City Council - Regular Meeting

All right, welcome to your meeting here today. It is a beautiful day outside. June 23rd, 3 p.m., we will officially call ourselves into order and recognize a quorum here today. We will start with some ceremonial items. I have, it's the law of church, Matt Johnson. Is Matt Johnson here? There we go. If you guys would, please rise for the invocation and stay standing for the pledges.

Well, Father, we thank you for your love and your grace. Lord, I pray that you're in our midst, that you fill this room. Fill this room with wisdom, with character, with love and compassion. Lord, I pray that this room is filled with unity, unity for the city, unity for one another, and unity around you. Lord, you've given us a great gift in this city, and may we manage it well. Lord, be with this council, be with these citizens. Lord, we love and trust you, and we give this place to you today. Amen.

with liberty and justice for all. On behalf of the Texas flag, I pledge allegiance to Thee, Texas, one state,

Real good. You guys please be seated. We've got two coming forward here today that we get to acknowledge. Gentlemen, if you'll join me downstairs, Councilman Simpson, I think I've given you the amateur radio week. And then every drop counts. Let's go ahead and have Andrew Cook come forward if I could. Anybody who's with that.

I'm sorry. Mayor, council members, good afternoon. My name is Andrew Cook and I'm honored to speak with you today as a water utilities program manager and the head of the Every Drop Counts program. I've been a part of the utility department for nearly seven years and serving on the Every Drop Counts committee continues to be one of the highlights of that time. This program isn't just about art, it's about inspiring awareness and action around one of our most critical resources, water. Year after year, the students of Amarillo show us just how powerful their voices can be. However, this year's contest looked quite a bit different than prior years. Last year's contest received a total of 45 submissions, and they were all great ones. This year's contest we received 240 submissions. This year's event brought in so many entries filled with creativity, passion, and a real understanding of water conservation that gives us hope for the future. These young artists are helping lead the way, whether they realize it or not, and their work speaks volumes. We had so many entries this year that we had to make brackets for elementary, middle, and high school. This year we have four winners in each bracket and of course the grand prize winner. The biggest struggle we had this year was finding a space large enough to display the artwork to facilitate judging. We filled the Regency Room of the Civic Center with artwork and invited all City of Amarillo staff to stop by and cast their vote. Everyone that came to vote said the same thing. Wow, this is challenging. They are all so incredible.

It was not easy this year.

We had an increased outpouring of sponsorship this year, welcoming seven new sponsors and eight that returned to support the initiative again. Amarillo Independent School District supported this year's contest in a huge way. And what's more, we also had an incredibly generous anonymous donor this year that contributed the grand prize, a $1,000 gift card for the contestant who secured their spot on the calendar cover. The 2027 calendars will be available starting in August at Utility Billing in City Hall, at all library locations, and the Sims Municipal Building. Every drop counts would like to take this opportunity to remind our sponsors just how grateful we are for their generous support and in donating the prizes to our winners. They include Amarillo Independent School District, Brush With Art, the Panhandle Groundwater Conservation District, the Amarillo Botanical Gardens, Urban Air, Western Bowl, Synergy Amarillo, Amped Amarillo, Pacasac, Wonderland Park, Bahama Bucks, the Don Harrington Discovery Center in Wildcat Bluff, Chick-fil-A, the American Quarter Horse Hall of Fame and Museum, and last but not least, the Amarillo Sod Poodles. Go Soddies. And now it's my pleasure to announce this year's Every Drop Counts calendar contest winners. As I call your names, please join me at the podium for a photo.

Let's see if this works.

This year's grand prize winner was Emma Arredondo. For January, Anabella Sanchez. February, Amelia Aniles Herrera. March, London Randall. April, Noah Shanks. For May, Jocelyn Harder. June, Marielle Vuofo. July, Peyton Swoop. August, Jayden Gonzalez. September, Maisie Meeks. October, Sophia Mendoza. For November, Charlie Knuckles. And for December, Addie Owens. Congratulations to all our winners and participants. You've made a real difference and we couldn't be prouder. For any contestant that was not selected this year and would like to receive their artwork back, please email everydropcounts at amarillo.gov and we will ensure that artwork finds its way back to the hands of the artist.

Everybody look at me 123. One more time. Sorry 123.

Thank you. Thank you.

We have a proclamation today on Amateur Radio Week, and I believe Raymond Winter with the Panhandle Amateur Radio Club president may be here, and anyone else with your organization, if you come up here as we recognize you today. Today's proclamation reads, whereas amateur radio operators have for over a century advanced communications across the airwaves and foster connections among communities worldwide, and whereas these operators provide vital volunteer services during emergencies and support local events and organizations without compensation, and whereas amateur radio plays an important role in emergency preparedness, including support for agencies such as local emergency management, the American Red Cross and the National Weather Service, as well as participation in programs like Sky Warn, and whereas the American Radio Relay League promotes amateur radio nationwide through activities such as the annual Field Day Emergency Preparedness Exercise. Now, therefore, we, Mayor and City Council members of the City of Amarillo, Texas, do hereby proclaim the month of June 2026 as amateur radio month in the city of Amarillo and encourage all residents to recognize the contributions of amateur radio operators.

So this is very good for the city to do this. Governor Abbott did it JUST THE OTHER DAY FOR THE WEEK 22nd THROUGH THE 28th FOR A PROCLAMATION FOR THE STATE OF TEXAS FOR AMATEUR RADIO. SO THIS JUST DOUBLES IT UP. THIS WEEKEND WE HAVE AN EVENT FIELD DAY ANNUAL EVENT ALWAYS THE FOURTH FULL WEEKEND IN JUNE AND IT'S GOING TO BE AT MY I have four acres that we're going to set a bunch of radio equipment up, and the public is invited. So Saturday from 1 o'clock until Sunday, the next morning, the next afternoon at 1 o'clock, the public is invited. Come out and see what we do. Thank you all. Thank you.

One, two, three. Thank you.

Okay, as always, we know it's very important to do those things. We appreciate you guys honoring and recognizing different groups and individuals in our community. That will get us all the way down to announcements. I'm not sure if we have any. Mr. Path, do you have any announcements, sir?

No, sir.

Okay. We'll move forward into discussion. So items 3.1. Uh, this is our tears zone. Um, there we go. Come on forward, Mr Brasfield. Walk us into this one.

Good afternoon, Marin Council Drew Brasfield, assistant director of planning, and it's my privilege to be in front of you today to discuss the East Gateway tax increment reinvestment zone number two and the potential expansion that we've been researching. So I thought it would be important to talk about the history of this zone and talk about where it started. And it started in November of 2016 by Ordinance 7627, established the zone at a tax base of just shy of 40 million with 940 acres, and it was set to expire 30 years later in 2046. In 2020, this zone was revised by Ordinance 7892, increased the tax base by $1.4 million, and added 449 acres. The original goals for this zone were to relocate and redevelop the Big Texan, add new retail and entertainment venues, an RV park, auto and truck outlets, full and limited service hotels, recreation facilities, and some new residential units. And so this is a map of how the zone currently stands as as it is today. It's bounded on the north side by East 3rd Street. The eastern boundary is lakeside or loop 335. On the south side at its southernmost point is Southeast 34th and then the western boundary is Eastern Street, ironically. The zone again today is 1,389 acres. 52 acres of that zone comprise about 300 single family homes, an RV park or a couple of RV parks, about a dozen businesses and a private cemetery. Almost three quarters of this zone is made up of vacant and undeveloped property. The 2025 tax value for the entire zone is $117 million, which is $77.6 million over its 2016 value when it first started. Some of the positives for this area include the Big Texan Steak Ranch, the FedEx facility, Xcel Energy has a facility out there plus their lay down yard, the Premier Truck Group facility, a few hotels and several other truck service facilities. The downside to this zone as it stands today is that there are numerous vacant tracks. There's closed businesses, blighted conditions, very poor drainage in several parts of this zone, and we have considerably undersized or lacking infrastructure. Within this zone, as far as the tiers goes, we've only got four current commitments. The Home 2 Suites Hotel Project is receiving 50% of their property tax back over 10 years, estimated to pay out a total of $281,000 over the course of that agreement, and there's eight years remaining on it. THE PREMIER TRUCK GROUP ALSO RECEIVING A 50% PROPERTY TAX REBATE FOR 10 YEARS. THE LIFE OF THAT AGREEMENT IS ESTIMATED TO BE ABOUT 1.08 MILLION AND THERE'S ALSO EIGHT YEARS REMAINING ON THAT. THE TUTEN TOTEM AT EASTERN ALSO RECEIVING A 50% PROPERTY TAX FOR 10 YEARS ESTIMATED TO BE WORTH 46,000 AND THERE'S NINE YEARS LEFT ON THAT ONE. And then the Tootin Totem at Lakeside, the big travel center, received 90% of their property taxes rebated for the first five years and 50% over the last five years, estimated to be worth $620,000, and there's eight years remaining on that. And just this last year, the tears board paid off about $221,000 worth of water and sewer extensions, reimbursed to the city. So now that we've talked a little bit about where we've been where we are why are we talking about a possible expansion well in the last 3 months of 2025 we had several projects inquire about potential incentives in this area those developers the projects that they were proposing would have brought in about 59.4 million in investment. The estimated annual revenue of those projects was preliminarily estimated to be about 52 million. So through some conversations that we had with you as a council, internally with management, we decided to take this idea to the tiers board and the tiers board heard that discussion in February of this year and the direction from the board was to examine several different boundaries. So this map is a representation of the area that we have started researching. The red part of this menu or of this map is where the existing zone currently is the properties that are colored kind of that tan color are properties that are over the last eight years have performed at a hundred thousand dollars or less we actually have several parcels out in this area that have lost considerable value one of the properties has lost close to four hundred thousand in value The blue hash marked are properties that have performed at 100,000 or more as far as improvement to their tax value over the last eight years. And so some more of this research. All in all, we have looked at 211 parcels in total. Acreage-wise, that would be close to 2,100 acres that we have examined. The 2018 value of these parcels being examined was just shy of 69 million and the 25 value is 116 million. So an eight year increase overall to the parcels being looked at was 47.8 million. The three largest projects that have been done in the area that we have been examining include the Utility Trailer of Texas project, a road ranger travel center, and of course, Buc-ee's. The parcels, as they were grouped together by value difference, those that were in the negative up to no performance, they've remained stagnant. There were 38 parcels or about 430 acres. In the $1 to $100,000 performance range, there's 108 parcels or about 1,000 acres, and so on and so forth. We're certainly not finished with all of our research on this, but as it stands today, this is the grand total of what all we have looked at thus far. So in conclusion, each parcel we will continue to examine for its potential for future development, because after all the point to a tier zone is to capture that incremental growth and be able to reinvest that back into this zone. Infrastructure extensions could be reimbursed by the tiers to the city or a developer through cash grants and or property tax rebates to help offset those initial costs. The benefit to an expansion would also aid in the projects where we've already had interest expressed. COULD HELP WITH POTENTIAL GROWTH WHERE IT'S CURRENTLY STAGNANT AND I WILL BE TAKING THIS IDEA, THE RESEARCH TO THE OTHER TAXING ENTITIES TO GET THEIR FEEDBACK AS WELL. AND SO WITH THAT, I'M HAPPY TO TRY TO ANSWER ANY QUESTIONS YOU MAY HAVE. QUESTIONS FOR MR. BRASFIELD, COUNCIL.

COUNCILMAN SIMPSON.

CAN YOU GO BACK TO THE MAP? Because it's kind of small. So the red area, what are the north-south streets that bound the current tier zone?

On the east side, it's lakeside. North side is southeast third. On the west side is roughly eastern. There's a little part there just north of I-40 and eastern where it kind of juts out a little bit. And then at its southernmost point is southeast 34th.

And then now if we're looking at this, so this area that's a mix of shaded blue and then kind of the tan, that's the area that we're looking at? Correct. But it's expanding. And then what is the western or the easternmost street that we have here?

On the parcels we are examining, we've gone as far east as Parsley Road or the east city limits.

So this would go past where Buc-ee's is? Correct. Into that area?

Buc-ee's is back further to the west. They're at Jewett-Atterbury or Airport Boulevard and I-40.

And so, because usually, in many cases, when you see Buc-ee's go in in other areas, development seems to follow there. Are we getting inquiries about that? Yes, sir. Right now, but it's going to take an incentive of some sort to get them there? Or they're just asking about this?

On some of the projects they have indicated that in order to make projects viable they would need some kind of an incentive. The primary concern that we're hearing from these speculative developers is the lack of infrastructure and being able to extend water and sewer mains in that direction. In a lot of these areas we have water relatively close. But due to the construction cost, it makes their projects a lot less feasible or not feasible at all. And so that tends to be kind of the main question we're being asked is, you know, what could the city do to help extend that infrastructure?

And so, I mean, when we look at the downtown tax increment reinvestment zone, which we had a presentation on a couple of weeks, I mean, we've seen, I guess, dozens of different projects in the downtown area. And we, we talked about the, the increase of the property downtown. Why, why haven't we been able to, I mean, so we've had this for about 10 years and we've had four projects. What's I mean, why, why, why is the traction not occurring? in this tiers versus the downtown tiers?

Well, again, I think it is due to a lack of infrastructure. Drainage being another part of that infrastructure that we're dealing with. A lot of these properties flood just due to the natural topography of that particular area. And so this area tends to be plagued with a little more prevalent issues like that that make development a lot more difficult.

And so is there something else? I mean, if we expanded this, I mean, do we think this is going to put it over the hump, if you will, for development? Or are there other things that need to be going to try to get traction in this area to get the growth, I guess, that we're looking for?

Well, you know, I think in the economic development world, a lot of times it's the horse to water kind of scenario. But at the same time, too, you know, extending the tiers boundary in this area just makes that tool available. And it does make it where conversations can get a little bit further down the road than maybe they wouldn't be otherwise.

And then when we look at the projects that have just come online recently, Bucky's and the Road Rangers, I guess, that value has already been established. Correct. So we couldn't take it. I mean, that would have been a considerable amount of money if we had included the tiers before the Bucky's or the Road Ranger would have been built. That would have generated a lot more that could have helped that area. But I guess that's... That's not available at this time, I guess, because the base would already be established. Correct.

If it was to be included in the new boundary, though, we could get any growth. Let's say Bucky's adds another million in value over the next five years. That could go to the zone versus staying.

OK. All right. Thank you.

So just looking at this map, what's proposed, why the patchwork?

Yeah, it's really not patchwork. It's just identifying what the values, the performance of the values of each of those parcels. Basically, the blue is performed and the tan is either stagnant or declined.

Okay, so the tan is what's stagnant. Correct. So what's proposed, though, are we showing, is it that whole tan area is what is proposed?

That's what's all being considered. It's not a final recommendation at this point. Yes, that's what's been analyzed. All right. Anything further?

So in clarifying, because I know the map, the key is super small for some people to see up there. So the entire area is what we're considering possible enlargement of that tier zone. So that's blue, red, and the tan. That would be one large tier two with an expansion. Are you considering lengthening the time on it? When does this one run out? 2045?

This one's in 2046. And no, we have not discussed extending the time. We've just discussed expanding the boundary.

So so no extension on timeframe or really the incentive structure, but then to to kind of go through it, it is interesting that no matter how many times we hear it, we as counsel still forget how these tier zones operate. And I know our constituents constantly kind of, I'd say, revert back to not understanding exactly how the tier zones hold property increases. So first of all, there's a set limit that your floor, so any taxable value that was existing. is still going to the city at large so we didn't draw a border around you know this trapezoid and put all the monies there we took everything that was already there as a foundation and then we're building on that with additional incentives right property taxes only drew YES, SIR.

PROPERTY TAXES ONLY.

SALES TAXES NOT INCLUDED.

CORRECT.

OKAY. SO I WANT TO REMIND EVERYBODY AS YOU GUYS LISTEN BECAUSE I DO KNOW THE MENTALITY IS OF WINNERS AND LOSERS. YOU'RE PICKING WINNERS AND LOSERS. Okay, so we create a zone that's got plenty of land out there. Anybody that would like to be a winner in this zone, we're hoping you come and be a winner, right? We also do this in empowerment zones. So other areas that are older neighborhoods, we do incentive structures for small businesses too, not just kind of your EDC pieces. But it is a long game. You're playing long ball. So your budget right now, this current year will probably bring in around $65 million in property taxes. Your sales taxes will revenue $90 million. We're roughly 10% over our revenue expectations for the year. So these zones are working to continue to support the entire city. And those monies that are held within those zones primarily can go for the one thing that we struggle with. You know, you used to could put in a sewer line for about a half a million a mile. Now, you know, we've seen numbers up to $4 million a mile depending on depth. And that's only going to get worse as you see construction continue to go big industrial construction all across the panhandle. We have less resources. So if the city can go and put in water and sewer to those parcels, then you have kind of a fair playing field for somebody. Say if they want to build a hotel out there, they want to build, you know, a gas refueling station. They have something else, an amusement, whatever it is. At that time, now that potential is not picking southwest part of town because water and sewer is already available and they don't have the $4 million that they can put into the additional infrastructure. So it's important that I think we remember The way tiers works. So we're not tying up anything on the way of retail sales, sales tax, and that is predominantly the way that we support the majority of, well, over half now. It used to be under half. But then when you look at development and the cost of construction to get that far out there to the east side of town, these can be very helpful. I just wanted to push back as politely as I can on like any incentive is a bad incentive mentality, right? There are certain things that cities can work with developers because capitalism loves capital. And they will put their capital in areas of town that are already serviced. So, as we have on service properties, we will allow them to just stay and stagnate at the existing property tax, which we're collecting right? Or we can incentivize and we can get that property tax increase back on a long game 20 years later. but we'll get the sales tax back on the front end. And then what comes up around it is additional businesses with sewer and water main extensions, which is the one thing that I think could be the most beneficial over here. So in expanding the tier zone, we already have it. And I understand there could be a conversation for, do we want tiers zones in town? Do we want any kind of economic stimulus? We're past that by a couple decades at this point. And so I think what I'm talking for is more or less stewardship of that existing zone. And so it'll cost me nothing to expand that. but it stands to gain me tens of millions of dollars in potential, especially if I look 20 years down the road. I wish somebody had looked maybe that far down the road 20 years ago on a few other items we're facing, right? So if I can gain a little support in that, I think it's good to have that long-term vision. So that's just my soapbox today. Drew, I wish I had a question for you in there somewhere. I think I'm supposed to ask questions.

I would echo exactly what you're saying, because if you look how, you know, property taxes are going to continue to be pressured. I mean, there are goals now to abolish property tax in the state of Texas. And so I think it behooves us to look at, okay, yes, that may be something that could go away, so what are we going to use to replace that? And what I see here is the potential to develop businesses along this corridor, as you mentioned, that are going to generate additional sales tax, going to generate additional hot tax, which would be free. The sales tax is going to our general fund, as you see, the sales tax. I was just looking at the latest figures, and we're in good shape. I mean, Amarillo is third in the state. when you look at increase in property tax from year over year. And so we're doing well, and that's great. But anything that we can do to continue to do that, because I think we're going to see property tax continue to shrink and shrink and be pressures being put on that at the state level of which we have no control over. When if we do things to invest in to increase our sales tax, like anything along I 40 or other areas, where we looked at these reinvestment zones, I think it's got a potential to help us in the long term and help us fund government longer than relying on so much on property taxes.

Yes, sir. Councilman Prescott, you had something. Just a clarifying question for me. The infrastructure would not occur until a viable project.

That's correct. You don't have to go and put yourself at risk and speculate like we do sometimes in the IN THE BUILDING INDUSTRY, THIS IS DRIVEN BY A PROJECT, SO YOU WOULD KNOW SIZING, YOU WOULD KNOW MAYBE THE WATER LOOP, YOU WOULD KNOW DEPTH, EVERYTHING, AND THEN WHEN YOU REALLY GET LIKE JEWITT, ATTABERRY, SOME OF THOSE OTHER ONES WHEN YOU START HEADING SOUTH DOWN THAT ROAD, YOUR DEPTH IS THE ISSUE TO GET EVERYTHING BACK UP TO I-40, AND SO IT'S A CONSTANT STRUGGLE. THANK YOU. Mr. Brass.

May I like to also add, I think this map here highlights one of the fundamental elements behind why tiers exist. Look at this zone here. A large portion that we're proposing is the tan, and those are properties that have clearly, over time, have struggled to maintain value, if not decrease value. That's not a benefit to us, to our community, to our entryway on the east side. And so TIER is a tool we have available to turn that ship around and make these properties contributing properties back to our economy for our community through value, through business, which goes to sales. So this is a tool that we have to try to stimulate growth, particularly, as I said, on one of our entry points of our community.

Thank you, Mr. Path. Any other questions for Mr. Brasfield?

I was going to say, if there's any feedback of is this kind of the right area to be looking at, or should we be looking smaller, larger, any of that kind of feedback would be helpful as we continue to work with the tiers board. Because just north of that, of course, you have vacant airport land, but I think a lot of that will be in coordination with the EDC and the airport, so it may not be necessary to have the

I would just like to jump out first and just say I think what you've got highlighted is the full extent of everything that makes good sense on paper in the form of an ROI. I think as you stretch further out from there, I think you could lose a little bit of your momentum. And then on the north side of that going into the airport, I think we have other mechanisms out there that are beneficial. Perfect. Thank you, sir. Mr. Brasfield, thank you. Appreciate the presentation. Gentlemen, that brings us to requests for future agenda items. Do I have anything that anyone would like to put on the agenda for the next meeting? Okay, we will move out of section three. We'll move into public comment. Miss Johnny, would you mind reading us into public comment?

Sure, Mayor. Thank you for participating in today's City Council meeting. We value your input and appreciate you taking the time to share your thoughts. Each speaker will have three minutes to address this council during public comment or the public hearing. At two and a half minutes, a single beep will signal 30 seconds remaining. When time is up, the timer will beep continuously. Please stay within your allotted time. We do have a public hearing today, and if you wish to speak... On the item with the hearing, please do so either during public comment or during the public hearing, not both, to ensure accurate records. We'll be using both podiums today. When your name is called, please make your way to the open podium. When it's your turn, state your name and whether or not you live within Amarillo City limits before beginning your comments. For topics not on today's agenda, the Texas Open Meetings Act limits how council may respond. Council may provide factual statements, ask for the issue to be added to a future agenda, or refer you to the city manager so staff can visit with you about your concern. If you'd like to speak but haven't signed up yet, please come see me now to fill out a form so we can add you to the list. At this time, I will invite Tom Sherlin as our first speaker, and our second speaker will be Gabby Morales.

So as Mr. Sherlin makes his way up, thank you guys, everybody, for honoring kind of our three-minute time limit. We appreciate the respect that's shown for everybody. And then if I have anybody here who wants to give public comment, if you haven't signed up, if you wouldn't mind coming around over here to Ms. Johnny, we'll go ahead and get you down for the record.

Mr. Sherlin, how are you doing today, sir? I'm doing great, Mayor. Mayor Stanley, Councilman Reed, Councilman Prescott, Councilman Simpson. Thank you all for allowing me to come forward today to speak to the leadership of Amarillo. I'm here to speak about item 6.2 today, which has to do with the audit. After our meeting two weeks ago, I would like to thank Andrew Freeman and his staff for the great job they did identifying where we had $43 million in open CIP projects. But with that information, it reminded me that two years ago, when I was sitting on that council, we voted to do road projects. But at the same time, we couldn't do the road projects because the money hasn't all been spent from a 2016 bond issue. Then I would have thought maybe that would have stimulated something. with Mr. Freeman and his staff going to find 43 million more. I think we've come to a point in time that I would like to ask for a forensic audit of all CIP projects. It seems like every time we get in there, we find a little money here and a little money there. There's only one way. We have a new CFO. If I was the CFO, I'd want a clean set of books. Evidently, we found enough money to pay for this audit. It's there. All we need to do is spend it, make a commitment to have a clean set of books. I mean, we're not asking for a lot, but I think as citizens, the citizens want to see where our money is, where it's going, and from what I understood from Mr. Freeman's report, he reported back to stuff as old as 2012. There's no reason for that. If I was running a business, I would have been fired on the spot for that. I'm not accusing anybody of any wrongdoing at all. In fact, I doubt if there is any wrongdoing. What I think we have is a problem maybe of communication, of the way we handle business. But it's very important. You guys are the funerary people for the city of Amarillo. It is y'all, your jobs to make sure our money is where it is and what they say it is. I would like to ask for you to seriously consider doing a forensic audit on CIP items. Thank you. I appreciate your time. I appreciate everything y'all do. I know what it's like sitting up there, so have a good day.

Up next is Gabby Morales, and if she's not here, we'll go ahead and have James Stank come up, and Jason Roden to the empty podium.

James Stank, Amarillo, it's been a bit. You know, I'm just going to go through right quick, speaking about 6.2 and things sort of pivoting off of what Tom was talking about. My personal history of Amarillo's budgets and how I started examining them back really in 2010 when McCart was in and then moving on into Harpo. I started attending budget meetings, very laborious and confusing. and a lot of rubber stamping going on as they just passed money things and I was sitting here going, what? Come to find out, Harpo, that was all done back in that little boardroom meeting. Nobody ever attended, nobody ever watched. So Harpo did a thing, brought it out in front where people could attend, but nobody really does. We moved on there and there was still a lot of rubber stamping from 11 to 15. And then all of a sudden we had a new council show up in 15. And one of the key players in that was Randy Burkett. He started asking better questions and had more concerns. And there was still a lot of rubber stamping going on that he would just shake his head at. And there was a lot of what I considered good conflict amongst council. and still a lot of rubber stamping, but there came out these excuses about government accounting. You can't run the city like you run a business. I disagree. You have to. Then all of a sudden, while I was watching through there, and I actually sat with the book, and I'm asking the CFOs, why do we have so much large reserves in these different departments, counting up you know, upwards of 30, $40 million in reserves just in departments. And then to find out we have over $100 million in the general fund because that's best practices. Okay, what? And then we start arguing about keeping a couple of parks open and we need three or four or five million dollars and you can't just get it from that general fund reserve. What? You're confusing me. It's what you do in your own household. The reserves in the departments were in excess. Whoa, that got there quick. Okay, so then we have the enterprise operations, which had about $25 million in there to keep our credit rating. You know, what's everybody going to stop paying their water bill real quick? And so now here we are again. Finding unused money sitting in CIP, $43 million, $30 million plus from the bond on top of that. It's probably still sitting, probably more in other departments. What's up with that? It's time to say why, and regular audits don't do the job. Please consider forensic.

Thank you, Mr. Skank. Appreciate you, sir.

Up next, we have Jason Roden, and after Mr. Roden, we ask Mr. Warren to come to the open podium.

Thank you. My name is Jason Roden, and I do live within Amarillo, and I'm here to speak against 5.7, the renewal of the Clearview AI contract. I think that when it comes to biometric data, there is special consideration that needs to be made about maintaining the privacy of that kind of information because unlike information like your driver's license or your social security, you can't change your biometric data. And so it requires special consideration to keep safe. I think it is a dangerous move to allow a private company to amass the scale of information that they have. They've existed, Clearview AI that is, has existed since 2017. In that time they've amassed 50 billion images, 50 billion. There was a class action lawsuit last year where Clearview settled for $51 million because it was realized that the scope of the potential victims was so large that it would qualify anyone who has had a picture posted online in the last 10 years would be considered a potential victim of that settlement. That is information that is important to consider when we're allowing a private company to collect this information and when we're empowering them by putting our money into them. If we can't trust them to manage that kind of biometric data, which again, we cannot change. We have to keep our biometrics are a core part of who we are. We cannot adjust those things. Allowing them to be collected frivolously by a private company opens us up to potential hazard. It opens us up to potential exploitation, potential hardship. because this private company doesn't just provide service to our state agents, which I think is one of the uses of it, but it also provides it to private individuals. And that kind of information is something that doesn't belong in the hands of a private company, and it's something that we as the citizens here should feel more comfortable that we are protected from. That also goes into the analysis of the accuracy of these. Not Clearview AI, but another similar program had announced that they had accuracy rates in the 90%. And it turned out that they were later found to have been misleading in those percentages. If we can't trust them to honestly have a conversation with us about the accuracy of the models that they're using, how can we trust the safety of our own citizens? Thank you for your time.

After Mr. Warren, we'll have Kim Benson.

all right good afternoon council thank you guys so much for having me as you know my name is thomas warren i'm proud to serve the citizens of potter county as their tax assessor collector i'm also serving as a member of the potter county appraisal district board of directors and that's why i'm here today i wanted to speak on agenda item 6.6 which is the letter about continued cooperation about the district um i reviewed the letter and i also were because i assume it's the same letter that canyon considered a few days ago and i also reviewed the memo that was attached to your agenda today the memo says quote the recent discussions by the potter county appraisal district board of directors have centered around pursuing separation with the randall county appraisal district board of directors end quote gentlemen that is just simply not true Nobody from Potter County has taken a position, to my knowledge, that they want the appraisal district to split. Nobody in any of our meetings have said that they want the appraisal district to split. This is a doomsday scenario that's being pushed by people who don't want reform. And let's talk about what that reform is that we're pursuing. what that reform is is we are trying to update our interlocal agreement at the appraisal district to come into compliance with texas law our attorneys at the appraisal district told us that as it stands right now the agreement is not lawful it is not in compliance with texas law all this process has done all this process is that we've been pursuing has been hiring attorneys to renegotiate the contract so that we can bring it into compliance with the law and continue operating the district in a way that, well, is compliant with Texas law. This is not about splitting the district. And I am a little disappointed that city staff put this on here that we're trying to split the district because that's just simply not true. And to my knowledge, nobody from city staff reached out to any of the board members of Potter County to ask if we were trying to split the district. Nor has anyone from city staff attended any of our meetings. This is just simply not true. I don't believe we are on the road to the district splitting. And I would just encourage you, gentlemen, reject this letter today. This is unnecessary. And all this is is an attempt by individuals who are supporting Randall County's position of not negotiating to reclaim the narrative and distract from what we're actually trying to do here, which is save our taxing entities from more liability. I appreciate your time. Thank you, gentlemen.

After Ms. Benson, we'll have Tanya Winston.

Good afternoon. Kim Benson. I live in the city limits. That's kind of a hard act to follow. I'm not going to be as articulate as Mr. Warren is, but a little bit of history about maybe how this all came to being. A couple of us citizens went to the Pratt meeting. They were going to start talking about filming and streaming their meetings, and you know how I feel about that. I was on board. We went and heard, they were swearing in some officers that particular meeting in January, and they talked about how they vote. And we were like, wait a minute, that can't be right. So we dug and got the contract and dug into that contract. That's where I'd like to ask for a statement of fact. Have any of you read that contract? You can talk to me, come on. Have you read the contract? Have you not read the contract? Can you proceed and do this joint letter today? I mean, who's initiating this? Are you guys initiating it or is it Mr. Path initiating that? Hopefully Mr. Path in his presentation is going to clarify that. I think like Mr. Warren said, I mean, we're thinking the sky's falling. Potter County has hired an attorney. They're reviewing the contract. Randall County Pratt Board is meeting tonight. We'll attend that meeting and see what they decide to do. They've not hired an attorney yet. So I think we're getting a little bit ahead of where we need to be. I mean, hopefully you guys will look at this. I'm not asking you to oppose. But don't take a position either side. Let the people that you've put on this board, three of them are elected, but the rest have been put on by the taxing entities. Trust those board members that they're going to do what's right for the citizens. So just don't get into the mix of this. Let it play out. Then if it doesn't play out like you want it to, then you can speak your piece. But just think about that before you discuss 6.6 today. Thank you.

Ms. Winston, if you'll make your way up to the podium. After Ms. Winston, we'll have Mike Fisher.

Good day. Council how you doing. I'm here before you today, I am a citizen of Amarillo Texas Potter and I stay in the city limits. I first I want to say that the 2026 Juneteenth. Parade and events where very well um coordinated and it was a success but i don't remember seeing you there cole where was you at did you come to the parade the theme was coming together i didn't think i saw you there i was looking for you um but i'm also here today uh I need to know if the planning department, does the Main Street U.S. grant still exist? Do you even know what that is? You don't? Huh?

I can't speak to that, but I can have staff get you that information, ma'am. Okay.

The reason, the concern is because The Amarillo Northside Association Advisory Board had been pushing for some development on the north side of amarillo and when i was campaigning i also pushed for this and what i discovered is that on the east side of town the barrio they have received their colonial lights to beautify that side of town uh all the way down 10th street We've been asking for these lights for years on the north side starting from 3rd Street going north to 24th Street and not yet we have received those lights and from what I understand the planning department is responsible for that and with the grant does The grant is responsible was supposed to be in the money to help. Put those in projection. So that's another concern that I have and then the trash. Between lips can in on St in the North Heights. For the last 4 years, there's a several areas on the north side of town. between arm and lips. There's a trash pal that's been there for years and I just don't understand when the city trash can come through there. Why they're not picking up that trash or not taking it back to the the department to let them know that that trash is there. It's just

Okay. So Ms. Winston, I know we've made a lot of progress over there on some things. Let me get you connected with staff on the trash issue and see what we can do. And then on the grant as well, Mr. Path, if you can look into the specificity of that and like what's available and not. Tonya, good to see you and we appreciate you speaking here today.

Thank you.

They'll contact you.

After Mr. Fisher, we'll have Mr. Ford.

My name's Mike Fisher. I live in the city limits of Amarillo. So there's a lot of talk about a forensic audit. I heard somebody say limited to like the CIP thing. I think when you say limit or you say scope, that to me takes it outside of a forensic audit. To me, a forensic audit is when you just hand somebody the keys and you say, let's see what you find. And I think it's well deserved and warranted and passed overdue, especially after finding all that CIP money. I think, Cole, it took you about three or four years to finally get somebody to admit it or to get somebody to say it out loud. that there's at least 40, 50 million sitting there. And they had to know, the staff had to know, somebody had to know, somebody sitting here, somebody over here had to know. But I think it would help with the new CFO. I think it would help with anybody that's sitting here at this behind the dash to help set a baseline to figure out what's been going on. And that way, if things collapse at some point and it's on your watch, it doesn't all get blamed on you. Because if we have a forensic audit, it'll show everything. And we probably, my guess is we wouldn't blame any of you guys. But I think as it sits now, we always blame the guy that's on the clock when it happens. And I think that that forensic audit will help with that. I'm doing my own little audit with Prad since they brought up this letter thing that they're trying to keep things the same way. I think you ought to look at that land out there that we're talking about with tears. I don't know anybody that their land value has gone down. But you can tell it's manipulation. I looked at some of the properties. It's always Atterbury. They did this with Tiers 3 on the south part of town and I-27. They kind of let that property value sit there, didn't change a dollar for 10 years, and then all of a sudden, after it got into a tier zone, it went up a lot, like double or triple. that property out there that's going to be on this that you're trying to expand this tiers to it's all the who's who are a lot of it is already looked at it while we're sitting here some of it is and the property that went down is very when you go down first then you're setting that baseline lower so then when you bring it into tears it can pop and then you can keep that money in the tears there and that's what's going on that the value of that land didn't go down Somebody's manipulated that to make it in favor of tears, but I'm in favor of a forensic audit of everything, not just the CIP stuff. Thank you.

Thank you, Mr. Fisher.

Two MFs in a row. How about that? Mike Ford, Mike Fisher, just for clarity. Amarillo Mayor, Mike Ford Amarillo, Mayor, Council, once again, surprise, I address the Council's serial structural violation of Chapter 551, the public's right to address its own government. Today's agenda, item three, discussion, item four, public comment, consideration before voice. I've handed each of you the text of 551 007 at this podium at least six times now. The question is no longer whether you have heard it. The question is whether you ever intend to follow it. The body you oversee, the AEDC, one week ago, I've been very critical of the AEDC. Item one on their agenda was call to order. Item two was public comment. They follow the law. The subsidiary has it right. The public parent body, you who appoints it, does not. Mayor Stanley, you recently said regarding public comment, it's not our opportunity to come and try and correct any perspective that you have, it's our opportunity to listen to you, end quote. that is not what the law says the statute places public comment before or during discussion consideration a citizen's right not the chair's privilege and as you amply demonstrated during your cheers to soliloquy discussion is consideration the city attorney certified today's agenda that it complies with the act that certification is false his certification 551 144 c shields closed session violations only The 551.007 violation is yours to own. So stop playing footsie with criminal acts. Section 551.144 makes knowing violations like authorizing water MOUs in closed session with no public notice, deliberation, or vote a criminal offense. Every one of you swore an oath to preserve, protect, and defend the laws of this state. Your silence and acquiescence is an abandonment of that oath. The same culture of noncompliance reaches into the city manager's organization. TCEQ rules, whose violations burned 52 homes, financial reporting failures that hide uncommitted capital equaling nearly one-fifth of the budget for this body. It does not begin with the fire. It begins here, gentlemen. So I leave each one of you with a question. You stand here tonight at three paths, or today at three paths, honor your oath and bring this council into compliance, hide behind the city attorney's false certification, or wait to be sued and let a court of this state tell you in a published opinion what your oath already requires. One of those paths honor you, the other two do not. Choose wisely.

Mayor, that is everybody who has signed up.

Really good. I appreciate everyone for speaking here today. Council, does anybody have any remarks here before we move forward? Okay. Thank you all for speaking here today and honoring each other's opinions and perspectives. At this time, we will close public comment, move into our consent agenda. Gentlemen, is there anything in Section 5 that you need removed for further discussion?

Yes, sir, Mayor, if we could remove 5.12 for further discussion. So restate that 5.1? 5.12, Utility Billing System Review.

Do I have anything else that needs to be removed?

I'd like to have a little bit more discussion on 5.7. Okay.

Anything further? Okay, gentlemen, before you is the consent agenda with removal of 5.7 and 5.12.

I move for approval with those two items removed from the consent agenda.

Second. Motion and a second. All in favor, please say aye.

Aye.

Any opposed? That motion passes. Let's take up 5.7 now. Mr. Path, on this one, you'd be okay if I call on some of our experts out there, or do you have somebody you'd like to bring forward?

Is Chief Hover here today? Yeah.

And Chadwick, I see you back there, and I would love to invite you up if you don't mind coming as well. Chief, how you doing today, sir? Good, good. Councilman, if you want to take the lead on this one, we'll jump into the discussion and you can ask any questions.

PROBABLY A LITTLE STRANGE COMMENT FOR ME, CONSIDERING THAT I'VE USED THESE THINGS BEFORE.

BUT I DO HAVE SOME CONCERNS, OKAY?

AS I LISTEN TO SOME OF THE PUBLIC COMMENT, AND I THINK IT'S IMPORTANT TO AT LEAST DELVE INTO THIS A LITTLE BIT. AS FAR AS THE CONTRACT THAT WE HAVE RIGHT NOW, THIS IS THE RENEWAL OF A FOURTH of a one year contract.

Yes, sir. We've had it for six years, but under contract, this will be year four.

Right. And so we would be looking at two more years. Over the next two years, we'd be renewing it a year at a time.

Yeah, we started doing one year at a time.

Right. So with what you're getting with this, how does the technology change or has it changed? I know it's changed, but how has it changed from where we got last year to what we would be getting this year?

Actually, the gentleman probably hit the nail on the head. I mean, it's just the increase of open source intelligence, so he's not wrong. It's about 60 billion images that are now available. They're all open source, meaning they come from social media. If you've ever been on Randall County mug shots, Amarillo mug shots, it comes from stuff like that.

So it's data that's out there already?

None of it comes from a closed source, so nothing from DMV, DPS, none of that.

And what we're comparing it to is if we get a – you have an investigation and we get a video, we're able to make some identifications using these biometrics. Right. Right? That is freely out there on open source media.

Mm-hmm. Yes, sir. The lawsuits he's referring to. I mean, I'll be honest with you. They all come out of Illinois. We don't share anything with Illinois anymore. Uh, not with LPR data. None of our data is shared with Illinois anymore. That BIP a lawsuit that he's talking about 52 million. That was an Illinois settlement.

Okay. And it's our data within the police department. Are we sharing any of that data through T decks?

No, no.

OK, so it all stays here. Yes, Sir.

The only the only stuff that we share is we have some internal databases that we share with Potter County, Randall County, Texas DPS guys that work here in Amarillo. Nothing outside of Potter, Randall County. We share some with Potter County DA's office, Randall County DA's office. But yeah, as far as any of our data or images or video, they don't leave us. In fact, we don't storm at all. We have 30-day retention on LPR. We have no images from this current platform we're talking about that go anywhere.

OK.

Thank you. Yes, sir. Any other questions on council? So to double check, there's no upload going the other direction because I think the gentleman I had a lot of concern on the security of the data that we were giving to Clearview. And so this is a bank. This is a file, a database that you're reaching into with existing images. And those images have certain identifications? Yes, sir. He's not wrong.

I mean, they do have the capability for us to add to their database. We've chosen never to do that. So our data simply sits as a comparison tool, and then our data is expunged, other than for auditing purposes.

So the capability is there with that, but we have a policy not to do that. And so that may bring a little comfort to kind of how we're handling the data that we're in possession of to our public. And then in the open source public reach, right? So everybody who came up and spoke here today, you're live streamed on YouTube and maybe another platform. And so that's public. That's an open source. Anybody that goes and looks into that, pulls that video, could retrieve any of that biometric data with that software.

With the exception of Illinois, yes, sir.

Without Illinois. Okay. I think it's important just to speak to it a little bit there, and I really appreciate Councilman Reed's questions. I don't have anything further. I just know it's helpful to hear it a couple times. Chief, do you have anything you'd like to add?

No, sir. He hit the nail on the head.

Okay. Yes, sir.

If I could go one more question. So the policy we have, is that a written policy?

Our retention policies are there. When we originally wrote all the policies, they were 60 days. I mean, I'm sorry, six months. We had 180 days. The reason we don't do that is because it's too expensive for us to do it. So that's why you have 30 days for LPR images and then no retentions necessary on this one.

Okay. Councilman, if you'd like to take a look at that policy, I'm sure we can get that to you. Okay. Chief, Mr. Chadwick, thank you, guys. Thanks, Mayor. Appreciate you. Thank you. Gentlemen, we're going to go ahead and move into 5.12, then we'll take up both items. Mr. Path, who would you like to have come up and answer a few additional questions on 5.12?

I'm going to turn it over to Rich Guyon.

Is it bad when you have the public works guy turn your mic on? This item is actually the independent audit we talked about after the initial review of the utility billing system. It is an outside agency that will review our billing system in particular. looking at reeds from every category, residential, irrigation, big commercial, and then running them from the reed all the way through the billing system to make sure that they're also not seeing any technical issues. So this is the technical review piece.

And so we're reviewing multiple systems to see how they're communicating with each other?

Well, yes. They'll look at the read as it comes off of the meter, and then the primary focus is the billing system itself to make sure that from read to bill there are no technical issues and that we're doing the calculation according to the rate plan the way that it should be done. It's similar to what we did in our process, but it's an outside agency.

So where are we on the, I mean, I don't know, we're looking at 85,000 on this, which is a pretty hefty investment, and I understand the problems. I'm just trying to figure out. What do we need them to do that our current vendor, I mean, who's the vendor that we purchased the new billing software system?

Who was that? That was Inquesta. Inquesta has done this process. Internal staff has done this process. This was insurance for council that's also being reviewed by an outside agency. They are not doing anything new. They're doing the same process.

And then where are we on what we found out so far? I mean, I know you gave us a summary of what the problems and issues are, but what have you learned since on this particular topic since the last time we talked?

There's been no material change. We have found other one-off issues, but the themes have all been the same.

Okay. Well, I don't know. It just seems like it's an additional money. I mean, I'm just trying to wrap my head around spending an additional $85,000 on something that we just paid a lot of money, and it seems like we just got a brand-new system. I mean, is there another way to review this, or is the only way to go through this is to spend an additional $85,000?

If Council wants this also vetted through an outside agency. This is the process that we did internally. This is insurance for the Council to ensure that another set of eyes looks at the system the same way that we did internally and gets the same result. Okay.

Mr. Gagnon, what's the gross revenues of water and sewer, sir?

Gosh, I'd have to ask Jennifer to be certain, but I think it's right at 100 million million.

Yeah.

Yeah.

And so these are our water and sewer customers that we're looking out for. It is an enterprise. And so I don't like the sticker shock either, $85,000. Can we not find a better way forward? Let's not waste any money. We potentially offended 55,000 of our customers with some water billing issues. some were errors right a lot of them were just over billing for length of time and duration with this rollout so no matter how many times we've had staff and and leaders apologize and and try to make it right i think because of that level of an issue it requires an outside third party to come in and then i don't know if there were some other budgets you know proposals that were more affordable, I just know this one is timely. And so not a normal set of circumstances and not justifying the cost, but an error in a hundred million dollar a year company as a board of directors, I think we spend what it takes to make sure we're right and we're whole with our customers.

Well, I will say that it's also not uncommon practice, even in private sector, to do an internal audit and then hand that to an external auditor to verify your work. So this isn't out of what I would consider normal practice.

Yeah. Well, and I don't deny that there's a need for the investment now. It's just like, boy, it seems like we just paid a whole lot of money for a water system that out of the chute seems to have some problems with it. And I know that that's – and now we've got to spend more money to figure out the problems from – the system that occurred initially. One other thing, just as a matter of record, it says is this item budgeted? We didn't know this was coming. It says it was budgeted. We didn't budget for a utility billing system review, did we?

No, this is coming out of funds that were part of the system, the funding for the system itself, if that makes sense.

Okay, so we have additional monies that were set aside that will pay for this? Right. But this particular thing was not budgeted? This specific item was not budgeted. Okay. That's correct. All right, thank you.

Any other questions on 512? Gentlemen, we'll take up 5.7 to have a motion. So moved. Second. Motion and a second on 5.7. All in favor, please say aye. Aye. Any opposed? Motion passes, 4-0 vote. Gentlemen, we'll take up 5.12. So moved. Second. Motion and a second on 5.12. All in favor, please say aye. Aye. Anybody opposed? Motion passes. All right. We're cruising along here pretty good. I'd like to get into our non-consent agenda before we take a recess. Keep moving. I know Councilman Prescott likes longer meetings, but I'll slow us down later maybe. Item 6.1, Ms. Lola, can I get you to come forward on this one? We've got this budget amendment to discuss.

Yes sir, so this is the second and final reading to consider ordinance number 8249 and it's the ordinance adopting budget amendments pertaining to the fiscal year 2024-2025 budget and provides an effective date for that. These are amendments to the previous fiscal year budget for the period from October 1st, 2024 to September 30, 2025. Since the last meeting, we have provided additional details to support the budget amendment, and the details come from the annual comprehensive financial report. Information such as listing of departments that were over budget and under budget were provided as of the end of the fiscal year. We also provided information on departmental costs after excluding non-cash items. Therefore, ordinance number 8249 is ready for your consideration tonight.

Thank you, Ms. Lola. Gentlemen, any questions? Councilman Reed, do you have anything? No.

So the summaries were provided to Council.

Yes, sir. They were in our packets here on the dais. Council, have y'all had time to review any of those yet? Maybe, maybe not. So if we can, I'm going to go a little slow here to make sure we're all tracking. And then we'd like to go back through and just double check, confirm a couple of these numbers. So Lola, if you can, tell me, you and I have had some good conversations about what is hard cost. And so one of our most important departments definitely core priorities is our police department. And so in the hard cost of like, we have hard cost and then you have what you called depreciation or amateurization items, right? Yes, sir. Can you give us an explanation of what like a non-cash item is?

So non-cash items, like you mentioned, we have amortization, and these costs are for leased computers, amortization of leased computers. That's excluded because they're non-budgeted costs for the department.

So does that mean that the check never went out of that department to pay for the leased computer? It came from somewhere else?

It's the way our accounting system, GASB, mandates us to account for items such as amortization of computers. So you spread out the cost over a certain amount of time, typically. the lease term for the product. However, the cash is a different thing. They are non-cash expense or use or consumption of items. Okay.

So if I was just to ask, like, what is the hard cost, right? You and I had discussed maybe that term is a better term for me on the private business mindset. What is the hard cost of the total expenditure to run the police department for year FY24-25?

So I have provided that and we have

sixty nine thousand two hundred and sixty nine million two hundred and thirty five thousand forty nine dollars that was provided in the additional documents we gave you this afternoon so okay and and this is where um gentlemen if you guys can follow along i've been doing a diligent review of of the audit so the act for and and trying to follow along on the the final which is before you here for your next item you know, the actual item there showed 72 million, 978, not the 69 million. And so there's a discrepancy there. And so in conversations with the auditor in trying to understand what non-cash is, I believe the auditor, you know, to have that in the column that shows it to be the actual amount. Can you tell me, Mrs. O, is Did we spend 72.9 or did we spend 69? Because we're going to amend the budget. Again, we already amended the budget once. So we had budgeted 66.1 million back in March, which is six months after the end of the year. We brought back a $240,000 adjustment. That was prior to you getting here. So we amended that budget. Now we're being asked to amend the budget again. But in doing my due diligence, I'm seeing two separate numbers. So I don't want to amend the budget for $3.8 million, and it really be $6.6 million that we need to amend the budget. So you've got a couple things here. that I didn't fully understand in just your explanation. So if we go to, it's the page where you've given me the breakdown. Police protection was over budget by 6.6 million, Ms. Lola?

Yes, sir.

It says non-cash depreciation. amateurization deduction of 1.8, and then a non-budgeted capital outlay deduction of 1.9. So it brought the overage down to 2.8. So you're only asking us to amend the budget 2.8 million. Yes, sir. Okay, and my issue there is I don't have that on paper as the actual cash, right? You've given me the 69 million, but the auditor has 72.9 million. So which number would be the correct one for hard cost?

So they are both correct numbers. The first number, $72 million, those are GASB numbers, which include non-cash and capital items. But for budget purposes, because the budget is built based on actual costs, costs on a budgetary basis, you don't need to amend the budget for the entire expenditures that are GASB expenditures.

So basically, if we didn't spend the money, even though it comes in the form of a GASB deduction, right, you can depreciate this, but it really doesn't affect your balance in the hard cost total of running the department. You're saying the department total was $69-plus million.

Yes, without those additional costs that are required by GASB. Like I said, those are costs pertaining to amortization of these computers and capital outlay items.

What is the capital outlay deduction? Does that mean we had $1.9 million somewhere that we didn't spend, so you're able to deduct it?

Those are fixed asset CIP costs that were brought back over to the departmental expenditures, and they are not budgeted expenditures. They are brought in as part of the reporting requirements as far as the reporting is concerned. But the cost that the department is concerned about are the budgeted costs, and that's what you amend the budget for.

Okay. Go with me into the future like a month and a half. We're doing budget review and budget prep. What is the recommendation from staff for the budget coming forward for APD? Is it $72.9 million or is it $69 million?

IT WILL REALLY DEPEND ON THE REQUESTS AND THE AVAILABLE REVENUES ONCE WE HAVE THOSE CONVERSATIONS.

OKAY. IF WE WERE GOING TO DO EVERYTHING AGAIN, JUST RUN THE DEPARTMENT AGAIN THROUGH AND WHAT ARE WE EXPECTING TO SPEND THIS CURRENT YEAR THEN? Like, what are we expecting to land? Are we spending 69 million or are we spending 72.9 million in the current year?

I don't have those numbers on hand.

Yeah, expenditures will change. Obviously, salaries will change from last year because there were salary increases to the police department. So year over year, you see an increase in expenditures. However, as far as the budgetary basis is concerned, you're looking at only the costs that pertain to the departments and not the capital costs or gas required expenditures.

Okay. I think the audit reads differently, but when we get our auditor, he may could weigh in to what the hard cost is. And then if the actual hard cost is the $72.9 million, would you still recommend we only amend the budget 2.887?

Yes, sir, because it's not necessary to amend to the full level.

Even if we know we spent that amount of money, we still wouldn't amend the budget there. We would just recognize the 2.88 because of the GASB or governmental accounting practices that you can implement. Yes, sir. Fire protection, if you go with me to that one. We amended the budget already in March, 3.715. That was before you got here.

Okay.

YOU KNOW, SIGNIFICANT OVERRUN FROM A $48 MILLION BUDGET. WE ARE NOW COMING BACK HERE AND ASKING FOR AN that it was over budget.

So I think it's the correct number that we should have had in March. So it's not on top of what we amended in March.

That's a great clarification. So Mr. Freeman, can you state that again so we make sure everybody hears that?

I think instead of what we amended in March, I think this replaces that amendment from March. Yes, this is the correct number now. So it actually came down overall.

So in March, we thought we were over budget and fire 3.7. Right. Now that we've got our audit back, we understand that we are over budget 2.228. Is that correct?

I think it's the 1.8 after you adjust the non-cash items.

OK. Give me a second here. I'm just comparing that to the audit. Well, actually, you have it on the other page. So on the back page there, Fire protection. What is the actual cost of the fire protection for the year, Ms. Lola? Hard cost.

So fire protection, on a budgetary basis, $54,485,148. That's the actual amount on a budgetary basis. Slightly different from the amount on a GAAP basis, $54.5 million.

Mr. Freeman is very helpful in this. He's telling me that we didn't go over budget 3.7. We went over budget 2.2. Then in reading this, you have a non-cash depreciation deduction of 4405. And then you have a capital outlay deduction of 385. Yes, sir. And so it brings the overage down to 1.8. Yes, sir. Okay. So my ACFER, though, my audit recognizes 5400. 327, 54 million from a $48 million budget. So I don't have the differentiation in this without the previous $3.7 million amendment. And then the number that we gave to the auditor, we may have to ask him, but I believe he worked off of that amended budget with the 3.7 included. So his ACTFR would recognize the 3.7, and now we would be amending that budget below what he audited.

THAT IS ALREADY INCLUDED. THESE ARE ADDITIONAL AMOUNTS NEEDED BASED ON THE BUDGET NUMBERS FROM THE ACFER STILL SHOWS US BEING OVER, SO IF WE AMEND IT BY THE AMOUNT GIVEN, IT WILL BRING US TO THE, IF WE'RE GOING TO BE MEETING THE BUDGET THAT WAY, IF WE AMEND IT TO THE AMOUNT THAT IS SHOWN OVER HERE.

SO IN SIMPLE CONTRACTOR TERMS, TELL ME, WE STARTED AT 48, YOU ADDED 3.7, NOW YOU'RE ADDING 2.2 OR YOU'RE ADDING 1.8?

YOU'RE ADDING 1.8. OKAY.

SO WE ARE ADDING THE 3.7.

DISREGARD WHAT I SAID.

AND WE'RE ADDING THE 1.8.

YES, SIR.

SO WHAT'S THE TOTAL COST OVERRUN FOR THE HARD COST OF RUNNING THE FIRE DEPARTMENT?

So because we're amending the budget, once you're amending the budget, you're eliminating the cost overrun because on a presentation basis, it looks like the department is within. However, if you look at the original budget you started from versus the final expenditures, that's when you know the actual cost overrun for the department because you're changing the starting point by amending the budget.

Council, y'all have any questions so far? So this right here is the exhibit from exhibit A back in March, right? 6.1, we voted on this. So we made these formal. So it's a legal document, right? So we put these monies in through the appropriations. uh... auditor worked on your verifying that these numbers are included like in the total and now you're adding the additional monies here uh... to these money so we're adding an additional one point eight three nine to the three point seven one five for the fire department yes sir and and what is the what what's the explanation for the the additional one point a little Because the 3.7, we had a bunch of mandatory callback time, I believe, and we had some other wild land things. But then there were some grant monies that were coming in that subsidized some of that. On this $1.8 million, what are we looking at?

Sure. Most of the departments were over budget, fire department included, due to overtime salary costs. So similar reasons.

So we spent 69 million in the police department. Yes, sir. Not 72.9.

If you exclude the non-cash items and capital outlay costs.

Okay. And then the numbers that were represented to the auditor, to CLA. When he took those numbers for the 72.9, he took those understanding that you would have non-cash items included in that amount, but he represented it in the actuals?

They should be there. They are correct to be there. But for the purpose of amending the budget, you don't need to amend the budget for items that are unbudgeted for in the first place. That's the rationale for excluding those items.

Okay. So if we go down to streets here, streets and traffic, 20 million was the original budget, 20.495. Actuals are 24,693, if I had my glasses on.

Yes, sir.

So you're over budget 4.8 or 4.6, whatever that number is. Actually, 4.3 when you get over there, less your non-cash items. Yes, sir. AND THOSE WERE UNBUDGETED STREET IMPROVEMENTS OR THOSE WERE BUDGETED THROUGHOUT THE YEAR?

SO, AGAIN, THE CAPITAL OUTLY ITEMS THAT WEREN'T BUDGETED, THAT AREN'T BUDGETED ITEMS, SO ONCE YOU HAVE ITEMS THAT AREN'T BUDGETED, THERE ISN'T A NEED TO AMEND THE BUDGET FOR SOMETHING THAT ISN'T PART OF THE BUDGET.

WHO APPROVED THOSE ITEMS? I mean, I understand with our police department, fire department, there's an approval. Like you run the department and you bring us the cost and our financial policy is updated and we'll get better notices. But on streets, these are projects that are awarded. So were these projects coming back to us and we were awarding them during the year? And Mr. Path, you may have to speak to that because I know that's not anything Lola was a part of.

I'd have to get information about that. I don't have it today.

So we don't know whether we approve the $4 million in additional projects. Because streets is projects, right? A large majority of that. I think, you know, Mr. Hooper, you can probably speak to this. $8 to $10 million is what we run that department on?

Yes, sir. I think so.

So the majority of these $4.3 million additionals in this line item, you know, budget amendment, these would be capital projects?

We would have to go back and look at that, too. We're in the same boat Mr. Path is in. We need to look and see what that is. If you look at the line item budgets, we didn't see where we were over in that.

OK. Ms. Lola, if I go down the page to transfers?

Yes, sir.

OK. So gentlemen up here, if you're following along, you've got A COUPLE THINGS HERE. YOU'VE GOT YOUR EXPECTED REVENUES THAT ARE ALL COMING IN. WE EXPECTED TO REVENUE $247 MILLION. WE DID GREAT. WE ACTUALLY REVENUED $266 MILLION FOR THE YEAR. NOW, YOU DIDN'T GET TO KEEP $6 MILLION OF THAT, AND HERE'S WHY. And Ms. Lola, you can probably correct me on this, but I understand that $6 million of that was intergovernmental services that we didn't pay ourselves within the timeframe we needed to. It was past 60 days by the year's end. And so that $6 million will actually go into FY25-26. Yes, sir. All right, gentlemen. So you got $6 million more to work with this next budget season. IF YOU RUN A VALID BUDGET IN CURRENT YEAR, YOU JUST PUSH 6 MILLION OF REVENUE INTO YOUR CURRENT YEAR. SO WE'RE DOING GOOD. SO WE ACTUALLY RAN 260 MILLION, NOT 266, BUT I DON'T WANT TO LOSE SIGHT OF THE FACT THAT WE JUST FOUND $6 MILLION, RIGHT, IN CURRENT YEAR. THOSE WERE ACTUALLY MONIES THAT SHOULD HAVE BEEN ON THIS, WE JUST DIDN'T BOOK THEM IN TIME.

Not in that way. They weren't received within the time period required to book them.

That's a good clarification. Those departments' services didn't pay the money out in time? Yes, sir. Okay. All right, that's an important point. If you go down to other financing sources, transfers from other funds, that means other departments are paying the general fund? Yes, sir. Okay. Expectation was $14.3 million, and the actuals were $6.898 million. Is that correct? Yes, sir. Why the shortage on that? How come we didn't transfer the money in like we budgeted?

I'll have to check into the details for that to see why there was a difference.

Okay. Then we approved, Council, you approved $37.2 million of outgoing to these other departments. You only spent... 25.9, a good majority of that, like 17.1 million CIP, is that correct, Ms. Lola? Those were CapEx projects, the 17.1. You gave me a breakdown on that 25 million.

Oh, yes.

Was that sewer and water?

For the $25 million?

Yeah, the majority of that was general construction. And then maybe, what else was it? No, it's not sewer and water, I apologize.

So there are a couple of categories. General construction, $12.5 million. We have another big item, 19, no, no, it's not. Yeah, that's the biggest item, the general construction operating transfers. Sewer and water, $2.9 million. Civic center, $2.5 million. And streets improvement, $2.5. It goes down the list.

So are these actual amounts? These are monies that got spent. These aren't GASB accounting practices where we just have a deduction because we can deduct it. These are actual transfers. Okay. So actual transfers, if we go over to the next page, it says municipal garage, 11.895 million. Oh, I'm sorry, that's 11,000.

Never mind.

11,000. So these are all actuals.

Yes, sir.

So 25.9 million. TOTAL GOING OUT IN ADDITION TO THE TOTAL EXPENDITURES OF 263 MILLION.

YES, SIR.

OKAY. SO, GENTLEMEN, IF YOU'RE FOLLOWING ALONG AND YOU GET DOWN TO YOUR FUND BALANCE, WE EXPECTED TO START THE YEAR WITH 48.4 MILLION. YOU STARTED THE YEAR WITH 69.6 MILLION. SO YOU PULLED, YOU KNOW, $21-plus million into the fund balance. Do we know where that came from, Ms. Lola? Is that because we didn't spend the money up there on what we thought we would put out?

You mean the change in fund balance?

Yes, ma'am.

So it's just a summary of our activities. OUR REVENUES AGAINST OUR EXPENDITURES WILL GIVE US THE CHANGE 2.8 MILLION.

Let me simplify that question, because I'll get us lost. We ran a budget. And back in September, we voted on a budget. We struggled, because we were really trying to pay our police and fire. And we had some built-in kind of programmatic raises. We were also trying to pay the other boots on the ground and the organization. And we ended up where we were even below our reserves in what we thought we would start the year in. And I want to say it was around $51 million when we recognize like a 52 million dollar minimum reserve did i walk into the year with 69 million or did i walk into the year with 47 million you got two numbers there on the fund balance end of the year so end is 47 and beginning is 69 million dollars And which one of those is what I started the year with? Just in having a clean set of books, right? I thought I was starting with 51 million. I may be starting with 47, but then I'm seeing this number of 69, which has some other costs in here that you're telling me aren't hard costs.

So you started the year with 69, and you had a net change of 21 million. So you ended the year with 47 million.

So then we start at FY25-26 with 47 million?

FY, this current year, yes, sir.

Okay, not the 51 that we budgeted.

Yes, yes. Okay. And typically that would be an estimate based on understanding of the activities for the year, which ends up always being different from what is estimated.

OK. And so on this, you're making recommendations that we amend the budget these amounts because they're not hard cash items. There's items that you're saying are depreciation and deductions that we can take. And so if we amend the budget per your recommendation, those are the totals that were needed to run those departments.

Yes, sir, as far as actual expenditures are concerned. Okay.

Well, I definitely think the remainder of that conversation may need to be with the audit company to verify and make sure that those add up. But then in amending the budget, I understand it's just a budget amendment, but those appropriations are important because of our amended financial policies. So I would hope we don't have to do this a third time. But you feel confident that those numbers, not these numbers, the first budget amendment, that was incorrect, but these numbers plus the first budget amendment combined together are the correct totals?

Yes, sir.

Okay. Thank you, Ms. Lola. Gentlemen, do you have any questions for her before we move on item 6.1? Okay. Would entertain a motion.

So moved.

I have a motion. Second. And a second. All in favor of approval of item 6.1, say aye. Aye. Anybody against? Motion passes with a 4-0 vote. All right. Let's take 10-minute recess, 4.50. Be back here at 5. We'll jump into item 6.2. Thank you all. Finish. No believers in the audience. Okay, we'll go ahead and call ourselves back into session. Thank you guys for continuing to hang out and wait with us. We're into item 6.2. Ms. Lola, if you want to come back up, you can read us into that one, and then we can hand it over to our CLA firm. All right, Mrs. Oh, item 6.2 with you.

SURE, GOOD EVENING. THIS IS THE ITEM TO CONSIDER ACCEPTING THE CITY OF AMARILLO ANNUAL COMPREHENSIVE FINANCIAL REPORT. AND THIS ITEM REVIEWS AND CONSIDERS ACCEPTANCE OF THE CITY OF AMARILLO'S ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2025, FILED IN ACCORDANCE WITH SECTION 103.003 of the Texas Local Government Code. So tonight we have our auditors from CLA. We have Mr. Scott Kuchnack and Mr. Chris Kessler who will be leading the audit presentation tonight.

Thank you, ma'am. Mr. Kuchnack, Mr. Kessler, if you guys want to come up together, that's great.

Thank you Mayor Stanley, council members, Lola for the introduction. I was here on June the 9th, the day after the annual conference financial report was actually issued to council. You all had one day basically to review it, which obviously wasn't enough time to go through a 322-page document, so if there are any questions since then to now, after I point out some key items here, please ask those questions. And some of the key points I brought up on the June 9th meeting is that CLA has rendered an unmodified opinion or a clean opinion that these financial statements are materially correct. And just wanted to reiterate that fact. And a few of the other key points I brought out in the short time from the previous meeting was on page 32 of your ACFR, and that is the general fund column. And that does show that for the year ended September 30th, the general fund had an ending fund balance of $47.8 million. The beginning of the year fund balance was $69.6 million, and there was a change in fund balance of a negative $21.8 million. 8,000,000 that was touched on by Mayor Stanley in the previous conversation. I just want to point out where that is in your financial statements and that actually is also on page 159 where the budget actual schedule is. And another key item I wanted to point out, which is discussed quite a bit, is the water and sewer fund. On page 36, that is basically your income statement for that fund, a shorter term of that. And in a previous conversation that was brought up, there's approximately a hundred million dollars in revenue and that figure actually was very accurate. The total operating revenues for the water and sewer fund for the year ended September 30th, 2025 was 100.8 million. And the water and sewer fund for the year actually had a change in net position or commonly referred to as net income of $5.4 million for the year. And that is on page 37. And another item that was discussed previously and today in previous agenda items was the budget to actual. And that is on page 159 of this document. And on page 159, the actual amounts, the amounts in that column actually tie up to page 32 that I pointed to before, dollar for dollar there. And the actual amounts in this column, those represent, it's $263 million. Those amounts are actual hard cost of expenditures for the general fund for the year ended September 30th, 2025. depreciation in the amortization expense of certain items, capital assets, your leases that are accounted for under GASB Statement 87, your software agreements under Statement 96, Those are not reflected in these numbers. That depreciation and the amortization expense on those type items are in the government-wide financial statements, which are on a full accrual basis of accounting, where the general fund is on the modified accrual basis of accounting. Those non-cash type items are not reflected in here. There was discussion previously on capital outlay and some movement of capital outlay budget expenditures or so forth from one department to the other. The total capital outlay expenditures for the year, I believe that is reflected on page 32. of this document. And that is just for the general fund. The total capital outlay was $7.8 million. And I did want to point out also that I think is significant for city council to here on page 159. If you go to the far right-hand column, that's the variance with final budget, positive and negative. And this is the excess deficiency of revenues over under expenditures, very far right-hand column there. That's prior to transfers. There was positive variance of 1.473 million. approximately $1.5 million. And then the transfer activity, that was also a positive variance of $3.8 million. So the positive variance between revenues over expenditures and less transfers occurring than were budgeted was a positive $5.2 million positive variance overall, not by individual departments, but just overall. And those were some of the key items I wanted to point out. In the act for one thing I did want to point out, and I believe council has been provided this information. It's just a summary of findings of the single audit portion of the entire engagement of this city of the Amarillo, which includes your federal and state grant programs. And there were actually nine findings related to the federal and state grant programs that are included on the summary. One of those is more significant than the other eight, and that is related to the airport grant. And that grant actually stipulates that the capital assets within airport need to be earmarked or asterisked or identified of the total assets, how much of those were expended or acquired with federal funds. And the records as they currently are could not distinguish which of those assets were acquired with federal funds. That is the crux of that comment there, and that comment will read to a material noncompliance, which will be a qualified opinion over that one major federal program that was tested. The other item that was of significance was a financial statement finding. There were two significant audit adjustments that were, and I refer to audit adjustments, not adjustments that management found prior or subsequent to closing the trial balance and then provided those to CLA is your auditor she had to the trial balance these were actual adjustments that we found is. Auditors mayor Stanley and touched on any part of one of those were receivables that are not collected within sixty days of the end of the fiscal year. The revenue is not recognized on those and is shown as unavailable revenue for whichever the type of service that may be. So in total, between the general fund and other governmental funds, that total was $9.1 million that will be recognized as revenue, assuming it's received, in fiscal 25-26. But that adjustment has been made and is reflected in your annual comprehensive financial report. in the other adjustment related to the recording of leases receivable in the general fund. And that adjustment actually has been reflected in your financials. Those leases received were recorded in your government wide financial statements they were just not recorded in the general fund so due to the dollar amount of those two adjustments they were material so they were uh... categorized as a material weakness but i did want to point out even though there's a financial statement finding in the material weakness it does not change at all the unmodified opinion or clean opinion that you've received on your set of financial statements because those corrections were reflected in this document those are some of the key highlights I want to point out, and I know the summary of findings is relatively new and the final report will be issued here shortly, but this is just kind of advance notice that these will be the findings that will be in the issued report. You know what's forthcoming and currently as we speak management is working on their responses to those findings as well as the corrective action plan for those 10 findings. Those are the key items I want to point out in this presentation. questions mayor stanley council members that you may have at this time please feel free to ask those questions council

Councilman Simpson.

Hey, good afternoon. Thank you. Thank you for being here. A couple of questions just so that I get clarity on this. So you're saying this is a, you called it an unmodified opinion. Yes. And which is kind of used the word clean audit. That's correct. Tell me again exactly what that means.

An unmodified opinion means we have not modified or qualified our opinion to point out significant departures potentially from generally accepted accounting principles or other items there are no modifications to this report it's unmodified basically unchanged that in our opinion these financial statements as issue presented are materially correct.

It's confirming that the accounting that we did is accurate as you checked it as an independent third party?

That is correct. Again, the material weakness that was identified as a finding, Those significant audit adjustments are reflected in this document, so the corrections were made to city records to reflect those two material items.

And then what are the other, outside of, so I guess an unmodified opinion is the highest standard that we can receive?

That's correct. That's the best opinion you can receive.

What falls below that? In other words, what would have been our other options and what do those other terms mean?

I'd love to jump in. And just a way of introduction, Chris Kessler, I'm the managing principal of our state government practice for CLA. Happy to be here. Just looking at the different levels of opinion, beyond unmodified, you would have a qualified opinion, which means there is something wrong IN THE FINANCIAL STATEMENTS THAT WE ALL AGREE THERE'S SOMETHING WRONG AND IT'S NOT CORRECTED. YOU COULD HAVE A DISCLAIMER OF OPINION WHERE WE ARE UNABLE TO EVEN DETERMINE WHAT IS RIGHT OR WRONG. AND SO WE WOULD BE DISCLAIMING AN OPINION AND THEN THERE IS AN ADVERSE OPINION WHICH JUST SAYS WE KNOW THIS IS WRONG SO THEREFORE WE'RE NOT OPINING. SO THOSE THREE ARE ALL VERY BAD LEVELS OF AUDIT OPINION. SO UNMODIFIED REALLY IS THE HIGHEST CLEANEST LEVEL YOU CAN HAVE AND REPRESENTS ACCURATE FINANCIAL REPORTING.

OKAY. AND THEN AND AGAIN I THINK I SAW THIS BUT Did we identify material weaknesses, some deficiencies or compliance findings? And if so, is that what we're getting staff to respond to at this point?

Yes, that is what those are. And so from an audit perspective, what we always want to look for is the corrective action plan that management is going to put together, not just the response, but what is going to be done going forward to resolve them and to address them. And that is what is being worked on right now to formalize that. There is a required submission document that has to come with that to go with the report from management itself. That's what's being compiled to really lay out for the granting agencies as well as for you all as counsel of what that corrective action plan and what that timeline looks like.

And so, but those types of things just mean that as you looked at it, not that there's any, again, you've audited the numbers, you say the numbers are correct, but those things would address maybe a lack of check and balances or a gap in the approval process where things could happen.

Correct. They cover two things. It's internal controls, which would be those reviews and approvals like you laid out. But as well within the single audit on the compliance, it could be that there was a particular grant rule that was not followed. And so therefore, that becomes a compliance issue. It doesn't mean anything was misspent. We don't have any question costs or anything along those lines. It's usually with these grants, there's so much red tape and so many rules and checklists that come with it, those processes have to be followed to the T, and that's typically what results in a compliance finding.

And I think you kind of went over these, but I just had to kind of get an understanding of it at a high level. What were the biggest factors that kind of either increased or decreased the city's financial position during 2025, FY25?

Well, these findings, if you will, those did not have any impact on other than the reversing the revenue recognition for items not collected within 60 days. But again, those were properly accounted for in your ACVIR. As far as highlights, if you will, if you're looking for... I tried to point out that The change in the fund balance of the general fund as well as the water and sewer fund, I think those are the significant highlights that would show how your fund balance increased or decreased within those two significant items there.

And then with what you've seen this year, as we're looking to, this is a more forward looking question, but are there any kind of, I don't want to use the risk, but obligations or things that the council should be paying attention to, whether it's debt service growth, personnel cost, other types of infrastructure investment that come out of this that you see in the audit. Are there things that, as a council, we should be paying attention to that these findings kind of say is something that should be on our radar?

One thing that would come to my mind, and Chris, I know you had something in mind as well, but throughout the year, maybe a better communication of where actual expenditures are now maybe if that's on a monthly basis a quarterly basis to identify that okay a budget amendment may need to be forthcoming as opposed to waiting several months after the end of the fiscal year to get your final actual numbers and then make budget amendments. Just something that comes to mind that may be a benefit to council members to amend the budget maybe on a more timely basis with more, I guess, reporting from the finance department to council.

And what I'll add to that, and maybe even particularly around the findings specifically, what I would suggest you all do from a council level is having some sort of regular check-in period with management on where the corrective action plan is. Because that's the key on it. Any finding that comes through from a grant standpoint or from a compliance standpoint, As long as there's no misspent dollars or things along those lines, the regulatory agencies are just going to wait and see if that resolves itself in the next year. They're going to want to make sure that's the case. And so that's really where you all need to be looking at that and saying, how is this being resolved? Are we on track for our corrective action? What is our process and what do we need to do differently to make sure that that gets done? If we say it's going to be done by September 30th, 2026, what is our plan of action and what is our check-in period to make sure that is in fact occurring? So that is something that we typically recommend our clients do when they have findings like that, so that there's an active tracking and resolution of those corrective actions. From an overall standpoint, with what we are seeing from, I'll just say from a budgetary level, and really what we're seeing from a trend basis, I mean, personnel costs are going up, healthcare costs are going up, general costs are going up. So when you look at your renewal and replacement to your infrastructure that you all are putting through in your capital planning, just making sure that you're considering those scenarios for what you're doing. Because everywhere we're going, regardless of where the fiscal year end is and regardless of where the geography is, we are seeing that being a real impact on our clients. And especially, I think you mentioned it, if property taxes is something that is going to go away and that becomes a revenue source impact, just thinking of those things as you look at some of your infrastructure and what that looks like is just critical right now.

And Mr. Simpson, one thing to... further expand on what Chris was talking about, the findings and corrective action plans as part of the single audit. we are required to report on the status of prior year findings. So that is going to be in your next year single audit report, the status of the findings that will be part of the September 30, 2025 audit. So that is required to report on where those stand.

So what I hear you saying is, as a council, maybe setting up something where we're monitoring more timely our actual real-time spending and how we're doing to the budget so that we can react accordingly to that. And then another thing that should be on our, I guess, our agenda is to follow up once we, because I guess staff will reply back to some of your findings. And you may say, well, wait a minute, that's new information. That's really not a finding anymore. Or you may say, no, then you're gonna come back to us with recommendations on the changes that we should implement, and that council should be setting up a regular time to follow up on those so that we don't have those same problems a year from now.

Yeah, agreed. Okay, good.

And then one other thing, I mean, we're gonna be talking about this later, but when we look at our infrastructure needs, particularly from a wastewater treatment plant, which is gonna be quite expensive, water resources, which we're gonna be talking about building a new pipeline, to provide water to the area. How is the city, when we look at the ability to issue debt to do these types of projects, which we're going to have to do, what's kind of our financial wherewithal on the ability to be able to do that and handle these needs going forward?

Well, just looking at the water and sewer fund, and this, again, begins on page 34, goes through page 37, your net position at the end of the year just in the water and sewer fund, which is kind of the equivalent of fund balance, is $606 million. I know a large piece of that is tied up in net investment capital assets, but the unrestricted amount of that $606 million I just pointed out actually is on page 35. Unrestricted in that position is $35 million. So even though that's a large number, technically here your net position is $35 million unrestricted that you could spend, which kind of leads to the question, well, with that amount of net position available, will there need to be additional debt to fund these projects? Okay. Thank you.

All right. I was really excited to read this book. And when I opened up looking at the table of contents, one of the things that I was looking for was what your findings were, just a document that said, here are our findings, something plain and simple that the average person would understand without having to read in-depth the book. And I don't see that.

And that actually is the separately issued document that is forthcoming, the single audit reports. That's where all 10 of these findings will be. in addition to the management's responses and corrective action plan. Some governments include within the annual comprehensive financial report at the very back end, the single audit section. A lot don't. this year which is how it's been done previously as well. You had one document for the annual comprehensive financial report and then a separately issued document related to the single audit. So that document is coming. It's just not included in this. Yes.

All right. And then I'm going to just follow up on something you've said about the 10 material exceptions. How come the CIP findings aren't part of those 10?

Well, CIP would... CLA did in auditing CIP, we got a roll forward of the construction and progress balances. We're talking about the assets that have not been placed into service yet as of the beginning of the year into the prior fiscal year. And then we test any additions to, on a scope basis, new additions to projects. And then we also test release from CIP to their respective asset categories to be placed in service and then depreciation commences on those assets. As far as looking at capital projects, what was appropriated for a project versus what was spent? That is not part of how we audit construction in progress, so. I know there had been mentioned of. Separate audits or forensic audits related to CIP, but I just wanted to give counseling an overview. how we go about on a team to see i p account asset balances that were born in here that does not go back in time to look at what was appropriated for each of the projects forces how much actually was spin on those projects to work okay we didn't spend this much money can we appropriate that to a new project that is not within the scope of THIS FINANCIAL STATEMENT ON IT.

THANK YOU. MR. PRESCOTT, YOU GOT ANYTHING? OKAY. Thank you guys for being here. Really appreciate you coming back. Welcome to Amarillo for the first time. Scott and I have been on the phone multiple times. I'm going to try to keep this as simplified as possible so I don't lose anybody. Let's go back to the CIP and just restate what you told me to make sure everybody hears it. As an example, if council appropriates a $10 million project and we go spend $5 million on the project for whatever reason, sometimes staff did an excellent job, you know, Mr. Danforth has showed his value time after time bringing things in under budget. Maybe we couldn't get it right of way, maybe the project stalled, whatever happened. But then when we give you that $5 million, you accept that amount and you capitalize that. you don't audit and look at was it budgeted or appropriated at 10 and where's the remaining 5 million that's there?

That's correct. The $5 million that is recorded in here, that's what we audit because that is an actual money spent that are capitalized and once the project is complete then they are moved to their respective line item if it's uh streets uh water and sewer or whatever the case may be and depreciation commences at that point but if five million that was appropriated wasn't spent, that's not part of the CIP balance. This is just asset only that's reflected in your act.

So the $43 million that's now being recognized in an ongoing CIP study and review does account for some of that. Like, these are where those monies are building up over time. And so you're not giving us any assurance that any of those budgeted or allocated monies, appropriated monies, have been looked at. You don't look at that in this scope of work. Now, that could be an additional scope of work, like what you were not recommending but referencing. So on the CIP, I think it is important to acknowledge, like we as elected representatives currently in today's climate, we operate with basically zero public trust. And that's just the way it is. I think we just have to acknowledge that. It doesn't mean that we don't have to strive to gain and rebuild that public trust. And so some of what I'm hearing calls for from some individuals is, that spoke earlier is you know the forensic audit would help to rebuild that trust and so like it's it's good to look at that as a potential especially when it brings about a furtherance of what we've already found that's proven to be a good problem like we found forty three million dollars sitting there that this council needs to appropriate so far according to the the the look back and there are other open projects that we need to go look at and pull that forward and then you said yourself you don't have any findings or anything nothing left the the organization uh... according to what you're looking at it we don't have a reason to believe that anything was was fraudulent right this time but we do have every reason to believe that we probably just can't trust that the monies are what the monies are just because that's the number we had i think ultimately you know i'm still confused on whether it's 72.9 million or 69 million for our costs to run the police department right and so verification or verification is going to be very important so your single audit findings 10 findings And you'll issue those at a later date, correct? And we're supposed to accept that as far as an administrative duty, right? Like you'll bring that back and we'll we'll vote to accept that as well.

Yes, that is a separately issued document. That would be. Issued in presented. To you all. And. The target date on that action is actually the end of this month. So that is in final form is forthcoming shortly. But if there's an action item for acceptance of the act for today, that would not include the single audit because that has not been issued yet i just brought up the findings so council has advanced notice that okay there are going to be some findings so when this final document is issued you won't say well we didn't know anything about this you at least have advanced notice you know management's working on the responses and corrective action plan, which will be part of that final issue document.

And Scott, I think the single, that's our grant funds, correct?

That is correct. Federal and state.

CDBG, home program, airport, that's our grant programs.

And the document that's forthcoming near the end of the month, that will list out all of your federal grants as well as state grants to get a cumulative expenditures of federal and state awards that's important it's expenditures not receipts of expenditures of those federal and state grant programs um okay if i could i'd like to go talk about sewer and water so will you go with me to page 221

And let me see if I have that right. So our change in our net position right there on page 221. So total revenues of the sewer and water enterprise, and I want to carve that out because that's an enterprise. So everything that we're talking about on government accounting practices and some of the things that go with general fund, this is different. This is actually a business. And so in the way we run this business, we revenued $100.8 million. Correct. And then our total expenditures, roughly 71 million is what I'm coming up with. And where I'm getting to that is, if you're looking on that page, total operating expenditures were 89.4. Correct. But then there's a depreciation of 17.7 million. Which is a non-cash item. non-cash item. We're kind of used to hearing that term here today. So really that's just a deduction off of, you know, a lot like if you're running a business and you were able to take a deduction for your taxes, it wouldn't affect the balance in the checkbook. uh... cuz you had a tax deduction so this is a depreciation on assets but then we we net revenue net profited in that sewer and water uh... department for the year twenty four twenty five roughly twenty nine million dollars if you add back in the depreciation expense but mayor stanley i did want to

add something to it didn't affect your checkbook. It did affect your checkbook when you bought them. That's when the money was expended. It wasn't shown as an expense. It was capitalized. So that initial cost, it is being expensed over the life of the asset. So in the current year, this $17.7 million did not affect your checkbook. But back when those assets were purchased, it did.

And those would have been purchased out of the CIP program that we had appropriated remaining monies that were previously earned in that enterprise, right? cip for our purposes assets construction in progress i think the city refers to that as your capital improvement program correct yeah so for for our capital program and then we we had some interest here uh... can you tell me a little bit about the interest it you and i know we had an arbitrage payment and so when you say well you're Your total net position is $606 million. That factors in a lot of different things. But there's several hundred million dollars that we've borrowed and cash that we have unrestricted that's all sitting in our investment portfolio right now earning interest.

Yes.

Okay. And so tell me, what's the net gain on the interest after the penalty?

Well, the interest earnings for, as you refer to the portfolio, for the year was $5.3 million. Interest in fiscal charges, that included not only interest expense on your debt, but included in there also is an arbitrage expense to where the investment earnings you're recording, if you're earning more on those and some of those that portfolio represented unspent bond proceeds, and you're earning more money by your own investments than the interest rate you're paying out related to the debt, you're not allowed to keep. those excess earnings and those actually are required to be paid back to the federal government. And shortly after the end of the year, I believe, within water and sewer, it was April or May, of the amount that was recognized, 1.3 or 4 million has already been paid back. And some of those actually are longer term in nature. They're not due immediately like at least the one of them was. But under generally accepted accounting principles, when you become aware of and arbitrage liability, you have to record the full amount of the liability recognize the expense related to the excess earnings.

So even with the arbitrage deduction, and the reason I'm driving on this is because we were understanding when we approved the budget that we had a sewer and water shortfall. And so we started the budget year with $7 million in there when we thought we were going to have like 22 million. And so we had a shortfall. No, I'm sorry. We thought we had 36 million is what should have been our net starting position. We ended up recognizing seven. So we had like this $29 million shortfall, and it tied it back to some water rights that we've I think eliminated at this point as a potential, but just now that we have the act for now that we've got the audited numbers, what did we finish the year at? If you take the depreciation out, like even though we paid for the other expenditures, how much money do we have in that account at the end of the year?

Well, if you looked at, uh, If you're talking about money being cash or investments, that actually... What page are you taking me to there, Scott? It is the previous page from where you were, page 220. And that will show you the actual cash and cash equivalent balances and investment balances for water and sewer fund as a whole. And then again, one thing that I had mentioned previously is the unrestricted net position is $35 million. That actually does not directly correlate to cash. or cash in investments.

So this number of 107.1 million has some prepaid expenses in there that could be throwing that off, but then it contemplates the additional monies coming from other funds and then the interest that you've gotten, all of that. Is that a net position at the end of the year for this enterprise, 107, if you factor those monies in?

$107.1 million.

So I think what you're getting at is the assets that are on the statement of net position, is that representative of really what's their liquid? What I would say... Yes, those are your assets, but a lot of them are already either committed or offset by liabilities that you also have in the book. So your real net position is really at the bottom there, that unrestricted 35 million. That's what I would say to really look at your financial health and your financial I WANT TO SAY LIQUIDITY BECAUSE THAT'S A LITTLE COMPLICATED, BUT THAT IS YOUR HEALTH IS THAT $35 MILLION, AND THAT'S WHAT YOU WANT TO SEE GOING UP YEAR TO YEAR BECAUSE THAT'S NOT RESTRICTED FOR DEBT OR TIED UP IN YOUR CAPITAL ASSETS ALREADY.

THAT'S GREAT, CHRIS. SO EITHER WAY YOU CUT IT, EVEN IF YOU HAVE A DEPRECIATION ITEM OR YOU HAD you know, some other ways to look at it, because you could look at it a couple different ways. We did not have a net shortfall out of the enterprise. No monies were deducted or should have been deducted out of that. Like, this is a healthy enterprise. It ran a net profit, and even if we just agree $35 million is the cash on hand there in that enterprise at the end of FY24-25. Agreed. Okay.

Great.

That's great. So... Council, you guys have anything? I'm going to jump into another one if you've got anything on sewer and water. All good?

Mayor, just real quick, just a separate topic real quick just for people's awareness. We're okay here, but there's a tornado warning about a mile west of us. So we're okay. It's heading south. And in case anyone's looking at that, we do appear to be okay right here, but we are monitoring that actively. Okay.

Well, we appreciate that. If you don't mind interrupt, if you get any other updates that we need to make anybody aware of, you are in one of the safest buildings downtown. It's not an old bomb shelter, but it was built like one. Okay, so on page 159, we have all of those actuals that we ran through. Yes. I know your sewer and water you helped me with. The CIP components or commitments you helped me with. On page 136, there's a remediation for the hillside suit. So there was an old Mission Clay failure over there. And so on page 136, if I could get an understanding, what I'm looking for, Mr. Kirchner, is recognized revenues. Do we have any recognized revenues in this fiscal year that came in from the proceeds from the lawsuit? I would have to scan through this note We had several deductions throughout the years. And then I know we more or less cleaned up somebody else's mess. And then I believe we were given a 6 million plus settlement and an 11 million plus settlement. My question is just that 17 million, does it show up here on any of my revenues that you've seen in FY24-25? Because if not, I'm curious if it comes in in this current year as an income or a revenue, and I haven't seen it in the previous year's audit either.

Well, just referring to the page 136, Mayor Stanley, very first paragraph there, it said, and this is part of the way down the third row in there, during 2022, the city recovered $11,725,000 in monetary damages. During 2023, the city recovered $5 million. So I think that's approximately the $17 million you were referring to, which according to this note, were received in 2022 and 2023 and not in the fiscal year that CLA just audited.

So in those monies that are received, how would they have been received? Where would they have come into? Because I just couldn't find them looking back. That's why I thought maybe we received them late. And you know how you had to push the six-plus million forward into the future year? I was just trying to confirm FY24-25. Where would those monies come into the organization? I mean, it's a sewer and water issue. The expenditures went out of that department. Should they have come back into that department?

Well, these according to these dates in here 2022 2023, those would have been recoveries or. A source of revenue, if you will, that would have been part of your change in fund balance in each of those fiscal years, and those would have been. Cash received added to your balances and.

spent however city council deemed appropriate to spend the receipt of those funds okay well then we'll we'll dig back through 22 and 23 again we've got miss lola kind of up and running maybe she can help me find those i don't see them on any recognized revenues that were that were given in the previous year's act for but that doesn't mean that i'm looking in the right spot so but as far as this act for you don't have any of those monies recognized here

So they would have had for those two items, and especially considering the dates that are disclosed here, they would not have came in as a source of funds in fiscal year ended September 30th, 2025.

Okay, I severely and sincerely appreciate all of your time and your work. And so thank you for all the time that you've invested in it. I definitely can see what is in front of us. and not to any one person's fault, but then government accounting is complex. These are hard to follow, not to mention they're two years ago now, and we're trying to talk about next year, so there's a great deal of confusion. In the effort of rebuilding trust, I would be interested in seeing if council has an appetite for a forensic audit that would scope the CIP projects, the sewer and water, and the ARPA monies. And I think that would be a really good place to start, and I think that we, that's a broad scope. I don't know what I'm asking for, if CLA would be able to weigh in on that. Not today, but if I had any council support for that to push that forward with the existing findings that you've gone through, all of the cleanup, the CIP projects that Mr. Freeman has recognized, and then we're running an incredibly large organization. Like, we're running a $570 million organization. And I am not an auditor, nor am I an accountant, nor did I attend college for more than like six minutes. So like, I'm not the qualified guy for you to take my word for it. I UNDERSTAND WELL ENOUGH THAT WE NEEDED TO HAVE A BUDGET AMENDMENT TO FALL IN LINE WITH OUR FINANCIAL POLICY. AND THEN AN ENTERPRISE HERE IS VERY HEALTHY AND WE DIDN'T HAVE A SHORTFALL IN THE SEWER AND WATER DEPARTMENT. SO IN MOVING ALL THIS FORWARD, WE'VE GOT TO COME TOGETHER, I THINK, AND THE BEST WAY TO DO THAT IS TURN ALL THE LIGHTS ON AND GET A QUALIFIED EXPERT. a fan of your work and just appreciate what you guys have done so far. Gentlemen, I see some mics lit up. I'll start with Mr. Prescott.

I would just ask that we get a price point on what an audit would look like. I don't like just opening up the checkbook and not having a point. We definitely would want to know what the audit would entail because that is a very specific task and it's going to take a lot of time. So I would want to know what the price point was going to be on that service.

What I will tell you is that when you approach any sort of forensic audit engagement, you want to be very diligent up front on what that scope looks like. And obviously that feeds the cost into it, but that'll be the critical part for everybody to work through here at the city is to say, what are the areas, what are the departments, what are the years, what are the transactions? Do you want a sample? Do you want the whole thing? Those are all the components that would go into that. Thank you.

So I guess I would say we would need to determine an appetite for that and the health of moving forward with a project like that. And then I would gladly take council's independent input of what that scope could cover, also weigh that with staff of what staff feels like is time well spent, and then push that over to you guys for an expert opinion of what does that look like in monetary costs and then timeframe. And then maybe we do have to narrow the scope if it's too broad. But for the most part, I think that's the direction that I've heard may be the best way forward from here. Councilman Simpson. Yeah.

I mean, I think it's something we've been down the forensic audit. I think we went down that road once before with the bond money on the streets. And the good news was that came back and they said there's no, in fact, we can't even spend the money that you had allocated for it. So I do think we need to be very specific about that. But I do have one point back to this audit that I just want to bring up before we go. It may be, you know, obviously there were new deadlines put in place this year that the state has asked us to meet on completing this. It looks like maybe hopefully we follow the spirit of the law, but maybe not the letter of the law because we did not get the final audit in time for this. I guess my question is, and this would be, and we don't need to spend but just a minute or two, what have we learned this year so that we don't find ourselves in this position next year? I'll take that, Scott.

Yeah, we learned a lot throughout the audit process. Coming to do an audit in the first year always takes a lot of time. Going through an ERP transition takes a lot of time, gives a lot of surprises. But the good news is that we've built our roadmap. We've worked our way through that. where those challenges are and we've worked through them. So all of that is really behind us. And what I would say, what I can commit that CLI will do differently to make sure that we smooth any remaining bumps out along the way on the timeline is just changing communication, more communication along the way so that everybody's on board. The audit's a partnership. It's us and the city working together on this to reach that conclusion and everybody deserves to be in the loop on what that looks like and why that's taking any additional time that it is. So not to say that we don't want any of those things to happen again, but should that happen, we want to make sure that we address them early in the process so that everybody can remediate them as they are occurring as opposed to, well, we're at the deadline and now we're just trying to get this thing out the door. That's the key is just early communication.

Okay. Well, good. Because I just know kind of what happened, because I've heard a variety of things that we got started late and those types of things. But then we did come to a point where, as I understand it, we were told you guys would be ready with the audit. And then we weren't. And then we came up with another date that you said that you'd be ready with the audit. And so that was what I just wanted to make sure that they were able to get that worked out because I felt like, you know, I wanted to make sure that our staff was doing everything on our end that we should. And I thought we were. But that was, I think, what was the confusing part is we thought we were going to get completed and it kept getting moved down the road.

And that's where I'll say the communication could have been better on our side to better understand that and communicate that. But to be honest, in year one, we're also overenthusiastic on wanting to overperform and wanting to deliver. And we're going to say, hey, we're going to have it. But then when we get into it and realize, oh, there's more we've got to dig through. And that's where going forward we will be better on that communication is when we get to that point being more realistic.

Yeah, and I liked optimism, but when the Attorney General is saying, you better get this done or we're going to punish you, that's a little bit different than just the normal years that we've had in the past. Agreed. I appreciate it. Thank you.

Councilman Reed, you had something?

We'll just go back to the forensic audit. I've thought for the last probably three, four months that that would be a great idea. The main thing pushing that is we have a new CFO. I know if I was coming into an organization that has over $500 million yearly budget, I'd want to know that all my books are clean and that I was moving forward with a good operation. And I don't think a forensic audit is saying that anybody's done anything wrong or that we're looking for anything illegal. It's just making sure that we are transparent and that everything is where it needs to be. But I do agree with you on the scope because you get scope creep in anything. What you thought started here could end up here, and you still don't prove anything. And so, you know, I think that that's an important thing. I appreciate that thought into it.

ANYTHING FURTHER, COUNCIL? OKAY. AND I KNOW JUST BECAUSE Y'ALL ARE STANDING HERE, JUST HUMAN NATURE IS TO KIND OF BE PRESUMPTUOUS AND ASK HOW MUCH SHOULD THAT COST OR WHATEVER. SO I DON'T WANT TO PRESUME THAT, LIKE, IT WOULD BE ONE FIRM OVER ANOTHER. I MEAN, WE PUT IT UP LIKE ANY OTHER OPPORTUNITY. SO REALLY APPRECIATE THE DISCUSSION. Gentlemen, you've got item 6.2 in front of you for consideration. You don't have anything further? No, I do not. Okay. Appreciate you guys.

I move to accept the City of Amarillo Annual Comprehensive Financial Report as presented.

Second.

I have a motion and a second on item 6.2. All in favor, please say aye.

Aye.

Any opposed, please say nay. Nay. VOTE IS A TIE TWO TO TWO HERE. CAN WE HAVE A DISCUSSION ON THAT?

SURE. TAKE OFF WITH THAT, MR. REED. MY ISSUE WITH THIS, AND MAYBE I'M A LITTLE CONFUSED, WE'RE ACCEPTING A REPORT THAT DOESN'T HAVE FINDINGS IN IT. And that's where I'm having the problem with it, because I don't know, I trust what's in here with what I can understand, that everything's in order and that we're healthy. But I don't have that that says it in English, plain English. We have a healthy organization. Here are the findings that we had. Whether there were anything negative, I don't know that. And so that's kind of where I am right now. Now, on the legal end, I don't know whether or not by not accepting it are we causing ourselves problems.

I think the ministerial question would be something that would be good to know from the legal perspective. Is this just a ministerial duty, but it's being put here as a vote, right? And so what happens in this situation, Mr. McWilliams?

Typically, the acceptance of an ACFER from an external audit is ministerial, okay? Because it's an external audit. It just is what it is. And you're just accepting it for what it is. Good, bad, ugly, doesn't make any difference. It's just what it is. It doesn't mean that you can't ask questions about it. It doesn't mean that you can't ask for clarification about it later on. That's all you're doing. The statute was meant to make sure that cities got an annual audit. The external audit has performed that. He's given you this unmodified opinion. It's there for your acceptance tonight. That's all it is.

So that's typically the way it is around the state. Let me ask one other question and then go to Councilman Prescott. Ministerially, per the charter, we had a conversation back in March, right, when we asked you to provide a draft. I believe our duty was limited and all the way up to the point where all we needed to do was file it with the city secretary, which we did. Now, it wasn't the final. Now we have a final that has another single audit coming behind it. We don't have that yet. I question the role of acting as like the presiding officer voting on an item that's already placed on the city secretary's desk per our charter. So I think we wrote a letter to the AG's office stating that, that like we've done what we needed to do by the time we had it and we had some extracurricular events. So tell me specifically in your interpretation of the law, what more are we required to do other than put it in the city secretary's hands?

Well, the state law doesn't speak to any kind of council action at all. It's completely silent. It just requires that the city secretary be filed in the city secretary's office by a certain date, that date being 180 days after the beginning of the next fiscal year. However, our ordinance contemplates that the city council will take it up and approve it. So it's our ordinance that you're effectuating tonight, if that makes sense.

It does. Councilman Prescott.

I just want to clarify one more time. We heard that it was an unmodified opinion, correct? Correct. And an unmodified opinion from auditors states clearly that everything is acceptable, correct? Correct. And there are no findings of... Please go ahead.

No. What an unmodified opinion states is that... In our opinion, these financial statements as presented are materially correct. It does not mention any findings. Findings would be forthcoming in the single audit reports. Our unmodified opinion is stating that, in our opinion, these financial statements are materially correct.

So how can you change the language of that? I mean, that's about as clear as it comes, right?

Yes. The unmodified opinion will not be changed at all. We've already issued that. You will have separate compliance reports.

But that's not going to change the unmodified opinion. That is correct. Okay. So from an audit standpoint, we have a clean bill of health with an unmodified opinion. Correct. Okay. I don't understand. I mean, if we're going to get some additional information, I don't see any additional. I mean, it would be a modified or there would be notes clearly identifying if there are activities that we're not going to allow this audit to continue, right? This audit to be favorable.

The single audit reports will not have any bearing on the opinion CLA is already rendered on these financial statements.

Does that make sense?

Yes, sir.

Tim, does that make sense? I mean, this is as good as it gets. Right.

There's two separate things happening here. There's a single audit, and then there's financials for the city. You have the financials in front of you today. The single audit's a separate thing. So it's for our grants. It's all part of the audit process, but it's not the financials. And so you're looking at the financials. You'll get the single audit when that's ready to go. So that's still coming.

Well, I want to go back to Mr. McWilliams. So the ordinance finds that the council shall accept the audit when completed. So we don't put it up for a vote if we follow the ordinance. The ordinance already told us our vote is yes.

The charter and the ordinance aren't particularly the same, okay? Your charter, which is your constitution, says you're going to have an annual audit. and it's going to be brought to you and it's going to be filed. The ordinance says that you will approve it.

Well, how do we have an ordinance in place that tells me what my vote shall be? And then why ask for the vote?

Like, why not just allow it to pass forward? It doesn't. It doesn't say that you have to vote for it. It just says you have to approve it. So if you don't want to approve it, you don't have to.

The thought here is this is a third party independent auditor who has audited. And so obviously none of us here are auditors or CPAs. And so they've done their work. We trust that they've done the right job. And so you are approving acceptance of receipt of the audit. I received it. I don't quite understand why the original ordinance was written the way it was. Because we don't really have the ability to say, auditor, you're wrong. necessarily. Right.

But I guess in as much as like we're not accountants and it's their work, it's a standalone piece. So I'm not rejecting their work. I think they've done a great job and a fine job, and they've performed, and we have it. It's filed as a draft with the city secretary. And so I'm being asked to approve, in the eyes of the public, the audit. What I'm stating is that as much as I shouldn't vote against it because I don't understand it and it's not my work, I shouldn't vote for it because I don't understand it and it's not my work. It's not an endorsement of the work. I think they've done a fine job. MY QUESTION IS THE REQUIREMENT PER THE CHARTER, LIKE WE FULFILLED OUR CHARTER REQUIREMENT. WE FILED THE DRAFT WITH THE CITY SECRETARY. NOW WE'VE RECEIVED THE AUDIT. I don't know what action we're required to take, and that's why I voted against it.

We need to file the final audit because the draft audit is not enough for our external entities when it comes to the clearinghouses, comes to TWDB, comes to those ones.

I move that we file the audit presented here today in the city secretary's office. If we want to... What do we have to do first if that would be the way? Because it's dead. Well, no, I'm sorry. It's two to two. So what is still on the table right now with this?

THAT THE VOTE FAILED BECAUSE IT WAS TWO TO TWO. IT MUST BE INFORMATIVE. YOU NEED THREE VOTES TONIGHT.

YOU TAKE NO ACTION ON IT THEN FURTHER TONIGHT. WE COULDN'T FILE IT.

YOU'RE STILL TALKING ABOUT IT. SO YOU'VE HAD MORE DISCUSSION. PERHAPS ONE OF YOU CHANGED YOUR MIND. NOW YOU'VE HAD FURTHER DISCUSSION. SO YOU GUYS CAN DO A DIFFERENT MOTION OR SOMETHING.

I APPRECIATE THE COACHING. I MOVE THAT WE FILE THE AUDIT FROM CLA IN ITS FINAL DRAFT WITH THE CITY SECRETARY'S OFFICE.

And I'll second that.

I have a motion and a second. Any further discussion on this one? All in favor, say aye. Aye. Any opposed? Motion passes with a 4-0 vote. Thank you, gentlemen. Thank you, guys. Really appreciate you all. Thank you, Ms. Lola. Okay, we're going to keep going. Item 6.3, public hearing, only one of the day. Mr. Brady Kendrick, our favorite presenter.

You're up. Good evening, Mayor, Council. This is a public hearing in consideration of Ordinance 8250. This is an alley vacation located in Block 143 of Plemons Edition. This is in Potter County, Texas, here in downtown, in the vicinity of Southeast 10th Avenue and South Buchanan Street. Applicant is Geospatial Data, Inc. for Rillo Investments, LLC. And this is the site that is proposed to be developed with a potential hotel in the near future. So they are needing the vacant alley that create a singular lot ultimately for that site. It was reviewed by the city departments and local utility companies and there are the utilities located in that alley. However, the developer was agreeable to providing an easement to the city at no cost so that those utilities can remain in place. With that, no fair market value payment is required and no objections were expressed or communicated on the request. We did send public notice as required and only have received a general inquiry as of the meeting today. Planning and Zoning Commission recommended approval of this with a 5-0 vote.

Mr. Kendrick, thank you. Any questions for Brady? At this time, I'll open a public hearing on item 6.3. Do I have anyone here who would like to speak for or against this item? Recognizing no one, I'll close the public hearing and request a motion.

I move to adopt ordinance number 8250 as presented.

Second.

Motion and a second. All in favor, please say aye. Aye. Any opposed? Motion passes with a 4-0 vote. Thank you, Mr. Kendrick. Mr. Balls in item 6.4, Water Development Board. Good evening, Mayor and Council.

ALL RIGHT. ITEM 6.4 IS CONSIDERATION OF RESOLUTION 06-23-26-1. THIS ITEM CONSIDERS RESOLUTION SUPPORTING AN APPLICATION TO THE TEXAS WATER DEVELOPMENT BOARD'S WATER SUPPLY AND INFRASTRUCTURE GRANT FOR A WATER INFRASTRUCTURE PROJECT LOCATED IN EAST AMARILLO. THE PROJECT WE'RE APPLYING THIS RESOLUTION IS ACTUALLY MANDATORY FOR US TO BE ABLE TO APPLY FOR THIS GRANT. THE PROJECT WE'RE APPLYING FOR IS A WATER DISTRIBUTION SYSTEM. THIS INCLUDES NEW WATER MAINS AND LOOPED INFRASTRUCTURE. THIS INCLUDES 8-INCH, 12-INCH AND 20-INCH MAINS, MOSTLY 20-INCH MAINS. THIS WILL ENHANCE SYSTEM RELIABILITY AND PROVIDE INFRASTRUCTURE NECESSARY FOR FUTURE GROWTH OF THE CITY. THE RESOLUTION IS WRITTEN AS A NOT TO EXCEED AMOUNT OF 34 MILLION. THE CURRENT ESTIMATE ON THE PROJECT IS 14.7 MILLION. CIP PROJECT 521795 BUDGETED IN MARCH OF 22. THIS IS FOR THE ENGINEERING ASPECTS OF THE PROJECT. THAT WAS IN THE AMOUNT OF 1.2 MILLION. THAT IS THE NEXT PIECE THERE IS KIND OF THE REASON FOR THIS. SO SYSTEMS THAT SERVE A POPULATION OVER 150,000 COULD NOT USE THIS GRANT FOR PLANNING AND DESIGN COSTS. SO THE PROJECT, WHENEVER WE APPLY, MUST BE READY TO PROCEED THE CONSTRUCTION AT THE TIME WE SUBMIT IT. THIS IS 100% GRANT WITH NO LOCAL MATCH REQUIRED AND I'LL ANSWER ANY QUESTIONS YOU MAY HAVE.

VERY GOOD, SIR. ANY QUESTIONS FOR MR. BALZAM? Okay, I think we understand it. Thank you. Would entertain a motion on 6-4.

I move to adopt resolution 062326-1 as presented.

Second.

Motion in a second. All in favor, please say aye. Aye. Any opposed? Motion passes. Item 6.5, Mr. City Manager.

Yes, tonight before you is a non-binding memorandum of understanding between us and the CREMWA Association. We have Mr. Drew Satterwhite here with us tonight to give you a presentation. And so just real quickly here, I think you were all aware Mr. Satterwhite visited us here a few months ago talking about CREMWA II. And this is a project that would be approximately 70 mile long pipeline, underground pipeline for one of our well fields to reconnect to Amarillo in the city south of us. And this is part of our ongoing water expansion needs for our region. So I'm just going to stop there and let Drew take it from there.

All right, good deal. Thank you for the introduction. Mayor, Council, thank you for having me here today. I'm just going to provide an overview of kind of the history of Cremois, specifically our water supply and infrastructure, but also talk a little bit more about Cremois 2 and what that does for the city of Amarillo and all of our member cities, in addition to the MOU in particular. Feel free to interrupt at any given time. I'm going to be throwing a lot of information at you guys, so if you want to stop at any point in the talk, let's do that. I'M GOING TO REFER TO CANADIAN RIVER MINISTRIAL WATER AUTHORITY FROM HERE ON OUT. SO THE CANADIAN RIVER PROJECT, THIS WAS REALLY WHAT SPURRED THE CREATION OF CRIM WALL AND THE IDEA WAS TO DAM UP LAKE MEREDITH AND PROVIDE WATER TO OUR 11 MEMBER CITIES. THAT PROJECT DID INCLUDE BOTH THE DAM AS WELL AS 322 MILES OF AQUADUX SYSTEM. That aqueduct ranges in diameter from 8 feet internal diameter down to 18 inches when you get to the further extremities of our system. Lots of pump stations also involved there. So I'm showing you this picture one because I like it and think it's cool, but also because I just wanted you guys to understand the provider perspective. I guess you can say on the types of pipe that we're talking about here. These are not common. This was this photo was actually taken during the sixties, and this is actually our pot that they were constructing up here in the region to install. So what this is right here, I'm kind of, that previous picture that showed our overall system, I'm zooming in for the northern extents of our system. As you can see, there are only Amarillo, Borger, and Pamper included here. But Cremois in the mid-90s began purchasing groundwater out primarily in Roberts County, and the primary driver of that was water quality lake meredith has continued to get saltier and saltier and the idea was is we needed groundwater to blend with lake meredith to ultimately reduce the salt concentrations coming those are not it's not a health-based concern whatsoever it's a taste and aesthetic issue So we continued to purchase groundwater rights over the next two decades. But what you'll see there on your screen is that phase one and two, that was largely done in 2001, came online in 2001. And that also included that 54 inch groundwater line that you see there heading there south of Borger and ties into our main aqueduct between the dam and Amarillo. And that's ultimately right now how the groundwater makes it into the system and ultimately to Amarillo South. Phase 3 there so it just so happens that in 2001 when this project came online again the primary driver was water quality there was obviously a water supply component of it as well but I don't think anybody understood that that year is going to be the beginning of a 20 plus year mega drought that we're just now kind of starting to come out of here. So phase three was done in 2010, right when we were in the grips of a, and that was amongst the worst times that we've experienced at Lake Meredith. And what that essentially did was doubled the capacity of our well field. It also added that 54-inch line between Phase 3 and Phase 1 to ultimately get that water into the system. And with Phase 3 in place, we now have well capacity in excess of what that 54-inch groundwater line will carry. So right now, that 54-inch groundwater line, that's our bottleneck in capacity for supplying to the cities. So what you're seeing here, this is a Cremois as a whole, not Amarillo specific, but this is just a graph showing our water supply over the years. And you'll see that light blue there, that is what the cities are supplying independently of Cremois. The dark blue there starting in 1968, that was the year that we began delivering water. So you can see that we were 100% surface water supplier up until 2001 when the well field came online. And then you see there that over to the right, the Cremwell Wells, that's our groundwater. That started in 2001 and you can see that ratio of well water to lake water continue to increase up until the point of 2012 and 13 when we were 100% relying upon groundwater. Not a situation I think anybody envisioned us being in certainly that quickly. We did recover, have recovered a little bit. You'll notice there that we've been averaging about 15,000 acre feet in the last decade or so, but that's a far cry from where we were in the 90s when we were pumping over 70,000 acre feet out of the lake pretty reliably. What you're seeing here is water levels. The dam was completed in 65, started impounding water. We didn't actually start delivering until 68, which you can see here, just the trend of water levels in Lake Meredith over time. We reached a high there in 1973, held relatively steady up until about 2001. You can see there where we just dropped off and we got down to the... a dire situation there in 12 and 13 when we had 26 foot water in the lake and it was too salty to pump out. One thing I do want you to notice there is that in 2001 you'll see the 389 parts per million, the chloride concentrations, and then you see today we're back at that same level and those chloride concentrations have doubled since that time. And so that's just indicative of a trend in the wrong direction of chloride concentrations in the lake. Up in this part of the world, we evaporate a lot, and evaporation takes all of the water and leaves behind the salt. And the only way we get rid of that salt is to pump it or release it. And thus far, since 1965, we've never had a release from Lake Meredith. So pumping is how we get rid of that. This is just maybe for some dramatic effect here, but for those of you that are familiar with Lake Meredith, I'm looking over Harbor Bay here, looking north, and just shows you how fast the situation out there can change. This is a matter of 12 years. So Cremois II, what you're seeing there, this is the same map I showed you earlier, but with the red line, which is meant to represent Cremois II. This is approximately 70 miles of 72-inch pipeline. It will include some additional wells, two pump stations. But what this is doing here is it gets that groundwater directly to what we call our Amarillo Regulating Reservoir, which is located on the northeast side of town. Our original lake water system there from the dam to Amarillo, it's 72 to 78 inch diameter pipeline. There's four pump stations that lift that water 800 feet over the course of about 35 miles. From there, gravity flows all the way down to Lubbock. We don't have to pump anymore. Actually, all the way down to La Mesa from the Amarillo Regulating Reservoir. But because that segment of pipeline is under the influence of those pump stations, you know, every time a pump starts and stops, there's surge. It's operating under higher pressure. That pipeline is also, it's pre-stressed non-cylinder pipe, and I know that's a lot. But basically, you know, the new types of concrete pipe that you're buying, they have a concrete cylinder in them. that's a lot easier to work on. You have something to weld to. These pre-stressed, it's basically real thin wire wrapped at 125,000 psi spiral around. When you start having corrosion, it's been in the ground for 60 years, you just lose the structural integrity of that pipe. And unfortunately, this pipe due to the pre-stress nature of it, typically doesn't leak, it blows out. I mean, we're talking chunks of concrete hundreds of feet away from where this happened. And because the arterial nature of our system, we have one artery going to every city, that's not good. You know, this pipe, I'll show you a photo here in a second, but I mean, if we're out in open country, everything's going well. Everything's going our way. This is a 10-day repair to replace a segment of pipe. We've got two days to dewater the pipe. We've got two days to refill the pipe. And then in between that period, you've got to get in and pull a 40,000-pound joint of pipe out of the ground and get a new one back in. This picture, I don't know if this picture is 72 or 78 inch, but it just shows our guys out working on a leak. And that pipe going in is actually, so what we have to do is we have, they're 22 foot segments. You have to go in and you have to jackhammer concrete saw and get a gap in the pipe so you can pull it apart and get it out. The pipe is too heavy for our track hose once you dig down to it to lift it out of the ground. So we have to get a crane on site to pull these segments of pipe out. And then we have to have a crane to drop these two, what we call makeup pieces in the middle. seal them up, but then you have to weld that interior. All that to say is it's a process when we do have a leak. So what is criminal to do for us, I mean these are in no particular order here but but one thing it does is it essentially eliminates the drought risk from a slope supply standpoint we are no longer. Not to say we won't continue to try to maximize our use of Lake Meredith, but we are if Lake Meredith goes away we still have a water supply that fits your needs here so. that Lake Meredith is just, as I showed you on that graph earlier, I mean, it's just the usability of it is just continuing to decline because of the chlorides. We also had a yield study completed here recently by an engineering firm that basically confirmed what we already knew, that you better prepare for years without water in the lake. So it eliminates the drought risk from a supply standpoint, but also the infrastructure redundancy that we just talked about. Right now, I mean, again, we have one artery going to every city. What this would do is it bypasses 25 miles of that 1968 pressure pipe. And just one more thing on that pipe, that was built specifically for the Bureau of Reclamation during that period of time. There's only a handful of other entities in the country that I'm aware of that have that type of pipe, and there's a reason for it.

There's a reason they've switched pipe types.

But it also bypasses 48 miles of our 2001 groundwater line. Now that, I would still consider that new pipe in infrastructure terms. It's just a different type of pipe, better type of pipe, and again, it's cathodically protected, which you can't do with the other type of pipe. I'm not as concerned about that 48 miles, but the problem is that 25 miles of pipe between where that groundwater hits the amarillo regulating reservoir 100 of the water that we provide to the city of amarillo which is not 100 of your water goes through those segments of pipe Another thing that it'll do is it'll allow us to get our capacity back up to its design capacity. Right now, where the lake's at, we're able to provide 90 million gallons a day total to all of our cities during a peak day in the summer. That number bounces around depending on lake levels, water quality, but is generally trending down. And during the 2012 and 13 years, that number was 65 million gallons a day because that's all we could put through the groundwater pipeline. But with CrimWall 2 online, we'd be able to fill our system with 112 MGD and not only add capacity, but make what you have right now significantly more reliable with this new pipeline. Another I guess side benefit is that we would we would also be able to utilize more Lake Meredith water because because if we have more groundwater to use we have we're able to blame more than ultimately use more Lake Meredith water which is a good thing for a couple of reasons one because as I mentioned earlier. The more water we take out of the lake, the longer we are prolonging our ability to use that water. And also, you know, we consider Lake Meredith to be a renewable supply. So from a resource management perspective, that's renewable. And as you all know, the groundwater in our region, we are producing it. This isn't a cremoir issue or an amaryllis. This is just what's happening. It's being used a lot faster than it's being recharged. So we try to use as much Lake Meredith water as we possibly can. So, give you a little history about the discussions on CRMWA II. The concept was introduced to the Board in 2012, the year that we didn't have any lake water. 2013, the Board of Directors authorized a route study for CRMWA II. What is the best, most efficient path to get that water from Roberts County to the Amarillo Regulating Reservoir and Park Hill, who's in the audience, I believe, and Friesen Nichols, they did that study for us. In 2014, we had a member, I say we, I wasn't here at the time, but we had good documentation from that meeting. We had a meeting with all of our member cities, and every city in that room said that we wanted, the latest date that they wanted construction to start was 2025 or sooner. And that ranged from right now to by 2025. That was the range of answers that we received. Obviously, as you saw in that graph earlier, 2014, we were beginning to climb out of the drought, and that somewhat eased the immediate need, I should say, to bolster our water supply. In 2015, we had multiple failures on our 72- and 78-inch line between the dam and Amarillo. Luckily, those mostly occurred during the winter. It was actually the eve of New Year's Eve. And so demand was really low and I don't think there was any just terrible consequences involved with that from the city supplies perspective. But I do think that that also brought, I mean, it just brought the need to the forefront of infrastructure redundancy. You know, unlike a city, and I'm not saying city systems are easy, but we can't valve off and bypass. When we're out, we're out. 2016, the board authorized right-of-way acquisition, and as we sit here today, I believe we have four, maybe five, I believe it's only four, though, parcels remaining, so that 70 miles of right-of-way is well over 90% acquired at this point. I got here in October, well, November of 2022, and relatively soon after I got here, the board directed me, we've got to figure out when we're going to start this project. We're not necessarily pushing the start of the project, but the uncertainty for our member cities was making it difficult for all the cities to plan their water supplies because we were hot and heavy, we're about to go, and now we're just not sure, and you have 11 different cities with 11 different needs. And they said, we've got to get a date decided. And so that process kind of began. We had at least two meetings with every member city just in person directly. We've had multiple board meetings over that period of time focused on CREMWA II and just long-range water supply planning in general. So, yeah. Let's see here. some of the challenges here involved in this and so we have to make these decisions so far in advance with these large projects like this it's an eight-year if if every city said criminal go right now let's go do this but we want to do in a conventional design did build manner we're not paying extra to expedite construction, we're talking about eight years. Four years of construction, two years of design, and then all of the efforts with 11 cities involved, debt issuances and planning and all of that stuff would precede that. And so I guess really a drought can set in a heck of a lot quicker than we could have a project online. Another thing is that the costs are continuing to increase, and I've heard that here today. I know you guys are very familiar with how the costs for heavy civil type infrastructure have just skyrocketed in the last decade. When we began talking about this in 2014, our first cost estimate was $340 million, and that's now at $1.1 billion in 2025. So that's obviously created a challenge, an unwelcome challenge. But another thing here is that the Cremois cities all have to agree on timing. Unlike a traditional water supplier, you know, our board doesn't decide, hey, we need more water, we're going to go issue debt for this project and we're going to raise the rates and move on down the road. The way we operate is our board has to approve it, yes, but we have to go to 11 different city councils and everybody has to agree that, hey, this is the right path forward. So that's obviously a challenge. So in January of this year we hosted a what we call the member city roundtable and this this follow to very long meetings. Discussing long range water supply planning and criminal to and what we had asked at this meeting is. A representative or representatives from each member city to get up and talk in front of just the whole group and talk about your needs what what would be the ideal timing for your city what could you live with what other projects do you have that are. that might impact your decisions and what are your challenges at your city and the I I think it was a healthy process ultimately at the end of the meeting there was a unanimous decision by our board 17 board members that 2034 we'd like to start construction that coincides with the debt issuance in the same year that would mean online date of 2038 They also approved a budget ramp-up concept, which I will talk about on the next slide. But essentially what that would do is it's going to be a significant budget increase, obviously, with a project of this magnitude. But it would ease us into the 34 debt issuance. But it would, one, provide cash so that we could pay cash for design, which is in the tens of millions of dollars versus financing that for 20, 30 years. And it would also provide funding for us to address several CIP issues that we have. I hesitated to even say that word, honestly. But we do have a lot of CIP needs, and I think there was a healthy concern that, You know once this projects online what said that services there the appetite from some or many of the cities for addressing all of the infrastructure that we already have may not be there. It can be some sticker shot obviously when that that point comes and so that we felt like this was an opportunity to aggressively address a lot of these issues. You know, this pipeline system will be 100 years old by the time, or close to 100 years old by the time this debt's paid off. And so we still rely on a lot of this, even though this new segment, Cremois II, provides a lot of redundancy, we're still heavily relying upon the older pipe, especially south of Amarillo. So there's that, and then they also approved the memorandum of understanding concept, which is ultimately what's on the agenda today. I'll talk about that a little more. They didn't actually approve the MOU at that board meeting, but they approved the concept, and we came back to our next board meeting with a document for them to review and ultimately approve. So what you're seeing here is a criminal budget forecast now this is not something that's necessarily set in stone this is this is handed on the annual basis of annual basis by our our board of directors. So our budget I know this is a lot to look at here but we have essentially 3 components of our budget we have our operations and maintenance which is staffing and just all expenses related to operating and maintaining the equipment that we have We have the PEC, which is pumping energy and chemicals. Largely, that's electricity, really out of our control for the most part. And then you have debt service. That's out of our control at the moment. The only time we have control of that is when we actually issue the debt, but we're obligated at this point. But you'll notice that that debt service tapers off, and in 2030, 31, that's the last year of debt service payments for criminal infrastructure. as it stands now. And then you'll see there that red ramp up, and that's essentially what we are talking about, basically taking, I hate to use the word baby step, but taking steps, let's say that, taking steps, conditioning to get to that $1.2 billion debt issuance in 33-34. And that one point, I know I said 1.11 earlier, we're factoring in that the costs aren't done inflating. And I think we put in there a 3%, or what was it? We put in their inflation, I believe it was 3.5% inflation. I'm not sure if we say it on here, but anyway. But what that will do, again, it provides us funding so that we can begin addressing some of these CIP issues that we consider to be critical. It also, I guess, conditions the cities to an extent by also accomplishing some much needed projects that we have and then also allows us to pay for design with cash versus two separate debt issuances for that process. So the MOU, again, I've already kind of talked, I mean, a lot of this, what I've said is actually in the MOU. It's a handshake among the cities that, hey, we've got to have some planning here. We've got to understand what the group wants to do so we can all plan effectively. And that was kind of the idea. We wanted to memorialize the plan, the timing and the ramp up. Again, non-binding. We can't commit a future council to issue debt. but also we you know we kind of told the story in there we try to tell a story so that future community leaders as they come and go between now when the project starts they can understand the process of how this came about and just really the whole process of how we got here But back to the allowing cities to plan and operate more effectively. I mean, it's just, it became clear to us that our cities were really needing to know a date on, you know, I need to know if I need to go start planning my next well field to get me by until this project starts. Or if I have, I need to plan my other capital projects around this debt issuance. I mean, they need to know this in their rate setting and just to run an efficient operation. And so that was really the precipice of getting all this put together. That's all that I had, but I'm happy to answer any questions there may be.

Questions, counsel, for Mr. Satterwhite?

Just really two questions, and these are kind of high level, but if we don't do CREM-Y2, what happens?

You're accepting a level of risk. I mean, there's not enough money in the world to make anything 100% reliable, but, I mean, you're – You're accepting a level of risk for drought, and you're accepting a level of risk for that infrastructure that's delivering you the 55 or so percent of the water that we're delivering right now. I mean, that's really what it is. And you're also going to likely have to go do another project on your own to make up for your increased water demands that are coming as well. I mean, that's something that's in...

So the city's gained the efficiency of working together to be able to- Yes, I believe there's some economies of scale. To do this. But then also, I guess the other thing, you're susceptible to drought, but I guess if we want to continue to grow the region, there will continue to be increased water demand. Absolutely. That's going to have to be met, that our current infrastructure would not be able to meet longer term drought or no drought, potentially.

Correct. I guess my immediate thought would be that you would want to go out and do a project on your own to beef up your water supply and to actually get more supply to meet some of the projected demand that you guys are seeing.

If we say, okay, going forward, what's crucial about the timing of this that you're proposing in this memorandum of understanding? What is the... Why is this timing the best? What happens if it gets kicked down the road further? What are the negative consequences if we don't come together right now to agree to this timing?

Really what it boiled down to is we're talking to all of our cities and some say we want it yesterday and some say we want it now and some say we want it tomorrow. And the kind of the band that we ended up with was a an eight-year ban from 2034 to 2042 for an online date of the project and 2034 would have meant starting it now so that we can have it online by 2034 and I think just you know with all the community city staff leaders that were sitting in the room that ultimate negotiation was that we'll kind of split it right down the middle And I believe that worked pretty well for the city of Amarillo. Maybe it was too late for some and too early for some, but I believe it was kind of right in the ballpark for what Amarillo was projecting their needs to be.

There was some good, robust conversation that happened back in January. So every community was asked to come bring a presentation about their future growth needs, their water needs. And so all 11 member cities, Lubbock, Plainview, Amarillo, Borger, Pampa, all those cities, each one of them do the same thing. We all try to forecast our growth. We all want to grow. We forecast economic development. We forecast industry, homes, and so forth. So we combined all of our notes, and so it kind of came down to, like Drew said, some cities are more like 2040, some are 2030. Thankfully, because of our forefathers here, we have options, and so we are able to work with them. It would be better if we moved sooner, but at the same time, we recognize that we are also one of 11. So we want to work with everybody and so we have options available to us that we can implement between now and this actually goes. But we also don't want to just exhaust all of our personal options. We have options only we have access to. But then we also have bought into options that the community, 11 of us have bought into. Part of our goal as staff is we'd like to try to tap into that, the community resource, 11th City, before we drain our own reserves that we have available to us. And so, again, thanks to our forefathers before us, we have options, but I'd rather not use those Upfront and when I have options for the criminal option to utilize that 1st, and so Donnie that.

Yeah, it's very accurate and the decision that we had to make and what we spoke about when we were talking about this with the other member cities was the fact that we have to make some decisions now. uh as as far as our well fields are concerned and how that development is going to go and we had many conversations with kermaw about that as well lubbock i think was in the same boat that we're in they have to make some decisions now uh either way so uh it's better for us to do this now than it would be then the other thing i'll throw in there he mentioned this and i was involved with kermaw back then as well when when all the decisions were happening in 2013 and 2014 everybody wanted to do it right now and then as soon as we started to see that that BEING SCARED WENT AWAY, WE STOPPED THINKING ABOUT IT FOR A WHILE. WE CAN'T DO THAT ANYMORE BECAUSE EVERYBODY HAS TO MAKE SOME DECISIONS.

THANK YOU. I'LL ASK REAL QUICK, JUST SO YOU KNOW, WE ALSO HAVE OUR REPRESENTATIVES JOHNNY MIZE AND ROY URIDIA WITH US, SO IN CASE YOU HAVE QUESTIONS OF YOUR BOARD REPRESENTATIVES, THEY'RE HERE WITH US TODAY.

COUNCILMAN?

COUPLE QUESTIONS, DREW. WHAT IS THE COST OF AMARILLA IN TODAY'S DOLLARS?

If it were to be done today, it would be about $450 million.

That the city of Amarillo would need? Yes. Okay, that would be our contribution.

I can't tell you what the prices will be in 2034 when we go out for bids, but I hope they're close.

What percentage of water do we get from Cremois on a day-to-day basis?

My understanding, I don't know about day-to-day, but on an annual basis, my understanding is it's approximately 55%, but I'm happy to be correct in that. And I don't know. I mean, that varies with a lot of cities. You know, sometimes they lean on us a lot harder during peak days and it just depends city by city.

Donnie, a question for you. What is the just a really rough ballpark figure of what would it cost to tie into the Roberts County assets that we have?

Oh, gosh. We would basically be footing the bill for what Cromwell II is wanting to do because we would have to build a pipeline. The other thing with that, the Roberts County water rights that we have, we can't use them until 2060. So there's some other water rights we have up there that wouldn't produce very much either that we could use now. It's in a different county. But, yeah, the pipeline, I mean, you're probably looking at exactly the same cost. Maybe a smaller pipeline, but you're still – We would have right-of-way acquisitions, all kinds of stuff that would have to come into play with that. So it would be a very expensive move.

Drew, one more question for you. With the chloride concentrations increasing at Lake Meredith, when is the forecasted saturation of the chlorides in Meredith with current meteorological conditions, what does that look like when that is not a viable source anymore?

I don't have that crystal ball to tell you for sure on when that would be. All I can tell you is that it's trending in the wrong direction.

Very quickly.

Absent of some wonderful rainfall that would allow us to overflow and spill and release water downstream and freshen everything up. It goes fast. I mean, we can climb 100, 200 parts per million over the course of a year. I mean, it's crazy how fast those concentrations change on a year-to-year basis or can change.

Has there been any research or studies on an additional reservoir?

Not on an – I mean, the Canadian River is tapped out. I mean, they – I think – To me, the reservoir was over designed. If it's never filled and spilled, to me, they were expecting a lot more water than was actually there. So I don't think there's any good options in the Canadian River Basin for sure. We have looked into Reverse osmosis on the water that we have that would allow us to remove the salt But those are the price tag on those is fairly large and kind of what we determine is that wasn't That would kind of shore up to an extent what we have now as far as reliable supply But it wouldn't move the needle for increased demands like the city of Amarillo and Lubbock are going to going to need and also I mean you're You go and build this $400 million RO plant, and you're still paying debt on it, and we hit a drought. We don't have any water to put through it. Yeah, we tried. We had this RO plant, no water, but now we need to go do crim wall, too, and it just didn't move the needle with the member cities, and understandably so. Thank you. Yes, sir.

Let me go back to something you said. The water we have in Roberts County, we can't affect the rights on that until 2060?

That's correct, some of it. And then there's another county we have some water rights in as well. But yeah, I think it was 2060 is the year on that. But we don't have a lot of water rights in Roberts County, especially compared to what Cremwell has.

We have 456,000 surface acres of groundwater rights. Obviously on behalf of our member cities, not ours, but the largest groundwater rights owners in the state of Texas. We've been told the country. I don't know where you verify any of that. We have a lot and I believe you guys are maybe three number three and that's independent of what you guys have through criminal so. It's amazing to me how water secure this region is over the next 100 plus years given the amount of rainfall that we get here.

The water rights that we have in Potter and Carson County are the ones that we would be targeting. If it wasn't for Cremont too, that's what we'd be looking at is developing our Potter County well field.

Does Lubbock pull any water out of Buffalo Lake?

I don't believe so, but they're actively, I mean, they're trying to get what they're calling Lake 7 off the ground, and that's immediately upstream of, what is it, Buffalo Springs, is that what you called it? Yeah, immediately upstream of that, and there will be an indirect reuse project where they'll get water rights credits coming out of their wastewater plant from their Ply Lake drainage system, and so they're pushing hard and heavy for that as we speak.

So I've got to assume when the agreements were made years back,

um the towns that are connected to this realized they had limited water supply yes they do and it blows my mind to think back in the 1950s sitting in la misa 200 miles from hey we're going to go damn up the canadian river and run a pipe and what are you i mean it just blows my mind the foresight but but yes and i think there's a lot of cities that wish they would have got in when during that period of time but Really, what we're up against right now is infrastructure limitations. Like, yeah, we've got a lot of supply out there, but you hear how expensive these pipes are to get that to where it's needed. And that pipe from here to Lubbock and all, I mean, every one of our pipes is allocated to somebody. And so that's really the limitation.

Have any other towns approached to be part of this?

We it's not uncommon for us to get requests hey we'd like some water, but it should like I said the infrastructure is the limiting factor, I mean it's like I said we have the water at Roberts County, but that the semantics of getting that from there to where they need it is you know makes it a unfeasible

So we're not looking at adding additional lines feeding out to other cities. It's still going to just remain the 11 cities, the two cities and nine towns that are in it?

Yes, sir. That's not just, I mean, that hasn't really been discussed at the board level, but thus far, I mean, it's just, they're just not, it's not feasible.

And by doing this, I mean, this Crimois 2 line, that's just coming to Amarillo. We're not doing any new lines down to Lubbock and La Mesa.

Correct. Correct.

Thank you.

So Amarillo and Borger and Pampa, I mean, just given proximity, it really enhances your reliability. And it does for everybody. Again, that segment between the dam and Amarillo is the segment we are most concerned about.

to make it clear in case anyone misunderstand the entire 1.2 is not all amarillo so it's it's to get it from the well fields to amarillo benefits all i guess nine of the cities pampan burger are they part of this too or are they yes okay so all all 11 cities are part of this so each one has a share of that portion so it's not all amarillo 1.2 we have a share of that just in case anyone was question was wondering that so

Mr. Satterwhite, always good to see you. Thank you for being here. Good presentation. I think we definitely understand what you guys are working on. Appreciate you having me. Yeah, glad to walk alongside you on it and move it forward. Good deal. Gentlemen, item 6.5 is before you here today.

All right. Move that we approve the memorandum of understanding between City of Amarillo and Canadian River Municipal Water Authority. As stated at 6.5.

Item 6.5 has a motion and a second from place four. Any further discussion? All in favor, please say aye. Aye. Any opposed? Motion passes with a 4-0 vote.

okay mr city manager over to you on item 6.6 yes thank you mayor so this a little history and context behind this one here um about two months or so ago councillor simpson brought to my attention some some news articles about some recent uh recent discussion at the prad board potter randall county appraisal district and so I reviewed those articles, and there have been some discussion, according to the articles, about possible implementation of Section 12 of their agreement, consideration of possible dissolution. Because they've had some discussion about some concerns about what the ability of Potter County has according to this contract. And so a little history here. Back in the 70s or so, the state passed legislation that said all individual entities, schools, counties, cities, could no longer do their own appraisal work. THEY NEEDED A CENTRALIZED COUNTY DISTRICT TO DO THAT. AND SO PART OF THAT LANGUAGE, IT ALLOWED COUNTIES TO CONTRACT WITH OTHERS. AND SO POTTER WAS THE ONLY ONE AT THE TIME AND STILL IS TODAY TO SAY, YOU KNOW WHAT, WE WORK WELL TOGETHER. WE HAVE A LOT IN COMMON. LET'S PARTNER TOGETHER. SO AT THE TIME, POTTER COUNTY WAS THE LEAD ENTITY FOR THAT CONTRACT. And so Randall contracted with Potter to provide the appraisal service. And at the time, they set up the district in Randall County. I guess that's where they bought their offices and so forth. Those are all decisions made back in the 70s and 80s. Then in the 80s came along and legislation changed and said, you know what? You have to make sure your appraisal district has your office in the county that's contracting with it. Well, Potter was the lead. Randall was contracting with Potter, but the office was in Randall. So decisions were made back in the late 80s or so to say, you know, we're going to flop roles. randall will now be the will now be the the primary contract holder and potter will be the contract the contract entity with randall so that way i guess they tried to avoid having to buy property and having to move the office i guess and so so with that the randall county for the contract is the primary is is the lead entity and potter is contracted within a private service so with this um that's a little history there so having having heard about the articles and having read those um I reached out to my counterpart, the chief appraiser, Jeffrey Daigley. That's who I would typically contact with and speak with. I reached out to him, and he and his assistant met with myself, and also Dr. Connor from Amarillo College. And we just asked him some direct questions. And so we asked questions, he provided answers. And from that information, and I think talking with each of you individually, There was enough concern that we thought, you know what, given some of the discussion going on, given that both entities have decided to start meeting separately, Randall in one, Potter in one, there was conversation about having legal counsel between both boards. And given there have been some discussion according to articles and Mr. Degley that separation could be an option there, it naturally warrants on my behalf as city manager, I should look into this and so see what could the consequences be from this? What could the cost be to our taxpayers should they separate? Not saying they will, they would, but if they were, what could that be? And so Mr. Degley gave us some concerning numbers about what they could look like to have two separate entities serving the city of Amarillo because we are crossing both borders. So with this, I reached out to Amarillo ISD, Canyon ISD, City of Canyon, Randall County, Potter County, Amarillo College, and we had a joint meeting, a virtual meeting here a few weeks ago. And so we also involved a legal counsel because we knew that legislation, we knew that law was in place that kind of governed how the privileges work and what say we have in that. We tasked our legal teams with researching that. Now, typically, in most situations, if an appraisal district were to make a motion and approve something, in most situations, the member entities, like, for example, here would be City, Amarillo, Potter County, we have the ability in some situations to veto that. We don't have that ability. Since our populations exceed 75,000, both counties, we do not have veto ability for our local appraisal district. So there is no reactionary option available to us. So with that, the executives of all of our entities say, you know, well, with that, that perhaps warrants at least a letter. Say, hey, we understand that there are concerns. They're valid concerns. They should be worked out. They should be discussed. Potter County, Randall County should discuss these things and make sure that both entities are satisfied with their agreement. But we just encourage you all to please, given discussion, given you are meeting separately for the first time in 37 years, you are obtaining, if not having obtained, legal counsel for each other. And given there has been discussion, according to my information I have, that separation was an option being considered, this warrants at least a letter. Now, I am encouraged tonight to hear from one of the nine members of Potter County that he is not considering separation. That's good to hear. He's one of nine. And so to me, the letter we have before you tonight, which can be amended, could be edited, is just simply saying, hey, we recognize there are valid concerns. Potter has some things they probably should work out with Randall. Please work him out. If we can help work him out, we'd love to do that with you. If we can help facilitate that, we'd be happy to. Either us or the college or Potter County, we'd be happy to do that. We just encourage you all, as our representatives, just like taxpayers speak to our council, we speak to the PRAD. They're our representatives. We encourage you all to just please don't pursue separation, if that were to be an option there. But instead, work these things out. If we can help, please do so. Again, it's just more of a friendly letter. But again, I don't have a reactionary option. To me, I'd be a little derelict if I didn't present to you an option that's preventative. And so given what I've learned, given what we've seen, and given the potential that could happen, it seemed prudent that I bring this to you tonight as an option to just encourage our representatives to say, hey, let's work this thing through together. And since we don't have a reactionary option available to us. So that before you deny us a letter, All the other entities that I mentioned, I've been considering it. I know City of Canaan did pass it last week. I do not know if the other entities are going to or going to not. That's up to them. But my recommendation is that we do pursue the letter or an amended version thereof. And I'm open to recommendations of the council. But I think I fulfilled my duty. My duty was to bring this to your attention as city manager, given there are potential high costs that could come from one scenario of this. And so I just wanted to bring this for you tonight. Questions, Council.

So what are those costs look like? In other words, so right now they're sharing resources. If they were to separate, what do those additional costs look like?

I'm relying upon what Mr. Daly gave me, so we've not verified this, but some of this is common sense. Obviously, you would have to have two appraisers, two assistant appraisers, two offices, two sets of software. There's lots of doubling up of things you'd have to then do. The estimated cost he gave us for any of our size was over $300,000 plus that we would be taking on by having two separate entities. servicing us. The schools obviously have a larger share because they have a higher tax base. And so they're more than 300,000, closer to 400,000. So with this, those are just the immediate rough costs. And again, we would have to, he was basing it off of similar sized counties and cities out there that he could find. I mean, we don't exactly know. Again, we'd rather not find out. And so we just know that having two entities would increase our costs.

So would there be, but if Randall remains, if Randall is separate from Potter and they're both conducting their own independent appraisals, would the amount of money that we're paying, I guess, Randall, I mean, would go down. Correct, yes. We're not getting any more appraisal work done then than we are now.

Yeah, it would be a net change across two entities. And so, yeah, we would see a decrease in Randall to a certain respect, and then you see the increase in Potter. Now, the net increase is what I'm talking about, having two appraisers, two assistant appraisers, two offices, two softwares, two everything.

And so would that not then be a reduction of staff in Randall County?

So we asked that question to him. Yes, there would be a possible reduction on their staff. It would be for the frontline staff. But, again, he was trying to take that all into account when he estimated that.

And are there minimum staffing requirements that you have to have an appraisal? Does the state have laws that say if you have an appraisal district, you've got to have this many employees or how that's set up? I mean, are they dictated on that?

I didn't ask that particular question. The answer I got was they are required to for sure have an appraiser and assistant appraiser. But I don't know about minimum staffing. I'm not sure about that.

Okay. Well, I think, in my mind, the representation concerns raised by Potter County deserve to be taken seriously.

Absolutely.

And members feel that they, and I don't think we should be weighing in on that, that part. Correct. That's the issue that they need to work out.

Yes.

I would, you know, I think the issue that I would want to weigh in on is that the hope that a solution can be found that improves the representation without creating additional burden to taxpayers.

Correct.

And I think that would be the thing, and I think what I hear you saying, that's the concern. If, you know, if, and we don't know, we're looking at various scenarios, but I think as fiduciary responsibilities, I think our encouragement would be if work this out, this is something that needs to be addressed, work it out. But if you can do it where it's not an additional things that we're going to have to cut or $300,000 or 200,000 or 400,000, whatever it is to find elsewhere, we'd appreciate that help and being able to do that. And I think that's something that that The public just needs to know if that's going to wind up being accurate, that that money is going to be there, that if this does separate, it's going to go to the taxpayers if we can't resolve this.

Yeah, no, a par letter here. We're not diving into the concerns. We want them to work those out. The most we've offered is, hey, in regards to the current concerns, if you need a facilitator, we can help with that, either us or the college or somebody can do that. But otherwise, we've not opined on that. on whether power should have this say or that say. That's up to them to decide. Councilman.

Grayson, thank you for bringing this to our attention. At what level do we, what would we see, I mean, would there be $300,000? Is that what we're hearing? Additional dollars that the city would have? I mean, we're thinking that there would be additional cost.

Yes, these are the rough estimates that are provided, and yes, we'd be looking at an additional overall net cost to the city of Amarillo of that number, yes. Again, we'd have to dive deeper into that, but that's the idea given to us.

Okay, thank you.

Mr. Warren, I know you can weigh in on this. Hang on one second. We'll get to Councilman Reed, and then we'll come back to you on that.

We appoint members to the Pratt Board, right?

It is a voting process. Each member city has a number of votes that goes towards the members. We don't have a Amarillo representative on there. The entities have a number of votes based off their valuation sizes. And now with recent legislation changes, three of the nine members are elected at large by the citizens.

Okay. so in a way we're kind of reversed here we're we're the customer right that's the city the school districts we're the customers and they are the governing body and so my my thought is I don't mind approaching them, but why wouldn't we just go to one of their meetings to express what our concerns are instead of putting something in writing that gets things stirred up that may not need to be stirred up. I appreciate what Mr. Warren had to say as he came up here. I trust him in saying that that's not the direction that any of them want to go. Because I think they've already laid out what the concerns are as far as costs and duplication of efforts and everything else. I would just think that going in person and voicing those things as opposed to putting it in a formal letter because that can be taken the wrong way. That's my concern with this. I really think the issues that Potter and Randall County are having are their issues. They're not ours. It's our cost, but yes. Right, but I think trying to put a dog in their fight may be the wrong thing to do at this point.

Yeah, so I did look at the option of trying to attend the meeting. At the time, when we met with Mr. Daley, no meetings were set. And so there was not one on the books to attend. But based off the information he gave us and based off of talking with the other entities, we felt that, and given we learned that there was no retroactive option available to us, again, given what I learned, that they were meeting separately for the first time in 37 years, Given they were talking about having out both legally both having their own represent legal representatives there and given I had no retroactive option available to me And given I did not have a meeting that I knew it coming up that I could attend to me The next point option was to do this Mr.

Path, thank you for Speaking to this. I think you you've definitely clarified your point. There's two things I'm hearing one cost increase and a concern so a lot of this I think is driven on the premise of We're gonna be billed more as the customer so I want to dig into that here in a minute But then take appropriate action is what I'm being asked to do consider and take appropriate action I don't understand what action we would take so as the customer you know, if we voted to approve this letter, what is that endorsement then that goes out that speaks to that entity? Like we acknowledge in the letter that we don't have an action. So you're saying if they do what they can do without us weighing in, We don't have any authority and we don't have that before or after either one. So like the the letter is an acknowledgement of a lack of authority, you know, but but we want to still communicate our desire.

Yes, it's an encouragement to work things through together. It's an encouragement for both Randall and Potter to recognize the issues, work them through, make whatever improvements they need to. But again, part of the letter is we encourage you all just to avoid a separation option.

Okay. Well, let me jump into, Mr. Warren, would you mind coming up here? Because I know as the tax assessor and a member of that board, you're going to understand the potential consequences. So if you would, lay out for us the potential consequences as a customer.

Sure. So I've taken a look at this quite a bit because, as I've said, Potter County is not trying to separate. And I want to clarify that... THE SECTION 12 PIECE THAT MR. PATH IS TALKING ABOUT HERE ISN'T THE DISCUSSION THAT WAS HAD IN THAT MEETING WAS NOT ABOUT SEPARATING THE DISTRICT. NO ONE HAS TAKEN THE POSITION THAT THE DISTRICT SHOULD BE SEPARATED. THE SECTION 12 DISCUSSION CAME ABOUT BECAUSE RANDALL COUNTY AT THEIR MEETING SAID THAT THEY DIDN'T WANT TO NEGOTIATE THE CONTRACT. So what do you do exactly when you have one party, you have two parties to a contract, the contract's illegal. The attorneys tell you the contract's illegal. So what do you do when you have one party to the contract who refuses to come to the negotiating table and the other party knows that the contract has to be amended? You've got to do something to get them to the table. And so we discussed EXERCISING SECTION 12 TO SET A HARD DEADLINE TO GET THEM TO THE TABLE MIGHT BE WHAT WE WOULD HAVE TO DO IF THEY REFUSED TO NEGOTIATE. NOW, THEY'RE HAVING THEIR MEETING TONIGHT. THEY WERE HAVING THEIR MEETING TONIGHT, MR. PATH. AND I DON'T KNOW WHAT'S GOING TO HAPPEN. HOPEFULLY RANDALL COUNTY, YOU KNOW, COMES TO THEIR SENSES AND DECIDES TO NEGOTIATE WITH US. BUT IF NOT, YOU KNOW, THAT MIGHT BE SOMETHING THAT COULD BE LOOKED AT AS FAR AS GETTING THEM TO THE TABLE. That still isn't a goal of splitting. No one's trying to do that. But let me address the cost. So I'm not really sure where the 300,000 to the city number's coming from, because I've taken a look at this. So populations that are similar to us, the five counties that are immediately higher than us, five that are immediately lower than us, I believe the average budget for those districts It was about 2.8 million when I was looking at it a few nights ago. Prad's budget right now off the top of my head, I think is around 5.4 million. So, you know, say 2.8 times two, that might be slightly higher. You know, what is that? A few hundred thousand, probably. But that's not going to be a few hundred thousand to the city. I don't even think we're going to get there, though, because hopefully Randall County decides to negotiate. But Randall County really started this whole mess. And so I do want to clarify that for you, sir.

So I'm curious how we pay, like, If we had to pay two separate entities, are we not base paid on a rate for what they're doing? What's the pay connected to?

Oh, no, you absolutely are. So it is a percentage based on the levy. So you would be assuming Okay, saying that the city's rate is going to go up with one entity versus down with the other, that assumes that all of the tax levies stay the same. Tax levies aren't going to stay the same, right? Because you guys might vote for a lower tax rate this year, and Potter County might vote for a higher one, or AISD votes for a higher one. And so that's assuming that all the levies would stay the same.

But I guess what I'm getting at is I think I understand that that's a matter of law on how we pay. Right. I don't understand as a customer, I feel like my rates are fixed. Whether I have one entity that's charging me for the total levy or I have two entities charging me for the total levy, I think they have an internal problem of how they balance their budget. That's your issue. For me as a payer, I want to make sure I understand either I have a premise of a potential cost increase or I don't. What could potentially cost us more here on the city side?

If there was any increase, it would be percentage-based, and it would be, I think, very minimal. But, again, we're not talking about splitting. I mean, that's not even a discussion that's being had.

But just worst-case scenario. And so right now the goal is for you guys to amend your existing contract to come into alignment with what both parties can agree to as a fairness for representation. Yes. And then, in your opinion, no cost increase because it's based on a rate?

Right now it's the levy? I think, I wouldn't foresee a cost increase because here's the other part of this. So, Randall County's district would have to buy out Potter County's district. And right now I'm just talking about the Potter County share. So, Randall County's district would have to buy out Potter County's district from the assets. Prad works with a operating surplus and so you'd have to get those numbers from Mr. Dagley as far as what those numbers would look like. But basically from what our discussion was in the board meeting, if something were to happen because of that, What would then occur, Randall County would do the buyout, Potter would have to go set up a new district. Now, that sounds kind of scary, but I want to be really clear about something. So it says that we can contract with another county for appraisal services. just because Potter Randall's not a district anymore, if that were the case. That doesn't mean we can't, you know, contract with Carson County, or contract with Moore County, or, you know, even Lubbock County, something like that. So, if it went a route like that, which setting up a brand-new district to do appraisals, I would imagine the first few years that probably is the most likely route. I don't think there would be any cost increase. In fact, it would probably be much, much, much less than you're paying right now. Because remember, you're paying a percentage based off of a $5.4 million budget. And so it would be quite a bit lower if it went that way.

Okay. Mr. Path, over to you.

Yes, and I'd like to just also remind, too, that this letter is written as much to Randall County as to Potter. We recognize that there are concerns Potter has, and so our encouragement here is for Randall. If there has been some hesitancy from Randall to negotiate, this letter is encouraging him to do that. We're encouraging him to work with Potter County. And then also, too, part of our concern is given Section 12 was discussed as being the remedy to then give to the table, that is a six-month notice of termination. And so part of the concerns would be that, okay, if it doesn't work out, do they go with another county who's obviously we're not a part of? We don't operate in Carson or the other counties. And then also, too, if that were not to work out, do they stand one up? And is there enough time to stand one up? And so, again, this letter here is just to encourage Randall County, as much as Potter, Hey, let's work this thing through. There are concerns that Potter needs to work out, and so let's work this stuff through.

And Mr. Bath, I will say, I think you are totally sincere, so I'm not doubting your sincerity at all. All I would say is the memo was directed to Potter County, because the memo said Potter County is trying to split. Potter County is not trying to split. And I think I've addressed that for you, gentlemen. But I really don't think that we're on the precipice of having some kind of huge budgetary impact to the city of Amarillo because I just don't think that's the way things are going. And a split, I think, is incredibly unlikely because nobody's advocating for that. But if something like that were to happen, if doomsday came true, I don't actually know that the city of Amarillo would see a cost increase because it really is just speculation.

And I'd be happy, too, even if it doesn't come across as a potter, I could be happy to add to the letter to speak more towards Randall. And so, again, I wrote it as speaking to both entities together. I see both 18 members as my representatives, and so I was writing it for all members. But I'd be happy to amend this to a degree to say just kind of emphasizing more the Randall, please, let's work through this kind of a thing. So, yeah.

So has the, I guess there's been two meetings involving just the Potter, how many meetings has Potter by itself had? Two. And at that meetings the option of the separation clause has been officially ruled out as an option?

Well, there is not a separation clause. Are you talking about the termination of the contract?

Yes. Because you're saying it's not going to happen. That's not the intent. But I'm just wondering, I mean, has that been, you're one member of the nine. So, I mean, you speak for yourself. It sounds like you don't see this separation as, but the other eight could have varying opinions.

Here's what I would say. You know, in order to get to that, there's nine members. And so it's just like council math. You've got to get five, right, to agree to that clause. I did not hear a single member of the board say, this is what we want to do. Right now we want to exercise this clause and get out of Pratt. No one said that. There were a couple of members, and I'll be honest with you, I mean, I expressed support for using this as leverage to get Randall County to the table if they wouldn't negotiate. Hopefully they will negotiate with us. But no, there's not a consensus. It doesn't even sound like it would be close as far as having a majority of the board saying that they would want to exercise that.

But we don't know until the nine of you meet and get together and vote.

Well, yes, but I think that's incredibly unlikely.

Okay. But I understand that, but it's still an option.

I mean, anything's an option, but I don't think that's going to happen.

Yeah. And then there's still an option on the table. We don't know the cost, but there could be an option that the cost could go up.

Well, it could go up, but I could go outside and get struck by lightning tonight. We don't know exactly what's going to happen. Like I said, there are ways, if there was a split, which again, I don't think there's going to be a split, but if there was to be a split, I think that there are ways where you actually would see an overall reduction to the cost.

So with that as a possibility, us still saying as a body, we hope that you could work this out so there's no additional cost to the taxpayer, would that be offensive to ask for that? I mean, again, and sitting in our seat, we don't know. We're talking to someone who runs an organization who I would guess is using a little bit of his experience in running an organization like this to be able to do that. But just as we sit here representing the taxpayers of us to say, hey, guys, if there's any way that we want you to resolve this, because this is a valid point that has been brought up, but if you can do that in a way where it mitigates the impact on the taxpayers, is that a request that would be looked upon unfavorably if we said that?

Well, I mean, that's for council to decide. I would say this. You know, I think that my biggest issue with the consideration of this, and I touched on it in the article that I had in the Globe News this past week, was the fact that it seems like there is a doomsday scenario that's being pushed based on misinformation. And I don't know if it's the chief appraiser, I don't know if it's just people in the community who are worried about it, that Potter County's out there trying to split the district and create this massive cost for the entities. And it's just not true. And that's why I'm saying, I mean, if you guys want to say, hey, just get it worked out, that's one thing. If you're saying, hey, Potter County, you know, act like adults, that's another.

Well, misinformation, welcome to our world. This wasn't misinformation. I heard someone say yesterday that the value of separating the district out would be that Potter's property is under appraised. And Potter County would get a whole lot more money if you would get separated out. There is all types of information going out, and it's hard to separate out. That's why we went to the source of someone who operates that to try to figure out what could this look like. And we don't know the political dynamics that are going on there. Our job is just to look out for our taxpayers.

Sure. No, and I understand that because, you know, I've got Potter County taxpayers, too, and we collect for them. I think I've told you guys this. I mean, every tax season I have taxpayers in my office who are upset and, you know, worried because they can't pay their taxes, and so I understand that.

I'd like to also, just for a quick, as a professional courtesy, Mr. Degley, he did not direct any of this. He did not ask to do this. I mean, I asked very direct questions. He provided answers. I mean, as a representative, he came. He couldn't not meet with me. So he said, can we meet? And so he did. So I'd like for the board to know that Mr. Degley did not ask or direct or anything like this. This is strictly myself talking to other leaders. And so I just want you to be aware of that. That's fine.

Yep. Thank you, Mr. Warren. Yes, sir.

Thank you.

Council, we can have a little discussion on this. I'll weigh in just briefly. I think good leadership here speaks to the potentials, which we've covered at a better level here. I think that the personal side of this is important in managing a potential. I don't like the letter being just sent with a vote behind it. I think it would be better served to take no action on this letter form and pursue one on one conversations and further try to assist the I'd say the reconciliation or whatever needs to happen between the other party.

Absolutely, yes, that's definitely an option. Again, you're not going to hurt my feelings if you don't do the letter. This is important to talk about, and I would encourage you as council members to talk to your board representatives. I spoke to my counterpart. I would encourage you to talk to your counterparts. And so I think given we've had this discussion, this is a good, robust conversation. Again, I present this to you as an option. We've talked about it. We've heard some good input. It's now public. Be aware. And so that's probably good enough right there.

So, Council, it's up to you guys. If you guys do feel like there's something better here in taking action on this item, or if you guys are in line with that to take no action, then we could move on to the next item.

I think you hit on a point there right at the end. Just having this public discussion has put this out on the table for people to see, and that may just be enough. I'm not real... KEEN ON THE LETTER MYSELF. I THINK THERE'S OTHER WAYS TO DO IT. BUT YOU MAKE A GOOD POINT. COUNCILMAN?

I THINK THAT THE BOARDS AND THE APPOINTED MEMBERS OF THESE BOARDS SHOULD MAKE THE DECISION AND IF THEY COME OFF THE RAILS, THEY COME OFF THE RAILS. IF IT GOES THE WAY WE WANT IT TO, WHICHEVER WAY THAT IS, I DON'T KNOW WHY WE'RE REALLY WASTING OUR TIME ON THIS.

UNDERSTOOD. Okay. Right now, based on that, I'm going to take that the council will take no action on item 6.6. Thank you. Thank you guys for being here. I'm going to see if we can push us through 6, 7, 8, 9, 10, 11. Nope, just 10. Quickly. Otherwise, we're going to take a recess. So let's start with item 6, 7 and see what we can do there with Ms. Johnny.

Good evening. I just brought forward an appointment for the Beautification and Public Arts Advisory Board. We have a vacancy due to actually attendance. We reached out to the member that was not attending very well and he chose to resign. And so we ask that you appoint a member of the Beautification and Public Arts Advisory Board.

Okay, so we've got a vacancy. In the past, we have had a list. Do we have a list here?

It was provided in your packet.

Okay. In the back of the packet?

Yes, sir.

Council, anyone want to make a nomination?

Well, before we do that, I know Mr. Kashub is here. Do you have any recommendations on...

So let me find it. It's got a bunch of beautification right now.

For the beautification board, there's only two applicants that we had. We would recommend Katie Paul for that position.

Okay. Thank you, Mr. Koshuba. Who's the other one, Mr. Koshuba?

Mr. Womack, but when I was looking at it, a lot of his applications were more for the hospital board and the public health board as opposed to beautification.

OK, Council, you got two applicants here still viable, both willing to serve. Katie Paul and then Mr Womack. Any discussion on either of those? I would move that we appoint Katie Paul to the Beautification and Public Arts Advisory Board. Second. Motion and a second on item 6.7 for Katie Paul. All in favor, please say aye. Aye. Any opposed? Motion passes. Item 6-8, back over to you, Ms. Glick.

It's a vacancy for the Parks and Recreation Board. Same thing. We found that a member hadn't been able to attend, and he chose to resign. And we brought forth you, or we brought you three applicants who were willing to continue, or I'm sorry, who were willing to continue. Why can I not say that?

Willing to serve.

So we do have a council member sitting on that. Mr. Reid, you're familiar. Do you have anyone that you would like to nominate if we do not already? No, not this time. Any one of those nominations. Okay. Mr. Koshuba, you mind coming back up? Who are the three and do you have a recommendation, sir?

So the three applicants are Sharon Delgado, Larry Guyon, I don't know how to pronounce his last name, and Susan Miller. The staff recommendation would be Susan Miller, who's an active user of the Warford Activity Center.

And you've contacted all three, they're all willing to serve? Yes. Okay. Council, I would nominate Sharon Delgado to serve there on Parks and Rec. We'll leave it out there for just a minute. If we get a second, if not, we'll ask for another nomination. Do I hear another nomination? Once again, Sharon Delgado. What was the other two, Mr. Koshuba? We can hear you. I'll repeat them. Susan Miller and the

Larry Guyon and Susan Miller. OK.

I'd nominate Susan Miller.

Motion for Susan Miller. Do I hear a second?

My hesitancy is I missed Sharon Delados as one of the applicants when I was reviewing them, so that's my hesitancy.

Well, we'll let it sit. If we don't get a second, we'll go back for another one. Okay, would request another nomination.

Mayor, what if, I mean, would it be the worst thing if we just maybe gave it two more weeks and maybe we could look at it and then come back in two weeks if somebody wants to look more at the applicants or somebody else hasn't?

We definitely could do that. Let me ask here, Mr. Reed, do you have a direction you can lead on here or do you feel like you need two weeks?

I would like to have that just so I can review the other application.

Okay, really good. So, Ms. Glick, when's their next meeting?

The parks meeting? I'm looking to Kashuba.

They've got a quorum every time. They're not in jeopardy. I mean, it's just the one vacancy, right?

That's correct. Our next meeting is July 8th.

Okay. So we'll be right after that. So that should give you a good time. Plus, you can kind of go back and compare notes. Okay. So we'll take no action on item 6.8. uh... item six point nine mister danforth i think we keep you last every time because we like we just enjoy spending time next agenda uh... i'd make them uh... a motion that we move whatever danforth item he has to the the front of the non-consent right i'm good with that i thought you get me just because i was good-looking that uh... all right item six nine sir all right six nine is uh...

The water line extension on Hastings and Western Street. This is an expansion of our water system to provide service that doesn't currently exist. It also enhances our fire security in that area that doesn't currently exist. And it allows us to work on balancing the system on the north side of Amarillo, both for current developments ongoing and future developments that are planned in the future. So what you're looking at today is basically a construction project or ward of the construction contract. We have provided these, the updates on this and previous presentations to council. So you've seen it before. It's been in the weekly updates with the city manager. So I think everything's pretty much current as far as in front of you.

Yeah, I don't think we have to go back and review anything, but we would pause here and see if we have any questions on this waterline loop. Questions, council? Okay, you have a ward in front of you.

I move that we consider the award of the construction service contract for Water Main Extension at Northwestern Street and West Hastings Avenue.

Second. Motion and a second. All in favor, please say aye. Aye. Any opposed? Motion passes. Mr. Danforth, can we do one more with you?

We can. I've got about 100 slides on a PowerPoint if you'd like it.

Yeah. Let's title all those asphalt repair.

I'll move quicker then. Basically this is similar to what we just covered. This is the mill and overlay project. It's phase two of the bond project that was approved. We're looking at several arterial streets that we'll be doing mill and overlay on. And this will satisfy the $12 million bond project that you guys approved. So this keeps us right on schedule. As Mr. Hooper represented, the goal was ultimately to get us to where we're doing these projects in the summertime during the paving season instead of awarding them in the fall.

Very thankful, grateful for the continued pursuing of this and just continuing to bring it forward and move it in a great way. I think it's REALLY GOOD. AND THEN THE COST, I KNOW I REVIEWED THE SUB BIDS. WE'VE GOT REALLY GOOD CONTRACTORS OUT THERE DOING GREAT WORK ALL ACROSS THE CITY. THIS ONE IS THE LOWEST BIDDER ON THIS PARTICULAR. SO I JUST ENCOURAGE ALL OF THOSE CONTRACTORS TO KEEP TURNING IN BIDS WITH US AS WE CONTINUE TO TURN OUT GOOD WORK. GENTLEMEN, ITEM 6.10.

I MOVE THAT WE AWARD THE STREET MAINTENANCE MILL AND OVERLAY CONTRACT TO JAY LEE MILLIGAN AS PRESENTED.