Oct 27, 2026 City Council on 2026-10-27 1:00 PM (SPECIAL CALLED)

[WORK SESSION BEGINS AT 1:00 P.M. IN THE COUNCIL WORK SESSION ROOM]

[00:00:09]

DENTON CITY COUNCIL. SEEING THAT A QUORUM IS PRESENT, MEETING WORK SESSION WILL START AT 1 P.M. DON'T HAVE ANY STAFF RECOGNITIONS, SO WE'LL MOVE ON TO NUMBER TWO. HEAR CITIZEN COMMENT ON CONSENT AGENDA ITEMS. IF THERE ARE ANY CITIZENS PRESENT TO SPEAK ON THE CONSENT

[A. ID 26-0075 Meeting Questions, Responses & Handouts]

[A. ID 26-0972 Receive a report, hold a discussion, and give staff direction regarding the City’s federal legislative efforts. [Estimated Presentation/Discussion Time: 30 minutes]]

EFFORTS. >> GOOD AFTERNOON, MAYOR PRO TEM AND COUNCIL KRISTI FOGEL, CHIEF OF STAFF, HERE TO PROVIDE OUR ANNUAL UPDATE ON OUR FEDERAL LEGISLATIVE EFFORTS AND ALSO WANT TO WELCOME RALPH, DEBORAH AND KENNEDY WITH CAPITAL EDGE WHO WORK ON OUR BEHALF IN WASHINGTON, D.C. I'LL GO THROUGH A FEW OF OUR FIRST SLIDES AND THEN TURN IT OVER TO RALPH AND HIS TEAM TO GIVE AN UPDATE ON WHAT'S HAPPENING IN WASHINGTON. SO JUST A LITTLE UPDATE OVERVIEW. OUR ADVOCACY OBJECTIVES ARE TO SECURE FEDERAL GRANT FUNDING, ENGAGE LEGISLATORS IN AREAS OF LEGISLATION THAT IMPACT THE CITY, AND THEN MONITOR AND PARTICIPATE IN THE FEDERAL RULEMAKING PROCESS. ONE OF THE BIGGEST THINGS THAT WE WORK ON AT THE FEDERAL GOVERNMENT LEVEL IS COMMUNITY PROJECT FUNDING, OR EARMARKS, AS THEY'RE KIND OF COLLOQUIALLY CALLED, ALLOW ALLOW LEGISLATORS TO ALLOCATE FUNDING SPECIFIC PROJECTS IN THEIR DISTRICT. SO WE PARTICIPATE IN THAT WITH BOTH OF OUR CONGRESSMEN, CONGRESSMAN RONNIE JACKSON AND CONGRESSMAN BRANDON GILL BOTH ACCEPT EARMARKS EVERY YEAR. AND SO WE'VE ACTIVELY ENGAGED WITH THEM THIS YEAR BY SUBMITTING A PROPOSAL TO EACH OFFICE. IN LAST YEAR'S BUDGET CYCLE, WE WERE ABLE TO SECURE A $2.2 MILLION, OR 23% OF A TOTAL PROJECT FOR THE MARSH BRANCH WASTEWATER IMPROVEMENT PROJECT. THAT'S OVER ON THE WEST SIDE, WHERE WE'RE GOING TO BE SEEING A LOT OF NEW DEVELOPMENT AND RIGHTSIZING THAT WASTEWATER SYSTEM FOR ALL OF THAT GROWTH. AND WE'RE IN THE IMPLEMENTATION PROCESS WITH THE HOUSING AND URBAN DEVELOPMENT TO COMPLETE ALL OF THAT DOCUMENTATION, AND THEN WE'LL RECEIVE THAT FUNDING IN EARLY 2027. AND THEN THIS YEAR, THIS SPRING, WE SUBMITTED A REQUEST FOR $1 MILLION TO COVER THE DESIGN AND ENGINEERING FOR THE MINGO ROAD BRIDGE PROJECT, FOR THE RAZING OF MINGO ROAD BRIDGE OVER COOPER CREEK IN NORTHEAST DENTON. THAT WOULD DO A LOT OF PREVENTATIVE INFRASTRUCTURE FOR FLOODING. AND THEN WE SUBMITTED TO CONGRESSMAN GILL, 32, MOBILE ANTI-VEHICLE BARRIER BARRICADES, FOR PROTECTING OUR DOWNTOWN COMMUNITY SPECIFICALLY, BUT ALL OVER THE CITY FOR ALL OF THOSE GREAT PUBLIC EVENTS THAT WE HAVE. AND THAT WAS BOTH OF THESE WERE INCLUDED IN THE APPROPRIATIONS WRITE UPS IN THE HOUSE. UNFORTUNATELY, THE LEGISLATURE OR THE FEDERAL GOVERNMENT HAS NOT PASSED A FINAL APPROPRIATIONS BILL FOR THIS YEAR. THEY HAVE A CONTINUING RESOLUTION UNTIL DECEMBER 11TH. SO WE'RE HOPING TO SEE ACTION ON THOSE ITEMS BY THEN. BUT WE'LL KEEP YOU ALL UPDATED ON ON THE FATE OF THOSE.

AND THEN 2026 GRANT AWARDS. JUST A LITTLE SUMMARY OF THE TOTAL NUMBER OF DOLLAR AMOUNT THAT WE'VE HAD IN GRANTS, THE 53,000 FOR THE I I, J A IS FOR PAVEMENT STUDY REIMBURSEMENT, THE 1 MILLION FOR THE US DOT INNOVATIVE FINANCE WILL HELP US IMPLEMENT AN INTELLIGENT TRANSPORTATION SYSTEM MASTER PLAN, AND THEN THE SAFE STREETS FOR ALL WILL HELP US WITH OUR

[00:05:03]

RALPH. >> THANK YOU SO MUCH. I THOUGHT I SAW ON THE BACKUP THAT WE WERE ACTUALLY AWARDED A GRANT THAT WE THEN TURNED DOWN FOR. IT LOOKS LIKE IT SAID TIMING.

AS FAR AS THE MOBILE. YEAH. CAN IS THAT SOMETHING THAT'S CONFIDENTIAL OR WHY DID WE NOT ACCEPT IT? THAT'S SOMETHING I KNOW WE'VE BEEN WANTING FOR A FEW YEARS.

>> WE'RE GOING TO HAVE A CLOSED SESSION LATER TO TALK ABOUT FEDERAL GRANTS. OKAY. THAT WILL

BE DISCUSSED THEN. >> OKAY. WELL, THANK YOU SO MUCH.

>> YEAH. OF COURSE. >> HOLD, PLEASE. >> ANY OTHER QUESTIONS?

>> OKAY. WITH THAT, I'LL WELCOME UP RALPH. >> IS THERE A OH, HERE. OKAY.

OKAY. THANK YOU. GOOD AFTERNOON RALPH WITH CAPITAL EDGE STRATEGIES WORK FOR THE CITY OF DENTON IN WASHINGTON HERE WITH MY COLLEAGUES DEBORAH DEHANEY HOWARD AND KENNEDY BAILEY. AND IT SEEMS WE'RE ALWAYS IN DENTON RIGHT BEFORE HALLOWEEN, WHICH I THINK IS JUST REALLY FUN AND REALLY COOL. YOU ALL REALLY GO ALL OUT FOR HALLOWEEN. SO SO JUST GOING TO TRY TO DO A QUICK.

IT'S, IT'S, IT'S ACTUALLY A TOUGH TIME RIGHT NOW TO DO A QUICK FEDERAL LEGISLATIVE UPDATE. THERE'S A LOT HAPPENING, BUT I'LL TRY TO BE QUICK TO LEAVE TIME FOR QUESTIONS AND ANSWERS. SO JUST A QUICK OVERVIEW OF THE PRESENTATION. GOING TO TALK ABOUT THE BUDGET KRISTI MENTIONED FY 2027. GOING TO TALK. THIS SOUNDS LIKE SOMETHING REALLY BORING, BUT IT'S IMPORTANT AND IT HAS TO DO WITH FEDERAL GRANTS. THE OMB UNIFORM GUIDANCE, THEY HAVE A PROPOSED RULE AND THEN START TALKING ABOUT FY 2028. AND AS KRISTI MENTIONED CORRECTLY, DIRECTED SPENDING REQUESTS FOR FY 2028. TALK QUICKLY ABOUT PENDING AND PASSED LEGISLATION.

AND ON THE PAST, I'M GOING TO TALK A LITTLE BIT ABOUT THE 21ST CENTURY ROAD TO HOUSING ACT, WHICH IS THE FIRST MAJOR PIECE OF HOUSING AND COMMUNITY DEVELOPMENT LEGISLATION SINCE 1991. SO IF YOU'D ASKED ME TWO YEARS AGO, WILL THERE BE HOUSING LEGISLATION, 119TH CONGRESS? I WOULD HAVE JUST KIND OF CHUCKLED AND SAID, NO, BUT HERE WE ARE. AND THEN GOING TO TALK ABOUT SOME PROPOSED RULEMAKINGS. THE ADMINISTRATION IS PURSUING A REALLY AGGRESSIVE, DEREGULATORY AGENDA, AND I JUST HAVE THESE TWO BULLETS HERE. I COULD PROBABLY SPEND ALL AFTERNOON TALKING ABOUT PENDING PENDING RULES THAT ARE OUT THERE THAT COULD IMPACT THE CITY. BUT GOING TO HIT THESE TWO IN PARTICULAR REALLY QUICKLY. SO FY 2027 APPROPRIATIONS IS KRISTI SAID THE FISCAL YEAR STARTED ON OCTOBER 1ST, AND CONGRESS HAS PASSED ZERO OF THE 12 ANNUAL APPROPRIATIONS BILLS THAT MAKE UP THE DISCRETIONARY SIDE OF THE FEDERAL BUDGET, THE HOUSE APPROPRIATIONS COMMITTEE AND THE HOUSE HAS APPROVED ALL 12.

APPROPRIATIONS COMMITTEE HAS APPROVED ALL 12 OF THE BILLS IN THE HOUSE, AND MOST OF THOSE HAVE PASSED THE HOUSE FLOOR. WE'VE SEEN ZERO BILLS FROM THE SENATE APPROPRIATIONS COMMITTEE.

SO. SO THE FIRST ORDER OF BUSINESS, WHEN CONGRESS COMES BACK IN TWO WEEKS FOR A LAME DUCK SESSION, WILL BE PASSING THE FY 2027 APPROPRIATIONS BILLS. RIGHT NOW, THE FISCAL YEAR START ON OCTOBER 1ST. AND THE FEDERAL GOVERNMENT IS OPEN UNDER A CONTINUING RESOLUTION THAT IS ESSENTIALLY JUST FUNDS EVERYTHING THE FY 2026 LEVEL, I CALL IT A KEEP THE LIGHTS ON BILL. NO FEDERAL AGENCY IS GOING TO UNDERTAKE ANY MAJOR NEW INITIATIVES OR PROGRAMS UNDER A CONTINUING RESOLUTION. THAT'S JUST KEEPING THE LIGHTS ON. I MENTIONED IN IN THE OVERVIEW, THE OMB PROPOSED RULE ON THE UNIFORM GUIDANCE FOR ALL FEDERAL GRANTS. OMB ISSUED A PROPOSED RULE THIS SUMMER TO REALLY OVERHAUL. YOU MIGHT HAVE SEEN WHEN YOU LOOK AT FEDERAL GRANTS, TWO CFR 200. THAT'S THE CODE OF FEDERAL REGULATIONS THAT COVERS FEDERAL GRANTS.

THAT'S A GUIDANCE RIGHT NOW, THE PROPOSED RULE WOULD MAKE THAT A REGULATION. AND IT'S A REALLY BROAD OVERHAUL. THE CONTINUING RESOLUTION THAT CONGRESS PASSED IS PRETTY MUCH A CLEAN, CONTINUING RESOLUTION. KEEP THE LIGHTS ON UNTIL DECEMBER 11TH. BUT THEY DID INCLUDE LANGUAGE IN THERE, AND THAT'S HAD BIPARTISAN SUPPORT SAYING, WHOA, OMB, LET'S PUT THE BRAKES ON THAT. OMB IS PLAN WAS TO FINALIZE THAT BY OCTOBER. AND THEY SAID, NO, NO, NO, LET'S JUST HOLD OFF ON THAT. YOU CAN'T DO ANYTHING ON THAT UNTIL DECEMBER 11TH. AS I SAID, THE PRESIDENT IN THE HOUSE, WE KNOW WHAT THEY'RE PROPOSING FOR FY 2027. THE SENATE HASN'T SPOKEN YET. IF LAST YEAR IS ANY CLUE, THE HOUSE AND THE SENATE AND THE HOUSE AND THE PRESIDENT HAVE PRETTY STEEP CUTS TO MOST PROGRAMS THE CITY WOULD CARE ABOUT. LAST YEAR, THE SENATE PREVAILED WITH HIGHER NUMBERS. AND I THINK THAT THAT'S SOMETHING IT'S REASONABLE TO

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WHAT DID THE HOUSE DO. AND YOU'LL NOTICE UNDER THE SENATE IT'S ALL BLANK BECAUSE THE SENATE HASN'T DONE ANYTHING YET. AND IF YOU LOOKED AT THIS RIGHT NOW, LIKE I SAID, YOU'D PROBABLY BE ALARMED AT SOME OF THE NUMBERS THAT THE PRESIDENT AND THE HOUSE HAVE. BUT I THINK AT THE END OF THE DAY, WHEN CONGRESS COMES BACK, THAT WILL BE THE FIRST ORDER OF BUSINESS IS WHAT ARE WE GOING TO DO ABOUT FY 2027 APPROPRIATIONS? AND THERE'S THERE'S SEVERAL OUTCOMES. THEY COULD DO A YEAR LONG CR LIKE THEY DID IN FY 2025 THAT JUST SAYS WE'RE GOING TO FUND EVERYTHING AT LAST YEAR'S LEVELS. MORE LIKELY, I THINK THEY'LL ACTUALLY WANT TO DO APPROPRIATIONS BILLS FOR A NUMBER OF REASONS. EARMARKS ARE A BIG ONE. MEMBERS, WHEN THEY DO A YEAR LONG CR, NOBODY GETS AN EARMARK, AND MEMBERS ARE GOING TO BE EAGER TO GET THEIR EARMARKS. I FORGET THE NUMBER, BUT SOME INSANE. THERE ARE SO MANY MEMBERS WHO ARE RETIRING AND NOT COMING BACK. AND IT WAS AN INSANE NUMBER IN TERMS OF YEARS OF EXPERIENCE THAT'S LEAVING CONGRESS AT THE END OF THIS CONGRESS. IT WAS LIKE ONE OF THOSE, OH MY GOD, THAT'S THAT'S A BIG NUMBER. EVEN WHEN YOU DIVIDE IT AMONG AMONG A LOT OF PEOPLE RETIRING AND NOT COMING BACK. BUT ALL THAT SAID, THEY HAVEN'T FINISHED FY 2027. I THINK AT THE END OF THE DAY, FY 2027, IN TERMS OF PROGRAMS THE CITY CARES ABOUT, COMMUNITY DEVELOPMENT BLOCK GRANT, HOME URBAN AREA SECURITY INITIATIVE, THOSE SHOULD ALL BE FUNDED, LEVEL FUNDED, OR EVEN SMALL INCREASES AT THE END OF THE DAY. BUT IT'S ALREADY TIME TO START LOOKING AHEAD TO FY 2028. AND AGAIN, THOSE THREE PROGRAMS ARE KIND OF THE BREAD AND BUTTER FOR THE CITY. THERE'S A LOT OF OTHER PROGRAMS WE TRACK, BUT THOSE WILL CONTINUE TO BE KIND OF OUR FOCUS FOR FY 2028 APPROPRIATIONS. AND THEN, AS KRISTI SAID, IT'S WE DON'T KNOW THE FATE OF OUR FY 2027 EARMARK REQUESTS YET, BUT IT'S ALREADY TIME TO START THINKING. WHAT WILL THE CITY'S FY 2028 EARMARK REQUESTS BE? THOSE WILL BE DUE TO CONGRESSIONAL OFFICES, PROBABLY SOMETIME IN MARCH. SO THIS IS JUST KIND OF THE TIMELINE FOR FOR EARMARKS. IDEALLY, WE'D LIKE TO IDENTIFY SOME PROJECTS BY THE END OF THE YEAR. AND THAT WAY AFTER THE NEW YEAR, WE CAN CAN REALLY GO INTO THE DETAILS AND ANSWER ALL THE DETAILED QUESTIONS THAT CONGRESSIONAL OFFICES AND THE APPROPRIATIONS COMMITTEES ARE GOING TO WANT ANSWERED FOR THOSE PROJECTS. AND THEN REALLY JUST ESSENTIALS FOR EARMARK SUBMISSIONS, LETTERS OF SUPPORT, A DETAILED BUDGET, PROJECTS RANKED BY THE CITY'S PRIORITY. SO THAT THAT ALL TAKES A LOT OF TIME AND EFFORT TO DEVELOP SO THAT WE'RE READY TO GO AT THE END OF FEBRUARY, BEGINNING OF MARCH. SO PENDING IN PAST LEGISLATION, THE TOP ONE THERE, PERMITTING REFORM, THAT KIND OF THEY'VE BEEN TALKING ABOUT PRUNING REFORM FOR ABOUT TWO YEARS. AND THEN RIGHT BEFORE THE RECESS AT THE END OF SEPTEMBER, BEGINNING OF OCTOBER, THE. THE LEADERS OF THE SENATE ENERGY AND NATURAL RESOURCES COMMITTEE AND THE SENATE ENVIRONMENT AND PUBLIC WORKS COMMITTEE ANNOUNCED THEY HAD A BIPARTISAN DEAL ON A MASSIVE PERMITTING REFORM BILL. AND THE THOUGHT IS THAT THAT WILL BE ONE OF THE FIRST ORDERS OF BUSINESS WHEN CONGRESS COMES BACK FOR A LAME DUCK SESSION.

IT'S IT'S IT'S NOT ONE THAT WE'RE EXPECTING. UNFINISHED BUSINESS SURFACE TRANSPORTATION REAUTHORIZATION. I'LL TALK A LITTLE ABOUT THAT. SURFACE TRANSPORTATION PROGRAMS EXPIRED AT THE END OF THE FISCAL YEAR, AND THEY'RE ALSO RUNNING ON A SHORT TERM EXTENSION. I DON'T THINK THIS CONGRESS WILL GET THAT DONE. SO THEY'LL PUNT THAT INTO THE NEXT CONGRESS, AND THAT WILL BE SOMETHING WE CONTINUE TO WORK ON IN THE NEXT CONGRESS. AND I THINK THERE'S AN OPENING THERE FOR GETTING MORE OF THAT FEDERAL TRANSPORTATION MONEY DOWN TO THE LOCAL LEVEL. AND THEN ONE, THAT'S LAW, THE 21ST CENTURY ROAD TO HOUSING ACT. I'LL TALK A LITTLE BIT ABOUT THAT. SO PERMITTING REFORM, IT'S IT'S CALLED THE AMERICAN AFFORDABILITY AND JOBS ACT, AND IT CAME OUT ON SEPTEMBER 30TH, RIGHT BEFORE THE RECESS. IT WOULD MAKE CHANGES TO TO THE NATIONAL ENVIRONMENTAL POLICY ACT, NEPA, THE ENDANGERED

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AND THE INTERESTING THING FOR DENTON IS THIS WOULDN'T APPLY TO YOU BECAUSE OF ERCOT. FERC DOESN'T HAVE AUTHORITY OVER ERCOT. BUT IF THIS BILL BECAME LAW, WHAT FERC DOES WOULD CLEARLY INFLUENCE WHAT WHAT HAPPENS AT THE STATE LEVEL. AND IT WOULD ESSENTIALLY REQUIRE THAT THE THAT THE TRANSMISSION AND OTHER INFRASTRUCTURE COSTS RELATED TO LARGE LOAD CUSTOMERS, DATA CENTERS WOULD BE BORNE BY THOSE CUSTOMERS. SURFACE TRANSPORTATION REAUTHORIZATION, THE. AND THIS IS KIND OF A THEME THAT THE HOUSE HAS A. HAS A FIVE YEAR REAUTHORIZATION BILL FOR FEDERAL HIGHWAY AND TRANSIT PROGRAMS. WE HAVE NOT SEEN LEGISLATION FROM THE SENATE. LOCAL PRIORITIES ARE ARE ESSENTIALLY. THE WAY I WOULD DESCRIBE THESE BULLETS IS, IS GETTING JUST A LITTLE BIT MORE OF THE RESOURCES FROM THE STATE LEVEL DOWN TO THE LOCAL LEVEL TO SPEND ON LOCAL TRANSPORTATION PROJECTS. AND, OH, I'M SORRY.

>> GO AHEAD. >> MY APOLOGIES. I WASN'T SURE IF WE SHOULD WAIT UNTIL THE END

OF THE PRESENTATION. OF COURSE, I'M HAPPY TO DO IT. >> EITHER WAY, WAIT TILL THE

END OF THE OKAY, IF THAT'S OKAY. >> REMEMBER THIS SLIDE? THANK YOU. SORRY FOR THE INTERRUPTION.

>> OH, NO. THAT'S FINE. AND AND I JUST THE THE LOCAL GOVERNMENTS, THE US CONFERENCE OF MAYORS, THE NATIONAL LEAGUE OF CITIES, THE NATIONAL ASSOCIATION OF COUNTIES, THE ASSOCIATION OF METROPOLITAN PLANNING ORGANIZATIONS HAVE ALL BEEN REALLY UNITED THESE PAST 18 MONTHS, WORKING ON REAUTHORIZATION AND WORKING ON SOME OF THOSE LOCAL PRIORITIES.

AND I'M GOING TO TALK A LITTLE BIT ABOUT SOMETHING CALLED THE BASICS ACT, WHICH IS WHICH IS OUR OUR LOCAL GOVERNMENT WISH LIST FOR WHAT WOULD WE LIKE TO SEE IN SURFACE TRANSPORTATION REAUTHORIZATION? WE, OF COURSE, DID NOT GET EVERYTHING WE WANTED IN THE HOUSE BILL, BUT I THINK THE HOUSE BILL REFLECTS A LOT OF OUR PRIORITIES AND WOULD MOVE THE NEEDLE TO GETTING SOME MORE RESOURCES DOWN TO THE LOCAL LEVEL ON THE HIGHWAY BILL. AND AND LIKE I SAID, I DON'T THINK THEY'RE GOING TO DO REAUTHORIZATION IN THIS CONGRESS, BUT I THINK THAT THAT LAYS THE GROUNDWORK FOR US TO HAVE A PRETTY GOOD BILL FOR LOCAL GOVERNMENTS WHEN THEY DO DO A BILL IN THE NEXT CONGRESS. SO I MENTIONED THE BASICS ACT. I LOVE THE NAME OF THE BASICS ACT THAT CAME OUT OF THE CURRENT CHAIR OF THE HOUSE TRANSPORTATION INFRASTRUCTURE COMMITTEE, SAM GRAVES FROM MISSOURI, WHO'S RETIRING. AND IF AND IF THEY DO GET A BILL DONE THIS YEAR, IT'LL BE BECAUSE SAM GRAVES WANTS TO GET A BILL DONE THIS YEAR BEFORE HE RETIRES. BUT, YOU KNOW, WE ALL WANT A LOT OF THINGS AND WE DON'T ALWAYS GET THEM. AND I THINK THE CALENDAR IS WORKING AGAINST THAT HAPPENING. BUT HE ANNOUNCED AT THE BEGINNING OF THE 109TH CONGRESS THAT THE NEXT HIGHWAY TRANSIT BILL, WE'RE GOING TO GET BACK TO BASICS. AND SO LOCAL GOVERNMENTS DECIDED WE WERE GOING TO NAME OUR BILL THE BRIDGES AND SAFETY INFRASTRUCTURE FOR COMMUNITY SUCCESS ACT OR THE BASICS ACT, WHICH I'M NOT SURE HOW WELL THAT WENT OVER, BUT IT WAS KIND OF FUNNY. BUT BUT THE, THE KIND OF THE CORE PRINCIPLES OF THE BASICS ACT INCREASED FUNDING SUB ALLOCATED TO METROPOLITAN REGIONS. IN YOUR CASE, THE RTC WOULD GET MORE MONEY TO DECIDE HOW THAT MONEY IS SPENT LOCALLY, STRENGTHEN INVESTMENTS IN LOCALLY OWNED BRIDGES AND SAFETY INFRASTRUCTURE, AND THAT SPECIFICALLY IT WOULD CODIFY THE BRIDGE FORMULA PROGRAM AND SET ASIDE A GOOD CHUNK OF THAT MONEY FOR LOCALLY OWNED, NON NONFEDERAL BRIDGES. AND THEN IT WOULD START SUB ALLOCATING SOME OF THE HIGHWAY SAFETY IMPROVEMENT PROGRAM MONEY, WHICH CURRENTLY JUST GOES ALL TO THE STATES. SOME OF THAT WOULD BE ALLOCATED TO TO LOCAL PROJECTS. THE 21ST CENTURY ROAD TO HOUSING ACT. THIS IS ACTUALLY THE LAW OF THE LAND NOW AS WE SPEAK. AND AND LIKE I SAID, THE LAST MAJOR HOUSING COMMUNITY DEVELOPMENT BILL WAS THE CRANSTON GONZALEZ HOUSING ACT OF 1991. SO MATH IS HARD. A LONG TIME OVER 30 YEARS. I WAS A JUNIOR IN COLLEGE WHEN THAT BECAME LAW. AND MR. CRANSTON AND MR. GONZALEZ HAVE LONG LEFT THIS WORLD. IT'S A LONG TIME AGO THAT THEY DID A HOUSING BILL, BUT THE STARS KIND OF ALIGNED IN THIS CONGRESS. IT'S IT'S A GOOD STORY. I'LL TRY NOT TO GET INTO THE WEEDS, BUT BUT TIM SCOTT AND ELIZABETH WARREN IN THE SENATE CHAIR AND RANKING MEMBER OF THE SENATE BANKING COMMITTEE, YOU KNOW, POLITICS MAKES FOR STRANGE BEDFELLOWS. BUT THEY DECIDED THEY WANTED TO DO HOUSING BILL IN THE HOUSE.

THE CHAIR AND RANKING MEMBER OF THE HOUSING SUBCOMMITTEE, MIKE FLOOD FROM NEBRASKA AND EMANUEL CLEAVER FROM FROM MISSOURI, FORMER MAYOR OF KANSAS CITY. THEY STARTED THE 109TH CONGRESS BY SENDING OUT A LETTER TO STAKEHOLDERS SAYING, HOW CAN WE IMPROVE THE CDBG AND HOME PROGRAMS? AND THEY ASKED FOR STAKEHOLDER INPUT. THEY DECIDED TO JUST FOCUS ON HOME. THEY DID

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THERE'S NOT MANY STICKS IN THIS BILL, BUT THERE IS ONE STICK ON THE CDBG PROGRAM. AND THAT'S THAT SAYS THAT IF YOU'RE PRODUCING HOUSING ABOVE THE NATIONAL MEDIAN, YOU'LL GET A BONUS IN YOUR CDBG ALLOCATION. IF YOU'RE BELOW THE MEDIAN, YOU'LL GET A PENALTY. AND THAT GOES INTO EFFECT IN FY 2029 OR 2030. SO THAT WILL COME TO AN END. HUD IS GOING TO BE SENDING NOTICES TO GRANTEES WE HEAR NEXT MONTH, LETTING THEM KNOW WHERE YOU MIGHT FALL ON THAT CALCULATION. AND THEN I TALKED ABOUT PROPOSED RULEMAKINGS. THE ADMINISTRATION IS REALLY PURSUING A STRONG DEREGULATORY AGENDA. I'M GOING TO TALK A LITTLE BIT ABOUT TELECOM PREEMPTION. WE TALKED A LITTLE BIT. WE TALKED ABOUT OMB UNIFORM GUIDANCE AND THEN CHANGES TO DECENNIAL CENSUS FOR 2030. SO TELECOM PREEMPTION, THIS IS ONE THAT I'VE BEEN DOING THIS JOB FOR 30 YEARS. AND WE'RE CONSTANTLY FACING PREEMPTION FROM THE FCC. WE'RE OFTEN FACING IT IN CONGRESS. AND THIS IS REALLY THE YEAR WHERE THE FCC LAST YEAR AND THIS YEAR WHERE THE FCC WENT FOR BROKE, THEY ISSUED TWO PROPOSED RULES ONE ON WIRELESS, ONE ON WIRELINE. AND ESSENTIALLY IT'S JUST ABOUT A BROAD PREEMPTION OF LOCAL GOVERNMENT AUTHORITY. AS YOU CAN IMAGINE, IF THESE RULES WERE FINALIZED, IT WOULD REALLY COMPROMISE YOUR ABILITY TO, TO, TO REGULATE THE SITING OF WIRELESS TELECOMMUNICATIONS EQUIPMENT, TO MANAGE YOUR RIGHTS OF WAY AND COLLECT COMPENSATION FOR THEIR USE JUST ON DOWN THE LINE. IT'S JUST A MASSIVE PREEMPTION OF LOCAL GOVERNMENT AUTHORITY. AT THE SAME TIME, WE HAVE A BILL THAT'S PASSED THE HOUSE ENERGY AND COMMERCE COMMITTEE THAT WOULD DO A LOT OF THOSE SAME THINGS. WE STOPPED A SIMILAR BILL IN THE 118TH CONGRESS, AND I THINK WE'VE STOPPED A SIMILAR BILL IN THIS CONGRESS. BUT ONE THING THAT I AM AFRAID OF IS GOING BACK TO PERMITTING REFORM. I WORRY THAT AS THEY'RE NEGOTIATING FINAL BILLS AT THE END OF THE CONGRESS, THE TELECOM INDUSTRY SAYS, WELL, THERE'S SOMETHING IN THIS PERMITTING REFORM BILL FOR ALL KINDS OF OTHER INDUSTRIES. WHERE'S OUR REGULATORY RELIEF CONGRESS? WE NEED YOU TO PREEMPT LOCAL GOVERNMENTS. SO THAT'S ONE THAT WE REALLY HAVE TO BE VIGILANT ON OVER THE NEXT TWO MONTHS. AND THEN THE CENSUS BUREAU PROPOSED RULE. THAT'S ACTUALLY AN OPEN RULE. COMMENTS ON THAT ARE DUE NOVEMBER 2ND. AND THAT IS A PRETTY THEY'RE PROPOSING PRETTY MAJOR CHANGES TO HOW THEY CONDUCT THE 2030 CENSUS. THEY'RE PROPOSING TO DO WHAT THEY'RE CALLING AN APPORTIONMENT COUNT. SO COUNTING ONLY CITIZENS AND LEGAL PERMANENT LEGAL RESIDENTS, WHICH WOULD MEAN A QUESTION ON THE CENSUS ABOUT YOUR IMMIGRATION STATUS. THEY'RE ALSO PROPOSING TO REMOVE QUESTIONS ABOUT RACE, ETHNICITY AND SEXUAL ORIENTATION FROM THE CENSUS FORM. AND THEN THEY'RE DOING ONE. IT'S AN INTERESTING CHANGE, AND IT'S WHERE ARE YOU COUNTED? TRADITIONALLY, IT'S, YOU KNOW, AS OF APRIL 1ST, WHERE DO YOU USUALLY LIVE? NOW THEY'RE GOING TO SAY THEY'RE PROPOSING TO SAY, WHERE DID YOU LAWFULLY SPEND MOST OF YOUR TIME BETWEEN JANUARY 3RD THROUGH APRIL 1ST? AND I'M NOT SURE I FULLY GRASPED WHICH ONE IS BETTER OR WORSE, BUT IT CERTAINLY THROWS MORE UNCERTAINTY INTO THE 2030 CENSUS AND DEFINITELY RAISES QUESTIONS FOR A CITY LIKE DENTON, WHERE YOU HAVE SO MANY STUDENTS IN TOWN, HOW ARE THEY COUNTED ALREADY A TOUGH POPULATION TO COUNT, AND THE CHANGES OBVIOUSLY COULD AFFECT CONGRESSIONAL APPORTIONMENT, REDISTRICTING AND MOST IMPORTANTLY, THE ALLOCATION OF FEDERAL FUNDING. SO I THINK COMMENTS ON THAT ARE DUE NOVEMBER 2ND. I THINK THE CENSUS BUREAU WILL ISSUE A FINAL RULE PRETTY QUICKLY, AND I THINK THEY'LL BE SUED THE DAY AFTER THEY ISSUE A FINAL RULE.

[00:25:04]

AND WITH THAT, HAPPY TO TAKE ANY QUESTIONS. I KNOW I WENT THROUGH A LOT OF STUFF QUICKLY.

>> THANK YOU. >> COUNCILMEMBER JESTER, DID YOU HAVE A QUESTION STILL?

>> SORRY. THANK YOU. THANK YOU SO MUCH. IT'S NICE TO SEE YOU AGAIN. AND YOU AND YOUR TEAM HAVE ALWAYS BEEN VERY WELCOMING, HELPFUL AND OPEN TO QUESTIONS AND COMMENTS. AND SO I JUST WANT TO SAY THANK YOU FOR ALSO HOSTING WHEN WE DO THE FLY INS AND THINGS LIKE THAT, YOU ACTUALLY ANSWERED SOME OF MY QUESTIONS REGARDING THE LOCAL PRIORITIES AND THE HIGHWAY BILL CONCERNING WHETHER IT JUST DEALT WITH HIGHWAYS VERSUS. AND WHEN WE SAY LOCAL, WHAT DID WE MEAN? BUT YOU EXPLAINED A BIT OF THAT MORE. SO THAT WAS THAT WAS HELPFUL. I DO HAVE A QUESTION. WHEN YOU WERE TALKING ABOUT THE HOME ACT, ABOVE OR BELOW THE NATIONAL MEDIAN. SURE.

IS THAT NUMBER THE THE PRICE OF HOMES, THE RENT AMOUNT, THE NUMBER OF HOMES. WHAT WAS THAT?

>> IT'S SO IT'S SO WHAT THEY'VE DONE AND THAT PROVISION OF THE 21ST CENTURY HOUSING ACT IS

CALLED THE BUILD NOW ACT. >> BILL BUILD NOW. >> AND AND WHAT IT SAYS IS. ALL CDBG LOCAL GOVERNMENT GRANTEES. SO THE STATES ARE LEFT OUT OF THIS. WE'RE GOING TO LOOK AT THE THE NATIONAL RATE OF NEW HOUSING PRODUCTION, PROBABLY LOOKING AT PERMITS AND GRANTEE CDBG GRANTEES WHO ARE BELOW THE MEDIAN WILL BE PENALIZED 10% OF THEIR CDBG ALLOCATION.

>> BELOW THE MEDIAN IN WHAT. THE NUMBER OF HOMES BEING. >> NUMBER OF HOMES. EXACTLY.

>> OKAY. >> SORRY. NEW HOMES. YES, EXACTLY. I'M SORRY. AND THEN AND THEN IF YOU'RE ABOVE THE MEDIAN, YOU'LL GET A SHARE OF A BONUS THAT YOU'LL GET YOUR PRO RATA SHARE OF THE PENALTY AS A BONUS. AND UNTIL HUD RUNS THE NUMBERS, YOU KNOW, MY GUESS OFF THE TOP OF MY HEAD IS DENTON IS ABOVE THE MEDIAN. BUT I DON'T KNOW. YOU KNOW, I'M SURE THAT DATA IS AVAILABLE SOMEWHERE, BUT WE HAVEN'T BEEN ABLE TO FIND IT. AND HUD WAS SUPPOSED TO NOTIFY GRANTEES BY SEPTEMBER 9TH. THE LAW SAID WITHIN 60 DAYS. SEPTEMBER 9TH IS OBVIOUSLY COME AND GONE, BUT WE HEARD LAST WEEK FROM SENATE BANKING COMMITTEE STAFF THAT HUD HAS THE LIST, AND IT'S GOING TO COME OUT IN NOVEMBER. AND IT'S, YOU KNOW, SUPER TOP SECRET. THEY CAN'T SHARE IT WITH ANYBODY BEFORE THEN. BUT WE SHOULD KNOW IN THE NEXT MONTH WHERE. AND THE GOAL OF THAT IS BECAUSE THIS DOESN'T TAKE EFFECT UNTIL FY 2029 OR FY 2030, IS TO GIVE CITIES A CHANCE TO CORRECT COURSE, AS IT WERE, AND IT RUNS THROUGH 20 FY 2042. SO THIS IS OVER A DECADE WHERE EVERY YEAR HUD WILL BE TAKING A LOOK AT, I THINK IT'S BACK THREE YEARS. ARE YOU BELOW OR ABOVE THE MEDIAN? WOW. SO YEAH. OH, THAT'S A THAT'S A GOOD POINT. SO THEY DO MAKE EXCEPTIONS. THEY EXCLUDE THE STATES. SO IT'S JUST CITY AND COUNTY CDBG GRANTEES. IF YOU'VE HAD A DISASTER FEDERALLY DECLARED DISASTER IN THE LAST THREE YEARS, YOU'RE EXEMPT. AND THEN THE OTHER EXEMPTIONS ARE ESSENTIALLY FOR DISTRESSED CITIES. IF YOU HAVE A VACANCY RATE THAT'S ABOVE A CERTAIN LEVEL, OR IF YOUR HOME PRICES ARE BELOW. IN OTHER WORDS, THEY'RE NOT GOING TO PENALIZE EAST SAINT LOUIS OR SYRACUSE FOR NOT BUILDING NEW HOUSING, BECAUSE THAT I DON'T THINK ANYONE WOULD WANT TO DO THAT.

>> THE CENSUS PROPOSED RULE. HOW MUCH OF THAT IS A SURE THING? DO YOU THINK THAT'S

GOING TO CHANGE? DO YOU THINK THESE ARE PROPOSED? >> I THINK SO, COMMENTS ARE DUE NOVEMBER 2ND. AND I DON'T MEAN TO SOUND CYNICAL, BUT I THINK THE CENSUS BUREAU WILL SAY THANK YOU FOR YOUR COMMENTS. HERE'S OUR FINAL RULE. AND AND AND LIKE I SAID, AGAIN, THIS SOUNDS BUT THEY'LL PROBABLY BE SUED THE DAY AFTER THAT. THAT HAPPENS.

>> DOESN'T TAKE A CRYSTAL BALL FOR SOME OF THESE. AND PAST BEHAVIOR.

>> AND, YOU KNOW, THE CENSUS HAS ALWAYS BEEN POLITICAL. AND AND I THINK THE GOAL HERE IS, IS TO HURT PLACES THAT ARE PERCEIVED AS BLUE AND HELP PLACES THAT ARE PERCEIVED AS RED. ALTHOUGH IN THE CASE OF TEXAS, I, YOU KNOW, YOU HAVE A PRETTY LARGE IMMIGRANT POPULATION. I THINK IT COULD MEAN TEXAS LOSES A HOUSE SEAT UNDER THAT KIND OF ACCOUNT.

>> RIGHT? YEAH. AND I, I AGREE WITH YOU AS FAR AS THE AMBIGUITY SURROUNDING THE WHERE ARE YOU THESE FOUR MONTHS OF THE YEAR? I MEAN, THAT THAT'S JUST I MEAN, FROM A LEGAL ASPECT, OF COURSE, IT'S ALWAYS, YOU KNOW, WHERE DO YOU INTEND TO RETURN? I CAN'T SEE THAT.

>> IT SEEMS LIKE IT'S MUDDYING THE. YOU KNOW, I'M NOT A DEMOGRAPHER, BUT IT SEEMS LIKE IT'S MUDDYING THE WATERS. AND, YOU KNOW, THE EXAMPLE THEY USE IS IF, YOU KNOW, YOU'RE A

[00:30:02]

WELL, THEN MOST OF THE TIME FROM JANUARY THROUGH MARCH, YOU, YOU KNOW, YOU'RE LIVING IN FLORIDA, BUT YOU PROBABLY PAY TAXES IN MAINE AND CONSIDER YOURSELF TO LIVE IN MAINE. SO YEAH, IT'S A IT'S AN INTERESTING. THAT PART OF IT IS THE OTHER PARTS I GET 100%.

IT'S, YOU KNOW, HOW CAN WE HELP REPUBLICANS? THE OTHER PART THAT SEEMS CONFUSING TO ME.

>> THANK YOU. THOSE ARE MY QUESTIONS. THANK YOU SO MUCH. >> OKAY. WE'RE GOING TO TRY TO STAY ON SCHEDULE AS MUCH AS POSSIBLE. SO IF WE COULD JUST KEEP QUESTIONS BRIEF.

>> YES. THANK YOU. JUST TO CLARIFY THAT, I UNDERSTOOD AND I APPRECIATE THE QUESTION.

COUNCIL MEMBER JESTER. IT'S THE NATIONAL AVERAGE THAT WOULD BE WEIGHED AGAINST. IS THAT

CORRECT? >> YEAH. AND IT'S THE IT'S THE NATIONAL MEDIAN.

>> IT'S THE NATIONAL MEDIAN OF NEW HOMES BEING PRODUCED. >> AMONG ALL CDBG GRANTEES.

>> RIGHT. >> SO THEY'LL LOOK AT ALL CDBG. >> GRANT MUNICIPALITIES THAT ARE RECEIVING WOULD BE WEIGHED AGAINST THAT NATIONAL AVERAGE. EXACTLY. OKAY. THAT IS

CONCERNING. >> YEAH. >> AND IN THE BACKUP THAT YOU PROVIDED, I'M WONDERING, IT STATES THAT THERE'S THE WANT TO CONSOLIDATE 28 OF THE OPERATIONAL DIVISIONS OF HHS INTO. 15 AND THEN I SEE UNDER, LIKE THE PRESIDENTIAL COLUMN, NOT APPLICABLE, IMAGINING THAT THAT'S THOSE ARE SOME THAT ARE GOING TO BE CONSOLIDATED. AND THEN IN BOTH CDBG AND THEN THE LOW INCOME HOME ENERGY ASSISTANCE PROGRAM ARE BOTH ZEROED OUT. ARE THEY WITH CONSOLIDATION NOT BEING PLANNED TO BE FUNDED? IS THAT WHAT I'M.

>> SO THERE'S A LOT HAPPENING. SO THE PRESIDENT'S BUDGET AND IT'S ALWAYS IMPORTANT TO REMEMBER THE PRESIDENT'S BUDGET PROPOSAL IS JUST THAT IT'S A PROPOSAL. RIGHT. AND YOU KNOW, THE KIND OF THE JOKE ON CAPITOL HILL IS, YOU KNOW, THE PRESIDENT'S BUDGET IS DEAD ON ARRIVAL. BUT THAT'S NOT ALWAYS TRUE. I MEAN, THE PRESIDENT'S BUDGET DOES SET THE TONE. BUT BUT IN BOTH OF HIS BUDGETS, THE PRESIDENT HAS PROPOSED PRETTY MAJOR CHANGES, A COMPLETE REORGANIZATION OF HHS, RIGHT, CONSOLIDATING JOB TRAINING PROGRAMS, CONSOLIDATING A LOT OF PROGRAMS AT HUD AND AND CONGRESS HAS ALWAYS HAS SAID, NO, NO, THANK YOU. WE'RE GOING TO DO. AND AND ZEROING OUT THE LOW INCOME HOME ENERGY ASSISTANCE PROGRAM. THEY PROPOSED THAT LAST TIME AROUND. AND I DON'T THINK CONGRESS WILL DO THAT. OKAY.

>> YEAH, YEAH, YEAH. OKAY. >> BUT, YOU KNOW, YOU ALWAYS NEVER TAKE ANYTHING FOR GRANTED.

>> YEAH. I MEAN, THE HOME ASSISTANCE, ENERGY ASSISTANCE IS WHAT FLOWS INTO TCA

APPLICATIONS FOR ENERGY RELIEF. OKAY. THANK YOU. >> OKAY. THANK YOU. ANY OTHER

[B. ID 26-1704 Receive a report, hold a discussion, and give staff direction regarding the implementation of potential structural changes to the Ethics Ordinance. [Estimated Presentation/Discussion Time: 60 minutes]]

>> THE MAYOR AND COUNCIL, MADISON RORSCHACH, DENTON CITY AUDITOR AND THE STAFF LIAISON TO THE BOARD OF ETHICS. IN CASE YOU'RE LIKE, WHY AM I HERE FOR THAT? ALL RIGHT, SO THIS WORK SESSION IS IN RESPONSE TO A TWO MINUTE PITCH SUBMITTED BY COUNCIL MEMBER FERRY A COUPLE MONTHS AGO. TO DEAL TO PROVIDE ESSENTIALLY THREE CHANGES THAT THEY WISH TO MAKE TO THE ETHICS ORDINANCE PROCESS. SO THE FIRST WAS TO AUTHORIZE ANONYMOUS COMPLAINTS. THE ORDINANCE CURRENTLY REQUIRES THAT THE COMPLAINT THAT AN ETHICS COMPLAINT INCLUDE THE COMPLAINANTS NAME AND CONTACT INFORMATION FOR IT TO BE ACCEPTED. AND THEN THE SECOND WAS TO SHIFT THE BURDEN OF PROOF AWAY FROM THE COMPLAINANT. CURRENTLY, THE COMPLAINANT IS REQUIRED TO PROVE TO A REASONABLE CERTAINTY THAT THE ALLEGED CONDUCT OCCURRED A KIND OF SIMILAR TO A CIVIL TRIAL MODEL. AND THEN LAST WAS TO IMPLEMENT A SECURE HOTLINE FOR ANONYMOUS COMPLAINTS. THE CITY CURRENTLY OPERATES A SECURE HOTLINE THAT ENSURES A REPORTER'S NAME WILL NOT BE COMMUNICATED TO THE CITY UNLESS THEY WISH TO REVEAL THEIR IDENTITY. SO I HAVE SOME BASICALLY PROPOSALS, BUT THIS IS REALLY MORE OF A DISCUSSION WITH YOU ALL. BUT I WANTED TO DEAL KIND OF FIRST WITH THAT THAT HOTLINE, ANONYMOUS HOTLINE COMPLAINT. AT THIS TIME, SINCE WE ALREADY HAVE AN ANONYMOUS HOTLINE, STAFF IS NOT RECOMMENDING A CHANGE, BUT WE CAN CERTAINLY GO FIND GET NEW PROPOSALS FOR DIFFERENT HOTLINE IF THAT IS COUNCIL'S DIRECTION. SO I WANTED TO JUST DEAL WITH KIND OF THAT PIECE OF IT FIRST BEFORE WE MOVED INTO THE DEEPER DISCUSSION, IF THAT'S ALL RIGHT WITH YOU.

>> SURE. COUNCIL MEMBER FAIR. >> SURE. I, I WOULD JUST SAY, LET'S MOVE FORWARD WITH KEEPING WHAT WE HAVE FOR THAT ONE AND MAKE THAT EASY. THAT'S MY DIRECTION. KEEP OUR CURRENT

SECURE HOTLINE. >> YEAH, I AGREE WITH THAT. >> GREAT.

>> THANK YOU. WE NEED ONE MORE PERSON. OKAY. THAT'S FOUR. >> EXCELLENT. THANK YOU.

[00:35:07]

>> I BEG YOUR PARDON. SORRY. >> HOW LONG HAS THAT BEEN IN? >> SINCE BEFORE I GOT HERE, I

THINK SINCE 2018, 2017, 2018. >> THANK YOU. >> ALL RIGHT. SO KIND OF THE NEXT PIECE IS TO TALK ABOUT POTENTIAL CHANGES TO THE STRUCTURE OF THE ETHICS ORDINANCE. I CREATED KIND OF THREE OPTIONS, ONE OF WHICH IS JUST OUR CURRENT MODEL TO TRY TO THAT, IN THEORY, WOULD TRY TO ACTUALIZE THE IDEAS OF ALLOWING ANONYMOUS COMPLAINTS TO BE SUBMITTED, AND THEN ALSO REMOVING THE BURDEN OF PROOF AWAY FROM THE COMPLAINANT AND ONTO SOMEBODY ELSE, BECAUSE YOU HAVE TO HAVE THERE IS ALWAYS A BURDEN OF PROOF. YOU CAN'T JUST GET RID OF IT. SOMEBODY IS RESPONSIBLE FOR THAT IF WE WANT THE PROCESS TO WORK. BUT I DO WANT TO MENTION KIND OF SOME CONCERNS ABOUT NOT REALLY CONCERNS, BUT JUST THINGS TO CONSIDER, BECAUSE THE BOARD OF ETHICS IS A QUASI JUDICIAL BODY. PEOPLE'S CONSTITUTIONAL RIGHTS ARE IMPLICATED BY THE ETHICS COMPLAINT PROCESS. SO WE CAN ACCEPT ANONYMOUS COMPLAINTS.

THAT'S ALLOWED. BUT WE HAVE TO CONSIDER THAT AT THE END OF THE DAY, THE RESPONDENT, THE CITY OFFICIAL WHO'S BEING ACCUSED OF SOMETHING, HAS THE RIGHT UNDER THE CONSTITUTION TO CONFRONT THEIR ACCUSER. SO THAT'S PART OF WHY WE CAN'T JUST GET RID OF THE BURDEN OF PROOF, BASICALLY.

SO LIKE I SAID, THE FIRST OPTION IS BASICALLY JUST IT WOULDN'T IMPLEMENT ANY CHANGES, WOULDN'T COST ANY MONEY TO, TO DO IT. IT'S BASICALLY WHAT WE HAVE NOW. SO UNDER THAT PROCESS, COMPLAINANT SUBMITS THE COMPLAINT AS THE CITY AUDITOR REVIEW IT, MAKE SURE THE FORM IS COMPLETED ACCURATELY. THE THING THAT IS ALLEGED HAPPENED WITHIN A REASONABLE TIME FRAME.

IT GOES TO THE BOARD OF ETHICS, A PANEL OF THE BOARD OF ETHICS. AND THEY CONSIDER AT THAT TIME, BASICALLY, IF IT'S WITHIN THE BOARD'S JURISDICTION, SO DO THEY IS IF EVERYTHING THAT IS ALLEGED IN THE COMPLAINT IS TRUE, WOULD THE WOULD IT EVEN BE A VIOLATION OF THE ORDINANCE? IF THEY BELIEVE THAT IT WOULD BE. THEN WE MOVE TO AN EVIDENTIARY HEARING WHERE THE COMPLAINANT PRESENTS THEIR EVIDENCE. BASICALLY, THE RESPONDENT HAS A CHANCE TO RESPOND TO THAT EVIDENCE, AND THEN THE BOARD DECIDES IF A VIOLATION OCCURRED AND WHAT SANCTION SHOULD BE GRANT SHOULD BE ISSUED IF A VIOLATION OCCURRED. THAT'S THE CURRENT PROCESS. NOT TO SAY IT DOESN'T COST ANY MONEY, BUT IT WOULDN'T COST ANY MONEY TO CHANGE TO CONTINUE DOING THAT. KIND OF SECOND OPTION IS BASED ON THE CITY OF HOUSTON'S CURRENT MODEL, AND IT WOULD TRY TO IMPLEMENT BOTH CHANGES, BASICALLY BY CREATING A REPORT MODEL WHERE THE COMPLAINANT WOULD BE JUST REPORTING CONDUCT THAT THEY BELIEVE IS A VIOLATION, BUT THEY WOULDN'T NECESSARILY BE RESPONSIBLE FOR PROVIDING EVIDENCE OF THAT. INSTEAD, UNDER THIS MODEL, THE REPORT WOULD GO TO THE BOARD AND THEY WOULD DIRECT STAFF TO TRY TO GATHER EVIDENCE TO DETERMINE IF THAT WAS TRUE, AND THEN A HEARING WOULD OCCUR IF THEY BELIEVED THERE WAS ENOUGH EVIDENCE TO MOVE FORWARD TO ALLOW THE RESPONDENT BASICALLY TO DEFEND THEMSELVES AGAINST THE ALLEGATIONS. THE THIRD MODEL IS MORE LIKE THE CRIMINAL MODEL, WHERE BASICALLY THE COMPLAINANT WOULD SUBMIT A TIP OF SOME SORT OF CONDUCT THAT THEY BELIEVED WAS IN VIOLATION OF THE ORDINANCE. A CITY EMPLOYEE WOULD THEN INVESTIGATE THAT TIP. THERE WOULD BE PROBABLY SOME MECHANISM TO PRESENT IT TO THE BOARD BEFORE IT WENT FORWARD TO A HEARING, BUT THEN THERE WOULD BE A HEARING WHERE THE CITY EMPLOYEE WOULD BASICALLY PROSECUTE THE ALLEGED VIOLATION VIOLATION BEFORE THE BOARD, AND THE RESPONDENT WOULD AGAIN HAVE THE ABILITY TO DEFEND THEMSELVES. SO THOSE ARE KIND OF THE THE BROAD STROKES OF THE THREE OPTIONS. AGAIN, THEY'RE ALL THE APART FROM THE FIRST ONE, WHICH IS DO WHAT WE'RE DOING CURRENTLY, THEY'RE TRYING TO GET TO THIS IDEA WHERE THE COMPLAINANT THEMSELVES CAN REMAIN ANONYMOUS AND DOESN'T HAVE TO PROSECUTE IF WE WANT TO USE THAT TERM, BUT PRESENT TO BEAR THE BURDEN OF PROOF. I DID HAVE A CONVERSATION WITH COUNSELOR FERRY YESTERDAY WHERE THEY CLARIFIED THAT MAYBE THEY WEREN'T TRYING TO ENSURE ANONYMITY. EXACTLY. SO THERE MIGHT BE SOME DISCUSSION ABOUT ARE WE TALKING ABOUT ANONYMITY OR CONFIDENTIALITY? AND AT WHAT POINT IS THAT? AND SO I HAVE SOME OPTIONS FOR THAT IF WE GET TO IT. BUT THIS IS WHERE I WHAT I'VE PRESENTED FOR NOW, DOES THAT HELP? LIKE I SAID, MOSTLY

DISCUSSION. I DON'T REALLY HAVE A RECOMMENDATION. >> OKAY. THANK YOU SO MUCH.

COUNCIL MEMBER. JESTER. >> THANK YOU FOR THE PRESENTATION. I KNOW WE HAVE SOME NEW COUNCIL MEMBERS. WE HAD THIS CONVERSATION FAIRLY RECENTLY WITH THE LAST COUNCIL,

[00:40:04]

THANK YOU. >> THANK YOU. I DO HAVE A POINT OF CLARIFICATION THAT I NEED TO MAKE SURE I UNDERSTAND BEFORE WE MOVE FORWARD, BECAUSE I THOUGHT WE TALKED ABOUT THIS IN THE AGENDA COMMITTEE AS WELL. ALL OF THIS IS APPLICABLE FOR CITY EMPLOYEES ONLY. IS THAT

CORRECT? >> IT'S APPLICABLE FOR ANYONE. THE ETHICS ORDINANCE ITSELF DOES NOT DISTINGUISH BETWEEN A CITY EMPLOYEE AND A MEMBER OF THE PUBLIC. ANY COMPLAINT A COMPLAINANT IS ANYONE. ANY PERSON CAN'T BE A CORPORATION, BUT IT'S A HUMAN. INDIVIDUAL CAN FILE A COMPLAINT AND IT TREATS ALL COMPLAINANTS THE SAME.

>> OKAY? >> COUNCILMEMBER HOLLEN. >> THANK YOU. I THINK THAT COUNCIL MEMBER JESTER EXPRESSED MY FEELINGS VERY ELOQUENTLY. I'D LIKE TO ADD TO THAT THAT THE COMPLAINANT IS THE IS THE BEST EXPERT OR SHOULD BE THE BEST EXPERT IN, IN ANY KIND OF A CASE LIKE THIS. THEY, THEY'RE THE ONE THAT, THAT OBSERVED THE ACTION OR, OR WHAT THEY PERCEIVE TO BE AN ACTION. AND, AND I THINK, I THINK THEY SHOULD BE ABLE TO STEP UP AND, AND, AND IDENTIFY THEMSELVES AND CLEARLY IDENTIFY WHAT THEY'RE AGGRIEVED ABOUT. SO I

WOULD SUPPORT THE CIVIL MODEL. THANK YOU. >> ANYONE ELSE? COUNCIL MEMBER

FERRY. >> SURE. YEAH. I WANT TO EXPRESS FIRST, I UNDERSTAND THE CONCERN. AND I THINK, IF I REMEMBER CORRECTLY, WHEN WE DISCUSSED THIS IN THE TWO MINUTE PITCH PROCESS, THAT THE QUESTION WAS SPECIFICALLY, I THINK, FROM COUNCIL MEMBER JESTER, WE'RE DISCUSSING A CITY EMPLOYEE MAKING A COMPLAINT AGAINST A MEMBER OF COUNCIL,

[00:45:05]

WITH MAYBE WHAT WE TALKED ABOUT. IS THAT FAIR TO SAY? >> COUNCIL MEMBER JESTER.

>> THANK YOU. SO FROM MY UNDERSTANDING AND PLEASE, I COULD BE WRONG. OF COURSE, BELIEVE IT OR NOT, YES, I COULD BE WRONG. WE ARE CITY EMPLOYEES. I MEAN, WE ARE IN THAT BUCKET.

OR IS THAT NOT CORRECT? >> I WOULD DEFER TO THE CITY ATTORNEY ON THAT QUESTION.

>> OKAY. >> SORRY, MACK. >> BECAUSE I THINK YOU RAISE AN IMPORTANT POINT THAT I THINK IS AN IMPORTANT DISTINCTION. SO, YES, I, I WOULD LIKE CLARIFICATION WHAT WE'RE TALKING ABOUT. THANK YOU SO MUCH FOR THAT. COUNCIL MEMBER

FERRY. >> IT'S HARD TO ANSWER BECAUSE I DON'T KNOW WHAT COUNCIL HAS DECIDED OR SAID. WHEN COUNCIL DECIDES HOW THEY WANT TO MAKE THIS APPLY TO WHO AND HOW THAT PLAYS OUT, WE CAN ADDRESS LANGUAGE TO ADDRESS THAT. BUT AS OF RIGHT NOW, I DON'T KNOW WHAT COUNCIL'S GOAL IS. WE'RE LOOKING FOR DIRECTION ON. ARE YOU TRYING TO LIMIT THIS TO JUST CITY EMPLOYEE TO CITY COUNCIL? AND IF SO, THEN WE CAN DEFINE WHAT CITY EMPLOYEE MEANS.

BUT RIGHT NOW, UNLESS I'M UNDERSTANDING THE QUESTION CORRECTLY, WE DON'T KNOW WHAT

THIS IS APPLYING TO. >> I UNDERSTOOD YOUR QUESTION TO MEAN, ARE YOU CURRENTLY CONSIDERED A CITY EMPLOYEE REGARDLESS OF THE ETHICS ORDINANCE OR ANYTHING? AND I DON'T KNOW THE ANSWER TO THAT. SO MAYBE I MISUNDERSTOOD YOUR QUESTION. I MEAN, I KNOW SOME OF YOU RECEIVE THE STIPEND, BUT I DON'T KNOW IF THAT CREATES AN EMPLOYEE EMPLOYER RELATIONSHIP,

IF THAT. >> AND SO I CERTAINLY AM NOT GOING TO SPEAK ON BEHALF OF THE CITY ATTORNEY, BUT IT WAS MY UNDERSTANDING THAT IT IT DID. AND SO IF WE ARE TALKING ABOUT EXCLUDING APPOINTEES, WHICH I THOUGHT THIS ALSO INCLUDED, THAT SOMEONE COULD COMPLAIN ABOUT SOMEONE ON PLANNING AND ZONING OR BEHAVIOR FROM, YOU KNOW, ANYONE THAT IS ACTING IN

THAT CAPACITY. >> UNDER THE ETHICS ORDINANCE. YES.

>> CORRECT. SO I THINK, YES, COUNCILMEMBER FERRY, IF YOU WANT TO TAKE THE OPPORTUNITY TO SAY AS FAR AS WHAT IS BEING PROPOSED TODAY AND FEEDBACK IS BEING ASKED FOR, IF YOU WOULD LIKE TO NARROW THAT IT IT COULD CHANGE PEOPLE'S OPINION AS FAR AS MOVING FORWARD.

>> THANK YOU. YEAH. >> NO THANK YOU. >> I HAVE A DIFFERENT UNDERSTANDING OF CITY EMPLOYEE. SO I WOULD LIKE TO DIRECTLY ASK, ASIDE FROM THE ETHICS, WHAT WE'RE DISCUSSING, I'M WONDERING, ELECTED OFFICIAL IS NOT A CITY EMPLOYEE. IS THAT CORRECT?

>> BY AND LARGE, YES, YES. >> OKAY. THAT WAS MY UNDERSTANDING. WE ARE NOT CITY EMPLOYEES. BY AND LARGE. WE ARE ELECTED OFFICIALS. PUBLIC OFFICIALS, PUBLIC OFFICIALS. SO A CITY EMPLOYEE BEING ABLE TO MAKE A COMPLAINT AGAINST AN ELECTED OFFICIAL, ONE OF THE SEVEN THAT SIT HERE IS WHAT I THOUGHT WE WERE MOVING FORWARD WITH TODAY, BECAUSE THAT WAS WHAT WAS SPECIFICALLY ASKED BY YOU. AND I SAID, ABSOLUTELY, YES, MA'AM.

>> OKAY, WELL, THAT'S JUST NOT IN THE PRESENTATION. >> SO NOW. I'M GONNA GO. NOW I'VE GOT THE NEXT PART. NOW I GOT POINT TWO. RIGHT. THANK YOU FOR THAT CLARIFICATION, COUNCILOR JESTER, AND THANK YOU FOR THE ANSWER. MACK. WITH THAT BEING SAID. I THINK THAT THERE'S AN OPPORTUNITY TO EDIT THIS A BIT. I LIKE THE CRIMINAL MODEL. I LIKE THE OPPORTUNITY FOR A COMPLAINANT TO HAVE CONFIDENTIALITY BE AN OPTION, MEANING THEY'RE GOING TO FILE THE FORM WITH ALL OF THEIR INFORMATION. WHAT IS REDACTED IF THEY CHOOSE TO BE CONFIDENTIAL, IS THEIR NAME, THEIR ADDRESS, THEIR PHONE NUMBER. THAT KIND OF INFORMATION SO THAT THEY'RE STILL ABLE TO BE CONTACTED BY, LET'S SAY WE HAD A CONSULTANT, NOT A CITY EMPLOYEE, BECAUSE I DON'T THINK WE NEED TO HIRE A NEW CITY EMPLOYEE TO HANDLE THESE COMPLAINTS, BECAUSE WE DON'T GET THAT MANY. WE COULD HAVE A CONSULTANT COME IN. THEY COULD BE THE THIRD PARTY WHO'S CONTACTING THE CONFIDENTIAL INDIVIDUAL WHO'S MAKING THIS REPORT TO GATHER MORE DATA, GATHER MORE INFORMATION, GATHER MORE BURDEN OF PROOF TO THEN MOVE FORWARD TO THE EVIDENTIARY HEARING WHERE THAT CONSULTANT WOULD SERVE AS THAT PERSON, JUST LIKE IT WOULD HAVE BEEN MADISON IN THE CURRENT MODEL. DOES THIS MAKE SENSE?

>> DOES I THINK THAT I WOULD LIKE CLARIFY, BECAUSE THE PROPOSAL WAS INTRODUCED AS STRUCTURAL CHANGES TO THE ETHICS ORDINANCE. IF WHAT WE'RE REALLY TRYING TO ADDRESS IS, IS THERE A WAY FOR A CITY EMPLOYEE TO MAKE A COMPLAINT, NOT EVEN NECESSARILY AN ETHICS COMPLAINT, BUT A CITY POLICY VIOLATION OR SOME OTHER THERE WAS INAPPROPRIATE CONDUCT COMPLAINT? I DON'T KNOW THAT THE BEST PLACE TO ADDRESS THAT IS THE ETHICS ORDINANCE.

>> YEAH. >> AND ALSO. >> I WONDER IF WE COULD DO THIS,

[00:50:03]

BUT I DO WONDER IF WE COULD GIVE DIRECTION TO TIGHTEN UP THAT SCOPE. A LITTLE BIT ABOUT CITY EMPLOYEES MAKING COMPLAINTS. AND THEN YOU COULD COME BACK AT ANOTHER TIME WITH

THAT SPECIFIC SCOPE. WHAT ARE YOUR THOUGHTS ON THAT? >> YEAH, I THINK THAT WOULD BE REALLY HELPFUL BECAUSE, BECAUSE I THINK IF WE'RE DISCUSSING JUST LIKE THE AN ETHICS EMPLOYEE, NOT, I'M SORRY, A CITY EMPLOYEE SPECIFICALLY, RIGHT? LIKE I SAID EARLIER, TRIED TO CLARIFY EARLIER, ETHICS ORDINANCE DOES NOT CARE WHO EMPLOYS YOU IF YOU'RE A COMPLAINANT. SO IF WE'RE TRYING TO CREATE BASICALLY A SPECIFIC PATHWAY FOR CITY EMPLOYEES TO ALLEGE INAPPROPRIATE CONDUCT OF A COUNCIL MEMBER, I DON'T KNOW THAT THE ETHICS ORDINANCE IS THE BEST PLACE TO DO THAT. AND SO IF THAT'S REALLY THE CONCERN, THEN WE CAN COME BACK WITH THAT.

BUT I DON'T KNOW IF IT WOULD GO IN THE ETHICS ORDINANCE. >> I ALSO HAVE A QUESTION FOR THE CITY ATTORNEY. IT SEEMS TO ME IT'S POSSIBLE THAT IF THE CRIMINAL MODEL WAS IMPLEMENTED, THERE WOULD BE A CONFLICT OF INTEREST. IF WE HAVE CITY EMPLOYEES INVESTIGATING AND PROSECUTING AGAINST COUNCIL MEMBERS. I DON'T KNOW THAT THAT'S ABSOLUTELY POSSIBLE.

>> SURE. NO, THERE'S A LOT OF SERIOUS CONCERNS THERE. IF YOU WERE EVEN GOING TO PURSUE SOMETHING LIKE THAT, WOULD BE OUTSIDE PARTIES PROBABLY HAVE TO BE BROUGHT IN TO INVESTIGATE AND TO PROSECUTE. IF THAT WAS THE DIRECTION THE COUNCIL WANTED TO GO, I DON'T THINK ANYBODY IN MY STAFF OR THE CITY EMPLOYEES SHOULD BE IN THAT POSITION.

>> AND IS THE CURRENT THE CURRENT SYSTEM OR THE CURRENT ORDINANCE ALLOWS CITY EMPLOYEES TO MAKE COMPLAINTS? YES. THE DIFFERENCE WOULD BE THE THE PERSON BEING COMPLAINED ABOUT DOESN'T GET TO KNOW WHO THEY ARE, AND THEY DON'T HAVE TO APPEAR TO EXPLAIN WHY THEY'VE

MADE THESE ACCUSATIONS. IS THAT ACCURATE? >> CURRENTLY? OR I GUESS.

>> WHAT IS BEING PROPOSED? >> YES. SO UNDER THE HYBRID OR THE CRIMINAL MODEL, THE THE IDEA WAS THAT THE COMPLAINANT, WHOEVER IS SAYING THIS CONDUCT WAS INAPPROPRIATE, WOULD NOT HAVE TO REVEAL THEMSELVES. THAT WAS MY UNDERSTANDING OF WHERE WE WERE TRYING TO GET FROM THE

TWO MINUTE PITCH. >> OKAY. AND WE'RE TALKING NOW ABOUT NARROWING, HAVING THE CURRENT CIVIL MODEL AS IT APPLIES TO COUNCIL MEMBERS. BUT AND FORGIVE ME, I DON'T WANT TO PUT WORDS IN YOUR MOUTH, COUNCILMEMBER FERRY, YOU'RE PITCHING THAT WE MOVE TO THE

CRIMINAL MODEL. BUT FOR FELLOW EMPLOYEES OF THE CITY. >> COUNCIL MEMBER.

>> FERRY. >> I THINK WHAT I'M UNDERSTANDING IS IN THE TWO MINUTE PITCH, SOMEHOW WE GOT LOST IN THE SAUCE ABOUT WHICH IS FINE, THAT THIS IS PART OF THE PROCESS, RIGHT? I THINK THAT WHAT NEEDS TO HAPPEN IS IF THE PURPOSE IS TO DEFINE WHAT A AVERAGE CITIZEN SLASH APPOINTEE OF ANY BOARD OR COMMISSION IS VERSUS A CITY EMPLOYEE IS TO CLEARLY DEFINE THE TWO, THEN WE NEED TO DEFINE THOSE TWO. AND THEN ALSO, MAYBE FOR THE SAKE OF THIS CONVERSATION, SPECIFICALLY STATE THAT WE ARE LISTED AS CITY OFFICIALS, NOT CITY EMPLOYEES, BECAUSE WE'RE NOT. MAYBE THIS MORE IS AN HR CONVERSATION AND LESS OF AN ETHICS CONVERSATION. BUT STILL, I WOULD THINK THAT DEFINITIONS WOULD NEED TO BE CREATED TO DESIGNATE THESE PEOPLE WHO THESE PERSONS ARE, THESE GROUPS OF PEOPLE.

>> YEAH. SO UNDER THE ORDINANCE, THE ETHICS ORDINANCE, IT'S VERY I MEAN, IT'S NARROW IN SOME WAYS. THE ORDINANCE AND THE BOARD OF ETHICS HAVE PRETTY NARROW JURISDICTION OVER VIOLATIONS OF THE SPECIFIC PROHIBITIONS LISTED IN THE ETHICS ORDINANCE OF CITY OFFICIALS, WHICH INCLUDES THE CITY COUNCIL, BUT ALSO PNC AND PUB AND THE THE ZBA AND AND ME AND THE CITY ATTORNEY AND THE CITY MANAGER AND THE JUDGE. BUT THAT IS KIND OF MORE OF A VOLUNTEER GROUP GENERALLY THAN A SEPARATE KIND OF POLICY, LIKE AN EMPLOYEE. AN INVESTIGATION OF AN EMPLOYEE DOES NOT GO THROUGH THE ETHICS ORDINANCE. THEY MIGHT VIOLATE THE ETHICS POLICY, BUT HR WOULD DEAL WITH THAT AND THEY WOULD INVESTIGATE IT. AND THEN THEY WOULD THERE WOULD BE SOME SORT OF CORRECTIVE ACTION IF SOMETHING HAD ACTUALLY BEEN PROVEN SUBSTANTIATED, ESSENTIALLY. SO, YES, I THINK WE USE THE ETHICS, THE ETHICS MODEL, THE ETHICS ORDINANCE IS KIND OF FOR THIS THESE SPECIFIC SET OF CONDUCT THAT WE'RE TRYING TO PROHIBIT FROM OUR MORE VOLUNTEER, THOUGH NOT ALL OF US ARE VOLUNTEERS. VOLUNTEER, YOU KNOW, OFFICIALS

[00:55:05]

IF WE ARE IF WHAT YOU'RE TRYING TO, IF YOU'RE WHAT YOU'RE SEEKING ACTUALLY SHOULD LAY IN THE ETHICS ORDINANCE. IF YOU'RE SPECIFICALLY CONCERNED ABOUT CITY EMPLOYEES ABILITY TO MAKE COMPLAINTS ABOUT CITY COUNCILORS, AGAIN, I DON'T KNOW THAT THAT SHOULD BE IN THE

ETHICS ORDINANCE. >> OKAY. >> YOU THINK THAT THAT WOULD

INSTEAD BE A CONVERSATION WITH HR? >> YES.

>> AND CREATING A STRUCTURE WITHIN THAT DEPARTMENT. OKAY. >> IF ONE DOESN'T ALREADY EXIST, I NOT FULLY LIKE THERE MIGHT NOT BE A, AN ORDINANCE OUT THERE THAT DETAILS IT, BUT I THINK THAT EMPLOYEES CAN CURRENTLY MAKE POLICY VIOLATION ALLEGATIONS AGAINST CITY COUNCIL MEMBERS AND THEY WILL BE INVESTIGATED. I AGAIN, I DON'T KNOW THAT THERE'S A CLEAR POLICY OR PROCEDURE ON HOW EXACTLY THAT HAPPENS OR HOW THAT WORKS, BUT.

>> OR HOW OR IF THEY'RE EVEN PROTECTED. RIGHT. >> WHAT DO YOU MEAN BY.

>> LIKE KEEPING THEIR NAME CONFIDENTIAL? >> OH, YEAH. I THINK I'D HAVE

TO DEFER AGAIN TO HR ON HOW THAT WORKS. >> OKAY.

>> LET'S TAKE A PAUSE REAL QUICK AND WE'LL GO TO COUNCIL MEMBER JESTER AND THEN ME. GO

AHEAD. >> OKAY, SO I JUST HAVE A POTENTIAL RECOMMENDATION THAT MAYBE WE ASK AT A FUTURE MEETING THAT OUR HR DEPARTMENT WALK US THROUGH IF THERE WAS A COMPLAINT FROM A CITY EMPLOYEE TOWARDS A COUNCIL MEMBER OR OTHER APPOINTEE, WHAT HAPPENS?

>> BECAUSE THAT'S SOMETHING I DON'T KNOW, AND THAT MIGHT HELP FLUSH OUT THE PURPOSE, WHICH I CERTAINLY UNDERSTAND THE PURPOSE OF. COUNCIL MEMBER FARIES. SUGGESTION TO DISCUSS TODAY, BUT IT MIGHT BE HELPFUL TO KNOW WHAT IS THAT ROLE AND WHAT IS THE CURRENT PROCEDURE.

AND THAT WAY WE CAN MAYBE DETERMINE IS THERE SOMETHING IN PLACE THAT WE FEEL COMFORTABLE ABOUT OR IS THERE NOT? AND IF SO, WHAT IS THE CORRECT AVENUE TO MAKE SURE THAT IF COUNCIL MEMBERS OR OTHER APPOINTEES ARE BEHAVING IN A WAY THAT IS INAPPROPRIATE BULLYING, WHATEVER THAT MAY BE, THAT THERE IS AN AVENUE FOR THAT TO BE ADDRESSED? THAT'S JUST A

THOUGHT, MAYOR PRO TEM, AND THANK YOU. >> YEAH. THANK YOU. COUNCIL MEMBER FERRY. WE'LL START HERE. I AGREE WITH THAT. I MEAN, ULTIMATELY, MY UNDERSTANDING GENERALLY HAS BEEN AND AND I DON'T KNOW WHERE IT GOT SIDEWAYS BUT IT'S OKAY. IS THAT THE INTENT HERE WAS ABOUT. EMPLOYEES OF THE CITY BEING ABLE TO MAKE COMPLAINTS WHILE ALSO HAVING PROTECTION AGAINST COUNCIL MEMBER. CORRECT ME IF I'M WRONG, YOU INDICATED THAT THE ETHICS ORDINANCE IS NOT THE APPROPRIATE PLACE TO HANDLE THAT NECESSARILY.

>> YEAH. >> I MEAN, I WANT TO BE CLEAR THAT EMPLOYEES CAN SUBMIT ETHICS COMPLAINTS, BUT IT'S A DIFFERENT PROCESS THAN PERHAPS LIKE A POLICY VIOLATION CONCERN

WITHIN KIND OF WITHIN THE ORGANIZATION. >> SURE. YEAH.

>> AND SO I'M FINE WITH HAVING THAT ADDITIONAL WORK SESSION. AS COUNCIL MEMBER JESTER SUGGESTED, WITH THE CAVEAT THAT IN THAT WORK SESSION, WE COULD GIVE DIRECTION IF THERE WAS SOMETHING THAT WE WANTED TO CHANGE. BUT I'M GOING TO I'M JUST GOING TO GO DOWN THE LINE.

COUNCIL MEMBER RUMOHR. >> I THINK THIS IS JUST BROADLY, AND I APPRECIATE ALL THE DISCUSSION AT THIS POINT OF SITTING BACK AND LISTENING AND TRYING TO MAKE A COHESIVE.

>> PICTURE OUT OF WHAT I'M HEARING. AND SO WHAT I HEAR IS WE'VE HAD A GOAL THAT CITY EMPLOYEES BE ABLE TO REPORT CONCERNS OF, YOU KNOW, COUNCIL MEMBER BEHAVIOR, BUT GIVE THEM A LITTLE MORE PROTECTED WAY TO DO IT. SO WE COULD HAVE A PRESENTATION FROM HR TALKING ABOUT THE PROCESS, OR I'M HAPPY FOR US TO JUST HEAR HOW WOULD WE ACHIEVE THAT GOAL? YOU KNOW, IF IT'S NOT THE ETHICS ORDINANCE, IF MAYBE IT'S HR, WHAT WOULD BE THE BEST ROUTE TO ACHIEVE THAT? I'M OPEN TO WHEREVER THAT HAPPENS TO TAKE US.

>> I CAN'T SPEAK DIRECTLY TO WHAT HR PROCESSES ARE, BUT IF HR RECEIVED A COMPLAINT AGAINST A COUNCIL MEMBER, THEY WOULD THEY WOULD DO SOMETHING WITH IT, RIGHT? YEAH. AND SO I BELIEVE THAT CURRENTLY EXISTS. SO I CAN'T SPEAK TO THE THE SPECIFIC DETAILS OF HOW IT WORKS.

>> RIGHT. SO, I MEAN, I'M HAPPY FOR US TO JUST KEEP LOOKING INTO HOW WOULD WE ACHIEVE THAT PARTICULAR GOAL THAT I THINK WE SET OUT FOR HERE? AND WHAT WOULD THAT LOOK LIKE? WHAT WOULD THAT PATHWAY BE? MAYBE IT'S HR, MAYBE IT'S YOU KNOW, I HAVE NO IDEA. BUT THAT'S KIND

OF WHERE I'M SITTING RIGHT NOW. THANKS. >> COUNCIL MEMBER PERRY.

>> YES. AND TO BE CLEAR, I THINK EVERYONE SITTING HERE I'LL SPEAK FOR MYSELF. I, I KNOW THAT THERE'S A PATHWAY TO MAKE A COMPLAINT AGAINST A COUNCIL MEMBER. THAT'S NOT, I THINK WHAT'S THAT QUESTION HERE? I THINK IT'S CAN THERE BE A PATHWAY WHERE AN EMPLOYEE CAN LODGE A COMPLAINT AGAINST A COUNCIL MEMBER? AND BECAUSE OF THAT POWER DYNAMIC THAT EXISTS,

[01:00:02]

INDEED, THAT SPECIFIC THAT SPECIFIC WANT. SO I APOLOGIZE. WHEN I SAW THE ISR, I DIDN'T THINK OF COMPLAINT IT NOT REFERRING TO JUST WHAT WE HAD AGREED TO BEING CITY EMPLOYEES.

SO THEN MOVING FORWARD, HERE WE ARE. AND THE COMPLAINT IS ACTUALLY EVERYONE THAT BROUGHT UP CONCERNS, AND I'M GRATEFUL FOR THE DISCUSSION. AND I WANT TO MOVE FORWARD WITH EXACTLY

THAT, THAT SPECIFICITY OF HOW DO WE ACHIEVE THAT GOAL? >> YEAH. AND I THINK I APOLOGIZE TOO FOR MISUNDERSTANDING WHAT WAS WHAT WAS INTENDED. I THINK I DON'T BELIEVE THAT CURRENTLY HR REVEALS THE NAME OF WHO IS COMPLAINING IF THEY RECEIVE A COMPLAINT, UNLESS THEY HAVE TO AS PART OF THE INVESTIGATION. BUT AGAIN, I DON'T REALLY WANT TO SPEAK FOR HR, SO I DON'T KNOW IF ANYBODY'S HERE, BUT FROM THERE. BUT YEAH.

>> I DON'T WANT TO LEAVE THIS CONVERSATION UNTIL I CAN MAKE SURE THAT STAFF HAS CLEAR DIRECTION ON WHAT WE ARE DOING. RIGHT. WE ARE GOING TO COME BACK TO A WORK SESSION ABOUT THE CURRENT POLICIES THAT ARE IN PLACE. I ADDED TO THAT, AND WITH THE POSSIBILITY IN THAT WORK SESSION OF GIVING DIRECTION. ARE WE CAN WE RAISE YOUR HAND? IF THAT WASN'T A SENTENCE THAT MADE SENSE, CAN YOU RAISE YOUR HAND IF YOU AGREE TO THAT?

>> I'LL REPEAT IT. >> YOUR SUGGESTION OF, OF, OF HAVING THE CONVERSATION ABOUT WHAT THE CURRENT POLICY IS AND THEN GIVING DIRECTION IF NEEDED IN THAT DISCUSSION TO ACCOMPLISH WHAT YOU'RE DISCUSSING, WHICH IS A CITY EMPLOYEE MAKING A COMPLAINT AGAINST A CITY COUNCILOR. CAN WE JUST RAISE MAYOR PRO TEM? I BEG YOUR PARDON? OKAY. PLEASE.

YEAH. >> IS IS THERE A RELATIONSHIP CURRENTLY ASIDE FROM THIS, BUT CURRENTLY WHERE THE HR DIRECTOR, THE HR DEPARTMENT HAS DEALINGS WITH A COUNCIL MEMBER. I UNDERSTAND THEY DEAL WITH EMPLOYEES, BUT IS THERE A IS THERE A IS THERE A A LINE BETWEEN HR AND A COUNCIL MEMBER CURRENTLY? BECAUSE I CAN'T THINK OF ONE.

>> WHAT CAN I FIND OUT? >> WHAT DO YOU MEAN BY LINE LIKE.

>> WELL, IF OKAY, IF AN EMPLOYEE VIOLATES A POLICY, THEY'RE DEALT WITH THROUGH THE HR DEPARTMENT, I PRESUME. YES. IS THAT CORRECT? THAT'S CORRECT. OKAY. IF IF A COUNCIL MEMBER WERE TO VIOLATE SOMETHING THAT WE'VE SEEN BEFORE, FOR EXAMPLE, IS THAT AN HR, DOES THAT GO TO HR? IT DOESN'T SEEM TO ME THAT THAT'S EVEN A EVEN AN APPROPRIATE AVENUE.

>> I THINK I THINK I UNDERSTAND WHAT YOU'RE SAYING. >> I'LL JUMP IN. SO IT COULD AND LIKELY WOULD DEPENDING ON WHAT THE COMPLAINT IS. HR HAS AN OBLIGATION BOTH TO LOOK INTO ALLEGATIONS BUT ALSO TO PROTECT EMPLOYEES. SO FOR EXAMPLE, IF THERE WAS A HARASSMENT COMPLAINT THAT WAS MADE, THE HR DEPARTMENT HAS AN OBLIGATION TO PROTECT THE EMPLOYEE. SO THEY HAVE AN OBLIGATION TO LOOK INTO THOSE THINGS. I THINK THE CHALLENGE AND THIS CAME UP LAST YEAR, WE PUT A POLICY IN PLACE BECAUSE THE SAME SIMILAR ISSUE CAME UP WITH COUNCIL APPOINTEES.

YOU ALL THE CITY COUNCIL IS THE BOSS OF THE CITY APPOINTEES. AND SO THERE WASN'T A CLEAR DIRECTION OR POLICY ON WHO GETS TO WHO GETS TO DISCIPLINE A CITY APPOINTEE, POTENTIALLY IF THERE'S A PROBLEM. AND SO COUNCIL ADOPTED A POLICY TO ADDRESS THAT SITUATION. I THINK THIS SOUNDS LIKE IT'S THE NEXT STEP, WHICH IS IF THERE'S A PROBLEM WITH CITY COUNCIL, WHO GETS TO DISCIPLINE OR ADDRESS THAT WITH COUNCIL MEMBER, SHOULD IT BE THE OTHER COUNCIL MEMBERS? HOW SHOULD THAT BE PROCESSED? THAT SOUNDS LIKE THAT'S THE BIGGER CONVERSATION IS HOW DO WE ADDRESS A SCENARIO WHERE A COUNCIL MEMBER HAS A COMPLAINT AGAINST THEM? WHO GETS TO ADDRESS THAT? WHO GETS TO LOOK INTO THAT, AND WHO GETS TO MAKE A DECISION ON WHAT TO DO ABOUT THAT? UNDERSTANDING THAT YOU ALL ARE ELECTED OFFICIALS AND SO YOU WERE PUT ON BY THE COUNCIL, CAN'T REMOVE YOU. SO WHAT ARE THE OPTIONS AT THAT POINT? IT SOUNDS LIKE

THAT'S PART OF THE CONVERSATION. >> SO IF I COULD RESPOND TO THAT, PLEASE, PLEASE. MY MY UNDERSTANDING IS THAT WHENEVER I HAVE A CONCERN OF ANY KIND OF STREET. ANYTHING, ANYTHING, I GO THROUGH THE CITY MANAGER'S OFFICE EVERY TIME. I DON'T, I DON'T, I DON'T GO TO DEPARTMENT HEADS, I GO TO THE CITY MANAGER AND I LET THE CITY MANAGER MAKE THE DECISION AS TO, AS TO WHAT HAPPENS AND WHAT DEPARTMENT HEAD FOLLOWS UP ON IT. I DON'T SEE HOW ALL OF A SUDDEN WE'RE WE'RE WE'RE PULLING IN A DEPARTMENT THAT I'VE NEVER I MEAN, OBVIOUSLY I'VE HAD I KNOW WHO THE HR DEPARTMENT IS, BUT I DON'T HAVE A RELATIONSHIP WITH THAT DEPARTMENT. IT JUST SEEMS.

IT JUST SEEMS LIKE AN ODD JUST A ONE OFF TYPE THING. >> I THINK HR WOULD SAY THE SAME THING. THEY'RE IN AN AWKWARD POSITION WHEN THEY GET THESE. SO THERE NEEDS TO BE

[01:05:04]

>> I WOULD EXPECT TO GET A CALL FROM FROM FROM THE CITY MANAGER IF IF I DID SOMETHING EGREGIOUS AND NEEDED TO BE DISCIPLINED OR, OR JUST SAY, HEY, DON'T DO THAT ANYMORE, STOP DOING THAT. I THINK IT'D BE APPROPRIATE FROM THE CITY MANAGER, NOT FROM HR. I'M SORRY. THANK YOU.

>> I APPRECIATE YOUR YOUR PERSPECTIVE. I BELIEVE THAT ALL OF US HAVE THE SAME HEART AND INTENT WITH WHAT WE WOULD LIKE TO SEE IN THE FUTURE. IT'S JUST A MATTER OF HOW WE CAN HAVE THAT DISCUSSION. SO I DO WANT TO GO AND MAKE SURE WE HAVE DIRECTION WITH COUNCIL MEMBER JESTERS. SUGGESTION. CAN CAN WE ALL JUST SHOW A RAISE OF HANDS IF WE WANT TO MOVE FORWARD WITH

THAT? OKAY. THERE ARE FOUR. >> JUST DIRECTION. >> OH YEAH. JUST DIRECTION. SO THERE'S FOUR PEOPLE WILLING TO GIVE DIRECTION TO MOVE FORWARD WITH THAT WORK SESSION.

>> I DON'T FEEL LIKE THAT IS A WORK SESSION I NEED TO BE INVOLVED IN. SO I WANT TO MAKE

SURE CASSEY FEELS LIKE SHE KNOWS WHAT IS THE NEXT STEP. >> I THINK WE NEED TO LOOK AT WHAT OTHER CITIES DO. I MEAN, I FEEL LIKE WE'RE FLOUNDERING HERE AND WE SHOULDN'T BE.

SURELY OTHER CITIES HAVE ADDRESSED THIS IN ANOTHER WAY. I WOULD LIKE TO HAVE MAYBE SOME TIME BEFORE THE NEXT WORK SESSION THAT WE DISCUSS THIS, TO REACH OUT TO OTHER ELECTED

OFFICIALS AND FIND OUT WHAT OTHERS DO AS WELL. >> SURE.

>> INTERIM CITY MANAGER, DO YOU HAVE WHAT YOU NEED? >> I BELIEVE SO. SO THE REQUEST IS A WORK SESSION ON HOW A PROCESS OR IF THERE IS A CURRENT PROCEDURE OR PROCESS FOR A CITY EMPLOYEE TO FILE A COMPLAINT ABOUT A CITY COUNCIL MEMBER, AND IF HOW THAT WOULD BE HANDLED, IF IT WOULD STAY CONFIDENTIAL AND HOW OTHER CITIES HANDLE COMPLAINTS.

>> ARE WE ALL GOOD WITH THAT? I SAW FOR MAYOR. >> JUST JUST ONE ADD NOT I WOULD WANT TO KNOW IF IT'S CONFIDENTIAL CURRENTLY, BUT ALSO IF WE WANTED TO EXPLORE THE IDEA OF KEEPING IT CONFIDENTIAL, WHAT THAT WOULD LOOK LIKE. SO I DO WANT A LITTLE BIT OF SUGGESTION ALONG THE WAY TO NOT JUST WHAT WE DO, BUT ALSO HOW CAN WE ACHIEVE THE

END GOAL HERE? >> YEAH, POTENTIALLY. >> THANK YOU. COUNCIL MEMBER

HOLLAND. >> CITY OF DENTON HAS HAD A HAD A MANAGER COUNCIL FORM OF GOVERNMENT SINCE THE 60S. I DON'T THINK I DON'T THINK WE NEED TO GO TO ANOTHER CITY TO LEARN HOW TO HOW TO DO THIS. I THINK WE'VE BEEN AROUND LONG ENOUGH TO DO THAT. I JUST DON'T

SEE THAT NECESSARY. >> THANK YOU, I HEAR THAT. THANK YOU FOR SHARING. I, I BELIEVE WE HAVE DIRECTION FOR YOU. THERE WAS FOUR. SO WE'RE GOING TO MOVE FORWARD WITH THAT.

THIS IS HEALTHY DISCUSSION. THAT'S WHAT THE MAYOR WOULD CALL I DON'T KNOW WHAT SCAR TISSUE. I THINK TRYING TO LIGHTEN THE MOOD A LITTLE BIT HERE. THE PROCESS TRUST. YEAH.

RIGHT. >> IT'S A HARD CROWD. >> I KNOW.

>> WE HAD SUCH A GOOD TIME LAST TIME YOU WERE HERE. >> I KNOW, I KNOW, I TRIED.

>> THANK YOU SO MUCH FOR THE PRESENTATION AND WE'LL PICK THIS BACK UP AT ANOTHER POINT.

SINCE WE ARE AHEAD OF SCHEDULE, WHY DON'T WE GO AHEAD AND TAKE ABOUT A TEN MINUTE BREAK? BECAUSE WE'VE GOT SOME HEAVY STUFF MOVING FORWARD. SO AROUND TEN EXCUSE ME, 2 TO 10 W

[D. ID 26-1706 Receive a report, hold a discussion, and give staff direction regarding the new South Branch Library and Active Adult Center. [Estimated Presentation/Discussion Time: 30 minutes]]

ADULT CENTER. HOW'S IT GOING? >> IT'S GOING WELL. GOOD AFTERNOON COUNCIL. SETH GARCIA, DIRECTOR OF CAPITAL PROJECTS. SO TODAY WE'RE GOING TO WALK THROUGH A BRIEF DISCUSSION TO TRY AND GET SOME DIRECTION ON SITE SELECTION FOR THE TWO NEW FACILITIES THAT YOU SPOKE OF.

SO JUST AS A REMINDER, THE 2023 BOND PROGRAM INCLUDED PROPOSITIONS F AND G, WHICH ARE THE ACTIVE ADULT CENTER AND SOUTH BRANCH LIBRARY. ALL OF THOSE WITH THE OTHER PROPOSITIONS WERE APPROVED BY VOTERS ON NOVEMBER 7TH IN 2023. I'VE GOT THE TOTALS FOR THE TWO PROPOSITIONS LISTED THERE, 47 MILLION FOR THE ACTIVE ADULT, AND THEN ROUGHLY 49.5 FOR SOUTH BRANCH LIBRARY AS PART OF THE BUDGET PROCESS THIS LAST FISCAL YEAR. WE WERE ALLOCATED $250,000 TO CONDUCT SITE PLANNING AND KIND OF MASTER PLANNING SITE SELECTION. SO TODAY WE'RE GOING TO BE SEEKING DIRECTION ON NEXT STEPS FOR THOSE TWO PROPOSITIONS. WANTED TO TALK SPECIFICALLY ABOUT SOME OF THE PLANNING EXERCISES. SO WE WILL BE LOOKING TO DO SITE ASSESSMENT ONCE WE HAVE THOSE ASSESSMENTS COMPLETED. WE DO PLAN TO GO OUT AND DO PUBLIC OUTREACH AND SOME STAKEHOLDER ENGAGEMENT WITH PEOPLE WHO ARE GOING TO USE THOSE FACILITIES ARE CURRENTLY USING EXISTING FACILITIES. WE'RE HOPING TO BE ABLE TO BRING BACK SOME COST ESTIMATES FOR BUDGET DISCUSSIONS THIS NEXT FISCAL YEAR. WE'RE ALSO GOING TO WORK WITH THE DEPARTMENTS TO LOOK AT PROGRAMING AND FACILITY USAGE. BASICALLY, WITH THE MONEY THAT

[01:10:01]

OPTION TWO IS GOING TO BE TO BUILD PROJECTS PER BUDGET BY VOTERS ON SEPARATE SITES. SO WE HAVE TWO SEPARATE SITES THAT BOTH FACILITIES COULD TO COULD GO TO. WE'LL HIGHLIGHT THOSE HERE IN A SECOND. OPTION THREE WOULD BE EXPANSIONS OF THE LIBRARY AND ACTIVE ADULT CENTER AT THEIR CURRENT SITES. AND THEN OPTION FOUR WOULD BE EXPLORE EXISTING BUILDINGS WITHIN THE CITY, WHETHER PUBLIC OR PRIVATE, TO PURCHASE AND THEN RENOVATE OR EXPAND TO MEET THE NEEDS OF THE FACILITIES. OKAY, WE'LL DIVE RIGHT IN. SO OPTION ONE IS THE JOINT FACILITY. SO WE TALKED ABOUT THIS BACK THROUGH BUDGET CONVERSATIONS IN THE SUMMER. SO COMBINED IT WOULD BE ROUGHLY $96.9 MILLION. THE CITY DID PURCHASE 14.4 ACRES OFF OF RYAN ROAD NEXT TO THE GOOD SAMARITAN FACILITY. IT IS LOCATED RIGHT HERE ON THE SOUTH PART OF TOWN.

ALMOST DIRECTLY ACROSS FROM MONTECITO ON RYAN ROAD. THAT ACREAGE WAS BOUGHT IN 2024, SO IT WAS A RECENT PURCHASE AFTER THE BOND PROGRAM. SOME OPPORTUNITIES WOULD BE ECONOMIES OF SCALE. SO AGAIN, IF WE WERE ABLE TO COMBINE THE FACILITY, WE WOULD EXPECT THAT CONSTRUCTION COST PER SQUARE FOOT IS GOING TO GO DOWN. AGAIN, THE SAME WOULD BE TRUE ON SITE PLANNING. UTILITIES. IT IS GENERALLY CHEAPER FOR US TO COMBINE THEM AND DO THAT. SO THAT WOULD BE ONE OPPORTUNITY. THE SECOND WOULD BE LOWER LONG TERM OPERATIONS AND MAINTENANCE COSTS BY ONLY HAVING ONE FACILITY INSTEAD OF TWO JOINT FACILITIES, YOU WOULD GET CROSS GENERATIONAL INTERACTION BETWEEN THE TWO FACILITIES, AND THEN YOU WOULD BE ABLE TO SELL OR REUSE THE CURRENT SOUTH BRANCH LIBRARY LOCATION. SOME CHALLENGES WOULD BE, IS THIS THE APPROPRIATE GEOGRAPHIC LOCATION FOR THE FACILITY FOR BOTH THE ACTIVE ADULT CENTER AND THE LIBRARY? AND THEN DESIGN COORDINATION. WE HAVE TWO VERY DIFFERENT GROUPS. WE WOULD MANAGE THAT THROUGH CAPITAL PROJECTS WITH THE STAKEHOLDERS, BUT DID WANT TO POINT OUT THERE'S GOING TO BE TWO COMPETING PRIORITIES GOING IN AT THE SAME SITE. SO THE SECOND OPTION WOULD BE SEPARATE SITES FOR THE FACILITIES. SO THE FIRST ONE WE'RE GOING TO TALK ABOUT IS THE ACTIVE ADULT CENTER. SO WE DO CURRENTLY OWN 16.2 ACRES AT MACK PARK ON MCKINNEY STREET. SO THIS IS JUST TO THE NORTH OF THE NORTH BASEBALL FIELD. IF YOU'RE FAMILIAR WITH THE SITE, SOME OPPORTUNITIES FOR THAT SITE FOR THE ACTIVE ADULT CENTER WOULD BE IT'S CURRENTLY CITY OWNED PROPERTY, SO THERE WOULD BE NO MORE LAND ACQUISITION. IT IS A MORE CENTRALIZED LOCATION FOR THE CITY CLOSER TO THE EXISTING FACILITY. AND WE WOULD BE ABLE TO OPTIMIZE PROGRAMING BY JUST FOCUSING ON THE ACTIVE ADULT CENTER ITSELF, NOT WORRIED ABOUT THE SOUTH BRANCH LIBRARY OR OTHER USES THAT WOULD POTENTIALLY BE IN THAT FACILITY.

SOME CHALLENGES WOULD BE HIGHER LONG TERM OPERATIONS AND MAINTENANCE COSTS. AGAIN, THAT IS IN PERSPECTIVE TO A JOINT FACILITY. SO LOOKING AT TWO FACILITIES, WE WOULD EXPECT OVERALL HIGHER LONG TERM COSTS IF IT WAS NOT TOGETHER. AND THEN THE PROXIMITY TO AMERICAN LEGION HALL, THIS FACILITY WOULD ACTUALLY MOVE IT CLOSER TO AMERICAN LEGION HALL JUST NORTH OF SOUTHEASTERN. SO AGAIN, WANTED TO HIGHLIGHT THAT AS WELL. SO FOR OPTION TWO FOR THE SOUTH BRANCH LIBRARY, IT WOULD BE ONLY BUILDING THE SOUTH BRANCH LIBRARY AT THE RYAN ROAD SITE. AGAIN, CITY OWNED PROPERTY WE WOULD BE ABLE TO OPTIMIZE THE PROGRAMING THERE.

THE GEOGRAPHIC LOCATION FOR THE SOUTH BRANCH LIBRARY DOES MAKE SENSE. WHAT THE LIBRARY USES IS KIND OF A 2.5 MILE DIAMETER FROM THEIR EXISTING FACILITIES. SO ACTUALLY BY GOING SOUTH FROM THEIR CURRENT, YOU CAPTURE MORE OF THE MEMBERS WITHIN THE CITY THAT CURRENTLY USE THE LIBRARY.

SO FOR LOCATION, IT ACTUALLY MAKES SENSE TO BE ABLE TO SERVE MORE PEOPLE WITHIN THEIR RADIUS THERE. WE WOULD BE ABLE TO EITHER SELL OR REUSE THE SOUTH BRANCH LIBRARY AT ITS CURRENT LOCATION. AND THEN AGAIN, THE ONLY CHALLENGE WOULD BE THOSE HIGHER LONG TERM OPERATIONS AND MAINTENANCE COSTS, AS OPPOSED TO ONE SINGLE FACILITY. SO OPTION THREE WOULD BE A LIBRARY EXPANSION. SO THE CURRENT SITE IS 2.8 ACRES. IT WAS ORIGINALLY BUILT IN 1994. SO WE'RE LOOKING AT SOMETHING THAT'S ABOUT 32 YEARS OLD. AND IT'S CURRENTLY 21,000FT■!S. THERE WAS A RENOVATION IN 2009 THAT ALMOST DOUBLED THE SQUARE FOOTAGE OF THE EXISTING ONE. WITH THE BOND PROGRAM, WE'RE LOOKING TO GET SOMEWHERE NEAR 40,000FT■!S, SO E WOULD BE LOOKING TO ALMOST DOUBLE THE SIZE OF THE FACILITY FOR A NEW FACILITY. SOME OPPORTUNITIES WOULD BE IT IS IN

[01:15:04]

SO THE EXPANSION FOR THE ACTIVE ADULT CENTER HERE IN OPTION THREE. SO THE CURRENT SITE IS ROUGHLY 2.5 ACRES. IT WAS BUILT IN 1977. SO IT'S ABOUT 49 YEARS OLD. IT WAS RENOVATED IN 2010 WITH SOME SQUARE FOOTAGE ADDED. SO WE'RE ROUGHLY AT 20,600FT■!S FOR THAT FACILITY. THE OPPORTUNITIES ARE. IT'S THE CURRENT LOCATION FOR THE THE SENIOR CENTER. SOME CHALLENGES IS RENOVATION UNKNOWNS. AGAIN, THIS IS A VERY OLD FACILITY. WE DON'T HAVE GREAT RECORD DRAWINGS THAT SHOW A LOT OF WHAT'S UNDERGROUND. SO WE WOULD BE LOOKING AT A FULL UPGRADE OF ALL MAJOR SYSTEMS, UTILITIES, THE KIND OF WHOLE SHEBANG THERE. THE BIGGEST ONE THAT I WANTED TO HIGHLIGHT TOO IS THIS SITE IS CURRENTLY WITHIN THE FLOODPLAIN. SO AS SOON AS WE TOUCH IT, WE WOULD HAVE TO DO SOME SIGNIFICANT IMPROVEMENTS TO EITHER BRING IT OUT OF THE FLOODPLAIN OR FLOOD PROOF IT, WHICH WOULD REALLY MAKE IT COST PROHIBITIVE TO BE ABLE TO EXPAND TO THE SIZE THAT WE NEED IT TO BE WITH THE PROGRAM. SO AGAIN, PROBABLY HIGH COST PER SQUARE FOOT BY KEEPING IT IN THE ACTIVE IN THE CURRENT SPACE BECAUSE OF THE ACTIVE FLOODPLAIN. AND THEN ONCE AGAIN, JUST KNOWING THE, THE BREADTH OF THE RENOVATION, WE'RE LOOKING AT 12 TO 15 MONTHS, IF NOT MORE OF CLOSURE DURING CONSTRUCTION OF THIS FACILITY.

SO OPTION FOUR WOULD BE, DOES COUNCIL WANT TO CONSIDER LOOKING AT ADDITIONAL BUILDINGS WITHIN THE CITY THAT COULD BE FOR SALE TO SEE IF THEY WOULD BE VIABLE FOR EITHER ONE OF THESE FACILITIES. SO AGAIN, WE HAVE $96.9 MILLION. WE COULD EXPLORE CENTRALIZED LOCATIONS.

THERE COULD BE POTENTIAL COST SAVINGS DEPENDING UPON THE AGE OF THE BUILDINGS THAT ARE AVAILABLE. AGAIN, NOT SAYING THAT THERE'S ANYTHING OUT THERE THAT'S AVAILABLE, BUT COULD BE AN ADDITIONAL CONSIDERATION. YOU COULD SELL OR REUSE THE SOUTH BRANCH LIBRARY AND ACTIVE ADULT CENTER SITES FOR OTHER CITY PURPOSES. AGAIN, THOSE CHALLENGES KIND OF STAY THE SAME. RENOVATION UNKNOWNS. WE WOULDN'T KNOW WHAT WE WERE GETTING INTO UNTIL WE ACTUALLY PROCURED THE BUILDING OR GOT WELL INTO DESIGN. AND THEN REAL ESTATE MARKET CONDITIONS WITH NOT HAVING ACTUAL BUILDINGS TARGETED. THIS WOULD KIND OF BE A BROAD LOOK TO SEE IF SOMETHING COULD BE AVAILABLE FOR THOSE FACILITIES. SO KIND OF NEXT STEPS IN COUNCIL DIRECTION. SO TODAY WE'RE ASKING TO HAVE OPTIONS SELECTED FOR SITE EVALUATION FOR FOR THE POTENTIAL SITES. IT DOES NOT HAVE TO BE ONE OPTION. I'M NOT ASKING YOU JUST TO CHOOSE NUMBER FOUR. FOR INSTANCE YOU COULD CHOOSE A COMBINATION. BUT AGAIN THIS WILL ALLOW US TO GO FORWARD WITH AN ARCHITECT TO SAY, HERE'S THE SITES THAT WE WANT YOU TO EVALUATE WITHIN THE MONEY THAT WE HAVE. AND THEN BE ABLE TO BRING BACK THAT INFORMATION WITH NEXT YEAR'S BUDGET, AS WE WOULD PREPARE TO ASK FOR THE FULL DESIGN AMOUNT TO START THAT DESIGN PROCESS.

AND AGAIN, THAT WOULD OUR GOAL IS IF WE CAN GET SOME DIRECTION TODAY, BRING THAT BACK WITH NEXT YEAR'S BUDGET PROCESS. SO WITH THAT, I'M KIND OF ASKING WHICH OPTIONS WOULD COUNCIL

[01:20:03]

SO YOU ALL CAN SEE THE OPTIONS. YEAH. >> WE'RE GOING TO START WITH QUESTIONS FIRST BEFORE DIRECTION. PERFECT. AND I DO HAVE ONE QUESTION. AND THEN I'LL STOP AND WE'LL GO TO COUNCIL MEMBER RUMOHR. I KNOW I TALKED TO STAFF ABOUT THIS AT ONE POINT AND BUT I DON'T KNOW IF WE EVER FOUND OUT POSSIBILITIES HERE. SO MY UNDERSTANDING IS THAT WHERE THE SENIOR CENTER IS RIGHT NOW, THERE'S ACTUALLY A EFFORT UNDERWAY TO CREATE A RESIDENTIAL HISTORIC DISTRICT, AND THAT BUILDING WILL BE COVERED THERE. ONE OF THE BENEFITS OF THESE REGISTERED HISTORIC DISTRICTS IS, IS CERTAIN CREDITS AND REBATES OFTENTIMES, AND THE REBATE IS LIKE A 25% REBATE FROM THE HISTORIC COMMISSION OF TEXAS. THE CITY CAN'T OFTEN BENEFIT FROM THE FEDERAL CREDITS, BUT MY UNDERSTANDING, AT LEAST HISTORICALLY, HAS BEEN WHEN YOU'RE TOUCHING, THEN A QUOTE UNQUOTE, HISTORIC BUILDING. WE CAN SELL THOSE CREDITS TO SOMEONE WHO'S PAYING FRANCHISE TAXES TO THE STATE AT LIKE 90%, 85% OF ITS VALUE TO RECOUP SOME OF THAT MONEY. I BRING THAT UP BECAUSE IT LOOKS LIKE THIS IS GOING TO TAKE PLACE. I THINK IT'S IN ITS FINAL STAGES WITH THE PARKS DEPARTMENT. NATIONAL PARK SERVICES. AND SO I WAS WONDERING IF YOU KNEW THE ANSWER TO THAT OR IF THE CITY ATTORNEY KNEW THE ANSWER TO THAT. IF THAT'S SOMETHING THAT

WE COULD BENEFIT FROM, I KNOW IT'S REALLY A NICHE. >> QUESTION VERY FAR OUTSIDE OF

MY WHEELHOUSE. SO, OKAY. >> WELL, I WANT EVERYONE TO KEEP THAT IN MIND. BUT THAT'S

THE ONLY QUESTION I HAVE. >> THANK YOU, MAYOR PRO TEM. SO QUESTIONS ONLY STARTING OFF, COULD YOU SPEAK TO SETH? YOU SORT OF TALKED ABOUT THE CHALLENGES OF RENOVATING EITHER OF THE CURRENT SITES, NOT LOOKING NECESSARILY SPECIFICALLY AT THESE TWO PROJECTS, BUT CAN YOU SPEAK TO JUST GENERALLY THE COST COMPARISON OF MAJOR RENOVATIONS OF BUILDINGS VERSUS NEW BUILDS, WHICH ONE TENDS TO BE LESS EXPENSIVE, MORE EXPENSIVE? CAN

YOU SPEAK GENERALLY LIKE THAT? >> YEAH. SO I WOULD SAY GENERALLY IN CONSTRUCTION, A RENOVATION WILL BE CHEAPER IN THE SHORT TERM AND LIKELY MORE COST, HIGHER COST IN THE LONG TERM. AGAIN, ONE THING THAT WE WOULD LOOK TO DO IS THAT FULL KIND OF COMPREHENSIVE RENOVATION TO WHERE IF, IF THE UTILITIES UNDERNEATH THE SOUTH BRANCH LIBRARY HAVE A 60 YEAR LIFESPAN AND WE'RE 32 YEARS INTO THAT, WE DON'T WANT TO TACK ON 20,000FT■!S AND LEAVE 30 YEAR OLD UTILITIES. SO ONCE YOU START ACTUALLY CUTTING INTO FOUNDATIONS, REPLACING UTILITIES, NOT ONLY ARE YOU INCURRING THOSE COSTS, BUT YOU'RE ALSO WEAKENING THE STRUCTURE FOR WHAT YOU WERE TRYING TO SAVE. SO AGAIN, IN MY EXPERIENCE WITH WHAT WE'VE SEEN WITH THE POLICE STATION RENOVATION, WE'VE JUST ENCOUNTERED SEVERAL UNKNOWNS THAT WE THOUGHT WERE GOING TO BE CHEAPER, THAT AFTER WE GOT TO THE END, IT MADE A LOT MORE SENSE TO, HEY, WE PROBABLY SHOULD HAVE BUILT A NEW FACILITY AND WORKED TO MAINTAIN THAT INSTEAD OF TRYING TO CO-MINGLE SYSTEMS WHERE I THINK IN THE LONG TERM, WE'RE GOING

TO BE PAYING MORE DOLLARS TO MAINTAIN THAT. >> RIGHT? BECAUSE THAT WAS ON THAT 29 BOND COMMITTEE THAT THAT TALKED ABOUT THE POLICE HEADQUARTERS. AND WE TALKED ABOUT NEW BUILD VERSUS RENOVATION. AND I THINK STAFF AT THE TIME SAID THAT RENOVATIONS CAN BE MORE EXPENSIVE OFTENTIMES. BUT IN THIS CASE, WE THOUGHT IT WOULD BE CHEAPER. AND IT SOUNDS LIKE IT MIGHT HAVE ENDED UP MORE EXPENSIVE IN THAT PARTICULAR

CASE. >> YEAH. I THINK ESPECIALLY HAD LOOKING BACK ON THE 2019, HAD WE CHOSE BEFORE COST JUST WENT NUTS THROUGH COVID, I THINK WE WOULD HAVE GOTTEN A BETTER LONG TERM PRODUCT. AGAIN, THERE'S THINGS THAT YOU FIND TO WHERE WE GOT INTO ONE WALL AND ONE OF THE STEEL BEAMS WAS BENT AND TWISTED, AND IT WAS A MILLION PLUS DOLLARS TO BE ABLE TO STRUCTURALLY FIX THAT. THAT WAS ONE OF THOSE UNKNOWNS. THAT WAS IN A TWO FOOT BY TWO FOOT AREA THAT WE COULDN'T SEE OR ANTICIPATE. THAT IMMEDIATELY COST A MILLION PLUS DOLLARS TO FIX. SO THOSE ARE THE KIND OF CHALLENGES THAT ARE REALLY HARD TO SPECULATE ON. AGAIN, THAT'S WHY WE WOULD KIND OF PUSH TOWARDS THE NEW BUILD WITH SOMETHING THAT WAS THIS OLD IF IT WAS TEN YEARS OLD, MAYBE A DIFFERENT STORY. BUT BOTH OF THESE BUILDINGS HAVE JUST ABOUT

REACHED THEIR USEFUL LIFE. >> THAT'S MY MAJOR QUESTION. STARTING OFF.

>> THANK YOU. OKAY. THANK YOU. ARE THERE ANY OTHER COUNCIL MEMBER? HOLLAND. THANK YOU.

>> HOW HOW'S THE MARKET ON A USED LIBRARY? I'M THINKING OF SOUTH BRANCH.

>> YEAH. SO GREAT QUESTION. SO FROM OUR RISK INSURANCE POLICIES WE ACTUALLY HAVE TO DO APPRAISALS. EVERY I WANT TO SAY IT'S TWO YEARS, MAYBE YEARLY. SO I WAS ABLE TO GET WITH OUR RISK DEPARTMENT AND PULL THOSE. SO OUR LAST APPRAISAL FOR THE SITE AND IT IS THE SOUTH BRANCH LIBRARY AND THE FIRE STATION SIDE IS ALL ONE SITE TOGETHER. THE VALUATION WAS ROUGHLY 4.6

[01:25:04]

MILLION. SO THAT WOULD KIND OF BE MY GUESS. >> DO YOU THINK THAT'S A REAL MARKET ESTIMATE? I MEAN, I MEAN, FOR EXAMPLE, WHAT WHAT KIND OF INDUSTRY IS GOING TO IS GOING TO BE LOOKING FOR A LIBRARY? OR ARE THEY JUST LOOKING FOR THE FOR THE LAND?

>> SO I THINK THE LIBRARY BUILDING COULD BE USED AGAIN. GENERALLY IT'S A LARGE OPEN SPACE. SO IT COULD BE CONVERTED PRETTY EASILY INTO OFFICE SPACE. SO YOU'RE LOOKING AT 20,000FT OF OFFICE SPACE WITH PARKING RIGHT NEXT TO A TEXDOT FACILITY THAT HAS AN ACCESS POINT DIRECTLY. SO I THINK THERE WOULD BE SOME WANT THERE. BUT AGAIN, IT'S IT'S HARD TO SPECULATE ON KIND OF THE OLDER FIRE STATION THAT AGAIN, HAS REACHED ITS ITS USEFUL LIFE.

BUT I BELIEVE OUR PLAN WOULD BE TO BRING BACK TO COUNCIL AN OPTION OF POTENTIALLY BUNDLING THAT UP AND SELLING THEM TOGETHER. I DON'T KNOW THAT WE WOULD WANT TO SEPARATE.

>> HAVE WE SOLD A BUILDING IN THE PAST? >> THAT'S A GREAT QUESTION. I'M

GOING TO DEFER. >> I DON'T KNOW OF A BUILDING THAT WE'VE SOLD, BUT WE ARE GOING THROUGH AND WORKING ON OUR SURPLUS PROPERTY RIGHT NOW. WE HAVE RFP OUT. WE HAVE TO GO THROUGH A SPECIFIC PROCESS. AND SO WE ARE WE ARE DOING THAT RIGHT NOW WITH SOME OTHER

PROPERTY THAT WE OWN. >> I JUST COULDN'T THINK OF A OF A, OF A STRUCTURE THAT WE'VE SOLD IN THE PAST. OKAY. OKAY. WHY IS THERE A HIGHER COST? YOU POINT OUT THE THE LESS EXPENSIVE COST. IF IF WE USED THE SENIOR CENTER AND THE NEW LIBRARY ON RYAN ROAD AS OPPOSED TO THE FACILITY ON MACK PARK AND TWO TWO SEPARATE. WHY IS THAT?

>> SO GENERALLY YOU'RE GETTING INTO OPERATING INDEPENDENT SYSTEMS. SO IT'S JUST REALLY THE ECONOMIES OF SCALE. IF IF FOR MAJOR SYSTEMS. AND TOM COULD PROBABLY ANSWER THIS A LITTLE BIT BETTER, IT'S CHEAPER FOR US TO OPERATE HVAC SYSTEMS ON ONE LARGER BUILDING AS OPPOSED TO TWO SMALLER BUILDINGS WITH THE SAME SQUARE FOOTAGE. YOU'RE, YOU'RE DOUBLING THE THE COST. SO AS YOU GET BIGGER, WE'RE ABLE TO MAINTAIN IT A LITTLE BIT

CHEAPER AND MORE EFFICIENTLY. >> OKAY, OKAY. I DIDN'T UNDERSTAND THAT. SO WE'RE TALKING ABOUT ONE GIANT BUILDING HOUSING TWO FUNCTIONS. CORRECT. I THOUGHT WE WERE TALKING ABOUT A LIBRARY HERE AND A SENIOR CENTER HERE. AND THEY SHARED A PARKING LOT IN

THE MIDDLE. >> AND THAT COULD BE A CONSIDERATION ALSO. AND AGAIN, EVEN IN THAT SCENARIO, YOU'RE SAVING ON SITE IMPROVEMENTS OF DEVELOPING ONE SITE AS OPPOSED TO SITE IMPROVEMENTS AND HAVING TO DO ALL OF THE DEVELOPMENT CODE STUFF FOR TWO SEPARATE SITES, WHICH WOULD BE, WOULD BE LIKE YOUR TRAFFIC IMPACT STUDIES, YOUR DOWNSTREAM ANALYSIS. SO EVEN JUST ON THE DESIGN SIDE, YOU WOULD SAVE MONEY. OKAY. FOR ONE.

>> SITE, YOU MENTIONED THE PROXIMITY TO THE AMERICAN LEGION HALL AT AT MACK PARK.

WHY IS THAT SIGNIFICANT? >> SO CURRENTLY THE THE SENIOR CENTER, WHERE IT'S AT AN AMERICAN LEGION HALL ARE BOTH DOWNTOWN. THERE WAS A PRETTY SIGNIFICANT RENOVATION A FEW YEARS AGO TO AMERICAN LEGION HALL THAT ALSO SERVICES THAT ACTIVE ADULT COMMUNITY. SO AGAIN, THERE WOULDN'T BE ANY BENEFIT TO PROVIDING SERVICE TO DIFFERENT PARTS OF TOWN. YOU

WOULD ESSENTIALLY BE KEEPING THEM BOTH CENTRALLY. >> THE AMERICAN LEGION HALL ON LAKE STREET. YES, SIR. I SEE OKAY. OKAY. THE FIRE STATION WOULD BE PRESUMABLY REMOVED IF IF WE WERE TO EXPAND SOUTH BRANCH, THE DRIVEWAY COULD BE USED. THE CURRENT DRIVEWAY FOR THE FIRE DEPARTMENT COULD BE USED FOR PARKING AS WELL, COULD IT NOT?

>> SO YOU'RE TALKING ABOUT. DRIVEWAY TO THE SOUTH OF THE BUILDING TO THE SOUTH?

>> YES. THE ACCESS TO THE FIRE ENGINE USES TO GET FROM THE BUILDING TO TO TEASLEY.

>> YEAH, POTENTIALLY IT COULD BE AVAILABLE SPACE AGAIN. I THINK IF WE GOT INTO THAT SCENARIO, WE WOULD BE LOOKING AT TAKING UP EVERY AVAILABLE SPACE TO PROVIDE THE MOST

AMOUNT OF PARKING THAT WE COULD. >> OKAY. AND LASTLY, THE, THE USE OF THE OLD SENIOR CENTER, WHAT, WHAT WOULD BE, WHAT COULD BE USED? WHAT, WHAT COULD BE DONE WITH THAT BUILDING?

>> YEAH, THAT'S A GREAT QUESTION. I WOULD, I WOULD DEFER TO MAYBE OUR CITY MANAGER IF SHE KNEW OF ANY IMMEDIATE NEEDS FOR THE FOR THE SENIOR CENTER.

>> I'M SORRY, CAN YOU REPEAT THE QUESTION? >> WHAT USE WOULD WHAT WOULD BE

DONE WITH THE OLD SENIOR CENTER WERE IT TO BE REPLACED? >> I DON'T KNOW YET. WE WE HAVEN'T PROGRAMED THAT OR LOOKED AT IT YET, SO I DON'T HAVE A GOOD ANSWER FOR YOU

RIGHT NOW. >> IS IS IT UNREASONABLE THAT THERE COULD BE. AND I HADN'T THOUGHT ABOUT THE SENIOR CENTER ON LAKE STREET, THE AMERICAN LEGION ON LAKE STREET, THAT THERE COULD BE MORE THAN ONE SENIOR CENTER, ONE ONE HERE AT THE QUAKER TOWN PARK AND THEN ONE SOMEPLACE ELSE. THE SOUTH BRANCH LIBRARY SITE OR THE RYAN ROAD SITE ARE OUR TWO SENIOR

CENTERS A BAD IDEA? >> I THINK IT WOULD JUST COME WITH ADDITIONAL COSTS AS FAR AS OPERATING, BECAUSE WE DON'T HAVE THE STAFF CURRENTLY TO OPERATE TWO DIFFERENT SENIOR CENTERS. SO THAT WOULD BE MY CONCERN IS THE THE OPERATIONAL COSTS THAT COME ALONG WITH

[01:30:06]

OPERATING ANOTHER FACILITY. >> OKAY. OKAY. THANK YOU. THANK YOU. MAYOR.

>> DO WE HAVE ANY OTHER QUESTIONS? COUNCIL MEMBER PERRY. >> THANK YOU. MY ONLY QUESTION IS WITH THE CURRENT LOCATION OF THE SENIOR CENTER. YOU'RE SAYING IT'S IN LIKE THE I'M GUESSING IT'S THE FEMA 100 FLOODPLAIN, CORRECT. 100 YEAR. OKAY. HAVE THERE BEEN DISCUSSIONS AMONG STAFF ABOUT APPLYING FOR THAT WAIVER, GETTING THAT EXEMPTION?

>> YEAH. NOT REALLY. AGAIN, EVEN EVEN FROM OUR OWN CODE, WE WOULD HAVE TO FLOOD PROOF THE BUILDING. AND JUST BY US TOUCHING A MAJORITY OF THE BUILDING, WE'D HAVE TO BRING EVERYTHING ELSE UP TO CURRENT CITY CODES. AGAIN, IT JUST BECOMES VERY COST PROHIBITIVE TO BE ABLE TO DO THAT. WE'D ESSENTIALLY HAVE TO LOOK AT IF WE WERE GOING TO RETAIN THAT BUILDING, FLOOD PROOFING IT, WHICH IS VERY EXPENSIVE. I THINK IN TIMES IT COULD GET THREE FEET OF WATER ROLLING THROUGH HERE, WHICH WOULD BE PRETTY SIGNIFICANT.

>> OKAY, THANKS. >> OKAY, SO SEEING NO OTHER QUESTIONS, IT'S TIME TO GIVE

DIRECTION. COUNCIL MEMBER RUMOHR. >> THANK YOU, MAYOR PRO TEM. SO WE'VE WE'VE GOTTEN SOME EMAILS FROM THE COMMUNITY. AND THEN I SERVED ON THE 2023 BOND COMMITTEE. SO I CAN SOMEWHAT REMEMBER SOME OF THE DISCUSSIONS THAT THAT HAPPENED AT THAT TIME FROM COMMITTEE MEMBERS. AND SO I WOULD RIGHT OFF THE BAT, I DON'T THINK I CAN SUPPORT A JOINT FACILITY FOR A FEW REASONS. AT THIS TIME. WE HAVE THE ONE I MEAN, WE DO HAVE TWO SENIOR CENTERS. ONE IS A LARGER ONE WITH A LOT MORE SPACE FOR ACTIVITIES, AND WE HAVE A MUCH, MUCH SMALLER ONE. BUT THAT MAJOR ONE, ESPECIALLY AS WE'RE GOING TO SEE GROWTH IN THE NORTH PART OF TOWN AND THINGS LIKE THAT, WE THAT THAT ONE SHOULD BE CENTRALIZED. AND THAT'S ONE OF THE TOP CONCERNS THAT I'M HEARING FROM THE COMMUNITY IS THEY WANT IT TO BE CENTRALIZED IN, YOU KNOW, SOMEWHERE IN THE CENTER OF TOWN, AND THEY WANT IT TO BE ACCESSIBLE BY PUBLIC TRANSPORTATION. I DO RECALL DURING THE BOND COMMITTEE THAT THERE WAS CONCERN WITH JOINT FACILITY AND A DESIRE TO KIND OF HAVE SEPARATE SPACE FROM A LIBRARY AS WELL. AND SO, SO I CAN'T SUPPORT OPTION ONE FOR THAT REASON. AND THEN WE ALSO HEARD FEEDBACK ABOUT, YOU KNOW, IN TERMS OF THE ACTIVE ADULT CENTER, IF WE WERE TO EXPAND AT THE CURRENT SITE VERSUS MACK PARK. OH, ACTUALLY, LET ME BACK UP. ANOTHER THING WE'VE HEARD FROM THE COMMUNITY IS THEY WOULD LIKE TO NOT SEE DELAYS ON THIS. SO I KIND OF AM CONCERNED OPTION FOUR WOULD CREATE DELAYS BECAUSE WE DON'T KNOW IF WE'RE GOING TO FIND A DIFFERENT PROPERTY. WE ALREADY HAVE TWO PROPERTIES IN HAND THAT IN THEORY MAYBE COULD WORK. SO LET ME GO AHEAD AND ALSO REMOVE OPTION FOUR FOR ME. SO I'M DEFINITELY FOR SEPARATE SITES.

SO THEN THE QUESTION BECOMES WHAT DO YOU WANT ME TO DO IT ALL AT ONCE LIKE THIS. OR DO

YOU WOULD YOU LIKE ME TO BREAK IT OUT A CERTAIN WAY? >> LET'S, LET'S BECAUSE SOME MIGHT WANT TO CONNECT THEM. YEAH. LET'S JUST DO ALL OF IT AT ONCE.

>> OKAY. IN TERMS OF THE LOCATIONS, I'VE KIND OF HEARD A MIX OF FEEDBACK. SO I'LL START WITH THE ACTIVE ADULT CENTER IN TERMS OF ITS CURRENT LOCATION VERSUS MACK PARK. I'M CONCERNED ABOUT THE SMALL SIZE OF THE CURRENT LOCATION. I SAW, WHAT WAS IT, TWO, 2.5 ACRES VERSUS MACK PARK IS AT THE 16 ACRE ONE? YES. AND SO I REMEMBER FROM THE BOND COMMITTEE THAT THERE WAS CONCERNS ABOUT BUILDING SPACE. THERE WAS CONCERNS ABOUT PARKING, YOU KNOW, AND HAVING ENOUGH PARKING, ESPECIALLY WHEN THE CIVIC CENTER POOL IS OPEN. SO THERE'S SORT OF A COMPETITION FOR FOR PARKING THERE TOO. SO MACK PARK IS GENERALLY THE CENTER, YOU KNOW, CENTER ISH OF TOWN. IT DOES HAVE A BUS ROUTE THAT GOES NEXT TO IT, AND IT WOULD PROVIDE ADEQUATE SPACE FOR, YOU KNOW, THE SIZE OF FACILITY THAT WE COULD AFFORD. AND IT HAS PLENTY OF SPACE FOR ADEQUATE PARKING. SO WE, WE WOULD RESOLVE THOSE ISSUES. AND IF IN THE FUTURE WE WANTED TO SPEND MONEY TO KEEP THE CIVIC CENTER POOL AND RENOVATE THAT AND POTENTIALLY ADD PARKING THERE, THAT WOULD CREATE POTENTIALLY SOME SPACE TO ADD SOME SOME PARKING THERE AS WELL. SO FOR THAT REASON, AND I COULD MAYBE BE CONVINCED OFF, BUT IT JUST FEELS LIKE THERE'S A LOT MORE SPACE TO DO WHAT WE REALLY WANT TO DO ON THE MACK PARK SITE WHILE IT'S STILL BEING KIND OF CENTRALLY LOCATED AND HAVING BUS ACCESS FOR SOUTH BRANCH LIBRARY, KIND OF THE SAME ISSUE IN TERMS OF THAT SITE, I THINK YOU SAID IS 2.8 ACRES. AND I REMEMBER IN THAT TOUR THAT WE GOT ON THE BOND COMMITTEE, THERE WERE CONCERNS THAT, YOU KNOW, THERE'S NOT ENOUGH SPACE FOR ALL OF THE PEOPLE VISITING THE LIBRARY. THERE'S NOT ENOUGH SPACE FOR ALL THE ACTIVITIES. THERE'S NOT ENOUGH PARKING. AND ESPECIALLY LOOKING AT THAT PICTURE AGAIN, EVEN WITH THE FIRE STATION GONE, I STILL QUESTION WHETHER THERE'S ENOUGH PARKING. NOW, I DID HEAR FROM SOME CONSTITUENTS THAT THEY LIKE BEING ABLE TO WALK TO IT AT ITS CURRENT LOCATION, BUT I'M CONCERNED AT ITS CURRENT SIZE OF 2.8 ACRES, THAT WE'RE

[01:35:01]

AND SO FOR THAT REASON, I DO LEAN TOWARDS THE RYAN ROAD PROPERTY FOR SOUTH BRANCH

LIBRARY. SO THAT'S KIND OF WHERE I'M SITTING RIGHT NOW. >> THANK YOU. THANK YOU,

COUNCILMEMBER JESTER. >> SURE. SO WITH THE SPIRIT OF THE BOND LANGUAGE AS WELL AS I THINK WHAT'S BEST FOR OUR GROWING POPULATION AND THE FEEDBACK THAT I'VE RECEIVED REGARDING SAFETY AND SOME OTHER ISSUES, I WOULD BE IN FAVOR OF EXPLORING OPTION NUMBER ONE, THE JOINT FACILITY, OR NUMBER TWO, THE SEPARATE SITES, WITH THE SOUTH BRANCH BEING AT THE NEW PROPERTY THAT'S BEEN ACQUIRED AND THE SENIOR CENTER EITHER BEING AT THE MACK PARK PROPERTY OR THE JOINT FACILITY. OKAY. AND I'LL JUST KEEP IT BRIEF BECAUSE I KNOW WE'VE GOT

A LOT. THANKS, I. >> APPRECIATE THAT. OH, I'M JUST GOING TO GO DOWN THE LINE AND GO WITH ME NEXT. I FORGOT TO MENTION THIS. I, I HAVE LIKE A PETITION THAT LINDY MCADAMS GAVE ME THAT I TALKED TO MACK ABOUT. THIS CAN JUST BE PUT IN THE PUBLIC RECORD TO INDICATE IT WAS ABOUT 100 PEOPLE ASKING TO KEEP THE SENIOR CENTER CLOSE BY. WITH THAT, I'M GOING TO ASK FOR OPTION TWO SEPARATE SITES THAT WE WOULD HAVE THE SENIOR CENTER, MACK PARK AND AND SOUTH

BRANCH AT RYAN ROAD. OKAY. COUNCILMEMBER FERRY. >> YEAH. GIVEN THAT WE DON'T HAVE A LOT OF FINANCIAL INFORMATION ABOUT OTHER THAN IT'S GOING TO BE MORE EXPENSIVE TO KEEP THE SENIOR CENTER WHERE IT'S AT, THEN I WOULD ASK THAT IT GO TO MACK PARK, AND I WOULD ALSO ASK THAT WE LOOK INTO. WHAT MOBILITY OPPORTUNITIES EXIST ON MCKINNEY STREET, WHAT NEEDS TO BE LOOKED AT. YOU KNOW, WE HAVE A LOT OF SENIORS WHO BIKE AND THEY DON'T DRIVE CARS.

THAT WAS A HUGE CONCERN THAT I GOT AT MY LISTENING SESSION IN EMAILS OF PEOPLE BEING ABLE TO BIKE CENTRALLY DOWNTOWN TO THE SENIOR CENTER. AND I WANT TO MAKE SURE THAT IF IT MOVES TO MACK PARK, THAT WE TAKE THAT INTO CONSIDERATION, THAT A LOT OF SENIORS DON'T DRIVE VEHICLES.

SO IT WOULD NEED TO BE WALKABLE. BIKEABLE YES, COUNCILOR RUMOHR ALREADY STATED THERE'S A BUS STOP THERE. SO I APPRECIATE THAT. AND KNOWING THAT IT'S GOT 16 ACRES, IT CAN BE A LARGER, NEWER, MORE EXPANDED FACILITY. SO I'M GOING WITH OPTION TWO SEPARATE SITES, SENIOR CENTER

AT MACK AND LIBRARY AT RYAN. >> OKAY. >> COUNCILMEMBER HOLLAND.

>> EVERYBODY FEELS THE SAME ABOUT THIS UNLESS YOU DON'T. I. I'M CONCERNED, I'M CONCERNED ABOUT WALKING AWAY FROM THE SOUTH BRANCH LIBRARY. I, I LIKE THAT BUILDING. I'M JUST VERY, VERY CONCERNED ABOUT THAT. BUT I THINK THE, I THINK THE BETTER THING IS OPTION IS OPTION TWO

SEPARATE SITES. IF, IF IT COMES TO THAT. OPTION TWO THANK YOU. >> CITY MANAGER. I WANT TO MAKE SURE YOU HAVE CLEAR DIRECTION. MY UNDERSTANDING WAS SEPARATE SITES MACK PARK AND RYAN ROAD.

>> I BELIEVE THAT'S WHAT WE RECEIVED CONSENSUS ON. I'M TRYING TO COUNT.

>> YEAH. ANYONE DISAGREE WITH THE STATEMENT I JUST MADE? OKAY. YEAH. WE HAVE CONSENSUS ON THAT.

MAYOR WILL BE BACK SHORTLY. IS THAT EVERYTHING YOU NEED? >> THAT'S EVERYTHING I NEEDED.

>> ANOTHER KILLER PRESENTATION. THANK YOU. >> THANK YOU.

[C. ID 26-1354 Receive a report, hold a discussion and give staff direction regarding updates to the Denton Renewable Resource Plan, Denton Municipal Electric fund balance, and electric rates. [Estimated Presentation/Discussion Time: 90 minutes]]

>> APPRECIATE IT. >> THANK YOU. >> MAYOR WILL BE HERE SOON, BUT WE WILL JUST BECAUSE OF THAT. GO AHEAD AND GET STARTED ON ITEM, SEE IF THEY ARE HERE. IS

DME HERE. >> IF YOU'LL JUST. >> GIVE THEM A MINUTE.

>> WE'LL GIVE THEM A MINUTE. AND I BELIEVE ALSO CHIEF HEDGES WAS GOING TO MAKE A STATEMENT PRIOR. IS THAT RIGHT. SO WE CAN GIVE YOU THE FLOOR WHILE THEY'RE GETTING READY.

>> I'M SO EXCITED. >> IT'S VERY OFFICIAL. YEAH. >> FIRE TRUCK. YEAH. I. LOVE

YOU. >> WELL, READY TO GET STARTED? YES. OKAY. GOOD AFTERNOON, MAYOR PRO TEM COUNCIL MEMBERS KENNETH HEDGES, INTERIM ASSISTANT CITY MANAGER. SO KIND OF JUST KIND OF SETTING THE TONE FOR THIS PRESENTATION. SO WE'RE REALLY HERE SEEKING YOUR DIRECTION ON TWO DIFFERENT CONNECTED DECISIONS. HOW DID DEFINES BEING RENEWABLE AND HOW WE KEEP ELECTRIC RATES AFFORDABLE WHILE PROTECTING THE FINANCIAL HEALTH THEN HAS MADE A POLICY COMMITMENT TO BE RENEWABLE ENERGY. AND ONE OF THE TOOLS USED TO SUPPORT IS

[01:40:02]

POINT. >> MAYOR PRO TEM CITY COUNCIL. TONY PUENTE, GENERAL MANAGER GOOD AFTERNOON. I KNOW WE HAVE A LOT OF SLIDES HERE TO GO THROUGH. WE'RE GOING TO TRY TO BE AS SUCCINCT AS POSSIBLE. MAYOR PRO TEM, IF YOU WANT ME TO GO THROUGH AND THERE ARE NATURAL PLACES WHERE I CAN STOP FOR QUESTIONS OR IF YOU WANT ME JUST TO DEAL WITH QUESTIONS AS

WE GO, WE GO THROUGH. >> THE MAYOR LIKES DOING THE STOP AS YOU GO UNTIL HE'S HERE, WE'RE GOING TO JUST. WE'RE JUST GOING TO THE BEAR. DID I SAY BEAR? THE MAYOR? OH, OKAY.

WE'RE GOING TO JUST KEEP GOING UNTIL HE CHANGES PACE. >> OKAY. VERY WELL. SO AGAIN, THANK YOU FOR FOR LETTING ME BE HERE TODAY. JUST REALLY QUICK. JUST WANT TO SAY THAT SOLAR AND WIND HAS ACTUALLY BEEN REALLY GOOD FOR THE STATE OF TEXAS. WE NOW LEAD THE NATION IN INSTALLED CAPACITY AND, AND ACTUALLY GENERATE A CAPACITY AS WELL.

>> LET ME PAUSE YOU REAL QUICK. I'M ALREADY MESSING UP ON THE JOB BECAUSE I DIDN'T CALL THE ITEM, WHICH IS ITEM C, I'D 261354, RECEIVE REPORT WHOLE DISCUSSION AND GIVE STAFF DIRECTION REGARDING UPDATES TO THE RENEWABLE RESOURCE PLAN THAT MUNICIPAL ELECTRIC FUND

BALANCE AND ELECTRIC RATES. SORRY ABOUT THAT. >> YOU'RE GOOD. AS I WAS SAYING.

SO TEXAS NOW LEADS THE NATION AND INSTALLED WIND AND SOLAR CAPACITY AND ALSO GENERATED GENERATION AS WELL. THAT HAS REALLY HELPED KIND OF KEEP RATES LOW IN THE STATE OF TEXAS.

AND REALLY QUICK. LAST YEAR WHEN I CAME TO THE COUNCIL, WE HAD A PEAK LOAD OF 408MW. THAT WAS JUST NATIVE LOAD, NOT DATA CENTER LOAD. ON AUGUST 26TH OF THIS YEAR, WE HIT A NEW PEAK OF 432MW. SO OUR INITIAL PROJECTION WAS THAT WE WOULD BE AT 500MW BY 2037 WHEN WE WERE AT 408. CERTAINLY, WE BELIEVE TODAY THAT WE'LL BE THERE A LOT SOONER THAN 2037. SO I JUST WANT TO POINT OUT THOSE ITEMS, JUST GOING THROUGH SOME GENERAL BACKGROUND DMS, RENEWABLE GOAL DATES BACK TO AT LEAST 2009, WHERE IT WAS 40%. I PUT ON HERE THAT THE WHITETAIL CONTRACT THAT WAS PART OF, OF, OF WHAT ACHIEVED THAT 40% TO SOME ADDITIONAL RECS. AND THEN IN 2016, THROUGH THE RENEWABLE DENTON PLAN, THE GOAL INCREASED TO 70%. AND IN 2018 WITH RENEWABLE RESOURCE PLAN COUNCIL THEN MANDATED AT THAT TIME THAT IT BE 100% RENEWABLE IN JUNE OR JULY, JUNE AND JULY OF 2025. YOU KNOW, BROUGHT THIS PRESENTATION FORWARD. ONE VERY SIMILAR TO THIS TO THE COUNCIL AT THE TIME, WE RECEIVED DIRECTION TO PURSUE A RENEWABLE ENERGY POLICY THAT JUST FOCUSED ON THE ENVIRONMENTAL ASPECT OF, OF THAT GOAL AND THEN TO, TO PURSUE THE DEVELOPMENT OF AN INTEGRATED RESOURCE PLAN, TO LOOK AT WHAT THAT FUTURE GENERATION MIX SHOULD BE THAT WOULD BE MOST APPROPRIATE FOR THE CITY OVER A 15, 20 YEAR LONGITUDINAL KIND OF HORIZON. AND THEN THE OTHER PIECE IS THAT TO RESEARCH AND POTENTIALLY PURSUE UP TO 600MW OF, OF EXISTING AND PROPOSED DISPATCHABLE GENERATION, JUST REALLY QUICK. WE'VE NOT MADE SUBSTANTIAL PROGRESS TOWARDS THOSE GOALS FOR A NUMBER OF DIFFERENT REASONS, INCLUDING REALLY, I THINK, A DESIRE FOR THIS COUNCIL TO KIND OF HAVE THESE DISCUSSIONS AND HAVE AN OPPORTUNITY TO PROVIDE THEIR OWN KIND OF FEEDBACK ON THIS.

AND SO THAT, ALONG WITH THE ITEMS THAT CHIEF HEDGES DISCUSSED EARLIER, THE REASON WHY WE'RE HERE. SO AS IT RELATES TO THE RENEWABLE RESOURCE PLAN, JUST GOING TO POINT TO THE LEFT OF THE SCREEN, THIS PLAN WAS REALLY KIND OF A TWO PART, 100% RENEWABLE PLAN.

[01:45:01]

I'LL JUST COVER A COUPLE. THE FIRST ONE, AGAIN, WAS A GOAL OF 100% RENEWABLE ENERGY AS EARLY AS 2020 OR 2024. AS THE CHIEF MENTIONED, WE BELIEVE WE ACHIEVED THAT IN 2021. THE NEXT ITEM ON HERE IS THAT IT ACKNOWLEDGED THE GREATEST CHALLENGE IN BALANCING THE SUPPLY SUPPLY PORTFOLIO AROUND INTERMITTENT RESOURCES. AND SO THAT'S PART OF THE PART OF THE CALCULATION THAT WE'VE MADE THAT WE'LL DISCUSS HERE WITH YOU, AND THEN ALSO IDENTIFY THE NEED FOR TO CREATE A PORTFOLIO HEDGING PLAN AND STRATEGIES, WHICH, WHICH WE HAVE DONE. AND, AND WE'RE CURRENTLY HEDGING TRANSACTIONS, BOTH PHYSICAL AND FINANCIAL TRANSACTIONS.

CERTAINLY I'LL TALK A LITTLE BIT MORE ABOUT THAT AS WE GO. SO WHAT IS A REC? YOU KNOW, THE CHIEF KIND OF MENTIONED IT. IT'S A TRADABLE INSTRUMENT. THERE IS A MARKET OUT IN ERCOT FOR FOR RECS. THOSE RECS CURRENTLY ARE VALUED AT ABOUT ABOUT $1.50 FOR A FIRST YEAR REC TO $0.50 FOR A THIRD YEAR REC. IT IS TITLE. THE EXAMPLE THAT THAT I'LL SHARE WITH YOU IS I BOUGHT A CAR FOR MY DAUGHTER AND SHE SAYS THAT'S HER CAR. SHE WASHES IT EVERY SUNDAY. SHE TELLS HER FRIENDS THAT'S HER CAR. BUT THE TITLE IS IN MY NAME, RIGHT? SO THE CAR REALLY BELONGS TO ME, RIGHT? IT'S THE SAME THING HERE, RIGHT? WHETHER OR NOT YOU OWN THE ENERGY, THE CAR, IF YOU HOLD TITLE TO THE REC, THEN YOU OWN THE RENEWABLE OR THE RIGHT TO SAY THAT IT'S YOUR RENEWABLE RIGHT. AND SO THAT'S WHAT THE REC IS. ONE MEGAWATT HOUR OF GENERATED RENEWABLE ENERGY OF ONLY THOSE RESOURCES RECOGNIZED BY ERCOT THROUGH THE WHAT'S CALLED THE TEXAS RENEWABLE PORTFOLIO STANDARD. AND STATES ACROSS THE COUNTRY HAVE THEIR OWN RENEWABLE PORTFOLIO STANDARDS. BUT IN TEXAS, ONLY THOSE THOSE RESOURCES THAT ARE INTERCONNECTED INTO THE GRID SOLAR, WIND, GEOTHERMAL, HYDROELECTRIC, WIND, TITLE AND BIOMASS ARE ENTITLED TO RECEIVE A REC. AND YOU GET A REC FOR EVERY 1 HOUR OR 1MW HOUR OF ENERGY THAT YOU PRODUCE OR CUT AWARDS THOSE ON A QUARTERLY BASIS. AND EACH REC, EACH INDIVIDUAL REC HAS A THREE YEAR LIFE, RIGHT? SO IF THAT REC IS GENERATED ON JANUARY 1ST OF 26 OR DECEMBER 31ST OF 26, THAT'S YEAR ONE. YEAR TWO THEN WOULD BE CALENDAR YEAR 27. AND YEAR THREE WOULD BE CALENDAR YEAR 28 AT THE END OF CALENDAR YEAR 28, DECEMBER 31ST OF 20 OF 2028.

THAT REC. IF IT HASN'T ALREADY BEEN RETIRED, IT EXPIRES OR IT MATURES AND AND THAT'S REMOVED FROM YOUR ACCOUNT. HAS BEEN DOIE HAS, FOR THE MOST PART, BEEN HOLDING ON TO THOSE RECS AND LETTING THEM MATURE AT THE END OF THEIR LIFE. AND SO, AND THEN THE OTHER THING THAT I'LL MENTION IS DME HAS TWO SOURCES BY WHICH WE OBTAIN RECS. WE GET RECS FROM OUR POWER PURCHASE AGREEMENTS, UTILITY SCALE CONTRACTS. I'LL, I'LL TALK A LITTLE BIT ABOUT THOSE. AND THEN WE ALSO DO MARKET PURCHASES FOR RECS. AND SO THOSE RECS THAT WE'RE BUYING TODAY ARE FIRST YEAR RECS. THE MOST EXPENSIVE RECS AT $1.50 WHEN WE POTENTIALLY COULD BE BUYING THEM AT $0.50. RIGHT. BUT WE'RE BUYING FIRST YEAR RECS OR, OR WHAT I REFER TO AS VINTAGE RECS. AND I MAY COIN THAT TERM AT SOME POINT, BUT SO YOU'RE FREE TO USE IT AT YOUR, AT YOUR WILL. SO RENEWABLE ENERGY INVENTORY, WHERE ARE WE TODAY? SO TODAY WE HAVE 595MW OF CAPACITY UNDER CONTRACT. AND WHAT DO I SAY THAT. SO THE YELLOW VIKING PPA AT 100MW OF SOLAR, THAT CONTRACT IS STILL NOT OPERATIONAL. THE COMMERCIAL OPERATION DATE FOR THAT PARTICULAR CONTRACT IS SCHEDULED FOR SEPTEMBER 30TH OF 27. AND SO CURRENTLY WE HAVE 495MW OF RENEWABLE ENERGY THAT'S ACTUALLY PRODUCING AND ACTIVE OUT IN THE MARKET. I WILL JUST THROW OUT JUST A LITTLE CAVEAT. SO FOR SOLAR CAPACITY, THE GENERAL UNDERSTANDING IS THAT SOLAR ONLY GENERATES ABOUT 30% OF ITS CAPACITY. WIND GENERATES ABOUT

40% OF ITS CAPACITY. >> SO THESE FIGURES HERE REPRESENT WHAT'S ACTUALLY GENERATED OR THE MAXIMUM CAPACITY. AND THEN WE APPLY THOSE PERCENTAGES THAT YOU JUST

DESCRIBED. >> CORRECT. AND SO SO FOR 2025 WE ONLY HAD 495MW. THAT ACTUALLY ONLY GENERATED 1.7 MILLION MEGAWATTS OF POWER. WHEN WHEN THE ACT, IF YOU DO THE CALCULATION ON THAT, YOU WOULD ANTICIPATE ABOUT 1.1, 1.9 MILLION. SO SO THEY HAVEN'T GENERATED AS MUCH POWER AS, AS, AS WE WOULD HAVE ANTICIPATED, JUST BASED ON WHAT THE GENERAL UNDERSTANDING IS OF RECS AND A LOT OF FACTORS ON THAT. MAYOR, CLOUD COVER TRANSMISSION ISSUES,

[01:50:08]

>> SO, AND JUST SO THAT I'M UNDERSTANDING. SO LET'S JUST TAKE SANTA RITA. IT SAYS IT'S 150 MEGAWATT CAPACITY. BUT WHAT YOU'RE SAYING IS, IS THAT SOLAR WHAT IS THAT WIND. SO WIND

OPERATES AT WHAT, WHAT HOW MUCH? >> 40% CAPACITY. >> SO THAT MEANS AVERAGE. WE'RE ONLY GETTING 60MW OF. OF CAPACITY PRODUCTION OUT OF THAT. OKAY. ALL RIGHT. THANK YOU.

>> AND AND I'LL JUST QUICKLY SAY THAT. SO SO THE CONSULTANT THAT HELPED PUT TOGETHER THE RENEWABLE RESOURCE PLAN, THEIR RECOMMENDATION IS THAT WE WOULD HAVE 200% CAPACITY TO TRY TO GET TO OUR LOAD. CURRENTLY, IF YOU JUST TAKE THAT 595 TOTAL CAPACITY THAT WE HAVE THAT WE WILL HAVE, THAT WOULD THEN GENERATE ABOUT 2.1 MILLION MEGAWATTS. AND SO JUST FROM A FORWARD LOOKING, IF WE LOOK AT THAT LOAD AND WE'RE PROJECTING THAT AT A 2% GROWTH, THAT LOAD WOULD GET TO THAT AMOUNT ROUGHLY BY 2032. AND SO I KNOW A QUESTION THAT YOU'VE HAD IS, ARE YOU GOING TO NEED ADDITIONAL CONTRACTS FOR WIND AND SOLAR? WELL, THE ANSWER BASED ON WHERE WE ARE TODAY AND BASED ON OUR FORECAST, IS I THINK WE'RE GOOD AT LEAST TO

2032. >> OKAY. AND THE RECS ARE BASED UPON LIKE THERE'S ONE REC FOR

EACH MEGAWATT HOUR PRODUCED OR CAPACITY PRODUCED, PRODUCED. >> AND SOLD FOR 2025 FROM OUR PPAS, WE RECEIVED THAT 1.1.175, AND THEN WE BOUGHT THE REST TO TO ROUND OUT OUR GOAL OF 613MW, WE BOUGHT IN THE MARKET. OKAY. SO SOME CHALLENGES AND INTERNAL AUDIT FINDINGS. I'M NOT SAYING INTERNAL AUDIT FINDINGS WERE CHALLENGES, BUT SO AGAIN, BEAR WITH ME HERE. SO GOOD NEWS.

SINCE 2021 THERE HAVEN'T BEEN ANY SYSTEM WIDE FORCED OUTAGES. THAT'S WINTER STORM URI. BUT I COULD BEST CHARACTERIZE THE MARKET AS STILL UNCERTAIN. SCARCITY CAP. THAT'S THE THE HIGHEST THAT POWER CAN GO TO WAS REDUCED FROM 9000 MEGAWATT HOURS DOWN TO $5,000 PER MEGAWATT HOUR. AND I WILL JUST TELL YOU THAT THERE'S SOME IN THE MARKET TODAY, PRIMARILY GENERATORS THAT WANT THAT PRICE TO RETURN BACK TO 9000. AND THERE'S SOME THAT ACTUALLY WANT THAT CAP COMPLETELY REMOVED. AGAIN, IT'S IMPORTANT TO UNDERSTAND THAT WE'RE IN A IN AN ENERGY ONLY MARKET. WE'RE NOT IN A CAPACITY MARKET. AND SO WHAT INCENTIVIZES ADDITIONAL GENERATION TO COME INTO THE MARKET IS REALLY WHAT THEY ANTICIPATE WILL BE THEIR RETURN IN A CAPACITY MARKET. GENERATORS ARE GUARANTEED A LEVEL OF RETURN IN TEXAS.

THEY'RE NOT UNLESS THE PRICE IS MATERIALIZE. THE OTHER THING THAT I'LL MENTION HERE IS THAT, YOU KNOW, THERE'S STILL ONGOING SUPPLY CHAIN CHALLENGES THAT ARE HAMPERING THE MARKET, WHETHER YOU'RE BUILDING A DISPATCHABLE FACILITY OR EVEN WIND AND SOLAR, GETTING THE ELECTRIC COMPONENTS FOR THAT. CERTAINLY WHEN YOU ADD ON TO, TO NOT JUST SUPPLY CHAIN ISSUES, BUT TARIFFS AND PROHIBITIONS FROM CERTAIN COUNTRIES, THAT'S CERTAINLY HAMPERING ADDITIONAL DEVELOPMENT GOING FORWARD. AND FROM A REGULATORY STANDPOINT, WE HAVE I THINK I'VE TALKED WITH I MENTIONED THIS BEFORE, THERE IS NOW A FIRMING REQUIREMENT. SO ANY WIND AND SOLAR INSTALLATION AFTER JANUARY 1ST OF 2027 WILL BE REQUIRED BY THE STATE OF TEXAS TO HAVE BACKUP GENERATION, EITHER EITHER GENERATION THAT THEY BUILD BATTERY STORAGE. IT COULD ALSO BE THROUGH THROUGH POWER PURCHASE AGREEMENTS AS WELL THAT THEY COULD ENTER. AND SO THEY'LL BE THEY'LL HAVE TO GUARANTEE THE AMOUNT OF POWER THAT THEY SAY THAT THEY'RE GOING TO GENERATE, AND IT HAS TO BE BACKED UP. AND SO THAT'S ALSO WHAT WE'LL BE DRIVING THAT THAT PRICE. SO WE'LL TALK A LITTLE BIT MORE HERE IN THE FUTURE GOING FORWARD. AND THEN THE OTHER ITEM THAT I'LL TOUCH ON JUST REALLY QUICK, AND WHILE THIS HAS BEEN SIDELINED, BOTH WHAT'S CALLED THE DISPATCHABLE GENERATION CREDITS AND THE PERFORMANCE CREDIT MECHANISM, THE LEGISLATURE, DURING THE LAST LEGISLATIVE SESSION, HAD A LOT OF CONVERSATIONS ABOUT POTENTIALLY REQUIRING LOAD SERVING ENTITIES LIKE DME TO BACK UP A CERTAIN PERCENTAGE, IF NOT ALL, OF THE LOAD THAT THEY SERVE WITH DISPATCHABLE GENERATION. RIGHT. AND SO IF YOU DIDN'T BACK IT UP WITH DISPATCHABLE GENERATION, THEN YOU WOULD HAVE TO BUY WHAT WOULD HAVE BEEN RIGHT? DISPATCHABLE GENERATION CREDITS OR PERFORMANCE CREDITS THAT YOU WOULD BUY AT THE END OF THE YEAR. RIGHT. AND SO THOSE, THOSE THAT DIDN'T, THAT LEGISLATION DID NOT HAPPEN. BUT WE CERTAINLY ANTICIPATE THAT THAT MAY COME UP IN THIS NEXT LEGISLATIVE SESSION. AND THEN FINALLY, WITH THE INTERNAL AUDIT FINDINGS, THIS WAS AN AUDIT. MEDICINES COME IN FRONT OF YOU. THERE WAS SOME DISCUSSIONS THAT WE HAD WITH HER ABOUT SOME AMBIGUITY AND THEN RENEWABLE RESOURCE PLAN AS TO HOW TO CALCULATE THE GOAL

[01:55:05]

AND SO, SO AGAIN, THIS IS JUST FOR ILLUSTRATIVE PURPOSES. WHAT I'LL MENTION IS THAT AND AS WE'RE TALKING ABOUT PRIMARILY SOLAR HERE, WHEN SOLAR IS, IS, IS PRODUCING DURING THIS KIND OF WHAT'S CALLED THE MID DAY BELLY FROM 10 A.M. TO 3 P.M. THAT'S, THAT'S ACTUALLY WHEN THE LOWEST DEMAND EXISTS IN THE MARKET, RIGHT? AND THERE'S AN INVERSE RELATIONSHIP BETWEEN THE TWO. AND SO YOU HAVE A LOT OF SUPPLY, A LOT OF SOLAR. AND WHAT HAPPENS IS DEMAND IS LOW AND PRICES COME DOWN, RIGHT. AND SO DURING THOSE HOURS, PRICES RANGE FROM 0 TO $30. AND ROUTINELY THEY GO NEGATIVE. I WILL MENTION TO YOU THAT ON OCTOBER 16TH, I WAS WATCHING THE MARKET JUST HAPPENED TO BE WATCHING THE MARKET LIKE I DO EVERY DAY. RIGHT. AND SO ON OCTOBER 16TH AT ABOUT 205, 79% OF THE MARKET WAS SOLAR SOLAR GENERATION. THERE WAS SOME WIND AS WELL. AT THAT POINT, PRICES IN THE MARKET WERE -$8.38. AND THEN AT 4:15 P.M. WHEN WHEN RENEWABLES WERE NOW 74.5%, DEMAND CAME DOWN AND PRICES WENT DOWN TO -$12. RIGHT. AND SO SO WE HAVE THESE CONTRACTS FOR WIND AND SOLAR, THAT AVERAGE $26, WE'RE PAYING $26 TO THE OPERATOR AND THEN WE'RE GETTING ZERO OR WE'RE OR WE'RE ACTUALLY PAYING INTO THE MARKET FOR THAT ENERGY. WE'RE PAYING PEOPLE TO TAKE THAT POWER AT NEGATIVE PRICES. AND SO THAT'S PART OF THE CHALLENGE HERE. THE OTHER CHALLENGE THAT WE HAVE IS THAT THERE ARE THESE SCARCITY PERIODS. SO FROM 8 P.M. TO 11 P.M. DURING THE SUMMER MONTHS, AS AS SOLAR COMES DOWN, IF WIND DOES NOT PICK UP, WHAT ENDS UP HAPPENING IS YOU HAVE PRICE SPIKES, RIGHT? AND SO IT'S DURING THESE HOURS THAT ARE VERY, VERY CRITICAL TO US WHEN PRICES CAN GO UP TO $5,000 A MEGAWATT HOUR. RIGHT. AND SO WHAT WE'RE DOING IN THE AEMO IS WHILE WE ARE COUNTING SOME OF

[02:00:02]

THE WINTER MONTHS >> OF 6 A.M. TO 9 P.M. AND SO, SO GOING INTO THIS WINTER, WE KNOW THAT WE HAVE THESE TWO PERIODS THAT WE'RE CONSTANTLY WATCHING FOR, THAT WE'RE TRYING TO PROTECT OUR RATEPAYERS BECAUSE OF THIS INTERMITTENCY THAT WE HAVE WITH OUR RENEWABLE RESOURCES. ALL RIGHT. SO KIND OF DRILLING DOWN INTO INTO RECS, I ALREADY MENTIONED THAT THE COST OF THE RECS INCLUDED IN THE PPAS, THE IMPUTED COST IS 3 TO $6. FOR PURPOSES OF THIS ANALYSIS, I JUST ASSUMED $3 AVERAGE PRICE FOR THOSE PPAS AND IN MARKET PURCHASES AT $1.50. I WILL POINT OUT THAT THE COST OF RECS IS EMBEDDED IN OUR CALCULATION. YOU KNOW, WHEN MACK COMES UP HERE AND TALKS WITH YOU ABOUT THE 3% INCREASE THAT WE PROPOSED, WE PROPOSED THAT 3% INCREASE ON THE BASE RATE SIDE, RIGHT? AND SO JUST BEING A PURIST, RIGHT? IF IF WE'RE TRYING TO KEEP THE ACCOUNTING PURE, ANY PROCEEDS FROM THE SALE OF THE RECS WOULD INHERENTLY GO BACK INTO THE ECA, NOT INTO THE BASE RATE SIDE. BUT AGAIN, CERTAINLY COUNCIL IS FREE TO PROVIDE DIFFERENT DIRECTION ON THAT. BUT GENERALLY WE PUT THE COST AND THE PROCEEDS WHERE, WHERE THEY, WHERE THEY ORIGINATE. RIGHT. AND, AND SO IN, IN OUR REC ACCOUNT, WE ACTUALLY HAVE A REC ACCOUNT IN ERCOT. AS I MENTIONED EARLIER, THOSE RECS HAVE A THREE YEAR LIFE. TODAY WE HAVE ABOUT 1.8 MILLION RECS THAT DATE BACK TO 2025 AND SOME FROM 2024. AND SO THE VALUE OF THOSE RECS THAT ARE IN OUR ACCOUNT TODAY AT A DOLLAR A PIECE, ROUGHLY ARE $1.8 MILLION FOR 2026. WE WILL COMPLETE THE ACCOUNTING OF THOSE RECS IN MARCH OF 2027. AT THAT POINT, WE WILL HAVE AN ADDITIONAL 1.8 MILLION RECS AFTER OUR FINAL ACCOUNTING TOWARDS OUR GOAL FOR 2026. AND THEN JUST TO JUST TO PROVIDE SOME CLARITY HERE, BACK IN JUNE OF 2025, I MENTIONED THAT THERE WAS A REC VALUE OF $5 MILLION, AND THIS IS WHERE THAT ORIGINATES. WHAT I DID IS I TOOK ROUGHLY THE 1.8 MILLION MEGAWATT HOURS OF RECS ASSOCIATED WITH NATIVE LOAD. AND THEN I ASSUMED 3.6 MILLION MEGAWATT HOURS FROM THE DATA CENTER AT FULL BUILD OUT. AND THAT'S HOW THAT THAT I ARRIVE AT THAT $5 MILLION. BUT THAT ASSUMED THAT THE DATA CENTER WOULD BE AT FULL BUILD OUT. OKAY. AND SO, SO JUST HERE ON, ON YOUR LEFT HAND SIDE, YOU KNOW, WE ARE TALKING ABOUT AVERAGES HERE, BUT ON AVERAGE FOR PPAS, YOU KNOW, THOSE HAVE GENERATED ABOUT 1.3 MILLION MEGAWATT HOURS. THOSE HAVE A ANNUALIZED VALUE OF ABOUT $4 MILLION. THAT'S EMBEDDED IN THOSE PPAS. AND THEN WE HAVE MARKET PURCHASES THAT AVERAGE ABOUT 800,000. THAT DOES INCLUDE SOME AMOUNT FOR DATA CENTER, BECAUSE WE ARE BUYING RECS FOR THE DATA CENTER, ABOUT 1.2 MILLION. SO THE TOTAL THE TOTAL IMPUTED COST IN IN OUR ECA ANNUALLY IS ABOUT 5.2 MILLION. IF WE BREAK THOSE OUT BETWEEN NATIVE LOAD AND LARGE LOADS, THAT BREAKS OUT ABOUT 4.6 MILLION FOR NATIVE LOAD AND ABOUT 600,000 CURRENTLY FOR LARGE LOADS. NOW WE DO WE DO ANTICIPATE THAT AS THE DATA CENTER CONTINUES TO RAMP UP, THAT NUMBER WILL CONTINUE TO GROW. AND EVENTUALLY, IF THEY RAMP UP TO THE FULL AMOUNT OF THEIR OF THEIR STATED CAPACITY, IT WILL BE TWICE THE AMOUNT OF, OF RECS COMPARED TO TO THE NATIVE LOAD OTHER THAN THE REMEMBER, THE PPA RECS ARE VALUED AT 3 TO $6, WHERE WE'RE BUYING RECS FOR THE. FOR THE CURRENT DATA CENTER AT $1.50

RANGE. >> SO TONY, IF I COULD. ON THE COST BY CUSTOMER TYPE, WHERE YOU HAVE THE NATIVE LOAD IS 4.6 MILLION. YOU'RE SAYING THAT'S A COMBINATION OF. BECAUSE YOU BREAK IT OUT IN THE TABLE ABOVE THAT YOUR PPAS ARE $3 A REC OR WHATEVER YOU USED IN YOUR MARKETS. WHAT IS THAT, A BUCK 50? SO IN THE NATIVE THAT IS THAT A COMBINATION OF BOTH PPA RECS MARKET. RECS. I MEAN HOW IS THAT NUMBER. HOW'S THAT NUMBER DIFFERENT THAN THAN IF YOU ADD ALL THOSE UP TOGETHER THEY SHOULD BE THE SAME NUMBER. YES.

>> SO SO SO SO THIS 4.6 MILLION IS THE 4 MILLION FROM THE PPA, BECAUSE THOSE ARE ALL ALLOCATED

[02:05:03]

LOAD. >> OKAY. AND THEN THE REST ARE FROM THE LARGE LOADS. YES.

CORRECT. ALL RIGHT. ONE AND YOU MAY HAVE IT ON NEXT SLIDE, BECAUSE I REMEMBER SEEING THIS, BUT WHEN YOU TALKED ABOUT THE DUCK CURVE AND THAT SOMETIMES THE MARKET PRICE GOES NEGATIVE AND WE'RE PAYING 20 BUCKS OR WHATEVER WE ARE, AND THEN WE'VE GOT ALSO, I DON'T KNOW WHAT YOU SAID, WE EITHER PAY SOMEBODY TO TAKE IT OR. SO THAT INCREASES CLEARLY OUR COST OF THAT PARTICULAR ENERGY AT THAT PARTICULAR TIME. CORRECT. YEAH. IS THAT IS THAT DIFFERENTIAL

ANYWHERE IN THESE CALCULATIONS OF THE COST? >> IT IS. WHEN I GET TO A COUPLE SLIDES FORWARD, I'LL TALK A LITTLE BIT ABOUT WHAT THE OPPORTUNITY COST IS AND

THAT'S WHERE THAT'S EMBEDDED. >> ALL RIGHT. THANKS. >> OKAY. SO SO NOW NOW SHIFTING TO THE COST OF PPS. SO THE AVERAGE PRICE OF PPAS TODAY RANGES BETWEEN 16 AND $44.

THOSE PRICES ARE CONFIDENTIAL WITHIN WITHIN THE PPA, BUT IT'S ABOUT A $26 ON AVERAGE THAT WE'RE PAYING. SO I'LL BE TALKING ABOUT AVERAGES HERE. AS I MENTIONED DURING THAT MIDDAY BELLY, 10 TO 3 P.M. 10 A.M. TO 3 P.M. AVERAGE PRICE IS 0 TO $30 IN THE MARKET AND ROUTINELY GOES NEGATIVE. RIGHT. AND SO AGAIN, WHEN WE'RE PAYING THE OPERATOR OF THAT RESOURCE $26 AND THAT'S BEING SOLD INTO THE MARKET, WHAT I'M GETTING BACK IS 0 TO $30. NOW, THERE ARE THERE ARE TIMES DURING THE DAY WHEN THERE'S PRICE PRICE SPIKES AND, AND WE TAKE THAT VALUE.

THERE'S ALSO TIMES WHEN, WHEN WIND AND SOLAR ACTUALLY GENERATE DURING THOSE SCARCITY PERIODS. AND WE CAPTURE SOME OF THAT VALUE AS WELL. BUT GENERALLY SPEAKING, MOST OF THE POWER IS BEING SOLD CERTAINLY AT OR BELOW OR CONSIDERABLY BELOW THAT $26 AVERAGE. AGAIN, PART OF THIS IS ROOTED IN THE INABILITY TO CONTROL OUTPUT. WHILE THESE PPAS DO HAVE CURTAILMENT LANGUAGE, AND THERE MIGHT BE OPPORTUNITIES AND TIMES THAT WE MIGHT EXERCISE THOSE CURTAILMENT OPTIONS TO REDUCE THE POTENTIAL LOSS. RIGHT. AND SO IF PRICES NOW GO BELOW, BELOW ZERO, RATHER THAN TAKE THAT LOSS, I COULD POTENTIALLY LOOK AT CURTAILING THE RESOURCE. I'M STILL ON THE HOOK FOR WHATEVER POWER THEY WOULD HAVE GENERATED, BUT AT LEAST I'VE REDUCED THE COST ALMOST LIKE A ALMOST LIKE A CALL AND PUT IF YOU'RE FAMILIAR WITH THOSE TRANSACTIONS ON THE FINANCIAL SIDE, WE'VE NOT EVER DONE THAT. BUT BUT CERTAINLY THAT OUTPUT, THERE IS AN INABILITY TO CONTROL THAT. ERCOT MAY ALSO CURTAIL SOME OF THESE LOADS. CERTAINLY IF THERE'S TRANSMISSION OVERLOADS AND OTHER ISSUES, ERCOT COULD CURTAIL THOSE LOADS AS WELL. AND THEN FINALLY, THE OTHER THING THAT I'LL MENTION HERE IS THAT WITH SOME OF THE FEDERAL TAX CREDITS AND AND SOME OF THESE TAX CREDITS HAVE BEEN TALKED ABOUT EXPIRING FOR, FOR A VERY, VERY LONG TIME, CERTAINLY WITH THE BIG BEAUTIFUL BILL, SOME OF THOSE HAVE ACTUALLY ADVANCED. AND SO, SO RESOURCES WILL NO LONGER HAVE THESE FEDERAL TAX CREDITS. THERE'S ALSO THE STATE FIRMING REQUIREMENTS THAT ALREADY MENTIONED. THAT'S ONLY APPLICABLE TO NEW RESOURCES, NOT EXISTING RESOURCES.

ALTHOUGH I WILL MENTION TO YOU LAST LAST LEGISLATIVE SESSION, THERE WAS A BILL THAT WOULD HAVE REQUIRED ALL EXISTING RENEWABLE RESOURCES TO ALSO BE BACKED UP WITH DISPATCHABLE GENERATION, THAT THAT DIDN'T HAPPEN. WE WERE ABLE TO TO DEFEAT THAT. BUT CURRENT INDICATIVE PRICING ON NEW PPAS FOR WIND AND SOLAR. REMEMBER, CURRENTLY WE'RE THERE AT AN AVERAGE OF $26. WHAT WE'RE SEEING IN THE MARKET TODAY IS IN THE 60 TO $70 RANGE, RIGHT? AND SO IF YOU ASSOCIATE THAT 60 OR $70 TO A KILOWATT BASIS, THAT'S A 6 TO 7 CENT PER KILOWATT HOUR COST. YOU COMPARE THAT TO OUR EC, A RATE THAT'S AT 4.6 $0.02. AND IT KIND OF TELLS YOU WHERE THAT COULD POTENTIALLY BE HEADING. NOW, GENERALLY, THE, THE, THE PREVAILING THOUGHT IS THAT IN THE MARKET, PRICES WILL CONTINUE TO, TO, TO RISE. AND SO THIS WILL ONLY BE KIND OF ONE COMPONENT OF WHAT POTENTIALLY COULD CAUSE CONTINUED INCREASED PRICES IN THE MARKET. AND SO, SO WHAT WE DID HERE, THE EXERCISE THAT WE TRIED TO ACCOMPLISH IS TO COME UP WITH KIND OF AN ESTIMATE. AND SO.

>> I JUST HAD A QUESTION FROM COUNCIL MEMBER. >> IF YOU WANT TO FINISH THAT SLIDE, I CAN WAIT FOR THE SLIDE TO FINISH AND THEN I'LL ASK MY QUESTION. OKAY.

>> AND SO SO TODAY, UNDER OUR CURRENT PORTFOLIO SUPPLY OF 100% RENEWABLE, WE WENT BACK AND LOOKED AT A SEVEN YEAR AVERAGE. WE BELIEVE THAT THE COST IN THE PORTFOLIO IS ABOUT $55 PER MEGAWATT HOUR. THAT TRANSLATES TO ABOUT $99 MILLION OF PURCHASED POWER EXPENSES THAT WERE THEN PASSING ON TO OUR CUSTOMERS. RIGHT. I MENTIONED EARLIER, YOU KNOW,

[02:10:02]

AND I'LL TALK A LITTLE BIT MORE ABOUT THAT. THE CHART HERE IS JUST TO TRY TO KIND OF DEMONSTRATE FOR YOU. THIS IS JUST A PARTICULAR DAY ON AUGUST 16TH OF 2026, ON THIS PARTICULAR DAY, WIND GENERATION HAPPENED, RIGHT? SOLAR GENERATION HAPPENED. AND SO DURING THESE DURING THESE TIMES, PRICES WERE LOW, RIGHT? BUT WE DIDN'T HAVE ENOUGH WIND GENERATION OR ENOUGH SOLAR GENERATION THAT WE ENDED UP IN THE RED, HAD TO BUY PRICES, HAD TO BUY POWER OUT IN THE REAL TIME MARKET NOW, BECAUSE WIND GENERATION WAS HIGH, BECAUSE WIND WAS HIGH, THOSE REAL TIME PRICES WERE RELATIVELY LOW. RIGHT. AND SO WE WERE WE WERE ABLE TO CAPTURE THAT VALUE. BUT THEN AS YOU GOT INTO THE AFTERNOON HOURS, OUR 20, WHICH IS 8:00 OUT TO 2020, OUR OR OUR 23 11:00 AT THAT POINT, WE HAD VERY LITTLE WIND, VERY LITTLE SOLAR, AND THEN THE DEBT KICKED IN. RIGHT. AND SO, SO WHEN THE DEBT KICKS IN FOR THE FOR THE GENERAL STRIKE PRICE FOR THE DECK IS PRICES HAVE TO BE ROUGHLY $35 OR HIGHER AT THE POINT THAT PRICES HIT $35. WHAT THAT MEANS IS IN THE MARKET, WIND AND SOLAR HAVE NOT SHOWN UP. PRICES SPIKE AND THEN THE DECK BEGINS TO GENERATE. RIGHT. AND SO IN THIS PARTICULAR DAY, THE DECK GENERATED MOST OF THE POWER THAT WE NEEDED, HAD SOME WIND AND SOLAR. AND THEN WE HAD TO BUY OUT IN THE REAL TIME MARKET. RIGHT. AND SO THESE, THIS RED AND THESE AFTERNOON HOURS, THOSE WERE, WERE PRETTY EXPENSIVE PRICES AT THAT TIME THAT EXCEEDED $35. AND SO AGAIN, THIS IS JUST A PARTICULAR DAY TO DEMONSTRATE TO YOU WHEN, WHEN WIND AND SOLAR SHOWS UP, PRICES ARE DOWN AND WE'RE PRETTY WELL PROTECTED FOR THE MOST PART. AGAIN, OTHER THAN YOU'RE BUYING THAT POWER AT $26 ON AVERAGE, PRICES COULD GO DOWN TO ZERO OR COULD EVEN GO DOWN NEGATIVE FOR THE DECK. IF PRICES DON'T HIT $35, IT DOESN'T RUN. AND SO THEN WE'RE ABLE TO CAPTURE ANY VALUE FROM THE MARKET, FROM JUST THE DECK ALONE.

>> I SHOULDN'T LET YOU KEEP GOING BECAUSE I GOT A THIRD QUESTION. OKAY. SO MY FIRST QUESTION WAS YOU SAID WE HAVE CURTAILMENT CLAUSES AND THAT YOU HAVEN'T EXECUTED OR USE THOSE CURTAILMENT CLAUSES BEFORE. CAN YOU EXPLAIN WHY WE HAVEN'T AND WHAT WOULD NEED TO

BE TRUE FOR US TO ASK THEM TO CURTAIL? >> YEAH, PRIMARILY BECAUSE THE ECONOMICS REALLY HAVEN'T HAVEN'T BEEN THERE. YOU KNOW, IT'S A, IT'S A PRETTY DRASTIC OPTION FOR US TO TAKE. NOBODY WANTS TO, TO CURTAIL THE RESOURCE. BUT BUT THAT'S PRIMARILY THE REASON IS THE ECONOMICS HAVEN'T BEEN THERE FOR US TO EXERCISE THAT.

>> OKAY. >> AND THEN MY OTHER QUESTION WAS, HOW LONG HAVE THE PPA PRICES BEEN THE 60 TO $70? IS THAT LIKE A MULTI-YEAR AVERAGE OR IS THAT A SPIKE? AND WE

DON'T KNOW IF IT'S GOING TO SUSTAIN OR NOT. >> YEAH, I THINK I THINK, YOU KNOW, JUST IN OUR REVIEW OVER THE LAST SEVERAL MONTHS AND WHAT WE'RE HEARING FROM OTHER COUNTERPARTS ACROSS THE STATE, THOSE ARE THE PRICES THAT WE'RE SEEING. WE HAVEN'T ISSUED A REQUEST FOR PROPOSALS, SO WE HAVEN'T PROVEN THAT OUT EITHER WAY. BUT CERTAINLY BECAUSE OF OF KIND OF THE THINGS THAT ARE HAPPENING AT THE FEDERAL LEVEL AND THE SUPPLY CHAIN ISSUES, THE STATE FIRMING, WE THINK THAT 60 TO $70 WILL CONTINUE TO STAY PRETTY STABLE OVER THE

NEXT FEW YEARS. >> OKAY. SO IT'S CURRENTLY BASED ON LIKE A FEW MONTHS PLUS JUST PROJECTIONS BASED ON THE ENVIRONMENT IN THE FUTURE, BASICALLY. CORRECT? CORRECT.

AND THEN MY LAST QUESTION IS, YOU SAID THAT WE WOULD HAVE WE WOULD HAVE HAD A LOWER COST PER MEGAWATT HOUR IF WE'D DONE THINGS DIFFERENTLY. SO I THINK THAT'S THAT UPPER RIGHT CHART.

YES. AND THEN IT LOOKS LIKE FROM 2025, OUR RATES WERE LOWER THAN OTHER RETAIL FOLKS. AND I LOOKED UP, I LOOKED UP COST COMPARISON. I THINK IT WAS MAYBE THE 2023 BUDGET PROCESS OR SOMETHING. AND WE WERE BOTTOM TWO, WITH ONLY SAN ANTONIO BEING CHEAPER AMONGST MUNICIPALLY OWNED UTILITIES. AND I'M NOT AWARE, IS AUSTIN ENERGY 100% RENEWABLE OR ARE WE

THE ONLY. >> OTHER THAN GEORGETOWN'S THE ONLY OTHER ONE, BOTH AUSTIN ENERGY AND SAN ANTONIO HAVE GOALS TO 100% RENEWABLE. 2035 2050 IS WHAT WE UNDERSTAND. OUR

GOALS ARE. >> OKAY, SO IT SOUNDS LIKE WE BEAT PRICES WITH A LOT OF PEOPLE OVER THE PAST FIVE YEARS. SO HOW WOULD WE HAVE LIKE, WE ALREADY BEAT SORT OF COMPETITORS OVER THE PAST FIVE YEARS? HOW WOULD WE HAVE DONE BETTER THAN THAT? WHY DIDN'T

[02:15:04]

>> YEAH, WHAT I WOULD SAY IS, I MEAN, I THINK OUR FOLKS HAVE DONE A FANTASTIC JOB. YOU KNOW, THEY THEY CERTAINLY DO A JOB THAT'S VERY DIFFICULT AND VERY STRESSFUL. BUT I THINK TRYING TO CAPTURE THAT VALUE WHEN WE CAN IS SOMETHING THAT WE DO EVERY SINGLE DAY. YOU KNOW, THE OTHER THING TOO, THAT'S THAT'S HAPPENED IS THAT FROM AN OPERATING STANDPOINT, FROM A CAPITAL PROJECT STANDPOINT, WE'VE ALSO RIGHTSIZED A LOT OF OUR BUDGET THAT HAS ALSO HELPED KIND OF MITIGATE SOME OF THE COSTS. AND SO, SO THERE'S, THERE'S PROBABLY NOT JUST ONE FACTOR OUT THERE THAT THAT EXPLAINS THIS, BUT, BUT CERTAINLY I'M AMAZED EVERY DAY

ABOUT THE WORK THAT OUR STAFF DOES IN MANAGING THIS. >> OKAY. THAT'S ALL I HAD FOR

THIS SLIDE. THANK YOU. >> SO JUST TRYING TO WRAP THIS KIND OF THESE TWO KIND OF PIECES TOGETHER. AGAIN, WE TALKED A LITTLE BIT ABOUT THE COST OF RECS. WE'VE TALKED ABOUT THE COST OF OF PPAS. I'M GOING TO GO OVER TO TO THE LEFT. AND SO, SO WHAT WE'VE COME UP HERE IS KIND OF THE, THE GROSS COST, IF YOU WILL, OF, OF WHAT THE WHAT, WHAT THE VALUE OR THE COST OF THE RECS THAT'S IMPUTED TODAY. AND THE MARKET PURCHASES PLUS THIS DIFFERENTIAL BETWEEN WHAT WE, WHAT WE DID AND WHAT WE WOULD HAVE DONE, WE BELIEVE THAT THAT COST IS ABOUT $16 MILLION, ALMOST $6.5 MILLION OF ADDITIONAL COST TO OUR RATEPAYERS AS A RESULT OF OF THIS 100% RENEWABLE SUPPLY. IF I KNOW THERE'S BEEN SOME CONVERSATIONS ABOUT SELLING RECS. AND SO WHAT I WHAT I SHOW HERE, THE 1.7 MILLION IS IF WE TOOK ALL THE RECS THAT WE HAVE FOR THE NATIVE LOAD ONLY AND WE SOLD THOSE INTO THE MARKET, RIGHT, IT'D BE ABOUT A $1.7 MILLION WORTH OF PROCEEDS. I NET THAT OUT. AND SO THE NET COST WOULD HAVE BEEN ABOUT 14.7 MILLION. THAT'S ABOUT A 15% IMPACT ON OUR RATES ON OUR EC A RATE. AND IF YOU REMEMBER, I MENTIONED THAT THE BASE RATE ACCOUNTS FOR ABOUT 55% OF A CUSTOMER'S BILL. ON THE RESIDENTIAL SIDE, THE EC ONLY ACCOUNTS FOR ABOUT 35% OF THE OF THE CUSTOMER'S TOTAL BILL.

AND SO THE IMPACT HERE THAT WE'VE ESTIMATED AT THAT 35% IS ABOUT A $7 PER MONTH OR $83 PER YEAR THAT IT'S COSTING OUR RATEPAYERS TO BE 100% RENEWABLE. WHAT I WILL MENTION IS THAT, YOU KNOW, WE WERE VERY CONSERVATIVE. WE THINK THERE'S PROBABLY A PLUS OR -5% MARGIN ON THIS PERCENTAGE. COULD BE 10%, COULD BE 20%. SO CERTAINLY THIS IS AN ESTIMATE. I WANT TO BE VERY CLEAR TO YOU. AND CERTAINLY WHAT HAPPENS GOING FORWARD INTO IN THE MARKET IN THE FUTURE. CERTAINLY WE ANTICIPATE THAT PRICES WILL CONTINUE TO INCREASE. AND IF THAT HAPPENS, CERTAINLY THIS THIS COST WILL CONTINUE TO TO INCREASE INCREMENTALLY. AND THEN WHAT I'LL MENTION HERE ON THE LEFT HAND SIDE IS SLIGHTLY DIFFERENT CHART JUST TO SHOW KIND OF REFLECT TO YOU HOW, HOW WE'RE MANAGING OUR PORTFOLIO EVERY DAY. AND SO WE'RE USING THE DECK AS A HEDGE. SO WE'RE ASSUMING THAT THE, THE DECK IS GOING TO PROTECT US. AND SO IF PRICES ARE BELOW $35, THE DECK IS NOT RUNNING. AND WE'RE BUYING THAT FROM THE MARKET, RIGHT. AND THEN RENEWABLES ARE THEN ON TOP OF THAT. RIGHT. AND SO THAT GIVES US THE MAXIMUM PROTECTION. WHAT HAPPENS IN THE AFTERNOON HOURS. BECAUSE AGAIN, REMEMBER OUR PEAK LOAD IS NOW 432. WE HAVE 225MW ROUGHLY. THERE IS SOME RATE THAT HAPPENS ESPECIALLY DURING THE SUMMER FOR THE DECK. SO WE'VE KIND OF BASED THIS ON 200MW. IF WIND SHOWS UP AND SOLAR SHOWS UP, THAT THEN COVERS US TO SOME EXTENT. IF IT DOESN'T, THEN WE'RE BUYING REAL TIME PRICES.

IF REMEMBER, IF THOSE RENEWABLES DON'T SHOW UP, ESPECIALLY IN THOSE AFTERNOON HOURS, PRICES ARE NOW SPIKING. THE DECK IS RUNNING TO OFFSET AT LEAST 200MW, IF NOT 225MW OF

THAT POWER THAT WE'RE BUYING. >> QUESTION. MAKE SURE I UNDERSTOOD WHAT YOU SAID ABOUT A PLUS OR MINUS PERCENTAGE. YOU SAID IT COULD BE EITHER 10% OR JUST DEPENDING ON ENVIRONMENTAL CONDITIONS, 10% OR 20%. I GUESS MY ONLY QUESTION IS BECAUSE I KNOW WHEN WE TALKED AT THE BUDGET DISCUSSIONS, WE WE ASKED THE 3% INCREASE THAT WAS PROPOSED. I THINK YOU I

REMEMBER YOU SAYING THAT THAT WOULD GENERATE LIKE $4 MILLION. >> 3 MILLION, 3.5 MILLION.

>> SO IF LET'S JUST TAKE OUT THE LAST SALE OF THE RECS BECAUSE WE HAVEN'T DECIDED ON THAT YET. SO LET'S JUST SAY THAT'S. SO WE'RE AT BASICALLY 16.5 MILLION. SO IF 3% EQUALS THREE AND A HALF OR FOUR, I'M JUST GOING TO SAY 4 MILLION. THAT'S ALMOST FOUR TIMES THAT, WHICH WOULD BE. SO INSTEAD OF A 5% RESIDENTIAL IMPACT, IT LOOKED LIKE BASED ON AT LEAST

[02:20:06]

TIMES THREE, 12%. SO WHERE AM I? WHERE AM I OFF ON THAT? >> YEAH. SO, SO THE 3% ON THE BASE RATE SIDE IS, IS, IS A DIFFERENT CALCULATION THAN WHAT WE'RE TALKING ABOUT ON THE RATE SIDE, RIGHT? AND SO, SO THAT'S, THAT'S BASED ON THE MEGAWATT HOURS THAT WE ANTICIPATE THAT WE'RE GOING TO SELL. WE ANTICIPATE THAT BASED ON THAT, THAT 3% IS GENERATING ABOUT $3.5 MILLION. RIGHT. AND SO ON THE SIDE, WE'RE RECOVERING THE NET COST OF POWER BEING WHAT IS THE POWER THAT WE BOUGHT IN THE MARKET, POWER THAT WE SOLD IN THE MARKET? WE'RE NETTING THOSE OUT, NETTING OUT ANY FINANCIAL TRANSACTIONS THAT WE HAVE. AND SO, SO IT'S A DIFFERENT CALCULUS ON THAT PARTICULAR SIDE THAN IT IS ON THE, ON, ON THE, ON THE BASE RATE SIDE, THIS, THIS 1.7 MILLION OR THE $16 MILLION. WHAT I WILL MENTION TO YOU IS THAT THE VAST MAJORITY OF THAT COST, THAT 11.8 MILLION, BECAUSE WE'RE IN THESE LONG TERM PPAS, THERE'S THERE'S REALLY, AT THIS POINT, NOT A WHOLE LOT THAT WE CAN DO UNLESS WE WENT OUT INTO THE MARKET AND TRIED TO SELL THEM. OKAY. AND SO, SO, SO, SO YOU'RE REALLY IN THOSE AGREEMENTS FOR THE LONG HAUL. AND SO, SO THERE'S REALLY NO WAY TO AVOID THE DIFFERENTIAL. THAT'S WHY I MENTIONED EARLIER THAT IT'S AN OPPORTUNITY COST, RIGHT? AND IT'S JUST A CALCULATED OPPORTUNITY COST OF WHAT IT WOULD HAVE BEEN HAD WE NOT HAD THOSE. IT'S A IT'S A BACKWARDATION. LOOK AT THE MARKET. AND, AND YOU KNOW, AS AS THE SAYING GOES, PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE. AND THAT'S WHY I'M THINKING THAT'S WHY I'M MENTIONING THAT GOING FORWARD, THAT DIFFERENTIAL MAY HAVE A PLUS OR MINUS MARGIN OF

ERROR OF ABOUT 5%. >> SO THEN THE YELLOW I WASN'T HERE WITH IS IT YELLOW TAIL, YELLOW VIKING, YELLOW VIKING. THAT'S FAIRLY RECENT. WAS THAT WITHIN THE LAST LAST YEAR, LAST YEAR. AND I DON'T AND CLEARLY YOU CAN'T SAY WHAT THE NEGOTIATED PPA RATES WERE FOR THAT. BUT THAT'S NOT TOO FAR REMOVED FROM WHAT YOU'RE DESCRIBING AS THAT MOVING FORWARD. YOU'VE GOT REGULATIONS. SO SO I'M ASSUMING THAT THAT PPA WAS MORE IN LINE WITH WHAT

OUR HISTORICAL ONES HAVE BEEN INSTEAD OF. >> IT'S IN THE HIGHER RANGE OF

THAT RANGE THERE. >> OKAY. FROM THE 16 TO 44. YES. OKAY. ALL RIGHT.

>> ALL RIGHT. SO JUST GOING, JUMPING BACK TO, TO, TO REX, I KNOW THAT'S BEEN PART OF THE QUESTION THE COUNCIL HAS. AND SO, SO WHAT YOU DO WITH REX, WHETHER TO BUY OR SELL, THAT IS A LOCAL DECISION. CERTAINLY THE COUNCIL IS FREE TO MAKE THAT DECISION. THERE IS A MARKET FOR THOSE REX. AND SO THEY CAN BE SOLD. AND SO BUT WHAT I WILL MENTION TO YOU IS THAT JUST WHILE THERE IS NO STATUTORY REGULATION OR STATUTE OUT THERE THAT THAT REQUIRES DME, THE CITY OF DENVER TO DO SOMETHING SPECIFIC WITH THOSE RECS, I WILL SHARE WITH YOU JUST WHAT I CALL KIND OF THE PREPONDERANCE OF EVIDENCE HERE. AND SO UNDER THE RENEWABLE PORTFOLIO STANDARD, WHEN THAT WAS ORIGINALLY DEVELOPED, THE INVESTOR OWNED UTILITIES WERE ALLOCATED A PERCENTAGE OF RECS THAT THEY HAD TO BUY AND THEY WERE REQUIRED TO RETIRE THEM.

THE PURPOSE AT THAT TIME WAS TO SPUR ADDITIONAL RENEWABLE POWER IN THE MARKET. THAT HAS SINCE BEEN DISCONTINUED. AS I ALREADY MENTIONED, THERE'S, YOU KNOW, TEXAS LEADS THE NATION IN RENEWABLE RESOURCES. WHEN THE INTERNAL AUDITOR CONDUCTED HER AUDIT, SHE SHARED WITH US AN EPA DOCUMENT CALLED THE EPA GREEN POWER PARTNERSHIP. THROUGH THAT, IT'S JUST A GENERAL PRACTICE GUIDANCE FOR FOR ORGANIZATIONS THAT IF YOU'RE GOING TO USE RECS TO BE SOME LEVEL OF RENEWABLE, THAT THE GUIDANCE FROM THE EPA IS THAT YOU RETIRE THOSE RECS RETAIL ELECTRIC PROVIDERS TODAY, IF THEY OFFER 100% RENEWABLE RATE. AND SO RETAIL ELECTRIC PROVIDERS IN THE DEREGULATED AREA OFFER A NONRENEWABLE RATE AND RENEWABLE RATE. AND SO THEY'RE REQUIRED IF THEY OFFER 100% RENEWABLE RATE OR SOME PERCENTAGE THEREOF, THE PUC T THROUGH REGULATION REQUIRES THAT THEY BUY RECS FOR THAT CUSTOMER'S LOAD AND RETIRE THOSE RECS. DME, AS YOU, AS YOU KNOW, DOES NOT OFFER A SEPARATE NONRENEWABLE RATE THAT WAS

[02:25:03]

GREENHOUSE GAS INVENTORY IN THE CITY IF WE SELL THOSE RECS. >> COULD YOU EXPLAIN THAT,

PLEASE? >> AGAIN. >> BECAUSE IT DOESN'T DEFEAT OUR IF WE SELL THE RECS, DOES THAT MEAN WE CAN'T SAY THAT WE'RE 100% RENEWABLE?

>> NO. AGAIN, THAT'S A THAT'S A LOCAL DECISION. AND SO SO IF IF THE COUNCIL ONLY WANTS TO COUNT THE ENERGY OR WANTS TO COUNT THE RECS AND THEN SELL THEM, THE COUNCIL COULD STILL SAY

WE'RE 100% RENEWABLE. >> WELL, I'M NOT TALKING ABOUT THE COUNCIL SAYING IT. I'M SAYING THAT ACCORDING TO WHAT RECS REPRESENT. SO WHAT YOU'RE SAYING IS THERE'S NO REGULATION OUT THERE THAT SAYS IF YOU IF YOU COUNT IT AND YOU SELL IT, YOU STILL CAN CLAIM IT.

>> THERE'S THERE'S NOTHING PROHIBITING OR ALLOWING THAT. >> OKAY.

>> SO OTHER THAN WHAT I WILL SAY IS THAT THEY'RE KIND OF THE GENERAL KIND OF VIEWPOINT OUT THERE IS IF, IF YOU COUNT THE REC AND THEN YOU SELL IT, THEN SOMEBODY ELSE CAN COUNT THAT REC AS WELL. AND SO THERE IS A POTENTIAL DOUBLE COUNTING THAT COULD HAPPEN.

>> YEAH. OKAY. SO THEN SO THAT'S ONE ISSUE OF CLAIMING IT OR SOMEBODY ELSE GETTING IT.

OKAY. SO THEN HERE'S THE OTHER ISSUE OF IF WE SELL THE RECS, SAY WE MAKE A DECISION OVER HERE TO SELL THEM, WE STILL 100% WE DON'T CARE ABOUT DOUBLE COUNTING. I'M NOT SAYING THAT'S ANYBODY'S POSITION. I'M JUST FOR THE SAKE OF DISCUSSION. SO THEN WE SELL THE REC AND THE

REC IMPACTS THE GREENHOUSE GAS INVENTORY IN THE CITY. >> HOW AGAIN, THIS IS BASED ON BEST PRACTICES, RIGHT? AND SO BASED ON BEST PRACTICES AND AND CLIMATE ACTION PLAN DEVELOPMENT IS THAT IF YOU'RE USING RECS AND THEN YOU, YOU SELL THEM, YOU NO LONGER OWE THEM, OWN THEM, THEN THEN THE BEST PRACTICES, YOU CAN THEN COUNT THEM AS AN OFFSET TO GREENHOUSE

GASES IN YOUR COMMUNITY. >> OKAY, SO. >> IT'S A, IT'S A GENERAL, IT'S

A GENERAL BEST PRACTICE. >> OKAY. SO THEN THERE'S NOT A RULE, A EPA REGULATION, STATE REGULATION THAT SAYS IF YOU'RE USING RECS, YOU CAN USE THEM AS A CREDIT AGAINST YOUR GREENHOUSE GAS GASES. YOU'RE SAYING THAT'S THE BEST PRACTICE. IF YOU'VE GOT THE RECS AND YOU DON'T SELL THEM, YOU CAN DO THAT. CORRECT. IF YOU SELL THEM, THEN YOU CAN'T DO THAT.

>> THAT'S THE GENERAL. THAT'S THE GENERAL BEST PRACTICE. YES. >> SO IN ESSENCE, IT'S THE SAME KIND OF PROTOCOL WITH RENEWABLE ENERGY. AND THAT IS YOU CAN'T SAY YOU'RE USING ANY RENEWABLE ENERGY WITHOUT THIS LEGAL PIECE OF PAPER OR THIS LEGAL INSTRUMENT CALLED A RENEWABLE ENERGY CREDIT. IT'S REALLY A PAPER THING. I MEAN, IF THE I THINK YOU'VE REPORTED THE GRIDS LIKE 40% RENEWABLE ALREADY IN THE SENSE OF HOW MUCH OF THE ENERGY IS BEING PRODUCED BY RENEWABLE ENERGY RESOURCES. YES. BUT SO IF WE DIDN'T HAVE ANY RENEWABLE ENERGY PLAN, WE DIDN'T HAVE ANY GOALS. WE JUST BOUGHT IT OFF THE MARKET. WE COULDN'T SAY THAT WE ARE 40% RENEWABLE SIMPLY BECAUSE THE GRID ITSELF IS 40% RENEWABLE, BECAUSE WE DO NOT HAVE THE RECS

ASSOCIATED WITH THAT. >> YES, THAT'S THE GENERAL PRACTICE.

>> AND IT'D BE THE SAME SITUATION ON THE GREENHOUSE GAS INVENTORY WITHOUT GREENHOUSE GASES. IF YOU HAVE A REC, YOU CAN KNOCK THAT DOWN. IF YOU DON'T HAVE A REC, THEN IT IS

WHAT IT IS. CORRECT. OKAY. ALL RIGHT. THANK YOU. >> OKAY. AND JUST TRY TO WRAP THIS UP A LITTLE BIT HERE BEFORE MATT COMES UP. YOU KNOW, WE'VE KIND OF COME UP WITH SOME POTENTIAL MODELS. THIS ISN'T A THERE IS NO RECOMMENDATION HERE. THIS IS NOT AN EXHAUSTIVE LIST.

THERE COULD BE DIFFERENT OPTIONS, CERTAINLY MORE LIKE A LIKE A MENU. AND SO WHAT WE'VE KIND OF COME UP HERE AS JUST AS POTENTIAL OPTIONS IS UNDER THE CURRENT ORIGINAL PLAN, UNDER THE RENEWABLE RESOURCE PLAN, WHERE IT'S 100% UTILITY SCALE, RENEWABLE ENERGY ONLY IN THAT PARTICULAR INSTANCE, YOU KNOW, CERTAINLY, YOU KNOW, RECS COULD BE RETIRED, RECS COULD

[02:30:01]

THE OTHER THE OTHER PLAN, THE OTHER OPTION HERE IS KIND OF A REVISED DRP IN THIS REVISED PRP, THERE'S STILL PPAS FOR WIND AND SOLAR, BUT NOW WE'RE ALSO GOING TO BE ACCOUNTING FOR ENERGY ASSOCIATED WITH ROOFTOP SOLAR AS AN EXAMPLE. OR IF WE WERE TO DO A SOLAR GARDEN, AS SOME UTILITIES HAVE DONE, BECAUSE THOSE DON'T RECEIVE RECS. ONE OF THE QUESTIONS THAT WE WOULD HAVE FOR COUNCIL IS, WOULD YOU WANT US TO COUNT THEM WITHOUT THE RECS, OR WOULD WE NEED TO BUY RECS AS WELL AND KIND OF GREEN THEM? IN THAT SENSE, WE THINK AN ENVIRONMENTAL GOAL POLICY WOULD BE CRITICAL FOR THAT. AGAIN, I'M NOT GOING TO GO THROUGH THE WHOLE LIST. WE WOULD ANTICIPATE HERE THAT THERE WOULD STILL BE AN INCREASE IN RATES GOING FORWARD.

AND IN THE NEXT MODEL IS THE RFP, THE RETAIL ELECTRIC PROVIDER MODEL. IN THAT MODEL, WE'RE ONLY BUYING RECS, RIGHT. AND SO WE HAVE THE RECS THAT WE'RE TIED INTO WITH OUR PPAS.

THERE'S NOTHING WE CAN DO WITH THOSE. BUT THAT DIFFERENTIAL NOW WE'RE BUYING RECS. BUT INSTEAD OF INSTEAD OF US BUYING THE MOST EXPENSIVE RECS ON THE MARKET AT $1.50, I'M GOING TO GO OUT THERE AND LOOK FOR THE CHEAPEST RECS POSSIBLE AT $0.50. I THINK RETIRING THE RECS AS, AS AS MANDATED BY THE PUC FOR FOR RAPS WOULD BE SOMETHING THAT WE WOULD THAT CERTAINLY, YOU KNOW, THE COUNCIL WOULD HAVE THE OPTION HERE IS TO RETIRE THEM. A GOAL WOULD BE NEEDED. WE WOULD ANTICIPATE THAT UNDER THAT SCENARIO, THAT WE COULD SEE A DECREASE IN THE RATE IMPACT, PRIMARILY BECAUSE, ONE, WE WOULD NOT WE WOULD NOT DO ANY ADDITIONAL PPAPPS. AND THE OTHER THING IS THAT WE WOULD ALSO BUY THE CHEAPEST RECS POSSIBLE. AND THEN FINALLY, THE LAST MODEL, WHICH IS A NONRENEWABLE MODEL, RIGHT. AND THAT MODEL, AT THAT POINT, WE'RE NOT WE'RE NO LONGER DOING ADDITIONAL PPAS. WE'RE LETTING THE PPAS THAT WE HAVE TODAY EXPIRE. THERE IS A POSSIBILITY THAT A, SOME PERCENTAGE OF RENEWABLE GENERATION WOULD BE NEEDED. THE WAY THAT WE VIEW THIS IS THIS WOULD BE A MORE DIVERSIFIED PORTFOLIO THAT YOU WOULD LOOK AT, NO DIFFERENT THAN YOUR OWN PERSONAL INVESTING OR RETIREMENT, RIGHT? YOU WANT TO HAVE NOT ALL APPLE STOCK OR NOT ALL MCDONALD'S. AND I'M NOT GENERATION THAT COULD INVOLVE ALL SORTS OF NEW TECHNOLOGIES, ALL SORTS OF NEW DEVELOPMENTS OUT THERE IN THAT IN THAT SCENARIO, RECS COULD BE SOLD. WE WOULD ANTICIPATE THAT IN THIS SCENARIO THAT THE RATE IMPACT THAT WE WOULD SEE A CONTINUAL DECREASE OF THAT RATE IMPACT, BECAUSE AT THAT POINT WHERE WE'RE REALLY LOOKING AT THE MARKET, REACTING TO THE MARKET AND DOING THE MOST

ECONOMICAL OPTION OUT THERE FOR FOR OUR RATEPAYERS. >> RUMOHR.

>> THANK YOU, TONY. WE'VE KIND OF BEEN TALKING ABOUT WELL, IN THE LAST SLIDE YOU TALKED ABOUT, IF WE DIDN'T ENTER INTO THESE PPAS, WE COULD, YOU KNOW, POTENTIALLY SAVE MONEY. I'M TRYING TO UNDERSTAND WHAT WHAT WOULD THE ALTERNATIVE LOOK LIKE? LIKE WHAT IF WE WEREN'T ENTERING INTO THESE PPAS? WHAT WOULD WE BE DOING? IGNORING THE RECS FOR A SECOND.

>> YEAH. >> SO SO ONE YOU'LL YOU'LL HAVE THE PPAS OUT TO AT LEAST 2024, 2030 TO 2044. WHAT WE'RE DOING AT THAT POINT IS WE'RE, WE'RE STILL KIND OF MANAGING THE PORTFOLIO THE WAY WE ARE TODAY. WE, WE'RE, WE'RE, WE'RE UTILIZING THE DECK AS A, AS A HEDGE. WE'RE ALSO BUYING POWER OUT IN THE REAL TIME MARKET DAY AHEAD MARKET. AND WE'RE ALSO DOING PHYSICAL AND FINANCIAL TRANSACTIONS. AND IN THIS SCENARIO, WITH AN INTEGRATED RESOURCE PLAN, WE WOULD WE WOULD CERTAINLY BE LOOKING AT ADDITIONAL GENERATION. THAT GENERATION COULD BE EVERYTHING FROM A SMALL MODULAR NUCLEAR REACTOR. IT COULD BE A MORE

[02:35:05]

AND SO I THINK, YOU KNOW, GOING FORWARD, THAT'S WHAT THIS IRP WOULD DO IS TO LOOK AT WHAT IS THAT FUTURE NEED FOR THE UTILITY TO CONTINUE TO KEEP THOSE RATES AFFORDABLE FOR OUR CUSTOMERS, AND ALSO TO IMPROVE THE RELIABILITY OF THE OF THE ELECTRIC GRID IN THE STATE OF TEXAS. AT THE END OF THE DAY, EVERYONE THAT'S IN THE GRID HAS A RESPONSIBILITY FOR THAT GRID.

AND SO CERTAINLY AS WE LOOK AT ADDITIONAL GENERATION THAT HELPS THE ENTIRE STATEWIDE GRID.

>> SO SO WHAT I HEARD, I THINK WAS WE WOULD BE DOING SOME OF THE BUY AHEAD AND THEN MIX IT.

SO THERE'S NO PPAS WITH OTHER SOURCES. BASICALLY IT'S JUST RENEWABLES.

>> THE BATTERY FACILITY. >> YEAH. WHICH THAT KIND OF COUNTS AS WELL. NOT NECESSARILY.

NO. >> NO. >> IT'S IT'S JUST STORAGE. IT'S

NOT RENEWABLE. >> YEAH. IT DEPENDS ON WHERE IT CAME FROM. ALL RIGHT. THANK YOU.

>> SO IF WE COULD GO BACK TO THAT SLIDE I KNOW EARLIER WITHIN THE LAST YEAR YOU I THINK IT WAS IN 25 THAT SAME PRESENTATION YOU TALKED ABOUT THE CITY NEEDING TO GO OUT AND BUY SOME TYPE OF ADDITIONAL GENERATION CAPACITY, SUCH AS WHATEVER. I MEAN, YOU KNOW, EVERYBODY'S GOT AN OPINION ABOUT THAT, BUT SOME TYPE OF GENERATION CAPACITY. AND I THOUGHT WHAT I HEARD YOU SAY IN THE FIRST COLUMN WAS THAT'D BE 100% RENEWABLE. AND THAT'S WHAT WE WOULD USE FOR ALL OF OUR GENERATION IS THAT DOES THE THE POTENTIAL PURCHASE OF ADDITIONAL GENERATION GENERATION ASSETS APPLY TO ALL FOUR OF THOSE MODELS? IS THAT IS THAT SOMETHING THAT'S IN EACH ONE OF THOSE OR IS. BECAUSE I THOUGHT MY QUESTION IS, DOES THAT FIRST COLUMN MEAN THAT WE ARE NOT GOING TO GO OUT AND LOOK FOR ADDITIONAL QUOTE UNQUOTE GENERATION LIKE WE HAVE AT THE DECK? LIKE IF WE WERE TO BUY, LIKE YOU SAID, INTO A

THERMO NUCLEAR OR WHATEVER, IS THAT FORECLOSED THAT? >> THAT'S CORRECT. BECAUSE AT

THAT POINT, IT'S JUST RENEWABLE ENERGY. >> AND IS THAT PRIMARILY

THROUGH PPAS? >> YEAH, THAT'S THAT'S CORRECT. THE ECONOMICS ARE STILL NOT THERE, EVEN THOUGH THERE WERE CHANGES IN IN FEDERAL STATUTE THAT MADE EMMA'S ELIGIBLE TO ACCESS SOME OF THE TAX CREDITS. THE ECONOMICS TO BUILD YOUR OWN FACILITY ARE JUST NOT THERE.

THERE'S A LOT OF OPERATIONAL CONCERNS. THERE'S ALSO WHAT'S CALLED REPOWERING OF FACILITIES.

AND SO MANY OF THESE RENEWABLE FACILITIES ONLY HAVE A 15 TO 20 YEAR LIFE VERSUS A DECK THAT HAS MORE OF A 50 YEAR LIFE. AND SO AT THE AT THE 10 TO 15 YEAR, AT THE 15 TO 20 YEAR END OF LIFE, AT THAT POINT, YOU'RE REPOWERING THAT SAME FACILITY TO CONTINUE TO GAIN THE SAME

AMOUNT OF GENERATION THAT YOU WERE GETTING PREVIOUSLY. >> SURE. WELL, AND I GUESS MY THE THRUST OF THAT QUESTION IS, FROM WHAT I'M HEARING YOU SAY, PPAS RIGHT NOW ARE NOT THE WAY TO GO IN THE SENSE OF IT LOCKS US IN LONG TERM, CERTAINLY FOR LARGE LOADS. I MEAN, IT LOCKS US IN LONG TERM. AND OF COURSE, YOU KNOW, YOU CAN SAY, WELL, THAT'S INSURANCE, IT'S FLUCTUATING. BUT FROM WHAT AT LEAST I'VE HEARD YOU SAY SO FAR THAT'S NOT THE BEST OPTION IS

TO, TO ENTER INTO A LOT OF ADDITIONAL PPS. >> YES. SO SO SO SO THAT'S CORRECT. AND I THINK I THINK HAVING THE DECK AT AT, YOU KNOW, 225MW, ADDING THIS BATTERY FACILITY AT 100MW, I THINK, I THINK THOSE TWO KIND OF HAVE US PRETTY WELL COVERED OVER THE NEXT FEW YEARS. YOU KNOW, COULD WE LOOK AT SOME TYPE OF SHORT TERM DEAL ON A RENEWABLE CONTRACT OR SOME OTHER TYPE OF DEAL FOR BATTERY STORAGE? CERTAINLY, WE HAVE RFP PROCESSES THAT WE HAVE TO FOLLOW, YOU KNOW, ON THAT. BUT KIND OF WHERE WE STAND TODAY, I THINK WE'RE GENERALLY WELL COVERED. YOU KNOW, ONCE THIS ADDITIONAL ONCE THIS BATTERY

FACILITY COMES ONLINE. >> AND SO NOW THAT BATTERY FACILITY AT 100MW, IF IT'S

[02:40:04]

>> TWO HOURS. >> TWO HOURS. >> IT'S A TWO.

>> HOUR FACILITY AT 100MW. AND THAT'S THAT'S WHAT IT COVERS. AND SO, SO WE WOULD, WE WOULD WE WOULD VIEW THAT BATTERY FACILITY FACILITY, NOR NO DIFFERENT THAN THE REST OF THE MARKET. IT'S AN ARBITRAGE PLAY, RIGHT? IT'S A IT'S A BUY LOW. SELL HIGH. RIGHT. GENERALLY IT'S ABOUT A $50 DIFFERENTIAL BETWEEN, BETWEEN WHAT YOU CHARGE AT AND WHAT YOU DISCHARGE AT. AND SO ONCE THAT PRICE SIGNAL COMES IN, WE'LL BEGIN TO DISCHARGE IT.

GENERALLY SPEAKING, MOST BATTERY FACILITIES IN THE STATE OF TEXAS ARE, ARE, ARE BEING DISCHARGED IN THAT FIRST TWO HOURS UNLESS THE FACILITY SPLITS THEIR FARM INTO, INTO BASICALLY TWO. SO IN THIS PARTICULAR CASE, YOU KNOW, YOU COULD HAVE 100 MEGAWATT FACILITY, YOU DISCHARGE HALF OF IT IN THE FIRST TWO HOURS, AND THEN YOU DISCHARGE THE SECOND HALF IN THE NEXT TWO HOURS. OUR PPA ONLY ALLOWS US ONE DISCHARGE PER DAY. AND SO IT'S IT'S ALL OR NOTHING. WE WILL WE WILL DISCHARGE IT AS SOON AS THAT PRICE SIGNAL HAPPENS AND TRY TO CAPTURE AS MUCH VALUE AS WE CAN. NOW, WE COULD POTENTIALLY DELAY THE DISCHARGE TO HOUR TWO OR HOUR THREE. BUT BUT WE WILL EXERCISE THAT OPTION EVERY SINGLE DAY.

>> SO IN THE PPA, WHICH I HAVEN'T SEEN THAT BECAUSE I WASN'T HERE WHEN THAT WAS APPROVED. SO THERE'S A SET PRICE. OBVIOUSLY YOU CAN'T SAY THIS PRICE, BUT THERE'S A THERE'S A PRICE THAT WE'RE SAYING WE'RE GOING TO PAY FOR THAT ENERGY. AND WHEN IT HITS THAT PRICE, I MEAN HOWEVER YOU WANT TO CALCULATE IT, IT'S NOT SOMETHING WE DON'T GET TO DECIDE WHAT WE'RE GOING TO PAY FOR IT. WE ALREADY HAVE ENTERED INTO SOMETHING THAT SAYS, HERE'S AT LEAST WHAT WE'RE GOING TO PAY. AND IF WE CAN GAIN SOMETHING ON THAT THROUGH DISCHARGING IT, I GUESS THE THE DELTA WOULD INURE TO OUR BENEFIT IF. GO AHEAD.

>> YEAH. SO THE PPA. >> IS, IS WHAT'S CALLED A TOLLING AGREEMENT. RIGHT. AND

SO SO YOU'RE PAYING A FIXED EXPENSE. >> GOTCHA.

>> YOU'RE PAYING A PREMIUM, RIGHT, FOR YOU TO DISCHARGE IT. AND SO, SO THE DISCUSSION THAT WE HAD, THE COUNCIL IS THAT THERE'S A RANGE. THERE'S A LOW, MEDIUM AND HIGH RANGE. BUT WE WOULD ANTICIPATE THAT UNDER NORMAL CIRCUMSTANCES THAT FACILITY WOULD WOULD HAVE A NET COST OF ABOUT $5 MILLION TO RATEPAYERS. BUT POTENTIALLY IT COULD GENERATE ADDITIONAL INCOME KIND OF ON THAT KIND OF HIGH END. NOW THERE'S ALSO KIND OF THE LOW END WHERE IT COULD

ACTUALLY BE YOU KNOW CLOSER TO THAT PREMIUM COST. >> SURE. AND BECAUSE MY UNDERSTANDING IS CORRECT ME IF I'M WRONG, BATTERY STORAGE IS AT LEAST THAT WHAT I'VE READ IS NOT NECESSARILY CLASSIFIED AS QUOTE UNQUOTE, RENEWABLE ENERGY. IS THAT RIGHT?

>> IT'S, IT'S. >> IT DOESN'T GENERATE ENERGY AT ALL. IT'S JUST STORAGE.

>> OKAY. SO WOULD WELL, IT'S STORAGE, BUT THEN WHEN WE DISCHARGE IT, IT'S CREATING ENERGY. WOULD WE HAVE TO BUY RECS TO COVER THAT? IF WE'RE GOING TO USE 100MW OUT OF THE BATTERY STORAGE FACILITY, WE'RE GOING TO TURN IT ON OR WHATEVER YOU DO IT. AND THAT 100MW IS COMING TO THE GRID FOR THE BENEFIT OF US, FOR OUR TRUING UP, WHAT DO WE DO WITH THAT? AS FAR AS THE RENEWABLE ENERGY GOAL? DO WE HAVE TO PURCHASE RECS FOR THAT OR IS IT JUST

100MW THAT IS KIND OF UNDEFINED? >> THAT FACILITY, THAT PPA WOULD BE TREATED NO DIFFERENT THAN THE DECK. SO ANY POWER THAT'S GENERATED CURRENTLY, WE ARE NOT BUYING RECS FOR THAT

ENERGY. >> FOR THE DECK. >> FOR THE DECK OR FOR THIS FACILITY. THAT'S NOT BEEN DIRECTION THE COUNCIL HAS GIVEN US.

>> SO HELP ME UNDERSTAND THEN. OKAY, SO IF AND AND THIS MIGHT BE A LITTLE FOR A DIFFERENT CONVERSATION, BUT IF WE'RE SAYING WE'RE 100% RENEWABLE, BUT WE'RE TURNING ON THE DECK AND WE'RE CREATING ENERGY THAT WE ARE BASICALLY GETTING CREDIT FOR, I MEAN, WE'RE SELLING IT AT THE ERCOT PRICE AND WE'RE BUYING IT. BUT DO WE HAVE TO BUY? WE'RE NOT BUYING RECS FOR

THAT. >> WE'RE NOT BUYING RECS FOR THAT. NO.

>> BUT IS THAT PART OF OUR PORTFOLIO? I MEAN, IS THAT PART OF THE THE, THE TOTAL NUMBER OF MEGAWATTS THAT WE'RE WHEN IT'S WHEN IT'S RUNNING THAT'S CREDITING US THE 200MW? I MEAN, I GUESS IF WE'RE GOING TO USE SOME OF THAT POWER AND WE'RE NOT, WE DON'T HAVE RECS TO

COVER IT, THEN HOW ARE WE 100% RENEWABLE? >> WHAT WE'RE COVERING IS THE LOAD THAT WE SERVE. SURE. SO THAT 1.7 MILLION IS WHAT WE'RE COVERING. WHAT I'LL WHAT I'LL SAY IS THAT THERE'S, THERE'S TWO LINES OF THOUGHTS HERE, RIGHT? SO SO THE FIRST IS IF YOU, IF YOU BUY RECS TO OFFSET THE DECK, BUT YOU'RE ALREADY BUYING ALL THE POWER FROM THE MARKET OF WHICH THE DECK IS, IS, IS INCLUDED. IN ESSENCE, WHEN YOU, WHEN YOU GREEN THE LOAD THAT YOU SERVE, YOU'RE GREENING THOSE ELECTRONS FROM THE DECK. THAT'S THAT'S ONE. OKAY. THE OTHER VIEWPOINT IS IF YOU'RE GOING TO COVER YOUR LOAD AT 1.7 MILLION MEGAWATTS, AND THEN

[02:45:04]

AT 100% PLUS RENEWABLE. >> I GOT IT, IT JUST IT JUST CONFIRMS TO ME THAT THIS KIND OF IS JUST SOMETIMES FORM OVER SUBSTANCE. I MEAN, I UNDERSTAND THAT AND THAT'S OKAY. BUT IF WE'RE TURNING ON A DECK OF 200MW FIRED GENERATION, AND YOU'RE SAYING, BECAUSE THAT'S ALREADY CONSIDERED IN OUR LOAD, THE 1.7 MILLION, AND WE'RE GETTING ENOUGH RECS TO COVER THAT? WELL, WHEN WE TURN IT OFF, WE'RE STILL COVERING OUR LOAD OF ONE POINT, WHICH IS THE 200MW COMING IN FROM SOMEWHERE ELSE OFF THE GRID. OKAY. ALL RIGHT.

>> WELL, I JUST POINT OUT IF, IF, IF THE COUNCIL DIRECTS US TO BUY RECS TO OFFSET THE MEGAWATT HOURS FOR THE DECK, THAT'S JUST ADDITIONAL COST THAT WE'RE GOING TO BE PASSING ON TO CUSTOMERS. SURE, SURE. AND THAT COULD AND THAT CAN RANGE.

>> SURE. YEAH. NO, NO, I GET IT. THAT'S NOT WHAT I'M THAT'S NOT THE THRUST OF MY INQUIRY. IT'S JUST I'M JUST TRYING TO UNDERSTAND BECAUSE WE DO TAKE A LOT OF PRIDE IN THAT BRAND OF 100% RENEWABLE. SO WANT TO MAKE SURE THAT IS THAT REALLY WHAT WE'RE LOOKING AT. BUT AGAIN, BASED UPON THE RECS AND THIS AND THAT, IT'S, YOU KNOW, IF YOU HAVE A REC, YOUR RENEWABLE, IF YOU DON'T HAVE A REC, YOU'RE NOT EVEN IF YOU ARE GETTING EVERYTHING YOU HAVE FROM A

SOLAR PLANT. >> SO THAT IS THE THAT IS THE GENERAL PRACTICE.

>> OKAY, GREAT. OKAY. ANY OTHER QUESTIONS? YES. COUNCIL MEMBER STEVENS, JUST.

>> ONE QUESTION. I NEED CLARIFICATION ON. COUNCIL MEMBER RUMOHR BROUGHT IT UP, AND IT WAS JUST A FEW SLIDES BACK WHEN YOU WERE TALKING ABOUT. WHAT THE PRICE COULD HAVE BEEN, RIGHT, VERSUS WHAT IT IS, ASSUMING THAT IT WAS JUST A DECK AND MARKET SUPPLY PORTFOLIO. CHAIR TAYLOR IN THE PUB BROUGHT THIS UP, THAT THAT UP TO THE SAME THING. AND I JUST NEEDED CLARIFICATION BECAUSE IT DOES CONCERN ME AS FAR AS HOW, HOW WE CAN WITH CONFIDENCE, ASSUME THAT OUR RATES WOULD HAVE IN FACT, BEEN LOWER CONSIDERING HOW LOW OURS ARE COMPARATIVELY. AND THE REASON I JUST NEED CLARIFICATION IS BECAUSE I FEEL LIKE I HEARD A DIFFERENT ANSWER TODAY THAN WHAT I DID WHEN WATCHING THE PUB MEETING.

>> OKAY. >> WHAT I HEARD IN THE PUB MEETING WAS THAT DME RAN A LEAN ORGANIZATION, AND THAT WAS THE MAIN CONTRIBUTING FACTOR TO TO WHY OUR RATES WERE LOWER, BUT I.

SO I JUST NEED CLARIFICATION FROM YOUR PERSPECTIVE ON WHY YOU FEEL CONFIDENT THAT DESPITE THE FACT THAT OURS ARE ALREADY WHERE THEY ARE, THAT THEY WOULD EVEN GO LOWER? ASSUMPTION HERE IS THAT THAT WE WOULD NOT HAVE ANY PPAS. THAT'S NOT THE REALITY. I MEAN, WE'RE TIED INTO THESE PPAS FOR THE LONG HAUL, RIGHT? SO IT'S SO IT'S PURELY KIND OF A BACKWARD DATED LOOK, RIGHT. WE'RE LOOKING BACKWARDS AT, YOU KNOW, WE PAID THIS PRICE, WHAT WOULD HAVE BEEN THE KIND OF THE NEXT ALTERNATIVE, NEXT BEST ALTERNATIVE. AND SO IT'S, THAT'S WHY I MENTIONED IT'S A, IT'S AN OPPORTUNITY COST, RIGHT? THAT'S NOT THAT'S NOT ANY IMPLICATION THAT, THAT WE DON'T HAVE, YOU KNOW, AFFORDABLE RATES. I THINK WE HAVE VERY AFFORDABLE RATES. CERTAINLY WHEN I LOOK AT WHERE OTHER MOU S ARE, WHEN I LOOK AT WHAT WHAT'S AVAILABLE ON THE MARKET, CERTAINLY OUR RATE IS VERY COMPETITIVE. IS OUR RATE HIGHER TODAY THAN IT WAS JUST A FEW YEARS AGO? THE ANSWER IS YES, ABSOLUTELY. BUT AGAIN SO SO AGAIN, THIS IS A THIS IS AN ESTIMATE OF WHAT WE THINK IT WOULD HAVE BEEN. BUT THE REALITY IS, IS THAT WE WOULDN'T BE ABLE TO GET TO THAT NUMBER UNTIL THOSE PPAS EXPIRED.

>> OKAY. ALL RIGHT. THANK YOU. >> IF YOU COULD GO BACK TO THE NEXT TO THE LAST SLIDE OR WHERE YOU SHOW THE COST. I'M SORRY, YOU HAD A QUESTION. NO. GO AHEAD. I DIDN'T.

>> ASK YOU A QUESTION THERE. >> OH, OKAY. ALL RIGHT. WELL, ALL RIGHT.

>> LET'S SEE HERE. I'M SORRY. THE ONE THAT HAS THE COST BREAKDOWN, THE TWO TABLES ON TOP OF ONE ANOTHER, RIGHT? RIGHT THERE. SO I GUESS A LOT OF THIS DISCUSSION ORIGINATED FROM THE COMMENT BACK A YEAR AGO, ABOUT $5 MILLION. IF WE SOLD THE RECS, WE COULD HAVE $5 MILLION. AND THAT SORT OF SPURRED THE CONVERSATION OF, OKAY, WELL, IF WE'RE IF WE'VE GOT THIS KIND OF MONEY THAT WE'RE LEAVING ON THE TABLE, WHAT POTENTIALLY WHAT, WHAT ELSE IS GOING ON? BUT WHEN I HEAR WHAT YOU'RE SAYING ABOUT THE PPAS AND THAT WE CAN'T GET OUT OF THOSE PPAS. SO THE COST OF PPA IS AT $11.8 MILLION. YOU'RE SAYING THOSE ARE

EXTENDING OUT FIVE, SIX, EIGHT, TEN, 15 YEARS. >> 20, 38, 20, 44.

>> SO PERSONALLY, I DON'T EVEN KNOW IF THAT'S EVEN A LEGITIMATE COST TO BE INCLUDED

[02:50:03]

>> THAT'S THAT'S KIND OF A PURIST STANDPOINT. CERTAINLY, IF THE COUNCIL WOULD WANT US TO DO SOMETHING DIFFERENT WITH THOSE. CERTAINLY I THINK THAT'S AN OPTION.

>> BUT FROM FROM THIS COST ANALYSIS AND YOUR COMPUTATION DOWN HERE ON THE RESIDENTIAL BILL IMPACT, THAT'S THE ASSUMPTION THAT WAS MADE IS THAT THAT THAT COST, AND ACTUALLY IT'S THE NET COST OF $14 MILLION WOULD GO TO THE EC, A RATE WHICH IS ONLY 35% OF THE ENERGY COST OR THE ENERGY BILL, WHICH AMOUNTS TO WHAT YOU HAVE HERE.

>> CORRECT. AND WHEN MATT COMES UP HERE, HE'LL HE'LL KIND OF GO THROUGH SOME OPTIONS FOR YOU.

THAT INCLUDES WHAT IS THE IMPACT OF SELLING THOSE RECS IN THAT 3% KIND OF ANALYSIS OR

PROPOSAL THAT WE MADE? >> OKAY, SO YOU'RE ASKING DIRECTION FROM US NOW ON ON THAT SLIDE, THIS ONE HERE, OR IS IT IS THE DIRECTION GOING TO BE WITH THE NEXT PRESENTATION?

>> SO I THINK, I THINK BASED ON DIRECTION THAT YOU GIVE IN THE NEXT PRESENTATION, WE MAY HAVE TO COME BACK TO THIS PRESENTATION FOR DIRECTION ON THAT. AND THAT WAY YOU KIND OF

HAVE THE FULL CONTEXT. >> OKAY. SURE. SO WE'RE NOT WE'RE NOT GIVING DIRECTION ON

THIS UNTIL WE HEAR THE SECOND PRESENTATION. >> THAT'S CORRECT.

>> OKAY. ANY OTHER QUESTIONS? OH, I'M SORRY. I TRIED TO FORGET THAT YOU HAD A LOT OF

QUESTIONS. NO, I'M KIDDING. THAT'S ALL GOOD. >> THANK YOU. THANK YOU, MR. MAYOR. IF WE COULD JUMP BACK TO SLIDE 12, PLEASE. YES. THANK YOU. SO. AGAIN, NOTING RENEWABLE PPAS CARRY AROUND A GROSS COST OF OR EXCUSE ME, THE COST OF BEING AROUND 12 MILLION.

I WATCHED THE PUB MEETING ON THE 19TH. AND THE CONVERSATION BETWEEN THE BOARD AND YOU WAS THAT CURRENTLY PPAS ARE IN THE MONEY, RIGHT. THIS IS A PROFITABLE THING BECAUSE WE BOUGHT THESE POS AT A LOW RATE, AND WE'RE BEING ABLE TO SELL THEM AT HIGHER RATES. WHEN WE KNOW THAT TODAY'S FORWARD MARKET, CURRENTLY SOLAR IS $60 ON AVERAGE PER MEGAWATT PER HOUR AND GAS IS $80 MEGAWATT PER HOUR, RESPECTIVELY. SO IT FEELS A LITTLE DISINGENUOUS THAT WE'RE PRESENTING THESE ASSETS AS LIKE A FINANCIAL LIABILITY WHEN RIGHT NOW IT IS HEDGING A LOT. IT IS DOING A LOT OF THE WORK BECAUSE WE BOUGHT THESE SO EARLY AND BECAUSE IT'S EXTENDED THROUGH 38 2042, I THINK THAT THERE'S SOME CONFUSION THERE OR SOME LACK OF INFORMATION IN THIS SLIDE THAT I THINK NEEDS TO BE FURTHER CONTEXTUALIZED, I THINK BECAUSE EVEN IN THE EXAMPLE ON SLIDE 11, AUGUST 16TH, THE PUB STATED THAT WAS THE SECOND HIGHEST LOAD DAY. SO PRESENTING THAT AS LIKE A TYPICAL EXAMPLE AGAIN IS HARD WHEN WE KNOW THAT ERCOT CAN BE PRONE TO SCARCITY AND THAT IT CAN BE EXTREMELY VOLATILE, THESE PPAS BECAUSE THEY'RE LEGACY, RIGHT? THEY'RE OLDER AND THEY'RE LONG STANDING. IT HELPS SHIELD RATEPAYERS FROM THAT, THAT IMMENSE MARKET INSTABILITY SOMETIMES. AND I FEEL LIKE THAT IS A FINANCIAL HEDGE THAT IS DESIGNED CORRECTLY AND IT'S BEING UTILIZED IN THE WAY ■IT WAS INTENDED. I ALSO WOULD LIKE TO JUMP BACK TO SLIDE 11. I FEEL LIKE I WANT TO UNDERSTAND, SO WITH OUR CURRENT SUPPLY PORTFOLIO, DRP, YOU GAVE THE COST PER MEGAWATT PER HOUR IN THE DECK AND MARKET SUPPLY PORTFOLIO 48, 96 PER PER MEGAWATT PER HOUR. I UNDERSTAND LOOKING SEVEN YEARS BACK, THAT'S WHAT THAT COSTS. BUT I THINK I WONDER WHY THE $7 MILLION ANNUAL COST OF THE MORTGAGE FOR THE DECK IS NOT INCLUDED IN THIS, WHEN THE ANNUAL COST WOULD INCREASE BY $49 MILLION TO THE DECK AND MARKET SUPPLY PORTFOLIO, THUS PUTTING IT FAR ABOVE WHAT THE CURRENT SUPPLY PORTFOLIO IS. AND I THINK THAT COST DIFFERENTIAL WOULD SHOW THAT THE DECK AND MARKET SUPPLY PORTFOLIO WOULD BE A LARGER

[02:55:03]

AND COUNT, IN MY OPINION. THE LAST. >> COUNCIL MEMBER, IF I COULD APPRECIATE YOUR COMMENTS, I KNOW YOU SAID YOU HAD A LOT OF QUESTIONS, SO I JUST WANT TO

MAKE SURE THAT IF YOU HAVE A QUESTION, I DO. >> SORRY, THOSE ARE STATEMENTS.

YOU'RE RIGHT, I APPRECIATE THAT. SO A QUESTION I HAVE ON SLIDE 12, PEAK LOAD YOU SAID HAS BEEN WAS 432MW, WHICH IS OVER THE 402 OR 403. WHAT'S BEEN THE PEAK LOAD FOR LARGE LOAD. AND IS THAT INCLUDED IN THE 432 MEGAWATT. NO IT'S NOT. WHAT IS THE LARGE LOAD PEAK SO FAR?

>> YES. THE LARGE LOAD PEAK IS, YOU KNOW, A LITTLE BIT OVER 200MW, CERTAINLY NOT AT THE AT THE FULL BUILD OUT. THEY CONTINUE TO, TO, TO RAMP UP. BUT YES, THAT 408 FROM 2025 IS

JUST NATIVE LOAD FOR 32 THIS YEAR IS JUST NATIVE. >> LOAD, RIGHT. AND THE FOOL WOULD BE FOR 11 PROJECTED CURRENTLY 391 AND 20. IS THAT CORRECT. LARGE LOAD.

>> WELL IT WOULD BE RAMPED UP TO ROUGHLY 200 PLUS THE 432. SO YOU'RE TALKING ABOUT 632MW OF

PEAK LOAD OF ALL OF ALL SOURCES. >> SO SORRY. IF BUILT OUT AT FULL CAPACITY, LARGE LOAD WOULD BE 391. OKAY. THANK YOU. CAN YOU. SEE 200 MEANS THAT. CAN YOU GIVE ME AN ESTIMATION

AROUND WHAT THE 200 VERSUS THE 391 EQUATES TO IN DOLLARS? >> SO, SO CURRENTLY THE LOAD, THE LOAD THAT WE'RE SERVING, THE NATIVE LOAD KIND OF ON, ON AVERAGE IS COSTING US ABOUT $90 MILLION. I MEAN, THAT RANGE IS, AND CERTAINLY THERE'S YEARS THAT IT'S JUST LESS THAN THAT YEARS THAT THAT'S MUCH HIGHER THAN THAT. IF WE CONSIDER THIS, THIS DATA CENTER LOAD AT FULL BUILD OUT WILL BE NOT 1.8 MILLION LIKE THE NATIVE LOAD. IT WOULD ACTUALLY BE TWICE THAT AMOUNT. SO IT'D BE 3.6 MILLION, RIGHT. SO SO PURCHASE POWER COST FOR THAT WOULD BE SOMEWHERE IN THE 150 TO $200 MILLION RANGE. BUT THAT PURCHASE POWER COST IS ALL

OBLIGATED TO THAT DATA CENTER. >> AND THEN WITH LARGE LOAD, HOW LONG HAVE THEY BEEN PAYING

INTO THE ECA? HOW MANY YEARS HAS THAT BEEN? >> REALLY THAT REALLY JUST STARTED. AND AND JUST TO BE CLEAR, WE HAVE A SEPARATE LARGE LOAD ECA CORRECT. THAT'S SEPARATE FROM THE NATIVE LOAD. CORRECT. BECAUSE WE'RE MANAGING THOSE SEPARATELY. CORRECT. AND SO, SO THEY HAVE BEEN PAYING THAT SINCE THE BEGINNING OF, OF THE CURRENT PPA. BECAUSE OF THE WAY THAT WE'RE MANAGING THAT LOAD, WE'RE NO LONGER MANAGING THAT LOAD AS A VARIABLE LOAD

[03:00:04]

FROM THEM TO PAY FOR THE COST THAT WE'VE INCURRED. >> SURE. I UNDERSTAND I WAS

ASKING WHAT YEAR DID THAT START? >> OH, WHAT YEAR THAT START? IT STARTED IN 2024. ACTUALLY, I THINK WE ESTABLISHED THE LARGE LOADS IN 2025. I JUST CAN'T REMEMBER THE DATE ON THAT.

COUNCIL MEMBER. >> OKAY, LAST QUESTION. I AM WONDERING. WHY MAYBE WE DIDN'T THINK TO INCLUDE IN THE CONTRACT WITH DATA CENTERS SPECIFICALLY BECAUSE OF THE LARGE LOAD WRITING INTO THAT CONTRACT THAT THEY'RE RESPONSIBLE FOR BUYING AND SURRENDERING THEIR RECS, RATHER THAN US BUYING THEM ON THEIR BEHALF, ON THEIR UTILIZATION,

ON THE GRID. >> SO, SO THE RECS THAT WE PURCHASE ON THEIR BEHALF, WE RECOVER THAT COST THROUGH THE E, C A THAT THEY PAY. SO THEY DO PAY FOR 100% OF THE RECS.

>> 100% OF THAT IS COVERED IN THAT SIX POINT SOMETHING PERCENT ECA YES. COUNCIL MEMBER.

OKAY, I JUST WANTED TO MAKE SURE. THANKS. >> OKAY. ANY OTHER QUESTIONS?

>> OKAY, I'LL PASS IT ON. >> YEAH, LET'S JUST TAKE 5 OR WEO THIS MEETING OF THE DENTON CITY COUNCIL. ON OCTOBER THE 27TH IT IS 4:23 P.M. WE'RE CONTINUING ON WITH OUR WORK SESSION REPORT ON AGENDA ITEM C. SO WE'RE INTO THE SECOND HALF OF THE PRESENTATION, I PRESUME? YES. OKAY.

>> GREAT. MAYOR. MEMBERS OF COUNCIL. MATT HAMILTON, CHIEF FINANCIAL OFFICER HERE THIS AFTERNOON TO TALK ABOUT FUND BALANCE AND SOME RATE OPTIONS AVAILABLE TO THE COUNCIL FOR CONSIDERATION. SO I JUST WANT TO PROVIDE A LITTLE BIT OF BACKGROUND. IN SEPTEMBER, CITY COUNCIL HAD REQUESTED THIS DISCUSSION ON THE FUND BALANCE PRIOR TO DECIDING ON RATE INCREASES. AND TODAY'S PRESENTATION WILL FOCUS ON FUND BALANCE AS WELL AS OPTIONS FOR RATE AFFORDABILITY. I ALSO WANTED TO MENTION THAT EARLIER THIS YEAR, PRIOR TO THE CHANGE IN COUNCIL, COUNCIL HAD PROVIDED DIRECTION TO MOVE FORWARD WITH AN INITIATIVE TO DEVELOP A COMPREHENSIVE FINANCIAL POLICY. AND SO WHAT THIS INITIATIVE WOULD DO IS JUST PROVIDE A UNIFIED FINANCIAL FRAMEWORK THAT WOULD ALIGN FINANCIAL PLANNING RESERVES, CAPITAL REINVESTMENT RATE, SETTING PRACTICES WITH SOME OF THE INDUSTRY BEST PRACTICES THAT WE SEE FROM THE VARIOUS NATIONAL ASSOCIATIONS. AND SO THIS CONVERSATION TODAY KIND OF PLAYS INTO THAT. I THINK IT'S A GOOD CONVERSATION, A PRECURSOR TO THE THE PRESENTATION THAT WILL BE BROUGHT FORWARD IN MARCH OF 2027 AROUND THIS COMPREHENSIVE FINANCIAL POLICY. BUT I THINK THAT THAT POLICY WILL ULTIMATELY SET THE FOUNDATION FOR PREDICTABLE INCREMENTAL RATE ADJUSTMENTS AND SOME STRUCTURED BENCHMARKING AS WE START TALKING ABOUT RATES AND FUND BALANCES AND THINGS GOING FORWARD, BECAUSE THEY'RE ALL INTERRELATED CONVERSATIONS. SO JUST TO START, WHAT IS A FUND BALANCE? AND I WANTED TO TO START HERE BECAUSE I THINK THERE'S PROBABLY A LOT OF INDIVIDUALS OUTSIDE OF FINANCE.

WHEN YOU START TALKING ABOUT FUND BALANCE, THE ASSUMPTION IS THAT IT'S A SAVINGS ACCOUNT AND THAT EVERYTHING IN THAT SAVINGS ACCOUNT IS CASH. AND SO THE CITY CALCULATES A FUND BALANCE FOR EACH FUND WITHIN THE CITY AND THE FUND BALANCE WITHIN THE CITY. WHEN WE TALK ABOUT FUND BALANCE IS WHAT'S CALLED THE NET WORKING CAPITAL OF THE FUND. AND NET WORKING CAPITAL IS CURRENT ASSETS MINUS CURRENT LIABILITIES. AND CURRENT ARE THOSE ASSETS OR LIABILITIES THAT ARE EXPECTED TO BE RECEIVED OR PAID WITHIN THE NEXT 12 MONTHS. SO THE FUND BALANCE IS REALLY A MEASUREMENT OF THAT FUND. AND THE AND THE CITY AS A WHOLE, THE SHORT TERM FINANCIAL POSITION AND THE ABILITY TO MEET THOSE NEAR-TERM OBLIGATIONS. SO JUST TO PROVIDE A COUPLE OF EXAMPLES OF SHORT TERM ASSETS AND LIABILITIES ON THE ASSET SIDE, WE HAVE CASH AND INVESTMENTS, BILLING RECEIVABLES, PREPAID EXPENSES, AS WELL AS INTERFUND RECEIVABLES. SO IN A FUND LIKE DME AND AND THE OTHER UTILITY FUNDS, THERE'S QUITE A FEW

[03:05:01]

>> MACK. I HAVE A QUESTION. JUST SURE. HELP ME UNDERSTAND SOMETHING. IF WE GO BACK TO THAT FIRST SLIDE. SO WHEN I READ, IS THAT THE ONE WHERE IT TALKS ABOUT THAT ONE? YEAH. SO WHEN I SEE THAT AND I SEE THAT THERE'S PENDING PAYROLL, THERE'S PENDING ACCOUNTS PAYABLE, THERE'S CUSTOMER DEPOSITS, SHORT TERM DEBT, AND THEN WE GOT CASH INVESTMENTS.

BUT I HOW ARE THOSE NOT INCLUDED IN THE ACTUAL BUDGET? I MEAN, WHEN I HEAR PENDING PAYROLL, I MEAN, SO I'VE GOT TO BE HONEST WITH YOU. THIS IS THIS IS A VERY DIFFERENT CONCEPT BECAUSE I THINK PROBABLY MOST PEOPLE HERE WOULD THINK, OKAY, WE'VE GOT ENOUGH CASH OR CDS OR T-BILLS OR WHATEVER INSTRUMENT YOU WANT TO USE THAT REPRESENTS THAT AMOUNT OF MONEY. BECAUSE NOW USING THIS FORMULA, IF THERE'S A FUND BALANCE OF $50 MILLION, WELL THEN TO ME THAT'S GOING TO SAY WE MAY HAVE MORE CASH AND MORE INVESTMENTS THAN 50 MILLION, BUT WHEN YOU OFFSET IT WITH THESE QUOTE UNQUOTE, SHORT TERM LIABILITIES, THAT'S THE NET

EFFECT. HOW IS THIS NOT THE BUDGET? I MEAN. >> YEAH, SO. SO THE BUDGET REALLY WHAT IT'S LOOKING AT IS IT'S LOOKING AT REVENUES AND EXPENSES. IT'S ALMOST LIKE AN INCOME STATEMENT FOR THE FUND, RIGHT. THE FUND BALANCE IN THE AND THE NET WORKING CAPITAL IS REALLY A REFLECTION OF THE BALANCE SHEET AND THE NET AMOUNT ON THAT SIDE. SO IT IS KIND OF TAKING ONE FINANCIAL ASPECT, RIGHT AND INCORPORATING IT INTO ANOTHER. BUT IT WHAT THE WHAT THE NET WORKING CAPITAL DOES IS IT REALLY SHOWS YOU KIND OF THAT TRUE POSITION THAT YOU HAVE. NOW, THE BUDGET'S GOING TO BE TOTALLY SEPARATE. AND WE DO ANTICIPATE WHEN WE ADOPT THE BUDGET, THAT, YES, WE'LL COLLECT 100% OF THOSE REVENUES, AND WE'RE GOING TO EXPEND 100% OF THOSE EXPENSES. AND THEN THAT WOULD BE OUR NET, WHATEVER THAT IS.

AND THEN WE WOULD TAKE THAT AND EITHER ADD IT TO OR SUBTRACT IT FROM THAT NET FUND BALANCE THE THE WORKING CAPITAL. NOW BETWEEN THE START OF THE FISCAL YEAR AND THE END OF THE FISCAL YEAR, THERE'S GOING TO BE FLUCTUATIONS IN IN THE ACTUAL CASH THAT'S GOING OUT THE DOOR.

[03:10:01]

STANDS. DOES THAT HELP? >> IT DOES. BUT WHAT I'M HEARING YOU SAY IS WHATEVER WE SEE AS FUND BALANCE, WHETHER IT'S THE GENERAL FUND, WHETHER IT'S UTILITIES. YES. THAT DOESN'T REPRESENT WE HAVE THAT KIND OF CASH TO IF WE RUN INTO A SITUATION, WE CAN DO THAT BECAUSE WHAT I'M HEARING IS YOU GOT YOUR BUDGET OVER HERE, AND THEN YOU HAVE THESE THINGS OPERATING IN THE BACKGROUND OF THE SHORT TERM ASSETS, CASH INVESTMENTS, INTEREST BEING ACCRUED, AP CUSTOMER DEPOSITS FROM. SO, YES, OKAY. I THINK IT'S IMPORTANT TO UNDERSTAND THAT WHEN WE'RE TALKING FUND BALANCE NOW, IT DOESN'T MEAN THAT REPRESENTS CASH OR THE

CASH EQUIVALENT. >> THAT'S CORRECT. >> OKAY.

>> YES. YEP. AND I HAVE A SLIDE COMING UP HERE THAT WE'LL GET INTO A LITTLE BIT OF THAT AS WELL. SO WHAT LEVEL OF FUND BALANCE IS NEEDED? THERE'S SEVERAL FACTORS CONSIDERED WHEN EVALUATING A SUFFICIENT FUND BALANCE LEVEL SEASONALITY OF CASH FLOWS, HISTORICAL EMERGENCIES BOTH MAJOR AND MINOR, THE CONDITION OF ASSETS AS WELL AS BOND RATINGS. AND SO THE GOVERNMENT FINANCE OFFICERS ASSOCIATION, GFOA RECOMMENDS A MINIMUM OPERATING RESERVE OF 90 DAYS, WHICH WOULD BE 25% OF BUDGET EXPENDITURES UP TO 180 DAYS, WHICH WOULD BE 50% OR MORE OF OPERATING EXPENDITURES, GFOA NOTES. AND THIS IS TRUE THAT THE USE OF FUND BALANCE SHOULD BE LIMITED TO ONE TIME EXPENSES, RATHER THAN APPLIED TO RECURRING EXPENSES, AND THE UTILITIES IS SELF-SUPPORTING. ENTERPRISE GENERALLY HAVE A HIGHER RESERVE GIVEN THE EXPENSE OF INFRASTRUCTURE AND CRITICAL SERVICES PROVIDED. GENERALLY, UTILITIES ARE NOT SUBSIDIZED BY GENERAL FUND OR OTHER FUNDS, AND SO IT'S THAT MUCH MORE IMPORTANT TO ENSURE THAT THE UTILITIES HAVE AN ADEQUATE RESERVE. SO THE CURRENT FUND BALANCE POLICY, THE CITY COUNCIL ADOPTED THE CURRENT POLICY IN SEPTEMBER 2021 FOLLOWING WINTER STORM URI.

AT THE TIME OF THE CHANGE, THE INCREASE WAS TO A RANGE OF 100 MILLION, WHICH EQUATES TO 46% OF BUDGETED EXPENDITURES TO 150 MILLION, WHICH IS 69% OF BUDGETED EXPENDITURES. THE WORKING CAPITAL REQUIREMENT OF THE FUND BALANCE POLICY WAS AN 8% MINIMUM. SO 30 DAYS IS KIND OF THE BASELINE. AND THEN IN ADDITION TO THAT 8%, HAVING A WORKING CAPITAL RESERVE OF 38% TO 61% OF BUDGETED EXPENDITURES. SO WHEN YOU TAKE THOSE TWO PERCENTAGES AND COMBINE THEM TOGETHER, THE TOTAL FUND BALANCE REQUIREMENT, AND THIS IS, I SHOULD NOTE, IS SPECIFIC TO THE ELECTRIC FUND. ME, THE MINIMUM WOULD BE 46%, WHICH EQUATES TO 165 DAYS OF RESERVE,

UP TO A MAXIMUM OF 69%, OR 248 DAYS OF RESERVE. SO YEAH. >> I'M SORRY, BUT THIS I MEAN, I UNDERSTAND THE CONCEPT, BUT I THINK IT'S REALLY IMPORTANT TO MAKE SURE THE COMMUNITY UNDERSTANDS THIS BECAUSE. SO WHEN I READ HERE AT THE TIME OF POLICY CHANGE, THE INCREASE WAS TO A RANGE OF 100 MILLION TO 150 MILLION. NOW YOU JUST SHOWED WHAT THE COMPONENTS OF THE FUND BALANCE ARE, GOT YOUR ASSETS AND YOUR LIABILITIES. WELL, SO THAT DOESN'T MEAN THAT YOU'RE GOING TO HAVE AN EXTRA $50 MILLION IN CASH OR DOES IT? BUT, AND, AND JUST EVEN THE LANGUAGE WORKING CAPITAL, THAT TO ME IS YOU CAN WRITE A CHECK ON THIS. THIS IS YOUR CAPITAL THAT YOU CAN EXPEND FOR. SO, SO RIGHT NOW, LET'S SAY IN THE FUND BALANCE OF THE UTILITIES, ELECTRICITY, ELECTRIC FUND BALANCE, HOW MUCH OF THAT IS WHAT IS THE FUND BALANCE STATED IN THE BUDGET, OR MAY BE WHAT IT'S GOING TO BE SOON TO BE? HOW MUCH OF THAT IS TRULY CASH OR CASH EQUIVALENTS, UNLESS YOU'VE GOT IT ON A DIFFERENT SLIDE?

>> I HAVE IT ON A. >> DIFFERENT WEIGHT. OKAY. YEAH, I'VE SLEPT SINCE THEN AND HAD SOME OTHER ISSUES COME UP. SO I, YOU KNOW, OKAY, THAT'S FINE. YES. YEAH.

>> MATT, I JUST WANT TO CLARIFY SOMETHING FOR ANYBODY WATCHING. SO THE 100 TO 150 MILLION THAT WAS ORIGINALLY TARGETED AT GENERALLY HOW MUCH DEBT WE TOOK OUT FOR WINTER STORM URI OR TRYING TO HAVE SOME MORE CASH ON HAND FOR THAT TYPE OF THING. RIGHT. WE WERE WE WERE

TARGETING A DOLLAR AMOUNT IS REALLY WHAT I'M TRYING TO SAY. >> WELL, SO WHAT HAPPENED IS STAFF IN CONJUNCTION WITH OUR INVESTMENT ADVISOR DID AN ANALYSIS TO LOOK AT WHAT SHOULD

[03:15:05]

NOT BE A FIXED $2,021 FIGURE. RIGHT. >> SO THAT'S, THAT MAKES SENSE.

AND THE LAST THING I WANTED TO JUST STATE FOR ANYBODY WATCHING IS THAT, OH, MY BRAIN JUST WENT BLANK. THIS WAS BEFORE WE HAD LARGE LOADS LIKE DATA CENTERS. WE MADE THIS POLICY. WE HAVEN'T MESSED WITH THIS POLICY SINCE THEN. NOT IN A LARGE WAY. RIGHT? YES. AND THEN LARGE LOADS ARE LOWER RISK THAN THE NATIVE LOAD WHEN IT COMES TO RESERVE. HOW MUCH WE NEED TO RESERVE.

>> CORRECT. AND AND SOME OF THE THINGS THAT THAT YOU HAD JUST BROUGHT UP, THE FACT THAT WE DID NOT HAVE LARGE LOAD AT THE TIME, THOSE FACTORS ARE BEING CONSIDERED IN THAT COMPREHENSIVE FINANCIAL POLICY WORK TO DETERMINE, YOU KNOW, GIVEN THE CIRCUMSTANCES. NOW, WHAT SHOULD THE FUND BALANCE POLICY BE? THANK YOU. AND THEN JUST A NOTE, I GUESS AT THE BOTTOM OF THE SLIDE, IF THE OPERATING RESERVE FALLS BELOW THE MINIMUM RANGE, THE POLICY DICTATES THAT THE CITY WILL IMPLEMENT NECESSARY CORRECTIVE ACTION WITH A FIVE YEAR PLAN TO RESTORE THE RESERVE BALANCES. AND ALSO, JUST TO NOTE THAT THE BALANCES ARE CONSIDERED LONG TERM LIABILITIES AND ARE NOT INCLUDED IN THE WORKING CAPITAL CALCULATION. SO THAT IS A SEPARATE RESERVE. SO TAKING A LOOK AT THE FUND BALANCE DURING THE BUDGET PROCESS, THE YEAR END FUND BALANCE FOR DME WAS ESTIMATED AT ABOUT $146 MILLION. THE CURRENT ESTIMATED FUND BALANCE IS ABOUT 154 MILLION. I WILL NOTE THAT THAT IS VERY PRELIMINARY. THERE'S STILL ENTRIES THAT NEED TO BE MADE, AND SO THAT NUMBER IS VERY LIKELY TO CHANGE. BUT TAKING THAT ESTIMATE OF 154 MILLION, WHAT THAT WOULD REPRESENT IN TERMS OF ACTUAL 2026 EXPENSES IS 49.4%, WHICH EQUATES TO 168 DAYS. HOWEVER, COMPARING THAT TO BUDGETED EXPENDITURES, IT WOULD EQUATE TO 31.7% OR 115 DAYS. AND SO THIS IS PART OF OUR REVIEW AS WELL, IS THAT THE CURRENT POLICY IS BASED ON BUDGETED EXPENDITURES. BUT IT'S IMPORTANT TO NOTE THAT LOOKING HISTORICALLY, WHEN YOU COMPARE ACTUALS TO ACTUALS THAT WE HAVE BEEN WITHIN POLICY WITH THE EXCEPTION OF FISCAL YEAR 2023. SO WITHIN THE POLICY, THAT IS SOMETHING THAT STAFF IS LIKELY TO TO RECOMMEND WHEN WE BRING OUR REVIEW BACK, IS TO CLARIFY THE LANGUAGE ON WHAT WE'RE COMPARING TO. BECAUSE IN THE BUDGET PROCESS, OBVIOUSLY WE'RE LOOKING FORWARD. BUT AS WE LOOK AT, YOU KNOW, WHERE WE ACTUALLY ENDED AND HISTORICALLY, ARE WE COMPARING TO ACTUALS? ARE WE COMPARING TO THE BUDGET AS WELL? SO PURSUANT TO THE POLICY IN THE 2027 BUDGET, THE AND THE FINANCIAL PERFORMA, WE DID PROVIDE THAT THE FUND BALANCE WOULD BE IN COMPLIANCE BY 2031, WHICH IS WITHIN THE FIVE YEARS. AND THEN TO THE ON THE RIGHT HAND OF THE SLIDE HERE, JUST PROVIDED THE HISTORICAL FUND BALANCE OF DME FROM 2019 TO 2026. AND YOU CAN SEE THAT IT

[03:20:04]

AND WITHOUT THOSE BASE RATE INCREASES, THE FINANCIAL PROFILE OF THE UTILITY SYSTEM WOULD BE WOULD BE PRESSURED. AND THEN PARTICULARLY ADDITIONALLY, IF WE WERE TO REDUCE THE FUND BALANCES AND LIQUIDITY OF EACH FUND. SO DOWNGRADE IMPLICATIONS IF IF WE WERE TO BE DOWNGRADED, IT WOULD INCREASE THE LONG TERM COST OF BORROWING. THERE'S ALSO COLLATERAL LEVELS WITH COUNTERPARTIES THAT ARE BASED ON CREDIT RATINGS. SO IF OUR CREDIT RATING GOES DOWN, IT JUST MEANS THAT WE NEED TO PUT UP MORE CASH POTENTIALLY WITH COUNTERPARTIES, AND THEN ALSO IMPACTING OUR ABILITY TO SECURE OTHER FUNDING. AND JUST TO NOTE THAT DME IS ONE OF THREE UTILITIES AS PART OF THIS COMBINED UTILITY SYSTEM. WHEN WE ISSUE DEBT, THE OTHER TWO BEING WATER AND WASTEWATER. THAT DME FUND BALANCE IS AN IMPORTANT COMPONENT OF THE COMBINED UTILITY SYSTEM. AND SO WHEN THE UTILITY SYSTEM IS

[03:25:03]

JUST SOMETHING TO, TO BE AWARE OF. OH, I'M SORRY. >> WHAT IS THE TERM

COUNTERPARTIES MEAN? USE THIS WAY. >> YEAH. SO ANY, ANY THIRD PARTY THAT DME IS PURCHASING POWER OR ENTERS INTO AN AGREEMENT WITH A POTENTIALLY WOULD REQUIRE A CERTAIN CASH LEVEL BASED ON OUR CREDIT RATING.

>> CAN YOU GIVE AN EXAMPLE OF THAT? >> I'LL HAVE TONY.

>> I'M SORRY. >> YEP. >> SO TONY THE GENERAL MANAGER.

SO FOR EXAMPLE, IF WE ENTER INTO A PHYSICAL TRANSACTION FOR 50MW OF POWER TWO YEARS FROM NOW, WHICH WE BUY POWER A YEAR, TWO, THREE YEARS IN ADVANCE, RIGHT? SO THAT POWER THAT WE'VE BOUGHT WITH THAT COUNTERPARTY GETS MARKED TO MARKET EVERY SINGLE DAY, EVERY SINGLE MONTH.

AND SO DEPENDING ON WHERE THE VALUE OF THAT POWER THAT WE LOCKED IN IS TODAY MAY REQUIRE US TO PUT IN ADDITIONAL COLLATERAL. SAME THING THE COUNTERPARTY, IF IT GOES THE OTHER WAY, THE COUNTERPARTY MAY HAVE TO PUT CASH COLLATERAL WITH US. SO SO IT'S JUST A VALUATION. AND THEN THAT GETS ALL SETTLED UP. WHEN WHEN THAT WHEN THAT POWER IS DELIVERED OR WHEN THAT FINANCIAL TRANSACTION EXPIRED. BUT, BUT IN BETWEEN THERE, THERE IS THAT FAIR MARKET VALUATION OR MARK TO MARKET VALUATION THAT HAPPENS. AND THAT'S JUST THE NATURE OF,

OF THAT HEDGING TRANSACTION. >> OKAY. OKAY. THANK YOU. >> OKAY. SO THAT BRINGS US TO TALKING ABOUT RATES. AND WE DID WANT TO PROVIDE A COUPLE OF, OF OPTIONS. SO JUST AS WE KIND OF THOUGHT ABOUT RATE AFFORDABILITY AND, YOU KNOW, THE, THE CONVERSATION WITH THE, WITH THE RECS AND THE FUND BALANCE AND WHAT WE COULD POTENTIALLY DO TO MITIGATE A RATE INCREASE. SO CURRENTLY, THE TOTAL BILL ON AN AVERAGE RESIDENTIAL CUSTOMER OF 1000 KILOWATT HOURS IS $135.36, WHICH EQUATES TO A TOTAL KILOWATT HOUR RATE OF 13.5 CENTS. SO UNDER THE ORIGINAL 3% BASE RATE INCREASE, WHICH IS THAT NEXT COLUMN TO THE RIGHT, THE FIXED RATE WOULD GO FROM $8.80 TO $9.06. AND THEN THE USAGE CHARGE WOULD ALSO INCREASE 3% TO $66.70. AND I KNOW THAT THIS WAS BROUGHT UP IN PREVIOUS PRESENTATIONS, THE $8.80 TO THE $9.06 IS A 3% INCREASE. WHEN YOU LOOK DOWN AT THE TOTAL MONTHLY BILL, THE $135.36 TO THE $137.56, THAT'S A 1.62% TOTAL BILL INCREASE. AND I KNOW EARLIER IN THE PRESENTATION, AS TONY TALKED ABOUT, THAT THE BASE RATE. IS ONLY 55% OF THE TOTAL BILL, THE E, CA30 5% AND THE TCRF 10%. AND SO THAT'S WHY THAT TOTAL BILL, WHEN WE LOOK AT THAT, THE PERCENTAGE ISN'T A 3% INCREASE. IT'S IT'S ACTUALLY LESS THAN THAT BECAUSE THE FIXED PORTION OR THE BASE RATE PORTION ONLY ACCOUNTS FOR 55%. SO JUST WANTED TO PROVIDE A COMPARISON TO, FROM WHERE WE CURRENTLY ARE TO WHAT A 3% BASE RATE INCREASE WOULD LOOK LIKE. AND SO WHAT, WHAT WE TRIED TO LOOK AT WAS, YOU KNOW, WHAT COULD WE DO TO KEEP THE TOTAL BILL THE SAME? AND SO WHAT WE DETERMINED WAS KEEPING THE 3% RATE INCREASE, BUT LOWERING THE ECA, WE ALSO INCREASED THE TCF FOR A TOTAL NET BILL. THAT WOULD REMAIN THE SAME. THE REASON FOR THAT IS THAT THE ECA WHEN WE LOOK AT THE ECA BALANCE CURRENTLY IT IS OVER COLLECTED AND SO THERE IS ROOM TO LOWER THAT. AND THEN THE T CRF. WE ARE ACTUALLY UNDER COLLECTING ON ON OUR TRANSMISSION COST RECOVERY. SO INCREASING THAT THAT WOULD LIKELY NEED TO BE INCREASED

[03:30:01]

NOW THE THIRD OPTION WOULD BE, YOU KNOW, ANY DIRECTION THAT THE COUNCIL WOULD LIKE TO PROVIDE IN TERMS OF SELLING THE RACKS AND PUTTING THOSE PROCEEDS TOWARD THE ECA, THE BILL IMPACT IS ABOUT $0.80 PER MONTH, WHICH WOULD BE A REDUCTION IN THE EAC OF ABOUT 2%. THE TOTAL KILOWATT HOUR RATE WOULD DROP TO 0.134. AND SO JUST KIND OF BASED ON THAT LIMITED IMPACT OF, OF SELLING THE RACKS, WE FELT LIKE OPTION TWO WOULD BE SOMETHING THAT THE COUNCIL MAY BE MORE INTERESTED IN, BUT OPEN TO ANY DIRECTION THAT THE COUNCIL WOULD LIKE TO

PROVIDE ON, ON THE RATES. >> MATT, HOW SUSTAINABLE DO YOU THINK THAT IS ON THE ADJUSTING THE ECA DOWN LIKE COULD WE KEEP KEEP IT AT THAT? WELL, NOT AT THAT RATE. CLEARLY IT'S GOING TO HAVE TO GO UP AT SOME POINT BECAUSE THINGS ARE GOING TO COST MORE. BUT YEAH, YOU GET

WHAT I'M SAYING. >> YEAH. SO WHEN WE WHEN WE DO THE ANALYSIS, I THINK THAT WE'RE CAREFUL NOT TO TRY AND ADJUST IT TOO FAR IN EITHER DIRECTION TO, TO MEET THE TARGET. I DO THINK THAT WE RECOGNIZE AT THIS POINT THAT WE ARE OVER COLLECTED, THAT THERE IS AN OPPORTUNITY TO LOWER THAT RATE AND PROVIDE SOME SOME RELIEF ON THE ECA RATE.

CONVERSELY, ON TCRF, WE KNOW THAT WE'RE UNDER COLLECTING IN THAT THAT RATE NEEDS TO INCREASE A LITTLE BIT. SO TO ANSWER YOUR QUESTION, WE WOULD NOT BE. IT IS SUSTAINABLE AT SOME POINT. WE. I MEAN, WE WOULD LOOK TO EITHER INCREASE OR DECREASE THAT THAT RATE.

AGAIN, IT'S CONSTANTLY BEING REVIEWED. SO I DO THINK AT THIS POINT, THOUGH, THERE IS AN

OPPORTUNITY TO LOWER IT. >> ALL RIGHT. THANKS. I'LL LET OTHERS ASK QUESTIONS FIRST.

THANKS, MATT. YEAH. >> YOU MENTIONED SOME A LITTLE BIT OF AN EXPLANATION FOR OPTION TWO'S INCREASE TO THE TCRF. THE TRANSMISSION RECOVERY COST. WE JUST HEARD THAT LARGE LOAD IS ABOUT 200MW PER HOUR. AND WE HEAR WE HAVE THE PEAK OF NATIVE AT 432. SO KNOWING THAT THEY'RE GOING TO SCALE UP I'M WONDERING. DO WE FEEL LIKE THAT'S GOING TO CONTINUE TO PUT MORE STRAIN? THE MORE IT RAMPS UP, THE MORE WE'RE GOING TO NEED TO INCREASE THE TCRF. DOES

THAT MAKE SENSE? >> YEAH. >> I'LL HAVE TO THINK ABOUT.

>> AGAIN. TONY GENERAL MANAGER, COUNCIL MEMBER SO JUST LIKE THE LARGE LOAD ECA, WHAT WE WOULD ENVISION IS THAT WE WOULD HAVE A SEPARATE LARGE LOAD TCR. SO AT FULL BUILD OUT THAT LARGE LOAD WILL INCUR AS MUCH OF THE TOTAL NATIVE LOAD COST AS, AS IT DOES TODAY. RIGHT. AND SO, SO WE WOULD ESTABLISH THAT LARGE LOAD TCR F RATE TO PASS THOSE COSTS ON TO JUST THAT LARGE LOAD. AND WE WOULD HAVE A SEPARATE TCR F FOR NATIVE LOAD. CURRENTLY THE IMPACT WHICH WAS BASED ON THEIR ACTIVITY IN 2025 AMOUNTED TO ABOUT $13,000. AND WE BUILD THEM FOR THAT. THAT'S GOING TO CONTINUE TO RAMP UP. AND AGAIN, WE WOULD ANTICIPATE BRINGING FORWARD TO COUNCIL APPROVAL TO ADOPT THAT LARGE LOAD TCR F. THAT WAY, THEY'RE RESPONSIBLE FOR THEIR OWN IMPACT TO THE TRANSMISSION GRIDS, AND THERE IS NO BLENDING WITH OUR NATIVE LOAD.

>> OKAY. UNDERSTOOD. THANK YOU. MY NEXT QUESTION IS IN TERMS OF FUND BALANCE AND HOW IT CURRENTLY EXISTS, AM I CORRECT THAT OUR NATIVE LOAD IS CURRENTLY FUNDING THE RESERVE THROUGH AN 8% OPERATIONAL REQUIREMENT? RIGHT? 8% THAT WORKING CAPITAL. WHAT'S THE WORD THAT YOU USED? YEAH, 8% OF BUDGETED EXPENDITURES WORKING CAPITAL COMES FROM BASE RATE

NATIVE LOAD. >> THE THE 8%. ENCOMPASSES ALL WORKING CAPITAL. SO IT WOULD

YES, THAT WOULD BE A COMPONENT OF IT. >> BUT THE BASE RATE IS WHAT IS

FUNDING THE FUND BALANCE. >> YES. >> OKAY. THANKS. SORRY FOR THE CONFUSING QUESTION, BUT I WANTED TO MAKE SURE I UNDERSTOOD.

>> IT'S NOT JUST NATIVE LOAD. IT WOULD BE ALL YES, THE LOAD. >> IT WOULD BE ALL.

>> YEAH. >> SO CURRENTLY BASE RATE OF BOTH NATIVE AND LARGE ARE GOING

[03:35:04]

INTO FUND. >> BALANCE BECAUSE THE 8% IS BASED ON THE BUDGET. THE BUDGET

INCLUDES EVERYTHING RIGHT? >> ROI, FRANCHISE FEES. OKAY. >> IT WOULD IT WOULD BE ALL YEAH. ALL REVENUES, WITH THE EXCEPTION OF THE E, C, A AND TCR.

>> OKAY. SO IF WE THINK OF NATIVE LOAD AND LARGE LOAD AS, AS DIFFERENT BUCKETS OF FUNDING, RIGHT? BECAUSE WE HAVE THOSE SEPARATED ALREADY, WE DON'T HAVE T, C, R F, BUT THEY DO PAY INTO IT, BUT WE ACTUALLY HAVE SEPARATE BUCKETS FOR THE ECA, THE ENERGY COST ADJUSTMENTS.

I'M WONDERING, IS THERE ANY LIKE LEGAL OR REGULATORY BARRIER TO US CHANGING HOW WE FUND THE FUND BALANCE? IF WE WERE TO PUT A PAUSE ON IF WE WERE TO REMOVE BASE RATE, BEING THE MAIN CONTRIBUTOR AND INSTEAD UTILIZING ECA, IS THAT A POSSIBILITY?

>> I DON'T THINK STAFF WOULD RECOMMEND BECAUSE THE ECA IS THE MORE VOLATILE OF THE TWO THE BASE RATE IS, THE MORE STEADY. AND THAT'S WHAT YOU'RE TRYING TO. THAT'S WHY YOU'RE

USING IT AS YOUR RESERVE BALANCE. >> I HEAR THAT I APPRECIATE THE ANSWER. I GUESS MY CONCERN IS FOR WHAT A CENTURY NATIVE LOAD HAS BEEN PAYING INTO THE ECA HAS BEEN FUNDING THE MAJORITY OF INFRASTRUCTURE COSTS, NEEDS WORKING CAPITAL. AND WE JUST HEARD THAT ONLY A YEAR AGO HAS THIS LARGE LOAD WHICH IS CONTRIBUTING CURRENTLY, LIKE ALMOST HALF OF THE ENERGY NEED IN COMPARISON TO NATIVE 432 MAX OF NATIVE, CURRENTLY 200 FOR LARGE LOAD. SO THEY'RE ABOUT HALF RIGHT NOW OF WHERE WE ARE, BUT THEY'VE ONLY BEEN CONTRIBUTING FOR LESS THAN A YEAR. IS THERE A WAY TO MAKE IT MORE EQUITABLE WHERE THE ECA CAN BE ADJUSTED HIGHER FOR LARGE LOAD AND PUTTING A PAUSE ON NATIVE LOAD AND LETTING THEM CATCH UP SOME OF THE RESERVE ON THEIR OWN TO SHORE UP WHAT WE'VE BEEN DOING FOR 100 YEARS.

DOES THAT MAKE SENSE? DOES THAT QUESTION MAKE SENSE? >> YEAH, I WOULD JUST SAY THAT I MEAN, MY MY CONCERN WOULD WOULD JUST BE THAT THE, THE INTENT OF THE ECA, YOU KNOW, IT'S, IT'S A RATE TO RECOVER THE, THE NET COST OF POWER, NOT THE OPERATING EXPENSES ASSOCIATED WITH, WITH THE UTILITY. AND SO THERE IS A, I THINK A BIG DIFFERENTIATION BETWEEN THE TWO. SO IT IN MY OPINION, I THINK IT WOULD BE CHALLENGING TO TAKE THE REVENUE FROM ECA AND APPLY IT TOWARD THE OPERATING EXPENSES OR OPERATING RESERVE OF OF THE

UTILITY. >> OKAY. SO WHAT I'M UNDERSTANDING IS TCR IS MAINLY THE COST OF WHEN WE HAVE TO EXPAND OUR INFRASTRUCTURE BECAUSE OF CAPACITY NEED.

>> TRANSMISSION. >> TCR YEAH, SO THEN THEN MAYBE IT'S THE SWITCH OF THAT ONE.

LIKE, I GUESS I'M TRYING TO FIGURE OUT HOW IS IT THAT WE ENSURE THAT WE'RE GETTING THE NEED FOR MORE INFRASTRUCTURE HAS BEEN CAUSED BY TWO NEW DATA CENTERS COMING HERE THAT WANT, AT FULL CAPACITY TO BE A 411MW PER HOUR. SO I GUESS I'M ASKING IF WE KNOW THAT THAT'S GOING TO DOUBLE OUR NEED. WHY ARE WE PUNISHING THE NATIVE LOAD RATEPAYERS FOR THIS EXCESSIVE GROWTH ON GROWTH OF LARGE LOAD AND NOT ASKING THEM TO SHORE UP THAT ACCOUNT AND GIVING THE

NATIVE LOAD A BREAK FOR HAVING DONE THAT FOR, AGAIN, A CENTURY. >> SO COUNCIL MEMBER, I, I THINK EXACTLY WHAT YOU'RE SAYING IS EXACTLY WHAT WE'VE DONE. SO SO INITIALLY WHEN THIS FACILITY CAME ON BOTH AS A CRYPTO MINING FACILITY AND WHAT IT IS TODAY IS NONE OF NONE OF THE NET INCOME FROM THE FACILITY WAS USED TO FUND ONGOING EXPENSES. RIGHT. AND SO, SO ANY REVENUES, ANY NET REVENUES FROM THAT FACILITY HAVE BEEN GOING EXACTLY TO THAT, BEEN GOING TO FEED THAT FUND BALANCE. AS AN EXAMPLE, GOING INTO INTO THE CURRENT FISCAL YEAR, WE HAD PROPOSED A 6.5% RATE INCREASE FOR FISCAL YEAR 27. WE WERE ABLE TO REDUCE THAT, A LOT OF DIFFERENT FACTORS. BUT ONE OF THOSE FACTORS IS THAT WE UTILIZE A PORTION OF THAT NET INCOME FROM THE FACILITY TO BUY DOWN THAT RATE INCREASE TO 3%. SO IT'S ABOUT $15 MILLION FROM THAT FACILITY THAT WENT TO THAT. AND SO, SO THAT FACILITY IS EXACTLY DOING THAT. IT'S EXACTLY FUNDING THAT THAT FUND BALANCE GROWTH AND IS HELPING MITIGATE THE IMPACT TO TO CUSTOMERS. SO EXACTLY WHAT YOU'RE TALKING ABOUT IS EXACTLY WHAT WE'VE DONE, ON THE BASE RAE HAVEN'T DONE IT OVER WITH THE TCF OR THE ECA. EVERYBODY PAYS FOR WHAT THEY INCUR.

>> I UNDERSTAND, AND I GUESS I'M ASKING THEN IF WE KNOW THE CAPACITY THAT WE'RE AT ALMOST MAX CAPACITY, WHAT CAN WE DO BY WAY OF TCF SPECIFICALLY TO ENSURE THAT THEY ARE SHORING UP MORE THAN WHAT THE NATIVE USERS HAVE BEEN UTILIZING AND PAYING FOR FOR A LONGER AMOUNT OF TIME?

[03:40:01]

SO WE'RE MAYBE A FEW YEARS AHEAD OF WHERE WE PROJECTED TO BE. BUT WE ALREADY KNOW THAT IN ONE YEAR, WE'VE INCURRED HALF OF THAT USAGE BY LARGE LOAD. DO YOU UNDERSTAND MY QUESTION.

>> YEAH, I THINK I DO. I THINK I THINK PART OF THE ISSUE HERE IS THAT SO THE CRF AND THOSE STATEWIDE TRANSMISSION COSTS, THOSE ARE PASSED ON TO CUSTOMERS BASED ON WHAT'S CALLED THE FOR C P. SO WHAT YOUR HIGHEST PEAK WAS IN JUNE, JULY, AUGUST AND SEPTEMBER.

RIGHT. AND SO WHEN WE LOOK AT THAT IMPACT, CURRENTLY THE NATIVE LOAD HAS A MUCH HIGHER IMPACT THAN THIS DATA CENTER LOAD. EVENTUALLY THE DATA CENTER LOAD WILL HAVE A LARGER SHARE OF THAT, AND THEY'LL PICK UP A MUCH LARGER SHARE OF THE STATEWIDE COSTS. RIGHT. AND SO, BUT FOR THE, FOR, FOR THE, FOR THE, FOR THE GRID, FOR THE LOCAL GRID, MAINLY ON THE DISTRIBUTION SIDE, THOSE COSTS ARE PASSED ON TO CUSTOMERS THROUGH THE BASE RATE. AND WHAT I'M SAYING IS THAT CURRENTLY THAT NET INCOME FROM THE DATA CENTER IS GOING TO OFFSET THOSE FIXED COST EXPENSES, BECAUSE WE'VE NOT ADDED ANY OTHER FIXED COST EXPENSES TO RELY ON THOSE,

BECAUSE WE'RE TREATING THOSE AS KIND OF ONE TIME REVENUES HEARD. >> THANK YOU. THEN JUMPING BACK TO ECA, I AM AGAIN WONDERING WHAT KEEPS US FROM ADDING A RATE INCREASE FOR LARGE LOAD IN AN EFFORT TO AGAIN, MAYBE PUT SOME OF THAT MONEY INTO THIS FUND BALANCE BY WAY OF WORKING

CAPITAL TO SHORE UP THAT 46 TO 68%. >> SO, SO CURRENTLY THE ECA FOR THE LARGE LOAD IS ALMOST $0.07. THE ECA FOR THE NATIVE LOAD IS 4.6 CENTS. AND WE'RE POTENTIALLY LOOKING AT REDUCING THAT. SO, SO I THINK TO SOME EXTENT THAT'S EXACTLY WHAT'S WHAT'S HAPPENING. BUT EACH OF THOSE ECAS ON THE BALANCE SHEET MATT REFERENCED THAT WERE OVERCOLLECTED ON THE ECA FOR NATIVE LOAD ON THE TCR, EXCUSE ME, ON THE LARGE LOAD ECA, WE'RE ALSO BUILDING A RESERVE FOR THAT. THAT'S ALSO $20 MILLION TO HELP HELP STABILIZE THAT PARTICULAR USERS POWER COSTS GOING FORWARD. I THINK TO DO TO DO WHAT YOU'RE WHAT YOU'RE WHAT YOU'RE ASKING, WE WOULD HAVE TO LOOK AT BLENDING THAT ECA TOGETHER, RIGHT? WHAT THAT DOES, THOUGH, IS THAT INTRODUCES A LEVEL OF RISK TO OUR NATIVE LOAD THAT THEY DON'T

HAVE TODAY. >> SO THE $20 MILLION THAT YOU'RE HOPING THEM TO GET TO OR THAT CURRENTLY EXISTS IN THE ECA LARGE LOAD BUCKET OF FUNDING.

>> WE'RE WORKING TOWARDS THAT. AND THAT'S WHY IT'S AT $0.07. IN ADDITION TO THAT, THEY'VE ALSO HAVE THE REQUIRED TO HAVE A SECURITY DEPOSIT IN EXCESS OF $200 MILLION. THAT'S THAT WE HOLD TODAY AS A LETTER OF CREDIT TO GIVE ADDITIONAL PROTECTIONS.

>> OKAY. AND THAT 20 MILLION OR WHATEVER THE CURRENT BALANCE IS NOT THE 20 MILLION. THAT'S THE HOPE IT GETS TO THAT IS ACCOUNTED FOR IN THIS PROJECTION IN THE.

>> IT'S IT'S. >> IN THE 156 MILLION. >> IT'S SEPARATE FROM THAT.

>> IT'S ONE. >> SEPARATE RESERVE. SO RATE STABILIZATION RESERVE.

>> OKAY. GOT IT. BECAUSE THE 154 AGAIN IS BASE RATE. THAT'S WHAT WE'RE SAYING. BASE RATE IS ALL THAT'S PUTTING INTO THIS. CORRECT. OKAY. SO NEITHER ECAS ARE BEING APPLIED TO THIS METRIC. AND I GUESS THAT'S WHAT I'M ASKING IS IF THAT COULD BE WHAT WE SWITCHED TO. AND I HEAR THAT THERE'S THE IT'S, IT'S WHAT IS IT? IT'S A LONG TERM LIABILITY. BUT I GUESS I WONDER WHAT THAT SHIFT COULD LOOK LIKE. THAT'S ALL I WAS WONDERING. AND THEN THE LAST QUESTION I HAVE IS WITH THE DOWNGRADE TO A FROM DOUBLE A, WHAT WAS THE PRIMARY DRIVER. IS IT THE ISSUANCE OF MONEY TO FUND GROWTH CAUSED BY LARGE LOAD COMING ON AND SCALING UP?

>> WELL, AT THE AT THE TIME OF THE RATING DOWNGRADE FROM FROM DOUBLE A TO A, IT WASN'T JUST DME, IT WAS A LOT OF UTILITIES ACROSS THE STATE FOLLOWING WINTER STORM URI. AND I THINK WINTER STORM URI EXPOSED THE RISK OF STORMS LIKE THAT TO UTILITIES, AND THE FACT THAT THERE WAS NOT ENOUGH FUND BALANCE AND RESERVES IN ORDER FOR SOME OF THOSE UTILITIES TO MAKE THE PAYMENTS TO ERCOT THAT THEY NEEDED TO MAKE DURING THE STORM. SO THE RATING AGENCIES LOOKED AT THAT MORE OR LESS DID A BLANKET DOWNGRADE. NOW, THE NEGATIVE WATCH THAT WE ARE ON FROM EARLIER THIS YEAR, THAT PRESSURE IS INTERNAL, AND IT IS DUE TO THE SIZE OF OUR CAPITAL IMPROVEMENT PROGRAM ON PARTICULARLY THE WATER AND WASTEWATER SIDE WITH WITH THE PLANT EXPANSIONS AND THE NEW PLANTS. AND SO, YOU KNOW, THAT'S WHERE THAT BASE RATE

[03:45:03]

>> OKAY. >> YEAH. >> I JUST HAVE TWO QUICK CLARIFYING QUESTIONS AS FAR AS THE DME WORKING CAPITAL COMPOSITION GOES, YOU SAID 40 TO 75%, DEPENDING ON THE TIME OF YEAR IS CASH. WHAT PERCENT? WHAT'S THE RANGE FOR YOUR

RECEIVABLES? >> I DON'T KNOW OFFHAND, BUT RECEIVABLES WOULD LIKELY MAKE UP THE THE BULK OF THAT DIFFERENCE, AND NOT NECESSARILY, YOU KNOW, BILLING RECEIVABLES, BUT IT COULD BE INTERFUND RECEIVABLES OR OTHER RECEIVABLES. BUT THAT WOULD

LIKELY MAKE UP THE MAJORITY OF IT. >> I ASK, I GUESS, BECAUSE USUALLY WHEN I THINK ABOUT RECEIVABLES, I THINK ABOUT HOW LONG THOSE RECEIVABLES EXIST.

LIKE WHAT PERCENT OF THOSE ARE UNDER 120 DAYS. LIKE I WOULD IMAGINE, LIKE, YOU KNOW, IN OTHER WORDS, WHAT I'M ASKING IS IT'S NOT LIKE THERE'S BAD DEBT BAKED INTO THOSE RECEIVABLES.

>> NO, NO. RIGHT. SO, AND THIS IS, I DON'T WANT TO SAY THE CHALLENGE, BUT THIS IS WHAT'S IMPORTANT TO UNDERSTAND IS THAT YOU'RE ABSOLUTELY RIGHT. WITHIN THOSE 12 MONTHS BETWEEN OCTOBER AND SEPTEMBER, COME SEPTEMBER, THE EXPECTATION IS THAT ALL OF THOSE WOULD BE RECEIVED AND ALL THE EXPENSES WILL HAVE BEEN MADE. IT'S JUST THE TIMING. IT'S A IT'S A CASH TIMING.

>> MAJORITY OF THEM THOUGH, LIKE SAFE TO SAY, MAJORITY OF THEM BECOME CASH IN UNDER 90

DAYS. >> LIKELY. >> OKAY. I JUST WANTED TO CLARIFY THAT. AND THE SECOND QUESTION I HAD, JUST BECAUSE I WANT TO MAKE SURE I'M FOLLOWING IT WAS ON SLIDE 22. YOU TALKED ABOUT THE YEAR END FUND BALANCE FOR DME WAS ESTIMATED AT 146.

CURRENT ESTIMATED FUND BALANCE. 154 JUST SO I, I UNDERSTAND AND I UNDERSTAND YOU SAID IT COULD CHANGE. YOU'RE SAYING THAT THE CURRENT ESTIMATE FOR THE YEAR END BALANCE CHANGED BY 8

MILLION, CORRECT? >> CORRECT. >> I DON'T KNOW IF THIS IS THE RIGHT QUESTION TO ASK, BUT OF OF THAT 8 MILLION, HOW MUCH OF THAT IS CASH?

>> ALL OF IT I WOULD GUESS. >> YES. AND SO THAT'S DUE TO A. WE PROFITED AT THE END OF THE YEAR. WHAT I'M GETTING AT IS WHEN WE WENT THROUGH THE WORK SESSION ON A SATURDAY, THE ESTIMATE WAS $200,000 WAS LIKE THE END BALANCE, RIGHT, FOR THAT YEAR. AND SO IT WENT FROM

200,000 TO 8 MILLION. CORRECT. >> THE NET INCOME. YES. YEAH. AND I THINK PART OF THAT IS THAT, YOU KNOW, THOSE ESTIMATES THAT ARE PRESENTED ARE PREPARED IN ADVANCE. AND WHAT WE HAD SEEN IS THE THE DATA CENTER RAMPED UP FASTER THAN WHAT WAS ANTICIPATED.

>> GO AHEAD. I JUST WANT TO SAY THAT IT COULD ALSO BE BECAUSE OUR EXPENSES CAME IN LOWER THAN WHAT WE BUDGETED. THAT'S ALSO A POSSIBILITY OF WHY THE ADDITIONAL NET INCOME. I DON'T

KNOW EXACTLY WHAT IT IS. >> TOTALLY FAIR. I WANTED TO ADD THEN ON THAT BECAUSE YOU THEN SAID, I'M NOT PICKING ON YOU, I SWEAR TO GOD. BUT YOU SAID, WE'RE NOT SURE REALLY WHERE THAT'S GOING TO END UP. YES. DO YOU MEAN? END UP LIKE WE COULD HAVE MORE END UP? WE

COULD HAVE WAY LESS. >> SO YEAH. WHAT WHAT'S IMPORTANT TO KEEP IN MIND IS THAT THERE'S MORE THAN JUST THAT CASH COMPONENT THAT MAKES UP THE BALANCE. AND SO NOT ALL THE ENTRIES ASSOCIATED WITH FISCAL YEAR 2026 ARE IN THE ARE IN THE SYSTEM AND FINALIZED. SO OUR ACCOUNTING STAFF ARE WORKING DILIGENTLY THROUGH THAT PROCESS. IT'S JUST TOO EARLY TO SAY DEFINITIVELY, RIGHT, WITHOUT EVERY ENTRY BEING IN THERE, WHAT THE ENDING FUND

BALANCE IS. >> I SUPPOSE I HEAR THAT, BUT. THERE I, I'M TRYING TO FIGURE OUT THE BEST WAY TO ASK THIS BECAUSE 200,000 VERSUS 8 MILLION IS VERY DIFFERENT. AND I WANT TO MAKE SURE THAT. MAYBE I'LL POSE IT AS A QUESTION INSTEAD. ARE YOU ARE ARE YOU SAYING THAT YOU REALLY DON'T KNOW HOW MUCH THAT 8 MILLION COULD SWING? I JUST AND I THINK THAT'S WHAT I WANT TO MAKE SURE I'M UNDERSTANDING THAT THAT THERE'S NOT MUCH KNOWLEDGE JUST

YET ON HOW MUCH THAT COULD SWING. >> SO, I MEAN, WHAT I WOULD SAY

[03:50:01]

PLUS OR -8 MILLION. I MEAN IT WOULDN'T. >> IT WOULDN'T BE THAT THAT.

OKAY. RIGHT. I JUST WANTED TO MAKE SURE. THAT'S ALL I HAVE FOR NOW.

>> YES. >> I HAVE ONE FINAL FUND BALANCE QUESTION FOR YOU. SO WE'VE I THINK I SUBMITTED A QUESTION AND I THINK I'VE SORT OF ASKED SOMETHING SIMILAR EARLIER. SO NATIVE LOAD IS, IS A LITTLE MORE RISKY WHEN WE THINK ABOUT FUND BALANCE. AND LARGE LOAD IS, IS MORE PREDICTABLE AND LESS RISKY. I'M VERY INTERESTED IN US LOOKING AT CALCULATING THE NEEDED FUND BALANCE DIFFERENTLY FOR LARGE LOAD THAN FROM HOW WE'RE DOING IT FROM NATIVE LOAD. IS THAT SOMETHING YOU'RE ALREADY LOOKING AT AS PART OF THE LONG TERM FINANCIAL PLAN? STUFF LIKE THE POSSIBILITY OF CALCULATING THOSE DIFFERENTLY?

>> YES. I MEAN, WE'RE LOOKING AT ALL THE COMPONENTS ASSOCIATED WITH NATIVE LOAD.

AND THEN THESE LARGE LOAD CUSTOMERS AND WHAT THAT MEANS. YEAH.

>> OKAY. THANK YOU. THAT'S ALL I HAD. >> OKAY. YES, MAYOR PRO TEM.

>> I APOLOGIZE. I HAVE ONE MORE QUESTION. JUST BECAUSE I NEED HELP ON THIS IS, I THINK, WHAT I'M GETTING AT THEN WITH WE WERE 8 MILLION OFF IN A VERY POSITIVE WAY. I GUESS WHAT I'M ASKING IS WHY IS IT THEN THAT THAT $8 MILLION NET HAS TO GO INTO LIKE, DOES IT JUST HAVE TO GO INTO THE FUND BALANCE? IN OTHER WORDS, WHY COULDN'T YOU TAKE OUT 3 MILLION OF, OF THAT AND JUST SAY, WELL, WE THOUGHT IT WAS GOING TO BE 200,000. IT'S REALLY 8 MILLION, LET'S CALL IT 5 MILLION, BECAUSE THAT 3 MILLION IS GOING TO GO TOWARDS. KEEPING THE RATE THE

SAME. >> YEAH. I THINK WE COULD CERTAINLY DO THAT. WE COULD CERTAINLY NOT DO THE 3% INCREASE. AND WHAT WOULD HAPPEN AT THE END OF THIS NEXT YEAR IS THAT $3 MILLION WOULD BE NEEDED FROM THE RESERVES. THE ISSUE IS GOING TO COME UP IN THE SUBSEQUENT YEAR, WHEN WE DIDN'T DO A RATE INCREASE IN THIS YEAR, AND WE DON'T NECESSARILY HAVE ANOTHER $3 MILLION TO CONTRIBUTE TOWARD THAT, BECAUSE WITHOUT TAKING ANY ACTION IN

THE SUBSEQUENT YEAR, WE WOULD NEED $3 MILLION. >> AND I HEAR THAT. I GUESS WHAT I'M THEN ASKING IS IN IN THEORY, YOU COULD GO WITH OPTION TWO, FOR EXAMPLE, AND SAY, AND WE'RE ALSO GOING TO DECREASE IT FOR A YEAR TO GIVE A LITTLE BIT OF BREATHING ROOM

FOR, FOR RESIDENTS. YOU COULD IN THEORY DO THAT. >> THAT'S. YEAH.

>> OKAY. THE ONLY OTHER AND I DON'T WANT TO GET OFF POSTING. I JUST WANT TO MAKE A REMARK SO THAT HOPEFULLY THE INFORMATION CAN COME BACK TO US. I WOULD IMAGINE BECAUSE OF THAT INCREASE FROM 200,000 TO 8 MILLION, THERE'S SOME ROI IN FRANCHISE FEES THAT WENT INTO THE GENERAL FUND THAT ARE HIGHER THAN EXPECTED. IT MIGHT BE INTERESTING TO GET SOME INFORMATION BACK ON WHAT THAT NUMBER IS, BECAUSE THERE ARE SOME THINGS I'VE READ IN THE NEWSPAPER RIGHT THIS PAST WEEK THAT COULD BENEFIT FROM THAT, THAT DIFFERENT NUMBER. SO I

JUST WANTED TO POINT THAT OUT. >> YEAH. AND YOU, YOU'RE ABSOLUTELY RIGHT. ARE THE ROI AND FRANCHISE FEE IS GOING TO BE A PART OF, YOU KNOW, ANY FLUCTUATION IN NET INCOME? I WOULD JUST SAY THAT DME IS NET INCOME DOESN'T OR A POSITIVE NET INCOME WITH DME DOESN'T NECESSARILY MEAN THAT IT'S ADDITIONAL ROI AND FRANCHISE FEE ABOVE THE GENERAL FUND BUDGET. IT KIND OF DEPENDS ON WHAT THE ORIGINAL BUDGETED NUMBERS WERE, BUT WE COULD LOOK

AT THAT AND PROVIDE THAT INFORMATION. >> AND I APOLOGIZE. JUST ONE MORE CLARIFYING QUESTION. IN THEORY, IF SOMEONE WANTED TO GIVE A TEMPORARY BREATHING ROOM FOR A YEAR, WOULD THAT IMPACT THE BOND RATING LIKE YOU'RE SAYING IT WOULD? IT COULD. YEAH.

>> I DON'T KNOW WHAT THE QUESTION WAS. WHAT'S THE QUESTION? COULD WHAT IMPACT

WHAT BOTTOM LINE. >> GIVEN THAT THERE WAS. $8 MILLION NET INCOME, IF YOU HAD TAKEN 3 MILLION OF THAT AWAY AND THE REST WENT INTO FUND BALANCE, WOULD THAT IMPACT THE

BOND RATING? WHICH THE ANSWER I GOT WAS IT COULD. >> OKAY. ALL RIGHT. WOW. OKAY.

SO I'M GOING TO GO BACKWARDS TO YOUR QUESTION ABOUT THE BOND RATING, BECAUSE WHAT I'M HEARING IS THE 3% IS WHAT WE'RE THINKING IS WHAT'S NECESSARY TO MAINTAIN THAT BOND RATING, THE

[03:55:05]

>> IT'S YES, IT'S THE GROSS REVENUE OF DME. >> YEAH. SO THE 8 MILLION COULD BE THE REVENUE BUDGET IS THE SAME, BUT IT COULD BE LESS EXPENSES, WHICH THAT WOULD NOT

IMPACT THE FRANCHISE FEE AND RETURN ON ROI. >> YES.

>> OKAY. AND I HAD SO MANY QUESTIONS. I SHOULD HAVE WROTE SOME OF THEM DOWN, BUT THAT'S OKAY. SO THEN BASICALLY WHAT I'M HEARING YOU SAY THE FUND BALANCE IS THIS IS JUST MY CONCEPT OF MY IT'S A BIG CHECKBOOK. BASICALLY. YOU'VE GOT THINGS COMING IN, COMING OUT, EVEN THOUGH IT'S YOU'RE SAYING IT'S A BALANCE SHEET. I TOTALLY UNDERSTAND THAT. BUT WHEN I LOOK AT THERE'S ONLY $59 MILLION BACK IN WHATEVER MONTH THAT WAS. WELL, THAT'S A HUGE DIFFERENCE THAN SAYING THAT WE'VE GOT $146 MILLION IN THE FUND BALANCE. WHAT'S BECAUSE WE'RE PAYING THESE THINGS THAT ARE TIMING ISSUES, AND WE'RE HOPING TO GET ALL THAT REVENUE BACK TO. SO AT THE END OF THE YEAR, IT ALL COMES IN. IT ALL GOES OUT. WHAT'S THE BALANCE IN THE CHECKBOOK? IT'S THIS AND IT STARTS ALL OVER AGAIN. SO I GET THAT BECAUSE WHAT I WANT TO SAY IS, OKAY, OF THE 100 MILLION IN SEPTEMBER, THAT IS THE FUND BALANCE IN CASH AND CASH EQUIVALENTS. THE REST OF IT IS, I THINK YOU SAID RECEIVABLES. SO DEPENDING ON WHAT OUR DEBT, YOU KNOW, IF WE HAVE DELINQUENT DEBT IN THOSE RECEIVABLES, THEN IT TYPICALLY WOULD WOULD IMPACT THE FUND BALANCE. SO AS FAR AS THE RATE. IF WE FIRST OF ALL, I'M HEARING THAT WE'RE WE'VE SORT OF BEEN OVER COLLECTING NICK RATE RATE. SO THAT MONEY SOMEWHERE IS. BUT BUT IT'S NOT IN THE FUND BALANCE. CORRECT. IT'S IN A DIFFERENT RESERVE FUND. DO WE KNOW WHAT THAT NOT THE 20 MILLION FOR THE LARGE LOAD. DO WE KNOW WHAT THE RESERVE IS FOR THE FUND BALANCE.

>> THE THE TARGET IS 20 MILLION AND WE'RE CLOSE TO 30 MILLION. >> NO. IS THAT THE LARGE LOAD

OR IS THAT THE NATIVE. IS THAT. >> THAT'S THE NATIVE. >> OKAY. SO WE'RE AT 20. AND SO WE'RE AT 30. CORRECT. OKAY. SO THEN REALLY WHAT YOU'RE WHAT MAYOR PRO TEM SORT OF FORMULA WAS IF YOU TAKE THAT 8 MILLION, TAKE THREE OF IT, OR HOWEVER MUCH YOU NEED FOR THE 3%, PUT THE REST IN THE FUND BALANCE. YOU COULD ALMOST DO THE SAME THING WITH THE RESERVE. AND THAT'S BASICALLY WHAT YOU'RE DOING HERE. YOU'RE SAYING WE'RE GOING TO TAKE THIS RESERVE, WE'RE GOING TO WE'RE GOING TO EITHER UNDER COLLECT OR COLLECT, AND WE'RE GOING TO USE THE MONEY THAT WE'VE OVER COLLECTED TO KIND OF SUBSIDIZE THIS RATE, AT LEAST FOR THIS YEAR AND MAYBE MOVING FORWARD, DEPENDING ON HOW THAT PANS OUT. BUT IF POWER, IF POWER COSTS GO UP, THEN THAT GOES UP BECAUSE YOU'RE JUST PASSING IT ALONG DEPENDING ON YOUR, YOUR RESERVE RATE CALCULATION. SO YOU WANT TO HAVE A TOTAL OF 20 MILLION IN THE NATIVE LOAD, AND YOU'RE SHOOTING FOR 20 MILLION IN THE LARGE LOAD. IS THAT IS THAT CORRECT?

>> THAT'S CORRECT. >> OKAY. ALL RIGHT. LET ME SEE HERE. TCRF. I GUESS I UNDERSTAND ABOUT THE RESERVES AND THE RATES, BUT I THINK THIS IS WHERE IT GETS CONFUSING IS WE'RE UNDER UNDER COLLECTING HERE. WE'RE OVER COLLECTING HERE. AND INSTEAD OF, OKAY, WHAT, WHAT, WHAT'S TRULY THE ACCURATE PICTURE THAT WE HAVE UNDERSTANDING. YOU CAN'T HAVE PERFECT PREDICTABILITY. SO I MEAN, I THINK TO ME, WHAT YOUR NEXT SLIDE IS. QUESTIONS. ARE THERE ANY OTHER QUESTIONS FOR THE PRESENTERS? YES. COUNCIL MEMBER HOLLAND.

>> I UNDERSTOOD THAT THE TARGET IS $20 MILLION FOR ECA IS THAT CORRECT? YES.

[04:00:08]

>> AND UP TO 20 MILLION. >> YES. AND WE HAVE 30 MILLION ON HAND.

>> THAT'S CORRECT. >> WE OVERSHOT THAT. YES. YEAH. OKAY. SO IS IT IS IT ALSO 20 MILLION FOR THE TCRF. MY QUESTION IS ARE WE TEN OVER OR ARE WE TEN UNDER.

>> YEAH. THE TCF. YOU KNOW DEFICIT UNDER. I DON'T KNOW THAT AMOUNT. I DON'T KNOW IF

TONY YOU KNOW OFF OFFHAND WE COULD FOLLOW UP WITH THAT. >> BUT. WELL IS IT 20 MILLION

EACH. IS THAT THE GOAL. >> IS THE GOAL. YES. >> OKAY. SO SO WE HAVE 30. SO

WE'RE SHORT 10 MILLION. >> I'LL LET TONY ADDRESS THAT. >> SO SO THE RANGE FOR THE NATIVE LOAD A PER THE POLICY THAT WE HAVE TODAY IS -20 TO PLUS 20. IT'S IT'S A RANGE. SO WHAT ENDS UP HAPPENING IS AS WE'RE BUYING POWER THROUGHOUT THE YEAR, THERE'S A THERE'S A FLUCTUATION THAT HAPPENS. SO. SO COSTS ARE VERY ARE USUALLY HIGHER FOR US IN THE SUMMER RIGHT THAN THEY ARE IN THE WINTER. SO DURING THE SUMMER, GENERALLY SPEAKING, WE DRAW DOWN THAT FUND BALANCE IN THE ECA TO TRY TO KEEP THE ECA STABLE FOR OUR RATEPAYERS. WHAT WHAT HAPPENED THIS YEAR, WHICH WE DON'T ANTICIPATE WOULD HAPPEN NEXT YEAR, IS THAT POWER PRICES WERE ACTUALLY MUCH LOWER THAN WE HAD ANTICIPATED. AND SO WE PAID LESS FOR POWER THAN WHAT WE COLLECTED FROM THE ECA AT 4.62. THAT'S WHY WE THAT'S WHY WE OVER COLLECTED ABOVE THE 20 MILLION. NOW, WE HAD PLANNED TO COME TO THE COUNCIL IN ADVANCE OF OF THIS DISCUSSION, BUT WE POSTPONED IT TO GET DIRECTION FROM THE COUNCIL HERE. SO WHAT WE'VE DONE IS TO IS TO GET TO THAT THAT SAME BILL WE'VE DRAWN DOWN THAT 30 MILLION, SOME AMOUNT TO BALANCE THIS OUT WITHOUT NECESSARILY DRAWING TOO MUCH, BECAUSE WE ANTICIPATE THE COMING YEAR MAY BE DIFFERENT. SO WE WANT TO HOLD ON TO A LITTLE BIT OF THAT EXCESS, RIGHT. AND WE'RE AND WE'RE LOOKING AT IT EVERY QUARTER. SO SO IF THE COUNCIL WERE TO DECIDE THIS, WE'LL BE BACK IN ANOTHER QUARTER. AND THERE COULD BE A POSSIBILITY THAT WE COULD DRAW, THAT WE COULD ACTUALLY DRAW THAT DOWN FURTHER AND DECREASE THAT ECA AGAIN IN ANOTHER THREE MONTHS.

SO BUT WHAT WE'VE DONE HERE IS WE'VE ONLY DRAWN ENOUGH RIGHT TO BALANCE OUT THESE INCREASES IN THE T, C, R, F AND THE AND AND THE FIXED EXPENSES ON THE BASE RATE SIDE AGAIN PENDING COUNCIL DIRECTION. BUT YOU KNOW, PART, YOU KNOW, WE KIND OF UNDERSTOOD THAT COUNCIL WANTED TO HAVE RATE AFFORDABILITY AND KEEP THAT RATE THE SAME AS WE DID. AND SO THAT'S WHAT WE'VE

DONE. >> OKAY. THANK YOU. >> WELL, I'LL JUST GIVE MY DIRECTION. I MEAN, BECAUSE YOU'RE NEEDING DIRECTION ON THIS SLIDE AND THEN YOU'RE NEEDING DIRECTION ON THE OTHER ONE THAT THE, THE FIRST HALF OF THE PRESENTATION, I THINK. WELL, I'LL GIVE MY DIRECTION ON THIS AND WE CAN FIGURE THIS ONE OUT FIRST. I'M. FOR ME, I THINK I WOULD RATHER USE THE $3 MILLION OF THE SURPLUS FOR THIS YEAR AND ADD THE ADDITIONAL FIVE, BECAUSE WHAT HAPPENS IS WHEN, WHEN THEY'RE LOOKING AT THAT BOND RATING, WE'RE NOT SAYING THAT WE'RE GOING TO NOT RAISE RATES IN THE OUT YEARS. WE'RE SAYING WE'VE GOT IT COVERED THIS YEAR. WE'VE GOT BUDGETED FOR THE NEXT THREE YEARS. AND WE COULD COME BACK AND DO THIS SAME PARADIGM, THE SAME FORMULA NEXT YEAR, DEPENDING ON THE E, C, A RESERVE, DEPENDING ON IF THERE'S, YOU KNOW, LOWER POWER COSTS. BUT I WOULD, I WOULD, I WOULD ON THE SIDE OF USING THE SURPLUS, WHICH WE DIDN'T THINK WE WERE GOING TO HAVE IN ORDER TO COVER THAT 3%, BUT THE REST IN THE FUND BALANCE LEAVE. AND IF YOU WANT TO REFUND THE E, C A RATE, YOU COULD EITHER PUT IT IN ESCROW TO COVER THE 3% CHARGE NEXT YEAR. I MEAN, BECAUSE NO MATTER WHAT WE DO, WE'RE LOOKING AT 8 MILLION. LET'S JUST CALL IT 7 MILLION. LET'S JUST SAY 7 MILLION SURPLUS. LET'S JUST SO THAT I'M SORT OF BEING A LITTLE MORE CONSERVATIVE. AND YOU'RE SAYING HERE, THEN WE ALSO HAVE THE CAPACITY TO USE 3 MILLION OR 3.5 MILLION OUT OF THE ECA RESERVE FUND BY DROPPING THE ECA. BUT MY UNDERSTANDING IS IT COULD CHANGE EVERY QUARTER. SO IT COULD GO BACK UP. AND THEN WE'RE LOSING THAT THAT BUYDOWN IS MY UNDERSTANDING. THIS ISN'T THIS ISN'T LOCKED IN FOR A YEAR. THIS IS SOMETHING THAT CHANGES QUARTERLY. SO IF THERE'S SOME BIG, HUGE SPIKE, IF THERE'S SOMETHING, WELL, THEN THAT EVAPORATES AND WE'VE ALREADY

[04:05:04]

THEY'RE LOOKING AT OKAY WE'VE GOT 3%. I THINK IT'S 3% TILL 2030. RIGHT. FOR ME. JUST EACH

YEAR. >> YEAH. >> IS THAT RIGHT?

>> I THINK IT WAS SIX. >> I THINK IT WAS SIX IN THE OUT YEARS. IT WAS 3% THIS YEAR.

AND THEN I THINK IT WAS 5 OR 6% IN THE OUT YEARS. >> YEAH. THAT WAS THE THAT WAS THE THE ORIGINAL PROJECTION THAT THE COUNCIL DOESN'T DO THE 3% INCREASE. CERTAINLY, YOU KNOW, STARTING NEXT MONTH WILL, YOU KNOW, STARTING IN JANUARY, WE'LL RECALCULATE ALL THAT AND WE'LL HAVE TO RESTATE KIND OF WHAT THOSE WHAT THOSE POTENTIAL FUTURE INCREASES MIGHT BE. THEY MAY NEED TO BE A LITTLE BIT HIGHER TO STILL GET TO, TO STILL GET TO THAT, THAT FINAL

GOAL, WHICH IS 2031. >> RIGHT. WELL, SO MAKE SURE I UNDERSTAND WE'VE GOT EACH ONE OF THESE YEARS PROJECTED. THIS YEAR IS 3%. LET'S JUST CALL IT 6% ALL THE OTHER YEARS. ALL RIGHT. WELL, WHEN YOU SAY THAT WE'RE NOT HAVING A RATE INCREASE HERE, WHICH COULD AFFECT THOSE RATE, BUT WE'RE NOT HAVING A RATE DECREASE, WE'RE KEEPING IT THE SAME. AND WE'RE TAKING BECAUSE THE RATE INCREASE, THE 3% IS MEANT TO ADD TO THE FUND BALANCE.

CORRECT. CORRECT. ALL RIGHT. SO WE'VE GOT AN $8 MILLION. CALL IT FIVE. I DON'T ANYTHING OVER THREE OR WHATEVER THE 3% IS. WE HAVE THAT ALREADY THAT MEETS THAT NEED. SO IF THAT NEED IS MET FOR THIS YEAR, I DON'T SEE WHERE AN ADJUSTMENT. I MEAN WHETHER YOU GET THE THREE THE $3 MILLION FROM THE BASE RATE FROM THE RATEPAYERS FOR THE NEXT YEAR, OR WHETHER WE GOT A SURPLUS IN THAT $3 MILLION GOES IN THERE. WE'VE GOT THE 3 MILLION. SO IT DOESN'T AFFECT THE RATE INCREASES MOVING FORWARD. IF MY IF I KNOW ANY KIND OF MATH, IT'S JUST YOU'RE

CHANGING THE FUNDING. >> IF YOU DON'T DO THE 3%, YOU'RE LOSING THE ANNUAL COMPOUNDING OF THAT 3%. AND YOUR TRADE OFF IS A ONE TIME REVENUE THAT YOU'RE APPLYING TO ONLY HELPS YOU IN YEAR ONE. SO WHAT THAT MEANS IS IN YEAR TWO, THREE, FOUR, AND FIVE, YOU NEED HIGHER RATE INCREASES THAN WHAT YOU'RE PROJECTED BECAUSE YOU LOSE THE COMPOUNDING EFFECT.

>> SO WHAT YOU'RE SAYING IS IF WE HAVE A 3% BASE RATE INCREASE NOW AND WE HAVE A 6% NEXT YEAR, THAT'S A TOTAL OF 9% OVER TWO YEARS. BECAUSE YOU'RE SAYING THE COMPOUNDING, YOU'RE SAYING WE'RE LOSING THAT ADDITIONAL 3% COMING IN. SO THE 3% WE'RE DOING THIS YEAR IS NOT PART OF

THE 6% THAT'S BEING ASKED FOR NEXT YEAR. >> IT'S IT'S AN ADDITION TO THE

REVENUE THAT YOU ANTICIPATE THAT INCLUDES THE 3%. >> RIGHT. AND SO YOU'RE SAYING BASICALLY, IF WE DO THE, AS YOU PUT IT ONE TIME, WHICH THIS IS A ONE TIME, THIS, THIS, THIS PULLING DOWN THE ECA RATE THAT'S A ONE TIME IT'S THE SAME, IT'S THE SAME SITUATION. SO IF WE'RE DOING THAT OR WE'RE DOING THIS, IF THAT'S GOING TO, NO MATTER WHAT WE'RE. YOU'RE STILL SAYING WE'RE GOING TO HAVE TO LOOK OUT INTO THE OUT YEARS, DEPENDING ON THE CALCULATIONS AND ALL THAT. SO THIS ECA CALCULATION OR ADJUSTMENT AND USING THE SURPLUS, THEY'RE THE SAME. THE OUTCOME IS THE SAME. AM I CORRECT IN THAT? IT IS. OKAY. ALL RIGHT. GO AHEAD.

>> I'M SORRY. I JUST WANT TO ASK THE QUESTION. I KNOW THAT THE THE VALUATIONS AND THE DETERMINATIONS OF OUR CREDIT RATING SOMETIMES ISN'T APPLES TO APPLES. SOMETIMES IT IS.

THEY WANT SPECIFICALLY THE I MEAN, IF THAT WAS SOME OF THE DIRECTION GIVEN. SO AND I KNOW THAT I'M PUTTING YOU ON THE SPOT. BUT IN YOUR OPINION, IS THE SOLUTION TO THE CURRENT YEAR THAT THE MAYOR IS PROPOSING? WILL THAT, TO THE BEST OF YOUR KNOWLEDGE, SATISFY WHAT WE'RE BEING ASKED TO DO TO PROTECT OUR CREDIT RATING? AND I'M JUST ASKING BECAUSE I KNOW THAT IT'S NOT IT'S NOT JUST DO YOU HAVE THE MONEY OR NOT? THEY WANT CERTAIN. SOMETIMES THEY WANT SPECIFIC ACTIONS IN ORDER FOR THEM TO RAISE OR LOWER THE CREDIT RATING. UNFORTUNATELY IT'S NOT IT'S A IT'S A BALL OF WAX. SO MAY I ASK THAT QUESTION TO YOU IN YOUR OPINION? I'M

SORRY. >> YEAH. NO, IT'S A IT'S A GREAT QUESTION. AND IT'S IT'S DIFFICULT TO ANSWER. AND THE REASON IS BECAUSE THEY ARE LOOKING AT THE COMBINED UTILITY SYSTEM. AND SO WHAT I BELIEVE THAT BOTH S&P AND FITCH ARE LOOKING FOR IS A WILLINGNESS TO RAISE RATES SUFFICIENTLY TO COVER THE FUTURE CAPITAL EXPENDITURES. NOW, HAVING SAID

[04:10:04]

A RATING AGENCY PERSPECTIVE. YEAH. >> COUNCIL MEMBER HOLLAND.

>> THANK YOU. JUST FOR CLARIFICATION, FOR MY OWN CLARIFICATION, DID I HEAR YOU? CHOOSE NOT OPTION ONE, NOT OPTION TWO, NOT OPTION THREE, BUT CRANK IT BACK TO THE

CURRENT RATE. IS THAT WHAT I HEARD? NO, NO. >> WELL, MY MY, MY RECOMMENDATION OR MY COMMENTS WERE OPTION TWO IS TAKING LET'S, LET'S JUST USE $3 MILLION FOR THE DISCUSSION. IT'S TAKING $3 MILLION OUT OF THE E. S A RESERVE FUND TO BASICALLY SUBSIDIZE THIS 3% REQUIREMENT FOR THE FUND BALANCE THAT WE'VE ALL BEEN TALKING ABOUT. AND I'M SIMPLY SAYING YOU CAN EITHER DO OPTION TWO OR YOU CAN DO IF WE HAVE A SURPLUS, WHATEVER THE NET OR THE GROSS SURPLUS IS FROM DME, YOU TAKE THAT SAME AMOUNT OF MONEY. BUT WHAT I'M HEARING IS THAT EITHER ONE OF THOSE OPTIONS STILL MAY CAUSE A CREDIT AGENCY TO LOOK AT. SO THE OPTIONS YOU'RE PRESENTING. OPTION TWO, OPTION ONE IS BASICALLY WHERE WE STARTED OUT FROM. BUT OPTION TWO, LET'S JUST SAY WE GO WITH OPTION TWO. IT STILL CREATES THAT POTENTIAL FOR THAT CREDIT RATING ACTIVITY BECAUSE IT'S IT'S THE SAME THING. I MEAN, WE'RE NOT DOING A 3% BASE RATE INCREASE. I MEAN, SO HELP ME UNDERSTAND, IS THERE A NUANCED DIFFERENCE? I MEAN.

>> YEAH, THEY'RE THEY'RE LOOKING AT THE BASE RATE INCREASE RATHER THAN THE ECA

RATE AND BALANCE. >> RIGHT. SO IF THAT'S THE CASE, THEN NO MATTER WHETHER WE DO THE SURPLUS OR WE DO THE ESA, IT DOESN'T. THEY'RE GOING TO SAY, WELL YOU DON'T HAVE A BASE

RATE INCREASE BECAUSE. >> IN UNDER OPTION TWO THERE IS A BASE BASE.

>> THERE'S A BASE RATE INCREASE, BUT WE'RE JUST SUPPLEMENTING IT. AND SO YOU'RE SAYING THAT IT'S THEY HAVE TO. OKAY. WELL FIRST OF ALL, I KNOW WE DON'T ISSUE REVENUE BONDS VERY MUCH ANYMORE FOR OUR UTILITIES. AREN'T THOSE TYPICALLY GENERAL OBLIGATION BONDS.

>> SO THE, THE WE HAVE NOT ISSUED THEM VERY OFTEN. THE CONCERN IS THAT WE ARE ISSUING THEM FOR THE TREATMENT PLANTS ON THE WATER AND WASTEWATER SIDE THROUGH SWIFT, THE TEXAS WATER DEVELOPMENT BOARD, AS WELL AS FOR ONE OF THE PROJECTS POTENTIALLY THROUGH WIFIA. SO THE COMBINED RATING IS IMPORTANT TO MAINTAIN AT INVESTMENT GRADE FOR THOSE

PROGRAMS ON THAT SIDE IS REALLY THE. >> SO THIS IS FORM OVER SUBSTANCE WITH THE WITH THE WITH THE SUPPLEMENT, WITH THE SURPLUS. IF WE ADDED THAT AND WE DID NOT HAVE A BASE RATE INCREASE THAT POTENTIALLY, AS YOU SAID, AFFECTS, THEY WANT TO QUOTE UNQUOTE SEE A BASE RATE INCREASE FOR US. THE MONEY'S ALL THE SAME FOR THE RATEPAYERS.

THE MONEY'S ALL THE SAME. THAT'S CORRECT. HERE WE HAVE A QUOTE UNQUOTE INCREASE, BUT WE'VE OFFSET IT WITH THIS SURPLUS THAT WE HAVE IN THE S A RATE. BUT THE S A RATE CAN CHANGE WHICH WOULD EVENTUALLY COULD DOESN'T MEAN IT WOULD IT COULD BASICALLY ELIMINATE THAT.

I MEAN IF YOU IF EACH QUARTER IF SOMETHING HAPPENED, THERE'S A BIG HUGE SPIKE OR SOMETHING THAT'S WE'RE GOING TO PASS THAT ALONG OR WE'RE GOING TO DRAW DOWN ON THE RESERVE TO SORT OF

CUSHION THAT. >> YES, WE WOULD REVIEW IT AND WE DO REVIEW IT QUARTERLY AND

ADJUST IT BASED ON THE PRICE OF POWER. >> OKAY. WELL, IF THAT'S THE

[04:15:02]

KEEPS THE OPTICS CORRECT, BUT MAKES THE THE BILL THE SAME. >> YES. THE BILL WOULD REMAIN

THE SAME. >> WE STILL GET A THREE. THE RATEPAYERS STILL GET A 3%

INCREASE. IS THAT WHAT I'M HEARING? THEY DON'T. >> PRACTICALLY SPEAKING, THEY DON'T. BUT YES, THERE WOULD BE A 3% BASE RATE INCREASE. BUT WHEN THEY ADJUST THE RATE, THE ACTUAL BILL WOULD BE QUOTE UNQUOTE EQUIVALENT TO WHAT IT'S BEEN WITHOUT THE 3%, BECAUSE

THEY'RE JUST SUBSIDIZING IT WITH THE S. >> OKAY. AND, AND ARE WE IN

SOME JEOPARDY OF GOING TO A 6% INCREASE NEXT YEAR? >> I THINK THAT'S YES. SORRY,

SORRY. >> I DON'T MEAN TO UPSET THE APPLE CART. THIS IS JUST AN IDEA. BUT WHAT IF WE MOVED SOME OF THE FUNDS FROM THE FUND BALANCE, THAT WE ARE IN EXCESS AND MOVED IT TO THE FUND BALANCE THAT WE ARE LACKING IN, IN AN EFFORT TO LONG TERM, NOT RAISE BASE RATES AS MUCH IN ORDER TO PUT MONEY TOWARDS THE FUND BALANCE AND OUR

ESTABLISHED GOALS. >> WHICH FUND OR YOU SAID THE FUND THAT WE'RE LACKING IN,

WHICH FUND IS THAT? >> I THOUGHT OUR THE THE FUND BALANCE. I MEAN, SO FROM WHAT I UNDERSTOOD, THE FUND BALANCE WE'VE OVER COLLECTED, BUT ON THE ONE THAT WE'VE UNDER

COLLECTED, WHY CAN'T WE BALANCE THAT OUT? >> YOU MEAN THE T THE TCRF.

OKAY. >> SO SO THE SHORT ANSWER. IS WE CAN ABSOLUTELY DO THAT. DME THE CITY, THE CITY HAS DONE THAT IN THE PAST. AND SO WE COULD TAKE THAT OVER COLLECTED AMOUNT FROM THE E, C, A AND MOVE IT TO THE TO THE FUND BALANCE FOR THAT FUND. AND AND SO THAT'S CERTAINLY UP TO COUNCIL. AGAIN, THAT TAKES US, THAT TAKES US AWAY FROM KIND OF THE INTENTION OF THAT ECS TO BALANCE ITSELF OUT. BUT HAS THE CITY AND THE 20 SOMETHING YEARS

THAT I'VE BEEN HERE DONE THAT BEFORE. ABSOLUTELY. >> OKAY. WELL, I'M JUST TRYING TO FIND A WAY TO HIT ALL THE BOXES AS FAR AS TRYING TO PROTECT OUR RATEPAYERS FROM INCREASES AS MUCH AS WE CAN WHILE KEEPING OUR BOND RATING SO THAT WE ARE NOT LOSING MONEY IN THE FUTURE. I'M JUST SO I'M TRYING TO THINK OUTSIDE THE BOX AND FIND A WAY TO BE AS

FISCALLY RESPONSIBLE AS WE CAN. >> AND I AND I THINK THAT. THANK YOU, MR. MAYOR. AND I THINK THAT I THINK AN ISSUE IS I WOULD LIKE TO KNOW WHAT THE TCRF BANK ACCOUNT LOOKS LIKE NOW AND WHAT WE WOULD LIKE IT TO BE AT. SO TO MY KNOWLEDGE, T CRF IS ONE BOTH LARGE AND NATIVE ARE COMBINED. IS THAT CORRECT? WE DON'T HAVE THEM PARCELED OUT LIKE WE DO ECA DID

I MISHEAR THAT? >> SO SO COUNCIL MEMBER CURRENTLY WE ONLY HAVE A NATIVE LOAD T CRF RIGHT? WE DO NOT HAVE A LARGE LOAD T CRF. AND I APOLOGIZE FOR THE FOR THE COMPLEXITY HERE. RIGHT. AND SO FOR THE T CRF WE DO NOT MAINTAIN A SEPARATE RATE STABILIZATION RESERVE, PRIMARILY BECAUSE THOSE COSTS TEND TO BE PRETTY WELL KNOWN.

WE GENERALLY HAVE A MATRIX THAT WE GET FROM FROM THE PUC T AROUND MARCH. SO WE KIND OF KNOW THAT THERE HAS BEEN SOME COMPLEXITIES THIS YEAR, UNFORTUNATELY, THAT HAVE CAUSED AN UNDER-COLLECTION. AND THAT'S THE REASON WHY WE NEED THIS, THIS INCREASE IN THE CRF. BUT THERE IS NO SEPARATE RATE STABILIZATION RESERVE FOR CRF, ONLY FOR ECA RIGHT?

>> RIGHT. IT'S AN ANNUAL PROJECTION. AND THEN IT WAS UNDER COLLECTED ON THIS YEAR IS WHAT YOU'RE SAYING. USUALLY AROUND MARCH YOU GET AN ANNUAL LIKE THIS IS WHAT THE NEXT YEAR IS GOING TO LOOK LIKE. THIS IS WHAT WE SHOULD BE CHARGING T CRF. WE CAN MAKE ADJUSTMENTS IF NEEDED. WE UNDERSHOT IT. WE NEED TO COLLECT MORE. I APPRECIATE THE ANSWER. THEN ON ECA YOU SAID WE WANT 20 NATIVE. WE HAVE 30 IN LARGE LOAD. WE WANT 20. WE CURRENTLY HAVE WHAT

OVER THE LAST. >> YEAR ABOUT 3 TO 5 MILLION. AGAIN, WE'RE STILL KIND OF WORKING THROUGH THOSE. AND THEY'RE GOING TO CONTINUE TO, TO, TO SHORE UP THAT BALANCE AS THEY CONTINUE TO RAMP UP. EVENTUALLY, ONCE THEY ONCE THEY GET TO 20 MILLION, THEN WE'LL BE ABLE TO WE'LL BE ABLE TO BETTER REFLECT WHAT THAT COST IS. AND SO LIKELY THAT WILL GO

DOWN. >> SO JUST TO UNDERSTAND FROM COUNCIL MEMBER JESTER, WHAT SHE'S SAYING IS IN ESSENCE, ON THIS CHART, WE BECAUSE IT DOESN'T HAVE A DOESN'T HAVE A FUND. THE CRF DOESN'T HAVE A FUND, BUT YOU CAN SUBSIDIZE THE UNDER-COLLECTION IN THIS YEAR WITH THIS SUBSIDIZED MONEY THAT THAT IF WE CAN. SO ONE OF THOSE NUMBERS IS GOING TO CHANGE THE RATE YOU'RE SHOWING AT 4620. UNDER OPTION TWO, IT COULD GO TO 4240. THE CRF IS 15, 16, 1720. IF WE DID THAT, THEN WHAT WE WOULD BE DOING IS LOWERING THE T CRF RATE BECAUSE WE'RE NOT NEEDING TO OVER, WE'RE NOT NEEDING TO MAKE UP THAT COLLECTION BECAUSE WE'RE

[04:20:02]

I MEAN, IN OTHER WORDS, EITHER ONE OF THOSE COULD BE ADJUSTED TO GET THE BILL DOWN TO THE

13536. >> THERE'S THERE'S A NUMBER OF DIFFERENT OPTIONS. OBVIOUSLY, THE WAY THAT WE'VE DONE THAT HERE IS BY USING THE ECA TO DRAW THAT DOWN.

>> OKAY. >> ALL RIGHT. >> YES. COUNCIL MEMBER.

>> QUICK QUESTION. ARE WE WITHIN OUR TARGET FUND BALANCE FOR ELECTRIC RIGHT NOW?

>> WE BASED ON THE ESTIMATE WE WOULD BE COMPARED TO ACTUALS FOR 2026.

>> FOR NOW. BUT NEXT YEAR WE ANTICIPATE NEEDING MORE FUND BALANCE OR NEXT FISCAL YEAR

THAT IS. >> SO YES, COMPARED TO ACTUALS WE WOULD BE WITHIN POLICY. I MEAN, WE WOULD IF IF THE POLICY UTILIZED ACTUALS, WE WOULD BE WITHIN IT AT 49.4% COMPARED TO BUDGETED EXPENDITURES IN 2026. WE ARE BELOW POLICY. AND THEN FOR NEXT YEAR, WE WOULD ALSO BE BELOW POLICY. AND THAT IS ANTICIPATED TO REACH THE BUDGETED POLICY IN 2031.

>> OKAY. >> AND SO ANY ANY ADDITIONAL MONEY WE HAVE IN THE FUND BALANCE TODAY CAN BE USED POTENTIALLY TO AVOID ADDITIONAL. I MEAN, THERE'S THERE'S ANTICIPATED RATE INCREASE, AS WE'VE SAID. I KNOW WE'VE TALKED BEFORE ABOUT HOW WE'RE TRYING TO AVOID BIG JUMPS IN RATES. SO WE'RE KIND OF DOING SMALL CONSISTENT TYPES. BUT ANY ANYTHING WE'RE PULLING OUT OF THAT FUND BALANCE IS GOING TO HAVE TO GET MADE UP FOR LATER, IN THEORY. AND THEN ON THE ECA RATE, ARE WE ABOVE TARGET I BELIEVE IS WHAT I HEARD.

>> YES. >> SO WE'RE YOU KNOW NEXT YEAR POTENTIALLY GOING TO BE BEHIND TARGET FOR THE FUND FOR THE FUND BALANCE FOR ELECTRIC. AND WE'RE CURRENTLY AHEAD ON ECA.

SO JUST BASED ON THAT INFORMATION I'M I'M MOST COMFORTABLE WITH OPTION TWO ON THIS. I DON'T WANT TO DO ANYTHING THAT WOULD HURT THE BOND RATING OR CAUSE A BIGGER SPIKE IN RATES NEXT YEAR. AND SO THAT THAT'S KIND OF MY THOUGHT PROCESS BEHIND OPTION

TWO FOR THAT LAST SLIDE ON HERE. THANKS. >> OKAY. YES.

>> I THINK I'M GOING TO CONCUR WITH COUNCILMEMBER RUMOHR AS FAR AS OPTION TWO AT THIS TIME.

>> COUNCIL MEMBER HOLLAND II2. >> OPTION TWO I WANT TO I WANT A MINIMAL IMPACT ON RATEPAYERS

WITHOUT JEOPARDIZING OUR BOND RATING. OKAY. >> YES. COUNCIL MEMBER PERRY.

>> WE ALSO RAISED INCREASED DRAINAGE. DOES THAT COUNT AS WELL? DID WE NOT?

>> WE DID. WE DID ALSO INCREASE DRAINAGE. >> FACTOR IN IN TERMS OF BOND

RATING. >> NOT MATERIALLY. >> OKAY. SO BECAUSE WE RAISED WATER AND WATER IS WHERE WE'VE EXPENDED QUITE A BIT OF COCOSCOS. OKAY. MY LAST QUESTION IS JUST SO I MAKE THIS WAS ACTUALLY KIND OF A SILLY GOOSE QUESTION, SO I APOLOGIZE.

THE BEST PRACTICE IS 25% TO 50%, RIGHT? I KNOW THAT WE CHANGED FROM PERCENTAGE TO DOLLAR FROM 100 TO 150 MILLION. CURRENTLY YOU SAID WE'RE AT 154.6, WHICH FOR ACTUAL IS 49.4%. AM I MISUNDERSTANDING THAT WITH ACTUAL EXPENSES, WE ARE AT THE TOP END OF WHAT BEST PRACTICE

SAYS WE SHOULD KEEP? AM I MISUNDERSTANDING THAT, MATT? >> SO WE. WE ARE NOW THAT. 20 BUT TO CLARIFY THAT 25% TO 50% IS THE. IS THE GFOA BEST STANDARD. I THINK WHEN YOU LOOK AT OTHER UTILITIES AND WHAT OTHER UTILITIES ARE ACTUALLY KEEPING AS THE RESERVE BALANCES, IT IS IT IS AT OR ABOVE THAT LEVEL. SO THAT IS THAT'S AN IMPORTANT PART OF WHAT WE'RE LOOKING AT TO BRING BACK IN MARCH. AS FAR AS THE KIND OF BIGGER PICTURE FUND BALANCE POLICY IS, IS EVALUATING WHAT OTHER UTILITIES ARE DOING AND WHAT TRULY IS THAT, YOU KNOW, APPROPRIATE LEVEL OF FUND BALANCE, BECAUSE THERE ARE THERE'S A LOT OF RECOMMENDATIONS OUT THERE AS TO WHAT THE PERCENTAGE SHOULD BE. AND GRANTED, EVEN FIVE YEARS AGO, BEFORE YURI, WE THE MINIMUM WAS 16%, I BELIEVE. SO. WE'RE WORKING ON THAT PIECE OF

IT. SURE. BUT YES, TO ANSWER YOUR QUESTION. >> BECAUSE I THINK I DON'T KNOW

[04:25:02]

I'M SORRY. THAT'S MY OPINION. OKAY. >> CAN I ASK A QUESTION TO THE COUNCIL MEMBER? SURE. SO THEN WHAT ARE WHAT ARE YOU PROPOSING? IF YOU WERE TO GIVE DIRECTION,

WHAT ARE YOU PROPOSING? >> I'M PROPOSING WE FOUND EIGHT, 8 MILLION EXTRA MORE DOLLARS THAN THE 200,000, WHICH. THAT'S SEPARATE QUESTION MARK FROM THE ECA OVER POOL. THOSE ARE TWO DIFFERENT THINGS. CORRECT. BECAUSE BASE LOAD GOES TO FUND BALANCE. SO WE GOT 8 MILLION MORE DOLLARS IN THE BASE RATE THAT WENT INTO THE FUND BALANCE. WE HAVE 10 MILLION EXTRA DOLLARS IN THE FUND FOR NATIVE LOAD, WHICH IS 10 MILLION MORE THAN WHAT THEY'RE ASKING US TO KEEP IT AT. SO FOR ME, I'M SAYING THAT'S $18 MILLION IN LIQUIDITY ASSETS, WHATEVER YOU WANT TO CALL IT. BUT WE'RE COMFORTABLE WASHING MONEY LIKE THIS TO MAKE IT THE SAME RATE.

BUT I JUST CAN'T WITH THAT $18 MILLION IS A LOT OF MONEY IN EXCESS. AND I AND I JUST FEEL LIKE IF WE'RE CONTINUING TO OVERDRAW ON NATIVE LOAD USERS, WHAT WHERE IS THE BREAK?

>> OKAY. AND THEN ONE MORE QUESTION, BECAUSE I JUST, I WANT TO MAKE SURE I'M UNDERSTANDING EVERYTHING, RIGHT? IF IF WE GO WITH OPTION TWO TODAY, IS THERE A POSSIBILITY THAT IN THREE MONTHS YOU COULD COME BACK WITH A SUGGESTION THAT WE CUT IT TOO MUCH?

>> I THINK THAT THAT IS PROBABLY UNLIKELY. I'LL LET TONY ALSO ADDRESS THAT.

>> SO, COUNCILMEMBER, BASED ON THE LATEST REVIEW THAT WE'VE HAD, OUR PROJECTION FOR THE FOR THE NEXT QUARTER IS THAT WE COULD WE'RE LIKELY GOING TO RECOMMEND TO DECREASE THAT ECAA

LITTLE BIT FURTHER. >> SO THAT. >> NO PROMISES. RIGHT. I MEAN, THE, THE, THE, THE MARKET IS A DYNAMIC MARKET. IT'S NOT A STATIC MARKET. RIGHT.

>> BUT IF YOU. >> WERE TO BASED ON WHAT WE KNOW TODAY.

>> I HEAR. >> YOU BASED ON WHAT WE KNOW TODAY, IN THREE MONTHS, WE'RE LIKELY GOING TO COME BACK TO COUNCIL AND, AND DECREASE THE A CAA LITTLE BIT FURTHER BASED ON

WHAT WE KNOW TODAY. >> AND IN THEORY, IF THAT WERE TO HAPPEN, IT WOULD BE A RECOMMENDATION FOR LOWER ULTIMATE RATES FOR THE RESIDENTS.

>> SO INSTEAD OF 135 WOULD BE LESS THAN THAT. >> OKAY. I THINK IN LARGE PART, IF YOU'RE WANTING DIRECTION, TO ME, A LOT OF THIS FEELS LIKE TOMATO TOMATO. I'M FINE WITH OPTION TWO. I WOULD STILL SAY WE HAVE THAT 8 MILLION. I DON'T KNOW THAT I NECESSARILY BUY THE IDEA, THOUGH, THAT IT ALL HAS TO GO INTO OUR WORKING CAPITAL. I MEAN, I DON'T I WOULD LOVE TO PUT 3 MILLION OF THAT ALONGSIDE OPTION TWO FOR A ONE YEAR, 3% RATE DECREASE TO GIVE PEOPLE BREATHING ROOM. SO I'VE BEEN TOLD TO GIVE BETTER DIRECTION. AND THEN GO FROM THERE. THAT WOULD BE MY DIRECTION. OPTION TWO PLUS AN ADDITIONAL 3% 3% DECREASE FOR A ONE YEAR

OPPORTUNITY FOR SOME BREATHING ROOM. >> OKAY. DO YOU HAVE THE LANGUAGE THAT FINCH PUBLISHED REGARDING DME? DO YOU HAVE THAT AVAILABLE?

>> YEAH, WE CAN PROVIDE THAT. YES. >> WELL, THE REASON I'M ASKING IS BECAUSE WHAT I'M HEARING IS THIS WHOLE DISCUSSION IS PREDICATED ON THAT ONE PRIMARY ISSUE. YOU GOT IT. OKAY. ALL RIGHT. SO I'M GOING TO READ IT. SURE. I DON'T EVEN KNOW IF IT'S EVER HAS THIS BEEN PUBLISHED BEFORE. I MEAN TO THE COMMUNITY. WE PUT THAT OKAY. LEVERAGE IMPROVED FOR FISCAL 25 ENDING SEPTEMBER 20TH, BUT REMAINED ELEVATED AT 9.9 TIMES FOLLOWING THREE AND A 3% AND A 1.5% BASE RATE INCREASE. AND THE REINSTITUTION OF ITS TRANSMISSION COST RECOVERY FACTOR IN RESPONSE TO WEAK FINANCIAL RESULTS IN FISCAL 2023 AND 2024, FITCH'S RATING CASE SCENARIO IS INFORMED BY DENTON'S FIVE YEAR FORECAST, WHICH INCORPORATES ASSUMED ELECT A SUMED ELECTRIC ANNUAL BASE RATE ADJUSTMENTS. I WANT TO REPEAT THAT ASSUMED ANNUAL BASE RATE ADJUSTMENTS FOR ELECTRIC AT 6.5 TO 7%, WATER

[04:30:04]

IT'S 3%. AND THAT WAS BEFORE OUR BUDGET, I BELIEVE. SO BECAUSE NOW WE HAVE TO EXPLAIN TO THE COMMUNITY, WE ARE GOING TO HAVE TO TELL THEM, YOU GOT A 3% BASE RATE INCREASE. YOU KNOW, AND SO I'M GOING TO I'M NOT GOING TO DO THAT. IF WE'RE GOING TO GIVE THEM A BASE RATE DECREASE, WE'RE GOING TO GIVE THEM A BASE RATE DECREASE. I MEAN, BECAUSE NEXT YEAR WE'RE GOING TO WIND UP IN THIS SAME BOAT WHERE FITCH IS GOING TO BE PROMINENT SAYING, WE'RE YOU'RE GOING TO CHANGE YOUR BOND BECAUSE WE'VE ALREADY DEFEATED IT. WE'RE AT SIX. WE'RE AT 3%.

IF WE JUST KEPT THE STATUS QUO AND THEY'RE SAYING YOU GOT TO HAVE 6.2, 7.5% BASE RATE INCREASE. I MEAN, SO I'M NOT GOING TO TRY TO COMMUNICATE TO THE PUBLIC THAT, WELL, YOU'RE REALLY NOT GETTING A 3% BASE RATE INCREASE. AND THE REASON WE HAVE TO SAY YOU ARE IS BECAUSE OF THIS RATING, BECAUSE OF THESE THINGS THAT MAY OR MAY NOT HAPPEN. AND IF WE IF WE'RE LOOKING AT REVENUE BONDS FOR OUR WASTEWATER, I'M NOT SURE WHY WE'RE DOING THAT UNLESS IT'S A UNLESS IT'S A CAPACITY ISSUE ON ON CEOS. IS IT A CAPACITY ISSUE FOR CEOS? WHY

ARE WE ISSUING REVENUE BONDS? >> YEAH. SO TYPICALLY TEXAS WATER DEVELOPMENT BOARD.

>> THIS IS THE SWIFT THING. THIS IS. YEAH. >> OKAY. CORRECT.

>> ALL RIGHT. AND THAT MEANS THAT ARE WE GETTING LOWER RATES. ARE WE.

>> YES. YEAH. WE'RE GETTING SUBSIDIZED RATES THROUGH SWIFT. OKAY. WE'RE RECEIVING THE SWIFT RATES EVEN THOUGH WE'RE ISSUING THE REVENUE BONDS, AT WHATEVER RATE WE ISSUE AT THE TEXAS WATER DEVELOPMENT BOARD IS BUYING THOSE BONDS AND PROVIDING US A SUBSIDIZED RATE.

>> OKAY. >> YEAH. >> DO WE KNOW WHAT THAT IS?

>> I THINK THE POSTING. >> NEVER MIND. DON'T ANSWER THAT. DO WHAT? YEAH. NO NO NO THAT'S FINE. THAT'S FINE. I JUST, YOU KNOW, IF I JUST CAN'T, I CAN'T HOLD MYSELF HOSTAGE OR THE RATEPAYERS TO SAY, OKAY, YES, THE BOTTOM LINE IS GOING TO BE THE SAME, BUT IT COULD CHANGE WITH THE CA. IT MAY GO DOWN, IT COULD GO UP. I MEAN, NOBODY KNOWS WITH A BASE RATE OF 0% BECAUSE WE'VE GIVEN ENOUGH MONEY IN THE FUND BALANCE. AND I'M ASSUMING FITCH THAT'S WHAT THEY'RE LOOKING FOR. THEY'RE LOOKING FOR YOUR OVERALL FINANCIAL POSITION. AND THEY'RE JUST THINKING THIS IS WHAT YOU GOT TO HAVE. WELL, LET'S MAKE SURE WE UNDERSTAND 6% A YEAR FOR THE NEXT FOUR YEARS FOR ONE FUND, 9% A YEAR IN THE NEXT FUND. I MEAN, SO ARE WE GOING TO BE ABLE TO SUSTAIN THAT TO MAKE SURE THAT WE ARE STILL GOING TO BE IN

GOOD GRACES WITH THEM? >> YEAH. LET ME LET ME JUST CLARIFY THAT THE RATING AGENCIES BASE THAT ON THE FINANCIAL FORECASTS THAT THE CITY PROVIDES. SO IN THE FINANCIAL PERFORMA THAT WAS PROVIDED FOR DME, WHICH WAS PRIOR TO THE BUDGET DISCUSSION, RIGHT. THAT IS WHAT WAS INCLUDED IN THE IN THE FIVE YEAR FINANCIAL FORECAST. AND THAT IS WHAT THEY BASE. THE RATING ON THE NEGATIVE WATCH CAME OUT OF THAT REVIEW. THE AMOUNT THAT WAS ULTIMATELY DETERMINED TO BE NEEDED FOR DME WAS LOWER. IT WAS 3%. THE RATING AGENCIES INTENT IS TO COME BACK OVER THE NEXT MONTH OR TWO AND REVIEW WHAT ACTUALLY HAPPENED, ALONG WITH ACTUAL YEAR END PERFORMANCE, AND SO THEY WILL TAKE INTO ACCOUNT THE NET INCOME OF THE FUND, AS WELL AS THE NET INCOME OF THE OTHER UTILITIES, AND TAKE ALL THOSE

[04:35:03]

RATES? >> WELL, AT LEAST IN THIS EXAMPLE, FOR THIS YEAR, IT

COULD DO BOTH, POTENTIALLY. IS THAT IS THAT WHAT I'M HEARING? >> COUNCIL COULD PROVIDE

DIRECTION TO DO EITHER. >> WHAT I'M SAYING IS THOUGH THAT THIS RATE IS SUPPOSED TO PRODUCE AN ADDITIONAL $4 MILLION FOR THE FUND BALANCE. FROM EVERYTHING THAT WE'VE TALKED ABOUT, THAT THE 3% BASE INCREASE IS TO PROVIDE MORE MONEY TO THE FUND BALANCE TO HELP SHORE THAT UP. YES. SO IF WE'VE GOT AN ADDITIONAL PLUS AN ADDITIONAL. OKAY. I'M GOING TO I'M JUST GOING TO GO WITH I'VE GOT TO MAKE A DECISION. SO I'M GOING TO GO WITH. AND OF COURSE WE'LL KNOW. NOW WE'VE TOLD IT TILL JANUARY. CORRECT. THE RATE INCREASE.

>> THE RATE INCREASE. >> IS THAT CORRECT. WE'VE TOLD IT TILL JANUARY. SO I WOULD ASSUME THAT BY THE END OF NOVEMBER OR SOONER THAN THAT, WE WILL HAVE A VERY FIRM

ESTIMATE OF ANY TYPE OF SURPLUS. IT. >> YES. I WOULD SAY BY DECEMBER WE WOULD. YES. I MEAN, IT'S PROGRESSIVELY. AS WE MOVE FURTHER AWAY FROM THE END OF THE FISCAL YEAR, WE WILL HAVE A BETTER AND BETTER IDEA AS FEWER AND FEWER ENTRIES NEED TO BE

MADE. >> AND WE HAVEN'T EVEN TALKED ABOUT THE WRECK SITUATION. SO YEAH, SO I'M GOING TO I'M GOING TO GO WITH NOW IF THE SURPLUS DOESN'T SHOW UP. IF IT'S ZERO WELL WE'VE GOT ANOTHER ISSUE. BUT WE CAN ALWAYS FALL BACK I GUESS ON OPTION TWO. I MEAN THERE'S THERE'S, THERE'S WAYS TO MITIGATE IT, BUT I JUST DON'T WANT TO HAVE TO SAY WE JUST PASS SOMETHING THAT'S GIVEN EVERYBODY A 3% BASE RATE INCREASE AND THEN COME BACK AND TELL THEM, OH, BY THE WAY, YOUR BILL IS NOT GOING TO GO UP. I MEAN, IF IT'S ALL GOING TO BE THE SAME, THEN I JUST ASSUME GO WITH WITH THAT. SO THAT'S MY DIRECTION AS TO APPLY THE SURPLUS. AND THEN IF THAT'S NOT ENOUGH, WE CAN ALWAYS FALL BACK TO OPTION TWO. IT SEEMS LIKE THERE'S BEEN A. AND IT SEEMS LIKE THE. WELL, ACTUALLY THERE IS A CONSENSUS FOR OPTION TWO, EXCEPT FOR. FOR YOU, COUNCIL MEMBER MAYOR PRO TEM, YOU ADDED THAT CAVEAT OF A 3% RATE, APPLYING IT TO A DECREASE. YEAH. ALL RIGHT. SO WE DON'T HAVE CONSENSUS ON OPTION TWO AT THIS MOMENT. I JUST WANT TO MAKE SURE THAT'S CLEAR. YES. COUNCIL MEMBER RUMOHR.

>> I WANTED TO CLARIFY THAT MY MY THOUGHT ON THE FUND OR MY MY CONCERN HERE MORE IS ON THE FUND BALANCE AND LESS ABOUT WHAT WE DO THIS YEAR IMPACT OUR BOND RATING. I DON'T FEEL SUPER UNCOMFORTABLE WITH, YOU KNOW, THIS ONE TIME THING IMPACTING OUR BOND RATING MUCH. AND ALSO, I THINK THE LAST ELECTRIC PRO FORMA I SAW WAS LIKE 4% INCREASE IS NOT 6 OR 7. SO THAT WHAT WAS READ KIND OF HAS CONFUSED ME A LITTLE BIT BECAUSE WHAT I'VE SEEN WAS FOUR.

BUT MY, MY BIG CONCERN IS JUST TO MAKE SURE THAT WE HAVE ENOUGH THERE SO THAT WE'RE KEEPING UP. SO IF ANOTHER URI HAPPENS THAT WE'RE NOT TAKING IT OUT LIKE $140 MILLION IN DEBT. FOR ME, THAT'S A BIGGER RISK THAT I'M CONCERNED ABOUT FOR THIS, THIS MOMENT, WHICH IS WHY I DON'T REALLY WANT TO TOUCH THE FUND BALANCE. I WOULD MUCH RATHER DECREASE THE RATE.

SO THAT IS A RATE DECREASE. I WOULD RATHER SEE US DO THE RATE DECREASE THERE TO KEEP IT FLAT.

OKAY. >> ALL RIGHT. OKAY. >> PARDON ME. DID WE NOT ASK

FOR FOR TWO. >> NO. NO. MAYOR PRO TEM WAS THE FOURTH. BUT THEN HE ADDED A CAVEAT TO IT. I SEE, YEAH. SO IF YOU WANT TOT I WANT TO RESPOO THAT BECAUSE I HEAR WHAT YOU'RE SAYING. I THINK WHERE I WOULD GENTLY PUSH BACK ON THAT THOUGH, IS I WOULDN'T SAY WE'RE TOUCHING THE FUND BALANCE. WE'RE JUST NOT GROWING IT AS BECAUSE IT WAS ALL THERE WAS A $200,000 NET INCOME AT THE END OF THE YEAR, AND WE'RE NOW JUST BEING INFORMED IT'S 8 MILLION.

SO I WOULD ARGUE THAT REGARDLESS, WE'RE STILL INCREASING THE FUND BALANCE FAR MORE THAN WE EXPECTED. THAT WOULD BE MY RESPONSE TO THAT. NOT AN ARGUMENTATIVE WAY, JUST HOW I'M SEEING IT. WHAT I WOULD THEN SAY IS I'M GOING TO GO WITH, LET'S USE SOME OF IT. OF

[04:40:02]

QUARTER AND STILL RECOMMEND A DECREASE. >> REDUCING THE. OKAY.

>> OKAY. YEAH. >> YES. I GUESS. >> MY FINAL QUESTION IS JUST YOU. YOU SAID WHEN FITCH COMES BACK IN A COUPLE MONTHS, THEY MEASURE WHAT OUR ACTUALS WERE

VERSUS THE PRO FORMA WE SUBMITTED. IS THAT CORRECT? >> THEY ESSENTIALLY ARE GOING TO LOOK FOR AN UPDATED PROFORMA. RIGHT, RIGHT. WITH ALL THE NUMBERS UPDATED.

>> YEAH. RIGHT. AND THAT ANOTHER IN ADDITION TO THAT, ONE THING THAT THEY LOOK AT IS POLICY. THE POLICY WE'VE SET FOR THE FUND BALANCE. ARE WE IN COMPLIANCE WITH THAT POLICY. IS

THAT CORRECT. >> YES. >> OKAY. SO THEN MY QUESTION BECOMES IF BUDGETED EXPENSES IS THE CURRENT POLICY THAT WE ARE FOLLOWING. RIGHT. WE WANT TO HAVE X TO X TO Y RESERVES IN OUR BUDGETED FOR OUR BUDGETED EXPENSES. BUT WE KNOW THAT WE GET MONTHS TO SHORE UP OUR ACCOUNTS, GET OUR ACTUAL NUMBERS OUT, AND THEN GIVE A REVISED PROFORMA. AND WE KNOW THAT THE ACTUAL EXPENSES HISTORICALLY ARE PUTTING US AT A HIGHER PERCENTAGE IN A GOOD WAY, HAVING MORE IN THE BANK, IN OUR RESERVE FUND, REALLY GOOD ON PAPER WITH ACTUAL NUMBERS. SO IT'S ACTUALLY FACTS Y NOT SWITCH THE POLICY TO

ACTUAL INSTEAD OF BUDGETED. >> WELL, SO IT THAT'S A REALLY GOOD POINT. AND I THINK THAT THAT IS A GOAL OF WHAT OUR REVIEW IS TO BRING BACK IN MARCH IS TO CLARIFY THE LANGUAGE IN THE POLICY SO THAT IT IS CLEAR. I WILL SAY THAT. I MEAN, THE RATING AGENCIES ARE LOOKING AT, YOU KNOW, WHAT, WHAT IS THE POLICY? BUT THEY'RE NOT TAKING THAT POLICY AND USING IT AS THEIR BENCHMARK. THEY HAVE ALL THEIR OWN FINANCIAL BENCHMARKS. SO WHILE IT'S SOMETHING THAT THEY LOOK AT TO SEE, OKAY, IT'S MORE SO IS THE GOVERNANCE OF THE FUND OPERATING WITHIN THE POLICY JUST FROM A. JUST FROM A MANAGEMENT PERSPECTIVE, BUT FROM A FINANCIAL PERSPECTIVE, THEY'RE GOING TO BRING THEIR OWN RATIOS AND METRICS THAT THEY'RE LOOKING AT. AND SO THAT'S ALSO ONE PART OF WHAT WE'RE LOOKING AT IS HOW DO WE ALIGN OUR POLICIES WITH THE RATIOS THAT THEY'RE USING SO THAT WHEN WE'RE DOING FINANCIAL FORECASTING, WE'RE EVERYONE IS IN KIND OF ALIGNMENT. US, THE RATING AGENCIES, ANYONE ELSE.

SO IT'S ALL PART OF THAT REVIEW. >> THEN I WOULD RECOMMEND THAT WE GET A LIST OR WE GET TO SEE WHAT THEIR METRICS LOOK LIKE, WHAT THEY, WHAT THEIR POLICIES LOOK LIKE, WHAT THEIR INTERNAL METRIC SYSTEM IS. DO THEY USE THE GOVERNMENT FINANCE OFFICERS ASSOCIATION RECOMMENDATIONS? IF THE ANSWER IS NO, THEN GREAT. I'D LIKE TO KNOW, LIKE WHAT WHAT THAT LOOKS LIKE. THAT WOULD BE HELPFUL IN GUIDING POLICY DECISION. I FEEL YEAH, I APPRECIATE THAT. THANKS.

>> YEAH. SO SO CURRENTLY WE HAVE NO DEFINITIVE DIRECTION ON ANY OF THE OPTIONS. WHICH MEANS CURRENTLY THAT MEANS THE DEFAULT IS THAT IN JANUARY THERE WOULD BE A 3% RATE INCREASE. AND ALL THIS IT ALL IT WOULD BE THE CURRENT, THE CURRENT AND THE CURRENT OR WOULD BE OPTION ONE, THREE, 3% BASE INCREASE WITH NOTHING ELSE CHANGING. SO JUST THAT'S,

THAT'S WHERE WE ARE RIGHT NOW. AND YES. NO, THAT'S NOT RIGHT. >> SO JUST TO CLARIFY, MAYOR.

SO WHEN THE COUNCIL ADOPTED THE THE BUDGET, THERE WAS NO ELECTRIC RATE ORDINANCE. AND SO OUR EXISTING RATE ORDINANCE, THE EXISTING RATES IS WHAT'S IN EFFECT TODAY.

>> OKAY. ALL RIGHT. BUT BUT I THINK WE TOLD IT TILL JANUARY, WHICH WOULD THEN IT WOULD THAT

NEW RATE WOULD GO INTO EFFECT. >> PERFORMA WAS BASED ON A RATE, A BASE RATE INCREASE OF 3%

BEGINNING IN JANUARY. >> THAT'S CORRECT. AND SO FOR US TO DO THAT 3% WE WOULD HAVE TO BRING A RATE ORDINANCE TO YOU. OTHERWISE THERE IS NO RATE INCREASE.

>> AND THAT'S JUST THE RATE ORDINANCE FOR ELECTRIC. THE RATES FOR WATER, WASTEWATER AND SOLID WASTE HAVE ALREADY BEEN ALL OKAY. ALL RIGHT. SO THEN IF WE DO NOTHING HERE, IF WE GIVE NO DIRECTION TODAY, THEN IT'S AS YOU AS TONY SAID, IT'S THE CURRENT RATES WHICH ARE UP THERE UNDER CURRENT. AND THEN COME JANUARY, IF THERE'S BEEN NO MOVEMENT ON THIS POLICY, THEN WE HAVE TO DECIDE, OKAY, BUT THEN THE 3% RATE INCREASE WILL GO INTO EFFECT. BUT BY

[04:45:05]

THEN. >> THE 3% RATE INCREASE WILL ONLY GO INTO EFFECT IF COUNCIL

ADOPTS THE ORDINANCE THAT INCREASES THE RATES. >> RIGHT, RIGHT. SO THAT WILL EITHER HAVE TO BE SOMETHING THAT DOESN'T HAPPEN BY OMISSION OR SOMETHING THAT'S BY COMMISSION. AND THAT IS AN ACTUAL ACT TO TO PASS IT OR DO NOTHING AND IT STAYS THE SAME.

OKAY. ALL RIGHT. OKAY. ANY QUESTIONS? YES. COUNCILMEMBER RUMOHR.

>> GOOD TO SEE MATT'S UP THERE. SO WHAT DOES THE FROM YOUR PERSPECTIVE, WHAT WHAT IS THE IMPACT OF NOT PUTTING THE FULL 8 MILLION INTO THE GENERAL FUND? HOW DOES THAT IMPACT THE COMING

YEAR? LET'S SAY. >> WELL, I, I, I MEAN, AS THE MAYOR NOTED, IF THE SUBSEQUENT YEAR WE HAD A NET INCOME AT THE END OF WELL, AT THE END OF THIS YEAR, THEN THERE'S REALLY NO THEN THERE'S REALLY NO IMPACT. IF THERE WERE TO BE AN EVENT, SOMETHING THAT WE'RE NOT PLANNING FOR THAT CAME UP, MAYBE SOMETHING IN THE ■WEATHER OR SOME UNEXPECTED EXPENSE OR WHATEVER IT MAY BE, WHERE WE ENDED WITH A NET LOSS, THEN WE POTENTIALLY WOULD GET HIT TWICE BECAUSE WE WOULD HAVE THAT DEFICIT PLUS THE NEED TO INCREASE RATES BECAUSE WE DIDN'T HAVE ANOTHER, YOU KNOW, SURPLUS TO PUT TOWARD MITIGATING THAT. I THINK MORE OR LESS, I DON'T KNOW THAT IT'S GOING TO GET US TO THE FUND BALANCE POLICY TARGET ANY FASTER REALLY, THAN 2030, 20, 31 BASED ON THE WAY THAT THE POLICY IS WRITTEN CURRENTLY.

BUT IT IS A PROGRESSIVE, GRADUAL PROCESS TO GET THERE. AND SO I THINK IF WE TAKE STEPS TO REDUCE WHAT WE ARE CONTRIBUTING TO THE FUND BALANCE, IT POTENTIALLY COULD HURT US LATER. SO THERE'S A LOT OF VARIABLES, UNFORTUNATELY, THAT GO INTO THIS. IN GENERAL, I WOULD NOT RECOMMEND DRAWING DOWN FUND BALANCE TO FACILITATE A DECREASE IN RATES WHICH ARE USED FOR RECURRING OPERATING EXPENSES. BUT IT IT THE THE SURPLUS CAN BE USED FOR FOR

THAT PURPOSE. >> AND I KNOW THIS IS ALL JUST GUESSING, RIGHT? BECAUSE WE DON'T KNOW EXACTLY HOW MUCH REVENUE WE'RE GOING TO BRING IN, HOW MUCH, YOU KNOW, ELECTRICITY EVERYBODY'S GOING TO BUY. BUT LAST I SAW, I THOUGHT IT WAS LIKE A 4% PROJECTED FOR THE COMING YEAR. THE LAST TIME, LET'S JUST SAY IT WAS 4%. YEAH. HOW MUCH DOES THAT DOES THAT 8 MILLION BRING DOWN THE PRESSURE OF THAT NUMBER? CAN IT BRING THAT NUMBER DOWN IN THE NEXT YEAR, OR IS THAT SUCH A SMALL NUMBER? IT WOULDN'T HAVE MUCH IMPACT.

>> SO WHEN WE PUT TOGETHER THE FINANCIAL PERFORMANCE, I MEAN THE RATE INCREASES LARGELY ARE TO MAINTAIN THE FUND BALANCES WITHIN THE RANGES THAT WE HAVE SET. SO IT IS DIRECTLY RELATED TO THAT. I THINK THAT PART OF WHAT WE'RE SEEING WITHIN DME OVER THE NEXT COUPLE YEARS IS RELATED TO THE DEBT THAT WAS ASSOCIATED WITH THE PURCHASE POWER IN 2023, WHICH IS, YOU KNOW. NOT, I GUESS, A REGULAR OPERATING EXPENSE, BUT IS EXPENSED OUT OF, YOU KNOW, OUT OF THE, THE OPERATING. SO I THINK ONCE THAT WAS FIVE YEAR DEBT, ONCE THAT FALLS OFF, I THINK THAT THERE'S GOING TO BE SOME RELIEF IN THE OPERATING FUNDS. BUT. YOU KNOW, I DON'T KNOW THAT DRAWING DOWN THE FUND BALANCE WOULD. WOULD BE THE WOULD BE MY RECOMMENDATION.

>> OKAY. I JUST WANT TO CLARIFY SOMETHING. I, I WAS MISTAKEN IN THE RATE INCREASES THAT WE WERE PROPOSING FOR OUR PERFORMA THAT WE ADOPTED FOR FY 27. THE RATE INCREASE GOES FROM 3.5% AND 28

UP TO 4% AND 29, AND THEN 4% EVERY YEAR UNTIL 31. >> OKAY. SO IT WAS FORCE. YES.

OKAY. >> AND THAT WOULD BE REVIEWED. THAT WOULD BE REVIEWED ANNUALLY

BASED ON THE END OF YEAR RESULTS. >> OKAY. ALL RIGHT. WELL, THAT MEANS THAT FORGET FINCH, BECAUSE WE IN NO WAY HAVE WE SCHEDULED. AND I'M NOT SAYING

[04:50:02]

THAT'S WHY I'M SAYING, BUT I REALLY I'M STRUGGLING WITH YOUR LANGUAGE WHEN YOU SAY DRAWING DOWN THE FUND BALANCE. SO THIS IS WHERE I'M AT BEFORE WE ENTERED THIS CONVERSATION, 3% RATE INCREASE WAS TO GO TO PROVIDE $4 MILLION TO THE FUND BALANCE. THAT WAS SAID UP AT THE. I ASKED THE QUESTION DIRECTLY, WHAT IS THE 3%? HOW MUCH IS THAT WORTH? $4 MILLION? AND I THOUGHT I HEARD THAT THAT'S PRIMARILY TO HELP WITH THE FUND BALANCE GOALS.

>> YES. >> RIGHT. >> YES.

>> OKAY. SO WHEN I HEAR AND IT COULD NOT MATERIALIZE TO $8 MILLION, BUT WHEN I HEAR THAT WE MAY HAVE A SURPLUS OF, LET'S JUST SAY, OVER $4 MILLION, THAT IF WE'RE TAKING THAT ADDITIONAL SURPLUS, IF IT'S SEVEN AND WE'RE TAKING THAT THREE, OR IF IT'S EIGHT AND WE'RE TAKING THREE, THAT FIVE IS GOING INTO THE FUND BALANCE SATISFYING WHAT WE HAD ORIGINALLY PROJECTED TO GROW THE FUND BALANCE BY BEFORE THIS CONVERSATION I'VE EVER STARTED.

SO I'M STRUGGLING WITH CALLING IT A DRAWDOWN OF THE FUND BALANCE. WHAT YOU'RE SAYING IS IF WE PUT THAT $8 MILLION IN THERE, THEN WE'RE GOING TO DRAW IT DOWN. BUT THE BASIC END RESULT IS WE ARE RIGHT WHERE WE WERE PROJECTED TO BE BEFORE ANY OF THIS EVEN CAME UP. SO HELP ME UNDERSTAND THAT BECAUSE IT'S NOT REALLY A DRAW DOWN AND IT'S AND WE'RE NOT IN A WORSE

POSITION FROM A FUND BALANCE PERSPECTIVE. YEAH, YEAH. >> NO, AND LET ME CLARIFY. SO MY INTENT AND MY INTENDED LANGUAGE WAS USE NOT DRAW DOWN FROM THE CURRENT LEVEL, BUT THE PRESUMABLY THE $8 MILLION WOULD BE THAT NET INCOME WOULD GO TO FUND BALANCE. AND THEN THAT WOULD BE UTILIZED BECAUSE WHAT WILL HAPPEN AT THE END OF 2026 IS ALL ELSE BEING EQUAL. THERE WOULD BE A DEFICIT AND THE RESERVE WOULD BE USED TO OFFSET THAT.

>> WHAT DEFICIT ARE WE TALKING ABOUT? >> WELL, SO IN THE BUDGET, IF IT'S CURRENTLY BUDGETED WITH, FOR EXAMPLE, A 3% INCREASE, THAT IS GOING TO BE REFLECTED IN THE REVENUE SECTION OF THE BUDGET. IF THE 3% INCREASE IS NOT ENACTED, OUR REVENUES WOULD

BE BELOW BUDGET, AND WE. >> WOULD DRAW THAT SORT OF AN ACCOUNTING KIND OF ON ON THE SPREADSHEET. YEAH. YOU'VE GOT $8 MILLION INCREASE IN THE FUND BALANCE. YOU'VE TAKEN OFF $3 MILLION IN THE REVENUE. SO TECHNICALLY, YES, YOU ARE QUOTE UNQUOTE, DRAWING DOWN THE FUND BALANCE. BUT PRACTICALLY SPEAKING, WE'RE BASICALLY SUPPLEMENTING THAT, THAT

REVENUE WITH THAT ADDITIONAL FUND BALANCE SURPLUS. >> YES. CORRECT. THAT'S OKAY.

>> THAT'S FAIR ENOUGH. OKAY, I GET THAT, I GET THAT. OKAY. WELL, I GUESS I'M STILL WHERE I AM, SO. WELL, MY DIRECTION IS TO, TO TAKE THE SURPLUS. AND IF IT WAS 4 MILLION OR WHATEVER THE 3% CALCULATION IS, WE'RE GOING TO USE YOUR APPROACH. WE'RE GOING TO ADD ALL THAT TO THE FUND BALANCE. AND THEN WE'RE GOING TO SUBTRACT IT. WE'RE GOING TO ADD ALLOCATE IT HOWEVER YOU WANT TO DO IT. YEAH. THE BUDGET WILL QUOTE UNQUOTE SHOW A DEFICIT ON PAPER. AND SO WE'RE THEN DRAWING ON THAT FUND BALANCE TO PAY THAT 3% TO MAKE UP FOR THAT 3% RATE INCREASE, BECAUSE IT WAS A SURPLUS FROM LAST YEAR THAT WE WEREN'T ANTICIPATING. I THINK THAT IF THAT SURPLUS WAS GUARANTEED, WE KNEW IT FOR CERTAIN 100%. BY THE TIME WE APPROVED THE BUDGET, WE WOULDN'T BE SAYING WE'RE GOING TO HAVE A DEFICIT IN REVENUE. WE'D JUST BE SAYING, OKAY, NO, THIS IS GOING TO BE PART OF THE ADDITIONAL REVENUE. SO THAT'S MY DIRECTION. I MEAN,

SORRY IT'S TAKEN SO LONG TO GET THERE. >> AND THAT WAS AN OPTION THREE.

>> YES. I MEAN, IT'S TO TAKE THAT ADDITIONAL SURPLUS TO SUPPLEMENT THAT 3% RATE. WITH THAT SURPLUS. WE COME OUT THE SAME ON THE FUND BALANCE AS PROJECTED ORIGINALLY. WE HAVE A 3%. WE DON'T HAVE A RATE INCREASE. AND THE STATUS QUO, FROM A FINANCIAL PERSPECTIVE IS ALL THE SAME, GIVEN THAT THAT SURPLUS COMES OUT TO WHERE IT'S MORE THAN THAT.

>> I SUPPORT THAT DIRECTION. >> YES. >> I SUPPORT THAT AS WELL.

>> OKAY, WELL, THAT'S ONLY THREE. SO. AND THAT'S OKAY. SO WE GOT 10S 20S. IF WE'RE GOING TO HAVE ANY MORE DIRECTION. IF NOT, WE'RE GOING TO, WE'RE GOING TO CLOSE THIS OUT. FIRST

[04:55:01]

>> FOR ME, THAT NEEDS TO JUST BE LUMPED IN WITH THE DISCUSSIONS ABOUT THE PLANS.

>> OKAY. >> SO THAT WOULD BE JUST GO WITH THAT.

>> OKAY. >> SO DOES THAT MAKE. >> SENSE TO BE LATE TO BE

DETERMINED LATER? AS WE LOOK AT THESE. >> THE INTEGRATED RESOURCE PLAN

AND THE, THE PLANS AS PART OF THOSE DISCUSSIONS. >> OKAY, SO WE'RE GOING TO TOLL THAT. WE'RE GOING TO SORT OF SUSPEND THAT UNTIL WE HAVE THAT MORE COMPREHENSIVE DISCUSSION.

OKAY. ALL RIGHT. I'M OKAY WITH THAT. I'M OKAY WITH THAT BECAUSE WE'VE WE THE CONVERSATION CAME UP TO HELP WITH THE 3% RATE INCREASE. I THINK. SO ANYWAY.

>> SO BASED ON THAT DIRECTION, WE'RE KIND OF HOLDING TIGHT ON WHAT WE'RE DOING. WE'RE NOT

GOING TO SELL OR RETIRE THE X. WE'RE GOING TO LET THEM EXPIRE. >> YEAH. I DON'T KNOW WHAT THE DIFFERENCE. I MEAN I KNOW WHAT RETIRE AND EXPIRE MEANS, BUT IT DOESN'T REALLY FOR US DOES IT.

IT DOESN'T REALLY HAVE DOES IT HAVE A DIFFERENT IMPACT IF WE RETIRE OR EXPIRE THEM.

>> WE'RE RETAINING THEM. THEREFORE, WE. >> LET THEM EXPIRE AFTER THREE YEARS SO WE CAN DO SOMETHING WITH THEM IF WE DECIDE LATER. CORRECT. OKAY. YES. THAT'S FINE.

ANYTHING ELSE? ALL RIGHT. WELL, BEFORE WE GO ON TO THE NEXT AGENDA ITEM, LET'S GRAB SOME DINNER BECAUSE IT'S PROBABLY YOU YOU MIGHT WANT TO STICK IN THE MICROWAVE ANYWAYS, RIGHT?

NO, WE GOT ONE MORE. >> I THINK WE HAVE TO. PUBLIC HEARING AT 630.

>> WE HAVE TWO. >> OH, OKAY. ALL RIGHT. YES WE DO. SO LET'S WELL, LET'S LET'S GRAB SOMETHING TO EAT AND THEN WE'LL, WE'LL JUST WE MIGHT BE A FEW MINUTES LATE, BUT. 630.

[AFTER DETERMINING THAT A QUORUM IS PRESENT, THE SPECIAL CALLED MEETING OF THE CITY OF DENTON CITY COUNCIL WILL CONVENE IN THE COUNCIL CHAMBERS AT CITY HALL, 215 E. MCKINNEY STREET, DENTON, TEXAS FOR CONSIDERATION OF THE CONSENT AGENDA AND ITEMS FOR INDIVIDUAL CONSIDERATION IMMEDIATELY FOLLOWING THE CLOSED MEETING. CONSIDERATION OF THE PUBLIC HEARING(S) WILL BEGIN AT/AFTER 6:30 P.M.]

FOR. >> WELCOME, EVERYBODY, TO TO THIS MEETING OF THE DENTON CITY COUNCIL ON OCTOBER THE 27TH, 2026. APOLOGIZE FOR BEING LATE. WE RAN A LITTLE BIT OVER IN OUR WORK SESSION. WE STILL HAVE SOME THINGS TO TAKE CARE OF, BUT WE WANTED TO COME OUT AND

[A. ID 26-1605 Hold a second public hearing regarding a moratorium on the acceptance, processing, and approval of applications for the development of data centers.]

CENTERS. >> GOOD EVENING, MAYOR AND CITY COUNCIL CHARLIE ROSENDAHL, THE DEVELOPMENT SERVICES DEPARTMENT. THIS ITEM BEFORE YOU TODAY IS THE SECOND PUBLIC HEARING REGARDING A MORATORIUM FOR DATA CENTERS. SO SOME BACKGROUND ON THIS ONE. MAYOR PRO TEM SUBMITTED A TWO MINUTE PITCH, AND THAT WAS APPROVED BY CITY COUNCIL IN THE MAY JUNE TIME FRAME. ON AUGUST 4TH, WE HELD A WORK SESSION AND CITY STAFF OR CITY COUNCIL DIRECTED STAFF TO MOVE FORWARD WITH AMENDMENTS TO THE DEVELOPMENT CODE AND TO START THIS MORATORIUM PROCESS.

WE APPROVED THE PUBLIC HEARING DATES ON AUGUST 18TH. WE HELD THAT FIRST PUBLIC HEARING ON SEPTEMBER 22ND AND THEN OCTOBER 13TH. TWO WEEKS AGO, WE HAD A WORK SESSION ON THE FINDINGS.

TODAY, WE'RE HERE HOLDING THE SECOND PUBLIC HEARING AND ALSO THE FIRST READING REQUIRED FOR THE ORDINANCE ADOPTING THE MORATORIUM. SO JUST BRIEFLY, WHAT IS A DATA CENTER? IT'S A PHYSICAL FACILITY, HOUSING, COMPUTER EQUIPMENT AND THAT TYPE OF EQUIPMENT. IS IT EQUIPMENT, COOLING CONTROLS, POWER SYSTEMS AND USUALLY INVOLVES SOME TYPE OF PHYSICAL SECURITY. THERE'S MULTIPLE TYPES OF DATA CENTERS, ENTERPRISE LEVELS FOR INTERNAL IT OPERATIONS, A CO-LOCATION FACILITY, HYPERSCALE LARGE DATA CENTERS, AS WELL AS EDGE TYPE FACILITIES. DATA CENTERS. IN DENTON, WE HAVE TWO. WE HAVE TWO HYPERSCALE LEVEL FACILITIES.

ONE IS CORE SCIENTIFIC, WHO IS NEARING CONSTRUCTION COMPLETION ON 79 CITY OWNED ACRES. WE ALSO HAVE THE WAHA OR CUMULUS AI DATA CENTERS, A MODULAR DATA CENTER THAT CONSTRUCTION HAS NOT YET STARTED ON. JUST TO PROVIDE AN UPDATE TO CITY COUNCIL, WE DID ADOPT CODE AMENDMENTS ON OCTOBER 13TH RELATED TO DATA CENTERS. THAT REQUIRES A SPECIFIC USE PERMITS AND ALL OF THE ZONING DISTRICTS IN WHICH DATA CENTERS ARE ALLOWED. AND WE ALSO RESTRICTED SOME OF THOSE ZONING DISTRICTS AS WELL. WE ADDED IN THAT IT REQUIRES PUC AND ERCOT APPROVAL PRIOR, PRIOR TO BEING PLACED ON AN AGENDA FOR SUP, WE ALSO INCREASED THE SETBACK DISTANCE FROM 100 TO 300FT. WE CHANGED THE LIGHTING REQUIREMENTS FOR DATA CENTERS, AND WE ADDED IN SOME ADDITIONAL REQUIREMENTS REGARDING CLOSED LOOP SYSTEMS OR FREE AIR COOLING SYSTEMS FOR THEIR WATER USE TYPE, AND ADDED IN SOME ADDITIONAL STUDIES HERE, YOU CAN SEE ON THE RIGHT THE

[05:00:01]

A NEED FOR OTHER PUBLIC FACILITIES, OR A COMMERCIAL MORATORIUM FOR US TO UPDATE LAND ORDINANCES, WHICH COULD NOT APPLY TO HEAVY INDUSTRIAL. WE MUST SUBMIT FINDINGS FOR THESE AND. THE FINDINGS MUST INCLUDE THE LEGAL BASIS FOR ADOPTING THE MORATORIUM. AS FAR AS OUR MORATORIUM PROCESS, YOU CAN SEE THE TIMELINE HERE ON THE RIGHT. WE ADOPTED THAT RESOLUTION WE PUBLISHED IN THE PAPER. WE HELD THE FIRST PUBLIC HEARING. AND THEN TONIGHT WE'RE HAVING THE SECOND PUBLIC HEARING AND THE FIRST READING. THE ANTICIPATED SECOND READING IS ON DECEMBER 1ST, AND THEN COUNCIL WILL THEN VOTE ON THIS ITEM. YOU CAN SEE HERE THE STATE LAW REQUIREMENTS AND THE THE SCHEDULE WE'VE PLACED IN FRONT OF YOU MEETS ALL THOSE REQUIREMENTS. AND WITH THAT, THERE'S THERE'S NO ACTION ON THE PART OF CITY COUNCIL. THIS

IS JUST THE SECOND PUBLIC HEARING FOR THIS ITEM. >> OKAY. MAYOR PRO TEM.

>> THANKS AND THANKS AGAIN FOR THE PRESENTATION. I JUST HAVE ONE QUICK QUESTION. IF YOU GO BACK ALL THE WAY TO WHEN I PRESENTED THE TWO MINUTE PITCH, ONE OF THE THINGS THAT I HAD ADDED IN THERE, PARTICULARLY FOR THE SAKE OF THE MORATORIUM, WAS SEEING HOW WHAT WAS PROMISED EQUATED TO WHAT WAS BEING DELIVERED. AND I THINK I GAVE A FEW DIFFERENT EXAMPLES OF THAT ECONOMICALLY. ONE OF THEM, I THINK, WAS ALSO ENVIRONMENTALLY. AND SO WHAT I'M CURIOUS ABOUT IS HAS STAFF LOOKED INTO THAT AS FAR AS HAVE THERE BEEN ANY KIND OF. AND I KNOW IT'S A BROAD QUESTION, BUT ENVIRONMENTAL CONSEQUENCES. HAVE THERE BEEN ANY COMPLAINTS MADE ABOUT MAYBE THEM VIOLATING CERTAIN LAWS? HAVE THERE BEEN LARGE EMISSIONS DUMPS, ANYTHING

LIKE THAT THAT YOU KNOW OF? >> I AM I'M NOT AWARE OF OF ANY THAT I COULD SPEAK ON, BUT I COULD DEFINITELY COME BACK AND PRESENT THAT INFORMATION TO YOU. OKAY.

>> YES. JUST TO SORT OF AUGMENT THAT A LITTLE BIT. YEAH. IF YOU COULD CHECK INTO THAT BECAUSE I THINK I DID SEE, I THINK I WAS LOOKING ON THIS TECH WEBSITE THAT JUST IDENTIFIES PERMITS AND IT LOOKED LIKE THERE HAD BEEN SOME, SOME ACTIONS TAKEN. SO IF WE COULD GET SOME INFORMATION ON THAT AND IF THERE'S ANY PRINTOUTS, IF THERE'S ANY REPORTS, THEN THAT'D BE GREAT. OKAY. YEP. OKAY. ANY OTHER QUESTIONS FOR STAFF BEFORE WE START THE PUBLIC HEARING? SEEING NONE. THANK YOU CHARLIE. ALL RIGHT. I WILL NOW OPEN THE PUBLIC HEARING. AND AND THIS IS JUST A PUBLIC HEARING. WE'RE NOT GOING TO TAKE ANY ACTION ON THIS ITEM TONIGHT. SO WE'VE GOT ABOUT SIX CARDS. BUT THIS IS A PUBLIC HEARING. SO IF YOU'RE WANTING TO SPEAK AND YOU HAVEN'T FILLED OUT A BLUE CARD JUST BEFORE YOU LEAVE TONIGHT, BE SURE AND FILL OUT A BLUE CARD IF YOU SPEAK. SO WHAT I'M GOING TO DO IS I'M GOING TO CALL THE NAME OF THE FIRST SPEAKER. AND AT THAT TIME I WILL CALL THE NAME FOR THE SECOND SPEAKER. SO WE CAN JUST SORT OF KEEP MOVING DOWN THE LIST. SO THE FIRST SPEAKER IS, I BELIEVE IT'S CHRIS SORBET.

SORBET. SORRY IF I DIDN'T PRONOUNCE THAT CORRECTLY. COME DOWN, STATE YOUR NAME AND YOUR TIME WILL BEGIN. AND I THINK IT'S FOUR MINUTES. IS THAT CORRECT? YES.

>> HI. SO IT'S CHRIS SOBER BR. MY NAME IS CHRIS. I LIVE IN 76209. AND I'M HERE TODAY IN SUPPORT OF THE CONTINUED EFFORTS TO APPROVE THE MORATORIUM ON DATA CENTER APPLICATIONS AND DEVELOPMENT IN THE CITY OF DENTON. WHILE I DON'T WANT TO SPEND MY TIME DISCUSSING WHETHER GENERATIVE AI IS A GOOD OR A BAD THING, I'D LIKE TO SHARE SOME OF MY PERSONAL EXPERIENCE. I'VE SPENT THE PAST YEAR LEARNING THESE TOOLS IN AND OUT, AND LIKELY TRAINING THEM TO REPLACE ME AT MY POSITION, AT MY JOB. AND I'VE TRIED TO KEEP UP WITH THE TRENDS. I'VE TRIED TO LEARN HOW THESE THINGS WORK, AND I'VE ULTIMATELY ABSORBED OTHER POSITIONS AT MY COMPANY THAT WE'VE ELIMINATED. AND IN TURN, I'VE EXPANDED MY SCOPE OF WORK TO COVER PEOPLE THAT MY COMPANY WILL LIKELY NOT HIRE IN THE FUTURE. AGAIN, THAT'S NOT WHAT

[05:05:05]

WE HAVE DIRECT EXPERIENCE WITH PROVIDING FINANCIAL INCENTIVE TO SPECIFICALLY CORE SCIENTIFIC, TO ALLOW THEM TO INVEST IN TECHNOLOGY. THAT WAS NOT PROVEN, AND IT TURNED OUT THAT WAS A BAD STRATEGY FOR THEM. WE SEE THE SAME TRENDS OCCURRING WHERE SOME OF THE LARGEST COMPANIES IN THE TECH SECTOR CONTINUE TO PROP EACH OTHER UP AND INVEST IN CHIPS THAT DON'T EXIST, AND INVEST IN SUBSCRIBERS THAT DON'T EXIST, AND ON PROJECTIONS OF REVENUE THAT DO NOT EXIST. I WORRY THAT THE CITY IS INVESTING OUR TAX DOLLARS IN UPGRADING DME INFRASTRUCTURE TO SUPPORT COMPANIES WHO HAVE NOT, WHO HAVE YET TO FULLY BUILD THEIR FACILITIES OR COME ONLINE LONG ENOUGH FOR US TO BEGIN TO MEASURE THEIR IMPACT. A MORATORIUM IS AN ABSOLUTE NO BRAINER, AND AT A MINIMUM, IT ALLOWS THE TIME TO MONITOR AND STUDY THE IMPACTS OF THESE FACILITIES AND GET A READ ON HOW THEY WILL ENVIRONMENTALLY AND FINANCIALLY AFFECT OUR

COMMUNITY. THANK YOU. THANK YOU. >> THANK YOU, I APPRECIATE THAT. AND I BROKE MY, MY, MY FIRST RULE, AND THAT WAS I DIDN'T CALL THE SECOND PERSON'S NAME. SO RITA BEVING, YOU'RE UP. AND THEN THE NEXT SPEAKER WILL BE JOHN RICH. AND YOU'LL STATE YOUR NAME AND YOUR TIME WILL

BEGIN. >> GOOD EVENING, MAYOR AND COUNCIL. MY NAME IS RITA BEVING.

I WORK WITH THE NONPROFIT PUBLIC CITIZEN, AND WE HAVE MANY MEMBERS IN THE DENTON AREA.

THERE ARE MORE THAN 40 COUNTIES THAT HAVE PASSED RESOLUTIONS ASKING FOR GUARDRAILS ON DATA CENTERS, INCLUDING ASKING THE LEGISLATURE FOR A SPECIAL SESSION OR FOR AN OUTRIGHT PAUSE ON DATA CENTER CONSTRUCTION. DENTON IS TAKING THE RIGHT STEP IN CONSIDERING A MORATORIUM, AS MANY CITIES HAVE PASSED DATA CENTER MORATORIUMS OR PAUSES ON CONSTRUCTION. LAST MONTH, LUBBOCK PASSED A 90 DAY DATA CENTER MORATORIUM WITHIN ITS CITY LIMITS UNTIL MORE RULES COULD BE DEVELOPED. IN AUGUST, ATHENS PASSED A DATA CENTER CONSTRUCTION BAN. IN JUNE, SAN MARCOS BECAME THE FIRST CITY TO OUTRIGHT BAN DATA CENTERS AND A SMALL TOWN. ALVIN PASSED A DATA CENTER PAUSE IN JUNE UNTIL FURTHER STUDY WAS DONE. IN MAY, HARLINGEN PASSED 120 DAY MORATORIUM AND THEN EXTENDED IT TO 180 DAYS IN AUGUST. NOW, DALLAS AND FORT WORTH ARE CONSIDERING MORATORIUMS OR RESTRICTIONS ON DATA CENTERS. DENTON IS RIGHT TO TAKE A MORATORIUM STAND, AS THE STATE HAS NOT FULFILLED ITS COMMITMENT TO SLOW DOWN DATA CENTERS. DESPITE A PROCLAMATION BY THE GOVERNOR A WEEK AGO LAST MONDAY, OUR ORGANIZATION, OUR ORGANIZATION, EXPOSED THE FACT THAT 17 ENVIRONMENTAL PERMITS, INCLUDING MINOR AND MAJOR AIR PERMITS, AS WELL AS CONSTRUCTION PERMITS, WERE STILL MOVING THROUGH T-C-E-Q FOR ALMOST A MONTH. DESPITE THE GOVERNOR'S ORDER. ADDITIONALLY, MANY OF THOSE DATA CENTERS THAT USE BEHIND THE METER POWER, WHICH TRANSLATES INTO NATURAL GAS TURBINES, ARE EXEMPT FROM THE GOVERNOR'S AUDIT. SOME CAMPUSES, SUCH AS STARGATE AND ABILENE, WILL HAVE A BUILD OUT OF 51 GAS TURBINES. IMAGINE THE VOCS, NOX, SULFUR DIOXIDE, PARTICULATE MATTER, CARBON

[05:10:06]

A MEDIUM SIZED DATA CENTER CAN TAKE UP TO 300,000 GALLONS. A LARGE HYPERSCALER CAN USE AS MUCH AS 5 MILLION GALLONS PER DAY. BESIDES THE POSSIBLE HEAVY USE FOR COOLING, MANY SYSTEMS, MANY CITIES HAVE NOT CONSIDERED THE WATER DISCHARGE FROM THESE FACILITIES. THEY CAN HAVE CONCENTRATIONS OF BROMINE, CORROSION INHIBITORS, OR PHOSPHATES, TRACE METALS OF COPPER, LEAD AND ARSENIC, ETHYLENE GLYCOLS, WHICH ARE TOXIC PROPYLENE, GLYCOLS AND PFAS OR FOREVER CHEMICALS. THESE DISCHARGES CAN BE CONCENTRATED IN OVERWHELM, A CITY'S WATER TREATMENT SYSTEM. THANK YOU. AND I HOPE DENTON WILL PROCEED ON ITS MORATORIUM.

THANK YOU. >> THANK YOU. APPRECIATE YOUR COMMENTS. JOHN. RICH, YOU'RE UP.

AND THEN NEXT WOULD BE SCOTT HEFFLEY. >> HELLO. I'M JOHN, I LIVE IN 76201. I SUPPORT THE MORATORIUM. I'M A SCIENCE TEACHER AND RECENTLY CERTIFIED SCHOOL COUNSELOR. THE TECHNOLOGY BEHIND THE DATA CENTERS AI IS SHOWN TO BE HARMFUL WITH AI INDUCED PSYCHOSIS. WE DON'T FULLY UNDERSTAND THIS PROBLEM YET. ADDITIONALLY, SAM ALTMAN THIS WEEK CAME OUT AND SAID HE THINKS THE PROBLEMS WITH AI MAY BE UNSOLVABLE, REFERRING TO THE HALLUCINATIONS THAT AI EXPERIENCES. GIVEN THAT THE TECHNOLOGY IS UNPROVEN AND POTENTIALLY HARMFUL, I DO NOT WANT OUR CITY TO FOOT THE BILL IF THIS BUBBLE GOES BUST LIKE IT HAS IN CHINA ALREADY. SO I THINK WE SHOULD SUPPORT THE MORATORIUM AND EVENTUALLY MOVE

TOWARDS A FULL BAN. >> THANK YOU. SCOTT HEFFLEY AND THEN TONY HARRIS WILL BE UP.

>> HELLO, I'M SCOTT HEFFLEY. I LIVE IN. >> OH, YES. YES. OKAY.

>> I'LL BE QUICK. I LIVE IN 76201, AND I JUST WANTED TO GO ON RECORD AS A LIFELONG RESIDENT OF DENTON, A CONSTITUENT OF YOU GUYS. AND JUST A PERSON THAT IS CONCERNED ABOUT OUR FUTURE, THAT I WANT TO GO ON RECORD AND SAY THAT I'M IN FAVOR OF THE MORATORIUM TO PUT SAFEGUARDS ON THESE AI DATA CENTERS AND REVIEW THEM MORE THOROUGHLY BEFORE WE GO

PRESS FORWARD. THAT'S ALL. >> THANK YOU. OKAY. UP NOW IS TONY HARRIS. AND THEN WOULD BE MILES. IS IT BEDLAM?

>> SO LIKE ALMOST ALL OF YOUR CONSTITUENTS. I DIDN'T HAVE A LOT OF TIME TO PREPARE ANYTHING.

AND I'M ALSO OKAY KIND OF TALKING OFF THE CUFF, BUT I BET YOU THE MAJORITY OF YOUR CONSTITUENTS AREN'T OKAY. SPEAKING OFF THE CUFF. SO I WORK FULL TIME AS A HOSPICE NURSE, YOU KNOW, MAKING SURE THAT OUR DYING NEIGHBORS PASS IN DIGNITY WITHOUT PAIN OR ANXIETY, SUPPORTING THEIR CAREGIVERS DURING THESE DIFFICULT TIMES. IT DOESN'T MATTER IF THEY'RE MAGA, IT DOESN'T MATTER IF THEY'RE RHINOS, IT DOESN'T MATTER IF THEY'RE CORPORATE DEMS, PROGRESSIVE DEMS, LIBERTARIANS, COMMUNISTS. I GIVE THEM ALL THE SAME KIND OF CARE. I'D HOPE YOU LOOK AT SERVING YOUR CONSTITUENTS SIMILARLY. I TOOK THE TIME FOR MY BUSY DAY TO COME HERE AFTER AN EIGHT HOUR DAY OF WORKING. YOU KNOW, MY DOGS WERE LOOKING AT ME SADLY WHEN I LEFT. YOU KNOW, THEY WERE LIKE, WONDERING WHY I WAS LEAVING AGAIN, YOU KNOW, INSTEAD OF TAKING THEM FOR A NATURE WALK AT CLEAR CREEK, WHICH IS WHAT I'D MUCH RATHER BE DOING RIGHT NOW. SO I HOPE YOU REALLY LISTENED TO ME AND TAKE MY CONCERNS SERIOUSLY. EVEN THOUGH I'M A COMMUNIST. JUST LIKE I TAKE THE SUFFERING OF ALL MY PATIENTS SERIOUSLY. I'M TIRED OF BEING GASLIT AND ACTING LIKE THIS IS NECESSARY.

[05:15:10]

IT DOESN'T MATTER IF YOU'RE CONSERVATIVE, IF YOU'RE PROGRESSIVE, IF YOU CONSIDER YOURSELF APOLITICAL, UNLESS YOU'RE MAKING MONEY OFF OF IT, YOU DON'T WANT IT. AND I'M ALSO WONDERING WHY THIS IS NECESSARY TO LIKE, FIGHT FOR A MORATORIUM WHEN IT WASN'T NECESSARY TO APPROVE THE AI POWERED FLYING KILLING MACHINE FACTORY. WHY IS IT NECESSARY TO DO THIS? WHY DIDN'T WE HAVE THREE HEARINGS OR TO START HAVING DATA CENTERS HERE IN THE FIRST PLACE THAT RISK OUR WATER, SOMETHING THAT WE ALL NEED. SOMETHING THAT YOUR CHILDREN NEED? SO NO MATTER WHO THEY VOTED FOR, NOBODY WANTS THIS. AND I WANT TO THANK THOSE OF YOU WHO HAVE SPEARHEADED THIS MORATORIUM AND ARE ACTUALLY SPEAKING OUT FOR YOUR CONSTITUENTS, AND I HOPE THAT ANYBODY ELSE THAT'S ON QUESTIONING IT SUPPORTS THE MORATORIUM. I WILL SAY THAT IF ANY OF YOU VOTE IN OPPOSITION, IN OPPOSITION TO THIS MORATORIUM, THEN YOU WILL REVIEW REVEAL YOUR TRUE COLORS. THIS IS NOT A PARTIZAN ISSUE. YOU WILL REVIEW YOUR REVEAL YOUR TRUE COLORS AS SOMEBODY WHO DOES NOT CARE ABOUT THEIR CONSTITUENTS, ABOUT THEIR NEIGHBORS, ABOUT THEIR WORLD. IT DOESN'T MATTER IF IT'S AT YOUR SOFTBALL GAME LEAGUE OR YOUR CHURCH OR THE BAR THAT YOU GO TO, OR WHATEVER IT IS THAT YOU DO. NOBODY WANTS THESE. AND I DON'T KNOW WHY WE HAVE TO KEEP ON COMING UP HERE AND LIKE FIGHTING THIS. THE ORGANIZERS OF THE COALITION HAVE PUT SO MUCH TIME INTO THIS. AND DON'T YOU THINK THAT WE'D RATHER BE DOING OTHER THINGS? I'M NOT ONE OF THE MAIN ORGANIZERS. I JUST WANT TO SAY LIKE I'M NOT. BUT THEY HAVE PUT SO MUCH TIME. MY HAT'S OFF TO THEM. THANK YOU. Y'ALL GET PAID. THEY DON'T.

THEY'RE JUST PUTTING THEIR TIME AND ENERGY TO SAVE OUR PLANET AND OUR WORLD.

>> THANK YOU. >> ALL RIGHT. THE NEXT SPEAKER IS MILES MEDLIN. AND THEN UP AFTER MILES IS ANNIE HEFFLEY. STATE YOUR NAME AND YOUR TIME WILL BEGIN.

>> MY NAME IS MILES BELTLINE. MY ZIP CODE IS 76209. I LIVE OFF OF LOOP 288. I'M COMING UP HERE FOR THE SAME REASONS THAT I CAME TO THE PAST PUBLIC HEARING AGAINST. I MEAN, FOR A DATA CENTER MORATORIUM. I ASK YOU ALL TO THINK OF THE COMMON GOOD AND TO ALSO THINK ABOUT IF ANY BENEFITS WILL COME FROM THIS AT ALL, BECAUSE I THINK THAT EVERYONE HERE CAN AGREE THAT IT'S HARD TO THINK OF ANY AT THIS POINT. MY MIND IS BLINKING. YEAH, I SUPPORT THE MORATORIUM. WE SIMPLY DO NOT HAVE THE INFRASTRUCTURE, ESPECIALLY CONSIDERING THAT OUR STATE HAS A HISTORY OF OUR GRID FAILING US. WE REALLY DO NOT NEED TO BE PUMPING A BUNCH OF RESOURCES INTO SOMETHING THAT WE DON'T REALLY KNOW IF IT'S A WORTHWHILE INVESTMENT. SO THANK

YOU. THAT'S ALL. >> THANK YOU. AND THEN ANNIE HEFFLEY AND THOSE ARE ALL THE CARDS THAT WE HAVE, BUT OH NO. YEAH, THAT'S ALL THE CARDS WE HAVE SUBMITTED, BUT IT'S STILL PUBLIC HEARING. SO WE'LL TALK ABOUT THAT AFTER THE COMMENTS ARE CONCLUDED.

>> GOOD EVENING COUNCIL. MY NAME IS ANNIE HEFFLEY. I AM A LIFELONG DENTON RESIDENT AND AN ORGANIZER WITH DATA CENTER FREE DENTON. I AM HERE TODAY TO SPEAK IN FAVOR OF A DATA CENTER MORATORIUM. AS I HAVE STATED IN PREVIOUS HEARINGS, I STAND AGAINST DATA CENTERS FOR AN ABUNDANCE OF REASONS ENVIRONMENTAL CONCERNS, HEALTH CONCERNS, RESOURCE CONCERNS.

THESE CONCERNS CANNOT BE REFUTED. DATA CENTERS NEGATIVELY IMPACT THE ENVIRONMENT, DRAIN RESOURCES AND CREATE HEALTH RISKS FOR SURROUNDING AREAS. THESE STATEMENTS ARE OBJECTIVE. DATA CENTERS IN DENTON WILL NEGATIVELY IMPACT OUR ENVIRONMENT, DRAIN OUR RESOURCES, AND CREATE HEALTH RISKS FOR OUR COMMUNITY. THIS WAS TRUE BEFORE THE ADDITIONAL REGULATIONS THAT WERE PASSED EARLIER THIS MONTH, AND IT

[05:20:04]

WE HAVE TOUTED THE CLOSED LOOP COOLING SYSTEM AS THOUGH IT IS COMPLETELY MITIGATED ANY AND ALL RISK TO US, AS THOUGH IT SHOULD QUELL ANY CONCERNS WE COULD POSSIBLY HAVE ABOUT THESE FACILITIES. CREATING RESOURCE SCARCITY AND NEGATIVE ENVIRONMENTAL IMPACT. THIS IS NOT TRUE. YES, CLOSED LOOP COOLING MAY USE LESS WATER THAN THE ALTERNATIVE, BUT IT USES MORE POWER. IT USES DANGEROUS CHEMICALS THAT HAVE THE POTENTIAL TO BUILD UP AND LEAK.

IT USES WATER INDIRECTLY. THESE REGULATIONS CANNOT AND WILL NOT WHOLLY PROTECT US. WE CANNOT BE SATISFIED WITH THE BARE MINIMUM. WE MUST CONTINUE TO DEMAND BETTER FOR OURSELVES. DO NOT FALL VICTIM TO THE MENTALITY THAT THE TEMPORARY NATURE OF A MORATORIUM NEGATES ITS VALUE. A MORATORIUM CAN STOP THIS DISEASE FROM SPREADING. WHILE IT WOULD ONLY LAST UP TO SIX MONTHS IN AN OFFICIAL CAPACITY, IT COULD ACT AS A DETERRENT TO ADDITIONAL FACILITIES FOR MUCH LONGER. A MORATORIUM IS AN ANNOUNCEMENT, A DECLARATION THAT DATA CENTERS ARE NOT WANTED IN THIS COMMUNITY, A STATEMENT THAT WE WILL NOT GO DOWN WITHOUT A FIGHT. AS ONE OF MY NEIGHBORS PUT IT AT THE LAST PUBLIC HEARING, IT IS BECOMING CLEAR THAT THIS MORATORIUM VOTE IS LESS ABOUT WHETHER OR NOT YOU SUPPORT A MORATORIUM, AND MORE ABOUT WHETHER OR NOT YOU WILL LISTEN TO YOUR CONSTITUENTS. AT THE FIRST PUBLIC HEARING ON MORATORIUM, THERE WERE 20 SPEAKERS, EVERY SINGLE ONE OF THEM IN FAVOR OF A MORATORIUM. WHEN COUNCIL MEMBER STEVENS ADDRESSED THE ROOM AND ASKED WHO WAS OPPOSED TO A MORATORIUM, NOT A SINGLE HAND WAS RAISED. OUR COMMUNITY HAS SPOKEN. WE HAVE MADE IT ABUNDANTLY CLEAR THAT WE ARE IN FAVOR OF A MORATORIUM. ARE YOU LISTENING? IF YOU ARE STILL SERIOUSLY CONSIDERING VOTING IN OPPOSITION TO A MORATORIUM, ASK YOURSELF WHOSE SIDE YOU'RE ON. WHO ARE YOU CLAIMING TO REPRESENT? OPPOSITION TO DATA CENTERS HAS UNITED PEOPLE ACROSS PARTY LINES, ACROSS BELIEF SYSTEMS, ACROSS DIFFERENCES, BECAUSE IT HAS BECOME CLEAR THAT THE ONLY PEOPLE TRULY BENEFITING FROM THESE FACILITIES UNDER CAPITALISM ARE THE BILLIONAIRES AT THE TOP. AT THE END OF THE DAY, IT ALL COMES DOWN TO ONE QUESTION WILL YOU CHOOSE PROFIT OR WILL YOU CHOOSE THE PEOPLE? I IMPLORE YOU TO CHOOSE US. I IMPLORE YOU TO CHOOSE A

MORATORIUM. THANK YOU. >> THANK YOU. ALL RIGHT. THAT'S THE END OF AT LEAST THOSE THAT FILLED OUT A BLUE CARD TO SPEAK. BUT THIS IS A PUBLIC HEARING. SO IF YOU DESIRE TO SPEAK, COME DOWN, STATE YOUR NAME, AND THEN BEFORE YOU LEAVE, PLEASE FILL OUT A BLUE CARD SO WE CAN HAVE

A RECORD OF YOUR OF YOUR COMMENTS AND YOUR VISIT. >> HI. THANK YOU. RACHEL WEAVER I'M IN A 76209. GOOD TO SEE YOU ALL AGAIN. ACROSS TEXAS, CONVERSATIONS ABOUT GROWTH INCREASINGLY INCLUDE A NEW TYPE OF DEVELOPMENT DATA CENTERS DRIVEN BY ADVANCES IN CLOUD COMPUTING, ARTIFICIAL INTELLIGENCE, AND DIGITAL INFRASTRUCTURE. DATA CENTER ISSUES ARE EXPANDING INTO EVERY COMMUNITY. WHILE THESE FACILITIES CAN BRING ECONOMIC OPPORTUNITIES, THEY ALSO RAISE IMPORTANT QUESTIONS ABOUT LAND USE, WATER RESOURCES, ENERGY DEMAND AND COMPATIBILITY WITH SURROUNDING LANDSCAPES. 20 YEARS AGO, THE AVERAGE DATA CENTER WOULD BE A 20 MEGAWATT DATA CENTER. TODAY. AI, AND SPECIFICALLY GENERATIVE AI, HAS CREATED THE NEED FOR HYPERSCALE DATA CENTERS THAT REQUIRE GIGAWATT OR MULTI GIGAWATT CAMPUSES. BIG TECH'S INTENT TO PUSH AI INTO EVERY ASPECT OF OUR LIVES BINDS US TO A FUTURE OF MORE, NOT LESS, DIRTY ENERGY. FOR DENTON, NATURAL RESOURCE PROFESSIONALS AND LOCAL DECISION MAKERS. THE CONVERSATION SHOULD EXTEND BEYOND THE FACILITY FOOTPRINT ITSELF. QUESTIONS ABOUT LOCAL AND REGIONAL WATER USE, ENERGY USE, LAND USE INFRASTRUCTURE AND LONG TERM COMMUNITY GOALS ALL DESERVE CONSIDERATION. THOUGHTFUL PLANNING TODAY CAN HELP ENSURE THAT FUTURE DEVELOPMENT ALIGNS WITH THE VALUES AND RESOURCES THAT MAKE TEXAS LAND SO IMPORTANT. NOW WE HAVE MORE RESOURCES OUT THERE. THERE IS A WHITE PAPER THAT WAS PUT OUT BY THE VIRGINIA BOARD OF SUPERVISORS AND TEXAS AGRILIFE SHARED AN ARTICLE ABOUT IT. OFFERING CONSIDERATIONS FOR COMMUNITIES DEALING WITH DATA CENTERS. THEY GIVE CLEAR RECOMMENDATIONS ON POLICY AND REGULATION, GUIDELINES THAT CAN HELP GUIDE COMMUNITIES IN THIS PROCESS, SUCH AS CONDUCTING PRE AND POST CONSTRUCTION NOISE STUDIES REQUIRING UTILITIES TO SPECIFY THE MAXIMUM POWER REQUESTED, AND HOW THE UTILITY PLANS TO DELIVER, REQUIRING THE DATA CENTER TO SPECIFY IN WRITING HOW MUCH WATER THE DATA CENTER

[05:25:01]

MORATORIUM AND A FUTURE BAN. THANK YOU. >> THANK YOU. THIS IS A PUBLIC HEARING. ANYBODY ELSE WISHING TO SPEAK? COME DOWN AND STATE YOUR NAME. AND BE SURE AND FILL

OUT A BLUE CARD. >> HEY, EVERYONE. HOW'S IT GOING? MY NAME IS LANE BOUCHER.

I LIVE IN DISTRICT FOUR. I, I WANT TO MAKE IT CLEAR, FIRST OFF, THAT I'M NOT AGAINST TECHNOLOGICAL DEVELOPMENT. I ACTUALLY WORK IN TECH. I WORK WITH AI A LOT. I WORK WITH IT EVERY DAY. BUT THE PROBLEM HAPPENS WHEN I. THE TECHNOLOGICAL DEVELOPMENT OF SOME, YOU KNOW, AREA, SPECIFICALLY ANTHROPIC, OPEN AI, ALL THESE DIFFERENT COMPANIES COME INTO CONTACT WITH OUR ABILITY TO LIVE RIGHT, WITH OUR ABILITY TO SUCCESSFULLY RUN A CITY. WE HAVE AN INFRASTRUCTURE PROBLEM. WE'VE GOT A WASTEWATER PLANT THAT'S RUNNING AT DEFICIT.

I THINK IT'S LIKE 21 MILLION GALLONS A DAY VERSUS LIKE 25 IN DEMAND, SOMETHING LIKE THAT.

WE'VE GOT A GM IS PRETTY, PRETTY CLOSE TO CAPACITY, LIKE 75MW REMAINING, RIGHT. AND WE ALREADY HAVE THINGS LIKE THE CORE SCIENTIFIC CAMPUS THAT HAVE PLANNED FOR TO EXCEED CAPACITY. I MEAN, WE'RE WE'RE AT OUR LIMIT HERE, GUYS. WE'RE AT OUR LIMIT FOR OUR INFRASTRUCTURE. AND THAT'S, THAT'S NOT EVEN TAKING INTO QUESTION, YOU KNOW, ALL THE ENVIRONMENTAL CONCERNS, ALL THE CONCERNS WITH, YOU KNOW, NOISE AND EVERYTHING GOING ON THERE.

IT'S JUST IT'S NOT A GOOD DEAL. IT'S NOT A GOOD DEAL AT ALL. NOT NOT FOR THE CITY, NOT FOR THE PEOPLE. THE ONLY GOOD DEAL IT IS, IS FOR ANTHROPIC AND OPENAI AND META AND ALL THESE OTHER COMPANIES THAT THEY'RE THEY'RE THEY'RE MAKING BILLIONS OF DOLLARS HERE. RIGHT. AND, YOU KNOW, IT'S JUST IT'S NOT WORTH IT. THERE IS ZERO REASON TO VOTE NO ON THIS MORATORIUM, ZERO REASON. IT'S A DELAY, RIGHT? IF YOU WANT TO BUILD DATA CENTERS, YOU KNOW, IN THE FUTURE, WE CAN DO THE MATH, RIGHT? AND WE CAN AND THE MATH WILL PROBABLY SAY IT'S NOT WORTH IT. BUT THAT'S A THING FOR LATER, RIGHT? WE NEED, WE NEED TIME TO BREATHE. WE NEED TIME TO LET DENTON DO THE MATH, TO LET DENTON FIGURE OUT WHAT'S GOING ON. RIGHT. SO YOU SHOULD VOTE YES. EVERYONE'S SAYING IT. EVERYONE IN THIS ROOM IS SAYING IT. PLEASE. PLEASE VOTE YES.

THANK YOU GUYS. >> THANK YOU. THIS IS A PUBLIC HEARING. ANYBODY ELSE WISHING TO SPEAK? STATE YOUR NAME AND YOUR TIME WILL BEGIN. YOU'LL HAVE FOUR MINUTES.

>> HI. MY NAME IS SUNNY BUSBY. I LIVE AT. EXCUSE ME IN 76208. I'M HERE TO ONCE AGAIN SPEAK IN FAVOR OF THE MORATORIUM. I JUST SAT WITH YOU THROUGH HOURS OF MEETINGS THAT HELPED TO DETAIL SOME OF THE FISCAL BENEFITS THAT OUR CURRENT DATA CENTER HAS BROUGHT. DENTON. NOT EVERYTHING IS ALL BAD, BUT NOT EVERYTHING IS ALL GOOD. WHAT COST IS TRULY COMING FROM THIS? HOW IS THIS IMPACTING THE ENVIRONMENT? HOW LONG CAN WE REALLY ANTICIPATE THESE FISCAL BENEFITS TO LAST? DEPRECIATION INFRASTRUCTURE CONCERNS THE LIFESPAN OF THE TECHNOLOGY AT

[05:30:02]

THANK YOU FOR DOING WHAT IS BEST FOR THE ENVIRONMENT. AND THANK YOU FOR APPROVING THE

MORATORIUM. >> THANK YOU. ANYONE ELSE WISHING TO SPEAK? CAN I STATE

YOUR NAME AND YOUR TIME WILL BEGIN. >> MY NAME IS ADRIENNE. I LIVE IN 76209, AND I HOPE THAT YOU ALL WILL LISTEN TO YOUR CONSTITUENTS AND NEIGHBORS.

REPEATED CALLS TO SUPPORT A MORATORIUM ON DATA CENTERS IN OUR CITY. MUCH FURTHER EVALUATION NEEDS TO BE DONE FOR US TO APPROPRIATELY AND FULLY UNDERSTAND THE LONG TERM STRAIN ON INFRASTRUCTURE AND THE DEEP LIVELIHOOD IMPACTS THAT DATA CENTER DEVELOPMENT WILL HAVE HERE. IT'S IMPORTANT THAT CITY COUNCIL ACT ON THIS MATTER IMMEDIATELY. WE MUST BE PROACTIVE TO PROTECT OUR COMMUNITY, RESOURCES, THE ENVIRONMENT AND THE HEALTH AND QUALITY OF LIFE OF CURRENT COMMUNITY MEMBERS AND FUTURE GENERATIONS ACROSS TEXAS AND IN OTHER STATES. WE SEE HOW CITIES ARE SUFFERING FROM NOT TAKING THEIR TIME TO EVALUATE SPECIFIC MEASURES FOR DATA CENTER DEVELOPMENT IN THE AREAS THEY REGRET THAT THEY DID NOT PAUSE IN THE SAME MOMENT THAT WE ARE IN RIGHT NOW. THIS IS YOUR OPPORTUNITY TO PRIORITIZE A SUSTAINABLE PATH FOR OUR COMMUNITY BY SUPPORTING AN IMMEDIATE MORATORIUM. THANK YOU.

>> THANK YOU. ANYONE ELSE WISHING TO SPEAK? COME DOWN. STATE YOUR NAME AND YOUR TIME

WILL BEGIN. THANK YOU. AND BE SURE AND FILL OUT A BLUE CARD. >> ALL RIGHT. HELLO, MY NAME IS REBECCA MARSHALL. I'M NOT VERY GOOD WITH PUBLIC SPEAKING. I WILL SAY THAT RIGHT NOW. BUT I COME TO YOU TODAY IN SPITE OF THAT, BECAUSE I FEEL IT'S MY DUTY TO COME SPEAK WITH YOU AS AN ARTIST. WHO WANTS TO ASK, WHY DO WE EVEN WANT AI IN OUR LIVES? WHAT DOES IT GIVE US? EVERY DAY I HAVE BEEN FIGHTING WITH AI IN ORDER TO CREATE MY OWN WORK AND HAVE IT RECOGNIZED AS SOMETHING THAT A HUMAN HAS MADE. I TRULY BELIEVE THAT AS GENERATIVE AI HAS BECOME PROLIFIC IN OUR CURRENT SOCIETY, IT'S NOT REALLY DONE MUCH GOOD FOR US. IT'S MADE IT HARDER TO ACTUALLY RECOGNIZE WHAT IS REAL AND WHAT ISN'T. IT HAS LIED TO US CONSTANTLY. I DON'T SEE WHY

I WOULD WANT THAT IN MY CITY. THANK YOU. >> THANK YOU. ANYONE ELSE? COME

DOWN. STATE YOUR NAME. YEP. >> MY NAME IS EMIL BUSBY 76208. AND I'M NOT GOING TO KEEP BEATING THE DEAD HORSE OF PASS MORATORIUM BECAUSE YOU ALL HAVE HEARD THAT A THOUSAND TIMES.

BUT I WORK IN CONSTRUCTION. AND ONE OF THE FUN THINGS ABOUT WORKING IN CONSTRUCTION, YOU WORK A LITTLE BIT OF EVERYWHERE. NOW, TALKING TO SOME OF MY INSPECTOR FRIENDS WHO INSPECT EVERYWHERE. THEY ARE GETTING REPORTS OF. THIS IS ANECDOTALLY, I CANNOT PROVE THIS. I'M GOING TO STATE THAT RIGHT NOW WE ARE GETTING ANECDOTAL REPORTS OF DATA CENTERS VIOLATING AND CHANGING WHAT THEY PROMISED THEY WOULD DO ON THEIR PERMITS. THAT IS SOMETHING FOR YOU TO LOOK AT WHEN WE DO GET THESE MORATORIUM PASS, AND WE DO GET THE RULES TO MAKE SURE THAT THE DATA CENTERS ARE AS SAFE AS THEY CAN BE. UNTIL THE STATE ALLOWS US TO BAN DATA CENTERS ENTIRELY. MAKE SURE THAT YOU GUYS ARE HAVING THAT DISCUSSION WITH OR WHOEVER THAT NEEDS TO BE WITH TO MAKE SURE THE INSPECTORS ARE HOLDING THE DATA CENTERS TO WHAT THEY ARE

[05:35:04]

ANECDOTAL. THEY ARE DOING THIS THOUGH. >> THANK YOU. THANK YOU. YES.

COME DOWN, STATE YOUR NAME AND YOUR TIME WILL BEGIN. >> HELLO, MY NAME IS LILY ALEXANDER. I LIVE IN 76201, AND I'M IN FAVOR OF A DATA CENTER MORATORIUM. BASED ON TODAY'S HEARING AND THE PREVIOUS PUBLIC ONE, I THINK IT'S CLEAR HOW THE COMMUNITY AND CITIZENS OF DENTON FEEL ABOUT DATA CENTERS. THE LEAST THAT Y'ALL COULD DO WOULD TO BE TO VOTE YES ON THE

MORATORIUM. THANK YOU. >> THANK YOU. YES. COME ON DOWN. >> HI, MY NAME IS TREVOR HOLCOMB. I LIVE IN 76208, AND I'M AN EDUCATOR IN DENTON. AND I'M CONCERNED ABOUT DATA CENTERS COMING TO DENTON, OF COURSE. AND I'M IN FAVOR OF A MORATORIUM. I'M ALSO CONCERNED ABOUT THE ENVIRONMENTAL IMPACT IT WILL HAVE ON THE CITY OF DENTON, PLUS THE COST ON RETURN.

THANK YOU. >> THANK YOU. ANYONE ELSE? STATE YOUR NAME. YOUR TIME WILL

BEGIN. >> HELLO. >> MY NAME IS REBECCA BEARDEN AND I RESIDE AT 76208 HERE IN DENTON. I STRONGLY SUPPORT THE MORATORIUM OF THE DEVELOPMENT OF DATA CENTERS DUE TO THE THREAT TO HEALTH RESOURCES AND THE ENVIRONMENT. AS MY FELLOW COMMUNITY MEMBERS HAVE MADE ABUNDANTLY CLEAR THE REASONS BEHIND THIS STANCE. I WANT TO REITERATE THOSE AND SIMPLY EMPHASIZE THAT, AS YOU HAVE HEARD, YOUR COMMUNITY IS IN SUPPORT OF THIS MORATORIUM. I URGE YOU TO DO RIGHT BY YOUR CONSTITUENTS AND TO LISTEN TO

YOUR COMMUNITY. >> THANK YOU. THANK YOU. COME DOWN, STATE YOUR NAME AND

YOU'LL HAVE FOUR MINUTES. >> HI, MY NAME IS JAYLEE CALABRESE. MY ZIP CODE IS 76208.

I'M IN FAVOR OF THE MORATORIUM. I THINK THAT EVERYBODY SAID A LOT OF REALLY GREAT THINGS, ESPECIALLY ABOUT MAKING SURE THAT WE'RE STUDYING WHAT AI IS ACTUALLY DOING FOR US AND WHAT THESE DATA CENTERS DO FOR US. THERE'S A LOT OF THINGS THAT WE'RE JUST REALLY UNSURE ABOUT, AND THERE'S NO REASON FOR DENTON, ESPECIALLY BECAUSE WE HAVE SUCH A LOVELY COMMUNITY AND WE ACTUALLY HAVE PEOPLE WHO REALLY CARE ABOUT THIS CITY. AND I THINK THAT IT'S GREAT THAT EVERYBODY IS TAKING A STANCE AGAINST SOMETHING THAT COULD HURT US ALL. AND I HOPE

YOU DO TOO. >> THANK YOU. THANK YOU. >> MY NAME IS CHRISTOPHER GRAHAM. I LIVE IN 760201. I SUPPORT A MORATORIUM ON AI DATA CENTERS AND A FULL BAN. IF THAT IS POSSIBLE. I COULD GO OVER THE ENVIRONMENTAL ECONOMIC CONSEQUENCES OF DATA CENTERS.

BUT ONE, LIKE JUST THE LOSS OF TRUTH AND REALITY THAT AI HAS CAUSED PEOPLE TO HAVE. I RECENTLY HAD TO CUT CONTACT WITH A FRIEND WHO DEVELOPED AI PSYCHOSIS BECAUSE HE. I TURNED FROM AN AFFABLE, FRIENDLY PERSON WHO LIT UP A ROOM INTO AN ANGRY, BITTER CONSPIRACY THEORIST AND JUST DESTRUCTIVE AT THE WORLD, AND I JUST DON'T SEE ANY BENEFIT TO A TECHNOLOGY THAT IS, AT ITS CORE, THEFT AND PLAGIARISM ON AN INDUSTRIAL SCALE. IT'S JUST PROPERTY THEFT COPYRIGHT. OR A TAX ON A MASS SCALE, AND I JUST DON'T SEE ANY PURPOSE TO THIS TECHNOLOGY WHATSOEVER. IT HALLUCINATES. IT POISONS OUR WATER. IT USES UP TOO MUCH ELECTRICITY, AND THERE'S JUST NO BENEFIT SOCIETALLY, ECONOMICALLY OR ENVIRONMENTALLY.

>> THANK YOU. THANK YOU. THANK YOU. ANYONE ELSE? >> HI. THIS IS MY FIRST TIME DOING THIS. MY NAME IS MACKENZIE SHRUM. I LIVE IN SEVEN SIX, 201, AND I SUPPORT THE MORATORIUM FOR BASICALLY ALL THE REASONS THAT EVERYONE HAS ALREADY STATED. THANK YOU.

[05:40:04]

>> THANK YOU. STATE YOUR NAME. YOUR TIME WILL BEGIN. >> MY NAME IS VINCENT GADDIS. I LIVE IN SEVEN, SIX, TWO, ZERO ONE AND I SUPPORT A MORATORIUM. AND I'M UP HERE DESPITE THE FACT THAT I'M SCARED TO BE HERE. I'M MORE AFRAID OF THE CONSEQUENCES AND BETRAYING MY MY PEERS, MY FELLOW CITIZENS, AND MY COMRADES HERE IN DENTON. AND I'M NOT HERE TO THANK YOU GUYS. I'M HERE TO THANK THE PEOPLE WHO SHOWED UP AND WHO SPOKE, WHETHER OR NOT THEY WERE PREPARED TO SPEAK, BECAUSE IT SHOWS THAT THEY CARE. IF YOU LIVE HERE IN DENTON AND YOU CARE, YOU WOULD NOT BE SUPPORTING THIS. OBVIOUSLY, THERE'S NO OTHER REASON THAN PERSONAL FINANCIAL GAIN TO SUPPORT THIS DATA CENTER STUFF, BUT I ALSO JUST WANTED TO THANK THE PEOPLE WHO GOT UP HERE AND SPOKE, AND THAT'S PRETTY MUCH ALL I HAVE TO SAY. THANK YOU.

>> THANK YOU FOR YOUR COMMENTS. ANYONE ELSE? >> ANNA TAO 76208. I WASN'T PLANNING ON SPEAKING. I'VE BEEN REALLY HAPPY TO SEE SO MANY NEW FACES COME HERE AND SPEAK FIRST.

BUT I DID HAVE SOME POINTS SO I'LL KEEP IT SHORT. I JUST WANT TO SAY THAT I WANT TO BELIEVE THAT YOU ALL ARE GOING TO VOTE FOR THE MORATORIUM. WHAT I WORRY ABOUT IS HOW YOU WILL ACT AFTER THE INITIAL VOTE IS OVER, AND HOW IN THE FUTURE TO ENSURE THAT IT CONTINUES THE MORATORIUM AND THAT YOU'RE WORKING TOWARDS A BAN, THAT THIS ISN'T JUST FOR NOTHING. I WANT TO MAKE SURE THAT THIS ISN'T JUST A WAY OF YOU TO BUY OFF TIME UNTIL YOU THINK THE COMMUNITY MAY EASE UP ON THIS TOPIC, BECAUSE THAT'S NOT GOING TO HAPPEN. SO I JUST WANT TO MAKE THAT REALLY CLEAR. LOOK, YOU ALL IN YOUR EYES, THAT'S NOT GOING TO HAPPEN IF YOU THINK YOU'RE BUYING OFF TIME, OKAY, YOU ARE UNDER A MICROSCOPE. RIGHTFULLY SO. AS OUR PUBLIC SERVANTS. SO WE ARE WATCHING CLOSELY. DATA CENTERS HAVE SHOWN TO NOT CARE ABOUT ARBITRARY RULES. THEY WILL BREAK THEM AND THEY WILL PAY LOW FINES BECAUSE IT MEANS NOTHING TO THEM. YOUR NEW REGULATIONS ARE NOT ENOUGH AND ARE TOO SOFT. PLEASE UNDERSTAND THAT WE ULTIMATELY WANT A BAN, AND THE PEOPLE OF THE CITY ARE NOT GOING TO BACK DOWN ON THIS OVER TIME. SO I'M ASKING YOU TO BE A LITTLE HARDER ON THESE DATA CENTERS. I TRULY DON'T CARE THAT ONE IS ALREADY 99% BUILT. I DON'T WANT IT TO RUN. THANK YOU.

>> THANK YOU. ANYONE ELSE? STATE YOUR NAME AND TIME AGAIN. >> HI, MY NAME.

>> IS GRACE HANSON. I'M IN DISTRICT TWO. I'VE LIVED HERE FOR ABOUT SEVEN YEARS. I'M NOT GOING TO REPEAT A LOT OF THE INCREDIBLE POINTS THAT EVERYONE ELSE HERE HAS MADE TONIGHT. I DO WANT TO REITERATE THE POINT THAT THE PERSON BEFORE ME JUST MADE, AND ELIZABETH BOOKER HOUSTON, WHO'S RUNNING FOR CONGRESS RECENTLY MADE IN MEMPHIS WHEN THEY PASSED OR THEY REJECTED A MORATORIUM RECENTLY THAT IF AN APPEAL TO ETHICS IS NOT LANDING FOR ANY REASON, THIS IS LIKE A UNITING ISSUE FOR EVERYONE. AND WE WILL REMEMBER. AND IF YOU'RE WANTING POLITICAL CAREERS IN DENTON, A CITY OF CREATIVES WHO JUST I MEAN, LOOK HOW MANY PEOPLE ARE IN TOWN FOR ALL OF THE ART FOR HALLOWEEN, LIKE BRINGING IN PROFIT, BRINGING IN TOURISM.

LIKE WE'RE GOING TO REMEMBER THE MICROSCOPE COMMENT. I COULDN'T AGREE WITH MORE. AND AS A LOT OF US ARE GETTING EDGED OUT OF OUR FIELDS AND JOBS FOR LIKE ALSO, YOU KNOW, THE NEW HEALTH EFFECTS. AND FOR FOLKS WHO ARE LIVING CLOSE TO DATA CENTERS, MEMPHIS IS ANOTHER EXCELLENT EXAMPLE. YEAH, WE'RE ANGRY AND TIRED. AND THIS IS ONE OF THE FEW THINGS WE CAN AGREE ON AS A CITY. SO PLEASE KEEP THAT CLOSE TO HEART. THANK YOU FOR YOUR TIME.

>> THANK YOU. ANYONE ELSE? STATE YOUR NAME AND YOUR TIME WILL BEGIN.

[05:45:04]

>> MATT BOWMAN 76201. ONE OF THE CO-CHAIRS OF THE GREEN PARTY OF TEXAS AND THE GREEN PARTY OF DENTON COUNTY. AND BY THE GRACE OF GOD, FOR MORE THAN HALF OF MY LIFE, I DIDN'T KNOW ANYONE LIKE YOU. AND WHEN IT COMES TO ART AND FASHION AND MUSIC, ANTONIANS HAVE BEEN REAL CAVALIER WITH AMAZING RESULTS. AND THAT'S PART OF WHAT MAKES THIS CITY GREAT WHEN IT COMES TO DEATH. MACHINES KILL THE PLANET, KILL OUR MINDS, AND HARSH MY MELLOW. WE DON'T NEED TO BE AT THE FOREFRONT OF THAT. WE DON'T HAVE TO BE LEADING THAT. WE CAN LET SOMEBODY ELSE DO IT. OR MAYBE IT DOESN'T NEED TO HAPPEN AT ALL. THAT BEING SAID, A MORATORIUM IS EIGHT. WE

WANT A BAN, SO DO WHAT YOU CAN. THANK YOU. >> THANK YOU. ANYONE ELSE?

STATE YOUR NAME? YOUR TIME WILL BEGIN. >> HELLO, MY NAME IS SHANNA ALSUP. I ALSO DIDN'T HAVE A SPEECH PREPARED TODAY, BUT JUST WANTED TO SAY I'M IN FAVOR OF A MORATORIUM AND EVENTUALLY A BAN FOR ALL OF THE REASONS THAT EVERYONE BROUGHT UP TODAY. AND JUST AS A NOTE, SINCE I'VE STARTED COMING TO THESE MEETINGS, I THINK A LOT OF US FEEL THE FRUSTRATION OF FEELING LIKE A RESEARCH TEAM. I'VE SEEN A LOT OF SURPRISED LOOKS OR NOTE TAKING WHENEVER SOMEONE BRINGS UP A FACT, AND IT SHOULDN'T BE THE FIRST TIME YOU GUYS ARE HEARING THESE KIND OF THINGS. I DON'T KNOW A LOT ABOUT THE INNER WORKINGS OF WHAT YOU DO, BUT I KNOW YOU HAVE ASSISTANTS AND RESEARCHERS AND WHY? WHY IS THIS THE FIRST TIME YOU'RE HEARING A LOT OF THESE FACTS? I WANT TO SEE THESE RESEARCHERS OR ASSISTANTS PUT INTO HYPERDRIVE DURING THIS MORATORIUM TO EVENTUALLY GET US TO A BAN, WHICH IS, I THINK,

WHAT A LOT OF YOUR CONSTITUENTS TRULY WANT. SO THANK YOU. >> THANK YOU. ANYONE ELSE? WHO WANTS. LAST CALL, ANYBODY WISHING TO SPEAK ON THIS AGENDA ITEM. ALL RIGHT. WE WILL CLOSE THE PUBLIC HEARING. AND THIS WAS A PUBLIC HEARING ONLY. SO NO ACTION WILL BE TAKEN AT THIS TIME. SO THAT CONCLUDES THAT PORTION THAT THAT ITEM FOR OUR AGENDA. SO WE'LL MOVE OH

COUNCIL MEMBER MAYOR PRO TEM STEPHENS SORRY. >> I'LL BE VERY BRIEF. JUST A FEW QUICK COMMENTS. SINCE THE LAST PUBLIC HEARING I DID THIS LAST TIME AND SOMEONE MENTIONED IT. BUT JUST SHOW OF HANDS. IF YOU'RE IN SUPPORT OF A MORATORIUM. OKAY, YOU CAN PUT YOUR HANDS DOWN. COULD YOU GIVE ME A SHOW OF HANDS? IF YOU'RE OPPOSED TO A MORATORIUM? OKAY.

JUST CHECKING. I JUST WANTED TO MAKE A FEW COMMENTS OR ANSWER SOME THINGS, BECAUSE THERE WAS A QUESTION THAT WAS BROUGHT UP ABOUT WHY WE HAVE TO GO THROUGH THIS ARDUOUS PROCESS. AND I GET IT. IT IS IT IS TEXAS STATE LAW. AND THAT IS WHY WE'RE HAVING TO YOU GO THROUGH THE PROCESS AS AS LONG AS IT'S TAKING US, Y'ALL ARE RIGHT. IN REGARDS TO DEVELOPMENT CODE CHANGES, I MEAN, I, I AM GRATEFUL THAT THE WORK THAT WE DID. BUT THERE IS MORE TO BE DONE. I MEAN, AND I BROUGHT THIS UP A FEW MEETINGS AGO, BUT COMMISSIONER ELLIS, WHO JUST CAME BACK TO THE PNC, HAS BEEN ASKING FOR THESE DEVELOPMENT CODE CHANGES FOR YEARS. AND SO I'M GLAD THAT THOSE FINALLY CAME FORWARD. I'M ALSO GLAD SHE'S FINALLY BACK ON PNC TO THEN BE ABLE TO CONTRIBUTE TO THAT CONVERSATION MOVING FORWARD. BECAUSE AS OUR OWN PRESENTATIONS STATED AT THE LAST MEETING, WE HAD THIS WORK SESSION ON ALL THESE FINDINGS THAT WERE NEEDED TO JUSTIFY A MORATORIUM. AND THERE WERE A LOT OF CONCERNING REASONS WHY WE NEEDED TO MOVE FORWARD. AND SO I ENCOURAGE YOU TO WATCH THAT, BECAUSE YOU WOULD BE ABLE TO SEE A LITTLE BIT MORE ABOUT WHAT STAFF RESEARCHED AND AND HOW IT IS VERY CONCERNING FOR THE CITY. BUT ONE OF THOSE THINGS I WANTED TO HIGHLIGHT IN THERE WAS THAT STAFF HAD EXPLICITLY STATED THAT DESPITE THE FACT THAT THERE WERE DEVELOPMENT CODE CHANGES, THEY WERE SOMEWHAT BROAD AND MORE NEEDED TO BE DONE TO SURE THAT UP MOVING FORWARD. AND SO THAT JUST ANSWERS THE BROADER QUESTION FOR ME. WHEN THIS COMES TO A VOTE, IT WOULD BE WEIRD IF I VOTED AGAINST IT. I WAS THE ONE THAT BROUGHT IT FORWARD. BUT SO YES, I'M GOING TO SUPPORT THE. THAT'S HAPPENED BEFORE THE I. I SUPPORT A MORATORIUM, AND IT'S FOR A LOT OF THE REASONS THAT Y'ALL LISTED. LARGELY, WE LEARN SOMETHING NEW EVERY SINGLE WEEK IN, IN FROM STAFF, FROM THE COMMUNITY, FROM OUR OWN RESEARCH. AND IT INDICATES THAT WE NEED THIS TIME TO REALLY STUDY THE FACTS AND MAKE BETTER DECISIONS MOVING FORWARD. ONE OF THE THINGS THAT Y'ALL BROUGHT FORWARD WAS A POTENTIAL BAN. I CAN ONLY ANSWER FOR MYSELF. THE ANSWER IS I KNOW

[05:50:06]

SPEAKS A LOT ABOUT OUR GREAT RESIDENTS. THANK YOU. >> THANK YOU. COUNCIL MEMBER

FERRY. >> THANK YOU, MR. MAYOR. YEAH. MAYOR PRO TEM STEPHENS COVERED A LOT OF WHAT I WANTED TO SAY AS WELL. I USUALLY HAVE A NOTEPAD. THIS IS MY FIRST DAY FORGETTING MY NOTEPAD BECAUSE I LIKE TO WRITE DOWN EACH AND EVERY ONE OF YOUR NAMES THAT COMES DOWN AND WRITE DOWN THE DETAILS ABOUT IF YOU SHARE WHERE YOU, WHAT YOU DO IN WORK AND WHAT YOUR POINTS ARE. IN CASE THERE ARE FOLLOW UP QUESTIONS, OR IF THERE'S A WAY I CAN CONTACT YOU. THAT'S HOW I'VE BEEN ABLE TO CONTACT SOME OF YOU IN THIS AUDIENCE. I REALLY APPRECIATE EACH AND EVERY ONE OF YOU COMING DOWN, AND ESPECIALLY THOSE WHO DIDN'T PLAN TO SPEAK AND GOT UP HERE TO SPEAK. AND JUST TO STATE YOUR NAME AND TO STATE THAT YOU WANT A MORATORIUM, I REALLY APPRECIATE THAT STRENGTH AND BRAVERY. AND I THINK THAT THERE'S A LOT OF CAMARADERIE IN THAT. AND I THINK THAT THAT SPEAKS TO THE LEVEL OF IMPORTANCE OF WHAT WE'RE TALKING ABOUT. I DO AGREE THAT WITH THE SIX MONTH POTENTIAL LENGTH OF A MORATORIUM, IT GIVES US AN OPPORTUNITY TO ALSO WATCH THE LEGISLATIVE SESSION THAT'S COMING UP TO SEE WHAT LAWS ARE GOING TO COME THROUGH AT THE STATE LEVEL, AND WHAT THAT'S GOING TO DO TO MUNICIPALITIES RIGHTS, WHAT WE ARE ALLOWED TO DO, AND WHAT WE'RE NOT ALLOWED TO DO. BECAUSE KNOWING THAT THIS IS A VERY IMPORTANT TOPIC THAT WE KNOW THAT PEOPLE AT THE STATE LEVEL HAVE ALREADY SAID, HIT A PAUSE. WE'RE GOING TO TALK ABOUT THIS AND WE'RE GOING TO LEGISLATE IT, LEGISLATE IT, LEGISLATE IT. WOW, WE'VE BEEN HERE. IT'S BEEN A LONG DAY. LEGISLATE IT. THEN WE WANT TO BE MINDFUL THAT WE DON'T JUMP INTO SOMETHING TOO SOON. THAT THEN CREATES LITIGATION AND COSTS THE TAXPAYER A LOT OF MONEY, RIGHT? SO THIS GIVES US FOR THE ENTIRE LEGISLATION THROUGH MAY 31ST, THE LAST DAY OF THE SESSION, THE LAST DAY OF OUR MORATORIUM, GIVES US THAT FULL TIME TO SEE WHAT THE LEGISLATION WILL DO BY WAY OF MORATORIUMS AND RESTRICTIONS FOR DATA CENTERS. AND THEN LASTLY, I WANTED TO STATE, YES, AS SOMEONE WHO WAS ON THE DEVELOPMENT CODE REVIEW COMMITTEE, I AGREE THAT THE CODE COULD BE STRONGER. ABSOLUTELY. I THINK THE FIRST AND MOST IMPORTANT PART WAS ENSURING AN SUP IS ATTACHED TO ANYTHING THAT MOVES FORWARD.

ESPECIALLY USE PERMIT REQUIRES THAT YOU GO THROUGH P AND Z, THAT YOU GO THROUGH COUNCIL, THAT YOU GET TO COME HERE AND SPEAK OUT AGAINST WHAT COMES BEFORE COUNCIL. THERE IS NO BUY RIGHT ANY LONGER. THERE'S NO APPLICATION THAT IN THE DARK OF NIGHT GETS FILED AND YOU HAVE NO IDEA IT'S COMING AS IT DID IN THE PAST, THAT THOSE DAYS ARE GONE. TODAY IS THE FIRST DAY THAT THOSE CODES GO INTO EFFECT. AND I THINK I'M GRATEFUL FOR THAT OPPORTUNITY BECAUSE IT'S FAR MORE TRANSPARENT THAN WHAT IT WAS. BUT I AGREE IT CAN GO FARTHER.

SO I JUST WANTED TO MAKE SURE I SPOKE THAT INTO EXISTENCE. I REALLY DO APPRECIATE YOUR TIME TONIGHT. THANK YOU SO MUCH FOR COMING. PLEASE REACH OUT IF YOU HAVE ANY OTHER QUESTIONS OR CONCERNS, AND KNOW THAT I AM DOING MY HOMEWORK AND I WILL CONTINUE TO DO MY HOMEWORK.

[B. Z26-0007a Hold a public hearing and consider adoption of an ordinance of the City of Denton, Texas, regarding a change in the zoning district and use classification from Residential 2 (R2) District to Light Industrial (LI) District on approximately 3.757 acres of land generally located on the south side of East University Drive, approximately 1,568 feet east of the intersection of East University Drive and North Trinity Road in the City of Denton, Denton County, Texas; adopting an amendment to the City’s Official Zoning Map; providing for a penalty in the maximum amount of $2,000.00 for violations thereof; providing a severability clause and an effective date. The Planning and Zoning Commission voted (4-1) to recommend approval of the request. Motion for approval by Commissioner Garland and second by Commissioner Riggs. (Z26-0007a, Vale Rezoning, Sean Jacobson)]

THANK YOU. >> THANK YOU. ALL RIGHT. WE'LL MOVE ON TO OUR NEXT AGENDA ITEM.

CERTAINLY WOULD INVITE EVERYBODY TO STAY AND HEAR SOME OF THE OTHER ISSUES THAT WE'RE DEALING WITH DURING THE CITY COUNCIL. SO BUT IF NOT, I CERTAINLY UNDERSTAND. SO I'LL CALL THE NEXT ITEM, WHICH IS ITEM B, WHICH IS Z26-0007A HOLD A PUBLIC HEARING. CONSIDER ADOPTION OF AN ORDINANCE OF THE CITY OF DENTON, TEXAS, REGARDING A CHANGE IN THE ZONING DISTRICT AND USE CLASSIFICATION FROM RESIDENTIAL R-2 TO LIGHT INDUSTRIAL.

>> GOOD EVENING, MAYOR AND MEMBERS OF COUNCIL. SEAN JACOBSON, SENIOR PLANNER HERE TO PRESENT Z267A THE REZONING. THIS IS A REQUEST TO REZONE FROM RESIDENTIAL TWO TO LIGHT INDUSTRIAL ALLEY ON APPROXIMATELY 3.757 ACRES. SO THIS IS LOCATED ON THAT FAR EAST END OF TOWN, JUST OFF 380 TO THE SOUTH. IT IS SURROUNDED CURRENTLY BY COMMERCIAL AND INDUSTRIAL PROPERTIES TO THE EAST, SOUTH AND NORTH, AND THEN HAS CORE PROPERTY. I'M SORRY, GOT THAT DIRECTION TO THE SOUTH, NORTH AND WEST. AND THEN THERE'S SOME CORE PROPERTY TO THE EAST. STAFF IS RECOMMENDING APPROVAL OF THIS REQUEST. WE'VE ASSESSED IT AGAINST OUR FUTURE LAND USE MAP. AND THE FUTURE LAND USE IS LIGHT INDUSTRIAL. THE ALLEY DESIGNATION IS INTENDED FOR LIGHT INDUSTRIAL ACTIVITY, AND THEREFORE THE ZONING IS APPROPRIATE WITHIN AN ALLEY. FUTURE LAND USE. SO THIS IS CONSISTENT WITH THE COMPREHENSIVE PLAN SURROUNDING AREAS. SO WE OFTEN WE LOOK AT IS A ZONING CHANGE JUSTIFIED BASED ON RECENT CHANGES IN THE AREA. IN THIS CASE IT IS. WE'VE BEEN RECEIVING INCREASING INQUIRIES AND SUBMITTALS FOR COMMERCIAL AND INDUSTRIAL DEVELOPMENT IN THIS AREA. IN ADDITION, A PROPERTY JUST TO THE WEST OF THIS WAS APPROVED FOR REZONING TO L I BY COUNCIL. SO THE TREND IN THIS AREA IS

[05:55:04]

ANYTHING, EVEN IN THE ETJ TO THE SOUTH. NOW, IF THAT USE CHANGES, IT HAS TO BE LIGHT INDUSTRIAL. IT HAS TO MEET THAT ZONING ORDER TO TAKE ACCESS THROUGH THIS PROPERTY, WHICH IS ZONED LIGHT INDUSTRIAL. SO THERE'S THE POTENTIAL BENEFIT TO WHAT IS DEVELOPED IN THAT AREA, EVEN IN THE ETJ, BASED ON THIS ZONING CHANGE. BEYOND THAT, WE HAVE, OF COURSE, OUR STANDARD ESSAY, TREE PRESERVATION WATERSHED PROTECTIONS TO MITIGATE ANY POTENTIAL IMPACTS. SO OVERALL, THIS REQUESTED REZONING DOES MEET OUR CRITERIA FOR APPROVAL.

WE DID SEND OUT THE STANDARD NOTIFICATIONS. WE RECEIVED NO RESPONSES. THE PLANNING AND ZONING COMMISSION DID RECOMMEND APPROVAL 4 TO 1, AND STAFF IS RECOMMENDING APPROVAL BECAUSE THE PROPOSED ZONING CHANGE DOES MEET OUR CRITERIA FOR APPROVAL. HAPPY TO ANSWER ANY QUESTIONS

YOU MAY HAVE. >> ANY QUESTIONS FOR STAFF. COUNCILMEMBER HOLLAND.

>> THANK YOU. SEAN. ONE OF ONE OF THE PHOTOS SAYS 377 AND ONE SAYS 380. IS THAT WHERE 380 AND

377 SHARE THE SAME ROADWAY? >> YES SIR. YES, I SPENT QUITE A BIT OF TIME.

>> YOU NOTICE. >> THAT THE NUMBER OF WAYS THAT PARTICULAR ROAD IS NAMED OVER

THE COURSE OF THAT AREA IS IMPRESSIVE. >> CAN YOU GIVE ME A LANDMARK

THAT I'M THAT I'M FAMILIAR WITH THERE? >> SO IN SOME, IN SOME WAYS, 377 AND 380 ARE BOTH ACCURATE FOR IT, BUT JUST BECAUSE IT DESCRIBES DIFFERENT ROUTE

DESIGNATIONS. >> YEAH, I DIDN'T MEAN THAT. I MEANT OH YEAH. YEAH. A

RESTAURANT OR A. >> LET ME THINK HERE. HAVE YOU SEEN THE VW BUG ON THE SIDE OF

THE ROAD WITH THE SIGN UP? >> NOW WE'RE TALKING. NOW WE'RE TALKING. VERY GOOD. THAT'S

EXACTLY WHAT I WANTED. THANK YOU. >> OKAY, NOW THAT'S TECHNOLOGY.

LET'S SEE. ANY OTHER QUESTIONS FOR STAFF SEEING NONE. OKAY. THANK YOU. APPRECIATE IT. AND THIS IS A PUBLIC HEARING. I WILL OPEN THE PUBLIC HEARING. WE DO HAVE A CARD WHICH I BELIEVE IS THE APPLICANT. IS IT MARISSA BREWER? AND THE APPLICANT HAS IS IT 20 MINUTES? TEN MINUTES? 15. TEN, TEN. OH, THERE IT IS RIGHT THERE. APPLICANT TEN MINUTES. OKAY.

>> GOOD EVENING, MAYOR AND COUNCIL. I'M JUST HERE FOR QUESTIONS. I HAVE A PRESENTATION. I'M HAPPY TO GO THROUGH IT, BUT IT COVERS EXACTLY WHAT SEAN ESSENTIALLY TOUCHED ON. SO I CAN PRESENT IT. OR WE CAN JUST BE HERE FOR QUESTIONS, WHATEVER Y'ALL WOULD

LIKE. >> WELL, LET ME SEE IF THERE'S ANY QUESTIONS FIRST OR IF THERE'S ANY REQUEST TO, YOU KNOW, GO AHEAD AND PROCEED WITH THE PRESENTATION. ANY, ANY QUESTIONS OR COMMENTS FROM, FROM MY COLLEAGUES SEEING NONE. OKAY. ALL RIGHT. AND IF SOMETHING COMES UP, WE CAN ALWAYS CALL YOU BACK UP IF THERE'S ANY QUESTIONS THAT COME UP. THANK YOU. YOU BET. THANK YOU. THIS IS A PUBLIC HEARING. ANYBODY WISHING TO SPEAK ON THIS ITEM, PLEASE COME FORWARD AND STATE YOUR NAME AND YOUR TIME WILL BEGIN. THIS IS A PUBLIC HEARING. ALL RIGHT. SEEING NONE, WE WILL CLOSE THE PUBLIC HEARING. COUNCIL MEMBER

JESTER. >> MOVE APPROVAL AS PROPOSED. >> COUNCIL MEMBER HOLLAND.

>> SECOND THAT. >> ALL RIGHT, WE HAVE A MOTION AND A SECOND. LET'S VOTE, PLEASE. AYE. MOTION CARRIES SIX ZERO. THANK YOU. AND I BELIEVE IN OUR PUBLIC HEARING AGENDA

[C. S26-0004b Hold a public hearing and consider adoption of an ordinance of the City of Denton, Texas for a Specific Use Permit to allow for a Group Home use on approximately 1 acre of land. The property is generally located on the east side of Fort Worth Drive (Hwy 377) and approximately 750 feet south of Johnson Lane in the City of Denton, Denton County, Texas; adopting an amendment to the City’s official zoning map providing for a penalty in the maximum amount of $2,000.00 for violations thereof; providing a severability clause and an effective date The Planning and Zoning Commission voted [5-0] to recommend approval of the request. Motion for approval by Commissioner Garland and second by Commissioner Pruett. THE APPLICANT IS REQUESTING THIS ITEM BE POSTPONED UNTIL THE NOVEMBER 17, 2026, CITY COUNCIL MEETING (S26-0004b, RHR Group Home, Julie Wyatt).]

CONTINUE TO LEAVE THE PUBLIC HEARING OPEN. ALL RIGHT. DO I NEED TO OPEN THE PUBLIC HEARING FIRST? ALL RIGHT. SO I WILL GO AHEAD AND OPEN THE PUBLIC HEARING FOR ITEM S26-000440004B, AND WE WILL CONTINUE THAT THAT PUBLIC HEARING TO NOVEMBER THE 17TH COUNCIL MEETING. ALL RIGHT.

[1. CONSENT AGENDA]

>> ZERO IS PULLED ALL TOGETHER. B IS TO GO TO ITEMS FOR INDIVIDUAL CONSIDERATION AND I

[06:00:01]

MEETING AT A LATER DATE. COUNCILMEMBER HOLLAND. >> I MOVE THE APPROVAL OF THE

CONSENT AGENDA ITEMS WITH THE EXCEPTION OF ITEM B. >> OKAY. COUNCILMEMBER JESTER SECOND. ALL RIGHT. LET'S VOTE PLEASE ON THE MOTION. MOTION CARRIES SIX ZERO. WE WILL NOW

[B. ID 26-1663 Consider approval of a resolution of the City of Denton establishing the 2027 City Council meeting schedule; and providing an effective date.]

>> YEAH. THE COUNCIL RETREAT DATE, WE HAD A QUESTION BECAUSE IT WAS THE SAME WEEK AS JUNETEENTH. AND SO I WANTED TO PROVIDE SOME ALTERNATIVE DATES IF COUNCIL WANTED TO CONSIDER THOSE, OR WE COULD JUST REMOVE IT AND COME BACK AND CREATE A DIFFERENT DATE FOR COUNCIL

RETREAT AT A LATER TIME. >> CAN CAN I MAKE A SUGGESTION? LET'S LET'S DO THAT JUST BECAUSE WE'RE GOING TO ALL BE SITTING HERE TRYING TO FIGURE OUT WHICH DATES TO CHOOSE. AND LET'S GO AHEAD AND PULL THAT PARTICULAR DATE OFF. AND WE CAN COME BACK MAYBE AFTER THE FIRST OF THE YEAR TO TO SETTLE THAT UP, IF THAT'S OKAY. THAT WORKS. ALL RIGHT. SO THEN WE DO HAVE WELL, I CHAIR WOULD ENTERTAIN A MOTION FOR AGENDA ITEM COUNCIL MEMBER PERRY. NO, WE'RE GOING TO NO, WE'RE GOING TO WE'RE GOING TO APPROVE IT, BUT WE'RE GOING TO CHANGE THE DATE WITH

WITHOUT THE COUNCIL RETREAT DATE. >> YEAH. SO I MOTION TO APPROVE

CONSENT AGENDA ITEM B REMOVING THE JUNE RETREAT. >> ALL RIGHT. THANK YOU MAYOR

PRO TEM I THINK I SAW YOU AS A SECOND. >> I'LL SECOND THAT.

>> ALL RIGHT. WE HAVE A MOTION AND A SECOND. LET'S VOTE PLEASE. THAT ITEM CARRIES SIX ZERO. WE

[A. ID 26-0924 Consider approval of a resolution of the City Council of the City of Denton, Texas, approving the establishment of policies, guidelines, and criteria governing Chapter 380 incentives; and declaring an effective date. The Economic Development Partnership Board recommends approval (10-0).]

GOVERNING CHAPTER 380 INCENTIVES. >> GOOD EVENING. MY NAME IS ERICA SULLIVAN. I'M THE ECONOMIC DEVELOPMENT PROGRAM ADMINISTRATOR HERE AT THE CITY, AND I'LL BE GIVING A PRESENTATION ON THE PROPOSED CHAPTER 380 POLICY TONIGHT.

WE'LL BEGIN WITH THE HISTORY. SO THE FIRST TAX ABATEMENT POLICY WAS APPROVED IN 1989. IT WAS UPDATED TO INCLUDE SUSTAINABLE INITIATIVES IN 2010 AND 2012, IT WAS BROADENED TO APPLY TO CHAPTER 380 OF THE LOCAL GOVERNMENT CODE AND GAVE US A WIDER RANGE OF PROGRAMS, INCLUDING CASH GRANTS IN 2014. IN 2018, WE ADDRESSED RETAIL DEFINITIONS. WE INCLUDED THE INVESTMENT FUND, THE AIRCRAFT INCENTIVE PROGRAMS UNDER ONE UMBRELLA, AND THEN IN 2020, THERE WERE NO SIGNIFICANT CHANGES AS WE WERE WORKING ON OUR STRATEGIC PLAN AT THE TIME.

SO THE STRATEGIC PLAN WAS ADOPTED IN 2021. IN 2022, THE TWO POLICIES, THE POLICY WAS SEPARATED IN TWO DISTINCT POLICIES. THE CHAPTER 380, WHICH YOU'RE LOOKING AT TONIGHT, AND THE CHAPTER 312, WHICH IS DEALS WITH TAX ABATEMENTS. AND SO WE ALIGN THE STRATEGIC PLAN WITH THE CITY'S CORE VALUES IN OUR POLICIES AT THAT TIME IN 2022. SO OUR STRATEGIC PLAN HAS FIVE GUIDING PRINCIPLES THAT PROVIDE A FRAMEWORK OF HOW WE DO ECONOMIC DEVELOPMENT IN DENTON. AND THAT'S CORE RESILIENCY, FUTURE FOCUSED, INCLUSIVE GROWTH, ENTREPRENEURIAL SPIRIT AND CULTURAL VITALITY. AND THE PLAN IS ALSO BASED ALONG THREE MAJOR GOALS TO ACCELERATE RECOVERY, FOSTER GROWTH, AND STRENGTHEN COMMUNITY INCLUSION. IN THE 2024 UPDATE, WE STRUCTURED THE PRIORITY CONSIDERATIONS FROM PUBLIC BENEFITS AROUND OUR STRATEGIC GROWTH AREAS OR SGAS, AND THEN OUR ECONOMIC DEVELOPMENT PARTNERSHIP BOARD SUGGESTED A COMPREHENSIVE BENEFIT PACKAGE THAT WE ADDED AT THAT TIME. WE ALSO INCORPORATED UNDERWRITING AFTER THE FINE ARTS PROJECT. SO THE PROPOSED CHANGES TO CHAPTER THREE POLICY. WE'RE LOOKING AT VALUES AND INDUSTRY SECTORS. HERE ON THE LEFT YOU'LL SEE THE CITY CORE VALUES. THEY HAD CHANGED SINCE THE LAST UPDATE. SO THE ONES IN BLUE ARE THE ONES THAT HAD CHANGED COLLABORATION, QUALITY SERVICE AND STRATEGIC FOCUS. AND THEN WE REPLACED OUR STRATEGIC GROWTH AREAS. THESE WERE NAICS CODES IDENTIFIED BY OUR STRATEGIC PLAN WITH TARGETED INDUSTRY SECTORS. WE HAD NUMEROUS STRATEGIC GROWTH AREAS AND WE WANTED TO BETTER DEFINE AND NARROW DOWN THE TARGETED INDUSTRY SECTORS. SO WE HAVE

[06:05:05]

IT'S ALSO DESIGNED AGAIN TO ADDRESS THAT LEAKAGE TO KEEP THAT HERE AND IDENTIFY ANY NEW MARKETS THAT WE MAY NOT BE UTILIZING. THE NEXT WAS IDENTIFIED IN OUR BOARD RETREAT.

AND SO SITE READINESS AND STREAMLINE PERMITTING WERE KEY FACTORS IN OUR BOARD RETREAT THAT WE HELD IN THE SPRING. SO SITE READINESS, WE INCORPORATED THAT INTO THE POLICY WAS DESIGNED TO PROVIDE FUNDING ASSISTANCE FOR ENDEAVORS, DUE DILIGENCE ENDEAVORS THAT MAKE PROPERTIES MORE DEVELOPABLE. SOME EXAMPLES WOULD BE PHASE ONE ENVIRONMENTAL ASSESSMENT, TITLE REVIEW, PLAT AND REMEDIATION. AN EXAMPLE OF A REMEDIATION GRANT THAT WE'VE RECENTLY AWARDED WOULD BE NOVARTIS AS WELL. ADDITIONAL CHANGES TO THE POLICY. AT THE JUNE BOARD MEETING, THE BOARD RECOMMENDED A REVISION TO ELIGIBILITY, AND THIS WAS IN THE CHAPTER 312 POLICY OR TAX ABATEMENT POLICY. SO WE INCORPORATED THAT HERE AS WELL.

AND THE CHANGE WAS FROM 24 MONTHS OF THE EXECUTION OF THE AGREEMENT TO 24 MONTHS FROM WHEN A PERMIT IS ISSUED. AND THIS WAS BROUGHT UP BY A DEVELOPER THAT SITS ON THE BOARD. NEXT CHANGE WOULD BE ADDED GROWTH CONSIDERATIONS FOR ENTREPRENEURIAL TECH AND AVIATION INITIATIVES. GROWTH IS A KEY CONSIDERATION FOR ENTREPRENEURIAL TECH, AND WE WANTED TO ADDRESS A LATTER TERM OF THAT. SO THERE'S A LITTLE BIT LESS RISK WITH THAT. SO WE FURTHER DEFINE THAT. THE NEXT ITEM THAT CHANGED THE POLICY INCLUDED CONSIDERATIONS THAT ADDRESS REDEVELOPMENT IN OUR DESIGN DOWNTOWN PLAN, SOUTHEAST DENTON MASTER PLAN, AND OUR DENTON MUNICIPAL AIRPORT MASTER PLAN. SO ANYTHING THAT'S GOING TO SUPPORT ACTIVITIES AND PROJECTS IN THOSE ZONES AND AREAS IN THE PLAN IDENTIFIED IN THE PLAN, WE REDUCED THE MINIMUM JOB THRESHOLD FROM 90% TO 75% OF THE JOBS IN THE APPLICATION. AND PART OF THIS WAS DONE BECAUSE OF. WANTING BUSINESSES TO INCENTIVIZE BUSINESSES THAT ARE GROWING.

AND SO WE WANTED TO DO THAT. WE ALSO WANTED TO TAKE CERTAIN THINGS INTO CONSIDERATION, LIKE TRAINING AND DIFFERENT DELAYS IN THE MARKET. WE REMOVED KNOWLEDGE BASED JOBS AND CHANGED THE DEFINITION OF HIGHER WAGE FROM 65,000 OR GREATER TO THE DENTON COUNTY AVERAGE WAGE. THE DENTON COUNTY AVERAGE WAGE IS 64,400. SO IT'S VERY CLOSE TO THE $65,000 FIGURE. AND PART OF THE REASON WE DID THAT WAS TO ACTUALLY FOLLOW THE MARKET RATHER THAN PICKING A FIXED NUMBER. AND SO WE THOUGHT THAT WAS A BETTER GAUGE AND IT WOULD BE ADJUSTED

ACCORDINGLY AS WE DO OUR TWO YEAR ANNUAL UPDATES. >> IS THAT A WHERE DOES THAT NUMBER, WHAT'S THE SOURCE OF THAT NUMBER? WHERE IS THAT SOURCED?

>> OKAY. SO ORIGINALLY WHEN WE IF YOU REMEMBER THE INVESTMENT FUND THAT WE CREATED, IT WAS 55,000 FOR A HIGH WAGE JOB. AND THAT WAS LOOKING AT OTHER JOBS IN THE MARKET AND LOOKING AT DATA AT THAT TIME WHEN WE AMENDED IT IN THE FUTURE, WHEN WE HAD OUR THAT WAS THE INVESTMENT FUND THAT WE HAD OUR CATALYST FUND IN THE CATALYST FUND, WE RAISED IT TO 65,000.

SO VIA ORDINANCE, THAT'S ANOTHER THING TOO, WITH THE. SURE. THAT'S WHEN WE LOOKED AT DOING THAT. BUT NOW WE'D RATHER GAUGE IT ON ACTUAL MARKET CONDITIONS RATHER THAN A FIXED

FIGURE THAT WE CONTINUE TO LOOK AT. >> IS THAT THROUGH A CENSUS, OR IS IT SOME KIND OF TRADE NUMBER, THAT TRADE ORGANIZATION THAT PUTS OUT THAT NUMBER? HOW DO WE

WHERE DOES THAT. >> THE DENTON COUNTY AVERAGE WAGE? WE'RE TAKING THAT FROM

JOBS RIGHT NOW. OKAY. SO WE HAVE A SUBSCRIPTION TO THAT. >> OKAY. GOOD. THANKS.

>> WE ADDED LANGUAGE THAT ADDRESSES THE PUBLIC PURPOSE. THIS IS A LEGAL REQUIREMENT THAT WE DID TO HELP ENSURE THAT IT'S THAT OUR INCENTIVES ARE NOT CONSIDERED AN UNCONSTITUTIONAL GIFT. AND SO WE'RE LESS LIKELY TO BE CHALLENGED IF WE GET A PUBLIC BENEFIT FROM OUR INVESTMENT. AND WE REMOVED THE CATALYST FUND LANGUAGE TO HELP STREAMLINE THE POLICY, WE DON'T NECESSARILY NEED TO IDENTIFY WHERE THE FUNDS ARE COMING FROM.

AND THEN WE REMOVE THE QUALIFIED CENSUS TRACT MAPS, BUT WE STILL RETAIN THE QUALIFIED CENSUS DATA IN THE POLICY. SO THE STAFF RECOMMENDATION IS COUNCIL ADOPT THE PROPOSED CHANGES TO THE CHAPTER 380 POLICY. AND I'M HAPPY TO ENTERTAIN QUESTIONS.

>> OKAY. COUNCIL MEMBER HOLLAND. >> THANK YOU. EXHIBIT FOUR. THE AVIATION. I DON'T HAVE TO HAVE

[06:10:10]

ME ABOUT AEROSPACE. WHAT DO YOU HAVE IN MIND FOR AEROSPACE? >> WE HAVE SOMEWHAT OF A CLUSTER ALREADY, SO WE WANT TO ENCOURAGE THINGS LIKE THAT WITH LIKE FASTENAL AND SOME OF THESE OTHERS MAY DAY MANUFACTURING, AVIATION, AEROSPACE. THAT'S ONE OF THE TARGETED SECTORS.

>> OKAY. OKAY. THANK YOU. THANK YOU MAYOR. >> SEEING NO OTHER QUESTIONS,

COUNCILMEMBER JESTER. >> I MOVE TO APPROVE AS PRESENTED. AND THANK YOU SO

MUCH FOR ALL THE INFORMATION. >> MAYOR PRO TEM. >> SECOND.

>> WE HAVE A MOTION AND A SECOND, LET'S VOTE PLEASE. MOTION CARRIES SIX ZERO. WE'LL

[B. ID 26-1216 Consider adoption of an ordinance of the City of Denton approving an agreement between the City of Denton and Hickory & Rail Ventures, LLC, regarding an Economic Development Program for Stoke Denton, in the amount of $158,000; and providing an effective date. The Economic Development Partnership Board recommends approval (9-0-1).]

158,000. >> GOOD EVENING, MAYOR AND COUNCIL CHRISTINE TAYLOR, ASSISTANT CITY MANAGER. I'M GOING TO HAND OVER THE BEGINNING OF THE PRESENTATION TO HEATHER GREGORY FROM STOKE. SHE'LL RUN THROUGH HER INFORMATION ON THE PROGRAM, AND THEN WE'LL FOLLOW UP WITH WHAT'S IN THE CONTRACT AND CONSIDERED FOR RECOMMENDATION

TONIGHT. >> GOOD EVENING COUNCIL. THANK YOU FOR THE OPPORTUNITY TO SPEAK TO YOU. I'M HERE TO TALK ABOUT HICKORY AND RAIL VENTURES AND THE PARTNERSHIP THAT WE HAVE WITH THE CITY OF DENTON TO OPERATE STOKE CO-WORKING. I'LL JUST TOUCH BRIEFLY ON THE HISTORY OF STOKE. WE ACTUALLY THIS AUGUST CELEBRATED TEN YEARS OF BEING OPEN, WHICH IS REALLY EXCITING. IN 2016 WAS WHEN STOKE OPENED. THE CITY ORIGINALLY HELD THE LEASE ON OUR SPACE AT 608 EAST HICKORY STREET, WHEN THAT FIVE YEAR LEASE EXPIRED. THE BUSINESS THAT I OWN TOOK OVER THAT LEASE, AND WE'RE NOW ACTUALLY IN OUR SECOND LEASE. AND SO WE OPERATE 12,000FT■!S OF CO-WORKING SPACE IN WHICH WE OPERATE. A LOT OF THE PROGRAMING THAT WE DO IN PARTNERSHIP WITH THE CITY. THESE ARE JUST SOME IMAGES OF THE CO-WORKING SPACE THAT WE HAVE. IT IS ANYTHING FROM PRIVATE OFFICES, SHARED WORKSPACE, WE HAVE A MAIL AREA, WE HAVE DEDICATED DESKS AND A LOT OF PROFESSIONAL AMENITIES THAT PEOPLE NEED TO BE ABLE TO OPERATE THEIR BUSINESSES. HOW WE OPERATE THE, THE CO-WORKING SPACE FACILITY THAT WE HAVE PEOPLE, OUR MEMBERS PAY MEMBERSHIP DUES TO HAVE ACCESS TO THAT SPACE. AND THEN THE PROGRAMING THAT WE DO TO SUPPORT THE ENTREPRENEURS THROUGH EDUCATION, NETWORKING EVENTS, CONNECTING THEM TO RESOURCES, PROVIDING MENTORSHIP IS WHERE OUR PARTNERSHIP WITH THE CITY COMES IN. WE FOCUS ON CURATING THE SPACE AND FACILITATING EVENTS TO GROW THE ENTREPRENEURIAL ECOSYSTEM. THERE'S A LOT OF PEER TO PEER LEARNING IN OUR CO-WORKING SPACE. WE PROVIDE EXPOSURE OPPORTUNITIES FOR ENTREPRENEURS TO SPEAK, GAIN VISIBILITY, AND GAIN CLIENTS. AND THEN AGAIN, YES, WE PROVIDE MENTORSHIP THROUGH EVENTS LIKE THE PITCH COMPETITION AND FLINT CONF. WE SERVE ENTREPRENEURS AT EARLY STAGE PRIMARILY, BUT WE ARE WORKING TO PURSUE MORE SUPPORT FOR GROWTH STAGE BUSINESSES. WE ARE A SPACE WHERE BUSINESS IS BORN AND NURTURED, AND WE DO A GREAT JOB OF MAKING SURE THAT WE PROVIDE OPPORTUNITIES FOR HISTORICALLY UNDERUTILIZED BUSINESSES AND PROVIDE PROGRAMING THAT IS AVAILABLE AND ACCESSIBLE TO EVERYONE. WE HAVE. LIKE I SAID, MEMBERSHIPS IN OUR CO-WORKING SPACE, WE HAVE ABOUT 113 PAID MEMBER COMPANIES ON AVERAGE EACH MONTH, AND THEY ARE HIGHLY SATISFIED IN THEIR MEMBERSHIP, AND THEY HAVE EXPERIENCED GROWTH OF ALL KINDS FROM INCREASING JOBS, INCREASING SALES REVENUE AND LAUNCHING NEW PRODUCTS AND SERVICES. WE'VE HAD A FEW OF OUR MEMBERS HAVE THEIR COMPANIES ACQUIRED DURING THEIR MEMBERSHIP AT STOKE. THESE ARE THE EVENTS AND PROGRAMS THAT WE OPERATE IN PARTNERSHIP WITH THE CITY. THE CW ACCELERATOR IS THE ONE EXCEPTION TO THAT. THAT IS A PARTNERSHIP THAT WE HAVE WITH TEXAS WOMEN'S UNIVERSITY.

COFFEE AND CONVOS IS OUR MONTHLY SMALL GROUP MENTORSHIP PROGRAM. I'M GOING TO GO THROUGH THESE QUICKLY, BUT HAPPY TO ANSWER ANY QUESTIONS. Y'ALL HAVE. THE ACCELERATOR

[06:15:01]

AGAIN, WE HAVE INCREDIBLE OUTCOMES AND IMPACTS FROM THIS AS SURVEYED FROM OUR ATTENDEES.

OH, OKAY. SO I WAS HOPING THAT THIS WOULD BE OUR UPDATED SLIDES WHERE I HAD SOME SUCCESS STORIES BECAUSE WHEN I PRESENTED TO ADP, THERE WAS A, A DESIRE FOR SOME SPECIFIC SUCCESS STORIES. THOSE SLIDES DIDN'T GET UPDATED. SO JUST A COUPLE OF THOSE I WANTED TO SHARE. THERE IS A BUSINESS THAT HAS ATTENDED FLINT CONF FOR A NUMBER OF YEARS. THERE. THEY HAVE GROWN THEIR REVENUE FROM THE YEAR THAT THEY STARTED THEIR BUSINESS IN 2021. THEY HAVE GROWN THEIR REVENUE TEN TIMES. THEY WENT FROM A STAFF OF TWO TO A STAFF OF 17 PEOPLE, AND THEY'VE JUST STARTED A NEW BUSINESS AND LAUNCHED A WHOLE NEW CONCEPT. SO THE REVENUE INCREASE AND THE SALES TAX INCREASE FROM THAT ONE BUSINESS ALONE IS INCREDIBLE. WE ALSO HAVE OTHERS LIKE THE WINNERS FROM THE PITCH COMPETITION. TRIPTIC COFFEE CO IS ANOTHER SUCCESS STORY. THEY STARTED AS A POP UP WHERE THEY WERE SORT OF OPEN A FEW HOURS A WEEK DOING POP UP EVENTS, AND NOW THREE YEARS INTO THEIR BUSINESS, THEY HAVE OVER FIVE STAFF AND THEY'RE OPEN SEVEN DAYS A WEEK AND A PERMANENT LOCATION. SO THOSE ARE JUST A COUPLE OF SUCCESS STORIES, AND I'M HAPPY TO ANSWER QUESTIONS. THESE ARE SORT OF THE CONDITIONS OF OUR AGREEMENT AND JUST KIND OF INDICATING THAT WE ARE KIND OF PERFORMING ALL OF THE MEASURES

THAT ARE IN OUR CONTRACT WITH THE CITY. >> OKAY. WE'LL QUICKLY RUN THROUGH ON THE CITY SIDE. WHAT CHANGED ON THE AGREEMENT THAT'S BEING PROPOSED FOR CONSIDERATION? SO THIS CONTRACT INCLUDES TRANSITIONING FROM A BROADER WORK PLAN TO PLANNED INITIATIVES THAT ARE TAX TASK BASED, MOVING THE ECONOMIC DEVELOPMENT STRATEGIC PLAN FORWARD. THE GOAL WITH THIS WAS TO MAXIMIZE THE ECONOMIC DEVELOPMENT DOLLARS THAT ARE IN THE GENERAL FUND BUDGET AND CONTINUE THE ALIGNMENT FROM THE 2020 STRATEGIC PLAN. SO A QUESTIONNAIRE WAS COMPLETED FOR EACH OF THE PROGRAMS THAT STOKE IS GOING TO BE COMPLETING FOR THIS YEAR, INDICATING HOW IT ALIGNS, WHAT PERFORMANCE METRICS WE'RE GOING TO EVALUATE EACH EVENT ON, AND THE COST FOR EACH OF THOSE EVENTS. SO THE 2025 WORK PLAN, THIS IS JUST A BRIEF OVERVIEW OF THE ITEMS THAT ARE BEING ADVANCED. AS PART OF OUR PARTNERSHIP WITH STOKE, AND THEN THE 2026 WORK PLAN SHOWS THAT MORE DETAILED BREAKDOWN WHERE WE HAVE THE WHAT THE INDIVIDUAL TASKS ARE AND MOVING THAT STRATEGIC PLAN FORWARD, THE COST OF EACH OF THOSE, AND THEN THE ANNUAL PERFORMANCE METRICS, AS HEATHER MENTIONED, THAT SHE'LL BE THE CITY TO SHOW HOW WE'RE ADVANCING THOSE STRATEGIC PLAN INITIATIVES. SO OVERALL, THE STRATEGIC PLAN ALIGNMENT REALLY FALLS DEEPLY ON OUR CREATIVE DENTON AND THEN OUR GOAL TO STRENGTHEN COMMUNITY INCLUSION. THIS ITEM WAS PRESENTED TO THE ECONOMIC DEVELOPMENT

[06:20:04]

SIDE. >> SCREENS. NOT UP. SO I DON'T KNOW IF ANYBODY'S ASKING. OKAY, I SEE NO QUESTIONS. I'VE GOT A COUPLE. OF COURSE, I WAS ON COUNCIL BEFORE WHEN THIS ALL STARTED, AND IT'S REALLY EVOLVED FROM WHAT IT WAS ORIGINALLY INTENDED TO BE TO THIS. AND SO I GUESS I'M GLAD THAT WE HAVE SOME SPECIFIC METRICS THAT WE'RE LOOKING FOR, BECAUSE I THINK THAT'S THE THING THAT I'M REALLY TRYING TO UNDERSTAND IS WHAT, WHAT IS THE THE RETURN NOW, SOME OF IT'S TANGIBLE, YOU KNOW, JOBS, REVENUE, SALES TAX, AND SOME OF IT'S INTANGIBLE. I GUESS, THOUGH, WHEN I READ THE BACKUP WITH THE QUESTIONNAIRE, WHEN IT WAS TALKING ABOUT SPECIFIC PROGRAMS AND THEN THE FUNDING THAT WAS SORT OF CONNECTED TO THOSE PROGRAMS, I'D LIKE TO SEE IN THE FUTURE A BREAKDOWN OF THE COSTS OF THOSE PARTICULAR EVENTS, BECAUSE IT LOOKED LIKE SOME OF THEM I COULDN'T I COULDN'T UNDERSTAND WHERE THE EXPENSES, HOW THE EXPENSES WERE ADDING UP TO THE AMOUNT THAT WERE ASSOCIATED WITH THE FUNDING OF THAT PARTICULAR EVENT. AND MY, MY COMPUTER'S DOWN FOR SOME REASON, I CAN'T

GET THE NETWORK AND I CAN'T I CAN'T PULL UP THE BACK. >> SO JUST FURTHER BREAKDOWN, I'VE GOT THE SLIDE UP ON THE ON THE SCREEN. SO WHAT YOU'RE ASKING FOR IS LIKE FOR THE FLINT CONFERENCE BREAKDOWN WITHIN THE 37,000, WHICH OF THAT I MEAN, LIKE THERE.

>> WAS THERE WAS ONE THAT THAT THERE WAS A RENTAL OF THAT FOR A DAY. I THINK IT WAS.

>> THE FLINT CONFERENCE. >> $3,000, I THINK IT WAS $3,000. AND IT USED TO BE A ONE DAY CONFERENCE AND NOW IT'S A TWO DAY. SO THAT'S $6,000. BUT I THINK THERE WAS AN ALLOCATION OF OF. THAT'S GOOD. YEAH, I CAN SEE AN ALLOCATION. I'LL JUST USE THIS AS AN EXAMPLE ALLOCATION OF 30,000. JUST BE INTERESTED TO KNOW WHERE THE OTHER 24 IS.

>> CERTAINLY WE CAN DO THAT. THIS WAS OUR FIRST YEAR TO KIND OF BREAK THAT DOWN. SO LOVE THE

RECOMMENDATION AND WE'LL GET THAT INCLUDED FOR NEXT YEAR. >> YEP, YEP. OKAY. THANK YOU.

THAT'S ALL I HAVE JUST MORE OF A, I'M GLAD THAT WE'RE GETTING A LITTLE BIT MORE CONCRETE METRICS THAT WE CAN LOOK AT. AND SO IT IS A, IT'S AN AGREEMENT WITH WHO.

>> WITH HICKORY RAIL VENTURES AND HEATHER GREGORY IS. >> OKAY. SO THAT'S NOT THE ORIGINALLY STARTED WITH THE PEOPLE WHO OWNED THE BUILDING, WHICH WAS I FORGOT WHO IT WAS.

>> GOING TO LET HEATHER ANSWER. >> THE MARTINO GROUP HAS ALWAYS OWNED THE BUILDING. THE ORIGINAL MANAGEMENT AGREEMENT WAS WITH THE DALLAS ENTREPRENEUR CENTER.

>> THAT'S WHAT IT WAS. >> OKAY. YES. AND THEY HAD THE AGREEMENT FOR ONE YEAR AND THEN CITY COUNCIL IN 2017 VOTED TO NOT RENEW THAT AGREEMENT. IT WAS OPENED UP FOR AN RFP, AND

HICKORY AND RAIL VENTURES HAS HAD THAT AGREEMENT SINCE 2017. >> OKAY. SO THAT'S A DIFFERENT ORGANIZATION. IT'S BASICALLY THE PARENT ORGANIZATION OF STOKE OR IT IS STOKE OR

SOMETHING TO THAT EFFECT. >> YES, STOKE IS A BRAND THAT WE AGREE THAT HICKORY AND RAIL

OPERATES. >> OKAY. GOOD DEAL. ALL RIGHT. ALL RIGHT. THANK YOU SO MUCH

FOR THAT. MAYOR PRO TEM. >> THANKS, MAYOR. I JUST WANTED TO ADD ON TO THAT. AND THIS ISN'T NEW BECAUSE WE TALKED ABOUT IT IN THE ECONOMIC DEVELOPMENT PARTNERSHIP BOARD MEETING, WHICH I HATE SAYING ALL THOSE WORDS OUT LOUD BECAUSE IT'S HARD TO PRONOUNCE.

BUT I BROUGHT THIS UP IN THERE BECAUSE IN THAT MEETING WITH THE PROPOSED CONTRACT UPDATES, WE HAVE THIS NEW ANNUAL QUESTIONNAIRE COMPLETED. I WOULD IMAGINE A PART OF THE REASON THAT WE HAVE THAT QUESTIONNAIRE COMPLETED IS TO HELP GIVE US THE INFORMATION WE NEED TO MAKE A GOOD DECISION. AND I DON'T MEAN THIS DISPARAGINGLY, IT'S JUST IT'S WHAT I SAID IN THE MEETING, IF THAT'S WHAT THAT WAS TRYING TO ACCOMPLISH FOR ME, IT DID NOT.

I DID NOT RECEIVE ADEQUATE INFORMATION IN THERE TO JUSTIFY THE FUNDING. I'M GOING TO SUPPORT THE FUNDING. BUT BUT FOR ME, IT DIDN'T COMPLETE THAT. WHEN YOU HAVE QUESTIONS IN THERE, LIKE WHAT'S THE SALES TAX REVENUE THAT WE'RE GOING TO RECEIVE? AND THE ANSWER IS YES.

RIGHT. AND THEN I UNDERSTAND HEATHER'S POINT, WHICH IS WE CAN'T TANGIBLY GIVE THAT ANSWER BECAUSE THERE'S OUTSIDE BENEFITS OF JUST RIGHT. LIKE THE BUSINESS IS GROWING. I DON'T KNOW THAT IT'S GIVING ME THE INFORMATION I NEED. AND SO I JUST WONDER IF THERE'S A WAY WE CAN, IN THE FOLLOWING YEAR, REWORK IT TO HELP PROVIDE A FULLER PICTURE. AND I KNOW I SAID THAT ALREADY, BUT I WANTED TO REITERATE THAT AND SEE IF THAT MAKES SENSE.

>> YEAH, ABSOLUTELY. >> AND HEAR YOUR PERSPECTIVE AS WELL.

>> ABSOLUTELY. AND I THINK, LIKE WE MENTIONED, THIS WAS THE FIRST YEAR OF THE SURVEY AND THE INTENT WAS THE FUNDING COMES FROM THE GENERAL FUND. SO LOOKING FOR WHAT ARE THE WHAT'S THE ROI ON PROPERTY TAX AND SALES TAX, BUT DIGGING INTO WHAT WE'RE ACTUALLY MOVING FORWARD ON THE TECH ECOSYSTEM OR INCLUSION, LOOKING AT PULLING IN DIFFERENT METRICS TO

KIND OF JUSTIFY HOW WE'RE ADVANCING THAT STRATEGIC PLAN. >> OKAY.

>> THANK YOU. >> COUNCIL MEMBER PERRY. >> THANK YOU, MR. MAYOR. YES.

[06:25:06]

AND I JUST WANTED TO ALSO LET HEATHER KNOW IN LEGISTAR IN THE BACKUP, WE DO SEE THE SUCCESS STORY. SLIDES LIKE THIS WILL CREATE A FIRST STRIKE ROWDY RETURN. WE DID SEE THOSE, JUST

SO YOU KNOW, TO ALLEVIATE THAT. >> COUNCIL MEMBER HOLLAND. >> THANK YOU. IS IT REASONABLE THAT AS STOKE IS MORE AND MORE SUCCESSFUL, THAT THE THAT THE SUPPORT FROM THE CITY WOULD

WOULD GO DOWN? >> I THINK IT DEPENDS ON WHAT WE'RE ASKING STOKE TO DO. WE HAVE TWO PARTNER AGREEMENTS, ONE WITH THE CHAMBER WHERE THEY'RE HANDLING BUSINESS RETENTION FOR US. AND THEN THIS ONE WE'RE SAYING THAT WE HAVE STOKE HANDLING A PORTION. THAT MOVE IS OUR MOVES OUR STRATEGIC PLAN FORWARD. SO I THINK HEATHER DID ANSWER THAT. AND EDPB ON WHAT PORTION OF THE FUNDING THAT THIS MAKES UP BECAUSE SHE DOES RECEIVE MEMBERSHIP FEES. WE ARE A SMALLER PORTION OF THAT, AND I THINK THE CONTRACT WILL JUST BE BASED ON WHAT WE EXPECT HER, WHAT WE EXPECT STOKE TO ADVANCE. SO WE LIKE THESE PROGRAMS, ARE MOVING OUR STRATEGIC PLAN FORWARD. IF WE WANT TO REDUCE THAT IN THE FUTURE. THAT'S HOW

I WOULD SEE FUNDING WOULD BE REDUCED. >> WOULD CONVERSELY, WOULD YOU

SEE THAT GO UP? >> IT COULD YEAH. IF WE ASK IF WE FIND MORE THINGS WITH AN UPDATED STRATEGIC PLAN OR HAVE ENHANCED PROGRAMING THAT THE CITY WANTS TO MOVE FORWARD,

THAT STOKE CAN LEAD FOR US, FUNDING COULD GO UP. >> OKAY. THANK YOU.

>> SO LET ME MAKE SURE I UNDERSTOOD WHAT YOU SAID. SO OUR FUNDING IS 158,000 CORRECT.

WHAT IS ANNUALLY. WHAT IS THE BUDGET. WHAT'S THE TOTAL BUDGET OF STOKE.

>> I'LL LET HEATHER ANSWER THAT. I THINK WE WERE 20% OF HER. >> YEAH.

>> THAT THAT PORTION MAKES UP JUST A LITTLE LESS THAN 20% OF OUR OVERALL OPERATING BUDGET

FOR THE YEAR. >> SO THE OPERATING BUDGET IS, IS HOW MUCH.

>> CURRENTLY WE'RE AT ABOUT 650 ANNUALLY. >> OKAY. IS THERE A WAY TO GET A COPY OF THAT? JUST THE BUDGET JUST SO BECAUSE I DON'T WHAT ARE THE OTHER MAJOR FUND

FUNDING SOURCES. >> OUR PRIMARY FUNDING SOURCES, MEMBERSHIP DUES. AND THEN WE HAVE ONE OTHER PAID PARTNERSHIP WITH TEXAS WOMEN'S UNIVERSITY FOR THE ACCELERATOR PROGRAM.

>> OKAY. ALL RIGHT. GOOD, I APPRECIATE THAT. THANK YOU. ANY OTHER QUESTIONS? SEEING NONE,

COUNCILMEMBER RUMOHR. >> I'D LIKE TO MOTION APPROVAL. >> COUNCILMAN PERRY.

>> I'LL SECOND. >> HAVE A MOTION. AND SECOND, LET'S VOTE, PLEASE. MOTION

[C. ID 26-1524 Consider adoption of an ordinance of the City of Denton considering all matters incident and related to the issuance, sale and delivery of $57,240,000 in principal amount of "City of Denton, Texas Utility System Revenue Bonds, Series 2026" to the Texas Water Development Board; authorizing the issuance of the bonds; approving and authorizing instruments and procedures relating to said bonds; enacting other provisions relating to the subject; and providing an effective date.]

CONSIDER ADOPTION OF AN ORDINANCE OF THE CITY OF DENTON. CONSIDERING ALL MATTERS INCIDENT AND RELATED TO THE ISSUANCE AND SALE AND DELIVERY OF $57,240,000 IN PRINCIPAL AMOUNT OF CITY OF DENTON, TEXAS. UTILITIES SYSTEM REVENUE BONDS. OH, THERE'S THE REVENUE BONDS

COMING UP. OH, OKAY. >> I ALSO HAVE TO. OKAY. >> ALL ALL RIGHT.

>> WELL, GOOD EVENING, MAYOR, MEMBERS OF COUNCIL. MATT HAMILTON CHIEF FINANCIAL OFFICER AND I'M ALSO JOINED BY KATIE COKE, THE PROJECT MANAGER HERE TONIGHT TO PRESENT A BOND ORDINANCE FOR THE TEXAS WATER DEVELOPMENT BOARD TO BE STATE WATER IMPLEMENTATION FUND FOR TEXAS, ALSO KNOWN AS THE SWIFT PROGRAM. SO I'LL LET KATIE TALK A LITTLE BIT ABOUT THE PROJECT, AND THEN I'LL TALK A LITTLE BIT ABOUT THE FINANCING ASPECT TO IT.

>> GOOD EVENING, COUNCIL MEMBERS AND MAYOR. I AM KATIE COKE, PROJECT MANAGER FOR WATER UTILITIES. AS A REMINDER, WE APPLIED FOR THE SWIFT LOAN TO FUND THE RAY ROBERTS WATER TREATMENT TREATMENT PLANT EXPANSION PROJECT. IN 2024. WE RECEIVED APPROVAL FOR THAT BY THE END OF THE YEAR, AND THIS IS THE THIRD YEAR YOU WILL BE SEEING THIS. THE RAY ROBERTS WATER TREATMENT PLANT WAS PLACED INTO SERVICE IN 2002, AND HAS A CURRENT TREATMENT CAPACITY OF 20 MILLION GALLONS A DAY. WE CURRENTLY HAVE A PROJECT CONCLUDING THAT WILL ADD TO THAT A LITTLE BIT, BUT THAT'S NOT WHAT WE'RE HERE TO TALK ABOUT. BASED OFF THE HUNTER COAL DEVELOPMENT ANALYSIS, OUR MUD GROWTH ANALYSIS, AND JUST OUR AVERAGE ANNUAL CITY GROWTH, WE ARE ANTICIPATING THAT THE RAY ROBERTS WATER TREATMENT PLANT WILL NEED TO SUPPORT A FULL BUILD OUT OF 110 MGD BY 2053. THIS PROJECT IS THE FIRST PHASE OF AN EXPANSION AT THE RAY ROBERTS CAMPUS. WE WILL BE ADDING AN ADDITIONAL 20 MILLION GALLONS A DAY VIA MEMBRANE TREATMENT PROCESSES AT THE PLANT. WE ARE BUILDING SPACE

[06:30:04]

>> GREAT. THANK YOU KATIE. SO TALKING A LITTLE BIT ABOUT THE SWIFT LOAN PROGRAM, THIS WAS A PROGRAM THAT WAS IMPLEMENTED AND PASSED BY THE LEGISLATURE THROUGH A CONSTITUTIONAL AMENDMENT. AND THE PURPOSE OF THE PROGRAM IS JUST TO HELP COMMUNITIES DEVELOP AND OPTIMIZE WATER SUPPLIES AT COST EFFECTIVE RATES. SO SOME OF THE BENEFITS THAT THAT WE'VE TALKED ABOUT WITH COUNCIL PREVIOUSLY IS JUST THE DIVERSITY DIVERSIFICATION OF OUR FINANCIAL PORTFOLIO. SO TYPICALLY THE CITY WOULD ISSUE CERTIFICATES OF OBLIGATION FOR LARGE INFRASTRUCTURE PROJECTS LIKE THIS. THIS ADDS ANOTHER FINANCING AVENUE THAT WE HAVEN'T HAD PREVIOUS TO THIS PROJECT. ADDITIONALLY, AND REALLY KIND OF MOST IMPORTANTLY, ARE THE INTEREST SAVINGS ASSOCIATED WITH THIS PROGRAM. AND SO THE TEXAS WATER DEVELOPMENT BOARD OFFERS SUBSIDIZED INTEREST RATES. THE TEXAS WATER DEVELOPMENT BOARD IS TRIPLE A RATED. AND SO ESSENTIALLY WHAT THEY'RE DOING IS GOING OUT AND ISSUING BONDS AT THAT TRIPLE A RATING. AND THEN NOT JUST GIVING THE CITY THE TRIPLE A RATE, BUT ALSO A SUBSIDIZED RATE OF 14% LOWER THAN WHAT THAT RATE IS. SO REALLY KIND OF A GOOD DEAL FOR THE CITY TO PARTICIPATE IN THIS PROGRAM. THAT 14% EQUATES TO ABOUT 1 TO 2% LOWER THAN THE RATES THAT THE CITY WOULD RECEIVE ON CERTIFICATES OF OBLIGATION. IF WE WERE JUST TO GO OUT INTO THE MARKET AND AND ISSUE BONDS. AND THEN THE OTHER BENEFIT TO THE PROGRAM IS IT OFFERS ONE OF TWO THINGS, EITHER AN EXTENDED AMORTIZATION SCHEDULE OR DEFERRED REPAYMENT OPTIONS WITH THE CITY HAS ELECTED IS AN EXTENDED AMORTIZATION SCHEDULE TO SMOOTH OUT SOME OF THE RATE INCREASES THAT WOULD OTHERWISE BE NEEDED. SO NOT ONLY ARE WE GETTING A LOW INTEREST RATE, BUT WE'RE ALSO EXTENDING THAT PERIOD OUT A LITTLE BIT. AND SO THAT'S THAT'S GOING TO LOWER THE COST, YOU KNOW, ANNUAL COST ASSOCIATED WITH THE DEBT REPAYMENT IN 2024. AS KATY HAD NOTED, THE WATER UTILITIES DEPARTMENT APPLIED FOR AND RECEIVED APPROVAL FOR THIS MULTI YEAR LOW INTEREST LOAN IN THE AMOUNT OF 195,845,000 FROM THE TEXAS WATER DEVELOPMENT BOARD. THE TOTAL ESTIMATED COST OF THE PROJECT IS 389,760,000, SO THE SWIFT PORTION REPRESENTS 51% OF THE TOTAL COST OF THE PROJECT. THE REMAINING PORTION OF THE PROJECT IS INTENDED TO BE FUNDED THROUGH WIFIA, WHICH IS AN EPA PROGRAM THAT ALSO OFFERS ADVANTAGEOUS FINANCING. SO TAKING A LOOK AT THE UTILITY REVENUE BOND SALE, AGAIN, THIS IS THE THIRD YEAR THAT WE'LL BE ISSUING BONDS IN THE AMOUNT OF 57,240,000. THIS IS FOR A 30 YEAR TERM AT AN ALL IN COST OF 4.29%, AND THE TOTAL ESTIMATED SAVINGS OF USING THIS PROGRAM VERSUS GOING OUT AND ISSUING CEOS IS $12.2 MILLION. THE DEBT SERVICE PAYMENTS ARE ALREADY INCLUDED AND BUDGETED IN THE 2627 BUDGET. WE WOULD ANTICIPATE STARTING TO MAKE PAYMENTS ON THIS $57.2 MILLION BEGINNING IN JUNE OF 2027. SO THE YEAR THREE FUNDING TIMELINE, WE ARE NOW VERY CLOSE TO TO THE END HERE. TONIGHT, COUNCIL WILL CONSIDER ADOPTION OF THE ORDINANCE AUTHORIZING THE ISSUANCE OF CITY BONDS TO TEXAS WATER DEVELOPMENT BOARD. AND THEN ON DECEMBER 3RD, WE WOULD ANTICIPATE THAT FUNDING TO CLOSE AND WE WOULD RECEIVE THE

PROCEEDS. AND WITH THAT, WE'LL STAND FOR ANY QUESTIONS. >> COUNCIL MEMBER RUMOHR.

>> THANK YOU, MATT. HOW CAN WE GET THAT TRIPLE A RATING THAT TTP THE OTHER GUYS HAVE? NO.

I'M KIDDING. DO YOU KNOW IF THE 110 MILLION GALLONS PER DAY PROJECT PROJECTION FOR 2053, IF THAT INCLUDES THE FUTURE CRAVER RANCH, DO WE KNOW IF THAT'S BEEN INCORPORATED YET? WE'VE GOT A NOD BACK THERE. OKAY. THAT'S ALL I WANTED TO KNOW. THANK YOU.

>> A COUPLE QUESTIONS. I'M SORT OF A LITTLE CONFUSED. OKAY, SO THE WATER BOARD THAT GO BACK, THAT ONE SLIDE, IF YOU WOULD. SO THE WHERE'S THE W? IS IT THE TWDB? OKAY. THAT'S THAT'S A

[06:35:03]

LOAN FOR THAT'S BONDS FOR 195 MILLION. IS THAT RIGHT. >> CORRECT.

>> AND SO THE PROJECT'S GOING TO BE 307,000,389. SO THE REST OF THAT BALANCE, WHICH IS ABOUT 200 MILLION, IS COMING BETWEEN THE SWIFT AND THE THAT WE FOR WIFI OR WHATEVER.

>> SO THE GOOD QUESTION. SO THE TOTAL OF THE SWIFT FINANCING THROUGH THE TEXAS WATER DEVELOPMENT BOARD IS THE 195 MILLION. OKAY. AND IT'S SPLIT OVER FIVE YEARS. OKAY. THE

REMAINDER OF THE FUNDING IS WITH YOU. >> SO I KNOW WE'RE DOING IT.

AND BEAR WITH ME. I'M NOT GOING TO BE OUT OF POSTING. I KNOW THAT WE'RE DEVELOPING A NEW WASTEWATER TREATMENT PLANT OUT WEST OF 35 TO HANDLE HUNTER, YOU KNOW, LANDMARK SOME OF THE MUD'S OUT BY PONDER AND SO FORTH AND SO ON, WHICH WAS PRESENTED IN THE SLIDE AS PART OF. BUT IS THAT THAT'S NOT GOING TO BE GOING THROUGH THE RAY ROBERTS PLANT, IS IT? OR IS IT? WHAT I'M READING HERE, THE NEED FOR THAT PLANT, THE NEED FOR THAT EXPANSION, SORT OF ENUMERATED SOME OF THAT DEVELOPMENT OUT WEST. BUT I THOUGHT WE WERE I THINK WE'RE EITHER IN THE PROCESS OF BUILDING IT OR THEY'VE LAID THE LINES. AND SO I'M TRYING TO UNDERSTAND WHAT IS THIS EXPANSION ACTUALLY GOING TO COVER? WHAT REGION OF THE CITY

IS THAT GOING TO COVER? >> LET ME HAVE DENNIS FROM THE WATER UTILITY.

>> SURE. YOU JUST THOUGHT YOU WERE GOING TO SIT BACK THERE AND NOT ONLY DIDN'T YOU. OKAY.

>> I WAS TRYING. >> OKAY. >> DENNIS QUARLES, ASSISTANT GENERAL MANAGER, WATER UTILITIES. RIGHT NOW WE'RE LOOKING AT THREE THREE WASTEWATER TREATMENT PLANTS. AS YOU MENTIONED, WASTEWATER TREATMENT IS THE CONCRETE WHICH IS CURRENTLY EXISTING, WHICH WE'RE GOING TO BUILD ANOTHER 20 MGD BASICALLY REPLACE THAT.

THERE'S A HICKORY CREEK PLANT WHICH WE'RE PUTTING ON HOLD FOR RIGHT NOW. AND THEN THERE'S THE CLEAR CREEK PLANT, WHICH WE'RE PROCEEDING WITH. AND THAT WOULD REALLY HANDLE THE STUFF MORE.

IN THE NORTH, WE HAVE THE CAPACITY FOR THE FLOWS THAT YOU'RE TALKING ABOUT AND THAT THAT AREA TO COME INTO CONCRETE AND SOME OF THOSE FLOWS THAT ARE COMING INTO CONCRETE WILL TRANSFER, NOT THOSE, BUT SOME COMING FROM THE NORTH WILL ACTUALLY END UP GOING TO CRATE

TO CREEK. >> CLEAR CREEK. >> NOW, WHICH ONE IS CLEAR

CREEK? >> CLEAR CREEK IS ON THE. >> IS THAT THE ONE WEST OF I 35

OVER THERE BY. >> IT'S BY THE THE. PARTLY FILLED. I'M SORRY. PARTLY

FILLED. >> OH, IT'S UP THERE. IT'S UP. OKAY. SO THE ONE THAT WAS BECAUSE I KNOW THEY LAID A LOT OF LINES OUT WEST FROM LANDMARK WHERE.

>> WELL THAT'S OKAY. >> IT'S ALL RIGHT. >> OKAY.

>> YEAH. NO IT'S OKAY. >> I'M DOING THE BEST I CAN. >> NO, NO IT'S NOT, IT'S NOT THAT I JUST SO SO IN OTHER WORDS, WHAT YOU'RE SAYING IS SOME OF THAT FLOW WILL COME INTO THE CONCRETE AND THEN WE'LL BE ABLE TO DIVERT SOME OF THAT'S COMING ALREADY INTO CONCRETE FROM THE NORTH OVER TO THE NEW RAY ROBERTS EXPANSION. WE'RE MOVING IT AROUND.

>> SO WE'RE TALKING. SO RAY ROBERTS IS A WATER TREATMENT PLANT.

>> OH WATER TREATMENT. I'M TALKING. >> WAIT.

>> IGNORE WHAT I JUST SAID. EVERYTHING I JUST SAID FORGET IT.

>> BECAUSE WE'RE NOT SENDING THE WASTEWATER. >> NO NO NO. SO NEVER MIND,

NEVER MIND. >> OKAY. >> I WAS CONFUSED. THANK YOU.

WE NEED TO RUN THOSE TAPES BACK. BILLY. BE SURE AND DELETE THOSE. NO. I'M SORRY. GO AHEAD. THAT'S IT. OKAY. ANY OTHER QUESTIONS THAT ACTUALLY PERTAIN TO THE SUBJECT MATTER THAT WE'RE

TALKING ABOUT? SEEING NONE. ALL RIGHT. COUNCIL MEMBER. JESTER. >> MOVE APPROVAL.

>> COUNCIL MEMBER HOLLAND. >> SECOND THAT. >> MOTION AND A SECOND. LET'S VOTE, PLEASE. CARRY SIX ZERO. THANK YOU. ALL RIGHT. THEN WE HAVE AGENDA ITEM THREE D, WHICH

[D. ID 26-1733 Consider adoption of an ordinance of the City of Denton, a Texas home-rule municipal corporation, authorizing the City Manager to execute a contract with Symetra Life Insurance Company, for basic/supplemental life and accidental death and dismemberment and voluntary short-term and group long-term disability (collectively “Life and Disability”) coverage for City employees for the Human Resources Department; providing for the expenditure of funds therefor; and providing an effective date (RFP 9073 - awarded to Symetra Life Insurance Company, for three (3) years, with the option for two (2) additional one (1) year extensions, in the total five (5) not-to-exceed amount of $5,900,000.00).]

>> THERE WE GO. >> OKAY. >> GOOD AFTERNOON, MAYOR AND MEMBERS OF CITY COUNCIL. I'M SARAH JONES, THE INTERIM DIRECTOR OF HR. TONIGHT, I'LL BE PROVIDING AN OVERVIEW OF THE CITY'S LIFE AND DISABILITY INSURANCE BENEFITS AND THE RESULTS OF OUR RECENT REQUEST FOR PROPOSALS. I'LL WALK THROUGH OUR CURRENT COVERAGE, THE OUTCOME OF THE RFP AND RECOMMENDATION MOVING FORWARD. OKAY. THE CITY HAS PARTNERED WITH SYMETRA LIFE AND DISABILITY SINCE 2019. HOWEVER, THE CONTRACT EXPIRES AT THE END OF THIS YEAR, WHICH REQUIRED US TO GO THROUGH THE COMPETITIVE PROCUREMENT PROCESS. AS A

[06:40:05]

>> COUNCILMEMBER HOLLAND. >> THANK YOU. IS THIS THE SAME POLICY FOR ALL CITY OF DENTON

EMPLOYEES, INCLUDING POLICE AND FIRE? >> IT IS.

>> YES. VERY GOOD. THANK YOU. >> ANY OTHER QUESTIONS? SEEING NONE, COUNCILMEMBER JESTER.

>> I MOVE APPROVAL AS PRESENTED. AND THANK YOU VERY MUCH, >> COUNCILMEMBER, FERRY.

>> I'LL SECOND. THANKS, MISS. >> VOTE, PLEASE. MOTION CARRIES SIX ZERO, SIR. IF YOU'LL JUST

STAY RIGHT THERE, JUST FOR A SECOND. >> I GUESS I'LL SPEAK INTO THIS,

MIKE. >> IT IS OUR TRADITION. WAS YOUR FIRST PRESENTATION TO COUNCIL TO PRESENT YOU WITH THE ELEPHANT, WHICH IS A SYMBOL OF MEMORY, SO THAT YOU WILL REMEMBER THIS. AND VERY GOOD JOB, I APPRECIATE IT. THANK YOU, THANK YOU. THANK YOU, THANK YOU.

[E. ID 26-1456 Consider approval of a resolution of the City of Denton, Texas, supporting TxDOT proposed alignments B and B2 for the Denton County Outer Loop project in Denton County, Texas.]

FOR DENTON COUNTY OUTER LOOP PROJECT IN DENTON COUNTY. >> OH, HELLO.

>> GOOD EVENING, MAYOR AND COUNCIL. MY NAME IS ANDREA NGUYEN. I'M A TRANSPORTATION PLANNER. I'M WITH TRANSPORTATION SERVICES. I'M PRESENTING ID 261456 RESOLUTION SUPPORTING THE OUTER LOOP PROJECT. WE ARE ASKING YOU TO CONSIDER APPROVING THIS RESOLUTION AGAIN, SUPPORTING THE TXDOT PROPOSED ALIGNMENTS. THEY'RE CALLED B AND B TWO.

I'LL SHOW THOSE IN JUST A LITTLE BIT. AND THIS IS FOR DENTON COUNTY OUTER LOOP PROJECT, WHICH BASED ON REGIONAL PROJECTED GROWTH FORECASTS, THE NCT COG DID FIND THAT SIX LANE EAST WEST FREEWAYS THROUGH DENTON COUNTY MAY BE WARRANTED. A LITTLE BIT OF HOW THIS DEVELOPED IN 2022. ALIGNMENTS BEGAN TO BE DEVELOPED FOR THE OUTER LOOP PROJECT 2023. THEY HELD PUBLIC MEETINGS TO IDENTIFY SEVERAL ALTERNATIVES, MOVING INTO SCOPING MEETINGS AND THE NOTICE OF INTENT THROUGH 2024. WE ARE RIGHT HERE TODAY TRYING TO RECOMMEND THE PREFERRED ALTERNATIVE IN 2026. THE ANNOUNCEMENT OF THAT PREFERRED ALTERNATIVE WOULD BE NEXT YEAR, 2027, FOLLOWED BY THE FINAL EIS AND RECORD OF DECISION. THE BUILD ALIGNMENT B AND B TWO THAT WE ARE RECOMMENDING APPROVAL FOR. THOSE WOULD BE THOSE GREEN HIGHLIGHTED BOXES, THE BLUE AND THE GOLD ALTERNATIVE. THESE TOUCH THE CITY OF DENTON BORDERS AND ALSO MINIMIZE FLOODPLAIN RISKS AS WELL TO. SO WE ARE RECOMMENDING APPROVAL BASED ON THE FOLLOWING. CURRENTLY, WE HAVE LIMITED MOBILITY DUE TO A LACK OF CONTIGUOUS EAST WEST ARTERIALS THROUGH THE REGION. WE ARE ALSO EXPECTING THE DENTON POPULATION AND EMPLOYMENT TO MORE THAN DOUBLE BY 2050. AND BECAUSE OF ALL THIS, WE SEE A NEED FOR

[06:45:06]

THIS HAS BEEN OUR RESOLUTION. IF YOU HAVE ANY QUESTIONS, PLEASE LET ME KNOW.

>> OKAY. THANK YOU ANDREA. COUNCILMEMBER RUMOHR. >> THANK YOU, ANDREW, FOR YOUR PRESENTATION. SO WE GOT THIS TODAY BECAUSE IT WAS ON CONSENT AGENDA LAST MEETING, AND I'D ASK TO PULL IT, BUT I INSTEAD ASKED TO KICK IT TO THIS MEETING BECAUSE I WILL BE OPPOSING THIS ITEM AND NOT BECAUSE I OPPOSE THE ALIGNMENT OVER THE OTHER ALIGNMENTS, BUT BECAUSE I HAVE CONCERNS ABOUT THE ENTIRE PROJECT. I WAS PART OF THE NORTHEAST DENTON AREA MASTER PLAN THAT NEVER REALLY GOT ADOPTED, BUT THIS IS ONE OF THE BIGGEST PIECES OF FUEL THAT IS GOING TO CAUSE MORE DEVELOPMENT IN THE RURAL AREAS OF NORTHEAST DENTON. BASICALLY, WHEN YOU ADD A ROAD, YOU'RE GOING TO START TO ATTRACT A LOT OF DEVELOPMENT AROUND IT. SO IT'S GOING TO ADD A LOT MORE TRAFFIC IN THE AREA AS WELL. I'M VERY CONCERNED ABOUT IT CAUSING MORE FATALITIES AT THE END OF THE DAY. AT A MOBILITY COMMITTEE MEETING LIKE A YEAR AGO, I GOT TO TALK TO SOMEBODY KIND OF INVOLVED IN SOME OF THE PLANNING OF THIS. AND, YOU KNOW, HE SAID IT WAS GOING TO IMPROVE SAFETY. AND I AND I BECAUSE IT'S A LIMITED ACCESS FACILITY.

AND I NOTED THAT I-35 IS THE HIGHEST THE ROAD WITH THE MOST DEATHS IN DENTON. AND THAT'S A LIMITED ACCESS FACILITY. AND SO I ASKED, HOW ARE YOU? HOW ARE YOU GOING TO AVOID THAT ROAD BECOMING LIKE I-35 IN TERMS OF FATALITIES? AND HE SAID, WELL, WE'LL WIDEN IT, WHICH IS WHAT WE'RE DOING WITH I-35. AND IT STILL CONGESTED, STILL KILLING PEOPLE. SO I'M JUST CONCERNED ABOUT WHAT THIS IS GOING TO DO IN TERMS OF ATTRACTING REALLY SPRAWLING DEVELOPMENT. AS WE'RE SEEING IN DENTON, OUR TAXPAYERS ARE STRUGGLING WITH ALL OF THIS MASSIVE INFRASTRUCTURE WE'RE HAVING TO, TO BUILD UP FRONT TO FUND ALL OF THE GROWTH THAT WE'RE SEEING. WE'VE GOT HUNDREDS OF MILLIONS OF DOLLARS OF DEBT WERE TAKEN ON FOR, YOU KNOW, WATER, WASTEWATER EXPANSIONS. WE'RE, YOU KNOW, DOING WATER LINES. WE'RE DOING TRANSMISSION LINES, WE'RE DOING ALL THESE OTHER ROADS. AND I'M VERY CONCERNED ABOUT HOW THIS IS GOING TO NEGATIVELY IMPACT US IN THE FUTURE. AND SO THAT'S THE REASON I'M VOTING NO, NOT ABOUT THE ALIGNMENT

SPECIFICALLY. >> OKAY. THANK YOU. ALL RIGHT. THANK YOU. ANY OTHER QUESTIONS?

SEEING NONE, COUNCILMEMBER JESTER. >> I MOVE APPROVAL AS PRESENTED.

THANK YOU VERY MUCH. >> ALL RIGHT. WE HAVE A COUNCILMEMBER HOLLAND.

>> A SECOND. >> WE HAVE A MOTION AND A SECOND. LET'S VOTE PLEASE.

MOTION IS TIED SO IT FAILS. RIGHT? YEP. ALL RIGHT. IF YOU'LL HANG ON JUST A SECOND.

I'VE GOT A LITTLE ELEPHANT AS WELL. YEAH. >> THERE YOU GO. THANK YOU.

THANK YOU VERY MUCH. >> WELL, AND I WAS GOING TO SAY THAT Y'ALL HAD TWO FAIRLY EASY PRESENTATIONS. BUT WE CAN SEE BY THE VOTE THAT THAT ONE SORT OF JUST HIDE. SO THANK YOU SO

MUCH. >> THANK YOU. >> THANK YOU, THANK YOU. YES.

[F. ID 26-1606 Conduct the first reading of an ordinance of the City of Denton imposing a moratorium on certain commercial uses (data centers), due to a shortage of public facilities including water / wastewater under Texas Local Government Code Section 212.135 as well as electricity under Texas Local Government Code Section 212.1351 and the inadequacy of existing development regulations under Texas Local Code Section 212.1352; providing for findings, severability, a repealer; and an effective date.]

>> GOOD EVENING, MAYOR AND CITY COUNCIL AGAIN, CHARLIE ROSENTHAL, DEVELOPMENT SERVICES.

THIS ITEM BEFORE YOU TODAY IS THE FIRST READING OF THE MORATORIUM ORDINANCE, AND THE NEXT ITEM FOR THIS WILL BE ON DECEMBER 1ST OF FIRST. FOR THE SECOND READING COUNCIL CONSIDERATION. SO JUST TO BRIEFLY GO THROUGH THE BACKGROUND AGAIN, THIS STARTED WITH A TWO MINUTE PITCH IN MAY FROM MAYOR PRO TEM STEPHENS, AND IT MOVED THROUGH THE PROCESS OF A WORK SESSION WITH CITY COUNCIL IN AUGUST. WE ADOPTED THE RESOLUTION FOR THE PUBLIC HEARING DATES, HELD THE FIRST PUBLIC HEARING IN SEPTEMBER, AND THEN TODAY WE ARE HOLDING THE SECOND PUBLIC HEARING AND THE FIRST READING OF THE MORATORIUM ORDINANCE. SO AGAIN, A DATA CENTER IS A STRUCTURE, A PHYSICALLY HOUSING COMPUTER EQUIPMENT. SOME OF THAT EQUIPMENT THERE IS LISTED ON THE SLIDES. THOSE COME IN VARIOUS TYPES OF DATA CENTERS.

WE HAVE AN ENTERPRISE THAT'S OWNED FOR AN INTERNAL IT OPERATIONS, A CO-LOCATION FACILITY WITH A FEW CLUSTERS OF ENTERPRISE DATA CENTERS. TOGETHER WE HAVE A HYPERSCALE FACILITY, AND THEN WE ALSO HAVE EDS TYPE FACILITIES. SO FOR A MORATORIUM IN TEXAS, THOSE ARE A TEMPORARY PAUSE ON ACCEPTING NEW APPLICATIONS. AND THEY CAN'T HALT OR INVALIDATE

[06:50:03]

ADDITIONALLY, THIS CAN BE FOR BASED ON A NEED FOR OTHER PUBLIC FACILITIES. WE HAVE TO SHOW THAT EVIDENCE FOR THOSE NEEDS AND DESTROY THEM. DEMONSTRATING ANOTHER ALTERNATIVE WILL NOT WORK. SO AS WE'VE DISCUSSED PREVIOUSLY, DME HAS REGULATIONS FOR CONNECTIONS FOR LARGE LOADS, AND ERCOT HAS ADDITIONALLY PUT A PAUSE ON THOSE INTERCONNECTIONS FOR LARGE LOADS. BUT WE HAVE ADDITIONAL 75MW OF CAPACITY AT THE TRANSMISSION VOLTAGE, BUT DO NOT HAVE A WAY OF QUEUING UP ADDITIONAL REQUESTS FOR THOSE CAPACITIES. AND SO THIS MORATORIUM WOULD BE BASED ON US HAVING A NEED TO PUT ADDITIONAL POLICIES IN PLACE SO THAT WE CAN ADDRESS THAT. AND THEN LASTLY, A COMMERCIAL MORATORIUM CAN BE PUT IN PLACE. WE NEED TO DEMONSTRATE THE NEED FOR NEW ORDINANCES OR REGULATIONS, DEFINE GEOGRAPHIC BOUNDARIES AND SHOW THE TYPE OF COMMERCIAL PROPERTY THAT THE MORATORIUM IS BEING ENACTED FOR. SO WHILE WE DID MAKE CODE AMENDMENTS THAT WE DISCUSSED EARLIER THAT BECAME EFFECTIVE TODAY, WE NEED TO UPDATE OUR CRITERIA MANUALS TO INCLUDE ADDITIONAL SPECIFICITY REGARDING WHAT A CLOSED LOOP SYSTEM IS, WHAT WE WANT TO SEE OUT OF WATER, WASTEWATER LOADING STUDIES, AND ANY TYPE OF ENVIRONMENTAL STUDIES. AND SO THOSE WOULD BE PART OF THIS MORATORIUM AS WELL. SO AS YOU CAN SEE HERE, THE MAP ON THE RIGHT SHOWS THE AREA IN WHICH THE MORATORIUM WOULD BE ACTED, ENACTED. SO THAT AREA INCLUDES OUR WATER AND WASTEWATER CCNRS. IT INCLUDES DME SERVICE TERRITORY, AND THEN ALSO THE CITY LIMITS OF DENTON, WHERE OUR REGULATIONS ARE EFFECTIVE FOR THE THE FOR OUR ZONING REGULATIONS, WHERE THOSE ARE EFFECTIVE. AND SO WE WOULD, BASED ON THE MORATORIUMS ENACTING, COME BACK AND PROVIDE ADDITIONAL REGULATIONS TO CITY COUNCIL FROM THOSE DDC AMENDMENTS, AND THEN BRING POLICIES AND OTHER REGULATIONS FORWARD FOR CONSIDERATION. AND WITH THAT, I WILL READ THE ORDINANCE INTO THE RECORD. THIS WOULD BE AN ORDINANCE OF THE CITY OF DENTON IMPOSING A MORATORIUM ON CERTAIN COMMERCIAL USES, DATA CENTERS DUE TO A SHORTAGE OF PUBLIC FACILITIES, INCLUDING WATER AND WASTEWATER, UNDER TEXAS LOCAL GOVERNMENT CODE, SECTION 212.135, AS WELL AS ELECTRICITY UNDER LOCAL GOVERNMENT CODE. SECTION TWO, 12.1351 AND THE ADEQUACY OF EXISTING DEVELOPMENT REGULATIONS UNDER TEXAS LOCAL GOVERNMENT CODE, SECTION 212.1352 PROVIDING FOR SEVERABILITY, REPEALER AND AN EFFECTIVE DATE. AND WITH THAT,

[06:55:01]

MR. MAYOR, I'LL TAKE ANY QUESTIONS. >> ANY QUESTIONS FOR STAFF? I BELIEVE THERE'S NO ACTION ITEMS ON THIS. IT WAS THE READING OF THE ORDINANCE AND. THAT'S CORRECT. I BELIEVE THAT IF THERE'S NO OTHER QUESTIONS OR ANYONE WISHING TO SPEAK, THIS IS AN ITEM FOR INDIVIDUAL CONSIDERATION. SEEING NONE. ALL RIGHT. THANK YOU. APPRECIATE IT.

[G. ID 26-1691 Consider approval of a resolution to elect a Region 8 Director to the Texas Municipal League Board of Directors; and providing an effective date.]

DIRECTORS AND PROVIDING AN EFFECTIVE DATE. >> GOOD EVENING, MAYOR AND COUNCIL KRISTI FOGEL, CHIEF OF STAFF. I WAS HOPING AGAIN THIS TIME THAT I'D GET TO BE YOUR FIRST PRESENTATION AND YOUR LAST. BUT AGAIN, TIME IS NOT ON MY SIDE HERE TO PRESENT THE TML REGION EIGHT DIRECTOR ITEM THAT WAS POSTPONED AFTER LAST MEETING. SO JUST AS A REMINDER, THE TEXAS MUNICIPAL LEAGUE WAS CREATED IN 1930 13 TO HELP CITY LEADERS NAVIGATE GOVERNANCE, PROVIDE LEGAL, LEGISLATIVE AND TRAINING SERVICES AND THE CITY OF DENTON HAS BEEN A MEMBER OF TML SINCE ITS INCEPTION. TML DIVIDES THE STATE INTO 15 SUB STATE REGIONS TO CONNECT LOCAL CITY GOVERNMENTS AND SHAPE STATE POLICY, LEVEL, STATE LEVEL POLICY, AND DENTON IS PART OF REGION EIGHT, WHICH INCLUDES DENTON. WISE COOK, PALO PINTO, PARKER, TARRANT, ERATH, HOOD, JOHNSON AND SOMERVELL COUNTIES, AND EACH REGION ELECTS A SLATE OF OFFICERS FROM THOSE PARTICIPATING CITIES. AND THE TML BOARD DIRECTOR, WHO WERE CONSIDERING THIS EVENING, SERVES A TWO YEAR TERM REPRESENTING THE REGION ON THE TML BOARD OF DIRECTORS, SO TML PROVIDED THE CITY WITH NOTICE OF THE UPCOMING ELECTION. TWO OFFICIALS HAVE BEEN NOMINATING, NOMINATED AND PARTICIPATING CITIES ARE INVITED TO VOTE WITH A MAJORITY OF THEIR GOVERNING BODY. THE FOLLOWING OFFICIALS HAVE BEEN NOMINATED TO SERVE, AND YOU HAVE THEIR BIOGRAPHIES IN YOUR BACKUP. MIKE BROWNING, COUNCIL MEMBER OF AUBREY AND MARY SARVER, MAYOR PRO TEM OF GRANDVIEW. HTML CITY IS ENTITLED TO ONE VOTE, AND THAT VOTE MUST BE CAST BY A MAJORITY OF THE CITY'S GOVERNING BODY. BUT THERE IS NOTHING REQUIRING THE CITY TO TAKE ACTION OR MAKE A VOTE, IF YOU SO CHOOSE. WE DID REACH OUT TO TML AND CONFIRM THAT WE ARE ABLE TO SUBMIT OUR BALLOT VIA EMAIL BEFORE THE NOVEMBER 5TH DEADLINE. SHOULD COUNCIL WISH TO PARTICIPATE IN THE ELECTION. WITH THAT, I'LL TAKE ANY

QUESTIONS. >> COUNCIL MEMBER PERRY. >> THANK YOU. I JUST WANTED TO MAKE MY COLLEAGUES, I GUESS, MAKE IT CLEAR WHERE I STAND. I WAS THE ONE WHO SAID WE SHOULD TABLE THIS TO THIS MEETING. AT THIS TIME, I JUST DON'T FEEL COMFORTABLE MAKING ANY RECOMMENDATION. AND THAT'S WHERE I'M LANDING, WHERE I'M. I'M GOING TO BE WANTING TO NOT

SUBMIT A NOMINATION. JUST SO YOU ARE AWARE. >> COUNCIL MEMBER HOLLAND.

>> DO WE NEED DO WE NEED A NOMINATION ONE ONE CANDIDATE OR THE OTHER? IS THAT WHAT YOU'RE

LOOKING FOR? >> YOU CERTAINLY CAN, BUT IT IS NOT REQUIRED THAT EACH CITY

PARTICIPATE. >> WELL, I UNDERSTAND, BUT HOW ELSE WOULD WE WOULD WE MAKE A WOULD WE MAKE A VOTE? IF WE MAKE A DECISION, HOW WOULD WE MAKE IT?

>> WE WOULD NEED TO MAKE A MOTION TO NOMINATE A CERTAIN ONE OF THE CANDIDATES.

>> OKAY. CAN YOU CRANK THAT BACK ONCE? ONE SLIDE PLEASE. ALL RIGHT. TWO SLIDES. THAT'S IT, MR. MAYOR. THEN I WOULD NOMINATE MIKE BROWNING FOR OUR FOR OUR REPRESENTATIVE TO THE

TML BOARD. >> OKAY. COUNCIL MEMBER. JESTER. >> I'M SORRY, I HAVE A

COMPETING MOTION, SO I'M NOT SPEAKING AS TO THIS MOTION. >> OH, WAS THAT A MOTION TO NOMINATE? TO NOMINATE. OKAY. ALL RIGHT. IS THERE A SECOND FOR MR. MIKE BROWNING? I'LL MAKE A SECOND. I'LL SECOND IT. SO WE HAVE A NOMINATION FOR MIKE BROWNING TO SERVE AS OUR TML REGIONAL, I GUESS, DIRECTOR POSITION. OKAY. ALL RIGHT. LET'S VOTE.

>> HOW HOW DO WE VOTE? >> HOW DO WE VOTE? >> OKAY, OKAY, I SEE, I THINK.

>> MOTION FAILS. ALL RIGHT. COUNCIL MEMBER. JESTER. >> YES, I MET WITH MISS SARVER WHO IS ABLE TO I WAS ABLE TO SPEAK WITH HER AND I'M COMFORTABLE NOMINATING HER TO BE OUR EIGHT DISTRICT EIGHT REPRESENTATIVE. AND I THINK SHE'S DONE A VERY GOOD JOB AND HAS A RECORD NUMBER OF EVENTS AND A RECORD NUMBER OF ATTENDEES. SHE'S VERY COMMITTED TO THE NATIONAL LEAGUE OF CITIES, AS WELL AS THE TEXAS MUNICIPAL LEAGUE, AND I MOVE

FOR APPROVAL. WE'LL SEE WHAT HAPPENS. >> OKAY. SURE. WE HAVE A MOTION.

DO WE HAVE A SECOND? COUNCIL MEMBER? RUMOHR. >> I'M GOING TO TRUST YOU ON

[07:00:03]

THIS ONE COUNCIL MEMBER JESTER I'M GOING TO SECOND. >> I'M SORRY.

>> I SAID I'M GOING TO TRUST COUNCIL MEMBER JESTER ON THIS ONE, AND I'M GOING TO SECOND.

>> THANK YOU. ALL RIGHT. WE HAVE A MOTION AND A SECOND. LET'S VOTE PLEASE. MOTION FAILS.

SO BOTH BOTH NOMINEES FAILED. SO YEAH. >> OKAY. THANK YOU.

[4. CONCLUDING ITEMS]

>> YOU BET. ALL RIGHT. NOW WHAT WE'RE GOING TO DO WE'VE GOT CONCLUDING ITEMS LEFT IS OUR LAST AGENDA ITEM. AND THEN WHAT WE'RE GOING TO DO IS, IS DO OUR TWO MINUTE PITCH OUR OPEN WORK SESSION HERE. AND THEN WE'LL JUST GO BACK THERE FOR ONE OF THE CLOSED SESSIONS, WHICH IS THE CONTRACT. SO WE SHOULD BE ABLE TO WRAP IT UP PRETTY QUICKLY. SO I'M GOING TO CALL

CONCLUDING ITEMS MAYOR PRO TEM. >> I'LL KEEP IT VERY BRIEF. ONE FLU SEASON. GO GET VACCINATED FOR THAT AND COVID IF YOU WANT. I DID BOTH LAST WEEK. MORE IMPORTANTLY, I WANTED TO IF YOU

DIDN'T HEAR THIS YESTERDAY, HAD SALLY PASSED AWAY YESTERDAY >> EVENING. I SAID THIS YESTERDAY. SHE'S ONE OF THE FEW PEOPLE TWO YEARS AGO THAT HAD MY BACK WHEN A LOT OF PEOPLE DIDN'T. SHE WAS A VERY COLORFUL, BOLD WOMAN, AND I'VE NEVER MET TWO PEOPLE THAT LOVED EACH OTHER, I THINK AS MUCH AS HER AND DAN DID. AND SO JUST KEEP HER AND IN YOUR THOUGHTS AND

AND KEEP DAN IN YOUR THOUGHTS. >> ALL RIGHT. THANK YOU. APPRECIATE THOSE HEARTFELT

THOUGHTS. COUNCILMEMBER HOLLAND. >> I LOVE THINGS THAT ARE UNIQUE TO DENTON. TWO WEEKS AGO, I GUESS IT WAS ABOUT TWO WEEKS AGO, THE PETERBILT PARADE, 54 OF THESE BEAUTIFUL SHINY PETERBILT TRUCKS, ALL OF THEM BUILT IN DENTON, TEXAS, PARADED AROUND THE SQUARE. IT WAS FANTASTIC, I LOVED IT. ANYBODY WHO DOESN'T BELIEVE THE 31 DAYS OF HALLOWEEN PROMOTION HAS BEEN A HUGE HIT WAS NOT IN THE DOWNTOWN AREA THIS PAST SATURDAY I WAS. I WAS STUNNED AT HOW MANY PEOPLE WERE. WERE HAVING A GREAT TIME BEHAVING THEMSELVES, HAVING LOTS OF FUN AND I'M REAL, REAL PROUD THAT WE SUPPORT THAT. AND MY LAST UNIQUE DENTON THING. NORTH TEXAS FOOTBALL. THURSDAY AT 630EPN. SPORTS CENTER ON CAMPUS AT 3:00 AT THAT STADIUM. SO BE

THERE. >> THANK YOU. THANK YOU. COUNCIL MEMBER MOORE.

>> ON ECHO WHAT COUNCIL MEMBER HOLLAND JUST SAID ABOUT HALLOWEENTOWN THIS ON SATURDAY, I GOT TO ACTUALLY BE WITH SOME FOLKS WHO WERE VISITING OUT OF TOWN, OUT OF STATE. THEY'RE FROM CHICAGO, SO IT WAS REALLY FUN WATCHING THEIR FACES AS THEY WALKED AROUND HALLOWEENTOWN. I THINK A COUPLE OF THEM KIND OF WANTED TO STAY IN DENTON. LIKE THEY THEY WERE REALLY ENAMORED BY IT. SO I MEAN, KUDOS TO, AGAIN, EVERYBODY THAT'S BEEN PUTTING THAT ON. AND I ALSO WANTED TO BLESS YOU. GIVE A SHOUT OUT AND A THANK YOU TO TECHNOLOGY FOR THE CITY. THEY GAVE ME A TOUR. I GUESS IT WAS LAST WEEK. FUN FACT, A WEEK AFTER I THINK I GOT THE FIRST PHISHING EMAIL I'VE GOTTEN AT THE CITY A WEEK AFTER, AND I'M WONDERING, I'M GOING TO ASK THEM IF THEY SENT ME A PHISHING EMAIL TO TEST ME, BUT JUST THANKS FOR FOR THAT TOUR AND HELPING ME UNDERSTAND KIND OF WHAT IT LOOKS LIKE ON THE TECHNOLOGY SIDE, KIND OF WHAT SOME OF THEIR CHALLENGES ARE, SOME OF THE THINGS WE'RE WORKING ON AND THINGS ARE EXCITED ABOUT. SO IT WAS, IT WAS A REALLY GOOD TOUR. I RECOMMEND IT IF ANYBODY WOULD

LIKE TO SEE WHAT'S GOING ON IN TECHNOLOGY. GREAT. THANKS. >> GREAT. ANYONE ELSE? I JUST I WOULD ECHO THAT ABOUT THIS LAST WEEKEND. I REALLY APPRECIATE THOSE THAT PUT ON THE DAY OF THE DEAD FESTIVAL. I MEAN, THAT THAT REALLY I MEAN, THE CITY WAS JUST WALL TO WALL PEOPLE WITH ALL THE DIFFERENT EVENTS AND WONDERFUL EXHIBITS AND COFFIN RACES AND CIRQUE DU HAW AND ALL THOSE KIND OF THINGS. SO I REALLY APPRECIATE THAT. ALL RIGHT. ANY ANY OTHER COMMENTS FOR CONCLUDING ITEMS? IF NOT, I THINK WE CAN JUST GO RIGHT INTO WORK SESSION. DO WE

[E. ID 26-0635 Receive a report, hold a discussion, and give staff direction on pending City Council requests for: 1) Discuss re-launching the Neighborhood Empowerment Grant with expanded areas of eligibility 2) Discuss actionable, best practice policies for addressing homelessness in Denton [Estimated Presentation/Discussion Time: 30 minutes]]

RECEIVE REPORT. HOLD DISCUSSION. GIVE STAFF DIRECTION ON PENDING CITY COUNCIL REQUEST FOR.

DISCUSS RELAUNCHING THE NEIGHBORHOOD EMPOWERMENT GRANT WITH EXPANDED EXPANDED AREAS AND DISCUSS ACTIONABLE BEST PRACTICES, POLICIES FOR ADDRESSING HOMELESSNESS AND.

>> GOOD EVENING. >> MAYOR AND COUNCIL. MY NAME IS JUSTIN STACKHOUSE, ASSISTANT TO THE CITY MANAGER. HERE TO PRESENT THE TWO MINUTE PITCH ITEMS. AS A BRIEF REMINDER, THE REQUESTING COUNCIL MEMBER WILL HAVE UP TO TWO MINUTES TO DESCRIBE AND JUSTIFY THE REQUEST. REMAINING COUNCIL MEMBERS WILL THEN HAVE A MAXIMUM OF ONE MINUTE EACH TO PROVIDE FEEDBACK AND INDICATE THEIR SUPPORT OF THE OF THE REQUEST. STAFF WILL RESPOND TO ALL REQUESTS FOR A CONSENSUS OF AT LEAST FOUR ELECTED OFFICIALS IS ESTABLISHED. THE AGENDA COMMITTEE WILL ASSIST IN SCHEDULING ITEMS RECEIVING CONSENSUS, AND COUNCIL MEMBERS MAY NOTE THEIR PRIORITY OF HIGH, MODERATE OR LOW WHILE SUPPORTING AN ITEM. THE FIRST

[07:05:05]

>> THANK YOU. I'LL KEEP IT BRIEF AND JUST REALLY REREAD MOST OF WHAT I WROTE. I'M ASKING FOR AN ISR AND A WORK SESSION TO DISCUSS THE PROGRAM WE WE USED TO HAVE AND RELAUNCHING. IT'S A NEIGHBORHOOD EMPOWERMENT GRANT, BUT WITH EXPANDED AREAS OF ELIGIBILITY TO PROVIDE FUNDING, TRAINING, AND IN-KIND SUPPORT FOR NEIGHBORHOODS AND SEEKING TO IMPLEMENT THESE ENVIRONMENTAL IMPROVEMENTS, THE PROGRAM. I'M NOT ASKING FOR ADDITIONAL MONEY. I'M ASKING THAT WE INCLUDE, WHICH I'LL GET TO AT THE BOTTOM. WE'LL JUST READ THIS. THE PROGRAM COULD INCLUDE FUNDING NEIGHBORHOOD PARK INFRASTRUCTURE, LANDSCAPING, SUPPORTED GREEN SPACE DEVELOPMENT ALIGNED WITH CITY GOALS, AND ADVANCED WALKABILITY. I'M PROPOSING THAT WE UTILIZE EXISTING FUNDING MECHANISMS THAT WE ALREADY HAVE.

IT'S A TREE FUND, PARKLAND DEDICATION FUND AND SUSTAINABILITY FUND. SO I'M NOT ASKING FOR US TO SPEND MONEY WE DON'T HAVE. IT'S TO REALLY HAVE A CONVERSATION ABOUT THE POTS OF MONEY. WE DO HAVE TO GO TOWARDS BRINGING BACK THIS EMPOWERMENT GRANT WITH SOME EXPANDED ELIGIBILITY. AGAIN, NOT NECESSARILY ASKING FOR YOU TO TAKE A STANCE ON IT. AS MUCH

AS I AM ASKING THAT WE HAVE THE CONVERSATION ON IT. THANK YOU. >> ALL RIGHT.

>> AND STAFF HAS A LOT ON THEIR PLATE. AND SO I'M PUTTING THIS AT A LOW PRIORITY.

>> OKAY. COUNCILMEMBER RUMOHR. >> I DEFINITELY SUPPORT THIS DISCUSSION AND I APPRECIATE YOU

BRINGING THIS FORWARD. THANKS. >> ANYONE ELSE? LET'S SEE. COUNCILMEMBER HOLLAND.

>> QUESTION, PLEASE. WOULD THIS BE EXISTING CITY LAND? >> I'M SORRY. I'M NOT SURE I

UNDERSTAND YOUR QUESTION. >> I'M ASKING WHAT? YOUR LANDSCAPING. WHAT?

>> SURE. NEIGHBORHOODS. >> PRIVATE PRIVATELY OWNED NEIGHBORHOODS. OKAY.

>> ALL RIGHT. COUNCILMEMBER PERRY. >> I SUPPORT THIS AT THE

RECOMMENDED PRIORITY LEVEL. >> LOW RECOMMENDED, LOW PRIORITY. OKAY. AND I GUESS IT'S IT'S HARD TO ASK. I'M GOING TO SUPPORT IN THE SENSE TO HAVE A CONVERSATION, BUT WHEN I HEAR SOMETHING ABOUT MONEY BEING SPENT, YOU KNOW, I UNDERSTAND WHAT YOU'RE SAYING ABOUT ADDITIONAL BUCKETS, BUT I CERTAINLY WANT TO MAKE SURE THAT IF WE GET THE ISR AND IT'S LIKE, WELL, IT REALLY NEEDS TO GO TO THE NEXT BUDGET CYCLE, THEN I'LL TRUST THAT. BUT SO TO MOVE IT FORWARD TO SEE HOW IT PANS OUT, I'LL DO THAT. SO THAT WILL MOVE FORWARD TO AN ISR.

AND THEN BASED UPON THE ISR AND MAYOR PRO TEM DIRECTION ON THAT, THEN IT MAY GO TO AGENDA

COMMITTEE. OKAY. ALL RIGHT. >> THANK YOU. OTHER PITCHES ON THE TO DISCUSS ACTIONABLE BEST PRACTICES, BEST PRACTICE, BEST PRACTICE POLICIES FOR ADDRESSING HOMELESSNESS IN

DENTON FROM COUNCIL MEMBER PERRY. >> FELLOW COUNCIL MEMBERS. IN OUR RECENT 2026 COMMUNITY SURVEY, HOMELESSNESS WAS IDENTIFIED AS A MODERATE TO MAJOR ISSUE BY 84% OF OUR CONSTITUENTS. MORE IMPORTANTLY, RESIDENTS RANKED ADDRESSING HOMELESSNESS AS THEIR NUMBER ONE PRIORITY FOR THIS COUNCIL TO TACKLE OVER THE NEXT TWO YEARS. OUR COMMUNITY IS ASKING US TO LEAD ON THIS, AND I AM ASKING YOUR SUPPORT TO ADVANCE THIS TOPIC TO A DEDICATED WORK SESSION. I ENVISION A ROUNDTABLE DISCUSSION WHERE WE CAN SHARE CONSTITUENT FEEDBACK, EVALUATE WHAT IS AND ISN'T WORKING, AND BUILD ACTIONABLE POLICIES ROOTED IN INTENTIONAL COLLABORATION. AS WE ANTICIPATE UPDATING OUR 2027 TO 2020 2032 CONSOLIDATED PLAN FOR HOUSING AND COMMUNITY DEVELOPMENT AND THE OVERHAUL OF OUR CDBG AND HOME FUNDS APPLICATION PROCESSES, WE NEED A UNIFIED STRATEGY. I WANT US TO DISCUSS EXECUTING AN MOU WITH OUR LOCAL PARTNERS. THIS WILL ALLOW US TO COLLABORATIVELY IDENTIFY OUR HIGHEST UTILIZERS, STRENGTHEN SERVICE CONNECTIONS, AND ENSURE THESE INDIVIDUALS HAVE CONTINUED OPPORTUNITIES RATHER THAN FALLING THROUGH THE CRACKS. WE ALSO NEED AN HONEST CONVERSATION ABOUT OUR OVERALL APPROACH. BEST PRACTICES CLEARLY SHOW THAT CRIMINALIZING HOMELESSNESS ONLY PERPETUATES BOTH THE STIGMA AND THE PROBLEM ITSELF. WE CANNOT PUNISH AWAY HOMELESSNESS IN ORDER TO SOLVE IT. OUR FOCUS AND OUR FUNDING MUST SHIFT TOWARD DIVERSION EFFORTS RATHER THAN REACTIVE INTERVENTION. AT THE SAME TIME, I RECOGNIZE THE NEED FOR A BALANCED ENVIRONMENT. I BELIEVE THERE IS AN OPPORTUNITY TO WORK ALONGSIDE OUR COURTS AND POLICE DEPARTMENT TO OUTLINE A NO APPROACH ZONE FOR REPEAT OFFENDERS AROUND THE DOWNTOWN SQUARE AND SURROUNDING ALLEYWAYS. IF DONE CORRECTLY, THIS WILL ADDRESS ACUTE BEHAVIORAL ISSUES AND PROTECT THE PUBLIC SQUARE WITHOUT RESTRICTING VULNERABLE FOLKS FROM ACCESSING THE CRITICAL SERVICES LOCATED NEARBY. THIS WORK SESSION IS OUR OPPORTUNITY

[07:10:01]

YOU. >> OKAY. ALL RIGHT. COUNCIL MEMBER STEPHENS. MAYOR. MAYOR

PRO TEM. >> I LIKE BOTH. YEAH, I'M SUPPORTIVE OF THIS AT HIGH

PRIORITY. >> COUNCILMEMBER HALL. >> I SUPPORT THIS AT A MEDIUM

PRIORITY. >> COUNCILMEMBER RUMOHR. >> I'M HAPPY TO SUPPORT THIS DISCUSSION. AND THANKS ALSO TO YOU FOR BRINGING IT UP. THANK YOU.

>> OKAY. ANYONE ELSE? I'M GOING TO SUPPORT IT AT A. WHAT KIND OF PRIORITIES ARE WE HAVING? WE GOT A. YEAH. WHAT IS A HIGH. WHAT WHAT TIME FRAME DOES A HIGH PRIORITY COME THROUGH?

>> AS QUICKLY AS WE CAN. >> GET IT. SO SOMETIME, PROBABLY SOMETIME IN JANUARY BECAUSE OUR COUNCIL MEETING. OKAY. YEAH, THAT'S AND THAT'S FINE. I GUESS WHAT I REALLY WANT TO STRESS THOUGH, AND I DON'T HAVE MUCH TIME LEFT, THAT STAFF HAS ENOUGH DIRECTION IN THIS PITCH TO BE ABLE TO PUT TOGETHER SOMETHING THAT CAN BE HELPFUL. I MEAN, I DON'T WANT IT TO BE SO BROAD AND SO SORT OF THEORETICAL THAT WE DON'T HAVE SPECIFIC GOALS, BECAUSE I THINK ONE OF THEM WOULD BE TOO, IS WE HAVE TO HAVE A CONVERSATION ABOUT HOW DO WE ALSO MITIGATE SOME OF THE IMPACTS OF THAT COMMUNITY TO THE BROADER COMMUNITY? BECAUSE I UNDERSTAND THAT IF WE LIMIT IT TO IF WE DRAW A CIRCLE AROUND THE SQUARE AND SAY, HOW DO WE DO THAT? IT MAY PUSH, YOU KNOW, CERTAIN POPULATIONS OUT TO NEIGHBORHOODS. THERE'S JUST A LOT OF ISSUES. IT'S TRYING TO FIND THE BEST WAY TO HELP. AND IT'S ALSO TRYING THE BEST WAY TO MITIGATE SOME OF THE ISSUES THAT HAVE BEEN CREATED THAT THAT HAVE JUST COME TO FRUITION.

SO I'M GOOD WITH SUPPORTING THAT. I DON'T KNOW HOW Y'ALL WANT TO DO IT, BUT WE JUST NEED TO MAKE SURE WE CAN GET SOME GOOD STAFF DIRECTION TO UNDERSTAND EXACTLY WHAT'S SUPPOSED TO BE DONE. IS THAT IS THAT OKAY? ALL RIGHT. OKAY. ANYTHING ELSE ON THAT?

>> THAT'S IT. >> THANK YOU. ALL RIGHT. THANK YOU. SO THAT CONCLUDES OUR TURN

[1. Closed Meeting:]