So thank you all for being here today.

The spring financial retreat is really one of our most important conversations that we have every year.

It gives us the opportunity to step back from day-to-day operations and to really focus on the bigger picture, where we are financially, where we're headed, and also how our resources align with our community's priorities and to allow time for us to celebrate some things as well.

So we'll have a couple of celebration moments throughout the next two days.

Across the valley, municipalities are facing growing financial pressures, many of which are driven uh by at the state level and are outside of those municipalities control.

Um the issues that have been for Gilbert decreases to our revenue streams that are put in a train on ongoing funding.

And so we uh what that means is we need to explore alternate approaches to ensure that we continue to maintain the high quality of life our residents expect.

At the same time, I want to celebrate this this part.

We have strong leaders and we have a dedicated workforce.

And we have proven financial policy.

Um that have really served us over time and have helped me for what it is today.

But also that uh we'll continue to serve as well into the future.

This retreat is not meant to solve every issue.

It's really going to be a series of sessions that we will work through together and an opportunity to provide clear guidance to our staff as we prepare not only the upcoming budget, but also as we tackle some of the challenges we know are before us.

You continue to have these discussions, but they are really important for the community center really acknowledging for doing that.

I also want to thank our leadership team, the work you and your teams have done to not only serve our residents at the highest levels, but also managing costs, improving efficiencies, and adapting to changing demands has not been easy, but it matters.

And so I really appreciate that.

We will likely have some tough conversations.

Surprise, surprise, it feels like every retreat.

We have some tough conversations, but that's what these are for.

So thank you again for your time and engagement over the next two days.

And I look forward to a productive and collaborative conversation.

Thank you.

And so I want to allow Matt to provide something.

Opening costs as well.

Thank you, Don.

Well, good morning, everyone.

So a couple of things first off.

They gave me a portable mic to wear, a loud mic to wear.

I would also remind you that Vice Mayor Angie Rani is joining us remotely for this conversation, which means for him as well as for anyone else who's listening.

Thank you.

All of your comments are being picked up by microphones that are in the ceilings here.

And those those microphones don't turn on and off when when you're when you call when you're called upon to speak, they are on all the time.

And that means that even your side conversations have the potential to block uh the vice mayor from being able to hear what's going on or for others to hear what's going on as well.

So I would just encourage you if you're going to have side conversations, take them out of the room so we don't interfere with the feed that's going on, and just remember the microphones are always listening.

Okay?

Alright.

So uh good morning.

And Chuck, uh just you might want to confirm that you can hear us as well.

I think you can unmute yourself to say hi, and uh, you also can just uh in teams you can flag the little uh hand raise button, and staff is here with that monitoring and will let me know if you get into the conversation as well.

So hey, fantastic, good to hear you.

So for those of you who don't know me, I'm Matt Merman.

In my practice, which is social prosperity partners, I serve as an independent civic facilitator, and I think this is the third year in a row for this room retreat.

I'm honored to be your facilitator.

My role is simply to hold space through this council and with staff alongside you to ask questions, hear each other out, explore options so that by the end of our time together, you as council have a clear direction about how these choices will be approached.

In my role, I don't advocate for any particular outcomes.

I'm here to protect the integrity of your process and ensure that the conversation remains focused and inclusive and constructive.

And to any residents who might be here or watching online, thank you.

Uh, this is a working session for the council.

It's intentionally transparent.

You deserve to see how direction begins to take shape before formal decisions are made.

So let's briefly acknowledge the moment that our community is navigating.

Uh, much of which council you have already been working on for many months.

Gilbert's vision speaks to being the city of the future.

Anticipating change, creating solutions so the community continues to thrive.

That future is shaped in conversations like this.

In the seriousness and the sensitivity and the creativity applied to the choices before you.

Inflation and uncertainty affect residents and businesses and municipal operations.

Costs rise, whether action is taken now or later.

There have also been state level changes affecting municipal revenue, the formation of the of Santan as a town, the ending of the rental tax and other possibilities, even still being discussed, that can impact how cities and towns fund essential services.

Those structural shifts frame the landscape that you're all working within.

And at the same time, key elements of infrastructure are reaching the end of their expected lifetime and maintenance and replacement are a part of the normal stewardship, but they come due all the same.

Every council inherits circumstances shaped by prior decisions.

Some made sense at the time, some were deferred.

That's simply the rhythm of governance.

The responsibility now rests with those serving today.

That's not a blame, that's just a reality.

Public attention is understandably high.

Residents are attentive to costs and to how decisions are made.

That makes clarity and steadiness here especially important.

So let me also clarify what today is and what it's not.

For anyone listening, especially.

This is not a meeting where final decisions are going to be made.

Those can only occur in a properly agendized council meeting.

Today and tomorrow is about understanding.

It's a, let me repeat it.

Today and tomorrow are about understanding.

It's a place to ask questions, to think out loud, to explore options, and to deepen shared understanding of the choices ahead.

Staff benefits from hearing council's questions and concerns and priorities.

That's what allows staff to prepare options that are aligned with what council is genuinely interested in examining further.

Direction here informs the preparation that will be done later.

Council and staff have distinct roles but share responsibility.

Council provides direction.

You've heard me say this before.

Council answer asks questions that begin with what and why.

Staff answers questions that begin with how and when.

That partnership works best when information is shared candidly and received thoughtfully.

So as we move through our agenda, I will, this won't, this is simple how I've done this in the past.

I'm occasionally going to ask for your help in getting clarity.

I'm going to ask you green, yellow, or red, council members.

Green means that in your heart of hearts, you're 90% or better.

90% doesn't mean that it's perfect.

90% means that I'm okay with that.

Yellow is 80% or better.

And 80% or better.

It may be that you would have preferred something else, but you'd be okay with this.

You could live with this, it would not be, it would not be terrible.

It's an okay, it's an acceptable way to proceed.

But in your heart of hearts, if we're talking about something and I'm asking you for clarity, if you're below 80%, you have not just the right, you have a responsibility to flash red, to bring the conversation to that point, and make sure that the conversation around that desert, that it's that we we give it the necessary time and attention.

I can't promise that we're going to set direction today.

We're not making final decisions, but we are looking for guidance.

I can't promise that we're always going to be gray and yellow on whatever guidance we're looking for.

There may be times that we just can't get there.

But I'm going to do my best as your facilitator to see if I can't find the sweet spot where at least we can give staff clear direction on how to proceed, at least at the green and yellow phase.

From time to time, you know that I will restate what I'm hearing, simply to confirm clarity, ensure that we're accurately capturing where things stand.

Please know I am not leading you.

I am not trying to take you, Don can come to me and say, hey, get council to agree to this or get them to this.

That's not my role at all.

But it is my job to restate what you say, make sure that we have clarity around it, and make sure that staff is hearing clearly the guidance that you're giving it.

So I will do my best in the moment to try to repeat it, but I'm not leading you.

I'm just trying to make sure that we're all on the same page.

And finally, I would just say that you've all invested significant time and effort thinking about these issues.

Today, and tomorrow gives you space to compare perspectives, and for council members to collaborate, to lean into each other's understanding and expertise and experience to go even deeper.

I would respectfully remind everyone that the city of the future isn't built only on vision statements, and it's not even going to be based on the specific directions or guidance that you offer today.

The city of the future is built on the discipline, the care, the thoughtful process that you bring to making these choices together, and I'm honored to help you move that conversation forward.

So it's time to begin.

First on our agenda, we're going to talk about the advocacy center, Eric.

I'm not Eric, but I'm not Eric.

Chief, you're definitely not air.

So unfortunately, Eric is under the weather, but I happen to know a little bit about the topic.

So the good thing is we should be all green lights on this because there's no decision we're going to make.

We celebrate where we've where we're at and where we're heading.

No problem, 70.

Yeah.

Alright.

So we will begin with the Gilbert Advocacy Center.

We want to give you an update on where we're at and where we're going in the near future.

So we'll provide you some project updates, some operational updates, and then looking at next steps.

So we'll revisit our why.

I'll explain that again.

Then I just did project updates, operational updates, and then what's next.

So back in 2017, I think it was in the odd years, 2017, 2019, our community needs survey.

One of the high priorities for our community was services for our community for victims of human trafficking, sex crimes, child abuse, and the advocacy center is fulfilling those needs.

And so with the community's impact with council support, we've been able to create our advocacy center, which is under construction.

We are close to keeping pigs one done.

We took it into it.

If you recall, you've seen this several times.

With the normal process, we do have, as a reminder, we do utilize Mesa and Channel's advocacy centers.

And so the concept is there, but we are taking our victims away from home and out of the Oilberg and going to other cities where they're not familiar, and oftentimes steal a disruption in and delay in getting those essential services for our victims.

So the graphic on the left, we get the job done, but it's somewhat convoluted at different locations at different times, and it's weird our goal is to streamline the process to minimize the trauma to the victims.

So the process on the right is more of an advocacy-centered focus where the victim is at the center of everything.

Everything comes to the victim, and we focus our attention on providing those services for the investigation, through medical exams when needed, and on to prosecution and now counseling, which I'll give me in a couple slides.

When we did when we got authorization for this project, we did a lot of research.

We went to Texas, we visited several locations, the Children's Advocacy Center in North Texas, the Children's Advocacy Center of Cullen County, which we stole a lot of ideas, and we really loved their concept there.

The Dallas Advocacy Center, and then the Child Safe in San Antonio.

We went to San Diego and toured one-side place, which is a county-run advocacy center in conjunction with our prosecutor's office.

And then we went to Tennessee, a metro uh version of an advocacy center, and then in Arizona, obviously, we looked in our backyard, looked at Mesa Channel Scott Cell Phoenix, and the Southwest has a five agencies combined in a one location.

Kudos to and thank you to Chuck Bongiolani, our Vice Mayor, Bobby Buckley, and our former council member Captain Kilkey for joining us on those tours.

Once we did the initial one, we took them back to show them that that concept.

And really took the project to the next level.

So looking at that design we showed you before on the left side, you see what we are initially inspire aspiring for.

After we, and you can blame the weather for this.

We we had a long delay in Texas, and we really had a good chance.

So we wanted to focus on our victims.

And in Cullen County, they do aftercare.

So they did counseling services for the community.

And so we we love that idea.

Obviously, that changed the scope of we had already started having discussions with P design.

And we really love the idea of not only doing the investigation, but then taking that and expanding it and providing that best service for our community.

And so bringing in counseling services was our next step in the evolution, and obviously that expanded the footprint as well.

But what we saw in Collins County was a high success rate in prosecution, reduced recidivism, but also keep in mind they were only doing child crimes.

They weren't focusing on adults.

And so again, that's where we're unique in the fact that we're doing this not only for victims, uh for our uh youth, our underage kids, but also for our adults, which complicates things, but we wanted to make sure that was done.

And I'll also throw out kudos to Leah throughout this project.

Um, I I can sometimes be hard-headed on some of my ways, and so this is a new concept in Texas.

Kind of had a vision, if you will.

Sorry.

It's been a long process, and uh so thank you to Leah for not saying no and pushing the limits and getting us to where we are now.

Um kudos to Elena.

Once we actually started doing construction, I kind of stepped back.

Um, the CIP team, Susanna, Jack, Eric, and they're the Lion Mass people, so I won't try naming everybody.

But everyone has had individual process with this budget, keeping us on target.

Um, and this is unique and okay to that medical defunding of using federal money.

We had to do things differently.

So with the vision of management and with the blessing and support of council, we were able to move into phase two, which is going to provide therapy services for our victims.

Uh getting into our mission and vision.

We spent a lot of time, and we brought in a lot of our existing uh nonprofits and uh dignity health, honor health, um, a lot of the experts in the field as we evaluated how the advocacy center would be run.

And um obviously PD is gonna have a component of that, but that's when we determined that the best course of action in the future would be to create its own department, and that's where we created the advocacy center uh department that will run the non-investigation site in conjunction with the police department.

And so, in those meetings, we we evolved and developed our mission and vision focusing on what are we really trying to accomplish.

Um the Gilbert Abbasid Center our mission statement is a place uh of hope for our community, providing an environment that fosters resilience and healing and providing holistic services as victims of crime recover from trauma and navigate the justice processes.

So we created this acronym to focus on the values if you remember when we did our uh groundbreaking or shovels, had this uh acronym on the on the handle to remind us of what's important and serve, which stands for and then we develop that support, encourage, recognize, validate, and empower.

Again, everything is focused on the victim.

So project updates.

Uh a year ago, a little over a year ago, in January, we did our groundbreaking, and then they got to work to leveling out that field, and by March, they started playing the footage uh for the building, and you can see where we were at a year later after groundbreaking.

We actually had the building up, and like any construction project, it looks like it takes a long time, and suddenly it's up out of the ground and it looks amazing, and then it slows down as you start moving on the interior.

That's where they're at now.

Uh so a lot of progress, they've really done a great job.

A couple other views of uh the two down here, the two memes, if you will, that is the therapy section.

Um overview from up above.

So phase one timeline.

Uh we obviously, as I mentioned, did the groundbreaking in January of 2025.

We went on to the foundational uh boring, uh, the beam sign.

We did our best to involve the community, council, all of our uh groups that have supported us, and it's meaning activities.

It is a community uh building and the processes for the community.

We've done everything we could to involve not only you all but the community as well.

The topping out ceremony, um the drawing in uh in October, uh about six months, eight, I guess it'd be 10 months later.

We were at about 50% complete.

Uh just last month we had our hard hat dinner, which was the inaugural uh fundraising event for the public safety foundation.

Sorry, not the public safety, the Gilbert Advocacy uh foundation, which Kathy Tilkia is now uh running in her retirement.

Uh we will be at 75% complete come April, and then shortly thereafter we will be at substantial completion, and we'll uh over the next few months after that begin moving in and uh getting ready to do a uh random opening in the fall, winter, uh sometime roughly September to November, and um we will be open for business.

Uh a few morals uh from those processes that I mentioned the groundbreaking, the uh signing the cement, signing the bean, and then placing that thing, which is roughly above the uh um the break room in the advocacy center.

So budget update.

Uh as you know, we use federal funding, ARPA funding, so that hated our timeline.

We have to be done with this project no later than December 31st of 2026, and we will be.

We are on schedule out of that ARPA funding.

We had 23 million dollars uh from the feds uh for that, and then we had 16 million of general fund uh from town funds to complete phase one.

So you can see as of December of 2025, where we were at uh with the money spent at that point, uh roughly six million dollars available from ARPA funding still, and we'd only spent just over a half million uh from the town, and we still have a lot to purchase in and pay for.

Um just last night we signed up on one of those contracts for the empefinity.

Uh so thank you for that.

Uh so overall, our budget was 43 million dollars.

Uh the good news is um we had $4 million in savings based on we we had a healthy contingency.

We were seeing the cost escalations continue to rise, and with a hard bid, we uh anticipated some changes.

Uh but we've done a really good job.

You are never gonna be 100% perfect on a construction job.

Um, so we will have some changes.

But with the amount of time we took in um perfecting that design as much as possible, uh, that limited the change orders, which reduced cost, and which some of that continues to be healthy in for those unanticipated changes, those oops moments.

Um, and so that's the good news is the four million came back to the general fund, and currently the budget now is 39 million dollars for phase one.

So, what's coming up next?

Uh we are working on phase two and phase three that began uh the spring.

In uh throughout the next six months, uh phase one will be reached substantial completion.

We'll be activating the building and moving in, and we're continuing our hiring and operations.

And then, as I mentioned in the fall, we'll do our grand opening.

So, phase two and phase three.

We have already done the uh RP process, and we have selected DFDG as our architect for phase two and phase three.

They are the current architect for phase one.

And then PMCM uh selected.

They are currently part of phase one, they're the PMCM uh deal as, but they are on contract for us to help us manage phase one.

So very familiar with the projects and we have not uh we had some preliminary design of phase two.

You see in blue, uh, roughly the area of the phase two and phase three.

Don't take that to heart because that's just a template.

We will design phase two and phase three based on our needs, and based on um that space we are confined by the space that's there that you see.

Um, but it can be any type of design based on those needs.

So we will begin that process.

Uh we should be going after our CMAR uh within the next six months around fall, uh late summer, early fall.

And so as we begin design, we'll get the CMAR included and try to make sure we have numerous sites on the project so that we can do it right.

Operational update.

Uh we announced that the hard hat gala, uh Trinity Donovan as uh graciously accepted uh our offer to be our first advocacy center director.

Uh Trinity has led a SEND for 15 going on 16 years and uh experience with city of Chandler and on their council and a lot of nonprofit experience, so we're happy to have her on board.

So we're happy to have her on board.

She will start in roughly 10 days on March 16th.

She'll be on board with us, and so we're happy to have her.

And now that we have her, we can start working on the rest of our hiring.

So this is the advocacy center uh positions, none of the PD, but excuse me, just the advocacy center positions.

Those in white are ones we all already have hired.

Um as you're aware of the GYAR, the Guru Youth and Adult resources are counseling, that's for the uh vendor side.

That will remain in the court building, um, but they will become part of the advocacy center.

So we're focusing not only defender but also the victim, uh holistic approach to those crimes.

So those in uh light blue are ones we still have to hire.

So now that we have the advocacy uh center director, I believe Monday is when the assistant director will be posted for recruitment, and we'll get that process started, and then shortly thereafter, we will begin uh the uh counseling manager and the uh admins and the therapist that will be part of that project in FY27, subject to approval in the budget process.

We will be adding uh customer service specialists, the data strategist, and uh the counseling managers.

So excuse me.

Oh, this one isn't done either.

Hello?

Good point.

Explain the looks I was gonna need.

Oh, yeah.

All right, we'll start over.

Uh FY27.

So the ones in blue, there's basically a core position that we were asking for in FY27, and that'll be operational.

Um subject to budget approval, as you'll see here shortly in the next uh couple weeks.

So outstanding uh our outside agencies, uh, as I mentioned before, honor health dignity health, ascend uh the Gilbert Advocacy Center Foundation is gonna do a lot for us in raising funds for supplies, clothing, diapers, uh the essentials that we need to provide uh to the victims and the conference as they come through.

And obviously the Department of Child Safety.

We already have uh three of their workers within the PD building, and uh just logistically, there's still a few things for us to figure out, but for the time being, Trinity will be working out of the training wing of the PSV building and training room one we've been on more staff, that's where they'll be now.

Once one is open, we'll be able to get a limited number of staff in phase one that's more operational as opposed to offices.

Phase two is where everyone will be working out once that's built.

Um pictures from our our gala from our hard hack uh those who attended, thank you for being there, and those who donated, thank you for your uh cheerful contribution.

Uh, we really had a good time as a good kick-off uh for the advocacy center.

So, next up, as I mentioned, we'll be continuing to fill the FY26 approved positions, and uh we are having an ongoing uh discussion with the county attorney's office reference forensic nurses.

There is a very limited number of forensic nurses, and so um we are trying to assure uh that we have the availability of forensic nurses.

That is going to be a challenge.

So, we are also talking about some options of how to um make sure that we have that need available.

So we are working with all of Honor Health and Dignity Health on those issues, and then onboarding.

So, this summer and fall, we've got a lot to do.

Um, this uh the advocacy center will be accredited, and that'll be one of the projects for the management team is to begin with the accreditation process and developing policies and procedures as we move forward.

And with that, uh thank you.

Once again, um, a lot of people in here had a piece of that.

Uh, as I mentioned, council members the Alina budget of making sure we're on target uh Susanna and Jack and her crew for GSP.

There's a lot that we'll do in the P project, and uh we appreciate a lot of support.

With that, um questions that you have questions, comments?

Oh, there's a hand from go ahead, Vice Mayor.

Yeah, anyway, um in the future, not right away, but in the future, has it been any kind of consideration or thought about um being able to do insurance companies?

We have not had that discussion.

Our goal was for a couple reasons was to avoid any of the HIPAA regulations as far as provide two.

That creates a whole different realm of issues.

And our goal was to provide now, it's going to be limited.

That's not ongoing.

Our target initially is 12 visits per client.

And at that point, and that's based on our assessment of if you need more than that, it's time for some more deeper dive.

And so we will work with our nonprofits, and at that point, whether it's insurance or nonprofits to help provide ongoing services beyond those initial 12 visits.

Now there could be some cost recovery, but that also comes with administrative costs as well.

So we can look at that in the future, but that is not our desire to get into medical building process and everything that comes with that, and as indicate uh it's a base to manage the rules and policies and whatnot.

Thank you.

Any other questions?

Questions, comments.

I'll just give one for your design team, and I'm glad you put this final picture.

If we've seen driving by, I think the end of the gala for all the design work, the different how different this building is from all the other town building, I think is an important note in that the service it does is different and it delineates very differently.

So just props for the final view on the space you've created and what it's gonna have an effect on the key.

Well that is it.

Green.

She thank you very much.

Thank you so much.

We are ready to move to the next item on our agenda.

That's the sewer.

Sorry, that's the utility rate study.

That's Jessica.

Hey Jessica.

Hello.

All right, I'm one of the ones that was able to speak up so that everybody can hear.

So we're gonna move into utility rate update.

Doesn't say study because there is no study happening.

But I just wanted to take a minute, you know, Don introduced the conversations over the next couple days.

All those uh difficult conversations that are gonna need to happen.

And I just wanted to take a moment to thank council for all the difficult conversations and decisions that have been made over the last four years as we looked at significant rate investments in our water and our sewer systems in order to provide some stability to those funds, um set us up for success for water resiliency, you know, as the Colorado River continues to deteriorate and there's little progress made.

We have the funding we need to finish our water plant and to drill our wells and to provide that safe viable checking water to our community.

Um we also now have um the rates in place to be able to better uh inspect, maintain, repair, rehab, and replace our infrastructure as it continues to age.

And so I just really wanted to thank council for for all those decisions and the support that we've um gotten for our critical infrastructure over the last few years.

Um and so I wanted to start off um real quick overview.

This looks like a lot um to share, but um just a few updates on our water fund, environmental compliance, and wastewater, and then do get a little bit of direction on the water resources recovery fee and a read option timeline.

So I did want to start off actually with some good news.

Um so in our water fund, um, several years ago we started with transmission main uh condition assessment, and this was um in order to improve our ability to isolate those lines when we have problems, um, take them down to do these types of inspections and then looking for corrosion and damage that has occurred so that we can get to it before it becomes a catastrophic failure.

So last year um we did inspections and we started this process on the Western Power Line Trail, and we found several locations as part of these inspections where there was damage and deterioration on the pipes that we were able to repair before those lines failed.

Um caused significant problems with our um water ability to look at water.

So um, this is Western Power Line Trail.

Um we have actually started if anybody's driven recently.

They know it's a little bit of a disaster between Rodney Bay and like Williamsfield.

Um, but that is part of our condition main uh condition assessment program.

And we're using this the same type of technology, but it's actually better in the sense that the vendor that provides the technology is on site and they're able to do the data analysis while we have that line shut down and while we have the contractor in place.

So it provides some efficiency there with us in terms of being able to repair things once they identify them a little more quickly.

So this is one of the first places that um they said we think there's an anomaly dig here, and so that's the picture on the left, and what you see is running this way across that hole is our 30 inch water transmission chain.

And what you see is running this way across that hole is our 30-inch water transmission lane.

Running this way up and up and down is a fiber optic conduit that hit the line and has caused some damage to it.

It's a little bit hard to see, but in this picture here, right there, that is deterioration of the steel casing of that water line that was caused when that conduit hit the line.

So the good news is we actually already know who caused it.

We reached out to them and they said, send us the bill when you're done repairing it.

So yay, we don't have to we don't have to pay to repair that because we found it, we found it before we have a shocket failure, and we know who's responsible and they're going to pay to replace it.

So we do still have the contractor out there, we're investigating additional locations where they've seen some anomalies in that line.

But this is a critical water line that connects the two water plants that runs all the way from the North Plant to the Santa plant, and a failure on this line in the middle of the summer would be devastating to our system.

And not only that, but it would cost 10 times more to repair in emergency conditions than it is during this control situation.

We're lucky this one is we know who caused the damage and they're gonna repair it, but there are others that were gonna be responsible for repairing as well.

So good news.

So this is not intended to be read.

Um it's a lot of information, but I did want to share there was a lot of work that needed to happen this year for the FY27 budget, which is a lot about what we're going to be talking about today in order to keep the water fund balanced within the rates that were just recently adopted by council.

Um there were more strategic deferrals of replacements and different rehab projects that are short-term solutions but are not sustainable long term.

Um, what we are comfortable with is that once we get past this large expenditure for the water plant and the wells, into the future, we're better set up with funding in order to be able to tackle this backlog of projects.

Now, some of these projects were actually deferred because they are water line replacements associated with street reconstruction projects that have been delayed because there is no funding to do the street reconstruction projects, um and the water lines are getting replaced with those.

If they were critical water lines, we would still move forward with it, but we're comfortable referring those until the streets projects can be reconstructed as well.

But overall, there was another 152-ish million dollars worth of projects that were spread out or moved beyond the five-year plan in order to get the water fund to balance in the FY27 to 31 five-year planning window.

So our team did a really fantastic job of evaluating and kind of strategically moving and shifting things around to keep the focus on the highest priority projects we have going on right now.

Um, but there's still a lot of need out there that because the right we have once we get past that five-year window, we have more ongoing funding available because of the decisions that were recently made in order to start working on all of this effort.

And that's everything on water.

So that was just a quick update.

I don't know if they want to stop their questions or just keep going.

We're gonna stop the questions.

Oh, okay.

Marty?

Um, the stuff we deferred.

Do we have and I just don't know?

Do we have emergency funds available in case something does fail on those systems that we refer?

Yes, we do.

So we did actually increase our contingency budget on the water fund this year from two four million dollars just in case we do have any emergency type situations.

We have the ability to fund those.

But hopefully, we get ahead of them, like these assessments so that they don't fail an emergency.

Um, but yes, we do have that available.

Other questions.

Okay, next up is our environmental compliance fund.

Um, and so I just wanted to give a quick uh sort of history of this fund and then um some of the uh work we've done with some carbons local partnerships to help reduce costs in this area and kind of the outlook for this fund as well in the next five years.

So this is a quick overview of our environmental compliance team because it's kind of a nebulous title, um, but they oversee our air quality.

The majority of this fund is paid for um is is doing our stormwater maintenance, our stormwater infrastructure maintenance.

Um, they also manage our household hazardous waste facility as well as our internal hazardous waste, and then it's very heavy on regulatory and permitting through the state for all of these different activities.

Every single one of them is very heavy, heavily regulated area, so they manage all those permits.

So this fund was actually just created in 2018.

Previously, all of these functions were kind of decentralized, and because of the regulatory nature of all of these different activities, we wanted to put it under one umbrella.

So this work group was created, and this fund and this environmental compliance fee was created in 2018.

We had one increase in 2023.

We did not have an increase in 2025 with the last week's water weight cycle.

And then today we're talking 2027.

So some of the things this team has done in order to help reduce costs of the fund is we we've been able to partner with the flood control district on the stormwater side and do some proactive planning, design concept reports or DCRs.

When we partner with them, they pay half the cost of that.

And then by by doing a study on a particular area, we can better determine the scope of the work that's needed in order to kind of refine the capital needs for those projects, and we've seen significant savings in those areas.

But we found we can do in this particular area much more efficiently ourselves.

And as a result of the study that we did, we were able to reduce the cost of that or the estimated cost of that project by almost $8 million.

And we also, because now we have that design concept report, we'll be pursuing some funding from the flood control district to help support the actual construction of that project, which will further reduce the cost impact to this particular fund.

We also did study at the um for the Nichols Park Basin, which is adjacent to the North Water Treatment Plant to help refine the scope of that project as well and save an estimated additional 11 and a half million dollars.

So lots of great plan now that we're able to come strategically partnered plan with the flood control district, we're able to better refine, and that's something that I know in in CIP in general we try to do more of is some of the preliminary designing in order to better understand the scope of a project so that we can get a better cost estimate for it before we actually go into construction.

So some of the other things we've been able to do, um we were able to get a $600,000 grant from the EPA to uh do a rehabilitation replacement of the crossroads pump station, which is the big palm station that um pumps all the water off of Santan Village Parkway when it goes underneath the railroad and a 202.

Um because of that's um because of the impact that that could have on those two um two facilities.

We were able to get letters of support from like a lot to pursue this grant.

We were able to actually be grant funding to do that project, um, which also helped reduce the pressures on this fund as well as some different maintenance activities, and instead of replacing entire um uh hatch bases and drainage structures, our team was able to find out a way to just replace deteriorating metal crates and in less and things that we were able to save over $800,000 on those projects.

Um in all over the last few years, the team's been able to realize about 11 and a half million dollars in budget reductions in this particular fund through all these strategic partnership partnerships with the flood control district through improving our own operational efficiency and getting creative in how we're how we're um operating and maintaining the system and just being more efficient and data-driven as that as that team continues to grow in sophistication as it as it's uh established for a longer period of time.

So we have this group stable rights going forward with all of those the efforts that they've had undertaken over the last few years.

Um, we are not projecting or recommending meeting for an increase in FY27 for this fund.

I do want to highlight that as I mentioned, um, we had an increase in 2023, we didn't have one in 25, we won't have one in 27, which means 29 would be the next that's a six-year gap.

We don't want to establish a pattern of not increasing, but because of all of these efficiencies and these additional housing funding, we're comfortable that um we are not going to need the rates right now, but want to just keep an eye on that to make sure we're keeping up with any potential market shifts in the future.

So that is environmental compliance.

Okay.

Yes.

Sorry.

This isn't a qu well, there's one question.

One well done.

That was a really good job.

That 11 and a half was amazing.

But taking that, and we talked about uh getting with our comms team about getting that out there so people can see the work you guys did and how it's contributing and stuff.

Yeah, we could definitely tell that we can definitely um highlight some of the some of the work that's done to uh to be created and innovative in that space.

So yeah, that one is is a projection right now, so you know we won't know the actual dollars until until it happens, but there's definitely things we can do to highlight, yeah, the work we take.

And Hondo, he's the manager back there, he's sitting back there right now, so he could say can you repeat what his question was?

Repeat Monty's question.

Oh, sure.

Um, he was asking if there were ways that we could work with the comms team to get information out on all the savings that we have in that one in the work.

Okay, okay.

Trying to put together uh I think it'd be better if I'll walk around with the microphone.

Yeah, I will I'm gonna be your filled on a few things for the because some of these cost savings are due to one-time monies due to cost share or due to grants.

Did you look to see whether if those monies did not come in, whether we would have needed the rate adjustments, so that maybe we could consider or evaluate what those rate adjustments may need to be in the future.

We did not specifically look at that.

Um we do have one of the things about this fund is that it's much more operationally driven and it is capital driven, and so we've been putting money into a replacement fund for all of these projects and then saving up so we can pay cash for it.

So we didn't look specifically there, there were less impacts like on the ongoing needs, and it's more of one time.

So we did not look at what increase would we need to have if we didn't get that funding because some of it's already saved up to be able to do those projects.

But that larger one that's 20 million, that one's still further out in the plan because we knew it was going to take us more time to save up for it.

So any money we can get to help out will help offset you know future needs for that for increases.

Other questions or comments just a comment.

I uh because I know Jessica, how hard you teamworked, and I know um you try not to read comments and you know and um we're asking a lot of the residents um based on the totality of circumstances.

Um has always been clear to me because I listen to you and see work you guys do in the products you put out, which is why I think it's valuable, but what Monty's saying is um all of your data and all of this information does not lie, and um there will always be people that will live in uh paper on perceptions without getting all the facts, but you have uh demonstrated to me, and I believe this whole council that um everything we've gone through was for a specific purpose so that you have ensured that we have everything we need in all of that space, water, wastewater, and the compliance in the future so their quality life does not deteriorate.

So I just want to say great job.

Thank you.

Um I know it's not easy because people beat you up, um, but you've done the right things.

Thank you.

And and I I very much appreciate that.

We have an amazing team that works really hard every day to make sure we're able to provide those services, and and thanks even to you again in the council for making sure that they have what they need to do their job and be able to provide those services.

So um it's it's really very much appreciated.

Any other comments or questions?

You can move forward.

All right, thank you.

Okay, next up is wastewater.

Um, so a little bit of a history on this one.

So, wastewater, um, where we ended uh with the last rates in wastewater was at the 95% increase in 2025 went into effect in April 2025.

Um, this fund did have that long history of moderate rate increases in the early 2000s in the 5 or 6% range, and then we did have this long gap, and then we had this large correction.

And so, what we're trying to do going forward is back to that um cadence of smaller incremental rate increases in order to um uh to just kind of keep up with that without inflation and other changes in operating costs.

But that 95% increase again is providing us the stability and that large course correction that we needed in order to keep keep our operations moving and be able to invest in that infrastructure.

So we did want to take a minute to kind of review some of the key drivers on the leader's rate increase and providing some updates on some of the progress we've made in projects that are being supported by these funds.

So to start off, we're going to talk about gravity sewer line rehabilitation.

So late last year, or maybe earlier this year, we came to council with a project that identified gravity sewer lines underneath the freeway that had deteriorated and needed to be rehabbed.

So then those have since been rehabilitated.

It's about 1700 linear feet of sewer line.

It costs about 2.6 million dollars in order to repair those.

That $2.6 million wouldn't have touched even a single catastrophic failure of one of those lines underneath the 202.

So our ability to proactively go in and make those repairs before they became a catastrophic failure is essential in preserving the stability of this fund.

We've got more to come, and I'll give you a highlight on that in just a minute.

But one of the other things we're able to do was increase our manual rehabilitation program.

In FY25, we're able to do 19, and in the FY26, we're able to do 50.

And those are being those are concrete manholes that are lined, and we're replacing them with more resilient materials so that we get a longer lifespan out of them, and they require less maintenance in the future in order to kind of it does cost more to do that, but in the long term, the ROI is there in terms of the cost recovery on the maintenance versus the rehab.

We've done improvements at several of our list stations, primarily around electrical and safety related improvements.

We have a couple of the stations that were recently completed through Meadows and Leighton Lakes, some that are currently underway, commons and the islands list stations, and those are just result of assessments that were done to improve the safety, the safety and the number of this electrical components that need to be replaced over time.

Our fourth main rehab, this is one of the big drivers of the of the rates that were recently adopted.

In FY25, we did about 10,000 linear feet in FY26.

So far, we've got one project that's almost completed, and then council did just see last night a contract for the next phase of that project, so that will be moving forward shortly.

Um, so we're able to make good progress on on that and get to those lines and get a rehabbed hopefully before they go.

We have several capital projects that have been ongoing at the Nealy water reclamation facility.

This is our oldest um wastewater treatment plant on water reclamation plant.

Um and most several of those are under substantial completion, so they've been completed, and the new facility, well, the same new facility, the new components of the facility are up and running.

Um, that was particularly tricky because it is an active plant and it had to maintain maintain um operations during all of that construction.

Um, there will be additional investment needed in this facility, and that's something that's going for in our capital plan going forward.

Um but we made great progress in getting some of the critical processes of that facility replaced as well.

Um, we've also done uh oops, some work on several of our reclaimed water lines and our reuse system, um, including replacing large functs of motors that have been that are at the end of their useful life, and then actually adding something called at protection to the storage reservoirs that basically your water your water heater has cathodic protection, and then it's like a it's a they call this sacrificial anode that deteriorates and grows faster than the tank itself.

Well, we have similar types of systems in our water tanks in order to protect the useful life and prevent deterioration of those tanks.

We've made some improvements on the reclaim water side as well in order to extend the life of those facilities.

And one of the big things we found that we've made improvement on in this past year.

So they last year council approved the purchase of a response water recycling sewer cleaning truck, and this truck um it's called water recycling because it takes the water from the sewer line and re-cleans the sewer line instead of using potable water, so it helps us reduce our water our water consumption there, but more importantly, it allows us to inspect larger diameter sewer lines that we previously had to contract out to outside outside vendors for inspection.

And so the team has looked at and reprioritized the way that they are inspecting sewer lines and looking at critical critical crossings and larger diameter mains more frequently than some of the lines that are in neighborhoods because those deteriorate more quickly and they have higher consequence of failure when if they fail.

But one of the first things they found when they went out and started using this new sewer cleaning truck was they were inspecting a gravity sewer line underneath the railroad tracks that goes into the Nealy plants along Nealie.

And that's the picture of the pipe.

They actually, when they were cleaning it, the cleaning nozzle got stuck into the pipe and broke a hole through the top of it.

That's what that big void is in the top.

It's kind of hard to see in the picture, but this pipe is actually inside a large five-foot diameter casing that goes underneath the railroad that has a few other pipes in it as well.

And so there's like you can see the support that kind of holds all the pipes away from each other inside that.

So good news is it didn't fail under the it failed inside its casing, but the entire thing underneath the railroad didn't fail.

Um it's not creating an interruption of service.

Um and we are currently working with CIP, it is actually currently being bypassed and being rehabilitated.

So this is another one of the one of those that we found and were able to correct in that entirely non-emergency situation, but non-emergency in terms of it's not it's not an active failure situation.

So progress made our ability to inspect these large diameter lines, um, has improved our ability to be responsive to these types of um failures before they before they become uh an emergency situation.

So on the wastewater side, some of the things that we had to do in order to balance the fund um over the five-year.

Again, not necessarily intended to read all the things, but just looking and kind of demonstrating the shifting of uh work that's being being programmed into our um capital improvements or wastewater.

Um got a couple of cases of this, but overall we had about 76 million dollars worth of projects that we either phased and spread out a little more or moved out of the five-year plan in order to um keep the sewer system balanced within the existing rate structure.

Um, again, these are very strategic.

Um, we talk about sewer gravity sewer rehab 36 million dollars, we just spread out 36 million dollars over a couple more years.

Um, some of that is actually workload talking to CIP how many projects can we actually do in any given year and making it more um manageable from a workload standpoint, um, but some of them are because we just won't have the funding available until later year in order to do that work.

But what that does mean is for the wastewater fund for for this rate cycle as well.

We are seeing stability and we are not um requesting a rate increase.

You know, we did have in this area where environmental compliance was a little there was less kind of movement that needed to happen in that five-year plan.

We did have significant amount of work that needed to be reprioritized in this fund.

Um, could we use a rate increase?

Maybe we want to ask for one, not do we so but again, these are short short term we can manage them.

Um, long term we do feel like we're set up for stability within this fund.

We are projecting you know smaller incremental increases in the hour years of this five-year plan in order to be able to make progress on some of those projects that have been deferred, and that's my use water update.

Questions questions have done what you do.

I'll be in a pain in the back side.

Not at all.

This is what we're here for.

Um I think in the last few weeks there was a main failure down on in Chandler south side of the town correct sewer main and intersection.

Anybody aware of that?

I think there's water.

Um there was water in Mesa, I knew that channel wires.

I didn't know you're reaching out to the other municipalities when they have these failures to see if they're seeing something different than what we are kind of baselining.

In other words, their failure could it be caused by something else that would help us get a hands up on some reviews or anything like that.

So we don't necessarily reach out when the failures happen, but we do have regular dialogue with communities regarding their infrastructure in general and how they're handling their um infrastructure repair replacement and what they're seeing.

We did actually just go out um kind of run out last week because Chandler was doing some some large diameter drilling underneath the 101 freeway to replace a replay line or gravity sewer line underneath the loop 202, using a tunnel boring machine.

Yeah, so so we do connect with them and kind of see what are you doing, what failures are you seeing, and how are you addressing them?

Um but not um I I what I had to reach out specifically about that issue.

So I just want to make sure we were kind of collecting data from those places because you never know if anything pops up different.

Um can I just follow up on your question for Jessica?

So the real question that you're asking is just from a good governance perspective, how do you connect with other communities that have similar systems to ours here in the desert?

And how do we know that we're kind of you know having the same experiences or anticipating experiences that others may be having, right?

That's that's really where you're going to, right?

So I'm gonna ask you just to try that one more time.

Yeah, it's I mean it's a small world and it's a tight end community, and so we have just relationships that we built with our peers over the years and have those conversations, um, not necessarily in a structured format all the time, but they're definitely, you know, we have the AC Water conference, and there's always networking, and we always have kind of informal discussions.

I have AMWA, and so we we almost always after the M1 meeting have a meeting of the 10 cities and talk about the challenges that we're having and things we're seeing.

So it's kind of a combination of structured and informal, just knowledge sharing.

Um, but we definitely do that.

So just from that, again, if you don't mind up there, is there anything that we that you can think of that we've learned from that that tells us that Gilbert is either experiencing something different than other communities are having better or worse?

I I think it's pretty consistent, honestly.

We're seeing a lot of the same things, and we're learning a lot from each other, you know, as we work on reprioritizing some of our assessment programs when we saw the massive failure of the lines underneath the 60 from that uh that was experienced that shut the freeway down for for several days.

Um, and so we definitely are learning as other people are experiencing challenges on how we can be more proactive to do better job.

We have not experienced the same.

Yeah, very good.

Thank you.

Um good job on the CIP rescheduling uh, but my question on that is pushing this stuff out.

Is there a potential to have a huge backlog that creates like a bump in the road in like 32, 33, or 34 that we need to be starting the plan for now?

There, I mean there will be um a bump, I'll say um we we're currently only looking at the five year.

Um we didn't move a ton out of that five year, but we will every year that the the that we add into that plan makes us kind of re-evaluate where everything is.

Um we have some longer term models that look at the the long-term needs and what we contribute to our replacement fund so that we can start planning beyond that five-year window.

Um, but there's I won't say that there won't be a need for more in the future, but we have we have a plan for evaluating that and making sure we're doing the most important stuff first.

My thought process there is mitigating the risk with deferment.

That's all so uh the other thing, love the picture of the truck.

I like more pictures like that, so thank you.

Other questions or comments?

Um, just a quick comment on the items and the projects that were putting off until maybe five years, some maybe 10.

What is what is the financial impact of that?

And I know you you we don't really know what the future is, but we have an idea, and I'd just like to know what the financial impact of putting all these projects off financially.

So a lot of the projects were shifted or phased just because of the cash flow and the need because we're cash funding all of these right now.

We just need to wait a little while for that money to come in.

Um we do have some that were moved out of the five-year plan, but we do have that in our window.

Um, and what we're looking at in the wastewater fund, at least for now was another five was a five percent increase, maybe three or four years from now.

We'll obviously continue to evaluate that, but everything we have planned for right now is fits within that structure with some just moderate like increases in a few future years.

So it's it was a lot of this one was more of a cash flow need because since we're not logging for cash flowing, we have to wait until we have the many save up to be able to do them.

So we just spread them out over a little more time.

Sorry, actually.

I don't know that that's fine.

Okay.

Uh do the funds that are coming in that we might not be using or needing at the moment because we're putting things out.

Um, are we earning interest on those?

Do we have those then enters very um we answer that?

Okay, great.

All right, Kelly.

We didn't push it out because there's money we're not using.

We push it out because the money's being used on other projects.

Um so we're we are using the money, we just don't have to push these out so that more money can come in and we can do those next projects.

But yes, any of the money that we have in the fund is interest bearing, and we are able to use that interest to help offset costs as well.

And yeah, and and just I just want to clarify that is so pushing these out, we still have to come up with the money to fix them because the money that's coming in now we are using for other things.

This money isn't just going into the bank, right?

You can talk without the mic as long as you just talk loud because the mics are still in the ceiling.

Yeah, so the existing rates, we just have to wait for more time to pass and bills to come in over time to pay it.

There, we think that the amount of money coming from the rates is sufficient for the projects.

We just can't do everything in year one and two.

We have to plan some things for years three, four, and five.

Okay.

So we haven't really planned planned for that yet.

Or years three, four, and five.

We have that's what's built into the five-year plan.

We just had to move things around and reprioritize so that it all fits.

Yeah, I'm right.

Okay, so I'm just talking about the funds and where they're coming from.

So we're just reorganizing everything, not everything, but a lot of things.

Yeah, we'll within the amount of money that's coming from our existing rates.

This should work.

Okay.

All right, thank you.

Thank you, Matt.

Jim, I see you over there.

Just it's you have a person loud so the mics will pick you up.

I'm probably capable of that.

Uh a little different question, but we do have a large group of people that have not paid their bills in a very long time.

How do we handle that?

How do we handle that short of shutting them off to make them pay their bills?

What do we do so we don't have a community catastrophe in that area?

So um, part of that is related to the water meter audit that's going on, and we are working internally on what that messaging and the plan looks like for once that audit is complete, addressing the findings, and then um reaching out to people that um have not paid their bill to allow them uh potentially time to catch up and and and pay it maybe over in payments and cocking projects to be better for that.

But we are aware of that, and you know, Kelly's been tracking that, and the revenues on water and wastewater have been running a little behind because there is that backlog.

But we do have we're working around a plan for how to get those people caught up once the audit is complete and any findings have been addressed so that uh we can start with our normal um you know turn off procedures and everything.

Yeah, uh council didn't take action to stop shutoffs from occurring, and so council doesn't need to take action to have them restart.

Um, but through all this process, we did pause late fees and paused shutoffs.

Um, as we worked with the community to make sure that the trust was there, uh that the confidence was there in the in those systems, and so as we get into early April and and our third-party consultant provides the final report.

Um, that's right now we're working on a plan of when that occurs, depending on what is received from that plan, what's a time period where we can then go out and tell people okay, the clock is starting within 15 days, within 25 days, late fees will begin, and shut-ups you will become eligible for shut off if you have any amount later than 45 days past due.

This is what you can do.

Contact our office, we'll work with you on some payment plans to take a few months to get caught up.

Um, we're working on that plan and and the communication that will come with that.

Um, but it it's a challenge that exists in in normal operating uh utilities all the time.

We've paused it for a good amount of time, and so we do have some compression there.

Fair enough.

Did that answer your question fully?

And do you have a comment to add to it or no?

I just wanted to know what the plan was because I see people being encouraged not to pay their bills by a few people online.

It's like this isn't gonna end well.

What are we doing to try and make it end well?

Yeah, we will definitely let council know um what that plan is once we have it and what the timing of that is that way if you start to hear anything, you're informed to know exactly what the process is for all to be able to respond to that.

Um sure, Bob just follow-up question on uh well, council member Torgeson was talking about.

Um is there any way that we can start putting out information that says you know, we will have the final audit.

Please start preparing if you have a larger bill that you have not paid, start preparing now.

Um because those will become due, you know, once we finalize these things in a couple of months.

I think it would be nice because they're just sitting there thinking some of them think they may not have to pay anything.

And that's that's gonna be a big shock to 6,000 people probably.

Yeah, and we've been we haven't waiting to get the results of the audit to make sure that there aren't any inaccuracies in any of those bills that might be outstanding.

I know the people mentioned last night they haven't found any systemic issues in the system, but they are addressing one-off you know items as they come up.

So I I know that I mean Hawkins if you want to do it already.

We're we're being mindful that messaging too early before an audit is final.

It could give mixed messages to customers that that still have that fear or that concern or that feeling that my meter is wrong.

This there's going to be some sort of change uh to my bill.

Um, but we're working with OCE and CANDAS and trying to get the timing right and the the framing of the language that you know we've brought in this party, the audit is complete, and that's where we get that is where our intention is to have some amount of time at that point.

Now is the time to get ready.

There will be a fixed date that lake fees will restart.

We will work to resolve all issues if they exist, um, and then contact us, and we'll we'll work with people that have large uh amounts and and see if we can't help them pay over a few months to get caught up.

We'll do whatever we can to be uh as accommodating as we can as we get back to normal operations there, but we really need to have that audit completed with their report so that we can stand firm on that ground when we make that change.

Good uh Kenny, please do things uh totally different essence.

Can you go back to the uh look at the manhole?

You're talking about some um right there, your ability to get to more in 26 um in the cost.

I know um I don't want to put a card ahead of a horse, but I know you guys are um looking at um a vendor who does things completely differently on the vertical.

Um I thought there was something happening with the second 1819 of those.

Do we have these numbers include that?

Are we still in a inspecting phase to determine our you know what's the right thing to do?

Um and if that ends up being something of a value, is what would be the difference in savings?

Or am I way too early?

If I am telling me restate the question so everyone understands what's being asked, okay.

Yeah, so um buckled, I think you're referring to some of the different types of materials that we're evaluating on our handhole replacements and whether they make sense to use in certain situations, what the cost difference is there.

So that is a little early.

We are still evaluating that.

Um it's kind of a case by case depending on the type of manhole where it's located, what its current condition is, and how it needs to be rehab.

So it wouldn't necessarily be like it.

We would only do it a certain way.

Um these manholes we're doing right now, are generally on our larger means in the main roadways because they experience deterioration more quickly.

Those are the ones where we are using the more um robust um inner materials that we'll set in useful way, um, but it is definitely um evaluated kind of case by case.

Um those again, they do cost more up front for capital, but then they have less maintenance going forward, so it does kind of balance out.

Um but I don't know that we've a hundred percent evaluated the the cost benefit of the different types of materials that were evaluating.

Okay, I appreciate it.

Didn't mean to catch you on card there.

I just um love that you guys are always looking at something different.

Leah, thank you for setting that up because if I don't know, I'm trying to stay if I see something at the NLC that may add value to us, but I'm not gonna do is try to influence you guys.

You're the subject matter experts I'm not.

Um but I just didn't know where you were with that, and um so obviously I'll leave it as thank you for always looking at different innovations uh that makes us better uh and um do it for less.

So secondly, in terms of so you guys um made my day when you caught that on the on the water side, you caught the uh the pipe, you're able to hold somebody accountable so that the taxpayers don't have to put that bill.

Yes.

So again, thank you.

Thank you.

Um that leads into my question.

I don't want that, I don't want us to lose that.

And I know previously, you know, you've heard me say consistently we are the shortest staff agency.

I run the numbers again.

We have climbed from 5.8 to 6.03.

Okay, but we're still way lower than everybody.

My um plea to you guys is that as you are building into the future.

What I don't want to slip is the timelines on these inspections because it's always it's always um less expensive to read to repair or refer than it is to replace.

So um we don't need to have discussion on the police as you guys are doing budgets for staffing.

Always please make sure that you um are including exactly what we need to make sure we're always staying on top of that, um, and then we don't get behind on that.

Because I think in the long run, that's just huge.

And I do believe um past demo of government while we've been doing more with less, and there are flat out some areas that we cannot do more with less, and that is exactly this area, public safety.

We've got some critical areas that matter, so it's gonna leave it there.

Yes, and I will say actually when has the five-year plan and the building of that plan.

We focus on the capital improvements and the adjustments made because um that's where the bulk of the cost is, but all of these funds do have employees built into that five-year plan for growing our staff as as we um add them in, whether it's a license technician or another crew to do more sewer cleaning or storm drain cleaning or new operators to operate the water plant less it's done.

So those are built into the rates as well, and we don't talk about those because we try not to touch those.

We know we need the team, the the people, um, and so we have we have more ability and more comfort in shifting the capital projects and shipping the people doing the work because we know that we need them.

So other questions or comments on this so far seeing nine, Jesse, you have more?

Uh two, yeah, two more sessions.

They're shorter though, I promise.

Okay.

Um so we're gonna scoot on to uh water and wastewater adjacent topic, um, which is our water resources recovery fee.

So during the reprocess for water, um the water gate adoption, the team um shared this concept of a water resources recovery fee for um homes that are connected to our water system but not connected to our sewer system because um when they use that water is lost to us forever, we don't recapture it.

Um so those septic systems are there's there's an added cost to continue to acquire more water in order to support those homes that are not returning anything to the sewer.

And so we have about 3,000 customers on our water system that are not connected to the sewer.

So at the time we we proposed this concept of a water resources recovery fee.

Um, we told council we wanted to do some more research on this and really um kind of dial in what that fee might look like and what the impacts would be.

Um I'm here today just to give you an update to say we haven't um pursued that as of yet, um, just because of you know, with the rate adoption and listening sessions and open houses and the ag rate did uh development and the water meter audit, there's been a lot going on.

Um, and so uh we wanted to propose um uh we wanted to just refresh this at the top of your mind, let you know it's still out there.

It is something we're still pursuing.

Our reclaimed water um specifically is um 15% of our total water portfolio, and every gallon of that that we can recapture is a gallon that we don't have to go acquire on that at a significant cost to the community.

Um, and so what we are proposing um is to come back.

Oh, yeah.

So we have a few technical challenges that we have to look at as part of this process, which is one of the reasons we haven't dug into it yet.

We have identified areas where people can connect to the sewer, where maybe some additional infrastructures needed, and there's some where it's really not feasible at all for them to be able to connect without significant investment.

Um there's the added challenge of um current a lot of these homes are in a county, and it's technically right now.

If you're in the county, you can't connect to our sewer unless you annex.

And so there's kind of a just some logistics around there that we would want to work on, and we talk about a framework for what this rate would look like.

Um, so what we're currently proposing is just um a recommendation to council that we'll come back with more information and a proposal at the fall retreat that we can discuss in more detail um and um get some type of direction from council on if you want to pursue adopting that type of rate or not.

So quick update on that, and we want to get some type of direction.

Comments, questions?

I'm just gonna start here every single time because it's totally fun.

So when we do the thing area, so when we do the um uh the reclamation side of the equation, um, how do we quantify the amount that we are reclaiming?

How is that calculated?

So the water, the reclaimed water is essentially any of the water that comes out of one of our two water reclamation facilities, and it's either um reused by directly by customers um or recharged into one of our recharge facilities.

So that was where I was wondering about this because typically a septic system, the water leaches back into the ground.

So it's gonna go back into the aquifer.

So is it really it we're gonna be looking at this?

I mean personally, if I had a septic system here, I would be pushing back because I'm like the water's coming back to you, it's just not going to your system.

So it'd be a little bit of a jerk.

I go, you need to pay me because you're not having to build anything to get it back to the aquifer, being you know, facetious there, but I I worry about this and the perception of it because it it looks like to me personally a little bit of government overreach, especially for the amount we're looking at reclaiming.

So I would just tell you I'm gonna struggle with this one a little bit.

Then the other aspect of it is if we're going to do that, would there be a way to pump the tank and all the stuff and up it into our reclamation center if it's about reclaiming the water?

So those would be would be two questions I have.

I really struggle with the fact that this stuff is going right back into the groundwater.

That is true.

It does it does eventually do that.

Uh, the difference is that we don't get the credit for it, and so it is lost to us, and we are not able to reclaim it, it's not reclaimed at that point, it's just it's going back into the aquifer, but if it's not recharged or in one of our facilities, then we don't get build up those credits for it that then allow us to pump groundwater for drinking water out.

So it has to be in a managed facility, and it has to be monitored and permitted in order for us to get credit for the water into our portfolio.

So that's an agency issue on a state level that gives those credits, correct?

Yes.

All right, so can we begin working with them to maybe create a formula to allow for that credit given the fact that it is going into the ground?

Those conversations.

Yeah, and part of that part of that um part of the discussion around the fee is just that um not only are people when you use this, we're really only looking at recapturing what's used in the home, right?

Because there are plenty of homes that use a lot of water outdoors while we don't ever get that back either.

So we're really looking specifically at you know what's being used in the home and not necessarily what's being used outside.

Um so there's some just some things we want to consider as part of that, like what is what is the fee based on in terms of how much water is being used, etc.

So yeah, that's that's part of some of that, and like when you talk about rain and storm water and things, that's kind of like the incidental recharge that happens to the aquifer.

And so we do actually get some credit for that, and that little four percent piece is what we're allowed to pump as a result of just that kind of incidental recharge that happens without having to put it back.

Um those are good things to consider as we as we look at um what that what that might look like.

Jessica, can I follow up on Monty though?

Is the question I think that he's also getting to is um if there was a formula that could be used for for measuring how the septic recharges something at some point, you're saying that's not a Gilbert issue specifically, that would be a state uh state level legislative kind of issue that would have to be taken up.

Is that is that what I'm hearing from you?

Yes, because that's all part of the recharge and the credits now.

That's kind of part of the groundwater management act that's um initial IC.

It's the state not and it not the federal government.

No, it's the Arizona is an aircraft specific.

Yeah, all right.

I got you on I would just say that I would have concerns over some of the consequences of this, because from a policy standpoint, we don't connect sewer for non-town property because we want them to annex, or we don't want to be paying for that infrastructure.

So I'm thinking of that from that consequence standpoint of what precedence does it start setting, what does that end up doing to future system development fees?

What does that start doing to future land in County Island as it gets developed?

So I guess my thoughts are that it would somehow need to be tied in with water service specifically to county properties in terms of can we negotiate or have some kind of like package deal of if you're in the county, they are they have different rules or systems based on the fact that we're not recouping the sewer or based on the fact that they're just in a different situation than our town properties.

So I think when staff comes back to us, I'd want to see kind of the full suite of consequences and then more tied to existing customers or and and like try to get them to yeah, like buy into the connection versus necessarily um creating a new precedent for all the county property or making sure that we fully understand the consequences there.

Yeah, absolutely.

Jessica, can I ask you just to just for clarity, just to repeat back your understanding of what the councilwoman says, just so we're we're all clear about what that was.

Yes, when we come back to discuss with the council, just looking at all the consequences of um requiring or not requiring or not being able to connect uh properties specifically that are in the county due to our current policies on on not allowing them to or unless they annex and kind of what their implications that are.

And we recognize that there are about a thousand of those properties in our county properties right now, and a lot of those are also ones that it's almost infeasible for them to ever be able to connect to the sewer because of the way the system is.

So, how do we address that?

Um in this type of a fee.

So we got it.

You want to comment?

Just the state will be exceptionally difficult to do any fees.

So I don't take too much of your time.

Okay.

And that lack okay, last topic.

Um, this is one I just want to kind of like refresh everybody seen this this uh chart quite a bit.

Um back in in 2022, we started this process of every other year evaluating um two of our enterprises with the intent of smoothing out any rate impacts year over year.

Um, part of that is the timing of our current rate adoption is we adopt the rates in April and they go into effect at the same time as water consumption starting, which compounds the impact of a rate increase on particularly water consumption and water use.

And this is something brought up about the rate adoption that we had is something we kind of started looking at internally.

It would would it make more sense to adopt our rates on the downswing of water consumption to kind of mitigate that where you see the rate increase on the water portion, but then your consumption is going down, so maybe it levels out a little bit and gives people a chance to adjust to that.

And so um, and this is just our our water consumption curve over the course of a year, you can see um in terms of the timing of when we would want to change that too.

But so our current um our current timeline is normally you know, we would be coming to you at the council retrieve right now and proposing a rate study be completed over the over the course of the summer, um, briefing you on that in November with a notice of consent in December and adoption in February and an implementation in April.

So we'd be looking to follow that same timeline, but then just push the actual adoption of the rate or that rate affected date until after the summer in October, November.

Um still follow the same timeline and still be able to have the same touch points with council on when the rates are needed and when the studies are taking place, um, but just change the effective date to happen after the summer instead of uh beforehand.

Um the other part of this is looking at now that we have done these order adjustments on these funds and we provided that stability and our outlook over the next five years is more um incremental increases, you know, in the 5% range in our water and wastewater funds.

Um, looking at do we want to consider doing them all in a single year every other year, and then having a year off in between to get a little bit of break for the community.

Um looking at do we want to consider doing them all in a single year every other year and then having a year off in between to get a little bit of a break um for the community there's a little bit of confusion that happens sometimes when you know we do a rate increase and then next year we do another one and they askfully increase like that was for a different fund and a different service and so there was a there was a thought that you know maybe now that we have that stability and we're seeing um less need for these these large adjustments would we want to consolidate them and just do them every other year to take to take an intermediate year off of that.

Um that's just kind of food for thought.

Um we we could make that decision um as we evaluate all of the funds next year and come to council next February with with a with a hey it we did eat all this year this is what it would look like.

Um other thing I will say is that because this would be delayed as a first year that we could make the shift, it would delay an increase by six months.

So that um rate study would need to account for the fact that we have six months of less revenue so it might be in that first year the rate looks a little different than what we're currently.

So that's the only thing.

Questions or comments on this point?

I was just gonna add a comment just to kind of double down on on Jessica's recommendations both for this alternate timeline when raiser in effect, but also consolidating it to every other year is that's consistently based off of conversations we've had with residents at the listening sessions, the sentiment that we're getting when you know council's getting emails.

So this is based definitely listening to um resident feedback, customer feedback, and providing those recommendations and solutions so we hear them loud and clear just what happened.

I uh why confuse the residents?

They shouldn't have to decipher one from the other from the other.

They're all busy trying to make living their lives in one group together.

So I actually love that idea.

It simplifies a bit.

Yeah, the rate will be a little more.

Well, yes, and and actually it would be a little more in the first year because we're doing a six-month delay on implementation.

But then once we shift that schedule, it would be it would level out.

Yeah, we should level out.

Yeah.

Other comments, questions?

Jessica, you're at the same time, Jessica.

We are right on time.

We are scheduled for a 15-minute break.

We'll be doing 15.

I just asked everyone that we are.

While we are in session microphones over your head, they are on all the time.

They are picking up everything.

We have to be careful because when someone is speaking, conversations tend to get picked up by those mics and broadcasts.

So I would remind you, please take any of your side conversations out of the room.

And even what we're doing breaks, just be careful to also take any anything sensitive or proprietary or anything.

And to uh that's going to be part of our morning.

That's involved some long-term financial planning, so this will be fun.

Um as you're aware, we have our long-term financial modeling that we look at, and so we're going to review some of what uh is in that.

But want to talk about the purpose of our long-term financial model.

It is really to explore where our trends are heading, uh, both on the revenue and expenditure side and where they might lead us in the future if those trends are to continue in the ways that we have seen them.

The long-term financial model uses fiscal 25 actual data as the base assumption.

What did we actually receive as revenue?

What did we actually spend in expenditures in fiscal 25, and then we forecast forward based on a lot of assumptions?

Those include inflation rates, projected population growth changes, changes in personnel costs, anticipated retirement contribution changes, planned debt service changes or projects that we have planned uh coming up.

Our capital improvement plan is a large part of that, and looking at the specific investments we want to make in infrastructure, and then also our sales tax and economic growth.

We make an assumption about what growth will be happening, what kind of sales tax there might be into the future.

That's our largest revenue source.

Um we don't know exactly what's going to happen in any of these areas, but we can make some assumptions to see where that takes us.

Um we continue to update it every year.

It gives us some good repetition at looking at that future and any big changes that might happen.

This is not a crystal ball.

It cannot tell us what exactly is going to happen five and ten years from now, but it does give us a peek into the future if current trends continue, and it helps us better understand uh how decisions we make today might change some of those future trajectories.

Some of the things that we have to be mindful of is there are historic and continued threats to our revenues and our operations.

Some of those include years ago, the legislature looked in taking away construction sales tax that would have had 10 to 20 million dollar impact for us.

Fortunately, that was avoided.

Um there was also opposition to the mid-decade census in 2015.

Um, most of our, as you're aware, our state shared revenues are mostly shared by population, and that was based on only the census numbers that were given at the time.

Gilbert wanted to do a mid-decade census because our population numbers had changed dramatically, and that would give us a bigger share of the pie.

A lot of the other cities and towns pushed back on that.

They didn't want new numbers because they liked their larger share of the pie that didn't represent Gilbert's growth at the time.

Um so we had to do a lot of work for that.

Fortunately, there's been changes since that time that now we update that population every year based off the census estimated population, and not only the decade or mid-decades since December.

So a lot of improvement there.

Um but that was a big challenge in having to pay for a mid-decade uh special census in the town.

We're aware of that income tax that that has had an impact on our revenues, uh, loss of residential rental sales tax, potential freeze on ongoing uh changing rates uh for the next four to five years.

Um could be have detrimental impacts on town revenues and abilities to maintain cost recovery and issue bonds.

Uh, also loss of food tax if that goes that's going to the ballot, and if voters say it'll freeze it two percent, that has an impact on us, or there's legislation to take it away in total.

So any of that uh could have an impact on us negatively.

As you know, our revenues are very sales tax reliant.

Um, it makes us vulnerable to changes in the economy and the market, and as well as changes from the legislature.

And so we just have to be aware of that vulnerability as we look at those long-term forecasts.

We don't know when there's going to be a recession.

There likely will be several times over the next you know, 40 years.

That's kind of how economic cycles go.

Do we know which year that's going to be in?

No.

So we have to look at what are some long-term trends and whether and the short-term stuff as it happens.

As we're aware, 2027 is going to be a very tough year.

It is getting more tough as we dive into it and work on balancing it.

Don uh and team will be giving more specific information about that in the presentation this afternoon.

The long-term model does not look specifically at 27.

Like I said, it's based off of fiscal 25 and uses inflation and basic assumptions to project forward.

Um, so this helps us understand what we're seeing in fiscal 27 is not just a one-off one time happening for the town.

The long-term model helps us understand that this is part of a long-term revenue and expenditure imbalance that we have going on that needs to be corrected to move forward, either additional revenues or change in our expectation of service levels so that those two lines can match, uh, or probably some of both to meet in the middle.

Fiscal 27 general fund requests are significant, about 200 FTE and LTA positions, and 90 to 100 million dollars of requests.

We clearly do not have that much money for fiscal 27 to make everything come together.

We are doing our best to balance that, and we'll bring that budget forward to council and get additional instruction from you with Don this afternoon.

So as I talked about, fiscal 27 is part of a larger long-term structural imbalance that we have and need to look at and need to figure out how to change that moving forward in a permanent way.

We are going to look at several what-if scenarios as we go through the model.

What if we lose food tax as a revenue source?

What if we are to catch up our staffing?

So we recognize what the budget that was adopted for current year, fiscal 26 had 20 million dollars of FTEs that were not funded, and 10 million dollars of ongoing operating costs that were also not funded.

And so if we added that into the budget into fiscal 27, how does that help us with our trends and understanding if we were to right size our operations into that level?

How does that change the future trajectory?

Oh, and then also looking at what if there's changes in our sales tax, so there's more or less than what we had anticipated in the model.

So with that, I am gonna hop over into the model.

But I need my mouse to do that.

So I'm gonna sit here for just a second, and thank you.

Perfect.

That hopped up.

Um, so what you can see on the screen, the green line here is our estimated amount of revenues.

Purple lines are our personnel salaries, retirement, medical, dental, other personnel related costs of purple.

Green are our supply and contractual.

What are the tools that our people need to do their jobs?

Red is our capital expenditures, and then blue are transfers working with water SDFs, our debt service payments, any of that type of stuff is in the blue.

Anything 25, fiscal 25 and before are actual numbers.

Anything fiscal 26 and forward are projected numbers.

You'll notice that fiscal 26 does go above the green line, and that is because we have one-time money from these prior years.

You'll notice some years we didn't spend all of the money that had been collected, so there was fund balance.

Um, a lot of that is because of how conservative we are with our budgeting.

We underbudget the revenues and then spend them as one-time money the following year, and so that's what's happening in 26.

But moving forward, we do need that line to balance.

We can't spend more money than we actually have.

One of the things to look at is what kind of a difference does it make if we lose food tax?

Food tax is about 20 million dollars, and if that is excluded from our revenue sources moving forward, it has a pretty big dramatic impact for trying to balance our ongoing revenues and expenditures.

I'm gonna lay food tax in because I like to pretend that nobody would really take that away.

Um does include the catch-up staffing, uh, 20 million dollars of staffing and 10 million dollars of ongoing tools in the green.

If we exclude that, we are closer, but we are still not balanced.

Um, and that means that we will continue to run understaffed forever into the future, which may have impact on turnover or the institutional knowledge that we have within our staff or the ability to continue to maintain some of the services that we have.

One of the other things we can look at is what happens if we have sales tax.

Can we grow our way out of this as our only solution?

Um, so if we pop in here, 10.

We're growing at 10 million dollars a year.

That is still not enough to balance everything.

We would need something more like 20 million dollars a year, and then we're over for the next several million years.

Um we are not moving at 20 million dollars a year, even now.

Um, and this number would need to represent it's one number for combined forecasting.

So it represents growth in inflation because as goods cost more, our 2% brings in a dollar amount that's higher.

Um, it's growth in volume of sales that happens, but we also have to remember there are changes that are gonna push sales down.

But we also have to remember there are changes that are going to push sales down.

As our households age over time, they will stop buying as many school supplies and start buying more retirement type of spending, which is a change.

There will be maybe the kids move away.

Often part of the built-out population is that there's a drop in population towards build-out.

When the kids leave the house and there's one or two people remaining in the household.

As Queen Creek builds out, they may have something closer to home that they choose to go to.

And so diversifying our portfolio and making sure that this will want to come into Gilbert to spend money for various purposes that are not close to home could be a part of our strategy.

But whatever it is, this combined number together, we're currently about six million.

We're currently anticipating about six million dollars per year of growth and all of that kind of combined.

Dan and team are going to give us some really good information in our last presentation tomorrow, the final presentation of the conference of the retreat that will talk through some of the current projects that are happening and what the economic impact is typically associated with those types of projects.

So you can see how many would it take to add up to six million dollars a year, or some other number doesn't have to all be new growth.

So that kind of gives us an idea of what we're looking at.

We have an estimated gap here, which is just the revenue minus or expenditure to see what that is.

It's not a specific target, like we mentioned, these are general assumptions that we're making, but it should give us an order of magnitude that we're looking at with the assumptions we currently have in place.

Just uh clarification, Kelly.

Um the six million or the twenty million, both of those assume that our state shared revenue is remain whole.

Yes, that is correct.

And that six million or twenty million would also account for new businesses, other businesses changing, closing, uh that kind of influx outflux that occurs every so often.

Yes.

And it's also an average.

So some years we're gonna have some great developments come in that are gonna be hopefully more than this, and other years we're going to have some slowdown or some recession, but on average, if we're hitting a six percent, then we say balanced kind of in total.

We'll have some good years, some tough years, but if this is in the middle, we could get balanced.

Well, not right now.

Other questions from council?

I this is just to help us see long term.

We do have a structural issue that we need to look at.

Continuing to approach that one year at a time to squeeze a different expectation into just the upcoming year, we'll probably make a whole bunch of difficult years all in a row because there is an ongoing issue.

So, Kelly, just to make sure that that we're clear.

This agenda item is really like free swim, right?

This is a chance where we get to ask questions and say, but what if this, what if this, and you can actually show us live what are the implications of thinking about this from a number of different ways, right?

Yes, I can't do all of the modeling live, but uh some more complex things unpack with, but um so council.

This is a time for you to ask questions.

These are the what if scenarios doesn't mean that you have to necessarily you know it'd be advancing it, but just that you want to think out loud about what are the opportunities that are even possible here and what would happen if you just said Kelly.

What if you utilize column K to adjust the numbers rather than N?

Does that affect the graphs the same?

Oh, so this is a percentage increase.

So we recognize that as sales tax grows over time.

We may not continue to grow three percent is a larger dollar number as you go because it compounds.

So we could do and say instead of looking at a dollar amount, if we wanted a 2% increase over time, what does that look like?

If it continues to be a 4% increase or a six percent, if it's easier for you to think in percentages, just be aware that that's compounding, so it's a larger dollar amount as we get out into 2040.

Okay, and that's a sales tax increase over the current rate, right?

As far as run more tax coming in, more tax coming in, not necessarily rate, but growth, all of that.

All right, great.

All right, Bobby has a question back here.

I've actually wanted to ask the question.

So yeah, one very good.

Other questions, comments, observations.

Yeah.

Junk has one.

Oh, very good.

We'll go get young first, and then I'll pick you up, Vice Mayor.

A large part of your bars that we're seeing over the next decade are what I believe are the quality life projects that are under the capital for the red sections.

Is that right?

Yes, we do have a lot of the capital part is the quality of life.

Um, there is there are other things planned over the time.

But this is and so this is an area where typically other agencies would not use general funds for those projects because we could also use secondary property tax, maybe primary property tax.

Um I don't know exactly maybe what I'm asking in terms of seeing it in the model, but I'm just wondering what that might look like if we shifted some of that.

Yeah, so Don's gonna talk about that in the presentation.

So I can speak to that.

That will be in our next presentation.

Or that will be in our next presentation where we talk about the potential option that is an option for council to consider, and we will run through a potential scenario of what that could look like, and then how much that would free up in terms of general funding.

And after we talk about it this afternoon, and you've got the details on that, we can pop back a model if you're desire and see what it looks like long term.

Uh Vice Mayor.

Thank you.

I know I saw this before, but I don't remember it off the top of my head.

But where are we compared to other cities in our sales tax rate?

Where are we in terms of other sales uh other cities on their sales tax rate?

Yes, they're sorry, I keep saying it.

Don't cover it in this license renewed.

Um we have it in there, we're about in the middle, we're at two percent.

Um that is different volume.

Like Chandler is at 1.5%, they get about 200 million dollars total sales tax a year.

At our 2%, we get about 200 million.

Um, Mesa has the same 2% that we do, and they get $340 million.

So there is definitely a different dollar amount that comes, even though the rates might be more or less or similar on the C.

Ellie, can we ask you?

Can you show us what this would look like if we were at the high end of that range?

Probably.

So we're playing with the spreadsheet.

Yeah.

Uh sorry, you see all the wheels turning.

So we are currently at about 200 million, and that is a 2% rate.

So I'm gonna close your eyes for a second while we pop over here.

If this was if we changed the rate, I'm gonna pop it into 20 uh we'll say 2027.

If we went to 250 uh or 2.5, that would give us another 50 million, so uh 250 million, and then it would go up from there.

Um, so that's about what that would look like.

Uh I do want up to a 2.5.

So my contact lenses aren't that good, but am I reading correctly that even at the high end of that sales tax rate, we still haven't dealt fully with the structural deficit?

That's that right.

Yeah, I and as we recognize probably one lever is not going to be able to close the full gap.

It's most likely going to take a variety of options, economic development and growth, maybe some change in rates, or as young mentioned, changing and putting some of the quality of life over a ballot issue, a secondary property tax, which would free up existing sales tax money to be able to use ongoing needs here.

Um, and a change in expectation about what our services are.

Chuck, let me just come back to you and ask do you have any other questions or comments on on this specifically?

No, I'm good, thanks.

All right, thanks.

So we're looking at about a 10% increase in the uh in our actual population build up or in the high 290s.

We've talked 315 to 330.

If you use using 330, just as a number with the shared revenues, what does that help us at all here?

That is already built in here, um, having growth in our state shared revenues over time.

Okay, so that's not just the growth of more money, inflation, etc.

That's the growth of population in there.

Yeah, and we're actually probably going to start to see where we are getting less of the pie and state shared revenue because as we hit our build-up population and start to solidify, other cities are still growing, and so the pie within the state will grow and we'll start to get less percent of the pie, but probably not less dollar amount.

And then with what hopefully happens here on the sky in the northwest part of town with redevelopment.

Is there any sort of reflection in here on that?

Yeah, that is part of this growth and inflation number that we need to hit of about six million dollars a year.

All righty then.

Thank you.

Thank you, Chairman.

Other questions, comments, observations on this?

This is hard to I mean, I'm looking at it, you know this a lot better than I do.

I'm even having trouble getting my head around the magnitude, but also the complexity of it and how these things all interrelate with each other.

I'm wondering if anyone has any questions or observations about that.

I think this would be a question for uh the leadership team.

Part of this is growing our way out of this, is right.

That's correct.

Um are we adequately staffed in our economic development team to be able to have the resources to go pursue that delta that's out there?

And do we have them?

Do we have them understood?

That might be a really good question to ask Dan when they're reform.

Yeah, and I'm happy to jump in at this point in time.

Um I think that's a really good question, and I think uh like so many service lines, there are a multitude of factors that play into success.

So it's the uh one of the things that you'll often hear Dan and Team say is that inventory is what helps win deals.

So staffing is certainly a component of having the available resources to go after different opportunities and identify opportunities, um, but there is also a real challenge when it comes to available inventory in Gilbert, both built and just available vacant land.

Um the other thing I would offer is one of the things that you'll see in Don's now infamous presentation that's coming later this afternoon.

Um looking at um our uh overall development process as well, and just any opportunities there.

Uh so I think it's a multitude of factors overall.

I think that there the team is pretty much daft.

I'm gonna giant offer a giant asterisk asterisk there.

However, most teams in Gilbert are very leanly staffed as compared to our counterparts.

So could they use additional team members?

Absolutely.

What I'm cautioning though is that it's that's one piece of the puzzle.

There's multiple pieces that I think need to be addressed as far as how we ready additional inventory, um, what we can do with our last remaining parcels that are available for development, uh focus on redevelopment, which the team is actively engaged in in Northwest Gilbert.

Um there's a multitude of factors.

Thank you.

Oh, I have a question.

I probably should have read email this.

But so what if we had not pushed out certain projects?

You know, we I think at our last retreat, we pushed out a number of projects because we didn't count the funds.

What income did we lose by pushing those out, like system development fees and different fees that if we continued that, would that have helped us in the current circumstances that we're in?

So I guess my question is did that help us, or did it also hurt us or both?

Yeah, so what's the impact of pushing out those one time projects on impact fees or development fees, those kinds of things?

I don't know the specific dollar amount of them, but it that's one-time revenue, especially assisted development fees, which aren't even represented on this graph because they're in other funds.

This is specific to the general fund.

But this is meaning that we have an ongoing revenue and expenditure misalignment.

So one-time projects won't fix that.

We need to figure out what are we going to do differently on revenue in a permanent way, or what are we going to do differently on expenditures in a permanent way?

Okay, and differently you mean give me some examples of differently that we need to do.

Differently would be putting in a primary property tax, changing our sales tax rate, um, doing adjusting different different items within our sales tax rate, um, looking at funding our quality of life projects through a secondary property tax bond, and then freeing up that ongoing sales tax for ongoing purposes in in fund here.

We don't have a lot of um levers to pull.

We don't have a lot of revenue options as a local government.

We have sales tax, we have property tax.

We have state shared revenues, but we don't have a lot of control over the change in that formula.

Um is even this is just the mix of revenues over time.

Sales taxes, this is in 2006, sales tax was half of what we made up, and then state shared was about a quarter.

Sales tax is the only one really growing, so this is our 2025 mix.

Um state shared revenues grow but not to the same amount that sales tax does, and our other revenue is continuing to decline.

It used to be 30% and now it's 15%.

So the this really all goes full circle back to where we were a few weeks ago or a few council meetings ago.

And it is obvious to me that the only way we're gonna help and get out of this is by increasing certain rights.

Probably a mix of things.

A mix, yes, yes, revenues and I we have to be able to find whatever services we want.

Yeah, but we would get the revenue by increasing rates and fees and more fees as we discussed a few weeks ago.

Um would be okay.

I did I you know, I think that's good probably for any residents that are listening so that they can get that difference as well and know you know why why don't we do this?

Why don't we not have that this fee?

And why don't we reduce the utility fees?

And I think that helps to clarify for others exactly where we're sitting.

Yeah, and and we are sitting in this place which is a little different from our peer communities, because most of our peer communities are charging both primary and second or primary and sales tax primary property tax and sales tax.

We'll get that out.

Um, where we don't have a primary property tax.

Mesa is the only other major community in the valley that doesn't have a primary property tax, and they're transferring over 140, 150-ish million dollars from their utility funds, so they overcharge on utilities and then use it in the general fund, transfer that over.

So that's how they balance their revenue sources.

We're doing it without those additional revenue sources or levers with the sales tax rate that's really competitive in the middle of our other communities, and we're providing award level services.

We get accolades all the time for our various services, um, and we have the lowest staffing.

So we're really we're trying to do the best we can and the most we can with the least amount of money, but at some point those two have to balance.

And the least amount of impact on the residents as well.

And so, whatever that impact is, I'm just hoping everybody realizes that we have done the research, we have done all the changes and the projections and everything to do the best and least impact uh on the residents.

The aren't don't some of the other cities have a primary and the secondary property tax?

Most all of them, I think, besides us and Mesa, the other ones do.

So that's that's something that I hope our residents will appreciate that that we only have a secondary, and we're doing we're doing all of this and all of these projections to try and prevent a primary property tax.

Okay, thank you.

So Bobby, thank you.

Um, do you mind if I ask you a couple of follow-up questions?

Bobby, do you mind if I ask for things that you raised?

Because now I'm I'm interested.

Um the first part that you asked about was are there any things that we've delayed postponed, whether they're one-time projects or other projects that had ongoing revenue uh uh uh implications to the town.

And what I heard you answer was you you you were specifically thinking about one-time projects, but but I think Bobby's question went a little bit bigger than that and you just asked was there anything that we postponed that actually negatively impacted our ongoing revenue over time.

And I just wanted to make sure we were clear on that.

What's your answer there?

Sorry, putting it on the spot I know.

Sure.

Um I think the question is probably specific to developments that maybe weren't approved.

Um if that were to never develop, then it would have an ongoing impact, but the likelihood that just because we say no to one development means that it will never that's unlikely.

So it at some point it will develop.

I don't know the difference of what wasn't approved now, what might get approved in the future, and if the future one has more sales tax or more ongoing value to the town.

That's more what it my crystal ball is not that clear.

I'm not sure that it was about uh and Chuck.

I saw you want to speak, I'll call on you in just a second, but it wasn't just about development, it was about was there other infrastructure investment or other facilities we were going to build or something that we've decided to postpone that also impacted ongoing revenue over time and and economic impact and the economic impact of it.

Yeah, and the economic impact that certain developments would bring in.

And we're looking at fees and things here, but they also that would you know certain developments that have restaurants and and a hotel except those would bring in more revenue in that aspect.

Yeah, so again, we're not going back in history, we're not trying to rethink the decisions that were made, but I think Bobby, the point that you're getting to is there an attitude as we approach development decisions or other things that we have to be mindful of in the pro in the course of this conversation.

Thank you.

And then Chuck, I promise I'll come to you.

What I would offer is uh you're gonna hear an example, a couple examples tomorrow afternoon on some projects that are already out of the ground that are under construction or in plan review.

The team has been really aggressive in going after some different projects, particularly mixed-use projects because they help um provide better installation for volatility in the market.

You might have a hotel, you might have a commercial, you might have a uh residential component.

Um there are several in pipeline in the pipeline that are going to be coming online in the next year, 24 months, 36 months that I think will you'll start to see some more of those uh show up in the community that will have positive impacts.

Um but I also think that our ability to capitalize on those opportunities is also a function of where we're at in the development life cycle.

I don't know that we would have had those same opportunities to attract the developments we're seeing now 10-15 years ago if that makes sense.

So where the heritage district is today, all of that success builds on future success.

So I think the team is actively poised and uh positioned to continue to go after those types of projects, and there's a handful there in the pipeline that you'll see starting to come out of the ground in the next 12 to 36 months.

And and those will definitely help these terms.

They will call on uh Chuck.

Go ahead.

Is the caller there?

That would be what filled on you would say Kelly.

Can you explain more for the residents um that are listening?

The different buckets that we have.

For example, I just keep hearing, oh, if we don't make that bridge, we'll have 160 million dollars that we can throw in to these other kind of things.

So can you go over really quick what buckets we can't take from?

What buckets we can't take from?

Yeah, certainly.

Um there are different restricted buckets or pots of money in the town, it's not just one big bucket of money that can be used for anything.

So your example of the bridge, um the bridges being paid for out of some of the transportation bonds, those are restricted use for only transportation projects.

If we were to not do the bridge, for example, we can't just move that money over into this.

This is our general fund.

We can't move it here and pay for police officers with that money.

It's restricted only for capital projects associated with streets.

Uh same with our system development fees.

Those are not represented here in this graph because they are in a separate checking account that are restricted to only spend on specific growth-related projects that have been approved in a study and gone through an adoption process.

So those are kept separately.

They will be spent on the infrastructure projects associated with growth as allowed.

This is our general fund is where we fund police, fire, parks and recreation, council salaries, human resources, IT infrastructure, it's the basic operations of the town to provide services.

And there's only specific money that comes over into here.

The bond money for transportation does not.

We have bond money that's only for water projects, like the North Water Treatment Plan.

We can't just not build the Northwater Treatment Plant and move that money over to the general fund either.

They're not interchangeable like that.

Thank you.

I really appreciate that.

Hey, Chuck.

Kenny.

So I think sometimes we maybe don't ask the right questions.

I think we tend to look at things in silos.

Sales tax myself.

Whatever different revenue levers individually.

And with all of it, we go, okay, well, where's the lowest we can make?

And I get it, because we all want to we want to take as little as possible to provide best classic service.

But if you take as little as possible from every area, and you take nothing from a couple of areas that other cities are taking from, you're a big zero.

At some point, and here we are now, you you can't be the lowest in everything.

So, like going into sales tax, I remember watching, and it was the council trying to be very prudent and trying to keep that rate low.

And we're talking, what's the question?

What's the rate?

Well, maybe the question needs to be what dollars do we need to get from that rate?

Because after that was done, I remember a graph showing that Gilbert is getting $995 per resident out of the sales tax.

And every other city around us was killing us.

Chandler has less population than us, Scottsdale TV, Peoria.

And all of them were even those that Scottsdale has a lower rate.

Chandler has a lower rate.

Um at the two point in the middle.

Every one of those cities is getting more out of that rate than we are.

And then I go back in my head and I remember patrolling these streets about that long ago, and we were 85% residential.

So we in early years did not plan for what the sales tax tax sales tax dollars could do at the scale that the other cities are.

And now we're here we are.

So we're gonna have to do some drastic things.

Either we decide we don't want a primary property tax, and we're going to have to live with like we're doing now with the the utility.

We've moved from lower than anybody to the high end.

Um if you I recall another chart that um you showed Kelly, where there was eight possible levers that local government can pull to generate revenue.

We pull in four of those.

All the other cities on that list pulled six of them, one pulled seven.

So we have to decide what's important.

Do we want to live on these volatile sex?

You know, let's the sales tax is like to me, like a stock market.

I would not plan my future, my household living on the stock market, right?

I want other investments that are more secure, and we we need to have a serious talk about balance, so that we're not taking nothing from here but living or working our way towards the highest tier.

Because everyone's emotional, we are public is everybody's, and we're only gonna see those big silos if we don't create balance, and it's gonna be you know the water rate now, everybody's complaining this it's the high, you know, high end of the world.

Well, to get what we to get the dollars we need if we do nothing else.

Our sales tax rates could be the same thing, and that's if the legislature lets us do it.

Thank you, Kennedy.

Can I absolutely right?

So Kelly, uh we're comparing ourselves to other cities.

We are a town, and maybe I think that could help if you can explain a little bit of the difference in how we operate versus a city, just like Mesa can take money from here and from the bucket, like Chuck's uh council member on your body sales, and um, but our buckets are like they kind of have a lock on them.

It's kind of the way I look at it, and I can rationalize with that.

It's kind of the way I look at it, and I can rationalize with that, that each one of them have a lock on them because therefore a certain item, just like everybody has a lock on their own house, then each of these items, and and it's different.

We operate not a lot different, but different budget-wise than a city like Chandler, City of Chandler, City of Mesa, City of Scottsdale.

Uh, I think that might help if we could explain a little bit of why we are the way we are, and they can dip into every bucket they have.

Sure.

Um, what's the difference between city and town?

There are two legal differences and distinctions.

Um we go to sell property if it's not in a redevelopment area.

We if it's over a certain dollar threshold, we have to put it on a ballot, like we did with the um the Helier site or the prior um public safety training facilities I had to go on a ballot and get approved.

Um, whereas Mesa as a city wouldn't have did that change.

Uh so it charter cities, charter cities don't uh charter cities don't have to go through that same process.

Cities and towns that are non-charter go through that process.

Cities have the ability to adopt charter we don't.

Thank you, Mary.

Um there there are some distinctions in state code between what cities and towns can do.

Um sales tax, it doesn't matter if we're a city or town, our rate is our rate, and we get the amount of money that comes in from sales tax.

For state shared revenues, it doesn't matter if we're a city or a town, our population is what it is, and it comes to us based on that population.

So for most of our revenues, our distinction of city or town probably doesn't make a difference.

Um what might make a difference between city and town, or uh your question about making money between funds, like Mesa doesn't do it because they're a city stealing money from their enterprise funds, they have a different level of financial practices and they are not triple A bond rated.

They have made different choices about what their financial best practices are.

And I guess we we have different choices and different policies that we follow.

Thank you.

Uh Jim.

With regards to the sales tax per resident, do we have any charge over a period of time that shows a change in what we're bringing in per person?

And I say that because we are so drastically lower than any other community, like for instance, Chandler, which is generally our go-to to compare ourselves to everybody.

Oh, well, Chandler does it that way, you're mismanaging it.

Well, Chandler people spend 50 or 70 percent more per person, and part of that's the culture that we have in this town.

This town's just old school culture, it's a certain way of savings, certain way of you know, eat at home, don't eat out, uh, but that culture changes over time.

Have we seen a shift in how much per person is happening, and if that shift will continue forward?

Does that make sense?

What I'm asking.

A historical shift in sales tax spending per person in Gilbert versus the other cities.

Um I don't have that data already analyzed or like recreative, we could look at it uh what it is over time, and you want for capital per person, not yeah, not for the whole town, just per person, because it seems to me that as we bring more people in that culture that that very frugal culture, let's call it, uh, will dissipate more, and people will be out spending more.

And if per person we're spending more, the reflection in what what we're gonna take may be different, it may not also, but it's it's a question worth asking.

Yeah, we could look at the data.

I I don't have it right here today.

Young working along the right.

I would just add on to that because we're torquisant that it's not necessarily that Gilbertonians are spending less, it's where we're spending our dollars.

If you want to go to buy a car, how many places in Bilbert can you really go to buy a car?

Those are big dollar items with big sales tax implications.

If you want to go to a Bass Pro shops, an REI, a SHIELS, none of that is in Gilbert, so we're shopping outside our community because we don't have those certain stores in our community.

So I think that is a big piece of where sales tax is going.

Some of it we have.

We have the largest Ford dealer in the country, I think.

For instance, that's right here in Gilbert.

But you're correct that we are shopping outside, for instance in the South, they go to Queen Creek for Target.

Yet the people in the South want to fight a target that is going to reclaim millions of dollars of sales tax, and they'll spend it in Queen Creek because they're going to hold out for a whole foods.

So yeah, we have a few things like that, but it's also what we actually spend.

And it it would be mitigated by some things she's bringing up.

But those things are coming online here, like Dick's sporting goods is now Dick's, whatever they call it.

It's going to be 10 times our size.

Yeah, agreed.

Those are really good businesses to have.

And that would be a TV.

So I think in analyzing that there may be something to that.

Jim, but I think also it goes back to what I was saying is we're late in the game when it comes to really focusing on commercial.

We were 85% residential, like 2000 five ish.

Don't hold me that number.

So when we're analyzing also need to see what's the commercial base that's generating the sales tax.

Like what percentage?

Chandler, I know has a lot more than we did.

They have an intel that we don't have.

What percentage of commercial do we have less of than everybody else making an assumption that you don't go 85% to little towards the end of that of uh build out?

And I think that's also a very we have to look at because some of that's like you can't make it up once it's gone.

So what we do with what we have left is critical.

Mary was talking about the mixed use, and I remember seeing a chart that pound for pound that was generating more dollars than anything else commercial.

Um a lot of times we don't want to consider that because it might be a residential component in there.

So we've just gonna start thinking differently.

But if you're analyzing that, please um you know if you guys can factor that piece into because that data won't lie, you know, we'll know what percentage we have, compared to how far can you get with what you have.

So let me just ask you a question while you got the mic.

Uh I don't tell me if I get the metaphor wrong.

But what it sounds like you're saying what I'm hearing others say is kind of like that Apollo 13 moment where you know the spaceship's broken and everyone on land says, well, this is what we have to work with, and somehow out of these materials we have to fashion whatever the solution is for oxygen or whatever it was.

Like that's where we are in Gilbert.

Whatever, whatever is in the past is in the past.

We have to work with the demographics.

We have the the economic mix that we have.

We got to make the most of what we have here.

Is that the metaphor?

That's very true.

All right.

Uh Mayor, can you?

Well, here's the complicated part of our discussion.

Um we spent the whole discussion talking about revenue.

How do we get more revenue?

And revenue seems to though it's just gonna get us to a certain point.

That's all we're willing to live with.

Well, the other side of that is the service level.

Can you talk about a little bit what the service level is?

It's pretty high in Gilbert.

We have we have to make the two meet, and if we do, that means we have to cut services.

And I know that's something that that many people want to talk about.

But if we can't get the revenue to uh match what we need, then we need to look at the other side of it, which is the service level that we provide.

We need to keep that in mind in our discussion.

Hey Mayor, can I ask?

I don't want to put you on the spot, but can I ask when you say cut service level?

That's cut the scope of services, not necessarily the quality of services, or or do you see those things as being very much tied together?

I don't know yet.

We'll have to uh look at it a little bit closer, but it could be simply uh cutting classes and parks and recreation because we can't find anymore.

It could be things that single.

Yeah, so it can be a reduction, which doesn't mean that what's offered is less quality, but the scope of it is less.

I understand.

Other comments, questions, observations.

Mario, go ahead.

Appreciate it.

I this has been a great discussion by the council.

Really appreciate all the and uh a lot of that like we talked about is gonna lead into our discussion later today, so I know we keep we keep doing that and putting uh quitting all the hype on Don's presentation.

We're gonna have a competition.

But that'll be good.

But at the same time, I wanted to um Kelly had a slide up earlier that talked about the mix of the fund sources and how heavily we rely on sales tax.

I think it was last year at 55%, sales tax was the revenue source that we rely on so heavily.

And you know, part of that, the primary property tax discussion, a lot of other cities have that in the mix.

Um, I think the other thing to point out is although our sales tax is at is at 2%, 0.5% goes toward the quality of life, and Councilmember Kaprowski pointed this out earlier as well.

So all those capital costs are also built in to that 2%.

Um and so really when it comes to the the OM of the services that are being provided to the town, the operations and maintenance, it's what you're really looking at is 1.5%, and that is the lowest, that's the lowest rate of the valley cities.

Um just wanted I just wanted to point that out because even though we're so reliant on sales tax because we don't have the full mix of other fund sources there, we're still really for the operations and maintenance of the services that we provide, we're really truly at the 1.5% level still.

Now I recognize there's some things that we can do, and we're gonna talk about that this afternoon to to make adjustments there if the council's willing to do that.

Um but I just wanted to really emphasize kind of that that over reliance.

I'll call it an over reliance on sales tax that we've got here in Gilbert.

So great discussion.

Really appreciate the opportunity to talk about that.

I give that man a cigar because that was profound.

Um I asked Kelly if she wouldn't mind going back to the general uh fund revenue sources for a second.

Because I'm I'm thinking about Kenny, what you said before about the uh the different levers that are available.

You said there were eight, but some we're using four, the most any other communities using is seven.

Kelly doesn't have that slide available for us today, but I was wondering if we could just go back to here and if I could ask Kelly if you don't mind me putting you on the spot.

Just as we look around this, can you just remind us where those levers are in the course of this?

I'm not sure I know with all the seven.

Maybe I'll put Kenny on the spot then.

Kenny, can you can you help us just think about what the so sales tax?

So a couple things that I recall we were not tackling, obviously the um primary property tax.

It was us and Mesa, but again, Mesa overcharges the water to fund what we fund in the general fund and replace the fire.

There's also we're taking um 14 million dollars from um the vehicle license tax, and we're using it differently than the other cities because they have a different um gas or transportation type tax.

I don't recall exactly how it's done, but they have an additional tax that they're using for their their streets and roads and stuff so that their VLT money is going into the general fund for us.

That's sort of quote, we have a 20 plus million dollar problem.

That one alone, that VLT is 14 million dollars that we're not putting into the general fund like every other city is.

We're using that for the streets and maintenance because we don't have what levers they're pulling to fund those things.

That makes sense.

I'll leave to everyone else in the room except me.

You know, and in terms of the property tax, the um all the other cities have it, and when the recession hits, and spending stops, because I can guarantee you my spending will stop.

All of our spending will stop.

Well, not stop, it's going to reduce.

Um, we take the biggest hit because we're living the largest on that most volatile tax.

And the property valuations, uh, you know, cannot go more than a difference of five percent.

So it's it keeps it incremental regardless of what happens with volatility in the markets.

So we're we're just playing in a riskier space.

Other cities are more well balanced.

But everybody hates the term property tax, and it feels bad.

I don't like it.

I like to moving here and not having it.

And that's great as long as you can afford it.

But when you hit a crossroads, um, if you're not balanced, you're gonna take the biggest hit.

So that's why I thought it was just useful to put this back up on the screen here, just as a reminder before we break for lunch that you know we got a problem to solve.

Council has a problem to solve, the city has or the town has a problem, but the sources that we have to work with currently are defined around this circle, right?

And so we have to figure out what's the mix of revenue generation or expense uh trimming that goes into this, or what are new revenue sources that might even be considered.

And at the moment we're putting it all on the table for purposes of discussion to say we got to think about it all, we got to think of it holistically.

We're approaching the end of this agenda item, but I want to just ask you all just to reflect together.

I mean, this is a great time for council members to be leaning into each other's expertise to uh their perspectives.

Is there anything that you'd like to ask each other, or anything that you'd like to observe generally as you think about the situation before we get into the mechanics this afternoon?

Anything else at this high level that you just would like to put on the table and make sure that we're aware of that we're thinking about before we go into it?

John?

And then I'll go over to Bobby.

One area that is not my strength, but is covered by general fund only, I believe, is our police and fire, and that's something that is very important to me, but is not like my expertise outside of this position.

So as we have these conversations, I would appreciate hearing more about how those departments are funded, how they evolve, how they continue to need to grow based on our population, um, and and how closely tied those are to general fund because I think those are extremely important in addition to you know everyone else, the parts of the rec, the whole admin staff.

But what I think I've seen just from a citizen perspective and in other communities is typically you know, staff cut certain departments like parks and arrack or place and fire, and I think that it's very important to talk about this and cutting service levels that we are cutting people, we are cutting service levels, not only when we talk about you know, maybe how how fast someone responds to you for a utility bill, but how fast someone responds to you in a crisis.

Thank you.

Yeah, can I restate just I'm not trying to lead because what I think I just heard you say was there are a lot of really important things that the town does, like not just really important, but essential responsibilities, and as we're gonna sing it or assuring it for the future, but I just you're bringing into the moment, we have to remember that public safety is one of those sacrosanct things for which we are responsible as a town.

Is that that I kind of capture it?

Yes.

Okay, thank you.

Bobby.

Thank you.

Um well, I just thought I would bring up while while we are here for all the council members, to first of all our our thought is because you know, at our our council meeting a couple of weeks or a month ago, we decided we wanted to see more of how we could not raise fees and rates, which are not taxes, they're rates and fees.

And so I my my thought is just the whole time we're here, we need to think about if we can't find another solution.

Are we willing to move forward with raising those fees and rates?

And if we're not, then I this is what I want to be thinking about is if we can't find a solution here.

If we don't want to do the full race uh rate increases, how much would you be willing to do?

Either half of it and try and find another solution for that.

But the the bottom line of why we're why we're here is you know, we need more funds, and Kelly came up with a solution that none of us really particularly want to do, and and we're here to try and find another solution.

But just in this morning, I'm not I'm not sure that we will find another solution that is gonna bring us the revenue that that we need.

Thank you, Bobby.

I'm gonna ask you on this one as well if you don't mind, just to make sure I'm hearing you.

I don't think that Kelly would say that she found a solution.

Well, I think what she would say is she's identified the framework by which to consider all the different options here.

And is that is that a fair yes?

I provide an option.

Okay, but that's better.

I'm a professional summarizer.

This is what I do.

No original thoughts, but I'm good at repeating other people's stuff.

But I will add one more thing, which is what I think I also just heard you say was that this is the time where council may need to think about tough decisions in either direction, right?

Either revenue or expense, but there's no question that there's pain involved in either direction.

Yes, absolutely.

I got you, I got you.

Thank you.

There was yeah, go ahead, Marty.

Sorry.

Um this may be my opinion, so take it for what it's worth.

But I feel like as this has become uh an issue for us, we've been talking around it and haven't it seems like we just keep acknowledging we have a problem, but we're not making, I don't feel personally, I'll put it that way.

I don't feel like we're making any progress toward a solution.

We're looking at potential solutions, but I don't feel like we're making progress to get there.

So one of my recommendations may be to us that we pull together like a blue ribbon panel or something from people both inside and outside the town to take a look at what we're doing and make recommendations to us for analysis, and that way we're bringing a brain trust to come bear on it.

I mean, that's my observation.

I don't know how you guys feel about that, but I would really like to see some other ideas, because frankly, this is an area that I want to say I'm a little ignorant in at times, so you know, Kelly, you provide us great information and gives us insight.

But when I look at what we can and can't do, sometimes I struggle with it because not what I do in the private sector, but government's a whole little different animal.

What would you do in the private sector?

Uh a couple things.

When we would have um revenue problem, we would look at the revenue streams that we have that generate the most profit and focus our resources on increasing sales in that particular area.

We will look at the areas where we were drilling money, you know, product that we put out that are maybe lost leaders or things like that, and see, okay, well, can we cut there?

We would also look at uh potentially uh adding resources, and I'm talking head count to increase production in different areas to help generate money in those areas where we have the highest profit margins, those are some of the things that we look at.

Uh or we may look at how can we improve our product to make it more you know marketable in the marketplace.

So, Mikey, can I put you on the spot and say so?

So now you're a council member, and there are people who might be listening to this, you know, who are thinking, yeah, that's that the business mindset is how we should be approaching local government.

As a council member, how do you now have to look at that differently?

What's going through your mind?

Um it seems like well, there's two factors of it that runs through my head.

Number one, we have restrictions that are coming from our state regulations that we have to be aware of that tie our hands in a lot of things that we can and cannot do.

We have historical decisions that are that were made that come to that are bearing on this current situation that we can't fix, so how do we go mitigate those things?

For instance, all that commercial property we're talking about, Mesa's revenue generation, all that property on the south side of the 60 that we just seeded that is generating money constantly, and Gilbert's going right across the road and helping fund Mesa.

So those are the kind of decisions that have hurt us.

So we look at like the economic uh the uh redevelopment projects we got coming up.

How can we, to Mary's point, maximize the use of that land to generate as much revenue as we can?

What kind of businesses that we need to bring in?

I was talking with somebody at the chamber yesterday, you know, looking at maybe um partnering with like we do with the airport, looking at the municipalities here and looking at developing some of the land that is north of the new Santan area to create an industrial park where we have heavy industry companies.

I'm sorry to I think it's an interesting dialogue.

I hope you all will indulge me for a second.

Um, in the business mindset, it was you described something that's very return on investment.

Let's focus on the things that drive the greatest profitability and and and ease up on the things that don't, and we're gonna grow out of this.

In your city council, in your town council mindset, you just said you have some legacy decisions that have been made that have impacts that you can't do anything about, you're beholden to.

And I was imagining what you were also gonna say was sort of like what Young was saying.

It's like if, and I was using this as a for example.

If uh if you said, yeah, well, we don't generate a lot of revenue out of the police department, but we do add a parks and rec, so let's ease up on the police and have a lot more classes that we can charge for.

You would also say, well, that doesn't work because you know, cities have to provide uh a police force and provide for public safety.

So that's also not a business mindset, that's a responsibility mindset.

So I was just trying to be explicit, like there's a different mindset involved in trying to solve these problems.

Yes.

100%.

Yeah.

Did you want to add to that?

I saw you didn't.

You want to grab the mic?

Yes, I I am.

I have to push back on you a little bit, brother, because I'm not interested in another blue ribbon panel.

We we did that.

We put together forge.

We brought very, very smart business leaders together with our very, very smart um manager, assistant managers, Kelly, and other staff.

And that group went through all of the numbers, looked at, verified there's still fat.

Um, looked at the different levers that we could pull.

In our very last session, we had that whiteboarding session where everybody went up and and made recommendations on levers that made sense given our problem and its timing over time, short term versus long term.

And ultimately, that's what led staff to come to us with all of the levers that were available based on what Forge had done.

It did include um primary property tax, although it was not 100% in force that they wanted that.

Um, but it was something they recommended we look at.

And then we narrowed down five of us voted, we narrowed it down to 9.8 million dollars in levers.

And five of us voted that down.

And so that was already done.

And I I believe what we're gonna see later is our staff through Don making some recommendations on how to navigate this thing.

So I want to hear what they have to say.

I need to trust our staff.

You guys are very, very um good at what you do, and want to hear what you guys have to say.

Um I don't think I don't feel like we need to bring more more uh forge committee on it.

We already get it.

And that's just a that might be a question that will come up at the end of the retreat again about whether we've put enough creativity, enough ideas on the table, and you're satisfied that we've we've found all the ways to make oxygen in the in the spacecraft, or if we need to go out and find other ways to do that.

So it's an interesting conversation.

We'll come back to it.

We are almost ready for lunch, and I'm just I'm gonna probably grab Jim who hasn't had a chance to get in on this one yet.

Sir, I want to incorporate what everybody here has said.

As you go in business, 80% of your customers are a pain in the ass.

You make your money off 20%.

But on this chart, approximately 70% of the revenue comes from privileged set license tax.

That's state and that's local and state shared.

That is our strong point right now.

With urban revenue sharing, it'll go up a bit because we have a certain amount of capacity.

Other others are the unpulled levers.

But if we look at our strong point where we're making the most amount of money, and we look at the deficits, let's say, like Bass Pro Shop, not enough car dealers, etc.

The glaring problem is that we have not had capacity or the will to push economic development as hard as it can be pushed.

That is what will force some growth out of this.

If people no longer go to Target Queen Creek and go to Target in Gilbert, if people no longer go to uh freeway Chevy and Chandler and they go to Auto Nation Chevy in Kilbert, we can start increasing that 70%.

Certainly that 70% could turn to 80%.

The problem with that is we're on a roller coaster still, we're still taking a percentage, but it's a much stronger point to be from.

And if we end up being something where people come to live, eat play, buy resorts, etc.

And look at that more.

That is probably the best shot we have at not increasing uh increasing base costs to people turning around and saying, hey, I want to add a dollar primary property tax.

Really the best shot we have is with the 70% here, and growing that pie larger and a larger percentage of that large pie.

And that's incorporating everybody's idea that's been spoken.

The smart moves economic development.

The smart move is doing whatever can be expediting uh permits for people to build a Cadillac dealership, things like that, uh, getting people through process as quickly as possible, getting them online as possible, turning over as many things as possible to public private partnerships.

That is where we will grow.

That's where we'll avoid a train wreck at this point.

That's listening to everybody's what everybody has said.

That is how we do it.

Jim, can I ask you when you think about economic development?

Do you think of that as both a long-term and a short-term solution to this?

It can help like even in the next fiscal year.

Yes, because it continues it will redevelop it will renew the Northwest quarter.

Well, I understand the long term.

I was really trying to get to, do you see economic development as a short-term solution as well that we could put into the budget and bank on it for the next fiscal year?

Not so much the next fixed year, but maybe the one after.

Okay, so um I I believe we're here two fold.

One we have an immediate issue of the 70 million dollar death that's right that we're looking at or the 20, 30, 40.

So we'll get into the specific is that we were going to increase rates and fees.

That's our immediate issue that we need to think about and deal with.

And we're also here because all of council wanted to find long-term solutions.

And I I think the solutions that have been mentioned, I I like them.

I think I think they were great ideas and and great things possibly for the future.

Um but what I don't want any of us to lose sight of is that we have an immediate issue that we need to fix.

Uh we need to find these funds, correct, prior to the July meeting, but more the fiscal year end.

But there will be some pain involved with that.

Yeah.

That's what that's what we're gonna do all afternoons.

Otherwise, we're gonna be cutting services and projects.

Um and that's that's the two issues that we're gonna just kind of have them really look at.

Bobby, that is the perfect concluding message for this morning.

Hey, um, first off, join me in thanking Kelly, who as always has a great job.

Let me also say thank you to council members for all of you for contributing.

This is a really important conversation to have in preparation for the discussion we're having this afternoon.

So give yourself a round of applause for that as well.

I'm sorry.

Hey Chuck, I don't know if uh if you're still uh with us, but just wanted to check in with you, make sure.

If you can hear us.

Yeah, I'm here.

Fantastic, thank you so much.

Glad to have you here.

He's on this way.

All right.

It goes there.

First, what's going on?

All right, let's do this.

All right, those puppets and cookies are really good, right?

All right.

So um it's time to get into the meat of our afternoon conversation.

And um as I was working with Don and with the leadership team here, it occurs to me that that there might be a worthwhile conversation for us to have before we get into the mechanics of everything.

And on your agenda it says Mentimeter exercise, and um first up, we're not gonna use Mentimeter, and uh exercise does not mean you're getting up and doing catalysts, which is good.

But it does mean that I was hoping we could have a quick conversation.

Um and the leadership team have suggested I went back and I watched your council meeting from the end of January.

I wanted to understand kind of the mood that you all were in as we're coming into this conversation today.

And I watched every word of it, and I understand from that a lot of the sensitivities that are kind of baked into the conversation today.

And so what I wanted to do was see if I did this.

This is my first time touching the uh search.

Hey, I did.

So I just wanted to respect that as your facilitator, I recognize that this is a conversation that's gonna be complex, it's gonna be sensitive, and it's gonna be really consequential.

Right?

You're making important decisions that don't just affect the town as an entity, it affects all of your residents, and it affects uh very personally the nature of governance that you all do as as members of the council.

And so I was hoping that we could take just a few minutes and you would let me ask you a single question that we can talk about together.

And um is gonna help me.

Council members, what I'm gonna ask you to do is to use your cell phone to pick up the QR code on what she's handing out.

Anyone else on staff?

I would ask you, please don't do this.

This is only for the council members themselves.

But the question I'm gonna ask you is this.

I'm gonna ask you in just one or two words, what values you would tend to rely on as you consider Gilbert's immediate short and long-term financial responsibilities and opportunities.

Before you answer it, before you start putting the words in, let me just set this up for you.

Because listening to your January meeting, I had some thoughts.

It occurred to me that each of you will be weighing these choices from many different angles.

You've got a sense of fairness, a sense of responsibility as stewards for the community's financial resources.

You have your oath of office to serve faithfully and impartially.

You have your own personal understanding of what is good governance.

You have awareness of how past council decisions and at times indecisions or absence of decisions have shaped today's reality.

Um concern for how today's choices will be experienced by the community and your shared aspirations for Gilbert's vision to be the city of the future.

And so I'm gonna ask you this question.

Oh, I'm supposed to tell you that as you're using this, and the first question is you're gonna say that you're gonna use it as a guest.

It's gonna ask you your name, but rest assured your answers are anonymous as they're appearing on the screen here, I think as they will in just a second.

So before we move into let me just do ask your stop, yeah.

You should be able to enter your answers into this question now, and your words are gonna council members are gonna start showing up on the screen.

I'm gonna ask you to enter answers with just one or two words together.

And then once you hit submit, you can enter more words.

There is no limit to the number of words you can enter, but I'm gonna ask you to keep your answers really short.

Once someone has done it once, we will see what the words look like when they appear on the screen.

I'm really asking you, is it working for anyone yet?

No.

Send me back scene you denied me.

It denied you.

You denied me the idea.

I denied you personally.

Wait until the presentation starts.

Oh it's it's more I think you're on a fire right now.

Uh oh, let's see.

I may need your problem here.

I don't know what the heck I'm doing, but we'll put it.

Jenica had to step out, so we're just gonna figure our way through this.

And if not, we'll just talk our way through it.

Oh my gosh.

Oh no, we broke that.

That's definitely not good.

I'll try this again.

What happens when you call the backup?

Um who set it up?

Who set up the Mentimeter?

Janica?

Yeah.

Okay.

It's not Mentimeter, though.

It's um in Canva that she did it.

Oh, she did it directly in camera.

Yeah.

Can I ask you to give us 20 seconds if we can't do it in 20 seconds, we're just gonna talk our way through it as well.

But here's my question for you while they're figuring this out.

I got you.

I'm looking for words that describe the values that you want to have in mind as you're guiding your thinking as you consider Gilbert's financial responsibilities.

What are the values?

The question is, what are the value?

What are the values that you want guiding your thoughts here?

And whether you're looking at that from governance or fiscal responsibility or promises that you've made, or anything else about what you think is good governance, why don't you just tell me?

Just shout out some of the words.

I will take notes and we will talk about them.

Just throw me some vocabulary words.

What would you say?

Responsibility.

Responsibility, great word.

What else?

Realistic.

Realistic.

What else, Mayor?

Prosperity.

Prosperity.

What else?

Integrity.

Say what?

Integrity.

Integrity, Chuck, thank you.

Needs.

Needs.

Like basic needs, Poppy?

Yeah, like what the town needs.

Yeah.

Basic needs.

What else?

You can throw up multiple words.

Come on, Monty.

Stewardship.

Stewardship.

What else?

The residents themselves.

The residents themselves?

You mean like.

Well, what they want and what they need and what they're expecting.

Yeah, so the residents' perspective on this, right?

Yeah, that's really important.

Help me out.

I could use a few words.

You can say multiple things.

You're not monopolizing this if you give me five or ten words.

I'm totally okay with it.

Jim, anything you want to throw at me?

Fulfilling.

Fulfilling.

What else?

Overthinking.

Overthinking.

Quality of life.

Quality of life.

Courageous.

Courageous.

Oh.

Innovative.

Innovative.

Hey, Chuck, let me ask you, throw it, throw out a couple more words for us.

On the spot now.

I'll throw on the thing.

You thought this was just going to be an easy afternoon.

You know, I am on a pink pill, so no.

I'll come up with them in a minute.

Calm.

Did you say?

Jim said.

Oh, Jim said calm.

Calm.

Serene.

Seriously, calm and serene?

Community.

I'm going to throw out data.

Trustworthy.

I'm in a different mindset.

Yeah, well, that's what we're trying to get to.

So the values that you're saying is you want to know that this is data, that this is driven in reality and concrete expectation.

Yeah.

Chuck, go ahead.

I heard you say something.

Trustworthy.

Trustworthy.

Balanced.

Balanced.

Let me just read back some of these words that you've all just said and see if if I can, if I've got them, if I can even read what I wrote.

Responsible, realistic, prosperity, integrity, stewardship, basic needs, resident population, fulfilling, forward thinking, quality of life, courageous, bold, innovative, trustworthy, balanced.

Factual.

What was that?

Factual.

Factual.

Yeah.

Factual.

Give me some more.

I'm not looking to end this anytime immediately.

I'd like to make sure that we get all this look.

If we were doing this in a word cloud, we would begin to see which words would grow in size, right?

I would be looking for where is their critical mass here.

So I'm just listening to you to understand the gist of what you're saying, because these things all sound very similar to me, Monty.

Realistic.

Realistic.

Believable.

Believable.

Hey, Chuck, let me ask you to elaborate on believable.

So if realistic means fact-based and rational, believable means what?

That the perception of it matters.

More the message.

More the messaging of it.

Oh, it's the messaging of it.

Yeah.

Thank you.

Could someone tell me what it means when I heard someone said fulfilling?

I'm not looking for who said it specifically, but what do you what do you interpret from a word like fulfilling in this context?

Fulfilling needs.

So fulfilling needs means it's serving specific needs.

Anyone else want to comment on what fulfilling means in this context?

Bondi?

When he said when they said when that was said, I was thinking it's aligned with probably perception, but when I when I drive around Gilbert, I I look at what we have created over the years, and there is a sense of accomplishment, of pride in what has been done.

So when you're looking for me, when I'm thinking about fulfilling, is it going to continue in that vein?

That what we produce, you know, stands the test of time and feels like it is, you know, permanent and a testimony to our character of our community.

So fulfilling, you're saying is um it's kind of um it's it's purposeful over the long term for me, yes.

That's really interesting to know.

Jim?

Grateful.

Grateful, what is grateful mean in this context?

That's bridging what he's saying, and I was saying about fulfilling when people look at something, they're grateful for what they have.

They don't take it for granted.

They're grateful for what they have.

Grateful, appreciative, appreciative, trusting, being confident.

I'm sorry, Bobby, what?

Confident.

Confident?

Yes.

And who's confident?

Our confidence in the decisions we're making and what we're hearing and how we're listening.

That council feels confident as we're making the decisions.

You need this process.

Again, we're talking about the values of the of the direction that we're setting.

Council needs to feel confident that what we're doing actually is solving the problem, serving our community.

We need to feel confident that we're doing the right things here.

Yes, absolutely.

That's a really important point.

Thank you so much.

Actually, the public being.

I'm sorry, young high value, low risk.

High value, low risk.

Tell me about that.

Um the decisions that we would make would result in ensuring that the services or things that we are paying for for our residents and businesses are high value, but low risk in terms of um not being volatile or not having risk of catastrophic consequences.

Let me repeat that one back and see if I got the gist.

When you say um high value, low risk.

What I'm hearing, what I think I'm hearing you say is it's important that the decisions we're making are going to deliver on the promises that we're that we're that we're making, right?

Deliver on the on satisfying the challenges that we have, but we also want to make sure that we are not over-promising, that the decisions we're making aren't short-sighted, that they're rational and and and we have confidence in them, but that that we're not overextending ourselves or future counsels in that regard.

Am I approximating what you're saying?

A little bit.

I think mine was more related to um the results of our decisions would be high value to our community, but low risk to the town.

High value to our community, low risk to our town.

All right.

I'm gonna read through all these words one more time.

I'm not trying to cut this down, but you can add more if you want.

But now, counsel, I would love for you to tell me as I'm going through this.

I'm guessing that most of these words would be green and yellow to you individually, that you would endorse this generally.

But I'm really interested if there's any red sensibilities that get triggered here.

And red sensibilities doesn't, in this context, it doesn't mean that you are opposed to it.

It just means that you want to talk about it a little bit and understand what it is when we say these words.

So I'm not gonna I'll kind of go quickly through this, but just tell me if I've if if any of these kind of get you, if not red, even if it gets you like orange, I would like to know about it, okay?

So responsible, realistic, prosperity, integrity, trustworthy, balance, basic needs, stewardship, high value, low risk, residents' perspectives, realistic, believable, fulfilling, forward thinking, quality of life, courageous, grateful.

I added appreciative to that.

Bold, innovative, factual, confidence.

Anything in there get you even closer than orange or red?

Anything here that you would want to just say, wait a minute, let's just be clear what we're talking about here, because that could take us you know into a place of discomfort.

I'm gonna adjust my comment about the low risk because I think that that is juxtaposition to some of the innovative and bold things, and more of a calculated risk.

Calculated risk.

And then a couple other words that stood out to me were prosperity and quality of life, because those could also be juxtaposition to some of the other words that were thrown out there, like realistic.

Oh, you're observing that prosperity and quality of life.

Quality of life, like that may sound kind of idealistic compared to realistic and factual.

Yes.

There's a natural tension, what you're saying is built in there.

Not that you're opposed to it, but let's just recognize that these things don't always um uh uh coexist uh easily.

Right.

Is that fair?

Yeah, yeah.

That's good insight.

Actually, it's it's it's a great insight, and it's really the right segue for what we're going to do.

Because I think it's useful just to lay these out.

I wish I could put them all into a chart and you could see your own way that you've done this, and you could see which words, because if I'm a word cloud, I would be asking you then to repeat yourself the words that matter most to you, and we would see which of these words for counsel rises up in size.

But because I ask you all, and because no one is is kind of declaring an absolute red, you know, allergy to any of these concepts, I'm just gonna say that these are all in play.

And I just I share this with you because um one of my observations from our earlier conversation is there are so many times when someone like me or or people on staff have to go to council members and say, we can't talk about that, right?

It's not on the agenda.

We can't, you know, we can't have this conversation with too many of us.

We don't want to violate open meeting laws, like get that.

This isn't one of those occasions.

Today, council gets to talk about all of this, and I think it's useful just to have this vocabulary and periodically in the course of the rest of the day and maybe into tomorrow, I might come back and remind you that these were the words that you said.

I'm not trying to hold it against you, I'm not trying to back you into a corner.

These were your words, and I'm just gonna use it as a lens to say, is it doing the things that we said?

But I think Jung says right.

Some of these things are naturally in tension with each other, and we're gonna have to figure out how to balance them and how to make uh uh choices uh within this.

So before I let this go and move on to the next part of the agenda, let me just ask are there any other words that are in your mind right now that you want to make sure get added to this list before we leave this exercise?

I think we should consider in this getting the best value at the lowest possible price for the residents.

So we don't want less value, but the best value we can get at the lowest possible price.

Can I ask you on that one?

If it's best value at the lowest price, does there a chicken and egg question here?

Like, do you decide first what is the best value, and then figure out what is the lowest price to deliver that, or is it the other way around, which is what can we do at the lowest price, and try to get the greatest value at that price?

Well, because I I prefer to try and find the best value and get the lowest possible price, the best value.

Can I just clarity on that?

I think best value is probably defined very differently across the board.

And so I think no matter if council agrees with that, I think it's just something that I'd love to hear as we communicate that out to the community.

What does that mean?

What is best value for you know the most fairest rate, right?

I think it's just important to understand that.

It's a good question, but I'm gonna ask if Bobby doesn't answer that question.

I'm gonna put it on the other council members for a second, if you don't mind.

When you hear Bobby say best value, I'd love to know what that means in your world.

How are you thinking about it?

Very broad.

Yeah.

Well, what could best value mean?

You when we talk about public safety.

Well, if I get like if you go shopping and you find something cheap, you can create value.

But is it the high standard that you want to achieve?

Yeah.

And I may say, in terms of services, I will say, I enjoy the bulk trash service, right?

And I'm willing to pay for it, but my neighbor might not find value in that at all.

And so what is value?

It's relative to the individual.

Let me I understand the question, and now I understand I didn't I didn't pick this up before.

Bobby, I'm gonna come back and ask you a question.

When you said best value, I'll tell you what I was thinking.

I wasn't thinking that you by value here that you meant what's the best, you know, what's the most inexpensive way of doing this?

I think what I heard was what's the best quality?

Right.

Right?

The best quality at the lowest.

Not necessarily best price, but the best value or what we're doing.

Yeah, how do we deliver the best value?

Which is I'm gonna take it as synonymous with quality.

So Kenny, I'll put it back to you.

Thank you.

That was a it was a great question.

So if the if Bobby is saying we want the best quality at the lowest price, then I'm gonna kick the back to you.

How do you feel that back?

I also want the best quality we can get.

The question is, are we willing to do what it takes to afford?

So that's that realism question.

That's the realistic coming in, right?

Can we afford to do the absolute best?

We might need to find some.

Right.

We may not be buying the Jaguar equivalent.

I don't know if that's the best quality.

It's not both.

But but you know, we could be just fine with uh I don't know cars.

I this isn't gonna help me at all.

Jim, how about return on investment as opposed to what you're saying?

Explain what return on investment would mean in this.

Well, let's say you're putting a dollar into something.

What's the highest return of investment on it?

If you're looking at different projects, you've got X amount of dollars.

Yeah, you're trying to get the most from it, the best, the in a sense the best value for what you have.

So you look at things.

If I buy a machine for 50 grand, does it do as much for me as one that's 65 grand that may do twice as much?

So it gives you the option to move within there, seen are your dollars properly spent?

Is your return on investment in that equitable?

Can you get the best at a great value?

Or do you have to step down because you only have this value?

So which which option gives you the most payoff?

Jim, this sounds like the same kind of question I was asking Monty this morning about kind of the businessman's take on looking at the budget situation and ROI return on investment is very much a business person's take on this, right?

Correct.

Okay.

Monty, did you have a comment back on that?

No.

That's perfect.

Okay.

Well, thank you.

Monty said that Jim Torgeson's book was perfect.

All right.

So thank you, Bobby.

Oh, did you want to comment on that?

I didn't mean to cut you out of that completely.

Anything else that you want to say about no, no, but the best value doesn't mean the highest price.

The best value for something, depending on how it works and everything, is the best value at the lowest possible price.

Yeah.

And yeah.

Yeah, Bobby has definitely got value in here.

I understand it, right?

Which is like we are we are spending our money strategically to accomplish the things that need to be done.

That doesn't necessarily always mean it's the top of the line model that we're buying, but it means we are we are paying for the value to satisfy the needs that need to be a problem.

And that we can afford it.

All right.

I think we've we've kicked this uh this idea around enough.

And I thank you for indulging me in in this part of the conversation.

It is time to move on.

Whoa.

Did we say all that?

Are those the words that we just we made it happen?

I mean for us to press value.

Can we give Elena around that is really impressive?

Thank you very much.

And I love the fonts too.

Yeah, like with that, it is time to go on to the next agenda item.

Don't I calling on you for that?

Yes.

All right.

Please welcome Dawn.

Yeah, Dog.

Oh my god.

Listen, this is what I'll say.

So totally made this sound like this is going to be the best presentation of the day.

What I'll say is it's going to be the rest presentation because you all are going to hear the presentation, and then you all are going to have the conversation that needs to be had to provide us with the direction that we need to involve.

So that's what I'll say.

This is the last presentation that we will do.

And this is so that there isn't anything after this that we are trying to kind of hold up time for, we don't have to move anything.

Really, I think the intention is for this to allow the council to have the conversation that needs to be had as long as you need to have it.

So this is our proposed financial frameworks.

We've heard from Kelly already that our 27th budget is looking really really challenging for us.

So we have worked diligently, we're still working diligently, we're still in the middle of it, but it has highlighted several things, which we'll talk a little bit about and prompted some differences and how we're approaching budget this year.

Um, but also I think leading into kind of what things we need to do that we need to hear from you so that staff can move forward with some items based on council direction to start to bring back information that will be helpful to the council and to the community and to our budgets and our future looking forward.

So I will start with a slide that you all have seen, heard, you know, you understand.

Um we have experienced some pretty significant budget losses in our revenue.

Um elimination of residential rental tax, which you see up there at the to the 29 million, um 5.5 million um reduction in the flat income tax, so we see that as well.

Um eight million uh reduction based on state conformity with the big deal of the bill.

Um so that's in the tax world, um, and then also um 1.8 million from San Jen Valley Incorporating, and now there are 92 cities that are all getting the shared revenue, and so our amount is Gilbert is less by one point.

That is to the tune of 20 million dollars per year, and this is you know the approximate total loss.

Um what this doesn't reflect is that Gilbert still has needs, continues to grow, and the cost of labor supplies, the cost of contracts construction, everything that we need to do and provide for the community continues to rise, and so those two things are not working together.

Our revenues are relatively flat, and Kelly's mentioned that prior as well.

Um, and so we need to then look to the future, look at some options for how we can start to address that.

So, a little bit of background on how we got here.

So, we've had several conversations with the council on our revenues and some revenue options.

So, particularly last December, we'll go through a little bit of that, and then brought back some options to council in January.

What we heard is that council's interested in a broader plan, additional options and other things to consider to help to lead us into the future, and so we'll go through some of that, and really our request of you today is feedback.

Feedback that would help us to further pursue options to address uh what we are facing.

Um these are not things that we're facing based on things we have done internally, but uh a lot of it is based on things that have occurred as I mentioned.

So, again, going back in the summer of 2025 is when staff really started looking at this, looking at revenue options as Ken mentioned the forage group that we work with pretty closely just to bring you know revenue options and items forward.

So we've been talking about this for a little bit.

We uh brought that to a larger council in at the fall retreat, and council asked us to follow up on the four items that you see there.

So point operated sales tax, tax license fees, restaurant bar sales sales tax, and communication sales tax.

And we heard you at that meeting, it would have brought it would have uh provided 9.8 million, not anywhere near the 20 million that we are looking at, and then also you know, from a budget perspective, um, also just would not have fixed the issue.

So uh we are here to talk about some things that we have done, and that we are also looking for your feedback on whether or not we should continue.

So with that, um, the proposed pay framework that we will go over today is as a part of the 20 uh 2027 budget.

We've looked at some non-personal non-personal operating budgets, so we'll talk through that.

We've also looked at service levels, so we will talk through that as well.

Um, we um are interested and want to convene an internal working group, so we'll talk through what that means and what the intent is there engaging the business community through the chamber.

So, as you know, our business community is really important in Gilbert.

We have really close partnerships, and so in Glate engaging the chamber as we go through this process is going to be really important.

So, we want to do that as a part of this.

Um, we will talk about quality of life projects.

So, I've got some phone and friends out there, so Susanna will help with quality of life projects.

Kelly will help with some of our um our um financials, um, so I'll I'll be having them come up as well.

Um, we also want to talk about how we would like to leverage citizen input to get additional information to provide for the council on some ways that we can kind of look at this from a different perspective and some options there, and then uh we intend to bring that back to you, those recommendations back to the council.

So we'll talk about what that potentially would look like and what would come back to you, as well as um talk about we know that economic development opportunities are also a part of that.

That presentation is not going to be today, that is tomorrow.

Our economic development folks are out of town, and so when they come back tomorrow, they will be giving a presentation, and that will be again another part of this.

You know, it was already mentioned that there's no one option that is going to fulfill this, and so we have a slate of things we will go through that um some of them are quicker than others, some of them have other impacts, and so we'll go through some of those options with you, and then finally, a follow-up with the council after all we pull together all that information and then a final whatever recommendations council would like us to walk through and to bring back for actual consideration with that come back to you as a final consideration outside of that.

Um so we will go ahead and jump in.

So I'm gonna start by saying Gilbert is physically responsible.

As you all know, we our budgets are pretty slim because we do a lot of things to ensure that we are being responsible with the public dollars that we have utilization of.

So zero-based budget we do every um three years, we do the whole organization, so a third of the organization every year, um, and that really looks at what is needed for each of our departments to conduct the service that they conduct and does not allow for any extras in those budgets outside of what's necessary.

And so every every three years, and we all love it.

You know, you've heard Patrick talk about you know, in the past talk about you know, taking ten dollars out of our budgets because we weren't using it, and so budget department does take that very seriously and goes back and looks at our usage of the money in those different buckets and determines what we actually need to provide the service that we're providing, and so um anything that comes up outside of that when we go through the year comes through as a contingency, so any extras, and um they have to be requested as contingency, and so there's a quarterly report, so part of our transparency, there's a quarterly report that goes to council, so any any contingency that comes through that way, council will see that anything over a hundred thousand dollars has to be approved by the council, and so again, lots of different ways we have check-ins and touch-ins on our budget and and how we um how we manage that.

Um, we are also triple A bond rated, so um, there are not a lot of organizations, even throughout the country that are triple A bond rated, and so we are in a special place, and that's because we have strong financial policies, because we follow those policies, and because we are spending money responsibly, we pay cash when we can, we we don't have a whole lot of debt, and so there are things that we are doing that really I think help us in that realm, but triple A bond rating is really important, and it's part of what we do.

And so there are things that we are doing that really I think help us in that realm, but triple A bond rating is really important, and it's part of what we do.

We also have benchmarking that we do, so it's really important for us to compare ourselves and to say how are we doing in comparison to other cities.

And that's a really important part because if you are not doing that, then the tendency is for you to maybe be outside of the realm of what is where cities are concerned.

So we look at that, we compare ourselves, and so I want to move on because this is something that Kenny has talked about quite a bit.

And when we do those comparisons, what we learn is just how fiscally responsible and fiscally conservative Gilbert is with how we spend our money.

This slide actually represents our staffing for a thousand residents, and so we this is something that we have shown before, but I think it really puts a fine point on the things that we do.

We are a full circus city, we provide all the services.

Some other cities may not provide other services, and they still have higher employee count than we have.

So we're very thoughtful with how many employees we have, what those employees do, and the services that we provide are high quality, as you know, um, and we do it with very much fewer employees and others.

Some uh organizations at the VBC Max, so this is our Valley Benchmark cities 11.71 employees per thousand residents for the max on that.

So we are we are the lowest, um, and I don't know that that's something for us to be super proud of, but it does speak to just how we spend money and what that looks like in our historic event.

Don't this week I ran based on the current Act first, so years later.

We're at 6.03.

Yeah, we're still below everybody.

And um we're still around 36% below the average.

And the high has gotten higher to almost 12 and a half.

So I'll get you that new data.

Thank you.

So I think these numbers be qualifies to just you know how uh responsible we are with how we do what we do.

So I want to jump in and talk about um FY27 budget.

So as we look at the FY27 budget, what we realize is that there is a lack of ongoing funding for our existing services that will provide what we need to move forward, um, which means the staff has and continues to look at very closely what we can fund, what that looks like, what gets left on the table.

And I know we talk about this every year.

This year the cuts are much deeper, as Kelly showed.

The cuts are much deeper.

We do not have ongoing funding, and one time is pretty slim too.

Um, and we've done a lot of things over the last couple of weeks kind of working on that.

Um, but I say that to say part of what we wanted to make sure everyone did was not just look at budget items and what we wanted to add, but also places where we could look to reduce those budgets, and so I asked the team to go back and to review budgets and to look for 3% reduction in budgets that we could look at to see what's in that 3%.

We asked them specifically to look at contractual supplies, so look at travel and training, so look at any vacancies that were out there that maybe hadn't been filled over the last year, that we could look to wait on those, and we also asked them to look at potential delays in CIP projects.

We recognize that there is an interest in uh from the council based on some prior conversations and looking at one time as a potential uh way to uh bridge.

Um we also recognize that that does not always work in all circumstances, and so looking at this three percent would give us an opportunity to identify potentially some ongoing funds, how much 3% is not an awful lot, but really giving us the potential to look at some ongoing, which we could potentially look at and determine if it if that was something we wanted to use as a part of the budget process.

Again, we've gone through.

I think this is probably the first time in a long time, if if at all, that we've really looked at it from this perspective and said let's look at a decrease in what we're doing, particularly because we're very lean anyway, and so the 3% really dug pretty deeply in.

And so I want to give you just a couple of examples of things that were in the three percent.

I think they also call upon some of the team members just to mention a couple of those things.

I think it matters for you to understand that 3% while it does not seem like a lot, really dug into some areas that uh we probably not comfortable digging into because our budget's a so slim.

And so some of the things that were on the three percent.

So I'm gonna see me looking down here because I want to make sure that I read a couple of these.

So we looked at some reduced uh amounts and contracts.

So some of the contracts that were looked at were landscaping services and parts and rec services and parts and rec reduction of programs, reduction of um events, so things like a compatibility, things like police in the park, are all things that ended up on the three percent list.

Um in other areas, uh we also looked at um some reductions, lots of reductions in employee development and employee appreciation.

That was also in there.

That was also some reduction in maintenance.

So in some of our funds, we are so slim.

And things like a reduction in maintenance or a roads was on there because there wasn't another place for us to look at that.

Now, I I say that this is on the list, but doesn't mean those are things we're cutting.

I express this specifically because it's important for council to understand when we say we're looking at reductions.

This is what a three percent means that is part of that amount that we need to figure out where departments were then sifting through what things do we absolutely need to do, and where are those things that potentially we can look for maybe some savings, and so it was a lot of areas, and I uh Chief, I wonder if you can just chime in on like an area or two.

Because I think that again this speaks to just how tight our budgets are and just how slim those margins are as to what a three percent would be.

Yeah, uh a couple of the items we're looking at.

We started about three years ago online reporting, which it gives the ability for businesses or residents to report crimes that have occurred without having to either come into the police station or have a police officer come to their location.

We just installed uh new kiosks in our lobbies so that they could, if they wanted to, they could walk in and do that from home or within our lobby if they don't have a computer at home.

Uh but that's one thing that we could cut.

Um the impacts to that, it means all those calls will now go to patrol.

Uh, some could go to our telescope officers, and the majority of those calls are coming in from our businesses for shoplifting.

Uh the majority of those that if they have a shoplifting event but they don't have someone in custody, they'll make that report.

So the loss prevention officers are making those reports.

Sometimes they do it as it happens, sometimes they'll wait at the end of the week or the end of the month, and they'll submit 20, 30 reports at a time.

And so if we remove that contract, which I can't remember if it was 75 or 85,000.

Um, but if we cut that one, those all those calls would now go to patrol.

So now you're tying up patrol officers when we handle it on the back end in records and and approving the role those reports.

Um that was one example, and I'm trying to remember the the other one is uh through spider tech is and versatum is kind of a customer service satisfaction and/or uh in addition to that uh an awareness of the status of their call.

So if somebody calls dispatch for the majority of the call types, if let's say you got your vehicle broken into, we'll enter in a call and they can opt in to notifications, either text or email from us.

So as soon as we enter that call, every time we do a status change on in the CAD system, it'll send them a notification.

The call's been created.

Here's your case number, it's been waiting for an officer to be dispatched.

Once we dispatch it, they get an update saying an officer has been dispatched, they're on their way to you, they should be there soon.

Once the officer gets there, he gets the information, and he when he updates that's cat uh case status, they will get a notification that it's a report was taken, an arrest was made, report was filed, it's ongoing or was closed, and throughout that process, they get updates on the status of their case.

If it gets assigned to a detective, they'll get a notification, it's now been assigned to detective so and so.

Here's how to get a hold of them if you have any questions.

So it is really a customer service relations, making sure they always know what's going on with their case.

There's a back end of that, a different program that does the victim notification that's actually funded by the state, um, and that'll hopefully get uh continued through the state.

That's actually funded by the state, and that'll hopefully get uh continued through the state.

But that front end, it gives them case status update, but also it does a customer service satisfaction.

Is there anything we can do to improve?

And so we get those daily from our customers, and they tell us where we're doing good, where we can improve.

There's actually a ranking, uh rating.

We're usually in the high 90s on satisfaction, which is where we want to be.

Occasionally, though we will get some uh issues where we didn't respond well and areas for us to improve, and a lot of times it's uh congratulations, thank you.

And so that's another thing.

It was a hundred and twenty-three thousand if I remember right.

That if we cut that, um it's more on the customer service side, we would still do our normal job, but that's some of the um satisfaction levels you're starting to cut into that communication and transparency with the victims as they were cases.

So those are just two examples.

On a minor example, we did find where we could cut and without impacting.

Um we use Mesa's outdoor firearms range.

We've talked to Apache Junction, they'll let us use theirs for free.

That's uh twelve thousand dollars.

Um, our ever tell system that we use for communication.

We had a uh about a hundred licenses that we have been paying for for others to use it, but uh the interest hasn't gone much beyond PD and fire.

Um, and so those are we could cut $9,000 in in fees there.

A lot of these we gotta make sure we may have to wait until our contract renewal to opt out at that point that we're no longer have funding.

So some of these could be immediate, some of these could be um it may take us a year.

We might have just signed the contract two months ago, and we'll have to wait another 10 months before we can opt out of that.

So those are some of the examples from Pete.

Thank you, G.

And I wanted the chief to express those specifically because I wanted you to see a lot of council to see exactly how deeply we started to look and started to identify what things we could look to cut.

I will also say just for clarity the things that are on the 3% list are not the things that are being cut.

We are looking at that list and identifying if there are opportunities on there that are going to have the least amount of impact to the residents as we can't.

What does that free up?

And I'll tell you where we are right now is a trade-off situation where since that is ongoing funds and we are limited on ongoing funds and interest from our directors to look at those ongoing funds and potentially we could attribute those and look forward at what we can do with those because that's part of the ongoing money that we now have available.

And so there are some conversations happening that where those trade-offs are being considered because of the limitation on ongoing funds that we have for this budget here.

So I just want to mention that.

Um I just have this um, these are some examples of things that we did.

I have one more thing to go through, and then I'll pause for counsel for any questions.

So I want to make sure that there's an opportunity to ask questions as we go through this.

Um, so you don't have to wait until the end.

There's there's uh quite a few slides and some pretty heavy things that we will talk through.

So the other thing we looked at as was mentioned uh was service uh our service lines.

Our we really had a focus to look at FY27 because that's what we're dealing with ahead of us, but we also recognize that there may be a need for us to look further and to say what what services do we have that have a higher level than we have to have, or then we that would save money for us to look at doing something different.

And so our proposal did you skip one?

I think you might have service lines.

There you go.

Okay, sorry about that.

Thanks, guys.

Um, our service lines um explore.

We we explored um potential service levels.

Three percent as well, um, and we focus on FY27.

Um, but we also just to move forward, um, look um are intending to look council's at services moving forward, what those service levels are, and putting together a working internal working group to really sit through that and to look through each budget, so do the service lines that we have and identify if there's some opportunity for us to further save some ongoing to be able to allocate that to ongoing needs without another funding for us to do that.

We recognize that not everything can be done with one time, and uh we face some of that this year where there are lots of things that are on the one-time list that are ongoing needs, and so looking for that.

So that's just one facet of uh potential for how we can look internally, understanding that a lot of the things that we have talked about and continue to talk about are things that we would be looking to the community to assist with.

We also felt those were important with Russell internally as well.

So we're just gonna pause here, and if there are questions from the council about what we have done budget-wise, happy to take those on questions, comments at this point.

Go ahead, yeah.

Hearing some of the discussion about that 3% look at all the service lines, really felt like we were maybe tripping over dollars to pick up pennies, and some of those things that you mentioned seem really high value or the cost.

Um in terms of looking at some of the service lines.

I I think that's the point that we are today, that that is necessary, and I would ask that if we move forward with that, that those considerations are given based on kind of like availability in the free market, you know, like there are subservice lines like sewer and water and trash, the municipality provides it.

There's no other option.

Um there may be other service lines that are that have more private side availability, it just may be more expensive.

So I think that those are big trade-offs that we have to consider.

Thank you.

And I think we agree.

That's why I said not everything is being cut.

We looked at those things and those high value items, those items that we believe, like yeah, that's not where we want to dig into.

To look at the budgets to identify where the potentials were, and and also identify what impacts those would have if we if we were to move forward with those things, which I think is also a part of the ongoing composition.

Jim, did you have a comment?

No, Don, let me ask a question just again for clarity's sake of how I interpreted what you just said, and just tell me if I got this right.

The first thing you said, the first item that you looked at the non-personnel operating budgets, that three percent is essentially an exercise that staff is doing itself saying what would a three percent cut look like across the board for us, just so we can be clear that that this is what would be entailed.

It's not a promise to deliver at 3%, but it was an exercise of examination.

Is that is that a fair statement?

Correct.

And there were things that were identified out of that that could be part of what we bring forth in the upcoming budget, but we're still working through what it's a demonstration, right?

You know, and it's a natural thing for for council to expect and for staff to go through the exercise to say, you know, isn't there just enough excess, enough waste, enough, you know, little bit of belt, you know, tightening that we can do that no one would notice, and we could just do it.

And the demonstration says, no, the a three percent actually has this this kind of um of impact within our organization.

Um Leah, did you want to answer that?

Yes, I'll bring the microphone to you too.

Sorry.

Some would say I don't need it to piggyback on what you just offered and to add on to what Don is sharing.

We recognize that as the council contemplates how to navigate and create a roadmap forward, it's not going to be any one particular solution, it's going to have to be a multi-pronged approach, and we also understand that our council and our residents want to feel that we have turned over every stone and examined every opportunity for efficiency and cost savings, including looking inwardly, so that you can feel confident when you craft that roadmap with us today, you can feel confident that we have turned over every stone possible.

And to Councilmember Kaprowski's point and to Don's, absolutely don't want to be penny wise and pound foolish and and cut services or an implement cuts that will actually shortchange residents, but there are potential opportunities where maybe it's a reduction in a certain type of service level, and and that's what Don was asking the directors to look at.

And the directors did a phenomenal job look working with their team to come up with the list.

Painful, but let me just acknowledge that you just used that word confident, which was one of the words that council said about how they want to feel coming out of this process.

So it's great.

I think hang on one second, I got Bobby over here.

Um, can you clarify?

I mean, this is just things that we're putting out there that could happen, but the three percent on on a budget is would that be each department?

I would like to see each department look at like what the chief just did on how it would affect.

I mean, our major departments like public works and each main department, and I and I did um have you asked them to do that, or if we just ask yes, so as a part of the review and the the directors going back and looking at the potential of the three percent reduction, they were also tasked with, and they will tell you this task with identifying what the impact would be of us actually reducing that.

What what would what would happen if we stopped doing that?

And so as she mentioned, um removing that software would then mean officers need to go out on the road and take those calls and take those reports.

Obviously, that's not what we want to see.

So, you know, we're still looking through that.

That will not be on the list, but I say that to say I think the directors did have that those marching orders to ensure that the impact we could look at that impact and identify which impacts were gonna be you know, anyway as powerful as we assess, or which ones we really are okay with, maybe looking at uh for a potential of sipping that into our ongoing as office.

Okay, and how did you come up with say three percent versus two or four?

Is that the amount that would hopefully get us out of where we are?

So, no, that amount is not what will get us out of where we are.

We have a lot of other things to go through and to talk through with the council as options.

Um, the three percent really came from um some uh information that we have an understanding of where some other cities who are facing some of the same challenges that we are facing or at, and we are seeing you know, cities looking at a five percent or more, some even up to a 10% of as a reduction to their budgets.

Obviously, we didn't want to look back deep.

That's not where we are.

We wanted to start somewhere, and so that's where the three percent came from, was from those conversations and that understanding of kind of the challenges that we know that are out there and some things that aren't consider under consideration to some of our neighbors.

So, to be clear, the three percent was it was a was an exercise to see what could be revealed if we if we set it at 3%.

And Matt, I have something that might add to that if you want you know, I wanted to ask the chief too, and then I'll be finished.

Uh, on on the cuts that you mentioned, would those be devastating to the department to lose those?

And and if we the other thing we should think about is if we do these cuts, how long do we?

I mean, can we come back and reinstate them in a couple of years or something?

So the intent of the exercise was you lose it, so it's not just for one year or two years, it's you're reducing your ongoing budget by the exercise was you would lose your your three percent for forever, basically.

Um and so that's where we had to look at because some things I could okay, I could go a year without, but I'm gonna need a year or two.

So we were looking at three percent of i items that we would have to cut, and I would say on behalf of everyone here, we're we're so mean that any cut will have some type of impact, whether it's employee development, uh employer recognition, uh, our basics of doing our basic job every single day.

You're reducing the resources available to provide those services.

You're still providing that high quality of value to your customers, uh yet with resources, we did not talk people.

The easiest thing to save three percent is to cut people, but we're already extremely lean on our staff.

And I think with PD is roughly 70% of my budget is personnel.

So those are the easy things to cut, but have a higher impact because you have less people doing the jobs.

Well, and and I did pick up on when you said, well, if people aren't answering those calls, then officers have to be out.

So that would almost probably take away from the 3% because you're gonna have to pay them money that you know.

I mean, personnel.

And the end result for PD fire and I think most of the departments, when you add on workload because there's less resources taking care of that workload for you, whether it's automated or people, you're now you're in the queue.

So you're gonna be waiting rather than a three-minute response time, you're looking at a five minute or a six minute response time because we're busy on other calls, or I go to your call, an emergency comes out, I have to leave you, take care of the emergency.

Now I come back if I have time to take care of that need.

So you're extending the delay or the time it takes for me to process a call because I've had all these other I gotta take care of emergencies first, then hit the rest.

Right, right.

Okay.

So that that you know, those are things that we don't want, those are things.

This is just my opinion, of course, that I don't want to see happen because of budget cuts, because that's not gonna help us.

We're still gonna break even, or maybe you end up costing a department more.

So I think if we're looking at those, we need to look at them really close and have the departments put exactly what they're gonna lose and how that's gonna affect these.

I think the way well let me let me ask Nathan to get in.

You said you had something to add to that.

Yeah, if you talk louder, the microphones will get you.

Yeah, I'll just say we so um as was mentioned, that we were looking at this as an exercise to see how much of an impact this would have.

We anticipated it would have a significant impact because unlike a lot of municipalities, we do zero base every three years.

And so we already know we don't have slush funds, we don't have fluff.

I'll give you an example just anecdotally.

I was at a conference, I was talking to an HR director for another city who told me that they still had 1200 in their budget for long distance phone calls for recruiting.

That's silly because nobody pays long distance fees anymore, right?

And for the most part.

So, but they that's because they don't zero base, and so they have items that have sat in their budget that have become slush for them over decades.

And I think that's when when citizens and residents talk about government waste or you know, that's that's the kind of stuff they're referencing.

That's not how we operate here because we zero base every three years, which means we trim things out of our budgets.

Arguably that zero base process sometimes trims things we need, but can't make a strong enough argument given other budget factors to keep it, and so we end up trimming things out of our budget, we run very lean budgets, and that we started with the three percent, knowing that would probably start to cut into things that would be detrimental or have significant impacts, and that's what we're seeing.

And so, as Don said, these are not cuts we plan to make if we feel that they would have detriment.

Um, there may be situations where we need to talk to council about service level impacts and things like that, but that was our intent was not to take those actions right away, it's to see is there any room?

And we found there's very little.

And just to hammer that home, when we first started this exercise, we thought it's not gonna be that hard because I knew things I could cut, but zero base had already cut them.

Because we were looking at we were like, all right, we'll cut this, this, and this, because we're not gonna do this, and then I got the list of killing, like we already took that through zero base, because we had just done the zero base, so we had the FY26 base budget, which had it, so then I had to compare the two budgets, and that made it a lot more difficult because zero base already took out about three percent.

Right.

So let me we're gonna move back to Don in just a second.

Jim, I'll come to you, but let me just make sure that we're we're clear on this, and Don just confirmed that I'm doing what you're expecting here, which was the purpose of this three percent exercise was not to make council decide on the nitty gritty expenditures of all these different departments.

It is expected to give you a taste of what a three percent cut would look like if the departments had to do this.

So I on firm brands so far, Don.

Okay, just to give you a sense of it, to give you the confidence and the clarity that we're not talking about you know, slush funds here, we are talking about actual things that that matter and that there would be real trade-offs about.

So just I come to you one second, Jim.

So if the first one was about this non-personnel operating budgets and what's revealed by looking at three percent, that's not a promise to deliver, but just what's revealed, then the second one that Don said was the service levels and the look at what we can look at to reduce.

How do we put together a strategic thought process of where are the things that are bigger pick uh bigger ticket items where the town might strategically want to say we will reduce our function in that area?

The third one, your internal working group was not just about looking at reducing in the second phase, but about services moving forward, which I gather is a long-term view about how we offer services and what's there.

And so I just want to make sure that we're at the right altitude in this conversation on these first three things.

We're looking at that those three things.

How staff could find up to 3%, but not necessarily easy.

What service levels could purposely reduce, and then what services could be reduced or changed going forward.

That's the altitude of this conversation.

Jim.

I want to kind of define a little framework with it because it started with no, you know, outside of personnel.

Now realize you can dig into personnel and it will have it'll have immediate repercussions.

I think we can all agree that we're at a minimum.

And it's not really productive for us to be looking at that.

Uh if you take it to an extreme, you can say, well, do without a pay raise.

Well, how long does that go?

Doesn't go very long.

But something that's interesting is if you look at our working budget, it's about 800 million, 3% of that's about 24 million.

That's about how far we're short.

So people are even subconsciously working.

How do we solve this problem without going to these other factors?

I'm sure the exercise will bring some fruit just because somebody found something.

Non-intentionally, if nobody institutes 3% across the board, somebody could say, hey, I actually don't need this anymore ahead of zero-based budgeting.

Your wife brought that forward years ago.

It's great.

We are a physically conservative town, and one thing that we should be able to do and not listen to the chatter, is your money is being handled responsibly.

The fact that people will sit there and call every one of us corrupt over a water increase that's been deferred for 15 years.

It comes to a point that it's part of the job.

If you lose an election, you do.

Who cares?

Because some people don't really appreciate what's in front of them.

I was I don't know if it was you that said it.

Somebody I was talking to outside, we've had it so good.

We're used to getting gold plated amenities and not thinking about it.

But you go to some place, I think it was Leah, you go to El Mirage, they were happy to get a YMCA.

Literally, they were happy to institute a primary property tax to get a YMCA and an actual building for their police department years ago.

So looking at this, they've done an exercise.

There'll be some fruit born from it, nothing major to count on.

But we should probably start more from the position, what do we do to augment this, not what do we do to cut this beyond reason?

I don't think any one of us wants to look would look at personnel as something to cut.

I mean, I'm gonna tell you, I just don't feel real good about cutting police and fire.

I mean, that's kind of scary, right?

What do you want to you want to cut Kelly?

I mean, that doesn't make sense, does it?

Right?

Uh at what point have you decided is your base?

And I think we should probably take a moment to respect the fact that there's there's guardrails that have been in place for over a decade, and maybe we should start looking at that as this is our base that we move forward with.

We could have to at some point trust the system that was put in place to keep it lean.

Always ask the questions, but I don't think looking, I think looking to save here is not as good as looking to create or trusting that we're trying to move forward.

I hate to be the guy that sounds physically non-conservative at this point, but I think it's an exercise of futility to sweat pennies.

I mean, what we could cut out lunch.

What's it gonna save?

I mean, it does save.

And there's people literally in our community, and you know who they are, Scott.

Well, they're getting luxury lunches, sure, yeah.

Well, who cares?

You know, this isn't this isn't the fat that we need to trim.

We don't have fat.

The greatest athletes in the world have some fat.

We should consider this a great athlete and be looking at ways to push the athlete stronger, build the athlete, make him better, surround him with a better team rather than cutting into what little fat he has.

So that was the point I was trying to make.

Council members, before we move on to the other items here, I could use some clarity from you, staff could use some clarity from you in terms of what direction you'd like to give them about these first three items, your level of enthusiasm for looking for those.

What do you need clarity?

No, thank you.

He's handing me his glasses.

Um, you know, for what your what your what your enthusiasm is, or what what the direction is that you'd like to give staff about looking for those incremental cuts, looking for short-term reductions, looking for long term reductions.

So, Jim, you just you just kind of got that conversation rolling, which was not enthusiastic about spending a lot of time on the incremental cuts.

Yeah, what could what falls from the sky falls from the sky?

But we're looking to take fat out of something that's a pretty lean machine at this point, and we can do some damage along the way.

Let me ask, are you ready for me to ask you a green yellow red question on on just that one?

Can I go ahead, Bobby?

I'm just looking for clarity.

I'm not looking to trap you or back you into a corner.

I'm just want to make sure that on this we understand where council is overall.

Okay, well, then this isn't on the first question, but I just wanted to make it clear.

I I was when I was talking to the achievement that I was trying to make a point of how much that would affect them if we looked at that exercise, that 3%.

I don't think that we should cut anything for our public safety, for our police or our fire.

We I as the chief said, I think they're lean already.

My only thought there is possibly not you know, not hiring any more people for a certain amount of time.

And I I know we have stuff in the budget already, which would be fine, but that's you know, if I thought of anything, it would be just not adding to um personnel for maybe any of the departments right now.

That's my own that's my thought there.

Uh, but I don't want to cut anything uh for police or fire.

So for police or fire, but the question that's coming from staff, because they're looking town wide, is there any appetite at all for finding additional cuts, other than you know, nominal kinds of cuts that represent efficiencies and you know, good smart zero-based budgeting.

Is there an imperative that's coming out of council where you're saying, yeah, it may not be three percent, but it should be two percent, or it should be one percent.

We're not saying where it's coming from.

We understand that you don't want to come from public safety, that's fine.

But but I'm listening for what is the overall governing guidance that you want to give to the staff today.

And Kenny wants to talk if you don't.

I I was just gonna answer part of that.

Mine would be, and I don't know, and maybe Call A, wherever she is.

I don't know about putting like a hiring freeze on right now, if that's gonna help us out of our uh immediate circumstances that might help us in the future.

Where what would that do?

That would give us some one-time money.

It wouldn't help us with our ongoing issues, and it would stress our existing staff to not be able to fill vacancies.

So that juice may not be worth the squeeze.

Okay, so that that would not solve our issue now.

Okay, and eager aspect.

Okay, I'm down to thank you.

Teddy, thank you.

You have no interest whatsoever in entertaining and talking about people, whether it's a freeze for now, not hiring for one year.

We just looked at data, and we are low set at six per thousand people.

If we were Glennale, if we were paradise, uh I mean uh pure um personal good here, Avant Hill.

I can entertain them, they're sitting around that average or higher TV.

Yes, they're the highest.

We are the very lowest, and our community is continuing to grow, whether people want it to or not.

It will continue to grow.

The data is grown every single year, and it's gonna grow until we hit build out, and maybe there's that taper down, but that's not now.

So I have no interest in burying our hardworking staff who's doing more with less than anyone further, because what we're doing is we're creating risk of them making mistakes, of them cutting and fleeing and running to other agencies where they're gonna get paid sometimes more, and they're gonna work less.

I'm not interested in that there.

I think for me, the big question is okay.

We we see how dire this is, and I think it's a great exercise to wake us up to reality.

Um for me, the question is like if when we're talking cuts, um, what service level cuts should we make?

Right, and well, it depends on what the citizens want, but not cuts that take away staff, the resources rather what like the mayor said.

Do we need to cut programs?

Do we need to shut down the library?

Do we need to shut down the library we just really rubble some feathers on our duty?

Um at the same time, ruffles are feathers when we raise taxes or you know, so you can't have it all.

But if I can, Kenny, let me just reinterpret that back into the three questions that Dawn has put out the first the first three items of the framework.

The first one was non-personnel budget cuts, right?

So in the first one, what I what I'm hearing you say is not a lot of excitement for making those kinds of cuts, but those are that's not personnel.

Number two and number three, which were short-term cuts and longer term cuts, that could potentially be personnel focused.

And what you're saying for two and three is not at all enthusiastic about looking at personnel cuts for those.

Okay.

I'm going oh, does Chuck have something?

Thank you.

I'm getting the hand signal for the back.

Let me uh let me call on Chuck.

Thank you.

Um I'm gonna throw a wrench in this whole thing and use a private equity model here.

A lot of private equity firms buy their way out of debt, which basically means invest in economic development, invest in Dan's team.

Let's hire some more people there so we can bring more businesses in, bring more private um private partnerships in, and just you know, see what we can do.

I know Monty had a had a uh a group that was really interested in working with us.

I think that sometimes you have this is horrible to say, but it works.

I've seen it work.

Sometimes you have to spend your way out of debt.

Thank you, Chuck.

Uh Jim wants to comment on that.

Yeah, part in the the group that uh Monty brought forward.

I happened to bump into one of them the other night, and in speaking about the Southeast Regional Park, they were very interested in a public-private partnership.

That public private partnership brings money where it's opposed to costing 14,000 an acre or whatever it is on parks every every year.

Uh so yes, growing our way out of it of allowing those things, maybe pushing some CIP things back, that's painful, people don't like it.

But guess what?

Maybe we can't afford that pickleball court today, not forever.

Not saying that we're pushing, but we have to make some some very cognizant decisions how to defer some of those costs, and maybe public private partnerships will allow us to have those those amenities without the cost associated with them.

I'm just gonna make a point of order as your facilitator.

Dawn's made clear we're gonna talk about economic development opportunities right tomorrow when they're here in the room.

But I'm saying push back CIP because we can do that, right?

But I just want to make the point that at the moment the thing that we're discussing are these first three items on the agenda, and we really need to know where your clarity is there.

I'll just clarify that I think like what staff is interested in and whether or not council wants us to continue looking at service levels or potential savings within service levels.

Do you want us to go back and to do that?

So that's certainly the biggest thing, I think that we would love to hear from you.

Um certainly can go back back and explore.

We will bring that back to you.

Does it mean that those things would be reduced?

But it means we would go back and we would look at opportunities to do that.

And so that's the first question that I think we would appreciate the fact that.

And I think Monty and Young wanted to talk about that specifically, but first Leah.

Yes, and as you contemplate your answer to that specific question, recognizing there's not one thing on this list that is the silver bullet.

So if you say no to one, that puts greater pressure on the other potential options.

So we're trying to provide as many tools as possible.

And just clarifying the the top ones are more short-term, right?

Versus you're talking about economic development, that takes time, that takes long-term investment and and planning.

So again, multi-lever, these top ones are short-term decisions that we need to have a conversation about.

So I'm gonna go to Monty Young and then Jim.

Monty, just on those first three.

I had a conversation with Kenny earlier in a conversation with Leah yesterday.

We have a person studying back here who is highly qualified in utilizing lean methodologies to bring efficiencies to our operations, and it may be worth the while to invest a little money to set up a workshop that she can lead, pull together a team and take a look at what we're doing so we know how to tweak stuff to get the most out of it.

I know that we were at Boeing, we were able to absorb a big bellwave of retirements by doing that, and we didn't have to add that many heads because we went and looked at made our operations very efficient.

And I don't know if that you know would be uh something you want to take on, but uh you know, when you look at something like that, uh it would allow us to look at all three of those top things and see where we can take the waste out and maximize the head count that we've got in order to not have as much of an impact maybe on service levels and give some ease to our operating budgets, and that the other thing I would ask is to use red level, I mean red, yellow, green in this budget situation that we're in, are we flashing yellow or are we flashing red?

Or flashing red.

Okay, so something like that would be I mean it wouldn't take a whole lot of investment money to to be able to do that and put a team like that together.

So I happy to do that.

That's something we absolutely can look at.

Um we are facing that the budget needs to be approved before July, and so it would take some quick work, but how you've got to look at that.

Um part of what we brought forward or why we brought it forward is again the need for ongoing money, and while a lot of these things can really go at one time, um there isn't um a lot of time to draw around, but we have significant significant amount of ongoing needs.

Just one last statement for me, as far as any head count cut, it's uh not.

And that's not that's not something we're considering at.

I just it's came up several times.

It's like that's not something that we're considering as part of this exercise.

I'm gonna go young and then Jim.

I do think that we need to look at the service levels, so to have that internal working group.

Why I think that is because we have been talking about this for a little bit now, we had some quicker wins or thicker solutions that did not move forward based on actions of the council from a dais.

And so I think at this point, because of needing to have this multifaceted framework that it is prudent of us to be data-driven and understand what our options are, even if we're saying we would never do this.

I think we have to know what options are on the table.

So I would be a proponent of the internal working group for the service level sex.

Thank you.

Jim?

I just want to say it.

I think that's pretty obvious nobody wants to cut staff.

There is no harm, no foul in looking at service levels.

And if if we can prioritize that to things that are non-catastrophic per se, certainly look at that.

And we don't have much time, so let's let's look more at our own efficiencies and just go with it.

We don't have a lot of time to deal with.

Let me repeat back what I think I'm hearing you say.

Tell me if I get this wrong.

On each of these first three, what I think I've heard you say is council is interested in what staff would come up with that could be cost savings that are not going to be this is my language, not yours, that's not going to be traumatic.

It's certainly not going to be reducing staff, but um, you know, to the extent that there is any belt tightening that we can do, we'd like to hear it.

And whether that's number one, non-personal operating budgets, or number two in the short term, or number three in the longer term that had to have an internal working group look at that.

We're interested in seeing what there is.

But what I'm not hearing you say is that there is a mandate that says there is some certain percentage that has to be cut, or that you're expecting to solve half of the structural deficit on the on uh on internal expenses.

Um what I'm hearing you say is please find us things that are reasonable that are worth our consideration, but that's it.

Jim?

I want Monty to say it.

The gold water rule, Monty.

Here, Monty, give the microphone so you can say whatever the gold water rule is.

Well, the gold water rule is you don't cut taxes till you deal with your uh uh expending first.

So you know, we we need to uh how how would you see this applicable in this?

Because you're spending your look at you're looking at cutting, but you wouldn't force your spending to it's it's the inverse.

Yeah, it's it's being responsible with what you're doing, basically.

One of my biggest frustrations with our legislature is they're cutting expenditures, but not for themselves.

And uh, but telling everybody how we're you know, we're doing good.

So can I ask you?

Are you I'm just gonna be blunt.

Am I hearing generally from council that you're agreeing with what Jim Torgeson said a little bit earlier, which is, and again, I'm putting words in your mouth, so I'm don't don't use my name.

It might get a negative reaction.

But the idea that as a council, we actually have a fairly high level of confidence that um that the budget that we have is conservative and well managed, and while we're always looking for economies within that, we are not looking deeper to reduce that budget even more.

Is that is that what pretty much what you said?

Well, the the budget as far as this goes, I think with some CIP can be budgeted further out, but no, I'm not looking at the operating expenses.

The 800 million that's generally people that's that's that's trucks that's cars, the things we use.

Yeah, I mean maybe get rid of Kyle or something.

I mean that's sorry, I had to do that.

There we go.

I got a little look under my trunk when I get in it.

Um but I get I think that there's a great deal of confidence that the organization is run well, it's run lean, and that's not the problem we're facing.

The problem we're facing is the tax money that would come to us, or let's just say the revenue isn't existent.

We've done it out of order.

We've we mean the state has cut our revenue, now we're scrambling.

How do we cut services?

We don't have any services to cut, what are our options?

The little we can cut, great, but I'm very confident that everybody's done their job.

Does that make sense?

You look confused.

Maybe I'm just not working.

And I here's here's what I think it is.

And I could do them individually, but I think I could do this as a group, which is on one, two, and three.

If the question is, um we have a fairly high confidence that the way we're operating is necessary and appropriate for our community, and we'll take efficiencies where we can get it.

We will consider choices when it makes sense to present them, but by and large, we're pretty good with where we are.

Green, yellow, red.

That's a green.

Green.

So I just need clarification.

So in being is green meaning.

Green means you're not going back and saying it's not looking at service levels.

We're not looking at one, two, and three for dramatic changes.

We are we are open to creative ideas that make sense, but we're not driving you to come back with major priorities.

No, I'm not green.

I'm more with young.

I think would you be yellow?

Would you be right?

What if you ask it this way?

Because I like what she said.

I think that that gave good direction.

What if you ask us if we are comfortable directing them to go look at service levels with an internal working group and bring back solutions to us?

Is that the way to say it?

And I think if we approach it that way with that language, I'm I'm green with that because I think that's the right approach.

Well, and the why matters.

And the why is we are we have a big enough problem that we are at risk after having just raised utility rates pretty good, yeah, of now having to raise different or pull different tax levers, um, which the citizens are not gonna like before that ever happens.

We owe the public to look at everything service level wise.

What can they do without because even and I realize we're I get it?

Um I don't I don't want to you know chase nickels when we need to be chasing dollars, but at the same time, if we find 15 percent, and that's not a lot, but we can find 15% of that total picture.

That's 15% less we have to take from the citizens' pockets and taxes, and I I think we owe that to them.

That's your gold water rule.

Yeah, I understand.

Chuck wants to say something.

Yeah, I don't know how to say this, but I think okay.

I don't know if I'm gonna say this correctly, but we need to get rid of sacred cows, which basically means just because it's a CIP project in that book doesn't mean we can't cut it or delay it.

Right, so it's later, yeah.

It's later on.

It'll come later on.

Okay.

So then Monty, can I was it you who just restated this for us?

And to be clear, there has been a conversation about what could be going.

But later on, we will talk more about actual exploration of CIP projects and what that looks like in terms of citizen engine.

I put my clipboard down so I normally would keep notes as your who said what, and I've lost the thread on this.

I thought it was Monty, who had a pretty good description of what the what the what would you would be green on if I was gonna ask you the question concisely and ask if you would ask it again.

And young, keep me honest here, but I I think what we're saying is is have an internal working group, go take a look at these service levels and bring us back recommendations that move us toward the direction we need to get.

Thoughtful recommendations, creative recommendations, but what I'm listening for is but it's not coming back and saying, but you have to solve X percent of the overall problem by doing that.

It's tell us the things that make sense given our expectations of service.

Yeah, because you've got another uh what do you call it, seven items up there that we're going to be approaching.

This is just the first three.

Yes, yeah.

We're good there.

So I'll ask you the question again green, yellow, red.

The combination of these first three things is we want staff to continue to look internally at the uh at the options and opportunities that exist here.

I'll be I I think there should be some clarification.

I believe they're talking about service levels that impact the community and and not continue to try to trend back from existing operating budgets.

That's exactly right.

Yes, so they're talking service levels that would impact the community, steer clear of operating budgets.

We've done the work there, we found there's nothing, there's no more squeeze from those oranges.

Is that what we say?

That's a good way to put it.

But if I can also add to that clarification that way, when we're because we're in the people business or when the people deliver that business, we we would be probably talking about cutting staff.

And I've heard comments about we don't want to consider cutting heads or cutting staff, but when we're talking about service levels, there's gonna be a staff component to that.

I just want to make sure to clarify that that's what you're asking for.

On that note, before I would even entertain anything like that, one of the things that we've done in the private sector in the past is like do a uh and god, I hate to say this, but I'm I'm gonna say it.

Um we would do a furlough for a week rather than cutting ahead.

Um like when COVID hit when I worked for Honeywell, we took a month, two of us took two, you know, group of us took two weeks off, no pay.

Next two weeks off, no pay, and we didn't have cut any head count.

So it would it was able, I mean it was tough, but it kept us from cutting any heads.

After 9-11, one of the things Boeing did, we took uh everybody took one day off unpaid for uh a pay period.

So we took two weeks we did that, and over six months we were able to not have to do mass layoffs after 9-11 because we had people canceling aircraft literally an hour after the first building fell.

So I would rather entertain something like that than looking at any type of head count cuts because I think that would really be detrimental to the community given where we're at right now with head count.

Does that make sense?

Well, furloughs are temporary measures.

But we're we're when we talk about cutting service levels, that's a permanent yeah.

But think about this.

If you did, we have 1800 employees, and this is Monty Math, so shut up, Chuck.

Um we have 1800 people.

I know this includes fire and police, but um we have to think about that.

But if you have 1800 people and you and you cut off a a day a month, they take it one day, no pay a month, that's 12 days in a year.

You're looking at about 5.6 million dollars savings for a year if you did that for the year.

For the year, or the year, and that's based on maybe a 75,000 dollar a year medium income, give or take.

Right, but it but if we if we cut a service level, it's for more than just that year.

But you can absorb one day uh of a person not being in.

If you have sick days, everything's you know, somebody calls in sick, you can you can absorb it a lot easier than you can a head through an entire head.

Does that make sense?

I'm gonna bring I'm actually not tracking with you.

That's fine.

I'm gonna bring the conversation back up to altitude as well.

I understand it it's a great conversation, but it's not gonna influence how we're deciding this.

Uh, Leah and I think Bobby had a comment.

I'm gonna call the question and move us forward on this as well.

Uh to the council member.

Oh, go ahead.

Do you want to go ahead?

Just make the observation that um as Kenny's pointed out, six FTEs per thousand-ish.

Um in most every line of service in the town, we are one D.

A furlough would be devastating on multiple fronts.

But we hear loud and clear the desire from council to explore every opportunity for efficiencies and in a way that doesn't harm staffing and ultimately doesn't harm service delivery.

And I think there's things we can continue to explore in one, two, and three that would be in alignment with what we're hearing from you all.

With that, I'll pass it to Bobby.

Well, I was gonna say a little bit of what she just said.

I I don't think by cutting have having an employee be offered an entire month with no pay.

I just don't see that as an option.

I mean, everybody's on the budget nowadays, and you know, you you cut a month out of their pay.

I don't know.

I'm beginning to think we should just wait and see what we find out from the others before we do a red, green, or yellow on this because right now I'm kind of a yellow, I'm right in the middle.

Yeah, uh yellow is actually a pretty good place to be at this point, which is all we're doing is is um is giving staff directions that says go do your internal working group.

Right, come up with your best ideas and come back to council and share it with us.

And that's that's exactly what I'd like to see.

That's then that's agreeing because that's all we're telling staff to do at this point.

So I'm gonna call the questionnaire because we have to move on in our conversation.

Am I hearing green and yellow?

Anything other than green and yellow in terms of giving staff the direction to go do the working group, come up with the ideas, and let's continue that conversation.

Kenny, I'm looking at you.

Monty, yeah, young mayor, Chuck.

Can I hear from you?

Green green.

All right.

I didn't miss anyone, did I?

No.

Okay.

That's one through three.

You want to move forward?

Do you want a kidney break?

What do you want to do?

Uh we can move forward if everyone's okay with that.

Or maybe follow store break, but um, so um, our next item that we'd like to talk about is um the engaging the chamber of commerce.

As you know, the chamber is a really close partner of ours.

Uh the change the chamber is also very critical when we're talking about potential revenues and what that looks like.

So engaging them and keeping them involved is really an important part of this process.

And so our intent uh should the council be comfortable with it, and as we talk through this, we love your feedback, is to engage the chamber board and the public policy team to uh work with them to provide education on um so for this group in particular.

Um, they we have engaged them where we were looking at potential sales tax, so we would engage them, educate them, understand or evasive, get the business leaders and communities perspective, and then um develop recommended financial solutions with them that would then come back to the council.

And so um, as a part of that, we also are um suggesting a joint meeting between the council and the chamber to further discuss the items that have come up as a part of that uh working with them, and um so that that discussion can happen in terms of the support, the understanding, the the uh between the council and the um chamber on uh potential options to help again another facet to help to um add to our our potential way of of uh solving uh part of this issue.

So uh wanna I want to just move on just to mention as we're um talking about going to the chamber and talking about having these conversations, want to circle back.

I know we've seen this already, but want to circle back on you know just the revenue sources that the town has.

So sales tax is a huge part of that, and so that's what um I mentioned as as in you know what we would look to have just uh conversations with the chamber on.

We also have um the urban revenue sharing and the state shared license, which uh would also be a part of the state shared purpose license tax, which is all which would also be a part of that.

So want to make sure that you understand and that we circle back on the four um options that we have for revenue, so we don't have a whole lot of options for revenues, and so you know, really looking at sales tax is a credible piece of that because it's such a large piece of the pie.

Um it's also just again it's been mentioned, but as a part of this conversation, wanted to circle back on where we stand in terms of primary property tax and where other cities stand in terms of primary property tax.

All other cities have that.

We're not proposing that at all, but again, it speaks to the revenues that Gilbert has available to it.

Um and sales tax is um sorry, secondary primary property tax.

Uh primary property tax is something that is not part of our work of law.

Mesa also does not have a primary property tax, uh, but does transfer utility funds as we mentioned, and so Gilbert does rely heavily on that sales tax.

So looking at that sales tax is definitely an option for us to consider and working with the chamber on that would help us to get a shorter picture of understanding of their priorities and perspectives as a part of that.

Um, this is where we stand in the middle of the pack.

Um, this represents sales tax rates, both primary uh sales tax rates for valley cities.

So we are in the middle of the pack.

Should we look at something it would change our standing of where we are?

So just wanted you to see where the other cities fall, so that you um understand that as we talk about having further conversations on what that could look like.

Um as was mentioned, we have had lots of conversations with the council.

So this slide really is a reminder as well in terms of the things that we looked at as immediate short-term options that we could look at, and some of those we did bring to you in January.

Um, there are also some things which we are going to talk about as a part of this retreat.

So parks and rec is on there.

We will we will talk about a potential um path forward on what that would look like and get your feedback on that.

Um, there are other things which uh we will talk about as a part of our economic development in terms of that long term um and then some other conversations that we will likely have further on in the year.

So this is on our on our radar, these are things that we've discussed.

These are potentials that can help us either add to immediate revenues and or um look at some long-term or medium-term solutions for how we move forward.

So, with that, I'd love just council feedback if you if you are ready to talk about that or if you have questions on our proposal to engage the chamber to look at potential sales tax um and where they stand that is community with regard to what those things look like that the town could potentially explore.

Can you go back to the last slide?

Maybe leave that up just a little bit.

Thank you.

Go ahead, Monty.

I I think engaging the chambers right move.

I know they are fairly concerned about the business climate in the community, and what we were talking about growing our way through this around of it, having a positive business environment is really important.

So getting their buy-in so that they're able to speak, you know, intelligently to other businesses that may be looking at the community or or laying the groundwork for our folks to do it, I think is really important.

So having that buy-in have their input, I think would be very helpful.

Thank you.

And I think you know, as we look at this as you notice under a media, there's several that are under there, which are part of our sales tax.

What I'll say is sales tax is a very complex thing.

We have talked about this prior, and so there are a lot of options within the sales tax that could be considered, um, and understanding where the chamber lands or the businesses land on those options is really an important part of this question.

I'm supportive of also working with the chamber in the last uh discussion I had with public policy committee kind of surprised me because like you said, sales tax is a complicated thing.

They knew we were struggling with that view on it was determine how much you need and then go set the sales tax.

Don't do the opposite.

So I think we're willing to support whatever it takes to close that game.

Yeah, but we need to know what that is before we set the sales tax.

Thank you, Mayor.

Other comments can I support you in that for sure.

And Mayor, thank you for saying that that what you were saying, was what I was talking about earlier.

Were we asking the right question?

What I had mentioned to Kelly, um, and I'll mention to you is I think what would visually help.

If you go back to the graph with the percentages, if you overlay that with the revenue generated by those taxes, it's gonna be a completely different picture.

It's probably gonna frighten you at how high we would have to raise that percentage if we wanted to live on that alone.

Um may help look at more diversity in options.

So that would encourage us.

Yeah.

That's a fantastic uh recommendation.

We'll work on getting a visual together, but until then the data is Chandler has a one point five percent rate and they're getting about two hundred million dollars of revenue from that.

Gilbert, we have a two percent rate and we're getting about two hundred million dollars.

So same amount of money, but their rate is lower because they have more volume of sales that happens.

Mesa has our same rate at two percent, and they are getting so we're getting two hundred million.

Mesa is getting three hundred and forty million dollars uh for that same rate.

Glendale two hundred or two point nine percent rate, and they're getting two hundred and ninety million dollars of revenue from their two point nine.

So very different value of actual tax revenue to provide services, even though the rates might be some easy ones.

I have to graph.

Literally, I have to graph on my phone.

The uh channeler, smaller than us a population per capita generates twelve hundred and eighty eight dollars to our nine hundred and ninety-nine.

Glendale, seventeen hundred and eighty-four to our nine hundred and ninety-nine.

We are the lowest.

I'm not gonna rush this agenda, but so far what I'm hearing you say is that you're generally in favor of uh engaging the business community.

Is that a green across the board?

And Chuck, I'm asking you to Yeah, I'm green.

Green, Mayor, Annie, Bobby, Monty, all right.

Is it would we like to take a little bit of a parade?

I think a ten minute kidney break is probably a good idea.

But a real ten minutes, not a not a twenty-minute actual ten minute kidney break starts.

I may say ten.

I know that's why I'm saying you're moving out of the way.

All right, let's continue.

I don't know if I'm list of our looking at this item is to look at our quality like CIP products.

As was mentioned, these CIP products are currently being paid for with our um cell packs.

Um cost of them as well.

Um, really um our one time costs.

And so as a part of that, what we've also heard is that council is interested in us looking at alternative options to perhaps look at some movement of projects from the quality of life into a one-time source.

And so we will talk through the potential of public safety bond and give you some example of what that could look like.

And Susanna and Kelly are going to help me do that piece of it to walk through that, also to walk through the potential amounts, the timing, and what the rate could look like and how that could be structured.

So that council has some information out, does not have to be what we selected that is open to council to select or determine projects.

This is just to give you an idea of what this could look like, and then also to get some feedback from the US to whether or not there's things you want to see differently or places where you don't want to go and that type of thing, so we can get the feedback as we go through this.

So I'm gonna pass this off to Susanna, who's going to walk us through our quality of life projects and go through the different groups, what's in those groups, the timing on those groups, and tech other items related to quality of life.

Thank you, John, and thank you for um allowing me to come up here and speak about these important projects.

So just from a historic perspective, we started with I think over 50 projects at one time back in January of 23, no to be December of 23.

You actually went through that list with us and prioritize in March down to about 23 projects and put them into three or four separate buckets of which bucket A button B and the T or group Agency is enabled here.

Um to attach themselves for this sales has increased as part are part of that.

So this is basically the schedule for those projects.

Um and as they sit right now today, and I know it's not been too long ago where we did move two of these projects out of group A into group B.

We'll talk about that in a minute, and affected those two projects by two years and the time frame of them.

But generally, we are currently working on all of the projects that are um in here at this point in time that you're seeing on this list, which include the advocacy center phases two and three.

Gilbert Regional Park phase two is um nearing the end of this design, and I believe we got a groundbreaking um setup coming up here.

I guess I don't have it on here, but coming in pretty soon that we'll we'll be um doing a groundbreaking to start phases two and three, or phase two, excuse me.

We also have the um the public safety and large operators maintenance facility.

Um we're doing some work who actually helped approve a contract last night that's allowing us to look at how that would fit into the South Area Service Center or the North Area Service Center where the best place is for that.

The Santan police substation again will be a part of that contract to approved last night that is allowing us to kind of look at how that fits into that overall area in the South area.

Um fire admin building.

We have done some initial work on that and continue to work through that as well.

We have been working also on some planning efforts already for that to basically say where does that fire fire admin actually fit over here on the public safety site across the road here.

The Desert Sky Park phase two.

Hopefully, um you recognize we did a groundbreaking, so we're underway and moving forward with that phase two right now in construction, and then the Freestone splash pad and freestone pickle courts are underway in design.

We do expect to basically work on um uh groundbreaking on that or not groundbreaking.

I believe some or fall of 26 that we'll have that groundbreaking.

So we're moving forward with all these projects that are on this list right now.

Um, hopefully, we'll be able to see some in use uh by the time we get in the mid-part of 2020 on some of those and show the activities that we're already um that we've been working on.

So for group B that moves to fire station number four, the Red Current Education Center, South Gilbert Regional Center, um some trail lighting of the crime lab and the public safety expansion.

So these two bottom ones we had come to do before, and we have moved those out by about two years and move them into group B.

So they've already been adjusted from the scheduling type thing by two years.

One of those is so that with the crime labs we could do a little more investigation, get a little bit deeper into that, and then the public safety expansion was how does it fit in with all the other work that's going in across the street, just making sure that we're able to get everybody in different places as we are upsetting areas of the area across there.

So we are moving forward in some respects.

I know you're gonna see that for a education center, we've been under some of the review of this and look at that in 20 since 24, South Gilbert Regional Center.

We really have not moved forward with that one, right now I realized that it's initiating the project issuer, we should not move forward with that.

Um and then group C, which is the last group, America on trail improvements.

We have several improvements there, and then several improvements to our fire stations.

Again, those are going to be out there a little bit farther in the listing and doing projects.

But these are the 23 projects you guys have come up with.

The prioritization that we've been talking about for almost two years here with that tax in place to help fund that capital.

And you know, I need to say what a brave moment that you guys did with these projects.

You looked at your community and you said we need to make sure that we're safe, we need to know that we've got a healthy community that has a quality of life, that our citizens are going to all live here, and our businesses are going to want to be here too because there's an opportunity for us to see that we're a growing community with a high level of standard.

Um and I I want to bring up you know this this last hour, hour and a half because you guys have been talking a lot about value, and I very much appreciate that because as we've listened to this initiative to build a city of the future, listening to the work that you guys have done, we've said we in CIP and in our engineering group in that just deliver projects because they're in a book.

You know, we need to be looking at each one of those projects and saying how do they develop our community?

We are utilizing what we consider a value management process to do that, and we've been instituting portions of that since since 2019 when we did the public safety training facility, where we sat down and said, what does that mean?

And what is it that this community values and what should we be building into that?

We've done that with several of our projects at this point in time.

I think with the Northwater Treatment Plant, one of those, that one basically resulted in a 30 million dollar savings.

You know, we looked at the bridge when all of a sudden escalation went to 100% of what we were expecting to do there, took about nine, ten million dollars off of the cost of that bridge with after that escalation had been applied.

So we've been looking at this from not only a perspective of we're just delivering a project that's in the book for whatever reason, but to say we're filling out this community to be that significant issue that you had vision and that you guys are putting together.

We're continuing to refine that process, and you're going to start seeing that more effective, more I think effectively applied across the board.

What we recognize with each and every one of these projects, and I think the quality of life is a good example of that, is the fact that we have taken one project and looked at how it now interlates with many projects from different types of places.

How does the funding apply to?

How can we use this funding to basically beneficial?

We have two parks that are under design at the same time.

How do we take advantage of the fact that one part needs the loser and the other part needs or pattern?

If we time those appropriately and we schedule those appropriately, we get some cost savings, we get some efficiency.

So your CIA team is working really, really hard along with your stakeholders and your shareholders to basically say what is it you need, how can we deliver that at the best cost that we can give you?

So and truly, we're utilizing a value methodology to do that, and value is defined.

What must it do?

What's it going to cost?

So, what is the performance of that product that we're trying to build, and how do we basically apply the right sort resources on it to bring you the best value?

So that is happening right now with all of these projects.

That's where we're at with them, and that's what's going on.

So thank you.

Thank you, Susanna.

I appreciate that.

Um, and appreciate the work that you're doing, it's resulted in some really good results.

I'm on my ticket, so I'm just gonna learn this down a little bit.

Um so I'm gonna call Kelly up now because I I would like us to move into uh the meat of the conversation to talk about uh quality of life, and if we were to look at some options in terms of moving some of those projects, what would that look like from a potential scenario uh standpoint?