Jul 21, 2016 City Council on 2016-07-21 12:00 PM

Well, good afternoon. Wanted to welcome everybody to this meeting of the Dent City Council on Thursday, July 21st, 2016. I believe this is our third meeting of this week. I thought you were in a committee meeting. So much for July being the break, but that's okay. That's good. We've got city business to do. So we'll go on with our work session reports. We do have a quorum. Work session report 1A is receive report, hold discussion, give staff direction regarding the economic development investment fund and the downtown reinvestment grant fund. And whoever, if y'all haven't, feel free to grab you some lunch. We just need to make sure that there's four of us that stay in here so we meet a quorum. Thank you, Mayor. Our Assistant Director of Economic Development, Carolyn Bo oth, will be presenting this item to the council. Thank you, Howard. I'm sorry, Mr. Martin. And Mayor and council members, I'm going to be visiting with you this afternoon about the downtown reinvestment grant program and the economic development investment fund. Stop going here. So the purpose of the work session is to present information on these two separate economic development related funds. And I'm going to compare the purpose and the policies of each of the funds and let you know how they support two of Denton's differing economic development objectives. I'm going to start out with the downtown reinvestment grant program. It was started in 2007 and its purpose is to provide cash reimbursement grants to capital improvements to buildings in the downtown area. $100,000 of mixed beverage tax revenues are dedicated each year to fund the program. The grants can range from $5,000 to $25,000 and they come in the form of a single payment reimbursement after the work has been completed on the property. It is strictly for capital improvements including facade rehabilitation, awnings and signs, impact fee reimbursement, and utility upgrades. Last year, council directed staff to stop processing new applications for this grant program. The two applications that were in process at that time, council directed that it was okay to let those two move forward. And one of those from Armadillo Ale Works was reviewed by the economic development partnership board at its July 13th meeting and recommended to the council for approval. So y'all will be seeing that on a future agenda. We do continue to get inquiries about the program and we're informing folks that it's on hold pending review, but we are allowing the applicants to go ahead and fill out the paperwork and submit it and just letting them know that we 'll get back in touch with them when there's an update to the program. Currently there have been four applications that have been submitted since October 1st of 2015 including the Denton County Brewing Company and JT Clothiers. Just moving into downtown. In terms of fiscal information, 41 grants have been awarded since the program was started in October of 2007 for a total of a little over $400,000 in city funds. That's equated to overall about $17.5 million total investment on projects including city and private funds and seven of the grants expired without payment to the recipient for various reasons. Some examples of projects that have received these downtown grant funds, the Hickory Street Lofts Wine Burgers Deli and Campus Barbers Building. That was an empty lot that was converted to mixed use. The project received a $15,000 grant in fiscal year 2008- 2009 and it's increased the property value an astonishing 2,361% between 2005 and 2015. Mellow Mushroom was a warehouse that was converted to a restaurant. They received a grant of a little over $7,000 in 2010-11 and it led to a 406% increase in the property value from 2005 to 2015. Finally the Downtown Reinvestment Grant Program has a fund balance of $223,926. So you have an idea of the boundaries of the program at the current time. This is a map of the area there. I know it's hard to see the streets but the rough boundaries are Carroll Boulevard in the west, Parkway and McKinney in the north, Exposition to the east and Sycamore to the south. Staff recommends continuing the grant program given its success in restoration of downtown buildings and the subsequent increase in property values. However, based on council direction the last time that we presented work session on this, we recommend expanding the scope of the grant program to add targeted redevelopment areas in addition to downtown such as major development corridors and entryways into the city including but not limited to the industrial corridor near the Brock Transit Center, the Fry Street area and entryways into the city such as University and Dallas Drive. And to that end we also propose renaming the program to the Small Business Improvement Grant Program to reflect the new scope. Now would it be better to stop and ask questions about downtown now before I move into the next one? Okay. Oh yeah. I didn't know there was a grant there. Go ahead. Yeah, there is or there can be. So as I understand it in 2007, is that when this started? Yes, sir. And there's a real clear goal geographically in terms of place making. I mean when you look at some of the earlier design guidelines and what needed to be required for this, I mean real clear targeted here's what we're trying to accomplish and clearly it's played a role in addition to many of the other tools we've had that spark development and create just a world class downtown center. One of my concerns when we say well let's just target other development areas, A, you really diminish the impact of $100,000 a year because there could be many different places that goes. But it's unclear to me what becomes the goal of the program at that point. It's real clear what the goal is downtown. I don't know what the goal is if we, what would determine if somebody on University Drive puts on something for a 70s style strip mall center that they're putting a new business in or something like that. What's our goal as a city in investing in that as opposed to something like Armadillo Ales that's putting something in in connection to downtown continuing on with a long standing vision and tradition of what the city's trying to invest in . And then how do you not having any clear sense of goal or how that relates to those different spots even determine between the value of one application versus another. So have you guys flushed that out a bit in terms of what's the criteria, how does that meet the goal, what even is the goal at this point as it relates to once you start diversifying this around the city? So I think that the goal remains broadly the same in terms of increasing property value and helping to create that sense of place. We've seen demonstrated success with that downtown and I think that there is a desire to try to see some of that improvement happen in other areas of the city that are being redeveloped. The initial idea is to use the same scoring system for projects outside of the downtown area that is used currently with downtown projects. We looked at it, we think it will translate fairly well. I think the only part that would change is if there was historic value to it and Julie Glover is also here. She might be able to shed some more light on this. If you have anything else to contribute, Julie, you're welcome to come up and help answer councilmember Roden's question. I think design guidelines were a major push on this initial downtown grant because we have suggestions, guidelines, we don't have any requirements. So this kind of gave us some overview and some control on what was happening downtown, how it blended with everything else. It is tied very strongly to the historic fabric of downtown . I do think that we might need to look at different areas of town and perhaps massage those things just a little bit to make it specific. You know, southeast Denton, the same things might not apply , but we also have changed that historic to historic/design. So we look at the stuff around it and see how it kind of fits in, if that helps any. Yeah, it's just that I think the value of this program has been in the target of a geographic area. And so the vision, the goals, everything aligned. And you even had a body that it made sense to run these paths. I mean, I guess you'd have to choose another body other than the downtown. I would think either that or add some folks to that group. Which is strange from -- It might be like -- I'm sorry, what we did with -- when we were doing like the bike plan and some other stuff, we would invite different groups in to join the task force, and those people represented certain interests just during that time period to give us their input, and they weren't permanent members, they were just kind of ad hoc. Well, let me clarify. My thought is, I think there are significant additional areas of town that we need to be thinking about beyond the square in terms of ripe new cultural districts that are ready to go. They've got interesting bones, they've got interesting architecture in place, they've got emerging kind of small business pockets happening. Part of my thinking is that if we extend this, the real value is going to be targeting one, maybe two other of those areas, but to just say, you can be on University, you can be on Dallas Drive, you can be on the Loop, that to me seems to be the exact opposite direction of where we need to go on this. So I'm open for extending this beyond the square. I just think if we're going to get real bang for our buck, there needs to be some vision behind that, which is what started this to begin with. And so my thought is this proposal just kind of lacks that sense of target, what are we doing with this? So anyways, listen. >> Councilmember Herri? >> Well, and I think the staff recommendation is basically a reflection of what council had said and we weren't very specific. So I think that's probably going to be up to us to do that. And strangely enough, you and I are thinking along the same lines, and I want to get even more specific and drill down to some more specifics. To me, I think the two things that we have to really think about when we talk about expanding the program past downtown, and I'm certainly fine with that , is we're going to need to put a good bit more money into it because now we're going to be going to some other areas. And if we go to other areas, I think we need to be more specific as to we're going to target this area or that area or maybe those two areas and what our goals are for those two areas. To be very specific and then invite the stakeholders in those two areas to see if we're even close to hitting the mark or if we're way off target. I mean, one of the areas -- I'm thinking of two areas and we probably have to come to a consensus on those, but it might be East McKinney Street. A lot of people drive that street and it's an area that's ripe for some type of redevelopment. Or you can think of one of our entrances into town. Did you want me to stop? Nope. [laughter] At home, when my wife stands up and goes to the microphone, I'm supposed to go and talk. [laughter] Or -- and we do have a microphone at home and I like to stand there sometimes and pretend that I'm important. Anyway, I'm thinking also of Fort Worth Drive where I've talked to some businesses that are locked in and they're afraid that they're not going to be able to expand because it's really likely that they're legally nonconforming and any kind of expansion means that they can't stay there anymore. And maybe we want to say on an entrance like a Fort Worth Drive entrance that over time our target is to move all of those industrial kinds of activities that are on Fort Worth Drive to one of our more appropriate industrial centers and not to one of our major entrances into town so close to neighborhoods. So if we had those kinds of targets, those kinds of goals, I would be -- I think that that's going to be necessary in order to expand the program to any other area. I think that we have a vehicle for creating that vision and that's the comp plan. Within a comp plan, it calls for several small area plans which are opportunities to engage the stakeholders within specific areas of town, small area plans as well as corridor plans where the stakeholders within those areas are engaged and a vision is set for that specific neighborhood or that specific corridor and then the grants could be utilized to accomplish that vision. I do see those two things aligning. I think the reason that they're not in line yet is because the small area plan and corridor planning is just kicking off with the implementation of the comp plan this year and this specific grant program exists today and has been in a stalled out state for several months and I think it's important to us to have a vehicle to continue to support small businesses in between this time when we're working on these small area plans. But I do think that that vision is set and the vehicle is there to accomplish exactly what you're talking about. We just don't have it fully in place yet. Yes. London is so much more than just downtown and as we look at our city, I support staff in this broad base view of this program. I'm a staunch supporter of the small area plan that we're talking about for different areas of the city and that's where the stakeholders come into play because the small area plan plans are going to be developed not just by staff but by people who live and work in these small areas because they know their neighborhood best. But I think at this point in time to just limit the funds to downtown is short-sighted. I think there was a time and a place for that. Our downtown is booming. I still welcome some funds to be allocated down there but I 'm a strong believer in branching out and allowing access to these funds by other small business owners across the city. The key is again focusing in on not just well, if you're in the city, you're eligible but to come back to those small area plan neighborhoods to say, "These are the neighborhoods that are going to be eligible for this program." So I think it's a seismic change in terms of where this program has been but I think for downtown's future, I think there's true merit in spreading this across the city to other economic zones that we want to see strengthened and developed and to see some of the same things in those neighborhoods that we are witnessing downtown. Yes. I'll second what Council Member Wasney just said. Also I'd like to point out that the funds come from mixed beverage taxes. So I think from an equity standpoint, it makes sense to spread those funds around the city because the funds don't only come from the square. If that's something that's a concern of ours, it's a concern of mine. The other thing I just wanted to maybe clarify a little bit . Are we saying that we think, I don't know that it matters, but are we saying that we think that this grant is what caused development? Like what spurred it? Is it a causation or a correlation thing? I don't know that this is that important but for me, I'm kind of hung up on it. Julie, come back, please. Maybe it is important because it actually affects how you go forward. If you're thinking that these funds cause redevelopment, that's one thing. If redevelopment is correlated with it, that's a completely other thing. That's a very hard question to answer. Some of these projects would not have happened had they not gotten the grant fund. Some of them would have happened anyway. It closed the gap some on some of the bigger projects for some folks. We've never put in financial need on this because we didn't feel like it was fair to the folks who are doing a lot of development downtown but also have a gap when they do a project in an area that's already highly developed. There's a lot more things, wheels in motion. It's a little harder to do downtown because you don't have any space around your building. You don't have any place to put landscaping and things like that. I think it's important to the people that have gotten it and important to the folks that have developed downtown and to some of them, it really did make the difference between yes or no. I would say it goes both ways. Sometimes it would have happened organically, sometimes it wouldn't have. Moving forward, it might be a good thing to kind of keep track of what is driving some people to take on these projects and if this is an actual big factor in their decision making, I don't know how easy or difficult it would be to collect that information but if we are collecting that information or something along those lines, it could be helpful. I think to that question, I think Julie could probably very easily list out a number of tools we put in place to help spur development and this would be one of those tools. I mean we've done major infrastructure projects. We've done other things to highlight, come and invest in downtown and it's part of a tool chest, any of which is hard to say. Recreating the streets downtown, did that spur this on directly? So I think you're right but we do know that something happened that caused success in downtown that didn't happen in other towns because of lack of attention, focus, investment and clear vision. So I think it's important for us to say we are at the place we are downtown because of clear vision, both between government and private industry in terms of driving what's happened. So I guess to clarify I think what Amy was saying and maybe I didn't understand it, what you guys are trying to do is unlock these funds. We've got funds building up. You've got people asking for them. There's certainly deserving projects we know of downtown because that's what the plan was for is the suggestion that let's continue to move forward on this as we identify new areas of town via the vehicle of small development plans or some other vehicle of identifying new districts to be focusing on is the idea that we don't start extending this beyond the D-tip area until something like that's been identified? The way that we have drafted the policy today would allow it to be available to businesses in other areas of town on a case by case basis and we define those as corridors, major corridors or targeted areas for redevelopment. So that's something that the board or the council depending on the level of investment would gauge with each application as it came in. Now certainly you could direct us to unlock the funds and continue to process applications and as the first small area plan comes online which is going to be the Fry Street historic Bonnie Bray sort of area then it would open up for that because we'd have a vision set at that point in time. I will tell you that small area plans are 12 to 18 months in the making. They're not put together quickly. We assemble a task force for each area and the community is engaged over the course of about a year while the plan is being developed and then it 's endorsed or blessed by the city council when it's complete. So it will take some time for us to get those in place and it's really whether or not you want in the meantime for businesses within those areas to be able to apply and be considered on a case by case. Just a couple thoughts on that and one is again I don't understand the goals if we extend this without that sort of vehicle in place. I mean there's underlying goals beyond the geographical area. There's walkability. There's form of buildings and kind of how that plays into walkability. It's connecting neighborhoods to kind of commerce in the smaller scale type thing. I mean to just say let's open up the door to University Drive seems to me to lack any real clear sense of what we're trying to do with this. What's the underlying drive? So that's why I'm more comfortable with saying once we've identified an area, I will put a caveat on that. Just my suggestion. It seems like we see pockets of this happening already without those plans. So you take for instance kind of what's happened along Congress Street and Locust Street in the congregation of different types of restaurants and rede velopment with juicy pigs, mural projects on the back of that tool place. That's right for somebody just saying and it could be just privately, this is a new district over here and we might see that emerge with or without a small area plan and decide as a city that is worth investing in or there's another pocket that's starting to emerge. That if there's a vehicle in place for somebody out there, maybe it's a set of business owners saying we think this is a place worthy, we're starting something grassroots here. We don't want to wait 18 months. We're going to present to you. I think if we had a place to be able to allow for that sort of entry into this program, there's some value in there. I mean if you look at other cities, a lot of new districts emerge, not top down. Bishop Arts districts emerge from the bottom up and a bunch of people doing some crazy, very interesting things until the city finally decided that 's cool, let's invest in this. So just to clarify my thought is I wouldn't be in favor of extending the grant to places without a real clear sense of what we're doing there and why. So that's got to come from the vehicle small area plan or some other mechanism. I'm going to come here. I sort of push for this to the expansion. I have to say I've had a reversal of heart over the months. I think especially given the budget discussions, I think we need to figure out a different avenue for this fund altogether. I have a different perspective. I don't think that this particular fund had a whole lot to do with the development of downtown. It was something that came in as part of first of all was an incentive fund before. That's what we named it as. Most of the people and most of the projects that took advantage of that, this wasn't the only thing that this wasn't the deciding factor in that. This is not anything I haven't said over seven years I've been on council. The investment we've made in downtown is a $20 million TIF, a $400,000 a year now lease with DATQ that is providing us some additional parking. An incentive to the rail yard, leasing office space in the rail yard both for our high tech hub, what's it called? Stoke. Is it Stoke? Yeah. And for Keep It Beautiful. I think there had been tremendous amounts of city investment. And this is a small amount of money and somebody could say, well, so what? It's just a small amount of money. But to me it's the principle of the thing. And in the sense that we have businesses all over the city. As far as the targeting of specific areas, this just happened to be easier. To me this, the origin of this was part of that. But by no means was it the centerpiece of it. It wasn't the centerpiece. And those projects you listed about how much tax incentive or how much the tax value grew. First of all, the growth of that, if it was after the TIF or since the TIF, stays in the TIF fund. Secondly, some of those projects were probably in the what? Half million to million dollar ranges. Your point? I was pointing to Julie. Oh. Oh. The non-measurement was about 900,000. They probably came in at a million total. The Weinbergers was about 1.5 in dollars back when you were talking 10 years ago. Sure. And I hear what you're saying about the targeting of this area and the commitment of the city with a vision. That certainly was needed to help downtown. Downtown now is probably the most expensive real estate we have in the city. Which is great. I mean, people are still moving down there. We've got somebody moving out of a center in Southridge moving downtown. So that means that's going to go dark. So that's going to be sort of a drain on a piece of property. But then we're looking at. So I really am opposed to continuing to give this fund to downtown businesses because of its amount. I mean, I think there are other businesses, whether it's targeted or not. I mean, you're saying that the whole purpose of this fund was to simply be part of the tools to target an area. $15,000, $25,000 and a million dollar project? Or a half a million dollar project? Money is not going to be easy to come by, I don't think, moving forward. And I think there are a lot of businesses and a lot of people who could use the extra $15,000 or $20,000 in ways that maybe are different than this. So I'm really opposed to continuing this program at this level in the downtown. I'm certainly not in favor of trying to increase this by any substantial amount of money. I think if we're going to do it and keep it in this form, why don't we target? Why don't we say, come to a consensus on what area do we want to target, other area in the city? You're saying you don't want it sort of happenstance. You want to have it in place and target. I don't disagree with that. But I don't want to keep burning through this cash while we 're doing that because to get together a small area plan to do everything that we did with the downtown area, that took years to develop and to identify and to create a plan. So I just really have struggled with this ever since its inception, just from the perspective of the money that we're spending really isn't making a determination of the project. I certainly don't believe that it's been the main driver to make downtown what it is. I can always tell when I lose Dalton because he puts his hands on his face like this and he's saying when is Watts going to be quiet? Yeah, okay. There you go. That's fine. So he's not listening. That's right. So that's where I am. It's not anywhere I haven't been before. I just think it's time. I just think it's time to say, look, we are pouring hundreds of thousands of dollars into downtown of city funds. One way or the other, all different shapes and sizes. This I think we can find another place for it, quite honestly. So I would not be in favor in continuing this fund to be allowed for downtown projects. Yes. And the mayor has pointed out why I never play poker. I think I'm going to do an advertisement and respond more to Councilmember Bagheri's comment. The advertisement is the National League of Cities Conference that moves around the country every year. It gives some great examples of what Councilmember Rodin was talking about where sometimes it's a ground up grassroots initiative to reidentify a neighborhood and revitalize a neighborhood. And I've seen that and I've gone to several of the NLC conferences in Austin, in Seattle, last year in Nashville. And I think this year it's in, it's not in Pittsburgh. Right. So I'll be very curious to see what they're doing there. But to Councilmember Bagheri's comment, since my wife and I are retired now, when we travel from one place to the other, we do lots of road trips and we leave particularly early. We give ourselves plenty of time because as we're going a lot of times on the back roads and we pass through a county seat, we stop and we tool around, tour around, look around and see what's going on. And it's amazing how in the same region, where seemingly the same sort of economic pressures and tides up and down are playing, some towns are vital and alive and there is so much going on and in other towns, county seat towns, maybe the next county over, maybe two counties over, it's absolutely dead. It's stunning. The contrast from one town to another here in Texas is stunning. And I'm trying to figure out why. And I'm curious as to if our staff has seen any explanations of that or could share that with us. You know, I'm thinking back to my seven years of looking at our TML magazines and I'm not sure that I recall any articles that have explained what cities have done, what the municipal government has done to either contribute to that or maybe in another town what they did to help stifle it. But I think our downtown, it really is a whole combination of things. This grant is probably a small part of it. And I think that there have been decisions made in terms of our ordinances. For example, it wasn't that long ago when our ordinances did not allow for residential in the downtown area. It discouraged it. It denied any new stuff. And then we turned around and we said, no, we want that. And I think that change, that one change in policy on the part of the city council has had an enormous effect. I think that the efforts towards walkability and the bump outs around the square to slow traffic down. And that all started, by the way, in the '60s when we redid Carroll Boulevard to encourage traffic through traffic going north and south to go a couple of blocks further west rather than to use Elm and Locust Street to make that a more pedestrian friendly area. So I think that there are a lot of factors that have come into play. I think that this is a factor. I don't think it's an enormous factor. But then we're not putting an enormous amount of money into it either. So I wouldn't expect it to be. Just to give you all a heads up, this is really outside of the protocol. So I apologize in advance. They're doing a little story on Davis Bakery, which is a fixture in this city for 60 years. So they wanted to comment from me. So I'm going to probably give one about 10, 15 minutes. So we'll see what happens. I remember visiting that. We ate six or eight chocolate bars at once while going to high school. So I certainly wanted to say it to Mama very well. I'm sorry, I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. >> The key to this discussion is one word, redevelopment. It's not development. It's redevelopment. And I come back to my premise that redevelopment is important in many parts of this city and not just downtown. We don't exist in a vacuum. We're part of North Texas. North Texas is booming. So while we have implemented policy changes and past ordin ances, we're also the benefactors of the North Texas boom. And part of Denton's growth is part of that North Texas growth. So that we just don't spin in our own circle, we are very much a part of that boom that's going on in residential, in business growth, in investment, with new monies coming into the county and the town. I think what's important is what is the message going to small business owners? And by keeping the money only in downtown, it's basically a message to business owners in other parts of the city that, well, gee, thanks for opening up a business in Denton, but we're going to keep that redevelopment money in downtown. I think that's just a critical message to small business owners that you are important and we do have a fund that can help you with redevelopment of the building that you're in. We offer tax incentives and huge economic programs for the big guys who come to Denton. This is an opportunity to send that message to the small business owners who, by the way, across this country employ a vast number of people, all 50 states, that's true of small business owners. I would recommend that we do not make a decision today because Joey Hawkins and Keely Briggs are both absent, and I value their opinion as well. So while this is a great discussion, I would hesitate to do a council direction today without their input. Okay. Yes, Councilmember Gregory. Clearly I did a very poor job in my last point because I wasn't asking why Denton is doing well and Chillicothe is not. I understand that. I'm asking why Chillicothe is not, but Childress is. What's going on in those towns and those different county seats? Why are some of those working better than others? And if there are any studies on those governments and how those kind of governmental activities in the different towns. To me, when we spend any tax dollars, what we want to do is we want to leverage them so that we get the most bang for the buck. And I think the way that we do that is not by scatter shooting to anywhere in the community. Because the way that you get the most bang for your buck is when you are focusing on trying to achieve a particular goal to help a neighborhood, to help a business district that is, whether it's grassroots or whether it's from some other source, is wanting to revitalize. The other thing about downtown, and a few years ago I was very ready to pull the plug on that money until a person in the business community reminded me of a truth that I know from public education, which is you focus your energy on where there are strengths . You don't try to get a very small, petite person and turn them into an offensive line person on a football team. If they want to be an athlete, probably they need to be a gymnast or whatever their interest is. So you look at what the strengths are, where the areas are, and you put your efforts into that. And so by us focusing our efforts and continuing to focus our efforts where we have already proven strengths or where we have potential strengths is much more effective in terms of the use of our tax dollars and leveraging our tax dollars than a broad based scatter shooting, where we're not going to get as much bang for the bucks because it's not just about that individual business that gets it. It's about what happens to the businesses around it, to the neighborhood around it, to spur more economic growth in that area. Sort of a, and I don't disagree with that, I guess. And I'm all for the targeting because it sounds like for you it's this lack of goals or this lack of direction or lack of vision. For you it's if we're going to do something different, we need to have the same kind of structure of goals and visions as we did with this one. So I agree with you, Councilman Wasney, that I'd like to hear the input, especially of someone who has a couple businesses downtown. But I think in the meantime, if we could begin to identify if there's some suggestions on particular areas, I know Councilmember Gary, you're more of the, because it comes from the entire community as far as the funding, how do we do that? Let's start sort of expanding and looking at different areas to say, well, where would this work? Where could we go take a potential strength and give it a little bit of life, give it a little bit of energy and see what happens. Because whatever we did with downtown, which was a lot of different tools, it's proven very, very successful. And so it would be nice to be able to try to go emulate that, maybe not to the same degree that we have in downtown , because I just think it's unique. But it could emulate it to some degree in some other areas of town. So I would be open to exploring, let's bring some specific suggestions of areas, specific suggestions of goals, specific suggestions of what that vision would be. Because the vision for downtown would be different than a vision for another part of the city. Now, sort of as a housekeeping measure, we have the presentation on the compensation study next. And staff and city managers informed me it would probably take a couple hours. And our consultants here have a hard time limit of, they need to be completed by about three. So my suggestion is, what if we were to take the economic development investment fund portion of this presentation and maybe tag it on to the back end of the compensation study so that we can accommodate our guests and hear that presentation in its totality? Is that something? Any more comments or suggestions on this particular issue? Yes. Well, it sounds like we're going to revisit this. And just another suggestion, and maybe this yields some discussion among you guys and others who are thinking about this. But as it relates to those goals, and so let's say there's still a place for some of those funds in downtown. Right now, the goal of which is pretty broad as relates in terms of what you can apply for. But perhaps since this fund's been in place, looking at kind of the needs, the pain points of downtown, even in terms of amenities for visitors and people who hang out down there, have changed such that you say, well, what if we targeted this and said, we're giving these funds for people who do this. Maybe it's things like putting up private bike racks or doing outdoor seating or doing some, I'm just throwing that out as examples. But if there's identified lacking of things downtown that this could then spur on specific goals that we know if we can inspire private investment in areas that meet public good. Perhaps that's a way of reframing this to not completely give up on downtown. The other aspect of thinking about this is it applies to the entire D tip area, correct? Most of the focus has been in a couple areas. The immediate downtown in the East Hickory corridor. We all know that there's a lot of room for improvement in some of the arteries leading up to it. South Locust, still a lot of things to be done on the other side of Bell Avenue that's still in the D tip area. So there could be a way of thinking downtown of saying, maybe restrict its use even in the downtown area to either particular functions or particular areas that have yet to really pop. And could use a little bit more help that is a way of not completely throwing the baby out with the bath water on downtown. So that's just some thoughts for future creative thinking. Okay, so we'll go ahead and revisit the second half of the presentation after agenda item 1B. So I will call agenda item 1B. Receive report and hold discussion, provide staff direction regarding objectives of a compensation plan and the results of the compensation market study conducted by the UM Global HR. Thank you, Mayor. Carla Romaine-Hagmark will be introducing this item. She has some issues she wants to discuss up front before introducing our consultants. Should I wait? Good morning, good afternoon, members of the City Council. Should I wait for the mayor or keep going? During the budget process for fiscal year 15-16, the council authorized funding for a comprehensive compensation and classification study for non-civil service positions. And so this did not include our temporary seasonal or police and fire civil service positions because they're on a step plan. And if you'll remember, we do review this police and fire pay plans annually with a process that's outlined in our meet and confer agreements. So with the funding approved, staff did an RFP and recommended that council contract with UM Global HR to do the study, which council approved on February 2nd. Since that time, Daniel LeBerry, who's president of UM Global HR, and Elena Mason, who's vice president, they've spent numerous numbers of hours doing the study, analyzed a lot of data, had a lot of meetings with the department heads and their managers and, of course, human resources. They're nearing the end of the project, so we wanted to come back to council and provide you an update over two different meetings today and August 1st. So today's meeting will highlight the current issues with our existing compensation program, provide an overview of the compensation program principles and objectives, and provide a summary of the results of the salary survey. On August 1st, Dan and Elena will come back and present to you their recommendations for the salary structure. And this is based on the feedback that they received from staff about the challenges we're having with our plan, their own observations of the challenges we're having with the plan. They did a thorough analysis of all of the positions in the city, and then they also had the results of the market survey. Again, they're pulling all that together to make the recommendations. They're also going to discuss the cost impact associated with the recommended salary structure and provide information on trends they're seeing in the market regarding merit and other recognition and rewards programs. So quickly, I just wanted to highlight, remind council some of the challenges we're having with our current plan. First, it's almost 10 years old, and with any compensation plan, best practice is to review the market periodically and make adjustments to the structures if needed. But many comp experts do recommend that you do a comprehensive study like we're doing now, about every five years. Compensation in and of itself is very complex, can be complicated. Ours is a little more complicated than most, as Dan and Elena can attest to. It makes it very difficult to explain to the employees and supervisors and for them to understand. And I'm going to be really honest with you, even those of us who have experience with compensation, it took us a little while to get our head around. Over the years, we've developed some internal equity concerns, pay compression issues, and market competit iveness issues with some of our positions. And quickly, internal equity, what I'm referring to there is comparable worth for like positions. Pay compression is when you have little difference in pay for employees that have less experience and skills than others with more and even with their supervisors. So there are several things that have contributed to these concerns. One, we implemented the pay plan back in 2007, and since then, we have grown a lot as a city. We've added about 279 new FTEs, and several of those new F TEs were brand new classifications. So we didn't already have them classified in our salary structure. And we do have a limited number of pay bands. And so what this does is it forces us into a best fit scenario. So you may have less complex positions and the same pay band as more complex positions. So again, that creates some of that internal equity. When we first implemented the pay plan, even by design, we had some compression issues with some positions with the supervisory level positions. And then the market has further perpetuated that. And I'll give you an example of our equipment operators. With the construction industry, we've had to bring people further into the range to be competitive and actually attract them. And so as they start out higher in the range, they're closer to their supervisor's pay. And then again, it creates pay compression issues with people in the same types of positions that have even more experience than them. And it's difficult to fix these compression issues without inflating the entire structure. As you know, we're a full service city. We have a variety of industries in our pay plan. An example of electric technology services, engineering. Things are in labor markets that we're seeing a limited supply. It's difficult in recruiting and getting people in here again without having offered them more salaries and bringing them further into the range. So they have a tendency to top out a little bit quicker too . Part of that is because our pay plan, the range is minimum to maximum. They're a little too narrow. And so there's not a lot of future earning potential for those employees once they get in here already so high into the pay plan. And so they'll go years without pay increases. Because of the different markets and the dynamic markets that we're experiencing, we're looking for a pay structure that can be more adaptable whenever we're having the challenges in recruiting. Last, I just want to say that we have limited -- we've been limited by traditional compensation practices. And we do have certain areas in our organization. They're competing with private sector and other industries where they're doing some more creative things to recognize employees with total compensation. And so we were looking for, I guess, exploring some different ways of maybe considering that to be competitive in the long term. So with that, unless you have questions for me, I'm going to turn it over to Dan and Elena. And they're going to talk to you about compensation philosophy objectives and then the results of the market survey. Good afternoon. Thank you for giving this time. Good afternoon, Mr. Mayor, Council Members, Ms. Martin, Ms. Burgess. We're going to use this time today, and I know you've had -- I've heard you've had three meetings already this week. And I'm sorry to say that ours is going to be shorter than two hours, and we'll try to do it a little bit faster as well. Our goal actually will be to keep you awake. And so we'll gauge our effectiveness against that measure. Well, you have lunch, you have afternoon, and you've had a lot of meetings. So I'm actually serious about that. What we're going to present today is to give you a little bit of background of the methodology that we use and an understanding of what goes into developing a compensation program and to how we analyzed your particular program. In addition to talking to managers and supervisors, we did have town halls with employees, so we gathered information on that. Elena told me yesterday we've had 60 meetings already, and we know that we'll be having much more. So we think we have a really good understanding of your program. We're a company, we're a small business located in Dallas, Texas. I have a Ph.D. from the University of California, Berkeley, in cognitive psychology and measurement, and the methodology that we use was developed by us. Elena has a degree in business and finance from the University of Hong Kong. We've done -- UM Global stands for Ulliburry-Mason Global, AHR. Why global? Because we have done work internationally. We primarily focus now in the public sector. We're highly statistical in the work that we do, so when Carter said that we collected a lot of data, we do. We collected a lot of data. Elena will tell you how many data points that we have and how thorough. The work that we do is specific to Denton. We don't give cookie cutter solutions. That's why we had so many meetings. So we find out what the issues are specific to the city and then design solutions in that. So let me start, and we will try to move faster if we can. First we have to learn how to hang to this. By the way, we will go back and forth on who's presenting. And in conclusion, apparently -- Yes, that's a great meeting. And if you could just make sure when you speak by the microphone, because we are being televised, and that way you'll be able to be picked up. Thank you. Okay. Okay, we use Macs. Macintoshes. Oh, there it is. Yeah. And then I have to do a head-and-aft. Hand her to change. Okay, what is a pay plan? These are the things we're going to cover today. What is a pay plan? Why have pay plans? We think it's important that everybody understands that. The pay plan's strategic considerations. A lot of people don't look at job descriptions. They don't look at their pay plans particularly. Maybe you've never even seen it. But actually it should be designed to be strategic in order to get you from here to there, and it should have some sustainability. The steps in developing the pay plans are specific steps that we go through. Steps in managing the pay plans, we'll go over that a little bit. We'll talk a little bit about what we have before us, and that has to do with what we found when we looked at your pay plan. And we're going to cover that briefly, but it's really significant in terms of what Carla said about placing people into positions and whether you have enough grades to place them in, and what are the consequences if that doesn 't happen. What we have done, we'll talk about that, the overview of our approach. We have a unique approach that we think is pretty thorough and pretty exact. It involves a lot of employee and managers and directors input. So they have a big say on what the results are so it's relevant to what they need in order to manage their business. And then we'll give you a high level profile of the results in the metroplex area. Some of the competition that's going on and hard to fill positions that we look at because you make exceptions. You have hard to fill positions that are permanent. They're always going to be hard to fill. IT positions is a good example, engineering positions. Then you have other ones that are based on the market, heavy equipment operators, for example. When there's a lot of heavy construction coming on, they're hard to fill positions. When the construction goes down, they're not as hard to fill. So that means you should have different solutions for those types of jobs. We'll talk about the defined labor market, which is the market that we go out to compare to. We collect data ourselves. We have national data sets, but we actually identify who would be the markets that we want to gauge, people that we lose people to. And I say we, I mean the city. So we have that data and we collect it person by person. So we don't ask the people in our market to provide us average salaries. We ask them for a database that says there's this many employees on this row that are in this job title and this is what they make. And this is how their average years of service. So we can look at it and they also give us a description of the work so that we can help match it. Then we'll talk a little bit about comparisons of overall averages and Elena will cover that. With that, I'm going to ask Elena to come up. Mayor, thank you again. Members of the council, thank you for the chance to talk to you today. At this time, I'd like to talk about some informational information data that begins with what is a pay plan. A pay plan basically is a structured guideline for determining appropriate pay for employees at the time of hiring, at the time of promotion, and at the time of transfers. The keywords here are structured guidelines and we put together a lot of good information for you to move forward with the recommended guidelines, which is pay plans that you can use for the next 10 years. A pay plan is not a merit plan. A merit plan is totally different and it is used to recognize performance. Merit plan impacts the pay plan on a strategic level. And I'm going to discuss that a little more later in the next ensuing pages. Now, appropriate pay means strategically paying salaries on the basis of education, experience, knowledge, abilities, skills that are required of the jobs, as well as the complexity of the work or the job itself. Pay plans are built with strategic aspects that are taken into account. Strategic aspects, of course, include the movements of the market as well as internal concerns such as compression and such as transfers and promotion, policies that are affecting compensation. Pay plans are built with technical aspects taken into account. Not just strategically, we also have to take a look at the structural technical aspects of a pay plan. It has to have hierarchical gradation, structure, so that you can differentiate those that are in the lower level, medium level, and higher level. Each grade in this system has range spread. The range spread boundary is to accommodate initial hiring, promotion, transfers, and merit increases. A range spread is simply the difference between the maximum and the minimum of a certain range within a grade. And we're going to talk a little bit more about that in issuing pages. Technically, each grade has minimum, it has a midpoint, and it has maximum. The minimum to maximum is the range spread, and the differences between grade midpoints is called grade differentials, and they should always be consistent. Now, here is a small demonstration of what a pay plan is. So here right here is the midpoint differentials. Midpoint differentials in this case is the difference between the middle number of the lower grade and the higher number of the upper grade. There should be enough differences for them so that you can avoid salary compression in the future. And the range spread that I was just referring to earlier is the minimum and the maximum that is in there. And if you calculate the differences between them and convert that into a percentage, then it becomes a range spread. Anatomy of a pay structure. Now, this is a graphical representation of a pay structure. I mentioned about gradation. You will see that we have grade one, grade one right here, grade two, and grade three represented by boxes. Inside those boxes are the jobs. The jobs we put in there on the basis of their skills, their knowledge, the education required of the job, and the complexity of the job. I mentioned that the less complex the job is, the lower the grade should be. And the more complex the job, they should be at the higher grade. And inside those grades, we have our maximum, our minimum, and our P50. P50 is the middle number, also called midpoint and also called 50th percentile. And inside those grades still, we have progression within the range. The progression within the range is the difference between the minimum and the P10, which is the 10th percentile, and the P25, which is the 25th percentile of the range, and from the 25th percentile to the 50th percentile. We measure that as well. Now, the reason why we have to measure it is because we have enough employees here. We have to be very cognizant that we do have range, progression within the range necessary for our merit increases, for our pay for performance, and for credentialing types of rewards that may be necessary in the future to maintain, to keep retention high, and also to maintain your hard to fill positions in the city. The diagonal line that you see here from the left to the right, it is called the base pay line policy. A base pay line policy is also your compensation philosophy . A compensation philosophy tells the people, it is actually a written statement or a statement of intent of how much you want to pay people the minute they walk in the door or even before they walk in the door, as in the case of your recruitment campaign. It tells us whether your philosophy is to pay at par with the market or above market or below the market, depending on the competition and also depending on whether or not the position is very hard to fill, as in the case of your engineering positions or your IT positions or your scientific positions. Again, also base pay line policy, the other side of that, tells us how you structure your pay plan strategically and technically. For example, if you have a progression that is uniform or consistent between grades, it will tell me that you have a straight line slope base line policy, meaning the difference between grade one and grade two, for example, is 10 percent and the difference between grade two and grade three is also 10 percent, so on and so forth. So that is called uniformity. And within a grade, within a grade we have boundaries. We have upper boundary and we have the lower boundary. What it is is the difference between the minimum of the grade or the range and the P-50 or the middle number of the range and the difference between the P-50 and the maximum, and that's called the upper bound. These two distances should always be equidistant. So whatever you have, differences from your P-50 to your minimum, it should be the same from your P-50 to your maximum. Structurally, it is very strong that way and it can help you sustain your pay plan for many years to come because you have uniformity. The grade overlap that we're referencing here is the difference between the minimum of the higher grade and the maximum of the lower grade. There is a very good reason for defining an overlap of the grade. It is to make sure that you have enough room for your employees to move within the range, even if they reach the P-50 or the middle number of the range, without being forced to do a promotion, just because you need to keep the employees and you need to give salary increases based on merit. So having enough room for overlap is good instead of having very less. So you can ask questions actually at any given moment. Sure. When you mentioned pay plan, are we strictly discussing salary and we're not discussing benefits or pension value? That is correct, yes. Thank you. That is just based salaries. Now, this is a live example. This is your non-exempt pay plan. There are differences. We have exempt and non-exempt. The non-exempt are those employees that by law you have to pay overtime to when they work more than 40 hours in a week . And those non-exempt are those positions that are exempted from overtime pay. Those are your positions in engineering, in management, in scientific work, and in your IT, as well as your management positions. This is your non-exempt example. The range that we reference in the previous pages will be this one, the maximum and the minimum. The seed number is your 29313, which is written in red. The reason why it is the seed number, this represents the market. From the seed number of the market for this position that is in grade G500, this actually represents your custodian. We start from his salary or the market rate of his salary, and we grew the pay plan from there. We defined -- Because it's not paid. Yes, exactly. It's your lowest paid position in the city. We defined the difference between the P50 and the minimum, which is 33%, and from the P50 to your maximum, which is also 33%, for a total of 66% range spread. And we say that the base pay line policy represents your uniformity of grade structure, differentials. We calculated for you a 10% differential between grades for your non-exempt. For your exempt position, it's a little bit lower. Question, just to make sure I understand your example. So when you say that the red is "market." Yes. So that's not -- I mean, so you've identified that as this position. This is what the market salary is, if you will. Exactly, for that position. And so then you extrapolated on either side of that to get this -- okay. Absolutely. And also, with that, I also have to keep in mind -- we also have to keep in mind that there are other positions in the plan. 10% represents or covers the other positions that are in the plan with regards to their market data as well, their market rate comparison. I calculated it. If I put in 5%, if I put in 8%, if I put in 15%, what would that look like? 10% is the optimum. It ensures that I cover all the other positions within the pay plan with regards to their market rate as well. Okay. So then to understand this chart, is this -- like, when you say live example, is this the city of dead? Absolutely. Okay. So this chart, this is what we've identified or you've constructed this chart from doing all these calculations from that red market value? This is what we both identified with the market and calculated based on the structure that we wanted to happen. Okay. So this isn't necessarily what we have now. No, no. This is -- all right. I wanted to make sure I understood that. Okay. The very lowest grade of the pay plan has to cover your lowest pay employee. So you start there. Correct. And you gauge that job to the market and we did it at the midpoint and then you build out. Okay. Thank you. Okay. Why do we have to have pay plans? It has several usage or utility and it's important as well for strategic and for technical purposes and for going forward continuity. For attracting and retaining, especially if you have employees that are about to retire, you may have succession planning in place, but you still have to replace the ones that are down below that will be vacated by the ones that are going to be succeeding the employees that are leaving. To ensure continuity of quality services by retention and attraction. To support dense objectives of competitive compensation, one of your compensation philosophy entries in your written statement is to keep competitive compensation within the city. And it's very important for the continuity of service, especially if the population is growing, the services are becoming more and more unique and is very specific to the city. That is very important. To determine what to pay employees at the time they're hired, promoted, transferred or demoted. You have to have something in writing that you can refer to and also it can also be a piece of information in cases of any disputes in the future. For internal equity, to address salary compression among jobs in the same grades. To address salary compression between supervisors and direct reports. Now salary compression happens because market moves. The market rates move for those positions. And if you are growing and adding more services, you tend to add more employees. And when you add more employees, you tend to compete and you tend to give them salaries that are within the market rate. And if your pay plan is not calibrated with the market rate , then chances are you will have salary compression. To have enough room to recognize quality of work and performance without the need to reclassify and upgrade. I mentioned about this a little bit earlier. When you have a very narrow salary structure or when you have a very small salary grade differentials, you will be forced to promote somebody simply to keep them as opposed to just giving salary increases on the basis of performance. Sometimes it's necessary to do a promotion because you need the job and the job is hard to fill. For external competitiveness, pay plans have to reflect market movement. And of course to assist in addressing the difficulty in finding qualified candidates by better pay plan design. The strategic considerations. When we create pay plan, when we design pay plan, we need to consider all the strategic aspects of it that includes merit-based progression. We do not want to reward simply because of the length of incumbency or years of service. We want to reward based on performance and based on merit. And we want to make sure that we have room enough in our pay plan to implement that. Credential-based progression through ranges. Now you have a lot of positions in the city that have licenses and certificates that are mandated by the state of Texas. And there's a lot of positions that you train them, you hire them without licenses and you train them and within six months or within one year, they have to have the license for them to continue working here. And if they do not, then usually they get demoted or they 're out of here. We want to make sure that for them to stay, because what's happening in some cases, they come, they get trained, they get certified, and then they leave. It's because they already got the training, the on-the-job training, and they got the certification, and they're not going to move on to a better pasture. In our pay plan structure, we want to make sure that we have something in there to recognize, to reward them that if you continue working here with those certifications, this is what's in the horizon for the positions that you are in. We recognize the market competition for this position, and therefore you don't have to go anywhere else. We have something here for you. A consideration of available funds, of course this is very, very important. We don't want to create something that we cannot afford, especially if we're looking at ten years from now. Consideration of labor regulations changes, such as the FL SA guideline. The Labor Department changes things quite often, especially in the areas of minimum wage and in the areas of overtime pay. Most recently, we're going to have something, we're going to see something implemented in the first of December this year, so we have to address that in our pay plan. We want to make sure that we are compliant. Go ahead. You're talking about overtime pay for what we've normally referred to as non-exempt employees. Absolutely, yes. I'm sorry, we had an in-question. Excuse me, go ahead. Oh, sorry. Yeah, he wasn't giving an answer. My question was regarding consideration of available funds. When you did the study and you compared other government entities, was there consideration of the size of the tax base of the other government entities and their tax rates? Yes, in all cases, actually in all cases, when they design their pay plans as well, they look at what the tax base is, the size. And I can tell you more about that when we go to the market study, because we have a criteria in there where we really take into account the size of the population and the tax base and the operating revenue that they report in their CA FR. Sustainability for future salary administration. The pay plan design, the structure that is, should last you 10 years. At least 10 years. And we attempt and we try to create one for you that would last, that would do just that, 10 years. And with that, of course, barring changes or major changes in labor regulations, that should last 10 years. Use of job complexity level for future reclassification of jobs. We provide you with a tool and a method that you can use for future when you want to reclassify or assign a job to a grade. There will be something in there for you going forward. Point factor method. Point factor method is something that we also put together for the City of Denton, specifically for the City of Denton . What it is, it measures 14 factors within the job complexity, including consequences of errors, education requires, skills that are required of the job, as well as supervisory and budget responsibility. Those types of things are measured so that we know that the job is in the right grade and in the right complexity are being paid correctly. And then, of course, the use of position description questionnaire, this will also be provided to you for rec lassification purposes. Steps in developing pay plans. Very briefly and very quickly, I'm going to go through this . When you want to put together a pay plan, especially if your business is growing, it's good if you have 50 employees at the time that you can have a very simple pay plan. But as you grow, you want to have something that you can manage that can grow with you as your business grows. You create groupings of jobs and arrange them in order of difficulty. For example, a clerk, a supervisor, a manager, they should be an ordinal number. Arrange their salaries in ascending order, low, medium, high, create grades to differentiate the difficulty and the salary variations among the jobs. The grades can be either alphanumeric or just numeric. It can be anything as long as they are being used to differentiate the jobs. Jobs with lower difficulty and lower salary should be placed in grade one, so on and so forth. As simple as that. But then you're going to have to manage the pay plan. To manage the pay plan, first of course you have to determine the market values of the organization. You have to update your minimum, your midpoint, and your maximum of the grade. Determine if your range spread per grade can sustain your growing business, distinguish between non-exempt and exempt employees. Again, this is very important for compliance reasons. Now, why do you want to manage it? Of course, you want your pay plan to actually help you to recruit employees, to be able to retain them. And the passing of time can make your pay plan obsolete. As in the case of your pay plan now, it's 10 years old and you guys have upgrown it. And it's been 10 years and services has changed. Numbers of employees have grown, so has the population have grown. So what do we have before us? These are the challenges that we have observed based on the interviews and the discussions that we've had with the employees, with their managers and supervisors, as well as the ACMs. The pay plan is 10 years old. The employees top out at the maximum range faster than the pay plan or the structure can bear. And that is because at this point we have a very narrow range. And again, the pay plan was created for the purpose 10 years ago and it served that purpose. But now that you have grown and you need to compete with more positions, that pay plan is no longer appropriate. And so now we're seeing that employees or pay are actually reaching the top of the maximum faster than the structure can actually bear. It is harder to attract and recruit qualified candidates and build qualified pools in some areas because the range that we're offering are not competitive enough. Some jobs remain open and will still remain open for extended periods of time. Now, three months for a job to be open is long. If you have six months open jobs, that is very, very long. The meanings that, go ahead. >> I'm sorry, finish your thought, I'm sorry to interrupt you. What it means is that you have a job that is there and somebody else is doing it for you. That means somebody is doing the job of two or even three jobs, rolling to one, and he's filling in for it. And in the long run that is really, it's not very good for morale and that employee will get burned in the long run. >> On the, some jobs remain open or still open for an extended period of time. Did you get a sense of what the reason was for that? >> It is the salary ranges that are being advertised or being offered is too low for the candidates to even pay attention to it. That's the number one reason that we've observed. The second is that jobs are sometimes very hard to fill. That is just, the jobs that are not, that are actually unique and it's not always available in the open market. That you have to go, sometimes you have to go outside of the state and advertise outside of the state to get candidates to apply for the job. Because you are a unique city. There's a lot of progressiveness in the city and the jobs are very unique as well. >> Do you have an idea of what, if you had to say a percentage on how much of these jobs that have been open for an extended period of time due to that sort of uniqueness, sort of specific expertise or because we're just, the starting salary isn't enough to grab anybody's attention because the market is higher. Do you have an idea of what that- >> We did have that data for you and we're going to discuss in August 1. >> Okay, okay, fantastic. >> But we're going to get into the details in August 1. >> Gotcha, fantastic, thank you. So employees are hired, trained, and only to leave for higher salaries elsewhere. I mentioned about the certification. They get trained, they get their licenses, and then they go for a better pasture. Again, elsewhere and also within the city, you also have internal competition. Some departments are just simply because of the market that they're in. They're centered by a market that's really high, both the private and public setup. Employees tend to go to that department because the salaries offered there are just slightly higher than the general government. That's the nature of the department and the nature of the services. But of course, that's not always happening. The chances of that happening is actually very low. It's not always happening. We have some instances, but it's not always. And if I may say so, actually, if you have jobs open in other departments within the city, it's actually not that bad. It means that you have opportunities within the city. The employees do not have to go outside. There's opportunity for him or her within the city as well. Some candidates are hired at level two immediately because the salaries at level one are too low. We now have 208 employees or 24% who are actually at the 75 th percentile or at the maximum of the existing range in our pay plan. And that is because, as I mentioned earlier, the pay plan is 10 years old and it has served its purpose. The ranges that we have now are too narrow for the positions to be fit into the ranges all at once. So that's what's happening. So, go ahead. So a question for those pay ranges. Within a grade and a pay grade, imagine that you have a fairly equal distribution of experience and of quality of work. All right. So within that range, would I expect to see in any particular pay grade about half of the people in the pay grade below the midpoint and half above the midpoint? Would I expect to see 25% in the top quartile, 25% in the bottom quartile? With the new pay plan, you would expect that most of the people will be below the new P50 because we designed it that way. The ranges that we're going to present to you will be wider than what you have now. But with your existing, you will tend to see people that are concentrated in the middle, in the midpoint right now. Because you do have a compensation philosophy that is managing within the midpoint. So you move people within the midpoint at a certain period of time based on their performance. Well, the reason I ask is because of that last bullet point . I would expect someone who had a certain amount of longevity, who had done a lot of continuing education, who is performing above average or quite satisfactorily for a number of years to be above the midpoint. And if we have a pay plan that is set up so that mostly you expect when you max out, you're at the midpoint. It seems like that could present certain areas of dissatisf action for the employee who's been loyal to the organization , who has a string of above average evaluations gone above and beyond in terms of certification, but is still only being paid at the midpoint. Do you run into issues like that? Yeah, we do consider those when we place employees or salaries or jobs into the grades. We do consider the years of service. This is when we did the internal equity analysis. That's when we ran into those issues. But we want to make sure that those who have been here for longer periods of time with the educational background that are continually increasing and improving, as well as cert ifications and licenses, we want to make sure that that person or that incumbent will be above than the rest of those that just came here. And I understand that it's not just longevity because we're not focusing on longevity years of service. We're focusing on the merit of their performance. Yeah, one of the things that we're doing is we are educating management and talking to them, even about talking to their employees about this idea of what's a fair value for the job. The philosophy of the city of Denton right now is to pay a fair value, the job worth, which is calibrated at the mid point. At least the old pay plan was done that way. But our education to you is that the market midpoint is very elusive. We know that you can do studies that depends on the peer groups that you're out there gathering the data from. It depends on the dynamics of the jobs. That's why we have different pay plans for like IT or DME and stuff like that. Also, when you calibrate the jobs, people move. So if you're at the 60th percentile right now and they calibrate the job, you're going to go below that. So and employees need to understand that you're not going to be at the 60th percentile every time we change calibrate the play plan. And so this whole idea that you market your job or you hang it on the midpoint is really detrimental and it causes those types of thinking. What they should be thinking about, am I being paid fairly for the work I'm done and is it competitive with the outside market? And that's what we're doing and it does have a mindset. The other thing that we do is we use a market average. We know that the real market value is going to be between the P25 and the P50. So we calibrate your jobs in that range to do that so that your employees aren't being penalized from your current philosophy to the new one. They're being gradually moved to it and they are going to be paid competitively. And that's one of the things that we'll need to communicate to them. And they know, they know when people leave, because they tell us, people are leaving because they're getting paid more at a different place. And so when we ask them about their pay, what do they think about it, they don't just come out and say, I want more money. They think that they're not being paid equitable to what they could get someplace else. A lot of people don't want to leave Denton. So, and a lot of people want to live here so they come here for the pay. But it can have morale issues. But that is an important point. Quick question, because I know we're talking about market. And so when you say market, let's say the market salary for a particular position, are you, is that considering, even though we're a municipality, that's also considering those job descriptions and requirements and efficiencies expertise in the private sector or is it just municipal government to government? How do we, I mean, the market's pretty, pretty big. So is it the total range, both private and public workplace ? We did look at both private and public, but in some positions, we also have to benchmark them with both. But in some positions, they're especially in the regulatory positions or departments. There's no equivalencies in private sector. So they are purely public sectors. The other thing that we do is we actually have multiple markets. So DME will have a market. Some jobs will have a specific market. Some places, the positions won't exist. So when we say these are the organizations that we compare you to, it wasn't every job. Some jobs have very specific markets. So you gauge that. And so when you see, if you were to go in and look at our data, you would see that for this job, here's where the market came from. These are the organizations. So we include both municipalities and we include full service municipalities on that, in addition to public and private. And that's where we go to get it. We're going to present that to you in just a little bit. And I think you'll like it because we're pretty rigorous about who we compete and how we get things and just don't ask. So we can call an organization and we'll say, no, we don't want every job. These are the positions we're looking for. We'd like to know what these people make. Okay. Oh, okay. All right. So we need a little bit of a -- Sure. Yeah. So it's just what we've done. This is the overview of our approach. We basically have five approaches, communication is number one of that. The objective is to maintain the project transparency and leverage institutional knowledge. We've done a lot of town halls and individual meetings. And then we did a job evaluation of all of your job positions in the city by the use of the position description questionnaires and the updated job descriptions , as well as job complexity leveling analysis and point factor method. And then we did the market study. The first of that is we define the labor market in which you are competing. We designed the survey questionnaire. We analyze and we describe the types of data that is needed for the survey. And data tabulation came next and data analysis. The objective is to determine the external competitiveness of all the jobs in the city as compared to our defined labor market. And then we set out and did the pay structures. The pay structuring we're going to present to you in August 1, but we have given you a primer today. The objective of that, of course, is to address the issues with the existing pay plans that is based on the market data. And we develop wider ranges to address compression. And then after that, we did grade assignments. And actually, this afternoon will be our last meeting with the last department when we meet with them and confer and confirm the jobs assignment to the grades that we put together. Before you go on, help me understand on the objective number two under job evaluation where it says to determine jobs internal worth. Right. Help me understand what that means. I mean, I think I know what the words say, but I'm still trying to figure out how those activities, what you're trying to get to. Help me understand that. Thank you for asking. Externally, you compare with the market. Those are called external worth of the job. Internally, you have to have hierarchy. For example, those that are lower complexity should have lower position in the grades. Those kinds of things. Okay. Organizationally, just sort of, yeah. It actually goes one step further than that. If you have an objective for sustainability or environmental programs and stuff, a position that has a comparator out in the market with a city that doesn't have that same objective is not going to pay as much for it. So you will pay more because you value that job and you want a highly qualified person. You have, for example, a household hazardous waste supervisor in solid waste. That position is $10,000 higher than the market. But the data that we collect when she talked about complexity level and point factor tells us that this job is unique and that the requirements for this job are superior to the market. And therefore, the market data isn't exactly accurate. And because we have this other data to fall back and this is an important position, it's three years old, that we know that we need to calibrate it unique to your city. And that's the worth part. Right. This position is what does. I appreciate that. Thank you. Okay. This is your, he's going to explain your existing pay plan right now. This is your existing pay plan. When Carla said it was complicated or hard to explain to people. What you have here, and I'm going to try to use my mouse to do this because I can't leave the podium. Okay, here. On this side, I guess is the right-hand side is what they call the business professional career track. And so you have grades there and jobs that are associated with that. On the other side, you have a technical professional track or technical job track and those are jobs that are more technical engineering and stuff that require computers and the like, stuff like that. Down here at the bottom, where you see the one and two, and my mouse disappeared. Here it is. These jobs here are your non-exempt jobs. So these are the hourly jobs. These are your grades. You have one, two, three, four, five, six grades on this particular track for your non-exempt jobs. The highest grade in that is a 9S. On the other side, the highest grade is a 10S. There's five job titles in each of those. Five each. That's 10. You can throw that grade away because you can't put anybody else in it. The people that report to them are in nine and grade 10, the grade below. There's 14 job titles in each of those. That means effectively you're left with -- oh, this changed . Sorry. This means that effectively you're left with four grades to force fit, and I use that word, force fit your jobs into. So we already know that you're going to have jobs in a grade that are not equivalent. And you have no place else to put them because if you put them in the next higher grade, it's too far because mid point differentials are too big. And you can't put them in the lower grade because the mid point differentials are too big and it's too far below. What we've done is merged those two so instead of having six grades, you'll have 12. And then did the technical analysis to allow you to position -- place jobs, place positions into the appropriate grades. And we did that for the top part as well. There's really four salary plans up here where you see three, three A, four A, and four. We've merged that into one exempt category with I think 23 job grades in there. And so now where we're meeting with the managers and supervisors and we've said our data analysis shows that this position that was in grade three should go to this grade. And what we need to communicate to them is that if you have 20 positions that are in current grade three, not all 20 are going to go to the same grade. Because we know that some of those should have been in a lower grade, which we've now provided for you, and some of those should be in a higher grade, which we've now provided for you. That was why you were having trouble with people topping out and not being able to hire people. You forced fit jobs into a range that was narrow and some of those jobs required a higher entry level above P50. And some were -- did only -- should be at the minimum. But they were all grouped together so you didn't have that availability to put jobs. And so that's the big thing I think that we've done for you is put jobs so that they're paid appropriately and you can deal with the issues of compression. This salary plan was good 10 years ago. It focuses on career ladders and stuff, but it will guarantee compression over time when you start adding the 200 and so jobs that you've had to add in the past 10 years . You talk about guaranteeing compression. And that's not just in the public sector. That's in the private sector also, isn't it? And so do you correct for compression by revising it? Is that the solution to compression? In this particular case, it was. I said we developed a pay plan that was unique to the city, so we did an analysis of the current pay plan. And it told us -- so if we look, this is your current pay plan right here. I took this -- that fan we just looked at. We took it and we put it into this hierarchy here. And so you have your non-exempt jobs at the top where it says G, grade one, grade three, grade five. That's the business side. And then grade two, et cetera, on the technical side. And to show you what it looks like, we did the analysis here. And it told us your midpoint differentials are too far apart. You can't promote people. And if you do, it's going to cost you money. Your ranges are too narrow, way too narrow. They're 35%. Not only your midpoint differentials, that P50, too far apart, they're not even consistent. Some places they're 9%. Some places they're 23%. It just changes. And so what we do is we keep it so that all of them are 10 %. All the ranges are 65%. And so you have uniformity. And that means you have the ability to manage your employees. Did I get to your question? Yes, sir. Okay. Ah, this is the fun part. Were we going to take a break here? Yeah, actually, if you want to take a break, 10 minutes break before we go into the market data discussion. This is going to be an interesting part. This is really interesting. Let's go ahead and take a break. Come back at about 2. Okay. We're moving on with our presentation. Thank you. Thank you very much, Mayor. We're moving on with the market study results. The market study results that we're going to talk about today are high level. I'd like to talk to you a little bit about the competition that we are seeing right now. These are the high profile corporate movements within the Metroplex within the last three years. The Denton Area Teachers Credit Union, the ATCU, recently completed the new headquarters in Corinth. State Farm Insurance, moving in their regional hub in Richardson, Toyota, of course we all know, moved their corporate headquarters in Plano. CVE Technology Group, the headquarters now in Allen, and they also have a presence in Plano. Liberty Mutual in Plano, 7-11, they have the 325,000 square feet headquarters in Irving that has just been completed, and a relocation from their downtown Dallas office has begun. The recruitment is in full swing. Sonica LP, bought by ETP, is based in Houston, and now moved to Dallas from Philadelphia. McKesson Corporation, which is a pharmaceutical company, they're looking to move to Las Colinas from San Francisco very soon. AmeriFlight, they moved to Dallas recently. Active Network, moved to Dallas, and OmniTrax, moved to Dallas. These are some of the high profile corporate movements in the Metroplex, and as they move into the Metroplex, the competition for labor increases. They advertise, and the positions that they are hiring right now are mainly the engineers, your real state lawyers , your degree accountants, and also your heavy equipment operators. It's very, very high in demand. It's also true, though, that they put a burden on the cities, because the workers have to live someplace, and we 're going to show you some data on mobility. So when you get more citizens in here, which is good for your tax base, they also demand more services. >> Yeah, so it's a double-edged sword. It's good, but there is a downside to that as well. It's good for the economy, but there's also a downside in terms of labor supply, that is. Now I'd like to talk to you about the workflows, inflow and outflow, within and the parameters of the city of Denton. As you can see here, the dark green arrow represents 40,821 people from outside of the city of Denton coming and comm uting into Denton to work here. We have 16,700 people that live in Denton and work in the city of Denton. And then we also have 33,952 people that live in the city of Denton, but commute outside of Denton to work. They work either in Dallas or in Plano, in Irving, in Louis ville, or in McKinney. >> Fort Worth. >> In Fort Worth even, as well. So with that movement, Dan? >> Yeah, we all know about the construction going on, you in particular, because you're on 35. But they're building all these highways in Fort Worth and Dallas, and there's a reason for that, because people are commuting. These numbers reflect people that are working full time, so it doesn't count the general population. This is a movement of people that are working. >> Talk about hard to fill positions. I mentioned a lot about this in my earlier pages. What are hard to fill positions? These are the jobs that are unique to the services. It takes time to find a replacement and to train repl acements for them. Having these positions vacant can result in service interruptions, not to mention the morale of the people that are going to be covering those empty jobs in addition to the jobs that they're doing. Right now we have 102 unique hard to fill positions with most of them that are in the DME, the electric department, and water and wastewater department. The sampling of these jobs are below. Now these are not necessarily vacant. They're just hard to fill because it took you guys very long to fill these positions, and that if the employees are to leave and vacate the position, it will be very hard to replace them because it's very hard to find the replacement . So as you can see, we have a handful of engineering positions. SCADA senior technology, SCADA-related positions, technician, fiber technicians. In the wastewater, we have your heavy equipment operators, flushing trucks, construction, wastewater collection manager, reclamation superintendents, reclamation maintenance managers, to name a few, and of course engineering, again, in the wastewater engineering field. The compensation study methodology that we put together. First, we defined the city's labor market through criteria and parameters. We're going to talk more in details about that later. The peer list or the organization's list were provided to us by the staff, and with that, we qualified those lists. We did not just put them all together and say this is our market. We qualified them on the basis of criteria and parameters that we defined. And the survey was created, and participants have submitted their data through online or through email. The job comparisons. When we compared your job, we did not just look at the job title. We looked at the job content. We look at the incumbent's profile. We compare your years of service, meaning the length of inc umbency in the city, and we want to make sure that the jobs that we are comparing you with also have the same length of service in their own organizations. Because you know that as the length of incumbency increases , so is the salary, and that's just the nature of it. Organizational chart. Organizational structure differs. And with that, salaries differ as well. For example, in other municipalities, transportation, engineering, and solid waste is under one giant department, which is the, yes, the public works. In here, in our city, it's different. There are their own departments, and each of those have their own directors. Whereas in other municipalities, there's one director, and the rest are assistant directors. Salaries are different because the authority, the level of authority, and the responsibilities are different as well. Blended jobs. We have a lot of blended jobs in the city right now. What we did for that, so we took five jobs. For example, we have HRIS and compensation analyst. Those are two jobs in other organizations being done by one person, rolled into one job here in the city. What we did for that is that we took five HRIS positions and five compensation analysts. And took the average of those and compared them and took them into one. A question back up on the first area where we defined the city's labor market through criteria and parameters. Oh, dear. I don't know what happened. My digital device just went off. In one of the backup pieces that we got, there was another report that we had. I don't think it is. Where it lists the cities that are in it. Is that the next slide? That's a criteria. So what I wanted to make sure of is, now it's coming back on. Anyhow, it was mainly metropolitan cities from Dallas and Fort Worth. And other cities, we did not include cities like Sanger and Violet Point. So I was going to try to read off the list because here's my concern. I want to make sure that our council is comfortable with that list of comparison cities. Because I would hate to get terribly deep into all of this and folks then object to the comparisons because we're not like these other cities. So could you just -- thank you. I don't know what happened to it. It was all set up. So the cities listed -- now I'm having to deal with bifoc als. Arlington, Carrollton, Dallas, Farmers Branch, Fort Worth, Frisco, Garland, which is very good because they have an electric department. Grand Prairie, Irving, Louisville, McKinney, Mesquite, Pl ano, and Richardson. So I guess my question for the council now or within the next few days is, if you feel like that that's a reasonable comparison group, then we need to indicate so. And if we feel like that that is an unreasonable comparison group for the market analysis, we need to indicate that pretty soon so that if they need to go back and do some more research, then it seems like now would be the time to do it. I guess one question in regards to that would be how were these cities chosen? What made them the cities to be chosen for comparison? That would help me understand if those were cities that I would think appropriate. Councilmember Gregory is referring to as the compensation program overview paper that I provided as part of your backup. This was kind of a historical perspective, things that we 've done in the past. These are standard survey cities that even when I first got here back in 1994, we were using them as part of our compensation analysis for the market. And Mercer helped us with that. I wasn't here, so I don't know what the conversation was with the council. But I'll tell you, even now moving forward when we're surve ying for police and fire, a lot of these cities are included . We have 12 comparator cities that's in our meet and confer agreement. We include several of these. When we're looking at our council point of positions, we've used these. So again, just from feedback from council and other sources over the years, that's how this list got developed. For this plan, I'm sure most of these cities are included. But what Dan and Elena did is they asked the department heads, where are you losing your labor to? Where are you drawing your labor from based on what you're hearing, your employees, the chatter that you're hearing from your employees. And again, as she said, then they provided a laundry list of public, private, the utility type operations, MOUs. And I mean, that was probably 200 some odd organizations through the department heads. And then they went through and they did this criteria, which she's about to go over with you. To qualify cities. Yes. So this is now what we call the defined labor market. The defined labor market is- I'm sorry. Go ahead. Throw something at me. So I'm sorry, Councilmember Gregory, you did want to have a discussion about if, like now would be the time to mention if there's some tweaking to the criteria used. Is that what you're saying? I just, I think it's better to know sooner than later if there are council members that object to the list that we are using or if we are satisfied with the list that we're using for the comparison for the market. So along those lines, what I think I understood you to say was that these are the criteria that were used and those were some of the comparison organizations used, but they also went outside of just the cities, correct? Correct. We went outside of the metroplex as well because our target also is to have municipalities that are full service with electric and with water waste water as well as landfill departments in their organization. Okay. So for me, the thing that I would like to see is a little bit narrower scale on the median household income and community mean housing value because that would probably correlate pretty well with tax base. Okay. And I don't know if we're going to get there, but I'm really struggling with the way that pay is being defined. I'm not sure how or if there's going to be a calibration for the benefits that public entities provide in terms of a defined benefit plan versus a defined contribution plan. So I'd like to see something where we're actually quant ifying how that's being calibrated if at all in these discussions. Well, we will not be discussing benefits because it's outside of the purview of the mandate of the project. We were commissioned to do base salaries, but I believe sometime in the very near future, HR is going to be looking at benefits as well. And with that, your questions on the defined benefits and defined contribution will certainly be addressed. And are you going to look at the benefits in the very near future? I'm not sure specifically what you're wanting us to look at . I mean, we look at that yearly as far as our the cost for insurance and make recommendations on what to do with some of the plan designed to help us with our insurance rates. But to do a total compensation comparison is really difficult because first of all, a lot of those private companies don't even provide that information to us. And, you know, their insurance plans, even if we were to get a dollar value for that and add it to the compensation, we don't know exactly what their plan design is like. So again, it may not be an apples to apples comparison. So that's always a challenge when you're doing a compensation study. That's why we look at base pay. It's getting crowded up here at the podium. I think there's a couple of things we'll show you in a moment. We're going to show you salaries, the average salary information, the market data against public sector organizations, which typically have the types of benefits. I think that you're referring to Councilmember Begarry. We also have a private sector comparison as well, which it's more difficult to know exactly what's in that total compensation mix. But perhaps as we go a little bit further in the presentation, you'll see some of those different ways that we measure that. We can certainly then from that discussion go back. And if you want us to look at trying to compare to some other public sector organizations, try to do that. And maybe we can have that discussion as we go further. I think that may help us a little bit as we go. Question. I think I'm sort of guessing where you're going with the total valuation, property valuation. But could you explain how that would impact our study of market analysis of what a wastewater engineer gets paid? I think one of the factors that I'm sorry, I'm going to call you Elena, apologize. I think one of the factors that Elena brought up was the ability of the city to pay. So the total funds available. So the tax base is directly related to that mean housing value and as well as how much actual property is on the rolls. So that's why I brought up the mean housing value as well as the mean income value, because I see those two things as being related to how much a city has available to pay. Sure. Well, then we would also need to figure in the sales tax because that's almost a third of our revenue. But to me that that's that that's different from the scope of attracting a backhoe operator. The market kind of dictates what what what a backhoe operator can make, whether the person is working for a city with with a bigger tax base or a city with a smaller tax base or a company that that has more money or less. So in terms of a pay plan, I'm not sure how how that really factors in. And and and if we're basing it on just median household income or median average household price, you know, sales for sales price for home. I don't see how that that plays into the to the labor market and our hiring folks and being able to retain folks. So how does how does that play? So they're the ones that actually made that a factor to consider. What I'm asking is just to narrow it. So they're making the determination that it does factor into compensation. I'm asking for it to be tightened up a bit. Then maybe you guys could explain a little bit more about how that factors in. The the household median household income is used for identifying like organizations like municipalities that are closer to you. We define that to be any municipalities that are excuse me three times smaller than you or three times larger than you . That's how we define it. We have defined we have defined these parameters in the past and it has worked well for us as as excuse me. We got you some water coming to you. We use these parameters to identify those and qualify the organizations that were in the list to begin with. And with that 300 percent plus or minus of your size is just the right number based on our experience. And the best practice is just that two or even one is way too narrow, meaning you are excluding a lot of municipalities and excluding a lot of organizations. And the availability of the jobs that are available to those very narrow supply of organizations may not be there. So this is why we have to expand it to at least three three times larger and three times smaller. Anything more than three will be too much. Anything less will be too less. I appreciate that. That's actually very helpful to me to understand kind of how the methodology came to be. How did Dallas get on the list in that case? Because Dallas actually with Dallas, they made it. They made a qualifying based on the geographic proximity and also the the number of employees that are plus or minus three three hundred percent. And also the services that they offer and the availability of the professions that they have in their organizations that are similar to yours. We use these criteria. You have to meet at least five of them to be in. So if the list that you usually use in the past, if that organization did not meet our criteria, then we would recommend it not be included. When you do a market study, it is a little bit of an art because I said the market changes depending on who you have in it. And if you want to be a leading employer, say you want to pay above the market, you're going to compare yourself with organizations that are bigger because you're expecting to grow. If you think you're not in a growth mode, you may pay compare yourself to smaller organizations. And what we know is that you're a growing organization, city, but not necessarily a Dallas or a Fort Worth and stuff like that. So we have this data pool that will give you on average what the market value is of a job without saying I'm too progressive or I'm too slow and stuff like that. So that's part of why we do it. Then we have one criteria that you can argue that I don't care if it didn't meet the five criteria we wanted in. We would be remiss in our view as professionals not to include Dallas. How do we know that? We both live in the Denton County. We both work in Dallas. I used to live in Richardson. I worked in Dallas. So it's ludicrous that we're not building 35 here so people can't drive to Dallas. We're building it so they can drive to Dallas. So that is a competitor. >> Yep. If you also noted that one of the criteria that we put in here is the compelling business reason. The compelling business reason is when you know that you're losing a lot of people to a certain neighboring city. That is a compelling business reason. We want to know how much are they paying the people that they're so attractive to your employees. Are you losing a lot of them to them? So a little note on the revenues that we use because one of those is the operating revenues. We looked at their CAFR or CAFR in the case of public agencies. But in the case of private organizations, we look at their publicly published financial reports. And the items that we have not included in terms of CAFR or revenues are those that are funds in the fiduciary fund revenues or bond revenues. They're not included when we calculated and compare operating revenues. >> Yes. Councilmember Walsley. >> Yes, ma'am. If we look halfway down, population served. I have a problem with no higher than 384,000 people. It's a common fact in government jobs that the bigger the city, the higher the pay. So if you take a comparable job in the city of Dallas and compare it to a comparable job in McKinney or Denton, it's going to be a different pay scale because you're dealing with a mammoth population in a large geographical city. So back to Councilwoman Baguerre's point, I think it helps us to tighten the list just a little bit. Especially with the population because I understand that. We have family members who either have or are working in the public sector. And that's all part of it. You move up by moving to a bigger city with a higher pay scale because it's more responsibility. So that would certainly, I think, be a criteria modifier for me to make it more impactful and effective and efficient. Do you have any recommendation as to what would you like to see in terms of population comparison? Well, if we're at 127,000, I think if we double that, but this is almost triple that. And I think that would help us. I think the 42,000 may very well be too small as well. There's a big pay swing if you work for a city with 40,000 people versus a city with 225,000 people. And I know you're looking for medium and average, but I think if we're going to be efficient with this, it's going to help us if we narrow the population criteria. Right. That's very important. Let me just say one thing. I was going to look at that. In addition, when we collect the data, we also develop a parameter, a 95% or 90% confidence interval. If the pay is outside that parameter, we call it outlier because outliers pull the average, seriously pull it up or down. And so we don't include it, whether it's from Dallas or even from Flower Mound or Highland Park. I forgot the castle right over here. So the data, when we get it, we also look at it to see whether it's an outlier and then we won't include it in the data because it's too high. That includes people that sometimes you'll see a high salary and it's because somebody's been there 31 years. We're not going to include the data. I have a couple of questions, Council Member Gregory. I'd be concerned with narrowing it too much because I think by doing that, we're then not acknowledging that in the metropolitan area, people are willing to drive from Denton to Dallas. There's 33, almost 34,000 people a day that do that. And that if we narrow that scope too much just because the city is larger, I mean, I'm not even sure that a person at a similar job classification, a backhoe operator in Denton makes that much less than a backhoe operator in Dallas or a firefighter in Denton. Of course, we can't do civil service, so that's not appropriate. But what we don't want to do is become putting ourselves in the situation like some cities have where because we're having our comparison pool too small, our market comparison too small, that we end up becoming a training ground and we then increase our turnover rate significantly. Because then all we're doing is training folks so that in order to get any kind of significant pay raise, they have to move to another city. And I don't think that we necessarily want to do that because we've had some other information that they provided in the backup about the cost to the city to take care of turnover. And I think that it becomes penny wise and pound foolish to save a little bit on our adjusting our pay grades and our pay scale by moving some of the cities out and then increasing our turnover rate to the point where we 're costing ourselves a whole lot more money than we should if we had just had our pay rate a little bit higher and kept our turnover rate lower. I didn't mean to be that dramatic. I feel strange getting this much into the weeds on this. I mean, these folks do this day in, day out. They analyze the market. They do it for several organizations probably on a weekly basis. And understand this particular market pretty well. So unless we have corresponding expertise to offer from our own personal experience or something, I'd be very hesitant to just throw out numbers and say just do double our size and half our size and restrict it to that. Because it sounds like you're saying on that list of five, if you go on that list on the previous slide, you have to hit five of those to even be put in the ball park. So they're including and excluding based on a number of criteria, not just one of those. And as he just mentioned, it's set up to detect outliers. So as you see something that's kind of way outside the mean and it's not, they're excluding that from their analysis. So these folks are statisticians, data experts on this issue. So again, unless we have a clear expert opinion as to why we'd change this criteria, we're just laymen talking about this kind of stuff in my opinion. >> Councilmember McGeer. >> Right, but what the parameters are determines the mean and then that determines outliers. So the whole idea of an outlier is determined by what these criteria are. Because if we're skewing on a higher end, the outliers will be higher. If we're skewing on a lower end, the outliers will be lower . So I actually think I have to respectfully disagree with Mayor Pro Tem. I do think it's important for us to narrow the scope of those three items. I would agree with Councilmember Wasney. And I don't see that that necessarily requires any expertise. >> Right, but I can show you what we have done in terms of outliers. But before that, I'd like to just tell you how many organizations have actually made it through the qualifying factors. We have received 139 altogether organizations and out of that we have 119 in state and 20 out of state organizations . With our qualifying factors, we qualified 107 organizations and 32 non-qualified. The non-qualified organizations are mainly the privately held and publicly traded corporations. They're just way too big for our purpose. And so we also narrowed down the organizations that have sustainability programs. These are the organizations that are almost similar to you. 43 of them altogether, municipalities and MOUs. >> Yes, Councilmember Wasney. >> Can we go back yet to this slide? Can I ask why we're including out of state in this comparison when it's my opinion that our real competition is North Texas? >> That's a very good question. We have had out of state organizations in the past. Actually, we took that out at the final analysis. They're not included. The reason why we have it there, because there are positions that are not immediately available within the state of Texas that we cannot find them. For example, your positions in the environmental protection services, environmental services. You have positions that are in the sciences. You have positions that are doing permitting. And it's not always readily available within the state of Texas. And so they told us that if you look probably outside, you will probably see them. And so we look initially. Initially, we look at them. Then eventually, we discarded them because there are just way too much of a difference in terms of cost of living. We cannot include their data. In the privately held and publicly traded companies, we have them because their organization's headquarters are outside of the state of Texas. But they do have operations here. And so what we did, instead of taking their salary databases that came from out of state, we looked at their organizations that are operating within the Metroplex. And that's who we collected data from. And if we have out of state in here, eventually they were not included simply because their data became outlier because of the cost of living differences. I've got a question. Because we had some discussion, if we could go back to the previous slide. We had some discussion on different ranges and different parameters. And you heard sort of the rationale for either narrowing it or leaving it the same, like what the outliers are determined by, these parameters, mediums determined. So based upon the observations and the discussions, sort of what are your thoughts on that? What are the consequences of if we do that? What would tend to be the impact of that? And if we didn't, then we'll be able to compare what those two alternatives. The number one consequence of narrowing the defined labor market is the availability of the jobs that we can compare you with. Some of the jobs, if we narrow it to a smaller number of municipalities or MOUs, some of the jobs that you have here may not be available there. So we will end up not benchmarking them, and we will end up just putting them, slotting them into jobs without having to see what the real value of these jobs are in the open market. That's the number one consequence. The second impact of that is, as Councilman Gregory mentioned, if you do not know what the value of this job is in the open market that you compete with, for example, you lose person, you lose employees to those organizations that are not necessarily within the scope of plus or minus two, but you lose employees to them constantly. You will not have the opportunity to know how much are they paying these people and why are they so attractive to them. Because it's not always just the salaries, it's also something else, programs, it's also incentives and things like that. And then, of course, again, you risk being just a training ground for them. So you get the licenses, you get the training, and then you go to a better pasture because you know that the salaries there are more attractive, the programs are more attractive. But going back to the outliers, when we looked at our data that we collected, we collected very conservatively. And when we weeded out the outliers, we are very conservative. We use interquartile range and we weeded out at least 25% on both sides. Because we want to make sure that our normal distribution is not riddled with outliers and not riddled with vari abilities that cannot be explained. And we have a slide here that talks about that, actually. >> If I could, Councilmember Gowdy, when you were talking about if we narrow it down, it changes the benchmarks, I think is what I heard you just say. So is the concern that when we extend the range, it somehow gives us an artificial median point for the jobs, or it sort of overinflates or creates a pay plan that might be more than what we would think if we were comparing it to a smaller range. What's the concern of the larger range? Is it, you'll have an inaccurate count? And I'll ask you as well, what's the concern there? >> Apples to apples. >> Well, if that's the case, then I wouldn't even say to compare it to a city that's double our size. I mean, if you're going to say apples to apples, to me it just seems almost, not arbitrary, but whether it's two or three, you're talking about a city of, Garland. Let's take Garland, for instance. Garland's about twice our size, and they have all the different utilities that we have as well. But how does that mean that their jobs, their salaries are going to be similar? So that's what I'm trying to understand. So for you, apples and apples is two times. And so without that, you think we're going to be skewed in the sense of too high? >> Yes. >> Too low? >> Yes. >> Too high. Okay, all right. Is that, I mean, well, I'm sorry, I didn't give you a chance to respond either. I think that's actually what they mentioned was that the larger the data pool, the more progressive the data will become because you have a larger pool that you're drawing from. That's what I understood. I mean- >> That is very true, yes. The larger the data points, the better it is in terms of survey. And the smaller the data pool, the harder it is to analyze. And the bias is certainly introduced if there's a very small amount of number in there. The larger the pool, the better the reliability. >> Exactly. >> Which means the numbers that you get from the market tend to coalesce around the mean. When you go out and collect data, people think that there's a market number flowing out there. There isn't. It's like a shotgun. They're all over the place. The technique is to narrow it down and get to that best number that gives you the best reliability of what the value of the job is. She'll show you a thing here, and it is a reliability measure, and it says how reliable are the data points that we got relative to the positions. And you'll see that it's really good for non-exempt jobs, and you would expect that because they're clearly defined. I guess a little reliability, while really good, is not as good for the higher paying jobs because individual characteristics like education, experience, reputation are taken into account when you hire people. And so the variability is higher. But we'll show you that. As Elena said, we've been very conservative. We are very cost conscious about when you go out and collect data that you don't get pooled in the wrong direction. >> Well, I guess my thought is, and correct me if I'm wrong in what I'm hearing from you all, is that how do we construct this study in a way that -- let me rephrase it. Okay, Council Member Garey, you said if there's a larger data pool, it's more progressive. Now, I think I knew what you meant by the term progressive. You're saying that instead of a grade one job being 80,000, if you increase -- that's just an example. If you increase the data pool, it might make the midpoint, let's say, 90,000. All right. Is that sort of what you're -- okay. So address that a little. Because what I don't want to do is -- I don't want to come at this from -- we've got to say we want to have a certain range of salaries here in the city of Denton. And we're going to create a report or parameters that will sort of help that. But their concern is if we have a larger pool, that somehow it will indicate that we may pay too much for a similar job . Is that -- that's sort of what I'm understanding. So help me understand or help us understand, first of all, is that correct? And is that one of the risks? And if so, why? And if so, why not? Because I just want to make sure we get accurate data that will help us make decisions for our employees. And I don't want it to be skewed, quite frankly, with a mindset of we want to pay too much or we're paying too much or we're paying too little. Whatever the methodology is, the best practice is. So is that -- so given that -- help me understand that or help us understand that. Thank you very much. It can happen if the person who's doing the analysis is not careful or do not know what he or she is doing. That can happen. But with the criteria that you put together with your knowledge in statistics and knowledge in data analysis, you have to weed out those outliers. The criteria can be the years of service of the individual that you're comparing with, the job content, and also the size of the organization as well as the organizational structure. If you do not include those data for the jobs that are ex uberantly different or too high for the job, you have to explain it for you to be able to include it. Explanation can be the reason this job is compared to this job with a very high salary is that maybe it's the years of service. But we are very careful in comparison. We do comparison one by one, job by job, to make sure that the comparison, even though -- no matter where the data come from, even though there's a data that you can compare them with, you want to make sure that there are criteria that you use. Years of service is one of them because the longer the person is in the job, you know that the salary increases, no matter where that data come from, no matter where that employee come from. I guess my concern is that if somehow we don't change the parameters, that may -- you guys may think that the report or the study lacks in validity. In other words, let's say we keep it the same and we get this data. Is that data that you can be confident in? Is that information that you can make policy decisions on and feel comfortable with making those decisions? For me, it's just a matter of weight. It's how much weight I'll put on it. It's not that it doesn't have validity. It clearly has validity and accepted methodology. It just -- there's a matter of not necessarily agreeing with some parameters so that decreases the weight then that you're putting on your decision making. Also, while I have the mic, can I just ask, was there -- you have to qualify for five of these parameters, but there 's a catch-all with the compelling business reasons, is that right, that can go circumvent the five parameters so you can actually bring in somebody that doesn't qualify under the five? Is that right? It has to be agreed by everybody in the HR department and the ACMs had to agree with it for the organization to be included. To me, that seems very wise and could potentially protect you from having a narrower scope. So that's why I'm less concerned about that scope issue because you do have this catch-all that can take into account factors that you can't necessarily quantify. Thank you. I want to ask a different question. And that's the validity of adding the private sector job comparison with government. If you work for a city and you're going to jump ship and you're going to find another job, you're going to look at your retirement. What retirement plan you currently have, how many years until you're vested, how many years on top of that investment is going to translate into what is the retirement package that you're going to have after you retire from, because across the state of Texas, you have different retirement sectors and plans. So that restricts you somewhat into where you're going to job hunt because you want to take whatever years you have in that retirement plan with you. You don't want to jump ship and go and lose whatever v esting time that you have with the city. To say that Denton is going to compete with that whole list of businesses that you had on the screen, we are never going to be able to compete because private industry is going to have a different pay scale. It also comes with a different set of risks that if people do leave the public sector and join the private sector, it comes with a lot of risk. It comes with just a whole laundry list of risks in terms of job security, vacation, sick time, protection in your job, that job titles are protected when they're government jobs, that they may not be so protected in the private sector. So for me, I'm going to place very little weight on the private sector. You are always going to lose a few people in a few sections of your city. Tech is one, for example, because tech is so valuable in so many different levels of society, and it is such hot potatoes that you're going to get pulled into the private sector and you're not going to care about the retirement plan you're leaving behind. But there are a lot of other sections that people work in the public sector that they are going to protect that retirement package, and they are going to look at benefits. They are going to look at the whole package that comes with working for the public sector. So I'm personally going to just put very little credence into the private sector and really look at who are we competing against government to government with those jobs. Councilmember Gregory. One thing that might be helpful to test your point of view or your hypothesis is to ask our HR department to do an analysis of the people that leave, not for retirement purposes, and to determine how many of them go to other municipalities or governmental jobs, how many of them move into the private sector, and of those that we hire, how many are we hiring from the private sector or from other municipalities. And especially when you're talking about jobs that are not unique, like police and fire, to municipality operations. Because while I certainly would see technology there, I would also see lawyers, because we've hired lawyers, a number of our lawyers that are currently on our staff came to us from the private sector. Engineers, just likewise, people in the financial department, whether they're bookkeepers or they're auditors or things like that. So I don't know if you have that handy or if you could pull that at some point. We collect why people leave the city, if they'll report that to us, like retirement or they're leaving for an equivalent job for better pay, but they don't always tell us what organizations they're going to go to. We could try to start collecting that moving forward, but again, not everybody's going to share that information with us. But I will tell you that the end processing sessions, we do those every two weeks. So those are all the new hires that come on board and we're getting them their benefits and getting them on payroll. I do ask, how many of you have come from the private sector versus public sector? So I go around the room to see who's had experience with the municipality. And I'll say, I mean, it's going to vary each group, but I 'd say at least half of them say that they come from the private sector. And don't even have any municipal experience. But again, I don't have any real hard data to be able to report back to council at this point in time. Well, it might be good to start collecting that for future analysis down the road. We can definitely try. Thank you. Thank you. I just wanted to move forward with the study participants that actually submitted their databases. We have 69 out of 107 that we qualified. We were only provided 69 databases. 69 organizations provided their databases. Four of them have agreed to participate, but have requested the extension. But by the time their data is available, it is too late. We've already done the analysis. Two of them agreed, but eventually did not submit the data. Nine of them simply declined to participate, and 21 organizations simply did not reply. And most of those are actually in the private sector. So altogether we have 64.5 participation out of 107 that we invited. So it is a pretty sizable good participation, actually. And out of that we have your market data reliability information. The data down here, the x-axis is your job classification represented by your job grades. The y-axis is the data points. This is a regression analysis, and this is actually an exponential regression, because the data actually exponentially increase very fast, so we have to use exponential regression analysis for this. As you can see, our r-squared, which is the coefficient of determination, is 0.92 for our general pay plan. And it is 0.83 for our DME pay plan. What this tells us is that the data that we have collected, as raw as they are, we do not have a lot of variability, even though we have so many of those organizations that come from various backgrounds, that the reliability of the data that we collected, we did not have a lot of outliers to begin with. And so it is a very conservative measure. It also tells you that if you did go out with a new sample, you are not going to get significantly different results. That is what reliability tells you. But does it also say, if I am understanding the numbers correctly, that the reliability of 0.92 is probably even a higher -- we have even more confidence in the reliability there than we do in the reliability factor of 0.83. 0.83, yes. Okay. But both of those -- what number would you see that would start causing you to have concerns about the reliability? Below seven. If the data is below 0.7, then that is a cause for panic, because that means you do not have data that are very reliable. You have a lot of outliers. So that means your labor market , your defined labor market is nonsense. So that gives us a higher level of confidence in the comparison group. Absolutely. And the reason why DME is a little lower, because let me tell you about the private organization benchmark. We have positions that we cannot just rely on the municipal data, because we compete with private sectors for them. The engineers, the positions not just in IT, positions in the DME, the SCADA specialist, even your heavy equipment operator. It does not matter. They do not just go to municipalities. They are being hired by private organizations, especially the ones that are constructing your roads right now. And when we look at job placement in a grade, we take into account other things as well. We do not give as much weight to people that have been here a long time because of the fact that they are vested. So they are not likely to leave. But they are likely to retire. And you do have a lot of employees that are close to retirement. The problem is hiring people. It is that minimum. What is the minimum pay you are offering? Is it competitive with the market? It is not the midpoint. It is the minimum. The midpoint changes every time you do the study. The minimum may not necessarily. If it is already, if you are not having difficulty attracting and hiring, you do not have to worry about the minimum. One real quick question. First of all, I was not very good at statistics. This is all over my head anyway. I am going to trust. We hired you guys. So if, by chance, if somehow we change some of those parameters that we were talking about, if there was going to be an impact on the data reliability, this is where we would see some of that. Is that right? That is absolutely correct. Would you anticipate there being much movement from that? I mean, I guess you are saying if it dropped five or six or seven points, then that could be significant in the sense of how reliable we believe the data is. We did not cover this, but we will August 1st. The methodology we use, first of all, we can compare each person, not just the job title. Each person. So we have market data for every single employee, not just the job title. Got you. And so we get variability there, and that tells us something. But we also have indicators where we have actually quant ified your jobs and what we call a job complexity level and also the point factor. A lot of times that will overrule the market to tell us whether that market number is too high or too low. And we see both of those. So we don't just take the market data and say this is the cinquanon and we use it. We also think about it. And we see things that don't make sense. Sure. Because not all cities are the same. And so there is a lot of thinking and a lot of work goes into that. Thank you. This process. Okay. Just the basic statistics for you, the count. The number of jobs within the scope of the study, we have 4 25 jobs in the city of Denton that we benchmarked. The number of city of Denton employees within the scope of the study is 994. Now this is excluding the seasonal, temporaries, the civil service employees. They're not in here as well. The Kraft pay plan, the Kraft employees are separate. We benchmarked them as well, but they're not included in 99 4. But we did their benchmarking as well. The number of job descriptions from Denton that we have read and we reviewed, 422. The number of benchmark job descriptions from the market that we have read and we reviewed one by one, 1700. The total data points after scrubbing, 117,300. The number of organizations submitted, 69. Total number of employee population in this study, 60,870. The average sample size for each non-exempt position is 45. 6 and the sample size for each exempt position is 26, average. That's the number of data points we had to compare to. Your organization with. Now I'm going to show you the summary on the next page, but before I do that, I'd like to explain a little bit more about it. The summarized market report that you're going to see next are all presented to you in averages. Now averages by definition, you cannot always make a decision out of the average because with the average, you have people that are below it and you have people that are above it. So to make a decision, you're going to want to see further information with regards to the salaries that you have now. So decisions should not be made on the basis of the average , but on the detailed analysis of market competitiveness by position. Averages indicate that there are values below and above. Survey information is only one contributor to the ultimate position classification that we recommend to you. Survey, market is just one. We also have job complexity, internal worth analysis. Survey information, the market information is dynamic and changes frequently based on a variety of influencers. For example, turnover, compensation philosophies, pay practices within organization. Compensation philosophies, when we compare you, we don't know what the other compensation philosophies are. That also can vary, that can contribute because some organizations, their philosophy is to pay below the market from the get-go, below the market, always following the market. And there are some also that their compensation philosophy is to pay at market. So that also gives variability into the data. On a granular level, differences in jobs may or may not be 100% reflected in job descriptions. Now we know that we only can go by job descriptions that we have. We can only interview so much people. So whatever is given to us is what we analyze. Differences in the way organizations are structured can also affect the value of the jobs in the open market. I talked a lot about this in my earlier pages. For example, your engineering department, your solid waste is not their own department. They are under one big giant department that is called Public Works. Here are the summaries that we gathered. Within the general non-exempt positions, when we index your salaries, overall average salaries for your non-exempt index to public, you are 1.14% below the averages of the public organizations in the labor market that we defined. When we index the jobs with the private organizations, we are 18.4% below the private organizations. Their salaries, 43,574 in the public on average and 52,562 in the private on average. Compare that to your non-exempt of 43,078. The non-exempt for your technical positions, when we index them to the public organizations in the defined labor market, they are at least slightly higher, 2.86% higher than the public and they are below with the private index at 7.91%. When it comes to DME, we noted that if we compare DME with the public organizations, now this includes municipally owned utilities as well as co -ops and as well as of course full service organizations, municipalities. We index their jobs with the public sector. It is 4.5, 4.05% below the market with the public and conversely 8.59% below the market with the private. Their salaries range on the public sector, 52,223 on average and 54,816 on average with the private organizations. Your salary for your non-exempt DME folks is 50,106 on average. Now moving on to the exempt employees, exempt categories. When we compared your exempt employees with the public organizations, their average salaries is slightly higher at 2.39%. When we compared with the private organizations, they are slightly lower, 11.36% than the private organizations. The technical exempt averages for your exempt positions, your IT positions, they also came out slightly higher than the public organizations in the labor market at 2.84%. Index that to the private organizations, we came up lower at 10.26%. DME exempt averages compared with other public organizations, we came up slightly higher at 0.91%. Index that to the private organizations, we came up lower at 7.04% accordingly. Now again, these are our averages comparison. We don't recommend for any of our clients that you give across the board increases until you've made sure you had internal equity and done things like that. This study, when we talk about being below or above the market, which are numbers we only provide because our clients ask, we wouldn't do it. Professionally, we don't abide by them. Because every job is different. Some are going to be higher and some are going to be lower. And it's the ones that are lower and the jobs that are at risk that we're interested in. Not in the ones that are easy to fill and not competitive. So this number just gives you kind of a general outlook. But in there, it's individual jobs that we look at. Secondly, this is the salary structure. This isn't the pay. The only people that would be impacted by a change in the salary structure are those people that are in grades and are paid now that are placed in grades where the minimum of the new grade is higher than the pay they're currently making. And so we call that minimum match. And we look at it, we calculate it and say, if you move to this new salary structure, the people that will be outside the grade that we think the job should be in and that the city has agreed that the job should be in, it would cost you this much to bring them to minimum. And so everybody else, it doesn't impact except for in terms of compression and internal equity. We would look at that and we will give you projections of how, if you wanted to address them, which are the most important to address and over what period of time in the next three years, say, could you have a plan in place to start to address those types of issue? We don't know what they are now and we won't know until the grade assignments are approved and then we can do the analysis to look at that. But just differentiate that this is about the salary structure, not about people's salaries unless you happen to be below the minimum. We got a question. But might there also be outliers within this organization who once you apply a new salary structure, their salaries might be above and that their pay might be affected in terms of, well, you're paying way above the market, so there's not going to be any particular, any significant raises for you for several years. I mean, that happens from time to time, doesn't it? No. The answer is no. Nobody is good. The ranges that we have now are so much bigger than they were before. They were so narrow that the people's salaries are going to be there and most of them will be moved. If they're high in the range now, they'll be above the mid point possibly, but they're not going to be outside of it. The second reason they're not is because a lot of jobs are being moved to grades that, not every job is being moved to the same grade. So a lot of jobs will go to an appropriate range. And some, if they are high paid, more than likely their job would go into a higher range where they would be appropriately placed. And that's why that doesn't happen. Okay. It's just now that with only four grades and you force fit people, and that's true at the example level and non-exem ple level, those people are in grades and that's why they're at the top because they're in the wrong grade. But to add up to that answer, yes, if in the final analysis , if the position or the incumbent is already paid higher than the market, then of course there will be no raises. I mean, you know, it's already there. Question. Council Member Waxley. And what do we look forward to on August 1st? You will have the pay plan structures that we have identified for you put together as well as any other question, technical questions that you may come up with today that you wanted us to produce for you on August 1st. We will do that. Any other questions? Yes, Council Member. The cost estimate as well. I'm sorry. I forgot. Cost estimates of all this. And also incentives. Did I understand your response to Council Member Gregory Cr ick that I think what you asked was if we have certain very highly compensated members of our staff, will they then be reduced in any way? And I think what I heard, your response was that the actual data set that we're using is so large that there won't be any outliers. Yeah, I probably said that wrong. Yeah. We haven't finalized the assignment of positions to ranges, but preliminarily from the data that we presented to the matters to look at and evaluate, we have not seen that there are people there that for the grades we've recommended, their salary is outside of the range that we 're recommending. That didn't happen. That's all. It could happen, but it didn't. Did you have a question? One other question for our next meeting. I think we all might be prepared to address, because there was something in the backup about the turnover cost that one third was for salary and recruitment. One third of the cost of a turnover is attributed to recruiting a new person, one tenth of the cost is for training, and one half the cost is for the learning curve, I'm guessing at first they're not going to be as productive as they might be later on. So I have two questions that come with that is, while we have some numbers about our turnover rate internally, I would like to know how they compare with, for example, the comparison group of other cities, and I would like to see if there's any information that we might have as far as what is considered healthy or an unhealthy turnover rate. I know there's going to be cost in turnover. Just unavoidable. But in some cases, I would imagine a certain turnover rate is actually somewhat healthy for an organization because you're getting an infusion of new ideas, and that means that some folks that are retiring out and other folks that maybe need to leave the organization are leaving the organization. But what is considered a healthy turnover rate and what is considered a turnover rate that might be cause for concern within an organization similar to ours? Do you want us to address that in August 1st or now? Not now. Okay, good. Thank you. And it might be that you could simply put it in the back up . Okay, we'll do. Yes, Councilmember Begheri. I don't know if this is within the scope of something that you can do, but what I would really like to see is the last time we did a compensation study was 10 years ago, I believe, was 10 years ago. I'd really like to see a comparison of, I mean, just a really 30,000 foot view of what was our population at that time, what was our compensation at that time, how has it grown or decreased from then until now 10 years later. I think that would help me just to have a very broad perspective about the overarching dynamics of the organization. That is a very good question. Actually, I've thought of that a lot and I thought of including that in the study, but I just did not have the time to really put together the data. But, yeah, definitely. Well, you actually do have it. Preliminarily, but we don't. Until we know what positions we need to come in. Oh, you need to come to the microphone. Yeah, yeah, please. Actually, she did include part of it and she looked at it so we know how much the new structure changed from the last structure. And I was talking to HR, I guess this morning, I asked them how many, what's the difference in your population size, employee population size. And I think it was around 260 or 274, you mentioned the number of employees that are new positions that they've had trouble fitting into the job grades that they have now over from 10 years ago. So we can have that data for you by August 1st. It would be, we would say it's included in the scope of work. Yes, because that's a question we asked ourselves. Sure. Just to follow up on that, I think all of our salaries come out of the general fund. Is that right? No, it does not. I was wondering if we could do a fund and compare the fund from 10 years ago to the fund now. But if we're drawing from different funds, I don't think we can. Rough numbers, about half of our employees are in the general fund and about half are in other funds, water, wastewater, DME, and so forth. So if you'd like some long term trend analysis of how employees have grown in all those different funds, we'd be happy to provide that. We could do that by year. Is that what you're asking for? I think it could be helpful when we're taking a top level view. Okay. Please. Councilmember Wasney. And also address Councilman Gregory's comment on turnover. It's very cyclical. When times are tough, people aren't moving. They're happy to have that job. When the recession hit Florida, cities and counties reduced their staff, their employees, by 20% or more because their tax base just went, you know, it disappeared. When times are good and governments are growing and adding and people are able to sell their homes and move, that's the other component to taking another job in another city. If the real estate market is dead, you can't sell your home , so you can't move. But if you can sell your house in a reasonable period of time, it frees you up to make that job hunt. So it's one of those variables that you can look at the data, but it can be skewed based on just economic situation . Okay. Any other questions for the meeting on August 1st? Requests? Yes. I want to thank you. That was just a real thorough report, and I know you've worked hard and just want to say thank you. I look forward to August 1st. Thank you. We appreciate it. Yes. Yeah, we hope that you've never seen as much information as been put together here about who we sample, how many people , how many per job. So Atlanta did a really thorough job. Thank you very much. Thank you. I'm just a finicky person. Fantastic. Thank you all. Well, we'll circle back around then to the last half of our presentation for work session item 1A. Right. Do I need to recall that? Okay. Receive report, hold discussion against staff direction regarding the Economic Development Investment Fund and Downtown Reinvestment Grant. We've already done the downtown. Right. And our Assistant Director of Economic Development, Carolyn Booth, will present the rest of this. Okay. Thank you, Mr. Martin, Mayor and Council Members. Good to see you again. So we're going to pick up on the second part of the presentation from earlier. We'll be talking about the Economic Development Investment Fund. The fund's purpose is to provide a cash grant program to increase Denton's ability to compete for large or targeted economic development projects. By way of background, in April 2014, the city expanded its incentive policy to include cash grants via Chapter 380 agreements. In August of 2015, the Economic Development Partnership Board recommended the creation of an economic development incentive fund. And then that same month, you all directed staff to create the Economic Development Investment Fund. I'm sorry, lost my train of thought there for a second. But the philosophy or the idea behind creating this fund was to allow the city of Denton to remain competitive against cities who have 4A or 4B type sales taxes. And therefore, a ready supply of cash to offer incentives to companies instead of solely tax-based incentives. When we were contemplating the way that we would structure this and the parameters that we would put around it, it was determined that in order to be eligible to receive a grant under this fund, the company must meet at least two of the following criteria, providing higher wage or knowledge-based jobs, making a substantial capital investment, or addressing a recruitment or supplier target. And I'll run through how we fleshed out those definitions. It's also included in your backup packet if you would like to look at that. At higher wage jobs, we defined as having an average annual wage of $55,000 or greater for all positions, or at least 25% of the positions having an annual wage of $ 65,000 or greater. We define knowledge-based jobs as occupations which require specialized and theoretical knowledge that's usually acquired through college education or work experience or training. Jobs that require some research, analysis, and report writing or presentations, or jobs that require special licensing, certification, or registration to perform the job task. In terms of what a substantial capital investment means under this economic development investment fund, that would be a minimum of $15 million. And then recruitment or supplier targets include aviation, advanced manufacturing, renewable energy, research and development, information technology, supply chain for existing industries, and large municipal utility customers. And these grants would be made via Chapter 380 agreements and run through the normal process of council approval of incentives. The council directed that $150,000 per year in mixed beverage tax revenue be used for the fund. And the fund's going to be created under governmental accounting standards board statement number 54, which allows for the unspent funds to be rolled over to future years. Adherence to GASB 54 is required in order to create the ability for the funds to roll over from one fiscal year to the next. And I noticed that Chuck Springer has stepped into the room . If you all have any specific questions about GASB 54, I will turn it over to him. And the staff recommendation is adoption of an ordinance establishing the economic development investment fund. And if you direct us to go forward with that today, we will finalize the draft of the ordinance that was included in your backup packet and bring it forward to you very soon. I thought we were also talking about using Are we are we talking about money for the downtown reinvest ment fund or for the economic development? This is the economic development investment fund, totally separate fund. And so that's where the money and we're identifying money from the same source mixed beverage taxes, but it would be two separate funds. Okay. And were we not also going to there had been discussion at one time of as of capturing some monies as some of the three 80 agreements roll off that we have not been accustomed to using in our general fund attack property tax or sales tax reimbursement that we were talking about rolling those into that fund also. That was up for discussion at a point in the past. But as we work through it and talk through things with finance, it was mutually decided that it would be best to designate a set amount of money every year from a certain from that revenue source. Instead of having a variable amount of money that might come in one year with when a three 80 or an abatement ended , but not come in for another five years so that we would know when we were going to negotiate with companies, how much money would be in the fund would be running into the fund each year if that makes sense. So it's a little bit more stability and predictability. It does make sense in terms of when it starts, but I think that, for example, you know, when the Sally beauty fund is going to expire, and you know that that fund that money's those monies may be available in four years. So that's pretty predictable. And you know how much that would be wouldn't you. Yeah, we would. Yes, we would know. Very close. It would seem to me that that would probably allow the fun to grow faster, but it looks like Chuck is just by are you are you wanting to come and answer. It might have to do with gas be 54. I bet it does. It does the only way when we look at the economic development incentive grants that come from the general fund, and you're correct, we have some grants and they'll end, and then we have others that are starting so we budget that in the general fund. But in order to segregate funds out of the general fund to another fun, you have to identify a specific revenue source . And then the way we've set these budgets up is on this one that council budgets each year, how much they want to come from that specific revenue source into the economic development fund, you just can't say we want to take some general fund revenues and put them over here. You have to identify a specific revenue source that those come from, and a specific amount during the year. So what we did with that hundred and 50,000 is that was roughly what was going to be rolling off in the next couple of years. Okay, so we kind of somewhat correlated those but it can't be a one to one correlation. And we are restricted by the amount of revenue that we get in mixed average tax in the general fund. So we couldn't designate an amount to go over to this fun, greater than what we received in the mixed average. And this is to comply with all of our. So, so that that when we have our annual audit, and they're comparing our practices with generally accepted. Generally accepted accounting principles. Yes, that that we 're in compliance. Correct, correct. Thank you very much. I mean the realistic would be. If we did it another way or auditors would say no you need to readjust that entry and pull that money back into the general fund. I'm, I understand. Thank you very much. This is for Carolyn. A process question. Thanks, Jack. Process question on the actual three eighty agreements who writes them and are they approved by legal or reviewed by legal before they actually come to council as a as a final product. We work with the legal department to draft the agreements and to review them before they're finalized and we're actually in the process with them right now of creating new agreement templates. That the staff attorneys are drafting so that we have the most current agreements with the best drafting that we have ready to go when we're ready to negotiate. So that all we have to drop in or the specifics of the agreement, but the bulk of the bulk of it is going to be already there and we're doing one for three eighty. We're doing one for a tax abatement and a couple of other types of agreements that we might enter into with companies and how they've been handled in the past. In the past, we've typically taken agreements that the council has already approved and sort of recycled the text. So this is just a way to make sure that that we're starting from a good clean agreement each time. That was the idea behind having the templates. Good. Thank you. What would be example? So assume someone and if you look at the two, the three criteria that two of which and hypothetically say one is a capital investment. So in that sense it might qualify for other sorts of economic incentives that we already have in place in which we have some latitude of what percentages we're looking at and what the terms of that is and what not. What would be an example of a prospect that would benefit from an infusion of cash as opposed to the equivalent of that amount in some other sort of agreement that's just giving them a tax abatement or something along those lines. I think in a situation like this, it would definitely in my mind be most appropriate for a relocation prospect because those upfront costs are so high when companies are reloc ating. That's that's often a barrier that we face when we're competing with cities that have for a for be cash funds because they can say, oh, your relocation expenses are going to be substantial. So let us help you offset that by giving you this cash upfront the way that we have to structure things right now. We can't provide any kind of incentive until a company has been issued their CEO after they've moved here and you know , been open. It actually kicks in the year after the issuance of the CEO . So there's just a substantial amount of time that passes. Does that. Yeah, it's just, you know, philosophically, it changes the dynamic for us. I'm just saying for good or for bad. I mean, there is a benefit to be able saying now when people say that's not a good use of our tax dollars to incentivize a company. Well, in fact, the way it typically works is those tax dollars aren't here present in our community yet until that particular business comes on board and we're just allowing them to retain a certain amount. Rhetorically, that's a it's nice at times to be able to say , especially when it's perhaps a more controversial type of a pick or something. It's a very different game now that we would be actually just infusing tax dollars into a company. I'm just I'm speaking out loud and the reason why is to address something else. And that it kind of piggybacks off some of my concerns with the previous discussion. And that is, is it worth us tightening our targets of eligibility because of that purpose? Because of that difference of use of tax dollars to really make sure that we're going after something that is in line with these clear criteria. Whereas the other way we use these sorts of tools of economic development is much broader and we kind of wait until something comes our way and we're able to look at it case by case because the tax dollars involved aren't yet present. So it's kind of there's an unlimited supply of what we can do. A couple of thoughts. And Amy, please correct me if I'm not remembering something , but I don't believe that we have had a project that has actually located in Denton yet that would have qualified under these criteria here to receive this kind of a grant. So it's a very, based on what we have seen, this wouldn't have been available to those companies. Some of the things that we're looking at tightening up going forward as we look to change the RFP process, bring that back in house, do a thorough job of vetting the request for proposals that we get. We're developing a scoring system for them that's going to incorporate our target industries and try to drill down a little further into that. I think we're thinking along the same lines that we need to be more targeted and we're definitely taking steps to get to that point. Councilmember Wasney. And I think something that will help you do that is software that I know is on the budget that I think is important to pay for and get up and rolling. Because it will allow this process to be less subjective and much more analytical because you're going to pour the information in and it's going to come out the other side and it's actually going to score with so many of these factors and as we grow and as we get more and more knocks on the door with requests, it's going to help staff really cut to the chase and swim through the weeds to pour that information in and take a look at it in a timely manner. And again, make it less subjective and more analytical and that's going to just help us get there faster and get there better. Yes, I agree. Thank you. Your next slide is going to even more detail as to what we define as a higher wage job. It's not on the slide. It's in your it's in your backup, but I can I can remind you it was an average annual wage of $55,000 for all positions or at least 25% of the positions with an average annual wage of 65,000. Well, I appreciate what both Mr. Rodin and Ms. Wasney said because to this point, I have had a level of comfort as I have voted when I voted in favor of a 380 agreement because it's all performance based. They're putting the money in upfront. We're only putting the money back to them. Once the performance has been done, the investment has been made. They proved to us that they have spent what they said they would spend or that they've hired what they said that they would hire. And this will be a very different animal for us of simply writing a check up front. Did you want to? Yeah. Can I say something first real quick? As we're working on these agreement templates with legal recapture is is it going to be a part of it is a part of our agreements, but we're strengthening the recapture provisions in the contracts, the clawbacks, you know, if we hold them to a performance standard and they don't meet it, then we can try to recapture the investment that we've made in that company. So we have the same concerns that you do about performance and do realize that this is a little bit of a different tool than we've had before. And we want to be mindful of protecting ourselves. I do think just because we're talking about a cash grant, that doesn't necessarily mean that we would write a check before they ever came here or before they ever demonstrated performance. What it means is that whatever it is that we're incentiv izing or reimbursing or attempting to accomplish with that company, we can front load it or do it more quickly. But what you may recall is when we were negotiating with Metzler Schaum, they were the ones that were the German foam company that was the recipient of the Texas Enterprise Fund money. You actually approved a cash grant provision for them at that time at the local level. And the way that we structured it, it was a cash grant over three years and it was a per employee amount given each year that they retain or grow a certain number of employees . And so we would build into every contract performance measures and as Caroline also mentioned, clawbacks if performance measures were not met. So we're not we will not get to a place where we're writing a check to a company that then never comes here or doesn't perform under the expectation of the reason that we that we incentivize them to begin with. You've just reduced my anxiety level significantly. Thank you. One more question and in that as it relates to there's been a lot of discussion of tech industry investment and what can we do because under typical economic development incentives, it's primarily based on property tax, your investment in capital that has a play out in property taxes or if it's some substantial retail center, their sales tax implications. So hypothetically, and I think I'm just making sure I understand the answer. Say Google decides they're going to create a new division. They've got a hundred jobs. They want to place it in Denton because we just have the best and the brightest coming out of our two universities. But because it's only what I say hundred jobs, but they guarantee them all hundred and 25,000 or more in terms of their salaries. But because of the size of the company, Lee says it's coming in doesn't require them building anything. They're able to find a place that they're able to come in and they're going to make an investment, maybe three million dollars to kind of get that office space up to what they need. Would that qualify given that there is no new cap, new project that's creating new property taxes? It would because information technology is one of the target sectors that we name. So it would meet those two criteria and be eligible under this program. Thanks. As far as like let's take that example. Will we I guess the process is to develop or are we going to develop certain templates, formulas like for instance, let's say the Google example. No capital investment to target company providing a hundred paying jobs. So there'll be some type of criteria or with that criteria is some kind of formula that says, OK, let's take that for example. Well, if you're providing X amount of jobs over an X amount , this is what your range is of an incentive. Are we going to get down into that kind of detail on the criteria of the actual grant or the from the fund? How do we come up with the actual dollar amount? So one of the software programs that we did request in our supplemental budget package is the impact data source prospect or project analysis software. And so what what that would allow us to do is do some gaug ing of payback periods based on certain amounts of incentives and things like that. So in that example, that would be something that I would want to put all of the parameters into that program and kind of get some get some visual information about payback periods and things like that. It would help us make a decision about that. And that may be still we're still probably developing that kind of. Did you want to say something? I at this point in time, what we're hoping to accomplish is to set a policy in place that is a starting point for us. And certainly each one of these would come to you all on a case by case basis, just like every incentive does right now. But to to to talk about the future and to talk about let's take Kevin's Google example. In a case like that, the formula that we would use is we would be looking at disposable income and the sales tax and property tax revenue that would be injected into our economy based on those jobs being in Denton. And there are I'm certain that impact data source utilizes a formula for that. And the state of Texas uses a formula for that to determine based on the wage, what disposable income we can expect to be spent, what percentage we can expect to be spent in Dent on and then use it utilize that as the basis for an amount per job, which in a case like Google would probably be the approach we would take would be an amount per job. Okay. All right. All right. Any other slides? Well, I guess what I would like to get from you guys before or as I finish is is direction on would you like us to go ahead and bring the draft ordinance or the ordinance forward for you guys to consider at this point on the edge. On the economic development investment fund. Yes. I mean, I would say yes. I mean, okay, if we want changes to it then yes. I don't like the economic development investment fund. It's a philosophical matter. I won't be voting for it. Okay, great. Yes. So, yeah. All right. Thank you. Thank you. We're still under the agenda item that allows me to ask a question about the first one. What timing are we thinking about we asked to come back with some more information and more discussion once we have a fuller council what what sort of timeframe or are you do you anticipate that's going to take before it comes back to council. Is that just a matter of how quickly we can find a spot on the agenda or do you guys need another three months to think think about the questions we asked her. I Kevin I really haven't thought about that. You know I'd hate to let it go for three whole months I mean it seems like we've come back to you guys and we got some suggestions about getting more specific and getting a better handle on the vision for changes. So I think a month, six weeks would be reasonable for us to get that together if that's not too long. Well the only reason I ask and this is pleasure of the council completely. As to what what you would suggest but given that there are folks who have been applying for this. They've got prospects in the downtown area they're waiting on I know some of them are waiting, we were supposed to meet about a month ago on this topic, and we pushed it back . Now we're pushing it back in could be another month, six weeks. I mean is there any is there any desire and council to say, give them some leeway to this these funds have been encumbered they've been tied up, it's essentially a mor atorium to be able to folks who've kind of been. At this, it's all abruptly stopped due to council direction last year. They've been making investments and wanting to do is there any interest in allowing some applications to gone through and understanding that we have complete control over whether or not we approve those at the end of the day, because they would end up on a consent agenda I think as part of their final approval, just to give some certainty to folks out there just kind of waiting and trying to figure out what they're supposed to be doing. You're looking at me. In general, because it's not that this discussion has been a year in the waiting. And now, since we were supposed to have it's been a month since then and it looks like we're going to be probably at least another month before we have it again I'm just trying to give some relief to folks who have applications in, you know, I mean if it's, it has been a year, which means it's been pretty steadily in place. And yes we were supposed to have a discussion a month ago. Because of the nature of the grant and the size of it compared to the overall project I don't think it's going to slow anything down or people aren't going to apply, aren't going to move forward on their project. I just soon wait till we get some finality on it because if we do open it up to other areas. I don't want all of a sudden, because if we have to wait to develop goals to identify an area to get a mission statement. Well by that time, I mean, you know, either years worth of grants or however we do this could all be gone within a matter of time. So I just assume wait, but I'm not just so sold on that, but I think it's been long enough to where people realize this really isn't available right now. They're still going to apply because it's money that they could get if it's approved. So those are my thoughts on it, but it's not a whole lot of heartburn. I would just assume move ahead for those that have been waiting. The money's been there, it's been encumbered. And I know that there are a couple that are on deck. Yes, there are four that have come in. Two are pretty certain that they'll meet the criteria. The other two were not quite as far along in their documentation process, but two of them are ready to go. I mean, it's money that's been budgeted, the criteria's in place. We have all of this and it's for the targeted area. I would just assume go ahead so that those that are looking for those, they could get an answer one way or the other. The total amount that we're looking at right now is approximately 200,000, is that correct? For the applications that are outstanding at this point. Just the total fund, the downtown reinvestment grant program? The fund balance is slightly over $200,000. It's right there. And if we're approximately with a max of 25,000, then we're looking at eight businesses total. So if we have four applications in and two may fly, that's already a big chunk of the program. If we're going to expand it out across the city, I think it 's fair to the small business owners in downtown to make a decision in 30 days of what direction we go. I think we should encourage Councilwoman Briggs and Council man Hawkins to watch the film of the presentation and the discussion that we had, so that in a month they're up to speed and can vote. But I think if it's been a year, 30 days behooves us because we're really just looking at a total of eight businesses. And we'll be through the grant program. It'll be done, it 'll be gone. So if you take eight businesses across the entire city, to be fair to the rest of the city, I'd say wait 30 days and then let's make a firm commitment in 30 days. I do have a question. Are we limited to the number, to the amount of grants per year? Like in other words, if it's 25,000, you know, we're funding at it, what, 100,000 a year? Yes. But if you have a fund balance and you can fund more than 100,000 within a particular year? Yes, that's my understanding. Is that right, Julie? Okay. I'd just like to point out that 25,000 is the top amount they can get. Very few projects qualify for 25,000. Our average grant is 7 to 10,000 because most of them are smaller projects. 25,000 was given to West Oak Coffee Bar. That was a large project. 25,000 to the Texas building when they completely rehabbed the building. But most of them, I mean, it's not like there's only four grants because that amount is not set every time. It's based on how the points and the criteria work when the task force scores it. So, again, can you fund more than 100,000 in a given year on the grants if you have the fund balance to do that? I'm sorry. Yes, the answer is yes. I was just trying to mention though that we would only have an appropriation, I believe it's for 100,000 in the fund. And so if there's more in the fund balance, we'd have to come back with a budget amendment to do that extra amount. But the dollars are there. But the authorization to spend it would have to come from the council. Okay, gotcha. Yeah, just bring it back. It's formality to bring it back to amend the budget. Yes, sir. Well, that doesn't give me much of a concern. I mean, we got, I mean, what are y'all's thoughts? I mean, I think you 're for it being -- Well, there's perhaps a way to make folks feel comfortable if you're worried about them draining it is to give a certain amount leeway to say let current applications go through, but we're only going to allow that up to $20,000 total for all those projects or something to let them decide if there 's something needy in the pipes that they know more than we do about what's kind of coming through there and whether or not it's required to give them some leeway of folks that they're working with. Okay, describe, say that again. So the idea would be to say we've got $200,000 in there. As a council, we're comfortable with giving you direction to up to $20,000 total, total, not per applicant, total for any existing applications that are on in hand right now for them to go through the normal processes of decision making and forward any that they feel like are worthy of being forwarded to council. They might have none. They might have a couple. They might reach $10,000, but they could never go over $20,000 until we give any other direction in subsequent work session. I mean, I'm okay with that because I don't think anybody will really apply for. I think if you if that's a total amount, you're only talking five or 10 possible for each one. So I think probably most but that I'm okay with that because you're only talking 30 days or can I get some clarification on that? We explained at the beginning of the presentation this afternoon that we have one for armadillo ale works that came in before the moratorium that you've agreed to go ahead and process. They don't fall under this criteria. Yeah, they don't fall under this. Yeah, this is for the ones that have come in since the it's kind of like the guests one more time. Is that okay with council? All right. Fantastic. Good work around. Thank you. All right. Okay. Concluding items. Anyone have concluding items? Yes. Councilmember Gary. I'm just like to reiterate. I think it was on Tuesday that I brought this up that I would really like for us to reeval uate the ordinance that determines what seats are held by or nominated by City Council on the EDP board. The reason being that we could have two non City Council members as City Council representatives. The second would be that before we get to the final budget talks, I'd like to have a chance to specifically evaluate. The Chamber of Commerce's contract with the economic development department because I think it's pertinent to our budget discussions. Have a work session on determining if that budgeted amount is something we want to continue or something we want to modify things such as that discussion. Yes. Okay. All right . Anything else? I've got one and I know we talked about this a while back when we talked about new council members and then the appointments to the different boards and commissions that may have been made under their predecessor . Is that the correct word? And we talked about how do we feel about that and I was talking with legal about I thought we had some kind of thought of that. Is there a way that right now you can only change out people in midterm for cause and there seemed to have been some discussion that if new council members come on, do they have an opportunity to nominate people for boards positions for current board members who may be in midterm. So I'd like to revisit that and it may be at the same time we talk about the economic development partnership board discussion on the board members. Yes. Based on that conversation that we had on Monday, we definitely need to have a discussion on an auditor. So that we establish auditor. Yes or no, because it's going to impact our budget discussions. Okay. Any any others. Fantastic. Well, seeing none as we will then adjourn our meeting at 340 or 350 excuse me.