[Budget and Fiscal Affairs on December 5, 2023]
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10:02 AM ON TUESDAY, DECEMBER 5TH, 2023.I'D LIKE TO WELCOME COUNCIL MEMBERS, STAFF, AND MEMBERS OF THE PUBLIC.
I AM THE CITY OF HOUSTON'S BUDGET AND FISCAL AFFAIRS COMMITTEE CHAIRMAN.
I'D LIKE TO ALSO WELCOME VICE CHAIR EDWARD POLLARD AND VICE MAYOR PRO TEM MARTHA CASTEX TATUM, ALSO JOINED BY COUNCIL MEMBER SALLY ALCORN, AND STAFF FROM DISTRICT A, DISTRICT B, DISTRICT C, DISTRICT D, DISTRICT H, POSITION ONE AT LARGE, POSITION TWO AT LARGE, POSITION FOUR AT LARGE, AND POSITION FIVE AT LARGE.
I'D LIKE TO CALL THIS MEETING TO ORDER AND TO WELCOME ALL COUNCIL MEMBERS.
IF THERE ARE ANY MEMBERS OF THE PUBLIC THAT WOULD LIKE TO PARTICIPATE IN THE PUBLIC COMMENT.
THERE IS A SIGNUP SHEET IN THE FRONT TABLE AT YOUR RIGHT, MY LEFT COUNCIL MEMBERS AND STAFF.
PLEASE HOLD YOUR QUESTIONS UNTIL THE END OF THE PRESENTATION.
WE'RE MAKING A SLIGHT CHANGE AS OUR FRIENDS FROM HOUSTON FIRST HAVE PREVIOUS COMMITMENTS THEY NEED TO GET TO.
SO WE'RE GONNA TAKE HOUSTON FIRST UP FIRST TO BE FOLLOWED BY THE CITY'S MONTHLY FINANCIAL REPORT AND UPCOMING FINANCIAL TRACTION, UH, TRANSACTIONS, AS WELL AS AUDIT PRESENTATIONS.
SO, I'D LIKE TO WELCOME CHAIRMAN OF THE BOARD, DAVID MINTZBERG, MR. PRESIDENT CEO, MICHAEL HECKMAN, AND CFO, MR. FRANK WILSON.
I'M GONNA, AND IF ANYONE, FRANK, IF YOU WANT TO SIT IN AND CHAIR, UM, COUNCILOR MICHELLE'S DESK, THAT WOULD BE FINE.
ACTUALLY, FRANK'S GONNA TAKE MY SEAT IN ABOUT 30 SECONDS, SO, OKAY.
MEMBERS OF COUNCIL, UH, THANK YOU FOR ACCOMMODATING US, ALLOWING ME TO, TO BE HERE FOR A FEW MINUTES, UH, UH, AND GO TO, TO ANOTHER, UH, MEETING AND APPOINTMENT.
I WANTED TO, UH, ESPECIALLY BE HERE AND THANK THE MEMBERS OF COUNCIL, UM, AND STAFF FOR ALL THE HELP AND SUPPORT THAT YOU HAVE PROVIDED TO HOUSTON.
AND IN PARTICULAR, UH, I WANT TO THANK YOUR CHAIRMAN, MAYOR PRO TEM, COUNCIL MEMBER DAVE MARTIN.
HE SERVED THERE CONTINUOUSLY SINCE I'VE BEEN CHAIR, WHICH IS NOW ALMOST EIGHT YEARS.
AND I WANT TO RECOGNIZE HIM FOR HIS EFFORTS, BEING NOT AFRAID TO QUESTION US FROM TIME TO TIME.
HE, UH, PREVIOUSLY COUNCIL MEMBER ROBINSON AND NOW COUNCIL MEMBER GALLEGOS, UH, DO AN OUTSTANDING JOB OF REPRESENTING CITY HALL ON OUR BOARD, ASKING TOUGH, UM, FAIR, UM, BUT TOUGH AND DEMANDING QUESTIONS OF EVERYTHING WE'RE DOING.
AND WE ARE BETTER AS AN ORGANIZATION FOR HAVING TWO MEMBERS OF CITY COUNCIL SERVE ON OUR BOARD AND SEE US DURING OUR DELIBERATIONS AND BEING A PART OF THE PROCESS.
AND I'M ESPECIALLY APPRECIATIVE TO DAVE, UH, FOR HIS SERVICE ON THE BOARD.
AND I, I WANTED TO BE HERE TO THANK HIM FOR THAT.
WELL, THANK YOU, MR. CHAIRMAN.
IT'S BEEN, UH, IT'S BEEN 11 YEARS OF FUN.
UM, YOU KNOW, WAY BACK WHEN UNDER, UH, MAYOR NIECE PARKER, UH, THE DECISION WAS MADE TO HAVE, UM, EX-OFFICIO MEMBERS OF CITY COUNCIL SERVE ON THE BOARD.
AND I THINK IT'S, IT'S BEEN A TREMENDOUS, TREMENDOUS ADVANTAGE BECAUSE IT GIVES US THE ABILITY TO INTERACT WITH OUR COUNCIL MEMBERS TO EXPLAIN THINGS.
THUS, THE BUDGET PROCESS HAS GOTTEN A LOT SMOOTHER.
UM, YOU KNOW, WE'VE BEEN THROUGH A LOT, CHAIRMAN, AND, UH, WE STARTED WITH HURRICANE HARVEY AND THE DEVASTATION TO OUR FACILITIES THAN WE WERE HIT BY THE PANDEMIC.
AND, UH, AS I EXIT STAGE, RIGHT, AND AS YOU EXIT STAGE, RIGHT, UH, TO USE SOME HOUSTON FIRST TERMS, IT'S BEEN A JOY.
I I BELIEVE WE LEAVE THIS ORGANIZATION IN BETTER SHAPE TODAY THAN WE INHERITED IT MANY YEARS AGO.
AND UNDER YOUR LEADERSHIP AND UNDER THE LEADERSHIP OF MICHAEL HECKMAN AS WELL, UH, WE ARE POSITIONED FOR BIG THINGS TO HAPPEN IN THE FUTURE.
I CAN'T WAIT TO SEE WHAT HAPPENS WITH THE INFUSION OF THE STATE DOLLARS ON THE EXPANSION OF THE CONVENTION CENTER AND SOME OF THE THINGS THAT WE HAVE THE ABILITY TO DO MOVING FORWARD, TO CREATE A BIGGER AND BETTER HOUSTON FIRST, UH, THAT WE CAN IMAGINE.
UH, I KNOW YOU HAD A BUSY SCHEDULE.
I KNOW YOU HAD SOMETHING PLANNED FOR, UH, TO GET OUTTA HERE.
YOU'VE DONE A YEOMAN'S JOB, YOU'VE DONE A TREMENDOUS JOB.
UH, WE'RE IN GREAT POSITION TODAY BECAUSE OF THE WORK OF YOU THREE GENTLEMEN ALONG WITH THE GREAT STAFF AT HOUSTON FIRST.
I'M, UH, I HAVE A TEAR IN MY EYE BECAUSE IT'S THE COOLEST THING I'VE EVER DONE.
I ALWAYS TELL PEOPLE WHEN THEY GET OPPORTUNITIES TO, TO SERVE ON THE SPORTS AUTHORITY, HOUSTON FIRST METRO, AND OTHER BOARDS LIKE THAT, TO REALLY LOOK CLOSELY AT HOUSTON FIRST, BECAUSE IT'S
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WHERE ALL THE COOL THINGS HAPPEN IN THE CITY.SO, THANKS FOR COMING TODAY, AND THANKS FOR, UH, UH, TAKING THE OPPORTUNITY TO SAY THOSE KIND WORDS.
SO, I, I WANNA JUST, UH, FOR ANOTHER 30 SECONDS, EXPAND ON THE COOL THINGS THAT WE DO.
SO, I, AGAIN, IT, IT'S SO IMPORTANT THAT COUNCIL KNOWS WHAT WE'RE DOING, SUPPORTS WHAT WE'RE DOING, UH, THAT IS SO VALUABLE TO US.
UM, BUT MANY TIMES THE PUBLIC SEES THAT, UH, OKAY, WE SECURED THE REPUBLICAN NATIONAL CONVENTION IN 2028.
WHAT YOU DON'T SEE, UM, IS HOW OFTEN WE ARE TALKING WITH EVERYBODY ELSE IN THE CITY ABOUT ALL THE THINGS THAT ARE GOING ON.
SO I THINK IT WAS LAST WEEK THAT, THAT, UM, MICHAEL AND I HAD LUNCH WITH THE CHAIR AND THE CEO OF THE HOUSTON BOTANIC GARDEN.
THAT'S JUST ONE SMALL EXAMPLE OF THEM REACHING OUT TO US AND US REACHING OUT TO THEM AND TALKING ABOUT HOW WE CAN BE HELPFUL AND SUPPORTIVE TO ONE OF THE WONDERFUL ORGANIZATIONS IN THE CITY.
UH, IN THE LAST FEW WEEKS, I'VE HAD THE OPPORTUNITY TO VISIT AT LENGTH WITH THE CHAIR OF, UH, MILLER OUTDOOR THEATER AND TALK TO THE NEW INCOMING CEO OF, OF MILLER.
UM, UH, COUNCILMAN, WELL, ALCORN AND I REGULARLY INSPECT TOGETHER MEMORIAL PARK.
OKAY? OH, YOU, WELL, THAT'S, I MISSED HER ONLY BECAUSE SHE WENT BY ME AT SUCH A, A BLAZING PACE.
BUT I'M, I TALK, UH, VERY FREQUENTLY WITH THE EXECUTIVE DIRECTOR AND, AND THE FOLKS AT MEMORIAL PARK AND ALL THE PARKS.
AND IT'S OUR JOB, UH, TO PROMOTE THE CITY OF HOUSTON IN EVERY WHICH WAY POSSIBLE.
AND SO YOU SEE THAT IN, UH, UH, BIG CONVENTIONS THAT GET ANNOUNCED.
UH, AND I HOPE THAT AS WE GO THROUGH OUR BUDGET, YOU'LL SEE THAT WE DO THAT IN SO MANY WAYS.
AND IT'S REALLY A TESTIMONY TO THE PHENOMENAL STAFF.
MICHAEL IS OUR LEADER, UH, AND HE'D BE THE FIRST TO SAY, AND JOIN ME, THAT IT'S A PHENOMENAL STAFF BEHIND US THAT, THAT MAKE IT ALL HAPPEN.
SO, UH, MR. CHAIR, COUNCIL MEMBERS, THANK YOU FOR YOUR TIME, AND THANK YOU FOR YOUR ATTENTION TO US THIS MORNING.
DAVE, UH, DAVID, THANK YOU FOR BEING HERE THIS MORNING.
I WANT TO, I WANT TO ECHO, UH, HIS COMMENTS, NOT ONLY ABOUT OUR TEAM, BUT ABOUT THE ENGAGEMENT THAT WE HAVE, UH, FROM ALL OF OUR BOARD OF DIRECTORS, UH, BUT PARTICULARLY OUR CHAIR, UH, ALMOST EIGHT YEARS NOW, SERVING AS CHAIR.
UM, AND, AND DAVID, THANK YOU FOR YOUR, FOR YOUR SERVICE.
AND, UH, AND MR. CHAIR ALSO, UM, THANK YOU FOR ALL OF YOUR ENGAGEMENT THAT YOU CONSISTENTLY HAVE WITH THIS.
AND, AND, UH, I WILL TAKE IT AS A HUGE WIN, UH, FOR YOU TO SAY THAT WE DO THE COOL STUFF.
SO, UH, WE, WE, WITH THAT, WE WILL GO AHEAD AND, UH, AND GET STARTED.
UM, SO JUST, JUST TO START, WE HAVE HAD AN OUTSTANDING YEAR THIS YEAR.
WHEN I SAY WE, I MEAN THE HOUSTON VISITOR ECONOMY AND THE HOSPITALITY SECTOR.
UH, WE WILL, UH, GENERATE A RECORD AMOUNT OF HOTEL REVENUE TO THIS MARKET, THE HIGHEST THAT IT HAS EVER BEEN IN HOUSTON'S HISTORY, WHICH IS AN ENORMOUS WIN.
UH, THE PREVIOUS RECORD OF HOT TAX COLLECTED WAS AROUND $91 MILLION.
WE WILL FINISH THIS YEAR WITH $105 MILLION.
AND THAT IS JUST AN OUTFLOW, UH, OF THE VISITORS THAT WE'VE HAD HERE, THE RATES THAT WE'VE PAID, AND, AND BEING A VERY HEALTHY, UH, VISITOR ECONOMY THAT WE'VE HAD.
WE OPENED LYNN WHITE SQUARE FOR THE PERFORMING ARTS, UM, IN THE THEATER DISTRICT, WHICH WAS A YEARS LONG, UM, UM, EFFORT, UH, REALLY A MANDATE FROM FROM MAYOR TURNER TO SAY, WE NEED TO DO SOMETHING IN THAT, IN THAT PART OF DOWNTOWN.
UH, AND A LOT OF PEOPLE DESERVE A LOT OF CREDIT FOR ULTIMATELY BEING ABLE TO MAKE THAT HAPPEN FROM A BOOKING CONVENTION STANDPOINT.
DAVID MENTIONED IT, UM, UH, ABOUT SOME OF THE BIG ONES THAT WE HAD FROM BOOKING THE REPUBLICAN NATIONAL CONVENTION IN 2028.
THAT'LL BE 50,000 ATTENDEES AND A, AND A, AND A GLOBAL, UM, UH, PERSPECTIVE THAT WILL BE BROUGHT FROM MEDIA AND EVERYTHING ELSE THAT WILL BE HERE IN HOUSTON.
UM, THIS YEAR WE BOOKED FOR NEXT YEAR A, A MAJOR OIL AND GAS, UH, INTERNATIONAL CONFERENCE CALLED GAS TECH.
UH, THEY'RE ALSO CONSIDERING US FOR A ROTATIONAL BASIS GOING FORWARD.
THAT WILL BE 14,000 INTERNATIONAL OIL AND GAS, UH, EXECUTIVES FROM, FROM ALL OVER THE WORLD.
THAT WILL BE HERE IN JUST AN ENORMOUS, UM, IMPACT.
WE'VE HAD MORE ME MEDIA FAMILIARIZATION, UH, TOURS THIS YEAR THAT WE HAVE TOURED PEOPLE AROUND HOUSTON, SHOWED THEM PLACES THAT ARE ALL OVER THIS DIVERSE COMMUNITY.
IT'S THE PLACES THAT, THAT, THAT JOURNALISTS WANNA WRITE ABOUT TO SAY, SHOW ME SOMETHING NEW.
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FAMILIARIZATION TOURS THAN EVER BEFORE.WE'RE BUDGETING AND PLANNING FOR 2024 TO EVEN EXCEED THAT NUMBER THAT WE HAVE HAD.
AND THEN OF COURSE, UM, EARLIER THIS YEAR, UH, WE WERE ABLE TO SUCCESSFULLY, UH, GET THE PASSAGE OF SENATE BILL 10 57, UM, IN AUSTIN, UM, UH, WHICH TRULY WILL BE GAME CHANGING LEGISLATION WITH, YOU KNOW, ROUGHLY $2 BILLION OF STATE FUNDING THAT WILL BE COMING BACK HERE TO HOUSTON, UH, TO COMPLETELY REIMAGINE OUR CONVENTION DISTRICT TO MAKE IT MORE, UM, UH, APPEALING, UH, TO OUR CONVENTIONEERS, UH, BUT ALSO TO HOUSTONIANS AND TO RECONNECT TO, TO THE EAST PART OF DOWNTOWN IN, IN CONJUNCTION WITH THE I 69, UH, I 45 PROJECT.
UH, BUT ALSO TO HELP SEED AN ENTERTAINMENT DISTRICT.
SO, CREATING A PRODUCT THAT WILL GET NATIONAL ATTENTION, UH, AND SOMETHING THAT WILL REALLY BE ABLE TO, TO HELP US MOVE FORWARD.
AND AS WE THINK ABOUT THAT VISITOR ECONOMY, IT GOES MUCH BIGGER THAN JUST HOTELS AND RESTAURANTS.
I WAS REMINDED THIS IN A VISIT THAT WE HAD, UH, JUST NOT THAT LONG AGO, UH, WITH COUNCIL MEMBER POLLARD AND TALKING ABOUT, YOU KNOW, THE SALES TAXES THAT ARE, THAT ARE CREATED, ALL THE OTHER ANCILLARY BENEFITS FROM VISITORS THAT COME, COME INTO TOWN, AND WHAT IT IS WITH THAT THEY LEAVE BEHIND, WHICH IS MUCH MORE THAN JUST IN JUST SPENDING IN, IN HOTELS.
AND THE THING THAT WE WAKE UP EVERY DAY UNDERSTANDING AT HOUSTON FIRST, IS THAT WE ARE IN A COMPETITIVE ENVIRONMENT.
UM, INDIVIDUAL LEISURE TRAVELERS, UH, CONVENTIONS.
THEY HAVE CHOICES OF WHERE TO GO.
SO WE ARE COMPETING ON A DOMESTIC BASIS.
WE ARE COMPETING ON AN INTERNATIONAL BASIS.
AND WE UNDERSTAND THAT IF WE ARE NOT MOVING THINGS FORWARD, IF WE ARE NOT POURING THE FUEL IN THAT ENGINE, THEN WE'RE GONNA BE MOVING BEHIND THE ATLANTAS, LOS ANGELES, MIAMI, YOU, YOU NAME IT, LONDON, MEXICO CITY.
THEY'RE ALL MOVING FORWARD AND INVESTING IN THEIR PRODUCT AND INVESTING IN THEIR PROMOTION, UH, MORE THAN EVER.
PART OF THAT WORK THAT WE DO ALSO IS, IS THROUGH OUR BRAND UNIFICATION.
MAYOR TURNER, SEVERAL YEARS AGO, ASKED US TO LEAD A BRAND UNIFICATION PROCESS, WHICH WE DID THAT WAS VERY INCLUSIVE ACROSS THIS COMMUNITY, AND REALLY WAS DATA DRIVEN.
UH, ALSO WORKING WITH PARTNERS ACROSS THIS CITY OF WHO IS TALKING ABOUT HOUSTON AND TELLING HOUSTON STORY.
IT'S BIGGER THAN JUST HOUSTON.
THERE ARE, THERE ARE MANY DIFFERENT ORGANIZATIONS AND COMPANIES AND THOSE ACROSS OUR, OUR COMMUNITY THAT ARE TELLING HOUSTON STORY.
BUT TO ENSURE THAT WE ARE GIVING THEM THE TOOLS AND THE MESSAGING THAT WE WERE ABLE TO COME UP WITH THE UNIFY HOUSTON'S BRAND ACROSS A MASSIVE CITY.
WE ALMOST HAVE AN EMBARRASSMENT OF RICHES IN THIS CITY.
UH, WE HAVE SO MANY DIFFERENT THINGS TO TALK ABOUT OUR INDUSTRIES THAT WE HAVE, OUR PEOPLE, OUR ATTRACTIONS, OUR HOTEL, THE THINGS THAT ARE TO DO HERE.
UH, BUT IT'S OUR JOB TO BE ABLE TO, TO MOVE THAT FORWARD, UH, IN THE BEST WAY POSSIBLE, TO BENEFIT AS MANY HOUSTONIANS AS WE CAN.
THAT IS OUR JOB, IS TO CREATE VALUE.
WHEN WE SUCCEED, JOBS ARE CREATED, JOBS ARE SUSTAINED, AND THAT'S WHAT WE THINK ABOUT EVERY SINGLE DAY.
THIS BUDGET AND THESE STRATEGIES GOING INTO 2024, I BELIEVE, BALANCES, UH, ARE NEED TO, UH, HAVE EVEN STRONGER AND WIDER PROMOTION OF HOUSTON AS A DESTINATION, WHILE ALSO INVESTING IN THE FACILITIES THAT WE'VE BEEN, UH, ENTRUSTED TO TAKE CARE OF ON BEHALF OF THE CITY OF HOUSTON.
AND I THINK THAT WHEN WE WALK THROUGH THAT, I THINK THAT, THAT YOU WILL SEE THAT.
SO, UH, WE'LL WALK THROUGH THE PRESENTATION.
FRANK AND I WILL, UM, AND THEN ANSWER ANY QUESTIONS THAT, UM, THAT ANYONE MAY HAVE.
UH, OUR FIRST SLIDE IS FOR OUR BOARD OR FOR ANYONE ELSE.
WE JUST LIKE TO RE REMIND FOLKS WHAT OUR MISSION IS.
WE'RE A VERY MISSION-DRIVEN ORGANIZATION, VERY, VERY FOCUSED ON WHAT WE'RE DOING.
AND THAT IS TO CREATE VALUE AND ENHANCE THE ECONOMIC PROSPERITY BY, BY PROMOTING THE HOUSTON REGION.
WE ALSO LOOK AT THINGS FROM A LONG-TERM PERSPECTIVE.
YOU KNOW, WE HAVE TO LOOK YEARS OUT INTO THE FUTURE OF WHAT WE ARE DOING, INITIATIVES, BUDGETING, ET CETERA.
AND, UH, TOGETHER WITH OUR BOARD, WE HAVE, WE HAVE ESTABLISHED THREE STRATEGIC PILLARS, TRANSFORMATIONAL LEADERSHIP, UH, DESTINATION DEVELOPMENT, AND THEN ENHANCING OUR, UM, UH, ASSET GROWTH AND REVENUE DIVERSIFICATION, SO THAT WE HAVE THE, THE FUNDING NECESSARY TO BE ABLE TO, TO ACHIEVE OUR MISSION.
IF THERE'S ANY MAJOR INITIATIVES THAT WE WANT TO, THAT WE WANNA UNDERTAKE, THEY HAVE TO TOUCH ONE OR MORE OF THESE STRATEGIC PILLARS FOR AS WE GO FORWARD.
WE ALSO, FROM A MANAGEMENT PERSPECTIVE, LOOK AT THINGS, UH, UH, AS TO HOW WE MANAGE OUR TEAM, KEEPING THEM VERY FOCUSED ON HOW IT IS THAT WE CREATE VALUE.
THERE'S REALLY FIVE OF THESE, AND THESE ARE THE SAME EVERY SINGLE YEAR.
BUT I LIKE TO REMIND OUR FOLKS IS OPERATIONAL EFFICIENCY.
WE HAVE TO BE VERY EFFICIENT IN THE WAY THAT WE OPERATE.
WE HAVE TO BE INNOVATIVE AS AN ORGANIZATION, AND WE HAVE TO ENHANCE OUR VISITOR EXPERIENCE, WHETHER IT'S AT OUR FACILITIES OR HELPING ENHANCE THAT ALL ACROSS THE DESTINATION TO MAKE SURE THAT WHEN PEOPLE COME TO HOUSTON, TEXAS, THEY HAVE HAD A GREAT EXPERIENCE AND THEY LEAVE AND DO BETTER ADVERTISING THAN WE CAN.
THE BEST ADVERTISING IS WORD OF MOUTH, PEOPLE TALKING ABOUT IT, PEOPLE POSTING ABOUT IT ON SOCIAL MEDIA, THAT THEY HAD A GREAT VISIT
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TO HOUSTON, GENERATING REVENUE.AND THEN FINALLY, AS I MENTIONED, OUR DESTINATION BRAND AND IMAGE ENHANCEMENT.
UM, SO THAT'S THE WAY THAT WE, THAT WE LOOK AT THINGS FROM A STRATEGIC PERSPECTIVE.
UH, AS I MENTIONED, WE HAD A VERY GOOD YEAR HERE IN 2023, AND OUR CFO, FRANK WILSON NOW IS GONNA GIVE A, A SNAPSHOT OF HOW WE'RE GONNA FINISH THE YEAR, UH, FOR 2023.
UH, MR. CHAIR AND COUNCIL MEMBERS, UM, I'M GONNA TOP TALK IN A VERY TOP LINE WAY, UH, FOR TOTAL REVENUE THIS YEAR.
WE'RE FORECASTING THAT WE'LL FINISH WITH ABOUT 225.7.
I THINK IT'S IMPORTANT TO KIND OF REMEMBER WHERE WE CAME FROM.
SO OUR ORGANIC REVENUE AS AN ORGANIZATION IN 2020 HAD FALLEN UNDER A HUNDRED MILLION DOLLARS.
SO FROM THAT VALLEY, WE'VE NOW REACHED, UH, TO, UH, A PEAK, UH, FROM A REVENUE PERSPECTIVE, FROM AN ORGANIC REVENUE GENERATION, FROM THE, THE ENTERPRISE, UH, FROM EXPENSES, WE'RE EXPECTING $225.2 MILLION OF EXPENSES, LEAVING ABOUT $600,000 OF REVENUE IN EXCESS OF EXPENSES.
AND WHILE, UH, WHAT WE'VE BEEN ABLE TO DO, UH, WITH THIS RECOVERY IS, INSTEAD OF USING FINANCING AND HAVING TO GO TO, UH, VARIABLE RATE DEBT SOURCES TO FINANCE OUR CAPITAL IMPROVEMENTS, WE, WE FUNDED OUR CAPEX OUT OF, UH, WHAT WE CALL PAYGO OR, UH, UH, THE REVENUES IN EXCESS OF OUR BUDGETED REVENUES.
AND SO WE WERE ABLE TO FUND ABOUT $20 MILLION WORTH OF OUR CAPEX, WHICH IS IMPORTANT BECAUSE WE MANAGE A LOT OF FACILITIES, AND THEY'RE OLD.
SO THAT'S A, THAT'S BEEN A BIG HELP.
AND THE STORY BEHIND THE NUMBERS, I'M, I'M JUST GONNA TALK TO BRIEFLY, IS THAT THIS YEAR WE HAD 29 CITYWIDE CONVENTION.
SO CITYWIDE CONVENTION IS A CONVENTION AND THEN HAS HOTEL ROOMS ON PEAK, THE PEAK NIGHT OF 1500 OR GREATER.
AND, UH, THROUGH NOVEMBER 1ST, WE, WE'VE HOSTED 142 EVENTS JUST AT THE GRB, NOT THE OTHER FACILITIES THAT WE MANAGE, BUT, UH, WE, WE, WE REGISTERED ATTENDANCE ABOUT 1.2 MILLION PEOPLE.
THAT INCLUDES TRADE SHOWS, CONVENTIONS, AND CONSUMER EVENTS.
SO I JUST WANTED TO TOUCH ON, THAT'S BEEN THE STORY, IS THE RECOVERY OF, UH, BUSINESS TRAVEL AND THE CONTINUATION OF LEISURE TRAVEL.
SO WITH THAT, I'LL TURN IT BACK TO MICHAEL.
UM, MOVING FORWARD TO THE NEXT SLIDE, YOU'LL SEE A VISUAL REPRESENTATION OF WHAT FRANK WAS MENTIONING, UM, THE YELLOW LINE, UH, INDICATING THIS YEAR'S, UH, HOTEL REVENUE TO THE MARKET.
AGAIN, WE'RE BACK WELL EXCEEDING EVEN WHERE WE WERE IN IN 2019.
UM, THE NEXT SLIDE WILL SHOW, UH, AGAIN, WHAT FRANK WAS MENTIONING IS TO WHERE WE WERE IN THE VALLEY BELOW A HUNDRED MILLION DOLLARS IN ORGANIC REVENUES IN 2020, UH, AND THAT WE LOOK TO HAVE, UH, AND, UH, BREAK ANOTHER RECORD OF REVENUES GOING INTO NEXT YEAR, WHICH WILL ALLOW US TO INVEST FOR A RETURN ON INVESTMENT IN ALL THE THINGS THAT WE ARE RESPONSIBLE FOR DOING, WHICH WE'LL TALK ABOUT, UH, IN OUR NEXT SLIDES.
UH, AS A REMINDER, UH, WE HAVE A VERY, VERY THOROUGH, UH, AND EXHAUSTIVE, UH, PROCESS AT, UH, THE, UH, THE HOUSTON FIRST BOARD.
THERE ARE COMMITTEES OF OUR BOARD THAT OVERSEE DIFFERENT, DIFFERENT SECTIONS OF OUR COMPANY, UH, AND GO THROUGH A DEEP DIVE WITH EACH ONE OF THOSE COMMITTEES, UM, ON OUR BUDGET IN THAT AREA, AND THE STRATEGIES IN THAT AREA.
OUR, OUR FINANCE COMMITTEE, UH, OF WHICH THE CHAIRMAN HERE, UH, SITS ON OUR FINANCE COMMITTEE, UM, IS, IS ABLE TO THEN, UH, LOOK OVER THE ENTIRE CORPORATION BUDGET, AND THEN IT FINALLY GOES TO THE BOARD OF DIRECTORS FOR ULTIMATE CONSIDERATION.
UH, I'M HAPPY TO SAY THAT ALL OF THOSE COMMITTEES AND THEN OUR BOARD OF DIRECTORS HAVE UNANIMOUSLY APPROVED THAT EACH, EACH STEP OF THE WAY FOR OUR, OUR PRIORITIES GOING INTO NEXT YEAR.
I WON'T GO THROUGH THESE IN ALL DETAIL.
I DO KNOW THAT YOU HAVE THEM IN FRONT OF YOU.
UH, STRENGTHENING HOUSTON'S BRAND AND ITS BRAND EQUITY ACROSS OUR COMMUNITY, AGAIN, IS VERY IMPORTANT AND WILL BE EVERY SINGLE YEAR.
THAT'S A YEARS LONG PROCESS TO BE ABLE TO GET THAT DONE.
UH, OUR LEISURE TRAVEL, WE SAW A BIG SPIKE DURING COVID, UH, UP SPIKE.
WE WANNA BE ABLE TO HOLD THOSE GAINS WHILE BUSINESS TRAVEL COMES BACK.
AND WHILE OUR CONVENTION BUSINESS CONTINUES TO, TO REALLY, REALLY SHINE, THAT WILL CONTINUE TO HELP US GROW OCCUPANCY AND GROW RATE, UM, ACROSS, UM, ACROSS THE CITY.
UH, WE'LL BE FACING A, A, A NEW SET OF CIRCUMSTANCES, BUT GOOD ONES AS WE HAVE THE, UM, UH, UH, THE REIMAGINATION OF THE CONVENTION DISTRICT, UH, DALLAS AND AUSTIN.
WE'LL BE VIRTUALLY TEARING DOWN THEIR CONVENTION CENTERS, UH, AND GETTING OUTTA THAT BUSINESS FOR AROUND FIVE YEARS.
THAT'S NOT THE ROUTE WE'RE GONNA GO.
WE WILL BE COMING BACK TO COUNCIL ENGAGEMENT OF THAT PROCESS NEXT YEAR AS WE, AS WE LOOK FORWARD TO, TO WHAT, UH, UH, WE MAY BE BUILDING AND, AND, AND THE WAY THAT WE MAY PHASE IT IN THE WAY THAT WE GO THROUGH THAT PROCESS.
BUT WE WANT OUR CLIENTS TO MAKE SURE THAT WE ARE OPEN FOR BUS.
THEY KNOW WE ARE OPEN FOR BUSINESS, UH, UNLIKE MAYBE SOME OF OUR COUNTERPARTS ACROSS TEXAS.
UM, UH, MEXICO CONTINUES TO BE A HIGH PRIORITY FOR US.
YOU'VE HEARD ME TOWN TALK ABOUT THAT YEAR AFTER YEAR.
THERE IS A LOT OF OPPORTUNITY DOWN THERE.
WE'RE SPENDING MORE RESOURCE, MORE BUDGET TO BE ABLE TO DO THAT.
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SUCCESSFUL, UH, MISSION TO MEXICO EARLIER THIS YEAR THAT WE HAD A, A, A BROAD, UH, SET OF, UH, ATTENDEES FROM ACROSS THE COMMUNITY AND BUSINESS COMMUNITY THAT PARTICIPATED THERE.UH, THAT, THAT COMMITMENT TO MEXICO WILL BE ONGOING.
70% OF OUR INTERNATIONAL TRAVELERS COM, UH, TO HOUSTON COME FROM MEXICO.
AND WE JUST WANT TO CONTINUE TO, TO DRIVE THAT FORWARD.
ON THE NEXT SLIDE, UH, WE'RE GONNA BE LOOKING AT INTERNATIONAL MARKETS IN A NEW WAY.
UH, CHINA WILL PROBABLY NOT COME BACK IN, IN, IN ANY TIME IN THE FORESEEABLE FUTURE, LIKE IT WAS PRE PANDEMIC.
BUT LOOKING AT, AT OTHER EMERGING MARKETS LIKE INDIA AND OTHER PLACES THAT HOUSTON AIRPORT SYSTEM IS OPENING UP ROUTES TO, UM, TV AND FILM.
SO TV AND FILM, UH, WE BELIEVE IS A GREAT OPPORTUNITY HERE IN HOUSTON.
UH, FORTUNATELY THE STATE OF TEXAS DID DOUBLE THEIR INCENTIVE, UH, AND MOST OF THAT, WINNING THOSE TYPES OF OPPORTUNITIES IS ABOUT THE INCENTIVE.
GEORGIA HAS A VERY STRONG ONE.
LOUISIANA IS A VERY STRONG WIN.
TEXAS HAS DOUBLED IT, BUT IT'S A VERY, VERY BIG STATE.
UH, WE WILL CONTINUE TO FOCUS ON THIS.
UH, WE'RE, UH, UH, ALLOCATING RESOURCE TO NOT JUST THE RETURN ON THE INVESTMENT, NOT JUST THE DOLLARS THAT ARE SPENT, BUT IF YOU LOOK AT WHAT WE DID A COUPLE YEARS AGO WITH TOP CHEF HOUSTON, THE AMOUNT OF EYEBALLS THAT WE GOT FOR THAT, THE AMOUNT OF IMPRESSIONS WAS PHENOMENAL.
SO WE WANT TO, WE WANNA MOVE THAT FORWARD.
WE'VE PUT A SMALL AMOUNT OF MONEY, $200,000 IN THIS BUDGET FOR A POTENTIAL LOCAL INCENTIVE TO SEE WHAT WE COULD DO TO, TO, TO LURE SOME PROJECTS HERE FOR THE HIGHEST RETURN POSSIBLE.
AND THEN FINALLY, DAVID MENTIONED IT EARLIER ABOUT OUR OUTSTANDING TEAM.
YOU CAN'T DO ANY OF THIS WITHOUT A GREAT TEAM.
AND SO WE WILL CONTINUE TO BE FOCUSING ON OUR, UH, CORPORATE CULTURE, UH, AND, AND MAKING SURE THAT PEOPLE FEEL ENTHUSIASTIC INCLUDED, UH, AND REALLY PASSIONATE ABOUT, UH, ABOUT PROMOTING HOUSTON.
SO THOSE, AS IT'S A HIGH VIEW, HIGH LEVEL VIEW OF OUR PRIORITIES GOING INTO NEXT YEAR.
AND FRANK'S GONNA TALK A LITTLE BIT ABOUT THE BUDGET THAT WE BUILT THAT WILL SUPPORT THAT.
UM, AS YOU'LL SEE ON THIS SLIDE, I THINK IT'S ONE BACK PLEASE.
UH, WE'RE BUDGETING FOR, UH, WE'RE PROPOSED.
UH, OUR PROPOSED BUDGET, UH, FOR NEXT YEAR IS TO, FOR 229.2 MILLION IN REVENUES.
IT'S ONLY ONE AND A HALF PERCENT MORE THAN WHAT WE'RE FORECASTING TO FINISH THIS YEAR WITH, UH, WITH EXPENSES OF 227.8, WHICH IS ABOUT A 1.2% GROWTH IN OUR EXPENSES.
AND THAT'LL LEAVE, UH, REVENUES IN EXCESS OF, UH, EXPENSES OF ABOUT 1.4 MILLION.
LIKE THIS YEAR, WE HAVE A CAPEX BUDGET OF 20.3 MILLION THAT WE'VE ASSUMED WE WOULD BORROW FOR, UH, USE OUR, UH, SUPPORT ANY NOTE PROGRAMS. THE ASSUMPTIONS ON THIS PAGE ARE REALLY IMPORTANT.
UH, UM, I WAS AN ECON MAJOR IN COLLEGE, AND, UH, MY FIRST JOB WAS WORKING AT A, A LARGE COMMERCIAL BANK WHERE I WAS IN THE WORK WITH THE CHIEF ECONOMIST.
SO I FOLLOW THE CHIEF ECONOMIST LOCALLY.
WE, WE EMPLOY, UH, BILL GILMER, DR.
BILL GILMER, CT BOWER, TO HELP US DO OUR FORECASTING, AS WELL AS, UH, AN ORGANIZATION CALLED TOURISM ECONOMICS, UH, WHICH IS A SUBSIDIARY OF OXFORD ECONOMICS.
AND, UH, WE'RE, WE'RE NOT ANTICIPATING A RECESSION THIS YEAR.
LOTS OF OPINIONS ON BOTH SIDES OF THAT, BUT MORE AND MORE WE'RE HEARING THE, THE ECONOMIC FORECASTERS TALK ABOUT THE, THE SOFT LANDING.
SHOULD WE, UH, FIND OURSELF IN A RECESSIONARY PERIOD AND START TO IMPACT OUR REVENUES.
WE'RE SMALL, WE'RE NIMBLE, WE'RE AGILE.
WE CAN TAKE MITIGATING, UH, UH, MOVES TO, UH, MAKE SURE WE STAY ON BUDGET.
WE EXPECT THAT LEISURE TRAVEL WILL CONTINUE ON PACE THAT BUSINESS TRAVEL WILL CONTINUE TO SEE IMPROVEMENT.
UM, ONE OF THE LESSONS I TOOK, AND MAYBE A LOT OF US TOOK FROM THE PANDEMIC IS WE MISS BEING CONNECTED WHILE WE'RE IN THE CONNECTION BUSINESS.
SO WE EXPECT THAT BUSINESS, UH, WILL TAKE THE LEAD AND CONTINUE TO GROW THE BUSINESS, UH, UH, MEETING, UH, MARKET.
AND IT HELPED TO DRIVE HOTEL OCCUPANCY AND RATE HERE IN HOUSTON BECAUSE OF BUSINESS BUSINESSES WANT TO BE CONNECTION, WANT TO BE CONNECTED.
UM, WE EXPECT THE RETURN TO OFFICE SLOWLY IN DOWNTOWN HOUSTON.
THAT'S IMPORTANT TO OUR PARKING BUSINESS, WHICH IS A $20 MILLION BUSINESS FOR US.
AND THAT CONCERT, SPORTING EVENTS AND OTHER EVENTS WILL CONTINUE TO DRIVE THE PARKING BUSINESS.
HOWEVER, ON THE NEGATIVE, WE DO EXPECT TO HAVE SOME CONTINUED INFLATION PRESSURE.
I DON'T KNOW THAT THE FED'S DONE WITH, ITS, ITS JOB OF, UH, PUSHING THE INFLATION RATE DOWN TO THE 2% TARGET.
UH, SO THERE COULD, WE COULD SEE SOME MORE RISE IN INTEREST RATES.
SO THAT'S ALL I WANTED TO TALK TO ON THE, THE, UH, ASSUMPTIONS.
THE NEXT PAGE GOES INTO A LITTLE MORE DETAIL ON OUR BUDGET.
UM, WE'RE FORECASTING HOT GROWTH TO GO OVER $111 MILLION, UH, FOR NEXT YEAR.
A 5% INCREASE IN THE REVENUES THAT COME TO HOUSTON.
FIRST, FROM THE HILTON PARKING REVENUES, WE'RE EXPECTING TO GO UP 5% AS WELL.
UH, AND THEN, UH, WE, WE'VE GOT SOME WORK TO DO.
WE DON'T, AT THIS POINT, WE'VE NOT BUDGETED AS MUCH FOR FOOD AND BEVERAGE.
UH, ABOUT $2.8 MILLION LESS BASED ON THE BUSINESS THAT'S ON THE BOOKS RIGHT NOW.
UM, BUT ALL IN ALL, WE EXPECT TO FINISH, AS I MENTIONED, UH, REVENUES IN EXCESS OF EXPENSES OF ABOUT 1.4 MILLION.
[00:25:01]
BUT WITH THAT, I'LL TURN IT BACK OVER TO MICHAEL.UM, UH, AGAIN, UH, THE, THE MANAGEMENT TEAM, I THINK REALLY DID A HECK OF A JOB WORKING THROUGH THIS AND BALANCING A LOT OF OBLIGATIONS, A LOT OF THINGS THAT WE NEED TO DO TO BE ABLE TO MOVE US FORWARD AS A DESTINATION AND, UH, ACHIEVE OUR MISSION FOR HOUSTON FIRST.
UM, AND, UH, WE BELIEVE THAT THIS BUDGET HELPS US FIND THAT RIGHT BALANCE AND IS ABLE TO, TO HELP US MOVE FORWARD TO ACHIEVE MORE RECORDS FOR, FOR 2024.
MR. MR. CHAIR, THAT'S, THAT'S OUR PRESENTATION.
HAPPY TO ANSWER ANY QUESTIONS THAT YOU OR ANYONE ELSE MAY HAVE.
UH, JUST A QUESTION FROM MYSELF.
UH, OUT OF THE, THE TOTAL REVENUES OF 229 AND EXPENSES OF 227 MILLION, THE CAPEX OF 20 IS INCLUSIVE IN THE TOTAL EXPENSE NUMBER NO.
IT'S, IT'S, IT'S BELOW THE LINE.
AND THEN THE, UH, THE OTHER QUESTION THAT THE STATE OF TEXAS DOUBLED THE INVESTMENT IN FILM AND, AND TV, BUT HOW FAR ARE WE STILL LAGGING BEHIND, PARTICULARLY GEORGIA AND LOUISIANA? IT'S, IT'S SUBSTANTIAL, MR. CHAIR.
UH, SOME OF THOSE STATES HAVE AS MUCH OF A 40%, UM, INCENTIVE THAT THEY HAVE IN PLACE.
AND, UH, I'M, I'M SAD TO SAY THAT THERE WAS A, A PRODUCTION COMPANY THAT WAS MAKING A, A, A TV SHOW OR A FILM THAT WAS SUPPOSED TO BE SET IN HOUSTON, AND THEY FILMED IT IN NEW ORLEANS.
UH, IT'S JUST THE DOLLARS AND CENTS.
BUT, UH, IT WAS A MEANINGFUL STEP THAT THEY, THAT, THAT THEY TOOK.
UM, BUT I THINK THAT WILL BE SOMETHING THAT, THAT WE WILL WANT TO, AS IN THE NEXT LEGISLATIVE SESSION, GO BACK AND FURTHER EDUCATE LEGISLATORS AT THE STATE LEVEL, WHAT IT MEANS, WHAT IT CAN MEAN FOR CITIES LIKE HOUSTON AND IN, IN THE STATE OF TEXAS AS A WHOLE, TO BE ABLE TO HAVE THOSE, THOSE INCENTIVES IN PLACE.
IT'S A BUSINESS, IT'S A BUSINESS LIKE ANYTHING ELSE.
AND, AND A LOT OF, UH, BUSINESSES IN THE STATE OF TEXAS GET INCENTIVES.
AND, UH, SO I THINK THAT WE STILL HAVE WORK TO DO.
THANK YOU, UH, STAFF FROM COUNCIL MEMBER KNOX'S OFFICE.
FIRST OF ALL, CONGRATULATIONS.
UM, FOR YEARS, WE HEARD THAT THERE WAS INSUFFICIENT HOTEL ROOMS AVAILABLE DOWNTOWN.
ARE THERE SUFFICIENT? DO WE NEED TO INCENTIVIZE COMPANIES TO BUILD MORE HOTEL ROOMS, OR ARE WE AT THE GOLDILOCKS MOMENT? ARE WE AT THE, JUST THE RIGHT NUMBER? SO I THINK IT, IT'S, IT, IT ALSO DEPENDS ON, ON THE SIZE OF THE PROPERTY, RIGHT? IT IS, IS, AND, AND I THINK IT, IT, YOU KNOW, IF YOU LOOK AT, UM, UH, THE MARRIOT MARQUE AS AN EXAMPLE, THE MARRIOT MARQUEE, OR EVEN THE HILTON AMERICAS, THOSE WERE GAME CHANGING, UM, HOTELS AS, AS, AS AN EXAMPLE, THAT REALLY BROUGHT, UM, A LOT MORE OPPORTUNITY.
UH, LOOK, I'D LOVE TO HAVE MORE HOTELS, UH, DOWNTOWN, UH, AND, AND WHAT THAT LOOKS LIKE.
UH, BUT IT'S ALSO THE SIZE AND CAPACITY OF THOSE, OF, OF THOSE HOTELS THAT, THAT, THAT ALSO MATTERS.
SO I'LL NEVER FORGET MY FIRST COUNCIL MEETING 11 YEARS AGO, UH, WITH HOUSTON.
FIRST WAS, I MET WITH, AT THAT TIME, I WORKED WITH THREE CEOS, DAWN EHLI, BRENDA BEAN, AND NOW MICHAEL HECKMAN, AND TWO CHAIRMAN OF THE BOARDS, RICK CAMPO AND DAVID MINTZBERG.
AND I NEVER FORGET WHEN THEY WALKED IN THE ROOM, I HAD THESE COMMENTS.
THE MOST VALUABLE PART OF A CITY'S PROPERTY IS AN ANCHOR HOTEL IN THE CONVENTION CENTER.
AND AT THAT TIME, I HAD NO UNDERSTANDING WHY WE GAVE AWAY THE CITY, GAVE AWAY THE MARRIOTT MARQUEE ANCHOR HOTEL TO A DEVELOPER.
TO, UM, JOHN'S QUESTION, UM, MOVING FORWARD, I WON'T BE ON THE BOARD.
WILL I BE ON CITY COUNCIL? NEVER GIVE AWAY AN ANCHOR HOTEL.
I DON'T CARE HOW YOU NEED TO FINANCE IT AND AFFORD IT.
YOU KNOW, YOU CAN PARTNER WITH THE INVESTMENTS OF THE CITY OF HOUSTON, OUR POLICE, OUR FIRE, OUR MUNICIPAL EMPLOYEE RETIREMENT FUNDS WHO MAKE INVESTMENTS IN REITS, REAL ESTATE INVESTMENT TRUSTS.
YOU CAN CREATE A REIT THAT HAS A HOTEL FOR THE NEXT HOTEL THAT WE'RE GOING TO BUILD ON THE SOUTH SIDE OF THE EXISTING CONVENTION CENTER.
SO, MY ASK IS DON'T GIVE IT AWAY TO A DEVELOPER, BECAUSE CORRECT ME IF I'M WRONG, FRANK, WE SPEND OUT ABOUT $40 MILLION IN PROPERTY PER YEAR FROM THE HILTON HOTEL.
SURE, YOU HAVE TO FINANCE IT A LITTLE BIT DIFFERENTLY, BUT DON'T GIVE IT AWAY.
AND I, I LOVE THE MARRIOTT MARQUEE.
I LOVE THE MINTNER FAMILY, BUT WE GAVE THE, THE 40 MILLION ANNUAL REVENUE PROFIT A A, A YEAR AWAY TO A DEVELOPER, AND THEY DO WITH IT AS THEY DO WITH IT, INSTEAD OF THE CITY DOING IT.
SO PLEASE LOOK AT THIS CLOSELY, BECAUSE YOU'RE GONNA BE ON THE WATCH FOR THE NEXT DEVELOPMENT THAT'S GONNA COME OVER THE NEXT COUPLE OF YEARS, AND DON'T GIVE IT AWAY AND KEEP THE REVENUE IN HOUSTON FIRST AND IN THE CITY.
NO OTHER QUESTIONS FROM COUNCIL
[00:30:01]
MEMBERS.GENTLEMEN, IT'S BEEN AN HONOR.
IT'S, UM, THIS WAS MY LAST BUDGET AND FISCAL AFFAIRS COMMITTEE, COMMITTEE MEETING.
I'M GLAD TO HAVE YOU HERE TO PRESENT.
Y'ALL DO A GREAT JOB DAY IN AND DAY OUT.
AS THE CHAIRMAN SAYS, I'M A LITTLE TOUGH SOMETIMES ON THE QUESTIONS, BUT I THINK THEY GET TO A CERTAIN POINT FROM A FINANCIAL ASPECT.
BUT I WALK AWAY AND SAY, UM, THE ORGANIZATION IS IN GREAT HANDS WITH BOTH OF YOU GENTLEMEN, AND ALSO WITH THE CHAIRMAN.
I'M SURE WE'RE, UH, WE'LL HAVE SOME CHANGES ON THE BOARD COME JANUARY 1ST, 2024.
BUT IT'S BEEN AN HONOR AND A PRIVILEGE OF WORKING WITH, UH, EVERYONE AT HOUSTON FIRST.
SO, UH, HOPEFULLY EVERYBODY'S WATCHING THIS.
AND GIVE MY REGARDS TO THE STAFF, BECAUSE THEY'RE WONDERFUL PEOPLE.
WE'VE TOTALLY ENJOYED IT, MR. CHAIRMAN.
AND, UH, YOU KNOW, UH, UH, IT'S SHARPENED US.
THOSE QUESTIONS HAVE SHARPENED US.
AND, AND TRULY THAT'S THE WAY GOVERNANCE SHOULD WORK.
THAT'S, THAT'S WHERE THOSE THINGS SHOULD HAPPEN.
UM, SO WE'VE, UH, WE HAVE ENJOYED IT.
AND, AND NEVER BUILD A MECHANICAL BIRD IN A POOL OF WATER.
THANKS FOR CONSIDERATION OF OUR BUDGET.
NEXT, WE'LL HAVE THE MONTHLY FINANCIAL REPORT AND, UH, THE EVER, SO PATIENT CONTROLLER CHRISTOPHER BROWN, AND, UH, FINANCE DIRECTOR WILL JONES.
SO, HEY, THANK YOU FOR YOUR, UH, LAST MINUTE ADJUSTMENTS.
WELL, MR. CHAIRMAN, UH, COUNCIL MEMBERS AND STAFF, I'M PLEASED TO PRESENT THE MONTHLY FINANCIAL REPORT FOR THE PERIOD ENDING OCTOBER 31ST, 2023.
THE CONTROLLER'S OFFICE IS PROJECTING ENDING FUND BALANCE OF 379.4 MILLION.
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 193.1 MILLION ABOVE THE CITY'S TARGET HOLDING 7.5% IN RESERVES.
OUR REVENUE PROJECTIONS ARE UNCHANGED FROM THE SEPTEMBER REPORT.
UH, EXPENDITURE ESTIMATES INCREASE BY 12.7 MILLION FROM THE SEPTEMBER 23 REPORT, AND THAT'S DUE TO THE FOLLOWING, A 3.6 MILLION INCREASE IN CITY COUNCIL DUE TO PRIOR YEAR ROLLOVER ALLOCATION, A 1.5 MILLION INCREASE IN GENERAL SERVICE DUE TO IMPROVEMENTS FOR THE LATINO LEARNING CENTER FACILITY, AN 802,000 INCREASE IN POLICE.
AND THAT'S PRIMARILY DUE TO OVERTIME PAY FOR INCREASED PATROLS DURING PUBLIC PROTESTS, AND A 6.3 MILLION INCREASE IN GENERAL GOVERNMENT, MAINLY DUE TO A 5 MILLION TRANSFER TO THE FIFTH WARD VOLUNTARY RELOCATION FUND, AND A TOTAL OF APPROXIMATELY 1.3 MILLION FOR OTHER VARIOUS PROJECTS IN THE ENTERPRISE FUNDS.
WE ARE, UH, PROJECTING NO CHANGES.
SO I'LL MOVE ON TO OUR COMMERCIAL PAPER AND BONDS.
UM, THE CITY HAS A PRACTICE OF MAINTAINING NO MORE THAN 20% OF THE TOTAL OUTSTANDING DEBT IN A VARIABLE RATE STRUCTURE.
AND AS YOU CAN SEE, ALL OF OUR VARIABLE RATE DEBT IS BELOW THE 20% THRESHOLD.
UH, THIS IS THE FOUR PLUS EIGHT FINANCIAL REPORT FOR THE PERIOD ENDING OCTOBER 31ST, 2023.
PROJECTIONS ARE BASED ON FOUR MONTHS OF ACTUAL RESULTS IN EIGHT MONTHS OF PROJECTIONS FOR THE GENERAL FUND, FOR THE REVENUE, THE PROJECTION IS 1.9 MILLION HIGHER THAN THE ADOPTED BUDGET, AND REMAINS UNCHANGED FROM THE PRIOR MONTH.
UM, SO EVEN THOUGH WE DIDN'T MAKE ANY CHANGES TO OUR REVENUE, I DO WANNA TALK A LITTLE BIT ABOUT THE SALES TAX SINCE WE LAST MET.
WE DID RECEIVE THE SEPTEMBER SALES TAX RECEIPTS.
SO THE SALES TAX RECEIPTS FOR SEPTEMBER, THERE WERE 76.9 MILLION, OR 2.8 MILLION, OR 3.79% HIGHER THAN THE SAME PERIOD LAST YEAR, AND 2 MILLION OR 2.71% HIGHER THAN WHAT WE PUT IN THE BUDGET.
UM, SO IN ORDER TO MEET THE BUDGET AMOUNT THAT WE PLACED IN THE BUDGET OF 865 MILLION, WHICH AGAIN WAS OUR CONSERVATIVE BUDGET, THAT WAS PROJECTED ABOUT 3% DOWN THE REMAINING MONTHS WOULD'VE TO COME IN AT 4.36, 4.36% LOWER FOR THE, FOR THE REMAINING MONTHS.
SO AGAIN, THAT'S JUST AN INDICATION INDICATING OF HOW WE TRY AND PUT A CONSERVATIVE BUDGET FORWARD.
UM, AND RIGHT NOW WE'RE TRENDING AT AN AVERAGE OF 2.71% HIGHER THAN LAST YEAR.
AND AGAIN, WE, WE CAME IN AT 3% DOWN.
SO THAT'S VERY GOOD NEWS AS TO WAY THE, THE PROJECTIONS ARE TRENDING.
UH, WE STILL WANT TO, BEFORE WE MAKE ANY CHANGE, TAKE A LOOK AT THE HOLIDAY, UH, SALES TAX RECEIPT BEFORE WE MAKE ANY CHANGE TO OUR PROJECTION.
BUT I DID WANNA HIGHLIGHT THAT.
[00:35:01]
SO ON OUR EXPENDITURE PROJECTION, IT'S 43 MILLION HIGHER THAN THE ADOPTED BUDGET AND 12.7 MILLION HIGHER, UH, THAN LAST MONTH.AND THE VARIANCE FROM LAST MONTH PROJECTION IS PRIMARILY DUE TO 6.1 MILLION INCREASE IN GENERAL GOVERNMENT.
AND THAT'S PRIMARILY DUE TO, UH, THE FUNDING TRANSFER, UH, TO THE FIFTH WARD VOLUNTARY RELOCATION FUND THAT WAS APPROVED BY COUNCIL A COUPLE MONTHS AGO.
AND THE VELASCO INCINERATOR SITE PROJECT CLEANUP, THERE WAS 3.6 MILLION INCREASE IN CITY COUNCIL TO REFLECT PRIOR YEAR UNUTILIZED COUNCIL DISTRICT SERVICE FUNDS, UH, 1.5 MILLION INCREASE IN GENERAL SERVICE DEPARTMENTS, UH, DUE TO IMPROVEMENT FOR THE LATINO LEARNING CENTER, 700,000 INCREASE IN THE POLICE DEPARTMENT TO REFLECT OVERTIME FOR HIGHER THAN ANTICIPATED PROTESTS, 410,000 INCREASE IN VARIOUS DEPARTMENTS TO REFLECT UN UNSPENT CITY COUNCIL FUNDING FROM PRIOR YEAR AND 306,000 IN MUNICIPAL COURTS DEPARTMENT FOR PERSONNEL REALIGNMENT.
SO WE'RE CURRENTLY PROJECTING AN ENDING FUND BALANCE OF 425.2 MILLION, WHICH IS 12.7 MILLION LOWER THAN THE LAST MONTH, AND 17.1% OF ESTIMATED EXPENDITURES, LESS DEBT SERVICE AND PAY AS YOU GO.
SO THE FUND BALANCE, UH, ENDING FUND BALANCE WILL BE 238 POINT, UH, 238.8 MILLION ABOVE THE TARGET AT 7.5% OF EXPENDITURES, EXCLUDING DEBT SERVICE AND PAY AS YOU GO.
UH, THE CONTROLLER AND I AGREE ON THE ENTERPRISE FUNDS, SO NO CHANGES THERE.
SO BEFORE I WRAP UP THE REPORT, I DID WANT TO TOUCH BASE ON, UM, THE 2023 AFER OF THE ANNUAL COMPREHENSIVE FINANCIAL REPORT, WHICH HAS BEEN COMPLETED.
UM, SO THE CITY'S NET NET POSITION HAS BEEN TRENDING UPWARD IN THE LAST FIVE YEARS.
SO THE NET POSITION, UH, WILL BE THE HIGHEST IN THE LAST 10 YEARS AT 7.6 BILLION AS OF THE END OF FY 23, WHICH IS AN INCREASE OF 1.7 BILLION COMPARED TO FY 22.
AND THE CITY'S UNRESTRICTED PORTION OF THE NET POSITION HAS IMPROVED BY APPROXIMATELY 1.3 BILLION, AND IS A DEFICIT OF 5 BILLION AT THE END OF FY 23.
SO, AGAIN, THAT IS, UH, VERY, VERY GOOD NEWS SHOWING, UM, THAT INCREASE IN THE CITY'S NET POSITION.
AND JUST A REMINDER THAT, YOU KNOW, EVEN THOUGH WE, WE DEFINITELY FACE CHALLENGES GOING FORWARD, THE CITY'S NET POSITION IS STILL THE STRONGEST IT'S BEEN.
UM, SO WE'LL NEED TO CAPITALIZE ON THAT AS WE LOOK, YOU KNOW, AHEAD TO ADDRESS THE CHALLENGES THAT THAT'S COMING TO US.
AND AGAIN, WHEN, WHEN YOU LOOK AT SOMETHING LIKE THIS, UH, THAT, THAT 7.6 BILLION OR 1.7 BILLION INCREASE IN THE CITY'S NET POSITION, THAT IS SOMETHING THAT THE CREDIT RATING AGENCIES LOOK AT.
SO WE DEFINITELY WANNA HIGHLIGHT IT.
UM, BUT AGAIN, WE, WE STILL KNOW THAT WE HAVE CHALLENGES, BUT AGAIN, THE GREAT NEWS, UM, THE HIGHS IT'S EVER BEEN, AND WE, WE LOOK FORWARD TO CONTINUE TO TRY AND GROW THAT.
UM, SO I JUST WANTED TO HIGHLIGHT THAT.
AND, AND AGAIN, BEFORE I CLOSE, I, I DO ALSO WANT TO TAKE SOME TIME TO RECOGNIZE MAYOR PRO TEM, UM, AS THE CHAIR OF THE BFA.
IT'S BEEN A PLEASURE WORKING WITH YOU OVER THESE PAST FEW YEARS.
VICE CHAIR EDWARD POLLARD AS WELL.
UM, I SEE JESSICA DISAPPEARED.
I DEFINITELY WANT TO RECOGNIZE HER AS YOUR CHIEF OF STAFF, BECAUSE IT'S BEEN A JOY WORKING WITH HER.
NOT ONLY, YOU KNOW, ON THE MONTHLY REPORT, BUT DURING THE BUDGET PROCESS.
JESSICA HAS BEEN A VALUABLE RESOURCE, UM, AND WE REALLY ENJOYED WORKING WITH HER, SO THANK YOU FOR THAT.
UH, WE HAVE NO COUNCIL MEMBERS IN QUEUE, UH, COUNCIL VICE P UH, VICE CHAIR ED POLLARD.
I DID WANNA TAKE THE TIME, UH, REALLY QUICKLY, UH, JUST TO THANK THE CONTROLLER FOR HIS, UH, FOR HIS SERVICE OVER THE PAST EIGHT YEARS, UH, AND THEN AS DEPUTY CONTROLLER BEFORE THAT.
SO THAT'S A LOT OF TIME, UH, THAT YOU SERVED YOUR CITY, AND, UM, IT TAKES A LOT TO SIT IN THESE SEATS, AND WE ALWAYS DON'T HAVE TO AGREE ON EVERY SINGLE THING.
UM, BUT THE THINGS THAT YOU HAVE BEEN ABLE TO BRING TO THE OFFICE, UM, THE SACRIFICES THAT YOU'VE MADE PERSONALLY AND PROFESSIONALLY TO BE ABLE TO SERVE THE CITY HAS BEEN NOTED.
AND I WANT TO TAKE THE TIME TO SAY, UH, THANK YOU FOR YOUR CONTRIBUTIONS AS WELL IN YOUR LAST, UH, BFA MEETING, UH, WITH THE CITY.
AND I APPRECIATE THOSE COMMENTS.
I WAS GONNA SAVE MINE FOR TOMORROW, BUT, UH, WHEN WE HAVE A WIDER AUDIENCE, BUT, UH, WE'LL DO THAT AS WELL.
I KNOW THERE'S BEEN AN ITEM ON THE AGENDA THAT I, I, I DON'T HAVE A LOT OF DETAIL ON, AND THAT'S THE ONE THAT GETS, KEEPS PUSHING BACK THE UNITED, UH, FINANCE AND INTERCONTINENTAL AIRPORT.
UH, WHERE ARE WE WITH THAT TODAY? AND, UH, GIMME YOUR PERSPECTIVE ON IT AS TO WHERE YOU BELIEVE THE, UH, UH, SOME OF THE ISSUES RELATE TO.
WELL, AS YOU ALL KNOW, UM, YOU KNOW, THIS IS A TERMINAL B REDEVELOPMENT PROJECT, UH, $2.55 BILLION.
SO THIS IS THE LARGEST, UH, PROJECT IN THE HISTORY OF THE CITY OF HOUSTON.
UM, YOU KNOW, UNFORTUNATELY, FROM MY PERSPECTIVE AS A CONTROLLER, UH, WE HAVEN'T DONE A STANDARD LEVEL OF DUE DILIGENCE ON THIS PROJECT.
[00:40:01]
YOU KNOW, FROM MY PERSONAL, UM, UH, EXPERIENCE, UM, YOU KNOW, MOST OF THE, UM, QUESTIONS, UH, THAT I HAD WERE RAISED AT THE TIME WHEN I FOUND OUT THAT IT WAS COMING ONTO THE AGENDA.SO, YOU KNOW, THERE WAS A, A COUNCIL COMMITTEE, AND I THINK THAT WAS BACK IN, UM, MAY, UM, BUT ABSENT FROM THAT, YOU KNOW, EIGHT PAGE SLIDE DECK WAS ANY FINANCIAL INFORMATION.
SO I GUESS I WRONGLY ASSUMED THAT, UH, IF THIS PROJECT WAS GONNA MOVE FORWARD, WE WOULD, UH, OBVIOUSLY DO THE STANDARD LEVEL OF, OF DUE DILIGENCE, UH, YOU KNOW, HAVE A, A, YOU KNOW, FEASIBILITY STUDY, UH, ALLOW OUR OFFICE TO HAVE, UH, QUESTIONS ABOUT HOW THIS IS, UH, BEING FINANCED.
SO, YOU KNOW, AS IT STANDS TODAY, WE ARE BASICALLY, UH, DOING THAT IN-HOUSE.
UM, YOU KNOW, MY PREFERENCE IS THAT WE FOLLOW THE STANDARD OPERATING PROCEDURE AND WE HAVE, UH, THE APPROPRIATE, UH, FINANCE WORKING GROUP AND, UH, THIRD PARTY, UH, CONSULTANTS THAT, UH, REVIEW THIS PROJECT.
UH, WE'RE, WE'RE WORKING TOWARDS THAT, UH, GOAL, BUT, UH, WE'RE NOT, WE'RE NOT THERE YET.
SO, UM, YOU KNOW, I I WOULD JUST SAY THAT, UM, YOU KNOW, IT WOULD'VE BEEN MY, UM, REQUEST THAT BACK IN MAY WHEN THIS WAS BROUGHT TO COUNCIL, THAT, YOU KNOW, THE DISCUSSIONS WOULD'VE STARTED BACK THEN, BUT UNFORTUNATELY, THAT WAS, UH, SKIPPED.
ARE WE GONNA SEE IT BEFORE, BEFORE MY TERMS UP? OR IS IT, YOU THINK IT GOES TO 24? I, I, I WOULD SAY THAT IN ORDER TO PROPERLY DO THIS LEVEL OF, UM, YOU KNOW, FEASIBILITY, UH, REVIEW, UM, YOU KNOW, IT'S VERY DIFFICULT.
AND, AND WHAT I HAD EXPRESSED TO UNITED, WHEN I FIRST MET WITH THEM, AS I SAID, WE, YOU KNOW, WE WELCOME THIS PROJECT.
UH, WE WANNA MAKE SURE THAT THE CITY CAN PAY FOR IT, AND IT'S, YOU KNOW, FINANCIALLY NOT GONNA BE A BURDEN ON THE, YOU KNOW, SUBSEQUENT ADMINISTRATIONS AND THAT WE'RE MAKING SMART FINANCIAL DECISIONS.
AND, UM, YOU KNOW, MY ESTIMATION WAS THAT, YOU KNOW, WE WOULDN'T BE ABLE TO BE ABLE TO COMPRESS, YOU KNOW, FIVE OR SIX MONTHS OF DUE DILIGENCE INTO FIVE OR SIX WEEKS.
SO, UM, I WOULD SAY THAT'S A, A NEXT YEAR, UH, NEXT ADMINISTRATION, UH, DECISION, WHICH I ALSO THINK IS APPROPRIATE.
I MEAN, WE'RE FOUR DAYS AWAY FROM AN ELECTION, SO, UM, YOU KNOW, IT MIGHT BE APPROPRIATE TO, YOU KNOW, AGAIN, GIVE THE NEXT ADMINISTRATION THE OPPORTUNITY TO OPINE ON THIS LARGEST PROJECT IN THE CITY OF HOUSTON, VICE PRESIDENT, MAYOR PRO TEM, MARTHA CASTEX TATUM.
THANK YOU, UH, MAYOR PRO TIMM FOR ASKING THAT QUESTION.
I, I GUESS, UM, I'M A LITTLE, UH, CONFUSED BY THOSE COMMENTS.
UM, WHEN YOU SAY THE LEVEL OF DUE DILIGENCE, UM, ARE YOU SAYING THAT, UM, THE DIRECTOR OF THE AIRPORT AND UNITED NEVER GAVE YOU ANY OF THAT INFORMATION PRIOR TO, UM, YOU SEEING THAT COMING ON THE AGENDA? 'CAUSE I KNOW WE TALKED ABOUT IT IN A COMMITTEE MEETING.
UM, I, I GUESS I, I'M CONFUSED BECAUSE THIS IS, SEEMS TO HAVE BEEN, UM, IT, IT FEELS POLITICAL.
UM, AND I WANNA MAKE SURE THAT WE ARE MOVING FORWARD WITH THIS PROJECT BECAUSE I KNOW IT'S A GOOD PROJECT FOR HOUSTON.
IT'S A GOOD PROJECT FOR UNITED, IT'S A GOOD PROJECT FOR PEOPLE THAT ARE COMING TO AND FROM OUR AIRPORTS.
AND I DON'T WANT US IN THIS POLITICAL SEASON TO USE POLITICS TO, UM, PREVENT US FROM DOING SOMETHING THAT IS GOOD FOR THE CITY OF HOUSTON.
UM, SO WHEN YOU SAY THE LEVEL OF DUE DILIGENCE, HAVE YOU NOT BEEN ABLE TO DO THAT YET? BECAUSE I, WHEN I GOT THE BRIEFING, I DIDN'T SEE THAT THIS WOULD, UM, IMPACT THE CITY'S FINANCES THE WAY I FEEL LIKE YOU'RE REPRESENTING THAT IT WILL IMPACT THE CITY'S FINANCES.
WELL, I THINK, UM, YOU KNOW, IF YOU SAW THE, UH, MEMO THAT I, UH, SENT TO THE AIRPORT DIRECTOR AND I THINK WAS COPIED ALL THE COUNCIL MEMBERS IN THAT MEMO, THERE WERE, UH, SOME QUESTIONS AND THE AIRPORT DIRECTOR, UH, RESPONDED, UH, THAT THEY ARE CURRENTLY IN THE PROCESS OF WORKING ON, UH, UPDATING THE FEASIBILITY STUDY, WHICH WOULD BE SOMETHING THAT, YOU KNOW, WE WOULD EXPECT TO SEE IN ADVANCE OF, UH, OF A DEAL OF THIS SIZE.
SO, YOU KNOW, AGAIN, TO, UH, THE CHAIR'S COMMENTS, UM, YOU KNOW, WE'RE WORKING THROUGH THE PROCESS.
I AGREE THAT, UM, YOU KNOW, WE WANNA SEE THIS, THIS IS GREAT FOR HOUSTON.
AND, UH, YOU KNOW, THE BIG QUESTION FOR ME IS, AS I LEAVE HERE AND SIGN OFF POTENTIALLY ON THIS, I NEED TO MAKE SURE THAT, UH, YOU KNOW, I KNOW THAT THIS IS A, A GOOD DEAL FOR HOUSTON.
AND UNFORTUNATELY, THE COMPRESSION OF TIME OF, UM, YOU KNOW, THE AMOUNT OF DUE DILIGENCE, IT'S JUST NOT ALLOWED ME TO DO THAT.
SO, I, I, LOOK, I WILL DISAGREE THAT I THINK THIS ADMINISTRATION, AS WE'VE SAT HERE FOR A NUMBER OF YEARS, HAVE MORE FINANCIAL ACUMEN INSIGHT INTO WHAT GOES ON AT THE AIRPORT, AND
[00:45:01]
ARE MORE PREPARED TO MAKE A DECISION ON THE FEASIBILITY OF BOTH THE AIRPORT AND UNITED AIRLINES.A NEW ADMINISTRATION IS GONNA HAVE MINIMUM OF SEVEN NEW PEOPLE WHO NEED TO GET UP TO SPEED.
AND QUITE FRANKLY, I DON'T THINK THEY CAN.
I HARKEN BACK ON MY FIRST DAYS, I COULD BARELY UNDERSTAND WHERE THE RESTROOMS WERE LOCATED.
UH, MORE OR LESS THE FEASIBILITY OF A $2.5 BILLION PROJECT, OF WHICH, CORRECT ME IF I'M WRONG, $600 MILLION IS ON THE CITY'S BOOKS, THE REST IS ON UNITED.
SO I WOULD THINK THAT THIS BODY AS 17 PEOPLE, INCLUDING THE PRESENT CONTROLLER, HAVE THE ABILITY TO OPINE ON A DECISION OF FEASIBILITY FOR THIS PROJECT VERSUS A BRAND NEW GROUP OF FOLKS.
AND I AGREE, I, UM, I JUST FIRMLY BELIEVE THAT.
SO, UH, THAT'S MY POINT ON THAT.
BUT THE SECOND POINT IS, ARE YOU QUESTIONING THE FEASIBILITY OF UNITED OR THE CITY? BECAUSE 2.5 BILLION, 600 MILLION IS ON THE CITY, WHICH HAS MADE UP A LOT OF FEDERAL FUNDS AND GRANT PROGRAMS. UH, THE LION SHARE OF THAT IS ON UNITED.
SO I LOOKED AT THEIR LAST REPORT, AND IT WAS PRETTY GOOD.
AIRLINE INDUSTRY AS A WHOLE IS NOT A GREAT PLACE TO, UH, TO MAKE AN INVESTMENT IF YOU'RE A STOCK PLAYER.
UH, BUT OF THE AIRLINES, I THINK DELTA IS PROBABLY IN MY BOOK, NUMBER ONE, I THINK UNITED IS RIGHT THERE.
I THINK THE FEASIBILITY OF THE AIRLINES, THE GOVERNMENT HAS SHOWED US THAT THEY WILL, AIRLINES HAVE TROUBLE.
SO IF YOU'RE QUESTIONING THE FEASIBILITY OF AN AIRLINE INDUSTRY, THEN YOU OUGHT TO QUEST A FEASIBILITY OF THE WORLD THAT WE LIVE IN.
SO I'M HAVING A HARD TIME WITH THE UNDERSTANDING OF FEASIBILITY.
IS IT UNITED OR THE CITY OR IS IT BOTH? AND THEN WHY DO YOU FEEL THAT A NEW ADMINISTRATION OUGHT TO TAKE ON THIS DECISION? WHEN WE'VE BEEN DEALING WITH THE, THE, THE TRIP, THE, THE, THE ATRI PROGRAM SINCE, GOD, IT'S I TRIP FOR, FOR YEARS.
I REMEMBER ATTENDING A MEETING AT THE MARRIOTT DURING THE PARKER ADMINISTRATION TALKING ABOUT I TRIPP.
SO I'M RESPECTFULLY DISAGREE, BUT I'D LIKE MORE INSIGHT.
YEAH, WELL, AGAIN, THIS PROJECT, 2.55 BILLION, UH, 1.9 BILLION OF THAT IS THIS SPECIAL FACILITY REVENUE BONDS, ESSENTIALLY THAT UNITED IS GONNA BE RIGHT FUNDING THROUGH TERMINAL AND GATE FEES.
BUT, YOU KNOW, WHEN THE NEXT CONTROLLER COMES AND GIVES HIS REPORT, UH, THE QUARTERLY REPORT, ALL THAT DEBT IS ON THE CITY BOOKS.
SO THE, THE LIABILITY IS TO THE TAXPAYERS.
SO AGAIN, THIS IS AN ENORMOUS AMOUNT OF MONEY.
THIS IS, UH, SOMEWHAT, UH, UH, ALMOST A 20% INCREASE IN OUR TOTAL DEBT, UH, THAT WE WILL HAVE AT THE CITY.
UH, AS I SAID BEFORE, WE NEED TO MAKE SURE THAT WE'VE DONE, UH, THE PROPER DUE DILIGENCE TO MAKE SURE THAT WE HAVE THE CAPACITY, UH, TO AFFORD THAT IN THE FUTURE.
UH, YOU KNOW, BEING HERE FOR 20 YEARS IS, UH, A BLESSING AND A CURSE, UH,
SO, UH, JUST TO REMIND YOU ALL THAT, ALMOST EIGHT YEARS TO THE DAY, I WAS IN THIS EXACT SAME POSITION WITH THE INTERNATIONAL TERMINAL REDEVELOPMENT PROGRAM.
AND WE HAD HAD SOME QUESTIONS ABOUT THE ABILITY FOR THE CITY TO PAY FOR AND COSTS AND ALL THESE DIFFERENT THINGS.
AND WHEN I WAS ELECTED ALONG WITH MAYOR, UH, TURNER, UH, YOU KNOW, I CONTINUED AS THE NEW CONTROLLER TO SAY, THIS IS SOMETHING THAT WE NEED TO TAKE A LOOK AT.
AND WE ARE ALWAYS, AS THE TAXPAYER'S WATCHDOG, UH, YOU KNOW, I'M ALWAYS GONNA FIGHT FOR THAT.
SO I FOUGHT FOR THAT EIGHT YEARS AGO.
AS YOU ALL REMEMBER, THAT PROJECT CAME TO YOU AS A COUNCIL AGENDA ITEM AT A COST OF $1.7 BILLION.
AND TO THE MAYOR'S CREDIT, HE SUPPORTED OUR OFFICE IN HOLDING THAT ITEM UP.
HE REVIEWED IT AND, UH, SENT IT BACK TO THE AIRPORT ADMINISTRATION, AND IT CAME BACK SOMETIME LATER AT A $1.2 BILLION COST.
NOW, FOR THOSE OF Y'ALL THAT AREN'T REAL QUICK WITH MATH, THAT'S A $500 MILLION SAVINGS TO THE TAXPAYER.
UH, SO I'VE BEEN HERE BEFORE, UM, I'M, YOU KNOW, 20 YEARS AT THE CITY.
I'VE SPENT ALMOST A DECADE IN INVESTMENT BANKING.
UM, YOU KNOW, THERE'S CERTAIN THINGS THAT I THINK, YOU KNOW, THROUGH THESE YEARS OF EXPERIENCE THAT, UM, I HAVE THAT BRING ME PAUSE.
AND SO FOR ME, AS I LEAVE HERE, I WANNA MAKE SURE THAT I LEAVE THE CITY AND, YOU KNOW, AS GOOD OR BETTER POSITIONED IN THE FUTURE, I, I THINK THIS IS A FANTASTIC DEAL FOR UNITED.
I DID HAVE AND WANT TO JUST UPDATE AND SAY I HAD THE OPPORTUNITY TO SPEAK WITH THE LEADERSHIP, UH, OF THE GREATER HOUSTON PARTNERSHIP.
UM, YOU KNOW, THEY'RE VERY EXCITED ABOUT THIS DEAL.
THEY ARE ALSO CONCERNED THAT THIS IS GETTING, UM, YOU KNOW, HELD UP.
BUT WHAT I, UH, EXPRESSED TO THEM THAT WE'RE GONNA CONTINUE TO MOVE THAT BALL FORWARD.
WE'RE GONNA, UH, BE REACHING OUT TO UNITED TO GET SOME OF THE ADDITIONAL QUESTIONS.
UM, YOU KNOW, IT'S GONNA GET DONE.
IT'S JUST, I CAN'T AT THIS POINT ANSWER WHEN EXACTLY THAT WILL HAPPEN, RIGHT IN MY COMMENT.
WE, I'D LOVE TO DEAL WITH IT BEFORE I LEAVE BECAUSE I THINK WE'RE, WE'RE COMMITTED TO THE PROCESS AND THE $1.9 BILLION ON UNITED, THE INDUCEMENT AND THE BOND
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FINANCING IS ON THEIR END, NOT THE OBLIGATION TO THE CITY.WE CHANGED THAT WITH THE ORDINANCE THAT WE PUT IN A FEW WEEKS AGO.
I'LL DO MY HOMEWORK TONIGHT AND COME BACK TOMORROW, BUT I DON'T BELIEVE THE OBLIGATION IS ON THE CITY OF HOUSTON.
I THINK THE 1.9 BILLION OBLIGATION IS ON UNITED AIRLINES IF, IF UNITED, UH, DECIDES TO REDUCE, UH, THOSE 40 GATES FOR ANY REASON.
AND, AND AGAIN, UH, EXPERIENCE.
UH, IF UNITED, UH, LET'S MOVE INTO THE FUTURE PAST WHERE WE ARE NOW.
WE'VE BUILT THE TERMINAL, UH, THERE'S 40 GATES, UH, THAT WILL BE BUILT.
UM, AND IF FOR SOME REASON THERE'S A DISRUPTION LIKE, UH, COVID OR GOD FORBID, ANOTHER NINE 11 OR A HURRICANE OR, OR ANYTHING, AND UNITED SAID, UH, WELL, WE NEED TO, TO GIVE BACK, UH, THOSE GATES, UM, YOU KNOW, ULTIMATELY THE CITY IS GONNA BE RESPONSIBLE FOR GOING OUT AND, UH, FINDING, UH, NEW TENANTS FOR THAT.
AND DURING THE PROCESS, WE'LL HAVE TO, YOU KNOW, PAY THE DEBT SERVICE AND, UH, ULTIMATELY MAKE SURE THAT THOSE, UH, REVENUE BONDS ARE SERVICED AND THE WORLD WILL COME TO AN END.
IF THAT HAPPENS, YOU REALLY THINK THAT'S AN, A LIKELY POSSIBILITY GIVEN THE POSITION.
I LOOKED AT UNITED'S, UH, LAST QUARTER REPORT, AND IT WAS EXCELLENT.
UH, STRONG PROFIT NUMBERS ARE GOOD.
THE ME, THE FEDERAL GOVERNMENT HAS SHOWED US THAT THEY WILL NOT LET AIRLINES INTERRUPT BUSINESS TRAVEL COMM.
THAT'S A VITAL PART OF THE ECONOMY.
A AGAIN, THE EXPERIENCE THAT I HAVE.
UH, UNFORTUNATELY, MY EXPERIENCE TELLS ME THREE YEARS AGO I WAS ON CALLS WITH THE CFOS OF ALL THE MAJOR AIRLINES, AND THEY WERE REQUESTING THAT WE RELIEVE THEM FROM THESE PAYMENTS FOR FEAR OF HAVING LIQUIDITY ISSUES GOING FORWARD.
NOW, THAT WAS A UNUSUAL BLACK SWAN EVENT, COVID, BUT, YOU KNOW, AT THE END OF THE DAY, AGAIN, I HAVE TO PROTECT AND ADVOCATE FOR THE TAXPAYERS, NOT FOR UNITED OR FOR OTHER ENTITIES.
SO, YOU KNOW, WE'RE, WE'RE CONTINUING TO DO OUR DUE DILIGENCE.
UM, YOU KNOW, WE DO LIVE IN A, A, A VOLATILE TIME, AND, UH, I DO THINK THAT ULTIMATELY THIS DEAL IS GONNA HAPPEN AND, UH, WE ARE SUPPORTIVE OF IT, BUT WE HAVE TO MAKE SURE THAT, UH, ULTIMATELY THE CITY OF HOUSTON TAXPAYERS CAN, YOU KNOW, AFFORD IT.
AND IT'S A NOT TOO MUCH OF A RISK.
I, CORRECT ME IF I'M WRONG, BUT THE ORDINANCE CHANGE THAT WE PUT IN TWO WEEKS AGO, THREE WEEKS AGO, MAKES THE INDUCEMENT IN THE BOND FINANCING ON UNITED, NOT ON THE CITY.
WELL, WE'RE STILL, UH, REVIEWING THE INDUCEMENT RESOLUTION, SO WE'LL, WE'LL CONTINUE TO LOOK AT THAT AND, UM, GIMME THAT AGAIN.
WE'RE STILL, WE ARE REVIEWING THE INDUCEMENT RESOLUTION AND, AND OTHER PARTS OF THIS, UH, DEAL.
SO AGAIN, IT'S BEEN, EVERY LAWYER I TALKED TO SAID THE INDUCEMENT IN THE BOND FINANCES AND IS ON UNITED BASED ON THAT ORDINANCE.
EVERY LAWYER I TALK TO, AND I'VE TALKED TO A FEW OVER THE LAST COUPLE OF WEEKS.
OKAY, WELL, THIS IS A, A POINT OF CONTENTION THEN, AND WE'LL CONTINUE.
AGAIN, PART OF MY DUE DILIGENCE, SO THANK YOU.
AND, AND I'LL REITERATE, IT'S BEEN A PLEASURE, UH, DEBATING, TALKING DISCUSSION, PLAYING GOLF, DOING WHATEVER WE NEED TO DO THAT WE DID, UH, FOR THE LAST, UH, IN MY CASE, 11 YEARS, UH, THE THREE YEARS YOU SERVE WITH RON GREEN AND THE EIGHT YEARS THAT YOU'VE BEEN CONTROLLER.
AND I, AND I RESPECT YOU TREMENDOUSLY.
SOMETIMES WE DISAGREE LIKE WE'RE DOING THIS MORNING, BUT, UH, THAT'S HEALTHY DIALOGUE AND THAT'S A HEALTHY DEBATE.
AND, UH, I'VE ALWAYS ENJOYED YOUR, YOUR FINANCIAL ACUMEN.
AND, UH, YOU KNOW, UNFORTUNATELY, WE'RE DEALING WITH THIS ISSUE IN THE LAST MEETING.
I THOUGHT WE WERE, UH, GONNA GO, YOU KNOW, GENTLY INTO THE GOOD NIGHT
AND, AND WE HAVE TO CONTINUE TO, AND I APPRECIATE ALL OF YOU ALL.
I KNOW, UH, A LOT OF TIMES WE'D, WE'VE AGREED, A LOT OF TIMES WE'VE DISAGREED, BUT I THINK THE, UH, THE MOST IMPORTANT IS TO CONTINUE THAT, TO RESPECTFUL DIALOGUE AND, AND WORK TOGETHER TO CONTINUE TO MAKE HOUSTON A A GREAT CITY.
RIGHT? AND, AND MY LAST STATEMENT WOULD BE, I DO BELIEVE THAT AN EXISTING BODY OF 17 PEOPLE THAT HAVE BEEN HERE A MINIMUM OF FOUR YEARS, A MAXIMUM OF 11 YEARS, AND THE MAYOR THAT'S BEEN HERE EIGHT YEAR, A CONTROLLER THAT'S BEEN HERE 11 YEARS, HAS MORE DECISION MAKING KNOWLEDGE TO MAKE THIS DECISION TODAY THAN A NEW BODY OF NEOPHYTES THAT DON'T KNOW WHERE THEIR OFFICE IS GONNA BE LOCATED.
AND I DON'T FIND ANY OF THOSE RUNNING FOR COUNCIL TODAY THAT HAVE A FINANCIAL BACKGROUND THAT, QUITE FRANKLY, YOU OR NOT YOU OR I HAVE.
AND I BELIEVE WE'RE BETTER PREPARED.
NEXT WE'LL HAVE THE AUDIT PRESENTATION.
MS. COURTNEY SMITH, THE CITY OF HOUSTON AUDITOR, TALKING ABOUT, UH, FINANCIAL YEAR 20.
COUNCIL MEMBER, OH, I'M SORRY.
UH, 2024 HOUSTON PUBLIC LIBRARY.
HOUSTON PUBLIC LIBRARY FOUNDATION.
[00:55:01]
OKAY.SO GOOD MORNING CHAIRMAN, COUNCIL MEMBERS AND COUNCIL STAFF.
UM, I AM HERE TODAY TO DISCUSS A FOLLOW-UP AUDIT THAT WE RECENTLY RE, UH, RELEASED IN OUR OFFICE.
THE FOLLOW UP AUDIT IS RELATED TO THE HOUSTON PUBLIC LIBRARY AND THE HOUSTON PUBLIC LIBRARY FOUNDATION.
UH, IN ADDITION TO THE FOLLOW UP AUDIT, WE'RE GONNA BRIEFLY GIVE YOU SOME UPDATED, UM, NUMBERS ON SOME REPORTS THAT WE'VE RECEIVED THROUGH THE FRAUD WASTE.
THEY ARE, I BELIEVE WE'RE HAVING SOME TECHNOLOGY ISSUES WITH THE PRESENTATION.
WE SHOULD HAVE A HARD COPY AT YOUR DESK.
AND WE'VE HAD SOME SIGNIFICANT AUDIO AND, UM, VISUAL, UM, ISSUES THIS MORNING WITH OUR, OUR EQUIPMENT.
ALRIGHT, SO, UM, IF YOU'LL LOOK ON SLIDE THREE, UM, THAT'S WHERE I AM.
OUR TEAM'S OBJECTIVES WERE TO EVALUATE REMEDIATION EFFORTS TAKEN BY THE HOUSTON PUBLIC LIBRARY FOUNDATION IN RESPONSE TO AN OPEN FINDING FROM AN FY 2012 PERFORMANCE AUDIT RELEASED BY OUR OFFICE.
AND SIMILARLY, TO EVALUATE REMEDIATION EFFORTS TAKEN BY THE HOUSTON PUBLIC LIBRARY IN RESPONSE TO OPEN FINDINGS FROM A PERFORMANCE AUDIT THAT WAS RELEASED IN FY 2020 TO ACCOMPLISH OUR OBJECTIVES, OUR OFFICE OBTAINED, REVIEWED AND ASSESSED MANAGEMENT STATUS UPDATES TO OPEN FINDINGS.
WE DETERMINED THE FINDINGS FOR WHICH MANAGEMENT STATUS UPDATES INDICATED THAT THEY WERE REMEDIATED.
WE REQUESTED AND RECEIVED DOCUMENTATION TO SUPPORT THE STATUS UPDATES REPORTED BY MANAGEMENT FOR EACH FINDING WE REVIEWED AND THE SUPPORTING DOCUMENTATION FOR SUFFICIENCY AND APPROPRIATENESS.
AND THEN WE TESTED PROCEDURES OR TRANSACTIONS AS NEEDED TO VERIFY THAT THE REMEDIATION EFFORTS THAT HAD TAKEN PLACE WERE ACTUALLY WORKING APPROPRIATELY.
UM, SO ON THE NEXT SLIDE, WHICH IS SLIDE FOUR, UM, OUR, THESE ARE OUR CONCLUSIONS.
UH, IN TOTAL, THIS ENGAGEMENT COVERED ONE FINDING IN THE 2012 REPORT AND SIX FINDINGS IN THE 2020 REPORT FOR REPORT.
2012 DASH 11, THAT WAS THE ONE THAT WAS RELATED TO THE HOUSTON PUBLIC LIBRARY FOUNDATION.
THE SINGLE FINDING HAS A, NOW HAS A STATUS OF FULLY IMPLEMENTED, AND WE ARE CONSIDERING THAT FINDING CLOSED.
UM, TO REACH THIS CONCLUSION, OUR TEAM GATHERED DOCUMENTATION THAT WAS RELATED TO EXPENDITURES, RECONCILIATIONS, AND REPORTS FOR, UM, ENDOWMENT ACTIVITY.
UH, WE THEN PERFORMED AUDIT PROCEDURES TO ENSURE THAT THOSE, UM, THAT ENDOWMENT ACTIVITY WAS REPORTED ACCURATELY.
AND THAT EXPENDITURES WERE, UH, ACTUALLY MADE IN LINE WITH DONOR STIPULATIONS.
UM, THAT WAS THE BASIS OF THE ORIGINAL FINDING WAS THAT MONEY WAS BEING SPENT NOT APPROPRIATELY LISTED ON THE, THE CORRECT AS COMING FROM THE CORRECT, UM, ENDOWMENT FUND, IF THAT MAKES SENSE.
UM, AND THAT THEY, THEY NEEDED TO DO, UM, MAKE SURE THAT THEY WERE PERFORMING RECONCILIATIONS AND REPORTING THAT INFORMATION ACCURATELY.
SO IN THE REPORT THAT WAS RELEASED IN 2020, UH, THAT IS REPORT NUMBER 2020 DASH OH ONE.
THAT REPORT WAS RELATED TO THE HOUSTON PUBLIC LIBRARY.
AND WE FOUND THAT SIX, THAT FIVE OF THE SIX FINDINGS NOW HAS THE STATUS OF FULLY IMPLEMENTED.
AND THOSE FIVE FINDINGS ARE CONSIDERED CLOSED.
UH, ALL OF THE FINDINGS THAT WE ARE CONSIDERING CLOSED, UH, RELATED TO, UM, THE MANAGEMENT TEAM UPDATING THEIR POLICIES AND PROCEDURES.
AND WE OBSERVED THEIR PROCESSES TO ENSURE THAT MA THE MANAGEMENT CHANGES THAT WERE MADE REGARDING THEIR PETTY CASH FUND AND THEIR ACCOUNT RECONCILIATION PROCESSES DID IN FACT REMEDIATE THOSE FINDINGS.
SO THOSE FINDINGS ARE CONSIDERED CLOSED.
THERE IS ONE FINDING THAT REMAINS OPEN.
UM, IT IS A FINDING THAT IS RELATED TO MORE OF A SAFETY ISSUE.
UM, AS PART OF OUR, UH, REPORT, WE NOTED THAT THERE WERE CAMERAS EITHER NOT THERE OR NOT OPERATIONAL, UH, WITHIN THE FACILITIES.
AND SO, UH, WHEN WE WENT BACK INTO, UH, LOOK AT THAT FINDING TO SEE IF THAT ONE HAD BEEN REMEDIATED, WE
[01:00:01]
DISCOVERED THAT ALTHOUGH MANAGEMENT HAD BEGUN REMEDIATION EFFORTS TO EITHER INSTALL OR REPAIR THOSE CAMERAS, THOSE EFFORTS WERE NOT COMPLETE.UM, THOSE EFFORTS ARE ALSO BEING MANAGED BY GSD AND, UM, ONCE COMPLETE, IT'S GONNA ENHANCE PERSONAL PERSONNEL SAFETY AS WELL AS TO PREVENT, DETECT AND DETER FRAUD AND OUR LOSSES.
UM, THIS SLIDE IS JUST AN UPDATE ON THE REPORTS THAT WE HAVE RECEIVED ON THE FRAUD WASTE AND ABUSE HOTLINE.
UM, THESE NUMBERS INCLUDE ALL OF THE REPORTS THAT WE HAVE RECEIVED FROM JULY 1ST OF THIS FISCAL YEAR THROUGH OCTOBER 31ST OF THIS FISCAL YEAR.
UH, WE'VE RECEIVED 51 REPORTS, AND TWO OF THOSE ARE OUTSTANDING, MEANING, UM, WE CONSIDER THOSE OPEN.
UH, WE, UM, THE ISSUE THAT WAS REPORTED IS BEING LOOKED AT, BUT WE HAVE NOT, IT HAS NOT BEEN RESOLVED.
SO, UM, THAT CONCLUDES MY PRESENTATION.
AND WITH THAT, I AM HAPPY TO TAKE ANY CON, UH, QUESTIONS OR, UH, ADDRESS ANY CONCERNS.
ANY QUESTIONS FROM COUNCIL MEMBERS OR STAFF? SEEING NONE, WE'LL MOVE ON TO THE PRESENTATION.
THE PRESENTATION THAT I SKIPPED ACCIDENTALLY.
SO ERROR ON DAVE MARTIN, AND THAT WOULD BE THE UPCOMING FINANCIAL TRANSACTIONS.
AND MELISSA DEBOWSKI, THE DEPUTY DIRECTOR OF CITY OF HOUSTON FINANCE DEPARTMENT.
UH, TODAY I'M HERE TO MAKE A PRESENTATION ON UPCOMING FINANCIAL TRANSACTIONS ON BEHALF OF THE FINANCE WORKING GROUP.
UM, SO ON SLIDE TWO, WE HAVE THE AGENDA FOR TODAY.
UH, WE HAVE ONE ITEM ON THE GENERAL OBLIGATION BONDS AND AN ITEM ON THE COMBINED UTILITY SYSTEM.
SO ON SLIDE THREE, UH, JUST TO GIVE YOU AN UPDATE ON THE GENERAL OBLIGATION BONDS, WHICH WE ALSO SOMETIMES CALL PUBLIC IMPROVEMENT BONDS SERIES 2023 A, UH, THIS IS A TRANSACTION THAT, UM, I PRESENTED PREVIOUSLY AT BFA BEFORE WE DID THE TRANSACTION.
UH, AND SINCE THEN, WE DID THE PRICING FOR THIS TRANSACTION IN EARLY OCTOBER.
THEN WE CLOSED ON THE TRANSACTION AT THE END OF OCTOBER.
SO, UM, TYPICALLY WHEN WE DO THE BOND TRANSACTIONS, WE LIKE TO COME BACK TO, UM, TO THIS COMMITTEE AND JUST GIVE YOU AN UPDATE ON WHAT HAPPENED WITH THE TRANSACTION.
UM, SO THESE BONDS, UM, FIXED OUT COMMERCIAL PAPER PROCEEDS, UH, FOR PROJECTS THAT, UM, ARE INCLUDED IN THE CIP.
SO THESE GENERAL OBLIGATION BONDS GENERALLY SUPPORT POLICE, FIRE PARK, SOLID WASTE, UH, THOSE DEPARTMENTS AND THEIR CIP PROJECTS.
UH, SO THE TOTAL TRANSACTION AMOUNT WAS 271 MILLION.
UH, AND WE HAD A VERY FAVORABLE DAY IN THE, IN THE MARKET THAT DAY THAT WE PRICED THE BONDS.
UH, SO WE WERE ABLE TO, UM, ISSUE THE BONDS.
I KNOW THE, THE RATE'S HIGHER THAN, UH, WE WERE BLESSED WITH THE LAST COUPLE YEARS, BUT OF COURSE, WE, YOU KNOW, WE'RE IN THAT INTEREST RATE ENVIRONMENT RIGHT NOW, BUT WE WERE ABLE TO ACHIEVE A 4.481%, UM, INTEREST ON THE BONDS.
OUR NEXT ITEM IS, UM, THE COMBINED UTILITY SYSTEM REVENUE AND REFUNDING BONDS, UM, THAT WE'RE PROPOSING FOR TO CALL SERIES 2024 A.
UM, SO THIS WOULD BE A NEW TRANSACTION THAT WE HAVEN'T STARTED ON YET.
AND, UM, SIMILAR TO THE GENERAL OBLIGATION TRANSACTION, UH, PART OF THIS TRANSACTION WOULD BE TO FIX OUT COMMERCIAL PAPER, UM, THAT WE CURRENTLY HAVE OUTSTANDING.
UM, SO AS YOU KNOW, IN ORDER TO FINANCE OUR CAPITAL IMPROVEMENT PLAN, UH, WE USE COMMERCIAL PAPER TO PAY OUR INVOICES ON THE SHORT TERM BASIS.
AND THEN ONCE THAT COMMERCIAL PAPER BALANCE GETS TO A CERTAIN POINT, UH, WE REFUND THE COMMERCIAL PAPER WITH LONG-TERM FIXED RATE BONDS.
UM, SO THAT IS THE, ONE OF THE PRIMARY COMPONENTS OF THIS TRANSACTION.
IF YOU LOOK ON THE SECOND BULLET POINT, UH, THE TOTAL TRANSACTION SIZE IS ESTIMATED TO BE AROUND 734 MILLION.
AND OF THAT 250 MILLION WOULD BE THAT, UH, REFUNDING OF COMMERCIAL PAPER AND THE BALANCE OF THE TRANSACTION WILL BE, UH, OPPORTUNITIES THAT WE SEE CURRENTLY BASED ON CURRENT MARKET CONDITIONS THAT WE CAN REFUND SOME EXISTING DEBT FOR SOME SAVINGS.
UM, SO THAT WOULD BE THE REMAINDER OF THE, OF THE TRANSACTION, AND THAT WOULD BE ABOUT 485 MILLION OUT OF THE 7 35.
UM, SO CURRENTLY OUTSTANDING, I MENTIONED WE'RE PLANNING TO FIX OUT 250 MILLION OF COMMERCIAL PAPER.
UH, THE CURRENT OUTSTANDING BALANCE ON COMMERCIAL PAPER FOR THE COMBINED UTILITY SYSTEM IS 180 MILLION, AND YOU CAN SEE THAT IN YOUR MONTHLY FINANCIAL REPORT BOOK.
UM, SO THE COMBINED UTILITY SYSTEM
[01:05:01]
DOES ANTICIPATE THAT THEY'RE GONNA CONTINUE TO DRAW COMMERCIAL PAPER TO FUND THEIR PROJECTS BETWEEN NOW AND THE TIME WE PRICE THE BONDS TO GET UP TO THAT $250 MILLION.UH, SO IN TERMS OF OUR NEXT STEPS, WE ARE PLANNING TO BRING AN RCA TO CITY COUNCIL IN MARCH.
THE NEXT SLIDE GIVES YOU OUR STANDARD FORMAT, UH, THAT BREAKS DOWN SOME OF THE KEY FINANCIAL HIGHLIGHTS OF THE TRANSACTION.
SO, LIKE I MENTIONED, 735 MILLION.
IT WILL BE A COMMERCIAL PAPER TAKEOUT AND REFUNDING, UM, FOR THE REFUNDING COMPONENT OF THE EXISTING, UH, DEBT THAT WE WANT TO REFUND FOR SOME SAVINGS.
UM, YOU KNOW, ONE OF THE METRICS THAT WE FOLLOW IS WE WANNA MAKE SURE THAT WE'RE NOT REFUNDING BONDS AND THEN ISSUING BONDS SORT OF, YOU KNOW, KICKING THE CAN DOWN THE ROAD.
SO WE WANNA MAKE SURE WHEN WE DO THAT REFUNDING THAT WE'RE STRUCTURING THE DEBT TO KEEP THE, UH, WEIGHTED AVERAGE LIFE WITHIN ONE YEAR.
SO ACTUALLY WHAT WE'RE ANTICIPATING IS THAT WE MAY BE ABLE TO SHORTEN THE WEIGHTED AVERAGE LIFE OF THE DEBT REFUNDED.
SO THAT'S WHERE YOU SEE THE ROW WHERE IT SAYS, UM, ESTIMATED CHANGE TO WEIGHTED AVERAGE LIFE, NEGATIVE 0.67, SIX YEARS.
SO THAT'S JUST AN INDICATOR THAT WE'RE NOT GONNA BE, YOU KNOW, REFUNDING PRINCIPLE AND KICKING IT OUT.
WE'RE ACTUALLY GONNA SHORTEN IT A LITTLE.
UH, WE ANTICIPATE THAT THE SAVINGS WE'LL BE ABLE TO GET IS, UM, $19.285 MILLION ON A PRESENT VALUE BASIS.
AND WE ESTIMATE THAT WE'LL BE ABLE TO ACHIEVE A INTEREST RATE OF, UH, 3.95 FOR THE TOTAL TRANSACTION.
SO, UM, AGAIN, THESE ARE SUBJECT TO THE CURRENT MARKET.
BY THE TIME WE GET TO THE SPRING, INTEREST RATES COULD BE VERY DIFFERENT, BUT THIS IS WHAT WE'RE ANTICIPATING AT THIS POINT.
SO, LIKE I MENTIONED, WE'LL BRING THE RCA TO COUNCIL IN MARCH AND HOPE TO PRICE THE BONDS IN APRIL NEXT YEAR.
I HOPE YOU'LL HAVE, UH, AT THAT TIME, CHAIRMAN POLLARD UP AT THE, UH, IN NEW YORK DEALING WITH THAT ONE AS WELL, THAT THAT'S GONNA BE A NICE ONE.
SO, UH, I'VE ALWAYS APPRECIATED WORKING WITH YOU, MELISSA, AND, UH, ENJOY THE TIME.
YOU'RE TOUGH AS NAILS, EVEN THOUGH YOU COME HERE AND PRESENT IN THIS MONOTONE PRETTY, UH, UH, EVEN KEEL FACTOR WHEN YOU'RE UP THERE NEGOTIATING ON OUR BEHALF.
YOU DO A PHENOMENAL JOB, AND IT'S BEEN, UH, A, A WONDER TO WATCH YOU DO THAT.
AND THANKS FOR EDUCATING ME AND THANKS FOR EDUCATING VICE CHAIR AND ALL THE FOLKS THAT TOOK THE OPPORTUNITY, UH, TO BE A PART OF THAT DISCUSSION WAY BACK WHEN.
AND, UH, IT, WE LEARNED A LOT FROM YOU, SO I THANK YOU FOR THAT.
UH, WE DON'T HAVE ANY COUNCIL MEMBERS IN QUEUE.
THAT'S BECAUSE YOU DO A GREAT JOB DAY IN AND DAY OUT EXPLAINING ALL THIS STUFF.
OR, UH, MAYBE YOU'LL SPEAK A LITTLE BIT OVER OUR HEAD SO WE DON'T UNDERSTAND A THING THAT YOU'RE TALKING ABOUT,
I THINK IT'LL BE A COMBINATION OF BOTH.
BUT, BUT, UM, THANK YOU FOR YOUR, UM, YOUR PRESENTATION.
AND I, I APPRECIATE YOU GUYS ALWAYS, UM, YOU KNOW, TRYING TO UNDERSTAND AND, UH, ESPECIALLY YOUR PARTICIPATION IN THE BOND TRANSACTIONS.
I THINK YOU GOT TO SEE SOME OF, UH, SOME, A LITTLE BIT EXCITING, SOME OF THE SAUSAGE BEING MADE, BUT, UM, I THINK IT'S, IT'S, UH, INTERESTING TO, TO SEE IT ALL FROM THE BEGINNING TO THE END.
SO I APPRECIATE YOUR PARTICIPATION AND, AND YOUR QUESTIONS AS WELL.
AND IT'S, UH, I DEFINITELY COULDN'T DO IT OUT WITHOUT THE WHOLE TEAM.
I, YOU KNOW, I ALWAYS SAY ON BEHALF OF THE FINANCE WORKING GROUP, SO THAT INCLUDES THE CONTROLLER'S OFFICE, UH, THE LEGAL DEPARTMENT, OUR OUTSIDE FINANCIAL ADVISORS, BOND COUNSEL, DEFINITELY THE ENTERPRISE FUNDS.
SO IT'S A, IT'S A BIG GROUP EFFORT.
YOU AND WILL AND, AND YOUR WHOLE TEAM ARE TREMENDOUS ASSETS FOR THE CITY.
SO THANK YOU FOR WHAT YOU DO EVERY DAY.
WE HAVE ONE PUBLIC SPEAKER, MR. DOUG SMITH.
YEAH, I COULDN'T MISS THIS MEETING.
THE LAST, UH, BFA MEETING OF THE CURRENT ADMINISTRATION.
AND DAVE, I HOPE, UH, YOU'RE NOT GONNA BE THE CONTROLLER, SO YOU WON'T BE ATTENDING THESE MEETINGS AT CONTROLLER, BUT I HOPE YOU'LL JOIN ME IN THE FUTURE AS A CITIZEN BECAUSE YOUR KNOWLEDGE OF THE FINANCES OF THE CITY ARE SO MUCH MORE IN DEPTH THAN MINE, AND IT'S GONNA BE NEEDED GIVEN THE CHALLENGES OF THE CITY IS GONNA BE FACING, UH, WITH BUDGET DEFICITS.
I HOPE I'M NOT THE ONLY ONE, UH, TO SPEAK AT THESE MEETINGS.
UH, COUPLE THINGS REGARDING, UH, SOME OF THE PRESENTATIONS TODAY.
UH, FIRST OF ALL, ON THE HOUSTON FIRST, UH, I'M CURIOUS WHY THEY WERE ABLE TO FUND $20 MILLION WORTH OF CAPITAL IMPROVEMENTS WITH CASHFLOW.
AND THIS YEAR ARE NOW THEY'RE PROPOSING THEY HAVE TO ISSUE DEBT TO DO THAT.
AND THAT WASN'T CLEAR TO ME IN THE PRESENTATION.
WHAT WAS CLEAR TO ME IN THE PRESENTATION WAS THAT
[01:10:01]
THEY WERE RESPONSIBLE FOR THE REDO OF LYNN WYATT SQUARE.AND I'M GONNA GO TO ONE OF THEIR BOARD MEETINGS IN THE VERY NEAR FUTURE AND PRESENT TO THEM SOMETHING THAT I PRESENTED, UH, AT MARTHA'S COMMITTEE REGARDING TRANQUILITY PARK AND THE EMBARRASSMENT THAT IS FOR THIS CITY.
AND COULD THEY CONSIDER WITH OTHER DOWNTOWN AREA BUSINESSES DOWNTOWN HOUSTON, THE TOURS AND VARIOUS THINGS REDOING THAT PARK BEFORE, UH, THE WORLD CUP COMES, I THINK, IS IT IN 2026, IF I REMEMBER CORRECTLY.
AND FINALLY, UH, REGARDING WHAT WAS JUST PRESENTED, UH, REGARDING THE, UH, REFUNDING OF BONDS.
I'M CURIOUS WHY, GIVEN THE WAY INTEREST RATES HAVE INCREASED, THEY'RE NOW REFUNDING BONDS AND, UH, WHY THEY DID NOT DO THAT SOONER, WHEN THE RATES ARE MUCH LOWER.
SO THOSE ARE THE COMMENTS THAT I HAVE.
UH, I'VE ENJOYED WORKING WITH YOU, AND I HOPE THAT WORK CAN CONTINUE.
AND NOW I I ECHO YOUR COMMENTS ON TRANQUILITY PARK.
YOU KNOW, WHAT WOULD BE INTERESTING IN MY OPINION IS THAT, YOU KNOW, THE CITY OF HOUSTON HAS TREMENDOUS AMOUNTS OF, UM, DEFERRED MAINTENANCE ON ALL OF OUR FACILITIES.
ESPECIALLY IF YOU WALK DOWN THE STREET TO WALKER AND LOOK AT THAT BUILDING AND THE AMOUNT OF DOLLARS, THE MILLIONS, MAYBE BILLIONS OF DOLLARS THAT NEED TO GO INTO DEFERRED MAINTENANCE IN ALL OUR FACILITIES.
I'D LOVE TO SEE ONE DAY A P THREE BUILDING SITTING ON TRANQUILITY PARK AS IT IS TODAY, AND TO TAKE THAT SPACE WHERE WALKER IS AND DO SOMETHING DIFFERENT IN THAT SPACE.
BUT THE CITY OF HOUSTON, AS I EXIT OUTTA HERE, UM, NEEDS BETTER FACILITIES.
UH, OUR FACILITIES, WE'RE PUTTING SO MUCH MONEY INTO DEFERRED MAINTENANCE, WE CAN'T KEEP ON DOING THAT.
WE HAVE TO REALLY LOOK AT IT STRONGLY AND DEVELOP SOME TYPE OF, TYPE OF A PUBLIC PRIVATE PARTNERSHIP THAT BUILDS A FACILITY THAT YOU CAN HOUSE.
UM, MANY DEPARTMENTS THAT ARE IN THIS BUILDING TODAY, AND MANY APARTMENTS THAT ARE IN THE, UH, THE WALKER BUILDING NOW, WE LOOKED AT THAT A COUPLE OF YEARS AGO WHEN WE HAD THAT EXXON BUILDING DOWN TO THE SOUTH OF US THAT WAS BEING, UH, UP FOR SALE MM-HMM
AND, UH, WE COULDN'T MAKE IT HAPPEN.
BUT I THINK MOVING FORWARD, THE CITY REALLY NEEDS TO LOOK STRONGLY OUT OF P THREE TO, TO BUILD AND WHAT BETTER LAND THAN ACROSS THE STREET IN TRANQUILITY PARK, WHICH ISN'T REALLY MUCH OF ANYTHING, IN MY OPINION.
I AGREE WITH YOU CURRENTLY, AND THE BIG EMBARRASSMENT IS IT'S RIGHT ACROSS THE STREET FROM CITY HALL.
HOPEFULLY SOMETHING CAN BE DONE.
ANYWAY, YOU KNOW, AN ART DECO BUILDING IN THE CITY OF HOUSTON WILL REMAIN FOREVER AND EVER AND EVER.
IT'S A, THIS IS A BEAUTIFUL BUILDING.
BUT I GO TO SAN ANTONIO AND YOU LOOK AT WHAT THEY DID WITH THEIR CITY HALL AND THE TRANSFORMATION THAT THEY DID AT, IN, IN THAT BUILDING THAT THEY HAVE, WHICH IS A HISTORIC BUILDING.
IT'S A BEAUTIFUL, BEAUTIFUL COMPLEX.
HOPEFULLY WE DESERVE BETTER IF THIS BUILDING STAYS, HOPEFULLY THEY CAN, UH, GET SOME NEW ELEVATORS, BECAUSE YOU GOT, THAT SEEMS TO BE, THAT'S THE BIGGEST PART OF OUR MAINTENANCE.
SO, UH, I'M NOT SURE HE'LL BE SITTING IN THIS CHAIR ON DECEMBER, ON JANUARY 3RD, BUT THE NEXT SCHEDULED BUDGET AND FISCAL AFFAIRS COMMITTEE MEETING WILL BE ON TUESDAY, JANUARY 3RD AT 10:00 AM WITH THE NEW BFA CHAIR.
AND, UM, UH, LAST COMMENTS, WE'LL GO TO VICE CHAIR EDWARD J. POLLARD.
UM, IT'S BEEN A, A PLEASURE AND AN HONOR SERVING AS YOUR VICE CHAIR.
AND, UM, WE'VE LEARNED, MY OFFICE HAS LEARNED A LOT FROM YOU, JESSICA, AND YOUR STAFF.
SO I WANT TO THANK NOT ONLY YOU, UH, BUT YOUR STAFF, UH, FOR ALL THE HARD WORK.
UH, THIS IS A TOUGH COMMITTEE WITH, UH, A LOT OF DETAILS, A LOT OF PRESENTATIONS, UM, IN THE CITY, UH, REALLY LOOKS AT US TO BE ABLE TO HELP THEM, GUIDE THEM, EDUCATE THEM ON THE CITY'S FINANCES.
I CAME INTO THIS ROLE NOT KNOWING, UH, AS MUCH AS I DO NOW ABOUT THE CITY FINANCES.
AND IT'S YOUR OFFICE AND, UH, THE MENTORSHIP THAT YOU'VE SHOWN ME, PAUL AND EVERYONE ELSE IN OUR OFFICE, UM, ABOUT THE ROLE IN THE, IN AND OUT OF CITY FINANCE.
SO ON BEHALF OF MY OFFICE, UH, WE HAVE A, A LITTLE PRESENTATION FOR YOU HERE.
IT'S, UH, SINCE, SINCE YOU CLAIM YOU'RE A ATHLETE, UH, IT, IT IS TWO, IT IS TWO MAYOR PRO TIM.
IT SAYS, UH, THE B-F-A-M-V-P AND EACH OF MY STAFFERS HAVE, HAVE SIGNED THIS BASKETBALL.
AND THIS IS JUST A SMALL WAY TO SAY THANK YOU, UH, FOR THE MENTORSHIP, THE FRIENDSHIP, AND FOR YOU TO REMEMBER US, UH, IN YOUR NEXT ENDEAVORS.
AND WITH THAT MEETING ADJOURNED FOR THE LAST TIME.