Aye.

Aye.

Minutes are adopted.

We have a full one today.

Item number one, new business.

Approval of disbursement from District 2 improvements funds.

Councilor Howard, West Alabama Multicultural Alliance.

If I have it in my budget, I would like to give $2,000 to Lama.

Umfist will be healed on April the 12th if it's a Sluser River Marking here in Tuscaloosa, and it is a big event.

So for those that would like to see it, please get there early.

It is a big okay.

Ms.

Standards, I believe the key phrase on that was if I have it.

Um so Miss Howard does have it in her um prior year, say but her two 2026 fiscal year amount has been completely expended, but she does have some to pull back from in savings, and so we'll have a budget revision for that.

This on this week's agenda or next one.

This week's agenda, I think.

Okay.

All right, yeah.

Well, I'll make a motion there.

Thank you.

All in favor say aye.

Aye.

Aye.

Item is approved.

Item number two.

Approval of disbursement from district two improvement funds for Skyland Elementary.

Um same deal.

Same deal.

Uh-huh.

Um, same deal.

Is this this you or cash?

This is me.

Scotland's yours?

Yeah, that's MIDI for this one used too.

Yeah, yeah, yeah.

We share that.

Yeah, okay.

Okay.

Please go ahead.

So I go ahead.

Yes, this one is a little late.

Um it was for their spring clean, but hopefully they could use it for their maybe.

Okay.

And that is also on the action we'll need to take.

Yes, sir.

In the exact same thing.

Okay.

There are motion.

Motion.

Second, all in favor say aye.

Aye.

Uh disbursement to Scotland is approved.

Item three, approval disbursement from District 4 improvement funds.

Uh, that's me for leadership Tuscaloosa charity benefit dinner totaling a thousand dollars.

Is it is it a good fundraiser for um budget warrior chief Tuscaloosa statue over top of River Hill.

Okay.

Okay.

Does he have the money?

Well, I'll make a motion.

Okay, there's a motion and a second.

All in favor say aye.

Aye.

Item is approved.

Um, item number four, approval disbursement from district seven improvement funds for West Alabama Multicultural Alliance.

Heritage.

Same as before.

I'll make a motion.

Right.

All in favor say aye.

Aye.

Aye.

Item is approved.

And that's coming from Mr.

Lanier.

Ms.

Bridget Gilmore, approval to amend a professional services contract with Ranica.

Good afternoon, Council.

Good afternoon.

So generally, when you build a website, the shelf life for that website is about three to five years before it needs to be updated or rebuilt to be modernized to changing technologies.

The city of Tuscaloosa's website is coming up on a decade old.

Um, so it needs to be updated.

And we actually started this project uh in 2019, right before COVID.

Um, and then with everything changing and as many things as we were handling during COVID, this project got put on hold.

Um, and so now we're we're coming back to refreshing the city of Tuscaloosa's website.

So in 2019-2020, we had built an updated version of the city's website, but now that it's six years later, we again need to refresh that updated version.

Um, one just to modernize it.

We don't want to launch a new website that feels old, and two, to address those accessibility standards that I talked to y'all about a couple weeks ago.

So this is a contract amendment with Granicus to make those changes to the site that we built in 2020 so that we can actually launch it.

And what's the total?

It is 36,231 dollars.

Okay, and that includes what they're they're taking ground up.

They're rebuilding, yeah.

Yeah, they're rebuilding, so main mainly the emphasis is on rebuilding the home page, and then the changes that we make to the home page will be reflected throughout the site, um, and then on making sure that everything about the way that it is built meets those new federal accessibility standards.

Do we have a regular amount we spent annually on website maintenance or refresh or whatever?

Whatever the equivalent of painting, a new code of pain is.

Yes, so there is an annual contract with granite for between 20 and 25,000 dollars a year, and that is for them to update and maintain this site on the back end of things, but it doesn't touch the way that it looks and it and then doesn't touch those accessibility standards.

So the annual contract is 20 ish.

Yes, sir.

And this is 36 on top of that, yes, sir.

All right, any other questions or comments?

I'll make a motion.

All in favor say aye.

Aye.

All opposed say no.

Um budget revision number 10.

Good afternoon, council.

So we have a number of budget revisions, and some of them are fairly um lengthy and involved, and so I'm not going to rush through any of this.

Uh, the general fund budget revision that is before you currently has two different parts to it.

The first one is um Miss Howard's district improvement funds requesting to pull three thousand dollars from her previous year's bank into the current year budget for her to be able to use in both of her requests from today.

That totals three thousand dollars, and um so that she her entire her total spending as of uh these two checks will be eighteen thousand eight sixty-eight.

The second part of the budget revision is a request from TPD to use their diversion and training technology funds um that are earned through uh court charges and are required to be set aside for law enforcement uh spending exactly within training technology.

They are asking to move 20,250 of that into their travel and education budget line item for um a little bit of technology for training and then also for some act for some classes.

Chief Sanders is here if you have any questions about the exact application of that 20,000.

Tune us in, please, Chief.

This is for uh training, um annual training.

Um we have one uh legal annual training is for a cyber analyst to get more training to do like uh fundamental criminal intelligence to come to uh 2700, the International Academy of Emergency Dispatcher Conference.

This is another training for our dispatch on one call takers, uh go over different uh scenarios as of what they need to do in case of an emergency, make our dispatches uh more advanced in the training that's come to $6400, uh caliber press recruiting seminar, uh that's $1,400 FBI negotiation uh school, which is $1,800.

That's for our negotiator, just have more advanced in training, and the professionalizing law for the community engagement training.

Uh that's another one that's is for $2200.

These are all advanced training for our department to make sure officers getting the proper training to make sure they can take it out of the streets when we need them.

So all right.

Any questions?

Not on that.

Is that finish that segment of it?

Yes, sir.

Thank you, Chief.

So that's those two item, those two individual parts with the general fund budget revision.

Um there is no uh change to the bottom line of the budget with either of those.

Um, it's just activating prior year save up funds.

Okay.

Is that it in this batch?

Yes, sir.

Okay.

Questions, comments?

Motion.

Second.

All in favor say aye.

Aye.

I mean it's approved.

Um, where are we?

Elevate budget revision number three, Miss Stanley.

Yes, sir.

Okay.

Um, this budget revision also comes in two separate parts.

Um, the first part is the Sabin Center was awarded uh Appalachian Regional Commission grant in the amount of one million dollars, and so we are recognizing the federal grant revenue of a million and then adding to the savings center project line item for the same million dollars again, zero impact to the bottom line budget.

Um, and the second one is also for uh a grant, but it is for the state portion of the um runway 422 grant.

If you'll recall uh um maybe about eight months ago, the um FAA uh section of DOT with the United States government awarded about 27 25.7 million dollars to extend the runway um at our airport.

The state that is that is supposed to be 90% of the project.

The state was commissioned to do the other uh five, sorry, it's 95% total federal.

The state was going to do 2.5%, and then the city was going to match the other 2.5%.

Um, and so we are recognizing the state portion of that grant today.

That is 676,596 in the revenue section, and then another um, and then adding an exact 676 to the runway extension project.

Okay, any questions, comments or a motion a motion second.

All in favor say aye.

Aye.

Item is approved.

Let's see.

Yes, so this one is going to be a little bit lengthier.

This one is actually in four different parts.

The first part is another grant.

This is the A Trip 2 grant awarded via the state for the Julia Tutweiler Access Project.

We are recognizing two million in state funds and then creating the Julia Tutweiler access project line item for that same exact two million.

Sorry, keep on going on.

Okay, we'll go through all of them.

So I any questions on that one.

So it's uh section number two in the budget revision.

Um, is we are uh closing out some previous paving um projects and their budgets and then moving it all to the 2026 citywide resurfacing and adding the funding that the mayor was mentioning in the uh projects committee uh item when it comes to the resurfacing contract with ST Bund.

So this will allow them to fully award the ST Bund bid um and uses uh projected year gas tax funds, and how much is that uh with all the closeouts and then the add-in that will be 2.668 million added to the project.

So you now currently within the RFFI you have 6.4 million available to award to ST bond 6.4?

Yes, sir.

And that's how much of next year's 1.4 million, 1.45 million of next year's members.

Any questions or comments?

Mayor, any comments?

Yes, sir.

Um just remote.

And I know this probably wouldn't work.

There wouldn't be a way to put this off and hope oil prices go down, and maybe we'll get a better price.

We had that discussion, yeah, and we ultimately came to the conclusion that it just it feels too risky at this point.

We just don't know what the I'll understand completely.

That's all I did.

I think we even discussed the idea of of what of the magnitude of um of a bid award.

Would that even kind of counteract the risk?

You know, a bigger, a bigger pot of money from the use might make them have their their quantities at a lower price point, but even that wasn't enough to offset the risk.

Um, the third item within the third section within this uh budget revision item is literally just closeouts and cleanup.

Um, there are about one, two, four.

There are five projects in here that have just some change left over after the project has been completed, and so we are requesting to close those out and move them to contingency that will move 194,869 into contingency.

Then the last item is usage of that contingency.

Um, the total contingency right now is sitting at 280,598.

Is that with the 190 pending here?

Yes, sir.

That is that is adding the one that I just mentioned into it.

Um, and so the usage of them is requested into two different projects that you heard about within projects committee today, the Julia Tutweiler Access Project, which we just recognize the revenue for from the state.

However, the state A trip funds will not cover design work, and so in order for them to complete design, the city will have to fund that amount.

The amount that they still need to be able to complete design is 72,875.

So we are requesting to use contingency that we just kind of bulked up towards that project.

The other amount is the fourth and 23rd one-way that you talk about also in projects committee that is uh funding the design work for that project that is 142,796.

So after all of that, there is still contingency within the RFFI of 64,927.

All right.

Like I said, I know it's I know it's layered.

And then question and comments on that.

64 64,927.

Is there any sunshine on the horizon there?

Um I will say that the uh fiscal year 2025, we are we are nearing the end of that audit, and um if I can brag on my on my colleagues just a little bit, a lot of the departments did extremely well in managing their budgets.

Um we had a little bit of revenue growth, we had some pretty good interest income come in, but really the departments watched their spending, and our surplus should be it's a little bit more than I thought it was going to be this year.

Um so hopefully there is some sunshine on the horizon of adding back to it.

Now, of course, we do have requests that come in and projects to propose that surplus for um, which will come with the mayor's capital project budget proposal in April.

But yes, at least there's there is the the horizon of having a little bit more in there.

All right, so motion motion all in favor say aye.

Aye.

All right, does that bring us to RSA?

Yes, sir.

I think it does.

All right.

I want to side in too to jump on.

Okay, so um the this is going to be an update for the uh RSA conversion, the police officer and firefighter pension conversion to employees retirement systems of Alabama.

Um I think most council members are pretty well versed in the general setup of this scenario, and so I'm really just going to go over a couple of review points, and then I'm gonna turn it over to the lawyers to do their part.

Um, so today we'll we'll just kind of go through the updated budget impact, the escrow balance, it's progress and projection, um, the financial statement impact and credit rating credit agency rating questions that they had, um, and then the current phase that we're in for the conversion.

So, as you guys are aware, we have done a conversion valuation with Kavanaugh McDonald every single year leading up to this um this conversion.

This is an excerpt from the valuation that we get from Cavanaugh.

Do we have a copy of this?

No, sir, probably not in your in your I can get you one though, I will send it directly, yes, sir.

Um, so this is an excerpt from the Kavanaugh McDonald uh valuation report, and you know, I can't stand on podium and point through very easily.

So really, what this is on on the second page and everything.

What this is going to show you is the unfunded accrued pension liability.

So, as of right now, the city of Tuscaloosa in RSA is projected at about 54 million dollars.

The current police and fire um plan will be total when it gets to RSA underfunded by 210 million dollars.

So combining those two together, we are going to be sitting at 265 million dollars underfunded within the R within our Res August 1st of this past year.

Yes, that is August 1st of this last year, but they do the valuation based off the January 1st previous.

So January 1, 2025 is this valuation outcome.

They produced the report on August.

So I kind of I put out this is this I added this section here, but it's just prior year comparison so that you can kind of see where we've moved from.

You can see that in 2022, the total overall um unfunded amount was 203 million, grew to 234 million, 247 million, and now we're at 265 million.

The other piece of information that's really good with this um piece of the report is the total employer contribution rate.

This is how um AF calculate the total budget needs over and what we currently budget for employer contribution rates, and so again, I put some of the prior information out to the side.

So you can kind of see as the um as the unfunded amount grows, so kind of changes the the employer contribution rate.

So we started out at 21.6.

We are we went to 24 in 2023 when things were really crazy in the market.

Um, we last year we were sitting at 23.92, and now we're right at 23.9.

So not really not a lot of movement in between here, which actually is really kind of good for us, knowing that our payroll is growing and the the unfunded total amount is growing.

So here is that's tier one for RSA members, and then tier two is here.

Now tier two is always going to have a higher contribution rate.

It's just the way that the that the fund is set up.

And so we went from 22.34 to 24.6, back down to 24.32, and now we're at 24.31.

So we will take these two percentages and we will apply them to payroll amounts budgeted for this upcoming fiscal year to figure out how much we will owe RSA as we go through payrolls.

Because if you remember when um when do you you asked before when do we actually make the payments to RSA?

We make the payments every payroll.

So as soon as we issue paychecks, we actually withhold money from both the employer and we add or from the employee and we add in money from the employer.

The employee is mandated by state law to only give up to a certain percent because of a tier one, tier two classification, but then the city makes up the rest, and this is how we do the makeup is by applying this percentage to payroll amounts.

So if we do that, we if we break all of our um city employees down into their tiers, and then we also take police and fire who are not applied to tiers right now, but we do that based off their hire date.

We get them into these types of buckets.

So now remember this conversion will affect every single city employee.

It's not just the general fund, it's the water and sewer fund as well.

Um so our tier one uh salary is about 50 million dollars in the general fund, and then of course, we take the overtime also we do a little bit of a um prognostication about how much is going to be applied to people that are that can earn more than 120 percent.

I'm not gonna go into that detail.

I'm just saying we we will apply those percentages to city payroll.

The 23.9% that you saw on the previous report is then applied to that total payroll number, saying that we will have to contribute $13.23 million or 023 million dollars for tier one employees, tier two employees, it is going to be this 10.8 million dollars.

So you add these two together, our total contribution requirement to RSA after conversion for the first year is projected to be 23.8 million.

Now we already budget some contributions, right?

So we already budget a certain amount to state to the state pension, and we already budget a certain amount to the fire and police pension.

So we're gonna take that budget capacity and kind of apply it here.

So like we're not we know that we have we we have to spend 23.8 million, but we already spend these two amounts, so budget capacity is there for that.

So you take these and you subtract out the 4.8 million that we already budget for state pension and the 8.3 million that we already budget for police and fire pension, and you come down to a needed general fund budget amount of about 10.6 million six million new dollars will be required in fiscal 27 to complete inversion to of our police soldiers to the employment retirement systems allows.

Okay, and that that is what we've been tracking on for the last year and a half.

You're exactly correct.

Carly won't won't do it, um, but I'll I'll do it.

Um her and her staff have projected in and around that number for four to five years now as we started this process in fiscal twenty-one, and she and her team and Kevin O'McDonald, they all deserve they've been well on a very a very fluid target.

Thank you.

Now, I mean speaking of fluid uh uh go ahead a little bit.

Okay, so so actually to your point, the this is the 2025 estimate based off of the same data.

Um, but you know, generally taken from the prior year, we were at 10.817.

So now we're at 10.6 roughly.

Now I will say that from projection of the escrow fund, which we'll come up on next.

I'm still using the 10.825 for conservative purposes.

I'd rather be completely over expectations of spending than under.

Okay, Carly, that number is off of a January one 2025 investment performance.

Correct.

So it's a year and a quarter still, being a year and a half when we go in.

Yeah, do we have any rough wet pum in the wind on how that's on what like maybe like what RSA did in the last year?

So don't even go, just we don't have anything to indicate it's substantially different.

No, correct.

Yes, I have nothing to set up to indicate that I should be changing this.

Changing that any time.

Any any month, anyways, market ups and downs, just kind of normal market ups and downs stuff.

Correct.

Yeah.

Okay.

So then we kind of go to the how do we pay for that?

That 10.6 million extra dollars, 10.825 is what I've really been estimating.

How do we pay for that?

Well, we set up the public safety fund.

I'm so sorry, I just made you move.

I know that's sitting here.

Um so we set up the public safety fund back in 2021 because of the new pay plan that we were putting into play for public safety, and we knew that we were eventually going to start thinking about RSA.

So, do we create this public safety fund for the new pay plan?

And then also to maybe save up for RSA, right?

So we started um earmarking these revenue sources to go directly into the public safety fund and never touch the regular general fund operating expenses.

So these are completely set aside just for this purpose.

They are the elevate Tuscaloosa public safety transfer amount.

If you will recall in the Elevate Fund, the huge you know massive spreadsheet that we get hand that we hand out every time we talk about elevate, within there is a line item that is a transfer specifically for public safety expenses.

We transfer that wholly into here 100% and so decide for RSA and the payprom.

Now within Elevate in fiscal year 22, we set aside 15% of all elevate um receipts.

We are proposing to escalate that to 25% over the next five years.

So increase 1% a year that will be in the elevate um proposal when it comes up at budget time in the fall.

Um say that say that sentence one more time.

That it will be part of the elevate proposal in the fall.

Starting with the one percent.

Okay, sure.

If you approve that one out of every four dollars we receive of elevate through sales and sales and use taxes, will go directly to the public safety fund.

Until changed.

It'll have to be that way, probably in perpetuity.

The expectation is it would be that yes, sir.

And that would generate every year, so every year, you know, 2026 is about 4.4 million with growth rate 4.7, 4.9, 5.1.

So that this is the revenue line item that that generates.

So 4.5, 5.

That's that's what we're tracking on for that 1%.

Correct.

All right.

Um okay, so then next is the event fee on ticketed items.

This is the this is slightly a slower subject, I know, but um, if there is a ticketed event of over a certain population number that uh and they serve alcohol at the event, they are required to pay us a public safety fee.

Right now, really the only people that do that is our own amphitheater, right?

Yes, um, so that generates about 40 grand a year.

Um moving on, the rental tax on 200 plus.

If you will recall 40 years ago, the um rental tax on student-oriented housing developments, the mega developments we propose to increase that rental tax from 1% to 3%.

That differential of 2% was going to be set aside specifically for this.

Okay, so that generates about $2.5 million a year.

Um we have a contract with the University of Alabama that they reimburse us for public safety expenses during gang day operations, it's $250,000 a year.

That is going to end in fiscal 28, unless we have a contract renewal for that.

Um I'm not counting on that though, as you can see.

Uh the sales taxes that are generated from the sale of alcohol at events on campus.

So that is when beer and wine and liquor is sold at Bryant Denny Stadium at Coleman Coliseum at um they do run the stadium.

Um but so that the all of the extra sales taxes generated from the sale of alcohol at those campus venues is segregated out from regular sales tax and put here that generates currently less than 100,000 a year.

We have traffic light cameras, um red light running cameras.

So every time a ticket of those gets paid, we stick it in here.

That generates, I mean, this last year it's gotten so anemic, it used to be about half a million dollars.

Now this last year we're at 146.

Is that because people are driving slower?

Won't let us put them when there's utility work or street work of cameras that are on Algot access roads, out doesn't allow us to put them back.

Wow.

So the number of cameras that we have been able to have out in the beginning.

So here comes the the um the new amount.

So the general fund budget, if you went to the um bond credit rating presentation in New York this last summer, I kind of pitched the idea that we would need to be saving about four million dollars out of the general fund budget every single year for a couple of years to make this thing balance because the expenses kept going up, and we and this revenue wasn't enough to be able to cover the expenses that were coming.

So that's the four million dollars per year, and then the mayor mentioned previously about this extra five million here proposed to go directly in there.

So on April 19th, my proposals of the roughly 17 million in surplus we have on the general fund side that we put five million of that directly into this fund.

And we still with that five million, we will still need 20 million dollars in budget cuts over the next four years to make RSA conversion work.

24 is the bogey.

Today with like without colas and step raises, and yes, yes.

Now I will say, Mr.

Busby, we managed that pretty well this budget year.

I mean, we did four million this year.

Um we do think with AI technologies and us just you know, you know, basically making this commitment.

We we will get there, we're gonna do our best, you know, certainly not to impact services out outward facing.

Um, but it does make it a little bit more challenging, especially as revenues sales tax revenue is is flatlined with the current you know issues with internet sales taxes.

Um the city council approved for last year's uh RFFI surplus to apply 1.7 million to uh this fund, so that's what that is, and then when we had the sale of fire station number 11, it generated about 230,000.

We put that in here as well.

Now, so this fund in fiscal year 2025 generated 14.3 million.

So you're kind of like, hey, we gotta only pay 10.6 million next year.

That's great.

Well, yes, but we still have to pay the pay plan.

So when we increased public safety's pay, we did that to say that it would be paid out of here, so any increase in salaries from what they were getting before to what they are getting now under the pay plan is paid out of this fund.

This last year that was about 5.6 million.

This upcoming budget year is 6.1 million.

Yeah, next year.

Oh, I think that's um so when you take that out of what the fund generates, we get about 8.7 million left over in the fund to be able to spend.

Now we have escrowed this, you know.

This this goes back other years, but it's kind of huge already, so I try to truncate it.

So in prior years, we have saved up other amounts, and so we add that 8.7 into what we saved up before, we get to 13.7 million in fiscal year 2025.

This is currently an audited number.

We have not produced the audited financial statements yet that will be coming in the next couple of weeks, but that number has been signed off on by our auditor.

So that is actually sitting there.

Projected into fiscal 26.

We should under this same kind of methodology we've been talking about, we should have about 18.9.

It's really great, great save up, right?

So then we get we get to conversion.

Fiscal 27 is our conversion year.

So we are anticipating that first year paying out the 10.825.

So we go through the same methodology, we pay out the 10.825, and then so our annual deficit for the year is about 4.9 million 9 million.

So where are we getting this 4.9 million from?

Well, from this escrow.

We also will have some debt that will pay off, so we'll have some extra budget capacity with that debt.

And so generally we have an uh we will have about 14.4 million saved up at the within the escrow at the end of the first year of conversion.

This is really the number to watch, right?

So at the end of the next year, fiscal 28 will have 12.026 left in the escrow.

10.9, 6.6.

Now that trend is alarming because it is going down, and eventually that going down will mean it will get to zero, right?

So within this plan, the way that it is projecting out, again, as of today, with the way that the salaries are set, that our debt roll loss will grow because we have extra debt that is being paid off.

And if we pay off debt and don't take on new debt, that debt payment is going to be applied here.

It's the only way it works.

Um, and so then we get to 3.19 million.

That's built into there.

Yes, sir, it's built into here.

Yeah, for us to pay off all of our all the debt that we have outstanding, the ones that are going to be paid off in the next few years.

If we do not take another piece out, that is baked into this number.

Unless you find an offsetting revenue.

Sure, unless we change the entire like methodology up here.

But we we're you know, we're gonna be committed as an administration to recommend you we stay disciplined in that.

Keep going, Carly.

I don't want to erupt your thank you.

So as we help keeps going down, we get to here, and our growth catches up with us.

Our growth catches up with us, and the pay plan becomes a minimal impact.

In fiscal 35, right?

Fiscal year 35, and so we then go to start going back up.

Now, again, what changes all of these numbers, and the reason that we have had to add multiple $4 million a year, and we could possibly continue into perpetuity doing that, but the reason that we've had to do that is because this line item, the public safety, sorry for all the public safety employees in the room, but the public safety pay plan has cost more than originally agreed to.

We have applied COLAS, we have applied step raises that were not originally worked into the plan.

And so, therefore, this this uh pay this new pay plan has cost more money into the future than we originally thought it would.

So, in so whenever payroll increases, number one, it gets paid out of here to begin with, but then it also adds to employer contribution requirements.

So, moving forward, if we don't keep that $4 million in, we would have to find some other offsetting revenue in some shape or form.

Now there will be a benefit though next year, beginning October 1, 2026, which will be the first day of fiscal 27, is that for our public safety employees, their retirement contribution amount will drop from 14% to if they're participating in stress bill, 8% for tier two, 7% for tier one.

And that's going to be a 6 to 7% pay raise across the board for every police officer and fire buyer.

And so I doubt in next year's budget you're going to see us recommend any COLA increases for public safety just because there will be a built-in increase by virtue of the retirement plan changing, which is good, very good for our men and women who do so much for us.

Yeah, their take-home pay will should increase with us not applying anything currently, and then it also saves this plan into a little bit more stability for a year.

Um so yeah, so all of that being said, the way that it stands right now, I think that we are good.

Now, when the first year payment comes due, things are going to change.

These are all projections and assumptions based off of a Cabinet McDonald valuation based off of revenue growth projections.

So please don't take this as gospel.

This is just a strategic projected plan.

Um, okay, so one thing that we need to discuss is the impact of the debt on our credit rating.

Um, when we have recently talked to Fitch and Moody's, they they work our debt profile into their ratings assessment.

They have a um both both firms in different ways have uh metrics that they look at to be able to grade us on where we should be sitting credit rating-wise.

Part of that grading criteria process is that they use our total debt and they compare it to things like the personal income percentage that we have here in town, the our total overall revenues, um, and then like our carrying cost of debt, which are our debt payments compared to our overall governmental expenditures.

And you can kind of see our two excerpts from the most recent FICH ratings uh report and the Moody's rating report, and you can see that they both discuss RSA.

So in Fitch factors that could individually or collectively lead to negative ratings, is um a 20% increase in long-term liability and carrying costs, which they reference the um the RSA conversion in a previous statement, and then Moody's ratings says it specifically here is that the series 2026, which is the current issuance at question, resulted in long-term liabilities ratio of 234 plus six.

That with the ERS conversion, um that long-term liabilities and fixed costs could rise above 300% and then 20% of revenue, and that could put pressure potentially pre putting pressure on the ratings.

So, and they would say it perfectly the credit impact will become a lot clearer when the transition is completed.

So okay.

And I and I think it's important, this all started when SP back in 2019 made the decision to say that the police and fire pension fund debt, which we always have maintained was not ours because the state act was clear that was not the city's liability.

SP said, City, that's your liability morally, and they're right.

I mean, frankly, they're right.

We we would ensure the pension funds for our police and fire fund.

So here's the for us now.

We're entering into a new world with SP, we probably improve in the way they look at it because we are tackling that issue that they said was there.

Fitch and Moody's have always took our position that the police and fire pension fund debt was not ours.

Now we're taking that debt in, and we're taking full responsibility for that debt.

So there could be a future impact on our credit rating because we're we're taking on this debt.

We have no choice.

I mean, the police and fire pension fund put itself into a box.

We had no choice but to do that for our police officers and firefighters, but there that will be likely over the next five to ten, you know, not five, one, two, three until 2035.

Every year we're going to have to be convincing to those rating agencies to show them that we're managing us taking on a quarter of a billion dollars worth of police and buyer pension debt.

Walk me through this slow because I'm a little I mean, I haven't seen or heard anything new today or the months leading up.

These are the same things we've been breathing, those two rating agencies up there in New York for what two summers up.

Am I one of my missed what is it they're looking at now?

Well, you know, I don't think there is.

I don't I hope this slide didn't, it's not meant to create a scenario.

I can put my hair out.

What we want to do is just disclose the fact, like with Elevate.

When we passed elevate, one of the things the rating agency said is you're about to take on a lot of debt.

We want to see how you manage it.

And so what we're saying is they're going to be closely viewing our management of paying for this quarter of a billion dollars worth of debt.

And I what we're trying to emphasize is that we have to be very disciplined as a council really the next three to four years as we begin this journey of making certain that we stick to the plan that's been presented that we really have been working on collectively since 2022-23.

We can't deviate from that plan, is what we're trying to emphasize, or else I do think Fitch and Moody's, who is going to and should be taking a look at our debt on this, that it will send up warning signals that could jeopardize our credit rating to some extent.

Well, and I think that my next slide should hopefully give a little bit rosier of a picture of their Moody's and Moody's and Fitch are really just saying that hey, we recognize this is on your radar, know that because it's on your radar, it's on our radar, and we want to see what you do with it in the future.

That's kind of really all that they're talking about here.

But this is what exactly, so into the future, what will they really be looking at, right?

So I did do this.

So in our financial statements, we have this disclosure in our in the notes to the actor, and you can kind of see it here.

So this is our total debt in our in the governmental funds, this net pension liability.

We disclose this line item every year.

So it'll tell you what the beginning balance is, the additions that we had to it.

So our debt, our net pension liability went up by 18.8 million because of just service costs.

We paid through 25.6 million plus some you know earnings that were created within the fund.

And so our ending liability balance as of 930 2024 was 180.5 million.

So this is kind of what they look at when they want to grade what our debt is, and then compare it to our pension liability.

The total, and then this number knowing that this number is going to change in the next few years because of conversion, right?

And the way that it's going to change is via that Cavanaugh McDonald report the current unfunded liabilities as we disclose in the financial statements for our RSA account is that top number for the police and fire pension, it is that bottom number.

And so our total pension liability for these two plans, you can see 180 million, right?

I don't have the so when you were asking, like, well, have do you know that what RSA's done lately for um what you can possibly change and project?

I don't I don't have RSA's valuation yet this year.

I'm going to be curious what that comes back at.

Um so that's current.

So we disclose our financial statements now.

Per the Cavanaugh McDonald valuation.

This is some other information if you want, but this unfunded liability after conversion.

2021 was going to be 212 million, 203 million, 234.

This is the 265 that I showed you earlier, right?

So let's just take 2024 is all of this the full year that we have.

We will go from 180 million of a liability to 247 million overnight.

But that's because we brought the 125 fire and police pension fund onto our balance sheet, right?

No, no, I mean it's on our it's on our balance sheet right now.

It's just that it transferred to RSA, and RSA benefits cost so much more because they are a much bigger package.

Um, so RSA benefits way above and beyond what the fire police pension benefits are, and so the benefits are just more expensive.

And so literally, so because we this fire and police pension number of 125 we we that's on our balance sheet, even though it was not technically our even though it's not technically ours because like the mayor said, more than known for the last six or seven years since we've met with SP.

I mean, everybody who's met has put their finger on that, and some of us will argue not technically ours, some of them will argue morally yours.

Um, but there's there's no surprise on there.

No, so there's no surprise on there.

The only issue is that again nothing that the credit agencies have not had visibility on every time we went up there.

Now, do they now yes, I'll agree with you.

We did disclose that it would grow to this number this last time.

Uh they didn't they did not deep dive on that point.

Um it was not very thoroughly discussed with them because they seem to be acceptable of just the overview information, but no, this that we did disclose that too them this last year, and the 10.825 million additional payments.

I mean, Moody's even talks about it in their rating report.

But my point for for this slide really is to say so we go from 180 million to 247 million.

That's a difference of additional debt load of 66.7 million.

When you take that as a percentage of the entire debt profile, that's only a 13.62% add.

If you recall, most of their changes are gonna be 20% difference, 20% increase in long-term liabilities and carrying costs.

I do think that we will be okay, but again, that's today before anything else really changes.

Okay, so then um, those all the financial disclosures.

I'm not gonna kind of get to the um to the lawyer side of things.

Um, in December 2022, the council adopted the resolution expressing intent um to divert, and then in May 2023, the state signed up uh passed the log signed by the governor authorizing Tuscaloosa to join ERSA for its police and firefighter employees.

Um for every single police and fire employee and all the current pensioners under the police and fire pension plan.

That work is extensive and will be thousands of staff hours, more so than I think that we were really imagining.

But so there's currently a product team ongoing of accounting and finance and human resources that are working with ERS representatives to get that transfer of information.

Um if we hit any snags within any of that, we will definitely like keep anybody abreast.

Um but today we are requesting authorization to conform to the rules of the ERS Board of Control, such that Tuscaloosa police and firefighter employees shall participate in the CH exclusive pension plan administered by ERS effective October 1, 2026.

This is language from a resolution that we are requesting to put to pass through finance committee and put on the council agenda for next week.

And now I'm gonna turn it over to Scott.

Tell me what that resolution is gonna do.

And so ultimately in December of 22, which didn't seem like it was that long ago.

I was kind of surprised when I saw that date.

Uh, this body passed the resolution authorizing us uh expressing your intent, uh adding the local act, the the act uh 2023 148 to the legislative agenda and authorizing city staff to do the work we've been doing behind the scenes, including all the work Ms.

Standards has been doing uh with the actuary team uh to to start building towards this.

Uh but believe it or not, uh next week we are six months away from from this conversion.

Um I think all of us uh a few months ago went, oh wow, a couple years from now is here.

Um and so what we're going to have before council on agenda next Tuesday is a resolution authorizing staff to to take the steps necessary to conform to the rules of the ERS Board of Control and conform to RSA's rules, and we need to take the steps necessary to go through this conversion.

Uh now, believe it or not, that will that resolution will be council's sort of last big yes move forward with conversion.

Now, ultimately you'll still have all the various budgeting decisions to make as those things click through.

Uh but we believe this will be the last real resolution for council to say yes, we want to go through with RSA conversion.

Um there will be other steps that will have to be taken.

Uh the pension board will have to have to approve.

The active members will have to approve the RSA.

Well RSA will have to sign off on everything.

Uh, but but this resolution is kind of hidden hit and go on on the process from a from a legal standpoint, so we can start setting that other sort of waterfall uh into effect.

Uh one of the things we're we're working on is trying to pin down a much more precise time frame.

There will have to be an election of the action the active pension members.

Uh Ms.

Johnson manages that election and is as you're probably aware she's currently managing the special election for uh district three right now.

And so we're hoping to let her get past that special election, but we do want to go ahead and start getting the timeline in place.

We're working myself.

Uh Jimmy King from Mayander Nixon has been helping us with this process, uh, and we've been in in contact with Elise Spruel, who's actually the attorney for the pension board to go ahead and start lining this up and hope to have a real well a solid timeline as to exactly when those uh elections will take place uh here within the next few weeks.

And and Mr.

King can answer probably some more technical questions than I have than I can if if y'all have them.

Yes, we still have one at a whole community.

We still have one more.

All right, so what you need today from finance committee is one more time, Mr.

Holmes.

Um I guess what we would need for Ms.

Johnson is is the the I guess a motion to move forward with that.

Frankly, Mr.

Busby, it may be simpler.

I think right now I have the resolution drafted to be on the council agenda at the mayor's request next week.

You said what we need from Ms.

Johnson is a motion to move forward.

What you'd need for Ms.

Johnson.

Frankly, Mr.

Busby, I think we can treat this as information only and just know there'll be a resolution on council agenda next week at the mayor's request.

I don't have a problem with that.

Thank you for the time.

I know this would be.

No, no, so this is important.

Thank you.

And Mr.

Stanford do more.

Yes, sir.

I will send it immediately.

I do just want to say to Miss Standards.

You are phenomenal.

You may all the time.

You need a day the way you had that in your head.

Yes.

That's very, very kind.

Thank you so much.

All right, we're ready for the next item, which is Miss Howell, you want to introduce it?

So introduces new firms credentials.

And so um, and he's gonna come very quickly because we are out of time, but what I would like to say as one of the senior most members of the council, it has been brought to my attention over the past eight years.

I know at least twice, and I've always been in favor of having a investment banker on location.

So Mr.

Garrison wanted to be um basically pitches pitch for the firm that he's currently working with, and I hate that we don't have a lot of time today, but he's here.

Well, unfortunately, with what I've come to request, probably uh with the timing of the current bond issue, might not be able to occur unless y'all take this and read it and digest it and decide that you can wait another week because I know you don't want to do anything in a hurry, and you shouldn't.

What I've included in in your package is just some information about our firm.

Um obviously we are a very diverse firm uh based out of Chicago, they hired me to cover the Southeast.

Uh been doing it five months now.

We're building our office downtown and Bright Bank right now will be moved in and mayorily in a team office at TTL.

Um, you know, I have nothing but positive things to say about the firm that I previously was with.

I appreciate the opportunity they gave me to learn the business.

Um I heard something in a movie the other day that somebody said when somebody says well they should have known, I'll never say that again because you never know what you don't know until you're in it.

So I don't think I'll ever say that they should have known better, but all I'm saying is that after seven years I learned a lot from the business, also burned a lot of things that other firms can do with capital.

Um what boutique firms can do with their capital, uh, how you can partner and syndicate uh larger deals.

Um and really what I wanted to come here today was just to provide y'all with information about our firm.

There's a lot of charts here about the current market.

You'll fall asleep.

I'm not planning to go over all that.

This is more of a plea to say I've known all y'all personal, it's hard not to be personal.

Um I made a professional move that I thought was in the best interest of my clients, and and ultimately, you know, bringing a firm to Tuscaloosa and lost Alabama, bringing an investment bank to here.

It was kind of always a dream come true, to be honest with you.

And I never knew it would happen.

And um, you know, the people at Fraser Linair and I were talking about this for about a year.

I've been having offers for various national firms for several years.

And you know, we had a lot of bankers covering one state.

I was trying to hunt elephants in certain areas, whether it'd be working for the state of Alabama or the University of UAV hospital.

Well, do work for them, you have to have a large capitalized firm.

Um, and so ultimately uh I made the decision that it was in my best interest for my clients, including the city of Tuscaloosa, which has a lot of debt and does large issuances like you're about to do, that it's wise to look at maybe adding a syndicate or another highly capitalized firm when you're at going out and issuing 80, 100, 150 million dollars, especially in a choppy market that we have right now, and y'all all know we're at war right now.

And rates have spiked anywhere from 30 to 50 basis points in the last two weeks.

We don't know what the next tweet will bring.

We don't know what tomorrow's gonna bring.

All we know is that we're in a choppy market when the market sees one under undercapitalized boutique firm as an underwriter on an 80 million dollar deal, they can take advantage of that.

Whereas if they have another firm that has capital that's willing to step in and buy bonds and say, hey, if you're not gonna buy bonds on this issuance, we'll step in and buy them and compete with the with the sellers.

And so I know the foot is on uh the shoes on the other foot.

I was selling Fraser Lanier and what in a great firm from Alabama for 50 years, but you know, I did what's kind of the American dream.

I I took an opportunity to grow, and so yes, we'd love to be a part of this deal.

Um it may be too late.

Um I think it would be wise for y'all to look at what I've included in your packet, including Fraser Lanier's capital base, which is public information that I've included in your packet along with ours.

We can do up to a five billion dollar bond issue with our capital base sold sold managed.

We work all over the country, except the southeast.

That's why they hired me.

I looked at multiple firms.

I even looked at getting out of the industry, to be honest with you.

But here I am today, and you know, there was a contract that you know I feel like I was standing up here four years ago fighting for my job.

Um but it ended, you know, with the last term, and you know, y'all assigned me as the banker in the contract, and I think we've worked well together.

We we've we've come up with a lot of creative ideas to really maintain those credit ratings to figure out you know how can we nobody wants to see the credit rating of the city drop.

You don't have enough time in the day, especially the mayor of the city or Carly to explain to the public why you don't that won't give you enough time, you just got a credit rating drop, and nobody wants to see that.

And through my five to six or seven years that I was the lead banker, we did nothing but maintain or upgrade, and we issued a lot of debt, and we came up with some creative strategies to do that.

Um, one was even an appeal with Fitch to make them go back and look at our person our our personal spending for those of our students, and they they agreed with us.

So, I mean, we fought and fought and fought to maintain what we had, and I know that sometimes you go with a firm, but sometimes you need to go with the person that that knows the most about what they're talking about and what they represent.

I set 12 years where you are.

Um, I tried to pay attention to what's going on on a weekly, monthly basis, what's going on with our city?

You know, um I I try to do everything I can to be a partner with the city, and uh you know it's it is it's personal to me, and I'm sorry to get emotional about it, but it is and uh I know there might be some commitments that were made that I didn't even know about, you know, but I'm here to plead with y'all to give me an opportunity.

We appreciate you coming in and appreciate the presentation, and that was the purpose to get that process started, Ms.

Ragan.

I gotta ask.

Have we have we dispensed with any thought of public safety or we're gonna still need to get the public safety agenda?

We have to meet this two.

We're asking Chief Sanders be moved to the litigation.

We'll push him to the next publicity.

Okay, if there's Rumo admin next week, I wouldn't buy it.

That's another one.

All right.

Okay, yeah, we have two legalizers that we have to put in.

So we are having it, yes.

Okay, and are there any questions or comments about it?

Is there any?

Oh, Lee, thank you for coming in.

Is there any other business be brought before the uh committee?

Make a motion to adjourn.