Six budget and fiscal affairs committee.

I'm Sally Alcorn, Chair of this committee.

I call this committee to order and would like to welcome all council members in attendance.

We have Vice Mayor Pro Tem Amy Peck, Councilmember Fred Flickinger, Count Vice Chair Mario Castillo, Councilmember Julian Ramirez, Councilmember Twilek Carter, and staff from the Mayor Pro Tem Martha Castex Tatum's office in attendance.

Thanks to all of you.

If there's any members of the public that would like to participate in public comment, there's a sign-up sheet right there at the front.

Feel free to do so, or you might have already signed up online.

Today's agenda we'll have the monthly financial report.

We'll have the audit division present from the controller's office.

We'll have an overview of multi-family the multifamily recycling pilot program.

Welcome those from Solid Waste.

And before we get started, just a few updates.

As you know, in this committee, we've been discussing the open space ordinance.

And during the last budget and fiscal affairs committee meeting, some of you requested additional information on spenditures from Fund 4035.

This is the fund that holds the park dedication fee.

The fee in lieu of.

This information that I got from H.

PARD has been distributed to council members last week on March 24th.

It's also been uploaded to the Budget and Fiscal Affairs website for public view.

So important dates to on this topic of the open space ordinance.

By ordinance, they have they present to the planning commission, and that will be done on April 30th.

Then May 14th, there will be a public hearing at the Planning Commission on the open space ordinance.

There could potentially be an additional hearing on May 28th, and then we'll look forward to that ordinance coming to City Council on June 2nd.

I mean to BFA.

And um and then a presentation June 2nd to BFA, and then it will go on to City Council.

Also, it's about to be budget time at the City of Houston.

So the budget will be released on May 5th.

On May 6th, uh we will get the five-year forecast.

May 12th through the 19th will be the budget workshops, and Jordan will get all this to you.

You don't have to like scrounge to write it down right now.

But May 16th, we'll have a budget town hall at Fondy Rex Center.

May 20th, there will be a public hearing at 9 a.m.

on the budget.

May 20th also, there will be a virtual budget town hall at 6 p.m.

That uh my vice chair Mario Mario Castillo and I will be doing those two town halls.

May 27th, Council members will submit amendments here at the horseshoe, and June 3rd will be the budget vote.

And again, we'll we'll have all these dates emailed to you, but just wanted to give you a you know overview of what's coming.

Also, you should have received an email from Jed Greenfield last week announcing the launch of the Strategic Purchasing Division Spend Connect Dashboard.

That is a centralized spend analysis dashboard designed to provide a clear, comprehensive view of how public funds are utilized across all city departments and procurement categories.

This tool brings together procurement, contract, and expenditure data to create a single source of truth for monitoring financial activity and supporting data-driven decision making.

This will be a primary tool for our category councils as we make strategic decisions.

You know how EY had those categories all lined up.

This is now how they'll be deciding about contract management.

To help they're gonna have a couple, if you want to learn more about this, there's gonna be a workshop.

H SPD is going to give April 1st from 230 to 330, and then April 8th from 10 to 11.

Those two workshops will be offered if you're interested in watching those.

And we're also going to have at our quarterly meeting at the next BFA meeting.

Jed will kind of give some more detail around that because we'll have our quarterly update on the Ernst and Young progress.

Okay, with that, we will start with the monthly financial reporter report.

We have Finance Director Melissa Dubowski and Director of Financial Reporting from the Controller's Office, Will Jones, to present the monthly financial report.

Good morning.

Good morning.

Um Madam Chair, members of the committee, thank you for the opportunity to provide the monthly financial update for the period ending February 28, 2026.

So in the general fund for our fund balance, we're projecting an ending fund balance of about $37 million for FY26 or roughly $11.7% of expenditures less debt and pay-go.

That's about $16.9 million lower than the finances estimates, mainly due to our more conservative revenue projection.

We remain above the city's reserve target with about $110.7 above the 7.5% of total expenditures, excluding debt service and pay as you go in reserve.

So for our revenue update, since last month's report, we've increased our revenue projection by about 39 million.

Most of the increase is driven by sales tax, which is up 22 million due to higher collections.

And then we have the ambulance related fees adding about 14 million due to higher uses and collections.

We also saw smaller increases from refunds and recoveries, including payments from Verizon, about 2.3 million, transfers from Park Houston, about 1.8 million, and slightly higher land sale proceeds, about 0.3 million.

These gains were partially offset by small declines in TERS administrative fee and direct service reimbursements between departments.

So moving on to the expenditures for the general fund.

On the spending side, we've increased our projection by about $68 million.

The biggest drivers are the fire department up about $51 million, mainly due to overtime, termination payouts, equipment and IT related costs.

And of that $51 million, about $39 million of that is related to the overtime costs, which is in line with what I was projecting back in February.

So now we're seeing the projection.

$39 million.

So and for the police department, we're up about $16 million, largely from again overtime and IT expenses.

And for police, the overtime is about $11.8 million of that $16 million.

We also have about $4.5 million in higher health benefit costs across departments, about $1.6 million for additional support in general government, including the Houston Forensic Science Services of about $900,000 and the enterprise risk assessment work about $600,000.

These increases are slightly offset by vacancy savings and also lower internal service chargeback costs.

So on the bottom line for the general fund, revenues are trending upward this month, but expenditures are growing faster, primarily due to the overtime and personnel related costs and public safety.

So moving on to the enterprise funds.

Overall, we're seeing mix mixed results across our enterprise funds with some revenue declines offset by expense savings and higher non-operating revenue.

Starting with the aviation fund, operating revenues are down about $27 million, mainly due to lower terminal rent and retail activity through landing fees.

Though lending fees are helping offset some of that decline.

Operating expenses are down about $5 million, largely from savings and supply services and delayed equipment purchases despite some higher personnel costs and none.

Operating revenues saw a $12 million increase in interest earnings.

Operating transfers to the airport improvement fund are down about $9 million.

In the combined utility system, operating revenues are down about $74 million, primarily from lower water and sewer collections.

Operating expenses are up about $1.6 million, driven by an accounting adjustment for the $311 services, but offset by personnel savings and lower contract costs.

And non-operating revenues are up about $37 million, mainly from impact fees, judgments and claims and recoveries and refunds.

So moving on to the dedicated drainage and street renewal funds.

For the Avalurum fund, spending is slightly down due to lower payments to the Chapter 380 program of about $700,000.

And the Metro Fund revenues are down about $5 million due to lower reimbursement from Metro.

Expenditures are down about $2 million, mainly from lower fuel materials and equipment costs.

So moving on to the Stormwater Fund.

Revenues are down about $37 million, mainly due to fewer transfers needed from the combined utility system.

And expenses are down about $20 million, and that's largely from lower demolition activity.

For the other funds, there are no significant uh no significant changes this month for the convention and entertainment fund or the remaining drainage funds.

So moving on to commercial paper and bonds.

The city aims to keep no more than 20% of its debt in a variable rate form, which is below the 25% level recommended by rating agencies.

At times, some enterprise funds may temporarily exceed this level, typically when funding large capital projects or expansions, such as the George R.

Brown project.

And on May 5th, the city priced $1.38 billion in bonds to restructure debt and fund phase one of the convention district transformation project, despite some market volatility, investors' demand was very strong, allowing us to tighten pricing and secure an all-in cost of 4.85 percent.

The remaining portion of the financing will close tomorrow to complete the project funding.

Again, want to thank our City Treasurer Vernon Lewis, our Finance Director Melissa Dabowski, and the entire financial working group on the their work on this.

And also, you know, if you have any questions, just let us know.

We look forward to a smooth closing tomorrow.

Okay.

And moving on to my final thought um on the general fund and where we are.

Uh as we move into general appropriation, as a reminder for council, that is where we true up the current year's budget.

So if we true up our FY26, and that also sets the baseline for the upcoming FY27 budget.

Revenues have reduced since the budget was adopted on the controller side, it's about 20 million if we recall.

We had to reduce about $52 million in property tax revenue.

That was offset by partially offset by uh increased sales tax.

Um, our expenses, um, however, they have increased drastically, about $78 million, and thus has been driven by fire and police, mainly due to overtime.

And so, and based on this month's report, the net impact to the fund balance is a decrease of $29 million, bringing the controller's projected deficit to $174 million, and this is nearly $100 million higher than when the budget was adopted with the $76 million gap.

And then also we we are still waiting on more details on the $17.3 million in category management savings that's baked into the budget.

Um if those savings aren't realized, that will be added on top of the deficit that we are currently reporting.

And thank you very much.

That concludes my report.

Thank you.

I would also like to welcome Councilmember Abbey Kamen, District C to the horseshoe.

Director.

Good morning.

This is the A plus 4 financial report for the period ending February 28, 2026.

Fiscal year 26 projections are based on eight months of actual results and four months of projections.

For the general fund, our revenue projection is $3.5 million lower than the adopted budget and $38.4 million higher than the prior month.

The variance from the prior month projection is primarily due to an $18.3 million increase in sales tax revenue due to higher than anticipated sales tax receipts, and $14.2 million increase in charges for services primarily due to higher than anticipated ambulance fees.

Also includes a $4.5 million increase in miscellaneous and other, primarily due to higher than anticipated reimbursement from Center Point Energy, as well as the Verizon rebate.

$2.6 million increase in other franchise fees due to higher than anticipated cable TV franchise fees and solid waste holler franchise fees.

$1.8 million increase in transfer from other funds due to higher than anticipated transfer from the Park Houston Fund, and a $456,000 increase in sale of capital assets to reflect higher than anticipated land sales higher than budgeted.

This is partially offset by a $1.5 million decrease in licenses and permits due to lower than anticipated special food permits, mobile food vendor licenses, and food managers permits as a result of statutory changes at the state level.

We're also showing an $833,000 decrease in interest due to lower than anticipated interest earnings and a $728,000 decrease in intergovernmental due to lower than anticipated reimbursement from tours for administrative fees.

So we're now on the repayment plan with them where we're going to repay it over a 43 month period.

And when you remove that large adjustment from the last month's report, the year's receipts for the same period would have been about 4.8 percent higher than the same period last year.

So it's kind of it's tough to see with all the numbers, but um uh the month of January did come in okay once you account for that one-time um anomaly last year.

So in order to meet the current estimate of 920 million, the remaining periods would need to come in flat to the prior year.

So we feel we're still projecting um fairly conservative, but but wanted to come up and then we'll make further adjustments if necessary.

Moving over to the expenditure side, the expenditure projection is $77.6 million higher than the adopted budget and is $68 million higher than the prior month.

And as Deputy Controller Jones mentioned, the primary driver of the increase is $50.6 million increase for the fire department uh primarily due to overtime.

And for the police department, $15.6 million uh primarily due to overtime uh above budget as well.

In other departments, um, there are some other increases, $4.5 million increase in various other departments for uh health benefits coverage, and a $1.6 million increase in general government to fund the Houston Forensic Science Center increase as well as the enterprise risk assessment project, which is going to be done through a consulting services.

We're also reflecting a $1.2 million increase in various departments due to uh interfund fleet chargeback overages, um, which is partially all these changes are partially offset by a $3.4 million decrease due to vacancy savings in various departments.

Uh we also are reflecting a $1.4 million increase in electricity chargeback savings to the general fund and a $1.3 million decrease in various departments to reflect interfund insurance chargeback savings that we're seeing.

So all these changes with the revenues and the expenditures together, we're currently projecting the ending fund balance to be $323.8 million, which is $29.7 million lower than the prior month and represents 12.4 percent of estimated expenditures, not including debt service and pay as you go.

This is $127.5 million above the target of holding $7.5%.

And when you compare this current projection compared to where we were at the time we adopted the budget for fiscal year 26, we are still slightly above that 12.0 percent.

Um as Deputy Controller Jones mentioned, the revenues are a little bit lower, the expenditure is a little bit higher, but the way we ended fiscal year 25 was much better than we had projected at the time of the budget.

Um so all in all, we're we're pretty much even with how we ended the previous year so far.

Uh for the enterprise special revenue and other funds.

I'll just touch on some of the bigger ones.

For aviation, operating revenue decreased by 26.8 million, primarily due to lower than anticipated terminal space rental fees, retail and auto rental concessions, and operating expenditures decreased by 5 million due to lower than anticipated electricity insurance fees and building maintenance services, while non-operating revenues increased by $12.3 million due to higher than anticipated interest on pooled investments.

And as a result, the operating transfers decreased by $9.3 million.

For the combined utility system, revenues decreased by $37 million due to a decrease in water and sewer revenues, which was partially offset by higher impact fees, judgments and claims, and uh uncovered meter revenue and recoveries and refunds.

Expenditures also increased by $1.6 million due to an accounting adjustment, which was offset by vacancy savings, IT contract implementation delays, and lower than anticipated water authority contract debt payments.

So altogether the operating transfers also decreased by $83.5 million due to lower transfer to stormwater.

Uh capital equipment purchase delays and the recognition of the accounting adjustment that I mentioned previously.

For the DDSRF Metro revenue decreased by $5 million due to a lower reimbursement for Metro Mobility Program related to street and traffic operating and maintenance costs and expenditures decreased by $2 million due to savings in supplies and services.

For the Stormwater Fund, expenditures decreased by 20 million due to delays in demolition services and operating transfers in decreased by $37 million due to lower transfer from the combined utility system related to stormwater's expenditure savings.

And I know Deputy Controller touched on the others, which are smaller than these I mentioned.

I know it's a lot to go over this month.

This is our MOFAR report that immediately precedes the general appropriation, which will be next month.

So although it's a lot of changes, it's really important that we true up the estimates as we get closer to trueing up the budget, which will happen in April.

That concludes my report.

Thank you.

Thank you very much.

I want to welcome Councilmember Salinas to the Hulk Shoe.

Good morning.

Councilmember Ramirez.

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

Director Dabowski just wanted to ask you.

You agree with that that they were expected.

Turn up the microphone.

Yes, I think that they have been trending over budget for most of the fiscal year.

I think the reason that we wait until this time in the fiscal year to make a projection to increase our overall estimate is to really see how much in savings are they going to have in the other areas of the department.

Are they going to have base pay savings?

Are they going to have savings in supplies or other services that we can use to offset the overtime?

So we sort of come out with the net number.

And we have got budget season coming up.

Can we expect the same sort of projections regarding overtime for this coming year's budget?

We are definitely going to be taking a closer look at how the overtime has been coming in the last couple years.

A lot of it is related to operation, operational need.

Some things are very unpredictable, especially when we talk about disasters or deployments.

So some of those things are a little bit harder to budget, but we're really going to be working with the departments on what is sort of core operational overtime and how that will look like for purposes of budgeting.

Thank you.

Let me ask you about the stormwater fund expenditures decreased by 20 million due to delays in demolition services.

Do you know why the demolition services were delayed?

So at the time of the budget, the combined the sorry, the public works department uh recommended a budget of $25 million for the entire fiscal year 26.

So right now they are projecting out of the $25 million to use $5 million and reflect $20 million in savings.

It's not going to be needed for this fiscal year.

I know that it took us a little bit of time to get those contracts moving and approved by this body.

And the other part of it is the public works department, and they can speak better to it than I can, but they are going through that process that was discussed at the time of Council's consideration of ensuring that each property is uses the correct source of funding for those demolitions.

So they were coming up with the criteria and the plan for which properties were eligible for which funding source.

Okay.

And I do recall there were several agenda settings before those contracts were approved.

So just looking at aviation revenues down by 26.8 million lower than anticipated terminal space and a combined utility system revenues down by almost 75 million due to decrease in water and sewer revenues.

Was is there any sort of pattern to these decreases in revenues based on economic factors or any other factors?

For the aviation, I think it is really how things are trending year to date.

But we'll continue to monitor on that.

With aviation, you know, usually the way they the way they are budgeting the revenues and the expenditures offset.

So you do see that it's although the revenues decrease, the expenditures decrease as well for the aviation.

Okay.

Just to add on aviation, I agree with what Director Debowski said.

And they were also, I think that at one point there was a plan to open the ICP facility, the international facility and uh Terminal E.

And you know, when they develop their budget, they sometimes make assumptions as to what how much additional revenue that was going to come in, and so they have to make some adjustments there.

Um so that may have something to do with it as well.

All right.

Thank you both.

The second part of his question was about the C US, the the decrease $25 million in in water sewer.

And I was going to ask that same question.

Is that something we see at this time?

Is it a time presentation?

I mean, I think we we see that usually when there's not as uh you know much rain or the the weather sometimes play a big part in the projections on uh for C US.

Okay.

Um we we see it every year.

Okay.

And and something else, um, Councilmember Ramirez, it's my understanding that as they go through that process on the stormwater fund of determining which which buildings meet the criteria, it's it's fewer than they than I guess they anticipated, so that number is less.

Councilmember or Vice Chair Castillo.

Thank you, Chair.

One question I had on the decreased collection on the TURS administrative fee, the .7 million.

That is a is that a fixed fee that we collect per TURS?

It is a percentage of the tax increment that gets transferred to the TURS.

So it is 5 percent of the increment comes back as administrative fee.

So if they are if we are projecting their incremental transfer to increase or decrease that 5 percent amount, the dollar amount will increase or decrease with that proportionally.

So essentially we overprojected some increment growth, and that is why the fees collected were decreased?

I think what we are seeing on the TURS specifically has to do with hearing loss, I believe, where some as property owners go through their hearing and dispute process, they have been able to dispute their values down a little bit, which impacts the revenue that the city collects and then remits as increment to the TERS.

So because of those hearing loss and decrease of values, um I shouldn't say decrease of values, decrease of values compared to what was projected.

Um it's still a year-over-year increase in most cases, but it could be lower than what we were projecting.

Got it.

Thank you.

I would like to welcome Councilmember Willie Davis this morning as well.

Councilmember Flickinger.

Thank you for the presentations.

Um can you go back over again the water and sewer, the decrease in that?

I mean, did we sell or did the residents use less water or I mean that's that's when when they say there is a decrease in water sewer revenues, that's that's what it is.

It's water, it's a decrease in in usage, perhaps.

Uh you did say there were several offsets to it.

I mean, it strikes me as odd that there would have been a significant decrease this time of the year for water.

I mean, I can see in the summer when we if we have a lot of rain that it would be significantly less than anticipated.

It just seems kind of odd for this time of year.

And we can look for more details on uh to give you more of a monthly view.

Um this is usually the time of year that we true it up, so it doesn't necessarily mean that there was less whether we have a lot of money.

Okay, so this could have been previous months.

Where it just reflected everything year to date.

Understood.

Yeah.

Um ambulance fees.

Did the residents use the ambulances more, or was it has there been a change in the pricing on the ambulances?

No, it is related to um I forget the exact Senate bill, Director Bowski probably can tell you, but there was the Senate bill that was extended in September.

Uh so they are able the the pricing, the cost is a little higher.

We're able to charge the code.

Okay, so we did increase rates.

Right.

Okay.

Um Director, if you could speak a little more about you talked about the 43-month payback.

Oh, yes, with the sales tax.

Um it was about a year ago, a little over a year ago, that we became aware of uh sales tax audit that the State Comptroller's office did.

Um and they found that there was about 25, 26 million dollars that was erroneously remitted to the City of Houston over a 43-month period.

Um 2018, I think.

2018 through 2023.

So essentially this is an error the controller made, they corrected the error in because I mean they distribute the money, correct?

They did distribute the money, right?

It was not an error on our part.

It was the state.

The state we were getting everybody else's revenues.

We were getting other cities' revenues.

Right.

And they withheld the amount from us in one of our monthly reports, which was a huge hit for one month for something that had been sent to us over a 43-month period.

So we work with them to get a repayment plan that is a zero percent interest.

So we're okay.

Essentially they took the money back, or they're taking the money back over the same period that they gave it to the solver, which seems reasonable.

Yes.

And the last thing I've got, um, the firefighter union took us to arbitration here a couple of months ago.

Um I'm hearing rumors that we lost that arbitration.

Is that correct?

It's my understanding that we are going to be setting up some individual briefings to get you all all the details on that.

But yes, that's correct.

Okay.

Um whether or not they won on the step increase.

Um they grieved several items.

That was one of them, and that was one of them that the arbitrator did roll on, yes, in their favor.

Okay.

Because I mean I find that real concerning.

When we talked about the contract, I specifically asked what triggers the step increases.

And there's been nothing that has occurred in that discussion that would have triggered it.

So, more to come.

More to come on that.

Councilmember Carter.

I mean, Cayman, I'm sorry.

She was first.

I I will not opine on uh arbitration clauses and how they can and cannot be drafted.

Um Director Dubowski, uh, you had mentioned with the overtime, and I don't want to beat a dead horse with overtime.

Director Dubowski, you had mentioned with the overtime, and I don't want to beat a dead horse with overtime.

We are going to go into budget season and have plenty of conversations on that.

But you mentioned that overtime was unpredictable.

And I remember many, many conversations during the budget, during contract negotiation, not contract negotiations when we were considering contracts about the concern with overtime.

And then we also raise, I raised the concern about natural disasters and emergency response.

And that in some ways it is unpredictable, but in some ways it is predictable.

We do need to be preparing for multiple events a year.

And I don't think we are doing a good job of that right now.

I my ask is as we enter budget season that we really start to consider, because most departments do not include in their budget costs of disaster response.

That's not included as a budget consideration.

How are we looking at this?

Because I do think it was somewhat predictable.

And now here we are almost a year later looking at the numbers that we were concerned we would see.

So again, I do think we need to be looking much more closely and considering the patterns that we are seeing with increased natural disasters, extreme weather, again, non-reimbursable events at times that we have to be considering in the budget process.

To that end, uh, do we have I know we have come to an agreement which I appreciate in terms of the with within the financial policies with our uh what I the rainy day fund, we have come to an agreement.

Do we have a timeline yet on when we're going to be taking up um the updated financial policies for the City of Houston?

So we did um make sure that we reviewed all the other components that we were looking at aside from that one section we talked about.

So yes, it is going to be coming shortly for sure before the budget is um passed.

Okay, so we'll have before us as a body um updated financial policies to review prior to us passing the next fiscal year's budget.

Is that correct?

Yes.

Yeah, the financial policies are part of the budget.

Correct.

But again, we I think we were supposed to take them up towards the end of last year, we keep bumping it, so I just want to make sure that we are taking those up.

Um again, I appreciate you and your team working with us, especially as it relates to the budget stabilization fund, but there's a lot, as you said, within that that we have to be looking at.

Thank you.

Thanks.

Councilmember Carter.

Thank you, Chair.

Um, you know, on the overtime uh uh Councilmember Ramirez had asked the question about uh what does it look like for next month?

But I just want to remind everyone, as we're talking about public safety and we are looking at a visitors economy, I think the term that was used last week, you know, um February we had starting on the 27th, we had 80,000 participants in a cheerleading contest over at the GRB, and you know, this this month on the tail end of that, because that was only one day out of the month, and we had the rest of you know that full weekend.

And when you look at you know the events going on in the city this weekend, somebody said to me, My gosh, what's happening in the city of Houston?

I said, what what do you mean?

And they said the increased uh law enforcement presence is clear.

And I said, Well, we have got the Houston Open, we've got an Astros Games, we have the SWE 16, we have got uh CrossFit over here, we have got the Bayou City Arts.

You know, there are so many things outside of a disaster that as we are drawing more tourism into the city that will naturally increase over time, and I think you know we have to certainly be prepared, but what price do we put, not to mention protest, organized protests that we can't plan for, but we have to make sure everybody is safe.

And what price do we put on public safety?

And you know, so as much as we can be prepared, certainly there are some factors that play into that increase.

I just that more of a statement than a question.

So thank you for your uh presentations.

Councilmember Ramirez.

Thank you, Madam Chair.

Yeah, and let me tack on to that, because I think all those events were planned well in advance.

They weren't pop-up events, and I am all for paying police and fire uh overtime when it is necessary, and it often is necessary.

Um but you know, the the real question is are we putting forth projections that are that are really accurate when we uh go into budget season and we discuss a budget.

Uh so that's that's really what it comes down to in my mind.

Councilmember Kayman.

One last question.

Um I know we don't have a crystal ball as it relates to future projections.

Uh and we have seen, again, greater than expected uh revenue generation primarily from sales tax uh toward and again we have had we spring in Houston is the best time, right?

We have so many amazing events.

I would assume that for the month of March, we're also going to see an increase with rodeo with everything that's happening.

Uh we had CERA week here, we've had uh the Houston Open, the list goes on.

Beyond March, though, I am assuming that kind of uh peters off a little bit.

If you could let me know if I am right on that.

Over summer months, do we kind of see it level out a little bit more and two?

The reason I am asking about projections in the future is because I have such a concern for the markets right now.

Uh as we head into, you know, however many weeks of a war in Iran and oil prices, which generally Houston uh does better than other cities around the country, but that still has an economic impact on the everyday Houstonian and the markets are not stable.

Can you all discuss, and again, I have the fear of you know a greater long-term economic impact to our markets right now in a downturn.

Can you all discuss a little bit about how that can impact our budget and what you all are looking at right now?

Yeah.

What I will say is we are always more conservative on the sales tax uh, you know, for that reason.

There are there are you know it the economy is very uncertain and very volatile, so we don't want to take just because we have increase now that we'll have it in the future.

So when we do our models, we do look at you know employment, um, we look at the price of oil, uh, and then we also try and factor in let's discount it.

You know, we knew we we know several years ago when when we had the oil bus or the economy, you know, what percentage of jobs that we lose, and we try to factor all of that into our projections.

Um but in the finance is conservative, but we're we're even more conservative on our sales tax projection.

And yes, you you will see, of course, you know, higher uh gains during you know the the Christmas time and you know the springtime, uh but the the economy right now is just too uncertain.

Um inflation and tariffs and trying to predict people's behavior and what they are going to do.

Uh so regardless of what happens, even with the the World Cup coming, uh we should still remain conservative because of that uncertainty.

So you are right, Councilmember Kamen.

So when you look at a monthly um sales tax collections, Mark March is our second highest month uh with December being the highest.

Um we do traditionally see a decrease from March to April as we go to the end of the year.

However, that is contemplated at the time we budget.

So you know, we know that's based on our historical projections, and even with the estimate that we're um showing in this month's MOFAR, it would uh contemplate that the remaining months come in flat to the prior year, so 0 percent increase, which you know, we hope of course it is more than that, but we feel that this is um a comfortable place to land for this monthly period.

As we move to budget for fiscal year 27, we um we have our internal uh modeling that we do, which gives a pessimistic, likely, and optimistic projections for sales tax.

We usually pick between the pessimistic and the likely, so sort of on the more conservative end um on our side.

So definitely something we are tracking.

And just one more thing to add, the the thing that is different this year.

Typically, you know, we budget conservative with sales tax, and then we come up at the end of the year, and that you know really helps us with our fund balance, but this year with the loss of that $52 million in the property tax revenue, and then on top of the the increase in overtime, as Director Dabowski said in the past we have had vacancy savings where we could cover that 50 whatever plus million in overtime, but we don't have that this year.

So while we increase the sales tax, we decreased on our you know property tax, and then our expenditures are growing at significantly greater rate.

So all of that is you know a cause for concern.

Plus the economy.

Plus the uncertainty of the economy.

Thank you.

I want to make sure and welcome um staff from Councilmember Martinez's office.

On the World Cup grant agreement, I see on this week's agenda there is a $15 million payment for some emergency preparedness supplies that will be paid for with that grant.

But the status of our agreement with the DHS shut down.

I mean, Jed mentioned this in agenda briefing.

It was brought to my attention.

So do you have any information on kind of where that is?

Well, the last the to my knowledge, we we do have the grant award letter from the federal government for that's for the $65 million grant.

Um and then we're also getting um a smaller grant that was um maybe at the beginning of March that those two items came to council to um apply for and accept the grants.

Um so those are moving.

So I think you know, the way we the way we spend from a grant perspective is that we don't feel comfortable to spend the money or procure the items until we have the grant award, um, which is my understanding that we do have that at this point, and then you know, usually it's usually grants are reimbursement based, so we'll go ahead and order things and get them in and then realize the cash.

You know, of course, we have to go through a federally compliant procurement process and the partial shutdown is not impacting the anything with the with the grant.

I'm sorry, Jed's not said that twice.

I think yeah, there was I'll just check with with Jed because they mentioned something in agenda brief about about um there being you know some delays with this because of the partial shutdown.

Could be maybe that there's going to be delays in reimbursement.

Yes, but we'll we'll track it down.

Okay, but but thank you.

Yeah.

Okay.

We do have uh, I think that's the end of our council member comments.

We do have one public speaker on the uh monthly financial report, Jack Valensky.

Oh, she he is passing.

Okay.

Thank you, Jack.

We will move on then to uh agenda item three, the audit division update.

And I'd like to welcome Jennifer Pierce, Deputy Director in the controller's office.

Good morning.

Good morning.

No problem.

Good morning, Madam Chair, members of the budget and fiscal affairs committee.

Thank you for the opportunity to provide an update on the audit division for fiscal year 2026.

Today I will briefly cover our audit pipeline, recent audit reports, remediation activity across the city, and the steps we are taken to taking to strengthen the performance and discipline of the audit division.

Uh next slide.

I will begin with completed work.

Since the last time I spoke with you, we have completed eight audits that reflect that work reflects both direct audit execution and our continued efforts to close the loop on prior issues through follow-up and validation.

Next slide.

We also have a substantial body of work currently in progress.

This portfolio reflects a balanced mix of operational compliance, payroll technology, and governance focused work.

I'd also like to point out that there are two overtime audits on this list.

Just FYI.

Next slide.

Looking ahead, upcoming work includes the beloved Houston Fire Department uniformed overtime audit, SCP segregation of duties, um, the fiscal year annual fiscal year 27 annual audit program, and additional follow-up work involving general services, the mayor's office, and parks and recreation.

I also want to take a moment to thank you all for the thank you all for approving and thank the administration for funding the contract related to the fiscal year twenty-six enterprise risk assessment.

This project is designed to give city leadership an enterprise-wide prior prioritized view of risk across financial, operational compliance, cybersecurity, strategic, and public facing areas.

For this effort to be meaningful, it will require support across the entire city of Houston.

That means engagement from all departments, support from the administration, and partnership with city council.

A high quality risk assessment depends on broad participation, candid candid input, and a shared commitment to identifying and addressing the risks that matters most to the city's citizens of Houston.

I will now turn to recent audit reports, and I'd like to recognize the auditors that worked on them at this time.

If I could get Mohammed Harun, Patria Amos, Marlia, Randon, and Teresa Watson to please stand.

They are responsible for the three audit reports that we have issued this month.

For the Houston Fire Department follow-up audit, our first objective was obtain to obtain status updates on all open findings and management did provide updates to all 32.

Our second objective was to assess their remediation, their management action plan and whether they had implemented implemented it properly.

Based on our work performed, HFD management's remediation efforts were adequate overall for 29 of the 32 findings.

That is a strong result and reflects substantial corrective action by the department, while also identifying the few areas where additional work is still needed.

The audit division also conducted a point in time assessment of all open audit findings in our tracking database.

The purpose of this effort was to support governance oversight by determining the remediation status of findings across city business areas and identifying which items are ready for follow-up audit validation.

The assessment covered 165 open findings.

More than half of those findings were issued prior to 2020, which underscores the need for continued structured follow-up.

Of the 165 findings, 112 were considered ready for follow-up audit validation, signaling a significant amount of work now positioned for the next phase of oversight.

Turning to the General Services Department audit, this engagement focused on GSD's contract management process and project assignment practices.

Our objective was to examine how projects are assigned to contractors and how related contract management processes operate.

The scope covered contractor payments from fiscal years 2021 through 2023.

No detailed findings were identified during the audit.

Next slide.

Although the audit did not result in formal findings, it did identify important observations and opportunities to strengthen controls.

First, we identified a gap related to the conf conflict of interest certifications.

Current city policy is limited in scope.

Disclosures are required only for elected officials, which we love that for you all.

And there is no requirement for city employees involved in contracting decisions to provide a conflict of interest certification.

We recommend annual certifications for all employees involved in contracting decisions.

The second primary observation, we identified risk related to the application of the city costs index or CCI in contracts.

Because the CCI is used to align construction pricing with regional market conditions.

I will now turn to audit division improvements.

One of the division's most improv most important improvement initiatives is the implementation implementation of audit board now called Optro.

That one of the questions you guys have frequently asked me about is the audit software that we use to govern our division.

This this is a per Opro is a purpose-built audit risk and compliance platform that centralizes workflows, work papers, issue tracking methodology, and reporting.

That matters because audit quality depends on disciplined systems, not disconnected spreadsheets, email chains, and shared folders on SharePoint.

By bringing the audit life cycle into one platform, Optro strengthens consistency, visibility, and accountability, timeliness, documentation retention, and institutional knowledge within my division.

Just as importantly, it strengthens our supervision, supports a more defensible audit trail, and helps us execute audits with greater discipline across the function.

Another important improvement area in our division is our use of weekly status updates.

These updates keep leadership informed, reduce surprises, and create a clear line of sight into audit progress.

They help accelerate evidence collection and decision making, surface blockers very early so they can be resolved promptly, strengthen trust through transparent communication, and reinforce accountability for commitments, deadlines, and delays.

The status update directly aligns with our goal to shorten the audit period from over a year to closer to what's reasonable of six to nine months.

In practice, they create a more disciplined operating cadence and improve the division's ability to manage multiple active audits with greater control, coordination, and follow-through.

In closing, the audit division remains focused on delivering independent oversight that drives accountability, strengthens operations, and supports better decision making across the city.

We are advancing critical audit work, maintaining visibility over remediation, and building a stronger, more disciplined audit function within our division for the future.

Thank you for your time and attention, and I welcome any questions.

Thank you very much for your presentation.

Vice Mayor Pro Tem.

Thank you, Chair, and thank you so much for the presentation and for all of the great improvements.

For the GSD audit for the conflict of interest certifications, is that something that you've just seen in GSD?

I don't recall seeing that in other departments.

And if so, is that something that they're actively working to change?

So I can't speak for anything outside of DSD.

When we when we looked at the conflict of interest, that would be something that we as auditors would expect from the GSC officials that are negotiating contracts.

That's when we notice that the that the actual guidance doesn't allow for them to do that.

I believe that they are planning to implement something, but that would be limited to just those under the direction of Director Messiah, right?

We would also have a secondary conversation we'd need to have with others that are involved in our Jedi's organization procurement and things like that.

Great.

Thank you.

Vice Chair Castillo.

Thank you, Chair.

And I don't have a question, but I do just want to thank you and your team for all the work you've done.

This is critical work and it's very helpful.

And I look forward to seeing the report when it comes out on the SAP segregation of duties.

You welcome.

Thank you.

Yes, thank you to all the auditors.

We really appreciate what you do in helping our city run more efficiently and effectively and playing by all the rules.

So thank you, Ms.

Pierce, for your presentation.

I don't see any other questions.

Are there any public speakers on this matter?

Okay.

Seeing none, we will move on to agenda item four.

Um Councilmember Kamen is very excited to see an update on multifamily recycling pilot program.

And I will actually pass the mic, Councilmember Kamen, for you to briefly set this up if you'd like.

I appreciate the opportunity as our Solid Waste team comes up.

Um colleagues, we see a lot of headlines, especially right now, about delays with trash and how our Solid Waste Department.

I know they are doing everything they can.

Y'all come on up.

Um, but one of the I think bright lights in terms of what the Solid Waste Department is doing right now is a first of its kind multifamily recycling pilot program that we received grant funding for.

Uh this came out of a actually a 2021 budget amendment uh formulated following the passage of the climate action plan.

And so what we're going to see today in um Chair Alcorn, I appreciate you uh weaving this in.

I know we wanted it also to come to resilience committee, but because it has such a the lack of accessible recycling has a profound impact on city finances.

Uh and so this is very germane, Chair.

I know you have been a strong proponent of this as well as other programs.

Um I just want to thank you all, but we're very excited to see this update.

Uh it's been years in the making.

So we appreciate it.

Thank you for setting that up.

Okay.

With that, you have the floor.

We have Veronica Lazama, Chief of Staff, and of course, Director.

Hilarious ass and fell out of my head.

Sorry.

Sounds good.

Well, we'll get started.

Thank you so much, Council members, for having us.

Uh, thank you, Director, for your leadership.

Um, I'll go ahead and get started, but Madam Chair, thank you for being a leader, Councilmember Kamen, uh especially helping us uh get through some of these uh big initiatives that um that we've got going on.

Uh like you mentioned, Councilmember Kamen, uh we had a long-range plan back in 21, and then of course in 23 we finished up a series of resource recycling implementation committee um stakeholder groups where we did get to this point where we have the uh multifamily um recycling project, but I just want to the first two slides are a couple of briefings on um some of the results of that study, which were that you've got about 82 percent of recycling in um commercial and multifamily that's uh that we're not tapping into.

So, of course, our services only includes the single family homes.

Uh the next slide will give you just another um here's another uh you know stat on how much we collect from curbside recycling.

We get about 54,000 tons.

Um, and then our uh third slide is a real slide I wanted to show you here about the equivalency between residential and and um commercial.

Um you'll see here in this picture that you've got about 2.5 acres, which is roughly 16 tons per year.

And again, uh Councilmember Kamen's office has been very helpful in getting us to the point where we now have a multifamily recycling pilot project.

And uh next slide, please.

About this pilot through a grant from the recycling partnership with funding from the Alliance to End Plastic Waste.

This pilot uh will deliver about 3,000 uh units across 12 properties.

Uh this effort is supported by Councilmember Kamen's office, whose leadership has helped uh ensure resources needed to advance uh the multifamily recycling and the city's climate action uh goal plan goals.

Next slide.

Uh pilot program benefits.

So this is a free service.

Uh we've got about six properties.

I know that's further in the in the presentation, but the free service includes uh, you know, there's no contract, but the city fully manages uh you know very simple hassle-free collection program.

Uh it's exclusive to here in Houston.

Uh the in-unit recycling bins are provided door to door along with education.

There's also valley services.

There's many multifamily properties that don't have enough room for a like 20, 30 yard containers.

So we also provide in this pilot a uh Valley services, uh, which there's two properties under the six that are um that are utilizing it.

Um in addition, those set out rates for just the valley properties are above uh 20 percent.

Dedicated city um support is offered by our department.

Uh again, we offer the we provide the containers, and we of course collect and transport all these all the materials to FCC.

Next slide.

Uh in collaboration with Councilmember Kamen, we have um worked with the Houston Housing Authority as well as the Houston Apartment Association to get uh roughly six properties, and we've got one in one in the works right now.

Uh we have uh done in-person virtual meetings as well as informational webinars uh for the apartment complexes that are interested.

Um we've had a lot of um, I'll say interest, but um some of course aren't candidates for this program.

Um others are just inquiries, but our staff has gone out and uh visited multi uh several fam several properties across the city.

Next slide.

The pilot goals are to increase recycling access and education uh to the sample size of about three three thousand multifamily units over a year and distribute in unit recycling bins.

Uh education, of course, being a top priority.

Um we've done uh several uh methods of of engaging residents at the properties, including an educational kit delivered to each door.

Uh measurable change.

We're going to, of course, document uh how this uh pilot goes with uh pre and post-program measurements, contamination rates, participation rates, as well as uh tonnage from each property.

Next slide.

Here are the currently enrolled properties.

Uh you'll see the unit counts.

We're about 1,300 properties in, and we're looking for 3,000.

So, council members, if you've got some in your district, we're interested.

So that you'll see the property list here, and of course, whether there are on-site or valet on the right.

Next slide.

Participation in progress.

Um, so far, again, I've mentioned the six properties.

Services started roughly in October.

We've had no miscollections, no illegal dumping, like I know many people were hesitant because we're gonna get a lot of illegal dumping.

We haven't had any of that.

Um, valley properties are achieving about uh 20 percent.

I know 20 percent sounds low, but in the multifamily world it's actually a really good participation rate, uh, medium to low contamination rates, and of course, visual inspections by the solid waste team where they are tracking for contamination and of course um replacing them as they get full.

We've collected about 9,080 pounds uh that have been diverted so far, and uh again it sounds low, but recycling is really light, so it's uh it's a good number at least for the for the past five months that we've collected uh introducing a new program at these properties.

Next slide, please.

So what's next?

Uh building on early successes, the program will move into the next phase of expansion, which is Camden properties.

We've been after Camden for a while, so this is uh a plus.

And I do want to thank I have Megan Rochet is in the back here, and she's been doing all the groundwork on this, and so I just want to thank her.

Um she's working directly with Camden and along with the recycling partnership, and we're hoping to get them on boarded in April.

Uh the goal is to enroll approximately 1,200 residents from that property.

Um, and then we've got, of course, her contact information in case council members you've got any um multifamily properties in your district that might be interested in this free program.

So I've put Megan's point of contact there.

And that's all I have.

Thank you, everyone.

Thank you very much.

Councilmember Kamen.

Thank you.

And thank you both for the presentation.

And Director, when you first came in to your position and we met, I said we can't let this go because of the impact that this can have, both financially and in terms of services and environmental.

So thank you all for the partnership.

I do want to recognize the apartment association that has been every step of the way.

Once we pass the budget amendment, there were actual group meetings and the pilot program is what the apartment association and other community partners recommended we do as a first step.

I do want to recognize, though, that we are so behind in timeline, which is okay that happens.

We want to make sure this is done methodically.

But just to kind of lay out the groundwork for anyone that is interested in your district.

And it we are looking for a diverse array of both market properties and income-based housing.

And I want to thank the housing authority because they have been incredible.

I know you said 20 percent participation.

Can you talk about the education, the contamination rates compared to uh on the residential side, what we're seeing?

Sure.

Residential-wise, we're about uh 38 percent in contamination.

Um of course, these are done through audits with FCC.

Uh here we're um and maybe Megan, you might have to help me with what the contamination rate is at the property complexes, but it's low.

Um just participation alone being at 20 percent when maybe the standard is roughly five percent.

Um we we we've noticed a lot lower.

I know we're doing visual inspections, photos, so I don't know what the actual rate is because we haven't done uh a uh contamination we haven't done a audit yet of the material.

It's only been five months.

Um so we're we'll be doing that here midway and then I believe at the end as well to see how we end up in contamination uh for these complexes.

Uh we, you know, these these uh drop-off roll-off boxes are like window based.

So you can't just come and dump a couch in, right, and things like that where we'd get the extra contamination.

It's not an open container.

Um so that helps mitigate some of the contamination.

Uh, but you do have um Megan is um also feet on the ground with um residential meetings, whether it's their safety meeting or their monthly meetings, or even just notices that comes maybe by way of a mobile application uh with that complex to remind folks about you know what to recycle and what not to recycle uh as well as she's usually you know promptly available for any questions for those properties.

Great.

And how one of the things when we discussed this initially several years ago was the number of people that live in multifamily housing.

And I think the grant the footage the images you showed of commercial versus residential and how much waste is actually being created.

I know nearly half, if not now more than half of Houstonians live in multifamily housing now and do not have access to recycling, and all of that waste is being uh sent to our landfills.

Can you talk about landfill uh I guess timeline to end of life for a landfill, what the cost is to actually create a new landfill.

Uh my understanding is we have to put them farther out.

So then you have trucks going even farther.

That's additional wear and tear.

So there's all these additional components to the creation of a new landfill.

Can you talk a little bit about just the resource strain and where we are with that?

Absolutely.

This uh the pie graph here is showing uh as a result from the resource recovery uh committee, uh really showed the 82 percent of the waste in in the city that is not being recovered.

Uh the you know, we're you we do have multifamily, I'm sorry, we do have single family that has, of course, a recycling program, but if you'll see 82 percent does not.

Um I think the maybe the second sli the next slide after this talks about the nine years left uh remaining at McCarty Landfill.

Um that is of course in our TCEQ report.

Uh we uh would when that closes, of course, that'll be a strain on uh the one that they have in the south, and of course, we've got a waste management in the north.

Um but of course, this being the closest and the most used by the department will have an effect, of course, on uh travel time and uh cost factor to it as we have to travel further.

Um in addition uh you know to bring on a new landfill uh when this committee was going on, uh we heard at roughly a 15-year um time frame to bring on a new landfill.

And of course, there's probably not a lot of space in the city, so these would probably be landfills to your point, Councilmember would be further out than um than something as close as what McCarty is.

And Madam Chair, if I may just follow up on that.

In the next nine years, we run out of space at McCarty, but it takes how many years to actually stand up a new landfill.

So our consultant uh gave us a 15 year estimate.

So we're already behind the curve on that.

How much does it cost to create a new landfill?

That number I don't have.

I'm pretty sure it's in the study, Councilmember, and we can forward you that the final report from the R RIC.

That would be great.

Um one of my last questions, and I'm happy to go back in cue.

Um we understand that the department is strained.

Employees are working as hard as they can and they do yeoman's work and don't get the credit they should for that.

When implemented via ordinance.

This department itself, the City of Houston would not be responsible for the recycling at commercial properties.

Is that correct?

This would be just like commercial properties are responsible for their own disposal of traditional waste, they too would be responsible.

So this does not pull away from personnel and staffing and costs at the City of Houston.

That's correct.

It's more of an enforcement, a reporting and enforcement agency.

Um that's what we have seen, and and part of course the RRIC was to look at how San Antonio, Dallas, uh, Austin are doing theirs, and of course, they've got uh mandatory recycling for multifamily, and I believe I what I understand is their programs are mostly reporting in and of course enforcement via inspections.

And I know that Houston is the only major city in Texas that does not have a multifamily recycling program really quickly.

What is the RRI COVID?

Okay, I'm gonna have to keep back in the queue.

Sorry.

I think it's important with the RRIC just to elaborate on what that is.

So it's the resource recovery and implementation committee.

It uh was went went on for about a year and a half, uh, 2023 through 2024.

And so there was a final report done, and that is how this program came about.

Right.

I always say the landfill gives me anxiety.

So I am a composter and recycler.

Okay.

Councilmember Carter.

Thank you, Chair.

Um just wanted to note that I was recently out at FCC, and they're certain certainly very concerned about the contamination rate on the residential side, and they actually will be here on May 7th to present for the resilience committee.

But um, you know, to the point of the landfill giving anyone anxiety, the more contamination, the more the landfill gets filled.

And so I think that, you know, they are very focused on the conversation was uh uh about the money that they are losing on the contamination and so on and so forth.

City of Houston has the highest level of contamination.

Um certainly glad to see the multifamily, but I you know, at some point uh, and we'll get with you all, but just to figure out how we can get the education.

I mean, it it's a it's a problem.

And I stood there watching in the window and I'm like, this is a hundred percent contamination.

I mean, because it's it's a lot.

And so um, you know, I think that that filled landfill is is a is just over the horizon.

I'm very concerned about that too, because it's it's gonna take a while to replace.

And what do we do with all that garbage?

Anyway, thank you all for your presentation.

Thank you, Councilmember.

Yes, and I think when they did the contract, I think they were anticipating about 25 percent.

And it's been almost double.

Councilmember Flickinger.

Thank you for the presentation.

Um I I thought I understood the program, but uh the Abby's last question kind of confused me.

So is the city is not picking up this recycling and taking it to the recycling center?

Yes, for the pilot project, Councilmember, we are, and uh, these are via a roughly 20 to 30 yard uh container that is placed at the multifamily property, and we are taking it to FCC.

Um that's part of our roll-off uh program.

Okay.

So we take the roll roll off in as far as the low contamination rates.

How are we discerning between residential recycling and this program?

There currently isn't.

It all goes to FCC.

There's no distinction.

That's why we're gonna do an audit on just this material.

Uh so there will be a forthcoming audit to determine how much of that material will be is contaminated.

Okay.

Um not yet, but we will that will be something forthcoming.

And how much was the grant for that we received?

It was 300 and I'm gonna say 8.

315.

Okay, 315,000.

Okay.

And and this pays for our cost for how long?

One year.

One year, okay.

And it's all our associated costs are 315.

Yes.

Okay.

Thank you very much.

Oh, one other question.

What is a valet service?

It's when you have the residents that put their garbage out like right in front of their door, and you have someone coming by to pick collect rather than them going to a roll off box.

Does the city go out and collect door to door?

No.

Okay.

So that's somebody in the apartment complex under the department management.

Right.

They have contracted the services.

And under the grant, we do provide we do pay for that service under the grant.

Okay.

Thank you.

So we have enough funding for the 3,000 to handle up to 3,000 units.

Yes.

Our in-kind contribution is the roll-off box and we actually purchased them for us.

And then so it is just the transportation cost, basically to SEC.

It will be $315,000.

Is that what I heard?

It does not include the transportation, which is our in-kind contribution as the city.

Everything else is.

Okay.

I am just trying to better understand that we're not paying anything, but we are paying something.

And it sounds like we are giving in-kind through the roll-off program.

But we bought the roll the containers with the grant funding.

We bought the containers with the grant funding.

The in the in unit bins came from that.

The Valley Living portion, which is not Valley Living, that's the name of a company.

The valet services are being paid for by the grant.

And the only thing that we are providing as an in-kind is the collection pickup and drop-off at FCC.

So we pay for the transportation.

Right.

So do we do we have a number for that?

We don't.

Okay.

Okay.

But essentially this has all been grant funded.

Right.

Other than that transportation.

And we have grant funding to handle 3,000 units.

Correct.

After that, we have to figure out what we are going to do.

Correct.

Okay.

Got it.

Councilmember Ramirez.

Thank you, Madam Chair.

Thank you all for the presentation.

Also want to shout out to the Houston Department Association as well for being a partner with you guys on this.

They were here yesterday.

And it's a good thing for the city when industry is able to give input on our legislation.

Regarding the landfill situation, you know, earlier in service delivery, we had a presentation on water, and many Houstonians may not know this, but we are not in the situation that Corpus Christi is with the shortage of water.

We have a surplus of water.

We have water to last us for many years through the foresight of prior administrations decades ago that arranged for us to be able to tap into the water in Lake Livingston.

And so we're we're doing good on water supply.

We have other water issues like the treatment plants, but to the point that was made, we need to get ahead of this landfill situation.

And Director Hassan, can you tell us uh what, if anything the city is doing to get ahead of the landfill uh filling situation?

Yes, sir.

That's a great question.

So what we have been doing here recently, uh once I first received the reports of the life expectancy of the landfill, we met with our uh partners, uh waste management and republic to actually gauge on where their next move will be as far as landfills in which uh you all are correct, most of the new landfills that are being constructed or a little bit further out.

So we have to come through our team and I have to sit down and come up with uh things logistically on how it can still be beneficial, whether that's contracting long hauling out where we are reaching out to uh other larger cities that have the same similar uh issue that they have because most of the landfills are uh currently not in their their city, so we're working together with those um larger cities to figure out how they are doing and how we can be uh just as efficient.

All right, I appreciate that.

Let me ask a few questions about the slide slide deck that you all uh presented.

Slide number two breaks down the source of waste.

Uh 67 percent commercial, that's all private pickup, 15 percent multifamily, that's all private pickup as well.

Is that correct?

Correct.

So when we talk about uh your your typical waste, uh the city uh only handles single family currently, and that is listed at 18 percent.

Can you can you tell us, give us an idea what how much of that 18 percent does the city pick up versus uh what is picked up by by private services?

Do you understand the question?

Sure.

So we have about a 400,000 customer base, right?

Um and then we have I am going to say 50 to let's just call it 50 to 80 of sponsor what we call sponsorship program where the city offers a rebate uh for lack of better words that uh you know uh those neighborhoods that are eligible for city services can utilize a private hauler, and we provide a six dollar rebate.

So about 400,000 out of about 480,000.

In that range, yes, sir.

Residential things.

Thank you.

Councilmember Davis.

Yes.

Thank you, Madam Chair.

Um I I wanted to go back to this.

Well, first of all, thank you both for your presentation.

I think the plan is very needful and to a degree in terms of it.

My concern is that uh I think Madam Chair addressed it somewhat in regards to the number and the grant, the grant part of it, the in kind, what is that amount that we are contributing to that to this plan, this pilot plan?

What what hard numbers that?

We can get you an estimate, Councilmember, when we first went into this agreement, uh we we definitely shared um I believe there was some numbers shared.

It's been about a year ago that we did this that we signed the agreement.

So we will have to go back and see what that number is.

Good.

I would love to have that.

Sure.

That number, right.

Okay.

So also my second uh is that to pick up the I drove, I rode around with the roll-off.

Uh I had a chance to go with them uh and speak to the whole union and all, big concerned about the time, hours they are concerned with in regards to the overtime that's not available now as it was.

So how much time is required to meet this pilot program by the people who who pick it up?

So it varies, Councilmember.

That's a great question.

What we have to what we had to do was take a look at from uh operational standpoint on how many vehicles that we had available, and it varies.

How many drivers are available and how many pieces of equipment are available while simultaneously still adhering to our normal uh day-to-day functions?

We have not seen any hiccups.

Uh we with the reduction in overtime, we're still able to adhere to our normal core functions while simultaneously uh working with the pilot program.

But we will get you those hard numbers once we take a look at it.

Very good.

Very good.

Well, let me commend you in doing that, but as we do know, we if if nothing else, we get more calls all the time about solid ways uh pickups and those type of things.

So I just wanted to uh you know get a better understanding, but to make those two things available would be very advantageous to us.

Thank you for what you are doing.

You know, want to commend you there, but at the same time, uh we want to know at least how we can help to defend the program and or answer questions about other areas because you got a hard job, and uh thank you for what you have done thus far.

Thank you.

I I might have missed this one, Councilmember Ramirez was asking about the number of sponsors.

You said about 80,000 homes, single family homes have sponsored are under sponsorship program, or is that I thought it was between 50 and 80, and we can get you that amount.

Uh we have got that number we can.

And we pick up about 400,000.

Yes.

Okay.

Got it.

Um Councilmember Kamen.

One, is it pertains to resource allocation within the department?

We are talking about six properties and roller trucks, which is completely irrelevant to residential property.

Is that correct?

Separate, yes, ma'am.

Okay.

Two.

Uh thank you, Councilmember Flickinger.

Uh I apologize if I was confusing.

I was trying to lay out things very quickly.

Once this if and when this is implemented citywide, and the reason why all of the stakeholders asked for a pilot program was to see how we can do this and make sure it is successful, that it makes a uh it's a financial gain for the city or at least break even, and that we're actually diverting waste effectively.

Once that not the pilot program, but if and when we have a like all other major cities in Texas, a multifamily recycling requirement or program, it would not be the City of Houston operating that program.

There would no be staff, there would not be staff trucks, et cetera, just like apartment complexes handle their own waste disposal currently.

Is that correct?

That's correct.

Okay, you look at the programs across other cities, and it is a reporting and enforcement uh function of the city, less than um and not a where we take on the apartment complexes that are.

Okay.

That's correct.

I just I wanted to clarify that.

Um again, we're talking currently about six properties and six hundred and fifty square miles uh to do this to potentially save hundreds of millions of dollars in the long run.

Uh and I again want to thank our partners for providing the grant funding.

One of the opportunities, Councilmember Carter, to your point about contamination rates.

What we're actually doing, and again, the department is trying new things in residential, how do we educate residents for contamination rates, and we're still not seeing those numbers that we need to be seeing.

But with this program, they're going so in depth with additional outside experts on resident education, so that we can have data points on what's working with education, what's not working with education based on different properties, based on different residents' needs.

Some places have valet pickup, that's the door-to-door pickup.

Others have the main centralized drop locations.

So we're going to see what works, and my hope is that that can also be extracted and applied to residential recycling as well.

Uh so that this is a benefit and a gain for the city as a whole.

While doing the right thing, while reducing uh landfill use and diverting waste, it's good for the environment, it's good for everything.

Uh and it's a service that we should be providing.

We're space city, and yet we don't even have recycling.

Uh that's a problem.

So again, I want to thank you all, Director.

I wanted to give you, unless there's someone else in queue, I did want to give the director an opportunity to do that.

Let's pause for a moment and go to Councilmember Carter.

Thank you, Chair.

Um just to to clarify, the um fact that on the uh recycling for the multifamily, you have specific roll-offs that are used for it.

As I understand from FCC, part of the issue with contamination is not really at the well, part of it is is on the residential side that the individuals recycling, but it's in the trucks because the trucks are contaminated to begin with, because we're picking up with solid waste trucks and not dedicated recycle trucks.

So if we're using recycle roll-offs, and that's all that's going in, the contamination rate by virtue of it being a clean container would be less anyway, right?

So on the education side, I I certainly uh respect that that comment of your your comments about education.

But from the as I understand from FCC and Councilmember Flickinger was shaking his head, and that from my understanding from FCC, it's at the truck level that the starting contamination, even if it's clean, sometimes we're using contaminated trucks.

Is that a factor?

Yes and no.

So let me explain what what they mean because we're still we still have some discrepancies between how it works.

If we have a truck, the truck doesn't start off contaminated.

Um that's kind of uh a little bit for fairs to say that the truck is contaminated.

What it is the educational piece, yes, we we're working together to partner to get an educational piece out there to teach clean recycling.

But as far as our trucks leave the leaving the yard to go pick up the first can and a truck is contaminated, no, that's not completely true.

Thank you for clarifying.

I don't talk trash very well.

I did that's questionable at times.

But I did understand I understood from a lengthy discussion that to be a problem.

So you may want to double check on that.

From from my visit out there, um councilwoman Carter's is correct.

They they had some issues with uh some of the trucks who had done a residential part of a residential route and had not emptied before they started picking up the recycling.

And I was out there, I think about eight or nine months ago.

So I don't know how much of that issue is is now, but that was that that was what they were referring to, the contamination was essentially had residential pickup in it.

Councilmember Kamen.

She's good.

I did if I'm blasting queue, I did want to give the director and Veronica, and I do want to thank the entire team.

This has been years in the making, and Houston is behind the ball uh on what is a standard service that is provided for residents of a major city.

Uh but I did want to give you all kind of the last word uh, if at all possible, Chair, uh, on this program right now.

And I would just add, uh, Councilmembers, that of course the more recycling, the longer the life of the landfill, which we know we're in a bit of trouble with this differentiation with one closing in nine years, is that of course, all the more recycling, the longer we're going to have uh on the life of that landfill.

So the more we can divert.

We we we need to focus on having less trash, and that's what we're all trying to do here.

So thank you very much, Director Hassan, Veronica Zama.

Appreciate both of you being here.

And we're going to move on to public speakers for this item.

First, with we'll start with Mike Garver, the very famous Mike Garbo, who I think won the Buffalo Bayou regatta last week.

He always wins.

I think he I think they may have a special prize for him since he does so much for the environment and clean water and Buffalo Bayou.

Yeah.

Great to see Mr.

Garver.

And it was fun to see you out at the Buffalo Bay Regatta.

I hear you won.

Well, I won the division they set up for old people.

Yeah, I we won some of that too.

The floor is yours.

But uh our mayor oh Tim Sally 15-mile canoe uh runner herself.

So um we appreciate you all.

What happened to my I'm here.

Well, come up here.

Next.

Okay.

Okay, well, just uh this is my daughter Gretchen.

And uh they figured out that I'm too old to do this anymore, so she's taking taking uh uh a lead here.

But uh we definitely uh as we're Texans for clean water and also Buffalo Bio Partnership.

So we're very interested in uh uh recyclables being recycled and not winding up in Buffalo Bio and our other streams, and then they finally make it to the port of Houston, which is the last stop between downtown and Houston uh until it makes it into the go to the Gulf.

But uh we we also are uh have a half a million dollar boat that's picking up this trash out of Buffalo Bio.

And uh we would certainly like to see it picked up before it ever gets into the stream.

And and that's what our position is.

Uh uh, but we definitely support the effort of this body for um uh recycling and enhanced recycling.

And uh appreciate all the time you're spending on it as far as uh how things are gonna work out.

But Gretchen has some more detailed information.

I gotta I can talk faster and I've got a few more details.

My name is Gretchen Hilliard.

Thank you, Madam Chair and Council members for letting us speak today.

I'm Gretchen Hilliard, Mike's daughter, and I've joined him with what has been something that I remember my entire life that he's been passionate about cleaning up Buffalo Bio and the trails, and if you don't clean up the litter on the ground, it ends up in Buffalo Bio and makes it out to the Gulf if it's not cleaned up.

Um we at Texans for Clean Water fully support multifamily housing recycling.

As a matter of fact, I recently moved from uh single family residents into multifamily housing where I don't have recycling, and it's a challenge to do the right thing.

I either have to collect my recyclables, take them to a center, or take it to his house, take it to my sisters or my daughters, which the average person in this busy life is not gonna do that.

So I think, yes, I agree we're behind, and we do need multifamily recycling.

We have another idea that Texans for Clean Water is working on, which we would love to sit down individually in a group and talk with you about because it pairs nicely with curbside recycling for everyone.

It's an incentive-based system, which ten states in the United States have them.

They're called DRS or deposit return systems.

And what it does is encourages the public to return their bottles and cans for either five or ten cents.

Ten cents is the sweet spot and Oregon has a magnificent program that's privately run, and we take tours.

We're gonna put another tour together.

Anyone who's interested, we're staffers, we'd love to have you go so that you can see it firsthand.

And what curbside recycling does is provide the the um convenience.

The DRS provides incentive to pick the litter up off the ground.

Also, it gets us more material.

This material is worth money.

Um Abby Kamen, council person member came in has said this.

We are throwing away, and on this page, it tells you how much Texans are throwing away in the landfills.

So if we got the material out and the we have it to give to the producers, the producers are the aluminum people who make the cans, the water bottles, and on that Coca-Cola bottle it says 100% recycled or recycled product.

The only way it's recycled is the producers in Texas are buying plastic from the other 10 states or from overseas, Malaysia, aluminum from Russia.

We don't need to be doing that because we're throwing it away.

And if we get it before it goes in our landfill, we're gonna extend the life of our landfill.

So this pairs nicely, and we hope that the City of Houston will support us in 2027.

We did well.

We uh with our bill, he's been working on this for over 25 years going to Austin, and this is the first time our bill was unanimously voted on a yes vote out of the environmental regulations committee.

So we're gonna keep going and we'd love to sit down with each and every one of you.

Great.

And I know several of us will take you up on that.

Um I cannot tell you you guys have made such a huge difference.

We've all participated in these cleanups on the bayou or along the trails on the bayou, and it's so sad.

It's so sad how everything that people throw on the ground or fall out of a trash can comes right down to our waterways.

You made that boat that picks up all the trash, right?

Yeah, um that's your that's your boat.

Um I can't thank you enough on behalf of all of us for all you have done to beautify our city.

We all want to learn more about this.

I'll certainly schedule a meeting and and um just thank you and keep up the good work and thanks for sitting through our long meeting so you can make it.

Yeah.

With the multifamily recycling.

We're trying to keep things out of the landfill, and we're certainly trying to keep things out of the bayous.

So appreciate all your work and keep at it.

Um 25 years of working on this.

Oh, he's doing it.

Even as a child, and my grandkids know.

Stop the car, that's a flootable.

Yeah.

Plastic bag or plastic.

It makes you never want to get a plastic bag from a grocery store or a plastic water bottle ever again once you've been to several of those cleanups, because that's that's what collects.

Um thank you very much for being here.

We really appreciate it.

And and and a picture, you know, is worth a thousand words, as they say.

And these pictures are we've all been there.

We participate in these and and just thank you for your continued fight against against this.

I appreciate it.

And we we have a lot of research too that we could compare and and that would be fantastic.

Thank you so much.

Thank you.

I hope you enjoy the booklets uh call it my book of dirty pictures.

Yeah.

But it's uh it's very accurate.

I can take those pictures again today.

I know, that's the depressing thing.

You go and clean up something and then it's right back after a rain.

Yes.

Yeah.

So thank you very, very much.

I appreciate your being here.

Next, we will hear from Malachi Key with Air Alliance.

Hi, Councilmembers, how are you all doing today?

Doing well, thanks for being here.

Absolutely.

Um I want to start off today with uh saying that I really, really appreciate uh the efficiency and the transparency of this program so far.

Um thanks a lot to uh Abby Cayman's office and to the Solid Waste Management Department.

This is really great here at Air Alliance.

We believe very, very strongly in uh efficient and transparent recycling.

Um I know this because I've had conversations with you one-on-one about some programs that we've found to be uh less than efficient to say the least.

So I really, really hope that this is a program that can get off the ground for a couple of reasons.

Um as an organization, we support it.

Uh but also individually I support this.

I've lived in multifamily housing since uh I've been in Houston, and uh it's difficult.

You would not believe what people just kind of leave piled up wherever.

Uh and in more recent years, you know, I I started out my time in Houston as uh uh a public health worker in a different capacity.

I was an emergency services worker, I worked uh as a paramedic, and uh that's an industry where you really see the impact of a lot of uh waste in a wide variety of different ways.

And now that I'm getting to work in public health, uh I can say that this is something that has uh so many more impacts than we're yet seeing.

I just came back from speaking the Texas Plastic Pollution Symposium, and you've all seen probably that sad picture of the turtle with the straw in its nose.

Well, let me tell you all, it's not just in the nose now, it's in their brains.

We're starting to see issues with cardiovascular systems in uh animals, and that's really gonna start affecting us at some point.

That's the thing, is that it's really coming back to us.

We're seeing early preliminary studies about the effects of BPA and phthalates, and the thing is if that plastic isn't managed well now, I would like it to be managed better upstream.

I would like plastic to be reduced in terms of how much we're creating, but the second best thing we can do is manage it better now.

And um beyond that, the emissions being put out by the trucks having to go further to these landfills.

Obviously, we're having issues with landfill capacity, but um I've talked to some of y'all about the issues with the the waste management drop-off sites.

Those trucks are shipping plastic out to other states from some of our research we found.

That's very early research, but that's more emissions on the planet, that's more costs as well of the city.

So that's a program that I encourage both for its climate friendliness for keeping Houston green, and also for I think this will be more efficient in the long run in terms of managing all of this.

Uh like mentioned by the amazing folks speaking before me.

You know, we used to have bottle deposit services.

I'm 27, I don't remember these, but I know they existed at some point.

Um I think there are ways we can move forward with this.

Uh and yeah, I think we are we have an issue, and I think this is something that we can do better on as a city.

And I would also encourage educational efforts around recycling.

That's a lot of what we do is I do think that in terms of you looking at this from a social science perspective or uh a social theory of change.

It takes a minute to get people caught up in all of this.

So I would love to whatever support we can offer as an organization.

We do have work on education and advocacy, and we've done a lot of work in educating around recycling.

We'd love to help as well as we can.

And last but not least, you all will hear about me, you all will hear from me at other meetings, but I would like to strongly encourage the adoption of a solid waste fee as well, because even if we're not, you know, paying for the recycling in general, the contamination of the trucks and other issues are something that needs to be taken care of, and the solid waste department is doing some really great work and they deserve uh a pathway towards better funding.

So thank you very much, Malikai.

We appreciate you and what All Airlines does in our city.

So thanks for being here.

Next we'll hear from Jack Velinski.

Thank you.

The fee.

We need the fee.

We're coming up on a budget season.

We're probably gonna see more cuts to solid waste.

I think the director uh has done a lot of work to try to make better.

The on-demand has seemed to be a disaster at this point.

It was in the media and then it was shut down.

We haven't heard anything about it.

Uh my trash was picked up at 650 yesterday morning.

I that's pretty incredible.

It's pretty incredible.

Well, we just don't have the resources.

We got new trucks.

We know the people work hard, those guys who drive a trucks through our neighborhoods on the streets that are so small.

Um with cars parked out there, that's all great, but still we just can't get it all done without the resources.

And how much more can you squeeze?

And I'm still guessing you never saw the report that the mayor did uh from the from the tr uh uh about trash.

We need to really get it done.

And I'm afraid of what else we're gonna be having cut.

Libraries, parks.

Um we just can't survive without having more revenue in this city.

I know if you've all tried.

You've all tried, but we're just not there.

And and we have some really, really hardworking people in the city, but they only can do so much.

Thank you.

Thank you very much, Jack.

We really value your input.

Next, we will hear from Bill Kelly.

He's online.

Bill.

The floor is yours.

Councilmember, can you hear me?

Yes.

Good morning.

My name is Bill Kelly, representing Environment Texas.

We support the pilot program on multifamily recycling and would like to see this expanded citywide.

Houston has one of the lowest diversion rates for recycling in the entire country.

In the last budget cycle, the Solid Waste Department projected that Houston would divert 18 percent in FY 2026, up slightly from the 16 percent in FY 2025.

That is right at half of the national average at 35 percent.

Expanding recycling to multifamily properties will help us reduce the huge amount of waste going to landfills and will give an opportunity for Houstonians to recycle.

As our executive director, Luke Metzger testified back in June of 2021 in supporting this pilot program, the cities of Austin, San Antonio, Dallas, and Fort Worth all already do this.

What's the difference?

Each of these cities has a dedicated solid waste fee that helps them support expanded services.

San Antonio, despite having just over 360,000 homes compared to Houston's almost 400,000, generates 127 million a year in a solid waste fee.

That is 20 million dollars more than the entire Houston solid waste budget.

And it's and Dallas, smaller than both, generates 165 million.

Austin generates 101 million.

Fort Worth, 92 million.

It is time for Houston to join them in both creating a fee and including multifamily recycling.

We applaud many of the efforts and the reforms of Director Hassan, uh the work of Veronica and Megan that they have been making, including the purchasing of more trucks, looking to install new transfer stations, and more public education that's critical.

However, we believe a critical way to permanently improve services is more resources.

Nearly half of all Houstonians now live in multifamily housing, and the number is anticipated to increase from 1 million in 2019 to 1.6 million by 2040.

Thousands of constituents want to recycle, but their multifamily buildings do not currently provide this service.

As we move towards a more sustainable and resilient city, recycling is a basic necessity that Houston must must catch up on.

We also again reiterate, along with a number of other organizations across the city in calling for an end for the quote, chemical recycling program started under the prior administration.

Chemical recycling only functions as another name for plastic incineration and actually generates massive amounts of toxic air pollution.

Finally, multifamily recycling is a big benefit for our air, water, and climate.

Ultimately we'll save the city money and avoid cost from expanding landfills.

The city is quickly running out of space in landfills and must find ways to reduce the amount of waste we generate.

Not only is the cost of new landfills prohibitive, the timeline to actually create a new landfill can take 15 years, as Veronica cited.

If we do not begin to significantly reduce our waste in the next few years, we will not be able to extend the life of our current landfills long enough until new space is required.

Thank you.

I don't know if you can hear the belly.

We really, really appreciate your participation and your good work for Environment Texas and all you do and they do for us.

And we hear you loud and clear and agree with agree with what you are saying.

And I just want to take before we adjourn, colleagues, just a big shout out to Councilmember Kamen.

We would not be having this discussion.

We would not be talking about the multifamily recycling if she had not been pushing for years.

I mean, we all voted to support that budget amendment.

Like what year was that?

2021.

Here we are in 2026.

Uh she has not given up.

You have to dip your toe in this and uh, you know, get us to the next to the next level.

So thank you to Councilmember Kamen for your leadership and for keeping your eye on this ball.

And I'm glad it's going so well and look forward to it expanding.

Um thank you, colleagues.

Our next BFA meeting will be Tuesday, April 28th at 10 a.m.

Meeting is adjourned.