Good morning, everyone.

That's my HGAC gavel I got, so I'm all excited to use it.

Welcome to the October Budget and Fiscal Affairs Committee.

We are going to get started right away because as you can see, we have a very lengthy agenda and a really impactful agenda today with a lot of uh interesting topics important to our city.

So I want to start by welcoming my council members in in attendance.

We have Mayor Pro Tem Martha Castax Tatum, Vice Mayor Pro Tem Amy Peck, Councilmember Abby Kamen is online, um Vice Chair Mario Castillo, Councilmember Joaquin Martinez is here, uh Councilmember Julian Ramirez, and Councilmember Twila Carter.

So welcome all.

We are going to get right into it with our first presentation, which is the monthly financial report with Will Jones representing the controller's office and Melissa DeBaske.

Floor is yours.

Good morning, uh Madam Chair, Councilmembers and staff.

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

In the general fund, the controller's office is projecting an ending fund balance of 356.7 million or 14 percent of expenditures less debt service and pay as you go for FY 2026.

This is 17.5 million lower than the projection of the Finance Department.

The difference is due to a lower revenue projection than the Finance Department.

Based on our current projections, the fund balance will be approximately 166.2 million above the city's target of holding 7.5% of total expenditures, excluding debt service and pay as you go.

Also, uh, we are projecting no changes in the enterprise funds.

Uh so for the commercial paper and bonds, the city's practice has been to maintain no more than 20 percent of the total outstanding debt for each type of debt and a 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.

Thank you very much, and that concludes my report.

This is the two plus ten financial report for the period ending August 31st, 2025.

Fiscal year 26 projections are based on two months of actual results and ten months of projections.

For the general fund, both of our revenue and expenditure uh projections remain unchanged from the adopted budget and from the prior month.

Therefore, we're currently projecting the ending fund balance to be $374 million, which is about $29 million higher than the adopted budget and represents 14.7 percent of estimated expenditures, not including debt service and pay as you go.

Um that fund balance is $183.7 million above the target of holding 7.5% of expenditures, not including debt service and pay as you go.

Not in my next presentation, but one of the other presentations in the on the agenda today.

I'll talk a little bit more about future projections for the fund balance due to the property tax rate that we're proposing.

Um but these are the figures as of this monthly financial report.

Um for the enterprise special revenue and other funds.

We're not projecting any forecasted changes uh to those funds.

And that concludes my report.

Thank you very much.

Any questions on the monthly financial report?

I would like to welcome Councilmember Caroline Evan Shbaz, Councilmember Fred Flickinger, Councilmember Mary Nana Huffman, Councilmember Willie Davis, and staff from Councilmember Cayman's Office is in chambers, and we have staff from Councilmember Ed Pollard's office and Councilmember Letitia Plummer's office.

All right.

I don't see any questions, so we can go on to your next presentation on upcoming financial transactions.

Yes, good morning.

I'm presenting this presentation today on behalf of the finance working group.

On the next slide, I'll go over our agenda for the day.

The first item is the public improvement bond series 2025 sale summary that we conducted last month.

I'll just give you an update about what happened with the bond sale.

And then we're going to talk about an upcoming commercial paper program series G2 item.

So on the next slide, just to update this body about the pension uh the public improvement bonds, sorry, nothing to do with pensions, public improvement bonds.

Um we had the sale for the bonds back last month on September 15th.

Um that week uh was a good week for issuers in the municipal market.

Um we happened to price the day before the uh Fed cut the interest rate.

Um, but I think as we've talked about in the past, the uh market largely uh anticipates those interest rate cuts and had that already priced into the rates in the market.

Um that week our transaction was the largest Texas deal in the municipal market for the week, and so we were able to attract a lot of investors for the transaction.

Because of that uh large interest uh that we had in the transaction, uh, we were able to uh reduce the interest rate that we have to pay to investors by up to 10 basis points um during the order period because of the number of orders that we brought in.

Um we additionally um negotiated with the underwriting team to um ask for additional adjustments in the interest rate because of that demand that we saw for the uh orders that uh were put in for our for our bonds.

And that uh additional negotiation saved an additional $55,000, um, which I know doesn't seem like a lot, but every bit counts as these bonds are going to be payable with um general fund resources.

Um all in the true interest cost of the bond transaction was 3.47% and uh represented a savings of debt service of approximately three million dollars over the life of the bonds compared to what we were looking at before the day of pricing based on the market and the what we were able to negotiate.

So on slide four um that gives you an overview of uh the transaction and the format that you are used to seeing.

Um it's our going to be our goal to, of course, we present to this body before the bond transaction and before the item comes to council for approval by ordinance, um and it's our goal to come after the bond transaction to update um this body on the results of those sales going forward.

So on slide five, you see an overall view of what the general obligation debt service looks like in total.

The blue bar represents our existing debt service with the additional bonds that we issued.

Um, we layered on the green bar and the small gray bar that you see there.

Um and we do um you know anticipate debt service declining over time as you see us paying off those streets and drainage bonds.

Um of course, as we continue on with our capital projects, we will begin to still layer additional um debt service on for funding those uh other types of improvements um like fire stations, police stations, parks, and whatnot.

So moving on to the next item, slide six.

Uh this is the commercial paper summary for the general obligation credit.

Um we're gonna talk about the series G2 today, which is a hundred and twenty-five million dollar commercial paper line provided to us by Barclays Bank.

It's expiring in November.

And if you go on to the next slide, a little bit on background, the series G2 program supports the city's capital improvement plan for the general fund related departments.

This underlying bank facility that supports the program is expiring in November.

Um and because of the expiration, we issued a request for proposals from our qualified banks that are in our pool to provide us with credit.

We received proposals.

Um, the finance working group met and made a recommendation or will be making a recommendation for this body to vote on tomorrow, actually, to replace um to replace the facility with a new bank based on the proposals we received, which would be Bank of America.

And it will be for a three-year term.

And like I mentioned, that RCA is coming to council for approval tomorrow.

And that concludes my report.

Thank you.

On slide five, uh the debt.

Okay, so that is kind of where we are now.

But but as we issue more bonds, I mean that's the same.

I mean, we have like a kind of a range where we like to keep that number.

I mean, it seems like we're at about 350 million.

I mean, like with additional bonds that and when do we plan to go for another bond election?

Another bond election, probably they usually happen about five years after the previous one.

Right.

Um based on how quickly we spend down the allocation that the constituents have voted on.

Um in terms of layering on additional debt, you're right.

There's um we do have a financial policy in place that we have a goal that we transfer no more no more than a certain percentage of our revenues as debt service, and we're in compliance with that policy.

But basically those blue bars will go up some in the out years as we issue more debt.

Yes, similar to how we added the green and the gray with this transaction, you'll see as we do the next transaction, we will layer on.

Okay.

Councilmember Ramirez.

Thank you, Madam Chair.

Thank you, Director, for your presentation.

And I apologize, I apologize if I missed it, but I see that we're switching banks for the city's commercial paper from Barclays to Bank of America.

Yes, sir.

Can you can you tell us why?

Sure.

So um Barclays is one of the banks a few legislative sessions ago, there were two Senate bills, Senate Bill 13 and 19, uh, which prohibited um entities in the State of Texas from doing business with companies that boycott oil or firearms.

Um Barclays has indicated that they are unable to provide these certifications, and so they are no longer able to enter into new agreements or renew agreements in the State of Texas.

So because of that, we had to go and identify another bank to replace them.

Um actually the proposals that we received, Bank of America, uh, we are getting more favorable pricing, um, which is about seven basis points lower than we were paying our existing provider, which is Barclays.

Great.

Thank you.

Thank you.

Seeing no other questions, um, thank you very much, Director, and we will move on to back to the controller's office, Will Jones.

Um last month, the Mayor Pro Tem made a request that we look at other cities and additional ways that they generate revenue.

And so the controller has taken a uh dive into that, and that's what this present that sets up this presentation.

Yes.

Thank you.

We'll go ahead and get started.

Next slide, please.

Okay, so uh as uh the chair explained uh last month we did present on disaster cost and uh you know how the city was behind some of its other peers in terms of what we were putting aside for uh the budget stabilization fund, and the question did come up well, are other cities doing something that we're not?

Um so we took a look at that.

And so uh what this presentation will show is at a high level, uh just uh a look at the other the revenue sources that other cities bring in um and identify some opportunities.

Uh now what is what this presentation does not do is not a a comprehensive deep dive on all of the fees.

Um and it's also not uh you know a recommendation of which fees we should pursue, but it's just to kind of give you an idea of you know what some other cities are doing that we're not.

Next slide, please.

So to start, uh we want to take a look at some of the uh the tax rates.

So just to be clear on this, because I know Director Dabalski is going to present on the property tax rate, these rates will most likely be different than what she is going to show.

These are the most recent proposed um rates, and some of them have not been adopted as of yet.

So Director to Balsi is going to focus on you know last year's rates that are already adopted, but these are the the latest proposed rates.

Uh so what you can see here is that uh first of all, Houston is does have the lowest rate.

Um when you look at some of the other cities, uh, you know, three of the cities are are decreasing their rate uh compared to the last year's proposed rate.

Um all of the cities except for Austin are below the VAR.

So Austin is going above the VAR, so they will have to go out uh to the voters in November to approve going above that rate.

Um but again the point here, Houston is the lowest, and what we haven't changed.

San Antonio also hasn't changed their rate.

Um but yeah, just to give you some an idea of how our tax rate compares to some of the other cities.

Next slide, please.

So again, we when we when looking at the the revenue sources, uh you will find a lot of commonality amongst the cities.

We all typically charge, you know, the same type of uh, you know, we have taxes, uh we have permit fees, so there's a lot of commonality among all the cities.

Um but what we did find, and uh of course, one of them is is no surprise, a garbage fee.

We are the only large city that does not charge a garbage fee.

And then when you look at other fees like the clean community environmental fee, it's uh similar to the garbage fee that but most cities do charge as far like um litter, um uh illegal dumping, those type of things.

Some some of the cities that's baked into the the garbage fee, other cities it's separate.

Um then a big one is the utility transfer.

Uh we'll talk more about that.

Some cities uh own their utility, electricity water.

Of course, we own our water, um, but there is some type of revenue sharing that happens between those cities that we don't.

And then below that line, I'm showing the transportation fee, and I show it below the line because I don't see that as necessarily a general fund impact.

Um and Austin is the only city that that charges that, and they use that fee for uh streets, street repair, uh that type of thing, which we we do have funding sources that that we do that, but uh they do charge that fee.

So next slide, please.

Okay, so um so other other cities receive hundreds of millions of dollars in general fund revenue based on uh some of the fees that we don't charge.

Of course, the garbage fee.

Uh when you look across the cities, uh, you know, uh in excess of a hundred million in revenue that some of these cities are receiving from the garbage fee.

Um I know hopefully soon we'll see that study um from Solid Waste on uh, you know, to see kind of where Houston lies in that.

Um again, I already talked about the the clean environmental fee.

The big one, of course, is that utility transfer fee.

Uh you can see uh San Antonio has the large about 504 million, and this is based on their latest budget, uh so kind of combing through their budget and looking at their revenue sources.

Um San Antonio uh receives about 500 million from their utility, so they actually receive more revenue from their utility than they do from property tax.

So that is their largest revenue source uh for San Antonio.

And you can see some of the other cities, Dallas, Austin also receives uh you know revenue from their water and their electricity, and then some of the other cities they do receive uh, you know, some revenue share from their uh utility.

Uh well, can I stop you right there for a second?

So when you say receives revenue or revenue sharing, like I mean, we obviously have our water system that pays for our water system.

Right.

They are transferring more money, like into their general fund from their utilities for right-of-way or for for what?

Well, y i it's it works in a similar way, because like we do charge a franchise fee, for example, to private companies where you know Center Point has to send us money for using our right-of-way.

Um it's different though when when they own the utility.

So it is a for the right-of-way, but for other general fund costs, but it's it's it's uh it operates in a similar way.

But since they own the the um since they own the utility, you you don't it's not called a uh franchise fee.

Uh so it is uh is essentially just revenue sharing.

So I think like for San Antonio, it's about 14 percent or so of the revenue comes directly to the general fund.

And so for those that were you know they own the water, it it is literally, you know, uh a revenue, a transfer of revenue.

Uh, so it's almost like that what's like what we charge for water is just and and I'm assuming it's a law that you can just charge for water what it costs to produce the water.

So like is there some kind of profit that's going back to the general?

Like I don't understand how how that money generated from water bills or electric bills or whatever can then be transferred over to the general fund.

Yeah, I mean they they justify it for again the right of way as a part of that, and then also to to re recover some general fund cost or so those transfer numbers are transferred to their general funds.

Right, right.

From the utility.

Yeah, so if you look at San Antonio's budget, then their revenue, you will see uh like a 400 plus million from the electricity and another, you know, 100 million or so from the water.

Does anybody else have questions about this specifically?

Mayor question.

So is that are that is that additional money for like the maintenance of their water supply or the how they provide the water?

Because I'm I thought we could only charge what it costs to deliver the water.

So where is that additional money that is being transferred to their general fund coming from?

Um so again, it it is it operates uh in a similar way to uh uh for for the right to use like the the the right of ways, but also uh from what I read for some of the cities, it recovers uh some cost uh from the that you know the general fund uh supports those uh those funds.

So um it's you know so all the revenue is collected in those enterprise funds based on whatever those fees are, but that is it is it is built into the structure that you know, whatever percentage is going to be transferred, it it's it's a part of the uh uh I I don't want to say covenant, but it's it it it's built into the structure of how they operate.

Um you think is it like maintenance like to maintain their waters source or their own?

No, no, I mean it's for the benefit of the benefit of the general fund.

So that it doesn't stay in the enterprise fund.

Whatever that percentage is comes directly to the general fund.

So whatever they need for maintenance and everything, it's already factored into separate and apart from that transfer that comes to the general fund.

So they can use that in their general fund for public safety or whatever they see fit.

Yes, yes.

Councilmember Flickinger on this on this specific issue.

Sorry, I kind of got us off track with this utility transfer.

So it's $504 million in the transfer.

That's $504 million above and beyond the cost to deliver those services to the citizens that they are transferring in general revenue.

Yeah, for San Antonio?

Yes.

Okay, go ahead.

Thank you.

Okay.

Um so if we we go to the the next slide, uh again, this is just another way of looking at, you know, the the revenue sources that they generate uh from from those uh you know, the garbage fee and from the utility transfer.

Um of course you can see Houston is a zero.

San Antonio again, the r it is really their utility is really huge.

So they get a lot of money from their electricity.

Um but you can see across the other cities uh the revenue that they generate uh from these fees.

Okay, next slide, please.

Okay, again, so just taking another look at uh uh how some of these fees operate.

So looking at the the solid waste fee, uh of course Houston zero.

So looking at around the average of what some of the cities charge, if you look at about $33, um, and again, you know, let's not get tied to that number.

I know Solid Waste is doing their own study, but if you looking at an average of $33, um Houston could generate about $164 million, and that again is assuming about $415,000 households.

Again, that number will depend on whatever the study shows.

This is just what we are using.

Um then again that clean environmental fee.

Um utility transfer, again, it it varies, um, but again, Houston is the only major city that is not uh transfer utility revenues to the general to the general fund.

Um again, we talked about that transportation fee that Austin charges that they've used for um for streets, uh street projects uh that generates about 100 million for them there.

Uh next slide, please.

So kind of wrapping it up, um again, we talked last month about uh how Houston is vulnerable to natural disasters and not having enough uh set aside for that.

But Houston, again, we have the lowest property tax.

We just talked about that.

Um all cities do operate under the revenue cap.

Um and we are seeing uh like I showed earlier where some cities are are you know decreasing their rates as well now.

Um there are a number of fees that all uh major Texas cities other than Houston charge.

We talked about the garbage fee, we talked about the clean community fee, and of course we talked about the utility share that they have for those that own their utilities.

Um charging fees in line with other Texas cities could free up about you know 200 million or so, of course, the garbage fee.

Our solid waste department, we have a budget of 100 million.

Um so if we were able to move towards a fee, we could move those costs out of the general fund.

Um so again, other there are some other fees that may not impact the general fund necessarily that we saw like with the transportation fee.

And I believe that concludes my presentation.

Any any other questions?

Thank you well very much for putting this together.

Mayor Pro Tem.

Talk about that transportation fee.

Is that for people commuting to Austin that pays that, or does everybody in Austin pay that?

Everybody pays that.

It's it is charged on their uh utility bill.

Let's see, I printed that out because I I knew you were going to ask that.

Uh yeah, so it's a fixed fee assessed to residents and variable fee assessed to businesses based on the traffic levels they generate.

Uh the fund, it funds streets, sidewalks, maintenance and repair, annual street overlay and stripping.

Uh so yeah, it is a it's a monthly fee and it varies between, you know, based on how much traffic they estimate you generate, and I don't know how they determine that, but yeah, it is a monthly fixed fee for per household.

And they also have a drainage utility fee as well.

They do.

How do they charge that transportation fee?

They put it on what bill?

It's on the utility bill, so probably yeah, well, they own their utility, so yeah.

Okay, thank you.

Vice Chair Castillo.

Thank you, Chair.

On the fees that are shown here on this slide, are any of these recently established that other cities have uh utilized, or are these all longstanding fees?

Uh these are pretty much long-standing fees.

Yeah, they they have all had garbage fees.

Um, I am pretty sure on the environmental fee.

Uh the utility transfer has been happening.

Um I mean, I I could go back and look, but it they're not new.

Okay.

Thank you.

Councilmember Flecken chair.

The clean community fee, how is that charged?

Um, a clean community fee, let's see.

It's a fixed fee charge to res uh residential and commercial utility customers to fund code enforcement activities.

This is specific to Austin with Austin development.

Um let's see, I don't see where it says.

Is that on a water or electric bill as well?

I am trying to say present 10 percent month increase to the rate coming to this cursor proposed to remain flat.

I would assume so.

It doesn't say it explicitly here, but I believe so as well.

You know, you had a note in here that Austin is the only city that's gone to voters to exceed its cap.

Right.

Houston went to the voters to increase.

I am talking about for this uh specific uh tax rate.

So they are proposing a tax rate that is higher.

Okay, on this year?

On this year.

Okay.

And we're allowed at any time we want to go to the voters and say we want to raise your taxes more than the cap, you just have to vote on it.

Yeah, if we proposed a rate that is higher than the BAR, we would go to the voters as well.

Okay.

Thank you.

Councilmember Ramirez.

Thank you, Madam Chair, and thank you, Will, for the presentation.

I have got a few questions for you.

Looking at slide number, I guess it is two.

Um high level review, bullet points down at the bottom.

What this is, it says it compares key revenue sources such as property tax.

Um the tax rate and property valuations.

Is that correct?

Correct.

But in your presentation, you don't mention property valuations.

It's in the next presentation.

Right.

So I I knew Director Darbowski was also presenting on property tax, so my focus was more so on the revenue.

I didn't want to focus too much on property tax, knowing that she is going to do the same.

Got it.

But the revenue is a function of of in part uh property valuations.

Correct.

Correct.

Okay.

Let me ask you about slide number three.

I guess it is.

Um five, voter approval rate.

That that is the that is the highest rate a city can charge without going to the voters for approval, is that right?

Correct.

Okay.

And then in the column next to that, you have got for Houston at least, um, a triangle pointing down.

So uh last year's tax rate is three dollars and forty-two cents less than the maximum we could have charged last year without going to the voters, is that correct?

Correct.

Well, for for this year, yes.

All right.

Because as I look at this slide, it looks like we're we are something is being reduced.

And in actuality, uh there's it's not a reduction.

Uh the proposal, I think, is to keep it where it was last year, is that right?

Well, yeah, if you look at so if you look at where I show the tax rate in the red box, right?

If you slip right next to it, it clearly says no change.

So that last one is comparing it to the State Cap, saying that we are that much below the State Cap, but we are not changing from where we were last year.

All right.

Um let me ask you about the revenue sharing aspect.

And I'll go to the I don't know what slide it is.

It's charging fees in line with other Texas cities would create or free at least 200 million in annual revenue.

And you state on here Houston is the only major Texas city does not transfer utility revenues to its general general fund.

Do you know what is different about in in the language the enabling legislation uh of their enterprise funds versus ours?

Yeah, and it uh I think it has more to do with like bond covenants and so I am sure Houston Public Works uh could explain that better, but there may be some language in our bond covenants that restrict us from from doing that.

Um, but it would require more of a legal review.

This is not the first time this has come up either.

I know the city has kind of explored this before.

Uh so it would require, you know, legal to kind of take a look at it and to make sure we go through those bond covenants and make sure we wouldn't be violating uh, you know, the bond covenants in order to get that revenue over.

I don't think it's more, I don't think it's a state level, it has more to do with our bond covenants.

And have you talked to anybody in legal about this?

Um not recently, but like I said, there this came up a few years ago, and I believe it made all the way to legal.

I am not sure.

Um we would have to circle back and see.

And last question, and I won't have to go back in the queue.

Down at the at the bottom in the fine print, a little asterisk, you say additional legal analysis required to consider pursue this option, maybe less viable in Houston.

Is that right?

That's correct.

Okay.

And that's much much smaller print than the big language at the top that says uh charging fees in line with other Texas cities would give us at least 200 million a year.

We don't even know if we could do that.

Is that right?

Um I mean uh it it would require like some uh some legal opinion.

Um like I say, it could be possible.

Uh it was pursued before.

Um it's an option.

It is an option.

All right, thank you.

Could you go back to the slide with the showing all the tax rates, please?

Um while while Houston could, you know, the VAR would allow the $3.42 increase, not in Houston, because we have to go by our voter-imposed revenue cap, which is an even lower amount, which we will get into in the next presentation.

Um Councilmember Kamen or Thank you, Chair.

Can you all hear me okay?

Yes.

Okay, great.

Um Will, thank you so much.

First, um, because we discussed it last week and you referenced it this week, uh, it is still one of y'all's recommendations that we also increase the budget stabilization or rainy day fund.

Is that correct?

That is correct.

Okay.

And um the will going to, I believe there's been some questions on the utility fees, including water, if we could go to that slide.

The utility transfer fee, uh my understanding under state law is the city cities can only recoup costs for actual um expenditures or the cost of delivering that service, we cannot necessarily make a profit on that.

So that's still the case, correct?

So when we're talking about increasing the utility transfer fee for water, where do we make that up?

Um I would have to probably dig deeper to see uh more of the language that the other cities are using for that.

Um that would I would have to dig a little deeper just to get some of the specifics.

Okay, that would be helpful because again, if there is money that we're expending that we're not recouping in terms of service provided, um I'm certainly interested in that.

And I appreciate what Councilmember Ramirez pointed out that we may already be getting to that point, but that would be helpful to see if we're missing something there.

Thank you.

Thank you.

Councilmember Huffman.

Thank you.

So we look at these different fees that other cities charge that currently the City of Houston doesn't right now.

But I think when we hear things like a garbage fee, you know, the general public thinks if I pay this fee, I am going to see better services, I am going to see a better result.

And we're not necessarily talking about that, right?

Because this is just talking about freeing up the general fund, right?

Correct.

I think you can do that.

Yeah, and I think to your point, uh, whatever we do with the garbage fee, we will need to be very clear that if we charge a garbage fee, you're not going to see an immediate uh improvement in services because you have to build up the capital to be able to cover your existing costs, and you have to prove that the revenue can cover your costs and before you can start expanding.

So, yeah, it is it is just to cover the costs before you can really start expanding.

So we we would have to that communication would be important uh if we ever get to that point.

Thank you.

Colleagues, uh we all know that that people don't just pay city taxes.

People pay county taxes, people pay ISD taxes, people pay Houston Community College taxes, people pay hospital district.

So my team did a little bit more of a deep dive into what those other tax rates are.

And valuations rightly so, Councilmember Ramirez are a big part of this, and we will go over those in the next presentation.

But just just to give you a little benefit of the research that we did.

He showed you the slide on the city tax rate where we're at the bottom.

Now Austin does have to pass their valuations are higher.

Austin will have to pass that rate.

On the primary ISD tax rate, we are at the bottom of the and this was Dallas, Fort Worth, San Antonio, Austin, Houston.

The county tax rate, we're at the top of those cities.

The hospital health tax rate, hospital district, were about third in line with those cities.

Community college tax rates at the bottom.

So it's an overall tax burden, but out of all those categories I mentioned without the county, we're at the bottom, or next to the bottom, or you know, it's not like we are just low in the city tax rate, is what I'm trying to say.

It the valuations matter, and we'll get into that.

And probably the most closely aligned valuations are with Dallas, where we also have a lower rate than that on all of those categories.

So thank you, Will.

This is all very important information.

Um we're not trying to be like every other city.

We're Houston, we're our own city, but we do have to be realistic about the revenue side of the equation in in um with with exceeding you know with growing expenses.

So thank you very much.

And next I will call up for additional talk on the tax rate, uh, Melissa Dabowski, finance director.

Okay.

Good morning again.

Okay.

Uh so on slide two, I'm going to talk a little bit about the um differences between the local revenue cap limitation and the state revenue cap limitation as it pertains to property tax.

Uh so on our local revenue cap limitation back in 2004, proposition one was enacted by voters that limits the city's property tax revenues to the lower of the prior year's capped amount, increased by population and inflation growth, or the prior year's actual revenues increased by four and a half percent, whichever of those two is lower.

Two years later, proposition H was enacted by voters in 2006 that permitted the city to add $90 million to any base used to calculate revenue limitation uh to be spent on public safety purposes.

So that's how we calculate our local cap.

On the next slide, uh we now also contend with the state revenue cap.

Um the state revenue cap I should say has been in place um for many decades.

Um but a big change was made back in 2019 to make that cap more restrictive.

Um that uh legislative session back in 2019, Senate Bill II was passed.

Um a number of the terms in the tape and the state tax code were renamed, but the most impactful change for us and other cities and counties around the state was that it reduced the multiplier from 8% to 3.5%, making the state cap more restrictive than it had been historically.

Um when we calculate the tax rate annually, we have to calculate all three ways the state cap and then the two local cap calculations, and we have to comply with the lowest of those three calculations when determining what our tax rate can be.

So on slide four, this gives you a view of historically what our property tax rates have been going back to the mid-90s.

Um you can see when proposition um one and H was voted in in 2004, but we had not yet hit the cap, which means we hadn't fully budgeted the allowable amount of property taxes until fiscal year 15.

In fiscal year 15, taxable valuation grew by such an amount that in order to collect our Prop 1 plus H amount of revenue, the city had to reduce the tax rate to comply with the cap.

So that's the year we started lowering the tax rate, and as you can see, we've consistently lowered the tax rate.

Um nine out of 11 years leading up to um this year, we're uh proposing you can see to keep the tax rate the same uh as we did in um tax year 25 and tax year 24 at a rate of 51.919 cents.

Slide five, um, as Deputy Controller Jones mentioned in his presentation, um, these rates are uh tax year 24's rates, which are last year's rates.

Uh for us, we have the same rate as last year, so you see the 51919.

Uh and these are how the rates compare across the state.

Um, as you saw based on his presentation, there is a little bit of variability from last year's rates to this year's rates based on what some of the other cities are proposing.

Um, but the trend remains the same.

Slide six uh gives you a snapshot, and I think this is what the controller was alluding to last month when Vice uh sorry, Mayor Pro Tem was uh asking about what other uh cities do as far as revenues.

Um this similar graph was presented about a year ago at this time of year, showing what other types of taxes and fees other cities collect and how they translate into general fund revenue for them.

For this slide, um, we kind of looked at it a little bit of a different angle than the controller's office presented.

They presented it in terms of a dollar amount.

We basically took it and tried to calculate to show an apples to apples comparison of if these fees were levied as a tax rate, uh, what would the synthetic rate come out to be and how does that compare to your rate that you see on your property tax bill?

So this is basically taking the amount of revenue that comes into the general fund and applying that revenue compared to each of the cities' taxable valuation to generate the the rates that you see on the graph.

The blue bar is the property tax rate.

Uh the green bar represents what a equivalent of a tax rate would be for uh for um a household for the garbage fee.

Um the yellow bar represents the amount of money that those cities transfer from uh their water utility to the general fund, uh, and the orange represents an electricity utility.

Um you can see as the controller's office mentioned, San Antonio uh gets the largest amount of transfer from their utility uh into the general fund.

So basically you just took the like the the number of cents per hundred dollar valuation and added on like as if that was part of the property tax.

Okay, on slide seven, um I think this is getting to what councilmember Ramirez was asking about uh related to assessed valuation, since tax rate is only one component of your bill, and actually the city's tax rate is only generally about a quarter of your tax bill overall, with school district being the majority of it, county and other taxing jurisdictions as well.

But this is just a comparison showing for the city portion of the tax bill in these taxing jurisdictions, taking last year's uh most recently adopted tax rate and applying that to the average homestead taxable value of those cities, and shows approximately what an average tax bill would be in each of those cities, and you can see how Houston compares to the others.

And this is again just on property tax, not including any of those other fees that we talked about in the previous slide.

So in this case, you can see that I'll just use Austin as an example.

Even though the city of Austin's tax rate is lower than the city of Houston's because their taxable value is higher, you can see that the average bill is about $800 higher than the city of Houston on the city's tax side.

Dallas, if you want to look at that as a comparison, even though their rate is significantly higher than ours at around 70 cents, you know, because of their taxable value, you you you can see the comparison here.

So going on to slide six, uh sorry, slide eight, um, talking about how our proposed tax rate is going to impact our budget.

Like I mentioned in my monthly financial report, um, the report given this month doesn't contemplate any of the changes that will be uh necessitated by uh the tax rate that we're going to adopt.

Um that'll be forthcoming in a future MOFAR, but this will kind of give you a preview of what we're looking at.

Um so the prior year tax rate, which is our current proposed tax rate of 51.919 cents, um, you see the property tax revenue estimate that it's going to bring in is 1.45 billion, which is a fifty about a $53 million variance to what we have in the budget for property tax.

This means that we're going to have to draw about $53 million out of fund balance to make up the difference.

The no new revenue tax rate, which is one of the rates that we're required to where we are required to calculate under state law, is actually higher than our proposed rate.

The no new revenue tax rate is the rate that the state basically the state describes it as this is the rate that you need to bring in the same amount of revenue as last year, sort of how they describe it.

Uh even this rate is uh higher than our proposed rate and would generate if the city uh was moving forward with that rate, which that's not the proposed rate, but if it were, it would generate 1.478 billion of revenue, which is still about 27 million below our budget.

In order for us to collect our budgeted amount of revenue, that's on line three, the property uh the property tax rate would have to be 53.7862 cents, which is about roughly two cents higher than our prior year tax rate.

That would bring in the amount of revenue that we have budgeted, so you see no variance to budget.

The voter approval tax rate, uh, which this is the state capped rate under law without going to voters is about 55 cents and would allow us to bring in about 43 million dollars above the budgeted amount.

But again, since we're limited to the lower of all of the different caps, like council member chair Alcorn mentioned, uh, really the maximum rate that we're looking at is the is the 53.7 cents.

And again, I want to emphasize that we're not proposing to increase the tax rate.

What the tax rate that's proposed is the same as the current tax rate of 51.919.

And for context purposes, um, because I know we talked about this last year at this time.

Any one penny increase to the tax rate, um, although it's not on the slide, it generates about 28 million dollars of additional revenue.

And what that means in terms of an average impact of the average homeowner, uh, one one penny increase to their city tax rate would mean about $2.85 a month additional, and that's for an average home value of $342,000.

For an average over 65 homeowner, it would be about 68 cents a month because they do get that over 65 exemption that you see on the slide, bringing down their taxable value.

So on slide 10, this kind of brings it together of what the impact to our projections for the fund balance are going to be.

Um based on the monthly report I presented earlier this morning, the August um projection from the finance department has an ending fund balance of $374 million, uh, which represents 14.73 percent of expenditures, not including debt service and pay as you go.

Um with the proposed tax rate of 51919, uh, that's going to bring down our revenue projection uh by $53 million below the budget, and that will bring our fund balance down to $321.5 million or 12.66 percent of expenditures, not including debt service and pay as you go.

That concludes my report.

Thank you very much.

Councilmember Kamen.

Thank you, Chair.

Thank you, Director.

Um, really quickly, I believe on slide eight, as you were talking, you said with no increase in the rate, we would have to draw down, did you say $53 million from the fund balance?

Correct.

And what would that leave as the projected remainder of the fund balance?

So that will leave our fund balance at $321 million, which is about $12.66 percent.

And that of the still above the permissible percentage.

Yes, it's still uh our projection is that it's $131 million above the 7.5%.

Okay.

And um, you know, I I know you knew this question was coming, but um as it relates to the financial policies of the city, right?

I'm continuing to advocate for an increase in the in our rainy day fund.

Um one of the reasons why is because of this, right?

We keep having to draw down from the general fund and we need dollars protected uh for worst-case scenarios.

Do we have a timeline for the uh proposed financial policies review?

We are still finalizing a few of the sections, um, particularly as it pertains to financial reporting as well as the economic development policies, um, but it it will be forthcoming sometime this fall.

Okay, and does that include um growth of the budget stabilization fund and the replenishment policies?

The policy that the policy that you're referencing is in the financial policies.

Um where we currently are is we are still in support of the uh increasing the minimum from the 20 million or one percent, increasing it to 25 million or one percent.

Um so that is something that we're planning to propose.

Um we still believe that the the timeline for replenishment within 365 days is uh problematic given the amount of time it takes us to recognize some of those um revenue reimbursements.

Understood.

Uh thank you.

And then going back to the constraints related to Prop 1 and Prop H, as it pertains to the public safety exception, right?

We went to the voters to ask for a public safety exception, and can you give a little background in context as to what the city's interpretation of that is, why we may be maxed out there just for some context and explanation understanding of what the city's official position on the public safety exception is.

So the public public safety exception was approved by the voters in 2006.

Um for let me go back to the slide.

It's on slide two.

It was approved by voters in 2006 that permits the additional amount of 90 million to be added to any base used to calculate revenue limitations for public safety purposes.

So when we look at public safety purposes, what we see at the city, you know, we generally organize the budget book.

Um there's a public safety section, and in that section is um certainly police and fire.

Uh even those two departments alone are almost 1.8 billion dollars of the general fund budget, um, over half of the $3 billion general fund budget.

So are we still continuing to include annually that addition of the $90 million to the base?

Yes.

Okay.

Thank you.

Mayor Pro Tem Cas tax Tatum.

Thank you, Chair.

Uh can we go to the comparison of average homestead property taxes slide?

Is this pre protests valuations and and what percentage of um folks are actually protesting?

And then my big question is I really want to know what percentage of our property tax is commercial businesses versus residential businesses.

Okay.

I believe that these figures are as of the certified role.

So that would be before the protests.

Um I guess what I can say is that when we calculate our property tax rate, and I know the controller's office does a similar analysis.

We look at what is the certified role that we receive from the appraisal districts, and generally what do we expect that valuation role to do?

How much do we expect to lose in value loss for hearings or refunds?

How much do we expect to generate an additional delinquent payments, for example?

So all of those variables go into the calculation of the tax rate.

Um, but I would say that these are, you know, these are all taken at the same point in time for comparison purposes.

As you mentioned, it may not equal up to be this you know exact number by the end of the year.

Um, but I think that the trend is a fair comparison.

Do we have um maybe a trend graph of the before the tax roll is certified and after the tax roll is certified?

I'm I'm curious to know what that what that variable is from people that protests.

And then I the big question is what percentage of our property tax is from commercial property.

Sure.

So let me address the the question about how we track the value of the roll.

So we track it on a monthly basis, historical every month.

Um we get the role and we true it up, so we can definitely provide you with uh a graphical representation of that.

Um in terms of the makeup of the role, Alma, is residential is about half?

Residential is about half of our overall role.

And so we have other commercial, um, industrial, personal property, other categories that make up the remainder.

I I really would like to look at that and see what the protest percentage is also on commercial commercial um property.

I think that there that there's a number there that we need to see.

Okay.

We can look at it.

Councilmember Martinez.

Thank you, Chair.

Um, you know, we we've known this for a long time, right?

Tax rate going down, nine out of the last 11 years, no trash fee, uh services are increasing, or we're needing to increase services, population increasing.

Um I guess my my question, um if we stay at the the same tax rate, 51 cents to the 100 dollars.

Uh it's uh it's rare for us to be able to increase the tax rate, uh, voter approved tax rate.

It's two years back to back.

Um if the following year uh something else happens and we have to decrease from from the 51 cents.

Um what's what's the likelihood of that even occurring or will we be able to see another rare occasion of the voter approved tax rate being able to increase?

There are quite a number of variables like Councilmember Ramirez was mentioning earlier.

Um the tax rate, but you're also looking at the valuation.

So what necessitated us to lower the tax rate all those years that you saw historically on slide four was because we had such high taxable valuation growth.

So in some of those years we had double digit valuation growth.

And when you are limited to be able to only increase your property tax revenue by let's say two or three percent a year, and valuation is scoring by eight, ten, twelve percent a year, those are the years that you saw us having to decrease the tax rate.

So that's a component of it.

Now we have seen in the last three years here, taxable valuation growth has not been as high, not in the double digit range.

This year is about 5 percent, 4.8 percent growth.

Um I think a lot of that is uh what is being done at the state level uh to try to limit the taxable valuation growth at the legislative level.

Um so it is, I guess it is a little bit difficult to predict what is going to happen in the future with valuations.

Um I think there's you know the legislat uh what is happening at the legislative level as far as increasing exemptions or whatnot.

And remember, we're only a piece of the property tax rate.

A lot of the legislature is focused on school taxes as well, which doesn't um directly impact us, right?

But it is related to the constituents and their overall bill.

Um in terms of the likelihood of bumping up against the state cap, what we have seen historically is that the city's cap is more restrictive than the state's cap.

Um but I can say that that margin has gotten narrower between the city cap and the local cap and how it's uh how it comes out in the calculations.

So um I guess just to you know for for me it's just having these conversations with the community, right?

It's important.

Um I think everybody is asking for services.

We've given this unrealistic expectation that we're going to pick up your trash, your recycle, your heavy trash, um, unrealistic expectation that your parks are going to be mowed on time every time maintain them as well.

There is a lot of uh deferred maintenance that we know about.

And uh, you know, we can we are exhausting all options.

Um at some point uh we really need to make sure that we make some tough decisions to whether it is the revenue cap or the a fee, specifically a trash fee, um on how we start right-sizing you know, departments uh at the end of the day.

Uh but I I appreciate this conversation, Chair.

Um I know there's a lot of folks that have been having these discussions around the horseshoe for some time, but it's time to make some tough decisions.

And I if I could add to that, I think that our focus this year, as you saw with the adopted budget was really looking at um reining in the expenditure side, right?

Going through the Ernst Young efficiency study, um, you know, proposing and adopting a budget, that's a two percent decrease on the expenditure side year over year.

So trying to find all those efficiencies that we can to um you know you utilize the limited dollars that we have the best way we can.

Thank you.

Vice Mayor Pro Tempe.

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

Um, going back to slide eight, um, looking at the different um rates.

I have questions about proposition H, kind of similar to what Councilman Heeman asked.

For the prior year rate, for the one that we're being asked to adopt, does that include the $90 million for Prop H?

Yes.

Okay.

So the $52.6 million variants that we're talking about, that's assuming the $90 million already included in this calculation.

The 90 million, I would say that the 90 million is included in the 1.452 billion.

Okay, so that's in the revenue.

So correct.

Okay.

And it's and it's the full $90 million that we're getting over what the base would have been.

Correct.

Okay.

Um I know I asked that pretty much every year because in years past there were some times that we weren't getting the full $90 million, but just wanted to make sure that over the base of what we would have gotten, it's the $90 million.

The full $90 million is included.

Okay.

Yes.

Got it.

Thank you.

Councilmember Fleckinger.

Thank you, Chair.

The prior year rate leaves us $52.6 million less than what it would have been adjusted for inflation of population growth?

Is that correct?

Yes.

So when we adjust our when we look at how to calculate what our revenue limitation would be based on the population and inflation growth, and then adding the $90 million for the public safety, that's the third on slide eight, that's the third row, the $1.504 billion.

Okay.

And in order to bring in that much revenue based on our assessed valuation, the tax rate would have to be $53.7 cents.

Okay.

And what were the figures used for the inflation and for the population growth?

The population growth was about three percent.

The inflation was less than one percent.

2 percent?

2.4 percent?

I'm sorry?

2.4 percent for inflation and about 3 percent for population.

And that is based on the language that uh Proposition 1, you know, the metrics that Proposition 1 tells us to use.

And the rate that is being proposed will bring in 1.452 billion.

Correct.

What was that revenue the previous year?

Um the previous year's revenue, um, this is about a two percent increase from the previous.

2 percent increase?

Roughly.

Okay.

Thank you.

So population plus inflation, we then did we have to use the 4.5 percent?

That's the lower of pop.

I mean 3 percent plus 2 and a percent.

No, because they are comparing off of different bases.

Uh so when you are looking at the different bases, you still are on the inflation and population side.

So we are still on the population and inflation.

And and on slide eight, which is up.

Um I want to we when we passed the budget in June, we passed the budget based pretty much on that third number there, the 53 cents.

We we based the budget on the cap.

We based the budget on the cap.

We didn't have all the information.

Not all the numbers, but an estimate of what the cap is.

So that's why if we keep the the tax rate exactly the same, that's why we we reduce our fund balance by $53 million, correct.

Because that was we had incorporated that into the budget.

And this is similar to what happened last year where we decreased it by 46 million.

And I understand that impact, but can you explain the impact this has on calculations for next year?

Sure.

So as I mentioned with the with the local cap, um one of the one of the calculations on the local cap has you to look at prior year actuals.

So the lower your prior year actuals are, the lower your cap amount is going to be the following year.

So that is on one of the local cap calculations.

On the State cap calculation side, similar story.

So the way that we have been decreasing our tax rate all these, you know, nine out of the last 11 years.

Um, and because we are limited by our local cap, that means we are bringing in less revenue than we otherwise could have.

Lower prior actuals on the State Cap calculation has a similar effect.

They base the State Cap calculation says look at your prior year actuals for your maintenance and operations functions.

Whatever you collected in revenue, you can increase that by 3.5 percent, and then you can add your debt service tax rate on top of that.

So the lower your prior actuals are, the lower your state cap amount is going to be the following year and so on.

Right.

So it doesn't just affect this year, it affects what our cap could be in in following years, and it affected our cap could be this year because we we stayed the same.

And you know, I will remind everybody we are at a $227 million deficit based in FY27, and we have just taken or we will take $53 million from that ending fund balance, which will then be less for a beginning fund balance for the next fiscal year.

Councilmember Flickinger.

Sorry about that, I forgot.

Um, the 1.452 billion, how much of that is additional properties added to the tax rolls?

We have that number.

I don't have it off the number.

Okay.

If you can get that to me, I would greatly appreciate it.

And I guess kind of to restate what the Chair stated.

Um essentially collect in taxes up to the cap affects us in perpetuity, no differently than the $90 million that we went back and added affects us in perpetuity.

I mean, it all keeps going forward, correct?

Each year's revenues.

Each year's revenues that would bring in impact it.

Thank you.

Councilmember Davis.

Thank you, Madam Chair.

Uh thank you, uh Director for that information.

I wanted to just kind of get a clarity on we we see the rates in comparison that was early given by the controller's office to other cities.

We we just uh had uh the county had a property tax increase from 0.35 to like 0.39, which was it calculated out to like an 8 percent tax rate in property tax.

So that affects by the whole county naturally affects the city.

And of course, uh Mayor Pro Tim asks about the protest evaluation that would be something that I would like to see because if a lot of the people rates, if they are getting protest their rates, naturally they would lose or reduce, say the taxes.

So which eventually would affect Houston in regards to odd numbers.

So is there a way to project that as well?

Because the tac the county did raise the tax rate to the overall county, which affects every city within the county.

And I think that's something that we have to take a consideration in you know, when we let's say we brought that to the voters about, you know, raising the revenue cap, we have to try to balance it to some degree how it's going to help us based on what the county has already done, in my mind.

Well, and I think that um your point is is well taken that the county uh the majority of the city of Houston is inside Harris County.

Harris County.

Um the majority of everyone's tax bill is the school district.

So that's that's first and foremost the highest amount.

Um and then, like I mentioned, the city is usually about a quarter of that, the county, and then the other taxing jurisdictions, depending on where you are.

You could have community college port, whatnot.

Um flood control district, you know, other components of the county um tax bill as well.

Um I did want to address the second part of your question on the value loss because of the hearings.

Um we calculate the tax rate, you know, we at this time of year, we have to make a projection.

You know, we're projecting that it's going to decrease our revenue by $53 million compared to the budget.

Baked into that projection is what we think the valuation loss is going to be because of the hearings and the protests.

So, in order to come up with that amount, you know, we get reports from the appraisal districts.

We also look historically.

Um we use our best judgment based on assumption at the time to come to these these estimates that you see before you.

Um, but that is definitely part of our um our methods and our assumptions when we make the calculations.

Sure.

Because it does it does make an impact.

It does make and then the point too is because when that happens, apartment rates goes up, housing um cost goes up, all of that goes up exactly with the same amount of uh effect by what the county does and what the city has to uh deal with.

So good.

Okay.

Thank you.

Thank you.

Thank you, Director.

R I see no other council members in the queue.

I appreciate this information very much.

As you know, colleagues will be voting on it on a hearing date tomorrow on the agenda on this tax rate.

And next we will move on.

I want to apologize for the length of this meeting too, especially to our visitors from the county.

We are going to um go into our discussion of the health departments.

There's been a lot.

I'm going to let my um my vice chair, Councilmember Castillo kind of set this up.

This was based on a a budget amendment he had.

If you'll remember, colleagues, um, there was a or the colleagues that were here, there was an interlocal agreement passed in 2023 to do more consolidation between the city and county, especially in the area of data sharing.

We're going to go over that.

But Councilmember Castillo, if you want to discuss your budget amendment and your your you have a history with the health department, so you know uh you know in detail the things that are perhaps duplicative and could be could be better done together.

Yes, thank you, Chair very much.

Um looking forward to this presentation and discussion.

Uh the amendment proposed was to allocate dollars to really look at the city's health department and the county's health department consolidating.

Uh so it went really a step beyond just the shared services uh look at uh but at what can we actually do to merge the two into one entity for the region, the county.

Um as we have had conversations about our fiscal challenges as a city and our our revenue cap.

Uh this is one area along with uh the other amendments for parks, libraries and and bark that could give us some flexibility financially and put us in a position where we're not starting every fiscal year in such a deficit.

Um when we are doing uh specific things and the county's health department is doing those exact same things, but we're doing them just in two different geographic regions.

Um there are other um uh public health uh departments out there that are just the county, you know, um that are large jurisdictions, and so there's some some precedent out there.

Uh Director Williams, when he was in Austin, uh he participated in a very similar exercise with Travis County Public Health and the City of Austin doing some joint operations and looking at really uh becoming more of one entity.

And so um that's that's where this all came from.

And uh having both uh both uh leaders here today to talk about it will give us um good insight into where there is more possibility and and what those next steps are that we can take uh to really move this forward in a meaningful way.

Thank you, Vice Chair.

I appreciate those remarks and want to welcome Leah Barton, who is the director of Harris County Public Health, and of course we have Dr.

Tran, who is our new director.

They're both fairly new in these positions and great strong women who I know are gonna run these departments um as efficiently as they possibly can and looking forward to how we can build stronger partnerships for in the public health field.

So the floor is yours.

Great.

Thank you so much, Chair, and thank you, um council members, for giving us the opportunity to uh present what we are already doing together.

So uh before I start, I wanted to recognize that we have um my health department team is here to uh to kind of answer any questions that uh of things that have happened before my time here.

But I also want to start by kind of um level setting a little bit.

I have the opportunity to look at this from both an outsider and constituent very recently and now also as the director of the health department.

And I will say before I stepped into this role, it was really natural for me to wonder what is the county and what are the county and the city doing together because I don't know how um how much effort was put into publicizing the amount, just the sheer amount of work and collaboration that already was happening.

And so as somebody outside of the health department, I was like, there's you know, why aren't we working better together?

And the f that was the first thing, um, the first natural inclination because you don't hear about it.

Um through this effort to put together this presentation for today, really, uh, and uh which is a presentation we're going to be jointly um presenting at Commissioners Court on October 30th.

I have learned so much about the collaboration that's already happening, and it's been really refreshing and also uplifting to know that yes, our ta my tax dollars are actually going towards great work together.

There is a lot of um work that we still can do together, but outside of having a health taxing authority and a mechanism for us to you know actually put all of our dollars in the same pot and do all the work for the five million members of our region.

Uh, you know, we're I think that this department and uh uh director Barton's department are doing a really great job.

So with that, let's begin.

How do I I don't know how the slides work?

Sorry?

Just say next slide.

Well okay, thank you.

All right, next slide.

So today you're gonna hear about the um progress on the ILA that was uh created between Harris County and the um the city of Houston in 2023.

Uh we're going to just pull out some highlights.

For reference, the what we're discussing is um progress on the interlocal agreement um that was uh signed at the beginning of 2023, which outlined like nine or ten items for collaboration between the Houston Health Department and Harris County Public Health.

We are going to call out some examples just for brevity today, but we also have for reference a document that outlines um more closely what uh each of the items from the ILA asked for uh some key collaborative points.

We can talk about um some of what we want to see, and you know, as Director Barton and I are kind of new in our role, there are areas that we already understand um are our areas of improvement, and we can talk a little bit about that uh and some of the progress that has already been made leading to some future aspirations.

And then, of course, uh our asks of our elected officials to support us in this uh ongoing work.

Next slide.

So uh to begin, we're gonna start by highlighting a big level thing, which is our community-wide planning through the community health assessment and the community health improvement plan.

Every five years uh we are required to do a community health assessment.

The county and the city have so far been doing these assessments separately, but um through the uh this the CHIP steering committee, which Dr.

Director Barton can talk more about because it's a Harris County Public Health Committee.

Um, and also the access to care assessment, which is something that we're working on.

Uh the deliverable is set to be due January through March time frame.

But we're uh Harris County is beginning their reaccreditation cycle with the public health accreditation board, and uh Houston Health Department is also going through that cycle next year.

So this access to care assessment is an opportunity for us to align the uh CHIP and or the CHA to potentially look at doing just a region wide assessment for both of our accreditation needs.

Um Dr.

Barton, you want to talk about the CHIP steering committee?

Sure, as part of that reaccreditation process, Harris County developed a um so uh something that was already established was this quad meeting between uh Harris County uh us, the Harris Health as well as the Harris Center.

And I think over time, because just emergencies created so many natural venues for collaboration and uh communication, these uh quarterly or monthly meeting cadences just kind of went away, and so we're committed to establish reestablishing those talks uh on a regular date basis.

Umly data sharing is a huge area for um uh efficiency that I think that we can all understand and recognize.

We already have an interlocal agreement to uh uh on notifiable health conditions as well as uh wastewater surveillance data that was uh established.

We have a big opportunity, we can talk a little bit more about this in future aspirations, but uh huge opportunity through our um just our uh electronic medical records to uh have patient data across the um across the region uh and that'll be in a little bit later in the presentation.

Next slide.

So um a natural area of um you know of coordination, of course, is public health emergency response.

Um we coordinate in a couple of ways or a few ways uh by just design by f like federal funding design as well as the way that we um the way that we respond to disasters and emergency uh excuse me, public health emergencies.

Um but we uh so we coordinate through the national stockpile uh sorry strategic national stockpile medical countermeasures work group when there are disasters and when there are um you know uh natural disasters uh you have to have places where you can get people medications when they're not able to get to, for example, the hospital or a clinic or the pharmacy.

And so we coordinate on that in prepare in preparation.

Um we have of course um biowatch or the whole whole air program that we coordinate on the uh let's see.

Oh, we also in preparation for large mass events where there may be problems with uh environmental, you know, terrorism, for example, or uh outbreaks uh when you have a bunch of people coming for the rodeo or for um the uh for the Super Bowl or FIFA coming up.

We coordinate our emergency responses for that as well throughout the region.

For FIFA, we're working on the family assistance centers.

So City of Houston is doing the FACs within our jurisdiction, and then of course Harris County has theirs outside.

Um so there's just several things that we've been assigned to work on that we work on together, of course.

Next slide.

A pretty significant role, of course, of maybe one of the most significant roles of public health is how we get information to uh to the public on actual health, like what we need to know for health as a trusted source for health information.

So our PIOs from the region, not just from Harris County and the Houston Health Department, but from Fort Bend as well, meet at least monthly.

Uh when there are emergencies, they are meeting more likely on a uh weekly cadence.

But we have uh co-branded templates, and uh an example is on this slide for you where uh we listed the vaccine locations for measles across the region, not just those that are you know within our jurisdiction or their jurisdiction.

Um so especially with outbreaks and especially after COVID-19, we really had an opportunity to strengthen the way that we coordinate with one message and one um face.

Next slide.

Uh another call-out area is um how we deal with clinical and preventative health care.

Of course, health care and clinical care really happens in neighborhoods and in regions where people live.

And so there's a natural coordination across jurisdictions of uh processes and workflows and referrals to uh in inside and outside of the jurisdiction so that plans um you know it doesn't matter where the patient actually is, the standard of care is the same.

Um significant call out I wanted to talk about was the um ending HIV uh epidemic, which is an initiative through the CDC that we have been nationally recognized for because uh Harris Um County Public Health and Houston Health Department together jointly um created a master plan that has been uh evaluated on a national level as you know kind of a um the a benchmark for how things ought to be done.

Uh and as I mentioned, um the next bullet point is on TB case management when we have patients across jurisdictions or where we refer um outbreaks, we we work pretty closely together on on where on how to respond to those issues.

Um as next steps, we have you know, we all know we have our multi-service centers and they have a dental clinic or they have mobile dental services, and so um we have MOUs in place to building on MOUs that have already been in place to um optimize how they use their mobile health uh clinics in addition with uh how where we have patients come in naturally already.

Next slide.

Um this slide is just a list of some of the other things that you'll see on the full document.

But um really truly across our divisions, we have a lot of in our programs, we have a lot of collaboration already.

I I our environmental public health teams do a lot of work together, and uh like when things are really low place-based interventions, uh they work together to make sure that the standards are similar across the board and that um that referrals are easy and seamless.

Um I mean, I could go through all of this, but I'll let you read that.

And the full document is on our website, everybody, but all the different things that are that they're collaborating on.

Yeah.

So we don't have BARC anymore, but we do uh we do the rabies um vaccinations and rabies testing.

Our laboratory services provides all of that, and they of course have um the county pets program.

Um so next on the next slide, really uh oh, sorry, excuse me.

I skipped one.

So new opportunities.

Um we are at a place, of course, where we as we just heard, we've got we've got to do more with less funding.

And so um that's something that Director Barton and I can discuss a lot more as we kind of get into this into this next budget cycle, but how we uh approach philanthropy, um looking into new ways of getting funding, including, for example, TURS and how maybe we can tap into some of that funding with our multi-service centers.

Um then this whole idea, and it's not just a regional idea, but this national idea of um you know shared savings that we that in prevention we are saving dollars, and so we we would love to see a mechanism for um for us to be able to continue our work based on that, as well as reimbursement as well for um the work that we do in public health outside of just acute care medicine, but really look going after the non-medical drivers of health and being able to get reimbursed for that.

As I mentioned before, there's room for improvement with our data sharing.

Um area that we could get help from with council is you know uh the Houston Health Department uses a version of EPIC, which is an electronic medical record keeping system that um through the through a vendor that's kind of old and um not user-friendly.

Uh so Harris Health has uh has really actually revamped their EPIC system to where instead of being a module, like kind of put together system, they're using the new and improved version of EPIC that has come out that has a lot of capability for big data and um AI and things like that.

So uh that is the instance or the the system that I think we should go to that Harris County is already going to.

And so through that just shared um version of an EMR that we're already like an EMR system that we're already using, if we're able to get that upgrade, you would see a lot of natural um data sharing that could happen through that.

Um so if there's something that council wants to work on, uh that would be amazing.

Um and then of course, legislative engagement.

We already work really well together uh on um on legisl when during session on legislation on the state and federal level, but uh we just need to continue at it and and we don't have any reason not to.

So uh next slide.

So your help and our ask really is to continue to support funding for public health.

Um we see our budget decrease every year, and I know I've heard during the budget meetings how um supportive of our department y'all are, and I appreciate that.

Um, but seeing that as general fund dollars would be helpful for us to at because we are so heavily grant funded and so heavily relied reliant on grant funding, um, being able to have the stability to uh to work on these public health issues is helpful for for us to continue collaborations and continue this like stable just having stability with our partners would be helpful.

Um messaging is important, and so uh if you look at the health department's Instagram or Facebook, for example, I would love to see every council member spread those messages.

Uh y'all have a much larger audience than um we do when y'all are combined.

So that's something that just promotion and amplifying our message because it is a joint message between our um two uh departments would be helpful.

And of course, your connections and your um just sponsorship of what we do uh in the community is helpful.

Um please spread the word that we are working together and that we uh we know that there are more ways that we can work together, like I said, short of a just creation of a public health district, which I think would be an amazing idea.

Um but it is a pie in the sky vision right now to have a an entire public health district that would include the hospitals and the uh like the safety net hospital and our departments together would need a taxing authority, and so um you know, as operators of our departments we're willing to work together and um you know do whatever y'all think we need to make that happen, but um that's just the reality of where we are now.

Thank you.

Thank you very much.

Uh Director Barton, do you want to add anything?

You've been fairly quiet, but I know that um that you're on board with all of this if you want to add anything.

You know, and and and and if you could just briefly describe, I mean, uh when people think of the county, a lot of times they think of the hospital district or how it's health.

Explain just briefly about Harris County public health.

I mean, you're an actual county department under the county, and you do kind of the same things we do the preventive care, the immunizations, the all the stuff.

You have the pets also, but other than that, it's the same kind of thing.

Yep.

I think my main message is we're not waiting to collaborate.

We're working together already, and we're continuing to look for new ways to do so.

I think the most important place that we need to collaborate is on areas that can help us expand the total pool of funding available uh to us as a as a city and county.

Uh Amen.

Yes.

But um But yes, Harris County Public Health uh has uh an explicit jurisdiction serving the two and a half million people outside uh the city of Houston.

But of course, we offer services across the county.

There are some things we do countywide, like mosquito and vector control, where we are the the only provider uh and and others uh that will where we'll go go anywhere uh like like mobile health, and we're excited to partner with the MSEs and the parks on that.

But yes, we have the community health and wellness, emergency preparedness and response.

Uh how many clinics do you have?

How many like our we have five physical clinics?

We have uh dental in Baytown medical and dental in uh Pasadena medical and dental in Umble, medical and dental in in Antoine, uh kind of near Acres Homes, and then uh a refugee clinic down in Harwin.

But um we have a broader set of WIC clinics in the unincorporated areas, and then we have our mobile and uh medical, dental and veterinary units.

Okay.

Okay.

Um Vice Chair Castillo.

Thank you, Chair, thank you, directors, both for the presentation.

Um Director Tran, you you touched on the taxing entity and how that is sort of uh longer term, uh loftier uh solution, but could be sort of the solution that brings everything together.

Um could you talk more about what it would take to get that established or where you've seen that work in other areas and how that's operating?

Uh I mean, look at our sports authority, for example.

Um that's kind of the model that I would imagine.

So whatever happened to make that happen.

Legislation.

Yeah, more likely legislation and but you know, and really all the leaders being on board on the same page.

Have you uh seen other uh larger jurisdictions that have used the the hospital taxing district uh be successful?

I believe that um Seattle and maybe San Antonio uh has that.

And then there's now there's also models where there were counties and cities together and then they separated.

So you could find models anywhere that you look, but uh as long as we're talking about a potential collaboration and looking at the positive merits of uh of a uh either consolidation or collaborative agreement um or district creation is uh I think that that's just a a model that we have outside of health care that seems to have worked.

And that that would be different from the the county's already existing hospital district.

Yeah, so in other places, like for example, San Antonio, um the Metropolitan Health District includes the hospital as well.

So we're not in a vacuum here because you can't just you know, it's not just the um the council members and the commissioner's court.

We have to consider the board of directors of Harris Health as well.

And I'm not gonna speak or we won't speak for any one.

Yeah.

Well, um I appreciate all the work that you all are already doing to uh to work together and your mention of the the request for an upgrade on on the software on the technology.

Um very willing to support that.

Uh has have you all had conversations with IT yet about about that?

Uh yes, I know that our IT um director is already in conversations with Harris Health.

Great.

Thank you.

Councilmember Carter.

Thank you, Chair.

I just wanted to say you you both are new, but you have done a great job, great presentation.

And I'm all for your pie in the sky dream of that district.

I think it's a great idea, especially when you know we talk about homelessness and and re-entry and such.

You know, there's no dividing line, and we need to work together as much as possible.

And I know you are collaborating, but I think that pie in the sky is certainly uh a good goal.

So thank you for being here and thank you for your presentation.

Thank you.

Councilmember Ramirez.

Thank you, Madam Chair.

Just an expression of thanks for for the work that you both do.

Um I think collaboration is certainly going to become more and more important going forward.

And uh we certainly appreciate the help that we get from our county commissioners and special welcome to you, uh, Director Barton.

I know you're a Houston resident and constituent of ours as well.

So welcome and thanks again for what you do.

Thank you.

I see no other council members in the queue.

Thank you very much for your presentation and for your continued work together to make the Houston Harris County area the healthiest it can be.

All right.

We did have a couple public speakers on this item that I was going to go ahead and call.

First, Laura Gallier, who I did I don't see online, but Laura, if you're there, star six and jump in.

Laura Gallier.

Okay.

Yes.

Okay.

My name is Laura Gowlier, District C.

Um, regardless of any overlap between the city and county health departments, the public health needs of the community are not being fully met.

Um the word efficiency has lately taken on a new dark meaning that includes eliminating programs that the community relies on and firing people with significant expertise, institutional knowledge, and commitment to public service.

We still need people like that to care for our community rather than cut any jobs.

If you find redundancies, savings or efficiencies, please reallocate the freed up resources to improve public health outcomes, both for the community at large and for our most vulnerable.

We entrusted you with our tax dollars to meet the needs of community that can't be met by individual efforts or even grassroots efforts.

Some health care challenges can only be met at the scope and scale of government.

These include the mental health crisis, where people with untreated mental illness are beyond the ability of their families to care for.

Since government health care is limited in Texas, and people with severe mental health can't hold a job, they don't have insurance through an employer.

They have nowhere to go except the streets or jail.

And if they go to the streets now, it's just a waylay on their way to jail.

I have families who could be part of this crisis were it not for their access to mental health care through the employer health insurance of their spouse.

The health care needs of people suffering from mental illness are not beyond our reach.

They are treatable.

They may refuse treatment, but this is true of most people with a mental health crisis.

Treatment is just as stigmatized as the illness.

You can change that.

Ditto for care for people with substance abuse disorder.

I'm a fortunate one who got treated before I took that elevator all the way down.

Through my experience of regaining sobriety, I witnessed firsthand the journeys of those who sunk very low.

Even the depths of substance use disorder can be reversed with treatment.

Um health issues resulting from dangerous air quality are not being met.

For example, in setagast in District B, as recently reported in the chronicle.

And access to women's health care, including contraception since many clinics are closing due to the abortion ban.

Houston's maternal death rates have been among the highest in the country for a decade, and yet about half of maternal health care providers were cut in the recent Harris County budget.

You're relying on a Kinder Institute study to consider consolidating the city and the county.

And please consider the Kinder study from November 2024, urging the county to move faster in improving maternal health.

I'll email a copy of it.

Thank you for listening.

Thank you very much for your comments.

Next, Sarah Remann.

Is this on?

Oh hi, my name is Sarah.

I'm a social worker.

I I do agree with this merger as someone whose employer does not provide health insurance.

I do see the benefit of the merger.

But what I wanted to say is that, you know, with like I wanted to just echo what Laura said of like mental health care is really rooted in the carceral here in Harris County.

And so I think one of the, you know, like one thing that y'all can take on with this merger is to focus on mental health care and decarcerating it.

Um then with the budget cuts around maternal health, we need to socialize w women's reproductive health and homeless health care services.

I do think this this merger can create space to kind of fill those gaps.

And I also just want to say that I think it's important, you know.

I also want to say that the the Harris County Sheriff himself, during the budget hearings earlier um, earlier this uh couple, like in September, he was also saying that we need to decarcerate mental health.

And so I think that with this merger, it can be a really great opportunity.

And I also want to say I think with Harris County Public Health, um, just like Houston Health has a doctor leading Houston Health.

We should have Harris County Public Health should be led by a doctor or a clinician.

I'm a social worker, and I think the impact of social work and community health and public health is like this.

And having someone who is just a chemical engineer with no actual community health experience or public health experience.

That I I I know like this is not the authority, but I just think that we should have actual medical professionals or clinical professionals leading public health efforts.

So thank you.

Thank you, Sarah.

I appreciate your comments.

Any other speakers on this item?

Okay, seeing none, thank you for your patience, everyone.

We will get to the Houston first.

And I do want to recognize that Councilmember Tiffany Thomas has been online during this meeting.

Um we will have our final agenda item seven overview of the GRB expansion project feasibility study.

And I will welcome President and CEO Michael Heckman and Handon Partners, executive VP of Consulting, Bethany DeRose.

Thank you for your patience.

I know this was a long meeting to sit through.

Uh Madam Chair, uh Mr.

Vice Chair, Council members and staff, uh it is our pleasure to be here this morning.

Um and we appreciate you uh giving us time uh with the other vital work uh that you're undertaking this morning.

Um but to talk about this generational project for Houston uh and uh what we uh along with the mayor unveiled back in March uh of what will truly redefine the eastern edge of downtown, which will uh continue to make Houston even more competitive uh than what we are today.

Uh what we're gonna talk about today is the economic impact of merely phase one.

Phase one will be the GRB South building, uh, but just the first phase of a maybe 15-year master plan that will connect to the East End, uh that will reface the eastern side of the George R.

Brown, will connect to the green space that will eventually be on the Cat Park above the I-69 I-45 thoroughfare, um, ultimately catalyze and create an adjacent entertainment district, uh create billions of dollars of new um income and wages for Houstonians and ultimately have an enormous amount of economic impact.

I think it is important to remember um how we got here from a funding perspective.

Um we are able to do this because of uh Senate Bill 1057 that was passed in the 2023 legislative session that was authored and passed by now Mayor Whitmeyer, uh understanding that the funding that we needed to be competitive would have to come from the state level.

Uh and so we're so fortunate to be able to have that dedicated funding for for this project.

Uh we have also spent the last six months uh engaging and listening to the community.

Uh we've made adjustments based on um uh guidance that we've had from a number of you, in particular Councilmember Martinez and his constituents and the folks in the community.

One of those outflows, not the topic for today, but um, is the adjustment to create greater connectivity between the east, the east side, and downtown through turning uh Leland Street into a two-way connection, which Houston First will be paying for in our in our project budget.

We have said all along, uh, from the beginning of this project, it is much more than just about hotel rooms.

Hotel rooms and tourism present great opportunities for our community, inject uh millions and billions of dollars into this community, but it's about saving and reinjecting vitality into Houston's city core.

Houston is a great destination.

Uh all of our um uh areas that surround the city, uh from Harris County to the woodlands to Sugarland and all around.

But the heartbeat of any big major world-class city is its downtown, and it has to be competitive.

And I can tell you that there are communities around this country, not just in the state of Texas, that are investing billions of dollars in development.

And if we don't move forward, if we stay stagnant as a community, we will fall behind.

We are in a competitive environment.

Uh companies have a choice as to where to expand their businesses, where to grow their businesses, where to move their headquarters, conventions, major events, have a choice as to where to be.

And we want that choice to continue to be Houston.

And we believe that this project will help us take a major step in the right direction to be able to do that.

We hired a eminently qualified firm to come out and take a full comprehensive look at the feasibility and economic uh impact of this project.

Hyden partners, I'm pleased to be able to have here today Bethany DeRose.

Bethany, not only in her work, but also the work at Hund, and they have done dozens and dozens, if not hundreds of these types of studies all over the country.

And with that, I'm going to have her turn it over to Bethany for the presentation.

Great.

Thank you, Michael.

Thank you, Council, for uh having me here today.

Uh excited to talk about this project with all of you.

Uh as Michael mentioned, we'll be focused today on the economic impact of the overall project.

Uh there is a lot of great dynamics of this project that will feed this larger ecosystem as Michael just spoke to.

Uh but we're going to focus today on these incremental impacts uh related to the expansion.

So you know, why do this?

Uh it's a it's a highly competitive environment.

Uh cities across the country are making similar investments.

This is a space that we we do want and need to be competitive in in order to keep that engine uh going forward.

So this will solidify uh Houston as a top-tier convention destination.

Uh and you see in the middle here on your screen stabilized annual performance improvements.

I think it's really important to point out and uh reinforce one point that Michael just made that this is uh only focused on the South Building expansion.

Uh there is uh other dynamics uh into the future of this project.

Uh today we're isolating just the South Building expansion.

And when we say a stabilized year, uh that is uh the performance of the building after construction.

We have uh forecasted stabilization to come about uh 18, 24 months after uh construction concludes on the building.

So stabilized annual performance improvements.

You see a 30 percent increase in events held, 62 percent increase in citywide equivalence.

You will hear that phrase a few times through this presentation of citywide equivalence.

Uh we will be using that as a um as a term looking at how we layer and stack business and do events simultaneously.

So this expansion allows us to do more than one event at the same time, and that event those events being of a size and scale equivalent or exceeding the definition of our current citywide in Houston.

Those impacts are really important, and we'll talk more about those in a second.

Uh you see the the next here that's important, and we'll speak more to this uh momentarily, a reduction in dark days.

Uh, these buildings are our large buildings.

Uh they they take a lot to turn a room, to move in, move out.

Uh, this expansion allows us more space and more flexibility to reduce the dark days and essentially fill more of the calendar, generating those larger impacts.

Uh CBD hotel occupancy lift at just under 5%.

So with this expansion, the overall market will see that increase in hotel occupancy.

Uh and 337,000 group room nights added because of this expansion.

On the right hand side, new spending.

Michael uh touched on this briefly of the the total impacts and value of this project.

Uh 20.6 billion in new spending, uh, 5.6 billion in new hotel room revenue, six billion in new earnings and payroll, and over 740 million in total tax collected.

Uh we'll dive more into this momentarily.

We'll go to the next slide.

And uh I'm gonna take a moment just briefly to highlight a few things in our market findings.

So we'll go to the next slide.

One of the key factors that we looked at across the different competitors across the country uh was not only the building and the layout of space and the total amount of space uh, but the attached and adjacent hotel room package.

Uh you can see that we are behind one of our key findings is that we are behind our competitive set in terms of those uh headquarter hotel attached and adjacent hotel rooms.

So our recommendation in this plan and in this report is to add an a minimum 800 room headquarter hotel that would be in conjunction with the expansion of the South Building that will allow for these larger groups that are looking for this kind of space to be accommodated in our downtown core.

Again, the stats I just showed you, including that nearly 5% CBD occupancy lift is inclusive of that uh new inventory coming online.

We're to the next slide.

Just to summarize, there's a lot in the larger report here.

These were just some key findings uh from our market study research.

Uh I mentioned how competitive this is across the country, and and uh Michael mentioned we do get to do this work across the country with with different uh cities looking at the convention center expansions and the tourism ecosystem at large.

This is a highly competitive industry.

These groups move, they have a choice, particularly in the corporate convention space.

They get to make those decisions based on the size, the scale, the fit, and the ability to do business in a place.

That is a very competitive market.

One of the advantages of this expansion, the South Building, the contiguous nature of the expansion is a critical component.

The program allows for Houston to put its best foot forward and to be competitive to capture more of its fair share of those high impact events.

So this is a very competitive space.

That number two, hosting simultaneous or overlapping events, being able to have this space so that we can do multiple events at the same time will again allow for those larger impacts to be compounded.

And we won't have to have as many dark days in the building in terms of turnover and things like that.

Number four, I wanted to highlight increased data availability.

So with more space allows us to sell to more groups and having more availability in our calendar, we can spread business out and be more strategic about how we sell into the calendar and into this space.

So there's a again, there's a lot more detail in the larger report, but I wanted to highlight a couple key things here for everybody.

We'll go to the next slide.

One of the key aspects here of this expansion is the type of business it allows us to pursue.

So we looked at history from 2017 through 2024.

We're showing on the left hand side here, 2024 actuals compared to our stabilized year event projections.

The areas where you see the largest increase in events and attendance is convention and conference, corporate convention, and trade show.

This expansion allows us to be focused on those groups that do generate those returns where we have the highest impact into the community and into our downtown core and ultimately lifting the market.

So a 30% increase in number of events, 62% increase in that citywide equivalent, and 59% increase in total GRB room nights produced.

Go to the next slide.

So this is a snapshot of the different revenue streams coming into the building.

Building space rental, you can see a 79% increase, food and beverage revenue, a 93% increase.

Obviously, we will have a bigger building, larger operation, we will have uh parallel increases in our expenses, but this allows us to look at where the revenue will come from and how to plan for those expenses accordingly.

We'll move to the next slide.

This uh this slide is even harder for you all to see, I'm sure, uh, on your screens.

But um the purpose of showing you this is that in this work, we went to a very detailed uh point to look at every single day that the building was in use historically, the room night generation from each day, uh, and what that would look like in the future.

In our stabilized year, you can see at the bottom, we have more green and more spaces essentially filled in.

That is that really just demonstrates a level of increased production.

In the top, uh there's more uh black boxes.

Those black boxes are the dark days I was referencing earlier.

So we have a 66% reduction in dark days by adding the square footage and uh and enabling the space to be more activated.

Our average daily room night uh generation goes from 983 to over 1,500.

We'll move to the next slide, please.

Uh quickly going to touch on uh hotel occupancy tax and PFZ projections.

So we'll move to the next slide.

This shows the projected forecast of our hotel occupancy tax uh projections.

Uh we showed a couple of uh key events into the future FIFA World Cup, uh, when the South Building would open, and when we're projecting the 800 room uh hotel to come online as well.

And uh after that you see into the into the future uh through 2053, where our hotel occupancy tax revenue is projected.

Move to the next slide.

This is uh the PFZ projections.

Uh we modeled several different scenarios.

Each of these uh that we've uh uh showed you on hotel tax on PFZ uh all have multiple scenarios.

What we're going with is is our uh base case, our recommendation.

Uh and so here you see three different scenarios for a low, middle, and high of our PFZ over 30 years.

You can see when the South Building uh expansion opens and when that headquarter hotel comes online.

Uh in that mid-scenario, 1.97 billion in PFC projections.

We'll go to the next slide.

Uh lastly, I want to touch on the economic, fiscal and employment impact.

So Michael mentioned um how important this project is to the broader community uh and the level of impact that a project of this size and scale will have.

Uh and so we'll touch on that uh now in the next slide.

So total, as I mentioned in the beginning, total spending at 20.6 billion, uh direct 12.2 and indirect at 8.4.

Uh earnings and payroll at uh just about six billion.

Total tax collected 741 million.

You can see below the 741 where we've broken out city sales, city hot sports authority, and county hotel occupancy tax.

These are really important figures.

Uh they make a significant uh impact into the community uh into the broader uh city and county at large, where these events will be coming from, how they will deliver impact uh on a more consistent basis due to this expansion.

And we'll go to the next slide, and then I believe we'll stop and take questions.

So again, this is a very competitive space.

Uh there are uh there are large cities in in Texas and across the country that are making investments into convention center assets and wanting to capture uh their fair share.

This expansion allows us to uh not only compete but have a leg up on those destinations.

Um and our ability to capture that will result in these uh in these key economic impact figures.

So thank you all for the time uh this morning.

Uh happy to stop there and take questions.

Thank you, Mr.

Rice.

Really appreciate your presentation.

To be clear, these numbers reflect just the South building, not what we're going to eventually do to the main building now.

It's just the South building.

Okay.

I'll go to questions by uh Mayor Pro Tem Castro Tata.

Thank you for the presentation.

I think that um this is the type of information that we we need as we are making these decisions because of the competitiveness of this business.

I feel like if we do nothing, um we get out of the running for a lot of really big conventions.

And for the city of Houston, that's important to us.

I mean, we just talked about, you know, the money that we have in our city and the money we don't have in our city.

And I I think that the greater good.

Um this seems like a really good program for us.

Um there are organizations, you know, that we participate in, and I remember hearing um groups like the Texas Municipal League, the National League of Cities, they talk about there are only really four cities that they can host their conferences in because they don't have enough hotel space or they don't have enough convention space to bring those conferences to certain cities.

And Houston has always been in the running um for that.

But I think as these conventions grow and are bigger and better, um, we've got to be competitive to make sure that Houston is a destination spot for these um conventions and conferences.

So I think it's it's a wonderful idea.

Um what I what I do want us to continue uh to do is making sure that we are touching on those hot buttons for the folks that aren't happy about what is going to happen on the South side.

We've had lots of conversations about it.

Um I've seen the emails um about the conversations we've had, you know.

I just want to make sure that we continue to communicate with the folks who are um not as happy about what's happening downtown.

Um but in my opinion, the greater good.

Um, you know, I'm I'm definitely going to support it, but want to have the ongoing conversations with the community members to see how we can continue to meet their needs as well.

Uh Mayor Pertem, you have our commitment um uh to follow through on the on the commitments that we have made.

Uh look, Houston First is is an organization that serves this community.

When we are successful, the community benefits.

And we take that role and responsibility extremely seriously.

Um we take um uh our charge from our board and from this body as well to be inclusive.

I can tell you that we have a 30 percent MWBE um goal for this project that we are currently exceeding and we will exceed that number.

Um we will have updates throughout the process on how many how many local local firms are participating in that as well.

So there's a lot of responsibilities that we have.

We have a responsibility to uh our next door neighbor communities and the broader uh destination as a whole.

And uh Mayor Pro Tem, you have our commitment that we will that we will continue to do that.

Councilmember Martinez.

Thank you, Chair.

Um and I think I want to speak to the competitive space at you know, because one of the one of the um kind of crux of the the disappointment or frustrations are um Polk.

And so why is this design, why contiguous?

Can you explain why is it that you need to do it build it this way?

Sure, I can start Michael if you want to add to that.

So the contiguous nature of the expansion is uh is critical for the success of these projections.

Um the program that we have worked on and evaluated uh in conjunction with Michael and the team at Houston First and the team of Populus on the design side is is really important.

We also had uh feedback from meeting planners in this process that validated the type of square footage and the way it is utilized.

If the program is broken up, uh it will not be as desirable.

There are other buildings that have more contiguous space, and it is easier to do business in that type of a footprint.

Uh they will you know likely choose to to do that business elsewhere.

So that that contiguous nature of the expansion uh is a critical component of these projections coming to fruition.

And this is phase one.

Phase two will ultimately break that contiguous base on the north side of the GRB facing the north side to the east end, east side, east downtown.

Um I guess that's part of the conversation of why it needs to be contiguous on the South End.

Correct.

Um and then uh I think I also want to just you know to my colleagues that are on the horseshoe or on online uh um what the Mayor Pro Tim is has been speaking to is was has spoken to as far as community engagement.

Um, continue to ensure and uh those that have maybe been to some of the meetings, uh there have been more than just one or two, there's been over a dozen that I've been to, whether it's a larger meeting, whether it's bringing some of the folks uh even people for Polk and Super Neighborhoods to the GRB to speak with uh Houston First, uh at least three, two or three.

Um then I've had several in person.

Um if you have any questions about where what work I've been doing uh to make sure that the community is being heard, uh, that there is East West connection, that we are looking at not just this project, but ultimately the um the surrounding area, where there is great separation, um, you know, I appreciate the commitment for lead-in to be a two-way uh which is something that's not new.

We were discussing this five years ago when TechStat was coming in to disrupt uh what was happening uh behind the George R.

Brown.

Uh but but um just want to say I I appreciate you all continuing to be open to being out in the community, and I know there's been more folks showing up to Houston First meetings as well, board meetings.

Uh but my my push is to continue to make sure that uh we continue to be forward-facing to the community as things continue to progress as well.

Thank you, Councilmember Martinez, and we appreciate um your leadership um with your district, your service and uh Councilmember Carter's service on on our board.

Uh it's incredibly important the feedback.

I will say about the the Leland connection is a is an example of um the results that came from the engagement with the community.

Um that was not in the original plan.

We listened, we heard uh the urgency and the feedback from the community and thus worked with the city, and the city endorsed the plan, uh readily endorsed the plan uh to turn Leland into a into a two-way connection.

Uh uh it is important for us who as the operator of these downtown venues to have great access to downtown.

Um to connect to the East End, which is a great community, and you have to look down the road into the future because the NHIP, the TechStot project will will radically change that area.

And our plans for this area were made after those plans were already set and in place.

Uh and so we wanted to improve that.

Connecting green space to green space uh with a a sports entertainment and convention district.

I'm not aware of one in the United States that exists like that.

Houston will be what it should be as a city, and in my view, is from the last 20 years that I've lived here, it should be a leader and it should be on the top of the pack.

And I think this project will help us continue to be there.

Councilmember Castillo.

Thank you, Chair.

Thank you all both for the presentation.

Um there's no doubt the financial impacts of this project are significant.

Um the community's request for you know certain uh components of a community benefits agreement.

One of those things is two-way Lela industry, which you've addressed is being done.

The other was for investment into the community from some of the proceeds or profits that this project generates.

Could you speak to the feasibility of that?

Yeah.

So as you all will be will be briefed in the future, uh, as our finance team is working with uh City Finance and the controller's office, you will get a briefing on the plan of finance and what this looks like.

Uh it will be uh a bond offering uh that allows us to move forward now to be able to not only uh uh uh take advantage of prices being where they are today versus where they are in the future, but also make us more competitive.

Uh the PFZ money, it's Project Finance Zone, that's the legislation from the State comes in over 30 years and is heavily back-ended, okay.

Um the revenues from from Houston First, as well as the Project Finance Zone legislation will be used to pay for for for the bond and the debt service that will be done there.

We have to continue our job of operating the other facilities that are in our communities, um, uh selling and marketing this community um all over the world.

Um to the extent that we can be supportive of our neighbors and the things that have great value, we will continue to do that.

I'm not sure what a revenue sharing model would uh would look like, but it is important to note that um the PFC funding is statutorily restricted.

And then uh for hot taxes that are collected through all the additional conventions and whatnot, I know some of that is designated towards our art and some of it is already kind of predetermined.

Is there flexibility and hot tax to reinvest into uh surrounding neighborhoods?

Well, again, uh I I think that there's there's opportunity in the in in the future, as there's a number of you that are here today that I've heard um advocating um for the East End community and will continue to do into the future.

Uh hot tax is another one of those that's as it's it's restricted by the State of how that can be used.

There's there's certain areas that that that that has to be done.

Um but I think it is important to to know that that this project will improve the areas surrounding our neighborhood.

So you see the economic impact numbers and the jobs numbers and the rest.

This project will be used to catalyze those things, create more businesses and jobs, and it will all it will it will improve those those areas.

So um in my view, I believe that that Houston First is is delivering on what it is able to do um through this project.

We will always be a great neighbor.

We will always be a great community um organization uh in working with with with our destination.

But it is important to note as as you as you mentioned, Councilmember.

Um the increase in hot is also very important for our our uh arts organizations.

Twenty percent of the uh hot that is collected comes off the top and goes back to to the art.

So uh probably not something that's that is considered when folks look at that 400 million dollars, um that's 80 million dollars that will go to the arts that otherwise would not have.

Thank you.

Councilmember Davis, thank you, Madam Chair, to my colleagues.

I I just could not wait until I had a chance to address this matter on the convention.

Thank you for your presentation.

Let me say one of the heartbeats for me is that I was a part and I had the privilege of hosting one of the largest conventions that came to the City of Houston in 2004.

That convention was amazing because we got a chance to highlight George O'Brown Convention Center as well as the Hilton Hotel.

Uh there's nothing more gratified when you bring in money in the city and the opportunity to where you bring people together in this city.

And I had to be the one who was which was a blessing to me, but I didn't even understand even then the impact of what that does.

It's phenomenal.

This project, we are the 11th.

Now we'll call Houston first.

We are the 11th city in terms of convention size, in terms of the size of the convention.

We need to be up there in the top five.

It's no question about it.

All of what Houston has to offer, and I know the colleagues around here understand this, the citizens understand it.

We talking about a lot of things, whether it's restaurants and all.

You there's no way any of these cities ought to be outpacing Houston for what and who we are.

Now East End, you want to talk about that, and I get it.

My heart is in that.

I was born in East End.

I grew up on the East End.

Uh my community that was East End is no longer.

It it's been wiped out.

I hear those who speak along the terms of the Polk Street, I get it.

But I'm a third-ward East End person, and we've seen changes go on in our city.

But the fact is we can get along.

We can do both things, and we can get it done.

This convention center is going to propel Houston to levels this city can't even imagine.

So I I want to say publicly, and I will say it continuously.

Twenty years ago, 21 years ago, when those 10,000 people came in here, they bragged on Houston.

We 21 years later down the road.

When you travel like I've done the religious communities and others, when you travel the major cities, New Orleans, Atlanta, they top the sides above Houston.

So I I want to commend you, Mike, and the others Houston First, and all of doing this project.

Uh I hope that all of City Houston get behind this.

We need this.

So uh I just say one last thing.

Start tomorrow.

Thank you.

Councilmember Huffman.

Thank you.

And just briefly, thank you for your presentation.

Um, you know, it's really key that this money is coming from the state, and it sounds like this is a project that we wouldn't be able to do but for this funding.

Um the presentation was great.

This looks like a win for Houston.

Thank you.

Thank you.

Councilmember Ramirez.

Thank you, Madam Chair, and thank you both for the presentation.

Appreciate all the work you guys do at Houston First, especially, Michael, and and the meetings that we've had.

I appreciate the information you've been able to convey.

I just um I'm wondering about the projections.

Um they sound wonderful.

And uh I'm just curious because other city a lot of other cities are doing the same thing, uh, as I understand it.

Um correct me if I'm wrong, um, but Las Vegas is expanding, Orlando, Austin, Dallas, Fort Worth.

And I'm I'm wondering how we're able to project that in that environment, our events are going to increase 30 percent.

Can you help me?

Can you walk me through that?

Sure, yeah.

Great question.

Um we take as as I showed in in one of the slides, we take a really detailed look at every day and every space that is available.

So we're looking at available square footage and what that available square footage added would allow for us to sell into.

We also look at the size of the market.

Uh, we interview competitive and comparable buildings, uh, competitive competitive and comparable sales teams that we're going up against, uh, and we have meeting planner input in this process.

Uh all of that factors into what our conversion rate will ultimately be.

So we don't go out and win every piece of business if uh if we did, it nobody does that.

So it's uh it's looking at what's out there in the market, what are we pursuing, and how are we able to increase that conversion rate?

This um and our opinion on this project is that with the the program as designed, the headquarter hotel as recommended uh as a minimum, it will increase our conversion rate and allow us to go after and secure more of that business.

Uh once we determine that conversion rate and the sort of size of the market that is available to Houston, we apply uh conservative spending figures for food and beverage, hotel, retail, transportation, and several other categories.

Uh that data is that is then what allows us to project into the future those economic impact figures and the average uh attendance, average daily spend, um, average individual uh length of stay.

Uh all of those factors allow us to get to those those large totals and 20 billion in in spending.

But Michael, do you want anything to do?

Yeah, sure.

Councilmember Maris, it's a great question.

You know, we've we've we've had that question some is like is there saturation from you know not just Texas, but but in other places.

I I think we look at it as we're either going to move ahead or we're gonna fall behind, right?

We do compete with Dallas all the time.

We compete with Phoenix, we don't really compete with Las Vegas, we don't really compete as much with Orlando.

Orlando, Chicago, Vegas are kind of in their own sector because they're so large.

But the the main reason that we can't book more business isn't from a lack of interest in Houston.

It's we don't have the space.

We have to turn it down.

And so that is the biggest issue.

You know, we have five exhibit halls.

We have one 34,000 square foot ballroom both the Hilton and the merit marquee both have larger ballrooms than that.

And so you are really only able to book one major group at a time.

We'll be able to layer groups on top of one another which is going to be what pushes out the the impact out into the community.

So it's a great question.

We are confident based on the the the feedback that we have received from from meeting planners already I I can't reveal which one nor even the sector but I can tell you that there is a uh client that has never booked Houston before it is 20,000 person convention has seen these plans will now consider booking us for 2031, 2036 and 2041 and we'll be pulling out of another U.S.

city uh to be able to do that.

So I can tell you that that the demand really will be there.

I will go back in the queue unless no one else Okay.

All right.

So 30 percent increase in events held are the number of events increasing or decreasing?

Increasing.

The number of events will increase and let me rephrase it the number of total events all across the country or or world or whatever is that number increasing or decreasing?

Yeah I'm glad you asked that because it was one thing I was going to attack on but I heard the bill the the one slide that's not included in here that is in the larger report that we have provided is the state of the industry.

And the there's a strong outlook on meetings and conventions globally and nationally that outlook allows us to say that there will be growth in average event attendance and number of events held in a year.

So these larger annual meetings that Michael's referencing the 10,000, 2000 personal meetings are growing and organizers feel strongly about the future performance of those events that education and networking will continue to be the number one reason that people gather and that is not showing any signs of slowing down in the future.

And I'm just curious the other cities that I mentioned Las Vegas, Orlando, Austin, Dallas, Fort Worth, did Hundan do the projections for those facilities as well?

We do work for Fort Worth.

So yes we have been in the Fort Worth market for for a long time.

We have also worked on and off for Dallas for the last couple of years.

We're not currently engaged in Dallas but we have worked on that project.

And part of what we do we have a proprietary database so even if we are not working directly on those projects we are keeping up on all of those projects because it's relevant to other clients and the work that we are doing so that we have a pulse on those expansions those investments and how they are playing out.

So we haven't worked on all of the ones that you mentioned but we're we interviewed Orlando for example in this process we interviewed Chicago in this process we we spoke with Austin.

So we're keeping very close tabs on those even if we're not directly working on them.

And not to be labor anything but $5.6 billion in new hotel room room revenue does that assume the hotel rooms that we already have or does that assume an another hotel to be constructed or what?

So it does include the recommended 800 room hotel.

It includes our existing inventory and then the third component that we did is we took a look historically at um pipeline rooms added each year and we took the average annual room increase over the last 10 or 20 years into the market and said that that number plus the 800 room hotel plus our existing inventory will be new hotel room revenue.

So there is an incremental increase in hotel room count uh into the future even if it's not in the pipeline known today but we took an average based on historic addition.

So Michael I'll ask you is there plans for a new hotel?

So when we got this report that's something that we're going to have to take under advisement with uh with our board and look at what a a process like that would look like we do we our sales team does believe what the uh the recommendation was we we believe that there would likely be a lot of interest from the private market for for something like this but based on the expansion the structure of what that would look like and how it would be done we don't know yet but it's something that we we will have to we will have to take on under consideration.

You anticipate that would that would uh entail public funds as well or strictly private?

Don't know.

All right and uh on the projections last area did you take into account um negative things that might happen like uh economic growth slows or or or goes down uh price of oil goes down hurricanes we we have those every now and then and we lose power for a week sometimes longer did you does your projections take that into account as well?

Um hurricanes, we we have those every now and then and we lose power for a week, sometimes longer.

Did you does your projections take that into account as well?

Yes.

So we did look back at uh historicals so that we could understand when those fluctuations would occur.

So it's not just a straight-line growth rate and project it into the future.

Uh so we work closely with uh with Michael and and Frank on the finance side to look at uh different scenarios and different pullbacks and where what we would call pullbacks as to where the market may have a correction and then uh a recovery.

So we did uh run those numbers and um and Michael, you could speak to this uh but those numbers have been provided to the finance team that are looking at the financing plans and uh the conservative estimates are being are being utilized.

And so yes, short answer.

We have worked uh through those details so that we can plan for any unforeseen events.

All right.

And uh to piggyback on to what Councilmember Castillo was asking, Michael, um and certainly appreciate uh Houston First, which I consider just to be really another city department.

I know it's a local government corporation, uh and there is a legal separation, however, um in regards to Leland, turning that into two-way.

My understanding is it could be reversible.

Um we'll we'll see how how that goes.

Uh conversation with public works, but that's another matter.

Uh I have I have tried to advocate for looking at additional streets to turn into two-way, Texas, for instance, maybe Franklin, maybe some other street.

What what is Houston's positions for position on Houston first position on that?

Yeah, we have heard that that question a lot from folks, and and that's really going to be the the city's purview.

I I I am not um uh a street engineer or expert in in public work, so it's it's it's not for me to say.

I'm not able to to to say what what the uh advantages or disadvantages of those things may be, but I know there's a lot of interest in in exploring that and exploring what those what those things um could potentially look like.

And I I think that a number of your colleagues have have some of the same uh interest in in looking at that, but we would really take the lead of uh of the city because that's really a city purview.

And is that how how the Leland uh conversion to two-way came about?

Did the city propose that or was that Houston's first idea?

I don't remember honestly whose idea it was, but it it Councilmember Martinez, do you remember?

Yeah, I it was it was my idea.

So you know, we can't do anything without you know the city's approval on on those those types of things.

So we had to go through the process and city has to go to the let me toss out an idea in Texas and or Franklin or some other street, you know, to uh improve access.

But one of the things we talked about, Michael, was would Houston first be willing to participate in in convening a stakeholder group uh to talk about East-West mobility uh and come up with with recommendations?

Would would you all support that?

We would absolutely be happy, uh Councilmember to be part of such a discussion and be part of a working group that that looks at those things.

You know, we are a really big stakeholder sitting right there, uh so we would be we would be pleased to be able to be part of that.

All right.

Thank you.

Councilmember Martinez.

Thank you, Chair.

And just to you know, follow up on some of the questions about East West Connection.

Uh so um, you know, Texas commerce, frankly, there are not new conversations as well.

This is something that I have been pushing since the beginning, uh, Councilmember Ramides, but as I mentioned to you several times, priority for me is Leland because how the proximity to Polk.

Um it is not lost that these other uh East-West connections are important, and I've continued to do the work uh making sure that we're bringing uh other stakeholders to help with the traffic study.

So Chris Larson from Downtown Plus is interested in in wanting to see some of that access.

I think we all have uh interest in making sure that East West connection into downtown as Michael has stated is a priority.

We don't want to build this per se uh quote unquote wall and no one can get in.

That's not the that's not the work that is being done.

And so just to be uh make sure that we're being very transparent.

Um it's been over six months.

This has probably been one of the biggest priorities on my table, uh, hence the several meetings that I have had with not just Houston First, with the community, and I have invited many of you all to these meetings as well.

Thank you all for coming.

Uh but in the future, as we continue to have these East-West connections, um, just want to make sure that these are gonna continue to be open to everyone.

Um, you know, not just the community, but to my colleagues to continue to be participate.

Uh and and again, just um East West Connection is a priority and will continue to be a priority.

Thank you very much.

Okay, I see no other council members in the queue.

We do have some public speakers on this issue.

Um thank you very much for your presentation and for all the work that's been done on this project.

I will start with Dominique Mazok.

Good to see you, Dominic.

Uh good morning.

I did take the 69 to the red line and uh walked over here in the tunnel, so let's declare that.

Um I wouldn't take something, take your comments.

I want to take this to the screen.

You said public engagement.

The GRB belongs is a city of Houston building.

Therefore, it belongs to the people who are the city.

I think this whole GRB project, including A B and C expansion, uh whatever it needs to be with changing street direction.

By the way, he's an avenue technical avenue under I-59 is already two-way street because it also rents uh the red and purple, I mean the purple and green line under I-69.

So that's okay.

That said, why aren't we putting this to a vote of the people?

If we're gonna have if we're gonna have a conversation with the community, why don't we have the ultimate conversation?

Put it on the ballot.

I'm hearing concerns.

Yes, this is a moneymaker.

But my thing is also hearing is if this is such a moneymaker, shouldn't it be a uh private project?

Should it be a triple P project?

Also, too.

We you know, we had uh meeting yesterday about the homeless.

Okay, to me, this is a could be a title six violation, at least in theory.

The people who come to these conventions have money that even regular Houstonians could not afford to go to.

I think this is got just as a bit.

I'm seeing Title VI, at least the spirit of Title Six violations here.

So I really really think this has to be brought before the state Houston.

Let's put it this way.

If this was a metro project, it would have to come before the voters because the city charter.

I think things like the GRB.

I think things like the Turds doing things, other than okay.

I can understand them putting flowers or fixing astronauts somewhere or putting benches up or fixing a bus stop.

That's low intensity stuff.

I'm talking things like Shepherd Durham.

I'm talking things like micros.

Yes, I also too.

I think that needs to be perfect for people.

And lastly, since we're dealing with budgets here, if we're gonna be up against a cap like we are like like we are talking about, I think the Turds are gonna have to have to do something.

They're gonna have to completely stop by giving new stuff.

They pay off the loans that they have, and that money comes into the general front.

I think that this whole thing, uh Houston First and the Turds.

I think that this the horseshoe really is gonna have to look very carefully about what's happening.

Uh thank you.

Thank you, Mr.

Mazak.

Really appreciate your being here, and always always good to see you.

Okay, okay, that's okay.

That's okay.

Okay.

I think about the rules.

Next speaker is Lisa Hunt.

Madam Chair and members of the committee, I want to thank you for all the work you're doing on this project.

And on behalf of our city.

Um to be clear, people for Polk has never been against the expansion of the GRB.

Our concern is about the transportation fabric and the quality of life implications of the current design.

Today, Houston First Corporation has spent 108.6 million dollars on the convention district expansion without a final budget.

They've begun construction on a 40 million dollar Bell Street expansion garage with fewer spaces than the perfectly functional one they plan to demolish in 2026, right before FIFA.

This is poor sequencing, poor planning, and poor stewardship of public funds.

Meanwhile, we've heard nothing substantive of the promised two-way Leland alternative.

How much will it cost?

Will it extend across downtown to Louisiana, which we would support or stop at Austin Street?

Will Houston First Corporation pay for it?

Will this proposal accommodate bicycles, buses, and pedestrians?

Will it be operational before the closure of Polk Street?

These unanswered questions show this plan is not ripe for vote.

Additionally, there's been no public unveiling of how TechSot's NHIP plan will be changed to make room for Houston First Corporations expansion plan and potential additional costs.

As recently as September 29th, Senator Carol Alvarado's state of the district event hosted TechSdot's public spokesman, and the design he was presenting was the design that the city of Houston settled with TechSot to address the inequity claims.

What funds will TechSot be providing for this change of plan if you do away with Polk Street, which is currently in the NHHIP plan?

Will the money be spent twice?

So we're going to rush to get this done for the Republican National Convention in 2026, only to have to be torn up as the NHHIP expansion takes place.

So then public funds will be spent potentially twice.

There's been a lack of financial transparency about the GRB expansion from the time of its unveiling in March until now.

And we stand with Unite here 23 in calling for financial transparency and accountability of Houston First Corporation.

Our workers are the face of our city's hospitality industry, and they deserve clarity, not closed doors decisions, as do neighbors.

Finally, the city's JRC process requires that appraisals be completed before street abandonment.

The appraisals of the six public rights of way proposed for the abandonment for the GRB expansion have not been completed until they are.

Council cannot responsibly vote.

We encourage you to hold off on approving this project until the process is complete.

Thank you.

Thank you very much, Ms.

Hunt.

Appreciate your comments.

Next, we'll have Amy Erickson.

Good afternoon.

Thank you, Chair and Council.

I do have a handout.

I'm Amy Erickson.

Um I'm here today to address the fiscal and governance risks of the convention district expansion project.

As you heard today, the debt structure spans th three decades.

Will they be still paying for this renovation when the next renovation is becomes necessary?

Um something that was left out was that the hotel occupancy tax revenue is down 4.7%.

Yet Houston First is still proposing we lock up this critical funding stream for 30 years.

Um that would starve arts parks, small business support, infrastructure improvements, and the CAT park.

There is there is money for the improvements we've asked for.

Phase one of the GRB transformation is only at 50% design development.

There's time to scale back spending and invest in mobility infrastructure.

Phase two design has not even begun.

Plenty of time to fund the CAP park and further mitigations.

To me, this is like blowing a bonus on a luxury car instead of making responsible home repairs.

Um scale it back, uh safe plans for everyone in the immediate area around you.

From the very start, this expansion planning has been egregiously out of order.

Was the economic feasibility of a design alternative that preserves Polk ever studied?

Um the JRC abandonment application should have followed community engagement, should have followed a traffic impact analysis analysis, it should have followed a feasibility study, and um and followed an updated master plan.

Where is that master plan?

Houston first declared the project financing zone in August of 2023.

Council and the public heard nothing until February 2025.

Will we allow Polk Street spate to be decided by arrogance and a process that valued convenience for a few over connectivity for many?

The Hyden feasibility study relies on optimistic scenarios.

It underrates risks like economic downturns, the Texas and National Convention Market competition, and international travel disruptions that are strained by inflation.

The study also did not increase address increased maintenance cost of the showy design, all the glass, all the windows.

We know that's going to be expensive to maintain, heat cool over the years.

One thing we have to remember is the city, not Houston First bears the debt risk.

Have the finance department and controller's office weighed in on this plan.

Have they seen the entire Hyden report?

We urge you to demand a following before moving forward.

Polk Street must remain open until all planning is complete.

I understand Houston First Board will consider this at their November board meeting.

So let's uh postpone it till then.

Um a unified plan with TechSt and Metro and Public Works should be in place before proceeding, as well as the appraisals and dedicated mitigation funding.

I'll wrap up.

Houston vote first chose to put the cart before the horse.

They need clarity from council that accountability isn't optionable, isn't optional.

Um meets the burden of proof that Polk Polk's only option is closure.

We don't believe we should do nothing.

We believe we can be competitive with a progressive design that preserves excess.

Thank you.

Thank you, Ms.

Erickson.

Appreciate your engagement.

Next we'll hear um on virtual Haywood Sanders.

Mr.

Sanders.

The floor is yours.

Star 6 if you need to push that on your phone.

Haywood Sanders.

Okay, next we'll have Roy Hirsch.

Uh good morning, Chair and members of the budget and fiscal affairs committee.

My name is Roy Hirsch, and I'm here on behalf of People for Polk to urge fiscal caution and accountability as you evaluate the convention district transformation project.

Houston First Corporation cannot issue debt on its own.

It relies entirely on the City of Houston to do so.

Every dollar borrowed will appear on the city's books and impact its abilities to invest in future priorities.

And with our bond rating already at AA with a negative outlook, debt capacity is precious.

We must preserve it for critical needs, infrastructure, housing, resilience, not speculative projects.

The Hyden feasibility study assumes optimistic growth and hotel demand in international travel, despite clear signs that inflation will constrain long-haul tourism in the coming decade.

It also overlooks the many cautionary tales from other cities.

Convention expansions across the country that ran over budget, behind schedule, and underperform their projections.

We risk repeating their mistakes.

And with 30 years of debt service, this project could still be on the books before the next GRB renovation is even due.

The last major expansion was just 23 years ago in 20 in 2002.

We urge you to pause any abandonment vote until appraisal for the six right-of-ways are complete, and these proceeds are earmarked for comprehensive East End mobility study and implementation and mitigation recommendations.

Members, you have a fiduciary duty to protect Houston's fiscal future.

Please demand a fully vetted and published budget, conservative forecasting, and public accountability before advancing this plan.

And I'd like to also put forth one question that I think is very prudent with respect to the closure of Polk Street.

Why can't Hudden Hyden give a projection of the profit loss and dollars of this expansion from not closing Polk Street?

So we can evaluate that into their profit projections.

Thank you very much.

Thank you, Mr.

Hirsch.

Do we have any other speakers that would like to speak on the Houston First or any other item that we addressed today at the budget and fiscal affairs meeting?

Seeing none, we are adjourned.

Thank you.

Oh, there will be a special called meeting on October 28 that 20th at 10 a.m.

on the CIP process amendments that we dealt with.

Council Member Alcore.