Good morning, everyone.

Welcome to the July 29th, 2025 Budget Fiscal Affairs Committee.

I am Councilmember Sally Alcorn, and I am joined by my colleague Mayor Pro Tem Martha Castax Tatum, Vice Mayor Pro Tem Amy Peck, Councilmember Joaquin Martinez, Councilmember Amy Peck, Council, I mean Council.

Oh my gosh.

Councilmember Abby Cavan, Councilmember Julian Ramirez, and staff from Councilmember Mario Castillo, Councilmember Ed Pollard, Councilmember Tasha Jackson, Councilmember Mary Nan Heffman's office.

So welcome all.

We will get started with Director Dabowski and Will Jones, Deputy Controller for the monthly, or it's the quarterly financial report and swap investment report and swap report.

And Councilmember Twilakarta is Carter is online and staff from Councilmember Letitia Plummer is also online.

So welcome all.

Good morning.

Okay, there we go.

Good morning, Madam Chair, committee members.

Um it's a pleasure to be here today to present you with the monthly financial report for the period ending June 30th, 2025.

I will also be presenting our quarterly investment report.

Uh so to start off in the general fund, um, the controller's office is projecting an ending fund balance of 413.4 million or 16 percent of expenditures less debt service and pay as you go.

So this is 8.3 million lower than the finance projection.

Uh last month we were closer to 40 million, so we've definitely um come more aligned with our projections.

The difference is due to a lower revenue projection than the finance department.

Based on our current projections, the fund balance will be approximately 219.3 million above the city's target of holding 7.5% of total expenditures, excluding debt service and pay as you go.

We have increased our revenue projection by $41 million from last month's report.

Um, and here are the key changes.

In property tax, it increased by $17.5 million due uh to account for the FY 2021 and 22 clawback of the uh property tax increment from TERS 24, um, and then transfer from other funds increased by 7.8 million uh due to recovery or prior or prior year three or uh 380 reimbursements from TURS 24.

If you recall a couple of months ago, uh finance already reflected this projection uh in total it's about 25.8, which makes up the majority of our uh 40 41 million.

Uh the controller's office.

Uh we've had a lot of discussions on TURS 24, and so now we're ready to reflect that projection.

Uh charges for services increased by 4.6 million, primarily due to stronger than expected ambulance fees.

Industrial assessments increased by 3.3 million due to higher than anticipated taxable valuations.

Uh intergovernmental revenues increased by 1.8 million based on higher reimbursements from metro for traffic uh enforcement activities.

Uh electric franchise fees increased by 1.4 million due to higher receipts.

Direct interfaced by 1.4 million, driven by higher chargeback for fire airport related services.

Uh miscellaneous other revenues increased by 0.9 million, primarily due to uh firefighter deployment reimbursements, license and permits increased by 0.9 million, mainly due to higher collections from burglar alarm, food dealer permits, and administrative fees.

Sales of capital assets increased by 0.6 million from proceeds related to land and easement sales.

So moving on to the expenditures, our projections decreased by 2.4 million from last month due to year-end savings and personnel supplies and services.

So across all the the different general fund departments, some up, some down, uh, but uh overall 2.4 million in savings.

Uh moving on to the enterprise funds, starting with aviation, operating revenues decreased by 16.1 million due to lower than anticipated collections for terminal space rental and signatory landing fees.

Operating expenses decreased by 7.5 million due to lower personnel and service costs as well as delays in non-capital equipment purchases.

Non-operating revenues increased by 2.5 million from higher interest income and land sales, operating transfers to the airport improvement fund decreased by 6.1 million.

Looking at the convention entertainment facilities fund, operating revenues increased by 1 million, driven by higher uh garage parking revenues, and for CUS operating revenues decreased by $61 million due to decrease in water and sewer sales, operating expenses decreased by $160.1 million due to lower spending in personnel supplies and services, non-operating revenues increased by $3.2 million due to higher interest income and operating transfers decreased by $59.2 million due to lower than anticipated transfer to capital projects and delays in both capital and non-capital equipment purchases.

And operating transfers decreased by $59.2 million due to lower than anticipated transfer to capital projects and delays in both capital and non-capital equipment purchases.

In regards to the dedicated drainage street renewal fund, the Avalurum tax expenditures decreased by $50.2 million due to lower transfer to capital projects and vehicle purchase delays.

For the DDSRF drainage charge, revenues increased by $5.5 million to reflect higher drainage revenues and higher interest income and expenditures decreased by $55.9 million due to lower transfer to capital projects and interference legal services.

For DDSRF Metro revenues decreased by 0.7 million due to lower interfund chargebacks.

Expenditures decreased by $6.1 million due to savings and personnel delayed vehicle purchases and lower infrastructure maintenance spending.

And finally, on the stormwater fund, expenditures decreased by $8 million due to savings and personnel, delayed vehicle purchases and lower infrastructure maintenance.

Now, taking a quick look for the commercial paper paper and bonds, the city's practice has been to maintain no more than 20 percent of the total outstanding debt for each type of debt in the variable rate structure, which is in line with the rating agency's guidance of 25 percent.

From time to time, uh the city's enterprise credits have exceeded this threshold on an interim basis as they have undertaken large capital improvement projects on major expansions.

So moving on to the quarterly investment report, as of June 30, 2025, the city had 5.7 billion dollars invested in our general investment pool.

This character of this pool is that of a short-term bond fund that holds investments of very high credit quality.

Fitch ratings reviewed this pool and assigned this pool with highest rating of triple A.

Our investment strategy is to match assets and liabilities for a time period of one year into the future to and to exercise discretion for the balance of remaining funds.

Investments are $39 million lower than last year, and this is primarily attributable to the higher expenditure in aviation.

As of June 30, 2025, the general investment pool was yielding 4.081 percent, which is up from the 3.927 percent yield in the prior quarter.

In addition to the general investment pool, we have two small investment pools that total about $60 million.

Those pools exist to comply with tax requirements of the Federal Government.

A detailed listing of the securities owned by the city appear at the back of the investment uh report.

And taking a look at our SWAT report report, along with our investment report, we have included in the MOFAR the quarterly SWAT report as is required by the city swap policy.

The written SWAT report that appears in the MOFAR offers a comprehensive description of the two SWAT positions.

The city had a net paid uh for the fiscal year ending June 30, 2025 from its swaps of six million.

Fair value for swaps as of June 30, 2025 was a negative 75 million, which is approximately 2 million more than a prior quarter of negative seven uh 73 million.

And finally, um again, a thank you to the Director Dabowski and uh the City Treasurer Vernon Lewis and the work and finance group uh last week, the City of Houston successfully pre-marketed and priced approximately 724 uh million airport system subordinate lien revenue bond series two uh 2025 AB to preserve the ability to redeem these bonds in the future.