[CALL TO ORDER]
[00:00:04]
I'M CHAIR OF THE AUDIT AND FINANCE COMMITTEE.
I'M GONNA CALL THE AUDIT AND FINANCE COMMITTEE TO ORDER ON THE DIOCESE WITH ME.
I HAVE COUNCIL MEMBER RYAN ALTER, COUNCIL MEMBER LESLIE POOLE, AND COUNCIL MEMBER MCKENZIE KELLY.
UH, COUNCIL MEMBER FUENTES WILL BE ABSENT TODAY.
UM, WE DO HAVE A VERY FULL AGENDA, SO WE ARE GONNA TRY AND BE AS PRODUCTIVE AS WE CAN, AND I APPRECIATE MY COLLEAGUES AGREEING THAT IF WE NEED TO, THAT WE CAN STAY UNTIL, UM, NOON TODAY.
I UNDERSTAND THAT WE DON'T HAVE ANYONE SIGNED UP FOR PUBLIC COMMUNICATION.
[1. Approve the minutes of the Audit and Finance Committee meeting of July 25, 2023]
THE FIRST ITEM WILL BE THE MINUTES FROM THE JULY 25TH MEETING, AND I WANT TO NOTE THAT THE CORRECT NAME FOR OUR APPOINTEE TO ACE IS TROY MAGIS.UM, SO IF THE CLERK CAN UPDATE THOSE MINUTES TO REFLECT THAT, THAT WOULD BE GREAT.
DO I HAVE A MOTION TO APPROVE THE MINUTES? COUNCIL MEMBER KELLY MAKES THAT MOTION SECONDED BY VICE CHAIR POOL.
[2. Cybersecurity audit follow-up.]
ITEM NUMBER TWO IS A CYBERSECURITY AUDIT FOLLOW-UP.UM, WE WILL COME BACK TO ITEM TWO IF NECESSARY AFTER WE TAKE UP ITEM EIGHT, WHICH WILL BE IN EXECUTIVE SESSION.
AND TO MAKE TODAY GO SMOOTHLY AND NOT MAKE EVERYBODY ELSE WAIT AROUND.
WE'RE GONNA TAKE THAT UP, UM, AT THE END OF THE MEETING.
SO THE NEXT ITEM THAT WE'RE GONNA TAKE
[3. Public Information Responses Audit.]
UP IS ITEM NUMBER THREE, THE PUBLIC INFORMATION RESPONSES AUDIT, UH, WHICH WILL BE PRESENTED.UM, PATRICK JOHNSON WILL BE PRESENTING THIS AUDIT.
THIS AUDIT WAS LED BY JASMINE TRIPLETT.
UM, AND, UM, YEAH, PATRICK WILL WALK US THROUGH IT.
YEAH, AS COREY SAID, UH, UM, MY NAME'S PATRICK JOHNSON, ASSISTANT CITY AUDITOR.
I DO WANNA ACKNOWLEDGE, UH, JASMINE TRIPLETT, WHO LED THIS AUDIT AND, AND THE REST OF OUR TEAM.
UM, ALSO WANNA EXTEND OUR APPRECIATION, UM, TO THE STAFF AND MANAGEMENT OF THE LAW AND POLICE DEPARTMENTS FOR ALL THEIR HELP.
UH, DURING THIS AUDIT, UH, OUR OBJECTIVE WAS TO DETERMINE IF THE CITY FOLLOW OPEN RECORDS LAWS AND PROVIDES REQUESTED INFORMATION IN AN EFFICIENT AND TIMELY MANNER.
UH, TALKING ABOUT PUBLIC INFORMATION.
SO THE TEXAS PUBLIC INFORMATION ACT PROVIDES A FRAMEWORK FOR ACCESS TO PUBLIC INFORMATION THAT'S PRODUCED OR MAINTAINED BY A GOVERNMENTAL ENTITY TO FOLLOW THE PRINCIPLES OUTLINED IN THIS LAW, GOVERNMENTAL ENTITIES MUST DO THE THINGS SHOWN HERE.
UH, NOTABLY TREAT ALL REQUESTERS THE SAME AND PROVIDE INFORMATION PROMPTLY.
THE CITY HAS MADE EFFORTS TO FOLLOW THESE PRINCIPLES, BUT CAN DO MORE TO IMPROVE THE TRANSPARENCY AND ACCESSIBILITY OF ITS PUBLIC INFORMATION.
UH, MOVING TO THE CITY'S PUBLIC INFORMATION OR P I R PROCESS, THERE ARE ESSENTIALLY FOUR STEPS AS SHOWN HERE.
UH, AT THE INTAKE POINT, UH, REQUESTS ARE SEPARATED BY THOSE SEEKING A P D INFORMATION AND THOSE SEEKING INFORMATION FROM ALL OTHER CITY DEPARTMENTS.
AND THE CITY CALLS THESE CITY SIDE REQUESTS.
UH, CURRENTLY A P D HAS A TEAM THAT MANAGES THEIR REQUEST, AND THE LAW DEPARTMENT, UM, UH, HANDLES ALL THE OTHER REQUESTS WITH ASSISTANCE FROM POINTS OF CONTACT IN THE DEPARTMENTS.
THE CITY ALSO HAS AN ELECTRONIC, UH, SYSTEM CALLED GOV QA TO HELP MANAGE THE PROCESS FLOW.
SO OUR REPORT HAS TWO FINDING AREAS REALLY RELATED TO IMPROVING REQUESTERS USER EXPERIENCE AND BRINGING MORE CONSISTENCY TO INTERNAL PROCESSES.
UH, OUR FIRST FINDING FOCUSES ON THE CITY'S CULTURE AND HOW IT APPROACHES PROVIDING ACCESS TO PUBLIC INFORMATION.
THE NEXT FEW SLIDES, UH, SHOW THAT A MORE PROACTIVE MEASURES COULD HELP IMPROVE THE CITY'S APPROACH, AS WELL AS THE PUBLIC'S PERCEPTION ABOUT THE TRANSPARENCY AND ACCESSIBILITY OF THE CITY INFORMATION.
UH, THE FIRST STEP IN ACCESSING PUBLIC INFORMATION IS REALLY UNDERSTANDING HOW TO DO SO.
UH, CURRENTLY THE CITY DOES NOT PROVIDE INFORMATION ABOUT THE P I R PROCESS IN ANY LANGUAGE OTHER THAN ENGLISH.
WE NOTED THE CITY'S OWN DATA SHOWS NEARLY A THIRD OF RESIDENTS SPEAK ANOTHER LANGUAGE AT HOME.
AND ANOTHER THIRD OF THOSE FOLKS, UH, WOULD CERTAINLY HAVE, UH, A DIFFICULT TIME UNDERSTANDING HOW TO ACCESS CITY INFORMATION.
UH, THIS IS A FUNDAMENTAL CHANGE THAT SHOULD OPEN REAL ACCESS, UH, TO MORE PEOPLE.
NEXT, WE LOOKED AT 10 MAJOR CITIES TO SEE IF THEY PROACTIVELY POST P I R RELATED INFORMATION ON THEIR WEBSITE OR THROUGH THEIR P I R TOOL.
UH, WE NOTED SIX CITIES DO THIS, BUT AUSTIN DOES NOT.
UH, WE ALSO NOTED AUSTIN'S P I R TOOL HAS SECTIONS FOR FREQUENTLY ASKED QUESTIONS, AS WELL AS TRENDING TOPICS.
UH, BUT THESE DO NOT APPEAR TO BE FULLY USED.
UH, FOR EXAMPLE, THIS SCREENSHOT IS FROM THE TRENDING TOPICS PAGE, UH, WHERE WE DID NOT SEE ANY INFORMATION AVAILABLE.
AUSTIN DOES POST INFORMA, ESSENTIALLY HIGH LEVEL INFORMATION ABOUT THE TEXAS PUBLIC INFORMATION ACT.
UH, PROACTIVE ENGAGEMENT TO ANSWER
[00:05:01]
QUESTIONS OR PROVIDE INFORMATION ABOUT TRENDING TOPICS MAY HELP REDUCE THE NEED FOR MEMBERS OF THE PUBLIC TO SUBMIT.A P I R, UH, WOULD ALSO SHOW THE CITY'S WILLINGNESS TO FREELY SHARE PUBLIC INFORMATION AND RELATED TO PUBLIC, UH, PERCEPTION.
WE SURVEYED PEOPLE WHO HAD SUBMITTED A P I R IN THE LAST FOUR YEARS.
OF THOSE THAT RESPONDED, MOST SAID THAT THEY DID NOT KNOW HOW TO CRAFT THE REQUEST IN A WAY TO GET THEM THE INFORMATION THAT THEY WANTED.
UM, SEVERAL NOTED, UH, THEY FELT LIKE THERE MAY BE SOME MAGIC WORDS, UH, THAT THEY COULD INCLUDE TO GET THAT INFORMATION, BUT THEY JUST DIDN'T KNOW WHAT THOSE WERE.
UM, AS A RESULT, A NUMBER OF THOSE REQUESTERS REALLY FELT DISAPPOINTMENT IN THE INFORMATION THEY RECEIVED AS SHOWN HERE.
UH, THAT TYPE OF EXPERIENCE CAN AFFECT THE PUBLIC'S PERCEPTION ABOUT HOW THE CITY APPROACHES ITS PUBLIC INFORMATION.
IN ALL 56%, UH, GAVE THE CITY A FAILING GRADE ON TRANSPARENCY.
AND AS SHOWN IN THE COMMENTS, UH, SOME REQUESTERS FELT LIKE THE CITY WAS ACTIVELY TRYING TO PREVENT THE RELEASE OF PUBLIC INFORMATION.
UH, MOVING TO THE SECOND FINDING, UH, THE CITY DOES NOT FOLLOW CONSISTENT PROCEDURES, UH, INTERNALLY TO RESPOND TO PUBLIC INFORMATION REQUESTS.
THIS CAN ALSO RESULT IN VARYING EXPERIENCES AMONG REQUESTERS.
SO, AS NOTED EARLIER, THE CITY DOES SPLIT P I R RESPONSIBILITIES BETWEEN A P D AND THE REST OF THE CITY.
ON AVERAGE, THE CITY GETS ABOUT 30,000 REQUESTS PER YEAR, 20,000 OF THOSE FOR A P D AND 10,000 FOR THE REST OF THE CITY.
UH, A P D HAS A, A STAFF OF SIX FOLKS, UH, TO MANAGE ALL THOSE REQUESTS.
WHILE THERE ARE ABOUT 120 STAFF ON THE CITY SIDE, UH, ESSENTIALLY AVAILABLE TO HELP WITH THOSE CITYSIDE REQUESTS.
AND AS SHOWN HERE, A P D STAFF HAS DOUBLED THE NUMBER OF REQUESTS, BUT IN PROPORTION HAS ONE STAFF MEMBER FOR EVERY 20 ON THE CITY SIDE TO HANDLE PIS.
UH, AND AS SHOWN ON THE NEXT SLIDE, A P D REQUESTS ARE NOT AS TIMELY AS THE CITYSIDE REQUEST.
AND A P D CURRENTLY HAS A BACKLOG OF ABOUT 20,000 REQUESTS.
AS I NOTED EARLIER, STATE LAW REQUIRES THE CITY TO PROVIDE P I R RESPONSES PROMPTLY.
OVER THE LAST FOUR YEARS, THE CITY CLOSED ABOUT 75% OF THEIR PIR WITHIN ABOUT A MONTH.
HOWEVER, THE REMAINING 25% EXPERIENCED DELAYS AND ESPECIALLY FOR A P D REQUEST.
AND OVERALL, I THINK THESE LONG RESPONSE TIMES FURTHER CONTRIBUTE TO USER DISSATISFACTION WITH THE CITY'S PROCESS, EVEN IF THERE MAY BE A REASON, UH, WHY THERE IS A DELAY.
SO, FOR EXAMPLE, ABOUT 14% OF THOSE LONGER RESPONSES ON THE CITY SIDE WERE DUE TO, TO, UH, THE CITY SENDING, UH, THE REQUEST TO THE, UH, ATTORNEY GENERAL'S OFFICE FOR A RULING.
AND THAT CAN TAKE ANYWHERE BETWEEN, UH, A MONTH AND A HALF TO TWO MONTHS, UH, TO GET BACK.
UH, WE ALSO LEARNED A P D SOME INFORMA A P D INFORMATION REQUESTED ISN'T AVAILABLE JUST DUE TO ONGOING INVESTIGATIONS.
AND THAT ESSENTIALLY CAN, CAN DELAY WHEN THAT CAN BE RELEASED.
UH, AGAIN, WHILE MOST REQUESTS WERE COMPLETED IN A REASONABLE TIME, UH, THE CITY NEEDS TO IDENTIFY FACTORS DRIVING THESE LONGER WAIT TIMES IN ORDER TO MAKE IMPROVEMENTS, SET REALISTIC EXPECTATIONS FOR THE REQUESTERS OR BOTH.
UM, AND ANOTHER ONE OF THE STATE PRINCIPLES WAS TO TREAT REQUESTERS THE SAME.
HOWEVER, WHEN WE LOOKED AT THE CITY'S SEARCH AND REDACTION PROCESSES, WE NOTICED SOME DIFFERENCES IN HOW THEY WERE DONE AMONG THE DEPARTMENTS.
UH, THESE DIFFERENCES CAN AFFECT WHAT INFORMATION'S IDENTIFIED AND PROVIDED TO REQUESTERS AND MAY RESULT IN UNEQUAL TREATMENT.
FOR EXAMPLE, FOR FOR SEARCHES, WE, WE SAW THREE MAIN DIFFERENCES.
FIRST, MOST STAFF, UH, SEARCH USING ONLY THE KEYWORDS THAT ARE INCLUDED IN THE REQUEST.
AND OTHER REQUE, OTHER, OTHER, UH, SORRY, OTHER STAFF.
THEY SEARCH THOSE TERMS. THEY ALSO SEARCH SYNONYMS AND, AND THEY MAY KIND OF TRANSLATE THOSE TERMS TO, TO TERMS THE CITY USES TO TRY TO FIND THE INFORMATION REQUESTED.
UH, THE CITY REALLY DOESN'T PROVIDE CONSISTENT, UH, GUIDANCE ON, ON WHAT SEARCH TERM STAFF SHOULD USE.
AND ALSO AS, UH, THE NUMBER TWO AND THREE HERE.
SO THE TOOLS AND THE WHO SEARCHES DIFFERENCES ARE REALLY RELATED.
UH, THEY REALLY, UM, KIND OF INVOLVE STAFF FROM THE CITY'S INFORMATION, UM, SECURITY OFFICE OR I S O.
UM, ELECTRONIC SEARCHES FOR SEVERAL DEPARTMENTS ARE DONE BY I S O STAFF.
UM, AND I, I I S O STAFF USES MORE SOPHISTICATED SEARCH TOOLS.
UM, AND THOSE SEARCH TOOLS REQUIRE SPECIALIZED TRAINING TO USE.
THAT'S IMPORTANT BECAUSE THE I S O SEARCHES CAN IDENTIFY RESPONSIVE INFORMATION, UM, WHERE A STAFF JUST USING THE STANDARD SEARCH TOOLS IS NOT GOING TO FIND, UM, THAT INFORMATION.
SO THIS CAN OBVIOUSLY RESULT IN DIFFERENT TREATMENT, UH, FOR DIFFERENT REQUESTERS.
UM, MOVING ON TO THE REDACTIONS, UH, AGAIN, SOME PUBLIC INFORMATION IS REQUIRED TO BE WITHHELD FROM RELEASE BY STATE LAW.
UH, SO WE SAW SOME DIFFERENCES AMONG DEPARTMENTS IN REDACTIONS, MAINLY FOCUSED ON THE TOOLS AVAILABLE TO THEM AND THE LEVEL OF TRAINING, UH, OF STAFF.
FOR EXAMPLE, UH, WE SURVEYED, UH, PUBLIC INFORMATION STAFF IN THE DEPARTMENTS.
MORE THAN HALF OF THOSE REPORTED NEEDING ADDITIONAL TRAINING REALLY TO UNDERSTAND WHAT NEEDS TO BE REDACTED.
[00:10:01]
AND FOR TOOLS, I THINK THAT OUR MAIN CONCERN WAS THAT A P D STAFF DOES NOT HAVE SPECIALIZED TOOLS TO REDACT AUDIO FILES, UM, AND REALLY TO REDACT PROTECTED INFORMATION AND AUDIO FILES.AND AS A RESULT, A P D HAS BEEN RELEASING, UH, FULL UNREDACTED VERSIONS OF THOSE FILES IN, IN RESPONSE TO REQUEST, UH, A P D ALSO REPORTED HAVING LIMITED, UH, UH, KIND OF TOOLS TO REDACT VIDEO FILES AND, AND WHICH MADE THAT A MUCH TIMELIER, UH, KIND OF PROCESS TO USE AND, AND DELAYED, DELAYED RELEASING THAT INFORMATION AS WELL.
UM, WE NOTED TRAINING'S NOT COMPLETELY CONSISTENT ACROSS THE CITY.
UH, AND WHILE WE SAW THAT THE CITY'S TRAININGS DO ADDRESS STATE LAW REQUIREMENTS, A P D STAFF TRAINED, OR A P D STAFF TRAINS THEIR STAFF THAT, THAT DO.
PIR LAW DEPARTMENT TRAINS ALL OTHER FOLKS IN THE CITY.
AND SOME DEPARTMENTS HAVE SOME SUPPLEMENTAL KIND OF GUIDANCE AND TRAINING THAT THEY PROVIDE.
AND AGAIN, THESE DIFFERENCES CAN CREATE SOME KNOWLEDGE GAPS THAT AFFECT HOW SOME REQUESTS ARE PROCESSED.
SO WE MADE FOUR RECOMMENDATIONS TO HELP ADDRESS THESE ISSUES.
UH, THE FIRST TWO, ASK THE CITY MANAGER TO CENTRALIZE THE MANAGEMENT OF THE P I R FUNCTION AND ENSURE THERE ARE ADEQUATE RESOURCES FOR STAFF TO, TO, TO PROCESSES YOUR REQUEST AND IN ACCORDANCE WITH THE LAW.
UH, THE LAST YEAR REALLY DIRECTED THAT THE GROUP, UH, SELECTED OR IDENTIFIED TO MANAGE PS IN THE CITY.
UH, ONE'S FOCUSED ON IMPROVING INTERNAL PROCESSES TO CREATE MORE CONSISTENCY, AND THE OTHERS FOCUSED ON ENGAGING WITH REQUESTERS TO HELP IMPROVE THEIR PUBLIC INFORMATION.
EXPERIENCE MANAGEMENT HAS AGREED WITH THESE RECOMMENDATIONS.
AND THAT CONCLUDES MY PRESENTATION, AND HAPPY TO TAKE ANY QUESTIONS.
UM, DOES STAFF, THE CITY MANAGER'S OFFICE WANT TO RESPOND? IS THERE SOMEONE HERE, I THINK, UH, DE FROM THE LAW DEPARTMENTS HERE? THANK YOU THAT LATER MORNING, DEBORAH THOMAS WITH THE CITY OF AUSTIN LAW DEPARTMENT.
UM, WE'VE WORKED VERY CLOSELY WITH THE AUDITOR'S OFFICE AND WITH, UH, THE POLICE DEPARTMENT.
AND, UH, WE ARE IN FULL AGREEMENT WITH THE RECOMMENDATIONS AND WE'VE GOT A PLAN IMPLEMENTATION PLAN TO ADDRESS THE ISSUES.
CAN YOU SPEAK A BRIEFLY TO THAT PLAN AND PARTICULARLY, UM, HOW YOU'RE RESPONDING TO THE RECOMMENDATION TO CENTRALIZED MANAGEMENT? THE, UM, PLAN IS FOR, UH, TO, TO CREATE A LEADERSHIP TEAM.
UH, IT'LL CONSIST OF THE CITY SIDE, UM, UH, PEER MANAGER, THE AT A, AN ATTORNEY FROM THE CITY SIDE, UH, AN ATTORNEY FROM THE WHO REP WHO SORT OF REPRESENTS THE A P D SIDE AND THE, UH, A P D MANAGEMENT, UH, THE A P D PEER MANAGER AND, UH, OUR, UH, C F O, UH, IN THE CITY OF, IN THE CITY LAW DEPARTMENT WHO REP, WHO, UH, MANAGES, UH, THE, UH, ENTIRE OUR CITY SIDE PEER.
AND, UM, THAT GROUP WILL GET TOGETHER AND, UH, FIGURE OUT HOW
SOME OF THOSE ISSUES ARE GONNA BE MORE LONG TERM.
UM, ONE OF THE MAJOR ISSUES, I BELIEVE IS GOING TO, IS GOING TO BE TO GET A P D SIDE MORE STAFF.
UM, THEY DO HAVE, UH, A LOT MORE PEER UH, REQUESTS THAN THE CITYSIDE DOES, BUT, AND I JUST THINK THEY NEED MORE PEOPLE.
AND SO THAT'S ONE OF OUR, HOW, HOW TO, HOW TO DO THAT IS GONNA BE ONE OF OUR BIGGEST CHALLENGES.
DO YOU HAVE ANY QUESTIONS? COUNCIL? WONDERFUL.
AND MAYBE MS. THOMAS CAN ANSWER THIS.
UM, AND, AND THANK YOU FOR THE REPORT.
IS THE TRAINING, WHEN WE HAVE DIFFERENCES IN THE TRAINING, IS IT COMING FROM THE SAME SOURCE? I MEAN, IT'S STATE LAW, RIGHT? SO WHERE IS IT THAT THE DIFFERENCES IN THE APPLICATION BETWEEN CITYSIDE AND A P T, WHERE DOES THAT FALL OUT? UM, THE, HOW IT WORKS IN THE EXISTING SYSTEM, WE WON'T TALK ABOUT IN THE, AND THE WAY IT WILL WORK NOW IS THAT, UM, THE CITYSIDE HAS A FULL, A FULL PROGRAM FOR TRAINING, AND WE WILL TRAIN BOTH THE CITY SIDE AND THE A P D SIDE.
SO WE'LL MAKE SURE THAT EVERYBODY IS GETTING THE SAME, THE SAME UH, INFORMATION.
DO YOU HAVE A SENSE OF HOW MANY STAFF NEED TO BE ASSIGNED TO A P D IN ORDER TO BOLSTER THAT WORK? 'CAUSE CLEARLY THAT'S WHERE THE EFFORT NEEDS TO.
NO, WE, THE, THE LEADERSHIP TEAM IS GOING TO HAVE TO EVALUATE THAT.
[00:15:01]
YOU.AND THANK YOU SO MUCH FOR THIS AUDIT.
I WAS AWARE THAT A P D HAD A BACKLOG.
I JUST DIDN'T REALIZE, SURPRISINGLY HOW LARGE IT WAS.
SO IT SOUNDS LIKE THEY DO NEED MORE PERSONNEL OVER THERE BASED ON YOUR ASSESSMENT.
IS THAT ACCURATE? I'M SORRY, COULD YOU SAY THAT AGAIN? OF COURSE.
SO WOULD MORE PERSONNEL AT A P D BASED ON YOUR ASSESSMENT AND WHAT YOU JUST TOLD US, THAT WOULD HELP WITH THE BACKLOG? YES.
BUT ALSO, UM, I BELIEVE THAT THERE SOME, THERE COULD POSSIBLY BE SOME A P D REQUESTS THAT WE MIGHT BE ABLE TO AUTOMATE.
AND SO THEY'RE, THEY GET, THEY GET A LOT OF DIFFERENT, THEY GET REQUESTS THAT ARE DIFFERENT THAN THE CITYSIDE.
THEY GET REQUESTS, A LOT OF ROUTINE REQUESTS.
AND SO, UM, ONE OF THE THINGS THAT WE'RE GOING TO LOOK AT IS HOW WE CAN MAYBE PUT ON THE SITE WHERE PEOPLE CAN ACTUALLY ASK FOR THE INFORMATION AND JUST GET IT, IF THAT'S A POSSIBILITY.
SO WE'RE, WE'RE JUST GONNA BE OPEN TO EVERY, IT'S EVERY OPTION THAT WE CAN THINK OF.
SO I'M OFTEN ASKED BY CONSTITUENTS WHY IF A PEER IS COMPLETED, IT'S NOT POSTED PUBLICLY ONLINE SO THAT WE DON'T GET DUPLICATE REQUESTS.
IS THAT SOMETHING THAT YOU MIGHT BE ABLE TO DO AS WELL? THAT, THAT, UM, IS ONE OF THE SUGGESTIONS FROM THE AUDITOR? THE, THE INTERESTING THING IS THAT WE DON'T GET A LOT OF DUPLICATE REQUESTS.
A LOT OF THE REQUESTS ARE FOR INFORMATION SPECIFIC TO THE INDIVIDUAL.
UM, THERE ARE SOME, AND, AND WE WILL, THAT WE SAID THAT'S PART OF OUR, UM, OUR IMPLEMENTATION PLAN TO LOOK AT THE ONES THAT WE CAN, UH, PUT ONLINE.
NOW THE QUESTION IS, WE'LL HAVE TO, I WOULD IMAGINE WE'LL BE WORKING WITH THE OPEN PORTAL TO SEE IF THAT WILL BE AN OPTION FOR US, OR IF WE SHOULD PUT IT ON.
SO THERE, THERE'S JUST A LOT OF THINGS TO, TO LOOK AT AND TO, AND TO, UH, PLAN FOR THOSE, UH, FOR THAT, THAT ABILITY.
BUT WE, THAT IS ONE OF THE THINGS THAT THE AUDITOR HAS SUGGESTED THAT WE DO.
I HAVE ONE FINAL QUESTION, AND THAT IS, IS THERE ANY COUNCIL ACTION THAT WE COULD TAKE TO HELP YOU IMPROVE THE PROCESS AT THIS TIME? NOT UNTIL WE GET TOGETHER WITH THE A P D AND, UH, LOOK DEEPLY INTO THE, INTO EACH SIDE AND SEE WHAT NEEDS TO BE DONE AND WHAT WE CAN DO ON THE SHORT, SHORT TERM, AND WHAT WE CAN DO, WHAT WE NEED, NEED FOR THE LONG TERM.
AND I, I, I'D IMAGINE IT MIGHT BE LONG-TERM, UH, ISSUES THAT WE MIGHT NEED COUNSEL AS ASSISTANCE WITH.
IS THIS SOMETHING THAT YOU COULD COME BACK TO THE AUDIT AND FINANCE COMMITTEE WITH TO LET US KNOW WHAT YOUR PROGRESS IS SO THAT OF COURSE, WE CAN BE AWARE.
UM, I KNOW IT'S A DIFFICULT TOPIC WITH MY CONSTITUENTS BECAUSE THEY GET FRUSTRATED WHEN THEIR PEERS DON'T COME THROUGH IN A TIMELY MANNER.
BUT ALSO I UNDERSTAND, YOU KNOW, YOU HAVE PERSONNEL RESTRICTIONS AND TIME RESTRICTIONS, AND THAT MAKES IT REALLY DIFFICULT.
SO THANK YOU FOR TAKING ON THIS HEAVY LIFT.
I REALLY APPRECIATE IT ON BEHALF OF THE COMMUNITY.
AND, UM, I KNOW IT'S NOT EASY, SO THANK YOU VERY MUCH.
ANY OTHER QUESTIONS? UM, THANK YOU, MS. THOMAS.
I WILL JUST ADD THAT, UM, WE DID JUST, UM, IN THE BUDGET ADD POSITIONS RELATED TO DATA MANAGEMENT.
AND I THINK AS WE IMPROVE THE DATA PRESENTATION AND THE OPENNESS OF THE A P D DATA MORE GENERALLY, THAT MAY RELIEVE SOME OF THE PRESSURE ON PIS.
PIS OBVIOUSLY GONNA BE MORE SPECIFIC TO INDIVIDUAL CASES, BUT I THINK IT WILL, UH, HELP IN THAT AS WELL.
AND, AND IMPROVING THOSE DATA PROCESSES, I THINK ALSO MAY, UM, BE PART OF THE SOLUTION FOR THE, FOR THE P I R.
AND AS, UH, COUNCIL MEMBER KELLY INDICATED, UM, AT THE APPROPRIATE TIME, YOU CAN EITHER COME BACK TO US OR PROVIDE US A MEMO ON, ON NEXT STEPS.
THANK YOU, PATRICK, AND YOUR STAFF.
[4. Long-Term Procurement Strategy.]
ITEMS FALL UNDER FINANCE, AND NUMBER FOUR IS THE LONG-TERM PROCUREMENT STRATEGY.[00:20:03]
ALL RIGHT.COMMITTEE CHAIR, ALTAR MEMBERS OF THE COMMITTEE.
JAMES SCARBOROUGH, FINANCIAL SERVICES DEPARTMENT, CHIEF PROCUREMENT OFFICER.
UM, I HAVE A VERY BRIEF, UM, UPDATE REGARDING SOME OF OUR ORGANIZATIONAL, UM, WORK AT THE FINANCIAL SERVICES DEPARTMENT WITHIN CENTRAL PROCUREMENT.
YOU HAD EXPRESSED SOME INTEREST, UM, SOMETIME ABOUT A YEAR AGO, I MADE A, A MENTION OF SOME CHANGES, UH, WITHIN OUR ORGANIZATION.
AND SO THIS IS SIMPLY AN UPDATE.
SO YOU, YOU KNOW, THAT, UM, SOME OF THE WORK THAT WE'RE DOING REGARDING HOW WE SUPPORT, UH, DEPARTMENT CUSTOMERS.
SO, UM, WE ARE REFERRING TO, WE'LL REFER TO, UM, UH, FREQUENTLY TO AUSTIN PROCUREMENT 3.0.
IT'S A WAY OF, OF REFERRING TO OUR LONG-TERM STRATEGY FOR EVOLVING THE CITY'S PROCUREMENT BUSINESS FUNCTION 3.0 IS NO SPECIAL MAGIC.
UM, ONE, UH, WOULD BE PAST TWO CURRENT THREE FUTURE.
SO IS THIS JUST THE FUTURE OF THE CITY'S PROCUREMENT BUSINESS FUNCTION? WE'LL TALK ABOUT THE ORGANIZATIONAL MODEL THAT WE'RE MOVING TO, UH, KIND OF THE ELEMENTS OF AUSTIN, UH, 3.0 AND THEN, UH, OUR PROGRESS TO DATE AND NEXT STEPS.
SO, UM, EARLY IN, UM, IN THE, UM, PERFORMANCE OF, UH, THE PROCUREMENT BUSINESS FUNCTION FOR THIS CITY IS LIKE, UH, SIMILAR TO, UH, MANY OTHER GOVERNMENTS.
UM, THE PROCUREMENT FUNCTION IS, IS ONE OF MANY BUSINESS FUNCTIONS TYPICALLY IN A DIS UH, DISTRIBUTED MODEL.
UM, FOLKS ARE GONNA BE WEARING MANY HATS, AND THEIR FOCUS IS, IS, IS ON GROWING AND ON SPEED AND RESPONSIVENESS TO CHANGING CONDITIONS.
AND, UM, UM, THAT MODEL DOES NOT ALLOW FOR A LOT OF SPECIALIZATION.
UH, IT, IT, IT DOES NOT ALLOW FOR A LOT OF STANDARDIZATION.
AND SO AT MOST ORGANIZATIONS OUTGROW THAT MODEL AND THEY EVOLVE TOWARDS A, A CENTRALIZED, UM, MODEL FOR PROVIDING PROCUREMENT.
UM, THAT IS WHERE WE ARE AT CURRENTLY.
WE'VE BEEN THERE FOR A NUMBER OF YEARS.
CURRENTLY ABOUT 90, UH, 8% OF ALL CITY CONTRACT SPEND GOES THROUGH FINANCIAL SERVICES DEPARTMENT.
UM, THIS IS TYPICAL OF MID-SIZE AND DEVELOPING ORGANIZATIONS, LOTS OF STANDARDIZATION, LOTS OF SPECIALIZATION.
UM, BUT BECAUSE WE SERVE ALL CUSTOMERS, WE DON'T HAVE THE ABILITY TO INTEGRATE AS DEEPLY INTO THEIR BUSINESS, UH, OPERATIONS AS WE COULD.
ALSO, IT DIMINISHES OUR ABILITY TO REACT SITUATIONALLY AND AS, BE AS AGILE AS AS WE WOULD LIKE.
SO MOST LARGER GOVERNMENT ORGANIZATIONS WILL EVENTUALLY EVOLVE TO, UM, WHAT WE REFER TO AS A HYBRID DISTRIBUTED MODEL.
AND THAT'S ESSENTIALLY PRESERVING THE BEST OF BOTH, UH, PRESERVING CENTRALIZED MANAGEMENT CONTROL, UM, STA UH, STANDARDS, UH, SYSTEMS, UM, OVERSIGHT COMPLIANCE, WHILE ALLOWING THOSE PARTS OF THE ORGANIZATION, THOSE DEPARTMENTS THAT HAVE HEAVY CONTRACT RELIANCE AND A NEED TO OPERATE AT A DIFFERENT SPEED AND BE MORE INTEGRATED INTO THEIR, INTO THEIR, UH, ORGANIZATION TO, UH, TO DO SO TO HAVE THEIR OWN PROCUREMENT GROUP.
SO THAT'S WHERE WE COME IN WITH OUR, OUR LONG-TERM STRATEGY, AUSTIN PROCUREMENT 3.0.
UM, THE DRIVERS ARE TO CONTINUE TO ALLOW THE CITY TO GROW AT THE RATE THAT WE HAVE BEEN GROWING AND ALLOW FOR THOSE DEPARTMENTS THAT ARE GROWING AT A FASTER RATE AND THAT ARE EXPERIENCING MORE CHANGE TO DO SO, UH, AT THEIR OWN SPEED.
UM, AS THE DEPARTMENTS HAVE, UH, INCREASINGLY UNIQUE CONTRACTUAL NEEDS AND RELIANCE ON CONTRACTS, UM, THEY MOVE AT DIFFERENT RATES, THEY HAVE TO RESPOND TO EMERGENCIES DIFFERENTLY.
UM, HAVING THEIR OWN PROCUREMENT, UH, GROUP, UM, WILL BE A BENEFIT.
SO WE'RE IDENTIFYING THREE ELEMENTS OF AP THREAT 0.0.
UM, UH, INITIALLY MANAGEMENT, WE INTEND TO CONTINUE TO CENTRALIZE THE MANAGEMENT OF OUR PROCUREMENT ORGANIZATION SYSTEMS. WE WILL CONTINUE TO CENTRALIZE AND MAINTAIN OVERSIGHT OF OUR, OF OUR PROCUREMENT SYSTEM FOR ALL DEPARTMENTS TO USE.
BUT WITH THE ORGANIZATION, WE WANNA BUILD A FRAMEWORK, A STRUCTURE TO ALLOW DEPARTMENTS TO ESTABLISH A DEDICATED TEAM, UH, INITIALLY MADE UP OF, UH, FINANCIAL SERVICE DEPARTMENT STAFF OVERSEEN BY US, AND THEN IF IT MAKES SENSE FOR THE DEPARTMENT AND FOR FINANCIAL SERVICES, AND SO LONG AS WE CAN MAINTAIN CONSISTENT OPERATIONS TO ALLOW THEM TO PROGRESS TO A, A DELEGATED, UM, UM, UM, OPERATION.
SO THAT IS, UH, THAT IS OUR LONG-TERM STRATEGY.
PROCUREMENT PROGRAMS AND POLICIES PROCEDURE WILL REMAIN WITH FINANCIAL SERVICE DEPARTMENT.
OUR SYSTEMS AND APPLICATION HELP DESK WOULD ALL REMAIN WITH, UH, FINANCIAL SERVICES.
UM, WE ARE WOULD SET UP AN ORGANIZATIONAL MODEL THAT WOULD ALLOW FOR THOSE DEPARTMENTS THAT MAKE SENSE TO DO SO, TO HAVE DEDICATED PROCUREMENT SUPPORT.
SO WITH THIS, WE HAVE DEVELOPED, UH, THREE DIFFERENT MODELS OF HOW WE WILL SERVE OUR
[00:25:01]
DEPARTMENT CUSTOMERS.UM, THE MAJORITY OF DEPARTMENTS WILL CONTINUE TO BE SERVICED BY US, AS AT, IN A GENERAL MODEL WHERE WE PROVIDE ALL STAFF.
UM, WE ASSIGN WORK TO CATEGORIES TO ALLOW OUR STAFF TO SPECIALIZE.
UM, WE WILL PROVIDE ALL CITYWIDE CONTRACTS OR CONTRACTS THAT ARE USED BY MULTIPLE DEPARTMENTS.
UH, WE WILL ALSO PROVIDE SINGLE DEPARTMENT CONTRACTS WHERE THEY HAVE, UH, DEPARTMENTS HAVE UNIQUE REQUIREMENTS THAT ARE NOT OTHERWISE AVAILABLE IN THE CITYWIDE CONTRACTS, AND WE'LL REPRESENT ALL OF THEIR RCAS FOR EMBEDDED DEPARTMENTS.
UM, WE WOULD, UH, CREATE A TEAM THAT WAS MADE, AGAIN, MADE UP OF FINANCIAL SERVICES STAFF, BUT WOULD BE DEDICATED TO SUPPORTING THAT DEPARTMENT ONLY.
UM, THINK OF, UH, AUSTIN ENERGY.
WE HAVE A TEAM OF FINANCIAL SERVICES STAFF, UM, THAT SUPPORT ONLY AUSTIN ENERGY.
AND SO AS AUSTIN ENERGY NEEDS TO MOVE AT A DIFFERENT SPEED, NEEDS TO CHANGE THEIR PRIORITIES, WE CAN CHANGE THE WORKLOAD AMONGST THE STAFF BECAUSE THEY'RE ALL DEDICATED TO AUSTIN.
CHANGING PRIORITIES AND WORKLOAD WHEN YOU ARE SUPPORTING MULTIPLE DEPARTMENTS IS MUCH MORE CHALLENGING AS IT MAKES SENSE.
AND WHEN WE ARE AT AN OPERATIONAL STATE OF READINESS TO DO SO, WE WOULD THEN ALSO BE ABLE TO MOVE SOME DEPARTMENTS INTO A DELEGATED STATUS, AND THAT WOULD SIMPLY MEAN WE WOULD DELEGATE PROCUREMENT AUTHORITY TO THOSE DEPARTMENTS AND MOVE OUT OF AN OPERATIONAL ROLE AND INTO A TRAINING COMPLIANCE SUPPORT ROLE SO THAT THEY CAN OPERATE ON PROCUREMENT USING THEIR OWN STAFF
UM, FORMALLY WE WERE KNOWN AS PURCHASING OFFICE.
UM, AT THAT TIME, WE, UH, REALIGNED OUR STAFF.
UM, UM, WE WERE, WE WERE ASSIGNING WORK TO STAFF BASED ON THEIR DEPARTMENT ASSIGNMENTS.
SO ONE STAFF MEMBER MAY HAVE ONE OR TWO DEPARTMENTS THAT THEY WOULD SUPPORT THAT LED THAT LED TO A FAIR AMOUNT OF DUPLICATION WHERE WE WOULD CREATE THE SAME CONTRACTS FOR MULTIPLE DIFFERENT DEPARTMENTS FOR THE SAME PRODUCTS AND SERVICES.
WE WOULD BE FRACTURING, UH, FRACTURING OUR, UH, ECONOMIES OF SCALE, UM, PERHAPS WITH THE SAME CONTRACTORS, DIFFERENT PRICING.
SO OVER THE LAST FEW YEARS, WE HAVE BEEN CONSOLIDATING CONTRACTS WHEREVER POSSIBLE, UM, BY HAVING STAFF FOCUS ON CATEGORIES AND NOT SPECIFIC DEPARTMENT ASSIGNMENTS.
SO, SO HOPEFULLY WE HAVE FEWER LARGER CONTRACTS, BETTER PRICING, MORE CONSISTENT TERMS AND CONDITIONS.
WE'VE ALSO DIFFERENTIATED OUR LEADERSHIP, UM, WHEREAS BEFORE THE, WE WERE, UH, ASSIGNED TO A TEAM OF FOLKS THAT WERE SUPPORTING, UH, ASSIGNED DEPARTMENTS, NOW WE HAVE OUR LEADERSHIP ASSIGNED TO POLICY, ASSIGNED TO, UM, CITYWIDE CONTRACTS OR CORPORATE, AND THEN ASSIGNED TO SUPPORTING EMBEDDED TEAMS OR TEAMS THAT ARE SUPPORTING, UH, SPECIFIC DEPARTMENTS.
UM, IN THE LAST COUPLE OF YEARS, WE HAVE, UH, BEEN INVOLVED IN THE CONSOLIDATION EFFORTS OF THE FINANCIAL SERVICES DEPARTMENT AND THE REALIGNMENT THEREIN.
UM, AND NOTABLY THE PURCHASING OFFICE AND CAPITAL CONTRACTING OFFICE HAVE BEEN MERGED TO FORM A LINE OF BUSINESS, UH, WITHIN THE FINANCIAL SERVICES DEPARTMENT REFERRED TO AS, UM, F SS D CENTRAL PROCUREMENT.
UH, WE'RE MADE UP OF FOUR DIVISIONS.
UH, WE STILL SUPPORT, UM, UH, CAPITAL DELIVERY SERVICES, UM, AS WELL AS ALL OF THE OTHER CORPORATE FUNCTIONS IN ADDITION TO EMBEDDED TEAMS AND PROCUREMENT POLICY.
SO NEXT STEPS, UM, PROCEDURES, REGULATION MANUALS.
UM, WHEN WE ARE, UM, DISTRIBUTING OUR PROCUREMENT WORKFORCE ACROSS THE ORGANIZATION, IT'S MORE NECESSARY TO HAVE A SET OF REGULATIONS AND PROCEDURES THAT CAN COMMUNICATE ACROSS, UM, ORGANIZATIONS.
WHEREAS WE MIGHT TRAIN STAFF, UM, ON THE JOB SIDE BY SIDE SECOND, CHAIRING, UM, UM, KIND OF WORKING ALONG WITH THEM.
WE NEED TO BE ABLE TO DO THAT WHEN, WHEN THOSE STAFF ARE NOT IN OUR ORGANIZATION OR THEY ARE NOT PHYSICALLY NEXT TO US.
SO THERE'S A GREATER EMPHASIS ON HAVING REALLY GOOD PROCEDURES, REALLY GOOD MANAGE, UM, UM, UH, MANAGEMENT TOOLS, REALLY GOOD SYSTEMS. SO WE HAVE A CONSULTANT NOW WHO IS HELPING US DO ANOTHER REVIEW OF OUR ORGANIZATIONAL STRUCTURE, HOW WE'RE SET UP, HOW OUR, OUR POLICIES AND PROCEDURES ARE ESTABLISHED, AND HOW WE COULD, UH, MAKE THEM BETTER IN THE COMING YEARS.
SOME OF THESE REGULATIONS WILL BENEFIT BY BEING ELEVATED TO, UM, MUNICIPAL CODE.
AND WITH THAT, THE ESTABLISHMENT OF THE AUSTIN PROCUREMENT CODE, UM, AS WELL AS TYING ALL OF THESE REGULATIONS, BOTH AT THE STATE LEVEL, AT THE MUNICIPAL CODE LEVEL, AT THE, UM, AT THE ADMINISTRATIVE RULE LEVEL, UH, ADMINISTRATIVE BULLETINS ALONG WITH, UH, CASE PROCEDURE AND CITY PASS PRACTICES INTO ONE LOCATION.
THIS WILL ALLOW FOR STANDARDIZED INTERPRETATIONS AND CONSISTENT APPLICATION
[00:30:01]
OF PRECEDENTS, UM, THAT WE WOULD DO THROUGH OUR PROCUREMENT MANUAL.UH, WE ARE ALSO DOING A REVIEW OF SYSTEMS. WE ARE CURRENTLY IMPLEMENTING A SYSTEM TO AUTOMATE THE DEVELOPMENT OF CONTRACT DOCUMENTS AND SOLICITATIONS.
UM, WE BELIEVE THAT THAT WILL GREATLY SPEED UP THE FRONT END DEVELOPMENT PHASE OF OUR, OF OUR PROCUREMENT, UM, UM, CYCLE TIME.
UM, WE ARE ALSO PARTICIPATING WITH FINANCIAL SERVICE DEPARTMENT IN THEIR, UH, LARGER REVIEW OF ALL OF THE CITY'S, UM, UH, FINANCIAL IT SYSTEMS, INCLUDING OUR, UH, OUR CITYWIDE OR CORPORATE E-PROCUREMENT SYSTEM.
UM, WITH THAT, WE'LL BE, UM, UPDATING ALL OF OUR TRAINING AND WITH TRAINING ALL OF OUR COMPLIANCE ACTIVITIES TO ENSURE, UH, STAFF ARE COMPLYING WITH, UH, OUR REGULATIONS AND, AND THE TRAINING THAT WE WILL BE PROVIDING THEM ON THEM.
UM, WE WILL DO THAT TO THE EXTENT POSSIBLE USING, UH, TECHNOLOGY USING, UM, UH, UH, RECORDED, UH, TRAINING INS, UH, SESSION, UH, AND APPLICATIONS THAT WOULD ALLOW US TO TRACK WHO HAS BEEN TRAINED WHEN THEY WERE TRAINED, AND WHEN WE HAVE UPDATES AND POLICIES AND PROCEDURES TO ROLL THAT OUT THROUGH A, A REQUIRED, UH, SIT DOWN AND REVIEW, UH, TRAINING SO THAT THEY ARE AWARE AND WE CAN CONFIRM THEIR AWARENESS OF, OF UPDATES TO POLICY AND PROCEDURE.
UH, WE ARE ALSO WORKING, UM, ON, UH, DEVELOPING CRITERIA AND CLARIFYING CRITERIA FOR BRINGING DEPARTMENTS INTO AN EMBEDDED, UH, CUSTOMER ROLE AND ALSO INTO A DELEGATED CUSTOMER ROLE.
I SAID, UH, IT WOULD BE SHORT AND QUICK, UM, BUT I WANTED YOU TO BE AWARE OF SOME OF THE, THE MAJOR KIND OF ORGANIZATIONAL SYSTEMIC CHANGES THAT WE'RE DOING IN FINANCIAL SERVICES DEPARTMENT, UM, PER YOUR PREVIOUS, UH, UM, QUESTION, UH, COUNCIL MEMBER.
BUT, BUT ALSO AS YOU MAY SEE, PROCUREMENT BEING DONE BY OTHER DEPARTMENTS.
YOU'LL KNOW IT'S A PART OF AN INTENTIONAL STRATEGY THAT WE ARE DEPLOYING, UM, OVER THE NEXT, UH, NUMBER OF YEARS IN N F S D.
AND WITH THAT, IF YOU HAVE ANY QUESTIONS, I'LL BE GLAD TO ANSWER THEM.
ANY QUESTIONS? UM, SO I HAVE A, FIRST OF ALL, THANK YOU.
I APPRECIATE, UM, THE WORK ON THIS AND THE, AND THE PRESENTATION.
UM, YOU KNOW, ONE OF THE THINGS THAT WE OFTEN HEAR FROM DEPARTMENTS OR OUT IN THE COMMUNITY IS THAT OUR PROCUREMENT TAKES A REALLY LONG TIME.
AND, AND SO, UM, YOU SPOKE TO THIS IN DIFFERENT WAYS IN YOUR PRESENTATION, BUT CAN YOU, UM, SPEAK SPECIFICALLY ABOUT HOW THESE CHANGES ARE DESIGNED TO IMPROVE THE SPEED? SURE.
UH, AND THANK YOU FOR THE QUESTION.
UM, UH, AS A, AS A CAREER LONG PUBLIC PROCUREMENT PROFESSIONAL, UM, THE SPEED OF OUR PROCESS HAS ALWAYS BEEN A, AN ELEMENT, UH, OF, UH, OF, OF, OF CURIOUSNESS.
UM, AND, AND TO BE PUT IT, FRANKLY, UM, PROCUREMENT PROCESSES DO TAKE TIME.
WE, WE KIND OF EXIST, UM, WITHIN THE, THE BERMUDA TRIANGLE OF, OF, UH, OF GOVERNMENT SERVICES WHERE WE HAD THE INTEREST OF THE PUBLIC AND THEIR ELECTED OFFICIALS.
WE HAD THE INTEREST OF OUR LEADERSHIP AND THE DEPARTMENT CUSTOMERS, AND THEN WE HAVE THE INTEREST OF OUR VENDOR COMMUNITY, AND SOMETIMES THOSE INTERESTS ARE NOT ALL ALIGNED.
AND SO TO, TO, UM, SATISFY, UM, THE, THE, UM, GREATEST NUMBER OF EXPECTATIONS, WE CAN BE VERY PROCEDURALLY ORIENTED.
AND THAT USUALLY TAKES, UM, A BIT OF TIME, BUT WE DON'T WANT THESE TIMES TO BE ONEROUS OR UNNECESSARY LONG.
SO WE ARE, UM, CURRENTLY IN THE PROCESS.
UM, WE'VE, WE'VE DISCUSSED THIS MO VERY RECENTLY WITH CITY MANAGER'S OFFICE, AND LIKE I SAID, WE ARE REVIEWING THE FRONT END PROCESS WHERE WE ARE DEVELOPING REQUIREMENTS THAT GO INTO CONTRACTS AND SOLICITATIONS.
BUT WE'RE ALSO LOOKING AT THE, THE OVERALL TIMELINE OF OUR TYPICAL PROCUREMENT CYCLES AND IDENTIFYING WHERE WE CAN MAKE CHANGES IN CORRECTIONS, BOTH WITHIN PROCUREMENT, BUT ALSO WITHIN SOME OF THE OTHER CITY PROCEDURES THAT TOUCH PROCUREMENT, UM, TO, UH, IDENTIFY EFFICIENCIES WHEREVER POSSIBLE.
THE LONGEST PART OF A PROCUREMENT PROCESS IS, IS ASSOCIATED WITH DEVELOPMENT OF REQUIREMENTS, AND THAT'S AN ITERATIVE PROCESS BETWEEN US AND THE CUSTOMER.
THE SECOND LONGEST PART OF A PROCUREMENT PROCESS IS THE AUTHORIZATION CYCLE.
SO THAT'S WHEN WE MAKE THE AWARD RECOMMENDATION THROUGH THE DEVELOPMENT OF THE R C A THROUGH THE HANDOFF OF THE R C A TO, UM, TO THE CITY'S, UM, AGENDA, UH, MANAGEMENT SYSTEM AND GETTING IT TO COUNCIL.
SO IF THERE ARE ELEMENTS IN THE FRONT END AND THEN THE BACK END OF OUR PROCUREMENT PROCESS WHERE WE CAN SAVE SOME TIME, UM, WE COULD, UM, SUBSTANTIALLY, UH, CUT DOWN ON THE LENGTH OF TIME THAT A TYPICAL PROCUREMENT TAKES.
BUT, UM, YOU KNOW, GOING FROM, FROM TYPICAL NINE MONTHS DOWN TO, YOU KNOW, TWO MONTHS WILL BE CHALLENGING.
BUT, UM, WE DO FEEL THAT WE CAN, WE CAN SHAVE SEVERAL WEEKS OFF OF THIS PROCESS, UM, BASED ON CURRENT IDENTIFIED OPPORTUNITIES.
AND JUST TO CLARIFY WHERE WE ARE RIGHT NOW, WE HAVE ONE DEPARTMENT THAT HAS BEEN
[00:35:01]
PILOTED AS EMBEDDED, WHICH IS AVIATION.IS THAT CORRECT? ARE THERE MORE? EXCUSE ME, I I DIDN'T MEAN THERE'S ONE DEPARTMENT THAT IS BEING PILOTED AS EMBEDDED ACCORDING TO THE SLIDE, CORRECT.
THERE'S NO OTHER ONES AT THIS POINT.
YEAH, WE WE'RE, WE'RE STILL DEVELOPING THE, UH, THE AGREEMENT WITH, UH, WITH AVIATION DEPARTMENT.
SO WE HAVEN'T, UH, IRONED OUT ALL THE DETAILS JUST YET, BUT IT IS OUR INTENTION AND WE HAVE BEEN MAKING PROGRESS TOWARDS SETTING UP AN EMBEDDED TEAM FOR AVIATION.
SO THEN THE PROGRESSION WOULD BE THAT THEY WOULD BE EMBEDDED? YES.
YOU'D DO THAT FOR A WHILE, SEE HOW THAT WAS WORKING? CORRECT.
AND THEN IF THEY HAD A DESIRE TO MOVE TO DELEGATED, THAT WOULD HAPPEN AND THEN CORRECT.
AT THE POINT THAT WE MOVED TO DELEGATED, THEN WE WOULD ALSO HAVE TO UNPACK AND RETHINK ABOUT OUR SPORTS SERVICES BUDGET SOMEWHAT DIFFERENTLY.
[5. Procurement Local and Small Business Preference Programs Update.]
QUESTIONS, I THINK WE CAN MOVE ON TO THE NEXT ITEM, WHICH IS ITEM FIVE, WHICH IS PROCUREMENT, UH, LOCAL AND SMALL BUSINESS PREFERENCE PROGRAMS UPDATE.AND THIS IS AN UPDATE THAT I'M VERY EXCITED ABOUT.
UM, IT STARTED, UH, WITH DIRECTION THAT I PROVIDED LAST FALL WHEN WE ADOPTED OUR MINORITY, UM, WOMEN BUSINESSES, UM, REPORT, UM, FOR, UM, FOR THAT PROGRAM.
WE PROVIDE DIRECTION AS A COUNCIL TO CREATE A SMALL BUSINESS, LOCAL PREFERENCE PROGRAM, SO THAT AS WE SPEND ALL THIS MONEY, UM, THAT OUR COMMUNITY IS ABLE TO ACCESS THESE CONTRACTS IN, IN AN EASIER FASHION AND A LEGAL FASHION.
SO I'M VERY EXCITED THAT, UM, TO HEAR THE UPDATE.
UM, AND, UM, PLEASE, MR. SCARBOROUGH.
UM, COMMITTEE CHAIR, UM, ALTER, UM, THANK YOU VERY MUCH.
WE HAVE BEEN LOOKING FORWARD TO COMING BACK TO THE, THE, UH, THE COMMITTEE IN THIS REGARD FOR, UM, UH, A LITTLE WHILE NOW.
WE HAVE WORKED, UH, VERY HARD IN DOING THE STAKEHOLDER ENGAGEMENT AND IN LOOKING AT, UM, PRACTICES ELSEWHERE AND, UM, DETERMINING THE EXTENT TO WHICH WE CAN, UM, UM, AFFECT SOME OF THE, UH, THE, UM, UM, OPERATIONAL AND POLICY OBJECTIVE CHANGES THAT, UH, HAVE BEEN EXPRESSED TO US BY YOURSELF AND BY THE REST OF THE COUNCIL.
SO WE'RE HAPPY TO BRING FORWARD, UH, THIS, THIS PARTICULAR, UH, SERIES OF ENHANCEMENTS.
UM, WITH ME, I HAVE, UH, SEAN WILLETT, DEPUTY PROCUREMENT OFFICER.
UM, AS I MENTIONED, WE HAVE DIFFERENTIATED OUR LEADERSHIP RESPONSIBILITIES, AND SEAN IS ACTUALLY RESPONSIBLE FOR ALL OF OUR PROCUREMENT PROGRAMS. UM, AND WE'LL BE DOING A, A, A LARGE PART OF THIS PRESENTATION, KIND OF WALKING YOU THROUGH WHAT WE, UM, OUR PLAN TO, UH, CHANGE WITH REGARD TO OUR LOCAL PREFERENCE PROGRAM AS WELL AS OUR SMALL BUSINESS PROGRAM.
BUT JUST TO ORIENT THE CONVERSATION REAL QUICK, UM, UH, AS YOU MENTIONED, UM, LAST YEAR, UM, OUR COLLEAGUES IN THE SMALL MINORITY BUSINESS RESOURCE DEPARTMENT, UH, COMPLETED A, UH, A, A A LONG AND VERY CHALLENGING, UM, PROJECT THEY DO EVERY, EVERY NUMBER OF YEARS.
UM, AND, UH, SUCCESSFULLY BROUGHT FORWARD THE, UH, DISPARITY STUDY TO LOOK AT, UM, OUR MARKET AND HOW, UM, UH, MINORITY OWNED AND WOMEN OWNED BUSINESSES AND THEIR AVAILABILITY, UH, IN OUR MARKET ARE FAIRING, BOTH IN TERMS OF CITY USAGE AND, UM, HOW THESE, UH, COMPANIES ARE, ARE ACHIEVING, UM, BUSINESS OPPORTUNITIES, UH, WITHIN THE LARGER MARKET.
AND IN THAT DISPARITY STUDY, THERE WERE, UM, SOME FINDINGS TO SHOW THAT IN CERTAIN AREAS THERE WAS A DECREASE IN THE QUANTITY, THE PROPORTIONAL QUANTITY OF, OF, UH, CERTIFIED FIRMS IN CERTAIN CERTAIN MARKETS.
AND THAT MAY, UM, RESULT IN CHANGES TO THE CITY'S M W B E, UM, GOAL SETTING PROCESS AND, AND HOW THE M W B E PROGRAM IS, IS, UM, GOING TO BE, UM, PERFORMED GOING FORWARD.
I HAVE WITH US HERE, UM, UM, EDWARD COMPOST, DIRECTOR OF S M B R, IF YOU HAVE ANY, UH, PROGRAM, UH, QUESTIONS, UM, REGARDING DISPARITY STUDY OR THEIR, UH, OPERATIONS GOING FORWARD.
I KNOW THAT, THAT HE'S BEEN IN, UH, VERY DETAILED COMMUNICATION WITH, UH, COUNCIL, UM, IN THAT, IN THAT REGARD.
AND THERE ARE SOME CHANGES UPCOMING, BUT WITH THE ADOPTION OF THE DISPARITY STUDY LAST NOVEMBER, WE RECEIVED FURTHER DIRECTION FROM THE COUNCIL, UM, TO ALSO LOOK INTO OTHER PROGRAMS THAT WOULD BE OF ADDITIONAL BENEFIT TO CITY CERTIFIED MBE AND WBE MIN MINORITY BUSINESS ENTERPRISES AND, AND WOMEN, UH, OWNED BUSINESS ENTERPRISES.
UM, AND TO DO SO IN A WAY THAT WAS RACE AND GENDER NEUTRAL.
UM, AND THAT WOULD, UM, UM, SPECIFICALLY TAKE A LOOK AT LOCAL PREFERENCE AND SMALL BUSINESS.
AND THAT'S WHAT WE'VE DONE OVER THE LAST SEVERAL MONTHS.
[00:40:01]
WE'VE HAD A NUMBER OF STAKEHOLDER ENGAGEMENTS.UM, WE HAVE, UM, UH, ALSO DONE RESEARCH TO DETERMINE, UM, UM, WHAT, UM, OTHER GOVERNMENTS AND WHAT WE HAVE DONE IN THE PAST, WHAT WORKED AND WHAT, WHAT DIDN'T WORK SO WELL.
UM, WE ALSO CONDUCTED AN ONLINE SURVEY, UM, AND WE RECEIVED A FAIR AMOUNT OF FEEDBACK.
UM, INITIALLY THERE WAS VERY STRONG SUPPORT, UM, FOR, UH, CONTINUING AND, AND, AND PRESERVING THE CITY'S M B E AND W B E PROGRAM.
UM, THERE WAS ALSO AN INTEREST IN MAINTAINING THE LOCAL PREFERENCE AND THE SMALL BUSINESS PROGRAMS SEPARATELY, UM, SO THAT, THAT, THAT COMPANIES THAT DID NOT QUALIFY FOR ONE WOULD STILL HAVE BENEFIT FROM ONE.
AND THE COMPANIES THAT WOULD QUALIFY FOR BOTH WOULD HAVE BENEFITS FROM BOTH.
WHEN WE ASKED, THERE WAS NO SET PREFERENCE FOR PRIORITY OVER ONE PROGRAM OR THE OTHER.
THERE WAS EQUAL, UH, VALUE FOR BOTH PROGRAMS. UM, THERE WAS AN INTEREST IN, UM, HAVING A SUBCONTRACTOR ELEMENT IN THESE PROGRAMS IF POSSIBLE.
UM, THE SMALL STATUS, UH, ASSOCIATED WITH THE FEDERAL GOVERNMENT SMALL BUSINESS, UH, SIZE STANDARD, UH, WAS, WAS UNANIMOUSLY AGREED, UH, WITH A COUPLE OF COMMENTS, UH, SUGGESTING OTHERWISE THERE WAS A, A LARGE AMOUNT AGREEMENT WITH REGARD TO, UM, UH, REVISITING OUR DEFINITION OF THE LOCAL AREA, UM, AND EXPANDING IT TO, UH, GREATER AUSTIN OR THE FIVE COUNTY, UM, METROPOLITAN STATISTICAL AREA.
THERE WAS ALSO, UH, FEEDBACK REGARDING HOW WE DETERMINE A COMPANY AS BEING, UM, LOCAL AND WHETHER IT WOULD BE HEADQUARTERS OR HEADQUARTERS AND SOME OTHER TYPE OF OPERATION.
UM, UH, ALSO REFERRED TO AS A BRANCH OFFICE.
BUT WHAT WE DID HEAR LOUD AND CLEAR WAS THERE WAS CONCERN THAT, UM, THAT THESE ENHANCEMENTS MAY NOT POSITIVELY IMPACT ALL GROUPS EQUALLY.
AND SO I WANTED TO ACKNOWLEDGE THAT, UM, THIS, THE, THE, THE, THE CHANGES THAT WE'RE RECOMMENDING, UM, ARE, ARE BROAD AND THEY WOULD BE APPLIED BROADLY.
AND BECAUSE THEY'RE BROAD, THEY ARE NOT NARROW AND, AND TAILORED IN A WAY AS TO TARGET ANY SPECIFIC CATEGORY OF, OF, OF, OF CONTRACTOR.
AND, AND THAT'S WHAT OUR M W B E PROGRAM IS FOR.
IT IS, IT IS SPECIFIC, IT IS NARROWLY TAILORED.
IT IS DESIGNED TO TARGET, UM, UM, UM, CERTAIN, UM, COMMUNITIES OF CONTRACTORS, WHEREAS THESE PROGRAM THAT WE'RE RECOMMENDING WOULD BE, UM, APPLICABLE TO ALL COMMUNITIES THAT WERE, UM, SMALL AND OR LOCAL.
SO WITH THAT, UM, I'M GONNA ASK, UH, MY COLLEAGUE SEAN, TO TALK ABOUT THE, THE SPECIFICS OF THE, UH, THE CHANGES THAT WE ARE PURSUING WITH BOTH THE LOCAL AND THE, UH, SMALL BUSINESS PROGRAMS. EXCUSE ME, THIS IS STILL YOU.
OH, YOU WANNA COVER
SO IF YOU JUST WANNA CLARIFY THAT FURTHER, ONE OF YOU.
SEE, I KNEW I'D MESSED THIS UP SOON AS I TOUCHED IT, BUT I, HE'S TOO TALL FOR ME RIGHT NOW.
I'M GONNA HAVE TO GET REALLY LOW.
CAN YOU HEAR ME? IT JUST WON'T, IT WON'T.
SO IN, IN REGARDS TO THAT, UM, YES, UH, AGAIN, BECAUSE WE HAD A LOT OF CONCERN REGARDING WE DIDN'T WANT ANY IMPACT ON THIS PROGRAM TO OUR CURRENT MW M W B E PROGRAM, WHICH IS OBVIOUSLY REALLY IMPORTANT.
SO, UM, OUR RECOMMENDATION ON THIS IS GOING TO BE TO PILOT IT PURELY AT THE PRIME LEVEL.
UM, THIS IS A OPPORTUNITY WE HAVE TO TRY TO HELP PEOPLE GET INTO THAT PRIME CONTRACTING, UM, SPACE.
AND SO OUR RECOMMENDATION, AS YOU'LL SEE IN MY UPCOMING SLIDES, IS TO ONLY HAVE THIS APPLY AT THE PRIME LEVEL RATHER THAN APPLYING TO SUBCONTRACTORS.
'CAUSE AGAIN, OUR M W B PROGRAM IS VERY SPECIFICALLY TO, UM, GEARED TOWARDS SUBCONTRACTING.
SO ON ON THIS SLIDE, THE, UH, PROGRAM ENHANCEMENTS, WHICH WE'RE RECOMMENDING FOR NEW, UM, IS WE WOULD LIKE TO BEGIN A TWO YEAR DEMO PERIOD, WHICH WE WILL START, UM, BEGINNING THE FISCAL YEAR ON TEN TEN ONE AND GO UNTIL THE END OF FISCAL YEAR.
UM, IN, UH, SEPTEMBER OF 2025, UM, WE WERE, WE'RE GONNA CAP BOTH PROGRAMS AT 50 MILLION.
UM, THAT IS FOR SINGLE SOLICITATIONS OR FOR CONTRACTS.
AND JUST TO GIVE IT SOME KIND OF BACKGROUND, THERE IS NO CONTRACT.
WE DID AN F Y 22 THAT WAS NOT FOR CONSTRUCTION THAT HIT 50 MILLION.
SO THAT CAP WOULD REALLY NOT RESTRICT A LOT.
UM, WE JUST FELT LIKE MAYBE, AT LEAST FOR THE PILOT, WE SHOULD HAVE SOME TYPE OF A CAP.
UM, WE OB OBVIOUSLY WILL CONTINUE TO MONITOR AND REPORT ON THE PROGRAM AND HOW IT'S PERFORMING.
[00:45:01]
WE'RE GONNA DO EVERYTHING WE CAN TO CONTROL AGAINST ANY NEGATIVE IMPACTS.AND THAT'S PART OF WHY WE, WE WILL CONTINUALLY MONITOR IT TO MAKE SURE THAT MAYBE THERE'S NO UNIN THAT THERE AREN'T ANY UNANTICIPATED, UM, IMPACTS ON ANY OTHER PROGRAMS, AND ALSO CONTINUE TO TWEAK AND DETERMINE ELEMENTS THAT WE MIGHT NEED TO REVISE A LITTLE BIT FURTHER.
IN ORDER FOR THIS TO WORK OUT.
THE WAY WE REALLY WANT IT TO, UM, OUR PLANS FOR LOCAL PREFERENCE IS WE'RE GONNA REVISE AND STREAMLINE THE PROGRAM CRITERIA BECAUSE WE ALREADY HAVE A, A, A PRETTY STRONG, UH, PROG PROGRAM, I'M SORRY, IN PROCESS.
AND WE'RE ALSO GONNA OPTIMIZE THE PRO THE PREFERENCES WHERE WE ARE ABLE TO DO SO.
AND THEN FOR SMALL BUSINESSES, UM, CURRENTLY WE ONLY, UM, HAVE A PROGRAM THAT GOES UP TO 50,000.
AND SO WE'RE GONNA IMPLEMENT A PROGRAM TO WHERE WE BRING THOSE SAME ELEMENTS OF PREFERENCE IN ABOVE 50,000.
AND WE'RE GONNA MIRROR THE SMALL PRE THE BUSINESS, THE PREFERENCES WE ALREADY GIVE TO LOCAL COMPANIES, TO THESE SMALL BUSINESSES.
SO IN REGARDS TO LOCAL PREFERENCE, IF YOU LOOK AT THE SLIDE, THE YELLOW IS THE, WHAT WE CURRENTLY HAVE IN THE GREEN IS OUR NEW RECOMMENDATIONS.
AND SO CURRENTLY OUR LOCAL IS FOR COMPANIES WITH A HEADQUARTERS OR A BRANCH OFFICE IN THE LOCAL AREA.
AND, UM, WE ARE PROPOSING TO LIMIT IT TO COMPANIES WITH HEADQUARTERS ONLY IN THE, UM, LOCAL AUSTIN AREA.
UM, AS FAR AS WHERE THE LOCAL AREA IS, AGAIN, WE REALLY LISTENED TO THE FEEDBACK WE GOT AND RATHER THAN, UM, LIMITING IT TO JUST THE FULL PURPOSE JURISDICTION IN AUSTIN, WE'D LIKE TO EXPAND IT TO THE GREATER FIVE COUNTY AUSTIN ROUND ROCK M SS A.
UM, AS REGARDS TO PREFERENCE CONDITIONS, CURRENTLY, UM, WE HAVE A PROGRAM THAT ABOVE 50,000, WE GIVE 3% PREFERENCE FOR INVITATION FOR BIDS.
UM, AND WE GIVE 10 PER 10 POINTS OR 10% 'CAUSE IT'S USUALLY A HUNDRED POINTS FOR OUR, FOR REQUEST FOR PROPOSALS AND FOR CONSTRUCTION, WE'RE ONLY ABLE TO APPLY THAT BELOW A HUNDRED THOUSAND.
SO WE CURRENTLY HAVE, UH, 5% FOR INVITATION FOR BIDS, AND FIVE POINTS FOR RFPS.
UM, OUR RECOMMENDATIONS ARE IN GREEN, AND I WANNA CAVEAT THIS WITH THE FACT THAT SOME OF THESE LEVELS ARE BASED ON STATE STATUTE LIMITS.
STATE STATE STATUTE SAYS THAT WE CAN'T APPLY ANY PREFERENCE FOR LOCALS, UM, FOR CONSTRUCTION PROJECTS ABOVE A HUNDRED THOUSAND.
SO THAT'S WHERE THAT A HUNDRED THOUSAND CUTOFF COMES IN.
AND THEN IT ALSO STATES THAT FOR ANY GOODS AND SERVICES CONTRACT OVER 500,000, WE'RE ONLY ABLE TO GIVE A 3% BID PREFERENCE ON AN I F B AND NOT FIVE.
AND SO AGAIN, THAT'S WHERE THOSE BREAKS COME IN.
AND SO WE'RE PROPOSING, UM, 5% FOR INVITATIONS FOR BIDS, AND 10 POINTS FOR RFPS BELOW A HUNDRED THOUSAND, INCLUDING CONSTRUCTION.
AND THEN WITHOUT CONSTRUCTION, A HUNDRED THOUSAND TO 500,000 WOULD BE 5% FOR IFPS AND 10 FOR RFPS.
AND THEN FOR ANY GOODS AND SERVICES OVER THE 500,000, AGAIN, BECAUSE OF STATE STATUTE, WE WOULD HAVE TO GO DOWN TO 3% FOR AN INVITATION FOR BID AND KIND OF TO KEEP IT COMPARABLE.
AND AGAIN, AS I STATED FOR SUBCONTRACTING, WE CURRENTLY, UM, ALLOW OR WE, WE GIVE A SMALL AMOUNT OF POINTS POSSIBLE FOR SUBCONTRACTING WITH LOCALS, AND WE'RE RECOMMENDING TO CHANGE THAT TO JUST KEEP THAT AT THE PRIME LEVEL.
IN REGARDS TO SMALL BUSINESSES, AGAIN, THIS IS OUR CURRENT VERSUS PROPOSED, UM, OUR CURRENT PROGRAM.
WE RECOGNIZE THE FEDERAL SMALL BUSINESS SIZE STANDARD, AND WE'RE RECOMMENDING THAT WE CONTINUE THAT SAME PRACTICE.
UM, AS FAR AS RECOGNIZING WHO IS SMALL, UM, CURRENTLY WE RECOGNIZE ALL CITY OF AUSTIN CERTIFIED M B E W B E AND SBE, AND WE'RE RECOMMENDING ALL THOSE CONTINUE TO BE RECOGNIZED.
WE DO RECOGNIZE THEIR, UM, HISTORICALLY UNDERUTILIZED BUSINESSES BECAUSE AGAIN, THEY MEET THE SMALL SIZE STANDARD.
AND WE'RE RECOMMENDING WE GO AHEAD AND CONTINUE TO RECOGNIZE THE HUBS, BUT ALSO INCLUDE STATE CERTIFIED SMALL BUSINESSES.
AND AS FAR AS FEDERAL, UM, WE ALREADY RECOGNIZE THE DISADVANTAGED BUSINESS ENTERPRISE AT THE FEDERAL LEVEL, BUT WE RECOMMEND ALSO BRINGING IN THE FEDERALLY, UH, CERTIFIED SMALL BUSINESS, UM, COMPANIES AS FAR AS PREFERENCE CONDITIONS AND AMOUNTS.
AS I SAID, UM, PREVIOUSLY, CURRENTLY OUR PROGRAM HAS ONLY APPLIED TO UNDER 50,000 FOR, FOR F BETWEEN FIVE AND 50.
WHAT WE DO NOW IS IF WE HAVE ENOUGH, UH, CERTIFIED OR SMALL FIRMS IN THIS AREA, WE, WE ONLY GIVE THE OPPORTUNITY TO THEM FIRST, AND IF THEY RESPOND BACK, WE DON'T EVER, YOU KNOW, GIVE THE OPPORTUNITY TO EVERYBODY ELSE.
WE'RE RECOMMENDED TO CONTINUE WITH THAT PROGRAM FROM FIVE TO 50, UM, FOR GOODS AND SERVICES INCLUDING CONSTRUCTION, UM, WHICH BELOW A HUNDRED THOUSAND, WE WOULD RECOMMEND 5% FOR RFPS AND 10 FOR RFPS.
UM, AGAIN, THIS, THIS, WHAT I'M READING TO YOU NOW, IT MIRRORS EXACTLY WHAT WE HAD FOR THE LOCAL, SO IT'S THE SAME AMOUNT OF POINTS FOR SMALL AND LOCAL.
AND IN THE INTEREST OF TIME, 'CAUSE I KNOW Y'ALL HAVE A LOT ON YOUR AGENDA, THIS IS, I THINK THE SLIDE THAT REALLY KIND OF WRAPS UP EVERYTHING AS YOU CAN SEE, BIG PICTURE HOW THIS PROGRAM WOULD WORK.
AS YOU'LL SEE FOR INVITATIONS, FOR BIDS, UM, IT, IT'S, IT HAS A COMPOUNDING EFFECT.
SO IF YOU ARE SMALL AND YOU ARE LOCAL, YOU GET THE, IS AN EXAMPLE FOR AN INVITATION FOR BIDS FOR GOODS, CONS AND SERVICES.
UM, NON-CONSTRUCTION, BETWEEN A HUNDRED, 500,000, YOU COULD GET 5% FOR BEING LOCAL, 5% FOR BEING SMALL, WHICH WOULD ACTUALLY GIVE YOU A 10% PREFERENCE, UM, DOWN IN THE, UH, REQUEST FOR PROPOSAL SPACE.
IF YOU LOOK IN ANOTHER EXAMPLE, GOODS AND SERVICES BETWEEN THE SAME THING, BETWEEN
[00:50:01]
A HUNDRED 500,000, YOU GET 10 POINTS, WHICH IS BASICALLY 10% FOR LOCAL, 10 POINTS FOR BEING SMALL.AND THAT WOULD GIVE YOU UP TO 20 POINTS OF PREFERENCE, UM, WHEN COMPETING FOR THOSE OPPORTUNITIES.
DO YOU HAVE ANY QUESTIONS ON ANY OF THAT PIECE BEFORE WE GO TO THE FINAL SLIDE? OKAY.
SO NEXT STEPS, WE WILL BE DOING A LOT OF COMMUNICATING WITH OUR STAKEHOLDERS.
THOSE THAT, UH, UH, GRACIOUSLY, UH, SHARED THEIR TIME WITH US TO GIVE US FEEDBACK.
UH, WE'LL BE UPDATING THEM ON THE, UH, CHANGES THAT WE INTEND TO MAKE WITH THE PROGRAM AND, UH, HOW THEY CAN, UM, UH, VIEW PROGRAM MATERIALS AND, AND PARTICIPATE IN OTHER PROCUREMENT OUTREACH ACTIVITIES SO THAT, UH, THAT THEY AND THEIR CONSTITUENTS AND THEIR MEMBERS OF THEIR MEMBERSHIP ORGANIZATIONS, UM, CAN, UH, PARTICIPATE IN, UH, CITY PROCUREMENT ACTIVITIES TO THE EXTENT POSSIBLE.
UM, WE WILL ALSO BE UPDATING OUR INFORMATION ON CITI WEBSITES, ON OUR INTERNAL SHAREPOINT SITES FOR STAFF.
UM, WE WILL BE DOING NOTICE TO ALL OF OUR THOUSANDS OF REGISTERED, UH, VENDORS, AND WE WILL BE JOINING OUR PARTNERS IN, UH, SMALL AND MINORITY BUSINESS RESOURCES AND THE, UH, ECONOMIC DEVELOPMENT DEPARTMENT AT THE UPCOMING MINORITY AND SMALL BUSINESS CONFERENCE, UH, COMING, UH, NEXT MONTH.
UM, LIKE I SAID, WE'LL BE UPDATING PROCEDURES, TRAINING STAFF, AND, UM, WE WILL BE, UH, PROVIDING TRAINING TO OUR CUSTOMER STAFF AND OUR PARTNERING DEPARTMENTS, UH, SO THAT AS WE CONTINUE TO, UM, PERFORM PROCUREMENT FUNCTION AS THIS PART OF OUR, UH, EVALUATION OCCURS, THEY'LL KNOW, UM, WHY IT'S OCCURRING, UH, DIFFERENTLY AND HOW THEY CAN, UH, PARTICIPATE IN IT.
WITH THAT, WE INTEND TO GO LIVE OCTOBER ONE.
UH, THIS IS, UH, UH, PRETTY EXPEDITED AS FAR AS, UM, IMPLEMENTING NEW PROCUREMENT PROGRAMS. BUT, UM, LIKE I SAID, WE HAVE BEEN, UH, CONSIDERING THESE CHANGES, UH, FOR A FEW MONTHS NOW.
UM, WE FEEL LIKE WE WE'RE, WE'RE READY TO PROCEED AGAIN.
WE WANT TO MAKE SURE THAT IT WORKS BEFORE WE LOCK IT IN LONG TERM AND MAKE, MAYBE MAKE ANY CHANGES TO OUR, OUR ADMINISTRATIVE RULES OR, OR, UH, PURSUE ANY, UH, NECESSARY MUNICIPAL CODE.
UM, WE, WE JUST DON'T KNOW WHAT WE DON'T KNOW.
AND WE THINK THAT WHAT WE'RE BRINGING FORWARD IS, IS HAS THE GREATEST POSSIBILITY OF SUCCESS.
IF THERE ARE OTHER ELEMENTS THAT WE CAN TWEAK AND PERHAPS, UM, IMPROVE ACCESSIBILITY, WE WOULD LIKE TO DO THAT AS WELL.
BUT WE, WE FEEL LIKE WE BROUGHT FORWARD A SAFE RECOMMENDATION, UM, THAT IS CONSERVATIVE ENOUGH, BUT ALSO AMBITIOUS.
AND, UH, HOPEFULLY WE'LL MOVE THE NEEDLE TOWARDS MEETING COUNCIL, UH, EXPECTATIONS BETTER IN THE COMING YEARS.
SO, WITH THAT, IF YOU HAVE ANY QUESTIONS, WE'LL BE GLAD TO ANSWER THEM.
UM, THANK YOU BOTH JAMES AND SEAN.
I KNOW THIS HAS BEEN A LOT OF WORK AND I HAD THE OPPORTUNITY TO PARTICIPATE IN SOME OF THE DISCUSSIONS AND I KNOW THIS IS VERY WELCOME, UM, BY THE BUSINESS COMMUNITY, UM, AND A AND A GREAT OPPORTUNITY FOR US TO USE OUR PROCUREMENT TO MAKE SURE THAT WE ARE BUILDING UP OUR COMMUNITY.
UM, I DO HAVE A COUPLE QUESTIONS THAT I WANNA MAKE SURE THAT WE CLARIFY.
UM, BEFORE WE MOVE FORWARD, UM, CAN YOU, UM, PROVIDE ANY BALLPARK ON THE VALUE OF THE CONTRACTS THAT MIGHT FALL UNDER THIS PROGRAM AND HOW WE MIGHT THINK ABOUT IT? 'CAUSE IT DOESN'T INCLUDE CONSTRUCTION OVER A HUNDRED THOUSAND, SO, YOU KNOW, WE SPEND A LOT OF OUR TIME TALKING ABOUT THE CONSTRUCTION PROJECTS AND THERE'S A LOT OF OTHER PROCUREMENT PIECES.
SO CAN YOU SPEAK A LITTLE BIT TO THE MAGNITUDE? SURE.
SO IN, UM, WE DON'T HAVE F Y 23, UM, NUMBERS, UH, YET WE'LL HAVE THEM, UH, UH, SHORTLY AFTER THE FIRST OF THE CALENDAR YEAR.
UM, BASED ON, UH, FISCAL YEAR 22, OUR, UH, TOTAL CONTRACT SPEND WAS JUST OVER $1.48 BILLION, UH, OF CONTRACT SPEND.
UM, OF THAT, IF YOU BACK OUT CONSTRUCTION AND YOU BACK OUT ADMINISTRATIVE CONTRACTS, SO THESE ARE OUR CONTRACTS CREATED BY DEPARTMENTS THAT WERE NOT, UM, NECESSARILY PROCUREMENT.
SO THESE WOULD BE LIKE LEGAL SERVICES CONTRACTS OR ILAS OR WHAT HAVE YOU.
IF YOU BACK OUT THOSE CONTRACTS, UM, THE REMAINING VALUE WOULD BE IN THE, IN THE 700 TO $800 MILLION RANGE.
SO THAT'S A CONSIDERABLE AMOUNT OF MONEY.
UM, AND CAN YOU CLARIFY WHAT IS EXCLUDED ONCE YOU GO ABOVE, UM, THE A HUNDRED THOUSAND DOLLARS LEVEL CONTRACT? YEAH.
UM, THE, THE, THE THINGS THAT ARE EXCLUDED ABOVE THAT LIMO.
UH, OBVIOUSLY CONSTRUCTION PROJECTS ARE EXCLUDED A HUNDRED THOUSAND.
UM, STATE SHE STATUTE DOES NOT ALLOW US TO USE THIS FOR PROFESSIONAL SERVICES, AND THAT INCLUDES ARCHITECTS, ENGINEERS POSITIONS, THAT KIND OF THING.
AND IT'S ALSO, THERE ARE SOME FEDERALLY FUNDED PROJECTS THAT WOULD, WHICH WILL NOT ALLOW US TO USE THE LOCAL PREFERENCE.
[00:55:01]
THEN HOW, IF YOU GO TO THE SLIDE, UM, THAT HAS THE COMBINATION.IF WE ALSO WERE DOING M W E, IF, IF A FIRM WAS M W E, MY UNDERSTANDING IS THAT THEY ARE, THEY ARE THEN ELIGIBLE AS AS SMALL.
UM, AND SO THIS IS FOR PRIME, BUT IF A CONTRACT HAD M W E REQUIREMENTS, HOW DO THESE WORK TOGETHER? YEAH.
UM, IF THE MW M W B, UH, THANK YOU
I MEAN, YOU HAVE TO DO IT OR YOU'RE JUST NOT IN THE, IN THE PAUL PARK.
AND SO IF THERE WAS GOALS ON A PROJECT, UM, IF A, IF A PRIME WANTED TO SUBMIT AS OBVIOUSLY PRIME, UM, THEY COULD, OR I'M SORRY, IF A CERTIFIED FIRM WANTED TO SUBMIT AS A PRIME, THEY COULD MEET WHETHER IT WAS THEIR M B E OR A W B PORTION OF THE GOALS, SO THEY COULD USE THEMSELF TO SELF, UH, COMMIT TO THAT PIECE AND THEN OBVIOUSLY SUBCONTRACT WHATEVER THEY MIGHT NEED ON TOP OF IT.
AND THEN IF THEY WERE LOCAL OR SMALL, THEY WOULD GET THIS ON TOP OF THAT.
SO IT'S, IT'S REALLY VERY MUCH DESIGNED TO BE SUPPORTIVE OF THAT PROGRAM AND ADDED ADDITIVE, AND YOU CAN BE BOTH SMALL AND LOCAL, OR YOU CAN BE SMALL OR YOU CAN BE LOCAL AND TAKE ADVANTAGE OF IT.
SO IT'S, IT'S I THINK, REALLY FURTHERING A LOT OF THE GOALS AND VALUES THAT WE HAVE AS OUR CITY.
UM, MY LAST QUESTION IS HOW DOES THIS COMPARE TO WHAT OTHER CITIES ARE DOING? DO YOU WANNA TAKE TURN WITNESSES? WHEN WE LOOK AT OTHER, UM, COMPARABLE CITIES, UH, PARTICULARLY IN TEXAS, WE CAN LOOK ACROSS THE COUNTRY, BUT WE REALLY NEED TO LOOK AT TEXAS BECAUSE THEY'RE SUBJECT TO THE SAME REGULATORY AND STATUTORY ENVIRONMENT, UM, THAT WE ARE.
UM, I WOULD SAY, UH, CONVERSATIONALLY THAT OUR PROGRAM, UH, CURRENTLY AND WHAT WE ARE, UM, MOVING TOWARDS IS ASSERTIVE.
UM, MOST OF THE OTHER GOVERNMENTS DID HAVE A LOCAL PREFERENCE, UM, BUT THEY WERE PRETTY MUCH TIED TO THE STATUTE, WHICH REFERENCES, UM, INVITATION FOR BIDS.
UM, WE HAD TO LOOK A LITTLE BIT FURTHER.
THERE WAS A COUPLE, UM, UH, THAT ALSO INCLUDED, UM, CRITERIA BASED SOLICITATIONS LIKE THE REQUEST FOR PROPOSAL, BUT THAT WAS THE EXCEPTION AND NOT THE RULE.
SO I WOULD, I WOULD CONFIDENTLY SAY THAT, UH, THAT OUR PROGRAM AS BASED ON THE, THE CURRENT, UH, UM, CHANGES, UH, WOULD BE, UM, THE, IF NOT THE MOST ASSERTIVE IT WOULD BE AMONG THE MORE ASSERTIVE PROGRAMS IN THE STATE.
I THINK THERE'S A, A, A REFOCUSING ON LOOKING AT PROCUREMENT AND HOW WE'RE DOING THAT, BOTH TO BE EFFECTIVE AND EFFICIENT TO GET THROUGH THE PROCESS, BUT ALSO TO MAKE SURE, UM, THAT WE'RE MAXIMIZING THE RETURN ON OUR, ON OUR DOLLAR.
WHEN, WHEN WE FIRST STARTED TALKING ABOUT THIS, WE DID, YOU KNOW, RESEARCH WITH A LOT OF OTHER CITIES AND A LOT OF OTHER, UM, CONVERSATIONS THAT WERE GOING ABOUT AND THIS WAS DEFINITELY THE DIRECTION, UM, THAT FOLKS WERE LEANING.
SO I REALLY APPRECIATE ALL THE WORK THAT HAS GONE INTO THIS AND COLLEAGUES WHO WANTED TO INVITE OTHERS IF THEY HAVE QUESTIONS OR COMMENTS.
WELL, UM, EXCITED TO SEE THIS MOVE FORWARD OCTOBER 1ST AND, UM, LOOK FORWARD TO, TO SUPPORTING YOUR EFFORTS TO SPREAD THE WORD.
I'M VERY EXCITED ABOUT THIS, SO THANK YOU.
[6. Tourism Public Improvement District.]
IS ITEM SIX, WHICH IS THE TOURISM PUBLIC IMPROVEMENT DISTRICT, AND KATIE SNICK AND NOT SURE IF TOM NUNAN IS ALSO SPEAKING.OH GOSH, I'M NOT QUITE THAT TALL.
I'M AN ASSISTANT DIRECTOR WITH THE AUSTIN CONVENTION CENTER HERE TO TALK TO YOU GUYS ABOUT THE PROPOSED AUSTIN TOURISM PUBLIC IMPROVEMENT DISTRICT.
UH, WE'RE COMING TO COUNCIL ON AUGUST 31ST, UH, TO REQUEST APPROVAL OF THE DRAFT SERVICE PLAN AND PETITION LANGUAGE, UH, WHICH WILL BE THE FIRST STEP IN CREATING THE TPI.
AND SO WE WANTED TO COME, UH, TO THIS COMMITTEE AND WE WILL ALSO BE BRIEFING THE FULL COUNCIL ON THE 29TH, UH, ON WHAT'S IN THE TPI, WHAT A TPI IS, AND HOW THE FUNDING THAT WILL BE GENERATED, UM, FROM THE CONVENTION CENTER'S ALLOCATION WILL ULTIMATELY FLOW TO THE CITY AS UNRESTRICTED REVENUE.
SO WHY CREATE A TPI? UM, SO TPI IS A SPECIAL TYPE OF PUBLIC IMPROVEMENT DISTRICT.
IT'S CREATED AT THE REQUEST OF THE HOTELS WITHIN THE CITY, UM, AND IT'S TO SELF GENERATE FUNDING SO THAT THEY CAN GIVE GROUP BUSINESS INCENTIVES AND DO SALES AND MARKETING ACTIVITIES, ALL WITH THE GOAL OF INCREASING HOTEL ACTIVITY, UH, WITHIN THE CITY.
UM, AUSTIN'S TOURISM DISTRICT OR PROPOSED TOURISM PIT, UH, WILL PROVIDE SOME ADDITIONAL BENEFITS.
UM, AS I MENTIONED IN THE SLIDE PREVIOUSLY, IT'S WILL GENERATE FUNDING, UM, THAT WILL BE ABLE TO BE TRANSFERRED TO THE CITY AS UNRESTRICTED REVENUE FOR CITY PRIORITIES.
UH, THROUGH THE SUCCESS OF THE AUSTIN CONVENTION CENTER, UM, CREATING THE TPI WILL ALLOW US TO REMAIN COMPETITIVE WITH OUR PEER CITIES THAT ALREADY HAVE T PIDS IN PLACE, UM, SUCH AS SAN ANTONIO AND
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DALLAS.UM, IT WILL ALSO PROVIDE A LEVEL OF CRITICAL FUNDING, UH, FOR TOURISM IN AUSTIN DURING THE YEARS THAT THE CONVENTION CENTER WILL BE CLOSED FOR THE REDEVELOPMENT AND EXPANSION PROJECT.
UM, AND THEN LAST AND CERTAINLY NOT LEAST, UH, IT WILL CONTRIBUTE, UH, TO INCREASED HOTEL OCCUPANCY TAX GROWTH, WHICH BENEFITS OUR CULTURAL ARTS, HISTORIC PRESERVATION, AND LIVE MUSIC EFFORTS.
SO THE AUSTIN SPECIFIC SERVICE PLAN, UM, AS I MENTIONED, IT'S COMPOSED OF SOLELY OF HOTELS, UM, AND IT'S ONLY HOTELS THAT HAVE A HUNDRED ROOMS OR MORE THAT ARE WITHIN THE CITY OF AUSTIN LIMITS.
THIS T ID, UM, HAS A 2% ASSESSMENT ON THE GROSS TAXABLE ROOM NIGHTS OF THOSE ELIGIBLE HOTELS.
UM, COUNSEL WILL APPROVE THE BUDGET AND UPDATED SERVICE PLAN ANNUALLY.
UM, IT WILL BE OVERSEEN BY A T ID MANAGEMENT CORPORATION THAT WILL BE CREATED, UM, AS AN AGREEMENT BETWEEN THE CITY, THE MANAGEMENT CORPORATION, AND VISIT AUSTIN.
AND THAT WILL COME AS PART OF THE CREATION DOCUMENTS WHEN, WHEN WE COME BACK BEFORE COUNCIL, THE BUDGET ALLOCATION IS CONTAINED WITHIN THE SERVICE PLAN.
IT'S A 10 YEAR SERVICE PLAN, UM, AND, AND EVERYTHING THAT'S CONTAINED WITHIN IT WILL REMAIN IN THAT WAY THROUGH THE 10 YEARS.
IN ORDER FOR THE, UH, PETITION TO BE VALID, YOU MUST BE APPROVED BY OVER 60% OF THE HOTEL OWNERSHIP GROUPS WITHIN THE CITY.
AND THEN THE AUSTIN TPI D PLAN INCLUDES A PRIMARY AND SECONDARY PROGRAM OF WORK, UM, THAT I'LL WALK THROUGH IN A LATER SLIDE.
AND THEN I DID WANNA ACKNOWLEDGE THAT THIS SERVICE PLAN THAT IS BEFORE THE CITY COUNCIL, UM, ON THE 31ST, IS DIFFERENT THAN WHAT WAS BROUGHT TO CITY COUNCIL IN NOVEMBER OF 2020.
UM, AT THAT TIME, THE STAKEHOLDERS REQUESTED A POSTPONEMENT FOR SOME, SOME MORE DUE DILIGENCE.
WE WERE IN THE MIDDLE OF THE COVID PANDEMIC, UM, AND WE'VE BEEN WORKING DILIGENTLY TO COME TO AN AGREEMENT ON THIS SERVICE PLAN, UM, IN THE, IN THE TIME SINCE HOWEVER, THE WORLD HAS COMPLETELY CHANGED, UM, FOR THE HOTELIERS IN THAT TIME, THEY WERE DECIMATE, THE HOTEL INDUSTRY WAS DECIMATED BY COVID.
UM, AND THEN ADDITIONALLY IN 2020, WE WERE ENVISIONING THAT THE CONVENTION CENTER WOULD REMAIN OPEN DURING THE EXPANSION, UM, PROCESS.
AND WE HAVE NOW SWITCHED, AND WE WILL BE COMPLETELY CLOSING THE FACILITY.
UH, SO AS I MENTIONED, THE PRIMARY PROGRAM OF WORK, UM, IT SPELLS OUT THE BUDGET ALLOCATIONS WITHIN THE SERVICE PLAN, AND THIS IS IN EFFECT WHEN THE CONVENTION CENTER IS OPERATIONAL.
UM, SO FOR THIS CURRENT 10 YEAR PIT, IT WOULD BE FIRST COUPLE OF YEARS BEFORE WE CLOSE IN 25, AND THEN AGAIN UPON REOPENING IN 2029.
UM, AND IT BREAKS DOWN THE DIFFERENT CATEGORIES AND HOW THEY'RE GONNA ALLOCATE THE REVENUE THAT'S COLLECTED UNDERNEATH, UM, UNDER THAT 2% ASSESSMENT.
SO THE FIRST CATEGORY IS THE CONVENTION CENTER GROUP BUSINESS INCENTIVES.
UM, AND SO THIS IS THE ONE THAT WE'LL FOCUS ON ON SOME MORE SLIDES.
THIS IS THE CATEGORY THAT ULTIMATELY WILL ALLOW US TO TRANSFER FUNDING TO THE CITY AS UNRESTRICTED REVENUE.
UM, THE SERVICE PLAN ALLOCATES 20% OF TOTAL REVENUE FROM THE T I D FOR THIS CATEGORY.
HOWEVER, IT DOES ALSO ALLOW FOR AN ADDITIONAL 20% FROM THE CATEGORY BELOW IF THE CONVENTION CENTER IS ABLE TO EXPEND ALL OF ITS INCENTIVES ALLOCATIONS, UM, IN A GIVEN YEAR.
AND I'LL QUICKLY PAUSE JUST TO EXPLAIN SORT OF WHAT OUR INCENTIVE PROGRAM IS.
UM, SO THE CONVENTION CENTER, LIKE EVERY OTHER CONVENTION CENTER IN THE, IN THE COUNTRY, UH, TAKES A LOOK AND EVALUATES EVERY PIECE OF BUSINESS THAT WE EITHER COMPETE FOR OR WANTS TO COME AND BOOK AT THE AUSTIN CONVENTION CENTER.
WE TAKE A LOOK AT THE TOTAL REVENUE THAT THESE EVENTS WILL BRING IN, NOT JUST THE REVENUE TO THE CONVENTION CENTER.
SO THAT'S THINGS LIKE HOTEL TAX, SALES TAX, ET CETERA.
UM, AND THEN IF THEY, IF THEY HIT A CERTAIN THRESHOLD, UM, WE WILL PROVIDE INCENTIVES.
UM, OFTEN IT'S, IT'S USUALLY JUST DISCOUNTS ON FACILITY RENTAL, THAT KIND OF THING.
UM, THAT'S OUR NORMAL COURSE OF BUSINESS.
AND WITHOUT THE TPI, THAT'S JUST, YOU KNOW, REVENUE THAT WE OTHERWISE WOULD'VE RECEIVED, UM, AT THE CONVENTION CENTER.
BUT IN RECOGNITION OF THE EXTRAORDINARY IMPACT OF THESE EVENTS, WE'RE WILLING TO FOREGO THAT REVENUE.
UM, AND THEN WE ALSO WILL SEE IT WILL, WILL BE MADE WHOLE THROUGH OUR ALLOCATION OF THE HOTEL OCCUPANCY TAX.
WITH THE T I D, WE ARE NOW ABLE TO BE REIMBURSED, UM, FOR THOSE, FOR THOSE INCENTIVES THAT WE ARE GIVING.
UM, AND THEN WE CAN TRANSFER THAT OVER TO THE GENERAL FUND AS UNRESTRICTED REVENUE ONCE THE EVENT TAKES PLACE AND THE STATE STATUTES ARE SATISFIED.
SO FOR OUR, FOR UNDER THE PRIMARY PROGRAM OF WORK, CONVENTION CENTER IS ELIGIBLE FOR UP TO 40% OF THE TOTAL ALLOCATION OF THE TPI DOLLARS.
THE NEXT CATEGORY IS THE SALES AND MARKETING ACTIVITIES.
UH, IT'S ALLOCATED AT 60%, BUT THAT COULD GO DOWN TO 40% IF THE CONVENTION CENTER IS ABLE TO GIVE INCENTIVES UP TO THAT 40% AMOUNT.
UM, THIS IS THE BULK OF THE WORK THAT THE T P I D WILL BE DOING.
UM, THIS IS THE VISIT AUSTIN INITIATIVES THAT, UM, THEY'LL BE UNDERTAKING ADDITIONAL SALES TRIPS, UH, FAMILIARIZATION TOURS, UH, EVENT TRUST FUND, UH, ALL THESE KINDS OF ACTIVITIES THAT ARE DESIGNED TO REALLY GENERATE TOURISM AND HOTEL ROOM NIGHTS WITHIN THE CITY.
AND IT'S GOING TO BE A CRITICALLY IMPORTANT COMPONENT, UH, FOR TOURISM IN THE CITY.
WHEN THE CONVENTION CENTER IS CLOSED, 10% OF THE
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TOTAL BUDGET WILL GO TOWARD HOTEL BUSINESS INCENTIVES.UM, THIS FUNCTIONS VERY SIMILARLY TO THE CONVENTION CENTER'S ALLOCATION, EXCEPT IT'S FOR EVENTS THAT OCCUR SOLELY IN HOTELS.
AND THEN THE LAST 10% IS ALLOCATED FOR RESEARCH AND ADMINISTRATION.
UM, THIS IS, WE'LL TAKE A LOOK AT ALL THE ACTIVITIES THAT THE TPIT IS DOING AND MEASURE IF THEY'RE BEING EFFECTIVE IN ACTUALLY, UM, GENERATING THE HOTEL NIGHTS THAT, UM, IT'S DESIGNED TO DO.
SO, FOCUSING A LITTLE BIT MORE ON THAT FIRST CATEGORY, THE CONVENTION CENTER INCENTIVE PROGRAM.
UM, SO I MENTIONED AGAIN, THE PRIMARY PROGRAM OF WORK.
UH, THE SECONDARY PROGRAM OF WORK, UH, IS IN EFFECT WHEN THE CONVENTION CENTER IS UNDER CONSTRUCTION.
IT WAS CREATED IN RECOGNI TO ALLOW THE CONVENTION CENTER TO STILL GIVE INCENTIVES WHILE THE CONVENTION CENTER IS CLOSED.
WE'LL BE, YOU KNOW, BOOKING EVENTS AT PALMER, LOOKING AT CITYWIDE APPROACH, UM, LOOKING AT OTHER CITY FACILITIES TO SEE HOW WE CAN ACCOMMODATE, UH, THOSE EVENTS THAT STILL WANT TO TRY TO MAKE IT WORK HERE.
UM, AND ANY EVENTS THAT WE'LL BE BOOKING DURING THE CLOSURE PERIOD.
HOWEVER, IT DOES RECOGNIZE THAT THE LEVEL OF INCENTIVES THAT THE CONVENTION CENTER WILL BE ABLE TO GIVE IS GOING TO BE SIGNIFICANTLY LESS THAN WHEN IT'S FULLY OPERATIONAL.
UH, SO THAT MEANS WHEN THE CONVENTION CENTER'S CLOSED AND THE SECONDARY PROGRAM OF WORK IS IN EFFECT, THE TOTAL CONVENTION CENTER INCENTIVE ALLOCATION IS REDUCED FROM 20% TO 10%.
UM, THAT 10% THAT THAT THAT'S REMAINING, UM, IS CONVERTED TO THE VARIABLE ROOM NIGHT GENERATION CATEGORY.
AND THIS JUST CREATES FLEXIBILITY FOR THOSE DOLLARS.
UM, AND IT'S CAN BE SPENT ON ANY ELIGIBLE USE FOR THE T I D INCLUDING ADDITIONAL BUY DOWNS AT THE CONVENTION CENTER.
UH, SO WE'LL BE WORKING DILIGENTLY TO ENSURE THAT WE GET THAT FULL 20% DURING THE CLOSURE.
UH, IT ALSO CREATES A REOPENING FUND.
SO IF THERE ARE ANY DOLLARS THAT WE'RE UNABLE TO ENCUMBER OR SPEND OUT OF OUR ALLOCATION, IT EARMARKS 50% OF THOSE, UH, INTO A REOPENING FUND THAT WILL BE AVAILABLE TO THE CONVENTION CENTER, AND THEN EVENTUALLY THE CITY, ONCE THE EVENTS OCCUR, UH, AT, WHEN WE REOPEN THE FACILITY.
SO HOW DO WE GET FROM T P I D TO GENERAL FUND? UH, SO WE CREATED THIS GRAPHIC THAT JUST KIND OF SHOWS HOW WE START AT THE TOP AND MOVE ALL THE WAY OVER, AND THEN EVENTUALLY THE CITY HAS THAT UNRESTRICTED REVENUE.
SO THE FIRST STEP IS THE HOTELS PAY THEIR 2% ASSESSMENT SIMILARLY TO HOW THEY REMIT THEIR HOTEL OCCUPANCY TAX.
UM, THEY DO THIS EITHER QUARTERLY OR MONTHLY, JUST DEPENDING ON THE HOTEL.
SO AS PART OF THE BUDGET EVERY YEAR.
UM, AND THAT'S SOMETHING THAT THE CITY COUNCIL WILL SEE.
THE CONVENTION CENTER WILL SUBMIT ITS ESTIMATED INCENTIVES AND, AND THE EVENTS THAT IT'S ASKING FOR REIMBURSEMENT, UM, OF THOSE INCENTIVES FOR EVERY YEAR.
UM, AND THEN THE MANAGEMENT CORPORATION, WHICH IS OVERSEEING THE DAY-TO-DAY ACTIVITIES OF THE PID, TAKES A LOOK AT.
IT, SAYS, THIS ALL LOOKS GOOD, THIS SEEMS FINE.
AND THEN COUNSEL WILL ALSO APPROVE IT, UM, LATER.
AND THEN THE EVENT, UH, THAT HAS THE APPROVED INCENTIVES ACTUALLY OCCURS.
AND I'LL QUICKLY STOP HERE AGAIN, JUST TO WALK THROUGH AN IMPORTANT PIECE OF THIS AND JUST TO SET SOME EXPECTATIONS.
SO THE CONVENTION CENTER BOOKS BUSINESS YEARS IN ADVANCE.
UM, SO WE'LL IN 2026, WE'LL START BOOKING THE NEW BUILDING IN 2029 AND 2030.
UM, SO THAT MEANS THAT WE'LL BE USING OUR ALLOCATION OF OUR DOLLARS, UH, FROM THE T I D FOR EVENTS THAT ARE OCCURRING IN THE CURRENT YEAR AND FOR FUTURE YEARS.
THOSE FUTURE YEAR EVENTS, THE FUNDING THAT WE EARMARK FOR THAT MUST REMAIN RESTRICTED AND ENCUMBERED UNTIL SUCH TIME AS THE EVENT ACTUALLY OCCURS.
SO THAT MEANS THE ONLY DOLLARS THAT CAN BE TRANSFERRED TO THE CITY ARE THOSE THAT HAVE AFTER THE EVENT HAS ACTUALLY OCCURRED.
SO IT WOULD BE THOSE CURRENT YEAR DOLLARS.
UM, SO THIS MEANS THAT THE TRANSFER THAT YOU SEE FROM THE, UM, FROM THE T I D TO THE CITY MAY NOT MATCH UP EXACTLY WITH THE ALLOCATION OF THE REVENUE THAT IS CONTAINED WITHIN THE SERVICE PLAN.
AND WE'LL BE UPDATING THOSE REVENUE NUMBERS AND EXPENDITURES AS PART OF THE BUDGET PROCESS EVERY YEAR AS WELL.
SO THE EVENT HAPPENS, UH, WE SUBMIT, UH, ALL OF OUR DOCUMENTATION TO THE T I D TO SAY, THE EVENT HAPPENED, HERE'S THE FINAL INCENTIVES WE GAVE.
YOU KNOW, WE'D LIKE TO BE REIMBURSED FOR THAT.
ONCE THAT HAPPENS, UH, THE MANAGEMENT CORPORATION WILL THEN TRANSFER THAT INCENTIVE OVER TO THE, UH, WE'RE CREATING A SPECIAL REVENUE FUND, AND CREATIVELY, I THINK WE'RE CALLING IT THE TAID FUND, UM, YOU KNOW, JUST FOR FUN.
UH, AND SO IT WILL, IT WILL BE TRANSFERRED THERE, AND AT THAT POINT, IT IS NOW UNRESTRICTED REVENUE.
AND SO WE WILL COLLECT, UM, AS THE YEAR GOES THROUGH AND EVENTS HAPPEN, WE WILL BE COLLECTING REVENUE INTO THAT FUND.
UH, AND THEN IT WILL BE TRANSFERRED OVER TO THE GENERAL FUND AS PART OF THE BUDGET PROCESS.
AND COUNCIL AT THAT POINT IS ABLE TO MAKE, UM, THEIR ALLOCATIONS, UM, BASED ON COUNCIL PRIORITIES.
OOPS, SKIP THE IMPORTANT SLIDE.
SO HOW MUCH MONEY ARE WE TALKING ABOUT? UM, SO THIS IS, UH, WHAT'S, THIS IS FROM THE SERVICE PLAN.
UM, AND THIS SHOWS THE ESTIMATED COLLECTIONS FOR THE, FOR A 2%, UM, ASSESSMENT.
THE REVENUE PROJECTIONS HAVE A 7.5%
[01:10:01]
GROWTH RATE, AND THIS IS VERY OPTIMISTIC, BUT IT'S DESIGNED THAT WAY SO THAT WE CAN ENSURE THAT WE'RE CAPTURING ALL OF THE REVENUE THAT MAY COME IN.UM, IN THE YEAR, IT'S POSSIBLE THAT THESE NUMBERS WILL ACTUALLY BE A LITTLE BIT LOWER, AND I WOULD SAY PROBABLY LIKELY.
SO THE, UH, COLUMN WITH THE PINK HEADER IS THE A C C D INCENTIVES.
UM, AND SO THAT'S THE ALLOCATION THAT WOULD ULTIMATELY COME TO THE CITY.
UH, YOU CAN SEE THE 10 YEARS, IT'S ABOUT 78 MILLION.
THERE'S ANOTHER CAVEAT, OF COURSE, BECAUSE CAN'T POSSIBLY GET THROUGH ONE OF THESE SLIDES WITHOUT A CAVEAT.
UM, IF YOU LOOK AND SEE WHERE THE LIGHT TAN HEADERS ARE, SO 20, 24 AND 25, ALL THE WAY DOWN TO 20 28, 20 29, THOSE BROS, YOU'LL SEE THE ASTERISKS NEXT TO THAT FUNDING.
THAT IS WHEN THE SECONDARY PROGRAM OF WORK IS IN EFFECT.
AND SO THAT'S WHEN THE CONVENTION CENTER'S ALLOCATION IS REDUCED FROM 20% TO THAT 10%, ALTHOUGH WE HAVE THE ABILITY TO GET BACK UP TO THAT 20%.
UM, SO THIS MEANS THAT THERE'S ACTUALLY A RANGE OF FUNDING THAT COULD COME TO THE CITY BASED ON THESE, UH, THIS LEVEL OF INCENTIVE.
UM, SO A 78 MILLION, IF WE GET JUST STRAIGHT 20% ALL THE WAY THROUGH, UH, CAN GO UP TO 120 IF WE'RE ABLE TO MAX OUT AND GET THAT 40% IN THE PRIMARY PROGRAM OF WORK.
UM, BUT IT MAY ALSO BE ALL THE WAY DOWN TO 60 MILLION IF WE AREN'T ABLE TO GET TO THAT FULL 20% DURING THE YEARS THAT WE'RE CLOSED.
AND AGAIN, WE'LL BE UPDATING THESE NUMBERS EVERY YEAR AS WE COME, YOU KNOW, AS WE DO OUR BUDGETS OR AS THE T ID DOES THEIR BUDGET AND COMES TO COUNCIL FOR APPROVAL.
I'LL QUICKLY TALK ABOUT THE GOVERNANCE SLIDE.
UM, SO AS I'VE SAID, I THINK FIVE TIMES NOW, THE, UH, T I'S GOING TO BE OVERSEEN BY THE TPI MANAGEMENT CORPORATION.
UM, IT'S, AGAIN, CREATED IN, UH, UNDER A CONTRACT BETWEEN THE CITY VISIT AUSTIN AND THE MANAGEMENT CORPORATION.
THEY'LL OVERSEE THE DAY-TO-DAY OPERATIONS.
UM, THEY ARE OVERSEEN BY A BOARD OF DIRECTORS THAT'S COMPOSED OF THE, OF HOTELS.
I THINK THERE'S 11 MEMBERS, AND IT'S A REPRESENTATION OF ALL DIFFERENT LEVELS.
SO YOU'VE GOT BIG HOTELS, MEDIUM HOTELS, SMALL HOTELS.
UM, THERE ARE ALSO THREE EXOFFICIO MEMBERS THAT WILL BE A PART OF THE BOARD.
UM, VISIT AUSTIN'S PRESIDENT AND C E O, THE HOTEL LODGING ASSOCIATIONS PRESIDENT AND C E O AND THEN THE AUSTIN CONVENTION CENTER.
I'M ON MY LAST SLIDE, I SWEAR.
UH, SO NEXT STEPS IN THE ACTIVATION PROCESS.
SO, UM, AS I SAID, WE WILL BE COMING TO COUNCIL ON AUGUST 31ST REQUESTING APPROVAL OF THE DRAFT SERVICE PLAN AND PETITION LANGUAGE.
UH, SO THAT VISIT AUSTIN AND THE HOTELIERS OR, AND THE HOTEL LODGING ASSOCIATION CAN COLLECT THE SIGNATURES FROM THE HOTELIERS.
AGAIN, WE HAVE TO HIT THAT 60% THRESHOLD, UM, OF THE OWNERSHIP GROUPS TO SIGN ON.
WE, WE ESTIMATE THIS PROCESS'S GONNA TAKE ABOUT TWO MONTHS.
UM, AND WE, ONCE THE SERVICE PLAN HAS BEEN APPROVED, IT CAN'T CHANGE AT THAT POINT OR ELSE WE HAVE TO START THE PETITION PROCESS ALL OVER AGAIN.
AND SO THAT ADDS ANOTHER LEVEL OF DELAY.
ONCE THE THRESHOLD IS EXCEEDED, COME BACK TO THE CITY FOR VALIDATION OF THE PETITION SIGNATURES.
AND THEN AT THAT POINT, UH, WE CAN COME BACK TO COUNCIL AND ACTUALLY CREATE THE DISTRICT.
THERE WILL BE TWO PUBLIC HEARINGS ON THE CREATION OF THE DISTRICT, ONE ABOUT THE CREATION AND THE SECOND ON THE ASSESSMENT RATE.
AND THAT CAN HAPPEN ON THE SAME DAY THAT COUNCIL ACTUALLY CREATES THE DISTRICT AS WELL.
SO ONCE COUNCIL APPROVES THE DISTRICT AND WE GOT IT, WE HAVE IT CREATED AND ALL THE BACKEND IS TAKEN CARE OF, UM, WE CAN START BEGINNING THAT ASSESSMENT.
AND THEN, UM, THE FUNDING FROM THE CONVENTION CENTER'S CURRENT YEAR BUSINESS, UH, WILL START TO FLOW INTO THAT FUND.
AND THEN AGAIN, AS I MENTIONED, DURING THE 2025 BUDGET PROCESS IS WHEN, UM, WE ANTICIPATE AND, AND WOULD RECOMMEND THAT CITY COUNCIL TAKE A LOOK AT WHAT'S IN THAT FUND AND THEN ALLOCATE BASED ON THEIR PRIORITIES.
AND WITH THAT, WE CAN TAKE ANY QUESTIONS.
UH, COUNCIL MEMBER RYAN ALTER.
UM, I WAS WONDERING IF YOU COULD TELL US WHAT THE, IF YOU HAVE PROJECTED OR WHAT THE BUYDOWN AMOUNT WAS OR IS PLANNED TO BE FOR FISCAL YEAR 2324? YES.
SO, UH, NOT THROUGH THE TPI, BUT YOUR JUST YES.
WE ACTUALLY DID AN ANALYSIS FROM, UM, NOW UNTIL WE, WE CLOSE AND IT'S GONNA BE ABOUT THREE AND A HALF MILLION.
UM, WE DID ABOUT THREE AND A HALF MILLION IN F Y 22.
UM, BUT WE ARE STARTING TO SEE EVENTS HAVING TO BOOK ELSEWHERE IN ANTICIPATION OF THE CLOSURE CLOSURE.
UM, THAT'S THOSE MULTI-YEAR EVENTS THAT COME TO US EVERY SINGLE YEAR.
UM, AND SO WE, WE ARE SEEING A SLIGHT DROP OFF, UM, IN THAT.
AND SO WE'RE ANTICIPATING ABOUT THREE AND A HALF MILLION, UM, UNTIL FROM NOW, UNTIL CLOSURE.
AND YOU SAY THAT'S A SLIGHT DROP OFF, HOW DOES THAT COMPARE TO PRIOR YEAR, PRIOR YEARS IN THE FOURS OR IN FIVES? WHAT SIGNIFICANCE HAS THE DROPOFF BEEN WITH THE ANTICIPATION OF THE CLOSURE? OH, IN TERMS OF THE NUMBER OF EVENTS OR, WELL, AND JUST IN TERMS OF THAT DOLLAR AMOUNT, THAT THREE AND A HALF MILLION, WAS IT CLOSER TO FIVE? WAS IT CLOSER TO FOUR? WHAT? SO IN 22, WE DID THREE AND A HALF FOR JUST THAT ONE FISCAL YEAR.
SO IT'S, YOU KNOW, YOU'RE TALKING LIKE MAYBE ANOTHER 500,000 OR SO.
[01:15:01]
IT'S NOT HUGE IN THE GRAND SCHEME OF THINGS, ALTHOUGH IT IS, RIGHT.SIGNIFICANT IN TERMS OF, OF TRYING TO GET THE FUNDING FROM THE TPI.
SO LOOKING AT THE CHART HERE WHERE IT TALKS ABOUT POTENTIALLY 23, 24 BEING FIVE AND A HALF MILLION IN ELIGIBLE BUY DOWN, THAT'S JUST GIVEN YOUR NUMBER.
THERE'S NOT AN EXTRA $2 MILLION WORTH OF BUY DOWNS OUT THERE TO BE HAD, PROBABLY NOT.
UM, WE ARE ACTUALLY LOOKING AT OUR INCENTIVE PROGRAM AND, AND LOOKING AT HOW WE'RE CALCULATING IT IN ORDER TO SEE HOW WE CAN MAXIMIZE WHAT WE'RE GETTING OUT OF THAT.
UM, AND SO WE'RE HOPEFUL THAT WE'LL ACTUALLY BE ABLE TO INCREASE THAT AMOUNT IF WE'RE, YOU KNOW, BETWEEN NOW AND PROBABLY JANUARY IS WHEN WE ANTICIPATE THAT WE'D BE STARTING TO COLLECT FOR THE TID.
AND SO WE'VE GOT SOME TIME TO REALLY RE REWORK THAT PROGRAM.
UM, IT WON'T LOOK ANY DIFFERENT FOR OUR CLIENTS, BUT ON THE BACKEND WE'LL BE ABLE TO KIND OF MAXIMIZE WHAT THAT DISCOUNT ACTUALLY LOOKS LIKE.
AND SO WHEN IN THE SERVICE PLAN, WHEN IT SAYS THAT IT'S GOING TO BE A MINIMUM OF 20%, IT'S NOT A TRUE MINIMUM, RIGHT? I MEAN, IF IF IT'S LESS THAN 20%, THAT'S NOT JUST GIVEN TO THE CONVENTION CENTER, IT IS REALLOCATED THROUGH THE PROCESS HERE.
IT, IT SAYS THAT AT THE END, AT THE END OF THE FISCAL YEAR, SURPLUS FUNDS WILL BE ALLOCATED TO SUBSEQUENT FISCAL YEARS.
SO WE'VE ACTUALLY BUILT LANGUAGE IN THERE AS WELL.
SO WE'LL BE USING, YOU KNOW, SO WE MIGHT TAKE, YOU KNOW, 500,000 OR WHATEVER AND USE IT FOR THE NEXT YEAR'S EVENTS.
UM, AND SO THOSE FUNDS ARE NOT ELIGIBLE TO BE REALLOCATED.
AND SO WE'LL BE WORKING TO MAXIMIZE WHAT FUNDS WE'RE ENCUMBERING FOR FUTURE EVENTS WITH EACH YEAR, UM, IN ORDER TO MAINTAIN AND, AND ENSURE THAT THOSE, THAT FUNDING STAYS WITHIN OUR CATEGORY.
BUT YES, THE MANAGEMENT BOARD OF DIRECTORS HAS THE ABILITY TO REALLOCATE SURPLUS FUNDS IN THE NEXT FISCAL YEAR.
AND THEN IN YOU, YOU TALKED A BIT ABOUT THE CLOSED YEARS, THAT 10%, 10% BIFURCATION MM-HMM.
SO FOR THE FIRST 10%, LIKE I SAID, THAT'S SUPPOSED TO GO TO BUYDOWN.
IT'S NOT AT THE CONVENTION CENTER, BUT PALMER OR OTHER, BUT ONCE AGAIN, WE CAN'T, IT'S NOT A 10% GUARANTEE.
IT'S A HOPE, RIGHT? IT'S, IT'S EXACTLY RIGHT.
AND THEN OF, IF, IF WE DON'T HIT THAT FULL 10%, HALF WILL GO TO THE REOPENING FUND AND HALF POTENTIALLY REALLOCATED CORRECT.
FOR THE ING FUND, IS THAT EXCLUSIVELY FOR BUY DOWNS? YES.
SO LOOKING THEN WHEN THE CONVENTION CENTER REOPENS UNDER THE SERVICE PLAN, RIGHT NOW, EXCLUDING THE REOPENING FUND, IF WE EXCEED 20% MM-HMM.
IS THERE ANY REAL SCENARIO WHERE WE EXCEED 40% AND THEN HAVE TO DIP INTO THIS REOPENING FUND? I MEAN, THAT SEEMS INCREDIBLY UNLIKELY.
AND THEN FOR THE OTHER HALF, THE VARIABLE ROOM GENERATION MM-HMM.
BUT AS WE TALKED, PRETTY UNLIKELY THAT WE'RE GONNA EXCEED 10% IN BUY DOWNS DURING THE CLOSURE.
UM, I WOULD SAY THAT'S NOT NECESSARILY TRUE BECAUSE AS I SAID, IN 26, WE'RE GOING TO START SELLING THE NEW BUILDINGS.
SO WE'LL BE EATING UP ALL OF THOSE DOLLARS AND ENCUMBERING THEM FOR SURE WHEN WE REOPEN.
UM, SO I THINK IT IS ACTUALLY LIKELY THAT WE COULD GET TO, UM, OVER 10% IN THE, IN THE YEARS, CERTAINLY ONCE WE START SELLING THE NEW BUILDING.
BUT TO YOUR POINT EARLIER, THEN THAT WOULD BE VERY DELAYED DOLLARS.
THOSE, WE WOULDN'T SEE THOSE TILL 30.
ALTHOUGH WE WILL HAVE A LEVEL OF INCENTIVES DURING THE CURRENT YEAR, RIGHT.
BECAUSE WE, I, WE WILL HAVE EVENTS THAT HAPPEN DURING THE YEARS OF CLOSURE AT PALMER.
IT'S JUST NOT GOING TO BE, YOU KNOW, FIVE AND A HALF MILLION.
SO I THINK YOU KIND OF ALLUDED TO IT, AND I JUST, I THINK IT'S IMPORTANT TO NOTE, LIKE THIS CHART IS THE ABSOLUTE ROST PICTURE BEST CASE SCENARIO, BUT I THINK PRETTY UNLIKELY.
AND SO I, I'M A LITTLE FRUSTRATED IN HOW WE GOT HERE IN THAT THERE WERE AGREEMENTS AND, AND AS A, A PRIOR COUNSEL PRIOR, YOU KNOW, DISCUSSION, BUT THERE WERE OTHER AGREEMENTS THAT WOULD HAVE POTENTIALLY ALLOWED FOR US TO GET GUARANTEED DOLLARS, AND THE LAW WAS CHANGED BY THOSE INVOLVED IN THIS NEGOTIATION THAT PREVENTS US FROM NOW DOING THAT.
AND NOW WE'RE STUCK IN A PLACE WHERE WE'RE TRYING TO GET
[01:20:02]
DOLLARS HERE AND THERE.THAT'S, UH, YOU KNOW, UP TO, IF WE'RE LUCKY, IF IT'S THE BEST CASE SCENARIO.
UM, I, THAT'S ALL I'LL SAY ABOUT.
ANY OTHER QUESTIONS? UM, THANK YOU.
I HAVE APPRECIATE, UM, YOUR QUESTIONS.
COUNCIL MEMBER ALTER AND I SHARE YOUR FRUSTRATION WITH HOW WE GOT TO THIS PARTICULAR PLACE VERSUS WHERE WE, WHERE WE STARTED.
UM, CAN YOU REMIND ME HOW WE PAY RIGHT NOW FOR THE SECURITY FOR SOUTH BY SOUTHWEST FEE WAIVER? I THINK, I THINK IT'S, I THINK IT'S PART OF THE FEE WAIVERS IN THE CITY'S BUDGET PROCESS.
BUT I DON'T KNOW IF WE HAVE ANY,
SO WE HAVE TO PAY FOR ALL THE CUPS AND ANY OTHER FIRST RESPONDERS THAT WE HAVE TO BACKFILL IN ORDER TO PROVIDE THAT SECURITY.
SO MY UNDERSTANDING OF THE LAW NOW WOULD NOT PERMIT A DIRECT PAYMENT FOR SECURITY SERVICES.
IT'S, IT'S RESTRICTED TO SALES AND MARKETING ACTIVITY, SALES AND MARKETING AND BUSINESS RECRUITMENT SPECIFICALLY RELATED TO HOTELS.
UM, WE CAN CERTAINLY HAVE SOME CONVERSATIONS AND TAKE A LOOK AT WHAT THOSE, THOSE FEES ARE AND HOW WE MIGHT BE ABLE TO GET CREATIVE WITH, UM, SOME OF OUR INCENTIVES FOR SELF BUY MM-HMM.
I MEAN, IT WOULD BE HELPFUL, YOU KNOW, WHEN YOU TALK ABOUT THE THREE AND A HALF MILLION INCENTIVES, WHAT PORTION OF THOSE ARE SOUTH BY AND DO YOU COUNT SOUTH BY IN THOSE INCENTIVES? OR CAN WE, CAN WE, UM, MORE ACCURATELY REFLECT THE INCENTIVES WE PROVIDE UNDER, UNDER SOUTH BY? SO THE INCENTIVES THAT, UH, SOUTH BY WOULD RECEIVE IS STRICTLY, UH, CONFINED WITHIN THE CONVENTION CENTER, AND IT'S A DISCOUNT OFF OF THEIR FACILITY RENTAL.
AND IT'S PROBABLY VERY SIMILAR AND IN LINE WITH, UM, WHAT OTHER CONVENTIONS ARE RECEIVING AS WELL.
UM, IT'S BASED SOME ON THE HOTEL ROOM OR, YOU KNOW, ON HOTEL ROOM NIGHTS.
UM, BUT WE CAN CERTAINLY, YOU KNOW, TAKE A LOOK AND SEE, LIKE KATIE SAID, IF THERE'S A, UM, IF THERE'S A CREATIVE OPTION WHERE WE CAN LOOK AT WHAT INCENTIVES THE CONVENTION CENTER IS GIVING, UM, THAT COULD CONTRIBUTE IN A, IN A ROUNDABOUT WAY.
SO WHEN YOU TALK ABOUT THE THREE AND A HALF MILLION, DOES THAT INCLUDE SOUTH BY? IT DOES, BUT IT'S A SMALL PERCENTAGE OF THE THREE AND A HALF MILLION.
IT'S NOT LIKE IT'S A MILLION OF THE THREE AND A HALF MILLION.
JUST OFTEN WHEN WE SEE, YOU KNOW, THE CONVENTION CENTER DATA RIGHT SOUTH BY HAS AN OUTSIZE IMPACT.
UM, SO I WAS JUST TRYING TO SEE IF THERE WOULD, THERE WAS A WAY FOR IT.
CAN YOU, UM, CIRCULATE TO US THE STATUTE THAT IS GOVERNING? UM, YES, WE WILL.
'CAUSE I THINK THAT WAS MM-HMM.
UM, IF THERE ARE NO OTHER QUESTIONS, I GUESS WE'LL CONTINUE THIS CONVERSATION NEXT WEEK AT WORK SESSION.
I UNDERSTAND THERE'S BEEN A REQUEST TO HAVE A PRESENTATION THERE AS WELL, AND SEVERAL COLLEAGUES WHO ARE NOT HERE I KNOW HAVE, HAVE MANY QUESTIONS MM-HMM.
UM, MR. NUNAN, I WANTED TO JUST RECOGNIZE YOU BEFORE WE CONCLUDE AND, AND SEE IF YOU WOULD LIKE TO SAY ANYTHING.
WELL, YOU'RE WELCOME TO IF YOU'D LIKE TO.
WELL, MADAM CHAIR, I'M SORRY I COULDN'T BE THERE TODAY.
I'M, I'M HOME ILL WITH COVID AS MY, OUR FAMILY IS, OR I WOULD'VE BEEN THERE AND I WILL BE BETTER NOW.
I WISH YOU A, A SPEEDY RECOVERY AND EVERYONE BE SAFE.
LOTS OF FOLKS ARE HOME WITH COVID, SO THANK YOU.
[7. Austin Convention Enterprises, Inc. Operations and Financial Information concerning the Hilton Hotel next to the Austin Convention Center.]
WE HAVE ITEM SEVEN, WHICH IS AUSTIN CONVENTION ENTERPRISES, UM, CONCERNING THE HILTON HOTEL NEXT TO THE AUSTIN CONVENTION CENTER.ARE YOU DOING THE PRESENTATION FOR US? WELCOME BACK.
UH, COUNCIL MEMBERS, THANK YOU FOR AFFORDING ME THE TIME TO JOIN YOU THIS MORNING.
I'M THE CURRENT PRESIDENT OF AUSTIN CONVENTION ENTERPRISES.
I DO HAVE MY BOARD CHAIR, PHILIP SCHMIDT JOINING US.
OH, MY LEGAL COUNSEL WILL BE HERE.
UH, SO, UH, MANY OF YOU'RE FAMILIAR WITH WHAT'S GOING ON AT OUR HOTEL, BUT I WANT TO GIVE YOU A QUICK RUNDOWN AND REMINDER.
WE WERE CREATED, ACE WAS CREATED IN 2000, SPECIFICALLY TO SUPPORT THE PROMOTION AND DEVELOPMENT OF CONVENTION AND TOURISM BUSINESS THROUGH THE CONSTRUCTION OF THE HOTEL AND PARKING GARAGE.
WE ARE STRUCTURED, UH, FIRST ACE IS A NONPROFIT, P F C.
YOU ALL HAVE CREATED OTHER PFCS, YOU'RE FAMILIAR WITH THOSE.
WE HAVE A HOTEL OPERATOR THAT IS HILTON, THAT HANDLES ALL OF OUR HOTEL OPERATIONS.
THAT AGREEMENT WAS RENEWED AT THE END OF 2020 AND COUNCIL CONSENTED TO THAT.
[01:25:01]
TRUSTEE THAT OVERSEES AND HOLDS ALL OF OUR RESERVE FUNDS.AND OUR BUILDING IS ACTUALLY 75% HOTEL.
AND THE REMAINDER OF IT IS PRIMARILY THE 5 5 5 RESIDENCES AND THE SMALL AMOUNT OF THE OFFICE AND RETAIL WHERE THE CHAMBER OF COMMERCE OFFICES.
WE ARE GOVERNED PRIMARILY BY THESE THREE DOCUMENTS.
WE HAVE A BOND INDENTURE THAT, UH, THE BONDS WERE REFINANCED IN 2017.
UH, WE HAVE A HOTEL OPERATING AGREEMENT THAT MAN THAT GOVERNS ALL OF THE RESPONSIBILITIES THAT ARE DELEGATED TO THE HILTON OPERATIONS.
AND THEN WE HAVE A CONDO REGIME, UH, THAT IS THE PARTICIPANTS WITH THE 5, 5 5 FOLKS IN THE CHAMBER OF COMMERCE TO HANDLE THE COMMON ELEMENTS.
OUR BOND INDENTURE WAS MOST RECENTLY AMENDED IN 2021 IN ORDER TO ACCEPT, UH, P P P LOAN AND ADDRESS SOME SHORT TERM ADMIN RESERVES RISK THAT WAS RELATED TO THE PANDEMIC.
UH, AND COUNCIL ALSO CONSENTED TO THAT.
SOME OF OUR HIGHLIGHTS OVER THE LAST TWO AND A HALF YEARS THAT I'VE BEEN PRESIDENT OF ACE, UH, PRIOR TO THE PANDEMIC ACE GENERATED SIGNIFICANT REVENUES AND TRANSFERRED $2 MILLION A YEAR BACK TO THE CITY IN UNRESTRICTED FUNDS.
IT'S A $6 MILLION SINCE 2017, RIGHT UP TO THE EDGE OF THE PANDEMIC AND HAD BUILT AN EXTRA $13 MILLION IN RESERVES.
IT'S A VERY SUCCESSFUL AND PROFITABLE HOTEL.
THE P P P LOAN THAT WE GOT IN 21 WAS 2.175 MILLION.
IT WAS FORGIVEN BY THE S B A AT THE END OF THAT YEAR.
WE ALSO UNIONIZED OUR HOTEL, UH, IN 2023 WHEN IT WAS APPROVED.
BUT THE, THE UNION GOT CERTIFIED IN 2022.
I KNOW THE AIRPORT HILTON IS ALSO UNIONIZED, BUT WE BEAT 'EM BY JUST A COUPLE OF MONTHS.
SO WE ARE THE FIRST UNIONIZED HOTEL IN THE CITY OF AUSTIN.
UH, ONE OF THE THINGS THAT I'M MOST PROUD OF, AND I KNOW OUR BOARD IS PROUD OF, IS THAT ACE IS INCREDIBLY TRANSPARENT AND ITS INFORMATION THAT IT PROVIDES TO THE PUBLIC AND TO BOND HOLDERS THROUGH OUR WEBSITE.
ALL OF THE INFORMATION THAT YOU SEE PRESENTED DETAIL LEVEL, MONTHLY PRESENTATIONS, VIDEOS OF OUR BOARD MEETINGS, MUCH SIMILAR TO THE WAY THAT COUNCIL PUTS ALL OF ITS INFORMATION ON THE WEB.
ALL OF THAT IS AVAILABLE ON THE ACE WEBSITE, UH, INCLUDING VERY DETAILED REPORTS THAT ARE PROVIDED BY OUR ASSET MANAGER, UH, C H M WARNICK ON OCCUPANCY LEVELS, DAILY RATES, REVPAR, WHICH IS A, A COMMON HOTEL ANALYSIS OF HOW WELL YOU'RE PERFORMING.
UH, WE ALSO GET REALLY GOOD FEEDBACK FROM OUR BOND HOLDERS ON OUR TRANSPARENCY AS WELL AS STANDARD OF BORES.
THEY ACTUALLY DID A SITE VISIT AT THE HOTEL LAST WEEK.
UH, IT WAS VERY SUCCESSFUL FOR ALL OF US.
THIS IS THE MAIN CHART I WANNA SHOW YOU IN TERMS OF HOTEL PERFORMANCE.
YOU CAN SEE THE THREE YEARS PRIOR TO THE PANDEMIC, UH, OUR REVENUES DROPPED, NOT SURPRISINGLY, AND WE HAVE RECOVERED AND NOW WE'RE BACK INTO THAT PRE PANDEMIC CONDITION FOR 2023.
THE LINE IS OUR RESERVE FUNDS OR ALL OF THE FUNDS THAT ARE HELD IN TRUST BY THE TRUSTEE, AND INCLUDING THAT $13 MILLION OF EXTRA RESERVES THAT WE HAD BUILT UP WAS EXPENDED FAIRLY DRAMATICALLY TO MAKE IT THROUGH THE PANDEMIC.
BUT WE DID NOT HAVE TO COME TO CITY COUNCIL FOR ANY ASSISTANCE DURING THAT TIME.
AND IN FACT, IT WOULD'VE BEEN VERY DIFFICULT TO DO SO BECAUSE OUR INDENTURE MAKES A VERY HARD LINE BETWEEN WHAT REVENUES ARE AVAILABLE TO PAY THESE BONDS.
IT IS HOTEL REVENUES ONLY, WHICH IS VERY DIFFERENT THAN ABLE, WHICH IS BACKED BY AIRPORT REVENUES.
AND YOU CAN SEE IN 23, WE HAVE MODELED TO THE END OF THIS YEAR.
UH, SO WE'RE THIS, UH, THE ACTUALS ON THIS SLIDE ARE ONLY THROUGH THE END OF JUNE, WHICH ARE THE PUBLICLY AVAILABLE, UH, REPORTS THAT WE PUBLISH, NOT JUST ON OUR WEBSITE, BUT ALSO TO THE SECURITIES WEBSITE, EMMA.
AND SO THOSE ARE MODELED THROUGH THE END OF THIS YEAR.
SO YOU CAN SEE WHERE WE'RE HEADED FOR 2023.
WELL, WHAT I REALLY WANT TO TALK TO YOU TODAY IS ABOUT CONVENTION CENTER AND UH, I HAVE CERTAINLY MADE THE ROUNDS WITH ALL OF YOUR OFFICES OVER THE LAST 18 MONTHS.
BUT, UH, THE, THE PRIMARY ISSUE FOR HILTON AUSTIN AND FOR ACE IS THAT OUR BOND INDENTURE HAS A VERY SPECIFIC CLAUSE THAT TALKS ABOUT EVENT OF DEFAULT RELATED TO THE CLOSURE OF THE CONVENTION CENTER.
IF THAT CLOSURE IS GONNA HAVE A MATERIAL ADVERSE EFFECT ON OUR GROSS OPERATING REVENUES AND IT WILL HAVE A MATERIAL ADVERSE EFFECT, THAT MUCH IS CLEAR.
AND SO WE'VE SPENT THE LAST 18 PLUS MONTHS WORKING WITH BOND HOLDERS, WORKING WITH THE CITY, WORKING WITH HILTON, COMMUNICATING WITH YOUR OFFICES TO TRY TO NAVIGATE HOW WE WORK THROUGH THIS EVENT OF DEFAULT IN SUPPORT OF THE PROJECT THE CITY WANTS TO DO WITH THE CONVENTION CENTER, YOU ALL APPROVE THE CMAR IN 21.
WE HAD A PUBLIC BOND HOLDER CALL IN DECEMBER OF 21.
ALL OF THAT TIME IT'S BEEN IN DEEP NEGOTIATION.
I KNOW SOME OF THE LAWYERS FOR THE CITY ARE HERE AS WELL.
IT HAS BEEN A LONG, HARD, UH, SLOG TO GET THROUGH
[01:30:01]
A VERY COMPLICATED AMENDMENT PROCESS.IN MY CONVERSATIONS WITH OUR ASSET MANAGER WITH STANDARD AND PORES, THERE'S REALLY NOT ANOTHER EXAMPLE NATIONALLY ABOUT WHAT IT MEANS TO GO THROUGH A PROCESS LIKE THIS.
SO WE ARE ALL TRAILBLAZERS MOVING THROUGH AMENDING AN INDENTURE AT THIS SCALE.
UH, WE HAVE FINALLY REACHED AN AGREEMENT AMONGST ALL THE PARTIES.
UH, WE ARE NOW GOING THROUGH THE FORMAL APPROVAL PROCESS.
THE ACE BOARD VOTED FOR ITS APPROVAL ON AUGUST 9TH.
HILTON PROVIDED ITS CONSENT LAST WEEK.
WE ARE NOW GOING THROUGH THE BOND HOLDER APPROVAL PROCESS, WHICH HAS A LOT OF RULES RELATED TO SECURITIES.
AND HERE'S THE DETAIL, FOUR MAIN AREAS I WANNA TALK ABOUT.
THERE'S A BOND HOLDER LOAN, TWO CAPITAL LOANS, AND THEN SOME OTHER TERMS THAT ARE PART OF THE AGREEMENT.
THE BOND HOLDER LOAN IS A MAXIMUM AMOUNT OF 25 MILLION.
IT WOULD BE AVAILABLE TO COVER ANY SHORTFALLS IN OUR DEBT SERVICE PAYMENTS AFTER HOTEL REVENUE.
SO HOTEL REVENUE LIKE ALWAYS GOES TO PAY DEBT SERVICE FIRST.
UH, BUT WE WOULD BE ABLE TO ACCESS THIS KIND OF LIKE A LOAN, A LINE OF CREDIT, UH, PRIOR TO TAPPING ANY OF OUR OTHER RESERVES WOULD EARN 2% INTEREST.
IT'S ONLY AVAILABLE FOR USE DURING THE CLOSURE PERIOD, PLUS SIX MONTHS.
AND OUR MODELING SHOWS THAT WE ARE UNLIKELY TO HAVE TO EVEN TAP THIS LOAN AT ALL.
THIS WAS, UH, ASKED FROM OUR BOND HOLDERS AND WORKING WITH CITI AND WITH HILTON.
WE'VE COME TO THIS, THIS LEVEL, UH, LIKE ALL THREE OF THESE LOANS, IT'S EXPECTED AND OUR UNDERSTANDING IS THAT IT'S GONNA COME FROM CONVENTION CENTER REVENUES, BUT UH, THAT'LL BE A DECISION YOU'LL HAVE TO MAKE LATER.
THEN THE PRIMARY CAPITAL LOAN, THIS IS 8.75 MILLION.
THIS WOULD BE AVAILABLE ONLY AFTER OUR MAIN CAPITAL FUND IS EXHAUSTED.
SO JUST LIKE WITH THE BONDHOLDER LOAN, HOTEL REVENUE PAYS FOR THINGS FIRST.
UH, THIS WOULD BE LIMITED TO CERTAIN LIFE HEALTH AND SAFETY PROJECTS.
UH, THESE ARE ENUMERATED SPECIFICALLY IN THE AGREEMENTS, AND I LIKE TO THINK OF THESE AS THE PROJECTS THAT ENSURE THE PUBLIC STILL HAS SAFE ACCESS TO ITS BUILDING IN THE LOBBY AND THE MEETING ROOMS AND THE STARBUCKS AND THE RESTAURANTS.
IT'S THINGS LIKE HVAC, FIRE SUPPRESSION, ELEVATORS, ESCALATORS, THAT TYPE OF THING.
UH, IT WOULD ALSO ONLY BE AVAILABLE DURING THE CLOSURE PERIOD, PLUS SIX MONTHS.
BUT THIS LOAN WE DO EXPECT TO FULLY UTILIZE, UH, IT'S REPAYMENT.
IN FACT, ANY OF THESE LOANS, FRANKLY, WOULD BE EXPECTED TO BE REPAID BY 2035.
UH, AND AGAIN, FUNDS, OUR UNDERSTANDING IS TO COME FROM CONVENTION CENTER.
THE THIRD IS A SECONDARY CAPITAL LOAN.
SOMEWHAT SIMILAR TERMS TO THE PRIMARY.
UH, IT'S AVAILABLE FOR CLOSURE PERIOD PLUS TWO YEARS.
BUT IT IS HIGHLY UNLIKELY THIS LOAN IS GOING TO BE NEEDED.
IT IS VERY CHALLENGING TO FIND A SCENARIO WHERE YOU'RE HAVING TO TAP THIS LOAN BECAUSE IT IS NOT ELIGIBLE UNTIL ALL OF OUR CAPITAL FUNDS ARE DEPLETED.
AND WE DO HAVE SIGNIFICANT CAPITAL RESERVES THAT WE'VE BUILT UP SINCE THE PANDEMIC.
SOME OTHER TERMS, OBVIOUSLY THIS WAIVES THE EVENT OF DEFAULT.
UH, DEFAULTING ON THIS INDENTURE IS NOT GOOD FOR ANYBODY.
CERTAINLY NOT ACE OR THE BOND HOLDERS OR HILTON OR THE CITY.
SO THIS IS THE PRIMARY REASON WE'RE DOING IT.
SOME CHANGES TO THE SUPPORT AND A MANAGEMENT FEE.
THE WAY THESE HOTELS ARE STRUCTURED, THE HILTON MAKES ITS MANAGEMENT FEE AS A PERCENT OF REVENUE.
UH, BUT PART OF THAT IS BASED ON THEIR PERFORMANCE OF THE HOTEL AND HILTON REQUESTED AND WE NEGOTIATED A CHANGE TO THE TEST THAT THEY HAVE TO MEET IN ORDER TO EARN THAT FEE.
IT DROPS A LITTLE BIT, UH, PRIOR TO OPENING AND THEN IT RAMPS BACK UP ONCE THE CENTER REOPENS.
IT'S ALSO IMPORTANT THAT THERE'S A, THERE'S A ANOTHER CHANGE IN HERE RELATED TO COM I R S COMPLIANCE, SLIGHTLY TWEAKING THE FLOW OF FUNDS, AND THEN THERE WILL BE REGULAR PROGRESS REPORTS THAT BOND HOLDERS REALLY WANT TO KNOW WHAT'S GOING ON.
SO WE'LL BE COORDINATING WITH CONVENTION CENTER STAFF TO MAKE SURE THAT, UH, AS THE PROJECT PROCEEDS BOND HOLDERS ARE KEPT UP TO DATE.
WE'RE GETTING THESE AGREEMENTS APPROVED RIGHT NOW.
CENTER CLOSES IN 25, THAT'S WHEN THE LOANS BECOME AVAILABLE FOR USE.
28 IS THE LAST, IS THE YEAR WHERE WE CHANGED OUR FLOW OF FUNDS SLIGHTLY FOR THE SUB SUBORDINATE MANAGEMENT FEE.
2030 IS THE FIRST YEAR THE CENTER IS OPEN.
THAT'S WHEN THE LOANS, THE PRIMARY AND THE BONDHOLDER LOANS NO LONGER AVAILABLE.
PERFORMANCE TEST RESTORED IN 23 AND THE FINAL BOND PAYMENT IN 2034.
AND THAT FINAL BOND PAYMENT IS IMPORTANT BECAUSE RIGHT NOW WE SPEND ABOUT $17 MILLION A YEAR IN DEBT SERVICE PAYMENTS, $17 MILLION A YEAR.
ONCE THOSE BONDS ARE EXPENDED, THAT $17 MILLION IN THEORY WILL BECOME AVAILABLE TO BE TRANSFERRED BACK TO THE CITY.
THERE'S A WHOLE PROCEDURE ABOUT HOW THAT NEGOTIATION
[01:35:01]
HAS TO GO ONCE THERE'S NO LONGER A BOND INDENTURE.BUT THIS PROPERTY GENERATES SIGNIFICANT REVENUE THAT AT THE TERMINATION OF THE BONDS CAN BE USED MUCH MORE BROADLY THAN JUST THE 2 MILLION THAT IT WAS GENERATING BACK TO THE CITY PRIOR TO THE PANDEMIC.
SO OUR NEXT STEPS, WE ARE DOING OUR PUBLIC BOND HOLDER CALL THIS AFTERNOON.
BOND HOLDERS HAVE UNTIL SEPTEMBER 6TH TO APPROVE ALL THE AMENDMENTS AND THE LOAN DOCUMENTS.
AND THEN THOSE LOAN DOCUMENTS COME BACK TO COUNCIL FOR YOUR APPROVAL, UH, ON THE CITY'S SCHEDULE.
AND THAT IS THE END OF MY PRESENTATION.
ANY QUESTIONS? I HAVE QUESTIONS.
UM, AND THANK YOU FOR BEING HERE TODAY, JIMMY.
UM, I REQUESTED THIS BRIEFING BECAUSE I WAS CONCERNED ABOUT THE IMPACT OF THE HILTON DURING THE CONVENTION CENTER ENCLOSURE.
AND SO I HAVE A COUPLE QUESTIONS TO JUST CLARIFY THINGS, IF THAT'S OKAY.
UM, I'M WONDERING, AND I DO WATCH YOUR MEETINGS, THANK YOU FOR POSTING THEM ONLINE.
UM, IT'S VERY TRANSPARENT, AS YOU SAID EARLIER.
IT'S MY UNDERSTANDING FROM WATCHING THOSE MEETINGS THAT AUSTIN HOTEL INVENTORY HAS INCREASED DRAMATICALLY.
UM, IT WAS MENTIONED THAT IT'S UP 120% SINCE 2015 WITH AN ADDITIONAL 9% COMING ON BOARD IN 2023.
THAT SAID, COULD YOU OUTLINE PERHAPS, UM, ANY PROJECTED REVENUE THAT WILL BE LOST AT THE HILTON AS A RESULT OF THE CONVENTION CENTER EXPANSION? HAVE YOU LOOKED INTO THAT? ABSOLUTELY.
WE HAVE A FULL MODELING OF THE CLOSURE PERIOD.
IN FACT, ALL THE WAY TO THE END OF THE BONDS THAT'S POSTED ON THE ACE WEBSITE.
WE DID AN INITIAL ANALYSIS OF THAT BACK IN DECEMBER OF 21.
WE'VE POSTED AN UPDATED ANALYSIS NOW THAT WE'VE HAD A FULL YEAR AND A HALF OF POST PANDEMIC BUSINESS.
UH, THE NUMBERS GOT A LOT BETTER, BUT GENERALLY SPEAKING, THE IMPACT OF CLOSURE OVERALL IS GONNA HIT IMPACT OUR REVENUE BY ABOUT 25%.
THE CLOSURE OF THE CONVENTION CENTER HAS A GREATER IMPACT THAN THAT, BUT WE THINK THAT THERE IS SOME BUSINESS WE CAN PULL IN THAT WILL MAKE UP SOME OF THAT.
BUT GENERALLY SPEAKING, IT'S A 25% IMPACT.
BUT YOU CAN GO TO THAT ANALYSIS AND SEE EVERY SIX MONTHS EXPECTED REVENUE, EXPECTED PROFIT IMPACT ON ALL OF OUR RESERVES ALL THE WAY DOWN.
UM, AND AT YOUR MAY MEETING IN APRIL MEETING, YOU TALKED ABOUT THE ROOF REPLACEMENT AND THE CHILLER.
COULD YOU TALK TO US A LITTLE BIT ABOUT HOW THAT PROGRESS IS GOING? SURE.
SO WE HAVE SIGNED OUR AGREEMENT, UH, FOR CHILLED WATER.
WE ARE A PARTICIPANT IN THE CHILLED WATER PROGRAM.
I BELIEVE OUR HOTEL WAS ONE OF THE FIRST PARTICIPANTS IN THAT PROGRAM.
UH, WE HAVE RENEWED OUR AGREEMENT.
I THINK IT WAS A 30 YEAR TERM SIGNED IT, I THINK IT WAS LITERALLY A WEEK AGO.
SO THE CHILLED WATER AGREEMENT IS SIGNED.
IT'S GONNA REDUCE OUR UTILITY COSTS, THANKFULLY, AND THAT'LL BE HELPFUL.
AND THEN THE ROOF PROJECT, WE ARE EVALUATING BIDDERS RIGHT NOW.
UH, WHAT'S INTERESTING ABOUT THAT IS THE ROOF PROJECT IS ACTUALLY OF THE CONDO REGIME BECAUSE THE ROOF IS CONSIDERED A COMMON ELEMENT WITH THE PRIVATE CONDOS.
SO WE'RE IN THE PROCESS OF EVALUATING THOSE TWO BIDS AND HOPEFULLY GETTING THAT PROJECT UNDERWAY SOON.
HOW LONG HAVE YOU BEEN WORKING ON FIXING THE ROOF? BECAUSE IT SEEMS LIKE IT KEEPS COMING UP IN YOUR MEETINGS.
UH, IT'S BEEN QUITE A LONG TIME.
IN FACT, THE PROCESS REALLY BEGAN IN EARNEST AFTER THE FREEZE OF 21.
THERE'S BEEN A LOT OF WATER KIND OF MAKING ITS WAY THROUGH THE BUILDING.
AND SO WE HIRED HO UH, A ROOF CONSULTANTS TO COME OUT AND EVALUATE IT.
WE HAVE, UH, WARRANTY CLAIM FOR SOME ROOFING MATERIALS.
WE'VE BEEN WORKING WITH THAT VENDOR.
WE HAVE ANOTHER CONSULTANT THAT WE CAME IN TO MAKE SURE THAT WE'RE GETTING THE RIGHT BIDS.
UH, IT HAS BEEN A LONG CHALLENGING PROCESS THROUGH THE CONDO REGIME, UH, BUT WE ARE VERY MUCH NEARING THE END OF THAT ANALYSIS AND BE ABLE TO GET THAT ROOF PROJECT STARTED.
AND THEN AT YOUR MAY OF 2023 MEETING, YOU TALKED ABOUT THE 2022 AUDIT.
UM, COULD YOU DISCUSS THE AUDIT AND THE MANAGEMENT LETTER FOR THE CORPORATION? AND HAS THE AUDIT BEEN FINALIZED YET? YES.
THE AUDIT AUDIT WAS FINALIZED, UH, IN JUNE.
WE HAVE A, A REQUIREMENT IN OUR BOND INDENTURE AND OUR DISCLOSURE DOCUMENTS.
WE HAVE TO POST OUR ANNUAL AUDIT, UH, BY SIX MONTHS INTO THE YEAR.
SO IT WAS APPROVED BY THE BOARD.
THE AUDITS THAT, UH, I HAVE BEEN A PART OF HAVE ALL BEEN VERY CLEAN AUDITS, NO ISSUES, NO PROBLEMS. UH, MUCH LIKE ACE AND OUR BOARD'S INTENTION TO BE VERY TRANSPARENT, THE HILTON FINANCE STAFF, WHICH DOES MOST OF THE AUDIT WORK WITH THE AUDITORS IS ALSO BEEN VERY GOOD.
OUR AUDITORS ALWAYS REPORT A VERY GOOD RELATIONSHIP WITH OUR TEAM.
AND THEN, UM, EARLIER YOU TALKED ABOUT THE S AND P RATINGS MM-HMM.
UM, I NOTED IN THE MINUTES OF ONE OF YOUR MEETINGS THAT THEY HAD CONCERNS ABOUT THE CONVENTION CENTER EXPANSION AND THE IMPACT ON THE HOTEL ITSELF.
COULD YOU TALK TO US A LITTLE BIT MORE ABOUT THAT? YEAH, THIS IS A GREAT QUESTION.
SO WE'VE BEEN WORKING WITH STANDARD AND PORES.
I MEAN, I'VE BEEN WORKING WITH STANDARD POS SINCE THE BEGINNING OF 21.
UH, WE, LIKE ALL HOTELS BONDS GOT DOWNGRADED THAT YEAR.
WE WENT ON TO NOT JUST A DOWNGRADED BOND RATING,
[01:40:01]
BUT WE WENT TO CREDIT WATCH STATUS.THAT WAS THEN UPGRADED TO, UH, OUTLOOK NEGATIVE IN THEIR LAST ANALYSIS IN S P'S LAST ANALYSIS, WHICH IS ALSO POSTED ON OUR WEBSITE.
IT REAFFIRMS THE BOND RATINGS, BUT IT EVEN, BUT IT SPECIFICALLY CALLS OUT THAT IF WE CAN GET AN AGREEMENT AND THEY WEREN'T SPECIFIC TO THE TERMS, BUT IF WE CAN GET AN AGREEMENT ON WAIVING THIS EVENT OF DEFAULT, THEN IT IS POSSIBLE THAT WE WILL GET UPGRADED ON OUR BOND RATING TO OUTLOOK STABLE.
AND SO THAT'S WHAT I'M WORKING TOWARDS WITH OUR S AND P FOLKS, IS TO, ONCE WE GET BOND HOLD APPROVAL AND COUNCIL APPROVAL ON THE LOANS, THAT ALL OF THAT HARD WORK WILL BE REFLECTED IN THE UPGRADE OF OUR CREDIT WATCH AND FROM, FROM OUTLOOK NEGATIVE TO STABLE.
SO MY LAST QUESTION, AND I APOLOGIZE COLLEAGUES, I'M JUST REALLY INTERESTED IN THIS AND I'M GLAD THAT WE ARE ABLE TO HAVE THE PRESENTATION TODAY.
UM, IS ABOUT THOSE, THE, THE LOANS MM-HMM.
SO MY CONCERN IS ABOUT ANY KIND OF DEFAULT OPTIONS ON THOSE LOANS IN CASE THE EXPANSION OF THE CONVENTION CENTER TAKES LONGER OR ANYTHING LIKE THAT.
HAVE YOU CONSIDERED THAT AS PART OF THAT PROCESS? AND MAYBE COULD YOU EXPLAIN IT A LITTLE BIT TO COUNCIL? YEAH, I THINK THOSE ARE GOOD CONVERSATIONS TO HAVE WITH CITY LEGAL AS WELL.
UH, IN ADDITION TO ME HERE IN THIS MEETING, UH, IT WAS A VERY LONG AND CHALLENGING PROCESS, UH, AS IT CAN OFTEN BE WHEN YOU'VE GOT THAT MANY LAWYERS IN THE ROOM.
UH, BUT ULTIMATELY THE WAY THE LOANS ARE EXPECTED TO PLAY OUT IS THAT ACE IS NOT GOING TO BE REALLY MAKING ANY PAYMENTS AGAINST DRAWS UNTIL AFTER THE END OF THE BONDS.
ONCE THE BONDS ARE EXPENDED, THERE'S AT LEAST $17 MILLION A YEAR THAT WE CURRENTLY MAKE IN DEBT SERVICE PAYMENTS THAT IN THEORY WOULD BE ELIGIBLE TO REPAY ANY LOANS THAT ARE TAPPED.
SO DEFAULT IS A CHALLENGING CONCEPT 'CAUSE YOU THINK ABOUT IT.
WELL, IS THIS LIKE A MORTGAGE? IS THIS LIKE A, AN INSTALLMENT LOAN? IT'S REALLY NOT STRUCTURED THAT WAY.
WE'LL BE MAKING DRAWS IN MY EXPECTATION, JUST ON THE PRIMARY CAPITAL LOAN AND THAT ALL OF THOSE DRAWS WILL BE REPAID IF NOT IN 20 34, 20 35, BECAUSE THE BONDS WILL NO LONGER REQUIRE DEBT SERVICE PAYMENTS.
AND THANK YOU FOR YOUR EMAILS TO COUNSEL REGULARLY ABOUT WHAT'S GOING ON OVER THERE.
IT'S, IT'S VERY IMPORTANT INFORMATION FOR US TO KNOW, AND I CERTAINLY APPRECIATE IT.
COLLEAGUES, I WOULD LIKE TO ENSURE THAT WE DO STAY ON TOP OF THIS THROUGHOUT THE CONVENTION CENTER EXPANSION TO ENSURE THAT, UM, EVERYTHING'S GOING AS SWIMMINGLY AS MR. SUGGESTS.
UM, THANK YOU FOR YOUR GOOD QUESTIONS.
COUNCIL MEMBER KELLY, UM, THEY RAISED A QUESTION FOR ME, WHICH IS, UM, SO WE'RE NOT, YOU'RE NOT PAYING THE BONDS BACK OR THE LOAN BACK UNTIL THE BOND IS PAID OFF, BUT YOU WILL BE GENERATING REVENUE AT A NORMAL LEVEL OR HOPEFULLY HIGHER ONCE THE NEW CONVENTION CENTER OPENS.
AND THERE'S A PERIOD OF AT LEAST FOUR YEARS WHEN THAT'S HAPPENING.
IS THAT, IS IT EXPECTED THAT WE WILL, YOU KNOW, STARTING WHEN IT REOPENS FULLY, THAT WE WILL BEGIN TO RECEIVE THE 2 MILLION PLUS BACK? SO IN REVENUE? SO THE WAY THE TH THANK YOU FOR THAT.
THE WAY THE BOND INDENTURE IS STRUCTURED, REVENUE COMES IN AND THEY, WE CALL IT THE FLOW OF THE FUNDS OR THE WATERFALLS.
THE REVENUE COMES IN AND WE HAVE TO FILL UP ALL OF OUR RESERVES IN A CERTAIN SEQUENCE.
RIGHT AT THE BOTTOM OF THAT SEQUENCE IS OUR SUPPLEMENTAL CAPITAL FUNDS CALLED SUPPLEMENTAL RENEWAL AND REPLACEMENT FUND.
THEN THERE'S THE SUBORDINATE MANAGEMENT FEE FUND, AND THEN THERE'S WHAT WE CALL THE EXCESS REVENUES CORPORATION ACCOUNT.
AND THAT'S WHERE THE 2 MILLION COMES FROM.
THE PANDEMIC HAS LEFT OUR SUPPLEMENTAL RENEWAL AND REPLACEMENT FUND IN PRETTY SERIOUS DEFICIT.
UH, AND WE EXPECT THAT DEFICIT WILL INCREASE DURING THE CLOSURE PERIOD.
SO THE MODELING SHOWS THAT THE INCREASED REVENUES THAT WE'LL EARN THE END OF 29, 30, 31, 32, 33 ARE STILL NOT SUFFICIENT TO MAKE UP THAT DEFICIT IN THE SUPPLEMENTAL FUND.
BUT IF THEY ARE, THE WAY THE AGREEMENTS ARE STRUCTURED, IS THAT UP TO THE END OF THE TERM OF THE BONDS, IF IF THAT 2 MILLION REACHES THE CORPORATION ACCOUNT, IT WILL BE TRANSFERRED TO THE CITY.
SO IF IT DOES REACH IT, IT WILL BE TRANSFERRED, BUT WE HAVE TO FILL UP THE RESERVES BEFORE WE GET AND, AND THAT WOULD BE TRUE WHETHER OR NOT WE WERE CLOSING THE CONVENTION CENTER BASED ON THE WAY THE INDENTURE IS WRITTEN.
AND HOW, BUT THAT CLAUSE STILL IS THERE.
HOW, HOW LARGE OR WHAT IS THE DEFICIT IN THE RESERVE RIGHT NOW? THE DEFICIT RIGHT NOW I THINK IS BETWEEN SIX AND 7 MILLION, BUT IT WILL INCREASE DURING THE CLOSURE PERIOD.
UM, IF THERE ARE NO OTHER QUESTIONS, WE SAY THANK YOU MR. FLANAGAN.
THE VISIT, UM, IS MS. STOKES IN THE ROOM? OKAY, THANK YOU.
[9. Identify items to be discussed at future meetings]
UM, BEFORE WE BREAK TO GO TO EXECUTIVE SESSION, I JUST WANTED TO INVITE YOU UP IF YOU WANTED TO BRIEF US ON ITEMS TO BE DISCUSSED AT FUTURE MEETINGS.ITEM NINE, AND THEN WE'LL GO BACK TO ITEM EIGHT.
[01:45:03]
YES, I THINK, UH, FOR MY OFFICE WE HAVE A, A COUPLE OF LARGE ITEMS COMING TO THE SEPTEMBER AUDIT COMMITTEE, THE ANIMAL SERVICES AUDIT, WHICH ALL REQUESTED BY RESOLUTION, UM, EARLIER THIS YEAR, AS WELL AS THE VEGETATION MANAGEMENT AUDIT, WHICH WAS REQUESTED THE SAME WAY.UM, SO BOTH OF THOSE WILL BE COMING BACK.
UM, I BELIEVE, UH, WILL ALSO BE, UM, THERE'S TWO BRIEFINGS.
ONE ON THE, UM, A T P TO AUSTIN.
UM, I ALMOST GOT THAT WRONG, UH, AUSTIN TRANSIT PARTNERSHIP.
I WAS ABOUT TO MAKE UP A WHOLE NEW ACRONYM FOR THEM.
UM, BUT I HAVE THE ACRONYM HERE.
UH, THEY'RE BUDGET UPDATE AND THEN, UM, I BELIEVE A, A BRIEFING ON STRATEGIC PLANNING FROM OUR FINANCIAL SERVICES FOLKS.
WE MAY ALSO HAVE OUR CITY ETHICS REVIEW REPORT, UM, OR THAT, THAT MAY ACTUALLY COME IN OCTOBER.
AND WHAT DID I MISS? VICE CHAIR POOL.
THANKS AND THANKS FOR MENTIONING THE FINANCIAL REPORT FROM THE TRANSIT PARTNERSHIP FOR US HERE, WHICH WE STARTED DOING EARLIER THIS YEAR.
AND I WANTED TO ASK THE CHAIR IF, IF SHE WOULD, UM, NOTIFY THE, UM, METRO BOARD THAT WE ARE DOING THESE UPDATES WHERE A T P COMES AND REPORTS TO THE CITY BECAUSE THE FUNDS ARE FLOWING FROM THE CITY TO A T P.
UM, I SIT ON THE FINANCE AUDIT AND ADMINISTRATION COMMITTEE OF THE BOARD AT CAP METRO, AND THAT COMMITTEE IS ALSO INTERESTED IN THIS INFORMATION, BUT BECAUSE OF THE, THE FLOW OF THE MONEY AND THE PROCEDURES, A T P RES REPORTS TO THE CITY AND NOT TO CAP METRO.
SO, UM, WE WANTED TO OPEN THE INVITATION TO F A A AND ANY CAP METRO BOARD OR STAFF WHO WANT TO COME OR DIAL IN TO LISTEN TO THE PRESENTATION THAT WILL BE MADE, UM, WITH SOME REGULARITY HERE AT THE CITY.
SO THE INFORMATION IS MORE BROADLY SHARED, UM, AS APPROPRIATE.
UM, VICE CHAIR, I WOULD INVITE YOU TO GO AHEAD AND MAKE THOSE INVITATIONS ON BEHALF OF THE, THE COMMITTEE SINCE YOU HAVE THE VISION.
UM, I THINK THAT WILL BE, UH, A QUICKER WAY TO GET IT DONE THE WAY THAT YOU WANT IT.
THANKS FOR THE SUPPORT AND, UH, UNDERWAY.
UM, AND I THINK WE MAY HAVE A LOBBY ORDINANCE.
THERE'S ALSO A RECOMMENDATION FROM THE ETHICS REVIEW COMMISSION RELATED TO THE LOBBYIST ORDINANCE TO COME BACK TO THIS COMMISSION.
I MEAN, COME BACK TO THIS COMMITTEE.
AND WE MAY DO THAT WHEN WE DO THE, COULD BE IN SEPTEMBER OR OCTOBER REVIEW BRIEFING, OR IT'LL BE IN OCTOBER WITH THE IF, DEPENDING ON THAT ONE.
UM, AND THEN DID YOU MENTION THE STRATEGIC PLANNING? YES.
UM, COLLEAGUES, I APPRECIATE, UM, THE REQUESTS FOR PARTICULAR ITEMS AND, AND THE MORE YOU CAN GIVE US THAT IN ADVANCE, THAT'D BE GREAT.
UM, I DO JUST WANNA FLAG FOR DEPARTMENTS WHO ARE PROVIDING US MATERIALS AND PRESENTATIONS, UM, WE REALLY DO WANT THOSE BY NO LATER THAN MONDAY NOON, UM, TO THE COMMITTEE.
AND IDEALLY THEY'RE POSTED THEN, UM, IT'S REALLY HARD FOR THE COMMUNITY TO HAVE A CHANCE TO CATCH UP EVEN IF THEY KNOW TO WATCH, UM, IF THOSE MATERIALS ARE NOT POSTED.
UM, WHEN WE HAVE A HUGE NUMBER OF PRESENTATIONS, IT'S HARD FOR US TO GET SOME MINOR QUESTIONS ANSWERED THAT DON'T NECESSARILY NEED TO BE, UM, IN THE PUBLIC FORUM.
SO I'M GONNA ASK AGAIN TO PLEASE MAKE SURE THAT THEY'RE IN BY MONDAY NOON.
UM, WE HAVE OUR PROCESS FOR, FOR THE AUDITS BEING PUBLISHED, WHICH, UM, ARE SLIGHTLY DIFFERENT, BUT WE'RE STILL TRYING TO GET THOSE UP AS SOON, AS SOON AS POSSIBLE.
BUT FOR THE FINANCE SIDE OF THE HOUSE, IF YOU COULD PLEASE REALLY TRY TO MAKE THOSE DEADLINES.
WE'VE HAD A LOT OF PRESENTATIONS COMING IN LATER AND LATER AND IT, IT DOES MAKE IT CHALLENGING FOR US TO PLAN.
SO I WOULD ASK THAT IF WE COULD MAKE AN EFFORT TO, TO GET THAT, THAT WOULD BE APPRECIATED.
[Executive Session]
ANYTHING ELSE BEFORE WE GO INTO CLOSED SESSION? OKAY, SO THE COMMITTEE WILL NOW GO INTO CLOSED SESSION TO TAKE UP ONE ITEM, UM, PURSUANT TO SECTIONS 5 5, 1 0 7 6 AND 5 5 1 0 8 9 OF THE GOVERNMENT CODE.THE COMMITTEE WILL DISCUSS SECURITY AUDIT MATTERS RELATED TO ITEM EIGHT, CYBERSECURITY AUDIT FOLLOW-UP.
UM, AND I WILL PRESUMING IF WE DON'T HAVE ANY MOTION THAT HAS TO TAKE PLACE FOR ITEM TWO, I WILL COME BACK, CALL ITEM TWO AND CLOSE THIS OUT.
IF WE DO NEED TO HAVE SOME KIND OF DISCUSSION, THEN EVERYONE WILL COME OUT.
SO IF THERE'S NO OBJECTIVE OBJECTION TO GOING INTO EXECUTIVE SESSION ON THE ITEM, UM, THE COMMITTEE WILL NOW GO INTO EXECUTIVE SESSION.
UM, WE'LL BE BACK IN THE EXECUTIVE ROOM.
[01:50:01]
WE ARE OUT OF CLOSED SESSION.WE TOOK UP AND DISCUSSED SECURITY AUDIT MATTERS RELATED TO ITEM EIGHT.
UM, WE DO NOT HAVE ANY BUSINESS TO CONDUCT WITH RESPECT TO ITEM TWO, WHICH WAS THE, THE RELATED, UM, PUBLIC SESSION.
AND SO WITH THAT AS CHAIR OF THE AUDIT FINANCE COMMITTEE, I'M GOING TO ADJOURN US, UM, ON AUGUST 23RD AT 12:08 PM THANK YOU.