Dec 19, 2023 City Council Work Session

SO WE JUST.

[00:01:08]

BADASS. BADASS.

I LIKE IT. OKAY.

THEY'RE SO FUNNY.

HE'S.

[WORK SESSION AGENDA DECEMBER 19, 2023 5:00 PM]

AND WE'RE GOING TO START THIS EDINBURG SPECIAL CITY COUNCIL MEETING WORK SESSION.

IT'S, I CALL THIS MEETING TO ORDER.

LIKE I MENTIONED, I DO SEE VISIBLE.

[1. CALL TO ORDER, ESTABLISH QUORUM]

ITEM TWO IS, CERTIFICATION OF PUBLIC NOTICE.

YES, SIR. MAYOR, I GOT TO SAY, THE MEETING WAS POSTED IN ACCORDANCE TO THE OPEN MEETINGS ACT ON DECEMBER 15TH, 2023 AT 640. THANK YOU.

I THINK WE'RE WE'RE GOING TO CLARIFY FOR THE RECORD, THE.

IT IS 508.

[2. CERTIFICATION OF PUBLIC NOTICE]

[3. DISCLOSURE OF CONFLICT OF INTEREST]

YES, SIR. MAYOR. UNDER STATE LAW, A CONFLICT OF INTEREST EXISTS IF A COUNCIL MEMBER OR CERTAIN MEMBERS OF THAT PERSON'S FAMILY HAS A QUALIFYING FINANCIAL INTEREST IN AN AGENDA ITEM, IF THERE IS A CONFLICT OF INTEREST, THE MEMBER CAN'T PARTICIPATE OR VOTE ON THE ITEM.

ANY CONFLICTS TO DISCLOSE? NO, SIR. NO, SIR.

THANK YOU. ALL RIGHT.

[4. PUBLIC COMMENTS]

DO WE HAVE ANYONE SIGNED UP FOR PUBLIC COMMENTS? NO, SIR. NO PUBLIC COMMENTS TODAY.

ALL RIGHT. WE'RE GOING TO MOVE RIGHT ON TO PRESENTATION REPORTS.

[5. PRESENTATION AND REPORT]

[A. Presentation Regarding the 2023 Water and Wastewater Rate Study. [Gerardo Carmona]

CORRADO CARMONA, DIRECTOR OF UTILITIES.

SO TONIGHT'S PRESENTATION WILL, WILL WILL PROVIDE THE THE COUNCIL THE DIFFERENT OPTIONS FOR THE FOR THE PROPOSED, RATE FOR WATER AND SEWER.

[00:05:08]

WE HAVE MR. CHUCK SALVIA, MR. IVAN GARCIA AND MR. OMAR CANO HERE WITH US.

THE CONSULTANT IS MR. DAN JACKSON, WHO WILL BE PRESENTING, WHO WILL BE DOING THE PRESENTATION FOR YOU ALL TODAY.

AND THEN WE ALSO HAVE OUR THE CITY'S FINANCIAL ADVISOR AS WELL HERE, HERE WITH US.

THANK YOU. MAYOR. MEMBERS OF THE COUNCIL.

MY NAME IS DAN JACKSON.

I'M VICE PRESIDENT OF WILLDAN FINANCIAL SERVICES.

AND I'VE GOT WITH ME MR. JASON LAUMER, VICE PRESIDENT OF WILLDAN AS WELL.

WE'RE THE FIRM THAT HAS HAD THE PRIVILEGE OF DOING THIS, WATER AND WASTEWATER RATE STUDY FOR THE CITY OF EDINBURG.

WE'VE DONE THESE KIND OF STUDIES FOR A LOT OF CITIES AROUND TEXAS, OVER 100 CITIES, ACTUALLY, INCLUDING MANY CITIES HERE IN THE RIO GRANDE VALLEY.

WE'VE I'VE BEEN COMING DOWN TO THE VALLEY FOR OVER 30 YEARS NOW.

I'VE WORKED FOR LAGUNA MADRE WATER DISTRICT.

WE'RE CURRENTLY DOING A STUDY IN, IN BOTH BROWNSVILLE AND IN HARLINGEN.

WE'VE WORKED FOR CITIES LIKE LA VILLA, MERCEDES, DONNA, LOS FRESNOS.

SO WE HAVE GREAT FAMILIARITY WITH THE CHALLENGES THAT YOU ARE FACING HERE IN THE RIO GRANDE VALLEY WITH REGARDS TO WATER AND WASTEWATER SERVICE.

WE WERE ENGAGED A FEW MONTHS AGO TO DO THIS LONG TERM FINANCIAL PLAN AND RATE STUDY.

AND THE PURPOSE OF TONIGHT'S PRESENTATION IS TO GO OVER THE FINDINGS OF THE STUDY AND TO PRESENT TO YOU SOME RECOMMENDATIONS FOR A NEW LONG TERM RATE PLAN FOR THE CITY.

WHAT HAPPENED? WE LOST IT.

HERE WE GO. OH, SORRY.

WE'RE HAVING A FEW TECHNICAL DIFFICULTIES HERE.

ARE. GOOD OLD MICROSOFT.

ALWAYS CRASHES AT THE RIGHT TIME.

DID WE RENEW OUR MEMBERSHIP FOR THE END OF THE YEAR? I T I T IN THE HOUSE.

IT'S IN OUR AGENDA.

IT.

JASON SHOES. IN THE MEANWHILE.

MEANWHILE.

I THINK WHILE WE LOAD THAT, I DO WANT TO ACKNOWLEDGE WE HAVE SOME MEMBERS OF THE COMMITTEE.

UTILITY RATE TASK FORCE.

ARE YOU HERE? IF YOU'RE PRESENT, CAN YOU PLEASE STAND TO BE RECOGNIZED? I JUST WANT TO LET THE PUBLIC KNOW THAT THERE IS A TASK FORCE THAT, THAT COUNCIL APPOINTED TO BEGIN EVALUATING THIS FOR COUNCIL MEMBER SALAZAR.

THESE ARE SOME RESIDENTS THAT, WERE APPOINTED.

THERE'S THREE OF YOU HERE. HOW MANY OF YOU ARE THERE? THERE'S FOUR TOTAL, SO THERE'S THREE OVER HERE OKAY GREAT.

BUT THANK YOU ALL. THANK YOU ALL FOR BEING HERE AND AND BEING A PART OF THIS, TASK FORCE.

SO THANK YOU.

LET ME GO THROUGH WHAT THEY HAVE ALREADY.

SO IT.

OKAY. YOU COULD JUST START BY GOING THROUGH.

WE ACTUALLY HAVE THE SLIDES HERE WITH US, SIR.

SO IF YOU, WE'LL GO THE OLD FASHIONED OLD SCHOOL WAY AND, GO THROUGH EACH SLIDE.

WE HAVE THEM HERE, SO IF YOU WANT TO GO THROUGH THEM, IF WE'RE HAVING TECHNICAL JUST BECAUSE WE HAVE A COUNCIL MEETING IN ABOUT 40 MINUTES.

YES. WE NEED TO GET.

WE APOLOGIZE FOR THIS. I'M NOT SURE WHAT THE PROBLEM IS, BUT I'M GOING TO FIRST TALK A LITTLE BIT ABOUT YOUR RATES IN GENERAL.

THEN WE'RE GOING TO TALK ABOUT YOUR CUSTOMERS AND VOLUMES AND THEN YOUR CURRENT AND FORECAST COST OF SERVICE.

IN OTHER WORDS, HOW MUCH WATER YOU'RE PRODUCING AND HOW MUCH DOES IT COST YOU TO PRODUCE IT.

THEN WE'RE GOING TO PRESENT YOU TWO ALTERNATIVE RATE PLAN SCENARIOS.

THEN WE'LL FINISH. THEN WE'RE GOING TO TALK ABOUT TAP FEES AND THEN WE'LL FINISH UP.

AND OF COURSE IF YOU HAVE ANY QUESTIONS ASK AT ANY TIME.

SO LET'S GO TO PAGE FOUR.

I WANT TO START OUT THIS PRESENTATION BY TALKING ABOUT SOMETHING THAT THAT I LIKE TO TALK ABOUT IN THESE KIND OF PRESENTATIONS.

AND THAT IS WHAT'S HAPPENING IN THE WATER INDUSTRY IN GENERAL, BECAUSE IT'S VERY IMPORTANT FOR DECISION MAKERS LIKE YOURSELVES TO UNDERSTAND WHAT THE FORCES AT PLAY IN THE WATER INDUSTRY HERE IN THE RGV, AS WELL AS THE STATE OF TEXAS IN GENERAL, THE AVERAGE UTILITY ACROSS THE UNITED STATES HAS BEEN RAISING ITS RATES 5 TO 6% EVERY YEAR.

THAT'S BECAUSE THE COST OF WATER SERVICE IS GOING UP AT AN ALARMING RATE.

AS A MATTER OF FACT, THE AMERICAN WATER WORKS ASSOCIATION PROJECTS THAT WATER AND WASTEWATER RATES ARE GOING TO TRIPLE IN THE NEXT 15 YEARS, SO EVERYBODY IS GOING TO BE PAYING SIGNIFICANTLY MORE FOR WATER A FEW YEARS FROM NOW THAN THEY ARE TODAY.

EVERYBODY HERE IN THE VALLEY, EVERYBODY IN THE STATE OF TEXAS, EVERYBODY ACROSS THE UNITED STATES.

[00:10:01]

BUT IF YOU LOOK AT THE COST OF PROVIDING AND SERVICING WATER, THOSE COSTS ARE GOING UP AT AN EVEN HIGHER RATE.

YOU KNOW, A LOT OF THE ELEMENTS OF WATER SERVICE ARE THINGS LIKE CHEMICALS, ELECTRICITY, INSURANCE, WORKERS COMPENSATION.

ALL OF THOSE ARE GOING UP AT VERY HIGH RATES.

AND WHEN WHEN YOUR COSTS GO UP, YOU'VE GOT NO CHOICE BUT TO PASS THOSE COSTS THROUGH TO YOUR ULTIMATE RATEPAYERS.

SO IF WE GO TO PAGE FIVE, WE'VE TALKED A LITTLE BIT ABOUT WHAT'S HAPPENING IN THE INDUSTRY IN GENERAL.

LET'S NOW TALK ABOUT WHAT'S HAPPENING HERE, SPECIFICALLY IN THE CITY OF EDINBURG.

YOU HAVE DONE A REMARKABLE JOB AT KEEPING YOUR RATES INCREDIBLY LOW OVER THE LAST DECADE.

THE CITY OF EDINBURG HAS NOT ADJUSTED ITS WATER AND SEWER RATES SINCE 2011.

THAT IS A PERIOD OF 12 YEARS.

THAT'S VIRTUALLY UNPRECEDENTED IN MY EXPERIENCE.

MOST CITIES THAT I WORK FOR RAISE THEIR RATES EVERY YEAR.

YOU GUYS HAVE GONE 12 YEARS WITHOUT DOING AN ADJUSTMENT AT ALL.

AS A RESULT, YOUR RATES ARE AMONG THE LOWEST IN THE REGION.

YOU'RE ALMOST ALMOST THE LOWEST IN THE VALLEY AND ALMOST THE LOWEST IN THE STATE, HOWEVER.

YOUR YOUR COSTS ARE CONTINUING TO INCREASE.

YOUR OPERATING COSTS ARE GOING UP.

YOU KNOW, AND ADDITIONALLY, YOU HAVE TO SPEND AS MUCH AS $260 MILLION IN CAPITAL IMPROVEMENTS OVER THE NEXT DECADE IN ORDER TO ENSURE THAT YOUR SYSTEM IS MAINTAINED AND OPERATING PROPERLY.

NOW, LOOK, EVERYBODY WANTS TO KEEP RATES AS LOW AS POSSIBLE.

THAT IS A THAT IS A REASONABLE EXPECTATION AND IT'S A REASONABLE GOAL.

BUT THE WELL-RUN UTILITY HAS TO BALANCE THE DESIRE TO KEEP RATES LOW, WITH THE NEED TO INVEST IN YOUR SYSTEM TO ENSURE THAT YOUR SYSTEM MAINTAINS AN ACCEPTABLE LEVEL OF SERVICE.

I WORK FOR SOME UTILITIES, HAVE INCREDIBLY LOW RATES, BUT THEY HAVE INCREDIBLY LOW RATES BECAUSE THEY'RE LITERALLY NOT PUTTING ANY MONEY INTO THEIR SYSTEM, SO THEY'RE THIS FAR AWAY FROM A CATASTROPHIC FAILURE.

IS THAT A GOOD WAY TO RUN A SYSTEM? NO, NOT NECESSARILY AT ALL.

IT'S SORT OF LIKE SAYING I CAN SAVE $100 BY NOT CHANGING THE OIL IN MY CAR.

WELL, YOU CAN, BUT A YEAR FROM NOW, YOUR ENGINE IS GOING TO BLOW OUT.

SO LIKE I SAID, YOU HAVE TO BALANCE THE DESIRE TO KEEP RATES LOW WITH THE NEED TO INVEST IN YOUR SYSTEM.

SO THE COMBINATION OF INCREASING OPERATING COSTS AND THE NEED TO INVEST IN YOUR SYSTEM IS WHAT'S RESULTING IN OUR RECOMMENDATIONS FOR A NEW LONG TERM RATE PLAN. SO LET'S SKIP AHEAD TO PAGE SEVEN OF THE PRESENTATION HERE.

THIS CHART RIGHT HERE I WISH IF THIS CHART RIGHT HERE IS A COMPARISON OF WHAT IT COSTS TO SERVE PEOPLE IN THE CITY OF EDINBURG WITH OTHER AREA, OTHER CITIES IN THE RIO GRANDE VALLEY.

THE AVERAGE RESIDENTIAL RATEPAYER HERE IN THE CITY OF EDINBURG USES SOMEWHERE BETWEEN 5 AND 7000 GALLONS OF WATER AND SEWER SERVICE A MONTH.

NOW THAT'S AN AVERAGE.

YOU KNOW, SOME PEOPLE USE MORE.

OBVIOUSLY, SOME PEOPLE USE LESS, BUT THE AVERAGE IS RIGHT AT 5 TO 7000 GALLONS.

A RATEPAYER, A RESIDENTIAL RATEPAYER WHO USES 5000 GALLONS A MONTH, PAYS $26.87 FOR THAT SERVICE HERE IN EDINBURG.

NOW, THAT'S JUST WATER AND SEWER SERVICE THAT DOESN'T INCLUDE GARBAGE OR TAXES OR OTHER COMPONENTS OF A UTILITY BILL.

IT'S JUST YOUR BASIC WATER AND SEWER SERVICE.

THE STATE AVERAGE IS $98.57, SO YOU ARE 25% OF THE STATE AVERAGE.

SO YOU ARE SIGNIFICANTLY BELOW WHAT ALMOST EVERYBODY ELSE IN THE STATE OF TEXAS PAYS.

FURTHERMORE, YOU'RE LOWER THAN JUST ABOUT EVERYBODY ELSE IN THE VALLEY.

FOR EXAMPLE, CITY OF MCALLEN, THEY PAY $41.70 FOR A SIMILAR SERVICE IN RAYMONDVILLE.

THEY PAY $62.84.

IN BROWNSVILLE, THEY PAY ABOUT SIX, ABOUT $55 A MONTH.

IN HARLINGEN, THEY PAY ABOUT $45 A MONTH.

SO AS YOU CAN AS YOU CAN SEE, YOU GUYS ARE REALLY, REALLY LOW.

NOW LOOK, THE FACT THAT YOUR RATES ARE LOW IS NOT IN AND OF ITSELF A JUSTIFICATION FOR RAISING RATES.

ALL IT IS, IS, IS INTENDED TO ANSWER THE QUESTION, ARE OUR CUSTOMERS DISPROPORTIONATELY BURDENED BY THE COST OF WATER AND SEWER SERVICE HERE IN EDINBURG? AND THE ANSWER IS CLEARLY NO, YOU'RE NOT.

YOUR RATES ARE VERY, VERY FAVORABLE WHEN YOU COMPARE THEM TO OTHER UTILITIES.

OKAY. JUST A COUPLE OF QUICK BACKGROUND CHARTS.

PAGE NINE, PAGE NINE SHOWS THAT YOU'VE GOT ABOUT 32,000 WATER ACCOUNTS RIGHT NOW.

YOU HAVE ABOUT 27,000 WASTEWATER ACCOUNTS.

NOW, CITY OF EDINBURG IS EXPERIENCING SOME VERY ROBUST GROWTH RIGHT NOW.

YOU'RE ANTICIPATED IT IS ANTICIPATED THAT YOU'RE GOING TO SEE GROWTH OF AS MANY AS OF AS MUCH AS A THOUSAND NEW ACCOUNTS EVERY YEAR.

THAT'S A VERY GOOD THING.

FROM A WATER AND WASTEWATER PERSPECTIVE, WATER AND SEWER SYSTEMS ARE BASED ON WHAT IS KNOWN AS ECONOMIES OF SCALE.

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IT'S A NEW VOLUMETRIC RATE.

SO WHAT IT MEANS IS THAT AS THESE NEW ACCOUNTS COME IN, YOU'RE GETTING ADDITIONAL REVENUE THAT IS GOING TO OFFSET THE NEED FOR RATE INCREASES.

IT'S NOT GOING TO ELIMINATE THE NEED FOR RATE INCREASES, BUT IT DOES MEAN THAT PROPERLY MANAGED GROWTH WILL ENABLE YOU TO MINIMIZE THE NEED FOR FUTURE RATE ADJUSTMENTS.

JUST IN CASE YOU'RE INTERESTED.

IN THE LAST YEAR, YOU SOLD ABOUT 4.6 BILLION GALLONS OF WATER.

SO YOU'VE GOT A VERY SOLID CUSTOMER BASE.

YOU'RE SELLING A LOT OF WATER.

YOU'RE ANTICIPATED TO SELL MORE WATER IN THE FUTURE.

OKAY. LET'S TALK A LITTLE BIT ABOUT YOUR PROJECTED COSTS IN THE FUTURE.

YOU KNOW, I TALKED A LITTLE BIT AT THE BEGINNING ABOUT THE GENERAL COSTS OF RUNNING A WATER SYSTEM.

LET'S TALK SPECIFICALLY ABOUT THE CITY OF EDINBURG.

LOOK, YOUR COSTS ARE GOING TO GO UP IN THE FUTURE.

UNFORTUNATELY, WHILE YOU'VE DONE AN EXTRAORDINARILY GREAT JOB OF KEEPING YOUR RATES LOW, YOU CANNOT REPEAL THE LAWS OF ECONOMICS.

AND ONE OF THE FIRST RULES OF THE LAWS OF ECONOMICS IS THAT COSTS GO UP.

CAN YOU THINK OF ANYTHING THAT DOESN'T COST MORE TODAY THAN IT DID TEN YEARS AGO, OR EVEN FIVE YEARS AGO? WATER SYSTEMS ARE SUBJECT TO THE SAME CHALLENGES.

COST OF EVERYTHING GOES UP 3 TO 4% A YEAR.

AND SO WHAT WE HAVE DONE IS WE HAVE DONE A LONG TERM FORECAST OF YOUR WATER AND SEWER SYSTEM COSTS OVER THE NEXT TEN YEARS.

AND ONE OF THE THINGS WE'RE ASSUMING IS THAT COSTS FOR MOST OF YOUR OPERATING EXPENSES ARE GOING TO GO UP 3 TO 5% A YEAR.

NOW, KEEP THIS IN MIND A FORECAST IS NOT A GUARANTEE.

IT'S A PREDICTION BASED ON A SERIES OF REASONABLE ASSUMPTIONS.

BUT ONE OF THE KEY ASSUMPTIONS IS THAT YOUR COSTS ARE GOING TO CONTINUE TO GO UP.

AND SO YOU HAVE TO DESIGN A RATE PLAN THAT WILL ENABLE YOU TO RECOVER THOSE COSTS.

ALSO KEEP THIS IN MIND.

YOU ARE NOT A PROFIT MAKING INSTITUTION.

YOU'RE NOT MAKING MONEY ON YOUR WATER SYSTEM.

ALL YOU'RE TRYING TO DO IS RECOVER YOUR COSTS.

SO AS YOUR COSTS GO UP, YOU HAVE TO PASS THOSE COSTS THROUGH TO YOUR RATEPAYERS.

IF YOU DON'T, IT MEANS THAT YOU'RE SELLING A PRODUCT.

AND WATER IS A PRODUCT LIKE, YOU KNOW, MCDONALD'S HAMBURGER OR A GALLON OF GAS OR ANYTHING ELSE.

IF YOU DON'T KEEP TRACK OF THESE INCREASED COSTS AND PASS THEM THROUGH TO YOUR RATEPAYERS, THEN YOU'LL BE SELLING THAT PRODUCT AT BELOW COST.

AND WE ALL KNOW THAT THAT'S NOT PARTICULARLY A GOOD BUSINESS DECISION.

OKAY. IS THIS BACK? YES. GREAT.

OKAY. IS IT.

IS IT? THERE WE GO.

HOLD ON A SECOND. IT DOESN'T.

STILL DOESN'T SEEM TO BE.

FULL SCREEN. AND THEN I TRIED TO TOGGLE IT DOWN AND IT'S NOT WORKING.

OKAY. OKAY.

OKAY, SO OUR FINANCIAL PLAN ASSUMES THAT MOST OF YOUR COSTS ARE GOING TO GO UP 3 TO 5% A YEAR.

IN ADDITION, AS YOU CONTINUE TO GROW, YOU'RE GOING TO HAVE TO ADD SOME ADDITIONAL EMPLOYEES.

OUR INITIAL PLAN INCLUDES THAT AS WELL.

SO WE'RE SO BUT THE KEY COMPONENT IS GOING TO BE THE CAPITAL IMPROVEMENT PLAN.

THE CAPITAL IMPROVEMENT PLAN IS THE FUNDING THAT YOU HAVE TO DO TO BUILD, EXPAND AND REPLACE AND MAINTAIN THE WATER AND SEWER SYSTEM.

IT COSTS MILLIONS OF DOLLARS TO BUILD A WATER SYSTEM, TO PUSH WATER THROUGH YOUR CITY STREETS, AND TO ENABLE YOUR WATER SYSTEM TO OPERATE AND ENABLE PEOPLE TO USE IT WHENEVER THEY NEED TO.

AND LIKE ANY SYSTEM, IT WEARS OUT OVER TIME.

THE CITY OF EDINBURG IS PROJECTED TO SPEND $260 MILLION OVER THE NEXT FIVE YEARS TO REPAIR, MAINTAIN AND EXPAND THE WATER AND SEWER SYSTEM. THAT'S A LOT OF MONEY.

BUT IN ALL HONESTY, FOR A CITY OF THIS SIZE, THAT'S NOT REALLY OUT OF PROPORTION FROM CERTAINLY FROM WHAT I SEE IN OTHER CITIES AS WELL.

BUT ALSO KEEP THIS IN MIND.

THIS IS AN INVESTMENT IN THE FUTURE OF THE CITY.

THE THE THE $260 MILLION INVESTMENT IS GOING TO GO TO BUILD ASSETS THAT WILL NOT ONLY BE USED BY YOU, BUT IT WILL BE USED BY FUTURE GENERATIONS OF RESIDENTS HERE. SO ONE OF THE GREAT THINGS ABOUT RUNNING A WATER SYSTEM IS THAT WHILE IT'S UNFORTUNATE THAT YOU HAVE TO GET YOUR REVENUES FROM YOUR RATEPAYERS, THE MONEY GOES RIGHT BACK INTO YOUR CITY AND AND ONCE AGAIN, IT GOES TOWARDS DEVELOPING THE CITY FOR THE FUTURE.

SO WE'RE LOOKING AT $260 MILLION I KNOW THERE'S A LOT OF TEXT ON THIS PAGE, BUT THIS IS A SUMMARY OF THE PROJECTS THAT ARE SCHEDULED AND FORECAST TO BE

[00:20:07]

NOW, TO NO GREAT SURPRISE, YOU DON'T HAVE $260 MILLION RIGHT NOW.

SO YOU'RE GOING TO HAVE TO GO OUT AND BORROW A SIGNIFICANT PORTION OF IT.

WE'RE PROJECTING THAT YOU'RE GOING TO FUND THIS CAPITAL IMPROVEMENT PLAN THROUGH A COMBINATION OF LONG TERM DEBT AS WELL AS FUND RESERVES, GRANTS AND ARPA MONEY.

BUT THE KEY COMPONENT FROM A RATE STANDPOINT, IS THE AMOUNT OF DEBT THAT YOU'RE GOING TO HAVE TO ISSUE.

THIS CHART RIGHT HERE SHOWS THAT WE'RE PROJECTING THAT YOU'RE GOING TO HAVE TO ISSUE ABOUT $226 MILLION IN DEBT BETWEEN 2024 AND 2029.

IN ORDER TO FUND THIS CAPITAL IMPROVEMENT PLAN.

THE BLUE PORTION OF EACH BAR CHART IS YOUR REGULAR BOND DEBT.

AND THE GREEN AND THE PURPLE PORTION IS TEXAS WATER DEVELOPMENT BOARD DEBT.

WATER DEVELOPMENT BOARD DEBT IS A LITTLE BIT CHEAPER THAN YOUR STANDARD REVENUE BOND DEBT, BUT OUR RATE PLAN FULLY TAKES INTO CONSIDERATION THE FACT THAT AS YOU ISSUE THIS DEBT, YOU'RE GOING TO HAVE TO START REPAYING IT, AND YOU'RE GOING TO HAVE TO HAVE REVENUES THAT ARE GOING TO BE ABLE TO COVER THE ANNUAL DEBT SERVICE COSTS.

SO THIS CHART RIGHT HERE IS A SUMMARY OF YOUR TOTAL PROJECTED COST OF SERVICE BETWEEN THE YEAR 2024 AND THE YEAR 2033.

THE CHART SHOWS THAT IN THE CURRENT YEAR, YOUR COST OF SERVICE IS ABOUT $22 MILLION.

OF THAT, ABOUT $5.5 MILLION IS DEBT SERVICE.

ABOUT 1.4 MILLION IS CAPITAL LEASES AND THE REMAINING IS YOUR BASIC OPERATING EXPENSES.

BY 2033, YOUR COST OF SERVICE IS PROJECTED TO DOUBLE FROM $22 MILLION TO $44 MILLION.

NOW HOW IS HOW AND WHY IS IT GOING TO DOUBLE.

WELL IF YOU LOOK AT THE BAR CHART ON THE RIGHT SIDE OF THE GRAPH, YOU CAN SEE THAT THE BLUE PORTION IS YOUR OPERATING EXPENSES.

THEY'RE GOING TO GO UP 3 TO 5% A YEAR.

COST OF EVERYTHING GOES UP.

AND SO THAT'S GOING TO GO UP AS WELL.

BUT THE PURPLE PORTION IS YOUR DEBT SERVICE.

YOUR ANNUAL PRINCIPAL AND INTEREST PAYMENTS ARE $5.5 MILLION TODAY.

BUT WITHIN FIVE YEARS, IT'S GOING TO BE $16.1 MILLION, AND WITHIN TEN YEARS IT'S GOING TO BE $17.8 MILLION.

SO YOUR COST OF SERVICE IS PROJECTED TO GO FROM 22 MILLION TO 44 MILLION.

THAT'S A $22 MILLION INCREASE.

OF THAT $22 MILLION INCREASE, 12 MILLION OF IT IS DEBT.

AND THEN THE OTHER AND THE OTHER 10 MILLION IS OPERATING EXPENSE INCREASES.

SO IT'S A COMBINATION OF THESE TWO THAT'S GOING TO RESULT IN THE NEED FOR THE CITY TO PUT IN A NEW LONG TERM RATE PLAN.

SO I'VE OFTEN SAID RATE MAKING IS AS MUCH AN ART AS IT IS A SCIENCE.

THERE'S A LOT OF DIFFERENT RATE PLANS YOU COULD PUT INTO PLACE THAT WILL GET YOU THE REVENUE YOU NEED TO FUND YOUR INCREASING COSTS.

THE QUESTION YOU, AS CITY LEADERS, HAVE IS WHICH RATE PLAN IS GOING TO BE THE MOST FAIR, JUST, REASONABLE AND APPROPRIATE RATE PLAN FOR THE CITY? SO WE'RE GOING TO PRESENT TO YOU TWO POTENTIAL RATE SCENARIOS, TWO POTENTIAL RATE PLANS FOR YOU TO CONSIDER.

SIR, I HAVE A QUESTION. CERTAINLY.

BEFORE YOU MOVE FURTHER, SO YOUR YOUR BAR GRAPH THERE ON THE FORECAST COST OF SERVICE, WHAT IS YOUR PROJECTED GROWTH IN THE CITY POPULATION WISE? ABOUT 1000 NEW ACCOUNTS A YEAR THAT THAT WOULD BE ABOUT 3000 PERSONS A YEAR.

POPULATION IN THE CITY RIGHT NOW IS ABOUT 70,000.

SO IT'S ABOUT SO WHAT WE'RE PROJECTING IS TEN YEARS FROM NOW, THE POPULATION WILL GO UP BY ABOUT ANOTHER 30,000.

THAT IS VERY ROBUST.

THAT'S GOOD SOLID GROWTH.

AND AND YOU SAID EARLIER THAT WITH MORE RESIDENTS, MORE GROWTH, IT ABSORBS THE COST.

IS THAT ALREADY CONSIDERED? YES, IT ABSORBS SOME OF THE COST.

IT WON'T IT WON'T ELIMINATE THE NEED FOR RATE ADJUSTMENTS, BUT IT CERTAINLY WILL, LESSEN THE NEED FOR IT.

IF I CAN MAKE A CORRECTION ON THAT.

THAT'S WITHIN OUR CCN, WITHIN OUR SERVER, WITHIN THE CITY OF EDINBURG SERVICE AREA.

YEAH, BECAUSE WE DO HAVE TWO OTHER PROVIDERS IN THE CITY.

THANK YOU. RIGHT.

SO THE FIRST RATE PLAN, THE FIRST THING I'M GOING TO DO IS I'M GOING TO SHOW YOU THE PROJECTED RATES THEMSELVES.

THEN I'LL SHOW YOU THE MORE IMPORTANT CHART.

AND THAT IS THE IMPACT ON AN AVERAGE MONTHLY RESIDENTIAL BILL.

WE WOULD RECOMMEND UNDER BOTH RATE PLANS THAT THE CITY CONSIDER IMPLEMENTING A FIVE YEAR RATE PLAN.

ONE ORDINANCE WHICH WOULD HAVE FIVE YEARS OF RATE ADJUSTMENTS IN IT.

THE FIRST RATE ADJUSTMENT WOULD BE IN JANUARY OF 2024, OR WHENEVER YOU COULD GET IT IN PLACE, AND THEN SUBSEQUENT RATE ADJUSTMENTS WOULD BE AT THE BEGINNING OF EACH FISCAL YEAR IN OCTOBER.

AND SO THIS CHART RIGHT HERE SHOWS YOU WHAT THE RATES WOULD BE.

THE RESIDENTIAL MINIMUM CHARGE CURRENTLY IS $10.78 A MONTH.

IF FOR THAT, YOU GET THE FIRST 3000 GALLONS OF SERVICE.

A RESIDENTIAL CUSTOMER THEN PAYS A VOLUMETRIC RATE AT PRESENT OF $2.49 PER 1000 GALLONS.

[00:25:07]

THE RESIDENTIAL OUTSIDE CUSTOMERS RIGHT NOW PAY A PREMIUM OF 25%.

THEY PAY 1.25 TIMES THE RESIDENTIAL RATE.

THAT IS A COMMON, APPROPRIATE AND ACCEPTED METHODOLOGY FOR CHARGING FOR RATES.

CITIES ALL ACROSS THE STATE OF TEXAS HAVE SITUATIONS WHERE THEY'VE GOT CUSTOMERS WHO ARE INSIDE THE CITY AND OUTSIDE THE CITY.

UNDER BASIC RATE MAKING PRINCIPLES, IT IS APPROPRIATE TO CHARGE A HIGHER RATE TO OUTSIDE CITY LIMIT CUSTOMERS AND INSIDE CUSTOMERS.

YOU HAVE A 25% PREMIUM.

I'VE SEEN PREMIUMS OF 50% 100%.

SO YOU'RE 25% PREMIUM IS ACTUALLY A VERY REASONABLE PREMIUM.

AND AS YOU CAN SEE, THIS CHART RIGHT HERE SHOWS THAT THE OUTSIDE CITY RATE WOULD ALSO GO UP BY THE SAME PERCENTAGE EACH YEAR.

THE WASTEWATER RATES UNDER THIS PLAN WOULD ALSO GO UP.

THE, CURRENTLY A RESIDENTIAL WASTEWATER CUSTOMER PAYS $8.05 AS A MINIMUM CHARGE, AND THEY GET THE FIRST 3000 GALLONS.

THEY THEN PAY A VOLUMETRIC RATE OF OF $1.53 PER 1000 GALLONS.

THE MAXIMUM RESIDENTIAL BILL IS 17,900 GALLONS.

AFTER THAT, IT'S A YOU KNOW, IT'S CAPPED AT AT THAT AMOUNT.

SO THAT'S A LOT OF NUMBERS.

THE QUESTION PEOPLE HAVE IS WHAT DOES IT MEAN IN TERMS OF WHAT PEOPLE PAY? THIS CHART RIGHT HERE ANSWERS THAT QUESTION.

REMEMBER HOW I SAID EARLIER IN THIS PRESENTATION THAT THE AVERAGE CUSTOMER USES BETWEEN 5 AND 7000 GALLONS A MONTH OF SERVICE? A 5000 GALLON CUSTOMER RIGHT NOW PAYS $26.87 A MONTH FOR WATER AND SEWER SERVICE.

UNDER THIS PLAN, THAT CUSTOMER'S BILL WOULD GO UP BY $2.96 A MONTH.

IN THE FIRST YEAR, IT WOULD GO UP BY BETWEEN 3 AND $4 A MONTH EACH YEAR FOR THE NEXT FOUR YEARS.

IF YOU'RE A 10,000 GALLON CUSTOMER, YOUR BILL IS $46.97 AT PRESENT.

UNDER THIS PLAN, THAT CUSTOMER'S BILL WOULD GO UP BY ABOUT $5.17 A MONTH, AND IT WOULD GO UP BETWEEN 5 AND $6 A MONTH EACH YEAR FOR THE NEXT FOUR YEARS.

NOW, I HATE TO TAKE THESE VERY COMPLEX FINANCIAL PLANS AND TRY TO SUMMARIZE IT IN TERMS OF 1 OR 2 NUMBERS.

I DON'T LIKE TO DO THAT, BUT IF I DID, I WOULD TELL YOU THAT THE FOR THE VAST MAJORITY OF CUSTOMERS HERE IN THE CITY OF EDINBURG, THIS RATE PLAN WOULD RESULT IN A RATE INCREASE OF ABOUT $3 A MONTH.

EACH YEAR FOR THE NEXT FIVE YEARS.

THAT IS THE IMPACT FOR MOST OF YOUR CUSTOMERS.

OBVIOUSLY, YOUR LARGER CUSTOMERS WOULD PAY MORE.

YOUR BIG COMMERCIAL CUSTOMERS WOULD PAY MORE, BUT MOST RESIDENTIAL CUSTOMERS WOULD PAY ABOUT THREE, MAYBE $4 MORE A MONTH UNDER THIS PLAN.

NOW WE ALSO HAVE A SECOND.

I'M SORRY. BEFORE I GET INTO THAT, HOW MUCH ADDITIONAL REVENUE WOULD THIS BE? THIS CHART RIGHT HERE SHOWS YOU THAT THIS WOULD GET YOU ABOUT $2.5 MILLION A YEAR MORE IN WATER REVENUE, AND ABOUT $1.5 MILLION OR MORE PER YEAR IN WASTEWATER REVENUE. AND THAT REVENUE IS NEEDED TO PAY THE ADDITIONAL DEBT SERVICE THAT YOU'RE GOING TO BE ACCUMULATING OVER THE NEXT 4 TO 5 YEARS.

SO THE RATES, THE RATE ADJUSTMENTS ARE DESIGNED TO BE COMMENSURATE WITH THE DEBT THAT IS ISSUED TO ENSURE THAT YOU CAN ISSUE THE DEBT AND MEET ALL OF YOUR BOND AND COVERAGE REQUIREMENTS.

OKAY. A SECOND SCENARIO SAYS, YOU KNOW WHAT? WHY DON'T WE DO THE LARGER INCREASES IN THE FIRST TWO YEARS WITH AS A RESULT, WE CAN DO LOWER INCREASES IN THE THIRD, FOURTH AND FIFTH YEARS. THE IDEA WOULD BE THAT YOU DO THAT.

YOU ADJUST YOUR RATES NOW TO ENSURE THAT YOU'VE GOT ENOUGH REVENUE TO PAY ALL OF YOUR DEBT SERVICE IMMEDIATELY, AND THEN AS A RESULT, PEOPLE PAY MORE.

NOW FOR THE PRIVILEGE OF PAYING A LITTLE BIT LESS LATER.

IT'S BOTH GREAT PLANS WILL GET YOU ABOUT THE SAME AMOUNT OF REVENUE.

IT'S JUST A QUESTION OF TIMING.

WHEN DO YOU WANT TO IMPLEMENT IT? DO YOU WANT TO? DO YOU WANT TO DO MORE NOW JUST KIND OF GET IT OUT OF THE WAY NOW AND DO MINIMAL INCREASES IN FUTURE YEARS? OR DO YOU WANT TO DO IT STEADILY EACH YEAR? IF YOU DID UNDER SCENARIO TWO, WHERE YOU DO MORE OF THE ADJUSTMENT, IT WOULD GIVE YOU MORE FINANCIAL CUSHION IN THE EARLY YEARS FOR THE RATE PLAN, IT WOULD PROVIDE YOU MORE FINANCIAL STABILITY AND SECURITY.

THE AND AS YOU CAN SEE, THE INCREASES WOULD BE HIGHER IN THE FIRST COUPLE OF YEARS AND LOWER IN THE OUT YEARS.

SO WHAT DOES THIS MEAN IN TERMS OF WHAT PEOPLE WOULD PAY? WHAT THIS CHART.

THIS CHART RIGHT HERE COMPARES SCENARIO ONE TO SCENARIO TWO.

LET'S TAKE A LOOK AT OUR RESIDENTIAL CUSTOMER WHO USES 5000 GALLONS A MONTH, WHO PAYS $26.87 A MONTH.

IF YOU FRONTLOAD YOUR RATE ADJUSTMENTS UNDER SCENARIO TWO, THEIR INCREASE WOULD BE HIGHER IN THE FIRST YEAR.

[00:30:06]

WHEREAS UNDER THE FIRST SCENARIO IT WOULD BE ABOUT $3 A MONTH EVERY YEAR.

BY THE FIFTH YEAR, YOU'RE AT THE SAME PLACE.

RIGHT NOW, YOU'RE PAYING $26.87.

BY OCTOBER OF 2027, YOU'RE AT ABOUT 44 TO $45 A MONTH.

YOU'RE GOING TO GET THERE UNDER EITHER SCENARIO.

YOU JUST GET THERE A LITTLE FASTER.

UNDER SCENARIO TWO, YOU ABSORB MORE OF IT IN THE EARLY YEARS AND LESS OF IT IN THE LATER YEARS.

LIKE I SAID, THE DOWNSIDE IS YOU'RE ASKING FOR A HIGHER RATE ADJUSTMENT IN THE FIRST YEAR.

THE UPSIDE IS YOU'RE PROVIDING MORE FINANCIAL SECURITY AND MORE ABILITY TO ISSUE DEBT WITH MORE FINANCIAL CUSHION.

THAT WILL ENABLE YOU TO DO THESE CAPITAL PROJECTS FASTER AND MORE, MORE QUICKLY THAN UNDER SCENARIO ONE.

SO EITHER OF THESE TWO SCENARIOS WILL GET YOU THE REVENUE YOU NEED.

NOW, WHAT'S THE IMPACT? WELL, THIS CHART RIGHT HERE SHOWS UNDER SCENARIO ONE FOR 5000 GALLONS.

WHAT A PERSON PAYS RIGHT NOW AND WHAT THAT RESIDENTIAL CUSTOMER WOULD PAY FOR EACH OF THE NEXT FIVE YEARS.

AS YOU CAN SEE, IF YOU IMPLEMENT THE SCENARIO ONE RATE PLAN, YOUR THE RESIDENTIAL CUSTOMERS BILL OF $26.87 WOULD EVENTUALLY REACH $45.28 BY 2027.

THAT IS STILL GOING TO BE ONE OF THE LOWEST RATES IN THE VALLEY, AND IT'S STILL GOING TO BE LESS THAN HALF THE STATE AVERAGE.

AND THAT ASSUMES THAT NONE OF THESE OTHER CITIES RAISE ANY OF THEIR RATES IN THE NEXT FIVE YEARS.

AND I CAN ALREADY TELL YOU THAT'S NOT GOING TO HAPPEN.

I KNOW OF SEVERAL OF THESE CITIES THAT ARE GOING TO BE ADJUSTING THEIR RATES.

NO, IF NOT EVERY YEAR, CERTAINLY SEVERAL TIMES IN THE NEXT FIVE YEARS.

SO YOU COULD IMPLEMENT EITHER THE SCENARIO ONE OR THE SCENARIO TWO RATE PLAN.

AND FIVE YEARS FROM NOW, YOU WILL STILL HAVE RATES THAT ARE AMONG THE LOWEST IN THE VALLEY AND LESS THAN HALF THE STATE AVERAGE.

AND I THINK THAT SPEAKS VERY WELL FOR FOR THE FINANCIAL MANAGEMENT AND THE OPERATIONAL MANAGEMENT OF THE CITY OF EDINBURG.

SO I JUST WANT TO INVITE MY COLLEAGUE JASON UP HERE FOR JUST A COUPLE OF MINUTES TO TALK ABOUT TAP FEES, BECAUSE THAT WAS ANOTHER QUESTION THAT WAS THAT WE WERE TASKED WITH IN THIS RATE PLAN. SO WE'RE ALMOST DONE WITH OUR PRESENTATION.

AS DAN SAID, THIS PART OF THE STUDY WAS LOOKING AT TAP FEES.

TAP FEES ARE BASICALLY THE COST OF CITY CHARGES FOR STAFF TO GO AHEAD AND TAP THE WATER LINE AND PLACE A METER IN MOST OF THE TIME FOR HOMES, SOMETIMES FOR LARGER COMMERCIAL PROJECTS, TYPICALLY ON, TWO INCH AND ABOVE, THE CONTRACTORS WILL DO IT INSTEAD OF THE CITY STAFF.

AND SO CURRENTLY THE CITY CHARGES $325 TO DO A RESIDENTIAL TAP, AND STAFF PROVIDED US WORK ORDERS AND COST.

AND IF YOU LOOK AT EVEN THE COST OF THE METER RIGHT NOW IS ABOUT $300.

AND SO YOU REALLY RIGHT NOW THE CITY IS REALLY INSTALLING THOSE METERS THAT BELOW YOUR ACTUAL COST.

AND SO WHAT YOU CAN SEE THE DIFFERENT CITIES, YOU KNOW, MCALLEN IS ABOUT I BELIEVE IT'S LIKE 750 RIGHT NOW.

HARLINGEN IS 435.

CORPUS CHRISTI IS ABOUT 600.

AND SO, PART OF THE STUDY WAS TO PROVIDE A RECOMMENDATION TO YOU ALL.

AND YOU CAN DO THIS, YOU KNOW, IN ONE TIME, OR YOU CAN DO IT OVER THREE YEARS, DEPENDING ON HOW YOU WANT TO ADJUST IT.

BUT WE'RE RECOMMENDING THAT WITH LOOKING AT THE COST, WHAT IT TAKES FOR STAFF TO INSTALL, PLUS THE OVERALL COST OF THE, YOU KNOW, CITY INFRASTRUCTURE.

AND WE'RE RECOMMENDING THAT RESIDENTIAL TAP FEE GO FROM 325 TO 650.

I APOLOGIZE, THERE'S A TYPO ON THE ONE AND A HALF THAT SHOULD HAVE BEEN 1800, NOT 2800.

AND BASICALLY, THIS WILL HELP COVER YOUR COSTS AND PROVIDE A LITTLE CUSHION.

SOME INSTALLS ARE HARDER THAN OTHERS.

AND TAKE A LITTLE BIT MORE TIME.

AND THIS WOULD BASICALLY MAKE SURE THAT YOU'RE RECOVERING YOUR COST AND DEFINITELY RECOMMENDED IT TO INCREASE.

IT HASN'T INCREASED EITHER, ALSO FOR QUITE A WHILE.

SIR, COULD YOU REPEAT THE TAP FEES FOR THE CITIES? BECAUSE IT'S MISSING FROM OUR PRINTED OUT PAPER.

WHAT WAS MCALLEN'S? MCALLEN'S. ON THE GRAPH, YOU CAN SEE IT ON THE GRAPH.

IT'S ABOUT, $775.

755. YEAH. THAT'S RIGHT.

HOW DO YOU SEE IT? OH, I GOT YOU.

HEY. ALL RIGHT.

YOU'LL BE HAPPY TO KNOW I'M HERE TO OUR VERY LAST SLIDE HERE.

I JUST WANT TO SUMMARIZE THIS PRESENTATION AS FOLLOWS.

YOU KNOW, I'VE BEEN DOING THIS FOR 35 YEARS NOW.

I'VE DONE HUNDREDS OF THESE KIND OF RATE PRESENTATIONS AROUND THE, AROUND THE UNITED STATES.

AND I KNOW IT'S NOT AN EASY DECISION TO MAKE.

I'VE NEVER HAD RATEPAYERS OR COUNCIL MEMBERS COME UP TO ME AFTER A PRESENTATION AND SAY, THANK YOU FOR RECOMMENDING RATE INCREASES.

WE REALLY APPRECIATE IT.

BUT I HAVE HAD PEOPLE SAY TO ME, I DON'T LIKE IT, BUT I UNDERSTAND WHY IT NEEDS TO BE DONE.

WATER COSTS ARE GOING UP ALL OVER THE COUNTRY.

WATER IS A PRECIOUS AND DIMINISHING NATURAL RESOURCE.

CITIES HAVE A RESPONSIBILITY NOT JUST TO PROVIDE WATER, BUT TO PROVIDE IT AT A LEVEL OF SERVICE THAT IS ACCEPTABLE TO THE COMMUNITY.

[00:35:01]

THE RATE PLANS THAT WE'RE REPRESENTING AND PRESENTING TO YOU TONIGHT, UNDER EITHER SCENARIO ONE OR SCENARIO TWO, WILL ENABLE THE UTILITY TO FULLY FUND NOT ONLY ALL OF YOUR OPERATING COSTS, BUT A CAPITAL IMPROVEMENT PLAN THAT WILL ENSURE THAT YOUR SYSTEM WILL MAINTAIN A SUPERIOR LEVEL OF SERVICE.

FURTHERMORE, IF YOU IF YOU IMPLEMENT THIS PLAN, IT WILL ENABLE THE UTILITY TO OPERATE SELF-SUFFICIENTLY 30 TO 40% OF UTILITIES IN THE UNITED STATES CHARGE RATES THAT DO NOT COVER THEIR COSTS, WHICH MEANS THAT FOR MANY, FOR THOUSANDS OF CITIES AROUND THE COUNTRY, THEIR GENERAL FUNDS ARE SUBSIDIZING THEIR WATER AND SEWER FUNDS.

YOU'RE NOT DOING THAT.

THIS RATE PLAN WILL ENSURE THAT YOU WILL NOT HAVE TO DO THAT IN THE FUTURE.

IT WILL.

IF YOU ADOPT THIS PLAN, IT WILL ENABLE YOU TO CONTINUE TO PROVIDE A SAFE DRINKING, SOURCE OF DRINKING WATER.

IT WILL ENABLE YOU TO EFFECTIVELY TREAT, TREAT YOUR WASTEWATER AND PROTECT THE ENVIRONMENT.

WE STRONGLY RECOMMEND THAT YOU CONSIDER PUTTING THIS PLAN IN.

I KNOW IT'S NOT AN EASY THING TO DO, BUT I THINK THAT FOR THE IT WOULD SERVE THE BEST INTERESTS OF THE COMMUNITY AND WILL ENABLE YOU TO BALANCE RATES THAT WILL CONTINUE TO BE SIGNIFICANTLY BELOW THE STATE AVERAGE, WITH REVENUES THAT WILL ENABLE YOU TO FUND ALL OF YOUR OBLIGATIONS.

I REALLY APPRECIATE THE TIME TONIGHT.

I'D BE HAPPY TO ANSWER ANY QUESTIONS YOU HAVE AT THIS TIME.

ALL RIGHT. WELL, THANK YOU, SIR, VERY MUCH FOR YOUR PRESENTATION AND FOR YOUR WORK TO PROVIDE THIS TO US.

BUT MY WATCH IS 541, SO WE GOT ABOUT 19 MINUTES COUNCIL FOR QUESTIONS.

SO I JUST WANTED TO PUT THAT OUT THERE.

I KNOW IT'S VERY IMPORTANT, BUT WE DO HAVE A SCHEDULED COUNCIL MEETING RIGHT AFTER THIS.

I WANT TO BE RESPECTFUL OF EVERYBODY'S TIME.

SO I'LL OPEN IT UP AT THIS TIME, FROM COUNCIL, ANY QUESTIONS THAT ANYBODY MAY HAVE.

WE DID HAVE A.

AN OVERVIEW. WASN'T THIS DETAILED I THINK, AT OUR LAST COUNCIL MEETING.

SO THIS IS A LITTLE BIT MORE THOROUGH AND MORE INSIGHTFUL.

AND AND AGAIN, THANK YOU TO THE COMMITTEE, THE TASK FORCE THAT HAS BEEN WORKING ON THIS.

SO AT THIS TIME I'LL OPEN IT UP TO COUNCIL.

GO AHEAD I HAVE A QUESTION FOR CARMONA.

AND MAYBE IT'S OUR FINANCIAL ADVISER, TOO, BUT, SO THE SCENARIO GAVE THE 260 MILLION OVER THE NEXT TEN YEARS, WE'RE GOING TO HAVE TO FINANCE AND THEN GIVE TWO SCENARIOS SCENARIO ONE AND SCENARIO TWO.

SCENARIO TWO GIVES US MORE MONEY UP FRONT.

OUR, YOU KNOW, OUR OUR, THE INFRASTRUCTURE REPAIR AND MAINTENANCE AND ALL THAT STUFF WE NEED TO DO.

ARE WE? DO WE NEED TO DO IT UP ON THE FRONT END, OR ARE WE GOOD TO SPREAD IT OVER THE TIME, OR DO WE TOWARDS THE BACK END? I MEAN, SOMEWHERE IN THERE THAT YOU'RE GOING TO SAY, OKAY, WE'RE.

NOT SURE IF YOU'RE GOING TO FOLLOW ME OR NOT, BUT SOMEWHERE WE SAY, OKAY, WE NEED 50% DONE NOW AND 50% DONE AT THE END.

THAT WOULD BE NICE. SPREAD OVER.

ARE WE LIKE 80% BEHIND? SO WE NEED THE MORE YOU NEED THE ADDITIONAL FUNDING NOW SO WE CAN CARRY OURSELVES TO THE SLOPE.

YES. OR SO.

WHAT I CAN TELL YOU IS THAT WE ARE, WE ARE BEHIND, RIGHT.

LIKE, ON, ON SOME OF THESE IMPROVEMENTS.

SO, IF WE WERE TO GET THE, THE, THE, THE REVENUE UP FRONT, WE WOULD BE ABLE TO JUMP, FASTER ON THESE, ON THESE PROJECTS THAT WE GOT TO DO. ALSO ANOTHER THING TO TAKE INTO CONSIDERATION IS LIKE, YOU KNOW, LIKE DAN MENTIONED WAS THAT, YOU KNOW, AS ANY OTHER SYSTEM, IT TAKES, IT TAKES, IT TAKES, TAKES WHERE ON, ON THE INFRASTRUCTURE.

RIGHT. SO YOU HAVE SEWER LINES, THAT NEED TO BE REPLACED.

RIGHT. THEY'RE THEY'RE AGING.

ALSO WATER LINES, WATER PLANTS, I MEAN, THIS INFRASTRUCTURE IS RUNNING 24 OVER SEVEN.

AND, AND WE DON'T WANT TO, THERE'S ALWAYS GOING TO BE COMPLICATIONS WHERE SOMETHING BREAKS DOWN, RIGHT? IT'S GOING TO BE INTERRUPTION SERVICE.

BUT, WE, WE WANT TO BE ABLE TO DO IS PROVIDE A VERY RELIABLE, YOU KNOW, SYSTEM TO, YOU KNOW, TO KEEP HAVING THAT RELIABLE SYSTEM AND PROVIDING GOOD SERVICE TO OUR CUSTOMERS.

BUT I GUESS, YOU KNOW. I GUESS WHAT I'M TRYING TO TRYING TO SAY IS WE HAVE A SYSTEM THAT'S IN SOME TYPE OF, YOU KNOW, IT'S, LIFE EXPECTANCY.

IT'S SOMEWHERE IN IT'S LIFE EXPECTANCY, AND, YOU KNOW, SOMEWHERE IN THAT LIFE EXPECTANCY.

WE NEED TO PUT AN INFLUX OF CAPITAL NOW TO FIX IT.

OR IT'S, YOU KNOW, WHERE THE DEPRECIATION OR LACK OF BETTER WORDS, THE INFRASTRUCTURE IS GOING TO WEAR OUT OVER TIME.

WHERE ARE WE AT IN THAT? BECAUSE THAT'S WHERE BECAUSE I'M PRETTY SURE MOST OF THE COUNCIL LIKE ME, WHO HAD RATHER SPREAD THIS OVER TIME.

BUT I ALSO UNDERSTAND THAT MAYBE I CAN'T WAIT THAT LONG AND I HAVE TO PAY THE BILL TODAY, AND HOPEFULLY I CAN SMOOTH IT OUT IN THE BACK.

AND THAT'S WHERE I'M GOING TO HAVE TO TAKE THE ADVICE FROM YOU AND SEE, WHERE IS OUR STRUCTURE? WHERE ARE WE AT? I THINK I THINK WHAT YOU'RE ASKING IS WHAT IS OUR CURRENT CAPACITY? WELL, NOT. AND ARE WE BEHIND? ARE WE. BECAUSE WE GOTTA COME.

SOMETIMES THE CAPITAL IMPROVEMENT IS TO, YOU KNOW, YOU GOT AN OLD CLAY CLAY PIPES AND THEY'RE CRUSHING THEM, FALLING APART, YOU KNOW, WHERE ARE WE AT? AND SAY, YOU KNOW, THIS SECTION SHOULD BE REALLY TORN UP AND REMOVED BEFORE IT COLLAPSES.

[00:40:04]

SO WHERE ARE WE IN THAT? IN THE NEEDS AND THE NEEDS BECAUSE, LIKE, COUNCIL MEMBER DAVID WHITE HAD MENTIONED IS THAT WHENEVER WE DO HAVE AN EMERGENCY, YOU KNOW, WE. CONTRACTORS TEND TO UPCHARGE BECAUSE THEY KNOW IT'S AN EMERGENCY.

SO, YOU KNOW, INSTEAD OF PAYING 100, MAYBE 100,000 TO REPLACE AN ENTIRE LINE, YOU KNOW, WE'RE GOING TO END UP PAYING MAYBE THE SAME OR A LITTLE BIT MORE FOR JUST DOING A, YOU KNOW, JUST THE REPAIR TO GET BACK THAT SECTION BACK INTO SERVICE.

I THINK COUNCIL MEMBER LET ME JUST STATE, I THINK, I TALKED TO OUR CITY MANAGER FINANCIAL ADVISOR ABOUT THIS ON THE LIST.

CIP LIST. I THINK THAT'S WHAT THEY HAVE IN PLACE.

THEY HAVE OUTLINED IN HERE ALL THAT NEEDS TO TAKE PLACE.

BUT I THINK WHAT WE'RE MISSING HERE, AND I THINK THAT'S WHAT YOU'RE ASKING, IS THE TIMELINE OF, YOU KNOW, PRIORITIZING THESE, OF WHEN WE'RE NEEDING TO DO THESE THINGS.

SO OBVIOUSLY, THE PLAN RIGHT NOW, PRESENTED BY THE CONSULTANT, IS TO FUND ALL OF THIS, RIGHT AT THIS TIME OVER THAT PERIOD OF TIME.

AND SO, SO I THINK THAT'S SOMETHING THAT WE NEED TO PROBABLY GET FROM STAFF IN TERMS OF SOME SOMEWHAT OF A TIMELINE AS TO WHEN REALISTICALLY, WE'RE GOING TO DO THIS BECAUSE I WILL STATE AND I ADVISE OUR CITY MANAGER ONE THING THAT I DO WANT TO BE MINDFUL AND I'LL LET VICE COUNCIL IS I JUST WE JUST NEED TO BE RESPONSIBLE HOW WE GO ABOUT IMPLEMENTING THIS. YOU KNOW, THE CITY, ON THE PROPERTY TAX SIDE, AS YOU ALL KNOW, YOU KNOW, THERE HAVE BEEN BONDS ISSUED IN THE PAST WHERE WE WEREN'T EVEN READY TO ISSUE BONDS, BUT YET WE WERE ALREADY COLLECTING, YOU KNOW, THOSE TAXES FROM OUR RESIDENTS.

SO IF ANYTHING, MY MY THING IS I WANT TO AVOID THAT.

I WANT TO MAKE SURE WE'RE PREPARED TO DO SOME OF THESE PROJECTS INSTEAD OF JUST CHARGING OUR RATEPAYERS THESE FUNDS THAT WE DO RESPONSIBLY, SO THAT WE HAVE A TIMELINE OF WHEN WE'RE GOING TO DO THESE THINGS.

I KNOW WE NEED TO HAVE THE ADJUSTMENTS MADE, BUT WE NEED TO PRIORITIZE SOME OF THESE THINGS.

IF YOU SEE SOME OF THESE ITEMS ON THIS LIST, I MEAN, THERE'S GOING TO BE PROPERTY THAT'S GOING TO NEED TO BE BOUGHT.

THERE'S GOT TO BE AN ENVIRONMENTAL DONE.

THERE'S GOT SOME OF THESE PROJECTS.

WE PROBABLY CAN'T EVEN START THEM UNTIL THREE YEARS FROM NOW.

RIGHT. JUST IF I MAY, MAYOR.

YEAH. LET ME JUST FINISH MY THOUGHT.

SO. SO, COUNCIL, I JUST WANT TO ADVISE YOU OF THAT, THAT WE JUST NEED TO KEEP THAT IN MIND.

RIGHT. BECAUSE WE CAN ADOPT THE PLAN LIKE THIS AND SAY, ALL RIGHT, THIS WILL FUND EVERYTHING.

BUT I REALLY DO THINK WE NEED TO LOOK AT A TIERED APPROACH TO SEE, ALL RIGHT, WHAT DO WE NEED TO FUND RIGHT NOW FOR WHAT WE'VE ISSUED BONDS FOR BECAUSE WE'RE BEHIND.

RIGHT. SO WE'VE ISSUED SOME DEBT LAST YEAR IF I REMEMBER, OR THIS YEAR RATHER THE, THE CIP LOAN.

RIGHT. AND THEN THE WATER DEVELOPMENT.

RIGHT THAT WE ALSO ISSUED.

SO THOSE AND I THINK THAT'S WHAT WE'RE TALKING ABOUT.

WE NEED TO TAKE CARE OF THOSE BECAUSE WE'VE ALREADY ISSUED DEBT FOR THINGS THAT WE'RE ALREADY NEEDING TO DO.

AND THEN THE NEXT MAYBE WAY TO SEE THIS IS ALL RIGHT.

WHAT DO WE NEED TO PRIORITIZE HERE SO THAT, IT MAY BE TWO, 60 MILLION? I DON'T KNOW, MAYBE 200.

MAY BE A LITTLE BIT MORE.

BUT WHAT IS IT? SO THAT THEN WE CAN PROPERLY PLAN AND ALSO USE A TIMELINE TO KNOW.

ALL RIGHT, WHEN ARE WE ACTUALLY GOING TO DO THESE PROJECTS? BECAUSE EVEN UP TO NOW THAT THOSE BONDS THAT WERE ISSUED, I THINK THEY WERE ISSUED IN 2018, IS THAT CORRECT, OR 2019? I BELIEVE SO, YES. AND WE'RE STILL WORKING ON THOSE PROJECTS.

RIGHT. SOME OF THOSE. SO I JUST WANT COUNCIL TO KEEP THAT IN MIND THAT.

WHATEVER WE'RE LOOKING TO DO, THAT WE DO IT IN A WAY THAT, YOU KNOW, WE WE DO A PROPER BALANCING, OKAY, WE NEED TO ADDRESS THESE NEEDS.

BUT AT THE SAME TIME, I DON'T WANT TO HAVE TO HAVE THE RATEPAYERS HAVE TO BE PAYING FOR THINGS THAT WE'RE NOT PREPARED TO DO AT THIS TIME.

YES, SIR. IF I MAY, TOM RYAN, ASSISTANT CITY MANAGER.

AND THAT IS CORRECT, MAYOR.

OUR CAP OR WHAT YOU HAVE IN FRONT OF YOU IS ACTUALLY FROM OUR OUR FIVE YEAR CAPITAL IMPROVEMENT PLAN.

EACH PROJECT IS BROKEN DOWN BY YEAR IS THE ONES THAT WE ARE NEED TO IMPROVE ALREADY AS, AS WE HAVE.

THAT WAS PRESENTED ALSO IN THE BUDGET, BUT I'M WILLING TO SHARE THAT WITH YOU AGAIN.

SO YOU CAN SEE HOW WE DIVIDED EACH OF THOSE PROJECTS UP PER YEAR.

SO THAT'S EXACTLY WHAT, OUR CONSULTANTS DID REVIEW THAT AS PER YEAR.

SO IN SCENARIO ONE, IT WOULD BE ABLE TO ADDRESS THOSE PROJECTS.

AND SCENARIO ONE, AFTER THE FIRST YEAR WE CAN START WORKING ON THOSE OTHER PROJECTS, THEN BY YEAR AND SO FORTH.

ON SCENARIO TWO, I'LL LET, MISTER KNOW, TALK A LITTLE BIT ABOUT THAT.

ON ON WHAT SCENARIO TWO MIGHT DO FOR US AT THAT PORTION.

THERE, FOR THE RECORD, IS TRYING TO ACCOMPANY MY PARTNER, BOBBY BOBBY VILLARREAL.

I GUESS, ONE THING IS, AND I CONCUR WITH YOU ABOUT PROPER PLANNING, I'M GLAD YOU RECOGNIZE THE FACT THAT WE SOLD BONDS IN 23, IN 21.

AND WE HAVE TO CATCH UP TO MEETING THOSE OBLIGATIONS.

[00:45:01]

YOU GENERATE REVENUES WITH YOUR BUSINESS.

YOU HAVE EXPENSES OPERATING EXPENSES.

SO IN 22 UNAUDITED YOU HAD REVENUES OF ABOUT $21.7 MILLION.

OF THAT YOU SPEND ABOUT 15 MILLION.

SO YOU HAVE 6.7 MILLION, 6.6 OF WHAT WE CALL IN OUR BUSINESS NET REVENUES OR AVAILABLE TO PAY DEBT SERVICE.

WHEN YOU PUT ALL OF THE DEBT THAT WE'VE ISSUED.

INCLUDING THOSE CAPITAL LEASES THAT WERE INCURRED.

AND THOSE CAPITAL LEASES, THOSE WEREN'T.

THOSE DIDN'T HAVE BOARD.

TO OUR RECOLLECTION, ONLY THE COUNCIL ACTED UPON THOSE.

WILL WE ISSUE BONDS. DON'T WE NEED TO GO TO A STATE AUTHORITY TO KIND OF MAKE SURE WE WE GET CLEARANCE? I THINK THOSE CAPITAL LEASES WERE FUNDED FOR EQUIPMENT.

RIGHT. AND I DON'T KNOW IF THEY WERE DONE OFF A BALANCE SHEET WITH A BANK.

I THINK THEY WERE DONE WITH A BANK.

BUT BUT YOU DIDN'T HAVE TO GO THROUGH THE 2019 AND 2021, SOMETHING LIKE THAT.

AND SO WHEN YOU ADD ALL THOSE PAYMENTS, YOU'RE ABOUT 6,000,686 AND 2024.

SO THE UNFORTUNATE THING FOR UTILITIES, WHENEVER YOU BORROW MONEY FOR UTILITIES, YOU HAVE TO DO IT THROUGH WHAT WE CALL REVENUE BONDS. IT'S NOT LIKE WHEN YOU SELL CERTIFICATES OF OBLIGATION WITH PROPERTY TAXES WHERE IF YOU BORROW $1, YOU CAN LEVY A TAX AND YOU GENERATE THAT DOLLAR AND THAT'S IT.

WITH REVENUE BONDS, YOU HAVE TO ACTUALLY RAISE THE RATES, RAISE THE REVENUE A YEAR IN ADVANCE, AND PROVE TO THE LENDER THAT UNDER LAST YEAR'S REVENUES, YOU CAN PAY FUTURE DEBT OBLIGATIONS.

BUT WE'RE NOT WE WE CAN'T DO THAT.

WE'RE RIGHT NOW WE'RE BARELY MAKING THAT PAYMENT.

SO THE RATING AGENCIES STANDARD AND POOR'S AND FITCH HAVE YOU RATED AT A AA CREDIT? A DOUBLE A CREDIT EVEN THOUGH OUR LEGAL.

COVENANTS WITH BOND HOLDERS SHOWS AND SAYS THAT WE WILL COVER THE DEBT ONE AND A QUARTER TIMES.

AS MR. JACKSON HAS SAID TO YOU.

THIS RATE INCREASES WILL COVER THE CONTEMPLATED DEBT ONE A QUARTER TIMES IN ORDER TO KEEP THAT DOUBLE A RATING.

YOU GOT TO COVER IT AT ABOUT TWO TIMES.

SO VERY LIKELY WHEN THE AUDIT SHOWS UP HERE IN THE NEXT MONTH FOR 2022.

THOSE NUMBERS ARE NOT GOING TO BE AS STRONG AS WE EXPECT THEM TO BE IN ORDER TO KEEP THE AA RATING.

SO GOING BACK TO THE REPRESENTATIONS MADE EARLIER.

THE FACT THAT YOU HAVE $260 MILLION IN CAPITAL NEEDS, THAT'S ONE CONCERN.

BUT THE MOST COMPELLING CONCERN IS MAKING SURE THAT WE COVER.

THE CURRENT DEBT.

CAPITAL LEASES.

SUBORDINATED BONDS.

THE CIPOLLONE.

THE CIPOLLONE HAS ACTUALLY KEPT THIS CITY COUNCIL FROM DOING PROJECTS FROM THE OTHER BALANCE, FROM THE OTHER LEDGER.

WE CAN'T DO CEOS FOR GENERAL FUND PROJECTS BECAUSE WE WE TAPPED INTO THAT SIEVE, WITH TECH STOCK.

SO MY POINT IS, WHATEVER YOU DO.

DO IT AS AGGRESSIVELY AS YOU CAN.

SCENARIO TWO IS WHAT WE RECOMMEND TO YOU.

WE'VE DONE IT PRIVATELY WITH THE CITY MANAGER, AND I'LL DO IT TO YOU.

YOU KNOW PUBLICLY THAT WE NEED TO CAPTURE AS MUCH REVENUES AS WE CAN.

BECAUSE EVEN IF YOU DO THAT, I DON'T KNOW IF YOU'LL BE ABLE TO DEMONSTRATE WHAT WE NEED TO DEMONSTRATE AS QUICKLY AS WE CAN.

WITH THAT, I'LL STOP AND ENTERTAIN QUESTIONS YOU MAY HAVE.

ANYBODY ON COUNCIL? YEAH. SO MY QUESTION IS THE INCREASE IN RATE IS ONLY TO MAINTAIN, THE CURRENT WATER OR FUTURE WATER NEEDS AND NOT TO PAY THE LOAN. IT'S JUST TO MAINTAIN, AND NOT BE BELOW COST.

THE CONTRACT IS CONTEMPLATED TO PAY WHAT WE NEED TO DO.

AND ALSO PROJECTED INCREASES OR PROJECTED ISSUANCES OF BONDS.

WHAT'S WHAT'S VERY GOOD ABOUT IT ALSO HELPS OUR OUR CREDIT TO BE ABLE TO ISSUE THOSE BONDS.

THAT'S RIGHT. BECAUSE OF THE RATE.

THAT'S RIGHT. SO WHAT WHAT'S VERY GOOD ABOUT THEIR RATE STUDY IS THAT THE RATES THAT YOU WOULD IF YOU WERE TO ADOPT IT NEXT MONTH.

IT'S NOT AN AUTOMATIC.

IT'S NOT LIKE EVERY YEAR AUTOMATICALLY GOES UP.

UTILITIES HEAD.

AND THEN WE'LL COME BACK TO YOU AND SAY, HERE'S A PLAN TO ISSUE THE DEBT.

WE WILL KNOW FOR A FACT HOW THOSE REVENUES PERFORMED, HOW THOSE NET REVENUES PERFORMED.

SO IF THE NET REVENUES ARE NOT THERE, WE MAY HAVE TO MAKE ADDITIONAL ADJUSTMENTS.

THE FACT IS THAT THE PLAN OF EXECUTION ON THE TWO 60 WILL BE COMING BEFORE YOU.

[00:50:05]

EVERY YEAR TO TELL YOU.

HERE'S WHERE WE ARE.

REMEMBER THOSE YEARS YOU ADOPTED A YEAR AGO? HERE'S WHERE WE ARE.

HERE'S WHERE THE SIP IS.

MORE IMPORTANTLY.

WHERE ARE WE WITH THE 23 BONDS THAT WE SOLD EARLIER THIS YEAR? ARE THERE ANY BALANCES THERE THAT WE HAVEN'T SPENT IN ORDER TO MAKE THE PROJECTS THAT WE TOLD THE PUBLIC WE WOULD DO, THAT HASN'T BEEN DONE IN THE PAST.

THE MAYOR HAS CHALLENGED ALL OF US, INCLUDING CITY MANAGER, TO TELL US TO TELL YOU HOW WE'RE SPENDING ALL THESE FUNDS THAT WE'RE BORROWING FOR AND ARE JUST BORROWING FOR THE HECK OF IT.

FAIR. YEAH.

I DON'T FEEL RIGHT ASKING RATEPAYERS TO PAY SOMETHING THAT, YOU KNOW, WE STILL HAVE BALANCES FOR.

SO THAT TO ME, YOU KNOW, WE NEED TO REALLY LOOK AT THAT AND SEE.

BUT YEAH.

BUT GOING BACK TO I APPRECIATE AGAIN THE STUDY COUNCIL I THINK WHEN WAS THE LAST TIME WE DID A STUDY FOR THE CITY? DO WE KNOW. BECAUSE THAT HAS BEEN ISSUED AN ISSUE.

BUT THERE WAS NO ASSESSMENT DONE, NO STUDY.

SO, SO I WANT TO, THANK ADMINISTRATION COUNCIL FOR, FOR DOING THIS BECAUSE THIS, THIS IS THE ONLY WAY FOR US TO REALLY, PLAN ACCORDINGLY, YOU KNOW, AT THIS POINT.

YEAH. BUT THE WAY THIS WAS SET UP, WE IN THE PAST, THE ISSUE DEBT FROM THE REVENUES THAT WE WERE COLLECTING.

NOW, THE PROBLEM THAT WE HAVE IS WE'RE RUNNING OUT OF REVENUE.

TO ISSUE MORE DEBT.

WELL, NO PROBLEM IS THE WE CAN STAY WHERE WE ARE.

WE PAY, WE'LL PAY OFF ALL THOSE DEBTS, BUT WE JUST DON'T.

WE JUST DON'T GO ANYWHERE.

NO, BUT PART OF IT, PART OF IT, CHIEF.

BUT THE OTHER THING IS THE EXPENSES.

I MEAN, LOOK AT THE CAPITAL LEASES.

I MEAN, HOW IS THAT AFFECTING OUR ABILITY TO BORROW DEBT? RIGHT UNDER THE UTILITY FUND.

WELL, IT'S ABOUT 1,000,005.

SO IT'S I MEAN, AND THOSE ARE THINGS THAT DIDN'T GET BOARD APPROVAL.

IS THAT 1,000,000,005 IF YOU WERE TO USE 1,000,005 30 YEARS, THAT THAT PROBABLY WOULD HAVE GIVEN YOU ABOUT $20 MILLION OF CAPACITY.

RIGHT. WE CAN DO THAT RIGHT NOW.

OF THOSE CAPITAL LEASES WEREN'T DONE.

I'M JUST RIGHT.

JUST AND THAT'S OFF THE ON THE EXPENSE SIDE.

SO IT'S A REVENUE BUT IT'S ALSO ON THE EXPENSE SIDE.

AND I MEAN I THINK I MEAN YOU'RE PRETTY MUCH YOU'RE THE SAME I WANT YOU TOGETHER.

WHAT WE OUR OBJECTIVE IS TO MAKE SURE YOU UNDERSTAND WHAT WE ARE I THINK.

YOU'RE A STICKLER FOR PROCESS, AND I REMEMBER BEING AN ADVOCATE FOR RAISING RATES WITHOUT PROCESS BECAUSE WE NEEDED THAT LAST SUMMER.

WE'RE IN DECEMBER, AND AS I TOLD YOU EARLIER, MAYOR, WE JUST GOT TO DO SOMETHING RIGHT.

AND I'M GLAD YOU RECOGNIZE THAT THAT WE GOT TO DO SOMETHING.

NOW, THE QUESTION IS, WE DO WE JUST, AT LEAST FOR ME, I OWE IT TO THE RESIDENTS TO MAKE SURE THAT.

EXACTLY. YOU KNOW, ON THE PROPERTY TAX SIDE, YOU KNOW, THE WAY IT WAS DONE.

I JUST DON'T WANT TO DO THAT.

I WANT TO AVOID THAT.

YOU KNOW, I WANT TO MAKE SURE WE HAVE PLANS IN PLACE.

YOU KNOW, WE'RE GOING TO ISSUE DEBT.

WE'RE GOING TO ASK THE RATEPAYERS TO PAY MORE MONEY.

WE GOT TO HAVE PLANS TO SHOW FOR THAT, YOU KNOW, NOT JUST ISSUE DEBT.

AND THEN, YOU KNOW, PLAN LATER.

WELL, THIS YEAR IN 24 COMING UP, I THINK WE'RE LOOKING AT $10 MILLION MAYBE FOR UTILITIES.

YES. THE BIG FINANCING WON'T OCCUR UNTIL 25.

RIGHT. SO THIS WON'T BE THE LAST, FIRST OR LAST TIME THAT WE'LL COME BEFORE YOU AND DEMONSTRATE THE JUSTIFICATION FOR DOING WHAT YOU'VE ALWAYS BEEN AN ADVOCATE FOR.

SO, COUNCIL ANY.

ANY OTHER QUESTIONS? ARE YOU RECOMMENDING THAT WE TAKE ACTION ON THIS RIGHT AWAY FOR 2024? LIKE ALREADY START INCREASING THE RATES ON SCENARIO NUMBER TWO.

YOU I'M BIASED.

I'M A BANKER, SO I WANT YOU TO DO IT YESTERDAY.

BUT OBVIOUSLY, YOU KNOW, WE HIRE THE CONSULTANTS, WE HIRE YOU FOR QUICKER THE BETTER.

SO COUNCILMAN. YES THE QUICKER THE BETTER.

YOU TAKE ACTION ON IT AS SOON AS POSSIBLE.

BECAUSE, YOU KNOW, FOR BECAUSE IT'S GOING TO AFFECT US FOR WHAT, 2025, I GUESS.

NO QUESTION. 2024 AND 2025.

YEAH. THE QUICKER THE BETTER.

YES, SIR. AND AND THE RECOMMENDATION IS OPTION TWO.

CORRECT. THAT IS CORRECT. THAT'S CORRECT.

THANK YOU. THANK.

ANYBODY ELSE? ANY OTHER QUESTIONS? I WANT TO THANK YOU, SIR, FOR THE PRESENTATION.

THIS IS VERY, VERY HELPFUL.

I APPRECIATE ALL THE THOROUGH BACKGROUND.

PROVIDED. AND JUST FOR THE PUBLIC'S SAKE, THIS IS, WHAT I HAVE HERE IS ONLINE.

IS THAT CORRECT? THAT IS CORRECT.

ANYBODY THAT HAS ACCESS.

SO WHAT IS THE NEXT STEPS HERE? SO WE WERE LOOKING FOR YOUR DIRECTION ON WHICH SCENARIO YOU WANT US TO, PROPOSE FOR YOUR, FOR OUR NEXT MEETING, TO BRING IT BACK IN TYPE OF AN ORDINANCE OR AN ADOPTION, FOR THAT, AS WE DID IN LAST MEETING WHERE WE GAVE THE PRESENTATION, WOULD GIVE YOU THE OPTION WHEN TO START IF WE APPROVE THE NEW RATE, IF WE WANT TO GIVE A GRACE PERIOD. WE I REALLY, REALLY WOULD LIKE TO DO SOME PUBLIC OUTREACH.

AT FIRST, BEFORE WE GET THAT AND THEN WORK ON A GRACE PERIOD TIME, IF WE ADOPT A NEW RATE.

SO I AM SEEKING DIRECTION, FOR WHICH SCENARIO YOU WOULD LIKE US TO LOOK FORWARD TO AND THEN PROPOSE IT BACK TO YOU ALL ON THE NEXT MEETING FOR ADOPTION.

OKAY. ANY SUGGESTIONS FROM COUNCIL?

[00:55:02]

RIGHT. BUT WHAT ABOUT THE PROCESS? I AGREE WITH SOME PUBLIC OUTREACH.

I THINK IT'S IMPORTANT WE ADVISE, I CAN COME UP WITH A TENTATIVE SCHEDULE, FOR YOU AT OUR NEXT MEETING, TO HAVE.

AND THAT WAY I COULD WORK WITH DAN AND WITH MR. HINOJOSA ON HOW IT'S GOING TO WORK.

AND I KNOW WE'RE RUNNING OUT OF TIME, BUT I WOULD ALSO LIKE TO HEAR FROM THE TASK FORCE AND, WHAT THEY HAVE TO SAY.

YEAH. AND IN THAT PUBLIC OUTREACH, I DO WANT TO SAY ALSO IN THERE INCLUDED FOR US TO BE MEETING WITH SOME CIVIC GROUPS AND JUST LETTING THEM KNOW WHAT WE'RE TRYING TO DO HERE, BECAUSE I GUESS THAT'S IMPORTANT.

COMMUNITY JUST NEEDS TO KNOW WHAT THIS IS AND WHAT WE'RE DOING.

SO. YES, SIR. GOOD AFTERNOON, IVAN GARCIA WITH RIO DELTA ENGINEERING.

YES. LIKE MR. ROSA WAS MENTIONING, WE AS A GROUP, AT LEAST ON MY PART, WE WERE LEANING TOWARDS SCENARIO TWO.

RIGHT. AND WE AGREE WITH TRYING TO IMPLEMENT THIS AS SOON AS POSSIBLE BECAUSE OF THE INFRASTRUCTURE NEEDS.

RIGHT ON OUR END FROM THE ENGINEERING SIDE, WE SEE IT THAT WAY.

SO, THAT'S OUR RECOMMENDATION.

ALL RIGHT. THANK YOU. OH.

MARCANO WITH SUPREME ENGINEERING.

THANK YOU FOR HAVING ME ON THIS.

ON THIS BOARD.

AND LIKE MISTER, MISTER GARCIA MENTIONED, I AGREE AS A AS AN INDIVIDUAL, AS A RESIDENT FROM EDINBURG, THAT, THIS IS A MUCH NEEDED RATE INCREASE, AND WE NEED THIS NOW, I THINK I THINK WE ALL AGREE AS A GROUP THAT WE'RE LEANING INTO SCENARIO TWO AS WELL.

CHUCK SALVI. I'M HERE AS A CITIZEN AND WE ALL DO AGREE THAT SOMETHING NEEDS TO BE IMPLEMENTED QUICKLY, AS SOON AS POSSIBLE.

FROM THE TAXPAYER CITIZEN'S PERSPECTIVE, I TEND TO LEAN TOWARD SPREADING IT OUT A LITTLE MORE EVENLY AND NOT UP FRONTING IT.

IF THE CITY COULD DO THAT.

BUT WE UNDERSTAND THE IMMEDIATE NEED, OF COURSE, TOO.

SO THANK YOU.

YEAH. THE OTHER THING I WOULD LIKE TO SEE, THANK YOU.

THANK YOU ALL SO MUCH FOR SERVING AND YOUR ADVICE AND FEEDBACK.

IS, THE TIMELINE ON EACH OF THESE PROJECTS? WE JUST I'D LIKE TO GET A SENSE OF, YOU KNOW, WHEN WE'RE LOOKING TO DO THESE THINGS, SOME KIND OF PROJECTED SCHEDULES.

I THINK THAT WOULD BE. YES, SIR.

YES, SIR. WE CAN DO THAT WITH OUR CURRENT CIP.

ALL RIGHT. IF THERE'S NO OTHER COMMENTS.

DO I HAVE A MOTION TO ADJOURN THIS MEETING? SECOND, A MOTION A SECOND.

ALL IN FAVOR, PLEASE RAISE YOUR RIGHT HAND.

ALL OPPOSED? WE'RE ADJOURNED FOR OF THIS WORK SESSION AGENDA.

WE'RE GOING TO START THE COUNCIL MEETING MOMENTARILY.

* This transcript was compiled from uncorrected Closed Captioning.