Thank you, Mr.

Chair.

Great.

Uh I wanted to note uh committee member Johnson would normally be here.

Uh, she's at home with a family medical situation, so we wish her all the best, and she will get on board, I'm sure, with vigor.

Uh, as soon as she's able.

Okay.

Um, so I have a couple of things.

Thank you.

Um, we're going to begin with our twenty FY twenty twenty-seventh budget workshop number two.

So um, I want to say good afternoon to everyone.

I hope everyone has been having a great day.

Um, and I'm going to call to our second council budget workshop for the twenty twenty-seven budget development into order this meeting tonight today.

As you all know, this is one of the most important and impactful pro policy items that we work on together each year in developing a plan to allocate city resources for our communities, alignment with our strategic priorities, and the need for our communities.

So thank you everyone for joining us today.

And with that, let's start by getting um our city manager, Marcus Jones to introduce the network that we're going to prepare to do.

As you do know, this is a an FY27 calendar twenty-six will be a bond year.

So there's a lot more work to put into this budget than what we did for the FY26 budget.

Then we have a mobility investment outlook, which is really a continuation from our discussion at the annual strategy meeting.

So, mayor, um, unless there's any other questions, I'll turn it over to budget and Hannah.

All right, thank you.

And then lastly, we'll discuss financial priorities as we head into FY 2027.

So just as a quick reminder, the capital investment plan is really a communication tool.

It's how we communicate with the community, what our plan is for the next five years in the capital expenditure space.

So year one is adopted, that's locked in, the four out years are simply a plan.

So you revisit them every year.

The capital investment plan includes various kinds of projects, and each one of those projects is born out of studies, data, plans, and community feedback.

The general capital investment plan is supported by general government revenues only, so primarily property tax and sales tax.

So you saw this slide last time, and it's really just a reminder that there are two funds within the general capital investment plan.

The one on the left is the pay as you go fund, PAYGO, and this is cash funding, and it's for projects and programs that aren't reoccurring or that aren't eligible for debt.

It can also be pilot programs where we test things before we put them into our ongoing annual budget.

And the important thing to remember about PAYGO is that the capacity is largely dependent on prior year general fund balance.

So remember from the February budget workshop, Marie and Ethan talked a little bit about our year-end closeout from FY25.

And there's only about 11,000 that's going to roll into PAYGO.

And from the last few years, the average has been about 14 million.

So that's quite a difference.

So we're gonna set PAYGO aside, and the rest of the presentation is going to be focused on the block on the right, the municipal debt service fund.

So this is how we pay principal and interest on our debt.

We have different kinds of debt within the municipal debt service fund.

Sometimes we take out COPS certificates of participation.

This is primarily used for facilities.

And then this is also where our general obligation bonds or our GO bonds are held.

You'll remember that we have three types of bonds affordable housing, neighborhoods, and transportation, and these do require voter approval because they're backed by the full faith and credit of our property tax.

So in the municipal debt service fund block, regardless of the funding mechanism, regardless of whether it's COPS or general obligation bonds, we usually talk to you about the capacity for this fund as one model.

So that's one of the differentiating factors of what Matt is going to talk about in a little bit.

So as we move on to talk exclusively about the municipal debt service fund, this graphic was in your February presentation.

It just sort of sums it all up.

We have our revenues on the left, they go into the municipal debt service fund.

That fund is used to pay principal and interest on debt that we take out for our capital projects.

So at our February budget workshop, I jumped to one specific section of the PAVE Act.

And judging by some of the questions afterwards, I think I made it confusing.

So I want to just take a step back and sort of zoom out, and I want to review a few specific sections of the PAVE Act that are relevant for our conversation today.

So the first one is we know that 40% of the PAVACT revenue is going to be dedicated to roadway system infrastructure.

We believe that in year one, FY27, that that'll be about a hundred million dollars of cash.

So that's about a hundred million coming in annually, specifically from this new sales tax source.

There was a question last time about could that cash be put into a debt model and used to finance capital projects?

And the answer is yes.

That's this second bullet, section 4.8, allows us to use it for financing.

So yes.

And then I've also included the definition of roadway system from the PAVE Act, just for reference.

So this is the section of the legislation that we discussed in February, and it is around supplementing rather than replacing existing local expenditures for roadway systems.

And it should really be thought of simply as a maintenance of effort.

But I've included the full language for reference if you're curious about how local expenditures are defined in the PAVE Act and how we're asked to calculate this maintenance of effort.

So from a maintenance of effort perspective, we're good.

We've followed the methodology laid out in the PAVE Act.

We've used the definition of local expenditures, and we've used the time frame that the PAVE Act asks us to use to calculate this.

And when we look strictly at the FY 2026, the current year budget numbers within each of these relevant categories, we're more than nine and a half million dollars above that maintenance of effort requirement.

So and we know that those expenditures are only going to grow as contracts increase, as costs increase.

So we can be comfortable that we've cleared this hurdle and we can refocus on how to use the PAVAC revenue most efficiently.

So I'm gonna invite Matt Hastett to come up again, City Chief Financial Officer, to talk more about what the debt service fund could look like with the addition of the PAVACT revenue.

Thank you.

So this is uh the a slide that was also in the previous uh budget workshop, and I'll say this is a slide that if I'm presenting, there's a decent chance you're gonna see this slide in some form or capacity because it is one that I simply love.

Because I think it's really important to always highlight the fact that whether we're talking about you know the neighborhood hospital or affordable housing sort of facilities bucket, hospitality, aviation, it's always under the umbrella that is the City of Charlotte City Council because you are setting management practices for the entire city, and it really all funnels back up to the manager and the policies that you're setting on a global scale.

Um, myself and some folks in finance were able to go to a transportation utility conference just this past week with representative from Charlotte Water and Aviation.

We met with investors and we're talking about the practices and policies of this council and how important that is to them.

And one of the things that I remember when we were at the strategy session that the manager talked about the debt that CATS currently has a department of the city and how that has to be handled, and that it is backed by the city.

And I'm going to take it even a step further that whenever you're looking at debt from the city, whether it's general obligation debt, facilities, aviation, it is always City of Charlotte water and sewer revenue bonds.

It is City of Charlotte general obligation bonds.

It is City of Charlotte debt, and that is why people are interested in that debt in the market and is being traded on the, you know, we don't necessarily think about the city as a public, you know, public company, a public, you know, that you people are buying and selling stock on a regular basis, but our bonds are being traded on a secondary market based on you know whatever an investor may do, and they're buying it on the strength of what this council is doing day in and day out by setting those practices.

So whether it's today or in the future by maintaining those sound financial policies, that's what really helps the long-term capital programs that we have.

And just wanted to walk through a little bit.

Uh Hanna already did this a little bit, so I won't go too far into it, but always I think it's important to sort of reference that we do have a couple different types of debt when it comes to the general uh governmental side.

We have the general obligation bonds, and this is as Hannah said, is used for the transportation neighborhood and affordable housing.

And then the installment financings, which we normally or historically call certificates or participation.

They also go by limited obligation bonds.

Those are the exact same structure as far as you go into the market.

General obligation bonds are always going to be the lowest cost of capital, but they are a timely process to go and getting voter approval.

Because we're pledging the fact that if we ever need to raise property taxes to make a debt service payment, we need the voters to support that.

So that's why we typically use those for the street neighborhood and affordable housing.

And it's also for a lot of those, you know, we don't really have a asset that we own completely by ourselves like we do for an installment financing for a certificate or participation, because those are primarily our police and fire stations that are our own facilities.

We're able to pledge the actual assets that we're financing to a to investors as that actual collateral.

So it really helps us.

Um even sort of just looking at the general obligation process.

You know, we're talking about that now.

That'd be adopted in the the FY27 budget, so adopted in June for effective in July.

It doesn't go to voters into November, then the Board of Election has to certify the results, and then we actually have to release the budget.

So it becomes a pretty long window as opposed to the installment financing that can simply come to city council for approval, and all debt comes to the city council for approval, and it's also approved by the local government commission, which is a part of the state treasurer's office.

We also use uh interim financing.

So these are what we use on a short-term or construction basis financing, and we've used these extremely effectively across a lot of our capital programs from water, aviation, and our our streets and neighborhood and um programs.

And what this allows us to do is essentially have a line of credit that we're able to draw down against as we have actual expenses.

So we are only paying interest on expenses.

We're not borrowing money up front with the thought that we might be able to use it.

We're only paying interest what's its time to actually have real um shovels in the ground or design work that we're ready to pay for.

The the only real difference between the bond anticipation notes that you have seen more frequently in commercial paper that you're starting to see a little bit more is bond anticipation notes are a privately placed and negotiated transaction, or commercial paper is a publicly available traded um instrument.

And we're starting to see commercial paper become a little bit more cost effective for us, especially for our large capital programs.

Um but um finance along with our um debt issuing departments work along with our independent uh registering municipal advisor, DEC Jamie Carter, many of you you may know.

So we always do an analysis on what is the best forum to for us to access that capital because we always want to make sure that we're maintaining the highest level of flexibility, but the lowest cost of funds.

Um we look at the the steady state model, and this is what um the manager brought to us in 2018.

That's been a fantastic way for us to really plan out our capital program.

Instead of having to do a tax increase every time we want to maybe start a CIP program, we're able to sort of maintain a level, steady state of funding for both our street neighborhood and affordable housing programs and our public facilities.

Um we've typically probably averaged around sort of a 220 million dollar all in, 170 for our streets and neighborhoods, and about 50 million dollars for housing on that side.

Um, but it is always a point-in-time analysis.

You you have seen that sometimes it can go up a little bit if revenues are going up and maybe go down a little bit.

But a couple of the really big drivers on that are the revenue, the spend rate, and the cost of funds.

So revenue is you know pretty straightforward.

If property tax and sales tax are coming in above expectations, we may get added capacity.

Spend rate really has to do with how quickly we're actually able to develop and put those projects into to practice.

And that's also something that's really helped us with the advanced planning fund that the manager also brought to us um several years ago to really do some of that advanced work so we're able to do it.

And really, as the spending occurs is when debt service comes online, and that's really what's driving that part of it.

And then cost of funds back in 2018-2020, cost of funds was extremely low.

And we've seen a really big ramp up of of rates.

Um, we are starting to see a I'd say a little bit of a coming down of rates, but it's extremely volatile, as many of you are probably seeing in the last you know, two weeks.

We've seen some very dramatic rising and lowing, lowering of the treasury, which has a direct relationship to our cost of capital.

So we just have to be prepared.

While we think long term the Federal Reserve may lower rates, until they do it, we're not gonna certainly bake it into our to our affordability analysis.

And it's also important to note that while the Federal Reserve may set the overnight rate for banks, ours is really a market-driven.

You know, that the market is taking into consideration where they think rates may go, and they're factoring that into our cost of funds every time we're in the market.

So it is not a situation where if the Federal Reserve drops, you know, an interest rate overnight, we automatically see something decrease because it may be built into the market months in advance of that.

You know, so when we start looking at the future, we really wanted to try to make sure that we are identifying how we going to best utilize the PAVACT revenue coming into the city to really set us up to maintain those really strong management practices with this new revenue.

So a couple of the things that really drove our discussions, uh, myself and hand in the budget office and the manager's office have worked pretty closely on this for probably at least a year, if not longer, really trying to figure out how we can best do this.

Because we wanted to make sure that we had a clear demonstration between the pay backed revenue and our funding on transportation related projects.

So that way we have a clear um it's not necessarily even back to the are we hitting the maintenance of effort or those types of things, but we want to make sure that our money is going where we said it was going to go to.

Um we do have prior authorizations on transportation and neighborhood bonds that have been approved by city council and the voters.

We you know typically those have a seven-year window for us to actually get through.

So, you know, we're still working through some of those previous ones, and those were done on the basis of property tax.

We, you know, we're trying to figure out how we take take those into consideration.

We're looking at revenue volatility, sales tax is a lot more volatile than property tax, and we've always had a bit of a mix in our municipal debt service fund between property tax and sales tax.

If we only look at the new PAVAC sales tax, that's gonna have a lot more volatility in it than just sort of a mix between property tax and sales tax.

So, how do we factor that into it?

And one of the other um big parts is as we evaluated this is the PAVACT gives us a a significant amount of new funding for transportation related projects.

It is still going to be the need for us to take these two voters for general obligation bonds every other November to actually get capital to fund these projects.

So the the we are able to identify the payback as the source of payment, but from a legal structure point of view from whether it's the local government commission, rating agencies or investors, they're still going to be general obligation bonds of the city, um, and that's in part um North Carolina statute is that you can't pledge sales tax as a revenue bond.

The payback did create a unique structure for the transit authority to do that, but the rest of North Carolina still operates and needing to go with general obligation bonds to fund those types of projects.

So I think that's a really important part of also if we're gonna have a property tax pledge, making sure we're considering how we sort of funnel that all together.

So the as Handa sort of sow my thunder a little bit with the preview of this, um, but what we're looking to actually do is keep one municipal debt service fund, but actually separate out our affordability calculations between housing and facilities, so that would be again our affordable housing and public facilities for police, fire, animal care control, all those types of projects, and the mobility being the transportation and neighborhood bonds.

And that's gonna really allow us to better any time that council wants to focus on an area, we can better identify the you know the cost mechanisms thereof.

So again, it's going to be one fund with two models, so we're keeping sort of essentially one fund balance between the two in one sense of policies and practices.

Um you can kind of see here, and this is where we're gonna go to for for you know, as Hannah goes on, and and we'll deal about this a little bit more, but obviously all of the paved sales tax will go into the new new mobility model, and then the existing revenues that coming into the municipal debt service fund for the steady state, it then comes a little bit of a priority and other type of discussion of how much of it stays in the existing debt service model for the steady state, how much of it moves to the mobility program, and then are there any other priorities that city council possibly wants to evaluate as well.

Um, you know, one of the things to look at is you know, obviously we're gonna get a significant amount of more revenue in the FY 2026 budget when we adopted the CIP back in 24, we anticipated going to a transportation and mobility um referendum year of 170 million.

So we have a lot more money, so how do we want to evaluate that?

Um the spend rate, right now to get through our current authorized and unissued you know projects that city council is already committed to, we're looking at about a hundred million dollars a year on simply not again, excluding the the pay go, but just the the debt funded portion of our SETI state is about a hundred million dollars a year.

Um so it's also important to sort of figure out anything we're spending is gonna be net above that.

Um, so how does that sort of factor in from both a organizational capacity and then the the overall construction market capacity as well?

And I already hit on it a little bit, but interest rates are definitely trending down, um, but we we have a lot of volatility right now, so we haven't really been able to update our affordability models based on on that.

We're we're pretty much holding steady where we have been, just to make sure on any day when we go to the market, because we don't play the market, we go to the market when we need to for capital financing.

We always want to make sure that we always budget in a way that we can always maintain those programs.

So if we looked at just the payback revenue, didn't look at any other priorities, any type of new advanced planning fund, any type of the authorized unissued from a pure affordability perspective, if we're looking at how much we could afford a new mobility program, it'd be five hundred north of probably 500 million dollars every other year.

So it's so we're gonna talk a little bit about sort of affordability from a cap like financing capacity and organizational capacity, making sure that they come together in a way that maintains those strong management practices.

Um that's you know, sort of that the next point there.

And you know, if you think about the the 2024 referendum, that was our largest referendum at the 300 million dollars for transportation and neighborhood, that required a pretty big ramp up, but we anticipated that coming back down.

So if we're gonna really ramp up to that type of funding or spending on a long-term basis, we need to have a significant sort of organizational investment to really be ready.

Um we're looking at some of the our peers across the set um, the country, Adam Phipps and that group has really talked about some of the real pitfalls that sort of can run into issues for cities or counties or authorities that sort of adopt these types of uh new sales tax, and that a lot of that is kind of and I think we talked about this at the strategy session as well.

You don't want to overpromise and underdeliver.

So this is really about making sure that we're taking a measured approach and how we go, and this is doesn't mean you know what we're thinking of as a long-term strategy, but is where we start today, and then give us that headway to to move up.

Um, because based on the the statute again, you have about a you have a seven-year window from the time the voters approve a referendum to spend the dollars.

So a lot of these projects, you know, that have been going on, you know, haven't had haven't gone through an advanced planning fund that we may want to go forward on next.

We may need a little bit of time to sort of build up some of that capacity up front so that way we can maybe look at some of that bigger investment going forward.

And we'll always evaluate sort of each time we come back for that two-year cycle.

Okay, what's our financing capacity, what's our organizational capacity, and sort of how do those two come together.

I think I'm gonna change it to Hannah for a little bit about some of the strategy session or strategy discussion on on revenue policy, unless there is questions first.

Thank you so much, Matt.

Thank you so much, Matt, for doing this.

I mean, I know that everybody on this council really wants to understand this deeply, and so we're gonna take some time, but before we do that, let's hear from the city manager.

So uh thank you, Mayor, members of council.

Uh Mayor Pro Tim, I I think Matt may be giving um Ed McKinney a little run for his money and the professorship.

Um a few things to kind of level so then a really good job of the guys doing it.

Uh okay, just because you can doesn't mean you should.

Okay.

So Matt put a big number out there.

All right, and I'm gonna tell you we're not ready for that number.

And what we have done, um, so remember the seven-year clock.

So it's very important that if we're going to have something that the voters vote on, that we can actually actually execute it.

Um I think it's really important that uh just giving kudos to the team.

Before there was a PAV Act, there was a visit to New York, and we had to talk to the rating agencies, we had to talk to investors, because you could not do legally what we were trying to do.

So we had to find a way that it could be done to protect the city in terms of the debt so that the authority could have its own debt.

So again, years in the making.

I think it's really important.

If we turn it over to uh the questions, is Matt mentioned uh financing capacity and organizational capacity.

So we are really excited about CIAs, and we could prove that we could put $55 million into infrastructure over two-year period.

Um there's a lot of bags on a lot of people's eyes because we didn't hire any new people.

We took people off of their day jobs, and we moved them into this pilot proof of concept.

So as we move back, it would be not good if we thought that those same people could all of a sudden deploy 300 million, 500 million.

So there needs to be a ramping up of capacity from error from a staffing where the staffing consultants, but just the ability for project delivery is so important because the last thing you want to do is have people approve a bond, and then we can't deliver the project.

So that's a little bit about the financing and a little bit about the the staffing.

Okay, thank you.

I've got a list already, and so let's I I I promise you I will.

Um, Ms.

Ashmir.

Thank you, Madam Mayor.

Great job, uh, Mr.

CFO.

And appreciate Mr.

Jones' uh implementation of steady state capacity backing 2018, which gives us some consistency in terms of the capital projects planning.

Uh going back to slide number eight, where you got this average of 51 million dollars.

So that's the minimum, right?

Based on the PAV Act.

Yes.

So the way that the PAVE Act asks us to look at it is they define local expenditures, and the PAVAC defines a 10-year period, and it asks us to calculate the average spent within that period on local expenditures within Broadway systems.

So that $51 million is the number when we calculate it according to the PAVE Act.

Got it.

So that number would not, it's a steady number, right?

It wouldn't change because that's looksing looking at the historic tenure.

Is that correct?

Okay.

Um I know you Matt, you talked about 500 million in borrowing capacity.

You said every two years, but I know that 100 million dollars is coming in every year.

So could you just elaborate on that?

So it if you look at sort of what we what your sort of ability to capitalize if you get 100 million dollars each and every year coming into the city, basically how much you could bond that out over a basically creating a new steady state that is only for mobility.

Again, this doesn't take into consideration on any of our old projects, any of our other priorities, but if you because basically you'd be ramping up a brand new spend over it, you know, that seven year window for each new bond.

So you know, if you look at 26, 28, 30, and sort of going out forward, you could you could afford on that hundred million dollars, because that would be turning into debt service.

So that 100 million dollars becomes debt service to support those projects, and that 100 million dollars grows over time as well.

Um, you know, as the economy grows as people continue to move to Charlotte, that 100 million dollars or 104 million dollars continues to grow, so is able to continue to support debt service of a new steady state program that could be that high.

So uh to follow up on that.

So since PAVE Act, well, the referendum was approved.

Do does it still need bond approval?

Is that because we are doing the data capacity?

We are using it to issue a DATER.

So because we are going to be issuing the roadway type projects of transportation neighborhoods using general obligation bonds, that necessitates us going to voters for their approval each time we want to do a G the requirements for us to get a bond referendum approved by the voters any time we pledge our full faith in credit, which and from a modeling perspective, we can identify internally the payback paying for it, but the legal pledge requires us to get voter approval.

That makes sense.

And this 500 million dollar includes both steady state, the mobility transportation as well as the uh housing and this specifically is just on the mobility side.

Oh wow, okay.

So what is what is our steady state number for the other 176?

That doesn't so I think that's gonna be actually part of the the second half of this conversation because a lot of this is going to be policy-driven decisions, and I think that's actually what we want to get some feedback today to figure out kind of how do we want to balance all the the different and that's another reason why we felt it was important to break it apart so you can really have strategic decisions on all the the levers to make sure that we're identifying what the priorities are in the best way.

Okay, and one last question.

In terms of um, I know you were recommending 300 million.

Uh so does that include does this take into account some of the reimbursement that we are incurring from for MPTA?

So that would be separate.

That's that's more sort of the transition operational cost, I believe.

This is really uh just the set of looking at just the mobility, and that 300 number is just the transportation and neighborhood portion that we're recommending.

Okay, that's all I have.

Thank you.

All right.

Um, council member Kemberley.

Thank you, Madam Mayor.

Thank you for the presentation, and I appreciate that we're only part way through, but I I do appreciate very much the opportunity to ask a few questions that came to my mind and are just causing me to be a little fixated.

Um, can you help me understand as I look and I'm glad we're on this slide?

Is the general fund where I would find any set-asides that we have made for residential or business displacement with any of these projects?

I think we heard at the retreat that you know we're gonna be doing some pretty bold things with this money, and there's gonna be some some um consequence to that along some of those corridors.

Can you speak to that?

So uh go ahead, Mr.

Dennis.

So I'll take the first shot.

Uh councilmember Owens.

Um Rebecca, we're here, but I'll give it the best shot.

Um hundred million dollar bond that we had in housing in the last bond cycle, a great portion of that is related to anti-displacement.

So when you start to think about some of the things we'll do around anti-displacement, it wouldn't be.

Exactly.

Yes.

I just I I that's what I thought that it was because I know that when we were talking about the PAVAC, and I would get that question from people is there a portion of this that is allocable to displacement, and the PAVAC didn't address that.

And so I guess my question is what sorts of assumptions, this is probably a takeaway for the housing folks.

What sorts of assumptions are we making?

Because this is a lot of growth.

These are a lot of projects, and that may be at a cadence that's a little bit faster than we generally go through those monies, and it feels like the displacement and the mobility that is attendant to that, or that the displacement that is attendant to the mobility needs that we're addressing feels like it really does um do a bit of a uh uh doozy on our housing abilities.

You know, there's there are other housing needs that are not mobility related, and I just I'm interested in that as a topic.

So I'll just kind of put that out there for y'all that I'm I I appreciate that it is coming out of where I where I feared it was.

Um what sort of, you know, as as I think the city manager said that you know, these are these are a long time in the making, you know, these these budgets.

What sort of assumptions of you if you have re readdressed them since we've got a war going on now and we've got increased prices, um, gas prices are up, everything's gonna be up, I assume, pretty soon if the if it continues to go on.

Have you made any sort of uh calculations in light of the change dynamics right now?

So I'd say on a cost of funds access in the capital market, it seems to relatively be up and down.

So we haven't had to change any of our assumptions there.

Um we may need maybe Ed or the general services folks to sort of talk about the cost of sort of inflationary pressures on the capital program.

But I do know that going through COVID taught the city a lot, and managers certainly can jump in, but I think it taught us a lot of how to address some of those sort of big shocks on inflation and making sure that we're building in enough on the front end to to make sure we can sort of level projects.

Well, and I'm glad you said that.

One of the things that I have heard from from a couple of constituents was questioning around the amount that we keep in reserves and how we generally have a double of the the number that is generally accepted to be what triple A should have.

Um that feels like based on your experience with COVID, we are well prepared, would you say?

I don't want to I don't want to.

I would say that that's really one of the hallmarks of the financial policies, whether it's us, aviation, water, maintaining strong reserves and liquidity allows us to address those short-term shocks and give us time to adapt to any long-term impacts that we may need to.

Okay.

Well, thank you.

I appreciate that.

No more questions.

All right.

Um Ms.

Anderson, you're up.

Thank you.

Thank you, Madam Mayor, and thank you for the presentation.

Um a couple questions around our organizational readiness, right?

So you talk about capacity and and uh understand that we we sort of stood up a team of teams to demonstrate the execution of the 55 million for CS.

But where are we as it relates to organizational readiness?

Because I think that is really the the linchpin of our ability to execute on um this this cash windfall that we're having.

So um Councilmember Anderson, we will absolutely positively be ready.

So what will we will need is some enhancements in this FY27 budget?

So there are two full two pieces to it.

One is are there any things in our processes that are not um best practices?

So the first thing we have to look is how efficient are we in moving projects through?

Then the other thing that is important is we'd have to look at just capacity in general, whether it's in procurement or whether it's in transportation, whether it's in um admirability office.

So uh it's our intention not to ask for a big CIP and not and i if we asked for that, we would pair that with the staffing level or the contracting level and aid it to enable us to execute.

Okay.

And so when we talk about the cash windfall and our readiness as organizationally, when do we anticipate, and I I'm not asking for you know a specific uh date and timestamp, but when do we anticipate that we'd be ready to begin to execute on these projects?

Is it a you know Q3, Q2 next year?

You know, when can we when can the public uh feel like okay, uh the city is beginning to take action with these dollars?

I'll take the first shot, and hopefully, Mr.

McKinney, I'm right with this, okay?

But you you'll jump in.

There are some projects that are shovel ready, and those are the first projects we we will attack, right?

We're already in 30% design, it's just been we didn't have the money, so we feel confident with that.

The other thing is really really important that we'll have a CIP that uh has many of the elements that we have today, sidewalks, vision zero, bike paths.

So what we will be doing is things that we have already done, they're in some level of design.

The funding just comes in, and now it's time to implement and execute.

And some of that will be ramped up.

Okay, okay, good.

Um do we have any type of uh reporting requirements uh at the state level that we have to demonstrate that we're executing uh the roadway dollars in a certain way.

Well, um not reporting specifically, but you know, of course, we could the state auditor could come and investigate how the funds are being used, and so that's why we have been so diligent and and thorough in making sure that we have tracked everything according to the PAVACT to a T.

Um, so so we could be audited, yes.

Okay.

I just think that's really important to bake in early on uh because we we know effectively someone's gonna come and ask us how are we executing on it's a new model of for the state.

There are other areas within the state that want to execute this type of model.

So I I say we we we bake that in early on.

And the last thing I'll say is that that you know there's a lot of the there is a lot of volatility in the market right now, um, but given the kinetic activity going on um in the Midwest and some of the signaling to them to the market, I think potentially some of these um inflationary pressures might settle down you know within a six to eight month time frame.

So if we're not executing within the next one to three months, we might see the tail of these inflation uh inflationary pressures begin to sort of settle, right?

And in that way we can make a better, a better purview, a better perspective of the real cost for these projects.

Thank you.

I greatly appreciate uh the presentation.

All right.

Um Ms.

Watlington.

Thank you.

Um I've got a couple of questions, and I'm the I'm really just trying to tie in the big so what, if you will.

Um the first question, just because you've already started to address it, Mr.

Manager, is as it relates to like operational excellence and project execution.

Can you talk a little bit about the strategy to actually identify the gaps in the value streams?

Yeah, so uh council member Waddlington, uh that's been my uh guess fight with my team over the course of the last uh month, which is good fight.

Um I I'm just not gonna come to you and say give me 70 people, right?

Because we are already examining can we be more efficient in procurement, right?

Do we need more um does the city attorney need more legal staff in order to review or so?

Some of this will be a combination of um contractual arrangements that we already have, and some of it will be as we start to look at this capacity, it will be adding additional folks, but not just throwing a hundred people in to say that we need a hundred additional bodies.

But you're right, the first thing, and we've been doing this for a while, is to take a look at um how efficient we are in delivering the projects.

Bottom line is when you look under the hood, it's tough because we took a bunch of people off of sidewalk projects and bike path projects and things like that, and we moved them over to see us.

So we have a little deficit there.

So whether the first move is moving them back and then adding capacity or backfilling.

So it's those are the kinds of discussions that we're having to make sure that from an organizational standpoint we can do project delivery.

And I'll do a spoiler alert.

We'll we'll have a project delivery team or project delivery office because we have to do something differently.

Thank you.

I would um be very much interested in and I'm gonna make an assumption that you all are creating value stream maps to identify the eight different types of ways.

I'd be interested to see what that looks like because there may be some efficiencies that could be gained through technology investment rather than necessarily labor, right?

And and other other means.

So not sure how um how sophisticated for lack of a better word, your continuous improvement and transformation uh work looks, but um I'd be very much interested in understanding how that ties into the overall strategy as we start to think about if we get if we need to make ads, have we really been able to articulate and justify um justify those net additions versus being able to replace it from another space?

We'd love to use your expertise.

I loved enough already.

That part.

Um and then my second question, it's I'm gonna try to articulate and help me get there.

So I think about the projects that we identify or that you all identify, and we've got what hundreds of projects, right?

Um, when we look at that uh the strategic investment areas, etc.

Can you help me understand what the future state assumptions were that were identified?

Let me ask it differently.

What I mean is there were certain projections in terms of traffic based on building building intensity and density and all of those things, right?

Um and then we identify projects that would alleviate whatever the we expected the infrastructure needs to be based on those assumptions.

Have we mapped that to a sp a particular year, say 2040, 2050, 2030, or are there projects that are not identified yet that are going to be needed to close future gaps as we continue to build?

Does that make sense?

And that may be an McKinney question.

I I was gonna say I think that some of the discussion we've had is you know, because part of the figuring out what your spend rate is gonna be is what types of projects you're gonna do.

So that that becomes a big conversation with myself and Kathleen Chisek, the chief city engineer and McKinney and henna's.

We sort of get a bit of a chicken in the egg sometimes of what projects drive spend rate and what spend right drives projects.

So that that's been a very big part of our discussion, so making sure we're we're matching those up to that way we're maximizing our flexibility to deliver the projects that the council of the community wants while maintaining a spend rate that sort of fits within our financial plan and not sure if manager or ad have anything at the moment.

And the next thing I'll go through is probably the best way then yes, sorry.

Um answer to your question is all the above, and I like I said, I when I get up, I can walk through.

I've got some things to talk about what that looks like for so I it might be better to hold that question and I can circle back to it in a few minutes.

Perfect, thank you for that.

I'll look forward to that because how do we tie that back to our zoning decisions, for example?

I want to be very clear like look, I'm knocking on the door of the limits of what we know we can pay for with this particular growth.

So um thank you for baking that in.

Um and then lastly, uh this follows up to my I'll say almost a decade old question now.

Mr.

Manager, you probably know where I'm going.

Exactly.

Also growth.

Yes.

Exactly right, because ultimately I want to make sure that we're not building our way into even more debt, right?

Um do you got anything from me this year?

Just curious.

I mean, I think one thing to note is because this is a sales tax as people are coming into our community, whether it's you know, hospitality, you know, things over the weekend or coming into use our source, that is an opportunity for us to capture a lot of that that growth that's occurring that may not stay here from a property tax perspective.

So I think this is a great way to be able to capture some of that that revenue and put it back without putting that burden back on property owners.

Thank you.

I'll keep asking that one.

I appreciate you.

Okay.

Let's see if we can move on after this.

Maybe we'll get some new hires right now.

So um, Mr.

Driggs, you're up.

Thank you, Mayor.

So I'm just trying at a high level to reconcile where we were and where we're going to be.

So we had uh three types of bonds.

I think it was a total of 400 million dollars in the last budget cycle for affordable housing, neighborhoods, and transportation.

Now, is that transportation money the road money?

Right.

So that that's the money that's the subject of this uh slide eight, right?

Talking about what we're spending.

Uh and then on slide 19, we have wait a second.

Anna?

Can I can I clarify and just make sure that I understand exactly what you're asking?

This on slide eight, this is local expenditures and indebtedness is removed from the PAV Act.

So there is no debt in here.

This is all property and sales tax from the general fund from PAYGO or cash payments from the debt service fund.

So this is this is no local expenditures that went to pay debt proceeds.

But this is for roads, right?

Yes, correct.

Right.

Local expenditures.

I'm wondering then when you have these two models, like you've got the mobility model and the housing and facilities model.

Are we assuming that the revenue that we will use in the mobility model is effectively 150 million dollars, being the new money from the PAVE Act and the money from the general fund?

No, sir.

The the revenue on or excuse me on slide eight, all of this is going to stay exactly where it was.

So we're going to continue using our local dollars in the general fund to pay for transportation.

We're going to continue using our general or local expense, our local dollars in the general fund to pay our street lighting bills.

None of this will change.

So that that new revenue is net new.

Right.

So then we've got we've got a pipeline of projects, some of which will be paid for from the from the general fund uh model, and some of it will be allocated to the mobility model.

Is that right?

I believe that the general fund will maintain this list of funding for sort of operational expenses behind transportation and roadway projects, or the payback will fund for the new capital projects going forward.

That was my next question.

So you're now talking, we have from our general fund an allocation to debt service and an allocation to operating expenses.

So are you saying you expect essentially all of the PAVE money to go into a debt service fund?

It it could, and that's part of the next part of the conversation is it's really a policy choice.

So you're modeling it though.

You're modeling debt capacity based on the assumption that you have up to 100 percent of the pavement money available for debt.

If if we did that, the 500 million dollar, that was assuming it all went to debt and basically nothing else.

And then that's what we're recommending, staying at the 300 million dollar level as you start to figure out maybe there are some operational needs that will support the capital program that we want to carve out to identify.

Okay, so I I think we just need to understand that on Apples with Apples basis, the 400 million and where we were before with our 220, whatever million steady state assumption.

Uh and does that assumption change?

Like in in that old fund, do we do are we still within the 220 million dollar steady state?

But I believe there have been changes to it because of the PAVE.

And I'm just trying I want to know what those deltas are.

I mean, I'm just telling you that I'm not asking you right now.

But uh, what is the impact on because I assume we're in you said 300 million on this slide for transportation and neighborhood.

I I assume that there is an additional amount for housing for affordable housing.

Yes.

So there will be some more discussion on the housing and the facilities upcoming, but we'll be taking essentially the 170 million that was planned for 2026 and the prior steady state model, moving that over to this new mobility model where we're now recommending the 300.

So that that's why we're we're actually planning to separate.

So we'd have, you know, we're recommending approximately 300 million dollars for the transportation and neighborhood in that mobility bucket.

And then what we're gonna talk about next are some of the decisions around what stays and the housing and facilities program, so that way we can look at that affordable.

The 300 million includes the PAVE money.

Is that what you're saying?

So Matt, I I think what council member Drake's can we go to slide 15?

I think what he's asking is what's in the mobility steady state and how are we paying for what's in the mobility steady state going forward?

What's going into the mobility steady state going forward will be the payback sales tax, and and we believe that we should have at least an allocation of existing property tax to that fund as well.

Right.

And this is the separation that I'm trying to make in my own mind, because what I'm I'm trying to get at is uh if it says transportation and neighborhood bond 300 million, is that does that align with the housing and facilities steady state calculation?

Or where is the 300 million coming from?

That is a new mobility steady state.

The old steady state will only have housing and facilities in there.

So this says transportation and neighborhood bond 300 million.

Where does the 300 million come from?

Which model is that?

The one on the right, the mobility steady state.

Neighborhood comes from the mobility.

Neighborhood is primarily some of the transportation roadway infrastructure that, and this is uh getting a lot of my scale, but typically much smaller, maybe like an intersection for a road as opposed to a longer roadway system or a smaller sidewalk.

That is what we use.

There was neighborhood and there was transportation.

So this isn't the same neighborhood definition as we were using before.

Yes.

It is or is not?

It is, it is the same.

Okay.

I'll look forward to seeing more numbers.

But um I think I get that.

Thank you.

I think you said that last year, Ed.

You wanted to see more numbers.

I know.

I'm struggling here.

Um so next um up I have yes, please.

So just uh a little clarity.

Councilmember Driggs.

Neighborhoods previously, we would say things like P3s and things that nature the vast vast majority of the projects under the neighborhoods were infrastructure projects, much like all of the transportation projects.

So what we'll do is show you how we've spent the neighborhood money over the past, and you'll see most much of it, almost all of it, is infrastructure.

So all of it would be eligible then for mobility for payback money.

Exactly.

Okay.

Thank you.

JD, just a moment.

Here you go.

Thank you, Mayor.

Uh thank you for the presentation.

I appreciate it.

I'm really interested to know if we have a criteria on that we use to prioritize capital projects.

Um particularly, you said you know, ramp up.

Well, what dictates us to say we're gonna ramp up these projects, right?

And so I really want to know if there's a set standard that we have as a city to say, well, we're going to work on this project and expedite it first and not this one.

What's the what's the why behind that?

Um the other thing is how are we measuring that success?

Are we getting an ROI for all these projects that we're funding?

Are we seeing um the impact really happen in the communities?

Um the other thing I was interested to know, and and these are just more questions for offline discussion, um, because I want to be respectful of time.

What are we not funding in this capital investment project strategy, right?

That we have really said we prioritized.

Um, for example, if we had 10% uh, you know, I'm just being crazy here, but we had a 10% revenue shortfall tomorrow.

What projects would we just delay or eliminate completely and not follow through on?

Um and I also uh uh council member Wallington really brought up a good point on like pause for growth.

I I you know you you said uh Manager Jones about the staffing decisions from some sidewalk and back land projects to staff our 55 million two-year commitment for COS, right?

Uh I have a concern about equity there, right?

Because you know, how are we making sure we're not taking capacity away from projects that we promised voters decades ago?

For example, I mean, it's a real life example in my district.

We just this council voted last month or a few weeks ago on a 12-year-old project on Central Avenue in Court Kilburn for a shared use path lane, right?

That folks voted on that in 2014 and 2017 and the bond, and they we did not vote on this until 2026.

So I think there is we might be chewing more than we can take sometimes, and I I I can appreciate this council and this city's approach on keeping up with the pace of growth, but I'm always concerned about the inequities of moving too fast.

So pausing and thinking about smart development and smart growth is essential for me because uh you know I don't want us to overcommit and over promise on these infrastructure proje projects and then have voters wait 12 years when we promised them a let's say this was supposed to be two shared use path lanes on both sides of the street, and now it's only one, right?

Because we incurred inflation costs, you know, rising cost of construction materials, etc.

And then they were given just a smaller scale project.

So I just want us to keep those things in mind.

Thank you.

And I would thank you.

Uh I would just add 12 years ago, pre-advanced planning, pre-steady state, so we feel comfortable now that we're in a much better place than we were uh 12 years ago.

Councilmember.

Thank you.

Mr.

Jones, you are absolutely right.

I remember the cross Charlotte Trail.

And I I think we learned some critical lessons there in terms of not choosing winners and losers, and really delivering on what we had promised.

Uh I remember uh council member Mayfield and Mitchell, we were part of that.

Uh and Mr.

Drake's we were part of that, where we had to make some tough decisions because a lot of this projects didn't go through some of the vetting that it goes through now.

So I certainly appreciate so I have a lot more comfort now when I tell constituent this project is in our what do you call pr advanced planning design that we are going to deliver because we can now put some certainty around numbers and um how accurate that number might be with the variance that's uh there.

So I certainly appreciate so I have a lot more comfort now when I tell constituents this project is in our what do you call advanced planning design that we are going to deliver because we can now put some certainty around numbers and um how accurate that number might be with the variance that's uh there uh but a couple of questions in terms of the mobility study state.

I just want to make sure I I get this.

So we get 500 million uh capacity based on that hundred million dollar uh sales tax revenue every yeah uh but you also mentioned that we will also include what is minimum minimally required based on the PAV Act, which is 50 one 51 million dollars.

That's minimum.

So the mobility steady state would include that uh 500 million steady state capacity every two years plus 51 from the general fund, or would that be different?

No, ma'am, that would be separate.

Okay, so the 51 it's sort of it's not like a capital, it's operating.

Correct.

Okay, but it will still fall under the mobility bucket.

It's still uh spending on transportation and I mean at the end of the day, see when you're talking to a resident, it doesn't matter whether it's coming out of operating or capital, they want to just see that they approved cell stacks for transportation and infrastructure that it gets spent on the transportation and infrastructure so that we keep up with the aging growth, I mean infrastructure as well as make new investments.

Can I?

Yeah.

So uh thank you, Councilman Ashmira.

I kind of look at it as two things.

One that 50 million dollars in the PAVA Act, it was designed so that you couldn't take the new zero art and all of a sudden pay for stuff that you've been paying for all along.

So you're exactly right.

We're going to pay for stuff that we've been paying for all along, right?

And then on top of that, we've got to do that.

Yeah, I'm gonna add more.

I I get that.

So I guess you know, when you look at the mobility steady state, it doesn't necessarily it's a comprehensive number because we're still putting our general tax money towards that that just shows our commitment to the infrastructure and just the growth, just try to keeping up try to keep up with the growth.

So the definition that it's in the PAV Act for roadway system, is that the same definition we used previously for neighborhood bonds.

Um I would I would say, and you guys can step in.

We are going to make sure that we use the definition that's in the PAIVAC when it comes to using payback dollars for these projects.

So then in that case, I will certainly um because I know that roadway system does include some of the C up goals that we have, uh, especially our infrastructure when it comes to some of our C up goals.

Uh, and I know that we haven't always had funding for that.

So I um I'm sure that we will consider that moving forward to ensure that we are meeting our C up goals aggressively, using the dollars to meet the infrastructure needs.

That's all I think.

All right, anyone else have a comment?

Okay, what's our next step, Mr.

Jones?

Uh we're back to Hannah.

Back to Hannah.

Now we get to have revenue policies.

That's right.

I love policy decisions, you know.

So Hannah Bromberger again, deputy budget director.

Um, this is the last section, and then uh Professor McKinney is next.

So I will try and be quick so that you can get to him.

But I do think this last section is gonna answer some of the questions that we just had.

So hang with me for another minute.

Um, so this last section, it draws some connections to how all of the general revenues are ultimately connected, and how resource allocation should be directly linked to your policy priorities.

So Matt showed you a very similar slide illustrating how the pay vac revenue within the municipal debt service fund will only go into the mobility model, and that other general revenues on the bottom will flow into both models.

Um, and and that's for rating agency considerations and for some other reasons.

But there's two differences in this graphic that I'm trying to illustrate.

First is sort of this arrow up on cash funded mobility projects.

And so I want you to know that you can choose to cash fund mobility projects.

You don't have to put it all into the debt service model.

So think of this like choosing to increase the allocations to relevant pay go projects, or think of it like increased advanced planning pool for more mobility projects.

The second difference is that there remains a policy choice to be made around how much general revenue is allocated to housing and facilities.

So Mr.

Dregs, I think this sort of gets to your question of apples to apples.

We haven't talked about the housing and facilities part yet, and so that's why it wasn't quite apples to apples yet.

Is then how much is available for other priorities that support the greatest community need.

And just as a reminder, the allocation of revenue is what we do annually.

So every year when you adopt the budget, you adopt the property tax allocation between the general fund, pay-go, and the debt service fund.

And so this is this is just like that.

Um in fact, it's the first budget principle that tells us to do this.

And so I've listed a few allocation adjustments from the past three fiscal years as examples.

So as I prepare to wrap up and turn it over to you for discussion on your funding priorities, I have just a couple reminders of where we are today in the CIP.

So first one is on the housing bond side.

Remember that we had $50 million bonds between 2018 and 2022.

In the 2024 bond, we increased that to 100 million, but not without taking some action.

So we had both a property tax increase and we pulled forward out year capacity in order to facilitate that $100 million bond.

And if you look at the schedule today, as it is in the current fiscal year budget book, those housing bonds returned to $50 million in the out years, including in 2026.

In the on the facility side, we have um almost $85 million of capacity for facilities projects, but only about $11 million of that is currently unprogrammed.

So it's already programmed in the out years for ongoing projects or programs.

Um so only about $11 million unprogrammed, and we have quite a few projects in the advanced planning program, including the helicopter hangar and the CMP, excuse me, the CFD commercial burn building.

Remember, we've been talking about the state of our facilities funding for a while now.

This is a slide from two years ago where we were trying to acknowledge that we had facility needs, and so we needed to include some projects in the advanced planning program in order to keep the pipeline of projects moving.

But we also knew that we were going to need more capacity to construct those projects in 2026 and beyond.

And we know that our growth and expenses is outpacing our growth in revenues.

Um this is also something to think about as you think about your priorities and how you want to allocate revenue.

So Matt and I are happy to answer any questions that you may have.

Um, and we would just like to hear a little bit about your funding priorities as we head into FY 2027 and resource allocation.

Okay.

And then Miss Kimberly, and then we'll come back to the gentleman in the room.

Sure.

It's just it's just five.

Who's going first?

Um we're going to go dump first.

Thank you, Madame May.

So go back to the slide number 24 where you got the housing and facilitat facilities side by side.

So we're looking at 84 plus 50 million in capacity for housing and facilities.

And and to get to a capacity number, we need to hear a little bit more about your priorities because capacity is all based on the amount of revenue that we put into it.

And so it sort of depends on on how we want to reallocate.

Okay.

So in the past years, how much did we allocate towards capital?

And we had a steady state capacity, I think it was 170 million in the previous cycles, correct?

For the for the mobility, the transportation and neighborhood portion, that was everything, right?

I mean now we are that did not include the housing.

Oh, that did not include the housing.

Okay.

So housing capacity back the last bond was for $100 million.

So now it's back to what is budgeted right now is $50 million.

But based on the discussion today, if we hear that $100 million or whatever number council deems is the appropriate amount, we would then go back and start looking at the revenue split to what we would need to be able to achieve a number different than 50 million.

But that that is what was in the budget when you previously adopted it.

I think we're looking for guidance, right?

Yeah, so here is obviously I would like us to continue with 100 million dollars, but what I would like to see is for housing and facility.

Let's remove that mobility steady state number, right?

Because that can't be touched for the for this.

And let's remove that 51 million minimum operating that we have to allocate towards the infrastructure, transportation.

So uh how much what is the max capacity we would get a steady state capacity for housing and facilities both?

That I guess I'm looking for a steady state numbers to really help with recommendations on how much should be the housing bond capacity.

Obviously, I would like us to continue to fund housing bond at 100 million dollars to really address the critical need.

Yeah.

So mayor, thank you, Councilmember Ashmer, and hopefully we can get off of the slide.

Absolutely positive.

No, no, no, but but but no, no, go back, please.

All right, so so uh what the team is basically saying, think about this as three buckets, okay.

Uh there's a bucket that's related to the general fund.

In the general fund, we play police officers, firefighters, right?

Uh, then there's this this paygo bucket that is really, you know, kind of sort of things of one time in nature, and we take a piece of money for that.

And then there's our debt service fund.

What the team is saying is depending on how much you want to go in our CIP, it is going to um have an impact on how much we go in the general fund.

Right?

So the way to alleviate some of that is you need more revenue.

So whether there's a property tax increase, that gets you more money coming in to divide between paygo, the debt service fund, and the general fund.

So there is no recommendation on slide 24.

It's just facts, what's in the budget, and that's the beauty of having the budget workshop because we will leave today with some direction about what you would like to do in the CIP, much like we had some direction at the retreat about what you would like to do with pay in the operating budget.

Okay.

So let me follow up on that, Mr.

Jones.

Um previously, without the property tax increase, we had a number, right, that would give us the capital because a lot of our general fund is fixed, right?

Because 60% of it goes towards public safety.

There is very little wiggle room there.

Um what I'm trying to get to, it's what's that wiggle room without the property tax increase currently, like we had in previous years.

Sure.

Right?

I mean, that would mean that number would be both for housing and uh facilities combined, but at least that will give us an idea.

Yeah, I I'm sorry.

So nothing I'm gonna be close, but you can land the plane.

So uh we had a steady state, but then the steady state it was 223, 220.

Um was an anomaly.

And it each time I say it, I think I irritate council member Driggs because we've pulled forward capacity to prove that we can deliver projects.

So that 400 million, I think 237 may have been 238, I think was transportation, and I think that's what you're asking.

How much was transportation, how much was um neighborhoods, and how much was housing.

That's right.

And then with the cops, not police officers, the certificates of we need a different term.

Certificates of participation, we do those over a two-year period.

Do I get that right?

And so she wants to know that number, the housing, as well as the um transportation.

That'll be your level set.

I'd ask you to compare the 22 bond with the 20 6 bond.

So to follow up on that, I think it uh I know that 24 was unique because we did frontload, right?

But then also now we have we don't have the pressure we did in 24 because we didn't have the sales tax 100 million that we could all the 300 million came from general fund, right?

From our property tax dollars.

Um I think having that number would help us.

Uh, but at the same time, I also don't want to discount the facilities because I know that helps with the response times.

Uh thanks to you all and Ms.

Harris for providing some of the response times numbers.

Certainly we've done an excellent job with uh 911 calls being answered and meeting the benchmark.

But when we look at prior, when we look at the response times for arriving on site, arriving on scene, priority two, three, four are lacking.

And I think the facilities, I we cannot discount that because that helps.

Uh at our town hall last week, both chiefs focused on the facilities as well as recruitment and retention to help with our response time.

So I I also want to be mindful of that.

So obviously I think there needs to be more data given to us in order for us to come up with recommendations, at least for me.

Um but I also read about, and I think we use COPS to also fund some of our fleet, like fire trucks, or do we not?

You can, so I'd say when we build new fire stations, that's included in the cost of the building out a a brand new fire stations.

We also utilize basically an internal loan within ourselves to help finance a lot of our rolling stock right now.

Um, but you absolutely can use um cops or installment financing to to finance um police vehicles, fire vehicles, general general services vehicles.

And that's not that's historically in the last several years has not been a part of that because we've been able to find a different funding source so we can maximize our facilities.

I think that's fair.

Um, because we want to maximize our facilities dollars.

Uh but I I will put in a plug for uh some of the recent media reports have reported on um fire trucks and long delays that we have experienced after the pandemic.

And I know that uh many uh here man in red have advocated for fire trucks and just uh because I think a lot of them are having to deal with a lot more repairs.

So how how do we do all of that within the resources that we have?

Uh it's not it's not I I can't give you an answer today that let's put hundred here and 30 here.

Uh I think I just need to see more because I'm also being very mindful and thoughtful about how property tax could impact the very people we are trying to protect.

So that's all I have.

Thank you.

All right, Ms.

Mayfield.

Thank you, Madam Mayor, thank you for the presentation.

So what we recognize based on the growth that we're seeing and the multiple financial requests that we have received from community, although Dr.

Wattlington and myself and council member Driggs worked over our summer to come up with the allocation of the 100 million, that was not an easy task when we were trying to identify what buckets the money should go into.

Today, what we're looking at is two weeks ago we approved the final 3.5 million that was just in the NOAA bucket alone.

Well, we got multiple NOAA requests that are still going to be coming, and we have to have a conversation about are we going to look to reallocate full transparency?

I'm not supporting anything that's going to take that 25 million from home ownership to try to put it somewhere else when we said this is the bucket, the bucket has been exhausted, but we are afraid to have the conversation with our development community.

I would like to get an update on exactly what has been the tax revenue impact of our TIGs.

Since we keep talking about the fact that we're not generating enough revenue, but we give beautiful subsidies to corporate interests while our community is looking at tax increase.

Where I'm also with I would like to see the numbers regarding how do we justify to the community these multiple tax increases that they buy the voter for, or we are going to implement, but then tell them that we are considering a reduction on our housing trust bond.

It would also be helpful since we love to do comparisons of other cities.

I believe all of us received information from one MEC and their recommendation, but what I appreciate in their recommendation is that they looked at Austin, Texas, Columbus, Ohio, as well as one other community, I believe, and we take it to the voters, and our voters have overwhelmingly supported the trust, the housing trust fund dollar requests, as long as we can prove to them that we have been good stewards.

I think we have a strong case where we have shown that we have been good stewards.

We have about 43 and some change, and Rebecca can correct me, million left out of the 100 million.

That's not taken into consideration the multiple asks that we have out there, but opposed to having on the board this initial 50 million.

We got as a council, we need to have a real conversation of increasing.

I'm not saying that I'm going to support the 500 million that Columbus did in 2025, but we have to have a real conversation based on the needs that are in our community today, and try to project that out 10, 15 plus years versus five years, and look at is 200 million a realistic ask for our constituents.

I can say personally, 50 million is not even a consideration for me based on what we have seen and what we have been able to do, as well as what the needs are as our standing community, and this is really for you, Manager Jones.

We are seeing a number of the developments that we have invested in.

They are going to be rolling into private ownership within less than a decade based on previous approvals that we have done at 15, 20 years.

Others, our residents are being priced out of those units based on the individual units model of increase and the impact that that is having locally.

So I would hope to get the responses back on again what is the impact on our revenue for these TIS, exactly how much have we discounted and how much revenue is coming in to help offset these costs because those are taxes that are not necessarily being paid at the level that we need.

How do we justify to the community even a consideration when we're increasing taxes but saying that it's planned for only 50 million?

And what would a would our debt capacity look like if we were to look at 200 and to 200 to 300?

Let's just get the range.

So that's two, two twenty-five, two fifty.

What would that look like in capacity for us to go to the community with a realistic ass that's gonna help us achieve the goals that we want that we've already committed to because we have some projects out there that there may be commitments on that haven't necessarily come to full fruition, but as we're moving through and we look at the totality of the housing bond and the five categories, at some point the mayor is going to help identify the ad hoc committee for us to go back in and look at the numbers again the way the three of us once did to see if the allocations are still appropriate.

Thank you.

So uh Miss Mayfield, I can I say something.

I I um I say this because I remember when we did the first 100, and I remember when people were in awe that we would do that, but we did it, and we did it in a way that everybody had an opportunity to have more opportunities for housing, and it was it was amazing what we could do.

And I I guess what I'm saying is that at some point we're gonna have to figure this out.

We cannot have people sleeping in our streets.

We cannot have without people kids not able to be able to go to school and all of these other things that it makes a big difference.

So I hope that um Miss Mayfield will stand up for this.

I think it's very important for that to happen.

So with that, I think I'm supposed to ask Victoria Watlington what she would like to talk about.

And are you done?

Oh, the manager, he yeah, he's here.

No, um so thank you, Mayor's council, and thank you, Councilmember uh Mayfield.

One of the things we didn't want to come here baking a cake.

So we get your input.

We have modeled a 400 million dollar bond, right?

300 million with the um transportation in neighborhoods, 100 million with housing in perpetuity.

And there's affordability with that.

Is that fair, Matt?

That's correct.

We haven't done any, we've done some other things like what I wouldn't recommend, like modeling 500 million for transportation in the first year.

I would not recommend that.

Um, but even with doing 300 million transportation, 100 million housing, there's still some capacity in the out years to potentially take the transportation higher.

So that is kind of our baseline.

Is that there to look at to try to replicate exactly what you took to the voters at the last cycle.

So, Mayor, just let me follow up just for clarification.

I appreciate that we have modeled out 400 with the 300 and the one.

What I'm asking is for that new model of what would it look like, separate from transportation for our housing bond to have that window of two to three so that we can have a more realistic conversation around this dais, and when we go to the community, we are able to share this is what we've learned, and we're not trying to.

I want us to be conservative because these are tax dollars, which is why I want to know where those other taxes are coming in.

But we also need to be realistic about the needs that we're seeing in our community, and when we have cities that potentially are comfortable, which is why I also would love to have that information, and they are able to have three to five hundred million supported just for housing that cannot be utilized in other places, but that goes into the buckets that we've identified.

I think we owe it to ourselves as representatives of multiple constituents in this community to do that work so that we can have a conversation that's going to take us into the next generation.

Let's see.

Um I think Ed who is next.

Um, Miss Watlington.

Yeah, right.

Thank you.

Um I think Councilmember Mayfield hits on something that's important to me, and it's just it's really that the operational discipline as a prereq to revenue requests, right?

Um we've had this conversation for several years now, zero-based budgeting and really understanding what are we already spending and how is that tied to our metrics, taking us back to our um our council retreat when we talked about what are the things that are important to us that we're really trying to move the needle, how did we perform versus last year?

Because for me, the number is going to follow the purpose of the dollars.

So I'm not interested at all in spending 100 million on additional rentals, for example.

I I would be very inclined to spend more money on home ownership.

So for me, it's two things.

It's how are we to your earlier point being good stewards of the dollars that we're spending.

I think we owe that to our constituents every time we ask for an increase.

Let's show our work that we're spending our dollars as wisely as we can, and that our metrics are delivering the outcomes we said are important.

And I think we we have to understand that there will never be enough money to deliver everything we want to do, but that's the importance of prioritization.

Um, and I think that that's the piece for me.

Every time we get to this part of the year, it feels like we're kind of trying to catch up.

Um, because it seems like there's some foundational things that we need to do that would really um steer the discussion at this point.

You know, actually I I wish that we would have some kind of way to do a design to say to people we want people to have housing, and we want everyone to be able to participate in it.

And I I think sometimes we jump out with the money without having the idea of what we have to do and who's going to do it.

Um I had the wonderful opportunity to go to California, which if you go through there, I guess, places and that you just have ownership of something small.

Um, and I remember the the uh the tour guide said one of the most important things you have to do for housing uh are is to be able to get a TV station because everybody wants to choose their own TV show.

And it's true, it's little things like that.

$79 for a TV inside of a building, and we're spending how much more.

So I I hope that this is an opportunity for um the committee to really run with us.

And so I think we have I think we have uh Ms.

Anderson next.

Thank you.

Thank you, Madam Mayor.

You know, I think this topic is a um could be a uh a challenge to some of our affordable housing developers here to have a a reimagin uh a reimagining uh challenge to put forward where they can come with concepts around you know the art of possible because there is a capacity, uh there will be some capacity opportunities as well, but they have a list of places and locations that they would like to uh put up housing.

Let's have a you know, sort of a a SWOT approach to some of the our best minds within this space who understand it most, and then I think that could inform our conversation even further.

But the housing conversation has to be um had also with our mobility conversation because on a monthly basis we talk about infrastructure, the lack thereof, um, the choking of um certain intersections and thoroughfares um that really cannot sustain the growth.

Um and certainly with an it an injection of you know two to three X of what we're putting out there, um our our infrastructure will fill it.

So I think this that conversation has to happen in tandem with some level of prioritization around um locations throughout the city who might that might have a level of readiness before others without increased infrastructure cost.

Um love this conversation about housing, but are we talking about are we only talking about housing here?

Are we talking about um I think we have another couple of people that want to talk about something else as well?

Okay, okay, great.

Well, I I wanted to talk about uh on the the right hand side here of this slide.

Seems like we're never gonna leave this slide.

Uh but certainly uh um advocating for some of the things that are on this slide, um the CMPD helicopter hangar, um, the commercial burning building for uh fire, and of course, as was mentioned earlier, you know, public safety is the lion's share of um uh certain aspects of our budget, but leaning into public safety in a meaningful way is gonna be critically important to sustain this year of momentum uh that the chief has uh the Chief Patterson has has called this.

So there's some really um good things on this list.

W our community advocated for the animal care control adoption facility, and so seeing that being able to execute, you know, we we we keep gateway station top of mind um all the time, but would love to see some update on any level of movement around that topic because we we talk about it quite a bit, but I I don't really see advancement.

Um not to say that that's not happening, but uh would love to just have a an update on what that really means for an investment and how how far it would go in this upcoming budget.

And uh at a certain certain point we're gonna begin to talk about our support as a council.

Um I I'd hope um and so I don't I don't know if this is the time to talk about that, but I definitely have some perspectives on individual council support both from a constituent relations and um and communication support.

Okay.

I'll leave it at that.

Mayor, thank you.

All right, so let's see.

Next up is Malcolm Grant.

Uh thank you, Madam Mayor, and and thanks Matt and Hannah for the for the presentation.

Um I got a uh the staff has really kind of uh kept me in the loop as the chairman of the the budget committee uh and we had a small conversation on on Friday as well in reference to the presentation and Ms.

Mayfield, I I told them for sure that 50 million dollars was a uh a non-starter for this group for sure, that there's a lot of momentum in reference to the housing space in our community, and I think you and Councilmember Wallington are really spot on in terms of it's just not a number, but how do we back our way into a number that makes sense for the community?

And so I I will leave that into uh the committee's hands to kind of lead us in the right direction when it as relates to that.

Um but I am really um um concerned and I put a circle around the gateway station for sure.

Uh it's in our uptown.

We've been talking about it for years, um decades maybe, uh, and I think it's really time for us to dribble a shoot uh on this uh understanding the complexities uh Mr.

Manager that it has attached to it.

Um certainly uh it's it is part of what we're trying to do from a transit mobility um perspective, uh and there are other agencies that may be involved with it uh as we move forward, but I think it's something that I I'm very very interested in.

Uh thank you for the information they sent me, uh Councilmember Anderson an update on that as well, because I asked the same question: where are we with it and how can we kind of get uh some momentum behind it, uh understanding the complexities that is thus attached to it now and certainly moving forward, and as a side note, uh Mr.

Manager, while I'm not up here, uh I do have a passing interest also in the um the transit um station uptown across from the from the arena um in reference to uh just kind of having a vision for how those two entities work together, if they work together at all.

Uh certainly the announcement that the Epic Center uh is now back on the market again creates um an opportunity, I think, to really kind of program two or three city blocks that from my perspective is kind of underutilized based on what's happening there.

I think the transit station itself uh uh has outlived this useful purpose at that location.

Uh and again, I understand there's some complexity with that as well.

Um, but certainly when I talk about gateway station and uh transportation hub in Uptown Charlotte, I kind of link those two things uh along parallel tracks.

Thank you.

All right.

Do we have someone else?

Kimberly?

All right, Kimberly, and then following Ed.

And then JD and then Demple.

Right.

Thank you, Mayor.

Um most of most of what I wanted to hit on has already been expressed by my colleagues, but I just wanted to amplify um, you know, one mech's speaking points were also very persuasive to me, seeing what other cities are doing.

And then also, you know, our time in DC and talking to other cities around the bounds of of as Councilmember Anderson said, what you know, what is the the art of the possible here and and what sort of challenges can we or should we be giving to our developer community, you know, looking at fee and lose structures and being appreciative of ways that you can subtly, and I'm speaking subtly because I I'm not certain what the legalities are and where we have to go request permission from Raleigh for some of this, and so this is born of my own ignorance.

But what are the possibilities to get more creative?

You know, I've talked at length about you know, when we look at the AMI percentages, you know, and and really looking at that 20 to 80 percent and getting very creative around each gradient that is in between those areas.

Can we can we do some some soft encouragement in some of the things?

And and for me, you know, that all comes down to a number that is is not 50 million.

Um years ago when I talked to one Mac and and the folks who are really in this housing space and some of our faith communities, even you know, they're like we think 200 million sounds sounds like a good number.

So I'm not comfortable with with a number that would have that, particularly at a time where we've already identified that we are expecting some displacement uh tended to building out the the silver line.

And so if that money is also going to be addressing those future needs as we look at mobility, I I don't see how we can get there with a with a smaller budget number.

So my priority would be on that.

I also though want to be very uh thoughtful about um, you know some of the ways that we um share our plans with the community.

I think if we've learned anything from what's going on with I-77, and I'm not gonna go there right now, but simply to say if we are anticipating growth causing displacement around where the silver line is going, let's have a community center out there.

Who's paying for that?

Is that money that's coming out of the housing trust fund?

But you know, these things that do bring along communities with the growth of our city.

We've got it, we've got to tell better stories.

I think we've got good stories to tell.

I just don't know where you find that budget to tell those, but I think that getting out in front of anticipated pain points helps both our housing and our mobility story.

So let's, you know, let's get it right.

So that's um that's it from me.

Thank you.

All right, JD.

I don't know, Kimberly's been preaching over here.

Ed, I'm sorry, Ed, and then you um so we've been we've been talking in generalities here, and we have some data points up there.

In the past, we had spreadsheets and bar graphs and stuff.

Are we gonna get those?

Yes.

So when are we gonna be able to talk about them?

Do we have another workshop or so we're gonna do that at that workshop?

Uh because I think a lot of what has been said here needs to be considered in the context of trade-offs and so on.

There's a certain increment in property tax that would be needed to service an extra hundred million dollars of debt every time, right?

So if you if you embark on a schedule where you're uh incurring a hundred million dollars of debt with each bond cycle for housing, then each of those requires another increment to the property tax.

So I I know we don't want to talk about tax increases, but I'm just saying we're constrained here.

And the sooner we get to a point where a lot of what's being discussed can be laid out in terms of the context of our needs and the costs and the revenue requirements associated with the better.

Because I think what we're talking about now is principles.

Thank you.

Thank you.

All right, Mr.

Jones wants to comment.

So uh thank you, Mayor.

Uh Councilmers and uh Councilman Driggs.

If we go back to slide 26, I think it's very important, and and I I'll own this.

Um while we say it, what we talked about last time, we need to build on all of these things.

So just as a little refresher as to your point, uh we already have a gap in the general fund, um, starting FY27.

There's been a lot of requests for police and compensation for fire compensation, fire houses, response times, things of that nature.

And I and I guess that's what I'm not doing a good job of again, those three buckets.

You have so you have the general fund, you have the paygo fund, you have the debt service fund, and as we've explained each year, there's certain things you can do how you allocate some of the revenue to those.

If we oversubscribe revenue to the CIP, it takes away from capacity from the operating fund.

So we just we'll figure out a better way of doing some of these trade-offs because it's easy to say I want this, I want this, I want this, I want this, I want this, but it's difficult to prioritize it.

Okay.

Okay.

All right, JD.

Thank you, Mayor.

Uh, again, thank you for the presentation.

So I I kind of want us to ground ourselves in the reality that a lot of our constituents and residents are facing, right?

To make sure that we are set up for success when it comes to affordability and making sure not only people afford to live in the city, but also are able to afford their rent or their mortgage.

And so I just want to go over some quick numbers to help us make sense as we continue to have conversations about potential property tax uh uh hike.

The FY26 county budget approved June 3rd of last year included a 96 cent property tax increase, which amounted to an annual increase of around $37 a year.

The city's budget last year approved June 9th, increased water, sewer, storm water, um, solid waste fee and rates, which was an annual increase of about $87 a year for the typical household.

2023 property reappraisals cost 85% of homeowners to see an increase in their home valuation, the next revaluation being next year.

Statewide homeowner insurance hike of 7.5% that went into effect last June, which costs an increase of $243 annually.

Then you have auto insurance hikes of 5% statewide that became effective October 1st, and now the sales tax that was passed last year, which had a 240 is having a 240 dollar impact a year to the average household.

All on top of that, with the North Carolina corporate tax rate being sunset to zero percent.

So for me, to my other colleagues' point and you know, answering the calling and finding creative ways to challenge our developer community, I fear that we have oftentimes gone into a corporate welfare state rather than one that takes care of our residents.

And so we really need to think clearly about not only our housing trust fund dollars, but also making sense when we are considering a property tax rate, which I'm all for.

But in order to be all for that, we need to make sure that the growth that we're going at, the burden that we are giving residents, not only us, but county, the state, etc., makes sense with our investments and that our investments, our budget, as we all know, that document is a reflection of our values as a city and as a county.

And we want to make I want to make sure that this council knows that with the housing trust fund dollars that it is reflective of those values to make sure that people continue to live here, not just the 157 that are moving to the region each and every day, but the folks that have been calling the city their home for generations.

Um and if you guys will allow me to.

Here you go, Mr.

Driggs.

Which I think would put us at a competitive rate across other cities in the region that have often, you know, Alana, smaller than us, has an international affairs manager, Jones.

You have seen that.

It was we had an immigration task force led by Federico Rios as well.

Whether it lives in economic development or community relations or what have you, uh we need to give support to that staff because again, we are at a crossroads where we are have great services, whether we deliver on those services exceptionally is another question, right?

And as we all know, everything costs money.

The other thing is uh making sure we're taking care of public safety, right?

A lot of the reasons why we might consider a property tax increase is because we want to make sure that we are solidifying and improving our public safety.

That means I'm all in support of the burn building um as well as modified duty positions to support injured firefighters and improve operational efficiency, and also giving them competitive salaries that match the rest of the salaries that we see in the Southeast.

Um and with our police force as well.

You know, we are a growing city and we come with growing pains, meaning natural disruptions here and there.

Um and then as well as you know, economic development funding our business district organizations.

We have seen the fruit of their labor with historic West End Partners and Five Points, as well as Charlotte East with the Eastland Yard Sports Complex.

And so as we continue these conversations, I want us to keep those things top of mind.

Thank you.

All right, is there anyone else that would like to speak?

Ms.

Ashmira.

Thank you.

Councilmember Massura already has an already started budget adjustment.

You're ahead of the curve here.

But great job.

I think some of what uh council member Masura Arias is asking in terms of the international affairs.

I know that we already had uh two staff members that helped us with the compass, a welcome compass.

And how I think some of our existing staff is already doing that, but how do we actually brand to ensure that the communities are being supported?

Uh especially when during the unrest during the border patrol, uh, where I felt like we needed we needed to fill void there in terms of the messaging.

Um but I I do agree with um Councilmember Masour Arias in terms of affordability because when you talk to residents, they are looking at overall property tax.

They're looking at can we afford to live here, right?

They are looking at tax, they are looking at insurance, which has gone up significantly, and the cost to live in the city continues to rise.

So I love when Councilmember Watlington always brings up the zero-based budgeting.

I think that should be part of our policy because we need people to show that we tighten our belts just like you do every single year, year after year, that we are doing everything in our power to ensure that we are not just passing the buck.

We are trying to figure out how are we being more efficient and effective with your tax dollars before we come to you and ask for more.

I think times are tough right now.

We are facing stagflation, right?

Uh we are seeing inflation, but at the same time, economy is slowing down.

Um we need to be very mindful about the burden of taxes.

Uh sales tax will go in effect in July.

Uh that's going to add to the burden.

So I just think when we look at property tax increase, this is not the right time.

And we have revaluation coming up.

Um Dr.

Watlington just reminded me of that, and that is going to hurt uh the very people we are trying to protect.

So I think we need to be very creative about our budgeting to ensure that it reflects our values, meets the community needs, but at the same time, we are being good stewards of our taxpayers' dollars as councilwoman Mayfield mentioned earlier.

So uh Mr.

Jones, you got a tough task uh here.

But I think you can do this.

That's all I believe in you.

Yes.

Um my gosh, it's four o'clock.

I I tell you, this has been a great conversation and a lot of good information, but we have a meeting that starts at four o'clock, and I think this is a closed session meeting, so let's see where we are.

Um, I think our city attorney is motion.

She has the motion.

All right, let's have a motion to go into closed session, and we'll still start with Andrea to provide us this.

Thank you, Madam Mayor.

I'll provide the language if someone can adopt the motion.

The motion is to go into closed session pursuant to NCGS 143-318.11.

And everybody here, I'm guys, we we really need to get this done.

So can everybody here okay?

Thank you.

And I'm sorry, I'm struggling with my voice today.

But the motion is to go into closed session.

Someone will need to adopt the motion, Madam Mayor.

Uh the motion is to go into closed session pursuant to NCGS 143-318.11A3 to consult with the city attorney regarding the regarding the legal legal implications of a proposed action and to preserve the attorney client privilege.

So moved.

Sorry.

All in favor, please raise your hand.

Is there anyone that opposes?

Does anyone oppose?

All right, with that, if everyone that's not a part of the council um would please move forward move along.