Okay, good morning. I think we've got a quorum. Welcome to the city council bond and uh budget workshop. I will call us to order and turn it over to our city management team. Christian's going to kick us off, but um I hope you had your coffee. We only have 105 slides that we're going to try to run through here. Um, since the council's going, we have our break next in July. This is the last work session. So, we're trying to get as much in as we can. You can thank Jay because it was like 155 slides till Sunday and he was like, "This is too long." So, um, okay. Good morning. Thanks for joining us for combined budget and bond work session. I'm Christine Simmons with the Fort Worth Lab. We have a tight agenda today, so I'm just gonna kick us off quickly. Um, just a reminder of where we are in the budget process. So here in mid June um the departments have just sort of presented their proposals and recommendations to the city management team last week. So they heard all those as a group for the first time. So our team in the Fort Worth lab will continue to work with the departments and city management through the rest of June and July to get us to the recommended budget in August. So we still have a ways to go. Um but as you know with these early work sessions, we like to bring you along the way on some of the big topics where we need feedback. One of those topics is fees and rates. So the city has a number of fees that it levies for a variety of purposes. The fees and rates we're talking about today are really like the big rock fees that you think about like general population. So water, waste, water, storm water, um environmental and solid waste. And then we'll talk about streets as well because many of you wanted to talk again about a dedicated funding stream for streets. So those are the four fees and rates topics we'll talk about in the work session today. Um we'll have a minute to talk about budget responses if you have questions and then we'll move into bond. So really quickly just for level setting, this is a current snapshot in that first column of the fees we're talking about today, fees and rates. I try to say both um uh in the current fiscal year. So this is a typical Fort Worth household and how the fees stack for them. Um so you'll see water and storm water or storm water at the bottom in purple and then you see water and wastewater. Um and then you won't see orange for street maintenance um until you get to the Austin bar. They're the only the only city on this particular chart that that has a street maintenance fee. Um so right now Fort Worth has lower combined resident charges than Dallas and with Austin. We don't know what everybody will propose for next year, even including us because again we're early in the process. But this is just sort of context. So as you start to see some numbers and figures today in the deck, you'll know sort of how we how we compare as of now. So with that, I'm going to start with environmental. O going to invite Pam Rambo Saxon who's their very new assistant director doing this presentation today um to talk about solid waste and environmental good morning mayor member city council I'm going to give my team members chance to introduce themselves also here to support me before I get started good morning good morning mayor and council Jim Keiesel assistant director environmental services over solid waste and Wendy Turpin and I have the environmental quality and health sections And thank you for that introduction, Christian. I am Pam Rainbow Sexton, the new assistant director for the business support division of environmental services. Um, today, as part of the 2026 budget development process, I'm here just to start the conversation of many to come about the solvency of the solid waste and environmental protection funds. Today's presentation is meant to lay the groundwork with the history and the challenges that prompt us to recommend rate increases and fee increases for the funds. But this is also at the same time a chance for us to acknowledge the fact that we understand having a safe, attractive, and clean Fort Worth is a priority for this council and this city manager. And we know how important it is for the residents and the business of community, but also because of the impact it has on the hundreds and thousands of visitors we get every year, which Val reminded me is evidenced in the cleanup efforts that are already underway and planned to come for the 2026 FIFA World Cup. So, quickly, the Environmental Protection Fund is a feebased special revenue fund. It supports the regulated environmental quality programs, projects, and services that are designed to address air, land, water pollution, and are aimed at improving public health, welfare, and safety. We do that through mitigation, remediation, and investigation efforts with the programs you see on the slide. These programs are also helped help ensure that the city and the community achieve all our local, state, and federal environmental rules and regulations. Then solid waste fund, that's an enterprise fund that is uh that provides trash collection and disposal, recycling, and other related services to ensure that the city has consistent, reliable solid waste options. It's collected on a rate for service basis. It's worth noting that we have a diversionbased solid waste system aimed to encourage waste reduction, reuse, recycling, and composting. Um, what's also not mentioned on this slide, but as part of the solid waste fund is the operations of the city's southeast landfill, the sweet stripper program, and support for roadway maintenance through the annual solid waste fund transfer to transportation and public works from fees collected from haulers. So to start with the environmental protection fund when it was established the original rates for the EPF were approximately 50 cents. So what I'd like to draw to your attention on this slide is that in its 29-year existence the rate the fees for the environmental protection fund have only been increased once. That was in 2003 2003 23 excuse me. Um, at the current rates and estimated account numbers, the environmental protection fees are expected to generate between 16 and 17 million in fiscal year 2025 without a rate increase. The challenge that creates is that the current capital needs for heavy duty equipment in particular continue to go unmet. And while the current service needs are being met, there's no capacity for increased services or increased demand on current services or to support other related programs like the good naturatured green space initiative. It's also increasingly difficult to address remediation for spills and releases that are often unexpected and can be very costly. To address those challenges, staff is recommending a varied rate increase across all account categories. For residents, $1.50 and nonprofit 75, bringing those into line at $3 per month. For commercial and industrial, a $5 increase each, bringing those to 35 and $110 per month. This increase is estimated to generate an additional 8.8 $8 million to start addressing those challenges that were identified, particularly with heavy equipment and unforeseen mitigation. In addition, it also allows for increased initiatives towards the clean, safe and attractive city efforts, allows for comprehensive and resiliency planning and other capital needs like wash bays for the sweepers and storage. This increase is expected to be sufficient to meet the identified needs for the immediate future. And so growth in collections beyond 2026 will be the result of the growth in residents and other accounts. So with that, I'll switch to the solid waste fund. So many of you will remember for many years trash collection and disposal has Oh, sorry. Pen, go ahead. I'm sorry. It seems like that the residence has the greatest percentage of the increase when I go back and look at from 150 to three uh dollars and then commercial goes from $30 to $35. So what was the thought process that went into that? Wendy, I'm going to let Wendy help me on that. Okay. Currently with the residential rates, they are the largest provider of fees. They pay the there's more of them and the fee is smaller. And so at this point in time, we felt that it was the most appropriate. It's hard to say that without getting into all the details. I apologize. um we tried to spread the proposed rates across the largest variety of businesses and our residents. So what we did there is everything that the environmental protection fund addresses all of the residents. Everything that we do from all of our prevention and all of our remediations addresses the entire city of Fort Worth. So, we wanted to make sure that the entire city of Fort Worth had an opportunity to put some funds into this program. That's the best way of saying it. Forgive me for my stutter there. Also, if you look at the city geographically, residential is the majority of the city. Yet, the the commercial is when this was set was set as a much higher rate to kind of make up the difference. And so, uh, there's been basically a subsidy going on for all these years. And so, the this is a this is just a proposal at this point. We want to get feedback from the city council on what things we like and don't like. So, when I put together the actual recommendations, we can bring back back something. But that that's really in essence that the the residential side's been subsidized by the rest of them in that. Well, that's good to hear. I just want to make sure that when we look at these things that we are resident focused that we realize that uh a lot of them while I can afford $3, uh there are some families that this may you know impact their budget. It sounds silly but I just want to be sure we're focused on making sure that when we look at these things we make sure that businesses pay their fair share. And that's why we showed that first slide showing when you stack them all on top of each other and you'll see more of these coming forward. Yeah. Well, we're going to be taking all that into account as we go forward. Thank you, Jay. Okay, so now switching to the solid waste fund. Um so again for many years trash um collection and disposal was an operation of the city until that changed into a contractor operated operation in um in 2003. So again 19 years 19 years since a rate increase. So the challenge that creates is that the rates do not currently cover the cost of the residential solid waste programs and supplemental revenue has to be used to deliver those services. The supplemental revenue we're talking about is approximately $20 million from landfill lease and fees and that's anticipated to cease with the closure of the landfill in around 2037 for this fund. Also, large capital investments such as new landfill or transfer stations aren't currently included in funding formulas. So, intentional savings and other revenue will be needed to address long range solutions as well as other market drivers like the distance garbage will have to travel once the landfill closes and the cost of potentially having to contract with a for-profit vendor like the commercial garbage market. um and the consideration that contractual rates for trash collection and disposal continue to increase year-over-year. So with transparency in mind, staff has worked to identify that gap between the current rates and the true cost of services and then address that with an incremental fund management strategy. We're avoiding any single significant balloon rate increases to the residents and addressing the long-term solveny needs for the fund. An important part of the strategy is also to implement stakeholder review of the annual evaluation process for future adjustments and to continue to have these conversations with you and the community. In this slide, you'll see that the current gap ranges from 68 $6.84 84 to 1245 increasing incrementally as the cart sizes increase. As far as rate increases for solid weight rate payers, we've also got a varied tiered system that continues to support that diversion strategy. The rate increases for residential is $1.25 25 taking it to a total of 1375 for this for residential 32gallon excuse me for the 64gallon $2 taking it to 1950 for the 96gallon $3 taking it to 2570 and what you see on your screen for additional carts is a blended rate because it's actually dependent on the specific cart size that you select for your additional cart. We also have a small set of commercial accounts. Those are primarily businesses that have been converted from residents and so their solid waste needs mirror those of residents. Excuse me if I can interrupt you for a second. Um, looking at this right there and I don't see a breakout or breakdown. These are trash cart rates. Trash cart rates. Yes, sir. Okay. I don't know if this is part of your presentation later u but what are recycling trends showing your staff that is is it still costing more to recycle? General question. Let Jim answer that. Good morning. Uh Jim Keasel, assistant director environmental services. Right now, um recycling up until about August of 2022 was a positive for us. Since August of 2022, it's been a net negative for us. However, that net negative has decreased. The last three or four months, we're very close to breaking even. Um, we still have a lot of challenges in the city with our recycling contamination. Our current recycling trends are we're ballpark about 27% contamination and we will be coming back to council at the first, I believe, first work session in August to discuss recycling as well. So, we can further elaborate on that. Okay. And then just one follow-up question. Are we still offering both sizes of recycling bins? Yes, we are. We offer the 64 and the 96. Okay. And then and then last, as you know, last October, we grandfathered the 32 gallons. no longer offer the 32 gallon and and trash or recycling for new residents. Existing residents can still have the 32 and the the 32 size. Okay. And it's still a cost-effective proposition to have the two sizes offered. Uh that's something that we're evaluating. I would say that's up for debate. Okay. Thank you, Council Hill. And just to clarify on the proposed 2026 rates, we're still operating a deficit for solid waste. That's correct. Okay. So, yeah. So, basically on with the when I looked at the solid waste fund and Cody who's out not here um met with me with Val went through it. We're in a crossroads. We're 11 and a half years away from our landfill being full. We've been subsidizing the solid waste fund with landfill funds. So in essence, we haven't been putting stocking dollars away to find a new landfill that we're going to need in 11 and a half years. And so we're we're at a crossroads where we need to make up that subsidy. And we need to decide and it'll probably happen we'll be bringing that forward to you in the next series of of meetings in the next 12 to 18 months. The city's going to have to decide whether we want to move forward to find a new landfill, maybe partner with somebody for a landfill or are we going to turn to a city that just pays to go to somebody else's landfill? And you know, both are expensive. Of course, if you have your own landfill, you kind of control your destiny more. Uh but there there's some studies going on right now to determine what makes the most sense. And so we want to bring that back, but we can't keep kicking the the can down the road from my perspective. And so we need to take these steps. I also know it's not feasible to just try to increase it that full amount that you saw on that first slide on what the gap is. And so this phased in approach um creating a a committee like the water department has where residents actually work with the staff on on what the annual increases should be is part of the the process that we're putting in place. So, we'd like to put in place and so that's what we're proposing here. Jay, it'd be helpful for me. Could we have the lab do an analysis of what we spent from 2006 to present and subsidizing solid waste? Oh, sure. We can provide that. Okay. And and again, this is all for feedback from you as we put together the final budget. We can make that part of our budget presentation. Any other questions at this point? Council Lars, are we still on track for the 11 years or is that incre? It's 11 years because we stopped taking, you know, we were having extra commercial come in and those kind of things. When we increased fees over there, it slowed that down. So, basically 11 and a half years is the timing when it's going to close. Is that pretty conservative or is that like it's it's actually middle of the road? Okay. At one time I when I left the city three years ago, u the estimate was 2045 and closed up. Yeah. It wasn't the estimate for being over a million residents also much further along too. So, as long as we continue to be a great city, I don't know. I see it being a lot through that 11 years. But think, yeah, any other questions here, council, one thing that may be necessary that this discussion is not dissimilar from what we went through with EMS, MedStar, and deciding what we're going to do there and creating an ad hoc committee because it does take quite a bit of time to study this. That may be something this council has to consider. Maybe it's a combination of of outside um entities as well to kind of work along environmental services staff. And I'm sure poor Cody is trying to enjoy a vacation somewhere, so we won't go too far down this road as to not stress him out while he's out. But um Pam, please. Thank you. Thank you. So, just to recap, you've already heard what the implications are of not increasing the solid weight rates. It really the funds um solveny is dependent on closing that gap and accounting for the associated loss of revenue that's inevitable with the close of the landfill. making sure we address those unfunded capital needs, but at the same time still managing the impact to rate payers by doing those incremental multi-year increases and avoiding any large balloon payments, which Jay alluded to. So, with that, here's a snapshot of the current recommended fees that will continue to be discussed. Thank you, Pam. Questions from council. Just one. Council Larsdorf. Thank you. Um, I'd say as we discuss the any fee increases, um, I think, you know, moving forward, I think what's we're going to have to have the difficult conversations about how we're going to pay for all the things that we need to pay for. Um, and I would, you know, for for district four, I would say a lot of the residents, you know, if they if they knew exactly what they were getting with those fee increases or the revenue from those fee increases, I think that that's incredibly important to really paint that picture clearly like, hey, with this extra money, this is exactly where we're getting. We're getting 19 new street sweepers, we're getting X, Y, and Z. So, it's very clear. um and I'd like to make sure we avoid you know the language um like we saw earlier and I know it's just in generality so it's not all set in stone but whereas um for other pro for other projects um like such and such so the fear is that that then goes into other projects that maybe aren't as important to the city. So just more clarity on exactly where that money is going. That's good feedback. We can delineate the specific types of projects that would be used. Council member Beck and Council Hill. Thank you. Um, so I think in a kind of perfect timing, one of the IRS that we have today is an update on the illegal campsite cleanup. And so I know that um that that the way we funded those cleanups is through our environmental protection fund and it's also how we fund the all of all of our litter abatement. Um, and so how much uh when when you came out with this fund with the the increase when you went back in the magic box and tried to figure out, you know, what the best dollar amount was, how heavily did our um homeless camp and litter abatement program factor into the need for an increase, if at all? I'm sure it did factor in because we know that's going to be an increased need. I'll let Wendy give you details. So each Upspire crew that we would like to hire is about $200,000 a year. And based on the needs um with the city, we would like to be able to program another five crews, which is about a million dollars um in the next upcoming several years as we gain those funds and we put it into the environmental protection fund so that we can continue address the illegal campsite abatement, the green spaces along the highways and elsewhere throughout the city. um camps are not just uh they're all over and they're well hidden and so we need to be able to provide services to all of our council districts across the city and those um so Upspire, pardon my ignorance. Um they also do homeless camp cleanup as well, not just litter abatement. Are they doing both or are they doing just litter abatement? They're fabulous. They do almost everything we ask them to do. Yes, they do help with the litter the the cleanups. Our water goats clean up in the water across the city along the highway and absolutely along our um homeless camp areas. We have I want to say three to four crews on a regular basis and on Fridays we tend to have an additional batch of crews to make sure that we leave our city clean for the weekend. Okay. Do you mind if I uh skip ahead a little bit just I know we're not at work session yet but um I I noticed uh in FY so we saw essentially double from FY 22 to 23 and again a doubling from 23 to 24. Um and it looks like we're on track to see um slightly higher numbers in 25 but similar to what we've seen in 24. And so my question is um are we is that number not increasing because we're at max capacity for what we can clean up or is that number not increasing because we can expect roughly speaking um a stabilized number of you know year-over-year is about 5 to 6,000 um getting the its money from Jay over here to my right. Okay. It's the capacity to the dollars available to hire Upspire and staff to be able to get to him. And the increase in this fund would allow us. Yes. I just want to make sure that if we're going to increase it, one of the um projected things we're going to do and with that increase is to hire more litter litter cleanup and homeless camps is one of the big issu areas that we do. Okay. because I think that gets to your to um Councilman Lowersorf's point about knowing kind of exactly where that increase is going to go because if if I can say um you know we're going to be able to to get more homeless camp cleanups for my district that's really important. Yeah, street sweepers might be for someone else but um or you know however it is but I think that's helpful. Yeah, council large. Council Hill, I think Councor Jay, I think this is a question for you, but do we have a formalized program that helps subsidize cost of of any program throughout the city for residents that can't afford it? The payment of the actual fee? Yes. I don't believe I know we there's one in the water department where donations are taken. Okay. But I don't I don't believe we have one on the environmental fee. It's been so small, $150. I don't know that there's ever been an issue of that not being paid. Um, and again, the the $3 is is a recommendation right now, right? And as as we start looking at everything and stacking things up and we get the final TAT appraisal and what that looks like, uh, there'll be an evaluation of if $3 is going up, you know, 100% on that fee is the right thing to do. I think it was going up like thinking more of the the trash carts. I mean, if we were able to to fully pay for the cover the cost it costs the city to provide that service, is that an option for us to look at? um I mean similar to what we do for the water department. I mean I think we can I think we can institute a program like that but yeah currently we don't have an an option as far as I know. Okay. I guess fortunately it's all part of their water bill anyway. So there's a way to kind of tie those things together if a resident is not able to pay their water bill. They're contacting the water department. Maybe they can pay something. Theoretically they're paying that $150 towards right waste but at the same time they're needing some subsidy there to help their household on the water bill. And we've talked about that before. Council Laror's brought that up before to make sure that's not um should be a basic quality service here in Fort Worth. I can tell you're chomping at the bit. No. And mayor and council, I just wanted to add to that the team is prepared and working with um the communications team to put together some one pagers to really show the service levels that they're getting now versus the service levels that could be enhanced with the fee increase. We had done that last time so we can share lane miles cleaned, camps that number of camps cleaned up. Um so we'll have those statistics because we understand the need to back up a fee increase um with actual projects and programs that the residents can see visually and I'm okay with that. But I'm just want to go back to my original thing and then with Councilwoman Hill, I just think when we stack all these fees together, we need to look at some kind of program to mitigate the uh impact for low-income residents if they can't. By the time we add all these fees together, it might create a hardship for some residents. Okay? Thank you. Thank you, Belle. Okay, if we're down there, we're going to move to street maintenance funding. Okay, thank you, Pam. Thank you. Well done. Um, so I'm glad to be back today to talk again about our street maintenance funding issue. Uh this presentation was requested by council at our last work session uh for me to come back and talk about all the funding options um including uh what the fee would look like again. And so uh for today's presentation I'm going to just really quickly highlight the purpose of this initiative again. and we'll talk about all the funding mechanisms that are available to us before I go into property tax and the street maintenance fee mechanism in more detail. Um at the end I'll provide you a comparison of these funding mechanisms and then lastly I kind of want to give you a third option which is a combined approach. Most of you have seen this now. Um, but to highlight the purpose of this initiative again, our citizens survey showed that street maintenance is our highest priority and lowest satisfaction city service. And we know that our street condition is continuing to deteriorate and that we are underfunded. So in 2024, we did our analysis and the top two boxes are kind of the key points from that analysis. We should be spending on average about $98 million per year for a network our size. And with the existing funding that we had at that time, the remaining funding need or that gap was $66.1 million. So that's what we are trying to find. The mechanisms available to find that funding are shown in this table. These are the primary sources of transportation funding. Although there are smaller um sources that may not be considered as much to address a need this size. The first two sources are not eligible to be used for maintenance. The second two sources um are eligible to be used for maintenance, but they are not as practical. Um grants aren't reliable uh for planning purposes for maintenance. Um and then sales tax is already maxed out. So this would require that we cut other programs um to offset that revenue um through things like CCPD or transit funding initiatives. And so um going to focus on for this presentation primarily on the bottom two transportation funding mechanisms. And I'm going to start with property tax, um, which I'm going to continue to show in orange throughout this presentation for clarity purposes. Um, this is eligible for maintenance. And, um, this is where we are currently funding our street maintenance at $38.8 million. That $ 38.8 million is 3.35 cents of the tax rate. If we want to use this mechanism to fund the gap, um that would be about $59.2 million or almost 5 cents additional to the tax rate. If we fund it all through increases, um that would be a total for street maintenance of 7.25 cents of the tax rate. it is possible um to cut programs and not just increase the tax rate. Um but since 7.25 cents is more than the current tax rate, um even if we cut all programs, we would still have to increase the tax rate some. So um this mechanism requires hard decisions. And um so let's talk about what the option would be for a street maintenance fee. Um this is also eligible to be used for maintenance. It creates a stable revenue stream dedicated to street maintenance. It does not require a public vote, but it does require council approval. Big picture. uh wanted to just introduce this topic with you know what is a street maintenance fee. It's similar to the other utilities that are shown here. Um we pass on the charges based on the usage of those systems to our property owners. So for water the usage of that system is assessed through the water meters for each property. For our storm water utility, the charges assessed are based on the usage of that property measured through impervious surface. And then for streets, the fee would be assessed based on usage um as expressed in in traffic demand or traffic generation of that property as determined by land use and square footage. This is not a new concept. Um, several cities in Fort Worth have a a street maintenance fee, or did I say in Fort Worth, I meant in Texas, have a street maintenance fee. Um, most of them are smaller than us just because we're big. Um, but Austin is about the same size as us. They've had a street fee since 1992. And most recently, last year in 2024, Waco added their street fee. Not all of those fees are the same. If you look at them, they're structured differently. They have different components. And so, as the city um considers this option, there's options and decisions available to us on how we set this up. Um first would be the fee structure. We can just have a variable fee component, um which is that usage based component. Um or we could also have a base fee plus the variable component. Um the base fee is something that's seen a lot in water and wastewater utilities. Um even if you don't use your water that month, you're going to get some minimum uh bill. And that base fee is usually to cover like the administrative costs for each account. So billing and collection. Another decision point would be the number of categories that we might have in our fee. Um, if we have fewer categories, it really helps in the expectation and the simplicity of our fee structure. Um, most businesses know where they would fall, what their square footage is, and what to expect from their charges. However, if we have more categories, it does give us more granularity in our traffic generation, um, but more complexity. So, there's a balance to be struck there. And then also each of these cities have different kinds of exemptions and I'm showing some of them here. Um but any exemption that we decide to move forward with would equal a revenue loss that would have to be offset through increased rates for other categories. So these are decisions that would have to be made throughout the process of developing a fee. And in order to have final rates, these decisions would all need to be made. For the purposes of looking at this mechanism though, I need to show you something. So, what I'm showing you is the um very preliminary um incompleted traffic generation analysis results from Frieza Nichols. They were under contract until April of last year and they had begun traffic generation analysis using our specific Fort Worth land use GIS data set and they had started assigning all of our over 300 properties to categories and they stopped um in April when we decided to move away from developing a fee and towards funding it through property tax. Um, so while we know that this is incomplete and there's some assumptions in this, um, I'm still going to show it to you and I'm showing it to you as a range because I know that those fees would change as some of these decisions and options um, were made. And so this is a good um, starting point just to show you where our potential fees could end up. Um, this shows that at $66.1 million in revenue, the single family rate could be as low as $4.50. I'm also showing in that last column the revenue percentage for each category. So if you look at the residential the total is about 25% of the residential um revenue and then 30 sorry the commercial percentage categories total to 60% and then all other categories make up that remaining 15% of the revenue and this is similar to the revenue distribution for our existing storm water fee. You can imagine developing something like this and doing it well takes some time. Um so we are at the very early stages should we decide to move forward. Um we haven't made some of those initial decisions yet. Um we would have to get Frieza Nichols back under contract to complete their traffic generation analysis and develop a fee and we would have to refine that fee through decisions of city leadership before we would end up with final rates. And at that point other work has to continue program development project development public engagement and very importantly the water department's billing integration in that there are some variables that could affect the timeline. They are um changing softwares in the water department. Um but we think that you know realistically in general you're looking at a 12 to 18month timeline to develop a fee. Council member Begs, you have a question. So, uh, the potential rates gets us, uh, that the slide before gets us to the $66 million. Um, does that, so that gets us, and just so I'm clear, the total number, the total dollar number we need annually to really tackle our maintenance is $66 million. Correct. That was the gap. the gap. That was the gap. Yep. And um the total annual need that we should be spending on maintenance is 98 million a year. Okay. Okay. Repeat that again. The total that we should be spending every year is $98 million. As of 24 when we did that analysis, that meant with our existing funding level that the gap was 66.1 million. Th this assumes that they this fee would fill the full gap, right, by 27 when you would actually put it in place. And and then the um the ranges the variable ranges is that are you giving us a range in which we could set because 450 to six. How do we I see ranges but then I see a dollar amount. So, can you Yeah, I I I had a dollar amount, but I made it into a range for the presentation because I didn't want to give the impression that these dollars were firm. Okay. Um there it's it's still an incomplete analysis. We know they'll change. Okay. So, if I built buffer in Okay. So, for example, if we did um the low end of each one of those, would we still get to $66 million or does that um do we need to be somewhere? Because you've given us a range up there, but we don't have a range down at the bottom. So, in other words, is $66 million projected for the low range or the high range or somewhere in between? Correct. you're pushing me to a commitment, but I will tell you that the early incomplete analysis that does have some assumptions and not all properties have been assigned to categories was showing the lower end of the range would generate $66.1 million. Okay. All right. Thank you, Council Member Flores and then Council Member Peoples. Okay. Okay. Um going back to your slide where you had the street maintenance fees of other cities in Texas of those and they were implemented at different times. How do those methodologies compare to what freeze and nickels are doing here? Very good question. So in order to generate something and have a starting point for discussion uh they had to make an assumption of some of these decisions. They assumed that we would have a variable fee without a base fee component. Um, and they increased the number of categories from what we previously showed which was seven categories up to 10 categories to give us a little better traffic generation granularity. You anticipated my next question. So, uh, more of a reliance on variable fees then. So it is the fee structure is based on usage and so it it does require that we put um the appropriate traffic demand on the appropriate traffic generating land uses. So commercial will be divided into a hightrip category. These are things like convenience stores, gas stations, Starbuckses, the things that we we generally drive to at some point every day. Yes. And then low trip commercial things like um uh banks um things like that. Um and one more question, how um Taran County is contributing more to certain, you know, road projects for us? Um is that taken into account here in, you know, what you're presenting to us at at their level, current level of contribution, assuming that it remains, you know, on trend. Yeah. Um Mary can probably speak to that program, but um I think she would say that the county's interlocal agreements are part of our maintenance program and it's a partnership that has a good return on investment. And so as our maintenance program increases, our ability to partner at larger um dollar amounts would would come along with. And just to clarify, um Jay just pointed out that a lot of times those those interlocal agreements with Tarant County are typically for new roads, not for street maintenance. Not always, but typically. Good. Yeah. It's it's both. It's a partnership for both. Yeah. All right. Thank you. Okay. So I my question is based on future costs and we talk a lot about that about the rising cost of materials. Have we is this rate going to be sufficient um to maintain these streets? I know we said it's going to take us 12 to 18 months to implement it. So what guarantee do we have that when you come back in 18 months that this 66 million is going to be adequate? The 66.1 million was very thoroughly analyzed in 2024 and there was inflation on the maintenance um procedures built into that analysis. Um, that being said, it will take us time to get to that funding level and the more time it takes us, the more maintenance we are deferring in the meantime. Um, so $66.1 million will get us very close. I don't know that it will get us 100% there. It depends on how long it takes us to get up to that funding level. Okay, so I'm going to continue. Um, so I went through both of these mechanisms and I created this slide. I really like it. It shows kind of the pros and cons of both and I've shown the pros highlighted green. U, a street maintenance fee requires more time and separate council approval to get in place, whereas property tax is very quick. Um, there's already a process for implementing that through the budget process. The street fee um would require monthly collection. So, more administration. Uh, for property tax, it's an annual collection that's automatic with taxes. But for the fee, um, it would allow us to, um, address any future increases needed, um, through a fee increase, not just property tax. Um, and then it also allows for specific exemptions. So, use-based exemptions like I don't have a car or something like that. Whereas for property tax, you can only use the tax exemptions. And last but not least, it creates a stable annual revenue for street maintenance. It's separate and does not rely on growth or property values. It's also a dedicated source, so it doesn't compete with other city needs. It's dedicated only for street maintenance. That being said, I don't want you to think that you have to pick one or the other of these two mechanisms. Um that's why I want to show you our third option which is a combined approach. In order to talk about our combined approach and what we're trying to do with it, I'm showing you first the original 2024 funding plan. In 2025, we had requested 18 million originally. Um considering the revenues for 25, we were fortunate to get 10.4 4 million. Um but that was still behind what we were planning. Now in 26 um we had also requested an increase of about 20 million. That's looking with our current forecasts pretty unrealistic. And so we look like we could be going into fiscal year 27 um about $30 million behind our original funding plan. So this combined approach would be to try to catch up to use both funding mechanisms and get to the funding level needed on schedule. So how we would do that is by uh creating a plan that would continue to increase our property tax pay allocations over time while also incorporating a smaller street maintenance fee. And um this table here is one way that we could do this. Um I built this uh plan here based on a smaller fee being developed for a January 1st, 2027 implementation. That means we would have 9 months worth of revenue in the first year and 12 months worth of revenue in the second year. I also built it based on wanting to limit the amount of increase each year for our outsourced um capital maintenance uh to 20 million or less just to have the contractor availability and scale up our delivery on that. I also um planned that all existing street maintenance funding would be preserved. And so what this scenario for a combined approach looks like is that in 25 we funded 10.4 4 million in 26. I put a conservative $5 million amount in there. Um, we'll know as as the property values continue to come in whether or not that's um possible. And then in 27, I'm showing that first nine months worth of revenue for a smaller fee. And then in 28, we would have the remaining three months worth of revenue from the fee. And then we would need to have additional PIGO funding in years 28 and 29 um in order to get up to the funding level on schedule. I put those at 10 million and 15 million because this is pretty this is pretty simple math right here. However, I wanted to show what the Fort Worth lab pointed out, which is that that $25 million towards the end of this plan for PIGO could be considerably less. This graph shows our PIGO funding and is showing it growing at three and a half% yearover-year. And it also shows the fee um as it revenue would come into that. You can see in 2029 if we put our 3.5% growth towards the gap that the amount of additional PIGO funding would be reduced down to about 16 million instead of 25 million. So you know 8 million each year is more achievable. You might be asking yourself what the smaller rates would look like. Um, so I'm showing you this graph again. What we've done is we've capped the single family at $2.50, multif family at $1.50, and then senior residential at a dollar. And then we've adjusted proportionally down all the other business and commercial rates. So this means that we could generate that $37.1 million with these rates that I showed in the combined approach. So to kind of summarize this combined approach, um I think that it's a benefit that the majority of our street maintenance would still be funded through property tax. Um, however, adding the additional source of revenue would allow us to have a more flexible approach in the future as uh additional funding is needed whether we could increase the funding through property tax or the fee. It would also allow us to move towards more equity because the the fee is structured to where it shifts the cost burden towards the users that use it most. And it provides us a dedicated source that kind of codifies and preserves for future years that we are prioritizing our street maintenance funding. It reduces our reliance on property values and growth and achieves the main goal which is delivering for our residents a timely resolution on this issue and being able to save the city money in deferring maintenance and reducing our future bond uh funding needs. So, um I think hopefully I have showed you all the options. U we're really interested to get your feedback and understand um where you would like us to go from here. Thank you, Lane. Question and I'll turn to Council Rebecca. I think he has a question. Um if you go back to slide 32, you just showed us accommodation approach. Yes. So to be clear, even moving into fiscal years 27 through 2030, you're still seeing an additional need gap that's noted there at the top of those charts. Correct. So, um, if this is based on just the $10 million that we got last year growing at three and a half% per year, okay, and the fee. So, this is to show how much additional PIGO we would need to fund in the combined approach. So the the text up at the top of each bar is showing that with the growth in PIGO and the smaller fee um the amount that we would need to fund additionally through PGO would be less because we're taking into account the 3 and a half% growth towards the gap. Okay. So this shows in 2029 that we would only need 16 million additional in PIGO. But if you look at my simple math, not including the growth in PIGO year-over-year, I was saying that we would need $25 million additional in PIGO. So if we decide to include the the three and a half% growth towards our gap, it would only be 16 million that we would have to add from here on out into POGO. That's helpful. I think maybe and we don't do it today in our future presentation just for my own sake. I think it's actually transparent for for taxpayers to if we start to talk about this combined approach or street maintenance fee, etc. I know we're talking about this PIGO edition that we did last year, but in my mind that is bare minimum now because we're trying to keep up with what is one of the greatest needs and asks of our constituents, right? And so if maybe we take this chart and rather than talking about additional need, it's just is this is the need if you want to close the gap. If you don't, then you're reducing that total amount of pay that you're putting in every year out of property taxes and you're adding the stack on top of street maintenance to try to close the gap at 98 million. Does that make sense? I see your point. Yes. Yeah. Okay. Thank you. Yeah. So, what what I like about this chart and this is the actual hybrid method is what what I would recommend if we came back with this that it allows the the opportunity for the city council on an annual basis based on what appraisals do, based on what the economy is doing to select how you fill that gap. if the gap's grown from year to year on whether or not there's an adjustment to a fee or additional pay goes is is available to to fill that gap. It adds a tool to the toolbox. I mean, our gap is 66 million. I don't see that being filled in one year by anything. Um the rates associated with that would be high. The amount of payo needed for that would be high. But as you move toward closing that gap, you have this tool that we currently don't have to address it either from one one tool or the other depending which one makes sense on that given year. Council peoples and I was just going to say am I I was looking at page 28 at the variable rate range and then I went to page 34 and on the partial funding. Uh if we um you took the lower end of the partial funding for the partial funding. I did. So I if we we could close some more of that if we uh went more with the mid-range. It was like single family was $450 to $6 and then you did 250. So if we made it three I mean we could play with those numbers some that gives us some wiggle room. We absolutely could. Yes. Okay. which would mean that we could increase our estimated revenue. Yes. Any other questions from council? Councelor Larsdorf and then council. So I guess back on slide 21 and um since we're all just kind of spitballing and throwing some hypotheticals out there um and just discussing things on the well I guess talking about the citizen survey. Uh since I think we all agree that the street maintenance is definitely highest importance and lowest satisfaction right now. We talk about it the most. Do we know where public transportation fell on that citizen survey by chance or transit? Do we I do not. I can go look at that. I'd be curious to see where it fell. Uh because I know over on site 21 where on the sales tax piece it said eligible but not practical. I think we proved with the EMS that Fort Worth can do very hard lifts and hard task and our staff is definitely capable. Um, I mean, I don't know what that even look like as far as the the sales tax and the public transportation, what that looks like and if it'd be better use for street maintenance across the board than than transit, but that just I'd just be curious to see what that even look like or how that would even work. I think the Fort Worth Lab could probably help in in providing you some information as a follow-up to that. Um, I believe the transit funding is funding for Trinity Metro. Um, and I'm I'm not sure how much they could they could reduce that amount. I mean, speaking for District 4, I mean, we definitely trade public transportation for uh for better streets. So, I mean, that's just again for I know it's going to be important in other areas for sure. And we we've had this discussion uh before as far as uh the on using on demand and reducing need for certain lines because it's you know be more cost effective in that way and then where could we use those additional dollars um you know if other districts need additional lines and by all means district 4 has some we can definitely throw your way um for sure. But, you know, speaking for what's important, if we're going to talk about what's important to the residents and if we're going to speak, you know, on behalf of our constituents, then, you know, for district 4, that's kind of kind of where we're at. So, again, it's just a discussion. Yeah. Um, and it's a good um good point. I pulled this slide up. Um, you know, this street maintenance initiative benefits the entire city. And um what we are showing for the fee right now for a split would be um 75% towards heavy contracted maintenance um and then 25% towards preventative. uh that would allow us to do some of those outside of the loop um CD4 concrete preservation packages um while also spending the appropriate amount of money inside the loop doing maintenance on streets that you know if we don't will become bond projects that are expensive council Hill just a follow-up question to Charlie's question I think for the lab if can you provide us a breakdown of the next session on um all of our commitments through sales tax currently and if we have any future commitments. Thank you. Council member Flores. Generally, I'm not going to I'm not prepared to really throw out any sort of number scenarios right now, but it's apparent to me and I think most of us here uh we need to consider, you know, an additional course. Yeah. Right. We're not we're not really gaining the ground we need to gain. That's correct. you know, on these street um maintenance and uh replacement issues. So, something that has to be done and I agree with the mayor. Uh we need to make sure that our uh residents do have adequate time to consider this because it does fall on us to make that decision. Any other questions? Thank you, Lane. Great job. Sorry record that I'm not comfortable um moving anything from transit. When you talk about street maintenance and longevity um a robust public transit system is how we reduce the overall need for our maintenance. It gets cars off the roadway. It keeps us from having to to build additional u miles of roadway to relieve congestion. So just for the record since that was brought up. Anyone else? Thank you, Lane. Appreciate it. Thank you very much. Okay, now we're heading into storm water management program. Jennifer Dyke is up next. Good morning, mayor and council. Um, so I'm going to be giving today's presentation. Um, but part of this presentation impacts storm water field operations, um, which is under lane, and so she is here for questions as well. So today I'm going to be talking about our high priority fiscal year 26 needs for the storm water management program. We'll start with a brief reminder about our program background and our highest asset funding needs and then go into more detail about our highest priorities and how a potential storm water fee increase could help us with these and then what the benefits and implications of uh this potential fee increase are for our community and our rateayers. The stormwater program was created in 2006 in response to community concerns after devastating flooding caused a loss of five lives and impacted over 300 properties citywide in 2004. The program works to achieve council's strategic priorities through our mission to protect people and property from harmful storm water runoff. The utility fee provides a dedicated source of revenue for storm water work and is paid for based on the amount of impervious surface on each property. Properties in the city are subject to the fee except those exempted by state law which includes state-owned properties and public and private colleges and universities. So our program works to fulfill our mission in four main ways. We maintain our drainage infrastructure. We mitigate flooding and erosion hazards. We warn and educate about flooding and erosion hazards. And we review development for compliance with city standards. So the work we do really improves overall community health and safety, advances sustainable growth and development, improves overall quality of life for our community. So this table highlights three of our major assets. Our culverts, our drainage pipes, and our engineer channels. The second column shows how many assets for each of those that we have. And the gray columns estimate the cost of our capital needs and the amount of funding we have to address these needs based on our approved 5-year CIP. This shows our high priority capital needs are over 10 times greater than our current 5-year capital program budget. And the blue columns estimate the cost of our annual maintenance needs for the same assets um and the current maintenance funding amount. And this shows our annual maintenance needs are over two times our maintenance budget. I've highlighted the channel line in blue because channel restoration needs will be the focus of today's presentation. And then the estimates in this are based on known needs and an incomplete inventory of our actual infrastructure condition. Um they don't take into account account also as the city grows and develops that we are gaining more and more assets to maintain. For example, in um 2015, um from then till now, we now maintain more than 200 miles of drainage pipes and more than 8,300 more inlets across the city. Okay. So, as we started to budget for 26, we really focused on our increasing costs just like everyone else across the nation um is experiencing. So, this graph, you've seen it before. Um it shows the national highway construction cost index and the significant increase between 2001 and 2004 is reflective of what what we're seeing in our capital projects. Um and so what isn't included here is now the potential impact that these new tariffs might have on our projects as well. Uh so when we focused on our budgeting the priority for us was really how to mitigate our growing channel restoration needs given these increased costs. So our team is responsible for main maintaining around 230 miles of engineered channels across the city and those are shown in red on this exhibit here. So this includes basic maintenance such as silt removal and vegetation management and also more extensive erosion mitigation work to restore highly degraded channels and meet original design and safety standards. There's also around 500 miles of natural channels across the city and those are shown in blue on this map and there um there's no dedicated drainage ements. So the city's not responsible for those channels. They are the responsibility of the private property owners. Channel restoration needs are prioritized based on field condition assessments that evaluate conditions to determine probability and consequence of the channel failure and that's used to determine the city's business risk exposure. To date, we've identified 17,000 ft of capital channel restoration needs. However, the need is likely higher since only 39% of our engineered channels have been condition assessed. Once we identify what our highest priority restoration needs are, we determine if we can address those needs inhouse or if we have to have a capital contractor help us with those and and perform capital improvements. So, our storm water field operations in-house crews can do restoration work focused on silt and debris removal. Um, and the work they do doesn't change the actual design of the channel. However, we need to use a contractor uh to do C channel restoration if the erosion is so bad um that we need to do that engineering design um if we might need additional easements or property um acquisition or if the location is very challenging. Maybe the channel is eroded so close that it's very very close to a building. Um so this example here you see is the channel's just very very close to this property. This uh slide here just shows several of the examples that we've identified in terms of high priority restoration needs across the cities. You can see uh we've got needs almost in all the council districts here that we could fit on the slide. Um and these these channels are the city's responsibility and as you can see they're starting to and have have already been impacting um those adjacent um infrastructure, private and public infrastructure. Um several of these are right adjacent to roadways and will start impacting the city's road infrastructure as well. Okay. So um due to the need for the engineering and design for capital channel restoration is that these types of projects can cost between 4700 to 6,300 a foot. Um very very expensive projects but we currently allocate $1 million a year for capital channel restoration improvements. This allows us to typically perform between 160 to 200 feet of cap capital channel restoration a year. Um and this will means it will take us around a hundred years to tackle this known backlog. So our in-house storm water operations team um they also perform channel restoration around 37,000 ft of both maintenance and restoration combined annually. And their work um is more affordable. It costs between $40 to $130 per foot depending on that type of work needed. Um and and that is a a cost range for maintenance and and more extensive restoration. But over the last five years, um as we've seen for everyone else, our equipment maintenance costs have increased 52% and our equipment rental costs have increased 121%. So we will rent equipment to perform our maintenance uh requirements if our equipment is going to be down for a long period of time. Additionally, um equipment replacement costs have increased by around 30%. Um and this has really impacted our ability to replace our equipment in a timely manner. And that's why our maintenance and rental costs are are starting to really increase. Um so these higher equipment replacement costs will begin to reduce our current maintenance ability, meaning less channel work um that we'll be able to do in house in the future, as well as other of our u routine maintenance responsibilities. will start to impact those programs as well. Um, hitting our annual channel in-house goals is critical to really keeping those channels in good condition. Um, so if we're not able to maintain them as frequently as we should, they're going to start rolling over and needing the more costly channel restoration um that then we need to bring in the contractor to help us with. So, why is channel restoration important? Um, it really improves public safety by mitigating um the risks along these channels. Um, this erosion, as you can see from those pictures, is really impacting the adjacent property, infrastructure, utilities. Um, and these are the city's responsibility. So, there's a a liability if we're not um really managing our channels. Um, also, the erosion can uh back up the storm water, uh, can cause trees adjacent to it to fall into the channel, back up, and then increase flood risk to the community. So due to our increasing channel needs and costs, we're really considering a stormwater utility fee for 26 because the utility uh does not receive general revenue every year we evaluate um our storm water utility fee based off of um the needs that we have and the risks that we've identified. And based on past stakeholder feedback when we went into this fee increase, we really looked at keeping the fee increase small uh to minimize the impact on all of our rateayers. So, right now we're recommending a 5% increase. That would bring an additional $2.4 million in fiscal year 26 um which because it would start on a J in January. Um and then $3.4 million uh for a full fiscal year in fiscal year 27. So, the potential uh fee increase was discussed with our stormwater program stakeholder group in February. Um we got some good feedback from the the residents. They felt like that the in terms of the impact um on residents that it was small. Um but as y'all are doing, they wanted to make sure that the city would take that into account with all the other fees um and increase cost of services um for the community. Uh, one of our largest rateayers was Fort Worth ISD and they also mentioned that the fee increase does become a fixed cost to school districts um and it will start to impact um takes away funding for instruction uh especially when enrollment is declining in different school districts. Okay, so talking about what the fee increase actually gets us. So our uh fee increase is really focused on council strategic priority of infrastructure improvements. So, our proposed increase would enable us to do over three times more capital channel restoration. So, the table on the bottom um that second column shows how many feet of capital restoration we can do with our current funding. And then the last column shows um what we could do with the current funding plus part of that potential fee increase. Um and then the um fee increase will also help us on our operational side. So again, our operations team performs very critical channel maintenance um and restoration. So the fee increase would really help us replace our heavy equipment in a timely manner. The line graph that you see on this slide shows um the blue line is showing that our um equipment replacement cycle is increasing and as it continues to increase over time, that's going to have more money going to um those costly maintenance and repairs and takes away money uh for our other work efforts. So, what this fee increase will really help us um get is to get on a a 14-year uh replacement cycle and maintain that cycle so we can really make sure that our equipment is up and that we're able to go out there and respond. We're able to perform our citywide maintenance responsibilities. Uh we're able to respond to storm events um and have our equipment out there staged across the city for big storm events. And that'll also um increase employee safety and risk reduction by having that newer equipment versus some of the equipment uh pieces that we have right now. So what is the impact on rateayers? So this table here shows the impact on single family residential rateayers. Um so our billing we have billing to four tiers based off of square footage. Um which correlates to the amount of imperous surface or the runoff and the impact on our storm water infrastructure. So, um, the average rateayer falls under the tier 2, um, category, and they would pay 35 cents more a month, um, for this, uh, proposed increase. So, but if you've got a smaller, uh, smaller square footage, 18 cents more a month or a larger home, uh, 70 cents more a month. And this, uh, category includes duplexes, triplexes, quad quadplexes, and manufactured homes. Um this table here shows the impact of the utility fee increase on larger rate payers. So the the top two um given show the small commercial and a small residential or small commercial and medium commercial um impact. So as you can see here in the one, two, three, fourth column um is if we in increase the fee 5% um they are paying uh between $6 and $58 more a month. Um and then those annual payment increases would go between $70 to $700 more a year. Um the bottom part of the table shows our top 10 rate payers. As you can see, the city of Fort Worth is a top 10 is the very top uh rate payer. Uh we just have so many um structures um and impervious surfaces, our parking areas across the city um that are city-owned. And so, uh Fort Worth ISD is right below us. So, you can see here is that this fee increase would increase um monthly payments between 3,600 and 5,300 uh more a month. um which annually that would be between 44,000 to 63,000 more um a year. Um I will note that we do have storm water fee credits available for these types of rate payers. Uh the Fort Worth ISD does take full advantage of those rates. Um, and so they can get credits if they do activities that um improve water quality, if they uh detain more storm water runoff to help with flood mitigation purposes, and then the ISD gets education credits and public um education credits for both public and students. So um these last slide shows um the history of the stormwater utility fee. So the first state fee started in uh fiscal year 7. Um we have had as you can see when the utility started we had a fee increase ramp up about five years and then we had a long time frame where we didn't touch the fee at all. Um the last several years we have had some um fee increases. Just last year, we did have a 5% fee increase, and the funding from that new fee increase is going specifically to storm drain rehab program to tackle those aging pipes across the city and trying to proactively rehabilitate them before those sink holes um form and cause the public safety hazards associated with those. The table on the right here shows um where the the accounts are and where that money is coming from from our revenue. So, as you can see here, we have more single family residential accounts. Uh, but more of the revenue comes from those non-s single family residential accounts because they have more impervious surface on their properties. So, with that, I want to thank you for uh considering this and take any feedback and questions. Questions from council. Council Rebecc. Yeah. Uh, because the impervious surface makes such a big difference. Um, have there been any discussion about changing our building code to uh to limit the amount of impervious service or um offer incentives to um either residential builders or um or commercial builders to use products that are um impervious. So yeah, we do have a stakeholder group um that is focused on on the imperous surface and we kind of call that the cumulative impact of all of that imperous surface on storm water runoff. So individually if you look site by site there's not a big impact but if you look cumulatively there is a large impact. So we have been working with stakeholders um over the last several years to try to get feedback on that. Um we also at the same time were looking with and working with stakeholders on the impact of filling in flood plane along the channels and of course that has an impact too on flood risk. Um based off our initial stakeholder feedback we're kind of advancing that forward first because it's much more straightforward. We've been having a lot of discussions with DAC on that lately. Um but the the plan is to wrap that up and then to delve back into the impervious surface because it is much more complex. um and have continue to have those discussions with our internal and external stakeholders. Other questions from council. Thank you, Jennifer. Thank you, Council. Thank you, Mayor. So, we've seen a number of presentations about uh fees for a variety of purposes and and justification for those. Uh can I get kind of just like a summary what is the impact in total of all of these for the average household? We we plan to do that as part of the budget process, but we can we can send that in an email. And and again, these aren't the full recommendations. These are what staff is recommending from the department on the amount they would need to try to stay up with things. At the end of the day, we'll be evaluating what that the city manager's office as we put the full budget together, what the impact is to the citizens. So, it would be I don't necessarily want to give that full amount because it probably that's not probably what's going to be recommended. Okay, Chris Harter is up next. All right. Uh, good morning, uh, mayor and council. My name's Chris Harter. I'm the water director. It's a usually a little early uh in June for us to be presenting rates, but uh we had our last uh retail rate stakeholder meeting yesterday. Uh they like uh what we're going to be proposing. I like what we're going to be proposing, so I was like, let's go ahead and propose it. So, we'll start with our budget. The budget itself is expected to grow by 9.3%. Now, don't get too concerned about that 9.3% because remember our system is growing. So, our revenue is growing. So, when we talk about rate increase, it doesn't necessarily align with the budget increase. So, when you look at that $57 million uh increase in our budget, this is the breakdown of that. Uh I've presented this kind of a a chart before. Normally what you see is uh the largest increase being capital investment. TR TRWD and TRA also has an impact and on andm you're talking about things like uh personnel cost as well as variable costs like power chemicals things that are associated with a growing system. This chart here shows the uh the just the breakdown of our budget. you'll see that capital is 48.5%. But when you factor in the fact that TRWD and TRA's rate also incorporates capital, you can see that in terms of your water bill, most likely over 50% of that goes to capital investment. So with that, we'll just go right into the capital improvement plan. When I became director in 2018, uh our capital uh budget has increased every year uh in consecutive years. So 2025 is no different. Uh but what you see here is actually um a lot of the investment that we're making related to growth is actually being constructed. So think about some of the investment that has been uh been done just recently. On June 10th, you uh approved a $294 million uh plant expansion in Eagle Mountain. We have a uh Mary's Creek plant that will be bid out in the next six six to nine months. We've uh got tanks in in construction. We've got pump stations in construction. So you you may recall back in February I gave a presentation related to all of the investment that we're needing for growth on the west and the north side. significant investment. So what you see here is that you see a lot of that growth related investment kind of uh being constructed. But I also want you to look at uh things like uh rehab and replacement. You see that's growing every year. So after 2028 really we're going to be uh devoting a lot more of the the dollars to renewal and re uh replacement compared to the the growth related type of investments. Now keep in mind when you uh when you pay for a growth related investment that's usually a 30-year bond. So you're paying for it over a significant uh time period. Uh just one other thing I thought I'd might mention is you see major transmission mains uh in 2026 and 2027. Some of those are new mains. Some of those are also a replacement of cast iron transmission mains. That's a huge priority of ours. So, one of the things that I thought I might mention on this slide is that our uh reduction in our capital uh budget beginning in 2029 corresponds to significant investment by TRWD in the Cedar Creek wetlands and other projects. Cedar Creek wetlands itself is estimated right now at $720 million. So between our just recent capital investment uh as well as TRWD's investment where they're going to be issuing uh debt 2829, you're going to see significant uh rate pressure on our rates. So let's get right into rates. As I mentioned, we had a budget uh that is increasing by 9.3%. But our revenues are also projected to grow. Our accounts are expected to increase by 2.9%. We're anticipating uh increased usage uh on the water side as well as increase uh discharge of wastewater. So that impacts our revenues. So that 9.3% uh budget increase what we see is our gap being about 2% on the water system and 2.14% on the wastewater system. So that's our revenue gap. Now I'm getting into kind of the rate design and what we're going to project to you in terms of rates. These two charts are very important uh in a in our discussion coming up. So what you see on the green bars, this is our winter quarter average uh water use. So this is what your sewer bill is based off of. And when you see that, it looks like it's a right around six ccf. Uh, one ccf is 748 gallons. So, it's about 4,400 gallons of usage. This is during the winter. This is when you normally don't have outdoor irrigation. The blue chart you see is the average water use. That's the average over the entire year. So, you can see that it goes from 4,400 to 7200 gallons per month. The CCF value is 9.68 here. So the numbers that I want you to to remember is 6 CCF on the winter quarter average, the sewer side, 10 CCF on the water side. So with our residential rates, they're broken into tiers based off of the usage. So this is what we have in terms of the tiers currently. So the lowest priced water is the the water that's used for base water uh domestic water use. That's the tier one. The highest water usage you see that's generally irrigation water. This again we're talking about the residential customer class. So what you have here is you have a tier 2 that goes from 6 to 18 CCF. Keep in mind what is the average uh water usage for the uh residential customer? It's 10 ccf. So what we have right now is a tier that goes well beyond the average water use. So that's what we have right now. This is what we're proposing. We're proposing that our tiers are logically break where the averages are. So the tier one will continue to be 0 to six. We're recommending a change of the tier 2 to be 6 to 12. What that does is it captures the average water use plus a little bit of grace from the 10 to 12 uh ccf usage. So another way to look at this, this usage in tier 2 is basically double the average of the indoor water use during the winter. Then you have the tier three that goes from 12 to 24 ccf and then tier 4 going to uh 24. So let me go back. This is what it is right now. This is what we're projecting uh recommending to go to. If we do this, uh well, let me let me show you what the rates are. So, these are the rates under the current tier structure. What we're recommending is that we do not change the rates. We just t change the tier brakes to align with the average water use. On the sewer side, we're uh recommending a slight increase of 4 cents uh on the uh per ccf on the uh the wastewater usage. So what does that do in terms of an average water bill? So for an efficient user and I have those uh those uh numbers efficient user all the usage is within that that first tier. So the increase would be 52 cents per month. Typical user uh that goes up to the 10 CCF that's 64 cents per month. A high user is uh a water usage of 15 uh ccf. So, you're getting into the third tier that would go up to four $445 per month. And and keep in mind, this isn't something that you're going to see every month. What you're going to see is when you get into uh above that 10 CCF, right? When you get into the third tier. And then the last example we have is really, really high usage of 45 CCF, which equates to 33,000 gallons per month. We don't see too many customers that have this, but that would have an impact about $15 per month. So, where we are in the rate maker process, we've completed our meetings with our uh retail rate stakeholder uh group. We have tomorrow a meeting with our wholesale customer advisory committee to go over wholesale rates. Uh we will we are waiting for TRA and TRWD to finalize their rates and then we anticipate coming back to you in August uh with a more complete uh rate uh presentation. Questions? Questions for Chris Council. Council Flores. Chris, thanks for that uh presentation and um the clarity, you know, those slides what you're proposing there on the tier breakdowns. Um, general question, what have you, what has your department seen as far as uh use behavior changes since uh the implementation of smart meters? And what I'm looking for ultimately is to see if uh residents are realizing some savings, you know, despite, you know, concerns being heard at the front end of that implementation that they were being charged more when in actuality it was just being registered more accurately. Yeah. And and you keep in keep in mind that that um AMI project, it was funded with a lowinterest loan from the water development board as a water supply strategy, conservation and uh water stewardship by our customer base. So that that's a good question and I will tell you the what we're really going to be looking uh forward to is see what our demands look like this summer. So, you remember last summer we used that uh uh AMI system to uh send out notices to customers when they were irrigating outside of the ordinance provisions. We followed that up with actual assessments to their water bill for repeated violations of that. Those are actually happening right now. So, really the question is going to be what is this summer's demands look like? And you know, you think about it, uh, this proposal that we're talking about has a little bit of risk associated with it, right? Because we're doing is we're making projections in terms of what the usage is going to be in the first tier, the second tier, the third tier, and the fourth tier. We have to recover our costs, right? So, I will tell you that we will most definitely be scrutinizing the data to see just what impacts not only the uh the tear breaks uh result in, but also uh just what the um the ordinance um enforcement has resulted in. Thanks. Any other questions for Chris? No. Yeah. Council Rebecca, under the uh current proposal, uh are we adding any additional capacity for our cast iron uh repair and replacement program? So I I if you look at the rehab and replacement portion of the uh CIP, what we're doing is we're increasing that every year uh with uh that that funding devoted to rehab and replacement of aging and high-risisk infrastructure. So, uh, Council Member Beck, not only we we using that as a funding source, that's PGO funding, but I wanted also to point out the the major transmission, those balloon numbers you see in 2026 and 2027, those are that the transmission main replacement also those big downtown. Yeah. So th those are the ones that you know when you talk about um cast iron pipe small diameter cast iron pipe it impacts customers it wastes water uh and it it creates a burden on our field operation staff. Large diameter cast iron potentially causes a boil water notice to our system. So we are we are doing everything we can to prioritize the large diameter cast iron. And just for clarity, um the the pipe that we saw uh bust on Lancaster, was it last summer was a transmission? 30-in cast iron 1938 uh install date. And we were how close to a boil order boil? I had a an email crafted to send to mayor and council. Okay. Um and so is this the first time that we've had major transmission mains as a separate item in No. So I will say that most of the time uh when you see major transmission mains they're growthrelated major transmissions. Uh so like the 54inch line on the north side uh you know these pipelines that we've installed on the west side those are in that category too. It's just that in in addition to that, we're putting in these large diameter cast iron pipe projects that could be 20 $30 million and would be eating up most of the PGO if we just use PGO to pay for it. Sure. Um can you I I don't need a a full IR. Um if you could just email me, I'd be interested to know um for the major transmission main category. How much of that is growth versus how much is uh replacement of the cast of our major cast iron transmission lines? Okay. Thank you. Any other questions for Chris? No. Okay. Um Jay, you want to talk about next steps? Yes. And we're running out of time and we we're going to get into the bond program. Considering that there are three council members that are not here, uh what I'd propose is that staff meet individually with council members over the next couple of weeks if we can set up times to go through the uh what we were going to cover on the bond program side to see if we can uh get consensus that we can move forward. Still trying to hit going forward to the to the public in in July. Uh once we we meet with everybody, we'll send out an email communication to the full council on on the overall program before we go to the public just to get consensus. Uh that way if that's amidable to everybody just because of the timing today and then the fact that we don't have any work sessions until August. Yeah. When do you plan on going to the public in July? It'll probably uh start late July. I'm not totally opposed to that. I'll just mention July is the worst time to go to the public. So, I mean, you might as well just wait until August when people are back from vacations and school and etc. So, that's just me. I know you're trying to meet a timeline, but throwing a few calendar meetings in July really doesn't move the needle. I I'm with you on July and really August too through the end of August. It's just hit or miss with vacations and whatnot. Um, so if we if the concern is we're we're not getting out to the public soon enough, um, maybe I challenge staff to have several, um, online town halls about it so that way we can begin the community engagement process. I know on these we typically focus a lot on individual council members having our our bond and budget meetings. Um, but this would allow us to go out in July and start start collecting additional feedback. I think the comm staff was working on kind of hybrid being able to do online and then go in in public combination of meetings. And I think in the past we've actually started in June and it's it kind of depends on the HOAs and those whether or not they we actually meet with them if they're available. Um, but we would like to even if we we do online start be able to have a list that we could work from starting to July to get some of that communication out and get it out into the public domain so people can start thinking about it. That works. Okay. Okay. We'll follow that. We'll break here and we'll be back at 1 for uh executive session and work session. Thank you. Thank you.