Thank you.

Welcome everybody to the special call meeting of the Denton City Council on July the 14th, 2026.

It's about 1.02 p.m.

I want to thank all my colleagues for being here and staff for the first real uh long meeting of the the new council since all the elections and the runoff elections have been completed.

So thank you all and uh look forward to it.

Uh we first have on the agenda uh I believe it's people who are here to comment on consent agenda item.

Do we have any comments for consent agenda items?

Seeing none, all right.

And then any comments from the council on consent agenda items.

I have a couple or any ones that are needed.

I think we're gonna pull agenda item O.

I think staff wants to pull agenda item P.

Now P is not going to have a presentation, it's being postponed to uh another okay.

And then agenda item H uh will be postponed, uh uh pulled for individual consideration.

Um that's a utility rate consent agenda item, which I just wanted to have a very brief presentation under IC.

Uh also I need to uh disclose that I will be recusing myself from an agenda item 2B.

And so at that time, uh the then mayor pro Tim Stevens will take the chair for that agenda item only.

All right.

So any clarifications from agenda items?

Yes, Councilmember Jester.

And I probably misheard you.

Um you mentioned that item H has been pulled for an independent vote.

And H is the renaming of a oh okay.

Which one, Mac was the the utility H.

Oh, H on the cons.

Well okay, H on the consent agenda, yes.

Yeah, H on the you're correct, Councilmember Jester, H on the individual items for consideration is the renaming.

But I was meaning H on the consent agenda.

And thank you for the clarification.

I think that was me, so thank you very much.

No, no, no worries.

You bet.

Any other comments or questions from council on any of the agenda items?

All right, then we'll move on to our work sessions, which are agenda item 3A, ID 26-0967.

Receive report, hold discussion, give staff direction regarding the nominations of council members to standing and ad hoc committees and other internal external groups and associated nomination appointing process.

Good afternoon, Mayor and Council.

Christy Fogel, Chief of Staff and Interim City Secretary, here to review the city council member appointments for the boards and commissions that you all sit on as city council members.

A little bit of background.

Uh, this process to internal and external boards, committees, and commissions occurs annually following each municipal election cycle.

There are three types of committees generally that council members serve on, the internal council committees consisting of only Denton City Council members that operate internally, internal hybrid committees, which include council members and residents, and then the external boards commissions and committees of regional and county entities where city council members serve as representatives of the city of Denton.

And while several of the external boards dictate a two-year term, committee membership and assignments are reviewed by council annually to allow for participation by new council members and to adjust assignments as needed.

The process, there are two different nomination paths.

The mayor does nominate members to the committee on the environment, which is then confirmed by council vote.

And then nearly all the other committees, any council member can put staff can put forward their nomination.

Um and then there are some where uh the bylaws of those external organizations require that it be typically the mayor who serves on that board.

We issued an informal staff report a couple of weeks ago requesting council members submit their preferred assignments.

We received all of those assignments.

Um so today, council is discussing preferences and providing direction on the formal nominations to bring forward.

The please note the community partnership committee nominations that we receive today will be on tonight's council agenda for approval.

This is to accommodate a tight meeting turnaround for their Friday, Thursday, Friday meeting this week for hot funds.

So, and all of the other nominations received today will be considered at next week's council meeting on July 21st.

So these are the three internal council committees.

They're authorized by the council rules of procedures.

They consist of three members serving at the pleasure of council.

The committee chairs are selected by the committee, typically at their first meeting following appointments, and they provide policy recommendations to council.

As you can see, the agenda committee is always uh the mayor, mayor pro tem and city manager.

So that requires no action today.

The committee on the environment nominations are received by the mayor and then confirmed by resolution by the full council.

And the community partnership committee, which is three council members.

The internal hybrid committees, these are council, these are committees that council members hold seats on, but they're also residents involved.

The development code review committee, which is three council members and three members of planning and zoning, the economic development partnership board, which also has a similar membership to the TERS two board, um, and then the TERS One board.

And then here are several of the external bodies.

These are seats that we hold on other body boards.

The Dallas Regional Mobility Commission, their bylaws require that that service be the mayor, but there is a vacant alternative alternate member available, as well as the Discover Denton Advisory Board, which recently exited the city and now has one member from City Council included on there.

The North Texas Commission, which has historically been the mayor with the city manager serving as a proxy or alternate, the Denton Community Shelter Advisory Board, and then the Regional Transportation Council, which Councilmember Jester has been serving on for the last two years.

And then the United Way of Denton County operates three leadership teams consisting of local leaders and education, government, corporate, and nonprofit industries, the behavioral health, the housing and homelessness, and the workforce success leadership teams.

These committee meetings uh happen six times a year each.

Um, and typically these first two have a council member and a staff member serve on those committees.

And then these are just two additional committees for your information that no action is required on today.

DCTA um council member rumor um and uh Pat Smith serves as the alternate through for a term through 2027, and then the Lake Gray Roberts P and Z Commission State Code requires that the mayor serve on that as well.

So with that, I will turn it over to the mayor to facilitate conversation.

Um today we're hoping to confirm the mayor's confirmation or nominations to the committee on the environment, review council members' submitted preferences, and then provide direct uh direction on formal appointments.

Those formal appointments will be considered at the July 21st meeting, except for the CPC appointments, which will be considered tonight.

Sure.

Uh great, thank you.

Uh any questions before we get started.

If you could put the slide back up on the internal council committees, we'll just take these kind of one at a time.

Absolutely.

Um agenda committees set committee on the environment.

The mayor says that, but I mean, is there anyone uh council member Holland?

Are you are you still wanting to serve on that environment on that committee?

Yes, I'd I'd like to continue on that on the committee.

Anyone else that would like to uh council member uh mayor pro Tim Stevens?

Okay, all right.

Uh so we have one more slot.

Would there be anyone else who would like to serve on the environmental committee?

No one.

Does that mean oh okay, Councilmember Ferry, thank you so much for that.

All right, so we've got that community partnership committee.

It seems like we have three.

Now uh council member Holland, you were on there uh last year.

Would you like to continue serving?

I would please.

Okay.

All right.

So that's uh I mean I'm okay with that.

So that leaves two.

Uh council member Stevens.

Uh, Mayor Pro Tim Stevens.

It's gonna take me a while to get used to that.

You can call me council member, it sounds good too.

Okay, um I uh I'm gonna withdraw my nomination for that one and just make a comment about if that's okay.

Sure.

I think that uh the other four people are more incapable of doing it.

I would just also keep in mind for everyone that is interested.

I think we have two special called meetings this week.

Yes, um, to make sure you can be in attendance for that are important.

But um I'm gonna withdraw.

I think you all can handle this.

It's okay, yeah.

All right.

So council mayor fair, uh council member billaryal.

I mean uh I mean I I can probably I mean it's gonna come to council what whatever happens.

I can still sit in on the the presentations tomorrow, but not just be an official part of the committee.

Is that correct?

I think we try to avoid that typically.

Oh, because of the quorum issues.

I got you.

That's right.

That's right, because it is a small, it is a committee.

Yep, gotcha.

Okay.

Uh so uh council member, y'all would y'all be willing to serve on that?

I would be willing to serve.

I'm mostly interested in either this committee or the economic development partnership board, so I'm fine with serving on either one primarily.

I can probably I mean it's going to come to council what whatever happens I can still sit in on the the presentations tomorrow but not just be an official part of the committee is that correct I think we try to avoid that typical oh because of the quorum issues I got you that's right that's right because it is a small it is a committee yep gotcha okay uh so uh council member ferry villarreal y'all would y'all be willing to serve on that I would be willing to serve I'm mostly interested in either this committee or the economic development partnership board so I'm fine with serving on either one primarily yes I am excited to serve on the CPC okay uh now I know um what what uh I talked about during uh the campaign was I just want to make sure that once we have these these uh presentations I guess we'll move forward with the regular procedure because it's really too soon to change that to the CPC will hear the recommendations from the the organizations and then they will have another called meeting to refer or to recommend the allocations to the full council is that correct correct okay all right so I I don't mind stepping back on that uh because I'll hear it anyway when it comes forward so we'll just go with those three with those three members if that's uh if that's okay with everybody okay Holland Ferry and Villarreal yes got it uh mobility committee so this is uh all the seats are available uh well council member holland would you still like to serve on that committee yes please all right and council member jester and council member more y'all agreeing to serve on that um yes sorry okay yep so I think we have those there uh economic development partnership board we have two slots and we have five that have demonstrated an interest in that board so I want to give any or all of those a chance to speak on uh their desire and I'm not quite sure uh having not done this if we have more that want to that desire to do it and that we don't then we have slots how do we resolve that is that a vote of the council eventually I guess it is right if it can't be resolved through direction they would ultimately come down to a vote nominations and vote by the council okay all right okay so I'll open the floor yes as somebody that sort of tried to see what the workload was for everybody in terms of what they signed up for what they're probably going to get and and that sort of thing to try to balance it out my thought on the economic development partnership board knowing that that that comes also with the TERS two appointment um would be Jester continuing to serve and adding Stevens and adding I'm sorry Stevens okay all right any other yes uh serving on the community partnership committee is fine with me so I'm fine to remove my name from consideration here okay anyone else yes councilmember I will also remove my name okay so we have currently um uh recommendation from councilmember more Jester and Stevens and then uh councilmember Holland uh any comments or I I think that fits smoothly with other other uh committee appointments that I've got okay you mean is that what you're asking me well or do you uh we've got two that have been been uh mentioned are you still wanting to but to to be serve here as well I'm happy to okay so we've got then we've narrowed it down to uh councilmember holland uh councilmember jester and council member uh uh who was the other Stevens Stevens yeah Stevens mayor Pro Tim Stevens so we've got three with two slots available so um any other further discussion or comments yeah oh yes I'll I'll add that that would put council member holland at seven committees which appears to be above everyone else while um it would put Stevens at um I think three something like that so again it's for me it's balanced I totally agree that it it matches a lot of the other committees you're on but trying to find some balance here okay all right councilmember Holland for purposes of balance uh I'm I'm certainly willing to to back off of that that's that's fine.

Okay.

That would give me that would give me six which is plenty right okay all right so then we have that committee I believe resolved yes uh now I know in the uh presentation it said that those that serve on that board also serve on the zone two board tax but correct they don't serve on the tax automatically to the zone one board correct okay so we need to look at that um so we have four there um watts mayor pro tem council member holland council member villarreal council uh mayor pro times again it's same as before I think the other three are um more than capable so I'm happy to remove myself from consideration okay all right uh councilmember holland you you've served on that you want to continue serving on that he does till next year huh he's already on until next year oh oh okay oh so we only have one slot okay I'm sorry that's my that's my mistake um yes my thought on that um understanding that uh council member Villarreal has a smaller set of committees was to place council member Villarreal on that one yes and I and I'll be glad to withdraw my name as well so yeah yeah you bet uh you bet and so we've got those resolved and then the next ones are Dallas regional mobility um we've got an alternate vacant councilmember Jester are you uh willing to serve as the alternate yes okay to all right thank you yes Mayor Pro Tim did I miss one the D CRC oh DCR

My thought on that, um, understanding that uh Councilmember Villarreal has a smaller set of committees was to place Councilmember Villarreal on that one.

Yes, and I and I'll be glad to withdraw my name as well.

So yeah, you bet.

Uh you bet.

And so we've got those resolved.

And then the next ones are Dallas Regional Mobility.

Um we've got an alternate vacant.

Councilmember Jester, are you uh willing to serve as the alternate?

Yes.

Okay.

All right, thank you.

Yes.

Mayor Pratim.

Did I miss one?

The DCRC.

Oh, DCRC.

Okay, go back.

I'm sorry.

Where is it?

Oh, it's the second one.

So you have yes, the second.

Oh, okay, DCRC.

You you do only have three indicated interest, so sorry, it should be do what now.

Yeah, there's two we got three, but we only have two slots.

Is that correct?

Yes, yes.

All right.

Any anyone who's listed there, have any yes, Councilmember Rumar?

Um, I would be continuing, I believe.

So there's really just two to fill.

My name is on the end of the case.

Oh, it's already there.

Okay.

So it should be a shoe-in for everybody.

Yeah, then we've got that set as well, I believe.

All right, so we've got the Dallas Regional Mobility Coalition resolved, didn't discover advisory board.

Uh Council Member Holland.

Uh I like that one a lot.

Okay.

Got that one.

North Texas Commission.

Uh I'll I I guess if it's been historically the mayor, I'll I'll go ahead and do that unless somebody has a yes.

Not with the mayor serving.

I'm sorry.

Oh, okay.

All right, yeah.

I I apologize.

My comments were regarding the alternate position.

So okay.

Uh the alternate position of which one?

North Texas Commission.

Oh, yeah.

Is that the the proxy one?

That it looks like we got a uh the mayor and then the city manager is a proxy, and you're saying that that's the alternative.

I think the city manager can be the alternate.

I don't know that they have to, so we also might hear from uh the interim city manager as far as her uh time uh commitment if that's something that she's interested in.

Uh I've been working with the North Texas Commission in my role with the Regional Transportation Council.

There's a lot of overlay uh there in the things that are tackled, and so that's why I had put my name in uh as an alternate, thinking that might be helpful.

However, if the decision is to uh remain with the status quo, um I I just want what's best for the city, sir.

Whatever you guys want to do.

Madam City Manager.

I'm fine either way.

Okay.

Well, we'll just go ahead and go with uh councilmember Jester as the alternative alternate, yeah.

I'm so sorry.

I think uh council member fairy had also been his name, so I just didn't want to grab the range.

That's okay.

I can remove myself, thank you.

Okay, thank you, Councilperson.

Uh the Denton Community Shelter Advisory Board, those are two vacants.

We have two people uh that have given a preference, so I have no issue with that, so I think we've got that covered as well.

And the regional transportation council, uh of course, uh councilmember Jester is there, which she needs to stay there.

Uh husband as the uh Watts is the alternate uh alternate.

Um Councilmember Rumar, uh share with me, you know, your desire to to to be the alternate.

Sure, that was only if you were not interested in it.

Okay, um so just kind of getting to know what what what they're working on and sort of studying our very skilled uh council member representative to the RTC.

Um but that even in when I submitted it to staff, it was only if you did not want the alternate spot.

And the alternate is just I guess councilmember Jester, if you're unable to attend, is that correct?

Or do are the is that is correct?

Um some alternates do attend every meeting, others uh attend if needed.

It is a formal process, however, so uh the alternate has to let and it has to be me that lets uh the RTC know that someone's going to be sitting in my stead so they are able to vote.

So uh but yeah.

Okay.

But if they want to attend and you're there, that this process doesn't have to occur.

In other words, they can just come if they're not voting, they can just come and attend.

Correct.

There's usually about a hundred people just watching in person.

So yeah, it's open to the public.

Uh Councilberry Rumar, if if um I mean I I've served on that board before last.

So if you would like to be the alternate, uh would you uh is your plan to try to go even when Councilmember Jester is in attendance just to observe and is a good thing.

Yes, I'd love to.

So I'm you know current on what's going on.

Yeah, sure.

Yeah, sure.

I'm okay with that.

Yeah.

Okay.

Yep.

All right, thank you.

All right, and the last three, the United Way Ditton County boards.

Okay.

Uh the mayor was on there last time.

Uh I guess um I I don't need to be on the Denton County, well, I don't need to be on any of them, but the Denton County Behavioral Health Leadership Team.

Uh, I'm I'm willing to sort of let someone else serve there.

I would like to be on the Denton County homelessness leadership team, but also uh I think that um so let's do one at a time.

Denton County Behavioral Health Leadership Team.

Councilmember Ferry, are you okay with serving on that?

Yes, thank you, sir.

Okay, you bet.

Uh the Denton County homelessness leadership team.

I would like to serve there, but I guess uh I would like to see how we maybe even set up an alternate so that if I'm not able to be there, if somebody other than just city staff uh could could stand in it could also be there, not instead of, but and do we have to have a formal process in order to change that?

Because I I know council member Ferries is as uh indicated an interest in that, and and I would certainly uh would want you to be able to be the alternate because I'm I'm not sure you know how often I'll be able to attend that, and if I can't, I would want somebody you know that uh we can we can have sitting there.

Yes, sure.

Yeah, I I currently have served on the HHLT for the last year and a half.

Oh, okay.

Um I just stepped down from my board position at DAC, but I was the representative appointed a year and a half ago.

So I've been going to meetings for almost two years.

Okay, good.

All right.

It is it okay to can does there need to be a formal process for that?

So I can reach out to United Way and ensure that that is acceptable, and then we can bring that back next week as long as I confirm with them that that's okay.

It'll probably just need to we'll just need to clarify that only one person will be a voting member of that.

Sure committee.

And if there's an honestly, if there's an issue with it, um I don't mind foregoing that because you've been serving on it for a year and a half, and you're really up to speed on on what's uh what's going on and sort of the situations.

Yep, okay.

Okay, we'll see what can get that result.

All right, and then the last one, the Denton County Workforce Success Leadership Team.

Could you help me understand what that is?

I'm not sure I'm familiar with that.

Yeah, it is let me find it in the packet.

So they meet um six times a year.

Each of these boards meet six times a year, and it's um for cities and towns.

Um to um let me look.

I got it.

There are policy making team tasks with improving planning, coordination, oversight, and implementation required to create systems change for workforce employment initiatives in Denton County.

All right.

Uh we have it's my understanding we have two slots open for that.

Is that correct?

We see two, just one.

Okay, I see that okay.

Yes, so it first it differs from the other two where you have a council member and a staff person.

This one is just a council member.

Okay, all right.

And council member bird was previously the representative.

Anyone have a preference on that and interest in that?

Councilmember Vilria?

I'd be interested in serving in my former uh councilmember's place on that commission.

Okay, yeah, great.

Thank you.

Okay.

All right, okay.

Any you have your direction and questions or comments to close this out?

Fantastic.

Oh, yes, Councilmember Jester.

Uh thank you.

Just one quick question.

Um, will there be time once we receive back who is slotted for each committee to I mean, just in case one's really overworked and one person doesn't have as many.

I mean, uh everyone's so flexible, and I would like to be flexible as well, that we would have an opportunity to or is that not doable?

So since we're planning to bring the formal recommendations next week, yes, typically we would have an additional week too.

Um and some of them we could potentially look at bringing just the time-sensitive ones back next week, but I think it it might complicate things a little bit.

No, I was uh trying to be helpful, but I think uh in this instance it's better to move forward with uh the direction given today.

Thank you.

Appreciate that.

Thank you.

You bet.

Okay.

All right, thank you.

Thank you.

We'll move on to work session report agenda item 3b, ID 26-0557.

Receive report, hold discussion, give staff direction regarding the current and forecasted budget all right.

All right, good afternoon, Mayor and Council, Amy Castlick, Chief Strategic Officer.

And today's presentation is really to provide you with an overview of the city's budget landscape with a focus on the general fund and the factors that are shaping the fiscal year 26-27 budget.

So as Denton grows, the decisions ahead about services, staffing, capital investment, and long-term stability are becoming more complex.

Today is intended to set the stage for our August 8th budget workshop.

We're going to be looking at Denton's growth, our budget structure and revenues, the pressures and risk we're managing, and the long-term obligations that will shape the decisions that we have ahead.

So understanding our budget environment starts with understanding Denton itself, who we serve, how large we are, and how quickly we are growing.

With nearly 170,000 residents across nearly 100 square miles, Denton is one of the fastest growing cities in the region.

And that growth is not just population growth, it is also geographic growth.

Each new development expands the area we serve.

It brings long-term service and infrastructure obligations, and that is an important part of the pressures that we are facing today with our budget.

Denton's economic growth continues to shape our budget outlook.

Sales tax is one of our most economically sensitive revenues.

We adopted a budget in the current year of $62.9 million, which is representative of a 4.6% increase.

Unemployment remains low, which does support the local economy, but also makes recruitment and retention more challenging.

At the same time, inflation remains elevated for construction materials, equipment, chemicals, medical supplies, software, and contractual services.

Development remains strong, but as Denton grows outward, service demand and infrastructure workload grows as well.

And revenues do not necessarily increase at the same pace as our growth.

We have growing demand, rising costs, constrained or volatile revenues, and increasing community expectations.

So when we look at our budget, ultimately it comes down to three questions that we need to ask ourselves.

What services do we provide?

So Denton provides a broad range of services.

We are a full service city from police, fire, animal services, planning, utilities.

We have all of those internal functions that support every department across the organization.

Second is what level of service do we expect?

So response times, mowing cycles, library hours, street resurfacing, our approaches to animal care standards, all have service level decisions.

Each of these has costs associated to staffing, to equipment, and to facilities.

Recurring services need to be supported by stable recurring resources.

Ultimately, the budget is both a strategic plan, but it is also a balancing act, aligning what we want to provide with what we can responsibly sustain.

Is understanding not only that all of our dollars are not interchangeable.

Each fund has its own purpose, its own restrictions, and its own limitations.

The general fund is our most flexible, but it also is highly constrained.

It is personnel driven.

Nearly 70% of our budget is personnel.

Enterprise funds consist of electric, water, wastewater, solid waste, and the airport.

These are supported by their rates.

These dollars can't be simply redirected to the general fund beyond approved ROI and franchise fee calculations.

Next, we have debt service, which is legally restricted to repayment of our debt with growing capital commitments that affect how much the overall tax rate is available for our operations.

We have special revenue funds.

I believe there are 20 special revenue funds.

These include street improvement, TERS, and impact fees, and these are restricted to the specific purpose for which those funds were created.

We also have internal services funds, so technology, fleet, facilities, procurement, and they all operate as cost pools, so that as their cost rises, so do the costs of every department in the organization.

So the distinctions between these different funds matter because resources may exist within the organization as a whole, but many are legally or not legally or financially available to the general fund.

So next, we're gonna look at a little bit more closely at the general fund.

So the general fund is the city's primary operating fund.

It supports many of the daily services that our residents depend on, and it employs the most of our workforce.

Public safety has the largest share at 53%, followed by neighborhood services, which includes parks and recreations, the library, community services, and development services.

Then we have our administrative functions.

So this is HR, Finance, Communications, the City Manager's Office.

They all support transparency, compliance, and again, they support the day-to-day operations of departments across the city.

We also have non-departmental costs, so that includes banking fees, in kind services, treasury contracts, our tax billing through the county, and then required transfers to the internal services funds that support the general fund.

So all of this draws on the same general fund, which is why the revenue mix matters and the limitations again also matter so much in how we are developing our budget.

So I will not cover all of the numbers on this slide.

This is just really to give you a sense of the scale of work within the general fund.

The numbers don't matter.

It really matters here today for what they represent.

And again, it's the volume and it's the variety of those services across the organization, particularly in this case, the general fund.

So next we're going to look at the general funds revenue mix as it helps us explain and understand both the strengths and the weaknesses within that fund.

About a third of the revenues come from property taxes.

Sorry.

That is flexible, but it is also highly sensitive to changes in the market and changes in consumer spending.

Next, we have ROI, which contributes about 10% and can vary based on our utilities consumption, weather, and market conditions.

Then we have fees, permits, and franchise fees, which make up roughly 15% of the general fund budget.

And these fluctuate based on development activity and based on usage.

Franchise fees are also declining, and that is due to cable and telecommunication market changes.

The remainder comes from interest earnings, miscellaneous sources, and then our internal reimbursements.

So the larger point is that only about one-third of the general fund's revenue is truly stable.

Much of it is affected by economic conditions, consumptions, and development patterns.

So we're going to take a closer look at each of those different sources of revenue.

So we're going to start with property taxes.

Our certified value rose to 22.76 billion in the current year, and that was an increase of 7.1%, resulting in a budget of 71.89%.

And to date, we are at 99% collected on our property tax revenue.

Property tax must support not only our daily operations but also our long-term capital investments, including debt repayment.

Next, we're going to look at our sales taxes.

That is the general fund's second largest source of revenues.

For the current year, we're projecting approximately 63.2 million dollars in revenue, which is about seven uh 7.2% increase over the prior year.

Um sales tax is really one of our most volatile major revenue sources.

It responds very quickly to changes in consumer spending, inflation, and then those broader economic conditions.

Both the amount of revenues involved, even moderate fluctuations can create immediate budget pressures.

Next, we're going to look at ROI, which is provided for in our city's charter.

It is another foundational part of Denton's financial structure and represents about 10% of the general funds revenue.

It is one of the financial advantages that we have to owning our own utilities and compensates the general fund for administrative, legal, and financial support.

Because it is formula driven and tied directly to our utility revenues, it is generally stable, but it can fluctuate with changes in consumption.

We know our utilities can be greatly impacted by weather conditions.

It can be impacted by conservation and market conditions as well.

For the general fund, the ROI is significant.

Without it, the fund would be considerably smaller and would be more dependent on property and sales taxes.

If I could just add a real quick question on this, uh the 14274 and 15123, was that because of winter storm URI?

I mean, that that's that's a you know 30 to 40 percent increase from the year before and a decrease in the year after.

So so I asked that I asked that very question, and the answer is really more about why it went down, not necessarily why it went up, it's why it went down.

Okay.

Um so they had indicated that the PUCT changed, and I'm gonna use a lot of acronyms here.

Uh the TCOS rate, and it reduced that dramatically, about 30 million dollars.

Um, so the city subsequently implemented our TCRF to help recover those costs.

Okay.

That was a lot of acronyms, and if Tony were here, I would probably have him explain all those acronyms to you.

Sure.

So then it's my understanding that uh the T cost revenue that we had, that was also included in the uh percentages for the return on investment others.

That was considered revenue from the utilities.

It wasn't just purchase power or water or waste, but that's also included in that.

And you don't have to answer that now, if just maybe a little clarification on that.

That'd be great.

Yeah, thank you.

Appreciate that analysis.

All right, next, we're gonna look at fees permits and franchise fees, which make up about 15% of general fund revenues.

Uh, fees and permits rise with construction and service use, and then they decline during slower periods.

By law, they must reflect the cost of providing the survey uh service and cannot be used to generate additional revenue or surplus revenue.

Uh franchise fees come from utilities, including our own, and again, those cable and telecommunic uh telecommunication companies who use the city's right of way.

Um, because these revenues are affected by our development cycles, market conditions, and regulatory changes, they are less predictable than our other sources of revenue.

All right, so when we put the revenue picture together, the structural challenges do become clearer.

Uh, property tax is stable but constrained, sales tax is significant but volatile, ROI can fluctuate with our utilities' revenues, and fees are limited to cost recovery.

At the same time, service demand and operating costs continue to rise.

The gap between how our revenue grows and how costs and demand grows creates again that ongoing pressure in our budget.

So once we have that you know revenue environment in context, um, I want to talk a little bit about some of the pressures that we have, starting with really with our operating costs.

So animal services, as you can see, is experiencing significant increases in veterinarian, pharmaceuticals, and supplies.

This is just one example across the organization of cost increases that we're seeing.

Um EMS is facing higher medical uh costs, medical supply costs, as well as a reduction in state reimbursements of about a million dollars annually.

Um fuel remains a major expense, and the city continues to absorb those higher costs.

Um we also have higher costs related to hardware and software, which is creating an additional pressure on our budget.

Um, and just through all of this, maintaining the same level of service costs more and more with each passing year.

Yes, Councilman Chester.

Thank you for letting me interrupt.

I hope breaking the okay.

Um I I was curious, and I had in my notes.

I couldn't tell for certain underprojected.

There's kind of a brown and then a little bit darker brown.

Yes.

Uh which one is which and the vet services.

Is that the highest amount or the outside supply?

The vet services is the highest amount.

And you may not know this off the top of your head.

Is that just our contract with our outside vendor for personnel?

And if you don't know, that's okay.

I know this is a high level, so I'm probably Nikki's in the Nikki is here if we want to ask her to come in and answer some questions.

I can ask later.

This is a bird's eye view, and so I'm I'll ask later.

Thank you very much for the offer.

Thank you.

Well, I mean, I I think it's fair to answer your question.

I mean, there's yeah, yeah.

If you could I apologize, I missed the last part of that question that was running over, but no, no, we're always so glad to see you and so appreciative of the excellent work you're doing over there.

The um it is outside services for the larger the gray portion.

Okay.

Uh that's a combination of our RSVP services, which operates our vet services in-house, plus the um outside services where we send animals out to various uh groups, so various veterinary practices.

So when the new uh construction is complete, will we have the ability to have uh if we decide it's cost uh advantageous to have our own in-house personnel?

Uh uh that's being looked at.

I know it's been asked in the past, I just don't remember where we're gonna be.

It is being it is being looked at right now in the budget process.

Um, there is some cost savings associated with bringing the uh vet techs in-house, and that would be potentially year-over-year cost savings.

However, the what we're seeing now with treating animals that come in the door for all sorts of um conditions, that has really what's ballooned our cost is sending them out because we can't provide those specialty services in-house.

So there's some emergency care that is needing to be taken care of, especially during kitten season right now.

We have a lot of them that need to go out.

Um, and then also some orthopedic surgeries that we're not able to do in-house.

So even if we brought the vet staff in-house completely, there are still several um things where we would need to outsource that for.

Well, as an owner of a five-month-old puppy that likes to eat rocks and sofas and beds and things, I know for a fact that these uh emergency costs are ballooning.

So thank you very much.

That was just a question.

Thank you, appreciate it.

As the owner of a four-month-old puppy, I feel you.

Feel you.

All right.

So next we're gonna look at our workforce pressures.

Um, our workforce pressures me remain one of our biggest challenges.

Uh, we have regional competition that is strong, particularly in our specialized, our hard-to-fill positions.

Police recruitment and retention remains difficult as agencies across the Metroplex compete for a limited application uh applicant pool.

And then fire is also facing higher baseline costs with the expiration of the safer grant, which complicates really our long-term staffing plans with the loss of that funding.

Um, and while we didn't have a cost of uh living or merit increase included in our budget for the current year, um, it is an added uh pressure, and it does again intensify that competition that we face with surrounding cities.

Uh, turnover retention staffing and competitiveness ultimately affect the service that we provide every day.

So we mentioned that Denton is growing, growing very rapidly.

So there then is an increased demand on our services.

Uh, first responders are managing more complex calls.

They are responding to a larger coverage area, and they are our increasing expectations from the community in terms of responsiveness, timely services.

Uh parks and recreation continues to see year over year heavier and heavier usage of their facilities and their programs.

So that increases demands on operating maintenance and staffing.

Um, these pressures are central to the discussions that we're having for the 26-27 budget around resources, service levels, and the priorities that we set.

Um, and then with that, that brings us to what we're hearing from the community regarding our services.

So I know we had a significant presentation on this a couple of months ago, so I'm just gonna cover this very very briefly.

Um the survey did indicate that the community sees Denton as a very desirable place to live.

Um, there is a strong sense of community here.

Um, but it did uncover some opportunities for improvement, which is why you do a survey, right?

You want to know what what our focus area should be.

Um so our residents' highest priorities are shown here, um, but these priorities also aligned with some of the city's lowest um rated performing areas.

Um, in addition to this, not identified as a top priority, but one of the themes that came from this year's survey uh were ratings for Denton as a place to work and then perceptions about uh economic opportunity.

Um again, residents continue to value Denton's amenities, they have a very very strong sense of safety, outpacing all of our benchmarks, no matter what time of day or where you are in the city.

Very high sense of safety.

Um but they do want a greater focus on streets, public safety, transportation, infrastructure, and our homelessness response.

So when we compare community priorities with the budget environment, um there is strong alignment, um, but also real tension between priorities, growth, cost, and our capacity.

Streets, transportation, and infrastructure are among the top needs for the community, but they are also some of the most resource-intensive services that we provide, particularly when it comes to maintaining aging infrastructure, rising construction costs, and then again the rapid growth that we are facing.

Um, public safety presents a similar challenge when when looking at public safety, our residents want greater visibility with our police department, and then stronger traffic enforcement.

Um, homelessness also remains a major concern for the community, um, but meaningful progress really is going to be dependent on regional partnerships.

And then declining perceptions around economic opportunity really reflect broader market conditions and aren't necessarily things that the city itself controls.

Um the thread through all of this is that the things that our community prioritizes the most are also the most costly services that we provide.

Yes, Mayor Courton.

Yes, Mayor.

Yeah, I have a quick question about this, and I think we talked about it a little bit when you went over the the last survey a few weeks ago.

Um but like a homelessness as an example says it's an issue for 84 percent.

Yes.

And uh in the next slide, homelessness response and and the need for resource-intensive homelessness services.

Like, is there a gauge for when residents list that as a top concern?

What they're indicating, is it that they want more resources, less, they're frustrated.

It is both ends of the spectrum.

Okay, um, in both the last two surveys, um, that has that is continued to be an issue, and and it is very much a mix of provide anything and everything this population needs to take away anything that attracts them to this community.

Um, it is polar opposites, quite frankly.

Thank you.

Yes.

Okay.

So next we're gonna look at capital needs.

I'm gonna be as brief as possible with this one because you've got another presentation today that's gonna go into a lot more depth.

But this just represents long-term investments that are required to maintain infrastructure, support public safety, and sustain our community amenities.

Okay, so the fiscal year 2026 adopted capital improvement program totaled 1.24 billion, and it reflects both the size of the city's infrastructure system and the extent of our long-term needs.

Each of these investments carries with it potential operating impacts.

So that could include maintenance, staffing, and equipment.

Delivering capital programs at this scale also requires sufficient internal capacity, so capital projects is not separate from the operating discussions.

Its size, timing, and composition helps shape future operating needs, financial constraints, and our debt obligations.

So again, this is going to be covered very extensively in our in the next presentation.

But debt service portion of the property tax reflects again that long-term commitment associated with voter approved bonds and certificates of obligations.

As new bonds are issued, timing must balance interest rates, project readiness, and the overall tax rate.

All right, so capital projects, they may be bond funded, but their ongoing operations are funded through operating budgets.

And I think that's it's very important to remember every time we build a fire station, if we add a new recenter, a new library, if we add a new vehicle, these all require ongoing maintenance, they require staffing.

When we renovate a facility, that brings long-term costs for utilities, maintenance, staffing, equipment.

And these renovations may extend the life of the facility, but they do not eliminate the need for in the future for roofs, HVA systems, electrical systems, and other major components.

So these our financial investments that don't stop once the building opens, these create ongoing expenses for the city.

So as we are finalizing our assumptions and finishing out the development of the 2026 27 budget.

On the cost side, health insurance costs continue to rise.

Public safety pay pressures are increasing, and then we've got increases in fuel chemicals, utilities, and contractual services.

We also continue to see supply chain issues that continue to affect both cost and lead times.

Then we have those external factors that add another layer of uncertainty into the process.

Legislative and regulatory changes can affect our revenue authority and require new investment.

Utility and environmental standards can create significant capital needs.

And then labor shortages and again supply chain issues can continue to affect our operations.

So when we look at these risks and look at these sensitivities, it's important that we're conservative in our forecasting, that we have strong reserves, and that we're flexible in how we allocate our resources.

So I mentioned legislative impacts.

One of those impacts this year is House Bill 9.

It immediately reduces revenues by increasing the exemption for business personal property.

Effective January of this year.

Strong reserves are essential in order to help us absorb that volatility, protect our bond rating, and then maintain our financial stability.

At the same time, resident expectations continue to grow.

So we have to meet those expectations with trade-offs with careful evaluations of our services, how we're staffing and our revenue strategies.

So when we're looking at our 2627 budget, there are a couple of questions we want to ask ourselves.

The first is which service levels must be protected.

So we need to provide clarity about what is essential and where adjustments are possible.

The next is what revenue strategies should be considered in order to meet the growing demand for services.

How should we invest in our workforce?

So we want to ensure that we continue to recruit and retain the top talent.

Which programs should be evaluated for realignment.

Through that and through our other practices, we want to ensure that we are allocating our dollars to where they are most effective.

And then finally, what long-term priorities need to be guiding our decisions because each of these priorities requires consistent planning and investment.

All right, so certain decisions have a significant impact on our development of the 2627 budget.

And you know that those are instances where early direction can make the process more strategic.

So workforce strategies are really our most critical.

So when we're looking at compensation, staffing levels, and recruitment decisions, these all require long lead times and how we prepare, particularly for police and fire as they plan for continued growth.

Streets and facilities maintenance also needs early guidance.

Backlog grows when investments don't keep the same pace.

So to level and structure of funding will directly affect our next year's budgeting.

Decisions about bond issuance and when to advance major projects affects both our debt service and our long-term operating costs.

So when we're looking at guidance, and we're going to have some decision points and discussions at the end of this conversation, it's really about assessing trade-offs, modeling different scenarios as we move forward and bringing that proposed budget.

So we had several priorities and directives when we kicked off the budget this year.

First was around investing in our talent in our workforce because we know that stability is essential in our workforce and in those that are providing the services to our community every day.

Departments were also tasked with completing workforce planning studies, and that really provided a clearer data-driven view of their staffing needs.

Next, we are looking at our service levels.

So the directive this year was really to maintain those current service levels, which also meant that with few exceptions that we did not consider supplemental requests as part of this year's budget.

So really, with all of these directives, it's really to get us to focus on people, planning, sustainability, reliable services, and again the fiscal discipline that we need.

So at this point, uh the major drivers should be clear.

I know I've spent a lot of time talking about the drivers and the pressures.

Revenues remain sensitive to our economic conditions, service demand continues to increase, workforce costs are rising, and operating costs remain elevated.

So those pressures are shaping the decisions about our workforce, public safety, infrastructure, and community programs, and how we allocate our limited resources in this next year.

So here it is again.

So strategic plan and our key focus areas.

So we want to make sure as we go through this process that our budget is connected to the city's key focus areas.

We want to use that in order to help clarify how we allocate our resources, how those resources are impacting each of these key focus areas.

And this just really gives us a consistent framework and a consistent focus as we move forward.

I will tell you that we spent a significant amount of time, April through June, meeting with departments, doing line by line reviews, talking through their workforce study, talking through their strategic initiatives, going through every aspect of their budget to understand what it was the departments were seeking to achieve with their budget budget requests, where they were needing those additional resources and where they were feeling constraints.

So this is it in detail.

I want to point out that July 22nd date, that is the date that we were to receive our certified values.

DCAD did inform us that this year we will receive estimated values instead because of the high volume of protests.

We did experience this back in 2022.

My understanding was I think either I wasn't here yet or too new to the organization, but it was several several months and perhaps even into early the next year before we receive those values.

So certified estimates don't legally uh or they are seen as legally sufficient for us to go through the truth and taxation calculation, but it does create more uncertainty in both the budget and revenue forecasts without having those certified values in place.

All right, so I want to take a minute and look at the strategic approaches that we used in developing the 2026-27 budget.

We again used uh zero-based budgeting, asking departments to justify programs and expenses from the ground up.

Um had that workforce planning study.

This was the first year for that study.

Again, giving us a data-driven view of current staffing, capacity, and the long-term needs of our departments.

Um collaborative budget meetings, two months of them, but really helped us focus in on every single department's operational needs.

And then this year we again had the budget task force, which was tasked with analyzing programs, expenditures, efficiency opportunities, cost-saving opportunities, and potential new revenues in order for us to work towards bringing the budget into balance.

So we had a couple of other approaches that we have this year that go beyond the department level.

The Office of Strategy, budget, and performance was developed, bringing strategy data performance and financial planning together into one team.

We are also expanding our community engagement and transparency.

Um, you may have seen yesterday on social media, the first of a five-part video series.

They're one-minute videos, um, and they provide viewers insight into the city's budget.

Um, it's great work.

So, definitely want to recognize Billy Matthews, Steve Force, and our actor Daniel Parrish, um, who did an amazing job.

So, we're really excited about that.

There'll be one released each week.

Um, with that, we also launched a platform.

Um, sounds fancy, really simple though, but wanted to give the community opportunity to submit their questions and provide their input on the budget.

That is out there now.

Um, and again this year we are going to be launching the budget simulator.

We're enhancing that with some additional survey questions, a little bit more interaction.

So that's another means for us to get that community input.

And we are also exploring additional community-based and neighborhood-based engagement opportunities as we continue through the budget process.

Um, another thing is the innovation grant program.

So we launched that just a couple of weeks ago, and it gives the employees across the organization the opportunity to test out their innovative ideas that improve operations and service delivery.

So, finalists are going to have the opportunity to pitch their idea to city management and could be uh awarded up to 25,000 to pilot those projects.

And again, you might say in a tight budget year, why would we launch this, right?

But we it's important that we invest in our employees, and it's important that we get their ideas for how we serve this community better and give them the opportunity to test out those ideas.

I'm really excited about that.

We close the application next week and already have 12 submissions.

So looking forward to going through all of those and seeing who's going to move ahead to pitch their idea.

All right.

So this is not in your presentation.

This was added today to this slide to the slide deck.

So we wanted you to, and I know there's a lot on the page.

There is a lot on the page, but we wanted to give you the opportunity to see where we're at now for the general fund.

So this is the general fund preliminary budget.

So I'm gonna actually start on the I'm always left right challenge.

We're gonna start on the far side of the screen.

All right, so we're gonna do that.

Um it's it's sad when I give people directions, it really is.

Um we're gonna start with the revenues.

So we are um only going to be receiving estimated values.

We want to be very conservative in how we are budgeting that at this point.

So we are budgeting property taxes uh for existing um to remain flat, and then at this point, DCAD is reporting that we have about 600 601 million uh in new values, so we are including an additional 2 million for that new value.

Um there's a lot that goes into calculating.

Um we go to a half a day of class, we get this book, right?

So there's a lot that goes into all of this.

This is our best estimate for for what that number will look like.

Um, we're gonna continue to get values from DCAD and continue to to look into you know, look at this and and make revisions as we need.

Um we are budgeting our franchise fees and ROIs a little bit higher than last year, but that's based on what we're seeing uh in the environment and and the impacts on that particular source of revenue.

Um, looking at expenditures, I know I said earlier that we did not provide cost of living or merit in the current fiscal year.

We want to be able to do that with the capacity that we have and with um particularly some of the salary savings that we have.

So in the current year, you'll see that in that estimated column.

We are uh proposing a one-time COLA that would provide 1,500 uh in a one-time payment to full-time employees and $750 for part-time, um, looking at employees who have been here for a window of time, I believe it's at six months, and that that would be in September.

Um we go through again the preliminary line, we get down to the bottom and change in fund balance.

We are not at a balanced budget yet, so we want to talk you through some opportunities.

Um, in order to balance the budget, again, I mentioned that task force, the task force identified $3.5 million in savings.

Um the list is fairly extensive, but the biggest components of that are right sizing our overtime.

Um, it is in travel and training, and even though we say that employee development is very important, it still provides uh opportunity for staff development.

Um, so that is very important, and that is still included in the budget.

Um, and then there were some minor adjustments in our transfers.

Uh, we are looking at sustainable approaches in terms of consumable apply uh supplies across the organization that uh was part of it, and then looking at um right sizing some of the software subscriptions that we use.

Um so that adds up to that 3.5.

Um based on salary savings that we see year over year, we are proposing that we budget salaries at 98% rather than 100%.

So that equates to roughly $3.2 million.

Uh, with that, um, we would also like in this next year to provide a 2% merit.

Um that includes our civil service uh employees as well as general general government.

That would be an effect in January of 2027.

And then we have our health cost increases with the city bearing the full amount of that increase.

That then brings our budget into balance, but I will say, even though it looks like we have a surplus, once this all gets factored in, um we then allocate and then apply those same merit increases and so forth across the organization.

We'll reallocate, revise all of our transfers.

There's a lot of things, we'll have calculations that happen behind the scene, and that will change that number, and then we'll we'll then know where we stand in terms of of any remaining balances.

Question about the numbers.

Sorry.

I a quick question here about the the numbers, and it's I think probably because I just don't understand it.

Uh franchise fees and ROI.

Could you help explain that to me?

Uh uh I'm gonna just talk out loud because I'm gonna confuse myself otherwise, and hopefully you can interpret the question.

Um so it shows 26, 27 will be 34 million.

The budget for 25, 26 was 32 million.

It shows the estimate was about 8 million less.

And so I I guess what I'm wondering is um where we expect the 30 percent increase to come from.

So this is this is this is part of our I ROI um sorry, return on investments, and that number is based on what we are seeing from our electric utility, they prepare performa.

So again, um knowing what's going on within their environment and with what they're seeing, they do feel confident in in this number.

Um it it is one of those things that has been volatile over the last few years.

Um, but based on what's going on within that utility, they do feel confident in that number going into this next year.

Oh yeah, I sort of had the same question, and I think um what we have to look at historically is also let me just say this the budgeting in the utility department, as we can see from this slide, is hypercritical.

Because when you look at the actual forecasts in the budget over the last four or five years, what the budget was and what the actual was for utilities, sometimes there's a fairly decent discrepancy, and it's usually lower.

I mean now in in the years of winterstorm Uri and and a couple other things.

So that that to me is a major potential issue, and I certainly hope that we've got some really good context of how that forecasting is gone because you can't afford to miss that.

You can't afford to miss it by eight million dollars.

So I just want to really emphasize to management and to utility department.

Take a look at the old forecasts and see because sometimes there's a 20 to 30 percent difference.

Well, we budget off of their budget.

Well, if they miss their budget, it doesn't really I mean they're just offset by lower expenses, lower revenue.

Here we've budgeted off of those uh anticipated revenue.

So this is very critical that we um get that pretty pretty close.

So I I agree with I I see the your question, and I I was gonna have the same question.

Mayor Pro Tem.

Oh one thing I guess if it's if it's possible when we have I guess we'll our budget workshop.

I I'd be really interested to see um maybe more in depth information on that and why we feel which I I I trust it, but why we feel more I trust that we were confident last year.

Um and I trust that we're confident this year.

I'd like to see how our predictions or tools that we're using have changed a little bit to maybe become a little bit more uh accurate.

Is that does that make sense?

Yes, we're gonna have the utility budget discussion next week.

So you'll have an opportunity to see more in depth into this calculation and then as well as have more discussions in the budget workshop.

Uh council member fair.

Yeah, and I don't want to belabor the point because I also wanted to talk about ROI, but basically my my my thinking was I think it was 15.1 million in 2023.

I could be wrong, but then it dropped uh of just the electric ROI that was transferred to general fund, and I'm wondering with like this downward trend.

And I'm wondering with like this downward trend, mine was gonna be like what fiscal kind of guardrails can we kind of um establish to kind of protect the general fund so that we don't see that huge swing.

Um so yeah, I'm in agreement, and I look forward to the conversation next week.

I guess one qu and you might not have the answer, and and we'll hear for sure next week, but in this franchise fee and ROI calculation, is that also including any anticipated revenue from the data center?

In other words, is that forecasting a certain amount of utility generation?

We we'll answer that question next week.

So that will be one of the questions coming next week.

Yeah, yeah.

Uh all right.

Okay.

Oh, yes, council member.

Rumor, yes, thank you.

Um I appreciate the conservative budgeting.

I'm always appreciative of that, um, including us planning for a zero percent increase.

Because I know things are sort of flattening out or even going down a little bit right now.

So I appreciate um that inclusion.

Um is the I asked this last year.

Is the sales tax forecast conservative enough?

Because I know I think it was last year it was four point something is what it came out to.

I don't know what it's been trending this year.

Um it is it is trending a little bit above budget, which means it is trending even more so over the prior year.

Um so we feel like yes, it is conservative, but we also keep an eye on that one every single month, every month, uh, and then we project out for the remainder of the year.

But that's one of the ones we watch.

We watch it all very closely, but that's one that we pay particular attention to.

And I know that we forecasted high four percent or something for for this budget year.

Um so we're seeing it trend above our forecast from this for this current budget year.

Yes.

Do you know percentage?

I think I just saw that a week ago.

You can get the um a range too.

Above five percent?

Below five percent.

It's it's we're with we're within one, we're within one percent.

Right.

Right.

So uh that makes me a little nervous because it the past two years has been under five percent, and for us to forecast five percent makes me a little nervous in terms of that being conservative.

Like it's not optimistic, but and that percent is an addition that that small increment is in addition to the five percent or the the percent that we budgeted last year.

So it's that percent plus we're above our budget.

So like eight percent or something.

Seven.

I'll get the number five okay.

Thank you.

Um and to clarify the no allocation, or we're assuming no allocation for catalyst street sustainability, that is related to the data center.

Not we're assuming we're not gonna get some of the revenues anticipated this fiscal year, is the assumption we're making with this.

We we are assuming we are assuming that we will not have the funds to transfer to those as part of the budget.

Okay.

Um just two more, I think.

Um do you recall what our fund balance percentage expectation forecast was last year for uh 2627?

So right now we're looking at it going below our bait bottom of our target for fund balance.

I don't recall what we were hoping.

I thought we were hoping to recover over the next five years.

I'm looking at Matt to see if is if he recalls that.

Um I'll have to look on that.

And then oh, and I'm very excited for the two percent merit.

I'm staff really need that.

It's been a little bit too long for no cost of living adjustment um of any kind.

So, or well, this is not that's not what that is, but um something to help them out because costs are going up and their salaries generally are not going up.

And so that's kind of like a pay cut for staff.

So I'm really excited about the two percent.

Um, I think that's all I have for right now.

Thank you.

Oh, unless she's got a answer.

20 percent.

20 sales tax?

Oh, no, sorry, sorry.

I've moved on.

Um, my brain.

My brain is for the ending percent.

Okay, thank you so much.

Appreciate it.

Thank you.

One last just question of clarification on the uh zero percent increase in property tax.

Um have we done uh is that included in this assumption or in what it would be this exemption that is applied to the business personal taxes, business property, the personal property.

Have we done an analysis of when we apply that?

If it's if the exemptions go into 125,000, uh when it was what, 1200, or I forgot what you said.

2500.

2500.

What is the impact, you know?

I mean, we might not have that many accounts and it might not be that much value, but what is the impact of that?

And if that's somewhere in that as well, because if we were using last year's tax number, that means it would not have those exemptions would not have been taking place at that time.

They're they're taking place at this.

I won't say this though overall.

I mean, that this uh I um well look at 2020 uh uh the last one where we thought there was gonna be um I think it was this last the year we're in, we thought we had started out with a really projected large projected deficit.

We thought we had started out with a really projected large projected deficit, but when we look at how it ended, how that fiscal year ended, we ended a lot better than what people had anticipated.

So I think if you go back and look at the prior years, what you forecast as to what's going to be decrease in the fund balance, you will see that typically you do uh have a you're better off at the end when it all gets trued up.

So I really appreciate staff's work on this because I know it's been very challenging, and quite honestly, it's been very challenging because this is the first substantive meeting that you've had with the city council because of you know just the election cycle.

Uh that we're about a month and a half and almost two months behind.

So hats off.

What a what a great job.

And um I look forward to as we keep crunching this that I think we're gonna find some some things that are even more helpful, and maybe it'll really help that bottom line even more.

But I I'll reemphasize the discussion next week, I think is going to be very important on franchise fee and ROI and what exactly is included in that because if there is some from what we anticipated from our our data center, and it's not if it's not performing, then we need to we need to know that.

So, yes.

Mayor members of council Matt Hamilton, Chief Financial Officer.

I just wanted to address the question in regard to HB9 and the um the impact.

So when this was proposed uh in the legislature last year, we did do an analysis, and what we concluded is that it would uh be an impact of about $572,000 on the ONM side of the general fund, but also have an impact of 428,000 on the INS, the debt service side.

So in total, it's about 900,000 um dollars.

Okay, great, great information.

Thank you so much for that.

I appreciate that.

That's very helpful.

Any other questions so far?

Okay.

Yeah, we move on.

Yep, thank you.

All right.

So next steps you'll be seeing us next week for those uh utility budgets and rates.

Um addition um is we are going to meet with you on the capital projects on August the 4th, retreat August 8th.

Um any follow-ups will be on August the 18th, and then we have our um budget and tax rate hearing on the 15th of September and adoption on the 22nd.

I would say, are there any more questions?

Any more questions?

Uh Madam City Manager, you have any comments or questions or I just appreciate Amy and her team and Matt and his team, they've done a fantastic job.

Um, especially given some of the challenges that we've had this year.

I really appreciate all of their work and all the departments because all of the department directors sat on the budget task force, and they worked through a lot of challenges with each other and what they could cut and what um what they wanted to recommend.

And and I appreciate all of their work.

Fantastic.

Thank you.

Oh, yes, I'm sorry, Councilmember Holland, yes.

Yeah, the retreat August 8.

Is that correct?

That's correct.

Okay, okay, thank you.

All right.

Thank you very much.

We'll move on to agenda item C ID 26-0968.

Receive report hold discussion, gift staff direction regarding uh the 2023 bond program.

All right, good afternoon, mayor council Seth Garcia, director of capital projects.

Today I'm gonna do a joint presentation with Mr.

Matt Hamilton, our CFO, to talk about the 2023 bond program.

So a little bit of a background on the 23 program.

So in April of 2023, City Council sent forward a special citizens bond advisory committee that was comprised of roughly 40 residents to evaluate some proposed projects and make a recommendation to city council for the 2023 bond election.

So that committee met a total of seven times over the summer and provided the projects uh shown in the table below.

And then on that right hand column, we also have the percent in support from the the uh citizen committee that went forward to city council.

So ultimately that committee recommended a grand total of 287 million or so uh in those projects listed there in the table.

So in August of 2023, council met a couple different times to look at the proposed bond program.

Uh ultimately, council decided to move forward with the proposed recommendation from the citizen committee with two minor modifications.

Uh those are listed there at the bottom.

So the first was they increased the South Branch Library to a new facility and added about 10 million dollars.

So the Citizen Committee ultimately wanted to renovate and add on to the existing South Branch Library.

Staff in 2023 provided some recommendations as to why they felt that was not the best idea.

So ultimately, council raised that back to the staff recommendation and put that on the ballot for a new South Branch library at a new location.

The second increase was to the Rudell Mingo Roadway and Quiet Zone project.

The Citizen Committee advised council that they did not want to see Rudell between US 380 and Mingo reconstructed.

Council felt it needed to be included with that project with the pedestrian improvements.

So that was ultimately added back in to the staff's recommendation.

So that raised the total bond program to just over $309 million that went to voters.

So on November 7th, we held the election, and ultimately propositions A through G were passed for a total of 291 million.

The only proposition that failed was proposition H, which was City Hall West by just a narrow margin of less than 1.5%.

Just for council's information, if a bond proposition fails, you cannot issue certificates of obligation for up to three years on that project.

So that will expire in November of this year of 2026.

So this is a current look at our bond issuance timeline.

As you can see, we're there in that fourth column, FY2627.

So with the proposed program, we would be looking at issuing about 70 million dollars for the program.

I did want to highlight on the bottom there, and Matt's gonna go way further in detail on this, uh, that the estimated tax rate increase for the entire 2023 program was roughly 5.7 cents for the life of the program.

So he will dive more into that when we get into the tax rate.

So for some down and dirty quick updates on the projects.

Um proposition A was our streets project.

So this is the Mingo Rudell Quiet Zone.

Currently, we're at 90% design on this.

We're working through coordination and agreements with Union Pacific Railroad.

We've started our right-of-way acquisition process for the right-of-way we need to build the infrastructure.

We are anticipating some franchise utility relocations to begin as soon as Q3 of 2026.

And once we've cleared all the hurdles with the railroad with franchise utility relocations and all the other pieces, we're anticipating a two-year construction duration.

Just real quick question.

Yes, sir.

So I understand.

So this will mean that when this is done, you're gonna have quiet zones in those spots that are marked on that map.

Is that you quiet zone work or is that is that because we've been working on those for a decade or so?

Yes, so that is correct.

So ultimately, with the new Rudell crossing, that is shown in the alignment in orange here.

Um we will have a quiet zone there.

The uh locations of Willis and Pertain will close to install the new quiet zone.

Okay, and so ultimately at the three red or four red locations and the one orange location, we will have a quiet zone.

At the end of this this construction project.

That is correct.

Okay, thank you.

Yes, Council Mayor Holland.

Forgive me.

And Willis and Pertane will remain closed.

I mean, forever.

That is correct.

Okay, thank you.

And so to build the new Rudell crossing, we have to give up two locations to build the new one.

Um so those will be the two that close.

All right.

Okay, so proposition B is our drainage project.

So the first one is our Oakland drainage and upstream detention.

So again, we're currently at 90% design with this one.

In April of this year, we did acquire the pond track that we needed to be able to build the detention pond.

And just for location, this is right behind the movie tavern off of Hinkle and US 380 in the Kroger kind of shopping center area.

So we do have that parcel um in hand.

We are working on some franchise utility coordination.

We have a large Atmos project that needs to happen on Oakland Street that you'll see go before this one.

And again, once we clear all those hurdles with our franchise utilities, just due to the size of the boxes we're putting down the roadway.

We are expecting a two-year construction duration.

The second drainage project is our PEC 4 phases three and four or Pecan Creek.

Um we are 100% design on this one.

We are nearing the end of our right-of-way acquisition.

We have one parcel that's outstanding.

Um with that, we have ongoing franchise utility uh relocations happening.

So Atmos is currently out there relocating along Mulberry and Bernard.

Umce they are clear and we have the last parcel in hand, we will advertise for bids.

And again, this is a two-year construction project.

Would this uh remove the major portion of the downtown out of the floodplain that we've sort of been talking about all along, or is this just part of the process in order to do that?

So when we did phases one and two, we removed a large portion that was south and east of Elm Street.

Yes.

The second portion will take a large piece that is again south of the square, but near Sycamore, Stroud, and Prairie, all of those pieces, and then going west towards Mulberry.

Okay, so they'll be they'll be out of the floodplain once this is completed.

Is that correct?

That's correct.

All right.

And do we do we get the uh we submit for the letter of map revision through FEMA?

We do.

Okay.

So we currently have a clomer already.

We'll submit once the once we do the as-built surveys, we'll provide the actual hydraulic models for the as-built conditions to FEMA.

They'll go through, we go through a notification process with public notices to let everybody know it's about a year's timeline to go through all of that, and then we will get our final letter of map revision.

Great, thank you.

You bet.

Okay, so proposition C was our parts projects.

So for trails, we have several that are under design currently, those being Hickory Creek Trail and our Peconcrete Trail.

We have several under construction, villages of Carmel, Bowling Green Park, and Briar Cliff Park, excuse me.

Uh, we have several projects that are completed.

Those are Joe Sciles Park, North Lakes Dog Park, and the Dina Park.

And we still have 11 million that's remaining to be issued in three future issuances.

Our inclusive playground is also underway.

There's a design contract that's currently under negotiation that's going to be brought before council.

Pars was awarded a 750,000 dollar grant from Texas Parks and Wildlife that's going to go in support of this project as well.

And they are anticipating cut construction to begin in mid-2027.

The last parch project is our waterworks park.

We are 100% design complete.

Uh we are waiting on permitting uh until we have our construction funding and we're ready to go.

And so we are awaiting that last 12 million dollars to begin our construction.

Proposition D was our public safety, so those are our fire stations and animal services.

Currently, fire stations five and six are both under construction.

So we're designed complete.

We executed contracts back in 2025.

Uh station five is a little bit behind station six just due to us having to set up the temporary station that you've seen out there.

Uh we are on track to be complete in April of 2027.

Fire station six, we have made a ton of progress on.

There's been some great social media posts if you've seen those recently.

Um we are expecting to hopefully have firefighters moved over before the end of the year with substantial completion being that November 2026 date.

Our animal shelter, the limit Linda McNat Annual Shelter.

We finished design, we brought a GMP to council in May.

They have started construction out there.

We are anticipating a November 2027 completion date, and so far we're we're just getting started, but uh again, we're on track to be done before the end of the year in 27.

Proposition E was our affordable housing.

Um staff is working on some recommendations that's going to be brought before council before the end of the year.

There has been no funding issuances yet to date for this proposition.

Uh so again, this will be brought before city council for consideration later on this year.

Our last two propositions are propositions F and G.

These are our active adult center and South Branch Library.

So the Active Adult Center is going to be constructing a new active adult center.

Uh one of the pieces of direction we're looking for today is potentially looking at the possibility of a co-located South Branch Library and Active Adult Center out off of Ryan Road in the parcel that was built or procured for South Branch Library.

Uh again, currently the funding is set to be issued this year and over the next two years after for construction.

The South Branch Library would be construction of a new 40,000 square foot facility.

Again, we did acquire those 14.4 acres off of Ryan Road next to the Good Samaritan Village, um just south of Montecito, if you know where that's at in October of 24.

And again, the funding is set to be issued this next fiscal year, and then construction following two years after.

So now I'll turn it over to Matt to talk about the tax rate.

Good afternoon again.

Matt Hamilton, Chief Financial Officer here to dig into some of the numbers associated with the 2023 bond program.

And what I'd like to do is just start with an overview uh of the city's debt profile.

So uh the city currently benefits from a AA plus AA plus uh credit rating from SP and Fitch.

Uh this was recently reaffirmed within the last two weeks uh from both credit rating agencies, and really this is a reflection of the city's strong balance sheet and our ability to repay the debt service annually.

And really, this is a reflection of the city's strong balance sheet and our ability to repay the debt service annually.

Um Denton currently leverages its high credit ratings to lower our borrowing costs.

Uh the majority of our tax-backed uh debt is actually issued on behalf of the utilities, and so the utility system benefits from the city's higher credit rating than than the lower A plus rating of the utilities system.

And so we're able to save the utilities a considerable uh amount of uh uh of interest in their uh bond issuances.

And this is really a cost-effective approach rather than issuing separate uh revenue bonds, that would be the alternative to CEOs if the utilities were to uh issue bonds on their own.

So as we look at the outstanding debt, uh the total debt of the city uh with a property tax pledge uh is 2.2 billion.

Uh if we uh back out the what we call the revenue supported debt, which is the debt um that the utilities uh pay for, it is one uh that is 1.4 uh billion, uh leaving us a net supported uh debt of 733 million, which is actually supported by the INS rate and property uh taxes.

So real quick just to clarify.

So that less revenue supported debt, that's primarily debt associated with the utilities.

Is that and primarily, is that right?

That's correct.

So what the city does is is the city issues CEOs rather than revenue bonds for the utilities in order to take advantage of that higher credit rating and lower the borrowing costs for the utilities.

Now, internally, administratively, the utilities make transfers into our debt service fund to make these payments.

So the utilities are making the payments, you know, on their own.

Um it's just being transferred internally to do that.

Okay.

Thank you.

Yep.

So I also wanted to provide um just an overview of our of our debt profile.

Um this slide is uh a little different than the one that you have in your packet, and the reason um uh was because Councilmember Rumer had uh asked us to include the uh prior 10 years as well to the uh chart.

So what you see here uh starting from 2016 up until that current line, um the light blue is total debt paid from property taxes, and the dark blue is the total debt paid from other revenues, which are primarily the utilities.

Uh and then going forward for the next uh 30 years uh from this point through 2056, what that debt profile looks like uh each year.

So our total outstanding debt that is supported either by property taxes uh or by the utilities.

And so uh I do want to note um this profile is not unique to Denton.

Um Frisco, Garland, other Metroplex cities uh have a very similar profile.

Those profiles are actually available uh online through the state, and you can see a very similar uh path.

And what you'll notice is that uh there was a steady uh increase, and then about in 2025, you see you see it jump up quite a bit, and really that's driven by two factors.

One is growth across the the Metroplex uh as well as a low interest rate environment.

And so when interest rates dropped during COVID, there was a lot of entities, Denton included, who took advantage of the very low interest rates.

That debt service doesn't hit until uh until that next year or so 22, 23 going into 24-25.

That's really when you start to see the the debt uh increase.

For Denton specifically, that increase is associated with uh a couple things.

One is uh going into 25, we had the very last issuance of the 2019 bond program.

We also had the first issuance of the 2023 bond program, and we also had uh a meaningful amount of CEOs which were associated with uh our facility condition assessment and direction from council to move forward with repairing uh city facilities as well as uh streets.

So just kind of wanted to uh illustrate this and and uh explain a little bit what happened in those years uh where you see the the debt increase.

Now, looking forward, uh the the forecast does not include any additional debt issuance, and so what happens just naturally with no additional debt issuances, so the debt will ultimately mature.

Yes, Council Mayor Remover.

Sorry.

Thank you.

I did want to thank you for making this chart.

It was I partly requested it because the charts I've seen like this in the past always show a downward trend, which I think just mentally, if we're not thinking about it, our brains tell us, oh, we're we're improving, right?

So it's just good to see the past that we we have been going up, and that's something to keep in mind.

I also wanted to uh note that I think it was the last Friday staff report, we got our our ratings, and so we have the the A uh plus.

Um one of those suggested we're barely hanging on to that plus.

We're out of I think it's a range of nine to ten is that rating, um, and we're at 9.05, so we're almost a double A.

Um, and our weakest uh rating in that in that overall assessment was our long-term liability burden.

Um so I just want to make sure that the room is aware of that, and we're keeping that in mind as we move forward.

So thank you for making the chart for me.

Yeah.

So uh you know, as we look and talk about the tax rate, one of the the biggest factors in determining the tax rate is the tax base.

And so what we've illustrated here is just looking back over the last 10 years uh in terms of what the growth in the in the tax base has looked like.

And so what you'll see is between 2017 and about 2022, about seven to eight percent on average.

There's a couple years where it did increase uh more than that.

Now, between 22 and 23, we saw that uh real substantial increase um during uh those later years of COVID.

Uh but uh what's important is from 2023 forward, you see the rate of growth declining significantly.

And that's something that we're experiencing, and Amy alluded to we've seen 17 percent in 2023 down to 7% last year.

Uh preliminarily uh for next year, it it is significantly lower, and so we'll bring uh those final values uh from the CAD or the estimated values from the CAD forward during the budget workshop, um, but just wanted to illustrate that while there is been growth, that growth has continued to slow year after year after year, and that's simply the pattern that we're in right now.

Taking a look at historical tax rates um and really kind of in the context of the 2023 bond program.

So in 2023, the debt tax rate uh was.20425.

Uh we refer to that as uh 20 cents, so that's about 20 cents for every hundred dollars of assessed value.

In fiscal year 2026, the current fiscal year, uh the debt rate is 0.26064 or 26 cents.

And so annually this the city sets two tax rates that combine into the total tax rate.

The first is the M and O rate or maintenance and operations rate, which is used for daily operations of the city, including salaries and programs, all the day-to-day things uh that the city does.

And the INS rate, otherwise known as the interest and sinking uh rate or the debt portion of the tax rate, is used uh only for the annual debt service on outstanding uh tax supported bonds.

And so what we've illustrated here is going back to 2018, uh the uh red portion at the top is the debt uh rate, the INS, and the bottom portion is the ONM, the um uh operations and maintenance rate.

And so in 2018, the total tax rate was about 68 cents.

That uh progressively declined through 2024 and then increased uh with the bond program uh really starting in 2025, uh, and then uh again in 2026.

Matt, real quick, just uh if you go back to that last slide, I want to see what the years were.

So we when you had the seven that 18 percent increase.

Now, if you go back to the tax rate slide, that was in 23.

Well, would you say that's probably what precipitated that drop from 59 to in other words, that's a lot of additional revenue coming in, and so it allowed us because we didn't have that much uh increase in expenses, so it allowed us to lower that rate at that time.

That's correct.

And just to keep in mind that we do have uh when we calculate the rate, uh, and Amy had talked a little bit about this, we do have the no new revenue rate and a cap of three and a half percent over that no new revenue rate.

And so as valuations move higher, uh it it pushes the tax rate down, and so um that would be the yes, the result of that.

Okay.

So there's a lot of information on this page.

I do want to take a couple of minutes to to walk through this.

Um what we've provided in the table to the left uh in terms of and all of this information is really in the context of projecting the the debt rate.

The table to the left includes the uh uh propositions that were brought forward for the 2023 bond program, the total that is listed there is what was approved by voters, the 291 million, and the third column in the table is the unissued amount.

So this is the amount that we have not yet uh issued for the program.

Uh this would be um uh 2027 and and uh and forward, and so what is not included in that unissued is uh what is being brought forward in the bond ordinances tonight.

So 2026 is not included in the unissued.

If council did not issue the bonds uh that that we bring forward tonight for the program, then that unissued amount would uh increase.

In the last column, the percent and support is the total uh uh voter approved uh or voter support percentage.

Um so we just wanted to provide that in terms of context of what voters supported uh in each of the propositions.

The table to the right uh is uh illustrating the uh debt tax rates.

So in the left hand column are is the fiscal year, the middle column is the tax rate forecast that was brought forward with the 2023 bond program in 2023, and then the right hand column is our current forecast as well as what the rate was, the actual rate was in 23 through 26.

So what you'll see in that right hand column with the updated forecast is that the current debt rate is the 0.26064, and next year uh with the issuances that we are bringing forward tonight uh and our outstanding bonds, that the debt rate uh is forecast to increase to 0.27087.

Now that is contingent, of course, on uh the estimated values that we get from the DCAD.

What is also not included here is we are also bringing forward a refunding, and so what that means is that um debt that we've previously issued at a higher interest rate, we're able to refinance that at a current lower interest rate, and so that will also help to decrease that INS rate uh potentially lower than that than that 27 cents there.

Um so our current INS rate is the 0.26064 of that rate, the 2023 bond program represents 0.029 or almost three cents of the tax rate.

Uh the rest of the tax rate is made up of prior bond programs that have been issued, and remember uh when we issue debt, it's typically for a 20-year term, and so even bond programs going back to 2014, 2012 uh and prior are included in that 26 cents because we are still paying debt service uh for those programs.

The um so when we look at the 2023 forecast versus where we are today, the the current variance to the 2023 forecast uh is 0.00677.

So we are very close, we are slightly over, but we're very close to where that original forecast showed that we would be.

However, um the total INS rate increase uh when the program was proposed in 2023 was forecasted to be uh 0.05764, so 5.7 cents on the tax rate.

And we're currently at 5.6.

So we are very close to that um uh uh upper forecast that we had in 2023, and we wanted to make council aware of that.

Um there are a couple things uh that I do want to highlight to to the right, that lower right hand box, uh, in terms of assumptions.

So some of the assumptions have changed certainly over the last couple years.

Um in the 2023 forecast, there was a 5% average AV growth assumption.

Um that's more like four percent, we think going forward.

Uh the uh also well the other big piece is um that in the 2023 forecast, it included CO debt up until 2027, but then no additional CO debt because that those plans hadn't been put together at that point.

So as we look at you know, our average CO issuance annually and assume that it's about 45 million going forward, that is also what is included in that debt forecast on the on the table to the upper uh right hand side in that 27 cents and beyond is assuming a 45 million dollar CO issuance annually.

So that's why we start to see this divergence between the 2023 forecast and our updated forecast.

Part of it is is due to the issuance of CEOs during that period and projected moving forward.

The one thing I do want to note is as staff had presented earlier this year, we are working on developing a comprehensive financial uh policy and long-range forecast.

And so our goal is not to issue 45 million dollars in COs annually, but we felt like from a forecasting perspective, because of that's what we've historically done, we wanted to include it.

So we are optimistic that with the work that we're doing, we will reduce that and it will relieve pressure on the on the INS rate.

Um, but that is another, you know, that's a difference between 2023 and and the 2026 forecast.

Yes, gets my rumor.

I I wanted to just say that I really do appreciate the assumption of 45 moving forward because it's always a little frustrating.

And I know you weren't in your role at back in 2023, so um it's a little always a little frustrating when we're working with numbers that aren't that are out of context in a way during the committees.

Um to assume, you know, look backwards, see what our average has been, assuming that, but aiming for not doing that.

I really appreciate that change to it, so that any future bond packages we're considering, we're including some sort of guesstimate of how much we might do, so we're not being surprised later on.

So I really appreciate that change.

Okay.

Couple of questions.

Um I see the assumption on 2026 assumptions, 4% AB growth.

Is that assessed value?

Is that what that stands for?

Yes, assessed value.

So help me understand um because I know was that for last budget cycle?

Because this budget cycle that we're talking about now, we've assumed on the general fund forecast we saw zero percent.

Is that different than what I'm seeing here?

I mean, um is this four percent what we're saying we're forecasting for this budget cycle?

So this this four percent is a longer term average that that we're assuming.

The zero percent was just for this upcoming 2027.

But one important distinction to make is that the state's three and a half percent cap over no new revenue only pertains to the OM side, not to the debt side.

Sure.

So assessed values could we could take advantage of higher assessed values to lower the debt rate more so than on the on the OM side because that there's a cap on that side, there is no cap on the other side.

So what I'm hearing you say is this four percent isn't what you're saying is assumed to create well to create the new oh the new debt service rate.

When we look at the forecast, what are we this four percent you're saying is sort of an average over the next, I don't know, three or four or five years, but for this year, what are we saying that when we calculate what we were going to forecast the debt service rate to be for this current budget cycle that we're gonna be deciding and approving, what are we using as an assumption for the assessed values for this particular year?

Yeah, so this particular year we're using the preliminary values that we have from the CAD, which are it is less than four percent.

Okay, so from the general fund forecast, we're assuming zero percent increase, but on the debt service side, we're saying it's gonna be four percent or less or something like that.

I just I just want to make sure that we're or am I misunderstanding that's sorry.

So the so the debt that we issue in the current year is going to impact it, we're gonna start paying the debt service next year.

Okay.

And so what is included in the in that 27 cents is the preliminary values from the DCAD for this current year that align with the operating budget.

Now, when we look at 2028 and beyond, that's the four percent assumption that we have, and that's just based on it ramping up.

Okay, all right, yeah.

So we're sort of we're using a different number for this year, 2027, and the 4% really applies to 28 moving forward.

Correct.

And the reason for that is because we know what 2027 will be or what we think it will be.

Sure.

So yes.

Okay.

Yep, yeah.

My only thought about that was in on we've got two tax rates.

We've got the operational maintenance debt service on operations and maintenance.

We're assuming a zero percent in the forecast we just saw, which what you're saying is for the debt service, we're gonna look more closely to what the actual values are that we're currently receiving from DCAD about the state real time about what it's changed from last year, and you're saying it's about two to three percent.

Yeah.

Or four, yeah, something like that.

Right.

So yes, it yes.

There's a little bit more that we're able to um utilize because we don't have the cap that we have on the OM side.

So yes.

All right.

And this probably goes back to maybe the last presentation, but I know you got in here the active adult center and South Branch Library.

I know there's been some discussion, and there's been some emails that I think council's received about location of the active adult center.

At what point will the council need to make a definitive decision either way?

Either you just stay with what it was originally proposed to be, and that doesn't have to be for this discussion.

I'm just because that that has come up, so where does that fit into the timeline of when we have to actually begin to think about issuing bonds for the 47 million dollars?

So that's just a question I pose out there.

And if it's I mean, it might not be might be inappropriate for this meeting, but uh yeah, no, that's a great question.

So I'm gonna click over one more slide.

So one of the things that we are seeking direction on today sorry um is that first one.

So is council council interested in us preparing some financial scenarios regarding the potential savings for a co-located library and active adult center.

So one thing that I wanted to point out, and and you could look at the numbers there on point two, the majority of the funding that is left in the issuances is tied up between those two projects.

Right, yes, but over half almost, yeah.

Correct.

And so if we look at potentially them being on one site, we need those two funding sources to go together.

So ultimately, if you're if you look at point number two and you want to look at scenarios to move it out, we would want those two projects to start and run concurrently so we can put them under one contract and build one facility.

Okay.

Um so any direction that you guys can provide today on if you are open to us prepar preparing those financial scenarios on what potential economies of scale and savings could be, we could look towards that.

Otherwise, um parks did let us know that they do have a secondary site at Mac Park.

That could be a potential option for the active adult center.

Again, we would have to go through that process to look at it.

The council in 23 gave direction on a joint facility.

So again, anything that you can provide would greatly help us.

And when would that direct when would you uh ideally need that specific direction?

When when were what kind of time frame are we looking about?

Ultimately before council decides when to issue the debt.

Okay.

And when are we anticipating that coming before council to issue the debt?

That is it is next year, is it uh that is some of the direction we're seeking today.

Okay, well, let's let's decide.

Okay.

I was thinking, yeah, okay.

We're gonna do it today.

Fair enough.

Uh okay, I'm gonna go Mayor Pro Tim, then Councilmember Rumore, and then anybody else?

Okay, go ahead, Mayor Pro Tim.

I I I guess I had I mean, as far as direction goes, I do have I I think I need some help with just some background information.

Um to start off with on South Branch Library.

What was the reasoning behind wanting a different South Branch library meeting counsel Jennifer Becker, director of libraries?

Um so we had done a facility master plan in 2020.

Um and one of the things indicated, which we knew in our hearts, was that South Branch Library was too small to serve the community.

Um it is a very busy location, um, and it is undersized.

It's hard to get to, so it's not accessible.

Um I would not want to ride my bike to that location.

So we knew that going in that the recommendation was to move South Branch nearby to serve that South community.

But that it needed to move and basically double in size.

Okay.

Is there a way to judge like how how we're defining like at capacity as could you explain that a little?

So that one the question I got when Todd Heilman was manager uh city manager was so what's the formula?

There is no formula.

Um years ago, um there was a national recommendation of one square foot per capita.

Um and then that was back in the 60s years ago.

Um and then some states have set a few recommendations.

Some of them have around 0.66 um square feet per capita.

Um, but Texas does not have any, and I think it's just down to like two states that have recommendations like that.

Um so there's no square footage recommendation because libraries are very specific to their community, and also with the evolution of digital materials and databases, um, we don't need to house as much stuff, but we still need space for community members who are still coming in.

What we're seeing is a big shift in community demand across the country for the whole library industry is people need space, meeting space, study room space, play space for kids, space for programming.

Um, and so that's where the space demand is coming from.

What's like um do you know the average amount of people in the facility per hour?

Yes, I do.

Because I don't, and I know you would.

Here we go.

Yeah.

So South Branch last year we had 159,703 visitors.

That's an average of um 50 people per hour open.

Okay.

Um it is our top circulation location significantly, um, and that's mainly driven by the families with young children.

So the youth area at South Branch, South Branch is our children's library.

Um we had 185,115 physical items checked out at that location.

Um say that number again.

185,115 items checked out by families.

Okay.

And programming, it is also the top location for programming.

We did a hundred or three hundred and one programs at that location.

We are limited because there's only one room, which also during voted voting.

If you want to go see a children's program, it's just out in the open.

Um, so we had 12,041 attendees.

Okay.

Um just out of curiosity, any idea like what um Emily Fowler gets per hour uh on average, or north branch gets per hour?

Just the yeah.

So comparison, when you're looking at visits, South is number two, north is number one.

They're the largest facility, and they're open more hours um during the week.

So um, in terms of one to three, um, north has 71 people per hour on average.

Um, South, 50 people per average, and Fowler, 33 people for per hour.

Okay, yeah, after thank you so much.

I appreciate it.

Um, I think that's all I had on the South Branch.

I had one other question about Active Adult Center.

Um I mean it could it could apply to the South Branch like actual property itself too, but again, it's just like for my education.

Let's um if if you know we have a different adult center, um like I have a uh honestly I I guess I just have a concern that the the current one will turn into City Hall West 2.0 in a sense as far as just like this thing that stays there that we then do you know what I mean?

Uh are are there are there plans for what would go in that place instead?

Would it just be a vacant building?

Um good afternoon, Mayor City Council, um Christine Taylor, assistant city manager.

So the downtown master plan did speak to using this space and did have some design of what it could look like that would require a future master plan for us to look at it, so there's no definite plans, but it did call for the building not being there at some point.

Okay.

In the park.

Okay.

Uh those are all the questions I had for now.

I'm gonna wait to give direction.

Catch Mayor Rumor.

Appreciate it.

Uh, I had a question about the um about number one here on the screen um in terms of financial scenarios.

Um do we have any idea how time intensive that would be to create these scenarios.

I know Seth is pretty good at scenarios.

He made one for me one time.

Yeah, so we've actually already kind of started that process.

So we uh one of my senior project managers, Aaron Skinner has done some extensive research on libraries and active adult centers built in DNW in DFW over the last three to five years.

So we have kind of a cost per square foot of what we think a facility would cost.

Um again, that's that's part of there's a lot of different options.

So ultimately, we would want to provide the most square footage to meet the operational need for both facilities, and it's hard for me to say that we could guarantee saving 10 million dollars off of what you see there, but uh we did meet with both departments and think that there is an opportunity for savings again.

A lot of it would depend on timeline and if the council is okay with moving forward with kind of the uh new site instead of looking to adapt to a current South Branch library site.

I I think to help me with that decision making is I know you know some people have called for keeping it where it is and expanding it, and the issue there, of course, is footprint.

Yep, parking, parking.

I remember when we toured it, um, one of the big complaints is there's not enough parking there at that location where it currently is.

Um Mac Park may not even have the room for parking, because what happens, what I've heard happened at Arlington was they built an uh senior center, and suddenly all the 50-year-olds are very excited to go there because now that's the cool new facility.

Right.

Um and so there was more parking need than they originally anticipated.

Um so there's probably more potential for the parking to be met elsewhere, where I start to have concerns is how far away that becomes from the rest of the city.

So it's not as centralized, so Mac Park at least is more centralized.

So there's a lot of trade-offs I'm I'm trying to work through in my head.

So if we could, as part of the scenarios include kind of generally what Mac, you know, doing them separately, what that looks like, what putting them together looks like, um, so we can kind of have those numbers, trade-offs, all of that to discuss as we're trying to figure this out.

Yeah, so I guess just one little point.

I think if we were to go with the Mac part site, we would be looking at utilizing every bit of the 47.3 million allocated.

Yes.

Um if if we were to go to a joint facility, that's where we get the economies of scale of only having to do one site design, one set of utilities, one set of operation maintenance costs going forward.

Again, same kind of co-location for um employee spaces.

Um so we can look to to see what that would look like, but I would anticipate it'll show using that entire amount of money on Mac Park using the entire amount of money for South Branch Library on the on the South side, and then we could provide potentially one or two scenarios for some square footage options for that.

Yeah, or just the amount of space there would be left over for parking, since I think that sounds like that ends up being a pain point after you you know settle in on it and you build the the facility.

Yeah, so either way, we would have to design the facility to meet the code requirements for parking.

So that would be included in the overall total cost without actually getting into some sort of schematic design or or concept.

Um I think it's safe to assume that we would meet whatever the parking requirement is for space uh to fit on the site.

It just may means we have to potentially go more vertical or or get creative with our design.

Right, it changes the building at that point.

Exactly.

That's all I have for number one.

Thank you.

Okay, okay.

Councilmember Billy Real.

Thank you, Mayor, and I'll be quick because I know we're running over time here.

Uh, real quick on option one.

First off, I'm in favor of seeing the different financial scenarios surrounding this.

Okay.

But was having a co-located site, just drawing my memory, a conversation that was had during the 2023 bond committee process?

That is correct.

In August of 23, that council considered it when they talked about moving South Branch Library to the new location was the synergies of a joint complex.

You better council member Holland, thank you.

Um I'm not a library guy.

I'm not.

Um I heard they had one at North Texas, but I never I never saw it.

Um but but it seems to me, I mean, I've been I've been to South Branch Library.

I mean, we vote every week around here.

And and uh and I've been I I didn't have any problem getting in or out of the South Branch Library, not one time.

Um, and I was just kind of thinking out loud.

Uh what about expanding the South Branch Library onto what will be the vacant station six site?

Yeah, so great point.

We did take a look at some concepts there.

Um, so actually, there is a public access road that comes that entrance goes into the Bent Creek Estates neighborhood.

So expanding to the what would that be the west of that location really doesn't make sense with the existing utilities and back entrance into that neighborhood.

So we actually looked at expanding to the north, which would be into the existing front parking lot to get roughly 8,000 square feet of additional space that would not quite get us to the 40,000 square foot facility.

You're almost looking at the same cost for an older facility.

Again, just modifying all the MEP requirements, looking at the additional uh parking that you would have to build for the parking that you gave up there, as well as the facilities condition assessment identified a lot of major deferred maintenance that needed to take place within five years, and that was done in 23.

So we would almost be looking at a 15 or so million dollar renovation plus another 15 to 20 million dollars to add on 8,000 square feet.

So at that point, you're priced into it's cheaper to buy a new building or build a new building than renovate the existing.

Okay, and if that's true, what about turning the South Branch, the current South Branch Library into the active adult center?

So I think space wise, we would need significantly more.

So just looking at active adult, I think we're gauging somewhere around 80,000 square feet of space needed for them, and then roughly 40,000.

So ultimately, if we could get a hundred and twenty thousand square foot building, that's where we want to be.

Um the current South Branch Library, I think is 201 and change.

21 and change.

So it's it's almost it may be smaller than the current active adult center.

Okay.

And okay, and then hypothetically, what in the world would we do with the 21,000 square foot building?

I'm glad you asked.

So, as part of our insurance uh requirements, we do appraisals on those properties for fire station number six and that facility.

Right now they're worth about 4.5 million.

So one thing that we could look at is once construction is complete, potentially selling those off as um inventory uh or real estate extra inventory and potentially use that to pay off some of the the debt.

Do you think there's a market for for uh for a used library?

I think there's a market for that location, yes, sir.

Okay.

Okay, thank you.

You bet yes, council member Chester.

Question is for number two.

So okay.

Um any other direction for question number one.

Yes, Councilmember Ferry.

Thank you.

Um I heard square footage, and I wanted to make sure I understood.

My understanding was it was 40,000 square feet active adult center, 40,000 square feet library, if separate.

Is that correct in the bond election?

No, sir.

So we are looking at, let me go back.

So we are looking at roughly 40,000 square feet for the South Branch Library for the active adult.

Our goal would be somewhere near 80,000 square feet, depending upon cost.

Again, some of the ways that you can get within budget is you cut square footage.

That's the that's the simplest way.

The active adult we're anticipating being a little bit easier construction because it's a lot of open spaces that's available for programming.

So that drives our cost per square foot down.

That's why we're looking at potentially being double around for the same cost as the South Branch Library piece.

Okay.

Um thank you for that clarification.

Yes, sir.

I also would love to see a breakdown of like the Mac Park option, because I also have gotten a lot of emails from constituents worried about decentralizing where the active adult center is currently and being so far away in D4.

Um that is a concern that I hold.

Um I also um I'm I appreciate um councilmember Holland's questions about what would the what the would the building then be used for?

Um and hear the need for space and expansion and uh would love to have more meeting spaces and meeting rooms and program rooms.

Um that is one of my favorite things about the North Branch Library, which is by my home.

I rent out that front space all of the time.

Um and that is a generation of revenue source as well.

Uh so I would love to see what that could look like on a standalone building to give them the space they need.

Um that addresses I think the first question.

Second question?

Could we go back to the recommendation slide, please?

Can we go back to your recommendation slide, please?

My apologies.

No, you're good.

You were helping me with the other way, but the other question.

Um, yeah.

So the potential savings across collating, okay.

Yeah.

Um and then I'll wait to give on two.

I'll let anybody else speak to one.

That's all I have right now.

Thank you.

So just so I'm clear, uh, you're looking at so the current South Branch library is 21,000 square feet approximately.

Correct.

Fire stations sitting on what's the acreage of those two parcels, just the raw land acres, do you know?

Oh gosh, I don't know off the top of the head.

That's fine.

So when I do a calculation of 40,000 square feet for 50 50 million dollars, that's 12, that's about 1100 a square foot.

Am I doing the math wrong on that?

No, you're not.

So part of that is goes into the land costs.

So we did take out 2.5 million to purchase the land off of Ryan Road that is coming off the bond amount.

Um, and again, we we put together some of these estimates based off of the idea that they're going to be standalone.

So all of the site costs, all of the utility costs, design costs, pieces going into that cost per square foot, we may construct for $700 per square foot, but once you add in all those soft costs and the land costs, we're getting to that total amount.

Sure.

So and then your your thought was um if you expanded or renovated the 21,000 square foot or expanded it, that eight thousand square feet would be the same.

I mean I'm just I'm struggling with the cost, quite frankly.

And and um uh I mean, if we need a a new library or we need a bigger library with expanded meeting space and all those kinds of things, totally get it.

Don't have any issue with that.

I just want to make sure I have a clear understanding of you know the the different options, and I guess this goes to dist to uh number one, um interested in the scenarios of co-locating.

But if you're talking a hundred and twenty thousand square foot building now, if you do a co-location, even though you're gonna maybe have some synergies, you're still looking at you still have the same issue with utilities.

Now you're not doing it for the Mac Park side if if we're talking about that one hypothetically.

Right.

So I I'm just really wanting to make sure that I understand are we getting the best uh use and efficiency of our dollars?

And when I look at a 1,100 a square foot, I mean I know what it costs to build things to some degree, but you know, utility costs and all that.

I've been watching Bonnie Bray go in for a couple of years, so I certainly I've gotten a new appreciation for roads and utilities, trust me.

Uh so I you know, I I'm okay with looking at the financial scenarios regarding the potential savings.

I I think if we didn't do that, we wouldn't really be doing our job to see hey, which one is the more effective.

Problem you're gonna have there is with the co-location of the actual location.

I don't know if the price is so much it it's the location of it having to be out in the southern part of town.

Right.

Um and I I guess if it's if it takes too much time, I'm not worried about it.

I really would like to understand, you know, if we've got deferred maintenance uh either coming up or we've got deferred maintenance currently on the library.

Uh deferred means we probably should have done it at some point.

We we're we're doing it, we we haven't done it.

I I'd like to know a little bit more about that.

I just want to make sure I'm understanding to where we're making the best decision because we're talking about a hundred million dollars here, yeah, which is over half of what we've got left.

And um I just want to be prudent about that.

So I'm okay with one, two.

Uh I don't know about extending the bond program to so what you're saying is hey, if we extended it out, we won't need this this one cent tax increase.

Is that what you're asking us for in this direction?

Okay.

Yeah, the the idea there is just that if the program were to be extended to you know, seven, eight, you know, nine years, and we took the remaining projects kind of one at a time.

Okay, that it would help to relieve some pressure on the INS.

Okay.

All right, Councilmember Jester.

Um is there a reason why uh not included was um, you know, I I think the parties for me for the city seem to be the streets and sidewalks, transportation and the potential for flooding and drainage.

Why was that not included in one of the suggestions?

Yeah, so the are those and the reason is because the projects are already in progress, and so stopping them and then restarting them would be even more expensive.

Okay, I didn't know if it was in addition to as opposed to stopping and starting additional projects.

No.

Um say that again in addition to the so as far as the amount that the uh bond committee allocated, are we restricted to the mingo road, roodell area as far as any of these bond dollars being spent on streets and sidewalks?

So the proposition itself allows for street improvements unless those specific uh named streets are in the proposition, which I I don't recall that they were.

So it would be possible to allocate bond proceeds to a different project if that's if that's what you're doing.

That's my question.

Yes.

Yeah, the um, and let me just back up real quick here.

Just as far as priorities as far as issuing any further debt at this point in time in our situation, um that would be something more in line with what I think is is timely as far as investing now versus giving us a break of a year or two, which I'm also on board with.

Go ahead.

Sorry.

Yep.

I I just wanted to refer back to the to the bond issuance timeline.

And what you'll see is in proposition A and B, um those the majority of the bonds have already been issued or are in are in the process of being issued, and so the remaining amount, the 20 million for streets and the 16.9 million for drainage, those are those are active units.

So we just have zero left project in that bucket.

Okay.

Right.

So I think at this point, um I mean I reserve the right to change my opinion after hearing arguments and facts.

However, uh, I tend to think let's give us a break on issuing any new debt considering uh how much help it would be to pay some of that down.

Okay.

Uh so make sure I understand.

So when you say so, on it on uh question two, you're saying to go ahead and wait to help reduce the impact of the tax rate currently.

Is that is that correct?

Okay.

Uh and I think it says if if so, is there a prioritization of the project?

In other words, do you uh when you look up there is because I think you said take them almost either one at a time or something like that, or and so any thoughts on that?

Uh certainly uh thank you for the follow-up question and reminding me of the other part of the question that's being asked.

Um I I would say the keeping in mind that I don't think prices are going to go down as far as uh real commercial rural property area as well as uh construction costs and supplies.

I think it would be in our best interest probably to go in about reverse order.

So the South Branch Library, in my mind being number one, the active adult center number two, affordable housing three, waterworks park four, and park trails five as something that we can work on in the future and is not something that maybe the price is not gonna go up as much if we're looking at really trying to be careful with our dollars uh this year.

Thank you for uh the question.

Sure, you bet council member at Rumore.

Thank you.

Um my priorities on these are I'm I'm definitely open to scenarios to try to um buffer ourselves a little bit from the the cost or our INS rate going up, that pressure that we're having.

Um I think I would prioritize a little bit differently, and it's kind of a mix of um how the the bond committee interacted with these because I was on that 2023 bond committee.

Um so it's sort of a mix of of need and sort of uh cost and what the bond committee was saying and how these performed um with the voters.

Um so affordable housing, that is still a need, especially for the deeply affordable housing.

So for me, that's number one.

Uh that's a critical need.

Um parks trails was did pretty well on the rankings as well.

It's low cost, um, but I would only prioritize that as number two if these are linear trails that have sort of a transportation component.

In other words, it's giving people another way to get around which can help them with household costs.

Um for me, number three and four would be the Active Adult Center and South Branch Library because of their costs, and we still have some decisions to make with those.

Um, and then last would be Waterworks Part because that one barely even got through the bond committee.

It actually failed and then passed, and that's why it says 15 million and one on that number, if anybody's wondering.

Um so be just because of how that one uh went through the bond committee, I would do waterworks at the bottom in the priorities.

But I'm I'm open to sort of extending some of these.

Thank you.

Uh C.

Uh Councilmember Holland and Mayor Pro Tim.

Thank you.

Um I'm in favor of anything that that is potential savings associated.

So I'm certainly in favor of that.

Uh as far as number two, uh yeah, I I like I like the idea of that, and I've always I've always subscribed to the theory of put the big rocks in first.

So uh as as council member Jester said, I've reverse order.

Start at the start at the big rock and go down.

Thank you.

Mayor Pro Tim.

Yeah, to give direction on on number one.

Uh I'm interested in in preparing that.

Um I think we should look at it.

Uh I'm interested as well number two preparing scenarios to extend the bond program.

Uh is there a prioritization of projects?

Um I would say uh affordable housing first, waterworks park last.

You can put off the other three right however you want to in the middle.

Okay.

That's direction.

Uh council member Villarreal.

Thank you, Mayor.

Uh, yes, I'm in favor of number one of us bringing back uh some of those potential scenarios.

Uh for number two, I'm in favor of affordable housing, then South Branch Library and the Active Adult Center, uh, then parks, trails, and water work park in that order.

Thank you.

Councilmember Ferry.

Thank you.

Um just a quick fact checking for myself.

Um, in the presentation in props C it had talked about um there are already being projects completed.

It shows that like I think 10.5 million was already allocated over the last two cycles, um, with like a remaining of over 17 million left for parks specifically.

And I know that there's a grant that's been awarded and tied to the inclusive playground.

Um I'm wondering in terms of what's remaining to give to parks, how much of that is left to allocate toward.

I'm guessing it's just the difference of 12 million, because 12 million is for the water park.

Is that accurate?

So for yeah, for for the park system, there's 23 million remaining.

Okay.

And of the 23 million, 12 million is for the waterworks park and 11 million is for trails.

Okay, heard.

Thank you for that clarification.

Um I also would like to see scenarios.

Um, I think my worry thought is when we're talking about ROI and the constraints that we're seeing when we issue this amount of money all at one time, what that can do to people's rates.

And I'm worried that we're gonna cause folks to have electricity rates that are exponentially more than they already are, and that is a worry thought I hold.

And if that doesn't sound valid, please be like, George, that's actually not how that works at all.

But I'm pretty sure that's my that's what I understand when giving like the CNOs when you disperse them, right?

Like when we're talking about ROI and it being constrained, that's like hundreds of millions of dollars that we're needing to be weary of coming back, correct?

So the it yeah, the ROI being on that ONM side of the tax rate.

Right.

Um is going to be a uh current year or next, when I say current year, next year budget consideration in that operating budget.

We wanted to bring this forward because this impacts the INS and debt side of it, and combined will give that total tax rate.

So you're right that there are budget constraints on the OM side.

We do have to pass a balanced budget regardless.

So we're going to get to that point at some point.

Um but um, but yes, I mean you know, we felt like it was important based on the 23 forecast, where we're at in 2026 to bring this forward because we are seeing pressure on on rates across the board.

Um this being specific to the INS, but you're right on the OM side, there is pressure as well.

Um Yeah, and the ONM has the constraint, right?

We're talking about that 3.5% cap.

Yes.

Without voter approval.

That's correct.

Okay, thank you.

I appreciate that.

So then yeah, I'd like to see what um scenarios could exist in terms of prioritization.

I would definitely say affordable housing.

Um, South Branch Library, Waterworks Park, Active Adult Center.

Thank you.

Okay, so let's see if we can't coalesce the direction.

Uh in uh issue number one.

It seems like we had four that said, hey, we'd like to see the scenarios with co-location for the my only thought about that is that seems to kind of be not in opposite to two, but so we're saying me personally, I I wouldn't want you to go spend a lot of time creating these scenarios if we're gonna put all this off, which we're gonna have to have another conversation about the priorities because we didn't get consensus on any particular order, which is okay.

We've got we've got time to do that.

Uh so I would probably say let's reverse those one and two.

Two says we're going to keep it the way it is in order to not have to maybe raise the uh the tax rate for the debt service by a cent.

And I think we can then once we get through this budget cycle and everything sort of clears out, flushes out, we know exactly what we're dealing with.

We can come back and address the priority of the bond issuances.

And I think at that time we can have a greater in-depth discussion about is there going to be a synergy of savings?

Because the location issue is one gonna be the major issue.

I don't know if the cost, I mean, yes, we we want to be concerned about costs, but if people don't want it out there, but we're spending all this, so I think we've got time for the prioritization, but I do hear very clearly we want to wait to to relieve the pressure from the debt service rate so that we may not have to add that cent.

Is that is that clear?

I mean, is that direction because that's one one thing I want to make sure is when y'all walk away from the the podium there that you really understand what we're asking for because if if we if you don't, that means we probably don't.

So what we can do is we can bring back some scenarios for extending the bond program and what that would look like.

Okay, and then once council gives us direction on the extension, then we can look at the different scenarios for the library and active adult center.

Okay.

So when you say bring back a scenario for the extension, you're talking about not just in this tax year, but in future.

Okay, gotcha.

Yes.

All right.

Okay.

That everybody clear on on that?

Good.

Yeah.

I just wanted to make one sure.

One uh point of clarification.

So the uh the implication of uh number two and extending uh the program uh and the savings associated with with potentially co-locating, that will impact uh the fiscal year 28 and beyond rates.

So the one cent increase for next fiscal year is um is really driven by the bond issuance that we have in the current year.

Sure.

And so I just wanted to make that that clarification that but we are anticipating as as you see here, uh, future rate increases associated with the program.

So um just wanted to note that.

Well, and and uh and I pre what what I I think what I'm hearing you say is that we can push not push move this out, delay it a little bit to save the cent here, but if we delay it, it may put pressure on future years for those rates, and we might have to just have this reoccurring discussion.

Uh but I also think would we have the flexibility if things turn out a little bit better than what we anticipate?

Let's say the A B rate comes in at three percent.

We we forecasted zero.

So that would be a huge difference, and we could maybe if we had to come back and you know, change course in midstream.

I mean, this is just sort of at this stage of the budget discussion.

Is that right?

Okay.

All right, I appreciate that.

Thank you.

Thank you.

You bet.

All right.

Uh Mayor Proteil, I'm gonna call this order and then I'm gonna take a real quick break.

So you'll if there's any questions or anything, you'll you'll be handling this next agenda.

I it won't be long.

Uh do y'all want to take a break?

Y'all want to take a break?

Let's take a break.

We've been going at it for uh almost two and uh two and a half hours.

Yeah, let's take a about a five minute break.

Welcome back to this meeting of the Denton City Council.

It is 345.

We are on agenda item in our work session, agenda item 3D, uh ID 26-1040.

Uh report receive report hold discussion, give staff direction regarding the appointment and employment of the city manager, including discussion of recruitment strategy, desired candidate profile, and natural search process.

Okay, thank you.

Good afternoon, Mayor and Council, Megan Gilbreath, Director of Human Resources.

Um, today we will discuss how you all would like to proceed with the city manager recruitment.

Um I'll be briefly review where we are, outline the recruitment process, and then present options available for council's consideration.

Council previously directed staff to move forward with an interim appointment and begin the recruitment process.

Cassie Ogden was appointed the interim city manager as of April 1st.

Um staff selected strategic government resources or SGR as the executive search firm, and a contract was executed in May.

The recruitment was paused pending the outcome of the May election to allow the newly seated council the opportunity to provide direction before moving forward.

If council decides to proceed, the recruitment is expected to take approximately four months.

The process includes stakeholder engagement, a national recruitment, candidate screening, committee recommendations, finalist interviews, and ultimately contract negotiations.

While SGR would manage the process, council remains involved at each major decision point.

And additionally, this process can be amended to accommodate council's preferred direction.

So at this point, I'm seeking council's direction.

The options are to proceed with the executive recruitment, pause the process while additional priorities are discussed, or provide alternative direction, such as an in-house recruitment or a direct appointment.

And I'm happy to answer any questions or receive counsel's direction on the recruitment.

Appreciate it.

I um can we go back to the options, please?

Um I'd like to do option one just for the sake of transparency, um, so that every you know whoever gets the job at the end did go through the process, they were the best candidate, um, whether that's an internal person or an external person.

Um so I do want that.

Um and as part of the um interview and and assessment of all the candidates, regardless of what the body decides today on the options.

I'd like to have the directors participate in the candidate selection or in the discussions and interviews or something along those lines.

I really want to hear from directors kind of their assessment of the candidates.

We can build that in.

Thank you.

Uh I'd like to proceed with option three.

Um I think we have lots of talent right here.

I think we have people that know the lay of the land that are ready to go to work that have been working.

Uh I I think I think that's the that's the best thing.

Just give just get take take advantage of of uh of talent that's already here.

Okay.

And can I ask, is that for in-house or direct appointment?

Direct appointment.

Okay.

Okay.

Who else?

Yes, Councilmember Perry.

Thank you.

Um, and while I I don't disagree with council member Holland at all that we don't that we do indeed have great talent here, I still want to echo councilwoman rumors uh option one.

Um I think one thing we experienced on this last six months of campaigning is the want from the public to have more of that transparent process, especially when we're talking about leadership positions such as the city manager.

Um in the previous slide on the recruitment process, is there for like the finalists an opportunity for the public to ask questions in like a town hall setting like we've done in the past?

Absolutely, yes.

Um it actually goes into there's a phase specific to that where we would do um it's a stakeholder engagement phase.

Okay, I didn't know that's so yeah, we could set those community discussions.

Excellent.

Then yes, I would also like to see option one, please.

Thank you so much.

Who else?

Mayor Prunted.

Yeah.

Eager to hear everyone else's opinion uh before I give direction, but I I do have some questions.

Um if I can remember them.

I hate I hate when that happens.

And I'm uh so I I guess as far as the recruitment process goes, um just out of curiosity, like well logistically, like when we get applications in, does council have an opportunity to review each application?

So you wouldn't review each application.

That's what we would defer to the executive firm.

Um they would actually kind of narrow it down and then bring you a pool of semifinalists, and then from there we would kind of skinny it down again to your finalist as we go through.

So there's a semifinalist pool, then we take it back and we would go through um a questionnaire, um, there's a video interview phase, and then it goes to a finalist phase.

So there's multiple multiple layers to that, um, but you wouldn't want to see the entire applicant pool.

They're gonna narrow it down and bring you um the the best qualified candidates.

Okay, and then just out of curiosity, um under option three, when you talk about in-house recruitment, is that stating that that as an alternative decision that in-house, like we only interview folks at our city of Denton employees.

Okay, so it's not us doing our own recruitment nationwide.

You I mean, I guess you could interpret it both ways.

We could handle it internally, so which I wouldn't recommend us doing that, um, or that you could also open it up internally as well.

I mean, you could take that either way.

Just so I know why, um, out of curiosity, uh, why do you not recommend us us doing it ourselves?

Us handling it internally.

I think it's a conflict of interest.

We report up to the city manager ultimately.

Makes sense.

Um then you know, as far as option one is concerned, it's a it's a question I have, and I don't know if it can be answered in open session.

So I'll ask the city attorney.

I mean, as far as like when the process were to start, would be in some ways based off of not necessarily based on the current contract.

You can start it at any time.

Can I ask?

Can I I don't know if I can ask, is there a end date on on the current contract?

Certainly, you can ask that.

Um let me give you a minute, I'll find it for you.

Okay.

Well, it's in April of 27 is when it hurts the current contract would end if we're I've read multiple things, so I want to clarify that that's accurate.

Okay.

Yeah.

Yeah, I think when I read it last night, it says that the interim city manager can serve until a recruitment process and someone's selected, and it's up to a maximum of 12 months.

So at any point in between, I think is not an it's not a definitive end date.

Yeah.

Okay.

I just wanted to make sure we're all on the same page.

So those are my questions for now.

Thank you.

Okay.

Uh yes, Councilmember Villarreal.

Thank you, Mayor.

So if we did pursue option one, would we be able to, I guess, require the outside firm to include multiple in-house cli um options?

So make sure they include some folks who are currently serving the city of Denton.

Sure, we can we would want to provide them the applicants that we have in-house.

Now, I guess you could tell them who you want to bring forward ultimately.

It's up to you all who you bring forward as semifinalists and finalists.

Um, but we also would want to defer to their expertise when we're making those selections.

Gotcha.

Thank you.

So, council member, is that an is that an option one?

My direction is I I'm in favor of uh option three direct appointment without executive recruitment.

Okay, alongside councilman Hall.

Okay.

All right.

Um who else I'm trying to see we got two, three.

Okay, so you you still haven't given direction, right?

That's okay.

I'm not pressured, I'm just saying, I'm just trying to understand.

So I have a question on option one.

And I'm just gonna share what my my thoughts are about this.

Because I I think I'm in favor of a recruitment process primarily because I think it provides just you know, a level of not transparency, but you know, you you get it, and plus it nothing prevents anyone that works for the city to apply.

And if they make it through the the finalists, that's great.

If not, the city council could still say we want okay.

Um I guess my thought is when you say it's only four months, that it could that the time could only take four months, that puts us right at the end of the budget pro budget process, October and November.

And uh I just I I struggle with um someone who's you know been appointed by the last council in March.

Uh I I guess I'm saying I'm all for option one, but I'd I'd like to kind of give that some time to get some other things under the belt.

We set the timeline.

So just the preliminary timeline says this could take four months.

We could do it in as fast as four months.

Ultimately, okay.

We will work together and we will put the dates to what you guys are comfortable with them being.

All right.

I appreciate that.

That's that's that's good uh information.

I I mean I've struggled with this a lot.

Um I've struggled with this a lot.

Um and I'll explain why.

Um one hand, the community wants transparency, and I think that that is a good thing.

I I think that the way that that's perceived is having a process that everyone can see.

Um also sitting in this seat, you get a different experience as well.

Um, and so it's it's two conflicting factors for me that I I've really had to wrestle with because without naming names, uh as far as like current staff goes, I I I really admire the staff that we have right now.

Um it's not just city management.

We have people who have like uh uh interim chief solace.

Like this is the only department where he served, you know, as a police department, like that's incredible.

Uh like we are lucky to have people like that in our community that that want to stay here through thick and thin.

Uh we have an interim city manager who has lived here her whole life.

Um I want a city manager that knows the difference and uh between the three Kroger's that we have.

You know, like that's that's a that's that's important.

Um because we our last three city managers really weren't from here.

Um, you know, George Campbell and then Todd Heilman, and I understand uh Sarah as well.

Like I understand she was an ACM, but she came from Austin.

And so I uh uh you used this um phrase last time the council spoke because I was sitting behind y'all uh listening was you wanted someone that knew where the bodies were buried.

Um and like I think that's a good metaphor of like I want someone that that knows it all.

I want someone that is invested in our community.

I really don't know, Chief.

So uh and so and so I think that is very important because we have not um done that uh in a bit, and and I'd like to see that on the other, and and so like my bias is very clear about what I want, um, without explicitly saying it at the same time uh to everyone else's point who's in support of option one.

I don't know if you want to call it an insurance policy or double checking or doing your homework or making sure um I I don't find it unreasonable to expand that search nationwide.

Well one question I have with that though is like I understand it's not a lot of money.

Um is there a possibility that we can negotiate that contract that if we stayed with someone in-house, you know, you get a 20% discount.

Like is that a thing?

No, the contract has already been executed.

I see.

Okay.

All right.

Uh those are my thoughts for now.

Okay.

Yes, Councilmember Chester.

Um first uh uh I apologize, but I'm gonna take a point of privilege.

Um my phone has been blowing up, and I think that's why uh Mr.

Hutzpa's phone has been blowing up, but um, I'm sorry, and I'm distracted.

Uh wanted to let everyone know that uh John Baines has passed away.

And I'm I'm sorry, I just uh but I just wanted to let everyone know, and um uh a longtime friend of probably many people in this room and uh a public servant and all around great person.

But anyways, I uh so sorry, I just wanted to go ahead and let everyone uh know that and um yeah.

Um I think that uh even though I think we probably have uh in our the burden our hand, um I think that it's in the best interest of the city to proceed with option one.

I think that going through the testing and showing everyone uh who is receiving this position um is truly the best person for the job.

I mean, uh I'd I'd feel very comfortable with option three.

However, what I think is in the best interest of our city is option one, so that's uh that's the direction I would give.

And I'm also in favor of um uh what our mayor discussed as far as not getting into the thick of it during the budget uh when we've got a lot of other things going on.

I think we have time and we've got kind of what we've called kind of a working interview, so I'm also in favor of maybe not kicking it off full steam until after that time, and I I think that the potential candidate in option three would be all right with that as well uh from the discussions that uh the prior council had with her in closed session.

Uh so that's my direction.

Thank you very much.

And sorry for the sidebar.

Um I appreciate that.

Thank you.

I do.

Our thoughts and prayers are with the family.

Thank you so much for sharing that.

Thank you.

Well, uh, I'm gonna echo uh council member Jester's comments.

Um I think uh for me, everybody knows um one of my mantras is I trust the process.

And um that's what I'm I'm gonna go with here.

Understanding that we very well could end up in the same place with option one and option three.

Uh but that we we've gone through the process.

My concern with that is that we make sure that we don't do it in a way that really provides undue burden and pressure on city staff during one of the most critical times that this council has to deliberate.

And so I'm gonna go ahead and go with option one, and no way is that saying anything about any particular individual, it's just simply saying a trusted process uh in the end.

Now my understanding is that that we have four council members who have indicated option one, which means that we we have direction.

Uh, I think council member Stevens, you're a mayor pro Dim, you're the only one that hasn't said anything.

You don't have to say anything.

We've we've got direction.

Yes.

Yes.

I apologize.

Uh I I uh uh it is uh option one then.

Um yeah, uh I must not have made that clear.

Um it's option one.

I I did have some questions on the timeline.

Sure.

Um I mean, are we gonna come back and discuss that or are we good discussing today as far as like you I hear your point as far as you don't want finalists in the middle of a budget session?

That would be weird.

Um but like could we talk about or is it another time?

When can we start collecting applications?

So that's usually a are you so that's usually a part of the first phase.

So when we do stakeholder interviews, they're gonna have conversations with you all so we can develop the candidate profile.

That information collecting phase takes a little bit of time, and so once we have all of that, then we can take it into consideration and and develop out the timeline from there.

So you all will participate in that as a part of the first phase.

So really we just need to determine when we want to start, um, and then we can start having those conversations to build out the profile in the timeline.

Okay.

Okay.

I mean, can we start that part now?

It's up to you guys.

I mean, absolutely if you want to, but it's there's still a lot to that.

I mean, it's still meetings and conversations.

So if you're not wanting to put that on top of budget stuff, I I would I wouldn't start it now.

Okay.

Okay.

Yeah.

Yes.

I think for me, I personally, what I'm to understand is it's not till the semifinalist round that like we're really getting into the thick of it.

Does that sound fair to say?

For the most part, yes.

So I would think that it might be, in my opinion, manageable to start the first part of the process and then have that longer six-plus month timeline.

But I also defer to my colleagues if they think that we need to wait longer to even start part one, because I understand and agree that we don't want in the middle of October or November to be interviewing some of your finalists.

We could even, you know, have that conversation or have those preliminary discussions maybe in the August time frame.

They're gonna go away for a little bit once they get that information from us, they're gonna go through and find it or find our candidates to bring back.

So there is a period of time where we won't have that much interaction with them.

I will.

You guys won't at that point.

Yes, customer Jester.

I'll I'll just say just and this is just selfishly.

Um I hope there'll be some grace in kicking it off because I know we've got two council meetings in August, and then I'm gonna be out of town for a little bit, and so hopefully there'll be some it won't be a strict timeline coming up this summer.

Thank you.

Yeah.

So my understanding is we want to kinda start forward, but maybe in August to really start putting the preliminary things together, and that buys us some time.

Is that is that was that my understanding from what you said?

Is that or would you want something different?

Sorry.

Um, it's my understanding from the process that I've been through with executive recruitment with other boards.

I've been on that.

I mean, there may be a meeting up front with the uh vendor, uh, the group that we have hired as far as uh considering what it is we're looking for, but other than that, like you said, they're gonna go away for a while.

So a meeting is one thing if we're gonna start having multiple meetings during the week.

That's what I'm saying might be a problem for summer time and other people's plans as well.

So we will ultimately need to they'll they'll want to meet with each of you and sit down and see what it is that you want in the next city manager, they'll want so we can develop that profile together.

Um so we'll do that.

Um that's gonna take a little bit of time working with each of your individual schedules as well as any other stakeholders that you all identify.

You've said you want the directors to participate.

So we would want some information from the directors on what they want to see in the next city manager.

I mean, depending on how far of a scope, that could take us some time to get all of those individuals scheduled and for the um executive firm to have those conversations.

Um so if we started that in August, I mean it could take them you know a few weeks to do that, or whenever you guys are ready.

Okay, September.

All right.

That everybody okay?

Yes, Councilman Rumor.

Um, just to make everybody feel, I guess, a little more secure about where everybody is.

I'm I'm flexible on timing.

Um I trust our our agenda committee um uh you know on timing of of when we could start.

I'm open to the talking to the um the firm.

Um I'm okay with delaying that a little bit if it looks like there's higher priorities with budget and or something like that.

So I'm I'm flexible on timeline.

Great.

All right.

It seems like uh we have direction.

All right, fantastic.

All right.

Uh still here.

Absolutely.

All right.

Uh we'll go ahead and call call the next one.

Uh agenda item three.

Still me.

Three e um ID 26-1041, receive report hold discussion, give staff direction uh regarding the appointment and appointment of the municipal judge, including discussion on recruitment strategy, desired candidate profile, and national search process.

Okay.

So the second item we have today is the municipal judge recruitment.

Um we are going to discuss how you all would like to proceed with that process.

So Judge Atkinson's last day was May 17th.

Um Judge Cynthia Burkett has been server excuse me, serving as the interim municipal judge since that time.

Um discussions have been postponed following the election to allow the newly seated council to provide their direction.

The anticipated recruitment timeline is approximately three to five months, um, depending on your preferred process.

At this time, no executive search firm has been selected.

Um if council wishes to pursue a national search, I will return with recruitment options and associated cost.

Um, a full recruitment process would require internal staff time from HR, legal, MARCOM, as well as the city manager's office.

Today I'm requesting council's direction on whether to proceed with a national recruitment pause the process or pursue an alternative approach, such as an in-house recruitment or a direct appointment.

And I'm happy to answer any questions.

Questions, direction.

Yes, Mayor Mayor Pro Dem.

Uh a question and then direction.

Um I'm gonna sound like a cheapskate throughout all these questions, but like uh can you use the same firm?

Of course.

Okay.

We um go ahead.

Well, you can, but we would put it through our procurement process and at least solicit and look at what type of proposals come back.

And the cost do vary, the city manager one from our perspective is pretty low.

Yeah, um, probably the judge and some of our other director recruitments have been.

That one's gonna be a little bit higher because of the niche.

Um, it it could end up costing us a percentage of salary, but to Christine's point, it would go through the formal process, but we could end up selecting the same firm.

Okay.

Um yeah, uh option one.

Okay.

Councilmember Jester.

Thank you.

Uh for me, this is a different, this is a different position in a different situation.

Um I would like to go with option three uh in the assistance.

We have someone that had been doing the job uh filling in as typically the municipal judge of those that don't know uh because of the sometimes 247 nature of uh what they do, we have several attorneys that have also been uh acting as municipal judge part-time for a number of years.

So I I think we have many excellent candidates in-house, and as far as uh Cynthia Burkett, she is who uh our previous municipal judge that I believe, you know, the last counsel was very happy with the work and innovations, etc.

Uh that were performed there.

Uh his recommendation was uh Cynthia Burkett.

I think she's currently in the position, is doing quite well.

Um I I she's got a good reputation.

She is not a personal uh you know, good friend, she's an acquaintance, but I know her reputation in the legal community.

I've seen her at work.

Um I think she's very unbiased, very even keel.

Uh and so in this instance, I I think we I would like to see the direct appointment without executive recruitment.

I I just don't think it's necessary with the uh track record of the multiple in-house candidates that we would have.

And I personally think uh Cynthia Burkett's doing a great job, and that would be in the best interest of the city.

Thank you.

Councilmember Villarreal, then council member Holland.

Thank you, Mayor.

And I think Councilman Jester just answered in one of my questions, but Judge Burkett is interested in pursuing the full-time position, right?

She is.

Okay.

I'm in favor of option three direct appointment without executive recruitment.

Uh Councilmember Hall.

My first speeding ticket was uh the the municipal judge at that time was Tom Jester.

And we met and we met in the basement at what what was at that time Denton Savings Association, and he found me guilty, and I probably was, but still a little little little steamed about that.

Um the the wonderful advantage that we've had with I don't know Judge Burquette.

I wouldn't know if she walked in.

Uh but the wonderful advantage that we've had with her is that we've had a we've had a test drive with her for some time and an opportunity to see how she works.

Uh Judge Atkinson liked her.

Um I think we've got a great opportunity.

Let's get to work.

But option three, direct appointment.

Okay.

Anyone else?

Yes.

I can concur with that option three direct appointment.

Option three.

All right.

It seems like uh we have I'll just give my feedback.

I I would still probably go with option one for the very same reasons that I spoke of before, and that is the outcome could still be the same.

Uh, but it we just go through that process.

And then, of course, if there's any um, you know, we'll certainly have an opportunity to talk with whoever.

I I so let me make sure I'm understand what everybody's saying.

For option three, we're not saying we've already nobody's saying anybody's decided on who we're saying we're going to talk about people.

Are we gonna are we gonna open this up to different people in-house or to different people outside?

Or I mean how does this application process gonna go?

I mean, for this.

You if we're doing a direct appointment, then you all would make a decision and on on who it is.

Okay.

Without, I mean, there wouldn't be an application, it would be you all have you know decided as a body who you would like to appoint for the role.

Right.

Council member rumor.

I'd like to be able to see some options before we make this election.

Um I'm up good with option three with some options effectively.

Yeah, uh council member gester.

Um I would recommend uh the similar process to the last council we're in.

We received the resumes of all of the associate, associate uh municipal judges that have been serving with us.

Let's find out which one of uh I think there may be more than one that's interested.

I'm not sure, but um, and then of course, have this council have an opportunity to speak with uh the candidate or candidates, even though I would be fine with uh moving forward.

Not everyone, of course, has had a chance to look at all the resumes and speak to the candidates.

So yeah, that's what I would recommend.

Council Member Ferry, did you have did I thought I saw your yes?

I was just wanting to seek clarification on where the option three folk were because I heard direct appointment without executive recruitment, which is why I was also a little confused.

But um, I'm hearing more in-house recruitment for option three, is what uh folks are saying.

I still agree that option one was my is my primary, is where I'm heading, but um I think in-house recruitment is a great opportunity and tool for this specific type of appointment as well.

So I think that would be the difference is is in-house versus direct.

I mean, direct means you guys just want to pick somebody in-house would be that we would evaluate resumes and look at our associate judges or whoever may be interested.

Okay, so I want to make sure now that we we get some clarification on the clarification on the direction.

So what based upon what you just said, I think council member Jester, what you shared.

I it sounds like um uh the in-house recruitment is what I'm hearing, or is it I guess I need everybody to restate their direction those with clarification on in-house recruitment, or you're just saying we're gonna we're gonna appoint a person instead of soliciting resumes like you had suggested and so forth.

So I'm gonna just go around the horn.

Uh council member rumor.

Option three in house recruitment.

Okay.

Option three in-house recruitment.

Okay, I think um, I would go with uh direct appointment.

Okay, then I think I know where we're headed.

Councilmare Ferry.

Option one direct appointment.

I'm option one, but we need to hit four.

Um to have some direction.

Right.

So I'm gonna pick the second best.

I want to be on the record.

I'm for option one.

Um, because I but I'm gonna go with option three in-house recruitment so that we can get four.

Yes, and I I think I'll I'll go with option three in-house recruitment.

That seems to be I believe what the direction is at this time.

I'm good.

Yep.

Okay, we can okay.

Thank you.

Is that it?

Yeah, I'm still here for closed.

So okay.

Uh all right.

So then we have uh agenda item three F, which is ID 26-0626.

Oh, yeah, we need to set the room.

What's that?

I only have one more open.

You do have one more.

Oh, yeah.

F okay.

Okay.

Uh receive report hold discussion, give staff direction on pending city council requests for city council member disclosure private meetings with developer structural changes to section two uh dash 279, the city ethics ordinance and temporary moratorium on new permit applications for multi-family.

And we'll just take those in order once we get to that point.

Who keeps the time?

Okay.

Okay, good afternoon, Mayor and Council.

Christy Fogle, Chief of Staff and Interim, City Secretary, here to present the two-minute pitch items.

Um as a reminder, and for those new on the council, um, the we can have up to seven two-minute pitches on each agenda, one per council member.

Staff will introduce each request, and then the requesting council member will have up to two minutes to describe and justify their request.

Remaining council members will have up to one minute to provide feedback and indicate their support for the use of city staff time to respond to the request.

And a consensus of six is required for a resolution or ordinance to be placed on a future city council agenda prior to a work session.

You can also the agenda committee will assist in scheduling items receiving consensus based upon priority offered by council members, work session availability and readiness of the item.

And then you can also indicate high, moderate, or low priority uh ranking whenever you're providing your feedback.

And with that, we'll um turn it over to the mayor to facilitate the two-minute pitch process.

The first one is city council member disclosure of private meetings with developers by Mayor Pro Tim Stevens.

Yes.

Uh it was my understanding that four was necessary to proceed.

What was correct?

Yes.

Yes.

So four to move forward, six if it was requested to go straight to a resolution or ordinance.

Thank you.

Thank you.

To skip all of the work session agenda committee.

Yes.

Okay.

Just as a reminder, and we all are aware of this, but these two minute pitches are to have a conversation, a work session about the particular subject matter.

Uh it's we're not we're not voting to either approve or deny the concept or the issue or the statement.

We're just simply do we want to move forward to have a conversation to consider uh what we want to a decision we will make on that.

So uh we will start.

I'm having to keep this on my phone, so y'all just bear with me.

Um council member uh Mayor Pro Tim, uh you have the floor.

You've got two minutes.

Thank you.

Uh this will feel like deja vu to Mayor Watts and and Councilmember Holland, because I think you actually made a very similar pitch like two years and two months ago.

Um I'm I'm requesting a two-minute pitch to have a work session on developing a policy that would require city councilors to disclose private meetings that they have with developers, uh developers that have pending matters before council.

It's pretty straightforward, uh, which is just I want us to promote more uh promote more transparency.

Uh this is not an opinion on whether or not one should meet with a developer at all.

It's uh it's about public perception and it's about our in my opinion uh obligation to always try to be as transparent as possible with everything we do.

Naturally, there's a lot of questions that come up uh with a policy like this uh like what is a developer, what's a pending matter, uh, what is a meeting, all that kind of stuff.

Um I think that we probably have the most talented city attorney that could provide that kind of stuff for us in the in an ISR and work session to help form a policy like this, and so uh that's why I am uh asking for you all to support this low medium priority.

Thank you.

Okay.

Uh we'll go start at the end there.

Councilmember Rimar.

Appreciate it.

Um I support this, and just based on time sensitivity, I'll go with Lowe.

Councilmember.

Uh I think we've heard you know many calls from the community that we need more transparency uh in this process, so I support moderate level.

Anyone else?

Um yes, council member just yeah.

Um I mean, I I it does raise questions as far as how it's enforceable, what happens if someone doesn't do it, you're not gonna know if meetings, and I feel like the bad actors aren't gonna report it anyways, and that's not really as helpful and it adds bureaucracy.

However, I'm certainly not anti-transparency, so I vote in favor of let's continue the conversation.

Okay.

All right.

Councilmember Barry.

I also uh vote this forward with medium priority level as well.

Yeah, and look forward to the discussion to help parse out some of those talking.

Okay, anyone else?

Yeah, uh I'm in I'm in favor of a meeting priority.

I just to remind everybody we do have a an uh resolution that it's voluntary, but that it happened when we had an issue with uh anyway, uh, where you know council members can disclose to the city manager that they've had meetings, uh, but it's not it's certainly not mandatory.

So we've had that voluntary kind of resolution for for a few years now.

So I think that passed or at least go to a work session to discuss.

And so uh we'll move on to the next one then, which is uh number two structural changes section two-279, the city ethics ordinance.

And I believe uh council member, that was yours, is that right?

Let me let me get the clock set up for you.

Uh okay.

I'll give you a few extra okay, thank you.

Uh yes, good afternoon.

This is my first two-minute pitch.

Yay.

Um, I across the election cycle, right?

At almost every single candidate forum, we were asked about how do we kind of help shape culture, especially for our internal employees.

Um, one big thing that continued to come up was our ethics ordinance and it needing a little bit more teeth.

And I am today pitching to hopefully focus squarely on asking council to give direction to staff to have a work session where we can talk about how to give teeth to that said ordinance.

Um this would be specific to city employees, wanting to make sure that when we're talking about power dynamics, right?

Um, that they are able to report anonymously uh and have be able to feel confident and safe being able to speak to you know when they're being mistreated or when um any type of misaction occurs by other leadership or by city council members.

Um currently, you know, we want to make sure that we have some type of third-party independent kind of opportunity to investigate these.

Um as our city auditor is a liaison with city council um to make sure that this is being evaluated, that it's being taken seriously, it's being uh given the time it needs to bring then forth to the ethics commission when that burden of proof is met.

Um so yeah, this is mainly to have a conversation to see how we can amend this to make sure that we're protecting our own employees and doing right by them, and instilling more of that confidence and transparency in our staff.

And I I have listed this as a priority that is high because I think this is something we can get across the finish line quickly.

Thank you.

Okay.

Councilmember Jester.

Uh thank you for this pitch.

Um, I I have seen the need as well, and I'm so glad that you brought it forward.

I I do want to be specific that this is in regards as my understanding, and I just want to state that this is what I'm in favor of uh anonymous, the ability to have anonymous complaints from staff regarding council members.

So we're not talking about staff versus staff, we're not talking about um uh members of you know, someone in Little Elm mad at a council member for you know a deal gone wrong, etc.

This is what we're talking about.

Is that correct?

Yes, that makes sense because if in thinking of leadership, like there is that HR, obviously could be that third party agent as well.

So, yes, specific to city council members.

That's a great question.

Great.

Thank you very much.

And and I'm in favor, yes, thank you.

Yes, council member Villarreal.

Thank you, Mayor.

I'm in favor, high priority.

Okay.

Mayor put down.

Uh I'm in favor, high priority.

All right.

Councilmember Rumar.

In favor, high priority.

Yeah, I'm gonna I'm gonna be in favor of high priority.

I think this was you know, this was discussed, and it you know, it's all it's all scar tissue.

We learn, you know, when things happen to uh figure out a way to keep it from happening again.

So I look forward to the discussion.

Any other comments on that?

All right, high priority, thank you.

All right.

And then we'll go.

Uh I think the next one is mine.

The last one is mine.

Let me start.

Oh, I'm gonna accidentally give myself four minutes.

No, I'm kidding.

I'm I'm kidding.

I'm teasing.

Here we go.

Here we go again.

Uh yeah, this is this is very simple.

And I again I just want to reemphasize that this is just to have a discussion because I think we've seen over the last uh five or six months how that if you'd asked me what was with all the apartments being built, and of course, we've all heard whether we were on the campaign trail or not, that people were wondering what's happening.

I would have given one answer based on some facts and data, I'd be giving another answer now.

And I think it's just good for us to have a discussion.

There's moratoriums are all temporary, they're not permanent, and they're very precise.

There's certainly things that have to happen, and in fact, when you go to approve one, you have to have, I believe it's a supermajority, but uh you have a couple of hearings to get there.

So I just want to be able to have a discussion on what is what is our what do we have, what's happened in the last five years.

We had an article come out a couple years ago when staff made a presentation to PNZ that things are a little bit further ahead than what we had thought.

And let's just have a conversation.

Is this something we want to do?

Because we're going to also be having a conversation of how we solve the problem with a lot of tax dollars being spent on the lack of affordable housing.

So uh that's that's my pitch uh to to really try to have some time where we can discuss this in a in a in a very comprehensive and deliberative way instead of just out there amongst the community.

So uh council member rumor.

I'm definitely open to a discussion.

I appreciate appreciate the pitch.

Um, I do want to remind us that we did get that um housing toolkit update in the Friday staff report, and that showed that because we do have a surplus of apartments, we are starting to see rents fall.

So I want us to be mindful of that in anything we're talking about.

Um, but because the rents are falling right now, generally that means development starts to slow down because things stop night stop making financial sense for development.

Um so because of that sort of natural lull we're gonna be seeing.

I'm gonna do this one low priority.

Okay.

Oh, I'm sorry, council member Holland.

Um this for me this conjures up a lot of questions and a lot of a lot of a lot of qualifications.

Um what is multifamily?

Is it duplex multifamily?

Um what what about a guy that that owns property that wants to that wants to do this?

All these other people have had have had the opportunity to do to do their project, and and now arbitrarily we uh we say you can't do it.

I'm not opposed to it.

I'm not opposed to it at all, but but I I wonder, I wonder if we have the uh the legal authority to uh to tell people that that despite the fact that their property is zoned properly, uh you can't you can't build on it.

Um that was this was one of the things that that people said to me they were concerned about uh multifamily during during my my first uh campaign.

Um I'm gonna support it at low priority, but I but I'm very very concerned about it.

Okay, I understand.

Yes, Councilmember Jetter.

Um I I think it's very timely.

Um I I think that there are a lot of questions to be answered.

At what stage is someone paused if they've been going through the process, if they spent a million dollars uh in reliance on uh development services and and what's been represented.

Uh, but I'm willing to have that conversation.

I think the rents are falling.

I think we do have more of a supply.

We're also more affordable than a lot of other areas in our um in our uh DFW area.

Uh however, I I think that we do need to have a real look at what is our ecosystem when it comes to housing.

We need more, I think, on the far edges, the really really affordable, and then also some of the higher end homes, so that we attract that and create jobs and create sales tax here.

So um I'm in favor, I think it's a good idea.

And I believe statutorily um it is allowed a moratorium.

However, it cannot be permanent, it is limited.

I forget if it's 120 days or exactly what it is, but it cannot be permanent.

And like I said, we're gonna have this conversation to make sure we're not harming people that have been working in good faith with us.

However, uh I think it's a great idea, and I support it at whatever level the uh mayor put it forward.

Thank you.

Uh yes, Councilmember Delivery.

Thank you, Mayor.

Um, I'm pretty sure I'm the only one up here who currently lives in an apartment.

I've lived in multifamily my entire adult life, but this is an issue that all of our constituents have brought up to us time and time and time again.

I think it's probably the number one issue I heard on the campaign trail.

So I think this is a conversation worth having.

I support this at high priority.

Oh, thank you.

Mayor Pro Tim.

Yeah, I support this as well, uh, medium to high priority.

Um I I'm saying this just to I'm I'm repeating what everyone else is saying as far as the questions uh asked by council members uh Jester Rumar and Holland about helping define what some of these things are.

I'm repeating this for the public's sake, even though we've all said it to remind them what a moratorium is.

A moratorium is not a permanent end to something in Texas, it is a six-month period due to a public shortage, I think is the terminology, uh, so that we can evaluate during that time period uh better policies uh moving forward.

Like that is the purpose of a moratorium.

It's not to kill multifamily development or anything like that, it's it's to have a really good conversation about how to move forward.

So I support this.

Okay.

And uh it looks like we've got uh four for this.

Well, we everybody supported that the difference is the priority, and I think there were four.

Oh, I'm sorry, did you you hadn't waited you hadn't waited in?

I'm sorry.

Excuse me.

Go ahead.

Go ahead.

No, no, go ahead, Councilmember Ferrari.

You bet.

I appreciate it.

Um, yeah, I want to echo what uh council member Stevens bear pro tem Stevens was just saying.

Um I look forward to a conversation about multifamily development and really getting down to the nitty-gritty of what affordable housing looks like for the city of Denton.

We've been I think we've done a really good job over the last year with these new matrices that have come out and really exploring opportunities like Councilwoman Jester was saying, you know, of what it looks like on either end of the spectrum and finding that missing middle and also understanding and really defining this and getting down to a better definition, especially when we're talking about an affordable housing bond coming up.

Um so yes, I am full support of this conversation occurring and uh I listed as high priority as well.

Okay, all right.

Thank you.

Thank you very much.

I apologize for that.

Uh so uh high priority it looks like bring the con and and I appreciate all the questions because I think that's part of the discussion, or all those we we will answer those questions before we make a decision.

So thank you.

Appreciate that.

All right, so that brings us to um our we're we're finished with our work session agenda, so that brings us to our closed uh session meetings.

Uh I think it looks like we're not going to be, we're not going to need to have closed session agenda item A.

I need to ask the council right now on closed session agenda item B.

That was the closed session placeholder for the municipal judge discussion.

It sounds like we have some direction on that, so I don't think I think we can forego that particular closed session item.

Is that is that what I'm understanding?

Okay.

All right.

And the rest of them I think we can we can move forward on.

So we'll just take five-minute break to get the room cleared up and um set up for the closed session, then we'll we'll come right back.

Thank you.

Oh, oh hold on.

We're not we're not doing yet.

Okay.

So we okay?

I believe so.

We're good.

All right.

Okay, so we'll go back to take five minutes, get the room set up.

Those that uh need to be here here, and those that don't um go ahead and enjoy your cup of coffee or your uh your drink of choice.

All right.

Welcome everyone.

This uh city council is now at 6 12 uh p.m.

reconvened from closed session, and no official action was taken on uh July the 14th, 2026.

So we are now in our a regular agenda hearing.

We will now go to the regular agenda of the special call meeting, and the first will be the consent agenda.

And I believe we had some agenda items pulled.

H O and P.

Okay, so agenda items, consent agenda items H, O, and P will be pulled.

Uh agenda item P is being postponed.

Agenda item H and O.

We'll just have a very brief presentation uh in items for individual consideration.

So chair would entertain any action on the consent agenda.

Uh council member Villarreal.

I uh move approval of the consent agenda accepting items H, O, and P.

Okay.

Councilmember Rumor.

Second.

All right, we have a motion and a second for approval of agenda, the consent agenda, a consent agenda item excluding H, O, and P.

Let's uh vote on the board, please.

Motion carries 70.

I can't see my screen.

All right, now we'll consider agenda item H and items for individual consideration.

First, uh agenda item consent H is to consider.

Hold on.

Yes.

Uh ID 26-0828 consider adoption of ordinance of the city of Denton, Texas, establishing the schedule of rates for electric service providing for a repealer, providing for several ability clause, the public utility board recommends approval 6-0.

Good afternoon, Mayor and City Council members.

Melissa Guevas with DME.

And today I have our quarterly review for our energy cost adjustment and transmission cost recovery factor.

So just a quick overview of what our current rates are.

Our native load ECA is currently set at 4.62 cents uh per KWH.

We're not recommending any changes there.

Our large load ECA is currently set at 6.06 cents per KWH, and we are recommending an increase to 6.96 cents per KWH.

And our transmission cost recovery factor, we are not recommending any changes.

So with our native load ECA, uh, we do have to maintain a balance of negative 20 million to 20 million dollars for our balance.

Um as you can see with us maintaining our current rate of 4.62 cents, we will have a positive balance of 13.5 million March of 2027.

Um the table to the right just shows what changes we've had to this native load ECA.

The last change we've had was a decrease in December of 2024.

Our TCRF forecasted account balance is our transmission cost um balance that we owe is is about 26 million dollars.

So as you can see here over the span of the calendar year 2026, we are seeing um expecting 27.9 million in revenue through the table on the right, it does show our rate changes as well.

The last change was April of 2026, where we decreased it to 1.56 cents.

So our recommendation today is no changes to our native load ECA or TCRF and an increase to the large load ECA effect of July 15th.

Any questions?

Any questions?

Chair would entertain a motion, council member Jesser.

I move approval as presented, and thank you for uh not only the presentation but um the the great discussion and answering of all our questions earlier today.

Thank you.

Thank you.

Councilmember Bill Ariel.

I concur.

Second.

All right, we have a motion and a second.

Let's vote, please.

Oh, yeah.

Oh, that's agenda item oh, we're on Hope.

Thank you.

Councilman Perry.

Thank you.

Yes.

Okay.

Still showing up.

We'll take we'll take a hand out here in a second.

There we go.

There we go.

All right.

We we do have a motion and a second for agenda item H of the consent agenda item, which is now an item for individual consideration.

Let's vote, please.

Motion carry seven zero.

We'll consider agenda item O on the consent, which is now individual consideration ID 26-1029.

Consider adoption of an ordinance of the city of Denton at Texas Home Rule Municipal Corporation authorizing city manager to execute a contract for lifetime tennis, DBA activities, etc.

etc.

Uh this was pulled.

Was there any presentation wanted on this?

Just questions.

Okay.

Is it questions?

Okay, sure.

Hi.

Um so um I do appreciate the responses I got back from staff.

I think I just need more help understanding this.

Um we have been doing this for a while.

I think my first question was after reading the questions was how did these numbers compare to uh other programs that we contract out?

Uh like I'm sure we do it for soccer, maybe or other sports.

Not in the same way.

Okay.

Uh, because tennis is primarily the private lessons or the group lessons.

Um we have an agreement with the contractor where we provide the space and then we do a 7030 split um for the revenue.

Okay.

73 uh I think it was 8020, right?

I'm sorry, yes.

Okay.

I just wanted to make sure.

Um so like if I did my math right, I I before I vote on it, I just want to make sure I understand it, which is it's um we're paying them 250,000 a year, and we're assuming that we'll get 70,000.

Um already misunderstanding.

We split the revenue after it comes in.

So people sign up for the service, we receive the revenue, and then we pay them their share.

The 80 percent.

Yes.

But outside of that, the contract outside of that revenue, uh, they start at 258 year.

We don't pay them for services that are not rendered.

Oh yeah, if I can so uh we give them 80 percent, we get 20 percent of X.

Yes.

Is the 250,000?

It I was reading where it says we're executing a contract for uh two hundred and fifty thousand.

Is that coming out of all that revenue, or is that an addition to no?

It's just coming out of the revenue.

Okay.

Let me let me look at something right quick.

Okay.

So we don't pay them outside of the services that they provide to the public.

Okay.

Let me let me look at something real quick.

Let me look at the agenda information because I I I might have just totally misread it and misunderstood it.

Um we budget for yes.

We we budget, I think uh if it helps for clarification, so the contract not to exceed amount is because we are bringing in the revenue and then we cut in a check with for an expense.

So you're giving us approval to expend the payout to them capped at the 250.

Okay.

But it's only based on the services that people sign up for.

Okay.

So they're not guaranteed the 250,000.

They're only guaranteed 80 percent of what people sign up to take lessons for.

But our contracts require a not to exceed expenditure authored authority for how we account for the money.

Okay.

All right.

That answers every question I have.

I that I that was not clear to me, and so thank you.

Thank you.

All right.

Chair would entertain them.

Uh any other questions?

Seeing none, Chair would entertain motion.

Uh council member Rumore.

I'll have a motion to approve.

Uh Mayor Pro Tim.

I'll second that.

Let's vote on the board, please.

Motion carries 70.

We cannot start our public hearings, which are the next agenda items till 630.

So, what we will do is we will move to items for individual consideration.

But we will, as soon as we finish one nearest after 630, we'll go back to public hearings because there's people here that are waiting for the public hearing.

So we'll make sure we get back to those.

Uh so we're going to read the items for individual consideration agenda item three is A26-001D.

Conduct the second of two readings and consider adoption of an ordinance of the city of Denton, Texas, annexing approximately 2.94 acres of land, generally located at 1671 feet of Mayhill Road.

Thank you.

Good evening, Mayor, members of council.

Angie Manglaris, assistant planning director, here to present A26D.

This is the Rollins annexation.

Uh so the purpose of this item is to conduct the second of two readings and act on an ordinance to annex approximately 2.94 acres of land, uh, generally located on the north side of Mills, approximately 1600 feet east of Mayhill Road.

As a little background on this request, this property did have a non-annexation agreement, which expired in August of 2020 as part of the city's initiative to bring those properties either um into a new non-annexation agreement or to annex them.

Um this property is is being annexed into the city limits.

Uh there is an existing structure on site, but it is largely undeveloped land.

We have conducted the first reading.

Um we have adopted a municipal services agreement as well as held a public hearing on the item.

Uh following that set of items, this was published in the Denton Record Chronicle.

Um, and now in accordance with our city charter, we are conducting the second of two readings, and following that reading, um, action may occur.

And so I am going to read the ordinance caption.

Uh this is an ordinance of the city of Denton, Texas, annexing approximately 2.94 acres of land, generally located 1,671 feet east of Mayhill Road, north of Mills Road, into the city of Denton, Denton County, Texas, providing for a correction to the city map to include the annexed land and providing for a saving clause and an effective date.

I'm happy to answer any questions you all may have.

All right, thank you.

Any questions?

Now my understanding, Mr.

City Attorney, that this requires uh what's the standard of vote on this?

Uh 80 percent, which is six votes.

Okay, all right.

Uh we have a uh council member Womar.

Motion to approve.

Councilmember Viru Leo.

Second.

All right, we have a motion and a second on agenda item A of item for individual consideration.

Let's vote, please.

A motion carries seven zero.

Okay, we'll go on to next uh agenda item uh three B, which is ID 26-0804.

Consider adoption of an ordinance considering all matters incident and related to the issuance, sale and delivery of up to 316,338,000 in principal amount of city of Denton general obligation refunding and improvement bonds and mayor.

Uh we have one presentation for this item and the next item if you're able to call that as well.

Yeah, I can call it so that's C.

Uh then we'll call agenda item C, which is ID 26-0805.

Consider adoption of an ordinance considering all matters incident and related to the issuance and sale and delivery of up to 295 million dollars in principal amount of City of Denton certificate of obligations series 2026.

Well, good evening, Mayor, members of council Matt Hamilton, Chief Financial Officer, here tonight to present uh the 2026 uh bond ordinance.

So this ordinance uh includes um a the issuance of geos as well as COs.

So for the 2023 bond program, what is being proposed is 44.2 million for propositions A, B, and D.

And included in this is the 2026 debt refunding.

So the average interest rate uh of our current outstanding bonds eligible to be refunded is five percent.

Uh the current interest rate that we're able to uh refund the bonds is three point six five percent.

And so as we look at uh total projected savings, uh we anticipate about 14.2 million dollars uh primarily within the electric system uh that we will save with the debt refunding.

So what we're looking at is refunding uh 22 million of the certificates of obligation series 2016, 142.2 million of the utility system revenue bonds from 2017, and 107 million uh of potential additional refunding, which are from the series 2014 through 2016.

Uh those we aren't 100% sure of if the uh refunding savings is going to make sense, uh, but what we're requesting is the authority to refund those if it makes sense at the time of sale.

Uh the threshold that we use uh is at least one percent, so um if it meets that threshold, then then we would proceed refunding the bonds.

But as you can see, the projected savings, the general fund uh would realize a savings of approximately 80,000 dollars, solid waste 224,000, water 164,000, wastewater 79,000, and the electric system 13.7 million.

So in total, between the 2023 bond program and the potential refundings, uh the GO bond sale would be 316,338,000.

Okay, is that I'm sorry, go ahead.

Was that it?

We we need to vote on these separately, correct?

Okay, yeah, go I'm sorry, go ahead.

Um in terms of the uh certificates of obligation, just to provide a reminder, we did uh issue a notice of intent uh in the Denton Record Chronicle.

Council approved that on May 5th.

Uh it was published in uh the newspaper on May 13th and May 20th, and the bond ordinance uh to authorize the sale of the CEOs was at least 46 days after the first publication per state law.

As we look at the general government CEOs, uh there was no change in the internal services between the notice of intent and the bond ordinance that remained at approximately six million.

Uh however, for the other general government totals, we were able to review the project list and reduce the list uh by about seven million dollars, uh primarily in our facility improvements, which during the review we determined that uh many of the improvements uh and and maintenance items that we needed um were either completed or um weren't in uh immediate need.

So we were able to reduce that seven million, bringing uh the uh total down from 63.7 million for the general government to 56.1 million.

Solid waste.

Uh there was no change in the projects between the notice of intent and the bond ordinance, and it remains at 17.4 million.

Matt, one question on that.

Sure.

Briefly, what is the organics program infrastructure?

Yeah, I don't know if we have anyone from Solid Waste available, but uh my understanding is that the uh department is um uh building the infrastructure infrastructure so that they're able to accept organic waste and process it.

Uh I believe it's also intended to be uh a more regional uh facility, uh and so it would accommodate organic waste and and um uh divert that from the landfill.

Okay, all right, thanks, appreciate that.

Uh the waste or um excuse me, the uh the water utility, there was no uh change from the no's of intent to the bond ordinance.

Uh the issuance amount of 44.9 million.

The wastewater utility uh also no change from the notes of intent to the bond ordinance, 113.9 million.

And for DME, no change from the notes of intent to the bond ordinance, 58.4 million in issuance.

So as we look at the CO bond summary, the general government at 56 uh 56.1 million, solid waste at 17.4, water at 44.9, wastewater at 113.9 million, electric at 58.4 million for a total of 290 uh million eight hundred and thirty six thousand four hundred and seven dollars with a projected issuance cost of four point uh one million, and that issuance cost is for both the GOs and the COs, uh and so that's a shared cost for a total CO bond sale of 295 million dollars.

So as we look at next steps, if approved tonight, uh the GO and CO bond sale uh will occur on July 22nd on August 6th.

Uh we also anticipate do um initiating the sale for the uh 2016 uh utility system revenue bonds, uh which we've placed in a separate series.

And the reason that we've done that originally these bonds were associated with uh the construction of the deck, and so in order to segregate those and just um keep it separate from from the rest of the uh city's bond issuances.

Uh we intend to do a 2026 A series.

Um this the purpose of this is really just to keep it separate on the books.

Um the the interest rates and and issuance process that will all remain the same as the as the GOs and 2026 uh COs on August 20th.

Uh we anticipate a preliminary close and delivery of funds for the GO and CO sale, and then on September 3rd, a preliminary close and delivery of funds for the uh refunding of the uh deck bonds and I'll stand for any questions any questions.

I will take that seeing none.

We will take these uh votes individually for items uh B and C of the items for individual consideration uh for agenda item B Councilmember Rumore.

Motion to approve.

Councilmember Jester.

Second.

We have a motion and a second.

Let's vote, please.

Motion carries seven zero.

Now we will consider agenda item C.

Councilmember Villarreal.

Move approval.

Oh, something happened.

Uh Councilmember Ferry.

Second.

All right, we have a motion and a second on agenda item C.

Let's vote, please.

Motion carries seven zero.

Thank you.

Let me make my notation.

We stopped on individual item C.

We're gonna go back to uh the public hearings.

So we'll call public hearing agenda item two A, ID 26-0925, hold a public hearing and consider approval of a resolution of the city of Denton, Texas, approving the establishment of policies, guidelines, and criteria governing tax abatements and declaring an effective date.

Good evening, my name's Erica Sullivan.

I'm the economic development program administrator here at the city, and I'll be giving a presentation on an update to our tax abatement policy for the city of Dent.

So we'll begin with the um overview and history, some tax abatement considerations, and then we'll move on to the proposed changes.

Uh there are several new members here tonight, so I wanted to give a brief overview of tax abatements.

Uh tax abatements are regulated by chapter uh 312 of the Texas Tax Code, and they're available to new and expanded businesses.

There's a minimal capital investment in this case, it's five million.

A property owner receives an exemption, and that's deducted from their tax bill, and this is accomplished through the uh debt and central appraisal district.

And as with all our incentives, we perform economic analysis before um to determine the um impact and return to the city.

And then by state law, we're not allowed to um abate anything that's already created.

So only new um improvements and business parts of property are eligible under tax payments.

So we'll begin with the policy history.

So the first policy uh was adopted in 1989.

In 2010 and 2012, we added sustainable incentives as well and considerations.

The policy was broadened in 2014 to include Chapter 380, which also gave us the ability to give cash grants.

In 2018, we addressed retail, retail leakage.

We added some definitions for sales and use tax for construction.

And then we grouped the investment fund and the AirCAF programs under one umbrella.

And then in 2020, we had no changes because we were updating our new economic development strategic plan.

So the strategic plan was approved in 2021, and then the policies were separated and aligned with our strategic plan in 2022, shortly after.

Here you can see the five guiding principles that define how we do economic development in Deton, and that according to our strategic plan.

Their core resiliency, future focused, inclusive growth, entrepreneurial spirit, and cultural vitality.

They're also organized under three main goals to accelerate recovery, as this was at the time of the pandemic when we were developing our strategic plan to foster growth and strengthen community inclusion.

So the last update to the policy, we restructured our priority considerations and our public benefit factors around our strategic growth areas, and our strategic plan had identified these areas by NACE code for recruitment.

And then we added a comprehensive benefit package consideration and incorporated underwriting after we did the fine arts theater project.

So some tax abatement considerations again, it's regulated by 312 of the tax code, and this requires us to adopt a tax abatement policy in order for us to be eligible to grant a tax abatement.

Policy is effective for two years after adoption.

And during that period, the policy can only be amended by a three-quarter vote.

So we would need a supermajority during that period.

That's one of the considerations in 2002 when we were redesigned the policies and aligned them with the strategic plan.

We separated chapter 380 and the tax abatement policy, giving us a little bit more flexibility.

So with the Chapter 380, we can amend it at any time.

If the policy were to expire for the tax payment, we could still use the chapter 380 policy.

Like right now, we had a board retreat, and we're using that a little bit of leeway to be able to make changes, incorporate some of the things that came out of that into the chapter 380 policy.

The government body must hold a public hearing like we're doing so today.

And then another consideration is that Denton County generally prefers to participate in tax abatements with cities, but there have been a couple chapter 380 participation with the county equivalent, chapter 381s recently.

So now we'll move on to the proposed changes to the current policy.

The first is any minimum job-related threshold will be at least 75% of the jobs in the application.

The previous was 90, and this is done for a number of reasons.

One for projects, we want to be able to incentivize projects that are moving towards full employment.

We also want to be able to account for delays in the market into supply chain training issues in that matter.

Another revision, which was said uh suggested by the economic development partnership board, was the eligibility evaluation requirement or timely completion from 24 months from the execution of the agreement to 24 months after a permit is issued to allow for more time.

And this came from a developer citing the lengthy process.

And then we had general administrative cleanups as well.

Um, so these would include some items that could be addressed in the agreement andor that were project specific that we really didn't need in the policy, so we could streamline it a little bit.

And then we updated the qualified census track maps with the eligible tracks.

So I wanted to highlight some of the changes of the current current policy with the city core values.

Uh, they've changed since our last updates.

You can see the previous and now the proposed inclusion, collaboration, quality service, strategic focus, and fiscal responsibility.

Really, the only main changes are collaboration and strategic focus as we were already working on outstanding customer service.

We're just reframing it.

And then another change to the policies that we're highlighting here is the targeted sectors.

A lot of uh entities, counties, uh cogs, cities.

We uh have selected targets that we're trying to recruit to our city.

And so our strategic plan created these strategic growth areas organized by NACE industry codes for our recruitment uh efforts, and they included connectivity, creativity, sustainability, and competitiveness, and there was a whole host of uh sectors that were under that.

Um we are proposing some different targeted industry sectors that might be a little less confusing than the previous target sectors using the SGAs.

So we're proposing advanced aerospace, mobility, advanced manufacturing, biomedical information technology, renewable energy, research and development, supply chain and logistics, significant consumers of utilities as we have municipally owned utility DME, and then UAS tech ecosystems.

So the economic development partnership board reviewed the proposed policy in June and recommended approval 7-0.

And then the staff recommendation is that council approved the Chapter 312 tax abatement policy with the proposed changes.

And I'm happy to entertain questions.

All right, thank you.

Any questions for staff before I open the public hearing see none?

Thank you very much for that presentation.

I will now open the public hearing.

I have one blue card to speak, but this is a public hearing.

So after the blue card is called, if you wish to speak, come on down.

The first the blue card we have is Amy Bissett.

If you'll come down and state your name, and you'll have is it three uh four minutes?

Good evening, Mayor, Council members, Amy Visit 109 North Elm, Denton 76201.

I'm here representing the board for the economic development partnership.

I sit on that board and just wanted to say thank you for considering the updates to our policy recommendations this evening.

Um I feel like Denton is strategically located geographically to be a leader in logistics and supply chain attraction and within the region.

Um I feel like our updated sectors, our targeted sectors more closely align with our university initiatives, and this particular policy change also helps us to attract high-paying jobs.

So we appreciate your consideration tonight.

Thank you.

Thank you.

Any questions for the speaker?

See none.

Thank you.

Thank you, Amy.

Uh Councilmember Jester.

Oh, well, any other any other people wanting to speak.

This is a public hearing.

Anyone else wishing to speak?

Don't see any movement.

We will go ahead and close the public hearing.

Uh Councilmember Jester.

Uh thank you.

I'm also on this board and appreciate uh all the collaboration uh to get to the point where we are today and happily move approval as presented.

Thank you.

Great, thank you.

Uh, Councilmember Villarreal.

This is an important tool for our toolkit.

I uh second.

All right.

We have a motion, a second.

Let's vote, please.

Motion carries 70.

Uh for agenda item two B.

I will be recusing myself.

So the Mayor Pro Tim will take the chair and conduct that public hearing.

And when that's complete, someone will come gather me and we'll resume our duties.

Thank you.

That's good to go.

Okay.

Uh so public hearing uh item B.

That's Z2601AB.

Hold a public hearing and consider adoption of an ordinance of the city of Denton, Texas, regarding a change in the zoning district and use classification from residential three district to residential seven district.

On approximately 0.74 acres of land generally located on the northeast corner of Bolivar Street and Talia Ferris Street, approximately 155 feet west of North Elm Street in the city of Denton, Denton County, Texas.

Adopting an amendment to the city official zoning map providing for a penalty and the maximum amount of $2,000 for violations thereof, providing for a severability clause and an effective date.

The planning and zoning commission voted 5-1 to recommend approval.

Motion for approval by Chair Pruitt and second by Commissioner Riggs.

We can go ahead and start our presentation.

Thank you, Mayor Pro Tem and members of Council.

Angie Mangleris, Assistant Planning Director here to present Z2518.

This is the Denton Duplexes.

This did come before City Council on May 5th, and the body recommended a continuance of the item until such time that the applicant could bring forward some additional information related to affordability.

The applicant is here this evening and does have that information.

Since we do have some new members, I am going to run through the presentation and just make sure we're all on the same page.

So this is a request to rezone approximately 0.74 acres at the northeast corner of Bolivar and Tolliver Street from R3 zoning to R7 zoning.

The intent of this rezoning is to allow for the development of duplexes.

Because it's a straight rezoning case, any use allowed in the R7 district could be allowed.

The surrounding area does vary.

There's a variety of housing types as well as religious institution and some supporting commercial uses, particularly as you get closer to US 380.

The current zoning on the subject property is residential 3.

It has a minimum lot size of 10,000 square feet.

The requested zoning is residential 7 with a minimum lot size of 4,000 square feet.

The zoning is a little bit mixed.

It is predominantly residential 3.

There is some existing residential 7 along North Elm Street and some R4 as you move further south, closer towards US 380.

The future land use map does call for this area to develop as low residential, which is predominantly single family residential development, but does include some supporting uses that include scaled commercial.

It does have a density between one and five units per acre recommended.

This particular project would have a density slightly greater than that should it develop as duplex units, but it is consistent with other goals in our comprehensive plan, particularly goals LU1 and LU3, both of which call to develop compactly as well as to maintain and strengthen our neighborhoods by filling in that fabric as gaps occur.

This site had previously been developed, and the single family home was demolished in March of 2025.

This also supports our housing goals, particularly goal HN1, which calls to develop and maintain a diverse housing stock.

Furthermore, the housing and population projections in the comprehensive plan do call for the additional development of approximately 6,000 other residential unit types, which are typically those units that don't fall necessarily within single family or multifamily, but sort of that missing middle where you would see duplexes, townhomes, and triplexes.

So it is consistent with those goals.

This zoning district in this location is also consistent with our R7 purpose statement, which is to accommodate a variety of housing types, maintain the compatibility of the area, and follow those design standards in the DDC.

The uses along the Bolivar Street are varied.

There is significant single-family development.

There are duplex developments that have been established over time, as well as some multifamily and triplex uses in the region.

Staff does find that this meets our criteria for approval, both the general criteria as well as that specific to zoning requests.

Notification was done in accordance with state and local laws.

We did receive several responses back in opposition, totaling approximately 11%.

The applicant did hold several neighborhood meetings as well as part of their public outreach.

Staff is recommending approval of this request as it meets the criteria established in the Denton Development Code.

The Planning and Zoning Commission did recommend approval 5.1.

I'm happy to answer any questions you all may have, and the applicant is here to speak as well.

All right, before we open the public hearing, are there any questions for staff?

All right, thank you.

Seeing none, uh, we will open the public hearing.

Uh first off the applicant.

Uh Amy Bissett.

Good evening, Mayor Pro Tem, Council members.

Give me just one moment to pull up my presentation.

That one is not it.

There we go.

Amy Bissett.

Um, in this particular case, I'm representing Mick Adams.

We are a zoning and development consultant, and um we are representing this zoning case this evening.

Appreciate your time this evening.

Um, I want to start by saying that our client in this particular case is a local family.

They live here in Denton.

Um, they've purchased this property as an investment in into a local neighborhood.

And we have, you know, part of our role as a development consultant and a zoning consultant is to spend time with the neighbors and work with them to the best of our ability to reach to reach a project plan that is compatible with the neighborhood and is something where everyone can work together.

We've spent many months working on that, and we have several neighbors here with us this evening, which we're happy to have here.

And I just want to let you all know that we've appreciated the time that we've spent with them, and we've we've all worked hard to try to work together here.

Um, as Angie shared, this is about three-quarters of an acre.

Um, so it's large for a single family lot.

It is in a single-family existing neighborhood.

Um, this would be an in-fill development, and there are existing duplexes integrated into the surrounding area.

Um, here's the zoning map.

You can see the um the darker brown corridor area is zoned R7 today with many of those being duplexes.

Um, R3 is the yellow, and then R4.

There's a little bit of R4 sprinkled in there specifically directly across the street and a little further south.

Here's an aerial overview of the site, which is outlined in yellow in the middle.

Um, we just wanted to point out that there are a number of duplexes and small multifamily projects that are within this neighborhood.

They're um circled in red on this map, and then there are some ancillary non-residential uses as well, circled in blue.

So this is the proposed zoning change and development is consistent with the surrounding pattern.

So I'm gonna walk you through a little bit of the history of this site and how it has evolved over the last several months because many of you are new faces up here.

Um, our original concept plan is four lots, each with a duplex building, which would equate to eight units.

Um, and at the zoning level, a concept plan is conceptual and non-binding, meaning that what you see here this evening does not obligate the property owner to develop what's on the site, but there are some things that we will talk about that commit that are commitments that have been made by the property owner associated with this zoning.

So the original concept plan is the duplex buildings would face Talia Faro.

I'm saying that wrong.

Tolliver, thank you, Councilmember Holland.

I knew I was gonna get it wrong.

She did, I noticed.

Um each lot has one building on it and four parking spaces, as you can see that are situated behind the building.

And as this concept plan is laid out, it does meet the minimum uh dimensional standards for R7.

We originally held two neighborhood meetings in December.

We mailed out approximately 250 invitations and had two or three folks in attendance at the original meeting.

Um we mailed to anybody within 500 feet of the property line.

And after those initial two meetings, we went to planning and zoning commission, which I'll talk to you about the outcome of that in a moment.

After planning and zoning commission, we had an on-site meeting with one of neighbors specifically, which we'll go into some details on that.

And then after the council meeting in May, we had an additional neighborhood meeting just to keep the neighbors apprised of what was happening as we moved through the process.

In the initial neighborhood meetings, we heard concerns about increased traffic on neighborhood streets.

I'm going to show you the trip generation numbers in a moment.

And we heard increased concerns about increased on-street parking and the current right-of-way width.

Um, it is our understanding from city meetings that the the property owner will be required to dedicate additional right-of-way on Tolliver to increase the width, and we are meeting off-street parking requirements for a duplex development.

We heard concerns about removal of trees.

Our preliminary tree preservation plan shows preserving roughly 14 of the 21 trees on site.

Trip generation tables show that in the peak hour in the AM and the PM.

We expect that this development would generate four and five trips per hour.

At Planning and Zoning Commission, we had some attendees that weren't originally in the neighborhood meeting, and we specifically the immediately adjacent neighbor to the north, which is the one single family neighbor that's not across a right-of-way or a street.

They expressed concerns that the parking spaces were facing north in their property, which you can see highlighted in yellow here.

And the total number of units.

After that meeting, we did meet with the neighbor to the north, and we kind of went back to the drawing board with concept planning to try to come up with something that would work a little bit better for the neighbors.

In that meeting with them, we did draft uh what ultimately became a memorandum of understanding with them that committed our client, the property owner, to certain concessions to that neighbor if the zoning change were to be approved.

So those concessions are as follows.

This is the updated concept plan.

We've reoriented the parking spaces to where they face south.

Um we we explored the idea of pushing the buildings back towards the north property line and putting the parking on the south, but that created the second story view issue and also some transportation-related issues at the intersection of the two streets.

Um the so the property owner has committed to um uh a tens of 10-foot landscape buffer along the north property line, preserving the existing trees within.

There are a number of large trees out there, um replacing their existing wood fence with an eight-foot tall new wood fence, and that the parking would be oriented towards the south.

There was an additional request that the number of units be reduced from eight to six, and our client felt that that um defeated the purpose of the zoning change because today, under R3 with single family homes and ADUs, they could have six units today.

And that that's what I was going to cover here, so I'm gonna skip right over that one.

Um there was a significant discussion at City Council in May regarding rental rates.

So I just want to go on record as saying that I made a mistake in that meeting.

I used the word affordable, and as we all know, affordable has some very specific federal definitions.

What I meant when I used that word when I shouldn't have used it, I should have used um housing variety, diversity, attainability is that to build duplex units is um gonna yield a more affordable product and a more affordable rate in the long run than building single family homes and ADUs because construction costs would be less.

Um so I'm here to go on record as correcting my mistake in that it is not intended to be an affordable development, it is intended to be a market rate development, and this is an in-fill project.

Um what I've displayed here are um average market rate rents for duplexes in 2026, two bedrooms range from 1350 to 1700 and three bedrooms from 1600 to 2,000.

So these are not their specific rents, they have not done financial um proformas to that level because right now they don't know how many units they're gonna be able to build and whether they're gonna be detached or attached units.

So I apologize for um having misled council in May and just want to correct that today.

And that is all I have.

I'm happy to answer any questions.

Thank you.

Uh thank you very much.

Um do we have any questions?

And I'm gonna start off actually just to end where or start where you ended.

Um I don't think you have anything to apologize for.

Um I watched that meeting.

I don't think you deserve to be treated that way, and so I'm sorry.

Um I appreciate it uh because to your point we can't answer those questions right now.

And so I just wanted to at least go on the record and acknowledge that publicly.

I appreciate that.

Uh council member Holland.