[7. Receive, consider and act upon a review of the Incorporation Study Financial Model and determination of a proposed maximum initial tax rate related to the Incorporation Planning Study;]

ANY OPPOSE. >> ALL RIGHT, AGENDA ITEM NUMBER SEVEN RECEIVE, CONSIDER AND ACT UPON A REVIEW OF THE INCORPORATION STUDY FINANCIAL MODEL AND DETERMINATION OF A PROPOSED MAXIMUM INITIAL TAX RATE RELATED TO THE INCORPORATION PLANNING STUDY.

NOW THAT WE CAN TALK MANY OF THE THINGS YOU SETTING YOUR PUBLIC COMMENTS, A LOT OF THIS PRESENTATION WILL HIT THOSE ASPECTS, AND HOPEFULLY ANSWER AND PLUG SOME OF THE HOLES THAT

YOU HAD QUESTIONS ABOUT. >> GOOD AFTERNOON BOARD OF DIRECTORS AND ALL OF THE VISITORS HERE. MY NAME IS MONIQUE SHARP FOR THOSE OF YOU WHO DO NOT KNOW ME I AM THE ASSISTANT DIRECTOR OF FINANCE AND ADMINISTRATION. ONE OF MY PRIMARY RESPONSIBILITIES IS THE FINANCE DIRECTOR FOR THE TOWNSHIP. TODAY I WILL WALK US ALL THROUGH

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, AS CAREFULLY AND DETAILED AS I CAN THROUGH THE INCORPORATION MODEL.

WE HAVE A LAYER THAT MAKES UP THE MODELS. THOSE VIDEOS ARE ONLINE FROM JULY 23 AND 24TH. THERE WERE PRESENTATIONS AT THE LIGHT MEETING.

I SAY THAT BECAUSE TODAY I AM NOT GOING TO GO OVER, AND HARDLY ANY DETAIL THE BASE BUDGET.

I WILL JUST TALK ABOUT THE PARTS WE HAVE BEEN WAITING ON IN ORDER TO COMPLETE THE CERTIFIED TAX ROLES AND WE HAD AN UPDATE ON THE SALES TAX REPORT. ON MONDAY BUT BUDGET WORKSHOPS WE WILL DISCUSS BATTLE LITTLE MORE. THERE IS ALSO, BESIDES THE BASE BUDGET A BUDGET INITIATIVE, THIS JETS HAS THE SAME LEVEL OF SERVICES WE ALREADY HAD.

EVERY YEAR WE HAVE VARIOUS INITIATIVES THAT WOULD ENHANCE SERVICES OR, WHAT WE STRIVE FOR IS LOWER COSTS WHILE MAINTAINING SERVICES. THESE ARE THINGS THEY LOOK AT AND DOUBLE BUDGET TASK FORCE DID MEET ON AUGUST 5 AND THE INITIATIVES WILL BE DISCUSSED NEXT WEEK. THE PRIMARY FOCUS FOR TODAY IS TO LOOK AT THE INCORPORATION INITIATIVES. WE HAD A PRELIMINARY REVIEW BACK ON JUNE 23 AT A PUBLIC MEETING.

THE VIDEO IS AVAILABLE AND TODAY WE WILL DO A REVIEW OF THAT AND LOOK AT THE TAX RATE GENERATED FROM THE UPDATED MODEL. WITH THAT I WILL START THIS PRESENTATION WITH GOING THROUGH THE BASE BUDGET AND LOOKING AT THE CERTIFIED TAX ROLL. BASED ON THE CERTIFIED TAX ROLL WHICH THE BOARD WILL ACCEPT, HERE'S A PREVIEW OF THAT. THE TAX, CERTIFIED TAXABLE VALUES HAS AN INCREASE FROM $21 BILLION IN THE PREVIOUS TAX YEAR.

THE INCREASE THAT WE SAW DUE TO REVALUATION OF EXISTING PROPERTIES WAS TO .3%.

THE INCREASE IN VALUES DUE TO NEW PROPERTY WAS 1.1% FOR A TOTAL INCREASE OF ( INDISCERNIBLE ). THE TAX RATES THAT WERE CALCULATED AND CERTIFIED BY THE TAX ASSESSOR'S OFFICE, MONTGOMERY COUNTY TAX ASSESSORS, LOOKING AT THE CURRENT RATE 22-POINT 3%. ON THE NO NEW REVENUE RATE PREVIOUSLY CALLED THE EFFECTIVE TAX RATE IS 21.81. THAT IS HALF OF A PENNY LOWER THAN THE CURRENT RATE.

THE VOTER APPROVAL RATE WHICH IS THE RATE IF THE LORD -- BOARD SET A RATE ABOVE THAT WOULD REQUIRE VOTER APPROVAL IS AT 23.25. THE CURRENT RATE IS 22.53 AND WE

HAD AN UNUSED INCREMENT FROM THE PREVIOUS TAX YEAR. >> WHILE WE ARE ON THIS SLIDE, I AM NOT SURE SINCE WE HAVE A LOT OF NEW PEOPLE HERE, THIS NEW LAW REGARDING PROPERTY TAX PROTECTS THE RESIDENTS AND BUSINESSES FROM THE ACCELERATED TAXING OF THEIR PROPERTY.

WHETHER THEY ARE A TOWNSHIP FOR A CITY THAT PROTECTION REMAINS IN PLACE.

I KNOW THERE WAS A COMMENT MADE ABOUT THE INITIAL TAX RATE ONLY BEING SOLID FOR A YEAR.

WHATEVER THAT TAX RATE IS, WILL THAT COVER COSTS IN YEAR FOUR OF THE TRANSITION PLAN.

IRREGARDLESS OF THAT, THIS CALCULATION THAT LIMITS THE ABILITY OF THE CITY OR TOWN TO INCREASE TAXES WITHOUT VOTER APPROVAL IS STILL INTACT. WHATEVER IT COMES OUT TO, THEY CANNOT GO ABOVE 83 AND A HALF% INCREASE WITHOUT VOTER APPROVAL. NO MATTER WHAT YEAR, THIS IS THE NEW BALL. THIS IS SOMETHING WE HAVE TO DO EVERY YEAR.

ALL PROPERTY TAXING AUTHORITIES HAVE TO GO THROUGH THE SAME. EXCEPT THE SCHOOL BOARD SPIRIT SO, THE COMPONENTS OF THE RATE AS IT STANDS NOW YOU CONCEIVE MAINTENNCE AND OPERATIONS AND WE HAVE SOMETHING TO COVER THE OUTSTANDING BONDS. AS A POINT OF REFERENCE EACH PENNY GENERATES $2.8 MILLION IN REVENUE. I WANTED TO PUT THE NO NEW REVENUE IN PERSPECTIVE. IT IS A HALFPENNY LOWER THAN THE CURRENT RATE.

[00:55:07]

IT IS ABOUT 459,000, THE RATE IS LOWERED BY THOUGHT HALFPENNY, THAT WOULD REDUCE TAX ON AN AVERAGE VALUE HOME BY $22.95. THE TOWNSHIP REDUCTION RELATED TO THAT WOULD BE ON .1 MILLION.

>> HERE IS A LOOK HISTORICALLY AT OUR PROPERTY TAX RATE. WHAT THE BOARD OF DIRECTORS, THE DECISION THEY HAVE MADE SENSE 200 VOTING STARTED AT THE BEGINNING AT 2009 WHEN WE WERE STILL A HOMEOWNERS ASSOCIATION. WE HAD THE COMPOSITE RATE AT 40 CENTS 2 CENTS.

THE AVERAGE BETWEEN THE ASSOCIATION SPIRIT SINCE THEN, WE STARTED THE TOWNSHIP WITH A 32.8% RATE. IT HAS DECLINED OVER TIME AND ALL OF THE YEARS EXCEPT TWO YEARS WHEN THERE WAS ECONOMIC CONDITIONS AFFECTING US. THIS IS THE EFFECTIVE TAX RATE.

YOU CAN SEE THAT SHARPER DECLINE IN THE EARLY YEARS FROM 2010 THROUGH 2015.

THAT WAS BECAUSE WE HAD SIGNIFICANT DEVELOPMENT GOING ON IN THE WOODLANDS.

AS YOU KNOW WITH THE TOWN CENTER, THE VILLAGE OF CREEKSIDE PARK, EVEN THIS AREA THERE WERE

A LOT OF GROWTH THAT IN THAT TIME AND I DROVE UP SALES TAX. >> IN THE MOST RECENT YEARS AS THE CONSTRUCTION AND COMMERCIAL DECLINE, IT HAS NOT GONE AWAY, BUT IT IS NOT AS ROBUST AS IT USED TO BE THAT IS WHY YOU SEE FLATTENING OUT OF THE TAX RATE. OVERALL THE BOARD, AS DECREASE

THE TAX RATE BY 47%. >> WHEN WE APPLY THE RATE, RIGHT NOW THIS IS BASED ON MAINTAINING THE RATE. WHEN YOU APPLY THAT TO THE PROPERTY AND THE TAXABLE VALUE, THE OTHER PIECE OF INFORMATION THAT WE WERE WAITING ON IN ORDER TO FINISH OUR ANALYSIS OF THE MODEL AND THE BASE BUDGET WAS ARMOR'S SALES REPORT. THIS IS FOR THE AUGUST REPORT WHICH IS TWO MONTHS. THIS RELATES BACK TO JUNE ACTIVITY.

YOU CAN SEE THROUGH THE EIGHT MONTHS WE HAVE COLLECTED $36.6 MILLION AND TAX REVENUE.

WE ARE ALMOST $2 MILLION I THOUGHT ABOUT ALL OF THE TIME. THIS IS RETAIL.

WE WILL LOOK AT THAT IN A MINUTE. WE HAVE MANY DIFFERENT CATEGORIES. MANY THAT WE SEE WHEN WE LOOK AT THE TRANSFEROR INFORMATION FOR MANUFACTURING AND WHOLESALE TRADE AND THE CATEGORIES ON THE UPWARDS TREND.

THAT IS REFLECTED IN THE NUMBER RIGHT THERE. WE HAVE SLIDES ON WHERE WE ARE WITH THE CONSOLIDATED BUDGET. I MENTIONED WE HAVE ALREADY GONE THROUGH MANY OF THE DETAILS.

WE WILL DO IT AGAIN NEXT WEEK. I WILL NOT SPEND TIME AT THIS MEETING ON THAT.

OUR TOTAL OPERATING BUDGET IS AT 1,327,000,000. THAT IS A 4% INCREASE OVER THE 2021 FORECASTS. IN TERMS OF CONSOLIDATED EXPENDITURES WE ARE PROJECTED AT 130.4 MILLION. THAT IS 82.6% DECREASE FROM THE PREVIOUS YEAR.

EVEN IF YOU JUST ISOLATE BY TWO OPERATING, WE ARE GOING OF LESS THAN A PERCENT.

>> FOUR PEOPLE FOLLOW BUDGETS WE SHOW OUR CAPITAL EXPENDITURES WHICH ARE NOT DRIVING THE

[01:00:03]

REPORT. >> WHAT IS THE TAX INCREASE? STANCE JUST TO BE CLEAR, THIS IS THE OPERATING BUDGET INCREASE. EVERYTHING ELSE IS CAPITAL ORIENTED.

>> WITH THAT I WILL MOVED INTO THE FIVE-YEAR PLAN. THE FIVE-YEAR PLAN NOT ONLY APPLIES WITH THE BASE BUDGET, AND THE ASSUMPTIONS WE WILL TALK ABOUT.

THIS IS ALSO THE PLACE INTO THE INCORPORATION MODEL BECAUSE WHAT WE ARE DOING WITH THE INCORPORATION, WE ARE LOOKING OUT TO YEAR FOR. SO, THIS IS WHAT WE WILL FOCUS OUR ATTENTION ON. LOOKING HERE, GROWTH, AS I MENTIONED EARLIER, WE HAD A BIG EVALUATION. THE ASSUMPTION IS WE WOULD HAVE THIS.

THE PROPERTY TAX RATE IN THE PLAN IS MAINTAINED AT 22.31. THE SALES TAX WE ARE PROJECTING FOR 3% AND THE FIVE-YEAR PLAN WE WILL TALK ABOUT THIS BUT NOT SO MUCH BECAUSE IT DOES NOT IMPACT OUR PROPERTY TAX RATE FEAR THE HOTEL TAXES USED TO FUND THE WOODLANDS AND TO FUNDED DEBT SERVICES. IT IS NOT USED FOR GENERAL OPERATING PURPOSES.

IT DOES NOT FACTOR INTO THE CLOSED CORPORATION ANALYSIS. WHEN WE STARTED THIS OUR CONSULTANT DID ANALYSIS ON WHERE THEY THOUGHT THE GROWTH ASSUMPTION.

FOR PROPERTY TAXES THEY PROJECTED 2% ANNUAL GROWTH AND FOR SALES THEY PROJECTED 3% ANNUAL GROWTH WE WERE MUCH MORE CONSERVATIVE AT 1%. THE NUMBERS AT THE TOP THIS IS LISTED IN BILLIONS. THE GREEN COLUMNS ARE THE UPDATED MODELS.

THE REASON YOU SEE THE INCREASE THERE IS BECAUSE AS I JUST MENTIONED THE ORIGINAL MODEL, 1% REVALUATION RATE 2% IN THE UPDATED. OUR ORIGINAL INCORPORATION MODEL, IT INCLUDED AN ANNUAL GROWTH RATE OF 1% FOR SALES TAX. THE REASON THAT WAS SO CONSERVATIVE IS, THIS WAS THE ACQUISITION. THIS WAS THE THIRD LARGEST PAYER OF SALES AND USE TAX IN THE WOODLANDS. WE RECEIVED THE SALES TAX BECAUSE THE CORPORATE SALES WERE THERE. WE WANTED TO BE CONSERVATIVE DURING THE TIME. ALSO WE DID NOT HAVE ANY HISTORICAL DATA TO PROJECT REVENUE THAT WAS RESULTING FROM THE SUPREME COURT DECISION ON SOUTH DAKOTA VERSUS WELFARE -- WAYFARER. THAT IS WHERE WE WERE ABLE TO COLLECT INTERNET SALES TAX.

AS IT TURNS OUT, THAT SUPREME COURT DECISION AND THE REVENUE BROUGHT TO THE WOODLANDS WAS

VERY SIGNIFICANT. >> RAISED HER HAND IF YOU'VE HAD A PRIME BOX ON YOUR DOORSTEP IN THE LAST WEEK. NOBODY USES AMAZON PRIME? THIS IS DRY INFORMATION.

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THE REALITY IS PRIOR TO THIS CHANGE WE WERE NOT COLLECTING SALES TAX FROM THE AT-HOME SHOPPING. THIS IS A HUGE.THAT CHANGES AND SHIFTS THINGS.

EVERYONE'S BUYING ONLINE. NOW WE ARE STARTING TO GET THE REVENUES IN.

>> I'M A REGULAR SHOPPER. RECENTLY I WAS LOOKING FOR A DRESS, YOU LADIES WILL UNDERSTAND. SOMETIMES YOU CAN'T FIND THE TREASURE LOOKING FOR SO YOU TRY TO SHOP IN THE WOODLANDS. IT WAS NOT AVAILABLE IN THE WOODLANDS SO I DECIDED TO GO ONLINE I'M NOT THAT GOOD BUT I FOUND IT AT A STORE IN HOUSTON. BEING THE PERSON I AM I DIDN'T WANT TO DRIVE HERE. I THOUGHT, THINK. SO I BOUGHT IT ONLINE.

THE TOWNSHIP WILL GETS THE SALES TAX. SO, INC. ABOUT THAT.

IT'S A WONDERFUL THING. THANK YOU SUPREME COURT FOR MAKING THAT DECISION.

>> ABBOTT'S LIFE THAT WILL SHOW THE IMPACT ON THAT. SO, THIS IS LOOKING AT THE SALES AND USE TAX WHEN WE COMPARE THE ORIGINAL MODEL WHICH IS THE BROWN COLUMNS VERSUS THE UPDATED MODEL WHICH IS THE GREEN. THE BIG DRIVER HERE AND THE CHANGE OF REVENUE AVAILABLE IS THE VERY CONSERVATIVE, PESSIMISTIC 1% ASSUMPTION IN THE ORIGINAL MODEL AND NOW WE ARE BACK UP TO, BASED ON THE INFORMATION YOU HAVE SEEN, AND IN CONJUNCTION WITH THE CONSULTANT'S RECOMMENDATION WE ARE BACK UP TO 3% FOR 2022 AND 2.2%, THEREAFTER.

THIS IS WHAT WE WERE TALKING ABOUT IN TERMS OF THE GROWTH IN OUR WORK INTERNET SALES TAX.

YOU CAN SEE THERE, WE ARE GOING BY LEAPS AND BOUNDS. THERE WILL BE ANOTHER RULE CHANGE THIS IMPACTS WHAT HAPPENS IN TEXAS. FOR INSTANCE I WILL USE THE DELL COMPUTER EXAMPLE. IF YOU BUY A DELL COMPUTER RIGHT NOW BECAUSE THE COMPANY HEADQUARTERS IS IN ROUND ROCK, YOU GET THIS. AFTER OCTOBER 1 THE TOWNSHIP WILL GET THE SALES TAX. THAT IS NOT ALL OF IT BUT THAT IS ONE EXAMPLE THAT WOULD DRIVE

REVENUE TO THE WOODLANDS. >> MONIQUE, WILL YOU PLEASE EXPLAIN, HOW, WHEN YOU BUY ONLINE, YOU MAY GET SOME SORT OF RECORD OF THE DIFFERENT ECONOMIC DEVELOPMENT ZONE TAXES.

IT SHOWING UP WITH A LITTLE MORE DESCRIPTIVENESS ON THE BILL. >> THE WOODLANDS TOWNSHIP ITSELF, THE ENTITY ITSELF POSES A 1% GENERAL SALES TAX. THE ECONOMIC DEVELOPMENT ZONE IMPOSES A 1% SALES TAX. THE EDC BOUNDARIES OVERLAY. THAT TAKES THE 2% MAXIMUM THAT YOU ARE ALLOWED IN THE STATE OF TEXAS. ON YOUR RIGHT, ON SOME OF THE

BILLS YOU WILL SEE THAT BROKEN OUT. >> THE OTHER THING I WANTED TO MENTION, ONE OF THE REASONS WE REVISED OUR SALES TAX, WE HAVE HISTORY TO LOOK BACK ON.

WE CAN SEE PRE-COVID-19, THOSE ARE THE SALES TAX GROWTH THAT WE EXPERIENCE.

BASED ON BAD AND WE ARE GROWING, THAT IS IN THE MIDDLE OF ALL OF THOSE AND AS WE HAVE SEEN ON

OTHER REPORTS, WE ARE FAR EXCEEDING THAT AT THIS POINT. >> HAVING LOOKED AT OUR TWO LARGEST REVENUE SOURCES, THIS IS WHERE WE ARE LOOKING IN THE FIVE-YEAR PLAN.

YOU CAN SEE THE TOTAL REVENUES GROWING FROM 2022-2026, THEY ARE THE OPERATING EXPENSES GROWING BY INFLATION FACTORS THAT WE HAVE BUILT-IN AND THE MAJOR CONTRACTORS.

[01:10:01]

WE INCLUDE ALL OF THAT IN THE EXPENSES AND THAT IS WHAT YOU SEE IN THE GROWTH.

IN THE GAP YOU SEE BETWEEN THE REDLINES, THAT'S WHERE YOU WILL FIND THE RESERVES.

WE WILL TALK ABOUT THAT NEXT. ONE IS THE HOTEL TAX RESERVE. PART OF THE GAP YOU JUST SAW, ANYWHERE BETWEEN 3 MILLION AND HOTEL TAX MONEY GOES INTO THE TAX RESERVE THAT CAN BE USED, WHICH HAS TYPICALLY BEEN USED BY THE BOARD FOR VARIOUS PROJECTS. IT'S IMPORTANT TO REMEMBER THE BOARD OF DIRECTORS HAS NOT USED THAT HOTEL TAX FOR GENERAL OPERATIONS.

IT IS ONLY USED TO FUND DEPTH SERVICE AND TO VISIT THE WOODLANDS AND THE REST GOES INTO THE RESERVE. THAT IS WHAT YOU SEE HERE. THIS MONEY CAN BE LEVERAGED FOR

DEBT SERVICE ON AN ECONOMIC PROJECT. >> NEXT WE WILL TALK ABOUT THE CAPITAL REPLACEMENT. OUR CAPITAL REPLACEMENT RESERVE IS VERY UNIQUE TO US RIGHT NOW, MOST MUNICIPALITIES WILL GO OUT AND ISSUED THAT IN ORDER TO FUND A LOT OF THEIR ASSETS.

WHAT THE BOARD DID BACK IN 2012 IS COMMISSION A RESERVE STUDY. WE LOOK AND BOOKED OUT 30 YEARS.

WE HAD AN ENGINEER COME IN AND& LOOK AT OUR ASSETS AND EVALUATE THAT AND THEN, DEVELOP A PLAN THAT GOES OUT 30 YEARS, WE LOOK THAT WE LOOKED AT THE PATHWAYS, THE IT EQUIPMENT.

ALL OF THAT IS INCLUDED IN THE STUDY. IT IS OVER $350 MILLION IN ASSETS. WE HAVE A FUNDING MECHANISM WHERE OVER THE 30 YEAR.

WE PUT FUNDS INTO THE RESERVES AND WE TAKE BONSALL AS WE NEED THEM TO REPLACE OUR ASSETS.

ONE BENEFIT OF THAT IS, WE CAN MAINTAIN OUR LARGE ASSET-BASED. ALL OF THE AMENITIES THAT WE ENJOY AND RELY ON. SO AGAIN, EACH YEAR, WE DON'T NATURALLY FOLLOW IT WE DO OUR OWN ANALYSIS TO MAKE SURE THE ASSET THAT NEEDS TO BE REPLACED, AND WE HAVE A WAY TO REPLACE AND REPAIR THE ASSETS AND MAKE SURE THEY ARE DONE IN A TIMELY MANNER.

THAT IS A VERY IMPORTANT COMPONENT. HERE'S THE TOWNSHIP AND IF WE WERE TO INCORPORATE IT SOMETHING THE BOARD WILL MAKE SURE WE CAN MAINTAIN.

AT THE RECENT WE CAN SESSION, WE DID LOOK AT HAVING A CHANGE IN THE RESERVE FUNDING METHODOLOGY.

WHAT WE HAVE RIGHT NOW IS A VARIETY OF RESERVES THAT ARE ALL OF THESE DIFFERENT BUCKETS.

ONE OF THE THINGS WE HAVE LEARNED ESPECIALLY GOING THROUGH A CREDIT RATING AGENCY IS THAT THEY ONLY LOOK AT CERTAIN ONES. OUT OF THE 15 WE HAD OUT THERE, THEY DID NOT CARE ABOUT 11-12 OF THEM. THEY FOCUSED ON THE OPERATING RESERVE AND THE CAPITAL REPLACEMENT. TAKING THAT INTO THE DECISION, THEY HAD SOMETHING CALLED A CAPITAL CONTINGENCY. OUT OF THAT RESERVE, NOT RECOGNIZED BY THE CREDIT AGENCIES AND MOVING IT INTO THE REPLACEMENT.

ADDITIONALLY IN THE FUTURE YEARS, RIGHT NOW AS WE HAVE FAVORABLE BUDGETS THAT WOULD BE ALLOCATED INTO THE RESERVE. INSTEAD OF DOING THAT, WE WILL PUT THEM INTO THE CAPITAL REPLACEMENT. BY CONSOLIDATING THE FUNDS THAT WILL ALLOW THE ANNUAL ALLOCATION WHICH IS $5.2 MILLION. WE CAN REDUCE THAT BY $1 MILLION AND WE ARE STILL, GOING TO

[01:15:07]

MAINTAIN THE AMOUNT RECOMMENDED BY THE RESERVE STUDY. UNDER THE CURRENT FUNDING METHOD, WHICH IS SHOWN IN THE BROWN COLUMN, IS THE PROPOSED FUNDING.

BUT AS ONE TIME BUDGET VARIANCES THE BOARD HAS PUT THOSE INTO THIS RESERVE.

THE OTHER REASON IT'S HIGH RIGHT NOW IS BECAUSE DURING THE PANDEMIC, WE DEFERRED CAPITAL PROJECTS AS A WAY OF MAKING SURE, THAT THE FUNDS WOULD STILL BE COMING.

THAT IS HIGH RIGHT NOW BUT OVER THE NEXT YEARS WE ARE PUTTING IT DOWN TO GET TO WHERE WE ARE BUT

STILL MAINTAINING A BALANCE ABOVE WHAT WAS RECOMMENDED. >> I THINK THIS IS AN IMPORTANT SLIDE FOR THE AUDIENCE. SOME OF THE COMMENTS WE GET, HOW WILL WE MAINTAIN THE COMMUNITY IN THE QUALITY WE EXPECT. WE CAN DO THAT BECAUSE WE HAD UPDATE REPLACEMENTS, AND KEEPING

HIGH QUALITY STANDARDS THAT THE COMMUNITY RESPECTS AND DESERVES. >> THANK YOU.

>> I WANTED TO SHOW, EVEN IF WE WERE TO INCORPORATE, THAT WILL NOT CHANGE THE FUNDING METHODOLOGY OR WHAT WE CAN SEE. WE CAN SEE THE BALANCE OF THE FUND WOULD NOT CHANGE, IN ORDER TO FUND ANY EXPENSES AND WE WILL SEE THAT IN THE MODEL AS WELL. WE MAINTAIN THE BALANCES AND WE

HAVE SUFFICIENT FUNDING. >> THE OTHER THING, WE LOOKED AT THE CHANGE IN FUNDING FOR YOUR OPERATING RESERVES. YOU HAD THE MONEY IN THE CAPITAL CONTINGENCY PLUS A SALES TAX RESERVE THAT WAS ESTABLISHED DURING THE PANDEMIC. THERE WAS SOME ONE-TIME BUDGET VARIANCES. JUST TO BE SURE, WE SET ASIDE THE MONEY.

THOSE ARE NOT REALLY FUNDS RECOGNIZED BY THE CREDIT AGENCIES.

THEY WOULD RATHER SEE THOSE COMBINED INTO AN OPERATING RESERVE.

THAT IS THE DECISION THE BOARD MADE. BY DOING THAT YOU CAN MAINTAIN YOUR BALANCE. RIGHT NOW YOUR POLICY SAYS, YOU HAVE A FLOOR OF 20%.

OPERATING EXPENDITURES, THIS CONSOLIDATION IS ALLOWING US TO GET CLOSER TO 25%.

THIS WILL REPRESENT THREE MONTHS OF OPERATION. THAT IS TYPICAL OF MOST LOCAL GOVERNMENTS WITH THOSE RATINGS. THIS CONSOLIDATION PROVIDES ADEQUATE LEVELS OF RESERVE INCLUDING THOSE FOR BUDGET INITIATIVES THAT YOU MAY APPROVE THE BOTTOM LINE IS ADDITIONAL FUNDING FROM ANNUAL PROPERTY TAX REVENUE WILL NOT BE REQUIRED DURING THE CURRENT FIVE-YEAR PLAN. THIS IS A LOOK AT WHERE WE ARE UNDERCURRENT FUNDING.

THE BROWN COLUMN IN SOFTWARE THE 20% OF EXPENSES IS. BUT YOU WILL RECALL, THE BOARD PRE-FUNDED TO PREPARE FOR A CORPORATION. NOW THE BALANCE IS THAT

$30 MILLION WITH THE CHANGES I JUST TALKED ABOUT. >> THIS IS IN MIND WITH OUR

ATTEMPT TO GET THE BOND RATING UP QUIRKS. >> YES.

>> BETTER BOND RATING. WE SHOULD BE AAA RIGHT NOW, BUT WE WERE NOT GIVEN CREDIT.

THE OTHER THING WE DID, WE INCREASE THE AMOUNT TO COVER ANTICIPATED -- RIGHT WHERE WE WERE TRYING TO DO AS WE WERE PLANNING WAS SAVING AND PREEMPTING AND GETTING INTO A POSITION TO MAKE THE COST OF INCORPORATION MORE APPROACHABLE BY SAYING IF WE WILL GET AN INCREASE WE WILL INCREASE OPERATING RESERVES. WE HAVE DONE THAT AND WE HAVE

[01:20:01]

INCREASE IT NOW. THESE WERE CUSHIONS AGAINST SOME OF THE STUDY PROJECTIONS THAT MAY NOT BE ONE 100%. WE ARE FINDING WAYS TO MAKE SURE WE CAN BE CONFIDENT AND HELP

WITH THE SERVICES OF THE COMMUNITY. >> IMPORTANT THING THAT I MENTIONED, YOU DID IT WITH FUNDING THAT CAME THROUGH. IT WAS NOT ONGOING REVENUES LIKE A PROPERTY TAX REVENUE. IT WAS SAVING MONIES THAT MATERIALIZED FROM THE BUDGET VARIANCES. WE WANTED TO LOOK AT THE OPERATING RESERVE POSTS INCORPORATION. THE SAME 30 MILLION-DOLLAR BALANCE, THE BLUE LINE SHOWN THEIR ON THE YELLOW, GREEN BARS IT SHOWS WHAT THE EXPENSES WOULD BE.

IT IS HIGHER THAN THE BROWN WHICH IS THE BAR FOR THE CURRENT SPRINT CORPORATION.

IT IS STILL DEFINITELY, WE HAVE SUFFICIENT FUNNY -- FUNDING TO CARRY THAT APPEAR WE WOULD BE

RIGHT AT THE 25% MARK. >> ONE OF THE QUESTIONS THAT HAS BEEN RAISED IS, THIS IS FINE AND GOOD EXCEPT WHAT HAPPENS AT THE END OF THE FIVE-YEAR PLAN. YOU CAN'T KEEP $30 MILLION FOREVER. AT SOME POINT THE NUMBER WOULD HAVE TO INCREASE AS EXPENSES INCREASE OVER TIME. I WANTED TO POINT OUT, EVEN THOUGH WE ARE FOCUSED ON THE FIVE-YEAR PLAN AND YEAR FOR OF INCORPORATION, THE BOARD OF DIRECTORS AND THE FINANCE TEAM ALWAYS LOOK BEYOND THE PLAN TO MAKE SURE WE CAN SUSTAIN DECISIONS BEING MADE WITHIN THE SHORTER TIMEFRAME. WHAT WE ARE SAYING HERE, AND THE FIVE-YEAR PLAN WE ARE TALKING ABOUT ALLOCATING AT $4.2 MILLION. BUT JUST OUTSIDE OF THE FIVE-YEAR PLAN, $4.2 MILLION, WILL BE ADEQUATE TO FUND BOTH OF THE RESERVES.

IT MAY NOT CONTINUE TO GO ALL THE WAY TO, IT MAY GO TO THE OPERATING RESERVE INSTEAD.

THE POINT IS, THE MONEY, EVEN WHEN WE GO OUT, IT IS SUFFICIENT TO KEEP THE OPERATING RESERVE OR

THE CAPITAL WITHIN THE PARAMETER WE JUST TALKED ABOUT. >> OF THIS ALSO GOES ALONG WITH THE FACT THAT WE LOOK OUTSIDE OF THE FIVE-YEAR PLAN. WE DON'T TALK ABOUT THIS A LOT, EVEN THOUGH IT IS ON MY RADAR, THESE ARE OBLIGATIONS THE TOWNSHIP WILL PAY OFF JUST OUTSIDE OF THE PLAN. THIS WILL BE ADDITIONAL REVENUES COMING INTO THE TOWNSHIP.

JEFFREY ON WHERE WE ARE NOW. WE DO HAVE SERVICE THAT WILL BE PAID OFF.

ONE OF THE SALES LOANS WILL BE PAID OFF. THAT IS SALES TAX REVENUE.

IT WILL COME BACK TO THE TOWNSHIP. AGAINST -- ADDITIONAL DEBT PAID OFF WITHIN THE NEXT 5-6 YEARS. SO AGAIN, ALL CASH FLOW, NOT WITHIN THIS PLAN BUT WITHIN THE

NEXT FIVE YEARS. >> THESE ARE THE OTHER RESERVES WHICH ARE EITHER LEGALLY MANDATED OR HAVE TO BE SAVED FOR BOND COVENANTS. THEY ARE NOT IMPACTED BY CORPORATION BUT I DID WANT TO MENTION THESE ARE THE ONES WE HAVE.

>> SO, WHEN WE TAKE ALL OF THAT INTO CONSIDERATION. ALL OF THE DEBT SERVICE PAYMENS AND THE ANNUAL ALLOCATIONS THAT WE TALKED ABOUT, WHAT WE ARE LEFT WITH IS AN UNDESIGNATED FUND BALANCE. THESE ARE MONIES TO BE USED FOR OTHER PURPOSES TO BE ALLOCATED TO ADDITIONAL RESERVES, TO BE USED FOR BUDGET INITIATIVES IN THE PAST IT WAS USED TO PAY OFF DEBT, USE FOR ECONOMIC DEVELOPMENT PROJECTS. BUT AS OF RIGHT NOW WITH THE

ASSUMPTIONS WE TALKED ABOUT, THIS IS WHERE WE ARE. >> THIS BRINGS UP A VALID POINT.

NOT ONLY DID WE DRIVE DOWN THE TAX RATE, HOW MUCH DEBT THAT WE PAY OFF?

>> IT HAS BEEN A REDUCTION OF 40% BUT I DON'T KNOW THE EXACT AMOUNT.

>> $50 MILLION. >> LOOKING -- LET ME GO BACK. THERE'S A BIG GAP.

THAT IS BECAUSE OF THE FUNDING CHANGES WE TALKED ABOUT ON THE RESERVES.

[01:25:01]

THEY SHARE WE ARE MAKING WILL BE NEEDED IN OUR ANALYSIS. WE WON'T NEED THAT ADDITIONAL MILLION NEXT YEAR. SAME FOR THE OPERATING RESERVE. WE ALSO, THE BOARD DECIDED TO PRESERVE 1.1 MILLION OUT OF 2022, TO ADDRESS THE ADDITIONAL WESTSIDE COMPANY FOR THE FIRE DEPARTMENT. WE ARE GOING AFTER A GRANT TO FUND THE OPERATING BECAUSE.

BUT THE CAPITAL COSTS WOULD NOT BE COVERED. THIS WOULD BE COVERED OUT OF

THAT AMOUNT. >> WHAT WE HAVE LEFT OVER, EVEN AFTER DOING THAT IS THE $3.3 MILLION. THE TASK FORCE MET LAST WEEKEND THEY IDENTIFIED APPROXIMATELY $1.4 MILLION IN INITIATIVES THAT THEY WILL RECOMMEND TO THE BOARD AT NEXT WEEK'S BUDGET WORKSHOP MEETINGS. I JUST LISTED SOME EXAMPLES THAT DOES NOT MEAN THE BOARD AS TO AGREE, JUST THE ONES THAT WILL BE COVERED NEXT WEEK. WE SET ASIDE MONEY FOR THAT.

THE REST WOULD GO INTO THE CAPITAL PLACEMENT RESERVE. IF THE BOARD CHOSE TO DO THAT WE DO HAVE PROJECTS THAT HAPPENED OUTSIDE OF THE NORMAL PROCESS. RIGHT NOW, YOU CAN SEE THOSE LISTED OVER THERE, PARKING, THERE WILL BE PROJECTS IDENTIFIED IN THAT.

THERE WOULD BE MONEY AVAILABLE TO ADDRESS THE PROJECTS IF THE BOARD CHOOSES.

WITH THAT, WE WILL MOVE TO THE INCORPORATION MODEL ITSELF. >> I HAVE A QUICK QUESTION.

WILL YOU REMIND US, WHAT PERCENTAGE AND DOLLARS WHAT GOES TO HOUSTON.

>> THIS IS ALSO 1%. THIS IS LIKE 55,000. >> OKAY, ONE RESERVE WE DIDN'T TALK ABOUT WAS THE INCORPORATION RESERVE. WE DID MENTION WE HAVE BEEN, THE BOARD HAS BEEN, WITH SOME FAVORABLE VARIANCES IN PREPARATION FOR THE STUDY AND FOR POTENTIAL INCORPORATION HAS SET ASIDE FUNDS. IT WAS AT 15 MILLION.

THAT'S PROBABLY WHAT YOU ARE FAMILIAR WITH. BUT WITH THE CONSOLIDATION OF THE BOARD HAD $5 MILLION SET ASIDE IN THE SITE PLAN RESERVE AND THAT IS MORE LOCATED IN THE INCORPORATION. THAT IS HOW WE GOT TO THE $20 MILLION.

ACCORDING TO THE CONSULTANT, WITH THE STUDY AND YOU CAN SEE THERE, WE WOULD NEED ABOUT $10.2 MILLION IN ORDER TO FUND A PUBLIC WORKS FACILITY AND EQUIPMENT.

THAT IS WHAT YOU SEE REFLECTED IN THAT WOULD DRAW DOWN THE FUNDS.

THIS WOULD BE ABOUT $5.3 MILLION. THESE ARE THE FUNDS THAT WE ARE ANTICIPATING WE WOULD RUN FROM THE RESERVE. THAT WOULD LEAVE US WITH A 70 MILLION-DOLLAR BALANCE IN THE RESERVE. THIS WAS A DECISION THAT WE WANT TO SHOW THE POTENTIAL USE OF THE FUNDS WOULD BE. WE HAVE A POLICE IN THE ORIGINAL MODEL, IT WAS ASSUMED THE COST WOULD BE FINANCED OVER 20 YEARS ATTITUDE% INTEREST RATE.

IN AN UPDATED MODEL WE HAVE THE SAME COSTS AT $30 MILLION. THOSE ASSETS WE WOULD FINANCE OVER 30 YEARS AND THE CURRENT INTEREST RATE WE PUT THAT IN, THE NEXT SPOT SHOWS WHERE WE WOULD PUT IN THE CORPORATION RESERVE. AND SELLER FINANCING $30 MILLION WE COULD USE $60 MILLION AND WE COULD FINANCE $14 MILLION. IF YOU HAVE THE SAME TERM IN INTEREST RATE, THAT WILL GET DOWN TO 562,000 OR A QUARTER OF THE PENNY.

>> THE ISSUING BONDS WOULD REQUIRE VOTER APPROVAL. THIS IS SOMETHING THAT WOULD

[01:30:08]

COME BACK TO THE RESIDENCE, TO THE VOTERS, TO VOTE ON, OUTSIDE OF OUR INITIAL TAX RATE.

WE CANNOT LOAD ANY DEBT SERVICE INTO THE TAX RATE BECAUSE YOU LEGALLY CANNOT UNTIL YOU ISSUE BONDS THEN YOU CAN IMPOSE THE TAX RATE. THAT WOULD BE A QUARTER OF A PENNY IF THAT IS THE DIRECTION THE BOARD WANTS TO GO. I DO WANT TO POINT OUT WE HAVE FUNDING WITHIN THE BASE BUDGET THAT WOULD COVER THAT DEBT SERVICE.

WE COULD IMPOSE THE CORNER BUT THE INCREASE WOULD BE FULLY OFFSET BY FAVORABLE VARIANCES WE HAVE IN THE BUDGET. ONE OF THOSE IS FROM A SAVINGS WHICH IS SOMETHING THE BOARD WILL CONSIDER ON MONDAY. IT IS ACTUALLY, THE BUDGET TASK FORCE HAVE LOOKED AT IT.

IT IS ENHANCING THE CURRENT LEVELS OF SERVICE FOR A CHEAPER PRICE FOR SAVINGS AT AROUND $462. DOES ANYONE HAVE ANY QUESTIONS ON THIS? ON THE POLICE MUNICIPAL COURT FACILITY, THE INITIAL TAX RATE CANNOT LEGALLY INCLUDE A DEBT SERVICE RATE BECAUSE THE RATE CANNOT BE IMPOSED UNTIL THE FUNDS ARE APPROVED BY THE VOTERS AND ISSUED. AS I POINTED OUT THERE IS SUFFICIENT OPERATING REVENUES TO INCREASE THAT WOULD ARISE TO FINANCE THE POLICE STATION. THE OTHER THING THAT INCORPORATION, ONE OF THE THE TOWNSHIP TO DO IS TO OFFER TAX RELIEF FOR THOSE OVER 65 AND DISABLED CITIZENS. A STATE LAW RIGHT NOW PROTECTS A TAX FREEZE ON HOMESTEAD PROPERTIES AND SCHOOL DISTRICTS CAN DO THAT, CITIES AND JUNIOR COLLEGES CAN OFFER A TAX-FREE SPIRIT PRESSURE PURPOSE DISTRICTS, ARE NOT ABLE TO OFFER THAT TYPE OF TAX RELIEF FOR THE SENIORS AND DISABLED CITIZENS. I JUST WANTED TO SHOW EVERYONE. THIS IS HOW A TAX FREEZE WOULD WORK IF THE BOARD CHOOSES TO OFFER THIS AS AN OPTION UNDER INCORPORATION.

SO YOUR FIRST YEAR OF QUALIFYING, AS I MENTIONED, THE AVERAGE VALUE HOME IS FORGE $59,000 PER IF IT'S AT THE CURRENT TAX RATE, YOUR TAX CEILING WOULD BE $1,024 IN ANNUAL TOWNSHIP TAXES. LET'S SAY THE NEXT YEAR YOU HAVE A TAX RATE INCREASE AND A REEVALUATION INCREASE, YOUR VALUE WOULD GO TO FORGE 68,000. NORMALLY IT WOULD BE IT WOULD BE LIKE THIS BUT IT WILL BE CAP. LET'S SAY IN THE SECOND YEAR YOU HAD A DECREASE AND IT ENDED UP 998 THE CEILING WOULD DROP. THE IMPORTANT THING HERE, ALEXIS YOU IMPROVE YOUR HOME, AND THAT SINCE DRIVING UP YOUR VALUE, ANYONE WHO QUALIFIES FOR THE TAX FREEZE, YOUR TAX WILL BE CAPPED

AT $1,024. >> LET'S STAY ON THIS SLIDE FOR A MINUTE SO PEOPLE CAN ABSORB IT. WE HAVE TALKED A LOT ABOUT THE BENEFIT TO THE SENIORS AND RIGHT NOW THE SENIOR POPULATION IS 10-15% OF THE RESIDENCE. WE WENT THROUGH A DEMOGRAPHIC STUDY WITH THE SCHOOL DISTRICT ON THE GROWTH IT ALSO SHOWED US BUT AGING POPULATION.

THIS TAX FREEZE, AND FOR THOSE 65 AND DISABLED IT MAY ONLY AFFECT 70% OF THE RESIDENCE, BUT THE PERCENTAGE MAY GROW EVERY YEAR AS WE HAVE MORE PEOPLE MATURE INTO THE 65-YEAR-OLD AGE GROUP. IT IS PROJECTED TEN YEARS TO BE A THIRD OF THE POPULATION IN THAT CATEGORY. I KNOW WE HEAR A LOT OF LACK OF BENEFITS BUT I WOULD PRETTY MUCH LIKE TO LOCK-IN ALL OF MY TAXES RIGHT NOW IF I COULD. I AM NOT 65.

BUT I THINK THIS IS A BIG BENEFIT TO THE COMMUNITY AND THE SENIORS CONCERNED.

THAT YOU CAN SEE HERE, THE INCREASE IN PROPERTY VALUES HAVE NO IMPACT ON THE SENIORS UNDER THE INC. MODEL. THIS BOARD AND OUR FINANCIAL PLANNING WE PUT IN THE MODEL, SO

[01:35:02]

REDUCING OUR OWN REVENUES TO AFFORD CERTAINTY TO THE SENIORS AND THOSE WHO ARE DISABLED.

THERE ARE PEOPLE UNDER 65 WHO WILL BENEFIT. IT'S NOT JUST AN AGE THING.

>> ALSO, BUT TAX SELLING APPLIES EVEN IF THEY ISSUE ADDITIONAL DEBT.

EVEN SO THE CEILING WILL APPLY. ANOTHER IMPORTANT BENEFIT. IF YOU THINK INFLATION IS GOING

UP, IT WILL BE HIGHER THAN A KITE. >> I'M SORRY, THEY CAN HEAR YOUR QUESTION. CAN WE HAVE THIS AT THE LEGISLATIVE LEVEL.

MY LAST VISIT I HAD TO GET IT CORRECTED. WE DID NOT HAVE THE PERFECT FIT RIGHT TO BECOME A CITY UNTIL WE WENT THROUGH THE PROCESS. EVERY MEETING I WENT TO THEY BASICALLY SAID, STOP ASKING FOR THINGS YOU GET AS A CITY. WE HAVE GIVEN YOU THE AUTHORITY TO BECOME A CITY OF YOU WANT THE RIGHTS, INCORPORATE AND STOP COMING BACK AND ASKING FOR SPECIAL TREATMENT. THAT WAS THE RESPONSE I WAS GIVEN.

THIS JUST SHOWS THAT OVER TIME YOU WOULD HAVE A CUMULATIVE EFFECT, SOME OF THE NUMBERS WE WERE LOOKING AT WERE SMALL BUT OVER TIME IT IS A GREAT BENEFIT FOR THE SENIORS AND DISABLED

CITIZENS. >> WITH THAT WE WILL ACTUALLY GET INTO THE INCORPORATION MODEL. I WANT TO REMIND EVERYONE WHERE WE STARTED OUT.

THE TOTAL TAX RATE DETERMINED BY THE CONSULTANTS WAS 28.6% BASED ON THE ASSUMPTIONS AND INITIATIVES APPROVED BY THE BOARD OF DIRECTORS AT THAT TIME. THIS WAS THE BASE BUDGET THIS WAS THE TAX RATE. ON TOP OF THAT THERE WAS AN ADDITIONAL 6.2 CENTS IN ORDER TO HAVE A BALANCED BUDGET IN THE FOURTH YEAR. OUT OF THAT, THERE WAS AN AMOUNT DIRECTLY RELATED. WAS WE HAD A DEFICIT IN THE BASE BUDGET THAT REQUIRED ONE POINT 8 CENTS TO GET TO THAT BALANCE BUDGET. NOW, I AM GOING TO GET OUT OF

HERE, AND I WILL PULL UP THE INCORPORATION LEVELS. >> SO WHAT WE WILL GO THROUGH HERE IS, HOW THE 6.2 CENTS WAS DERIVED IN ORDER TO BALANCE THE BUDGET.

THIS WAS DURING THE 2020 BUDGET WITH CONSULTING AND BASED ON THE ASSUMPTIONS THAT WERE DECIDED AT THAT TIME. WE WILL START WITH THE REVENUE SOURCES AND THEN WE WILL GO TO THE SCHOOL YEAR. THIS IS THE FOURTH YEAR, I KNOW IT HAS NOT BEEN DETERMINED BUT WE HAD TO PICK A YEAR. LOOKING AT WHERE WE ARE NOW, FISCAL YEAR 25 WOULD BE FELT FOURTH-YEAR. STARTING WITH THE SOURCES. THERE IS A MIXED BEVERAGE TAX, THE TOWNSHIP IS NOT ELIGIBLE TO RECEIVE BUT WOULD UNDER INCORPORATION.

THAT IS NOT MONEY COMING. >> THE STATE IS GETTING THE FUNDS RIGHT NOW.

UNDER INCORPORATION, AND PART OF WHAT THE STATE WOULD GET TO THE TOWNSHIP.

YOU CAN SEE IT WAS AT $960,000 ASSUME FOR ALL OF THE YEARS IN THE MODEL.

THIS WAS BASED ON A. STUDY. IT WAS BY THE CONSULTANTS.

ALL OF THE INFORMATION IS ONLINE AND WITH THE FRANCHISE FEES. BASED ON THAT THEY ARE ESTIMATING THAT FOR A FULL YEAR WE WOULD HAVE FRANCHISE FEES. MOST MUNICIPALITIES CHARGE A SEPARATE FEE. YOUR TRASH IS NOT INCLUDED IN YOUR PROPERTY TAX RATE.

MOST LOOK THAT THEY HAD A SEPARATE FEE FORCE SOLID WASTE. THAT WAS AN OPTION PRESENTED TO

[01:40:03]

THE BOARD. IF YOU WANTED TO MOVE IN THAT DIRECTION AND THE ANSWER WAS NO, WE DON'T SHOW ANY REVENUE TO THE NEW CITY RELATED TO THAT. IN THE FORFEITURES, THOSE WILL BE USED AS AN OFFSET TO PAY FOR COURT COSTS. EVEN THOUGH THAT IS A REVENUE SOURCE, IT WOULD BE FULLY OFFSET SAME THING FOR PERMANENT FEES. PROJECTING 150,000, BUT YOU CAN SEE THERE'S A BUILDING PERMIT REVIEW AND THAT IS OFFSETTING THE $150,000.

IN TERMS OF USE AND FONTS WE JUST TALKED ABOUT THIS, THIS WAS FOR THE PROPERTY TAX CEILING FOR THE SENIOR CITIZENS AND IN THE ORIGINAL MODEL WE WERE LOOKING AT AND EVALUATION.

YOU CAN SEE THE EXPENSE ASSOCIATED. WE TALKED ABOUT THE BUILDING PERMIT REVIEW. WE HAD THREE POSITIONS THAT WERE IDENTIFIED BY THE CONSULTANT AND THIS WOULD BE CRITICAL. THIS WOULD BE A CITY SECRETARY, A RISK MANAGER AND PARALEGAL.

YOU CAN SEE THE COSTS ASSOCIATED. THE CONSULTANT IN REVIEWING, LOOKED AT THE PUBLIC WORKS BEARING THIS WOULD TRANSFER FROM THE COUNTY TO THE NEW CITY.

YOU CAN SEE THERE THE DIFFERENT OPERATING EXPENSES, SHOULDER MAINTENANCE AND IMPROVEMENTS ASSOCIATED WITH THE PUBLIC WORKS DEPARTMENT. I DO WANT TO MENTION, THESE COSTS, ARE INCREMENTAL TO WORK WE ALREADY DO. WE DO HAVE STREETSCAPE MAINTENANCE. WE ALREADY HAVE $6.8 MILLION IN OUR OWN BUDGET, THAT WE ARE ALREADY SPENDING TOWARDS PUBLIC WORKS. THE COST YOU SEE HERE WOULD BE THE INCREMENTAL. SAME FOR OUR OPERATING. WE CURRENTLY HAVE 16.1 MILLION DOLLARS IN EXPENSES. WE ARE CONTRIBUTING TO LAW ENFORCEMENT BECAUSE --

>> CAN YOU SCROLL OVER TO THE RIGHT OF THE SPREADSHEET. I THINK IT IS CLOSER TO

$14 MILLION. >> I'M SORRY DID I SAY 16 MILLION.

>> I SEE NEW FACES I WILL.OUT, EVERYTHING IS FULLY FUNDED BY THE TOWNSHIP.

WE PURCHASE THEIR VEHICLES WE PLAY THEIR OVERTIME, WE ARE BASICALLY FUNDING THE PATROL DEPUTIES. THEY WERE FUNDING 12 IN HARRIS COUNTY, IS WHY WHEN YOU HERE, TAKE IT ON LAW ENFORCEMENT, AND TAKING ON THIS EXPENSE IT IS AND AN LOOK ADDITIONAL COST.

THE $14 MILLION IS ALREADY COMING OUT OF OUR CURRENT TAX RATE.

THAT IS WHY SHE IS SHOWING YOU THE INCREMENTAL COST. I GET IT UP WITH THAT ALL OF THE TIME. I HEAR YOU GUYS WILL BANKRUPT US.

WE ARE ALREADY GETTING IT. >> WE JUST TALKED ABOUT ALL OF THAT SO I WON'T GO OVER IT AGAIN. YOU CAN SEE IN THE ORIGINAL MODEL THERE IS THE $1.8 MILLION IN DEBT SERVICE THAT WE PICKED UP. WE HAD GENERAL FUND EXPENSES.

WE WERE HAVING TO PICK UP, UP FUNDING THAT WAS IN OUR FIVE YEAR PLAN.

THAT WAS WHEN I MENTIONED A MINUTE AGO. >> I GUESS I'M READING AND NOT

[01:45:04]

PAYING ATTENTION. THIS IS WHERE WE REDUCE OUR TAX REDUCTION AND WE DID KNOW HOW

MUCH WE WOULD GET IN SALES TAX. >> IN TOTAL, THAT MEANS WE HAD GENERAL FUND EXPENSES INCLUDING THE DEFICIT OF 22-POINT TOMORROW AND ALL WITH YOU OFFSET THAT WITH THE REVENUE WE HAD NET

EXPENSES IN THE ORIGINAL MODEL OF $13 MILLION. >> DOESN'T SHOW THE TAX RATE?

>> THAT'S WHAT I AM GETTING TO RIGHT NOW. >> THIS IS THE SUMMARY.

IT WAS UNDER THE ORIGINAL MODEL. WE HAD REVENUES OF THE 9.1 MILLION DOLLARS.

WE HAD EXPENSES WE JUST TALKED ABOUT THIS AND THAT IS HOW WE GOT TO THE $13 MILLION.

AGAIN ADDING TO THE TAX RATE AND THE BUDGET WE NEEDED THIS TO BALANCE THE BUDGET.

THIS WAS GOING TO BE THIS AMOUNT. I JUST WANTED TO WALK EVERYONE THROUGH IT TO SHOW, WE RECONCILED THE CONSULTANTS RATE AND THE INITIATIVE.

>> EVEN FURTHER, THIS ALSO INCLUDES THE UPDATES TO OUR FIVE YEAR BASE BUDGET THAT DID BREAK IN THE INCREASED WAGE COSTS FOR THE RECENT LAW ENFORCEMENT PAYROLL INCREASE.

>> YES. THAT IS INCLUDED. >> NOW, AS PART OF THE UPDATE OF THE MODEL, I WANT TO WALK BILLBOARD THROUGH THE INITIATIVES AND SEE IF THERE'S ANY CHANGES YOU WANT TO MAKE. THESE HAVE BEEN PRESENTED TO THE TASK FORCE.

WE ARE GOING TO GO THROUGH HERE AND EXPLAIN EACH ONE. THESE ARE THE ONES YOU WILL SEE HIGHLIGHTED IN THE YELLOW. ONE OF THE THINGS I WANTED TO MENTION.

THIS IS ACTUALLY IN AGREEMENT WITH WHAT THE CONSULTANT ORIGINALLY RECOMMENDED.

WE WOULD HAVE A GROWTH FACTOR AND THE REVENUES JUST LIKE WE HAD IN THE EXPENSES.

IF YOU LOOK DOWN, YOU CAN SEE THEY ARE GROWING EVERY YEAR. THE EXPENSES ARE GROWING.

IN AN ULTRA CONSERVATIVE MOVE THERE WAS NO GROWTH IN THE REVENUES, OBVIOUSLY, THAT IS NOT A SUSTAINABLE PLAN. JUST LIKE IN YOUR PERSONAL LIFE IF YOU WILL INCREASE YOUR PERSONAL LIFE YOU HAVE A CORRESPONDING INCREASE IN REVENUES IN ORDER TO STAY BALANCED. ONE OF THE THINGS WE ARE RECOMMENDING, WE WOULD GO AHEAD AND BUILD THAT GROWTH FACTOR INTO THE REVENUES. IN DOING THAT, THAT IS THE INCREMENTAL THAT WOULD BE ADDED. IS THE SAME THING FOR THE FRANCHISE FEES.

THAT WOULD BE IF WE THE SAME. THIS WOULD BE THE SAME WITH THE FINES AND FORFEITURES.

AND THE PERMIT FEES WE WANT TO BECAUSE THOSE EXPENSES YOU CAN SEE ARE ALREADY AT 150.

WE ARE JUST TRYING TO MANAGEMENT WE WILL NOT TURN THOSE ON. THOSE ARE ONE OF THE SUGGESTIONS WE ARE MAKING IN ORDER -- IN THE REVISED MODEL. AS WE TALKED ABOUT EARLIER THE REVALUATION IS 2% NOT 1%. IN ORDER TO PROPERLY ACCOUNT FOR THOSE COSTS, WE WILL MAKE THE COSTS HIGHER. THIS IS SOMETHING WE WANT TO PROVIDE TO THE RESIDENCE.

I WILL TURN THIS OFF. ALL OF THESE, WE ARE RECOMMENDING THESE BE REMOVED.

[01:50:13]

THIS IS REGARDLESS IF WE INCORPORATE. THIS IS ALREADY INCLUDED.

WE HAVE THE RISK MANAGER AND PARALEGAL INCLUDED IN THE BUDGET IF WE WERE TO INCORPORATE THAT WE WOULD MOVE IT UP TO 2022. WE DON'T WANT TO DOUBLE COUNT. WE WILL REMOVE THOSE.

>> YOU JUST STATED THE THREE POSITIONS ARE WITHIN THE BUDGET.

BUT ARE THERE OTHERS SUCH AS CITY COUNCILMEMBERS, IF WE DO BECOME A CITY, GENERALLY NOT

PAID AND THE SAME WITH THE MAYOR? >> YOU DON'T HAVE TO BE PAID AS THE CITY COUNCIL OR MAYOR. THAT IS SOMETHING THE GOVERNING BODY CAN DECIDE.

SOMEONE WAS KIND ENOUGH TO MENTION IT IS A TWO-STEP PROCESS.

THE CHARTER COMMITTEE AND THE RESIDENCE CAN ACTUALLY PUT IN A RESTRICTION FOR CITY COUNCIL OF THE MAYOR RECEIVING ANY COMPENSATION. NONE OF US GET PAID.

IF YOU QUADRUPLED MY SALARY, OR TIMES 0 IS STILL 0. OUR MODEL ASSUMES WE WILL NOT CREATE A PAID FOR ELECTED POSITION. THE RESIDENCE, THROUGH THE CHARTER PROCESS CAN QUANTIFY THAT AND ENSURE WE DON'T END UP CREATING A POLITICAL CLASS OF

PAID FOR PEOPLE. >> YES, THE DIRECT ANSWER IS NO, THE CALLS ARE NOT IN HERE

BECAUSE THAT IS NOT SOMETHING THE BOARD HAS DISCUSSED DOING. >> THE PUBLIC WORKS EXPENSES AND LAW ENFORCEMENT EXPENSES ARE COMING DIRECTLY FROM THE NOVAK MODEL.

THESE ARE ALL BASED ON. REVIEWS AND REVIEWS OF COSTS AND THEY ARE EXPLAINED DURING THE CONSULTANTS PRESENTATIONS. THEY WILL BE DISCUSSING MORE DETAILS.

I WON'T GO INTO THE LAYERS OF WHAT MAKES IT UP. THE POINT IS WE HAVE NOT ADJUSTED THOSE COSTS FOR PURPOSES OF THE MODELS THIS IS WHAT WAS PRESENTED BEFORE.

>> I WANT TO TALK ABOUT THE OPERATING EXPENSE. WHY DOES IT GO FROM A COUPLE OF HUNDRED THOUSAND THIS IS FOR THE TRANSITION SERVICES THIS IS FOR THE COUNTY FOR THE SERVICES.

THEY WILL HAVE SERVICE PROVIDED AND WE WILL BACKBONES OVER TIME AND AT THE END OF THE DAY, THE FUNDING WILL CONTINUE AND WE WILL PICK UP ADDITIONAL. AGAIN.

>> WE ARE FOCUSING ON THIS COLUMN. WE WANT TO MAKE SURE WHATEVER WE DID WAS SUSTAINABLE WHEN WE WERE FULLY LOADED ON EXPENSES. THE TAX RATE WERE TALKING ABOUT IS NOT FOCUSED ON THE FIRST YEAR SECOND YEAR, IT'S WHEN ALL OF THE TRANSITION TAKES PLACE AND WE ARE FULLY LOADED ON THE EXPENSES. THE DEBT SERVICES FOR THE POLICE STATION FOR MUNICIPAL COURT FACILITY, AGAIN, WE TALKED ABOUT THAT.

IT WOULD NOT BE $1.8 MILLION. WE TALKED ABOUT WE HAD THE FUNDING TO DO THAT WITH THE INCORPORATION AND USING SOME OF THOSE FUNDS AND HOW WE HAVE BEARABLE -- FAVORABLE VARIANCES.

OUR RECOMMENDATION IS WE WOULD TURN THAT TO KNOW BECAUSE WE ALREADY HAVE FUNDING THAT WOULD PAY FOR THAT AND WERE TRYING TO BE CAREFUL WITH THE FUNDING AND NOT OVERCHARGE THE INITIAL TAX

RATE. >> WE CAN'T LEGALLY INCLUDE A DEBT SERVICE.

WE TALKED ABOUT THE MONEY YOU SEE RIGHT HERE THAT WAS OUR FUNDING DEFICIT -- THIS --

[01:55:01]

DEFICIT. SO, WHAT WE WANT TO DO NOW IS TURN THAT OFF.

THOSE NO LONGER APPLY, AND WE WANT TO UPDATE IT WITH WHAT IS IN THE CURRENT BUDGET BASED ON THE ASSUMPTIONS WE TALKED ABOUT A LITTLE WHILE AGO. IF YOU RECALL, THE CHART THAT WE LOOKED AT OUT IN THE YEAR 2025, WE HAD A SURPLUS OF $6.7 MILLION.

>> WHEN WE TAKE ALL OF THAT INTO ACCOUNT, AND ASSUMING THE BOARD AGREES WITH THE CHANGES WE MADE, WE WOULD HAVE REVENUES OF $109,000. YOU WOULD RECALL IN THE OTHER MODEL IT WAS A NEGATIVE $13 MILLION. WITH THE CURRENT CHANGES WE JUST MADE TO THE BASE MODEL AND TO THE GROWTH WE ARE NOW BASICALLY BALANCED IN THE BUDGET.

WE WILL GO DOWN HERE. AND WE WILL TURN THE 13 MILLION OFF.

WE WILL LOAD IN THE NEW ONES. THIS IS A REMINDER. THIS IS WHERE WE WERE WITH THE ORIGINAL MODEL. AND NOW WITH OUR UPDATED MODEL, ASSUMING, THE CURRENT TAX RATE, AND WHAT WE WOULD NEED FOR INCORPORATION BASED ON WHAT WE SAW WOULD BE 0.

THIS IS SHOWING YOU CAN DECREASE IT BY A TINY BIT. WE WOULD BE LIMITED ADD 0.

THE CONCLUSION IS, AT THE CURRENT TAX RATE, AND BASED ON THE ASSUMPTIONS THAT WE'VE LOOKED AT IN THE BASE MODEL AND THE INCORPORATION INITIATIVES IN THE UPDATED MODEL, THE MAXIMUM TAX RATE WOULD BE THE CURRENT OF 22.31 CENTS. DOES ANYONE HAVE QUESTIONS

WITHOUT? >> I AM SURE THAT WILL STIR SOME QUESTIONS.

>> JUST TO BE CLEAR, THAT DOES INCLUDE THE TOP -- PROPERTY TAX FREEZE FOR SENIORS OVER 65 AND

DISABLED? >> YES. >> THAT IS TREMENDOUS.

>> SHOWED THE NATURE OF THIS WORKSHEET. GO TO THE 65 YEARS AND OLDER.

GO UP AND SCROLL DOWN. YOU CAN SEE THE OUTPUT. >> WHERE IS IT, IT IS RIGHT

HERE. >> IF WE WERE TO TURN THIS TO KNOW, THAT MEANS WE WON'T OFFER THIS BENEFIT. AND THEN WE WERE TO GO BACK DOWN.

>> AND THIS COULD BE BUT IT'S REALLY NOT THAT MUCH. >>

>> HOW MUCH WOULD SENIORS AND DISABLED SAVE? YOU SHOW THE GRAPH OVER 20 YEARS

IT GOES WAY UP. >> I'M SORRY IT DOESN'T -- IT LOOKS LIKE THE BALANCE, WE HAVE $500,000. I THINK THIS IS VERY MEANINGFUL FOR THE SENIORS AND DISABLED PEOPLE TO SEE. IF THERE'S NO MORE QUESTION ON THE MODEL I WILL GO BACK TO THE POWERPOINT TO SUMMARIZE ALL OF THIS UP. THE FIRST THING WE WANTED TO

[02:00:18]

LOOK AT, IS TO MAKE SURE EVEN UNDER INCORPORATION, AND OUR ASSUMPTIONS THAT THE REVENUES, THE OPERATING REVENUES OUTPACE WE DON'T WANT TO GET SIDEWAYS ON THAT.

THE ORIGINAL MODEL THAT WE LOOKED AT, WERE REPRESENTED BY THE RED AND BLUE LINES.

THE BLUE LINE YOU SEE WERE REVENUES PRE-INCORPORATION OF THE REDLINE IS EXPENSES REINCORPORATION. THAT WAS THE GAP WE HAD. NOW THE GREEN LINE REPRESENTS REVENUES POST INCORPORATION AFTER WE INCORPORATE AND THE YELLOW REPRESENTS THE EXPENSES POST INCORPORATION. YOU CAN STILL SEE THE CAP BETWEEN THE GREEN AND THE YELLOW THAT ALLOWS US TO FUND THE CAPITAL REPLACEMENT RESERVES AND THE HOTEL TAX RESERVE SPIRIT -- THIS IS A SUMMARY LOOKING AT THE COMPONENT SPIRIT THIS IS WHAT IT LOOKED LIKE ON THE ORIGINAL MODEL. YOU CAN SEE, IN ORDER TO GET THE BUDGET TO BALANCE WE REQUIRED REVENUES TO IMPOSE AN ADDITIONAL SIX-POINT TO SENSE TAX RATE IN ORDER TO GENERATE THE PROPERTY TAX TO BALANCE THE BUDGET. THEN DOWN UNDER THE EXPENSES ARE THE ITEMS WE WERE FUNDING.

HERE, UNDER THE UPDATED MODEL WE LOOKED AT WE CAN TAKE ADVANTAGE OF THE $6.7 MILLION IN THE BUDGET. AT THE CURRENT TAX RATE IT ALLOWS US NOT TO IMPOSE ADDITIONAL TAX RATES AND AT THE BOTTOM OF YOU CAN SEE THE DIFFERENT EXPENSES AND A REMINDER THERE, UNDER LAW ENFORCEMENT IT IS INCREMENTAL EXPENSES WE WOULD NEED.

THERE'S ALWAYS THE, 1.46.8 MILLION IN PUBLIC WORKS IN THE BASE BUDGET.

BECAUSE THERE IS SUCH A LARGE, A BIG DIFFERENCE IN THE SIX-POINT 2% RATE AND NOT NEEDING AN INCREASE, I WANTED TO SHOW, A LOT OF NUMBERS SO WE DON'T HAVE TO GO THROUGH ALL OF THEM.

THIS IS THE RECONCILIATION BETWEEN THE MODELS TO GET TO THAT.

THE ONES THAT I HIGHLIGHTED ARE THE BIGGEST DIFFERENCES BETWEEN THE TWO MODELS.

THE DEBT SERVICE ON THE POLICE FACILITY, INCLUDED IN THE ORIGINAL MODEL.

THE MARKET HAS CHANGED ON THAT BUS WE HAVE FUNDS WE CAN APPLY TO THE PROJECT, PLUS THE OVERWRITING, EVEN IF WE DID NOT HAVE IT WE CANNOT INCLUDE ANY RATE ASSOCIATED IN THE TAX RATE.

BY LAW WE CANNOT DO THAT. THE OTHER BIG DIFFERENCES THE THE CHANGE IN THE UNDESIGNATED FUND BALANCE. WE WILL LOOK AT THAT TOO. HERE ARE THE DIFFERENCES.

ON THE FAR LEFT THAT IS OUR WE GOT TO AN UNDESIGNATED FUND BALANCE.

IN THE THIRD COLUMN OVER UNDER THE UPDATED MODEL, THIS IS HOW WE GOT TO THE POSITIVE SIX-POINT $7 MILLION IN THE FUND BALANCE. THE ITEM CIRCLED IN BLUE, ARE THE BIGGEST CONTRIBUTORS TO THE CHANGE IN REVENUES. WE HAD AN $8.7 MILLION CHANGE IN THE MODELS.

OUT OF THAT $6.000000 IS RELATED TO SALES TAX REVENUE. WE SAW THAT ON THE PREVIOUS CHART AND THE TREMENDOUS GROWTH WE HAVE HAD IN THE SALES TAX THAT IS CONTRIBUTING TO THE NUMBER RIGHT THERE. THE OTHER TWO ARE THE CHANGE IN FUNDING METHODOLOGIES THAT WE DISCUSSED. DECISIONS WE NO LONGER HAVE TO FUND AT THOSE LEVELS, WE HAVE THE SAVINGS FROM BAD. IF YOU WANT TO BREAK IT DOWN INTO THE SIMPLEST COMPONENTS

THOSE ARE THE AREAS CAUSING THE CHANGE BETWEEN THE TWO MODELS. >> ME ALSO TALK ABOUT WHAT IS NOT INCLUDED. WE KNOW WITH CERTAINTY THAT THIS COMMUNITY IS NOT RECEIVING THE FEDERAL FUNDS THAT IT WOULD RECEIVE AS A CITY. NONE OF THOSE PROJECTED NEW REVENUES, MUNICIPAL FUNDING WE WOULD GET FROM THE STATE OR FEDERAL GOVERNMENT ARE INCLUDED IN THE MODEL. JUST WITH THE CURRENT FEDERAL FUNDING, COVID-19 STIMULUS, THIS COMMUNITY SHOULD GET UP TO $30 MILLION IN FEDERAL AID. WE ARE CURRENTLY GETTING 0.

WITH THE CARES BACK, IT WAS SIX-POINT $1 MILLION FOR MONTGOMERY COUNTY AND HARRIS

[02:05:09]

COUNTY. WE GOT THE 774,000 FROM HARRIS COUNTY.

ANOTHER SIX-POINT $1 MILLION. HERE WE ARE AT 0. WE ARE CURRENTLY WORKING WITH THE TREASURY, AND THE STATE, BUT THEY TOLD US WE DON'T EXIST. WE LIKE TO BE CALLED A TOWNSHIP BUT WE ARE A SPECIAL-PURPOSE DISTRICT, IT IS NOT A CBD G ELIGIBLE COMMUNITY WHICH MEANS WE ARE LEFT OUT OF FUNDING THAT COMES OUT OF OUT OF THESE FEDERAL PROGRAMS. WE DID NOT INCLUDE ANY INCREASE FUNDING WE WOULD HAVE ACHIEVED FROM HOUSTON GALVESTON AREA.

THEY REDISTRIBUTE STATE AND FEDERAL DOLLARS FOR NUMEROUS PROJECTS AND ROADWAYS AND FLOOD WAYS AND PARKS AND RECREATION. AS A MUNICIPALITY WE WOULD BECOME A VOTING MEMBER OF THAT BOARD. TODAY WE ARE NOT A VOTING MEMBER.

YES, THERE WILL BE SOME TAX RATE CERTAIN NEEDS FOR SENIORS WHICH WE KNOW THEY EXPRESS THE LARGEST AMOUNT OF CONCERN. THERE IS OTHER REVENUE SOURCES THAT WE DID NOT PUT INTO THIS THAT ARE REAL AND SUBSTANTIAL AND CAN FURTHER MITIGATE OVER A LONGER PERIOD OF TIME.

TO THE PEOPLE ASKING ABOUT WHY ARE WE LOOKING AT THIS AND THIS TIME PERIOD, THE FUNDS ARE INTO PACK SPIRIT THE FIRST FUNDING WENT OUT IN AUGUST. THE SECOND FUNDING GOES OUT NEXT YEAR. THE TREASURY GUIDELINES ONLY PROVIDED THE DIRECT FUNDING TO SEPARATE ENTITIES WHICH LEFT US IN NO MAN'S LAND. IF WE ARE INCORPORATED IN THIS CALENDAR YEAR, WE COULD GET THE FUNDING IN ROUND TWO WHICH GOES OUT NEXT YEAR.

NO GUARANTEES, BUT RIGHT NOW, WHEN WE TALK TO THEM, WE ARE NOT A MINOR ( INDISCERNIBLE ) AND IN OTHER STATES THEY DID GET DIRECT FUNDING THAT PROVIDED LESS GOVERNMENT SERVICES THEN THIS COMMUNITY PROVIDES. LET ME SPEAK TO HOW RIDICULOUS THE SITUATION IS IN THE MIDDLE COVID-19. REFUND $40 MILLION OF LAW ENFORCEMENT.

WE GOT $0 BACK IN ALL OF THE MONEY THAT WENT OUT. TRILLIONS.

WE HAVE OUR OWN FIRE DEPARTMENT. PROPERTY PROTECTION CLASS 1. NUMBER ONE IN THE COUNTRY.

WE GOT NOTHING. WE DID GET SOME FROM THE CARES ACT.

WE GOT A COUPLE OF HUNDRED THOUSAND OUT OF MONTGOMERY COUNTY.

EIGHT FIRE STATIONS, PARAMEDICS, FIRE TRUCKS AND WE ARE BEING TREATED LIKE WE DO NOT EXIST.

IF EITHER ONE TO BE COUNTED, 120,000 HAVE COLLECTED MONEY THAT ARE NOT GETTING THE TAXES THAT THE COMMUNITY PAID BACK TO THIS LOCAL COMMUNITY. WE CAN ARGUE ABOUT THE TIMING AND BENEFITS ANYBODY REMEMBER 2018? THE REALITY IS THEY TOLD US WE DON'T EXIST. THEY DO NOT ACKNOWLEDGE WOODLANDS OF THE PLACE.

WE ARE ON SOME MAPS OR SOMETHING ELSE WE CAN GO WITH THE FEDERAL GOVERNMENT.

WE CAN DO THIS FOR OVER A YEAR. I KNOW SOMEONE SAID I WAS TALKING TO THE WRONG PERSON.

WE HAVE BEEN TALKING TO EVERYONE. WE WANT TO MAKE A DECISION FOR OURSELVES. DO WE WANT TO BE COUNTED. DO WE WANT TO BE A DIRECT RECIPIENT WITHOUT BEGGING. DO WE WANT THE FIRE DEPARTMENTS TO BE RESPECTED LIKE THOSE WHO ARE GETTING FUNDING. THINK ABOUT THIS. THE CITY OF SHENANDOAH, THEY ARE GETTING CARPAL FUNDS. THEY HAVE A POPULATION OF LESS THAN 5,000.3 WE ARE THERE FIRE DEPARTMENT. LIKE I SAID, PEOPLE WERE TALKING ABOUT WHAT WOULD HAPPEN IN THE COMMUNITY. ALL EIGHT FIRE STATIONS CURRENTLY OPERATED BY THIS

[02:10:06]

GROUP. ALL OF THE 220 MILES OF PARKS AND PATHWAYS.

THE AMENITIES, THE NEXT COMMUNITY CAME FROM THIS COLLECTIVE BOARD AND PREVIOUS BOARD AND MOSTLY OUR STAFF. LET'S BE CLEAR. THE PROFESSIONAL EXECUTIVE TEAM THAT RUNS THIS COMMUNITY AND EMPLOYEES WE HAVE AND THEY ARE CAPABLE OF TAKING THE COMMUNITY FORWARD IN A WAY THAT IS RESPONSIBLE AND NOT OVERLY BURDENSOME.

ANYONE CAN COME DOWN ON THE DECISION DIFFERENTLY. IF THE REST OF THE COMMUNITY DON'T THINK IT'S IN THEIR BEST INTEREST, SO BE IT. THEY ARE WORKING TO TRANSITION THE BURDEN TO THEIR FAMILY. TO PUT US INTO A POSITION TO BE COUNTED, RESPECTED AND TREATED THE SAME AS EVERYONE SURROUNDING US. TODAY WE ARE NOT.

OTHER BOARD MEMBERS, DO YOU WANT TO SPEAK? >> A COUPLE OF OTHER BECOMING A CITY DOES NOT CHANGE THE PROCESS. YOU ALWAYS HAVE A BOARD.

THAT DOES NOT CHANGE. THE OTHER QUESTION WAS WHAT ARE WE LOOKING AT.

WHICH IS THE CITY MANAGER TYPE FORM OF GOVERNMENT. NEW LINE SO WITH THE BOARD VIEW.

OBVIOUSLY, AT SOME POINT, THE ADVANTAGES OF BEING THAT CITY ARE ENORMOUS.

WE WOULD OBVIOUSLY BE WORKING TOWARDS THE DRAFTING OF THE CHARTER WHERE WE COULD QUANTIFY, THE CONSERVATIVE VALUES THAT HAVE MADE THIS SOUNDS GREAT. NO COMPENSATION, NO COMPENSATION FOR BOARD MEMBERS. PERHAPS THE ABILITY TO HAVE ANY ORDINANCE THE BOARD OR CITY COUNCIL MAY ENACT. WE COULD ACTUALLY BECOME THE MODEL FOR MUNICIPALITIES IN THE ENTIRE U.S. I THINK WE HAVE THAT OPPORTUNITY.

I CAME ON THE BOARD I SAID ULTIMATELY, THE COMMUNITY NEEDS TO INCORPORATE.

IT'S THE ONLY WAY TO PROTECT YOURSELF. I STILL BELIEVE THAT TODAY.

WE WILL CONTINUE TO BEEF LEAVE IT. AT SOME POINT, THE IDEA THAT WE KEEP DELAYING THIS AND NOT ALLOWING RESIDENTS THE OPPORTUNITY TO MAKE DECISIONS SEEMS FOOLISH. I HAVE A LOT OF FAITH IN THE PEOPLE LIVE HERE.

WE WERE MADE A TOWNSHIP. IT IS IMMATERIAL TO ANYONE WHO SITS UP HERE.

THE IDEA THAT, FRANKLY, THE IMPLICATION THAT ANYONE APPEAR IS DOING THIS FOR THE PURPOSE OF SOME SORT OF FIDUCIARY BENEFIT IT COST ME MONEY TO BE ON THIS. IF THERE IS A PLAN TO MAKE MONEY FOR BOARD MEMBERS ON THIS DEAL, SOMEONE NEEDS TO ENLIGHTEN ME BECAUSE I DON'T SEE IT.

WE HAVE WORKED SO HARD AT THIS. I THINK WHAT'S IMPORTANT, WHEN WE TALKED ABOUT THE TASK FORCE.

THIS WAS PLAYING HAVOC WITH THE TAX RATE. THIS TIME WE REALIZE WE CAN'T DO IT IMMEDIATELY. I JUST WANT TO COMMEND THE TASK FORCE.

[02:15:22]

I AM BLOWN AWAY BY WHAT YOU GUYS DO. LIKE I SAID, A LOT OF THINGS, WE HAVE CAUGHT A LOT OF FAIRWINDS. WE HAVE HAD DIFFICULTIES AS WELL.

THE IDEA OF THE CHANGE IN INTERNET SALES TAX IS HUGE. WE DID NOT COUNT ON IT.

THE FACT THAT THE COUNTY, ACTUALLY MAKES US PAY FOR THE SERVICES NOW THAT'S ACTUALLY THE IMPACT ON LAW ENFORCEMENT. I AM PRETTY PROUD OF THE WORK WE HAVE DONE.

I AM PROUD OF THE BOARD. I KNOW THIS HAS BEEN A HUGE TEAM EFFORT.

>> THE ACTION ON THIS AGENDA ITEM AND THE PROPOSED TAX RATE. WE WILL LET Y'ALL KNOW WHAT WE ARE DOING. WE WILL COME BACK AND HAVE AN AGENDA ITEM TO GO OVER, WHETHER OR NOT THIS WILL BE ON THE BALLOT. SO YOU MAY WANT TO HANG AROUND WHILE WE BREAK. PEOPLE WILL WANT TO KNOW THESE ARE PROJECTIONS.

WE DID THESE PROJECTIONS IN 2020. WE BUILT THIS MODEL TO BE UPDATED EVERY YEAR BASED ON THE THEN CURRENT ECONOMIC CONDITIONS AND THE BUDGET.

I DO NEED A MOTION AND A SECOND TO ACCEPT THE UPDATES AND THE OUTPUT OF THE INITIAL TAX RATE

WHICH I THINK -- JOSH MAURO? >> NO, I WAS JUST PUTTING THIS UP THERE.

>> IT IS THE CURRENT TAX RATE. >> SO MOVED. >> MR. CHAIRMAN IF I MAY.

IT HAS A MOVE AND SECOND. IT WAS MY UNDERSTANDING THAT THAT 25% OF HOTEL GROWTH THERE WAS CONCERN AND I HAVE UNDERSTOOD SEVERAL LARGE CONDITIONS -- CONVENTIONS HAVE POSTPONED AND CANCELED. I HAVE A CONCERN ABOUT THAT. I ALSO HAVE A CONCERN, DOES IT

BLOCK IN THE TAX RATE AS THE EFFECTIVE TAX RATE? >> I WILL ANSWER THE FIRST QUESTION ABOUT HOTEL TAXPAYERS. YOU ARE RIGHT, WE HEARD ABOUT SOME OF THE CANCELLATIONS OR POSTPONEMENTS. AS I'VE MENTIONED EARLIER, HOTEL TAX DOES NOT FACTOR INTO THE TAX RATE. WHAT WOULD HAPPEN, IF WE DON'T NEED BUDGET PROJECTIONS THIS YEAR INSTEAD OF $1.8 MILLION GOING INTO THE RESERVE IT WILL BE SOMETHING LESS.

I'M NOT CONCERNED BASED ON PROJECTIONS THAT WE CAN MAKE DEBT SERVICE PAYMENTS OR THE OPERATIG EXPENSES. THAT IS NOT AN ISSUE. IT IS JUST WHAT GOES INTO THE RESERVE. THE 25%, WE CERTAINLY CAN REVISIT.

WE HOPE THIS IS JUST A BLIP IN TERMS OF DEALING WITH THE SURGE RIGHT NOW AND THAT THINGS WILL REALLY REBOUND NEXT YEAR. AND YOU MAY WANT TO ADDRESS SOMETHING FURTHER.

>> I JUST WANT TO REMIND EVERYONE LAST YEAR WE HAD A DISASTROUS TAX RATE YEAR.

WE STILL COVERED EXPENSES AND DEBT SERVICES. OBVIOUSLY, WE ARE GENERATING MORE REVENUE THIS YEAR THAN LAST YEAR. IT IS BY A SUBSTANTIAL MARGIN.

THE NUMBER, THE TOTAL NUMBER IS, IT ALWAYS ESCAPES ME. BUT THE DEBT SERVICE NUMBER IS

$2.8 MILLION. THIS IS THE BUDGET FOR THE YEAR. >> 2 MILLION THIS YEAR END 2.5

MILLION. >> WE ARE APPROACHING THE NEXT REPORT THAT WILL BE VERY CLOSE.

WE ARE GOOD ON THAT TOO. >> IN TERMS OF THE TAX RATE, THE DECISION THE BOARD CHOOSES TO

[02:20:07]

MAKE, THE TAX RATE PLACED ON THE BALLOT. IF THEY MOVE FORWARD, IT WOULD BE LISTED AT THE 2231 CURRENT RATE. THAT IS A SEPARATE, IT IS RELATED BUT SEPARATE TO WHAT YOU WOULD TAKE ON THE ACTUAL PROPERTY RATE WHERE IT YOUR PROPOSED RATE WILL BE NEXT WEEK. THAT WILL DETERMINE IF YOU HAVE A PUBLIC HEARING AND YOU ARE SCHEDULED TO VOTE ON THE PROPERTY TAX RATE FOR THE BUDGET AT YOUR AUGUST 25 BOARD MEETING.

WHAT THIS IS SAYING, IN ORDER TO HAVE THE BALANCED BUDGET FOR INCORPORATION PURPOSES, AND

THAT'S ALL YOU'RE GOING ON TODAY. >> I SHARED THIS WITH --

>> I HAVE CONCERNS WE HAVE NOT SEEN THIS. PERHAPS OTHER BOARD MEMBERS HAVE. FRIDAY AT 3:30 P.M. I HAVE CONCERNS WITH THAT.

>> THE ONLY THING THAT HAS NOT BEEN SEEN WAS, THE PLANNING SESSION TO WAIT FOR THE SALES TAX REPORT IN THE PROPERTY TAX TO BE CERTIFIED. EVERY OTHER, ALL OF THE EXPENSES FOR INCORPORATION ARE THE SAME THAT HAVE BEEN OUT THERE AND APPROVED BY THE BOARD FOR OVER A YEAR END A HALF. THE BUDGET ADJUSTMENTS AND THE RESERVES, THAT WAS DONE IN A TODAY GENERAL SESSION. ALL OF THE THINGS WERE PUT IN. THE ONLY THING KNEW TODAY WOULD'VE BEEN UPDATING THE CALCULATOR BASED ON, KNOW WE HAVE THE CERTIFIED TAXES AND THE

BOND SALES TAX BACK CREATES THE OUTPUT. >> WE DISCUSSED IT BUT WE DID NOT VOTE ON A. SO CHAIRMAN I RESPECTFULLY DISAGREE.

IF THIS WAS SOMETHING THAT WAS INFORMATION PRESENTED TO THE TASK FORCE, WHY WAS IT NOT SENT

TO US WITHIN OUR BOARD PACKET. >> I THINK IT DESERVES AN HONEST ANSWER.3

>> ALL OF THE ASSUMPTIONS WE DID IN THE BUDGET WORKSHOP. SO, THIS IS NOT A CASE OF BAIT AND SWITCH. THIS IS WORKING THROUGH THE ASSUMPTIONS.

WE DIDN'T HAVE THE REPORT SPIRIT AND FOR CLARIFICATION IF IT GOES ON THE BALLOT THAT IS THE

MAXIMUM TAX RATE FOR NEXT YEAR, NOT THIS YEAR. >> THE TAX RATE FOR THIS YEAR WILL HAVE TO BE DETERMINED PRIOR TO SEPTEMBER 30 IN ORDER FOR THE TAX ASSESSOR TO DO WHAT SHE NEEDS TO DO. UNDERSTAND YOUR QUESTION. IN TERMS OF NOT PUTTING SOMETHING OUT PRIOR WE HAVE THE SALES TAX REPORT. WE GOT ON WEDNESDAY.

I WAS LITERALLY UPDATING THE MODEL FOR THE FINAL ADJUSTMENTS UNTIL TODAY.

IN THAT REGARD, THAT'S WHY DID GO OUT EARLY. >> THANK YOU.

>> I HAVE A MOTION AND A SECOND TO APPROVE THE UPDATES TO THE INCORPORATION PLANNING STUDY, AND THE PROPOSED INITIAL TAX RATE OF .2231. A MOTION AND A SECOND, ALL IN FAVOR SAY AYE. ANY OPPOSED? IT CARRIES.

[8. Recess to Executive Session to discuss matters relating to real property pursuant to §551.072, Texas Government Code; deliberation of economic development negotiations pursuant to §551.087, Texas Government Code; discuss personnel matters pursuant to §551.074, Texas Government Code; discuss IT network or critical infrastructure security pursuant to §551.089, Texas Government Code; and to consult with The Woodlands Township’s attorney pursuant to §551.071, Texas Government Code;]

WE WILL NOW, RECESS TO EXECUTIVE SESSION TO DISCUSS MATTERS RELATED TO REAL PROPERTY PURSUANT TO 551.074. DISCUSS PERSONAL MATTERS PURSUANT TO 55 1. ALSO FOR TEXAS GOVERNMENT CODE, DISCUSS IT NETWORK OR CRITICAL INFRASTRUCTURE SECURITY PURSUANT

[02:25:02]

TO 551.089 TEXAS GOVERNMENT CODE.

[9. Reconvene in public session;]

[10. Receive, consider and act upon the adoption of an Order to Amend Order No. 018-21 (calling the Directors Election; authorizing contracts for services to conduct the election; and determination of procedure for giving notice of and conducting same) to include a special election on November 2, 2021 for the incorporation of The Woodlands Township district into the City of The Woodlands, as a Type-A general-law city, adopting the maximum initial city property tax rate for the City of The Woodlands, and authorizing the transfer of The Woodlands Township district’s rights, powers, privileges, duties, purposes, functions, responsibilities, the authority to issue bonds, and the authority to impose taxes from The Woodlands Township district to the City of The Woodlands (with Supplemental Agenda for Adoption of Order Calling Elections);]

>>> OKAY, WE ARE COMING BACK FROM EXECUTIVE SESSION WE WILL GO TO AGENDA ITEMS AND RECEIVING, CONSIDER AND ACT UPON ADOPTION OF IN ORDER TO AMEND ORDER NUMBER 018-21.

I WILL TURN IT OVER. >> THE DEADLINE TO CALL IF THE BOARD IS INTERESTED IN CALLING FOR NOVEMBER 2, 2021 IS ON MONDAY. WE DO HAVE THAT INCLUDED ON YOUR AGENDA FOR CONSIDERATION. WE DO HAVE, IN ORDER AMENDING THE BOARDS CURRENT ELECTION ORDER, WHICH THE CURRENT ONE WAS ADOPTED IN JULY IN ORDER TO CALL THE BOARD OF DIRECTORS ELECTION FOR THE THREE POSITIONS THAT ARE UP THIS YEAR. THE AMENDED ORDER, IT JUST ADDS ON THROUGH A SERIES, THAT THE BOARD IS AUTHORIZED TO CALL THE ELECTION AND IT WOULD BE HELD IN THE SAME MANNER THE BOARD OF DIRECTORS ELECTION IS HELD. IF THE BOARD CHOOSES TO MOVE FORWARD WITH THAT, THERE WOULD BE TWO PROPOSITIONS ON THE BALLOT.

PROPOSITION A AUTHORIZES THE CITY INCORPORATION OF THE WOODLANDS TOWNSHIP DISTRICT AT THE ADOPTION OF A INITIAL TAX RATE OF NOT MORE THAN, BASED ON THIS EVENINGS MEETING, 22.31 CENTS PER $100 EVALUATION OF TAXABLE PROPERTY. PROPOSITION TWO WOULD BE THAT UPON INCORPORATION OF THE WOODLANDS TOWNSHIP DISTRICT INTO A TYPE A GENERAL CITY TO BE CALLED THE CITY OF WOODLANDS THE TRANSFER OF THE RIGHTS, POWERS AND PRIVILEGES, DUTIES, RESPONSIBILITIES, THE AUTHORITY TO ISSUE BONDS HAVE THE AUTHORITY TO IMPOSE TAXES FROM THE WOODLANDS TOWNSHIP DISTRICT& TO THE CITY OF THE WOODLANDS. BOTH OF THOSE WOULD BE A VOTE

FOR OR AGAINST. >> DO WE HAVE THE ABILITY TO DISPLAY THE BALLOT LANGUAGE?

>> IF YOU CAN GIVE US JUST A MINUTE. >> WE HAVE PEOPLE WHO ARE HERE.

I WOULD RATHER LET THEM BE IT, IF IT IS POSSIBLE. >> VERY GO.

-- THERE YOU GO. >> THAT IS NOT THE EXACT WORDING FOR THE PROPOSITIONS.

>> IT IS TRANSLATED INTO MULTIPLE LANGUAGES. >> ALL OF THE ELECTION ITEMS ARE

TRANSLATED INTO SPANISH, VIETNAMESE AND CHINESE. >> IF WE CAN TAKE A RECESS WE

[02:31:18]

CAN FULL IT UP. >> I CAN POLL THE AUDIENCE BY HAND, WHO WANTS TO SEE THE

LANGUAGE, IF YOU WANT TO SEE IT? >> DROP TO READ THE. >> NO.