WEBVTT

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 Okay, good afternoon. This is the special bond program financial presentation

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 convening at 3 o 6 p.m. for our television viewers and we'll turn over

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 to David Gaines. All right well good afternoon everyone thanks for being

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 here as we go over the the financial forecasts that we have right now for the

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 bond program that we're that is up for consideration for 2019. So during this

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 presentation we're gonna touch on an overview of our of our debt structure

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 talk talk about what our current debt service outstanding debt services and

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 look at a little bit of our issuance history over the past few years for

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 both CEOs and for our bond programs touch on our bond ratings and then

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 really get into the details of what our financial assumptions are right now and

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 to talk through some of the scenarios that the committee has asked for and

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 some other scenarios to help kind of see how things could play out with different

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 assumptions moving forward with the bond program. So here's our current tax

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 breakdown for our property tax. Our property tax is broken up into

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 maintenance operations and debt service rate and so you can see our forty point

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 five cents for maintenance operations and then twenty one point five cents is

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 our our property tax rate for debt service which goes specifically to make

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 our general government debt service payments and you can see there our tax

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 rate has declined six cents over the past three years by a combination of

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 SS value growth throughout the city and having a emphasis at a management level

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 to stay near the effective tax rate to those past three years. So just want to

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 talk a little bit at a high level about what the considerations we have when we

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 look at debt for the city. Our outstanding debt that we have right now

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 is comprised of three components general obligation bonds which are a lot of what

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 we're discussing today for the bond programs for our 2014-2012 bond programs

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 those are five bond programs that have outstanding debt associated with them and

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 debt service payments to them. Next is our certificates of obligation which

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 I'll touch a little bit more on later about the amounts of certificates of

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 obligation that we've issued but and what those are here in just a couple

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 slides but they make up a big portion of what we have outstanding. With those COs

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 what you'll see if you look at our total amount of debt a lot of that debt is

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 self-supporting debt so within our COs you're gonna see a lot of our utilities

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 that have debt that are not better technically backed by property tax but

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 they're not paid for by property tax they're paid for through revenues from

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 the utilities or wherever the other self-supporting funds are. We do have

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 limited revenue bonds outstanding a lot of those are associated with that with

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 the DEC with the Denton Energy Center but and I'll touch on this later too but a

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 practice we have now is for those utilities we don't use revenue bonds

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 where we say the revenue is gonna be the sole source to pay this debt service we

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 issue those with certificates of obligation and thus getting a lower

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 interest rate which we then divert to our street maintenance fund. So our

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 debt service fund is ultimately what pays our debt our debt service payments

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 so we have property tax and other revenue sources come into the debt

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 service fund and then that that fund makes our usually about twice a year

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 payments on the debt service that we have outstanding. Maturity schedule what

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 we're for this for this program for the bonds we're looking at we're looking at

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 20 year 20 year bonds for each of the issuances we have for the 2019 program

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 all of those bonds have nine-year callable options and as a principal you

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 try to keep the debt to correspond with useful life that's not that's not a rule

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 and it's and a lot of times when you look at will issue 20-year debt for a

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 street that is gonna last longer than 20 years but it's more prudent for us to

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 issue that 20-year debt for those pieces for those projects. I will say on this as

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 you know as we mentioned the nine-year call option one of the changes in the

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 tax reform bill a couple years ago it does not allow us to do any more

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 advanced refundings as a municipality which is a tool that we had in the past

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 where we could refund essentially refund our bonds early and you go for interest

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 rate savings that is no longer an option for us. So when you say nine-year call

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 option what do you mean by that specifically? Is that where you can resell?

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 We can refund yeah we could refund or we could we could pay it off early

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 okay at that point but before that point you can't do anything. So you can't

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 accelerate payments prior to nine years? Correct. Can you accelerate them after the nine years?

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 You could issue I mean if you refund them and on a different schedule you

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 could but that would be there. So it's basically a one-time refinance option

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 at nine years after it's issued? Not one time you could do it after that.

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 But it doesn't have to be a full refinance at nine years it could be just

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 accelerate payments right well starting in year 10 yeah you can accelerate the

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 payments to pay it off in 15 years for instance. Right it would be years 10 through 20 in this

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 case that you either refinance or pay off. Yes sir. And you can choose whatever amount you'd like to do.

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 And our debt service payments are real they're they're essentially level

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 payments it's not gonna be the exact dollar amount because of the way we have

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 to issue the debt but it's essentially level payments just like a mortgage

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 payment where you're paying a lot of interest up front and then principal

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 later and I have a chart that will show our current debt service and you can see

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 how that how that works. So the the state limitation that recently passed that's

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 a limitation on the zero through nine year period? That's a it's a I have a

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 later on I can start getting the weeds on that but really that focuses on the M&O

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 side. Okay. And then the debt service is just kind of added on top but I'll get into that.

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 Okay. In detail with you. So we did we just touched on these but again general

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 obligations these are these are the voter approved a for voter approved

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 bonds which we're talking through today have a uniform election date you do get

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 lower interest rates with certificate then certificates obligation or revenue

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 bonds but you and you go through this the process of an election where a

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 certificates of obligation you don't go through a process of an election but we

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 do have to do a notice of intent to sell certificates of obligation currently as

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 of today the notice of intent window is 30 days you have to tell her you have to

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 put that notice out for 30 days in advance that we're gonna sell sell this

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 amount of CO's with the legislation that was just passed by the state that is

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 extending to 45 days and some different requirements on how you post those so

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 that starts in September we currently just we just issued a notice of intent

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 for some CEOs this year that were under the old regulation so starting next year

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 we'll have some new stipulations with those and those are that also that

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 legislation also applies to our bond bond language which I'll get to in the

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 next slide as well. Can you explain what the rationale is for the change in the

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 law? I would I would defer but I would say mostly it's just transparency they're

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 trying to get more time more window more people to see those certificates of

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 obligation because there's no election associated with them. That's right just trying to

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 give voters more time to basically petition if they want to.

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 So here's some of that some of the additional pieces of that legislation

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 that was really going to impact how we would go forward with a potential 2019

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 program the legislation updates some of the language that we have to post within

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 the each proposition including showing the principal and interest we have on

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 all of our outstanding debt obligations you know since we have our own utilities

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 since we have our own electric our number looks can look inflated to other

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 cities just by the simple fact that we we have our own electric we have our own

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 solid waste we have water and wastewater so that number can look larger than

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 other cities of comparable size you have to you have to include in the language

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 your estimated interest rate that you're using in the program what you've

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 anticipated for your for your principal and interest payments the debt tax rate

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 associated with the Brown program so as we go through this a lot of a lot of

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 discussion rightfully so has been talked about can we keep it out keep our rate

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 of the total tax rate or keep it at the effective tax rate but for the actual

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 language itself we have to show what we anticipate to happen to the debt service

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 tax rate so even if our total tax rates stay in the same and we're just

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 decreasing the M&O increasing the debt service the language has to reflect that

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 debt service increase that ballot language or ballot language right the

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 ballot language is pretty it's pretty it's gonna be pretty long now there's a

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 table and there's a lot of information included yeah so does that become a

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 concern in terms of helping people understand what is going on here what was

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 being proposed I I think I think it's just something we need to be aware of

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 and make sure that we understand understand that we obviously hit

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 everything that we need to hit understand the implications of it and

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 then another piece of that along with the debt tax rate they did have a

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 stipulation there to show what that impact would be on just they picked a

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 hundred thousand dollar appraised resident home stay which obviously is

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 lower than our average but just as a reference I assume for so they can have

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 a comparison to all other municipalities or anyone else issuing those bonds the

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 impact of the debt tax rate on 100,000 is that is that impact based on what we

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 are assuming in terms of property value growth in a way it is because it's

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 trying to you're trying to guess what your max so we'll end up saying what our

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 max debt service rate will increase so whether it's five or six cents and I

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 assume I don't know if they have detail on how we calculate this yet but I assume

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 you take that number in and apply it to a hundred thousand dollars right basically

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 be like what's the impact of you know the five cents all right what's the

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 impact of five cents basically the five cent increase so basically you would be

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 showing your tax rate today plus the five cents and what's the word I'm sorry

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 where the five cents come from later on we get to our base case right now it's

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 between five and six cents that we're anticipating the debt service rate to go

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 up so we're just kind of jumping ahead in reference to what we'll probably if

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 we go with what our 210 number is and our base assumptions it would it's going

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 to end up between five and six cents that the debt service tax rate would

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 increase so here's a history just to kind of to put these in terms for

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 everyone so you can see what we what we've issued over the past since 2012

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 2013 with the the first issuance of the 2012 bond program as we've talked

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 previously we've already we've issued the entirety of the 2012 program and

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 then next year we'll issue the in 2020 we'll issue the final amount of fourteen

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 point six six million of the 2014 program and you can see how we've issued

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 those year after year to get to it to get to our totals you can also see our

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 CEO funded projects here just added at a subtotal range there's a lot of detail

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 within those on what we've issued each year to equal our total that's just for

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 just for reference for everyone so we've issued for 41 million and 17 and 18 for

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 CEO funded projects why the what was the spike there in CEO funding that was when

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 we were I can pull up the detail I want to say is it was when we added the

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 additional money to streets to some of our bond program projects but I can pull

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 that up very quickly so it looks like it's it coincides with the issuance of

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 all the 2012 that because it dropped off it dropped off the year before I'll put

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 I think this could have something to do with when when the reality of price

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 increases started hitting that year and there was a lot of there was a lot of

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 you know trying to find how to fund projects right because I mean we had we

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 had projects that doubled in cost that was basically the funding the gap

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 between it was kind of a catch-up here right for cost increase it just struck

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 me that it was a significant increase compared to the also you can see these

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 are all the projects that we issued in 17 18 so you know obviously it adds up a

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 lot of that was that street reconstruction about ten million

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 dollars to the street reconstruction in association with the previous bonds

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 airport roads mayhill bridge was included in that the five million

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 dollars that was not a bond package right this is just see these are all CEO's

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 yeah but some of those were to make up the shortfall in the bond correct I

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 think and a lot of that's going to be in the street reconstruction down and the

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 fire station yeah okay so that detail on what that was all right thank you sure

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 the fire station number eight is that the one that so that was for the design

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 but we're gonna reimburse that aren't we with this we're not we're not gonna

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 reimburse me that that 500 the money that we've already issued that we won't

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 come back and reimbursement we just already spent that that amount for it is

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 the design but what that allows us is that first year when we issued the money

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 in 2020 we're able to get started on the fire station right away since we've

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 already paid for that so here's just a reference and you can see how the

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 principal interest falls off as we go forward and then our principal this is

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 our total debt service outstanding at the beginning of this fiscal year so

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 before we've issued the debt that we're issuing right now in FY 18 19 where we

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 said about 25 million dollars and you can see how you know over the next 40

00:15:07.960 --> 00:15:12.720
 years that at that entire amount will or over the next 20 years that entire

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 amount will will go away but you can see kind of how that slopes down and

00:15:16.880 --> 00:15:21.600
 obviously as we look forward to a 2019 program it would just kind of increase

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 it where it stays steady and actually increases over that 25 million dollar

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 debt service number this is all general government so it's general geo and CEO

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 that are paid for with property tax program so one I want to touch just very

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 briefly on our bond ratings we have just had bond ratings from all three of the

00:15:45.120 --> 00:15:51.080
 rating entities over the past few months the first two associated with our bond

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 influences our CEO NGO issuances this year and you can see there we've been

00:15:56.560 --> 00:16:00.440
 rated by all three of the entities at that that's here right below that prime

00:16:00.440 --> 00:16:05.000
 grade for each they all have different lettering and numbering combinations but

00:16:05.000 --> 00:16:10.160
 that's where we sit the Moody's rating was an increase for us we increased from

00:16:10.160 --> 00:16:15.680
 the double a two to a double a one so that we're now with Moody's equaled

00:16:15.680 --> 00:16:19.720
 where we are with Fitch and S&P on that same level and ultimately what that does

00:16:19.720 --> 00:16:24.480
 it helps our interest rates by having our having higher bond ratings it helps

00:16:24.480 --> 00:16:27.120
 our interest rates well we can project for and what we actually pay in our

00:16:27.120 --> 00:16:30.320
 interest rates as we issued debt here are some of the pieces that they pointed

00:16:30.320 --> 00:16:34.960
 to for increase our tax base having a healthy and stable financial profile and

00:16:34.960 --> 00:16:39.000
 some of those other strength strengths like having the steady universities our

00:16:39.000 --> 00:16:47.160
 population growth so we'll start getting into the forecasting and want to first

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 touch on our assessed value it before we get to what our projections are look in

00:16:51.800 --> 00:16:55.600
 the past and see how our ourselves value has grown you know as we all know our

00:16:55.600 --> 00:17:00.000
 assessed values growing significantly over the past few years you can see here

00:17:00.000 --> 00:17:05.280
 since 2014 the large amount of increases that we've had in 2014 about 11 and a

00:17:05.280 --> 00:17:09.840
 half percent and each year going forward all above that eight percent growth in

00:17:09.840 --> 00:17:17.080
 assessed value but prior to that in 2010 to 2013 you know we weren't seeing that

00:17:17.080 --> 00:17:21.560
 that massive amount of growth where it was it was it was lower even in 2010

00:17:21.560 --> 00:17:27.480
 after the recession where it actually decreased I do want to make a note as we

00:17:27.480 --> 00:17:31.680
 talk about our assessed value and it'll be a footnote that we have for a while

00:17:31.680 --> 00:17:35.780
 as we show these history reports when we're showing these just for comparison

00:17:35.780 --> 00:17:41.360
 sakes we have the frozen values included so starting in 2018 going forward all of

00:17:41.360 --> 00:17:47.320
 the over 65 freeze values are taken out of our assessed values total that as we

00:17:47.320 --> 00:17:51.880
 do some projections so we a lot of times we'll look at our freeze adjusted

00:17:51.880 --> 00:17:55.960
 assessed values for this purpose we've kept them in there for comparison sake

00:17:55.960 --> 00:18:00.120
 if you take and so you can see that eight point seven six cents percent that

00:18:00.120 --> 00:18:03.960
 we're projecting right now as an increase next year but if you take out

00:18:03.960 --> 00:18:12.880
 the frozen values it's really right at eight percent of an increase so yeah

00:18:12.880 --> 00:18:17.000
 that's the blue line is just showing kind of our total increasing so if you

00:18:17.000 --> 00:18:20.760
 look on the right here it's saying you know we're up to 12 billion over 12

00:18:20.760 --> 00:18:27.200
 billion around 12 billion in assessed value so in 2010 we're closer we're

00:18:27.200 --> 00:18:31.640
 around 6 billion in assessed value so it's been increasing you know steadily

00:18:31.640 --> 00:18:36.880
 to get up to that 12 billion whereas the bars are just showing that year over

00:18:36.880 --> 00:18:42.720
 year percentage increase in our assessed value so it's billions not millions it's

00:18:42.720 --> 00:18:46.840
 bill yeah so this is 14,000 no debt for this like it's billions on the side

00:18:46.840 --> 00:18:54.220
 there are there a couple of projects in 14 and 17 that caused that larger value

00:18:54.220 --> 00:18:59.800
 increase that maybe we should take into account because you can't count on a

00:18:59.800 --> 00:19:04.440
 large commercial value coming in I think it's really just been steady I mean if

00:19:04.440 --> 00:19:07.800
 you look at our history it's really just been steady growth on our existing

00:19:07.800 --> 00:19:11.080
 values that's just driven it hasn't been a lot of the new value our new values

00:19:11.080 --> 00:19:14.000
 been steady we have we do see an increases here in our new value but it's

00:19:14.000 --> 00:19:18.400
 not enough to really to drive these increases it's really just our total

00:19:18.400 --> 00:19:22.760
 base having those value increases each year

00:19:22.760 --> 00:19:40.080
 so right of this total right now so for 2019 our preliminary we're looking at

00:19:40.080 --> 00:19:46.080
 off the top of my head between 420 to 440 million in new value previous year

00:19:46.080 --> 00:19:49.440
 it was and I can get these exact numbers for you so these are just estimates

00:19:49.440 --> 00:19:55.600
 around 330 million in new value and so that was fairly consistent that's been

00:19:55.600 --> 00:19:59.640
 growing as well but just you can see kind of as a perspective we're looking at

00:19:59.640 --> 00:20:06.440
 12 almost 12 billion in total AB at 400 to 450 million in the new value mix up

00:20:06.440 --> 00:20:11.400
 that amount but that does as we talk later about the effective tax rate and

00:20:11.400 --> 00:20:15.120
 that three and a half percent rollback that does come into play with that as

00:20:15.120 --> 00:20:17.280
 well

00:20:17.280 --> 00:20:30.640
 so just to make a conclusion here that 12 billion 400 new value is about four

00:20:30.640 --> 00:20:37.080
 or five percent yeah yes you know it's not much but it does have just have an

00:20:37.080 --> 00:20:41.440
 impact on on us when we're doing a lot of our rate calculations and that new

00:20:41.440 --> 00:20:51.600
 value helps us so I want to talk a little about these are these are some of

00:20:51.600 --> 00:20:55.040
 the assumptions that we have in each one of the scenarios for our out years

00:20:55.040 --> 00:20:58.520
 moving forward so I'm going to touch on each of these and we can kind of keep

00:20:58.520 --> 00:21:02.280
 these in the back of your mind as we look at any other scenarios these are

00:21:02.280 --> 00:21:07.520
 pretty much baked into each one that we look at so start with for next year's

00:21:07.520 --> 00:21:11.320
 debt issuance is we have the fourteen point six six which we reference

00:21:11.320 --> 00:21:16.040
 frequently to close out that 2014 bond program that's baked in assuming we're

00:21:16.040 --> 00:21:19.880
 gonna we're going to do that next year I think what you'll see is by having that

00:21:19.880 --> 00:21:26.000
 fourteen point six six in already any we're also planning on issuing bonds

00:21:26.000 --> 00:21:29.520
 next year if the program goes forward so it just adds to that and increases our

00:21:29.520 --> 00:21:34.600
 issuance in 2020 and then we also have five million dollars not only in next

00:21:34.600 --> 00:21:39.680
 year's program but also five million plan but five million dollars in each of the

00:21:39.680 --> 00:21:44.000
 following years for certificates of obligation for vehicle replacements and

00:21:44.000 --> 00:21:48.720
 facility improvements this has been pretty much an ongoing ongoing amount

00:21:48.720 --> 00:21:53.480
 that we've used for those for those projects where we take that one point

00:21:53.480 --> 00:21:56.960
 five million for facility improvements and then we're able to use those on all

00:21:56.960 --> 00:22:01.320
 of our municipal facilities throughout throughout the city and then that three

00:22:01.320 --> 00:22:04.280
 point five million on vehicle replacement is again that's just a

00:22:04.280 --> 00:22:09.320
 placeholder amount for all of our general government vehicles obviously

00:22:09.320 --> 00:22:13.240
 the utilities pay for themselves and even we get new vehicles a lot of the

00:22:13.240 --> 00:22:16.680
 internal service funds will pay for those that initial cost of the new

00:22:16.680 --> 00:22:21.120
 vehicles and it is a drive of ours what one of the initiatives that we've had

00:22:21.120 --> 00:22:24.600
 this year as we've gone through the budget process and really before the

00:22:24.600 --> 00:22:28.360
 budget process was to take a hard look at our vehicles and see how we can

00:22:28.360 --> 00:22:32.800
 utilize our current fleet instead of replacing fleet kind of share vehicles

00:22:32.800 --> 00:22:37.160
 across departments so it's very likely that three and a half million number

00:22:37.160 --> 00:22:40.560
 will come down in out years even next year I think we're looking at a lower

00:22:40.560 --> 00:22:43.920
 number than three and a half million but we just that's just plug number just so

00:22:43.920 --> 00:22:48.280
 to stay conservative and what that amount might be we have we are showing

00:22:48.280 --> 00:22:53.140
 beginning in 2020 through 2023 a drawdown of our fund balance in our debt

00:22:53.140 --> 00:22:58.560
 service fund the debt service fund currently has an inflated fund balance

00:22:58.560 --> 00:23:03.340
 of close to five million dollars which really isn't necessary for what the debt

00:23:03.340 --> 00:23:07.240
 service fund does the debt service fund essentially is just a pass through of

00:23:07.240 --> 00:23:11.960
 the revenues we get in to pay out for debt service because property tax values

00:23:11.960 --> 00:23:16.560
 are pretty stable in a year to year where we get our certified values and we

00:23:16.560 --> 00:23:21.000
 essentially know about 99% collections what we're going to get in for revenue

00:23:21.000 --> 00:23:25.520
 in the property tax in the debt service fund we don't need a straw a really

00:23:25.520 --> 00:23:30.500
 inflated fund balance to cover any mitigating circumstances so our goal

00:23:30.500 --> 00:23:34.560
 right now is to draw that fund balance down to a million dollars you know that

00:23:34.560 --> 00:23:40.200
 fund balance increases simply because we get our certified values from the CAD

00:23:40.200 --> 00:23:45.320
 saying here's here's what your assessed value is that's the number we use for

00:23:45.320 --> 00:23:48.520
 budgeting purposes but it's a fluid number so throughout the year we get

00:23:48.520 --> 00:23:53.160
 supplemental assessed values from the appraisal district that can increase

00:23:53.160 --> 00:23:57.760
 that the actual AV and then we end up with more revenue than we budgeted so

00:23:57.760 --> 00:24:01.640
 that that's what can increase the fund balance so our plan is to use that fund

00:24:01.640 --> 00:24:07.640
 balance to mitigate some of the debt service payments so is that that's used

00:24:07.640 --> 00:24:15.480
 to pay down existing that accelerate the payment on that that's yeah you got to

00:24:15.480 --> 00:24:18.560
 use it for debt service so yeah yeah you do have to use it for debt service so

00:24:18.560 --> 00:24:21.760
 essentially that's what it does and I mean it's always just when you use those

00:24:21.760 --> 00:24:25.760
 the one-time hit essentially but you know in those years it does help us

00:24:25.760 --> 00:24:29.560
 mitigate some of that increase that we would need on the debt service side in

00:24:29.560 --> 00:24:34.760
 those years as we as we do all that down so going back to the slide the

00:24:34.760 --> 00:24:41.360
 outstanding debt service or are the numbers we just saw the fourteen point

00:24:41.360 --> 00:24:46.920
 six and the five million it's gonna be issued in 2020 is that reflected in this

00:24:46.920 --> 00:24:51.440
 debt service there it's not this is this is just before we issue even the 2019

00:24:51.440 --> 00:24:56.500
 okay so this is what we have outstanding at the beginning as of 18 right yeah as

00:24:56.500 --> 00:24:59.680
 we move forward it's in it's in all of our forecast moving forward but this is

00:24:59.680 --> 00:25:02.880
 just where we sit right now so obviously that would increase with those amounts

00:25:02.880 --> 00:25:12.520
 in the 2019 amounts so as far as our interest rate assumptions that we have

00:25:12.520 --> 00:25:16.160
 in each each of these forecasts we're showing we're reflecting an interest rate

00:25:16.160 --> 00:25:22.120
 of 3.75 percent on all of our geo debt for that we issue in 2020 and that's

00:25:22.120 --> 00:25:27.440
 really based on issue interest rates are low right now so we want to be

00:25:27.440 --> 00:25:31.480
 conservative and expect that they'll increase but instead of expecting they're

00:25:31.480 --> 00:25:35.220
 gonna increase all the way back up to four and a half percent next year we

00:25:35.220 --> 00:25:38.200
 built in saying okay even if they increase they're probably not gonna go

00:25:38.200 --> 00:25:44.360
 out that much next year to kind of ladder that increase up before we get to

00:25:44.360 --> 00:25:49.320
 2021 where we've just put in a four and a half percent conservative interest

00:25:49.320 --> 00:25:53.440
 rate number you know interest rates can just fluctuate so quickly and when you're

00:25:53.440 --> 00:25:58.560
 looking at a six-year window it's really tough to try to anticipate that a low

00:25:58.560 --> 00:26:05.840
 interest rate I think you can get in some trouble with that so we wanted to

00:26:05.840 --> 00:26:09.840
 just as we start getting to the forecast just do a step back on the current

00:26:09.840 --> 00:26:13.960
 projects these about as you've seen throughout all of our presentations thus

00:26:13.960 --> 00:26:17.600
 far these amounts have to have our fluid and have changed as we've had

00:26:17.600 --> 00:26:22.440
 discussions and they will I'm sure they will continue to change as we discuss

00:26:22.440 --> 00:26:25.960
 these with the committee especially as we get into some prior virtualization

00:26:25.960 --> 00:26:29.800
 discussions with the committee but just as an update of where we are right now

00:26:29.800 --> 00:26:35.200
 with some of these changes notably the street rehab program which which we had

00:26:35.200 --> 00:26:39.080
 a lower number but based on the conversation we had on the 13th on June

00:26:39.080 --> 00:26:44.400
 13th have increased that amount and then decreased at Ryan Road amount because

00:26:44.400 --> 00:26:48.320
 some of those discussions where that need for that larger road isn't isn't as

00:26:48.320 --> 00:26:54.200
 necessary now and then these are also now prioritized by our our staff

00:26:54.200 --> 00:26:57.200
 prioritizations on what these road projects would be where we have Bonnie

00:26:57.200 --> 00:27:01.720
 Bray first Hickory Creek second and in the street rehab programs are number

00:27:01.720 --> 00:27:05.960
 three priority at that inflated amount so we'll get we obviously get into more

00:27:05.960 --> 00:27:10.240
 detail on those specific programs with those presentations that we have coming

00:27:10.240 --> 00:27:15.480
 up but wanted to show those there and then just have essentially taken that

00:27:15.480 --> 00:27:19.240
 and kind of just move some move some of the dollars around as necessary to get

00:27:19.240 --> 00:27:23.540
 to our 210 million total but again this will be a bigger discussion for the

00:27:23.540 --> 00:27:26.800
 committee as we get to those prioritizations and you got you all

00:27:26.800 --> 00:27:32.200
 really talk internally about where those dollars need to go first obviously first

00:27:32.200 --> 00:27:35.840
 talking about what is that total pie and then how does it break how does the pie

00:27:35.840 --> 00:27:40.280
 break down one piece that's not in here and on this chart is public art that

00:27:40.280 --> 00:27:43.840
 would also that would be whatever public art amount would be in addition to this

00:27:43.840 --> 00:27:49.880
 or or come from another spot and you pulled street lighting and open space

00:27:49.880 --> 00:27:54.360
 off we've listed them here we have not had street lighting and open space in our

00:27:54.360 --> 00:27:58.480
 recommend recommendations since we've come from council not to say that it

00:27:58.480 --> 00:28:02.960
 shouldn't be on here it's just as as we put forward options it was on the on the

00:28:02.960 --> 00:28:07.640
 bottom of the prioritization scale but definitely open to including those and

00:28:07.640 --> 00:28:11.660
 seeing how we can work can you remind me again what was the discussion on Jim

00:28:11.660 --> 00:28:17.160
 Crystal why was it on there and then taking off the Jim Crystal is simply a

00:28:17.160 --> 00:28:22.520
 prioritization of trying to get to 210 million dollars and as as staff

00:28:22.520 --> 00:28:26.800
 prioritized the roads Jim Crystal was a little bit lower than because other areas

00:28:26.800 --> 00:28:30.080
 went up we cut that

00:28:30.080 --> 00:28:40.800
 and that construction would be paid for by the developers as they build that out

00:28:40.800 --> 00:28:47.640
 right it's gonna be a combination yes would be a combination of the West Park

00:28:47.640 --> 00:28:56.760
 clients is necessary and can you remind us of with the FM 428 that's gonna be

00:28:56.760 --> 00:29:02.480
 all other sources of correct yeah we initially put this together based on

00:29:02.480 --> 00:29:05.640
 this is where we're here and people really yell right now from these roads

00:29:05.640 --> 00:29:13.120
 we try to get these for communication purposes we're currently talking to the

00:29:13.120 --> 00:29:15.520
 state right now

00:29:27.480 --> 00:29:36.120
 so Ryan Road we were thinking that four million could get both intersections and

00:29:36.120 --> 00:29:42.200
 maybe just the maintenance kind of thing but now it's at eight six nine so what I

00:29:42.200 --> 00:29:46.000
 think we're still in a stage where there's a range and we don't have

00:29:46.000 --> 00:29:48.960
 precise numbers on what it's gonna be with the changes that's happened have

00:29:48.960 --> 00:29:51.600
 happened with the Ryan Road this is obvious this is a number that's a

00:29:51.600 --> 00:29:55.120
 placeholder to some extent as we look at how we shift money around and get more

00:29:55.120 --> 00:30:00.880
 detail it can change but that's where we know our option contemplated

00:30:00.880 --> 00:30:24.040
 so we don't know so just I drive that road so the intersection at Teasley it's

00:30:24.040 --> 00:30:30.880
 pretty wide looks okay got lights what I'm not sure all the redesign is I know

00:30:30.880 --> 00:30:34.160
 that there's a business that's going to be in play but you're going to be

00:30:34.160 --> 00:30:37.560
 pulling it back the side triangles we've got new development that's actually

00:30:37.560 --> 00:30:43.360
 coming in there's another proposal council we see in the next meeting for

00:30:43.360 --> 00:30:51.960
 significant multifamily use right there across from the Walmart and so the idea is

00:30:51.960 --> 00:30:56.000
 trailer what do you have to do with all different parts of that intersection to

00:30:56.000 --> 00:31:07.480
 get it to its ultimate build out okay thanks so I want to move on I want to be

00:31:07.480 --> 00:31:12.480
 cautious with this with this slide this is really just one scenario that could

00:31:12.480 --> 00:31:16.680
 play out for how we would sell our how we would issue our bonds for these

00:31:16.680 --> 00:31:20.200
 programs and really just for planning purposes so everyone understands the

00:31:20.200 --> 00:31:26.640
 impact of timing on these on our issuances you know we up it up until

00:31:26.640 --> 00:31:31.720
 today I've been have been working on this model to get to a point where we to

00:31:31.720 --> 00:31:35.760
 show amounts that would be feasible to actually accomplish the goals that we

00:31:35.760 --> 00:31:40.360
 have with these projects and stay at our goal with 210 million dollars of being

00:31:40.360 --> 00:31:45.360
 below our current tax rate our current total tax rate so this this this plan

00:31:45.360 --> 00:31:50.640
 does that so I'll touch on a few pieces of it you can see in the plan now we've

00:31:50.640 --> 00:31:55.360
 issued all of our amount all of our dollars for the public for the police

00:31:55.360 --> 00:32:03.000
 department substation and renovation in 2021 in 2021 to have those dollars

00:32:03.000 --> 00:32:07.400
 completely out so that we can meet our goals of getting it complete we

00:32:07.400 --> 00:32:12.280
 previously had that in later years but moved it up and we also obviously have

00:32:12.280 --> 00:32:16.280
 big numbers there for Bonnie Brand Hickory Creek in the first couple of

00:32:16.280 --> 00:32:21.580
 years and then starting kind of ramping up into our street rehab program even

00:32:21.580 --> 00:32:26.320
 with a 70 million dollar total we we're not gonna need a full 10 million dollars

00:32:26.320 --> 00:32:31.080
 the first year because we still have that for some of that 14.66 million is

00:32:31.080 --> 00:32:34.880
 street rehab so that millions really gonna be for design for this the

00:32:34.880 --> 00:32:41.080
 program so that we can hit the ground running in 2021 David did I just hear

00:32:41.080 --> 00:32:46.840
 this wrong but I thought chief Dixon wanted to do the substation first so he

00:32:46.840 --> 00:32:50.480
 could move some functions out of City Hall East to the substation then then

00:32:50.480 --> 00:32:55.840
 renovate the substation right yeah that that is his plan so it looks like you're

00:32:55.840 --> 00:32:59.640
 doing both at the same time well for the issuance we have some to issue the

00:32:59.640 --> 00:33:03.320
 dollars because even though they're staggered they're pretty condensed to

00:33:03.320 --> 00:33:06.880
 the point that we would need to issue all the dollars in 2021 to get them

00:33:06.880 --> 00:33:12.280
 both complete on the schedule I believe we have this another slide second in

00:33:12.280 --> 00:33:17.280
 another presentation I could bring it up I believe it was December 2022 that we're

00:33:17.280 --> 00:33:28.240
 planning on having this the station complete so again these numbers these

00:33:28.240 --> 00:33:31.840
 numbers can really be affected by the decision that we make and what our

00:33:31.840 --> 00:33:35.440
 targets are as far as you know if you push some of these out and you push

00:33:35.440 --> 00:33:40.000
 some of the issuance to later years it will it will change our impact on our

00:33:40.000 --> 00:33:43.760
 tax rate but obviously will mean the delay in getting any project started

00:33:43.760 --> 00:33:47.560
 especially with some of these projects that are tied to other funding sources

00:33:47.560 --> 00:33:50.880
 so we can continue to have those discussions as we look at

00:33:50.880 --> 00:33:55.520
 prioritizations and the pieces associated with those so I'm going to

00:33:55.520 --> 00:34:00.720
 get into the details on a number of different scenarios a lot of these the

00:34:00.720 --> 00:34:04.640
 committee's request to kind of see the full impact of these scenarios a lot of

00:34:04.640 --> 00:34:08.720
 these slides are gonna have be in the weeds on a lot of numbers so I'll try to

00:34:08.720 --> 00:34:14.000
 to call out what we're looking at but definitely ask any questions as we go

00:34:14.000 --> 00:34:18.120
 along here's a summary page of the programs that we'll be looking at this

00:34:18.120 --> 00:34:23.000
 first one is essentially our base case and our recommendation that you saw

00:34:23.000 --> 00:34:28.400
 previously and that's what we've been working on throughout the process of a

00:34:28.400 --> 00:34:35.360
 210 million dollar program assuming assessed values increase at 4% and all

00:34:35.360 --> 00:34:38.560
 the other assumptions we looked at earlier and as you'll see in the next

00:34:38.560 --> 00:34:42.920
 slide that equates to between a five and six cent increase on the debt service

00:34:42.920 --> 00:34:48.920
 tax rate but does keep us total below our current tax rate or current total

00:34:48.920 --> 00:34:58.800
 tax rate so it's that same five cents or 56 cents that's just a type it's five zero five cents zero five six

00:34:58.800 --> 00:35:09.120
 yeah it's a big difference yeah and it's that same case with the 33 cents there

00:35:09.120 --> 00:35:12.160
 that should be three point three cents it is correct and you'll see those on

00:35:12.160 --> 00:35:18.520
 later slides too okay and I just want to just confirm the point one nine is

00:35:18.520 --> 00:35:24.000
 correct zero one nine on that aggressive yeah so if we get as we get to that

00:35:24.000 --> 00:35:27.960
 aggressive approach you'll see if we were if we're assuming 8% AV growth

00:35:27.960 --> 00:35:32.440
 throughout the life of the program we would anticipate only about a two cent

00:35:32.440 --> 00:35:42.800
 increase in our debt service tax rate so that was just really a layout as we go

00:35:42.800 --> 00:35:48.160
 through these scenarios what you'll see here so this is our base case scenario

00:35:48.160 --> 00:35:53.600
 at 210 million dollars and the 4% growth in those out years I will say on each of

00:35:53.600 --> 00:35:58.160
 these we'd have updated our preliminary 2020 with our estimated assessed value

00:35:58.160 --> 00:36:03.360
 which I saw earlier was about 8% over our last our previous years assessed

00:36:03.360 --> 00:36:07.240
 value so that piece has been updated but all out years are going to have the

00:36:07.240 --> 00:36:12.000
 assumptions that we list here below so the base case 210 million dollars it

00:36:12.000 --> 00:36:18.520
 keeps the total tax rate below our our current tax rate of about 62 cents as we

00:36:18.520 --> 00:36:23.680
 go as we go forward even on this 22 is that it's below our current tax rates

00:36:23.680 --> 00:36:28.840
 surrounding issue that makes it look like it's level with that so as you go

00:36:28.840 --> 00:36:34.520
 forward the total tax rate stays below the our current total tax rate but as

00:36:34.520 --> 00:36:39.680
 as mentioned the debt service tax rate does go up between five and six cents

00:36:39.680 --> 00:36:43.280
 that will be the piece that has to be on the ballot language of what will it how

00:36:43.280 --> 00:36:48.280
 much will our debt service tax rate increase some of the other pieces here

00:36:48.280 --> 00:36:52.600
 you can see here's our our effective tax rate in each of these years and again

00:36:52.600 --> 00:36:56.040
 as we look at these effective rates and some of this rollback rates these are

00:36:56.040 --> 00:37:00.840
 all just projected calculations a lot of assumptions made moving forward but a

00:37:00.840 --> 00:37:05.760
 range of where we might end up on those rates in future years so you can see

00:37:05.760 --> 00:37:10.920
 we're about two cents on average above the effective tax rate in this model at

00:37:10.920 --> 00:37:16.760
 the 210 million dollars for reference here I've included the some estimates in

00:37:16.760 --> 00:37:20.720
 what we might anticipate for the three and a half percent rollback rate this is

00:37:20.720 --> 00:37:24.760
 the new based on the new legislation of that rate coming down from eight percent

00:37:24.760 --> 00:37:29.640
 three and a half percent and because that's mainly on the because it's on the

00:37:29.640 --> 00:37:34.280
 maintenance and operation side as we go through these slides you'll see that the

00:37:34.280 --> 00:37:37.880
 range is really going to be you're going to see mostly around 12 or 13 cents I

00:37:37.880 --> 00:37:41.000
 would say just for precaution I'll say it's probably going to be between one

00:37:41.000 --> 00:37:46.520
 cents and two cents that we are below the three and a half rollback in future

00:37:46.520 --> 00:37:50.900
 years and that's probably just going to be a circumference what we have to to

00:37:50.900 --> 00:37:54.440
 live with moving forward and that's not affected by the debt service tax rate

00:37:54.440 --> 00:37:59.360
 but it'll just it'll be a constraint on us as we go through our operating budget

00:37:59.360 --> 00:38:04.080
 each year I think one of the pieces but I think what it's good to reference that

00:38:04.080 --> 00:38:08.840
 as we look at adding a station as we look at adding a substation or fire

00:38:08.840 --> 00:38:12.960
 station and we consider what are the operating costs that that we need as a

00:38:12.960 --> 00:38:18.040
 city to be able to point back to these things and say you know we know that we

00:38:18.040 --> 00:38:21.440
 have these needs so if we ever get to a point where we need to have a election

00:38:21.440 --> 00:38:24.880
 on our rollback rate which will be associated directly with operating cost

00:38:24.880 --> 00:38:29.360
 we can we can talk to it and point to those specifics that that increase would

00:38:29.360 --> 00:38:35.480
 be related to we've shown the overall the average tax bill here on this

00:38:35.480 --> 00:38:38.480
 scenario and this is about as you look at these scenarios are going to be about

00:38:38.480 --> 00:38:44.360
 the same because our M&O rate is at that effective rate it drives these to be

00:38:44.360 --> 00:38:49.120
 fairly similar as you look across the board but about a 3% increase to the

00:38:49.120 --> 00:38:53.200
 average tax bill and this is increasing that average tax bill by the same amount

00:38:53.200 --> 00:38:59.480
 that we're increasing AV in those future years so is the three and a half percent

00:38:59.480 --> 00:39:05.400
 rollback which we'll have a new name I guess going forward is that applied just

00:39:05.400 --> 00:39:09.960
 to the M&O rate or is that applied to the total rate how does that so it can

00:39:09.960 --> 00:39:14.160
 get a little complicated but I'll at a high level what it does is it goes you

00:39:14.160 --> 00:39:18.280
 with your M&O rate you say what is your effective M&O rate what M&O rate do you

00:39:18.280 --> 00:39:24.000
 need now to pay for your existing values next year then you add three and a half

00:39:24.000 --> 00:39:28.660
 first you do a three and a half percent one point zero three five to that then

00:39:28.660 --> 00:39:32.400
 add the debt service tax rate on top of it so that's the way the debt service

00:39:32.400 --> 00:39:36.520
 tax rate stays out of the calculation yeah you can increase on it's on but

00:39:36.520 --> 00:39:41.640
 there's also a piece to it where because we get it we have a sales tax relief that

00:39:41.640 --> 00:39:45.760
 comes from our additional half half cent of sales tax comes through our general

00:39:45.760 --> 00:39:49.280
 fund for property tax relief that also plays into our formula a little bit so

00:39:49.280 --> 00:39:56.600
 it's not as clean as seeing that okay so I got a high level if you look at 40

00:39:56.600 --> 00:40:02.200
 cents you know at three and a half percent you get close to that twelve to

00:40:02.200 --> 00:40:07.320
 thirteen so one point three to one point four cents and that's kind of how it

00:40:07.320 --> 00:40:11.080
 rolls out in the rollback difference okay

00:40:13.000 --> 00:40:16.400
 so I'll just start going through some of these scenarios and connect answer

00:40:16.400 --> 00:40:23.160
 questions as we go along here's here's a chart showing the tax rate impact of

00:40:23.160 --> 00:40:27.880
 that to it of the 210 million base case scenario so you can see our property

00:40:27.880 --> 00:40:31.680
 total rate really staying stable fairly stable throughout the process dipping a

00:40:31.680 --> 00:40:35.760
 little at the end with that operations rate essentially coming down the debt

00:40:35.760 --> 00:40:39.600
 service rate coming up in those two years to pay for the program and offset

00:40:39.600 --> 00:40:43.760
 that five to six cent difference in those out years and keeping our total

00:40:43.760 --> 00:40:51.040
 tax rate stable so one I want to make sure we hit all of the the scenarios

00:40:51.040 --> 00:40:56.000
 that were mentioned this is a moderate growth scenario so this would be instead

00:40:56.000 --> 00:41:00.360
 of a four percent AV growth in each year we had six percent AV growth what would

00:41:00.360 --> 00:41:04.400
 that look like so in this scenario we're looking at between three and four cents

00:41:04.400 --> 00:41:09.640
 that service tax rate increase because we're obviously you're with the increase

00:41:09.640 --> 00:41:13.160
 AV we don't need the debt service rate to go up as much but you're gonna see a

00:41:13.160 --> 00:41:16.620
 lot of the sim a lot of similar things on the on the difference here with the

00:41:16.620 --> 00:41:20.720
 rollback and then our average tax bill just because the average tax bulls on

00:41:20.720 --> 00:41:25.800
 based on a larger amount so that's how it comes out especially as we're focused

00:41:25.800 --> 00:41:29.880
 on these scenarios of keeping our operations rate M&O rate at the effect

00:41:29.880 --> 00:41:37.760
 nearly effective tax rate so this is six percent growth and again between three

00:41:37.760 --> 00:41:46.200
 and four percent increase to the debt service tax rate if you if you want to

00:41:46.200 --> 00:41:50.840
 get it we have we have additional detail we can get into the weeds of exactly

00:41:50.840 --> 00:41:54.560
 what we're using for fund balance drawdown what we're we're showing for our

00:41:54.560 --> 00:41:57.840
 tax rate everything that happens in our debt service fund if you want to get in

00:41:57.840 --> 00:42:01.760
 into those but for now this is more of a summary of kind of all the machinations

00:42:01.760 --> 00:42:08.560
 that got us here so here's a here's an aggressive growth scenario so say we you

00:42:08.560 --> 00:42:11.960
 know we ended up with eight percent growth over each year this bond program

00:42:11.960 --> 00:42:16.280
 looks similar to last bond program over the past few years we've had that growth

00:42:16.280 --> 00:42:20.560
 each year what would the tax rate look like and if we were to hit eight percent

00:42:20.560 --> 00:42:24.720
 growth each year we'd be looking at about a only two percent increase to the

00:42:24.720 --> 00:42:30.280
 debt service tax rate you know I I think it would we would obviously want to be

00:42:30.280 --> 00:42:34.240
 cautious with making this our we're gonna bank on this this is what we're

00:42:34.240 --> 00:42:38.960
 gonna put forward but it is useful to see how much it can change but it is it

00:42:38.960 --> 00:42:44.440
 is what we've average over the last five years or more right it it absolutely is

00:42:44.440 --> 00:42:50.280
 I just I think as we go to the voters it would be we definitely want to be

00:42:50.280 --> 00:42:55.720
 conservative to not it and I appreciate that but I also think that we have to

00:42:55.720 --> 00:43:01.680
 you know I don't think we we need to short sheet this bond package because

00:43:01.680 --> 00:43:07.560
 we're afraid we won't grow at 8% I did in all indications would say we have

00:43:07.560 --> 00:43:13.480
 every reason to expect to continue to grow at 8% or more yeah and I think I

00:43:13.480 --> 00:43:16.000
 think it's just two different conversation as far as the bond language

00:43:16.000 --> 00:43:19.400
 itself I think we definitely don't want to go to the voters and say it's only

00:43:19.400 --> 00:43:22.440
 going to be a three cent when it could be higher but as far as the discussions

00:43:22.440 --> 00:43:25.760
 amongst the committee of where you expect it to actually happen I think that

00:43:25.760 --> 00:43:28.760
 that's definitely a discussion that committee can have and this can

00:43:28.760 --> 00:43:34.000
 definitely add to that discussion in 14 we asked for two cents three three and

00:43:34.000 --> 00:43:42.360
 we didn't take any of it right well it's I mean the right is a variable here in

00:43:42.360 --> 00:43:49.240
 the SS value the real what's the average tax it's gonna be a function of those

00:43:49.240 --> 00:43:54.000
 two and so if if your growth is more your rates last if your growth is less

00:43:54.000 --> 00:44:01.640
 your rates more is there any feeling for I guess all these scenarios are computed

00:44:01.640 --> 00:44:06.360
 with the M&O staying at the effective rate is there any feeling for whether

00:44:06.360 --> 00:44:11.440
 that's more or less likely given the conservative or medium or aggressive

00:44:11.440 --> 00:44:16.840
 scenarios presented here as opposed to I don't know I get up nearer to that three

00:44:16.840 --> 00:44:21.400
 point five percent increase I don't know that it would be I'll say two things I

00:44:21.400 --> 00:44:25.840
 don't know that would be necessarily tied to the the aggressive scenarios

00:44:25.840 --> 00:44:29.620
 maybe tied to the total obviously if we don't have the this the new station we

00:44:29.620 --> 00:44:33.240
 we came we're not necessarily gonna be able to hire as quickly to fill it like

00:44:33.240 --> 00:44:36.480
 we would plan to but I will say as we get to the end you'll see some

00:44:36.480 --> 00:44:39.320
 variations being in the details of this as we look at the aggressive scenario

00:44:39.320 --> 00:44:43.720
 included is also assuming our new value is gonna grow additionally so that new

00:44:43.720 --> 00:44:47.960
 value comes and helps the M&O rate I do think it's gonna be tough and as we look

00:44:47.960 --> 00:44:51.880
 at this this three and a half percent rollback rate I mean it's it's very

00:44:51.880 --> 00:44:56.440
 difficult to stay at the effective rate for multiple years and it's that's gonna

00:44:56.440 --> 00:45:00.600
 be a constraint on us I even when you look at this forecast this I want to

00:45:00.600 --> 00:45:03.480
 make sure that everyone knows this is not our proposed budget that's going to

00:45:03.480 --> 00:45:07.760
 counsel but for planning purposes we've already said that for this planning

00:45:07.760 --> 00:45:10.960
 scenario we've assumed that we're gonna go two cents above the effective tax

00:45:10.960 --> 00:45:18.120
 rate in next year's budget well if you look at preliminary 2020 we're showing

00:45:18.120 --> 00:45:21.640
 us we're showing a two percent two cent increase right as we've shown as we've

00:45:21.640 --> 00:45:23.920
 gone through the budget process we've counseled we've tied each of those

00:45:23.920 --> 00:45:27.600
 increases to kind of a tier of supplemental packages so we're not

00:45:27.600 --> 00:45:31.280
 saying that's going to happen but I think it's worthwhile to include in our

00:45:31.280 --> 00:45:36.040
 in our forecast for now I guess what I mean it's difficult because it's

00:45:36.040 --> 00:45:42.160
 predicting the future but what I'm trying to assess from a risk perspective

00:45:42.160 --> 00:45:50.440
 is with the various growth scenarios right they present a different burden on

00:45:50.440 --> 00:45:57.120
 the debt service rate in order to pay back the bonds right and so does the

00:45:57.120 --> 00:46:03.120
 projected burden on the M&O rate go in the same direction or does it go to the

00:46:03.120 --> 00:46:08.920
 opposite such that the risk is is mitigated you know yeah I think it's tough

00:46:08.920 --> 00:46:12.720
 to tie it directly to AV growth because a lot of AV growth is just a single home

00:46:12.720 --> 00:46:16.080
 just appreciating in value sure whereas that doesn't have any demands but if

00:46:16.080 --> 00:46:19.720
 we're talking about new developments coming in that does change the equation

00:46:19.720 --> 00:46:23.000
 okay so we don't have that in here that would be probably a different discussion

00:46:23.000 --> 00:46:29.400
 but I think I think this is also tied to the larger discussion on how much does

00:46:29.400 --> 00:46:34.720
 growth sustain itself as we've continued sort of peeling back what it's costing

00:46:34.720 --> 00:46:39.520
 us to provide services to developers versus what they're actually paying in

00:46:39.520 --> 00:46:45.160
 we've had those discussions of council particularly water waste water we're

00:46:45.160 --> 00:46:48.360
 about ready to have it on the street impact fees and then our cost for

00:46:48.360 --> 00:46:53.320
 providing planning and development services if the council decides that you

00:46:53.320 --> 00:46:56.680
 know the growth should be paying for much more the cost of the staffing it

00:46:56.680 --> 00:47:00.360
 requires and the capital projects then there is another lever here but right

00:47:00.360 --> 00:47:03.840
 now they haven't made that policy decision because we really have only

00:47:03.840 --> 00:47:08.800
 framed it recently for him so David's overseeing a study right now on those on

00:47:08.800 --> 00:47:14.200
 those fees and that could provide a little bit of relief to the M&O rate

00:47:14.200 --> 00:47:17.680
 moving forward if they decide that they're going to start subsidizing left

00:47:17.680 --> 00:47:21.640
 so that that's the other important variable even if you're seeing increased

00:47:21.640 --> 00:47:25.320
 growth but it's not paying for the services on an ongoing basis you're

00:47:25.320 --> 00:47:29.560
 getting nowhere and so that's the that's the policy discussion that you'll be

00:47:29.560 --> 00:47:34.480
 who will be having with council here in the next 45 days or so

00:47:34.480 --> 00:47:48.680
 we wanted to add a fourth scenario as we go through each of these kind of high level

00:47:48.680 --> 00:47:52.360
 scenarios and dollar amounts and this one is hey let's say obviously the ones

00:47:52.360 --> 00:47:54.920
 we've been looking at so far are consistent growth each year what about a

00:47:54.920 --> 00:47:59.360
 scenario where we start off where we kind of see the trajectory around now

00:47:59.360 --> 00:48:04.520
 was a person next year maybe a dip in 2022 but then maybe we hit some sort of

00:48:04.520 --> 00:48:07.560
 recession or at least a downturn to some degree and we see it trail off in the

00:48:07.560 --> 00:48:11.440
 future years I think what you see in a lot of these mixed scenarios is they

00:48:11.440 --> 00:48:15.160
 basically come in at that 4% number essentially you know the hero we're

00:48:15.160 --> 00:48:18.960
 looking again right under a six cent taxing to increase on the debt service

00:48:18.960 --> 00:48:23.280
 tax rate not meant for anything other than just another comparison that to

00:48:23.280 --> 00:48:26.880
 kind of include in your decision-making as you look at each of these scenarios

00:48:26.880 --> 00:48:30.080
 and think through what could play out

00:48:30.080 --> 00:48:46.320
 so we can definitely go back and touch on any of these as we go through but I'll

00:48:46.320 --> 00:48:51.200
 kind of move on to the next kind of round of scenarios we included numbers

00:48:51.200 --> 00:48:55.680
 for 150 million dollar package again this is just a comparison when we started

00:48:55.680 --> 00:48:59.800
 the process we said we would look at a 200 million dollar package which we said

00:48:59.800 --> 00:49:02.520
 would keep us around the total tax rate we would look at a hundred million dollar

00:49:02.520 --> 00:49:05.840
 package which would keep us around the effective tax rate which we'll have

00:49:05.840 --> 00:49:08.880
 later but also just wanted to show here's what a hundred fifty million dollar

00:49:08.880 --> 00:49:12.560
 package would do I think an important consideration as we look at these other

00:49:12.560 --> 00:49:17.040
 packages hundred and fifty and a hundred million dollar package the piece that we

00:49:17.040 --> 00:49:20.000
 would have to then go back and do is go back and look at that schedule and not

00:49:20.000 --> 00:49:24.320
 only say what projects do we need to do with this new amount but how do we plan

00:49:24.320 --> 00:49:30.080
 them out and what are the priorities on timing of these so with a hundred fifty

00:49:30.080 --> 00:49:34.280
 million dollar scenario at our base case the four percent growth looking at

00:49:34.280 --> 00:49:38.840
 between the two and three cent tax increase at two point four cent tax

00:49:38.840 --> 00:49:44.120
 increase on the debt service tax rate and again as I say those tax increases

00:49:44.120 --> 00:49:48.720
 that's the maximum tax rate increase you know it'll be what where's that number

00:49:48.720 --> 00:49:52.640
 where it's the highest and then it'll in most years it's going to be below that

00:49:52.640 --> 00:50:01.960
 but we want to make sure we're focused on what is the maximum rate as we move

00:50:01.960 --> 00:50:06.440
 to the moderate growth the six percent growth on 150 million dollars looking at

00:50:06.440 --> 00:50:10.960
 just about a cent and a half increase a maximum tax rate increase on the debt

00:50:10.960 --> 00:50:16.960
 service side and you can see the total the total percentage tax bill increase

00:50:16.960 --> 00:50:20.000
 is going to be less in this scenario than it was in the previous scenario

00:50:20.000 --> 00:50:23.560
 just because our debt service tax rates going to be lower whereas previously it

00:50:23.560 --> 00:50:27.840
 was at three three and a half now it's around two two percent growth I know we

00:50:27.840 --> 00:50:31.480
 had a question of how would these compare to inflation no inflation kind

00:50:31.480 --> 00:50:40.560
 of nationwide right now is it about two percent so there's that comparison and

00:50:40.560 --> 00:50:43.360
 if you if we do an aggressive approach say hey we're going to do 150 million

00:50:43.360 --> 00:50:46.600
 we're going to think through what would that be at eight percent growth each of

00:50:46.600 --> 00:50:50.200
 those out years really you're in a situation where you're looking at maybe

00:50:50.200 --> 00:50:56.960
 a cent maximum taxing tax rate increase on your debt service tax rate but as

00:50:56.960 --> 00:50:59.640
 you can see as we go through all these scenarios that rollback rate doesn't

00:50:59.640 --> 00:51:06.400
 change much because of the way the calculation right right and again here's

00:51:06.400 --> 00:51:10.880
 that mixed variable rate growth moving forward and you kind of end up back

00:51:10.880 --> 00:51:23.280
 where we started on the four percent growth a final scenario was the hundred

00:51:23.280 --> 00:51:28.880
 million dollar program the goal with this was to remain you're at right at

00:51:28.880 --> 00:51:32.240
 near the effective tax rate as the numbers shake out we're really right

00:51:32.240 --> 00:51:36.600
 there as on average a little less than a cent away from the effective tax rate a

00:51:36.600 --> 00:51:41.840
 hundred million dollars moving forward and these are 4% growth I think what

00:51:41.840 --> 00:51:46.040
 you'll notice on this is if we were to do a hundred million dollar program we

00:51:46.040 --> 00:51:51.520
 would not have the increase in the in the debt service tax rate other than a

00:51:51.520 --> 00:52:02.120
 small increases by kind of a few a few percentages of it of a cent moderate

00:52:02.120 --> 00:52:07.800
 growth again same story where you're not seeing increase over that current 2.15

00:52:07.800 --> 00:52:13.600
 debt service tax rate in those out years but I you know a hundred million dollar

00:52:13.600 --> 00:52:17.480
 program I think we'd have to make some pretty significant choices and I think

00:52:17.480 --> 00:52:20.400
 even if you say we were going to do a hundred million dollar program but we

00:52:20.400 --> 00:52:25.040
 were going to include the police station and fire station and some of those big

00:52:25.040 --> 00:52:28.520
 roads that really have to have those dollars up front if we were going to

00:52:28.520 --> 00:52:32.360
 front load this we kind of showed it more spread out for these purposes if we

00:52:32.360 --> 00:52:36.480
 were going to front load those and do maybe a four-year program a three-year

00:52:36.480 --> 00:52:40.200
 program instead of a six-year program then you might you might have those

00:52:40.200 --> 00:52:44.160
 increases that we're looking at now it would just be a shorter program to be

00:52:44.160 --> 00:52:53.560
 hit with that burden and then you can see the eight eight first 8% AV growth

00:52:53.560 --> 00:52:57.080
 really seeing a steady decline in that debt service tax rate moving forward

00:52:57.080 --> 00:53:06.040
 with a hundred million dollar program and then our mixed our mixed scenario

00:53:06.040 --> 00:53:09.960
 comes out pretty pretty close where you're not you're not up to your debt

00:53:09.960 --> 00:53:13.320
 service tax rate in those out years

00:53:13.320 --> 00:53:23.560
 that's all we have for the presentation for the scenarios I hope I hit on

00:53:23.560 --> 00:53:26.600
 everything you all were looking for for this initial presentation but would be

00:53:26.600 --> 00:53:30.640
 happy to answer any questions talk through any of the details on this or

00:53:30.640 --> 00:53:33.640
 any other questions you have there's a lot of information that you're just not

00:53:33.640 --> 00:53:37.840
 getting so if you need to digest it and come back and now you can ask any

00:53:37.840 --> 00:53:46.600
 questions of me obviously today later anytime any general questions is this

00:53:46.600 --> 00:53:51.240
 the same presentation that's going to be made to the entire bond committee or

00:53:51.240 --> 00:53:56.120
 will there be one I think that's I think as we talk with the committee we look at

00:53:56.120 --> 00:53:59.600
 the schedule we can talk through that I'm sure at some point we need to do a

00:53:59.600 --> 00:54:02.160
 high-level I don't know we want to it's up to the committee we can go into this

00:54:02.160 --> 00:54:05.640
 much detail we can go into high level whatever the committee would like kind

00:54:05.640 --> 00:54:09.920
 of the thought was is let's all of us go through the laborious task of talking

00:54:09.920 --> 00:54:14.200
 about this and then bring back a proposal or you know I don't think we

00:54:14.200 --> 00:54:18.240
 need to bring everything to the full committee or else we'll probably swallow

00:54:18.240 --> 00:54:26.600
 their tongue and have their eyes roll back in their head. Basically I was doing

00:54:26.600 --> 00:54:30.360
 your averages and your so your five-year average of growth right now the last

00:54:30.360 --> 00:54:35.480
 five years is nine point six seven six percent and your ten-year average is six

00:54:35.480 --> 00:54:40.040
 point nine six four percent so I don't really know why we're using a four

00:54:40.040 --> 00:54:44.520
 percent if literally the last ten years average growth is nearly seven percent

00:54:44.520 --> 00:54:49.320
 so what I was gonna ask is this committee are we supposed to make a

00:54:49.320 --> 00:54:54.680
 recommendation for what percentage the other committee the main committee uses

00:54:54.680 --> 00:54:58.600
 when considering this bond program should we define a number say we're

00:54:58.600 --> 00:55:01.600
 gonna go with X. I think that was the intent is we would bring back a

00:55:01.600 --> 00:55:06.640
 recommendation to the larger body to consider. I mean this data also doesn't

00:55:06.640 --> 00:55:15.320
 include the 2008-2009 recession numbers so it's a little bit skewed. Well it is but

00:55:15.320 --> 00:55:19.720
 we're ten years removed from that. You know you could you can you could say

00:55:19.720 --> 00:55:25.480
 well it doesn't include the Great Depression of 1929 but we're we're well

00:55:25.480 --> 00:55:32.400
 past some of that and I think we have to also begin to project what we think the

00:55:32.400 --> 00:55:42.040
 growth rate is likely to be based on what we know is coming. Based on those

00:55:42.040 --> 00:55:46.800
 numbers I don't see where eight percent is aggressive at all I feel like your

00:55:46.800 --> 00:55:52.880
 average over ten years is six point nine six four so six would be your lowest

00:55:52.880 --> 00:55:56.760
 number not four yeah and I feel like you should be looking at you know six eight

00:55:56.760 --> 00:56:02.680
 ten. So what is the risk if you sell this package saying we anticipate eight

00:56:02.680 --> 00:56:07.280
 percent growth and you end up before. I think the risk the risk for that is

00:56:07.280 --> 00:56:13.260
 significant in that we lose our validity with with residents to some degree if we

00:56:13.260 --> 00:56:17.080
 go to them and say here's what we can do for you at this tax rate and then we

00:56:17.080 --> 00:56:34.240
 can't can't follow through on that I think that reflects. So your bond program you're

00:56:34.240 --> 00:56:37.280
 eventually going to issue the projects right but it just might take you a lot

00:56:37.280 --> 00:56:43.280
 longer to do it so right now you're talking about five six year program if

00:56:43.280 --> 00:56:47.720
 you come in a lower you know growth it may take you seven years or it just

00:56:47.720 --> 00:56:51.680
 depends on how you have to rebalance you know your tax rate or what all else is

00:56:51.680 --> 00:56:55.880
 going on at the city so basically just could prolong the whole process. And that

00:56:55.880 --> 00:57:06.800
 gives you more opportunity for inflation. I think you can look you can look back

00:57:06.800 --> 00:57:13.760
 from a historic standpoint look back at the 2005 bond issue and what happened then because that

00:57:13.760 --> 00:57:19.960
 basically 2005 I can't remember what the desk what the projection was on growth

00:57:19.960 --> 00:57:27.880
 then you get 2008 recession and so you can see what would happen and that bond

00:57:27.880 --> 00:57:37.920
 program stretched out ten years versus five. So staying more

00:57:37.920 --> 00:57:43.760
 conservative we can I wouldn't say guarantee we wouldn't come close to

00:57:43.760 --> 00:57:49.160
 doing what we needed to do in projects by staying more conservative because if

00:57:49.160 --> 00:57:53.800
 we don't if we do eight and then we don't hit that. Well if you stay

00:57:53.800 --> 00:57:59.160
 conservative and you don't you don't hit yeah and you only hit four percent

00:57:59.160 --> 00:58:06.680
 growth or you have a two percent in there in some year the double-edged sword

00:58:06.680 --> 00:58:11.920
 of value that assess value going up is the cost of construction is going up as

00:58:11.920 --> 00:58:18.120
 well and so you can do less projects with the money that you have and so you

00:58:18.120 --> 00:58:23.460
 know if we're think it's going to be eight percent increase every year we

00:58:23.460 --> 00:58:28.360
 better build everything first year yeah because inflation is going to eat into

00:58:28.360 --> 00:58:33.680
 the project. Yeah but I think what also comes with that is if you go with a

00:58:33.680 --> 00:58:38.840
 conservative estimate you're talking about asking the voters to authorize a

00:58:38.840 --> 00:58:45.000
 larger tax increase and that and that becomes the other side of that sword

00:58:45.000 --> 00:58:50.160
 really is that that the voters at some point might say I don't think I don't

00:58:50.160 --> 00:58:56.160
 think we can afford to do this and if we and if we're if we were to assume a more

00:58:56.160 --> 00:59:01.160
 what I'm gonna call more accurate growth rate then we're able to really have a

00:59:01.160 --> 00:59:04.960
 conversation with the voters based on what our history is telling us rather

00:59:04.960 --> 00:59:11.520
 than than a sense of the what-ifs and and the what-ifs are always going to be

00:59:11.520 --> 00:59:16.800
 out there but but but there's a bigger a bigger issue if you're asking the

00:59:16.800 --> 00:59:20.720
 voters for a for a significant tax increase that they don't want to support

00:59:20.720 --> 00:59:27.000
 and do you believe five cents is significant that's a that's a pretty big

00:59:27.000 --> 00:59:35.640
 chunk three cents wasn't it five cents so David when we were first getting

00:59:35.640 --> 00:59:40.680
 started I think you mentioned that you were gonna check on the legal

00:59:40.680 --> 00:59:45.840
 requirements of SB 2 or maybe it's some other legislation that stipulates what

00:59:45.840 --> 00:59:49.760
 assumptions and how that has to be worded on the bond measure is that

00:59:49.760 --> 00:59:56.280
 correct yes HB 477 I'm sorry I was thinking SB 2 yeah and that's that's

00:59:56.280 --> 00:59:58.720
 kind of that's what we're basically referring to here I think there's there's

00:59:58.720 --> 01:00:01.320
 more to it these are some of the bullet points of what we have to do in that

01:00:01.320 --> 01:00:04.640
 bond language but it's really focusing on what we have we have to really feel

01:00:04.640 --> 01:00:08.040
 say what was I increase on the debt service tax rate gonna be and what is

01:00:08.040 --> 01:00:12.560
 that impact on this hundred thousand dollar residential homes that gonna be

01:00:12.560 --> 01:00:18.760
 for yeah I think just as we talk through this it may be and maybe helpful to

01:00:18.760 --> 01:00:22.640
 understand what the requirements of the bond language that goes on the

01:00:22.640 --> 01:00:27.920
 proposition would be because to some extent right now it just feels like we

01:00:27.920 --> 01:00:33.000
 come up with a number and then that's what people read I think that's what I

01:00:33.000 --> 01:00:36.160
 think that's where it gets back to you know what they've asked for now is you

01:00:36.160 --> 01:00:38.960
 include the interest rate that you're projecting a lot of those different

01:00:38.960 --> 01:00:41.400
 pieces and there's a table that goes along with it but we can come back and

01:00:41.400 --> 01:00:48.120
 kind of show you what that table would look like in this scenario and also so

01:00:48.120 --> 01:00:53.440
 as I look at the in these various scenarios that the one or direction the

01:00:53.440 --> 01:00:57.600
 difference in the debt service rate from you know fiscal year to 2019 to the end

01:00:57.600 --> 01:01:05.480
 in 2026 am I correct in assuming that if that trends up that our ability to

01:01:05.480 --> 01:01:11.940
 issue another bond program at that six to seven to eight year out range would

01:01:11.940 --> 01:01:18.480
 be curtailed and that if it trends down then the difference there would suggest

01:01:18.480 --> 01:01:22.560
 a certain size of a bond program that that we could afford at that point if

01:01:22.560 --> 01:01:28.080
 the D turns up if the debt service rate trends up versus trending down the let

01:01:28.080 --> 01:01:33.320
 me try to explain some background so I think in our first meeting maybe there

01:01:33.320 --> 01:01:38.280
 was some discussion about how road maintenance is paid for and how you know

01:01:38.280 --> 01:01:42.480
 the general crack ceiling and that sort of thing is paid out of the the general

01:01:42.480 --> 01:01:47.840
 fund but the end-of-life road reconstructions have typically been

01:01:47.840 --> 01:01:53.880
 paid for out of out of bond monies right so right now we're we're planning this

01:01:53.880 --> 01:01:58.520
 bond to reconstruct a certain number of roads over the six-year period but after

01:01:58.520 --> 01:02:01.480
 that six years is up that we're not just going to magically not have to

01:02:01.480 --> 01:02:07.600
 reconstruct any roads right so the the question would be how much future debt

01:02:07.600 --> 01:02:12.960
 service relief do we or gap do we need to plan for to be able to continue

01:02:12.960 --> 01:02:19.360
 operating like that if that's what we do I wonder so I mean I think we can

01:02:19.360 --> 01:02:23.080
 definitely as far as scenarios in that case as you look at okay here's our debt

01:02:23.080 --> 01:02:27.280
 service falling off we add on the new programs here a new program we issue

01:02:27.280 --> 01:02:30.720
 those then it falls off obviously by debt falling off there's gonna be some

01:02:30.720 --> 01:02:34.440
 capacity there within the current debt tax rate to add more debt in future

01:02:34.440 --> 01:02:38.040
 years but maybe we go a little higher so that would be a whole nother you know we

01:02:38.040 --> 01:02:41.440
 can get to that point where we try to make them projections in future years but

01:02:41.440 --> 01:02:45.680
 ultimately that's going to be kind of a decision that you make later on but we

01:02:45.680 --> 01:02:48.800
 could I mean essentially we could do we can definitely show something like this

01:02:48.800 --> 01:02:52.960
 where we show if we did a 210 million dollar package on our scenarios how does

01:02:52.960 --> 01:02:57.560
 that debt fall off where do we sit on your seven of what our different debt

01:02:57.560 --> 01:03:00.800
 rate is what we the tax rate do we can go into those I think that'd be helpful

01:03:00.800 --> 01:03:10.560
 sure that's gonna ask I know this is a ridiculous question having my

01:03:10.560 --> 01:03:18.440
 experience but your Hillwood Hilltop securities guy where do y'all see

01:03:18.440 --> 01:03:29.960
 long-term debt going in terms of interest rates when I was doing I was

01:03:29.960 --> 01:03:37.280
 doing private partnerships and you know we hit it in 2000 2004 to 2006 we were

01:03:37.280 --> 01:03:44.360
 like just getting these incredible deals and everyone wanted to you know do more

01:03:44.360 --> 01:03:49.400
 do more do more and all of our consultants kept saying hey what goes

01:03:49.400 --> 01:03:54.840
 down has to go back up and you know we talked with you earlier it sounds like

01:03:54.840 --> 01:04:01.160
 we're in the bottom of a trough so you know here in the last two or three years

01:04:01.160 --> 01:04:05.000
 we've been fluctuating at bottom trough so like last year rates were up this

01:04:05.000 --> 01:04:09.560
 year they're they're way back down again and so next year you know they're most

01:04:09.560 --> 01:04:12.280
 likely gonna go up what's happening now with the Fed rates you know they're

01:04:12.280 --> 01:04:16.320
 cutting the short end of the curve but that's making the curve a lot flatter so

01:04:16.320 --> 01:04:20.240
 it's not really affecting the long end where you all are issuing you know 20

01:04:20.240 --> 01:04:26.840
 year debt okay so you know right now a 20 year deal at a double a rate you're

01:04:26.840 --> 01:04:30.320
 looking around you know 3% I know the current issue is a little bit lower than

01:04:30.320 --> 01:04:34.440
 that but that's just because there's a refunding that's shortening the life but

01:04:34.440 --> 01:04:39.960
 going forward I mean I think you know adding 50 basis points on the next year

01:04:39.960 --> 01:04:43.480
 issue just looking out a year from now I think that's you know a conservative

01:04:43.480 --> 01:04:47.680
 and prudent estimate and then looking into the future you know a hundred base

01:04:47.680 --> 01:04:50.640
 points on top of that you know getting you to around the four and a half five

01:04:50.640 --> 01:04:55.380
 percent range that's that's not unlikely if you look at you know a chart from the

01:04:55.380 --> 01:05:00.540
 80s I know what the 80s was really high but to today I mean if you take an

01:05:00.540 --> 01:05:04.280
 average across that I mean you're gonna be a lot higher than than where we are

01:05:04.280 --> 01:05:07.480
 today and it's gonna be you know a lot closer to you know probably that five

01:05:07.480 --> 01:05:14.080
 year you know the five percent interest rate but you know there's no telling but

01:05:14.080 --> 01:05:18.480
 right now we're at historically low rates and I wouldn't assume that they're

01:05:18.480 --> 01:05:23.520
 gonna stay around two and a half three percent so you that's what you were

01:05:23.520 --> 01:05:33.760
 showing previously is kind of four and a half percent in the long term right now

01:05:33.760 --> 01:05:37.880
 as I've said we go we show that incremental increase next year about four

01:05:37.880 --> 01:05:41.320
 and a half is just for planning purposes what we want to show in those out years

01:05:41.320 --> 01:05:46.440
 because it just gets almost dangerous to kind of assume those going to be low in

01:05:46.440 --> 01:05:52.000
 those out years because it fluctuates so much so that doesn't go that doesn't

01:05:52.000 --> 01:06:00.520
 directly address Tim's question which is are we using a you know putting the guy

01:06:00.520 --> 01:06:04.440
 in the street if you say well we're assuming four percent this you know

01:06:04.440 --> 01:06:11.040
 assess value growth and everyone says heck my property is going up eight

01:06:11.040 --> 01:06:23.480
 percent why don't I get some credit for that is that a fair remark so I'm just

01:06:23.480 --> 01:06:28.680
 trying to think how do you how do you slice the baby well I think

01:06:28.680 --> 01:06:35.000
 let's use a different metaphor I guess what I'll say to that is that for both

01:06:35.000 --> 01:06:40.440
 the 2005 bomb program and Tim you were right for that certainly you know 2014

01:06:40.440 --> 01:06:45.120
 bomb program we use very conservative estimates around four percent we're very

01:06:45.120 --> 01:06:49.020
 clear with the voters that at four percent this could take up to a four

01:06:49.020 --> 01:06:53.200
 cent tax rate increase or a three cent tax rate increase and be the new one of

01:06:53.200 --> 01:06:58.160
 those materialized I think what makes it very difficult is that if you go too

01:06:58.160 --> 01:07:02.520
 aggressive and we can argue whether that it's aggressive or not is you can get a

01:07:02.520 --> 01:07:07.040
 situation where you've now told voters we're gonna be at a percent and this

01:07:07.040 --> 01:07:12.000
 isn't gonna cost you any any tax rate increase how do you then go back to them

01:07:12.000 --> 01:07:17.360
 when that doesn't happen and now you've got to raise the tax rate I think it

01:07:17.360 --> 01:07:21.440
 puts you in a very difficult position with the voters about that so so I think

01:07:21.440 --> 01:07:25.320
 for other arguments about being or not being conservative I think I think the

01:07:25.320 --> 01:07:28.800
 four percent is really conservative is certainly what staff feels comfortable

01:07:28.800 --> 01:07:33.880
 with and the idea would be if if rates come in higher right praise values come

01:07:33.880 --> 01:07:37.640
 in higher then we'll be anticipated that we were not we're not gonna do those

01:07:37.640 --> 01:07:40.720
 tax rate increases which is exactly what's happened over the last two bomb

01:07:40.720 --> 01:07:44.960
 programs and potentially even further yeah correct it gives you from a

01:07:44.960 --> 01:07:49.040
 staffing perspective I think a little more flexibility and at least you're

01:07:49.040 --> 01:07:53.240
 being open with them with the voters where you may or may not be if you say

01:07:53.240 --> 01:07:57.520
 8% and it's not gonna take a tax rate increase and that doesn't come in I

01:07:57.520 --> 01:08:02.840
 think really all you have at that point is to extend that bond program it's

01:08:02.840 --> 01:08:05.880
 gonna think it's not a contract with the voters but it's gonna be very

01:08:05.880 --> 01:08:13.760
 difficult so if we're kind of a contract with the voters so so the question the

01:08:13.760 --> 01:08:16.880
 logical question that comes with that would be whether or not we think that

01:08:16.880 --> 01:08:23.080
 telling the rest of the committee and and the community that this could cost

01:08:23.080 --> 01:08:30.320
 five and a half to six cents are we comfortable doing that or do we have to

01:08:30.320 --> 01:08:34.680
 begin to talk about cutting the package and cutting back on the projects we're

01:08:34.680 --> 01:08:40.000
 gonna do and I don't know and I would just say my view I don't think we can

01:08:40.000 --> 01:08:44.500
 cut the projects that we have in line I think they're not really they're all

01:08:44.500 --> 01:08:48.880
 desperately needed and this does not include anything related to parks right

01:08:48.880 --> 01:08:54.720
 and lighting or lighting and if we add park money and now are we talking about

01:08:54.720 --> 01:09:06.160
 seven cents that's a that that's that's asking a lot of the voters even if we're

01:09:06.160 --> 01:09:09.320
 able to say well yeah but you know it'll grow faster than that and it won't

01:09:09.320 --> 01:09:13.320
 happen and that was a question as you were talking Tony I was thinking you

01:09:13.320 --> 01:09:21.180
 know how many voters are gonna remember the last two bond packages and they

01:09:21.180 --> 01:09:25.160
 didn't have a tax increase that's you know people typically don't remember

01:09:25.160 --> 01:09:28.600
 what things they didn't lose yeah well or they know what happened to their tax

01:09:28.600 --> 01:09:37.540
 bill right they know what they happen to their tax bill right so how would we

01:09:37.540 --> 01:09:42.480
 like to pursue pursue this would you want to someone put forward a motion of

01:09:42.480 --> 01:09:48.160
 at least one yeah I was actually gonna say I'm a numbers guy I mean I run a

01:09:48.160 --> 01:09:52.840
 business I know you got everything else besides numbers but numbers are for me

01:09:52.840 --> 01:09:56.080
 very key in understanding where the business is going whether we're making a

01:09:56.080 --> 01:09:59.480
 profit whether or not making a profit what needs to change what needs to be cut

01:09:59.480 --> 01:10:04.240
 but when you're looking at these numbers I feel like a 10-year average should be

01:10:04.240 --> 01:10:07.680
 the number they're using if it's six point nine six four and that's exactly

01:10:07.680 --> 01:10:12.420
 what it is and that should be what it is not six or five or some made up number I'm

01:10:12.420 --> 01:10:16.040
 really not to get bad at the city but I feel like y'all throwing a number out by

01:10:16.040 --> 01:10:20.960
 throwing out a four percent or a six or an eight it came out of the sky no no I

01:10:20.960 --> 01:10:23.880
 don't know where that number came from then I haven't heard of any definitive

01:10:23.880 --> 01:10:28.640
 of where you get that number from but I'm looking at numbers on the screen and

01:10:28.640 --> 01:10:33.880
 they tell me what the average is so that's what I'm saying I'm more concerned about the

01:10:33.880 --> 01:10:41.160
 impact as Tony was saying of going with an eight and then losing losing not not

01:10:41.160 --> 01:10:46.200
 kidding eight and having to then say oh never mind we said it wasn't gonna cost

01:10:46.200 --> 01:10:50.840
 you anything but by the way it's gonna cost you five cents that I think is

01:10:50.840 --> 01:10:58.880
 suicide basically I with regard to selling them yeah yeah I agree yeah yeah

01:10:58.880 --> 01:11:03.800
 I mean I think a lot of this may become more clear when we get an example sheet

01:11:03.800 --> 01:11:08.600
 of what the ballot initiative we have to look like given those regulations right

01:11:08.600 --> 01:11:13.920
 yeah that's a good point and I guess just a couple things well it may look

01:11:13.920 --> 01:11:18.000
 like these things came out of sky the previous committees have used the four

01:11:18.000 --> 01:11:21.480
 percent as a planning standard you're never gonna meet a finance director

01:11:21.480 --> 01:11:26.440
 that's going to suggest that we should go a bit more aggressive than that you

01:11:26.440 --> 01:11:32.200
 just won't because they don't like being wrong and I also don't agree yeah I also

01:11:32.200 --> 01:11:36.320
 don't agree with your 10-year average I think if you take if you take the the

01:11:36.320 --> 01:11:40.200
 two peaks out I can probably defend that more and you're probably still around

01:11:40.200 --> 01:11:45.000
 seven - because you take that last year the recession that our highest year out

01:11:45.000 --> 01:11:49.720
 and you may have a little bit more of a case to make here in terms of we are

01:11:49.720 --> 01:11:53.720
 being you know too conservative so if you're if you're landing that six to

01:11:53.720 --> 01:11:57.200
 seven - you've got some you've got a story to tell this sort of right in the

01:11:57.200 --> 01:11:59.920
 middle where you're all talking about and the whole point to give you those

01:11:59.920 --> 01:12:05.800
 scenarios just just to get your thoughts start a conversation I agree with Tim

01:12:05.800 --> 01:12:12.960
 that the four percent is just how you explain that I mean we tend to look at

01:12:12.960 --> 01:12:16.280
 in the municipal side you do the victory dance when you know you assume four and

01:12:16.280 --> 01:12:19.040
 you're able to get eight the problem is you left all that money on the table for

01:12:19.040 --> 01:12:21.840
 projects that are needed now and they're going to cost a lot more down the road

01:12:21.840 --> 01:12:26.160
 so I think if you can get somewhere in that six to seven two percent we can

01:12:26.160 --> 01:12:30.280
 explain that you could put an audit the oversight committee together every year

01:12:30.280 --> 01:12:33.280
 saying okay here was it here was the what we were planning on in terms of

01:12:33.280 --> 01:12:35.920
 growth assumptions here's how it measured up that's something that we're

01:12:35.920 --> 01:12:40.560
 not doing as overtly as we probably should be because staff is you know

01:12:40.560 --> 01:12:45.240
 taking credit for well we haven't raised the tax levy for the bonds but we were

01:12:45.240 --> 01:12:48.720
 not really showing it every year that this is what we planned on and here's

01:12:48.720 --> 01:12:52.280
 what actually happened so I think I think that's an important part of the

01:12:52.280 --> 01:12:56.280
 audit process moving forward is just sort of changing how we position that

01:12:56.280 --> 01:13:00.960
 because the other side of this is this the city has become so reliant on

01:13:00.960 --> 01:13:07.480
 issuing CEOs I would argue you couldn't backtrack it and trace it anyway so you

01:13:07.480 --> 01:13:10.280
 know that's one of the things that we're trying to do is getting our general fund

01:13:10.280 --> 01:13:14.680
 a little bit more structured in terms of let's get all the subsidization of

01:13:14.680 --> 01:13:19.560
 growth over to the side make sure that those programs are standing on its own

01:13:19.560 --> 01:13:23.360
 that we really can have discussions about what is happening once you isolate

01:13:23.360 --> 01:13:27.400
 the growth variable because it's clear there's millions of dollars a year of

01:13:27.400 --> 01:13:32.040
 subsidy happening in that area but I think if we build the formula this is

01:13:32.040 --> 01:13:35.520
 how we're going to go back and audit it and explain it to everybody each year

01:13:35.520 --> 01:13:40.200
 and make sure that we're on track and that becomes the subject of a you know

01:13:40.200 --> 01:13:44.040
 of an annual report or two something like that it makes it a whole lot easier

01:13:44.040 --> 01:13:48.520
 to get by it but I still think that 8% is way too aggressive and you're gonna

01:13:48.520 --> 01:13:52.120
 regret it because even if you hit it most years those years you don't

01:13:52.120 --> 01:13:58.000
 inflation is outpacing that right so you probably gonna want to end up in the

01:13:58.000 --> 01:14:02.200
 middle somewhere and I would agree with you probably more than the 7% but you

01:14:02.200 --> 01:14:05.200
 take those two out and you've got a really strong argument to what you're

01:14:05.200 --> 01:14:10.640
 trying to say so just kind of a little context for how how we're helping you

01:14:10.640 --> 01:14:15.640
 work through this but it I like I like your I like your question I like Tim's

01:14:15.640 --> 01:14:20.320
 point - you can you can get so conservative that these numbers seem

01:14:20.320 --> 01:14:24.440
 monstrous and people are scared right now you've just had the 750 million hit

01:14:24.440 --> 01:14:30.800
 from the school districts you know in that bond issue the city is 15% of the

01:14:30.800 --> 01:14:35.000
 tax bill 20% of tax bill at the most and yet that's what people are gonna

01:14:35.000 --> 01:14:42.940
 remember so the story you tell is important so let me make a motion which

01:14:42.940 --> 01:14:49.400
 is not to take a definitive position but rather that if we were to use a six and

01:14:49.400 --> 01:14:58.340
 a half percent assumption rate growth rate and what the ballot language might

01:14:58.340 --> 01:15:02.720
 look like if we could see all of that together with a six and a half percent

01:15:02.720 --> 01:15:09.760
 rate then then maybe take action on how we feel about that once we sort of see

01:15:09.760 --> 01:15:22.960
 it that's a really really vague way of making a motion in formal since there's

01:15:22.960 --> 01:15:25.800
 no not a quorum of the whole committee won't be a right motion but it's an

01:15:25.800 --> 01:15:36.880
 informal so any feedback on that Susan you're uncomfortable yeah okay

01:15:40.280 --> 01:15:44.400
 people feel more comfortable my understanding is like the main reason

01:15:44.400 --> 01:15:48.800
 this bond proposals before the city and for us is because we're expecting growth

01:15:48.800 --> 01:15:53.120
 we're expecting to need these roads to be wider and have more traffic and to

01:15:53.120 --> 01:15:59.000
 handle more growth I mean it seems counterintuitive to not expect to have

01:15:59.000 --> 01:16:02.360
 this growth that you're planning for to make these streets wide otherwise why

01:16:02.360 --> 01:16:06.520
 would you be widening the streets so I mean it's it's kind of to me they feed

01:16:06.520 --> 01:16:09.640
 off each other if you're gonna project the growth and you're gonna project you

01:16:09.640 --> 01:16:14.120
 need these roads couple of these roads it's already that should have been done

01:16:14.120 --> 01:16:20.160
 ten years ago yeah and I think you have a high school that's really yeah one and

01:16:20.160 --> 01:16:25.120
 I think the community is gonna say yes we have to have this for the high school

01:16:25.120 --> 01:16:30.680
 because there's too many parents who have waited in line so my to my CPA and

01:16:30.680 --> 01:16:36.720
 to my former city CFO what would be a great that you know taking Tim's idea

01:16:36.720 --> 01:16:41.040
 what would you a rate be you would be comfortable with I'd be comfortable with

01:16:41.040 --> 01:16:51.520
 five going between six and four yeah five okay or four and a half you're

01:16:51.520 --> 01:16:54.240
 getting too conservative at that point I'll just be honest with you I think that

01:16:54.240 --> 01:16:58.000
 when you do that you're you're asking the voters for a big number if you want

01:16:58.000 --> 01:17:06.840
 to do all the projects that need to be done well well but I think I mean I like

01:17:06.840 --> 01:17:14.800
 the more conservative approach that if you it's it's if you under promise and

01:17:14.800 --> 01:17:22.000
 over deliver because if you say five percent and with this here's here's a

01:17:22.000 --> 01:17:25.880
 rate increase we're gonna have to have a five which is not as high as four but

01:17:25.880 --> 01:17:34.320
 certainly less than six and how do you defend five percent well you know go

01:17:34.320 --> 01:17:39.200
 back to when it was negative in 2010 and you know there's a lot of other things

01:17:39.200 --> 01:17:47.560
 in there too that we have the sales tax which is part of the part of the half

01:17:47.560 --> 01:17:51.440
 cent that comes back you know we've seen what's happened to sales tax in the last

01:17:51.440 --> 01:18:00.800
 year so and it's the fact that most of the growth has been driven by value on

01:18:00.800 --> 01:18:10.280
 existing properties not not this point in fact we probably lost many properties

01:18:10.280 --> 01:18:19.240
 that were paying tax to University of North Texas or hospitals becoming not

01:18:19.240 --> 01:18:26.520
 for profits I mean I'm having said that I'm good with five Eric how about you

01:18:26.520 --> 01:18:32.680
 well I just to repeat what I tried to say earlier maybe not very effectively I

01:18:32.680 --> 01:18:38.780
 think I I just want to see what the ballot initiatives is gonna have to look

01:18:38.780 --> 01:18:47.320
 like yeah so if we need to be the ones who direct what growth percentage is

01:18:47.320 --> 01:18:51.720
 used for that assumption then I think we need to look at the recommendation of

01:18:51.720 --> 01:18:55.160
 four percent and maybe a different recommendation and understand what

01:18:55.160 --> 01:19:00.640
 governs our ability to actually claim a percentage on that language on the

01:19:00.640 --> 01:19:05.840
 ballot you mean we need definitely as far as writing the knowledge we can we

01:19:05.840 --> 01:19:08.800
 can write in whatever scenarios you'd lying multiple scenarios that's no

01:19:08.800 --> 01:19:18.800
 problem so we have that we have to five or six cents per thousand dollars what

01:19:18.800 --> 01:19:24.640
 is that on the average house that's that's different right your average tax

01:19:24.640 --> 01:19:29.760
 bill is different than the language we have to have on the ballot correct yeah

01:19:29.760 --> 01:19:39.480
 so it's $100,000 so right on the debt service side also when you think of a

01:19:39.480 --> 01:19:43.680
 percentage tax bill increase they're not just thinking of the city they're

01:19:43.680 --> 01:19:47.800
 thinking about the entire right you know they're thinking about school districts

01:19:47.800 --> 01:19:53.080
 and everything and so somehow if we can I don't know how you saw it but it's got

01:19:53.080 --> 01:19:58.040
 a bit smaller say it's about about a sense about $30 it's $30 a year so then

01:19:58.040 --> 01:20:07.520
 that makes a lot of difference I mean I need that exact amount but also the the

01:20:07.520 --> 01:20:12.720
 part of the equation that's within the city's control is a right it's not the

01:20:12.720 --> 01:20:20.000
 assessed value right right so if you if you build in you go into a bond and you

01:20:20.000 --> 01:20:27.400
 say this is a potential rates we could be based upon this growth rate if you

01:20:27.400 --> 01:20:32.280
 exceed the growth rate you always have the ability to back down on the rate

01:20:32.280 --> 01:20:38.320
 increase right but you're not gonna have the ability if you don't have the growth

01:20:38.320 --> 01:20:45.280
 rate to say well we missed it instead of five cent increase it's gonna have to be

01:20:45.280 --> 01:20:50.720
 seven cents because that's when you start cutting programs for extending the

01:20:50.720 --> 01:20:57.800
 projects yeah well I guess to my early concern you know if your growth or if

01:20:57.800 --> 01:21:01.160
 the actual growth falls short of projected growth and your debt service

01:21:01.160 --> 01:21:06.120
 rate has to increase you have lower flexibility to you know replace roads

01:21:06.120 --> 01:21:09.060
 that you need to replace later which then means we're in the same boat where

01:21:09.060 --> 01:21:16.400
 everybody's gonna be on the roads continuously playing catch-up yeah John

01:21:16.400 --> 01:21:23.320
 I know you're you're biting your tongue I'm not a banker so I but if you're

01:21:23.320 --> 01:21:26.520
 going to a bank they ask for a five or ten-year business plan they look past

01:21:26.520 --> 01:21:30.920
 that's six point nine six four percent of course I just took the numbers that

01:21:30.920 --> 01:21:34.640
 you had on the screen it is the last ten years includes the negative one and a

01:21:34.640 --> 01:21:39.720
 half percent and that's where I came up with almost seven I'd probably be fine

01:21:39.720 --> 01:21:43.480
 with six percent because that's what they presented was a four and six and

01:21:43.480 --> 01:21:47.040
 eight and it sounds like everybody in this committee threw the four out

01:21:47.040 --> 01:21:51.960
 actually because nobody said four so as far as my understanding is I think the four

01:21:51.960 --> 01:21:56.680
 should be out and we need to be deciding something closer to six that's not what

01:21:56.680 --> 01:22:07.440
 I said I would prefer four actually I was thinking five was a compromise so yes

01:22:07.440 --> 01:22:12.400
 since we're in the since we're in the court in the military you always look at

01:22:12.400 --> 01:22:18.680
 three courses of action so we're gonna look at three courses of action so about

01:22:18.680 --> 01:22:25.120
 language for four percent a five percent and a six percent if I could add a small

01:22:25.120 --> 01:22:32.640
 thing to that perhaps if there's I think those are great I don't really know what

01:22:32.640 --> 01:22:39.400
 area cities in Texas or what the right region is to consider how how have they

01:22:39.400 --> 01:22:42.920
 what percentage have they put on their ballot initiatives say in the last five

01:22:42.920 --> 01:22:50.480
 years is there a general rule what's the methodology as far as the verbiage or

01:22:50.480 --> 01:22:56.520
 the adult percentage the assumed AV growth I mean up to this I don't know

01:22:56.520 --> 01:23:02.360
 that the assumed AV growth even is included now moving forward so I think

01:23:02.360 --> 01:23:05.400
 it's really just been focused on what is that depth increase and that's really

01:23:05.400 --> 01:23:09.240
 gonna be yeah that right that's gonna be so determined it on the size of the bond

01:23:09.240 --> 01:23:14.940
 package and other considerations yeah it just it strikes me as odd that you you

01:23:14.940 --> 01:23:18.560
 put a ballot initiative in front of people where you have to give specific

01:23:18.560 --> 01:23:21.720
 numbers and those specific numbers are based on a growth assumption that you're

01:23:21.720 --> 01:23:26.200
 not putting an initiative well yeah I think when you see the language it's

01:23:26.200 --> 01:23:29.840
 pretty complicated already and there's a lot of numbers so the more you put on

01:23:29.840 --> 01:23:33.640
 there but I think there's two things there's there's what the ballot

01:23:33.640 --> 01:23:41.700
 language is and there's also what the what the explanation of the program is

01:23:41.700 --> 01:23:47.600
 going to be and you can all you can always include that information in that

01:23:47.600 --> 01:23:52.480
 area but yeah I appreciate the four five and six examples and what that would

01:23:52.480 --> 01:23:58.600
 look like could I just also ask do we have any kind of projections about

01:23:58.600 --> 01:24:02.360
 housing developments that are going to be coming online over the course of the

01:24:02.360 --> 01:24:06.040
 next five to six years commercial development that's going to be coming

01:24:06.040 --> 01:24:13.360
 online in that time frame that would it would in turn be something that informs

01:24:13.360 --> 01:24:20.080
 our projected growth rate because of these things that are at various stages

01:24:20.080 --> 01:24:27.240
 of coming online well isn't that there's 707 approved

01:24:27.240 --> 01:24:40.600
 developments I Tim when he's looking at a number of projects or projected value

01:24:40.600 --> 01:24:49.560
 yes well we haven't obviously yeah I mean we haven't said here's the

01:24:49.560 --> 01:24:53.120
 development we haven't have coming on next year and made those assumptions we

01:24:53.120 --> 01:25:01.400
 can definitely look at that and see what the best way to incorporate that is so

01:25:01.400 --> 01:25:05.200
 my suggestion would be to bring those three courses of action back to us and

01:25:05.200 --> 01:25:18.120
 that changes quarter to quarter but but we also know for example that and and

01:25:18.120 --> 01:25:22.320
 and admittedly it's it's still very vague but that you've got Hunter Ranch

01:25:22.320 --> 01:25:29.600
 and coal ranch that could be at the end of this because it conceivably when

01:25:29.600 --> 01:25:33.560
 they're starting to come online or that there are other developments that are

01:25:33.560 --> 01:25:36.720
 occurring somebody was telling me about the development that's occurring over

01:25:36.720 --> 01:25:48.000
 by the Walmart grocery store that's now now coming on well and PNC just

01:25:48.000 --> 01:25:57.520
 approved chairman drive that's a major development got approved yeah you're

01:25:57.520 --> 01:26:05.620
 right so that come to council this month so I mean even if you ignored on our

01:26:05.620 --> 01:26:12.520
 bridging coal ranch there's other significant developments that are

01:26:12.520 --> 01:26:18.960
 definitely wheels are turning will start will be coming online in this time frame

01:26:18.960 --> 01:26:29.040
 but historically we only had 420 440 million right that's why big number to

01:26:29.040 --> 01:26:35.080
 make an impact on valuation you know 12 billion so are you comfortable with that

01:26:35.080 --> 01:26:40.480
 approach yeah absolutely we can come back with everything requested thus far

01:26:40.480 --> 01:26:44.840
 as far as a timeline I'm assuming you want to have another one of the this

01:26:44.840 --> 01:26:50.520
 group meet again we can talk about that now not next week so not not every two

01:26:50.520 --> 01:26:54.400
 weeks do you want it we can do it all the same

01:26:54.400 --> 01:26:58.440
 I actually have one question it goes back to my original question the purpose

01:26:58.440 --> 01:27:04.400
 of our committee is it to pick and help the committee establish a percent and

01:27:04.400 --> 01:27:09.200
 all I've heard us do not to be this you know the thorn in everyone's side is

01:27:09.200 --> 01:27:13.920
 three more numbers so I thought our committee was supposed to pick a number

01:27:13.920 --> 01:27:19.080
 and then that's what's presented to the other committee not three more I agree

01:27:19.080 --> 01:27:23.680
 but I think to see the three numbers to pick a number so I think Eric's point is

01:27:23.680 --> 01:27:31.680
 is and I agree with it is there's language and it's all in the a lot of it

01:27:31.680 --> 01:27:35.880
 has to do with the presentation and to the public and to see those three

01:27:35.880 --> 01:27:42.280
 scenarios and then we can then I think bring a motion or we can't bring a

01:27:42.280 --> 01:27:45.600
 motion in this group please make a recommendation to the larger group this

01:27:45.600 --> 01:27:51.160
 is what we think should should it be you know is it four percent probably not but

01:27:51.160 --> 01:27:57.960
 you know these guys put a lot of effort into it and haven't been a government

01:27:57.960 --> 01:28:03.320
 bureaucrat for most of my life I want to honor their hard work and and their

01:28:03.320 --> 01:28:11.040
 understanding implications the wording is going to be identical in all three if

01:28:11.040 --> 01:28:16.320
 we see if we don't if we don't look at all three then we're basically in my

01:28:16.320 --> 01:28:21.440
 opinion making a decision without really understanding what the sensitivity is of

01:28:21.440 --> 01:28:24.560
 those decisions that makes sense I understand if you're gonna have three

01:28:24.560 --> 01:28:29.480
 options but I would really like one of them to be based on historical data can

01:28:29.480 --> 01:28:44.360
 can it can we not go with these numbers that everyone keeps pulling out of here can one of them be whether it's 10 year, 15, 20, you all want to pick what that data is based on, can we have a number that's actually based on historical data?

01:28:44.360 --> 01:28:51.760
 I've built a lot of performance you know I just did a ten million dollar deal in you

01:28:51.760 --> 01:28:55.760
 keep you don't have to have the exact number sometimes we're trying to

01:28:55.760 --> 01:29:02.840
 communicate very complicated topics to a very uninformed public and to be able to

01:29:02.840 --> 01:29:06.400
 just say well you know this is a range that we looked at I think is not

01:29:06.400 --> 01:29:16.240
 unreasonable so am I wrong in that? I don't think you're wrong you know I guess my question is so then what I'm hearing the committee saying is you're

01:29:16.240 --> 01:29:21.520
 comfortable with 210 is that is that what I'm hearing the subcommittee saying

01:29:21.520 --> 01:29:26.840
 is it you're comfortable with 210 it's a matter of is it four is it five is it six

01:29:26.840 --> 01:29:30.340
 percent is it eight percent and then what does that mean on a potential tax rate

01:29:30.340 --> 01:29:51.360
 increase is that kind of what I'm hearing yeah in my business I have to wear many hats for government's sales and I'm totally agreeing this has to be sold to the general public if we pick a 210 million dollar bond program or whatever that number is this eventually has to be sold to the citizens of Denton and the more

01:29:51.360 --> 01:30:21.240
 conservative we are on that number the harder it is to get the citizens to approve it and that's why I'm really focused on the statistics and the historical data because that is helping us I don't really I feel like everyone's fighting me in this room because the better and closer we are to the statistical data of 6.9% over 10 years is going to help us sell this to the citizens and that's why I'm kind of like not understanding why y'all fight so much you want to be conservative and all this but so I'm gonna take the opposite standpoint did you

01:30:21.240 --> 01:30:50.040
 live here in the 1980s okay what happened to home values in the 1980s what happened home values in 2001 what happened home values in 2008 great so instead just follow that pattern and every seven to ten years you can expect an economic downturn so we can

01:30:50.040 --> 01:30:54.520
 realistically expect an economic downturn sometime in the future we are in the

01:30:54.520 --> 01:31:02.300
 longest bull run bull market ever is that accurate statement so let's hedge our

01:31:02.300 --> 01:31:18.360
 bets a little I think John if if I thought 8% was was was a realistic number

01:31:18.360 --> 01:31:22.500
 I'd be I would have brought to you a 400 million dollar bomb program not a 200

01:31:22.500 --> 01:31:26.000
 million dollar bomb program I think you know by staying conservative and I think

01:31:26.000 --> 01:31:30.420
 6% probably still a conservative number just to be clear with you you know the

01:31:30.420 --> 01:31:35.640
 reality is if if in three years things work out the way we hope that they're

01:31:35.640 --> 01:31:40.260
 going to work out then likely we'll be back to you or to another committee for

01:31:40.260 --> 01:31:44.520
 another bomb program you know that could be parked it could be far more extensive

01:31:44.520 --> 01:31:49.760
 than what we've presented here you know and so but but again I think I think the

01:31:49.760 --> 01:31:54.000
 210 if the committee the subcommittees making that recommendation that's you

01:31:54.000 --> 01:31:58.360
 know we're at the 210 and then we can bring back as many scenarios you want

01:31:58.360 --> 01:32:02.480
 with the ballot language and have you make make a recommendation on what that

01:32:02.480 --> 01:32:07.540
 needs to be so I I think the one thing that goes with that 210 question because

01:32:07.540 --> 01:32:12.400
 I think it's a really important question is are we leaving something out that the

01:32:12.400 --> 01:32:16.780
 committee as a whole is going to want is that are we going to need to put park

01:32:16.780 --> 01:32:23.720
 land into this bond to go above the 210 to go above the 210 I think and I'm

01:32:23.720 --> 01:32:28.660
 really saying is that something that the committee is going to you know if we if

01:32:28.660 --> 01:32:33.360
 we were to assume 210 and the committee says no it needs to be

01:32:33.360 --> 01:32:43.120
 250 21 what you know are we then yeah are we then trimming something else and

01:32:43.120 --> 01:32:48.080
 up I have a point I'd like to agree with that comment because there's a lot of

01:32:48.080 --> 01:32:51.200
 things that I actually haven't really pushed for in the committee meetings

01:32:51.200 --> 01:32:55.760
 and one of them is street lighting I agree yeah I agree street another thing

01:32:55.760 --> 01:33:00.160
 that I've talked to the city about is East McKinney Street and I don't have to

01:33:00.160 --> 01:33:03.680
 make a formal comment in the meeting later tonight but I don't I want to see

01:33:03.680 --> 01:33:08.000
 East McKinney as a possibility on here for us to consider and think about and

01:33:08.000 --> 01:33:12.120
 I'm talking about the section of the city took over thanks to the city for

01:33:12.120 --> 01:33:15.720
 doing that but now the city is responsible for widening McKinney all

01:33:15.720 --> 01:33:20.920
 the way to Luke 28 and that's a very busy road it's I'm just saying there's

01:33:20.920 --> 01:33:24.880
 those are two things that one's on here and one's not that would definitely

01:33:24.880 --> 01:33:30.240
 impact why I'm saying we need to be better on our rate here because I don't

01:33:30.240 --> 01:33:36.040
 think two tens enough well if you if you're moving towards a five to a six

01:33:36.040 --> 01:33:42.280
 percent area you can probably obviously bump that number up to 230 240 my only

01:33:42.280 --> 01:33:47.000
 concern with you know I think we just need to crunch the numbers more because

01:33:47.000 --> 01:33:51.100
 the city's never been in a position growing this fast where we've had to

01:33:51.100 --> 01:33:56.220
 face a rate rollback and I think what I'm concerned about to be honest is if

01:33:56.220 --> 01:34:00.400
 we're wrong and we don't perform on the you know and hit these numbers and then

01:34:00.400 --> 01:34:04.600
 we have to go to voters saying we've got to hire more police officers and we need

01:34:04.600 --> 01:34:08.040
 you know is that going to get held against the city at that point and

01:34:08.040 --> 01:34:11.840
 there's a there's a fine I totally agree we could probably come up with a billion

01:34:11.840 --> 01:34:16.880
 dollars in need here and there's no question but the question is every time

01:34:16.880 --> 01:34:19.680
 you go out to the voters you need to be able to say this is what we told you

01:34:19.680 --> 01:34:23.880
 this is what we did and I have it just David never talked about this yesterday

01:34:23.880 --> 01:34:28.400
 it's just apparent to me that in three four years we're probably going to be

01:34:28.400 --> 01:34:32.600
 going to a rollback election given our public safety needs in particular where

01:34:32.600 --> 01:34:36.960
 I've been taking vacant positions since I got here and we've moved 20 of those

01:34:36.960 --> 01:34:42.600
 over to the PD but they're way behind and so I'm worried that we'd be able to

01:34:42.600 --> 01:34:46.080
 perform you know do what we say we're going to do report back that we did that

01:34:46.080 --> 01:34:49.800
 so when we need them for operational help down the road given this new

01:34:49.800 --> 01:34:58.120
 legislation that we've built that track record when do you think if if ever

01:34:58.120 --> 01:35:02.120
 assuming no downturns those kinds of things when do you think the next bond

01:35:02.120 --> 01:35:06.080
 package would be needed to come back to the voters probably three or four years

01:35:06.080 --> 01:35:11.520
 and so that parkland could be in that street lighting could be in that so

01:35:11.520 --> 01:35:17.040
 probably so one of the things I was wrestling through thinking through is

01:35:17.040 --> 01:35:26.040
 what are there other sources of to pay for some of these requirements so yes it

01:35:26.040 --> 01:35:35.120
 parts the answer is yes and street lights we are looking other other

01:35:35.120 --> 01:35:39.120
 electric utilities then municipally only the utilities in other communities about

01:35:39.120 --> 01:35:46.320
 50% it's a 50/50 split about 50% put in everything and the other 50% the city

01:35:46.320 --> 01:35:53.000
 puts it in and and in the MOU takes it over in Denton the city puts it in and

01:35:53.000 --> 01:35:59.480
 then the DME takes it over we're looking at how can we phase that onto existing

01:35:59.480 --> 01:36:03.760
 streets that already that we had not new streets existing street corridors how

01:36:03.760 --> 01:36:07.600
 much can we afford within the DME budget and so that is something we're currently

01:36:07.600 --> 01:36:11.920
 working on and could help address some of that but again we're still looking at

01:36:11.920 --> 01:36:15.760
 that and I'm on the park side we're also looking at what are essentially impact

01:36:15.760 --> 01:36:19.480
 fees for you right that go into funds that can be used for parkland acquisition

01:36:19.480 --> 01:36:22.320
 that Gary mentioned last time as well so those are some other sources of funds

01:36:22.320 --> 01:36:28.200
 that could be used for open space piece so it's $24.99 a text out route yes and

01:36:28.200 --> 01:36:33.880
 did they not put in light no text out apparently made that change a couple

01:36:33.880 --> 01:36:37.880
 years ago on new roadways that are constructed they no longer put in

01:36:37.880 --> 01:36:44.680
 streetlights so we're now having to account for that and we actually we had

01:36:44.680 --> 01:36:57.320
 to pay for an upgrade to I-35 for lighting otherwise you'd be coming up

01:36:57.320 --> 01:37:05.160
 from Dallas and all this and be dark and Denton so I think the consensus is 210

01:37:05.160 --> 01:37:12.320
 is what we want to shoot for and then we're still thinking through whether

01:37:12.320 --> 01:37:18.080
 open space and street lighting are above the line or below the line and that we

01:37:18.080 --> 01:37:25.280
 then want to look at a four percent five percent and six percent ballot language

01:37:25.280 --> 01:37:33.000
 and what that looks like to meet after on July 11th seems that three o'clock so

01:37:33.000 --> 01:37:36.360
 if we did say we met here at three o'clock to go through the scenarios I

01:37:36.360 --> 01:37:40.360
 think as we talked to the schedule for the whole committee agile dry 11th

01:37:40.360 --> 01:37:43.400
 meeting for the committee in the hole I think we really have to get to that

01:37:43.400 --> 01:37:46.520
 point where you all start talking about poor prioritization and going through

01:37:46.520 --> 01:37:50.240
 that exercise so they don't kind of set the stage for your conversation as a

01:37:50.240 --> 01:37:57.440
 committee on what goes below and above the line and you've already prioritized

01:37:57.440 --> 01:38:02.600
 right these are priorities are just staff we're showing a recommendation

01:38:02.600 --> 01:38:06.560
 this is not we're not set with this but this is just for discussion purposes for

01:38:06.560 --> 01:38:10.200
 the committee there just aren't that many projects here that we're gonna you

01:38:10.200 --> 01:38:23.600
 know we're gonna really be and I and and if it is the case that we're at 210 then

01:38:23.600 --> 01:38:28.440
 I I don't see that we're gonna be talking about cutting anything it's

01:38:28.440 --> 01:38:37.200
 already been cut the staff has already done that no I'm talking about it

01:38:37.200 --> 01:38:42.920
 street lighting is not in their open space that in essence the staff

01:38:42.920 --> 01:38:49.680
 recommendation right now has cut it to 210 or 209 whatever that right but is

01:38:49.680 --> 01:38:55.880
 there any flexibility in the current staff option column like on Ryan Road

01:38:55.880 --> 01:39:01.280
 to divide that back down to 4 million and then you know use the other four to

01:39:01.280 --> 01:39:07.240
 buy street lighting or sure and in the grim Jim Crystal we can take it we can we

01:39:07.240 --> 01:39:11.800
 can try to find other funds for that especially if the council increases the

01:39:11.800 --> 01:39:16.040
 impact the which will be recommending shortly so you do you do have a little

01:39:16.040 --> 01:39:21.920
 bit of flexibility we moved we moved the street rehab program that that number

01:39:21.920 --> 01:39:26.100
 has essentially doubled after we met with the committee last time and we had

01:39:26.100 --> 01:39:30.440
 that in-depth discussion about our OCI rating so yeah you could you could say

01:39:30.440 --> 01:39:35.480
 you know what let's move that back to 55 million or whatever and between that

01:39:35.480 --> 01:39:39.040
 and Ryan Road we've got some money for street lighting open space you can

01:39:39.040 --> 01:39:44.480
 certainly do that but to your point Tim yeah we did prioritize the the projects

01:39:44.480 --> 01:39:51.480
 I would the only exception that is I put the firing range last up on prop one so

01:39:51.480 --> 01:39:55.240
 the committee could see it and you know we just don't get very many opportunities

01:39:55.240 --> 01:39:58.160
 where we can possibly bring in two to three hundred million dollars of other

01:39:58.160 --> 01:40:05.040
 people's money so that was that was a huge that was a huge driver for us you

01:40:05.040 --> 01:40:09.400
 know and then the street rehab we've got dollars going through 2020 so we need

01:40:09.400 --> 01:40:12.560
 dollars starting in 2021 again but that number could go down a little bit we

01:40:12.560 --> 01:40:16.680
 just wouldn't be able to make as big of a run on the OCI but if you felt like

01:40:16.680 --> 01:40:20.200
 that was the trade-off to get street lighting and open space dollars that's

01:40:20.200 --> 01:40:27.960
 fine so I think to the question of is 210 the right number I'm kind of I'm not

01:40:27.960 --> 01:40:34.600
 as concerned about a specific number as I am about making sure the projects on

01:40:34.600 --> 01:40:40.000
 there will easily pay for themselves with the assessed value of the residents

01:40:40.000 --> 01:40:45.480
 that they support right but that will be a full committee discussion I'm sure as

01:40:45.480 --> 01:40:55.680
 we go through them all right as far as dollars go I think I think actually maybe

01:40:55.680 --> 01:41:01.120
 I should ask what's more important the dollar amount are how it affects the

01:41:01.120 --> 01:41:05.040
 taxes and the effective tax rate I think that's really what we're supposed to be

01:41:05.040 --> 01:41:11.400
 deciding if we want to keep the effective tax rate below 0.05 and and we

01:41:11.400 --> 01:41:17.800
 agree on you know whatever the percent it's five percent let's just say then

01:41:17.800 --> 01:41:27.040
 that should be what determines how much this and I push back on that and that

01:41:27.040 --> 01:41:33.880
 I'm more concerned about preparing for when I 35 becomes a mud hole in five

01:41:33.880 --> 01:41:41.680
 years and preparing for Denton High School and preparing for all the growth

01:41:41.680 --> 01:41:50.600
 and that's good experience mainly on the south side of town and you know we can

01:41:50.600 --> 01:41:54.920
 say well we're gonna we can pat ourselves on the back that we kept the

01:41:54.920 --> 01:41:59.920
 growth rate under a certain amount but we shortchanged ourselves for future

01:41:59.920 --> 01:42:04.040
 growth that we know is going to come and people are going to behave in life

01:42:04.040 --> 01:42:07.640
 because we don't do everything that we knew we should have done like we should

01:42:07.640 --> 01:42:12.520
 have done with Mayhill Road and Luke 288 does that make sense

01:42:12.520 --> 01:42:16.760
 I'm actually gonna bring up later tonight about Ryan but it's because I

01:42:16.760 --> 01:42:20.560
 think Ryan and vintage should be connected so I don't I don't agree with

01:42:20.560 --> 01:42:24.320
 making it a two-lane road in the center median because I think it should be

01:42:24.320 --> 01:42:26.880
 connected to vintage but that's something I'm gonna talk about later

01:42:26.880 --> 01:42:30.960
 just leave it alone taking it out yeah well I wouldn't spend any money on it if

01:42:30.960 --> 01:42:34.240
 the city doesn't what I'm getting at is I would take it out and say don't do it

01:42:34.240 --> 01:42:36.840
 till you know what you're gonna do with the road if you don't know if you're

01:42:36.840 --> 01:42:41.200
 gonna connect it don't spend the money right now but that's because I feel we

01:42:41.200 --> 01:42:44.680
 should do street lights and I feel there are things that may be more important

01:42:44.680 --> 01:42:49.080
 make you know I'm just saying as far as the long term we don't know I mean it's

01:42:49.080 --> 01:42:51.640
 kind of up in the air whether they're connected or not connected it's all I'm

01:42:51.640 --> 01:42:55.400
 getting at and I've seen cities build things and then ten years later like I

01:42:55.400 --> 01:42:59.040
 35 actually five years later tear it all up again because they want to put an

01:42:59.040 --> 01:43:03.160
 express lane down the middle but well that's not the city events that's the

01:43:03.160 --> 01:43:11.560
 thing well I don't think that's gonna happen with Bonnie gray I don't think

01:43:11.560 --> 01:43:16.620
 there's any intention to tie Ryan in the vintage of Todd's data that he shared

01:43:16.620 --> 01:43:21.100
 last week or maybe two weeks ago I mean we haven't shared with the committee yet

01:43:21.100 --> 01:43:28.040
 basically that Hickory Creek provides such a significant reliever they just

01:43:28.040 --> 01:43:32.160
 didn't think it was worth moving forward it does need to be rebuilt or

01:43:32.160 --> 01:43:36.400
 upgraded at least resurfaced if not and improved in some areas which is where we

01:43:36.400 --> 01:43:40.560
 came down that four million but there's no intention we have one committee

01:43:40.560 --> 01:43:44.360
 member advocating to tide in the village but Todd it was not in agreement with

01:43:44.360 --> 01:43:46.360
 her

01:43:50.360 --> 01:44:02.800
 any other thoughts so right now we're probably two propositions if you were to

01:44:02.800 --> 01:44:06.800
 add open space you'd have to add a we'd add a third of proposition but street

01:44:06.800 --> 01:44:12.400
 lighting could likely just roll into our so so actually what's not here and you

01:44:12.400 --> 01:44:16.800
 spoke to it earlier but there's nothing related in the public art component

01:44:16.800 --> 01:44:21.240
 there's got to be added in the price so that's about nine hundred thousand and we

01:44:21.240 --> 01:44:24.240
 have this kind of five hundred thousand gap here so that we would have to find

01:44:24.240 --> 01:44:28.600
 a way to fit it in depending on councils direct or the committee's direction and

01:44:28.600 --> 01:44:34.640
 that would that would likely all be in public safety because we no longer do

01:44:34.640 --> 01:44:39.320
 public art on the correct correct with the current policy but we'll bring that

01:44:39.320 --> 01:44:42.720
 up again with the committee this afternoon

01:44:47.800 --> 01:44:55.120
 well we discussed or that I mentioned having this group come back together on

01:44:55.120 --> 01:45:00.240
 July 11th wanted to finish that thought so David and I talked we really need to

01:45:00.240 --> 01:45:07.480
 wrap up business as a whole committee on July 18th correct I think as we look at

01:45:07.480 --> 01:45:10.560
 the schedule and we'll talk about this layer 18th is one goal I think we can

01:45:10.560 --> 01:45:15.000
 easily do the 25th as well as was our original plan we've kind of pushed our

01:45:15.000 --> 01:45:19.640
 dates go to council to August 1st so we can easily fit in the July 25th date

01:45:19.640 --> 01:45:22.440
 given where we are now that we haven't gotten to the prioritization

01:45:22.440 --> 01:45:25.960
 conversation it's I imagine we're probably gonna need that July 25th so

01:45:25.960 --> 01:45:29.160
 that would give us three more meetings all right so if we could meet July 11th

01:45:29.160 --> 01:45:34.360
 and come up kind of commit to come out of that meeting with a recommendation to

01:45:34.360 --> 01:45:43.160
 the full committee right of a specific dollar size as a target and then

01:45:43.160 --> 01:45:50.520
 recommended a B or tax increase which is what you're looking for right yeah

01:45:50.520 --> 01:45:54.360
 it's well I feel like when you're talking to voters that's what they care

01:45:54.360 --> 01:45:58.760
 about is their pocket yeah that percent increase and how it's gonna affect them

01:45:58.760 --> 01:46:03.000
 and that's why for me to be closer to the seven like said I'd agree to six

01:46:03.000 --> 01:46:06.080
 because it's a percent lower than seven and a percent higher than five I don't

01:46:06.080 --> 01:46:09.320
 know but but we're our committee we're supposed to make that recommendation as

01:46:09.320 --> 01:46:15.800
 a whole so as far as I just feel like the better we project closer to what we

01:46:15.800 --> 01:46:19.000
 think it's really gonna be the easier it is probably to sell because that

01:46:19.000 --> 01:46:22.960
 projection is higher than what the conservative number is and it may allow

01:46:22.960 --> 01:46:30.640
 us to go above 110 but that's still a debatable whatever the county to ten

01:46:30.640 --> 01:46:37.920
 that's all right yeah I think that's a good direction one thing I heard city

01:46:37.920 --> 01:46:43.340
 managers say earlier was that the city hadn't faced a rollback election

01:46:43.340 --> 01:46:47.360
 recently and that it's looking increasingly likely that that may happen

01:46:47.360 --> 01:46:52.280
 in the next three five years so I think I said this earlier but I'd really like

01:46:52.280 --> 01:46:56.480
 to understand if if there is any relationship between these different

01:46:56.480 --> 01:47:05.040
 options and how soon or how much that is likely to happen because I think that

01:47:05.040 --> 01:47:09.960
 plays into what is responsible to ask the voter for at this point so does

01:47:09.960 --> 01:47:12.320
 everyone understand what they mean by the three and a half percent rollback

01:47:12.320 --> 01:47:18.160
 election no so kind of back to the understand that's great to the

01:47:18.160 --> 01:47:21.120
 discussion I'll just pull this up so you can see which other three and a half

01:47:21.120 --> 01:47:25.000
 percent rollback here this was eight percent it's now gone to three and a

01:47:25.000 --> 01:47:27.200
 half percent so it's what we were talking about a little bit earlier where

01:47:27.200 --> 01:47:31.600
 that maintenance and operations piece for our operations our property tax that

01:47:31.600 --> 01:47:37.080
 goes to the general fund if that rate goes the calculation kind of works is

01:47:37.080 --> 01:47:41.040
 really focused on that if that rate goes up to the to the taxpayer to an average

01:47:41.040 --> 01:47:45.360
 taxpayer essentially from existing values to current values if it goes up

01:47:45.360 --> 01:47:49.360
 over three and a half percent with a tax rate we're putting forward we would have

01:47:49.360 --> 01:47:54.120
 to go to the voters on it for an election on our operations now if that

01:47:54.120 --> 01:47:58.040
 in November of that year that election failed we have to go back to our current

01:47:58.040 --> 01:48:04.440
 tax rate okay so the election would say do you want to hire these police officers

01:48:04.440 --> 01:48:08.480
 or roll your taxes back how does that work all the specifics on the language

01:48:08.480 --> 01:48:12.760
 are still being developed so that it's all fresh but it's most likely I'm sure

01:48:12.760 --> 01:48:16.040
 we have some kind of justification we can put forward for the operations cost

01:48:16.040 --> 01:48:20.160
 but it's gonna be specifically on do you approve us going to this tax rate or do

01:48:20.160 --> 01:48:23.680
 we or do you think we should go back to that lower tax rate and it's

01:48:23.680 --> 01:48:28.360
 automatically triggered this on now it's automatically triggered whereas previously

01:48:28.360 --> 01:48:31.920
 it was a petition that you had when it's 8% you had to have a petition to get to

01:48:31.920 --> 01:48:34.600
 that point so now if you go over that three and a half you're automatically

01:48:34.600 --> 01:48:38.000
 there so what we've tried to show here is that it's really me between that one

01:48:38.000 --> 01:48:43.040
 and two cents increase is gonna trigger that for us in future years there are

01:48:43.040 --> 01:48:46.760
 some caveats with that one piece of it is if we don't go up say all the way to

01:48:46.760 --> 01:48:51.600
 that 1.3 that we get to bank some of that for future years but it is a

01:48:51.600 --> 01:48:54.760
 significant constraint on us in those future years especially as we're looking

01:48:54.760 --> 01:48:58.400
 to hire significant amount of officers and different things and I think I just

01:48:58.400 --> 01:49:02.280
 want to be clear for Eric to that my understanding is we back out the debt

01:49:02.280 --> 01:49:06.600
 service rate so it's not as if it's not as if the debt service it's really

01:49:06.600 --> 01:49:10.040
 convoluted it's not as if the debt service rate hurts us there it's the

01:49:10.040 --> 01:49:15.040
 story we tell the voters this was our plan we've been able to execute our plan

01:49:15.040 --> 01:49:21.920
 so go ahead and support this next it's it's all about credibility right here's my point

01:49:21.920 --> 01:49:26.760
 do you want to meet at three again on that 11th or is going to be a three or

01:49:26.760 --> 01:49:52.960
 would forward what would be better for the city staff for for is fine to keep

01:49:52.960 --> 01:50:00.520
 you guys from having to wait around for school okay so we'll meet again on July

01:50:00.520 --> 01:50:07.160
 11th at 4 p.m. in here yep and we'll come out there with a recommendation of

01:50:07.160 --> 01:50:23.420
 full committee all right thank you all thank you thank you I will miss the July