Aug 07, 2023 Special Water and Wastewater Commission

ALL RIGHT.

SO THERE'S NO, THERE'S NO ITEMS FOR THE PUBLIC COMMUNICATION AND WE WILL GO AROUND AND SEE WHO'S RECUSAL AND WHO IS QUESTIONS ON, WANTS TO PULL SOME OF THE, NO, NO, I GUESS WE HAVE TO DO THE MEETINGS MINUTES FIRST.

UM, SO FIRST WE'RE GOING TO, UH, CONFIRM THAT WE HAVE A QUORUM.

THAT'S A GOOD POINT.

DO WE HAVE A QUORUM? THAT'S BEEN A TOUGH ONE LATELY.

1, 2, 3, 5.

SO WE NEED SIX FOR A QUORUM.

AND I SEE SIX PEOPLE.

SO IS THAT, THAT'S ALL I HAVE TO SAY IN THAT.

OH, RIGHT.

THERE'S ALL, WE'RE ALL PRESENT EXCEPT FOR ALEX NAVARRO, COMMISSIONER NAVARRO, AND HE IS ON THE, UM, TELEPHONE COMING IN.

WILL BE LOOKING FOR THE, UM, THE MINUTES, APPROVAL OF THE MINUTES FOR THE MAY 10TH MEETING.

AND WE HAVE, UM, CHAIR RIETTA IS NOT HERE.

AND THAT'S IT, I GUESS.

IS THAT RIGHT? ALRIGHT, SO WE

[APPROVAL OF MINUTES]

COULD I HAVE A MOTION OR, AND IS THERE ANY COMMENTS OR QUESTIONS ABOUT THE MINUTES? AND IF NOT, CAN I HAVE A MOTION ABOUT THE MINUTES TO APPROVE RULE APPROVAL? THANK YOU.

UM, WILLIAM MORIA, ARTIE, COMMISSIONER MORIARTY, UM, HAS, HAS SAID THAT HE WOULD KNOW APPROVAL OF THE MINUTES.

AND, AND ANYONE? SECOND? I'LL SECOND.

GREAT.

THANK YOU.

ALL RIGHT.

SO, UH, COMMISSIONER PEN IS SECONDED.

SO WE WILL SAY THE, EVERYONE IN FAVOR? AYE.

RAISE YOUR RIGHT HAND.

AND I SEE EVERYONE'S GOT THEIR RIGHT HAND UP.

SO IT'S AN A, UM, APPROVAL OF THE MAY 10TH MINUTES AND HASS BEEN, UM, OKAY.

SO NOW WE'LL MOVE ON TO THE DISCUSSION,

[DISCUSSION AND POSSIBLE ACTION ON RECOMMENDATIONS TO COUNCIL]

POSSIBLE ACTION OF RECOMMENDATIONS TO COUNSEL.

WE HAVE ITEMS ONE THROUGH SEVEN AND THEN WE HAVE SOME, UM, ACTIONS FROM THE COMMISSION ON DISCUSSION POSSIBLE FOR EIGHT, NINE, AND 10.

SO WE WILL BE LOOKING AT, UM, ONE THROUGH SEVEN.

FIRST, ANYONE HAVE ANY QUESTIONS OR RECUSALS? I'LL GO AROUND THE TABLE.

COMMISSIONER MORIARTY QUESTIONS ON ITEM FOUR? ALRIGHT, UM, UH, COMMISSIONER ANGO, ANY QUESTIONS OR RECUSALS? COMMISSIONER MAXWELL GAINES.

ANY COMMISSION RE UH, QUESTIONS OR RECUSALS? NO QUESTION.

HAS NO RECUSALS.

ALRIGHT, I HAVE NO QUESTIONS.

OR RECUSALS AND MR. COMMISSIONER PENN? I HAVE A RECUSAL AND ITEM FOUR AND I HAVE NO QUESTIONS.

BY THE WAY, COMMISSIONER PENN IS, IS NEW TO THE COMMISSION TODAY, OR NOT REALLY? HE'S A OLD COMMISSIONER, BUT ANYWAY, WE WELCOME HIM HERE AND WE'RE SO GLAD TO HAVE HIM 'CAUSE OF THE WHOLE DEAL THAT WE'VE GOT GOING ON WITH IT.

DON'T FORGET.

COMMISSIONER NAVARRO.

OH, AND COMMISSIONER NAVARRO.

ANY QUESTIONS OR RECUSALS ON ANYTHING? COMMISSIONER NAVARRO? NO QUESTIONS.

AND, AND, UH, LET'S SEE.

SO THAT'S ALRIGHT.

SO, UM, LET'S SEE, WILLIAM, LET'S SEE.

THE, UM, COMMISSIONER MORIARTY HAD A QUESTION ON FOUR, AND THAT'S THE SAME ONE THAT, UM, COMMISSIONER PENN SAID HE HAD TO RECUSAL ON.

SO WE'VE GOT THAT, THAT ONE.

OKAY, SO WE HAVE 2, 3, 5, 6, AND SEVEN IS EVERYONE, DO WE HAVE ANY MOTIONS FOR THE CONSENT TO MOVE APPROVAL? OKAY, WE HAD A MOTION AND A SECOND.

I'LL SECOND.

ALRIGHT, THE APPROVAL SECONDED BY MAX COMMISSIONER MAXWELL GAINES.

ALL IN FAVOR OF THE CONSENT AGENDA.

RAISE YOUR RIGHT HAND PLEASE.

AND I'M SEEING A COM A

[00:05:01]

FORM THERE.

ALRIGHT, AND THEN, OKAY, SO WE HAVE NUMBER

[4. Recommend approval to execute a Construction Manager at Risk contract for pre-construction and construction services for the Walnut Creek Wastewater Treatment Plant Expansion with McCarthy Building Companies, Inc., in an amount not to exceed $760,000,000. (District 1)]

FOUR.

DO I READ IT OUT? BLANCA NUMBER FOUR.

SO, UM, ANYONE HAVE ANY QUESTIONS? MORE, DR.

COMMISSIONER MORTY, YOU HAD ONE.

WHAT IS YOUR AND WHO WILL BE REPRESENTING US ON THE FOUR? UH, CHARLES SORO WILL BE ANSWERING COMMISSIONER MORIARTY'S QUESTIONS.

OF COORDINATING ALL THE WORK HAPPENING ON THE SITE, UH, IN COLLABORATION WITH US.

UM, CAN I START ASKING? YES SIR, YOU MAY.

UM, I'D LIKE TO UNDERSTAND WHY WE DO THINGS LIKE THIS AND, UM, WHY DID WE DECIDE TO DO THIS NOVEL APPROACH TO THIS LARGE PROJECT, WHICH I WOULD CALL, THERE'S PROBABLY A NAME FOR IT, THAT YOU ALL KNOW THE NAME.

I CALL IT DESIGN BUILD OR CMAR.

WE'VE HAD OTHER NAMES, BUT AS OPPOSED TO WHAT TYPICALLY IS DONE BY THE WATER DEPARTMENT WHERE YOU DESIGN IT.

, THANK YOU.

BID IT OUT, YOU AWARD THE CONTRACT AND YOU DO THE CONSTRUCTION AND THE CITY INSPECTS IT AND IT GETS CLOSED OUT.

SO WE DECIDED TO NOT DO THIS.

UH, WHY WAS THAT? GOOD EVENING.

COMMISSIONER SHAY ROLSON, DIRECTOR OF AUSTIN WATER.

THANK YOU FOR YOUR QUESTION.

UM, SOME TIME AGO WE GAVE A PRESENTATION ON OUR C I P PROGRAM.

I CANNOT SEEM TO GET FAR ENOUGH AWAY FROM THIS MIC.

UM, SO, UH, WE HAVE TRADITIONALLY WE USE A LOT OF LOW BID CONTRACTING.

WE PUT TOGETHER THE PLANS AND THEN WE ISSUE THEM FOR BID.

UH, WE COLLECT BIDS FROM CONTRACTORS ON THAT WORK THAT IS FULLY SCOPED AND DESIGNED AND WE PICK THE LOW BID.

THERE ARE OCCASIONS WHERE THAT IS NOT REALLY A BEST VALUE APPROACH FOR US.

IN THE CASE, WE HAVE A FEW OF THESE, UM, WE TALKED ABOUT THEM, UH, SEVERAL OF THEM, UM, IN THAT C I P PRESENTATION A FEW, SEVERAL MONTHS AGO, UM, IN THE CASE OF THE WALNUT CREEK EXPANSION FROM 75 TO 100 M G D, IT IS NOT JUST AN EXPANSION WHERE WE'RE GONNA GO NEXT TO THE EXISTING PLANT AND BUILD ANOTHER 25 M G D OF, OF CO OF UH, TREATMENT CAPACITY.

WE ARE ALSO IMPLEMENTING BIOLOGICAL NUTRIENT REMOVAL AND WE ARE IMPLEMENTING UV DISINFECTION AND WE ARE IMPLEMENTING WET WEATHER TREATMENT AND A FLOOD WALL.

SO IT'S A VERY COMPLEX PROJECT THAT AFFECTS EVERY AREA OF THE PLANT.

AND IN ORDER TO, AND IS A VERY LARGE PROJECT, $760 MILLION IS THE CURRENT, UH, CONSTRUCTION COST ESTIMATE.

SO IN ORDER TO, AUSTIN DOES NOT HAVE THE CONTRACTING CAPACITY TO HAVE A SINGLE CONTRACTOR DO THAT PROJECT AS A LOW BID.

WHAT'S MORE WE WOULD HAVE, UM, TO PUT, WE HAVE A PRETTY SHORT TIME.

WE NEED TO GET THIS CAPACITY ON THE GROUND AND IN ORDER TO FULLY DESIGN THIS PROJECT AND THEN BID IT OUT IN SMALL ENOUGH PACKAGES THAT WE COULD GET A GOOD COMPETITIVE, UH, BID PROCESS THAT WOULD TAKE A, A FAIR AMOUNT OF TIME.

AND THE, UM, THE LEVEL OF EFFORT ON OUR PART, SOMEBODY HAS TO MANAGE THE COORDINATION OF ALL OF THAT WORK.

AND SO WE WOULD HAVE MULTIPLE CONTRACTORS WORKING ON TOP OF EACH OTHER ON THIS OPERATING TREATMENT PLANT.

AND WE WOULD HAVE TO COORDINATE THE MAINTENANCE OF PLANT OPERATION AS WELL AS ALL OF THESE CONCURRENT CONSTRUCTION PROJECTS HAPPENING AT THE SAME TIME WITH DIFFERENT CONTRACTORS.

SO WHAT WE DID FOR THIS PROJECT IS WE DID A REALLY, I'M GIVING YOU THE HIGHLIGHTS OF A VERY ROBUST PROCESS THAT WE WENT THROUGH WITH OUR ENGINEERING AND OPERATIONS STAFF TO DEVELOP AND OUR CONSULTANT TO DEVELOP AND PUBLIC WORKS UH, OUR PUBLIC WORKS PROJECT MANAGER, TO DETERMINE WHAT CONTRACTING PROCESS WE WANTED TO USE FOR THIS, FOR THIS PROJECT.

AND ULTIMATELY WE CHOSE CONSTRUCTION MANAGER AT RISK.

AND THE BENEFITS TO THAT FOR US IS THAT WE GET TO BRING THE CONTRACTOR ON NOW AT 30% DESIGN AND THEY ARE INVOLVED THROUGHOUT THE REMAINDER OF THE DESIGN.

IT ALLOWS US TO IDENTIFY EARLY LEAD ITEMS AS SOON AS WE KNOW WHAT ELECTRICAL GEAR WE NEED, WHAT SIZE TRANSFORMERS WE NEED, WE CAN ORDER THOSE.

AS SOON AS WE KNOW WHERE THE BUILDINGS ARE GOING, WE CAN START TO BUILD THEM.

SO THERE'S A LOT OF EFFICIENCIES IN THAT.

THE CONSTRUCTION MANAGER AT RISK IS RESPONSIBLE FOR MAINTENANCE OF PLAN OPERATIONS IN CONJUNCTION WITH OUR OPERATIONS STAFF.

SO THEY ARE, THEY HOLD RESPONSIBILITY

[00:10:01]

BUT WE ARE NOT HOLDING THE CONTRACTS WITH MULTIPLE DIFFERENT CONTRACTORS THAT ARE ON TOP OF EACH OTHER.

SO THERE'S A LOT OF, OH, AND AS WE DEVELOP THE WORK PACKAGES, THEY WILL GO GET COMPETITIVE BIDS FOR THAT WORK AND WE WILL BE INVOLVED IN REVIEWING THOSE BIDS AND MAKING THE SELECTION ON WHAT WE MOVE FORWARD WITH.

SO WHILE GENERALLY, UH, LOW BID CONTRACTING IS SOMETHING THAT WE UNDERSTAND VERY WELL, WE DO IT EVERY SINGLE DAY.

UM, AND SO THERE'S A LOT OF, UH, WE HAVE A LOT OF INSTITUTIONAL KNOWLEDGE INVESTED IN THAT IT WAS NOT A GOOD FIT FOR THIS PROJECT.

UH, AND WE FEEL VERY, UM, POSITIVE ABOUT USING THE CONSTRUCTION MANAGER AT RISK, UH, DELIVERY PROCESS.

AND I, I APOLOGIZE, I HAVE SEVERAL QUESTIONS, SO I'M GONNA KEEP GOING HERE.

BUT, UM, IS THIS THE SAME PROCESS WE USE FOR WATER TREATMENT PLANT FOR, WHICH IS NOW CALLED THE HANCOCKS PLANT? IS IT THE SAME THING? WE DID USE CONSTRUCTION MANAGER AT RISK FOR HANCOCK'S.

SO SAME PROCESS.

I, I'M SURE THERE WILL BE DIFFERENCES AND THERE CERTAINLY ARE A NUMBER OF LESSONS LEARNED.

UM, BUT THE GENERAL CONTRACTING WAS SIMILAR.

UM, TELL ME HOW YOU ARRIVED AT THE RECOMMENDED CONTRACTOR.

I, I WANNA UNDERSTAND THE STEPS THAT YOU WENT THROUGH AND, UM, AND YOU DON'T HAVE TO SPEND A LOT OF TIME, I JUST NEED TO KNOW, I KNOW THERE WERE FIVE, WE DIDN'T GET A LOT OF BACKUP AND I KIND OF ASKED FOR MORE AND I WE DIDN'T SEE A LOT ABOUT THIS KIND OF A BIG JOB TO JUST VOTE ON REALLY SKIMPY BACKUP.

SO I'M ASKING THE QUESTION.

FIVE PEOPLE PRESENTED THEIR QUALIFICATIONS IN SOME KIND OF PACKAGE, SOME KIND OF PROPOSAL, AND KIND OF TAKE ME THROUGH THE PROCESS.

UH, CHARLES LOWER AUSTIN WATER.

UH, THE PROCESS AS IT GOES THROUGH THE CAPITAL CONTRACTING OFFICE, AS I SEE IT, I'M NOT WITH CAPITAL CONTRACTING, IS SIMILAR TO ALMOST THE QUALIFICATIONS OF WHEN WE GO THROUGH AN ENGINEER.

SO THERE WAS A SET, UM, UH, UH, CRITERIA WHERE THEY NEED TO FOLLOW.

UM, SOME OF THE ITEMS WERE FOR SAFETY RECORDS, THEIR WORK PLAN, THE WORK SCOPE, THE PEOPLE INVOLVED WERE ALL IN PART OF THEIR, UM, UM, PACKAGE THEY SUBMITTED TO THE CITY OF AUSTIN.

AND, UH, SO EACH OF THE FIVE BURNS GAVE YOU A PRICE? UM, FOR THEY, WHAT THEY, WHAT THEY PROVIDED WAS THE CONSTRUCTION MANAGER PERCENTAGE FEE.

THAT'S JUST A PERCENTAGE.

AFTER THAT WAS THE SELECTED FIRM.

AND THAT WAS FOR THE PROFIT AND OVERHEAD, THEY PROVIDED A COST FOR GENERAL CONDITIONS.

THERE WAS A SECTION OF OH 500 THAT PROVIDE, THAT'S KINDA LIKE THE FRONT END DOCUMENTS OF, YOU WOULD SAY, OF A, OF A CONSTRUCTION COMPANY, OF, OF, OF A CONSTRUCTION PROJECT, GENERAL CONDITIONS.

AND THEN THERE WAS A THIRD NUMBER, WHICH WAS NOT PART OF THE VALUATION, BUT IT IS A NUMBER OF PRE-CONSTRUCTION SERVICES.

AS, UH, DIRECTOR MENTIONED, THE CONTRACTOR COMES ON BOARD DURING DESIGN, THEY ARE IN A 30, THEY'RE GONNA GIVE US 30% REVIEW, COME AT 6%.

SO THERE, SO THERE, THERE IS A PAYMENT OVER THAT PRIOR TO THE BIDDING.

AFTER THE BIDDING, THEN THE GENERAL CONDITION COVERS ALL THE KIND OF FRONT END DOCUMENTS AND THEN OF THE COST OF WORK OF, THEY'RE GIVING A PROPOSAL FOR, TO BUILD THIS PART OF THE PLANT.

THEY GET A MARKUP OF, OF, OF THIS CONSTRUCTION MANAGER, UM, FEE.

DID THEY EVER GIVE YOU A, LIKE A PRICE FOR THE WHOLE JOB? NO.

SO THEY, THEY NEVER, OKAY, LET'S STAY, STAY WITH ME HERE.

FIVE FIRMS SUBMIT.

THEY GIVE YOU PERCENTAGES OF PERCENTAGES, WHICH YOU, YOU PROBABLY CAN'T EXTRAPOLATE INTO ANY PRICE OR BID OR ANYTHING.

UH, 'CAUSE WE SAW THOSE PERCENTAGES AND THEY DIDN'T MAKE ANY SENSE TO ME.

BUT ANYWAYS, AFTER THE FIVE SUBMITTED, DID YOU CUT IT DOWN TO FEWER? UM, I BELIEVE WE HAD, UH, FOUR SUBMIT, UM, TOTAL THAT WE REVIEWED.

I THOUGHT IT WAS FIVE FOUR.

UM, IT WENT TO A, UH, ONCE UNLIKE, UH, A LOW BID WHERE YOU OPEN IT UP, THERE'S A PRICE, YOU GO THROUGH THE QUALIFICATION TO MAKE SURE EVERYTHING'S OKAY.

THIS ONE ACTUALLY WENT TO A SELECTION COMMITTEE, A EVALUATION PANEL SIMILAR TO LIKE AN, UH, AN ENGINEERING SERVICES FOR REQUEST FOR QUALIFICATION.

THERE WAS, SO IT WAS REVIEWED THERE AND SCORED THERE.

AND THEN THE TOP TWO WERE GO, WENT TO INTERVIEWS.

AND THEN THERE'S ADDITIONAL POINTS FOR THE INTERVIEWS.

AND THEN THAT, THAT THE TOP FIRM

[00:15:01]

DID AT ANY POINT ANY OF THESE FIRMS EVER TELL YOU WHAT THIS WHOLE THING WAS GONNA COST? NO, BUT WE CAME BACK INTO IT.

SO DID, DID YOU BACK INTO IT? YES.

SO IT, SO THAT DOESN'T MEAN THAT'S THE COST OF THE PROJECT, RIGHT? IT'S JUST AVAILABLE MONEY FOR THE CONSTRUCTION COST IF THE, THE, THE, THE, UM, THE AGENDA ITEM MATERIAL IS NOTE $760 MILLION.

SO THAT'S THE MOST IT CAN, THAT'S THE MOST THAT IT WILL CAN, IT CAN BE, UM, AS THIS GOES TO CITY COUNCIL, THE ONLY CONTRACT THAT WILL BE WRITTEN AT THIS TIME IS FOR PRE-CONSTRUCTION SERVICES.

WE'LL WAIT TILL AFTER THAT GETS DONE FOR A BID.

BUT IF I TAKE THE SEVEN $60 MILLION AND SUBTRACT THE PRE-CONSTRUCTION SERVICES AND I SUBTRACT THE GENERAL CONDITIONS, 'CAUSE THEY GAVE US THOSE TWO PRICES, I'M LEFT WITH A NUMBER AND IF I TAKE OUT THE, UH, CONSTRUCTION MANAGER, UM, UH, I WANNA MAKE SURE EXACTLY WHAT IT'S CALLED, UH, UH, UH, FEE FROM THAT, I GET A NUMBER.

IT'S AROUND $600 MILLION.

SO I'D LIKE TO, UM, MAKE A POINT ABOUT THE CONSTRUCTION COST IN THAT WE ARE ONLY AT 30% DESIGN.

YEAH.

SO AT THIS POINT, THE WORK IS NOT FULLY DESIGNED AND DETAILED OUT.

THERE IS STILL A LOT OF GROUND TO COVER BEFORE WE UNDERSTAND THE FULL COST OF THIS WORK.

AND, AND LET ME FOLLOW THROUGH HERE A BIT.

SO THE FINAL TWO FIRMS YOU EVALUATED AND TOOK THOSE PERCENTAGES OUT AND WERE LEFT WITH 600 MILLION.

DID I UNDERSTAND THAT CORRECTLY? BOTH FIRMS HAD EXACTLY 600 MILLION.

I I, I'D LIKE TO STAY AWAY FROM THOSE 600 MILLION BECAUSE WHILE WE DID SOME MATH ON, YOU KNOW, WHAT THE OVERALL COST OF THIS MIGHT BE, THE, THE COST OF THE WORK WAS NOT PART OF THE SELECTION OF THE CONSTRUCTION MANAGER AT RISK.

THEIR QUALIFICATIONS TO DELIVER THE WORK AND THEIR COST TO US FOR THE ITEMS THAT WE CAN DEFINE TODAY, WERE PART OF THE SELECTION PROCESS.

UM, OKAY.

THAT'S A LITTLE MURKY.

BUT, UM, LET'S SAY AFTER YOU DID YOUR EVALUATION THAT ONE OF THE FIRMS WAS APPRECIABLY HIGHER, A HUNDRED MILLION DOLLARS HIGHER, BUT THEIR QUALIFICATIONS WERE THE BEST.

WOULD YOU HAVE TAKEN THE MUCH MORE EXPENSIVE FIRM? THE SCORING CRITERIA, WEIGHTS BOTH QUALIFICATIONS AND PRICE? SO ALL OF THAT WAS PUBLISHED IN OUR SELECTION DOCUMENTS WAS, UH, IN OUR PROCUREMENT DOCUMENTS WAS WHAT WEIGHT, UM, THE QUALIFICATIONS HAS VERSUS WHAT WEIGHT THE COST HAS.

YOU JUST TOLD ME WE'RE STAYING AWAY FROM THE PRICE.

WE DON'T WANNA TALK ABOUT THE PRICE.

HOW, HOW NO, THEY, NO, NO.

THEY, THAT THE, THE COST OF THE WORK THAT IS GOING TO BE CONSTRUCTED, THAT IS A PRICE THAT WE ARE STILL, UH, WE HAVE A GOOD ESTIMATE ON.

WE'RE AT 30% DESIGN, BUT WE HAVE A LOT LEFT TO DESIGN THE COST THAT THEY GAVE US, THEIR OVERHEAD PERCENTAGE, THEIR PRE-CONSTRUCTION SERVICES, THOSE COSTS ARE FIXED AND ARE, UH, PART OF THE SELECTION PROCESS.

SO THAT IS WHAT WAS WEIGHTED IN THE SELECTION PROCESS.

BUT THEY'RE FIXED AS A PERCENTAGE OF A NUMBER.

THAN THAT WOULD BE DISCOUNTED ON THAT.

A NUMBER THAT I AM AT THIS POINT NOT UNDERSTANDING, BUT AGAIN, I I'M NOT TRYING TO, I I I'M JUST TRYING TO UNDERSTAND, I'M NOT TRYING TO MAKE THIS HARD FOR YOU, BUT, SO IF A, IF ONE OF THE FIRMS TOLD US THAT THEY WERE GIVING US THAT IT WAS 20% OVERHEAD AND PROFIT AND THE OTHER ONE SAID, OR WHATEVER WE'RE CALLING IT FEE, AND THE OTHER ONE SAID IT WAS 15%, THEN THEY WERE ACTUALLY, WHY DON'T YOU DESCRIBE IT? SO IN THE, IN THE COST EVALUATION, SINCE THERE WASN'T A NUMBER RIGHT TO LOOK AT, RIGHT? IS THAT, UM, LET'S, FOR AN EXAMPLE, OKAY.

'CAUSE I'M GONNA DO IT IN MY HEAD REAL QUICK.

UH, LET'S SAY THAT THE CONSTRUCTION MANAGER RISK WAS 4%, RIGHT? SO THAT WAS THE LOWEST NUMBER, RIGHT? SO FOUR, THAT BECOMES A DENOMINATOR.

SO 4% DIVIDED 4%, ONE TIMES 10 POINTS A HUNDRED PERCENT TIMES 10 POINTS 10%.

THE NEXT ONE CAME IN AT 5%.

SO YOU GO 4% DIVIDED BY 5%, YOU GET 80%, 80% TIMES 10 POINTS EQUALS EIGHT POINTS.

SO SINCE WE DIDN'T HAVE THAT NUMBER AT THE BOTTOM ONE, THEY WERE EVALUATED THAT WAY.

THE, THE, THE FIRM THAT HAD THE LOWEST, OR, YOU KNOW, AT THIS TIME, THE LOWEST WOULD GET THE FULL AMOUNT OF POINTS, RIGHT.

AND THEN ANYTHING AFFIRMS ANYTHING HIGHER

[00:20:01]

SO THAT'S HOW IT WAS EVALUATED.

WHICH FIRM GOT THE MOST POINTS FOR THAT? M W H HAD THE MOST POINTS FOR THE, UH, WHICH WAS 10 POINTS FOR THE CONSTRUCTION MANAGER FEE.

AND THEN ALSO FOR THE, UM, FOR THE GENERAL, EXCUSE ME, THE, UH, THE MANAGER FEE WAS 20 POINTS, EXCUSE ME.

AND THEN THE GENERAL CONDITION WAS 10 POINTS.

AND THE N W H WAS THE HIGHEST, GOT THE FULL POINTS ON THAT AS WELL.

UM, TELL ME ABOUT THE QUALIFICATIONS OF THE FIRM THAT YOU'RE SELECTING OR AT LEAST RECOMMENDING.

UM, ARE THEY, UH, PLANT TYPE CONSTRUCTORS? UM, I WAS NOT PART OF THE VALUATION COMMITTEE, SO I CAN'T, I DON'T, I DON'T, I DIDN'T SEE THEIR, THEIR, THEIR PROPOSAL THAT'S DONE WITH THAT COMMITTEE.

HOWEVER, UH, WE DID LOOK AT SOME PREVIOUS SMAR TYPE PROJECTS.

AND IN GENERAL, M W H, MCCARTHY AND SONT OF THE ONES THAT WE WERE ABLE TO EVALUATE WERE ABOUT HALF THE, THE ONES THAT WE LOOKED AT IN TERMS OF WHEN WE'RE TRYING TO FIGURE OUT SEAMAR CONTRACTORS, THEY HAVE DONE ABOUT HALF OF THE ONES THAT WE'VE IDENTIFIED THAT WERE DONE RECENTLY.

SO THEY ARE VERY PREVALENT IN THE SEAMAR CONSTRUCTION.

SEAMAR CONSTRUCTION OF PLANTS, WASTEWATER WATER PLANTS? YES.

SO YOU'RE COMFORTABLE THAT THIS ORGANIZATION COULD, UH, DO THE JOB? YES.

UM, DO ANY OF THE REST OF YOU HAVE ANY QUESTIONS OR NO.

TO TAKE A VOTE ON IT, OR IF THERE ARE QUESTIONS, THEN IT CAN BE, UM, VOTED ON WITH EIGHT AND 10 AFTER THE, THE, UH, BUDGET PRESENTATION.

UM, THERE'S, THERE'S BEEN SIX MEMBERS WITH ONE RECUSAL, SO THERE'S LACK OF A QUORUM, SO WE WILL NOT BE VOTING ON THE ITEM AT THIS TIME.

UM, WHAT ABOUT NUMBER NINE? WHEN DO WE DO NINE? SO YOU'LL, UM, WE'LL MOVE, YOU CAN, UM, ASK IF THERE ARE ANY QUESTIONS FOR, UH, AGENDA ITEM NINE

[9. Approve recommendation to Council of Austin Water’s Capital Improvement Projects located in the Drinking Water Protection Zone for inclusion in Austin Water’s five-year Capital Spending Plan (for Fiscal Year 2023-2024 through Fiscal Year 2027-2028) as required by Financial Policy Number 8.]

ALL RIGHT.

DOES ANYONE HAVE ANY, UH, QUESTIONS ON NUMBER NINE AT THIS TIME? NO.

ALRIGHT, WELL, WE WILL GO AHEAD WITH NUMBER SECOND.

ASK A MOTION FOR NUMBER NINE FOR NINE NOW.

MM-HMM.

CAN I HAVE A MOTION FOR NUMBER NINE, PLEASE? IS THAT LOOKING FOR APPROVAL? YES.

SO IF THERE ARE NO QUESTIONS FOR AGENDA ITEM NINE, UM, THERE WILL BE A VOTE FOR AGENDA ITEM NUMBER NINE.

I MOVE APPROVAL OF AGENDA ITEM NUMBER NINE.

AND DO I HEAR A SECOND FOR NUMBER NINE? I SECOND THAT MOTION.

ALRIGHT, SO IT ALL IN FAVOR OF VOTING FOR NUMBER NINE.

PLEASE RAISE YOUR RIGHT HAND.

AND I'M SHOWING THAT IT'S A UNANIMOUS VOTE.

SO NINE HAS BEEN APPROVED AND NOW WE'LL MOVE ON TO, UM, THE STAFF.

DO YOU WANNA SKIP THE OTHER TWO FOR NOW? AND THEN JUST TO THE STAFF BRIEFING SENTENCE, IT LOOKS LIKE Y YES.

SO I RECOMMEND THE, UH, UPDATES THE REPORTS BY COMMISSION SUBCOMMITTEES, UH, FROM COMMISSIONER MAXWELL GAINES AND COMMISSIONER MORIARTY, AND THEN THE BUDGET, UH, PRESENTATION.

HAVE THE, UM, UPDATE FROM THE JOINT DIS SUSTAINABILITY COMMITTEE BY CHRIS MESSEL, BY COMMISSIONER, COMMISSIONER MAXWELL GAINES? PLEASE SEE? OKAY.

UM, COULD I PLEASE

[11. Update from Joint Sustainability Committee – Commissioner Chris Maxwell-Gaines]

UM, I'M REPORTING ON THE MAY 24TH, UH, MEETING BECAUSE I DID, I DID NOT ATTEND THE JUNE OR THE JULY, UM, JOINT SUSTAINABILITY COMMITTEE, UM, MEETING.

THERE WAS A LOT OF, UH, A LOT OF STUFF GOING ON IN THIS MEETING.

AND, UH, I WAS INTRODUCED TO A LOT OF, UH, NEW, UH, TOPICS AND SUCH, UM, FROM THE CITY POINT OF VIEW.

UM, AND SO I'LL JUST OF COURSE HIT THE HIGHLIGHTS OF THE MEETING.

UM, SO, UH, THE, THE JOINT

[00:25:01]

SUSTAINABILITY COMMITTEE, RIGHT? IT'S THE REPRESENTATIVES FROM, YOU KNOW, THE VARIOUS, UH, BOARDS AND COMMISSIONS.

UM, AND, UM, IN THE PAST THEY HAVE, UM, CREATED WORKING GROUPS AND, UM, THEY WERE NOT FORMALIZED.

AND SO THEY WENT THROUGH A PROCESS OF FORMALIZING THE WORKING GROUPS, UM, WHICH WAS, UH, IN ORDER TO HELP ADVANCE THE IMPLEMENTATION OF THE AUSTIN CLIMATE EQUITY PLAN.

UM, SO THE EQUITY PLAN WAS, UH, PASSED IN SEPTEMBER, 2021 BY CITY COUNCIL.

THE PLAN INCLUDES THE GOAL OF EQUITABLY REACHING NET ZERO COMMUNITY-WIDE GREENHOUSE GAS EMISSIONS BY 2040.

UM, SO THEY VOTED TO, UH, FORMALIZE ALL THESE, UH, WORKING GROUPS INCLUDING TRANSPORTATION, BUILDINGS, CONSUMPTION AND, AND NA UH, NATURAL SYSTEMS. SO, UM, AND THEN WE RECEIVED A, UH, AN UPDATE ON THE INFLATION REDUCTION ACT, UM, COORDINATED GRANT APPROACH BY THE OFFICE OF SUSTAINABILITY.

SO, UM, THE, UM, INFLATION REDUCTION ACT IS ONE OF THE LARGEST, YOU KNOW, CLIMATE INVESTMENTS IN THE US HISTORY, $391 BILLION.

SO OBVIOUSLY WITH SUCH A LARGE BUDGET AND SUCH A LARGE ACTION FOOTPRINT, IT'S A VERY CONVOLUTED WAY OF, OF APPLYING FOR THESE, THIS, THIS MONEY.

SO BASICALLY, THE OFFICE OF SUSTAINABILITY IS GOING THROUGH A PROCESS OF FIGURING OUT WHAT'S THE BEST OPPORTUNITIES TO SYNERGIZE THE, UM, APPLICATION, UH, FOR GRANTS, UH, THROUGH THE INFL, UM, INFLATION REDUCTION ACT.

SO WE GOT AN UPDATE ABOUT THAT PROCESS.

UM, AND THEN WE WERE GIVEN A PRESENTATION BY, UM, SIDNEY LANDRY FROM THE OFFICE OF SUSTAINABILITY, UH, WITH AN OVERVIEW OF THE CLIMATE AMBASSADOR PROGRAM.

UM, AND THE, UH, CLIMATE AMBASSADOR PROGRAM WAS CREATED AS A PAID OPPORTUNITY FOR PASSIONATE AUSTINITES TO ENGAGE THEIR COMMUNITIES AND GET INPUT FOR THE AUSTIN CLIMATE EQUITY PLAN IN, UH, 2020.

SO WE WERE GIVEN A, AN UPDATE ABOUT, UH, THE, UH, AMBASSADORS, UM, RESULTS AND, AND THINGS THAT THEY'VE BEEN DOING IN THE COMMUNITY.

AND THEN, UM, THERE WAS A DISCUSSION ABOUT THE, UM, OR CITY OF AUSTIN'S SUPPORT FOR THE ENERGY INNOVATION AND FOSSIL FUEL NON-PROLIFERATION TREATY.

UM, AND SO OBVIOUSLY WITH THE ADOPTION OF THE AUSTIN CLIMATE EQUITY PLAN, THE, UH, JOINT SUSTAINABILITY COMMITTEE HAD CREATED A RESOLUTION TO ASK THE CITY COUNCIL TO ADOPT THE FOSSIL FUEL NON-PROLIFERATION TREATY.

UM, AND THAT TREATY IS A GLOBAL TREATY, UM, WHICH WOULD, UH, COMMIT COUNTRIES TO ENDING NEW FOSSIL FUEL EXPLORATION AND EXPANSION PHASE OUT EXISTING PRODUCTION IN LINE WITH THE GLOBAL COMMITMENT TO LIMIT WARMING TO 1.5 DEGREES CELSIUS AND ACCELERATE, UH, EQUITABLE TRANSITION PLANS.

AND SO THE, UH, JOINT SUSTAINABILITY COMMITTEE, UM, VOTED ON CHANGING SOME OF THE LANGUAGE OF THEIR PRIMARY RESOLUTION AND THEN VOTE IT, UH, AND IMPROVE THE RESOLUTION THEN TO SEND IT TO THE, UH, CITY COUNCIL.

AND THEN LAST, UM, THE, UH, COMMITTEE DISCUSSED A RESOLUTION ON THE CO COOPERATION BETWEEN THE AIRPORT ADVISORY COMMISSION, THE ENVIRONMENTAL COMMISSION, AND THE DEPARTMENT OF AVIATION ON THE ENVIRONMENTAL MATTERS THAT EXTEND OUTSIDE THE BOUNDARIES OF THE A B I A PROPERTIES.

SO, UH, THIS COOPERATION WOULD HELP TO IMPROVE ENVIRONMENTAL CONDITIONS SURROUNDING THE AIRPORT.

UH, MANY OF THE AIRPORT ACTIVITIES, UH, EXTEND, UH, OR INFLUENCE THE LAND AROUND THE AIRPORT.

UM, AND SO THE ENVIRONMENTAL COMMISSION WANTS TO SET UP A COLLABORATIVE RELATIONSHIP WITH THE AIRPORT ADVISORY COMMISSION.

UH, THE FINAL DECISIONS WOULD ALL REMAIN WITH THE AVIATION DEPARTMENT, BUT THE ENVIRONMENTAL COMMISSION WOULD ONLY PROVIDE RECOMMENDATIONS.

SO THE, UH, JOINT SUSTAINABILITY COMMITTEE VOTED UNANIMOUSLY AND UNANIMOUS UNANIMOUSLY IN FAVOR OF THAT RECOMMENDATION.

SO, LIKE I SAID, UH, THERE WAS A LOT OF STUFF, WHIRLWIND OF STUFF TO, UH, AND A MEETING TOOK A QUITE NUMBER OF HOURS.

AND, UM, BUT I LEARNED A LOT.

AND, UM, I TRIED TO PROVIDE MY INPUT FROM A WATER AND WASTEWATER, UH, STANDPOINT, AND I'M SURE I'LL GIVE PLENTY OF OPPORTUNITIES IN THE FUTURE.

SO THERE YOU GO.

OKAY, THANK YOU VERY MUCH.

UM, DOES ANYONE HAVE ANY QUESTIONS OF COMMISSIONER MAXWELL GAINES REGARDING THE COMMITTEE OF SUSTAINABILITY?

[00:30:02]

UM, COMMISSIONER

[12. Update from the Austin Integrated Water Task Force – Commissioner William Moriarty]

MOR MORIARTY, CAN YOU PLEASE GIVE US OUR, YOUR, UM, INTEGRATED TASK FORCE MEETING NOTES, PLEASE? I'D BE HAPPY TO.

UH, ALTHOUGH NOT MUCH TO TO TALK ABOUT THE, UH, WATER FORWARD TASK FORCE HAS NOT MET IN SEVERAL MONTHS, WE SUFFER FROM THE SAME PROBLEM AS THIS COMMISSION WITH THE, WITH THE COUNCIL, NEW COUNCIL MEMBERS.

WE DON'T HAVE A QUORUM.

UH, WE'RE HOPEFUL OF HAVING OUR REGULAR MONTHLY MEETING AT THE END OF AUGUST 25TH.

THE SEVERAL MATTERS THAT ARE AT WORK, AT THE WATER FORWARD TASK FORCE IS, OF COURSE, THE AUSTIN WATER DEPARTMENT IS WORKING AN ORDINANCE THROUGH THE SYSTEM THAT RELATES TO WATER CONSERVATION IN ISSUES RELATED TO, UH, DEVELOPMENT AND THE REQUIREMENTS FOR CONNECTION TO PURPLE PIPE SYSTEMS. AND, UM, THEY'VE BEEN DOING PUBLIC MEETINGS IN VARIOUS MEETINGS ABOUT THAT ORDINANCE, WHICH HAS BEEN YEARS IN THE DEVELOPMENT.

UH, SECONDLY, UM, THE MOST IMPORTANT PROJECT IN THE RECOMMENDATION IS THE DEVELOPMENT OF AN AQUIFER STORAGE AND RECOVERY FACILITY.

AND THAT MOVES FORWARD WITH A LIKELY IMPLEMENTATION IN 10 TO 15 YEARS.

IT'S QUITE A BIT OF THE FUTURE.

AND THIRDLY, OF COURSE, THE ISSUE RELATED TO MORE SEVERE CONSERVATION RESTRICTIONS WE'RE AT CONSERVATION STAGE ONE, I BELIEVE, UH, ABOUT TO MOVE TO MORE SEVERE LEVELS.

I WOULD LEAVE THAT TO THE, UH, DIRECTOR OF THE WATER DEPARTMENT TALK ABOUT THAT.

SHE KNOWS MORE THAN I DO, BUT THOSE ARE THE ISSUES THAT WOULD, WE WERE HAVING MEETINGS WE'D BE TALKING ABOUT, AND WE'RE LOOKING FORWARD TO REINITIATING OUR MEETINGS AS WE GAIN FULL MEMBERSHIP AT THE END OF THE MONTH.

HAPPY TO TAKE ANY QUESTIONS.

ARE THERE ANY QUESTIONS FOR COMMISSIONER MORIARTY? NOPE.

ITEM 13, AND THEN AFTER THAT, WE WILL DO THE EIGHT AND 10 VOTING IF POSSIBLE.

WELL, WE WILL MOVE ON TO, UM, THE STAFF BRIEFING ON

[13. Staff briefing regarding Austin Water’s Proposed Fiscal Year 2023-2024 Budget]

SO, THANK YOU.

SORRY.

I'VE BEEN STRUGGLING WITH A, UH, SCRATCHY THROAT ALL DAY.

UH, JOSEPH GONZALEZ, ASSISTANT DIRECTOR OF FINANCIAL SERVICES FOR AUSTIN WATER, AND TONIGHT I'LL BE PROVIDING AN UPDATE ON AUSTIN WATERS F Y 2024 PROPOSED BUDGET.

FOR OUR AVERAGE CUSTOMER, UH, WILL INCREASE FROM, YOU KNOW, TO $83 AND 44 CENTS, UH, WHICH, WHICH REPRESENTS A 25 CENT INCREASE OVER THE FISCAL YEAR 17 AVERAGE RESIDENTIAL MONTHLY BILL.

SO I'LL BEGIN WITH, UH, THE PRESENTATION WITH AN OVERVIEW OF THE PROPOSED BUDGET, UH, FOLLOWED BY HIGHLIGHTS OF PROPOSED REVENUES AND EXPENDITURES AND, AND END, UH, WITH AN OVERVIEW OF THE CAPITAL IMPROVEMENT PLAN AND, UM, AND DEBT MANAGEMENT.

UH, UPDATE.

NEXT SLIDE.

SO, THE GOAL OF THE ANNUAL BUDGET PROCESS IS TO INVESTOR FINANCIAL RESOURCES IN A WAY THAT SUPPORTS THE UTILITIES MISSION GOALS AND, AND PRIORITIES.

AND, UM, ENTERPRISE RESILIENCY HAS BEEN A PRIORITY FOR THE UTILITY OVER THE LAST SEVERAL YEARS.

AND, UH, SO, SO THE PROPOSED BUDGET INCLUDES CONTINUED INVESTMENT IN, UH, RESILIENCY, UH, ENTERPRISE RESILIENCY, UM, INCLUDING, UH, OVER $7 MILLION, UM, IN, IN STAFF RETENTION AND, AND RECRUITING EFFORTS IS RECOMMENDED BY THE AUSTIN WATER EXTERNAL REVIEW.

THE PROPOSED BUDGET ALSO RECOMMENDS ADDING, UH, 20 POSITIONS TO SUPPORT, UH, OPERATIONS, SECURITY, UH, CUSTOMER ENGAGEMENT AND, AND WATER FORWARD.

UH, IN, IN ADDITION, THE PROPOSED BUDGET INCLUDES, UH, KEY INVESTMENTS IN, UM, CAPITAL IMPROVEMENT AND, AND, UH, INFRASTRUCTURE TO MAINTAIN SERVICE RELIABILITY AND, AND WATER QUALITY.

NOW FOLLOWING OUR, UM, F Y 18 RATE REDUCTION AND IN, IN FIVE YEARS OF NO RATE INCREASES, UH, WE, WE ARE PROPOSING A MODEST RATE INCREASE OF 3.3% FOR OUR AVERAGE RESIDENTIAL CUSTOMER.

UH, WHILE, WHILE, YOU KNOW, BALANCING AFFORDABILITY WITH, WITH INCREASING COST DRIVERS FOR OUR AVERAGE RESIDENTIAL CUSTOMER, UH, THE, THE AVERAGE BILL, UH, FOR,

[00:35:01]

YOU KNOW, FISCAL YEAR 17 WAS THE LAST YEAR WE, WE HAD A, A RATE INCREASE FOR OUR, OUR CUSTOMER ASSISTANCE PROGRAM OR, OR CAP CUSTOMERS.

UH, WE ARE NOT POSING A, A RATE INCREASE AT THIS TIME.

UM, AND I WOULD, I WOULD NOTE THAT, UH, THE AVERAGE BILL FOR OUR CAP CUSTOMERS OF, OF $39 AND 59 CENTS IS, IS $14 AND 57 CENTS LOWER THAN THE F Y 17 AVERAGE CAP BILL AS A RESULT OF THE F Y 18, UH, YOU KNOW, RATE REDUCTION AND, UH, 2020 C O D UH, REDUCTION.

SO WE CONTINUE TO, TO HAVE, UM, YOU KNOW, STRONG CUSTOMER ASSISTANCE PROGRAM BENEFITS AND, AND, AND SOME OF THE LOWEST, UH, RATES IN THE COUNTRY FOR OUR, UH, CAP CUSTOMERS.

AND THEN FINALLY, THE PROPOSED BUDGET INCLUDES, UH, FUNDING FOR OUR CONTINUED DEBT MANAGEMENT STRATEGIES, INCLUDING $44 MILLION, UH, FOR A DEFE TRANSACTION IN THE FALL, UH, WHICH WILL HELP US CONTINUE TO MAINTAIN, UH, THE UTILITIES FINANCIAL STRENGTH AND STABILITY.

640.6, ALMOST 641 MILLION, UH, THAT REPRESENTS ABOUT A $32 MILLION INCREASE OVER, OVER THE CURRENT YEAR BUDGET.

UM, SO THIS SLIDE SHOWS OUR, OUR FUND SUMMARY, ESSENTIALLY A SUMMARY OF OUR, OF OUR PROPOSED BUDGET, BEGINNING WITH, UM, BEGINNING WITH OUR BEGINNING FUND BALANCE, UH, ADDING IN REVENUES AND OTHER OTHER TRANSFERS IN, UH, YOU KNOW, TAKING OUT EXPENDITURES, TRANSFERS OUT FOR NET CHANGE IN FUND BALANCE TO ARRIVE AT AN, AT AN ENDING BALANCE I'D, I'D HIGHLIGHT THAT OUR BEGINNING FUND BALANCE IS SHOWN IN, IN THE ESTIMATED COLUMN, THE F Y 23 ESTIMATED COLUMN WAS $260 MILLION, UH, WHICH IS ABOUT 29, UH, MILLION DOLLARS HIGHER THAN, UH, WHAT WE THOUGHT IT WOULD BE, UH, THIS TIME LAST YEAR, WELL, ACTUALLY WHEN WE SUBMITTED OUR BUDGET LAST YEAR, LAST MAY, UH, AS A RESULT OF INCREASED, UH, YOU KNOW, WATER CONSUMPTION AND DEMAND, UH, DURING THE HOT DRY SUMMER LAST YEAR.

SO WE SAW, UM, AN ANTICIPATED REVENUES THAT LED TO A LARGER THAN ANTICIPATED FUND BALANCE.

UM, UM, WE, WE HAD ANTICIPATED, AS YOU YOU CAN SEE IN, IN THE AMENDED COLUMN, WE HAD ANTICIPATED SPENDING DOWN ABOUT $11 MILLION OF, OF ANTICIPATED FUND BALANCE INCREASES.

UM, BUT, BUT GIVEN THE LARGER, UH, BEGINNING BALANCE, UM, PLUS, YOU KNOW, STRONG, STRONG REVENUES, UH, YEAR TO DATE, WE ANTICIPATE, UM, AN INCREASE TO, TO FUND BALANCE IN THE YEAR AT AROUND 267 MILLION.

UM, FOR F Y 24, WE'D START WITH THAT 267 MILLION, UM, AND PROPOSED REVENUE WITH PROPOSED REVENUES OF 698 MILLION, UH, PROPOSED EXPENDITURES OF 748 MILLION FOR, UM, A REDUCTION IN FUND BALANCE OF, OF $50 MILLION, OVER $50 MILLION.

I WOULD POINT OUT THOUGH THAT ALTHOUGH THE PROPOSED BUDGET INCLUDES, UH, AGAIN, FUNDING $44 MILLION FOR A PROPOSED DEFIANCE TRANSACTION, WE DON'T GET TO RECOGNIZE THE BENEFIT OF THE DEFE TRANSACTION UNTIL IT ACTUALLY OCCURS.

AND SO IT'S SCHEDULED FOR THE FALL.

SO WE ANTICIPATE THAT THAT DEFIANCE TRANSACTION WILL REDUCE, UH, F Y 24 DEBT SERVICE REQUIREMENTS BY ABOUT 29 MILLION.

SO, BRINGING, UH, WE ANTICIPATE ACTUAL EXPENDITURES, UH, WILL BE ABOUT $721 MILLION, UH, WHEN ALL IS SAID AND DONE, AND THAT CHANGE IN FUND BALANCE WOULD BE A REDUCTION OF ABOUT 21 MILLION, UM, WITH, WITH AN ENDING BALANCE OF ABOUT $246 MILLION.

UM, SO THAT'S SIMPLY, YOU KNOW, FROM A, FROM A BUDGETING PERSPECTIVE, WE CAN'T TAKE CREDIT FOR IT, BUT, UM, WE'RE ACCOUNTING FOR THE EXPENDITURES AND, AND AS SOON AS THE FEES AND TRANSACTION OCCURS, WE'LL BE ABLE TO TAKE FULL CREDIT, UH, FOR THAT.

UM, YOU KNOW, IN TERMS OF BUDGET HIGHLIGHTS, I THINK I'VE KIND OF TALKED A LITTLE BIT ABOUT THOSE.

THIS WOULD BE OUR FIRST RATE INCREASE, UH, SINCE 2017.

UM, THE PROPOSED BUDGET INCLUDES, UH, FUNDING TO CONTINUE EMPLOYEE EMPLOYEE RECRUITING AND RETENTION, UH, INITIATIVES, NEW FTES, AND, UM, AND, AND ONCE THE FEES TRANSACTION TAKES PLACE, YOU'LL CONTINUE TO MAINTAIN STRONG LEVELS OF DEBT SERVICE COVERAGE AND DAYS CASH ON HAND.

NEXT SLIDE PLEASE.

SO THIS IS AN OVERVIEW OF, OF OUR PROPOSED, UH, REVENUE FOR, UH, FOR FY 24.

UH, WE'VE PROPOSED REVENUES, YOU KNOW,

[00:40:01]

AND, AND THAT'S A FUNCTION OF CERTAINLY THE, THE PROPOSED RATE INCREASE, BUT, BUT ALSO CONTINUED GROWTH.

UH, WE, WE GENERALLY SEE ABOUT 2% GROWTH, UH, O OVER THE LAST FEW YEARS.

AND, AND WE'RE ANTICIPATING, YOU KNOW, CONTINUING TO SEE, UH, O OVERALL, YOU KNOW, ABOUT 2% GROWTH, UH, FOR, FOR NEXT YEAR.

AND THE 32 MILLION IS, IS SPLIT SOMEWHAT EVENLY OVER OVER WATER SERVICES, WASTEWATER SERVICES, UH, BUT ALSO MISCELLANEOUS REVENUE.

UM, ACTUALLY MISCELLANEOUS REVENUE IS THE BIGGEST INCREASE OF, OF, OF THE THREE AT 11.6 MILLION.

AND THAT'S, UH, DIRECTLY RELATED TO THE INTEREST RATE ENVIRONMENT THAT WE'RE IN.

UH, SO WE'RE SEEING, UM, MUCH HIGHER LEVELS OF INTEREST INCOME THAN WE'VE SEEN IN PRIOR YEARS.

AND, AND SO THE, THE INCREASE TO 21.3 IS REFLECTIVE OF, UH, YOU KNOW, CURRENT LEVELS OF, OF INTEREST, INCOME AND ANTICIPATED LEVELS FOR, UH, F Y 24.

SO WHAT THAT MEANS FOR, FOR OUR AVERAGE CUSTOMER, AND I, I THINK I'VE ALREADY, UM, YOU KNOW, ARE ALREADY SPILLED THE BEANS IN TERMS OF, OF, OF THE IMPACT.

BUT, YOU KNOW, 3.3% INCREASE FOR, FOR OUR AVERAGE CUSTOMER, UH, AMOUNTS TO ABOUT A $2 65 CENT INCREASE, UH, MONTHLY INCREASE FOR, FOR OUR AVERAGE CUSTOMER WHO USES ABOUT 5,800 GALLONS OF WATER AND DISCHARGES ABOUT 4,000 GALLONS OF, OF WASTE WATER.

UM, AND, AND THIS IS AN ALL-INCLUSIVE BILL, YOU KNOW, THAT'S INCLUSIVE OF ALL THE FEES THAT, THAT WE CHARGE, UH, ON, ON OUR BILLS, INCLUDING, YOU KNOW, THE, UM, WATER REV REVENUE RESERVE FUND SURCHARGE, AND, UM, THE COMMUNITY BENEFIT FUND SURCHARGE.

AND THEN JUST CONTINUE TO WIND DOWN AS WE WIND DOWN THE A M I PROJECT.

UM, FOR OUR CUSTOMER ASSISTANCE PROGRAM, AGAIN, WE ARE NOT PROPOSING, UM, AN AN INCREASE, UH, FOR OUR CUSTOMER ASSISTANCE PROGRAM.

UH, HOWEVER, WITH THE INCREASE, UH, FOR OUR, OUR RESIDENTIAL CUSTOMERS, UM, THE, THE DISCOUNT THAT FOR OUR CUSTOMER ASSISTANCE PROGRAM CUSTOMERS, UH, WILL GO UP FROM ABOUT 51% TO, UH, 52.6%.

UM, I'D ALSO HIGHLIGHT THAT, UH, WE'RE SEEING, UH, GROWTH IN TERMS OF OUR CUSTOMER ASSISTANCE PROGRAM PARTICIPANTS, UM, LARGELY DUE TO, UM, TO COUNCIL RE RECOMMENDED CAP PROGRAM EXPANSION, UH, FOR AE AS PART OF, UH, AS PART OF THEIR RATE INCREASE THAT COUNCIL ADOPTED IN DECEMBER.

UH, COUNCIL ASKED, UH, YOU KNOW, TO EXPAND THE CAP PROGRAM TO GET AS MANY, UH, FOLKS IN THE PROGRAM AS, AS WE'RE ELIGIBLE.

SO AS A RESULT, UH, WE'VE SEEN JUST IN THE LAST TWO MONTHS ALONE, UH, ABOUT A 37% INCREASE IN RESIDENTIAL, UH, CUSTOMER ASSISTANCE PROGRAM PARTICIPANTS.

AND, AND FOR OUR MULTI-FAMILY CAP PROGRAM, WHICH IS A NEW PROGRAM FOR US, UH, THAT WAS IMPLEMENTED IN 2021, UH, WE, WE'VE SEEN A 41% INCREASE, UM, JUST OVER THE LAST TWO MONTHS.

AND JUST AS A REMINDER, YOU KNOW, CUSTOMER ASSISTANCE PROGRAM CUSTOMERS, UM, HAVE WAIVED, UM, FIXED FEES, UH, FOR, FOR BOTH WATER AND WASTEWATER, AND THEN THEY SEE A VOLUMETRIC DISCOUNT, UM, IN, IN TERMS OF THE VOLUMETRIC RATES.

UH, NEXT SLIDE, PLEASE.

IN TERMS OF OUR, UH, OUR EXPENDITURES OR USE OF FUNDS, UM, AGAIN, WE'RE, WE'RE PROPOSING, UH, YOU KNOW, ALMOST 749 MILLION, UH, DOLLARS OF EXPENDITURES, UH, WHICH IS, UH, ABOUT A $64 MILLION INCREASE.

UH, BUT IF YOU BACK OUT THE ANTICIPATED SAVINGS FROM, FROM THE DEFIANCE TRANSACTION, UH, THAT, THAT NET INCREASE IS ABOUT 34 AND A HALF MILLION, UH, WITH, WITH MOST OF THAT ACTUALLY 39 MILLION, UM, COMING FROM OPERATING PROGRAM REQUIREMENTS.

UM, AND, AND MOST OF THAT IS WAGE AND BENEFIT INCREASES AND, UM, AND, AND COST INCREASES WITH OUR, THE GOODS AND SERVICES THAT WE PROCURE.

UM, I, I MENTIONED DEBT SERVICE AT, AT, YOU KNOW, ALMOST 187 MILLION, ALTHOUGH AGAIN, WHEN YOU FACTOR IN THE DEFIANCE TRANSACTION, UH, WE, WE EXPECT TO END THE YEAR WITH ABOUT 157 MILLION IN DEBT SERVICE REQUIREMENTS, WHICH WOULD ACTUALLY BE ABOUT AN $18 MILLION DECREASE YEAR OVER YEAR.

SO, UH, ROUGHLY HALF OF HALF OF THE, UM, INCREASE WE'RE SEEING IN, IN OPERATING REQUIREMENTS, WE WILL BE REDUCED BY, UM, REDUCED DEBT SERVICE REQUIREMENTS.

AND THEN FOR TRANSFERS, UH, TRANSFERS ARE GOING UP ALMOST 10 MILLION, AND THE BULK OF THAT IS, UH, AN INCREASE TO GENERAL FUND

[00:45:01]

TRANSFER.

AS OUR REVENUES GROW, OUR GENERAL FUND TRANSFER GROWS, AND, UM, AND AS OUR C I P GROWS, WHICH WE'LL TALK ABOUT, UH, HERE SHORTLY, UH, WE, WE CONTRIBUTE MORE FUNDS TO, TO CASH FUND A PORTION OF OUR, OUR CAPITAL IMPROVEMENT PROGRAM.

SO, SO THE BULK OF THOSE INCREASES ARE FROM GENERAL FUND AND, AND C I P CASH TRANSFERS.

UH, NEXT SLIDE PLEASE.

SO THIS SLIDE HIGHLIGHTS, UH, THE SIGNIFICANT CHANGES IN OUR OPERATIONS AND, AND MAINTENANCE BUDGETS.

SO, AS I SAID, UH, THE MAJORITY OF THE INCREASE IS HAPPENING ON THE, ON THE WAGE AND BENEFITS SIDE.

UM, WE ARE, UH, PROPOSING ABOUT, UH, ALMOST $13 MILLION OF INCREASE IN WAGE AND, AND BENEFIT UPDATES, UH, INCLUDING, YOU KNOW, 4% ACROSS THE BOARD INCREASE AS PROPOSED BY THE CITY MANAGER.

UH, IN ADDITION, THERE'S, UH, YOU KNOW, ADDITIONAL 7.7 MILLION, UH, FOR, UH, EMPLOYEE RECRUITING AND RETENTION INITIATIVES THROUGHOUT THE YEAR.

WE'VE IMPLEMENTED A COUPLE OF RECRUITING AND, AND, UM, AND RETENTION INITIATIVES, INCLUDING A, UM, A 10%, UH, RETENTION STIPEND.

UM, WE'VE IN INTRODUCED A, UM, A NEW HIRE, UH, INCENTIVE WHEREBY EMPLOYEES, YOU KNOW, AFTER THEY MEET, UM, YOU KNOW, SAY THREE MONTHS, SIX MONTHS, UH, THRESHOLDS WITH, WITH THE UTILITY, WE'LL GET, YOU KNOW, A, A, A BONUS FOR, UH, FOR JOINING AND, AND, AND STAYING, UH, WITH THE UTILITY.

UM, LET'S SEE.

WE ALSO INTRODUCED A SAFETY STIPEND, UM, A QUARTERLY STIPEND, UH, DEPENDING ON, UM, YOU KNOW, OUR EMPLOYEES' ROLES WITH THE UTILITIES, THOSE, THOSE, THOSE ROLES THAT, UH, YOU KNOW, ARE INHERENTLY MORE DANGEROUS OR, UH, YOU KNOW, UH, GET A, WHAT WE CALL A TIER ONE STIPEND OF $150 A QUARTER.

AND, UM, FOR FOLKS THAT, THAT DO HAVE SOME, YOU KNOW, INCREASED SAFETY EXPOSURE, UH, TIER TWO AT 75.

SO, UM, LET'S SEE.

AND THEN IN ADDITION TO RECRUITING AND RETENTION INITIATIVES, UM, THE PROPOSED BUDGET INCLUDES ABOUT 2.3 MILLION, UH, FOR 20 NEW FTES.

UM, THEN ON THE CONTRACTUAL AND COMMODITY SIDE, UH, WE'RE SEEING ABOUT A $13 MILLION INCREASE WITH ABOUT HALF OF THAT BEING RELATED TO COST INCREASES FOR CHEMICALS.

UH, CHEMICALS IS THE, THE AREA WHERE WE'VE SEEN THE BIGGEST, UM, YOU KNOW, GOODS AND SERVICE INCREASE O OVER THE LAST YEAR AND A HALF.

AND, UM, SO THE BUDGET INCLUDES ABOUT 6.6 MILLION, UH, INCREASED FUNDING FOR, FOR THE COST OF CHEMICALS IN, IN OUR TREATMENT PROCESS.

UH, THE PROPOSED BUDGET ALSO INCLUDES 1.7 MILLION FOR, UH, YOU KNOW, INCREASE IN, IN JANITORIAL SERVICES.

AND THAT'S, UH, DRIVEN BY A COUPLE OF FACTORS.

ONE IS, UM, YOU KNOW, AN INCREASED LEVEL OF, OF, OF SERVICE, UH, AS WELL AS TAKING ON A COUPLE OF ADDITIONAL FACILITIES IN TERMS OF, OF, UH, YOU KNOW, THE CONTRACTED JANITORIAL SERVICES.

AND THEN JUST IN GENERAL, WE WE'RE SEEING, UH, ABOUT, YOU KNOW, ALMOST $6 MILLION INCREASE FOR, FOR OTHER GOODS AND SERVICES THAT WE PROCURE, UM, YOU KNOW, ALL ADDED UP, UM, YOU KNOW, SMALLER INCREASES.

UM, THOSE, THOSE INCREASES ARE OFFSET BY, UM, A, A DECREASE IN FINANCIAL RATE CONSULTANT, UH, SERVICES WHERE WE'RE CURRENTLY GOING THROUGH A COST OF SERVICE STUDY.

AND SO THIS IS A, A DECREASE IN ONE-TIME COST ASSOCIATED WITH THE COST OF SERVICE STUDY.

AND THEN THE OTHER LARGE INCREASE IS, UM, AN INCREASE OF 4.2 MILLION, UH, FOR THE SERVICES THAT AUSTIN ENERGY PROVIDES, YOU KNOW, UTILITY BILLING AND, AND, AND CUSTOMER, UH, CUSTOMER SUPPORT COSTS, UH, WENT UP, UH, 4.2 MILLION OR ABOUT 22%.

UH, I, I WILL NOTE, I I EXPECT THIS TO BE KIND OF THE PEAK YEAR IN TERMS OF, OF THAT, THAT ALLOCATION TO US.

UH, THIS, THIS ESSENTIALLY, YOU KNOW, IS KIND OF FULLY LOADED COST OF, OF METER READING.

THE WAY, THE WAY THIS COST IS ALLOCATED TO USER DEPARTMENTS IS, UM, ON A, ON A LOOKBACK BASIS.

SO IN F Y 24, WE ARE GETTING THE ALLOCATION FOR THE COST THAT AUSTIN ENERGY INCURRED IN FISCAL YEAR 2022.

SO AS WE CONTINUE ALONG WITH OUR, UH, A M I PROGRAM AND WE GET MORE METERS INSTALLED, YOU KNOW, THAT, THAT, YOU KNOW, PHYSICAL MANUAL METER READING CONTRACT, WE'LL, WE'LL START TO WIND DOWN.

SO F Y 22 SHOULD BE THE PEAK IN TERMS OF METER READING CONTRACT, UM, PHYSICAL METER READING CONTRACT, AND, AND WE'LL, YOU KNOW, READ, UH, METERS ELECTRONICALLY GOING FORWARD.

WE CURRENTLY HAVE ABOUT 160,000, UM, METERS INSTALLED, AND WE'RE BILLING OVER OVER A HUNDRED THOUSAND.

SO, UM, F Y 23 WILL BE MUCH LOWER THAN, THAN THAN 22.

[00:50:01]

UM, IN TERMS OF PROPOSED, UH, NEW FTES, AGAIN, YOU KNOW, 22 FTES, ABOUT HALF OF THOSE ARE, UH, ADDRESSING ENTERPRISE RESILIENCY, UM, WITH, UH, FIVE OF THEM BEING, YOU KNOW, BRAND NEW FTES AND, AND, AND FIVE OF 'EM BEING, UM, YOU KNOW, UH, FTES THAT WILL, WILL KINDA BE PERMANENT REPLACEMENTS FOR SERVICES THAT ARE EITHER CURRENTLY PROVIDED BY TEMPORARY EMPLOYEES OR, OR THAT ARE CONTRACTED THROUGH, UM, THROUGH OUTSIDE SERVICES.

IN ADDITION TO, TO THOSE FIVE, UM, CONTRACT AND, AND TEMP CONVERSIONS, WE'VE GOT ANOTHER FIVE, UM, POSITIONS FOR OUR SECURITY PROGRAM.

UH, WE'LL BE IN INSOURCING FIVE FTES, AGAIN FROM CONTRACTED SERVICES AND, AND BRING THOSE IN-HOUSE, UH, YOU KNOW, NEW FTES.

UM, AND THEN ADDITIONALLY, YOU KNOW, TWO NEW WATER FORWARD FTES, UM, YOU KNOW, ANOTHER F T E EACH IN CUSTOMER SATISFACTION, UH, ONE FOR THE MY A T X WATER PROGRAM AND, AND ONE TO SUPPORT THE, THE CITY'S EXPEDITED PLAN REVIEW, UH, INITIATIVE.

THAT BRINGS US TO OUR FIVE YEAR, UH, CAPITAL PROGRAM HIGHLIGHTS, UH, FOR, UM, FOR THE FIVE YEAR PERIOD FROM FISCAL YEAR 24 THROUGH FISCAL YEAR 28, UH, WE'VE GOT A FIVE YEAR SPENDING PLAN OF ALMOST $1.9 BILLION.

THAT REPRESENTS ABOUT A 37% INCREASE OVER, UH, OUR, OUR CURRENT FIVE YEAR PLAN.

UM, AND, AND THAT'S REALLY, YOU KNOW, THE, THE RESULT OF, YOU KNOW, CONTINUING TO IMPLEMENT OUR INFRASTRUCTURE RESILIENCY INITIATIVES, UM, UH, BUT, BUT ALSO, UH, THE ACCELERATION OF, YOU KNOW, SEVERAL OF OUR LARGE STRATEGIC PROJECTS INCLUDING, UH, THE WALNUT CREEK, UH, WASTEWATER TREATMENT PLANT EXPANSION THAT, YOU KNOW, WAS ON THE AGENDA EARLIER.

SO IN, UH, THE WALNUT CREEK, UH, WASTEWATER TREATMENT PLANT EXPANSION, UH, IN THE FIVE YEAR PERIOD, WE ANTICIPATE ABOUT 574 MILLION OF, OF, OF SPENDING FOR, FOR THAT PROJECT.

UM, YOU KNOW, FOR FOR SOUTH AUSTIN REGIONAL, UH, WASTEWATER TREATMENT PLANT, UH, TRAINS A AND B IMPROVEMENTS, WE, UH, THERE'S, THERE'S ANOTHER 105 MILLION IN THE FIVE YEAR SPENDING PLAN FOR, FOR THAT PROJECT.

UH, WE, WE TALKED A LITTLE BIT ABOUT, UH, AQUIFER STORAGE AND RECOVERY.

UM, THERE'S, UH, 89 MILLION IN THE FIVE YEAR SPENDING PLAN FOR, UH, FOR BOTH THE A S R PILOT, UH, AS WELL AS THE, UM, THE FULL SCALE, UH, AQUIFER STORAGE AND RECOVERY PROJECT IS, IS, UH, STARTING TO, TO COME INTO THE FIVE YEAR SPENDING PLAN.

UM, AND THEN I'LL JUST HIGHLIGHT, UH, YOU KNOW, THREE OF THE FOUR PROJECTS, UH, UH, ON THE BOTTOM ARE, UH, YOU KNOW, UH, RESILIENCY RELATED AND ELECTRICAL IMPROVEMENTS.

SO CENTER STREET PUMP STATION REPLACEMENT ON ELECTRICAL IMPROVEMENTS, UM, SOUTH AUSTIN REGIONAL, UH, YOU KNOW, ELECTRICAL, UH, UH, SUBSTATION ONE REPLACEMENT, AND THEN ALL REC, UH, UM, WATER TREATMENT PLANT, LOW SERVICE PUMP STATION, ELECTRICAL FEED.

AND SO THOSE, UM, YOU KNOW, THOSE, THOSE PROJECTS WERE ACTUALLY IN THE PIPELINE BEFORE URI.

BUT, UH, THOSE, THOSE PROJECTS ARE STARTING TO WIND DOWN.

UH, TO GO FROM 7,200 TO TO 7,700.

AND THEN THIS SLIDE SHOWS, UH, A COMPARISON OF THE, THE LAST FIVE, FIVE YEAR CAPITAL SPENDING PLANS.

AND, AND SO YOU CAN SEE AGAIN, UM, YOU KNOW, THE, THE, UH, CAPITAL SPENDING PLAN IS, IS, IS RAMPING UP AS A RESULT OF, YOU KNOW, OUR CONTINUED INVESTMENT IN, IN RESILIENCY AND IN INFRASTRUCTURE.

UM, BUT, BUT, BUT ALSO, YOU KNOW, IT'S HEAVILY IMPACTED BY, UM, YOU KNOW, THE WALNUT CREEK EXPANSION PROJECT, UH, UH, WHICH, WHICH MAKES UP, UH, ALMOST 40% OF OUR TOTAL SPENDING PLAN.

UH, LET'S SEE.

YEAH, UH, NEXT SLIDE PLEASE.

AND THEN IT'S, YOU KNOW, KIND OF A RELATED TOPIC TO OUR CAPITAL SPENDING PLAN.

IN ADDITION TO OUR SERVICE RATE, UM, INCREASE, UH, WE ARE PROPOSING AN INCREASE TO, TO IMPACT FEES.

UH, WE ARE REQUIRED BY STATE LAW TO UPDATE OUR, OUR IMPACT FEES OR, OR CAPITAL RECOVERY FEES AS WE REFER TO 'EM, UH, AT LEAST EVERY FIVE YEARS.

AND, UM, SO OUR LAST UPDATE WAS IN 2018.

UH, SO WE'RE PROPOSING AN INCREASE TO, UH, TO OUR CAPITAL RECOVERY FEES OF, OF $500 TOTAL FOR A WATER AND WASTEWATER CONNECTION,

[00:55:01]

AND, AND THE WAY THE IMPACT FEE IS CALCULATED IS, YOU KNOW, WE, WE, UH, IDENTIFY BOTH HISTORICAL AND, AND FUTURE, UH, GROWTH RELATED PROJECTS THAT, UH, EITHER WE ARE CURRENTLY PAYING DEBT ON OR WILL BE PAYING DEBT ON OVER, OVER THE NEXT 10 YEARS.

UM, SO WE IDENTIFY THOSE GROWTH RELATED PROJECTS AND, AND THE COST OF THOSE PROJECTS, AND, AND WE DIVIDE THOSE COSTS BY, UH, THE, THE ANTICIPATED NUMBER OF SERVICE UNITS, UH, THAT, UH, THOSE, THOSE PROJECTS WILL, WILL SERVE.

UM, AND, UM, SO ALTHOUGH WE ARE, WE'RE CONTINUING TO SEE INCREASED GROWTH IN TERMS OF, OF OF SERVICE UNITS THAT, UH, UM, THAT THOSE PROJECTS SERVE, UM, THE, THE, THE GROWTH IN OUR CAPITAL SPENDING PLAN IS REALLY WHAT'S DRIVING THE, THE INCREASE, UH, OVER THE, THE 2018 UPDATE.

AND, UM, NEXT SLIDE PLEASE.

SO THAT BRINGS US TO, TO DEBT MANAGEMENT AND, AND DEBT SERVICE SAVINGS.

UM, YOU KNOW, OVER THE LAST SEVEN YEARS, WE'VE, WE'VE BEEN HEAVILY FOCUSED ON, ON DEBT MANAGEMENT.

UM, YOU KNOW, IN, IN TRYING TO, TO STABILIZE OUR, OUR, OUR DEBT SERVICE REQUIREMENTS, THIS CHART SHOWS, UH, THE BLUE BLACK, THE BLUE BARS SHOW ARE EITHER OUR ANNUAL ACTUAL, UH, HISTORICAL LEVEL OF, OF, OF DEBT SERVICE, UM, OR, YOU KNOW, FOR FUTURE PERIODS, THE SCHEDULED LEVEL OF, OF DEBT SERVICE.

UH, WHILE, WHILE THE GREEN, UM, THE GREEN BARS AT THE TOP SHOW THE AMOUNT OF SAVINGS THAT WE'VE, UM, INCURRED THROUGH OUR DEBT MANAGEMENT EFFORTS.

AND THAT'S, YOU KNOW, THE USE OF CAPITAL RECOVERY FEES TO, TO DE FEES DEBT.

UM, THAT'S THROUGH, UM, AND, AND, YOU KNOW, A DEBT DEFE IS, UH, YOU KNOW, SIMPLY A MECHANISM WHERE WHEREBY WE, WE PAY OFF DEBT EARLY, MUCH LIKE, UH, YOU KNOW, MAKING EXTRA PAYMENTS ON YOUR, YOU KNOW, YOUR CAR PAYMENT OR YOUR MORTGAGE.

UM, IN ADDITION, WE'VE, UH, WE'VE, UH, REFUNDED, YOU KNOW, DEBT OVER, OVER THE LAST SEVEN YEARS AT, AT, YOU KNOW, LOWER INTEREST RATES, AGAIN, MUCH LIKE YOU WOULD REFINANCE YOUR, YOUR HOME MORTGAGE WHEN WE WERE IN A LOWER INTEREST RATE ENVIRONMENT TO TAKE ADVANTAGE OF LOWER INTEREST RATES.

UM, AND THEN KIND OF THE THIRD BIG, UM, BIG PART OF OUR, OUR DEBT MANAGEMENT, UM, AND, AND SAVINGS EFFORTS IS THE USE OF WATER DEVELOPMENT BOARD LOANS TO, UM, UH, TO FINANCE MANY OF OUR PROJECTS AT, AT BELOW MARKET INTEREST RATES.

UH, SO AS A RESULT, WE'VE, WE'VE SEEN ABOUT, UH, YOU KNOW, $497 MILLION OF SAVINGS SINCE 2016.

UM, AND YOU CAN SEE, UM, YOU KNOW, IF YOU TAKE THE BLUE BAR PLUS THE, THE GREEN, UH, SHADED AREA ABOVE THAT, THAT GIVES YOU A SENSE OF WHAT OUR ANNUAL DEBT SERVICE WOULD'VE BEEN, YOU KNOW, IF NOT FOR OUR DEBT MANAGEMENT EFFORTS.

SO IN 2018 AND 2019, OUR DEBT SERVICE REQUIREMENTS WOULD'VE BEEN AT OR AROUND 240 MILLION.

AND AGAIN, FOR, FOR 2024, IF NOT FOR OUR DEBT SERVICE OR OUR DEBT MANAGEMENT EFFORTS, UH, WE'D HAVE DEBT SERVICE REQUIREMENTS OF ABOUT 240 MILLION.

UM, BUT, UH, YOU KNOW, RECALL WHERE WE'RE ANTICIPATING TO BE IN THE, IN ABOUT THE $160 MILLION RANGE, UH, FOR, FOR F Y 24.

AND THEN FINALLY THE, THE GREEN LINE, UM, AND IT'S HARD TO SEE THE NUMBERS, BUT, UH, THE GREEN LINE SHOWS THE PERCENTAGE THAT DEBT SERVICE MAKES UP OF OUR TOTAL ANNUAL BUDGET.

AND IN F Y 17, IT MADE UP ABOUT 36% OF OUR TOTAL ANNUAL BUDGET.

UH, WE PUSHED THAT DOWN TO A LOW OF ABOUT 22% IN F Y 22, UH, 23% IN, IN F Y 22.

UH, BUT, BUT IT'S KIND OF STABILIZED AROUND THE 26, 20 7%.

AND THAT'S, UH, A LEVEL THAT, THAT WE FEEL COMFORTABLE WITH, UM, AND IT'S GONNA BE IMPORTANT AS OUR CAPITAL SPENDING PLAN GROWS THAT WE CONTINUE OUR DEBT MANAGEMENT EFFORTS TO, TO KEEP, UM, TO, TO FREE UP CAPACITY FOR, FOR THE NEW DEBT THAT WE'LL BE TAKING ON WITH, UH, OUR GROWING, GROWING CAPITAL SPENDING PLAN.

UH, NEXT SLIDE PLEASE.

AND THEN AS WE LOOK AT, UH, REALLY, YOU KNOW, ONGOING AND, AND FUTURE, UH, YOU KNOW, BUDGET CONSIDERATIONS, UH, AGAIN, I'VE TALKED ABOUT OUR GROWING, UH, CAPITAL SPENDING PLAN.

WE'VE GOT SEVERAL LARGE STRATEGIC PROJECTS ON THE HORIZON, UM, YOU KNOW, INCLUDING, UH, WALNUT CREEK EXPANSION, UM, INCLUDING A S R, UM, YOU KNOW, IN ADDITION, YOU KNOW, WE'VE GOT, UH, UM, EXPANSION OF, OF SOUTH AUSTIN REGIONAL WASTEWATER TREATMENT PLANT ON, ON THE HORIZON, AND THAT'S STARTING TO, TO, TO COME INTO OUR FIVE YEAR SPENDING PLAN.

UM, SO AGAIN, OUR, OUR, OUR DEBT MANAGEMENT EFFORTS ARE GONNA

[01:00:01]

BE IMPORTANT, UM, TO, TO BE ABLE TO TAKE ON THOSE PROJECTS AND THE ASSOCIATED DEBT, UM, WHILE, WHILE STILL, UH, TRYING TO MAINTAIN AFFORDABILITY.

AND CERTAINLY PROBABLY, YOU KNOW, EVEN MORE YOU KIND OF, UH, IN THE FOREFRONT IS, UH, THE IMPACTS OF, OF, OF THE DROUGHT.

UM, YOU KNOW, AS WE, AS THE HIGHLAND LAKES GET, UH, APPROACH, UH, YOU KNOW, 900,000 ACRE FEET AND, UM, YOU KNOW, DROUGHT STAGE TWO RESTRICTIONS ARE, ARE ON THE HORIZON.

YOU KNOW, WE'LL CONTINUE TO MONITOR, UH, YOU KNOW, BOTH, UH, DEMAND AND, AND THE ASSOCIATED REVENUE IMPACTS.

BUT WHAT I WOULD SAY IS, YOU KNOW, EVEN, EVEN AT THE PEAK OF, OF, YOU KNOW, THE, THE PREVIOUS DROUGHT, UH, YOU KNOW, WE SAW A DEMAND OF, OF ROUGHLY 5,800 GALLONS A MONTH, UH, YOU KNOW, AVERAGE ANNUAL DEMAND OR AVERAGE MONTHLY DEMAND, AND WE HAVEN'T REALLY, UM, SEEN ANY, ANY SIGNIFICANT INCREASE THERE.

SO, UM, YOU KNOW, SO EVEN, YOU KNOW, IF THE DROUGHT WORSENS, I DON'T ANTICIPATE SIGNIFICANT IMPACT, UM, TO, UH, TO OUR DEMAND.

BUT SHOULD WE GET INTO STAGE THREE OR, OR, OR BEYOND, UH, WE DO HAVE IN, IN OUR FEE STRUCTURE, UM, YOU KNOW, DROUGHT SURCHARGE, UH, THAT WOULD BE INTENDED TO OFFSET, UM, YOU KNOW, ANY REVENUE LOSS ASSOCIATED WITH, UH, FURTHER REDUCTIONS IN DEMAND.

AND THEN FINALLY, YOU KNOW, AGAIN, TALKING ABOUT CAPITAL RECOVERY FEES, UM, YOU KNOW, WHILE, WHILE THE HIGH INTEREST RATE ENVIRONMENT HAS BEEN GOOD FOR US FROM AN INTEREST, UH, EARNINGS PERSPECTIVE, UM, I THINK WE ARE STARTING TO SEE THE IMPACT ON, ON DEVELOPMENT.

UH, IT'S MORE EXPENSIVE TO TAKE ON NEW DEVELOPMENT AND, AND, UH, SO CURRENT, YOUR CAPITAL RECOVERY FEE REVENUES IS, IS LOWER THAN IT'S BEEN IN ABOUT FOUR, YOU KNOW, OVER THE LAST FOUR YEARS.

AND SO WE'RE CONTINUING TO MONITOR, UH, THOSE REVENUES.

BUT, UH, YOU KNOW, WE, WE ANTICIPATE, UH, YOU KNOW, WE'RE, WE'RE STILL SEEING STRONG CAPITAL RECOVERY FEES, AND SO WE DON'T ANTICIPATE, UH, YOU KNOW, SIGNIFICANT IMPACT.

IT'S JUST, IT, IT'S SOMETHING THAT WE'LL CONTINUE TO MONITOR AND, AND CERTAINLY, UM, IMPACT FUTURE, FUTURE BUDGET, UH, UM, RECOMMENDATIONS AND DECISIONS.

AND WITH THAT, UH, I'D BE HAPPY TO ANSWER ANY QUESTIONS.

YES, COMMISSIONER MORIARTY, I AM, BY THE WAY, THIS IS A VERY GOOD REPORT AND REALLY APPRECIATE ALL THE WORK THAT HAD TO GO INTO IT, BUT I THINK THERE'S A PROBLEM WITH THIS IMPACT FEE ONLY GOING UP A HUNDRED BUCKS.

I MEAN, HOW CAN I LOOK AT THIS AND THAT YIELD ONLY A HUNDRED DOLLARS MAKES NO SENSE TO ME.

NOW, I KNOW WHAT YOU'RE GONNA TELL ME THAT THE NUMERATOR IS BIG.

WE GOT LOTS OF NEW DWELLINGS, AND I DON'T KNOW, I'LL TELL YOU WHAT I WOULD DO IF I WERE YOU, I WOULD HIRE SOMEBODY TO CHECK THAT BECAUSE YOU KNOW, WHEN, WHEN WE WERE HAVING BUDGET PROBLEMS YEARS AGO, AND YOU REMEMBER THIS, IT'S WHEN WE FINALLY GOT THIS THING STRAIGHTENED OUT AND WE WERE GIVEN 75% DISCOUNTS TO EVERY TOM, DICK, AND HARRY IN THE CITY, WE SHUT ALL THAT DOWN AND STARTED COLLECTING THESE IMPACT FEES.

AND TO TELL ME THAT 2013, 10 YEARS WE'RE ONLY GOING UP A HUNDRED DOLLARS WITH ALL OF THESE PROJECTS THAT YOU'VE GOT LINED UP TO DO.

SO THAT'S A SUGGESTION.

UH, DON'T NEED TO SAY YES OR NO.

UM, TERMS OF THE, IF, IF I COULD JUST, UH, GO AHEAD.

IT, IT IS GOING FIVE UP $500.

UM, THE $100 IS THE INCREASE OVER 20, 20 13, SO IT IS GOING UP $500, AND MOST OF THAT SHOULD HAVE NEVER WENT DOWN.

I MEAN, THE, THE, I DON'T THINK THESE DEVELOPERS WOULD BLINK IF IT WAS 12,000.

I'M NOT TELLING YOU WHAT TO MAKE IT, BUT I'M, I'M, I'M TELLING YOU, YOU GOT A LOT TO WORK WITH THERE THAT IF WE, I, I JUST CAN'T BELIEVE THAT WE CAN'T THROW MORE OF THESE PROJECTS INTO FUTURE PLANNING AND STUFF.

AND, UH, I JUST WONDER IF WE'RE BEING A LITTLE CONSERVATIVE, BUT YOU, YOU ALL ARE KNOW WHAT YOU'RE DOING, UM, IN TERMS OF THE EMPLOYEE INCENTIVES THAT YOU'RE, ARE THEY WORKING? SO THE, THE, THESE INITIATIVES ARE RELATIVELY NEW INITIATIVES.

UM, MOST OF THEM HAVE BEEN IMPLEMENTED, UH, YOU KNOW, MARCH OR LATER, UH, WE HAVE SEEN A REDUCTION IN ATTRITION.

I DON'T KNOW IF THREE MONTHS IS ENOUGH TIME TO SAY, UH, TO SAY THAT THAT REDUCTION IN ATTRITION IS FULLY ATTRI ATTRIBUTABLE TO, TO THOSE INCENTIVES, BUT, UM, IT'S NOT GOING THE OTHER WAY.

INCENTIVES, KEEPING THE GUYS AND, AND, AND LADIES YOU ALREADY HAVE, AND THAT SEEMS TO BE HELPING KEEPING, AND THEN THERE'S ATTRACTING THE NEW ONES, AND THAT SEEMS TO BE WORKING TOO, SO, OKAY.

SO, SO THERE'S, UH, THERE'S, THERE'S RETENTION

[01:05:01]

UM, WE'RE ASKING FOR ANOTHER 20 FTES, AND I GUESS I CAN'T FIND THE RIGHT PAGE.

OH, SO THE UNIVERSE AT AUSTIN WATER WOULD GO FROM 1,361 TO 1008, UH, 1003 81.

HOW MANY PEOPLE ARE YOU ACTUALLY PAYING TODAY? I, I THINK WE ARE AT ABOUT 1250.

SO YOU ARE SHORT, UM, 131.

THAT SOUNDS RIGHT.

SO OF COURSE THAT HELPS YOUR BUDGET TOO, A HUNDRED.

AND SO PEOPLE, YOU DON'T, YOU DON'T HAVE TO PAY A CHECK TO ON EVERY OTHER FRIDAY.

UM, HOW, UH, HARMFUL IS THAT TO YOUR OPERATION TO BE SHY, 1,100 PLUS EMPLOYEES? WELL, WE CERTAINLY ARE VERY FOCUSED ON RECRUITING AND HIRING.

UH, AND I WOULD SAY IT VARIES BY WORK GROUP AND HOW BIG OF AN IMPACT IT'S HAVING.

UM, BUT I WOULD ALSO POINT OUT THAT WE HAVE ONE OF THE FASTEST FILLED A RATE FILL RATE TO FILL TIME TO FILL IN THE CITY AND ONE OF THE LOWEST VACANCY RATES IN THE CITY.

SO WE ARE ACTIVELY WHICH RATE? WHAT DOES THAT MEAN? THAT MEANS THAT THE, FROM THE TIME WHEN THE POSITION BECOMES OPEN, UNTIL WE HAVE SOMEONE HIRED, WE'RE VERY FAST AT THAT, FASTER THAN OTHER DEPARTMENTS AT THE CITY.

OKAY, THAT'S GOOD.

SO ANYWAYS, THAT WAS A LITTLE CONCERNING, BUT THANK YOU VERY MUCH.

ANYONE ELSE WITH ANY QUESTIONS THEY'D LIKE? YES, JESSE, COMMISSIONER? YEAH.

UH, AGAIN, THANK YOU FOR A GREAT REPORT.

I, I WAS CURIOUS ABOUT THE DEBT MANAGEMENT, UM, PART OF THE EQUATION IN THAT I'VE SEEN OVER THE YEARS A LOT OF IMPROVEMENT IN, AND THAT CREATED FOR A LACK OF A BETTER TERM, MAYBE SOME HEAD SPACE, SOME OPPORTUNITY FOR, FOR YOUR FINANCIALS.

WITH THE ENVIRONMENT THAT WE'RE IN NOW, AND WHAT WE MAY SEE IN THE FEW YEAR, IN THE NEXT COMING YEARS IS, IS THERE LESS OPPORTUNITY THAT TO, TO CREATE SAVINGS THAT THAT, THAT YOU, THAT COULD BE PUT INTO OTHER USES JUST BECAUSE WE'RE ALREADY, IT'S GOING, IT WAS, IT'S GONE UP, THERE'S NOT A LOT OF REFINANCING YOU CAN DO NOW.

DOES THAT, WHAT KIND OF IMPACT DOES THAT HAVE IF IT'S EVEN TRUE? GREAT.

YEAH.

THE, THE INTEREST RATE ENVIRONMENT, SO THE HIGH INTEREST RATE ENVIRONMENT DOES IMPACT OUR ABILITY TO REFUND OR REFINANCE EXISTING DEBT AT LOWER INTEREST RATES.

UM, OCCASIONALLY WE DO STILL SEE AN OPPORTUNITY WHERE WE'RE KIND OF TRACKING ONE NOW, UM, BUT WHERE, WHERE WE MIGHT NOT HAVE AS MUCH OPPORTUNITY, UM, FOR REFINANCING OR REFUNDING OPPORTUNITIES.

THE HIGH INTEREST RATE ENVIRONMENT DOES HELP US FROM, FROM A DEFIANCE PERSPECTIVE.

SO WHEN, WHEN WE DEFEASE OR PAY DEBT OFF EARLY, WE, WE SET THAT MONEY ASIDE INTO AN ESCROW AND WE, WE PURCHASE SECURITIES, UM, IN, YOU KNOW, IN THE ESCROW.

AND, UM, BECAUSE INTEREST RATES ARE HIGH, THOSE SECURITIES EARN MORE, UM, THAN THEY WOULD HAVE TWO YEARS AGO.

AND, AND SO IT COST US LESS TO THE FEES, YOU KNOW, THE SAME AMOUNT OF DEBT THAT, YOU KNOW, WE MIGHT'VE DEED TWO YEARS AGO.

UM, IT'S PROBABLY NOT, UM, YOU KNOW, AN APPLES TOBBS COMPARISON.

SO, UM, IN, IN OTHER WORDS, THE, THE LOST REFUNDING OPPORTUNITIES PROBABLY AREN'T TOTALLY MADE UP, UH, BY THE, UH, INCREMENTAL, UM, EFFICIENCY OF, OF DE FEES TRANSACTIONS.

UM, BUT I, I DON'T, UM, WE, WE DON'T RELY ON, ON REFUNDING OPPORTUNITIES IN TERMS OF, OF, OF BALANCING OUR, OUR BUDGET.

GOTCHA.

SO THAT'S ONE, IT'S JUST REALLY IMPORTANT TO MANAGE IT THE BEST YOU CAN BECAUSE OF THE, THE, OF THE OP, YOU KNOW, THE POTENTIAL LOSS OF OPPORTUNITY IF YOU, IF YOU DON'T.

AND TWO, THE OTHER, THE OTHER THINGS LIKE, UH, REVENUE BECAUSE OF POTENTIAL DROUGHT ESCALATION, LARGE SCALE LONG RANGE PROJECTS, THOSE ARE REALLY THE DRIVERS, UH, KIND OF AS YOU HAD IN YOUR SUMMARY SLIDE.

CONTINUED AND, AND GROWING INVESTMENT IN, IN, IN OUR INFRASTRUCTURE, UH, YOU KNOW, PART OF THE REASON THAT WE WERE ABLE TO NOT HAVE A RATE INCREASE IN, IN FIVE YEARS WAS BECAUSE WE HAD, UH, YOU KNOW, A STABLE CAPITAL SPENDING PLAN.

UM, AND, AND I WOULD SAY, YOU KNOW, AS, AS WE LOOK FORWARD OVER, OVER THE NEXT FIVE YEARS THAT, UM, THAT THE, THE, THE BIGGEST COST DRIVER WILL BE, UM, YOU KNOW, OUR

[01:10:01]

UM, AND, AND SO WE WERE BRINGING IN ENOUGH REVENUE, UM, TO, TO MANAGE THAT LEVEL OF, OF CAPITAL INVESTMENT.

UM, SO AS, AS OUR CAPITAL SPENDING PLAN GROWS, IT, IT PUTS MORE PRESSURE ON, YOU KNOW, OUR, OUR REVENUE REQUIREMENT.

AND SO AGAIN, THAT'S WHERE, UH, YOU KNOW, CONTINUING TO MANAGE OUR, OUR, OUR DEBT SERVICE WILL, WILL CONTINUE TO BE IMPORTANT AND, UM, UM, YOU KNOW, WE, WE HAVE TOOLS TO, TO DO THAT EVEN IF THERE AREN'T A TON OF REFUNDING OPPORTUNITIES.

THANK YOU VERY MUCH.

SURE.

ANY OTHER QUESTIONS? OKAY.

UM, I WOULD LIKE TO, UH, LET'S SEE.

THE NUMBER 10 ITEM WAS APPROVED THE RECOMMENDATION ACCOUNTS OF THE PROPOSED BUDGET COMMITTEE REPORT, AND THAT WAS AT THE END OF THE, UM, THE BUDGET REPORT THAT, THAT HE PROVIDED.

SO I DIDN'T KNOW IF THERE WAS ANY QUESTIONS ON THAT BEFORE WE MOVED ON TO VOTE ON THAT ITEM IN NUMBER EIGHT ALSO.

UM, DO I HEAR A MOTION OR, UM, ON NUMBER EIGHT AND 10, WE'RE GONNA VOTE ON THOSE TWO TO BE APPROVED.

IS IT A MOTION ON 19? OH, NO.

SO, UH, THEY HAVE TO BE SEPARATE MOTIONS FOR EACH ITEM.

TO COUNSEL OF THE PROPOSED BUDGET COMMITTEE REPORT.

NO, NO.

CUTTING CORNERS HERE.

OKAY, SO WE'VE GOT NUMBER

[8. Approve recommendation to Council of Austin Water’s Fiscal Year 2023-2024 Proposed Operating Budget, Capital Budget, new appropriations, rates and fees, and 5-Year Capital Improvement (CIP) spending plan.]

EIGHT.

DO WE HAVE A, A MOTION TO APPROVE NUMBER EIGHT.

LET'S MOVE TO APPROVE.

OKAY, A SECOND PLEASE.

SECOND, I WAS, MOTION WAS MADE BY COMMISSIONER ANGO AND SECONDED BY COMMISSIONER MORIARTY.

ALL IN FAVOR, PLEASE RAISE YOUR HAND.

UNANIMOUS VOTE SAYS YES.

OKAY, GOOD.

AND THEN, UM, NUMBER 10, APPROVED RECOMMENDATION

[10. Approve recommendation to Council of the proposed Budget Committee Report ]

DO I HAVE A MOTION ON THAT ONE TO APPROVE? I MOVE TO APPROVE.

COMMISSIONER MAXWELL GAINES APPROVED IT.

AND, UH, ANYONE A SECOND? SECOND.

COMMISSIONER PENN.

SECONDED IT ALL IN FAVOR? RAISE YOUR HAND.

OKAY, WE HAVE THAT ONE CARRIED UNANIMOUSLY ALSO.

ALRIGHT, UM, WE'RE GETTING NOW DOWN TO NUMBER 14.

ANY FUTURE AGENDA

[FUTURE AGENDA ITEMS]

ITEMS SO FAR? I HAVE THE, UM, ONE FROM COMMISSIONER MORIARTY REGARDING, UM, THE, WHAT WAS IT? THE, THE, UM, LEGISLATIVE UPDATE? WHAT, I GUESS WHAT WHAT THE LEGISLATURE'S DONE TO THE UTILITY? DID I ASK THAT THE LAST TIME? I'M NOT SURE.

I KNOW I DID TOO.

I, I I THINK I DID.

SO THAT, THAT IS A PLAN FOR AN UPCOMING MEETING.

IT, IT USED TO BE JUST TO WHEN THE LEGISLATURE WAS IN SESSION.

WE USED TO GET REPORTS EVERY MONTH AND WE KIND OF DON'T DO THAT ANYMORE.

I'M NOT MISREMEMBERING AM I, I HAVEN'T BEEN HERE FOR, UH, THE PREVIOUS CYCLE, BUT IT IS, IT IS COMING UP, UH, FOR A FUTURE MEETING AND AND HEATHER USED TO BE THE ONE THAT DID IT.

SHE GAVE THE REPORT LIKE LOTS OF THEM AND THEN LIKE NOW WE WE'RE, WE'RE GETTING, WE'RE GONNA GET ONE IN A MONTH OR TWO IS WHAT YOU'RE SAYING? YES SIR.

I THINK THERE WAS ALSO A, A AQUIFER AQUIFER, UM, YOU KNOW, PLAN THAT, WAS IT THE AQUIFER STORAGE, STORAGE RECOVERY PLAN THAT YOU WANTED TO ALSO HEAR ABOUT? IS THAT CORRECT? THE, WE'D HAVE TO BRING IN SOMEONE FROM AUSTIN WATER FOR THAT, WHICH MARISA AND THERE'S A WHOLE CREW THAT COULD TALK ABOUT THAT AND THEY GIVE US REPORTS ON IT, ON, ON THE WATER FOR TASK FORCE EVERY MONTH.

SO IT WOULDN'T BE HARD TO DO.

SO THAT'D BE A GOOD ONE TO DO AS WELL.

UM, OKAY, WELL SO WE'VE ASKED FOR MAYBE NEXT TIME SINCE IT'S COMING UP TO THE FINAL, YOU KNOW, SINCE THEY'VE ALREADY, I GUESS THAT IS THE SESSION IS THE, HAVE THEY MADE ALL OF OUR DECISIONS ON US YET ON THE YES.

SESSION IS IS OVER.

AND EVERYTHING THAT WE'RE GONNA HAVE HAPPENED TO US HAS HAPPENED TO US THAT I, I DON'T KNOW, BUT I KNOW THAT WE WILL UPDATE THE COMMISSION.