[Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] oh [Music] oh [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] hold on Ryan it's time for 2024 budget Studio we ready to go live hey we just can hardly wait teres is so excited over there you know and you know it's just going to be fabulous work done I hope everybody read about the econ economy in the United States that was sent in their packet and then today I heard a new economy report that said it was completely different so let's just go with it and see which one we end up with so um why don't we go Ahad ahead and make sure everybody is um here and so we have six people I believe and why don't we do introductions we'll start with our finance director uh Teresa Smith CFO Ryan Bergman budget director Lana Mayfield council member at large Char Mard alol Graham District 2 Marcus Jones city manager F mayor Dante Anderson mayor protim district one dmle at Large Ariel Smith lead city clerk all right with that um I'm going to turn it over to Mr Jones so thank you mayor members of council uh as you said mayor it's that time of year we're going to begin our budget workshops and we always always believe it's very good to have a a general understanding of where we are with the revenue where we are with the expenditures as well as um being able to talk about compensation and what we've been able to do or you've been able to do over the past few years as well as a capital projects update and our Capital uh investment plan capacity the one thing I I will say before I turn it back over to you mayor and then to to Ryan is that there's been a lot of uh good things that have occurred over the past few years as it relates to uh our Workforce and our city and our AAA Bond rating and our ability to um provide for uh exceptional good exceptional Services as well as keep the tax rate low uh as we go through uh today's workshop and subsequent workshops we'll also Express how tough It's been to do that um but that doesn't stop us from continuing to down that path to make sure that we're providing these exceptional services that would be good value for our residents so with that said there I'll turn it back over to you and if not we'll go right to Ryan to Ryan okay thank you mayor and councel uh I will start by talking a little a little bit about uh the general fund Outlook uh talked just in one and two slide format at The Retreat I'm going to go a little bit deeper uh but I will say that even one month of data from January to February uh is a lot of change this time of year when we're working through items in the budget office so there's a little bit of change here that I will try to point out uh but let me also point out that the first two presentations um I I'm a little bit of uh of a presentation hog so I'm going to give both of them but then I would promise to be done for the workshop but but they're really uh interconnected the general fund Outlook uh will tell us where we are to keep Services exactly as they are now unfortunately there's a lot of costs that you do need to contribute to be able to keep things going the exact way they are uh but the the story of what the city of Charlotte does is really its Workforce uh by far our biggest expenditure so uh the second presentation is really designed to complete our general fund budget Outlook uh for this uh budget cycle where you can see the successes of some of the compensation strategies that city council has done over the last couple of years uh I am happy to say that we do have uh uh some very good information to share that's positive on some of the successes of what you guys have done over the last couple of years but as the manager said uh we've been trying to keep this thing moving uh for quite a few years and it is becoming a bit more challenging each year so the first slide and I did this a few years ago uh you can kind of track on the left what's happening there as as you go through it uh when we're building a budget before we talk about any compensation increase the the things we're going to do is we're going to update the revenue we're going to to figure out the unavoidable costs we're going to talk about what we need to what we think we need to do to keep Services as they are exactly and that kind of leads to a variance that you then look at compensation scenarios and you then look at any kind of service enhancements that the city council would like to direct us towards so when we look at the general fund revenue forecast it's a few million dollars up from The Retreat which is good uh as I mentioned this time of year lot of data lot of information uh data from the county uh with uh a uh a pretty solid property tax number in our base case here uh sales tax is really the revenue Source that's most directly connected to what is actually going on at the state and National level so uh just in the last month sales tax uh has ticked upwards our Economist is making a a higher projection uh things that have happened at the national level such as a really really good jobs report nationally um uh small business and consumer confidence being at two-year highs uh have led to uh him revising that upwards so when you look at this Revenue scenario you're really looking at that bottom number that 39.1 million in the box and another way to think of that is about 4.7% growth which is a solid growth number in a year for Charlotte we also tried to put in pessimistic and optimistic so you can kind of understand where we may fall as we go through the next few months and so when you look at it that way it's about 3.3 to 5.8% and where we fall is going to uh depend on a million factors that we will be working on uh throughout the budget process so then moving on to uh what we call the unavoidable costs and I'll try not to repeat some of the ones that I dug a little bit deeper into uh at the retreat uh one thing to mention when you look at something like contractual increases uh $7 million it's not really atypical from where we usually are in that number maybe a little bit high but there's some good stories even in that number uh one of the uh biggest cost increases in that number includes uh Street lighting our annual cost is up about a million and a half dollars a year which is a uh a good thing because city council has invested uh additional Street lighting throughout the city with our vision z uh program so you see some of those things like that there uh Healthcare I did mention at the retreat but uh Healthcare over the last 5 years we've really talked about trying to limit the impact on employees as much as possible as part of our retention strategy our attraction strategy so uh over five years we're spending about 30% more per employee and the employees at least on the premium side are paying about the same that they were 5 years ago uh finally one other thing I'll mention uh Charlotte firefighter retirement system I did want to call that out a little bit of focus there uh for those who don't know this is a uh retirement system that is run by a board that's uh appointed uh some by the city some by judges uh but it's separate from the state retirement system and it's just for city of Charlotte firefighters uh over the last four years we have significantly increased the employer contribution level uh there was kind of an agreement a few years back that the city would increase by 2% per year we are still still continuing to do that uh I I do expect that as we discuss with uh the fire retirement system board they're likely to make a request for additional funds beyond that 2% and uh I I've been working with the board on other possibilities and scenarios uh that we may look at as far as changing the system while making sure you protect all existing employees so more to come on the Charlotte firefighter retirement system uh but just as it is you get to about $34 million of unavoidable costs to try to keep the services going so you can see on the left that results in a little less than $5 million so a little bit better than the number I had shown at the retreat but now we do have an opportunity to go a little bit deeper uh into kind of a next level of uh budget work that we do um forgive the uh uh the graphics there we're not really a graphic design department but what we're trying to show here is we work with uh all of the Departments that are running City operations throughout the year on what it takes to uh maintain the same service levels and just from an early look at some of the information between departments this is probably a fairly conservative number of uh things that we probably will need to do to keep things going so think about costs such as uh keeping vehicles on the road as Parts become much more expensive as uh you know sometimes you go to a specialist and the per hour uh increases uh some of the technology that we need to keep systems going as they are so these really aren't the exciting things we would talk about in a budget but they are the things that we do need to continue to do from year to year and so that gets us to uh kind of an outlook before we get into any compensation scenarios uh so when you look at this we are positive which which is a good thing uh but uh the next presentation after we talk about our staffing levels I will I'll show this slide again with a couple of compensation scenarios which is where some of the real discussion uh likely uh would need to happen it is important to note I will note again that this does not include any service enhancements uh so anything extra or a little bit more that the city council would like to do in anything operating uh I'd also point out that uh this is my uh sixth budget process uh We've uh done a lot of work with departments department heads have been fantastic over the last 5 years on trying to make this thing work each year we we've found efficiency improvements reductions in non-core Services uh some centralizations uh we do get into diminishing returns it's a little bit more difficult to look at uh where some of those opportunities may be this year but we will of course try um so with that uh we'll talk deeper in compensation at the next presentation but this is it for the Outlook it'll turn it back over to the mayor for any questions sure thank you um so I mean just as we we're teeing up our budget process and journey here right now and that's kind of the premise I think anyone who is paying attention knows we're being teed up for an M Night Shyamalan twist at the end of this which is we have to raise taxes I mean like like there's no doubt in my mind just even based on the first slide that's where it is so just to lay out kind of where where I'm going to be given that's the you know huge elephant in the room uh is if there's going to be any shot for me personally to be able to support this budget I have to see a very deep commitment towards the work in presenting us I'm not asking for zero based budgeting but this is the usual approach we take which is all the old stuff we do is don't look at that here's the new money and here's how the new money would be spent paired with increasing um salaries and things like that so I I I am going to ask very crisply and clearly right now that there are two buckets added to this area which is what do we need and are we able to do less of that is in the broader budget that carries over from last year where kind of doesn't go looked at by us at least at all uh where can we tighten our belt there and then what are some of the things then that we might want to do more of very tactically not across the board one of the things I definitely want us to look at is Charlotte water and other um trade skill-based jobs uh to see if we can focus on incenting both upskilling and tying some of that great work that we've now seen a lot of um to their pay but that's the easy part is US listing out our wish lists of what we we want and what we'd like to do more of the hard part is going to be um what can we do less of and if we don't do that tough exercise at all we're going to be at a spot where it is a foregone conclusion that taxes must be raised so no one wants to say what should we do less of what businesses should we not be in things like that but just to be real clear um if that exercise isn't done done well and in good faith then I I will be an automatic no if the punchline on the end of this whole process is we must raise taxes we ha we have to to take a good Noble effort at doing that Mr so thank you council member Bari one of the things that we we do which I'm sorry in a budget process which is typically done which I don't like doing is this uh crosso cut where you just go and tell each department to you know give up two 3 4% what you find out is because of the way Charlotte and mecklinburg is designed in terms of what services we Prov provide versus let's say the counting ARS is heavily weighted to Public Safety so when we go through those things I hear exactly what you're saying we can show you that way which I'm convinced you would say please don't do that but we'll also look at what are some low priority services that we typically provide that we can get out of the business of doing um typically it's not as much as you think but I appreciate you're asking us to exercise I think one point of clarity on that is the standard rebuttal we always hear every year is well police is such a huge line item you want to cut the police but the problem with that line of thought is it's said more to shut down the process of us doing it holistically than to actually do it so if you come back with meaningful cuts that don't impact morale that don't impact all the things we really care about and we're working to rebuild but there are little things there sure let's put them on the table and consider it but but more importantly all of the Sacred cows throughout this whole process that maybe our low priority or lower prior maybe your higher priority but should we be the ones doing them if you take that lens to it and come back with an with an honest list of things we could do that' be difficult I will tell you um I I will I will be a good faith player in what going through the rest of that process Mr Dre so uh my position is very similar I've said in past years uh you get this narrative that says we need more money in order to pay the police or keep the children safe or whatever and it's all fungible right so so a tax increase is paying for the least important thing in your budget not the most important thing and that's why uh uh I too uh am going to be very skeptical uh we'll want to be confident but if we get to a point where uh there are a couple of ideas that we have about things we ought to be able to do and if they can get done then that might be an outcome that might be a unanimous vote but uh we have maneuvered ourselves kind of into this position with some of the spending and I point to things like the cost of our huge commitment to affordable housing which I know is a sacred cow around here but we're paying a price for that and that bubbles up in terms of Debt Service cost it bubbles up in terms of diversion of capital spending away from some pretty basic obligations of the city if we look hard at boring sort of requirements like Street resurfacing and so on we we are not keeping up uh so uh uh again I hope to be in a position where I could say all right if we could do this and this then I'm good and that's not an unreasonable thing um otherwise you may have to just get by with a majority I had one question mayor I'm sorry uh what inflation assumptions are in your base case as as far as revenue or on the expenditure side just generally I mean how are you adjusting year to year for inflation so on the revenue side um sales tax which is the one that uh uh is most volatile for us we have a a pretty standard uh increase in fy2 with which is 4.5% and the variability is really about what happens uh for quarter three and quarter four of this year uh property tax is uh uh less about inflation of course and just what new properties come online we expect it to be pretty similar to the last couple of years uh on the expenditure side it's drastically different um based on each of uh the topics that we would uh talk about for for things like uh retirement we kind of know what's going to happen from the state but for contractual items the ones that uh aren't necessarily locked in they can be anywhere from you know 10% for some of the construction type uh expenses which uh we'll talk about in the third presentation today to uh not really any uh inflationary increase on some of the other expenses so uh this is really just kind of a macro view each of these uh for expenditures has kind of a different expectation uh what do you dig deeper into the budget okay so um but just to be clear on as far as compensation is concerned you're talking entirely nominally flat prior to the adjustments that you're going to discuss in the next section right so so so those would be any increase nominally and in real terms correct the only compensation that would be on here is annualizing providing 12 months of funding full year effect yeah got that that's it yeah thank you all right mmea thank you madam mayor so Mr bukari brought up a good point about taking looking at budget at deeper level sort of from Department to Department I and I know Mr bakari is the vice chair of the budget governance and intergovernmental committee I think it would be uh appropriate for us to look at this at more granular level at one of the budget committee meetings um because when you talk to Residents in our community they often say we do not want to see property tax increase and when I tell them that look you know we haven't had property tax increase in 5 years they said well my property tax went up whether it's the city or the county or the uh home value went up my tax went up and that's just the overall perception that taxes are going up and I so as we look at our overall budget we do need to look at it uh from the efficiency perspective to ensure we are avoiding any waste but also looking at expanding our services especially especially infrastructure to Mr Drake's Point sidewalks High injury networks to reduce fatalities that we are seeing and obviously affordable housing and I know there is a greater need that we need to invest more in affordable housing uh you know Mr Mitchell Committee Member has brought that up several times I think we need to look at that holistically uh but we can do that at the committee level and take a deeper dive thank you did I respond to that I was just going to say compared to uh our merging uh council member asir and council member bari's points uh we we do an exercise uh in the budget that we can share some information which we call our service inventory which uh tries to give a better understanding of the actual external services that each department is providing to the city residents which we can have a a a good look there to the manager's Point earlier about um Public Safety in the general fund that that's very true to the to the tune of when you take out the things that we do that are reimbursed by Revenue such as planning um two-thirds of the budget is police and fire in the general fund so it is very heavy uh Public Safety uh if you add in transportation and solid waste uh you're actually up over 80% so that that is a that is the core component of what we do with our general fund dollars Mr dggs uh Mr makes a very good point I just wanted to expand a little bit when the revaluation happened uh residential real estate went up by 50 something per commercial real estate went up by less the result was a bigger even though we did Revenue neutral last year a bigger portion of that got assigned to residential so individuals who owned property felt it and in my view we kind of kicked a can down the road last year in order not to pile onto that a tax increase that maybe would have been Justified then and that's why I say we're in a little bit of a Hole uh we found ways to avoid doing something then and we still have a little bit of the same problem now people are still hurting from those increases uh and they don't understand you know the economics of Revenue neutral and uh you know all the moving parts so we will be working against that perception this year any other questions or comments as we're starting out okay all right Ryan okay so we'll move on to the uh compensation and Staffing presentation um I probably should have mentioned this at the beginning but uh the presentations uh in your binder um along with a little bit of the pre read materials that we sent out last week are also in your binder um and then any questions doesn't necessarily have to be today if you just ask Marie just like you would uh during a uh a regular Council agenda we'll be sure to provide answers to the questions before the next uh budget Workshop okay so compensation and Staffing uh last year uh and the last two years really uh National Trends coming off of uh the pandemic and some of the inflation we are experiencing uh across the country wages were increasing it was getting extremely difficult for us to attract and retain uh employees uh we saw a historical vacancy rates a couple of years ago of 13 5% for our hourly employees uh city council last two years has taken really aggressive action typically in the past we may have done three sometimes we would get as high as three and a half or 4% for hourly employees but the last couple of years have been uh somewhat historical from a compensation standpoint where if you look at 23 we were providing 8% and on top of that we were also beginning to use shift differential commercial driver's license incentives so you had uh quite a few employees that were able to get a 10.5% increase and then last year uh we uh we proposed a pay plan and then some adjustments were made uh from city council during budget adjustments to increase that where hourly employees essentially got a minimum increase of $3,600 uh cumulative for the year uh police uh and fire we did some uh addition increases raising the minimum and the maximum and so now what we're going to talk about is the results of that the initial results but first let me mention uh some of the the benchmarking work that we do around lowest paid hourly employees so using our 20 Pier cities that we traditionally use uh the five biggest in North Carolina uh happy to say that uh we are uh essentially a leader in this front uh even if you did a cost of Labor adjustment we would still remain uh number one with our Pure cities so almost 40% over the last 3 years 50% over five years if you wanted to look at it that way but as of right now A a full-time employee would start at uh full-time 40-hour employee would start at 2221 so uh this is uh this is the same slide that we've shown the last couple years uh last year we saw uh you can kind of see on there calendar year 2021 resignations to 22 we were starting to see positive results of some of the Investments That City Council made in uh some of our employees and I'm happy to report that in 2023 uh we did better than we ever anticipated uh you can see that uh we had a 25% reduction in general Employees leaving us you can see that every single General employee category uh saw a a a better retention rate than the year prior uh we lost uh 10 less police officers to resignation as we did the year before uh the only one that went up here is fire uh which historically is our lowest uh resignation rate and even at that 11 that represents about 1% of the fire Workforce uh so it's still uh very very low so we've seen a lot of success from the Investments That Council have made and so when you see this slide where people are leaving us much less frequently paired with this slide of the hourly employee hiring in 2023 and you see that uh even though less people left we hired 100 more new people in 23 than we did in 22 and in 22 we hired 200 more than we hired in 2021 you can kind of see the long-term strategy and the successes which brings us to this which uh I I did include in the pread at the retreat uh but that silver line was the biggest concern which is the hourly employees that we have the hourly General employees you see that 13.5% and you can see that's now under 9% we we'd love to to keep getting it lower but even at this 88.9% number that is very typical to what we have historically experienced prior to the pandemic early in the year you you've had some retirements this is typically a year where the rat's a little bit higher but you can see the progress here uh that is uh uh great we expect that if we show this slide next year we think it's going to be even better even if we show this slide in uh 3 months we expect this to be better because we are uh hiring people at a very good rate um police and fire uh fire ticked up a little bit that's primarily because we added uh companies that we haven't filled yet um we're trying to fill them but uh with police and Fighter the recruitment is a little bit different where you can only do a certain number ofies police we are a little bit better but I want to dig a little bit deeper into police and fire to see what that looks like so uh this Council has had a uh at least a five-year strategy more more like more than likely a six-year strategy on uh work with the public safety pay committee and increasing top pay when compared to our Pure cities there there is a lot of data on this slide I'm certainly not going to read it all but I'll kind of explain how it works so over the last five years uh in all three cases for fire firefighter fire engineer fire captain we've increased our top pay uh substantially more than the median top pay uh if you look at the uh the top pay with a four-year degree you'll see that we've made good progress nationally and Eastern uh to at least uh at the median or above the median which was uh a daunting goal goal when we first looked at this 5 years ago uh when you get into without education incentive or with cost of living adjustments where we have a number of different ways to look at it uh we lose a little bit ground but uh the improvement over the last 5 years is just the same and then looking at police same format uh We've increased uh 3 2% to our top pay over the Last 5 Years uh even though a lot of PE a lot of cities have been investing in uh police to try to attract and retain we have stayed uh above the median and we've made some progress again to be at or above the national median and we are extremely competitive uh on the Eastern side of the country uh second of nine for uh for police officers now this this is maybe the uh the the most exciting slide uh if I can geek out a little bit here having been working on this for quite a while so way back in the early 90s we've mentioned this before uh there was a a very big investment in cmpd where we hired a lot of new officers as a city um unfortunately a lot of those officers have been retiring recently just as you get to the 30-year cycle so for the last few years and into 2023 our retirements have been very high so when you look at this you look at the separations the the darker grade number that's the retirement number the other number is resignations terminations any other kind of Separation so in the past the past few years we've been trying to hire as many officers as possible but because of all those retirements and because uh we weren't able to get enough recruits we were still slightly losing ground each year by the time the recruits graduated but if you look at what happened in calendar year 2023 for the first time since at least I've been here and likely much longer than that we actually see a possible net gain in this year by the time we get uh the academy starts to graduate and so you look at that 165 academy starts in 2023 when you look at what 2024 and 2025 might look like uh police is expecting to be able to hire anywhere from 200 to 250 recruits and they their uh resourc to do so in in the current uh the current budget and the retirements are likely to start ticking down into the 60s rather than the 80s and90s that we've seen so the the chief really mentioned this at the retreat but uh we we are now kind of at the point where uh the the the scales have tipped and we are likely to be able to add police officers at fill the vacancy rate over the next couple of years because of some of the Investments That city council has made such as uh uh 23% starting increase over the last two years alone so this is a certainly a good story um shifting back to to more the macro general fund level this is the slide I was talking about and it's my last slide here we have that same revenue forecast of 39 million I did put in the pessimistic and the optimistic scenario so you can kind of see where it's at again this does not have any service enhancements but what it does have is two compensation scenarios and this isn't a uh choose one of these scenarios type thing it's to try to get a feel uh for um where city council would like us to be uh that first scenario is kind of back to that traditional uh 3% for General employees 1.5% plus a step for Public Safety employees and then that second scenario is similar to what we did last year now the the data on inflation would tell you that you should probably be somewhere between those two um but you can kind of see how the numbers actually work within the general fund when we're trying to plan a uh compensation scenario for the budget we do have a variability there of almost $15 million so with that I will stop turn it back over to the mayor Miss Mayfield thank you Madame mayor if we can go back to slide two and I think you answered this question in your presentation when we look at the council actions and the retention when we look at fire again are we seeing that increase because of the retirement because historically a lot of firefighters stay on but I've had a number of conversations within multiple fire departments last year and it was mentioned that where where historically they would stay on a lot of them are retiring now that they're eligible so is that number encompassing the retirement or is it strictly those that have resigned so this number is strictly those that have resigned we I I haven't deeply looked into that we can certainly get you that it is true that just because someone is eligible for retirement doesn't mean uh they'll retire that year so we can get you data on when people are retiring and fire now compared to a couple of years ago I think you kind of address it a little bit on slide bless you slide seven when you talk about you note some of the changes as far as Retirement I just want to make sure that we're looking at pretty accurate numbers because hopefully we're seeing that the increases and the adjustments that were made last year is helping our firefighters to want to stay versus those who were looking at tapping in and utilizing their retirement versus thck in a while okay thank you I know yes the manager wants to comment on that as well so um council member Mayfield I wanted to take a another run at what you said about the um resignations from fire um if we can pull that up the um I do want to start by saying that uh we are very fortunate that the city council has taken these actions over the past few years um because my peers across the country I I guess the best way to um explain it is it's been very chaotic with employees because of the uh inability to compensate people I would say that it's it's broader than that in in terms of uh the options that our employees have with hybrid work schedules um you know even with their hourly employees there's some departments that do 4 10 hour days so a lot of you know flexibility with that prepaid tuition uh down payment home assistance keeping health care costs down so so a lot of great things I saw Sheila somewhere in in the room so so thank you Sheila and I don't see her thank you Sheila and and thank you Ryan and Shan and the whole team as we've talked with the employees to make make sure what's important to them and we've learned things even this last uh time that we met with their employees Concepts like financial literacy is extremely important so again you've been able to put together a very good Pat package that makes us a very attractive place on on this one Council M Mayfield I would just say that if we go over to the 2021 resignations so I I believe fire is like 1,200 I think uh total employees so that number were so low so nine um and then you know in 2022 the re resignations were six so 6 to 11 seem so big you get that big 83% but they're so historically low that any kind of swing in that will give you a much bigger swing mayor if I can follow up Mr manager one of the things that you just mentioned as we're having this conversation is the down payment assistance we know that staff can run the report a good number of our police and our fire do not live within the city limits so as we're having this conversation of where we can do cut Cuts I am going to just put into the Universe I support my colleagues regarding those that are in support of us looking at what we can do around our housing because again that's Revenue generating for us if they if you are a resident of the city and paying taxes here versus living in Dallas and driving an hour or more to come in to work what benefits and what is what does the survey say that will get resident get our employees to be able to live within the city recognizing the market is doing something very different hopefully we're going to see some type of change we're not going to see 70 $80,000 $100,000 homes anymore yet there could be a leveling off cuz I did attend the center city state uh their state of addressed a couple of weeks ago and looked at a number of the new developments both in multif family and single family that's already in the pipeline looking at how many of our employees percentage wise do not live within the city limits versus those who do and just suppose that with those who want to but financially are unable to all right Mr drgs followed by Miss Johnson Mr thank you mayor um a quick comment for one I think it's interesting to see the comparisons with other cities but at the end of the day uh the bottom line is retention and Recruitment and Mr manager you may remember that I pushed you pretty hard on this a few years ago it's nice to see that it's working so we are making that investment and we're seeing the results so we're I think we're in a good place appreciate that um resourc to hire the cmpd is resourced to hire that sounds like uh we don't need to make any adjustments to our budget process because of the prospect of bringing in all these new officers is that right well no the uh when I say resource to hire I mean the the positions are on the books and to run theems they have what they need to run theems at a higher level we did make some Investments there in the current year uh as these officers graduate and start to advance up the steps at it will take additional resources so in in terms of what you told us before like this the status quo extending and then the compensation these new officers don't fit into either of those categories where are we adjusting for the increase in the number of officers so because we've had the vacancy levels for several years the officers basically go into those slots as more graduate police has to use less overtime or gets to use less overtime because they have additional officers and so it's kind of a up and down thing when you work on it in the budget but we we never even though we couldn't uh we couldn't fill all those officers over a number of years we never cut officers from cmpd so so that's what I mean by they have the resources to support the additional um the additional trainees until we get closer to that compliment number they already have so I guess my concern is that uh there may have been in the budget funding for positions that weren't filled and that represented cash that was available either to pay overtime or for other purposes as the Staffing levels go up is the operating budget from cmpd going to come under strain because they're not having the benefit of those unfilled positions the answer is yes and that's something we're consistently working with them on where yes they they have to use a lot of that savings quote unquote savings for overtime to uh to to do their normal Staffing levels but it is true that they have been able to use uh some of the savings for some of the technology needs that they've needed from year to year so yes as we move forward if they're at the higher level there will be some strain on their operation to make sure that we see that in advance and don't find out about it later could we go to the last slide please oops uh so I'm trying to infer from that what kind of a gap we are looking at in each of those scenarios like uh I don't see our base case Revenue line I'm trying to you know if you take base case revenue and base salary increase what kind of a gap are we looking at so that'd be about $15 million it's yeah sorry it's uh the 54 million total costs minus the 39 million base Revenue case so 15 million yep and that that's at the the lower historical compensation level without any service enhancement so um by itself that's uh a bit less than a penny on the tax right three4 what we are we calculating 21 million or something percent uh all right I'm just trying to calibrate here a little bit thank you Miss Johnson thank you Madame mayor if you could go back to the resignation numbers please so as someone with a a fairly unique perspective of uh Charlotte employment I think that these um numbers are good for um they look good for the culture it kind of speaks to the culture of the organization I wanted to know if we track the number of terminations do you mean like uh non- resignation terminations yeah yeah we we do and HR can provide that I don't have it off hand though okay that just kind of also helps us with the the culture as well um and then I see that the minimum wage is not minimum wage but yeah the minimum wage for Charlotte employees is $22.74 is that what I saw for General employees correct that what 2274 what does that that means for all employees right uh 2221 2221 and that that's the minimum hourly wage for all Charlotte employees for General employees for firefighters work a little bit different schedule yeah okay all right correct what' you say I'm sorry General is hour and S and then you have the uh swor the sworn okay all right thank you so that's good to see um especially since the focus is going to be on that 60% Ami for housing when I looked at the numbers the other day it didn't even seem that Charlotte employees were receiving that so that's great to hear that's something we want to be conscientious I think of the Ami and that 60% um that rate and make sure we're always I think as as a city that we're meeting that and our employees fall into that rate um and then I had asked a while ago about the a report for the cmpd hiring process and I was working with Chief Jennings for a while I'd like to follow up Mr Jones where are we losing C candidates we were we were looking at a breakdown of where we're losing candidates specifically well not specifically but also a breakdown with for minority candidates like we are in the process so I think that that would help us in the future for that hiring process if we could revisit that and and and see where we're losing um candidates and if there's some changes that we can make from an equitable perspective if it's testing questions or if it's you know what what that would look like so thank you thank you great job thank you any other comments on this position missir thank you Madame mayor could you go to slide number 10 please so for the base salary increase what is the increase are we looking at 3% yeah that that's just this is kind of a it just to show you a range that base salary is 3% for General employees and the next column how what percentage increase that's what we did last year so more like 8% % for hourly not for salaried salaried was four last year okay and so this doesn't include to your point any increase in our services whether that's housing or infrastructure or anything correct okay thank you any other questions all right all right you guys are done with me um I will uh uh bring up our city engineer Jennifer Smith and Hannah bromberger assistant director in the budget office uh to talk about our capital projects update I'll I'll I'll talk while they get set up here um so our next Capital Workshop uh per the the budget committee plan we do anticipate to be very focused on forward-looking CIP and our next Bond 2024 Bond and even our 5year CIP um before we can get to that point though we need to talk about the existing capital projects uh it does uh because of easements and real estate and design and planning uh local government capital projects do take a while so this is really intended to be about the ones that are already ongoing uh as we' faced some of the same national uh inflationary trends that every city has been dealing with good afternoon mayor members of council as Ryan said my name is Hannah bromberger I'm the assistant strategy and budget director and presenting with me today is Jennifer Smith the city engineer so today Jennifer and I will review the funding status of all active previously approved capital projects so that includes both transportation and neighborhood projects that are funded by General obligation bonds as well as facility projects funded by certificates of participation or cops as we often call them then we'll review the funding estimates of the named projects that are currently in advanced planning scheduled for the out years of the bonds so everything we discuss today is ongoing active capital projects that have previously been approved we'll shift gears for the March workshop and begin to talk about the fun stuff the 2024 Bond and Beyond uh but we think it's important to have this conversation first so that you can have the lay of the land on the current state before we begin talking about the future CIP state so I'm going to turn it over to Jennifer now to provide some project updates and set the stage uh with an update on market conditions in the construction industry thank you Hannah um I first want to remind Council um about the impact inflation has had on our projects um when material and labor prices uh increase significantly that does affect our project cost estimates um so the graph on the right one two um the graph on the right shows National inflation data and what I've done was taken three different construction material items um and I'm trying to really highlight that this graph is showing the percent change in the price um compared to the prior year and so in general uh material prices are not decreasing they are just not increasing as significantly as they were in 2021 and 2022 um Lumber and plywood is an exception on this graph you see a high Spike over 100% increase then we had some lower uh or negative decreases um and you can kind of see that on the table so we took these three um materials and kind of laid out so the concrete pipe um let's say it costs $100 per foot in January of 2020 the cost of that pipe in January of 2024 was $138 so a 38% increase over that time period we use a lot of concrete pipe in our projects um next slide Hannah so we're contining monitoring the market and evaluating the unit prices coming in on our bids uh we use this data to update our project cost estimates we federal grants or state grants um and we're also trying to move priority projects forward as quickly as we can we have 149 Bond projects of which 17 were completed last year um 16 are current currently in construction including a design build project and we've added 44 new projects to our list of the 149 projects there are eight projects that are projected to be over budget and 11 that are at risk uh these numbers are similar to what we saw what I shared last year and now Hannah I'll pass it back over to you to talk about the Outlook thanks I'm going to provide a little bit of funding context to the information that Jennifer just shared so you may remember that the adopted current year budget includes planned undesignated future capacity in all of the bonds in the 5-year CIP that unprogrammed funding first appeared in FY 2023 and that was in the midst of those percent change spikes that you saw on Jennifer's earlier material cost graph um so we included that funding and we left it undesignated on purpose to help address inflationary increases on projects that were currently underway or planned in the future so the planned 2024 Bond includes 22 million of that additional unprogrammed capacity and we believe that based on what we know right now with the numbers that Jennifer just shared and those the specifics on those projects we think that that 22 million of additional unprogrammed capacity is sufficient to cover any funding needs that we may have in FY 2025 but just like Jennifer said it's important to remember that even though inflation in the construction industry has normalized to those traditional levels of growth prices are not returning to those prior year prices and so we believe that it's really important to maintain that undesignated future capacity in the out-year bonds in 2026 and 2028 so while that additional undesignated future capacity in those out years isn't exclusively intended to address the inflationary cost on the named projects um that are currently in advanced planning like Jennifer said General Services is is continually updating those project estimates based on bid information on active projects that are coming in real time and based on those bid numbers we do believe that the the budgets on all three of these projects will need to increase in the out years and that we will need to use some portion of that undesignated future capacity uh to cover those those increases and I do just want to connect a DOT here uh 2024 is the second year of a 2-year community area planning process and this second year of the process is dedicated to capital projects and capital programs within each of the community area planning geographies so we're going to be back in the community this year and we understand that as these project uh estimates are increasing and they take up a a significant portion of bond capacity in those out years so we will be testing these project scopes with the community to ensure that we are delivering their highest priorities in terms of infrastructure we'll turn it back to Jennifer for facility projects okay our facility projects include police stations fire uh houses our sustainability projects Ada building improvements and other new city-owned buildings or major Renovations uh we have a total of 24 projects two of which were completed last year nine projects of these facilities are actually in construction right now and we added 10 new projects this past year uh as with the bond projects we're watching the market and bid prices closely to estimate our projects and we currently are only showing two projects at risk one is a police station and one is a firehouse so as we wrap up uh sort of the annual look back that we provide of all previously approved projects there's just a couple key takeaways I want to recap first is uh that we believe the 22 million that is already in the 2024 Bond as that undesignated capacity we think that that is sufficient to cover the next fiscal Year's needs in terms of any ongoing project overages but secondly we think it's really important to maintain that undesignated capacity in the out-year bonds in the 2026 and 2028 bonds as we look ahead to the March workshop and planning for the 2024 Bond and Beyond uh Teresa Smith the city's Chief Financial Officer will provide an update on our CIP our Capital affordability um and that'll help you continue thinking about your programming priorities for the 2024 Bond so with with that we're happy to answer any questions all right I have Miss um Ashira followed by Miss Mayfield and then we'll come to Mr dggs and Mr Graham and Mr Mitchell and Mr Mitchell sorry [Laughter] everyone uh thank you madam mayor so there is good news that we have the uh contingency in 2024 to cover any well to cover over to cover the increase that we have seen which is 22 million then there is a bad news that we don't really have the capacity to do any other projects outside of that list um I I would really like us to move needle in further in terms of tackling our sidewalk projects I think that's way overdue especially in high injury networks and I know I have requested the list of high Injury Network where there have been fatalities we got to make that a priority and vision zero projects um I would like us to take a look at those um I think longer we wait we are losing more lives to injury and traffic fatalities so Mr Jones I would like us to prioritize some of this infrastructure projects that's been put on hold for many years now thank you all right thank you Mr Jones so um thank you council member asme and thank you Jennifer and Hannah you know one of the things I just want to jump in um early on as the conversations I continue this was um creating four Bond cycles that was the city council's four Bond cycles and prior to that we had four Bond cycles and I won't even mention some of the projects like the crossr trail but we had to as I as I mentioned it and and what we had to do was try to find a way to give you more certainty in the future when we talk about these projects so this was never intended to be ambitious these four Bond Cycles it was really trying to make sure you had confidence in us that we could um put something before you you could put it before the residents and we could uh deliver and so know one of I guess the big takeaways as we go through this is never this was never intended to be ambitious um it's great that you did not use that unprogrammed capacity because it was able to C we would have a totally different discussion today today if we came back to you with the with a problem that we could not address with the capacity and so that's also what's been said earlier let's not go into 27 or 29 and use that capacity because there's still some outstanding um you know issues out there but I just as terms of level setting I want to thank the the team for putting together something that had a bit certainty so to your point uh Miss ashme if there needs to be more that's a conversation that happens the budget workshops yes so follow so there are I got a list of all the projects it was in our it was in our uh package earlier this week and I see there were some projects and there was one segment for AC cross Charlotte Trail I think segment number six I know it went through the whole Capital design process to ensure that we had more accurate estimates so all of these projects that's in the list did go through the capital planning process is that correct so yes it's all gone through planning and design but when we see 20% increases that was never anything that so that was beyond ipated right that was beyond our imagination all right thank you all right Miss Mayfield thank you Madame mayor thank you for a very detailed presentation when we look at the projects at risk do we know which police station and Firehouse that we talking about yes it's on the on the list it is the cmpd Northwest division station and Firehouse 11 where are those located right so that's the reason I was asking because um I didn't is in G I am geographically challenged so therefore I use map quest for everything so where where is the Northwest station located northwest station is off of Mount Holly Huntersville Road okay and fire station 11 I think is off of 28th Street um and I think it's Graham it's 28th 29th I can't can't remember the exact street but it's so that's where we're looking to build it's actually a replacement of an existing station 11 I'm trying to remember okay I'll right back through cmpd police is a new build okay thank you cuz I was like we don't have a I know the station over there is relatively small and the area has grown considerably just in the last few years so and there's a volunteer station right up the street but the capacity that's needed that makes sense in these new 44 projects when we identified the 44 new projects that are added I guess what I'm really trying to figure out is how much wiggle room we may have if we're looking at a minimum of two that are at risk in comparison to some of the new projects that were added if those are projects that can be delayed so the majority of the new projects are new sidewalk projects that are in a sidewalk program and so we really monitor that program as a whole and we'll only start what we can afford within that program um the other projects that were added were within the vi Vis Vision zero program as well so whether it be Street lighting projects or pedestrian hybrid beacons um those are also in a program that has a set dollar amount and we will monitor those programs on how many we can start based on the program funding that's so the days of old where we actually came in under budget on sidewalk projects and were're able to reallocate like I was able to do many years ago those days are gone because we we have a new level set so even though as you mentioned the prices are going down we've already proven that here's a number where the economy the market says okay here's good for us to still maintain our profit so we don't have those wins like we used to where the project came in under budget right okay thank you all right thank you um Mr dggs thank you mayor um so picking up on Miss ad Mira's Point are we right to understand that we have enough capacity if we reserve what was previously uncommitted to see through projects that are on our list but as it stand stands right now we don't have capacity to add anything to that list right that's correct so just so we're clear we're now uh I mean the needs don't go away right and so uh now of course one way around that is you increase your Revenue you increase your allocations to The Debt Service fund and then your calculation on capacity changes so I'm waiting to see how that plays out um what does at risk mean at risk what is it yep so what we have done is looked at um the project estimate we think depending on how our bids come in we may be okay um and if we don't have to dip into much contingency that we have set in that project budget that we may still be able to complete that project within the the current budget but the current budget includes like a 10 or 15% contingency right so you'd still be within budget if you need use some of that you're talking about the possibility that you need more than that yes if the bids come in greater than what we had estimated so again uh the capital uh project management um we started down that road changed the way we did things partly because we had some bonds that had been authorized and where the authorization was threatening to go stale after 7 years uh what is the status right now now the authorization we have for bonds versus the time uh remaining until those authorizations expire sure so right now we are spending on authorization from 2018 but we we should be within that seven-year window to spend all of that authorization so we think that we will not again be in a position of having to reauthorize because time ran out correct and we created I think a $20 million type cap Reserve uh revolving fund or something is there a balance outstanding or what's the status of that yeah so that's the advanced planning and design fund and yes we have several of the projects that are currently on the list that are active have gone through that program and the funds whether it be cops or bonds that we had recently allocated in either 22 or the 23 budget are going to replace and replenish that so I want to say the current current balance is probably or will be somewhere around 9 million um in there so we still have capacity to add additional projects as other projects are coming out of that and that means we don't put the bonds on the ballot until closer to the time correct right yep that's all working that's great thank you Mr Graham uh thank you madam mayor uh Mr Dres asked my first question which was the definition of at risk right I think they're both in District 2 so I needed to know that but the secondly um the animal care and control does that address many of the issues that we heard throughout the last year in reference to upgrading the facility s so there there is a phase three animal care and control that is in in advanced planning now uh that we're evaluating that is looking at the the current issues and that would be a new facility or renovated facility or um what we're looking at is renovations to existing facility no thought off a new facility that's a capacity expansion expansion so Mr grah I'm sorry I think Mr Jones okay Jennifer Mr Jones okay I'll give so uh Mr Graham to to your point um we spend a little time time with cmpd and the uh individuals who run annual care and control and try to do an assessment I'm just saying me personally about um what are some things that we can do in that area even before we talk about a new facility so what I'd like to do is make sure in a Thursday's packet I'll just give you some information about Animal Care and Control and it's really highly respected when you look across the country what is happening there in terms of uh Innovation around adoptions and things of that nature um a new facility will have a very very very big price tag and we should just have a discussion about that going into it one of the reasons that we have advanced planning and you know Jennifer and Ryan and Teresa you can stop me from misstating it is you may get to a place of Designing something and decide that it's just not something that you're willing to do but you can't you shouldn't make that decision until you have some level of design to see what the cost will be and I will say that that's not an insignificant project uh that's why we put it in advanced planning um I'm looking forward to having the conversation I I think it's a conversation that we need to to have and is either down but certainly as the city grows that that thing has been I mean notwithstanding the work that they do I'm talking about the physical environment in which the work is being done which is problematic okay um and now we have Mr Mitchell uh Mr Mitchell would you mind if I just piggyback on that go right ahead sir uh so I'm interested in that too at one time Mr manager we had $70 million planned right and and then it got pushed aside because of other stuff we didn't put any of that back right so I thought I heard that maybe there was 9 million or some number like that uh that we that we might be contemplating we need to do more there it's it's a basic obligation of the city and we're not keeping up sure and that's why I want to get the information to you there's been phase one and phase two there have been dollars that have been deployed there have been Renovations in the current building one of the concerns was it's on Airport property and at what point would the airport uh kick animal care and control off so I would just want to get all of that information to you because unfortunately the conversations we have are when people sign up to discuss it as opposed to having a conversation amongst the council during the budget Workshop all right Mr Mitchell uh Madame mayor uh I think Miss Ashman say she has a question on the same animal control so I'm I'm thank thank you thank you Mr Mitchell so I agree with the council member Dres and council member Graham on animal care and control uh at uh I remember in last year's budget we had also increased one uh full-time staff there so as when you send us a memo if you can also uh give us an update on resources because that's also been an ask that hasn't been addressed in a while so before since we're doing animals um I know that we also had the um site over on Tumi Avenue is that still ours the existing site so you know if you look at a city that's 30 thou 30 miles across I think you may have some ideas that around well do you build one big place that everybody has to go to or are there other opportunities that would be available and I think we really need to include in this discussion not just just the money part of it but there's been some studies done about how you do animal control facilities and a number of ways that other cities I think we need to get some ideas of what else is happening and where it's going if we're going to have this conversation and it's going to be one I think we ought to be thinking ahead what's in the future for animal control as well as um the some of the studies that are showing the increase in animals but also in the abandonment of animals more than anything and which is an entirely different thing than um what we have currently I think so if we could if we're going to do this let's do it completely in a whole because it's it is going to be significant all right now I think I'm ready thank you Mr Mitchell [Music] for oh my gosh okay so let me uh and and Council mcgraham councilman madri said the same question I had about defining project at risk so thank you staff uh let me jump to the Future project updates and particularly is this around the 2024 community area plans I think that's something we have all focused on and say it's a priority what what I have I'm feeling a little uncomfortable though I guess I don't know what dollar amount that that we are allocating uh part of the 2024 community area plan so I don't know if that's we need more import input from planning or have we designated out of that 22 million how much we going to use for the community area plan so council member Mitchell I I think that's on the operating side okay that we put money in pgo last year that yes so to cover that okay yes okay thank you and the second request is the facility project update great job staff cuz in the construction Market it is challenging um and as you know and so I'm glad you're you're keeping up with the trends in the market with concrete and and lumber let me ask you one question though we had a conversation about a police station and so is that is that listed as number 10 projects added that was a uh police station that first started off Northwest that oh that's still the same one okay that's the one we're saying at risk so we're going to rebid that out correct okay great all right thank you Madame mayor thank you staff great job okay I have Miss Johnson Miss Johnson thank you Madame mayor um I wanted to follow up how are at risk projects identified so so we are looking at the current budget we have for that project um that includes some amount of contingency that still remaining on the project right and we're looking at what our estimate is for construction if that budget is pretty tight and right there really close to what we think the ultimate cost of the project is going to be we're calling it at risk because in those projects I have not bid that project out and gotten actual prices to do that work and so if the bid prices come in to what I'm predicting they'll come in we think it will be on target or on budget right we'll meet the budget however if the bid prices come in higher than what I've estimated right then it's probably going to be over budget so there there's these projects that are right there on the line of I have very little yep go ahead yeah we uh we are very afraid of the color red in the budget office so we probably made this more confusing than we needed to be so basically the way to think of it is over budget is red at risk is yellow and everything else is green and so next year when we come back some of those yellows will become green and they're fine and some of them will become uh red and over budget so it's really kind of a warning that we're getting pretty close to that contingency level okay um can we look at the projects Mr Jones I just want to understand so when I look at the at risk projects um where let me ask where is Firehouse number 11 is on page six or you mean like where is geographically where is fire I think 28th Street in Graham okay so that's not District Four good okay but when I count but when I count these I it looks like so I think it's four or five of these 11 are in District Four so it's about if it's it's 45% of them are in District 4 if I'm looking at them correctly you can correct me if I'm wrong of the ones that are at risk and I wanted to know how those were um identified and if in this in this presentation we can add a column for district so that um so that I and also Council and our public can see that these are um Equitable and evenly distributed and we can be assured that these Cuts aren't political or anything like that so if we could add the column for the district please I don't understand how 45% could be in one District when there are seven districts across the city okay okay uh so I'll I'll I'll try so um some of these projects um predate the the I guess guard rails we put in place for the four Bond cycles that this Council put together uh a few years ago again before advaned planning things of that nature so we are going to always have to inherit some projects that really didn't have the design that an engineer would have liked to have beforehand um and then we can figure out where things are you know by District uh council member Johnson what I will say is that one of the things that we're trying to do is move away from this but we have to stay here until we give you the next thing but the next thing would be those Strategic investment areas that's all across the city that we can scale up depending on the funds that are there because this leads you to having a conversation about what's in my district or somebody else's District as opposed to getting to a place where you can really unlock some capacity by being data driven around projects throughout the city but I can only do what I can do because this is what we have right now and we can make sure we put it by District I just want us to think a little bit about where we're in the future that it's more data driven well and and and let me just say council member Graham I'm not happy that it's in any District but that would have been the difference between 45% and 54% so that's what I I wasn't sure where that was um so yeah I I think that we um as a city want to make sure that we're looking at all of the districts and that um if there have to be any cuts that they should be done equitably um and evenly as possible thank you okay I think that's last word on this one thank you madam mayor I I just want to make sure we are all on the same page so with any over cost overruns we have enough capacity of $22 million to cover that so there are no cuts from any of this list is that correct I just want to make sure the the ones that are over by budget for what we need in fy2 we feel there is sufficient capacity to do it so there is sufficient capacity of 2 million in 24 B cycle to cover this um so there are no uh second um for Eastland I do see that under Workforce Development and I it says on Targets this only includes general fund correct this doesn't includes if there are any other sources so maybe that's why East is not on here okay correct this is general fund this this is about what council has already um allocated in past budget so if there's some future ask for anything we of course wouldn't have it in here got okay thank you m mayor Mr DRS just uh in response to that I remind everybody of this document so we have in here 200 miles of road widenings we have 260 Mi of thorough fares and sidewalks I think there's a question about what assumptions we're making concerning CIP capacity versus the expectation of new sales tax are we being clear about how we make that distinction because according to this there are huge needs that would probably only could be met by a new Revenue Source uh and therefore would not have to be included I mean a lot of what we do in CIP could be covered by the new Revenue that we would get from a sales tax under the Mobility plan is that right that that is correct all right so then uh I think it's worth being clear about what we discussed that is predicated on the uh the revenue and pursuit of this plan versus what we can do with CIP on a more urgent and immediate n because we have two road projects right now in CIP that's it and it's not nearly enough so let's recognize we are heavily dependent on being able to pursue this plan in order to achieve the greater needs thank I think that also includes sidewalks a lot of that if we could have this the Mobility plan one I think it would go faster and it would be covered by the tax that um extends beyond our city limits instead of putting this all on our PE people for property taxes so is something to be said about about that all right Miss Brown thank you madam thank you madam mayor I want to just be clear I know that um I'm looking at it and following it and I get the on said over budget and at risk what are we doing are we doing the same thing with those that I so yeah yes so uh council member Brown uh what we're doing is for those uh projects that are over budget we believe that there was enough uh of capacity that we didn't align with any project that we can cover those overages so that's um the the I guess the big takeaway and I'm glad you've asked that we don't see a problem right now with anything being over budget because we have capacity elsewhere to cover it yes okay that's it for me all right okay um um what's next okay so our our last uh presentation which we've handed out for you to put into the binder will be by our CFO to talk about our CIP capacity oh the fun part now right so thank you Ryan and uh thank you Council I am excited to be the last uh presentation uh with you today to talk about the capital plan uh capacity or affordability I may use the two words interchangeably so if you hear me say one or the other they are essentially the same thing um before I get started I did want to introduce Matt hasted who is also here with me um City Treasurer so uh we'll both be available to answer any questions that you may have so I wanted to start out um just talking about steady state because we we use the term steady state and I know for many of you on the council you were here when we started steady state so you understand what that means and for others it may not be as easy to recognize what we mean when we say steady state uh but this was something that we introduced in 2018 as a way to preserve our bond funding into the future so rather than looking at what we could afford today we're actually looking at those future Cycles to make sure that we're preserving of that affordability as we go forward this is part of our comprehensive Capital plan um so we look at not only debt but we look at how we use pgo and grants and contributions and cash but debt is a major part of this program uh I wanted to highlight the AAA rating here because what we're doing today this planning process is one of the reasons that we uh are able to maintain that AAA rating uh we use the term management AAA which means that you all have strong financial policies and that you do undertake this planning process that looks forward so you're not just looking at what is best for today but you're looking at what is needed over the long term uh this having the triaa rating allows us to issue that at lower rates uh because people see this as high quality with minimal risk and that's what people uh sort of flock to one of the financial policies uh that I wanted to highlight and you'll see this as we get into the model is our use of fund balance so just to kind of give you an example of what the financial policies look like we do make sure that we maintain uh 50% of our fund balance into the next year so that we can ensure that we're covering those Debt Service payments also wanted to highlight that affordability is a point in time analysis so that means what we know today based on the audit based on what we have budgeted uh based on what our projections are and based on what our rate assumptions are so an affordability number you would expect that to change that it will fluctuate up and down when any of those things change uh the other thing there to note is when we talk about affordability we can allocate this between bonds and cops and we'll talk a little bit more about that as we go through the presentation so steady state uh is what we account for in our Municipal debt service fund so the Municipal debt service fund is funded the two major sources there are a dedicated portion of the property tax and a dedicated portion of the sales tax we also have other revenues uh an example there would be investment income and I highlight that because we'll talk about that um in a future slide then the uses for those revenues this is where we are funding our uh debt issuances related to those things for construction so those large capital projects and then our facilities and our equipment so just to give a little bit uh of of Baseline here when we talk about our construction and our capital projects this is typically where we'll use a general obligation Bond so when we talk about our bond package that's what we're referring to is the general obligation Bond uh those require voter approval uh we have already talked about a little bit the seven-year authorization window so once we ask voters to approve that we have seven years to use that authorization on projects if we don't use that the authoriz ation expires the other thing about the general obligation bond is that it is a pledge to raise property taxes so what that means is that once you enter into a general obligation Bond if you cannot afford that debt service you have pledged that you will make sure you raise property taxes to do that which is why the steady state is so important because we're modeling in a way that you're not pushed into a property tax increase that you under understand the debt affordability that you're going into as we go through along with our general obligation bonds we also use what we call a bond anticipation note program that is a short-term draw note that we'll use before we issue the general obligation Bond so you may hear these all of these terms and see these things in counil actions so goo General obligation ban is the bond anticipation note and then we use cops which was referenced earlier certificates of participation that is what we'll typically use to fund our facilities and our equipment and the difference between the cops and the bonds is that the cops do not require voter approval and what we what we pledge there is generally the asset so if we're buying new vehicles we can pledge that vehicle uh for that loan so you kind of think of that as the way you think of a home mortgage is the way the cops work so when we go into the debt model and how we actually come up with the steady state affordability there are three big buckets and so I want to talk you through those uh I'm going to talk through them right to left uh and I I think you'll see why when we get to the left uh but I'm going to start with the cost of funds so what we are referring to here is our interest rate assumptions um these are driven by market conditions so the last time we made an update for interest rates interest rates had really jumped significantly we haven't seen that because they've held at that steady rate so they're still higher than we would like to see but they haven't changed significantly so when we're looking at how that affects our affordability we would say this was a neutral impact into this year's calculation of steady state the next one there is spend rate so spend rate kind of addresses how quickly we have to issue debt um we just heard and we just talked about in the prior presentation about the cost for the projects going up so as we spend money faster we will have to issue debt quicker so when we look at that and how that plays into the model that has a negative impact on our affordability so we've indicated that here with red because we agree with budget we don't like red and then finally we look at Revenue so as we talk about the revenues that are coming in we want to make sure that we have conservative but reasonable assumptions uh and for 24 just as you heard on the general fund presentation we do expect the revenues to come in stronger than we had initially projected so from a modeling perspective that has a positive impact on the affordability so what does that look like when you put it all together so the new updated steady state affordability puts you at 228 million in total if you utilize all of that growth for streets and neighborhoods um you'll see the note over to the side the prior capacity was 210 million so we have added a little bit of affordability uh a little bit of capacity but I also wanted to highlight the note on the bottom so if you allocate any of this new growth in capacity to housing bonds you add 10 million on your affordability and there's a difference in affordability because of the way those bonds work uh because of the rates that have to be U estimated for those those two types of financing but you can see that you could do a combination of allocating this affordability uh it is not a one for one I will say that uh but if you allocated it all to streets and neighborhoods that would put you at 228 million in total and with that I will stop for questions questions million how do you divide it and if you look at what's new or different or changing the amounts from what we've had in our steady state there are consequences to deal with this in terms of how you have to change um the Capac it and and perhaps how we have to change the um debt equation so that's what I heard um so I think this is something that as we've talked about this the ideas of around where do we allocate this money is very very important um and sometimes because I'm not sure when this test to take place Mr Jones so that you know so that you can prepare if things are going to be different than in the past that's that's the other thing I heard so am I and I missing it no not at all mayor so a mayor members of council I would call this just a check-in with you uh just to let you know where we are with um the steady state it's it's funny they tease me because I I try not to forget a number I think at some point the steady state was at 226 and then it went down to 22 then 210 and now back up to 228 and and I would tell you um mayor members of council we shouldn't even debate 18 million right now because 18 million is not going to deal with the issues that we have in the long run we're just letting you know that we're moving um in a positive direction versus a negative Direction um not to the I think the boldness that many of you have talked about but it's just a check in to to to see where we're at we'll you know say this also and great job Teresa and your team you know she mentioned the concept of a management AAA and that that's pretty important it is for the most part the rating agencies look favorably on Charlotte because of the way we manage this not because of the wealth factor or things of that nature so we just need to continue to be conservative um because that's what keeps us in this AAA territory how we manage um this debt so um I think that the prioritization for the council in terms of I think Miss asir talked about well how do we make sure that people can um walk through our streets and and that we get to zero um fatalities on our streets so that that comes out of the 160 for the last time and then as we continue to think about this what do we are what are we doing and committing I think there was no estimate for the neighborhood projects yet because those are not in the new the new 16 how many is it 16 yes 16 districts we don't have that yet and on 50 I've heard a lot of conversation about moving that to 100 so how does that all prioritize and I think that's going to be the discussion this council is going to have to have um Mr Jones is that yes so no I totally agree with the mayor the the thing that um I ask you all to think about is the budget is presented I think May 6 we're going to have a number of discussions either in budget workshops or in the uh committee there's been you know talk about potentially a um sales tax the sales tax won't get here by May 6 so there's some things that we have to talk about in terms of the city of Charlotte and how do we um continue to address the needs that are out there that we're identifying and then I I'll also say you know how we work we will try our best to be as Innovative and creative around how we can get the the biggest bank for a buck for lack a better word so I would not suggest that this is a take it or leave it it is just a beginning of a discussion mayor thank you um miss Mr Dres was first and then miss asmir so um the the management triaa as I understand it means that our debt level is relatively high for a AAA but they preserve the AAA because they appreciate the quality of our management is that a good description that is a good description okay so um and the other thing I just wanted to point out is when we talk about steady state the simplest way to put this is if we go above the steady state number this year we would expect to have to issue less debt in future years it's a just a one forone tradeoff right so that's the the amount that you can do every year if you get ahead of that schedule you're going to have to catch up by issuing less debt later um I will also mention just to tie in with the prior presentation those yellow numbers up there uh are what we were told earlier will be needed for projects right so so the I I thought that's what I heard no sorry and I know this gets confusing the the yellow is actually new capacity that's never been in our model oh okay it's a different yeah yeah right so so uh that that was the result of updating the calculation so we had new capacity uh then what we were told before was compared to this new capacity um it is still the case that we need to keep all of the uncommitted money in our CIP available to deal with the cost of current projects right um okay that was it I just wanted to be clear on that thank you m thank you madam mayor so Ryan or Madam CFO this increase in capacity was it because of the projections in Revenue change yes that was so we have we have actually more better projections not projection projections were always good but it's just that we are uh our Revenue projections are looking better right and and if you remember from the general fund presentation that Ryan did property tax was one of those and since property tax is a major source of revenue for this fund we're seeing a similar thing there I did also uh I was going to mention the interest income because you know when we see the rates rise anything that we have invested our interest income is actually higher so those were the two Revenue sources that increased got so can we go back to that slide number five uh so very at the bottom where it says if new capacity attributed to housing bonds growth amount is 10 million per Bond cycle I'm not sure if I follow that sure so a street and neighborhood bond is different from a housing Bond um in a couple of different ways so a street and neighborhood bond is a tax exempt Bond so the rate that we have on that is a little bit lower than a housing bond which which is a taxable Bond so that's one place that we start that the interest rate will be higher on a taxable Bond the other thing just from a modeling perspective the way that these funds come online and the way that we have to issue debt it comes faster on the housing side and so we pick up more principle a little quicker than we do on the other and so those factors together just make the affordability smaller if you dedicate it all over to to he housing G so so the way I look at when we look at municipality Bond because those are usually taxfree the housing doesn't fall in that category it's just the rest okay right okay um so this 160 million in streets and neighborhood that's all been allocated right uh we don't have any additional capacity here so what is 1 cent s 1 cent increase in property tax how much increasing capacity would we get I know for operating we talked about 25 million was it but I I don't know what would that equal to for the capital um yeah so it's about $21 million of Revenue and what that would generate there's all kinds of different scenarios for whether it's in housing or cops or streets of neighborhoods when it comes on so I I think we would probably be best to take that as a question we would come back with different answers for yes so I would be interested in that and how far along can we what progress can we made truly in terms of sidewalks infrastructure projects and even housing um because in 2018 we increased from $ 15 to $50 million our affordable housing and since 2018 we haven't made an increase so uh I would be interested in that number as well obviously I think 50 million uh we need to do more I don't know I I can't tell someone yes I'm in support of 100 or 150 or 75 because I don't know what that looks like from the property tax perspective so having that numbers um in capacity increase that would give us would help thank you can I may I add Miss asmir um if we do take the penny or a penny it would be I want to make sure I understand this it's been a while so you know so if you take that Penny it would be dedicated for the next seven years to that debt plan so it's not like you can do the penny and have operations you are then making a decision to grow the capital part instead of the operational part is that am I right okay just what seven years but you could do mix right well I'm sure you could it could be half I mean you but whatever you do the rule is it's dedicated this is a happy way to end this not really let's see all right go ahead oh Miss Brown she's good okay Miss Johnson you have any other remarks before I this is the last presentation that we have I want to make sure miss Molina all right Miss asme mayor proam Mr Graham that's party I don't know we have to decide whether to divide that one s into um getting food or into the DJ so yes I was just going to say it's my mom's 66th birthday today I was hoping I could get a a mayor Proclamation quick on camera all right so we'll have to see about that one right well Saturday was Bishop Johnson's birthday happy I know that um if you give me just a minute we have over 35 people signed up to speak no I'm not surprised but I just want you to know that um we'll go through it and there'll be two minutes for everyone and hopefully people will say well you just said what I was going to say and then um we'll go from there um so but any questions on the consent while we're here any questions on the consent agenda all right Miss Mayfield mayor Marie is getting some information for me I did ask a question about item 35 I believe and manager it was a simple one I was real nice the out today it was only one question basically and it's item 35 it's not challeng it was basically the maintenance for our 302 Acres I just wanted to know how much of those acres is developable okay as we're having these conversations around addressing our housing so the other question I have is there anyone that would like a make to make a comment on one of the consent items and make a comment on the consent items items yes those on the consent [Music] [Laughter] items yes so does any does anyone want a separate vote off of any consent [Music] item [Music] okay you want to take it as a separate vote 35 thank you okay thank you grounds maintenance services all right that's it um what time is it now 4 it's 4 it's like 3:55 we'll take that hour and five back there you go we're some busy folks all right thanks everyone thank you I want to say these mayor excuse me mayor M may may mayor can I get a motion to adjourn please I know I'm going to say that but I was going to say first I want to say thank you to the team you guys put together amazing work complicated and you made it simple enough for me to understand so thank you very much we have a motion to re and we all in favor yes I am okay there we [Music] are