Rice.

We should play a game show called The Prices Right.

I think if you're flashing on there, you're we flashing uh we are flashing.

Good afternoon, everyone, and welcome to the City Council Finance Committee for the City of Norman, Thursday, October 16th, starting just after 4 p.m.

Thank you to everyone in attendance and everyone who may be watching online.

We'll go ahead and get into our agenda items.

Number one is a discussion regarding trust structures, including the creation of a parking authority trust.

Okay.

So it's been um a couple of years at least since we talked about this, I think, and maybe even this committee, maybe another committee.

Might have been yours.

Um I wanted to talk a little bit about public trusts generally since we have some new faces, and then talk more specifically about the parking uh trust.

So why do we create public trusts?

Um they exist as legal entities separate and apart from the city that protects the city from liability for the trust activity, the trust activity or the trust is protected from liability for city activity, and that includes financial liability as well.

Um that's why we have, for instance, the hospital operating in a separate authority so that the city and the general fund are not at risk for hospital activities and and vice versa.

Um they exist for the public benefit as a public trust.

You have to act uh on behalf and in furtherance of a public function and a beneficiary.

Uh, you may issue debt.

Uh, there's a constitutional provision that prohibits the city from issuing long-term obligations like debt, and so we use our trust to issue debt oftentimes uh so that we can commit to longer term uh financial obligations.

They can they can uh sell property, exercise the power of an imminent domain, and you'll see I have an indenture I'll pass out in a little bit.

Um the powers that a public trust can engage in are really broad, and what we typically put in these indentures are everything that the statute allows uh a trust to do so that if they ever wanted to do something uh in accordance with the purpose of the trust, they have the authority to do that in the trust indenture.

Um the public trusts operate under the authority of a board of trustees that creates a fiduciary relationship.

The trustees hold the title to the property and act as authorized in relation to the property for the benefit of the beneficiary.

Um they have to file annual financial reports each year with the beneficiary, audits uh with the state auditor, they engage in competitive bidding just like the city would, and they have to comply with the open meeting and open records act just like the city does.

Where the beneficiary comes into play is when they want to issue debt.

And we saw this with Norman Regionals big uh I can't remember the name.

Fire Health, thank you.

I was wanting to say Vision Norman, but that's a different plan.

Um Spire Health a few years ago, they had to come to the city, and the city as the beneficiary had to approve the debt before it could be issued, and and that requires two-thirds approval, so that always gives the beneficiary some control and some some uh influence over that.

But other than that, it operates completely separately from the city.

Uh when we create a public trust, you uh consider a trust indenture, and that's really just sort of like the charter for the trust authority.

Um the council would adopt a resolution approving the trust indenture and accepting the beneficial interest in the trust as the beneficiary.

That also requires two-thirds approval, and then we record the documents with the county, the secretary of state, and uh file a notice with the state auditor's office so they know to expect audits.

If I make that for one thing about that two-thirds approval is whenever you're whenever we're issuing revenue bond debt, that's when you see me getting really nervous about all the council members are here because two-thirds for us is six votes, but in order to waive competitive bidding to issue the debt on a negotiated basis, you have to have three-fourths majority, which for us is seven votes, and it's seven votes, it doesn't matter how many are here.

So that's why you know if there's something on the agenda about issuing revenue bonds, we're gonna pick everybody here.

Um so we have quite a few public trusts as you all know, and the way we agendize it uh for your meetings, you're acting in as trustees of these trusts, except for the hospital, and uh this as a city council, so that items that come before you might be an NUA item, a Norman Utilities Authority item, City of Norman item, uh tax increment finance authority item, all in one meeting.

Uh we have five trusts right now that operate.

Only one is governed differently from the others.

Uh the Norman Municipal Authority, we really use to issue debt uh revenue bonds.

It's used for sanitation and golf course operations.

Uh Norman Utilities Authority is water and sewer projects.

Uh the hospital authority is obviously the hospital system.

Uh the tax increment finance authority is any TIFF revenues or TIFF projects funded with TIFF revenues, and then the Norman Economic Development Authority is one we created back in uh 20, I want to say 14.

Um I think that's right, um, to do citywide economic development projects.

At that time we discussed a permanent funding source that's never really gotten off the ground, but it's still out there and could be available for use if needed.

Um each trust is has its own uh system of governance.

Uh ours are all very similar except for the hospital authority.

They are the mayor appoints the board members with the consent of council, and those operations thankfully are managed entirely by the board for the hospital.

And so you'll see people on that board who are very specialized in hospital operations, financial issues, things like that, uh, because that is such a specialized area.

As a beneficiary, we receive those annual financial reports.

We've, as I said, approve issuance of debt and things like that.

Um, with our other trusts, you all serve as the trustees, and the city manager is the general general manager, the city attorneys, general counsel, city clerk is your board secretary.

So we kind of duplicate everyone's roles uh with most of our trust.

All of our trusts right now, the city is the sole beneficiary.

So if we need to issue debt, the city only needs to, or the trust only needs to get action uh taken by by the city.

Um and they follow the same policies that we use for other things, contracts that go to the trustees for approval, uh competitive bidding, all of those things.

And I want to point out though that what's interesting about this setup is when you put on your, I'm gonna use Anthony's terminology here.

When you put on your Norman Utilities Authority hat, you're no longer thinking about what's the best for the city.

You're thinking about what's best for this business that we're running this utilities authority.

And so you have a duty of care as a council member, but you have a whole separate duty of care as a trustee.

And so that's really uh important when you are acting as a trustee for these um trusts.