Oh, I got to do I guess we'll be all right. Okay. All right. Ready? All right. Call the special city council meeting to order. Commissioner Smith, you give us the prayer and pledge, please, sir. Our
father God, we come once again before your presence, asking God for your continued guidance, your blessings upon this meeting, upon this council, upon this mayor, that you'll lead us and guide us in the direction you will have us to go. That all that we shall do and say we pleasing and acceptable in your sight that we be good stewards of the
resources you're providing for us. Bless those that intend us. In thy son Jesus name we pray. Amen. >> Amen. I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation under God, indivisible, with liberty and
justice for all. >> Okay. All right, Sean, come on down. Get right into it. >> I know the weather's bad and adds extra traffic. I wasn't sure it was a
hairy rod getting here, but we appreciate you coming out tonight. I'm sorry about the tardiness. Yeah, the the weather got me. >> Okay, get your mic up. You speak in the mic loud if you can. >> That better? >> Yeah. >> Okay, awesome.
There's normally a clicker. >> Um, good evening. Uh for the record, Shauna Caseia with Reptalis Financial Consultants. Um coming back to you today, uh Encore presentation um you know, from the follow-up from last week's uh uh council meeting. Um so
one of the things that we we looked at at the request of the council was some alternative scenarios. Um what I'm going to do in this it's a brief slideshow this evening uh recap the just the prior presentation what was covered on the third then talk about uh the the alternatives that were requested
uh by uh the commissioners and then talk about summary findings and revised rate adjustment recommendation. So just as a a quick recap from uh last week um we as a part of that presentation we reviewed the the major tasks and considerations associated with
the rate study. So that's looking at things like cash flow, uh, overall liquidity and cash balances for the utility system as well as, you know, other loan covenant requirements like your debt service coverage. Um, and those are all major considerations that we, you know, look at when we're evaluating the overall sufficiency of
revenues for the system. Um we then also uh reviewed the major assumptions embedded in the water and sewer and and reclaim water rate analysis such as customer growth, operating expenses, uh annual debt service payments, your capital improvement program or your CIP and then the the corresponding related
uh funding plan. Um just to recap some of the major issues that are impacting the rates for the city, there's the uh significant capital improvement program to upgrade and expand the system. Uh and then associated with the funding of that capital plan, there was the the future increase in annual debt service payments
uh due to the additional borrowing that would be required in order to fund some of those major projects in the multi-year capital plan. Um another item is you know uh the inflationary increases in operating expenses and uh some additional personnel uh as well built into that plan. So, um the the
discussion there was uh showing uh significant uh rate increases um that uh I'm sorry, there was another item was the the listing which I have it at the end of this presentation if we want to reference it again or just some other municipalities that are also experiencing significant rate
adjustments uh that have been adopted. So, uh, to recap the prior rate proposal, it was a 15 and a.5% increase across the board for the water, wastewater, and reclaim systems for fiscal years 26 and 27, followed by 3 and a half% per year for fiscal years 28
and 29. Um, then at the the presentation, the council had requested review of two additional uh rate scenarios in order to try to slow the the bill impacts to your your existing customers. uh alternative one we'll call it was to aim for less than 10% per year
for fiscal years 2026 through 2029. So uh to accomplish uh that scenario we evaluated it based on 9 and 3/4% increase per year. Alternative two was to keep the same first year increase at 15 a.5% but then uh lower the second
year increase to 9% and the subsequent increases to 6% per year and that would be the the path for 2026 through 2029. uh in order to develop these scenarios, we also um tried to adjust the CIP in order to to try to make these alternatives work.
So uh one thing I want to mention that was also a part of the scenarios and this impacts uh both of them accordingly was we did also get some uh uh updated uh 2026 budget information that we we folded into the the forecast period as well. Uh with that information, that did increase operating costs uh predicted
for 2026 and beyond by about $2 and a half million dollars. That's spread across the various utility departments. Um so that's an increase in cash outflows about $2.5 million for 2026 through 2029. That being said, we also had additional information about $2.5 million of additional grant funding that
wasn't built into the plan previously that we just got information on. So we netted that against the capital projects. And then we also made adjustments of about $ 8.7 million to uh pay as you go capital or rate funded ongoing capital uh related projects. Uh the two main ones that were adjusted
there uh annual water pipe replacement program and the wastewater collection system uh pipe R&R program or renewal and replacement program. Those projects are still being funded just not quite to the same degree over the forecast period in order to try to make some cuts. And that 8.7 million is again spread across
the the water and wastewater system. Uh one other adjustment that we made uh in the plan was there's a significant project about $25 million a water plant expansion project and that project was pushed back in its timing from uh fiscal year 2027 to fiscal year 2028. And what
that allowed us to do there was uh you may recall in the prior presentation we were looking at two additional borrowings in order to fund the capital plan. By splitting this $25 million project out and pushing it back a year, we were able to fund the plan over three debt issuances. So, why is that
important? It's because now we can stair step those increases in debt payments over a three-year period of time instead of a two-year period of time. So, it gives a little bit of rate relief there um to to phase up into. Uh so uh with those adjustments in mind again the on andm the capital the the
debt structuring and so on uh we looked at the first alternative at a rate of 9.75% uh per year for fiscal years 26 through 29 that's a total cumulative increase of just over 45% by 2029 slightly higher on the tail end but um
lower increase in on the front end. Um, when we looked at that scenario, that rate path, >> can I pause you right there real quick? Just a quick question. The 45.1, >> how do we get to that number? >> It's a cumulative but compounding. So, if you if you go up by 9.75 the first
year, when you go up by 9.75 the second year, it's also accounting for that incremental increase of the 9.75 of the first year. So, they actually compound over time. So, it's it you end up with a a higher rate than just adding the 9.75s together. So it's like a time value of money
calculation. Is that the same scenario or >> it's it's not so much a time value of money, it's just the the compounding. So if if it was I I'll use a simple example for myself here. If if it's a $10 bill and we increase it 10% the first year, it's now 11. But if we increase it 10%
again, the increase is not another dollar, it's a$110. So each increase even though there's still 10% gets a little higher on each uh cycle. >> So is that same calculation being done on that original table as well? I can get it. Um I don't have it listed
on this slide here. I think that one was I want to say 42 and change. I can I can pull that though. >> No, that then that that tracks with the numbers that I'm doing. Okay. Thank you. >> Yes, sir. Um so when we looked at this particular scenario, uh the the rates um
weren't generating sufficient margins to to um to sa well, I'll say it cautiously, safely meet the coverage requirements in the latter years of the forecast. The reason I I mention that is because again, since we're lower increase on those first two, when the new debt starts to come online, again,
remember your debt service coverage is a ratio that's represented by your gross revenues minus your operating cost. So, your net revenues, that net revenue number compared to your your debt payment. So, since the revenue component of that is increasing at a slower rate, the debts increasing. We did stair step
it, so there's some benefit there, but it wasn't quite enough. So it's projected that while it would be above your requirement level, it'd be right on the on the line there. So that the risk there is if your operations don't occur as planned, if you have, you know, a bit more operating cost or a bit less
revenue, then that could be a risk for what's called technical default on your your loan agreements. Um technical default is not an issue where you can't make the payment. It's just you can't make the the margin requirement on top of the payment. That's a part of that. >> Does the lender at that point do they
does that do we become in default if that happens or is it just we're calling it technical default it's nothing actually occurs >> um there there could be impact one of the things they'll want to see is that you have um a plan in place to fix that issue there may be some uh
creditworthiness implications I'll be honest that's a an area where that' be more the realm of an FA to make that kind of comment um but essentially it can it can put you at at risk there um in other borrowings >> thank you >> also the the rate plan under that level
because again it's it's slower on the front end and everything. Uh the rates don't generate quite enough cash flow to achieve the the city's targeted cash balance level by the last year of the forecast of about 150 days uh by 2029. Um so you you'd be running very lean on cash. You'd be running very lean on
coverage um in this particular scenario. >> That scenario does hit the 120day mark correct of reserves. >> Uh yes sir. By the by the last year it dips a little bit in 28. This is a rather busy slide here. Uh the the top left side is cash outflows and cash
inflows. So the bars represent expenses, debt payments, transfers, and uh capital. The dotted lines at the two colors, the black dotted line is representative of revenues at existing rates. The blue dotted line is representative of revenues at the proposed rates under the new rate trajectory here in the scenario. Uh the
top right um chart is then a projection of operating reserves over the forecast period. And so essentially it'll remain roughly about the 120 days level dipping below that. Um what I would note here is that would be all unrestricted reserve essentially for the city and um you know
the the target has normally been 180 days of revenue for the city of Apaka but being okay with 150 days. Um so we would be running a little lean at 120 days here on this scenario. Um, but it would get to that 120 day by the end, but not to the 150 that we were uh
looking at in the the original scenario there. In terms of annual debt service coverage, that's the two bottom charts there. They're they're very busy. The the left one is representative of the senior lean obligations. So, your bonds and and those sorts of items, you would be in compliance here. The the steep
decline that you see going from 25 to 26 and then the smaller decline in 27 and 28 is when those other debts come online. again that ratio analysis as the debt goes up the coverage goes down. Um, so not as big an issue here, but on the subordinate lean side, your your SRF loans, um, you'll see the decline. And
if you look at uh the net revenue one, that's the the orange bar component there. In 2027 2028, it's at a 1.19. Uh, your your minimum requirement with SRF is a 1.15. So you'd be very tight on that margin there. And again, if if operating costs came in higher or if
revenues came in just a bit lower, there's the risk that um, you would dip below that uh, requirement threshold. Uh the second alternative we looked at was the the same increase in fiscal year 2026 and then a lighter increase in 27
and then an averaging out in 20 uh 28 and 29 uh 15.5 9% and 6% per year. Uh cumulative increase it's about 41.5% again that compounding issue uh by 2029 just under the original scenario. Again I think the original was about 42 point
something. I'd have to double check to be precise. Um, in this particular scenario, because the the increase is again a little more front-loaded, um, it does generate sufficient margins to make sure that those coverage requirements aren't as tight in those middle years as the new debts come on. And it also
generates sufficient cash flow to make to meet the the minimum uh, target that we were originally aiming for of 150 days of uh, unrestricted reserves by 2029. Uh, same uh, chart layout here. uh you'll see the the operating reserve by by the end of the window getting to
about that 150 days of cash uh level. And again, if you look at the bottom right chart, uh the 2027 and 2028 are they have a a bit more margin there compared to your requirement. So, it's a little bit safer in case something happens uh in in the planning cycle.
You're not immediately going below your required level. uh terms of the uh comparison here. So, this comparison is still showing the the 155. It's based on alternative 2 that we were just talking about. We did update it for a couple of the communities um that we know have rate adjustments
upcoming in 2026. Uh you'll see that for the city of uh Winter Garden on the left. You'll see that for the city of Groveland to the right and as well as the city of Ovido. Um so with those known um changes in rates that are forthcoming for those particular communities in 2026, it does raise the
average bill on the comparison slightly to about $81.30, which would put the the city of Apakka's uh bill at 6,000 gallons of usage just slightly above that level at $8246. >> But but that doesn't So the only ones that you have that are the new rate is
Winter Garden, Apopka, and Ovido. The rest of these are the the 25 rates, correct? >> Yes, sir. >> Okay. >> So, uh again, we're we're in the same situation. The the revenues at existing rates, so the existing rates themselves are projected to be insufficient through
2029. again due to increases in operating cost. Your your capital improvement program for renewal and replacements for expansions and upgrades to the system and the associated additional debt service costs are what are you know causing that. Again, even with the adjustments we made in terms of
reducing the the capital plan by about $9 million, pushing back $25 million of a debt issuance. Um there you know there were some additional costs on the on the operating and maintenance cost side that also impacted this. Um so the the revised rate uh proposal here would be um under uh scenario two again the same
increase for 26 but a lower one in 27. Uh the other thing I would would note here is there's also um the the other u city initiatives that were discussed on the meeting on the 3 um that um the u city administrator talked about uh in that meeting about different revenue
enhancements and other items that could be made to potentially make the picture look better in those latter years once those things are are accounted for. Um, I know this is just a a special meeting, so there's no action um right now, but again, the the proposed rate adjustment plan would would uh have a positive cash
flow through the forecast period. Your coverage requirements would have a safe margin to them, and you would still hit that uh desired uh 150day target of cash by 2029. >> Thank you, Sean. Rad Williams, interim city administrator. Uh, mayor, commissioners, just wanted to take a
moment to kind of dig back into the 401 budgets and just present some additional information uh at the 401 as a whole. So, this first slide, and I did provide a sheet there that has this information along with some additional detail uh with the year-over-year um spends for
those budgets. Um, the FY26 tenative 401 budget. I've split this down into personnel costs, operating costs, capital cost, debt cost, and transfer to general funds. So, this first pie chart illustrates uh what percentages of the
overall combined 401 budget um propos or tenative budget uh go to each of those categories. So, our personnel costs are looking at 23%. uh operating at 40, capital at 23. Uh debt is registering under uh that one
under zero, so 130,000. And then transfer to general fund is at the 6.2 million. I just broke that out into what each dollar uh goes into that. This chart just takes that data and puts it into a bar chart for you to to see a
trend here. Um so year-over-year the uh the operating costs um are relatively uh similar. We do have an increase in 24 and again an increase uh in this 26 uh budget. And you'll see the capital which
is the light green uh definitely has a large increase uh this year. just to highlight some of the major capital projects in the tenative 401 budgets and uh 403 budgets. Uh the 401 tenative budget uh has a
proposed $9.8 million in capital improvements. The uh 403 tenative budget, which again is our impact fee, uh we're estimating uh projects at 26.3 million uh dollars. So those are those are those projects
directly related to the new growth in the city. Uh going down the list here, uh I just wanted to provide again a call out to the major infrastructure, major uh improvements that we're looking to uh accomplish in this FY26 budget. uh
including the new uh flexet tower bases uh some emergency generators um some upsizing agreements uh the ozone treatment uh design for gross bacher before you leave that slide just I just want everybody to take a just a quick
look at if you look down to about the sixth item it says lift station rehabilitation replacement program lift station number 17 $3.7 million that's in the 401 account but to go down a few more lines down And you'll see another
lift station um master lift station of size program S LS17 construction 2.5 million. So what that's telling you is that as we replace that lift station 17 which is over 50 years old that some of the money is
coming from operating for for us that have lived here for well my entire life. And then the other the two and a half million is coming from new residents paying their impact fees. So that's that's an example of a lot of things that we're doing in the city are they're a combination of the 401 which is
operating which for everybody who's been here 10 years, 50 years, whatever, 100 years, we're paying that. The 403 is is the impact fees that that are for all the new construction going on. So, as you see, a lot of the projects we're doing, it it'll be a it'll be a balance
where it'll be um it'll have both 401 and 403 funds paying for a particular um item or facility or whatever. So, I just want to highlight that just because I think sometimes we get lost in the, you know, in the the big numbers and want
drill down as to how that how we come up with that number. All right. So again, just a list here of some of the higher uh uh major capital projects that we have identified for this uh fiscal year coming up.
And as we discussed at the last uh council meeting, uh we are undertaking some additional steps to to build on the positive trends in the utility operations. Uh that includes the um pushing and rectify the flexnet uh meter issues by end of the end of this calendar year. uh installing new Flex
Netapet base stations, um preparing a proposed new installation fee adjustments, and that's again for new uh water taps, sewer taps. Those rates uh when in our initial review do look like they need some increasing. Uh
working uh a new email notification system to help try and get delinquent accounts back online before going to collections. uh proposing a utility tampering fee or fine, I'm sorry. Uh apologize for the typo. Uh fine to
accompany the tampering repair cost and again try and um discourage any tampering of our utility equipment. Uh search for additional operational small capital budget efficiencies as we move through FY26. So that includes looking at the trucks uh that we have
not only in this upcoming capital uh plan our capital plan year but also the next four years to see what's the op operational need, what's the status of the vehicle, uh can we get a little bit more life out of it. Um and then also looking to propose a small credit card
processing fee to recover some of the credit card processings that are currently being paid by the utility fund. Um again the uh the plan is to um get through the first quarter of five F26 and then re-engage with Raf Telis to
assess how those uh adjustments are are affecting uh the operation and the trends and then as we discussed the last meeting the pleasure of the council we can bring this back uh halfway through the fiscal year to uh to get this in front of you to see if there's where the
positive trends are looking at. And I just wanted to take a chance to uh uh we put together this uh table and the goal of this table is just to take the current rate the proposed FY26
rate increase 15 a.5%. And extend that out um to estimate some FY26 bills compared to what the current rate is. So, if you're looking at the water 0 to 6,000 gallon line, um we have the current
rate. Well, obviously we have the base rate in the first line and the current rate reflect we uh reflect those out. Um and that estimated FY26 bill sets at 1435. The current FY25 bill is 1242 for
a $1.93 difference. So, just thought this was good information to rather than go for a specific estimated bill, uh, kind of break it out by the different consumption rate levels that we have. Um, the 6,000 gall the 0 to 6,000 gallon
rate is a 6,000 a 6,000gallon estimate. The 6,0001 to 15,000 is a 15,000gallon estimate. So, we're using the high-end estimate of those levels to give you a look at what that could look like. And I think that's the last slide and we
can be available for questions. And >> let me go >> ahead. Let me ask you, do we know what the average homeowner consumes? How many gallons? >> Oh, okay.
Okay, >> our finance director is working on it. >> All right, but I thought this would be helpful for even homeowners to look at this chart and kind of see where they might land on the consumptive use to kind of get an
idea of what that might look like. Any other questions for Sean or Bradley? >> Yes, I have a couple questions. Sean, thank you for coming back and and running through these scenarios for us. Definitely appreciate the exercise and again it helps to the public to understand kind of what we're trying to accomplish as well as uh kind of the
pain points of how we're navigating this. Uh what is our total amount for 401 debt that we're going to be taking on? because I'm not seeing that in any of our budgets of what like updated debt costs are going to be, but we're increasing rates as if it's there
somewhere. So, I just What's that total amount? Is it that 188? >> Uh, no, it's it's um I want to say by the end of the forecast window, it was about 8.2 8.3 million in total additional annual debt service cost on top of what you pay today, which I going
for memory, I believe is about five million. Um, one of the things in that chart with the breakdown of the dollar that was um the debt funded from fund 401, but you have a very significant portion of your debt that's funded also from fund 40 uh 403. The >> Can you actually go back to that that slide please?
>> Yeah, thank you. So say that again, please. >> Sure. Um, so when it comes to budgeting your annual debt service payments, you pay them out of fund a portion of them out of fund 401, but also a portion out of I believe fund 403, the impact fee funds. Um the reason for that is again
impact fee monies can be used um for expansion related capital costs which we're using in the plan but you can also use it for the expansion related component of debt. So to the extent you have debt that was used to expand a facility then a per share of that that was associated with the expansion could
be funded through these expansion type fees. And so that uh 30 there I think is just that component of it. Um because the other portion of your debt um that's being funded from those growth fees is about the difference you 5 million change.
>> But the total debt you said is about is going to raise to 8.2 >> in terms of annual debt service. I can grab my other briefing document from you can. Yeah. Just so I have that number please. Sure. Thank you. Just while he's getting that, I just want to one of the things that Radley
was talking about is the increased revenue uh fee increases. So these are for like uh the taps for water, wastewater um reclaimed water and backflows. The number that if we and we have to
obviously we have to be able to to justify these numbers, but looks like we can increase the revenue per year about $262,000 on on all the um all of those taps. the um the utility billing fee was if that's
if we go $2 per credit card charge that would be $43,000. The um financial impact, you know, we've got obviously we're looking at the meters as we get to lower the no reads and the estimates, we we're we're expecting some
some additional revenue there. I know that's but but Sean has to work in the current he can't work in what we we hope to do. And so that's the numbers he gives us are if he were to go to the bond market today, he couldn't go on what we think we can collect. He's got
to go on what we're currently collecting. And so >> and what you have a plan in place for you. >> And that's that's his role here is to make, you know, to give us, you know, if we go to the bond market to borrow money for whatever, he he's got to be able to stand by his, you know, his numbers. And
so that's, you know, we appreciate, you know, you know, your honest assessment of where we are. >> Yes, sir. Thank you. Um, so regarding the the capital improvement program, uh, it was originally total expenditure was about $188 million. Again, we we paired
that down by about I want to say 9 million or so. And then there was also two and a half million of grant funding that we got information on. Um but in terms of the the total funding of the plan about 101 million was originally anticipated to be funded through uh borrowing. Um and that had a corresponding increase in the annual
debt service payment by the end of the forecast period of about 8.1 8.2 million. >> That's between both funds or is that just for 401? >> Oh, between the two? >> Okay. Are you able to tell me what 401 exclusively would be taking on?
>> I can go back. I'm sorry. >> Yes, please. >> Yes. Thank you. >> And while he's getting that, uh, Mayor, you mentioned the credit card fee. >> Yes. >> Uh, is that going to be a flat $2 fee regardless of what your >> correct >> the bill is?
>> Yeah. Well, what we we were looking at the average bill, the credit card was $81, I think something. >> Yeah, we're trying to keep it below the what it would the 3% which is what a credit card would charge. >> Okay. Yeah. And the reason why I was asking because I know when you go to
some merchants, they actually charge you 3% of whatever you you charge them the card. And so that's why I was wondering if it's just going to be a flat $2. >> Just $2. Okay. >> They charge us the Yeah. the 3%. So you know the credit cards. And so we we wanted to keep it under what they would
pay. Um if you take $81 times 3% that's $2.40. So the average bill they're still get it's less it it's still a hit to us but not near what the full the full thing is. >> Yeah. >> Mr. Sherman I actually have a couple
questions for you while uh Mr. Sean's working on that. Maybe I can run through those questions um to give them a little bit more time. We had said or there it was presented there's an additional like about $2.5 million in grants that that we're expecting. Uh where are those coming
from or what what are those grants? >> That grant is the grant that we received um the state appropriation for the uh asbestous galvanized pipe project. >> So we had already received that. >> Well, we just got awarded. It just came to council not too long ago,
>> right? >> Okay. So that's not it's new, but it's not like as it's not within the last week. No, >> no, no, no, no, no, no, no, no. But basically what we did when going through this exercise, we had the opportunity to try to true up everything to make sure
we was on, you know, the same page. This process started months and months ago and they actually started with a basis of FY25 with escalations in it. So because they have cost escalations. So basically what we did this time as we
were going through and looking at these scenarios we tred everything up. >> Okay. Okay. >> Understood. The So we were talking about lift stations and how obviously some increase uh in capacity is able to be uh that cost is able to be put onto the impact fee side 403.
>> What's an average of that? It's a total of 6.2 million between 401 and 403 for lift station number 17. Is that an average cost? Maybe that's not a you question, but is that's is that an average cost to do what we need to do for a lift station of that age? >> Actually, it should represent the
capacity component of the project. >> Vladimir Simonovski, public works director. Commissioner Netor, that's related to uh that particular lift station. So, the increase in capacity for that one lift station, which is number 17, it's uh percentage- wise
presented in the budget. So, >> I broke it up like that. But so on that so it's this is not just being uh kind of brought up to date so to speak it's also being >> it's not an average may in our lift station maybe 50% right >> okay so about 3 million per lift station what's our average age of lift stations
right now do you happen to know that and I'm not going to hold you to this plus or minus 10 years >> I don't have that information for you because lot you you have to take into account that a lot of the developments are actually new developments and uh
just maybe for for thoughts Right. Let's say 5 years ago we had about 141 lift stations. Right now we have 5 years later about 167 something like that. >> 167. Okay. >> And I think what lift station 77 is
going to be that's going to be more expensive than 17 >> I believe. So yes. Yes. Because that's going to be a quadruple pump. Yes. >> Okay. Would you have that information later on available to be able to give us that kind of average age of of across the board of what?
>> Absolutely. Yeah, we can. >> Just so we kind of understand because if one is $3 million and we have 167 of them, >> some are newer, that's fine, >> but I assume some are aged. >> So we it we need to put at least understand what that looks like long term. >> Yes. >> Okay. Thank you.
>> And in the system overall there's only total of 11 master stations. All the other ones are some are smaller. Most of them are actually residential subdivisions, >> right? >> And also, can you give us the life average life of a lift station?
>> Uh, yes. Yeah, we can definitely look into that. >> Yeah, that'd be helpful for sure. >> Yeah. Just for information, this number 17, >> yes, >> is is 1970. So, it was an old package plant that was converted to a lift station, and that's one of the most critical lift
stations that we have on the list. Gotcha. Understood. Thank you. >> That one, I'm sorry. Lift station number 17. >> Number 17. >> It's from 1970. >> 1970. >> And where was that one located again? >> This is right next to uh >> Frankton. Frank. >> Is that the one by the skate park over
there? >> Yes. >> Oh, that's the one that the kids always complain about. >> That is the smell. >> Station smell. Uh back to your your question of the breakdown of that 8 million and change. Um so uh of that amount it's about $8.1
million by the end of which about 5.3 million would be funded from uh 403 uh and the remainder about 2.8 million um would be from 401 >> and by the in 2.8 again just to restate 2.8 is the debt service per year that
that'll be increased to okay >> increased >> increased to correct so well over the the 130 so maybe total debt cost will be just over three million >> I think this is additional right or is it up to 82
>> so total existing debt across both funds right now is about $5 million a year that would be increasing to about 13.1 million by the end but again It's it's broken out. Um about 2 point excuse me 5.3 million of the of that expansion the
excuse me the newer debt um would be funded from uh fund 403 or about 35% of it. >> Okay. So >> excuse me um the inverse um the 35% would be from 401. >> Understood. Okay. So the 403 will have
total debt service cost annually of 10.3 million approximately and then what's that number? So about four and a half million for fund 401.
So uh one thing with that um when it when you are paying um annual debt service from impact fees uh the these water and sewer connection impact fees um there are certain limits because you also have to have the revenues from the impact fees coming in to then put
towards it. So if growth slows down then it's uh proportion could change as as a function of that as well. So um >> interesting. Okay. So as development starts to slow down and we don't see as much of these revenues coming in on the impact fee side, >> right? >> 401 may have to then pick up the slack.
>> Correct. That that is a that is a possibility there because um it's those impact fee revenues are a function of growth. >> Wow. Okay. How often do you see that happen in in other municipalities that you work for
that that occurs where their impact fee debt service payments they can't keep up with that and it has to go to their 401 equivalency? >> No, no, good question there. Um what what I will say there is um you know on
a at least on a ratio basis um the the city's proportional payment of its existing and future debt um being funded from impact fees is high. So you're trying to make the most of the revenues that you're getting to go towards that debt. Um so it is higher than the other communities I work with. Um as far as
projected slowdowns in that well what you know we while we are experiencing significant growth you know right now and in the past you know 5 years and even a little bit before that as well on an average basis um you know we are anticipating slowdowns you know in the future. So that would be a thing. So you
know one other concern that could be in like a more longer term horizon would be that that potential risk out there of you know over reliance on on impact fees. Um I this was before the time I was uh uh practicing. Um but uh Henry um you know and them let me know about it
was you know back in I want to say 0708 the housing market collapse that took a a big impact on you know on impact fee revenues because of the change in growth and everything there. And so if you did have uh uh communities that were relying on those impact fee revenues it could could and and to uh a number of
communities did cause a rate increase just because of that lost revenue >> to take on Yeah. Take on the that debt service annually. Okay. Understood. Thank you for that. Got that question. Grant funding um average citizens. So the the transfer to general fund
we have not really increased that I guess why is that what is that based off of? What number is that based off of? >> So the um the the budgeted uh transfer to the general fund I want to say in the 25 and 26 about six million >> 6.2
>> 6.2 million. Um there's a a couple of components uh embedded in there. Uh part of it is um uh part of it is uh uh indirect cost reimbursement to uh the general government itself. Um and that's a large portion of the the the transfer there.
>> Can you give me some examples of that? >> Sure. Um so as an example um you know the the utility system for the city has the benefit of being a part of the city and so if it was let's say a privately owned uh company it would have to have its own HR department its own IT department its own you know finance
group and so on all of those other administrative overhead type functions they would have to house internally but because they're part of the city the the city's HR department IT department finance and and so on general government function city manager um you know they have a a portion of their time allocated
to providing service and support to the utility system. And so a good portion of that transfer um that the utility system is making to the general fund is to reimburse it for those costs that are that associated with the benefit that it's receiving. >> Okay. Is that explicitly what that would be built out of or what that's
>> that is the I believe the majority of it. >> Okay. >> Um historically what the city has also had as a part of that transfer it it used to be a brokenout item. It was um uh in lie of uh charge a payment lia tax payment lea franchise fee um and in conjunction with that transfer to the
general fund as a reimbursement. Um what we've uh done here is u essentially called it all one transfer to the general fund and then on a percentage basis increasing it over time we've slowed that growth rate. Um the reason
being um you can end up with some circulars if you will. So if let's say you had um uh a rate of return on the on the funds of you know a certain percentage 5% 6% well as you raise the rates that
percentage rate of return would increase right so to some extent the increase in the rate of return then goes back and drives the rate increase and you end up with a bit of a loop there. So, one of the the directions we were provided was to to to break that link so that that wouldn't happen here and we wouldn't
have this kind of iterative cycle of of uh rate increase increasing a transfer increasing a rate increase and and so on. Um so that was collapsed down into just a flat 5% per year increase uh there to not uh link back to that. Um
but the the bulk of the transfer there or the majority of the transfer is that indirect cost reimbursement. Well, it doesn't seem like we're increasing it at all. If you look at the 22, 23, 24, 24 increase, but that was it. 25 came back down and we're duplicating 25 again.
>> It is increasing in the in the model, but the we um the mayor basically wanted to keep it at the same level, at the same amount each year. When I came in the office, we were the transfers from the utilities to general fund was higher than it should have been,
>> but I didn't want to do a shock to the the the general fund. So, instead of getting it to where it should be at around 7%, um we just are holding the line and and let catching up with the the transfers as obviously, you know, health insurance
goes up, pensions go up, those kind of things that are the the transfers. We're just going to hold the line and then I guess in the next three or four years we'll be where we should be at 7% of transfers from from utilities to the general fund.
>> Right. The the the intention was that as a percentage of your total revenues that transfer would be a declining percentage of that. >> I'm just doing quick maths. Give me a second please. So that the general the transfer general
fund is currently 14% of the total 401 budget. I mean it's it's 14%. It's on the other slide which >> yeah the the if you go to the chart it depicts that properly. So it's that 14%. So with what was just said, we're trying
to get that to 7%. I guess what was it at before? >> Want to say >> that's a a stretch for my memory there, so I don't want to be inaccurate. Um >> I guess I I just want to see what that I guess that number what's built out of it
or what's built into it. And then >> what's that? He's asking about the 7% >> that I mean that's the number that but you've I know Sean you've looked at it from the average across the municipalities about 7%'s the average
transfers. >> It it can vary but yeah it can be within that range um because it depends on what the the different communities have. So some uh communities will have a payment in lie of taxes and a payment in le of franchise fee. They may have a rate of return component. um they may have they
to be perfectly frank that some will also use it to do some budget balancing as well and that can be over and on top of the indirect cost reimbursement as a part of that. Um and um so it it kind of depends on what that particular municipality has because I work with some communities that don't have any of
those and I work with some communities that have all of them. Um so that's why there's a bit of a variance there. But I do recall back in the prior study with the city back in uh 2021 2022 the total combined transfers to the general fund inclusive of the indirect cost reimbursement I want to say was upwards
of 30% which was a significant percentage which is why we're trying to bring that down over time but still not shock the general fund. >> Okay. Yeah. I mean it's been at 20% when 2022. Yeah. Was at 25%. We've been up there for a while.
And I guess that's my concern too. Is this being used to subsidize the general fund? Because if we're we're taking into HR all of those items into account to build this transfer amount,
it just seems a little ambiguous uh that we've kind of just kept it the same versus actually building it out to what the actual costs are that are associated with this. I think when we compared it to actual it was about seven million that year. >> Yeah. Back in the
>> Yeah. >> Yeah. Back when the the other component. >> Yeah. It was it would have been about 7 million back then. >> Back then being >> 2021. >> Okay. Because I mean it was 7 million in 2024
>> as well. >> Can you come up here please? around when we first looked at this and we looked at the transfer amount and how it was calculated um back in 2021 it was about $7 million when calculated but basically as I said the mayor has kept
it at the same level same amount our cost has gone up but we haven't increased that every personnel cost has gone up everything >> well that's my point but the why I guess the why there's no >> because lessen the impact on the fund 401
>> I understand But if we're is one sub subsidizing the other is what I guess my question. We don't know what's built into the 6.2415343 million. >> Well, that's what he just explained to you. The indirect cost, the personnel cost for like finance, HR,
all of those fees, all of those costs is pretty standard. It's pretty standard. You typically have a cost allocation model, but in this particular case, we do have a calculation and it includes that indirect cost and those other costs that he mentioned. So, I understand we just we don't have I guess there's no you couldn't provide me
with exactly how that 6.2 was broken down. >> We'll break it down for you. >> Well, no, I don't need you to. I'm saying like right now you don't that wasn't provided to uh Sean to say this is how this is this number is broken down. It's just the same number we've been using
indirect costs that just are variable. Basically, >> you you have those numbers because you were showing us the >> I'm you might not have it with you tonight, but >> I was just asking if that was available. I I'm not saying that I'm not asking to have it created. It just it I understand
the indirect cost. I understand all that goes into that. There just wasn't a number provided that was built out. It looks like we just put equal signs every year and just said, "Let's just keep it the same somewhat arbitrarily." >> Um that be And the only reason I ask again it's a
it's a large percent of what is in 41's budget. So I I think it's helpful to understand it. So the indirect cost reimbursement component I believe and I'm trying to go quickly here so if I'm a little imprecise I apologize about uh
2.9 million um and that that's in uh 2025 increasing at a rate of uh 5% per year to uh 3.5 million by the the last year. So that's that's in an attempt to try to account for the fact that there's cost increases in those supporting
departments that you that we were talking about before HR finance and and so on. So there is a bit of margin built in to that projection in the operating cost assumptions to account for that. And because we're trying to keep the the overall total transfer number at a
reducing percentage of your total revenues, the the the other component is the part that's while increasing it's still a smaller percentage of your revenues. >> It's not increasing at the same same rate. Yeah. >> So, it's still going to be increasing overall. So, it does add to the total rate increase amount.
>> That 5% is a a tangible number that does create this increase that we're passing on to the residents. >> And then, so I'm between FY25 budget, FY26 budget, just looking at the total, it's a 40% increase. Does that sound
right? Does that look right? Did I do that math right? 43 million this year. Last year was 31 million. I think that would include capital >> probably does. >> That total budget number would be inclusive of capital and so um capital
expenditures can be rather for lack of a better word lumpy over time depending on when the capital projects are taking place. Um if we were to look at the the projection of just the operating costs themselves. So if we if we take your budget and that's kind of how we model this is we take your total operating budget for the departments and then we
back out of that um your capital costs and your annual debt service costs and the reason for that we track that in another place in the model but it allows us to then be able to talk about just the actual O andM or operating and maintenance cost of the system on a standalone number uh for that
uh on a forward-looking basis it's about uh for 2025 uh again adjusted it's about 24.7 7 million and that would be increasing by the end uh to 34 million overtime.
And again, we had talked about some of the reasons for that rate of climb, additional personnel, inflation impacts on on your operations, um some of the revised information u for repair and maintenance costs built into there as well. >> Okay. All right. Yeah. So, so my biggest
question is just that transfer general fund just how that's built out. Again, I understand the indirect costs that build that. It just seems that there's not a a specific number that that's built out to or tied to percentage wise. I mean, because again, it's 15%. Last year, it was 20%
in 2024. So, it's and it's 25% around in 2022. So, just trying to understand, wrap my head around what that number is. But, um, for now, that's all the questions I have. Thank you. in the 22, 23, and 24, you're dealing with actual numbers. And then um 25 and
26, you're looking at budget numbers. So again, you know, we budget when we budget, we budget as though we're going to spend everything, but at the end of the year, we actually don't. >> True. >> So there's a true up process. Yeah, I understand that. >> So that doesn't factor like when you're looking at the actuals, you're not
dealing with carry the carry for. Okay. So, the things that weren't spent that were budgeted. >> Okay. >> Okay. >> I I I get it. I I understand what the words you're saying. >> I just again I don't think there's a I
understand what you're saying. It it it just >> to have that number actually broken down because it's a big tangible number >> and how exactly we've built it um would be very helpful to understand how this is all built out. >> Thank you. >> We can get you to break down. >> Okay. Any other questions for Sean or for
Lance or Lad? Okay. Public comment. >> Who wants to? >> Sure. >> Good evening, Albert McKime 360 Golden Gem Road. Thank you Sean for your presentation. As just an average member of the public, most of this is way above
my head. However, what I'm aware of as an average member of the public is that when we look at budgets, a financial projection is only as good as the information that we give Shan. My question is, commissioners, how
confident are you that the information we provided, Sean, is substantial enough to base a budget on? Let me give you an example. There's things like risk assessment. There's things like contingency.
These are things that I understand that nothing's been mentioned about. Now, Commissioner Nesa brought to our attention not too long ago that the comprehensive plan was based on water consumption at Golden Gem Road.
Water consumption that we don't currently have. So, that's one instance when we're basing financial projections on information that's completely invalid. What other information do we present Sean that may be completely invalid?
Well, commissioners, it's only about 3 weeks ago I came to this dis and I made you aware that I got information from planning department and the planning department's current information is based on information
back as far as June 2024. And at that particular point they had only like 10,900 houses that they had projections in some stages have been built. I would guess that today that's about 40% more. My question is
who and when did we start to implement this financial projection and do we really know if we can service the properties that we're building? Because if we can't, can we issue occupancy certificates? And if we can't issue
occupancy certificates, can we collect impact fees? Impact fees. Are we collecting all the impact fees that we should have been collecting? Or were Southwood Commons given impact fees waivers that have never been taken into consideration?
There's a whole lot of things that I don't know. There's a whole lot of questions I continue to ask. I made a public record request this week regarding the critical infrastructure of lift stations. Unfortunately, I was denied that information. Apparently,
it's protected information. But I can ask how many fire stations there are. I can ask how many fire service people there are. I can ask how many engines there are. But I can't ask how we move around the city.
I have some real um questions on some of these issues and I want to talk as fast as I can without losing my lungs. Uh one is the transfer to general funds can be very specific and should be um some of the things that were mentioned should be
under personnel costs. The health um the medical the person uh anything to do with personnel should be under personnel costs. They shouldn't be under general funds transfer to general funds. The IT stuff could be under a line item of IT
specifically. Um, which is what it is in some of the other departments including they had it under fire department, police, etc. They had those under it and mentioned buying computers and buying phones and stuff like this. They were specified. Um, if you do it in one department, you should do it in the
other and we should be specified as what you're getting and etc. Um, so there shouldn't be just a lump percentage. When you're running a budget and you're running a business, you need to know what you're spending money on in each
department at your business. Um, that's silly. Um, it it's like a slush fund then out of that department. And if we're spending all this money, we as citizens need to know what we're buying. Um, another issue is waste water. Um, we
buy wastewater from Orange County. Um, we get it free from other places. Um, we need to know this right up front. It's part of our expenses and income and uh it needs to be accounted for in
our budget. We need to know how much money we're spending and making. And it's like 1,6 about over 1,600 um a month that we pay whether we get water or not from Orange County. And then we pay 51 cents a,000 for every for
all the water we're getting from Orange County on top of that. So like this last month it was uh $6700 or so the water bill was from Orange County. Well, we can buy that water from our citizens that have flooding going
on. Why not pay um Clear Lake for their water instead of charging them for pumping it out? Um they deserve the money and it wouldn't cost them as much to get rid of their problem that wasn't their fault to begin with.
um pay them for that water and they deserve that money um to compensate them or at least break even. Um and there are so many other questions I see in in in this, but we need to account for and be informed of
what's going on with our budget and not be guessing at what's in there and what that uh slush fund is all about. I just got a real quick question before you start my time. Is there a public comment section or is it just going to be this three minutes on the rate increase talk
>> because I didn't hear a public comment section in the beginning of >> this is only on the on the water. >> Is there going to be a public comment section? >> No. Okay. So, I'll just I'll try to streamline this in. So, Ian Kimberell, Park Meadow Drive, Magnolia Park states,
I want to start off with a quote. Uh, hard times create strong men. Strong men create good times. Good times create weak men and weak men create hard times. We are in the weak men hard times chapter of our life right now.
Unfortunately, what I've heard is a lot of big numbers being spit about on these pretty charts. And I do appreciate the time and effort that you took to put these together. Unfortunately, it doesn't really give us an idea of how we got to those big numbers. So, like as a common man, again, doesn't mean much to
me. Um, as I also witnessed and listened here, had a lot of questions about where money is, percentages of increases of general funds and this and that. And per the last meeting that I was at last week when you, Mr. mayor got so kind of
reserved and wondering about having some um discretionary mayor spending budget, some oversight on that really was alarming and it's still alarming to me um that you guys are so tonedeaf when it comes to the fact that we're here talking about double jit double digit
price increases and people I remember were here last year talking about they don't flush their toilets because of what the cost it is for these water bills. I don't know how you got to an average bill of $72 because it's me and my wife. My bill was $125 and146 last
month. And then to sit here and say that we want to spend 600 grand on a piece of property, we don't know if we have it or we don't know if we want to need it or what we're going to do with it was disturbing. And then after spending almost eight hours at this meeting last week, uh I turned it on on my car on my
way home cuz I had to go feed my dogs. And then to hear you, Mr. Mayor closed the meeting out with, "Hey, compadres, my buddy's selling his lumber business over here. Might want to think about what buying it." And, "Oh, isn't it a historical building?" Yes. So, here we are again after spending eight hours
talking about frivolous spending, being more accountable to our spending, being more transparent to our spending, and none of that is happening. And you suggest to spend more money of taxpayer money to buy your buddy's company's property. Tonedeaf. I don't understand it. I
sincerely want to invite Doge once again back to this city to go through our budgets, to go through our spending, to go through these past few years to understand how we got to these monies, where money is being redirected, where it's being transferred, how it can be saved, how it can be spent more
effectively and efficiently. Because what I see here is just a bunch of guys putting numbers together, hoping it works out, and then another year or maybe come back and revisit it in the first half of next year. You know what? If we come back in the first half of next year and it's like, well, these
numbers aren't working. We're going to have to increase again because you guys are blindly and unintelligently looking at a budget and hoping that it works. Moving money around to to rob Peter to pay Paul. It makes absolutely no sense.
And you guys need to be more transparent and you guys need to be more clear on how our money is being spent. Rodles 13156 Rolling Hills Lane. I come up here religiously because I want a better popka. Better for me, better for my wife, better for my daughter, better
for my grandchildren. We take pride over the years of, hey, we got a low millage rate. We've got great utility rates. Well, get we got what we paid for. You wouldn't have had the big crowd. And tonight, we probably have a bigger crowd if it weren't for the weather. If it were one, two, 3%
increase. Inflation goes up every year by that. It's a, pardon my French, a fart in the wind. Now, 40% over two years. It's a result of poor planning, poor budgeting, failure to fix the water meters. Three years we're still talking about these darn things. Lack of
preventive maintenance. 10 years without a developer free increase. This is crazy. July of 2024, 13 months ago, I sent you all uh recommendations. Eight recommendations. Two of you are heard from. Thank you. Never a comment about
the recommendations that would make this a better city today. Wake up, stop talking, and start acting. I have an assignment for each of you. You can rotate it around if you like. Commissioner Anderson, I'd like you to break down the development process by steps and find ways for us to slow the
process. For instance, separating the change in land use, development, and zoning. You stretch it over two meetings means we buy two to six weeks. We need to look at developers. It's against city ordinance to be doing construction work on the weekends. Right by the construction sites that's going on. When
did we find them and when have you suspended they their uh their construction? Commissioner Velasquez, through postexit interviews. That's 3 to 6 months out. would like you to apply your detective background and find out the underlying cause for people that
leave the city. Commissioner Neesa, I'd like a budget plan from you to ensure timely and accurate information allowing for timely input and an accurate budget. Commissioner Smith, I'm tired of hearing about South Aka specific timeline all by October 15th. Mayor, stepbystep camp
wewa plan. You sold us on, hey, look, we're going to do okay on this. We'll break even. Well, let's see a plan and a 20-year strategic plan. What is that? If you fail to have any direction, guess what? You're out where we at. I have a couple quotes for you. Quote, "When
things go wrong in your command, start by waiting for reasons and increasing larger concentric circles around your own desk." General Bruce Clark. Quote, "The day soldiers stop bringing you their problems is the day you have stopped leading them. They have ne
either lost confidence that you can help them or concluded you do not care. In either case is a failure of leadership. Coen pow. We have a failure in leadership. I continue to bring up ideas. I continue to come here not because I believe you as leaders are going to take care of it. It's my hope
and prayers that someday you're going to wake up and listen. Thank you. Is that it? >> Okay. Bradley Blanch. So,
thank you for your attendance and attention. Um, what I'm seeking at this time again is another consensus. We do I do have to bring the resolution back on September 17th at our 7:00 meeting. Let me give share with you one of my
concerns. I have included the as as we discussed at the previous meeting on September 3rd, the 15.5% in the tenative budget. Our final budget hearing is scheduled for six o'clock on
the 17th. So the final budget hearing is actually before the resolution is approved. Typically it works after because it usually would have been approved on that one at the third. So if
I'm hoping that we're able to come to a consensus uh on what we want to include in there um because it depends on how I would handle that final budget hearing. I may have to handle in a situation um of a recess and a continuation as we did the
tenative budget hearing last year. So I think you've seen both scenarios. I think Sean has explained to you the impact on both of those scenarios. Um we're looking at a with the 15.59 six and six. Overall it's a smaller increase. I think the first year will
give us what we need and the next few years will be a lower increase. And I know Commissioner Smith, this is one that you were comfortable with and Commissioner Velasquez, I think this is one that you were discussing as well and wanted to understand. So, we've made
those adjustments and I just need that consensus. >> And that was the 159 >> 15.5 9% 6% 6%. >> 159 I'm sorry
>> 15.5 and 26 9% and 27 6% in 28 and 6% and 29. But the only thing that the resolution is just for FY 26 year at the 15.5. >> So no matter what we agree to this could
easily change next year. So even though we're saying 15.59 66 next year could be 20, could be 10, could be three. >> Yeah. We got to come back every year for whatever we do. >> Okay. So we're not agreeing to 27 28 or 29.
>> No, it's just in the plan. And I need to complete this study if I'm ever going to go out and secure finance. And I'm apologize. I'm fighting the cold. I need a plan. And I need a plan that has been somewhat adopted by
this council. We have to show that we can pay that money back. If we want to move forward with these projects, >> I understand the debt service coverage ratio that that we'll we'll have to obtain. I would just be surprised that a bank, any lending institution would be okay
with us. They're they're using numbers that we haven't approved. We've just given soft nods to >> go let Sean speak on that. >> Oh, mine was on a different name. >> Oh, well, let me on a different >> one uh comment. Um if you are going to
go to the market for for borrowing um then one of the things that the lending community is going to want to see is a uh an adopted plan of um rate adjustments that would be sufficient to cover again those margin requirements and other items. So they would want to see a multi-year plan in place to give them uh assurance that there are rates
in place to take care of the needs of the system at least projected at the time when the the feasibility analysis for any borrowing would be conducted. >> Okay. So, your recommendation is that we do approve a 4-year rate increase plan, not just a one-year plan. >> We're looking at the the four-year
window, but with the potential to adjust the latter years based on those other initiatives that were mentioned. >> Okay. We didn't discuss on this sheet that was provided to us, and this may not be for Mr. Shan, I'm not sure who the the additional capital items removed or reduced. We didn't go over those
numbers at all. >> Yes. So, Commissioner, those were >> Hold on, M. Sherman, you gave me a weird look on that. Did you not see this yet? >> Um, I think rather is this one you >> Yeah. Yeah. >> Commissioner, those are the some of the additional items referenced in what we're looking at as we move into FY26.
There's a list of some trucks there uh that we're going to reassess before we make that purchase to see if we do operationally need those or if we can extend the life of the trucks that we have currently. So is that that so it totals so part of it's a reduction of
900,000 from lift station number 17 the one that we've been discussing that's at 6.2 million to >> yeah fix. So what we're looking at there the initial estimate on that project from the consultant had a 30% built-in
contingency on the project. Vlad uh our public works director is reassessing that to see if we can drop that contingency more to what our normal 10% contingency is on those projects. >> Okay. And then so that nine the capital improvement plan for four fund 401 9.881
million is that after these are removed? >> No, those have not been removed yet. No, >> those are just possibilities. Correct. Those are additional areas that we're going to try and and um reduce
additionally that amount to go back to Rap Telus to to hopefully impact the fees for future years. >> And and remember, we still got to make it a $ 8.7 million adjustment with this 15.59 6 and six. So,
>> can we why don't we just move forward with removing those items now? Save 1.2 2 million and then what did that look like with a rate an updated rate with that in mind? Then >> the what what he was looking at it would
impact 27 through 29 not 26. >> So I don't know the the list of items that you gave him was that >> yeah those were vehicles in 26. >> That was in 26 >> right in 26. >> No >> FY 26. to the first year budget what
we're talking about. So we could remove we could remove all of this 1.27 million that you provided to me now and get an updated rate adjustment adjust our rate as needed from there. >> It depends on how they funded in 26 and
we can see what the impact of that would be. >> Yeah. So it depends on how they're funded in the body. this this list. >> Yeah, that's my list. >> I did not create. >> Okay. So, you don't know what when you were putting this together, what did this come out of? >> No, we took that out of the tenative
budget that's listed. Those are capital items identified and as I had mentioned, we tried to identify some areas that possibly could help improve the rates in the future. >> So, fund 401 >> from 401. Yes. Okay. So, these are Sorry, those are 401,
>> but you're talking more future, right? >> Right. All right. Well, the again the exercise was to try and look at some of the currently planned capital purchases to help impact the rates as we move forward in the plan.
So, what I I I don't want to do like an artificial rate decrease in come January, February because we have the information now that we could do it. We would have to we'd have to see if that impact would actually make the
difference we need. I think reptiles would have to look at that information a little bit further. >> Well, let's go through that then. This you guys provided this so that's the only reason I'm asking about it. >> Right. It's part of that exercise of going through the FY26 operations and capital plan to make some of those reductions to then come back and
hopefully reduce the rate moving forward. Well, let's tighten our belts and see what this looks like up front on a rate adjustment. Then if we can do it come January, February, we can do it now. That's my request. So, um I think that's one strategy that
was being discussed. >> Yeah. >> Um prior to getting to the before we got to those scenarios. Am I correct? Correct. >> Okay. So, understanding that that's a question that you have. Um, but again, I'm still looking for a consensus in
regards to the resolution. I'll try to have that answer for you. But right now, we still have the um 15.5 factored in the budget. Um, nine the 96 and six is what is being recommended by Raph Tills.
>> So, you wanting a motion tonight? this. >> I I don't I guess if a council I can't I can more of a consensus because we can't vote. You have to vote on the resolution. >> Oh, okay. >> So, it' be great to if if I could get >> I still >> I can't I didn't think I could.
>> Okay. >> So, I try. Yeah. So, I just need a consensus of what to actually put in this resolution and in the final budget. >> And I think we can, you know, hopefully we can come back in the first year and we we'll see the impacts that we've made. Yeah.
>> Um and and we can use that going forward, but >> Desan's got to work off numbers we've got. He can't work off numbers we think we're going to have. And so that's the >> the difference between what Sean's doing and what we're we're hoping for is >> Yeah.
>> You know, it's it's a it's a you know, couple of million dollar difference. >> Yeah. And that was intended before we got to this point with these alternatives. So >> So yes, Commissioner Smith, that's what I'm looking for, consensus. So we would
be moving removing all these FY26 major capital projects that you listed here. >> The way we presented it, the goal was to have FY26. We start FY26 and we assess those items as possible items to not
purchase which would then have an impact as we move through the rate plan to help improve the rate for 27 28 29. >> Correct. But now lift station isn't that a critical >> lift st lift station is not on just
talking about specifically the bottom >> table. >> Yeah the bottom part but it less >> uh that remember that was the our typically our projects carry we try to plan a contingency of 10% above the
estimated cost. When we went back and looked at this, the consultant that prepared this, and I think Vlad's back here, uh, initially put a 30% contingency on this project. Vlad is looking in into that and thinks we might be able to reduce that down to a 10%
contingency, which would then again leave some additional savings out of what we're budgeting. But again, as the mayor to the mayor's point, we want to make sure those are solid numbers um before they're built into the plan. And again as he mentioned
here in the further act city actions search u for additional operating and small capital budget efficiencies as we move through FY26. So it's is the objective is to lessen the impact going forward.
>> So it's actually all the vehicles for public services then. >> Yeah. And I think you have to re-evaluate. >> Yeah. And we do have a large fleet in public works and utilities. This would be primarily utilities, operations vehicles because this is a 401 fund. So,
but we do want to make sure that we're getting vehicles that we operationally need and then assess the life value that's left on those. Sean, would would a three-month, you know, the one so going through the end of the end of the fiscal end of the um
calendar year, would that give you enough comfort if we the things that we've kind of projected? Um, would that give you enough comfort that we could look at a rate reduction as of February or something if we were to or does you need more than three
months of data on these additional proposed updates that that Rally put you know with our the public works team put together? Would that give you enough comfort that >> if um if we had the the plan of what items could be paired out, what what
we're talking about um then that should be enough time to um to look it over and see um what what those could do. Um the the magnitude of the numbers being talked about, I I I missed that earlier a little. I apologize. What was
the the dollar value was being spoken about? [Music] 1.27 million. 1.27 million. >> Okay. Um, in terms of your total capital plan, that's maybe a half a percent of
the total expenditure over the five-year period. in terms of the dollars in that plan. Um, if you do it as a a one-time hit to expenditure, that the benefit is really to your cash balance as far as what would happen in terms of the rate,
>> which isn't the first year. The whole point is to increase our reserves. So, this would dollar for dollar quickly change that. Correct. >> It would um it would have an impact in that first year by that amount that's cut. Yes, sir. Um, in terms of the the rate path, it would
I'd have to look at it, but it would probably be very small on a percentage basis, like fraction of a percent if I had to wager a guess. >> And in the same way of us coming back to you in December to reduce the rate, we could also just reduce the rate now and
if it's not working, increase it then in February. Correct. With the same data, just do the exact opposite if need be. That's that's the council's decision how it it would want to to approach that. I believe >> if if we reduce the rate, we have to
reduce the budget because the 15.5 is factored that revenue generated. So we do it we have to reduce that. >> I understand the >> relationship there. >> Yeah. I I'm still in the same place I was when we met in the city council meeting. As I
said then that we've enjoyed these low rates for for years, not just since this council, this mayor's been in office, but even before >> and we've always bragged about how cheap it was to live here and that's why everybody was moving here. Now it's caught up with us and so we've enjoyed
as long as we could. >> Right. >> So now we need to do what we need to do. >> Okay. Commissioner Velisquez, >> which is we're doing the 966 or we're doing the 15
>> 15.5 966. >> Okay. >> 96. Um >> but when we were at the coun at the last council meeting
um we had also kind of considered the 966 and six. >> No ma'am what we had presented at the previous meeting was 15.5 15.5 >> 15.5 but the reason why we're here today was to try and reduce that >> and we did >> we did this in the second year we
reduced it. It was the first presentation was 15.5 15.5 I think it's three and three as he presented let me go back see right that was the initial and then after the alternatives came in and we
know that the 9.75 he as he explained it doesn't really work it's a cumulative increase of 45.1 more over time with alternative two the 15.596 and six cumulative increase of 41.5. So it's less of an increase over time it
gives us the 150 days of reserves which is needed whereas the other one is I think barely made the 150 was 120 I'm not sure but in any regard that's the difference. So this is the recommended
the 15.5 96 and six and the resolution and what is factored in the budget is the 15.5 and the resolution that that was tabled that I need to bring back will that's what I'm
trying to get a consensus on at the 15.5 in regards to the overall plan. If we want to work the plan that we're talking about, I need to be in a position to go out and secure the funding with a plan that has been
accepted by this council. >> Well, not not only does it have to be accepted by the council if without support from a Telus that >> Oh, it's got to be sound, >> right? So, you know, putting a number out there that's not sound it >> it it won't work for us to for any
borrowing. >> Exactly. It has to be sound. Listen, I think we we're all up here. We all understand that this is not this is makes us uncomfortable. It's not an easy it's not an easy decision. And I, you know, nobody wants to to you know, keep rates low any lower than I do. But but
we've got to you know, we got to face the facts. We're we're you know, we're in a we're in a hole. >> We've got to get our we got to dig our way out of this. But but I I think we've got a pretty good plan. Yes. Uh like I said, I've been proud of, you know, the utility billing side and public works side and and Radley and everybody
collectively getting together that to try to come up with some some revenue generating, you know, uh ideas as well as some, you know, some cost cutting ideas that by the first of the, you know, by the first year, we might we can see some results. And if if you know, if
we can if we're able to sell water that we're not we're not collecting money on now, then that's obviously it's that's that's easy found money. So, we just got to but we got to prove to to Sean and his team at Rafelis that that we actually can do what we say we're going to do. And so, you know, he's always looking behind and we're, you know,
we're trying to look forward, but we can't until we've, you know, as far as when it comes to to loans and and, you know, trying to get get a loan. So, you know, I go back to listen, this this is not an easy it's not it's not
>> nobody makes this in a you know, in a >> a joyous way. We we we wish we were, you know, 6667 whatever you know but but we aren't >> Yeah. >> And and by the same token just as
you would assume that there may be a possibility the rate could go up in 27 and 28 there's also the possibility could go down >> in 27 and 28 if we do this. >> Yes. >> What we're talking about. >> Yeah. I feel I feel good that we're going to we're going to see some
results. I mean we the team is really they're really engaged. They're really working hard. We've already seen some results in the, you know, the month or two that we've been working at it. And, you know, we're we're everybody's engaged. They know what the, you know, what the plan is. Um, and we're we're
we're working as hard as we can to get the number where we can, you know, we can reduce the rate increases going forward. >> Exactly. So when we looked at the budget, I mean when you looked at it, I mean you you
each met with the mayor as a team and you decided where you can cut some of the capital u these additional capital and there was nothing else in the budget that we can cut. I mean the budget that
you have the budget with the 15.5 is the same budget that was presented at the workshops. >> No, I know that. >> Yes. >> But I'm talking about the adjustment here where you're saying that we can take uh the additional items removed. There was nothing else that within the budget
that we can I was I was not included >> commissioner on that first sweep was some of the say lowerhanging fruit that we maybe could address. We'd have to continue going through it as we move through the operation of the FY26 budget to see if the efficiencies we're trying
to build into the operation are actually resulting in those those efficiencies. So, >> so it's like I guess they there but we're going to see if it's a true need is what you're saying. And then that's where we're going to where he talked about gaining the efficiencies and
making sure but he before he spend anything on vehicles he want to look at the fleet do a fleet analysis to see where it stands. It's just taking some extra steps before you know proceeding with those purchases. She wants to know if there's any more public comments.
>> Yeah, we're we're done with that. Okay. So, I'm just we're looking for consensus here. I This is what we need to do. >> Yes, ma'am. >> 9 We're adjusting 15 96 and six. >> Yes, ma'am.
>> Okay. >> If that's what we have. >> I know we all have heart. Yes, ma'am. >> Commissioner Anderson, >> she said Oh, yeah. >> What's that? I I think I got a consensus. Yes. From Commissioner of the Last Quiz, Commissioner Anderson.
>> I'm I'm still at No. >> Okay. Well, at least I got three. That's >> I know you want >> Huh? Excuse me. >> So So you got three? >> Yes, I have three. I know you want some additional information and I'll get that for you. >> Yeah, I think I I a lot more questions from this than I do answers at this
point. That's That's the problem. >> Okay, mayor. I'm sorry. >> No, no. I I just then I'd like to get those whatever those questions are answered so that you're comfortable that the rate we're >> we're providing is is what we we need to charge to to to make sure that we're funded properly. >> Yes.
>> Yes. >> Tough times. Okay. >> Yeah. Okay. All right. >> All right. Thank you very much. >> That's it.