OPENPUBLICA · PUBLIC MEETING RECORD
Record of Proceedings

Houston Budget & Fiscal Affairs Committee Meeting - March 3, 2026

Committees and Commissions — Tuesday, March 3, 2026
BodyHouston, Texas
SessionCommittees and Commissions
DateTuesday, March 3, 2026
StatusFILED
Video Record
0:00 / 1:48:37

Transcript — Verbatim
0:00

Colleagues, I have Vice Chair Mario Castillo, Councilmember Twila Carter, staff from Councilmember Ed Pollard's office, Councilmember Joaquin Martinez, Vice Mayor Pro Tem Amy Peck, staff from the Mayor Pro Tem's office, Councilmember Julian Ramirez, staff from Councilmember Mary Nhuffman's office, and staff from Councilmember Abby Kaman's office.

0:22

Welcome all.

0:23

And once again, we have a full agenda, and we're going to get right started with uh started right with the with the monthly financial report.

0:29

All right.

0:30

Uh good morning, Madam Chair and members of the committee.

0:33

Thank you for the opportunity to provide the financial update for the period ending January 31st, 2026.

0:40

And the general fund for the fund balance, we're projecting an ending fund balance of about $336 million for FY 2026 or roughly 13% of expenditures less debt and pay go.

0:53

That's about $17.5 million lower than the finances estimates, mainly due to a more conservative revenue projection from the controller's office.

1:01

We remain above the city's reserve target with about $145 million above 7.5% of total expenditures, excluding debt service and paygo.

1:12

With that context, revenues and expenditures remain unchanged this month.

1:16

So I'll move on to the enterprise funds with aviation non-operating revenues increased by 20.2 million due to land sales.

1:24

As a result, operating transfers to the airport improvement fund increased by the same amount.

1:29

We are projecting no changes from the previous month's report and the other enterprise funds.

1:34

So moving on to 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 the rating agency's guidance of 25 percent.

1:49

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.

2:00

Thank you very much, and that concludes my report.

2:03

Thank you.

2:04

Paula Good morning.

2:12

This is seven parts five financial report for the period ending January 31st, 2026.

2:18

Fiscal year 2026 projections are based on seven months of actual results and five months of projections.

2:26

For general fund, our revenue projection is 41.9 million lower than the adopted budget and remain unchanged from PIOMAN.

2:36

For the sales tax receipts for the December will 88.1 million.

2:41

So in order to meet the current estimate of 92.3 million, the remaining period would need to come in 8.68 percent below prior year.

2:54

For our expenditure projection is 9.5 million higher than the adopted budget and remain unchanged from PIOMED.

3:03

We are currently projecting the ending fund balance of $353.5 million, which remain unchanged from higher month, and 13.9 percent of estimated expenditure listed service and pay as you go.

3:19

The fund balance is 162.3 million above the targeted seven and a half percent of expenditure, excluding debt service and pay goal.

3:29

And we agree with the controller projection for aviation that non-operating expense increase by 20.2 million due to higher than anticipated land sale.

3:40

As a result, operating transfer increase by 20.2 million.

3:45

That's conclude our report.

3:47

Thank you.

3:48

Thank you.

3:48

I don't see anyone in the queue.

3:50

These this is pretty much unchanged from last month.

3:52

So really appreciate your comments.

3:54

We will move on to the m to the upcoming financial transaction.

3:57

Thank you, Deputy Director Jones.

3:59

Appreciate your time here.

4:12

Welcome Elvira Altaveras, who will be presenting for us.

4:17

Also like to welcome Councilmember Alejandra Salinas to the horseshoe.

4:23

Is this it's on, yes.

4:27

Good morning.

4:28

My name is Silvaro Thiberos, and I'm here to present the upcoming financial transactions uh on behalf of the financing working group.

4:36

Uh we only have one transaction that we'll be talking about today.

4:40

Uh this transaction pertains to the general obligation commercial paper program series K1.

4:49

Next slide, please.

4:52

On slide three, gives you a summary of the geo-variable rate exposure that the city has.

5:16

Uh, with uh RBC Bank and expires in 2030.

5:23

We also have the Series K2, also for 200 million with the same provider and same expiration date.

5:29

Next slide, please.

5:31

Uh just to give you a little bit more background on the Series K1 and K2, they are appropriation only facilities and support the DDSRF program for the city's drainage and street infrastructure.

5:44

Um, they allow us to enter into contracts with various vendors to implement the Bill Houston Forward Capital Improvement Plan.

5:51

Since Bill Houston Ford is a past you go program, we don't draw on these lines, they only use uh they're only used to establish appropriation capacity, so we can certify the funds and move contract forward.

6:02

Uh then when the invoices come in, we start paying um paying them cash.

6:08

Uh the plan for DSRF funding is first we are to use it to pay down existing street and drainage debt that was used prior to the implementation of Built Houston Forward, previously known as Rebuilt Houston.

6:21

And as we continue to pay down the debt, we are freeing up funding for more pay as you go projects.

6:27

Additionally, since the approval of the Jones settlement, the general fund will be transferring approximately additionally $100 million annually.

6:35

So as more projects come online, we anticipate additional appropriation capacity will be needed.

6:41

Um pursuing this transaction in order to appear before city council and request your approval.

6:50

Unless my place.

6:53

Um for an additional um $300 million increase and extension.

Discussion Breakdown — Share of Meeting
Water And Wastewater Management███████████████████████████27%
Parks and Recreation█████████████████████21%
Budget████████████████████20%
Public Health█████████9%
Engineering And Infrastructure███████7%
Affordable Housing█████5%
Procurement███3%
Public Engagement███3%
Fiscal Sustainability█1%
Summary of Proceedings

Houston Budget & Fiscal Affairs Committee Meeting - March 3, 2026

The Budget and Fiscal Affairs Committee of the Houston City Council met on March 3, 2026, to receive financial updates, discuss proposed amendments to the Open Space Ordinance, review the city's electricity exposure, and receive an update on the East Water Purification Plant project. The meeting included public testimony and multiple presentations from city staff.

Monthly Financial Report

  • Deputy Controller Paula presented the financial update for the period ending January 31, 2026. The general fund ending fund balance is projected at $353.5 million (13.9% of expenditures less debt and pay-go), which is $162.3 million above the targeted 7.5% reserve. Revenues are projected $41.9 million below the adopted budget; December sales tax receipts were $88.1 million, needing to come in 8.68% below prior year to meet the current estimate of $92.3 million. Expenditures are $9.5 million above the adopted budget.
  • The controller's office projected an ending fund balance of $336 million (13% of expenditures) for FY 2026, $17.5 million lower than earlier estimates due to more conservative revenue projections from the controller's office.
  • For enterprise funds, aviation non-operating revenues increased by $20.2 million due to land sales, with a corresponding increase in operating transfers to the airport improvement fund.
  • The city maintains a policy of no more than 20% of total outstanding debt in variable rate structure, in line with rating agency guidance of 25%.

Upcoming Financial Transactions

  • Deputy Director Silvaro Altiveras presented a proposal to increase the Series K1 General Obligation Commercial Paper program by $300 million (to $500 million total) and extend it, with Series K2 remaining at $200 million, bringing total appropriation capacity to $700 million for drainage and street infrastructure under the Built Houston Forward program. The lines are used only for appropriation capacity; no draws are anticipated. The proposal will go to City Council on March 18, 2026.

Open Space Ordinance Amendment

  • Parks Director Kenneth Allen presented on park sector revenue disparity. Since 2007, over $100 million has been collected in the Parks and Recreation Dedication Fund across 21 park sectors. 53.5% of total revenue is generated by just five sectors (Sector 14 in orange brought in $21 million; Sector 3 around $7 million). Only six park sectors meet the national benchmark of 10 acres of parkland per 1,000 residents. To address disparity, staff recommended amending Chapter 42 to allow up to 30% or more of park dedication fund revenue to be strategically deployed citywide.
  • Planning Director Von Tran outlined steps to comply with Chapter 212 of the Local Government Code. Recommendations include: adopting the lower, more straightforward fee calculation option for multifamily; considering a fee-only approach for multifamily (to avoid city paying the delta between fee and land value if land is dedicated); and extending the three-year obligation window for spending funds. Proposed timeline: final redline ordinance by April 23, Planning Commission presentation April 30, public hearing May 14, another committee presentation June 2, then City Council.
  • Key clarifications: No fee increase is proposed currently; the fee remains $700 per unit. The 30% redistribution would allow funds from high-revenue sectors to be used in underserved areas.

Public Comments on Open Space Ordinance

  • Mike Dishberger (San Castle Homes, representing Greater Houston Builders Association) expressed willingness to consider a fee increase but called for transparency on past spending of park dedication funds. He opposed large increases, noting that every $1,000 increase in costs removes 2,400 families from home affordability in Houston. He suggested redrawing sector lines rather than just redistributing 30%.
  • Taylor Valley Presley (Coalition for Environment, Equity and Resilience) supported the 30% redistribution and urged that funds be used for land acquisition and park expansion. She requested HPARD share a detailed accounting of funds per sector.
  • Pastor Deb Bonario Martin (Super Neighborhood 45, representing 60,000 stakeholders in District H) questioned the criteria used to create park sector disparity map and requested a meeting with parks and arts committee. She noted her area is underserved and disputed its moderate-need designation.

Understanding Houston's Electricity Exposure

  • Deputy Director Will Jones presented on the city's electricity costs. The current contract with Reliant ($640 million total for up to 7 years) is in its first one-year renewal option, with a 90% rate increase compared to the initial fixed rate. Approximately $530 million has been spent/encumbered; $110 million remains in spend authority. FY 2026 projected spending is $123 million, so the remaining capacity may be insufficient, leaving a potential gap of $10–20 million in FY 2027.
  • About 50% of electricity costs are pass-through costs (transmission/distribution, ERCOT, taxes). The renewal folded many ERCOT costs into the fixed rate. General fund costs have shifted: streetlight costs now come from the dedicated drainage street renewal fund, not the general fund. The general fund electricity costs in FY 2026 are about 40% higher than before.
  • Key takeaways: The city must plan for a new electricity procurement process, as the current contract ends in 2027. Long-term costs from Winter Storm Uri, Hurricane Beryl, and the Derecho will continue impacting rates.

East Water Purification Plant Update

  • Deputy Director Samir Solanke presented an update. A 2021 condition assessment found that less than 1% of assets at all three plants (Plants 1, 2, and 3) are estimated to be operational in 20 years. The plant's average daily production is 239 million gallons per day (MGD) versus rated capacity of 362 MGD. The city is proceeding with a new 360 MGD facility and rehabilitation of Plant 3 (180 MGD) to achieve combined capacity of 540 MGD, meeting demand for 40 years. Plants 1 and 2 will be rehabilitated to last until 2032 and will not be decommissioned as previously thought.
  • Budget: Enhancement project (new plant) estimated at $4.2 billion; Plant 3 rehab at $250 million; total $4.45 billion. Funding: $966 million from Texas Water Development Board SWIFT loan (14% below market rate), over $2 billion from federal WIFIA program (deferred payments for 5 years post-completion, then 30-year repayment), and remaining $1.176 billion from cash and market financing. The WIFIA application is in process; a letter of interest has been approved.
  • Timeline: 180 MGD operational by April 2032; full 360 MGD by August 2033; final completion January 2034. Construction manager at risk (CMAR) delivery method will be used to accelerate delivery and provide cost certainty.
  • Public Works Director Randy Mackay emphasized the project is not optional due to risk of catastrophic failure; it keeps him up at night.

Public Comments on Other Matters

  • Doug Smith questioned why the city focused on the Northeast Water Plant (where Houston only gets 16% of water) rather than the East Plant, and requested detailed accounting of the $1.3 billion CUS surplus and unspent DDSRF funds. He also noted a discrepancy between budgeted and projected fund balance ($380M vs $480M).
  • Bill Kelly praised the controller's office for work on electricity rate oversight and criticized state policies that allow CenterPoint to pass costs directly to ratepayers, reducing local accountability. He urged council to meet with Tina Paez's team on rate hearings.

Key Outcomes

  • The committee received all presentations and public comments; no votes were taken.
  • The Open Space Ordinance amendment will proceed through the proposed timeline: Planning Commission hearing on April 30, public hearing May 14, and back to committee June 2, then to City Council.
  • The Series K1 commercial paper increase request will go to City Council on March 18, 2026.
  • Staff will provide a detailed accounting of park dedication fund expenditures and the CUS fund balance allocation, as requested by speakers and council members.
  • The next Budget and Fiscal Affairs Committee meeting is scheduled for March 31, 2026.

Meeting Transcript

Colleagues, I have Vice Chair Mario Castillo, Councilmember Twila Carter, staff from Councilmember Ed Pollard's office, Councilmember Joaquin Martinez, Vice Mayor Pro Tem Amy Peck, staff from the Mayor Pro Tem's office, Councilmember Julian Ramirez, staff from Councilmember Mary Nhuffman's office, and staff from Councilmember Abby Kaman's office. Welcome all. And once again, we have a full agenda, and we're going to get right started with uh started right with the with the monthly financial report. All right. Uh good morning, Madam Chair and members of the committee. Thank you for the opportunity to provide the financial update for the period ending January 31st, 2026. And the general fund for the fund balance, we're projecting an ending fund balance of about $336 million for FY 2026 or roughly 13% of expenditures less debt and pay go. That's about $17.5 million lower than the finances estimates, mainly due to a more conservative revenue projection from the controller's office. We remain above the city's reserve target with about $145 million above 7.5% of total expenditures, excluding debt service and paygo. With that context, revenues and expenditures remain unchanged this month. So I'll move on to the enterprise funds with aviation non-operating revenues increased by 20.2 million due to land sales. As a result, operating transfers to the airport improvement fund increased by the same amount. We are projecting no changes from the previous month's report and the other enterprise funds. So moving on to 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 the 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. Thank you. Paula Good morning. This is seven parts five financial report for the period ending January 31st, 2026. Fiscal year 2026 projections are based on seven months of actual results and five months of projections. For general fund, our revenue projection is 41.9 million lower than the adopted budget and remain unchanged from PIOMAN. For the sales tax receipts for the December will 88.1 million. So in order to meet the current estimate of 92.3 million, the remaining period would need to come in 8.68 percent below prior year. For our expenditure projection is 9.5 million higher than the adopted budget and remain unchanged from PIOMED. We are currently projecting the ending fund balance of $353.5 million, which remain unchanged from higher month, and 13.9 percent of estimated expenditure listed service and pay as you go. The fund balance is 162.3 million above the targeted seven and a half percent of expenditure, excluding debt service and pay goal. And we agree with the controller projection for aviation that non-operating expense increase by 20.2 million due to higher than anticipated land sale. As a result, operating transfer increase by 20.2 million. That's conclude our report. Thank you. Thank you. I don't see anyone in the queue. These this is pretty much unchanged from last month. So really appreciate your comments. We will move on to the m to the upcoming financial transaction. Thank you, Deputy Director Jones. Appreciate your time here. Welcome Elvira Altaveras, who will be presenting for us. Also like to welcome Councilmember Alejandra Salinas to the horseshoe. Is this it's on, yes. Good morning. My name is Silvaro Thiberos, and I'm here to present the upcoming financial transactions uh on behalf of the financing working group. Uh we only have one transaction that we'll be talking about today. Uh this transaction pertains to the general obligation commercial paper program series K1. Next slide, please. On slide three, gives you a summary of the geo-variable rate exposure that the city has. Uh, with uh RBC Bank and expires in 2030. We also have the Series K2, also for 200 million with the same provider and same expiration date. Next slide, please. Uh just to give you a little bit more background on the Series K1 and K2, they are appropriation only facilities and support the DDSRF program for the city's drainage and street infrastructure.

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