH IN THE GENERAL FUND HAS BEEN DRAMATIC.
BUT, YOU KNOW, I THINK IN 24 WE'LL BE IN GOOD SHAPE, BUT 25 I THINK IS GONNA BE, UH, A REAL CONCERN.
NOW, COUNCIL MEMBER GALLEGOS AND I WON'T BE HERE AROUND THE HORSESHOE IN 25, BUT, UH, JUST KEEP YOUR EYES OPEN ON THAT AS WE MOVE INTO 24.
MAYBE WE CAN USE MOST OF THE FUN BALANCE TO CARRY OVER AND MAKE SURE THAT WE'RE PRESENTING A GOOD PICTURE WHEN THIS ADMINISTRATION LEAVES AND LEAVES IT TO ANOTHER MAYOR.
BUT WE ALWAYS DON'T APPRECIATE YOU, GENTLEMEN ENOUGH.
Y'ALL DO A GREAT JOB DAY IN AND DAY OUT.
SO THANK YOU VERY MUCH, CONTROLLER BROWN, AND THANK YOU VERY MUCH, DIRECTOR WILL JONES.
SO WE HAVE ONE PUBLIC SPEAKER THAT I MENTIONED, MR. DOUG SMITH.
AND THANK YOU FOR ADDRESSING ONE OF MY QUESTIONS REGARDING THE, UH, MILLION AND A HALF DOLLARS IN THE FINANCE PROCUREMENT DEPARTMENT.
I WAS CURIOUS WHAT THAT WAS MYSELF, BUT I DO HAVE A COUPLE OF OTHER QUESTIONS.
UH, ON THE MOFA ON PAGE SIX, UH, THERE, IT SHOWS THE GENERAL FUND AND IT SHOWS OTHER, UH, FISCAL 23 VARIANTS OF $5,700,000.
AND THERE WAS A BREAKDOWN ABOVE THAT.
A MILLION AND A HALF WAS DUE TO DIRECT FROM SERVICES, 900,000 WAS INCREASED IN CHARGES FOR SERVICES.
THAT'S ABOUT HALF OF THE, OR LESS THAN HALF OF THE 5,000,007.
AND I'M WONDERING IF WE COULD GET A BREAKDOWN OF WHAT THE REST OF THAT IS, SO, SURE.
SO ARE YOU LOOKING AT PAGE VI SIX AS IN VI OH YEAH.
I DID IT OFF MY COMPUTER, BUT YEAH.
AND, AND IF YOU COULD REPEAT THAT AGAIN SO WE MAKE SURE THAT WE HAVE IT.
YOU SEE UNDER GENERAL FUND IT SAYS THERE'S A MILLION AND A HALF INCREASE IN DIRECT INTER FUND SERVICES.
ABOUT HALFWAY DOWN THE PAGE, AND AGAIN, THE PAGE NUMBERS MIGHT NOT BE THE SAME.
IT'S THE, UM, IT'S THE BEGINNING OF THE LETTER FROM
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THE FINANCE DEPARTMENT, THE FIRST PAGE OF THE LETTER FROM THE FINANCE DEPARTMENT.THAT, YEAH, THAT'S OUR PAGE FIVE.
I'LL TRY TO, NEXT TIME I COME NO, NO, NO, NO.
THE 1.5 INCREASE IN INDIRECT FUND SERVICES, A MILLION AND A HALF DOLLARS, UH, DUE TO DIRECT INTERFERENCE SERVICES AND 900,000 IN CHARGES FOR SERVICES.
BUT THEN DOWN AT THE BOTTOM OF THE BOX, IT SHOWS THE CHANGE IS 5,000,007 SO THAT THE, THEY EXPLAINED LESS THAN HALF OF IT, AND I'M CURIOUS WHAT THE REST OF IT IS.
AND, AND WE'LL, UH, WE'LL SEND AN EMAIL TO DIRECTOR WILL JONES TODAY.
AND WE'LL COPY YOU ON THAT AS WELL.
AND THEN I HAVE A QUESTION ON THE WATER DEPARTMENT.
UH, THIS WAS PROMPTED LAST WEEK WHEN THERE WAS A $10 MILLION ITEM ON THE AGENDA, I THINK TO LEASE BACK WATER FROM FORT BEND OR SOMEPLACE LIKE THAT.
I, I'M NOT SURE EXACTLY WHERE IT WAS.
AND, UH, IT BROUGHT TO MIND A QUESTION TO MY MIND.
UH, THE CITY'S POPULATION HAS BEEN, BEEN DECREASING THE LAST COUPLE OF YEARS, AND IT APPEARS AS THOUGH WE'RE PROVIDING WATER TO ENTITIES OUTSIDE THE CITY.
AND THAT SEEMS TO BE GOING AGAINST WHAT WE'RE TRYING TO DO WITHIN THE CITY, UH, TO GROW THE POPULATION.
SO I'D JUST LIKE TO ADDRESS THAT, TO CONFIRM THAT THAT'S TRUE.
AND THEN THE OTHER QUESTION REGARDING THAT, I KNOW WE'RE SPENDING HUNDREDS OF MILLIONS OF DOLLARS ON, UH, EXPANDING THE, UH, EAST SIDE WATER TREATMENT PLAN.
AND MY QUESTION REGARDING THAT IS, UH, I HEARD AT A MEETING ON WHETHER IS THIS CONCEPT, OUR COMMITTEE MEETING OR ANOTHER DEPARTMENT, THERE'S A, THAT THERE'S $1.2 BILLION WORTH OF DEFERRED REVENUE IN THAT PLAN.
AND MY QUESTION IS, WOULDN'T THE MONEY HAVE BETTER BE SPENT FIXING THE DEFERRED REVENUES RATHER THAN EXPANDING A PLANT THAT HAS 1,000,000,002 IN DEFERRED REVENUES? SO I'LL DO AS GOOD A JOB AS I CAN UNDERSTANDING WATER, BUT, UM, WE HAVE A NUMBER OF PARTNERS IN THE NORTHEAST WATER PURIFICATION PLANT.
UH, I THINK 17 PARTNERS THAT WE HAVE THAT PROVIDE WATER TO THEIR SPECIFIC AREAS OUTSIDE OF THE CITY OF HOUSTON.
SO CONTRACTUALLY WE'RE OBLIGATED, IT'S NOT 17, THE CITY'S SHARE IS 17% OF THAT.
I THINK THERE MAY BE FIVE OR SIX WATER ENTITIES THAT ARE INVOLVED WITH US.
SO WHEN IT COMES TO PAYING FOR THE WATER TREATMENT FACILITY, THAT'S UP TO $2 BILLION.
THE CITY'S OBLIGATION IS ONLY 17% BECAUSE OF THE WATER, UH, AUTHORITIES THAT WE'RE IN PARTNERSHIP WITH AND HAVE BEEN FOR MANY, MANY YEARS.
UH, WE SHARE IN THE EXPENSES AND WE ALL SHOW ALSO SHARE IN THE ALLOCATION OF THE WATER TO THOSE AREAS OUTSIDE OF THE CITY OF HOUSTON, PASADENA, PEARLAND, KATY.
SO WHILE YOU'RE CORRECT, UH, THE CITY, UH, POPULATION ON THE LAST CENSUS DECREASED A LITTLE BIT.
UM, THE PARTNERSHIP THAT WE HAVE WITH THESE AUTHORITIES ON THE EXPENSE AND THE REVENUE SIDE IS, IS PART OF THE REASON WHY WE SHARE WATER BECAUSE WE'RE IN BUSINESS WITH OTHER ENTITIES TO PROVIDE WATER TO AREAS OUTSIDE OF THE CITY OF HOUSTON.
UM, I'M NOT SURE ABOUT THE 1.2 BILLION IN DEFERRED REVENUE.
AND I DON'T KNOW WHAT COMMITTEE I HEARD THAT IN, BUT THIS WAS SOMETIME IN THE LAST MONTH OR SO.
NOW ARE YOU TALKING ABOUT THE NORTHEAST OR THE EAST? BECAUSE I THINK IT WAS THE EAST, UH, THE EAST I THINK.
THE ONE THAT WENT DOWN AND WE HAD TO HAVE A BOILED WATER NOTICE FOR YES.
I MEAN, WE'LL CHECK ON THAT, BUT, OKAY.
UM, IF YOU LOOK AT DEFERRED MAINTENANCE ALL ACROSS THE CITY OF HOUSTON, IT'S HORRIBLE.
ALL YOU HAVE TO DO IS WALK INTO THIS BUILDING AND LOOK AROUND AND WALK OVER TO TRAVIS AND LOOK AROUND AND YOU'LL SEE A LOT OF DEFERRED MAINTENANCE.
UM, THESE BUILDINGS ARE NOT IN GREAT SHAPE.
AND, UH, WE HAVE A BOOKLET THAT WE RECEIVE EVERY YEAR ON DEFERRED MAINTENANCE AND WHAT WE'RE DOING ABOUT IT.
AND, UH, QUITE FRANKLY, WE DON'T HAVE THE FUNDS TO SUPPORT A LOT OF THE DEFERRED MAINTENANCE OBJECTIVES OF, UM, OKAY.
YOU'RE EXPANDING THE PLANT, BUT IT ALSO NEEDS A HELL OF A LOT OF MAINTENANCE.
SO, AND THANKS FOR THE EXPLANATION ON PROVIDING WATER TO THE OUTSIDE OF THE CITY.
I HAD NO IDEA THAT, UH, THEY WERE PAYING FOR THAT PLANT.
WE WEREN'T THE ONLY ONE PAYING FOR THAT PLANT.
SO THAT, YEAH, THE CITY PAYS 17%, WHICH IS ALWAYS, UM, OKAY.
AND WE'LL GET BACK WITH YOU ON THOSE, THOSE QUESTIONS ON THE 1.5 AND THE 935,000 INCREASE.
AND THEN THE, UH, DEFERRED MAINTENANCE ON THE EAST WATER.
NO OTHER COUNCIL MEMBERS IN QUEUE.
BEFORE WE ADJOURN, PLEASE NOTE THAT THE NEXT REGULARLY SCHEDULED BUDGET AND FISCAL AFFAIRS COMMITTEE WILL BE ON MARCH 7TH AT 10:00 AM IF THERE ARE NO OTHER COMMENTS OR QUESTIONS, THIS MEETING IS ADJOURNED.