To order with the Madam Clerk please call the roll.

Councilmember Dizale Anton McCampbell.

Present.

Councilmember Letitia Johnson.

Present.

Councilmember Mary Waters.

Present.

Mr.

Chair, you have a quorum present.

Thank you so much, Madam Clerk.

Um that'll move us on to the approval of minutes.

Um members should have received the minutes.

Is there a motion to approve?

Motion.

All right.

Um any objections?

Without any objections, the action shall be taken.

Don't move us on to chair remarks.

I would just keep it very brief.

We do have a 2 p.m.

Uh C B C D B G.

I always get the acting around.

The CDBG um hearing, so we will get through as much as we can with budget financial audit, but just want to let folks know that.

And with that, we will move on to public comment.

Because we are on time constraints.

I am going to give folks um one minute on public comment.

I understand that is very that is a low number, but as folks know in this committee, I try to give folks their full two minutes, but we are at time constraints.

So we'll have one minute for public comment.

Um that will the request for public comment will end at 127.

Um, and um also before we move on to public comment, I'm going to uh uh open up the 115 presentation on uh water revenue and then we'll recess their presentation at the call of the chair.

So with public comment, uh do we have someone in the audience?

I believe we have one person in the audience, and how many if you are on Zoom, please use the raise hand function if you like to give public comment.

Um we'll start with folks in the audience here.

If you come to the front here, uh to the chair.

Good afternoon.

Um if you just want to state your name and then give your public comment.

Uh Russ Ballant and I uh uh want to raise uh the question through the committee, uh, which I understand the officer's chief financial officer will answer today in the meeting about the um the revenue estimating conference data that I reported to city council eight days ago.

Um the fiscal year 25 showed 590 million dollars round slightly rounded in revenue, but the fiscal year 26, our current year was estimating 724.4 uh about 135 million dollar increase.

And I was asking what the basis was for that increase and whether that whole 725 uh 724.4 million is coming from uh customer accounts.

And so I would like to know how much DWSD will actually be collecting in fiscal year 2026 based on the best estimates.

And I also take note of uh uh on the page 13 of that report, it says in uh uh bullet that DWS to me include bonds and other funds not reported in revenue actuals and why they're using the years a different I know uh the time.

Why are they using those I gotta cut you on reporting fiscal years in a different way?

Thank you.

That causes confusion.

Thank you.

Yeah, all right.

Um Zoom, how many folks do we have on zone?

Hi, Mr.

Chair.

We have seven hands raised right now.

All right, um, let's who's the first caller?

Yep, our first uh speaker is owner Papa.

All right, Miss Hughes, good afternoon.

You have one minute good afternoon, and through the chair, may I be heard?

Yes, you may.

Many times I would rather hear Rust Ballot than what you guys are saying at the table.

He's giving information and you don't want it disseminated.

I'm looking at 6.1, which is the citywide payroll performance audit.

I looked at that audience a couple of weeks ago and now it's unavailable.

I would like to know where that audit is and where the discussion around that audit will will begin.

And um, it's it's it's it's many it's it's strange to me that during the audit um season when plant morant was here, they carved out uh DW.

They did not include it in the audit.

I'm wondering why that was and uh why can't we see the audit for um the water department?

Uh that would be within our purview to see, and we do need to have a conversation around the estimating the revenue of estimating because something is happening with the citizens' property tax surplus, and we really need to um investigate why you're using it so recklessly.

Thank you.

Next speaker.

Our next speaker is William N.

Davis.

Commissioner Davis, good afternoon.

You have one minute.

Commissioner Davis, are you there?

I heard are you there?

Okay.

Can I be heard?

Yes, you may.

Okay, I like to act on what both the previous callers just said.

I would like answers answers to their questions.

Awesome.

How far would like uh answer to this question?

Myself, like Russ, I mean I worked for DWSD.

I did 34 years in the water department.

Every year that I was working, the city of Detroit told the ratepayers that part of what they was paying in their water and sewage rates was for our water department employees is their benefits, which included my pension, and which included my health care.

But yet, you know, that did not happen.

It's not happening.

So if in the event that they uh decided to shortchange DWSD retirees, because we DWSD continue to pay into the pension fund.

Uh it it will the city be planning on giving the ratepayers or a rebate or reduction, or are they gonna fully fund our pensions?

Thank you.

Thank you.

Next speaker.

Our next speaker is resident.

Resident, if you could um you have one minute, so if you can state your name and begin your public comment.

Yes, good afternoon.

May I be heard?

Yes, you may.

Okay, thank you.

Um, very disappointing that in the last meeting with the executive organization plan number one, it wasn't attached to the agenda.

I don't care if it was published in the legal news, it should be attached to the agenda if we truly care about transparency and government.

That shouldn't have been difficult to do.

Number two, very disappointing that ever since I've been paying attention to the council as a returning resident to the city of Detroit, the charter is not fully complied with.

Not in charter section 7-201.

There was a little bit of talk about that in the last meeting.

But Charter Section 9-405, elimination of redundancy.

To my knowledge, that report has not been done, and there's so much redundancy in government.

And what does that mean?

That means our tax dollars are being misspent and inefficiently.

And so it'd be nice that to address all the questions that went that people uh call into.

Also, for the right to council, $760 a case, but the Zalsmer law firm for the solar takings are getting way more than that, and that's not.

Thank you.

Our next caller.

Our next caller is Betty A.

Varner.

Miss Varner, good afternoon.

You have one minute.

Uh, good afternoon.

Uh Mr.

Chairperson and to all the uh council members involved.

Uh that's within the sound of my voice.

I would like the answers to all the questions that have been pre previously asked.

I'm asking uh the council to consider monies to help uh organizations, black clubs, 501c3s, and uh associations pay for that uh land use hearing fee.

I'm asking the administration to consider waiving that land use hearing fee.

Um advocating for the Sodales World Black Association.

We're still in need for monies for uh our think of corridor, uh the same type of monies that has been spent in other core uh corridors.

Also, we are looking for um help to uh with our project to expand our park.

We purchased uh three additional lots, and we we need help.

Thank you for this time and God bless you all.

Thank you, Miss Varner.

Next speaker.

Our next speaker is Cunningham.

All right, before we go to Brother Cunningham, public request for public comment has been cut off.

Um Brother Carmen Cunningham, you have one minute.

Good afternoon.

Good afternoon, everyone.

The sound of my voice, 31344 9114.

31344, 9114.

That never was made as you can remember it.

I would give you a point.

Roller Park Transit Center and Harbor President Center in areas where there's chemically addicted folks, they keep asking me for food, who hungry, they're hungry, they're hungry.

If you can't help, if you can't help with hand armors, if you can't help gloves and hats, which I provide, I need you to make some peanut butter and jelly sandwiches, or give me a bunch of peanut butter, give me a bunch of jelly, give me a bunch of baggies, give me a bunch of bread, and I in a nice sanitary and clean area, make sandwiches for the people.

I don't know.

I don't want to talk about that today, but folks are really hungry.

The food costs have increased, and folks are struggling.

Take care and thank you, council people.

Thank you, Brother Cunningham.

Next speaker.

Our second to last caller is phone number ending in 169.

Phone number ended on 169.

You have one minute.

Good afternoon.

Hello, can you guys hear me?

Yes, we can.

Okay, great.

Um, I believe, I believe, I believe, I prove we believe that the players are working.

Thank you, Brother Cunningham.

Fighting or keeping um to the public transportation.

Um, I just want him to have one victory.

I know Cunningham is tired of losing.

He is the underdog.

This quoted from Bob Marley as a man.

So yeah, we we and I know that the talk is deep, but in the heat of the battle is as we as the thank you for my time.

Thank you.

The last speaker, yep.

Our last caller is Darren McCluskey.

Um Darren McCluskey.

Good afternoon.

You have one minute.

Hey, good afternoon.

Um, it's interesting to catch the tail end of that prior meeting where everyone seems so concerned about right to council entangled titles.

It's it's incredible.

I mean, it is a very important thing.

I agree.

But it's the city takes a completely 180-degree different approach when they are the aggressor.

In the case of the solar takings, they not only no right to council, they used police action to remove people from homes to take their homes.

So it's interesting when this when the city's on the other end of the spectrum, they're willing to spend tens of thousands of dollars per property to take a property.

When on the other hand, they're spending seven hundred dollars or so per property to protect someone's rights to it.

Um, it's really it's just really two-faced.

Um, and then this is also another yet another notice that fraudulent data was used to come up with just compensation.

That Tanya Studemar use fraudulent statements.

Thank you.

All right, that brings us to the end of public comment.

And then we'll go to our um 115 discussion um regarding water revenue estimates.

I just I know it's noted on the um public comment.

I appreciate folks bringing this up.

Um, especially Mr.

Ballon, and just want to know, folks, that this came up and we came to the table to make sure we got all the ducks in a row with this conversation.

So I appreciate you bringing that up and appreciate our folks for administration being here.

So if you can come forward so we could begin our discussion.

Oh, yeah.

And I'll call the 115 discussion back to order.

Thank you.

Good afternoon.

If you could just state your names for the record, please.

Good afternoon.

I'm Valerie Goli, acting treasurer and deputy CFO, City of Detroit.

Good afternoon, Lashonda Davis, Director of Finance, Detroit Water and Storage Department.

Thank you both for being here.

Um, and and if you could just run down the estimates and how you came to those estimates, and you probably heard during public comment just um if you can just touch on there being a 23% increase um between uh fiscal year 25 and fiscal year 26, and where that comes from.

So thank you.

Thank you.

I'll just start to say that the estimates in our revenue estimating conference for Detroit Water and Sewer Department revenues were based on stale information, and I apologize for that.

And so what we've done is we've asked the finance director with DWSD to come and provide you with updated information through the chair.

Um the 23% uh increase for fiscal year 26, fiscal year 26 was not accurate.

Um, we have provided the department of budget as well as the Treasury Department, as well as the OCO's OCFO's office with updated revenue estimates to align to our current estimates that we expect for fiscal year 26 through fiscal year 30.

With that, um the hundred and twenty four million dollar increase that was expected for fiscal year 26 is actually reduced down to uh reduced down 106 million dollars.

So that increase is not expected to be.

It was um reported in the revenue conference that DWSD was going to have an adopted revenue of 724 million point four million in revenue.

In actuality, we expect that our uh estimates will actually be 618 million, and with that, it was also communicated that uh the increase was based on uh DWSD going to the market to issue bonds.

Um that act information is actually inaccurate.

DWSD will not be going to issue bonds in fiscal year 26.

We are expecting that we may go to the market to issue bonds at the end of fiscal year 27, of which we're expecting to issue possibly uh 60 million dollars in bonds, 30 split for water and 30 split for sewer.

But if that is determined, we will definitely have conversations previous to that being determined, as well as uh having to take that to the Board of Water Commissioners for approval previous.

Um so that is what we provided in our estimates uh to the Office of Budget as well as the Treasury office to uh that we may issue bonds in fiscal year 27.

If we do issue bonds in fiscal year 27, it will be at the end of the fiscal year, um, which will happen approximately around March April.

Um we wouldn't expect to receive those bonds until May, which would not affect debt service to citizens or ratepayers in fiscal year 27.

Um, all of those calculations would be expected to be received in fiscal year 28 and further.

Uh so with that, the Office of Treasury is expected to release an update a report of the revenue conference estimates that accurately reflect what uh estimates are from DWSD.

Thank you.

Um I have a few questions about customs.

I'll start with my uh colleagues.

Um you have any questions?

First chair Johnson.

Thank you, Mr.

Chair.

I'm not really sure where to start.

Um do you have any documentation, anything that you can share with the public to just kind of go through to show what it is that you just indicated?

I know you said that the information was erroneous, um, but there is an increase from the previous fiscal year for the fiscal year 26, right?

You're anticipating somewhat of an increase or fiscal year 27.

For 27, okay through the chair.

Um, and how much of an increase?

For fiscal year 27, it will still be a reduction.

So um through the chair, the yes, we do have a uh a document that we can produce to to the public.

However, um currently the WSD is in a rate negotiations and has to get approval from the board.

So upon completion and getting approval from the water commissioners board, we can definitely release that information.

Um we have provided it to be um entered into the system to the Office of Budget so that it can be in calculation as well as to inform the treasurer uh with that, but the estimates are currently that the all fiscal years would have a reduction based on what was displayed in the revenue conference.

All of those estimates were over estimates.

But it was still in sorry, through the chair, it was still an increase from the prior year.

Correct, through the chair.

That's what I was asking.

So what's the increase from the prior year?

For through the chair, um for fiscal year 25, those were actual amounts for fiscal year 26.

The estimated uh budget would be 618 million dollars.

Can you give me what it was for 25?

Through the chair, it was 589 million dollars.

Okay, so about 33 million dollars.

Okay.

Um I I actually wanted to ask a question about the agreement with the Great Lakes Water Authority and the funding that is received or the dollars that are received.

Do those dollars increase over time?

Through the chair, they do not.

They stay stagnate at $50 million that are spit, $22.5 million for the water side and $27.5 million for the sewer side.

And through you, Mr.

Chair to Mr.

Corley, how do we renegotiate that?

I think that's that's insane, quite honestly.

Um, with with everything, the cost of everything going up.

We we know that DWSD's assets are as old as I don't know, um, as this city is, right?

Um, so how do we address that knowing that additional dollars are needed to improve the infrastructure that we have?

Also noting that the Great Lakes Water Authority gets funding from the state um and other entities for them to do improvements to.

Um because so the Great Lakes Water Authority is getting resources from the state, which to me is saying, okay, we're giving them additional resources in the city of Detroit for them to do improvements to the infrastructure that they now um I don't know what word I want to use, but that that they have currently have access to that they're leasing.

Um but DWSD just gets the 50 million dollars, and I know in prior years we've had conversations about DWSD's rates increasing, I would presume because they need to address the infrastructure.

But yet in still the Great Lakes Water Authority just gets to give that same 50 million dollars, which begins to diminish over time, right?

How do we address that?

Because if not, the ratepayers will continue to address it.

Mr.

Chair, that's that's that's uh that's a wonderful question, and just to remind the council.

So coming out of bankruptcy, I think in 2014, um, there was a memorand memorandum of understanding between the three counties, you know, Wayne County, Oakman County, um, and McComb County, and also with the governor at the time, um Rick Snyder, and out of that agreement was this $50 million payment to the DWSD.

Um, and you're right, that I there was not like in cost of living adjustment, no inflationary adjustment, it's just a flat 50 million.

So you're right, you know, over time that 50 million is not worth, you know, um what it should be.

So um uh member Johnson, I think that would be a wonderful question for Mr.

Brown, the DWSD's uh director and their legal counsel, because I don't know if the city on its own can open up, you know, that uh MOU between the counties.

I I tend to doubt it, but I think that's gonna need that's gonna require legal a legal analysis.

Thank you, Mr.

Corley.

And so DWSD receives the 50 million because DWSD owned everything, the assets that now are part of this regional authority.

Is that why DWSD receives the funding?

That is correct.

That is the credit, the regional portion of the um water and sewage operation um is being leased, you know, to uh the Great Lakes Water Authority, and based on that lease, it's a 40-year lease, but that lease unfortunately it increases whenever they issue more bonds.

Um and so right now, my understanding it's a 40-year lease, but I don't know what the exact term now is because I can't recall the last time bonds were issued on behalf of um water source department.

Um so that'd be another good question.

So what is what is the length now of that lease, you know, because it it extends, you know, whenever they you know issue bonds.

And so um, you know, of course we're gonna have a budget hearing, you know, with Mr.

Brown, um, and you know, his department.

So please try to remember to raise those questions to him when he comes.

Thank you, Mr.

Quarley.

Another brief question because I know we have limited time.

Um, who actually approves of the bond issuance?

So it's my understanding that the bonds are actually issued through the Great Lakes Water Authority.

Um, you know, come again, that was part of of the MOU because quite quite frankly, the bond can achieve a greater credit rating coming out of the Great Lakes Water Authority, and so that was a major reason why they did that, but maybe Ms.

Davis can offer some additional comment.

Through the chair, Mr.

Corley is correct that the bonds are issued through the Great Lake Water Authority.

The process starts in March of each year for review, and DWSD is then offered the uh the extension, the opportunity to join in with the Great Lakes Water Authority and the bond issuance, as this year they are in the process of currently discussing their bond issuance, of which we will not be joining in to issue bonds with them.

Thank you.

Thank you.

Um and so my point in that was we don't have any authority over the extension of the lease because it doesn't come before this body.

Thank you.

Thank you, Mr.

Chair.

Thank you, Vice Chair.

Uh member waters.

Um your mic.

Oh so if we are getting we're not actually getting 50 million if we're paying part of that 50 million, right?

I I I don't quite get that.

You're saying we're supposed to be getting 50 million, but if we're paying part of that, how how does that work out for us through the chair?

The 50 million dollars is incorporated into the revenue true that is associated with the revenue that was reported through the revenue conference.

Um however, the rates do intertwine um that the dollars are split and do go back and forth, so there is uh a balancing with the variance that is received that is accurate.

So how much is Glee would contribute again to um DWSD?

Well, there's through the chair, there are shared services that are also incorporated that we um negotiated and that are uh termed out in the lease agreement or the MOU that um Mr.

Curley was referring to, and so different things are associated with different costs associated with that MOU or lease agreement, and then with that we also incorporate the rate increases that it the cost that is associated for us to buy the the water wholesale from the Great Lakes Water Authority, those rates are provided to us annually through the Great Lakes Water Authority.

That meeting is being held right now to discuss what those costs are, and then we incorporate them into the rates of which we provide on along to our ratepayers.

So that rate changes annually.

Thank you.

Can anyone tell me whether or not Gleba contributes to our general fund?

Mr.

Chair, um I think I can take that one so it it it does not.

It does not, okay.

All right.

Because I think that whatever dollars they're responsible for contributing as it relates to this city are going to be diminished um over the next 10 years.

And so that's something that that we'll have to uh have further conversations about uh as it relates to them.

I mean, they control everything.

It's not like we can we can have any authority when it comes to that authority.

So I I just I just wanted to put those things out there, um, Mr.

Chairman.

Thank you.

Thank you, Member Waters and thank you.

But wait a minute, but if we issue uh the bonds, um, where would the six million what fund would the six million dollars go into again?

Through the chair, the sixty million dollars will be split between the water and sewage funds equally sewage funds.

Okay, equally, yeah, 30 and 30.

That's right.

You said that.

Okay.

Thank you.

Thank you.

Thank you, Member Waters.

So I this yeah, I definitely want to have a conversation around the um the lease because as has been mentioned, and I and I'll go to questions about the revenue estimate.

As has been mentioned, if we're if the 50 million is at the similar at the stagnant rate, and then we're also they have the ability to increase our our rates as they're discussing right now.

Um it seems to me that at some point that 50 million becomes moot.

And but we're holding the resources that every community is using.

Um it is just I know this came out of the plan of adjustment, but this is this just seems like a bad deal for the city of Detroit.

Um in my view.

So we definitely have uh have some questions around the budget um here in this will, but I just want to touch on and I appreciate you coming forth with the accurate information on the estimates.

Um, and thank you for your work on that.

I want to get to the mechanics of how we got to have an accurate estimates, and if is there work for safeguards being put in place that this doesn't happen again um in that part?

Whoever wants to take that through the chair.

Yes.

Um, so with that in previous fiscal years, we provide a five-year lookout.

And so former years data was used for the revenue conference.

Um, but however, to prevent what has happened now, we have put additional controls in place.

So uh the DWSD team will be a part of the preliminary reviews of the revenue conference uh documents previous to them being distributed to the public.

So we'll be incorporated into those meetings as well as do a formal review, um, and then we'll overview with the budget department.

We've now set up monthly meetings with the budget team to ensure that all of the financials that they hold for DWSD are as accurate as possible.

So we put some controls in place as of this happening to ensure that this does not happen in the future.

Thank you, Ms.

Davis.

Mr.

Gold, did you have anything to add to that?

No.

All right.

Through the chair, I'm unaware of any actuals that do not show uh bonds or um revenues associated with grants.

All revenues that are incorporated in actuals are truly actuals that are associated with all revenue funding sources.

So not aware of any situation where we're not being transparent in regards to bonds and or uh grants or any additional revenue sources.

Yes.

And so if I may, I I'd like to review that footnote after this meeting and get back to you to make sure that it's accurate.

Okay.

Okay.

And we can submit their question right now too just.

I appreciate that.

Thank you.

Absolutely.

I don't have additional questions on that.

I I just yeah, it the timing of this is happening as we as the Gleewa is, as you mentioned, discussing the water race.

I just as we continue to get into aspects where water and utilities, I know we're gonna have a quite uh conversation on the affordability programs that the department has.

I just folks are struggling to make ends meet and just understand more and more about this agreement with Glea.

It is it's going to impact our residents and ratepayers um that are already struggling.

So I I look forward to the conversation on what we can do to help alleviate that and because this these are our assets in the city.

Um we just have to we just need to do all that we can there to make sure that that happens.

Um any other questions for um members here on the committee?

Mr.

Chairman.

I just have a quick one uh Mr.

Chairman, yes, no orders.

Just want to make sure that I understand whether 60 million dollars will go when it's being split.

I see a whole lot of big pipes around the city, and I I'm just not sure how's it how's it gonna be used?

Through the chair, um, once we receive the additional bonds, there will be a um pri CIP or uh capital improvement projects that within the city of Detroit that will be allocated to basically um split those dollars um that are associated with different projects that are prioritized within the engineering department at the water department.

Give us an example, a couple of projects that are prioritized.

Well, currently we have a Jefferson project.

Currently, well, there are numerous projects I could actually provide you with a list.

Yeah, well, you you you can.

I just want you to give us a couple of examples of some.

And if you could send us a list though, yes.

Through the chair, I can definitely provide you a list of all of our CIP projects that are currently.

All right, then thank you.

Yes, thank you, Mr.

Chairman.

Thank you, Member Davis.

Um member waters.

Thank you, Ms.

Davis.

All right, uh Mr.

Corey.

Mr.

Carly.

Thank you, Chair.

So um, I think it'd be important to clarify also for the rate payers.

So when bonds are issued on behalf of DWSD, the total amount of bonds is not impacting the rate payer.

It's the debt service on those bonds that's impacting the rate payer.

So if they issue 60 million dollars in bonds for capital improvements, usually those bonds are you know 25, 30 years old, 30-year amortization to pay them off.

So it's it's the annual amount of the debt service could be a million dollars, two million, whatever that's impacting the rate.

It's not it's not the entire amount of the bond proceeds.

So when uh a citizen sees this schedule that was you know shared and it's gonna be corrected, right?

It's gonna show a $60 million increase, probably in fiscal 2028.

A citizen should not interpret that as meaning that their race is gonna go up astronomically because of additional 60 million dollars in bond proceeds.

It's only gonna go up based on the debt service.

And so I just want to make that clear so that citizens aren't alarmed, you know, when they see um uh increase in the revenue because of a bond sale, because the whole bond sale would not impact the rates, it's the debt service on those um by on those bonds.

And Ms.

Davis can correct me if I'm wrong.

Through the chair, that is accurate, and we have incorporated the cost associated with that debt service in our uh ongoing budgets for the next fiscal years, and so the the cost of the debt service that needs to be has been calculated and been incorporated and the revenues that should cover those there that uh the debt service is also incorporated in the calculations that will pre be provided.

So, with that, that is accurate per what Mr.

Corley has just stated.

Thank you, thank you so much, and and for members of the public as we get that information we'll make sure that folks are able to see it.

All right, anything further?

All right, thank you so much, Ms.

Davis.

Thank you so much, Mr.

Goalie.

Um, and we uh and for folks, we know this is not the last conversation that we'll be having about uh the water rates, the water department's budget, and also the affordability programs.

But thank you for coming um to speak with us today.

Thank you.

All right, that will move us on to the agenda.

Um we have under unfinished business.

Um there's 6.1, the status of office of order general, um, the city wide payroll performance audit.

Um, before I ask for a motion on this, I know it came up in public comment.

Um, it if there's someone from the administration or um the not to mention the auditor general's office or someone can that can point us uh if this report is published right now.

Is there anyone here?

Maybe LPD.

It's LPD.

Do you know if this um audit is has been published?

It has been published.

Uh Mr.

Chair, usually their audit reports are published on the order general's website, but I I have not looked at it recently, so I don't know if this one is, but usually they are.

All right, so I we're gonna double check um to make sure that it is on, and I know Miss Hughes brought this up, so we'll make sure to uh point you in the right direction for the link there.

Um but we've been uh so because of budget season and such, we've been asked to bring this line item back in six weeks for the presentation.

Is there a motion to bring us back in six weeks?

Motion with discussion, discussion.

Uh thank you, Mr.

Chair.

Just wanted to Johnson.

Thank you.

Um, just wanted to note that it is this uh payroll audit is on their website.

All right, thank you.

Okay, so the payroll audit is on the auditor general's website.

Thank you, Vice Chair Johnson.

Any further discussion?

There's been a motion to bring us back in six weeks.

Motion, yeah.

Without any objections, without objections, this 6.1 be brought back in six weeks.

That will move us on to let me reach 6.2.

There's been um this is the status of council member Santeo Gramaros.

Um submitted a memorandum regarding the centralized fee schedule for city services.

We're gonna defer to LPT on this.

Um the status of this, yes, Mr.

Corley.

Thank you, Mr.

Chair.

Um, please bring this back in a week.

Our report be coming out in a day or two.

Okay.

There's been a motion to bring this back in one week.

No objections.

6.2 shall be brought back in one week.

That would bring us on to new business from the office of the chief financial officer.

This is a report relate relative to the financial report for six months ending in December 31st, 2025.

And I know we're at 2 p.m.

Um, if folks from administration want to step forward, please good afternoon, Mr.

Chair.

Uh, I am Donnie Johnson, and I am the acting deputy chief financial officer and budget director for the city.

And I'm Valerie Gowley, acting treasurer, deputy chief financial officer for the city.

All right, thank you.

And I know we as I mentioned, we are coming up on the uh CDBG um hearings.

It is two o'clock.

I'm waiting for the um here you got do you wish for me to proceed with the financial report?

Yep.

Okay.

We have to uh do you have to need to get one meeting a board?

Oh right.

So will this uh this committee will stand adjourned at the call of the uh recess at the call of the chair.

Thank you.

Well, now I would like to call to order the extended budget finance and I'm sorry, extended planning and economic development standing committee for the purposes of the C D B G N O F hearings.

Madam Clerk, will you please call the roll?

Councilmember Scott Benson.

Councilmember Letitia Johnson.

Present.

Councilmember Denziel McCampbell.

Present.

Councilmember Renata Miller.

Councilmember Gabriela Santiago Romero.

Councilmember Mary Waters.

President Councilmember Angela Whitfield Callaway.

Council President Pro Them Call Me Young.

Council President James Tate.

Here.

Is it President to not have a quorum?

Thank you so much.

Just want to make it uh known for the record that the reason why we don't have a quorum at this moment is because we are still in the midst of budget finance and audit uh standing committee.

And we are going to for those who are here today for the appeals.

Uh the plan, because we are uh behind and there are a number of individuals, and we'll just put it right out there that are going to be attending the state of the state uh today.

Uh we are going to um hold just the public comment portion uh after BFA to allow for public comment, but we will not have appeals, the actual hearings today.

We will reconvene at our regular scheduled time for tomorrow.

So letting everyone know who's tuning in right now for the um uh appeals hearing that they will not be taking place uh today, but they will be taking place again tomorrow at its normal schedule time, and we will be reconvening after BFNA, BFA for uh public comment.

Mr.

President, yes, ma'am.

Um I just want to note for the record that um I need to recuse myself from the proceedings for today uh per the law department.

Okay.

All right, thank you.

Um but with that being said, I would like to um recess to the call of the chair.

Thank you.

Oh, yes.

We'll call the budget finance and audit um committee meeting back to order the clerk, please call the role.

Council member Denzel McCampbell.

Present.

Councilmember Letitia Johnson present.

Council member Mary Waters.

Member Waters has um indicated that she has to leave early, so uh note that please.

Thank you so much.

All right, we're back.

We uh thank you for your patience.

If you can state your name one more time for the record, and then go into the report.

Thank you, Mr.

Chair.

Uh my name is Donnie Johnson, and I am the acting deputy chief financial officer and budget director for the city.

Bailey Agoalie, acting treasurer, deputy chief financial officer for the city.

Thank you so much.

All right, thank you, Mr.

Chair.

We are here to discuss the December report, financial report, which is the report for the six months ending December 31st.

And this also includes a quarterly report.

So when I pass it over to Treasurer Goley, she'll have a few extra slides than we typically do, but we will move expeditiously knowing that folks' time is pressing today.

So jumping right into our executive summary, uh, for the 11th straight year, Detroit home values are up uh this time by an average of 10 percent citywide, adding 500 million dollars in wealth for Detroit homeowners.

Home value gains in 2026 bring the total value of Detroit's residential property to 10.5 billion dollars under the Michigan Constitutional T constitution, taxable property value increases are capped at 2.7 percent for 2026 as long as there is no change in ownership.

On February 13th, the city held its revenue estimating conference to receive an update on the Detroit economic outlook and approve revised economic revenue and revenue forecasts for FY 2026 through FY2030.

FY26 revenues are up 18.4 million dollars compared to the September conference and are reflected in this month's financial report.

The mayor will deliver her proposed 2027 uh fiscal year 2027 budget and fiscal year 27 through 2030 for your financial plan to the city council on the afternoon of March 9th.

Jumping right into the budget versus actuals report.

Um at this time, as of or as of December 31st, we were running ahead on our revenues.

We have a surplus in revenues of 35.6 million dollars.

This is driven primarily by the wagering taxes as well as um over uh higher collection than expected at this point in the year in property taxes.

Treasurer Goalie will get into more details um when we get to the revenue slides.

On the expenditure side, we are um right now we as of or other I keep saying right now, I mean December 31st.

Um we were trending at 8.3 million underspent on our expense budget.

So on the whole, um, as of December 31st, we have an operating surplus of 43.9 million dollars.

When we annualize and uh provide a projection for the budget, we do continue to project uh based on uh municipal income taxes uh being less weak than we originally thought, but still weaker than we would like.

We do still expect to end the fiscal year with a $13.8 million dollar revenue deficit, an under collection on revenues.

However, at this time, we are we now have enough data halfway through the fiscal year to begin forecasting the expenditure budget, and so we have some of our initial forecasts in the model, and that shows that we are on track at the December 31st of an underspend of 16 million.

So we currently have an expected annual surplus of 2.2 million dollars.

Um this is good news.

So currently our underspend is outpacing our undercollection on revenues in our forecasts.

We will of course fine-tune this each month when we meet with you, um, but that's where we stand right now.

In terms of continuing appropriations, no major changes here.

Um no amendments or changes were made to these appropriations since the last report.

And finally, for my part of the presentation, the employee count monitoring.

Um, since the for the November to December report in that period, we did go up overall citywide in the head count.

We um uh brought on 23 new FTEs to the city government.

Um big movers and shakers month over month, um really not a lot of big activity.

Fire, we did have a a somewhat large drop of 16 FTEs in the fire department from November to December.

We did have a lot of a lot of retirements as we got to the end of the calendar year.

Um, a number of folks did um put in their paperwork for retirement.

So no operational impact from that.

Um obviously um the fire uh fire academy classes are well attended, so we have no operational concerns there.

Um seasonal positions, you'll always see those go down in those winter months as we have fewer outdoor you know grounds maintenance activities.

Um but yeah, in terms of our positions, no major changes, nothing particularly um uh notable other than oh, sorry, I say that and then I have to correct my record.

Um, transportation.

We did have a large increase in transportation of 53 FTEs.

That's because we've brought on a substantial number of transportation students back in those months.

Um, and so um that was the the increase there in the hopes that retention from that class would be good based on the new um wages that were approved for the drivers union.

And now I'm gonna pass it over to Treasurer Goalie for revenue deep dive.

The next slide is income tax collections, and if we look at year-to-date December 31st, 2025 compared to the same point last fiscal year, we can see that withholding is up $8.8 million dollars compared to the same time last year, while corporate income tax revenues are down by $4 million.

Uh we did incorporate some of this information into our updated revenue estimates.

I believe that if it isn't already on the agenda, we will be planning to present the uh summary of the revenue estimates to this committee in the future in the near future.

Um collections net of refunds and disbursements compared to the same time last year, is up by about four million.

Um the next slide shows our cash position.

We show you this slide every month to show that we have a strong cash position for December 2025.

Our total general ledger cash balance is 1.6 million.

Um we in the column to the right of that, we show that at the same point last year it was a little over 2 billion.

And I've um explained before some of the reason is ARPA spend down, spend down of bond proceeds in the capital project funds.

Um, and then we are of course making legacy pension payments from the general fund and the payments from the retiree protection trust fund.

The next slide is our operating cash activity, which shows cash inflow and cash outflow.

Um, if you look uh five columns to the right, that is our actual December 2025.

Um you can see that our ending common cash pool is approximately 712 million.

Um, and and we consider that healthy.

The next slide is accounts payable and supplier payments.

Um I did get uh summary um in the highlights.

I think what this committee is generally interested in is the AP aging, and I did note that for the current month the invoice count for 31 to 60 days is 43.

Um so I did check with the accounts payable director.

40 of those invoices were payments that were voided and reissued.

So that's that explains the large number.

And um on the 61 plus days, she let me know that of the seven, three were credit invoices and four were invoices that um were payments that were voided and reissued.

The next slide is a slide that we provide on a quarterly basis.

It is the property tax collection rate analysis.

So we look in terms of property tax collections, how we're doing compared to the same point in the prior year.

Um pretty much everything is uh on track and similar.

Um the one difference that you'll see is residential, and we looked into the collections data, and as you know, um winter property taxes are mailed on December 1, and um are due on January 15th.

They include the winter property taxes, and um, depending on how a taxpayer chose to pay, could include one half of the summer tax payer um tax payments that were due.

And here we notice that a mortgage service uh mortgage provider services servicer made that payment for all of the mortgages in December as opposed to January.

So I think when we see January, it's gonna even out.

The next slide is also uh a slide that we include on a quarterly basis, it gives uh a port um a summary of our investment portfolio.

So here we show for the different investment categories that Treasury oversees all but the retiree protection trust fund at the bottom.

Um what we do is we show how that portfolio has performed, and then um on the right we show the total portfolio gains or losses.

So you can see on the right um bottom 38.2 million in gains through this period.

Um all of the uh portfolios are um performing on a positive basis.

Um the the only thing that really would be different if you pulled up this same slide from a year ago is that the size of our portfolio is smaller for reasons that we talked about in the previous slide, ARPA spend down, capital project spend down, etc.

And interest rates are somewhat lower.

The next slide is um shows uh and it is a quarterly slide that shows the city's contributions to pension payments.

It's a slide that the Financial Review Commission had originally asked be included just to demonstrate that we are making these payments on time, and um and that's what this slide shows.

The last slide is our um debt service slide.

This we provide on a quarterly basis.

Um it shows all of our unlimited tax general obligation debt and how much is outstanding and how much we pay, um how much we are to pay for the entire fiscal year and how much has been paid through December 31st.

The same thing for the limited tax general obligation bonds, and then there's a separate line for Michigan Transportation Fund bonds.

In the quarterly report, you get details of each bond issue and the repayment schedule, and then I'll also point out the last two pages of this report show our um UTGO debt service requirements, a summary through the end of when that debt is paid, and then there's also a slide for our LTGO debt service requirements until all of that debt is paid.

That concludes my presentation.

Back to you, Mr.

Chair.

Thank you so much.

Umson of questions.

Thank you, Mr.

Chair.

Um the only question I will ask at this moment is uh relative to the property tax collection.

Um I heard what you just said, Miss Agoli, uh, as it relates to December and January, but I'm just wondering if there's any impact on the uh solid waste contracts that we have in place.

Through the chair to council member Johnson.

There is in the sense that the solid waste fee is part of the property tax bill.

It's part of the summer property tax bill.

And so the payment rates on that bill also affects the payment rates on the solid waste fee.

So if property tax payments are going up, more people are making their property tax payments, then we're likely going to see higher revenue on the solid waste fee.

Same goes for delinquent tax when the when we do our delinquent tax reconciliation with the county.

That delinquency also includes delinquent solid waste payments, so we will get a little bit from that.

So the solid waste fee revenue tends to trend as you know, as goes property tax, so goes um solid waste fee.

Um and so if they're going up, then the hope is that we're gonna see full payment of the solid waste fee for folks as well.

So that's how they tie together.

They're not property taxes themselves do not support the contracts, it's the solid waste fee that just happens to be part of the same bill, if that makes sense.

Okay, and so we are um still in alignment with the projections for um the increased services for the contracts that are currently through the chair to council member Johnson, yes.

Okay.

All right, thank you.

Thank you, Mr.

Chair.

Thank you, Vice Chair Johnson.

I'll use my time to defer.

I know Mr.

Corley has some questions if there's anything you want to bring up.

Uh thank you, Mr.

Chair.

So um fortunately, you know, as was discussed um at length in the last February 2026 revenue estimating um conference.

Um income tax revenue is fairly steady, you know, based on moderate growth and wages and employment levels.

Um, and that's why you see a break-even, just like that's why you see a break-even point with the income tax revenue versus budget through December of 2025.

Um also it was indicated, I recall that corporate income tax collections have improved slightly.

So hopefully that's going to continue moving forward.

Um, is there any other factor that maybe Mr.

Johnson or Ms.

McGowley that I missed that could explain why we still see a steady moderate but steady growth in income tax revenue?

Um you you alluded to it when you talked about um wages, and we do see withholding um coming in higher than we had expected.

Um and and that contributes to it.

Um as well as uh we are seeing um greater tax compliance revenue than we had originally projected.

That's it.

Thank you, thank you so much.

Thank you.

I do have a trying to make sure that we what you did go over.

I I guess I have a question about the overall census to Corley and at the end of the year.

Are there any type of um unless we're going into the budget season coming up?

Are there any takeaways or things to flag as we see from the end of this year and this last quarter going into um just now in 2026 that'll help inform budget conversations?

That's an incredibly good question, Mr.

Chair.

Um, I think I think the takeaway, the high-level takeaway is that while we are not as concerned as we were previously, we are I would say highly guardedly optimistic.

Um there's a lot that can change the Supreme Court tariff ruling, for example.

We know that that has essentially, you know, the that the president has reissued new tariffs using different legal methods, and so that caused some chaos in the market.

Um doesn't seem like it is the kind of stuff that would filter down to us, but we're gonna keep an eye on it.

So uh the world is I think as unpredictable as it was last year.

That I don't think that has changed for us, and so we're we're being very cautious, we're being very conservative with what we're assuming.

Um, and that isn't going to change in the current year, and that's that's sort of the the advice that I would give, you know, this honorable committee and and the council as a whole is continue to kind of share that slightly more conservative approach to things because we just don't we don't know what's coming, sometimes day by day, sometimes week by week.

And so um we're just being very cautious with with the numbers we're doing.

We're we're heartened to see positive trends.

You know, we like to see withholdings increasing, and these are all very good things, but we also know that things can turn quickly.

Um, and so we're just being very cautious.

Thank you for that.

Yeah, I you touched on the tariffs and the decision, and that we've had a couple of uh conversations about that.

I did have one further one on the um I know it was just of I think it was three, but the vacancies there was uh three additional vacancies in BC.

Um just do you was that because of retirements or uh I would have to get back to you on that one.

That's not one that I um did a deep dive on just because it was a smaller number.

Um but uh my assumption is probably just the ordinary churn.

Okay, folks, you know, they leave, they come in.

It it's kind of the ordinary course of business, but I can definitely look into it and let you know.

Thank you.

Any other questions?

All right, thank you all so much.

Thank you, Mr.

Nick.

Okay, we're going to try to finish out this agenda before we close out.

So we will um that'll move us on from the uh office of the city clerk and city plan the commission.

Um would you like me to make a motion to receive and file line item 7.1?

Yes.

There's been a motion to receive a file, line on the 7.1.

Not see any objections.

Um this 7.1 will be receiving a file.

Thank you.

Thank you, Vice Chair Johnson.

All right.

So moving us on to 7.2.

This is a neighborhood enterprise zone certificate application for the rehabilitation of a single family unit at 1255 Bagley in a Corktown neighborhood enterprise zone area.

Is there a motion to discuss?

All right, there's been a motion to discuss.

Um we have Mr.

Gulak on good afternoon.

Afternoon, Mr.

Chair Chris Gulak, CPC staff.

We also may be joined by we're also joined by the petitioner, Matthew Cassidy.

All right.

All right, Ms.

Chair, I have I think I have a brief slideshow.

Um would you like me to share that?

Yes, please.

Sorry.

All right, we're able to see it.

Thank you, Mr.

Chair.

Uh staff submitted a uh a memor uh a report and a resolution for your consideration.

Uh this is a NEZ certificate request.

This is for a structure on the south side of Bagley near um South Michigan Avenue in the Corktown neighborhood.

This is a image of the uh house.

Uh staff has confirmed this is in the Corktown NEZ.

There's a map on the screen, this blue box uh out on outlines the Corktown NEZ, which was created back in October of 1994.

It's about 50 acres.

Uh the building uh under review is was built in 1880, and this isn't located in the historic district.

Uh the building, the building contains two separate sides.

Uh 1257 is on one side, and that has two rental units.

And the petitioner today was before you about a month ago on that request.

Today, the other half of the building is one, two five five Bagley, which contains one unit.

And the petitioner is Matthew Cassidy, and the unit is to be for his residence.

So this shows half of the building, the 1255 is on the eastern half of the building.

So we he received the two certif the one certificate to rehab the other side, which has two rental units, and this side is to have an NEZ certificate as the primary residence.

So the residents has this on the on the this side of the building has three bedrooms and contains about 2,316 square feet.

Uh the most recent sale date records show October 2023 for 315,000, just at one side of the building.

And the assessed value is 204,700, and the taxable value is 1,000 56,608.

Uh the petitioner.

Our understanding is uh because it's a historic district, the rehab work is allowed to begin uh prior to the NEC certificate being submitted or approved.

Um so the petitioner indicates uh the estimated cost of the rehab is about 103,000.

Um some of those uh listed in the report, about 50,000 for the kitchen, um 12,000 for interior updates uh and other other features.

Um so the most of the rehab is substantially completed in 2024.

Regarding parking, there's two spaces in the back off of the alley.

Regarding accessibility, uh, because it's an older historic building, they did not have any plans for uh dedicated accessible features.

So uh staff confirmed it's in the Cork Down NEZ zone is recommending approval resolutions to submitted for your consideration.

Thank you, Mr.

Chair.

That concludes my overview.

Thank you, Mr.

Gular.

Mr.

Cassidy, do you have anything to add to that?

Umson any question?

Thank you, Mr.

Chair.

Um, Mr.

Gulag, is can you just help to explain why um these were two separate NEZ applications?

I can I can chime in first and maybe turn it over to Mr.

Cassidy.

Yeah, because it it's a it's a multi it's a family with it's a building with different units, and the I think the NEZ allows you to s apply for rehab, which can be rented because if it's a rehab, you can rent out units.

So Mr.

Cassidy presented uh one certificate for the one side, which has two rental units, and then this one on this side is almost like a condo uh where he owns a it's a somewhat of a duplex, I guess, where he owns that side, and he can submit a rehab NEZ certificate for that side, which he's not renting, he's he's owner occupied.

I wish they would have come to council together.

I didn't I didn't know there was a two different sides of the building when we when we last presented to council, but uh you they allowed to do that um as as done as he's done.

Thank you.

But in essence, it could have been all on one NEZ application because it is under one roof.

For the chair, well, it would have it it would have had to be at least two separate applications, one for uh with this when it goes to the state, they have to have two different applications, one for one side of the building and one for the other side.

So one for 1257 and one for 1255.

We uh uh we might have been able to have one resolution with both addresses, but it gets it's possible.

We could probably could have done it at the same time, but I'm not I'm not positive.

Do you know if the two applications would be required by the state because he's residing in one of the units to the chair through the chair?

Um no, I think uh rehab uh NEZ rehab allows you to he he could he could rent all he doesn't uh you don't need to own or occupy there if you're rehabbing.

That's only for new construction.

So you can rent um you can rent rehab units.

In this case, he's chosen to live in one half and apply have a separate certificate for that.

Yeah, thank thank you for that.

I think that's my point.

That's why I'm trying to understand why it was two applications as opposed to um just submitting one for the entire property.

Because it's it's an NEZ rehab, right?

Yeah, correct.

And and to the chair, uh Mr.

Cassidy might know as well, but I think there has to be two separate.

Say say the other side had five rental units, you need one application for all the rentals, and then if it's owner occupied, I think it's cleaner to have one separate application for that because if Mr.

Cassidy ever sells that each side of the building, then that new owner could use that certificate for the remainder of its duration.

So it's I think it's good to uh have set you have to have separate separate applications because there's I think technically separate ownership for both.

I think he bought one side at one point in time and the other side he bought later, but I I'll defer to him on that too.

Yeah, um I can mention some detail on that.

So yeah, because they're two separate parcel numbers, they're basically two separate land structures that could be technically sold, I guess, separately.

Um because one side is one parcel number and the other side is another parcel number that necessitated two applications, and then it also necessitated because on the application itself it lists do you is this an owner-occupied property or is this an investment property?

Um, and it lets you check one box.

So because of that, I had to do two separate um applications.

Okay.

Thank you.

Thank you, Mr.

Chair.

Thank you.

Thank you, Vice Chair Johnson.

Um Mr.

Cassidy, I know you plan to live in this.

Do you plan to live in a long term or do you plan for this to be a uh long-term housing for you?

Yeah, yeah, for sure.

Um, so my family routes are kind of in the Corktown neighborhood.

Um, so this is basically it feels like home, it is home.

So the plan is to stay here long term for many years.

Okay.

And my another question.

So understand it as two separate sides.

So there in how the house is set up or in your renovations.

The it is there any other than the front and I guess the rear.

Is there any other way for there to be access to the other unit?

Or do you there's no act okay?

Yeah, you have to go outside to access the other unit.

Um, this 1255 for this NEZ has all independent um access to get in and out of the property for this side.

Okay, they're two separate sides, yeah.

Thank you.

And how much of the in your estimate, how much other have you spent on rehab so far?

Um the rehab I estimated at 103, approximately 103,000.

Okay.

I I know Mr.

Gulag mentioned that you had done some work already.

Is that correct?

Okay.

And how much of that work have you done?

Yeah, that's the estimate is the 103.

Okay, yeah.

Got it.

Just want to make sure.

All right.

Okay.

Um that's the end of my question.

Is there a motion on 7.2?

Motion to say in line item 7.2 to formal with a recommendation to approve.

There's been a motion to send 7.2 to formal with a recommendation approved.

Without any objections, that action shall be taken.

Thank you so much.

Thank you.

All right.

That will move us on to miscellaneous under miscellaneous 7.3 uh from Vice Chair Johnson.

Uh submitting a memorandum requesting the LPD to provide evaluation regarding amendments to interest and fees charged on deliquent tax taxes.

Vice Chair Johnson.

Thank you, Mr.

Chair.

Um motion to discuss uh discussion.

Um through you to Mr.

Corley, how much time is requested for response?

Yeah, thank you.

Um Chairman Um McCambo, please give us two weeks.

We have someone to sign, but we need about a couple weeks.

Okay.

All right.

Uh thank you for that.

Motion to bring line item 7.3 back in two weeks.

Um there's been a motion to bring 7.3 back in two weeks without any objections, that action shall be taken.

Thank you.

Thank you.

That will move us on to member reports.

Motion to suspend member reports.

There's been a motion to suspend member reports.

Without any objections, member report shall be taken.

Seeing no further business before this committee, is there a motion to adjourn?

So move.

This budget finance audit meeting has is adjourned.

Thank you.