Budget and Fiscal Affairs Committee meeting.

I'm Sally Alcorn, Chair of the Budget and Fiscal Affairs Committee.

I'm joined by my Vice Chair, Mario Castillo, Councilmember Joaquin Martinez, Vice Mayor Pro Tem Amy Peck, Mayor Pro Tem Martha Castex Tatum, Councilmember Julian Ramirez, Councilmember Abby Kamen, Councilmember Willie Davis, staff from Councilmember Mary Nan Huffman's office, and staff from Councilmember Plummer's office online.

So we have a full agenda, so we'll get right to it.

We'll start with the monthly financial report.

So I think we're going to have Will Jones present, Deputy Controller and Melissa Dubowski, Finance Director.

Okay, you ready for me?

Ready?

Okay.

Uh good morning, Madam Chair, Council members of staff.

I'm here today to present the monthly financial report for the period ending July 31st, 2025.

In the general fund, the controller's office is projecting an ending fund balance of $328.1 million or $12.9% of expenditures less debt service and pay as you go.

This is $17.5 million lower than the projection of the Finance Department, and the difference is due to a lower revenue projection.

Based on our current projections, the fund balance will be approximately $137.6 million above the city's target of holding $7.5% of total expenditures excluding debt.

The FY26 beginning fund balance is $8.1 million higher than the FY25 ending fund balance reported in June.

The increase is due to year-in adjustments to revenues and expenditures that will continue until we finalize the annual comprehensive financial report.

For the general fund revenue, we have increased our revenue projection by $55 million from our FY 2026 trends report as follows.

Property tax increase by $43.9 million, and this is due to the census population that came after the proposed budget and after we presented our trends report, which is reflected in the adopted budget now.

Transfers from other funds increased by $9.6 million, primarily due to recovery of the $380 reimbursements from TERS 24.

Again, this was something we projected in June.

We're just now showing reflecting that in our uh this first MOFAR and direct interfund increase by $1.3 million to reflect higher reimbursements from airport for police services following pay raises.

On the expenditure side, we're making no changes, and we're also making no changes on the enterprise funds for commercial paper and bonds.

The city's practice has been to maintain no more than 20 percent of the total outstanding debt from each type of debt and variable rate structure, which is in line with rating agency's guidance of 25 percent.

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

Uh thank you.

Good morning.

This is the 1 plus 11 financial report for the period ending July 31, 2025.

Fiscal year 26 projections are based on one month of actual results and 11 months of projections.

Looking back on fiscal year 25, um, in accordance with government accounting standards for governmental funds, the final uh revenues for FY25 will include revenues earned through June 30th, only if they are collected by the end of August.

So those items are still pending, um pending the finalization of the annual comprehensive financial report.

So uh expenditures also continue to be uh were continued to be recorded until um August 31st.

So based on the revenues and expenditures so far for fiscal year 25, the current preliminary undesignated fund balance for the general fund is 422 million, which is the same as our June MOFAR projection.

And so as I mentioned, the results are not final until the publication of the ACFR, which will be sometime probably in December.

So moving to fiscal year 26, our revenue and expenditure projections remain at budget.

Um just an update on the sales tax, sales tax receipts for June, and this is um again, this kind of goes to the prior year still, but um sales tax receipts for June uh were $7.6 million higher than the same period last year, which is about 9.9 percent higher than the same period last year.

So we are going to continue to monitor sales tax, of course, as we enter uh FY26.

We're currently projecting the ending fund balance to be $345.6 million, which is $40.7 million higher than the adopted budget, and is 13.6 percent of estimated expenditures, not including debt service and pay as you go projects.

And that uh the fund balance represents 155 million above that minimum of holding 7.5 percent.

For the enterprise special revenue and other funds, we are not projecting any changes at this time.

That concludes my report.

Thank you very much.

Director, on the sales tax numbers, does that does that include are we did are they deducting the amount member is that happening yet?

So the audit um the audit that we talked about a couple months ago, um we still haven't heard back from the state on their final results.

The State Comptroller's Office was sending it to a higher level of review internally just to make sure that they had the right number.

What they had indicated to us is it was going to be around 25 million dollars.

Right.

And what we've talked about preliminarily with them is um once we do have to start paying back the audit finding, spreading it over, I think a believe it's a 43 month period, which comes out to about $600,000 a month.

We haven't started that payment yet, but it is something that we continue to monitor and you anticipate that being in the next few months or who knows, whenever they get it figured out.

We do stay in regular contact with them.

We reach out to them at least once a month to talk to them about it.

Sure.

I was also going to ask about SB 10 and and what and what's going on I know that in October we'll be approving a tax rate, and I know you guys are busy calculating anything.

Um will feel free to opine also.

But um colleagues, as you know, at this at the State Legislature, they're considering a change to the voter approved tax rate from three and a half percent.

Then you go to the voters to two and a half percent.

And just wanted um wanted to get your input on on how that, if that does um come to fruition, how that might affect our numbers.

Sure.

So um whatever uh changes the legislature makes with this pending legislation uh won't impact the tax rate that we adopt this year, would impact the tax rate for the following year.

Um but just in terms looking historically, we did an analysis to see if our um state cap multiplier was two and a half percent instead of three and a half percent.

What would that have meant for us?

It basically brings the state's cap in alignment with our cap, roughly.

I mean, there are they are different formulas, different calculations, but historically our local cap has been more restrictive than the state cap, and this would kind of bring the state cap down closer to what we see locally, based on historicals.

Mr.

Jones, do you have anything to add?

No, I would agree.

And uh, I guess where the concern will come is if they go below the two and a half percent.

I've heard talks of maybe one percent.

I don't I don't know where they are with the amendments on that, but um that would be a concern.

There was one amendment in the House.

I know that exempted public safety spending, so I did see that.

Um Councilmember Ramirez.

Thank you, Madam Chair.

And um, Director Dabowski, with regard to potential legislative changes, um, that uh state cap being lowered uh would not affect our ability to go to the voters for, let's say a public safety exception, right?

So on the local side, we could still, of course, go to the voters to ask for our own exceptions for public safety or other needs.

We could also go to the voters and ask to amend the charter.

Um the state side, they also have a process to go to the voters to seek an amount on top of whatever the state cap limitation is.

Okay.

So we all have always have that right, in other words, to go to the voters and see if they feel differently about it.

Based on the way the statute is today, yes.

Okay.

And uh Director Jones.

Question about your projections for property tax increase due to revision of the population estimate.

Um is that some sort of a formula that the controller officers use?

No, I mean we are in line with finance.

It is just that whenever uh the budget was proposed and when we did our trends report, we didn't have the the U.S.

Census Bureau numbers yet, so we both assumed 0 percent growth.

And then when that number came out, I think it was closer to 6 percent.

So finance redlined the budget to show that 43 million, and I'm just showing the exact exact same thing here.

But I guess is there some sort of formula that X amount of population growth is gonna translate into Y amount of property tax growth?

Well, yeah, because of uh the the way the prop cap works is the the CPI plus the population.

Okay.

Thank you.

I would like to take this opportunity to welcome Councilmember Tiffany Thomas, who is online, and Councilmember Tarsha Jackson staff from her office also online.

I see no other questions for the monthly financial report.

So thank you very much for your presentations.

And Mr.

Jones, if you'll stay, you're next.

Well, Jones will be presenting on the economic evaluation of disaster preparedness.

I think he has a fancier, fancier title there.

It's basically dealing with very uh good timing, as we'll be discussing that later and Councilmember Kayman's budget amendment, but uh presentation on the financial preparedness for natural disasters.

Right.

Essentially weathering the storm, so it's very timely.

Um something we have been looking at presenting for a while now, um, and the time is just perfect with it now, especially with the discussions that's going to be happening with the budget stabilization fund.

Uh so if you can go to the next slide, please.

Um so before I even get into the presentation, I do kind of want to set up uh one of the top priorities of the controller's office is uh to provide what we call insights, which is what this report is.

And if you recall, I did a presentation of a few months ago on overtime, uh was very well received by everyone.

Um people had a lot of nice things to say about me because of that report.

So um I decided to come back and start giving you more reports, you know.

But um reality is, you know, uh, you know, our goal is to provide some in-depth, important uh details on you know what's happening with city finances and bring it to council um and to the public.

So throughout the years or throughout the year, uh you'll see uh us come forward with with more insights, looking in topics that's important to you guys and topics that's important uh to the city of Houston.

So that's what uh a broader overview of what our our goal and one of our top priorities is as it comes to looking at city finance.

Next slide, please.

So um so what this presentation is again is just going to take a look at uh historical disasters, uh the frequency severity, it's going to look at uh the financial impact.

Um and it's only going to focus on general fund.

I want to be very clear.

I'm only looking at general fund, that is where we have a structural uh budget issue.

So that's where we're going to focus enterprise funds.

You know, they they too have to deal with disasters and have to be prepared financially, but this is not the focus today.

And I want to be very clear that this is not um uh a focus on how the city responds to disasters, how our public safety mobilizes around disasters.

Um we know that you know we have our firefighters and our police officers do a fantastic job when when emergencies happen.

Uh this is not an evaluation on that.

This is strictly looking at uh the economic impact.

So next slide, please.

Okay, so we'll talk about a little bit of the history and climate.

We'll like I said, we'll look at some economic vulnerabilities, uh, take a look at our disaster reserves, and then offer some opportunities.

Uh next slide, please.

Okay, so of course, uh first we're gonna take a look at uh you know the history of the disasters, take a look back at, you know, some of the the especially the Houston region, how we have been impacted by disasters.

Next slide, please.

Okay, so uh disaster costs nationwide have escalated uh pretty drastically over the past decades.

Decades.

Um in the 80s, total disaster costs were about 220 billion, as you see there.

By 2010s, uh it had balloons to close to a trillion.

Um again, this is nationwide.

And already in the 2020s, with half the decade still to go, we have seen 746 billion in disaster costs.

So we still have uh quite a few years left in in the decade.

The main driver uh of the cost are tropical cyclones, which include hurricanes, uh tropical storms uh and depressions.

Uh these accounts for more than half of the disaster cost since 1980, averaging about 53 percent.

In 2000, that share peaked at uh uh peaked at about 70 percent, underscoring how destructive hurricanes and tropical storms can be.

Uh the Houston Gulf region plays a big role in these national figures.

Um our area is frequently hit by uh some of the most costly storms.

Of course, we had Hurricane Harvey, Ike, and more recently Hurricane Barrel.

So this puts Houston on the front line of the nation's rising disaster costs.

So I guess a T uh key, the key takeaway from this slide is the U.S.

is seeing disasters grow not only in frequency, but also in financial impact.

And Houston is sitting on sitting on the Gulf is directly contributing to and experiencing these sharp increases.

Next slide, please.

So again, so hurricane uh they drive costs higher uh with Houston among the hardest hit.

So the chart shows, of course, the top ten costliest cyclones led by Hurricane Katrina uh at 201 billion, followed by Harvey at 160 billion as the you know the second costliest storm.

Um of course Hurricane Ike back in 2008, but about 43 billion.

So and importantly, uh recent storms dominate the list.

So six out of the of the ten costliest storms have occurred since 2015.

So this tells us that not only are the storms recovery more frequent, they're also becoming more expensive.

And again, Houston is right in the bullseye of that with two of the top ten most costliest storms.

Next slide, please.

So again, looking over the decades from the 80s, so uh, you know, Houston has faced about 25 FEMA declared uh disasters since 1983.

And again, you know, 10 of those disasters have occurred since 2015 showing you know a clear uptick.

Um the vast majority of these storms are driven by uh storms and flooding.

Uh 13 major severe storms and flooding events in 1980.

Uh this makes the single most common disaster type we experience.

Um and we just witnessed that this past weekend uh with you know the flooding over the Memorial Day, uh, I mean Memorial Day Labor Day weekend, uh you know, a lot of rain, a short amount of time, and we saw what happened.

Um so again, the the storms and flooding is the major uh the the most type of disaster that the Houston area experiences.

In addition, Houston has faced five tropical storms and five hurricanes highlighting highlighting the region's exposure uh to Gulf weather systems.

Um and then even you know, there's a couple outliers on there.

You'll see the of course the pandemic and then winter storm Uri, which was kind of the first of its kind for us in in the area.

And again, like I say, last year we we dealt with Hurricane Barrel and uh the Derecho wind storms.

Uh next slide, please.

Okay, so today FEMA uh ranks Harris County number one nationally in hurricane risk.

So uh we actually tie with uh is it Miami-Dade County, Florida for the highest, the highest score you can get is 100, and that's what we scored.

So basically the FEMA uses uh hurricane risk score that factors in, you know, expected financial losses, uh social vulnerability and communities' ability to recover.

Um as you've just seen over the the past couple of slides, Houston, we are we we we tend to have some of the most costly storms come through our area.

Um again, so for for us is this is not a uh a statistic.

Uh we already we've seen the consequences.

Um again, Hurricane Harvey cost 160 billion.

We had Hurricane Ike.

Um again, we had two uh storms last year.

Um so these disasters highlight the Harris County is not only at the maximum risk on paper, but we have faced severe uh financial and human impacts in reality.

So next slide, please.

So now we're gonna take a look at some of our economic vulnerabilities, these things that kind of restrict us from being able to um you know fund more towards disasters.

And and we're all used to some of these terms, a structural budget deficit, for example, where our recurring revenues um are not enough to cover our recurring expenses.

Uh we talked about the property tax cap, uh we have the volatility of our sales tax revenue.

Uh then of course we have state and legislative policies that impact our ability uh to drive revenue.

So if you go to the next slide, please.

There we go.

Um so let's take a look at uh as we all know, we we do have a structurally uh balanced budget problem where our recurring revenue is not enough to cover recurring expenses.

And that as a result, we've had to dip into our fund balance uh to make up that difference.

Um so if you looking at that chart, you'll you'll notice the orange where uh we generated a lot more revenue, and that was solely due to ARPA funding during the pandemic where we received ARPA dollars to help recover revenue loss, uh those funds have been expended, um, and now we're back to our underlying uh structural budget uh situation.

Um so if you look, so in FY25, uh you see like one of the largest draws on the fund balance at 145.

Uh the budget we just adopted that's about 76 million.

Um, and then uh just using uh you know the Director Dabowski's five-year baseline projection just to show where uh the the gap could go based on their baseline projection.

Um again, uh this just kind of highlights that we still have that underlying structural uh budget problem where we are forced to kind of use our reserves.

Of course, I know that you know we we have the EY plan.

There are things that we are trying to do to address that issue.

Um I'm just presenting the facts as it is now.

Next slide, please.

Um again, we just kind of talked about this.

State and local uh laws restrict our ability to generate property tax revenue and also on the expense side, we all know about our property tax cap.

Um we've had to reduce our tax rate, I would think nine out of the last 11 uh times.

Um I think according to finances projection, it's cost us about 2.6 billion almost since we hit the cap.

Um we just talked about uh you know SB9 or 10, what it's going to do to the cap.

And then over time, there's been some other uh you know laws that have uh impacted severely impacted our ability with revenue.

Like, for example, if you remember the SB 1152 that impacted uh our franchise fees uh costing the city close to 20 million.

Um and so you know these laws really kind of we're already struggling with a structural deficit, and now we're having to face uh these other you know uh restrictions.

And on the expense side, we also have um you know some laws that kind of uh dictate how we can uh manage our public safety police budget.

You know, uh HB 1900, you can't reduce you know the police budget by more than what the overall budget reduces.

Um so again, that's our largest expense, so that's something that we kind of have to manage, and of course, uh you know, other legislation pending uh proposing uh spend caps.

Next slide, please.

And so again, we all know police fire uh make up the majority of our budget, and then when you add debt, uh it really uh it's almost jarring when you kind of look at the chart to see how much of our budget is tied up in three uh three business areas, if you will, police, fire, making up 58 percent, then of course debt another 17 percent.

Those three alone is 75 percent of our uh general fund budget, which leaves uh the remaining 25 25 percent uh for all of the other departments.

So again, um limited in in flexibility in how we can uh move dollars within our budget when over 75 percent is tied up in public safety uh and debt.

Next slide, please.

Okay, so now we're taking a look at the policies as they exist now and how do we compare to other cities, and how do we compare against you know what's the recommended best practice?

So, first looking at our policy.

Next slide, please.

And so according to our financial policies, we are to maintain a minimum fund balance of 7.5 percent of expenditures less debt and a budget stabilization fund minimum, which is the greater of one percent of general fund expenditures listed or 20 million.

And I know again we're gonna be talking about uh some council amendments a little bit later.

Uh next slide, please.

So again, just kind of taking a look in recent years, fund balance has been used to cover, like we've talked about, budget deficits.

Um, and when you look at you know that the top chart of the fund balance, we've had some record uh fund balance in these past few years, particularly looking at FY24, um, you know, that reached 567 million, uh, and that's 23.4% above our policy minimums.

So the but the excess uh and fund balance that we received, we've had to use to help balance the budget.

Um and then when you look down at the budget stabilization fund, um it hasn't grown above whatever the minimum was, and you'll see the dips in there whenever we have a disaster and we have to dip into that, and then we have two years to pay that back, but it never grows more than uh the minimum of our our policy.

So even though we have some of these record uh year-ending fund balances, that's been used to help with our structural budget issue.

Next slide, please.

Okay, so I think this slide is very helpful just to kind of so you can kind of see how we compare to two other cities.

Um when you look at it, uh of course, our with our minimum reserves of seven and a half percent plus the one percent, you know, we we range from eight to nine percent, uh, which is pretty uh shallow compared to some of our counterparts.

Uh when you look at like Dallas with 19 to 20 percent, San Antonio, 15 to 16 percent, uh, Miami, 20 percent.

And also when you look at uh some of those cities, uh they also they have separate reserves for uh you know economic type downfalls or other contingencies in addition to budget stabilization funds.

Um but when you look at uh what's recommended in best practice from GFOA, it is recommended uh you know, two months of your expenditures or about 16.7 percent.

So you can see that we we do fall fall short of that.

Next slide, please.

So again, like I've already said, uh, you know, shallow reserves leave Houston financially vulnerable.

Um at 8 to 9 percent, we are below the recommended 16.7 percent uh from JFOA, and we're a little behind percentage-wise compared to some of our other counterpart counterparts.

Uh so the reserve uh depth is insufficient compared to uh those standards.

So let's take a look at some opportunities.

Um next slide, please.

Yeah, there you go.

Uh okay, so just I just wanted to take a look at some some options.

Of course, the just raise the minimum fund balance.

I I know that sounds like a you know it's a simple thing to do, but of course, we've talked about some of those economic vulnerabilities.

Um, but uh we should strive to try and raise that minimum amount of seven and a half.

Um and just to kind of give you an example of you're if you were to go from seven and a half to eight, that will require another 25 million added to that minimum uh balance.

Uh but we should strive to to get to that point to where we are able to increase that.

Um and then increase the budget stabilization fund uh right now again, we're at one percent of expenditures.

Um and I like I said I know some some council members have uh put some things forward to try and help address that.

And I know you'll talk about that later.

Um allocate uh access above uh the minimum.

So again, we we saw you know we have some record fund balances, um, and we you know it it would be ideal if our policies uh kind of dictated more so what to do with some of that excess reserves right now, it kind of just flows to fund balance.

And you know, in order for us to use it, um it it should it should not be for a recurring expenses.

Um but uh we could strengthen some of those policies to allocate a portion of that to the budget stabilization fund.

Again, I I've I've read some of the amendments and I I can see that council is kind of thinking a little bit in that direction already.

Um and then just an uh idea or an opportunity, allocate special fund clawbacks.

Um part of our financial policies, we do have certain special funds where we claw back uh you know any excess and it goes back to the general fund revenue since I think 2019 we have clawed back about uh want to say nine million or so.

Uh so we could add a little more strength of the financial policies and and and allocate that to uh the budget stabilization fund as opposed to just going to the general fund reserves.

And then also kind of separate in our budget stabilization fund uh where we combine uh you know financial disasters with uh natural disasters.

Um like I said, some of the other cities have separate uh contingencies to deal with different design.

That way the disaster money is just for disasters, as we've seen, we are prone to more to disaster.

So um to kind of separate that financial aspect of it.

Um so I think those are some options we can take again, financial policies is it that is where we have the opportunity to strengthen uh some of these reserves.

And again, I do appreciate you know the council members looking at during the budget process to see how you guys could contribute and and and help build up those those reserves.

Next slide, please.

Okay, so uh in closing, um, like I said, Houston has a history of disasters and ongoing financial pressures, but with deliberate uh policy choices, we can build stronger reserves and be better prepared for the future.

So thank you.

That concludes my presentation.

Thank you very much, Mr.

Jones.

Great presentation.

And I'll go to questions now.

Councilmember Kamen.

Thank you.

Um I'll also say thank you for the timing of this.

Uh while I don't know if this was planned this way, I wasn't aware, but again, we're about to take up as you reference some of the budget amendments related to the budget stabilization fund, which is our rainy day fund.

Um it's also not lost on me, right?

You referenced Katrina and Harvey, were right, smack dab in the anniversary of those storms and the recovery efforts.

I noticed, though, in the uh cost projections, you had y'all had, which is a great presentation, uh, provided the costs of hurricanes specifically, but that didn't include, for example, the costs of the winter storms or the the floods that may not have been federally declared or the combination, right?

Barrel alone may not have made that list, but combine that year with the Derecho, that balloon the cost for that year.

So there's an addition to that list, I would say even more numbers that I think we can point to to show how costly this is and how frequently these storms are occurring.

Correct.

Um I want to thank y'all for not just pointing out the issue, but coming up with some suggestions for us to talk through.

Um, you know, in city budgeting, we use a lot of percentages a lot of times when really we're trying trying to get down to the numbers.

Um in some of your suggestions, again, when we're comparing to other cities, for example, my budget amendment we're going to be hearing later, had um, I guess increase the floor from 20 to 25 million and would require annual replenishment because again, we're seeing these storms more and more frequently.

Um is 25 enough?

Is it a good starting place?

What are what are you seeing?

Because again, we compare percentages to other cities, but other cities have different budget size.

So in percentages, can you tease that out a little bit?

Yeah, I mean, like I said, um uh it's definitely a good start.

Um so again, if you think about how 1 percent is equal to about 25 million, right?

And so our right now our policy requires uh 1 percent.

So you know 5 million, like I said, is a good start.

But when you look at it in comparison to like what a 1 percent is, we're talking 25 million.

Right.

Okay.

And then lastly, on slide 11, um we have always had to struggle with a budget deficit challenge, right?

A structurally balanced budget.

That is something that most cities grapple with.

It's nothing new.

But I see, you know, we were in the red in 2019, right?

You have negative seven, negative thirty-nine negative one, it goes up because of the Federal funding.

Totally because of ARPA, yeah.

And we are grateful for those dollars.

But then there is a much larger drop than what we saw in, for example, 2019.

What explains that jump, for example, that that ballooning of us going into the red?

Right.

Again, it it's a combination of uh a lot of the the economic vulnerabilities we talk about, the rising cost, um, and then but the revenue not rising at that same level.

So when you're coming off of ARPA dollars, I am talking 160 plus million infused in the so when you look at those, if you were to take those out, it would probably you would probably see more of a steady uh drop towards that 145.

Um again, it's just a rising cost and and you know limited revenue growth.

Um but like I said, the ARPA dollars really uh infused a lot of of revenue into the city.

Um, but the underlying problem was still there even during the ARPA time.

So that's that's why you see such a big drop.

You're probably see more of a steadier drop without the ARPA.

Thank you.

I do want to recognize that um three council members are online, council uh Councilmember Carolyn Evans Shabazz, Councilmember Fred Flickinger, and Councilmember Twilakarta.

They have been on and heard your presentation.

So welcome.

And I'll go to the Mayor Pro Temp.

Uh thank you, Chair.

Thank uh thank you for the presentation.

I think it's good information.

The question that that looms in my mind on page 17, um, where we are looking at um other cities, our peer cities and their um recommended best practices.

I'm always interested in knowing how other cities are financing uh things in their cities, and I I recognize we don't have a trash fee, we don't own our water.

Are there some other ideas from other cities that we aren't considering in the city of Houston?

I I would like for us to do a, you know, we always talk about other cities.

Right.

You know, a deeper dive into some possibilities in Houston, like maybe some other cities are doing.

Is there anything that just kind of jumps out at you that could be something we could do in Houston?

I mean, nothing jumps out.

I mean, we could, you know, try and go and look at a little more detail to see what the other cities are doing.

Um like you mentioned garbage fees and uh of course, here with our our cap, uh it kind of puts us at a severe handicap compared to some of those cities.

Um yeah, I mean, uh I would love to take a look at that and see if there are any if there's anything that jumped out, jumps out.

Um but most likely it's gonna be things like the garbage fee and them not having certain uh restrictions on revenue growth that we have.

Yeah, every time I I see the the peer cities, I was like, I want to us to be looking at apples to apples, and it it's I know that's hard.

It is very hard.

Every city is unique.

Um but I really want to kind of dive into what other opportunities may be out there that we haven't thought about.

Um I mean the hard but easy thought is you know, a fee.

Um I'm thinking, how can we restructure something without a fee?

Um what can we do if if somebody else, another city is doing something maybe that we just haven't thought about?

Yeah, no, we can take a look.

And I know uh well I'm sure EY took a look at a lot of those things as well.

Um but yeah, that is absolutely something we can take a look at as well.

Thank you.

Yeah.

Well, on Dallas on this slide, so they they have a 13.7 percent minimum.

Right.

Okay, like and then their contingency reserve, that's is that like their rainy day fund, their budget stabilization fund?

And then they have a will they have a separate emergency reserve as well.

Separate and apart from the regular fund balance.

And I see that that's a JFOA kind of recommendation.

But what like why?

I mean, 20 we keep it in there, we keep it with part of fund balance, and what what what is the benefit of separating it out?

Well, I guess uh to kind of preserve that fund balance solely for disasters.

Um like I said, we we we face disasters nearly every year now.

Um with the the financial disasters, uh like I say we are, and I guess it depends on uh what do we consider a financial disaster?

That to me that can be somewhat loosely interpreted.

I mean, some people may say we're already in the financial disaster.

We just want to be able to not you don't want to touch it so easily.

And so to to be disciplined, you really want to separate, you don't want to lump every potential type of disaster possible into that like we need to be prepared for these storms and disasters.

So that's why this is a good practice to separate.

Okay.

Thank you very much.

Any other questions, colleagues?

Okay.

Thank you, Will.

Appreciate the presentation and the work that the controller's office did on that.

We will move now to agenda item four, financial policies update, and we will also address Councilmember Cayman's budget amendment 8.01.

So I'll welcome back Finance Director Melissa DeBaski.

Okay.

All right.

Um we have a few paper copies if you need them, but they're also presentation is also on the screen.

Uh so going to an overview of the financial policies.

Uh the financial policies um on the second slide, they're um I think this must be a different must have a different okay.

Well, that wasn't the right slide deck then.

Sorry.

Um, can you give us a minute, we'll straighten it out.

Yeah, that was a version control issue.

Okay.

Um so you have the paper copies.

So just an overview of the policies.

The financial policies are broad in scope and cover several different areas, including financial planning, operating and capital budget development, debt management, internal financial controls, and economic development as well.

Um so on the second slide, you see there's sections one through N broken out into the uh different categories.

And the next slide, slide three.

So that for the one on the screen, I don't know, it's not it's not tracking at all.

That's a yeah.

If we if y'all want to send real quick Jordan the new slides, we can get them up on the screen.

If not, uh I mean, and that will benefit the people online, but if not, um you have a hard copy if you're here.

If you're online, give us a second as soon as we get it, we'll get that up.

Okay, thank you.

We'll scan it in.

Don't worry, we'll scan it in and get it up.

Take five, everybody.

Might be faster for them to send it to the first thing.

Did you want to talk about it?

However, you want to handle it, Director.

If you want to just kind of talk through, I know you can find the financial policies in the budget book, and you can find them online.

And that's what those first pages represent.

We also indicate in the budget whether anything's in whether we're in compliance or not in compliance.

So if you can talk a little bit about that.

Sure.

Yeah, and just as some background, I know we spend a lot of time talking about financial policies and the average member of the public might think, well, where are these financial policies you always talk about?

So you can find them in a couple different places.

Um first on the finance department website um on our home screen, there's a link to the financial policies as indicated in the slides.

And then the second place you can find them is included inside the um both the proposed budget book and the adopted budget book.

So in the proposed budget book every year, uh we put what we call a uh the current status of each policy, whether they're in compliance, out of compliance, or in progress.

And then in the adopted budget book every year, um, there's a section from for the financial policies where we put the current status, but then we also put what we call the compliance statement.

So that's where it tells a little bit more information about why we're in compliance or why we're not in compliance, and if we're not in compliance, what is our plan to get in compliance in the future?

So you can find that in the in the budget book.

And then as background on the financial policies, their basic financial policies were adopted by resolution back in 1988.

Back in uh 2014, um, a refreshed version, a much expanded version of the financial policies were adopted.

They were a page and a half before.

I was here when we did those other ones.

The 28, whatever, the 19, whatever when was that?

When was the first 14?

No, the earlier ones.

1988.

1988 ones were a page and a half, so not a whole lot of meat to those ones.

So Kelly Dow, the director, uh the finance director at the time really pushed us to update those, and that was a product of that.

Yes, I know that was a major effort.

And um, so that was updated in 2014.

Uh in 2015, um, additional policies were added to include provisions regarding pay as you go funding.

And then in 2018, um, there was an update to the financial policies uh to um I don't know if it I think it was at that time there were some multiple changes, but one of them was to uh put into place the requirement to review the policies every two years.

Um and so since that time we've brought them back in 2020 to revise them and update them.

Um the 2020 update included updates related to federal uh requirement changes, clarification of certain uh content, um items related to debt, financial reporting, and economic development.

And then the last update in 2023, um, the policies were revised and updated with the primary change being to add the a whole additional section related to TURS policies.

So on the next slide, um, section B4, this is the section that states that the policies should be reviewed at least every two years, um and the results of the review are to be presented to the budget and fiscal affairs committee, and any proposed amendments should be presented to city council for consideration.

So typically we would bring those um by ordinance to council for adoption.

So every two years, the goal is to review the policies for improvement.

If there's a policy that's not clear, if it could be written more clearly to reflect what's going on today, uh is there language that's confusing or conflicting, um, particularly with other laws or policies, and how can we do things better?

Uh this review also and includes not just the finance department but the economic development group as well.

So we work with uh Gwen Tillotson and her team.

So on the next slide, the proposed amendment um, this is a proposed budget amendment by Councilmember Cayman, amendment 8.01 pertain to the budget stabilization fund uh to increase the the minimum um budget stabilization amount from the greater of 1% or 20 million to be the greater of 1% or 25 million.

And then the second um proposed item was to contemplate allocating sufficient funds or replenishing the budget stabilization fund within 365 days, and the current language reads that the funding should be replenished at the end of the second subsequent full fiscal year.

So we want to break this um break this down into its different pieces on the next slide, slide eight.

So slide eight shows the policy the way it's worded now with the 20 million and the uh greater of the one percent or 20 million, and then the uh the language about the second full fiscal year.

So um in the conversations at the time of the budget, um, we did we support the change of the policy, the increase to the minimum being the 1% or the 25 million.

Um the the concern on our end comes with the restoring funds within the 365 days in lieu of the two fiscal years, and kind of um talk about timing and why we feel that's problematic from our standpoint going forward.

So on the next slide, slide nine.

Um the way the FEMA public assistance program works is that it's a reimbursement-based grant program.

So the city by its nature has to complete the work, uh, including permanent work, pay the vendors and submit the documentation showing proof of payment to FEMA and TEDum in order to get the projects completely obligated and get the reimbursements received back and ultimately closed out.

Um just talking about on the second bullet bullet point, this can be a lengthy um process.

Even just talking about the most recent disasters that we had, the Derecho and Hurricane Barrel, we're still working with FEMA to complete and obligate those project worksheets.

Although we have gotten some advanced funding from them and they have been good partners as far as timing, the process does does take time.

Moving, sorry, moving down to the next slide.

FEMA actually comes in TEDum and they go through line by line looking over where we are right now is looking at HPD overtime costs.

They'll examine all the time cards for each individual officer that worked overtime to validate that time to validate that the dollar amount is correct.

And it's a very tedious process.

So we do want to take the time to follow that process and make sure that we're you know documenting everything that we can.

Typically, what we see is that in the past it is more than 365 days after the disaster event that we would have finally closed out those project worksheets and what we feel is you know no longer a risk of de-obligation from FEMA as far as our our reimbursements.

So on the next slide, best practices and pure city comparisons.

Um I know we talked about that in the previous presentation.

Um there are certainly um other peer cities that have, of course, we're talking about the dollar amount higher thresholds, but in terms of the time to replenishment, um, there are there are definitely cities and best practices that allow for the replenishment of up to two years or sometimes even more.

GFOA actually allows up to a three-year replenishment period following the disaster from an extreme event.

So on the next slide.

I did want to point out another thing that um GFOA also recommends.

GFOA also stresses the importance of insurance, which plays an equally important role in disaster recovery in addition to just having cash reserves.

Um we really have worked to improve since Hurricane Harvey, um, back at the time of Hurricane Harvey, our total flood insurance coverage limit was 100 million dollars.

And that included our city facilities plus these uh facilities that Houston First Corporation leases from the city.

Um so since that time, uh the previous administration and this administration has continued on with increasing the combined flood coverage uh for city properties, which will really help when we have an event that has damage to our property, as well as I'll talk about business interruption.

So right now, um historically that hundred million dollars, our our combined flood coverage now totals $600 million, which is an increase of $500 million from the time.

Um and that um the coverage similarly is high for name storms and hurricanes.

So this is something that the administration and regulatory affairs department handles.

Um the insurance policies for the city, they come on an annual basis to get council approval for the refreshed policy, laying out the the policy, the limitations, and the premiums that we pay.

The insurance that we have also covers business and eruption insurance, which we did utilize part of that during Hurricane Harvey when of course we had a lower limit.

So the business interruption, I believe was part of the limit that we have.

But now we have business interruption coverage that would allow protection against lost revenue due to a storm that would damage property, and the limit on that is an additional $596 million.

Um that covers the airport system, general services, and um Houston First Corporation, the facilities that are managed there.

On top of that, the city also maintains terrorism property insurance coverage with a 250 million dollar loss limit for all of our locations and properties.

And I know I'm talking about these high dollar amounts and what's covered.

All of this insurance obviously costs money, right?

The higher the limit you want, the more premium that you're going to pay, just like you would on your own insurance that you have for your house or your car.

Um and so, in addition to the amount of money that we have separate and set aside in the budget stabilization fund, the city is spending a significant amount maintaining this property insurance as well.

So, in terms of the current status of the budget stabilization fund, um, as I mentioned, the policy mentions that you replenish the budget stabilization fund um within two fiscal years after the date of the event.

Um so we tried to proactively look at at the time we proposed the budget, try to proactively look at well, we know we don't have to replenish the fund until fiscal year 27, but is there an amount that we feel we're far enough along in the FEMA process now of validating those time cards and making sure that we're gonna get that FEMA revenue to replenish at least part of the budget stabilization fund to set it aside.

So we tried to proactively look at at the time we proposed the budget, tried to proactively look at, well, we know we don't have to replenish the fund until fiscal year 27, but is there an amount that we feel we're far enough along in the FEMA process now of validating those time cards and making sure that we're going to get that FEMA revenue to replenish at least part of the budget stabilization fund to set it aside.

And the amount that we felt comfortable at the time we proposed and adopted the budget was an additional $12 million out of the total.

So that brought the total budget stabilization fund now is uh planned to be 14.4 million by the end of fiscal year 26.

And based on I mentioned where we are with the FEMA process, we don't believe we're going to be able to replenish the budget stabilization fund up to the the 25 million, although we support that policy in fiscal year 26 without tapping into the fund balance because of where we are with the FEMA process.

So typically, like that $12 million we added in fiscal year 26, that's a transfer coming from we have a separate disaster fund set aside from that disaster fund into the budget stabilization fund because we feel that we'll have those reimbursements from FEMA at that time.

So the other thing I did want to mention that's not on the slide, but it does pertain to tapping into the fund balance of the general fund is Councilmember Peck's uh budget amendment 6.01 that she proposed and that the administration supported that stated that if the actual fund balance is higher than the expected um fund balance as of the proposed budget, then um one percent of that difference will be moved to the budget stabilization budget stabilization fund.

So that's one where we're gonna be already monitoring the fund balance.

Hopefully we have strong sales tax performance and revenue performance throughout the year to continue to you know build up that fund balance and be able to transfer some additional funding to the budget stabilization fund.

So as far as next steps, um, we're gonna continue to review other financial policies.

There may be some other um recommendations that we need to move forward related to financial reporting.

Um we're gonna be working in consultation with the controller's office on those as they affect the annual comprehensive financial report, and then um ultimately we'll come back to City Council to pass an updated ordinance on the financial policies.

And that concludes my presentation.

Thank you very much, Director.

Councilmember Kamen.

Thank you.

And I'd ask for a little additional time since we're discussing the proposed budget amendment.

Director, thank you.

Um we've been eagerly awaiting this conversation since uh we took up the budget.

And one of the things if I can lay out, Madam Chair, the reason I believe it's so important to have increasing the amount as well as how frequently we are reimbursing it.

And I appreciate the commitment to the increase it to $25 million.

And uh as I asked the controller's office, right?

It compared to other cities, it likely needs to be more.

And we're trying to be sensitive to the constraints that we are faced with our own budget right now.

But with that, when we talk about uh federal reimbursements, we are continuing to rely on reimbursements to replenish um the fund.

And one, as I said before, we cannot necessarily rely on FEMA for reimbursement right now.

Two, it takes a really long time.

But we know from the timeline of Houston's disasters, a disaster doesn't wait two years necessarily.

It doesn't even wait six months necessarily.

So the importance of having those dollars set aside, protected and ready to go is all the more critical, especially when it's such a low amount.

Let's say we were at 50 million.

Okay, maybe there's some wiggle room.

So my concern remains that with such a low amount that barely skims the surface of what is needed for disaster recovery, and then our reliance continuously on federal reimbursement to get us through the next one, that's what gives me pause right now.

Um I'm sure there's more to discuss, but I I want to be very open and clear that I'm gonna continue to push for an annual replenishment, or if we want to come to the table and say, okay, maybe we can do a little bit more, no problem.

But again, we're relying on such a low amount, and we cannot rely on FEMA to necessarily always get that money back.

Um additionally, Director, uh the one thing you said, I just want to be clear on slide 12.

With the uh second bullet point, based on analysis performed, finance department is unable to replenish the budget stabilization fund up to 25 million in FY26 without tapping into the fund balance, um, which we understand.

I do want to point to during the budget committee process, I had said we will have at least 10 point I I was making sure we were confirming this.

Uh and we had an understanding we will have at least 10.8 million included in this year's budget.

While we are not passing this right now, we will safeguard that amount from the general fund for when we take up the financial policies so that it will at least be 25 million for this fiscal year.

And then the mayor said we will.

So does that mean that y'all have safeguarded those dollars that we had aligned on to bring it up to 25 million?

So the additional money to bring it up to 25 million will have to come from the fund balance if that's the uh because of where we are with the FEMA reimbursement process.

Now it could be that, you know, we go through the process and by the end of fiscal year 26, we'll have more funding realized from FEMA, but at this point it would have to come from the fund balance.

And I mean, I know that the fund balance is something I try to I try to guard with my life, I feel.

Um the way it's looking now for fiscal year 25 ending fund balance, it's about 16.7 percent, um, which is of course in excess of our seven and a half percent.

That's for fiscal year 25, and then we're planning to use about you know 75 million of that to draw to close the budgetary gap in fiscal year 26, and that would bring it down to about 13.6 percent.

Um those are the overall, you know, the overall numbers of where the fund balance is, where it would have to come from.

At the end of the day, when a disaster happens, like uh if we take the winter storm that we had um last season, for example, that was not a declared disaster.

We did incur costs related to warming centers over time.

And since there was no declared disaster, the departments still performed the function that they need to, right, for disaster recovery, and they funded it outside inside their department budgets, right?

So that meant they had to either, you know, delay filling other positions or kind of still attempt to stay within their overall budget.

Um when there's no reimbursement back, we have to live within the budget that we have.

Um at the end of the day, if there's too much in expenditures that you can't make other reductions, it really you know comes out of fund balance or would result in fewer dollars that got sent to fund balance at the end of the year if there were other vacancy savings.

So to me, the money is either sitting in the fund balance, sitting in the budget stabilization fund, it's kind of you know moving from one pot to the other.

Right, I get it.

And but again, when we do have such significant budgetary constraints, what you're saying is when it's not a declared disaster, when we can't rely on reimbursement, departments are left to eat that cost at the sacrifice of other services potentially.

And as the fourth largest city ranked number one by FEMA now for natural disaster risk, we have to be planning more and setting aside those dollars and safeguarding those dollars as a council.

So um I appreciate this.

I I'll go back in here.

But that was a bonus two minutes.

Thank you very much.

Council Vice Mayor Pro Tempeck.

Thank you, Chair, and thank you, Director, for the presentation.

Um after we do get the reimbursement from FEMA, how long does it take then at that point for it to go back to the budget stabilization fund?

Is that automatic or are there other processes in place that take some time?

Um I don't I don't think it's really a processes that take time.

Um it's a matter of making the entry in SAP.

I know I'm talking detail now, but um no, so what we typically do is um we will look at okay, how much did we draw, uh, what disaster was it for the revenue comes in.

The key piece for us is making sure that the project worksheet is not just obligated, but we look at closeout a lot of times because until a project worksheet is closed out, FEMA could say, well, I'm gonna de-obligate from that.

Maybe your time cards aren't, you know, you said you had five million of time cards, we only see four million, so we're gonna take away a million.

So until we really close out that project worksheet, that's the time that we like to wait to reimburse that, you know, send that money back from the disaster fund into the budget stabilization fund.

Okay.

So we're not talking months and months after it's close out.

Okay.

Um we spend more than the budget stabilization fund, for example, in Harvey, when we were, you know, taking money from other areas um to pay for things.

When we get reimbursed, or is that money getting paid back just based on which fund it came from, or is there a priority for it to go to the budget stabilization fund before it goes to like the general fund or some other fund?

So it for Harvey, for example, we're looking at the funding going back to the funding source than it came from.

So let's say, for example, um uh the courts project.

Okay, so we're still in the process of building out the court.

When FEMA reimburses us for their share of that court, that funding is basically gonna go to offset, because we are gonna have to um debt finance that project, go to offset the debt payment for the court, um just as an example.

Um but in the case like um let's say the water utility had a project worksheet for Harvey, the funding comes in, it would go back to the water utility because they fronted the money for it.

So instead of maybe saying that it has to get re reimbursed or paid um fully within two years, what would be the ramifications of us instead saying when we get reimbursed from FEMA that that has to be a priority to go back to the budget stabilization fund up to that 20 or 25 million dollars before anything else gets paid back?

There are cases where I'd have to go back and see which disaster it was, but there are cases where the FEMA doesn't reimburse us the full amount of whatever the disaster was.

And let's take, for example, the local share.

Um we have local share on projects.

Typically it's 75 percent federal share, 25 percent local share.

If the disaster fund paid the invoices, FEMA reimbursed us back to 75 percent, some money is gonna come back to the budget stabilization fund from the disaster fund, but the s but the general fund in that case may have to supplement and take from general fund fund balance to replenish budget stabilization.

So it's not always that you're gonna get every dollar back from FEMA that you spent.

Okay.

And Chair, I think that there, you know, as we're looking at the financial policies, that might be some avenue to kind of take a deeper dive into looking at um to see if maybe there's a way to just prioritize that money to go back to that fund rather than other places.

But I I hear what you're saying too about there could be issues with that as well.

Thank you.

Thank you.

Mayor Pro Tem Cas Text Tatum.

Thank you, Chair.

I I want to just kind of get a a better understanding of how long uh those reimbursements take, because we're just talking about um moving this money from fund balance and then making our deficit bigger and then the previous conversation we just had is making sure we have more money in the fund balance.

So the bottom line is we just need more money.

But I mean, I feel like we're just moving money to move money.

Um what's what's the I guess most prudent place for us to hold the money?

Because if we move more money here, but we really are saying we want more money in our fund balance, why would we want to move this money from our fund balance to the to the reserve?

Yeah.

It's complicated.

It is.

I I agree with you that at the end of the day it's not it's not generating more money.

It's the same money that's in this pocket or it's in this bucket, which pocket is it in.

Um I think that when the rating agencies look at it, what at least what I spend a lot of time talking to them about is our fund balance.

Do they want to make sure we have a budget stabilization fund?

Yes.

But I don't believe I've ever gotten the question from them have you refilled it by this day or how much, what is your percentage?

They really focus on the fund balance.

Um, the general fund fund balance, separate from the budget stabilization fund balance.

Um to me, leaving it in the general fund fund balance, the funding is still there.

It's still going to be available.

Like I mentioned at the end of the day, the first responders are gonna go out, the debris is gonna, you know, the solid waste are gonna go out, they're gonna pick up the debris, and the funding, if it's not available in the budget stabilization fund and we're still waiting on FEMA, it's gonna ultimately come from the fund balance.

So whether you transfer it from the general fund fund balance today into budget stabilization fund or tomorrow, it's the same dollar.

Um I think that part of what Councilmember Kamen mentioned about then it impacts other services.

You know, that's why we went through the Ernst and Young study.

That's why when we uh uh proposed the the budget and it got adopted, it's a decrease of expenditures from one year to the next, trying to find the efficiencies, find the savings as much as we can so that we can preserve the fund balance um if needed.

You know, the other part of it, like um uh deputy controller Jones mentioned is the most of our general fund is spent on public safety.

Public safety is important, that's a readiness cost, right?

I mean, if you have all your money squirreled away into a savings account and you didn't use it to have a contract to recruit and retain public safety, who are the people that are gonna be performing the services in the case of the disaster?

I mean, you kind of have to have a balance between being able to recruit and retain a strong workforce to provide those services versus having the money saved aside.

So I think it is a balance and um I I appreciate Councilmember Cayman uh making sure that we have that readiness because as she mentioned, it does take a while to get FEMA reimbursement, but it is a balance.

I like the idea of us going to the 25 million, but I also like the flexibility and would prefer to see that money stay in our our fund balance.

FYI.

Councilmember Davis.

Thank you, Madam Chair.

My Madam Director, I was I recall uh was last year, you remember I asked about the 100 million things that FEMA owe from the previous disaster, right?

That we had the conversation about the 100 million dollars, which is the concern, and I think what Councilmember K and then what Mayor Pro Tin was just asking, the stabilization from the balance from the fund.

Um shouldn't we be concerned about the time frame?

I mean, I know what what is the norm of the reimbursement?

Sure.

Reimbursements are faster for what we call nonpermanent work.

So you get reimbursement faster for debris removal, and then what FEMA calls category B emergency protective measures, which is like overtime.

Um it takes longer to get reimbursement for a permanent work type of project.

So, for example, like the courts, they're only going to reimburse us back after we spend the money.

Um it takes years to to spend a capital project.

So it really depends on the type of work and the disaster type that's needed.

So I would say debris removal, they reimburse most quickly.

And FEMA has also I hate to use history to predict the future, but all I can speak of is history.

Historical, they have worked with us on advancing funds.

And then with the uh the Derecho and Hurricane Barrel last year, we also partnered with the State to tap into the uh TCEQ, they have a solid waste fund that allowed us to cover the local share of those disasters for the debris removal, which was critical.

So back to your question, the timing of the reimbursement really does depend on the type of work.

Okay.

Okay.

So when Councilman McPeck asked a question about the different department when the re reimbursement comes back, then does that come to us to decide where that reimbursement goes in regards to what was we typically would send it to the fund that advanced the money.

That what?

Advanced the money.

So let's say a public public works fund advanced the money to repair one of their facilities when the FEMA sends the money for that project worksheet, it will go back to that department for that fund.

Um in this case, the what we're talking about replenishing the budget stabilization fund, this draw was um made really to cover the Derecho and Hurricane Barrel cost for debris removal and overtime was really the primary focus of that disaster.

Okay.

All right.

Thank you.

Councilmember Romares.

Thank you, Madam Chair.

Curious, Director.

Um we pay a lot of money for insurance.

Do the insurance companies look at our budget stabilization fund at all?

I I don't know.

I mean, I could I could definitely reach out to ARA and ask if they have had those conversations.

The ARA department is the one that really works with the with the insurance providers on an annual basis, but I haven't not that I am aware of.

It would seem like that might potentially result in some lower premium cost if they saw we were being responsible and preparing for the next disaster, we we all know we're gonna have another disaster.

It is just a matter of time.

And we will have to dip into this fund.

I don't think anybody would dispute that.

It seems to me the differences in how long it takes to get reimbursement.

I do know that ARA has a lot of robust conversation with the insurance providers about mitigation measures we have done in the past, things we do to protect our facilities.

Um I'm just not certain if that if that uh topic is one of them, but I will be glad to follow up with them.

So the reimbursements can take longer than 365 days is is what you have said?

Yes.

Up to two years and potentially more?

Yes.

So for example, now on the Derecho and the barrel on the project worksheets for the overtime for HPD and HFD, we still haven't received all the reimbursement from FEMA on those.

They're going through the process.

I don't believe that it's stalled, but they're in the process of reviewing the time cards right now, and it's been more than 365 days from that disaster.

I mean, if the reimbursement uh delay caused us to get into a financial bind, I mean there are other measures we could take, are there not?

Uh there are certain emergency borrowings that the city can do that we looked into after Hurricane Harvey, other ways to access additional funding.

Um it would mean issue, you know, issuing debt basically like an emergency note is what it is called under state law.

Uh there are other options, of course, um to explore.

And then as I mentioned, uh if it's something that we feel we can sustain as far as pulling from fund balance, that's something that happened, like for example, with the winter storm.

Right.

And state law does allow us in the fiscal year following uh a natural disaster to raise additional revenue.

I think the county did that.

Isn't that right?

They do, and our local cap also allows us to bring in additional revenue in the case of a disaster.

Right.

So I mean I I think the budget stabilization fund is is a really good idea in having it um where it needs to be is is a really good idea as well.

So I'm sympathetic to um Councilmember Cayman's amendment.

Thank you.

Councilmember Martinez.

Thank you, Chair.

Uh Director, uh have have y'all looked at uh the recent DR uh funding that uh takes into consideration mitigation, the um debris repository acquisition uh development program and then the vegetation management.

We usually spend a lot of money um on the telling once the disaster happens, but what is that how does that impact what we would normally be putting out uh during a disaster?

Um I have to get with uh with the team on exactly the details of that, because of course we have to stay within the the guidelines laid out by HUD.

Um but what I can say is that to me part of readiness is making sure that you have the staff and the vehicles and the equipment necessary, especially um like on the degree removal, like you mentioned.

Um, you know, if you don't have the staff and the equipment purchased ahead of time or a contractual vehicle in place that we procure ahead of time um to have something in place, then it's difficult to respond to a disaster at the time.

Is it fair to say that um if we did not have these dollars that we would have to eventually look for a reimbursement in the future uh from from HUD?

Oh, sure.

Um or FEMA in the case of the U.S.

FEMA, right?

And so we would we essentially are helping ourselves out by making sure that we're having these dollars ahead of time.

Um I agree.

I think that you know we definitely need the rainy day fund for the rainy day fund uh that we already have um, and I am sympathetic to making sure that we have those dollars available.

But I think as much as possible that we can continue to be uh forward thinking and addressing these these issues uh um it's definitely helpful as well.

Um but I'd I'd like to see more um detail as to how this is going to be helpful.

Um, you know, ensuring that we end up spending a lot of the dollars uh when a disaster happens.

Director, on the insurance, uh this past March we we spent about 24 million dollars on premium for all our buildings, not including the Houston First properties, but for our other 12 billion dollars worth of buildings and properties that we have.

Yes, that's right.

How does insurance play into all this?

So we have a damaged building and it's insured because we paid this $24 million premium.

And we ha how soon do those come in?

Is does that cover our 25 percent match?

How does that work with the project worksheets and what we get from FEMA?

How does insurance play into this?

So the last time we had a major draw on our policy that I can recall was during Harvey.

Um they basically, the insurance provider wants to verify that you kind of you know met your damage requirement, there's a deductible.

Um, and then shortly thereafter, they sent us um basically the hundred million dollars and said, okay, you decide how you're gonna split it up.

Um as far as we our damage threshold was so far in excess of that hundred million dollars, right?

Um that was an exceptional event.

Um from FEMA standpoint, though, FEMA doesn't actually see that insurance um money as part of the local share.

They make you take an insurance deduction as part of the Federal share, and then you still have to cover the local share cost.

However, FEMA.

So that's so it goes into the 75 percent?

It does.

Like it's like uh whatever we get from insurance is deducted from the 75 percent we'll get from FEMA.

It does, yes.

And then we have to use our own some other funds for the 25 percent match, correct?

Okay.

However, um FEMA also says that you have to you have to maintain insurance, and if it's a facility that flooded in the past that FEMA paid to uh help repair in the past and you don't maintain insurance on it, then that property is no longer eligible for FEMA reimbursement in the future.

Okay.

And you you gave an example, you said we used business interruption insurance for what?

What was the uh during Harvey um the theater district garages that were flooded, the Houston First collects parking revenue, so the business interruption went towards that, and it also went towards um lost revenues at the airport during Harvey.

Okay, thank you.

Councilmember Kamen.

Thank you.

Um I really appreciate the entire discussion, right?

That we are talking about how to best financially prepare and safeguard the city against future disasters.

Director, you and I have talked a lot about general fund versus budget stabilization fund.

And my understanding is general fund gives you a lot more flexibility day to day, correct?

So for example, uh an administration in the strongest form of mayoral government could um use those dollars for something other than disaster response with the general fund, correct?

Yes.

And it doesn't necessarily, depending on the amount, have to come to council.

A significant amount would come to council for approval.

There would be a competitive process, a contract, it would come to the process.

Most of the contracts, but there's also pretty large contracts that aren't coming to council as well.

Um with the budget stabilization fund, Mayor Pro Tem, it's a for in my opinion, it's a clearly defined use and purpose, and it requires for those funds to be expended, it to come to council for a vote for that specific purpose.

So, for example, we've had so many conversations about overtime, right?

And outside of a disaster, regardless of the issue for which overtime is needed, that those additional overtime funds for a department can come from the general fund.

So we will continue to potentially eat away.

I don't I don't want to say eat away, utilize general fund dollars potentially throughout the year.

So there's no safeguard in place to say no, this money is for emergency response as it pertains to disasters or with our budget stabilization fund, economic fallout as well.

So the that's why, in my opinion, the budget stabilization fund is so important.

And I go back to, again, this was I appreciate the timing.

I want more information from Director U and also the controllers that pertains to what other cities are doing, because again, they may have a replenishment that's longer, but they have a lot more in their fund.

So I think it's the distinction of we're putting our money for a natural disaster, which we know is coming, and we're on borrowed time for in with everything else that the city can be spending money on versus no, we are protecting this in case and for when a disaster comes, and those dollars have to come to council for authorization and approval so that we're aware of how this money is being spent.

That that's really why I think it's important, especially in light of how Houston our natural disasters are.

Sorry, one final question, Director, not related to this, but just with the timing, I'm gonna keep asking because I think it's so important.

As we look at the financial policies, are y'all still considering looking at when our fiscal year starts and the timing of all of that?

We're looking at it, but I don't think it's going to be recommended in this round based on where we are today.

Thank you.

Thank you.

And on the other financial policies that you're reviewing.

I um you know, we we've heard a lot lately about our the condition of our facilities.

Um and financial policy G8 um talks about the uh operating maintenance funding uh will be prioritized each year to ensure capital facilities and equipment are sufficiently maintained and maintenance is not deferred to future years to implement this policy.

Funding for operating maintenance of general fund facilities shall be increased by at least 0.25 percent biannually beginning the FY 2020 and until funding reaches at least two percent of current replacement value.

Uh you know, I know money is tight, and you know, it's not like we have a lot of extra money to be putting into that fund, but uh I would ask that we do look at if there's a way to kind of potentially increase that amount to go towards the um go towards deferred maintenance and our our MRR fund.

So we have been um, as you mentioned with the policy, it increases uh at least 0.25 percent every other year.

So I believe in fiscal year 26 is the first year we hit the two percent.

So we're at 2 percent.

That's it this year.

And is that a GFOA kind of thing, like you have 2 percent of your total property value, even if it's all completely in a bad in a bad way?

Well I think it's this is the the amount that the standard um when you look industry standard what they say is at least two percent of your current replacement value so as not to basically further increase your deferred maintenance amount it's basically the amount to kind of keep your deferred maintenance steady.

Okay.

So we're doing this 2 percent that gets transferred through the MRR fund but we're also um if you look in the capital management policies there's another policy policy H 5 that talks about an additional 2 percent being allocated in the CIP to focus on capital maintenance.

So in other words you know not using not using CIP dollars to add um square footage or add footprint but it should either be replacing an old building or maintaining the building that we have.

So you think those two policies on the operating side now that we're at two percent so we don't keep increasing it we're just we're at we are where we are we'll increase it as our building asset value increases be going up a little bit.

Yes.

So between that policy and the one in the capital policies you think that were in a good spot there.

I mean I think we had a robust conversation last week about the deferred maintenance at the city I think we really need to look at um that citywide facilities master plan and really do an assessment of what buildings do we need how can we best utilize the dollars that we do have.

And I think that will help us um you know be able to also drive down that deferred maintenance by just figuring out what of this building stock do we need to maintain.

Is it even being used?

Right and and I'll defer to my the Vice Mayor Pro Tem um if if you wouldn't you you brought it up briefly the budget amendment and I'm I apologize we should have probably included that in this discussion about your budget stabilization fund putting one percent of what is an e is it one percent of what's in excess of our projected fund balance?

Yeah it's one percent of the difference between you know if the actual fund balance came in more than the expected okay and that we're planning to do yes okay yeah so what I can do regardless of if we're already at 25 million or whatever.

Right.

So it won't I guess the issue with the timing there is that we won't necessarily know until fiscal year 26 is over because you know it's kind of going to kind of be the final ending fund balance compared to what we thought it was going to be and then doing that calculation.

So it will yes we are doing it the amendment passed the administration supports but it will be you know after the end of fiscal year 26 that will for sure know that dollar amount.

Okay.

Anyone else great discussion everybody more to come on this I'm sure um appreciate everybody's diligence um Councilmember Kamen um your advocacy but we all uh there's no doubt we need money for disasters and I appreciate this deep dive into it.

Thank you very much.

We will now deep dive into the dedicated drainage and street renewal fund balance and we will be joined by Samir Solanke Chief Financial Officers for Public Works and David Wardlow, Senior Assistant Director of Public Works and we will discuss Vice Mayor Pro Tem Peck's CIP Amendment 6.02 which uh is related to the unspent funds of the fund the D D SRF fund balance.

So with that, the floor is yours.

All right awesome good morning my name is Samir Salonke thank you for your representation today.

I am joined by my colleague David Wardlow and we will be covering the dedicated drainage and street renewal fund.

We call it fund balance but as we walk through we want to help you understand the the mechanics of how this fund works and uh later on we'll answer any questions that you may have.

Next slide please and you know we've covered this before but I just want to do a quick uh overview again the DDSRO for the dedicated drainage and street renewal fund was approved in November 2010.

You created a dedicated funding source to improve street and drainage infrastructure the three components to it it is a pay as you go fund it is prioritized prioritized by the needs data and three things happen with it.

We use the funding for to repair a lot of that it's uh for OM purposes but also rehabilitate and reconstruct on the CIP side please next slide please let's talk about the funding this might look a little bit familiar to you we've covered this before it's been a couple of years but uh there are four different funding sources.

The first one is through ad valorum taxes which is the property taxes.

And then um uh then it comes to us for the street and drainage project for uh traffic signals, sidewalk projects, operations, and maintenance.

Again, this is after paying off the pre-rebuilt Houston uh built Houston forward debt.

The second source of funding are the third party funding, which is Metro and TextOt, which pays for street and drainage projects, traffic signals, pedestrian bike projects, and then other operations and maintenance.

The third funding source is the drainage utility charge, which we see on the water bills, and that pays for street and drainage projects, including property acquisition, planning, design, survey, and construction, and also operations and maintenance, including personnel, equipment and facilities.

Then the fourth one is the developer impact fee, which goes through the public uh permitting process, and this funds um our street and drainage for future development.

This is for essentially new buildings that come uh that are constructed, and then any impact to the water and source side.

This is the fee that's collected for those purposes as well.

Next slide, please.

And you've seen this uh graph before.

We have made some significant progress towards paying off the pre-rebuild debt.

Um so far, including principal and interest, we've paid off about two billion dollars in debt, and the amount that's owed is 449 million.

As I recall uh a couple of years ago when we did this presentation, we still had a little over a billion dollars in debt uh left to pay, including principal interest, and we made some significant pro uh significant progress towards paying this off.

That's a great slide, man.

Look at that slide, everybody.

Look at that slide.

Two billion dollars of debt paid.

Thank you.

Four fathers of the rebuild Houston program.

If you're listening, Steve Costello.

We're making good progress.

And this graph gives us an overview of what the revenue forecast is going to look like from 2026 through 2024, and is broken up into the different components that we talked about.

You've got your drainage charge, third party fun uh third party funds, ad vularum tax, and the developer impact fees.

Let's jump to the next slide.

I will hand it over to David.

All right, thank you, Samir.

Um we thought it would be useful again, just as a reminder, we've been here a couple of times when we we talked about splitting up the old special revenue fund into different parts uh where we've talked about the mechanics, but it's useful as a refresher, just to make sure everybody's on the same page about how this works and how it's a little different than some of the other funding sources you see coming through the budget.

Okay.

So the principal purpose for the ad forum and the drainage charge revenues that are being collected is to pay for capital projects going out the door.

So that transfer to capital line you see in the budget.

Okay.

But how does that work?

We don't appropriate when we come to you to approve a construction contract or a design contract, we're not allocating directly against the funds in that special revenue fund, right?

We have the separate capital funds.

And the best analogy I can give, it's not perfect, um, is an Amex card, an old school Amex card.

So not a credit card, but this is essentially uh um Marshall Paper line that we appropriate against.

So it's that promise to pay, so we honor our constitutional commitments, uh, we honor our charter commitments.

Um but when bills come due, right?

Then invoice is turned in, the pay estimate comes through, cash is then pulled from the special revenue funds at that point.

Okay.

So cash is sitting in the special revenue funds.

What you see over there is number two, right?

But we've actually appropriated all the capital work on the capital side, right?

So there's that segregation where you're not seeing the full as we might call it liability or commitment to the capital programs showing up in that what's presented as fund balance on the MoFER uh reports every month.

Okay.

Um so again, as we spend um, you know, and cash comes back in, we free up that capacity so we can appropriate new contracts as we go forward.

We will expect to come to you pretty soon as revenues are increasing and the program size increasing, that K series line also needs to be increased.

So look forward to that coming soon.

Uh next slide, please.

All right, and this is just a quick snapshot to give you a picture of what do we have on the capital stack uh on the capital appropriation side, right?

In those funds 4042 and 40 and 4046 versus what's sitting in the special revenue funds.

Okay, and this is only looking at beginning of the year beginning fund balance compared to what promises you have already made, contracts we've already awarded and are not yet spent.

That's the bottom.

That's the FY25 carry forward.

Well, you've already approved yet this fiscal year, what is in process, so contracts coming to you soon, right?

Um, and what's already approved in the CIP as planned work.

So this is the work we anticipate beginning and start spending on this year compared to the balance that's sitting basically in the special revenue fund today.

So when we talk about there being available fund balance, we we wouldn't use the that terminology all because the commitments for the program on a capital side still exceed significantly so what's sitting there.

So then it comes back to priorities question, right?

Which is we can only spend the money once.

So if we want to redirect that planned work somewhere else, that's when we have those conversations about amendments of well, if you want to do this thing over here, we're gonna have to choose not to do something else.

Okay.

And that's really the the general overview that we have for you to kind of get through this.

Um we're happy to answer questions.

I know there will be a lively discussion.

So with that, I think.

Vice Mayor Pro Tempe.

Thank you so much for the presentation and chair.

Thank you for um having this heard today.

Okay, so going back to the budget that we pass um for DDSRF, when it shows that there's for FY26, 187 million dollars restricted but not committed in that balance.

And I get that it works a little bit differently because we're you know doing all of this work and then paying back, but there's still a budget somewhere where we know how much in a fiscal year we expect to spend, and in every other budget that is um committed because we're committing that money.

So help me understand the difference because I've added up all of the numbers of all of the you know projects plan for all DDSRF projects, and there's still a balance there.

And I get that there's other things that happened in previous fiscal years that we're paying down, but help me understand that 187 million dollars.

Sure.

Can you go back to the previous slide?

Um again, it really comes down to the difference between where we are making that contractual commitment and then where you see the accounting reported.

That's how I would explain it, right?

So that in the budget uh that you adopt as the annual OM budget for funds 2310 and 2311, you're seeing a forecast of how much those capital projects will spend out that year, and that's what's being presented as the liability against the fund.

That doesn't mean we haven't made other promises and other contracts that will still spend that money in the fund balance.

It just means that that fiscal year, the the bills might not have come due yet.

Does that help?

So basically we're saying there's unspent appropriations or projects in the plan to use that fund balance that haven't come through yet, hasn't been spent.

But that doesn't mean that there isn't a either contractual commitment or a planned use, which is it depending on how you view the CIP, right?

How committed is a project in the CIP, that that's really the difference there, right?

So if again we want to use that fund balance for something else, that means there are projects in the CIP that will not get committed and will not be delivered because we're choosing to do something else.

That's a choice.

That that's a that's a policy perfectly valid prioritization question.

So for FY26, it w is 151.4 million dollars in MO and operating transfers.

So you're saying that's just for FY26, but the 1870 million dollars could be from previous fiscal years?

Well, it's uh so this year, right?

We go to construction on a project in well, barely any construction project is going to be completed in a one fiscal year, right?

So what's not expended yet will carry over into the next fiscal year.

So in this, if you go to the next slide, that FY25 carry forward, those are contracts, commitments, appropriations that have just not been spent yet, right?

So the biggest part of it is gonna be that, right?

The commitments we have made around this table to deliver work and the those projects in the CIP plan that we expect to come before you for votes, but have not come yet, right?

So again, if if that 186 million, if we choose to use it for something else, appropriate for some other project, which takes time to develop, that means we're not gonna use it for those projects that we're planning to come to.

Okay.

I mean I I understand what you're saying.

And I I think it would be helpful maybe to see it broken down a little bit more with that 187 million dollars as far as what the expectations are from previous, you know, projects that we still have to pay, because in any other budget that we look at at the city, it doesn't work that way where it's just you know things that we still have obligations for.

It's you know, here's how much money in this fiscal year we expect to spend versus how much you know the budget is for.

So when there's a project that's scheduled for um to begin in a fiscal year, and then it gets pushed back to another fiscal year.

What happens to that money that we expected to spend in that fiscal year?

For example, spring shadows that you and I talk about all the time.

You know, we were going to start in a fiscal year and now we're not.

So what happens to that?

Is it is that part of that $187 million, or are we supplementing it with another shovel already project and shifting it around?

In an ideal world, yeah, you would have another project that could be accelerated and use that same capacity.

In practice, we see that that doesn't work out all the time, right?

So you see a fund balance grow because you still have a planned program of projects to go do, that is still a committed plan of projects to go do, and the resources just haven't been appropriated and spent yet.

So again, it's a yeah, you're seeing that uh the balances grow in that special revenue fund because we have projects in the queue, projects that have not spent and spent yet.

But you know, if we choose to do something else, then then um you know, when that project comes and is ready, then the resource to appropriate might not be there.

Okay.

I do think that um we need to start looking at that as far as you know, if project doesn't happen and there's always you know factors of why that doesn't happen, to have another project shovel ready to put in its place and spend that money down because then when the other project does, you know, is ready, theoretically that other project that we moved it for, you know, the fund should be available at that time.

So you know, whether that's within each council district to have another project just ready to go around the same, you know, price that might get complicated.

But just any project really, you know, just to make sure we're that money isn't just sitting there, which I never tried to say that, but when it comes to drainage projects, I mean we really need to spend the money and get those projects done.

Yeah, clearly, we we definitely share the concern of delivery is super important.

We want it to be invested in our communities and providing infrastructure and and benefits for everybody to avoid flooding, better transportation, all the rest of it.

What I would say is that's part of why you see a shift, right, towards more rehabilitation spending, right?

Is because those programs do have a little bit more of a rhythm, and there's less dis can be less disruption to the to the cycle if something comes up on the design side, let's say.

Thank you.

Thank you.

And thank you, Councilmember Peck, for bringing all of this up.

You know, it you were looking at the drainage charge ending fund balance of 187 million.

There's also uh Ad valorum of another 137 million.

I I guess you know, the best way you you you you appropriate against commercial paper when they come due, and you're uh that that's just you're just saying that's all for either CIP, that every bit of that money in both of those accounts are are are for either past bills or future or planned projects.

Yeah.

There's not there's not anyone I'm gonna say any, because I mean there's a wiggle room year, there's small amounts.

There's wiggle room in that.

There's a few things here and there, right?

There's a lot of Vice Mayor Pro Tem and I have been looking at this for a long time, and that always seems like a big amount, and it's a little bit different than the than the other balances that we see in other departments.

Um Councilmember Ramirez.

Thank you, Madam Chair.

Just clarification on slide eight.

RCA routing is RCA is that request for council action?

Correct, sorry, apologies for the acronym there, yes.

Okay.

And um tell me about that as opposed to the contracts that we've been through procurement on and they're being set up in our financial system and to be presented to you for award.

All right.

Thank you.

Okay.

Well, thank you very much.

I don't know if you want to opine at all on the amendment.

I would like I'd like for Councilmember Peck to bring it up and and we'll talk about that for for a moment here.

So the amendment was basically any actual money not spent or planned to be spent um in DDSRF to move over to the Spring Shadows project.

So I mean uh clearly it's not 187 million dollars plus the amount in the ad valorum, but there might be something.

So how much do you expect in FY26 for there to actually be as a traditional fund balance where we're not spending the money, we don't have it committed for something, we're not planning on spending it.

Well, again, it that comes back to the discussion we just had about what is that ending fund balance that gets reported in in the financial statements, right?

Which isn't if we were to put every dollar of um CIP commitment against that and record as a liability, it would look very different, right?

Um that's a hard answer for me to provide.

I would prefer really at this point back to the budget and the published figures that are there.

So there will be an ending fund balance in both of these funds.

So from that point of view, I think the policy question is germane of what do we do with that, right?

Is the an amendment to redirect it worthwhile?

And I get I think that's again it comes down to a policy question of what is the committed program of capital projects, what's most important?

And if we decide that delivering Spring Shadows is more important than the other work, we can we could pursue that path.

For sure is to the Vice Mayor Pro Tem.

So I guess I guess what I would like to see, and and I think what the Vice Mayor Pro Tem on this account, I mean, you're you're you you kind of threw it all up at the end, right?

Um it's kind of hard to project ahead on what that that wiggle room might be.

But maybe as as we go on talking about this fund balance, there could be some kind of uh line in the budget book that uh of things that were not that don't match up with any planned commitment.

Uh is there a way to do that?

And do you have that number for FY25?

So I mean we we've kind of presented here what you see as coming over as the planned program, right?

Um compared to what the fund balances were.

So that's where it would look at first, right?

Um in terms of the value of what we're expecting to do in delivering drainage and street projects on the capital side versus the resources sitting in the special revenue funds today, right?

So we we can absolutely provide that.

Um in terms of a tell us where it goes.

But yeah, I I it it really it comes down to sound like a broken record.

It comes down to a priority-setting question of what we're doing.

Right, but is there a way to give us a number like at the end of each year?

Because the balance is against future projects, uh it's hard to come back to uh another number besides what you are seeing reported in the financial statement.

I guess.

Same here, give me a yes.

Yeah, um, I guess what we're trying to say is especially on that chart, I don't know if we can bring that up, but you know, looking at the breakdown on the special revenue fund, we call it the fund balance on the left side.

We're looking at what the carry-forward commitments are.

We're looking at what council has already approved.

We're looking at what's already the RCA routing process and also a big chunk of what's already been planned and comparing it to what we call the beginning fund balance or oversubscription.

So that's what David keeps going back to.

You know, if a council wants to make a decision on reprioritizing some of these funds.

So when he asks us for a number, I guess the question is, you know, based on that oversubscription for what's already been planned and committed, it's it's it's a bit of a difficult answer to come up with.

Okay.

Vice Mayor Pro Tem.

Thank you.

So I mean, there should be a number though, of the amount that's in the that we will have in that fund at the end of the fiscal year versus how much we have spent in that fiscal year, and then also how much is planned for you know future payouts.

And there should be some delta between you know whether we've overspent or underspent on that amount of money.

I mean, it there should look at any budget, I mean, there has to be some number there, right?

So at the end of the year when you're figuring all of that out.

I think again, the way I would actually express it is the CIP that you all have adopted, is that planned use that it continues, and it's not necessarily contracts that have been awarded yet.

It's not necessarily contracts that have been awarded and not spent yet.

Um that is a claim on that resource we're talking about, right?

So I would present it as what we show here is what's coming up actually exceeds what is in the fund balance.

That's that's how I would prepare what you are asking for.

If you're wanting just to know what cash is in there, that's already being presented.

There really is those are the two general ways to look at it because there isn't an unplanned use at this point in time, right?

So we're looking for like, is there a spare capacity to go deliver really important capital projects?

And I totally get that.

That to me is a priority-setting question about what resources we have versus trying to find some amount that quite frankly isn't isn't there.

I don't know that that helps.

Yep.

Thank you.

We are we are trying really hard to find that spare capacity.

And I think this money, but I I do understand what you are saying.

That's, you know, but I guess when we're talking about the CIP, that is when we are ordering the priority of the projects and and that's the place to do it.

Because we were looking for that spare capacity.

Like other areas, we we need more like we are we are.

And you all are saying there's no based on our CIP, there is no spare capacity here.

Right now, on the correct.

All right.

Thank you very much you guys for hanging in today.

This has been a long meeting, um, but a lot of good subject matter.

And I will uh announce that on September 15th at 10 a.m.

Oh, we do have public comment.

I don't want to forget about you, Doug.

I see you back there waiting patiently.

I but I do want to let everybody know on September 15th at 10, we'll be having a follow-up meeting to the meeting we had on the CIP amendments.

We might be taking up other things too.

And I would it is my goal to actually take a vote at committee as to whether to uh forward that on as a recommendation to the to the full council for consideration at the September 15th, 10 a.m.

Um we'll be dealing with the the amendment primarily Councilmember Ramirez's and and possibly did you you had Councilmember Peck's amendments on on that.

And we might bring up the back up the paper budget stabilization fund too, but not sure about that yet.

Um Doug Smith.

Oh, sorry, Councilmember Ramirez.

Um Madam Chair, I just look at the calendar.

There is um an event that's tentatively scheduled at 1130 uh in the legacy room.

So just make you aware of that.

Maybe we should visit a little offline about that.

Maybe we can move up the time or or uh don't worry, we're not gonna have it when you can't attend.

Okay.

Doug, good to see you.

Okay.

Excuse me.

Uh you just mentioned uh Councilmember Peck's amendment that was discussed at last week's meeting, and uh she wants to try to allocate the uh money for uh a lot of stuff that the public works does by district.

And uh I didn't think about it at the time of that meeting, but I think what we have to consider uh uh regarding that is that uh public works, I believe said that they have done a map of where the problems are.

And uh I think a lot of the problems are in the northeast area of the city, and it doesn't seem fair that the money that they spend gets allocated evenly around the whole city uh if there are areas of the city that they have identified that really need it more than any any place else.

So uh just I wanted to mention that uh in regards to what you're gonna do with that amendment.

Then uh regarding the the MOFAR, uh the uh we just talked about DDSRF.

Uh I had a couple questions on page uh page seven of the MOFAR.

Uh there's a discrepancy in interest income of two and a half million dollars between the uh controller and the tr uh the uh uh finance department.

And I'm curious as to why there is such a large difference for you on that.

So early in the year.

Uh on page 12 uh in note C, uh I think that they have about a trillion dollars more than they should.

They talk about the city has authorized a thousand billion in combined utility system bonds.

Uh that's a trillion dollars, and I think it's just a typo.

I think it should be about thank you, Doug.

And uh what else?

Uh I think I think that's it.

Regarding the discussion that we just had, I don't understand why there has to be a balance in the DDSRF fund at the end of the year.

Uh they say it's for future projects.

Well, why can't they spend everything?

And as they do future projects, they can issue commercial paper to cover those, and that year's DDSRF will pay for the commercial paper.

It it still does not make sense to me.

Yeah, and and I think we've tried to ask it every which way.

And but uh but I hear what you are saying, Vice Mayor Pro Tem.

Thank you, Chair, and thank you for your comments.

And I agree, I don't know that an equal distribution of all of the money um in each council district is necessarily the best way to do it, but it was more about getting to some fair way of distributing the funds or the needs of each council district um are being met, whether that's you know a smaller project that fixes a big flooding issue in the council district or a project that maybe costs more money, but definitely using um data.

We absolutely have to use that to make those allocations.

So I completely agree with you on that.

Okay.

Yeah, I just didn't hear that in your proposal.

So that's all.

Thank you.

Thank you so much, Doug.

It's always great to see you and appreciate your due diligence.

Is Dominic Mazoc here?

Don't see him.

Anybody else want to speak?

Okay, and I just said that September 15th date, but scratched that.

Found out I had a uh water resources committee meeting for Houston Galveston Area Council, and there sounds like there's another another conflict, so stay tuned for the date on that meeting.

And with that, this meeting is adjourned.

October meeting?

Yeah, probably.