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Good afternoon. Welcome to this meeting in City Georgetown City Council. Call us to order, and we're going to start with our employee recognitions.

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And who's going to lead us off here? Mary Lee.

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Remember push, put the mic on. Thank you. So good afternoon, mayor and council. Today I have the honor of recognizing the extraordinary dedication of our employees for their years of service with the city. These individuals are the ones

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Once keeping our city services running smoothly and ensuring our community receives excellent customer service.

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Thank you for your passion, your hard work, and your unwavering commitment.

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Today we are celebrating February milestones.

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All right, this month there's one employee celebrating five years of service.

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Ernest, can you come on down?

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That's okay, we're warming up.

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We're going to gather around, this is our only five year celebration person celebrating.

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Let me just,

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it's allergy season.

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Yeah, Ernest, if you would stay there and get the photo,

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representing all five years of service.

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Thank you and congratulations again.

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Well, this is exciting.

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There are five employees celebrating 10 years of service.

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So I'm gonna call you down here.

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You're gonna get your plaque and then you're gonna stay

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for the group photo.

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So, first on deck is Aaron St. Pierre from Finance.

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I've been too many things.

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Change my slide.

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Look at that.

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There we go. These are all our candidates. Leslie Laffing, Finance, come on down.

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Lee Wallace, Finance, Woo-hoo!

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Cynthia Economos is not here today, but representing City Secretary

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and Rocky Menchaka, permitting in inspections.

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You're probably going to have to get closer for that photo.

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Thank you all.

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We

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have one employee celebrating 15 years of service.

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So, Tate, you could see how this is done.

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Tate Sugamura for Finance or Fleet as we like to call it.

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Thank you.

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And congratulations.

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I would now like to call Assistant Fire Chief Craig Cranky.

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We're going to recognize Lance Jordy for 25 years of service.

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Well,

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unfortunately, Lance is not here today, but that is kind of what Lance is all about.

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He is not one for being in the spotlight.

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He came to work every day, did a great job, a great attitude, but he didn't want anybody

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to recognize him for anything.

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His attitude was phenomenal.

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He would help our members out if they were struggling at home, or if they were struggling

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with just life in general, he's the top person that had sit down and talk to him, he was

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great with finances, he offered, hey, if you want me to go over ways you can invest money

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and stuff, I'm not going to tell you how to do it, I'll just explain it to you, he did

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it for me and I owe him a lot for what he taught me and allowed me to do. Good enough to

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where tomorrow is his last day.

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He's retiring.

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So Lance's last shift was on Saturday.

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He worked at station 4 at the airport.

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His official last day is tomorrow, 11.

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So we wish him the best on his retirement.

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He is actually taking over the family business.

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Him and his father run a plumbing company

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and his father wants to retire.

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So Lance is taking that over.

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So that

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is super impressive.

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So thank you everybody for showing up to celebrate our 5 or 10 or 15 and our 25 years of service.

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We really appreciate it.

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All right.

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Thank you very much.

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And now we're going to move to item B, Cameron.

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Hey, good afternoon, Mayor and Council.

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I appreciate you guys making time to talk about economic development.

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Can you guess you're okay?

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Okay.

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So I thought it would be a good time to do an annual kind of economic update.

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And there's been a lot of really great things happening in Georgetown, not even just in the

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the last 12 months, but really over the last five years.

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So we're gonna hit on some of the main things

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like our approach to economic development,

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incentive tools and our philosophy behind

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how we use those tools.

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I think the exciting part will be the

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economic development activity and project update.

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So kind of talking about what's happened recently

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here in Georgetown, what the impact is.

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And then also looking forward at our opportunities

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and the focus that we'll have in the years to come.

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And we'll have some time for Q and A at the end too.

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So if you have questions, you're more than welcome

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to jump in while I'm going through this,

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but we can also have time for Q&A at the end, too.

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So really Georgetown, it's probably no surprise to anyone

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in this room.

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We've had just a tremendous amount of population growth

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from 2010 to 2025.

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And you've seen that go from about 123% in growth.

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That's just a historic amount of growth.

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I think that would bring a lot of opportunities and challenges

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to any community across the nation.

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But I think this is really given Georgetown an opportunity

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to make ourselves even better than we were before.

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And not wholesale change, but really make us the best version

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of ourselves that we can be and that's kind of what we do is we work proactively to harness those

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opportunities and help shape the growth occurring. We can't necessarily stop all growth or limit it,

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but we can work to make sure that growth that's coming is quality growth that's going to be a

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net positive add to our community. And one of the strategic ways we do this is we worked through

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a strategic plan for economic development. So this was adopted in early 2024 and there's three kind

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of goal areas for economic development. The first is business development that's kind of what you

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think of when you think of recruiting businesses and growing the ones that are already here,

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but with that comes talent development of making sure that we're developing the local workforce

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and our future workforce with our partners at GISD to fill those jobs and also quality

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place-making to make sure that Georgetown's a unique place to live and keeping that community

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culture that we have here thriving. And a big part of that strategic plan that was adopted

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is a target industry study. So that looks at not only is what's a good fit for Georgetown

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from their perspective but what's a good fit for us from our community perspective as well.

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So it has to be a match and when we look at the type of opportunities that exist for Georgetown

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and what's a good fit for those communities. Three main areas emerged which is advanced manufacturing

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and when you think of that you can kind of see things with Samsung suppliers, with semiconductors,

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EV vehicles and components so Tesla suppliers and other areas like that. Computer electronics

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manufacturing is a large one for us and we're going to dig into that a little bit more in this

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presentation, aerospace, patient, aviation, and clean energy technology as well.

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Professional services, again, is also a big thing with us being the county

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seat of Williamson County. There's a lot of professional services located in

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our community, especially in the downtown. And then healthcare and life sciences and

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emerging industry with biotech and research facilities, but also health care

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facilities as well in Georgetown.

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And one of the ways that we are trying to be

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proactive and work to be proactive is looking at several different

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the criteria when we look at a project.

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So we don't just look at, does this project

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want to be in Georgetown?

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When we look at, is this a project a good fit

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for our community?

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Are the wages competitive?

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Can someone support a family and have a career

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with these jobs?

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Do we have the infrastructure to support that?

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So it's great to get a $2 billion project,

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but if you have to spend $4 billion

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to build out the infrastructure,

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is that a good deal or not?

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Do we have career pathways that are being created

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for residents that are already here living here?

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People are moving here or students at Georgetown ISD.

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those are the kind of questions we ask ourselves, and then is it a benefit for the entire community?

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So we want to make sure that all these kind of criteria are looked at while you're evaluating a

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project with you. We also look at if this project is going to cause any unintended impacts to the

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community. So if there are, are there ways that we can minimize those when they're happening?

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We also look at kind of taking a growth pace for growth approach. So things like impact fees,

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making sure that current residents aren't necessarily paying the impact more traffic or more infrastructure

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being built to support that specific business. Those companies just help pay for their fair share

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and we also have things like electric utility policies for large customers so we want to make sure

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that we're safeguarding the existing customers when a new large user comes in to make sure that they're

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paying for 100% of their infrastructure needed to support that project. I think Georgetown's also

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done a really amazing job for long-term planning and that's something we'll touch on in a few other

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slides but when we look at where these companies are coming into Georgetown, the really inappropriate

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places that are not popping up next to neighborhoods or schools, they're coming into areas that

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are planned for business parks that have the infrastructure to support them in the road

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networks that are around them are really planned to handle that type of capacity.

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And I think this is a good example of that.

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This is the city's first real master planned business park with North Park 35 and then

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been the epicenter of a lot of the growth that's happened here in Georgetown in terms of advanced

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manufacturing. This happened well before my time, but I really feel fortunate to work in a community

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that put this type of effort into planning for infrastructure and just in lane use in this area.

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So you can see a lot of the major employers that we're going to see in a few slides are actually

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located in this business park.

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And I think this was recognized. So it's not just us saying that

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Georgetown's done a great job of planning. The American Planning Association actually awarded

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Georgetown community of the year distinction for the planning efforts that have happened in 2024. So

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we're very fortunate to have that representation, but we're also very fortunate to have the team

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all working together to make sure that Georgetown's growing and developing in a planned way.

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And this is just an example so you can see ZT systems in the back. That's one of our largest

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employers now in Georgetown and you can see more and more employers are coming into this area.

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These business parks don't just pop up overnight. It takes a lot of work to plan for the roadways,

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is the water, the wastewater, the natural gas that's come in.

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And I think this is just a great example of showing our citizens

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that when you have these large employers,

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you don't necessarily know what's happening

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behind those four gray walls.

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You can just see on the outside,

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they all look fairly similar and clean,

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but there's some really high-tech advanced manufacturing

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that's happening in these facilities here in Georgetown.

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That's creating a lot of opportunities for our residents as well.

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And I mentioned infrastructure,

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But again, this doesn't happen overnight, and Georgetown is in a great job of playing for water, wastewater, electricity, and even working with our partners like Atmos on natural gas.

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These are years-long processes that have put it in place to help position us to compete for these projects that we're seeing come in now.

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One thing I did want to touch on is water. So I know just being in central Texas water is a commodity that's very precious to our residents and our businesses as well.

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So we're seeing new technology being used.

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This is an example of a closed loop system,

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whether it's at a data center or an advanced

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manufacturing facility that's using it for cooling.

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I think this basically works where you top it off

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and it basically recirculates that water

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instead of being evaporated into the air.

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So it can operate very, very efficiently.

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And you're seeing more and more data centers

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actually use this technology to drastically reduce

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the amount of water that's being used

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at their facilities for cooling.

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Hey, Cameron, can I ask you about that?

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Yeah, sure.

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It's just since it's kind of a hot topic going around.

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Yeah, like what's an idea?

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Like the amount of water these types of day centers

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you're using equivalent to like residential.

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Yeah, yeah, so like just using,

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it all goes by the electricity,

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but let's say it's a 75 megawatt data center.

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I would say they use with this closed loop system,

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probably somewhere between seven to 15 homes

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is what we've seen from some of the projects we've looked at.

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If you looked at the size of land

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that those type of projects you go to,

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you're looking at several hundred homes

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or Tannums, it could be over 1,000 Tannums for that same size project.

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So make sure we're saying the right, so a 75 megawatt data center is the closed loop system is the equal.

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Local government, 15 houses worth of water, and you could put, you know, 100 acres worth of houses on that same site. That's, that's right based on what we've looked at. Yes. All right, just want to make sure we're looking at that right. Thanks. Also, we're currently developing some language regarding data center and some of our high electric users, and as well as could have been a potential high water users. Just to out clarify that steps were

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We're taking to be cognizant of that, to manage risk on the electric side, manage cost

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and making sure there's not cost burden outside of those customers and the same thing on

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the water side.

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So we're going to develop, just let's say we're talking about examples, just to help better

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understand how we're trying to mitigate the risk associated with these types of users.

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Yeah, thank you for adding that.

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So I did want to give a case study of that.

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So I know I mentioned theoretically there's companies doing this, but here's an actual company

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that has used a closed-loop system in their facility.

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So total-side solutions has come into Georgetown.

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They've quickly become one of our largest employers.

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And they actually do.

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A lot of work with it is, and they're testing some of the equipment that is being used

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in those facilities.

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And their closed-loop system has dramatically brought down the amount of wire that they would

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have used if they used more traditional kind of antiquated equipment.

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So there are also a key customer for Georgetown Electric, and the cost of the infrastructure that

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that was basically paid for for the facility

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was 100% borne by this company

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and was not passed on to users

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as David mentioned because of those policies.

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So I did wanna kind of connect this

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so I know when people see a big company

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coming into Georgetown,

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it's not just the people who are being hired

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by the facility that benefit.

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I think there's a real connection to our general fund

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that pays for critical city services like police, fire,

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the public library,

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parks and rec, streets and roadway infrastructure.

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If you're really going about your daily life in Georgetown,

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You're going to be touched by one of these things, most likely every single day of your life.

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And these projects really are net contributors where they generate more taxes than they basically take in certain city services.

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So this helps fund the city and helps us continue to grow and operate as a first class city into the future as we continue growing.

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And again, so kind of hitting on that, Georgetown has the lowest property tax rate and central taxes at the city level.

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And these type of projects are a big part of that.

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So being able to basically contribute more taxes than they take has helped us continue to have a very competitive tax rate.

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Again, so I mentioned those jobs that come with it.

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So there's 300 full-time positions plus at that facility that doesn't account for the spin-off effect.

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So when you do economic modeling and you see the type of companies that are supplying them or people going out to eat in the community at restaurants or shopping and stores,

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economic modeling show there's about 237 other jobs in our community they're

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supported by them being here. So it really has a cumulative effect where when

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we make an announcement it says 300 employees are coming or 500 employees

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there's really a bigger effect on our community that we see with these types of

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manufacturing projects. And I will mention in the lastly

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total site solutions, Pegatron, Compon, ZTE. These are all employers that have come

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in recently and they're all in the same industry and they're actually being

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great partners where I think people could think they're competing for the same jobs, but they're

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actually working together with Georgetown ISD, TSTC and ACC to help develop the pipeline of talent.

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So we're working to develop curriculum with all these groups, and we're going to work on some

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of the positions like a testing technician that all of these companies need to help open up these

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job opportunities for local residents. So you don't necessarily have to have manufacturing experience.

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If you can go into these programs within a matter of weeks, you can get the skills needed

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to go ahead and apply for these types of jobs.

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We're going to talk about some of our incentive tools

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and our philosophy behind these tools.

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So really, I think the great thing about Georgetown

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is we have the whole toolbox

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of economic development incentives.

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We don't have a prescriptive approach

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where if you do this, you necessarily are owed this.

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We look at each project on a case by case basis

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and see what's the most appropriate tool

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with the goal of always trying to get the best return

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for our residents and the public.

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So when we look at tax abatements that's lowering taxes

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taxes on the property tax side for a period of time up to 10 years.

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Taxary rates can be them paying those taxes and then coming back.

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Triple freeports, a tool that's used to help incentivize manufacturing in an area where

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if they export those goods within 175 days, they don't have to pay freeport taxes on those

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or inventory taxes.

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So that can help bring in more manufacturing companies to our area.

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Foreign trade zone, if you've been watching the news and seeing the news on tariffs, a big

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Part of foreign trade zones benefits now is delaying the payments of those tariffs.

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So not that they don't pay those, they still will pay the full tariff, but instead of paying

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those when the goods that they buy come into the warehouse and they start making a product,

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they would pay those tariffs after they sell that good to a customer and it leaves the warehouse.

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And then again, we have type A and type B economic development corporations.

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Type B is GTEC, so that's really a great tool for us to making sure that Georgetown has

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great road to infrastructure and has helped support a lot of our economic development projects.

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And type A is Jedko, which we use on our bringing in mostly manufacturing but also other types of jobs into Georgetown as well.

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And I did want to hit on the point that all performance programs are performance based.

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So all incentives are performance based.

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It's not just a, here's a reward for doing a good job.

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It's, will you need this incentives in order to move forward?

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You have to move forward and hit these key benchmarks.

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And when we look at that, we need to agree upon a minimum amount of full-time employees,

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a minimum amount of capital investment, hit a construction date, and also hit a finishing

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of the construction date as well.

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And then we put guardrails and protections in.

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So we always want to make sure that if a project doesn't perform, it doesn't receive funding.

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And there's even opportunities for cloud backs where if they say they're going to do something,

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they don't do it over a period of time that there's way to pull any money that has been paid back.

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We also do annual compliance reports with multiple checks in each year.

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So we're always checking in with these projects and seeing how they're doing

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to just make sure that they're performing and delivering their end of the bargain as well.

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And we look at economic development incentives as an investment done under non-unordination.

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So when we're talking about these projects, we always look at what's the net benefit,

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what's the rate of return, how long does it take us to actually earn our money back through that payback period.

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And we actually look at those incentives on a per-job basis as well.

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So we just want to see are these heading the metrics that we look at for those projects to make sure it's a good benefit for our community.

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And I think some people have asked why are incentives needed? Why are the government involved in doing this?

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Why do we have an economic development corporation? I think the answer is that economic development projects are highly competitive.

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There's a real benefit for our community to get these projects to come in and really every city across the nation realizes that.

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So these projects are being competed for not just on a state basis, but on a national and international level as well.

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We've had some really great international companies come into Georgetown in recent months and years and these projects have the opportunity to look across the nation and even in other countries like Mexico for these types of investments.

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We also look at using these incentives to overcome initial cost gaps such as infrastructure costs, which can make a site uncompetitive.

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So if we have a site that maybe has a sewer line that's 3,000 feet away, but otherwise they want to come to Georgetown that can potentially be an opportunity for us to work with them to overcome those initial costs to bring us into a competitive nature.

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And it can help shape a project was so they can make our project an even stronger fit for our community.

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So some of these projects have really had a huge impact. I said all of our projects have had a huge impact on our community and has helped us diversify the local tax base.

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I think Georgetown's done a really good job

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in not becoming overly reliant on one single employer.

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If you think of Detroit with Ford

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or another city that has one large employer,

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that can be dangerous if that employer

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grows out of business and people are out of work

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and people have to relocate.

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You're gonna see, I think over 13 projects have come in

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the last few years to Georgetown,

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which has helped spread out that level of risk

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and also diversified the local tax

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based in different industries as well.

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And it's increased the amount of jobs

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and career opportunities for existing residents,

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future students as well.

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It's also helped us fund key critical services and

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infrastructure. So I mentioned that earlier, but I just want to thank them again

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that these really do help us pay for a lot of the key city services that we

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provide. And we see another benefit just in a quality of life standpoint where

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daytime populations, one of the key things that restaurants and retailers look at

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so they want to make sure it's not just people there at nighttime going out to

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dinner is there going to be a lunch crowd or they're going to be people

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shopping at our business from nine to five. And having these employees here in Georgetown

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really helps move those metrics where we can get even higher quality retail and entertainment

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options in Georgetown.

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So now I think we're moving into the fun part. So I think this is

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what have we done in the last 12 months and the good news is that we actually had our best year

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on record. So I'm really happy to announce that we had $650 million of capital investment over 11

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700 jobs and 573,000 square feet of space utilized.

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So that's over five or six HEBs worth of space

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filled up with really high quality jobs.

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These announcements included TSS,

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we looked at earlier.

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JF actually moved their R&D facilities here

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to Georgetown from California, which is great.

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The Blueprint Data Center's Project Announce,

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and then we had Pegatron enjoy us from Taiwan.

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So they're one of the premier manufacturing companies

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from Taiwan.

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They're one of the top five companies in Taiwan as well.

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and then TML and TML Risk pool announced their headquarters here in downtown

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Georgetown as well which will have a huge impact positively in our community.

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And just looking back up in the last few years, these are all the just the

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companies that have come to Georgetown. So it's pretty impressive when you look at

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what Georgetown's been able to do in the last four to five years. I think a lot of

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communities across the state would just be very, very happy with this level of

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investment. And Georgetown is consuming to see this. So I think we're going to have a

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Why have we, I said big focus, so when you look at this,

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you'll see a lot of companies in that advanced

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manufacturing sphere.

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And I think some people ask, well,

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why do you want that more than another type of industry?

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And really, there's a few different reasons.

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I think these projects are hired locally.

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So there's a lot of things that are happening

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across the economy where a lot of things are being

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optimized or AIs impacting them.

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Manufacturing is really hard to do that with,

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where a lot of the things that they're making

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or at such a detailed level that changes every three to four weeks where they're going

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to need high staff counts.

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So a lot of the companies that have come and have told us with their announcing 500 jobs

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it's going to stay at about 500 jobs even with automation.

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It also creates a lot of career pathways for people with zero or even minimal manufacturing

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experience to jump into that sector and really start making a great rewarding career kind

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of money and support their families.

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So we've had situations where people have worked at coffee shops and have been hired on

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and some of these local companies

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and now they're making $75,000, $85,000,

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whereas before they were making hourly wages.

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There are also a future profile guy mentioned

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and many of the projects also involve significant investment

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into machinery and equipment.

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So when we look at the tax impact of these projects,

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as opposed to, let's say, a warehouse.

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A warehouse has a lot of things on shelves

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that are shipped out and doesn't generate

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a lot of taxable value,

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but some of these machines are several million dollars each

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and we actually benefit from the property taxes

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that come from those machines and it helps make those projects a little more sticky

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where the company is less likely to pick up and move if they're installed there.

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So those 13 projects alone have a count of about 1.4 billion in capital investment,

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5,000, 25 new full-time positions, and 3.2 million square feet of space utilized.

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So I think that's just a really great impact for Georgetown and working continue to see

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more and more of these types of companies coming thanks to the hard work and plenty that's been put in

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to our community, just looking at business park space.

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I know we've had some comments about,

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hey, I see an empty building, what's going on there.

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And I think we're seeing a lot of activity.

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I think pretty soon we'll see some of those vacancies filled.

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But I would say there's actually not that many vacancies.

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There's been about four million square feet of space

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that's been absorbed.

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And you can go down the list going from 600,000 square feet

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00:27:29,720 --> 00:27:31,820
of space down to 41,000 square feet of space

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and see the types of companies that come in.

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and it's really not a lot of distribution.

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It's almost all manufacturing,

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which is really exciting to see.

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And again, so when we looked at our strategic plan

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and it recommended computer electronics and manufacturing,

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that was just after ZT systems came.

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So we were beginning to understand

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how we could work with our electric utility

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and our city to go after these projects.

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And we've seen three other types of these projects

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come into Georgetown in recent years.

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In addition to companies like Bear Manufacturing

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who are supporting those industries as well.

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And I think this has been a really big impact on us.

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So we've created new types of jobs for our residents.

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We've had homegrown companies that left Georgetown,

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like control panel's USA, who went to Austin,

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00:28:15,060 --> 00:28:16,900
come back and benefit and the opportunities

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00:28:16,900 --> 00:28:18,560
have been created here with this business workspace.

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We've had companies from all the way in Taiwan

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come to Georgetown to make investments here.

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And I think a big part of that is that

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we have a great relationship with Georgetown ISD.

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So the future ready complex has actually been

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a huge asset for us.

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A lot of our recruiting meetings that we have are actually held at the future ready complex

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to show these companies that were committed with Georgetown ISD to develop these talents

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of pipeline.

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And on your right, you can actually see that students are working on aerospace where they

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00:28:45,420 --> 00:28:50,060
actually build a plane and fly it from Georgetown Executive Airport, but they also have a manufacturing

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00:28:50,060 --> 00:28:53,820
program that just started this last year, where they're working with companies like Selling

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to actually donate equipment and learn on that cutting edge technology at the high school

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level, which is exciting.

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00:29:01,570 --> 00:29:06,270
Fort Hood is also a huge asset for us as well so you can see just coming straight down into Georgetown.

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People can come to work here in about 35 or 40 minutes as opposed to going down to other parts of Austin.

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00:29:13,510 --> 00:29:18,090
And that's helped our employers actually capture a large percentage of the soldiers who transitioned out of the military.

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00:29:18,810 --> 00:29:27,590
And we're actually seeing about seven to 800 soldiers every single month retiring from the military looking for work and Georgetown's capturing a large portion of those people.

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I know we've talked a lot about manufacturing in some of those projects, but I also wanted

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to hit on the fact that supporting retail development is a big focus first as well.

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We put a lot of focus into that more recently.

462
00:29:42,780 --> 00:29:46,840
So things like Southwestern, announcing the 560 acres, I think that's going to be a very

463
00:29:46,840 --> 00:29:50,580
important project for our community that's going to bring in new types of high-quality,

464
00:29:50,820 --> 00:29:51,800
mixed-use development.

465
00:29:52,600 --> 00:29:53,840
We also have our first parking garage.

466
00:29:53,980 --> 00:29:57,100
I say our first because we're working on potentially a second garage in downtown.

467
00:29:57,100 --> 00:29:59,880
and we developed a retail attraction profile.

468
00:30:00,000 --> 00:30:28,920
I'll tool to share with developers and retailers. So we go to conferences and actually practically meet with a lot of the developers and retailers themselves to permit Georgetown and actually just return back from a trip doing that in California where we had a follow-up meeting today. So we're seeing good interest from those types of companies. And we're actually having ongoing experience discussion with experienced developers to do new developments in Georgetown as well. But we've had groups like Sprouts, lows, home goods, HEB and Texas Honey Ham.

469
00:30:29,460 --> 00:30:31,880
open up new stores here in Georgetown.

470
00:30:31,880 --> 00:30:33,680
And we're gonna continue to see more and more of that.

471
00:30:34,640 --> 00:30:36,820
And I think one good example that is blue bonnet plaza,

472
00:30:36,920 --> 00:30:38,960
just to kind of highlight what some of these projects look like

473
00:30:38,960 --> 00:30:40,500
where you have groups like Summer Moon,

474
00:30:41,400 --> 00:30:43,280
Bell the Talk, Shake Shack coming to Georgetown,

475
00:30:43,280 --> 00:30:46,320
which I think is a good indicator of what's coming.

476
00:30:47,420 --> 00:30:49,100
We're also seeing projects like the Junction.

477
00:30:49,260 --> 00:30:50,340
So it's a little bit more creative

478
00:30:50,340 --> 00:30:52,580
where there's gonna be a mixture of restaurants,

479
00:30:52,820 --> 00:30:54,500
pickleball courts, a performance stage,

480
00:30:55,000 --> 00:30:56,460
mixed in with flexible office space.

481
00:30:56,840 --> 00:30:58,080
And this is coming into an area

482
00:30:58,080 --> 00:31:00,320
where a lot of the manufacturing projects are actually

483
00:31:00,320 --> 00:31:01,520
located next door.

484
00:31:01,840 --> 00:31:03,660
So people can walk over from those facilities

485
00:31:04,160 --> 00:31:07,860
to come and grab a cup of coffee or grab a pizza next door

486
00:31:07,860 --> 00:31:08,920
and enjoy some of the facilities.

487
00:31:10,800 --> 00:31:13,000
Also our downtown is just continuing to thrive.

488
00:31:13,000 --> 00:31:15,040
So I think our downtown teams have an amazing job

489
00:31:15,040 --> 00:31:17,400
and really that benefits us in the economic development

490
00:31:17,400 --> 00:31:20,080
department as well, where when we're just kind of selling

491
00:31:20,080 --> 00:31:22,460
Georgetown and letting people know that it's a great community

492
00:31:22,460 --> 00:31:25,200
that can fit their company, they're able to envision themselves

493
00:31:25,200 --> 00:31:26,620
living here and enjoying Georgetown

494
00:31:26,620 --> 00:31:31,460
in our community and fitting in and our downtown is really the front doorstep to that so it's been

495
00:31:31,460 --> 00:31:36,600
a great asset for us. And I mentioned the Texas Municipal League. I think this is going to have a

496
00:31:36,600 --> 00:31:41,820
big impact on that too. So having the events that are associated with TML, having those workers here in

497
00:31:41,820 --> 00:31:47,560
Georgetown is going to further support a lot of those activities in our downtown. And then looking

498
00:31:48,280 --> 00:31:53,560
forward at the future, I think Georgetown's an a great job so nationally we've had some headwinds

499
00:31:53,560 --> 00:31:58,020
manufacturing, but Georgetown's really continuing to excel.

500
00:31:58,720 --> 00:32:05,060
I think some of our key sectors are manufacturing assembly, aerospace and defense, automotive parts, and electrical equipment.

501
00:32:05,940 --> 00:32:11,880
So a lot of things are still tied to data centers, but we're seeing more diversification into aerospace and defense as well.

502
00:32:13,200 --> 00:32:21,520
And we're seeing more growth with Samsung, so them actually having their announcement that they're going to be open at the end of this year has kind of led to a lot of the

503
00:32:21,520 --> 00:32:25,760
creating companies of re-engaging and we're going to see more growth coming from that hopefully

504
00:32:25,760 --> 00:32:26,460
at the end of this year.

505
00:32:29,010 --> 00:32:32,590
So our project pipeline continues to be about a 50-50 mix I would say

506
00:32:32,590 --> 00:32:37,230
of international and US-based companies but the good thing is that whether it's an international

507
00:32:37,230 --> 00:32:41,810
company or a company from another part of the United States they're still hiring almost I would say

508
00:32:41,810 --> 00:32:47,250
95% of these jobs locally whether there will be a few management level positions that maybe come from

509
00:32:47,250 --> 00:32:52,010
another location but the vast vast majority of those positions are being hired here at the local

510
00:32:52,010 --> 00:32:57,190
level. And we've also seen a really good uptick and interest from Taiwanese companies, so we have

511
00:32:57,190 --> 00:33:02,070
a delegation actually coming to visit us later on this year from Taiwan. And part of that is that

512
00:33:02,070 --> 00:33:05,510
they've seen that Georgetown's worked really well with these two major companies, so they have

513
00:33:05,510 --> 00:33:11,710
an increase interest in us. Again, Samsung has led to more interest from South Korea and we're seeing

514
00:33:11,710 --> 00:33:14,830
an opportunity with Japan, with some of your connector companies as well.

515
00:33:16,850 --> 00:33:18,050
Again, kind of wrapping up,

516
00:33:18,050 --> 00:33:24,470
But Georgetown's continued rapid growth has led to more opportunities for high quality projects on with the retail and entertainment side.

517
00:33:25,670 --> 00:33:32,930
Just with the thousands of jobs that have come into Georgetown with these other projects, that's helped us demonstrate that there's sufficient demand for these type of projects.

518
00:33:33,650 --> 00:33:39,710
And we're currently engaged in other conversations with mixed use developers and developers of entertainment and opinions as well.

519
00:33:41,030 --> 00:33:45,690
With that we've got some time for Q&A, but I hope that kind of showed what we're working

520
00:33:45,690 --> 00:33:47,250
on and how the opportunities we have to.

521
00:33:47,870 --> 00:33:48,710
Thank you, Cameron.

522
00:33:49,090 --> 00:33:50,730
That's a lot of great information.

523
00:33:51,010 --> 00:33:52,930
Any questions, comments for Cameron?

524
00:33:54,630 --> 00:33:56,270
I think Amanda has a question.

525
00:33:58,090 --> 00:34:04,590
Are there any small niche grocery stores that are begging to come into Georgetown?

526
00:34:05,110 --> 00:34:07,690
And if so, why are you telling them they can't come?

527
00:34:08,610 --> 00:34:13,030
I think Georgetown will be a great location for any grocery store that needs to come here.

528
00:34:14,290 --> 00:34:15,390
No, I do have a comment.

529
00:34:15,650 --> 00:34:17,410
So thanks, Cameron, for the presentation.

530
00:34:17,710 --> 00:34:23,750
I actually was going to say I'm going to ask you a question, but I'm not baiting you for that particular retailer.

531
00:34:24,430 --> 00:34:32,430
But when we do hear people that do ask questions around, you know, we have several developable sites, I think, for retail right now.

532
00:34:32,430 --> 00:34:38,410
Would you say that we have more interest than we have sites currently available?

533
00:34:38,670 --> 00:34:39,630
Is that a fair question?

534
00:34:39,750 --> 00:34:44,730
I think about blue bonnet, McCoy, you know, potentially Southwestern, the future, but

535
00:34:44,730 --> 00:34:45,390
we're not there yet.

536
00:34:45,570 --> 00:34:48,590
I mean, are we seeing enough interest to actually fill those spaces?

537
00:34:48,590 --> 00:34:52,390
Because I think sometimes the community sees things like, you know, not develop out as fast

538
00:34:52,390 --> 00:34:53,590
as they would like them to.

539
00:34:53,790 --> 00:34:55,670
I mean, Wolf Lakes is another great example.

540
00:34:56,070 --> 00:35:00,230
So where do you see that sitting as far as getting some of those things developed out in

541
00:35:00,230 --> 00:35:01,890
in a way we want them to be developed out

542
00:35:01,890 --> 00:35:03,170
because I would also preface with,

543
00:35:03,430 --> 00:35:04,510
we don't just want anything,

544
00:35:04,670 --> 00:35:07,010
we want the right businesses to come to Georgetown

545
00:35:07,010 --> 00:35:09,350
that we want and that residents want.

546
00:35:09,810 --> 00:35:11,730
Yeah, I would say more recently,

547
00:35:12,050 --> 00:35:14,010
the vacancy rates in Austin have kind of shrunk,

548
00:35:14,070 --> 00:35:16,070
so there's just more demand for retail space.

549
00:35:16,270 --> 00:35:17,430
So even with online shopping,

550
00:35:17,430 --> 00:35:18,530
some of the things that have happened,

551
00:35:19,170 --> 00:35:21,710
there's still strong demand for restaurants and retail stores.

552
00:35:21,990 --> 00:35:23,090
So we're seeing more and more interest

553
00:35:23,090 --> 00:35:25,450
from groups like Endeavor that are doing Blibond and Plaza.

554
00:35:26,170 --> 00:35:27,530
I think we're gonna see more of those types

555
00:35:27,530 --> 00:35:28,630
of developments around Georgetown

556
00:35:28,630 --> 00:35:34,390
with high quality tenants and we're focusing on working with good developers that have good relationships with tenants as well.

557
00:35:34,930 --> 00:35:39,230
Because it's one thing for me to go and talk to those retailers and try to convince them and we can do that and we do do that.

558
00:35:39,770 --> 00:35:43,670
But it's really more of a that's like it's harder to get the returns on that.

559
00:35:43,870 --> 00:35:47,390
But when you're working with a developer that has those relationships and knows all the other brokers.

560
00:35:48,010 --> 00:35:51,650
We're able to see five or six or seven different companies come in with that development.

561
00:35:52,290 --> 00:35:54,250
And I think that's where we're going to see the most gains.

562
00:35:54,970 --> 00:35:56,910
but I think there's a lot of opportunity in Georgetown.

563
00:35:56,910 --> 00:35:59,210
I know some vacancies are still existing,

564
00:35:59,630 --> 00:36:00,870
but there's still a lot of demand.

565
00:36:01,070 --> 00:36:02,470
And I think we'll see those filled up soon.

566
00:36:02,810 --> 00:36:03,310
Okay, great.

567
00:36:03,450 --> 00:36:05,230
And I think that, you know, the other thing that I hear a lot

568
00:36:05,230 --> 00:36:06,750
and I always tell people is, you know,

569
00:36:06,850 --> 00:36:08,690
we don't determine, you know,

570
00:36:08,970 --> 00:36:11,970
who people choose to rent their property to,

571
00:36:12,230 --> 00:36:13,830
but I do think when we have more demand,

572
00:36:13,830 --> 00:36:16,490
then there are, you know, more choices out there.

573
00:36:16,550 --> 00:36:17,470
And when there are more choices,

574
00:36:17,670 --> 00:36:19,510
then maybe developers can be more selective

575
00:36:19,510 --> 00:36:20,730
about what's coming here,

576
00:36:20,730 --> 00:36:22,150
which you said that that's fair to.

577
00:36:22,330 --> 00:36:22,770
I agree.

578
00:36:22,770 --> 00:36:26,750
Yeah, on the private side, there's just more complications where when they get into lending and credit

579
00:36:27,250 --> 00:36:31,890
They need to see that that person going into has great credit and the financing behind them and sometimes there's

580
00:36:31,890 --> 00:36:37,450
complications or things going on or maybe one group only works with national tenants while we have more local tenants

581
00:36:37,450 --> 00:36:41,030
So it's really a matter of matching those people up and finding the right opportunities

582
00:36:41,030 --> 00:36:45,230
So I would say if there's anyone watching and they're a local company and they want to be in any of these developments

583
00:36:45,230 --> 00:36:49,630
They can reach out to us and we'll help try to match make and find the right opportunity for them. Great. Yeah

584
00:36:49,630 --> 00:36:55,190
I think that I was loved what you said about, you know, that these larger employers then help, you know,

585
00:36:55,310 --> 00:36:59,490
as get other better retailers in a higher quality of retailer because they want to know that there's

586
00:36:59,490 --> 00:37:03,730
places for people to come and eat and shop and do all those things. So, I think that was a great play on

587
00:37:03,730 --> 00:37:07,610
why are we only, you know, because some people do think that we're only focused on all of this large

588
00:37:07,610 --> 00:37:12,590
industrial, but we really are focused on other things as well. And the fact that that impacts who

589
00:37:12,590 --> 00:37:17,470
wants to come here to have a local food shop or restaurant or business or retailer.

590
00:37:17,470 --> 00:37:21,050
Yeah, it's kind of like building the foundation that will lead to those things.

591
00:37:21,070 --> 00:37:24,970
Yeah, well the last thing I want to say is you know as the chair of Jedko and you know

592
00:37:24,970 --> 00:37:29,210
I know that except for the fact that I know you really have to manage Sean a lot on G-Tech

593
00:37:29,690 --> 00:37:35,650
As the chair of G-Tech and Cameron and his team do a great job. Thank you for always bringing projects to us

594
00:37:35,650 --> 00:37:41,850
I think it's exciting that every meeting we tend to always have a project to look at and to make decisions about

595
00:37:41,850 --> 00:37:46,090
So thank you for all that you and your team do to make our lives easier. Appreciate it. Thanks. Thank you

596
00:37:47,470 --> 00:37:54,050
I have one comment first and importantly, as a former member of the Economic Development

597
00:37:54,050 --> 00:38:00,810
Board, I appreciate what you have done since you've come here and the energy level that

598
00:38:00,810 --> 00:38:06,350
I see with you and your team will play results down the road.

599
00:38:06,650 --> 00:38:09,010
And I just think it's a great thing that we're doing.

600
00:38:09,990 --> 00:38:10,750
Thank you.

601
00:38:10,770 --> 00:38:12,670
I appreciate it.

602
00:38:12,670 --> 00:38:24,950
Hey, Karen, on slide 31, you mentioned a 4.1 million roughly square foot of space talking about the industrial buildings.

603
00:38:25,610 --> 00:38:38,150
Is that that number, the 4.1 million, is that what we have class A today on the ground, or is that what you're saying that your record show has either at least or has traded hands as sold.

604
00:38:38,150 --> 00:38:40,310
At least our traded hand is sold, right?

605
00:38:41,250 --> 00:38:43,870
Do you know how much roughly we have on the ground?

606
00:38:43,870 --> 00:38:44,810
Not necessarily it's in title.

607
00:38:44,910 --> 00:38:46,830
I know there's some stuff that's in title that's yet to build.

608
00:38:47,170 --> 00:38:48,310
Or is it?

609
00:38:48,650 --> 00:38:49,830
I'm just doing the math in my head.

610
00:38:49,950 --> 00:38:51,010
There's some smaller spaces.

611
00:38:51,190 --> 00:38:53,050
So I would say the larger spaces have been taken.

612
00:38:53,230 --> 00:38:55,390
So anything that's 300,000 square feet or 400,

613
00:38:55,650 --> 00:38:57,590
a lot of that has a lot of activity on it.

614
00:38:57,610 --> 00:39:00,510
So it's either sold least or could be least soon.

615
00:39:01,250 --> 00:39:03,090
Some of the smaller spaces have been a little bit harder

616
00:39:03,090 --> 00:39:03,390
to move.

617
00:39:03,490 --> 00:39:05,950
So 40 to 50,000 square feet have been more challenging

618
00:39:05,950 --> 00:39:18,730
because we've had so many big companies come in but I will say these big companies have come and now it's time to get the suppliers that support those companies so I think this will be a good opportunity to transition to recruiting some of those groups to support.

619
00:39:19,390 --> 00:39:33,590
Yeah because it's just the number I know calling on businesses and Round Rock from my day job years ago there's so many small businesses you don't realize that are there that are actually pretty good size businesses that are support to Dell.

620
00:39:33,590 --> 00:39:42,070
that they do some niche function that you don't really know as a job really or something that a business would solely do.

621
00:39:43,770 --> 00:39:46,230
There's so many of them out there, you don't even realize, so you have to have a having,

622
00:39:46,850 --> 00:39:49,850
you will likely see some of those pop up for some of the larger companies here.

623
00:39:49,910 --> 00:39:54,010
They're going to need support folks, businesses here that would need that kind of space.

624
00:39:54,970 --> 00:39:58,390
When the reason I asked mine, this question was, I've been asked multiple times,

625
00:39:58,390 --> 00:40:04,790
like while we don't have just the industrial space, but near the airport, I think it's probably

626
00:40:04,790 --> 00:40:08,430
the most visible for most people, just the way the land, the terrain sits, I guess.

627
00:40:08,970 --> 00:40:14,110
Um, other folks ask, you know, is all that bacon? Looks like it's bacon. It's all built.

628
00:40:14,310 --> 00:40:18,510
No, I think my understanding is it's all pretty much leased whether they're actually occupied

629
00:40:18,510 --> 00:40:24,150
and operational yet. Uh, is, is a different story potentially, but my understanding is most

630
00:40:24,150 --> 00:40:26,070
of it is leased. Is that, is that a correct statement?

631
00:40:26,070 --> 00:40:27,690
Yeah, it's almost all of its lease.

632
00:40:27,850 --> 00:40:31,490
There's I think one small 70,000 sub lease situation,

633
00:40:31,490 --> 00:40:32,730
but everything else is taken.

634
00:40:33,010 --> 00:40:37,170
So the vast, I would say 95% of its lease debt are occupied.

635
00:40:37,610 --> 00:40:40,170
One of the companies mentioned throughout the presentation

636
00:40:40,170 --> 00:40:44,790
here are any of them fully operational.

637
00:40:44,910 --> 00:40:46,850
Because I know like selling, for example,

638
00:40:47,410 --> 00:40:50,670
they kind of had a staged onboarding,

639
00:40:50,670 --> 00:40:52,710
if you will, of ramping up the full production.

640
00:40:53,390 --> 00:40:55,950
Are most of those companies that we've seen recently

641
00:40:55,950 --> 00:41:00,150
are they kind of in that stage as well of ramping up getting to getting to where they're at capacity?

642
00:41:00,570 --> 00:41:04,570
Yeah I would say so I think most of the companies we work with they try to grow as quickly as

643
00:41:04,570 --> 00:41:09,270
possible and we grow with them on the infrastructure side too but I would say it's pretty common for

644
00:41:09,270 --> 00:41:14,230
like three to four to five years of like a ramp period for them to grow out and we're seeing that

645
00:41:14,230 --> 00:41:18,950
with most of the manufacturing groups too just as they hire more people and add more customers and

646
00:41:18,950 --> 00:41:24,390
more business. It's pretty specialized manufacturing type work that you can't just turn on the switch.

647
00:41:24,390 --> 00:41:33,030
Yeah, some of them have an existing contract which drives them to move quickly, but most of the time they have a contract, but they're bringing on more business and they're growing along the way.

648
00:41:34,290 --> 00:41:37,530
Well, the numbers are impressive on what your department's done.

649
00:41:38,810 --> 00:41:45,710
What's interesting, on my Council Facebook page, my posts have about 2,700 followers.

650
00:41:45,710 --> 00:41:57,550
the highest, most successful post I've made was announcing home goods and marshals was opening up and the spring had 150,000 views.

651
00:41:58,050 --> 00:42:04,070
So out of 2,700 followers, there was so much engagement and the algorithm pushed it up 150,000 views for home goods and marshals.

652
00:42:07,630 --> 00:42:15,110
Yeah, I think we get that and we were so mad when it doesn't I think most people most

653
00:42:15,110 --> 00:42:18,270
people aren't engaging in interacting with these companies we bring in every single day

654
00:42:18,270 --> 00:42:22,370
but you do with the home goods or another company so we respect that and that's why we

655
00:42:22,370 --> 00:42:25,750
do want to bring in more of those type of uses too so that'll also be a focus for us.

656
00:42:26,010 --> 00:42:33,150
Well no you're right I mean the average person ZT systems they're never going to while

657
00:42:33,150 --> 00:42:36,210
While they may end up buying something or using something that ZT systems is touched

658
00:42:36,210 --> 00:42:39,010
or is part of, they won't ever even know that.

659
00:42:39,650 --> 00:42:42,990
But home goods and marshals, they know they can feel it, they can touch it, they can see

660
00:42:42,990 --> 00:42:43,130
it.

661
00:42:44,030 --> 00:42:48,770
You know, and that's the one thing I think that, from an economic development standpoint,

662
00:42:49,030 --> 00:42:52,330
you mentioned it here, we've talked about it before, but just I think the one thing that

663
00:42:52,330 --> 00:42:56,990
Georgetown kind of is missing is more of that entertainment kind of concept.

664
00:42:57,150 --> 00:43:01,290
We have it with our square, is really the square really fits that in my mind.

665
00:43:01,290 --> 00:43:06,470
And I think the junction development is something that would kind of fit in that sector as well.

666
00:43:06,650 --> 00:43:12,510
I know of another development being considered that has some more pickleball type with restaurant

667
00:43:12,510 --> 00:43:17,130
and things on the other side of town, but I think, you know, there's been recently that what

668
00:43:17,130 --> 00:43:20,810
that pop stroke, advancing like a really cool concept that Cedar Park, Cedar Park said

669
00:43:20,810 --> 00:43:25,270
a great job of getting some of these projects for one reason or another and every market or every

670
00:43:25,270 --> 00:43:28,410
community is different and I'm happy for them to get those.

671
00:43:28,530 --> 00:43:29,870
I plan on going over there and checking out.

672
00:43:29,870 --> 00:43:45,710
I guess what is it the Nebraska furniture, martin shields never seen them never been to them, but people say it's a big deal, but I think just from the average citizen, those types of things are what they're hoping for, but that's not all that you do you're really trying to create more tax based more jobs.

673
00:43:46,190 --> 00:43:56,250
I think you've done a good job with that, trying to as we can fill in the gap for things we're missing as a community is something that I think you you're working on and continue to work on and I'm sure.

674
00:43:56,250 --> 00:44:03,050
Before long, we have the rooftops and the density that something like that will go some but Cameron, thank you for the presentation.

675
00:44:03,290 --> 00:44:03,570
Thank you.

676
00:44:06,770 --> 00:44:08,570
I just want to say thank you Cameron.

677
00:44:08,950 --> 00:44:12,910
You kind of soft sold it earlier that some of the work had begun before you got here.

678
00:44:13,110 --> 00:44:24,710
But my experience serving with Amanda on GTEC and Jedko is your team is first class and you are the example for all the cities around us and so we're proud to have you.

679
00:44:25,230 --> 00:44:25,830
Thank you.

680
00:44:26,030 --> 00:44:27,050
I'm glad to be on team George now.

681
00:44:27,050 --> 00:44:27,350
All

682
00:44:30,160 --> 00:44:37,520
right. Thanks, bud. Appreciate it. All right. Next up, Leah, you're going to lead this

683
00:44:37,520 --> 00:44:39,160
one for us on the cost recovery.

684
00:44:42,420 --> 00:44:44,860
Yes, sir. I get this adjusted.

685
00:44:49,020 --> 00:44:50,920
Thank you, Austin, for pulling

686
00:44:50,920 --> 00:44:51,780
that up. All right.

687
00:44:55,110 --> 00:44:59,390
So good afternoon, Mayor and council members. Lee Wallace, Chief Financial Officer,

688
00:44:59,390 --> 00:44:59,970
Sir, here-

689
00:45:00,000 --> 00:45:09,320
With you this afternoon, at the Water Advisory Board last week, I did accidentally introduce myself as Lee Water, and I've never seen Wes Wright laugh so hard in his life.

690
00:45:11,340 --> 00:45:29,940
This is a pretty good Freudian slip. Yeah, so I bring you information today that was pulled together in partnership with Chelsea Solomon, our Waters Utility Director. We also worked very closely with Matthew Garrett, our rate consultant from New Gen Strategies and Solutions, as well as Jennifer.

691
00:45:29,940 --> 00:45:34,060
for Ritter Douglas, our financial advisor from Specialized Public Finance.

692
00:45:38,800 --> 00:45:46,280
Okay, so we're here today to talk about financial policies, particularly for our water utility,

693
00:45:47,000 --> 00:45:53,160
how the compliance with those policies affect our bond ratings and our customer rates,

694
00:45:53,720 --> 00:45:59,660
propose to you an alternative policy, specifically for fixed cost recovery in the water base rate

695
00:45:59,660 --> 00:46:02,140
and first tier, and then get your feedback.

696
00:46:02,140 --> 00:46:17,420
We need to bring a fiscal policy like this to you this early in the planning cycle so that we can take your feedback and inform our rate modeling for the fiscal year 2027 budget process.

697
00:46:19,820 --> 00:46:28,360
So every year we review the fiscal and budgetary document policies with you and you adopt it with the budget.

698
00:46:28,360 --> 00:46:34,880
It's got budget policies, accounting policies, debt policies, there's a lot of things in here.

699
00:46:35,700 --> 00:46:40,420
The overall purpose of that document is to guide decision making on financial topics,

700
00:46:40,740 --> 00:46:45,980
including lots of policies specific to our large utilities with water and electric.

701
00:46:46,800 --> 00:46:49,820
And they are a tool for risk mitigation.

702
00:46:53,310 --> 00:46:57,570
But those policies also then have a direct impact on rates.

703
00:46:57,570 --> 00:47:04,690
So the strong policies demonstrate to our investor community that our city has long term financial stability in the utilities

704
00:47:05,370 --> 00:47:11,930
Helps us get a favorable bond rating, which in turn helps us get the most favorable interest rate that we can on the market

705
00:47:12,790 --> 00:47:13,370
for

706
00:47:14,010 --> 00:47:17,730
paying off the large infrastructure projects over time

707
00:47:18,850 --> 00:47:22,530
Those policies also require that the rates are set to satisfy

708
00:47:22,530 --> 00:47:27,330
by several financial metrics and ratios each year.

709
00:47:27,570 --> 00:47:31,390
So we're not just talking about meeting the immediate cash needs of the water utility,

710
00:47:31,410 --> 00:47:35,510
but also achieving coverage ratios and reserves.

711
00:47:38,340 --> 00:47:44,360
For the water utility, it's going to be difficult to maintain our existing fixed cost recovery

712
00:47:44,360 --> 00:47:49,100
policy in the near term while balancing rate affordability for customers.

713
00:47:50,520 --> 00:48:00,780
So, when we look at our preliminary model going into 2027 and on our five-year forecast horizon,

714
00:48:02,890 --> 00:48:12,710
fixed costs are projected to grow from around 64 million in 2025 to 138 million in 2030.

715
00:48:13,490 --> 00:48:18,350
So, fixed costs the big rocks in those buckets are going to be your annual principal and

716
00:48:18,350 --> 00:48:24,890
debt payments for infrastructure and then take or pay water supply contracts.

717
00:48:25,110 --> 00:48:27,550
Those are the big, big rocks in fixed costs.

718
00:48:29,330 --> 00:48:34,190
When I say preliminary, I just want to be really clear for you today as well as our media

719
00:48:34,190 --> 00:48:35,830
partners that may be watching today.

720
00:48:36,370 --> 00:48:39,430
We're still updating all the inputs to the model right now.

721
00:48:40,690 --> 00:48:48,290
And so while I am giving you a variety of numbers in the presentation today that will

722
00:48:48,290 --> 00:48:52,810
will illustrate conceptually what's going to happen, they're based off of numbers as of December,

723
00:48:53,050 --> 00:48:58,750
but we are constantly making updates this spring to bring you the real rates back.

724
00:48:59,770 --> 00:49:05,590
So I just want to be clear about that when I show the numbers today, my goal is to basically,

725
00:49:06,070 --> 00:49:11,970
when we bring the rates back in May, to be in the same ballpark as what is being illustrated today.

726
00:49:11,970 --> 00:49:19,150
So currently in that five-year forecast, because of these increasing fixed obligations for

727
00:49:19,150 --> 00:49:24,930
new supply of water and all the capital infrastructure from our master plan, our water rates are

728
00:49:24,930 --> 00:49:28,930
forecasted to increase 9% per year for five years.

729
00:49:32,660 --> 00:49:40,000
We have a policy inside the fiscal and budgetary policy documents specific to fixed costs recovery

730
00:49:40,000 --> 00:49:46,800
for the water utility. And today, that policy is that 65% of fixed costs will be recovered

731
00:49:46,800 --> 00:49:54,300
through the base rate charges, and 90% will be recovered through the base plus the first

732
00:49:54,300 --> 00:50:02,120
year. And so the table on the screen is an illustration of how our rate modeling achieves

733
00:50:02,120 --> 00:50:07,180
that. You can see with the green dots through the five-year forecast on the bottom that we

734
00:50:07,180 --> 00:50:14,480
We are meeting those policy requirements, and then we get real close to the edge by that

735
00:50:14,480 --> 00:50:15,900
fifth year in 2030.

736
00:50:18,540 --> 00:50:24,180
And again, this is illustrating what that would look like with a 9% per year increase

737
00:50:24,180 --> 00:50:25,240
on water rates.

738
00:50:29,690 --> 00:50:30,130
Excuse me.

739
00:50:30,270 --> 00:50:38,070
So this is another view of that same information, see how the colors are coming across good here.

740
00:50:38,070 --> 00:50:47,890
So we have, you can see in the gray bar along the bottom, all of the fixed costs for the water utility going up to the 100% mark.

741
00:50:48,130 --> 00:50:56,110
And then in kind of the beige color after that are the variable expenses and other financial targets for the water utility.

742
00:50:56,310 --> 00:51:05,270
And then the bars are showing you the revenue from the tiers and the red dotted lines are how today, under the current policy,

743
00:51:05,270 --> 00:51:12,350
we're achieving 65% recovered through the base rate, 90% through the base rate plus the first tier.

744
00:51:13,430 --> 00:51:17,350
And just like you saw on this slide before, you can see that it's stronger in the earlier years

745
00:51:17,350 --> 00:51:20,590
and it's much closer to the line when we get to 2030.

746
00:51:24,520 --> 00:51:27,140
Okay, so we want to propose a change to this policy.

747
00:51:28,980 --> 00:51:35,480
We want to relieve the pressure on rate affordability while we're supporting this large capital

748
00:51:35,480 --> 00:51:41,500
infrastructure plan, and this major operating impact from the new water supplies that we are

749
00:51:42,110 --> 00:51:48,960
currently trying to obtain. And while our rating agencies measure leverage and liquidity

750
00:51:50,070 --> 00:51:57,760
and debt coverage ratios, they also measure rate affordability in the rating criteria. So they

751
00:51:57,760 --> 00:52:04,500
look at the utility bill as a percent of median household income. Currently the Georgetown combined

752
00:52:04,500 --> 00:52:10,820
water and electric utility is at 1.9%, so we're right there in that one to two

753
00:52:10,820 --> 00:52:17,180
percent average range, but really close to being at the two or more, which would

754
00:52:17,180 --> 00:52:22,940
be a weak rating on that specific criteria. So how do we shift more costs to

755
00:52:22,940 --> 00:52:27,840
volumetric rates without compromising the financial stability of the utility?

756
00:52:30,460 --> 00:52:35,740
And when we shift costs to the volumetric rates, those are the users that are

757
00:52:35,740 --> 00:52:38,740
driving peak demand and our need for infrastructure.

758
00:52:41,870 --> 00:52:46,910
So if we made a change to this policy, then the base rates could be increased more gradually,

759
00:52:47,250 --> 00:52:52,850
and the volumetric rates could be increased at a more accelerated pace.

760
00:52:53,370 --> 00:52:57,390
And that's going to still get us to the total recovery that we need.

761
00:52:58,890 --> 00:53:03,710
It would reduce the total increases required to the average residential bill.

762
00:53:03,710 --> 00:53:12,690
And as we get further you'll see that it is going to provide staff and you as the council greater rate setting flexibility in the future.

763
00:53:15,870 --> 00:53:29,450
So we are proposing that we change the policy from 65% through the base rate to 50% through the base rate and 90% through the base rate and first year to 75%.

764
00:53:29,450 --> 00:53:38,790
Again, these are a comparison of our preliminary modeling, looking at years 2027 through 2030.

765
00:53:39,250 --> 00:53:43,990
So our baseline projections column would be under the current policy.

766
00:53:44,510 --> 00:53:50,510
As I've already mentioned, we'd be increasing rates 9% per year on the water minimum charge.

767
00:53:51,350 --> 00:53:57,210
If we were to move to this alternative, then the base rate would increase 4% per year.

768
00:53:57,210 --> 00:54:02,470
the volumetric rate would increase 14% per year.

769
00:54:03,030 --> 00:54:05,350
So that's where you can see that differential.

770
00:54:05,910 --> 00:54:08,910
And again, we still get to total overall revenue recovery

771
00:54:08,910 --> 00:54:10,830
that's needed for the utility.

772
00:54:13,120 --> 00:54:16,500
So let me show you what that looks like for our customers.

773
00:54:16,940 --> 00:54:19,740
So on this slide we've got over on the right,

774
00:54:19,920 --> 00:54:23,460
you can see graphically the change in the monthly water bill

775
00:54:23,460 --> 00:54:27,180
as of the forecasted year 2030.

776
00:54:28,220 --> 00:54:37,300
So residential customers using 12,000 gallons of water or less would see a reduction in their bills in 2030 as compared to baseline.

777
00:54:37,980 --> 00:54:44,940
So again, we're not saying water bills are decreasing, but they will increase at a slower rate.

778
00:54:50,470 --> 00:54:56,250
Here are some examples at different tiered usages.

779
00:54:56,250 --> 00:55:20,170
So, the first graph on the left is just the base rate, so you can see our current policy on the bottom and what that would look like in the year 2030 versus the proposal we're bringing today where we would shift the policy so that base rate in 2030 would be at $58.30 which is lower than the $70.

780
00:55:20,170 --> 00:55:31,970
Then we start to introduce consumption on top of the base rate, so on the right we have someone who's basically only using a very small amount of indoor water, 2000 gallons,

781
00:55:32,810 --> 00:55:41,230
and so under the current policy, their projected monthly bill in 2030 is $78.20.

782
00:55:42,210 --> 00:55:47,550
If we were to make this shift to the revised policy, it would be $67.80.

783
00:55:47,550 --> 00:55:53,210
sense. And I've just got some more examples of that walking through the tiers. So we've got a

784
00:55:53,210 --> 00:56:01,150
6,000 gallon water user on the left here. You can still see that under the alternative that we're

785
00:56:01,150 --> 00:56:10,650
proposing their future rate is lower. Then what's currently proposed once we cross the 12,000 gallon mark

786
00:56:10,650 --> 00:56:17,170
over to the 15,000 gallon user, you'll see that that bill now starts to be larger in 2030.

787
00:56:17,170 --> 00:56:25,250
Again, because we are shifting from the base rate and accelerating tiered usage more quickly.

788
00:56:28,080 --> 00:56:34,920
And here's an example of a 35,000 gallon user and a 60,000 gallon user just to get our fourth and fifth tiers in there.

789
00:56:41,920 --> 00:56:50,040
So here's that same graph that you saw before but now showing what this would look like under the alternative that's being proposed.

790
00:56:51,220 --> 00:57:03,460
and that we are still able to meet that goal and it's just illustrating for you how it does that across the tiers.

791
00:57:04,140 --> 00:57:10,820
We still recover all the revenue that's necessary to satisfy this policy but also our fixed cost coverage ratio,

792
00:57:11,160 --> 00:57:15,560
our debt coverage ratio, our dayscash on hand, our reserves policies for the utilities.

793
00:57:15,560 --> 00:57:17,200
all of those would still be met.

794
00:57:17,980 --> 00:57:19,640
Excuse me, under this proposal.

795
00:57:27,020 --> 00:57:28,300
So that sounds really good.

796
00:57:28,500 --> 00:57:29,240
What are the risks?

797
00:57:30,580 --> 00:57:35,280
It wouldn't be fair to not also cover that with you.

798
00:57:35,560 --> 00:57:40,440
So when you shifting costs from the base rates to volumetric use,

799
00:57:41,000 --> 00:57:44,420
you're becoming increasingly reliant on that customer usage.

800
00:57:44,840 --> 00:57:47,280
If you have really severe drought conditions,

801
00:57:47,340 --> 00:57:50,040
or really higher than average rainfall conditions,

802
00:57:50,040 --> 00:57:55,380
either one can result in lower water consumption that could be a risk.

803
00:57:55,600 --> 00:58:00,340
However, we've discussed that at length with our rate consultant at New

804
00:58:00,340 --> 00:58:07,420
Gen. The city already has very, very strong reserve and days cash on hand policies.

805
00:58:08,500 --> 00:58:12,180
It's an existing strength that is noted in our current bond rating.

806
00:58:12,440 --> 00:58:16,280
We would be able to maintain those with this shift in policy.

807
00:58:16,280 --> 00:58:23,380
and so we basically have a buffer if we were to have one, you know, particularly difficult year,

808
00:58:23,740 --> 00:58:28,160
with not selling a lot of consumption. We have reserves. That's what those reserves are there for

809
00:58:28,160 --> 00:58:34,560
and we would pull together a plan where we would then make a correction, you know, for the following

810
00:58:35,260 --> 00:58:37,500
year or several years for the utility.

811
00:58:40,160 --> 00:58:44,840
Another important note is the current structure of our tier

812
00:58:44,840 --> 00:58:51,440
and where tiers and where those thresholds are for volume is predicated on the current

813
00:58:51,440 --> 00:58:56,040
policy at the 65% and 90.

814
00:58:56,680 --> 00:59:04,440
If we make this change to 50% and 75%, it's going to give you an opportunity.

815
00:59:05,120 --> 00:59:12,540
Basically we could adjust those tier ranges, so the thresholds as well as the differential

816
00:59:12,540 --> 00:59:15,720
in price between the tiers in the future.

817
00:59:19,340 --> 00:59:23,740
And, you know, we did discuss that length with our financial advisor, and this came up

818
00:59:23,740 --> 00:59:27,780
at the Water Advisory Board meeting that we do not believe that adjusting this policy

819
00:59:27,780 --> 00:59:29,800
would negatively affect our current rating.

820
00:59:30,900 --> 00:59:37,080
Again, it's very strong, and as I've already mentioned, the rating agencies also look at

821
00:59:37,080 --> 00:59:40,440
rate affordability as part of your overall criteria.

822
00:59:41,480 --> 00:59:51,300
So in conclusion, we do recommend moving to the 50% and 75% for fixed cost recovery through the rates.

823
00:59:51,940 --> 00:59:59,740
It improves our ability to adjust to these really sizable fixed costs that are coming.

824
01:00:00,020 --> 01:00:17,600
In the fund over our five-year forecast, we are balancing out maintaining strong financial metrics with rate affordability and intend to maintain our current excellent rating of double a-minus.

825
01:00:20,290 --> 01:00:31,050
So, I can take your feedback and questions today. I should mention, so we had two water advisory board meetings on this.

826
01:00:31,050 --> 01:00:37,230
one in February and then one last week in early March ultimately that board voted to

827
01:00:37,230 --> 01:00:43,350
recommend the change to you with a vote of four to one and there were two members absent.

828
01:00:45,390 --> 01:00:49,790
So I can take your feedback. Basically I'm looking forward to you support staff's recommendation

829
01:00:50,450 --> 01:00:56,250
or not because I then need to take that back with our rate consultant. We need to update the

830
01:00:56,250 --> 01:01:03,950
modeling based on that feedback, and then we are anticipating that we will bring the rates back to the water advisory board.

831
01:01:03,950 --> 01:01:11,570
I believe it's actually May 9th, not April 9th, and then we've got the May 26th Council workshop slated to bring those back.

832
01:01:12,450 --> 01:01:14,850
Thanks, Lee. Kevin had a question.

833
01:01:15,370 --> 01:01:20,830
Yeah, I think I said the water board just for the sake of the diocese here the modeling you have here

834
01:01:20,830 --> 01:01:28,150
Which once again, this is this is just policy. This is not rate setting. This is setting the policy to direct you guys on how to go set rates

835
01:01:28,150 --> 01:01:33,970
And then obviously rate setting will come back to this body in the future whenever those those are

836
01:01:34,750 --> 01:01:39,110
Reviewed but this is just policy to help you not asking you to say yes to a 4%

837
01:01:39,810 --> 01:01:44,130
Increased on the base rate today. I'm not guaranteeing that's exactly what's gonna come back

838
01:01:44,130 --> 01:01:53,110
What I'm saying is right now it's looking like it would be in the range of 9% and if we make this shift I can bring back something in the range of 4%.

839
01:01:53,110 --> 01:01:56,110
That's then offset in the volumetric rate.

840
01:01:56,510 --> 01:02:01,830
But that's I'm asking for your guidance because this policy is in a document that you adopt.

841
01:02:02,190 --> 01:02:12,370
I need your feedback now so I can work it into the rates and I would bring both the rates back for you to approve and the, you know, literally the policy document for you to approve.

842
01:02:12,370 --> 01:02:20,350
And then the this does not assume or this assumes our water CCN as it sets today as well from anything you put in here

843
01:02:20,350 --> 01:02:25,830
We're not we're not making any of your modeling. I know once again. This is policy any your modeling. We're not looking at

844
01:02:25,830 --> 01:02:32,090
Any changes to the CCN at this point because that's not a guarantee. That's correct. We're working on

845
01:02:32,690 --> 01:02:37,330
versions of modeling that but none of that is reflected here today. Okay, and

846
01:02:37,330 --> 01:02:47,390
And this model would only include reservation payments for one of the ground water deals,

847
01:02:47,630 --> 01:02:50,570
not the ground water for the entire CCN.

848
01:02:51,110 --> 01:02:52,210
Would that be a correct statement?

849
01:02:55,300 --> 01:02:55,480
Yes.

850
01:02:59,230 --> 01:03:09,370
It does, if I could just clarify, it does, it does assume debt portions of bringing basically

851
01:03:09,370 --> 01:03:15,930
we're planning and developing a pipeline from so it does include it's including one of the

852
01:03:15,930 --> 01:03:22,550
preserved groundwater deals for the CCN that we're retaining. It's not we're not loading in.

853
01:03:23,010 --> 01:03:30,210
Even though we're factoring in for this model the entire CCN, we aren't presuming that we're

854
01:03:30,210 --> 01:03:35,270
going to get the groundwater for the entire CCN as part of this model is that correct statement.

855
01:03:35,270 --> 01:03:42,690
Yes. Thank you. So let me I think this might be the same question as Kevin's but phrased a different way and I

856
01:03:43,250 --> 01:03:46,770
Sorry for you know, I'm trying to wrap my head around this

857
01:03:46,770 --> 01:03:52,570
So with this policy direction that you're looking for we said are we effectively setting the lower limit?

858
01:03:53,670 --> 01:03:57,590
Of the fixed cost recovery or are you or is that the percentage?

859
01:03:58,910 --> 01:04:05,790
It would basically be the lower limit. We couldn't go any lower than this. We could in any given year

860
01:04:05,790 --> 01:04:13,610
better than this, we could still, we could go back to 65% and 90% and we'd still be meeting

861
01:04:13,610 --> 01:04:20,510
these minimums of 50 and 75, but it's basically giving us more flexibility, where to set

862
01:04:20,510 --> 01:04:24,110
that from year to year, but not to go below it.

863
01:04:24,250 --> 01:04:24,770
That's what I thought.

864
01:04:24,890 --> 01:04:25,790
I just wanted to clarify that.

865
01:04:25,890 --> 01:04:26,170
Thank you.

866
01:04:26,670 --> 01:04:28,310
And then I also have a clarification question on that.

867
01:04:28,430 --> 01:04:33,010
So I think Kevin helped with that, that helps as well, but this is assuming that whatever

868
01:04:33,610 --> 01:04:54,330
We would come back with based on this direction that there would be rate increases in the next several years, and then at 2030 there would be, this would change into the lower, taking into the variable the lower percent, the lower rate users, is that because I'm seeing that 2030 number, when does the shift happen?

869
01:04:54,330 --> 01:04:57,270
The shifts would be starting in 2027.

870
01:04:57,670 --> 01:04:58,450
Okay, that's what I thought.

871
01:04:58,450 --> 01:05:00,390
The rate that you would adopt in 2027,

872
01:05:00,390 --> 01:05:03,490
would reflect moving towards this.

873
01:05:03,690 --> 01:05:06,090
Okay, so the change doesn't happen in 2030.

874
01:05:06,290 --> 01:05:07,110
It happens in 2027.

875
01:05:07,130 --> 01:05:09,530
We're just trying to illustrate over time,

876
01:05:10,110 --> 01:05:12,350
because if I show you just one year's change,

877
01:05:13,450 --> 01:05:16,590
it's not as much variance as when we show,

878
01:05:16,750 --> 01:05:20,190
like, the cumulative impact over the five years.

879
01:05:20,430 --> 01:05:21,070
Okay, thank you.

880
01:05:21,230 --> 01:05:22,330
So it would change immediately.

881
01:05:22,330 --> 01:05:25,510
and 27 not just have this shift in 2030, perfect.

882
01:05:26,130 --> 01:05:27,550
Correct, okay, thanks.

883
01:05:27,930 --> 01:05:29,970
I think it also be helpful to know that we're also

884
01:05:29,970 --> 01:05:31,970
from rate making cost of service standpoint.

885
01:05:32,290 --> 01:05:36,090
We're looking at, we showed you kind of a five year outlook.

886
01:05:36,650 --> 01:05:38,730
We're also looking longer term because we recognize

887
01:05:38,730 --> 01:05:44,050
that one of the things that we're currently negotiating

888
01:05:44,050 --> 01:05:47,330
is a water supply agreement that would bring additional water

889
01:05:47,330 --> 01:05:50,170
and have contract obligations for buying water,

890
01:05:51,050 --> 01:05:53,490
starting in roughly a 20-30 time frame.

891
01:05:53,770 --> 01:05:56,070
So if you want to go ahead.

892
01:05:56,070 --> 01:06:03,850
That's why things start to get tight or with yellow dots for a variety of them.

893
01:06:03,910 --> 01:06:05,650
So if you were to look at any metric in the forecast,

894
01:06:05,930 --> 01:06:06,790
they kind of look like this.

895
01:06:06,950 --> 01:06:09,050
It's like green, green, green, green, green, and then 20-30,

896
01:06:09,410 --> 01:06:16,610
ooh, it starts getting tougher because that is when we are currently projecting the significant

897
01:06:16,610 --> 01:06:28,550
can't cost a new water supply to start hitting and we're trying to anticipate that and make it as smooth as we possibly can versus a big cliff.

898
01:06:29,450 --> 01:06:42,550
And so what you'll see is you'll continue, we're looking at 27 and then outlook to 2030, but you'll continue to see us as we move along over the next several years, you'll see the impact of that assumptions.

899
01:06:42,550 --> 01:06:51,310
I mean, we believe we're close to negotiating an agreement, but you'll see that start to

900
01:06:51,310 --> 01:06:55,370
be programmed in in 2031, 2032, and modeling out.

901
01:06:55,550 --> 01:07:01,110
And that's why I think it's really important, and we've been on this track record of having

902
01:07:01,110 --> 01:07:03,570
a cost of service study rate-making on an annual basis.

903
01:07:03,910 --> 01:07:09,430
So that is a very much of best practice, and especially important for us, given the dynamic

904
01:07:09,430 --> 01:07:10,690
nature of our water utility.

905
01:07:10,850 --> 01:07:16,910
Hey Lee, this is the residential policy correct for our residential rates, right?

906
01:07:17,390 --> 01:07:17,510
Correct.

907
01:07:17,950 --> 01:07:24,470
When we have separate rates for multifamily commercial, is this also going to be the policy for

908
01:07:24,470 --> 01:07:28,730
the rate making for those as well, even those are different rates?

909
01:07:30,310 --> 01:07:34,750
Are we setting the rates for commercial and multifamily right now too?

910
01:07:34,750 --> 01:07:39,290
I mean, are we setting the policy for setting the rights for commercial and multifamily?

911
01:07:39,830 --> 01:07:41,750
So this is different numbers.

912
01:07:43,730 --> 01:07:49,790
This policy is geared towards residential, because that's where it's going to have the biggest

913
01:07:49,790 --> 01:07:58,430
impact, but we have similar targets for commercial.

914
01:07:58,930 --> 01:07:59,110
Okay.

915
01:07:59,590 --> 01:08:04,730
Yeah, I just wanted to see if we're going to apply the same logic to commercial slash multifamily

916
01:08:04,730 --> 01:08:07,230
family where we're going to have the fixed costs in the

917
01:08:07,230 --> 01:08:09,690
base rate and I got you.

918
01:08:10,030 --> 01:08:12,610
I mean, we'll probably be coming back to discuss more about

919
01:08:12,610 --> 01:08:15,450
other opportunities with with commercial rates.

920
01:08:16,210 --> 01:08:20,870
But it's this we're largely focused on residential here with

921
01:08:20,870 --> 01:08:22,790
this discussion today. Sorry, Ben, I didn't mean to interrupt.

922
01:08:22,910 --> 01:08:25,450
Go ahead, Ben. No, just also as a feedback because you asked for

923
01:08:25,450 --> 01:08:28,610
feedback is I do think I do like this in the fact that, you

924
01:08:28,610 --> 01:08:31,390
know, we have talked about and I think we've we've said over

925
01:08:31,390 --> 01:08:34,590
the last few months or last year and I know Kevin has

926
01:08:34,590 --> 01:08:39,210
brought the stuff numerous times, you know, to not put this on the lowest

927
01:08:39,210 --> 01:08:43,130
year rate payers, you know, the people that are using the least amount of water

928
01:08:43,130 --> 01:08:46,310
should not be, you know, the people that are charged at the same rate.

929
01:08:46,650 --> 01:08:51,430
Yeah, and that's part of why we're have some of these examples here to show or

930
01:08:51,430 --> 01:08:56,430
even if I go back, you know, to this one, I don't know if you all can see where my

931
01:08:56,430 --> 01:09:00,850
mouse moves, right? But that 12,000 gallon line is right here where we start

932
01:09:00,850 --> 01:09:08,750
going from below zero to over, I believe we provided some information in the supplemental slides

933
01:09:08,750 --> 01:09:15,710
that were also attached to the agenda that show you the percent of customers that are in this group

934
01:09:15,710 --> 01:09:20,610
here, right, is a significant, I forget the number off the top of my head, but it's pretty significant.

935
01:09:21,430 --> 01:09:25,850
Yeah, so I think that this achieves exactly what we've asked for you to look at, is there a possibility

936
01:09:25,850 --> 01:09:31,370
to allow the users that are not using as much water to not have to pay as much for that.

937
01:09:31,610 --> 01:09:35,130
So, I like this policy and I like the direction we're moving from a feedback standpoint.

938
01:09:35,390 --> 01:09:45,870
Right. So, 45% of bills exceed 7,000 gallons, which is kind of right there where that first red line is,

939
01:09:47,270 --> 01:09:54,650
and then we get to about 60% of customers at that 12,000 gallon mark.

940
01:09:54,650 --> 01:10:02,110
So that, I mean, it will have a substantially positive impact on most customers.

941
01:10:04,620 --> 01:10:11,760
I only want to comment for the group to be aware that at the Water Advisory Board meeting last week,

942
01:10:11,960 --> 01:10:17,320
this was a topic of long discussion, possibly the longest discussion we've had in quite a time.

943
01:10:18,020 --> 01:10:23,320
And the result was that recommendation with a four to one vote that we moved towards this policy.

944
01:10:23,320 --> 01:10:26,000
and Kevin, thanks for your input last week.

945
01:10:26,300 --> 01:10:26,960
It was very helpful.

946
01:10:27,560 --> 01:10:29,280
I think we're heading in a good direction.

947
01:10:31,910 --> 01:10:34,470
So I agree with the policy, the concept,

948
01:10:34,730 --> 01:10:37,790
but I do have some questions on slide six.

949
01:10:39,530 --> 01:10:43,290
There's a big change between 2029 and 2030.

950
01:10:43,470 --> 01:10:45,370
The fixed rate goes way up,

951
01:10:45,370 --> 01:10:48,210
and the variable rate goes down.

952
01:10:48,390 --> 01:10:50,690
I'm just surprised that the variable rate went down.

953
01:10:51,390 --> 01:10:53,250
Do you happen to know why or is that something

954
01:10:53,250 --> 01:10:55,130
and you can get back to me later on.

955
01:10:55,370 --> 01:10:59,870
Well, again, 2030 is when the water supply costs

956
01:11:00,390 --> 01:11:02,690
for new groundwater, that's when we're projecting

957
01:11:02,690 --> 01:11:03,730
for those to start.

958
01:11:03,790 --> 01:11:06,110
And so the cost per gallon will go down

959
01:11:06,110 --> 01:11:07,230
when we get the new groundwater.

960
01:11:10,160 --> 01:11:12,040
That's what it looks like to me, but I,

961
01:11:12,340 --> 01:11:13,740
and if you don't have the answer today,

962
01:11:13,740 --> 01:11:15,580
that's okay, I just noticed that

963
01:11:15,580 --> 01:11:18,580
and it's surprised me that the cost would go down.

964
01:11:20,800 --> 01:11:24,220
So the cost of groundwater is baked into that fixed cost,

965
01:11:24,220 --> 01:11:27,220
that fixed cost is a take or pay number.

966
01:11:27,820 --> 01:11:27,840
Okay.

967
01:11:28,080 --> 01:11:30,600
So, even if there is a volumetric,

968
01:11:31,140 --> 01:11:34,840
we are signing a contract based on a take or pay amount.

969
01:11:35,580 --> 01:11:37,000
So, it's going to be a set amount

970
01:11:37,460 --> 01:11:39,060
whether you take the volume or not.

971
01:11:39,440 --> 01:11:41,620
So, you won't have it in volumetric

972
01:11:41,620 --> 01:11:43,320
or you won't have it in the variable,

973
01:11:43,520 --> 01:11:45,060
it will become fixed at that point.

974
01:11:45,480 --> 01:11:46,780
So, that price goes up.

975
01:11:47,540 --> 01:11:50,260
How does that drive the volumetric down?

976
01:11:50,600 --> 01:11:52,540
The variable goes down

977
01:11:52,540 --> 01:11:59,560
because the more the more take or pay water you get, the less reservation you're paying because you're actually taking down that water.

978
01:12:00,600 --> 01:12:03,960
Okay. We've been paying reservation for five years since the reservation.

979
01:12:04,320 --> 01:12:08,060
Okay. And then to slide nine,

980
01:12:10,480 --> 01:12:23,040
the comment is that rating agencies measure and track affordability, percent of median household income, we need the same amount of revenue from this.

981
01:12:23,040 --> 01:12:28,040
So we're really not changing the average cost per person.

982
01:12:28,260 --> 01:12:32,260
We may be changing the cost of the median household.

983
01:12:32,480 --> 01:12:36,940
But I just wondered how that, because we're really not changing the average.

984
01:12:37,080 --> 01:12:39,520
So it's still going to be 1.9%.

985
01:12:40,400 --> 01:12:46,220
If you take the average and compare it to the median, the average cost to the median income,

986
01:12:46,420 --> 01:12:46,540
right?

987
01:12:46,960 --> 01:12:47,800
Does that mean it's something?

988
01:12:49,580 --> 01:12:50,220
I'm sorry.

989
01:12:50,360 --> 01:12:51,520
I'm not following your question.

990
01:12:51,520 --> 01:13:12,440
I'll follow up with you afterwards then, because I don't want to waste a lot of time, but I do have a question about that and then back to the mayor's question, is there ever do commercial or industrial ever paid less than residential per gallon of water under these changes?

991
01:13:17,440 --> 01:13:20,940
In other words, or residential supporting commercial and industrial?

992
01:13:20,940 --> 01:13:32,270
So currently your residential has tiered rates, and so those tiered rates, as you get to the higher tiers, are higher than the commercial tiered rates.

993
01:13:33,050 --> 01:13:37,910
Commercial though, however, is required to have a separate irrigation meter, and that's at a higher rate.

994
01:13:38,350 --> 01:13:47,590
So we keep the rates for commercial that is for business use at something comparable to residential in the lower tiers.

995
01:13:48,210 --> 01:13:51,850
But there is an opportunity to look at that as we go forward.

996
01:13:52,330 --> 01:13:58,950
I would like to look at that and make sure that the residents will not subsidizing the commercial and industrial.

997
01:14:01,570 --> 01:14:03,750
Okay, we can follow up with you on that.

998
01:14:03,750 --> 01:14:05,330
And again, I support the concept.

999
01:14:05,330 --> 01:14:08,830
I think it's the right concept and just wanted to ask that question.

1000
01:14:08,930 --> 01:14:09,410
So thank you.

1001
01:14:13,880 --> 01:14:16,170
Overall, I'm obviously supportive of the policy.

1002
01:14:16,170 --> 01:14:36,530
policy. I think the slides you show the comparisons of water rates based on the old and the new illustrated there, we're putting more of the proportion of cost on the higher users and less on on the existing, there are the folks are using it just for primarily domestic use.

1003
01:14:37,230 --> 01:14:44,890
I think one of our housing policies we have is to try to help people stay in their home and the cost of living is one of that one item of that.

1004
01:14:44,890 --> 01:14:59,970
So lower income folks or folks who don't have much yard they shouldn't have to see as much of an impact as they're we're basically having to build the parking lot for Easter Sunday for our systems everybody can water as much as they want.

1005
01:15:00,000 --> 01:15:29,920
To up to up to the restrictions, at least those who aren't aren't using that shouldn't have to see the big is much of an increase. Obviously they're certainly going to see an increase, but to try to shift some of that off. And I think that's what you've illustrated here with this policy would allow for that. It doesn't restrict us from going back and using setting rates the same way we already have been. And so I think it gives us more flexibility. And if it works, then I think it'd be a great thing for many. The one concern I had

1006
01:15:29,920 --> 01:15:31,240
I don't think you highlighted well.

1007
01:15:31,420 --> 01:15:33,180
What do we do on drought years?

1008
01:15:33,720 --> 01:15:34,760
What we're telling people don't water.

1009
01:15:34,900 --> 01:15:35,800
We're not selling as much water.

1010
01:15:35,920 --> 01:15:38,780
What do we do on years where we actually get more rain

1011
01:15:38,780 --> 01:15:40,840
than we expect and people aren't having to water?

1012
01:15:41,460 --> 01:15:41,880
What does that do?

1013
01:15:42,100 --> 01:15:44,160
Well, that's something we'll have to monitor, obviously.

1014
01:15:44,420 --> 01:15:46,600
And if we have to adjust, we'll adjust at the time.

1015
01:15:47,720 --> 01:15:49,640
But from a rating agency standpoint,

1016
01:15:50,260 --> 01:15:51,760
Jennifer was at the Water Board meeting,

1017
01:15:51,940 --> 01:15:55,000
and I asked her, I don't think she's here,

1018
01:15:55,080 --> 01:15:56,200
what her thoughts were on this.

1019
01:15:56,200 --> 01:16:03,540
She felt like the potential of a downgrade in rating wouldn't necessarily be because of this policy or setting rates in this this

1020
01:16:03,540 --> 01:16:09,040
For a fashion it was it would be basically just from the sheer amount of debt. We would the amount of leverage we would have

1021
01:16:09,540 --> 01:16:14,740
Would be probably our biggest risk from a downgrade standpoint. Not this policy or this type of rate setting. So

1022
01:16:16,220 --> 01:16:19,520
Just some feedback I wanted to share, but overall I'm supportive

1023
01:16:19,520 --> 01:16:20,240
Fickley

1024
01:16:22,720 --> 01:16:27,400
Yeah, now that was Kevin kind of hit on the one thing I was gonna say is is you know

1025
01:16:27,480 --> 01:16:33,480
So we wanted to do everything we can to avoid a downgrade on the rating just because we're

1026
01:16:33,480 --> 01:16:36,960
about to do a lot of things that are dependent on rating.

1027
01:16:37,940 --> 01:16:43,300
And so, you know, anything that is going to jeopardize that from the standpoint.

1028
01:16:43,880 --> 01:16:47,560
And the other thing, too, I think we just need to be real transparent with the right pairs

1029
01:16:47,560 --> 01:16:53,300
about is, you know, a lot of this is geared towards modifying behavior.

1030
01:16:54,380 --> 01:17:06,800
and if it works, then it's going to somewhat have this effect of, okay, now we have to adjust rates back because it worked really, really well.

1031
01:17:07,460 --> 01:17:12,080
And everyone stopped irrigating on July 15th.

1032
01:17:12,120 --> 01:17:17,480
As Kevin said, even on days, years when we don't have drought conditions, even on years when we don't have heavy rain.

1033
01:17:18,820 --> 01:17:29,940
And so the better it works, you know, it's going to have this impact where we're going to have to raise the fixed rate to cover the fixed cost because we have take or pay contracts.

1034
01:17:30,980 --> 01:17:33,500
And that's just the reality of water and such taxes.

1035
01:17:33,740 --> 01:17:35,860
We added that extra tier of over 50,000 right now.

1036
01:17:36,100 --> 01:17:41,960
If you look at slide seven of the supplemental presentation presented, 0.8% of our customers exceed 50,000 gallons.

1037
01:17:42,140 --> 01:17:46,060
So hopefully we'll look up in the future and we won't need that tier anymore because we don't have any customers in it.

1038
01:17:46,060 --> 01:17:48,820
but as of right now we do, so we have a tier.

1039
01:17:49,360 --> 01:17:52,520
Yeah, so yeah, I think great policy

1040
01:17:52,520 --> 01:17:55,180
and let's implement it and see how it goes going forward.

1041
01:17:55,260 --> 01:17:56,800
Great, thank you for your feedback.

1042
01:17:57,080 --> 01:17:58,640
I'll take that consensus feedback

1043
01:17:58,640 --> 01:18:00,740
as to move forward in this direction

1044
01:18:00,740 --> 01:18:03,180
and we'll follow up with Councilmember Bellar

1045
01:18:03,180 --> 01:18:03,800
on his questions.

1046
01:18:03,960 --> 01:18:04,360
Thank you.

1047
01:18:04,680 --> 01:18:05,740
Thank you.

1048
01:18:06,180 --> 01:18:08,420
Hey, let's take five minutes before we roll into the audit.

1049
01:18:08,600 --> 01:18:09,940
That's gonna be lengthy.

1050
01:18:15,670 --> 01:18:16,930
All right, we're back, let's get rolling.

1051
01:18:22,930 --> 01:18:23,250
Sorry.

1052
01:18:23,590 --> 01:18:25,350
Good afternoon, Mayor and Councilmembers.

1053
01:18:25,350 --> 01:18:35,610
Sir, before I start my presentation, I just want to say this document is a lot to put together.

1054
01:18:36,450 --> 01:18:43,410
And I just wanted to say what a amazing team I have over there, my accounting department,

1055
01:18:43,850 --> 01:18:50,350
they work so hard to put this together, and they gather data from all the departments across

1056
01:18:50,350 --> 01:18:56,610
the city, so this really is a team work effort across all the departments and we thank all

1057
01:18:56,610 --> 01:19:02,530
the departments for their responsiveness and my team, they do an amazing job and this

1058
01:19:02,530 --> 01:19:07,610
is the earliest we have had a final draft prepared in my eight and a half years here.

1059
01:19:07,970 --> 01:19:13,370
So thank you to my amazing team and thank you for letting me say that to them.

1060
01:19:13,370 --> 01:19:20,730
Okay, let's talk about the annual comprehensive financial report and our annual audit.

1061
01:19:23,220 --> 01:19:29,360
All right, so some background terms, aquifer or aquifer refers to the annual comprehensive

1062
01:19:29,360 --> 01:19:35,460
financial report, which is prepared according to GAP, which are generally accepted accounting

1063
01:19:35,460 --> 01:19:36,020
principles.

1064
01:19:36,560 --> 01:19:41,280
These are the rules and standards by which all financial reporting is presented and prepared.

1065
01:19:42,080 --> 01:19:49,380
This is not the same as the budgetary accounting that you all see in the fund schedules that are presented to you in the quarterly report.

1066
01:19:50,920 --> 01:20:01,160
And you'll also hear the term gas being. This refers to the governmental accounting standards board. That is the oversight body for accounting standards for governmental entities.

1067
01:20:01,160 --> 01:20:02,080
All

1068
01:20:06,140 --> 01:20:11,420
right, our independent annual audit, this is required by state law and city charter.

1069
01:20:11,820 --> 01:20:14,900
It is performed by an outside independent audit firm.

1070
01:20:15,400 --> 01:20:21,780
The firm is selected by you and they perform, they conduct their audit in accordance with

1071
01:20:21,780 --> 01:20:26,320
generally accepted auditing standards and government auditing standards.

1072
01:20:27,100 --> 01:20:32,580
And their job is to provide assurance that our financial statements are materially free

1073
01:20:32,580 --> 01:20:37,840
of misstatements. And they ensure that we're not only complying with federal and state laws,

1074
01:20:38,060 --> 01:20:42,780
but also with our own internal policies and external requirements.

1075
01:20:45,530 --> 01:20:46,570
All right, let's talk about

1076
01:20:46,570 --> 01:20:53,210
the offer. There are six sections to the offer. The first is the introductory section. This starts

1077
01:20:53,210 --> 01:20:58,570
with a transmittal letter, which tells you about what's going on across the city. It's a letter

1078
01:20:58,570 --> 01:21:05,250
from management to y'all, telling you about all the projects going on and general information

1079
01:21:05,250 --> 01:21:10,510
about the city. The next section is the Independent Audit Report. This is where the auditors

1080
01:21:10,510 --> 01:21:17,890
give their opinion on whether or not our financial statements are free of material misstatement.

1081
01:21:19,270 --> 01:21:27,630
Now, the offer is a very technical document and the next section, the MDNA as we call it,

1082
01:21:28,570 --> 01:21:34,810
management, discussion, and analysis, that is geared for more non-accounting people.

1083
01:21:35,870 --> 01:21:39,430
So if you're new to reading it, that's a great place to start.

1084
01:21:40,250 --> 01:21:45,450
Not only do we do year over year comparison, but we also explain why those things, why those

1085
01:21:45,450 --> 01:21:48,430
variances happened, that's a great place to start.

1086
01:21:49,430 --> 01:21:52,330
The next section is the financial section.

1087
01:21:52,850 --> 01:21:55,330
And in there you'll see two sets of financial statements.

1088
01:21:55,330 --> 01:22:00,370
The first is government-wide, where the city as a whole is presented as a business type activity.

1089
01:22:01,630 --> 01:22:10,670
And then we have the fund schedules, where each of the different types of funds are presented in their accounting treatment.

1090
01:22:11,290 --> 01:22:17,210
So the governmental funds are presented in modified a cruel basis and the enterprise funds in full of cruel basis.

1091
01:22:18,250 --> 01:22:22,110
Now, no financial statements are complete without the notes to the financials.

1092
01:22:22,110 --> 01:22:26,510
They're an integral part, and you can think about the notes to the financials as the words

1093
01:22:26,510 --> 01:22:28,050
or the story behind the numbers.

1094
01:22:28,690 --> 01:22:32,330
So if there's more information we need to give you about the numbers, they'll be in

1095
01:22:32,330 --> 01:22:32,710
the notes.

1096
01:22:33,190 --> 01:22:35,170
They help make it more clear.

1097
01:22:36,430 --> 01:22:43,890
The last section of the offer is the statistical section where we maintain 10 years of data that

1098
01:22:43,890 --> 01:22:47,510
will help you see trends and analysis with all that information.

1099
01:22:47,510 --> 01:22:54,750
All right. Let's talk about the statement of net position. If you're in business in the

1100
01:22:54,750 --> 01:22:58,650
private sector, you'll see that you'll know this as a balance sheet, similar to a balance

1101
01:22:58,650 --> 01:22:58,970
sheet.

1102
01:23:01,130 --> 01:23:06,870
Sorry, coughing. Overall, we had an increase in assets of

1103
01:23:09,080 --> 01:23:13,720
428 million, 94 million

1104
01:23:13,720 --> 01:23:17,320
of that was an increase in current and other assets.

1105
01:23:17,900 --> 01:23:21,200
That was results increased cash from bond proceeds

1106
01:23:21,200 --> 01:23:22,080
and receivables.

1107
01:23:23,040 --> 01:23:25,740
And then we also had an increase in capital assets

1108
01:23:25,740 --> 01:23:27,380
of $335 million.

1109
01:23:28,000 --> 01:23:32,220
Of that $335 million, $216 million was the result

1110
01:23:32,220 --> 01:23:34,860
of whip work in progress or projects

1111
01:23:34,860 --> 01:23:38,280
that we have going on right now around the city.

1112
01:23:39,100 --> 01:23:42,880
We also saw an increase in liabilities this year.

1113
01:23:43,720 --> 01:23:49,220
And that was a result of an increase in OPEB, which is other post-employment benefits,

1114
01:23:49,840 --> 01:23:56,460
net pension liability, our arbitrage liability, and the increase in debt due to bond

1115
01:23:56,460 --> 01:24:04,640
issuance. All right. Now for the summary, the statement of activities, you can think of this as

1116
01:24:04,640 --> 01:24:13,800
income statement. So this year the city had a change in net position or net income you may

1117
01:24:13,800 --> 01:24:22,780
think of it that way as $253 million. So let's look at where the changes are, where the changes

1118
01:24:22,780 --> 01:24:30,240
happen. In governmental revenue we saw an increase of sales tax of 4.6 percent. We did see an increase

1119
01:24:30,240 --> 01:24:34,500
and property tax, and we did have significant interest income again this year.

1120
01:24:35,460 --> 01:24:42,040
In the business type activities, we saw increases in charges for services due to water and

1121
01:24:42,040 --> 01:24:47,460
sewer rate increases, customer growth, and electric's new very large load customers.

1122
01:24:48,600 --> 01:24:54,500
In the governmental expenses, we had an increase year over year of $11 million due to new positions,

1123
01:24:54,500 --> 01:25:23,860
Pay increases, the increase in capital projects spending for parks, roads and public safety and the business type activities had increased expenses due to customer growth, pay increases new positions and the water that service for capital projects.

1124
01:25:23,860 --> 01:25:27,980
So here's some highlights, here's

1125
01:25:30,890 --> 01:25:33,690
some highlights for 2025.

1126
01:25:35,390 --> 01:25:38,950
That is highlighted and I don't know why because that's the wrong number.

1127
01:25:40,590 --> 01:25:41,450
That's interesting.

1128
01:25:41,950 --> 01:25:47,170
Okay, so property tax collections, we had property tax collections of 62.6 million,

1129
01:25:47,550 --> 01:25:51,790
which was a 5.6 percent increase over the prior year, not three.

1130
01:25:52,670 --> 01:25:59,830
We had sales tax collections of 52.8 million, which was another 4.5% over the prior year.

1131
01:26:01,930 --> 01:26:08,530
We saw franchise tax collections increase to 9.7 million this year.

1132
01:26:09,110 --> 01:26:11,250
That's an increase of 15%.

1133
01:26:11,250 --> 01:26:18,450
We also saw investment income at 49 million, which isn't an increase over the prior year,

1134
01:26:18,450 --> 01:26:22,150
but still continues to be significantly more than years prior.

1135
01:26:24,470 --> 01:26:30,630
We did see an increase in our arbitrage liability this year of $4.5 million, which staff continues

1136
01:26:30,630 --> 01:26:35,790
to monitor, and that was mostly in the water fund, and with all the water fund projects

1137
01:26:35,790 --> 01:26:38,270
going on, we continued to monitor that situation.

1138
01:26:39,830 --> 01:26:46,690
We also had a $9.4 million reimbursement from the Chisholm Trail Foundation for improvements

1139
01:26:46,690 --> 01:26:56,410
to Gary Park. And this year accounting undertook a big project and we moved all of the utility

1140
01:26:57,090 --> 01:27:02,450
fleet assets out of the fleet fund and into the enterprise funds

1141
01:27:03,350 --> 01:27:09,030
onto their balance sheet so they could get the benefit of depreciation. Now fleet will still

1142
01:27:09,030 --> 01:27:15,110
manage their acquisition maintenance and replacement of those vehicles. The vehicles will now live in

1143
01:27:15,110 --> 01:27:17,070
their respective utility funds.

1144
01:27:17,930 --> 01:27:25,850
And last highlight of the year, electric sales revenue increased 8 percent over a prior

1145
01:27:25,850 --> 01:27:33,790
year due to organic growth, the very large CNI customer loads, water and sewer sales

1146
01:27:33,790 --> 01:27:42,390
revenue increased 30 percent due to expanded irrigation schedule, organic growth, and rate

1147
01:27:42,390 --> 01:27:48,570
increases to support the capital program and the new water supply and with

1148
01:27:48,570 --> 01:27:54,090
that we are going to now have Adam McCain from our audit firm. We've

1149
01:27:54,090 --> 01:27:55,790
rented welcome and produced comments.

1150
01:27:59,690 --> 01:28:00,630
Thank you very much Christine.

1151
01:28:03,340 --> 01:28:06,620
Appreciate the opportunity to be with Council today and present the results of our

1152
01:28:06,620 --> 01:28:12,000
audit for the fiscal year ended September 30th 2025. Please feel free to stop

1153
01:28:12,000 --> 01:28:14,840
me if you have any questions as we're going along. I don't mind being interrupted at

1154
01:28:14,840 --> 01:28:21,640
all. So just speak up if you've got any questions. My name's Adam McCain. I am the engagement partner

1155
01:28:21,640 --> 01:28:27,680
on your audit engagement and Brandon Trian will be here a little bit later if we're the council

1156
01:28:27,680 --> 01:28:32,080
meeting if you guys have any questions that come up at that point. Just kind of walk you through,

1157
01:28:32,240 --> 01:28:35,960
remind you kind of what the audit process looks like and critical touch on some of this. We do

1158
01:28:35,960 --> 01:28:40,500
perform our audit under generally accepted audit standards, which is the same set of standards we

1159
01:28:40,500 --> 01:28:44,300
would perform the audit under if we were to audit just any commercial business. Then we layer

1160
01:28:44,300 --> 01:28:49,360
on top of that, generally except the governmental auditing standards, which essentially just has

1161
01:28:49,360 --> 01:28:54,400
a few additional requirements associated with our independence and our works surrounding

1162
01:28:54,400 --> 01:28:59,220
internal controls are really the biggest kind of differences there. And we issue our report

1163
01:28:59,220 --> 01:29:04,260
under both of those standards. We also perform a single audit, an audit of the expenditures of

1164
01:29:04,260 --> 01:29:11,100
federal awards that the city spends, so that is kind of a risk-based process. And for this year

1165
01:29:11,100 --> 01:29:16,900
we did look, there are some continuing use of coronavirus recovery funds running through

1166
01:29:16,900 --> 01:29:21,460
the city, and so that was the program that we looked at for this year. We also do some

1167
01:29:21,460 --> 01:29:26,700
work on compliance. We don't issue an opinion on compliance, but we look to make sure that

1168
01:29:26,700 --> 01:29:34,160
we don't see any types of non-compliance with rules, regulations, contracts, federal

1169
01:29:34,160 --> 01:29:37,840
awards, things like that. It might have a material impact on the financial statements.

1170
01:29:39,770 --> 01:29:41,730
It kind of reminds you what our timeline looks like.

1171
01:29:41,810 --> 01:29:46,350
We really get started on our audit as soon as we wrap up the previous year, kind of keep

1172
01:29:46,350 --> 01:29:50,390
in touch with management, make sure that we know about any significant contracts.

1173
01:29:50,570 --> 01:29:55,970
We read the minutes, and then come what you'd started and start kind of the summertime working

1174
01:29:55,970 --> 01:29:59,790
out our interim work, which includes kind of our understanding and testing of internal

1175
01:30:00,000 --> 01:30:07,220
Financial reporting, and also internal controls over compliance. Then we come out after the

1176
01:30:07,220 --> 01:30:11,280
city has closed the books in December and start working on the audit itself, really digging

1177
01:30:11,280 --> 01:30:17,380
into the transactions, looking at support for what's recorded on the books so that we

1178
01:30:17,380 --> 01:30:23,740
can spend most of January, February, helping management put together that big, big document that

1179
01:30:23,740 --> 01:30:28,700
Christy was just talking about with you guys, and then come to present to you so that we can

1180
01:30:28,700 --> 01:30:29,700
started just for next year.

1181
01:30:31,980 --> 01:30:33,280
So I'll kind of run through our

1182
01:30:33,280 --> 01:30:37,180
required communications and findings or a lack thereof here for the

1183
01:30:37,180 --> 01:30:42,940
report. So first we are required to point out to you any significant changes to

1184
01:30:42,940 --> 01:30:45,720
our planned out of strategy that may have occurred since we initially communicated

1185
01:30:45,720 --> 01:30:50,220
with you guys. We have not had any significant changes for our strategy. Nothing

1186
01:30:50,220 --> 01:30:54,520
came up that we didn't expect that causes have to change the focus of our

1187
01:30:54,520 --> 01:30:58,780
audit. As far as our report goes we have issued an unmodified or clean

1188
01:30:58,780 --> 01:31:02,200
opinion on the financial statements, highest level of assurance that we can give on set

1189
01:31:02,200 --> 01:31:07,580
of financial statements. We also issued our report on internal control over financial reporting

1190
01:31:07,580 --> 01:31:12,620
and compliance and other matters and had no findings to report to there and we did issue

1191
01:31:12,620 --> 01:31:17,820
our single audit report to report on compliance and internal control required by the uniform

1192
01:31:17,820 --> 01:31:22,420
guidance and are able to issue a clean on modified opinion there.

1193
01:31:23,760 --> 01:31:27,820
So you can kind of look at this part as the report card here. We had no material

1194
01:31:32,140 --> 01:31:46,020
We had no material weaknesses or significant deficiencies in internal control that we would report to you, and we don't have any independence matters that we would report to you if we had come up with any independence matters that would be communicating that to you now.

1195
01:31:47,240 --> 01:31:52,640
As I said, no adjustments that we had to post really, it's not very many of our audits

1196
01:31:52,640 --> 01:31:55,960
that we run through where that ends up being the case, so I want to commit management

1197
01:31:55,960 --> 01:32:02,360
on their work to get ready for us, get the financials, get the books closed, so that

1198
01:32:02,360 --> 01:32:05,960
we can really spend our time auditing and not have to go in and reconcile and clean up

1199
01:32:05,960 --> 01:32:09,500
and figure out kind of what's going on. We've got a clear record so that we can really spend

1200
01:32:09,500 --> 01:32:13,200
our time testing and focusing on the financial reporting itself.

1201
01:32:13,200 --> 01:32:13,500
So

1202
01:32:15,580 --> 01:32:30,140
we are required to communicate to you what we call our significant risks in the audit this and so we've got kind of three significant risks that we point out to you. There's significant risks in every audit that's part of the audit standards is that we identify significant risk.

1203
01:32:30,640 --> 01:32:39,960
First when we point out point out as management override of controls this is pervasive in every audit has nothing to do with the city and almost every audit that you would look at this would be one of the significant risks.

1204
01:32:42,100 --> 01:32:46,460
And so we kind of plan our audit surrounding that, assuming that that could be the case.

1205
01:32:46,840 --> 01:32:50,260
We have no audit findings associated with our testing there.

1206
01:32:52,160 --> 01:32:58,160
Improper revenue recognition is something identified by the standards is in most organizations,

1207
01:32:58,340 --> 01:33:01,700
most entities, commercial, non-commercial, governmental, and non-profit.

1208
01:33:03,120 --> 01:33:06,500
Revenue recognition is going to be a potential for our risk.

1209
01:33:06,500 --> 01:33:13,700
And so we do kind of narrow down and identify risk of improper property tax revenue recognition as a risk.

1210
01:33:13,980 --> 01:33:21,120
We have some specific procedures that we perform related that make sure we're comfortable with the way that revenue is getting recognized and we have no findings to report to you.

1211
01:33:22,060 --> 01:33:26,480
We also identify kind of the risk of movement of expenses between budget categories.

1212
01:33:26,480 --> 01:33:34,300
You know, it could be someone trying to manipulate the budget for compliance purposes, and so we identify that as a risk.

1213
01:33:34,320 --> 01:33:39,980
We do perform procedure related to that and don't have any audit findings to present to you related to that risk as well.

1214
01:33:41,420 --> 01:33:52,760
Some of the other areas where we spend time that I'll touch on just general expenditures related liabilities including payroll capital projects and general disbursements obviously as a government spending money is kind of one of the things that you do.

1215
01:33:52,760 --> 01:34:00,040
And so we look to make sure that money is being spent consistent with the way the council has defined those created those budgets.

1216
01:34:01,080 --> 01:34:07,240
Revenue and related receivables, including utility revenues, taxes, charges for services and grant revenues.

1217
01:34:07,480 --> 01:34:16,480
Being sure those are getting recognized in the correct period, in the correct fund, so that they're getting credited appropriately, the fund balance that's appropriate as well.

1218
01:34:16,480 --> 01:34:20,440
So, cash and investments looking to make sure that the custody of cash and investments

1219
01:34:20,440 --> 01:34:22,840
exists as management has told us that it has.

1220
01:34:22,840 --> 01:34:28,900
We confirm cash and investments with third parties and testing material, reconciling

1221
01:34:28,900 --> 01:34:29,160
items.

1222
01:34:30,060 --> 01:34:35,640
And then long-term debt can be a little bit sticky, making sure that the debt and any kind

1223
01:34:35,640 --> 01:34:39,920
of deferred items associated with the debt is getting appropriately reported and amortized

1224
01:34:39,920 --> 01:34:41,660
off as they should be.

1225
01:34:45,160 --> 01:34:47,760
So, it's important to read the notes of financial statement,

1226
01:34:47,880 --> 01:34:48,860
Chris, you kind of touched on that.

1227
01:34:50,280 --> 01:34:53,560
And so, all the significant accounting policies are summarized

1228
01:34:53,560 --> 01:34:54,520
in the financial statements.

1229
01:34:55,040 --> 01:34:58,680
There are no new significant accounting policies adopted this year.

1230
01:34:58,760 --> 01:35:00,760
They should be pretty consistent with what you've seen in the past.

1231
01:35:01,860 --> 01:35:04,640
It's important to remember that the preparation of any financial statements

1232
01:35:04,640 --> 01:35:05,880
does include these investments.

1233
01:35:06,580 --> 01:35:09,500
And so, we do take a look at the estimates and make sure that we believe

1234
01:35:09,500 --> 01:35:12,960
that the inputs to those methodologies used by management are appropriate

1235
01:35:12,960 --> 01:35:16,260
and so they are materially presented in these financial statements.

1236
01:35:17,280 --> 01:35:21,380
Some of the estimates that are included in your financials, the allowance for

1237
01:35:21,380 --> 01:35:25,860
uncollectable receivables, compensated absences, pension, and other

1238
01:35:25,860 --> 01:35:30,860
post-employment benefits, self-insurance liabilities, we don't need many of

1239
01:35:30,860 --> 01:35:35,640
these as significant or subjective estimates, pension and OPEB.

1240
01:35:36,960 --> 01:35:41,660
You know, you could consider that way but you, you know, there's third-party

1241
01:35:41,660 --> 01:35:45,500
actually were involved, there's not a whole lot of say by management on how those estimates

1242
01:35:45,500 --> 01:35:46,880
are going to be derived.

1243
01:35:50,320 --> 01:35:54,780
Just to point out a couple of significant disclosures that are relevant to the financial

1244
01:35:54,780 --> 01:36:01,020
statement presentation, the debt disclosures obviously, then there's disclosure of your

1245
01:36:01,020 --> 01:36:05,700
regulatory asset position and the commitments and contingencies are significant footnotes.

1246
01:36:06,620 --> 01:36:10,860
We're not aware of any significant or unusual transactions that we came across as we were

1247
01:36:10,860 --> 01:36:14,900
For performing audit this year, we'd communicate those two if we did.

1248
01:36:15,300 --> 01:36:19,280
We're not aware of any identified or suspected fraud, same thing.

1249
01:36:19,460 --> 01:36:22,440
You'd be hearing about it before now if we'd run into anything.

1250
01:36:23,440 --> 01:36:26,940
Did not encounter any significant difficulties in dealing with management.

1251
01:36:27,180 --> 01:36:32,620
In fact, again, as I mentioned, I really appreciate all the hard work by counting and finance

1252
01:36:32,620 --> 01:36:35,900
and everybody that kind of rolls up into that, getting all the information, getting everything

1253
01:36:35,900 --> 01:36:40,840
ready for us so that we can really do a good job auditing and not have to chase things

1254
01:36:40,840 --> 01:36:45,240
down and track down pieces of information that we may not be able to find.

1255
01:36:46,220 --> 01:36:50,380
Did not have any discrements with management over any accounting issues or anything like that.

1256
01:36:50,720 --> 01:36:52,960
If we did, we'd be required to communicate that too.

1257
01:36:55,660 --> 01:37:02,460
Management does sign a rep letter, essentially telling us they provided us everything that we need for the audit and that everything that we've been given is true and accurate.

1258
01:37:03,760 --> 01:37:07,080
As I mentioned, there's no significant new accounting policies this year.

1259
01:37:07,080 --> 01:37:11,300
We're not aware that management did an opinion shopping going out and checking with other

1260
01:37:11,300 --> 01:37:13,540
accountants on the way that they think should be treated.

1261
01:37:14,880 --> 01:37:19,380
We don't have any other significant matter to find these to present to you.

1262
01:37:22,160 --> 01:37:25,500
That'll be happy to answer any questions that you guys may have related to the audit.

1263
01:37:26,220 --> 01:37:26,680
Thanks, sir.

1264
01:37:27,600 --> 01:37:28,440
Any questions from?

1265
01:37:32,860 --> 01:37:33,080
All right.

1266
01:37:33,240 --> 01:37:34,040
Well, thank you very much.

1267
01:37:34,040 --> 01:37:35,080
We appreciate the thoroughness.

1268
01:37:35,400 --> 01:37:35,920
Thank you very much.

1269
01:37:38,160 --> 01:37:41,480
Mayor, I wanted to call out one thing, of course, liposetistical data in the back.

1270
01:37:41,480 --> 01:37:46,260
back. But Glenn was here earlier and I see him here anymore.

1271
01:37:47,700 --> 01:37:55,800
Well, based on what the audit says the last 10 years, Glenn and his Department have done 682,908 inspections.

1272
01:37:57,580 --> 01:38:02,040
The last 10 years, 682,908 inspections.

1273
01:38:03,200 --> 01:38:04,400
Glenn did that himself.

1274
01:38:04,620 --> 01:38:06,280
Glenn did all by himself is what it says.

1275
01:38:06,900 --> 01:38:11,460
His department, I believe, but the residential permits last 10 years, 16,000.

1276
01:38:11,460 --> 01:38:14,000
and what's interesting about the commercial permits,

1277
01:38:14,180 --> 01:38:16,220
you look at commercial permits every year

1278
01:38:16,700 --> 01:38:19,340
for the past 10 years besides 24 and 25,

1279
01:38:19,600 --> 01:38:23,220
the highest, there was never a year over 100 commercial permits.

1280
01:38:23,300 --> 01:38:25,680
85 was the highest in 17, but then the last two years

1281
01:38:25,680 --> 01:38:28,640
we've had almost 250 each year.

1282
01:38:28,840 --> 01:38:30,300
So basically over the past 10 years,

1283
01:38:31,020 --> 01:38:34,080
47% of our commercial permits have been issued

1284
01:38:34,080 --> 01:38:34,960
in the last two years.

1285
01:38:35,660 --> 01:38:37,360
So the commercials fall on the rooftops,

1286
01:38:37,420 --> 01:38:38,620
rooftops are here, the numbers are here,

1287
01:38:38,620 --> 01:38:43,580
It feels like we're finally seeing, hitting the metrics for side selectors and the commercials

1288
01:38:43,580 --> 01:38:44,640
falling behind it.

1289
01:38:46,520 --> 01:38:52,660
Well, I just wanted to add in echoing thanks of our accounting team or finance team.

1290
01:38:53,020 --> 01:38:59,600
And it is a broad team effort to be able to present the effort and go through the audit

1291
01:38:59,600 --> 01:39:02,440
process and compliance associated with that.

1292
01:39:03,440 --> 01:39:07,480
It's kind of interesting that pretty much every workshop item we had tonight was actually

1293
01:39:07,480 --> 01:39:13,160
a very large team effort to be able to get us to this point and be able to have, just

1294
01:39:13,160 --> 01:39:17,460
talking about the economic development wins, have the different achievements that we've

1295
01:39:17,460 --> 01:39:18,880
been able to identify tonight.

1296
01:39:19,120 --> 01:39:22,940
So I just wanted to personally say thank you to the finance team and congratulations on

1297
01:39:22,940 --> 01:39:23,460
the clean audit.

1298
01:39:23,760 --> 01:39:24,900
It's a big achievement.

1299
01:39:26,700 --> 01:39:28,000
Yes, thank you very much.

1300
01:39:28,220 --> 01:39:28,940
Appreciate you guys.

1301
01:39:30,240 --> 01:39:30,580
All right.

1302
01:39:30,580 --> 01:39:46,520
We are going to roll into executive session to discuss sections 551.071, 551.072, 551.087 and 551.074. Thank y'all.