[Budget and Fiscal Affairs on August 29, 2023.]
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MARTIN, CHAIR OF THE CITY OF HOUSTON'S BUDGET AND FISCAL AFFAIRS COMMITTEE.I CALL THIS MEETING TO ORDER AND WOULD LIKE TO WELCOME ALL COUNCIL MEMBERS IN ATTENDANCE.
WE HAVE VICE CHAIR EDWARD J. POLLARD, COUNCIL MEMBER SALLY ALCORN, AND STAFF FROM COUNCIL DISTRICT C ABBY CAYMAN'S, OFFICE COUNCIL, DISTRICT D CAROLYN, EVAN SHABAZZ'S, OFFICE COUNCIL DISTRICT G MARIANNE HUFFMAN'S, OFFICE COUNCIL, DISTRICT H CARLOS CIRO'S, OFFICE COUNCIL DISTRICT AT LARGE POSITION TWO.
MICHAEL KNOX'S, OFFICE AND POSITION, I'M SORRY, POSITION ONE, MICHAEL KNOX'S, OFFICE AND POSITION TWO.
DAVID ROBINSON'S OFFICE AND STAFF FROM VICE MAYOR PRO TEM MARTHA CASTEX, TATUM'S OFFICE, DISTRICT K AND STAFF FROM COUNCIL MEMBER LETITIA PLUMMER, POSITION FOUR.
AND MS. AMY PECK, DISTRICT A GOOD AFTERNOON.
I'D LIKE TO WELCOME EVERYBODY.
IF THERE ARE ANY MEMBERS OF THE PUBLIC THAT WOULD LIKE TO PARTICIPATE IN TODAY'S PUBLIC COMMENT.
THERE'S A SIGNUP SHEET AT THE FRONT TABLE, DAMARI PEREZ WILL BE MONITORING IT ON MY LEFT.
I'D LIKE TO ACKNOWLEDGE COUNCIL MEMBER ED POLLARD, VICE CHAIR OF BFA FOR ANY OPENING COMMENTS OR REMARKS.
GOOD MORNING, NO COMMENTS AT THIS TIME.
COUNCIL MEMBERS AND STAFF, PLEASE HOLD YOUR QUESTIONS UNTIL THE END OF THE PRESENTATION.
AS OF OUR DEADLINE YESTERDAY AT 3:00 PM THERE WERE NO PUBLIC SPEAKERS.
HOWEVER, THERE ARE MEMBERS OF THE, IF THERE ARE ANY MEMBERS OF THE PUBLIC THAT WOULD LIKE TO PARTICIPATE.
THE SIGNUP SHEET IS AT THE FRONT, AS I MENTIONED, AND WE WILL BE MONITORING THAT.
SO AT THIS TIME, I'D LIKE TO WELCOME CONTROLLER CHRISTOPHER BROWN AND DIRECTOR WILL JONES TO PROVIDE THE MONTHLY FINANCIAL REPORT CONTROLLER BROWN.
UH, I'M PLEASED TO PRESENT THE MONTHLY FINANCIAL REPORT FOR THE PERIOD ENDING JULY 31ST, 2023.
IN THE GENERAL FUND, THE CONTROLLER'S OFFICE IS PROJECTING AN ENDING FUND BALANCE OF 400 AND 0.5, UH, 405.6 MILLION FOR FY 24.
UH, THIS IS 45.8 MILLION LOWER THAN THE PROJECTION OF THE FINANCE DEPARTMENT.
BASED ON OUR CURRENT PROJECTIONS, THE FUND BALANCE WILL BE APPROXIMATELY 222.5 MILLION ABOVE THE CITY'S TARGET OF HOLDING 7.5% IN RESERVES.
THE FFY 2024 BEGINNING FUND BALANCE IS 26.6 MILLION HIGHER THAN THE FY 23 ENDING FUND BALANCE REPORTED IN THE JUNE 30TH MONTHLY FINANCIAL REPORT.
AND THIS INCREASE IS DUE TO YEAR END ADJUSTMENTS TO REVENUES AND EXPENDITURES THAT WILL NOT BE FINAL UNTIL THE 2023 ANNUAL COMPREHENSIVE FINANCIAL REPORT IS PUBLISHED LATER THIS YEAR.
OUR PROJECTIONS ARE UNCHANGED FROM THE FY 2024 TRENDS REPORT, SO WE'LL MOVE ON TO THE ENTERPRISE FUNDS.
AND ACTUALLY IN THE ENTERPRISE FUNDS, WE ARE PROJECTING, UH, NO CHANGES.
SO WE'LL MOVE ON TO COMMERCIAL PAPER AND BONDS.
ALL OF OUR VARIABLE RATE DEBT, UH, IS WELL BELOW THE 20% THRESHOLD.
YOU CAN SEE AVIATION, UH, POST OUR MOST RECENT DEAL, UH, IS NOW AT ZERO.
AND AS WE DO MORE DEALS IN THE FUTURE, WE'LL SEE THAT VARIABLE RATE PERCENTAGE COME DOWN.
THANK YOU, CONTROLLER BROWN, WILL JONES.
THIS IS THE ONE PLUS 11 FINANCIAL REPORT FOR THE PERIOD ENDING JULY 31ST, 2023.
PROJECTIONS ARE BASED ON ONE MONTH OF ACTUAL RESULTS AND 11 MONTHS OF PROJECTIONS BEFORE I GET TO FY 24 FOR FY 23 IN ACCORDANCE WITH THE GOVERNMENT ACCOUNTING STANDARDS FOR, UH, GOVERNMENTAL FUNDS.
THE FINAL REVENUES FOR FY 23 WILL INCLUDE REVENUES EARNED THROUGH JUNE 30, ONLY IF THEY'RE COLLECTED BY THE END OF AUGUST.
EXPENDITURES THROUGH JUNE 30 WILL INCLUDE SPENDING INCURRED BEFORE THE END OF JUNE.
THESE EXPENSES CONTINUE TO BE RECORDED AS ACCRUALS TO FISCAL YEAR 2003 UNTIL AUGUST 31ST.
THE CURRENT PRELIMINARY UN-DESIGNATED FUND BALANCE FOR GENERAL FUND IS 469 MILLION, WHICH IS APPROXIMATELY 19 MILLION HIGHER THAN OUR JUNE MOPAR PROJECTION.
THE RESULTS ARE NOT FINAL UNTIL THE PUBLICATION OF THE FY 23 ANNUAL COMPREHENSIVE FINANCIAL REPORT.
AND REALLY ALL I'M SAYING FOR FY 23, IT'S STILL OPEN.
SO THERE'S STILL GONNA BE ACTIVITY POSTING TO LAST FISCAL YEAR, WHICH MEANS THAT THAT FUND BALANCE, BEGINNING FUND BALANCE MAY STILL SHIFT A LITTLE BIT.
SO BACK IN JUNE, WE PROJECTED 450 MILLION.
RIGHT NOW, BASED ON THE ACTUALS, IT'S 469, BUT THERE'S STILL REVENUE AND EXPENDITURES TO BE RECORDED.
SO THAT FUND BALANCE MAY CHANGE A LITTLE BIT, BUT IT'LL STILL BE BETWEEN FOUR 50 TO FOUR 70, UM, WHICH IS STILL THE HIGHEST FUND BALANCE WE'VE EVER HAD.
SO JUST WANNA BE CLEAR ON FY 23, THIS IS THAT WEIRD TIME WHERE WE HAVE BOTH FISCAL YEARS OPEN AT THE SAME TIME.
UM, SO WITH THAT, I'LL MOVE ON TO FY 24.
UH, SO BOTH OUR REVENUE EXPEND PROJECTIONS REMAIN UNCHANGED FOR THE MONTH.
THIS IS OUR FIRST MOVE FAR SO NO CHANGES.
WHEN YOU LOOK AT THE ENDING FUND BALANCE, UH, OF 451.4 MILLION, WHICH IS 48.5 MILLION HIGHER THAN THE ADOPTED
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BUDGET IN 18.5% OF ESTIMATED EXPENDITURES, LESS DEBT SERVICE AND PAY AS YOU GO.THE FUND BALANCE IS 268.3 MILLION ABOVE THE TARGET AT 7.5% OF EXPENDITURES EXCLUDING DEBT SERVICE.
AND WE HAVE NO FORECASTED CHANGES FOR OUR ENTERPRISE AND, AND SPECIAL REVENUE FUNDS.
THANK YOU, DIRECTOR OF WILL JONES, UH, VICE CHAIR ED POLLARD.
THANK YOU MAYOR PROTO, AND THANK YOU BOTH FOR YOUR REPORT.
UH, DIRECTOR, UH, CAN YOU ELABORATE A LITTLE BIT MORE ON WHAT YOU JUST STATED REGARDING FISCAL YEAR 23? ARE YOU STATING THAT IT IS PROJECTED THAT THE ENDING FUND BALANCE WILL BE BETWEEN 450,000,400 70 MILLION FOR FY 23? CORRECT.
BASED ON ALL THE REVENUE AND EVERYTHING THAT'S CURRENTLY COMING IN? CORRECT.
SO BACK WHEN I PRESENTED THE, THE JUNE MO FAR, WE ESTIMATED ABOUT 450 MILLION, BUT AT THAT POINT, THE, OR AT THIS POINT, THE FISCAL YEAR IS STILL OPEN, SO WE STILL HAVE TO MAKE SURE WE CAPTURE ALL OF THE EXPENSES AND THE REVENUE.
UH, SO IT'LL BE ANYWHERE BETWEEN WHAT WE PROJECTED IN JUNE AT FOUR 50 TO MAYBE FOUR 70 ONCE WE RECORD ALL THE FINAL REVENUES AND EXPENDITURES.
AND INITIALLY ON OUR BUDGET, WE WERE AROUND 405 MILLION AS THE, WHAT WE THOUGHT THE CURRENT FUND BALANCE WAS AT THAT TIME.
BUT ALL THIS MONEY HAS GROWN SINCE THEN, CORRECT? WHEN, SO WHEN WE GET TO FY 24, CORRECT.
WE WERE ESTIMATING, I WANNA SAY 400 AND YEAH, 403 MILLION WAS WHAT WE ESTIMATED FOR THE FY 24 ENDING FUND BALANCE.
AND RIGHT NOW THAT'S SITTING AT 450 MILLION.
AND AT THE END OF FISCAL YEAR 23, THIS IS KIND OF FOR THE CONTROLLER, UH, I SEE RIGHT NOW, CONTROLLER, YOU HAVE, UH, THE FUND BALANCE OFF FROM THE FINANCE DEPARTMENT BY ABOUT 45 MILLION.
THAT'S, THAT'S A PRETTY BIG NUMBER.
UM, AND I KNOW, UH, YOU HAVE, UH, THE PERSPECTIVE OF IT'S BETTER TO BE, UH, TOO CONSERVATIVE THAN NOT, UH, WHICH I SHARE YOUR SENTIMENTS.
UM, BUT WITH SUCH A LARGE NUMBER, WHERE WERE, YOU ALL REMIND ME AT THE END OF FISCAL YEAR 23, I KNOW YOU WERE VERY CONSERVATIVE IN 23 AS WELL, BUT DID IT COME BACK TOWARDS THE, UH, CLOSING THAT GAP TOWARDS THE END OF, OF FISCAL YEAR 23? AND DO YOU, DO YOU PROJECT THAT THAT COULD BE THE CASE IN FISCAL YEAR 24 AS WELL? WELL, UH, GREAT QUESTION.
SO THAT, UH, THAT 45.8 MILLION, THAT'S ACTUALLY FOR FY 24, FOR THE FIRST PERIOD OF FY 24.
AND AS YOU ALL KNOW, HISTORICALLY, THIS BEING THE FIRST MONTH OF THE FISCAL YEAR THAT WE REPORT ON, UH, THOSE VARIANCES TEND TO BE VERY LARGE, AND THEY, THEY NARROW AS WE GET CLOSER, UH, TOWARDS THE END OF THE FISCAL YEAR AS WE GET MORE CERTAINTY FROM SALES TAX MAINLY, AND OTHER REVENUES COMING IN.
UM, YOU KNOW, THE CHALLENGE, I THINK LAST YEAR, UH, AND KUDOS, UH, TO DIRECTOR JONES, UH, HE MORE ACCURATELY ESTIMATED, UH, SALES TAX.
WE HAD SEEN A 16% INCREASE, UH, FROM FY 22.
UH, WE SAW, UH, ABOUT A SEVEN PLUS PERCENT INCREASE, UH, LAST YEAR, UH, ALTHOUGH I THINK IT ENDED UP AROUND 887 MILLION.
SO IT WAS KINDA RIGHT IN THE MIDDLE OF OUR TWO, UH, ESTIMATES.
WE ARE, UH, SUBSTANTIALLY LOWER, UH, 45.8 MILLION.
AND THE MAJORITY OF THAT, UH, 30, UH, 6 MILLION OF THAT IS IN SALES TAX.
AND, UH, THE REASON AGAIN, UH, IS WE ESTIMATE, UH, THAT WE WILL SEE A DOWNTURN IN SALES TAX.
UH, WE ESTIMATED IN OUR TRENDS, UH, THAT THAT COULD BE AROUND 6%.
UH, IF YOU LOOK AT, UH, BILL GILMORE'S, UH, MOST RECENT SALES TAX FORECAST, HIS LOWER BOUND IS 10% DOWN.
UM, SO, UH, YOU KNOW, THIS IS, AGAIN, AS YOU MENTIONED, BEING MORE CONSERVATIVE, UH, AS THE CONTROLLER, WE HAVE TO GUARANTEE THE AVAILABILITY OF, UH, THESE FUNDS AND CERTIFY THEM FOR COUNCIL.
SO, UH, WE ALWAYS TAKE A MORE, UH, CONSERVATIVE APPROACH.
SO, AND DO YOU LOOK INTO, AND TAKE INTO CONSIDERATION LIKE THE, THE COLLEGE FOOTBALL CHAMPIONSHIPS, ALL THE CONVENTIONS THAT HOUSTON FIRST, UH, HAS SCHEDULED ON THE BOOKS, UH, IN YOUR PROJECTIONS FOR, UH, THE SALES TAX, WHICH OVER THE PAST FEW YEARS IS DURING COVID, OF COURSE, IT WENT WAY DOWN, BUT THEN IT STARTED TO COME BACK UP LAST YEAR.
BUT DO YOU TAKE ALL THAT INTO CONSIDERATION, OR IS THAT NOT A PART OF THE FORMULA? YEAH, I MEAN, EVERY, YOU KNOW, THE STATE WILL COLLECT, UH, THAT MONEY AND THEY WILL, YOU KNOW, PRO RAT OUR SHARE OUT.
UM, YOU KNOW, IT'S HARD TO ESTIMATE.
UH, I THINK DIRECTOR JONES WILL CONCUR.
YOU KNOW, WHEN WE HAVE THESE ONE TIME LARGE EVENTS, WHETHER IT'S THE SUPER BOWL OR, YOU KNOW, THE FIFA WORLD CUP IS COMING, THOSE ARE ALL DEFINITE POSITIVES.
UM, BUT NOT ENOUGH WHEN YOU'RE
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LOOKING AT GETTING, YOU KNOW, EIGHT, $900 MILLION A YEAR IN SALES TAX, UH, TO SUBSTANTIALLY MOVE THAT NEEDLE ENOUGH.AND AGAIN, THOSE ARE NOT RECURRING.
THE, THE REAL KEY IN ALL THIS IS, YOU KNOW, WE WANT TO MATCH RECURRING REVENUES WITH RECURRING EXPENDITURES.
AND SO A LOT OF TIMES, YOU KNOW, WHEN YOU HEAR ME, UH, YOU KNOW, SOUND ALARM OR EXPRESS FRUSTRATION, IT'S BECAUSE WE'RE MATCHING ONE TIME REVENUES WITH RECURRING EXPENDITURES, WHICH THOSE ONE TIME REVENUES, LIKE, FOR EXAMPLE, THE COVID FUNDING, WE KNOW THAT AS A DEFINITIVE LIFESPAN.
UH, SO WHEN WE USE THAT TO FUND RECURRING, UH, EXPENDITURES, THAT MONEY GOES AWAY, THEN WE HAVE TO FIND THAT REVENUE IN THE FUTURE.
SO, ANOTHER REASON WHY WE'RE, YOU KNOW, OVERLY CAUTIOUS, IT'S, IT'S, UH, YOU KNOW, JUST AS WE'RE NEARING THE END OF THIS, UH, YEAR, UH, WE ARE IN PROBABLY, UH, FROM A FUND BALANCE STANDPOINT, I THINK, UH, ONE OF THE BEST POSITIONS, UH, THAT I'VE SEEN, UH, YOU KNOW, OVER TIME THAT THE CHALLENGE IS THAT'S, YOU KNOW, ON PAPER FROM A CASH STANDPOINT, BUT WE HAVE, UH, GROWN THAT STRUCTURAL DEFICIT THAT STRUCTURALLY IMBALANCED BUDGET BECAUSE WE'VE RELIED ON COVID MONEY BECAUSE WE HAVE AN OUTSTANDING, UH, UNRESOLVED ISSUE WITH PROPERTY AND THE FIREFIGHTERS, UM, BECAUSE WE'VE SEEN SUCH A INCREDIBLE INCREASE IN PROPERTY AND SALES TAX POST COVID BECAUSE THE FEDERAL GOVERNMENT HAS PUT TRILLIONS OF DOLLARS INTO THE ECONOMY, UM, YOU KNOW, THAT IS GOING TO, YOU KNOW, A BUBBLE THAT'S GONNA COME BACK DOWN.
SO, YOU KNOW, THE CHALLENGE GOING FORWARD, IT'S NOT GONNA HAPPEN TODAY.
IT'S PROBABLY NOT GONNA HAPPEN, YOU KNOW, NEXT YEAR, BUT THE FOLLOWING YEAR, THERE'S PROBABLY GONNA BE SOME REALLY DIFFICULT CHOICES.
AND I, I, AGAIN, URGE THE COMMITTEE AND AND COUNCIL MEMBERS TO, UH, START TO PREPARE FOR THIS BECAUSE, YOU KNOW, FOR THOSE OF YOU THAT WILL CONTINUE TO BE HERE FOR THE NEXT, UH, FOUR YEARS, YOU, YOU'RE, YOU'RE GONNA BE FACED WITH SOME PRETTY TOUGH CHOICES, I THINK, UH, MIDWAY INTO YOUR NEXT TERM.
AND I WAS JUST LOOKING BACK AT WHAT WE, WE THOUGHT WHEN WE ADOPTED THE 23 BUDGET, WHAT WE THOUGHT THE ENDING FUND BALANCE WOULD BE, AND IT WAS 327 MILLION.
SO LOOK WHERE WE'RE ENDING UP AT 469, GIVE OR TAKE.
BUT I, BUT I AGREE WITH YOU, CONTROLLER.
I MEAN, IT, IT FEELS GOOD TO HAVE THIS BIG FUN BALANCE, BUT WE DO HAVE TO BE REALLY CAREFUL WITH IT.
I, I WANTED TO ASK YOU ABOUT, UM, NOW THAT WE'RE IN THE NEW FISCAL YEAR ABOUT THE WHAT, UH, ACTIONS ARE COMING WITH THE OPE TRUST.
WHAT HAPPENS? WHAT HAPPENS NOW? WELL, I, I THINK, UH, YOU KNOW, LET, UH, DIRECTOR JONES COMMENT, UM, IN MORE DETAIL, BUT WE'RE HAPPY TO HEAR THAT THERE IS MOVEMENT TO FUND A OPE TRUST.
UM, YOU KNOW, WE BELIEVE THAT THIS WILL NOT ONLY SECURITIZE THE BENEFITS FOR EMPLOYEES, BUT ALSO, UH, SUBSTANTIALLY, UH, REDUCE THAT UNFUNDED LIABILITY SIMILAR TO WHAT, YOU KNOW, THE REFORMS THAT WE DID WITH THE PENSIONS.
THE CHALLENGE, AGAIN, AND AS WE TALK ABOUT THIS IS, YOU KNOW, YOU HAVE TO FUND IT AND YOU HAVE TO FUND IT OVER A PERIOD OF TIME.
AND HAVING, UH, MONEY TO BE ABLE TO FUND THAT, IT IS A, UM, A VERY EFFICIENT USE OF, OF MONEY IN THE STANDPOINT OF, UH, YOU KNOW, IF YOU CAN PUT 10 OR $15 MILLION A YEAR INTO THAT FUND FOR THE NEXT, YOU KNOW, 10 YEARS OR SO, UH, YOU CAN HAVE AN OUTSIZED REDUCTION IN THAT UNFUNDED LIABILITY.
YOU CAN KNOCK A BILLION DOLLARS OFF OF IT BY, UH, GETTING MARKET RETURNS.
BUT, BUT WE HAVE TO HAVE THE MONEY TO FUND IT.
SO TO ANSWER THE QUESTION, UH, BY THE END OF THIS YEAR, WE WILL BE BRINGING THAT ITEM FORWARD FOR, UH, TO, TO MANAGE THE FUND FOR, YOU KNOW, CONSULTANT OR A, A FIRM TO MANAGE THE FUND.
IT IS INCLUDED IN THE BUDGET SO THAT IT'S THERE.
WE, WE JUST EITHER FINALIZE THE PROCUREMENT PROCESS, WHICH IT IS WELL, ON ITS WAY TO BEING COMPLETE, SO YOU'LL SEE SOMETHING IN THE NEXT COUPLE OF MONTHS OR SO.
AND THE KEY TO THAT IS, LIKE WE'VE DONE WITH THE COUNCIL DISTRICT SERVICE FUNDS, IT CAN'T BE A ONE YEAR, IT HAS TO BE CONTINUOUS.
IF WE'RE GONNA MAKE AN IMPACT TO, TO WHAT THE GENTLEMEN ARE SAYING, IT HAS TO BE A CONSISTENCY.
I WOULD EVEN SAY STEP UP, YEAR AFTER YEAR AFTER YEAR, WE STARTED WITH 10 MILLION, A GOOD MOVEMENT.
NEXT MOVEMENT NEXT YEAR WOULD BE 15 MILLION, FOLLOWED THAT WITH 20.
UH, AND THEN CONSISTENTLY MOVE IT TO CONTROL OF ROUNDS POINT.
THAT'S WHERE YOU MAKE A SIGNIFICANT DIFFERENCE IN THE DEBT AND, UH, AND HOW WE CAN ATTACK THAT.
BUT, UH, OFF TO A GOOD START, CAN'T WAIT TO GET THAT ITEM.
AND, UH, AND TOWARDS THE END OF THE YEAR, UH, VICE CHAIR ED POLLARD, THANK YOU, MAYOR PRO TEM DIRECTOR, UM, WITH THIS LARGE FUND BALANCE THAT WE HAVE, UM, AND UNDERSTANDING THAT MAYBE NOT NEXT YEAR, BUT THE FOLLOWING YEAR, AS THE CONTROLLER MENTIONED, WE MAY HAVE SOME TOUGH CHOICES TO MAKE.
UH, WHEN YOU THINK ABOUT THE FIREFIGHTERS, YOU KNOW, OP P DEFERRED MAINTENANCE, UM, SOME OF THE EMPLOYEE GROUP NEGOTIATIONS, THINGS THAT WE KNOW THAT ARE, THAT ARE COMING, WHAT, WHAT ARE WE DOING, UH, TO PREPARE AND STRATEGIZE FOR THAT? AND, UM, WHAT SHOULD WE KNOW AS COUNCIL BASED ON YOUR OFFICE'S PROJECTIONS ON, ON HOW WE NEED TO, UH, UM, BE MINDFUL OF, OF
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OUR FISCAL RESPONSIBILITIES? RIGHT.AND SIMILAR TO THE CONTROLLER, YOU KNOW, I ALWAYS LOOK OUT FIVE YEARS, UM, TO SEE FIVE OR EVEN 10 YEARS TO KIND OF SEE WHERE THE, THE DEFICIT IS GONNA GO.
I GUESS THE BIGGEST DIFFERENCE IS HIS IS A LITTLE, QUITE A BIT MORE CONSERVATIVE, UH, THAN, THAN WHERE I AM WITH IT.
UM, AND SO WHEN I PRESENTED THE FIVE YEAR, I DID SHOW, YOU KNOW, A RANGE OF A GAP OF WHAT WE COULD BE FACING IN TERMS OF THE DEFICIT.
SO WHEN WE GET TO, OF COURSE, FY 24, WE COVERED FY 26 WITH THE, THE STRENGTH OF THE FUND BALANCE, OR FY 25, I SHOULD SAY, WITH THE STRENGTH OF THE FUND BALANCE.
UM, IF WE, IF WE, WE WON'T HAVE TO NECESSARILY, UH, MAKE MAJOR CUTS IN ORDER TO BALANCE THE BUDGET.
UM, SO THAT WILL BE COVERED WHEN YOU GET TO 26, 27, 28, YOU WILL START TO SEE, YOU KNOW, THE RANGE OF THAT DEFICIT GROW.
UM, AND AGAIN, WHEN YOU LOOK AT, UH, THE IMPACT OF THE REVENUE CAP AND LIKE THE 1.8 BILLION THAT WE'VE, WE'VE WRITTEN REVENUE THAT WE'VE LOST SINCE HITTING THE CAP, IT HAS A MAJOR, MAJOR IMPACT.
AND WHEN YOU LOOK AT, UH, THE MAKEUP OF THE GENERAL FUND, WHICH IS PRIMARILY PUBLIC SAFETY, UH, AGAIN, IT, IT, IT CREATES VERY DIFFICULT, UH, DECISIONS THAT WILL BE HAVE TO MAKE ON HOW WE, UH, CAN BALANCE THAT BUDGET.
BECAUSE LIKE I SAID, PUBLIC SAFETY, I WANNA SAY IT'S ABOUT 60, 60% OR SO OF THE GENERAL FUND.
AND SO WHEN YOU LOOK AT IT THAT WAY, AND THE REST OF THE DEPARTMENTS WOULD TAKE MAJOR REDUCTIONS IF YOU CAN'T BALANCE IT WITHOUT TOUCHING PUBLIC SAFETY.
SO WE DO HAVE TO LOOK AT OTHER, UM, YOU KNOW, FUNDING SOURCES.
UH, AND SO IS THAT WHAT WE'RE DOING? ARE WE LOOKING FOR OUTSIDE REVENUE SOURCES THAT AREN'T TRADITIONAL TO OUR, THE REVENUE SOURCES THAT WE DID, BUT LEANING ON THE PRIVATE SECTOR FOR WHEN THEY WANT TO INVEST IN, UH, THE CITY OF HOUSTON AND PRESENT PACKAGES THAT BRING IN REVENUE TO THE CITY? YOU KNOW, HOW AGGRESSIVELY ARE WE LOOKING AT THOSE? YEAH, I MEAN, WE ARE LOOKING AT, I MEAN, JUST, AND JUST TO BE, YOU KNOW, HONEST, THOSE, THOSE TYPE OF REVENUE SOURCES WILL BE, UM, PROBABLY SMALL IN COMPARISON TO WHAT WE NEED, BUT EVERYTHING IS ON THE TABLE LOOKING AT ALL THE DEPARTMENTS THAT WE'RE LOOKING AT, THE FEES THAT WE'RE CHARGING AND MAKING SURE WE ARE CHARGING THE CORRECT FEES.
UM, WE ALWAYS TALK ABOUT SOLID WASTE AND THE POTENTIAL THERE FOR A FEE TO HELP, YOU KNOW, REMOVE THAT COST FROM THE GENERAL FUND.
AND SO THERE, THERE ARE A LOT OF THINGS THAT WE'RE LOOKING AT IN TERMS OF WHAT OPTIONS DO WE HAVE, BUT THE REALITY IS LIKE THAT, THE DEFICIT FROM THE PROPERTY TAX CAP IS A, A HUGE, HUGE DEFICIT IN TERMS OF THE REVENUE THAT WE LOST.
AND IT WOULD TAKE A MAJOR, MAJOR REVENUE SOURCE TO FILL THAT GAP, OR IT WOULD TAKE MAJOR BUDGET CUTS TO, TO FILL THAT GAP.
SO IT'S GONNA BE ONE OF THE TWO.
AND LIKE I SAID, WITH PUBLIC SAFETY BEING OUR PRIMARY, UH, EXPENSE IN THE GENERAL FUND, IT, IT, IT DOES CREATE DIFFICULT, A DIFFICULT CHALLENGE IN TERMS OF HOW YOU BALANCE IT, BUT YEAH, UH, WE ARE LOOKING AT, UH, OPTIONS FOR WHERE WE CAN BRING IN MORE REVENUE.
UM, IT, IT'S JUST, RIGHT NOW THERE'S NO SILVER BULLET IN TERMS OF A, A BIG REVENUE SOURCE THAT'S GONNA OFFSET, UH, THE REVENUE THAT WE, WE, WE LOOK, WE LOSE WITH THE PROPERTY TAX CAP.
AND SO THAT PROPERTY TAX CAP, IT HAS A PROVISION, I THINK THAT THERE'S AN EXCEPTION FOR PUBLIC SAFETY, SAFETY.
IS THAT SOMETHING THAT HAS TO GO BACK TO THE VOTERS, OR IS THAT SOMETHING THAT THE ADMINISTRATION HAS DISCRETION OVER? RIGHT.
SO RIGHT NOW THERE IS 90 MILLION THAT'S BILLED INTO, UH, THE, THE, THE PROPERTY TAX CAP, UH, PROP H UM, NOW IF YOU WANT AN ADDITIONAL EXCEPTION, YES, THEY WOULD HAVE TO GO BACK TO THE VOTERS IN ORDER TO HAVE AN, A PUBLIC SAFETY EXCEPTION TO, TO THE CAP.
BUT THE 90 MILLION IS A COUNCIL VOTE.
WHAT'S THAT? THE 90 MILLION, IF YOU USE THE 90 MILLION ON PUBLIC SAFETY, THAT WOULD BE A VOTE OF COUNCIL, NOT OF THE PEOPLE, UNLESS YOU GO BACK FOR RE-ENGINEERING OF THE ORIGINAL.
THE 90 MILLION WAS ALREADY APPROVED BY THE PUBLIC, AND IT'S ALREADY FACTORED INTO THE CALCULATION IF YOU WANT ANOTHER EXCEPTION THAT WOULD HAVE TO GO BACK FOR A VOTE.
VICE CHAIR, UM, COUNCIL MEMBER, UH, MIKE, NO KNOX'S OFFICE.
WELCOME TO COUNCIL MEMBER DAVID ROBINSON AND STAFF FROM COUNCIL MEMBER TIFFANY THOMAS'S OFFICE.
JUST A QUICK QUESTION, UM, IN YOUR REPORT, WHEN DO YOU FORESEE THE PUBLICATION OF THE 23 FINANCIAL REPORT? COMPREHENSIVE FINANCIAL REPORT TO MY, THE, THE BUDGET, THE ADOPTED BUDGET OR THE, THE, NO, WHEN DO YOU, OH, THE COMPREHENSIVE FINANCIAL REPORT? YES, SIR.
THE CAPPER, TYPICALLY IT'S TOWARDS THE END OF THE YEAR, UH, NOVEMBER, DECEMBER.
SO WHAT CAN WE TELL THE PUBLIC THAT THAT WILL, IT WILL BE AVAILABLE DECEMBER-ISH? UH, YEAH, WE USUALLY, UH, SHOOT FOR A NOVEMBER 15TH DEADLINE WITH, UH, YOU KNOW, YOU KNOW, OVER 20 DIFF DIFFERENT DEPARTMENTS AND, UH, LIMITED RESOURCES, YOU KNOW, THAT, UH, IS A CHALLENGING, UH,
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DEADLINE.BUT WE USUALLY GET IT OUT, UH, FIRST WEEK OF DECEMBER.
UH, WE'LL HAVE IT ONLINE IN ADVANCE FROM WHEN WE PRINT.
SO WE USUALLY WOULD HAVE, UH, EARLY DECEMBER, WE WOULD HAVE, UH, THAT POSTED ONLINE.
UM, AND THEN WE WOULD HAVE ACTUALLY PRINTED COPIES AVAILABLE FOR COUNCIL, UH, RIGHT AFTER THE FIRST OF THE YEAR.
NO OTHER COUNCIL MEMBERS IN QUEUE AND NO PUBLIC SPEAKERS.
SO WE'LL MOVE ON TO OUR NEXT AGENDA ITEM.
PLEASE WELCOME DEPUTY DIRECTOR MELISSA DKI TO PROVIDE A PRESENTATION ON THE UPCOMING FINANCIAL TRANSACTIONS.
I'M HERE TODAY TO PRESENT ON THE UPCOMING FINANCIAL TRANSACTIONS ON BEHALF OF THE FINANCE WORKING GROUP.
UH, SO IF WE GO TO THE AGENDA, SLIDE TWO.
UM, WE HAVE A COUPLE ITEMS TODAY, ONE FOR THE COMBINED UTILITY SYSTEM RELATED TO THE SYSTEM'S VARIABLE RATE DEMAND BONDS, ONE ITEM FOR THE GENERAL OBLIGATION CREDIT RELATED TO OUR COMMERCIAL PAPER SERIES H TWO.
AND THEN WE HAVE TWO ITEMS FOR THE HOUSTON AIRPORT SYSTEM.
UM, FIRST A ITEM FOR ASSURITY POLICY, AND SECOND, A PRICING UPDATE FOR THE BOND PRICING THAT WE DID, UM, BACK IN END OF JUNE, AND WE CLOSED IN JULY.
OKAY, SO ON SLIDE THREE, UM, TO START ON THE COMBINED UTILITY SYSTEM, UM, RELATED TO THE, UM, REMARKETING AGENT FOR THE VARIABLE RATE DEMAND BONDS.
UM, ON SLIDE THREE, THIS GIVES YOU A SNAPSHOT OF THE, UM, OUTSTANDING COMMERCIAL PAPER SERIES, AS WELL AS HIGHLIGHTED FOR YOU THE VARIABLE RATE DEMAND BONDS FOR THE COMBINED UTILITY SYSTEM.
SO THE VARIABLE RATE DEMAND BONDS YOU SEE HIGHLIGHTED HERE.
UM, THERE ARE, UH, SEVERAL SERIES OF BONDS.
THESE ARE LONG-TERM BONDS THAT ARE VARIABLE RATE, UM, THAT WE HAVE A REMARKETING AGENT IN PLACE FOR.
AND WE'RE GONNA TALK ABOUT THAT REMARKING REMARKETING AGENT TODAY.
UH, SO IF YOU GO TO SLIDE FOUR, UM, ALL OF THESE BONDS, LIKE I MENTIONED, THEY HAVE A VARIABLE RATE, SO THEY GET REMARKETED WEEKLY, AND THE VARIABLE RATE GETS RESET WEEKLY BY THIS REMARKETING AGENT.
UM, AND SO THE CURRENTLY THE REMARKETING AGENT FOR THE CITY, UM, HAS EXPRESSED INTEREST, UM, TO US THAT, UH, WE MIGHT WANNA CONSIDER, UM, REPLACING THAT CURRENT REMARKETING AGENT.
UM, SO IN ORDER TO GET THE BEST DEAL FOR THE CITY, WE'RE GONNA PUT OUT A REQUEST FOR PROPOSALS FROM OUR, UM, POOL OF BANKERS, UH, TO IDENTIFY THE BEST, UM, THE BEST REMARKETING AGENT OR AGENTS FOR US TO USE AT THE CITY.
UH, SO ONCE WE IDENTIFY THE BEST FIRM OR FIRMS FOR THAT, UM, FOR THOSE SERVICES, WE'LL BRING IN RCA TO CITY COUNCIL SOMETIME THIS FALL.
UM, MOVING ON TO THE GENERAL OBLIGATION.
UM, THIS SLIDE GIVES YOU A SUMMARY OF THE VARIABLE RATE EXPOSURE THAT THE GENERAL OBLIGATION HAS.
SO, UH, WE HAVE A SERIES OF COMMERCIAL PAPER, UM, FACILITIES IN PLACE THAT HELP US SUPPORT THE, UM, THE CAPITAL IMPROVEMENT PLAN.
UH, SO THE ITEM WE'RE GONNA TALK ABOUT TODAY IS THE SERIES H TWO, WHICH IS HIGHLIGHTED ON YOUR SLIDE.
UM, THE SERIES H TWO, LIKE I MENTIONED, UM, GIVES US, UH, ACCESS TO COMMERCIAL PAPER THAT WE USE TO FINANCE OUR CAPITAL IMPROVEMENT PLAN, UM, FOR OUR GENERAL OBLIGATION TYPE PROJECT.
SO THIS WOULD BE ANYTHING FROM, UM, YOU KNOW, UH, RENOVATING A FIRE STATION, UM, TO, UM, YOU KNOW, A COMMUNITY CENTER RENOVATION OR WHATNOT.
UM, PROJECTS THAT ARE IN THE CIP THAT HAVE TO DO WITH THE, THE GENERAL FUND TYPE DEPARTMENTS.
UM, SO LIKE I MENTIONED, THIS SERIES SUPPORTS, SUPPORTS THOSE, UM, PROJECTS.
AND WE, WE DRAW ON THESE COMMERCIAL PAPER FACILITIES IN ORDER TO ACCESS CASH TO PAY INVOICES.
UM, AND THEN AT A LATER POINT IN TIME, WE REFUND THAT COMMERCIAL PAPER INTO LONG-TERM FIXED RATE DEBT.
UM, SO CURRENTLY OUR AGREEMENT, UM, IN PLACE FOR THIS COMMERCIAL PAPER PROGRAM IS SLATED TO EXPIRE IN NOVEMBER.
UM, AND SO TYPICALLY BEFORE THE EXPIRATION OF ONE OF THESE FACILITIES, WE, UM, EITHER ASK FOR RENEWAL PROPOSAL, UM, FROM THE EXISTING BANK, AND THE EXISTING BANK DID COME BACK WITH A FAVORABLE RENEWAL PROPOSAL.
SO WE'RE RECOMMENDING TO RENEW AT THAT BANK, WHICH IS TD SECURITIES.
OKAY, SO ON SLIDE SEVEN, WE'LL MOVE ON TO THE HOUSTON AIRPORT SYSTEM.
UM, YOU MIGHT HAVE REMEMBERED, WE DID TALK ABOUT THE HOUSTON AIRPORT SYSTEM SURETY POLICIES ABOUT A YEAR AGO.
UM, PART OF THE MASTER TRUST IN DENTURE, UM, BETWEEN THE HU THE, THE AIRPORT SYSTEM, WHICH IS THE CITY AND THE BOND HOLDERS, UM, STATES THAT WE HAVE TO HAVE RESERVE FUNDS, UM, IN PLACE FOR BOTH OUR SENIOR LIEN BONDS
[00:25:01]
AND OUR SENIOR LIEN NOTES.SO THIS RESERVE FUND, UM, PERTAINS TO THE SENIOR LIEN NOTES, WHICH ARE THE, UM, COMMERCIAL PAPER FOR THE HOUSTON AIRPORT SYSTEM.
UM, SO BASED ON THE SIZE OF THAT PROGRAM, WE HAVE A RESERVE FUND REQUIREMENT OF 22.6 MILLION.
AND THAT RESERVE FUND REQUIREMENT IS FUNDED RIGHT NOW WITH A COMBINATION OF, UM, CASH AND SURETY POLICIES.
UM, SO TWO OF THESE POLICIES ARE EXPIRING IN OCTOBER, AND ONCE THOSE POLICIES EXPIRE, UM, THEIR VALUE IS RIGHT AT 6.4 MILLION.
SO WE'LL NEED TO REPLACE THOSE POLICIES TO GET OUR, UM, RESERVE FUND FULLY FUNDED.
SO IF YOU MOVE ON TO SLIDE EIGHT, UM, THE NEXT STEPS, UM, IN RELATION TO THAT.
SO, UM, AS I MENTIONED EARLIER, YOU PROBABLY REMEMBER WE DID A BOND TRANSACTION FOR THE HOUSTON AIRPORT SYSTEM.
UM, AND WHILE WE WERE WORKING ON THAT TRANSACTION, WE DID REACH OUT TO DIFFERENT CHARITY POLICY PROVIDERS, UM, AND WE IDENTIFIED AND NEGOTIATED TERMS WITH ASSURED GUARANTEE WHO'S A SURETY POLICY PROVIDER.
AND SO WE ARE GONNA BE MOVING FORWARD WITH RECOMMENDING THAT WE REPLACE OUR EXPIRING POLICIES WITH A POLICY FROM ASSURED GUARANTEE, AND WE'LL BRING THAT ITEM TO COUNCIL IN SEPTEMBER.
AND SO ON SLIDE NINE, LIKE I MENTIONED ON THE HOUSTON AIRPORT SYSTEM BOND TRANSACTION THAT WE DID, UM, SO WE LIKE TO FOLLOW UP WITH THIS BODY, YOU KNOW, WE PRESENT THE TRANSACTIONS WE'RE GONNA DO, WE TALK ABOUT ALL THIS WONDERFUL SAVINGS WE'RE GONNA HAVE, UM, AND WE LIKE TO COME BACK TO, UM, TO THIS COMMITTEE TO LET YOU KNOW HOW THE TRANSACTION WENT, THE SAVINGS THAT WE WERE ABLE TO ACHIEVE.
UM, SO THIS IS THE DEAL THAT WE PRICED, UM, BACK AT THE END OF JUNE, AND WE CLOSED ON IT IN MID JULY.
UM, IT WAS THE TRANSACTION, THE PARAMOUNT WAS, UH, 756 MILLION.
UM, PART OF THAT PARAMOUNT WAS A REFUNDING, UH, WHERE WE LOOKED AT EXISTING, UM, CANDIDATES OF BONDS TO SEE IF WE COULD REFUND THOSE FOR SAVINGS FOR THE AIRPORT SYSTEM.
UM, SO WE DID THAT, AND YOU CAN SEE SOME OF THE, UM, INFORMATION ON THE SLIDE.
UM, THERE WERE TWO DIFFERENT SERIES OF BONDS, UM, BUT IN TOTALITY WE SAVED, UM, YOU CAN SEE BROKEN DOWN BY THE SERIES, IF YOU LOOK AT THE PRESENT VALUE SAVINGS ROW, UM, WE SAVED $4.4 MILLION ON ONE SERIES OF BONDS AND 8.8 0.4 MILLION ON ANOTHER SERIES OF BONDS.
SO THAT WAS A TOTAL SAVINGS OF, UM, ABOUT 12.8 MILLION ACROSS THE TRANSACTION.
UM, AND WE WERE ABLE TO ACHIEVE, I KNOW WE'RE IN A, YOU KNOW, WE'RE IN A PRETTY HIGH INTEREST RATE ENVIRONMENT RIGHT NOW.
UM, BUT WHEN YOU LOOK AT THE SERIES OF BONDS, UM, I FEEL LIKE THAT WE GOT, YOU KNOW, A GOOD DEAL FOR THE CITY.
AND, UM, I WANTED TO THANK, UM, MAYOR PROTON CHAIR OF THE COMMITTEE AND THE VICE CHAIR COUNCIL MEMBER POLLARD, FOR JOINING US ON THAT BOND TRANSACTION.
SO I HOPE YOU, UM, I HOPE YOU ENJOYED IT, AND WE HAD A, A REALLY GOOD TRANSACTION AND A, AND A GOOD RESOLVE FOR THE AIRPORT.
THAT CONCLUDES MY PRESENTATION, VICE CHAIR, ED POLLARD, UH, THANK YOU MAYOR PRO TEM, AND, UM, MELISSA, YOU, YOU THANKED US, BUT WE WANT TO THANK YOU AND YOUR ENTIRE TEAM, UH, THE OUTSIDE ADVISORS, EVERYONE WHO PLAYED A ROLE IN, UM, THAT BOND SALE.
IT WAS DEFINITELY A, UM, EXPERIENCE FOR MYSELF TO REALLY UNDERSTAND WHAT GOES ON BEHIND THE SCENES AND HOW FAST PACED IT IT CAN GET AND WHAT GOES ON THROUGH THE NEGOTIATIONS.
AND I THINK YOU REPRESENTED THE CITY EXTREMELY WELL IN GETTING US THOSE COST SAVINGS THAT WILL, UH, GREATLY BENEFIT, UM, UH, THE RESIDENTS OF THIS, OF THIS CITY.
SO THANK YOU AND YOUR ENTIRE TEAM FOR ALL THE HARD WORK, UH, THE CONTROLLER'S OFFICE, EVERYONE WHO PLAYED A ROLE IN IT.
UM, IT WAS, IT WAS DEFINITELY SOMETHING THAT, UH, UM, HIGHLIGHTED HOUSTON IN A POSITIVE WAY.
AND THE, UH, THE BANK THAT WE USED IN, IN NEW YORK, THEY DID A PHENOMENAL JOB IN ACCOMMODATING AS WELL.
COUNCIL MEMBER DAVID ROBINSON.
AND UH, MELISSA, THANK YOU FOR ALL YOU DO.
I'VE HEARD THE ACCOLADES, UH, AND THE TALES OF YOUR TRIP TO NEW YORK.
AND MY QUESTION IS A REAL BROAD ONE.
WHY DON'T WE DO THIS MORE OFTEN? THAT'S A GOOD QUESTION.
SO, UM, SO WE HAVE FOUR DIFFERENT, UM, CREDITS AT THE CITY.
THIS IS PERTAINING TO THE AIRPORT.
WE HAVE COMBINED UTILITY SYSTEMS, GENERAL OBLIGATION, AND THEN THE CONVENTION ENTERTAINMENT CREDIT.
UM, AND SO WE, RIGHT NOW, YOU KNOW, WE'RE IN A RISING INTEREST RATE ENVIRONMENT, UH, SO WE DO TAKE A LOOK AT WHATEVER DEBT WE HAVE OUTSTANDING TO SEE IF THERE'S ANY OPPORTUNITIES FOR SAVINGS.
UM, BECAUSE OF THE INTEREST RATE ENVIRONMENT WE'RE IN, THERE HASN'T BEEN TOO MUCH OF AN OPPORTUNITY.
UM, BUT WE DO ANTICIPATE, UM, THERE COULD BE A, POSSIBLY A SMALL REFUNDING COMPONENT.
WE DO ANTICIPATE A GENERAL OBLIGATION ON SALE THAT WE'RE GONNA BE DOING TO REFUND THE COMMERCIAL PAPER FOR THE GENERAL OBLIGATION CREDIT.
UM, AND WE'RE PLANNING TO DO THAT THIS FALL.
UM, SO WE'LL BE LOOKING AT IT AGAIN.
UM, PROBABLY FOR THE COMBINED UTILITY SYSTEM, WE'RE LOOKING AT SOMETHING MAYBE IN CALENDAR YEAR, EARLY CALENDAR YEAR 24 MM-HMM
[00:30:02]
IT'S, I WOULD SAY FOR EACH CREDIT, IT'S, YOU KNOW, MAYBE ONE TRANSACTION A YEAR.IT'S, IT'S REALLY, A LOT OF IT IS DRIVEN BY, IN TERMS OF REFUNDING DRIVEN BY THE INTEREST RATE ENVIRONMENT WE'RE IN.
SO GOOD POINT ON WHERE WE ARE WITH THE MARKET RIGHT NOW AND SEIZING THE OPPORTUNITY, AS YOU MENTIONED, WE WERE SORT OF WHISPERED TO, OR ONE, I GUESS THE WAY YOU DESCRIBED IT WAS KIND OF ONE OF OUR CONSULTANTS, ONE OF OUR TEAMS SAID, HEY, IT'S GONNA BE A GOOD TIME TO DO THIS.
IS THAT A OVERSIMPLIFICATION OF WHAT I HEARD? UM, I THINK, I THINK IT'S A COMBINATION OF THINGS, RIGHT? YOU, IT'S, UM, IT'S A COMBINATION OF THE INTEREST RATE ENVIRONMENT YOU'RE IN, RIGHT? BUT IT'S ALSO BALANCING THE OPERATIONAL NEEDS OF THE DEPARTMENTS.
FOR EXAMPLE, IF WE'RE UTILIZING, UM, IF WE'RE PART OF THE TRANSACTION IS REFUNDING OUR COMMERCIAL PAPER, ONCE WE GET CLOSE TO THAT LIMIT ON OUR COMMERCIAL PAPER LINE, IN ORDER FOR US TO CONTINUE TO PAY INVOICES ON THE CAPITAL PROJECTS, WE NEED TO FIX OUT THAT COMMERCIAL PAPER INTO LONG TERM DEBT TO FREE THAT UP.
SO I WOULD SAY IT'S A COMBINATION OF OPERATIONAL NEEDS OF THE DEPARTMENTS TO IMPLEMENT THE CIP AND TRYING TO, IF THE INTEREST RATE ENVIRONMENT IS CORRECT, UM, REALIZE ANY REFUNDING SAVINGS WE CAN.
I KNOW I WAS SORRY TO MISS THAT TRIP.
I WAS SCHEDULED TO GO AND HAD A CONFLICT THAT CAME UP.
SO, UM, YOU KNOW, WITH LIMITED TIME AVAILABLE, UH, IN THE REMAINDER OF THE TERM THAT I HAVE, I'D LOVE TO BE KEPT, UH, ABREAST OF WHAT'S GOING ON, UH, COMING FORWARD.
SO HOPEFULLY YOU KEEP, KEEP THE COUNCIL INFORMED.
WE HAVE NO OTHER COUNCIL MEMBERS IN QUEUE, AND I'LL TAKE THIS MOMENT TO, UH, UH, I, I CALLED YOU THE BULLDOG.
I THINK, UH, THAT WAS APPROPRIATE.
UH, WE HAD SOME CHANGES WHEN WE WERE UP THERE.
UH, IT CHANGES BY THE MINUTE, ACCORDING TO THE FED, AND WE HAD SOME BAD NEWS FROM THE FED THAT WE THOUGHT WOULD AFFECT, UH, A COUPLE OF OUR TRANCHES.
AND, UM, I THINK YOU CHANGED THREE OR FOUR TRANCHES, WHICH ACCUMULATED THE SAVINGS OF, I THOUGHT IT WAS 20 SOME ODD MILLION DOLLARS.
SO, UH, THAT 20 SOMETHING, 20 SOMETHING, UM, MILLION DOLLARS WAS A DIRECT RESULT OF YOUR THINKING, YOUR WISDOM, YOUR FORESIGHT, AND YOUR, UH, STICKTOITIVENESS AND THE ABILITY TO GET US, UH, UH, A BETTER RESULT ON THE BOND SALE.
SO IT'S REALLY INTERESTING TO WATCH HOW THE SAUSAGE IS MADE BECAUSE IT CHANGES BY THE MINUTE.
AND, UM, AND OUR TEAM, UM, BOTH YOU AND YOUR OFFICE AND THE FINANCE DEPARTMENT AND THE CITY OF HOUSTON CONTROLLER'S OFFICE MM-HMM
DID A REALLY GOOD JOB, AND THEY WERE VERY, UH, VERY ASTUTE IN, IN, IN THE, THIS PARTICULAR SALE.
SO YEAH, WE LOOK FORWARD TO MORE, MORE TO COME AND, UH, SEEING THE BULLDOG IN CONTINUOUS ACTION.
SO THANK YOU, THANK YOU, THANK YOU.
IT'S DEFINITELY A TEAM EFFORT, LIKE YOU MENTIONED THE CONTROLLER'S, OFFICE, CITY LEGAL.
YEAH, WE HAVE OUR, UH, MASTERS AND OUR FINANCIAL ADVISORS AND, UH, OF COURSE OUT OUTSIDE LEGAL COUNSEL MAKING SURE THAT, UM, YOU KNOW, ALL THE DOCUMENTS ARE TOGETHER.
SO, UM, IT'S DEFINITELY A TEAM EFFORT, BUT, UM, IT'S, IT'S A GREAT RESULT FOR THE CITY.
NEXT WE'LL HAVE A PRESENTATION FROM CHIEF FINANCIAL OFFICER OF HOUSTON PUBLIC WORKS, MR. SAMIR SOLANKI, AND CHIEF FINANCIAL OFFICER OF METRO MR. GEORGE FONT TO PROVIDE A PRESENTATION ON METRO'S GENERAL MOBILITY PROGRAM.
ALL RIGHT, WE'LL JUMP RIGHT INTO IT.
GOOD MORNING, COUNCIL MEMBERS AND REPRESENTATIVES.
UM, TODAY WE BRING BEFORE YOU THE METRO GENERAL MOBILITY PROGRAM AGREEMENT.
I AM JOINED BY MY COLLEAGUE, MR. GEORGE TINOS, WHO'S THE CHIEF FINANCIAL OFFICER FOR HOUSTON METRO.
AND AS ALWAYS, I'M SURE MOST OF THE COUNCIL MEMBERS ARE USED TO SEEING THIS SLIDE HERE.
UM, OUR PURPOSE FOR HOUSTON PUBLIC WORKS IS TOGETHER WE CREATE A STRONG FOUNDATION FOR HOUSTON TO THRIVE.
AND THIS PARTICULAR PRESENTATION, THIS GMP AGREEMENT, HIGHLIGHTS THE VALUES OF RESPECT, COMMUNICATION, AND TEAMWORK.
WORKING TOGETHER WITH METRO WILL ALLOW US TO FOCUS ON THE CRITICAL NEEDS OF THE CITY'S INFRASTRUCTURE.
AND THESE ARE THE WONDERFUL LOOKING PEOPLE THAT ARE IN CHARGE OF HOUSTON PUBLIC WORKS.
AND THIS GIVES A SNAPSHOT OVERVIEW OF THE PUBLIC INFRASTRUCTURE THAT HOUSTON PUBLIC WORKS IS RESPONSIBLE FOR.
I'LL NOW HAND IT OVER TO MR. GEORGE FORTINOS, UM, WHO WILL WALK US THROUGH THE GENERAL MOBILITY PROGRAM.
AND THANK YOU TO THE MEMBERS OF THIS COMMITTEE.
[00:35:01]
MY NAME IS GEORGE FORTINOS, I'M THE CHIEF FINANCIAL OFFICER AT METRO.I'LL BE COVERING A LITTLE HISTORY OF THE PROGRAM AND HOW IT OPERATES TODAY.
METRO'S GENERAL MOBILITY PROGRAM FALLS UNDER THE CRITERIA DEFINED BY TEXAS TRANSPORTATION CODE 4 51.
THIS IS THE GOVERNING CODE UNDER WHICH METRO OPERATES UNDER TRANSPORTATION CODE 4 51 METRO WITH WITHIN ITS SERVICE AREA CAN CONSTRUCT OR MAINTAIN STREETS, ROADS, BRIDGES, GRADE SEPARATIONS, AND TRAFFIC CONTROL SIGNALS.
IT CAN ALSO INSTALL AND MAINTAIN STREET LIGHTS, LANDSCAPING, AS WELL AS DRAINAGE IMPROVEMENTS ASSOCIATED WITH THESE PROJECTS.
SO, SINCE 1982, METRO HAS COLLABORATED WITH THE CITY OF HOUSTON, A NUMBER OF THESE ACTIVITIES DEFINED UNDER THE TEXAS TRANSPORTATION CODE THAT HAVE DEEMED TO BE BENEFICIAL FOR BOTH ENTITIES.
IN 1984, METRO ESTABLISHED THE JOINT GOVERNMENTAL PROJECTS PROGRAM, WHICH EARMARKED, UH, AN AMOUNT OF FUNDS, UH, TO THE TUNE OF 150 MILLION TO BE ALLOCATED TO THE CITY.
AND METRO'S OTHER PARTNER ENTITIES LIKE HARRIS COUNTY AND THE 14 OTHER MUNICIPALITIES.
AND JUST FOR FOOTNOTE HERE, I'LL REFER TO THESE 14 OTHER MUNICIPALITIES THROUGH THIS PRESENTATION AS THE MULTI-CITY.
SO THIS PROGRAM, THE JOINT GOVERNMENTAL PROGRAM, UH, GOVERNMENTAL PROJECTS PROGRAM LASTED THROUGH THE END OF 1988.
AND ONE CAN SAY THIS WAS THE FIRST ITERATION OF WHAT IS TODAY THE GENERAL MOBILITY PROGRAM OR GMP.
IN 1988, THERE WAS A BALLOT MEASURE, WHICH FORMERLY ESTABLISHED THE PROGRAM, GENERAL MOBILITY PROGRAM, AND IT STATED A GOAL TO DESIGNATE 25% OF AVAILABLE SALES TAX REVENUES FOR THE ENHANCEMENT OF MOBILITY WITHIN THE SERVICE REGION.
THE AIR, THE PROGRAM WAS ALMOST ENTIRELY, UH, ROAD AND STREET PROJECTS, MANY OF WHICH METRO SERVED AS MANAGER AND ADMINISTRATOR.
IN 1992, METRO INSTITUTED THE INFRASTRUCTURE IMPROVEMENT PROGRAM, WHICH PROVIDED A DIRECT PAYMENT TO THE CITY OF HOUSTON, HARRIS COUNTY, AND THE 14 MULTI-CITY TO FUND ELIGIBLE PROJECTS AS DEFINED BY TRANSPORTATION CODE.
ALSO, UNDER THIS PROGRAM, METRO WAS ABLE TO DESIGNATE PROJECTS AND ACTIVITIES DEEMED AS BENEFICIAL FOR TRANSIT OPERATIONS AND MOBILITY NEEDS IN THE SERVICE AREA.
AND THESE, UH, ACTIVITIES WERE UNDERSTOOD IS NOT BENEFITING A SOLE ENTITY, UH, BUT RATHER BENEFITING ALL OF METRO'S ENTITIES.
UH, THE CURRENT EVOLUTION OF VISIBILITY IS REFERRED TO AS AREA WIDE ACTIVITIES, UM, UNDER THE GENERAL MOBILITY PROGRAM.
AND I'LL, I'LL WALK, I'LL TALK TO THAT A LITTLE LATER IN THIS PRESENTATION.
UM, BUT THE INFRASTRUCTURE IMPROVEMENT PROGRAM WAS REPLACED IN 1999, UH, BY THE EXECUTION OF THE TRANSPORTATION IMPROVEMENT AGREEMENTS.
THESE ARE THE FIRST ITERATION OF THE AGREEMENTS UNDER WHICH THE GENERAL MOBILITY CURRENTLY OPERATES, AND I'LL WALK YOU THROUGH THOSE IN A FEW SLIDES.
SO, FROM 1999 TILL NOW, THERE HAVE BEEN SOME SUBSEQUENT BALLOT MEASURES AND AGREEMENTS ALL EITHER EXTENDING OR MAKING UPDATES TO THE PROGRAM.
THE MOST IMPORTANT RECENT BALLOT MEASURES ARE, HOWEVER, WORTH HIGHLIGHTING, AS THEY CHANGE THE AMOUNT OF TOTAL FUNDING THE PROGRAM RECEIVED WITH REGARD TO ITS PERCENTAGE OF METRO SALES TAX REVENUES.
THE REFERENDUM IN 2012 ESTABLISHED A BASELINE OF FUNDING AT 2014, AND THEN SPLIT ANY GROWTH TO THAT FUNDING AMOUNT AT 50% TO METRO AND 50% TO GMP.
THE SUBSEQUENT REFERENDUM IN 2019 EXTENDED THAT SPLIT TO 2040.
UH, THE ATTEMPT OF THIS GRAPHIC HERE IS TO SHOW THAT SPLIT AS IT APPROACHES 2040.
HERE YOU CAN SEE THE AMOUNTS THAT METRO BOTH HAS CONTRIBUTED AND IS PROJECTED TO CONTRIBUTE OUT TO 2040 A TOTAL PROGRAM OUTFLOW FROM INCEPTION OF 2040 AT OVER $9 BILLION.
SO LET'S TALK ABOUT THESE AGREEMENTS, UH, BUT BEFORE YOU LOSE YOURSELF IN THIS SLIDE, LET ME FIRST SAY AGAIN THAT THE GENERAL MOBILITY PROGRAM IS FUNDED BY A PERCENTAGE ALLOCATION OF METRO SALES TAX REVENUES.
THAT AMOUNT IS THE ENVELOPE OF FUNDING FOR METRO'S PARTNER ENTITIES.
AND METRO HAS INDIVIDUAL AGREEMENTS WITH EACH OF THOSE PARTNERS TO DEFINE HOW FUNDS ARE ALLOCATED.
AND THAT IS WHAT YOU'RE SEEING IN THE SLIDE, A FLOW CHART OF THAT FUNDING ALLOCATION.
UH, AND WITH ALL THE HISTORY I'VE GIVEN YOU ABOUT THE PROGRAM, YOU CAN SEE THAT THIS IS NOT A SIMPLE SLIDE.
UH, YOU'RE SEEING A REFLECTION OF THE PROGRAM'S EVOLUTION REPRESENTING PAST AGREEMENT ACTIVITIES LAYERED ON TOP OF SUBSEQUENT AGREEMENT ACTIVITIES.
SO THERE IS A SERIES OF FUNDING ACTIVITIES THAT TAKES PLACE FIRST WITH THE REMAINING OF THE FUNDS OCCURRING IN A SECOND PHASE.
UH, THE DELINEATION IS REFERRED TO IN THIS CHART AS ABOVE THE LINE AND BELOW THE LINE.
THE ABOVE LINE ITEMS OCCUR BEFORE THE BELOW THE LINE ITEMS ABOVE THE LINE, THE CITY GETS $10 MILLION FOR SPECIFIC PROGRAM OF STREET REPAIR PROJECTS.
IT ALSO INCLUDES METRO'S ALLOCATION TO ITS MULTI-CITY PARTNERS, WHICH REPRESENTS ABOUT 12% OF PROGRAM FUNDING.
THE AREA WIDE PROJECTS IS SOMETHING TO WHICH ARE REFERRED EARLIER.
THESE ARE ACTIVITIES FOCUSED ON REGIONAL MOBILITY AND CONGESTION MITIGATION.
AND THEY DO NOT BENEFIT A SOLE ENTITY, BUT RATHER ALL THE ENTITIES, THEY INCLUDE THE MOTORIST ASSISTANCE PROGRAM, OTHERWISE
[00:40:01]
KNOWN AS MAP.THIS IS THE WRECKER OPERATIONS, UH, THE WRECKER TRUCK OPERATIONS, WHICH PROVIDES ASSISTANCE TO STALL VEHICLES ON THE REGION'S HIGHWAYS.
IT ALSO INCLUDES METRO OPERATIONS AT TRANS STAR PLUS TRAFFIC POLICE ENFORCEMENT ON THE HOV AND HOT LANES.
A SMALL AMOUNT OF AREA-WIDE FUNDS DOES SUPPORT METRO STAFF TIME FOR ADMINISTERING THE PROGRAM.
THE CURRENT AGREEMENT HAS THE ANNUAL ALLOCATION TO AREA-WIDE ACTIVITY CAPPED AT $4 MILLION.
NOW, MOVING BELOW THE LINE, WHAT'S LEFT OVER AFTER THE ABOVE THE LINE ACTIVITIES OCCUR IS A PERCENTAGE BREAKDOWN GO INTO THE CITY AND THE COUNTY WITH A SMALL PERCENTAGE UNDER THE METRO BOARD'S DISCRETION.
UH, DURING MY EXPLANATION BELOW THE LINE SPLIT IS FAIRLY COMMON TO GET THE QUESTION ASKED.
WHY IS IT THAT THE THE BELOW THE LINE SPLIT USES THESE PERCENTAGES? THE ANSWER IS THAT THE PERCENTAGE SPLITS AS WELL AS MOST OF ALL THE ACTIVITIES IN THIS FLOW CHART HAVE BEEN UPDATED AT DIFFERENT POINTS IN GENERAL MOBILITY'S HISTORY.
AND THE SPLIT SPECIFICALLY GETS ADJUSTED WHENEVER CHANGES TAKE PLACE ABOVE THE LINE.
SO, FOR EXAMPLE, IN PRIOR AGREEMENTS, MULTI-CITY HAD DIFFERENT AGREEMENT ALLOCATIONS THAN THEY DO NOW, BECAUSE THESE ALLOCATIONS HAVE CHANGED SOME ACTIVITIES FROM BELOW THE LINE TO THE ABOVE THE LINE, THE ALLEGATIONS OF THE CITY AND COUNTY HAD TO BE ADJUSTED TO, TO MIMIC THE ALLOCATION AMOUNT THAT WAS PRIOR TO SUCH A CHANGE.
UH, ANOTHER EXAMPLE IS THAT BOTH THE CITY AND THE COUNTY, UH, USED TO HAVE ABOVE THE LINE ACTIVITIES THAT, UH, THAT ARE NOW COMPLETE.
UH, BECAUSE THAT COMPLETION REDUCES THE ABOVE LINE ACTIVITY, THE BELOW THE LINE ACTIVITY PERCENTAGE WAS ADJUSTED TO ENSURE THAT BOTH THE CITY AND THE COUNTY MAINTAIN THAT SAME LEVEL OF PERCENTAGE FUNDING THAT THEY HAD BEFORE.
SO NOW THAT I'VE PRESENTED A HISTORY AND A PRE, UH, PICTURE OF HOW THE GENERAL MOBILITY AGREEMENTS ARE STRUCTURED, I'LL FINISH MY SECTION OF THIS PRESENTATION WITH SOME KEY POINTS IN THE AGREEMENT UPDATE BEING PROPOSED.
FIRST, THE CURRENT, UH, AGREEMENT WITH THE CITY OF HOUSTON.
THE CURRENT GMP AGREEMENT EXPIRES IN 2025.
THIS PROPOSAL UPDATES THE AGREEMENT, UH, EXPIRATION DATE TO 2040, WHICH IS IN LINE WITH THE 2019 BALLOT MEASURE THAT EXTENDS GENERAL MOBILITY OF 2040.
NUMBER TWO, IT ALSO PROVIDES MORE FUNDING FOR AREA WIDE ACTIVITIES, CHANGING THE CAP FROM 4 MILLION TO 5 MILLION.
WITH SUBSEQUENT INCREASES, DEPENDING ON SALES TAX GROWTH, THIS INCREASE WILL BE USED TO CONTINUE TO FUND THE AREA WIDE ACTIVITIES, UH, CURRENTLY, UH, BECAUSE THE CURRENT $4 MILLION CAP IS NOT SUFFICIENT, UH, ADDITIONALLY IT WILL ALSO ALLOW FOR MORE FUNDING TO SUPPORT ANY ADDITIONAL FUTURE REGIONAL MULTIMODAL INITIATIVES TACKLING MOBILITY AND TRAFFIC CONGESTION.
ALRIGHT, WE'RE GONNA MOVE INTO THE USE OF THE METRO GMP FUNDS.
SO HERE'S A QUICK SNAPSHOT OF HOW BUILT HOUSTON FORWARD IS FUNDED.
OF THE FOUR FUNDING SOURCES THAT YOU SEE TODAY, WE'RE FOCUSING THE ONE ON THE WAY TO THE LEFT, WHICH IS THE THIRD PARTY FUNDS THAT INCLUDES METRO NOW FUNDING RECEIVED UNDER THE GENERAL MOBILITY PROGRAM SUPPORTS BILL FROM FORWARD.
THIS IS THE CITY'S PAY AS YOU GO APPROACH TO DRAINAGE AND STREET INFRASTRUCTURE.
IT IS PART OF THE DEDICATED DRAINAGE AND STREET RENEWAL FUND THAT YOU SEE ON AN ANNUAL BASIS.
WHAT WE BRING FORWARD, THE BUDGET TO COUNCIL, ALSO KNOWN AS D-D-S-R-F.
AND THESE ARE THE PRIMARY USES OF THE METRO GMP FUNDING.
UH, THAT RANGES FROM THE OPERATIONS AND MAINTENANCE, WHICH IS THE UNIT RATE REIMBURSEMENT, WHICH FUNDS THE 2312 FUND ACTIVITIES.
THEN WE HAVE THE MAYOR STREET REHABILITATION INITIATIVE, THE COUNCIL DISTRICT SERVICE FUNDS.
UH, WE ALSO HAVE AGREEMENTS WITH PARTNER AGENCIES TO IMPLEMENT TRANSPORTATION BETTERMENTS, AND THE FUNDING IS ALSO LEVERAGED AS LOCAL MATCH FOR TRANSPORTATION GRANT PROJECTS.
SO LET'S MOVE ON TO SOME OF THE VISUAL EXAMPLES OF THESE.
AND HERE WE'RE LOOKING AT THE UNIT RATE REIMBURSEMENT, WHICH IS THE 2312 ACTIVITIES I MENTIONED, UH, BEFORE.
WE MOSTLY USE IN-HOUSE CREWS TO ACCOMPLISH THIS.
AND THIS IS ROUGHLY ABOUT 70 TO $75 MILLION ON AN ANNUAL BASIS AS A REIMBURSEMENT FROM METRO.
SOME OF THE ACTIVITIES INCLUDE, UH, PAYMENT MAINTENANCE SUCH AS POTHOLES, SKIN PATCHES, MILL AND OVERLAY PANEL REPLACEMENTS, STRIPINGS AND MARKINGS, BRIDGE MAINTENANCE, TRAFFIC SIGNAL MAINTENANCE, ITS, AND TRAFFIC ENGINEERING.
HERE'S AN EXAMPLE OF THE IN-HOUSE MILL AND OVERLAY.
HERE'S AN EXAMPLE OF THE SIGNAL MAINTENANCE UNDER THE UNIT RATE REIMBURSEMENT.
AND THEN WE HAVE AN EXAMPLE OF THE PAVEMENT MARKINGS.
THEN WE HAVE THE MAYOR'S STREET REHABILITATION INITIATIVE, WHICH
[00:45:01]
IS ROUGHLY ABOUT 50 TO $60 MILLION ANNUAL ANNUALLY THROUGH THE METRO GMP, WITH SOME ADDITIONAL FUNDING THROUGH THE DEDICATED DRAINAGE AND STREET RENEWAL FUND AT VALOREM TAX.THE EXAMPLE THAT WE'RE SEEING HERE IS ENNA STREET REHABILITATION, RIGHT IN FRONT OF TEXAS SOUTHERN UNIVERSITY.
HERE'S ANOTHER EXAMPLE, REHABILITATION PROJECT.
THIS IS WASHINGTON AVENUE ROUNDABOUT.
THIS ALSO INCLUDES METRO, UH, GMP FUNDING THROUGH COUNCIL DISTRICT FOR SERVICE FUNDS, UH, PARTICULARLY DISTRICT C.
HERE'S ANOTHER EXAMPLE OF THE COUNCIL DISTRICT SERVICE FUNDS.
THIS IS A SIDEWALK RECONSTRUCTION AT LAWNDALE STREET.
AND HERE'S AN EXAMPLE OF A PARTNERSHIP PROJECT, WHICH IS NORTH PARK DRIVE WITH THE LAKE HOUSTON REDEVELOPMENT AUTHORITY, ALSO KNOWN AS TS 10, THE CONSTRUCTION JUST RECENTLY BEGAN.
AND HERE'S AN EXAMPLE OF A TIGER GRANT, WHICH IS THE TRANSPORTATION INVESTMENT GENERATING ECONOMIC RECOVERY, WHICH PROVIDES FUNDING FOR SUCH THINGS AS INTELLIGENT TRANSPORTATION SYSTEMS ITS THAT INCLUDES DYNAMIC MESSAGE SIGNS SUCH AS THESE.
THIS IS ANOTHER UPCOMING GRANT PROJECT, THE HIGHWAY SAFETY IMPROVEMENT PROGRAM, OR HSIP.
IT'S A $30 MILLION PROGRAM OF CRITICAL PROJECTS OF THE CITY'S HIGH INJURY NETWORK.
IT WAS IDENTIFIED THROUGH OUR VISION ZERO PLANNING EFFORTS AND IN COORDINATION WITH METROT MANAGEMENT DISTRICTS AND OTHER PARTNERS WHERE THE CITY RESPONSIBLE FOR THE COST SHARE WILL COME FROM THE METRO GMP AGREEMENT.
SO SIMILAR PROJECTS WILL BE IMPLEMENTED UNDER HSIP.
THIS IS, THIS EXAMPLE IS ILLUSTRATIVE.
WE'LL MOVE ON TO THE UPDATED GMP AGREEMENT AND HIGHLIGHT A FEW POINTS ON THOSE.
AS GEORGE HAD MENTIONED PREVIOUSLY, THE TERM EXTENSION ON THIS AGREEMENT IS, IS THROUGH 2040 AS APPROVED BY VOTERS IN THE 2019 METRO NEXT BALLOT MEASURE, THE PREVIOUS 2012 VOTER AUTHORIZATION FOR GMP RAN THROUGH 2025.
THIS WILL INCREASE, UH, THE INCREASE THE AREA WIDE ALLOCATION, FOUR TO 5 MILLION SUPPORTS, METRO DELIVERED REGIONAL PROGRAMS AND MORTIS MOTORIST ASSISTANCE IN OUR HOV LANES, HOUSTON TRANS STAR.
AND WE'RE ALSO LOOKING INTO BIKE SHARING.
THIS WILL ALSO PROVIDE GREATER COORDINATION OPPORTUNITY TO ALIGN TRANSPORTATION PRIORITIES EACH AND EVERY SINGLE YEAR.
AND JUST SOME GENERAL ADMINISTRATIVE UPDATES, SOME LANGUAGE CLEANUP TO SIMPLIFY PROCESSES AND ADD SOME ADDITIONAL FLEXIBILITY.
PLEASE NOTE THAT NO MATERIAL CHANGES TO HOW THE FUNDING IS ALLOCATED BETWEEN THE PARTIES OR THE PURPOSES TO WHICH IT CAN BE USED.
AND THAT CONCLUDES OUR PRESENTATION.
THANK YOU BOTH FOR YOUR PRESENTATION.
WE'LL NOW GO INTO COUNCIL MEMBER QUESTIONS.
FIRST IN THE QUEUE IS COUNCIL MEMBER SALLY ALCORN.
AND THANKS FOR THE PRESENTATION.
I JUST WANNA, I'M, I'M JUST LOOKING AT THE NUMBERS ON, ON SLIDE EIGHT, YOU'VE GOT THAT BASE ALLOCATION AMOUNT, WHICH LOOKS LIKE IT'S ABOUT A HUNDRED MILLION OR GIVE OR TAKE.
I MEAN, IT'S UNDER 500, KIND OF DOWN TOWARDS THE, RIGHT, RIGHT.
SO THAT, AND THAT STRETCHES ALL THE WAY TO 2040.
THEN YOU WENT INTO YOUR COMPLICATED, UH, CALCULATION.
'CAUSE I WE'RE NOT GETTING A HUNDRED MILLION A YEAR, MUCH LESS, MORE OF A GAP.
WHEN I LOOK AT OUR BUDGET, SAMIR, MAYBE I'M LOOKING AT THE WRONG CATEGORY.
WHEN I LOOK AT THE D-D-S-R-F REVENUES FOR METRO FROM METRO, IT'S MORE LIKE, THIS YEAR WAS NOT IN 90, I MEAN, IN 24 IT WAS 92.
SO CAN YOU EXPLAIN THAT DISCREPANCY? SO THE, UH, THE ALLOCATION, UH, IT IS JUST THAT AN ALLOCATION AND THE WAY THAT WE FUND, UH, IS FROM, UH, EITHER WE REIMBURSE ACTIVITY THAT HAS OCCURRED AND OR THERE IS A CERTAIN AMOUNT OF PROGRAMS THAT THERE IS AN ADVANCED PAYMENT.
SO IF METRO DOESN'T PAY THOSE, THE ALLOCATION STILL STANDS.
AND WHAT WE HAVE IS WE KEEP IT IN CARRYOVER.
SO, SO FOR EXAMPLE, UM, IN 2022, YOU KNOW, THE ALLOCATION WAS 130 MILLION, BUT POSSIBLY THE CITY THAT FORWARDED INVOICES THAT WEREN'T UP TO THAT AMOUNT.
SO WE KEEP THE AMOUNT READY TO GO.
SO THERE'S AL IT'S ALWAYS AVAILABLE.
SO, SO THAT AMOUNT THAT THAT SHOWS UP IN OUR BUDGET IS BASED ON SAMIR, WHAT OUR REIMBURSEMENT, WHAT WE'VE ASKED FOR.
AND, AND KEEP IN MIND THIS IS FOR OM EXPENSES
[00:50:01]
AS CIP IS AN ADDITION.THE CAPITAL PROJECT FUNDING IS AN ADDITION.
SO WHAT WE'RE LOOKING AT HERE IS JUST THE OPERATIONS AND MAINTENANCE REIMBURSEMENT THAT WE GET FROM METRO BASED ON THE WORK THAT WE'VE DONE FOR THAT PARTICULAR YEAR.
I GUESS I'M HAVING TROUBLE MATCHING UP THE, AND THEN SOME OF YOUR NUMBERS THAT YOU SAID, YOU SAID ON 70 TO $75 MILLION FOR THE, UH, UNIT REIMBURSEMENT, 50 TO $60 MILLION IN THE, IN THE, UM, THE REHAB IN THAT STREET REHAB, YOU DIDN'T REALLY GIVE AN AMOUNT FOR THE, THE GRANTS AND OTHERS, BUT IT, IT BASICALLY ADDS UP TO MORE THAN WHAT I'M SEEING BUDGETED.
AND MAYBE SOME GOES IN, I MEAN, I'M JUST LOOKING AT WHAT THE REVENUES ARE FROM METRO IN THE BUDGET AND, AND MAYBE I'M MIXING APPLES AND ORANGES OR SOMETHING.
BUT, BUT WHEN I SEE THE METRO REVENUE COME IN, IN THE D-D-S-R-F, IT'S IN THE LAST COUPLE YEARS, 92 OR 84, AND I GET YOUR EXPLANATION, IT'S JUST KIND OF WHAT WE NEED.
AND THERE'S, THEY'RE STILL HOLDING SOME BACK.
SO MAYBE NEXT YEAR IT'S 150 OR SOMETHING.
'CAUSE WE HAVEN'T TAKEN AS MUCH.
BUT THEN WHAT YOU JUST SAID SOMETHING ABOUT THE CAPITAL BUDGET KIND OF CONFUSED ME.
WE WE'RE, WE'RE HAPPY TO TOUCH BASE WITH YOU A LITTLE BIT AFTER THIS IF YOU'D LIKE.
UM, BECAUSE THERE IS A COUPLE OF DIFFERENT PORTIONS TO IT.
LIKE I SAID, THERE'S THE O AND M PORTION THAT'S A REIMBURSEMENT BASIS.
AND THEN THERE'S ALSO A CAPITAL, UH, PORTION TO IT AS WELL THAT KIND OF, MAYBE THAT'S WHAT YOU'RE LOOKING AT AND WE NEED TO CLARIFY EXACTLY THE NUMBERS THAT YOU'RE LOOKING AT.
SO WE CAN GET YOU THE RIGHT ANSWER ON THAT.
UM, GENTLEMEN, PICKING UP ON WHAT COUNCIL MEMBER ALCORN JUST SAID, IF YOU COULD GO MAYBE TO SLIDE 10 OR 11 WITH THE ABOVE, THE LINE BELOW THE LINE.
UH, I'M GONNA HAVE TO SCHEDULE, I THINK A SIMILAR MEETING BECAUSE IT'S, UM, AND MAYBE THIS, THIS JUST MAY BE MY DAY THAT I'M NOT GETTING IT.
I UNDERSTAND SOMETHING COMES OFF THE TOP, SOMETHING'S GOTTA GIVE ON THE BOTTOM.
UM, I GUESS MY QUESTION IS REALLY ABOUT WHO DECIDES THAT, YOU KNOW, IS WHAT IS THE DISCRETIONARY NATURE OF DECISION MAKING ON THIS? IS THERE, IS THAT ARBITRARY OR DOES IT E EBB AND FLOW? AND IF THAT'S THE QUESTION I HAVE ON 10 AND 11, I WANT TO GET TO PAGE 13 WHERE THE CHART SHOWS BUILD HOUSTON FORWARD.
YET, OTHER THAN THE FACT THAT I THINK YOU MENTIONED THE D-D-S-R-F OUT LOUD, I DON'T SEE THAT.
OR MAYBE, UM, MISSING SOMETHING.
WHAT IS THE D-D-S-R-F OR WHAT DID YOU MENTION THAT, WHY DON'T WE START THERE AND THEN IF YOU COULD WORK BACK TO THE DISCRETIONARY NATURE OR WHO DECIDES SURE.
I CAN TACKLE THAT QUESTION ON THE DDSR.
SO THE, WHAT YOU SEE HERE IS WHAT, THESE ARE THE FOUR FUNDING SOURCES THAT MAKE UP THE DEDICATED DRAINAGE AND STRAIGHT RENEWAL FUND.
AND THE FOCUS FOR TODAY'S DISCUSSION WAS ONE OF THE SOURCES, WHICH IS THE THIRD PARTY FUNDS THAT'S SORT OF OUTLINED BY ORANGE ON THE LEFT RIGHT HERE.
THAT'S FROM METRO AND SOME OF THE, UH, FUNDING THAT WE ALSO GET FROM TXDOT.
AND SO WE'RE FOCUSING ON THE AGREEMENT THAT WE HAVE METRO PARTICULARLY, THERE ARE OTHER THINGS THAT WE GET FOR, UH, UH, STRAIGHTENED DRAINAGE, INCLUDING THE ADVER AND TAXES, DRAINAGE, UTILITY CHARGE, AND DEVELOPER IMPACT FEES.
BUT THIS IS JUST FOCUSING ON THE METRO FUNDING ASPECT OF IT.
NOW GETTING BACK TO SLIDE 10 OR 11, YOUR CHOICE, UM, THE FUNDING ALLOCATION AND THEN THE AGREEMENT AT, THE ONLY THING THAT'S DIFFERENT IN THE SLIDE THAT I CAN PUT MY EYES ON IS THE 4 MILLION GOING UP TO 5 MILLION PLUS SALES TAX GROWTH.
SO IS THAT WHAT THE WHOLE PRESENTATION IS ABOUT? IS THAT DELTA OF 1 MILLION? IT'S THE EXTENSION OF THE, OF THE AGREEMENT TO 2040.
UH, AND THEN THAT, THAT AMOUNT ABOVE THE LINE, UH, INCREASING FROM 4 BILLION TO 5 MILLION.
UM, BUT, BUT I COULD ADDRESS THE QUESTION THAT YOU ASKED EARLIER ABOUT, AND, AND THAT WAS THE ATTEMPT OF JUST GOING THROUGH ALL THIS HISTORY IS WHAT YOU'RE SEEING, YOU KNOW, ALL THE WAY BACK, WHETHER IT WAS THIS PROGRAM OR THAT PROGRAM, YOU KNOW, THERE CAME TO BE A HISTORICAL PRECEDENT OF HOW THE DIFFERENT ALLOCATIONS THAT THE DIFFERENT PARTNERS WERE GETTING.
SO IT, UH, HISTORICALLY HAS, HAS BECOME A TYPE OF TARGET THAT HAS BEEN, EVERY TIME THESE AGREEMENTS HAVE BEEN NEGOTIATED, HAS, HAS BEEN, UH, THE MOST AGREEABLE.
SO WITH THAT SAID, I MEAN OF, OF THE, OF THE AMOUNT THAT GOES IN THE GMP ENVELOPE, UH, THE CITY OF HOUSTON GETS 68% OF THAT.
SO IF SOMETHING HAPPENS OFF THE TOP, THAT CHANGES THAT WE ADJUST THOSE BOTTOM BELOW THE LINE PERCENTAGES TO KIND OF REALLY TARGET TO THAT PERCENT.
SO THAT NUMBER, YOU SAID 68%? YEAH, THAT'S THE, THE HOW COME WHERE DO I SEE 68 ON ANY SLIDE? IT'S NOT ON THE, UH, ON THE, ANY PRESENTATION HERE, BUT, OKAY.
SO THAT GETS BACK TO THE POINT THAT THIS SEEMS ARBITRARY, I'M NOT GONNA SAY CAPRICIOUS, BUT THAT THERE IS SOME DISCRETIONARY NATURE OF THINGS AT WHO'S, YOU MENTIONED THE NEGOTIATION.
[00:55:01]
WELL, THERE WAS AN, THE LAST AGREEMENT WAS FOR THE 2012 REFERENDUM, UH, THAT OCCURRED, I BELIEVE THAT YEAH.NEGOTIATION TOOK PLACE AROUND THEN.
AND SO THAT BRINGS US INTO WHERE WE ARE NOW, IF THAT'S THE CURRENT AGREEMENT THAT WE'RE OPERATING UNDER, IT EXPIRES IN 2025.
I'M GOING TO YIELD TO THE CHAIR.
I THINK YOU'RE ASKING EXCELLENT QUESTIONS, AND I THINK WE'RE ON THE, ON THE SAME PAGE.
UH, THE DISCRETIONARY NATURE OF WHO'S MAKING THE DECISIONS, WHO'S AT THE NEGOTIATING TABLE? UM, YOU MENTIONED NEXT WEEK OR THE WEEK AFTER, WE MAY BE GETTING, UM, SOME LANGUAGE TO VOTE ON AT COUNCIL, BUT NONE OF THE MATERIAL CHANGES WILL, WILL BE APPLICABLE TO WHAT WE'RE DISCUSSING.
IS THAT POSSIBLE FOR MATERIAL CHANGES TO COME TO THIS BODY? LIKE WHO'S MAKING THE DECISIONS ON HOW DO WE GET TO THESE FIGURES? ARE THESE VOTER APPROVED? ARE THESE BETWEEN THE ADMINISTRATIONS AND METRO? LIKE HOW ARE WE GETTING TO THESE FIGURES? UH, SO THE, THE VOTER APPROVAL ITEM IS, IS REALLY THE FUNDING ENVELOPE.
AND SO WITHIN THAT FUNDING ENVELOPE, THERE'S AGREEMENTS BETWEEN EACH OF THE ENTITIES.
UM, AND, AND THAT'S WHAT THIS, UH, UH, VERY COMPLICATED LOOKING FLOW CHART IS, IS, IS, UH, REFLECTING IS, UH, AND IT, AND IT IS AN ITERATION, RIGHT? THIS IS AN EVOLUTION.
THERE WAS ACTIVITIES THAT TOOK PLACE FOR ONE AGREEMENT AND THEN THEY'RE STILL GOING.
BUT, UH, THE CONVERSATIONS HAVE BEEN TO KEEP THOSE ABOVE THE LINE.
THEY GET FIRST
UH, THOSE WOULD BE DISCUSSIONS BETWEEN ULTIMATELY ELECTED OFFICIALS AND THE METRO BOARD, THE CITY COUNCIL OR THE ADMINISTRATION, LIKE THE DEPARTMENTS.
I, I, I COULDN'T, UH, I, I'M NOT PRIVY TO THOSE DISCUSSIONS OR HAVE NOT BEEN IN THE PAST AND I, AND I THINK THAT WHAT WE'RE GETTING, THAT DOESN'T COME HERE, THAT DOESN'T COME HERE, UH, NOT TO MY RECOLLECTION AT LEAST.
IT PERHAPS IT DOES IN A PACKAGE OF GOODS, BUT I THINK WHAT THE CHAIR AND I ARE REALLY WANTING TO HAVE ANSWERED IS HOW DO WE GET TO THAT NUMBER? AND, YOU KNOW, I THINK YOU'RE STRUGGLING TO ANSWER IT.
PERHAPS YOU DON'T, YOU DON'T HAVE THE ANSWER, BUT WE'RE WONDERING, WHAT I DO HAVE IS HISTORICAL AMOUNTS.
SO WE CAN GO ALL THE WAY BACK, YOU'RE SAYING AND SAY THAT'S, WELL, THIS PERCENTAGE IS, AND, UH, HISTORY IS HELPFUL.
WE GET, AND IT ESTABLISHES PRECEDENT AS YOU SAID, AND THEN WE GET TO NOW WHERE WE'RE TRYING, AMONG OTHER THINGS AT THE END OF THIS ADMINISTRATION TO UNDERSTAND HOW FINANCIAL POLICIES ARE ARRIVED AT.
AND SO I SEE MR. WARDLOW COMING UP.
LEMME ASK DAVID TO STEP IN REALLY QUICK.
DAVID WARDLOW, ASSISTANT DIRECTOR WITH HOUSTON PUBLIC WORKS, AND I APPRECIATE THE CONVERSATION TODAY.
IT'S REALLY IMPORTANT, UM, THAT WE KIND OF TALK THROUGH THIS AND MAKE SURE YOU ALL ARE COMFORTABLE WITH HOW THIS WORKS.
IT'S BEEN 10 YEARS RIGHT SINCE THIS AGREEMENT WAS LAST TOUCHED.
SO IT MAKES SENSE THAT YOU'RE ASKING QUESTIONS ABOUT SOMETHING YOU HAVE NOT SEEN.
SO JUST DELAY THE BASIC GROUNDWORK HERE.
THIS IS ABOUT THE OVERALL ALLOCATION OF SALES TAX TO METRO AND THE PARTIES INVOLVED IN SUPPORTING METRO.
SO I JUST WANT TO KIND OF HIGHLIGHT FOR EVERYBODY, THIS IS WHAT THE PARTIES COLLECTIVELY HAVE BEEN COMFORTABLE WITH ON THESE REVENUES BEING SHARED FOR THE COMMON PURPOSE OF PROVIDING TRANSPORTATION SERVICES.
UM, SO THAT'S JUST KIND OF THE VERY BASIC KIND OF GROUNDWORK I WANT TO START FROM.
YOU'RE, UH, YOU'RE NODDING VIGOROUSLY BEHIND THE SPEAKERS EARLIER.
DEMONSTRATED THE IMPORTANCE OF THIS.
SO YEAH, SO HAPPY TO HAVE INDIVIDUAL CONVERSATIONS WITH YOU ABOUT ANY SPECIFIC QUESTIONS YOU HAVE.
UM, OBVIOUSLY EACH PARTY WOULD BE INTERESTED IN RECEIVING MORE.
I THINK THAT'S A NATURAL, UH, UNDERSTANDING.
UM, SO IF YOU HAVE QUESTIONS ABOUT THAT, WE CAN KIND OF GO THROUGH THAT.
UH, MR. TZ KIND OF HIGHLIGHTED HOW MUCH THE CITY DOES RECEIVE THROUGH THIS AGREEMENT.
AGAIN, NOTE, MOST OF THE INVESTMENT THAT METRO MAKES WITH THE REMAINDER OF THE SALES TAX PROVIDES TRANSPORTATION SERVICES PRIMARILY WITHIN THE CITY OF HOUSTON, BUT ALSO IN THOSE OTHER JURISDICTIONS.
SO IT'S, IT IS A VERY MULTI-LAYERED, COMPLICATED THING EVERYBODY HAS WORKED TOWARDS OVER THE PAST FOUR DECADES.
WELL, JUST ONE REALLY BASIC THING, AND THEN I'LL YIELD MY TIME IS REALLY THE, UM, THE QUESTION ABOUT HOW THAT, HOW AND WHERE THAT TAKES PLACE.
BECAUSE I THINK WE GET, WE GET TO VOTE ON THINGS OCCASIONALLY THAT HAVE TO DO WITH PROJECTS, CAPITAL PROJECTS AND BUDGETS.
UM, BUT I DON'T THINK ANY OF US REALLY HAVE A PICTURE OF WHAT THAT LOOKS LIKE, WHERE IT'S HAPPENING, WHEN IT'S HAPPENING, WHO'S IN THE ROOM, AND, UH, HOW NEGOTIATIONS TAKE PLACE.
YEAH, I CAN IMAGINE A LOT OF THINGS, BUT I THINK I'D RATHER KNOW WHAT THE REAL DEAL IS.
UH, NONE OF US, WERE ACTUALLY THERE IN THE ROOM WHEN THESE, WHEN THESE ITEMS WERE
[01:00:01]
ADDRESSED MANY, MANY, MANY YEARS AGO.UH, I WILL JUST SAY THAT AGAIN.
I THINK WHAT WE'RE BRINGING TO YOU NOW REFLECTS A STABILITY IN THE PROGRAM THAT EVERYBODY IS GETTING KIND OF COMFORTABLE WITH.
AND I APPRECIATE THE HISTORY TOO.
SO I, I ALL YOU'RE DOING IS I THINK, PRODUCTIVE.
SO THANK YOU STAFF FROM COUNCIL MEMBER EVAN SHABBAT'S OFFICE.
UH, MAY I ASK AFTER THIS MEETING FOR DISCUSSION ABOUT THE METRO PROJECT NEAR TEXAS SOUTHERN? SURE, ABSOLUTELY.
STAFF FROM COUNCIL MEMBER MICHAEL KNOX'S OFFICE.
UM, DOESN'T THE MAYOR APPOINT A NUMBER OF THE METRO BOARD MEMBERS? HOW MANY? FIVE OF THE NINE.
WELL, THE MAYOR APPOINTS HIM THEN.
COUNCIL, COUNCIL MEMBER AMY PECK.
UM, AND I ALSO WOULD LIKE MORE INFORMATION TOO ABOUT HOW THIS IS ALL DECIDED.
BUT MY QUESTION IS, IF WE ARE PUTTING MONEY IN FROM LIKE OPERATING FUNDS, FOR EXAMPLE, INTO SOMETHING THAT'S ALSO A METRO PROJECT THAT WE DO SOMETIMES, LIKE WITH COUNCIL DISTRICT SERVICE FUNDS, IS THAT CHANGING ANYTHING IN THE ABOVE THE LINE THAT THEN WOULD RESULT IN ANY CHANGES IN HOW MUCH WE'RE RECEIVING BELOW THE LINE? LIKE IS OUR SUPPLEMENTAL FUNDING CHANGING ANYTHING? UH, THE, THE ONLY ABOVE THE LINE IS THE, UM, WHAT'S TERMS SPECIAL CITY PROJECTS, WHICH IS KIND OF ASPHALT REPAIR.
UH, THAT $10 MILLION THERE, AND THAT JUST REFLECT, REFLECTS THAT THAT DISCUSSION HAPPENED IN AN EARLIER AGREEMENT AND IT KIND OF HAS FIRST BUY AT THE APPLE, IF YOU WILL.
AND THEN BELOW THAT IT'S, IT'S AGNOSTIC.
IT'S JUST A PERCENTAGE OF FUNDING.
SO HOW THAT GETS SPLIT WITHIN THE CITY'S OPERATIONS IS IT'S NOT SOMETHING THAT, UH, THAT METRO HAS REALLY INPUT ON SO MUCH.
SO IF WE'RE USING OUR OPERATING FUNDS TO SUPPLEMENT LIKE A STREET OVERLAY PROJECT OR SOMETHING LIKE THAT, IT DOESN'T CHANGE.
IT DOESN'T, IT DOESN'T CHANGE THIS, UH, THE FUNDING SCHEME.
YOU KNOW WHAT, WHAT THE, THE CRITERIA IS IT, IT HAS TO BE AN ELIGIBLE ACTIVITY UNDER TEXAS TRANSPORTATION CODE 4 51.
UH, THERE ARE NO OTHER QUESTIONS IN QUEUE FROM COUNSEL.
UH, WE WILL NOW MOVE INTO THE PUBLIC COMMENT PERIOD.
AS A REMINDER, AT OUR DEADLINE YESTERDAY, THERE WERE NO PUBLIC SPEAKERS THAT HAVE SIGNED UP ON OUR ONLINE FORUM.
HOWEVER, IF YOU WOULD LIKE TO SPEAK, THIS IS YOUR FINAL OPPORTUNITY.
IS THERE ANY FROM THE, ANYONE FROM THE PUBLIC WHO WOULD LIKE TO SPEAK? SEEING NONE.
UH, BEFORE WE ADJOURN, PLEASE MAKE NOTE THAT THE NEXT REGULARLY SCHEDULED BUDGET AND FISCAL AFFAIRS COMMITTEE MEETING WILL BE ON TUESDAY, OCTOBER 3RD AT 10:00 AM THERE'S NO BFA IN SEPTEMBER.
ALSO, EARLIER THIS YEAR, A BUDGET AMENDMENT WAS PASSED TO INCREASE THE VISIBILITY OF CITY AUDIT REPORTS.
AS A RESULT OF THAT AMENDMENT, THE CONTROLLER WILL BEGIN PRESENTING AUDIT REPORTS TO THE BFA COMMITTEE MEETINGS, STARTING WITH BUILDING SECURITY.
I'VE WORKED WITH THE CONTROLLER TO CREATE GUIDELINES FOR BRINGING AUDITS TO BFA WITHIN 45 DAYS OF AN AUDITS RELEASE.
NO MORE THAN THREE AUDITS WILL BE PRESENTED IN A SINGLE BFA AND THE CONTROLLER WILL REPORT ON THE SCOPE OF THE REPORT RELEASED.
IF THERE ARE NO OTHER COMMENTS OR QUESTIONS, THIS MEETING IS ADJOURNED.