Ms.

Prime, good morning.

Good morning, Mayor.

And good morning, everyone.

This is a meeting of the El Paso City Council, and it's a work session for Monday, November 17th, 2025.

It is 905 a.m.

Mayor Johnson is present and presiding in Council Chambers along with Mayor Potem Chavez.

Representative Acevedo, Representative Maldonado Rocha, Representative Boyatrejo, Representative Nino, Alternate Mayor Potem Piero, Representative Limon, and Representative Canales.

Mayor, we have a quorum.

Great.

Representative Canales, would you lead us in the pledge, please?

All right, we have a number of presentations today.

We're going to get started with uh number one, Miss Bryant.

Yes, sir.

Item number one is discussion and action on the state of Al Pasos Internal Audit, current state, maturity and needs assessment prepared by Weaver and T well LLP.

Good morning, guys.

Good morning.

All right.

Getting it pulled up here.

It'll eventually show up.

There we go.

There we go.

Good morning, Mayor, representatives of council.

It's our pleasure to be here today from representatives of Weaver that conducted this assessment.

My name is Brandon Tannis, and the partner that led the engagement, joined by my colleague Holly Hart, director who led the day to day and interacted with all of you all as well.

And so it's our pleasure to come back to this council meeting to really talk about the roadmap and the recommendations that we made in the really internal audit current state maturity and needs assessment.

And so to take us back a little bit, we were back in front of you all on June 23rd, where we talked about the initial results of this assessment.

And so we talked about the initial results, the recommendations.

Following that, we met with the then city auditor and his uh his team to talk about those recommendations to get some additional feedback.

And then from there, we built what we're going to kind of focus a lot more of our time today, talking about the roadmap.

So the recommendations and the roadmap of how do you get uh to those next steps.

And so I will click this.

And so to remind the the council of our scope.

And so the scope of engagement was to assess the current structure, the organization, the roles, responsibilities, and practices that were implemented by the city's internal audit department, and the coordinating activities to determine if they reflect the best practices and have the tools, resources, and capabilities really to address the city's needs.

And so this review assessed the functions of effectiveness through the lens of independence, transparency, accountability, and alignment with stakeholder expectations, which is everyone here along with uh city management.

And an emphasis on how internal audit delivers value to the city and its constituents accordance with two sets of standards.

The first one is uh commonly referred to as the Red Book, so the Institute of Internal Auditors Global Internal Audit Standards, and then the yellow book, which is the GAO's government audit standards, uh, looking at those requirements and guidance as well.

But to clarify, this was not a peer review.

Um, would you also have a peer review in your internal audit department that does a deep dive into your work papers and quality control and things like that?

This you know has many elements of that, but is not considered a peer review itself and really looks at best practices of the internal audit department.

And so we assessed in our scope uh and used a customized maturity model.

And so we'll talk about that here in a second a little bit more to really assess and have benchmarking for the current practices.

Again, we had two sets of standards that we talked about also with the COSO integrated risk management framework and the capability maturity model integration and frameworks.

And so when we did the system assessment, a lot of this was a focus on alignment with standards, the peer review that was being already performed, and focus on the current maturity level.

And when we talk about maturity, is where do we want to be in the sense of you know having best practices, having new systems, and how do we approach the risk that impacts the city and looking at short and long-term improvement initiatives and how those are aligned with the city's strategic plans and risk and so forth.

So a summary of our procedures, we did do a detailed analysis of the internal audit's policies, procedures, work papers, and the reporting.

We also had interviews with stakeholders, including city management, the council, the FOAC, and we performed those in the in the beginning in February.

And I'll turn here in a minute to our project timeline that gives a little bit more detail on that.

We did also benchmarking against peer city practices, leading industry models, also an analysis of internal control charter, I mean the internal audit charter along with the hotline practices, an evaluation of the internal audit function against that maturity assessment and that model looking at the current state strengths and areas for improvement and of course the capability gaps.

Then we had a development of a really tailored and very detailed action, both short-term and long-term action items that you will find in that report that takes you from your current state all the way to you know implementation to the maturity level that you all have decided you would like to achieve.

And so we performed that and had our conclusions, which were presented in our final report that was presented to you all.

And so below you'll see the real detailed project timeline of the phases that were performed from the start of the R really the RFP being uh solicitation and the award in the fall of 24 to having our planning that ended in January of 25 and really kicked off with on-site time starting in February of 25.

And with that also to be mindful that there was a transition with the elections with the new FOAC and new council.

So there was a little bit of time to make sure that that new council and FOAC was put together so that we could have those those interviews with you all.

And then in the March to May timeframe, there was a lot of document gathering, analysis, benchmarking, additional interviews and so forth to validate all the areas that we were identifying.

And then in June 25, we of course met at the FOAC on June 17th, and then the whole council here on June 23rd to talk about our preliminary results, get some additional feedback, and work through the final report that was ending in September of 25 and delivered as a final report on October 3rd.

And so one of the key ads and what we're gonna focus on today is really the roadmap, but also give you some additional context.

So you'll notice this very busy uh slide.

Uh it really represents the stakeholder matrix.

So who did we talk to?

What did we talk about, and what were the key areas in focus?

So I'm not going to go through all of these areas, but it definitely gives you some insight on all the different discussions, items and what the focus was to really understand from all the stakeholder groups.

So you'll see on the left, those groups included the mayor, the city council members, the internal audit team, and then proceeded with city management and the FOAC members specifically.

And so each one of those member uh those stakeholder meetings was focused to gather feedback to really understand where what is your thoughts on the internal audit department and the function, not just a person.

And so it's important to see how did we look at this function, how does it operate, does it address the key risk, and does it provide the value that we expect of the city?

And we used all that to assess through a capability maturity model.

And so the capability maturity model integration really just provides a structure.

And when we talk about you're doing any type of benchmarking or assessment, it's not just us come and say, Well, Weaver says this, and this is what you should do.

We use authoritative guidance, criteria, best practices, and in this case, when doing this type of assessment, you want to use a maturity model assessment that has been established and is something that is continually updated.

And in this case, we use the the really kind of well-known in the internal audit field of the capability maturity model, which again was updated uh in 2024, uh, and it is actually maintained uh by ISACA, which stands for the Information Systems Audit and Control Association.

And so this also was fully customized for this city.

So we use this model, but then customized it based on the two sets of standards that are used by the Internal Audit Department, the Yellow Book and the Red Book, and be able to assess to really benchmark where we're at to where we need to go.

And so with that, I will turn it over to Holly, who's gonna walk us a little bit more through the actual roadmap of the recommendations provided previously.

All right, so you guys have a very long report in front of you.

So I'm going to skip to the parts that we want to focus on today, uh, which are the newer components of the report uh for discussion.

Um detailed results.

And so the the big ad to talk about today is that target roadmap that we've been discussing.

So again, in within our roadmap, you're gonna find uh that we evaluated under each element all the various components that really make up a holistic review of an internal audit function.

And so within the roadmap, we identified the current state condition, which is you know, where are we today, what level of maturity are today.

Uh we identified some of the missing elements within those uh those areas, and then from that we developed tailored action plans that divine define short and long-term steps to advance maturity, uh, 45 of them in total, and they are quite lengthy and and and we wanted to make sure that they were detailed and provided enough context for you to understand uh exactly what we were aiming to achieve within those action items.

Within each of the detailed action items, we also do have implementation considerations, the benefits and challenges of each recommendation, so that can afford a strategy for implementation.

Uh we know that every decision at the city does have a cost benefit to it, and so understanding what the benefits are, what are the challenges can hopefully better prepare us to be in alignment whenever we're going to implement the recommendations and also all the various stakeholder groups that are involved.

And then we also added a prioritization approach based on those implementation considerations, based on the effort and impact, which we'll talk about a little bit more, uh, that's required.

These this helps to give you a pace and a sequence for implementation for maximum effectiveness, and we hope this uh just provides a little bit more of an a way that's uh uh a better ability to implement that roadmap because again it it is quite um extensive, and uh we're excited to uh present that to you today.

All right, so I'll skip over to an example.

Uh we wanted to, so I'm not gonna go through every single component, the detailed results because there's there's just a lot, there would be a lot to go over, but I did want to provide some context.

We I just explained at a high level what's included in each of the detailed results of each component, but this is an example of what I was just referring to.

So at the top you see the element that's of focused, which in this case is just the first one that we evaluated, ethics independence and professional judgment.

The component under that, and that this specific slide relates to is ethics and integrity.

And then on that far left side, you'll see that for each of the components we defined, just to help orient you so you never get lost as you're going through it.

Uh, where you are in the current state, in this case, you're kind of approaching into the repeatable uh approaching defined, and where you want to be in the future state, which is all the way through defined, um, you know, really approaching that managed state.

And so that's specific to ethics and integrity.

You'll see a different, you know, that change a little bit as you uh go through the various components because we don't we don't necessarily want to uh be at the same level at every single component, depending on what our priorities are.

And then again, uh we did indicate what the current state condition is within each of the components, and so those are gonna be focused on the key elements within each components, in this case with ethics and integrity.

We're focused, we were focused on training, you know, policies and procedures within internal audit that align with the ethics of the city, internal audits contribution to ethics, stakeholder feedback and feedback mechanisms, how we keep uh our internal audit function accountable to maintaining ethics and integrity within the body of its work, and then the collaborative leadership within that to ensure that we have a holistic approach to ethics within the city.

And then on the on the right-hand sign, you'll find the missing elements that would help to reach the future state.

And this is really not to say that you know there's anything critically wrong with internal audit, but this is where the gap assessment really occurred.

What are the missing elements that are going to really get us from that repeatable into defined where we really want to be that sweet spot of where we want to be when it comes to uh ethics and integrity within our internal audit function?

We have a hot mic, please make sure that if you're in teams, your microphones are muted.

Thank you.

And then another busy slide.

You'll see many of these throughout the detailed results.

Um, but the reason for that is because they are, you know, we wanted to be sure we we provided uh the right level of detail to really help understand what we're referring to when we say action items.

And so at the top we've got our short-term action items, which means action items that we estimated, you know, may take three to twelve months for um for achievement.

And at the bottom, we have our long-term path to goal maturity, which could be 12 plus months.

Now, these are just estimates.

You know, things can change, things evolve at the city.

So we want to, you know, be mindful of the fact that you know things could happen sooner, things could happen, take a little bit longer.

It just kind of depends on the you know, kind of what's going on in our environment.

Um, you know, things happen every day that we need to, you know, prioritize.

And so this is just a a recommendation.

It's a tool that you can use that it's not meant to be in stone, it's adaptable to your environment.

Um right hand side, you'll see that we've identified the repon the stakeholders and kind of their responsibilities within the framework of each action item.

And so uh you've got various stakeholders that are involved in the implementation of this, including you know, responsibility, uh, who's consulted, who's accountable, who's informed.

We really wanted to be sure that we identified within each action item exactly who we anticipate needing to be involved in at what level.

Um we'll talk a little bit about you know, kind of the lift in each stakeholder group.

Using this framework, we were able to identify uh the kind of effort that would be required at each stakeholder level.

And that's also to help show the collaborative effort that's needed to really ensure that this is a successful implementation.

And then finally, like I mentioned, we do identify at a high level for the action items the benefits to implementation as well as the challenges.

Um a lot of the challenges that you'll see are regarding uh just the time that's needed, the resources that's needed.

Uh the more that there is involvement for multiple stakeholder groups, the the more of a challenge we have.

Sometimes we need dollars behind some of the uh and budget considerations behind some of the action items that we've uh laid out for you.

And so um a lot of times that's some some of the challenges as well as ensuring that there is extra external and internal stakeholder feedback along the way, and then of course the benefits uh you know, you'll see throughout a lot of strengthening of governance, uh, better feedback, better collaboration, um, you know, strengthening where needed, independence considerations, um, and just really making the internal audit move from that current state to future state area that we want to be in.

And so I'll kind of, you know, we we could talk all day about all the great things that are identified in all these slides, but I want to go to some other areas that we think may be helpful in remembering as you're going through implementation.

Uh we mentioned that there is a uh a recommendation prioritization.

And so with you know, not only have we identified the stakeholders involved and you know exactly how much effort uh we I we think may be needed within each of those groups, but we also identified a methodology to help you allocate resources, decide on the sequence of implementation, um a lot of the you know, recommendations, they're you're not all the same, you know.

So some have a little bit more of a lift, some have um, you know, but less of a lift.

The way we did that was by identifying, and this is all based on professional judgment and the your current environment, but we identified the potential impact of the recommend of the implementation of the recommendation, um, you know, from high to low.

A lot of the more high impact recommendations are ones that significantly enhance the value and effectiveness of the internal audit function.

Um, you know, and then some of the more medium and low impact are those that uh we would have noticeable improvements or uh operational refinements and efficiencies may be a little bit more narrow in scope and incremental in benefit.

Important nonetheless, just the impact may not be quite as high as some of our more overarching recommendations, especially those that are related to areas of governance and collaboration and uh those that involve a lot of stakeholder input and um coordination.

And then again, another component of the prioritization is looking at the effort that's required, the level of resources, time, and change management needed to successfully implement a recommendation.

Change management is definitely a key word here within pretty much anything you do in the city, you know, any regardless of it's this particular um uh project that you're working on or others, you have a degree of change management that needs to be considered, right?

Doesn't matter what what we're talking about.

Um so change management applies here.

Change how you know, when we where we're gonna change a process, how does that affect upstream and downstream processes when we're going to change your structure or governance of something, we have to consider the impact.

Or if we're gonna introduce new technology, what's the impact of that?

And so change management has to be a consideration as well.

And so everything, again, high, medium, low, high effort requires significant resources, a process redesign, cultural change.

Implementation may take multiple phases, it might be iterative, and it also might need to be something that's monitored long term for consistency.

Um medium and low effort is stuff that we can you know certainly allocate, you know, either a resource, a one-time resource consideration, or there's maybe some coordination, but not quite as much as the high effort uh components or action items.

And then our low effort ones are not important nonetheless again, but can be implemented relatively quickly with minimal resources or disruption.

A lot of the more low effort, meet to medium effort is stuff that internal audit uh can uh kind of own and you know, do a lot of uh a work um internally to shore up, and so the high eff or high effort and medium effort usually are items that require a little bit more work outside of internal audit in addition to the work that's occurring within we we we like numbers and audit, and so based on the prioritization framework that we um developed, we were able to identify exactly you know, out of the 45 recommendations, this is our estimate again, an estimate.

Uh the ones that we think are more low effort, low impact on that bottom left-hand side, and as you move up the chart and to that more red, orange, yellow, those are uh action items that require more imp more effort, have higher impacts to count, you know, so that you can kind of orient yourself as to how many are we talking about?

Everybody likes some numbers, you know, to give us an idea of exactly what that lift will be.

I did mention that there is we did using that racy framework, responsible, accountable, consulted informed.

We were able to identify the lift and stakeholder involvement with uh just overall holistically across all 45 action items.

As you can see, I mean, um, we I'd have to zoom in to see all the little tiny numbers, but at the uh you'll see a lot of involvement from the internal audit department.

All 45 action items require internal audit, right?

Because they are the heartbeat of this um, you know, of this area in this function of your um of internal audit within the city.

A lot of effort also required from your your audit committee from the FOAC, um, given that they are the direct line of report for your city auditor.

Of course, city council is gonna be involved.

Um, city management uh also has a lot of involvement.

You'll also see quite a bit of involvement from city directors.

Why?

That's because your city directors are the first line of management that are dealing directly with uh internal audit during the course of an engagement.

Really critical to make sure that those feedback mechanisms, that that coordination, that you know, areas improvement that are needed involve the city directors very closely as the process owners and the ones who really understand the day-to-day of the process areas and operations that audit will be uh working on throughout the course of their audit plan.

And then finally, we did leave you guys with aside from just this report, we did provide uh a workbook so that you can certainly track the status of these recommendations at any one given point in time.

We identify the element, the component, we have our reference number that links back to the report so that you can make sure that you can go quickly and easily find the the details of that action item.

We also identified the uh impact and effort.

Um, you can certainly sort, you know, on these different ones if you're looking to see you know how much we've accomplished in each of the um areas, and then um again on that right-hand side, we identify stakeholder involvement.

And so you can use this workbook to identify you know what have we accomplished within each of these recommendations, what's left to accomplish, uh, you know, what date were they accomplished, who was involved.

You can use this workbook a lot of ways to help the FOAC and internal audit track where we are and hold ourselves accountable to making sure these things get done.

And so that's really all for our prepared comments.

We're excited to take any additional questions that you have.

Um, and of course, if there's any addition, you know, along the way later, if there's any questions on the detailed uh action items, we're happy to as well address those.

Very good presentation.

Uh, one quick question going from where we are now to define you you recommend it three to twelve months, we could get that done.

Is there a way to also be working on manage at the same time?

Or do you have to do it?

Yeah, no, these these um action items are not necessarily meant to happen, you know, in a linear fashion.

These recommendations are meant to be very dynamic in nature.

Uh you can be working on a long-term action at the same time that you're trying to look at some of that more low-hanging fruit, you know, lower impact or lower effort items.

Uh, we can, you know, as a city that you know, to be efficient as efficient as possible, we can be working on things in tandem.

Okay, um, depending on the bandwidth and uh the you know environment and prioritization of other things going on within the city, of course.

Okay.

Very good.

Representative.

Thank you, Mayor, and thank you, Brandon and Holly, and to Miss Mack, to Miss Neiman, and also to the internal auditor's office.

Mr.

Montale and Liz, you know, this has been a collaborative effort.

We've all have met many times and had different conversations.

And I'm just gonna touch base on what we talked about FOAC last week in regards to we are in the process of essentially hiring a new internal auditor, and we talked a lot about the collaboration efforts that we're really trying to improve, right?

And um we talked about ensuring that the new auditor does have a seat at the table.

And I know that this kind of completes the work, the scope of work with you all, but I did ask in regards to you all being available to have a conversation with a future auditor to ensure that if they have any questions with this plan that essentially we're moving forward with, um, they are also part of that conversation.

Can you kind of touch a little bit base on that?

Of course.

And you know, with the I would say the the best time is when you have a new city auditor coming, and now you've had this report provide some very clear, you know, objective, you know, information about where we're at and where we need to go.

And so we're happy to to meet with that new city auditor when that person is hired, uh, be able to talk through the report, answer questions, and also encourage them to, you know, meet with the the new staff and talk uh that they're gonna be inheriting as part of their internal audit function, kind of understanding you know everything about them, but also how do we take this report and move forward.

So we're happy to have those conversations uh going forward to help them make sure they get integrated into their new position.

Yeah, and thank you for that.

And also I would like to give an opportunity to Liz and Mr.

Montiele if they wanted to touch base.

I know that in the conversation we had last week with FOAC, they mentioned that some of the recommendations and actions that we are looking into in this plan that they said that they've already kind of start working on some.

And I just wanted to give you all you know congratulations and props for for being proactive and working on some of those actions as well.

Liz Delao with internal audit.

So, yes, so some of the items were communicated to us prior to the finalization of this audit.

I mean this assessment.

So we have begun um proactively implementing some of the recommendations.

Thank you for for doing that for being proactive.

Um and again, thank you for all the work that has taken into this.

I'm looking forward to even further conversations.

I have no further questions, Mayor.

Representative Chavez.

Thank you, Mayor, and thank you, Holly and Brandon, for the presentation.

Um, as Representative Nino said, last week we had an extensive um overview of of this report, and I know you've been working hard on it for the last nine months, so I want to thank you, thank the city staff and everybody that's been involved in this process.

I know that accountability is a value that I hold dear to my heart, and I am happy that we are being held accountable and that we now have a guide to uh implement as we um hire this new city auditor.

Um I know that we talked a little bit about this on Friday, and I don't want to go too much into debt into depth with this, but we talked about non-negotiables as we try to you know scale up to that managed phase.

Um if you could just briefly touch on that, you know, on on some highlights.

I would appreciate it.

Well, as we mentioned uh in the discussion on Friday, you could look at any of these and feel that some it's some way that they're they're non-negotiable to really get to that future state.

But when we're talking about the true non-negotiables and laying a foundation for everything else to really work, um it's really truly in the areas of governance.

Um and so you know, the there not only how you and internal audit uh interact, but also how internal audit interacts and coordinates with city management and what that looks like, what's the framework for that, what are the feedback mechanisms, the account of performance management, accountability of that, uh making sure that our framework for identifying high risk areas and our audit planning is a one that's really well understood, uh the ins and outs of that as well as aligned with our strategic goals and objectives.

And so all of that kind of governance component that really lays the foundation for the effectiveness of the internal audit department are ones that we would say are the most non-negotiable in the you know body of the recommendations that we provided.

Thank you, Holly.

And I know that there's a whole section on governance, so we appreciate again once once again your efforts and thank you for being here today.

Representative Savedo.

Thank you, Mayor.

I just wanted to echo what my colleagues are saying.

It's been a it's a it's been a real pleasure to work with your team and really seeing how this has come to life over the course of the year.

City staff have also been really great and helping this document.

And now we have a really nice roadmap.

Ms.

Mac was saying that she would have loved to have something like this when she came into the role, but you know, that's Ms.

Mack, and she loves having roadmaps and all these plans, and I really appreciate that about her.

But as we look at this report, the auditor will be hired in the coming weeks, and they're gonna have this to guide their work, and that's going to be really nice.

So I'm really happy that we are finalizing this report before we hire that person, and then they come in and then they're gonna be able to get to work immediately.

The other essential part to this is that a lot of transparency is going to be really important for this.

And so I really appreciate how you've put this together, the table.

There's a lot of information.

And at the FOAC, what we were discussing on Friday is establishing a cadence with our FOAC, give the new auditor some time to come in and then have a standing item at FOAC, meaning to give us a report on where they are with this implementation, whether it's short term, long term, and then of course, maybe looking at coming to council quarterly or twice a year to give the council updates on how we're doing with the implementation of this whole report.

So I appreciate the work.

I hope that um we continue this relationship.

I I think we will have a lot more to discuss throughout the the next year or two as we implement this.

So thank you for being available on meeting with the auditor and seeing where things are going with this.

And mayor, I don't think there's a motion on this, right?

Yeah, I think we need to go into motion.

Yeah, to adopt the recommendation.

I'm happy to make it.

I move to approve this and accept the final weaver report.

All right, there's a motion and a second.

Uh Representative Rocha.

Thank you, Mayor.

And thank you, Holly and Brandon.

Nice to see you in person here.

Welcome back to La Paso.

Um, I I do want to also thank you for the detailed roadmap that you've provided.

I think essentially we all want within the city as well to be able to be more efficient, and and this definitely provides us that in addition to all the integrity and everything that goes along with it.

Not to slight what the internal audit auditor's office is already doing, right?

They're doing some wonderful work.

This is just gonna take them to the next level.

So we really appreciate it.

I do have a question for the internal auditor's office, and really it's not a question, Liz.

It's just to go over some of these out of the 45 you've already started implementing.

You were really specific during FOAC as to where you are with each one.

So if you could just go through that briefly with us, and that way we add it to the record as well, please.

Sure.

Okay, so we identified 14 that are um related to our internal processes, those we have already implemented.

Just to give you an example, one of them was regarding our um our audit reporting protocol.

So with that one, um, previously, um, prior FOAX, we reported quarterly on the results of the reports, and now we report uh monthly.

Let's see, 10 of the items we are uh currently in the process of implementing.

Two we foresee being integrated with our next budget cycle.

Four we foresee being integrated into the risk assessment and audit plan.

Right.

And then four we see uh more of a multi-level collaboration, so that might take a little bit more time.

Eight of the items are just FOAC.

Um, where the FOAC is the decision maker, and then three of the items we need to do a little bit more research.

Thank you, Liz.

And and part of what we discovered also through through the the assessment is that there is a need for technology.

So I want to make sure that that we are level set on what the need is from your office.

And I know Miguel, you spoke briefly about what the costs were for the license specifically, and forgive me if I say this wrong.

The ACL.

Was that yes?

And then additional to the technology upgrades.

For and and correct me if I'm wrong, but by doing this, we'll be able to increase the number of audits that are done every year.

Is that correct?

Okay, so if you could just go through the costs really quickly.

Of course.

Um, we talked about uh I previously attended a uh a conference where I talked to a couple of the vendors that deal with uh automated work papers, just got some uh ballpark quotes on some of implementation fees that range anywhere depending on the software and licenses and stuff, anywhere from 45,000 to about 85,000 to implement first year, plus a recurring uh subscription fees of I don't know, uh approximately maybe uh five thousand per user.

So there's about nine of us in the office of about 45,000 or so per year for subscription fees for these electronic work papers.

Uh we talked about ACL or that analytics software.

We currently only have one license, uh that license is a thousand per year or so more or less.

So uh we don't need everybody in our office to have a license, but maybe have an additional two or three that helps a lot in streamlining uh work.

Uh I know you can I've done I've used this software in the past and in the previous job, and I was able to analyze about over a little bit over a million transactions in one with a couple clicks, and I was able to do all this work.

It was on the pre-card uh auto was performing that over there.

So it does take up uh while they do cost money, they do save a lot of hours, and that's how we run.

We don't, you know, some other departments run on on dollar budgets, ours, ours, our budgets, you know, already.

So uh if we can save any minute we save any couple hours we save, that goes towards uh uh more audits too that we can do.

Thank you, Miguel.

I appreciate it.

Of course, and thank you, Liz, for bringing that.

I was checking it against what I had written down on Friday.

And so Holly Brandon, thank you again for everything that you provided in in this roadmap.

I do encourage everyone to take a deep dive into it.

There's a lot of data in it, but it's really, really um interesting and needed to be able to get us to that defined level.

So thank you again.

Appreciate it.

Thank you, Mayor.

All right, and and it's good to hear that we're already working on the recommendations.

You guys are well out ahead of this, so congratulations to our IA department.

Uh and uh Holly and Brandon, thank you guys for the presentation.

We we have a workbook and we have a roadmap now, which is really, really good, and it's you know, it's it's gonna be handy for the next uh inter auditor that comes in.

So we thank you guys for the work.

Ms.

Brown, we have public comment on this.

Yes, we have Miss Osman that signed up to speak.

Ms.

Osman star six, please to unmute your telephone.

Good morning.

You have three minutes.

So some of this I bought up to uh people in SOAC, namely uh Mr.

Assarello, but I also had lengthy conversations with our previous internal auditor.

I had conversations with uh an auditor who some of y'all during the last administration actually recognized.

Mr.

Asevilla was there, Mr.

Fierro was there, and so was Canada.

And at that time with those conversations, we had discussed what is on page five um 15.

Um, I'm sorry, uh item five, page 15 in regards to your technology.

Now, y'all touched on technology, and what I'm curious is to find out is whether that is going to be a technology that's not just an auditor's office, but when these receipts, when these amounts are set up within the various departments, does that then that software program funnel up to the auditors department, and so that any discrepancies are caught in red flag almost immediately.

Now, those programs do exist, and I know because I spoke to that same recognized auditor you all brought in during the past administration.

So it does exist.

Any discrepancies would just be caught, which is what is falling through the cracks now.

Right now, you've you've got the media talking about the FBI, the past audit, the P card issues.

There are still issues.

We're having problems where y'all are saying we don't have funds for the roads.

Well the media is also stating that proper audits would wipe away a lot of this wasteful handle, which has been caught.

So the proper software program needs to be implemented.

Something that catches it from the department side and filters up to the audit site.

And something that department heads cannot play around with, cannot cater, cannot fix a map.

That has to be on the audit side.

Thank you.

All right, Miss Brian, we have a motion to adopt the recommendation in a second.

Would you call for the vote?

Yes, so the motion was made by Representative Acevedo, seconded by Mayor Pro Tem Chavez on that motion, call for the vote.

And the voting session.

And the motion passes unanimously.

All right, thank you.

Next item, Miss Bryan.

That brings us to item two, and this is Invision El Paso comprehensive plan update on housing needs assessment.

Good morning, council.

Good morning.

I'm Matt Prosser.

I'm a principal with a firm called Economic and Planning Systems.

We're a land use next economics firm that's been working with the city on envision El Paso and including development of a housing strategy.

And I'm here to present on the first component of that, our housing needs assessment.

So we'll bring up the slideshow, and I'll I'll lead you through a presentation and then happy to answer any questions that you may have.

All right, here we go.

Let's see if I can get the perfect.

All right.

Well, first I want to show uh start with what we're sort of asked to do, um, what our scope of work is, and really that the purpose of this project was to help um identify strategies that you all as a city can undertake to help support and increase the production of both market rate and affordable housing, and then also assess risks for displacement and housing and security, and develop sort of an overall housing strategy for that.

And there's really kind of two major components that uh we've been working on for this.

First was this housing inventory and gaps analysis.

This is really an understanding of what your current housing conditions are, what challenges and opportunities there are, and what gaps or needs as we like to call them, you need to address.

Um, from there, we're using this information to define what affordability means in El Paso, excuse me, and develop some policies, yeah, policies and tools that you can implement to address those.

And so our main deliverables here are really that inventory and gaps report, a housing strategy report, and then ultimately we're gonna help work with city staff to develop a dashboard where we can track housing conditions, hopefully real time, um, so we can see what our progress is going forward.

So, our schedule we started in earnest in April working on this.

So, the first part of our technical analysis is really that blue part up top, um, looking at the housing inventory and gaps, and we're here to present those today.

And then since we've sort of have started to wrap that up, we're moving into identifying policies and strategies.

Um, and through that, we've used um engagement in a couple different forms to help support our plan.

So we worked with sort of four different groups more or less.

First, we had a working group.

We've been working with this working group uh um, you know, about a month, monthly basis, a little bit, less frequency every month or two months we check in with them, and really they're sort of guiding or helping us work through the information and data, vet conditions, make sure that we're tailoring and understanding local conditions.

This group is made up of um some housing or I'm sorry, neighborhood organizations, housing advocates, experts, housing providers, folks that are active in both addressing issues but also providing housing in the community.

We also have done two in-person engagement trips where we've come out and we've talked to uh a couple different folks in focus groups.

So, first we had sort of a community organization's um focus group.

Um, and these folks are a more diverse set of community organizers that are working in housing related services.

Um we had a gamut from uh affordable housing providers to actually some of the lending communities, so the banks and folks that are working on mortgage programs were in these meetings, as well as sort of just community and neighborhood organizational leaders.

Um we also met with developers.

Uh, we did this through a number of individual interviews, um, both in-person and over the phone, um, as well as presentation to a developer's uh working group that city staff meets with pretty frequently.

Um then lastly, we pulled together, we like to pull together what we call design professionals.

So architects, engineers, folks that are designing the development projects, the housing that's going in, and understanding, you know, what they're seeing in terms of trends, but also what challenges and opportunities they see with your regulatory process.

And so that's sort of the an overview of who the folks that we've been getting input from throughout the process.

So first I want to talk through some demographic trends and help you understand sort of what we've been seeing in the data in terms of how your community is changing and evolving.

So we've done is sort of identified these upfront trends, and then we're gonna walk through a couple data points and then talk about some of the impacts of these.

So the first one is really something that was kind of striking to us is in the data that we're looking at, the city's population has started to sort of stagnate or said have stopped growing, uh yet your employment is growing.

We're seeing shifts in population, um, a lot of old more older folks in the community, a loss of children in the community, um, and then a growing need for diverse diversity of housing types.

And uh, I'll talk through some data points that kind of indicate that.

This first slide shows the change in population in the county as well as the city since 2000.

As you can see, the El Paso's population has sort of flatlined since about 2010 or so, whereas the county has continued to grow.

And that was sort of sort of striking to us because what we've noticed is that your employment continues to grow at a pretty steady rate, you know, about 1% uh a year annually, your employment growth, and you have rebounded pretty pretty quickly and pretty well from the COVID-19 related recession.

And so, sort of a striking finding of us.

What's going on here?

What are those disconnects that are occurring?

Um, some of that we think may be related to undercounting of population in the census, but also is you start to look at the housing production data and other indicators, you start to see that there are shifts going on, and that's something that is uh we wanted to highlight in our effort here.

Um we looked at change in demographics in terms of age.

Um, some things to note here, you have a uh an aging population, an increase in number of residents over the last 13 years that are over the age 60, while your workforce population, those folks that are you know 25, 45, um, that population has largely been flat.

And really the most striking thing that we found was a loss in the number of folks under the age of 20.

So a loss in the number of children in the community, about 24,000 uh residents under the age 20 over the last 13 years.

And this uh dovetails a lot with some of the conversations we had with the school districts in the region, especially especially El Paso ISD, and their their loss in enrollment and the challenges that they're seeing there, and so that's showing up in our data as well as the data that they have, which is almost more of a leading indicator in that they're looking at it yearly in terms of enrollment.

And then lastly, um, you know, you El Paso is a unique place.

It's not quite the same as other big cities in Texas.

Um, it has different dynamics to it, different um economic economies, different um issues.

And so we wanted to account and look at some of those.

And one of the most striking things that we identified was just the presence of multi-generational households here and how that has an impact on the housing types and needs that you have.

Um, nearly 60% of folks that are 18 to 34 in the community actually live with their parents or a relative.

Um that's you know, over 15 to 20 percent higher than you see in Texas or the US.

So a very strong sort of uh I think uh largely cultural sort of practice of living with family, especially when you're younger and becoming established.

But it also is an indication of perhaps of the lack of options and perhaps affordability for some of these folks.

So when we look at these demographic trends, what are some of the things that we want to consider based on these?

So, in terms of the population, what we're seeing is more folks that are working in our community are commuting from outside of our community for their job, and that has implications on your transportation systems, also as implications on revenue you generate to provide services and others.

Um, and part of that is becoming your neighbors are becoming more mature, they're growing into sort of their own more standalone communities, which hasn't traditionally been the case in El Paso.

And so as they grow, there are more options for places people can live, and that has more impacts and more sort of um challenges or considerations as a city you need to consider.

Uh the aging population, obviously, older folks have more diverse housing needs than perhaps uh uh you know their traditional family or a younger person.

Um, and so a lot greater diversity in household sizes, types of products you need, and so considerations for that.

And then really that sort of less workers in the community as well as more folks choosing to live outside the city means we're you know we're challenged with the number of kids there in the community, and really uh the loss of enrollment in the school district was something that was very striking in our conversations.

And that has an impacts on neighborhoods.

If losing schools makes existing neighborhoods less attractive and makes attracting folks back into the city uh more challenging as well.

And so there's a bit of a cyclical nature to that.

Lastly, growing diversity of housing needs.

We talked about sort of multi-generational households.

Um the the biggest challenge here is the majority of your housing stock is really oriented more towards family households.

And as we see a greater diversity of needs, it's harder for that sort of traditional housing stock, that single-family detached home to meet those needs, both from affordability and a physical sort of standpoint.

And so as there are less housing options in your city, uh, that means most folks or more folks are looking outside for other options.

We also looked at trends related to housing production.

So, same sort of approach here, sort of high-level trend that we found, and some of the implications of that.

We've seen a really dramatic shift in the amount of housing that's being built out of the city, outside of the city, and either the unincorporated part of your ETJ or in neighboring communities.

Less housing being built overall in the region, and then really uh housing price spikes that occurred in 2000.

We'll dig into that in a second.

So this slide, excuse me, one second as I guess if water shows the number of units that were built by decade collectively in the city and in the county as a whole.

And really, on the far right, what we're highlighting is really a large or growing delta between the number of units built in the city and then the number of city units built overall in the county.

And so a really large portion of new housing development in your region over the last 10-15 years was built outside of the city, and that's really new for you all.

That hasn't been the case.

Traditionally, you've sort of captured the vast majority of the housing growth.

And so about 31,000 housing units since 2000 built outside of the city.

Um that's you know, 70 to 80,000 new folks living outside the community that may traditionally have been within your city boundaries, and that starts to create some new regional dynamics, but also as an indication of shifting housing production patterns.

Um this next slide is sort of a complicated chart, but I'll try to simplify it in terms of what we're seeing here.

And what we did, so we tracked the annual number of housing units that were permitted in the city, the county, and the US over the last 30 years, just to see where you at in terms of your rate of production.

What you can see in these lines is traditionally you've sort of tracked with the rate of production in the US until the Great Recession or so, when you know, nationally there was a pretty large dramatic drop in production related to sort of the housing um crisis, financial crisis that occurred at that time.

You all were sort of um atypical and benefited from largely, I think, the the base area of closures that occurred nationally that brought a lot of missions here.

And so the economic sort of input or stimulus of sort of uh more folks moving to Fort Bliss, um more missions there, really I think helps maintain sort of your economy and your housing production in a time when the rest of the country was really struggling.

Um, and then we've seen a really unique dynamic in the last 10 years, whereas the rate of production in the US has really increased at a pretty substantial rate, but uh the city and the county, even though we're seeing more growth in the county outside the city collectively has is near 30-year lows in terms of the rate of production for housing in the community.

Um, and so sort of very striking patterns there.

And sort of it it's interesting in a time when you're still growing economically to see these drops in production, and so something that we think is of concern or something to consider and how we think about uh your housing needs going forward.

And then lastly, um this chart um shows uh the housing price index in your region since 2000 compared to the percent change in wages, incomes, um, rental rates and the consumer price index.

Um showing how housing costs tracked with these other things like income wages and even rental costs here.

And what we saw in the start of the pandemic was a spike in housing costs in the region.

Now, this has happened everywhere in the US, um the same sort of large spike, but you're in line with that.

But at the same time, you know, wages did not spike, incomes haven't spiked.

And so what used to be affordable in 2019 is a much different.

We're in a much different situation today.

And so that shift in home prices has really had some big impacts on who can afford what in the community.

And some something that you will have to address in terms of your housing needs, and that certain products used to meet needs for certain households, and that's no longer the case.

And so we have to think perhaps differently about the types of products we have in our community.

So in terms of how these trends are impacting housing needs, uh housing being built outside the city, as you know, statewide annexation laws changed in 2017 and a little bit more in 2019, and that's had really significant impact on how large cities like yourself grow.

You can no longer unilaterally annex, most annexations are voluntary.

Um that means more competition from your neighboring cities as well as your ETJ.

Whereas developers have more options to choose, pick and choose where they want to try to develop.

Um, and they're finding it, at least when we're talking to them, it's it's cheaper and easier in a lot of cases to develop outside the city versus in the city.

And at the same time, the buyers are not finding the value proposition of being in the city.

And so that's the challenge where you're not attracting the home production that you used to, and that has implications on where your house, your future workforce, and your growing population.

Um we've seen a reduction in uh housing production, as I mentioned.

Um this has occurred despite a growing economy, and the less sort of options we have because we're not producing as much housing, um, it becomes more challengers, challenging for buyers and renters, and they're choosing having to choose sometimes um substandard or suboptimal uh housing solutions.

And coupling that with housing cost spikes that occurred in the community really puts uh increased amount of demand on a decreasing amount of supply in your community, which can lead to higher prices, and so sort of uh unfortunate ill-timed um spike in housing costs versus a reduction in production.

And really, when these type of things happen, when we see large price increases, um challenges with affordability, the folks that are most impacted are your most vulnerable populations, the folks that are already housing insecure or are in substandard options, and so they're often the ones that are feeling the most stressed when you see these types of things occur.

So, with that background of demographic and housing production trends, um, we start to dig into understanding what the gaps are in the community.

Where is our existing housing stock in comparison with the levels of affordability of our existing residents?

And that's really what we think about when we're talking about housing gaps.

And so affordable housing or housing in general, we have a lot of jargon, a lot of planner terms that we throw out, and so we want to define somewhat some of that before we get into this conversation.

A lot of housing, especially housing policy, focuses around what is referred to as the area median income.

And so the US Department of Housing and Urban Development sets a defines an area median income for region every year as a way to set parameters for qualifying for different federal housing and social support programs.

And so this indicator of AMI is used a lot of times in affordable housing programs and policies and strategies to define what we mean by different income levels and where we need to address gaps.

And so for El Paso, um the definition of area median income kind of depends on the number of people that are living in a household.

So for a two-person household, it's the area median income is 63,600.

For a three-person household, it's 71,500.

So when you think about 100% of AMI area mean income, we're in that sort of 65 to 70,000 dollar range, just depending on the number of folks living in a household.

So this chart shows the number or the percent of households, uh, the different AMI cohorts in the community.

You can see sort of the spread uh across the community, and then sort of how that's shifted since 2010.

And so largely uniform, except for we actually saw an increase in the number of households that are in less than 30% of AMI.

So a growing need at the lowest, lowest income levels, which is a challenge for for a lot of communities.

Um this gives you a sense of sort of the distribution of households by income and sort of larger sort of concentrations on that below 80% of AMI, and then sort of on the far end, you know, above 200% of AMI.

We also pulled some together some data related to wages in the community and helping to try to translate that into what a household income versus wage is and try to help illustrate where the need is in the community.

And so this chart shows the 10 most prevalent occupations in El Paso and their annual average wage that's paid.

Actually, it shows the number of jobs in the blue bar, and then the red little dashes the annual average wage.

So the average annual wage for all occupations is about $52,000 a year.

When we look at the four largest occupations in the city that account for 41% of all jobs in the city, the average is about 37,000.

So obviously we have a large concentration of sort of medium to low wage earner jobs in the community.

And so that really translates or has a lot of impacts on your housing needs.

And so we wanted to translate that into household income.

So you kind of have a sense of you know, somebody earning this wage, what their likely household income is.

And so somebody that's earning the median wage is a probably right around the 100% of AMI, earning about 70,000.

And so that makes sense.

Somebody earning their average wage probably lives in a household that has the average income.

That's that makes sense.

When we talk about these four largest occupations, that translates into about a $50,000 household income, estimating for the number of workers in a household and how many jobs they have.

And that's about 70% of AMI.

So typical worker and the most prevalent occupations, they likely live in a household that earns about 70% of AMI.

So I just want to sort of plant those numbers in your head as we think about the available housing and the affordability of both for sale and for rent housing at different AMI levels.

So this chart or this graphic here illustrates the affordability for a median household in the community.

And so on the left shows the medium sales price for a single family home in the community, about 250,000.

The estimated income you would need to earn annually to afford a home, that home under your sort of typical assumptions around a down payment and in interest rates.

It's about 85,000.

And so there's a gap between what the median household that's earned being earned in the community now versus what they need to earn to be able to buy the median home in the community.

Then we look on the rental side, we same sort of exercise.

So the annual rent is about $19,000 per year.

You would need about $64,000 in a household income to afford that rent.

And that's just about where the median household is in the community.

And so starting to see a gap at sort of the median household income for rental affordability in the community, and there is already a gap in terms of home ownership.

And we sort of started play that out over a series of AMI levels as well as household sizes to try to get a sense and how that's shifted over the last four or five years.

And really what we're seeing here is the annual this slide talks about single family home ownership becoming less affordable.

The annual income needed to afford the median single family home increased from about 63,000 to 83,000 from 2019 to 2023.

As I mentioned, those home price spikes that we showed in the previous slide, this is the impact.

We have a less number of folks that traditionally have been able to buy a home in the community are likely more challenged to do so now.

And so right now you need to earn about 145% of AMI to be able to afford the median single family home.

And so it just gives you a sense of what income level you have to be at to afford the median price.

Obviously, their their home sales above and beyond below the median price, but just you know, the average home, this is what you need to earn.

We also looked at this in terms of rental affordability.

Um we're starting to, as I mentioned, to see more gaps for folks that are earning median income in terms of being able to afford the the median rent in the community.

You need to earn about 105% AMI.

Um there are housing options obviously below and above that, but you're starting to have to earn more than the average household income to just afford the median rent in the community.

And that's that's an emerging challenge that I think is new for El Paso, which a lot of sort of your peer cities in Texas have been dealing with for a number of years.

Um of those big city in uh you know, Austin, Dallas, Houston, those challenges are starting to come home to El Paso as well.

Um what we've done is track the number of homes that were sold and the number of units that were rented from 2020 to 2023 at different AMI levels in terms of their affordability.

And really what this slide is telling us that we have less options that are affordable at the median income level.

And so in 2020, about 42% of the home sales were affordable, the folks earning 120% of AMI or less.

That has decreased to 27% in 2023.

And so less folks being able to afford the homes that are being sold.

We looked at that from the rental standpoint, looking at the number of units that were affordable for folks earning 80% of AMI.

So 80% of AMI is a little bit more than sort of what those most prevalent workers probably earn.

35% of those rentals affordable in 2020, that's down to 22% in 2023.

And then lastly, we we charted out the number of households by AMI level, so their income level in the blue on these charts, both for homeowners, households as a rental household.

And then we compared that to the number of sales or rental units.

And that's sort of that overlap is where we have mismatches in housing supply.

And so where you can see blue is where there's a lack of options that are occurring for those folks.

So on a home ownership standpoint, what we're seeing is uh gaps emerging at under 100% of AMI and really becoming bigger, anything lower than that.

Um then also on the high-end side, there's a lack of sales that are sold at prices that are actually affordable to folks that earn over 200% of AMI.

And so sort of lack of what you'd say a higher end luxury market.

And when there's a lack of some of those products at the higher end, what you have is folks that can earn or afford more or choosing less, and that puts pressure on folks that uh lower incomes as well.

And we saw that on the rental side as well, sort of lack of those luxury rentals that might be affordable, the folks that rent that have higher incomes.

Um, and again, sort of the gold, the gold um blobs sort of show consolidation in the type of products that are out there, and they're all sort of around the same price point, especially on the for sale side.

And really, sort of that's an indication to have sort of a lack of diversity, and that greater diversity can help address some of these gaps going forward.

The last thing I'll mention on this is in terms of the rental side, gaps in terms of the availability of rentals really becoming more prevalent under 80% of AMI.

And so as we look at a whole sort of the biggest challenges really start to present themselves for folks that earn less than 80% of AMI in the community.

That's where sort of the biggest need started to stand out to us.

So we do this assessment called a housing needs assessment, and really this is a way for us to kind of try to quantify the number of housing units you need to work towards to address existing gaps.

And we define this two ways.

We define it in what we call key keep up needs.

So this is an estimate of the number of housing units at different AMI levels that you need to try to preserve or create to catch up to your existing needs.

Then we think about keep up needs, and this is sort of the number of units you need to produce annually to keep up with the growth of your economy going forward.

And we try to measure them both ways, keep up and catch up, um, to give you a sense of how to address those.

And sort of the solutions for those are different as well.

They can be the same, but they're somewhat different.

So what we did is we estimated the housing needs for both catch-up and keep up throughout the city, as well as for six sub-areas within the community.

And we really worked with the working group to help define these sub-areas, both in terms of socioeconomic conditions but other considerations and what we've identified, these sort of six sub-areas that are shown on the map here.

And so, first I want to talk about catch-up needs.

So, catch up is addressing housing issues that are uh emerging in your community when you have housing stress, a lack of housing options and affordability, um, these housing issues are the ones that tend to crop up, and they're a way for us to see or measure sort of what challenges the community is facing because of a lack of the housing options and affordability in the community.

And so the main issues can vary in terms of community, but the ones we looked at here in El Paso were overcrowding, temporary housing, unhoused population, and long commuting.

And so the overall estimated need of households based on these needs assessment are about 18,300 units that are sort of deficient because of the challenges we're facing.

Overcrowding generating the most of that.

When we say overcrowding, the way we've defined that is uh folks that are living in a household that have one than more than one person per room.

And when I say room, I don't mean bedroom, I mean any room in the house, whether that's a bathroom, a kitchen, a living room, or a bedroom.

And so a house that has a bedroom, a living room, and a kitchen and a bathroom, that you know, that's four rooms.

And so when there's more than four people living in a unit like that, that's an indication that they're overcrowded, and that is an indication of a lack of housing options for those folks.

We also looked at temporary housing, that's like living in a car or couch surfing with a friend, or other sort of temporary solutions.

Unhoused populations, obviously, is our homeless population.

And then long commuting, we looked at lower income households that are driving a significant distance for work in the community.

And usually that's an indication that they're not able to find housing options here that are affordable.

And so when we think about these catch up needs, um, and how do we address those?

It's not that we just need to build 18,000 new housing units, and that'll solve the problem.

Really, the the focus, a lot of catch up needs is around preserving existing housing options that are you know naturally affording occurring affordable housing or you know, permanently income restricted units.

So preserving our existing affordable options, improving the existing housing stock that exists in the community.

You all have a lot of older homes that perhaps are not being utilized the way that they could be, and how do we better utilize the housing that we have now?

And then a portion of it also is potentially housing production, especially building some affordable housing for those really uh lower income levels that are are lacking market rate options.

And so those are strategies to consider in terms of addressing catch-up needs.

We also quantified a keep up needs.

Keep up, as I mentioned, is estimated based on the growth of your economy.

And so we looked at the forecast growth for El Paso County, what the historic capture of employment in the city has been for the community, and then translated that into estimated households that would be generated by these new jobs.

And the need over the next 10 years is about 17,000 new units to keep up with employment growth.

And sort of that indication, you have a growing economy, we need to make sure that the production of housing is creating options for our workforce.

Then we spread the need over different AMI levels based on the wages these jobs are likely to pay.

And the areas where those jobs are most likely to concentrate.

So we can understand the diversity of need throughout the community at different AMI levels as well as geography based on where these jobs are likely to go.

And when we think about keep up needs, these are more production related strategies.

So, how do we allow more housing options and more places in our community?

How do we reduce regulatory barriers that may exist?

How do we improve the development process?

And then what are some tools to help support the cost of development for developers, especially as your community becomes more infill-oriented, because your ability to grow outward is much more challenged and more costly sometimes.

How do we address the need uh the needs for developers looking to build and within our city boundaries and some of the challenges that come with you know upgrading infrastructure or addressing sites that are a little bit more challenging to develop?

So we estimated what the diversity of this housing need by different AMI level is, and what that would translate into different product types that would be needed.

Started to do that here, but I think we do that in a better way on this slide.

And so about 20% of the housing need is what is really what we would call affordable housing.

So below 50% of AMI, this is housing that likely needs to be rent or income restricted.

Um you provide this housing now through public housing, housing vouchers, low-income housing tax credit development projects, and other sort of affordable housing programs.

And really, this need is throughout the community.

Um we did distribute it by different sub-areas, but really there's a need throughout the community for some portion of affordable housing to address needing.

The next bucket is what we're calling sort of mixed income rental, affordable for sale.

This is 50 to 80% of IMI.

This is a mixture of folks that might be able to afford a market rate option that may not.

And how do we create more options, whether it's smaller housing units or in mixed income developments, or you know, other sort of solutions to provide more diversity of smaller, more affordable options, and again, sort of similar across all sub areas in our community.

The next bucket, about 30% is what we call middle market first-time buyers, 80 to 150% of AMI.

This could be market rate apartments, for sale, compacts for sale, duplexes, single family homes, town homes, condos, those are the type of housing products that would be affordable at this range.

Locations near job centers are really the places where you really want to prioritize trying to attract this type of housing.

Um the most need was estimated for El Paso, uh East El Paso, but that's really just sort of the size of that sub-area and the amount of employment that's out there is the reason that that showed up.

But really, where we have job centers are the places that we want to try to increase the availability of sort of this middle market housing options.

And then lastly, about 20% of the market is luxury move up buyers, more affluent households that can afford more.

So above 150% of AMI, and this is luxury apartments, large lot single family, higher end condos or town homes.

Um these are the places that you can try to attract these products to are the more sort of um desirable markets and where they can support sort of higher construction costs, uh higher quality product.

And right now seems like there's more of potential for supportive market in central, northeast, and west El Paso for these products.

But they could occur anywhere, but that's just where the market seems to indicate there might be success for those types of products now.

And we've estimated both the catch-up and keep up need by different sub-areas in the community.

Um so this this chart shows that distribution of need throughout the community in terms of catch up, which again is about both preservation of existing um households that are affordable, making more households that are market rate long permanently affordable, or producing some affordable housing.

Whereas keep up is really focused on increasing production, that's meeting the needs of our growing workforce.

And what we've done is we've identified sort of these major issues we've identified through these.

Um these are all you know, topics we've talked about already in terms of this the trends and the gaps and stuff.

And we started to translate those to what are some potential strategies we should consider?

And sort of the three major things that we identified as potential strategies to help guide our policy development going forward is the need to reinvest and stabilize our neighborhoods.

How do we make sure that our neighborhoods are strong, they're healthy, they're supporting the folks that live in them, and we're utilizing our housing stock the best we can.

The second strategy is about producing more diversity of housing options than you have traditionally, so we can address different needs, and then overall, how do we increase housing production back to sort of average levels or or beyond to make sure that we're keeping pace with our employment growth in our community?

And so those the sort of big three strategy buckets we identified, and we're gonna start moving into developing policies, strategies, and actions for you all to consider based on sort of largely these three buckets and the needs that we've identified and working with our working group and others to refine those actions and bring them back to you at a future date.

So next steps, as I mentioned, are developing those strategies, vetting and refining that with staff in the working group, producing a draft and final report for you all in terms of the strategy, and then completing that dashboard as I mentioned, so we can track conditions in real time.

And so with that, I I'll take a pause from presenting and let you all ask any questions you may have.

I appreciate your time here today.

Fascinating report.

Thank you.

Um just a couple quick questions from me.

On page eight, you talked about the 24,000 we lost under 20.

Where did they go?

Do you know?

Um, a couple of things.

Um, a number of things.

So they either just got older, and so you know, children children living here got older, and they're in different age cohorts.

Um, what we've seen is less immigration into the community over the last 10, 15 years, and so there's less young families moving to El Paso and starting a family here, and so that's part of the component.

You saw a number of folks, I think, move outside of the city into the ETJ or into surrounding communities for other housing options or perhaps different school options, and so it's a combination of all of those, sort of less workers or workforce household or worker age uh residents having children and staying in the community, some of them moving outside the community, and then less people coming overall into your community.

Okay.

And then on page nine, you talked about 57% of the residents.

18 to 34 live with their parents or relatives.

Yes.

And that would be Texas in the US is about 44%.

Yeah, am I reading that right?

Okay.

And on page 18.

I realize something else is running.

You talked about the um area median income for region, then you talk about 63,600 for two-person household.

Yeah.

That's without dependence.

Yes, that's total number of people.

So without dependence.

So once you add dependents into that, it gets it grows more.

Yeah.

So three-person household is 71, four-person house, and is probably around 79, 80,000.

Yeah.

Wow.

Okay.

Very good.

Represent Canales.

Thank you, Mayor.

Yeah, excellent, excellent uh report that you've developed for us.

Thank you for all the effort on it.

This is housing production in general has been like my number one concern.

I've you know largely ran a campaign centered on it, and um I'm glad that this hasn't made a liar of me.

I think this is uh exactly what I've been uh talking about for the last several years.

You know, we had the last comprehensive uh study of of our housing needs done in 2017, that El Paso Housing Needs Assessment.

And I think we could already see a lot of the gaps starting to emerge, and and some of these slides in production and attainability and affordability starting to emerge then, and that was a real warning indicator for us.

And then of course everything was exacerbated by the pandemic, and and that you know, seven years later, here we are with uh I think now something demonstrating a real a real problem, something that needs real intervention now to stop these slides.

And so um, you know, clearly we have a lot of tools in our tool belt, um, you know, beefing up our uh transit-oriented development and and incentive infill incentive policies, um, you know, pre-appl pre-approved floor plans, there's all kinds of things that we can implement.

Um I guess I'm I'm speaking this urge my colleagues on the council to as these strategies come before us to give them some serious thought because um you know we we've seen like I said, that slide start to happen gradually.

Uh your work here has has given us a real uh uh a clear picture of where we stand now, but I think also kind of a clear picture of where we stand to be in the future if we don't start to address some of the the concerns, particularly about production to fill those those particular gaps, like you said, at both the low end and the the luxury end um I I think it's clear that everybody up here wants El Pasoans to be able to afford to live in the city of El Paso, and uh the reality is we've uh not necessarily through our fault through market conditions and and other reasons, but we've been out competed by uh the county, the ETJ, you know, people leaving the city limits, and so uh we we do have to take some steps and um you know I think we we have some things uh that have already been discussed that are in the pipeline, and and again I'm I'm happy to see that we'll continue with next steps to help develop more of a concrete roadmap and a cross-functional team, for example, uh, to help us work through some of these things.

So again, thank you for the for the effort to to yourself and to our internal staff who worked on this as well.

Um it's it's a good solid picture of what we need to do.

Thanks.

Thank you, Mayor.

Representative Lima.

Thank you.

Thank you, Mayor.

Thank you very much.

I had the opportunity to have Alex Hoffman do this presentation.

Is he in the audience?

Alex, would you stand up, please?

So we wait we we normally uh just spend some time, but we spent um spent a long time really discussing this um briefing that I held, and it allowed us to have some conversations about some of the uh outlying um items.

And I'm curious on page three, when it talks about community organizations.

Do you know what uh because it says two focus group meetings?

What community groups were involved in this presentation?

So do you know somebody?

Nicole?

I'm gonna let Nicole enter the couple of things.

Okay, Nicole.

I'm curious to know who was involved.

Oh uh good morning, Nicole Rodriguez Community Human Development.

Some of the organizations that we involved were some of the neighborhood associations in South Central, uh Families Unidas, Chamisa.

Um we had representation from some of the affordable housing developers, home, and a couple of other organizations that you give me two seconds, I'll take a look.

But those were the main players.

I I'm just wondering, like community first, uh, the community organization.

Um I'm trying to think of you you talked about the familias Chamisal and other some more of the small groups.

Yes, ma'am.

Good that that were involved.

So I tab this.

So let me let me go to the next tab that responds.

We talked about on page nine, and mayor touched on it right now.

57% of our residents age 18 to 34 live with their parents or relatives in the state of Texas.

How do we compare?

I know we've got um a national, but in the state of Texas, how do we compare with that number?

Yeah, so the Texas average, I'm doing my math quickly here, is 42.3%.

So 42%.

So it's right the next one right now.

Right to the right, yeah.

Okay, so we're at uh 57.

It is that um oh I did the math wrong there.

I'm sorry.

So that'd be 45 percent.

45 and nationally nationally is um 44.

44, okay.

Um so that's certainly something that we need to um uh to look at.

When you talked about discussing this, uh you mentioned the El Paso School District.

Did you have conversations with the other districts?

And I'm quite I'm asking you because on page 10 on the aging population and loss of children, it states school district is losing enrollment, and we find that all of our school districts or the majority of our school districts.

So does that encompass all the districts versus just one?

Yeah, we so in our conversations for the overall El Pass Envision El Paso process, we met with three or four school districts in um including El Paso Y SD.

Um all four of them did mention challenges with the loss of enrollment, some of the faster growing ones, you know, Horizon City area, they have less of those challenges, but the most acute were was the El Paso ISD conversation that we had.

I think their estimate was about 7,000 annual annual 7,000 reduction annually was what they were forecasting over the next five, 10 years in terms of reduction, and so it was a pretty striking number.

It is.

Um looking at the housing issues on page 28, and that was the catch-up um slide that you had there that had the different issues overcrowding temporary housing and the unhoused population.

Yesterday on the Sunday morning program, there's an interesting, very interesting um presentation by Dan Rather, who touched specifically on this and the housing issues, and he was um the story was really based in Atlanta, but it talked about how is it possible for someone to have a full-time job and still be homeless?

And it talks specifically on the temporary housing, extending extended stay housing.

Oh, yeah.

And um how that could just really eat eat your earnings up, and it's the loss or the lack of a good um credit score.

And so it's it's a cycle that just keeps going on and on.

And my question, I don't know.

Uh do we have that kind of a problem here in El Paso, Alex, maybe, of the temporary housing uh forcing an impact on the community?

Uh while he's coming up, I'll I'll address so anecdotally, at least my observations and working other communities, uh, you don't nearly have the same presence of sort of institutional operators that have that type of model.

I've done work in Las Vegas region as well in uh the Reno area in Nevada, and they have uh a much higher present uh presence of that.

Um we did hear some in the working group conversations around issues related around tenant protections, and sometimes that's a challenge is when you have a poor credit score or other issues you you are more vulnerable to be taken advantage of potentially.

And so just their comments were making sure that we have the ability for tenants to have their rights protected, and how can we look at that as a potential strategy going forward?

Yeah.

And the rights protection comes under whom who would be doing that rights protection piece.

Um so a couple things we heard, and then you can look at different things you might put into policy as a city in terms of tenant protections.

Um, as well as a lot of times we've heard is there's just a lack of resources for a lower income renter who can't fight an eviction or something like that, and there's very few sort of providers out there in the community that can help support them.

Um and so some of the comments we heard from the working group was just more resources and access to helping folks that might be treat being treated poorly to make sure that their legal rights can be represented, and it's a lot more challenging for those lower income renters.

So those are the coupled sides of the coin you can uh address that with.

And it's it's so in so important to break that cycle or to facilitate the breaking of that cycle for the community.

Thank you very much.

Appreciate it.

Representative Chavez.

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

I'm also uh grateful to Alex for giving me this presentation last week.

Um I I have a few follow-up questions.

Um in your engagement with different stakeholders, you mentioned developers as one of them.

Um, in your conversations with them, and I don't know if you could tell us how many developers you're speaking with, but what have they told you about the reason that they have dropped their production within city limits?

Um some of the things that they heard or we heard was um some of the standards are a little more stringent in the city versus in the ETJ, um, which is typical everywhere in Texas.

There's really a challenge in terms of what a county can require versus what the city does, and um so there's there's some of that disconnect, you know, whether it's parks requirements um terms of land education or park development fees, and then a few others.

Um of that, some of that sort of review process and the time to development were some of the things that we heard.

Um also heard sort of you know, flexibility for different product types.

That was one thing that we've heard is just we want to try something different, getting that through permitting and doing that quicker.

Um, those are some of the things that I remember hearing from the development community.

So a lot of process related stuff and some related to standards.

I mean, I think that's a difficult uh two sides of the swords in terms of standards.

You want to make sure that new subdivisions are providing a quality environment.

Um it's not necessarily that you need to reduce your standards.

Um they also mentioned sort of the cost of development.

So the uh you know growing upfront costs for infrastructure, and they're having to cover that with a smaller pool of buyers and having challenges to raise their own prices to do that.

Um, and so some of the things we were thinking about are sort of tools that the city might consider to help developers, you know, whether those are special districts or other sort of public financing tools where public regional public improvements can be funded in a way that shifts that cost to the ultimate homeowner as opposed to being an upfront cost, which is harder to overcome for a developer.

Um yeah, those that's kind of I think the realm of stuff that we talked about, yeah.

So um, some of those um I guess differences between developing outside of city limits versus within city limits increases the hot the cost of those homes.

Is that correct?

From what I understood.

Yeah, yeah, some of that is, yeah.

There's a perception it's more expensive, and it's not necessarily that premium of being on the edge of the city and whether you're in or out, there isn't necessarily that value proposition.

Um and then the you know, some of it's market-driven in terms of where buyers want to be, and sort of that discussion of you know um schools and where folks want to try to have their kids go, and those those are things that that played in as well.

So when we talk about the strategies that you listed on page 35 where you say you want to increase housing production, and you know, we just discussed the risk restrictions that we have within the city limits.

How do you foresee us increasing housing production?

Is it by decreasing those um requirements or incentivizing developers, or what is it?

What is it that you have thought about?

Yeah, I think it's a mixture.

Um I I think you're probably aware that um city staff has um been selected to be part of a housing production accelerator program, and that'll be a great opportunity for you all to look at a variety of things.

Um we're developing some recommendations on areas to focus on.

I think uh process improvement in terms of your development process, how long it takes to get approval is one thing to consider that can help address cost the longer it takes to develop or the more expensive it is.

Um as I mentioned, you're becoming more infill-oriented just because you it's less sort of traditional greenfield single family development, and so looking at your your process review process, your regulations, making sure that those are oriented towards different types of projects and not what you had just seen previously in different decoration uh decades, um, can make it easier and less challenging for developer to build um a diversity of housing.

And so those are the couple of things I would look at sort of changes in regulations to create more flexibility, more options, more ability to different different product types, looking at the time for approvals.

Um I think it was interesting as the large master plan community you have in Northeast El Paso, and I'm planking on the name, but compo, yeah, Campo del Sol uh in the municipal management district that's an innovative strategy to allow them to work at a pretty quick rate in terms of permitting units and increasing production.

uh decades um can make it easier and less challenging for developer um to to build um a diversity of housing and so those are the couple of things i would look at sort of changes in regulations to create more flexibility more options more ability to different different product types looking at the time for approvals um i think it was interesting as the large master plan community you have northeast el Paso and I'm planking on the name but compo yeah Campo del Sol uh in the municipal management district that's an innovative strategy to allow them to work at a pretty quick rate in terms of permitting units um and increasing production um and so different innovative strategies for different developments are ways that you can help increase production so aside from that is what is the city's involvement exactly in affordable housing in affordable housing overall um well currently the majority of what you do is funded through your entitlement funds that you get community development block grant funds home funds and traditionally you've used those for supporting affordable housing development projects um as well as home repair and improvement grants um the shift recently has been more to supporting development of affordable products through gap funding and financing for those for those those developments but I still think there's a need to help uh with repair emergency assistance to homeowners as well and so what is as sort of becoming a new challenge for El Paso is you've traditionally just relied mainly on just those federal dollars to come support affordable housing programs and what we're seeing in your peer communities in Texas is them trying to find other funding sources to address these needs because they're a lot more acute and challenging than they were traditionally and so communities creating housing trusts um contributing a portion of uh future bond issuance to supporting housing projects whether that's a continuation of gap funding um affordable projects or supporting home repair or or other strategies that we can talk about it's the resources you have to support development affordable housing um is really been a big focus for other communities that we've worked with in Texas and that's something I think that needs to be seriously considered here and likely something that'll be in the strategies.

And then how you allocate those dollars that can be done in a number of ways and I think should be tailored to what your specific needs are and and I want to thank you for that I just feel like um when I see this presentation I feel like there's just a lot of opportunity I think and almost like a call for action from from council to ensure that we are promoting economic development and creating opportunities for for people within our city to have you know higher paying jobs better jobs in general and jobs that will keep our youth here in the city.

So it's not just about delivering affordable housing but really you know bridging that gap between you know where their wages currently are and where they need to be so that they can actually you know have the opportunity of buying a home.

Yeah I I or renting one if that's their preference I I totally agree.

I think when we first started in the envision L Passel process the things that jumped out to us were that focus or need to focus on economic development as well as addressing sort of a changing housing situation in terms of conditions.

And so some of the work that we've been working on is supporting developing policies and strategies that fit into that envision El Paso umbrella related to economic development but as well as addressing specific housing issues as well and so I think I think your your your comment is is well put in terms of there needs to be a focus on making sure that we're growing uh a diverse economy and that can help um increase um income and opportunity for all residents.

Okay.

Thank you.

Yep.

Representative comprehensive presentation to say the least I really appreciate it.

As we were looking at slide six earlier we're seeing the population growth in the city has stagnated and that's been a topic of conversation in the media for the past few months at least where do you see the county is it also stagnating right there.

I mean I see it stagnate for the last few years but will it uptick a little bit more um well a couple things going on I mean the county did show uh growth very more growth than the city did um and so we have you are seeing growth in the county for sure outside of the city um and that's evident on the slide I think there are some challenges with the census um and undercounting and so there's some some difficulty there but I think the demographic story and the production story kind of speak to why we're seeing sort of that stagnation and so in those shifts of where um families with kids are living um that's a big part of it you have less folks moving into the community um that's a slide that we have or uh data point we have in the needs report um it shows immigration into the community immigration most often driven by economic opportunity to speak to the previous comment um as well as uh the rate of folks being born in the city has been declining as well so you have less less people living here that are having kids and you have less new people moving in with kids and I think that sort of compounds that and then when you have some families choosing the shift outside of the community that's I think the components of why we're seeing these these changes and really that drop of population has been largely in that younger cohort.

So you have less less people living here that are having kids and you have less new people moving in with kids, and I think that sort of compounds that and then when you have some families choosing the shift outside of the community, that's I think the components of why we're seeing these these changes, and really that drop of population has been largely in that younger cohort.

And so the sprawl has been something that I've been concerned about for quite a bit now, and you know as I continue to talk to different people.

I I asked them why they chose to go outside of city limits to Horizon or anywhere in the in the county.

And one thing that continues to come up in those conversations is that they wanted something new.

And they didn't want to deal with the fixed repers.

So just in what you are seeing here.

Um do you have a percentage or an idea of how many people are choosing to do that because of that reason alone?

Um no, I don't off the top of my head have a percentage for that.

I do know there were some conversations about doing some surveying of the community to help support the strategy, and that's the type of question you could ask to get at sort of housing preferences in while folks are making the shift that they are.

So that that could be an additional data point you seek going forward to help inform strategies.

Yeah, I would appreciate that if we ever get it to a survey of sorts.

I think that could give us a better informed decision making process, I guess, for infill, which on slide 34.

It was really nice to see those numbers by sites of town.

And so for me, it that looks like a starting point for infill development, whether it's you know, we're looking at policies that will change in the near future.

We've worked with a consultant on our infill policy, so that's coming in the next few months, hopefully.

Yep, and we could look at that in in this sense, which for me in fill at least for for my district, I only share boundaries with uh EPISD, and there's a lot of s schools that have been closed throughout my district.

And on slide 10, I thought it was really interesting that you say sorry jumping all over that closing schools make existing neighborhoods less attractive for families.

Is that just something that you're speculating, or is that grounded in some sort of research, something that you've heard or seen?

Yeah, I I think it's uh grounded in in both um studies in other communities that we've done and and have read as well as some of the comments from the outreach that we've had too.

It's just it's challenging.

Um when you lose a neighborhood school becomes a less sort of uh attractive option for a new family because you know that's one of the major drivers of housing choices for your for families is definitely schools.

Um, and so the the lack of the presence of one even becomes you know a challenge there, and not to say that I don't know there's lots of debate about housing um uh closures and all of that.

So not not weighing into that, but just saying it's it is a challenge for neighborhoods.

Yeah, I I've done quite a bit of research on school closures, and that's not something that I saw come up a lot in the research, so that's why I was kind of flagging that to for my own need to go look at it a little bit more, just because it's not something that is always considered usually you know, we're closing schools because we don't have money and we need to do this, and this is hard decision, but we're doing it.

And then all these consequences happen after, right?

And as I talked to constituents in the last round of school closures that happened last year in in my area, they're like, Well, now we have another school that's closed down the block.

We already had one to our left now, we have one to our right.

Can you make it into a park?

And I'm like, well, I don't have any money for that, I'm sorry.

And so it it just speaks to the bigger comprehensive strategy where I see us working with the school districts across the city to look at infill and say, okay, well, we want to bring kids back in here, but then we also want to do something with your property, whether it's going to be housing or any other things that can be an asset to the community, because I my constituents continue to tell me, you know, this is draining our neighborhood, it's ugly, there's blight, there's eyesores everywhere.

So I'm just kind of throwing that out there as I was seeing your presentation.

Yeah, I mean, that's one strategy we we've definitely talked about, is a partnership with the school districts to look at um unused sites and what you might be able to do with that.

We've done some work in other communities that you know are much different in El Paso, but where they've actually worked with school districts to build housing on their land to address affordable housing needs.

I'm not saying that's necessarily what we would be proposing, but um utilizing that land in a way to sort of re-invigorate the neighborhood, I think is is a great idea and something we can consider.

Okay, thank you, appreciate it.

Representative Treho.

Thank you, Mayor.

Thank you for this uh very comprehensive presentation.

It's very good.

I I have a question on page 34.

Uh and you show the the catch-up and the and the uh keep up for Northeast.

Was we're do you have uh in a was the uh 1200 homes accounted for that 12,000, I'm sorry, 12,000 homes that are being projected to be built in Northeast.

Was that accounted for?

Uh no, this is doesn't uh address those proposed plan new development.

So that the fact that there is growing uh entitled development occurring out there would more than uh address the keep up need that you have.

And I think that's great if they're producing more than your need, but that speaks to an opportunity that Northeast perhaps has that other areas don't in terms of they have a a large master plan development that's creating a a great diversity of housing up there, and that could help address a number of needs.

So yeah.

What did you uh speak with developers to see what homes are currently being phased in for the different areas?

Yeah, we did speak with that, the developer of that product, uh the project um as well as other ones and looking at their changing um needs that they're they're looking at, and so we have information and data on what they've been planning, at least in their initial phases.

Does that does that create an oversupply or I don't think so?

I mean, you can this was just to look at what the needs are specifically in different sub-areas based on how we um looked at that.

There is a comprehensive total need for the city that can as we indicated overall production is down in the city and as a whole in the county, and so ensuring that we're keeping pace with production anywhere in the city, I think is is great.

And then if we can address more of these acute needs in certain sub-areas where we can, that's even better.

But I mean, I think looking at it from a citywide perspective at a starting point, I think is a great place to start, and then from there addressing where we might need to be more targeted addressing certain needs in different sub-areas.

Okay.

And then on page 20, I think it's also great that you've included the wages, the jobs.

I you know, as a council, one of our the majority of our our uh interests is to bring in economic development.

And this actually pinpoints where we should be looking at, right?

What what are the areas that we need to focus on to make sure that we're bringing in higher paying jobs?

So this is very good.

Thank you.

Representative.

Thank you, Mayor, and thank you for all your work that has to get into this.

I also was uh briefed by the great team of the city of El Paso.

Um I'm looking forward to further conversations of defining housing affordability, just because you know, affordability can mean many different things to many people, and I've often set that in all of our conversations, even in the budget where I want to navigate um you know the first-time home buyer programs, the info development and strategizing to support even further.

I know earlier this year we supported uh the El Paso Housing Corporation for uh, you know, the grants and then then the loans for for first-time homebuyer programs.

Um and again, I think you know when it comes to us defining housing affordability.

I know that you kind of highlighted that we often look at the the low-income housing, but to me that that's not the answer.

It's really helping navigate the conversation of the infield development and how do we further navigate uh individuals becoming first-time home buyers so that they could build that generation of wealth.

Um I'm interested also in further conversations of you know, the city of O Paso is working on Envision O'Paso, we're working on the Flume on our housing strategy.

Can you tell us kind of how all of this will marry and get you know collaborate together because there's so many components to it?

Yeah, yeah.

So we've been doing a lot of stuff for you folks, um, including uh helping for stuff uh with analyses to support the Flume development and the broader envisioned El Paso.

So we've been coordinating with Arcatus, which is the lead consultant on the Flume and the comprehensive plan to integrate our materials, um, using our strategies to help support staff and arcadis and development of the Flume and seeing that sort of dovetail, as well as developing some tools to help with that development of the Flume.

We've also been looking at fiscal impacts of new development and trying to understand how different development patterns impact the city fiscally.

Um and so we've been coordinating and it's been it's been a really wonderful comprehensive effort.

Um, but there's been really good coordination back and forth uh in terms of all the folks involved and us having a part in multiple elements of that, I think it's been really helpful and making sure we're coordinating with the rest of the folks regularly.

Uh our regular check-in meeting includes um planning, housing, and economic development, and so all of those groups are hearing sort of what we're up to on a bi-weekly basis and sort of connecting the infill incentive strategy with um other economic development efforts are going on as well with the housing and then the flume effort.

So that's great.

And in regards to the outreach and engagement that you all did on slide number three, um did you guys do a survey or how did you guys get all that data that was presented when you did all this outreach?

Yeah, so we were fortunate to so our engagement um was pretty targeted to those specific groups that are very involved in housing.

Uh the data related to rents and sales prices came from data sources that track that within the community.

Um, and so the multiple listing service um data from that for for sale homes and then tracking of rental listings, whether that's through Zillow or CoStar or other sources that attract sort of apartment rental rates through and just uh overall rental units in the community.

Um so that was informed on sort of just primary data that is tracked in the community.

Perfect.

And in regards to the need of 18,300 units here in the city of O'Paso, but us having a you know a flat line growth.

How long have we had that need for?

Do we know that data or that information?

I don't know historically how that's been, say, five, ten years ago.

The there was an assessment done as was mentioned before the pandemic that had an estimate.

Um, and so we could compare that.

It's definitely grown.

Um, and so um, but I don't know that off the top of my head.

And it's uh sort of a dynamic number as well.

But I think the the high line is it's it's been growing in the size pretty significantly, I think, in the last four or five years, just given that price spike that we you experienced here.

So becoming more acute than perhaps it was previously.

And uh one last question on slide number 34 where you showed the needs by area.

Um, there's color coordination by area, northeast, east, central, mission, south central, west side.

Um, I'm just trying to understand in regards to the color coordination.

Is this data being presented just for the city of O'Paso, or does it include also the county uh jurisdiction that goes outside of the city limits?

Uh no, this is specific to your city boundary.

Oh city boundary.

Yeah, the map might go us beyond uh oh, that's why the the map in some cases goes beyond the city boundary and those colors because it's based on census track lines, which don't always match with the city land.

And so unfortunately, we um when we're doing more sub-geography analysis, we have to use those census checks um and blocker data, and sometimes they don't exactly line up with the city, and so it's the best way that we can approximate um sub-geography needs, then tie that to what the control total is for the city.

And so and the reason why I'm asking this because there's been a lot of growth in Instill Paso, like in Horizon and it's not part of the city, so when it comes to you mean just obtaining some of that data, some of the growth might have happened outside of the city limits.

Yeah, no, I don't think that our numbers are influenced by that growth that's outside of the city.

Okay, perfect.

Well, no further questions.

Thank you.

Thank you for your presentation.

Representative Lemo.

Thank you.

So, in conclusion, and and and looking at the final steps, um, it says vet refined strategies with staff and working groups.

And so I don't know if this is for you or for Alex, but there's two key organizations that I think that really should be involved, and one of them is sembrando esperanza, and the other one is community first coalition.

They have forums and focus groups on this particular topic.

So I really would like to see them if they're not involved, Nicole, that they they could be involved.

And then the other thing, uh possibly Nicole, I'm really interested in how whether we already have or how we can develop a um a rights protection or a tenant protection program.

I don't know if that's already embedded in the city, but if not, I know that the Texas Rio Grande Legal Aid does a lot of that work, but how can we as a city maybe become involved or or get information from them as we proceed with this housing issue?

Yes, ma'am.

And we're also looking uh through the anti-displacement policy work that's coming up for thank you very much.

Thank you, sir.

Thank you, Mayor.

All right.

Very good presentation.

Thank you.

Thank you.

Miss Bryan?

We do have public comment on item two, Mayor, from Ms.

Osmond.

Okay.

Miss Osman, star six, please.

I don't see her in the queue anymore.

I believe she dropped off.

Okay, so that brings us to item three.

Okay.

And this is discussion and action on a right on a resolution to approve the formation of a cross-functional team to address the housing strategy implementation by providing background and context on housing needs throughout the community as well as an understanding of the best practices in housing policy.

Good morning.

Good morning, everyone.

Marcella Dolini, Urban Design Manager with Urban Planning and Design.

This presentation introduces the housing strategy implementation cross-functional team as a response to El Paso's housing challenges in a data-driven and action-oriented way.

The CFT participants would be representatives from districts one, three, four, and five.

And the goals are to receive an overview of current housing needs, understand existing housing policies and ordinances to discuss and evaluate strategies related to increasing housing supply in the city.

The CFD will meet once a month and run through the adoption of envisional Paso and the comprehensive plan update.

The CFD outcomes are policy recommendations to bring to council and to the community for consideration.

Proposed building and zoning code amendments to increase housing production and lower costs to propose economic incentives and community engagement for a transparent outreach of policy recommendations in a date and dedicated community workshops.

The recast action to council is to formally approve the resolution to form the housing strategy implementation cross-functional team.

Okay.

Motion to approve.

Second.

Any questions from Marcel on this?

This is great, by the way.

Thank you.

All right.

No further questions, Miss Bryan.

We have public comment on this.

We have Miss Osman signed up for this item.

I don't see her in the queue.

I don't see her phone number in the queue.

Miss Osman, if you're in the queue, star six, please.

No, the phone number that I see in the queue is related to somebody someone else.

Okay.

Ms.

Prime, call for the vote.

Yes, sir.

The motion was made by Representative Nino, seconded by Representative Gonales to approve the resolution on item three.

On that motion, call for the vote.

In the voting session.

And that motion passes unanimously.

Thank you.

Prior to taking the next couple items, I would entertain a motion to go to executive session.

Motion to go into executive session for item number four and five, mayor.

Is it to discuss items four and five?

What is it, Miss Neiman?

I mean, Miss Sha tells us.

Um we are requesting permission to move into executive session to go through items one and one, two and EX.

EX.

For executive session, yes, yes, yes, at this time.

Yes, ma'am.

We would like to provide you legal advice before you take items four and five in open session.

All right, let's take the there's a motion.

Is there a second?

All right.

And this is for EX1, EX2, and EX4.

Correct, Miss Nemeck.

Thank you.

There's a motion and a second to return to executive session.

All in favor?

Aye.

Anyone opposed?

And the city council of the city of Al Paso may retire to executive session pursuing to section 3.5A of the El Paso City Charter in the Texas Government Code, Chapter 551, Sub Chapter D to discuss.

Executive session item one, statement of intent of Texas Gas Service Company, a division of one gas inc to increase rates within the company's incorporated areas of Central Gulf West North and Rio Gran Valley service areas, OS-25-00028202.071.

Executive session item EX2.

Legal consultation regarding municipal transportation user fees, HQ number 23-1161 under 551.071 and executive session item four Joseph Pickett versus City of Al Paso, clause number 2024, DCB 5250 under 551.071.

These measures are taken into executive session under 551.071 consultation with attorney.

It is 1104 a.m.

Is there a motion to come out of executive?

There's a motion and a second to come out of executive session.

All in favor?

Anyone opposed?

And the meeting is back in session at 1219 p.m.

And Miss Bryant, I'm gonna take item number five next.

Yes, sir.

That brings us to item number five, and this is a presentation, discussion, and action on railroad commission of Texas docket numbers OS-25-000-28202.

The statement of intent of Texas Gas Service Company, a division of one gas, Inc.

to increase rates within the company's incorporated areas of the Central Both West North and Rio Grand Valley service areas.

Good afternoon.

Good afternoon, Council members.

My name is Stacy McTaggart.

I'm with Texas Gas Service.

I'm the director of rates and regulatory affairs.

Um I didn't know if a city staffer was going to speak first or someone from the attorney's office, but um I'm happy to just jump right in.

Um how do we pull up the presentation?

IT will pull it up.

Magic, look at that.

Do I advance it with this?

The arrow.

Okay, thank you so much.

I don't see the staff here to make the presentation.

Should we wait?

Matt, are you making a presentation?

Okay, we'll go with Matt first.

Thank you, Mayor.

Thank you, Council.

Sorry about that, or run downstairs.

Okay, uh good afternoon, Mayor of Council.

Matt Marcus, Assistant City Attorney.

So I'm part of the city's utility regulation team, and so the purpose of today's presentation is to discuss and to tech uh and for council to take action on TGS's uh Texas Gas Service Company's rate case as it was initially filed, uh which consists of their request to increase rates, but also to consolidate their current three service territories in the state of Texas into a single statewide uh service territory with system-wide rates.

So I'll be giving a brief overview of the case, some of the main issues, and uh members of Texas Gas, as you know, are here uh and they can uh they will be providing a presentation and be able to ask uh answer questions from council and uh the public.

Umtility regulation is a specialized area of the law, very technical.

So we've been analyzing this case uh since it was filed over the last several months with our utility team, which consists of our outside counsel, uh Don uh Davey and Norman Gordon, uh, really experienced in this area of the law and also expert consultant uh consultants.

So we do have a recommendation uh for counsel today, and that is to deny the rate case as filed.

And I'll also be touching on the next steps going forward, because I do want to emphasize and make it clear that at the state level the case will continue uh with the railroad commission of Texas, who has jurisdiction over gas cases for their final decision, uh which we anticipate at the end of January.

Uh in this area of utility regulation, the tech the city of El Paso does exercise like other municipalities its original jurisdiction uh over the rates of uh investor-owned utilities like TGS, but it's the railroad commission at the state level with appellate jurisdiction for the final determination.

So the reason why we're here is because uh Texas Gas filed a rate case earlier this year.

Uh it is comprehensive rate review that happens every few years.

Uh and that process, what it really is meant to do is to determine what their customers uh will pay for gas utility service uh on their monthly bills going forward over the next few years.

And so now in this case, TGS filed uh that they filed, they are claiming a revenue deficiency.

So what that means in this context is that their rates that are currently set are not enough for them to recover enough money from their customers in terms of uh the payments that the customers uh pay on their bills to be able to cover all of their operation and maintenance expenses as a company, but also to earn a return on their infrastructure investments like their service lines that be able to provide uh their service to homes and businesses.

So as filed, one component of this case is their requested return on equity, which is at 10.4%.

And that is an important part of this case.

It's a driver of the increase.

But I do want to focus on the main issue in this case, which is their proposal to consolidate those three service territories into one.

That is a request that is harmful to El Paso ratepayers.

But to better understand that whole aspect of consolidation, it may help to provide some visual images of their corporate structure and the service territories in the state.

So Texas Gas, as you'll see here, is a division of a larger parent company, One Gas that operates in Kansas and Oklahoma.

But now in Texas, you'll see on the bottom line there has three distinct geographically separated service territories.

So El Paso circled there is in the West North service area.

And here's a map to be able to show that, which is the blue section of the maps.

You'll see those service areas sort of patchwork across the state.

So in this case, what El Paso or Texas Gas, sorry, wants to do is again set those uniform rates across the state, the complete opposite side of the state, from the Rio Gran Valley down in green at the very bottom of the state, to over on the east side of the state, the Gulf and the central portions of the state into one unified system.

And TGS has mentioned, and it is true that they have been successful in other rate cases, recent rate cases to consolidate, but that's more on a smaller scale and a regional scale.

And it's uh in light of the significant differences across the state in these service territories.

But more importantly, what it does is lead to El Paso rate payers here in our service territory subsidy subsidizing other parts of the state.

So put a little historical context here.

And uh you'll notice here that this is the fourth rate case over the last 15 years going back to 2010.

And you'll notice that they usually file rate cases about every six years.

This one they chose to file this case uh several years earlier than we uh expected.

But you also know that there's a big difference with the overall request at 41 point million uh point one million dollars for those three service territories, uh, a lot larger than the 18 and the 12 back in 22 and 2016.

The city has been actively involved uh over the years in these type of cases uh to be able to help reduce the impact to our ratepayers here locally.

So we uh are involved here, so not any different in that sense.

Uh, this chart just shows some uh comparisons on the residential average bills uh across the three service territories.

Uh the one of the reasons that Texas Gas has has put forward for attempting to consolidate is that they say that our residential ratepayers here on average pay less than other parts of the state.

Uh and consolidation, in their view, would equalize the average month bills across the state.

Um, but what that really reflects in and what the results in is uh El Paso ratepayers here would see a monthly average increase of anywhere from about $9 to 14 dollars on top of what they already pay, where residents in other parts of the state would have a smaller increase or even a decrease, like you see in the red here in the Rio Grande Service Valley.

Those folks would see a decrease while our residents here uh would face a significant increase.

At the state level, the city has been uh actively involved and strongly opposed to this consolidation at the RRC for several reasons, and the problem is pretty clear when you look at this chart here, which is um a comparison of what they're requesting at that, like I mentioned, about 41 million dollars, uh, which will all fall on El Paso uh El Paso ratepayers compared to what the increase request would be without consolidation, uh which is in our view uh more in line with the historical aspects of how they have traded this part of the state.

And that without consolidation, the increase as a standalone basis would be about 14 million dollars based on the cost to actually serve our ratepayers here in this part of the state.

Again, more in line with what we saw in terms of increases back in 2022 and 2016.

Significant difference when you compare those of over 25 million dollars more.

Now, in terms of uh timeline and zooming back out, uh, like I mentioned, they filed it uh a few months ago, uh about five months ago uh with the state and the local municipalities that they serve, like El Paso.

Uh and as you can imagine, a uh rate case uh is very large filing, it's very technical.

So over the last few months we've been carefully reviewing uh this case and with our team, we filed uh expert testimony.

We participated recently in a hearing with the administrative law judge who is assigned uh in to oversee this case in Austin.

Uh and after council uh takes action today, we can expect uh the case to go forward.

Uh and we expect that the judge will issue a proposal for decision, which is essentially recommendation to the RRC railroad commissioner commissioners.

We anticipate that in uh mid to late December, and then the RRC would uh make a final determination at the end of January of 2026.

I mentioned uh the state and local levels because I do want to make it clear that up to now this case has been essentially uh moving along parallel tracks when they filed it uh on the same day here with the uh with the city at the local level and at the state.

Uh but these cases now when council takes action today will merge and like I mentioned will proceed uh at this state level.

We will be actively involved.

And uh to this point we have been actively involved in uh exercising that original jurisdiction that I mentioned, engaging uh consultants, attorneys engaged in a lot of discovery back and forth with TGS uh to be able to provide that testimony, and it might make our case to the administrative law judge uh that um why the consolidation is so harmful for our ratepayers uh on uh on the issue of consolidation.

Um, like most cases, there's usually uh several different uh issues of concern in this case.

I mentioned the return on equity, some other ones here, but again, I do want to focus on that consolidation.

That has been the driver of this case, the main focus of this case, and like I mentioned before, uh there has not been uh statewide consolidation precedent in our view, uh, especially when you consider the large subsidization that TGS is asking of our right payers.

Um there's also been no evidence of any benefits to our right payers to be consolidated and to see such an increase.

Um Texas gas will talk about the the public interest, but we believe that uh the rates uh that the requesting do not reflect the actual cost to service our right payers here.

Uh so they're unreasonable and improper in our view, uh, which is why the recommendation uh right now is to deny uh as filed uh the request and the proposals for the consolidation.

Uh that's all I have, Mayor.

I don't want to take up too much time, but I'm happy to take any questions or yield the floor.

All right, is there a motion to approve?

Can we hear from Texas Gas?

We're gonna take a lot of comment, yeah.

Is there a motion to approve this?

To approve the resolution that the recommendation.

Oh, yes, motion approved.

Second.

All right.

Chris Representative Canales.

Well, I I was hoping to ask the questions to Texas Gas.

We're gonna bring everyone up.

Do you do you want to talk now or let them present?

Any questions for is yours?

Well, okay.

Matt, thank you.

Thank you, sir.

All right, council.

Texas Gas.

All right, hi.

Good afternoon.

Good afternoon.

So if we can get the presentation up.

So uh Mr.

Marquez's presentation was very thorough.

So um I'll I'll speed.

I mean, most of what I have to say, he said.

So I'll I'll try to go through it quickly.

As I said, I'm Stacy McTaggart.

I'm the director of rights and regulatory affairs for Texas Gas.

And I want to just start out by telling some of you who may not be as familiar with us a little about us.

We serve about 700,000 customers in about 100 cities.

We employ over a thousand people in Texas.

We're 100% regulated, and we're the third largest utility in Texas.

Atmos and Center Point are larger than us, and they serve Atmos serves sort of more North Texas and Center Point serves kind of Southeast.

We invested over in 2024, we invested over 300 million throughout the state, and paid 71 million dollars in salaries to Texans and 17 million dollars in property taxes.

And we had nearly a million dollars in charitable donations from employees and from the foundation.

And we're very proud of all the volunteering that our employees do in the communities.

We logged 1,423 hours volunteering in Texas communities during 2024.

Some of the things that we did were participating with the Red Cross, with food banks, beach cleanups, United Way.

We just wrapped up our 2025 United Way campaign, and in El Paso specifically, El Paso employees donated $126,000 to the United Way just here in the El Paso area.

As Matt said, we have a rate case that we filed in June and looks at cost of capital and expenses, cost of investing capital in the ground and expenses, depreciation rates and rate design.

And two of the things we wanted to highlight about this rate case that are beyond the usual is the consolidation of service areas and also the requests that we've made to increase the amount of funding that goes to community partners as part of our share the warmth program.

So I'll talk a little more about that in a minute.

So yes, we want to what consolidation means is we want to have a statewide rate as opposed to three separate rates.

We don't we don't operate an El Paso gas company and a Harlingen gas company and an Austin gas company.

We operate in Texas as a single entity.

We incur costs as a single entity.

We have a single purchasing department.

Well, our call center is here in Texas, is in El Paso and serves the whole state.

So it's a statewide operation for us, and we think that it's fair and appropriate for us to recover costs from the customers who receive that service on a statewide basis.

So and it also reduces risk because if you if you carve the state up into little areas, and then say there's a hundred-year flood in one area, then the impact of that flood is going to hit just that small group of customers.

If you do things on a statewide basis, it smooths all of that out and spreads risk.

So we think that that's uh an advantage as well.

Uh it's a 41 million dollar increase, as Mr.

Marquez said, and um the biggest drivers are continued investment in the system for safety and reliability, replacing aging pipe, and um also uh employee salaries and and health insurance.

That's um uh labor costs are our single biggest operating expense item.

Uh talk a little about the share the warmth contribution that we're that's part of this request.

Um we're our share the warmth program provides funds to community partners like Project Bravo that'll help customers if they're having trouble paying bills, and um so we want to significantly increase the dollars that go to those community partners as part of this request.

Um so that's part of the request.

Uh Mr.

Marquez showed you bill impacts, and his are going to be slightly different than mine because he his used statewide average, and um Paso specific area average usage, which is just a little bit different, but um, but these are the bill impacts if you're using El Paso specific area usage is a $9.81 cent increase a month for small residential customers and a $13.23 increase a month for large residential customers.

And just to refresh people's memory on that, we have two different residential rates.

We have small that is uh under 331 CCF a year, and large that's over 331 CCF a year, but a customer can choose either rate.

I mean, it's not it's not like they have to meet a requirement, but the rates were designed with that 331 CCF break point, uh, so that the smaller rate has a higher volumetric charge and a lower customer charge, and the larger rate has a higher fixed customer charge and a lower volumetric rate.

Uh and uh our billing system will automatically put a customer on the rate that should be most advan advantageous for them based on historical usage at that premise.

Um, but they can choose whatever they prefer.

All they have to do is call customer service and um and request it.

And our customer service reps will also work with them to um help them you know do some hypothetical calculations based on their usage to see what the different bill impacts would be.

Uh Mr.

Marquez already went over the timeline, so I won't bore you with that.

And um, in addition to our share the warmth program, um we also encourage customers, any customer who's having trouble paying their bill.

Sometimes people will say, well, that share the warmth thing is nice, but but I don't qualify for that.

Um we encourage customers to call our call center.

Our our call service reps are well trained and friendly, and we'll work with any customer who calls.

We will do pay arrangements.

Um we have on our website uh energy conservation tips that customers can go look into for lowering their bill.

And we also have a program called average payment plan that spreads your bill out over the course of 12 months.

So instead of paying really high bills in the winter and really low bills in the summer, you just pay an average amount every month, so it's the same every month, and it makes it easier to budget.

And I believe that is the end of the presentation, and I'll be happy to answer any questions.

Thank you for the presentation.

Lots of questions.

Sure.

All right, Representative Canalis.

Thank you, Mayor.

Um thank you.

I've I have 10 questions.

I'll get to as many as I can in my in my first go here and might have to come back to me.

Um as clearly explained in your presentation, your your filing proposes to merge the three existing kind of regionalized service areas into the the one statewide service area.

That's right.

Um your filing references what it what it calls consistent and equivalent cost impacts and administrative efficiencies from that consolidation.

Can you explain what measurable benefits El Paso customers specifically will receive from the consolidation and what you've calculated the the dollar value of that benefit to be for all the time?

We haven't calculated a dollar value benefit.

Um, but I can say that the probably the biggest impact is what's called rate case expenses.

So when we go through this process, it can be expenses expensive rate case expenses for the company and the uh interveners can total well over a million dollars, sometimes two or three, it just depends on the case.

Um and so we will have fewer cases, and that means fewer rate case expenses.

Well, that means fewer cases specifically for El Paso customers, or is this a specific fewer cases statewide?

Because it seems to me that you'll be filing on a similar cadence, you know, approximately every six years in within each region anyway.

And so the only additional expenses that El Pasoans would incur otherwise, like well, they wouldn't incur them because they would be rate cases filed in other jurisdictions.

Well, instead of incurring rate case expenses every six years just for El Paso, they wouldn't, and it might or might not be six years, it could be three years, right?

Of course, four years, but whatever.

Um, instead of incurring periodic rate case expenses of say a two million dollars for just the West North service area customers, it would be periodic rate case expenses of say two million dollars for the entire state.

So it would cut rate case expenses for El Paso customers specifically by a third.

But are El Paso customers currently paying rate case expenses for other service areas?

No.

So I don't see where the reduction would happen.

Because the rate case expenses for a statewide case would be similar to the rate case expenses for just a West North case.

I see.

So it would be a reduction to Texas gas, but not a reduction for El Paso ratepayers.

Uh rate case expenses end up being paid by the customers.

Within the specific service area that they apply to, though, correct?

Within, yeah, wherever the whatever the territory is, the rates are set for.

I see.

So I'm I'm uh we can leave it there, but I'm still not seeing where the reduction would happen if we're they're paying rate case expenses either one-third of the share of the statewide or just our own without the consolidation.

Because just your own without the consolidation is two million, and statewide is two million, but you would only pay a third of that.

I understand.

Okay.

Um rates are supposed to reflect the actual cost to serve.

That's right.

Um your filing states that TGS operates the same way statewide, but operations and cost to serve aren't like quite the same thing.

They're not exactly the same.

Um since its creation in you know, past rounds of consolidation, the West North service area has had lower rates than the other two service areas.

So I I would say it stands to reason that historically this service area has had a lower cost to serve.

Can you show us or discuss a comparative cost to serve data for uh West North versus the other service areas and maybe explain how identical rates are justified if those costs to serve uh figures across the state are different?

Sure.

Yeah, I I don't have you know figures here or presentation here comparing the cost to serve or the current rates in the different areas.

Um one of the one of the slides had the current rates in the different areas.

Um the cost this these rates that we're requesting, they are based on our cost to serve.

So it's our cost to serve statewide.

You're talking about the difference between a cost to serve statewide versus how much is allocated to any particular service area.

So it's it's not a question of a difference in the cost to serve, it's a question of how that cost to serve is apportioned among the service areas.

And currently, even though our are it costs us the same to provide the service to any given service areas.

Um, first of all, El Paso had a rate case most recently longer ago than the other two service areas.

They've had rate cases more recently.

So their rates are higher partly because of that.

And then for RGB in particular, their rates are higher because it costs the same to serve down there, but there's fewer customers more spread out.

Uh so rural customers are at a disadvantage compared to urban customers where it's more densely populated and they get more economies of scale.

And we think that it's fair for customers to pay the same for the same service, regardless of whether they happen to live in a rural area versus a city.

Okay, but the folks in the rural areas of the West North Service area are paying the same the impact to them is the same as say somebody living in downtown El Paso.

Yes.

Yes, for people who are currently in the West North Service area.

So that distinction only applies in that the kind of general makeups of the different service areas have a little bit of a different allocation of or a difference in in distribution between urban and rural.

Yes, I think that's an accurate way to say it.

Okay.

Um you're also requesting a 10.4% return on equity in this case.

Um the city's expert in in our filing recommends something closer to 9%.

Um I kind of have a multi-part question here about that in general.

Can you explain what the the risk profile unique to Texas gas uh is that justifies that 10.4% ROE, and then what in that risk profile has changed compared to the the 9.6% ROE that was previously authorized in the West North service area uh in that last rate rate case in in 2022.

And then lastly, are those risks actually present in El Paso or within that broader West North service area, or are they statewide?

Like I'll use the example of kind of environmental and operational risk due to extreme weather.

Um, you know, the Gulf Coast has hurricanes, North Texas has tornado risk, Central Texas has a much greater winter storm volatility and risk.

Um El Paso simply doesn't encounter a lot of those same environmental operational risk uh risks that you might find justified in in this kind of risk profile.

So what why what is the justification for El Paso to be paying rates reflecting an ROE that's based on at least partially risk that we don't face here locally?

Right.

Okay.

So sorry, multi-part, I know.

Yeah, a lot of questions there.

So I'll I'll try to remember and and and back up to the beginning.

Um we're requesting a 10.4% return on equity because we feel like that fairly represents what we're seeing in the industry in Texas.

Um so we compete with other gas utilities uh to for investors.

We need we need investors, they provide the funds that allow us to replace aging plant and operate a safe and reliable system.

And we compete for those funds from investors with other gas utilities.

And so we're gonna request a return on equity that we think puts us in a comparable position to other gas utilities.

And um and the cities that have intervened and the railroad commission, they also have that same lens.

I mean, they have the same understanding of the purpose of the return on investment.

And the administrative law judge at the railroad commission will look at those and will come to a conclusion based on what the different PhD economists who do these studies have provided as as evidence.

You asked what's changed since uh since we received a 9.65 return on equity in our last case.

Um that was based on a 2021 test year.

And uh and it did not reflect as much of what's happened in the economy with inflation some with high interest rates.

Um so the higher the interest rate that pushes up our the higher our need for a return on equity.

Um so that's the big thing that's changed since then.

We see rate cuts on the horizon, interest rate cuts.

Yes, but they're still, even though we've had some cuts, they're still way higher than they were.

So I I hope they do come back down.

Um is that you're talking about the risks that it's based on.

Um is that statewide or is that by area?

It's statewide, and it's not just statewide, it's company wide.

The return on equity is set for the entire company for the parent company because that's who is in the financial market uh borrowing money from investors.

So, yes, the it's it's based on the risk for the entire company.

Okay, and so there are parts of that risk profile that necess aren't necessarily reflected here in El Paso, but would be captured because of consolidation.

That's true.

Well, not just because of consolidation, always.

I mean, return on equity is always an issue in a rate case, and return on equity always reflects the company-wide risk profile.

So that's not uh uh a unique issue because of this case.

Okay.

Um your request includes recovery of uh a lot of capital investments uh as part of that requested 41 million dollar increase.

Um can you identify maybe just broadly for investment categories like what those what those investments have looked like and and why they were timed the way that they were in the intervening time since the last rate case.

Um I can talk a little, I can talk really broadly.

Uh Jerry Sanchez might be able to talk about specific things in El Paso.

Um, but we spent, as I said, we spent about 300 million dollars in in capital statewide last year.

Uh we spend about that much every year.

Uh go through an extensive capital budgeting process.

It's uh risk-based in terms of um age of pipe, material of pipe, uh, whether or not leaks have been repaired on that pipe.

And um so uh you know it's it's a very robust process and a very extensive capital budget gets put together for each year, and um it's gonna be I think 70% or more related to um to replacing aging pipe and then the other 30% is gonna be like government relocations, uh IT infrastructure, vehicles, um, and then some amount for growth.

But um I want people to know that the our expenditure for growth of the system is only to the extent that that the revenue from that growth will pay for itself so that other customers don't have to pay for growth.

Um if a growth project costs more than the revenue is gonna cover then the customer or the developer who's requesting the extension has to pay the difference.

Understood.

Can I get one more in there?

I'll tee you up on the next one.

I'll give you some extra time on the other end.

Uh we've got you.

Wanted to give you an opportunity to come up if you wanted to say anything.

Vince.

Good afternoon.

Good afternoon.

Mayor Johnson and Council.

Uh I'm just here uh on behalf of the uh state delegation.

Uh we sent a letter uh to the city council, and thank you very much for for your uh careful consideration of this matter.

We had the opportunity to meet with representative for representatives from uh Texas Gas uh where we discussed uh this increase, and and as uh you all are well aware uh you know that they're through this consolidation, El Paso would see about a 27% increase, while other parts of Texas would see about a 10% uh reduction in their rates because El Pasoans pay uh a comparatively lower rate uh while at the same time uh the utility is also requesting uh an increase in their profit margin, and and I think many of the points that Representative Canalis uh brought up with with some of the uh risks in other areas compared to what we see here in El Paso is very valid.

Um but you know, we share the same constituency.

Uh you know, El Pasoans are having uh a very difficult time.

We're seeing increases uh across all utilities, electric water uh and uh here now with gas.

Um it's just a very difficult time for many El Pasoans and uh the delegation uh just sent a letter urging council uh to reject uh any settlement uh at this point uh to to help El Pasuans with uh you know with this increase.

Uh again, one of my concerns was it it seems that El Paso uh is subsidizing uh this particular increase when you look at the decrease and others, and so that's something it is that we continue to uh to look at.

But we we appreciate your careful consideration of this.

And again, I just wanted to uh come here on behalf of the delegation to thank you for your consideration of this and uh thank you for receiving our letter.

And uh if you have any questions, I'm happy to take any.

Okay, thank you.

Any questions for okay?

Thank you very much.

Thank you.

Representative Fierro.

Thank you, Mayor.

I I unfortunately hadn't seen the representatives uh the delegation's letter.

I did receive a letter, we all received a letter from Senator Blanco, and just a couple of things that he mentioned that that I wanted to bring up is you know, he himself also is hearing from the constituents who are expressing the hope that we work together and uh make sure that there's a fair and reasonable outcome to this and deny this this um this expenditure.

You know, he also said one more thing.

Is it an additional increase in national natural gas rates would further add to the financial pressure of people that are experiencing in our community right now?

Um I I have a a question for the the yes ma'am, I'm sorry, I don't remember your name.

Stacy, thank you, Mayor.

Um Ms.

McTaggart.

Oh, I'm sorry, well, yes.

Um Representative Canala said was referring to the rate case expenses.

So are you did I understand correctly?

If you're there was five regions up there, six regions in the state of Texas?

There's three currently.

No, but there's three rate rate jurisdictions.

Okay, so there's three rate jurisdictions.

And to to do a rate case or increase potential in one is the same cost as in three.

Typically, yes.

Oh, there's not an increase in hours, there's not an increase in jurisdiction in in staff support, it costs the same.

Huh?

Yeah.

I need one of those calculators.

You know, on slide number three of your presentation, it says TGS uh make this uh here you go.

Uh makes a statement that TGS has made a $309 million investment in Texas infrastructure.

That's right.

Oh, no, thank you.

Um, how much of that was in El Paso?

Uh I I don't know for sure, but I would say at least a third.

A third.

Oh, it's the same way you divided the rate cases.

Good.

As it happens, yes.

Yes.

All right.

And then I would want to ask you, um, so how does this consolidation directly benefit El Pasuans in our El Paso constituents?

Um, I think that the biggest benefit to El Paso since it does mean an increase in rates for El Paso customers, which I understand people don't like.

Um, the biggest benefit um to El Paso customers specifically is the risk sharing that's achieved by uh having statewide rates.

So that if there is the example I always give is a catastrophic flood or a tornado or something that destroys a whole bunch of our above-ground infrastructure, and we've got to go in and do a lot of rebuilding, the cost of that's gonna be on the backs of the specific people in that community if we have rates designed for every little area, whereas if we have rates designed for the entire state, then costs like that are gonna get spread across the state.

And you know, everybody has everybody has something bad happen in their community at some point, you know.

Like the winter storm a few years ago.

Winter storm Uri is a good example, not for El Paso, because Alpassas are.

Oh, that's a good example.

We all did such a great job here, thank you.

Because you were able to save us money there.

Um then my last question, Mayor.

Some of the ratepayers end up paying higher rates than than others would without consolidation.

So, how would the public interest this be for the public interest of El Paso rate payers?

Right.

So we think the public interest is served by all customers paying the same rate for the same service.

And we think that the um lower administration costs and that the spreading of risk is also in the in best interest of customers and therefore in the public interest.

Thank you, Mayor.

Representing.

Thank you, Mayor.

And it thank you to you all for going out to our community and meeting with our constituents and hearing some of their concerns.

Yeah.

We know that we're, you know, everyone, a lot of people in our community are struggling.

You know, in 2016, your rate case was $8.8 million, and then in 2022, it was 14 million dollars.

And now in 2025, we're seeing 41 million dollars.

I'm trying to understand on slide six, Texas Gas, you have a statement saying today customers in different areas may pay different rates, even though we provide the same level of service and operate the same way statewide.

Are you all saying that there's absolutely no differences in the location, operation, transportational costs for the entire state of Texas?

That's right.

We don't we don't see significant differences in our cost to operate.

Okay.

And you know, OPASO has uh poverty rate higher than the state average.

How is the decision made for Opaso to essentially subsidize other Texas customers?

Has Texas Gas conducted any economic studies showing if OPASO customers could afford a 10 month $10 a month increase in their monthly bill?

We have not conducted economic studies like that, no.

And um, you know, one of the biggest things that I advocate is affordability.

Um how has this proposed increase impact?

How will this proposed increase impact low income households, seniors, or fixed income families in El Paso, and also what specific programs or bill assistant options does Texas Gas expand to help its customers absorb the proposed uh rate hike?

Right, right.

So the low income customers, hopefully um that this will impact them similarly to other customers, um, so not worse, not better, not worse.

Um, if they happen to be smaller homes, uh perhaps the impact will be a little lower than the average impact.

Um we we recognize that this is gonna be hard for low-income customers, and we recognize that the environment, the economic environment, um not just in El Paso, but statewide and really countrywide is not great right now.

And um that's why we part of our proposal is we're seeking to expand the dollars that go to project Bravo and community partners like that to help low-income customers.

Also, for people who don't maybe qualify for assistance like that, um, we do have payment programs like I talked about.

Um, we'll we'll do a pay arrangement, which you can call our call center and just say, hey, this is the situation I'm in, this is what I can afford, and they will do a payment arrangement and spread those payments out over time.

Uh you can also get on what's called our average payment plan, which will levelize your bills across the months so that you can budget better and you don't get hit with those really big bills in the winter.

So really suggest that anybody who's listening uh sign up for the average payment plan before we head into winter because that will help you out a whole lot.

Would you be able to share with us what percentage of residential customers are already in a rehearsing or behind in payments?

Um we don't have a lot.

Um we work with everybody that you know that calls us up.

Um and I don't have figures, but um uh I had someone from um our our call center operation telling me a couple of weeks ago that it's it's not super high.

And would you be able to share any steps taken by Texas Gas Service to reduce its own operating costs before passing additional expenses to its consumers?

Sure, yeah.

Um affordability is really important to us.

Um natural gas is one of the more affordable energy options, and we're proud of that.

And um trying to remain affordable as affordable as we can uh is super important to us, and our employees are always encouraged to look for ways to you know improve costs and stuff.

And so, like one example that I like is line locating.

Um we had um outside contractors doing our line locating in almost all areas, and the price of contractors was going up, up, up in the last few years.

And so we hired employees and brought all the line locating in-house and even paying a good living wage and health insurance and stuff, we're able to do it in-house cheaper than those contractors were, and we actually have um a much better um record in terms of locating in terms of line hits.

If a line locate isn't done accurately, then you might have a hit line.

Um, and we have we're doing much more accurate line locates than the contractors were, and we've saved money.

And that and that money savings is reflected in the filing that we filed this year.

Thank you for that.

And would you be able to share any alternate options that Texas Gas has considered before filing this specific rate structure specifically, such as maintaining regional distinctions?

I mean, I do think that there's a lot of different regions that you all provide service and O Paso's economic climate, everything is very different than almost the rest of Texas.

So when we filed, we filed a consolidated proposal, and then we also filed three individual separate proposals.

So we filed both ways.

And ultimately, of course, our proposal is the consolidation.

But all the data and the numbers and the calculations are there for three separate standalone rates as well.

And so ultimately our regulators, you all and the railroad commission, uh, you know, can make a final decision on that.

Okay.

Thank you for that.

I have no further questions.

Thank you.

Representative Chavez.

Thank you, Mayor.

And also thank you for going out to District One and doing a presentation for my constituents.

Sure.

Um you give us a breakdown then this new rate proposal.

What would be the rate increase for El Paso specifically for El Paso?

Um consolidated.

If consolidated, the rate increase specifically for El Paso would be I don't have that, I don't have those numbers in front of me.

You might of the or there might have been in Mr.

Marquez's presentation.

Of the 41 million requested, what would be what El Paso would be burdened with?

Right.

I don't know that specific number.

Okay but it's but it's it's the largest portion for sure.

Okay, and how would that compare to other cities that would be consolidated with us?

So if you were consolidated, the West North Service Area would be paying the largest share of that 41 million dollar increase, the Central Gulf service area would be paying a smaller portion of the increase, and the Rio Gran Valley would be actually getting a decrease.

And I think Mr.

Marquez's presentation may have had those numbers, but I don't have them off the top of my head.

And then on a standalone basis, Mr.

Marquez had those numbers.

El Paso would be getting a 14 million dollar increase.

So out of the three areas, just to um recap what you just mentioned, El Paso would be getting the largest increase.

That's right.

There would be another area that would also be getting an increase, and then a third area that would actually be getting a decrease.

Because their rates are currently like double El Paso's rates.

And and I think you understand that we're here as representatives of our district, and we have to make sure that we advocate for people, especially through this financial uh crisis, some may label it as such, with rising costs everywhere.

There are other utility companies that have also come to ask us for a rate increase.

So how does Texas gas justify that?

You know, because just the thought of it, you know, just even saying it here out loud in front of some constituents that are here in the audience and others that have you know joined us virtually.

How does Texas gas justify that?

You know, to a city that's already facing a lot of adversity financially.

How do you justify asking the public for this type of rate increase?

A 27% rate increase to our community.

Right.

Yeah, I I I do understand.

I absolutely understand your responsibility as city council members in El Paso, and I understand how the citizens of El Paso appeals feel when they see that that 27% on the notice.

And so there's there's a lot of different things I would say about that.

One thing is I trust the process, and the process is we file with all the cities and we file with the railroad commission, and the cities get involved, and uh they go through, comb through our filing in tremendous detail, and they hire uh outside council who's experienced in rate cases and they hire consultants, and um there's a lot of give and take that goes on between the company and those consultants, and ultimately there is if it comes to it, um uh the railroad commission that will make a decision between competing points of view, and so I think that customers can feel that they have been well represented by their city council and that they will be well represented at the railroad commission when the ultimate decision is made.

And the other thing that I would say is that I I think customers across the state are experiencing difficult economic times.

I mean, I don't think it's confined to El Paso.

I I and I know in the Rio Gran Valley, um, the average income is actually lower in the Rio Grande Valley than it is here.

So customers across the state are experiencing this hardship, and we tried to stay out from filing a rate case as long as we could, but inflation's impacted us too, and our costs have gone up too, and we have to provide safe and reliable service.

We're obligated under the law to provide safe and reliable service.

So eventually we have to come in and ask for an increase.

And so that's why we're here, and that is why we have proposed some things like the higher share the warmth contribution to try to help low-income customers and encouraging customers to call the call center.

We know it's a hard time.

And I understand that others may be facing financial difficulties as well, but our job as counsel is to protect our community and what we see facing us at this moment in time.

And what I see facing my constituency, especially those living off the fixed incomes, is you know, I don't think it's fair that they foot the bill for others in Texas, and that while we're, you know, being requested to pay the majority of that tax of that rate increase, others are actually going to be seeing a decrease, in fact.

And um the message there is you know, El Pasoans will basically be subsidizing other areas in our state, and that I don't think is a fair request at this time from our community.

Um I I do appreciate the fact that you're a reliable utility company and there's value in that.

Um, but do you can you tell me the difference if we do not consolidate?

Would every all those three areas be facing an increase if we do not consolidate?

Yes, if we do not consolidate, all three areas would receive an increase, I believe.

And the the increase would be significantly less for El Paso, would be less for El Paso, that's correct.

Uh as I uh told the other representative, we've we've actually filed both ways.

So all of that, all that data is in the filing, which is on our website, anyone can look at.

Um, and yes, there would be uh a lower increase for El Paso on a standalone basis, and and all of them would be receiving increases.

Um but what that doesn't reflect is that our actual cost to serve customers in those other areas is similar to our cost to serve El Paso.

It's similar, but not the same, right?

It's not equal.

I guess it depends on how you carve it up.

If you carve it up, if you make the decision to carve it up into separate areas, then yes, the cost comes out different per customer.

You know, I I think the bottom line for me is it's just not fair that El Pasoans have to foot the bill for other people in the state of Texas.

Our costs are not the same, even though they may be similar, they're not the same.

And um that that is why you know um we're we're in this position where we have to advocate for our constituents in this case.

Because you mentioned the share the warmth on slide nine, um there is a contribution to share the warmth fund.

Um would it be recovered from residential customers as part of their monthly bill?

Yes.

Okay.

Thank you very much.

Thank you.

Representative.

Thank you, Mayor.

And I want to start off on a positive note because I I think TGS has done a great job for our community across Texas.

The the reliability of the services there.

And that's important to note.

And there are many El Pasoans that are employed with TGS, and I think they're very happy employed at TGS.

So I want to start there.

Um I also appreciate that you agreed to do community meetings and have gone across the city to meet with our constituents.

And I got the opportunity to be there on Thursday, and we had a a small meeting but uh an important one with great information.

One thing that I had asked from that Thursday meeting that I was hoping that I would see in this presentation today was what do the rate increases look like for the um other two areas for the Gulf area and for the RGV area.

And because we're we're seeing here from what you've stated today, El Paso is gonna have the brunt of this increase of the 41 million dollars.

RGB is gonna have a decrease, and then the Gulf will have a small portion of that 41 million.

I would love to see that broken down by numbers.

I think you don't have the numbers with you today, but I think the the public deserves to see that from a transparency point of view.

We we need to see, okay, out of the 41 million that you're asking is El Paso gonna do 30 million, and then the Gulf is gonna do the the other 10 million.

It's it seems like that to me, but we don't have those numbers today.

So I guess if you want to say something to that, and if you know what increases have happened in the other two areas that I'm assuming that's why they're not getting big increases in this rate case.

That's right.

The Rio Gran Valley had an in green increase um about a year and a half ago, and Central Gulf had an increase uh about nine months ago.

Um, and I don't I don't remember off the top of my head what the size of those increases were.

Um, but they have had increases more recently, and so that's a big piece of it.

And and then for this case, again, I don't have the specific numbers in front of me, but Rio Gran Valley would be getting a decrease, and Central Gulf will be getting a smaller, a much smaller increase than the El Paso customers.

And one question that I still have from the Thursday meeting that we had with my constituents is you've done this about every six years, you're coming in at three years.

Can you give me a succinct answer as to why that's happening?

Inflation.

Inflation.

Yeah.

Okay.

Yeah, we're usually able to stay out longer because our costs go up a little every year, but they don't go up a lot every year, especially you know, back when inflation was like one percent or something.

Um that was wonderful.

And we just haven't been in that environment in the last few years.

Okay.

And you know, the the public may be watching at home.

We have a pretty full room here.

There's a lot of media here, and one overarching thing that I see from my colleagues asking questions is consolidation.

And so I wanted to bring um if IT could bring up slide five from Mr.

Marcus's presentation, the first one for this item.

I I think this is where El Pasuans really need to understand where the consolidation questions are coming from and why this is such a huge risk and a really big detriment to El Paso with the rate case as is, and if you look at what's on here, we're part of the blue area, and the consolidation would mean that yellow and green would all turn into blue or you know, or green or yellow, but they would all be under one area.

And and so what this means here is that we would be subsidizing the rest of the state when they have natural disasters occur to them.

We're lucky here.

Um I remember the freeze of 2011, and we were okay for the most part in 2021.

But one thing that was said to me at the meeting that we had last week is as constituents were asking about subsidizing the rest of the state, I was under the impression from the answer given to me by TGS that we would not need to be subsidizing the rest of the state if there's a hurricane on the Gulf, then you would have the ability to go out and just charge those customers and not charge the whole state for that.

And now, from what you're saying here to some of my other colleagues, is that this would be risk risk sharing that is spread across the street.

So which one is it?

Um for individual incidents like uh a hurricane here, a tornado there, a flood here, it would be risk sharing.

So I apologize if that wasn't clear when we spoke last week.

Um we spoke last week, we were talking about winter storm Uri that happened in 2021, um, where there was uh a statewide case for recovery of the costs associated with winter storm Uri.

And um El Paso advocated to not be part of that pool and successfully advocated for themselves on that.

And I expect that if we had a statewide incident like that or a statewide case like that, that El Paso would would absolutely be able to make that same argument again in the future if we had a situation like that.

So that's what I was talking about.

Okay, so there's risk sharing.

Your idea is it's all one um area now, there's no three areas anymore after it gets consolidated.

But then El Paso can say, well, we weren't affected by the storm, and then you'll consider it.

It's not up to us, it's up to the regulator.

Uh with whether it's a good idea, it was the railroad commission.

Okay.

And so would you be willing to put something in writing that would state that that you would be okay with areas that aren't affected by natural disasters to you would encourage them to do that, or you would be on their side in that sense?

I I don't I don't know that my company would be willing to put in writing a hypothetical for a future case.

Well, I mean with global warming, I mean I it's only gonna get worse from here.

So that's where I worry about what's happening on the Gulf Coast, you know, the the winter storm, and we're also not part of ERCOT, and we're part of the other part of the country, right?

We're the only ones that are not in the state.

So that's that's my worry there.

We're we're getting the biggest increase out of this whole thing, and then we're also gonna be subsidizing storms, and we don't have the guarantee that we're gonna be carved out.

So that worries me there.

One other thing that you had also said is that um you want to make this more fair, whether you're in a rural or an urban area, you're getting the same gas, so you should be able to pay the same rate.

And that made my eyebrows go really high, like above my forehead.

Um just because I I think there's a big difference there.

So from from that statement, does that mean that you're saying that there's absolutely no difference in location, operation, transportation costs across the entire state of Texas?

No, I'm not saying there's no difference.

I'm saying that uh the service that the customers receive is the same, and I think it's fair for people to pay the same rate for receiving the same service.

Which I guess could also be applied to say it's fair for us to subsidize natural disasters that don't affect us.

And to have natural disasters that do affect you, risk shared with the rest of the state.

So when we had the 2011 freeze, how did we handle that?

Did was it a big cost on the utility?

Um the 2011 freeze was not a big cost on the utility.

That's just the last disaster that I remember that I could think of that was a big one, right?

And then we had the storm 2006, but that wasn't really a gas thing.

So just judging by the history that we're we're having there, I I don't I don't think it's fair.

And then also you said at the beginning that this is not the hard game gas company or the El Paso gas company, but we're still gonna just be in solidarity with the rest of the state by saying, okay, well, I'm sorry, we'll we'll we'll pay for your natural disaster.

Like do you see how that's a big deal to tell my constituents and how how that doesn't seem fair from their point?

Yes, I I see your perspective on it.

I think I think that it's it's fair fair people can see it from both sides.

Okay.

And I guess um with the share the warmth fund, that fund is being established from residential customers paying their monthly bill.

That's correct.

Okay.

And and so if you're thinking about affordability and everything that you said that you know it's it's a bad economy, it's it's bad timing, stuff like that.

Um you considered using any profits to fund this fund?

Well, the OneGas Foundation, um, I think on one of my slides uh said contributed uh 933,000, I think, um, in contributions across the state in 2024.

And um the foundation matches employee contributions to the United Way and um company wide this year's United Way program, I think was 1.7 million dollars contributed total.

Um so yes, the company is also contributing money in different ways.

Okay, and then the consolidation and making it one whole state instead of three regions, that's gonna give us better service.

What is better service mean?

I um I think that it's going to ensure our ability to give you the same good service.

I mean we we want to give you the very best service today, yesterday.

Um so I I think it it'll it will better ensure our ability to continue to give you excellent, safe, reliable service.

That sounds like no change.

It sounds like no change between having three areas or one area.

I don't believe that the quality of your service would be negatively impacted.

So what would be the positives of having one area versus three?

So it's fairness as far as we're concerned.

And also there's some administrative savings and the risk sharing, which we think is a benefit, but is not appealing to you.

What are the administrative savings?

Mostly the rate case expenses that we talked about earlier.

Okay.

Yeah, I don't I don't think that's a a very strong argument because I mean if somebody is in the Gulf and they call where who picks up the phone?

Somebody in El Paso.

Yeah.

Yeah, so I think that that's already happening with three areas rather than just one.

Yes, yes, absolutely.

We operate, that's why we're asking for our rates to be statewide.

We already operate statewide.

So yes, absolutely, that's already happening.

Yeah, I I don't know, there's there's a lot of holes here.

Um I I just worry about not having all those numbers, and I would really like if you could work with our city staff to give us those numbers so the public knows out of the 41 million that you're asking, El Paso is gonna be X amount, and it's the largest amount.

This needs to be very transparent.

But I appreciate you taking questions.

Representative Trajo.

Thank you, Mayor.

And thank you also for coming out to our district.

Uh sure just this past week.

And you all heard directly from our constituents, you know.

Yes, we did, yes, we did.

And you know, I can see that that was that was difficult, right?

Oh, it was it was very impactful.

I mean, people are struggling.

Yes, people are struggling.

You know, in my district, there's we have many seniors, but one of the the things that stood out to me was also a family man who spoke, who spoke up, right?

I remember exactly who you're talking about.

He spoke up, he's a family man, he's he works.

Uh his he has a disabled child, his mom, his uh wife can't work, and so he was like, What do I do?

What do we do?

What do we do in this situation?

Has um TG has conducted an economic study showing that El Paso customers can't afford this increase?

No, we haven't conducted a study like that.

Um as I say, I spoke just a couple of weeks ago with uh someone in our customer service operation who told me that no, we don't have a lot of people in arrears right now.

So I I have that data point.

Um it doesn't currently seem that there are a lot of customers who aren't able to pay their bills.

But we do have uh that's with current rates, right?

But with changes in rates, you know, it's not only the gas company, we have other utilities that are looking at increases, and so this is definitely gonna affect those who are in a fixed income.

Yeah.

Uh on slide show seven, I mean I'm sorry, site eleven shows that the average monthly increase to El Paso rate players will be about ten dollars for the small residential home.

How much is the increase in other service areas?

Um this is gonna be in my oh, it's not in there.

Um I want to say, I'm doing this off the top of my head.

Uh I want to say that the increase in Central Gulf is four dollars, and then in um Rio Grande Valley is a decrease, and I don't remember the amount of the decrease.

Okay.

One of the things I was mentioned is sharing the spreading the risk.

And and um Acevedo spoke quite a bit on this, but when you look at El Paso being low risk, weather related, you know, we don't have hurricanes, we rarely, if not have a uh tornadoes, our bad weather storm, system infrastructure, things like that.

Those are not things that are typical to El Paso.

And so given that specific risk in El Paso currently facing, how would that make that risk pooling beneficial for El Paso?

Um it would not be beneficial if El Paso never experiences an unusual an expensive unusual occurrence.

Uh I would be surprised if El Paso never experiences an expensive unusual occurrence, but if they never did, then the risk sharing would end up not benefiting them.

When was the last time there was um issue with El Paso as far as weather-related infrastructure, anything like that?

The the the two that I'm aware of are the 2011 freeze and the 2006 uh flood.

Okay.

Looking at the three point, what is it, 309, 309 million investment statewide?

How much of that went to El Paso's infrastructure?

And what is expected for our future investment in El Paso?

About a third of our capital budget goes to El Paso every year.

And I expect it to continue at that pace.

Okay.

And then going back to the administrative efficiencies.

What would be the result of the consolidation for those uh administrative efficiencies?

The primary administrative efficiency is the rate case expense that we've discussed.

Okay.

All right.

Thank you.

Representative.

Thank you, Mayor.

Thank you, Ms.

McTaggart, for the presentation today.

I just have three quick questions.

I'm not going to be long here.

But could we go back to your slide 11 that we could bring it back?

Okay, there it is.

So you indicated that the cost of rate cases are passed on to the consumer.

On this particular slide, are the cost of the rate case already included?

No.

The cost of the rate cases of the rate case is a separate docket at the railroad commission that will be conducted after this case.

And so the these numbers are low at this point in time.

It's usually fairly small, but yes.

I'm not I and I won't even ask you what what you anticipate that to be.

But I did want to talk or ask you about uh you were talking about the company contributing money and setting things aside.

You talked about share the warmth, but that fund is being generated by rate payers.

Is that correct?

Um currently ratepayers can elect to give to share the warmth.

And so there's a small amount of money that goes to share the warmth from ratepayers choosing like a check box on the bill to give a dollar.

Um and our company also occasionally gives funds to community outreach and and to charitable contributions and stuff.

Not our not our utility, the the One Gas Foundation does.

Um the one foundation is the one that will do it, but not the company itself.

That's right.

Okay.

That's right.

Well, then let me continue then.

When you also talked about the United Way, generally united way funding comes from the employees.

Is that correct?

And then our one gas foundation matches, and the foundation matches.

Okay.

I just wanted to make sure that when you talk about the company contributing, that it's also important to say that it's the ratepayers and the employees who probably are putting in a huge amount of that of that funding for it.

So and I guess as a synopsis, would this be correct?

You're asking our community to pay more.

So people in other parts of Texas see a decrease in their bills.

Is that correct?

That's the result.

Thank you.

That's the result.

Thank you.

Represent Canales.

Thank you, Mayor.

Um get it, if that's okay.

Um a rate case wasn't required for our West North Service Area until 2028.

Uh and then the other two areas uh saw rate cases much more recently in the last year-ish, two years?

Right?

That's correct.

Um what specific operational or financial change made this kind of major statewide consolidation filing necessary right now in 2025?

You mentioned inflation.

Are there any other safety or reliability or compliance issues that required you to accelerate that timeline of this filing?

Not really.

It's just it's just the uh steady rise of our operating expenses.

Okay.

And I guess was consolidation necessarily like the driver of this filing, or did is it kind of incidental in that you had these other uh you had you know financial pressure to uh look to increase rates and uh it just became an opportune time for this type of consolidation filing?

That's correct.

We would have had to file no matter what.

Okay.

Um if El Paso becomes part of a a single statewide service area, how would regulatory actions taken by other cities across the state affect uh El Paso customers and then kind of this bodies or you know the city of El Paso in general uh our our ability to regulate um with within our original jurisdiction?

So like would I guess would consolidation dilute uh El Paso's regulatory authority over local rates if the area is larger?

Um and and would our uh personnel, our experts be required to attend or participate in in proceedings triggered by or maybe hosted in uh further away parts of the state, you know, something like a show cause action in a different city.

Right.

No, um it wouldn't change your regulatory authority.

Um it wouldn't change the control or authority you have over El Paso and the citizens in El Paso, and it wouldn't obligate you to assume authority or responsibility for other parts of the state.

Really, in that respect, it's not different than the way it is right now.

So, like right now, El Paso is part of the West North service area, and so Borger, for example, is part of the West North Service Area.

And in this rate case, Borger hired an attorney, Borger hired some consultants.

Um they're taking care of themselves, and and you would be responsible for your citizens the way that you are.

Um and so that wouldn't change in that respect, and and you would still have original jurisdiction just the way that you do now.

Okay, I guess perhaps as as an intervener at the at the railroad commission, we may have more other cities to work with because there would be more other cities with there would be more interveners.

There would be more interveners.

Okay.

Um you briefly mentioned labor costs in your in your presentation as a as a really large expense.

Um I'm kind of interested in both ends of the range of labor costs, all the way from kind of executive compensation to you know salaries and overtime and benefits for you know your your field technicians and and other blue-collar employees.

Um how much of your requested uh rate increase covers personnel and other labor related expenses, and are there any increases uh of these pay categories included or rolled into your your rate proposal?

Um so our rate proposal is based on current salaries, right?

So it's not adjusted for any proposed future increases.

It's it's just based on salaries right now.

Um I don't know the percentage off the top of my head uh of the increase that's associated with labor.

I apologize.

Um It is a large expense though.

You said like it's one of your largest.

Yeah.

Okay.

Um I guess uh then if if you do have future uh increases in your labor costs, do those get absorbed internally or are those are there interim filings that you'd capture those in, or do they get rolled into future rate case?

They get absorbed internally until we have a rate case and we request higher rates, you know, until until costs go up to the point where we can't absorb anymore and we request uh a new rate case.

Okay, but there's no interim filing that captures increased labor costs.

That's correct.

Okay.

Um and then this one's a bit more in the weeds, but I'm just very interested in this topic.

Um the the schedules in your filing reference uh several regulatory assets uh and you know, kind of deferred costs, uh, I guess for the public following along that's like expenses from past rate cases that's or from past events that were deferred uh for collection into the future um you know that you carry forward.

Sure.

Um of those originate from rate cases across the other service areas you know, set aside in settlements or or the you know there's recovery timing issues that create those all kinds of reasons.

But can you talk about the regulatory assets that you're looking to amortize in this case and kind of the the it might be too much to ask you like the remaining balances of those, but whether any of them originate from issues from from prior dockets in the other service areas and you know, kind of a discuss why El Pasoans would suddenly be on the hook for those?

Sure.

Sure.

So just uh regulatory assets actually they exist to ensure that the company doesn't over-recover.

So if you have uh an unusual occurrence in one year that would be an operating expense in your test year for your rate case, and you set rates based on that, then the company's gonna recover those rates every year, which means they're gonna recover that extraordinary unusual cost every year.

And you don't want that because it was a one-time thing, it's not an ongoing thing.

And so you pull it out and you create what's called a regulatory asset.

And you usually you'll amortize it over six years, which means you're only recovering one sixth of it for six each of six years.

So it's to ensure that the company doesn't over-recover, is what a regulatory asset is for.

And so we have regulatory assets associated with extraordinary costs incurred during winter storm URI that were not related to gas cost.

So we had to have employees deployed around the city to mine the city gate stations and the regulators to make sure they didn't freeze off.

Right.

And different things like that.

So there's regulatory assets associated with that for the Rio Gran Valley and Central Gulf and West North, all three.

And there are regulatory assets associated with let's see, with some regulatory actions taken in the West North service area.

And without the schedule in front of me, I'm having a hard time remembering what the others are.

There's about five or six of them total.

Yeah, I think the bulk of the cost was the winter storm URE, right?

That that was the largest of the regulatory assets.

Okay, possibly.

We incurred a lot of extraordinary costs during COVID, and by extraordinary, that means things that aren't going to happen over and over and over.

And so those costs to avoid the company recovering them over and over and over, uh, they get pulled out from the rate calculation.

And those are being amortized over six years.

So we have COVID-related regulatory costs in all three of the currently designated service areas.

So then when we come along to answer the second part of your question, when we come along and we do a consolidated case, all of those for all three areas are in the consolidated case.

All costs associated with the state are thrown into one bucket and spread across all customers in the state.

Okay.

And you know, that means this is one of the areas where the city has at least some direct legal authority to protect our our residents on an essential service, though a final decision doesn't really rest with us.

You know, a three-person elected statewide body.

Um and so uh I think our responsibility in this kind of hearing is to ask good questions, and uh you've done a great job answering our questions.

Um, you know, about whether the request is is fair and reasonable and supported by the evidence you've provided with your filing.

Um and I want to be clear, and I think others have said kind of similar I uh I hope that you don't view this as something that's adversarial.

Um, you know, we're we're grateful that you've come to answer our questions and especially that you were able to, you know, Texas Gas was able to put together um our the public meetings that we requested you hold on on very short notice.

And so um, you know, the the the whole process is about making sure that Al Pasoans are treated equitably and that any uh rate changes or uh uh rate increases uh that arise from this are are ultimately justified.

So thank you for your willingness to engage with El Paso on this.

Um it's been helpful to have you there to answer uh constituents' questions directly.

And I I also want to be fair and clear with the public about uh the situation here in Texas.

Utilities are entitled by state law to recover their their prudent costs and to earn a reasonable return for for the service that they provide us, you know, in exchange for the the safe and reliable service uh that we get from from Texas gas.

Um I think in these cases though, you know, the utility also has a burden of showing that that those investments were all necessary and that the need is is well documented and that the proposed rates reflect the actual cost of service uh for for customers, you know, I'll say in my opinion, in each region, uh, you know, that might change with consolidation.

Um ultimately I'm I'm not an expert on the the prudence or the correctness of your individual capital investments, and you know that's why the city has hired experts and you know I rely on the experts to let us know uh what what investments were prudent.

But on the consolidation portion of the filing, you know, my understanding based on uh reading your filing, and I did take quite a long time pouring through all the different parts of the filing, and and from what I'm hearing today is that you know El Paso will face the largest part of the rate increase despite having what seems to me to be a smaller slice of the overall risk profile pie.

Um and I just can't really justify the the higher costs in the face of what I see as greater exposure through through risk sharing.

And so um, you know, I I don't know that I'll be able to support uh the the request as filed, and that's really the only option uh largely that the council has today is you know the the case will continue.

Um there's possibilities for settlement, there's you know possibility of a decision from the the railroad commission.

Um but I think if if uh I have to consider this case on essentially an an up or down vote on the way on the the way it was filed with consolidation, um I I just don't think I can I can support that because of that impact to El Paso constituents.

So uh again, I I just wanted to be clear about explaining that and you know thank you again for being here and answering the questions and you know I I hope it didn't seem like a grilling.

Um I we you've provided good information in response to the question, so thank you.

Thank you, Representative.

I I do understand your perspective.

And I and I just want to say that the company very much values its relationship with the city of El Paso, and um and we appreciate the role that you play in this.

That's all thank you, Mayor.

Yeah.

Thank you, Mayor.

Thank you so much, Stacey.

I appreciate it.

And and I wanna I do want to thank you and the staff that were out at the meetings um last week.

One I know got a little contentious, and um you all handled it so well just answering questions, but there's a few questions that that I have just for clarification purposes.

Earlier, one of the very first things that you said was that um consolidation would bring a reduction to rate uh cases, right?

Because we consolidate it under the state instead of each rate jurisdiction.

Right.

So let me ask you, what is the what is the co the comparable numbers of customers, not necessarily the the areas, but the the customers per each of these rate jurisdictions.

Would you happen to know that?

There's 300 and some odd thousand customers in the west north service area and 300 and some odd thousand customers in the in the central Gulf service area and about 70,000 customers in the Rio Gran Valley.

So between the Western North and Central, we're about equal.

About even.

About even.

But Rio Grande is the one that is is typically you mentioned that's the rural area.

It's about 70,000 customers, right?

And more spread out.

In in that jurisdiction.

Right.

Okay.

And then, you know, I I also know that you had operations that are centralized right now in El Paso.

Some for the most part, right?

What other centralization is proposed with this?

There's no proposed outside of the sorry, outside of the rate cases.

Sure.

There's no proposed changes to the way we operate because we already operate on a centralized basis.

So for example, we have the call center here in El Paso that serves the whole state.

We have a um pipeline integrity testing team that travels around the state and does pipeline integritesting throughout the whole state.

Um I work throughout the state.

Um there are some custom employees, you know, the fellow with a wrench in his hand who is turning the the nut on your meter, who obviously lives in El Paso.

But there's probably 50% of our employees that are working on a statewide basis, and then also employees, even the fellow with the wrench in his hand, they go from area to area uh as needed when you know things occur when there are outages and things like that.

You move crews around.

We move crews around.

Okay, that's the easy way to say.

Yeah, yeah.

No, no problem.

And so let me ask you, is this what other states do you operate in?

Uh in Oklahoma and Kansas as well as Texas.

Is that similar to is is what you're proposing right now similar to how you operate in Oklahoma and Kansas?

Yes, it is.

It is.

That's exactly how you operate.

Yes.

Everything is centralized under one group.

Right.

That's correct.

Your all your rate jurisdictions are under one.

Yes.

One operation.

In Oklahoma and then in Kansas.

Okay.

All right.

Thank you, Stacy.

I appreciate the answers.

Sure.

Thank you.

Representative Mino.

Thank you, Mayor.

And um, I'm still trying to understand in regards to consolidating O Paso to other regions, right?

And um when it comes to operational cost, is costs the same all across the board in the state to operate the utility.

But one of the questions that I have is in regards to salaries for your employees.

Are salaries all the same all across the state compared to O Paso or San Antonio or other areas that you might have staff?

So our compensation system is it's individualized.

Um so any I uh there's probably not any two employees that make the same salary.

Um it's gonna be based on their tenure with the company, their education, their performance evaluation, um, lots of different things.

Okay.

I I think that you know, in the conversation of the consolidation, that would be important to also look into to you know, if we're gonna have the same operational cost, um, having that aspect of ensuring that you know the the salaries are are part of that, you know, and my thought process is about deciding about the fairness and protecting the people of El Paso and the district.

Um, but thank you again for for being here.

I just wanted to make that question about the salaries.

Okay, thank you.

Thank you.

All right, Miss Metaker, we're almost done.

All right.

Uh we're gonna be taking some public comment here in in a minute, but again, I understand you know the utility having a balanced reliability with with affordability.

Um but this is very difficult times for a lot of El Paso, and as you you mentioned earlier, and I appreciate appreciate you being empathizing with our residents because food costs have gone up, housing has gone up, child care has gone up, the recent government shutdown, you know, people are losing their jobs.

And when El Paso, and I'm summarizing here, uh gets a 27% increase over other parts of the state that are getting a 10% uh reduction, and trying to still wrap my head around the average cost for small home when I don't know really know what that means.

981 for a small home, 1322 for a large one, that still translates to about 117 and 160 per year, which is sizable for for this community.

Uh and again, the 41 million dollar increase in El Paso uh getting about a 14 million dollar uh portion of that.

You know, we talked a lot about the 10.4% ROE, you know, and and that's that's a big number.

Um so you know, El Pasoans, their basic question is why are we consolidating?

You know, that's that's that's the question.

And you know, I I appreciate you uh being able to put yourself in in their shoes because times are hard right now, as you mentioned earlier.

So this is very difficult for you know my my colleagues on the on the diocesa, and I you know, we we stand with our our our state delegation and and all the residents, you know.

This this is a big this is a big jump for us.

So um with that said, we'll take some public comment, but thank you for for coming here.

Thank you for answering the questions.

We really appreciate that.

And we value our relationship with you guys too.

Thank you.

Thank you, Mr.

Mayor, and thank you, representatives.

Thank you.

Ms.

Bryant, take public comment.

Yes, sir.

We have uh 10 members of the 11 members of the public that signed up to speak, and we received over 50 letters of opposition that I would have shared with city council.

The first person is Gabriel Regalado.

Gabriel Regalado, star six, please to unmute your telephone Gabrielle Regalado, star six, please to unmute your telephone.

Good afternoon.

You have three minutes.

Go ahead.

You have three minutes.

All right.

Um I appreciate everybody.

Um question uh questions and answers that I didn't even consider in regards to why we're consolidating.

But I do find it very atrociously simplified, I suppose it's in regards to why benefits you get.

And that's one thing I really want to like emphasize in the how I disapprove this.

We have a lot of struggling community members here, and just uh trying to generalize all these fees or we've rate kind of like we're just gonna be the punching bag of Texas.

And in that I find very unfortunate.

But one thing I did find interesting was how the simplification uh how we could just simplify what I said so far is that these rate of pieces are heavily are heavily chosen based off of profit and inflation.

I feel like this would have been taken into consideration from the previous rate type.

Um, from what I found, um one gas had gained a profit margin of 3.3 billion dollars in the last year uh today.

In addition, what's available on the Texas gas from what I found is that they had a trending, they have had a subtle trending increase in the stock within the last year.

So I don't really see how their company is struggling uh from the you from this data to justify such a high rate and decision for how things are going at the moment.

That is all I have to say.

Thank you.

The next speaker is Francisco Tarin, followed by Angel Uyoa, Veronica Carvajal, Wesley Lawrence.

Good afternoon, you have three minutes.

Good afternoon.

Well, I was hoping to show my uh laptop today, but I don't need it, I've got the numbers up here.

Unlike uh Miss Macdagar, Stacy, I have the numbers in my head.

Thank you for the time today.

This is my first time at City Council.

I'm excited.

I did the neighborhood leadership academy uh with their facilitator over here, and it was a great experience.

So now I feel equipped uh to even take on the billionaires, apparently.

I'm gonna go over the when I asked Stacy.

We asked Stacey what the total revenue for Texas gas was.

Stacy said, I don't know.

Uh we asked Stacy how much does your CEO make?

Stacy said, I don't know.

So Stacy did tell me.

I don't know, you're gonna have to look through my Form 11K.

Now I read Form 11 case with my coffee, pretty much for work.

So it's not in your Form 11K, it's Form 8K, publicly published through the Security Exchange Commission federally.

So I'm gonna show you some numbers.

Before I show you the numbers, though, keep in mind these numbers are through Q3 September 30th.

Release November 3rd, hot off the presses.

So what happens in Q4, guys?

It gets really cold, and that's when we use the gas, right?

I'll speed it up for you because I'm running out of time.

1.8 billion, as the caller mentioned earlier, probably 3.3.

6 million and 92 million.

Not 230, but I think it's 230.

I'm not a financial expert, and I'm not the numbers guy with Texas CEO.

1.8 billion revenue, guys.

2 billion dollars in revenue they bring in.

They want to take out Welita's money.

6 million is the CEO's salary, 6 million a year.

And uh finally, the 92 million is from new rates already through Q3.

I go back.

We have not gone through the most expensive time of the year, and they've already made 100 million in new revenue.

It's that's all chicken scratch, I'm sorry.

Let me get to a point.

The company brings in two billion, they pay their CEO six million on paper.

They want an ROE because the CEO has given himself a raise every year, a 200% race every year since being hired in 2020.

How many of you guys here made a million in 2020?

Raise your hand.

How many of you guys gave yourselves a 200% raise the next year?

Raise your hand.

The CEO's pay went from 1.8 million to 2 million to 4 million to 6 million now.

And this is all public information.

You can uh Google it or whatever, and uh it's publicly out there.

CEO salary.com.

So this is my ugly eight up here.

I think they want to go up to eight, double it to 12 perhaps.

That'd be nice.

Um the CEO has doubled their salary.

What I'm trying to say, if I may, is this is a completely unfair, we're completely against it.

The numbers don't lie, even if Texas Gas One does lie.

Thank you.

Thank you.

The next speaker is Angel Uyoa.

Angel Uyoa.

She will be followed by Veronica Caramajal, Wesley Lawrence, Felipe Agunia.

Good afternoon.

You have three minutes.

Good afternoon.

All right, well, uh, thank you to those that have presented today, and recommended denial of the rate increased as proposed by Texas Cas.

I'm a constituent of District 8 here in El Paso.

And I'm also all for denying one gas's um proposal because investments, equity, and making up for profit loss is not ratepayer responsibility.

And I, in my day-to-day job, do work with organizers and constituents in the Rio Grande Valley.

I know how much they are already burdened by costs from multiple oil and gas facilities.

They also have SpaceX plus border wall costs, but to subsidize other cities should not be on us.

To pass the financial responsibility from one overloaded community to another is not a good practice on Texas Gas Services part.

And El Pasoans are already stacked with proposed rate increases.

So El Paso Electric is still trying to impose their current proposed proposed rate increased increase, probably about the third we've seen since they were bought out by JP Morgan, and we'll probably see more of these if the meta data center is constructed.

And especially as the winter is coming, an increase on a gas bill is extremely dangerous.

Rather than constituents having to break our necks to figure out how to pay this, the railroad commission should consider that community members would rather go without.

And as the weather has been so fickle over the past years, we have no idea how this winter will go, and we have no idea how brutal the cold will be for us.

So this increase is incredibly unjust all around.

You saw the presentation.

And if the point to protect our community's well-being with the changing seasons coming doesn't hit, then look at this through an economic stand point.

El Paso ratepayers are tired.

And if you're going to throw community initiatives in our faces to justify charging us more money unnecessarily, then take it all back because at this point, utility companies are not company partners.

The community does not and should not trust any utility company that twists our arms to line their pockets.

So do not burden, put the burden of paying for your utility pitfalls on us.

So thank you for taking public comment from the community, to the railroad commission, and to everyone who has advocated to deny this proposal.

Thank you.

The next speaker is Veronica Carabajal, followed by Wesley Lawrence, Felipe Acunia.

Good afternoon.

You have three minutes.

Good afternoon.

Good afternoon, uh Mayor and Council, Maronica Carvajal, community organizer with the Sembrando Esperanza Coalition.

Our coalition wants utilities that are affordable, reliable, and healthy for us and the environment.

We are asking for the following.

Number one, we're asking that all of the comments that have been submitted today, whether they be in person by phone, electronically, um, or in writing, be sent to the railroad commission and to be submitted as part of the record.

Um we are asking that you say no, that the commission ultimately, but the city definitely say continue to say no to an increase in residential rates, a no to increasing the profit margin to 10.4%, no to merging with and subsidizing other areas of Texas, and no to um any upfront costs related to data centers, especially the metadata center.

Uh we are concerned about utility companies paying for those um services for the data centers and us having to subsidize them as residential rate payers.

Our coalition is made up of nine neighborhoods, eight of them are in the city, um, seven are south of the highway, and um the ninth one is Montana Vista.

The median income in our Sembrando Esperanza neighborhoods is $35,000 a year.

So we looked at how both the increase in electricity and gas bills will affect the lowest income El Pasoans.

Um the table included in the comments that I just provided to you breaks down those numbers.

Um, as you heard, Texas Gas Service has two different categories of users, the small users and the large users.

That is not based on the size of your house, it is based on the historic consumption in your household.

Um we recommend that every El Pasoan call the gas company to make sure that they're in the right category because some are paying more up front than others.

Um we looked at what the poorest um El Pasuans are going to have to pay in their utility bills for energy, both electric and gas.

Their income is about 11,000 a year, and that's about 60,000 families in our county that have to survive with that little money.

It is recommended that all of us pay 6% or less of our income into energy usage, electricity and gas.

It doesn't include water.

The poorest El Pasoans are already paying 14% of their income towards these two bills.

If the both the electric company and the gas company get their way, this amount is gonna go up to 18%.

If they're a large user, it's 21%.

For the the folks that are making $34,000 a year, this is going to put them on the brink of not being able to afford gas.

And we all know that not having gas in our community is both a health and safety issue.

We ask that you stand with us, uh the people, and not with profit uh making um utility companies.

Thank you so much.

Thank you.

The next speaker is Wesley Lawrence.

Mr.

Lawrence Star 6, please to unmute your telephone.

Wesley Lawrence, star six, please.

Wesley Lawrence.

Good afternoon.

You have three minutes.

Can you hear me?

Yes, sir.

Hi, good evening, uh, Mayor Johnson and Council.

I just want to start off by apologizing for not being able to make it there, but like many working class families in our community, a lot of us are being stretched in.

Uh I currently work in a retail environment, and I can tell you uh that because of record inflation, people are spending less and less money every single day.

Um, and that should not be at the behest of special interest groups, it should not be at the behest of major uh corporations or our utilities.

You know, I've been speaking with hundreds of El Pasoans across this great city, and many of them are stressed to the max.

Our bills are going up, but our pay is staying the same.

I'm gonna ask you one simple thing.

Stand tall with your constituents and stand tall against these outrageous increases and actually deliver solutions that work for our people.

If we have to have a rate increase, I think it would be the best responsibility of the city uh to work with a lot of these nonprofits to get them the funds to help a lot of these uh low-income individuals that are suffering day in and day out.

Uh if you're not able to do that, then we really have to have a serious conversation as a city on how we're going to really deliver affordability, uh, which includes utilities, which includes ensuring that we have access to high paying jobs without having to worry about catering to these special interest big donors.

Uh to thank you for your time and thank you for everything you're doing.

I ask you to vote no on this and urge those of the Sector Rail Commission, which we know typically do not have our best interest at heart uh to stand against this as well.

Thank you.

The next speaker is Felipe Acunia, followed by Saul Gonzalez, Patricia Osman, Mary Woodruff Herman.

Good afternoon.

You have three minutes.

Good afternoon.

Uh good afternoon, Mayor.

Good afternoon, uh, City Council.

Uh I'm also a member of uh the Sembrano Esperanza Coalition.

My name is Felipe Acunia, and I have a very difficult time speaking uh in a public setting, but I want my voice to be heard.

I should be at home enjoying my retirement.

My reasoning to speak up against the Texas gas rate hike is because of the mental and financial stress that is put on Alpasuans.

The words rate hikes, taxes, fees, insurances, tariffs, medical care, co-payments, and the cost of living is eating away at our American dream.

We can no longer afford homes, new cars, education, or health care.

Feels like these utility companies are trying to squeeze every drop from like from a sponge and have a firm grip and start squeezing and squeezing until nothing drops, and then squeeze again.

What are we to do?

Just take it or fight back.

You give us no choice.

I can't take a cross-country trip to visit my granddaughter because what little savings I have, I must save for a rainy day.

I live in an area where structural damage is common, pollution is highly concentrated, caused by Union Pacific.

Our health is at risk.

Life in El Paso can be brutal.

Thank you.

Thank you, Felipe.

The next speaker is Saúl Gonzalez, followed by Patricia Osman, Mary Woodruff Herman, Justin Waltman, and Joshua Simmons.

Good afternoon.

You have three minutes.

Good afternoon.

Hi, good afternoon.

Hi, Mayor, members of council.

My name is Saul Gonzalez, and I'm an organizer with Sembrando Esperanza, and I'm a resident of District 3.

And I'm here because families in El Paso are being pushed to the edge.

Every major utility in our city is expected to increase electric gas.

And even soon, even our water bill, while your new maintenance fees are being discussed, and wages stay exactly the same.

People are being squeezed from every direction, and the 27% gas rate increase being proposed.

It's not only excessive, it is fundamental on just.

Thank you.

The next speaker is Patricia Osman.

Ms.

Osman star six, please to unmute your telephone.

Good afternoon.

You have three minutes.

I want to make sure that uh Mayor Johnson does clarify because he does have a motion to approve, although he did kind of switch it to approve staff's recommendation.

Staff's recommendation is to deny.

So I want to make sure that Mayor Johnson is aware how he proposed that motion.

What they are trying to do is get a blue city to pay for red communities.

No different than California pays low more into the federal system than in Texas tapes.

That's what Texas Gas is trying to do to El Paso.

The thing is that El Paso is not the fourth largest economic driver in the state of Texas.

Like California happens to be the fourth largest economy in the world.

So they want to put a higher burden on citizens of El Paso to fund a low income as your previous presentation on the housing showed.

A low income community who's already struggling to even try to get into a home or get into rent.

They want to put that burden on our citizens to make up the difference for other communities that voted against their own interest.

Communities that do have those issues do have those weather-related problems.

Yes.

Those were weather events we didn't have a problem with, like the rest of Texas, because of our location.

And no, we should not be further burning a low-income community.

Nickel and Diming, this community in their citizens to fund corporate welfare on any scale.

It is shameful.

I I'm very appreciative for some of the members who have flat out made sure that their response is they don't want to abide by this approval.

I do want to make sure that Mr.

Johnson clarify his motion to approve.

It should have been to deny.

Thank you.

Thank you.

The next speaker is Mary Woodruff Herman.

Followed by Justin Waltman, Joshua Simmons.

Mary Woodworth Herman.

We'll move on to Justin Waltman.

Justin Waltman.

Joshua Simmons.

Joshua Simmons.

I see a phone number in the queue.

If you'll if are you Mary Woodriff Herman?

Yes.

Hello?

Hello.

Your name for the record.

Joshua Simmons?

Go ahead, Mr.

Simmons, you have three minutes.

Okay, thank you.

Good afternoon, City Council, Mayor Johnson and distinguished city staff.

I would like my name is Joshua Simmons.

I am a constituent and resident of District 5.

I come to you today to make comment on behalf of myself and humbly request that aside from all the opinions expressed today by the elected members of the council and as well as many of the uh residents that have already spoken up.

Um not much I can ask uh to add to that, but I would like to uh be in solidarity with their humble request for the denial of this rate case by TGS.

Um this is an effort from the slave masters of TGS, their donors to promote that energy dominance that is so toughly beaded upon the chest, um, then we should also have allowed in the state the diversification of the energy portfolio, particularly that which would benefit our region greatly.

So with that, I just want to commend every one of the El Paso residents that uh are affected by this rate case for coming out today for voicing their opinion and for um and collectively we are all asking for a denial of this rate case, and I'm sure that I'm I'm sure that many of the residents participants will uh be following up with letters uh be directed to the railroad commission of Texas.

Uh thank you for your time and uh I look forward to hearing the wonderful news of the denial of this rate case in the future.

Thank you.

Thank you.

Mayor, that concludes public comment on this item.

Okay, Ms.

Brian, would you read uh into the record what we're voting on?

Mayor Pro Tem Chavez was going to read the resolution, I believe.

Okay, yes.

Mayor Chavez.

Thank you, Ms.

I know we're we're a little tired.

Thank you, Mayor.

Thank you, Ms.

Prime.

Whereas Texas Gas Service Company, a division of One Gas Inc.

TGS or the company, a gas utility distributes natural gas within the city limits of the City of Al Paso pursuant to a franchise originally granted to Southern Union Company on February 22nd, 2000, then aside to one OK Inc.

and subsequently assigned to one Gas Inc.

the parent company of TGS.

And whereas on June 30th, 2025, TGS filed with the City of El Paso its statement of intent of Texas Gas Service Company, a division of One Gas Inc.

to increase rates within the company's incorporated areas of Central Gulf, West North, and Rio Gran Valley Services Area's application, and propose that the rate change should be effective in 35 days from that filing date.

And whereas, pursuant to the Gas Utility Regulatory Act, Gura, Texas Utilities Code Section 103.001, the City of El Paso has exclusive original jurisdiction over the rates, operations, and services of TGS within the city limits of the City of El Paso.

And whereas on July 21st, 2025, the City Council has local regulatory authority suspended the proposed rate change for a period of 90 days beyond the date the change would otherwise be effective in order to determine whether the rates are appropriate, fair, just, and reasonable to ratepayers.

And whereas the City of El Paso hired and directed legal counsel and rate consultants to prepare a response to TGS's requested system-wide rate increase and proposed consolidation of service areas.

And whereas the city council finds that the rates and proposed consolidation of services areas proposed by TGS's rates are unreasonable and unjustified, and the rate request and consolidation should be denied.

And whereas the city council has determined that the amount of the rate increase request, proposed consolidation of service areas, rate class, changes, and the rate design proposals in the company statement of intent are unreasonable.

And whereas the city council has determined that the appropriate action in light of the nature of the filing is to deny the request in its entirety.

And whereas Gura and 103.022 provides the reasonable costs of services incurred by the City of El Paso for participating in or conducting rate making activities are to be reimbursed by the regular regulated utility.

Now therefore be it resolved by the City Council of the City of El Paso.

Number one, that the application, including the proposed rate increase, consolidation of service areas, rate class changes, and rate design changes identified in the company statement of intent filed on June 30th, 2025, are in all things denied.

Number two, that TGS is directed to reimburse all reasonable rate case expenses incurred by the city in relation to the application.

Number three, that the city manager shall so notify TGS by having a copy of this resolution delivered or mailed to the chief executive officer of the company.

Approved by the city council of the city of El Paso, Texas.

Ms.

Ryan, do we need another well?

The motion was made by representative Pierre seconded by Representative Limon, and this is to approve the resolution as read into the record by Mayor Potential.

Would you call for the vote?

Yes, sir.

This is a to approve the resolution to deny the rate increase.

On that motion, call for the vote in the voting session.

And that motion passes unanimously.

Thank you.

Thank you, everyone that came out to speak.

Ms.

Bryan.

Did you want to go to item four?

You guys ready to move to the next one?

Yes.

Okay.

Item number four is presentation and discussion providing an overview of the transportation user fee process requirements, key policy considerations, and next steps.

Mayor Representative Limon.

Mayor I'd like to make a motion that we delete this item, please.

Okay, there's a motion in a second to delete this item.

Item number four.

Any discussion?

Ms.

Prime, will you call for this vote?

Yes, sir.

The motion was made by Representative Limon.

Second.

I'm sorry.

Representative Canales wants to go ahead.

Yeah, I think it's worthwhile to at least see the presentation and show the information to the public so they can hear from staff.

I'd ask that we at least hear the presentation.

It is only a presentation, and there is it's not posted for action.

There's no decision to be made by the council today.

I got a motion and a second.

Uh representative Chavez.

Did you want to say something?

Thank you, Mayor.

Sorry.

Thank you, Mayor.

Um I know it's not listed for action, yet there is some engagement with community members, which has me question the direction council is giving to staff to engage with the community if there's no action to be taken at this time.

I think we should vote on the motion to delete it by Representative Limon and second by Representative Fierro.

Yes, sir.

On that motion to delete, call for the vote.

And the voting session.

And that motion passes five to three.

Representatives Chavez Trejo Niño Pierre Limon voting aye.

Representative Acevedo Rocha Ganales voting aye.

Nay, the motion does pass.

Okay.

Next item, Ms.

Prime.

That brings us to the executive session items.

Okay.

Is there a motion to adjourn?

So move.

There's a motion and a second to retire to executive session.

All in favor?

Aye.

Aye.

Anyone opposed?

And the city council of the city of El Paso may retire to executive session pursuant to section 3.5A of the El Paso City Charter and the Texas Government Code Chapter 551.

Sub Chapter D to discuss executive session item 3, William C.

Haywood versus El Paso Police Department et al, clause number 320-CD-00114 under 551.071.

Executive session item five, application of El Paso Electric Company for approval of an amended distribution cost recovery factor.

PUC number 58910, HQ number utility-73 under 551.071.

Haywood versus El Paso Police Department at all calls number three twenty dash cd zero zero one one four under five five one point zero seven one executive session item five application of Al Paso Electric Company for approval of an amended distribution cost recovery factor PUC number five eight nine one zero HQ number utility dash seventy three under five five one point zero seven one executive session item six discussion on economic development opportunities in downtown al Paso Texas HQ number twenty five six zero two eight under five five one point zero eight seven and executive session item seven discussion on economic development opportunities in downtown alpaso Texas HQ number 25-4395 under five five one point zero seven one five five one point zero seven two and five five one point zero eight seven these matters are taken into executive session under five five one point zero seven one consultation with attorney five five one point zero seven two deliberation regarding real property and five five one point zero eight seven deliberation regarding economic development negotiations it is two twenty five p.ms prime i think we're ready there's the motion and a second to come out of executive session all in favor anyone opposed the meeting is back in session at 331 p.m we are on eX one mayor potem ex one I already read into the record earlier today but there's no additional action there's uh we have public comment on that miss prime i don't see miss no i don't see miss osman in the queue so no action thank you no action ex two no action we have public comment on that one too miss prime yes sir that from uh miss osman i don't see her in the queue okay x three no action thank you ex four no action thank you ax five motion made seconded and carried that the city attorney in consultation with the city manager be authorized to hire and retain outside counsel and any other necessary consultants and to file an intervention in the application of el Paso electric company for approval of an amended distribution cost recovery factor under the Texas Public Utility Commission docket number five eight nine one zero and matter number high q utility dash seventy three and to take all steps necessary including the execution of any required documents in order to effectuate this authority is there a second all right representative masavedo thank you mayor just wanted to say that I've received 1750 from the El Paso electric employee back okay miss prime we have public comment on the X5 yes mayor I don't see Ms.

Osman in the queue okay call for the vote yes sir the motion was made and read it to the record by mayor potem chavez seconded by representative limon on EX5 and this is to retire hire and retain outside council on that motion call for the vote representative aye thank you in the voting session and that motion passes unanimously let's take ex six right misses no action thank you we have public comment on EX6 yes sir I'm I'm miss osman is not no longer in the queue okay ex seven no action just want to make sure public comment again yes sir and she miss osman has left the meeting okay all right second there's a motion miss there's a motion and a second to adjourn the work session all in favor anyone opposed and the work session for Monday November seventeenth twenty twenty five is adjourned at three thirty three p.m thank you council