It's time for this biweekly meeting of the Finance and Business Committee of Denver City Council.

Join us for the Finance and Business Committee starting now.

This committee today is Tuesday, October 14th, although it feels like a Monday, but it's Tuesday.

My name is Serena Gonzalez Cutieres.

I am one of uh your council members at large and chair of the committee.

We have a few things on the agenda before we get into that.

I'm going to have everyone, the council members here go around the table and introduce themselves, and then we'll go into what's on today's agenda.

And I don't have believe I have anyone participating virtually, so we'll go with the folks in the room and I'll start here on my right.

Hey, Denver, Chris.

So Denver.

That was very perfect.

Paul Cash from South Denver District 6.

Good morning, Darrell Watson.

Fine District 9.

All right.

Okay.

I don't know what was in your copy this morning, but here we are.

With that said, we have uh we have at least one action item on the calendar today, and this is a presentation from General Services regarding the Secure Test contract extension.

And then we do have a briefing on the revenue outlook, and we don't have any items on consent, believe it or not.

So with that said, we'll turn everything over to General Services, have you all introduce yourselves and proceed with your presentation.

We'll take questions at the end, and go from there.

So Adrena Gibson, Executive Director Interim for General Services.

Happy to see you all.

Good morning.

Good morning, everyone.

Cammy Jolie, I'm the director of administration in general services.

And Nicole Sudret.

Gosh, where am I?

Citywide Contracts Manager.

I need your copy.

Citywide contracts manager for General Services.

Thank you.

Thank you for joining us this morning.

We'll go ahead and get started today.

Today we're here to discuss and present the citywide security personnel service amendment.

This will be the fourth amendment to the original agreement.

Thank you.

So we'll discuss the overview of the current contract for security personnel.

We'll talk a little bit about the spend from the inception through 1231 2025.

Talk a little bit about budget reduction changes, impacts, and opportunities that we've uh viewed over the course of this contract.

Um talk about some strategic enhancements for the future of a security solicitation, and then our resolution request.

So first let's discuss a little bit uh those contract and what's provided.

Currently, the agreement is with Securitas Security Services.

Uh the current term of the agreement is January 1, 2022, and is set to expire 1231, 2025.

With this amendment, we are asking your support to extend that contract term through 1231, 2026, as well as increase the contract capacity from 51.2 million dollars to 71.2 million dollars.

Um under this agreement, Secures Toss provides the city with unarmed and armed security personnel services, a screening at uh entrances such as X-ray, magnum meters and wands.

Um, they do also provide interior and exterior facility patrols as well as security monitoring and the security operations center staffing.

Currently, the contract covers over 30 um locations across the city.

That includes municipal um buildings as well as uh 24-7, 24 hours a day, seven days a week shelter sites.

And these services are both for programmed and emergency service requests.

Now I'll have Cammy uh talk a little bit about the staffing.

Good morning again.

Um, so Cammy Joe Lee, and uh I just want to mention quickly on the locations in the appendix.

If you're interested, all of the locations are uh listed there as well.

So uh as an overview for account staffing, we're using some of the slides that you all may be familiar with from last time that we came before this body asking for an amendment.

So this is just kind of a refresher of how this account is supported.

So we do do have dedicated account positions.

You can read them there, but several folks that are just specifically dedicated to the work here with the city and county of Denver.

Then we broke out the Secure TOS and subcontractor guard counts.

You'll see that we are basically right around our count from last year at 250, we're at 253.

That includes 153 unionized workers there.

And then I put the breakout between the full-time versus part-time.

So we are primarily our account is primarily full-time at 236 versus 17 on part-time.

There on the right hand side, you'll see most of our guards in the city are unarmed, so they don't carry any kind of firearms or restraints.

And this is specific to arts and venues that do carry pepper spray or OC spray.

And that those guards are only assigned to very specific specific municipal facilities that have gone through an assessment process.

So just so you're aware, none of our shelters have armed assignments.

So go forward.

But this time we decided to break out and show you actual counts from 2024 through September of 2025, just to kind of show you an idea of how many individual guards are getting training.

So this is above and beyond the minimum required training that's 40 hours per week.

So this includes both Secure TOS and subcontractors.

There are a couple, like for instance, cell phone use, complacency.

Those trainings were not conducted in 2024.

Those were at the request of our chief security officer and in conjunction with Securitas to provide this training in 2025 just to address some behaviors that we were seeing on the account.

So since this was only through September 30th, 2025, we do expect that some of those other basic trainings you'll see increase on numbers for those by the end of this year.

So at our request, we uh of Securitas, we included what benefits that they provide to to their staff specifically.

There is a Kaiser medical plan at 80% cost covered for employee and family.

I'm not going to read all of those, but you'll see what those benefits are, as well as on the right-hand side, you'll see the enrollment.

So 53 out of the 153 total employees have have enrolled in those benefits.

And then we did start asking some questions.

Why don't you think people are enrolling in the benefits?

Some of the feedback that we got was potentially, you know, they're covered under another espouse or another member's plan.

Potentially they participate in a Colorado offered health care option, or may not choose any coverage.

We did learn though that the employee must be employed for 60 days to be able to opt in to that coverage.

And so there is some turnover, unfortunately, I think, kind of in the security industry in general, but definitely on our account.

So the 60-day opt-in period may be part of that as well.

Performance, so we did take a lot of feedback from this body and the general city council on how we needed to do better about looking at performance and addressing issues that come into the city on any sort of interactions that they may have had with anyone working on the account.

And so you all are probably aware that we have a quarterly scorecard that we do, and that's actually our chief security officer, does that in conjunction with uh with each agency that uses the services through this contract.

So DHS, arts and venues, wastewater, any of the agencies that that use it, as well as general services, go through the 44 question scoring process, the user weighted categories on, and you can read them there, what uh some of those different categories are and uh and we measure that performance, and then any performance that is below our standards, city standards, uh, a performance improvement plan is implemented with uh Securitas to address that.

And you'll see the overall annual scores there.

We have been improving, and uh so we're we're happy to see that uh that we're you know we're not backsliding uh on any of those numbers year over year.

Uh the numbers that you have here are only through Q2 of this year.

Uh our chief security officer just uh completed Q3 but did not have the scoring available to put into that overall score that you see.

So as I mentioned before, we did take uh your feedback uh uh your strong feedback about doing a better uh job of uh getting feedback from our customers.

And so we do have signage posted at all of our screening stations, uh and there's it the signage is there, and you can kind of see it, but kind of not.

Um but that is posted at all of our screening stations, and then the to the right, that's actually a business card that we can hand out to individuals as well that want to provide uh feedback.

And then that feedback goes back to or comes back to the chief security officer on a monthly basis.

This is not only for any sort of poor interaction that may have occurred with a guard, but it's also for kudos.

Um, and uh we do receive those kudos and Securitas lets us know, you know, if they're mentioning folks in a in a newsletter for those kudos, um, did they potentially get like a gift card or something to recognize the work that they've done?

Uh we also have things that are not tied to any of the feedback from these two items that are listed here, but we do uh city investigations as well.

So individuals will contact our Denver Security Office either through our 24-7 security operations center or uh directly connecting with one of our Denver Security Office uh employees and our chief security officer about a complaint or an issue that has come up, and then we fully investigate that and uh follow up with Securitas since they are the prime on the account, and speak to them about, you know, if this is something we need to take some immediate action on.

Uh does this need to be uh potentially someone going through some remedial training?

Um, how are we uh addressing that with the employee immediately, but it is incorporated into that quarterly uh scorecard review process.

So everything kind of funnels into that process, so we have a true and accurate um uh sort of uh view of of the performance of the contract.

All right, so the big question is why are we here?

Obviously, we are asking for an extension for another year that will allow us time to go through a full RFP process and transition to a new contract, whether that's with Securitas or a different provider.

And so the part of that is that we need to fully fund this contract in order for us to get through December 31 of next year, and so uh what we've done here, and I'm glad you can see this a little bit better.

Uh, what we've done is we've broken out the spend from 2022 uh to what we are projecting through 2026.

So you can see our largest, and and I have a you know, the the most spend to the least spend on this.

So you can see that really general services we are driving a lot of that with.

You'll see an estimated five year spend of about 33 million.

That's for all of our city municipal buildings that would include our DMBs, the animal shelter, uh Roslin, um, you name it, all of the buildings here in the downtown core, that includes as well.

And then you kind of go down from there.

Uh, we do have the all in mile high sites coming in at kind of a distant second on spend.

Uh I know you're going to meet with uh our partners in host to talk about or uh community planning and housing committee uh will be meeting with them today to talk about those provider contracts.

Um hopefully you all will be able to listen in to that discussion, but we are estimating that we're gonna have less spend in 2020 6 because of the new providers that are going to potentially be under contract here on January 1.

So that will change um uh change the security needs there because uh potentially some of those uh companies will be providing their own security, and that won't fall under the citywide contract.

Uh, but then you kind of go from there, you know, to all of the different agencies that uh that use our agreement.

Um we have, as you can see from 2022, where we spent you know, less than 10 million, and you're getting to uh the last couple of years we were spending about 16 million and projecting about 16.7 uh this year, uh and a lot of that was driven primarily by um all in my Ohio as one of our big expenses, but also the newcomer program and supporting um, you know, safe and secure um uh locations, cold weather sheltering, uh all of that.

So that's really kind of um thrown us into you know spending around 16 million.

Um you'll see in 2026 that we are estimating that um we're looking at probably around 12 to 13 million based on kind of what we know about what we're gonna be doing from a security perspective in in 206.

Um, but uh with that said, our initial contract value for three years uh was 25 million.

Obviously, we had a lot of changes with our needs and where we were.

So we came back with an amendment asking for 18 million that was granted, as well as a third amendment for 8.2 million, which gets us to the 51.2 that you all um approved through uh council last year.

Um so with this proposed amendment, what we are looking to do is to cover the rest of our 2025 expenses as well as cover our 2026 expenses, and uh that would be 18.

Uh 15 for that, and then what we are asking for is a 10% contingency on top of that, which would be $8.5 million.

That those dollars are really because we are in this transition time in 2026 to go to new providers at the all in mile high sites.

We know that they have come forward and provided security plans, but we also are proceeding cautiously.

That yes, you know, while I think host has uh committed that you know they are they're um supportive of the security plans that have been put through.

We also want to keep a little bit of cushion capacity within the contract to ensure that if we do need to transition and provide security support through the citywide agreement, that we have the ability to do that.

So, really all in with the 20 million asked that we have for you all.

Uh, we are anticipating if there aren't any other changes that that will get us through 2026 without having to come back to this body.

And I think this is my final slide before I hand it back over to Nicole.

So uh we are going through a process is as you're aware, and uh during budget briefings, we we spoke about this, and I might have um Adrina weigh in if she has anything additional to say, but we do have a budget reduction that we are looking at making uh 1.1 million in 2026 to better optimize our contracted security, and it's also to align up with the needs as we know them right now in the city.

Uh so the changes that we are looking at implementing are consolidating consolidating the two web building entrances into one entrance.

Um that will probably be the um closest most um public facing change uh that we'll be seeing here in the city.

We're also looking at closing two of the four uh Lindsay Flanagan courthouse screening stations at 11, uh 11 a.m.

We have found that the foot traffic into the courthouse significantly drops out after the morning hours.

Uh so we are looking at um we'll still have two screening stations open.

So one on the Alati main entrance and the Fox entrance will continue to be open with screening stations.

Uh we're also looking at reallocating some of the city and county building uh guards uh supervisors to cover some patrol hours uh that we have there, and also as I mentioned a couple times now, aligning our all in mile high, uh our plans and security with the all-in-mile high providers, those new providers.

So impacts um anticipating that you know, we are uh anticipating that appointment by city contractors folks will be uh impacted with the reduction in hours here.

We are working closely with Securitas to figure out uh how many how many uh securitas staff as well as how many uh subcontractor staff will be uh affected by that or impacted by that, as well as how that will be communicated out to um to employees.

Uh we may uh experience some high traffic uh volume, uh so we have to think about you know alternate plans if we need to uh re-look at opening something or potentially like at the courthouse, do we now need to maybe look at you know keeping things open until noon instead of closing at 11?

So we're just gonna have to monitor, monitor that as well as the web building.

Uh, we're looking at reducing some hours with the um X-ray screening uh that we have there for this is for packages, uh not actually for the public, but for packages coming into the building, so um so that may slow things down there.

Um, and you know, communication is gonna be super important for us just to make sure that we're communicating uh with folks uh so they're aware of all of those changes.

But we do see some opportunities here, really in streamlining our resources, maximizing those resources, you know, finding cost efficiency, obviously 71 million dollars over five years is that's a large contract for the city.

So we want to make sure that we're being good stewards of those dollars that have been granted to us, as well as you know, really promoting some active engagement by the existing guards that are on site, and so looking for some opportunities to do that.

Um, I want to pause for a moment.

Did you have anything to add on that?

Okay, great.

Thank you.

Um so I'll hand it back over to Nicole.

So as Cammy mentioned, uh, we will be looking at going back out for RFP for next year.

So a new contract will begin January 1, 2027.

And so getting ourselves prepared to do that, we've really taken a look at the contract in its current capacity, where are some enhancements, where can we make some instruction restructure changes that are impactful not only for the city but also for a new provider potentially?

Um, and so looking at that, we are looking again at the training requirements as Kimmy kind of outlined.

We've actually looked at um what was previously outlined in the original agreement, but also areas of opportunity, so extending those and can um continuing those under the new solicitation, um, also looking at really encouraging subcontractors to provide service under this agreement and what as well.

Again, 71 million dollars is uh a large sum of money, so how do we encourage those subs to work under the agreement with the city?

Um is also uh one thing that's very important to us is how do we encourage retention reward recognition programs and the benefits for the employees that work under this agreement as well, and how do we help them and be a good partner to not have uh maybe some uh areas where we're not being serviced or that they don't feel supported or getting them to even be able to utilize the uh medical benefits that are afforded to them as well.

So, really, how do we work um together to make it successful for all?

So, quickly just wanted to go over the timeline um with you all again.

Uh we did offer briefings uh and sent an email out with a um executive summary over the uh amendment that went out on September 30th.

Um we're offering and requested if there were any council briefings to happen between September 30th through October 10th.

Um, today we are here um to present to the committee, um look at going to mayor council for approval on the 21st, and then full body city council approval on the 27th of October.

So with that, we'll in closing, we're just asking for your support uh to move resolution number 25 1477 forward to amend the current contract with Secure Toss to uh through a new contract term of 1231 2026, as well as increasing the contract capacity um to 71.2 million dollars.

And with that, we know questions.

Thank you very much.

Um, all right.

Uh so I want to first welcome council president Sandable and Councilwoman Albidras.

Thank you for joining us today.

Um, and with that, I'll go right into the queue.

I have a starting with council president Sandoval followed by Heinz and Watson.

Thank you.

Um, just wanted to say first start with a thank you in the summary.

I think Councilmember Watson and I brought to your attention the closing of the second floor of the city and county building and how it felt um as somebody who works here all the time and having those doors closed off and how dark it felt.

And um, I think you within a month you reopen them.

And I know that that was um attempting to do a cost saving.

Um, and I just want to say that as somebody who works here and wants people to participate in our democracy, having that door open really, really, really makes a huge difference in my life here in this building.

So just wanted to start by saying thank you.

Um, second is with the if you can go back to the slide with the impacts.

Yeah.

So may impact employment by city contractors, may impact immediate parcel delivery into the web building.

May so if you say if you see the impact, there's lots of may.

How do we know if we approve this as the body that approves things using the word may or may not?

Feels like a gray area.

So how can you give me just more specificity on that?

And I know that we don't know, right?

We have we don't all have a crystal ball.

But in your analysis, how would this impact it?

Because I just have a hard time with those like out of four of them, three of them have May in there.

And I know you're trying to probably be nimble by using that term, but for me, I'm like, oof, I don't know.

That sounds um, that that's just not the type of um specificity that I feel comfortable with.

So can you just talk about those a little bit more?

Yeah.

Does that make sense?

Yes, absolutely.

Um, thank you for calling that out.

Happy to um provide some more context there.

So, specific to the may and impact employment by city contractors.

What we're working with Securitas on right now, because we do want to begin to implement some of these changes so we can start getting some savings before January 1, 26, is to uh whenever we say may impact employment, we do know that there are probably 15 employees that are gonna be impacted in some way, shape or form by uh this reduction in in city service or these locations.

However, they will be offered other employment, whether that is with Securitas or that is with the subcontractor.

Uh, we have two different subcontractors.

So it it really is how that individual is deciding what they are gonna do in their career, um, you know, whether it's potentially they would be a part-time physician at the Lindsay Flanagan Courthouse, which I think that is more on the subcontractor side.

But uh, so maybe with the city there would only be 20 hours worth of work on our account, but they would be offered 20 hours elsewhere to make up that difference.

So they are continuing 40 hours of employment.

But if someone were to say, you know, I don't want to do that, I'm just gonna go elsewhere, I'm gonna find a physician elsewhere.

That's why I said it may impact that.

We just don't know because those are individual decisions that those those folks have to make.

As far as uh, whenever I say, you know, may impact parcels coming into the web, we think we have a good plan for um supervisors or someone at our information desk to be able to go and to screen in those parcels whenever they come in.

So we think that we have um a backup plan for that, um, but as you know, uh sometimes things just get really, really um busy, and so um we're planning on on addressing that with the individuals that will continue on uh in that building, but um if it's a really busy day and we have call-offs and things like that, we could potentially have a it might be a slowdown at the dock.

Also just add to that, thank you for that question.

Um so with regards to what we've been planning, I will add twofold that Securitas has also been responsible.

We've asked for them to put together a succinct plan with regards to the employees on who the employees are, the hours, the relocation, whether that's gonna be on city assets or whether that's going to be on another contract that they have, and that's for the prime and the sub.

So we're that plan is going to be in hand before we start making any changes to those cost savings.

Um, in addition to the parcel piece of that, that's not going to be something that we plan and just move forward on.

We will be then assessing the changes and the impacts that we're making to see how those are working.

So, with regards to reassessing the supervisor and the info desk um guards to assist, we're gonna be tracking so if we're getting complaints or if there's been concerns with the time that it's taking, we'll keep track of that, so then we can make sure and reassess whether that's something we want to continue doing or whether SecureTOS needs to come with a different mitigation plan.

That's great, because some of the times, even I just have a tiny council office, right?

But when we're waiting for parcel or like packages to be able to get out to our community, and like sometimes our front desk isn't open, and then they get sent back and then they come back.

And I've just had that in my little office just with my staff, and we're like waiting, like literally, we're watching, and we're like, hey, does someone need to go to the front door of the city and county building and our our office up on the fourth floor so that we can get our parcels?

I can't imagine how that would impact the web building and all of the different agencies and all of the moving parts that make sure the um because at the end of the day, I just I keep going back to this motto that we're here for customer service and that we have to be there for the people who pay our salaries, and um, with taking into consideration these budget shortfalls um and how we do more with less, but it seems like a simple thing.

Oh, we're just gonna change the operations of our packages, but like having gone just taken an operations class for my master's, I can see all of the new moving parts now and be like, okay, that's just not as that simple.

So similar to the reassessment of the second floor when we close that, I would hope that if we hear complaints and we can send them to you, Director Adrena, that you can provide an update, that would be great because once we started hearing these complaints about the Sencator, we continued to send them to you, and you immediately followed back through and came forward with a different plan.

So I appreciate that type of leadership is saying it's not set in stone.

Let us be flexible to see if this works out and then be able to move forward.

Um, and I just want to also say thank you for the complaint based system.

That was something that I had brought forward.

I think I had told um Adrini yourself and then director um uh Al Gart Gardner.

I felt uncomfortable with how that was set up, and so thank you for modifying that and bringing that because I think it protects us and it protects the workers, and that's essentially what I'm attempting to do when I bring suggestions to you all, say, hey, how are we protecting us as the city, right?

But at the same time, thinking about the workers and how hard it could be to make a complaint when you're treated unfairly or when you're not treated correctly.

So thank you.

Thank you, Madam Chair.

Thank you.

Um, we have Heinz and then Watson.

We have about 10 minutes or so left of this uh for this item.

So go ahead.

Thank you, committee chair.

Um, thank you for the presentation.

Um I uh I want to touch a little bit on our um our express intentions on getting more minority women-owned businesses and workers.

Um I think that one of the ways we do that is through um uh having Secure TOS uh hire uh maybe we be uh or sub to it, maybe we be is our is that right?

Correct.

And what's the name of that?

Um so we have two different subcontractors right now, JCJ and APS.

Uh JCJ, I believe is a certified small certified MWBE.

Okay, thank you.

Um, and um SecureTOS is uh represented um, and I think you you put in the presentation that that that's uh just moving forward, uh represented by a CIU, and that's that's moving forward.

I I don't think either um JCJ or APS, um, I guess it doesn't really matter um whether they have union representation or not, but it's my understanding that secure task employees get paid something other than minimum wage, is that is that right?

Because then they don't they're they're not at minimum wage, there's something higher.

Correct, yeah.

So we do have um, we do have our rates stated within the contract, and then there are the rates that are in the CBA.

Yeah.

So I believe they're they're paid on the CBA rate, not the the contracted rate.

And APS and JCJ, are they paid?

It's it's my understanding that they are paid minimum wage.

Um and uh and so that I I the reason I bring that up is that is um if that is the case, um, then it is a little confusing or frustrating to workers that are um that we're trying to share a value system where um we want to hire more um minority businesses and employees.

Um I just hope that they um uh they get a similar rate um than um you know then than the general contractor.

So in it um in the interest of time, I'll just kind of leave that there and maybe we can chat about it afterwards.

But um, follow up with you.

Thank you.

Allow us to bring it back.

Yeah, thank you.

Great, thank you, Councilman.

Councilman Watson, followed by Councilwoman Albitris.

Uh thank you so much, committee chair, and um thank you so much, Director, um uh Gibson, um, Nicole and Cammy.

Uh I appreciate uh the uh briefings that you provide to my team and and really your responsiveness, really any questions that my office has had.

We want to first uh start with a a thank you similar to uh council president.

Uh Troy is the uh secure task person at the DMV at 2855 Tremont.

I had no idea what my process was to provide a commendation.

He is has been amazing, not just simply in I believe his identified um required task work as a security task um security officer, but his support to the DMV staff with managing the queue and the line, uh our DMV is very small area and folks queue outside.

Um Troy spends a lot of time speaking with the folks outside, ensuring if their elders or folks are needing uh support um that they are brought inside.

I don't know if that's by direction of the DMV.

I've had meetings with them on what their queuing process is.

I know that's been his process, and speaking to your attrition uh process, he has been one of the longest um serving um at our DMV.

I mean, I've been in office for two and a half years.

I think we've gone through five committed folks, and he has been around.

So I at least wanted to um highlight that he's doing well, and now that I know how to do accommodation for him, I'll we'll put something in official, but um truly want to say that um he has been a real great support to our team.

Um thing on your agency spend you have 2026, you have the aid center with an approximate estimated umount.

Um is that um I'm curious from the team.

I'm looking at that, I think that's that's adding up towards the actual ask amount.

Is that amount being removed or did we review that spreadsheet to make sure based on changes during this budget cycle for anything that's listed 2026 that's no longer actually a forecasted cost um that we're removing that from the amount of what we're asking for in the contract.

So we did make some adjustments, thank you for the the question, and thank you for the commendation for for that guard.

It's it's great to great to hear that.

I don't think that's part of his regular duties.

So he's going above and beyond for for sure.

Um, so the the estimated spend uh I will say for general services we did take into account um changes, operational changes, um the other spend within the other agencies.

Um we we base that off of their 2024.

Um sorry, 20 uh 2025 estimated uh base the the 2026 estimated off of that.

So um not sure how many changes are occurring in those other agencies, uh but we can certainly um follow up and and understand that a little bit more.

And I'm sure I mean there's there's flexibility there, but um, there's an 87,000 amount, which is above the 2025 estimated uh for 2026 and the aid center.

I'm not certain if that support is going to be needed.

So my recommendation is that um if this is coming to the floor, we actually have a highlight on any changes that we know that are clearly made within the 2026 budget because we're getting some certainty with departments that may not.

I mean, agencies that may not require your support, maybe a highlight of that.

We know the budget doesn't close until November, but um maybe highlighting that so we know when we vote on it, we're not voting on spend um for um needs that are not necessary, yeah.

And the the 26 um estimated as well.

We did uh calculate in the up to three and a half percent for um for 26 as well.

So that's why you'll see some of those uh numbers going up.

Would it be helpful to call that out in a separate slide so that you can see like with all in mile high with AIDS and or anything else that was as part of our 2026 budget hearing?

That would be helpful for stickiness because once this goes into record when we do a vote, um folks are gonna go back and reference this three years from now and say, Well, the eight center wasn't here.

Why is there money going to so I think that would be helpful?

We'll do that.

Thank you for the suggestion.

All right, great, thank you.

Councilwoman Alvidras.

Um, I'll be quick.

I didn't get my briefing, so we'll schedule one.

But I was just looking at the um slide five, and you have um for 2025, including 153 union workers, but not what was in 2024 for reference.

So that would be helpful, and then um it seems odd to me that it says um Securitas and the SCIU 105 um uh CBA expired in 2024.

So what does that mean for 2025 and 2026?

And is it normal to renew a contract while you're under negotiation?

So I just want to confirm 2020, your 2024 component.

You um, similar to councilman Watson, you'd like for us to pull in what changes occurred in 2024 so you can see the change across the board.

Yeah, specifically for union and non-union workers since you have it broken out for 2025.

And I do believe that while they are continuing to negotiate on that contract, that they are still using the most recent contract.

Okay, that that still applies until they're able to renegotiate, okay.

Is there a reason why you wouldn't wait to do the extension until you have that agreement made?

So the agreement would be separate and distinct from the city and county of Denver, so what what they're negotiating is separate from what the city is doing.

Um we have to be delicate correct.

We have to be really delicate in how those are two working together.

So we will grandfather and take in what's currently in that expired agreement into this new contract.

Um, and we are very understanding and acknowledging the complicatedness that this creates with that being in mind that the operational piece is still heavy with everything that we have going into the cold weather and as well as into the next year.

Okay.

Yeah, and I'd appreciate further, I know we're at time, but um definitely wanted to, you know, councilman Heinz and I are working on best value contracting, so to see how that fits with this.

What could be a great example for us to talk through?

Okay, did you have anything else?

Okay, um, I'll just kind of take it from there.

I don't have anybody else in the queue, so I just had just a few questions, and these could also be follow-up, and I think I might um take you all up on a follow-up briefing before this comes to full council.

Um, but kind of taking off from Councilman Alvidres um wanting to so hearing that you treat the contract or the negotiations, the CBA, the um collective bargaining agreement negotiations separate from the negotiations for the contract.

However, um, one of the conversations I had with Director Gardner before all of the the changes was whether or not there was an opportunity for union representation during those contract negotiations and really for the fact that if there is a current collective bargaining agreement already either in place or being utilized or being negotiated, that there is some um continuity of you know what is being requested by the workers through that collective bargaining agreement.

I think there are maybe some cities who do some similar things, so it's just something that I wanted to throw out there to you all, and we can maybe have more conversation about.

Um, but I'm just curious has there been any union representation during the negotiations for this particular contract.

So I mean, do you know and have conversation?

Yeah, so I I just want to make sure that I kind of understand.

So our agreement is specific with Secure Atos, and we will do a better job whenever we go out to RFP to make sure that um whoever is bidding on this next contract is aware that there is a CBA.

Um so that that is known and that any proposer would understand that yes, we will have a city agreement, and that will be with the city.

However, there is a CBA that we need to take into account as well, and they can do their homework and they can have their you know discussions separate from what we're doing on the the citywide agreement specifically with that vendor.

Um so that that is the plan.

I I know we did receive some feedback that that wasn't clear uh in in the previous RFP, and so we'll do a much better job of of highlighting that in this RFP.

But I don't believe go ahead.

Yeah, I was just gonna add on to that.

So just also kind of separating where we're at.

So with this amendment, all of there wasn't essentially no negotiation because we're just amending the contract, so all of that was kind of already written in.

However, with the RFP as Cammy shared and what your request is, and what um uh executive director Gardner shared is involving the union reps and the makeup of that RFP.

So that is still going to happen.

But with regards to the information that we shared here today, all of that is already been outlined, and it's just exercising our option to amend.

But yes, in terms of our RFP, we plan on having a entire event, a concessionaire to get feedback on what needs to be in the RFP, what we're looking for being in the RFP, inviting small businesses, inviting um our union reps, et cetera, to be there to be a part of that and to be full fully informational on what's coming down the pike with the security piece of it, but just wanted to separate the two.

Thank you so much.

That's great to hear um that that's something you you were working on.

Um, I think the final question I have before we have to transition over.

Well, we have to pass this um first, uh, is whether or not if you're aware if the increases, right, that's part of this um amendment amended contract um is going to go towards employee wages.

Is that something that you have knowledge of?

Yeah, um, so yes, they will.

Uh for every annual year, we uh add 3.5% or the CPI index increase, and those go strictly to employee wages.

Okay.

Thank you so much uh for that clarification.

And thank you all for for the presentation and and being so always well prepared.

Um, with that said, I have committee members here.

Um I need a motion and a second, sorry, motion by uh Councilman Watson, seconded by councilman Heinz.

Um, is there any need to take a roll call vote for this?

All right, this will go forward um to the full council.

Council members, if you need any additional information in the meantime, please reach out to the team here.

Thank you so much for your time.

Thank you.

Thank you.

We'll take a few minutes to transition over to Department of Finance.

You should have music playing when it doesn't have to be.

Okay, we've got a star team up here, and uh if you want to both introduce yourselves and go ahead and proceed with the presentation, I'll be taking a cue from council members with questions.

Sure.

Justin Sykes, budget management office director, glad to be here this morning.

Lisa Martinez Templeton, Chief Economist.

Turn it over to Lisa to start us off.

Yeah.

So welcome to our revenue outlook and forecasting.

This is just providing you guys with a little more detail for 2026.

So we have in the agenda we're gonna do, I'll give an overview of how we do the sales tax modeling.

And then Justin will go over some 25, 2025 and 2026 one-time revenues that we saw and are expecting to see in the city, as well as our five-year forecast, and how we have our reserve policy.

So sales tax modeling.

Modeling, right, technically is uh quantitative assumptions using economic data, right?

But what they really are, it's just a simplified and subjective approximation of reality.

And it really allows us to learn from the past to try and predict um future behaviors.

And this is crucial for uh credible economic forecasting, any rate, um, developing economic narratives as well as calibrating uh policy decisions.

So the specific uh sales tax modeling we do here in the city is actually consumption-based modeling.

Um we use the this type of modeling to forecast how various economic and financial developments will affect future growth, and again, it's based off of past regularities.

So really the crucial first step before any sort of modeling takes place, right, is we need to pre-process all of the data that gets entered into the model.

So this includes de-trending the data.

Uh, we seasonally adjust the data, as well as here specifically, I adjust all the data for tax increases.

Since again, this is consumer consumption-based modeling.

Um, we are interested in the consumer's reaction and how they uh proceed to spend their dollars.

Uh, not necessarily, you know, tax rate increases that were passed.

Um, so that can cause some noise and flexion points within the data.

Um, so we actually utilize here an artificial neural network to do our modeling.

Um, lots of distinguishing features make them really valuable and attractive, I feel, in forecasting.

So, first up, they're nonlinear data-driven, right?

Uh, so this means they can perform uh nonlinear modeling without a priori knowledge about the relationships between those input and the output variables.

Um, this really makes them more general and flexible modeling tools for forecasting.

A network can approximate any continuous function, be it a utility function or cost function, to any desired accuracy and again have really more general and flexible forms than traditional statistical methods can effectively deal with.

And this includes noisy information that can be seen throughout the model.

Um, we've seen in particular here in Denver, improved performance over traditional multivariate modeling.

An example would be AREMA modeling, right?

So those tend to, while in theory work really well, they actually tend to struggle with um high-dimensional multivariate problems, nonlinear relationships, as well as incomplete data sets, which are all unfortunately things that occur uh really commonly in real world data.

But again, this does make it an ideal application of those neural networks.

So here we have some key factors that drive consumer spending and are used for modeling purposes.

So these are uh in endogenous factors.

These are things that occur within the model, right?

So we've got historical revenue data.

And the way I feed this in and look at it is it's actually monthly granular sales tax collections by six-digit industry level.

So that's about as specific as you can get.

So what that means is um, you know, I'm able to see fluctuations or differences between, say, as opposed to just overall restaurants, right?

I can see any sort of differences between like fast food restaurants or sit-down restaurants or the catering type businesses.

Um, and then uh I look at it by revenue period.

So this is slightly different than um the typical deposit period, because again, I'm modeling that consumer uh consumption activity, which revenue period is, I'm looking at it in which the period that the activity actually occurred, not when, say we got the check from the business.

Um we look at weekly foot traffic data for various retail business districts, corporates population growth, number of establishments, household wealth, and then some of those external factors or exogenous would be things like inflation, interest rates, various labor market data indicators, travel tourism indicators, consumer price index and consumer sentiment index, and then things like special events, like concerts, festivals, et cetera, or external events, which would be, for example, we saw this with COVID, severe weather events, you know, sort of things, this would be definitely outside of anybody's uh control.

And some of these exogenous factors, they do require adjustments to the model forecast.

So if you think of model forecast is like your baseline forecast that is spit out from just again looking at those patterns in the past behavior.

And one of the significant advantages of that neural network is its flexibility in handling different scenarios.

So for example, um, the model can take inputs such as an adjustment value for uh like a hotel occupancy variable, and it will use it to predict the expected revenues for those highly correlated industries.

Um, so what their revenues will be based off of the adjustment to say hotel occupancy.

And so what you're looking at uh is a sample of like the typical output that I would get.

Um, and what this is is the monthly revenue forecast by industry for uh total tax collections across all various tax rates.

Um so that would be short-term auto rental, regular food and beverage.

I also provide fuel and OPT, and then I create a, you know, just using the ratios of blended core sales and use general fund amounts.

Um, and then you know I assess the uncertainty and risks around the baseline, which again are conditional on those assumptions, and quantify alternative scenarios.

So if you think of it this way, right, a model is really sort of like a virtual laboratory for economic experiments, right?

So we can model different types of scenarios.

Umfortunately, uh as crucial as they are, just the straight modeling has limitation, right?

They can't ever match just the complexity of the real world.

Um, and they're always based off those assumptions, so which can be wrong.

Um, past patterns, which their base may not hold true in the future, and so this is why the city's projections are a combination of those model-based computations as well as uh adjustments.

So, what do we do, right?

We take these model-based adjustments and complement them with um assumptions to uh adjustments to those assumptions, um, macroeconomic propagation.

So that would be like non-linear non-linearities in the inflation process, or other specific factors such as um like supply constraints due to supply bottlenecks.

And so this is done in various ways.

Um, utilize sensitivity analysis, uh, generating uh probabilistic distributions around the projection baseline and scenario analysis, which are particularly useful in the presence of large shocks or very uncertain uh socioeconomic or geopolitical developments.

This would be an example would be modeling in tariff impacts, right?

Um, so this typically has a tendency to improve the forecasting accuracy over a short-term horizon by incorporating pre-announced policy measures or accounting for unprecedented events for which obviously that prior behavior would not exist in the data that's being put into the model.

And then finally, uh, you know, I provide a final five-year forecast with confidence interval bounds as well as both optimistic and pessimistic scenarios to BMO.

And I think that's how I do the modeling.

So I'll go ahead and pass it off to Justin now.

Thank you, Lisa.

Uh so what I'm gonna spend my time focused on are three other areas that council asked us to address.

And so one of those was one-time revenue, another was long-term forecasting, and the third was the city's reserve policy.

So starting with one-time revenue, uh, in both 2025 and in 2026, we were able to use one-time sources to a much greater degree in 2025 than in 2026.

But in both years, we were able to pull dollars that were sitting outside of the general fund back into the general fund to help us balance the budget.

In 2025, that amount totaled just over $36 million.

22 million dollars of that was transfer from the border crisis response fund back to the general fund.

And the big reason there was because the newcomer arrivals uh fell off significantly in the second and third quarters of last year.

And so the dollars that were rescinded from agency budgets in mid-2024 were not all needed to go towards that newcomer response from the city.

The next largest transfer in to the general fund came from the Stapleton Reserve Special Revenue Fund.

That was something where we had been socking away money for a couple of different years in anticipation of the stapleton uh retained tax payment from the Denver Urban Renewal Authority going away fully next year.

It's being cut in half this year, with the expiration of the Stapleton TIFF this past July, and then we'll be fully gone in 2026.

And so, in anticipation of that loss of revenue from that retained tax payment, we we were able to set aside money in prior years and then pull the six million dollar balance in that fund back to the general fund in 2025.

There were several other funds where we had either built up a balance or were able to change the activity out of the fund that in aggregate led to just over $36 million of one-time revenue for the general fund this year.

In the proposed budget for 2026, you can see that it's a lot less.

We are only projecting to have about a little over five million dollars of one-time revenue, and just about all of that is from the uh the full transfer of what we expect to be the remaining balance in the border crisis response fund.

I think the key takeaway from these two slides is really that we maximized this strategy in 2025, and so really don't have it to go back to as a strategy in the 2026 proposed budget, in the 2026 proposed budget.

What you're seeing are a lot more expenditure reductions that are intended to be uh structural changes to how the city does business.

Next, I want to pivot to the five-year forecast.

Um, and we'll just acknowledge that this is something we are working on for the 2026 budget.

It's something that we will finalize uh once the budget is set.

That is not something that is done yet.

Uh, the last time we did this was in the final version of the 2025 budget.

Uh but of course, a lot of the numbers and assumptions used at the time are obsolete now, given everything that has changed over the past year.

Uh so really want to spend most of this section of the presentation talking about the philosophy and methodology behind the five-year forecast.

Uh it's something that will be finalized and incorporated into the final version of the budget book, which will be published and released uh either later this year or very early next year, depending on uh when ultimately that is printed.

Um, why do we do a five-year forecast?

So there are several reasons.

Uh, one is just to establish a baseline of what to expect if the current economic trends that we're seeing continue.

Another is to understand what those historic revenue and expenditure patterns have been.

Uh a third is that it allows us to kind of foretell or get an early warning sign of if we are expecting a structural imbalance in some of those out years.

And then finally, it's just really important context as we start thinking about the next year's budget process.

And so uh in the budget management office, we like to joke that it's always budget season where uh we are still in 2025 uh on the uh cusp of hopefully in the next few weeks finalizing that 2026 budget.

But then by April already of 2026, we will be working on the 2027 budget.

And so this long-term forecast really informs what type of environment we're in in terms of budgeting for those out years.

In terms of the timing, like I mentioned, this is something that we've historically waited until the budget is approved.

And of course, that has not yet been done, but once it is, uh in early November, uh December time frame, that's when we will uh work with other agencies, look at historical uh growth rates for different categories of expenditures, and then use that to extrapolate out for what we expect to see both in terms of revenues and in terms of expenditures.

Uh I don't like to say best case and worst case, as good as things are, I think they can always get better, as bad as things are, they can always get worse.

But then what we will do in that final version of this long-term forecast would come up with a better case or a less good case scenario to understand, just as Lisa was speaking to, that there's typically a range.

It's really hard to project to begin with.

Um, and and so what we try to do is think about kind of a better case, a less good case scenario, uh, both in terms of revenues and expenditures.

I think what's really important to note here is that we are not trying to set policy with this long-term revenue forecast.

What we're trying to do is objectively understand if we were just to carry forward the trend lines that we're seeing, where would we be?

So, for example, we don't make any assumptions about adding positions or about adding new revenue streams in those out years.

It's really just an extension of that approved budget, kind of knowing everything that we know today, but also taking that with a grain of salt, recognizing that a lot can change in a year, uh, and then also having that underlaid by the fact that the city needs to propose a balanced budget.

So no matter what we're projecting for those out years, uh, if revenues were to fall, we are obligated per city charter to balance the budget such that it is not more than the opening balances and the anticipated income.

In terms of methodology on the revenue side of the equation, we really focus on those top 35 revenue streams, those constitute between about 93 and 95% in any given year of total general fund revenues.

Uh, you just heard from Lisa about the detailed thinking and analysis that goes into the sales tax forecast.

Uh we also are looking at recent state legislation to understand any impacts to property taxes or to other revenue streams that are derived from the state.

For example, the highway users tax trust fund, uh HUTF, or the state marijuana sales tax share back, uh, where sometimes what the state does can impact how much we as a city will receive in general fund revenues.

Additionally, uh we will work with Visit Denver on what their projections are for tourism activity to understand what the lodgers tax revenue is likely to be over that five-year out time horizon.

And then I think really importantly, we try to reach out to and engage with all of the agencies that bring in revenue.

Uh, they are typically the most expert and the most knowledgeable about policy changes, operational changes that may impact the revenue streams that are generated by the work that different city agencies are doing.

And then lastly, we we would strike out those one-time revenue sources.

So, for example, that $5 million one-time transfer from the border crisis response fund, uh, if if that is approved in the proposed 2026 budget, 2026 is the only year that we can bank on that.

Uh, that five million dollars would have to come out in 2027 and beyond.

On uh just as a reminder, this is a look at the potential 2026 general fund revenue forecast.

We are anticipating about 1,664 million dollars of 2026 general fund revenues, with over two-thirds of that amount coming from sales and use tax as well as from property tax.

On the expenditure side of the equation, here again, just reiterate that we're not trying to project what the policy of the mayor and of city council is going to be in those out years.

What we will do is remove any one-time expansions or reductions.

But other than that, we're really looking at the historical growth rates in various expenditure categories, for example, uniform personnel or career service personnel, where we try to strip out just the amount that is due to salaries and benefits increasing.

We don't try to anticipate whether we'll add or subtract full-time equivalents in those out years.

In terms of the services and supplies and capital replacement, we're typically looking at inflation.

And so the state office of planning and budget will publish a projection for that next year inflation forecast.

We will also look to the Department of Local Affairs, which publishes a historical look back at average inflation over the last five years.

That is what we are applying to some of those services and supplies account code citywide.

And then finally, in terms of internal services, the two largest categories within internal services are general fund contingency and general fund transfers for general fund contingency.

We assume that to be 2% as required per charter of estimated expenditures out of the general fund.

And then in terms of transfers, we assume that those stay flat, given that in nearly all cases, those are policy decisions as to how much to transfer towards different programs out of the general fund.

Lastly, here before opening it up for any questions, want to spend a little bit of time talking about the city's reserve policy.

And the way that we think about our reserves depend on what they are as a percentage of expenditures.

And so what we do is either for the books when they close on 2025 or for where we think the books will close at the end of 2026, we look at how much is either actually in the reserves or is projected to be in the reserves, and then divide that by the expenditures.

So at the end of 2025, it'll take a couple of months for the books to close.

But once that happens, we will know what those reserves are, we will know what actual expenditures are, we will take that amount in the general fund balance reserves, divide it by what we actually spent in 2025 out of the general fund, and that is our reserve percentage.

Similarly, for 2026, we are estimating how much we think will be in the reserves, dividing that by our estimated expenditures for 2026, and if reserves are above 15% of either actual or anticipated expenditures, that's when they can be used for those one-time items, capital, debt pay down, one-time expenses, or to program in the subsequent year's budget.

So if hypothetically we were to end 2025 with reserves higher than 15%, which is not what we're currently projecting, but if we were to, that incremental amount above 15%, would be something that we would think about as part of the 2027 budget process, because we wouldn't know about it until the books close in early March of next year.

If reserves are between 10 and 15%, that's the level where you can use reserves in order to stabilize expenditures in a period of below average economic growth.

This is the situation that we find ourselves in currently.

We are on the lower end of that range, and so therefore, working to build back up our reserves to get up to the higher end and then eventually to exceed that 15% target that we specify in our fund balance policy.

Finally, if reserves are less than 10% of estimated expenditures, which is a situation that we strive mightily to avoid, that's when you would only be able per policy to tap into them in response to a severe economic or other emergency.

And so that is what we are trying to avoid by having furloughs this year, by having hiring freeze this year, because that's the situation where you're at risk of potentially spending down the reserves, and then once you've spent the reserves, there are really no more options.

You have no choice but to cut expenditures.

Some really important considerations when thinking about reserves, first and foremost, the reserves provide a short-term solution to allow the city to make structural changes.

They are not something that you can, or we as a city can rely on forever.

Just as if somebody has a savings account, that might allow you for a few months or a few years to spend more than you're bringing in.

If you continue to dip into that savings account or continue to dip into your reserves uh month after month or year after year, there will eventually come a point where there are no more reserves.

And so I think uh when it comes to reserves, thinking of think of them as allowing us to buy time to make those big changes to bring the city's revenues and expenditures back into structural balance.

I think another important philosophy is that we oftentimes will focus on what we can control, which is our spending.

I think revenue is really critical, but it's also more speculative.

If you were to hypothetically uh propose a tax, that's something that voters would have to approve.

Uh, if you were to raise a fee, that might be something that consumers or businesses change their behavior around.

So there's some dynamism in projecting how much revenue you will actually get if you raise taxes or raise fees.

Uh, it may not just be uh if you raise a fee by 10% that you're gonna get 10% more in revenue because people could change their behavior in response to raising that fee.

And then lastly, we'll just note that any time we are below 15%, uh, and certainly any time we're hovering around that kind of 10% minimum threshold.

It's really important to have a game plan for how to build those reserves back to 15%.

And so for the 2026 budget, we have proposed a uh an increase in the fund balance reserves that would bring us up to 11% from just above 10% that we're projecting at the end of this year, and then really in those future years, uh, have several strategies, uh, one of which would be to preserve as much contingency as possible.

Any amount that's not spent out of contingency lapses into the fund balance.

Another strategy is continuing to pursue the 24 million dollars in shelter and services program reimbursement that we firmly believe we are owed by FEMA and the federal government.

Uh lastly, the city has undertaken a number of large-scale capital investments that we believe in the long term will generate economic growth and sales tax activity that will on a longer term basis help grow our revenues as a way of building back our reserves.

We have about 15 minutes left, so I want to make sure we get sure to council member questions.

Um I can just do these last two in like 30 seconds if that works.

So this is really just a link for everybody's reference.

If you want to read the city's actual fund balance reserve policy, you can find it in our fiscal accountability rules.

Uh, this is also just the excerpt from charter, which does uh contemplate that every budget has some amount of reserves, which can only be tapped into with a two-thirds vote of city council for emergencies.

And so with that, glad to take any questions.

Thank you so much.

Um, and thank you so much for putting pulling this all together.

All the team, uh, I know I had sent a request because I thought this would be timely as we're getting ready to go through our.

We're still we're in the middle of our budget process and we're getting prepared to um, you know, move forward with voting on the budget uh next month.

So I thought this would be a great presentation for us to have and to better understand what the projections have been over the years.

Um but with that said, um, we'll go to the queue and start with council president Sandoval, followed by Councilman Alviderez and Councilman Watson.

Thank you.

Um, for the first part of the presentation when we do the AI, what's the platform that we use?

Who's our vendor?

Well, sorry, it's program.

So, okay, is like a broader super broad term, right?

So it's actually a machine learning algorithm that we call.

So it's just a program in Python.

Who created it?

The Python.

Well, so I coded it.

You coded it right.

Yeah, okay.

And then do we use it for other things or just this?

This is my realm of that's all I use it for.

Okay.

And so I actually have, yeah, so I have a custom built laptop that accommodates it allows me to do everything on my machine within my machine.

So okay.

And then have we how when did we start using it?

Um, actually in 2020.

Um, Brendan brought me on to take a look at um right after COVID, uh, when we saw our revenues were definitely not gonna be on track to what they had typically been to he knew I had done some different methodology in grad school and was asking me if I could uh perhaps make it applicable here.

And does it and is it pretty aligned your findings on when we close the budget?

Are they because they're they're the projection right in this modeling?

And then when we close out, are they pretty aligned?

Yeah.

So I make multiple series of projections throughout the year, right?

So I think when this first comes out, the initial projection was made back in March for the following full year.

Yeah.

Um, as time goes on, so um, you know, all the way up until right before you know the budget goes out in like July-ish August.

Um, it's quite accurate, that latest one.

Now, what we can do with the budget at that time, you know, timing issues.

But um, yes, it actually tends to be really accurate, much better than the multi-bury.

What's the percentage of margin?

Do you have that?

I bought, yeah, I think Alison, do you know off the top of your head or if not, you could get back to me because I know that we have we're but I'm fascinated on this.

I would love to know, introduce yourself.

So in 2024, we collected 98.8% of the budgeted core sales and use tax estimate that's based on Lisa's modeling, so about 10 million shy of what was budgeted was collected.

Can you break that down into percentage of like how correct?

I'm not, I can't just do on the fly.

Like you modeled something and then compared to what came in, what's that percentage?

Does that make sense?

The 10 million is like what percentage of the total.8% of our estimate.

Okay, so like 2% off.

Just yeah, okay.

1.2%.

Well, that's fascinating.

Right.

So that's off a billion dollars worth of revenue.

Yeah, so that's great.

Yeah, that's congratulations on that.

That's a hot commodity.

Thank you.

I've never heard that before up until now.

I didn't know we had that type of um that we had that type of expertise, and so excited to have that modeling and how that's why I wanted to know the margin of like the error is to say, okay, how are how accurate are we in doing this so that we can lean on it, right?

And have confidence in it.

So that's fascinating.

One question to you, Justin, is um fees.

I think we keep talking about fees is like trash fees and sidewalk fees and things.

I have an issue with some of our fees, so the right-of-way vacation process, um, you get to vacate right of way and take it into private from private public property into private property for a thousand dollars.

We have not updated our fee in Dottie, and it's not you.

Dottie has not updated that fee since like the early 2000s.

So I'm wondering when we have these budget shortfalls, who's doing the analysis on some of our fees?

Like one of our fees we did raise in the fire department, and we're actually gonna bring in more revenue from the fire department for their fees for the elevators because it's a nuance and we need to get that short up.

I'm wondering how who looks across the board at some of our really old fees, like it's 2025, and our right-of-way vacation process fee got updated.

I think I want to quote myself, but I might be wrong in 2009.

It's ridiculous.

I can't stand our vacation process because you're literally taking public property and turning it into private property, and the value on that, if you were, if I was doing a transaction between the two of us would not be a thousand dollars at all.

And you can do a huge swath of land or you can do a small swath of land.

So when we're talking about fees, has there ever been some type of analysis done on what fees are really out antiquated?

And how could we bring those fees in alignment?

And I'm not trying to say that to make money, quote unquote money off of them, but to bring them into 2025 standards and to actually be able to confidently say to people, our fees have been adjusted according to everything else that has happened in the city.

It's something that my former predecessor was um like a dog with the bone, he would not let it go on that right-of-way fee.

I try to pick it up when I got re-elected in 2019, and then other bigger things like COVID hit.

And I was like, I'm not gonna bring this on.

And I started working on land use issues, but I still do think that some of our fees are really um generous to certain groups in Denver and not generous to other groups in Denver.

There's not equity amongst them.

They're not parity.

So have we ever done that analysis?

So great question and great point.

I think so.

Every year as part of the budget process, uh, we will always invite agencies to identify revenue opportunities.

And so, in in many cases, that will be uh raising fees, adjusting fees for inflation, periodically.

I want to say the last time we did it as a city was in 2018.

Uh, we will look kind of holistically across all fees and fines, um, try to understand what's the method.

Is it something that city council needs to approve?

Is it something that the manager of the Department of Transportation and Infrastructure, for example, can raise on their own?

Um, I think that is something I would I would love to do here in the budget off season.

Um, it's always budget season, but uh once the 2026 budget is set, there are a few months before we're really working on the uh outlook for the 2027 budget.

And so I think that is something, um, especially for those top 35 revenue sources that once we uh get through the budget process, uh, the budget management office would would love to spend some more time really calling through what when was the last time we raised them?

Um, what would inflation be if we had just increased those fees by inflation?

I think we we always want to bear in mind who's paying those fees, and so that is something that we we understand that residents feel cost of living has never been higher, and so don't want to kind of uh without being careful, raise fees.

Uh, one thing we always try to think about is is there a particular group or neighborhood or type of business that is gonna get hit multiple times by multiple different fees?

Um, but I love where your thinking is, and I think it's just something that we have not done for for a number of years, would love to do again here in this budget off season, and then come back to you all and share with you here's kind of our findings as to uh when these fees were last updated, what the mechanics would be of updating them to allow for a fuller conversation around that.

I would love that.

If we could um figure out how to support you, I would be willing to take that on.

I know my staff is watching and saying I shouldn't take anything else on.

But I was that was before I got into office was in 2018, that was when I was a council aid, just leaving the um city council and going to the fire department.

And it, I if I remember correctly, it wasn't as comprehensive as we had had hoped it would be across all of those and saying where is there to bring everything into parity, right?

And have that have it clearly defined.

Um, everyone always is like, oh, well, we're so busy with this or we're so busy with that.

The reason why I was asking about the modeling and where did that come from?

Is there I'm always thinking about technology, is there a way to input some of our fees and say when was the last time?

Because the people power that it would take to do that is immense.

And so I'm always trying to figure out how do I come up with some, how do I creatively come up with answers and using some of the technology we have?

That's why I didn't realize it was a model you made for the forecasting.

I was like, is there an opportunity for us to use some type of AI, quote-whatever that is, to look at import those and say when was the last time these were updated?

What are other cities and because we do that a lot when we do policy work?

We'll go to our central staff and say, hey, here's this idea on these parking situations that we're having.

Can you please do peer study reviews?

What are their policies look like?

When was the last time they brought those when?

When was the last time?

And then that's how we vet them amongst each other.

For is this actually a good policy to move forward with?

Do we have the backing?

Do we have the research?

And so I was just trying to think about how could we use that without having to expend all of the people power because we don't have as many people right now, and yet saying, hey, we are facing this, and we should be aligning some of our fees that are really antiquated up into um modern times because that's what good government it's just another form of good governance, I think.

And I appreciate what you mentioned about that right of way vacation fee.

That was that one on my radar.

And so I think one area where we would welcome input from city council is if there are particular fees or areas that uh you see issues with or have questions about.

Um, but I do think that in the offseason that is something we would love to work on, and then as part of the 2027 budget process, kind of report out to you all on and uh bring to the table.

Yeah, how whole swaths lands be vacated and apartments be built on them, and then they the developer makes the profit, and it was literally a thousand dollars, and they got like 12,000 square feet.

That's it, that's that you couldn't buy that for a thousand dollars in Jefferson Park.

All right, thank you, madam chair.

Thank you, Council President.

Uh, next up, I have I believe uh, make sure I don't.

Uh Councilman Alvidres and then Councilman Watson.

Thank you so much, and thank you, Councilwoman um Gonzalez Cutieres for having the foresight to think about having this presentation.

This is very helpful.

Um, and thank you for the information and you know, letting us get a peek into your world and kind of understanding like what council president said about it helps us understand where these numbers are coming from rather than just um get them.

Um one of my questions uh is about the border border crisis fund.

So I am concerned and I would love to see more information on where that money came from.

Why aren't we putting it back there?

You know, like the Castro building project or other things where we took money from.

Are those things continuing?

Or and why didn't why did we choose to put that in the general fund rather than go back to the funding sources where maybe they were needed?

I know maybe not all of them were needed.

That's a very fair question.

So I think what I would really just emphasize is that the uh revenue that came into the border crisis response fund came from a variety of different sources, and so there was some from the Castro revitalization.

Um that work is still moving forward with other dollars at human services.

A significant portion though also came from general fund contingency, came from rescission from general fund agencies budgets.

Um so I think we can we can certainly pull together an accounting of where all of the dollars that uh went into that fund came from, uh, but it was over several years and it and it was across several different sources.

That's why we need you to break it down for us, otherwise we would be able to do it ourselves.

And we certainly can't.

And I think one of the questions I still I'm I'm still trying to process all of that and where the money went and where it's going and where we're replenishing funds, and I know there's a lot of sources.

I believe one of them was like tipping deeping into the 911 fee.

Are we still doing that?

Is that new revenue that we've added permanently to the budget, or was that we just dipped into that fee source for the cell phone 911 fee for just that?

But I don't expect an answer right now, but I would love a complete breakdown of all of those instead of just like one off answers.

For the um the border crisis response fund, I don't believe any of the revenue was from the 911 trust fund.

That is a very restricted source of funding where you're absolutely correct.

But I believe we put funding into that service, and then we took from the general fund part of that, because I know that was part of their as part of the budget last year, you are correct.

There were uh positions in 911 that were shifted over to the trust fund permanently um permanently.

That then there was a fee increase earlier this year that was approved, I think, by city council, that was approved by the uh public utilities commission.

Um, and I believe that is set to escalate going forward uh by the allowable amount uh per the manager of safety.

Uh but but glad to get more details.

A larger breakdown on all of those things would be helpful so that we could have a full picture instead of me having to think of each line item and come back to you if that if that would be possible.

Um and then one of the slides that was like concerning to me is slide 13 because the way I'm reading it is it shows our actual budgeted revenue versus revenue actuals, and then expenditures actuals, and our expenditures are more than our revenue, and it doesn't look like that's going to change until maybe 2028.

And so I think what you're looking at is an excerpt from the 2025 budget book, and so a lot has changed since that point, and so what we actually did in the updated version of the deck is take that out to prevent confusion.

Um, because what has changed is for the proposed 2026 budget, which is not yet finalized, but the amount that we are spending would actually be less than the revenues.

And so, so what I think you're looking at was where we were a year ago, and and we were forecasting this fairly significant gap between the revenues that we were going to be bringing in and the expenditures.

Um, because of the work over the course of this year's budget process, we we have tried to bring the revenues and expenditures into structural alignment, because what what you were seeing in the 2025 budget book certainly would not have been sustainable.

Okay, and then is in this revenue calculation it calculated if the bond were to pass.

I know with the current bonds, there was interest revenue that was extra made.

That's where the funding for the soccer stadium site came from.

Is there a projection of that?

Are we counting on none of that for 2026, or what is that look like?

Uh, so so the the five-year forecast that we do as part of the annual budget is is really just looking at the operating budget, and so it's not looking at those dedicated capital funding sources, and so we're we're not contemplating any of that in terms of just the operating budget.

Um, let me let me check in with the capital team on how that interest income would be forecast, uh, and get back to you with a better answer.

Great.

Thank you.

Thank you, committee chair.

Thank you.

Councilman Watson.

I think I'm good.

I just I guess I'll just do a compliment to Lisa.

I think that modeling is fantastic.

Um, and Justin, thank you so much for the clarity on the contingency.

I think that's going to be really important for us as we look at the need to kind of with our reserves.

Um, actually, I think it's 11.2% right now, not 10, unless it's fluctuated since then.

Um, so in the uh proposed budget, which again is not yet final.

We are anticipating that we would be at 10.3% at the end of 2025.

Um, that's just our best guess at this point in time.

We we could spend more or less than we think we will right now.

Revenues could be a little bit higher or a little bit lower.

So we will know definitively where we landed for 2025 in uh March or so of 2026, and then for the proposed 2026 budget, uh, we are projecting we would be at 11% by the end of next year.

All right, perfect.

All right, thank you so much.

Thank you, Major.

Thank you.

Um, I'll just go with one question.

I did ask our producers if we could go over a few minutes, and they said that was fine.

Um, I guess going back to the fund balance reserves, um, and and we were as we were just talking about that, Councilman Watson bringing up where we were at, um, where we're projected to be.

Um, I'm curious what the what the fund balance reserves last year.

Um, sorry, what we were I wrote this question down, and I'm going okay.

Did I write this right?

What were we projecting for fund balance reserves last year for the current year?

And then what was the trend?

What has been the trend since 2023?

So what were those where were we at with each year since 2023?

Great question.

So uh what you're seeing on this slide, uh, which is in the appendix, is looking at where we actually ended.

And so for 2024, uh, we actually ended at 239 million dollars or 13 and a half percent of our 2024 expenditures in our fund balance reserves.

Um, that was a little bit lower than we had forecast.

And so at this point in time, one year ago, we were thinking we would end at about 14.7% for 2024.

But what happened is we ended up spending a little bit more than we thought we would.

Revenues ended up coming in a little bit less than we thought they would.

And so those combined factors led to us being about a percent lower in where we actually landed.

And so right now we're projecting that we will end 2025 at 10.3%, but then won't know for sure until we get into about March of next year, where that actually is.

So was it taken into account both?

I think Lisa, this is your terminology that you use, the pessimistic model or does it cover both ends, right?

A pessimistic or optimistic um modeling.

So I think for fund balance reserves, we're just pinpointing one number.

Uh we we do not come up with scenarios for that.

So in the five-year forecast, we will have kind of a pessimistic or an optimistic scenario.

Uh but for the uh schedule 100, we we need to provide a specific amount.

Um and so we're we're saying we think expenditures will actually be this amount, we think revenues will actually be this amount, which would then render this much as our uh fund balance reserve balance.

Uh so we we don't give that range when it comes to our fund balance reserves.

So we don't use any kind of scenarios in those to create that projection.

We are not.

I mean, I think that they're um you know, the one thing with projections is that they're usually wrong.

Hopefully you're very close, right?

Uh, but to actually get that number on the nail uh is really really hard.

And so I think what one can think of just as we saw uh at the end of 2024, where we projected one number, we were a little bit off from that number, um, really hard to get it exactly right.

Um, but really what that number is based on is what we think we will spend in the current year, the future year, and then what we think the revenues will be in the current year and the future year, and then it's just math where where you take that existing balance and the reserves, you um, and then add or subtract the the change in reserve.

So if if we um bring in more revenue than we spend, we're adding to those reserves, vice versa, we're dipping into them.

Um, and so we're not doing a scenario in those cases, uh, it ties out to what's actually the spend and revenue projection.

My last question uh before we wrap here, and I think this might be better suited for for Lisa, and thank you for all that you're doing.

Like this is I the new information.

Um, when did we realize that there was a projection to what we are experiencing right now with this budget shortfall?

So was there a point in time seeing that we do these projections and the fact that your projections are pretty accurate?

Um, you know, there's a slight margin.

Um, and and so I'm curious, was there a point in time where during that process, starting 22, 23, where you started to see that fall off, the revenue fall off?

Um I think I you know, I said.

So I think starting mid-2023, about mid-year, um, we started seeing a lot of um anomalies and started to see a lot of volatility in our collection.

So I know you know, certainly I think starting with 2023, um, I started to have concerns about sales and use tax, but um, just in terms of what it was looking like in terms of forecasting.

Again, like it had been fairly consistent um, you know, for the past couple of years, even if you included the variability from um inflation, right?

That we are seeing these huge increases, but um just the month to month um differences between like consumer activity and what we were seeing between like foot traffic, so like all of those different things that I look, it just was no longer really falling into alignment.

I think so.

Um I don't know.

I mean, I guess just on that case with sales and use tax, I think started to see some volatility like mid 2023, and that certainly has just continued and carried out until um through 2026 at least.

And the I guess follow up on that for Justin, maybe on your end of when did then, I guess what what was then done to address that concern, those concerns as they were raised.

So I think if you think back to a year ago, um we we were projecting that our general fund revenues would be higher.

And so that was based on the best available information at the time.

Um when there were new tariffs declared, when the economic uncertainty that resulted from that uh kind of came to fruition, we revised down that projection for 2025, the current year, uh, by 59 million dollars.

And so that that is something that as we're getting new information, we are incorporating into those projections.

Uh and then for the 2026 budget, uh, we're budgeting revenue very conservatively.

We are projecting that it will be essentially flat, although you know just a hair less than in 2025.

Um historically, if you look back at that rate of general fund revenue growth, it has averaged about four or five percent over the last 10 or 12 years or so.

Um, but but I think that trend line is really telling where right after COVID it spiked, and then since that point it's been increasing, but at a slower and slower rate.

And so so as we get more data, we are building that into our forecasts each year based on the best information available at that time.

Um, well, thank you for all of this information.

Um hopefully this will help us as we continue on our journey with the budget currently, and then hopefully help us learn um from any shortfalls that we've had um as far as budgeting and and uh projections and all of those things um going forward.

So thank you so much for your time.

And um with that said, we don't have any items on consent, so we are adjourned.