First BFA meeting of the year.

Happy New Year to everyone.

I'm Sally Alcorn, Chair of the Budget and Fiscal Affairs Committee, and we are joined here by Will Jones and Melissa Dubowski, who are going to go over the monthly financial report.

Also joined by my colleagues, Councilmember Joaquin Martinez, Mayor Pro Tem Martha Cast Tatum, Councilmember Willie Davis, and Councilmember Julian Ramirez.

Staff and Vice Mayor Pro Tem Amy Peck and Councilmember Mario Castillo, staff from Councilmember Ed Pollard's office and Councilmember Abby Kamen's office.

Welcome all.

We will get right started with the monthly financial report.

The floor is yours, Mr.

Jones.

Thank you and happy new year.

Good morning, Madam Chair, Council members and staff.

I'm here today to present the monthly financial report for the period ending November 30, 2025.

In the general fund, the controller's office is projecting an ending fund balance of $336 million or 13.2% of expenditures less debt service and pay as you go for FY26.

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 $144.8 million above the city's target of holding 7.5% of total expenditures, excluding debt service and pay as you go and reserve.

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

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.

So moving on, I do want to touch base on the 2025 ACFA report.

So on December 19th, 2025, the controller's office officially filed the FY 2025 Annual Comprehensive Financial Report, also known as the ACFER, with the City Secretary's Office.

And this report is now available on the City Controller's website.

So just a little information.

So when you look at the primary government financial position, which includes all funds, the city's net position, which is a broad indicator of the overall financial condition, at the end of FY 2025, the total net position, including governmental activities, which is included general fund and the business type activities, which are enterprise funds, total 10.3 billion, an increase of 1.5 billion from last year or from 24.

Governmental activities account for $3.5 billion of that $10.3 billion, and the business type activities account for $6.9 billion.

Approximately $1 billion of the overall increase is in net in the net position is attributable to the net investment in capital assets.

So these are our buildings, our you know, roads, bridges.

So and at year end net investment in capital assets total approximately $11.8 billion.

And so again, while these are essential to delivering city services, they are not available for general spending.

So looking at the unrestricted, unrestricted net position deficit, uh the city continues to report an unrestricted net position deficit, which primarily reflects long-term obligations such as pensions, uh retiree health care, compensated absences.

At the end of FY25, the unrestricted deficit totaled $3.7 billion, representing an improvement of $420 million from the prior year.

However, the governmental activities account for an unrestricted deficit of $4.5 billion, and this is offset by positive unrestricted uh balance of $817 million in your business type funds, which is your enterprise funds.

But you know, those enterprise funds are restricted, so you can't use those funds to offset the unrestricted deficit we have in the general fund.

On the pension systems, the Houston Firefighters Relief and Retirement Fund moved from a small net position asset of approximately $427,000 to a modest net position liability of $1.3 million in FY25.

They remain $99.8% funded.

For the Houston Police Officers Pension System, they experienced an increase in net pension liability liability rising from approximately $374 million to $501 million and is 94.3 percent funded.

And the Houston municipal employees systems showed an improvement with this net position liability declining from 1.5 billion to 1.2 billion and a funded ratio of 79.6 percent.

Overall, the city's total pension liabilities declined by approximately 114 million from 1.8 billion FY24 to 1.7 billion in FY25.

And looking at the OPEB, the city's OPEP liability declined to 1.7 billion from 1.93 billion in the prior year.

So kind of wrapping it all up, while the city's net position increased by 1.5 billion in FY25 billion, that improvement was largely in investment in capital assets, and it's not really a flexibility for the budget.

So again, those are your streets, buildings, bridges, and represent long-term investments that support service delivery, but but cannot be used to fund operations or close budgetary gaps.

And with the general fund, we are still seeing a decline in revenue and an increase in expenditure.

So there still needs to be a strong focus on long-term financial planning to get to a structural balance and expenditure control uh remains critical.

So in the in the upcoming weeks, we look forward to sharing um our popular annual financial report, which is a much simplified version of the AC for to make it friendly for the citizens and easy for them to pick up.

Um so we'll we'll still working on that, but last year was our first year, it was very successful, so we look forward to continuing that trend.

I do want to give special thanks to my team in the controller's office financial reporting for their months of hard work.

Certainly want to recognize the finance department for their collaboration and to all the other departments for helping us get to the finish line.

So thank you very much.

And that concludes my report.

Thank you.

So thank you for that quick rundown.

I appreciate it.

Okay, Director Debaski.

Thank you.

Good morning.

This is the 5 plus 7 financial report for the period ending November 30th, 2025.

Fiscal year 26 projections are based on five months of actual results and seven months of projections.

For the general fund, our revenue projection is $41.9 million lower than the adopted budget and $2.6 million higher than the prior month.

The variance from the prior month projection is due to an increase in intergovernmental to reflect the utilization of unallocated ARPA funds for the purpose of revenue replacement.

To touch on sales tax, the sales tax receipts for the month of October were $78.7 million or about 6% higher than the same period last year, and represents about 9% higher than what we have budgeted for that period.

To meet the current estimate of $902 million, the remaining periods would need to come in about $3.65% below the prior year.

So we will continue to monitor that.

No changes are recommended at this time.

On the expenditure side, our projection is $9.5 million higher than the adopted budget and $3.4 million higher than the prior month, with the variance due to the $2 million increase for the Solid Waste Department for heavy trash pickup and a $1.3 million increase for police to restore critical positions.

With the revenues and expenditures together, we're currently projecting the ending fund balance to be $353 million, which is about $800,000 lower than the prior month and represents $13.9 percent of estimated expenditures, not including debt service and pay as you go.

That fund balance is $162 million above the target of holding $7.5% of expenditures, not including debt service and pay as you go.

We're also projecting no changes to the enterprise special revenue and other funds.

And I just wanted to uh touch on the audit again, um, definitely echoing everything that um Mr.

Jones said the FY25 audit was released successfully.

It was a clean audit with zero findings, which is one of our key performance indicators that we track in the finance department.

Um there were definitely some challenges uh with this particular audit.

We did transition to a new audit firm, which is recommended to transition to a new audit firm from time to time by the GFOA.

So after going through an RFP process, this is our first year with our current audit partner uh who is Weaver.

Um of course, when you go through uh a transition process with the new auditor, they do have a lot more questions.

They're digging, they're trying to understand.

So the team did a really great job.

Both the city departments, the finance department, of course, the controller's office also works hand in hand with the new partner.

Which with the new partner, like I mentioned, there is significantly more additional scrutiny as you onboard the new uh audit firm.

Of course, we have to adopt to their firm's methodology and the approach with the new auditor.

Um there were also, of course, you know, several retirements in key positions at the city due to the VMARPO, but due to just normal attrition.

Um so we did have uh the rest of the team really stepped up to the challenge.

Um the finance department's financial reporting and operations division um helps to liaise with the other departments at the city and works hand in hand with the controller's office.

They also handled a single audit process uh which pertains to the federal and state grants, um, which was also completed and filed timely.

Um as I mentioned, uh we had the new audit partner and they were very complimentary of the of the team with the new uh firm with the audit partner saying that the team was very impressed with the city's accounting system and environment.

Um so I feel really good about the collaboration we had both internally and with our our partner.

Um so congratulations to Will and his whole team as well.

It was a it was a task to get here, and we definitely have lessons learned.

So we're we're already planning to meet to talk about those to get ready for next year.

So that concludes my report.

Thank you.

Thank you, and and thanks for getting it on time.

I know at TML this year they made a big strong push that they're gonna be so serious about people that filed these late.

So I appreciate that getting done.

On the on the um the ARPA revenue replacement, that is this the end of the end of the ARPA uh operating the funds that we can use for operating?

So we're gonna continue to monitor um any time that we feel like the funds will not be expended by December 31st, 2026.

We still have the opportunity under the rules um put out by the Treasury Department that we can still put towards revenue replacement, but we are down to you know the smaller amount.

And is that the um is that the desired place for any ARPA funds that are unspent to go for revenue replacement, not for other type activities or other projects?

The other projects would have had to be obligated by December 31st, 2024.

Okay.

So all we're left with is revenue replacement for any of these unexpended funds.

Um Deputy Director Jones on the on the do you have any inform or any either of you have any information on the um critical vacant positions at HPD, the 1.3 million dollar increase?

Or is that do I need to just check with HPD?

I think HPD could probably give you a a better sense from the operational side of it.

Um but we did, you know, go through that request with them in the administration, and they were positions that they feel are critical to supporting the police operations.

Okay.

Um I do want to welcome Councilmember Fred Flickinger and staff from Councilmember Tiffany Thomas's office to the horseshoe.

And council member Kamen is online.

And staff from Councilmember Evan Shabazz's office.

Um do any of my colleagues have any additional questions about the monthly financial report?

Um, with Councilmember Kamen's office.

Thank you so much for your presentation and thank you for the report.

Um can we see coming to the full council the budget amendments that were voted out of the last budget and a fiscal affairs committee?

I'll have to follow up with the administration on that.

Okay, thank you so much.

All right.

Seeing no other questions, we will move on.

Thank you very much for your presentations.

We will see you tomorrow.

And we will move on to our next agenda item.

I'd like to welcome Houston Public Works as Deputy Director Samir Salanke and Assistant Director David Wardlow to present an overview and history of stormwater fund spending.

Welcome.

Thank you.

As you as you know, there's been a lot of discussion about this fund recently.

So we're interested in digging in a little deeper.

Absolutely.

Thank you, Chair, Council members and staff.

My name is Simeir Solonki, I'm the chief financial officer for Houston Public Works.

I'm joined by our assistant director in Houston Public Works, Jamie Wardlow, which everybody knows who he is.

Um let's go to move to the next slide.

So just to give you sort of an overview and the breadth of what Public Works uh is in charge of.

We've got 16,000 miles of streets, 3,900 miles of storm drains.

We treat 170 billion gallons of water on an annual basis, 2500 traffic signals, 20 to 900 miles of roadside ditches, 6.2 million water bills sent per year, 550 permits.

We handle $3.5 billion with a B on an annual budget with about 4,000 employees in public works.

Next slide, please.

So the focus and purpose today is to kind of look at stormwater funding, the history uh of the uh stormwater as well as its um historical revenues spending and its operational uses.

This is based on the briefing that was required uh requested by City Council.

Next slide, please.

By the way, just to mention the stormwater fund was established in the early 90s, roughly about 1992.

So the purpose and to give you context of stormwater funding, it supports drainage operations and maintenance citywide, uh, maintains open and closed drainage systems, and we're going to go through a few pictures to present to you that to you as well.

Uh protects public safety and reduces flood risk.

And the fund itself primarily acts as like a pass-through account.

Next slide, please.

Spent a little bit of time on this so that we have a uh a good overview of of how the stormwater gets its funding.

This is sort of a funds flow.

It's a lot of stuff going on here, but focusing on the big box right there, stormwater fund.

It receives primarily its revenue from the combined utility system, which is Houston Water.

It also gets a uh portion of its revenue from the DDSR of group, and it's important to note that stormwater is outside of the DDSR group.

And then historically speaking, there has been some funding that is provided from the general fund, which has been discretionary, primarily related to the stormwater action team or us uh SWAT projects.

Um it's also important to note that the combined utility system, which was formed in 2004, allows for 8% of its gross revenues to be transferred for drainage related purposes.

And it's also important to note that when that transfer happens on a practical basis.

First, the utility will pay for its operations and maintenance, then it will pay for the first lien debt, the second lead debt, all of that.

And at the very bottom bucket, we have a fund called 8305, which is a we call it a either a savings account or a general purpose fund.

Then that funding gets transferred into the stormwater fund for drainage related purposes.

Okay.

Move on to the next slide.

David?

Great.

Thanks, Samir.

Um, this graph is just to give you that historical perspective on the revenues coming into the stormwater fund, and it aligns colorwise with that previous graph, so you can see the heavier reliance of the stormwater fund on those transfers from the combined utility.

Um as you can see uh a significant uptick in the last few years.

That is primarily driven by the implementation of the roadside ditch reestablishment program.

So kudos to everybody in getting that program stood up, as well as more recently uh taking on those uh activities uh from the Department of Neighborhoods and what we're likely going to get asked about here too is the increase level of activity uh in uh removing of uh dangerous buildings.

Okay, let's move on to the next slide.

Yeah.

So give you a quick overview on the expenses.

Umwater fund does manage uh closed storm sewer drainage system maintenance and then your open ditch drainage system maintenance um as well.

And some of the details behind that, it'll handle things like stormwater collection, which is inspection, cleaning, flushing and repair, junk and expression removal.

Um let's move on to the next slide.

You can kind of see some of the debris and other junk that's been accumulated that blocks the drainage system there as well.

Pretty good representation there as well.

Let's move on.

Okay, move on to the next slide.

We can move on to the next slide.

And this is some of the demolition work um that's been done as well.

Um you can see some of these internal uh crews that have been used from Houston Public Works for uh uh some of these building demolitions um recently that have been conducted.

So um it also supports functions and internal transfers within the Storm Water Fund as well.

Next slide.

All right, so we've kind of walked through what how we pay for the stormwater fund and the activities that the stormwater fund engages in, which is really those OM heavy activities.

This is the breakdown of those expenses.

Um apologies for trying to present a lot of information in one graph, um, but uh any distance away from zero is positive here, right?

Above the line, we're trying to show those activities that are really those service providing functions.

So the work that is ongoing for the storm sewer maintenance and operations, the open systems of ditches and basins, vegetation management, our stormwater quality enforcement group, and then you see in 2026 budget that allocation of $25 million for the increased level of demolition activity.

Below the line is kind of the operations or the kind of the more back office-y kind of stuff, so the ongoing debt service that comes out of the stormwater fund as well as administrative and support.

Again, you see that uptick coming from early 23 going into 24, 5, and 6 for the implementation of the roadside ditch reestablishment program.

That is what is really driving that increase in the orange bar that you see, right?

As well as effects of inflation and other factors uh driving a little bit of cost increase.

We did highlight here uh the amendment uh that was passed for this budget uh 7.02 for the 20 million for a roadside ditch there, just to give you an indication that that that increase from 25 to 26 was juiced a little bit in the budget uh by that amendment.

Okay.

Next slide.

Oh, that's yeah.

Um this is to give you an idea of the FTEs that are with housed within the stormwater fund itself.

Um so what's in the background, so the area kind of graphic is the budgeted level of FTE positions.

The bars in front are those actual positions.

Uh so you can see we have the actual 325.

Um we did also note, though it is not in the stormwater fund, the FTEs that the Stormwater Fund is paying for in 2301 uh due to the consolidation of the inspectors from uh Department neighborhoods.

So you can kind of see we increased the staffing level in the Stormwater Fund because of the ditch re-establishment program going into 25, and that's pretty flat going to 26, right?

The increase for 26 is really due to that consolidation uh of Don.

Next slide, please.

All right.

This primarily focuses on um previous debt that was issued for stormwater, uh stormwater related capital needs.

And as you can see, that's been going on since about 2007, and the uh major trickle down uh will take place in 2031 with uh pretty significant drop out in the 2040 time frame.

And again, this is previous debt that is continuing to be paid down over a period of time.

We're gonna see that drop off um um over the next few few years.

Next slide, please.

All right, we wanted to give you a picture, just some illustration.

It is a little difficult to try to combine all the activities and give you some sense of this, but the stormwater fund is doing work citywide, right?

It supports the proper and efficient operation of the drainage system across the city.

So we want to give you a graphic of this is the work orders from the last five years of activity from 21 through 25, uh kind of illustrating that we're doing, you know, depending on the types of drainage systems that serve each area of the city, uh, more closed system or open system work, uh, but you're seeing that as well as vegetation uh control throughout throughout the city.

Next slide, please.

So again, a few key takeaways.

Stormwater fund supports a wide range of drainage activities.

Spending is focused on operations, maintenance, and risk reduction.

The fund operates as a pass-through account aligned with approved uses.

The activities support public safety and flood resilience.

That concludes our presentation, and we'll take questions.

Thank you very much.

Mayor Potem.

Thank you for your presentation.

And I know that you are aware of the decision that we have to make this week.

What I am trying to figure out if you can walk me through.

We had uh one slide that talked about the Don consolidation, the transfer to 2301.

I know that we depended a lot on Department of Neighborhoods for demolitions.

Um we talked about the transfer and the moving of inspectors to public works.

Um was any of that discussion also to include us moving those uh the process of of demo to this fund as well, because we it seems like we moved the Department of Neighborhood functions.

And so a big function of Department of Neighborhoods was demolition.

So does that also transfer to our ability to pay for the functions of the Department of Neighborhood?

If we moved all the people there, do we also transfer the functions of the Department of Neighborhoods to be able to pay?

The short answer is yes.

That was the idea when transferring over the employees that the functions will be taken over as well.

Okay.

Thank you.

Staff from Council Member Cayman's office, Kate.

Thank you.

Looking at slide, slide 10, the stormwater fund expense overview.

Um, I see FY26 is the first year with demolition being funded by the stormwater fund.

Is that correct?

We haven't used this fund before for demolition.

That's the first year where it's been sort of called out for building demolition, but I will tell you that historically speaking and in practice, um, Houston Public Works has uh removed buildings that have been destroyed by fire, for example.

Uh we haven't specifically called it out within the budget, and so in order to be a little bit more transparent, it's been called out via uh different cost center or different accounts so that people are actually able to see that this funding is being used for a dangerous building demolition.

But I will tell you that in practice, historically speaking, uh firefighters or the fire department has called Houston Public Works to help remove buildings that have been uh heavily damaged by fire previously.

Councilmember Ramirez.

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

Uh question before the consolidation of Department of Neighborhoods under public works, when Department of Neighborhoods uh demoed buildings, how how was that paid for?

What fund did that come out of?

Building inspection.

Permitting, right?

I'm I'm not exactly sure where that was held, but we can get that answer for you.

The transfer in was to the transfer in this year in this year's budget uh shows that it goes into the permitting sector, it's a transfer into the permitting to HPC, which had never been done before.

So I am assuming that Melissa that that maybe came from code enforcement building and you know permitting.

So there are a couple different avenues historically.

Don.

Some other demolitions were done using debt that was issued certificates of obligation, which we repay with general fund dollars.

Uh that's programmed in the CIP in previous years.

Um then also, like you mentioned, the the building inspection fund, I believe, was also part of it.

And so we're no longer relying on that sort source of funding where we're going to take it out of stormwater?

We do have to finish using the certificates of obligation that were already issued, the debt that was already issued because it was issued for that specific purpose, and we can get you a figure on how much that is left.

Okay.

Um let me ask you a question about something out of FY26 uh budget, the big budget book we got had a bullet bullet point on the stormwater fund page that said includes an additional 25 million funding to fund the demolition of unsafe buildings on behalf of Department of Neighborhoods.

Um this item on the agenda tomorrow is for how much the spending authority covers more than one fiscal year, right?

So it's current year spending, which I think is the 25, plus it has some capacity to continue into the following fiscal year.

So I think that's why you see the $30 million number that's on that's that's my understanding of what the item is uh on on Council's agenda.

All right.

And the bullet point said additional $25 million funding.

And this again is on the stormwater fund page.

Additional implies that there is already funds that are being used to demolish unsafe buildings.

Where were those funds coming from?

I think that's Sumir kind of illustrated within the stormwater fund itself, the Department had been asked to perform some of these demolitions before with its own in-house resources, primarily, some contractor, just within its routine operations getting a request from another department.

In this case, it is $25 million specifically set aside in the budget to perform that function through contractors.

That is why it is tagged specifically as additional $25 million for that purpose.

Sorry to interrupt, but that that goes kind of goes to your other question.

I think what Melissa said was some of the COs still didn't need to be used and and some of the ones that don't have a nexus with drainage, um, I am assuming will come from the COs or the building inspection fund.

Okay.

And let me you may not be able to address this, but when this item or an earlier version of it first appeared on an agenda, it was back in October, and we inquired about it at that time.

I believe we were told uh, hey, this is for uh asbestos abatement in in buildings that need to come down.

Um I am wondering about the the nexus if there is a nexus between the the buildings that Director Mackai spoke about in in December that are adjacent to our ditches and that that are responsible for material going to the ditches, whether those buildings all contain asbestos or how many of them contain asbestos?

I think we could follow up with you on that.

But obviously, if we are going to demolish a building, we have to remediate the situation that's there for hazardous materials, and that would include asbestos removal if we are going to take the building down.

Thank you.

Councilmember Vice Chair Castillo.

Thank you, Chair, and thank you both for the information today.

So looking at the slides, obviously we see debris in ditches, and you know, we've seen and heard the examples previously of uh abandoned dangerous building collapsing into a ditch or damaging um inlet infrastructure.

What process will take place that will determine when this pot of money is used to bring down a building that is impacting drainage?

I think ideally there have been identified, already identified dangerous buildings that are out there that are impacting trainage generally, and so there is a plan in place to kind of go through and identify which has a in terms of priority.

Um so once that takes place, essentially there's a list of dangerous buildings that are out there that need to be taken down that are impacting trainage currently.

And so public works is we move forward with probably most likely the uh uh most high priority buildings um and then moving forward that way.

So there's a lot of buildings that are out there.

And so we just need to identify which are the highest priorities and move forward that way.

I was saying, Councilmember, you have got the resource folks here.

I know that discussion is going on right now about what criteria we use to specifically identify which in that list have that logical nexus with stormwater, which ones would have to rely on other funding sources.

But um, to our understanding, a large number of them have that nexus, right?

So I think while that work is ongoing, uh we understand your interest in it.

Yeah, Councilmember Castillo, I do think that that um that is uh more of these are more of the financial people, but I think that operational question was brought up several times in our discussion before the holidays.

So I think there hopefully, Randy, is something being worked on to um that kind of criteria.

You don't have to get into it now, but um we'd probably like to see something in right in here.

Yeah, and I'll be I'll be very brief on that.

Uh we have a flow chart that is actually in development.

I am hoping to have that completed and certified to give to everybody next week.

But in large part, like everything that we do that is related to inspection, we rely on our inspectors.

And the inspectors will have a very rigorous process of documentation that goes into the decision-making process that clearly demonstrates that there is an existing nexus, and if there is no evidence of such, then we would use the other contracts that have been mentioned so far.

Thank you.

Thanks.

Any additional questions?

Okay.

Uh Vice Mayor Pro Tempek.

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

Um I don't have a lot of questions because um I met with the mayor's office last week and got all my questions answered.

But I was hoping that you could talk um a little bit more about the capacity um for public works for maintaining ditches.

The biggest takeaway for me from that meeting was that if we vote this contract down, and now we have this additional or $25 million that we are not spending on this, that we don't necessarily have the capacity then to shift it into maintenance of more drains and storm maintenance and what we are currently doing right now anyway, because so much of that would go into just kind of maintaining those ditches that are having the illegal dumping anyway.

So can you talk a little bit more about that?

Yeah.

Yep.

Can I tap in on that?

Go ahead and take a seat.

Go ahead and take a seat.

Yeah.

This chair looks more comfortable.

Um, that that's a great question.

Well, I think one of the things that you saw in uh in Samir's presentation here showed the resources that are from a personnel standpoint that are being funded by stormwater right now.

What you saw was the actual versus the budgeted, and that gap is widening as we increase the revenue into the fund as well as the expenses going out of it.

Uh this particular item that's kind of brought the genesis of this conversation is one for outside contract help to come in and do that, because we do not have internal resources.

And in fact, if you think about, for instance, the examples of where we support HFD to demolish a building after a fire, typically because the materials are flowing into other places, et cetera.

Um, we're actually taking our folks off task who are dedicated to ditch reestablishment and other regular maintenance activities to go in and support that.

So we want to have additional outside capacity right now while we are very aggressively trying to hire internal staff to help support the rest of those operations.

We're a little bit right now in a chicken and egg sort of situation of which one are we going to be able to get first in order to move forward.

Capacity is a problem because internally uh the departments at the lowest number of FTEs that we have had in probably a decade.

Um there's a lot of reasons for that, but we've also, through the restructure, we have become very aggressive in our hiring opportunities, and we have got a lot of talent that is very interested in joining us.

It's just a matter of time and how we can get those folks spun up and ready to go.

Thank you.

Councilmember Kamen.

Thank you.

Director H HPW, thank y'all.

Happy New Year.

Um back to Vice Chair Castillo's question about the criteria on which we're determining the nexus for the impact of flooding.

Uh I think you said that that criteria may be available, excuse me, the following week.

Is that correct?

Yeah, that our goal is uh I've seen early drafts of it, and we want to make sure that it is thought through all the way and polished and in a presentable format.

So my target is within hopefully the next seven to ten days, we'll be able to distribute that to Council.

Okay.

And I think one of the questions I have with that is this is coming back to council tomorrow for a vote.

And we haven't yet seen that criteria.

So the timing of this is a little I'm not comfortable yet.

I'm not there yet with this.

Uh in terms of engagement, when we have a big policy shift or a shift in how we are utilizing funds, there's normally stakeholder engagement.

Director, can you speak to what organizations the department or the administration worked with before this was proposed or while this was being proposed?

Well, I think a lot of the genesis of this goes all the way back to when we proposed this year's fiscal budget in the first place.

I mean, this was something that was clearly identified up front as we wanted to include that because of the uh inclusion of the Department of Neighborhoods into public works.

We knew that, and this goes to the Mayor Pro Tem's question, right?

Moving the people over was one thing, but we were taking all of the things the people were doing at the same time.

You know, that included not just building demolition, that included, you know, bandit signs, that included uh, you know, junk motor vehicles, and all of those things are the same sorts of activities that our commercial inspectors could have been doing, but we had this separation between commercial and residential.

So to that end, so that's notice, but did we engage with that end a lot of contractors?

A lot of the reason and why we made that integration in the first place was broad community engagement from the administration.

I won't speak for the administration on who they went to.

My job is to provide the operational nexus on how we're going to get it done.

Okay.

And that was the opportunity.

Got it.

So you are not aware of which organizations, if any, the city met with in this proposal.

And the reason I bring that up.

I couldn't answer that question for you.

Okay.

And the reason I bring that up, it's not look, we have blighted buildings.

We need to deal with dangerous buildings.

We have had buildings abandoned that have caught on fire even in District C.

But it's the question as to whether or not the fund for storm water fund can be used in this manner.

So we moved, you know, consolidation is important.

It's efficient, it is effective.

We moved on over, but we didn't necessarily handle the funding for that, and now we're trying to use a new type of funding.

Uh and that's really where my questions hinge.

Uh how much, and this may be more so towards staff.

Um we talked a lot about SWAT uh at the last council meeting, that we all have all of these unidentified uh excuse me, identified drainage projects that do not yet have a funding source.

Is there any way to quantify or calculate a ballpark of outstanding but identified or unfunded drainage projects that the city wants to do, whether that's SWAT, whether that's CIP.

I mean, I can think of millions of dollars in district C projects alone that have been identified, even that we have designed for.

Do we know have a way to estimate that?

Um I believe that's something that we can take a look at and estimate.

Um I know that a lot of the CIP and OMM is already built into the CIP budget as well.

Um so we can start there, but then um we can take a look and see what we can identify just from a citywide perspective and provide something to you.

Yeah, that would be helpful because again, and I'll wrap up, Chair.

Um we have a lot of funding needs at the city.

And this is one fund that is specifically for drainage.

So securing the ditches, clearing out ditches.

I'm so glad we brought up the new ditch re-establishment program, which was a big step forward for the city, and we have to fund that.

Uh, but we when we talk about the dollars needed to invest so that we're not kicking the can down the road on drainage, that's what this is for as well.

Yeah, and that your council member, your points your point's well taken.

I I will just highlight where the stormwater fund has been utilized in the past is for the maintenance of the system, right?

We have not used that towards large-scale CIP and expansion.

Um it's gone towards that maintenance part.

And I think where we find projects that typically are unfunded, it's because they become large CIP projects.

But but I understand where you are coming from.

Thank you.

Thank you.

Staff from Councilmember Thomas's office.

Good morning.

Thank you for your presentation.

Um is my understanding that there is a wide range of cost you know to demolish these buildings, both for residential and commercial.

But with that, are you able to provide a dollar amount that we are looking at for cost per demolition and how many buildings you might be able to demolish that have been identified that impact the stormwater drainage system?

Yeah.

The answer is no.

I don't think we can give you a cost base, even off the more than 2,000 we have on the list because each property is is so unique, you know, to the point David made earlier about asbestos abatement, for instance, we don't know which buildings are going to require additional remediation before we even get in there.

Some of them are going to have additional hazardous um survey that is required to be taking place as well.

So it is really difficult for us to give you an estimate on that.

You you did give an estimate at the at the couple weeks ago.

Yeah, it like an ordinary house.

If we just took down just an ordinary house, you are looking probably somewhere between 15 to 20,000 to get that out.

Um, just the demolition part.

Just the demolition part, right?

But we have had some ordinary houses that we thought were 15 to 20,000.

Did you get in there and all of a sudden it became 50 to 60,000 because of other things that you find, right?

So that is just on a house side.

On the commercial side, it is significantly more expensive.

Uh you'll you're talking typically six figures on up for each demolition there.

Uh SEMS Road, for instance, right?

That was $250,000 that it took us to do that one.

Okay.

Um basically this year's stormwater fund went up about $66 million from what we we have used to have.

Uh $41 million of that attributed to the ditch re-establishment program.

Certainly a valid expenditure.

Uh $25 million for this, this number went over, like I said earlier, to the building inspection fund, the transfer directly.

And and understand this comes from Houston water to stormwater to, you know, to build, you know, that's the transfer.

Um that was the $25 million.

There was also an $18 million increase, or I'm sorry, $18 million increase.

$25 million for permittee, $18 million increase, I guess just a normal increase in the financial management part, and then $16 million increase from special revenue fund.

Is that DDSRF?

I need to go to the U.S.

David.

David's nodding.

I assumed it was.

So I I kind of broke down where the increases were coming from from the C U.

S.

So an additional $60 million coming out of the C U.

S.

I appreciated very much your explanation, Samir.

If you go back to the busy slide, um, Helen, um with the with that the all water, you're saying all water and wastewater operations and maintenance covered first.

First and foremost.

Firstly in C US debt, next.

Secondly, in C US debt, next.

And then there's leftover funds.

So it's from these leftover funds that are going into the stormwater fund to for this.

So we can be assured with all our vast, incredibly growing monumental consent decree related, every single thing we need to be spending with all our leaks and all our problems in the CUS.

We are a hundred percent confident that we can take an additional sixty million dollars.

Some of that is normal.

This is but let's just say the twenty-five.

We can take that twenty-five million dollars.

Totally also understand we don't that wouldn't be even be in there for we don't have the capacity to do it for drainage.

But we're doing it's not it's not the least bit short-sighted to take that twenty-five million from our water.

And if I may add, Councilmember, um the operating budget for the combined utility system is in excess of two and a half billion on an annual.

Right.

And the and the fund balance is 1.3 billion.

I looked it up.

I mean the CUS on paper looks like it has a jillion dollars.

And this is why we are going to the water system on several things in our in our in our budget.

But we also are a city that has outdated infrastructure, leaky pipes, losing billions of dollars of gallons of water.

So my issue isn't so much because I have a better understanding that we're not taking away from drainage projects.

Correct.

Because we didn't have that $25 million in there or the capacity to do the extra drainage maintenance.

My issue now is the C US is the water system.

Because eventually what happens when you are not spending enough on everything we should be doing in the water system, the rates go up.

We need to go ask the ratepayers for more money, because we are spending what was designated for the C U.

S.

And I appreciate the 8 percent.

We are allowed to use 8 percent.

I don't think any of this is illegal.

I mean, I I trust that that this is this is a legal use of funds.

My my biggest concern is is the issues in Houston water.

And maybe I I think you can answer that in any way you want to.

I know right now we are taking care of all our business.

There will never be enough money to take care of everything we need to do.

But um I think that that is kind of where my uh where my uh nervousness about that has kind of shifted from a drainage taking money away from drainage to taking money away from the from Houston water.

Madam Chair, your your point's taken very well.

Uh and I want I want to assure everyone, you know, we have had these conversations well in advance, even of proposing last year's budget to get to that point.

Those were the very questions we asked.

A lot of it had to do with, and the question comes up each budget cycle, uh, Vice Mayor Pro Tem usually brings this one up, right?

What's going on with all this money that's sitting in a particular fund balance?

And our answer is always we don't have savings, we don't really have a fund balance.

Everything we could dedicate towards something.

But you get to a point in a particular fiscal year where you say, but we're not going to spend it this particular fiscal year right now because we don't have the capacity to do anything.

And at the same time, there's not a single project we are not going to do as a result of dedicating it to this side.

So let's see what we can do with some outside help right now.

Let's see what problems we can solve now.

We know it will take some time to recoup money off of liens, but we are also satisfied that the result of that process means that we don't have to replenish this fund every single year from stormwater money with $25 million year over year over year.

We would like to kick start the program now so that it can become effectively self-sustaining thereon out, and as we build the department, we can do more of those projects that come forward, and we deplete the fund balance as these huge capital projects like a new East plant, like expansion or replacement of our pipe system 3 percent every single year, that starts to come down as we increase our internal capacity to complete the project too.

Okay, I appreciate that.

Uh I'm I'm a little concerned also when, hey, we have been knocking down fire buildings with this fund for a long time.

I mean, what, you know, I mean, how many?

Like how much stormwater money has been spent knocking down buildings.

I mean, it's one to are these one-offs or 10 a year, or you know, uh I don't I don't appreciate just like, oh, we're now just calling it out, we have been doing it all along.

Because that was certainly not anything I was aware of that was being used for the stormwater fund.

So can you give a little bit more explanation on that?

Do you think I mean is this a regular practice for years and years that you've been knocking?

Is it just fire buildings, buildings that have caught on fire?

Using the stormwater fund, not other public works funds.

That's true.

You always go straight to the stormwater fund when you are called on to demolish something that's unsafe.

I think it's been the easy way in the past, and this precedes all of us in many capacities.

It's been the easy way in the past when you come across items that weren't budgeted to go to the revenue source that has capacity to pay for it, and stormwater has been that source.

Yeah.

And and like Councilmember Cayman says, there is no doubt these buildings need to come down.

And you know, I I understand and appreciate your looking under every rock for for that money.

Um I want to talk a little bit about the debt, Samir, if we could go to that slide.

Obviously, this was all pre-uh rebuild Houston debt that was issued because we stopped issuing debt for for storm drainage when we passed rebuild Houston.

So what what is the total debt associated with this debt service?

I'd have to get the I do have the number.

Um I would have to get back to you, but Melissa's got it, I think.

Yeah.

She has it.

Okay.

So this debt is separate from the debt that gets paid out of the 11.8 cents.

Yeah, that's that was.

Right.

So this is a separate, it is about 235 million that was issued over several series.

Was it issued like from the C US?

Is it C U.

S debt?

It is GO debt, general.

Okay.

Yeah.

General obligation debt.

It was issued in several series 2004.

I remember it was during Billy.

Yeah.

Okay.

It was in the early 2000s.

And what did you say the number?

Was the total amount issue, but it's but you can see it's been paid down since.

Okay.

And it's been steady.

We looked back over the years at about 16 million, and this year it's jumping to 25 million.

The debt service and other uses line.

Is that just a function of it's based on the amortization of the damage that was issued.

There's nothing about that.

No.

Okay.

And I will say, and I appreciate very much that, yes, the 25 million was in the budget book.

And you know, really when I read that, I thought there must be some big drainage issue with some building in the way.

You know.

I will also say there was a tax increase in the budget book.

There was an $18 million savings on contract spending in the budget book.

There's all kinds of things in the budget book that we get to scrutinize as our right.

We did not give up our right to scrutinize the spending.

And this might be my speech for tomorrow, sorry.

I'm just going to get it out today.

We we don't lose our right to scrutinize spending when items come before us in in in these this matter just because we passed the budget book.

So I'm putting it out there.

I won't say it again tomorrow.

Um that's all I have.

I I really, really appreciate.

Oh, we got more council members in the queue.

Councilmember Davis.

Thank you, Madam Chair.

Thank you guys for your presentation.

Question I have is uh how many liens approximately are we looking at uh direct maca?

How many?

You know, I know there are several buildings approximately.

So how many liens are we expecting?

Yeah, I mean simply put, if we demolish it, a lien will be placed there.

So if you look at the list of the backlog we currently have, there's more than 2,000 on there.

If we end up doing all 2,000 of those, then there would be 2,000 liens out there.

2,000.

Now I will tell you that when we go through the process of building demolition, there is uh it's not a short process.

Um there is a lot of involvement with ownership and others, et cetera.

Many times when we finally get to the doorstep of we've got the demolition order in hand, it's not uncommon for an owner to step up and say, I'm gonna tear it down myself because they can find someone to do it cheaper or whatever, right?

So none of that is even a promise that just because it's on the list and we have an order, we're going to actually accomplish the work, but we go through the process to get there.

We do not lean any of the work that goes into preparing to demo a building.

We only do it after the building is demoed itself.

Right.

So then what is the pay itemized from that?

Yeah, 100 percent of our expense.

100 percent.

Correct.

Right.

Would that also include some of that property that we know owners is going to walk away from or whatever?

It if we perform work on the property, we are going to lean 100 percent of the cost of the work done on that property.

Right.

Okay.

All right.

So we talk in 2000 at least.

Could be.

Okay.

Yeah.

Thank you.

And it's my understanding there is work being done that that we're going to speed up the lien process and get this money back into the equivalent.

Okay.

Well, we would all like to see more on that probably too.

Um, Councilmember Cayman.

Thank you.

Uh earlier as I was coming in, uh, our office had asked a question about, because now we have an allocated segment for demo, right, in the fund.

In the back and forth with Chair Alcorn just now, though, just to clear up the record.

Were we already using the stormwater fund for demolitions?

If so, how many?

For example, on average compared to what we're now allocating?

So can you clarify that?

Because now I'm Yeah.

Yeah, the answer is we have used it before.

It is difficult for us to quantify because of the way those transactions took place.

And that is, and this is the point I made in December.

To me, it was important that we were much more upfront and transparent with.

We want to dedicate this here now, and everyone knows where it's coming from, because we don't track that.

And there's a I mean, this is just one of many activities within the department for many years that it's not that we did it wrong or improperly.

It is just that we could have been more upfront with how those things had taken place.

The SEMS building that I showed you in December, for instance, was one that for sure I can tell you was used that utilized stormwater funding by way of a chargeback.

Um the pictures that David showed here where we supported HFD operations, all of those use stormwater funding.

But how many more?

You know, I can only tell you I know that we assist HFD dozens of times a year, and that's where the funding sources traditionally been.

Right.

And uh it would be helpful to understand further the scope of the Sims project because we keep leaning on that a lot because my understanding is it wasn't just the building, right?

There was a yard.

It was clearing the roadway, clearing the ditch.

Uh there was a ditch, there was an enclosed system, we removed the foundation of the structure itself.

There was a lot of trash that was hauled out of the building, uh regrading the land itself so that the sheet flow would work well after the fact.

Right.

So again, it would be helpful to understand the scope of some of what we are saying is precedent for this.

Because again, I raised the question, just because we did it doesn't mean we should have.

Right?

And I appreciate that we want to be more transparent, but that doesn't mean just because we were doing it one way, doesn't mean we should be doing it now.

And this is a very important conversation to have.

So it would be helpful to have those context of those examples.

And there's a last question with the amount allocated now.

We have a backlog of 2,000.

I am assuming that not all 2,000 are going to qualify given the parameters and nexus that were.

I've seen properties myself where absolutely certainly not.

Okay.

And but compared to how much we are allocating now versus if we were demoing a few each year before, I would like to understand, even if it is a ballpark, how much more we're now going to be allocating.

Does that make sense?

So just because one, we were doing something before doesn't mean we should be, but it would be helpful to understand what we how many we were utilizing previously, even if it was three, five.

I understand what you are saying.

You know, and public works has not been the building demo department in the past.

The Department of Neighborhoods was, they spent about a million and a half per year typically on that.

That's it, which was again when we presented this previously, 25 million was the a little bit of the wow factor for the city as a whole, and particularly to property owners who have neglected it for so long, this was a clear indication to them that the city was going to be serious about enforcement and moving forward on this because we were dedicating real dollars behind it.

Right.

And going back again to our our c what we're saying now is hey, since we consolidated Don, we need to use these funds.

But before I I just would like a better understanding of we were using the fund before, but Don wasn't involved then.

So it's not really matching up for me right now.

Can you re rephrase that for us?

We are now saying that because we're consolidating the Department of Neighborhoods, that was a function that they performed.

Correct.

So we're now going to use these funds because we have consolidated and now this is within the domain of public works.

But we were using what you're saying some of these funds before, even though Don was not within this.

Yeah.

And so I I I see I see where you're coming from.

I was very in artful when I said as we support HFD and knockdown buildings, that's not a typical building demolition process, right?

Um that's where we have supported in the past, but going through the process of you give property owners notice, time to cure, et cetera, that was a Department of Neighborhoods process.

When we absorb their people, we absorb the process as well.

And this was the funding source we identified in absorbing the process on how to move forward on activities they did.

Previously, their contracts were, as Director Dubaski mentioned, um, you know, geo obligations and other other funding sources, the building inspection fund, which is pretty well tapped out at this point, was a source of that assistance as well.

Stormwater did not support the Department of Neighborhoods prior to the consolidation.

Thank you.

Councilmember Martinez.

Thank you, Chair.

Um I think just for clarity as well, um, because public works always had handled uh habitability, right, which was commercial properties, and that is where some of the confusion, even as a staffer like who do you send out uh to inspect?

And uh I think the movement where Department of Neighborhoods were moving into public works was uh deeply appreciated by several district council members because at times you would always go back and forth.

Um there was dollars already being utilized from stormwater for demo or for fencing or for whatever needed to do to at least uh get a handle on what was going on in the property.

I think for me, I think it would be good to understand how much of it was being utilized already.

Um then uh just uh I think it's a it as as we move forward uh also that nexus identify identifying that process.

I know you are still trying to um finalize it, but any any uh verbiage that you can share with those now just to kind of set some ease would probably be helpful as well.

I appreciate this conversation.

I know I know we're uh the Chairwoman um has been focused on and and we're not getting rid of any projects because of this these dollars.

Um I will say that I am supportive of this uh because we do have several buildings.

We have had uh fires where squatters have been, we lost the firefighter last year, uh actually a year be prior uh because of this these types of uh buildings that have been left uh vacant.

Um so uh just so kind of uh sharing some of those less you know um you know details would be helpful as well in making a decision tomorrow.

We will work to do that.

Councilmember Ramirez.

Thank you, Madam Chair, and uh Director, just so I am clear.

So we are still being asked to vote on this uh item tomorrow before we get the criteria that you are in the process of developing.

Is that right?

Yeah, it is on the agenda for tomorrow.

That's that's absolutely true.

And um when when you develop the criteria and you have estimated that it will be seven to ten days, will Council be asked to approve that criteria, or are you just going to be informing us these are the guidelines that we will be using?

Yeah, generally, generally and and very respectfully, we we don't come and bring to council our operational uh processes for approval.

It would be in on an informed basis.

All right.

Thank you.

Thank you very much.

Very good presentation.

I think all of us have a much better understanding of the stormwater fund and its uses and its and its revenue sources and and how we are spending it.

So really appreciate your attention to this and um any public speakers that we have.

Jack Velinski is online on the monthly financial report.

On the monthly financial report, and feel free to feel free to go.

Jack, are you on?

Star six.

Star 6?

Hate saying that, you know.

It's like you're muted.

It takes me right back to COVID.

Star six and you are muted.

Okay, Jack, sorry, can't hear you.

Okay.

Who else?

Laura Gallery.

Laura Gallery in person.

Come on up.

Um I was having a very simple question in the uh presentation about the stormwater fund.

Um it was there was just a bullet point that said it improves public safety.

And I wanted to, while they are still here, maybe find out what they mean by that.

I think by maintaining our stormwater system, I mean that is a public safety issue, but then you I think that's they're nodding.

So I think that's that's the public safety issue to maintain adequately maintain our drainage system.

You know, flooding impacts safety and crime.

I think of public safety is about crime and law enforcement.

Right.

This is this is more public health, public safety, public keeping everybody safe from all things.

Thank you.

And welcome back and happy new year, Doug Smith.

Happy New Year, everybody.

A couple of comments that came up during the meeting of the day were kind of shocking.

Two thousand buildings that need to be demolished.

That's a little bit difficult to believe.

And then the comments you made, uh the uh there is a 1.7 billion dollar uh uh amount of money available in the uh consolidated uh fund, the water fund.

And my question regarding that was if there is all that money there, why isn't more work being done on the East plant, which seems to need probably all of that, uh if not more for what they are doing.

But in any case, um on page three of the uh report today, there's some comments that I or some figures that I just wanted to mention.

They talk about utilization of the unallocated ARPA funds for revenue replacement.

I mentioned this before, not for a couple of years probably, uh, but it's gonna be very interesting to see how they report that, because the city did not lose any revenue uh during COVID.

There was a very small drop, and then it continued right back up.

So I don't know how that is going to be reported, but I will be interested to see because they allocated a lot of money uh to that account.

And also I talked about this last month and I just didn't quite understand it.

The $52 million drop in property tax.

I think that relates to your proposal to increase uh property taxes that didn't get uh voted on.

Was that included in the budget?

I didn't realize it was included in the U.S.

Yes, that that amount so because of valuations, this was one of the years when our both the State and local CAP would allow us to have raised the tax rate 1.7 cents or something like that, and that is the $52 million.

It wouldn't have required a vote.

That is what we were allowed to raise it, and that not that is what we were allowed to raise it based on the tax caps.

So the revenue, the revenue projections in the budget book book included that $52 million.

So we basically voted on that during the decided not to do it.

Well then when the tax rate discussion came up, we we changed we have to do that.

Yeah, okay.

I didn't realize that your proposal was in the budget.

Uh, it was in the budget in the form of increased um uh in the in the line item of property tax fund.

And the final question, uh there's a line in here two million dollar increase in solid waste management department for heavy trash pickup.

Uh I don't know where that money went.

Uh all I know is it didn't go to my neighborhood.

Uh we had somebody from Solid Waste come to our super neighborhood meeting in November, and he indicated that there were trucks in our area, uh, and we expected things would be picked up.

And uh we have seen nothing for three months uh as far as that's concerned.

And if anybody uh could do something to get those trucks into the A-leaf neighborhood, it certainly would be appreciated.

And and we will be hearing from Director Hassan at this committee in February 3rd for that's his six-month you know update on on solid waste.

So I appreciate your comments.

Also, Samir, to to Doug's point, and um I would like some information on uh I know we have uh or Melissa too, we have requirements on the C US fund balance in both in our financial policies and probably debt debt covenants and all kinds of things.

So I'd like a better understanding of of what is required with our one point, you know, to keep maintain a such a high fund balance in the C U.

S.

I think there is reasoning for that, and I can share that with you, Doug, when when I get that.

And then one final thing.

Uh I didn't think uh I didn't realize this was going to be on the stormwater fund today.

I saw Samir and David gonna be here, and I thought, oh great, we're gonna get an explanation on the DDSRF.

I still I still would like to understand why we end the year with a half a billion dollars of unspent money in the DDSRF uh when there was so much to be done.

And I heard a comment about capacity.

Well, if it's capacity, then maybe we contract it out to people to get it done, would be my comment.

So that's all.

Thank you, Doug.

Thank you very much for your interest.

Um colleagues, that brings us to the end of our meeting.

Jack Velinski, we're gonna try one more time.

Um, I am sorry, I think there was a he was having an issue unmuting, and that might be on our end.

So I apologize, Jack.

If you want to email comments, I'm happy to get those out to everyone.

But I appreciate your channel.

We can't go.

Okay.

Okay.

Um colleagues on February 3rd, uh, like I said, we'll have uh the Director of Solid Waste come and give his kind of update on things going on at Solid Waste.

And also we're gonna have a discussion on the open space ordinance, which is the fees developers pay the in lieu of fee for park space.

We're going to be taking a look at revising and improving that ordinance.

So this is going to be the first of a series of meetings on that on that topic.

I appreciate everyone's attention.

Happy New Year, and see ya in a couple hours.