SO I WILL CALL TO ORDER THE WOODLANDS TOWNSHIP BOARD OF DIRECTORS SPECIAL MEETING.
[1. Invocation / Pledge of Allegiance;]
[2. Call meeting to order;]
[00:00:04]
WE DO NOT HAVE AN INVOCATION OR A PERSON LINED UP FOR AN INVOCATION TODAY.DEAR GOD, THANK YOU FOR OUR STAFF AND OUR COMMUNITY AND EVERYONE WHO POURS THEIR HEART AND SOUL INTO THIS TOWNSHIP.
WE PRAY FOR YOUR WISDOM AND GUIDANCE THROUGHOUT THIS BUDGET PROCEDURE, AND WE PRAY FOR YOUR INTERVENTION IN THIS COVID CRISIS, THE THERAPEUTICS AND FOR VACCINES TO COME QUICKLY.
I PLEDGE ALLEGIANCE TO THE FLAG OF THE UNITED STATES OF AMERICA AND TO THE REPUBLIC FOR WHICH IT STANDS, ONE NATION UNDER GOD, INDIVISIBLE, WITH LIBERTY AND JUSTICE FOR ALL.
I PLEDGE ALLEGIANCE TO THEE, TEXAS, ONE STATE UNDER GOD, ONE AND INDIVISIBLE.
>> I NEED TO CLEAR STATE LAW 72 HOURS IN ADVANCE.
POSING OF THE TOWNSHIP AT TOWN HALL, AND ADDITIONALLY WAS POSTED ONLINE.
I WILL NOTE THAT OUR AGENDA WAS CORRECTED DURING THE 72-HOUR PERIOD.
INITIALLY IT SAID THURSDAY, JULY 30TH RATHER THAN WEDNESDAY.
WE DID MAKE THAT CORRECTION AND WE DID LOOK INTO THAT, THE DAY BEING WRONG.
THAT DOES NOT INVALIDATE OUR BOARD'S POSTING AS THE DATE OF WEEK IS NOT A REQUIREMENT.
HOWEVER, WE WILL RATIFY TODAY'S ACTIONS AT A FUTURE BOARD MEETING OUT OF AN ABUNDANCE OF CAUTION.
NOW STATE LAW REQUIRES THESE FOUR BOARD MEMBERS BE IN ATTEND ABSENCE.
>> WE ARE ALL PRESENT AND ACCOUNTED FOR.
[3. Receive, consider and act upon adoption of the meeting agenda;]
WE CAN NOW TAKE ON OUR AGENDA.I NEED A MOTION TO APPROVE OUR AGENDA.
>> ANY OPPOSED? WE HAVE AN AGENDA.
MOVING ON TO PUBLIC COMMENTS, WORE DOING PUBLIC COMMENT VIA 3 VIDEO
[4. Public comment;* ]
CONFERENCE AS WELL.INSTRUCTIONS ON HOW TO CALL IN AND MAKE PUBLIC COMMENT WERE POSTED WITH THE BOARD MEETING.
MEMBERS WERE PROVIDED, AND WE WILL TAKE EACH CALLER IN THE ORDER THEY CALL IN.
I DO ASK THAT WE KEEP THE COMMENTS TO THREE MINUTES AND THAT THEY STATE THEIR NAME AND AREA OF THE WOODLANDS THAT THEY ARE IN SO WE CAN NOTE THAT IN OUR.
WE WILL NOW TAKE OUR FIRST CALLER.
>> ONLY HAVE ONE CALLER AT THIS TIME.
THIS IS STEVE BLAKEY CALLING FROM THE VILLAGE OF ALDEN BRIDGE.
WE'RE ENTERING INTO A VERY, VERY BUSY TIME OF YEAR.
THIS, AS MOST OF YOU KNOW, IN MY VIEW IS THE MOST IMPORTANT PERIOD OF THE YEAR.
I KNOW THAT YOU AND THE STAFF ARE GOING TO BE WONK HARD OVER THE NEXT WEEK OR TWO TO GET TO A BUDGET.
I'M CONFIDENT, THAT AS IN YEARS PAST WE WILL DO SO IN A VERY CONSTRUCTIVE WAY.
YOU WILL NO DOUBT BE HEARING FROM ME A TUMOR TWO AS WE GET TO SPECIFIC BUDGET INITIATIVES AND WHAT YOU HAVE BUT I DID WANT TO CALL AND JUST GIVE MY WARM REGARDS TO EVERYONE AND THANK YOU ALL FOR YOUR SERVICE AND WISH YOU NOTHING BUT THE BEST AS WE WORK THROUGH THE DOING DURING THESE, TO SAY THE LEAST, CHALLENGING TIMES.
AND DO WE HAVE ANY OTHER CALLERS IN THE QUEUE?
>> WE HAVE NO OTHER CALLERS IN THE QUEUE.
WE WILL NOW CLOSE PUBLIC COMMENT AND MOVE DIRECTLY INTO OUR REGULAR AGENDA.
[5. Receive, consider and act upon a Sixth Amendment to the Housing Interlocal Agreement with Montgomery County Hospital District (C-2014-4140A6);]
AND AGENDA ITEM 5, RECEIVE, CONSIDER AND ACT UPON A SIXTH AMENDMENT TO THE HOUSING INTERLOCAL AGREEMENT WITH MONTGOMERY COUNTY HOUSING DISTRICT.THE NEXT TWO ITEMS, ITEM 5 AND 6, ARE CO-JOINED IN WHAT WE'RE TRYING TO DO.
WE HAD IN A PREVIOUS ITERATION OF THE HOUSING AGREEMENT WITH MONTGOMERY COUNTY HOSPITAL DISTRICT THAT THEY BASICALLY HAD FIRST RIGHT OF REFUSAL TO
[00:05:03]
BASE AN AMBULANCE STATION 8 ON GOSLING ROAD.THIS CONTRACT THAT YOU HAVE BEFORE YOU JUST TAKES THAT OPTION AWAY FROM THEM FOR THE TIME BEING WHICH WILL ALLOW THE SECOND THING ON THE AGENDA, THE HOUSING WITH CYPRESS CREEK EMS WHICH WILL ALLOW THEM TO BASE A FIRE STATION OUT OF FIRE STATION 8.
>> SO WE HAVE A MOTION TO APPROVE THE AMENDMENT.
>> JUST FOR CLARIFICATION, CHIEF, THIS FIRE STATION IS OVER IN CREEK SIDE, CORRECT?
>> A LOT OF PEOPLE MAY NOT KNOW THAT.
SO THAT'S THE REASON WHY IT MAKES SENSE TO GO WITH CYPRESS CREEK?
>> I CONVERT THAT INTO A MOTION.
WE HAVE APPROVED AGENDA ITEM INURNMENT 5.
WE WILL NOW GO DIRECTLY INTO AGENDA ITEM 6.
>> STATION -- THE STATION THAT IS BEING DISCUSSED IS IN INDIAN SPRINGS ADJACENT
TO -- >> IT'S RIGHT THERE ALONG SPRING CREEK.
>> BUT KAREN IS SAYING IT'S BASICALLY -- >> IT'S IN MONTGOMERY COUNTY.
>> MONTGOMERY COUNTY SIDE OF THE CREEK.
>> IT'S THE GOSLING STATION THAT WE'RE TALKING ABOUT.
I THINK AS THE CHIEF WAS DISCUSSING, WHAT'S HAPPENING RIGHT NOW IS THAT THE MONTGOMERY COUNTY HOSPITAL DISTRICT DOES NOT HAVE THE NEED TO HOUSE A UNIT OUT OF THERE AT THE CURRENT TIME, BUT WE CAN IMPROVE THE SERVICE TO CREEK SIDE PARK IF WE HAVE CYPRESS CREEK LOCATE IN THAT STATION.
THIS AGREEMENT WILL COME BACK AS THINGS CHANGE BUT IT GIFTS AN OPPORTUNITY TO IMPROVE -- GIVES AN OPPORTUNITY TO IMPROVE SERVICE.
>> THAT FIRE STATION PREDOMINANTLY IS RESPONDING TO CREEKSIDE PARK EVEN THOUGH IT DOES HAVE THE SECTION OF INDIAN SPRINGS RIGHT THERE TOO.
AND THE CREEKSIDE PARK AREA, OUR KUYKENDAHL AND STATION 8 ON GOSLING MEET AT ROB FLEMING RECREATION CENTER.
SO THEY HAVE AIRED SHARED RESPONSIBILITY FOR THE CREEKSIDE PARK AREA.
AGENDA ITEMS 6 IS TO ENTER AN AGREEMENT WITH CYPRESS CREEK EMS TO CO-LOCATE AT
[6. Receive, consider and act upon an Agreement with Cypress Creek EMS Association for co-housing at The Woodlands Fire Station 8 (C-2020-0192);]
FIRE STATION 8.CHIEF, ANYTHING ELSE YOU WANT TO ADD TO THAT?
AGAIN, AS MR. NORRELL POINTED OUT, THIS IS AN ENHANCEMENT TO EMS TRANSPORT SERVICE IN THAT WHOLE AREA, SO WE'RE EXCITED TO MAKE THIS HAPPEN.
>> CHIEF, NO ADDITIONAL COSTS ASSOCIATED WITH THIS, RIGHT?
ACTUALLY, ANOTHER WAY THAT THE FIRE DEPARTMENT IS BRINGING REVENUE BACK TO YOU.
WE'LL GET AN ADDITIONAL $1,000 A MONTH FROM CYPRESS CREEK EMS.
>> WE HAVE A MOTION TO APPROVE?
[7. Receive, consider and act upon a presentation on the 2021 Preliminary Budget for The Woodlands Township;]
>> NOW WE GO TO THE MAIN ENTREE OF THE EVENING, AGENDA ITEM 7, RECEIVE, CONSIDER AND ACT UPON A PRESENTATION OF THE 2021 PRELIMINARY BUDGET.
>> THANK YOU AND GOOD EVENING.
THIS IS THE OFFICIAL KICKOFF, I GUESS, TO THE BUDGET SEASON FOR 2021 AND THE FIVE-YEAR PLAN, BUT DID WANT TO FIRST SAY THERE'S BEEN, OF COURSE, A TREMENDOUS JUST WANT TO TAKE A MINUTE TO THANK THE DEPARTMENT MANAGERS FOR ALL OF THEIR WORK AND INPUT ON THE BUDGET, THE EXECUTIVE MANAGEMENT TEAM, MY COWORKERS THE ON EXECUTIVE MANAGEMENT TEAM AND ESPECIALLY MR. NORRELL WHO THOUGHT HE HAD SEEN HIS LAST BUDGET SEASON LAST YEAR BUT GOT TO DO ONE MORE.
MY FINANCE TEAM FOR THE EXCELLENT WORK THEY HAVE DONE.
I WANT TO THANK THE BUDGET TASK FORCE.
THEY'VE ALREADY PUT ABOUT TEN HOURS OF REVIEW INTO THIS AND PROVIDED VALUABLE GUIDANCE ALONG THE WAY.
AND, OF COURSE, TO THE ENTIRE BOARD OF DIRECTORS FOR YOUR CONTINUED GUIDANCE AND THE POLICIES THAT YOU HAVE SET TO GET US HERE.
SO WITH THAT, I WILL START THE PRESENTATION.
AND KAREN, AM I ABLE TO SCREEN SHARE OR ARE AYALA RUNNING IT UP FOR ME?
[00:10:05]
>> MONIQUE, IT'S THE INTENTION TODAY TO GO OVER THE BASE BUDGET, NOT ACTUALLY TAKE CAN ACTION TO THE ON ANY INITIATIVES OR CHANGES, CORRECT?
THIS WILL JUST BE AN OVERVIEW AND THEN WE'LL GET TO THE DETAILS AND THE BUDGET INITIATIVES NEXT WEEK.
I WANT TO FIRST START OFF TALKING ABOUT THE FINANCIAL ASSESSMENT OF WHERE WE ARE 8 TODAY.
THE WOODLAND DOES CONTINUE TO BE IN A POSITION OF FINANCIAL STRENGTH EVEN AS WE GO THROUGH THIS PANDEMIC.
OUR FISCAL HEALTH IS THE RESULT OF EFFECTIVE FISCAL MANAGEMENT, LONG-TERM STRATEGIC PLANNING.
THERE ARE ONGOING COMPREHENSIVE EFFORTS TO ADDRESS COST-EFFECTIVE METHODS OF SERVICE DELIVERY.
THE BOARD WORKS HARD TO CREATE A POSITIVE ATMOSPHERE FOR ECONOMIC DEVELOPMENT.
AND ONE THING THAT WE'LL TALK A LOT ABOUT DURING THIS BUDGET PROCESS IS PROVIDING FLEXIBILITY ON BUDGET ISSUES AS WE ARE IN UNCERTAIN TIMES.
WE ARE WELL POSITIONED TO MANAGE THE FINANCIAL IMPACTS OF THE COVID PANDEMIC.
THE 2021 BUDGET, AS WE GO THROUGH THIS, YOU'LL SEE PROVIDES RESOURCES TO MAINTAIN HIGH LEVELS OF SERVICES AND AMENITIES DESIRED BY THE CITIZENS.
IT IS NOT BURDENED ONE FUNDED PENSION COSTS OR LARGE VACATION AND SICK LEAVE BALANCES DUE TO THE TYPES OF BENEFIT PLANS THAT THE BOARD HAS IMPLEMENTED.
IT POSITIONS THE TOWNSHIP TO BENEFIT FROM IMPROVING ECONOMIC CONDITIONS AS THEY OCCUR AND AS WE PULL OUT OF THIS PANDEMIC.
AS I MENTIONED BEFORE, IT PROVIDE BUDGET FLEXIBILITY.
AND IT MAINTAINS THE POSITIVE CASH FLOWS AND THE RESERVE BALANCES THAT ARE EVALUATED BY THE RATING AGENCIES.
SPEAKING OF THE RATINGS AGENCIES, THE WOODLANDS TOWNSHIP CONTINUES TO EFFECTIVELY MANAGE ITS LONG TEMP DEBT PLAN.
WE HAVE MAINTAINED A DOUBLE-A BOND RATING FROM STANDARD & 9 POOR'S ON OUR GENERAL OBLIGATION PONDS ASK WE MAUN AN A2 BOND RATE CAN FROM MOODY'S ON OUR REVENUE BONDS.
AND JUST TO HAVE A THIRD PARTY VIEW POINT OF OUR FINANCIAL ASSESSMENT INSTEAD OF JUST ME, SOME OF OUR RECENT REPORTS FROM THE CREDIT AGENCY, THE COMMENTS HAVE INCLUDED THAT THE TOWNSHIP AS A HISTORY OF STRONG FISCAL MANAGEMENT WITH MAINTENANCE OF HEALTHY FUND BALANCES AND LIQUIDITY, CREDIT STRENGTHS INCLUDE A LARGE AND DIVERSE TAX BASE AND STABLE FINANCIAL OPERATIONS WITH SOUND RESERVES AND LOW DEBT AND PENSION BURDENS, AND THEY HAVE STATED THAT TOWNSHIP BENEFITS FROM CONSERVATIVE BUDGETING AND CAREFUL EXPENSE MANAGEMENT THAT HAS CONTRIBUTED TO STABLE FINANCIAL RESERVES.
SO AGAIN, JUST WANTED TO GO OVER THAT AND BALK WHAT REALLY GREAT -- TALK ABOUT WHAT REALLY GREAT FINANCIAL POSITION AND WHAT FINANCIAL STRENGTH WE HAVE AS WE GO INTO THIS 2021 BUDGET PROCESS.
WE ARE, AS CHAIRMAN BUNCH MENTIONED, COUNTY TONIGHT WE'RE GOING TO TALK ABOUT THE BASE BUDGET, AND AS REMINDER, THE BASE BUDGET MAINTAINS EXISTING SERVICE LEVELS, IT MEETS CONTRACTUAL AND STATUTORY OBLIGATIONS, IT ACCOMMODATES COMMUNITY GROWTH, ACCOUNTS FOR CHANGING ECONOMIC FACTORS, IT CONTINUES THE CAPITAL PROJECTS AND OTHER INITIATIVES PREVIOUSLY APPROVED BY THE BOARD.
IT IS BASED -- THE NUMBERS, THE TAX REVENUES YOU'RE GOING TO SEE TONIGHT IS BASED ON THE CURRENT PROPERTY TAX RATE OF 22.4 CENTS.
WE HAVE NOT YET RECEIVED CERTIFIED PROPERTY TAX ROLLS 10 FROM THE APPRAISAL DISTRICT, NOR DO WE HAVE THE EFFECTIVE AND ROLLBACK RATES NOW CALLED THE NO NEW REVENUE RATES AND BOARD APPROVAL RATES FROM THE COUNTY TAX ASSESSOR'S OFFICE.
SO THOSE ARE -- A ONE TIME WE WERE TOLD THAT MAYBE THE CERTIFIED ROLL INFORMATION WOULD BE AVAILABLE TOMORROW, IF NOT, ON MONDAY, AND THE TAX RATES PROBABLY WILL NOT BE AVAILABLE UNTIL NEXT WEDNESDAY.
SO UNLIKE PREVIOUS YEARS, BECAUSE OF THE NEW LAWS, WE WILL NOT BE ABLE TO GO INTO OUR BUDGET WORKSHOP MEETINGS HAVING THAT DATA.
BUT AS SOON AS I DO RECEIVE IT, I WILL, OF COURSE, DISTRIBUTE THAT AND PRESENT THAT TO THE BOARD.
AND AGAIN, AS WE TALKED ABOUT EARLIER, WHAT WE ARE GOING TO LOOK AT TONIGHT
[00:15:03]
DOES NOT INCLUDE BUDGETED INITIATIVES.THOSE WILL ALL BE DISCUSSED AND ADDED TO THE BASE BUDGET, ADDED OR SUBTRACTED NEXT WEEK.
SO LOOKING AT THE CONSOLIDATED BUDGET, WE ARE PROJECTING REVENUES OF $129 MILLION AND EXPENDITURES OF $127 MILLION FOR 2021.
THAT NET REVENUE DIFFERENCE OF $2 MILLION, THAT IS WHAT WE USE PRIMARILY TO FUND RESERVES.
IN TERMS OF OUR OPERATING REVENUES, WE ARE SEEING ABOUT A $400,000 DECREASE FROM THE 2020 BUDGET, AND THAT REPRESENTS ABOUT A 3% -- A 0.3% DECREASE.
IN TERMS OF CONSOLIDATED EXPENDITURES, WE ARE SEEING ABOUT A $6.7 MILLION DECREASE FROM THE 2020 BUDGET, WHICH REPRESENTS ABOUT A 5% DECREASE, AND WE'LL GET INTO THE DETAILS OF WHAT IS INCREASING AND DECREASING IN EXPENDITURES AND A MINUTE.
IN TERMS OF HOW OUR REVENUES ARE BEING ALLOCATED, THE $129 MILLION OUT OF THAT, $112 MILLION IS BEING FUNDED, USED TO FUND OPERATING EXPENSES.
ABOUT $9.6 MILLION IS USED TO FUND RESERVES.
ABOUT $6 MILLION IS USED TO FUND DEBT SERVICE.
CAPITAL EXPENDITURES BEING FUNDED OUT OF THE GENERAL FUND ARE ONLY ABOUT $400,000.
WE DO HAVE MORE CAPITAL EXPENDITURES BEING FUNDED OUT OF THE CAPITAL REPLACEMENT RESERVE.
AND THEN WHEN WE TAKE ALL OF THAT INTO ACCOUNT, WHAT WE HAVE THAT HAS BEEN UNDESIGNATED IS ABOUT $640,000.
FIRST I'M GOING TO LOOK AT OUR DIFFERENT REVENUE SOURCES.
SO WHEN WE LOOK AT REVENUES BY TYPE, OUR SALES AND USE TAX IS OUR LARGEST REVENUE SOURCE AT ABOUT $54.5 MILLION.
NEXT IS PROPERTY TAX AT JUST UNDER $46 MILLION BASED ON CURRENT ASSUMPTIONS.
OUR HOTEL TAX PROJECTIONS FOR 2021 ARE ABOUT $8.2 MILLION.
AND I'M NOT GOING TO READ THE REST OF THEM, BUT THE REST OF THEM ARE PROGRAMS, BASICALLY THE REST OF THESE ARE ITEMS THAT HAVE OFFSETTING EXPENDITURES ATTACHED TO THEM.
SO TO BREAK THAT DOWN A LITTLE BIT FURTHER, SALES TAX MAKES UP ABOUT 42% OF OUR TOTAL REVENUE SOURCES.
AND OTHER REVENUES, SO BASICALLY OUR PROGRAM REVENUES, AT 16%.
AND JUST TO SHOW YOU HOW WE COMPARE WITH OTHER COMMUNITIES, ACCORDING TO THE STATE COMPTROLLER, LOCAL GOVERNMENTS RAISE ABOUT $1 IN SALES TAX 12 REVENUE FOR EVERY $7 IN PROPERTY TAX REVENUE.
THAT'S THE AVERAGE IN THE STATE OF TEXAS.
SO OBVIOUSLY WE DO NOT FIT INTO THAT MOLD AS OUR SALES TAX REVENUE OUTPACES OUR PROPERTY TAX REVENUE.
THIS IS A LOOK AT WHAT IS INCREASING AND DECREASING IN TERMS OF OUR REVENUE SOURCES.
SO THE LARGEST INCREASE THAT WE'RE SEEING IS IN GRANT FUNDS, BUT, OF COURSE, THERE'S ALSO EXPENDITURES THAT ARE ATTACHED TO ALL OF THIS FUNDING.
SO GRANT FUNDS ARE INCREASING ABOUT A THIRD OF THAT, SO ABOUT $500,000 OF THAT IS RELATED TO CARES ACT FUNDING TAKING THE PLACE OF OUR BUS FARES BECAUSE YOU'LL SEE DOWN TOWARDS THE BOTTOM OR BUS FARES HAVE DECREASED, HAVE DROPPED OFF DURING THIS PANDEMIC, BUT WE DO HAVE FTA CARES ACT FUNDING THAT IS OFFSETTING THAT INCREASE.
WE ALSO HAVE FTA CARES ACT FUNDING THAT IS PAYING FOR OUR HALF OF THE TROLLEY OPERATIONS.
SO TYPICALLY WE HAVE HAD TO FUND 50% OF THAT, BUT UNDER THE GUIDELINES, THE CARES ACT FUNDING IS PICKING UP OUR 50%, SO THAT'S ABOUT A .
$5 MILLION HAS TO DO WITH THE EXPANDED BUS SERVICE TO THE ENERGY CORRIDOR.
THERE ARE GRANT FUNDS THAT ARE BEING USED TO HELP OFFSET THOSE EXPENSES.
OUR OTHER INCOME INCREASE HAS TO DO WITH THE CONTRACTS THAT THE BOARD NEGOTIATED AT THE END OF 2019, TIED TO THE COMPREHENSIVE COMMUNITY SERVICES AGREEMENT, SO THAT WAS ABOUT $300,000 RELATED TO COVID ADMINISTRATION AND RE$31,000 RELATED TO REIMBURSE FOR STREETSCAPE MAINTENANCE 13 EXPENSES.
YOU CAN SEE RIGHT NOW PROPERTY TAX, BASED ON OUR CURRENT ASSUMPTIONS, IS JUST FLAT, SO THERE WILL BE A LOT MORE TO COME TALKING ABOUT PROPERTY TAX.
SALES AND USE TAX, WE, IN DISCUSSIONS WITH THE BUDGET TASK FORCE AND WITH THE
[00:20:02]
BOARD OF DIRECTORS LAST WEEK, WE DETERMINED -- WE ARE -- WE DECIDED JUST TO KEEP SALES AND USE TAX FLAT WITH THE 2020 BUDGET.AND THEN WE ARE SEEING DECREASES IN INTEREST INCOME CAN INCOME, AGAIN TIED TO THE ECONOMY AND THE COVID IMPACT.
THE BUS FARES WE ALREADY TALKED ABOUT, AND THEN THE HOTEL TAX, WE'RE SEEING ABOUT A $1.5 MILLION DROP-OFF IN THAT COMPARED TO THE 2020 BUDGET.
I'M NOT GOING TO SPEND A LOT OF TIME RIGHT NOW ON TAXABLE PROPERTY VALUES BECAUSE AGAIN WE DON'T HAVE CERTIFIED ROLLS, SO ALL YOU'RE SEEING IN HERE IS WHAT IS BASED OFF OF THE PRELIMINARY TAX ROLL, AND AS I MENTIONED, WE'RE PRETTY MUCH STAYING FLAT WITH REVENUE.
WE HAVE IN THE PRELIMINARY ROLL WE SAW ABOUT A $300 MILLION INCREASE IN TAXABLE VALUE.
AND, OF COURSE, DOWN AT THE BOTTOM I HAVE QUESTION MARKS BECAUSE UNTIL WE GET THE DATA, WE WON'T KNOW WHAT PART OF THE INCREASE IS DUE TO REVALUATION AND WHAT PART IS DUE TO REAL PROPERTY.
THIS IS JUST A HISTORICAL LOOK OF WHERE WE ARE WITH THE TAX RATE GOING ALL WITH A BACK TO COMMUNITY ASSOCIATION DAYS BEFORE WE TRANSITIONED INTO WHAT WE ARE NOW AS THE WOODLANDS TOWNSHIP.
THAT RATE WAS AT 42 CENTS AND YOUR TAX RETURN, AND THEN YOU CAN SEE AS WE -- EVER SINCE THE INITIAL PART OF TOWNSHIP IN 2010, THE INITIAL RATE WAS 32.8 CENTS, AND IT HAS STEADILY DECLINED OVER THE YEARS TO OUR CURRENT RATE OF 22.40.
THIS IS A LOOK JUST BACK OVER THE LAST FIVE YEARS WHERE WE HAVE BEEN COMPARE TO THE EFFECTIVE TAX RATE.
SO IN ALL YEARS EXCEPT FOR 2017 WE HAVE BEEN EITHER RIGHT AT OR IN THE CASE OF FISCAL YEAR 2018, A LITTLE BIT BELOW THE EFFECTIVE TAX RATE.
I'VE CIRCLED THE THAN THE 217.
THAT WAS THE YEAR THAT WE WERE HIGHER BY A PENNY THAN THE EFFECTIVE TAX RATE, AND IF YOU WILL RECALL THAT WAS THE YEAR THAT WE WERE EXPERIENCING SORT OF THE SAME THINGS THAT WE ARE NOW, NOT DUE TO THE PANDEMIC BUT DUE TO ECONOMIC SLUMP IN OUR SALES TAX REVENUES JUST WERE NOT WHERE THEY HAD BEEN, AND SO IN THAT YEAR THE BOARD DID CHOOSE TO MAINTAIN THE CURRENT TAX RATE INSTEAD OF LOWER TO THE EFFECTIVE RATE.
AND I'M NOT GOING TO SPEND A WHOLE BUNCH OF TIME ON HERE.
PROPERTY TAX REVENUES ARE FLAT RIGHT NOW, AND WE WILL HAVE MORE DISCUSSION ON PROPERTY TAX REVENUES ONCE WE GET THE INFORMATION FROM THE TAX ASSESSOR'S OFFICE.
I'M GOING TO MOVE TO SALES TAX.
WE HAVE A 2% SALES TAX IN THE TOWNSHIP.
WE HAVE WHAT WE CALL THE BASE 1%, AND THEN 1% THAT IS GENERATED BY ECONOMIC DEVELOPMENT ZONE.
THE BASE 1% IS USED TO FUND THE GENERAL FUND, SO THAT'S ABOUT $27.5 MILLION, AND THEN IN TERMS PROJECTS 2 AND 3, THAT RELATE TO THE OUTSIDE PORTIONS OF THE MALL AND MARKET STREET, SO THE TAX -- THE 1% EDZ TAX IS RETURNED TO THE DEVELOPERS THOSE PROJECTS OR THE PUBLIC AREAS, AND THEN THE REST OF IT IS DEDICATED TO PUBLIC SAFETY.
IN TERMS OF OUR SALES TAX REVENUES, WE ARE SEEING THE IMPACT OF THE COVID PANDEMIC HERE IN THE 2020 FORECAST, AND YOU SEE THAT REFLECTED THERE.
WE HAVE PROJECTED ABOUT A 13 -- ABOUT A 12% LOSS FROM WHAT WE ORIGINALLY BUDGETED BASED ON WHAT WE'RE SEEING NOW.
AND THEN AS I MENTIONED EARLIER FOR THE 2021 BUDGET WE'VE GONE BACK UP TO 2020 BUDGET LEVEL.
THIS IS A LOOK BACK AT OUR HISTORICAL SALES AND USE TAX GROWTH RATE.
SO YOU CAN SEE BACK IN THE EARLY PART OF THIS CHART, IN 2012, 2013, 2014, WE HAD HUGE ANNUAL INCREASES IN OUR SALES TAX.
AND IF YOU WILL RECALL, THAT WAS DURING THE TIME OF THE DEVELOPMENT, THE TOUCHDOWN CENTER HAD A LOT OF CONSTRUCTION, A LOT OF DEVELOPMENT GOING ON.
WE HAD THE BEGINNINGS OF PIEWS LANDING, CREEKSIDE PARK, THE VILLAGE OF CREEKSIDE PARK WAS UNDER DEVELOPMENT SO THERE WAS A LOT OF CONSTRUCTION AND GROWTH IN THE TOWNSHIP AT THAT TIME, AND WE BENEFITED FROM THE SALES TAX GROWTH.
AS THINGS HAVE MORE NORMALIZED, WE ARE SEEING MOST RECENTLY, WE ARE SEEING ANYTHING BETWEEN 2 AND 3 PERCENT IN ANNUAL SALES TAX GROWTH.
SO GOING FORWARD, MAYBE THAT IS WHERE -- MAYBE THAT'S WHERE WE END UP ON AN ANNUAL BASIS.
[00:25:02]
THERE, BUT THEN WE CAME BACK THE VERY NEXT YEAR, AND AS I MENTIONED, WE HAVE FORECASTED ABOUT A 13.5% DECREASE THAT ARE PROJECTING THAT WE WILL COME BACK STRONG IN 2021.ONE OF THE REASONS THAT WE BELIEVE WE CAN COME BACK STRONG IN 2021 IS IF YOU LOOK AT THIS, THIS IS OUR SALES AND USE TAX BY BUSINESS SECTOR, SO MOST PEOPLE, WHEN THEY THINK OF SALES TAX, THEY KNOW ABOUT THE RETAIL TRADE AND THE FOOD SERVICES, BUT WE HAVE A LOT OF OTHER CATEGORIES IN OURS, AND THAT IS ONE OF THE THINGS THAT I MENTIONED EARLIER, THAT THE CREDIT AGENCIES ALWAYS MENTION IN TERMS OF OUR DIVERSE TAX BASE.
SO EVEN THOUGH WE ARE SEEING A DECLINE IN RETAIL TRADE, IT'S ONLY AT 3% AT THIS POINT.
IT'S ONLY DOWN ABOUT $439,000, AND THAT IS -- THAT IS NOT A BAD PLACE TO BE COMPARED TO WHERE SOME OTHERS ARE.
WE HAVE SEEN A BIGGER HIT IN OUR FOOD SERVICES AT ABOUT 19%.
BUT THE OTHER, THE NEXT FOUR CATEGORIES, WHICH ARE THE OTHER HIGH-END, MAKE UP ABOUT 30% OF OUR SALES TAX BASE.
WE'RE SEEING POSITIVE GROWTH IN EACH OF THOSE, SO INFORMATION, MANUFACTURING, PROFESSIONAL SERVICES, WHOLESALE TRADE.
SO THAT'S ALSO HELPED KEEPING US IN A PRETTY DECENT PLACE AND THE REASON WHY WE THINK WE'LL BE ABLE TO BOUNCE BACK ONCE CONDITIONS IMPROVE.
AND THEN DOWN AT THE BOTTOM I HIGHLIGHTED THE OIL AND GAS.
THAT IS -- SOME OF THAT IS DUE TO THE PANDEMIC, BUT A LOT OF THAT IS WHAT WE EXPECTED BECAUSE THAT HEADQUARTERS MOVING OUT OF OUR JURISDICTION AND THEREFORE WE NO LONGER GET THE SALES TAX WITH THAT.
LOOKING AT HOTEL TAX REVENUES, AGAIN WE ARE GOING TO SEE AN IMPACT HERE FROM THE PANDEMIC.
YOU CAN SEE THE DROP IN THE 2020 FORECAST.
WE ARE PROJECTING ABOUT A 40% DECREASE FROM THE 2020 BUDGET.
AND THEN FOR 2021 WE DID BUDGET TO COME BACK AND BE WITHIN ABOUT 15% OF THE ORIGINAL 2020 BUDGET.
THIS IS A LOOK AT HOW OUR HOTEL TAX IS ALLOCATED.
SO THE MAJORITY OF IT GOES TO PAY DEBT SERVICE ON OUR REVENUE BONDS AT ABOUT $2.8 MILLION.
VISIT THE WOODLANDS GETS AN ALLOCATION OF HOTEL TAX OF ABOUT $2.5 MILLION.
AND THEN THE REMAINDER, WE HAVE A SMALL PORTION THAT'S USED TO FUND PHASE 3 OF THE TROLLIES, BUT THE REMAINED GOES TO A TAX RESERVE, A HOTEL TAX RESERVE AT ABOUT $2.7 MILLION IF OUR ASSUMPTIONS HOLD UP FOR 2021.
AND SO WHAT THIS REALLY TELLS US, THE REASON THIS IS IMPORTANT IS BECAUSE IF FOR SOME REASON THE HOTEL TAX PROJECTIONS ARE NOT AS HIGH AS WE ORIGINALLY ANTICIPATED, WE HAVE $2.7 MILLION CUSHION, IF YOU WILL, AND STILL BE ABLE TO FUND DEBT SERVICE IN VISIT THE WOODLANDS.
IF THERE ARE NO QUESTIONS ON REVENUES, I'M GOING TO MOVE INTO EXPENDITURES.
>> MONIQUE, ON THE WHOLESALE TAX, I KNOW THAT DIRECTOR RICER AND I HAD A CONVERSATION WITH THE HOTEL INDUSTRY LAST WEEK.
THEY'RE NOT AS BULLISH ON 2021 AS PERHAPS WE ARE RIGHT NOW.
1 ADJUSTMENTS ON OUR PROJECTED HOTEL TAX, GIVEN THEIR FEEDBACK.
I DON'T KNOW IF THE CHAIRMAN OF VISIT THE WOODLANDS RIESE WANTS TO CHIME IN ON THAT.
>> I WANT TO THINK ABOUT IT, GORDY.
AS MONIQUE HAS RIGHTLY STATED, THERE IS A FAIRLY LARGE CUSHION IN THAT NUMBER ALREADY, SO I DON'T THINK WE GET HURT ONE WAY OR THE OTHER.
>> MY CONCERN IS AS THOSE EXTRA FUNDS GO INTO DIFFERENT RESERVES, IT CAN PAINT A PICTURE THAT THERE'S EXTRA FUND CAN AVAILABLE FOR OTHER ITEMS THAT MAY NOT MATERIALIZE, AND I JUST WANT TO MAKE SURE THAT IF WE DIDN'T HAVE THAT, WHAT'S THE OFFSET? IS IT DEBT SERVICE OR FUTURE DEBT SERVICE OR PROJECTED CONSTRUCTION OF THE PERFORMING ARTS THEATER? IS THAT WHERE IT'S ALL GOING NOW?
THAT RESERVE IS DEDICATED TO FUTURE DEBT SERVICE ON THE PERFORMING ARTS FACILITY.
SO IT DOESN'T IMPACT ANYTHING ELSE.
>> NO, GORDY, I MEAN, IF WE WANT TO MAKE AN ADJUSTMENT DOWN, I MEAN, IN THE END IT'S NOT AS IF IT'S UNALLOCATED AT THIS POINT.
IT'S ACTUALLY BEEN PLEDGED TO FUTURE DEBT SERVICE.
AND I JUST WANT TO REMIND THE BOARD THAT WE'RE ALSO DOING SOME PRELIMINARY WORK
[00:30:02]
ON THE FEASIBILITY OF EXPANDING THE CONVENTION CENTER.SO I MEAN, I JUST -- I THINK WE ALL UNDERSTAND THAT THAT'S WHERE 19 THAT MONEY NEEDS TO STAY, AND IT'S NOT KIND OF A WE CAN JUST PICK UP A COUPLE MILLION DOLLARS AND START USING IT TO FUND OPERATIONAL PRIORITIES.
>> IF YOU WANT TO REDUCE -- WE'LL TALK ABOUT THIS NEXT WEEK.
I AM NOT OPPOSED TO LOWERING THE TARGET ON THE HOTEL TAX REVENUES AS LONG AS THE -- I JUST WANT TO MAKE SURE THAT WHATEVER TARGET WE SET COVERS OUR DEBT SERVICE AND OUR OBLIGATION TO -- ON THE WAY IT'S ALL LAID OUT HERE.
SALES TAX OBVIOUSLY WOULD HAVE A DIRECT IMPACT ON OPERATIONAL EXPENSES, AND RIGHT NOW, IF WE GO BACK TO THE SALES TAX REVENUE, IT'S -- AND I UNDERSTAND WHY SOME OF THE CATEGORIES ARE DOING WELL.
DID WE GET JULY'S TAX REPORT YET THAT WOULD HAVE REFLECTED MAY OR JUNE? I GUESS WE GOT MAY.
>> WE GOT THE JULY REPORT BACK AROUND THE MIL OF THE MONTH, AND THAT'S I -- MIDDLE OF THE MONTH, AND THAT'S WHAT I SHARED LAST WEEK, SO IT WAS ANOTHER -- IT WAS DOWN 23% FOR THE MONTH.
THE PREVIOUS MONTH IT WAS DOWN 26%.
>> AND SO JULY IS GOING TO REFER BACK TO MAY ACTIVITY.
AND THE CHALLENGE WE HAVE IS THE NEXT REPORT WE HAVE WILL BE FOR JUNE ACTIVITY, AND THAT WILL PROBABLY LOOK BETTER THAN WHAT JULY IS GOING TO MATERIALIZE AT BECAUSE IN JUNE WE DIDN'T HAVE THE SPIKE THAT SENT EVERYBODY BACK HOME AND KIND OF PUT THEIR WALLETS UP.
AND WE WON'T USUALLY -- THOSE COME OUT ANYWHERE BETWEEN THE 10TH AND THE 12TH OF THE MONTH, SO IT WILL BE AFTER THE BUDGET WORKSHOP MEETINGS BUT BEFORE THE BOARD MEETINGS WHERE THE BOARD ADOPTS THE BUDGET AND THE TAX RATE.
>> WHICH KIND OF BRINGS US BACK TO THE CHAIRMAN'S ORIGINAL POINT, IS DO WE WANT TO LOWER THE FORECAST ON THE HOTEL TAX REVENUES, AND I THINK THAT'S -- THAT SHOULD BE A FAIRLY LIVELY DISCUSSION NEXT WEEK.
>> WE DON'T HAVE EMPIRICAL EVIDENCE, ENOUGH TO BE CONFIDENT IN THE NUMBERS.
WE CAN TALK ABOUT THE RECOMMENDED ADJUSTMENTS.
I JUST THINK THE SALES TAX IS GOING TO BE -- WE HAD A GDP REPORT COME OUT TODAY SHOWING A 33% DROP IN DOMESTIC GDP FOR THE WHOLE COUNTRY, WORSE THAN '08, WORSE THAN ANYTHING IN OUR LIFETIMES, AND UNLESS WE HAVE A CLEAR PATH TO REOPENING IN FULL, WE'RE IN THIS RESTRICTED CAPACITY MODE RIGHT NOW, AND I DON'T KNOW THAT WE'RE GOING TO BE ABLE TO ACHIEVE A QUICK RAMP-UP THE LONGER THAT THESE RESTRICTIONS STAY IN PLACE.
WE'RE GOING TO STILL HAVE A RESTRICTED ECONOMY.
>> JUST ESSENTIALLY, GORDY, WE'VE TAN A VERY CONSERVATIVE LOOK.
WE CAN ALWAYS GET MORE CONSERVATIVE.
>> I'LL LEAVE IT FOR NEXT WEEK.
>> MONIQUE, I HAVE ONE QUESTION, IF I MAY.
2 DIALOGUE THAT WE HAVE HAD PREVIOUSLY THAT VISIT THE WOODLANDS HAD READJUSTED THEIR BUDGET NOT ONLY FOR THE REMAINING 2020 BUT ALSO FOR 2021.
THEY HAVE ADJUSTED IT SIGNIFICANTLY FOR THIS YEAR TO STAY WITHIN THE RESTRICTED REVENUES THAT WE'RE EXPECTING AND THE SAME THING FOR NEXT YEAR.
THEY DID NOT GO BACK UP TO THEIR PREVIOUS 2020 BUDGET.
IT IS STILL -- IT IS STILL -- I CANTS REMEMBER THE EXACT AMOUNT.
>> OUR PRIOR YEAR BUDGET WAS OVER $3 MILLION SO THIS IS HALF A MILLION OR MORE BELOW PRIOR YEARS BUDGETS.
>> THIS YEAR'S BUDGET IS NEARLY $1 MILLION LESS THAN WHAT WAS ORIGINALLY BUDGETED, AND NEXT YEAR'S IS ABOUT $800,000 LESS THAN THIS YEAR'S BUDGET.
[00:35:02]
SO WITH THAT I'M GOING TO MOVE INTO THE EXPENDITURES.
SO I MENTIONED EARLIER THE CONSOLIDATED BUDGET FOR EXPENDITURES FOR 2021 IS $127 MILLION, AND THAT REPRESENTS ABOUT A $6.7 MILLION OR 5% DECREASE FROM THE 2020 BUDGET.
AND THIS IS A LOOK AT THE DIFFERENT COMPONENTS IN OUR EXPENDITURE BUDGET.
SO STARTING AT THE TOP, THE THREE AREAS WHERE WE ARE SEEING INCREASES IN OUR BUDGET ARE IN THE SOLID WASTE CONTRACT, LAW ENFORCEMENT, AND FIRE DEPARTMENT.
2 NEXT WEEK, BUT BASICALLY THE SOLID WASTE CONTRACT, THERE'S A 3.5% ESCALATOR IN THE CONTRACT.
THAT'S WHAT'S GENERATING THAT INCREASE.
AND LAW ENFORCEMENT AND FIRE DEPARTMENT INCREASES ARE PRIMARILY RELATED TO PERSONNEL COSTS.
IN ALL OTHER AREAS OF THE BUDGET, WE HAVE PROJECTED DECREASES FROM THE 2020 BUDGET.
SO SEEING THERE GENERAL GOVERNMENT, PARKS AND RECREATION, TRANSPORTATION, OUR DEBT SERVICE, THE BOARD REFINANCED TWO OF OUR OUTSTANDING DEBT OBLIGATIONS LAST YEAR, AND THAT RESULTED IN A $500,000 DECREASE IN DEBT SERVICE.
WE WERE JUST TALKING ABOUT VISIT THE WOODLANDS.
WE ARE SEEING ABOUT A $600,000 DECREASE FOR ALL THEIR.
AND THEN THE LARGEST DECREASE IS IN OUR CAPITAL PROJECTS OF ABOUT $5.7 MILLION.
THE EXPENDITURES BY DEPARTMENT.
SO CONSISTENT WITH PREVIOUS YEARS, OUR FIRE DEPARTMENT IS OUR LARGEST COMPONENT OF OUR BUDGET FOLLOWED BY PARKS AND RECREATION.
COMMUNITY SERVICES INCLUDES OUR MAJOR CONTRACTS FOR SOLID WASTE AND STREET LIGHTING AND STREETSCAPE SERVICES AND ALSO INCLUDED IN THERE IS COVENANT ADMINISTRATION AND ENVIRONMENTAL SERVICES AND THEN LAW ENFORCEMENT.
SO THOSE FOUR CATEGORIES HIGHLIGHTED IN THE BLUE THERE MAKE UP ABOUT 70%, ABOUT 65% OF OUR BUDGET.
AND THEN WHEN WE LOOK AT EXPENDITURES BY TYPE, AGAIN 23 CONSISTENT WITH PREVIOUS YEARS AND BECAUSE OF THE TYPE OF SERVICE ORGANIZATION WE ARE, CONTRACTED SERVICES AND PERSONNEL COSTS MAKE -- BY FAR MAKE UP THE LARGEST PORTION OF OUR BUDGET.
AND SO AGAIN I'M NOT -- TONIGHT DID I NOT PLAN TO GO INTO A BUNCH OF DETAIL ON EXPENDITURES.
I WAS JUST LAYING OUT WHAT YOU CAN EXPECT TO SEE, BUT NEXT WEEK WE WILL GET INTO A LITTLE BIT MORE DETAIL.
AND, OF COURSE, THE BUDGET TASK FORCE DID SPEND A LOT OF TIME GOING THROUGH THE DETAIL OF EACH OF THE DEPARTMENT'S EXPENDITURES.
SORT OF SETTING THE STAGE HERE FOR CAPITAL PROJECTS.
TONIGHT I'M NOT GOING TO GO INTO ALL OF THE DETAIL ON THE CAPITAL PROJECTS.
BUT THE IMPORTANT THING TO TAKE AWAY FROM OUR CAPITAL PROJECTS BUDGET FOR 2021 IS THAT EVEN THOUGH WE ARE OUTLINING $8.8 MILLION IN CAPITAL, ONLY 400,000 OF THAT THAT IS FUNDED WITH CURRENT YEAR TAX DOLLARS OUT OF THE GENERAL FUND.
ALL OF THE REST OF IT IS BEING FUNDED OUT OF THE CAPITAL RESERVE, INCLUDING SOME OF THE CARRYOVERS FROM PREVIOUS YEARS OR FROM LAST YEAR.
SO TAKING A LOOK AT OUR DEBT POSITION, RIGHT NOW WE HAVE OUTSTANDING BONDS OF $45 MILLION AND THE ANNUAL DEBT SERVICE ON THOSE BONDS IS $6 MILLION.
THE FIRST ONE LISTED THERE FOR THE CONVENTION CENTER, THAT IS A REVENUE BOND AND IS PAID, THE DEBT SERVICE ON THAT IS FUNDED FROM OUR HOTEL TAX, AND THEN OUR UNLIMITED TAX BONDS ARE FUNDED FROM THE DEBT SERVICE PORTION ON 24 OUR PROPERTY TAX RATE.
WE HAVE SEEN A SIGNIFICANT REDUCTION IN DEBT STARTING AT 2013.
WE HAVE GONE DOWN FROM ABOUT 60% OR $67.5 MILLION.
AND THIS IS A LITTLE BIT MORE DETAIL ON OUR OUTSTANDING BONDS, AND WHAT'S HIGHLIGHTED IN YELLOW WILL BE A DISCUSSION FOR NEXT WEEK, BUT WE DO HAVE TWO BOND ISSUANCES THAT ARE CURRENTLY PAID FOR WITH TAX THAT ARE CALLABLE IN 2021, AND THE AMOUNTS IN YELLOW ON THE FAR RIGHT, WHAT WOULD -- THE AMOUNT THAT IT WOULD TAKE TO FULLY DEFEE THOSE FUNDS.
[00:40:01]
CURRENTLY THE TOWNSHIP HAS ABOUT $1.8 MILLION IN ITS BOND REDEMPTION FUND, SO THAT WOULD NOT BE SUFFICIENT TO PAY OFF EITHER ONE OF THOSE, SO IF PAYING THOSE OFF IS A PRIORITY OF THE BOARD, THEN WE WILL HAVE TO IDENTIFY ADDITIONAL FUNDING OR TRANSFER FROM ANOTHER RESERVE IN ORDER TO DO THAT.ANOTHER OPTION, AND I'M WORKING WITH OUR FINANCIAL ADVISER ON THAT RIGHT NOW, IS WE MAY HAVE AN OPPORTUNITY TO REFINANCE THESE AS OPPOSED TO PAY THEM OFF, AND I'LL BE ABLE TO GIVE YOU THAT DATA NEXT WEEK.
SO NOW WE'RE GOING TO MOVE INTO OUR RESERVES AND FUND BALANCES, AND SO WE HAVE TALKED ABOUT REVENUES, AND THEN WE'VE TALKED ABOUT THE EXPENDITURES, THE CAPITAL AND THE DEBT SERVICE.
AND AFTER WE ACCOUNT FOR ALL OF THOSE THINGS, WHAT WE END UP -- WHAT WE GET DOWN TO ARE OUR FUND BALANCES AND OUR RESERVE BALANCES.
I'M NOT GOING TO GO THROUGH ALL OF THESE, AND AGAIN WE'LL SPEND MORE TIME NEXT WEEK TALKING ABOUT THEM, BUT THIS IS A LIS THEM.
YOU CAN SEE FOR 2020 WE HAVE A TOTAL ENDING FUND BALANCE OF ABOUT $95 MILLION, AND THEN THAT INCREASES IN THE 2021 BUDGET ABOUT $2 MILLION TO $97 MILLION.
AND THOSE ITEMS HIGHLIGHTED IN YELLOW IN EACH OF THE COLUMNS ARE THE AMOUNTS THAT ARE UNDESIGNATED AT THIS POINT.
SO THEY HAVE NOT BEEN ALLOCATED TO ANY FUNDS AND WOULD BE A FUNDING SOURCE TO FUND BUDGET INITIATIVES NEXT WEEK OR TO JUST SAVE AND RETAIN THOSE FOR FUTURE USE.
THERE ARE A COUPLE THAT I WANTED TO HIGHLIGHT AND TALK ABOUT, SO OUR CAPITAL REPLACEMENT RESERVE CURRENTLY WILL HAVE A BALANCE THE END OF THIS YEAR OF ABOUT $31 MILLION.
OUR ANNUAL FUNDING ALLOCATION TO THAT RESERVE IS ABOUT $5.3 MILLION.
ADDITIONALLY, WE ARE MAKING AN $800,000 ALLOCATION FOR LAW ENFORCEMENT VEHICLES.
THIS WOULD BE THE REPLACEMENT COST FOR ABOUT 15 VEHICLES.
YOU CAN SEE THERE THAT WE HAVE ABOUT $5 MILLION IN PROJECTED EXPENDITURES.
AND SO WE WOULD HAVE AN ENDING FUND BALANCE IN 2021 OF $33 MILLION.
THE REASON THAT I WANTED TO GO OVER THIS IS WE TALKED ABOUT THIS WITH THE BUDGET TASK FORCE, BUT THIS IS A KEY COMPONENT OF THE FLEXIBILITY THAT WE HAVE BUILT INTO OUR BUDGET, SO WE WENT AHEAD AND FUNDED THE $5.3 MILLION OUT OF TAX REVENUE, BUT KNOW THAT WOULD MAKE A GREAT FUNDING SOURCE FOR US IF LIKE SOME OF THE DISCUSSION TONIGHT, IF OUR PROJECTIONS ON SALES TAX REVENUES DID NOT COME TO FRUITION, THIS WOULD BE A SOURC COULD USE IN ORDER TO FUND ON A TEMPORARY BASIS UNTIL ECONOMIC CONDITIONS IMPROVED.
SO WANTED TO POINT THIS OUT SPECIFICALLY, THAT WE COULD USE THESE SIMPLY BY DEFERRING CAPITAL, THAT WE WOULD NORM FUND OUT OF HERE, WOULD MAKE THESE FUNDS AVAILABLE, SO THAT WILL BE AN IMPORTANT DISCUSSION AS WE GO FORWARD NEXT WEEK, BUT THIS IS ONE OF THE BIG SOURCES OF THE FLEXIBILITY THAT WE HAVE BUILT INTO THIS BUDGET.
USING OUR DISCRETIONARY REVERSED FOR BUDGET FLEXIBILITY IS ANOTHER KEY POINT OF THE BUDGET.
SO IN ADDITION TO THE CAPITAL REPLACEMENT RESERVE, WE DO HAVE THESE BALANCES AVAILABLE.
I SAY THEY'RE DISCRETIONARY BECAUSE THEY ARE NOT TIED TO ANY SPECIFIC STATUTORY REQUIREMENT OR BOND REQUIREMENT OR ANY TYPE OF AGREEMENT THAT WE HAVE.
SO IT'S NOT THAT WE WANT TO USE THESE.
WE WOULD LIKE TO BE ABLE TO MAINTAIN THESE.
BUT THE FACT IS THAT WE DO HAVE $48 MILLION THAT COULD BE USED FOR FLEXIBILITY IF THE FUNDING -- IF OUR SALES TAX AND OTHER REVENUE PROJECTIONS DO NOT COME TO FRUITION.
TALKED A LITTLE WHILE AGO THE ITEMS THAT WERE HIGHLIGHTED IN YELLOW IN TERMS OF OUR UNDESIGNATED BALANCES.
THESE NUMBERS AGAIN, THEY'RE BASED ON OUR PROJECTIONS FOR 2020 AND 2021.
SO THEY'RE SHORT OF -- LET'S SEE -- SWISHY NUMBERS, I WOULD CALL THEM BECAUSE IT'S NOT LIKE THIS IS MONEY IN THE BANK RIGHT NOW.
THIS IS THE WHAT WOULD BE IN THE BANK IF OUR PROJECTIONS ARE 27 ACCURATE.
TO THE EXTENT THAT WE DON'T MEET THE REVENUE COMES IN LESS, THEN WE ARE PROJECTING THAT THESE NUMBERS WOULD GO DOWN.
BUT BASED ON OUR CURRENT ASSUMPTIONS FOR 2020, WE FEEL LIKE WE WOULD HAVE
[00:45:04]
ABOUT $2.2 MILLION IN UNDESIGNATED FUNDS, AND THIS WOULD BE FUNDS THAT COULD BE USED FOR ONE-TIME EXPENSES SUCH AS CAPITAL PROJECTS OR ALLOCATIONS TO OTHER RESERVES.WE COULD SET ASIDE A PORTION OF THIS MONEY FOR COVID-RELATED EXPENSES OR WE CAN RETAIN IT FOR FUTURE USE.
AND THEN IN TERMS OF THE 2021 UNDESIGNATED FUND BALANCE, WHAT WE ARE CURRENTLY PROJECTING IS ABOUT $640,000.
BUT I DID WANT TO POINT OUT THAT USUALLY IN THE CURRENT YEAR BUDGET WE SAY THAT THESE FUNDS ARE AVAILABLE TO FUND LIKE ONGOING EXPENSES OR ONGOING BUDGET INITIATIVES.
BUT THIS YEAR IT'S DIFFERENT BECAUSE WHAT WE -- THE MAJORITY OF THIS, AS YOU CAN SEE, ABOUT $570,000, OUT OF IT IS COMING -- IS BEING GENERATED BECAUSE WE ARE USING TRANSPORTATION CARES ACT FUNDING.
SO THAT'S NOT AN ONGOING REVENUE SOURCE.
WE WILL USE THAT CARES ACT FUNDING UP WITHIN THREE YEARS AND THEN WE WILL HAVE TO REVERT BACK TO HAVING TO PAY FOR TROLLEY OPERATIONS AND SOME OF OUR PARK AND RIDE OPERATIONS OUT OF OUR GENERAL FUND.
SO THIS WOULD BE AGAIN MORE BETTER OF USE FOR ONE-TIME TYPES OF EXPENSES.
>> IT WOULD BE FAIR TO SAY THAT FUNDING AND THE CLAWBACK OF OUR TAX ABATEMENT, WE'D BE RUNNING A FUND DEFICIT THIS YEAR.
>> YES, SIR, THAT IS AN ACCURATE STATEMENT.
SO WITH THAT I'M GOING TO GO INTO OUR FIVE-YEAR PLAN BECAUSE, AS THE BOARD ALWAYS DOES, WHILE WE CONCENTRATE ON THE 2021 BUDGET AND THAT IS WHAT IS GOING TO BE ADOPTED, WE DON'T ADOPT A FIVE-YEAR PLAN BUT WE ALWAYS PREPARE A FIVE-YEAR PLAN TO LOOK AT, IN CONJUNCTION WITH IT TO MAKE SURE THAT THE DECISIONS THAT THE BOARD IS MAKING FOR THE CURRENT YEAR, WHAT TYPES OF IMPACTS THAT IS HAVING ON FUTURE YEARS.
SO THIS IS A LOOK AT THE ASSUMPTIONS THAT WHY USED TO BUILD THE FIVE-YEAR PLAN.
IN TEMPERATURES OF NEW RESIDENTIAL GROWTH, WE ARE JUST ABOUT BUILT OUT.
THERE ARE VERY FEW RESIDENTIAL UNITS LEFT TO BE DEVELOPED.
COMMERCIAL PROPERTY, THERE IS MORE THERE.
I DON'T HAVE THE NUMBERS RIGHT HERE.
I CAN PROVIDE THAT NEXT WEEK, BUT THOSE ARE BUILT INTO OUR FIVE-YEAR PLAN IN TERMS OF SQUARE FOOTAGE AND COST PER SQUARE FOOT AND WHAT WE BELIEVE THAT WE WOULD GENERATE IN ADDITIONAL REVENUE FROM PROPERTY TAXES.
>> I'M A LITTLE CONFUSED BY THE SLIDE.
>> YOU'RE SHOWING SALES TAX GROWTH IN 2021 AS BEING ZERO.
THAT'S ZERO OVER THE BUDGET OF 2020, CORRECT?
2 ACTUALLY LESS THAN THE 2020 BUDGET.
IT'S ACTUALLY A NEGATIVE NUMBER.
THAT'S WHAT THE PARENTHESES IS SUPPOSED TO INDICATE.
SO WE'RE TALKING ABOUT A 15% REDUCTION IN TAX REVENUE.
SO SALES TAX GROWTH WE DO HAVE IN THE FIVE-YEAR PLAN A 2% ANNUAL GROWTH, AND THEN IN HOTEL TAX, AS DIRECTOR RIESER JUST POINTED OUT, IS 15% NEGATIVE GROWTH FOR 2021 BUT THEN STARTING IN 2022 WE HAVE IT BOUNCE CAN BACK IN ORDER TO GET BACK TO 2020 PRE-PANDEMIC LEVELS.
INFLATION IS BUILT INTO OUR FIVE-YEAR PLAN AT 2%.
THE ONE LARGE EXPENSE THAT WE DO HAVE BUILT INTO THE FIVE-YEAR PLAN IS WE KNOW AT THE END OF THE CONTRACT, THAT WE WILL ASSUME ADDITION COSTS FROM THE DEVELOPER RELATED TO THE WATERWAY MAINTENANCE.
WE ARE ESTIMATING THAT TO BE AROUND $300,000.
AND THEN IN TERMS OF THE CAPITAL PROJECTS, JUST SHOWING THERE THE AMOUNT HIGHLIGHTED IN YELLOW IS WE ARE CONTINUING TO FUND ONLY ABOUT $500,000 A YEAR OUT OF GENERAL FUND.
EVERYTHING ELSE IS BEING FUND OUT OF THE RESERVE.
WHEN WE LOOK AT OUR FIVE-YEAR PLAN, WE ALWAYS WANT TO MAKE SURE THAT OUR OPERATING REVENUES ARE OUTPACING THE COST OF OUR OPERATING EXPENSES AND DEBT SERVICE, AND THAT IS THE CASE 30 HERE.
WHAT WE USED THAT GAP BETWEEN THE BLUE LINE AND THE RED LINE FOR IS TO FUND OUR RESERVES.
HERE'S A LOOK AT -- THESE ARE THE FUNDS THAT WE ACTUALLY HAVE ANNUAL FUNDING GOING ON.
WE TALKED ABOUT EARLIER THE CAPITAL REPLACEMENT RESERVE OF HAVING ABOUT A $5.2 MILLION ANNUAL CONTRIBUTION TO THAT.
THE REASON THAT IT GOES DOWN AND FOURTH IN THE FIVE-YEAR PLAN IS BECAUSE SOME OF THOSE YEARS WE HAVE THE RESERVE STUDY HAS EXPENSES THAT SUCCEED THE ANNUAL
[00:50:02]
CONTRIBUTION.BETTER THEN YOU SEE BACK THERE IN 2025 BOUNCES BACK UP.
SO THAT'S TRUE WHEN YOU LOOK AT THE 30 YEAR RESERVE STUDY.
SOME YEARS GOING TO GO UP AND SOME YEARS ARE GOING TO GO DOWN.
AND THEN OUR OPERATING RESERVE, WE HAVE ABOUT A $500,000 ANNUAL CONTRIBUTION TO THAT IN ORDER TO MAINTAIN A RESERVE BALANCE EQUAL TO 20% OF GENERAL FUND OPERATING EXPENDITURES.
>> MONIQUE, I HAVE A QUESTION, IF I MAY.
ON THE FIVE-YEAR PLAN, IS REDEVELOPMENT CONSIDERED FOR NEW RESIDENTIAL PROPERTY?
>> NO, WE DID NOT HAVE THAT BUILT IN SPECIFICALLY.
ALL WE HAVE IN TERMS OF REVALUATION OF PROPERTY TAX REVENUE IS A 1% ANNUAL INCREASE.
SO TO THE EXTENT THAT WE HAVE SIGNIFICANT REDEVELOPMENT, THEN REVALUATION MAY BE HIGHER THAN THAT, BUT WE DON'T TYPICALLY BUILD A LOT OF THAT INTO OUR FIVE-YEAR PLAN PROPERTY TAX REVENUES BECAUSE THERE HAS BEEN A TENDENCY TO TRY TO GET CLOSE TO THE EFFECTIVE TAX RATE, AND SO WE DON'T WANT TO RELY ON BALANCE THE BUDGET.
WE TALKED ABOUT THIS A LITTLE BIT EARLIER.
THIS IS THE HOTEL OCCUPANCY TAX RESERVE, SO TO THE EXTENT THAT WE LORE GROWTH PROJECTIONS, THEN SOME OF THIS WILL BE LOWERED.
RIGHT NOW THAT FUND IS GROWING BECAUSE WE HAVE NOT -- EVEN THOUGH WE HAVE ISOLATED FOR POTENTIAL DEBT SERVICE PURPOSES, WE ARE NOT ACTUALLY USING THAT AS AN EXPENSE OBVIOUSLY BECAUSE WE DON'T -- WE HAVEN'T ISSUED DEBT.
BUT WHAT THIS IS SHOWING IS AN ANNUAL GROWTH OF AROUND $3 MILLION GROWING TO ABOUT $3.7 MILLION.
IN THE OUTER YEARS THAT COULD BE USED FOR DEBT SERVICE PAYMENTS.
I THINK LAST YEAR WHEN WE LOOKED AT THIS, ABOUT A $3 MILLION IN DEBT SERVICE WOULD FUND ABOUT $35 MILLION CONTRIBUTION TOWARDS THE PERFORMING ARTS FACILITY.
AND SO WHEN WE TAKE AGAIN -- >> OR, MONIQUE, IF WE DECIDE TO DO SO, AN EXPANSION OF THE CONVENTION CENTER.
>> IN TOTAL I'M NOT GOING TO GO OVER THE DIFFERENT RESERVES BUT IN TOTAL WHAT THIS SHOWS IS THAT WE ARE MAINTAINING OUR RESERVE AND FUND BALANCES THROUGHOUT THE FIVE-YEAR PLAN.
WHAT THIS SHOWS IS, AGAIN, THIS IS SORT OF THE SLIDE THAT THE BOARD ALWAYS, WHEN WE GET TO THE END OF EVERYTHING, THIS IS WHAT IS REMAINING AFTER EVERY OTHER REVENUE AND EXPENSE IS ACCOUNTED FOR.
SO FOR 2020 AND 2021 WE'VE ALREADY TALKED ABOUT THOSE NUMBERS, THAT BASED ON PROJECTIONS, WE COULD HAVE ABOUT $2.2 MILLION IN 2020 AND ABOUT $640 MILLION IN 2021.
WE STILL HAVE A BALANCED BUDGET IN '22 AND '23.
IT'S NOT UNTIL WE GET TO YEARS 2024 AND 2025 IN THE FIVE-YEAR PLAN THAT WE GO NEGATIVE IN TERMS OF A FUND BALANCE.
BUT WHEN WE'RE LOOKING FOR FIVE YEARS OUT AND WITH FAIRLY CONSERVATIVE BUDGET ASSUMPTIONS, THAT IS NOT AN UNCOMFORTABLE PLACE TO BE.
WE'VE ACTUALLY BEEN A LOT MORE NEGATIVE IN THE OUT YEARS THAN THAT IN RECENT PAST.
>> MONIQUE, ON THIS SLIDE, IF YOU WERE TO TAKE OUT THE UNKNOWN CARES ACT FUNDING RECEIVED FROM THE FTA, ALSO THE TAX ABATEMENT RECAPTURE AND THEN THE TWO $300,000 CONTRACTS THAT WE SECURED AT THE END OF 2019, ALL THESE NUMBERS WOULD BE NEGATIVE.
>> YES, SIR, THAT IS ABSOLUTELY CORRECT.
>> SO WE ARE SITTING HERE LAST YEAR AT THIS TIME, ALL THESE NUMBERS WOULD HAVE BEEN -- YES, SIR.
I WANT TO SHOW YOU, SPEAKING OF CARES ACT FUNDING, THE LAST TWO YEARS THAT WE'RE SEEING WHERE IT GOES NEGATIVE, WE WOULD BE -- THE REASON THAT WE ARE GOING NEGATIVE IN THOSE YEARS IS PRIMARILY RELATED TO OUR TRANSIT PROGRAMS. SO WHAT WE CAN SEE HERE IS WHEN STARTS EXPIRING, OR NOT EXPIRING, YOU CAN USE IT UNTIL IT'S GONE, BUT WE GO THROUGH IT, AND BY THE TIME
[00:55:04]
WE GET TO YEAR 2024, WE START TO RUN OUT OF WHAT THE $7.2 MILLION THAT'S BEEN ALLOCATED TO US, AND THEREFORE YOU ARE SEEING AN INCREASE IN THE PARK AND RIDE AND IN THE TROLLEYS, SPECIFICALLY IN THE TROLLIES AB AN INCREASE IN WHAT THE GENERAL FUND, WHAT THE TOWNSHIP TAX REVENUE HAS FOUND IN ORDER TO KEEP THOSE PROGRAMS WHOLE.SO THAT'LL BE A DISCUSSION THAT WE HAVE NEXT WEEK.
I MEAN, IN TERMS OF PARK AND RIDE, WE CAN TALK ABOUT BUS FARE INCREASES OR DECREASING ROUTES IN ORDER TO DECREASE EXPENSES, BUT AT SOME POINT IN TIME WE SEE A PRETTY BIG KICK-UP HERE OF WHAT WE ARE GOING TO HAVE TO START CONTRIBUTING TO OUR TRANSIT PROGRAMS, WHICH UP UNTIL THIS POINT WE'VE HAD TO CONTRIBUTE VERY LITTLE.
SO OUT OF WHAT WE SAW HERE ON THE PREVIOUS SLIDE, YOU CAN SEE DOWN THERE AT THE VERY BOTTOM ARE INCREASES FOR THE TRANSIT PROGRAMS INCREASE IN 2024 BY $600,000, AND THEN ANOTHER ALMOST $300,000 IN 2025.
AND THAT'S LARGELY CONTRIBUTING TO WHERE WE GO NEGATIVE IN 2024 AND '25 THERE.
SO WITH THAT, THESE ARE THE LAST TWO SLIDES OF THE PRESENTATION.
BASED ON THE CURRENT ASSUMPTIONS AND WHERE WE ARE NOW, WE HAVE A 2021 BUDGET THAT HAS FLAT REVENUE GROWTH.
WE DID SEE A, OUT OF $6 MILLION DECREASE IN EXPENDITURES, ABOUT 5%.
WE ARE MAINTAINING OUR RESERVE BALANCES, AND WE CONTINUE TO 34 HAVE LOW DEBT BALANCES.
AND SO IN THE END, WHAT WE HAVE RIGHT NOW IS A 2021 BUDGET THAT REFLECTS FINANCIAL STABILITY AND BUDGET FLEXIBILITY TO MANAGE WHAT ARE DEFINITELY UNCERTAIN TIMES RIGHT NOW AS WE GO THROUGH AT THE COVID-19 PANDEMIC, BUT WE'VE ALSO IN THIS BUDGET CONTINUED TO PROVIDE THE HIGH LEVEL SERVICES THAT OUR COMMUNITY EXPECTS.
AND WITH THAT, THAT CONCLUDES MY PRESENTATION.
I'LL BE GLAD TO ANSWER ANY OTHER QUESTIONS.
>> DOES THE BOARD HAVE ANY QUESTIONS FOR MONIQUE? TODAY WAS JUST A GENERAL OVERVIEW.
I KNOW WE DID ASK QUESTIONS AS WE WENT ALONG, BUT I'M SURE SHE WILL ANSWER ANY MORE QUESTIONS THE BOARD HAS.
WHEN YOU SHOWED THE SALES TAX PIE.
WHERE IN THERE, IF ANYWHERE, IS IT DESIGNATING THAT WE HAVE TO PAY THE CITY OF HOUSTON AND THE CITY OF CONROE? FOR OUR RELATIONSHIP WITH THEM TO PREVENT THEM FROM ANNEXING US? I DON'T KNOW IF YOU CAN GO BACK TO THAT.
>> YEAH, IT WAS IN THE -- THERE WAS TWO DIFFERENT PIES.
ONE PIE HAD RPA EXPENSES, AND I THINK THE PIE YOU'RE TALKING ABOUT, DR. SHELLEY, DID NOT, BUT YOU'RE RIGHT, IT SHOULD OBJECT BOTH PIE CHARTS.
>> SO WHAT THIS IS REPRESENTING ARE OUR REVENUES.
SO IT'S NOT -- IT'S NOT SHOWING THE RPA EXPENSE.
BUT WHAT THE RPA EXPENSE IS, IS IT'S 1/16TH OUT OF THE BASE 35 1%.
>> SO MAYBE THAT'S THE WRONG SLIDE, BUT IS THERE ANOTHER ONE THAT SHOWED SALES TAX EXPENSES?
IT IS SAYS "RPA." >> I MISSED IT.
>> THE RPA EXPENSES, IT'S SORT OF THERE IN THE 1:00 POSITION, IS $1.7 MILLION BASED ON OUR REVENUE PROJECTIONS.
ANY OTHER QUESTIONS FOR MONIQUE?
>> NICE JOB, AS ALWAYS, MONIQUE.
>> I DO WANT TO COMPLIMENT MONIQUE ON THE PACKAGE THAT SHE PROVIDE ALL OF US.
IN CASE YOU MISSED IT, THEY INCLUDED THE DISTINGUISHED BUDGET PRESENTATION AWARD THE TOWN RECEIVED FOR LAST YEAR'S BUDGET, AND THAT COMES FROM THE GFOA WHICH JUST SPEAKS TO EXCELLENCE AND WORK PRODUCT THAT THE WHOLE EXECUTIVE TEAM, FINANCE TEAM AND ACTUALLY ALL OF THE STAFF OF THE TOWNSHIP PUT TOGETHER THIS ANNUAL BUDGET PRESENTATION, SO CONGRATULATIONS TO THE BOARD AND HOPEFULLY WE WILL WORK HARD TO GET ANOTHER ONE THIS YEAR BECAUSE IT'S YEAR TO YEAR.
IF WE COULD, WE WOULD GIVE YOU A STANDING OVATION BUT I'M NOT SURE HOW THAT WOULD
[01:00:01]
WORK OUT.THE ONLY ACTION TO TAKE IS TO ACCEPT THE OVERVIEW.
WE HAVE A MOTION TO ACCEPT THE OVERVIEW?
>> WE HAVE A MOTION AND A SECOND.
WE DID NOT HAVE EXECUTIVE SESSION TONIGHT.
AND THAT WILL TAKE US ALL THE WAY TO ITEM 10 WHICH IS CONSIDERING ITEMS FOR NEXT MONTH'S AGENDA MEETING.
[11. Board announcements; and]
>> NO, BUT MR. CHAIRMAN, MAY I JUST SAY SOMETHING FOR OUR NEW DIRECTORS GOING INTO THEIR FIRST BUDGET CYCLE.
I KNOW DR. SHELLEY AND JASON, THIS MIGHT BE VERY BURDENSOME AND OVERWHELMING AT FIRST.
I KNOW I CAN ACTUALLY REMEMBER THE VERY FIRST BUDGET SESSION I WENT INTO.
I WOULD RECOMMEND GOING THROUGH AS MUCH AS POSSIBLE, ASKING MS. MONIQUE, IF YOU HAVE TIME, TO ANSWER QUESTIONS BECAUSE WHEN NEXT WEEK IT'S GOING TO BE SO MUCH -- SO MANY NUMBERS AND SO MANY GRAPHS AND CHARTS, YOU MIGHT FEEL OVERWHELMED, SO IT'S GREAT THAT WE GOT THESE AHEAD OF TIME THIS YEAR.
I SPENT MOST OF THE DAY TODAY DIGESTING MOST OF THIS BINDERS SO GIFTS ME A HEAD START.
BUT I JUST WANTED TO SAY I REMEMBER THAT DAY, MY VERY FIRST BUDGET SESSION, SO JUST HANG IN THERE.
>> I WAS GOING TO SAY, IN OTHER WORDS, WE'VE ALL BEEN THERE.
>> IT'S AN INCREDIBLE AMOUNT OF HAS ANY QUESTIONS, I'M HAPPY TO BE YOUR RESOURCE, ALTHOUGH MONIQUE IS A MUCH BETTER RESOURCE THAN I AM.
WITH REGARD IF THERE ARE NO BOARD ANNOUNCEMENTS, THEN WE'LL TO GO A MOTION TO ADJOURN.
>> WE HAVE A MOTION AND A SECOND.
ALL IN FAVOR IN ADJOURNMENT SAY AYE.
WE HAVE A BASE BUDGET OVERVIEW, AND WE WILL RECONVENE 8:30 ON MONDAY AND START WORKING THROUGH THIS BUDGET INITIATIVES AND ALL THE FUN STUFF.
* This transcript was compiled from uncorrected Closed Captioning.