[Council Government Performance & Financial Management Committee on May 22, 2023.]
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OUR FIRST ITEM OF THE DAY IS TO CONSIDER A MINUTES OF APRIL 24TH, 2023.
IS THERE A MOTION TO APPROVE? SO MOVED. SECOND. THERE'S A MOTION AND A SECOND.
ARE THERE ANY CHANGES OR CORRECTIONS? HEARING NONE. ALL THOSE IN FAVOR, PLEASE SAY AYE.
AYE. ANY OPPOSED? MOTION CARRIES UNANIMOUSLY.
THANK YOU. OUR NEXT ITEM IS SUPPOSED TO BE BRIEFING ITEM A, BUT I JUST WANT TO PAUSE FOR A SECOND AND TALK ABOUT ITEM J AND ITEM J IS RECOGNITION OF THE DISTINGUISHED BUDGET PRESENTATION AWARD FOR OUR WONDERFUL BUDGET OFFICE.
AND SO JUST WANT TO MAKE SURE WE GET TO THAT ITEM SINCE IT'S SO FAR DOWN THERE AND SAY CONGRATULATIONS TO JACK AND JANELLE AND JEANETTE AND I DON'T SEE HER HERE.
SHE IS ACTUALLY HERE VIRTUALLY.
THERE YOU ARE. CONGRATULATIONS.
SO I THINK IT SAID 24 OR 25 YEARS IN A ROW THAT YOU ALL HAVE RECEIVED THAT.
SO I JUST WANT TO START OFF WITH SOMETHING THAT NICE.
AND WE ALSO INDICATED IN THE MEMO, IF COUNCIL MEMBERS HAVE SUGGESTIONS ABOUT OUR BUDGET DOCUMENT, WE ALWAYS ARE OPEN TO HEARING YOUR THOUGHTS AND WE WOULD TAKE THOSE UNDER CONSIDERATION AS WE DO OUR BUDGET EACH YEAR.
SO IF ANYONE HAS SUGGESTIONS, PLEASE JUST SEND THEM OUR WAY AND WE'LL LOOK AT THEM.
AND HAVE YOU ALREADY RECEIVED SOME SUGGESTIONS? RECEIVED A COUPLE. YES.
OKAY. WELL, I THINK I HAVE SUBMITTED 1 OR 2.
YOU HAVE. AND I MAYBE HAVE ONE MORE TO GO.
ALL RIGHTY. WELL, THANK YOU VERY MUCH.
AND THANK YOU FOR THAT INVITATION TO OFFER SUGGESTIONS ON THE BUDGET PRESENTATION.
SO OUR NEXT ITEM IS DEVELOPMENT SERVICES.
AND BECAUSE WE HAVE A VERY STACKED AGENDA, IF YOU DON'T MIND, I KNOW THAT EVERYBODY'S DONE THE WORK TO READ WHAT YOU PRESENTED, WHICH IS APPRECIATED. SO I'M WONDERING IF ANYBODY HAS QUESTIONS ABOUT THE MEMO AND PRESENTATION.
WE DON'T HAVE TO GET INTO ALL THE DETAILS HERE BECAUSE IT'S PROBABLY MORE FOR ANDREW THAN YOU, BUT I'VE JUST HAD SOME CONCERNS AROUND THE Q TEAM EXPRESSED TO ME JUST ABOUT MORE VIRTUAL MEETINGS THAN IN-PERSON MEETINGS AND CAMERAS BEING OFF AND JUST SOME OF THE DELAYS AND THINGS THAT HAPPEN EVEN DURING THAT Q TEAM ZONE. SO WHILE I'M EXCITED TO SEE THESE NUMBERS GROWING AND THAT MORE OF THESE ARE HAPPENING, I THINK THERE MAY BE SOME PRACTICES THAT WE NEED TO TAKE A LOOK AT AND EXPLORE AND REFINE A LITTLE FURTHER.
SO I JUST WANTED TO GET THAT IN FRONT OF YOU.
THANK YOU. ARE THERE OTHER QUESTIONS FOR DEVELOPMENT SERVICES? COUNCIL MEMBER RIDLEY.
MAJED, I NOTICED THAT THE NUMBER OF DAYS FOR NEW COMMERCIAL REMODEL APPROVALS MUSHROOMED FROM NINE IN MARCH TO 15 IN APRIL, AND AT THE SAME TIME THE NUMBER OF APPLICATIONS DROPPED.
CAN YOU ACCOUNT FOR THAT DISCREPANCY? SO THE NUMBER OF APPLICATIONS DROPPED FROM THE.
GOOD AFTERNOON, FIRST AND FOREMOST HONORABLE CHAIR, MEMBERS OF THE COMMITTEE.
MY APOLOGIES FOR MY BAD MANNERS.
THE NUMBER OF INTAKE HAS DROPPED FROM 190 SOMETHING TO, I BELIEVE 133, 194 TO 133.
BUT WE WERE ABLE TO MOVE ALONG 135 PERMITS.
AS I'VE MENTIONED IN PREVIOUS COUNCIL MEETINGS, USUALLY EVEN IF SOME OF THE THINGS DROPPED, SOME OF THE PERMITS TAKE 3 OR 4 REITERATIONS OF REVIEWS.
SO WITH THAT, WE HAVE ACTUALLY NO PERMITS THAT ARE IN DELAYS.
AND SO WE'RE PROCESSING ALL PERMITS OR ALL REVIEWS ON TIME, EVEN THOUGH THE PERMITS MAY HAVE ONLY BEEN ISSUED LESS THAN THE INTAKE.
WE'RE STILL MOVING PERMITS ALONG AS WELL AS REVIEWS ALONG.
AND THAT'S WITHIN THE 15 DAYS THAT WE'VE COMMITTED TO.
AND NOW WE WANT TO DO WE WANT TO IMPROVE THAT 15 DAY PERIOD TO HOPEFULLY LESS THAN FIVE DAYS.
THAT'S THE COMMITMENT THAT I'VE HEARD FROM FROM STAFF OVER AND OVER AGAIN.
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OKAY. THANK YOU.COUNCIL MEMBER WEST. THANK YOU, CHAIRWOMAN.
WHAT'S GOING ON WITH SELF CERTIFICATION? AND SORRY IF YOU MENTIONED THAT EARLIER.
SO, I'VE MADE SOME EDITS TO THE REPORT.
HOPEFULLY YOU SHOULD BE ABLE TO SEE IT NEXT MONTH.
OKAY. SO THERE'S IT'S COMING WE'RE GOING TO GET MORE UPDATES IN THE NEXT 30 DAYS.
IS THAT WHAT I'M HEARING? WELL, YOU'RE GOING TO GET AN UPDATE AND HOPEFULLY THE FINAL REPORT WE SHOULD BE SEEING IN THE NEXT COUPLE OF WEEKS, THEY'RE WORKING ON IT.
THE CONSULTANTS ARE WORKING ON IT.
THERE'S A FEW THINGS THAT I WANTED TO MAKE SURE THAT WE YOU KNOW, WE HONE IN, SUCH AS THE REVIEWS, THE, YOU KNOW, THE RESPONSIBILITIES, THE LIABILITY, BASICALLY, BECAUSE THERE'S A HUGE LIABILITY WITH WITH SOME OF THE SELF CERTIFICATION REVIEWS AS WE'VE SEEN FROM OTHER CITIES.
SO THOSE ARE THE COMMENTS THAT I'VE MADE.
AND THE CONSULTANT IS MAKING THOSE FINAL COMMENTS AND PRESENTING THEM TO US.
SO WHAT ARE SOME OF THE CHALLENGES THAT YOU'VE HEARD FROM OTHER CITIES? I THINK IT'S NOT ABOUT THE CHALLENGES.
I THINK IT'S ABOUT THE OPPORTUNITY TO SELF CERTIFY AND BE ABLE TO TO FEEL THAT THAT TYPE OF SERVICE IS EQUIVALENT OR BETTER THAN WHAT THE CITY CAN PROVIDE TIME WISE.
ALSO AND FRANKLY, PROCESS WISE.
THEY HAVE TO HAVE SPECIFIC EXPERIENCES.
SO ARE YOU SEEING AS THE CITY WITH THE BEST PRACTICE SO FAR BASED ON YOUR INITIAL REVIEWS? NORTH LAS VEGAS IS PROBABLY ONE THAT HAS BEEN MOST PROGRESSIVE AT UTILIZING THAT OTHER CITIES THAT WE'VE SEEN TULSA WAS WAS NOT IN FAVOR OF IT THAT WE'VE SEEN NOT TO PUT TULSA ON THE SPOT, BUT I THINK THE MODEL DIDN'T WORK FOR TULSA.
BUT NORTH LAS VEGAS HAS BEEN SUCCESSFUL AT IT.
THAT DOESN'T MEAN THAT THERE IS A HUGE VOLUME OF INTAKE ON THE SELF CERTIFICATION.
IT'S JUST THAT NORTH LAS VEGAS HAS HAD THE PROCESSES IN PLACE THAT WOULD MAKE IT SUCCESSFUL.
THANK YOU. CHAIRMAN ATKINS, DID YOU HAVE A QUESTION? CAN YOU HEAR ME? YES.
MAJED ON SELF-CERTIFICATION RIGHT NOW, I KNOW A WHOLE LOT OF COMPANY'S TALKING ABOUT SELF CERTIFICATION. WHAT IS THE NEGATIVE AND WHAT IS THE POSITIVE IF WE DO GO TO THAT FORMAT ? I THINK AT THIS POINT IT'S VERY SPECULATIVE AGAIN I'VE HAD CONVERSATIONS WITH CITIES WHO HAVE HAD A SUCCESSFUL SELF CERTIFICATION PROGRAM.
I'VE TALKED TO THE CITIES WHO HAD A VERY NOT SO POSITIVE CONVERSATIONS ABOUT THE SELF CERTIFICATION.
I DON'T KNOW THAT UNTIL WE ACTUALLY EXPERIENCE IT OURSELVES.
IT WOULD BE NO DIFFERENT THAN A THIRD PARTY REVIEWER.
BUT WITH THE FULL RESPONSIBILITY SHIFTED ON THE SELF CERTIFIER.
IF IT'S DONE WRONG, WE'RE GOING TO DO A MAJOR, MAJOR AUDITS AND MAJOR BOOKKEEPING OF EVERYTHING THAT GOES ON IF SOMETHING GOES WRONG, BASICALLY, AND THE ENFORCEMENT PIECE AND ALL OF THAT IS GOING TO BE PART OF THIS WHOLE DYNAMIC. OKAY.
SO IS BEING IN A SENSE THAT IF WE DO SELF CERTIFICATION, WE NEED TO FILL OUT HOW DO WE CHECK THE BOXES, HOW DO WE MAKE SURE THAT WE ARE THE STEWARD OF WHAT'S GOING WRONG THERE? WHO IS RESPONSIBLE? WHO IS LIABLE? WHAT'S GOING ON IF YOU DO A THIRD PARTY SELF CERTIFICATION? SO SO THERE'S A WHOLE LOT OF WORK OUT HERE FROM YOUR VOICE THAT WE GOT TO LEARN FROM THE BEST PRACTICES OF THE OTHERS SAID HOW ARE THEY GOING TO DO IT AND WHO IS
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GOING TO BE AT THE END OF THE DAY, WHO IS GOING TO BE RESPONSIBLE? IS THAT A FAIR STATEMENT? THAT'S CORRECT, SIR.OKAY. THANK YOU, MADAM CHAIRMAN.
I KNOW THAT IT'S BEEN A DISCUSSION FOR A WHILE NOW, AND I'VE ACTUALLY, IN THE PAST WEEK HEARD FROM THREE DIFFERENT FRIENDS OF MINE IN THE RESTAURANT INDUSTRY AND WHO ARE OPENING NEW LOCATIONS.
SO AS FAR AS COMMERCIAL PERMITTING, I THINK THAT WE ARE WE'RE MAKING IMPROVEMENTS BECAUSE THESE ARE PEOPLE WHO HAVE GONE THROUGH THIS PROCESS PREVIOUSLY.
AND IT WAS REALLY REFRESHING TO HEAR SOME POSITIVE FEEDBACK.
AND THAT'S WHAT THEY WANTED TO GIVE ME.
SO I WANTED TO MAKE SURE TO EXTEND THAT TO YOU AND THE TEAM.
AND MAJOR, MAJOR KUDOS TO THE EXECUTIVE TEAM OF DEVELOPMENT SERVICES, INCLUDING ANDREW VERNON, SAM, CAROLINA, HAREM AND JAMES THE WHOLE TEAM.
THE WHOLE TEAM HAS WORKED INCREDIBLY DILIGENTLY.
I'VE SEEN THEM AT WORK ON A DAILY BASIS.
I BOTHER THEM ON A DAILY BASIS AND IT'S BEEN REFRESHING TO SEE THE ENERGY AND THE CARE THAT THEY EXHIBIT NOT ONLY THEM, BUT THEIR TEAM. I MEAN, I GET ABOUT MAYBE 10 TO 20 KUDOS EVERY SINGLE WEEK ON A JOB WELL DONE.
OF COURSE, YOU KNOW, NOT A LOT OF PEOPLE HEAR THAT.
BUT I KNOW OUR DEPARTMENT RECEIVES IT AND I'M ABSOLUTELY GRATEFUL TO BE PART OF THAT TEAM.
THEY DO A PHENOMENAL JOB AND I'M GLAD TO BE THEIR TEAMMATE.
THANK YOU. ARE THERE ANY OTHER QUESTIONS FOR DEVELOPMENT SERVICES? SO I HAVE ONE, WHICH IS IF YOU COULD JUST MAYBE EXPLAIN TO US, THERE SEEMS TO BE QUITE A LOWER VOLUME OF COMMERCIAL PLAN REVIEW SUBMITTALS THIS YEAR. AND SO IF WE TOOK THE SEVEN MONTHS THAT YOU HAVE REPORTED HERE AND DID SORT OF A TREND LINE, WE WOULD END UP WITH ABOUT 4400 FOR THE YEAR WHERE LAST YEAR WE HAD 5300 PLUS.
SO THAT'S A VERY, VERY BIG DIFFERENCE.
I'M WONDERING IF YOU COULD JUST SPEAK TO THAT AT ALL.
IT REALLY IS CYCLICAL AND IT'S NOT IT'S NOT ATTRIBUTED TO ONE THING OR ANOTHER.
SOMETIMES IT'S YOU KNOW, THE INTEREST RATE PLAYS A PART IN IT.
WE'VE SEEN, THOUGH, A DROP IN THE LARGE COMMERCIAL PROJECTS, BUT WE'VE SEEN AN INCREASE IN THE REMODELING OF SMALL MOM AND POP SHOP AND LARGER, YOU KNOW, LARGER SHOPPING CENTERS FOR THAT MATTER.
I THINK BECAUSE WE'RE LOOKING AT ON THE COMMERCIAL REMODELS, WE'RE LOOKING AT AN ENTIRE YEAR AND THAT'S ABOUT 4100 FOR LESS THAN SIX MONTH.
WELL, SO THAT'S SEVEN MONTHS THOUGH.
YEAH, BUT WE'VE SEEN THAT INCREASE IN RECENT TIMES.
SO I SEE THAT PICKING STEAM ESPECIALLY IN THE SUMMER.
WELL, I GUESS WE'LL SEE HOW THAT GOES.
SEE GOT YOU OUT OF HERE QUICKLY.
THANK YOU, MAJED. OUR NEXT ITEM IS FROM OUR CITY AUDITOR.
WE HAVE A COUPLE OF SPECIAL AUDITS THIS MONTH.
I GUESS I'LL JUST SAY UP FRONT, IF ANYONE WOULD LIKE TO GO INTO EXECUTIVE SESSION FOR THE CONFIDENTIAL AUDITS, THEN WE ARE ABLE TO DO THAT AND WE HAVE SOME FOLKS THAT WILL HELP US SAY ALL THE RIGHT THINGS IF YOU WOULD LIKE TO DO THAT.
OKAY. HONORABLE CHAIR MENDELSOHN AND MEMBERS OF THE GOVERNMENT PERFORMANCE AND FINANCIAL MANAGEMENT COMMITTEE, I AM MARK SWANN, CITY AUDITOR AND MAMATHA SPARKS AUDIT MANAGER, WITH ME AND DANIEL GENTS, PRINCIPAL AUDITOR, TO ASSIST ON ANSWERING QUESTIONS.
SINCE OUR BRIEFING IN APRIL, THE OFFICE OF THE CITY AUDITOR HAS ISSUED FOUR NEW AUDIT REPORTS.
I'LL BE PROVIDING A BRIEFING OF TWO OF THE FOUR REPORTS.
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AND AS YOU MENTIONED, IF WE DESIRE TO GO INTO EXECUTIVE SESSION, WE HAVE THE PEOPLE ON A READY TO DO SO.ON SLIDE THREE IS THE SPECIAL AUDIT, THE CHIEF FINANCIAL OFFICER, ELIZABETH REICH, WHEN SHE LEFT, IS A REQUIREMENT ON THE CITY CHARTER THAT WE DO THESE SPECIAL AUDITS OF ANYBODY WHO DEPARTS OR DIES.
BUT MISS ELIZABETH REICH HAD NO DEBTS TO THE CITY AND HER ACCESS TO HIS SYSTEMS AND FACILITIES WITHIN THE CITY HAVE BEEN TERMINATED ALONG WITH ALL HER AUTHORITIES, AND THERE WERE NO OBSERVATIONS.
SO IF YOU I ASSUME YOU HAVE NO IF YOU HAVE ANY QUESTIONS ON THAT ONE, WE'LL.
OKAY. AND I WAS GOING TO THE NEXT AUDIT IS ON SLIDE SIX AND IT'S THE AUDIT OF THE SAP SOFTWARE SOLUTIONS OF THE DELOITTE CONSULTING SERVICES CONTRACT ON THE SAP SYSTEM IS AN INSTRUMENTAL IN THE COLLECTION OF OVER $1.1 BILLION DOLLARS ANNUALLY IN REVENUE AND THE DELOITTE CONSULTING SERVICES CONTRACT AVERAGES AROUND 5 MILLION A YEAR IN COST.
THE OBJECTIVES OF THIS AUDIT WERE TO VALIDATE IF THIRD PARTY PROVIDER RISK MANAGEMENT IS EVALUATED AND CONTRACTING WITH A THIRD PARTY IS COST EFFICIENT OR THE CITY EXAMINING THE VENDOR FOR SERVICES RENDERED QUALITY AND ACCOUNTABILITY.
AND THE VENDOR CONTRACTING BUILDINGS ARE ACCURATE AND THE OBSERVED CONDITIONS ON SLIDE 7.
A THIRD PARTY RISK MANAGEMENT POLICY WAS NOT IN PLACE.
AN ANALYSIS OF CONTRACT PERFORMANCE AND COST EFFICIENCIES WERE NOT AVAILABLE AND A LONG STANDING RELATIONSHIP WITH THE VENDOR DATED SERVICE LEVEL AGREEMENTS AND IMPRECISE, INCOHERENT DOCUMENTATION OF CONTRACT PROVISIONS REDUCED THE QUALITY AND ACCOUNTABILITY OF VENDOR SERVICES AND THE INTERNAL PROCEDURES FOR INVOICE PAYMENT VERIFICATION FOR TECHNOLOGY CONTRACTS ARE INFORMAL.
ON SLIDES EIGHT, NINE AND TEN, WE HAVE OUR RECOMMENDATIONS TO OUR 11 REPORT RECOMMENDATIONS.
NINE OF THOSE WERE ACCEPTED OR 82% OF THE ACCEPTANCE.
THE TWO RECOMMENDATIONS MANAGEMENT ACCEPTED THE RISK WERE RELATED TO ROTATING PERSONNEL FOR THEIR RESPONSIBILITIES FOR CONTRACT MONITORING AND ROTATING EMPLOYEES FOR THE INVOICE SERVICES TO ENHANCE SERVICE KNOWLEDGE AND REDUCE FAMILIARITY WITH THE VENDOR.
AND SO IF THERE'S ANY QUESTIONS, WE'LL.
ARE THERE ANY QUESTIONS ABOUT THIS? I HAVE A COUPLE QUESTIONS ABOUT THIS.
ALL RIGHT. COUNCIL MEMBER WILLIS.
SURE. I'M LOOKING AT IT LOOKS LIKE PAGE NINE.
I THINK THIS IS OF YOUR REPORT.
IT TALKS ABOUT CONSIDERING A ROTATING SCHEDULE OF EMPLOYEES RESPONSIBLE FOR CONTRACT MONITORING TO ENHANCE KNOWLEDGE SHARING AND CONTINUITY AND REDUCE FAMILIARITY WITH THE VENDOR.
AND THAT RECEIVED AN ACCEPT RISK.
SO CAN YOU TELL US MORE ABOUT THAT OR DO WE NEED TO HEAR FROM WHO IS ACCEPTING THE RISK? BECAUSE THAT CONCERNS ME WHEN I SEE ABOUT C VENDOR RELATIONSHIPS.
AND ANYWAY, THAT'S JUST A CONCERN.
THANK YOU. MY NAME IS MAMATHA SPARKS, I'M THE AUDIT MANAGER FOR THE PROJECT.
AND SO REGARDING THAT PARTICULAR RECOMMENDATION, IT WAS REFERRING TO THE FACT THAT WE HAD THE SAME PERSONNEL IN PLACE FOR THE COURSE OF THE CONTRACT, WHICH WAS IS NOW UP TO 12 YEARS.
SO SOMETIMES THE FAMILIARITY WITH THE CONTRACT REDUCES OUR ABILITY TO REACT QUICKLY TO INCIDENTS AND COMPLIANCE ISSUES THAT COME FROM SERVICE LEVEL AGREEMENTS. SO MANAGEMENT ACCEPTED THE RISK.
THEY CHOSE TO KEEP PERSONNEL IN PLACE.
I THINK MANAGEMENT WOULD BE BETTER TO ANSWER THAT WHY THEY ACCEPTED THE RISK.
SO IT TALKS ABOUT A ROTATING SCHEDULE.
IS THAT IS THERE THE POSSIBILITY OF JUST HAVING MORE PEOPLE INVOLVED WITH IT VERSUS ALWAYS ROTATING? OR IS THERE ANOTHER MEASURE THAT WAS EXPLORED TO KEEP THAT? YOU KNOW. SO THE ROTATING SCHEDULE REFERS TO HAVING A SET OF MANAGERS THAT ARE ALREADY IN PLACE, THE PROJECT MANAGERS THAT ARE ALREADY IN PLACE, AND JUST HAVING THEM SWITCH BETWEEN CONTRACTS BECAUSE THEY'RE ESSENTIALLY PERFORMING THE SAME RESPONSIBILITIES.
BUT IT WOULD JUST BE A DIFFERENT CONTRACT THAT THEY WOULD BE DOING THE SAME COMPLIANCE REVIEW ON.
SOME CONTRACTS MAY NOT REQUIRE ROTATING DEPENDING ON HOW LONG THEY ARE, ESPECIALLY IF THERE ARE TWO YEAR LENGTHS, BUT A CONTRACT THAT EXCEEDS 12 YEARS LIKE THIS AND IT'S CONTINUING. THERE'S A CONSIDERATION FOR CHANGING THAT OUT.
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YEARS IF YOU JUST HAD THE SAME GROUP.IT JUST DOESN'T SEEM LIKE A GOOD IDEA.
SO I GUESS WE CAN FOLLOW UP ON THAT OR GET A RESPONSE ON WHY THAT IS.
SO I JUST WANT TO GO THROUGH THE OBSERVED CONDITIONS BECAUSE I FEEL LIKE OF THE AUDITS THAT I'VE SEEN YOU DO, THESE ARE SOME VERY SUBSTANTIAL COMMENTS THAT WERE MADE.
SO I'D LIKE TO ACTUALLY START FROM THE BOTTOM.
INTERNAL PROCEDURES FOR INVOICE PAYMENT VERIFICATION FOR TECHNOLOGY CONTRACTS ARE INFORMAL.
I'M WONDERING IF YOU CAN EXPLAIN WHAT THAT MEANS EXACTLY.
SO CAN YOU JUST PULL THE MICROPHONE A LITTLE BIT CLOSER? THERE'S ACTUALLY TAKE THE WHOLE UNIT AND BRING IT CLOSER TO YOU.
SO THE CURRENT PROCEDURES FOR INVOICING ARE DETERMINED BY CITY COMPTROLLER'S OFFICE.
AND SO THEY ARE GENERIC AND THEY'RE ACROSS THE CITY.
BUT FOR THE INVOICING PROCEDURES, FOR TECHNOLOGY CONTRACTS, THEY REQUIRE A LITTLE BIT MORE DETAIL, ESPECIALLY THE NUMBER OF CHANGES THAT GO ALONG THROUGH THE ENTIRETY OF THE CONTRACT. SO THE INVOICES THEMSELVES DON'T HAVE SUFFICIENT DETAIL TO SHOW WHAT'S BEEN SERVICED, WHAT SERVICE LEVEL AGREEMENT HAS BEEN MET OR NOT MET, HOW MANY HOURS HAVE BEEN SPENT.
SO THAT WAS WHY WE HAD SAID, LET'S TAKE THESE INFORMAL PROCEDURES THAT ARE BEING CONDUCTED, BUT HAVE THEM DEVELOPED SPECIFICALLY FOR THESE PROCUREMENT CONTRACTS THAT ARE RELATED TO TECHNOLOGY, BECAUSE THE TYPE OF INFORMATION THAT'S INCLUDED IN THAT INVOICE VARIES FROM TECHNOLOGY TO OTHER TYPES OF CONTRACTS. SO FOR INSTANCE, YOU WERE JUST SAYING ABOUT LIKE THE NUMBER OF HOURS WHERE IN A TECHNOLOGY CONTRACT IT MIGHT BE THE NUMBER OF, YOU KNOW.
THERE'S THE PROJECTS, THE TYPE OF PROJECTS.
APPLICATIONS SO IS THAT THE KIND OF ITEM THAT YOU'RE TALKING ABOUT THERE? YES. OKAY.
BECAUSE INFORMAL TO ME MEANS SOMETHING VERY DIFFERENT AND A LITTLE MORE ALARMING THAN THAT.
OKAY. SO A LONG STANDING RELATIONSHIP WITH THE VENDOR DATED SERVICE LEVEL AGREEMENTS AND IMPRECISE, INCOHERENT DOCUMENTATION OF CONTRACT PROVISIONS, REDUCE THE QUALITY AND ACCOUNTABILITY OF VENDOR SERVICES.
SO THAT TALKS ABOUT LARGE THE ENTIRE CONTRACTING MONITORING PROCESS.
SO THERE ARE SEVERAL COMPONENTS TO IT.
THE DOCUMENTATION SPEAKS TO THE FACT THAT TECHNOLOGY PROCUREMENT CONTRACTS DON'T STAY STILL.
AND THERE ARE SEVERAL CHANGES THAT HAPPEN TO EACH PART OF THE CONTRACT.
THE WAY THE CITY CONTRACTS THOSE THROUGH IS THROUGH SUPPLEMENTAL AGREEMENTS.
THE SUPPLEMENTAL AGREEMENTS DON'T ALWAYS HAVE THE LEVEL OF DETAIL, AND THEY DON'T TRACK BACK TO ALL THE CHANGES NECESSARILY THAT HAPPENED FROM THE BEGINNING TO THE END.
AND BECAUSE TECHNOLOGY IS SUCH AN EVOLUTIONARY PROCESS, THE LEVEL OF DETAIL IS SIGNIFICANT.
AND WITH EACH CHANGE, THERE'S A DIFFERENT SERVICE LEVEL AGREEMENT THAT NEEDS TO BE MET.
AND SO IF YOU DON'T DEFINE THOSE, THEN THE IMPRECISE AND LACK OF COHERENCE IN THAT DOCUMENTATION DOESN'T GIVE US THE LEVERAGE TO HOLD THE VENDOR ACCOUNTABLE FOR WHAT THEY SHOULD BE PROVIDING US.
AND THAT'S WHAT THAT'S SPEAKING TO.
AND IF YOU GET FAMILIAR WITH THE VENDOR OVER A PERIOD OF TIME, THEN YOU KNOW WHAT THEY'RE PROVIDING.
SO I MEAN JUST THAT ITEM ALONE, I SEE THAT IT'S BEEN ACCEPTED BY MANAGEMENT.
BUT I MEAN HOW MUCH TIME DO THEY HAVE TO CORRECT THAT ITEM? THIS IS ONE OF THOSE ITEMS THAT'S A LONG WHAT I CALL A LONG SHELF ITEM BECAUSE IT'S NOT A ONE TIME DO IT ONCE AND YOU'RE DONE BECAUSE THE PROCESS THAT THEY IMPLEMENT NOW CAN BE APPLIED TO OTHER CONTRACTS AS WELL, NOT JUST THIS ONE, BECAUSE WE FOCUSED ON SAP AND BECAUSE IT IS SOMETHING THAT POTENTIALLY COULD BE REPLACED. WE'RE RECOMMENDING THAT TO BE DONE SOONER THAN LATER BECAUSE THIS COULD BE THE BASELINE FOR WHICH THE FUTURE CONTRACTS ARE BEING EVALUATED AGAINST.
OKAY. SO LET'S GO UP TO THE NEXT ONE.
ANALYSIS OF CONTRACT PERFORMANCE AND COST EFFICIENCY ARE NOT AVAILABLE.
I MEAN, HOW WOULD WE NOT KNOW THAT CONTRACT PERFORMANCE? SO THIS GOES BACK TO WHAT WAS INITIALLY ESTABLISHED IN THE CONTRACT.
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DAYS, NUMBERS, HOURS.THE REPORTING METRICS, HOWEVER, ARE NOT AT THAT SAME PACE.
THEY ARE COMPLETELY DIFFERENT.
SO YOU CAN'T CORRELATE THOSE TO SAY THIS MATCHES.
BUT OF COURSE, SOMEBODY HAS THE DATA OF HOW LONG THAT TICKET HAS BEEN OPEN.
RIGHT. IN YOUR VERY EASY TO UNDERSTAND EXAMPLE, WE'RE JUST NOT RECEIVING IT AS REPORTING.
BUT AGAIN, THEY WERE RELATED AND THEY WERE REPORTED IN A DIFFERENT METRIC LEVEL.
SO NO ONE ACTUALLY, TO OUR KNOWLEDGE, TOOK THE METRICS THAT WERE REPORTED IN THE REPORT AND COMPARED THEM BACK TO THE SERVICE LEVEL AGREEMENT, WHICH WAS A DIFFERENT LEVEL OF METRICS TO SEE IF THAT WAS BEING MET.
LET'S TALK ABOUT THE FIRST ONE, BECAUSE, YOU KNOW, YOU HAVE THE MAGIC CYBERSECURITY WORD IN THERE.
AND I THINK WE'RE ALL A LITTLE SENSITIVE TO THAT WORD RIGHT NOW.
SO CAN YOU TALK A LITTLE BIT ABOUT THAT FIRST OBSERVATION? SURE. THIS IS WITH THIRD PARTY RISK MANAGEMENT THE CITY IS GOING MORE AND MORE TOWARDS CONTRACTING CERTAIN SERVICES WITH EXTERNAL PARTIES.
AND SO WHEN THAT HAPPENS, WE'RE TRANSFERRING A PORTION OF OUR RISK TO THESE VENDORS.
AND SO THERE'S ALWAYS THE RISK THAT WE'RE NOT GETTING FROM THEM WHAT WE WOULD NEED.
AND WITH EVERY TECHNOLOGY CONTRACT, CYBERSECURITY IS GOING TO BE A COMPONENT OF THAT.
SO THE CONCERN HERE WAS THAT BEFORE WE STARTED HAVING SOME OF THESE CYBERSECURITY PRACTICES, THE CONTRACT WAS IN PLACE AND IT DOESN'T HAVE ALL THOSE COMPONENTS INCLUDED THAT MIGHT BE CONSIDERED FOR THIRD PARTY RISK MANAGEMENT, SUCH AS HOW MANY OTHER PEOPLE ARE INVOLVED.
SO THAT POLICY OF EVALUATING HOW FAR DOWN THE CHAIN DO WE WANT TO GO WITH THE RISK AND HOW MUCH RISK ARE WE TRANSFERRING THAT'S CURRENTLY NOT IN PLACE? OKAY. SO DOES ANYBODY HAVE ANY ADDITIONAL QUESTIONS ABOUT THIS AUDIT? WHAT I'D LIKE TO PROPOSE IS I THINK COUNCIL MEMBER WILLIS ASKED A VERY GOOD QUESTION ABOUT THE ACCEPTANCE OF RISK FOR THAT ITEM.
WELL, THERE'S TWO ITEMS, BUT ALSO, I MEAN, TO ME, IT SOUNDS LIKE EVERYTHING IS REALLY CONTRACT BASED, LIKE THE CONTRACTS JUST NOT FITTING THE WAY WE'RE EXPECTING THE PERFORMANCE TO EVOLVE.
WHAT I'D LIKE TO ASK JACK IS IF WE COULD MAYBE PUT THIS ITEM BACK AND HAVE MAYBE THE CITY ATTORNEY TALK TO US A LITTLE BIT ABOUT THE CONTRACTING AND MAYBE BILL WON'T BE SO BUSY NEXT MONTH AND CAN TALK TO US A LITTLE BIT ABOUT HOW THIS IS ALL BEING WORKED OUT AND HOW THEY CAN ADDRESS IT.
WOULD THAT BE ALL RIGHT? YES, MA'AM.
NEXT. AND THE REMAINING TWO AUDITS ARE THE ONES, IF YOU WISH TO GO INTO EXECUTIVE SESSION ON AVIATION, ON THE C2M2 MATURITY MODEL. AND RELATED TO THIS, WE ALSO LOOKED AT THE SAP SECURITY ON INFORMATION SECURITY ELEMENTS OF THIS CONTRACT. AND SO THOSE ARE THE TWO ITEMS. SO BOTH OF THOSE AUDITS CAME TO, I THINK, THE FULL COUNCIL TO REVIEW, BUT THEY'RE NOT DISCLOSED PUBLICLY FOR OBVIOUS REASONS.
BUT IF YOU HAVE QUESTIONS ABOUT THEM, WE CAN GO INTO EXECUTIVE SESSION.
DOES ANYBODY FEEL THE NEED TO DO THAT? OKAY. I THINK NOT.
SO THANK YOU VERY MUCH FOR SHARING THAT INFORMATION AND MAKING SURE THAT WE ARE AWARE OF OUR SITUATION IN BOTH OF THOSE AREAS. VERY APPRECIATED.
SO OUR NEXT ITEM IS OUR QUARTERLY INVESTMENT REPORT.
GOOD AFTERNOON. CHAIR MENDELSOHN, MEMBERS OF CITY COUNCIL.
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MY NAME IS JENNY KERZMAN, ASSISTANT DIRECTOR OF TREASURY AND THE CITY COMPTROLLER'S OFFICE.THANK YOU FOR THE OPPORTUNITY TO PROVIDE YOU TODAY AN INVESTMENT PORTFOLIO OVERVIEW.
DURING THIS PRESENTATION, WE WILL REVIEW THE CITY'S INVESTMENT POLICY, THE INVESTMENT COMMITTEE, THE INVESTMENT ADVISOR AND WILL PROVIDE YOU HIGHLIGHTS OF THE SECOND QUARTER PERFORMANCE FOR ALL FUNDS.
THE TREASURY DIVISION OF THE CCO MANAGES THE INVESTMENT OF CITY FUNDS FOLLOWING THE GUIDELINES PROVIDED BY THE INVESTMENT POLICY AND THE STATE OF TEXAS PUBLIC FUNDS INVESTMENT ACT, KNOWN AS THE PFIA.
THE CITY'S INVESTMENT POLICY IS APPROVED ON AN ANNUAL BASIS AND IS SUBMITTED TO THE GOVERNMENT TREASURERS ORGANIZATION OF TEXAS GTOT FOR CERTIFICATION EVERY TWO YEARS.
SO I MENTIONED THIS IS A TWO YEAR CERTIFICATION THAT WILL END ON MAY 31ST OF 2025.
CITY'S INVESTMENT COMMITTEE MEETS ON A QUARTERLY BASIS REVIEWING THE PERFORMANCE OF THE PORTFOLIO, ECONOMIC TRENDS AND THE STRATEGY FOR THE FOLLOWING QUARTER. WHILE MEETING THE OBJECTIVES OF THE INVESTMENT POLICY OF SAFETY, LIQUIDITY AND YIELD.
AND WE'RE ADDING A NEW MEMBER, THE DIRECTOR OF BUDGET AND MANAGEMENT SERVICES.
THROUGHOUT THE YEARS, THE CITY HAS USED THE SERVICES OF AN INVESTMENT ADVISOR.
CURRENTLY WE ARE UNDER A THREE YEAR CONTRACT WITH MEEDER PUBLIC FUNDS.
PAGE SEVEN IS WHEN WE START HIGHLIGHTING THE SECOND QUARTER PERFORMANCE FOR ALL FUNDS, WHICH INCLUDES THE OPERATING PORTFOLIO, THE ARTS ENDOWMENT, THE GO AND THE DALLAS WATER UTILITY COMMERCIAL PAPER PROGRAMS, THE IDA GREEN LIBRARY FUND AND THE WATER RESERVE.
AS OF MARCH 31ST, 2023, THE MARKET VALUE FOR ALL FUNDS WAS $3,488,074,267, PRODUCING AN ENTRANCE EARNINGS OF $26,332,611. THE WEIGHTED AVERAGE MATURITY WAS 634 DAYS AND IT WAS WITH THE YIELD OF 3.40%.
HERE ON PAGE EIGHT, YOU WILL SEE THE BALANCES OF ALL THE DIFFERENT PORTFOLIOS.
THE CHANGES FROM THE QUARTER ENDING ON DECEMBER 31ST AND THE FINAL BALANCE OF 331.
AS I MENTIONED, MARCH 31ST, THE OPERATING PORTFOLIO PUT BALANCE WAS $3,402,892,324. WE PRODUCE AN INTEREST EARNINGS OF 25,485 064 IT'S WORTH TO MENTION THAT THE BOOK BALANCE FOR THE SECOND QUARTER OF THE CURRENT FISCAL YEAR IS THE HIGHEST OF THE LAST FIVE YEARS.
SO YOU CAN SEE ON PAGE 10 THE BOOK BALANCE HOW IT HAS GROWN FOR THE STARTING IN 2018 OF TO THE CURRENT FISCAL YEAR SHOWING THE SECOND QUARTER, OF COURSE, BEING THE HIGHEST.
YOU SEE HOW IT'S BROKEN DOWN BY EACH MONTH AND YOU CAN SEE THAT JANUARY AND FEBRUARY ARE USUALLY OUR HIGHEST MONTHS, AS WE DID ALL OF THE PROPERTY TAX INCOME THAT COMES INTO THE CITY.
THIS CURRENT YEAR WE RECEIVE A LITTLE OVER 1.3 BILLION IN PROPERTY TAXES.
PAGE 12, ONE OF MY FAVORITES, THE INTEREST EARNED FOR THE SECOND QUARTER OF 2023, WAS 2 5.5 MILLION
[00:35:06]
COMPARED TO 12.1 MILLION THE PREVIOUS QUARTER, FOR A TOTAL OF OVER $37 MILLION DOLLARS IN JUST SIX MONTHS.AND MY FAVORITE CHART, PAGE 13.
WE WERE AT A HIGH OF 46 MILLION AVERAGE AND WE STARTED GOING DOWN AS THE INTEREST RATES STARTED TO COME DOWN, WE WENT FROM 46 TO 29.5, THEN 7.5 DURING THE YEAR OF 2021 WENT UP A LITTLE BIT IN 21, 22 AND NOW AT 37.6. THE ASSET COMPOSITION IS ONE OF THE FIRST THINGS THAT WE WORK WITH OUR INVESTMENT ADVISOR IT'S HOW WE CAN REDUCE THE AMOUNT OF CASH THAT WE MAINTAIN OVERNIGHT.
RIGHT NOW OUR OBJECTIVE IS, OF COURSE, TO MAINTAIN ENOUGH LIQUIDITY ON HAND TO MEET OUR DEBT PAYMENTS AND ANY OTHER EXPENDITURES AND TO MINIMIZE THE AMOUNT OF EXCESS CASH IN THE OVERNIGHT.
WE ARE AIMING AT A 10% TO MAINTAIN OVERNIGHT.
AND I'M GOING TO LET SCOTT TAKE OVER HERE SO HE CAN TALK TO YOU A LITTLE BIT ABOUT THE ASSET COMPOSITION AND WHY IS THAT IS SO IMPORTANT IN A PORTFOLIO AS LARGE AS THE CITY OF DALLAS? YEAH.
THANK YOU FOR HAVING ME. AND MY NAME IS SCOTT GRUBER.
SO ONE OF THE BIG KEY CHARACTERISTICS THAT WE'VE BEEN ABLE TO ADD VALUE OVER THIS PAST YEAR IS MOVING THINGS IN AND OUT OF BANKING PRODUCTS OVERNIGHT, GOVERNMENT INVESTMENT POOLS, COMMERCIAL PAPER, ETCETERA AS THE ENVIRONMENT HAS CHANGED.
WE TOOK A LOOK AT THE CITY'S INVESTMENT POLICY, MADE A FEW QUICK CHANGES.
AND NOW, AS THE ECONOMY IS CHANGING AND THE ENVIRONMENT IS CHANGING, WE CAN BE MORE ADAPTABLE AND REACT QUICKLY WITHOUT HAVING TO THEN COME CHANGE THE POLICY DOWN THE ROAD. THIS HAS BEEN VERY BENEFICIAL, AS YOU CAN SEE WITH SOME OF THE INTEREST EARNINGS OVER THE PAST SIX MONTHS.
SO WE WANT TO BE PREPARED FOR THAT.
YOU CAN SEE JUST OVER THE LAST FEW QUARTERS, WE'VE MOVED A LOT MORE FUNDS OUT OF INVESTMENT POOLS AND BANKS WHICH ARE LIQUID ASSETS AND MOVING THEM MORE INTO TERM PRODUCTS TO TRY TO LOCK IN AND CAPTURE INTEREST RATES TODAY FOR A LONGER PERIOD OF TIME.
KEY THINGS FOR US IS, AS JENNY MENTIONED, WAS MAKING SURE THAT OVERNIGHT LIQUIDITY IS SUFFICIENT.
YOU KNOW, WE WANT TO BE VERY LIQUID.
THAT'S PRIORITY TO MEET DEBT OBLIGATIONS AND EXPENDITURES.
BUT WE ALSO DON'T WANT TO BE TOO EXCESSIVE SO THAT WE'RE NOT MISSING OUT ON LOGGING IN INCOME.
SO OUR GOAL IS TO DIVERSIFY, LEVERAGE THAT PORTFOLIO AND LOCK IN THINGS FROM THAT 3 TO 5 YEAR PERSPECTIVE, WHICH WAS A NEWER CONCEPT TO THE CITY WITHIN THE PAST YEAR. I MEAN, YOU'LL SEE WE ARE VERY WELL DIVERSIFIED.
WE'RE SPREADING THINGS OUT ACROSS US TREASURIES, GOVERNMENT AGENCIES, COMMERCIAL PAPER, ETCETERA, ALL OPERATING WITHIN THE CONFINES OF THE CITY'S POLICY AS WELL AS THE PUBLIC FUNDS INVESTMENT ACT.
A COUPLE KEY CHARACTERISTICS WEIGHTED AVERAGE YIELD WEIGHTED AVERAGE MATURITY.
TWO VERY IMPORTANT CHARACTERISTICS THAT WE FOCUS ON.
WEIGHTED AVERAGE YIELD IS A BYPRODUCT OF WHAT WE'RE INVESTING IN.
RIGHT NOW AS OF 3/31, THE CITY'S PORTFOLIO WAS A 3.36 AND IT IS CURRENTLY CLIMBING AND WE EXPECT THAT TO CONTINUE OVER THE NEXT COUPLE OF QUARTERS, EVEN AS INTEREST RATES HAVE STARTED TO TOP OUT BECAUSE OF HOW WE'VE STRUCTURED THE PORTFOLIO, WE'LL STILL BE BENEFITING FROM ROLLING OUT OF LOWER YIELDING SECURITIES AND REPURCHASING HIGHER YIELDING SECURITIES FOR THE NEXT FEW MONTHS.
WEIGHTED AVERAGE MATURITY IS, OH, I'M SORRY, WE SKIPPED AHEAD.
[00:40:08]
BUT AS WE'VE COME INTO A RISING INTEREST RATE ENVIRONMENT, POSITIONING THAT FOR THE NOW AND INTO THE FUTURE IS GOING TO BE VERY IMPORTANT.SO NOW LOOKING AT PAGE 19, THE WEIGHTED AVERAGE MATURITY, ONE OF THE OTHER KEY CHARACTERISTICS THAT WE MADE WITHIN THE CITY'S POLICY WAS TO ALLOW THE PORTFOLIO TO BE ABLE TO GO A LITTLE BIT LONGER.
SO BEFORE THE MAXIMUM AVERAGE MATURITY WAS ONE AND ONE HALF YEARS.
NOT THAT WE WOULD EVER GET TO THAT POINT IN OUR OPINION, BUT IT JUST ALLOWS US TO PUSH A LITTLE MORE FUNDS INTO THAT 3 TO 5 YEAR SPACE, WHICH NOW, AS INTEREST RATES HAVE BEEN DECLINING ON THE LONGER END LOCKS IN AND SECURES INTEREST INCOME FOR A GREATER PERIOD OF TIME FOR THE CITY.
AND YOU CAN SEE THAT THAT STATISTIC IN THE CHART THERE GOES FROM 400 OR 251 DAYS A YEAR AGO TO 432 DAYS JUST OVER THIS PAST QUARTER. AND WE'LL BE VERY FLUID.
OBVIOUSLY, YOU KNOW, THE LIQUIDITY AND THE NEEDS OF THE CITY'S EXPENDITURES DRIVE PRIMARILY MOST OF THE STRATEGY, BUT WE WILL BE VERY FLEXIBLE AND ADJUST THIS AS NEEDED GOING FORWARD. THANK YOU, SCOTT.
AND THE LAST SLIDE IS JUST THE NEXT STEPS FOR US IS OF COURSE, CONTINUE TO PROVIDE QUARTERLY INVESTMENT REPORT TO THIS COMMITTEE AND WE'LL COME TO THE COMMITTEE AND TO CITY COUNCIL IN OCTOBER TO GET THE APPROVAL FOR THE ANNUAL APPROVAL OF THE INVESTMENT POLICY.
AT THIS POINT, WE DON'T ANTICIPATE ANY CHANGES, AS THERE WERE SEVERAL CHANGES MADE LAST YEAR.
HAPPY TO ANSWER ANY QUESTIONS YOU MIGHT HAVE.
WELL, THANK YOU AND I APPRECIATE YOU POINTING OUT YOUR FAVORITE SLIDES.
I SEE THAT. COUNCIL MEMBER RIDLEY, I'M GOING TO CALL ON YOU FIRST.
THANK YOU, MADAM CHAIR. MR. GRUBER. ON SLIDE 15, I NOTICED THAT THE TREND IN THE PROPORTION OF THE PORTFOLIO IN MONEY MARKETS HAS DECLINED IN THE LAST THREE YEARS, FROM 17% TO ONE TENTH OF A PERCENT AT TIMES WHEN MONEY MARKETS ARE YIELDING RECORD HIGH PERCENTAGES RECENTLY 4.9%, WHICH IS 40% MORE THAN YOUR WEIGHTED AVERAGE YIELD IN THIS PORTFOLIO.
I'M CURIOUS WHY THE ALLOCATION TO THE MONEY MARKET HAS DECLINED SO SUBSTANTIALLY? YES, SIR. VERY GOOD QUESTION.
OBVIOUSLY, RIGHT NOW WE'RE IN AN INVERTED ENVIRONMENT.
SO THE SHORTER YOU ARE, THE HIGHER YIELD YOU'RE GOING TO GET.
WHAT THAT TELLS US IS THAT THE MARKETS ARE VERY BEARISH TO SHORT TERM ENVIRONMENTS.
SO AS WE EXPECT THE FEDERAL RESERVE TO BE TOPPING OUT AND SLOWING THE PACE OF THEIR RATE HIKES AND EVENTUALLY STARTING TO CUT INTEREST RATES, YOU WILL SEE THOSE YIELDS DROP QUICKLY TO WHERE THE CURVE NORMALIZES.
SO IN THIS CASE, WE NOW NEED TO BE PUSHING STUFF OUT OF THOSE HIGHER YIELDS, GIVING UP A LITTLE BIT OF YIELD ON THE SHORT END TO PREPARE OURSELVES AND LOCK IN FOR AN EXTENDED PERIOD OF TIME.
AND SO WE DO UNFORTUNATELY, HAVE TO GIVE UP SOME SHORT TERM YIELD NOW FOR THE LONG TERM GAIN, AND THAT HAS BEEN THE STRATEGY TO TRY TO POSITION A LITTLE BIT LONGER TERM AND, YOU KNOW, LOCK IN RATES FOR A LONGER PERIOD OF TIME.
SO FOR THE FUNDS THAT YOU ARE ALLOCATING FOR SHORT TERM OBLIGATIONS OR NEAR TERM OBLIGATIONS PER THE CHART ON SLIDE 16, WHAT IS THE TYPE OF INSTRUMENT THAT YOU'RE USING TO HOLD THOSE FUNDS IN? IS IT IS THAT WHERE THE MONEY MARKET IS, OR ARE THERE OTHER SHORT TERM INSTRUMENTS THAT YOU USE FOR IMMEDIATE CASH NEEDS? LET ME PLEASE ANSWER THAT QUESTION.
WE USE TEXAS CLASS LOGIC AND TEXAS AND TEXPOOL.
ALL THREE ARE PAYING ABOUT 5.2.
SO HAVING THE OPTION OF USING THOSE THREE LGIPS, THAT'S WHERE THE FUNDS ARE.
[00:45:06]
THE OTHER PIECE OF CASH AND EQUIVALENTS, THAT SMALL AMOUNT, IT'S MONEY KEPT AT THE BANK THAT WE ARE USING TO OFFSET FEES BASED ON THE INCREASE OF THE INTEREST RATES.SO WE ARE ABLE TO KEEP ENOUGH CASH THERE TO OFFSET OUR FEES ON A MONTHLY BASIS.
SO BETWEEN THOSE TWO, THAT'S WHERE YOU SEE THE LIQUID FUNDS.
AND WHAT KIND OF AN INSTRUMENT IS THE LGIP? IT'S ESSENTIALLY A MONEY MARKET THAT YOU'RE REFERENCING EXCLUSIVE TO STATE AND LOCAL GOVERNMENTS.
IT'S A MIX. SO IT'S SHORT TERM MATURITIES.
YES. YOU CAN CALL UPON IT WHENEVER YOU NEED IT, DAILY LIQUIDITY.
DAILY. AND WHAT DO YOU DO WITH THE 25 MILLION THAT WE'VE EARNED IN THE LAST QUARTER ON THE INVESTMENTS? WHERE DOES THAT MONEY GO? THE FUNDS GET ALLOCATED THROUGH ALL THE DIFFERENT FUNDS THAT PARTICIPATE.
JACK IRELAND CHIEF FINANCIAL OFFICER.
WE BUDGET IN THE DIFFERENT FUNDS THAT WE WILL RECEIVE REVENUE.
THEY MAKE A PROJECTION ON INTEREST EARNINGS FOR THEIR OPERATIONAL FUND.
THIS YEAR WE'RE SEEING RETURNS HIGHER THAN BUDGET.
SO THEY WILL STAY IN THE OPERATING FUND WHERE THE CASH THE DEPOSIT IS.
THANK YOU. ARE THERE ANY OTHER QUESTIONS FROM THE COMMITTEE? OKAY. WELL, HEARING NONE.
THANK YOU FOR YOUR PRESENTATION.
APPRECIATE IT. THANK YOU, SEEING YOU DIDN'T GET PUT AT THE END OF THE AGENDA THIS TIME.
YOU SHOULD HAVE THE PRESENTATION IN FRONT OF YOU.
SO SINCE YOU HAVEN'T HAD TIME TO REVIEW THIS IN ADVANCE, DEPENDING ON WHAT IT SAYS AND THE NUMBER OF QUESTIONS, WE MAY END UP NEEDING TO HOLD THIS. IS THERE A TIMELINESS? I'M SORRY. CAN YOU IS THERE A TIMELINESS TO THIS PRESENTATION? A TIMELINESS? SO WE WANTED TO GO OVER THIS TODAY AND THEN ON JUNE THE 13TH WE WILL BE BACK.
SO IN THREE WEEKS FOR ANOTHER GPFM MEETING.
AND THEN THERE'S AN ACTION ITEM ON JUNE THE 14TH.
SO WE WANTED TO COME BEFORE GPFM TWICE ABOUT THIS TOPIC.
NEXT TO THE END IS STEVE JOHNSON FROM HILLTOP SECURITIES, AND STEVE IS OUR FINANCIAL ADVISOR AND SO HE'S JOINING US TODAY . FOR THE OVERVIEW ON SLIDE TWO, JUST HERE TODAY TO REVIEW THE PURPOSE AND BACKGROUND OF OUR BRIEFING, GO THROUGH THE FINANCIAL PROJECTIONS FOR BOTH THE CONVENTION CENTER FAIR PARK.
TALK ABOUT THE UPCOMING DEBT ISSUANCE THAT WE HAVE PLANNED, REVIEW OUR TIMELINE AND OUR NEXT STEPS.
AND THERE'S A TIMELINESS ON THIS AND THAT WE DO NEED TO ISSUE DEBT DURING THIS CALENDAR YEAR.
SO WE ARE REQUIRED TO ISSUE THE FIRST TRANCHE OF THE DEBT BY DECEMBER THE 31ST.
YEAH. THANKS, CHUCK. GOOD AFTERNOON, CHAIR AND COMMITTEE MEMBERS.
I'M THE TREASURY ADMINISTRATOR FOR DEBT AND THE CONTROLLER'S OFFICE.
TO GIVE YOU A QUICK BACKGROUND, IF I CAN JUST ASK YOU TO TAKE THE ENTIRE MICROPHONE UNIT AND MOVE IT CLOSER.
[00:50:03]
THANK YOU. SORRY ABOUT THAT.WELL, AGAIN, MY NAME IS FELICIA HERNANDEZ.
I'M THE TREASURY ADMINISTRATOR FOR DEBT IN THE CITY CONTROLLER'S OFFICE.
AND I'M JUST GOING TO START WITH A BRIEF BACKGROUND.
THIS IS INFORMATION THAT YOU'VE PROBABLY SEEN BEFORE SEVERAL TIMES, BUT QUICKLY IN 2019, OF COURSE, WE BEGAN THE PROCESS OF DISCUSSIONS, INTERACTION WITH FAIR PARK AND THE CONVENTION CENTER TO DISCUSS THE POTENTIAL RENOVATION AND EXPANSION OF THE CENTER TO REMEDY APPROXIMATELY 6 TO 700 MILLION OF DEFERRED MAINTENANCE AND ALLOW THE CITY TO KEEP PACE WITH ITS COMPETITIVE SET.
THEN IN 2021, THE LEGISLATIVE SESSION ALLOWED EXCUSE ME FOR CHAPTER 30, I'M SORRY, 334 OR THE BRIMER BILL TO INCLUDE FAIR PARK IN A SPLIT USE OF THE ADDITIONAL 2% HOT OR HOTEL OCCUPANCY TAX, ASSUMING AN EXPANSION OF THE CONVENTION CENTER WAS UNDERWAY.
AND THEN THE CITY COUNCIL APPROVED A RESOLUTION AUTHORIZING AN 80/20 PERCENT SPLIT OF THE ADDITIONAL 2% INCREASE IN HOT OR BRIMER, WHICH WAS THEN APPROVED BY THE VOTERS UNDER PROP A IN NOVEMBER OF 22.
SO THEN CITY STAFF, OUR BOND COUNSEL AND FINANCIAL ADVISORS, HAVE BEEN WORKING TOGETHER TOWARDS A SHORT TERM ISSUANCE THAT'S PLANNED FOR SEPTEMBER OF THIS YEAR AND THEN A LARGER BOND SALE NEXT YEAR IN 2024, AND POTENTIAL FUTURE TRANSACTIONS FOR THE FINANCING NEEDS.
SO BY ISSUING SHORT TERM DEBT VIA PRIVATE PLACEMENT WITHIN THE FIRST YEAR, THIS WILL ALLOW US TO EFFECTIVELY LEVERAGE OUR CAPACITY TO MEET THE NEEDS OF INITIAL PROJECT DESIGNS AND CONTRACT AWARDS, BUT ALSO MAINTAIN THE COVERAGE REQUIREMENTS FOR FUTURE REFUNDINGS AND BOND ISSUANCES, AND THEN ALSO KEEPS US IN COMPLIANCE WITH THE BRIMER ISSUANCE DEADLINE. SO ON THE NEXT SLIDE, AGAIN, THIS MAY BE A FAMILIAR SLIDE.
YOU'VE SEEN THIS BEFORE IN THE JOINT COMMITTEE IN JANUARY AS PART OF ROSA'S PRESENTATION.
YOU'LL SEE WHERE WE ARE NOW, WHICH INCLUDES THE ANALYSIS FOR FINANCING FOR CONVENTION CENTER AND FAIR PARK, AS WELL AS THIS INITIAL BOND ISSUANCE LEADING UP TO, OF COURSE, ADDITIONAL REVENUE ISSUANCES OR BOND ISSUANCES IN 2024.
SO THE NEXT SLIDE GIVES AN OVERVIEW OF THE PLEDGED REVENUES FOR OUR BONDING CAPACITY.
THE FIRST ONE BEING THE PROJECT FINANCING ZONE OR PFZ, WHICH WAS APPROVED IN NOVEMBER OF 2021 TO REDIRECT STATE HOTEL RELATED INCREMENTAL TAXES, WHICH INCLUDES HOTEL OCCUPANCY SALES, ALCOHOL AND BEVERAGE TAXES FOR THE CONVENTION CENTER.
THE NEXT IS THE 2% HOT INCREASE, WHICH AGAIN IS THE BRIMER, WHICH WAS APPROVED BY VOTERS IN NOVEMBER OF 22, WHICH ALLOWS FOR AN 80% ALLOCATION TO THE CONVENTION CENTER.
ADDITIONALLY, THERE IS THE 4.718% OF THE LOCAL 7% HOT.
AND THAT'S ESTIMATED TO GENERATE APPROXIMATELY 114 MILLION IN REVENUE ANNUALLY.
AND THEN LASTLY, WE HAVE NET EVENT REVENUES FROM THE CONVENTION CENTER ACTIVITIES, WHICH IS TO BE DETERMINED BECAUSE IT'S BASED ON VARIOUS ACTIVITIES LIKE CLIENT USE AGREEMENTS, AV, FOOD AND BEVERAGE TECHNOLOGY, PARKING AND THOSE ADDITIONAL KINDS OF COSTS.
SO THE NEXT SLIDE IS THE VISUAL REPRESENTATION OF THE PREVIOUS SLIDE OF THE PLEDGED REVENUES.
YOU'LL SEE ON THIS STACKED BAR GRAPH, THE PROJECTED 4.718% HOT REVENUE, THE PROJECTED 80% BRIMER ALLOCATION FOR CONVENTION CENTER AND THE PROJECTED PFZ REVENUE.
THEN WHAT YOU SEE IN THIS FIRST TOP PINK LINE, WE TRY TO MAKE SURE IT WAS VERY VISIBLE IS THE BONDING CAPACITY THAT IS AVAILABLE BASED ON OUR CURRENT REVENUE.
AND THEN JUST BELOW THAT, YOU'LL SEE THIS PURPLE LINE, WHICH IS IN THE ESTIMATED DEBT SERVICE.
AND AGAIN, THIS IS FOR THE CONVENTION CENTER MASTER PLAN.
SO THE NEXT SLIDE IS JUST SOME ADDITIONAL CONTEXT THAT AS YOU SEE IN THE PREVIOUS SLIDE, AS REVENUES CONTINUE TO GROW, SURPASSING DEBT SERVICE, THE STATUTE DOES ALLOW FOR ADDITIONAL OFFSET OPTIONS FOR EXCESS FUNDS, WHICH COULD BE USED TOWARDS O&M PREPAYMENT OF FUNDS TO PAY DOWN OUR DEBT FASTER, CAPITAL IMPROVEMENT FUNDS FOR FUTURE IMPROVEMENTS, AND AS CAPACITY ALLOWS, ISSUANCE OF ADDITIONAL DEBT.
[00:55:02]
SO THE NEXT SLIDE IS OUR ESTIMATED SOURCES AND USES FOR THE CONVENTION CENTER.YOU'LL SEE IN THE FIRST COLUMN IS THE SHORT TERM FINANCING WE'RE WORKING ON FOR THIS FALL, WHICH WOULD PUT APPROXIMATELY 170 MILLION TOWARDS INITIAL PROJECT DESIGN COST.
AND THEN IN 2024, YOU'LL SEE A SENIOR AND SUBORDINATE LIEN DEBT ISSUANCES THAT WILL REFUND THE SHORT TERM DEBT AND PROVIDE AN ADDITIONAL 1.2, APPROXIMATELY 1.2 BILLION TOWARDS PROJECT FUNDS, WHICH WOULD GENERATE APPROXIMATELY I'M SORRY, 1.4 BILLION PROJECT PROCEEDS OVERALL.
AND TO CONTINUE ON THE NEXT SLIDE.
THIS IS SOMETHING YOU'VE ALSO SEEN, I'M SURE, SEVERAL TIMES.
AND ON THE NEXT SLIDE FOR THOSE ADDITIONAL NON BONDED PROJECT COMPONENTS, CONVENTION CENTERS WORKING CURRENTLY ON ALTERNATIVE FUNDING PROPOSALS WHICH ARE LISTED HERE.
AND WE CAN FOLLOW UP ON THAT LATER WITH ROSA.
SO THE NEXT SLIDE IS THE PLEDGED REVENUE FOR FAIR PARK IMPROVEMENTS.
AND AGAIN, THIS IS THE 2% INCREASE OR BRIMER ALLOCATION FOR FAIR PARK, WHICH IS 20% AND IS ESTIMATED TO GENERATE APPROXIMATELY 350 MILLION IN REVENUE OVER 30 YEARS.
THE NEXT SLIDE IS AGAIN THE VISUAL REPRESENTATION OF THIS.
YOU'LL SEE THE GREEN IS THE PROJECTED 20% ALLOCATION OF BRIMER REVENUE.
THE TOP PINK LINE IS THEN THE REVENUE ESTIMATED FOR BOND FINANCING BASED ON CURRENT REVENUE AND THE PURPLE LINE JUST BELOW THAT IS THE ESTIMATED DEBT SERVICE. AND ON THE NEXT SLIDE, SIMILAR TO FAIR I'M SORRY, TO CONVENTION CENTER, ANY EXCESS REVENUES FOR SURPASSING DEBT SERVICE REQUIREMENTS CAN BE USED AGAIN FOR OPERATION AND MAINTENANCE COSTS TO PAY DOWN DEBT FASTER FOR CAPITAL IMPROVEMENT FUNDS AND AS CAPACITY ALLOWS ADDITIONAL DEBT. THE NEXT SLIDE IS THE SOURCES AND USES FOR FAIR PARK.
AGAIN, THIS FIRST COLUMN IS OUR SHORT TERM FINANCING FOR THIS FALL.
YOU'LL SEE ABOUT IN THE MIDDLE THERE'S 50 MILLION TOWARDS PROJECT FUND COSTS.
AND THEN IN 2024 WE'LL HAVE ADDITIONAL PROJECT COSTS OF APPROXIMATELY 25.5 MILLION AND REFUNDING THE SHORT TERM BONDS, WHICH WILL GENERATE APPROXIMATELY 75.8 MILLION IN PROJECT PROCEEDS OVERALL.
AND ON THE NEXT SLIDE, THIS IS AGAIN A REFRESHER OF THE PROJECTS FOR FAIR PARK, WHICH INCLUDE REFURBISHING THE COTTON BOWL STADIUM AND RESTORING VENUES SUCH AS THE FAIR PARK MUSIC HALL, THE BAND SHELL AUTOMOBILE BUILDING, CENTENNIAL HALL AND THE COLISEUM.
OKAY. AND EXCUSE ME ONE MOMENT.
SO THE NEXT SLIDE IS FOCUSED ON JUST THE UPCOMING SHORT TERM FINANCING.
AGAIN, THIS IS JUST A REITERATION OF THE PREVIOUS SLIDES, THE SOURCES AND USES.
YOU'LL SEE THE ISSUANCE AMOUNTS OF 170 MILLION FOR THE CONVENTION CENTER AND 50 MILLION FOR FAIR PARK, WHICH IN TOTAL, INCLUDING COST OF ISSUANCE COST IS PLANNED TO BE ABOUT 223 MILLION IN BOND ISSUANCE.
AS MENTIONED, PREVIOUSLY ISSUING THE SHORT TERM DEBT VIA PRIVATE PLACEMENT IN THE FIRST YEAR ALLOWS US TO LEVERAGE THAT BONDING CAPACITY, REMAIN IN COMPLIANCE WITH THE BRIMER AND ALSO MEET THE QUICKLY UPCOMING NEEDS OF FAIR PARK AND CONVENTION CENTER.
AND THIS ALSO FOR THE CONVENTION CENTER ALLOWS FOR CURRENT ESTIMATED FOR THE I'M SORRY, CURRENT SHORT TERM ESTIMATED ISSUANCE THAT CAN BE OFFSET BY PFZ COLLECTIONS.
CURRENTLY AVAILABLE CONVENTION CENTER REVENUES AND AVAILABLE HOT REVENUES.
AND THEN FOLLOWING THE FIRST YEAR ISSUANCE, AS WE'VE MENTIONED, THE SHORT TERM DEBT IS PLANNED TO BE REFUNDED INTO LONG TERM DEBT AS A SENIOR LIEN AT ONE AND A HALF TIMES COVERAGE AND A SUBORDINATE LIEN AT 1.2 COVERAGE TO OBTAIN THE MAXIMUM BONDING CAPACITY.
AND OF COURSE, BONDING CAPACITY IS FOR REFUNDING AND NEW ISSUANCE IS DRIVEN BY A RATING AGENCY CRITERIA PRIMARILY CENTERED ON A MARKET STUDY WHICH INCLUDES ASSESSMENT OF HOT, BRIMER, PFZ, AND CONVENTION CENTER REVENUES.
SO ON THE NEXT SLIDE IS THE TIMELINE FOR THE UPCOMING SHORT TERM FINANCING.
TODAY, OF COURSE, WE'RE BRINGING YOU THIS PRESENTATION, THE FINANCIAL PLAN UPDATE.
AND AS JACK MENTIONED, ON JUNE 13TH, WE'LL COME BACK WITH ADDITIONAL INFORMATION ON THE SHORT TERM
[01:00:06]
SELL. AND THEN WE DO HAVE AN AGENDA ITEM SCHEDULED FOR JUNE 14TH FOR APPROVAL OF A RESOLUTION TO PROCEED WITH THE BOND SALE AND THE PAYMENT OF COST OF ISSUANCE. TYPICAL WITH WHAT WE DO WITH EVERY BOND SALE.AND ON SEPTEMBER 28TH, WE ARE PLANNING TO DELIVER THE BONDS AND RECEIVE THE PROCEEDS.
AND THIS WILL HELP US IDENTIFY OUR MAXIMUM BONDING CAPACITY.
AND ALSO IN ORDER TO FACILITATE A MARKET BOND SALE, IT'S REQUIRED.
AND WE'RE ALSO GOING TO BE PLANNING FOR THE ISSUANCE OF A LONG TERM DEBT TO BRING YOU INFORMATION IN A TIMELY MANNER AND TO REFUND OUTSTANDING SHORT TERM DEBT, AND ALSO TO CONTINUE TO UPDATE THE COMMITTEE ON ANY UPCOMING TRANSACTIONS AND ITEMS FOR YOUR REVIEW AND APPROVAL.
SO I KNOW THAT'S TWO FINANCIAL BRIEFINGS BACK TO BACK.
I WILL LEAVE IT OPEN FOR DISCUSSION AND QUESTIONS.
AND IF I MAY, BEFORE WE GO TO QUESTIONS, JUST REFER BACK TO PAGE 20 ON JUNE 14TH, MS. MENDELSOHN YOU ASKED THE QUESTION BEFORE WE STARTED WHEN AN ACTION ITEM WOULD BE NEEDED.
SO JUNE THE 14TH, WE HAVE A CITY COUNCIL ITEM THAT WE'RE PLANNING, WHICH WOULD BE WHEN CITY COUNCIL WOULD AUTHORIZE US TO PROCEED AND WE CAN BRIEF YOU AND WE PLAN TO BRIEF YOU ON JUNE 13TH, BUT THAT'S BACK TO BACK DAYS.
I'M WONDERING IF YOU CAN PUT THIS JUST SORT OF IN LAYMAN'S TERMS ABOUT WHAT'S REALLY HAPPENING HERE.
SO LAYMAN'S TERM FOR WHAT IS GOING TO HAPPEN HERE, WE'RE ASKING THE CITY COUNCIL TO AUTHORIZE ON JUNE THE 14TH FOR STAFF TO PROCEED WITH THE BOND ISSUANCE SALE, AND THAT IS TO MAKE FUNDS AVAILABLE SO WE CAN BEGIN THE PROJECT AT THE CONVENTION CENTER AND AT FAIR PARK.
THIS IS THE FIRST TRANCHE OF THAT $170 MILLION FOR THE CONVENTION CENTER, $50 MILLION FOR FAIR PARK.
WE'RE DOING THAT IN SHORT TERM THIS YEAR BECAUSE WE HAVE TO DO IT IN THIS CURRENT CALENDAR YEAR.
AND THEN WE WILL COME BACK IN 24 WHEN WE HAVE MORE INFORMATION FROM THE WORK THAT'S BEING DONE.
WE WILL REFUND THE SHORT TERM DEBT THAT WE ISSUE THIS YEAR AND ISSUE ADDITIONAL DEBT TAKES US UP TO $1.4 BILLION FOR THE CONVENTION CENTER AND $76 MILLION FOR FAIR PARK.
AND WHY ARE YOU ONLY ISSUING THAT MUCH AT THIS TIME? AND WHY I'M SORRY, WHY ARE YOU ONLY ISSUING THAT MUCH AT THIS TIME? YEAH. SO ONLY ISSUING THE SHORT TERM NOW BECAUSE WE BELIEVE WE CAN MAXIMIZE AND ISSUE MORE ONCE WE HAVE MORE INFORMATION, ONCE WE HAVE MORE ACTUAL INFORMATION ON REVENUES FROM PFC AND OTHER THINGS A YEAR FROM NOW, WE BELIEVE THAT WE WILL HAVE GREATER BONDING CAPACITY THAN WE COULD HAVE. NOW, WE CANNOT RATING AGENCIES WILL NOT ALLOW US TO AND BOND BUYERS WILL NOT BE INTERESTED IN OUR DEBT BASED ON PROJECTIONS FAR INTO THE FUTURE.
SO WE WOULD LIKE TO HAVE ANOTHER YEAR'S WORTH OF DATA UNDER OUR BELTS WHEN WE GO OUT TO THE MARKET.
AND WHAT IS THE BONDING CAPACITY TODAY? THE BONDING CAPACITY TODAY, BASED UPON OUR PROJECTIONS AND BASED UPON WHAT WE BELIEVE WE CAN ISSUE DEBT ON, IS GOING TO BE A TOTAL OF $1.4 BILLION FOR THE CONVENTION CENTER AND $76 MILLION FOR FAIR PARK.
SO THAT'S SIGNIFICANTLY DIFFERENT THAN WHAT WE'VE PREVIOUSLY BEEN TOLD.
CAN YOU EXPLAIN THAT GAP? YEAH. HI, GOOD AFTERNOON.
I'M ROSA FLEMING, THE DIRECTOR FOR CONVENTION AND EVENT SERVICES.
SO ONE OF THE THINGS AND STEVE IS HERE FROM WHO IS ONE OF OUR FINANCIAL ADVISORS, WHAT WE ARE USING RIGHT NOW FOR THAT PRELIMINARY DATA IN ORDER TO HAVE NUMBERS TO BRING FORWARD IS A STUDY THAT WE DID.
IF YOU RECALL, WE REFUNDED THE DEBT ON THE CONVENTION CENTER IN 2021.
[01:05:06]
NUMBERS, WE NEED TO GO BACK AND I NEED TO GO FORWARD AND DO AN AA, AN ADMINISTRATIVE DIRECTIVE TO OR ADMINISTRATIVE ACTION TO ENGAGE A FIRM TO UPDATE THAT ANALYSIS.THAT ANALYSIS OBVIOUSLY DOESN'T INCLUDE ALL OF 21.
AND SO USING THAT STUDY, WHICH IS A DATED STUDY, IS WHERE THAT 1.4 AND THE 76 COME FROM.
WHEN WE UPDATE IT AT THAT TIME, THEY'LL BE ABLE TO GIVE US NUMBERS THAT ARE BASED MORE ON WHAT IS ACTUALLY GOING TO HAPPEN, IF I CAN ADD, COULD INCREASE OR DECREASE.
BASED ON THE DATA THAT WE HAVE NOW, THIS WOULD GO UP BECAUSE WE RECOVERED IN 22.
AND SO THAT'S WHAT MAKES SOME OF THAT DATA INACCURATE.
AND I KNOW YOU WANT TO SAY SOMETHING, IF I CAN JUST FOLLOW UP THIS ONE QUESTION, SINCE WE'RE HERE.
SO OF THE 1.4 BILLION OF KNOWN BONDING CAPACITY, DOES THAT INCLUDE ROLLING THE 200 MILLION ON THE EXISTING DEBT FOR THE CONVENTION CENTER IN OR IS THAT SEPARATE? IT DOES NOT, NOR DOES IT INCLUDE SOME OF THE FUNDS THAT WE HAVE ON HAND IN OUR CAPITAL FUND TO PAY FOR THE PROJECT MANAGER.
SO THOSE ARE SEPARATE AND APART.
THAT 172 WOULD BE FOR THE SOME OF THE SOFT COSTS RELATED TO THE CONVENTION CENTER.
SO THAT ARCHITECTURE, ENGINEERING AND DESIGN, BECAUSE RIGHT NOW WE'RE, YOU KNOW, WE'RE AT CONCEPT PHASE, RIGHT? SO THAT WOULD ALLOW US TO DO THAT.
AND SO I'M JUST GOING TO ASK ONE MORE QUESTION BECAUSE I THINK WELL, LET ME ASK THIS ONE.
SO AT THIS TIME, EVEN THOUGH THIS NUMBER IS SIGNIFICANTLY LOWER THAN PROBABLY WHAT'S GOING TO BE NECESSARY TO BUILD THE CONVENTION CENTER AS PRESENTED TO US PREVIOUSLY, YOU HAVE NO INTENTION OF MAKING ANY MODIFICATION TO YOUR PLAN, IS THAT CORRECT? NO, THAT'S THAT'S NOT TRUE.
SO WHAT WE WOULD PUT IN OUR SPECIFICATIONS FOR ANY ARCHITECTURE, ENGINEERING AND DESIGN FIRM IS THE KNOWN CAPACITY AT THE TIME BECAUSE YOU CAN ALWAYS GO BACK AS WE WORK THROUGH THE PROCESS AND ADD TO THAT.
BUT WE WOULD DESIGN AND I THINK THAT I SAID THAT AT THE AT OUR LAST MEETING IN JANUARY OR FEBRUARY, IS THAT WE WOULD DESIGN TO WHAT OUR FINANCIAL ADVISORS TOLD US TO DESIGN TO.
AND SO WHAT WE CONCEPTED IS, IS SCALABLE, STILL PROVIDING THAT, STILL PROVIDING THAT OPPORTUNITY FOR THE CONVENTION CENTER TO BE ONE OF THE BEST IN THE COUNTRY. SO IT IS SCALABLE.
WELL, THEN LET'S GO FOR COUNCIL MEMBER RIDLEY.
WHAT IS THE DIFFERENCE BETWEEN THOSE TWO TERMS? HI. STEVE JOHNSON WITH HILLTOP SECURITIES.
THE DIFFERENCE BETWEEN THE TWO LINES ALLOWS FOR BOND COVERAGE.
SO IS THAT SOMETHING THAT THE BOND UNDERWRITERS WILL EXPECT? YES. AND THE RATING AGENCIES ON THE NEXT SLIDE NINE, YOU INDICATE THAT SURPASSING IF THE REVENUE CONTINUES TO GROW, THERE ARE FOUR OPTIONS FOR USE OF EXCESS FUNDS.
ONE WOULD BE ISSUANCE OF ADDITIONAL DEBT.
CAN YOU EXPLAIN WHY WE WOULD INCUR ADDITIONAL DEBT IF WE HAVE ADDITIONAL REVENUES, IF THERE'S ADDITIONAL PROJECT NEEDS AT THE CONVENTION CENTER AT A FUTURE DATE, FOR INSTANCE, IF YOU REFER BACK TO SLIDE EIGHT, YOU'LL SEE THAT RIGHT NOW THE REVENUES ARE PROJECTED TO GROW AND.
THE PROBLEM WITH ISSUING AGAINST THAT RIGHT NOW IS IF WE HAVE ANOTHER GREAT RECESSION OR COVID EXPERIENCE, THEN IF YOU STRUCTURE IT AROUND THE FACT THAT YOU MIGHT ISSUE BONDS IN THE FUTURE, THEN THAT REVENUE MIGHT NOT BE THERE TO PAY FOR THE DEBT SERVICE.
[01:10:07]
THIS. AND MR. REALLY POSSIBLY MORE RELEVANT TO FAIR PARK IN CONVERSATIONS WITH FAIR PARK.IT MAY BE THAT WE'RE ONLY ABLE TO ISSUE $76 MILLION IN DEBT NOW, BUT ONCE WE GET OUT FIVE YEARS OR SO, WE'VE REALIZED THAT REVENUE HAS GROWN BEYOND WHAT'S NEEDED FOR DEBT SERVICE.
AND THERE WOULD BE DISCUSSIONS ABOUT DO WE NEED ANOTHER TRANCHE OF DEBT TO CONTINUE PROJECTS AT FAIR PARK? OKAY. YOU HAVE OUTLINED IN SLIDE TEN THREE DIFFERENT DEBT TRANCHES.
I UNDERSTAND THE SHORT TERM SERIES THAT MUST BE ISSUED THIS YEAR.
WHY SENIOR LEAN SERIES AND A SUBORDINATE LEAN SERIES IN THE SAME YEAR? TYPICALLY FOR SOMETHING LIKE THIS, WHAT YOU MIGHT DO IS WITH A SENIOR LEAN STRUCTURE, YOU COULD ISSUE EVERYTHING UP TO, YOU KNOW, WHEN WE WERE TALKING ABOUT THOSE LINES A ONE AND A HALF TIMES COVERAGE AND GET A.
WHAT DOES THAT REFER TO, BY THE WAY? THE COVERAGE RATIO THAT'S THE DIFFERENCE BETWEEN THE REVENUE GENERATED THAT'S AVAILABLE FOR DEBT SERVICE AND WHAT YOU'RE PAYING IN DEBT SERVICE.
OH, I ALREADY ASKED YOU ABOUT.
OKAY. SO THAT'S THE DIFFERENCE BETWEEN THE 10 MILLION AND THE 12 MILLION.
IF YOU HAVE A 1.5 TIMES COVERAGE, YOU MIGHT NEED 15 MILLION AS OPPOSED TO 12 MILLION.
SO A SENIOR LEAN ALLOWS YOU TO GENERATE A HIGHER CREDIT RATING IN A MORE SECURE BOND ISSUE BECAUSE YOU HAVE MORE COVERAGE.
BY LEVERAGING DOWN TO A SUBORDINATE LEVEL, IT ALLOWS YOU TO GENERATE MORE PROCEEDS.
BUT THERE'S SOME RISK INVOLVED WITH THAT.
AND THAT WOULD PROBABLY BE SOLD AT A HIGHER INTEREST RATE GIVEN THE HIGHER RISK.
YES, AND THAT WAS TAKEN INTO ACCOUNT IN THE ANALYSIS.
AND ON SLIDE 19, YOU TALK ABOUT USING THE SHORT TERM DEBT TO LEVERAGE BONDING CAPACITY.
HOW DOES THAT LEVERAGE BONDING CAPACITY? BY ISSUING SHORT TERM DEBT NOW.
IT ALLOWS YOU TO GENERATE, LIKE ROSA SAID, YOU KNOW, THE ACTUAL CONTRACT PRICE FOR THE FACILITY, AND IT ALLOWS YOU TO GENERATE ANOTHER YEAR OF HOTEL AND PFZ REVENUES SO THAT YOU HAVE A HIGHER BASE FROM WHICH TO START YOUR PROJECTIONS FOR ISSUING LONG TERM DEBT.
AND SO WHY HAS THE TOTAL FUNDS EXPECTED TO BE RAISED FROM THE VARIOUS TRANCHES OF FINANCING DECLINED FROM WHAT WE WERE ORIGINALLY TOLD TO EXPECT WHEN WE WERE CONSIDERING THE CONVENTION CENTER PROJECT? SO THE AMOUNT THAT WE'RE EXPECTED TO TAKE IN FROM THE PROJECT FINANCING ZONE AND FROM BREMER AND FROM LOCALHOST HAS NOT CHANGED.
WHAT WE'VE DONE IS IS ANSWERED Y'ALL'S QUESTION AND ANSWERED OUR FINANCIAL ADVISORS ADVICE AND QUESTIONS IS TO TAKE A MORE CONSERVATIVE APPROACH. IF IF I DON'T REMEMBER IF YOU MAY RECALL, WE DID A A SLIDE FOR YOU THAT HAD VARIOUS GROWTH RATES AT LIKE 4.1%, 6% UNTIL 2029 AND THEREAFTER GOING BACK TO 4.1.
WE PROVIDED THAT AND WE THOUGHT THAT IT WAS A SAFER MODEL TO ACTUALLY FOLLOW OUR FINANCIAL ADVISORS ADVICE AND LOOK AT LOWERING THAT PERCENTAGE, I BELIEVE, IN YEAR TEN.
YEAH. SO THAT THAT IS WHAT GETS YOU THE APPEARANCE THAT IT'S GOING TO BE LESS.
BUT IT'S REALLY JUST A CONSERVATIVE APPROACH I BELIEVE THAT THE MARKET WOULD ACCEPT RIGHT NOW.
AND THAT IS WHY WE ALSO CAME UP WITH AND DISCUSSED WITH JACK AND HIS TEAM AS WELL AS OUR FINANCIAL ADVISORS WHAT COULD HAPPEN WITH THE FUNDS WHEN THEY REALIZE THAT THE HIGHER PERCENTAGE INCREASE THAT WE ARE ESTIMATED TO TO TAKE IN FROM THE STATE AND FROM LOCAL HOT.
[01:15:01]
OF THE CONVENTION CENTER FROM WHAT IS OUTLINED IN SLIDE 11? NOT NECESSARILY THE SIZE.WHAT I WOULD DO IS COVER IT ON ANOTHER SLIDE.
APART FROM THAT, SINCE WE DO NOT HAVE TO, WE CAN'T EVEN START THAT PROJECT UNTIL LATER IN 2028, 29.
THAT GIVES US AN OPPORTUNITY TO DISCUSS THAT AS PART OF A LARGER CONNECTIVITY PROJECT WITH COG AND TEXDOT BECAUSE WE ARE PLANNING MULTIPLE DECK PARK CROSSINGS ACROSS INTERSTATE 30.
AND SO WHEN WE DO THAT, WE CAN ACTUALLY USE THOSE FUNDS IN THE ACTUAL CENTER ITSELF.
THANK YOU. WHO ELSE HAS QUESTIONS? COUNCIL MEMBER WILLIS.
SURE. THANK YOU FOR THE PRESENTATION.
IT HAS TBD. AND SO HAVE WE SEEN A NUMBER BEFORE THERE? I DON'T RECALL IT BEING TBD.
NO, WHAT I'M DOING IS RERUNNING THE ANALYSIS.
WE HAD A BANNER YEAR THIS YEAR.
SO ON JUNE 13TH, WHEN WE COME BACK, I WANT TO GIVE YOU THAT ACTUAL NUMBER FOR THIS YEAR.
WE'VE ALSO GOT AN ESTIMATED NUMBER.
WE WERE NEGOTIATING SEVERAL CONTRACTS.
WE'RE TAKING IN SOME SMALLER CONVENTIONS FROM OTHER CITIES.
WE ALSO HAVE SOME PENDING INFORMATION FROM FIFA THAT WE'RE WAITING ON.
SO I DIDN'T WANT TO GIVE YOU ONE NUMBER NOW AND COME BACK TO YOU JUNE 13TH WITH A DIFFERENT NUMBER.
OKAY. ON GOING UP A LINE ON THE LOCAL HOT AND THE 114 MILLION GENERATED ANNUALLY. IS THAT BEING INCLUDED AS AS A 30 YEAR PERIOD OF THAT 114 MILLION? YES, IT'S BEING INCLUDED.
THE. IF YOU LOOK AT THE GRAPH ON SLIDE EIGHT, YOU'LL SEE THE BLUE BARS ARE REPRESENTED OF WHAT THE CURRENT 4.718% IS INCLUDED IN THE TOTAL REVENUES.
OKAY. SO AT SOME POINT, BECAUSE IT'S ALSO FOR OPERATING USE OF THE CONVENTION CENTER.
SO ARE YOU SAYING IN 5 TO 10 YEARS THAT'S WHERE WE WOULD EXPECT TO PULL FROM THAT AMOUNT TO GO INTO OPERATING USE? I MEAN, IS THAT.
AND SO WE'VE KIND OF LOOKED FUTURISTICALLY RIGHT NOW, AS I PROMISED, FULL COUNSEL IN SOME OF OUR BRIEFINGS, WE ARE FOCUSING SOLELY ON LIFE, SAFE AND SAFETY AND JUST THE GENERAL DAY TO DAY THINGS, NOT INVESTING TOO MUCH IN THE BUILDING THAT WE'RE GOING TO OTHERWISE DECOMMISSION. AND SO YOU START TO SEE AN UPTICK IN WHAT CAN BE USED FOR OTHER THINGS.
AS WE DO THAT, LET ME GO BACK TO THE BOTTOM LINE.
SO UNDER TBD, I MEAN, DO YOU HAVE AN ESTIMATION RIGHT NOW? I MEAN, UNDERSTANDING THAT WE'RE GOING TO HAVE A NEW NUMBER COMING TO US? I MEAN, I JUST YOU KNOW, I'D LOVE TO HAVE A BETTER HANDLE ON THAT.
SURE. I CAN SEND THAT TO YOU IN A MEMO.
SO YOU SAID THAT WILL INCLUDE THE REST OF 2021, 2022.
WILL THAT INCLUDE ANY OF 2023? AND WHEN WHEN DO WE EXPECT TO HAVE THAT MARKET READY STUDY DONE? SO WE'RE I'M DOING THE ADMINISTRATIVE ACTION RIGHT NOW TO ACTUALLY PROCURE THAT.
I WILL HAVE TO DEFER TO FELICIA ON THE TIMING FOR WHEN THAT STUDY WILL START.
WE'LL NEED THE STUDY COMPLETED BEFORE WE GO TO MARKET NEXT FALL TO DO THE LONG TERM.
WE'RE STILL WORKING ON THE CALENDAR TO DETERMINE WHEN THAT STUDY WILL ACTUALLY BE COMPLETED.
BUT THEN YOU ALSO MENTIONED ON JUNE 13TH, YOU'RE GOING TO COME BACK WITH A GREATER MEAN.
[01:20:04]
SO WE WON'T HAVE THAT ASSESSMENT.MM THAT MARKET ANALYSIS I BELIEVE LAST TIME TOOK BETWEEN 5 AND 6 MONTHS TO COMPLETE.
THEY LOOK AT A LOT OF A LOT OF FACTORS AND THEY HAVE TO LOOK FUTURE FORWARD.
SO SOME OF THOSE UNKNOWNS ABOUT SOME OF THE LARGER EVENTS THAT WILL TAKE PLACE AT FAIR PARK BUT FILL UP HOTELS OR TAKE PLACE IN, YOU KNOW, IN OTHER PARTS BUT FILL UP DALLAS HOTELS, THOSE ANSWERS WOULD BE ANSWERED WITHIN THAT PERIOD OF STUDY.
AND THAT IS WHERE YOU START TO SEE THAT LARGER THAT LARGER HOT ANALYSIS, LARGER AMOUNT OF HOT, AS WELL AS THE SALES TAX, ALCOHOL AND BEVERAGE, ETCETERA.
SO WE VOTE ON THE 14TH, BUT THEN I GUESS BRIMER HAS TO BE ENACTED.
WE HAVE TO ACT ON THAT BY DECEMBER 31ST.
BUT I'M JUST WONDERING IF WE GET SOME SORT OF RESULT FROM THIS THAT'S UNEXPECTED OR I MEAN, DO WE HAVE ANY FLEXIBILITY IN IN THERE IF WE SEE SOMETHING THAT'S CONCERNING OR THAT MAKES US WANT TO ALTER COURSE A LITTLE? SURE. WHAT YOU'RE VOTING ON ON THE 14TH IS THE THE SMALLER TRANCHE.
CORRECT? OKAY. SO THAT IS THE 172 AND THE 54 FAIR PARK.
AND WE'LL COME BACK LATER, OBVIOUSLY GIVE YOU AN ANALYSIS OF THE STUDY.
I BELIEVE WE DID THAT LAST TIME.
WE PROVIDED AN ANALYSIS OF THE STUDY BY MEMO AND THEN IT WAS REQUESTED IN PERSON.
WE WOULD DO THAT SAME PROCESS THIS TIME.
AND OBVIOUSLY, IF THERE ARE CHANGES TO THE CONCEPT AND YOU ALL WILL BE INTEGRALLY INVOLVED IN THE EARLY ARCHITECTURE, ENGINEERING AND DESIGN COMPONENT AS WELL.
SO AS WE NEED TO PULL BACK, WE WILL.
OKAY. I'VE GOT THE CHRONOLOGY.
SO THAT'S TO INFLUENCE THE NEXT ROUND THAT WE WOULD DO.
ALL RIGHT. THANK YOU. OTHER COUNCIL MEMBERS.
CHAIRMAN ATKINS, YOU'RE UP NEXT.
WELL, THANK YOU FOR THE PRESENTATION.
WOULD WE BE AMENDING THIS BRIEFING AND OUR NEXT BRIEFING BEFORE WE HAVE FULL COUNCIL BRIEFING SUNDAY ADDED TO IT? SO THE NEXT STEP WILL BE TO COME BACK TO YOU ON THIS COMMITTEE ON JUNE 13TH, GIVE UPDATES TO ANY QUESTIONS THAT THE COMMITTEE HAS BETWEEN NOW AND THEN AND THEN. ON JUNE 14TH, WE'RE ASKING CITY COUNCIL TO APPROVE THE RESOLUTION AUTHORIZING US TO PROCEED WITH THE $220 MILLION BOND ISSUANCE.
SO ON JUNE 13TH, WE WILL ANSWER ANY MORE QUESTIONS THAT YOU HAVE IF YOU HAVE OTHERS THAT YOU WANT TO SEND TO ME OR CALL AND WE WE CAN TALK THROUGH AND WE'LL MAKE SURE WE GET YOU ANSWERS ON THE 13TH.
THANK YOU. SO, JACK, IF I CAN ASK FOR COUNCIL MEMBERS, WHETHER THEY'RE AT THIS COMMITTEE OR THEY'RE NOT ON THE COMMITTEE, ANYBODY WHO'S ASKING YOU QUESTIONS ABOUT THIS, IF YOU COULD SHARE THOSE ANSWERS FOR ALL OF THE CITY COUNCIL.
YES, MA'AM. THIS IS A, YOU KNOW, OBVIOUSLY REALLY CENTRAL PROJECT TO OUR CITY.
UM, SO I DON'T SEE ANY OTHER QUESTIONS.
UM, FIRST OFF IS ON PAGE FOUR, YOU'RE INDICATING THAT THERE'S 6 TO 700 MILLION OF DEFERRED MAINTENANCE AND THAT'S THE FIRST TIME I'VE SEEN THOSE NUMBERS. SO I THINK QUITE A FEW TIMES THE NUMBER 500 MILLION HAS BEEN PUBLISHED.
SO I'M JUST WONDERING WHERE THAT WAS COMING FROM.
IT'S JUST AN ESCALATION AS WE LOOK AT DOING SOME OF THESE REPAIRS, MINIMAL REPAIRS AS WE GO FORWARD.
IT'S THE ADDITIONAL COST OF GOODS IS WHERE IF WE'RE GOING TO DO THIS AND THE COST AT TODAY'S RATE.
NOW. SO THERE ARE SOME YOU KNOW, IF WE CONTINUE WITH THIS, THERE ARE SOME REPAIRS AND RENOVATIONS TO THE ROOF SYSTEM THAT WOULD HAVE TO HAPPEN. THAT HAS ESCALATED IN COST BECAUSE OF JUST THE CURRENT COST OF THINGS AT TODAY'S RATES.
SO THE ISSUE FOR ME IS THAT IF I WAS LOOKING AT THIS BRIEFING AND I DIDN'T KNOW ABOUT THIS TOPIC AND I'M LOOKING AT BACKGROUND, IT LOOKS LIKE A DECISION WAS MADE BASED ON A 6 TO $700 MILLION DEFERRED MAINTENANCE.
AND THAT'S NOT WHAT THE DECISION POINT WAS.
AND MY RECOLLECTION YOU COULD VERIFY IT.
I MAY HAVE DONE THAT IF I HAD GOTTEN THIS EARLIER.
UM, THE NEXT ITEM I HAVE FOR YOU IS, IS THERE AN AMOUNT, IS THERE AN AMOUNT THAT MUST BE ISSUED SO YOU'RE REQUIRED BY THE END OF THE CALENDAR YEAR TO ISSUE DEBT, BUT DOES IT HAVE TO BE THE FULL AMOUNT THAT YOU THINK YOU COULD BOND TODAY? OR COULD YOU EVEN DO SOMETHING SMALLER IF IF THAT WAS PREFERRED? NOT THAT I'M AWARE OF. THE CITY COULD ISSUE ONE BOND, SAY, $5,000 AND STILL AND STILL MEET THAT REQUIREMENT.
[01:25:08]
TECHNICAL AND ENGINEERING COSTS.AND IN LOOKING AT THE FAIR PARK SIZING, WE COULD GO UP TO 60 MILLION.
BUT TO GET THEM AS MUCH AS POSSIBLE, WE DON'T WANT TO GO COMPLETELY UP TO THAT.
WE WANT TO MAKE SURE WE STAY CONSERVATIVE.
AND SO. SO I WANT TO TALK ACTUALLY ABOUT FAIR PARK FOR A MINUTE.
HI, HOW ARE YOU DOING? YOU'RE THE WHOLE REASON THIS THING EVEN PASSED, SO I'M GLAD TO HEAR THAT.
OH, WE'RE GOING TO PULL THIS MONEY BACK.
RIGHT, BECAUSE IT'S OPTIONAL, IT'S NOT REQUIRED.
AND SO YOU'VE PROPORTIONATELY REDUCED THAT AMOUNT.
IS THAT HOW THIS HAS HAPPENED? NO, IT'S BASED ON THE UP TO 20% AND THE NUMBERS THAT WE GOT.
GOING BACK TO YOUR QUESTION THAT YOU ASKED JUST A LITTLE BIT AGO ABOUT REDUCING WHAT THE TRANCHE THAT WE'RE ASKING FOR ON JUNE 13TH AND JUNE 14TH, THAT IS THE AMOUNT THAT FAIR PARK FIRST AND PARK AND RECREATION HAVE SAID THEY NEED AS WELL TO DO THEIR ARCHITECTURE, ENGINEERING AND DESIGN.
SO WE ARE THE CONVENTION CENTER IS NOT THE ONLY PROJECT THAT'S IN MASTER PLAN.
CONCEPTING FOR PARK IS AS WELL.
MEANING WHAT WOULD IT MEAN IF WE COULDN'T GO BEYOND THIS? RIGHT? WHAT WOULD THAT MEAN TO YOU? BECAUSE IT'S A VERY DIFFERENT NUMBER AND PROBABLY A VERY DIFFERENT OUTCOME FOR FAIR PARK.
IS THE REASON THAT WHY DO YOU HAVE TO DO A NEW MARKET READY STUDY? IT'S BECAUSE THE NUMBERS YOU HAVE TODAY WOULD NOT BE ACCEPTED BY THE FINANCIAL MARKET, CORRECT? WELL, NO, BECAUSE THEY'RE THEY'RE DATED AND THEY'RE NOT ACTUALLY FACTUAL AS THEY STAND, BECAUSE IN THAT MARKET STUDY, WE DID NOT ANTICIPATE SUCH A QUICK RECOVERY FROM COVID.
WE WERE ACTUALLY IN THEM WHEN WE DID THAT REFUNDING.
AND ALL OF OUR CONSERVATIVE OUR CONSERVATIVE ESTIMATES THOUGHT THAT WE, ALONG WITH THE REST OF THE COUNTRY, WOULD NOT RECOVER FROM COVID UNTIL 2025.
ACTUALLY, WE STARTED TO SEE A SLIGHT RECOVERY IN 21.
A FULL RECOVERY IN 22 IN TERMS OF HOSPITALITY INDUSTRY IN DALLAS.
AND SO THIS ALLOWS US TO TAKE THAT INTO CONSIDERATION.
IT ALSO ALLOWS US TO TAKE INTO CONSIDERATION WHAT WE ARE ANTICIPATED TO GET AND SOME OF THOSE LARGER SPORTING EVENTS THAT ARE COMING TO DALLAS, WHICH ARE THE EQUIVALENT OF SEVERAL SUPER BOWLS.
AND SO THAT GIVES US THE OPPORTUNITY TO PUT THAT DATA IN THERE SO THAT WHAT WE'RE PUTTING OUT TO THE MARKET AND SELLING AS WHAT WE BELIEVE OUR CAPACITY TO BE IS MORE ACCURATE THAN A STUDY THAT WAS ACTUALLY DONE IN 2020.
AND WE USED TO DO A SALE IN 21.
SO IF THE STUDY DONE IN 2020 AND 2021 SHOWED A HIGHER NUMBER THAN TODAY AND YOU'VE ACTUALLY RECOVERED FROM WHERE YOU WERE, WHY DON'T WE HAVE THE BONDING CAPACITY THAT WAS EXPECTED? I'M NOT SURE WHERE THE ORIGINAL BONDING CAPACITY CAME FROM.
I KNOW THAT THE PROJECT AMOUNT WAS TALKED ABOUT 2.2 OR 2.8 BILLION.
I THINK THAT WAS IN A BRIEFING BACK IN APRIL LAST YEAR.
OKAY. AND I'M NOT SURE YOUR MICROPHONES.
CAN YOU PLEASE MOVE YOUR MICROPHONE CLOSER? YEAH, SURE. UM, THE FIRST ANALYSIS THAT I RAN ABOUT A YEAR AGO FOR ELIZABETH RICH, I BELIEVE FOR AN APRIL BRIEFING LAST YEAR, WAS IN THE 1.4 TO $1.7 BILLION RANGE AS FAR AS BONDING CAPACITY.
AND THAT WAS PARTLY DEPENDENT UPON INTEREST RATES.
INTEREST RATES ARE 200 BASIS POINTS HIGHER, SO IT IS DOWN AT THAT 1.4 BILLION LEVEL.
SO, ROSA, YOU WERE JUST MENTIONING ABOUT FIFA.
WHEN WAS THE LAST TIME FIFA WAS IN DALLAS?
[01:30:06]
I WOULD HAVE TO DEFER.AND SO IT'S FAIR TO SAY THEY'RE NOT LIKELY TO COME BACK AGAIN AFTER 26 FOR QUITE A FEW DECADES.
CAN WE SAY THAT? WE CAN SAY THAT.
NO, THAT'S NOT WHAT I'M SAYING AT ALL.
I'M SAYING THAT THE DATA DOES NOT INCLUDE ALL OF 2021.
IT DOES NOT INCLUDE A FAIR NUMBER FOR 22, 23 OR 24 OR 25 BECAUSE WE DID NOT ASSUME RECOVERY OF THE DALLAS TOURISM MARKET UNTIL 2025 IN THAT STUDY.
AND SO IF WE ARE GOING TO GIVE A FAIR REPRESENTATION OF WHAT THE DALLAS MARKET HAS, INCLUDING WHAT COULD COME WITH FIFA, BUT NOT JUST AND SOLELY BASED ON FIFA, WE HAVE TO UPDATE THE STUDY SO THAT IT FAIRLY REPRESENTS WHERE THE MARKET ENDED IN 22IN TERMS OF REVENUES GENERATED BY OUR EVENTS, BOTH CONVENTIONS, CONFERENCES AND LEISURE TRAVEL IN DALLAS FOR 22, WHERE WE'RE LANDING IN 23 AND WHERE WE'RE PROJECTED FOR BASED ON EVENTS AND THINGS THAT ARE KNOWN FOR 24, 25 AND 26.
OKAY. SO FOR OUR FINANCIAL ADVISOR HERE, WOULD YOU RECOMMEND WE DO ANY KIND OF BONDING BASED ON AN EVENT LIKE FIFA? WOULD A FINANCIAL INSTITUTION CONSIDER THAT OR ARE THEY DISMISSED THAT REVENUE? I THINK IT WILL GET INCLUDED IN THE MARKET STUDY AND IN THE PROJECTIONS.
THE WHOEVER DOES THE MARKET STUDY WILL TAKE THAT EVENT INTO ACCOUNT.
YOU MIGHT NOT SEE IF THE EVENT IS IN 2026, YOU MIGHT NOT SEE A SIGNIFICANT GROWTH IN 2027.
AND I THINK THAT'S ONE OF THE REASONS WHY THE STUDY NEEDS TO BE DONE, IS SO THAT, LIKE ROSA MENTIONED, TO TAKE INTO ACCOUNT THE RECOVERY SINCE COVID TO MAKE SURE THAT THE INFORMATION BEING PROVIDED TO THE BOND MARKET IS IS ACCURATE AND IS UP TO DATE AS POSSIBLE.
SO IF IF WE JUST BASE IT ON ACTUAL NUMBERS FROM OR PROJECTIONS FROM 2026 PROVIDED BY WHAT ROSA MIGHT BE RECEIVING, THE BOND MARKET PROBABLY WOULD DISCOUNT THAT.
BUT HAVING A BONA FIDE MARKET STUDY WILL PROVIDE COMFORT TO THE BOND MARKET THAT THESE NUMBERS HAVE BEEN ANALYZED BY A PROFESSIONAL IN THIS FIELD AND WE'LL BE ABLE TO TAKE INTO ACCOUNT THE STRUCTURE AND THE SIZING OF ANY BOND ISSUE THAT'S SOLD.
WELL, YOU HAVE TO FOOTNOTE OUT FIFA FOR THE BOND MARKET.
I MEAN, THEY'LL PROBABLY PROBABLY BE A FOOTNOTE IN THERE.
YES. OKAY. AND IS THERE AN OPTION FOR THE COUNCIL TO DIRECT YOU TO REDUCE THE CONCEPT OF THE CONVENTION CENTER IF THE BONDING DOESN'T COME IN WHERE YOU'RE EXPECTING IT TO? SURE. AND WHEN WE DID THE THE JOINT COMMITTEE, I THINK THE NUMBER THAT WE PUT FORWARD WAS 1.9.
THE ADDITIONAL IS, IS THE DEBT PART.
RIGHT? SO THAT'S THE ADDITIONAL.
LET'S SEE WHERE WE CAN SCALE BACK IN A WAY THAT STILL MAKES IT A BOON FOR THE CITY OF DALLAS.
OKAY. WELL, ROSA, I DIDN'T BRING MY LIST OF 20 REASONS I VOTED AGAINST THIS PROJECT, BUT ONE OF THEM IS EXACTLY THIS, THAT THIS PROJECT HAS NOT BEEN APPROVED BY TXDOT, HASN'T BEEN APPROVED BY THE COG, AND YOU DON'T KNOW THAT THAT FUNDING IS THERE.
SO IN TERMS OF APPROVAL, YES, WE'VE HAVE WORKED WITH THE COG.
YOU HAVE FUNDED BECAUSE I HAVEN'T VOTED ON IT.
NO, WE HAVEN'T. THEY'RE NOT FUNDING THE PROJECT.
YEAH, CORRECT. BUT NOT NECESSARILY HAVING THE COG PAY FOR THE WHOLE THING.
NO, THERE'S DIFFERENT TRANCHES OF FUNDS THAT I CAN LOOK TO TO TO PAY FOR THAT, PARTICULARLY SINCE WE HAVE LOOKED AT IT AS A KIND OF A LOOKED AT IT AND NOT MAKING THE WEIGHT, THE LOAD ON IT AS HEAVY BY USING DIFFERENT TYPES OF OF CURRENT
[01:35:09]
ARCHITECTURE AND THINGS LIKE THAT.SO WE CAN REDUCE THE COST THAT WAY.
SO FOR PAGE EIGHT, WHO PUT THOSE ESTIMATES TOGETHER? THE REVENUE NUMBERS THAT WAS THE STRATEGIC PARTNERS REVENUE FROM 21.
SO AGAIN, THESE ARE THE NUMBERS THAT WE'RE USED TO AS PART OF THE AS PART OF THE REFUNDING IN 21.
THAT'S WHAT THE THE YEAR IS FOR IN ORDER TO GIVE US A 5 TO 6 MONTHS TO DO THE STUDY AND UPDATE THAT.
SO WE'RE COMING TO THE END HERE.
UM, SO THE FIRST SENTENCE IS AS REVENUE CONTINUES TO GROW, MY QUESTION IS HOW DO YOU KNOW THAT IT WILL AND HOW ARE YOU DETERMINING THAT? AND SO HOT HAS CONTINUED TO GROW.
YOU'LL SEE AN ADJUSTMENT AND AN ENHANCEMENT REQUESTED ALREADY.
YOU SAW THAT IN OUR MID-YEAR APPROPRIATION ADJUSTMENT.
IT EXCEEDED WHAT WE BUDGETED AND EXCEEDED OUR NON CONSERVATIVE FORECAST AS WELL.
YOU'LL SEE THAT AGAIN AS THE FORECAST FOR THE BUDGET THAT WE'VE SUBMITTED AS A PROPOSAL, WE HAVE AN ENHANCEMENT IN THERE FOR WE'VE CONSERVATIVELY PROPOSED A BUDGET THAT INCLUDES HOT, BUT WE HAVE AN ENHANCEMENT THAT ALLOWS US TO INCREASE THAT.
WE'VE JUST SEEN AN INCREDIBLE RISE.
THERE'S JUST A STUDY THAT WAS PUBLISHED, A NATIONAL STUDY THAT CAME OUT THAT SHOWS DALLAS AS NUMBER FIVE IN THE NATION IN TERMS OF GROWING CONVENTIONS THIS YEAR AND THE END OF LAST YEAR.
AND SO THOSE ARE THE FUNDS THAT WE'RE ANTICIPATING.
WE'RE IN LINE WITH WHAT THE STATE'S PROJECTIONS ARE.
WE'RE IN LINE WITH WHAT TOURISM ECONOMICS IS SEEING FOR DALLAS.
AND SO WITH THOSE EXTRA FUNDS, THAT WAS THE QUESTION THAT WE ASKED, JACK, THAT WE ASKED OUR FINANCIAL ADVISORS IF IF WE DO GET TO THAT 6% GROWTH, THAT IS PROJECTED GROWTH THAT IS PROJECTED, THEN WHAT CAN WE DO WITH THOSE ADDITIONAL FUNDS? AND THIS IS WHAT THEY HAVE ADVISED US CAN BE DONE.
BUT OPERATING AND MAINTENANCE COSTS, THOSE ARE REQUIRED, CORRECT? NOT NECESSARILY.
THAT'S THE DAY TO DAY OPERATION AND MAINTENANCE.
SO YOU'LL USE YOUR WARRANTY UP TO A CERTAIN POINT.
AND THEN YOU'VE GOT TO MAINTAIN THE FACILITIES SO THAT YOU DON'T RUN INTO THE SITUATION THAT WE NOW SEE AT BOTH FAIR PARK AND AT THE CONVENTION CENTER, WHERE WE DID NOT DO A GREAT JOB OF THAT IN THE PAST.
BUT WE DIDN'T DO A GREAT JOB BECAUSE WE DIDN'T DO THE MAINTENANCE PART.
WOULD WE AGREE? OKAY. SO I WOULD AGREE, JACK, I HOPE THAT YOU'RE GOING TO COME BACK TO US WITH SOME SORT OF FMPC THAT SAYS WE MUST FUND MAINTENANCE BECAUSE WE'RE GOING TO END UP IN THE SAME EXACT SCENARIO AND THAT MONEY'S GOING TO GET SKIMMED OFF TO DO ALL SORTS OF OTHER THINGS.
DO WE HAVE ISSUANCE OF ADDITIONAL DEBT? I GUESS THIS IS MY VERY LAST QUESTION.
ARE YOU COUNTING ON FUTURE REVENUE GROWTH TO GENERATE ADDITIONAL DEBT? IT'S POSSIBLE.
AGAIN, LIKE I MENTIONED EARLIER, ONE THING WE MAY CHOOSE TO DO, ESPECIALLY REGARDING FAIR PARK, IS AS WE GET A LITTLE FURTHER DOWN THE ROAD, MAY ISSUE ADDITIONAL DEBT TO DO ADDITIONAL COMPONENTS OF THEIR PROJECT.
IT WOULD BE SOMETHING THAT'S A POSSIBILITY.
BUT THEY'RE RESTRICTED TO 20%, CORRECT? YES, MA'AM. COUNCIL MEMBER.
THE BRIMER FUNDS WERE RESTRICTED TO 20% ADDITIONAL CAPACITY.
BOND ISSUANCE WOULD BE SUBJECT TO THE SAME.
WHAT I'M REFERRING TO IS THE GREEN BARS CONTINUE TO GROW OVER TIME.
HOWEVER, WE ARE LIMITING OUR DEBT TO THE LINES THAT ARE GOING ACROSS THE PAGE.
IF THE REVENUE CONTINUES TO GROW, WHAT DO WE DO WITH THAT EXCESS REVENUE ABOVE THE DEBT SERVICE PAYMENT? THE THINGS ON PAGE 15, O&M COST, CAPITAL IMPROVEMENTS ISSUE ADDITIONAL DEBT THAT WE COULD DO WITH THAT.
[01:40:08]
I JUST WANT I WANTED TO MAKE SURE THAT I UNDERSTOOD IT CORRECTLY.I DIDN'T KNOW IF WE WERE TALKING ABOUT OUTSIDE OF THE BRIMER FUND PROJECTION.
AND I WAS I WAS WONDERING IF WE WERE BINDING THE SAME THRESHOLD.
BUT YOU'VE ANSWERED THE QUESTION.
SO THANK YOU FOR THE CLARIFICATION.
AGAIN, IF YOU COULD BE COLLECTING QUESTIONS BOTH FROM THIS MEETING THAT MAYBE YOU CAN SHARE AND THEN ADDITIONAL ONES THAT COME IN AND THEN MAYBE JUST KEEP SHARING THOSE IN FRIDAY MEMOS UNTIL WE GET BACK TO THIS MEETING.
I APPRECIATE IT. THANK YOU VERY MUCH.
I THINK THIS IS A VERY IMPORTANT PROJECT.
I DO WANT IT TO BE SUCCESSFUL.
OKAY. SO I'M HAPPY TO HEAR YOU SAY.
OKAY. SO WITH THAT, WE'RE GOING TO MAKE ONE LITTLE SHIFT.
WE'RE GOING TO POP OVER TO DO ATMOS NEXT, WHICH IS F AND THEN WE'LL DO E AFTERWARDS.
I HAVE TO LEAVE AFTER THIS. SO I GUESS WE'LL JUST LET HER KNOW. OKAY.
VERY GOOD. WE TALKED ABOUT PROCESS ON LETTING PEOPLE KNOW WHEN YOU'RE LEAVING A MEETING.
THANK YOU FOR THIS BRIEFING ON ATMOS.
SO MY NAME IS NICK FEHRENBACH.
I'M THE MANAGER OF REGULATORY AFFAIRS AND UTILITY FRANCHISING FOR THE CITY OF DALLAS.
THE PURPOSE OF THE BRIEFING TODAY IS TO GIVE YOU AN UPDATE.
THE CITY COUNCIL ON THE ATMOS ENERGY CORPORATION'S ANNUAL FILING AND REVIEW THE PROPOSED SETTLEMENT AGREEMENT, AS WELL AS DISCUSS OPTIONS AND THE CITY MANAGER'S RECOMMENDATION AS WELL AS THE NEXT STEPS.
ATMOS FILED ITS 2023 DA CASE ON JANUARY 13TH OF THIS YEAR, REQUESTING AN INCREASE IN ANNUAL RATES OF $20.6 MILLION FROM RESIDENTS OF THE CITY.
THIS EQUATES TO AN AVERAGE RESIDENTIAL BILL INCREASE OF ABOUT $6.10 PER MONTH AND AN AVERAGE INCREASE FOR COMMERCIAL BILL OF ABOUT $20.30. AND THEY REQUESTED A JUNE 1ST EFFECTIVE DATE FOR THESE NEW RATES.
PER STATUTE, THEY'RE ALLOWED TO EARN A RATE OF RETURN ON THEIR INVESTMENT IN CAPITAL.
RIGHT NOW, THE RETURN ON EQUITY THAT ATMOS RECEIVES IS 9.8%.
THAT'S THEIR ALLOWED RETURN THAT WE SET IN THE LAST CASE.
THEIR COST OF DEBT FOR THE DA, WE USE THEIR 13 MONTH AVERAGE, ACTUAL COST OF DEBT, WHICH IS 3.89%, GIVING THEM A WEIGHTED COST OF CAPITAL OF ABOUT 7.43%. IN THE PAST YEAR, ATMOS INVESTED OVER $180 MILLION IN NEW PLANT IN DALLAS THAT REPRESENTS 64 MILES OF NEW PIPE WITHIN THE CITY, WHICH IS ABOUT 2% OF THEIR SYSTEM.
AND THEY ALSO REPLACED OVER 3200 STEEL SERVICE LINES.
NOW, THE CITY AMENDED THE TARIFF BACK IN 2020 IN RESPONSE TO THE COVID 19 PANDEMIC.
AND THAT LANGUAGE IS SORT OF PARTICULAR BECAUSE IF THERE IS A STATE OF EMERGENCY DECLARED BY THE FEDERAL GOVERNMENT, STATE, CITY OR COUNTY, IT DOES EXTEND OUR REVIEW TIMELINE FOR THE CASE.
THE GOVERNOR HAS CONTINUOUSLY ISSUED A STATE OF EMERGENCY EVERY MONTH.
THE LAST ONE BEING APRIL 15TH.
AND AS A RESULT, THE REVIEW PERIOD IS EXTENDED UNTIL AUGUST 28TH.
[01:45:02]
THE CITY RETAINED OUTSIDE CONSULTANTS TO HELP US REVIEW THE CASE.GARRETT GROUP HAS BEEN UNDER CONTRACT SINCE 2017 ON A MULTI-YEAR CONTRACT.
THE RATES WILL NOT BECOME EFFECTIVE UNTIL SEPTEMBER 1ST RATHER THAN THE REQUESTED JUNE 1ST DATE.
AVERAGE RESIDENTIAL BILL WILL STILL INCREASE SIGNIFICANTLY BY ABOUT $5.73 A MONTH.
COMMERCIAL BILL BY ABOUT $14.11.
OPTIONS OPEN TO THE CITY COUNCIL ARE TO ADOPT THE PROPOSED SETTLEMENT AGREEMENT.
THE COUNCIL COULD ADOPT RATES AT SOME OTHER AMOUNT OF INCREASE.
ATMOS WOULD HAVE THE RIGHT TO APPEAL THAT DECISION TO THE RAILROAD COMMISSION OF TEXAS.
THE CITY MANAGER DOES RECOMMEND ADOPTING THE PROPOSED SETTLEMENT.
IT'S A SAVINGS OF $2.4 MILLION TO DALLAS RATEPAYERS, OUR RATE CASE EXPENSES TO BE REIMBURSED.
AND AGAIN, THOSE RATES WON'T BECOME EFFECTIVE UNTIL SEPTEMBER 1ST.
AND THAT ALSO AVOIDS ANY UNCERTAINTY OF AN APPEAL TO THE RAILROAD COMMISSION AND AVOIDS ADDITIONAL COST OF LITIGATING AT THE RAILROAD COMMISSION AT THIS TIME, I'D ASK IF THERE ARE ANY QUESTIONS.
OKAY. THANK YOU. COUNCIL MEMBER.
I'D ACTUALLY LIKE TO MAKE A MOTION.
OKAY. SO IN LOOKING AT THE PRESENTATION IN THE DATES THAT THINGS NEED TO BE ADOPTED, IT LOOKS LIKE WITH AN EFFECTIVE DATE OF SEPTEMBER 1ST, WE PROBABLY WOULDN'T HAVE TO ACT ON THIS UNTIL AUGUST.
IS THAT TRUE? OUR STATUTORY DEADLINE TO TAKE ACTION IS AUGUST 28TH, SO WE HAVE TO HAVE FINAL RESOLUTION BY AUGUST 28TH OR THE RATES WOULD BE DEEMED APPROVED AS REQUESTED.
OKAY. AND THAT APPROVAL WOULD COME FROM FULL CITY COUNCIL BY THAT DATE? THAT IS CORRECT. OKAY.
UM, SO THERE'S A MOTION ON THE FLOOR TO DEFER THIS ITEM FOR CONSIDERATION.
IS THERE A SECOND? SECOND. THERE'S A SECOND.
AND SO WOULD YOU LIKE TO DISCUSS? YES, I WOULD. SO THANK YOU FOR THE PHONE CALL.
WE HAD TO WORK THROUGH ALL OF THIS.
AND NOW AFTER BEING HERE FOR A COUPLE OF YEARS, I UNDERSTAND A LITTLE BIT MORE ABOUT HOW THIS WORKS.
SO AN UNDERSTANDING OUR ATMOS FOLKS ARE HERE IN THE GALLERY.
UM, YOU KNOW, I'M ALWAYS OPEN TO EXPLORING THIS ON BEHALF OF OUR RESIDENTS TO SEE IF THERE'S FURTHER PROGRESS THAT COULD BE MADE, ESPECIALLY JUST WITH, YOU KNOW, THE MARKET CLIMATE AND HOW IT'S PUTTING SUCH STRESS ON OUR RESIDENTS.
SO WHAT IS YOUR THOUGHT AROUND GOING BACK AND TRYING TO NEGOTIATE FURTHER? UH. I BELIEVE IN NEGOTIATING THE SETTLEMENT.
I GOT THE BEST DEAL I COULD OUT OF ATMOS.
AND I THINK THIS IS A REASONABLE OUTCOME IF DIRECTED.
OKAY. WELL, THERE'S A MOTION ON THE TABLE TO DEFER ACTION ON THIS ITEM.
[01:50:07]
OH, DIDN'T SEE THAT.WELL, I WANT TO THANK YOU FOR THE WAY THAT YOU FRAMED YOUR ANSWER.
I THINK THAT'S THE WHOLE POINT IN THE THE MOTION IS, I BELIEVE MAKING IT STOP NOW WOULD WOULD BE ACCEPTING. I THINK THAT IT WOULD BE BETTER PROCESS FOR US TO ALLOW FOR STAFF TO CONTINUE THAT CONVERSATION INSTEAD OF SAYING HOW I REALLY FEEL ABOUT WHAT'S BEING PRESENTED AND SEEING IF WE CAN GET TO A BETTER PLACE.
THIS IS THE HIGHEST INCREASE, YOU SAID.
THIS IS THE HIGHEST INCREASE IN THE NOW 11 YEARS THAT WE'VE HAD THE TARIFF.
AND WHEN YOU LOOK AT WHAT THE AVERAGE TAXPAYER AND HOMEOWNER IS GOING TO SEE IN THIS TYPE OF RATE INCREASE, I MEAN, WE WE MAKE VERY DIFFICULT DECISIONS THAT ARE LONG AND DRAWN OUT JUST TO SAVE PEOPLE $12 A YEAR WHEN IT COMES TO INCREASING THEIR PROPERTY TAXES ALONE.
I SEE THAT THERE'S NO ADVERSE IMPACT TO Y'ALL.
GETTING BACK TO THE TABLE WITH ATMOS AND SEEING WHAT COULD BE WHAT, IF ANYTHING, COULD CHANGE FROM NOW UNTIL WHEN COUNCIL HAS TO TAKE ACTION SINCE WE'RE NOT BOUND BY A TIMELINE, THAT'S THE ONLY REASON I'M ASKING FOR THIS TO HAPPEN.
SO I JUST WANT TO MAKE IT CLEAR WITH CONTEXT.
AND OF COURSE, WE KNOW A LOT OF THAT WAS BECAUSE WE HAD SOME VERY UNFORTUNATE EVENTS.
IS THAT RIGHT? YOU CAN SHAKE YOUR HEADS UP THERE.
I THINK THAT IS AN ITEM THAT YOU DIDN'T QUITE SAY, WHICH IS THAT NOT ONLY IS THIS A MASSIVE RATE INCREASE, WHICH I THINK WE ALL RECOGNIZE THE AVERAGE HOMEOWNER IS GOING TO SPEND, I THINK IT'S $68, ALMOST $69 A YEAR.
IT'S A LOT OF MONEY FOR PEOPLE.
THEY'RE MAKING THESE CAPITAL INVESTMENTS AND REPLACING THE PIPE.
AND AGAIN, WE NEED THEM TO DO THAT, BUT WE'RE PROBABLY GOING TO SEE THIS AGAIN.
IT'S BEEN A REALLY LOW COST ALTERNATIVE.
AND I THINK THAT'S GOING TO END UP CHANGING AS THE SYSTEM IS UPGRADED.
BUT IN THE MEANTIME, THERE THERE'S A MOTION ON THE FLOOR AND IT DOES HAVE A DATE UNCERTAIN.
FOLKS, WE HAVE ONE SCHEDULED MEETING BEFORE THE END OF THIS TERM.
YOU COULD REPORT BACK AND WE WOULD PUT IT ON THE JUNE AGENDA.
IF YOU FEEL LIKE THERE'S SOMEWHERE TO GO WITH IT AND THERE'S PROGRESS, WE'LL HAVE TO SEE WHAT THE SITUATION IS WITH STARTING THE NEXT TERM AND THAT COMMITTEE.
THIS COMMITTEE IS THE ONLY ONE THAT'S ACTUALLY REQUIRED BY THE CHARTER.
SO IT'S NOT IT'S IN A LITTLE BIT OF A DIFFERENT CIRCUMSTANCE.
IT'S POSSIBLE THIS COULD BE FORMED BEFORE THE OTHERS.
I DON'T KNOW. BUT THAT WILL HAVE TO BE PART OF THE CALCULUS AS WE DECIDE WHEN IT COMES BACK.
BUT I THINK THE INTENT OF WHAT YOU'RE ASKING IS FOR CONTINUED DIALOG.
SO WITH THAT, UM, THERE'S A MOTION, THERE'S A SECOND.
ALL THOSE IN FAVOR OF THE MOTION, PLEASE SAY AYE.
OKAY, SO WE'LL SAY IT PASSES UNANIMOUSLY.
WE'LL BE BRINGING THIS BACK AGAIN.
DATE UNCERTAIN AT THIS POINT, BUT IF YOU WOULDN'T MIND CONTINUING TO HAVE A DIALOG TO SEE IF WE COULDN'T HELP OUR RESIDENTS IN SOME WAY BECAUSE WE KNOW THIS IS A VERY LARGE INCREASE. AND WE'LL WE'LL SEE YOU BACK SOON.
[01:55:05]
OKAY. OKAY.OKAY. NEXT ITEM IS THE TECHNOLOGY ACCOUNTABILITY REPORT.
THE MOST POPULAR MAN IN DALLAS CITY HALL RIGHT NOW, BILL ZELINSKY.
THE SECOND MOST POPULAR MAN COMING RIGHT BEHIND HIM.
BRIAN GARDNER, CHIEF SECURITY INFORMATION OFFICER.
SO EVERY MONTH YOU'VE BEEN DOING THE TECHNOLOGY ACCOUNTABILITY REPORT, AND IT'S AN EXCELLENT REPORT, BUT WE DON'T REALLY TALK ABOUT IT VERY MUCH.
AND SO GIVEN THE FOCUS THAT WE'VE HAD ON TECHNOLOGY LATELY, YOU'RE A NEWSMAKER.
I WAS HOPING YOU COULD KIND OF GO THROUGH AND SHOW US WHAT YOU'VE BEEN PUTTING TOGETHER EVERY MONTH.
THIS HAS ONLY BEEN HAPPENING SINCE OCTOBER OR DATA AS OF OCTOBER.
SO THE FIRST REAL ONE WAS NOVEMBER.
AND WITHOUT GIVING AWAY THINGS THAT WOULD MAKE BRIAN LOSE SLEEP.
THANK YOU. GOOD AFTERNOON, CHAIR MENDELSOHN AND ESTEEMED MEMBERS OF THE COMMITTEE, BILL ZELINSKY, CHIEF INFORMATION OFFICER THANK YOU FOR THIS OPPORTUNITY TO BRIEF YOU TODAY ON THE TECHNOLOGY ACCOUNTABILITY REPORT.
IT'S PRODUCED MONTHLY BY THE INFORMATION AND TECHNOLOGY SERVICES DEPARTMENT.
ORGANIZATIONS MAKE LARGE INVESTMENTS IN TECHNOLOGY WITH THE EXPECTATION THAT THEY WILL SEE MEASURABLE IMPROVEMENTS IN THE OUTCOMES THAT THEY DELIVER HERE AT THE CITY OF DALLAS, THAT IS NO DIFFERENT BECAUSE OF THE CRITICALITY AND COSTS ASSOCIATED WITH ITS USE.
IT'S IMPORTANT THAT AN ORGANIZATION ENSURE THAT THE INVESTMENTS IT MAKES IN TECHNOLOGY ARE ALIGNED TO ITS STRATEGIC OBJECTIVES, ARE SUCCESSFUL IN DELIVERING ITS INTENDED OUTCOMES AND ARE MONITORED AND MAINTAINED OVER TIME TO ENSURE THE INVESTMENTS CONTINUE TO BE SOUND.
THE TECHNOLOGY ACCOUNTABILITY REPORT, THE TAR WAS DESIGNED AND IMPLEMENTED TO PROVIDE THE MAYOR CITY COUNCIL AND CITY EXECUTIVES WITH INFORMATION ON ITS INVESTMENTS IN TECHNOLOGY, THE STATE OF IT, DAILY OPERATIONS IN THE HEALTH AND SECURITY OF THE TECHNOLOGY SERVICES THAT ARE DELIVERED.
THE TAR IS COMPRISED OF FIVE SECTIONS TO INCLUDE ONE IT PROGRAMS AND PROJECTS.
STARTING ON PAGE FOUR OF THE APRIL 2023, TAA, THE IT PROGRAMS AND PROJECT SECTIONS PROVIDES INFORMATION ABOUT THE CURRENT ACTIVE PROJECT PIPELINE.
THE PROJECTS IN THIS SECTION REPRESENT THE TOTAL AGGREGATED TECHNOLOGY INITIATIVES THAT ARE CURRENTLY APPROVED AND TRACKED BY THE IT DEPARTMENT TOWARD COMPLETION. AS OF APRIL 30TH, THERE WERE 118 TOTAL APPROVED PROJECTS IN THE PIPELINE, WITH A TOTAL ESTIMATED COST OF JUST UNDER $450 MILLION.
THESE ESTIMATED COSTS ARE THE TOTAL AGGREGATED COSTS ASSOCIATED WITH THE IMPLEMENTATION OF THE PROJECT TO INCLUDE ONE TIME SERVICES FOR DEVELOPMENT AND INTEGRATION OF THE NEW SYSTEM LICENSING COSTS, HARDWARE AND ANY OPERATIONS AND MAINTENANCE COSTS THAT ARE COVERED WITHIN THE TOTAL PERIOD OF PERFORMANCE OF THAT CONTRACT.
SO WHEN WE ESTIMATE THOSE COSTS AND WE PLACE THEM WITHIN THE TAR, WE'RE REALLY NOT JUST LOOKING AT THAT ONE YEAR COST, WE'RE LOOKING AT THE THE KIND OF THE THE INITIAL LIFE CYCLE FROM IMPLEMENTATION THROUGH THAT INITIAL PERIOD OF OPERATIONS AND MAINTENANCE AND THOSE OPERATIONS AND MAINTENANCE COSTS ARE THEN CARRIED FORWARD FOR THE LIFE OF THE PROJECT IN THE IT OPERATING BUDGET.
THERE REALLY ARE ABOUT FOUR DIFFERENT WAYS THAT AN IDEA BECOMES A PROJECT.
IF YOU THINK ABOUT HOW A BILL BECOMES A LAW, THIS IS HOW A THOUGHT BECOMES AN IT PROJECT.
ONE IS IT'S DRIVEN BY THE NEEDS OF THE INDIVIDUAL MISSION DEPARTMENTS.
[02:00:04]
REALLY, WE DON'T DO TECHNOLOGY FOR THE SAKE OF TECHNOLOGY.WE DO TECHNOLOGY FOR THE SAKE OF MEETING A MISSION PRIORITY OR MISSION OBJECTIVE.
THE SECOND WAY IS THAT ON AN ONGOING REGULAR BASIS, THERE'S REQUIRED.
WE PRIMARILY UTILIZE COMMERCIAL VENDOR PRODUCTS.
AND SO AS THOSE SYSTEMS, AS THOSE SERVICES ARE UPGRADED OR ENHANCED, IT DOES CAUSE US TO HAVE TO DO UPGRADES AND ENHANCEMENTS OURSELVES IN THOSE SYSTEMS. THIRD IS THAT WE DO SEE CHANGES IN LAW CITY CHARTER OR OTHER CIRCUMSTANCES THAT CREATE AN EMERGENT NEED FOR US TO BRING SOMETHING TO LIFE.
YOU'LL OFTEN SEE AFTER A CHARTER CHANGE THAT THERE'S THEN A REQUEST FOR FUNDING FOR BUDGET TO ALLOW FOR AN IT PROJECT THAT WILL ASSIST THEM IN CARRYING OUT THEIR NEW DUTIES AND RESPONSIBILITIES. AND THEN FINALLY, WHAT WE SEE IS THAT THERE ARE THINGS LIKE SYSTEMS REACHING THE END OF LIFE AS THOSE SYSTEMS BEGIN TO DEGRADE OR NO LONGER SUPPORTED, BECOME MUCH MORE VULNERABLE TO PROBLEMS OR ISSUES OF BUSINESS CONTINUITY THAN WE REALLY DO HAVE TO CONTINUE TO UPGRADE AND TO HAVE MAJOR CHANGES OR REPLACEMENTS OF THOSE SYSTEMS. THIS SECTION OF THE TAR PROVIDES INFORMATION ABOUT THE OVERALL PIPELINE AND STATUS UPDATES OF MAJOR PROJECTS.
AS YOU HEARD, IT'S 12 YEARS IN.
WE ACTUALLY HAVE ALREADY PUT OUT THE RFP, THE RFP, THE TECHNICAL EVALUATION HAS BEEN COMPLETED, AND THAT ACTION IS GOING TO BE COMING TO THE CITY COUNCIL SOON FOR REVIEW AND APPROVAL AND ALL OF THOSE THINGS THAT WE TALKED ABOUT IN TERMS OF THE VULNERABILITIES AND THE CONTRACT LANGUAGE, THOSE WILL ACTUALLY ALL BE INCLUDED IN THE NEW CONTRACT TO ENSURE THAT WE ARE COVERING DOWN ON ALL OF THOSE ITEMS THAT WERE THAT WERE SHOWN IN THERE.
STARTING ON PAGE 17 OF THE APRIL TAR IS THE IT OPERATIONS SECTION.
ANY SORT OF INCIDENTS THAT ARE REPORTED, ANY REQUESTS FOR SERVICES.
THIS REALLY IS A PERFORMANCE REPORT FOR US TO SHOW HOW MUCH ARE WE SEEING COME IN? WHAT ARE THE THINGS THAT PEOPLE ARE REQUESTING, WHAT SORTS OF PROBLEMS THAT WE ARE SEEING? NOT ONLY DO WE DO WE USE THIS TO BE ABLE TO KNOW AND UNDERSTAND HOW WE ARE PERFORMING AND HOW WE CAN MAKE IMPROVEMENTS IN PERFORMANCE AND ADDRESSING THOSE ISSUES.
BUT IT ALSO GIVES ME GOOD INFORMATION THAT AS I'M LOOKING AT FORMULATING BUDGET WHERE WE MAY HAVE RECURRING PROBLEMS OR ISSUES AND WHAT ARE THE THINGS THAT I NEED TO DO TO ENSURE THAT WE ARE IMPROVING THOSE FOR THE LONG TERM? IT PROVIDES DATA ABOUT IT, OUTAGES AND THEIR IMPACT ON THE DELIVERY OF CITY SERVICES AND PROVIDES A COMPARISON TO PATHS PAST MONTHS SO WE CAN TRACK OUR IMPROVEMENT AS WE MOVE FORWARD.
THE IT DEPARTMENT IMPLEMENTED SERVICENOW IN APRIL OF 2021.
IF WE ROLL FORWARD TO PAGE 26, WE HAVE THE BUDGET EXECUTION SECTION OF THE TOUR AND IT REALLY PROVIDES A REVIEW OF THE IT RELATED ITEMS THAT HAVE BEEN APPROVED BY THE COUNCIL IN THE LAST CYCLE.
AND THEN IT ALSO HAS AN ABBREVIATED REPORT ON OUR STAFFING INFORMATION.
THE NEXT SECTION OF THE TAR IS THE CYBERSECURITY SECTION AND IT STARTS ON PAGE 31 OF THIS REPORT.
THE TAR TRACKS, THE PROGRESS ON THINGS LIKE OUR OUR MANDATORY ANNUAL CYBERSECURITY AWARENESS TRAINING, BUT IT ALSO REQUESTS IT ALSO PROVIDES A LOT OF INFORMATION ABOUT THINGS LIKE PHISHING ATTEMPTS INTO THE CITY AS WELL AS INFORMATION ABOUT KIND OF THE CHALLENGES THAT WE FACE.
[02:05:09]
ENVIRONMENT. THIS FIRST SLIDE ON PAGE 35 SHOWS THAT IN APRIL OF 2023, THERE WERE 188,870 DIRECT MALWARE ATTACKS, ATTACK ATTEMPTS ON THE CITY'S ENVIRONMENT.THIS IS ABOUT 6000 PER DAY ON AVERAGE THAT WE SEE IN TERMS OF MALWARE ATTEMPTS TO THE CITY.
WHAT'S SIGNIFICANT ABOUT THIS IS THAT THIS IS A INCREASE FROM ABOUT 35,000 FROM THE PRIOR MONTH.
DOCTOR BRIAN GARDNER, CHIEF INFORMATION SECURITY OFFICER SO THIS INCREASE IS SOMEWHAT NORMAL, ALTHOUGH THE OVERALL WE DID SEE AN INCREASE IN APRIL ON ALL OF THESE AS FAR AS ATTACKS.
SO WE WILL EXPECT WELL NEXT MONTH, WE'LL EXPECT IT PROBABLY TO INCREASE SIGNIFICANTLY MORE GIVEN WHAT WE'RE WORKING THROUGH, BUT THEN IT'LL START TO SUBSIDE AND REDUCE BACK TO SOME SOMEWHAT OF A NORMAL NUMBER.
YOU WILL SEE THESE KINDS OF CHANGES WITHIN THE REPORTS.
SIMILARLY, ON PAGE 36, THERE'S A SHOW, THERE'S A CHART SHOWING THAT ONLY ROUGHLY 30% OF ALL OF OUR INCOMING EMAIL MESSAGES ARE DEEMED CLEAN. AGAIN, THERE'S SOME VARIABILITY IN FLUCTUATION, BUT IN GENERAL, WE DO SEE THAT THERE'S A VERY LARGE PROPORTION OF OUR INCOMING EMAILS THAT ACTUALLY CONTAIN EITHER SPAM OR PHISHING OR SOME OTHER TYPE OF OF THING TO BE WATCHED OUT FOR AND THAT WE ARE REMOVING OR BLOCKING OR TAKING THOSE OUT.
AND THAT'S A VERY NORMAL PATTERN FOR US TO SEE.
AND THEN AS WE MOVE TO PAGE 37, THIS IS THE SECTION ON IT INFRASTRUCTURE.
WE'RE HIGHLIGHTING A PROJECT WHERE WE WORKED WITH A CONSULTANT.
HE NAMED IT CADRE TO CONDUCT A COMPREHENSIVE INVENTORY OF ALL OF OUR CITY SYSTEMS AND IT SERVICES.
AS WE LOOK AT OUR TECHNICAL DEBT, AS WE TAKE A LOOK AT OUR AGING INFRASTRUCTURE, AS WE TAKE A LOOK AT THOSE SYSTEMS THAT ARE MAYBE REACHING END OF LIFE OR MAY HAVE OTHER ISSUES, RISKS, PROBLEMS THAT ARE ASSOCIATED WITH THEM, IT'S IMPORTANT TO HAVE THAT VERY COMPREHENSIVE INVENTORY OF ALL OF THE SYSTEMS THAT YOU HAVE TO THAT WE DO A HEALTH ASSESSMENT OF EVERY SINGLE ONE OF THOSE SYSTEMS. AND IT IS FROM THIS PARTICULAR PROJECT WHERE WE HAVE IF WE COULD GO TO THE NEXT PAGE, GO ONE MORE 38, ONE MORE.
39. I'M NOT EXPECTING ANYONE TO READ THAT THAT FIRST PIECE UP ON TOP THAT THAT ACTUALLY IS A IS A IF YOU LAID THAT OUT IN A READABLE CHART THAT'S ABOUT 70FT LONG AND IT REPRESENTS THE MORE THAN 850 SYSTEMS THAT WE HAVE HERE IN THE CITY'S IT ENVIRONMENT.
THIS INVENTORY THAT WE PROVIDED, IT PROVIDES A LOT OF DETAILED INFORMATION RELATIVE TO THE BUSINESS PROCESSES THAT ARE SUPPORTED, THE SYSTEMS THAT ARE SUPPORTING THEM, THE DEPARTMENTS THAT THEY SUPPORT, THE STRATEGIC PRIORITIES THAT THEY SUPPORT, AND THE INTERCONNECTIONS OR THE THE TOUCHPOINTS IN IN BETWEEN EACH OF THOSE SYSTEMS. AND IS THAT INFORMATION THAT WE USE TO REALLY BEGIN TO UNDERSTAND, TO UNDERSTAND THE EXACTLY WHERE WE NEED TO ADDRESS CRITICAL ISSUES OR ISSUES OF TECHNICAL DEBT WITHIN OUR ENVIRONMENT.
SO THE I RAN THROUGH THAT VERY QUICKLY GIVEN THE AMOUNT OF TIME.
SO THE TAA IS INTENDED TO REALLY PROVIDE CITY LEADERSHIP WITH THE INFORMATION NEEDED TO ENSURE THE SUCCESSFUL DEPLOYMENT USE AND MANAGEMENT OF TECHNOLOGY IN ACCOMPLISHING DEPARTMENT MISSIONS. AGAIN, WE DON'T DO TECHNOLOGY FOR TECHNOLOGY'S SAKE.
WE DO TECHNOLOGY BECAUSE IT IS MEANT TO IMPROVE OUR MISSION DELIVERY ACROSS THE CITY.
AND WE ARE WE ARE A SERVICE PROVIDER IN DOING SO.
REALLY, THIS REPORT IS FOR YOU.
IT'S FOR, AGAIN, CITY LEADERSHIP.
AND SO WE'VE LAID OUT THIS INFORMATION.
[02:10:07]
PROVIDE YOU ALL WITH THE INFORMATION THAT YOU NEED TO MAKE THE BEST DECISIONS ON BEHALF OF THE CITY RELATIVE TO OUR TECHNOLOGY INVESTMENTS.AND WITH THAT, I WILL OPEN IT FOR QUESTIONS.
COMMITTEE DO YOU HAVE ANY QUESTIONS? SO THE ONLY THING THAT I DON'T THINK IS REALLY IN HERE IS WE'RE NOT REALLY TRACKING WHAT YOU CALL TECHNOLOGY DEFICIT OR SOMETHING CLOSE TO THAT.
UM, AND WE MIGHT I DON'T KNOW IF THAT'S SOMETHING THAT WOULD BE PUBLISHABLE.
UM, BECAUSE WE CAN'T JUST KEEP GOING ON THIS WAY AND YOU KNOW THE ITEM YOU WERE SHOWING ON 39, I JUST PASSED AROUND THE PHOTO THAT I HAVE OF YOU STANDING THERE WITH THIS.
AND LIKE THE LITTLE TINY BOXES ON THE TOP, THAT WOULD BE THE LIFE SIZE PERSON.
AND UM, DEFINITELY SOMETHING THAT IF WE COULD SHOW IT, IF IT WASN'T SENSITIVE, THEN I THINK PEOPLE WOULD BE LIKE, WOW, THAT'S AMAZING. UM, BUT I JUST THINK THE CONTEXT THAT THIS PROVIDES IS REALLY IMPORTANT.
I THINK THE INFORMATION HELPS US UNDERSTAND WHAT YOU'RE ASKING FOR AND WHY IT'S IMPORTANT FOR US TO INVEST IN IT AND REALLY PROVIDES THE KIND OF GOVERNANCE THAT WE CAN DO.
AND I STILL THINK THAT'S FAIRLY LIMITED BECAUSE WE CAN'T KNOW ALL THE THINGS THAT YOU'RE DOING.
UM. BUT THIS IS VERY HELPFUL AND HAS HELPED EDUCATE ME A LOT.
SO THANK YOU FOR THE WORK TO PUT IT TOGETHER EVERY MONTH.
THANK YOU FOR ALL THE EXTRAORDINARY WORK YOU'RE DOING RIGHT NOW.
ANYBODY ELSE, NO? THANK YOU GUYS SO MUCH.
THIS WOULD BE OUR SENIOR TAX RATE.
SENIOR EXEMPTION, SENIOR AND DISABLED.
SO GOOD AFTERNOON, JEANNETTE, DIRECTOR OF BUDGET AND MANAGEMENT SERVICES.
THANK YOU FOR THE OPPORTUNITY TO PRESENT VIRTUALLY.
STARTING ON SLIDE NUMBER TWO WITH THE OUTLINE OF TODAY'S PRESENTATION, WE WILL SHARE BACKGROUND.
THE TAX RATE IS SPLIT BETWEEN THE GENERAL FUND AT 72% AND THE DEBT SERVICE FUND AT 28% OF REVENUE.
PROPERTY TAX IS GOVERNED BY STATE LAW, AND IT'S BASED ON THREE THINGS THE PROPERTY VALUE SET BY THE APPRAISAL DISTRICTS, THE EXEMPTIONS ALLOWABLE BY STATE LAW AND SET BY CITY COUNCIL, AND THE PROPERTY TAX RATE SET BY CITY COUNCIL.
PROPERTY OWNERS MAY PROTEST THEIR VALUE AT THE APPRAISAL DISTRICTS.
TODAY IS THE DEADLINE FOR TO FILE A PROTEST WITH DALLAS CAD.
AND OF COURSE WE WILL RECEIVE OUR CERTIFIED VALUES FROM THE APPRAISAL DISTRICTS ON JULY 25TH.
A SIGN NUMBER FOUR, WE PROVIDE MORE BACKGROUND ON PROPERTY TAXES.
THE CURRENT TAX RATE IS 74.5.08 CENTS PER 100 VALUATION.
THE NEXT BULLET HERE ON THE SLIDE LISTS THE PROPERTY TAX REVENUE AMOUNT EQUIVALENT TO THE TAX RATE, AND THE TABLE ON THE BOTTOM OF THE SLIDE REFLECTS THE REDUCTIONS OVER THE LAST SEVEN YEARS FROM FISCAL YEAR 17 THROUGH FISCAL YEAR 23.
AND YOU CAN SEE THE TOTAL AMOUNT OF REVENUE FOREGONE FROM THOSE EXEMPTIONS AT $90.3 MILLION.
[02:15:03]
ON SLIDE NUMBER FIVE, THE PROPERTY TAX OR THE PROPERTY VALUE IN DALLAS IS 179.4 BILLION AND IS COMPOSED OF RESIDENTIAL PROPERTIES AT 45% AND NON RESIDENTIAL PROPERTIES AT 55%.THE TAXABLE PROPERTY VALUE REPRESENTS THE MARKET VALUE LESS.
ANY EXEMPTIONS ON THE PROPERTY AND THE CITY OF DALLAS THERE IS 50.6 BILLION IN VALUE THAT IS EXEMPT FROM TAXATION AND THIS EQUALS 377.5 MILLION IN REVENUE FOREGONE BECAUSE WE DO NOT TAX THAT EXEMPT VALUE.
THERE ARE TWO LOCAL OPTION EXEMPTIONS APPROVED BY CITY COUNCIL.
AND THE CURRENT AMOUNT IS SET AT 115,500.
SLIDE NUMBER SIX SHOWS THE HISTORY OF THE VALUE OF OUR EXEMPTIONS.
AGAIN, YOU CAN SEE IN FISCAL YEAR 23, TOTAL VALUE OF PROPERTIES EXEMPT AT 50.6 BILLION.
THIS INCLUDES THE HOMESTEAD EXEMPTION, THE OVER 65 EXEMPTION PROPERTIES THAT ARE TOTALLY EXEMPT, SUCH AS GOVERNMENT PROPERTIES, SCHOOL PROPERTIES, CHARITABLE ORGANIZATIONS.
WE ALSO LIST THE FREEPORT EXEMPTION, WHICH IS BUSINESS PERSONAL PROPERTY EXEMPTION.
IT'S AN EXEMPTION ON INVENTORY THAT'S IN THE CITY LESS THAN 175 DAYS AND OTHER EXEMPTIONS SUCH AS ENVIRONMENTAL AND TAX ABATEMENT. AGAIN, THE REVENUE FOREGONE FOR ALL OF THESE EXEMPTIONS TOTALS 377.5 MILLION.
THIS EXEMPTION IS AVAILABLE FOR OWNER OCCUPIED RESIDENTIAL PROPERTIES.
CITY COUNCIL AUTHORIZED THIS 20% EXEMPTION, WHICH AGAIN IS THE MAXIMUM AMOUNT THAT HAS BEEN IN PLACE SINCE 1988. THIS EXEMPTION PROVIDES ACROSS THE BOARD TAX RELIEF FOR ALL HOMEOWNERS.
IT REMOVES PART OF THE HOME'S VALUE FROM TAXATION.
HOMESTEAD EXEMPTIONS ACCOUNT FOR 14.4 BILLION IN VALUE.
AND IT TOTALS 170 107.6 MILLION IN REVENUE FOREGONE.
AND THIS REVENUE FOREGONE AMOUNT IS EQUIVALENT TO 5.99 $0.07 ON THE TAX RATE.
ON THE NEXT SLIDE. SLIDE NUMBER EIGHT, WHICH IS REALLY THE TOPIC OF OUR DISCUSSION TODAY, IS THE TAX EXEMPTION FOR PROPERTY OWNERS AGED 65 OR OLDER OR DISABLED.
CITY COUNCIL AUTHORIZED THIS EXEMPTION IN 1986.
IT WAS INITIALLY ESTABLISHED AT 50,000 AND INCREASED AGAIN THE SAME YEAR TO 64,000, AND IT WAS AT 64,000 FOR SEVERAL YEARS.
AND THEN IN 2007 IT WAS INCREASED TO 90,000.
CITY COUNCIL AUTHORIZED ANOTHER INCREASE IN 2019 TO 100,000.
IT INCREASED AGAIN IN 2021 TO 107,000.
AND THEN THE LAST INCREASE APPROVED BY CITY COUNCIL WAS IN 2022.
AT THE CURRENT RATE OF 115,500.
THIS EXEMPTION PROVIDES TAX RELIEF FOR ELIGIBLE HOMEOWNERS, AND THIS EXEMPTION IS A SET DOLLAR AMOUNT THAT REDUCES THE HOME'S TAXABLE VALUE.
ON SLIDE NUMBER NINE, ELIGIBLE HOMEOWNERS PAY NO CITY TAXES IF THE MARKET VALUE OF THEIR PROPERTY IS $144,375 OR LESS.
AND HOW DO YOU DETERMINE THIS NUMBER? IF THE PROPERTY IS VALUED AT $144,375, YOU GET A 20% HOMESTEAD EXEMPTION.
THE 20% REDUCES THE VALUE TO 115,500.
AND WHEN YOU ADD THE OVER 65 DISABLED EXEMPTION WITH THE 115,000 EXEMPTION, IT REDUCES THE VALUE TO ZERO, MEANING THE HOMEOWNER PAYS NO CITY TAXES TO THE CITY OF DALLAS.
SIMILAR TO SLIDE NUMBER SIX, WE ARE SHOWING THE 7.1 BILLION IN VALUE ASSOCIATED WITH THIS EXEMPTION AND THE REVENUE FOREGONE AT 53 MILLION.
AND THE TAX RATE EQUIVALENT, WHICH IS 2.95 $0.03.
AT THE BOTTOM OF SLIDE NUMBER NINE, YOU SEE A CHART HERE THAT SHOWS THE VALUE OF THIS EXEMPTION.
[02:20:02]
THE REVENUE FOREGONE AND THE AVERAGE SINGLE FAMILY HOME MARKET VALUE FROM FISCAL YEAR 17 THROUGH FISCAL YEAR 23.WHAT YOU SEE ON THIS NEXT SLIDE IS A VISUAL REPRESENTATION OF THE PREVIOUS SLIDES CHART.
AND THERE WAS ABOUT A $25.7 MILLION IN REVENUE FOREGONE.
AND THE REVENUE FOREGONE AMOUNT IS EQUIVALENT TO $37.8 MILLION AT THAT POINT IN TIME.
WE INCREASE THE EXEMPTION AGAIN LAST JUNE FROM $107,000 TO 115,500, AND THAT REPRESENTS ABOUT $53 MILLION IN REVENUE FOREGONE. ON THIS NEXT SLIDE, I'M JUST GOING TO QUICKLY POINT OUT THE NUMBER 23 DOES REQUIRE AN ANNUAL COMPARISON FOR THE CURRENT EXEMPTION FOR INDIVIDUALS THAT QUALIFY FOR THIS AT AGE 65 OR OLDER.
AND WE LOOK AT THE ANALYSIS ANNUALLY LOOKING AT TWO SCENARIOS.
REALLY. THE FIRST SCENARIO IS THAT WE LOOK AT THE MOST RECENT ANNUAL CONSUMER PRICE INDEX SPECIFICALLY FOR THE ELDERLY, AND WE ALSO LOOK AT THE YEAR OVER YEAR CHANGE IN THE AVERAGE RESIDENTIAL MARKET VALUE OF A SINGLE FAMILY HOME.
SO THIS IS WE ARE REQUIRED TO PROVIDE THIS PRIOR TO JUNE 30TH FOR ANY POSSIBLE INCREASES OR CHANGES BECAUSE APPRAISAL DISTRICTS REQUIRE THIS BY BY THAT TIME EVERY YEAR. IF WE WANT TO MAKE THAT EFFECTIVE IN THE NEXT UPCOMING TAX YEAR.
ON THIS NEXT SLIDE IS JUST A VERY QUICK SUMMARY OF THE ANALYSIS THAT WE SAW.
SO LOOKING AT THE TIME PERIOD FROM APRIL 2022 WHEN WE WERE LAST HERE TO APRIL 2023 OF THIS YEAR, THERE IS A 5.43% INCREASE IN THE CONSUMER PRICE INDEX FOR THE ELDERLY.
THAT AMOUNTS TO ABOUT A $6,270 INCREASE.
SO FOR THE NEXT SCENARIO, LOOKING AT THE YEAR OVER YEAR CHANGE IN THE AVERAGE RESIDENTIAL MARKET VALUE, AGAIN SPECIFICALLY FOR SINGLE FAMILY HOMES, WE'RE SEEING ABOUT A 20.66% INCREASE, WHICH AMOUNTS TO ABOUT $23,900.
SO AGAIN, INCREASING FROM 115,000 TO ABOUT $139,000.
AND THAT CHANGES LOOKING AT THE MARKET PRICE.
LAST YEAR WHEN WE WERE AT ABOUT $328,000 TO THE AVERAGE MARKET PRICE THIS YEAR, $396,000.
BUT I DID WANT TO POINT OUT BEFORE I STARTED SPEAKING ABOUT THAT CHART, THERE WAS A MINOR CORRECTION FROM THE VERSION THAT WAS UPLOADED LAST FRIDAY, SPECIFICALLY THE LAST TWO COLUMNS FOR SCENARIO B AND OUR RECOMMENDATION, THE CITY TAX BILL WAS SLIGHTLY OVERSTATED BY ABOUT $7 ON THE PREVIOUS SLIDE ON THE PREVIOUS VERSION THAT WE UPLOADED ON FRIDAY.
SO THAT VERSION SAID $1,332 ON FRIDAY, BUT WE CORRECTED THAT.
SO THE VERSION YOU'RE SEEING ON YOUR SCREEN RIGHT NOW IS CORRECT AT $1,325.
SO I THINK THE VERSION THAT WAS UPLOADED LAST FRIDAY SAYS $1.8 BILLION.
BUT BUT IT NEEDS TO SAY 1.7, AS YOU SEE ON YOUR SCREEN.
AND SIMILARLY, THE TOTAL REVENUE FOR SAID $13.3 MILLION.
AND IN REALITY, THAT WAS ACTUALLY $12.8 MILLION.
IT APPLIES TO ABOUT 72,000 PROPERTY OWNERS THAT QUALIFY FOR THIS EXEMPTION AND THAT CURRENT VALUE OF EXEMPTION, AS DIRECTOR WE MENTIONED EARLIER, IS WORTH $7.9 BILLION IN MARKET VALUE.
THAT TOTAL REVENUE FOREGONE AGAIN, IS WORTH $53 MILLION IN AND OF ITSELF IN AN AVERAGE CITY TAX BILL FOR AN AVERAGE SINGLE FAMILY HOME OWNER WHO HAS A VALUE OF 396,000 WOULD EXPECT TO PAY A BILL OF $1,503.
SO IF WE WERE TO LOOK AT SCENARIO A, THAT'S ASKING, THAT WOULD BE REQUIRING AN INCREASE OF 5.4% AND THAT WOULD INCREASE US FROM $115,000 TO ABOUT $121,000. THAT WOULD INCREASE THE VALUE OF THE EXEMPTION FROM 7.1 BILLION TO $7.6 BILLION .
[02:25:04]
TOTAL REVENUE FOREGONE, LOOKING AT SCENARIO A STILL WOULD INCREASE FROM $53 MILLION TO $56.6 MILLION.AND THEN THE CITY TAX BILL AN AVERAGE AGAIN LOOKING AT THE SAME AVERAGE MARKET VALUE WOULD DECREASE FROM $1,503 BY ABOUT $46 TO $1453.
SCENARIO B, I'LL JUST SPEAK TO THE FINAL COLUMN.
OUR RECOMMENDATION OF 139,400, BECAUSE THAT'S JUST A CLEANER NUMBER TO LOOK AT.
SO THAT WOULD INCREASE THE EXEMPTION BY THE EXEMPTION AMOUNT BY 23,900.
AND SO THE VALUE OF THE EXEMPTION, THE SORRY, THE TOTAL REVENUE FOREGONE WOULD ALSO, AS THEY'RE TIED TOGETHER, WOULD INCREASE FROM $53 MILLION TO ABOUT $65.8 MILLION OR SO.
AND WITH THAT SCENARIO, AN AVERAGE CITY TAX BILL WOULD DECREASE BY $178.
ONE LAST THING TO POINT OUT ON THIS SLIDE IS THAT IF WE WERE TO GO WITH THE RECOMMENDATION OF 139,400, THE AMOUNT OF $143,000, AS DIRECTOR WHEATON MENTIONED EARLIER, SOMEBODY WOULD BE THAT HAS A MARKET VALUE OF $174,000 IN THIS CASE WOULD PAY NO CITY TAXES.
ON THIS NEXT TO LAST SLIDE, JUST TALKING ABOUT OTHER TAX RELIEF OPTIONS FOR HOMEOWNERS.
QUARTERLY PAYMENTS WITHOUT PENALTY INTEREST WOULD BE OFFERED FOR TAXPAYERS WITH FIXED INCOMES.
AND ANOTHER TAX RELIEF OPTION IS THAT THEY HAVE THE ABILITY TO FILE A TAX DEFERRAL IF THEY'RE UNABLE TO PAY, AND THAT'S ALLOWED ON A RESIDENT'S HOMESTEAD UNTIL A TAXPAYER NO LONGER OWNS OR OCCUPIES THE HOME.
THIS PROTECTS PROPERTIES FROM BEING SOLD FOR BACK TAXES DURING OWNERSHIP.
ON THIS FINAL SLIDE, THE RECOMMENDATION AND NEXT STEPS.
WE DO RECOMMEND INCREASING THE AGE 65 AND OLDER EXEMPTION FROM 115,500 TO 139,400.
AND LASTLY, JUST WANTED TO ONE ONCE AGAIN POINT OUT THAT WE HAVE UNTIL JUNE 30TH TO SUBMIT THE EXEMPTION CHANGES TO THE APPRAISAL DISTRICTS FOR IT TO BE EFFECTIVE WITH THE NEXT TAX YEAR.
BUT WITH THAT, WE'LL TURN IT OVER TO THE COMMITTEE FOR ANY QUESTIONS.
THANK YOU FOR THE PRESENTATION.
SO I'M WONDERING, COMMITTEE MEMBERS, DO YOU HAVE ANY QUESTIONS? COUNCILMEMBER RIDLEY? THANK YOU, MADAM CHAIR.
ON SLIDE 13, SCENARIO B IS THE PERCENT CHANGE IN EXEMPTION PROPOSED BASED ON THE YEAR 2021 VERSUS 2022? AND I KNOW THAT PROPERTY VALUES INCREASE TREMENDOUSLY THAT YEAR, BUT THEY'VE SLOWED DOWN CONSIDERABLY THIS YEAR.
AND SO I'M JUST WONDERING IF THAT IS THE APPROPRIATE NUMBER TO USE GIVEN THAT THOSE VALUES ARE FLUCTUATING AND FOR MANY PEOPLE MAY HAVE DECLINED THIS YEAR.
UM, IS THERE ANY WAY TO PROVIDE A MORE CURRENT DATA POINT FOR THAT CALCULATION? THANK YOU, COUNCIL MEMBER RIDLEY FOR THE QUESTION.
AS YOU KNOW, WE RECEIVED CERTIFIED VALUES ON JULY 25TH.
AND SO THE INFORMATION THAT WE HAVE, THERE'S A SORT OF A LAG IN THE INFORMATION.
AS MENTIONED PREVIOUSLY, PROPERTY OWNERS RECEIVE THEIR NOTICE OF VALUES IN APRIL.
THEY HAVE THE ABILITY TO PROTEST THOSE VALUES AND WE WON'T RECEIVE UPDATED VALUES FROM THE APPRAISAL DISTRICT, UPDATED CERTIFIED VALUES UNTIL JULY 25TH OF THIS YEAR.
SO OUR FMPC LOOKS AT THE AVERAGE SINGLE FAMILY HOME MARKET VALUE CHANGE.
AND SO THAT'S WHAT WE'RE USING FOR THE ANALYSIS.
SO THAT NUMBER IS CALCULATED EXCLUSIVELY UPON THE CHANGE IN THE CERTIFIED TAX BASE FROM DCAD? THERE'S NO OTHER DATA THAT YOU CAN USE TO UPDATE THAT NUMBER? CORRECT. WE TAKE THE VALUES THAT ARE PROVIDED ON JULY 25TH.
[02:30:04]
AND SO THAT'S WHAT WE USE FOR THE ANALYSIS.AND IT'S A CONSISTENT DATA POINT.
I THINK LAST YEAR THERE WAS A CONVERSATION ABOUT USING CHANGES IN VALUES THAT PROVIDED BY MAYBE THE HOMEBUILDERS ASSOCIATION OR MAYBE A REALTY ASSOCIATION.
SO WHAT WAS THE DISCUSSION ABOUT USING THOSE OTHER INDICIA OF PROPERTY VALUES? SO I BELIEVE LAST YEAR DURING THE RECOMMENDATION TO THE COMMITTEE, THERE WAS A SIMILAR QUESTION ABOUT THE YEAR OVER YEAR CHANGE IN MARKET VALUE.
AND AND IF WE IF THERE WAS AN OPTION TO USE A DIFFERENT DATA POINT AND AGAIN, OUR SAME OUR RECOMMENDATION IS THE SAME THAT WE USE THE CERTIFIED VALUES THAT ARE PROVIDED BY THE APPRAISAL DISTRICTS.
AND WHAT'S THE BASIS FOR THAT RECOMMENDATION? BECAUSE AGAIN, IT'S IT'S A CONSISTENT DATA POINT.
IT'S BASED ON THE ACTUAL PROPERTY VALUES.
PROPERTY OWNERS RECEIVE A NOTICE OF VALUE FROM THE APPRAISAL DISTRICTS.
THEY HAVE AN OPPORTUNITY TO PROTEST THAT VALUE.
THERE'S WORK THAT TAKES PLACE BETWEEN THE APPRAISAL DISTRICT AND THE PROPERTY OWNER.
WE USE THOSE VALUES FOR TAXATION.
I JUST I'M EXCITED ABOUT THIS.
TO THIS RELIEF THAT THIS WILL BRING TO THOSE 65 AND OLDER AND DISABLED.
AND SO WHEN WE LOOK AT THE TOTAL OF TAX REVENUE FOREGONE $377 MILLION WHEN YOU PULL OUT THE HOMESTEAD EXEMPTION, WHEN YOU PULL OUT WHAT'S BEING RECOMMENDED HERE, WE'RE REALLY AT TWO 16.9 MILLION.
SO WHAT IS THE COMPOSITION OF THE REST OF THAT, THOSE PROPERTIES WHERE TAX IS FOREGONE? THE NEXT HIGHEST CATEGORY OF TAXES FOREGONE IS ACTUALLY TOTALLY EXEMPT PROPERTY.
SO THAT INCLUDES SCHOOL DISTRICTS, GOVERNMENT PROPERTIES, CHARITABLE ORGANIZATIONS.
THERE'S A WHOLE HOST OF TOTALLY, TOTALLY EXEMPT PROPERTIES.
AND THAT GRAY BAR, THIRD FROM THE BOTTOM, IS THE TOTALLY EXEMPT CATEGORY THAT MS..
SO SCHOOL, SCHOOL, CITY, COUNTY, CHURCHES, HOSPITALS.
JUST WANTED TO DELINEATE THAT, BUT I'M EXCITED FOR THIS RECOMMENDATION.
IS THERE ANYBODY ONLINE THAT WANTS TO WAVE AT ME? NO. OKAY.
WE JUST HAD A CONVERSATION ABOUT THE ATMOS GAS BILL.
COULD BE, YOU KNOW, ANOTHER $70 FOR FOLKS, FOOD, MEDICATION.
AND I THINK THIS IS JUST A PRETTY NICE WAY FOR US TO BE ABLE TO HELP FOLKS WHO REALLY DON'T HAVE THE VARIABLE INCOME AND, YOU KNOW, COULD BE FORCED FROM THEIR HOMES BASED ON TAXES.
AND I HEAR THAT ALL THE TIME IN MY DISTRICT.
I KNOW ACROSS THE CITY PEOPLE ARE STRUGGLING.
SO I THINK THIS IS A REALLY GREAT WAY FOR US TO ADDRESS THOSE NEEDS, AND I LIKE THAT WE DO IT ON THE CPI THAT'S SPECIFICALLY FOR SENIORS.
SO I THINK THAT'S REALLY HITTING THE ACTUAL PAIN THAT THEY'RE FEELING AS PRICES DO INCREASE.
SO WITH THAT, IF THERE'S A RECOMMENDATION, A MOTION TO RECOMMEND TO COUNCIL SO MOVED AND THIS IS TO RECOMMEND TO RECOMMEND THE APPROVAL OF THE $139,400.65 PLUS DISABLED EXEMPTION.
AWESOME. AND THEN I HEARD A SECOND FROM COUNCILMEMBER RIDLEY.
UM, ANY DISCUSSION? HEARING NONE. ALL THOSE IN FAVOR, PLEASE SAY AYE.
ANY OPPOSED? MOTION CARRIES UNANIMOUSLY.
THANK YOU VERY MUCH. THANK YOU FOR THE PRESENTATION.
I THINK THAT WE'LL HAVE A BUNCH OF VERY HAPPY SENIORS.
I MEAN, OBVIOUSLY, WE TRY TO GET THEM BY THREE.
WE KNEW THIS MEETING WAS PROBABLY GOING TO RUN A LITTLE BIT LONG.
UM, JACK, WOULD IT BE ALL RIGHT IF WE WOULD HOLD M AND L FOR NEXT MONTH?
[02:35:08]
YES, MA'AM.OKAY, SO LET'S DEFINITELY DO THAT.
SO LET'S, LET'S TALK ABOUT I, DALLAS 365 PERFORMANCE MEASURES.
YOU'VE DONE A VERY NICE MEMO ON THAT.
IT'S GOT ALL OF THE DIFFERENT ITEMS THAT THE CITY IS TRACKING ALREADY FOR PERFORMANCE MEASUREMENTS AND COUNCIL MEMBER RIDLEY HAS AGREED TO JOIN ME IN GOING THROUGH THEM TO EVALUATE THEM AND THEIR PERTINENCE TO THIS COMMITTEE AND GOVERNMENT PERFORMANCE IN GENERAL.
AND WHAT WE WOULD LIKE TO DO IS COME BACK NEXT MONTH AND TALK ABOUT THIS AGAIN, AND WE WOULD LIKE TO PROPOSE TO THE COMMITTEE ONES THAT WE FEEL LIKE MIGHT BE VALUABLE TO US IN OUR GOVERNANCE ROLE AS WELL AS THE PUBLIC AND BEING ABLE TO EVALUATE THE CITY.
SO YOUR TIME FRAME IS THIS WOULD BE INCLUDED WITH THE BUDGET, IS THAT CORRECT? YES, MA'AM. WE WOULD TAKE YOUR INPUT AND WORK WITH EXECUTIVE MANAGEMENT AND BRING THE BUDGET AND ANY NEW DALLAS THREE 60 FIVE MEASURES ON AUGUST THE 8TH. AND IS IT IS IT CORRECT TO SAY THAT ALL OF THOSE MEASURES ARE BEING TRACKED ALL THE TIME? ANYHOW, IT WOULD BE NO NEW CECILIA.
HELLO. CECILIA XU, ASSISTANT DIRECTOR IN BUDGET MANAGEMENT SERVICES.
SO I MEAN, IT MIGHT NOT AND MIGHT NOT BE AS THEME ORIENTED IF IT'S AN ITEM THAT YOU'RE ONLY GOING TO BE ABLE TO UPDATE QUARTERLY AS OPPOSED TO SOME THAT YOU DO MONTHLY. BUT I DO THINK IF WE CAN, YOU KNOW, ACTUALLY HAVE MEANINGFUL DATA THAT'S GOING TO BE MORE IMPORTANT THAN THE THEME.
WELL, THANK YOU. AND WE'LL SEE THAT ONE CIRCLE BACK NEXT MONTH.
AND I'M WONDERING IF YOU WANT TO JUST KIND OF TALK THROUGH THAT ONE.
YES, MA'AM. SO ITEM H IS A MEMO THAT WE PREPARED.
I BELIEVE EVERY ONE OF THESE FACTS WERE IN THE BRIEFING THAT JEANETTE AND IVAN JUST GAVE.
BUT I WILL GO OVER THEM AGAIN.
OUR EXEMPTIONS, $50 BILLION OF PROPERTY THAT IS EXEMPT FROM TAXES.
THAT'S 377.5 MILLION OF REVENUE THAT'S FOREGONE.
AND THE THING THAT'S DIFFERENT HERE THAT I WANT TO POINT OUT IS MS. MENDELSOHN AND I HAD THE CONVERSATION ABOUT, WELL, WHAT DOES THAT EQUAL AND A TAX RATE.
SO IF WE WERE NOT EXEMPTING THAT $377 MILLION, WHAT DOES THAT EQUAL IN A TAX RATE? AND IT'S 28.6 $0.07.
THE SAME FOR OUR HOMESTEAD EXEMPTION.
WE EXEMPT $14 BILLION OF VALUE.
THAT'S $107 MILLION OF REVENUE.
THAT $107 MILLION OF REVENUE IS NEARLY $0.06 OF A TAX RATE IN THE EQUIVALENT.
AND THEN FOR THE OVER 65, PRIOR TO THE ACTION YOU JUST TOOK, THE REVENUE FOREGONE IS $53 MILLION, WHICH EQUALS JUST UNDER $0.03 ON THE TAX RATE.
AND SO THE DISCUSSION WE WERE HAVING WAS, WELL, WHAT WOULD HAPPEN IF WE STOPPED EXEMPTING SO MUCH PROPERTY? NOW CERTAIN THINGS, OF COURSE, HAVE THEY COME WITH IT.
AND SO THAT'S WHAT THE MIDDLE BULLET IS.
THE FOURTH BULLET IS A DIFFERENT DISCUSSION.
SO LAST YEAR WE HAD A SPREADSHEET THAT LOOKED AT ALL THE DIFFERENT CITIES AND LOOKED AT, YOU KNOW, DO THEY HAVE A HOMESTEAD EXEMPTION? DO THEY HAVE THIS EXEMPTION? AND, YOU KNOW, THAT'S THE THING THAT, YOU KNOW, WE DO HAVE A VERY HIGH TAX RATE, BUT WE ALSO HAVE THE HIGHEST TAX EXEMPTION THAT'S ALLOWED. AND SO WHAT IF WE DIDN'T HAVE THAT HOMESTEAD EXEMPTION, WHICH MANY OF OUR SURROUNDING CITIES HAVE, EITHER NONE OR THEY HAVE A MUCH SMALLER
[02:40:04]
ONE. AND SO WHAT WOULD THAT LOOK LIKE? AND SO WHAT HE WAS SHOWING IS THAT WHILE IT'S ABOUT A SIX CENT TAX RATE REDUCTION, BUT OF COURSE THAT WOULD ALSO CHANGE WHO IS PAYING TAX AND HOW MUCH THEY'RE PAYING. SO I DON'T KNOW THAT THAT'S A ROUTE WE WANT TO GO, BUT I DO THINK IT'S AN AN INTERESTING DISCUSSION TO HAVE ABOUT, WELL, WHAT DOES THAT LOOK LIKE IF WE TRIED TO MIRROR WHAT OTHERS WERE DOING WITH TAX RATE, NOT SAYING WE SHOULD, BUT BECAUSE WE ARE CHARGED WITH EVALUATING THE TAX RATE AND LOOKING TO SUBSTANTIALLY DECREASE IT, THIS HOMESTEAD IS ONE OF THE WAYS.SO THAT'S REALLY WHAT THIS MEMO IS ABOUT.
SO WHILE THE FIRST PARTS, YOU KNOW, ARE A REPEAT OF WHAT WE JUST DISCUSSED WITH SENIOR, I THINK, YOU KNOW, BULLETS THREE, FOUR AND THREE AND FOUR ARE REALLY ACTUALLY A COMPLETELY DIFFERENT DISCUSSION.
A STRUCTURAL CHANGE WOULD RESULT IN VERY DIFFERENT TAXATION RESULT FOR OUR POPULATION.
SO JUST WANTED TO MAKE SURE WE COULD SHARE THAT WITH YOU.
THE FORECAST END IS AT THE VERY END.
I KNOW YOU'VE ALL BEEN ABLE TO READ THAT.
IF YOU HAVE ADDITIONAL ITEMS, PLEASE LET ME KNOW.
BUT OF COURSE, WE HAVE ITEMS CIRCLING BACK AND NEW ONES TO COME.
I THANK EVERYONE FOR BEING HERE AND I HOPE YOU HAVE A GREAT WEEK.
* This transcript was compiled from uncorrected Closed Captioning.