Budget Committee - October 02, 2024   10/2/2024

Roll Call

• • SPEAKER_10
  • 00:00:00
    Good morning, everyone.
• • SPEAKER_02
  • 00:00:05
    Thank you for the spooky violins to kick off Spooky Season Month.
  • 00:00:11
    We have a Hitchcock vibe in the chambers all of a sudden.
  • 00:00:15
    So we're going to hear today about our Office of Financial Services department budget.
  • 00:00:21
    Within that, we'll also include the debt budget and the capital improvement budget.
  • 00:00:24
    So these are all very foundational
  • 00:00:27
    and other departments and services that support the rest of the work all around our city and in the community.
  • 00:00:31
    So with that, I guess I'll start with Director John McCarthy of OFS to take us through today's presentation.
  • 00:00:36
    Thank you so much and appreciate your hard work this budget season on behalf of all other departments and our offices as well as your own.
  • 00:00:44
    Welcome.
• • SPEAKER_00
  • 00:00:47
    Good morning Council members.
  • 00:00:49
    I'm John McCarthy, Director of the Office of Financial Services.
  • 00:00:52
    I pulled out the podium today, so hopefully this doesn't mess with the microphones or anything like that, but we've got a lot of notes I want to make sure I get to.
• • SPEAKER_02
  • 00:01:02
    What you got to do.
  • 00:01:03
    We support it.
• • SPEAKER_00
  • 00:01:03
    Committee.
  • 00:01:05
    So, yes, as Council President Scholle noted, we have a full agenda for you today.
  • 00:01:10
    I'm going to start with some background on the finance department and our budget, and then I'm going to turn it over to debt manager Neil Youngins, who is going to walk through the debt budget, and then we're going to wrap with senior budget analyst Nichelle Baca-Woods, who is going to walk through the capital improvement budget.
  • 00:01:26
    a lot of content.
  • 00:01:35
    So starting with the agenda for the finance portion of the meeting, this is the high-level look at the information that the Council requested that we present to you today.
  • 00:01:46
    We tried to touch on everything.
  • 00:01:48
    Again, it's a lot of information.
  • 00:01:49
    If there are things that we don't bring up today that you have questions about, please ask.
  • 00:01:53
    We'll try to respond to them today.
  • 00:01:55
    And if we can't put it in for today, as always, happy to bring follow-up information for you for some of those additional topics.
  • 00:02:03
    So department overview starting with the high-level overview of OFS including the department's mission and strategic objectives our mission is simply to manage the financial health of the city and we do it by Taking good care of the finances that residents of St. Paul have entrusted in us providing excellent customer service both to our internal department customers and external public customers and
  • 00:02:27
    and lastly creating a supportive and anti-racist workforce that supports and reflects the community that we serve.
  • 00:02:38
    We provide a big range of services in OFS across multiple divisions we are frankly like find folks are surprised a lot when they find certain functions live within OFS so I wanted to give you kind of a high-level run-through of
  • 00:02:53
    of a bunch of the different divisions that
  • 00:03:15
    Maintaining over 1,100 vehicles.
  • 00:03:18
    They're also responsible for managing the city's fuel pumps distributing about 400,000 gallons of gas every year and manage a replacement value of the total fleet of 78 million dollars in Real estate which is led by our real estate manager Bruce Engelbrecht that includes our real estate administration the design and construction team and
  • 00:03:39
    the City Energy Coordinator and the City Hall Annex Maintenance Team.
  • 00:03:44
    Recent major accomplishments from that team is managing the historic $27 million investment in capital maintenance across the city.
  • 00:03:54
    And also real estate has managed dozens of energy improvement projects across city facilities and that has resulted in reducing total emissions from city buildings by almost 45%.
• • SPEAKER_02
  • 00:04:07
    and the City Council and the City Council.
• • SPEAKER_00
  • 00:04:24
    Council President Jilali, we can follow up with some more detailed information on that.
  • 00:04:28
    We have a lot of good data and stats.
  • 00:04:30
    It's really hard to quantify financial savings because the cost of energy keeps going up every year, but our usage has gone down quite a bit, so we provide data on both of those things so we can get you detailed information on that.
• • SPEAKER_02
  • 00:04:42
    Yeah, it just seems like a good story to tell that we—I remember us making changes in the first couple years that I was here to get toward this.
  • 00:04:50
    of the City of St Paul.
• • SPEAKER_00
  • 00:05:00
    Next up, our accounting team is led by accounting manager Lori Lee.
  • 00:05:04
    This team processed over 63,000 invoices last year for a total of over $429 million in payments.
  • 00:05:12
    Over 99% of those were made in 35 days or less, so great performance there.
  • 00:05:18
    They were also awarded the Government Finance Officers Association Award for Excellence in Finance Reporting for 47 consecutive years, so another great accomplishment there.
  • 00:05:31
    Our grants team which is the newest Team within OFS led by grants director Lindsey Bacher has managed spending reporting in compliance for the 166 million dollar American Rescue Plan grant across 51 different projects led by city departments and
  • 00:05:50
    and then our business support team which is led by our brand new hire Peter Jensen is responding to over 200 requests for service related to in four per month and that's a pretty small team managing that those requests every month.
  • 00:06:05
    Moving on to our treasury team led by treasurer Sarah Brown.
  • 00:06:08
    This team manages a $616 million debt portfolio which you'll hear more about shortly.
  • 00:06:14
    Recently had the largest bond sale on city history for the McCarran's water treatment plant for a bond sale of $94 million.
  • 00:06:23
    our budget team which is led by budget manager Madeline Mitchell.
  • 00:06:27
    So in addition to managing the process to balance a $855 million proposed budget for 2025, they also held 41 budget engagement events with submissions from 399 St Paul residents on the budget.
  • 00:06:43
    So kind of at their busiest time of year running around hosting budget engagements and taking input from city residents as well.
  • 00:06:52
    and lastly two important department-wide stats that we like to call out.
  • 00:06:57
    The first and these are really led by our entire department contribute to these two.
  • 00:07:03
    The first is that we maintain compliance with the city's general fund fund balance policy.
  • 00:07:07
    We were able to do that during COVID and post-COVID when we're seeing record inflation and record
  • 00:07:13
    and the City Council and the City Council.
  • 00:07:30
    it's a real team effort of all the divisions in OFS and it's something that as a department we're super proud of you know it's an external kind of independent analysis of the financial management and the economy in St Paul so we look at it as a great report card and we're thrilled with those results.
• • SPEAKER_02
  • 00:07:48
    Thank you, Director.
  • 00:07:49
    I see Ms. Naker and then Ms. Dost.
• • Rebecca Noecker
  • 00:07:51
    Thanks, Council President.
  • 00:07:52
    I wanted to thank you, Director McCarthy, for these very specific outcomes.
  • 00:07:56
    I think it's really helpful to see that snapshot of the kind of work your department is doing, and I just really want to applaud you again for the work to manage our AAA credit rating.
  • 00:08:06
    Sometimes I think the eyes glaze over when we talk about financial things like that, but that saves people in St. Paul.
  • 00:08:13
    I don't know how much, but hundreds, thousands probably of dollars as a community every year because we're able to borrow at those low rates because we have such strong credit.
  • 00:08:22
    So I just think it's important to talk about that direct impact on people's lives when we're talking about the work that your team does.
• • SPEAKER_00
  • 00:08:29
    Thank you for saying that.
  • 00:08:33
    We focus a lot on like the kind of report card aspect of it and as like a stamp of approval but it's a great point that that does it results you know not only is it a good mark for the city but it actually results in savings to our residents.
  • 00:08:45
    Thank you
• • SPEAKER_07
  • 00:08:49
    I was curious about the fund balance.
  • 00:08:57
    How much money is currently in the general fund balance and what percentage is it I saw in here that we're exceeding the 15%?
  • 00:09:04
    I was just curious if you have that information.
• • SPEAKER_00
  • 00:09:07
    Council President Jollily, Council Member Joseph, it's a great question and we can follow up with that.
  • 00:09:11
    I don't have it at the top of my head, but the policy is that we need to have at least 15% of the following year's budget and we're above that right now.
  • 00:09:19
    So yes, we can get back the specific dollar amount.
  • 00:09:25
    here's the department org chart again showing all the different services that we provide across the city there are two kind of changes to the OFS organizational structure in 2025 the first is the addition of that grants team so that's a new box on this chart
  • 00:09:42
    you can see that kind of right here in the middle with three FTEs on the grants team and the second is that we removed the ARP administration team box as that work kind of slows down and those duties get absorbed by the grant team.
  • 00:09:55
    The administration box went away and the grants team box added came on.
  • 00:10:00
    In total we have 96.2 FTEs in OFS and that includes seven positions that are within the Office of Financial Empowerment that is office within OFS.
  • 00:10:15
    This is a historic look back at our FTEs by fund going back to 2020 Again, this table also includes includes OFE staff in these totals the major changes here for 2025 include the addition of one general fund FTE related to the grants team which I'll cover in more detail on a a
  • 00:10:36
    and then the removal of the ARP administration team FTEs from fund 211, that third box down, you see that goes from 13 FTEs down to two, as again that work has been absorbed into the grants team.
  • 00:10:52
    And then the last change is the shift of one and a half OFE grant funded positions to the general fund, and that's something that, you know, when OFE is back in front of you, they can speak to that in more detail, but it affects the total FTEs in OFS.
• • SPEAKER_02
  • 00:11:08
    And I do see a follow-up question from Ms. Naker.
• • Rebecca Noecker
  • 00:11:11
    Go ahead.
  • 00:11:11
    Thanks, Council President.
  • 00:11:12
    I think two questions.
  • 00:11:13
    One, is this an actual reduction in people or are people just doing different work and going to different funds?
  • 00:11:18
    And secondly, is this an actual reduction in FTEs or are we just shifting these to another fund?
• • SPEAKER_00
  • 00:11:24
    Council President Jilali, Council Member Naker, it's both and I can provide you the breakdown of which is that.
  • 00:11:31
    Several of the grants admin team were absorbed into OFS as part of the new grants administration.
  • 00:11:40
    Some of those positions went back to their previous functions.
  • 00:11:43
    We had a staff member on loan from emergency management who's now back.
  • 00:11:46
    and Emergency Management.
  • 00:11:48
    This also included city attorney positions and HR positions, some of which have been either added or absorbed back to those teams.
  • 00:11:58
    So I can get the full breakdown for you because it's kind of a mix.
  • 00:12:06
    Next, we were asked to provide you with some information on the OFS revenues by fund.
  • 00:12:12
    This is a good question and it's not something that we look at often and we do actually have a lot of different revenues, which kind of surprised me as I was putting this together.
  • 00:12:21
    Starting with the general fund, we don't bring in a ton of general fund revenues.
  • 00:12:25
    Commission, procurement card commissions.
  • 00:12:27
    This is, you know, kind of think of this as like, you know, if your personal credit card, if you get cash back or points for using that, that's what this revenue essentially is, is that we get commissions back for when departments use procurement cards, which are city-issued credit cards, to make purchases.
  • 00:12:42
    In general, we tend to collect about $90,000 to $100,000 per year from that revenue.
  • 00:12:50
    The next one up is transfers in to the OFS General Fund.
  • 00:12:54
    That is where OFS special fund functions pay for dedicated accounting support within our department.
  • 00:13:02
    So they are essentially transferring money into our general fund to pay for that specialized accounting support.
  • 00:13:06
    So it's a little in the weeds, but it's a way for our assessment fund and our treasury and debt fund that have really specialized accounting needs to help pay for some of the accounting staff who support their work.
  • 00:13:16
    And that's about $185,000 per year.
  • 00:13:20
    the assessment fund is next most of the different assessment revenues in the city flow through the OFS assessment fund including assessments for some street reconstruction projects as well as all the abatement assessments that you see on your agendas every week those all flow through OFS also the assessments for the new the newly expanded downtown improvement district come through OFS and OFS manages those property assessments and then lastly
  • 00:13:47
    disease tree assessments are when private properties can remove trees on their private property and have the city front the cash for that work and then pay it back over time through assessments.
  • 00:14:01
    The central service fund is where we budget services that OFS provides to other city departments.
  • 00:14:06
    Most of the revenues you see here are city departments paying us for those services.
  • 00:14:11
    They include things like the ERP maintenance where we pay for support and licensing for Infor and TASS and other city-wide software.
  • 00:14:19
    Investment service fees for managing the city's cash investments.
  • 00:14:23
    Some of that is done in-house and some of it is done with external money managers and departments all bear some of the costs for that work.
  • 00:14:30
    design service fees.
  • 00:14:32
    That's when our real estate design and construction folks help departments plan for or manage construction projects and charge a fee for that service.
  • 00:14:40
    City Hall annex rent is pretty straightforward.
  • 00:14:42
    Everyone who offices in City Hall annex pays to help support the cost of that building to operate and maintain it.
  • 00:14:49
    Real estate and assessment administration fees and then lastly the energy coordinator fees where departments pay in to support the work of the energy coordinator.
• • SPEAKER_02
  • 00:14:59
    I see a question from Ms. Bui.
  • 00:15:01
    Go ahead, Ms. Bui.
• • Anika Bowie
  • 00:15:02
    Thank you, Council President.
  • 00:15:03
    Thank you, Director McCarthy.
  • 00:15:04
    I have a question about the rent, City Hall Annex rent, if you could explain why this year is lower compared to last year.
  • 00:15:14
    And then also, I know you're kind of speeding through this, a lot of content.
  • 00:15:19
    If you could talk a little bit more in depth about the investment service fees and why it's at zero for year-to-date.
  • 00:15:28
    Yes.
• • SPEAKER_00
  • 00:15:28
    Council President Jolli, Council Member Bowie, great questions and I should have prefaced that a lot of the stuff in the year-to-date column for 2024 really just a function of kind of when we do those bills most of them are internal and sometimes we do them all at once at the end of the year when we kind of have we settle everything up at the end of the year and that's definitely true for the investment service fees example as well as the City Hall annex rent I'm even surprised that we have anything honestly for the rent so far the history I think we do usually do that all at once at the end of the year
• • Anika Bowie
  • 00:15:58
    Yeah Does that answer your question?
  • 00:16:07
    are there opportunities for adjustments, like how is that managed?
• • SPEAKER_00
  • 00:16:12
    Yes, Council President Jilali, Council Member Bui, so the OFS, the city owns that building and we maintain it.
  • 00:16:20
    We have, you know, custodial staff and contract custodial work over there and maintenance workers and we essentially calculate how much it costs to run that building every year and we charge it out to all the other departments that
  • 00:16:34
    and we have negotiated lower rents and kind of helped save general fund money when we've needed to with that building.
  • 00:17:00
    So it's been
  • 00:17:01
    And then our last fund is the
  • 00:17:23
    for vehicle repair and rental fees where departments pay to rent vehicles from us or to have those vehicles repaired.
  • 00:17:30
    And then lastly, equipment sales where we sell old city vehicles at auction.
  • 00:17:41
    Let's see.
  • 00:17:42
    Next, we were asked to provide information on challenges and opportunities that our department is facing.
  • 00:17:48
    This is a really great question to ask, and I think we tried to frame it as places where there are both challenges that we're trying to turn into opportunities to leverage future improvements for the department.
  • 00:17:59
    So I have three that we're going to run through today.
  • 00:18:01
    The first relates to our annual comprehensive financial report, also known as the ACFR, and our audit, and the timeline with that work.
  • 00:18:12
    we you know our annual report has been late for the past several years due to a range of factors including staff turnover at the city, state auditor staffing, technology upgrades, changing accounting standards, and just kind of an overall need for process improvement to work that we've been doing the same way for a number of years.
  • 00:18:33
    we've taken a lot of steps this year to make improvements when I presented my budget to the council last year I said this was my number one priority and that's still true for this year and you know we've been able to hire a deputy director to oversee the accounting and business support teams and really focus on those day-to-day operations and making sure that those are happening more efficiently we have
  • 00:18:54
    change staff assignments to be able
  • 00:19:14
    and this year is something that you know I've been really pleased to see we really treated as a kind of all hands on deck assignment and we've had help from the budget team the Treasury team like everybody is working to get this work done knowing that it's our top priority to improve here.
  • 00:19:30
    So we still have a long way to go, but we are already seeing great progress and I'm really pleased with that.
  • 00:19:36
    We're anticipating that the 2023 financial report will be done three months earlier than the 2022 report.
  • 00:19:42
    So a big move in the right direction.
  • 00:19:43
    I'd like to get another three months better than that for the 2024 report to really get us back on track, but we're moving in the right direction.
• • SPEAKER_02
  • 00:19:52
    That's great to hear.
  • 00:19:52
    Thank you for the detailed explanation here.
  • 00:19:55
    What is GASB?
  • 00:19:56
    I just don't know what that acronym is.
• • SPEAKER_00
  • 00:19:59
    and the City Council.
  • 00:20:12
    and the City Council.
  • 00:20:32
    and I appreciate that update too and I'm just wondering if that's also inclusive of the HRA audit as well.
  • 00:21:01
    Council President Scholle, Council Member Johnson, yes, those two, you know, we can't submit our audit and financial report until the HRA is done, until the River Center is done, and the Port Authority.
  • 00:21:12
    They all have to be done, and water utility all have to be done before we can submit ours, and there are things that the HRA is dependent on us to finish before they can submit theirs.
  • 00:21:23
    and the timeline for us is the same for them as well.
  • 00:21:28
    We want them to be on time as well so we anticipate that they're going to be done three months ahead of schedule or ahead of last year as well.
  • 00:21:40
    really closely related to this the next challenge relates to staffing especially in the accounting area I'm sure everybody read this bond buyer article but you know I think it's worth sharing again but
  • 00:21:57
    you know this is really highlighting a national problem where we you know we have several pending retirements in accounting and some recent ones and because of this national shortage we've had a lot of challenge hiring new accountants and this is this will also be true currently or soon in other OFS divisions but we're experiencing it kind of most acutely in accounting right now
  • 00:22:22
    so you know we've put together a really good improvement plan it's really made it so that we've been very intentional about succession planning and you know as we have people who are leaving who have all of these this institutional knowledge in their heads we're making sure that they're putting it down on paper we're actually we're making sure that they're working with their successors so that those people know how to do this work before they go out the door and we've done
  • 00:22:47
    we've kind of created career pathways so we've been able to do several internal promotions for our team so that's been great to be able to grow that talent from within when we know it's really hard to get people externally in for these positions so I as I was reviewing this this morning I see the last bullet says that our current that our accounting team is fully staffed and that's actually not true we have a vacancy right now because we were trying to overlap hiring right now we've been doing that as a strategy so that
  • 00:23:12
    you know has typically you wait till the person's out the door and then the new person starts and they have no overlap to be able to learn those those functions and so we're intentionally overlapping hiring so that we have some cross training opportunities there.
• • SPEAKER_02
  • 00:23:26
    Great.
  • 00:23:27
    I see Ms. Bui with a question.
  • 00:23:28
    Go ahead.
  • 00:23:28
    Thank you, Council President.
  • 00:23:29
    Thank you, Director McCarthy.
• • Anika Bowie
  • 00:23:31
    I had a question around, well, first, before my question, I just wanted to say I appreciate the intentionality that the city has, especially with hiring and also investing in that new talent with the trends of our new positions and the growth and evolution of the city and the needs of our managing these dollars.
  • 00:23:55
    and the City Council.
• • SPEAKER_00
  • 00:24:14
    Council President Jalali, Council Member Bowie, it's a great question and I think a lot of the work that we're focusing on with the kind of succession planning is about are there different ways to do this process that we've been doing the same way for you know
  • 00:24:29
    for the City of St Paul.
  • 00:24:52
    Committee.
  • 00:25:04
    of the City of St Paul.
  • 00:25:27
    and then the last area of challenge that I want to talk about relates to the budget amendment that the council approved last week and that relates to our fleet replacement equipment or a fleet equipment replacement budget you know the challenge here is that the average age of our fleet is too high at fourteen and a half years
  • 00:25:45
    We have seen historically high inflation recently and that's just made this situation even harder.
  • 00:25:53
    We are continuing to pursue grants.
  • 00:25:55
    We've been really successful getting Minnesota Pollution Control Agency and DOE grants to be able to replace
  • 00:26:02
    and the City Council.
  • 00:26:18
    and we were trying really hard to incentivize kind of right sizing the fleet that there are folks who kind of have like you know the backup to the backup to the backup that they're like well we need to save that just in case like these other three vehicles break down it's like we need to make the decision to get rid of those and right now we talk about our billing structure is sort of like the buffet model where it's kind of like there's no
  • 00:26:41
    City Council meeting.
• • SPEAKER_02
  • 00:27:04
    Thanks.
  • 00:27:04
    I saw a question from Ms. Yang and then Ms. Jost.
  • 00:27:06
    So let's take them in that order.
  • 00:27:07
    Go ahead, Ms. Yang.
• • Nelsie Yang
  • 00:27:08
    Thanks, Council President.
  • 00:27:09
    Director McCarthy, I have a couple of questions about this.
  • 00:27:12
    But I first want to say I feel that OFSU all do stellar work.
  • 00:27:16
    So thank you so much, because I really believe that our city wouldn't be able to function without the expertise and skills of you and your team.
  • 00:27:24
    So I'm so incredibly grateful to all of you.
  • 00:27:26
    In terms of the conversation on fleet, can you let us know basically how much are we
  • 00:27:34
    how much do we need?
• • SPEAKER_00
  • 00:27:44
    Council President Jilali, Council Member Yang, it's a great question.
  • 00:27:46
    I know we have good metrics on that and I can get back to you on those.
  • 00:27:49
    I don't have those off the top of my head.
  • 00:27:51
    I know our fleet professionals talk about like a ratio of equipment budget to equipment replacement value.
  • 00:27:58
    I talked about that value is like 78 million dollars and the budget is only three million dollars.
  • 00:28:02
    We know that ratio is out of whack.
  • 00:28:04
    We want to again bring down the amount of vehicles that we have and bump up the replacement budget to get that more in alignment.
  • 00:28:11
    But I can follow up with specifics on that.
• • Nelsie Yang
  • 00:28:14
    I know that last week we approved the council resolution for the $1.5 million for fleet but I'm just trying to understand like is that a lot would you consider that a lot or a little and so without that context it's just hard to understand thank you
  • 00:28:31
    Thanks.
• • SPEAKER_07
  • 00:28:32
    If that's all, then we'll go to Ms. Jost.
  • 00:28:33
    Go ahead.
  • 00:28:34
    Thank you, Council President.
  • 00:28:35
    Director McCarthy, I also have a couple of questions about the fleet.
  • 00:28:38
    It's such a large proportion of the overall budget.
  • 00:28:44
    And I was curious, two questions.
  • 00:28:47
    How much of the money budgeted for fleet services is for maintenance costs?
  • 00:28:52
    And then also,
  • 00:28:54
    I see that vehicle replacement costs are much higher than 2019.
  • 00:28:58
    Do you still see a long-term cost savings in buying new vehicles versus the maintenance cost of these really old vehicles?
  • 00:29:08
    Understanding that we're still really behind to replace a large proportion of them.
  • 00:29:12
    I was just curious about that.
• • SPEAKER_00
  • 00:29:13
    Council President Jolli, Council Member Jost, I'll get back to you with the specific breakdown on maintenance versus replacement.
  • 00:29:20
    The majority of the budget is maintenance.
  • 00:29:21
    It's mostly staffing, you know, those 32 FTEs that are charged with maintaining the vehicle fleet.
  • 00:29:31
    But yeah, I'll get that specific breakdown.
  • 00:29:33
    I would say we do know, and I'm sure every one of our mechanics can point to a specific piece of equipment where they say,
  • 00:29:40
    we were putting in way more than this piece of equipment is worth in maintenance and that's exactly you know again to the point of like faster replacement we also I shared the revenue slide and saw that you know we're not bringing in a ton of money on vehicle sales that's also because by the time we sell them they're kind of you know they've been worn well-worn it'd be great if we were at a faster cycle so that we could get more money in for replace you know through auction
  • 00:30:05
    which then generates more money for vehicle replacement but again it's all you know it's this whole cycle and it's as Mr. Wurst when he was here last week presenting to indicated these are kind of long-standing challenges that are hard to fix overnight but we have been gradually building that replacement budget up a little bit at a time.
• • SPEAKER_02
  • 00:30:23
    Okay thank you.
  • 00:30:24
    And I saw a question from Ms. Naker go ahead.
  • 00:30:27
    Thanks council president director I heard you say that we
• • Rebecca Noecker
  • 00:30:30
    or PACRATS and we're hanging on to way too many vehicles.
  • 00:30:33
    I assume there's a cost associated with hanging on to those vehicles that it sounds like your department is trying to address by incentivizing departments to get rid of those vehicles.
  • 00:30:42
    Can we help incentivize that by cutting departments' fleet budgets to the size that they should be?
• • SPEAKER_00
  • 00:30:49
    Council President Jilali, Council Member Naker, it's a great question.
  • 00:30:52
    I mean I think the biggest challenge is that that funding gets paid into our department to maintain and replace and so any cuts there I mean it'd be more about can we prioritize it for replacement versus maintenance but again it's we're in the cycle of having to maintain what we have to make sure they're ready for a snow emergency or you know forestry response
  • 00:31:11
    so that we just have to be careful.
  • 00:31:14
    It's a way of disrupting the cycle, I'll say, but we need to probably be a little bit more sort of gradual because I think that would have too much of an impact on our daily operations to maintain what we have for the time being.
  • 00:31:27
    It's a great question, and I think we do need to like build in some more sort of forceful incentives And we do think this billing approach is gonna be a good way of doing that where people can see I'm having to pay for this thing that we haven't used and you know in three years, but we're having on standby Okay, I appreciate that understood and you know let us know if there's something that we can do to yeah mean departments off because that it does seem like there's there's a cost and I
• • Rebecca Noecker
  • 00:31:55
    saying that you no longer get the budget to afford that cost.
  • 00:31:58
    I understand we wouldn't want to do it all at once, but maybe there's some sort of step down that we want to consider.
• • SPEAKER_02
  • 00:32:03
    These are my emotional support vehicles.
  • 00:32:06
    That's literally the case.
  • 00:32:13
    But this is a good discussion.
  • 00:32:14
    I've actually really enjoyed getting under the hood, if you will, of what it all takes to maintain these cars.
  • 00:32:20
    And just to connect it to the item last week,
  • 00:32:23
    I appreciated getting to realize that we're trying to evolve from what we're currently doing, which is that those vehicles we're swapping out are so run down and ancient that you functionally can't get any type of meaningful resale revenue.
  • 00:32:38
    That's not actually a sustainable cycle either.
  • 00:32:40
    What's the right new system?
  • 00:32:43
    So this is well worth the conversation.
  • 00:32:45
    I appreciate it.
  • 00:32:47
    Okay, I can keep moving if I don't see any other questions.
  • 00:32:49
    Let's go ahead.
• • SPEAKER_00
  • 00:32:50
    great and the last thing I'll say on that one is you know in terms of current status it was great to have that resolution approved last week it does give us that one and a half million dollar kind of one-time boost and it was a way for us to leverage savings we have made a lot of operational changes within fleet moving most of our staff to one location and that allowed us to kind of eliminate some duplicative
  • 00:33:09
    of the City Council.
  • 00:33:25
    Next I want to provide an update on the most significant budget investment that we had in our 2024 budget and that was the establishment of the citywide grants team.
  • 00:33:36
    We've hired all three FTEs for the new grants team.
  • 00:33:39
    That team's really hit the ground running.
  • 00:33:40
    they're providing support to departments already with things like you know grant prospecting and strategy an example of this is they're working to do a scan of both the IIJA and IRA grant funds to make sure that departments are ready for those opportunities as they come up they're working on grant writing and searching for new money and a good example of this is that they the grant team supported an application for
  • 00:34:06
    of the City of St. Paul.
  • 00:34:23
    and doing training and development and establishing citywide best practices and policies including currently working on a grants manual that will help define the department's operations as well as help other departments manage their grant opportunities.
  • 00:34:41
    So very excited that that team is up and running.
  • 00:34:45
    as for a hiring update as I said pleased to say we've hired all four positions that were included in the 2024 budget as new investments including all three of the grants team as well as the deputy director so all four of those positions are on board and have all been working for us for a while now.
  • 00:35:06
    Next is an update on our ARP funded project.
  • 00:35:09
    I should say formerly ARP funded.
  • 00:35:11
    It's now a special funded project on Electronic payments.
  • 00:35:15
    We're making steady progress on citywide electronic payments we hired a consultant that conducted a kind of citywide inventory and needs assessment and helped us prioritize this work we take in payments across the city and a huge number of ways and this was a
  • 00:35:31
    and the City Council.
  • 00:35:46
    Been helpful, but also slowed down a little bit of this work Some of the big ones that are happening right now as you know, we're taking over the billing portion of the solid waste Function, so we've been actively involved in assisting with that launch Water utility is replacing their billing software.
  • 00:36:03
    We've been involved in that and huge project with DSI on replacing their permitting and licensing software and
  • 00:36:10
    we bring in a ton of volume of payments through our current software there and so we have been working on that with your electronic payments team.
  • 00:36:18
    That last one we're really optimistic it's kind of early with this but that is a new vendor for the city and it has a lot of really good potential for payments and we have been you know one of our big takeaway learnings from this assessment is that this needs assessment is that we have a ton of different software across the city that people are using to bill and it'd be great if we could
  • 00:36:38
    streamline that down to just one or two major softwares and the platform that DSI is using could have that potential to work for other billing functions in the city.
  • 00:36:50
    And then the last thing is we're finalizing the contract to bring on a project manager that will actually go through and implement the payment processes that were identified in the needs assessment.
  • 00:37:00
    So again like I said steady progress but a lot of work in that area.
  • 00:37:08
    Next, the next several slides include budget data that we were asked to provide starting with a look back at our budget actual general fund spending going back to 2021.
  • 00:37:16
    A couple things that I want to point out here that amended budget column reflects changes to the budget that encompass kind of two different changes.
  • 00:37:25
    the first is that in all three of these years we did reductions to move OFS savings to other department budgets at the end of the year via the year-end resolution and that was to help but kind of balance the city general fund citywide and then the other pieces carry forward of budget for prior year contracts that are still in process this one's kind of in the weeds but essentially you know if the department brings on a consultant in October
  • 00:37:51
    and the budget
  • 00:38:08
    OFS has really kind of the frontline bird's-eye view of what's happening across the general fund and We also then are sort of one of the first lines of defense and our leadership Has given clear direction when we see general fund challenges across the city that we need to tighten spending So, you know when there's a rock slide on Wabasha or we have ten snow emergencies our department knows and we immediately kind of sound the alarm and say oh
  • 00:38:33
    we need to manage vacancies, we need to hold off on that essential spending.
  • 00:38:37
    You can see this especially true in 2022 where in May we got the court decision that said we could no longer charge street maintenance fees this way and that was a year where we started with OFS but we told all department leadership we need to tighten our spending, we need to manage this and we were able to land I think in all three of these years the general fund below budget and it really became part of that tight spending control that we had to do to respond to those
  • 00:39:03
    kind of emergency situations as they came up.
  • 00:39:09
    The next table is the total OFS department budget by fund.
  • 00:39:14
    A couple big changes in 2025 to call out here.
  • 00:39:18
    The first is on that third or the second line down, the General Government Special Projects Fund.
  • 00:39:24
    That's where you can see the shift of the electronic payments project from the ARP budget over to the special fund budget.
  • 00:39:31
    Most of that change is associated with that move of about $1.3 million from ARP over to the special fund.
  • 00:39:38
    the other big change here relates to the assessment fund which is the third one down as I noted all the assessments flow through or most of the assessments flow through the assessment fund two big changes that are happening there in 25 is that we're anticipating more capital project spending and so the assessments for those capital projects need to flow through our budget so we bump those up in response to the demand on capital projects and the second is relates to private sewer connections you may know about this but
  • 00:40:07
    Private property owners can have their private sewer connection replaced where the city fronts the cash for that work and then the property owner can pay that back over time through assessments and again that flows through our budget so we're seeing an increased demand for that work and this just reflects the revenue and spending associated with that.
  • 00:40:30
    and then next we were asked to present our department budget by kind of division or activity this was a sort of a tough exercise because it's not really how we you know we budget by sort of salary and benefits and things like that and so it was a good exercise is a good way of looking at our budget but it took a little bit of kind of back of the envelope math so all of these aren't exactly precise I would say but are kind of our best estimate for how much we're spending on each of these functions including
  • 00:40:56
    you know the department administration, our accounting team, the business support team, the budget division, our citywide grants team, the fleet operation, you know our treasury team, the assessments team, our real estate administration team, the design and construction group, and then our energy and climate team as well as the team that manages and maintains the city hall annex.
  • 00:41:20
    So again a lot of information there but it was a good exercise to try to break our spending into that.
• • SPEAKER_01
  • 00:41:26
    Breakdown.
• • SPEAKER_00
  • 00:41:29
    and then lastly a summary of the major proposed changes to our 2025 budget on the general fund side we had the addition of a senior accountant to the grants team the accounting for grants is really complex and unique and we have been really fortunate that we were able to hire a super experienced grants accountant from another city I'll say and she has been working on the ARP administration team for the past couple years
  • 00:41:58
    and now that that work is winding down we're moving her over to the general fund to be a permanent member of the team.
  • 00:42:05
    We were also able to make several staffing adjustments in 2025 related to you know back filling vacancies at lower titles or lower steps and in some cases we had folks who were not working full-time and we were able to bump those positions up to full-time which is how you see that increase of 0.35 FTEs and we were able to make all those changes and still actually save
  • 00:42:27
    and the City Council.
  • 00:42:43
    and then on the special fund side, I referenced this earlier, we have a one-time investment in bringing in a consultant to work on payroll and accounting work.
  • 00:42:52
    The payroll team is based in HR, accounting is in finance.
  • 00:42:56
    Our biggest expense is city payroll and there are a ton of challenges.
  • 00:42:59
    with getting data from payroll over to accounting.
  • 00:43:02
    This is one of always the big holdups on getting our annual report and audit done.
  • 00:43:08
    There are just a lot of kind of technical and process challenges between those and we are bringing in a consultant to help us streamline that work to make sure we can reduce errors, reduce the correction time that it takes to fix those errors, make sure we are all paid every two weeks and those kinds of things.
  • 00:43:25
    And that's it for OFS.
  • 00:43:28
    I know you asked a number of questions as we went, but if you have others, happy to take them now.
• • SPEAKER_02
  • 00:43:33
    All right.
  • 00:43:33
    So that's part one of a couple different presentations we're getting today.
  • 00:43:37
    Let's take questions on what we've heard so far, and then we'll keep it moving.
  • 00:43:41
    Any questions for Director McCarthy?
  • 00:43:43
    Go ahead, Ms. Naker.
• • Rebecca Noecker
  • 00:43:44
    Thanks, Council President.
  • 00:43:45
    Director McCarthy, I know we added staffing to HR for payroll in this year's budget.
  • 00:43:52
    and the City Council.
• • SPEAKER_00
  • 00:44:05
    It's a good question.
  • 00:44:08
    I think I would say on the payroll side that's really about staffing up and making sure they have enough bodies to process the work.
  • 00:44:15
    It's just we've you know our departments have grown there's complex union contracts and I think literally just managing the day-to-day payroll cycle has been a challenge for HR so a lot of that I think is literally just getting enough people to be able to turn out that payroll.
  • 00:44:31
    at the same time that they're managing that they have gone through a major technology upgrade with an in for upgrade and so I think what we are really focusing in is like those kind of core processes because we can have new people doing the old processes which maybe will continue to create the same errors we need to like take a step back and actually just sort of reimagine how we do both of the functions on both the accounting side and the payroll side
• • SPEAKER_02
  • 00:44:56
    of the City Council.
  • 00:45:19
    their pay and all related issues.
  • 00:45:21
    This request before us for the payroll accounting consultant is to look at process improvements and actually say how do we get out of the system we have right now which has issues or could use improvement, and that's different than just people trying to get payroll out.
  • 00:45:38
    and City Council.
• • Anika Bowie
  • 00:46:02
    When is like the on-ramp and off-ramping of this position?
  • 00:46:07
    Do you foresee this consultant working the full year or what is like that that timeline of?
• • SPEAKER_00
  • 00:46:15
    Council president jalali comes from everybody.
  • 00:46:16
    That's a great question.
  • 00:46:17
    I would say we haven't quite gotten That far in our planning for this.
  • 00:46:21
    We actually we just had an internal Accounting and finance meeting on this yesterday to map out.
  • 00:46:26
    What do we see is the biggest challenges on the accounting side?
  • 00:46:30
    we're going to finalize that and then bring in the HR team to get their list and then I think once we do that then we'd be scoping the contract to really get a sense of how much work do we think this is how long do we think it'll take you know a person or a team of people to get this work done so we're not quite there yet I mean we're really just kind of creating the laundry list of challenges right now that we then want to figure out how to scope the contract around.
• • Anika Bowie
  • 00:46:54
    got it.
  • 00:46:55
    In my next follow-up, is this payroll accounting consulting just for the Office of Financial Services or all departments across the board that has all payroll challenges across all departments?
• • SPEAKER_00
  • 00:47:09
    This would do a city-wide approach.
  • 00:47:14
    Some departments have kind of their own dedicated payroll folks within their departments, but most of it is centrally managed by HR, but we would make sure that those folks in other departments are looped in on the work, but it would be primarily HR central payroll and OFS central accounting doing the work that impacts all departments.
• • SPEAKER_02
  • 00:47:36
    All right, I see a question from Ms. Johnson.
  • 00:47:38
    Go ahead.
• • Cheniqua Johnson
  • 00:47:39
    And I guess I was kind of trying to look ahead, too, to see if it's covered anywhere.
  • 00:47:44
    But could you just explain a little bit more around the franchise fees decision and just looking at the general government special projects and knowing that OFS has a role in the collection of those?
  • 00:48:01
    Could you talk about the 1.5 million that we're receiving and then also quantify like the on average like the power of home weatherization program has about a $300,000 short start I believe.
  • 00:48:12
    Do you know about roughly like what that really translates to as far as like housing and goals for the years or just like what are we anticipating from the numbers of that actually translating to and the climate action coordinator role as well?
  • 00:48:27
    What is the actual impact of that investment?
• • SPEAKER_00
  • 00:48:29
    When you say impact, do you mean what individual property owners would pay?
• • Cheniqua Johnson
  • 00:48:37
    We're receiving a revenue of $1.5 million, correct?
  • 00:48:43
    With the changes to the franchise fees.
  • 00:48:46
    And the allocation right now proposed for the power of home is $300,000, is that correct?
• • SPEAKER_00
  • 00:48:51
    Yes, I believe so.
• • Cheniqua Johnson
  • 00:48:52
    And what does that really translate to as far as
• • SPEAKER_00
  • 00:48:57
    Council President Scholle, Council Member Johnson, that function is kind of office within OFS, but it's really managed by our Resilience and Climate Coordinator team, which is managed by Russ Stark.
  • 00:49:11
    I can work with him so that we can get a more detailed follow-up on the specifics for that.
• • Cheniqua Johnson
  • 00:49:16
    Sure, and just how you came up with the number and what numbers were you guys working with.
  • 00:49:21
    I think it'd be really great to see that.
• • SPEAKER_00
  • 00:49:24
    So I will say the first year is planned for $300,000.
  • 00:49:27
    I think once it's up to full launch, we'd anticipate that it would be about a $500,000 program.
  • 00:49:32
    But knowing that it's going to take some time to ramp up and demand for the first year would be lower.
  • 00:49:37
    Sure.
  • 00:49:37
    Yeah, the idea is that that would, but I think you're asking kind of outcomes and number of
• • Cheniqua Johnson
  • 00:49:43
    and City Council.
  • 00:50:13
    I just wanted to know if you could provide a little bit more detail around that.
  • 00:50:21
    I think it's a fund that's related to what was ARPA money but now is going to be used I think for service level adjustments out of the special fund.
  • 00:50:31
    Could you just explain that 300,000 transfer so it makes sense?
• • SPEAKER_00
  • 00:50:35
    Council President Jilali, Council Member Johnson, we moved the entire budget for, or the remaining budget, what hasn't been spent yet, out of ARP over to the special fund.
  • 00:50:45
    And that total, I think it was roughly 1.3 million, maybe 1.4, somewhere around there.
  • 00:50:52
    So that was a shift from the old funding source to a new funding source in the special fund.
  • 00:50:58
    I'm not sure on a $340,000 transfer though, so I may have
• • Cheniqua Johnson
  • 00:51:03
    Okay, I think it's just a proposed maybe a proposed change from It looks like the electronic payments project I think is what the ARPA transfer rate to the special project was I Think it was that I thought it was the full 1.3 million of moving that budget Yeah, and so was that all obligated for the electronic payments or was there a $300,000 lift like something left over that was sent somewhere else.
  • 00:51:28
    I
• • SPEAKER_00
  • 00:51:29
    prior to this move, a portion of that budget had been moved to a different project.
  • 00:51:35
    I can get the history on that.
  • 00:51:37
    The original budget for the payments plan was closer to two million, I think, but those changes were made kind of way prior to this shift from ARP to the special fund.
  • 00:51:49
    So I can get that breakdown.
• • Cheniqua Johnson
  • 00:51:50
    Okay, I think one of the things like just going through the presentation, it's great to kind of go through it.
  • 00:51:55
    I really want to understand the incredible work that you guys do.
  • 00:51:58
    and so just sometimes understanding like what so like with the milestones and just kind of the transfer and the numbers like for like what that really what that is specifically would be really helpful for me as I'm kind of digesting the presentation and also what's being reported mostly because you know the special funds gonna have a lot of incoming and outgoing things and I think it would just be really great to
  • 00:52:21
    be able to be provided kind of like similar to the composite summaries and like the other places that have numbers and ways to know like what's obligated what isn't like all of those things have been used and expended but like if there are proposals in the budget that warrant a change or are recommended using special funds that is like a proposed change it'd be really nice to see that.
• • SPEAKER_00
  • 00:52:44
    Council member Johnson I can't say at a really high level that again that budget is around 1.3 million We've only spent on two different projects one is that needs assessment that was that we had a broadening outside consultant for and then a second was you know piece of kind of software and implementation for a
  • 00:53:02
    Accounts receivable portal into in for that is even way too technical for me to understand but apparently makes it easier for cash and checks and in credit card payments to flow into in for And in total that was somewhere around between those two things about a hundred around fifty thousand between those two investments So we still have a lot of resources left in that but we are really ramping up the TSI
  • 00:53:25
    Business license and permitting software Replacement and we know that that one is gonna need some support from external consultants and staff time to get that successfully launched on the timeline that we have envisioned so I Expect that that's where we'll be spending a chunk of our money here soon as well as that project manager.
  • 00:53:42
    That's coming on board Okay.
• • Cheniqua Johnson
  • 00:53:44
    Thank you so much.
  • 00:53:45
    Dr. McCarthy
• • Anika Bowie
  • 00:53:47
    All right, are there any other questions
  • 00:54:03
    is coming from the assessment funds and I was just wondering how is that tracked and particularly I know we vote as a body on projects that is going to be assessed and then that goes to the residents
  • 00:54:18
    and the residents, depending on their situation, may have a payment plan or is going to put on their taxes.
  • 00:54:24
    How are we, I guess, assessing on what we're projecting and particularly what we're going to receive?
  • 00:54:31
    And is this fund just the assessments that's been placed on there or is this actual payments that have been received from residents?
• • SPEAKER_00
  • 00:54:43
    Council president July councilmember Bowie, it's both.
  • 00:54:46
    It's the payments that come in Over time because you know often those or prepaid some people pay kind of right it right away all at once and then others pay overtime on taxes or You know spread it out and so the assessment fund holds that receivable which means that those payments come into the assessment fund over time but then the assessment fund also transfers out money to a
  • 00:55:09
    and the City Council.
  • 00:55:26
    and the City Council and the City Council.
  • 00:55:42
    other project funding sources like bonds or you know municipal state aid versus assessments and you know just the challenge is always that it means if we have fewer assessments it means there's less work that we can do because that remaining project funding source just has to take on more of the share of the project so I know that it can be challenging because
  • 00:56:07
    you know that has a direct impact on the residents who are impacted by the construction but also you know we have a long history of assessing for projects tons of other cities do it as well it seems like a fair mix of saying you know you have a direct benefit of the project as well as the city-wide share that pays for the rest thank you
• • Anika Bowie
  • 00:56:25
    This is a follow-up.
  • 00:56:27
    I know my office definitely will be reaching out to talk more extensively about this, but you mentioned the sales tax.
  • 00:56:37
    Part of the revenue for the sales tax is going towards street construction, and some of those constructions still include assessments.
  • 00:56:48
    talk further when that is brought to us, particularly to vote on it.
  • 00:56:54
    I would like to have a really clear explanation around what does that match.
  • 00:56:59
    What is the assessments going towards, particularly around how it's matching with the sales tax and the assessments, just so we can have whatever that formula is, just because people are under the impression that
  • 00:57:16
    that revenue is going towards that and we just want to make sure that we have a very clear understanding of our assessment process.
• • SPEAKER_02
  • 00:57:34
    All right, so we've got about half an hour to get through debt management and CIB budget.
  • 00:57:40
    So I'm going to welcome up our next presenter, Mr. Young-Hans, to talk about the debt management budget and the mayor's proposed 2025 debt budget, and we'll keep it moving.
  • 00:57:52
    Go ahead.
• • SPEAKER_01
  • 00:57:53
    Good morning.
  • 00:57:55
    I'm Neil Younghands, Debt Manager in the Office of Financial Services.
  • 00:58:00
    I'm going to be going through the debt management portion, and I'll be covering debt management as well as our proposed 2025 debt budget.
  • 00:58:10
    So just as a refresher there are two types of municipal bonds.
  • 00:58:15
    I'm sure every time I come here.
  • 00:58:16
    I'll just try to Reiterate that our general obligation bonds are pledged by their general property taxes or property tax debt levy It's repaid to bond holders and we use that for both our general obligation capital improvement budget bonds as well as our street reconstruction bonds and
  • 00:58:34
    of the City Council.
  • 00:58:49
    So just as a reminder, there's two different types of bonds.
  • 00:59:13
    So our total outstanding debt portfolio as of September of 2024, we have about $249.9 million in general obligation debt outstanding for
  • 00:59:24
    our general obligation bonds and then $366.9 million for our revenue backed bonds for a total of $617 million.
  • 00:59:34
    And just as a note that the revenue bond portion, this is usually split about 250 million between general obligation and then 250 in revenue bonds.
  • 00:59:44
    But the Lake McCarran's water treatment plant project has been taking on more debt as we are working through that once in a generation project.
  • 00:59:53
    and that project is I think 70 or 80 percent complete at this point and then St Paul Regional Water will be moving on to doing some financing through for the lead service land replacement project.
  • 01:00:12
    So for credit ratings, this is a measurement of our ability and willingness to repay debt.
  • 01:00:17
    It serves as an independent third-party assessment.
  • 01:00:21
    The City of St Paul has a AAA and stable outlook.
  • 01:00:25
    I have on here slight differences between a couple different rating agencies.
  • 01:00:30
    So you can see Moody's has basically the same scale, but shown slightly different, and S&P and Fitch use the same exact rating scale.
  • 01:00:41
    and the City of St Paul, we only use S&P and Fitch.
  • 01:00:47
    So the city has for our general obligation ratings, we have a AAA that's due to our very strong management with strong financial policies, very strong liquidity providing for strong cash levels to cover both our debt service and expenses.
  • 01:01:02
    And we have very strong budgetary flexibility with available general fund reserves exceeding the city's 15% policy.
  • 01:01:10
    and a strong budgetary performance.
  • 01:01:15
    So on this next slide, this shows the borrowing rates for a AAA general obligation 10-year and a 30-year term debt.
  • 01:01:24
    So as you can see right now, this doesn't follow exactly with interest rates, but general direction it does, or with the federal funds rate, I should say.
  • 01:01:33
    For the 30-year, it looks like we're slightly below 4% for a 30-year borrowing and then for a 10-year we're slightly below the 3% for a 10-year borrowing.
  • 01:01:49
    So the FOMC is the Federal Open Market Committee, which is a branch of the Federal Reserve.
  • 01:01:57
    And so when the Federal Reserve meets or the FOMC meets, they produce a projection.
  • 01:02:04
    And so on this dot plot, it's basically a view of participants' view of what the future interest rate environment will look like, which is based on their inflation expectations as well as employment expectations.
  • 01:02:19
    So by the end of the year as of the last FOMC meeting that by the end of the year they were projecting a rate decrease down to about four and a half basis point or excuse me down to four and a half percent And then by the end of 2025 down another hundred basis points to about three and a half percent and for a terminal rate in 26 through the medium term of about three percent and
  • 01:02:44
    So that opens some opportunities for us.
  • 01:02:48
    So next year we'll probably be in front of you with a bunch of refunding opportunities.
  • 01:02:52
    This will look a lot like if you have a mortgage, you'll want to refinance at a lower rate.
  • 01:02:57
    So we have a handful of refunding opportunities.
  • 01:03:04
    We have some debt from back in 2014 through 2015.
  • 01:03:10
    This is with our sewer revenue bonds and some geo street issues as well as our Highland Bridge and geo revenue bonds from back in 2020 or when they were callable in 2021.
• • SPEAKER_02
  • 01:03:24
    I see a couple of questions from Ms. Jost and then Ms. Bowie.
• • SPEAKER_07
  • 01:03:27
    Go ahead.
  • 01:03:28
    Thank you, Council President.
  • 01:03:30
    For these potential refundings, I was just curious, is the call date, is that the maturity date?
  • 01:03:36
    Or what does that mean?
• • SPEAKER_01
  • 01:03:37
    So the call date is it gives you the option to refinance that.
• • SPEAKER_07
  • 01:03:41
    Oh, OK.
  • 01:03:42
    I see.
  • 01:03:43
    OK. That was the exact same question.
  • 01:03:46
    So thank you.
• • SPEAKER_01
  • 01:03:51
    So I'm going to move on to the proposed 2025 budget.
  • 01:03:55
    So for the general debt service property tax levy, it's going to be $24.7 million, which is a $1.53 million increase over the prior year, which is a 6.6% increase.
  • 01:04:11
    And that represents 11.1% of the total property tax levy.
  • 01:04:18
    So I'll talk about our debt model.
  • 01:04:21
    Our debt model is a tool for nerdy people like Sarah and I.
  • 01:04:27
    It helps us project our short and long-term debt obligations, and it includes our existing debt service as well as our future planned issues.
  • 01:04:36
    As you can see in that top spending portion, there's our total debt service for existing and future at $34.7 million for 2025.
  • 01:04:46
    as well as $969,000 for administrative costs and a subsequent year debt service in relation to our debt fund fund balance policies of $16.1 million for a total of $51.9 million.
  • 01:05:04
    And the fund is supported by a variety of revenue sources.
  • 01:05:09
    So we have special assessments related to reconstruction bonds as well as our mill and overlay program.
  • 01:05:16
    So that's 2.7 million dollars.
  • 01:05:19
    Sales tax, there's three and a half million from the half cent sales tax that's transferred
  • 01:05:24
    Committee.
  • 01:05:44
    When you include the property tax budget of $24.2 million, it's a total of $51.8 million for the total debt model.
  • 01:05:52
    So this includes all the debt for a total of $51.86 million.
  • 01:05:59
    So to keep the debt model financially balanced over the long term, we need to continue increasing the property tax budget in the near term.
  • 01:06:08
    and that's to ensure that we don't have to dramatically increase the tax levy in future years.
  • 01:06:14
    I think it's around in years 2029 or 2030, depending on some of our assumptions.
  • 01:06:20
    If we don't continue to increase the property tax levy or the debt service property tax levy, we'd fall below our debt service fund balance policy.
• • SPEAKER_02
  • 01:06:30
    so just so I understand what this slide is showing us, is this basically explaining the many sources by which we pay down our debt and what we historically use, like this is the breakout of how we pay it?
• • SPEAKER_01
  • 01:06:42
    Yes, that's correct.
• • SPEAKER_02
  • 01:06:43
    Okay.
  • 01:06:44
    And then does that mean that for some of these things that we use for other programs, like STAR, STAR funds
  • 01:06:51
    for the 2020-2025 plan debt issuance.
• • SPEAKER_01
  • 01:07:21
    Oh, sure.
  • 01:07:24
    So for next year, this is our tentative plan right now.
  • 01:07:28
    We'll be, of course, back in front of Council in January with our preliminary resolution, which gives us the legal authority to issue the debt.
  • 01:07:38
    But as of right now, I'll talk about the sales tax revenue for the one cent on the next slide.
  • 01:07:44
    But we are planning on issuing for about $17.6 million for general obligation various purpose bonds.
  • 01:07:50
    So that's for our CIB program, green energy projects, and public safety vehicles.
  • 01:07:54
    $15.5 for general obligation variable street reconstruction bonds.
  • 01:08:00
    Those are just for the 2025 street projects.
  • 01:08:04
    Forgot to include it in there, but there should be some authorized but unissued bonding authority.
  • 01:08:10
    $13 million for sewer revenue bonds and down into the water section.
  • 01:08:18
    So $29 million for Lake McCarran's water treatment plant project.
  • 01:08:20
    I think we only have one or two financings through the public facilities authority left for that project.
  • 01:08:27
    And then $10.6 million for the lead service line replacement, which will also go through our public finance authority.
• • Rebecca Noecker
  • 01:08:34
    Go ahead Ms. Naker.
  • 01:08:35
    Thanks Council President.
  • 01:08:36
    How do these numbers compare to previous debt issuance?
• • SPEAKER_01
  • 01:08:42
    it's a little complicated because in starting last year or 2023 we started issuing on more of a cash flow basis so we'd ask departments how much you expect to spend of your total bonding authority and so we've transitioned to issuing based on what they had to anticipate spending in the next year so if we had 11 million dollars as part of our CIB program
  • 01:09:06
    now where that can kind of like fluctuate based on what their expectations are for cash flow.
• • Rebecca Noecker
  • 01:09:14
    So can you follow up with how much we've issued in previous years?
  • 01:09:17
    I understand the reason why it might change, but it's just helpful to know is this more or less are we keeping things relatively the same for these different uses?
• • SPEAKER_01
  • 01:09:25
    Okay, I can go, I can look up some information after.
  • 01:09:28
    Yeah, after.
• • Rebecca Noecker
  • 01:09:29
    Thank you.
• • SPEAKER_02
  • 01:09:34
    Sorry, I see Ms. Johnson.
  • 01:09:35
    Go ahead.
• • Cheniqua Johnson
  • 01:09:36
    Thank you.
  • 01:09:37
    And I think just along that lines, for me, it would be really helpful to know, what is our ballpark?
  • 01:09:43
    Where do we try to stay within?
  • 01:09:45
    To me, these are really big numbers.
  • 01:09:46
    And I think to someone who's just looking and learning more about debt issuance, you may be like, oh my goodness, that's a lot of money and a lot of debt.
  • 01:09:55
    I'm just wondering from a lens of, where do we try to aid between?
• • SPEAKER_01
  • 01:10:04
    So it's hard to give you like a pretty
  • 01:10:19
    of the City of St Paul.
• • Cheniqua Johnson
  • 01:10:42
    No, no, that's helpful.
  • 01:10:44
    I think I'm just like, oh my goodness, just trying to figure out if that's something that we should be thinking about or if that's like, is it normal?
  • 01:10:53
    So a really helpful context and just important to keep in mind.
  • 01:10:58
    So I appreciate it.
• • SPEAKER_02
  • 01:11:00
    I saw a question from Ms. Bowie.
  • 01:11:01
    Go ahead.
  • 01:11:02
    Thank you, Council President.
• • Anika Bowie
  • 01:11:03
    Along those lines, I know when I had my first meeting learning about bonds, my question was, well, how do we use this tool?
  • 01:11:12
    How do we know that this tool is going to be helpful?
  • 01:11:17
    And why not just finance our services through the bonds and then have a general fund?
  • 01:11:26
    I'm not suggesting that.
  • 01:11:28
    I'm just giving a question particularly around how to look at it.
  • 01:11:33
    Can you talk about what are the parameters around a project that would qualify or be eligible for general bonds versus a project that we just will continue paying for through our general fund?
• • SPEAKER_01
  • 01:11:50
    So if we're bonding for a project, it has to match the useful.
  • 01:11:55
    So the useful life of the project has to match the term of the bond.
  • 01:11:59
    So if we were to do a project that was very short-lived, it was only two years of useful life, we would only be able to match that with a two-year debt instrument.
  • 01:12:10
    And so our CIP funding, we do 10-year maturity.
  • 01:12:13
    So whatever project that would be going forward would have to be at least 10 years.
  • 01:12:19
    Does that answer your question?
• • Anika Bowie
  • 01:12:22
    I understand utilities are going to have lifelong span, but we have green energy projects, we have public works and a parks project.
  • 01:12:36
    These are more capital projects and infrastructure.
  • 01:12:41
    Have we ever seen bonds issued for short-term, non-infrastructure related projects?
• • SPEAKER_01
  • 01:12:49
    I don't think we can legally issue bonds for operating costs.
  • 01:12:55
    It has to be a capital in nature.
• • Anika Bowie
  • 01:12:58
    Is that the federal guidelines?
• • SPEAKER_01
  • 01:13:05
    I believe that would be federal and state.
  • 01:13:08
    I can look up some statute after if you like.
• • SPEAKER_02
  • 01:13:16
    Other questions?
  • 01:13:20
    Let's keep it moving.
• • SPEAKER_01
  • 01:13:24
    and John very briefly talked about this but for the 1% sales tax.
  • 01:13:31
    So the proposed 1% sales and use tax spending and financing budget for parks projects are still preliminary.
  • 01:13:39
    So we are working right now with the Parks Department to hone in on an optimized plan where we balance planned expenses with sales tax revenues and bonding.
  • 01:13:50
    The plan is dependent on the department's actual and projected cash spending.
  • 01:13:55
    This way will ensure the most efficient use of financing of projects.
  • 01:14:00
    So the original budget assumed a bonding amount of $36.8 million in sales tax revenue bonds to be repaid by future revenues from the one cent sales tax and $18.5 million in sales tax revenue.
  • 01:14:14
    We will be coming back in front of Council once we have a finalized plan of finance to adjust the budget.
  • 01:14:20
    So at least right now, this plan is somewhat TBD on the department's spending activities.
• • SPEAKER_07
  • 01:14:27
    Thanks.
  • 01:14:27
    I see a question from Ms. Jost.
  • 01:14:29
    Go ahead.
  • 01:14:29
    Thank you, Council President.
  • 01:14:30
    Ms. John Hands, I had a question about how often is the sales tax revenue coming to the city?
  • 01:14:38
    Is that quarterly or twice a year?
  • 01:14:40
    And when you say that you're coming back to give us an update on the 1% sales tax, will that be this year?
• • Rebecca Noecker
  • 01:14:48
    yes so the we do receive the sales tax revenue monthly from the Department of Revenue and the plan for right right now is that we'll be back in front of council by the end of the year okay thank you go ahead miss naker thanks council president I'm also a little bit confused about the last column of this slide so I understand assessments for work that takes place the sales tax bonds the thirty six point eight is what we're
  • 01:15:18
    were selling bonds for that work, and that's the amount that we expect to bring in.
  • 01:15:22
    And then the sales tax projects, 18.5, that's the actual yearly revenue from the sales tax.
  • 01:15:30
    Can you clarify what each of those lines?
• • SPEAKER_01
  • 01:15:33
    Yeah, so that might have, there might be a typo in here, but we are anticipating about roughly, I think, the $46 million in revenue from the one cent sales tax, of which 25% goes to Parks and the other 75% goes to Public Works.
  • 01:15:48
    but at least in our CIB budget books, we're showing parks spending plan, so their budgeted spending amount.
  • 01:15:59
    And so this column is just showing a mix of revenue and the bonds that we were anticipating.
  • 01:16:05
    But again, we'll have to come back and change to actually reflect the amount of just sales tax cash we'll get and then bonding that we will eventually use for those projects.
• • SPEAKER_02
  • 01:16:17
    So is the 2025 proposed 18.5 million for city 1% sales tax projects accurate on here?
• • SPEAKER_01
  • 01:16:24
    I think the fourth row there, I think the project amount and the revenue are flipped.
  • 01:16:33
    So I think that's an error.
• • Rebecca Noecker
  • 01:16:36
    OK. Well, maybe we just need clarity on the slide.
  • 01:16:43
    But I guess my big picture question was if we are
  • 01:16:47
    I assume that every year we're not going to show the full amount of sales tax revenue being used for projects because some of that is being used to pay back our bonds.
  • 01:17:03
    And I guess I'm just curious, what's the amount of cash used versus bonding used and how much is going to pay off bonds each year?
  • 01:17:11
    Does that make sense?
• • SPEAKER_00
  • 01:17:14
    Council President Scholle, Council Member Naker, yes, that does make sense.
  • 01:17:17
    And I think, you know, as Ms. Jeringens noted, we just need to work with parks to really finalize that project plan.
  • 01:17:23
    Part of it was there's a huge pent-up demand for maintenance needs across the park system, and so we wanted to do kind of a big boost of project spending right away.
  • 01:17:32
    Also, there's the reality of trying to manage that many projects all at once that I think parks is now kind of, you know, experiencing as they get those projects out.
  • 01:17:40
    So we want to revisit that plan for the adopted budget.
  • 01:17:43
    and we will I think as part of that follow up we can more clearly show how much of those sales tax proceeds are going to repay debt, how much is going towards projects on a cash basis and how much are we planning to borrow for projects.
  • 01:17:57
    So it's kind of those three different elements I think is what I heard.
  • 01:18:00
    Thank you.
• • Rebecca Noecker
  • 01:18:00
    And as a quick follow up, is all the sales tax revenue going to parks in 2025?
• • SPEAKER_00
  • 01:18:05
    Council President Jolli, Council Member Naker, we are splitting it out as it comes in just to make for ease of tracking and spending down the road just because we know Public Works is going to take a little bit more time to plan and spend but just we're going to be parking it in those departments so that we don't have to do any kind of a true-up later.
• • SPEAKER_02
  • 01:18:26
    so this chart is about both departments.
• • SPEAKER_07
  • 01:18:40
    Thank you Councilwoman Bernanke for your questions because I had a similar question.
  • 01:18:46
    If the 1% sales tax revenue, I know this is very new, if we were to have more sales tax revenue than we originally estimated, would we be able to use that money for paying down our debt faster, basically?
  • 01:19:05
    It looks like we already have almost $77 million in sales tax.
  • 01:19:10
    debt.
  • 01:19:11
    I'm just curious, like, when we do have more sales tax revenue, how can that money be used?
  • 01:19:15
    My understanding would be for projects, and then I guess my question is, can it be used for our debt?
• • SPEAKER_01
  • 01:19:21
    City Treasurer Sarah Brown.
• • SPEAKER_06
  • 01:19:27
    Council President, Councilmember Jost, you need to separate the half-cent and the one-cent sales tax.
  • 01:19:34
    So, yes, you can use the sales tax to prepay debt.
  • 01:19:38
    but only the one cent sales tax would be applied to the one cent debt, if that makes sense.
• • SPEAKER_07
  • 01:19:43
    Okay, so the $76.6 million sales tax in the debt portfolio is one percent and half percent?
• • SPEAKER_06
  • 01:19:52
    That would actually just be half cent.
  • 01:19:54
    We haven't issued any debt for the one cent yet because it's so new.
• • SPEAKER_07
  • 01:19:57
    Okay, that makes sense because I was confused when I saw that.
  • 01:20:00
    Okay.
  • 01:20:00
    Yeah, yeah.
  • 01:20:01
    I appreciate that.
• • SPEAKER_06
  • 01:20:01
    It kind of clears mud.
  • 01:20:02
    Sorry.
  • 01:20:02
    and that's exactly what we're right now trying to size is how much debt should we be issuing under the new one cent sales tax and exactly to your point, Council Member Naker, what should be cash versus debt and how to balance that because the more debt you issue that will reduce the cash coming in because it will be needed to pay debt service.
• • SPEAKER_07
  • 01:20:21
    Okay, thank you.
  • 01:20:21
    Thank you.
• • SPEAKER_02
  • 01:20:29
    All right.
  • 01:20:40
    Well, thank you for that very helpful discussion.
  • 01:20:42
    Let's keep it moving to welcome up our next presenter on the proposed capital improvement budget.
  • 01:20:48
    And we can push out, like, five, ten minutes if we need to to make sure we can talk through this very important topic.
  • 01:20:53
    I also want to personally appreciate you, Ms. Vodka Woods, the artist behind the crochet dolls, if you did not know.
  • 01:21:01
    So that's pretty special.
• • SPEAKER_04
  • 01:21:08
    We've never looked better.
  • 01:21:09
    Knowing that I crocheted you and now, wow, I did not know that.
• • SPEAKER_02
  • 01:21:17
    We should have just put all of our dolls up here and then played a prank or something.
• • SPEAKER_10
  • 01:21:24
    I have been dying to know how I can have a prank.
• • SPEAKER_02
  • 01:21:27
    Yeah, what's the plan for it?
• • SPEAKER_10
  • 01:21:29
    Now that you're here, we can put you on the spot.
  • 01:21:31
    What is said plan?
  • 01:21:33
    Because I think there's personal requests of having the tiny, wonderful, artistically beautiful resemblances of other selves.
  • 01:21:42
    I have never had that.
  • 01:21:43
    but like even from a representational standpoint like you talked about in the excerpt for the exhibit like about Barbie seeing yourself represented but I've like never seen a doll that has a hanbok on right so like selfishly but also like because it's really effing cool like what how does one make that request and for another day but just like secretly dying to know how we get to have those dolls.
• • SPEAKER_04
  • 01:22:11
    My plan was to just sneak them into your offices somehow, so that you couldn't say no.
  • 01:22:18
    That wouldn't be my idea at all.
  • 01:22:19
    I'd be terrified.
  • 01:22:19
    That wouldn't be me at all.
• • Nelsie Yang
  • 01:22:20
    And I 100% would expect the others.
• • SPEAKER_10
  • 01:22:22
    For another day, but I think just like, sorry to be so out of order with this Council President, but just to extend just the deepest of gratitude for what an incredible installment that was.
  • 01:22:31
    And what an honor and privilege to have you here.
  • 01:22:33
    Like, what a multi-faceted staff member.
  • 01:22:35
    Thank you.
  • 01:22:35
    Words of the city.
• • Rebecca Noecker
  • 01:22:37
    I think it would be phenomenal if on, say, October 31st we walked into this room and each of these chairs was populated by ourselves.
  • 01:22:49
    I'm just putting it out there.
  • 01:22:50
    Oh, that'd be so great.
• • Cheniqua Johnson
  • 01:22:51
    Just like public music right now.
  • 01:22:53
    Clearly.
  • 01:22:54
    No, but I also like the same type of sentiments.
  • 01:22:58
    I kind of am also just like, I was very floored by it and it honestly was just such an honor.
  • 01:23:04
    it's incredibly talented and to be able to get down to some of the details of our fabric and for me it was my dress and all of the attention that you paid to it meant a lot and I did share it with my in-laws who were responsible for my outfit and they also
• • SPEAKER_04
  • 01:23:23
    was very impressed.
  • 01:23:42
    you know it did mean something but I also want to credit Shannon Forney who also happens to be my CIB partner so she is the owner of the coffee shop.
  • 01:23:56
    It would have been a weirder thing to have those and make them just at my home.
• • Anika Bowie
  • 01:24:08
    I just want to say shout out to you for the attention for the braids.
  • 01:24:11
    I've never seen braided crochets and braids, so thank you for that.
• • SPEAKER_04
  • 01:24:16
    I imagine you're familiar.
  • 01:24:18
    It takes a long time, so thank you.
  • 01:24:22
    Well, sorry.
  • 01:24:24
    I'm really sorry to put you on the spot.
• • SPEAKER_02
  • 01:24:26
    I just felt like we needed to take our moment to just really appreciate how kind and beautiful that was as a gesture.
  • 01:24:32
    Thank you.
• • Cheniqua Johnson
  • 01:24:32
    And everyone has to be really nice to her, because remember, there are those that exist that look at you.
• • SPEAKER_02
  • 01:24:41
    Well, thank you for your tremendous work as part of this department and in really leading us through.
  • 01:24:47
    I know that you've given us briefings and helped us understand at a high level in previous presentations this year what the CIB budget is, changes that have recently even been entertained after a lot of not change, and kind of where we're at.
  • 01:24:59
    So some of this will be some refresher, and then we'll also just be working to understand what the proposed budget is and what else you want us to know.
  • 01:25:06
    So with that, welcome, and I'll let you take it away.
• • SPEAKER_04
  • 01:25:11
    Thank you.
  • 01:25:12
    I know that we have technically two minutes, so I'll try and go fast.
• • SPEAKER_02
  • 01:25:17
    No, we have more.
  • 01:25:17
    I think I'll take us till at least 11.40, so let's start with that and we can add on, too.
  • 01:25:24
    That's fine.
• • SPEAKER_04
  • 01:25:24
    Awesome.
  • 01:25:25
    Thank you.
  • 01:25:25
    I also just would say, too, if you have questions, stop me.
  • 01:25:29
    It tends to help me focus.
  • 01:25:32
    I do want to go through the capital improvement budget and committee, sort of our revenue sources of the capital improvement budget, our plans for the 2025 proposed budget, and then specifically drill down into capital improvement bonds.
  • 01:25:47
    I know that recently, well, last spring we talked sort of about how we use CIB to mean about six different things.
  • 01:25:53
    So we're going to talk about all six of what those CIB things are.
  • 01:25:59
    So as a means to just start our capital improvement budget is a separate budget obviously from our operating budget and it is for the physical improvements to facilities and infrastructure and is about 30 to 70 million dollars annually and obviously it funds projects which are in areas that have capital
  • 01:26:24
    facilities, so primarily public works and parks, but as well as PED libraries, public safety.
  • 01:26:32
    These next slides are just sort of showcasing some of the projects that we have.
  • 01:26:36
    I think very often when we talk about CIB, we think about things like the community centers or libraries, which are important and wonderful.
  • 01:26:45
    However, it also is about facilities, maintenance, and things like that.
  • 01:26:51
    Safety improvements for bump outs and street safety It is managed by the capital improvement Budget Committee, which is a group of 18 members appointed by the mayor and they Do a variety of works every project that goes to the CIB Bonds has to receive a priority score rating through the capital improvement Budget Committee and they so they do reviews of all projects and
  • 01:27:21
    and also annual reviews of our budget.
  • 01:27:24
    They make a recommendation to the mayor for funding each year.
  • 01:27:29
    The guiding principles of this group are racial equity and inclusion, strategic investments and fiscal responsibility.
  • 01:27:35
    And the tools and templates that we use for guiding scores, scoring of projects, we always work to ensure that those applications, those tools reflect
  • 01:27:50
    those guiding principles as well as trying to work with our committee members and our committee leadership to work to keep our focus on those guiding principles.
  • 01:28:06
    Our major revenue sources which have been going over a bit are our general obligation bonds.
  • 01:28:12
    Primarily we talk a lot about our capital improvement bonds but that also includes public safety, library and street reconstruction bonds.
  • 01:28:18
    These are backed by our ability to pay them back, so often by property taxes, capital projects.
  • 01:28:26
    For CIB bonds, the standard rule of thumb is that they need to be on city property, city-owned projects with a useful life of at least 10 years.
  • 01:28:39
    The thing that you'll often hear is that we use the variety of revenue sources.
  • 01:28:47
    use our revenue sources to manage our ability to do projects.
  • 01:28:51
    So MSA, I think, and Public Works will often talk about how they manage MSA along with the bonds.
  • 01:28:58
    Because as a refresher, municipal state aid is only eligible for certain streets and reconstruction of roads.
  • 01:29:06
    And only about 20% of streets in St. Paul are designated as MSA roads.
  • 01:29:10
    So I think the most
  • 01:29:12
    We also have St. Paul Streets program which is funded through street reconstruction bonds and other which includes the
  • 01:29:42
    sales tax, the city 1% revenue bonds, private donations, and other financing tools.
  • 01:29:52
    So this one's a little bit dense, but this is a look at our major revenue sources.
  • 01:29:57
    So in this version, under our local financing sources, I've added the 24 and 25 version, as well as the percent of the budget.
  • 01:30:07
    The city 1% sales tax on this slide is showing the city
  • 01:30:11
    1% sales projects and bonds, not the revenue that we'll use to pay that back.
  • 01:30:15
    So it's what is budgeted for projects for 2025 to sort of more closely reflect the way that our other funding sources are shown.
  • 01:30:27
    And yeah, so you can see capital improvement bonds are a small portion of our overall funding and our city sales tax
  • 01:30:40
    is a large percentage.
  • 01:30:44
    However, as Neal Younghens had mentioned, our sales tax, our current estimate, we will be coming back, it's...
  • 01:30:57
    Sorry, I have it written down.
  • 01:31:00
    So it's our...
  • 01:31:04
    is still preliminary and working with Parks Department to hone in on an optimized plan.
  • 01:31:08
    So that's where we'll be coming back with you.
  • 01:31:10
    I think that the bonding is all with Parks Public Works is using the cash base is not bonding for their projects.
  • 01:31:21
    And so those will come in more slowly.
  • 01:31:23
    So while it is a high percentage of this pie chart, I would say that our goal is to bring that down.
• • SPEAKER_02
  • 01:31:33
    So just to understand, I'm sorry if I'm misunderstanding.
  • 01:31:41
    I just want to make sure I learned this while we have all of you here.
  • 01:31:44
    So for the next round of parks sales tax funded projects, like the new 1%, we are figuring out what portion of that is used for taking out debt or financing debt, and then we also are figuring out
  • 01:32:03
    and the City Council.
• • SPEAKER_00
  • 01:32:18
    Council President Schaller, it does make sense and it goes back to the question that Ms. Naker had as well, or Council Member Naker had as well about.
  • 01:32:30
    It's going to be a mix of, for parks alone it will be a mix of both borrowing that they will repay with sales tax and also sales tax cash as it's coming in and we're trying to break that out with them.
  • 01:32:42
    Committee.
  • 01:32:43
    What makes more sense to borrow and which makes more sense to just use sales tax cash and then right now on the public works side it is all sales tax cash paying for that.
  • 01:32:53
    And so, yeah, we'll have that breakdown more clearly.
• • SPEAKER_02
  • 01:32:56
    and the City Council.
• • SPEAKER_00
  • 01:33:15
    the proposed budget in kind of June and we didn't even know how much collections we were going to be taking in yet from sales tax, how much the revenue would generate.
  • 01:33:24
    Parks was just kind of beginning what their plan would be so this was our best guess at the time and we knew that we were going to have to come back and revisit this.
• • SPEAKER_02
  • 01:33:31
    Got it.
  • 01:33:33
    It's an A24 movie trailer.
  • 01:33:34
    There's like three things in it you don't know what's going to be about.
  • 01:33:37
    Okay.
  • 01:33:38
    I don't know if my humor is making sense today to everyone but I'm tracking.
  • 01:33:41
    Okay, that made sense.
  • 01:33:42
    Let's keep moving, thanks.
• • SPEAKER_04
  • 01:33:49
    So then just looking more clearly just at the capital improvement bonds We are currently functioning and I know we've talked about this under the five-year program which began in 2022 and Dedicated bonds through 2026 this had helped us front-load budgets and fund higher priority projects such as library and fire station projects and it also held annual program funding study and
  • 01:34:19
    However, at this point, what we are at is a place where we don't have additional funding for projects and we're not necessarily seeing new ones because they had started in 2022.
• • SPEAKER_02
  • 01:34:37
    I see a question from Ms. Naker.
  • 01:34:39
    Go ahead.
  • 01:34:40
    Thanks, Council President.
• • Rebecca Noecker
  • 01:34:42
    How do we determine, this is similar to Council Member Johnson's question earlier, what are
  • 01:34:49
    what our envelope is for how much we can bond for capital improvements in a five-year period and what allows us to make the determination that we're going to front load projects.
  • 01:35:00
    We have a lot of priority projects, other libraries, for example, that we've not front loaded to fund, but we could do that potentially in the next five years.
  • 01:35:08
    I know we often talk about our credit rating and we can only issue this much at a certain time, but obviously in a couple of years here we issued a lot more, so I'm curious how
  • 01:35:18
    what our max is, how we determine that, how we decide in a given year that we can triple that to front load it, and what that does to our credit rating.
• • SPEAKER_06
  • 01:35:36
    Council President, Council Member Naker, challenging question.
  • 01:35:43
    Let me go way back in history.
  • 01:35:46
    So the Accelerated Capital Plan came up originally because there were three big projects that the council at that time, as well as the mayor, really wanted to prioritize.
  • 01:35:54
    The only way we were able to make that available was with extending the term on at least one of those projects, and this is where the debt model comes back into the conversation.
  • 01:36:04
    So within the Accelerated Capital Plan, yes, we were able to move them forward for budget purposes.
  • 01:36:10
    as the debt manager, Neil Young, has mentioned we are issuing things on more of a cash flow basis.
  • 01:36:16
    But in the model, we had to adjust things for the term of one bond in order for us to not have to come back to and ask for more money for the debt levy.
  • 01:36:25
    The goal was to keep the debt levy flat at that $1.5 million until the fund balances out.
  • 01:36:31
    And so that was basically the modeling that we did at that time.
  • 01:36:34
    And it's worked out because there have been delays, obviously, with Hamlin Midway Library.
  • 01:36:37
    And so we actually might not have to
  • 01:36:40
    for the library project.
  • 01:36:46
    So it's a bit of an art, it's a lot of modeling, and it's also when a need arises that we look for creative financing solutions, and that was one of them.
  • 01:36:56
    It's not just a blanket, this is how we're doing things.
  • 01:37:00
    And I guess to answer your other question more around CIB is that if you look at that five-year term, we kept that borrowing
  • 01:37:07
    and the City Council.
  • 01:37:27
    and also within that time period we then moved those three big projects over to use sales tax capacity and that's where we issued that additional one-off sales tax bond this year for three of those projects and then that ultimately freed up 24 million for additional capital maintenance works so that's where this one's a little confusing but in total for CIB we're at 55 million over five years
• • Rebecca Noecker
  • 01:37:55
    with that budget just front loaded for those projects.
  • 01:38:16
    since those are also priorities.
  • 01:38:18
    I'm also curious if you can just speak to the 11 million that stayed constant I think since 2006.
  • 01:38:22
    And purchasing power has not.
  • 01:38:27
    When do we or can we do that evaluation to say, I know I've asked this question before, we've talked about it.
  • 01:38:34
    Now we can bump up to this level because our tax base has grown, our budget has grown, inflation has grown, and $11 million just isn't what it used to be.
  • 01:38:45
    ask and answer that question.
• • SPEAKER_06
  • 01:38:47
    I think it's a conversation that can always be had, because it's a really good point that you make.
• • SPEAKER_07
  • 01:38:52
    I've always been having it.
• • SPEAKER_06
  • 01:38:54
    The challenge is paying for it, right?
  • 01:38:55
    Any increase is going to come with an additional levy ask.
  • 01:38:58
    And so if you're looking specifically at CIB, if you take $1 million, divide that by 10, it's roughly $100,000 would be the levy ask plus interest.
  • 01:39:08
    And that's for a one-time $1 million increase.
  • 01:39:11
    It's going to be more if that's a $1 million increase ongoing.
  • 01:39:15
    So that's the math and the calculation we'd have to do if you wanted to increase the borrowing for CIB.
  • 01:39:20
    The other challenge then is obviously the more debt we take out, just like Mr. Young-Hans stated earlier, it will put pressure on our rating.
  • 01:39:29
    Compared to pure cities, we do have a lot of debt outstanding, and there's some pretty large issuances that possibly are coming down the pipes in terms of arena conversations that are being had.
  • 01:39:38
    So it's just a balancing act that we need to look at the whole debt portfolio and what are the cities
  • 01:39:44
    goals that we want to achieve.
• • SPEAKER_04
  • 01:39:46
    Thank you.
  • 01:39:58
    So, for capital improvement bonds, this is our projects for our annual for 24 and 25.
  • 01:40:08
    Is sort of reflecting what you had seen in that previous slide that most of what you're seeing here are our annual programs so these are programs that are funded at the same level each year and most often are Not like tied to a particular location, right?
  • 01:40:26
    So, um As an example our citywide tree prep planting program is a fund that doesn't necessarily Put projects or to put trees into a particular location the way that burned suburban sidewalks
  • 01:40:38
    infill is tied to a specific location.
  • 01:40:41
    Oh, I apologize.
  • 01:40:48
    The two annual programs here that I had not or that are slightly different from these other projects are ones that are managed through CIB committee process, which is the community proposal process and the long-term capital maintenance process.
  • 01:41:03
    I just mentioned that because
  • 01:41:06
    Community Proposals is highlighted.
  • 01:41:08
    It's $500,000 a year, which is allocated every two years and was the Process that the committee ran through this year.
  • 01:41:17
    Um this year we did have The open call for community proposals and we do a full review of that
  • 01:41:34
    of every project again.
  • 01:41:35
    The proposers come from throughout the city and have a variety of familiarity with the process.
  • 01:41:47
    These projects are reviewed and were recommended by the committee for funding at this level.
  • 01:41:58
    That recommendation went to the mayor and the final
  • 01:42:04
    project recommendations will be pushed forward as part of the 2025 budget.
  • 01:42:13
    I would say that there were large themes in traffic safety and street adjustments to make streets safer.
  • 01:42:28
    So pedestrian safety, bump out, things like that.
  • 01:42:32
    or Traffic Calming Measures which were requested.
  • 01:42:35
    These projects are on the whole I think interesting projects because they are smaller dollar projects than some of our other types, but also still adhere to the requirements of having a ten year life expectancy.
  • 01:42:59
    And I want to answer questions if you have them specifically about the process.
  • 01:43:02
    I can go in more detail.
• • Anika Bowie
  • 01:43:06
    Great.
  • 01:43:07
    So I see a question from Ms. Bui.
  • 01:43:09
    Go ahead.
  • 01:43:09
    Thank you, Council President.
  • 01:43:11
    Thank you so much.
  • 01:43:12
    If you could put that slide back up, it might be OTC.
  • 01:43:17
    I had a question around the capital improvement.
  • 01:43:21
    So when you first started, you talked about there is a community process.
  • 01:43:27
    So is this the mayor's budget of capital improvement?
  • 01:43:33
    Because I know in our ward offices we have capital improvement year round.
  • 01:43:38
    I'm finding that it seems like it functions in the same way.
  • 01:43:42
    And are these similar budget
  • 01:43:49
    funds and my other question is what is the process, if any, that I know there's a congressional capital improvement budget and you mentioned $500,000.
  • 01:44:03
    I think they have $2.5 million of community-based allocations, whether it's capital or appropriations.
  • 01:44:13
    does your department or your line of work, is that in alignment, or excuse me, is that in connection with the congressional budget?
  • 01:44:21
    If that makes sense.
  • 01:44:24
    I know it's a pretty loaded question.
  • 01:44:28
    So the first one was, is this just the mayor's proposal, his capital improvement?
• • SPEAKER_02
  • 01:44:34
    I think I heard you, yeah.
  • 01:44:36
    I think that's what I heard the ask is what's proposed,
  • 01:44:39
    here is what's proposed for the 2024-25 committee recommendations.
  • 01:44:46
    These are when departments go into the process for the year that it's theirs, and they can get stuff funded, right?
• • SPEAKER_04
  • 01:44:53
    So next year will be the next department process.
  • 01:44:58
    So every other year, we tend to swap out.
  • 01:45:00
    However, we had not selected the new department proposed projects.
  • 01:45:04
    These ones are the smaller budget of ones that are strictly from community.
  • 01:45:09
    So it's a
• • SPEAKER_02
  • 01:45:14
    Sorry, so this 2024-25 slide are community proposals.
  • 01:45:18
    Yes.
  • 01:45:19
    And the reason the department is on there is because they're implementing it.
  • 01:45:22
    But they're not like the department's projects that they submitted through the process.
  • 01:45:25
    Exactly.
  • 01:45:26
    That is what we're trying to understand.
• • Anika Bowie
  • 01:45:27
    So this is the mayor's community basically goes to the mayor's office.
  • 01:45:34
    And these are the proposals, the capital improvements that he wants to see.
  • 01:45:38
    And it goes through your department because you're over capital improvements.
• • SPEAKER_04
  • 01:45:42
    So it works the same way, I would say, as the operating budget, essentially, just on slightly different timelines.
  • 01:45:52
    This is the proposed budget which goes to the council for final adoption, is what I mean by that.
  • 01:46:00
    So working similarly to the operating.
• • SPEAKER_02
  • 01:46:02
    So the community proposes these projects to the CIB.
  • 01:46:05
    They work on that with CIB staff.
  • 01:46:08
    their district councils and such, that committee of 18 appointees reviews, makes, selects winners, brings that to us and the mayor for recommendation.
  • 01:46:17
    It becomes the mayor's recommendation.
• • Anika Bowie
  • 01:46:19
    That was my second question, because when I hear of CIB, there's a congressional, there's a federal CIB.
  • 01:46:24
    There's like Congresswoman Betty has her own CIB.
  • 01:46:28
    and those projects could be in our city.
  • 01:46:32
    And this earlier said it's part of the representation of the CIB committees, also state leaders.
  • 01:46:40
    So I'm not sure exactly where this is.
• • SPEAKER_02
  • 01:46:42
    This is purely the city's CIB budget process.
  • 01:46:47
    And there are other people on that 18th panel that are reviewing it, but it is entirely for the purpose of
  • 01:46:53
    city projects with city funds.
• • Anika Bowie
  • 01:47:03
    I guess if someone was to, because people come to my office all the time looking for funding for projects, and I'm happy to see that there is other funding for it.
  • 01:47:18
    I just wonder, because one of the projects is the pedestrian traffic safety program.
  • 01:47:25
    I think that's housed in Public Works.
  • 01:47:29
    But people would only get access to that through Public Works, I don't think
  • 01:47:33
    I'm just wondering how does a regular day-to-day person or organization knows to request funding through the capital improvement budget?
• • SPEAKER_02
  • 01:47:44
    I think what I'm hearing Ms. Bui say is we would like to continue to develop out with you just the clear path by which community can work with our offices, who usually wear their person they know related to the city, wear the point person, wear their council member, to
  • 01:47:58
    and the City Council.
• • SPEAKER_04
  • 01:48:20
    I also, yes, and I am encouraged to hear you say it because I think that actually the conversation about how do state funds and those fit into CIB is also very interesting and I think that sometimes the answer can be working with the departments is the best route because so often, especially if you ask OFS, right, the answer will always be, well, it depends to a general question because it
  • 01:48:47
    because it can, right?
  • 01:48:48
    We spend a significant time with community proposers who would propose projects which could not be eligible for CIB funds to try and help them, like coach them into how do we adjust those proposals to something that could be eligible.
  • 01:49:01
    And I think that, I think that the plan around those kind of involves a lot of work from different groups.
  • 01:49:10
    And so I do, I'm encouraged to,
  • 01:49:15
    to hear that that's a focus because I think that it can be confusing for me who that's my job.
  • 01:49:21
    So yeah.
• • SPEAKER_02
  • 01:49:22
    So maybe a starting point for member offices and then I want to get us to the rest of the question line is like my office has a set of sort of the topics that our ward brings to us like this intersection is bad, this storefront needs this, like we have the kind of five problems in the ward and then we take a first pass and look at
  • 01:49:41
    actually this is a star problem, we can fix that.
  • 01:49:43
    This might need to be a CIB ask, how do we get there?
  • 01:49:46
    And so I think we can play a role in organizing what communities bring into us in their organic everyday way and be the bridge and the translator and then be set up to work with your team.
  • 01:49:56
    So I think what we're saying is this will be a partnership and will continue to be and we appreciate that.
  • 01:50:02
    So the line I have is Ms. Johnson, then Ms. Naker, and I thought I saw Ms. Yang.
  • 01:50:06
    So let's do Johnson, Naker, Yang.
• • Cheniqua Johnson
  • 01:50:09
    Thank you so much and thank you for the presentation.
  • 01:50:11
    I appreciate the discussion that's happening here.
  • 01:50:14
    I just wanted to take the time to say thank you to the staff and to you all who have been through the capital improvement budget process, the committee process with our office.
  • 01:50:25
    I'm kind of joining as a new council member and I remember when CIB went open and closed we had an initial presentation on what CIB was and the committee process and I remember being able to look into the community projects that were submitted seeing no award seven committee projects that had been
  • 01:50:44
    submitted from community, and it allowed me with several other folks and our staff to communicate with community members to submit the things that were important to them.
  • 01:50:54
    And so I just wanted to acknowledge that and say that I am glad to see that the basketball courts at High Wood Hills and the four lighting upgrades are taking place in Dayton's Bluff, partially because prior to these recommendations and even being able to work
  • 01:51:11
    Council, and the
  • 01:51:31
    for committee members to be considered and also thank you to the committee for voting on actually reopening the process to the public.
  • 01:51:38
    I know that the community members on that committee represent multiple places throughout the city, and I just want to say thank you to their attendance to decide to open it back up again to give people an additional opportunity to submit community proposals.
  • 01:51:54
    And I appreciate the questions that were being had here.
  • 01:51:57
    It is my understanding that this happens
  • 01:52:01
    and the community process would happen again in 2027?
  • 01:52:05
    Two years?
  • 01:52:07
    It's every other year?
  • 01:52:08
    Or 26?
  • 01:52:09
    So 26.
  • 01:52:11
    As we get through that process, what I'd like to be able to do is just like, since we joined and we kind of heard about the presentation after it closed, I for sure, for the future, really want to know about those coming up and just set the dates and if we can just be
  • 01:52:26
    Thank you.
• • SPEAKER_02
  • 01:52:56
    All right.
  • 01:52:57
    I have Ms. Naker and then Ms. Yang.
  • 01:52:58
    Go ahead, Ms. Naker.
• • Rebecca Noecker
  • 01:52:59
    Thanks, Council President.
  • 01:53:00
    One comment, one question.
  • 01:53:01
    My comment is, and those of you who are on the Audit Committee already know this, but we've been talking about our next topic selection for the Audit Committee, and one idea that has come up a couple of times now that seems to have interest and that I've talked with Director McCarthy about as well is the idea of looking at the CIB community proposal process, which is something that the department recently looked at, made changes to, and one of the ideas is to look back at how those changes have been working and
  • 01:53:25
    see if there are further improvements that can be made.
  • 01:53:27
    So some of the ideas and comments that have been fluctuating around the table, I just want to say we may have an opportunity to engage with the department on those in a more structured way.
  • 01:53:37
    My question is we receive from Neighborhood Star the list of not just the applicants that were funded but also all the applications and the ranking that they receive.
  • 01:53:48
    They use a pretty standard rubric to decide and everybody gets a numerical ranking.
  • 01:53:53
    I've received that before from CIB, and it would be really helpful to know who applied and wasn't funded, and I assume there's some sort of scoring matrix or some sort of objective decision-making.
  • 01:54:04
    So what is that set of criteria that they use to decide who was awarded?
  • 01:54:10
    So if that's something we can receive in this budget cycle yet, because my understanding is the budget cycle is where we actually sign off on these recommendations, right?
  • 01:54:17
    Yes.
• • SPEAKER_04
  • 01:54:17
    Yeah.
  • 01:54:18
    I can definitely send that over.
  • 01:54:22
    I think we always try to balance between sending too much information and sending the right amount, so I will send over more, always.
• • Rebecca Noecker
  • 01:54:34
    No such thing as too much.
• • Nelsie Yang
  • 01:54:38
    Great.
  • 01:54:38
    And then I have Ms. Yang.
  • 01:54:40
    Thanks, Council President.
  • 01:54:41
    Well, first I just want to say, Council Member Bui, I really appreciate your questions.
  • 01:54:45
    I feel like, as council members, we have so much that we balance and have to
  • 01:54:51
    and the City Council and the City Council.
  • 01:55:07
    and the City Council.
  • 01:55:24
    funding opportunities, but STAR and anything else too.
  • 01:55:27
    So I generally want to say that because I think that this is a really, really important funding source to really resolve a lot of the community issues that our residents are going through and that come through our office.
  • 01:55:42
    So I'm even thinking about having
  • 01:55:45
    a roster of some sort where I keep track of these things.
  • 01:55:48
    And when it comes time to apply, I would go back to those folks and say, hey, make sure you put in a proposal around this.
  • 01:55:55
    And then Council Member Nicker, I really like your suggestion.
  • 01:55:58
    I think just being able to see applications on which ones are submitted, which ones are funded, that's really helpful for transparency and also to really inform us as council members.
  • 01:56:10
    What are the people in our wards talking about?
  • 01:56:13
    and the City Council.
  • 01:56:32
    of the year.
  • 01:56:44
    Proposals in your words that have been granted CIB funding Because I also understand that in the areas that you represent similar to mine It's areas where we have always lacked a lot of applications because it's harder to reach the folks and so really making sure that we meet people where they're at and get for information directly to them is really helpful and I really appreciate how your offices have done that and
• • SPEAKER_02
  • 01:57:12
    All right, any other questions or comments on CIB or anything else we've heard today before we wrap?
  • 01:57:19
    Thank you.
• • SPEAKER_00
  • 01:57:20
    I have one important piece of information that I neglected to include in my presentation.
  • 01:57:26
    I referenced all of our different division managers.
  • 01:57:28
    I also talked about all the great work that our Deputy Director is doing and neglected to mention that person's name.
  • 01:57:33
    So I want to call out Deputy Director Laura Logsdon, who's been in the role for a while now, and realized that I neglected to mention the important work that she's doing.
  • 01:57:42
    I wanted to make sure I didn't skip that.
• • SPEAKER_02
  • 01:57:45
    Thank you, thank you.
  • 01:57:45
    We are really grateful for just the collaboration and responsiveness of your entire team and all the work you do every day to support us and to support all the other departments in the work we're doing for our community.
  • 01:58:00
    I want to emphasize that.
  • 01:58:01
    I think we have some follow-ups and ideas of what to do next year, but this has been a really helpful discussion, and I also want to thank you because it builds on the collaboration we got to do earlier this year, just going through the modules of the building blocks of the budget, these topics at a basic level around debt and CIB and how we build things, and so I appreciate the commitment to collaboration through just building people's knowledge of the institution.
  • 01:58:25
    I think that's been a really
  • 01:58:27
    of the City Council.