Aug 07, 2026 City Council Work Session

[CALL TO ORDER]

[00:00:19]

FRIDAY, AUGUST 7TH, 2026. THIS IS THE CITY COUNCIL WORK SESSION AT THE COUNCIL CHAMBERS, 401 EAST VIRGINIA STREET, MCKINNEY, TEXAS. FIRST ITEM IS PUBLIC COMMENTS ON AGENDA ITEMS. IS THERE ANYBODY HERE THAT WOULD LIKE TO SPEAK? HAVING NONE. WE'LL MOVE ON. NEXT

[26-0755 Discuss Fiscal Year 2026-27 Budget]

AND THEN MR. HOLLOWAY AND HIS TEAM WILL TAKE OVER AND RUN YOU THROUGH A PRESENTATION. IT ALL THE KEY FUNDS IN THE BUDGET. TALK A LITTLE BIT ABOUT OUR REVENUES AND OUR EXPENSES, AND THEN WE'LL WRAP IT UP. WE OBVIOUSLY WILL TAKE AS MUCH TIME AS YOU NEED TO ANSWER ANY QUESTIONS. THERE WILL BE QUESTIONS MAYBE TODAY, AND THERE MAY BE QUESTIONS SUBSEQUENT TO THIS. AND WE, OF COURSE, ARE SERVE AT YOUR PLEASURE, AND WE'LL ANSWER THOSE AS BEST WE CAN THROUGH THIS PROCESS. JUST A REMINDER, WE'RE LOOKING AT WE HAVE A PUBLIC INPUT SESSION AT OUR NEXT COUNCIL MEETING ON AUGUST 18TH. THE BUDGET, THE PUBLIC HEARING, WHICH IS REQUIRED BY LAW, WILL BE SCHEDULED THE FIRST MEETING IN SEPTEMBER ON SEPTEMBER 5TH, I BELIEVE. AND THAT IS ALSO THE BUDGET ADOPTION, SEPTEMBER 1ST. I'M SORRY THAT MONDAY, TUESDAY, SEPTEMBER 1ST AND BUDGET ADOPTION AS WELL WILL BE SCHEDULED FOR THAT DATE. MORE ON THAT TO FOLLOW. AND I AM LOOKING AT MY READING GLASSES ARE HERE. THANK GOD I WAS STALLING TRYING TO MAKE SURE I GOT MY READING GLASSES. SO THANK YOU. OKAY, SO I'LL MAKE A FEW COMMENTS. BEAR WITH ME, BUT I WILL BE NOT SPEAKING MUCH FOR THE REST OF THE MEETING SINCE MR. HOLLOWAY WILL. SO YOU'LL HAVE TO INDULGE ME FOR THIS, BUT. SO I'M PLEASED TO BE BEFORE YOU AGAIN TO PRESENT THE CITY OF MCKINNEY'S FISCAL YEAR 27 BUDGET. IT'S HARD TO BELIEVE WE'RE TALKING ABOUT FISCAL YEAR 27. NOW, AS ALWAYS, IT IS A PRIVILEGE TO HAVE THE OPPORTUNITY TO PRESENT THE CITY'S BUDGET PROPOSED BUDGET TO OUR LEGISLATIVE BODY, OUR BOARD OF DIRECTORS, THOSE THAT STEER THE BICYCLE OF PUBLIC POLICY IN MCKINNEY TO PRESENT THE BUDGET IS IN MANY WAYS THE EASY PART. I WANT TO RECOGNIZE AND THANK THE HARD WORK OF STAFF WHO COLLABORATE, COOPERATE AND SOMETIMES DEBATE THE FORMATION OF THE BUDGET, CHIEF FINANCIAL OFFICER MARK HOLLOWAY AND HIS TEAM TREVOR DAGAN, TRACY PHELAN, PALOMA RODRIGUEZ. THEY ALL PUT IN THE THE DETAILED, YEOMAN'S WORK TO PULL THIS BUDGET TOGETHER. AND FOR THAT, WE'RE GRATEFUL. I ALSO WANT TO GIVE A SHOUT OUT TO LEWIS MCCLAIN. HE'S A BIT OF A SCION OF THE TEXAS PUBLIC FINANCE COMMUNITY. HE ALSO CONTRIBUTED SOME THIRD PARTY ANALYSIS IN PREPARATION OF THIS BUDGET. AND WE'LL REFERENCE A COUPLE OF HIS THINGS THROUGHOUT. THIS YEAR'S BUDGET DIFFERS FROM THE PAST NINE THAT I'VE PRESENTED, AND ONE IMPORTANT ASPECT THIS YEAR, OUR RESIDENTIAL PROPERTY TAX BASE ACTUALLY SAW A MODEST DECREASE IN VALUATIONS, PROPERTY VALUES AND REVENUE REQUIREMENTS, KNOWN AS THE TAX LEVY, WORK TOGETHER TO PRODUCE A TAX RATE. AND AS ALGEBRA WOULD HAVE IT, THE TAX REVENUE OR LEVY IS A FUNCTION OF VALUES TIMES RATES. IF VALUES DECREASE, THE RATE HAS TO INCREASE TO YIELD THE SAME REVENUE REQUIREMENTS. IT'S FOR THIS REASON THAT THE STATE REQUIRES US TO STATE OUR BUDGET IN THE PARLANCE OF TAX LEVY, AND IN THEIR CASE, IN THIS CASE, THE NO NEW REVENUE RATE, A RATE BASED ON EXISTING REVENUE ONLY WITH NO NEW TAXES, FEES, OR OTHER REVENUE SERVICES AND SERVES AS THE BASELINE PLUS ANY POTENTIAL PERCENTAGE INCREASE.

THE STATE CAPS THAT, PLUS NO NEW REVENUE PERCENTAGE INCREASE AT 3.5% PER FISCAL YEAR. OUR FISCAL YEAR 27 PROPOSED BUDGET IS NO. NEW REVENUE, PLUS 1.76%. THAT IS WELL BELOW THE REGIONAL RATE OF INFLATION OF 2.6% AND THE NATIONAL RATE OF 3.5%. AND PUSHING UP. WE ALWAYS TRY TO KEEP OUR PROPOSED BUDGET AT OR BELOW THE RATE OF INFLATION, AS TAXPAYERS HAVE ENOUGH INFLATIONARY PRESSURE TO CONTEND WITH, AND WE DO OUR BEST TO KEEP OUR BUDGETS REASONABLE. IT ALSO IS A GRADUAL WAY TO COMPEL US TO EXPLORE MORE EFFICIENT WAYS TO DELIVER PUBLIC SERVICES TO THE COMMUNITY. NOW, WHAT CONFUSES A LOT OF FOLKS IS THAT THEY SEE THE MCKINNEY'S BUDGET HAS INCREASED OVER THE YEARS AND TAX BILLS HAVE GONE UP WELL.

[00:05:01]

HOWEVER, ONE MUST ADJUST FOR OR NORMALIZE FOR POPULATION GROWTH AND INFLATION. WHEN DOING THAT, YOU WILL SEE THAT OUR PER CAPITA SPENDING IS ABOUT THE SAME NOW AS IT WAS THEN. AND WHEN YOU LOOK AT OTHER FACTORS THAT DIRECTOR HOLLOWAY WILL SHOW LATER, LIKE NUMBER OF EMPLOYEES PER 1000 RESIDENTS, ETC. MANY IS MCKINNEY IS AMONG THE LEANEST OF ALL OF OUR PEER COMMUNITIES. THIS GRAPHIC WILL SHOW YOU THE PER CAPITA ANALYSIS AS NORMALIZED AS ADJUSTED FOR INFLATION FROM 2018 TO THIS CURRENT PROPOSED BUDGET. THE LAST TWO LINES, THE LAST TWO BUDGETS ARE DOTTED BECAUSE FISCAL YEAR 26 IS NOT YET COMPLETE, FISCAL YEAR 27 IS PROPOSED, BUT YOU'LL SEE HERE US, COMPARED TO A COUPLE OF OUR PEER COMMUNITIES, WE ARE SUBSTANTIALLY BELOW THEM IN COST PER CAPITA WITHIN OUR BUDGET. I WANT TO TALK A LITTLE BIT ABOUT VALUE TO HOMEOWNERS. WE HAVE ANOTHER GRAPHIC HERE THAT REMINDS FOLKS WHAT OUR SHARE OF THE PORTION OF YOUR OF THE TAX BILL. MCKINNEY IS 23% OF THE OVERALL TAX BILL. AS AS NATURALLY WOULD BE EXPECTED, YOUR SCHOOL DISTRICTS ARE THE BIGGEST PORTION, 63% IN MCKINNEY. AND THEN YOU HAVE OTHER TAXING AGENCIES, MEANING COLLIN COUNTY AND COLLIN COLLEGE FOLKS, BUT THEY SPREAD THEIRS OUT OVER A MUCH LARGER TAX BASE RATHER THAN JUST THE CITY OF MCKINNEY. IT'S THE ENTIRE COUNTY. SO THAT'S A HELPFUL GRAPHIC TO REMIND FOLKS WHAT PERCENTAGE OF THEIR TAX BILL THAT WE'RE TALKING ABOUT HERE TODAY, 23% OF IT. PART OF THE BUDGET PROCESS IS TO ENSURE THAT WE HAVE ALIGNMENT BETWEEN THE CITY COUNCIL'S POLICY PRIORITIES AND THE PROPOSED BUDGET. THE NEXT PART OF MY COMMENTS WILL FOCUS ON HIGHLIGHTS OF HOW WE ARE MEETING THE COUNCIL'S GOALS. WITH THE PROPOSED BUDGET. I WANT TO GO THROUGH VARIOUS FUNCTIONAL AREAS OR OPERATING AREAS WITHIN THE CITY AND TALK ABOUT HOW THE PROPOSED BUDGET IS MEETING THOSE POLICY GOALS, AS DEFINED BY THE COUNCIL AND YOUR STRATEGIC GOAL SETTING AND AND OUR STRATEGIC PILLARS. THE PROPOSED BUDGET EXPANDS FIRE DEPARTMENT STAFFING BY ADDING TEN SWORN POSITIONS. THIS INCLUDES THREE CAPTAINS, THREE DRIVER OPERATORS AND FOUR FIREFIGHTERS, ENABLING THE DEPLOYMENT OF A NEW FIRE ENGINE COMPANY AT FIRE STATION ONE, ESTABLISHING MCKINNEY'S FIRST DUAL COMPANY STATION, AND SUPPORTING THE CITY'S ABILITY TO MAINTAIN THE ISO ONE RATING. A RECENT ASSESSMENT OF MCKINNEY FIRE DEPARTMENT RESPONSE TIMES DETERMINED THAT USING DUAL COMPANY OPERATIONS AT STATIONS ONE AND 11 IN THE COMING YEARS IS A MORE EFFECTIVE AND SIGNIFICANTLY MORE COST EFFICIENT STRATEGY THAN CONSTRUCTING NEW STATIONS. WHILE ADDITIONAL STATIONS WILL EVENTUALLY BE NEEDED AS GROWTH CONTINUES NORTHWARD, CURRENT CHALLENGES ARE DRIVEN BY CAPACITY RATHER THAN COVERAGE. THE CITY'S EXISTING STATION LOCATIONS REMAIN WELL SUITED TO MEET ESTABLISHED RESPONSE TIME GOALS. IT'S IMPORTANT TO NOTE THAT THE PROPOSED BUDGET ALSO INCLUDES THE USE OF TRES TWO FUNDING TO PAY FOR FOUR POLICE OFFICER POSITIONS, AND A SERGEANT FOR THE TIME THAT THEY WILL SPEND, OR STAFFING THE COMMERCIAL PASSENGER SERVICE TERMINAL, MCKINNEY NATIONAL. THIS WILL HELP RELIEVE PRESSURE ON THE PROPERTY TAX LEVY BY USING TERRORIST FUNDING DESIGNATED FOR THIS ZONE. PUBLIC WORKS THE PROPOSED BUDGET INCLUDES STAFF AND EQUIPMENT TO SUPPORT THE CITY'S EXPANDING MUNICIPAL FACILITIES FOOTPRINT. THE PROPOSED ADDITIONS TO THE FACILITIES TEAM WILL BRING THE CITY CLOSER TO INDUSTRY STANDARD BEST PRACTICES REGARDING REQUIRED STAFFING EQUIPMENT TO MAINTAIN THE CITY'S OVERALL FACILITIES. SQUARE FOOTAGE THE BUDGET ALSO INCLUDES APPROXIMATELY $700,000 TO EXPAND THE EXISTING POTHOLE MAINTENANCE PROGRAM, WITH THE GOAL OF REDUCING RESPONSE TIMES FOR REPAIRS AND HIGHLIGHTS THE CITY'S USE OF MODERN TECHNOLOGY LIKE OUR PATCH TRUCK, TO DELIVER MORE EFFICIENT AND HIGH QUALITY REPAIRS. LAST FISCAL YEAR, THE CITY COUNCIL GRANTED THE DOLLARS TO BEGIN A FORMAL INFLOW AND INFILTRATION. WE KNOW IT, AS I AND I REDUCTION PROGRAM FOR OUR I AND I. THE PROGRAM IS DESIGNED TO ACTIVELY LOCATE AND REDUCE I AND I INTO THE CITY'S SANITARY SEWER SYSTEM. THE PROPOSED BUDGET ALLOWS FOR AN ADDITIONAL $230,000 TO BE ALLOCATED FOR ANY REPAIRS IDENTIFIED BY THE PROGRAM, GIVEN THE ANTICIPATED NORTH TEXAS MUNICIPAL WATER DISTRICT RATE INCREASES OVER THE NEXT SEVERAL FISCAL YEARS, REDUCTION OF I AND I FLOWS WILL HELP WITH OVERALL COST CONTROL. ALSO NOTED THE BUDGET INCLUDES FUNDING TO BEGIN DEVELOPMENT OF A FUTURE PUBLIC WORKS CAMPUS EXPANSION NEAR LAKE FOREST AND THE FUTURE LOT PARKWAY, WITH THE GOAL OF SUPPORTING THE CITY'S GROWTH AND ENSURE HIGH SERVICE LEVELS FOR CRITICAL INFRASTRUCTURE AS WE GROW INTO THE NORTHWEST SECTOR UNDER PARKS AND RECREATION, THE DEPARTMENT IS CELEBRATING A SUCCESSFUL YEAR AS THEY CONTINUE TO GROW, REFRESH AND EXPAND THE CITY'S PARKS AND RECREATION ASSETS. THE PARKS

[00:10:02]

THE VOTER AUTHORIZED $20 MILLION. THEY ACTUALLY AUTHORIZED MORE THAN THAT. BUT WE ARE ISSUING $20 MILLION OR WE ISSUED 20 MILLION OF THAT THIS PAST YEAR, AND THEN WE'LL HAVE ANOTHER 20 MILLION NEXT YEAR. ADDITIONALLY, THROUGHOUT 20 2027, THE TEAM IN OUR CONSTRUCTION PARTNERS WILL COMPETE, COMPLETE A FULL RENOVATION OF IRWIN PARK, CONTINUE PHASE ONE OF TOWN LAKE PARK REIMAGINING. COMPLETE THE NEW SOFTBALL FIELD COMPLEX AT GABE NESBITT COMMUNITY PARK, AND REFRESH NEIGHBORHOOD PARKS IN VARIOUS CORNERS OF THE COMMUNITY, AND EFFORTS TO BOLSTER THE COUNCIL'S STRATEGIC DESIRE FOR ENHANCED QUALITY OF LIFE AMENITIES. FINALLY, FOR THE FIRST TIME, AT LEAST IN MY TENURE, MCKINNEY COMMUNITY DEVELOPMENT CORPORATION WILL BE CONTRIBUTING TO FUNDING OPERATIONAL ACTIVITIES IN THE PARKS DEPARTMENT, 1.2 MILLION IN SALES TAX FUNDS ARE PROPOSED TO BE SPENT ON VEHICLES, EQUIPMENT AND LONG RANGE PLANNING EXERCISES. THESE OFFSET EXPENSES THAT ARE VALUABLE NOT ONLY TO THE PARKS DEPARTMENT BUT TO THE GENERAL FUND AT LARGE, ALLOWING FOR PROPERTY TAX FUNDING TO BE DEPLOYED IN OTHER AREAS. AND I JUST WANT TO CALL OUT AND THANK THE MCTC FOR THEIR CONTINUED PARTNERSHIP IN THE INFORMATION TECHNOLOGY, DATA AND ANALYTICS AREA. THE CITY'S I.T. DEPARTMENT IS STRENGTHENING ITS SECURITY INFRASTRUCTURE AS GLOBAL THREATS EVOLVE. WE'VE RECENTLY SEEN HOW WATER SYSTEMS HAVE BEEN HACKED IN MINNESOTA, AND I BELIEVE IN GEORGIA AS WELL. SO THIS IS A REAL THREAT. THE 2027 BUDGET INCLUDES INVESTMENT IN ZERO TRUST ARCHITECTURE TO ENABLE CONTINUOUS AUTOMATED USER VERIFICATION ACROSS NETWORKS AND DEVICES. ADDITIONALLY, THE CITY WILL ADD A NETWORK SECURITY ARCHITECT AND A SERVER SYSTEMS ADMINISTRATOR TO ENHANCE THE EXPERTISE NEEDED TO PROTECT CORE OPERATIONS NOW AND IN THE FUTURE. FINALLY, WORKING WITH THE DATA AND ANALYTICS DEPARTMENT, IT WILL SUPPORT THE CITY'S AI AND INNOVATION EFFORTS BY ADDING AN AI SOLUTIONS ENGINEER TO HELP DEVELOP AND DEPLOY AGENTS THAT STREAMLINE OUR WORKFLOWS.

TOGETHER WITH DATA AND ANALYTICS. ROLL OUT OF THE SNOWFLAKE PLATFORM, THESE INVESTMENTS POSITION 2027 TO BE A STANDOUT YEAR FOR DATA INNOVATION ACROSS THE ORGANIZATION. MUNICIPAL COURTS AND OUR MUNICIPAL COURT CONTINUES TO OPERATE EFFECTIVELY AND EFFICIENTLY, RECORDING GROWING CASE LOAD AND FINAL VERDICTS IN 2025 AND 2026 AND THE 27 BUDGET, THE EFFORT TO PLAN FOR THE NEXT GENERATION OF MUNICIPAL COURT FACILITY IS PROPOSED. WHILE THE FINAL LOCATION IS STILL TO BE DETERMINED, IT IS IMPERATIVE THAT WE BEGIN PLANNING FOR THE SPACE NEEDED AT A FUTURE COURT FACILITY. CURRENT BUILDING OPENED IN 1966 AND HAS SERVED THE COMMUNITY WELL FOR 60 YEARS, BUT IT'S GETTING A LITTLE LONG IN THE TOOTH AS WE ALL KNOW, IN OUR INTERGOVERNMENTAL RELATIONS FUNCTION, 2027 WILL MARK THE 90TH CONVENING OF THE TEXAS LEGISLATURE, AND WITH IT, A FLURRY OF WORK AND DISCUSSION RELATING TO PROTECTING LOCAL CITIES ABILITY TO OPERATE EFFECTIVELY. THAT SAID, WE ARE COMMITTED TO WORKING WITH OUR STATE PARTNERS TO ADVANCE PROJECTS AND PROPOSALS THAT WILL SERVE ALL OF MCKINNEY FOR YEARS TO COME. SPECIFICALLY, WE'LL BE PROPOSING TO ADVOCATE ENHANCED ROADWAY FUNDING FOR OUR REGION FROM TXDOT, MORE INVESTMENTS AT MCKINNEY NATIONAL AIRPORT, FROM STATE AND FEDERAL LEVEL, AND ADJUSTMENTS TO HISTORIC ANNEXATION AND LAND USE LEGISLATION THAT HAS LEFT AREAS LIKE OURS IN NORTH TEXAS WITH MORE QUESTIONS THAN ANSWERS WHEN IT COMES TO THE DELIVERY OF CERTAIN MUNICIPAL SERVICES IN THE DEVELOPMENT SERVICES FIELD, WE'RE GOING TO TALK ABOUT SEVERAL FUNCTIONAL DEPARTMENTS WITHIN DEVELOPMENT SERVICES. WE'RE GOING TO START WITH CODE SERVICES. AS MCKINNEY CONTINUES TO GROW, SO DO THE EXPECTATIONS FOR SAFE, WELL MAINTAINED NEIGHBORHOODS AND RESPONSIVE COMMUNITY SERVICES. THE PROPOSED BUDGET INCLUDES ADDITIONAL STAFFING FOR ANIMAL SERVICES AND CODE ENFORCEMENT TO HELP KEEP PACE WITH THE INCREASING SERVICE DEMANDS AND PROACTIVELY ADDRESS ISSUES THAT AFFECT THE APPEARANCE, SAFETY AND LIVABILITY OF OUR NEIGHBORHOODS. AN ENGINEERING TO SUPPORT MCKINNEY'S EXPANDING INFRASTRUCTURE NETWORK, THE PROPOSED BUDGET INVESTS IN KEY STAFFING TO IMPROVE PLANNING, DELIVERY AND LONG TERM MANAGEMENT OF PUBLIC AND PRIVATE PROJECTS. A NEW EROSION CONTROL INSPECTOR AND SPLIT FUNDED CIP ENGINEER WILL STRENGTHEN CAPITAL PROJECT DELIVERY, SUPPORT DEVELOPMENT AND PROTECT CRITICAL INFRASTRUCTURE AND NATURAL RESOURCES. ADDITIONALLY, ADDING A SIGNAL SYSTEMS OPERATOR TO MANAGE THE TRANSPORTATION MANAGEMENT CENTER WILL OPTIMIZE TRAFFIC OPERATIONS, ENHANCE SYSTEM PERFORMANCE, AND IMPROVE MOBILITY CITYWIDE. THIS IS A FIRST POSITION FOR US WHEN OUR PEER COMMUNITIES HAVE MULTIPLE POSITIONS FOR THIS ROLE WE HAVE.

WE'VE BEEN DOING IT AS A COLLATERAL DUTY SINCE INCEPTION. SO THIS IS A A POSITION THAT SORT OF CATCHES US UP WITH SOME OF OUR NEIGHBORING PEER COMMUNITIES IN HOUSING AND COMMUNITY DEVELOPMENT. THE PROPOSED BUDGET INCLUDES A NEW HOUSING SERVICES MANAGER POSITION TO STRENGTHEN THE HOUSING AND COMMUNITY DEVELOPMENT DEPARTMENT, AND ITS CAPACITY TO ADDRESS MCKINNEY'S EVOLVING HOUSING NEEDS. WORKING ALONGSIDE THE HOUSING

[00:15:02]

THESE RECOMMENDATIONS ARE BASED ON THE CITY'S BIANNUAL PAY AND COMPENSATION STUDY, AND ARE IN ALIGNMENT WITH THE COUNCIL'S GOAL OF ESTABLISHING PAY RANGES AT THE 55TH PERCENTILE OF OUR COMPARABLE COMMUNITIES. WE'VE TALKED ABOUT THIS BEFORE. WE ARE FAIRLY LEAN AND RELATIVELY RELATIVE TO OUR PEER COMMUNITIES IN COLLIN COUNTY, BUT YOU PAY FOR PRODUCTIVITY AND THE COUNCIL HAS CONSISTENTLY SAID, WE WANT TO MAKE SURE THAT WE'RE FAIRLY COMPENSATED IN OUR EMPLOYEES, AND THIS IS WHAT WE'RE TRYING TO DO WITHIN REASON. SO THE COST OF LIVING ADJUSTMENT IS A PART OF THAT. THERE'S ONE MORE IMPORTANT SECTION TO NOTE IN THESE COMMENTS. THEN I'LL BE DONE. THESE ARE THE INCREASING HIDDEN COSTS THAT WE'RE MORE AND MORE HAVING TO BEAR, WHETHER FROM UNFUNDED MANDATES, FROM THE STATE OR FROM COUNTY SERVICES THAT ARE BEING PUSHED ONTO THE CITIES, INCLUDING MCKINNEY. HERE ARE SOME EXAMPLES OF THOSE. WE'VE GOT AN ADDITIONAL $29,000 IN HEALTH INSURANCE COSTS AS A RESULT OF HOUSE BILL 4144. THAT COVERS SWORN POLICE AND FIRE PERSONNEL FOR A PRESUMPTION OF DISABILITY FOR CERTAIN TYPES OF CANCER, STROKE AND HEART DISEASE THAT ENSURES POLICE AND FIRE PERSONNEL FOR THREE YEARS POST RETIREMENT. THIS WILL INCREASE THE $65,000 NEXT FISCAL YEAR AND THEN THEREAFTER THAT IS THAT IS PLACED ON US BY THE STATE. WE HAVE NO CHOICE. THAT IS NOT A SUPPLEMENTAL ITEM. IT'S NOT A DISCRETIONARY ITEM. IT IS BAKED INTO OUR BUDGET.

THE CITY WILL INCUR AN ADDITIONAL $34,000 FOR WARRANT SERVICES PROVIDED BY THE COUNTY, AND THAT THE COUNTY PREVIOUSLY FUNDED THEMSELVES. THEY'RE NOW PASSING SOME OF THOSE COSTS ON TO THE CITIES. OUR SHARE OF THAT IS $34,000. ADDITIONAL COSTS OF ANIMAL CONTROL INCLUDE

[00:20:02]

AND NOW I'M GOING TO TURN IT OVER TO MR. HOLLOWAY TO TAKE OVER FROM HERE AND OUTLINE THE REMAINDER OF THIS WORKSHOP. AND THEN ONE FINAL THING, MR. MAYOR. WHENEVER I MEAN, THIS IS A THIS IS YOUR TIME. WHENEVER YOU FEEL LIKE YOU NEED A BREAK OR DO A QUICK RECESS OR COFFEE OR BIOLOGICAL BREAK, WE CAN DO. SO JUST FLAG US AND LET US. CORRECT. YES, SIR. BUT WE WON'T RUN COMMERCIALS IN THE SAME. YEAH. THAT'S RIGHT. WELL THANK YOU PAUL, THAT WAS VERY THOROUGH. EXCUSE ME. MARK, MAY I SAY SOMETHING? FIRST OF ALL, I WANT TO GO ON RECORD THANKING THE ENTIRE STAFF FOR PREPARING THIS BUDGET. FOR THOSE OF YOU THAT HAVE NOT LIVED THROUGH THE PAINFUL AND ARDUOUS PROCESS OF COMPLETING A BUDGET ON A VERY COMPLEX ORGANIZATION WITH MOVING PARTS, YOU DON'T KNOW WHAT YOU'RE MISSING. SO FIRST OF ALL, I WANT TO MAKE SURE I PUBLICLY THANK YOU. I KNOW WHAT YOU'RE GOING THROUGH, PUTTING THIS BUDGET TOGETHER. AND THEN JUST SO THAT EVERYBODY, FROM MY PERSPECTIVE, UNDERSTANDS MY, MY VIEW ON THIS, THIS BUDGET, AND I'VE BEEN VERY VOCAL ABOUT CHANGES THAT ARE AFOOT. AND WE'VE GOT PUBLIC I MEAN, WE'VE GOT PRIVATE INDUSTRY THAT IS RETOOLING THE WAY THEY'RE DOING BUSINESS UNDER THIS NEW ECONOMY.

AND WE NEED TO BE EXTREMELY SENSITIVE TO WHERE THE TAXPAYERS ARE COMING FROM AND HOW THOSE TAXPAYERS ARE HAVING TO RESPOND TO ECONOMIC CHANGES. AND, YOU KNOW, AGAIN, MY CONCERN IS, IS WE'RE IN A VERY STRONG POSITION COMPARED TO SURROUNDING AREA GOVERNMENT ENTITIES AND WANT TO TAKE ADVANTAGE OF THAT STRENGTH AND MAKE STRATEGIC CHANGES FROM A POINT OF STRENGTH AS OPPOSED TO REACTION REACTING TO THOSE IN A IN A RESPONSIVE OR NEGATIVE RESPONSE. AND ONE OF THE THINGS THAT CAUSES ME CONCERN AT THIS JUNCTURE IS, IS RECENTLY THIS WEEK THAT THE TEXAS COMPTROLLER OFFICE ASKED FOR A LIST OF POSITIONS TO BE ELIMINATED IN THE NEXT COMING BUDGET. AND THIS IS A STATE AGENCY IN A STATE THAT IS GROWING EXPONENTIALLY AND REVENUES GROWING. AND WHETHER THEY PULL THE TRIGGER ON THAT, WHO KNOWS.

BUT THEY GOING INTO THE BUDGET CYCLE, ASK FOR POSITION ELIMINATIONS. SO MY CONCERN IS, IS THAT WE WE ARE LOOKING AT OPPORTUNITIES TO SLOW THE GROWTH OF THE OPERATING BUDGET, IF NOT REDUCING THE GROWTH IN THE OPERATING BUDGET. AND MY FOCUS IS, IS TO TRY TO PUT OURSELVES IN A POSITION TO RESPOND NOW, AS OPPOSED TO REACTIONARY OR DRACONIAN CUTS IN THE LATER IN LATER YEARS. AND I KNOW IT'S A LITTLE BIT DIFFERENT MINDSET, BUT, YOU KNOW, MISS GRIMES, YOU EVEN SAID FOR THE FIRST TIME IN YOUR TEN YEARS, THE THE APPRAISED VALUE YEAR OVER YEAR, YOU KNOW, WENT DOWN. AND I THINK THERE'S GOING TO BE CONTINUED REVENUE PRESSURES FOR US TO DEAL WITH. AND I WANT TO PROACTIVELY TRY TO STROKE, SLOW DOWN THE GROWTH CURVE. NOW, THE THE DEBATE, IF YOU WILL, IS GOING TO BE HOW YOU MANAGE THAT GROWTH. AND I AND I GET THAT, BUT I JUST WANTED TO KIND OF GO ON RECORD SAYING MY FOCUS IS I'M GOING TO BE OPPOSED TO ANY RATE INCREASE. AND VERY CONCERNED ABOUT ANY GROWTH IN THE OPERATING BUDGET YEAR OVER YEAR. I ACKNOWLEDGE THE PRESSURE ON THE COST INCREASES. I GET IT, AND THERE'S SOMETHING THAT WE'VE GOT TO MANAGE AND I'VE GOT TO MANAGE THROUGH. BUT I JUST WANTED TO GO ON RECORD GOING INTO THIS PROCESS. IT THINGS ARE CHANGING AND WE'VE GOT AN OUTSTANDING STAFF THAT CAN RESPOND TO THOSE CHANGES IN A WAY THAT WE CAN MANAGE THE FUTURE AND MAINTAIN THE STRENGTH THAT IS MCKINNEY. SO I JUST WANT TO GO ON RECORD SAYING THAT IT'S GOING TO BE A CHALLENGING TIME, AND I'D MUCH RATHER US HAVE THE DISCIPLINE

[00:25:03]

EXCITED TO PRESENT TO YOU THE FISCAL YEAR 27 PROPOSED BUDGET. I'M MARK HOLLOWAY, CHIEF FINANCIAL OFFICER FOR THE CITY. COULD YOU HAND ME THE. YEAH. SORRY ABOUT THAT. THIS IS OUR AGENDA FOR THE MORNING. WE HAVE A LOT OF INFORMATION TO GET THROUGH. WE WILL TRY TO MOVE FORWARD AS QUICKLY AS WE CAN, BUT WE WE WILL RESERVE AS MUCH TIME AS YOU NEED TO JUST MAKE FOR DISCUSSION OR FOR QUESTIONS. YOU WILL FIND THIS PRESENTATION FAMILIAR, AS WE HOPE THAT WE ARE HIGHLIGHTING THE IMPORTANT ASPECTS OF OF THIS PROPOSED BUDGET. I'LL HAVE HELP WITH MY PRESENTATION THIS MORNING. IN FACT, PROBABLY WON'T BE HEARING FROM ME FOR A MAJORITY OF THE TIME, BUT WE'LL WE'LL HAVE ASSISTANT CITY MANAGER TREVOR MINYARD, WHO'S BEEN, AS IS TRADITION, HAS BEEN PRESENTING WITH WITH ME SINCE HE WORKED IN FINANCE. BARRY SHELTON IS GOING TO TALK ABOUT THE AIRPORT. TREVOR DOUGAN, OUR BUDGET MANAGER, WILL SPEAKING. AND ALSO WE HAVE OUR CONSULTANT, DAN JACKSON TO TALK ABOUT WATER RATES. AND THEN GARY GRAHAM WILL BE DOWN PROBABLY IN A LITTLE WHILE. AND HE WILL ALSO HELP US DISCUSS OUR ROADWAY INFRASTRUCTURE PROGRAM. ONCE AGAIN, PLEASE FEEL FREE TO STOP US AT ANY TIME. ASK ANY QUESTIONS. IF WE DON'T HAVE AN ANSWER IMMEDIATELY, WE'LL BE HAPPY TO GET IT FOR YOU MOVING FORWARD. AS WE DO EVERY YEAR. WE'LL MAKE A LIST AND WE'LL WE'LL GET YOU THAT INFORMATION AS WE GO. SO JUST WANT TO TALK ABOUT OUR BUDGET PROCESS A LITTLE BIT. I THINK IT'S IT IT'S OUR FUNDAMENTALS, THE FOUNDATION OF WHAT WE'RE DOING. WE TRY TO REMAIN DISCIPLINED AND PROVIDE A CONSISTENT AND THOROUGH BUDGET PROCESS EACH YEAR. AND SO WE DO THINGS THE SAME WAY. AND I WILL TALK YOU THROUGH THAT. SO HERE WE GO. THIS IS MY CIRCLE. OUR CIRCLE.

I DO THINK IT IS IMPORTANT TO NOTE IT. EACH YEAR IT'S BROKEN DOWN INTO FIVE STEPS. THE FIRST STEP IS PLANNING INCLUDES STRATEGIC PLANNING DONE BY THE COUNCIL, ADOPTION OF THE BUDGET GUIDELINES AND RENEWAL OF OUR TEN YEAR PLANS. FRANKLY, OUR TEN YEAR PLANS CHANGE ALL THE TIME, BUT WE DO FOCUS ON THEM QUITE A BIT DURING THIS PHASE. THEN WE MOVE INTO THE DEPARTMENT BUDGET. THAT'S WHERE WE PLAN THE UPCOMING YEAR WITH THE DEPARTMENTS AND IDENTIFY THEIR NEEDS. THEY PROVIDE THEIR SUPPLEMENTAL REQUESTS. DEPARTMENTS TELL US WHAT THEY NEED TO JUST CONTINUE THEIR OPERATIONS AND WHAT THEY NEED TO MEET THE CHALLENGES OF THE NEXT YEAR. ALSO WANT TO BE CLEAR DURING THIS TIME, BUDGET STAFF GOES THROUGH EACH AND EVERY LINE ITEM OF THE BUDGET TO ASSURE THAT WE ARE PRESENTING AN ACCURATE BUDGET TO COUNCIL AND CITY MANAGER'S OFFICE. THEN WE MOVE INTO THE THIRD PHASE, WHICH IS THE CITY MANAGER'S PORTION OF THE BUDGET. THIS IS WHERE THE CITY MANAGER'S OFFICE MEETS WITH THE DEPARTMENTS, RECOMMENDS THE BUDGET TO COUNCIL. THIS IS A MONTHS LONG PROCESS. MEETINGS WITH DEPARTMENTS ARE IMPORTANT AND THEY'RE FASCINATING. WE GET TO HEAR ALL OF THEIR PLANS FOR THIS YEAR AND BEYOND WHAT CHANGES THEY'RE MAKING. THEN PAUL AND THE CITY MANAGER'S OFFICE STAFF DELIBERATE THESE NEEDS. THERE ARE QUITE A FEW. AND THEN THEY. THEY BALANCE THAT AGAINST THE REVENUE PROJECTIONS THAT WE WE HAVE. AND THEY PROVIDE THAT RECOMMENDATION RECOMMENDATION TO COUNCIL. AND NOW WE'RE AT A TRANSITION POINT. THIS IS WHERE THE CITY COUNCIL WILL REVIEW THE CITY COUNCIL'S BUDGET BEGINS AND FOLLOWED BY ADOPTION.

SO WE'LL PRESENT THIS TODAY AND THEN WE'LL HAVE A DELIBERATION. AND THEN WE GO INTO THE FINAL PHASE, FIFTH, THE FIFTH PHASE, WHICH THE ADOPTED BUDGET PHASE, WHICH IS THE OPERATIONAL PHASE OF THE BUDGET. SO THESE ARE THE GOALS AND STRATEGIES THAT ARE DEVELOPED BY COUNCIL, AFFIRMED BY COUNCIL EARLIER THIS YEAR. IT WAS IN THE FIRST BOX OF THE CIRCLE THAT I SHOWED YOU.

SETTING THEM DRIVES THE PROCESS. IT ALLOWS US TO. WE ACTUALLY DO NOT BEGIN THE BUDGET PROCESS UNTIL THESE ARE SET EACH YEAR. SO JUST LIKE TO PUT THOSE UP THERE EVERY YEAR JUST TO REMIND

[00:30:06]

THE FIRST IS THE GENERAL OBLIGATION DEBT SERVICE PLAN. AND I SAY EACH YEAR THAT I SHOULD PROBABLY CHANGE THE NAME OF THAT AND JUST CALL IT THE DEBT SERVICE PLAN. BUT YEARS AGO I NAMED IT THE GENERAL OBLIGATION DEBT SERVICE PLAN. SO I JUST KEEP IT THAT THAT WAY BY TRADITION, BUT IT OUTLINES OUR TOTAL DEBT CAPACITY. IT MAINTAINS OUR I AND S PORTION OF OUR OUR TAX RATE AND MAKE SURE THAT WE HAVE THE, THE CAPACITY AND THE ABILITY TO DO ALL OF THE PROJECTS THAT WE HAVE IN OUR CAPITAL IMPROVEMENTS BUDGET. AND SECONDLY, WE HAVE A GENERAL FUND PLAN. IT PROVIDES A TEN YEAR PROJECTION OF OUR OPERATING REVENUES AND EXPENDITURES, JUST TO MAKE SURE THAT WE ARE ABLE TO CONTINUE PROVIDING THE SERVICE LEVEL THAT THAT WE DO THAT WITH. I ALSO PUT IN THERE LAST YEAR THE WE'VE WE'VE ADDED A FEW YEARS AGO, A CIP LEADERSHIP TEAM THAT REALLY HELPS DRIVE OUR CIP PLAN AND MAKE SURE THAT WORKS IN, IN CONJUNCTION WITH OUR GENERAL OBLIGATION DEBT SERVICE PLAN.

AND IT HELPS US CONTINUE TO, TO PLAN OVER THE LONGER TERM HORIZON, ALL OF OUR OUR ALL OF OUR CAPITAL IMPROVEMENTS. HERE ARE SOME EXCERPTS FROM THE FROM THE COUNCIL ADOPTED BUDGET GUIDELINES. I'M NOT GOING TO READ ALL OF THOSE TODAY. WE COUNCIL ADOPTS THIS DOCUMENT AT THE BEGINNING OF OUR BUDGET CYCLE AND IT HELPS US GET TO OUR OUR, OUR PROPOSED BUDGET.

YOU CAN SEE WE HAVE JUST BASIC GUIDELINES THAT, THAT WE TRY TO MAINTAIN AS WE AS WE MOVE FORWARD WITH, WITH OUR PROCESS. IT ALSO, YOU KNOW, TALKS ABOUT THE GENERAL FUND, TALKS ABOUT OUR UTILITY FUNDS. AND SO SPEAKING KIND OF, OF RATE ADJUSTMENTS AND STUDIES AND OUR UTILITY FUNDS, WE DO HAVE A CONSULTANT HERE WHO I LIKE TO TRY TO GET IN AND, AND OUT A LITTLE BIT EARLIER. I TRY TO BE MAKE SURE THAT HIS TIME IS KNOWN. SO WE, WE ALLOW HIM THIS TIME AT THE BEGINNING, AFTER I MENTIONED UTILITY FUNDS. SO I DO HAVE DAN JACKSON WITH WILLDAN HERE TO MAKE SURE THAT WE'RE, YOU KNOW, ON THE RIGHT TRACK WITH OUR WATER UTILITY.

AND HE'S GOING TO GIVE US A REPORT ON OUR WATER AND WASTEWATER RATES IF YOU'RE READY. SO. SURE. AND THERE YOU GO. ALL RIGHT. THANK YOU EVERYBODY. I REALLY APPRECIATE THE OPPORTUNITY TO BE HERE. MY NAME IS DAN JACKSON. I'M VICE PRESIDENT OF WILLDAN FINANCIAL SERVICES, AND THIS IS MY 11TH YEAR OF PROVIDING SERVICE TO THE CITY OF MCKINNEY. I REALLY APPRECIATE THE CONFIDENCE YOU ALL HAVE SHOWN IN MYSELF AND MY FIRM OVER THE OVER THE YEARS.

IT'S A REAL PRIVILEGE FOR A CONSULTANT LIKE MYSELF, PARTICULARLY SOMEBODY WHO HAS LIVED IN THE DALLAS AREA PRETTY MUCH MY WHOLE LIFE. I'VE HAD A FRONT ROW SEAT TO SEEING HOW THE CITY OF MCKINNEY HAS GROWN OVER, AND PARTICULARLY OVER THE LAST 10 OR 11 YEARS SINCE I BEGAN, SINCE I BEGAN WORKING FOR YOU. AND I'M VERY PLEASED AND PROUD TO BE A PART OF IT.

EVERY YEAR,■ THE CITY HIRES US TO DO A REVIEW OF ITS WATER AND WASTEWATER RATE AND FINANCIAL PLAN. WE GO OVER ALL OF YOUR EXPENSES, WE GO OVER YOUR GROWTH ESTIMATES, AND WE PROVIDE A RECOMMENDATION FOR THE RATES FOR YOU TO IMPLEMENT FOR THE UPCOMING FISCAL YEAR.

WE ALSO PRESENT TO YOU A FORECAST OVER THE NEXT 4 TO 5 YEARS OF WHERE WE THINK YOUR EXPENSES AND YOUR RATES ARE GOING. THAT'S VERY IMPORTANT FOR DECISION MAKERS LIKE YOURSELVES, BECAUSE IT'S IMPORTANT TO SEE THE LONG TERM TRENDS IN THE WATER INDUSTRY.

ONE OF THE ADVANTAGES OF RUNNING A WATER SYSTEM IS THAT YOU TEND TO KNOW YEARS IN ADVANCE WHEN CERTAIN EXPENSES ARE GOING TO BE INCURRED. AND SO SINCE YOU KNOW THOSE

[00:35:01]

I WANT TO START OUT JUST BY TALKING ABOUT THE CHANGES THAT HAVE OCCURRED IN THE LAST YEAR.

WHAT'S WHAT HAS BEEN HAPPENING IN THE IN YOUR WATER UTILITY SINCE THE LAST TIME I SPOKE TO YOU ALL LAST YEAR? WELL, YOUR WATER USAGE IS CONTINUING TO GO UP. TO NO GREAT SURPRISE, YOUR POPULATION IS GROWING AS YOU ADD CITIZENS, AS YOU ADD BUSINESSES, YOUR USAGE IS GOING UP, BUT YOUR USAGE IS NOT QUITE GOING UP AT THE SAME PACE AS YOUR POPULATION GROWTH. AND THAT'S A GOOD THING BECAUSE IT SHOWS THAT PEOPLE ARE BECOMING MORE AND MORE PRUDENT ABOUT THEIR ABOUT THEIR WATER USAGE. WATER IS A PRECIOUS AND DIMINISHING NATURAL RESOURCE.

WE WANT TO MAKE SURE THAT THE WATER IS AVAILABLE FOR PEOPLE, BUT THEY DON'T USE IT EXCESSIVELY. THE BIGGEST FACTOR, HOWEVER, IS THE NORTH TEXAS MUNICIPAL WATER DISTRICT. AS MR. GRIMES INDICATED EARLIER IN HIS OPENING REMARKS, THERE HAVE BEEN SOME PRETTY SIGNIFICANT CHANGES TO NORTH TEXAS'S FORECASTS FOR THEIR FUTURE COSTS. THEIR WATER RATES ARE PRETTY MUCH TRACKING WHERE THEY THOUGHT THEY WOULD BE. HOWEVER, AS WE'LL SEE IN A COUPLE OF MINUTES, THEY HAVE SIGNIFICANTLY INCREASED THEIR FORECAST OF YOUR FUTURE WASTEWATER RATES, AND THAT DIRECTLY IS GOING TO IMPACT THIS FINANCIAL PLAN. ANOTHER ANOTHER IMPORTANT ASPECT OF THE WATER AND WASTEWATER RATE AND LONG TERM FINANCIAL PLAN IS THE DEBT AND THE CAPITAL IMPROVEMENTS THAT YOU NEED TO RUN YOUR SYSTEM. WATER SYSTEMS ARE VERY, VERY CAPITAL INTENSIVE. YOU HAVE TO SPEND A LOT OF MONEY TO BUILD A SYSTEM, AND YOU HAVE TO SPEND A LOT OF MONEY TO MAINTAIN THAT SYSTEM. NOW, SOME UTILITIES HAVE VERY, VERY LOW RATES. THEY HAVE LOW RATES BECAUSE THEY'RE NOT INVESTING IN THE CAPITAL IMPROVEMENTS REQUIRED TO MAINTAIN THE SYSTEM AT A LEVEL OF SERVICE THAT IS ACCEPTABLE TO ALL OF THEIR RATEPAYERS. SO THEY HAVE LOW RATES, BUT THEY ALSO HAVE A SYSTEM THAT'S HIGHLY AT RISK. THE CITY OF MCKINNEY HAS NEVER FOLLOWED THAT PRINCIPLE. THE CITY OF MCKINNEY HAS ALWAYS BEEN WILLING TO MAKE THE NECESSARY INVESTMENTS TO ENSURE THAT YOU HAVE THE HIGHEST QUALITY LEVEL OF SERVICE, BUT THAT COMES AT A COST, PARTICULARLY NOW, BECAUSE, AS WE HAVE SEEN OVER THE LAST FEW YEARS, THE COST OF FUTURE CAPITAL IMPROVEMENTS HAS SKYROCKETED. AND I SEE THIS I WORK FOR OVER 200 CITIES, OVER 100 CITIES IN TEXAS, AND I CAN TELL YOU THAT VIRTUALLY EVERY CITY IS EXPERIENCING THIS. THE COST OF CAPITAL IMPROVEMENTS IS SIGNIFICANTLY HIGHER NOW THAN IT WAS JUST A FEW YEARS AGO. AND SO WHEN YOU DO THESE CAPITAL IMPROVEMENTS, YOU HAVE TO HAVE THE RATES IN PLACE THAT ENABLE YOU TO FUND THEM. AND AS THE COSTS GO UP, YOUR RATES HAVE TO GO UP AS WELL. ANOTHER IMPORTANT FACTOR IS YOUR ACCOUNT GROWTH. MCKINNEY, AS WE ALL KNOW, IS A RAPIDLY GROWING CITY, AND THAT BENEFITS YOUR RATEPAYERS IN ONE SENSE, BECAUSE EVERY NEW ACCOUNT IS A NEW MINIMUM CHARGE. EVERY NEW ACCOUNT IS A NEW VOLUME CHARGE. WATER IS A CLASSIC BULK COMMODITY. IT DOESN'T COST YOU TWICE AS MUCH TO SERVE 100,000 CUSTOMERS AS IT DOES TO SERVE 50,000 CUSTOMERS. SO PROPERLY MANAGED GROWTH CAN BE BENEFICIAL TO THE SYSTEM. AND SO THE GROWTH ESTIMATES THAT WE PUT IN THESE FORECASTS ARE CRUCIAL TO WHAT YOUR RATE PLAN ULTIMATELY IS GOING TO BE. AND FINALLY, AS YOU'RE ABOUT TO SEE, AS YOU'LL SEE, COST OF SERVICE IS COMING IN ABOUT WHERE WE'D EXPECTED IT TO BE FOR THE NEXT COUPLE OF YEARS. BUT DUE PRIMARILY TO NORTH TEXAS MUNICIPAL WATER DISTRICT RATE INCREASES, THE FORECAST IN THE OUT YEARS ARE GOING TO BE A LOT HIGHER. AND THAT'S SOMETHING THAT WE NEED TO START PLANNING FOR RIGHT AWAY. OKAY. ONE HAS SOME BACKGROUND. ONE OF THE KEY QUESTIONS MOST PEOPLE ASK IS, WHAT DO WE PAY FOR SERVICE AND HOW DOES IT COMPARE TO OTHER UTILITIES? COMMON QUESTION ASKED THIS CHART RIGHT HERE IS A COMPARISON OF MONTHLY RESIDENTIAL CHARGES FOR 10,000 GALLONS OF WATER AND 5000 GALLONS OF WASTEWATER. FOR A RESIDENTIAL CUSTOMER. THE AVERAGE RESIDENTIAL CUSTOMER HERE IN MCKINNEY USES SOMEWHERE BETWEEN EIGHT TO 9 TO 10,000 GALLONS A MONTH. THAT VARIES A LITTLE BIT. OBVIOUSLY, IT'S MORE IN THE WINTER, IT'S MORE IN THE SUMMERTIME, A LITTLE LESS IN THE WINTER TIME. BUT 10,000 GALLONS IS A VERY, VERY GOOD BENCHMARK. THIS CHART SHOWS THAT THE AVERAGE MCKINNEY CUSTOMER PAYS ABOUT $142 A MONTH FOR 10,000 GALLONS OF WATER AND 5000 GALLONS OF WASTEWATER. AS YOU CAN SEE, IT COMPARES VERY FAVORABLY TO MOST OF THE OTHER CITIES HERE IN THE NORTH NORTH DALLAS, COLLIN DENTON COUNTY CORRIDOR, YOU'RE ABOUT WHERE YOU WOULD EXPECT TO BE. YOU'RE HIGHER THAN SOME. YOU'RE A LITTLE BELOW OTHERS.

[00:40:01]

YES, SIR. ONE QUESTION ON YOUR CHART. IT'S INTERESTING. WYLIE IS ONE OF THE HIGHEST AND THEY'RE THE CLOSEST TO THE PLANT. YEAH, THAT'S KIND OF INTERESTING, ISN'T IT. AND IS ONE OF THE FARTHEST AWAY. AND THEY'RE UP THERE. SO HOW DOES WYLIE. WELL, THE MAIN REASON IS THAT NORTH TEXAS CHARGES THE SAME RATE TO EVERYBODY, WHETHER YOU'RE NEXT TO THE PLANT OR 40 MILES AWAY FROM IT. AND I'VE ALWAYS THOUGHT THAT WAS A VERY GOOD POLICY, BECAUSE IF YOU START TRYING TO DIFFERENTIATE A CUSTOMER BASED ON HOW FAR THEY ARE FROM THE PLANT, THAT'S A REAL SLIPPERY SLOPE ARGUMENT. I MEAN, DO YOU CHARGE SOMEBODY MORE WHOSE 20 MILES AWAY FROM THE PLANT THAN SOMEBODY WHO'S TEN MILES AWAY FROM THE PLANT LONG AGO, NORTH TEXAS SAID, WE'RE NOT GOING THERE. WE'RE GOING TO CHARGE THE SAME RATE TO EVERYBODY. SO THE FACT THAT WYLIE'S RATES ARE HIGHER ARE DUE TO FACTORS PROBABLY OTHER THAN NORTH TEXAS SPECIFICALLY.

I DO NOT WORK FROM WYLIE, BY THE WAY, SO I DON'T KNOW ANY OF THE DETAILS BEHIND THAT. OKAY, LET'S AGAIN, SOME MORE BACKGROUND CHARTS HERE. THIS IS A CHART OF YOUR CURRENT HISTORICAL AND FORECAST WATER AND WASTEWATER ACCOUNTS. AS YOU CAN SEE RIGHT NOW, IN THE CURRENT YEAR, YOU'RE EXPECTED TO HAVE ABOUT 77,800 WATER ACCOUNTS GROWING PRETTY SIGNIFICANTLY IN THE LAST SIX YEARS, FROM 61,000 IN 2020. AND IT'S EXPECTED TO HIT JUST ABOUT 100,000 CUSTOMERS BY THE YEAR 2035. AGAIN, AS SOMEBODY WHO'S LIVED IN THE DALLAS AREA ALL MY LIFE, IT'S JUST REMARKABLE TO SEE THE KIND OF GROWTH THAT THIS THIS AREA HAS UNDERTAKEN.

THIS CHART RIGHT HERE SHOWS THE ANNUAL NEW WATER ACCOUNTS THAT THE CITY HAS ADDED IN MOST YEARS. THE CITY ADDS SOMEWHERE BETWEEN 1500 AND 2500 NEW WATER ACCOUNTS. NOW, KEEP IN MIND THAT THE AVERAGE WATER METER SERVES ABOUT THREE CUSTOMERS. SO IF YOU ADD 2500 CUSTOMERS, THAT MEANS YOU'RE ADDING A POPULATION OF ABOUT 7500 PEOPLE. WHAT'S ALSO INTERESTING IS THAT GROWTH DID DIP A LITTLE BIT IN THE LAST 12 MONTHS. BUT WE BASED ON OUR ANALYSIS, WE THINK THAT'S AN ANOMALY. AND IT'LL BE BACK TO PRETTY NORMAL LEVELS IN THE COMING YEARS. AND THAT HAPPENS WITH GROWTH. I MEAN, SOMETIMES YOU HAVE A LITTLE BIT MORE GROWTH IN ONE YEAR AND A LITTLE BIT LESS IN THE NEXT, BUT IT EVENS OUT OVER THE TIME FRAME. BOTTOM LINE IS THAT WE'RE STILL EXPECTING RIGOROUS GROWTH, AND THAT BENEFITS YOUR LONG TERM RATE PLAN. THIS CHART RIGHT HERE IS AT LEAST I PEOPLE LIKE ME WHO ARE WATER NERDS FIND THIS INTERESTING BECAUSE THIS KIND OF SHOWS YOU HOW PEOPLE ARE USING WATER. IT SHOWS THE BLUE. THE BLUE BARS ARE YOUR HISTORICAL USAGE. LOOK AND SEE HOW IT GREW PRETTY STEADILY TILL ABOUT 2023 2024, BUT IT'S KIND OF EVENED OFF IN THE LAST COUPLE OF YEARS. SO THERE HASN'T BEEN A LOT OF CONSUMPTION GROWTH. THERE ARE TWO FACTORS THAT THAT ARE GOING INTO THAT. ONE IS THAT PEOPLE ARE USING WATER MORE PRUDENTLY. YOU HAVE CONSERVATION BASED RATES, WHICH GIVE PEOPLE A FINANCIAL INCENTIVE TO CONSERVE WATER USAGE, AND THEY'RE OBVIOUSLY DOING THAT. AND SECONDLY, WEATHER IS OBVIOUSLY AN IMPORTANT FACTOR. YOU KNOW, IF IF THE CLIMATE IS A LITTLE BIT MORE MILD, PEOPLE AREN'T GOING TO USE AS MUCH WATER. AND IF IT'S HOTTER, PEOPLE ARE GOING TO USE MORE WATER. BOTTOM LINE IS THAT WE STILL BELIEVE THAT YOUR USAGE IS GOING TO

[00:45:01]

THIS CHART RIGHT HERE IS NORTH TEXAS'S FORECASTS OF THE RATE INCREASES THAT THEY WILL BE IMPLEMENTING FOR THE WATER UTILITY OVER THE NEXT TEN YEARS. EVERY YEAR, NORTH TEXAS REVISES ITS LONG TERM FORECAST, AND THEY PROVIDE US THESE NUMBERS. AS YOU CAN SEE, NORTH TEXAS IS PROJECTING THAT IN 2027, THEY'RE GOING TO DO AN 8.7% RATE INCREASE. AND IN 28 AND 29, 12% EACH YEAR. NOW THEY ARE PROJECTING THAT AFTER THAT, THE INCREASES WILL BECOME A LITTLE BIT MORE MODEST. BUT WHAT THIS IS TELLING US IS THAT WE'RE LOOKING AT 30 TO 35% RATE INCREASES. THE CUMULATIVE IN NORTH TEXAS WATER RATES OVER THE NEXT THREE YEARS. THIS IS NOTHING MORE THAN A PASS THROUGH. AND SO AS NORTH TEXAS INCREASES THEIR RATE, YOU AS A CITY HAVE NO CHOICE BUT TO PASS THAT RATE INCREASE THROUGH TO YOUR CUSTOMERS. NOW, THE SILVER LINING ON THE CLOUD IS THAT, BELIEVE IT OR NOT, THIS INCREASE FOR THE NEXT COUPLE OF YEARS, THE INCREASES ARE A LITTLE BIT LESS THAN WHAT THEY SAID IT WOULD BE LAST YEAR.

THIS CHART RIGHT HERE PROJECTS NORTH TEXAS'S RATE PER THOUSAND GALLONS FOR THE NEXT TEN YEARS.

IT SHOWS THE 2025 THEIR 2025 FORECAST, WHICH THEY GAVE US LAST YEAR, WHICH IS IN BLUE.

AND THE RED, IS THEIR LATEST 2026 FORECAST. AS YOU CAN SEE, FOR THE NEXT THREE YEARS, THEIR UNIT RATE IS ACTUALLY A LITTLE BIT LESS NOW THAN WHERE THEY SAID IT WOULD BE LAST YEAR. BUT BY THE TIME YOU GET INTO THE 2030S, IT'S PRETTY MUCH CAUGHT UP. SO WHAT THIS IS TELLING US IS NOT JUST THAT THE INCREASES ARE GOING TO BE MORE IN THE NEXT COUPLE OF YEARS, BUT WE BUT WE HAVE TO BE PREPARED FOR THE FACT THAT THESE INCREASES ARE NOT GOING TO END ANYTIME SOON. YOU PAY A LITTLE AROUND $4, ABOUT $4.50 PER THOUSAND GALLONS. RIGHT NOW, THAT RATE IS EXPECTED TO HIT ALMOST $8 BY THE YEAR 2035. OKAY, NOW LET'S TALK ABOUT WASTEWATER. AND WASTEWATER IS WHERE THE REAL A CHANGE HAS OCCURRED BECAUSE NORTH TEXAS'S LATEST FORECAST OF WASTEWATER INCREASES ARE SHOWING ANNUAL RATE INCREASES SUBSTANTIALLY HIGHER THAN WHAT THEY EVEN SAID IT WOULD BE LAST YEAR. THE. THERE ARE TWO BASIC SYSTEMS THAT SERVICE THE CITY OF MCKINNEY. THE REGIONAL SYSTEM AND THE UPPER EAST FORK SYSTEM. NORTH TEXAS IS PROJECTING THAT THE ANNUAL RATE INCREASE. THE ANNUAL RATE INCREASE BETWEEN 2027 AND 2032 FOR THE REGIONAL SYSTEM IS GOING TO BE 16.8%, 16.8% EVERY YEAR FOR THE NEXT FIVE YEARS.

THEY'RE ALSO PROJECTING THAT THE UPPER EAST FORK ANNUAL INCREASE IS GOING TO BE 9.5% PER YEAR OVER THE NEXT TEN YEARS. NOW THE QUESTION IS WHY? WHY, WHY ARE THESE INCREASES SO SIGNIFICANT? WELL, NORTH TEXAS HAS STATED THAT THE PRIMARY REASON FOR THAT IS THAT THEY ARE INTENDING ON INVESTING $1.7 BILLION IN CAPITAL IMPROVEMENTS OVER THE NEXT FIVE YEARS. AND ON THIS CHART, IT IDENTIFIES THE REGIONAL AND UPPER EAST FORK CAPITAL IMPROVEMENTS THAT THEY HAVE IDENTIFIED. AS YOU CAN SEE, $1.3 BILLION IN REGIONAL WASTEWATER SYSTEM IMPROVEMENTS, INCLUDING $600 MILLION FOR THE SISTER GROVE REGIONAL FACILITY, 433 MILLION FOR TRINITY EAST FORK ON THE UPPER EAST SIDE, UPPER EAST FORK SYSTEM. THEY'RE TALKING ABOUT $386 MILLION OF IMPROVEMENTS. SO, LOOK, IT DOESN'T IT DOESN'T TAKE A ROCKET SCIENTIST TO UNDERSTAND THAT IF YOU'RE GOING TO SPEND $1.7 BILLION IN CAPITAL IMPROVEMENTS, YOU'RE GOING TO HAVE TO RAISE THE RATES. AND THEY'RE RAISING THEIR RATES, AND THEY ARE ANNOUNCING THEY'RE PUTTING EVERYBODY, ALL OF THEIR MEMBERS AND ALL THEIR CUSTOMERS ON NOTICE THAT THEIR INCREASES ARE GOING TO BE VERY SIGNIFICANT OVER THE NEXT 5 TO

[00:50:03]

NOW, THIS IS THE CHALLENGE THAT YOU FACE AS A UTILITY AND AS A CITY. YOU KNOW, THESE LARGE INCREASES ARE COMING IN THE FUTURE. THE IMPACT IS NOT GOING TO BE SO MUCH IMMEDIATELY, BUT IT IS GOING TO BE VERY SIGNIFICANT IN THE LONG TERM. SO THE PRUDENT UTILITY STARTS PLANNING. NOW FOR THESE MAJOR INCREASES THAT WE ALL KNOW IS COMING IN THE NEXT IN THE NOT TOO DISTANT FUTURE NOW. SO THIS IS WHAT THE IMPACT IS ON YOUR TOTAL WASTEWATER COSTS. IT'S COSTING YOU ABOUT 50 ABOUT 47 TO $50 MILLION A YEAR FOR WASTEWATER TREATMENT SERVICE FROM NORTH TEXAS. LAST YEAR, UNDER THEIR FORECAST THAT THEY PROVIDED US LAST YEAR, THE PROJECTION WAS THAT YOUR TOTAL WASTEWATER COSTS WOULD HIT ABOUT $96 MILLION BY 2035. NOW WE'RE TALKING ABOUT BEING $134 MILLION. SO YOU CAN SEE THE MAGNITUDE THAT THESE INCREASES ARE CAUSING. THE CITY OF MCKINNEY'S UTILITY DEPARTMENT. OKAY. BUT THAT'S NOT THE ONLY CHALLENGE THAT THE CITY FACES. THE OTHER MAJOR CHALLENGE THE CITY FACES IS IN ITS CAPITAL IMPROVEMENT PLAN. NOW, THE THING ABOUT A CAPITAL IMPROVEMENT PLAN, AND I AND I JUST LOOK AT THIS FROM A FINANCIAL PERSPECTIVE. I'M A CLASSIC FINANCE GUY. I DON'T KNOW HOW TO BUILD ANYTHING. I DON'T KNOW HOW TO REPAIR ANYTHING. BUT I CAN TELL YOU HOW MUCH IT COSTS. AND I CAN TELL YOU WHAT THE IMPACT IS GOING TO BE FINANCIALLY ON A UTILITY. THE CHALLENGE THAT ALL UTILITIES FACE IS TO BALANCE THE NEED TO DO CONSTRUCTION PROJECTS WITH THE DESIRE, WITH THE WILLINGNESS OF RATEPAYERS TO PAY FOR IT. AND SO WHAT THE CITY HAS IDENTIFIED NOW IS $334 MILLION OF CAPITAL IMPROVEMENTS THAT ARE GOING TO BE REQUIRED FOR THE CITY'S DISTRIBUTION AND COLLECTION SYSTEM. IT'S PRIMARILY WATER DRIVEN, BUT 214 MILLION IS WATER, AND ABOUT 119 MILLION IS WASTEWATER. THE THE ADVERSE NEWS IS THE FACT THAT THIS IS SIGNIFICANTLY HIGHER THAN WHERE THE CITY THOUGHT IT WOULD BE LAST YEAR. LAST YEAR THERE. PROJECTING ABOUT $266 MILLION. I WISH I COULD TELL YOU THAT THIS WAS UNUSUAL, BUT IT'S NOT BECAUSE I'M TELLING YOU THIS IS WHAT ALL CITIES ARE FACING RIGHT NOW. GIVEN THE INCREDIBLE INCREASE IN CAPITAL IMPROVEMENT COSTS OVER THE LAST FEW YEARS. THIS IS THE CHALLENGE YOU'RE FACING. NOT ONLY DO YOU HAVE THESE NORTH TEXAS INCREASES, BUT YOU ALSO HAVE CAPITAL IMPROVEMENT NEEDS INCREASES AS WELL. SO CAPITAL IMPROVEMENT PLANS IMPACT RATES IN THREE WAYS. HOW MUCH DO YOU HAVE TO KNOW FINANCE. WHEN DO YOU HAVE TO FINANCE IT. AND AND HOW DO YOU FINANCE IT. SO THIS CHART RIGHT HERE PROJECTS THAT THE CITY WILL ISSUE $333 MILLION OF WATER AND WASTEWATER RELATED DEBT OVER THE NEXT FIVE YEARS. NOW, AS YOU CAN SEE, THE DEBT IS PRETTY SPACED, PRETTY EVENLY SPACED OUT, ABOUT 74,000,020 2760 1,000,020 28 AND SIMILAR AMOUNTS OVER THE NEXT THREE YEARS. SO WHAT IT MEANS IS THAT YOU'RE NOT ISSUING ALL $300 MILLION RIGHT NOW. YOU'RE KIND OF PHASING IT IN OVER THE NEXT SEVERAL YEARS.

THIS WITH THE CONSTRUCTION OF SOME RELATIVELY INNOVATIVE FINANCING TECHNIQUES THAT THE CITY IS VERY, VERY WELL KNOWN FOR. CITY AND ITS BOND ADVISORS ARE KNOWN FOR ARE GOING TO HELP MINIMIZE THE IMPACT ON YOUR RATEPAYERS. BECAUSE WHEN YOU ISSUE A LONG TERM BOND, YOU KNOW, YOU CAN DO YOU CAN DO INTEREST ONLY FOR A COUPLE OF YEARS. YOU CAN MINIMIZE THE PRINCIPAL PAYMENTS FOR A COUPLE OF YEARS. IN OTHER WORDS, YOU CAN KIND OF PHASE IN THE DEBT OVER YEARS. AND THAT HELPS MINIMIZE THE THE IMMEDIATE IMPACT ON YOUR RATEPAYERS. NOW, THIS IS A VERY IMPORTANT CHART BECAUSE IT ILLUSTRATES THE IMPACT OF THE DEBT AND NORTH TEXAS ON THE CITY'S COST OF SERVICE. THE TWO PIE CHARTS SHOW YOUR WATER COST OF SERVICE AND YOUR WASTEWATER COST SERVICE. IT'S COSTING YOU ABOUT $100 MILLION IN THE IN THE UPCOMING FISCAL YEAR TO RUN YOUR WATER SYSTEM. OF THAT TOTAL COST, ALMOST 60% OF IT IS

[00:55:05]

LAST YEAR WE WERE PROJECTING THAT IN 2026, YOU'D NEED ABOUT A 7 TO 8% WASTEWATER RATE ADJUSTMENT. WE NOW, BECAUSE OF THE INCREASE IN NORTH TEXAS'S COSTS, WE'RE PROJECTING THAT YOU'RE GOING TO NEED AN 11% WASTEWATER INCREASE THIS NEXT YEAR. SO THAT IS OUR PROPOSAL FOR OCTOBER OF 2026. WE PROPOSE THAT A TAKE EFFECT AT THE BEGINNING OF THE FISCAL YEAR, WHICH IS OCTOBER OF 2026. MORE IMPORTANTLY, THOUGH, WE ALSO PROJECT THAT YOU'RE ALSO GOING TO NEED ANOTHER 9% WATER ADJUSTMENT AND AN 11% WASTEWATER ADJUSTMENT IN OCTOBER OF 27 AND OCTOBER IN 2028 THROUGH 2030. WE THINK THE WATER RATE ADJUSTMENTS WILL BE LESS, ONLY ABOUT 4%. WASTEWATER ADJUST RATE ADJUSTMENTS WILL START TO TREND DOWNWARDS A LITTLE BIT IN THE OUT YEARS. BUT WHAT THIS DOES IS THIS BUILDS YOUR FUND UP NOT ONLY TO ALLOW YOU TO FUND THE ADDITIONAL DEBT SERVICE, BUT ALSO BUILDS YOUR FUND UP TO FUND THE ADDITIONAL NORTH TEXAS INCREASES THAT ARE COMING DOWN THE PIPE. SO THIS CHART RIGHT HERE JUST SHOWS YOU THE RATES THEMSELVES. I'LL JUST KIND OF GO OVER THIS BRIEFLY, AND THEN I'LL GET TO THE MORE IMPORTANT CHART. AND THAT IS WHAT THE IMPACT IS ON AN AVERAGE RESIDENTIAL AND NONRESIDENTIAL CUSTOMER. BUT YOU CAN SEE THAT BASICALLY WE'RE RECOMMENDING AN ACROSS THE BOARD INCREASE OF 9% IN YOUR BASE CHARGE AND IN YOUR VOLUMETRIC RATE. WE RECOMMEND THAT YOU KEEP THE INVERTED BLOCK RATE. SO IN OTHER WORDS, WHATEVER SOMEBODY PAID LAST YEAR, THEY'RE GOING TO PAY 9% MORE IN THEIR WATER BILL THIS YEAR IF THEY USE THE SAME AMOUNT OF WATER. AND THEN YOU CAN SEE THE PROJECTED RATES FOR EACH OF THE NEXT FOUR YEARS AFTER THAT. THIS IS YOUR NONRESIDENTIAL WATER. NO RATE PROPOSAL, SAME AS THE RESIDENTIAL. EVERYBODY GETS THE 9% INCREASE. AND THIS IS YOUR WASTEWATER ADJUSTMENT. THAT'S THE 11% INCREASE THAT WE'RE RECOMMENDING ONCE AGAIN ACROSS THE BOARD FOR EVERYBODY.

WHATEVER THEIR WASTEWATER BILL WAS LAST YEAR, IT WOULD BE 11% MORE. SO HERE IS PROBABLY THE MOST IMPORTANT CHART IN THE PRESENTATION BECAUSE THIS SHOWS WHAT THE IMPACT IS ON A RESIDENTIAL CUSTOMER. REMEMBER HOW I SAID EARLIER IN THIS PRESENTATION THAT THE AVERAGE RESIDENTIAL CUSTOMER USES ABOUT EIGHT TO 9 TO 10,000 GALLONS A MONTH? WELL, THAT CUSTOMER PAYS $142.60 RIGHT NOW UNDER THIS PROPOSAL, THERE, THAT CUSTOMER'S BILL WOULD GO TO

[01:00:07]

ALL YOU'RE DOING IS ASKING YOUR RATEPAYERS TO PAY WHAT IT'S COSTING YOU. AND AS YOUR COSTS GO UP DUE TO YOUR OUTSIDE SUPPLIER AND YOUR NEED TO DO CAPITAL INVESTMENT, THEN YOU'VE GOT NO CHOICE BUT TO PASS THOSE COSTS THROUGH TO YOUR CUSTOMERS. IT HAS BEEN VERY BENEFICIAL FOR THE CITY OF MCKINNEY TO CONTINUE TO PURSUE THIS POLICY OF THESE ANNUAL RATE ADJUSTMENTS. IT'S BEEN BENEFICIAL BECAUSE IT HAS ENSURED THAT YOUR REVENUES CONTINUE TO COVER YOUR COSTS. AND ALL 11 YEARS THAT I'VE WORKED FOR YOU, YOU HAVE NEVER HAD A SITUATION WHERE YOUR WATER UTILITY HAS REQUIRED TO BE SUBSIDIZED BY YOUR GENERAL FUND. IT'S NEVER OCCURRED AND HOPEFULLY IT NEVER WILL OCCUR IN THE FUTURE. IT'S ALSO ALLOWED FOR YOU TO MAKE THE CONTINUED INVESTMENTS IN THE SYSTEM. YOU KNOW, YOU'VE DONE AN ENORMOUS AMOUNT OF CAPITAL INVESTMENT HERE IN THE CITY OVER THE LAST DECADE. THE RATES THAT YOU'VE PUT IN PLACE HAS ENABLED YOU TO DO SO, AND IT'S ENABLED YOU TO DO SO IN A WAY THAT HAS KEPT YOUR UTILITY VERY HEALTHY FINANCIALLY. YOU'VE GOT A VERY WELL RUN UTILITY. YOU'VE GOT A FINANCIALLY HEALTHY UTILITY. AND IF YOU IMPLEMENT THIS NEW RATE PLAN, THAT WILL CONTINUE TO BE THE CASE. WE STRONGLY RECOMMEND THAT YOU CONSIDER AND ADOPT THE RATE PLAN THAT WE HAVE RECOMMENDED FOR YOU TONIGHT. SO WITH THAT, I'D BE HAPPY TO ANSWER ANY QUESTIONS YOU HAVE AT THIS TIME. APPARENTLY CURRENTLY WE'RE SHOWING ABOUT $6,566 MILLION IN THE FUND. OUR LAST CAPITAL, BIG CAPITAL EXPENDITURE. IF I'M LOOKING AT THIS RIGHT, WAS 13.9 MILLION, WHICH WAS LAST YEAR. 13. I'M LOOKING AT I'M JUST LOOKING AT THE BUDGET HERE FOR THE WASTEWATER FUND RIGHT HERE. DO YOU MIND SAYING THE PAGE NUMBER REAL FAST? 2626. THIS IS FOR FISCAL YEAR 26, CORRECT? YEAH, YEAH. AT LEAST HALF OF THAT 7.5 MILLION IS THE LAND THAT WE BOUGHT UP NORTH. SO CURRENTLY THE PROPOSED FOR 2627 IS BASICALLY WE'RE NOT MAKING IT'S FLAT KEEPING IT AT. IS THAT YOUR PROPOSAL WHERE WE'RE KEEPING THE FUND PRETTY MUCH FLAT. NO INCREASE TO THE FUND. YES. THAT'S WHAT WE ARE DOING. AND WE'VE BEEN TRYING TO

[01:05:05]

YES. IT'S IN OUR WE HAVE CAPITAL IMPROVEMENT FUNDS. LET ME LET ME PULL THAT UP WHILE WE'RE SITTING HERE. SO RIGHT NOW IN THE UTILITY CONSTRUCTION FUND, WE HAVE ABOUT $75 MILLION WORTH OF EXPENDITURES BUDGETED FOR 20 FOR FISCAL YEAR 27. NOW, WHAT WE DO IS WHEN WE GET THE TIME TO ACTUALLY ISSUE DEBT, YOU KNOW, HE, HE, HE SHOWED ABOUT 70, 70 MILLION THERE IN POTENTIAL DEBT. WHAT WE DO IS WE TAKE A LOOK AND SEE WHAT WE ACTUALLY CASH FUND. OUR CIP.

PEOPLE HAVE GENERALLY ASKED FOR ABOUT THIS MUCH. WE HAVE NEVER EVER ISSUED THAT MUCH IN WATER DEBT IN ONE YEAR. SO WE WE TYPICALLY MAKE SURE WE'RE CASH FUNDING THOSE CORRECTLY. SO I JUST WANT TO MAKE SURE WE EVERYBODY HERE UNDERSTANDS YOU HAVE $70 MILLION IN CAPITAL EXPENDITURES. WE HAVE 65 MILLION IN THE FUND. ARE YOU SAYING THAT WE'RE GOING TO DEPLETE THIS FUND THIS YEAR? ABSOLUTELY NOT. WE WILL. THE CAPITAL EXPENDITURES. WE WILL, WE WILL, WE WILL BORROW. WE WILL DEBT SERVICE THAT AND YOU WILL CONTINUE TO KEEP YOUR FUND BALANCE. NOW, WE DID SPEND, LIKE I SAID, ABOUT $7.5 MILLION BECAUSE WE FELT IT WAS PRUDENT.

OUR FUND BALANCE WAS WAS HEALTHY IN THE OPERATING SIDE. SO WE, WE DID SPEND THE 7 MILLION THIS YEAR TO PURCHASE THAT LAND. WE DID NOT ISSUE DEBT FOR THAT LAND. OKAY. ALL RIGHT. I'M JUST TRYING TO I THINK MY ONLY QUESTION IS WHY DOES THE FUND HAVE TO BE SO HIGH IF WE'RE GOING TO GO OUT AND GET DEBT? WELL, WE ARE REQUIRED TO KEEP AT LEAST 25% FUND BALANCE. YOU CAN SEE WE ARE DRAWING THAT DOWN TO ABOUT 120 DAYS THIS YEAR. SO WITH A FLAT BUDGET, SO WE'RE ABOUT WHERE WE SHOULD BE. WE TEND WE WOULD WITH ALL OF OUR ESPECIALLY WITH OUR TWO MAJOR OPERATING FUNDS, THE GENERAL FUND AND THE WATER FUND, I TRY TO KEEP AROUND 35% FUND BALANCE FOR THE FOR THE BOND RATINGS. OUR TRIPLE-A BOND RATING ON THE GENERAL FUND SIDE IS HIGHLY CONTINGENT UPON KEEPING AROUND A 35% FUND BALANCE. GROWING UTILITIES YOU GENERALLY SEE ON THE GENERAL FUND AND UTILITY FUND SIDE, AROUND 35 TO 40% FUND BALANCE. AND THAT WOULD KEEP THAT IN THE OPERATING SIDE. OKAY. JUST MY OPINION. I JUST, YOU KNOW, I KNOW THE BOND RATING IS ALWAYS BEEN THE THING OF BORROWING MONEY. WE KNOW CITIZENS HAVE BEEN VERY OPPOSED TO ISSUING DEBT, YOU KNOW, SO FOR, FOR, FOR ME THEN I WOULD LIKE TO GET LEAN AS POSSIBLE ON HOW MUCH WE RESERVE FOR BOND JUST FOR A BOND RATING, GET THAT TO CLOSEST TO, TO THE MINIMUM REQUIREMENT AS POSSIBLE IF WE CAN, BECAUSE I THINK THERE'S A LOT OF EXTRA MONEY THAT WE COULD BE PUTTING BACK INTO OUR SYSTEM IF WE DO THAT.

BECAUSE I DON'T I DON'T TALK TO ANY CITIZEN OUT THERE AND SAY THEY'RE WORRIED ABOUT THE TRIPLE-A BOND RATING. YOU KNOW, I KNOW WE ARE. BUT, YOU KNOW, IT'S IT'S TIMES ARE DIFFERENT.

SO SO I WOULD JUST SAY IF WE WERE A BUILT OUT COMMUNITY, WE WOULDN'T NEED AS MUCH RESERVE.

BUT WHEN WE'RE GROWING UTILITY, OUR GROWING COMMUNITY, SOMETIMES YOU NEED TO BE ABLE TO HAVE ENOUGH CASH AVAILABLE, THE EXTRA RESERVE TO BE ABLE TO EITHER MAKE PURCHASES OR BE ABLE TO BUILD SYSTEMS, ADDITIONAL SYSTEMS AS WE GROW. IT'S A DIFFERENT STORY IF WE'RE IF WE'RE BUILT OUT THAN BEING A GROWTH COMMUNITY. HOW MUCH DEBT DO WE CURRENTLY. LET'S SEE. ARE YOU TALKING ALL FUNDS? WATER. WATER. OKAY. WHERE'S OUR OUTSTANDING. ALL RIGHT. GEO BONDS. HERE WE GO. STANDING REVENUE BONDS. JUST RIGHT AT $400 MILLION. PRINCIPAL 288 MARK. QUICK, QUICK, QUICK QUESTION ON THE RESERVE BALANCE, THE 25%. JUST HELP ME EDUCATE ME A LITTLE ON THAT. I MEAN, FROM A PRIVATE INDUSTRY STANDPOINT THAT'S FUNDED DEPRECIATION. AND I GET WHAT YOU'RE DOING WITH IT. BUT THE 25% MARK. HELP ME UNDERSTAND THAT. I MEAN IS THAT STRICTLY TO MAINTAIN THE THE THE DEBT RATING, OR IS THAT A LIMIT THAT

[01:10:02]

THAT. I WOULD HAVE TO, YOU KNOW, THE PERCENTAGE RATINGS PROBABLY, YOU KNOW, I'M NOT SURE THAT THERE'S A TON OF DIFFERENCE BETWEEN A DOUBLE A PLUS OR A TRIPLE A, BUT THAT THAT'S A THAT'S A CHOICE THAT THE COUNCIL COULD MAKE AT SOME POINT. WE'VE ATTEMPTED TO MAINTAIN THAT TRIPLE A OVER THE LAST FEW YEARS. SO. IT'S NEVER BEEN REALLY HUGELY IMPORTANT UNTIL THIS YEAR BECAUSE OUR VALUATIONS HAVE DROPPED. AND SO NOW WE'RE SEARCHING FOR DIFFERENT WAYS TO FUND THINGS. ABSOLUTELY. I MEAN THAT'S SOMETHING YOU TAKE INTO ACCOUNT.

ANYONE ELSE. COMMENTS. QUESTIONS. YOU YOU FINISHED. I'M DONE. JUST THANK YOU ALL.

THANK YOU. WHO'S NEXT? MARK. YES I AM. OKAY. THE. WOULD YOU LIKE TO KEEP GOING? WE'RE KIND OF AT A NATURAL BREAK. OR YOU CAN TAKE A BREAK, OR WE CAN KEEP GOING. YOUR CHOICE. SURE.

ABSOLUTELY. SO WITH THAT, WE'LL WE'LL MOVE INTO JUST A LITTLE BIT OF THE BUDGET OVERVIEW. AND THEN WE'LL MOVE TO PROPERTY TAX AT OUR BUDGET. INPUT HEARING. BACK IN APRIL WE KICKED OFF AN ONLINE SURVEY TOOL. IF YOU RECALL, IT'S A VIRTUAL TOWN HALL TO LET CITIZENS TELL US WHAT THEIR PRIORITIES FOR OUR BUDGET ARE, THEIR RANKINGS AND COMMENTS ARE AVAILABLE HERE, AND THEN WE'LL BE HAPPY TO PROVIDE EACH OF YOU A HARD COPY OF THE RESULTS. YOU CAN SEE EXACTLY WITH WITH WITH COMMENTS WHAT EVERYBODY DID. WE HAD 394 RESPONSES THIS YEAR. SO WHAT YOU SEE HERE, THE LOWER THE NUMBER IS, THE HIGHER THE PRIORITY. PEOPLE VOTE ON A 1 TO 10 SCALE, WITH ONE BEING THEIR NUMBER ONE PRIORITY. THE NUMBERS ON THE BAR REPRESENT YOUR OVERALL RANKING, AND THEN THE OVERALL AVERAGE IS REPRESENTED BY THE BAR. AS YOU CAN SEE, THE TOP TWO PRIORITIES ARE THE SAME AS LAST YEAR STREETS AND PUBLIC SAFETY.

SAFETY. IN FACT, THE ENTIRE LIST IS EXACTLY THE SAME ONE THROUGH TEN, SO HAD NO CHANGE ON THAT. I JUST WANT TO ADD TO THAT LITTLE COLOR COMMENTARY THAT IS ALSO VERY CONSISTENT WITH OUR BI ANNUAL COMMUNITY WIDE SURVEY. WE DO A STATISTICALLY SIGNIFICANT SURVEY EVERY OTHER YEAR. THE NEXT ONE IS COMING UP IN FEBRUARY OF 27, AND THAT WE CONSISTENTLY GET THE SAME RESULT. PUBLIC SAFETY, PUBLIC WORKS STREETS OBVIOUSLY ARE USUALLY YOUR TOP TWO. AND AND IT MOVES DOWN THAT LIST PRETTY MUCH IN LINE WITH THAT. I THINK MAYBE PARKS AND REC MIGHT BE HIGHER ON THIS COMMUNITY WIDE SURVEY THAN THIS, BUT IT'S STILL VERY SIMILAR. RACING EVERYTHING ELSE. SO THIS NEXT SLIDE IS JUST KIND OF A HIGH LEVEL UPDATE OF OUR 2027 OPPORTUNITIES. WE HAVE A CURRENT TAX RATE OF 0.412. THIS DOES HAVE AN INCREASED RATE AT 0.417, WHICH IS 1.76 ABOVE THE NO NEW REVENUE RATE. OUR SALES TAX IS STEADY. WE HAVE SLIGHTLY OVER PERFORMED IN THE CURRENT FISCAL YEAR, PROJECTING GOOD GROWTH FOR NEXT. I'LL WALK THROUGH THOSE NUMBERS WHEN WE GO THROUGH THE REVENUE SECTION OF THE GENERAL FUND. THIS BUDGET ALSO WILL PROVIDE STEP INCREASES FOR ALL NON-SWORN

[01:15:02]

WE ARE FURTHER EXPANDING OUR STREET STREET MAINTENANCE WITH POTHOLE PROGRAM THAT PAUL MENTIONED AND THEN STAFFING ACROSS MANY, MANY DEPARTMENTS. MARK, I HAVE A QUESTION BACK ON.

MIGHT AS WELL START HERE ON STAFFING. IF I'M READING ON THE COMMENT ON PAGE FIVE, THE BUDGET IS CONTEMPLATING 52 MORE FTES FOR THIS YEAR. IT SAYS 32 POSITIONS IN GENERAL FUND, 20 POSITIONS IN OTHER FUNDS, OF WHICH THOSE 14 WOULD BE PUBLIC SAFETY. IS THAT CORRECT? SO I'M BACKING OUT IN MY MIND. THOSE ARE I'M NOT I'M NOT QUESTIONING FIRE AND POLICE. THOSE 14 ARE IN PLACE. SO THAT LEAVES ME. 38. I DO HAVE ONE QUESTION ABOUT THE PROPOSED POLICE AND FIRE IS, IS THAT FTE HOW MANY OF THOSE 14 ARE REFLECTED IN THE AIRPORT? OKAY, SO AM I JUMPING AHEAD? YOU CAN TELL ME BACK OFF AND WE'LL DO IT. NO THAT'S FINE. I MEAN, MIGHT AS WELL. YEAH. HOW MANY OF THE 14 ARE AS A RESULT OF COMMERCIAL SERVICE AT THE AIRPORT? SO OF THOSE 14 NONE ARE THE FIVE OR THE FOUR OFFICERS AND ONE SERGEANT THAT WE'RE ADDING. THEY'RE ALREADY IN THE BUDGET. THEY'RE NOT INCLUDED IN THAT. SO THOSE 14 HAVE ARE NOT REFLECTED IN THE STAFFING FOR THE AIRPORT. CORRECT. I CAN JUMP IN A LITTLE BIT. SO ON THE FIRE SIDE, YOU'RE LOOKING AT THREE CAPTAINS, THREE DRIVERS AND FOUR FIREFIGHTERS THAT ARE GOING TO BE STATIONED HERE AT STATION ONE WITH A SECOND COMPANY. SO THAT'S A LARGE PORTION OF THAT ON THE POLICE SIDE. IN ADDITION TO THE ALREADY FUNDED POSITIONS, HE TALKED ABOUT THE FOUR POLICE OFFICERS PLUS THE SERGEANT THAT ARE IN THERE NOT INCLUDED IN THOSE 14. MOST OF THE POSITIONS IN THE POLICE DEPARTMENT THIS YEAR ARE GOING TO BE NON-SWORN POSITIONS, BUT A COUPLE OF THOSE ARE GOING TO DO KIND OF A THEY'RE GOING TO BENEFIT US BY FUNDING A CIVILIAN POSITION TO DO A TASK THAT'S CURRENTLY BEING HANDLED BY A SWORN POSITION. SO WE'RE GOING TO HIRE A AN ADMINISTRATIVE PERSON TO OVERSEE TRAINING THAT WILL ALLOW THE CURRENT SWORN POLICE OFFICER WHO'S DOING THAT TASK TO BECOME A FULL FLEDGED POLICE OFFICER. SO LET ME GO AT IT A DIFFERENT WAY. SO THEN I'LL MAKE SURE I'M CLEAR. SORRY, LITTLE A LITTLE SLOW ON MY ONE REMAINING FUNCTIONING NEURON. SO THE 38 THAT ARE OUTSIDE THE FIRE AND POLICE, NONE OF THOSE CONCEIVED 38 WOULD BE AIRPORT FTE INCREASES AS A RESULT OF COMMERCIAL COMING ONLINE OF THE NON PUBLIC SAFETY THERE ARE IN THE AIRPORT FUND. THERE ARE I BELIEVE IT'S THREE OPERATIONS AGENTS AND FOUR. SO OF THE 38, 12 WOULD BE RELATED TO COMMERCIAL OPERATION AT THE AIRPORT. SEVEN OKAY. SO THEN WE'RE BACK DOWN. NOW IF YOU TAKE OUT PUBLIC SAFETY AND FTE INCREASE AS A RESULT OF COMMERCIAL SERVICES, WE'RE DOWN TO 31 FTE. THAT WOULD NOT BE RELATED TO PUBLIC SERVICE, FIRE, POLICE OR AIRPORT. IS THAT CORRECT? RIGHT. THAT SEEM RIGHT WITH THE QUICK MATH. I'M WITH YOU. I HAVE THE SAME NUMBER.

YES, BECAUSE WE SAID 14 WERE FIRE AND POLICE, AND THEN SEVEN WERE RELATED TO THE COMMERCIAL OPERATION OF THE AIRPORT. SO I'M DOWN TO 31 ADDITIONAL POSITIONS OUTSIDE THOSE FUNCTIONS. IS THAT CORRECT? YES. YOU'RE ASKING FOR THIS IN THE BUDGET. OKAY, THEN ONE QUICK QUESTION. AND YOU KNOW, YOU CAN GIVE ME, YOU KNOW, JUST A COST ESTIMATE, BUT 31 ADDITIONAL FTES AT THE AVERAGE SALARY OF THOSE EMPLOYEES THAT YOU'RE PROPOSING. THAT WOULD BE HOW MUCH IN SALARY, WAGES AND BENEFITS FOR THE YEAR. I WOULD SAY $3 MILLION. I MEAN, IT'D BE 3 MILLION. AND YOU'RE DOING YOU'RE DOING BENNIES ON TOP OF THAT, RIGHT? THAT'S THAT'S SALARY BENEFIT. SO THAT'D BE THAT'S A VERY ROUGH, ROUGH ESTIMATE. YEAH. AND OUTSIDE THAT SCOPE, OKAY. THAT'S SPREAD OUT ACROSS ALL OF OUR FUNDS. NOT ALL OF THAT BEING IN THE GENERAL FUND. SO OKAY. AND, AND AGAIN, THOSE 31, AS YOU SAID, ARE KIND OF SPRINKLED ACROSS VARIOUS DEPARTMENTS. ABSOLUTELY. OKAY. NOT JUST THE DEPARTMENTS, BUT FUNDS FUNDS, RIGHT? I MEAN, THEY'RE, THEY'RE NOT CONCENTRATED IN ONE DEPARTMENT. THEY'RE ACROSS THE OTHER. I GUESS WHAT I WOULD ADD IN NOT ASKING FOR IT AT THIS MEETING, BUT BUT AT LEAST FOLLOW UP FOR THE COUNCIL, IF THOSE 31 FTE WERE NOT APPROVED, HELP ME UNDERSTAND WHAT KIND OF SERVICE IMPACT THAT WOULD WOULD HAVE SOME KIND OF SENSE OF, OF, YOU KNOW, WHAT, WHAT AREAS, WHAT WOULD WE NOT BE ABLE TO ADD? WHAT WOULD BE? AGAIN, JUST FROM MY PERSPECTIVE, I'M TRYING TO

[01:20:06]

LOOK AT EVERY OTHER POSSIBLE OPPORTUNITY BEFORE WE ADD POSITIONS, BECAUSE ADDING POSITIONS GETS KIND OF EXPENSIVE AND WE RUN THAT MATH. BUT I HAVE YET TO FIND A WAY TO PROVIDE OR MAINTAIN A LEVEL OF SERVICES. AS WE GROW. AND YOU ADD 6 OR 7000 RESIDENTS A YEAR, I HAVE YET TO FIND A WAY TO DO IT WITHOUT ADDING PEOPLE. AGAIN, WE DON'T ADD PEOPLE ON A LINEAR RATE, AND WE'VE EVIDENCED THAT AGAIN WITH NOT ASPIRATIONAL BUT COMPARATIVE BENCHMARK DATA. YOU DO HAVE TO BE ABLE TO REPORT TO YOUR TAXPAYERS. HOW DO WE COMPARE WITH OUR NEIGHBORING COMMUNITIES? AND IT'S GOOD TO HAVE THAT PERSPECTIVE AND THAT POINT OF REFERENCE. WE FULLY UNDERSTAND WHERE YOU'RE COMING FROM. WE I THINK WE'RE DEMONSTRATING VALUE TO OUR TAXPAYERS. AND I THINK MOST TAXPAYERS WANT TO KNOW WHAT'S THE VALUE WE'RE GETTING FOR THIS. BUT IF IT COMES TO, YOU KNOW, REDUCING, I DON'T KNOW HOW YOU REDUCE WHEN YOU'RE A GROWING ORGANIZATION, JUST AS ENCORE WIRE DOESN'T REDUCE THEIR STAFFING WHEN THEY'RE ADDING EMPLOYEES. AND SAME WITH THE OTHERS. SO PRIVATE SECTOR IS ADDING EMPLOYEES. THEY ARE ADDING FOLKS. AND WE'RE SEEING THAT WELL, AND WE HOPE IS YOU'RE ADDING EMPLOYEES IN THE RIGHT PLACE AND YOU'RE DOING THE RIGHT THING. AND I UNDERSTAND THAT. AND RAYTHEON'S ADDING EMPLOYEES AND THEY HAVE TO JUSTIFY THE VALUE PROPOSITION IN THE REVENUE

[01:25:05]

WOULD WE RATHER NOT STRIKE THE BALL FIELDS A LITTLE LESS IN 26 AND 27, AS OPPOSED TO LETTING THE BALL FIELDS JUST TOTALLY DETERIORATE WHEN WE CAN'T KEEP THEM UP? OUR STRATEGIC GOAL SETTING PROCESS AND THE BUDGET PROCESS IS ABSOLUTELY THE OPPORTUNITY FOR THE COUNCIL TO TELL US WHAT YOU WANT. WHAT ARE YOUR PRIORITIES? IF THE COUNCIL SAYS WE'RE OKAY REDUCING THE LEVEL OF SERVICES OR THE QUALITY OF SERVICES BECAUSE WE DON'T WANT TO ADD FTE TO THE BUDGET, WE'LL WE WILL TAKE THOSE MARCHING ORDERS AND MOVE FORWARD. YOU JUST WE NEED TO MAKE SURE WE UNDERSTAND THE CONSEQUENCES OF THAT DECISION. AND IT'D BE $3 MILLION IN SAVINGS IF YOU DIDN'T ADD THE 31 FTS. OKAY. I DID WANT TO CLARIFY ONE THING THAT I SAID ON YOU ASKED ABOUT THE AIRPORT POSITIONS, AND I TOLD YOU ABOUT THE SEVEN TRULY AIRPORT POSITIONS, BUT THERE ARE SOME THAT ARE AIRPORT RELATED POSITIONS. FOR INSTANCE, WE'RE ADDING FOR FACILITY MAINTENANCE PERSONNEL, PEOPLE THAT MAINTAIN OUR OUR STRUCTURES. AND I FORGOT THE NUMBER OF STRUCTURES WE HAVE ACROSS THE CITY. BUT AS WE ADD SQUARE FOOTAGE OF STRUCTURES. SO WE ADDED A NEW FIRE ADMIN BUILDING. WE ADDED WE'RE ADDING A TERMINAL AT THE AIRPORT. WE'RE ADDING. SO THEY'RE ADDING FOR FACILITY MAINTENANCE. SO YOU COULD SAY SOME OF THEM ARE ARE RELATED TO THE GROWTH OF THE AIRPORT, EVEN THOUGH THEY'RE NOT TRUE AIRPORT PERSONNEL. AND THEN ON THE IT FRONT, I BELIEVE WE'RE ALSO PROPOSING TO ADD ONE I.T.

PROFESSIONAL THAT WOULD GIVE US THE CAPACITY TO HANDLE ANY IT ISSUES TO ADD ON TO THAT VARIOUS CORRECT. AS WE, FOR LACK OF A BETTER TERM, COMPLICATE THE TECHNOLOGY FOOTPRINT AT THE AIRPORT WITH COMMERCIAL SERVICE, WHETHER IT BE TSA OR VENDOR SUPPORT IN THE PUBLIC FACING AREAS AND EVERYTHING RELATED TO THAT. THERE ARE MINIMUM CONDITIONS THAT NEED TO BE MET FROM A TECHNOLOGY STANDPOINT AND STAFFED FRANKLY. SO ONE OF THE POSITIONS OF THE 31 THAT YOU'VE MENTIONED IS IT'S IN THE GENERAL FUND. IT'S A TECHNOLOGY IT POSITION IN THE GENERAL FUND. HOWEVER, ITS PRIMARY RESPONSIBILITY WILL BE IN RESPONSE TO THE COMMERCIAL SERVICE TERMINAL TURNING ON. OKAY. SO, BARRY, WHAT YOU'RE TELLING ME IS, IS IT'S MORE THAN SEVEN FTE. IT WOULD PROBABLY BE TEN OVERALL.

LOOKING AT THE 1IT PLUS THE TWO FACILITY MAINTENANCE. SO TEN FTES WOULD BE RELATED TO THE AIRPORT. I JUST WANT TO CORRECT MY PREVIOUS STATEMENT. OKAY. I THINK I'M JUST TRYING TO SAID PUBLIC SAFETY. I THINK WE HONED IN ON THE PUBLIC SAFETY POSITIONS. SO THERE'LL BE 28 FTE INCREMENTAL REQUEST INCREASE, NOT RELATED TO PUBLIC SAFETY OR COMMERCIAL SERVICE AT THE AIRPORT. IS THAT SAFE TO SAY? 28 AND THAT'S STILL $3 MILLION, GIVE OR TAKE UP OR DOWN POTENTIAL SAVINGS. OKAY. PAULA, YOU THAT YOUR DEPARTMENT LEADS REPORT TO YOU THE NUMBER OF EMPLOYEES THEY WISH TO HIRE CORRECT. EVERY YEAR. AND DO YOU HAVE THAT FIGURE? WE HAVE IT IN OUR SUPPLEMENTAL BUDGET REQUEST. THE NUMBER REQUESTED. YES. VERSUS THE NUMBER THAT'S BEING PROPOSED IN THE BUDGET. WE GO THROUGH THIS THIS YEAR AND THIS YEAR IN THE GENERAL FUND, 68 POSITIONS WERE REQUESTED. ALL FUNDS SAY 95. OKAY. THANK YOU. I'M GOING TO ADD A FEW THINGS.

EXCUSE ME. LISTEN TO WHAT COUNCILMAN LYNCH WAS SAYING ABOUT THE FTES, WHERE MY HEAD GOES IS PERHAPS IN IS THERE A WAY TO REPURPOSE SOME POSITIONS THAT AREN'T NEEDED ANYMORE INTO THE NEW POSITIONS? AND I DON'T KNOW THE ANSWER TO THAT. I THIS IS MY FIFTH ONE OF THESE, AND I'VE. LEARNED TO GAIN A LOT OF TRUST IN YOU GUYS. THE. BUT ON A COMMON THREAD, I THINK THAT WE HOLD UP HERE IS. DESPITE THE AVERAGE HOMEOWNER SEEING A DECREASE IN THEIR ACTUAL TAXES ON THIS THING, YOU KNOW, WE HAVE ROUGHLY, YOU KNOW, 3% DECREASE IN VALUATIONS, A 1% INCREASE IN THE RATE, YOU KNOW, SO THE AVERAGE HOMEOWNER WOULD WOULD SEE A LITTLE BIT OF A

[01:30:05]

FORGIVE ME IF I'M WRONG TO THE PARKS DEPARTMENT. AND THIS YEAR THAT NUMBER IS A LOT LESS. BUT I DO UNDERSTAND THAT THEY ARE PUTTING SOME MONEY INTO OPERATIONS IN PARKS, AS OPPOSED TO MAYBE INVESTING IN NEW PARKS, BUT THAT SEEMS TO BE A BENEFIT TO THEIR BUDGET, THAT IN ANY YEAR THAT WE'RE LOOKING AT A TAX RATE INCREASE, I QUESTION WHETHER THAT'S REALLY ENOUGH. I QUESTION WHETHER OR NOT WE COULDN'T GO TO THEM FOR SOME MORE. AND WHAT SOME MORE MIGHT LOOK LIKE IS THEY DO PUT SOME MONEY INTO OUR ROADS, OUR NEW ROADS, WHICH THEY CAN COMPLIANTLY DO. AND IS THERE A WAY FOR THEM TO AUGMENT THAT IN ORDER TO KEEP THE TAX RATE DOWN? I PERSONALLY, AND I DON'T BEGRUDGE ANYBODY ELSE UP HERE FOR QUESTIONING THIS THING.

IT'S A WONDERFUL WORKSHOP THAT WE'RE HAVING, MAYBE THE BEST IN THE FIVE YEARS THAT WE'RE GRINDING ON THIS, BUT I DON'T REALLY QUESTION YOUR NEED TO PROVIDE THE SERVICE. AND, WELL, I'LL TELL YOU WHAT, 11 MONTHS OUT OF 12, THE DISCUSSIONS I'M HAVING WITH RESIDENTS ARE ABOUT SERVICE. WHY THE HELL IS THIS NOT DONE? YOU KNOW, WHY DO I NOT HAVE GOOD GRASS AT THIS GRADY LITTLEJOHN THING OR SOMETHING LIKE THAT? AND OUR PEOPLE ARE USED TO GOOD SERVICE AND I'LL I'LL ADD ONE LAST THING BEFORE I STOP MY COMMENTS. YOU KNOW, WE HAD THE FIREWORKS THING THIS YEAR THAT SURPRISED US WITH THE NUMBER OF PEOPLE THAT CAME OUT. WE HAD DISPLAY DAY. I THINK THAT SURPRISED US WITH THE NUMBER OF PEOPLE THAT CAME OUT. I'M SEEING THINGS ALL OVER THE PLACE WHERE PEOPLE ARE LOOKING AT LOW TO NO COST THINGS TO DO WITH FAMILIES. AND I THINK THAT MCKINNEY DOES A GREAT JOB OF PROVIDING THAT. AND AT A TIME WHERE WE'RE TALKING ABOUT THINGS WE CAN'T HELP, WE CAN'T HELP WHAT'S GOING ON WITH WATER, BUT WHAT ARE THE CHANCES WE NEED TO DO A GOOD JOB PROVIDING WATER? 100% CHANCE, 100% CHANCE WE HAVE TO DELIVER GOOD WATER AND WE CAN'T SHORT THAT THING. SO I GUESS WHAT I'M LOOKING AT IS THERE IS THERE A WAY TO AND I LOOK AT THE CDC AS LOW HANGING FRUIT ON THIS THING, TO HAVE THEM AUGMENT A LITTLE BIT MORE IN ORDER TO KEEP OUR OVERALL TAX RATE DOWN. THE ANSWER MAY BE NO TO THAT, BUT THAT'S A QUESTION I'VE GOT. THANK YOU. I HAVE A QUICK QUESTION. WHAT IS THE DELTA BETWEEN. THE REVENUE WE GET TODAY ON THIS TAX RATE AND THE REVENUE THAT WE'RE GOING TO GET ON THE NEW TAX RATE? WHAT'S THAT NUMBER THAT WE NEED TO MAKE UP? ROUGHLY, WE KEPT THE TAX RATE ROUGHLY $2.2 MILLION 2.2. OKAY. GREAT. OKAY. MARK, WHERE ARE WE IN THE PROCESS? WE'RE TALKING ABOUT A BREAK. I'VE GOT ONE MORE SLIDE. AND THEN I THINK NATURAL BREAK POINT. OKAY. AND IT'S A QUICK ONE. SO I JUST WANTED IT WAS JUST ONE MORE QUICK UPDATE.

IT'S KIND OF JUST A FOLLOW UP ON OUR, OUR BOND PACKAGES, JUST KIND OF SHOWING WHAT'S AHEAD OF US IN 27 AND BEYOND WITH OUR RECENT BOND ELECTIONS, MANY PROJECTS COMING UP THAT ARE EXCITING REQUIRE RESOURCES AND, AND, AND STAFF TO COMPLETE. AS YOU CAN SEE HERE, WE HAVE PRETTY MUCH COMPLETED OUR 2019 BOND PACKAGE IN ITS ENTIRETY, A SMALL OUTLIER HERE ON THE PUBLIC WORKS FACILITY. I KNOW YOU HEARD A PRESENTATION AT WORK SESSION THIS WEEK THAT TALKED ABOUT HOW WE'RE MOVING FORWARD THERE, AND OUR 2024 BOND PACKAGE IS WELL UNDERWAY, SO WE DO ANTICIPATE MORE PROGRESS ON THAT IN FISCAL YEAR 27. SO JUST WANTED TO GIVE A QUICK UPDATE WITH THAT. THAT'S BEFORE WE MOVE INTO THE PROPERTY TAX SECTION AND THE REVENUE SECTION OF THE GENERAL FUND. SO I'LL TAKE ANY QUESTIONS OR YOU CAN. ARE THERE ANY QUESTIONS ON MR. HOLLOWAY? LET ME CLARIFY. I WANT TO MAKE SURE. SO YOU'RE TELLING ME THAT OKAY, WE KEPT THE SAME TAX RATE WE DID THIS PREVIOUS YEAR, THAT WE WOULD BE TWO 2.2 MILLION IS THE NUMBER WE'RE LOOKING AT. YES, THAT WOULD BE CORRECT. OUT OF THE GENERAL FUND. WELL, I

[01:35:08]

THAT'S THE FIRST TIME I'VE HEARD THAT IN FIVE YEARS. LIKE I WOULDN'T WANT TO CUT FTES OVER $2.2 MILLION. I MEAN, YOU CAN YOU CAN LITERALLY GO TO THE CDC AND, YOU KNOW, LOOK, LET'S REDUCE OUR PARKS BUDGET BY FOUR AND HAVE THEM WRITE A CHECK FOR FOUR OR SOMETHING. I'M JUST THROWING OUT NUMBERS. BUT LIKE, THAT'S NOT TO ME, THAT'S NOT AN INSURMOUNTABLE IN THIS RELATION TO THE SMOOTHED AVERAGE OF THAT 2.2 MILLION. THERE'S ELIGIBILITY CONSTRAINTS AS WELL.

SO IT'S NOT TO SAY THAT WE DON'T HEAR THAT, AND WE'RE NOT OPEN TO DOING SOME ANALYSIS TO THAT FRONT. BUT THE THE FUNDING LEVEL THAT'S REPRESENTED IN THE CITY MANAGER'S PROPOSED BUDGET AND THOSE POSITIONS, THEY DON'T ALL EXIST IN AN AREA THAT CAN BE OFFSET BY CDC FUNDS. FOR THIS SPECIFIC EXAMPLE. I'M JUST SAYING LIKE, IF YOU REDUCE THAT BUDGET BY 4 MILLION AND YOU TAKE IT IN FROM SOMEWHERE ELSE, AND YES, THAT MONEY IS AVAILABLE FOR US, I THINK WE'RE FULLY OPEN TO ANALYZING ANYTHING THAT THE COUNCIL DIRECTS US TO DO. BUT I JUST WANTED TO MAKE THAT NOTE THAT THAT 2.2 EXISTS ACROSS ALL FUNDS OR ALL THE GENERAL FUND ACTIVITIES. OKAY. I CAN'T SPEAK FOR EVERYBODY UP HERE, BUT I'D MUCH RATHER LEAVE THE TAX RATE THE SAME AND FIND WAYS TO GET THE MONEY FROM SOMEWHERE ELSE. AND IF IT'S ONLY 2.2 MILLION, THERE OUGHT TO BE A WAY WE COULD LOOK AT TO IT AND SEE IF THAT COULD BE DONE. AND I'LL JUST ADD TO THAT, MR. MAYOR PRO TEM TO ME, AND I'VE APPROACHED MR. GRIMES ABOUT THIS. THE THREE PLACES TO GO ARE MAINLY CDC AND THE TWO TOURS. I GIVE STAFF A LOT OF CREDIT FOR USING TOURS TWO FOR, YOU KNOW, SOME FTES THAT WE'RE USING OVER THERE, BUT THAT THAT'S THE PATHWAY I'D MOST LIKE TO GO DOWN. AND AGAIN, I RESPECT EVERYBODY UP HERE AND RESPECT THAT. YOU ALL BRING SOME DIFFERENT STUFF TO THE TABLE. BUT MY, MY BIAS AND WE ALL HAVE BIASES. MY BIAS AFTER FIVE YEARS OF DOING THIS IS I TRUST THIS, THIS STAFF THAT WE HAVE LED BY MR. GRIMES TO STAFF US APPROPRIATELY AND MAKE US PROUD DURING TIMES WHERE I'LL SAY WINTER STORMS OR SOMETHING LIKE THAT, WHERE A PUBLIC WORKS STEPS UP HUGE AND THEY MAKE US PROUD ALL THE TIME. AND I WANT TO KEEP THAT PRIDE. BUT I, I, I'M, I'M WILLING TO SACRIFICE SOME THINGS IF IT'S A, IF IT'S A WORLD THAT'S DOABLE. COMPLIANTLY SACRIFICE A WORLD WITH CDC OR SOME OF THE TOURS TO TAKE SOME THINGS OUT OF THAT IN ORDER TO MAKE THIS THAT TAX RATE WORK. SO THANK YOU. AND IT WOULD STILL BE A GOOD EXERCISE, THOUGH, TO SEE WHAT THOSE YOU KNOW, THOSE POSITIONS ARE FTE POSITIONS THAT ARE THAT COUNCILMAN LYNCH SAID THAT THAT ARE KIND OF OUT THERE JUST TO SEE WHAT THEY ARE AND SEE WHAT THOSE ROLES ENTAIL. AND HOW IMPORTANT ARE THOSE ROLES? I MEAN, ARE THEY OR I MEAN, WE HAVE ARE THEY VERY ADMINISTRATIVE WHERE WE COULD KIND OF, YOU KNOW, ELIMINATE THEM OR, OR JUST KNOW WHAT THEY ARE? YOU KNOW, WE JUST HAVE A NUMBER RIGHT NOW. BUT WHAT, WHAT, WHAT IS IN THAT NUMBER? WHAT, WHAT ARE THOSE ROLES THAT WE'RE LOOKING AT THAT ARE, ARE THEY CRITICAL? YEAH, I DON'T WANT A POTHOLE BEING MISSED BECAUSE WE SAID WE DIDN'T NEED A, A POSITION. BUT IF IT'S JUST RUNNING A, A FILE FROM THE THIRD FLOOR TO THE FIFTH FLOOR, THEN MAYBE WE LOOK AT THAT.

WELL, I, I WOULD SAY WE HAVE LOOKED AT IT AND WE'RE NOT BRINGING POSITIONS TO YOU THAT HAVEN'T GONE THROUGH SOME SCRUTINY BECAUSE WE'VE REQUESTED 90 SOME POSITIONS ON ALL FUNDS. OKAY. SO WE'VE ALREADY CALLED THE REQUEST LIST, SO TO SPEAK. AGAIN, IF THE COUNCIL WISHES US TO NOT MOVE FORWARD WITH SOME OF THESE, WE'RE GOING TO YOU'RE GOING TO GIVE US THE THE BUDGET AND WE'LL HAVE TO MAKE IT WORK. SO THAT'S WHAT WE'RE PREPARED TO DO. BUT I CAN ASSURE YOU THAT THE POSITIONS THAT WE'RE LOOKING AT, WE'VE HAD THESE SCRUBBING CONVERSATIONS, IF YOU WILL, WITH OUR DEPARTMENTS AND THE REQUESTS. YEAH. AND THE ONLY THING I WOULD ADD, WE ARE GOING TO GO THROUGH THEM TODAY. I MEAN, WE'RE GOING TO GO THROUGH SOME OF THOSE. AND THE ONLY THING I WOULD ADD TO TO COUNCILMAN JONES COMMENT IS, IS, YOU KNOW, ONCE THE 28 FTES ARE BAKED INTO THE BUDGET AND IT GOES BACK TO THE EARLIER COMMENTS, THEY BECOME AN IMMOVABLE OBJECT. BECAUSE THEN IF YOU'RE LOOKING AT OPERATIONAL EFFICIENCIES DOWN THE LINE, BECAUSE THE TAX BASE CONTINUES TO DECLINE, OTHER EXPENSES LIKE WATER AND SEWER THAT WE CAN'T MANAGE, WHICH IS GOING TO PUT MORE PRESSURE ON THE PART OF THE BUDGET THAT'S TOTALLY DISCRETIONARY THAT THEN YOU'RE LOOKING AT, YOU KNOW, WORST CASE SCENARIO OF POSITION ELIMINATION, AND IT'S AS DISTASTEFUL AS IT IS TO LOOK AT SERVICE LEVELS. NOW, I CAN ASSURE YOU IT IS MUCH EASIER TO HAVE THAT UNCOMFORTABLE DISCUSSION ABOUT SERVICE LEVELS AND EXPECTATIONS AS OPPOSED TO COST REDUCTION, POSITION

[01:40:06]

WE DON'T HAVE A SHRINKING PIECE OF PIE. WE'RE BLESSED IN MCKINNEY. OUR PIE CONTINUES TO GROW WHILE WE'RE SEEING TAX VALUES FLAT, SLIGHT MODERATE DECREASE IN THE RESIDENTIAL SIDE, FLAT IN THE COMMERCIAL SIDE, THEY'RE THE LONG TERM. WE'RE STILL GROWING. AND SO I DON'T THINK WE'RE IN A SITUATION WHERE WE'RE HAVING TO GO IN AND, AND HACK THE LIMB OFF THE TREE, SO TO SPEAK, TO SAVE THE TREE. THAT COULD HAPPEN. I PROMISE YOU THAT.

WE'VE BEEN THROUGH IT. I'VE BEEN THROUGH IT. MR. HOLLOWAY HAS BEEN THROUGH IT. HE CAME FROM MESQUITE, AND THEY'VE HAD SOME. DURING THE GREAT RECESSION. THEY HAD SOME TOUGH YEARS. WE KNOW HOW TO DO THAT. AND WE KNOW HOW TO TO TO MAKE THOSE CUTS AND ADJUST THOSE KNOBS AND LEVERS. IF WE GET TO THAT POINT, WE'RE NOT AT THAT POINT. WE ARE STILL GROWING.

WE'RE STILL SEEING OUR TAX BASE GROW. WE'RE JUST NOT SEEING THE VALUES WHERE THEY HAVE BEEN FOR THE LAST NINE YEARS. AND WE'RE HAVING TO MAKE SOME ADJUSTMENTS, AND IT'S PUTTING UPWARD PRESSURE ON THE RATE BECAUSE OF THE MATH. THAT'S JUST HOW THE MATH WORKS. AND SO WE'RE AGAIN, WE'LL GO THROUGH ALL OF THESE DIFFERENT POSITIONS AFTER THE BREAK, WALK YOU THROUGH. WE'RE HAPPY TO ADDRESS ALL OF YOUR QUESTIONS, AND WE WILL HEAR YOU IF THE COUNCIL'S DIRECTION IS TAKE 2.2 MILLION FROM SOMEWHERE ELSE, WE'LL TRY TO FIND THAT AND COME BACK TO YOU. SOME THINGS WON'T BE FUNDED OUT OF THE WON'T BE ELIGIBLE OUT OF AN MCDC FOR EXAMPLE, SOME THINGS WON'T BE ELIGIBLE OUT OF A TERSE. BUT WE'LL TRY TO PATCH THAT TOGETHER. IF THAT'S THE DIRECTION OF THE COUNCIL. I THINK MAYBE WHAT COUNCILMAN LYNCH IS SAYING. BUT YOU'RE RIGHT. IT'S IT'S THINGS ARE REALLY GOOD RIGHT NOW, BUT THERE WILL BE A DAY WHEN WE'RE HAVING A DIFFERENT CONVERSATION AND IT'S BETTER TO TALK ABOUT AND LET'S LOOK AT IT. WHAT WOULD IT WHAT WOULD IT LOOK LIKE IF WE PUT STRESS ON THE SYSTEM AND SEE WHAT IT WOULD LOOK LIKE? SO I'M ALSO HEARING MORE TALK OF LEAVING THE RATE WHERE IT IS. SO MAYBE PUT YOUR THINKING, YOUR YOUR NOODLES TO WORK AND SEE IF THERE'S A WAY TO MAKE THAT WORK. I ABSOLUTELY, I WOULD JUST ASK YOU TO RESERVE THAT FINAL DIRECTION UNTIL AFTER WE'VE SEEN THE BUDGET PRESENTATION. YES. YES YES YES YES. YEAH. OKAY. ARE YOU GOOD? YOU'LL TAKE A BREAK. OKAY.

LET'S TAKE A, YOU KNOW, TEN MINUTES. 12 MINUTES. WELL DOCTOR PHE OKAY, MR. MINYARD, WE ARE BACK. WHERE'D YOU GO? WE'VE LOST OUR CHIEF FINANCIAL OFFICER. I APOLOGIZE, SORRY. ONCE WE GET THE SLIDES PULLED UP, WE'RE GOING TO JUMP INTO PROPERTY TAX.

MR. GARY GRAHAM HAS ALSO JOINED US IN THE ROOM TO TO TALK A LITTLE BIT ABOUT ROADWAYS. SO WE MAY TAKE A LITTLE AUDIBLE TO PUT HIM UP A LITTLE FURTHER ON THE AGENDA AFTER WE GET THROUGH PROPERTY TAX. BUT I'LL LET MR. HOLLOWAY GET INTO THAT. SO I'M GOING TO JUMP IN FOR A FEW SLIDES TO TALK ABOUT THE GENERAL UPDATE TO THE ASSESSED VALUE MAKEUP OF MCKINNEY, THE PROPOSED RATE IN THE CITY MANAGER'S BUDGET, AND A LITTLE BIT OF DETAIL IN RELATION TO OUR FOOTPRINT OF FTES IN COMPARISON TO THE REST OF OUR MAJOR CITIES IN COLLIN COUNTY.

SO IF YOU HAVE ANY QUESTIONS THROUGHOUT, PLEASE INTERRUPT AND WE CAN ANSWER THOSE. OR IF SOMETHING'S NOT CLEAR, PLEASE ASK AND WE'LL TRY TO DO OUR LEVEL BEST TO GIVE YOU A GOOD RESPONSE. FIRST THINGS FIRST, JUST OUR TOTAL TAX RATE LAID OVER ON OUR TAXABLE VALUE.

YOU'LL SEE HERE THAT OUR CURRENT TAXABLE VALUE FOR FISCAL YEAR 27 IS PROPOSED TO BE RIGHT AT $45 BILLION. THAT'S A $1.5 BILLION UPTICK AGAINST THE TOTAL TAXABLE VALUE THAT WAS ON THE ROLL LAST YEAR. AS WE'VE BEEN MENTIONING THROUGHOUT THE MORNING, THAT'S A BIT OF A A SLIGHT DECREASE TO THE TOTAL GROWTH. THAT'S THE BEST WAY TO SAY IT. AND THE PREVIOUS FISCAL YEARS, WE WERE SEEING ANYWHERE FROM 3 TO $4 BILLION OF ADDITIONAL TAXABLE VALUE ADDED TO THE TAX ROLL. THIS YEAR. THAT NUMBER IS A BILLION AND A HALF. SO WE'VE ADDED $1.5 BILLION IN TAXABLE VALUE YEAR OVER YEAR. THERE'S THAT CORRESPONDING ALGEBRAIC IMPACT TO THE TAX RATE, AS MR. GRIMES MENTIONED IN HIS OPENING COMMENTS. AND AS WE'VE TALKED A LITTLE BIT ABOUT THROUGHOUT OUR CONVERSATIONS THIS MORNING. SO YOU SEE THE TAX RATE BEING RECOMMENDED TO ADJUST UP HALF A PENNY. THIS IS A COMPARISON TO THE MAKEUP OF APPRAISED VALUES TO OUR LARGER SISTER CITIES IN COLLIN COUNTY. WE'VE USED THIS AS SOMEWHAT OF A BENCHMARK, A

[01:45:04]

AND THEN WE'LL SPEND A LITTLE BIT OF TIME ON THIS, THIS SLIDE PARTICULARLY, AND THEN THE BREAKDOWN OF EACH INDIVIDUAL COMPONENT OF THE APPRAISED VALUES THAT ARE ON THE ROLL THIS YEAR. BUT I WANT TO DRAW YOUR ATTENTION TO THE DECREASING SHARE OF RESIDENTIAL SINGLE FAMILY VALUE THAT'S OCCURRED OVER THE YEARS, AND THEN THE INCREASING SHARE OF OTHER TYPES OF APPRAISED VALUE UNITS. SO YOU SEE THAT COMMERCIAL ITSELF ON THIS TEN YEAR PERIOD HAS GROWN AS A PERCENTAGE OF THE TOTAL, THE MOST WE'VE SEEN A 4.4% INCREASE AS A PERCENTAGE OF THE TOTAL SINCE FY 2018 TO THIS YEAR'S PROPOSED OR EXCUSE ME, THIS YEAR'S ASSESSED VALUE ON THE GROUND AND COMMERCIAL. AND THEN REALLY, THAT'S ALMOST 1 TO 1.

THE DEDUCTION OF THE TOTAL VALUE IN THE CITY THAT'S COMING FROM SINGLE FAMILY. AND THEN OUR LOT AND LAND, I'VE SAID IT IN THE PAST AS AS WE DEVELOP MORE, THE TOTAL VALUE OF THE RAW LAND THAT'S IN THE COMMUNITY DECREASES. WE'RE DIVING INTO NOW EACH INDIVIDUAL UNIT OF THE TAXABLE VALUE THAT WE HAVE IN THE NEXT YEAR'S BUDGET. THE PERCENTAGES ON THE SCREEN ARE INCLUSIVE OF EXISTING VALUE ON THE GROUND AND NEW VALUE DEVELOPED. SO THE 0.5% DECREASE THAT YOU SEE FISCAL YEAR 27 TO 26 IN SINGLE FAMILY INCLUDES ALL OF THE NEW SINGLE FAMILY DEVELOPMENT. IF YOU BACK OUT THE NEW SINGLE FAMILY DEVELOPMENT, THE EXISTING VALUE OF SINGLE FAMILY IN THE CITY OF MCKINNEY WENT DOWN ABOUT 2.3% ACROSS THE SMOOTHED AVERAGE OF THE CITY. ON MULTIFAMILY, THERE'S A A LARGER SHIFT IN THAT SAME LOGIC.

THIS INCLUDES NEW VALUE ON THE GROUND AND EXISTING VALUE. WE SEE AN INCREASE OF THE TOTAL TAXABLE VALUE OF MULTIFAMILY OF 6.3%, THE MEANING THE VALUE OF THE TOTAL STOCK OF MULTIFAMILY IN THE CITY IS HIGHER. BUT IF YOU BACK OUT THE NEW VALUE, THAT MULTIFAMILY THAT WAS EXISTING IS RIGHT THERE IN LINE WITH THE DECREASE AT 3% OF IN COMPARISON TO THE PREVIOUS YEAR'S TAXABLE VALUE. SO IT KIND OF MIRRORS WHAT HAPPENED ON THE ON THE SINGLE FAMILY SIDE, THERE'S JUST MORE MULTIFAMILY THAT WAS DEVELOPED FROM A NEW TAXABLE VALUE ON THE TAX ROLLS IN FISCAL YEAR 27. AND THEN HERE'S WHERE WE SEE A LARGE UPTICK. THE COMMERCIAL VALUES, AS THEY'VE DONE OVER THE LAST FIVE YEARS, HAVE CONTINUED TO CLIMB, BEING IN DOUBLE DIGITS EACH ONE OF THE LAST FIVE YEARS. SO WE SEE ON THE SCREEN COMMERCIAL VALUES, BOTH NEW AND EXISTING. AND THEN THOSE NEW AND EXISTING VALUES HAVE JUMPED OVER DOUBLE DIGITS, SOMETIMES OVER 15% IN RECENT YEARS. TO REPRESENT THAT OFFSET THAT I MENTIONED IN MY FIRST SLIDE OF THE TOTAL MIX OF OUR APPRAISED VALUES THAT MAKE UP THE PROPERTY TAX RATE. ON THE MOST RECENT YEAR, YOU SEE, THERE'S BEEN ABOUT AN 11% INCREASE IN TOTAL TAXABLE VALUE OF COMMERCIAL VALUE IN MCKINNEY. OF THAT, IF YOU BACK OUT THE NEW VALUE, THE EXISTING COMMERCIAL VALUE IN MCKINNEY THAT WAS ALREADY ON THE GROUND BEFORE NEW CONSTRUCTION WAS 7.2% UP. SO COMMERCIAL IS POPULAR, IT'S VALUABLE AND CONTINUES TO MAINTAIN ITS VALUE IN MCKINNEY. AND THEN LAND VALUES FLUCTUATE IN RELATION TO THE TOTAL AMOUNT OF RAW LAND AVAILABLE. ANNEXATIONS THAT OCCUR, THAT ADD OR DECREASE THE AMOUNT OF RAW LAND STOCK THAT'S IN THE CITY. AND THEN, FRANKLY, WHAT THE CAD ALLOCATES AS A ACRE VALUE IN THEIR ANALYSIS AND IN THEIR APPRAISAL SYSTEM AS WELL, WE CAN SEE THAT NOT ONLY DO WE HAVE INVESTMENTS CONTINUING AND NEW CONSTRUCTION CONTINUING, WHICH IMPACTS THE AMOUNT OF RAW LAND AVAILABLE WHERE YOU SEE THE DECREASE THAT EBBS AND FLOWS OVER THIS TEN YEAR PERIOD THAT WE'RE LOOKING AT? THE REAL TAKEAWAY IS THAT WE ARE CONTINUING TO SEE COMMERCIAL VALUES, COMMERCIAL TAXABLE VALUES, MAKE UP MORE OF THE PIE IN MCKINNEY ON TAXABLE VALUES AND RESIDENTIAL VALUES,

[01:50:03]

[01:55:06]

EXCUSE ME, THE CITIZEN SERVE PER EMPLOYEE. WE HAVE ANOTHER SLIDE THAT SHOWS IT IN THE INVERSE, BUT RELATIVELY TO GIVE THE COUNCIL AND THE PUBLIC A FLAVOR OF THE THE TOTAL NUMBER OF EMPLOYEES THAT EACH THOUSAND CITIZENS REPRESENT. ANOTHER WAY THAT WE SHOW THIS IS ON THE NEXT SLIDE IN COMPARISON TO OUR SISTER CITIES OF WHAT EACH EMPLOYEE. IF THEY WERE TO BEAR A NUMBER OF CITIZENS INDIVIDUALLY, WHAT THEIR BEARING WOULD BE, YOU'LL SEE THAT WE'RE ACTUALLY DECREASING A LITTLE BIT WITH THE RECOMMENDED BUDGET ON THAT NUMBER. AND THEN WE STILL ARE OPERATING RELATIVELY LEAN IN COMPARISON TO OUR SISTER CITY NEIGHBORS, AS MR. GRIMM MENTIONED, WHICH IS ULTIMATELY THE VALUE PROPOSITION THAT WE OFFER IN MCKINNEY IS THAT WE ARE EFFICIENT. WE'RE TRYING TO INVEST IN INNOVATION. THEREFORE, OUR INDIVIDUAL EMPLOYEE BASE IS SOMEWHAT SMALLER IN COMPARISON TO SOME OTHER CITIES IN THE COUNTY. AND I THINK I'LL BURN THROUGH THAT. SO I'LL HAND IT BACK OFF TO MR. HOLLOWAY, WHICH I THINK HE IS GOING TO BRING UP. MR. GRAHAM. YES. IS THERE ANY QUESTIONS IN RELATION TO THE TAX RATE, THE ASSESSED VALUE, MAKE UP OR ANYTHING IN RELATION TO OUR COMMENTS THERE? THANK YOU. OKAY. WITH YOU GUYS PERMISSION. I WANT TO CALL A LITTLE BIT OF AN AUDIBLE. I WAS GOING TO TALK ABOUT GENERAL FUND REVENUES HERE. GARY GRAHAM IS HERE. HE IS. HE NEEDS TO PROBABLY LEAVE A LITTLE BIT EARLY TODAY. HE HAS A DRIVE TO MAKE. SO I THOUGHT THAT HE WAS HERE TO TALK ABOUT OUR ROAD RECONSTRUCTION PLAN. SO IF WE COULD JUMP AHEAD MAYBE A FEW SLIDES. AND HE HAS ABOUT 3 OR 4 SLIDES TO TO TALK THROUGH. AND I WOULD LET HIM GET GET OUT OF HERE AND ANSWER ANY OF YOUR QUESTIONS. SO WITH THAT, I'LL, I'LL ADVANCE THE SLIDES TO WHERE GARY CAN START. I APPRECIATE HIM HIM BEING HERE TODAY. THANK YOU. MARK. MAYOR, COUNCIL MEMBERS, THANK YOU FOR ACCOMMODATING MY, MY, MY TRAVEL SCHEDULE. ALMOST LIKE MR. HAUSER TAKEN OFF HERE. SO I WANT TO GIVE YOU A QUICK UPDATE. JUST A HAYMAKER FROM LEFT FIELD.

ENGINEERING EMPLOYEES TODAY. YEAH. SO I WANT TO GIVE A QUICK UPDATE TO ON OUR STREET RECONSTRUCTION PROGRAM THAT WE'RE DOING, WE'RE GOING TO FOCUS MAINLY ON THE PROJECTS EAST OF 75. WE'RE DOING A LOT OF WORK ALL OVER THE CITY, BUT MAINLY THE STREET RECONSTRUCTION HAPPENS, HAS BEEN FOCUSED EAST OF 75. ON THIS GRAPHIC, YOU CAN SEE IN BLUE THE PROJECTS THAT WE'VE COMPLETED. SO YOU CAN SEE WE'RE MAKING A LOT OF PROGRESS ON STREETS BEING RECONSTRUCTED. ORANGE ARE PROJECTS THAT ARE UNDER CONSTRUCTION GREEN, AND THERE'S A LOT OF GREEN ON HERE. OUR PROJECTS, WE ANTICIPATE GOING TO CONSTRUCTION NEXT YEAR IN FY 27 AND THEN READ OUR PROJECTS. WE HAVE IN THE DESIGN AND PLANNING PHASES TO CONTINUE THAT CYCLE OF BRINGING PROJECTS FORWARD. HOW DO WE PAY FOR THESE PROJECTS? THIS IS THE BOND ALLOCATION THAT WE'VE DONE SINCE BACK TO 2018 OF OUR GENERAL OBLIGATION STREET FUNDING. YOU CAN ON THE GRAPHIC COLORS. BLUE IS MONEY THAT WE'VE ALLOCATED TOWARDS NEW CONSTRUCTION CAPACITY IMPROVEMENT TYPE PROJECTS. YELLOW HAS BEEN PROJECTS THAT WE ARE BEEN RECONSTRUCTION IN NATURE. AND THEN GREEN IS ACTUALLY GENERAL FUND REVENUES THAT WE HAVE USED FOR ROAD MAINTENANCE. SO IF YOU LOOK BACK AT 2018, WE ACTUALLY DIDN'T HAVE ANY MONEY THAT WE SOLD BONDS FOR FOR RECONSTRUCTION PROJECTS. BUT THEN BACK IN 2019, WE STARTED TO GET THAT FIX, THAT FOCUS BACK ON TO THE RECONSTRUCTION EFFORTS FOR THE AGING INFRASTRUCTURE IN 2022 AND 23. THAT'S WHEN WE STAFF HAD THE CONVERSATIONS WITH COUNCIL ABOUT, WE NEED TO INVEST MORE IN OUR AGING INFRASTRUCTURE. SO WE SET A TARGET OF ABOUT $20 MILLION PER YEAR THAT WE WANT TO PUT TOWARDS MAINTENANCE AND RECONSTRUCTION. THAT'S REPRESENTED BY THE RED LINE THERE. WE'VE INCREASED THAT RED

[02:00:03]

AND SO YOU CAN SEE HOW WE WERE RAMPING UP THE LAST THREE YEARS. WE'VE KIND OF DIPPED DOWN TO THE $20 MILLION RANGE. PART OF THAT IS DUE TO JUST VARIOUS DELAYS AND FRANCHISE UTILITIES, RIGHT OF WAY ACQUISITION, OR EVEN MAYBE SOME DESIGN DELAYS. THOSE WE'VE BEEN SELLING BONDS, THOUGH. AND SO WE HAVE THAT MONEY. AND SO WHAT YOU'RE GETTING READY TO SEE IS WHAT WE'RE PROJECTING IN 2027, A HUGE INCREASE IN ACTUAL EXPENDITURES RELATED TO STREET FUNDS. IN FACT, WE ANTICIPATE IN ABOUT THE NEXT 3 TO 4 MONTHS, HAVING TWO PROJECTS TO THE COUNCIL FOR APPROVAL OF CONSTRUCTION CONTRACTS OF ABOUT $40 MILLION. AND THOSE ARE TWO RECONSTRUCTION RECONSTRUCTION PROJECTS IN AND AROUND DOWNTOWN. SO YOU'LL BE SEEING A LOT MORE ACTIVITY OVER THE NEXT YEAR AS WE START TO SPEND DOWN THOSE FUNDS THAT WE WE HAVE. THIS NEXT SLIDE IS A SNAPSHOT OF OUR PAVEMENT CONDITION INDEX. MR. GILLINGHAM GAVE YOU A PRESENTATION A FEW MONTHS AGO ON OUR UPDATED ROADWAY ASSESSMENT THAT A CONSULTANT PERFORMED FOR US. THIS IS A SNAPSHOT OF THAT. FROM THAT REPORT. I WANT TO HIGHLIGHT, THOUGH, THE NUMBER OF MILES OF CENTERLINE MILES THAT ARE IN THE 0 TO 25 RANGE AND EVEN 25 TO 40, THAT IS A TREND THAT'S GOING DOWN FROM OUR 2021 ANALYSIS THAT WAS DONE. SO THE WORK THAT WE'RE DOING IS WE'RE FOCUSED IN ON THOSE LOWER PERFORMING STREETS AND TRYING TO GET THOSE OFF OF OUR, OUR, OUR, OUR RECORD THERE. SO THIS IS A GRAPHIC REPRESENTATION OF THOSE PCI SCORES. AND YOU CAN SEE DOWNTOWN STILL HAS MAJORITY OF THOSE RED ORANGE STREETS THAT WILL CONTINUE TO HAVE OUR FOCUS. BUT YOU CAN SEE TO THE WEST OF 75, YOU'RE STARTING TO SEE A FEW STREETS WITH, YOU KNOW, YELLOW, ORANGE AND MAYBE A FEW RED PAVEMENT CONDITION SCORES. SO AS WE, YOU KNOW, CONTINUE TO REHAB THE, YOU KNOW, THE EAST SIDE, THAT FOCUS IS GOING TO HAVE TO START GOING TO THE WEST SIDE AND HITTING SOME OF THOSE STREETS AS THOSE CONTINUE TO AGE. SO WITH THAT, THAT IS A VERY QUICK UPDATE OF THE RECONSTRUCTION EFFORTS. ANY QUESTIONS THAT I MAY ANSWER? THANK YOU. THANK YOU GARY. SAFE TRAVELS. THANK YOU. SO LET ME RUN THIS BACK NOW. AND WE WILL START TALKING ABOUT GENERAL FUND REVENUES. AND WHAT WE'RE SEEING FOR FISCAL YEAR 27. HERE'S A HIGH LEVEL OVERVIEW. I'LL BREAK DOWN SOME OF THESE NUMBERS IN A MINUTE. BUT OVERALL OUR BUDGET FOR SALES TAX REMAINS CONSERVATIVE. I'LL GO THROUGH SALES TAX IN A MINUTE. BUT RIGHT NOW WE HAVE IT AT ABOUT 3.5% ABOVE FISCAL YEAR 26. ON THE BUILDING PERMIT SIDE, WE'RE BUDGETING THAT LEVEL WITH WHAT WE'RE SEEING FOR FISCAL YEAR 26, END OF YEAR ACTUALS FOR THE CURRENT YEAR ARE ABOUT 4% ABOVE LAST YEAR.

AT THIS TIME, IT'S GOOD NEWS. IT SAYS THAT WE'RE STILL IN A GROWTH PHASE, PRETTY HEAVY GROWTH PHASE. WE'LL BE ABLE TO SEE, YOU KNOW, THE BENEFITS OF OF GROWTH TO OUR APPRAISED PROPERTY VALUES. SO I ALWAYS LIKE TO, TO HIGHLIGHT BUILDING PERMITS. AND THEN SOMETIMES WE LIKE TO DO ENGINEERING INSPECTIONS AS WELL, BECAUSE THAT'S, THAT'S EVEN THE FIRST PRECURSOR TO THE BUILDING PERMITS. SO WE'RE STARTING, WE'RE NOT SEEING ANY, ANY DECREASE THERE. AND THEN WE'RE SEEING BUILDING PERMITS CONTINUE TO INCREASE. SO THAT'S REALLY GOOD NEWS FOR THE NEW NEW VALUE ON THE ROLE THAT WE'LL BE SEEING OVER THE NEXT FEW YEARS. OUR FRANCHISE FEES ARE BUDGETED ABOUT 3.5% ABOVE FISCAL YEAR 26. FRANCHISE FEES ARE DRIVEN GENERALLY BY POPULATION. SO AS OUR POPULATION CONTINUES TO GROW, WE'LL SEE THAT. IF YOU REMEMBER A FEW YEARS AGO, THAT'S WHY WE HAVE A LITTLE ASTERISK A STEADY

[02:05:04]

I THINK THIS SLIDE HAS BEEN AROUND SINCE ABOUT 2014, BUT WE THINK IT'S RELEVANT. IN FACT.

MR. MINYARD, I MADE THIS SLIDE FOR A. WAS IT A DIORAMA THAT WE DID? I WOULD RATHER JUST LET YOU CONTINUE. WELL, IT WAS FOR A TOWN HALL AND IT WAS RIGHT AFTER WE STARTED HERE AND A BUNCH OF OTHER DEPARTMENTS HAD THESE FULL PROFESSIONAL DISPLAYS, AND TREVOR AND I HAD A POSTER BOARD. BUT TO BE FAIR, WE WERE ONLY GIVEN A FEW HOURS NOTICE. WE DID SHOW YOU EARLIER HOW WE COMPARED PERSONNEL WISE TO OUR SISTER CITY, THIS SLIDE AND A FUTURE SLIDE THAT WE'LL DO ALSO SHOWS. THIS SHOWS OUR REVENUE PER CAPITA COMPARED TO OUR SISTER CITIES. YOU CAN SEE THAT THE THAT WE DO WE'RE COMPARABLE TO. BUT STILL BELOW ON THE THREE SISTER CITIES, YOU'LL SEE THAT ALMOST EXACT NUMBERS FOR THE THE EXPENSE ON THE GENERAL FUND SIDE, BECAUSE WE ALL ARE REQUIRED TO ADOPT A BALANCED BUDGET. THIS IS A COMPARISON OF OUR FISCAL YEAR 27 PROPOSED BUDGET TO OUR SISTER CITIES. FISCAL YEAR 26 ADOPTED BUDGETS BECAUSE WE DON'T HAVE THEIR PROPOSED BUDGET AT THIS TIME. I'M HAVING TROUBLE MAKING IT UP. THERE WE GO. ALL RIGHT. SO JUST GENERAL FUND REVENUES. THIS IS THE THIS IS THE MAKEUP OF ALL THE TOTAL REVENUES IN THE GENERAL FUND OVER A TEN YEAR HORIZON. IT'S ABOUT A 5.5% INCREASE FROM 26 END OF YEAR TO FISCAL YEAR 27 PROPOSED. AND YOU CAN SEE THAT THE THE YEAR OVER YEAR AVERAGE IS ABOUT A LITTLE UNDER 7%, AROUND 7% OVER A TEN YEAR HORIZON. ALL RIGHT. THIS IS THE COMPARISON OF OUR REVENUE SOURCES ADOPTED 26 TO PROPOSE 27. VERY LITTLE CHANGE HERE.

WOULD LOVE THAT SALES TAX PORTION TO CONTINUE TO GROW AS A PIECE OF THE PIE HERE.

LICENSE AND PERMITS. CHARGES AND FINES REMAIN ALMOST UNCHANGED. YOU CAN SEE WE'RE AT ABOUT 52% OF THE GENERAL FUND BUDGET IS PROVIDED BY PROPERTY TAX, 2,020% BY SALES TAX. YOU KNOW, FRANCHISE FEES RUNNING AROUND 10% CHARGES, FINE LICENSES AND PERMITS SOMEWHERE IN THE SIX RANGE, YOU KNOW, FLIPPED LAST YEAR WAS FIVE AND SEVEN AND THEN OTHERS AND TRANSFERS MUCH SMALLER PORTION. BUT ONCE AGAIN, ABOUT 72% OF THE BUDGET MADE UP OF PROPERTY AND SALES TAX. SO THOSE ARE OUR OUR TWO MAIN REVENUE SOURCES. IT'S THE TWO THAT WE FOCUSED ON ON THE MOST. SO IT'S BEEN A COUNCIL REQUEST FOR US IN THE PAST TO COMPARE MCKINNEY'S REVENUES TO OUR SISTER CITIES REVENUES. IT'S A LITTLE BIT APPLES AND ORANGES. DIFFERENT DIFFERENT CITIES DIFFERENT DIFFERENT REVENUES. WE WE SEEM TO TO MIRROR ALLEN A LITTLE BIT, BUT YOU CAN SEE OUR PROPERTY TAX COMPARED TO, TO SOME OF THEIRS. WE'RE, WE'RE A LITTLE BIT MORE RELIANT ON PROPERTY TAXES AND LESS RELIANT ON SALES TAX JUST BECAUSE OF THEIR LARGER SALES TAX BASE OF BOTH PLANO AND FRISCO. SO JUST LIKE TO SHOW THIS COMPARISON WITH THE SIDE BY SIDE, JUST AND YOU KNOW, IT'S YOU CAN THESE ARE INTERESTING IN IN A THEY'RE INTERESTING TO LOOK AT. BUT, YOU KNOW, IF YOU LOOK AT LOOK AT AN ALLEN, YOU LOOK AT PLANO LICENSE AND PERMITS ARE MUCH LESS OF THEIR GENERAL FUND BUDGET BECAUSE, YOU KNOW, THEY'RE ALMOST BUILT OUT. SO IT'S A LITTLE BIT BIGGER, BIGGER, BIGGER PORTION OF OURS.

SO IT'S JUST, IT'S AN INTERESTING HOW, HOW EVERYBODY BRINGS IN THEIR REVENUES. THIS

[02:10:11]

AND IF NOT, I'LL BE HAPPY TO HAND THIS OFF TO TREVOR DAGGETT, WHO WILL TALK ABOUT GENERAL FUND EXPENDITURES. YES. THANK YOU MARK. ALL RIGHT. I'M GOING TO TAKE US THROUGH THE GENERAL FUND EXPENDITURES. OKAY. SO AGAIN, SAME SLIDE AS WE SAW EARLIER. LITTLE DIAGRAM HERE.

YOU'LL SEE FOR US OUR AMOUNT PER CAPITA MATCHED OUR REVENUES BECAUSE AGAIN THE GENERAL FUND, WE ALWAYS WORK TO ADOPT A BALANCED BUDGET. BUT AGAIN, JUST SHOWING US IN COMPARISON TO THE REST OF OUR SISTER CITIES. ALL RIGHT. SO SOME HIGHLIGHTS IN THE GENERAL FUND BUDGET THIS YEAR FOR 27, AS YOU SAW, AS WE KIND OF WENT THROUGH THOSE NEW REQUESTS, TOTAL ABOUT $7 MILLION. AND THEN IN JUST THE GENERAL FUND, 32 NEW POSITIONS, 14 OF THOSE BEING PUBLIC SAFETY. AND AGAIN, THOSE 32 AND 14 DON'T INCLUDE THE FOUR OFFICERS AND ONE SERGEANT FOR THE AIRPORT, WHICH AGAIN, THOSE ARE WHILE THOSE ARE IN THE GENERAL FUND, THOSE ARE FUNDED FROM REIMBURSEMENT, FROM TOURS TO FOR THEIR SALARIES. ALSO IN HERE, TOO, YOU KNOW, WE HAVE OUR STEP INCREASES FOR BOTH SWORN AND NON-SWORN TOGETHER. THAT'S ABOUT 4.6 MILLION. AND THE ON THE NON-SWORN SIDE IN THAT $2.5 MILLION NUMBER ALSO INCLUDES THAT 1% COLA. I BELIEVE PAUL MENTIONED EARLIER IN HIS OPENING COMMENTS. ALSO IN THERE TOO, WE HAVE OUR ANNUAL TRANSFER TO OUR CAPITAL EQUIPMENT REPLACEMENT FUND.

THIS IS SO THAT WE CAN CASH FUND SOME OF OUR LARGER CAPITAL ITEMS, YOU KNOW, REPLACEMENT VEHICLES, WHICH TOTALED ABOUT 5.7 MILLION THIS YEAR. AND THAT'S 44 VEHICLES. WE ARE REPLACING SOME OF THE BIGGER ONES THERE. YOU KNOW, THE POLICE VEHICLES AND THEN THE A NEW FIRE TRUCK PLUS AN AMBULANCE. AND THEN ALSO TOO IN THERE, WE TAKE CARE OF OUR CURRENT FACILITIES, WHETHER THEY NEED UPGRADES OR REPLACEMENTS, YOU KNOW, SUCH AS HVAC ITEMS, BOILER REPLACEMENTS, WATER PUMP REPLACEMENTS, ANYTHING LIKE THAT. THIS YEAR,

[02:15:05]

IT'S YEAR END CONDITION. THEY, YOU KNOW, OR SORRY MILE AND CONDITION. THEY DON'T, YOU KNOW, IT'S NOT JUST BASED ON THE MILEAGE, BUT GENERALLY ABOUT 3 TO 4 YEARS IS ABOUT WHAT WE GET OUT OF A, OUT OF A MARKED POLICE VEHICLE. YEAH. NOT TO SAY IT DOESN'T HAVE TO BE DONE.

I WAS JUST NOTING THAT, I MEAN, THERE'S, I WENT, I GOT THE OPPORTUNITY TO GO BACK THERE AND SEE ALL THE VEHICLES AND THERE'S LIKE A NIGHT SHIFT FLEET OF VEHICLES. AND THEN THERE'S A DAY SHIFT FLEET OF VEHICLES. AND I DON'T KNOW THE ROTATION OF HOW THAT HAPPENS BECAUSE THERE'S LIKE, THERE'S A LOT OF VEHICLES THAT JUST SIT THERE ALL DAY LONG. AND THEN LIKE, THEN THEY COME IN AND THEY BRING VEHICLES BACK, AND THEN A NEW SET GOES OUT. I JUST DON'T KNOW WHY I WOULDN'T JUST SOMEBODY JUMP INTO THAT CAR THAT'S ALREADY ON AND TAKE THAT CAR OUT AND REFUEL IT UP. I MEAN, I DON'T KNOW THE PROCESS. I DON'T KNOW HOW IT WORKS. I JUST SAY I'M JUST IT WAS JUST A LOT OF VEHICLES BACK THERE. IT IS. BUT IF WE IF WE IF WE DID THAT, THEN WE WOULD BE REPLACING EVERY ALL THAT. MAYBE THAT'S THE FORMULA. THAT'S LIKE, I DON'T UNDERSTAND. MAYBE THAT'S THE FORMULA, RIGHT? HEY, THE LIST AND THE MAINTENANCE COST, YOU DO IT THIS WAY BECAUSE YOU EXTEND THE LIFE OF IT LONGER. AND THAT MIGHT BE THE ANSWER. BUT AND IN ADDITION, YEAH, YEAH. AND IN ADDITION TO THAT, YEAH, IT WOULD BE A INCREASE REPLACEMENT COST. BUT AS THEY COME OFF SHIFT, YOU KNOW, WE WANT TO HAVE OUR NEXT SHIFT IMMEDIATELY INTO THE FIELD. YEAH. WHEN THE PREVIOUS SHIFTS COMING IN. AND IT'S NOT AS SIMPLE AS IT'S A CAR. IT'S ALSO A CAR WITH A COMPUTER SYSTEM AND THE DASHBOARD CAMERAS AND ALL EVERYTHING ELSE THAT NEEDS TO BE MAINTAINED AND UP KEPT AND DOWNLOADED AS WELL.

SO THERE'S, THERE'S A LOT TO IT. BUT YOU'RE ABSOLUTELY RIGHT. IF WE WERE TO JUST ROLL THEM IN, HOP IN A HOT CAR AND ROLL IT BACK OUT, WE'D BE REPLACING THEM A LOT SOONER. THANKS. ALL RIGHT. AND THEN JUST AS WE LOOKED AT ON THE REVENUE SIDE, JUST SHOWING OUR GENERAL FUND EXPENSES AND THE INCREASES OVER THE TEN YEAR PERIOD, IT'S ABOUT BEEN ABOUT A 5% AVERAGE INCREASE OVER THOSE TEN YEARS FOR THE END OF YEAR OF 26. IT'S ABOUT OH, SORRY. SO 27 INCREASING OVER OUR END OF YEAR PROJECTIONS FOR 26 IS ABOUT 4%, 27 IS ABOUT 7% OVER WHAT WE ORIGINALLY BUDGETED FOR. 26 YOU KNOW, THERE'S VARIOUS INCREASES IN THAT. 27 BUDGET, AS I MENTIONED, THAT $7 MILLION IN NEW ADS THAT WE HAD IN THERE, ALMOST 5.5 MILLION OF THAT BEING RECURRING COSTS. AGAIN, IT INCLUDES THOSE FIVE ADDITIONAL. WELL, FOR ADDITIONAL OFFICERS, ONE SERGEANT, I KEEP WANTING TO SAY FIVE OFFICERS FOR THE AIRPORT.

AND THEN ALSO INCLUDING THOSE STEP INCREASES FOR STAFF, BOTH SWORN AND NON-SWORN. AND THAT 1% COLA'S IN THERE AS WELL. ALL RIGHT. AND THEN JUST KIND OF SHOWING OUR GENERAL FUND MAKEUP, YOU'LL SEE FROM YEAR TO YEAR. AND EVEN IF WE PROBABLY WENT BACK ANOTHER FIVE YEARS, THAT MAKEUP'S RELATIVELY STAYED THE SAME WITH PUBLIC SAFETY TAKING UP THE BIGGEST CHUNK OF THAT PIE, AND THEN FOLLOWED BY OUR GENERAL GOVERNMENT. OKAY. AND THEN AGAIN, THIS IS JUST COMPARING OUR SISTER CITIES. YOU'LL SEE HERE WE PRETTY MUCH COMPARE. WE'RE ALL RELATIVELY ABOUT THE SAME. AGAIN, IT IS NOT APPLES TO APPLES COMPARISON BECAUSE WE MAY ALL PAY FOR THINGS DIFFERENTLY. FOR EXAMPLE, YOU SEE, PLANO IS A MUCH HIGHER TRANSFER PERCENTAGE THAN THAN EVEN WE DO BECAUSE THEY TRANSFER DIFFERENT THINGS OUT, LIKE THEIR ECONOMIC INCENTIVES.

THEY THEY TRANSFER OUT ABOUT $11 MILLION OF THAT. WHEREAS OUR ECONOMIC INCENTIVES RELATE

[02:20:02]

SO THOSE ARE JUST SOME KIND OF DIFFERENCES THERE. YEAH. QUICK QUESTION. BUDGETED INCREASE ON THE BENEFIT SIDE FOR EMPLOYEES. WHAT ARE YOU BUDGETING THE PERCENT INCREASE FOR HEALTH AND RETIREMENT? I'M JUST I KNOW IT'S BURIED IN HERE, BUT I'M JUST CURIOUS. WE BUDGET ABOUT WE BUDGETED ABOUT A 3% INCREASE ON THE SALARY SIDE AND HOW MUCH ON HEALTH BENEFITS, HEALTH BENEFITS. WE KIND OF WE HAVE A PPY THAT WE GO OFF OF. WE'RE ALMOST AT ABOUT 15000 EMPLOYEE FOR HEALTH. AND THE WAY WE BUDGET THAT IS WE BUDGETED ACROSS ALL FTES. SO WHETHER PERCENT WISE, WHAT I THINK OUR TREND IS ABOUT 7 OR 8% IS THAT WHAT YOU'VE EXPERIENCED THIS YEAR IS 7 OR 8 WHAT'S PROJECTED FOR NEXT YEAR. SO WE HAVE A HEALTH BENEFIT CONSULTANT CALLED HUB INTERNATIONAL, I THINK IS HER NAME, BUT THEY ARE BENEFITS HOUSE. AND THEY SIT DOWN WITH US AND WE GO THROUGH IN ADVANCE OF THE BUDGET PROCESS. WHAT ARE THE PROJECTED RATES FOR NEXT YEAR? YOU'RE NOT BUDGETING ANY ANTICIPATED MAJOR CHANGE IN THE BENEFIT? NO PLAN OR STRUCTURE. OKAY. AND THE GOOD NEWS ABOUT OUR HEALTH PLAN, WE I THINK WE PROJECT, WE, WE, I'M SORRY IF WE PRESENT THIS TO YOU EACH YEAR. OUR HEALTH PLAN RUNS VERY WELL, BUT TREND IS TREND AND TREND OUTPACES INFLATION YEAR AFTER YEAR AFTER YEAR. SO. ALL RIGHT. THANKS.

ALL RIGHT. SO WE'LL KIND OF GO THROUGH EACH OF THOSE PIECES THERE. NOW IN MORE DETAIL.

FIRST ONE UP IS OUR GENERAL GOVERNMENT. YOU KNOW, THAT CONSISTS OF ALL YOUR KIND OF YOUR ADMINISTRATION, FINANCE, CMO, MARKETING, HOUSING AND DEVELOPMENT. THIS YEAR WE ARE ADDING, I THINK, AS PAUL MENTIONED, SEVERAL OF THESE IN HIS OPENING COMMENTS, BUT WE'RE ADDING A HOUSING MANAGER TO HELP WITH THE HOUSING COMMUNITY DEVELOPMENT WILL BE RESPONSIBLE FOR IMPLEMENTING AND MANAGING, YOU KNOW, THE CITY'S AFFORDABLE HOUSING STRATEGY, AS WELL AS WORKING WITH OUR THE MCKINNEY HOUSING FINANCE CORPORATION AND THEN ALSO SEVERAL ADDS IN, I T, YOU KNOW, SPECIFIC TO DATA AND SECURITY, A DATA LOSS PREVENTION PROGRAM THAT MONITORS AND CONTROLS THE MOVEMENT OF SENSITIVE DATA, ESPECIALLY OVER THE CLOUD. A NETWORK SECURITY ARCHITECT TO PROVIDE OVERSIGHT TO SECURE CRITICAL INFRASTRUCTURE. AND THEN AN AI SOLUTIONS ENGINEER THAT ENABLES THE CITY TO TURN ITS EXPANDING USE OF AI AND DATA INTO MEASURABLE OPERATIONAL OUTCOMES. AND THEN ALSO TO WE MENTIONED EARLIER THAT SERVER SYSTEMS ADMINISTRATOR, WHILE YES IN THE IT DEPARTMENT WILL MAINLY SERVE THE. THE NEW COMMERCIAL AIRPORT. NEXT UP, PUBLIC SAFETY. THE BIGGEST PIECE ABOUT 117 MILLION IN FISCAL YEAR 27, AGAIN, 14 ADDITIONAL ADDS HERE. I KNOW IT SAYS 19. BUT AGAIN, THAT INCLUDES THOSE FIVE THAT ARE SPECIFIC TO THE AIRPORT. ON THE POLICE SIDE, THOSE ARE THE ONLY SWORN ADDS. AS WE LOOKED AT EARLIER. BUT FOR OTHER CIVILIAN POSITIONS, FOR RECORDS MANAGEMENT, MONITORING OF COMPLIANCE AND BACKGROUND INVESTIGATION, FOR EXAMPLE, ON THAT BACKGROUND INVESTIGATION, AS BARRY MENTIONED EARLIER, THAT NOW THEY DO HAVE SOME SWORN PERSONNEL WHO HAVE TO HANDLE SOME OF THAT. ADDING THIS BACKGROUND INVESTIGATOR WILL FREE UP TIME OF SWORN PERSONNEL, YOU KNOW, LETTING THEM DO OTHER DUTIES. ALSO NOT LISTED ON HERE. WE ADDED TO THE FLOCK CAMERA SYSTEM FOR THIS YEAR. THAT'S MAINLY GRANT FUNDED. ALL THAT REQUIRED WAS A $70,000 CITY MATCH. AND THEN ALSO, AS WE TALKED ABOUT EARLIER TO THE ADDITION OF THOSE TEN SWORN FIREFIGHTERS, CAPTAINS, DRIVERS, THOSE WILL CREATE A DUAL COMPANY OVER THERE AT FIRE STATION ONE, AND THEN THE INDEX BE STAFFING IS WHAT I HAD TALKED ABOUT EARLIER. IT'S THAT TO STAFF THE ARFF TRUCK OVER THERE AT THE AIRPORT, IT'S REQUIRED TO HAVE SO MANY HOURS OVER THERE SINCE WE'RE GOING TO COMMERCIAL. BUT AGAIN, THAT IS ANOTHER COST THAT IS REIMBURSED BY TOURS TO. OKAY. NEXT UP, OUR DEVELOPMENT SERVICES, OUR ENGINEERING ANIMAL CONTROL CODE, COMPLIANCE PLANNING DEPARTMENTS. AGAIN, FOUR ADDITIONAL POSITIONS ARE IN THE PROPOSED BUDGET TO BE ADDED. HELP SUPPORT CODE COMPLIANCE, ANIMAL SERVICES, AS WELL AS THE SIGNAL SYSTEMS OPERATOR. WE TALKED ABOUT THAT HELP SPECIFICALLY TO SUPPORT THE CITY'S GROWING TRANSPORTATION INFRASTRUCTURE.

[02:25:04]

AND I BELIEVE I THINK THERE'S A DUMP TRUCK IN THERE AS WELL. THIS WILL ALLOW THE STREET DEPARTMENT TO, YOU KNOW, MORE EFFICIENTLY PERFORM PERMANENT HOT MIX ASPHALT REPAIRS, REDUCE REPEAT FAILURES, AND INCREASE DAILY PRODUCTION AND COVERAGE CITYWIDE. HEY, TREVOR, THIS WOULD BE OUR SECOND POTHOLE PATCH TRUCK. IS THAT CORRECT? YES, SIR. OKAY. THANK YOU. I DIDN'T ADD ONE LAST YEAR. MAYBE A COUPLE YEARS AGO. THEN ALSO TO ADDING A PREVENTATIVE MAINTENANCE TEAM. THIS WOULD BE FOR INCLUDE FOR PERSONNEL DEDICATED TO PROTECTING AND MAINTAINING THE CITY'S GROWING NUMBER OF FACILITY ASSETS. AND THEN ALSO, AS WE TALKED ABOUT EARLIER, ABOUT HALF OF THAT, THE ONE OF THE CREW LEADERS, ONE OF THE MECHANICS WOULD BE DEDICATED TO THAT. THE COMMERCIAL TERMINAL OVER THERE. AND THEN SOMETHING WE LIKE TO MENTION THIS EVERY YEAR, THIS IS WITHIN THE GENERAL FUND BUDGET. THIS IS OUR GRANTS TO COMMUNITY. I BELIEVE IT WAS LAST YEAR WE MOVED. WE HAD SEVERAL DIFFERENT RECURRING GRANTS IN THERE. WE MOVED THEM ALL INTO THAT COMMUNITY SUPPORT GRANT LINE PER COUNCIL'S REQUEST. SO BEING IN THAT COMMUNITY SUPPORT GRANT LINE. SO FOR ANY OF THAT FUNDING, THEY HAVE TO GO THROUGH THE APPROVAL PROCESS OF THE COMMUNITY GRANT PROCESS. ALL RIGHT. LET ME SKIP THROUGH THESE. UNLESS Y'ALL WANT TO HEAR ME TALK ABOUT THESE TWO.

GOOD. I'LL LET MARK FINISH UP OUR CAPITAL IMPROVEMENT HERE. YEAH. THIS WAS THE PORTION THAT GARY STARTED. BUT BEFORE THAT DID, DID YOU DID YOU HAVE ANY QUESTIONS ON THE GENERAL FUND EXPENDITURES? BEFORE I MOVE FORWARD ON THE CIP PROGRAM? THANK YOU FOR WELL, TREVOR'S GOING TO BE TALKING REALLY SOON AGAIN. SO. I JUST WANTED TO POINT OUT OUR OUR CIP PROGRAM.

I WON'T GO THROUGH EVERY LINE HERE, BUT REALLY THE, THE, THE TOTAL IS, IS $2.2 BILLION OF, OF CIP PROJECTS. WHETHER WE ACTUALLY DO THAT MANY. THAT'S WHAT IS BEING ASKED FOR. WE, WE OVER THE NEXT FIVE YEARS, A LOT OF PROJECTS OUT THERE IN THE FUTURE FOR US. AS YOU CAN SEE, THE WATER WASTEWATER SIDE IS DRIVING A LOT OF THAT ALONG WITH WITH OUR STREETS, JUST A LOT OF INFRASTRUCTURE TO BE BUILT WITH ALL THE GROWTH AS WE MOVE INTO THE KIND OF THE NORTHWEST SECTOR, HERE ARE SOME OF THE MAJOR PROJECTS THAT ARE INCLUDED IN FISCAL YEAR 27. I WON'T READ THE ENTIRE THING, BUT WE DO HAVE SOME AIRPORT PROJECTS THERE THAT ARE NOT RELATED TO THE COMMERCIAL TERMINAL. AND THEN ON THE FACILITY SIDE, WE'RE STARTING TO TO LOOK AT POTENTIAL FUNDING FOR THE PUBLIC WORKS NORTHWEST CAMPUS. THAT'S THE FIRST PHASE.

IF IF WHEN WE MOVE FORWARD, I DON'T KNOW THAT WE'LL BE READY TO MOVE FORWARD THIS FISCAL YEAR WITH THAT. AS YOU KNOW, YOU JUST HEARD THAT PRESENTATION TODAY. SO WE WILL WE WILL ISSUE BONDS WHEN WE'RE READY FOR THAT. BUT IT IS IN THE IN THE PLAN FOR NOW. THEN

[02:30:01]

LET'S NOT OPINE ABOUT THAT. RIGHT. OKAY. THE EMPIRE STRIKES BACK. ANYWAY. SO THAT'S THAT'S WHAT'S IN THE PARKS THEN ON THE STREETS. THESE ARE JUST NEW STREETS. THIS IS NOT INCLUSIVE OF THE OF THE RECONSTRUCTION WORK THAT WE WERE ARE THERE IS ONE HERE THAT'S INCLUSIVE OF RECONSTRUCTION WORK, BUT THESE ARE SOME OF THE MAJOR ONES. BUT VIRGINIA PARKWAY AND AIRPORT ROAD, STREET REHAB IS IN THERE FOR $5 MILLION. AND THEN THE STONEBRIDGE EXTENSION, $16.1 MILLION. THAT'S FROM 380 TO TUCKER HILL. MARK, I'M GOING TO INTERRUPT, AND THIS MAY NOT BE A MARK QUESTION, MAYBE MORE OF A TILTON'S NOT HERE, BUT SOMEBODY'S QUESTION. DO WE EXPECT STONEBRIDGE DRIVE EXTENSION TO ACTUALLY HAPPEN NEXT YEAR, OR IS IT JUST THE FUNDING? SO I'M PUTTING IT IN THERE FOR THE FUNDING. I'LL LET SOMEBODY ELSE SPEAK TO WHEN WHEN IT ACTUALLY BEGINS. BUT ONCE AGAIN, IF, IF, IF THE PROJECT ISN'T READY TO BEGIN.

ON TIME WE WOULD. SOMETHING WE WOULDN'T ACTUALLY ISSUE. WE WILL ANSWER BEFORE THE END OF THE DAY, AND WE WILL ABSOLUTELY ANSWER WHEN WE THINK THE THE BEGINNING OF THAT IS. AND THEN ONCE AGAIN, THE THE WATER WASTEWATER PROJECTS THAT FAIRLY LARGE WATER LINE FROM US 382 TO BLOOMDALE IS, IS, IS ONE THAT'S LOOMING OUT THERE IN THE FUTURE. SO THAT'S, THAT'S WHAT I'VE GOT ON CIP. IF Y'ALL HAVE ANY QUESTIONS ON THAT, I WILL ACTUALLY GIVE IT BACK TO TREVOR DAGGETT. NOW HE'S GOING TO GO THROUGH, YOU'VE ALREADY HEARD QUITE A BIT ON WATER AND WASTEWATER RATES, SO WE AREN'T GOING TO GO BACK THROUGH THAT. BUT HE WILL GIVE YOU KIND OF A HIGH LEVEL VIEW, JUST LIKE WE DID FOR THE GENERAL FUND. WHAT WE'RE PLANNING OPERATIONALLY.

SO JUST SOME HIGHLIGHTS ON THE WATER AND WASTEWATER SIDE. AGAIN, WE CONTINUE OUR WATER LINE REPLACEMENT PROGRAM. ALSO, AS MENTIONED EARLIER, SOMETHING WE STARTED LAST YEAR WAS THE IMPLEMENTATION OF AN INI PROGRAM. SO THAT INFLOW AND INFILTRATION, IT HAS BEEN HIGHLY EFFECTIVE IN IDENTIFYING DEFECTS AND SOURCES OF INFLOW AND INFILTRATION. SO FAR, JUST IN THE LAST YEAR THAT WE'VE IMPLEMENTED IT, IT WAS SPECIFICALLY DEVELOPED TO REDUCE THE LONG TERM EXPENSES WE PAID IN NORTH TEXAS MUNICIPAL WATER BY MINIMIZING UNNECESSARY FLOW SENT FOR TREATMENT. IN ADDITION TO THAT, I AND I. ONE OF THE ADS THIS YEAR IS THE PIPE ASSESSMENT AND METRICS PROGRAM THAT ADDS ONE INFLOW AND INFILTRATION DETECTION TECH. ITS PURPOSE IS TO STRENGTHEN THE INFRASTRUCTURE ASSESSMENT, IMPROVE NON-REVENUE WATER, REDUCE INFLOW AND INFILTRATION, AND SUPPORT DATA DRIVEN PROJECT PLANNING. AND THEN ALSO ON THERE, WE HAVE A COUPLE PUMP STATION MECHANICS TO CONTINUE AND SUPPORT THE CITY'S 247 PUMP STATION OPERATIONS AND COVERAGE. AND THEN I ALSO WANT TO MENTION THERE TOO, OUR REAL LOSS OF TREATED WATER IS STILL DOWN RELATIVELY LOW. IT'S AT 8%, I BELIEVE, THIS LAST YEAR. AND YOU SEE HOW HIGH IT WAS ABOUT 13 YEARS AGO. SO WE'VE REALLY MADE A LOT OF STRIDES IN THAT. AND THEN AGAIN, JUST ON THE RATES, WE SAW THIS EARLIER FROM OUR CONSULTANTS LOOKING AT 9% ON THE WATER SIDE AND 11% ON THE WASTEWATER SIDE. AGAIN, THIS HELPS KEEP THIS FUND SELF-SUFFICIENT. AND ANOTHER LOVELY SANKEY DIAGRAM HERE, YOU'LL SEE AGAIN, AS OUR REVENUES FLOW IN FROM MAINLY WATER AND SEWER, AND THEN HOW THEY'RE DISTRIBUTED OUT. THE TWO MAIN DEPARTMENTS IN THERE, THE WATER DEPARTMENT AND WASTEWATER DEPARTMENT. AND YOU SEE THE BULK OF THEIRS IS PAYMENTS TO NORTH TEXAS TOTALING 110 MILLION IN FISCAL YEAR 27. AND I WANT TO SAY THAT'S I MEAN, THAT'S ROUGHLY $15 MILLION HIGHER THAN IT WAS LAST YEAR THAT WE PAID TO THEM. AND THEN YOU'LL SEE THE DIFFERENT FLOWS I'LL SEE OF YOUR DEBT PAYMENTS DOWN THERE COMING OUT AT ABOUT 27 MILLION FOR 27 DEBT. ALL RIGHT. NEXT UP, SOME OF OUR OTHER ENTERPRISE FUNDS ARE SOLID WASTE AND SURFACE WATER DRAINAGE FUNDS. SO ON THE SOLID WASTE SIDE THERE'S ALSO PROPOSED MODEST INCREASE THERE. THE RESIDENTIAL CUSTOMERS ABOUT $0.63 FROM WHAT IT IS NOW TAKING IT TO $20.99.

THERE'S ALSO PROPOSED COMMERCIAL RATE INCREASES AS WELL. AND AGAIN, THIS ALLOWS THAT FUND TO REMAIN SELF-SUFFICIENT. THIS WAS BASED ON AN ANNUAL STUDY DONE BY THE

[02:35:06]

ULTIMATELY, THE AIRPORT ITSELF IS INTENDED TO FUND ALL OF ITS OPERATIONAL EXPENSES, IN PARTICULAR THE PERSONNEL NECESSARY FOR THE TERMINAL OPENING, AS WELL AS THE POLICE AND FIRE. ON THE 18TH OF THIS MONTH, WE WILL BE HAVING A TOURS TWO BOARD MEETING WHERE WE'RE GOING TO BE ASKING FOR THE FUNDING WE'VE DISCUSSED TODAY TO FUND THE OVERTIME FOR THE FIRE DEPARTMENT TO MEET THE INDEX B REQUIREMENTS, WHICH ARE INCREASES OVER WHERE WE ARE TODAY. SO WE DO HAVE THE ARFF TRUCKS NECESSARY TODAY, AND WE FUND CURRENTLY A SINGLE DRIVER OPERATOR POSITION THAT IS ON EVERY SHIFT, EVERY DAY, 24 OVER SEVEN THAT IS THERE FOR THE AIRPORT RESCUE RESPONSE. YES, SIR. A COUPLE POINTS OF CLARIFICATION. ON PAGE 27, YOU'RE SHOWING COMMERCIAL SERVICE AIRLINE PROPOSED IN THE BUDGET, $3 MILLION IN REVENUE IN THE AIRPORT. COLLECTIVELY, BOTH THE GENERAL AVIATION AND COMMERCIAL IS FORECASTED AT $1 MILLION OPERATIONAL LOSS FOR FOR 2627. NOW, IF I REMEMBER CORRECTLY, WE WERE FORECASTING THAT THE AIRPORT IN TOTAL, BOTH COMMERCIAL AND GENERAL AVIATION, WOULD WOULD BE AT A BREAK EVEN POINT IN 2 TO 3 YEARS OUT. IS THAT STILL KIND OF IS MY MEMORY, RIGHT? IS THAT STILL OUR INTENTION? YES. OKAY. SO WE WE'RE BUDGETING $3 MILLION IN REVENUES DIRECTLY COMING FROM THE TERMINAL. SO THAT INCLUDES AIRLINE FEES OR PER PASSENGER FEES THAT THEY PAY US. IT ALSO INCLUDES THINGS LIKE CONCESSION FEES, RENTAL CAR CONCESSION FEES, PARKING FEES, AND EVEN SOME SPACE RENTALS, TSA RENT, SOME OFFICE SPACE, AND THE AIRLINES RENT SOME OFFICE SPACE SO THAT COLLECTIVELY, AT 130 AIRPLANE PASSENGERS, WE'RE ANTICIPATING TO BE THAT $3 MILLION YOU SEE ON THAT PAGE. AND, YOU KNOW, UNDERSTAND IT'S A START UP AND UNDERSTAND THE RAMP UP AND GET ALL OF THAT. AND THAT WAS YOU, YOU, YOU READ AHEAD OF WHERE I WAS GOING. I WAS JUST TRYING TO GET A SENSE IN, IN THIS UPCOMING BUDGET, HOW SENSITIVE THE VOLUME PROJECTIONS WERE IN TERMS OF OUR ASSUMPTIONS. SO CAN YOU KIND OF GIVE ME SOME ABSOLUTELY SOME KIND OF SENSE OF SOME SOME BEING THE FIRST YEAR OF OPERATIONS? OF COURSE, WE'RE HAVING TO WORK WITH OUR CONSULTANT TEAM WHO HAVE A PRETTY DETAILED MODEL THAT THEY USE BASED ON THE AIRPLANE PASSENGERS AND THE ESTIMATED PARKING FEES AND THINGS LIKE THAT. AND WE TRY TO BE AS CONSERVATIVE AS IS REASONABLE. WE WANT TO BE ALL OF THE

[02:40:06]

CURRENTLY, THE ANNOUNCED ROUTES ARE 19 PER WEEK WITH OUR ONE AIRLINE, WHICH I DID A LITTLE MATH HERE, WHICH IS 988 FLIGHTS PER YEAR. AND IF THOSE, YOU KNOW, THEIR AIRCRAFT HAVE 189 SEATS, THAT'S 186,000 SEATS. AND WE'RE ESTIMATING 130,000 PASSENGERS FOR THAT FIRST FULL YEAR. SO WE'RE TRYING TO BE CONSERVATIVE. WE WILL HAVE A LOT BETTER NUMBERS ONCE WE GET OPERATING. THEN WE'LL KNOW HOW MANY PEOPLE ARE PARKING CARS AND HOW LONG, AND WHO TAKES AN UBER AND WHO HAS A FRIEND DROP OFF AND WHO RIDES A BICYCLE, AND HOW MUCH PARKING REVENUES WE HAVE, HOW MANY BAGELS ARE SOLD VERSUS CUPS OF COFFEE, ALL OF THAT. AFTER THE FIRST YEAR, WE'LL WE'LL KNOW A LOT MORE. SO WE'RE RELYING RIGHT NOW A LOT ON OUR MODELS, WHICH WE, WE FEEL ARE VERY DETAILED, BUT IT'S KIND OF A WAIT AND SEE AT THIS POINT. WE'RE HOPEFUL THAT OUR CURRENT AIRLINE PARTNER IS GOING TO ADD A THIRD AIRCRAFT WITHIN THE FIRST YEAR, IF HOPEFULLY VERY EARLY IN THE NEXT FISCAL YEAR, THAT WILL INCREASE THOSE FLIGHTS. AND THEN, YOU KNOW, WE'RE STILL TALKING WITH OTHER AIRLINES AND FEEL CONFIDENT WE'RE GOING TO HAVE MORE THAN ONE AIRLINE AT OUR AIRPORT WITHIN THE NEXT FISCAL YEAR. WE'RE WE'RE PUSHING THEM AS STRONGLY AS WE CAN TO, TO ANNOUNCE AND MOVE FORWARD. SO HOPEFULLY, AND I HOPE IS NOT A GREAT BUDGETING TOOL. AND I UNDERSTAND THAT, BUT HOPEFULLY WE FAR EXCEED WHAT OUR ESTIMATES ARE. SO THEN THE QUESTION IS, WHAT ARE YOU DOING TO TO COVER THE COSTS OVERAGES OVER YOUR REVENUES? AND SO THAT WE REALLY HAVE A, A THREE PRONGED ATTACK. THE FIRST IS FROM DIRECT AIRPORT REVENUES. SO AIRPORT REVENUES WILL COVER THOSE COSTS. AND WHERE WE FALL SHORT, THAT THE NEXT THING WE ARE DOING IS WE TYPICALLY HAVE A, A SIZABLE TRANSFER FROM OUR AIRPORT OPERATING FUND INTO OUR AIRPORT CONSTRUCTION FUND. SO WE START TO BUILD A FUND BALANCE THAT HELPS US TO BUILD FUTURE PROJECTS AT THE AIRPORT. WE'RE ACTUALLY GOING TO ELIMINATE THAT TRANSFER BETWEEN THOSE TWO FUNDS AND USE THOSE OPERATING FUNDS TO COVER COSTS AT THE AIRPORT FOR THIS FIRST YEAR. AND THEN FURTHERMORE, IF WE DO NOT COVER THOSE, ALL OF THE COSTS BY REDUCING THAT TRANSFER, THEN WE'RE GOING TO DIP INTO OUR AIRPORT OPERATIONS FUND FUND BALANCE SO THAT THE GOAL IS TO AND I THINK WE HAVE A REALLY GOOD PLAN. EVEN IF WE DON'T ADD MORE FLIGHTS THIS YEAR, TO BE ABLE TO COVER ALL THE OPERATING EXPENSES AT THE AIRPORT WITHOUT EVER HAVING TO COME AND ASK THE GENERAL FUND FOR ADDITIONAL DOLLARS. SO A COUPLE THINGS REALLY QUICK I WANTED TO TOUCH ON WITHOUT TRANSFERRING THE DOLLARS FROM THE OPERATIONS FUND INTO THE AIRPORT CONSTRUCTION FUND. THAT SOUNDS LIKE, WELL, WE MIGHT BE COMING UP SHORT ON THE AIRPORT CONSTRUCTION SIDE FOR THE NEXT PROJECT. WITH THE COMMERCIAL SERVICE, WE TAP INTO TWO REALLY GOOD REVENUE SOURCES THAT WE'VE NEVER HAD BEFORE. CURRENTLY, THE AP HAS AN ENTITLEMENT FUNDING PROGRAM, SO GA AIRPORTS. SO ENTITLEMENT ARE FUNDS YOU GET JUST BECAUSE OF WHO YOU ARE AS A GA AIRPORT. WE CURRENTLY GET EVERY YEAR $150,000 OF FEDERAL FUNDS THAT THAT HAVE TO GO TOWARDS CAPITAL EXPENSES AT THE AIRPORT. SO THAT'S MAINTAINING THE AIRPORT, FIXING RUNWAYS, TAXIWAYS, PATCHING CRACK SEALS AS WELL AS FUTURE CONSTRUCTION. SO $150,000 DOESN'T GO VERY FAR AT AN AIRPORT. IF WE HIT THE 130,000 IN PAYMENTS THAT ARE CONSERVATIVE, ESTIMATE IS THAT NUMBER JUMPS TO $1.456 MILLION OF ENTITLEMENT FUNDS THAT WILL COME INTO THE AIRPORT TO HELP US WITH CONSTRUCTION PROJECTS, MAINTENANCE PROJECTS AND UPKEEP. IN ADDITION TO THAT, WE START TO APPLY FOR AND RECEIVE WHAT ARE KNOWN AS PASSENGER FACILITY CHARGES. THOSE ARE TYPICALLY A $4.50 FEE THAT GOES ON EVERY TICKET SOLD FOR A DEPARTING FLIGHT, AND AT THAT 130,000 ENPLANEMENTS, THAT WOULD BE ANOTHER $585,000 THAT CAN GO TOWARDS CAPITAL PROJECTS, CAN ALSO GO TOWARDS DEBT SERVICE, AND CAN ALSO GO TOWARDS MATCHING FOR FEDERAL GRANTS. SO WE CAN GET PFC CHARGES, PUT THEM IN THE FUND, AND THEN AS WE RECEIVE FEDERAL GRANTS THAT ARE TYPICALLY 90% OF A CONSTRUCTION PROJECT, THE 10% CAN ACTUALLY COME OUT OF THOSE PFC CHARGES. SO WE START TO GENERATE REVENUES THAT NOT ONLY HELP US TO BUILD FUTURE PROJECTS, BUT HELP OFFSET THE COSTS OF MAINTAINING THE AIRPORT. I SAY ALL OF THIS BECAUSE OVER THE NEXT 2 TO 3 YEARS, WE WANT OUR OPERATING EXPENSES TO START TO COVER ALL OF OUR EXPENSES AND HOPEFULLY TURN A PROFIT AT SOME POINT IN THE NEAR FUTURE. BUT ON THE CAPITAL SIDE, WHICH IS ALSO A MAJOR COMPONENT OF RUNNING AND MAINTAINING AN AIRPORT, WE'RE GOING TO BE GENERATING A LOT OF REVENUES THAT WERE NEVER REALLY AN OPTION FOR US BEFORE WE WENT COMMERCIAL SERVICE. SO LIKE I

[02:45:05]

CONSTRUCTION UPDATE WE ARE ON SCHEDULE TO OPEN FOR OUR ANNOUNCED NOVEMBER 11TH FIRST FLIGHT TO FORT MYERS, FLORIDA WITH AVELLO AIRLINES. YOU CAN SEE THE AERIAL PHOTOGRAPH HERE.

THE VAST MAJORITY OF PAVING ON THE TERMINAL SIDE IS COMPLETE. THERE ARE SOME KIND OF BUTTONING UP THE THE LAST STAGES BEING DONE. WE ARE BRINGING A CONTRACT TO THE CITY COUNCIL ON THE 18TH FOR OUR PARKING VENDOR THAT WAS SELECTED THROUGH AN RFQ PROCESS, AND THEY WILL BE INSTALLING THE PARKING GATES AND AND PAYMENT SYSTEMS. YOU CAN SEE THE INSIDE.

WE'RE WORKING ON THE FINISHES. THEY'RE POLISHING FLOORS, PUTTING DOWN CARPET, TILE. THE DROP CEILINGS ARE COMING INTO PLACE. THE BOTTOM RIGHT IS THE BAGGAGE CLAIM AREA, THE ROLL UP DOORS, THE, THE BRICK FACADE THAT'S GOING ON IN THAT SPACE. SO A LOT OF WORK GOING ON.

WE'RE, WE'RE VERY HAPPY WITH WHERE WE STAND ON ALL OF THIS. ON THE PART 139 CERTIFICATION SIDE, WE HAVE APPROVED THE FAA HAS APPROVED OUR SECURITY PLAN. THEY'RE GOING TO HAVE THEIR FINAL INSPECTION COMING UP HERE IN THE NEXT COUPLE OF MONTHS, WHERE THEY COME OUT. NOW THAT WE'VE COMPLETED THE MARKINGS ON THE RUNWAY EXTENSION PROJECT, THEY'LL COME AND CERTIFY US FOR PART 139. AND THEN THE OPERATIONAL EXPENSES. WE'VE TALKED ABOUT IT DIRECTLY IN THE AIRPORT FUND. YOU'RE LOOKING AT AN ADDITIONAL FOUR LINE SERVICE TECHNICIANS. THEY'LL BE DOING THE SIMILAR WORK THAT WE DO ON THE GA SIDE INTO PLANE FUELING SYSTEM WILL BE FUNDED THROUGH THAT OR THOSE FOUR PEOPLE AND FUNDED THROUGH A SLIGHT SURCHARGE THAT GOES ON TO ALL.

EVERY GALLON WE PUT INTO A COMMERCIAL FLIGHT, THEY THEY PAY A SURCHARGE THAT OFFSETS THAT COST. AND THEN THREE OPERATIONS AGENTS, WHICH ENSURE THAT REGULATORY COMPLIANCE. SO REGULAR INSPECTIONS, IF THERE'S AN INCIDENT ON THE AIRFIELD, THEY MAKE SURE THAT WE CAN KEEP THE RUNWAY UP AND OPERATING. SO VERY IMPORTANT. BUT WE'RE MOVING FORWARD AND ON SCHEDULE WITH THAT. WE'VE TALKED ABOUT AVELLO. SO FAR. THEY'VE ANNOUNCED FIVE ROUTES, FOUR OF WHICH ARE GOING TO FLORIDA AND ONE TO LAS VEGAS. TYPICALLY, AVELLO IS A LOW COST CARRIER, AND WHAT THEY LIKE TO DO IS FLY FROM SECONDARY AIRPORTS IN MAJOR MARKETS LIKE OURS, OR LIKE NEW HAVEN, CONNECTICUT, OR WILMINGTON, DELAWARE, RIGHT OUTSIDE OF PHILADELPHIA, LAKELAND, FLORIDA. FROM OUR AIRPORT TO MAJOR AIRPORTS. AND SO WITH THE TWO BASE AIRCRAFT HERE, THEY WILL ALSO HAVE BASE CREWS. SO PILOTS, FLIGHT ATTENDANTS, TICKETING AGENTS, MAINTENANCE CREWS WILL ALL BE BASED HERE IN MCKINNEY. SO THOSE WILL BE LOCAL JOBS AS WELL. SO VERY EXCITING. THEY ARE LOOKING TO ADD A THIRD AIRCRAFT AS SOON AS THEY TAKE DELIVERY OF THAT AIRCRAFT. AND THAT WOULD INCREASE THE ROUTE MAP AND THE NUMBER OF FLIGHTS PER WEEK. AND THEN WE SHOW THIS EVERY YEAR, WHICH IS OUR AD VALOREM TAX REVENUE. SO PEOPLE ASK ABOUT WHAT IS WHAT DOES THE AIRPORT MEAN TO OUR CITIZENS. AND YOU CAN SEE YEAR OVER YEAR, THE, THE NUMBER OR THE DOLLARS COLLECTED BY THE DIFFERENT ENTITIES CITY, COUNTY AND COMMUNITY COLLEGE, THE CITY TAXES. MANY OF THOSE TAXES ARE COLLECTED BY THE TOURS TOO, AND WE INTEND TO SPEND THOSE DOLLARS ON THINGS THAT ARE NECESSARY FOR THE AIRPORT SO THAT WE DON'T HAVE TO DIP INTO THE GENERAL FUND FOR IT. BUT YOU CAN SEE THE IMPACT ON THE SCHOOL DISTRICT, THE COUNTY AND THE COLLEGE AS WELL. IT FLUCTUATES FROM YEAR TO YEAR BASED ON THE FLEET THAT'S BASED THERE, BUT ALSO BASED ON DEPRECIATION SCHEDULES FOR THE AIRCRAFT. ONE NUANCE OF THE CITY'S TAX COLLECTIONS, IF YOU BUILD A HANGAR OUT THERE OR YOU HAVE EQUIPMENT OUT THERE IN THE HANGAR, THOSE REAL PROPERTY VALUES ARE CAPTURED BY THE TOURS. BUT THE AIRCRAFT THEMSELVES ARE BUSINESS, PERSONAL PROPERTY, AND THAT IS NOT CAPTURED BY THE TOURS. SO AS WE HAVE SOME OF OUR GA CLIENTS BRINGING NEW AIRCRAFT IN, ONE OF WHICH IS LOOKING TO LOCATE $280 MILLION AIRCRAFT. THOSE DOLLARS ARE CAPTURED BY THE GENERAL FUND AND NOT BY THE TOURS. SO WE SHOW THIS EVERY YEAR AND YOU CAN SEE THE FLUCTUATING. BUT WE OUR SECOND HIGHEST YEAR IN TERMS OF TOTAL TAXABLE OR TAX REVENUE FROM THE AIRPORT THIS PAST YEAR. SO STILL MOVING FORWARD. THE GA SIDE IS STILL MOVING FORWARD AND DOING VERY WELL. WE ARE SELLING MORE FUEL THAN EVER, EVER. AND WE'RE GENERATING THAT

[02:50:03]

ME ONE MORE TIME. I'M JUST GOING TO TAKE US THROUGH SOME OF OUR COMPONENT UNITS. SO THAT'LL BE OUR VISIT. MCKINNEY AND OUR CDC AND EDC. SO JUST TO START OFF HERE, I JUST WANT TO MENTION THE HOTEL MOTEL FUND. AND OF COURSE, THOSE ARE THE DIFFERENT CRITERIA THAT THOSE TAX REVENUES CAN BE USED ON THIS YEAR FOR 27, WE'RE ESTIMATING ABOUT 3.6 MILLION IN REVENUE THERE. AND THAT'S ABOUT A 5% INCREASE OVER 26. THAT FUND'S BEEN SHOWN PRETTY STEADY GROWTH. WE SAW THE DIP AROUND, YOU KNOW, DURING COVID, BUT IT'S REALLY COME BACK STRONG.

AND SO WE'RE PROJECTING AT LEAST A 5% INCREASE IN 27. AND THEN JUST TO MENTION OUR VISIT MCKINNEY FUND, THEY ARE MAINLY THEY ARE FUNDED BY THE HOTEL TAX FUND. THEIR COSTS ARE UP ABOUT 96,000 OVER WHAT THEY ADOPTED LAST YEAR. THAT'S MAINLY DUE TO THE ADDITION OF A TOURISM MASTER PLAN. IT'S A ONE TIME COST THAT WILL HELP PROJECT FUTURE VISITATION, HOTEL DEMAND AND OUTLINE DESTINATION GROWTH OVER THE NEXT 5 TO 10 YEARS. IT WILL HELP WITH FUTURE TOURISM ASSETS THAT ARE COMING ONLINE IN THE FORM OF, YOU KNOW, VENUE AND CANNON BEACH. AND THEN, YOU KNOW, OF COURSE, WHAT WE SEE FROM THE COMMERCIAL TERMINAL.

AND THIS IS JUST A SNAPSHOT OF THEIR BUDGET AS WELL AS THEIR STAFFING. AND THEN CLOSING DOWN HERE, WE HAVE OUR MEDC AGAIN, THEM AND CDC SPLIT THAT ONE 1%, $0.01 SALES TAX, AND THEY SPLIT IT IN HALF CENT, SO THEY'RE PROJECTED TO BRING IN FOR 27 ABOUT JUST OVER $26 MILLION IN SALES TAX REVENUE. AND THEN JUST THERE'S SOME OF THE THINGS THAT CAN BE THE EDC MONEY CAN BE SPENT ON. AND THEN I DID JUST WANT TO MENTION, YOU KNOW, WE STARTED IN FY 23 AND GARY MENTIONED IT, THAT ROADWAY TRANSFER THAT THEY DO TO THE STREET CONSTRUCTION FUND FOR NEW ROADWAY DEVELOPMENT. YOU KNOW, BACK IN 23, THE TWO OF THEM, THEIR TWO CONTRIBUTIONS MADE UP ABOUT 1.1 MILLION FOR FISCAL YEAR 27. WE'RE PROJECTING THAT THEIR COMBINED CONTRIBUTIONS TO BE ABOUT 5.7 MILLION. SO IT IS STARTING TO GROW. AND AGAIN, THAT THAT CONTRIBUTION IS BASED ON SALES TAX GROWTH FROM THE BASE YEAR OF FISCAL YEAR 22. AND THEN AGAIN, JUST A SNAPSHOT OF THEIR CURRENT STAFFING AND BUDGET. EDC DID HAVE IN HERE TWO ADDITIONAL POSITIONS. ONE WAS A SECOND PROJECT MANAGER AND THEN A DATA ANALYST, WHICH THEY ARE SPLITTING WITH CDC. SO THAT POSITION SPLIT FUNDED BETWEEN THE TWO. AND THEN ON THE CDC SIDE, SAME KIND OF SLIDE AGAIN, THAT $26 MILLION IN SALES TAX REVENUE. AND THEN WHAT THEIR FUNDS ARE ALLOWED TO BE USED ON. AND AGAIN, JUST WANTED TO MENTION AGAIN THIS YEAR, THEY ARE FUNDING APPROXIMATELY 600 000 IN PARKS, VEHICLES AND EQUIPMENT. AND THEN JUST A SNAPSHOT THERE OF THEIR BUDGET. AGAIN, THAT NEW POSITION THEY'RE ADDING IS THE ONE THAT'S SPLIT FUNDED WITH THE EDC, WHICH IS A DATA ANALYST. AND THEN I'LL PASS OFF HERE TO MARK FOR CLOSING REMARKS. AND THEN ALSO, WE CAN CERTAINLY OPEN IT UP FOR DISCUSSION AFTER THAT AS WELL. SURE. THANK YOU. TREVOR. YOU CAN SEE THE BUDGET CALENDAR AHEAD OF US NEXT OR OUR NEXT COUNCIL MEETING. WE'LL HAVE A CITIZEN INPUT MEETING. AND THEN WITH PUBLIC HEARINGS BEING HELD ON SEPTEMBER 1ST AND THE ADOPTION OF THE BUDGET PLAN FOR SEPTEMBER 1ST, AS WELL. AS WE GO THROUGH THIS BEFORE WE BEGIN, YOU KNOW, QUESTIONS OR COMMENTS? I JUST WANT TO SAY AGAIN, THANK YOU TO TREVOR DAGAN AND PALOMA AND TRACY, THE BUDGET STAFF. THEY'VE DONE A FANTASTIC JOB PUTTING THIS TOGETHER THIS YEAR. ALSO, A LOT OF ADDITIONAL FINANCE STAFF THAT THAT AREN'T HERE TODAY, THAT THAT SPENT A LOT OF TIME ON THIS. AND FINALLY, I WANT TO THANK THE CITY MANAGER'S OFFICE. ALL THE ALL THE PEOPLE SITTING HERE, STEVE TILSON, WHO'S NOT HERE TODAY. NIMRA EVERYBODY HAS PUT IN A LOT OF TIME ON THIS BUDGET. SO I WANT TO SAY THANK YOU BECAUSE WE COULDN'T HAVE GOTTEN IT DONE WITHOUT EVERYBODY THAT'S HERE TODAY. SO WITH THAT, THAT'S THE END OF THE FORMAL PRESENTATION. WE, ALL OF US HERE ARE READY TO FOR

[02:55:07]

AMY. TALKING ABOUT GOLF COURSE FUND. IN LOOKING AT THIS LOOK AT IT. LOOKING AT EXPENSES 23 TO 24. CAN YOU JUST KIND OF GIVE A HIGHLIGHT OF OF HOW OCALA WAS RUN AND HOW IT'S FUNDED, HOW IT'S MANAGED? I'LL LEAN ON AMY IF SHE SEES I'M OVER MY SKIS TOO MUCH HERE OR COMING AT THE BALL SHALLOW. ESSENTIALLY THEY'VE SEEN RECORD NUMBERS OF ROUNDS IN RESPONSE TO THE UPTICK THAT'S HAPPENED JUST IN THE GULF INDUSTRY SINCE COVID. IF YOU'LL RECALL, GOLF COURSES WERE ONE OF THE ONLY RECREATIONAL ACTIVITIES THAT WERE ACROSS THE BOARD ENJOYED DURING THE COVID LOCKDOWN TIMES. SO THAT UPTICK MAINTAINED THROUGH THE PAST FISCAL YEARS, THEY ARE IMPLEMENTING DIFFERENT CONTROL MEASURES TO TRY TO MAKE SURE THAT THE 60, 65,000 ROUNDS A YEAR THAT THEY DO IS NOT ONLY SUSTAINABLE FROM A OPERATIONAL STANDPOINT, BUT FROM A COURSE MANAGEMENT STANDPOINT. ON THE CITY SIDE, AS THE MAYOR HAS MENTIONED, FROM TIME TO TIME, WE WILL PUT IN CAPITAL INVESTMENTS, THE MOST RECENT BEING A REBUILD OF THE GREEN COMPLEXES AND THE TEE BOXES, I BELIEVE, BACK IN 2020 223. AND THOSE HAVE COME IN WELL, WE'VE RECEIVED A RANGE OF REQUESTS IN RELATION TO FUTURE CAPITAL FROM THE MANAGEMENT TEAM OUT THERE.

THE PARKS STAFF AND MYSELF HAVE REVIEWED SOME OF THOSE. WE HAVE OUR OWN IDEAS ABOUT WHERE THERE IS SOME OPPORTUNITY FOR IMPROVEMENT AT THE COURSE, BUT IT IS A VERY POPULAR PARKS AMENITY IN THE CITY OF MCKINNEY. IT'S PROBABLY ONE OF THE HIGHEST TRAFFICKED PARKS AMENITIES IN THE CITY OF MCKINNEY. WE'RE SEEING THAT, AS YOU SEE REFLECTED IN THE SUMMARY SHEET THERE. THERE'S THIS UPTICK IN REVENUE THAT'S OCCURRING, WHICH GOES INTO THAT FUND BALANCE AS A REMINDER OF HOW THAT STRUCTURE WORKS, WE RECEIVE A PERCENTAGE KIND OF SIMILAR TO A LICENSE AGREEMENT PLAN PAYMENT FOR THE OPERATIONS BEING COMPLETELY OFFSET TO A THIRD PARTY. THAT AGREEMENT IS, I BELIEVE, IN YEAR ONE OF A FIVE YEAR EXTENSION THAT WAS COMPLETED ROUGHLY ABOUT 12 TO 18 MONTHS AGO. SO IT'S UP AGAIN FOR REVIEW HERE IN THE NEXT THREE AND A HALF TO FOUR YEARS OR SO. IF I IF I IF YOU WANT ANOTHER ANSWER OR IF I KNOW WHAT YOU NEED, IF YOU COULD HIT OTHER INCOME 23 TO 24 AND THEN 24 TO 25, WHAT WHAT HAPPENED? I'LL DO MY BEST HERE BECAUSE I'M SO, JUST SO SO WE JUST, WE WERE AT 1,000,002, 23, 24 AND THEN 200,000 THE NEXT YEAR. SO THAT HAD TO DO WITH, I THINK, WAS IT 24? DID WE DO THE TEE BOXES AND GREENS? I THINK WE FUNDED THAT THE PARKS CONSTRUCTION FUND. SO THAT WAS AN ACCOUNTING MOVE THERE OF THEM TRANSFERRING THAT ASSET INTO THE GOLF FUND FOR ABOUT $1 MILLION. IT'S PROBABLY ABOUT AS BEST AS I CAN EXPLAIN IT. SO SO ESSENTIALLY, THE GOLF FUND IS ITS OWN GOVERNMENTAL FUND AT THE CITY OF MCKINNEY. AND THE PARKS CONSTRUCTION FUND WAS THE IS A SEPARATE FUND. IT'S A CIP FUND. THAT WAS THE INSTRUMENT THAT WAS USED TO FUND THE RENOVATION OF THE GREEN COMPLEXES, THE PARKS CONSTRUCTION FUND. BUT BECAUSE THE GOLF FUND EXISTS AS AN ENTERPRISE WITHIN THE CITY OF MCKINNEY, AND IT'S ITS OWN INDEPENDENT FUND, FROM AN ACCOUNTING BASIS STANDPOINT, YOU HAVE TO RECOGNIZE THAT ASSET IN THE GOLF FUND, AND THAT OCCURRED IN THAT FISCAL YEAR. YEAH. THE THE TRANSACTION ITSELF DID NOT CHANGE OUR OUR ENDING CASH. THERE WAS AN OFFSET TO THE TO THE INCOME.

THAT'S A GREAT QUESTION. IT'S KIND OF A STRIKING CHANGE FROM THE DOLLAR YEAR TO YEAR, BUT IT'S A GREAT QUESTION. I GUESS IT'S NOTED AT THE VERY BOTTOM. SURE. UNDER THE TECHNICAL TERM OF BALANCE SHEET ADJUSTMENT. YES. YES, YES, YES. IS THAT OTHERS LIKE OTHER SAME THING AS OTHER. YES IT IS. GOT IT. OKAY. IT'S A JOURNAL ENTRY. GOT IT. OKAY. MAKES SENSE. THANK YOU.

ANYTHING ELSE OVER HERE? I JUST WANT TO SUMMARIZE WHAT I THINK WE'VE HEARD TODAY. SOME OF THE FEEDBACK WE'VE GOTTEN FROM THE COUNCIL. A COUPLE THINGS, COUNCILMAN LYNCH. COMMENTS ARE TAKEN TO HEART. OF COURSE, THERE ARE A COUPLE THINGS THAT YOU SHOULD KNOW, AND WE'LL BE COMING BACK TO YOU THAT THE BIG SHIFT YOU AND I HAVE TALKED ABOUT THIS, THE BIG SHIFT IS

[03:00:05]

THEY'RE WORKING THROUGH RIGHT OF WAY ACQUISITION AGREEMENTS, SOME SURVEY WORK, RIGHT OF ENTRY WORK FOR THAT SURVEY WORK. AND THEN THE, THE DEBT ISSUANCE THAT WAS REPRESENTED ON THE SLIDE IS NOT ONLY TO PAY FOR THAT DESIGN WORK AND THAT ENGINEERING WORK THAT'S GOING TO OCCUR AT THE FRONT END OF THE PROJECT, BUT HAVE THE FUNDS READILY AVAILABLE AT THE CONSTRUCTION START OF 2028, AND THAT'S CALENDAR YEAR 2028. WE HAVE FUNDS ALSO FROM THE DEVELOPER OF THOSE. YES. AND IT'S NOT IT'S NOT JUST DEBT FUNDED. THERE'S PRIVATE FUNDING, DEVELOPER FUNDING INVOLVED IN THE PROJECT. AND COUNCILMAN, JUST WHILE THE ANTICIPATED BID DATE IS 2028, WE DO HAVE AN OBLIGATION TO DELIVER THE THE FULL SEGMENT OF STONEBRIDGE BY MARCH OF 2030. THANK YOU. APPRECIATE IT. I HAVE A MOTION TO ADJOURN, MR. MAYOR. I HAVE A MOTION AND A SECOND MOTION BY COUNCIL. A MULTIPLE SECONDS TO ADJOURN. ALL THOSE IN FAVOR,

[03:05:05]