Finance Committee - Regular Meeting

2026. At this time, we'll start with a roll call. Alderman O'Neill?

Present.

Alderman Thorpe? Present. And I am also present, so we're all here. Beautiful. Is there a motion to approve the agenda as presented?

So moved.

Second. All those in favor, please say aye. Aye. Motion, aye. Motion carries. The agenda is approved. Is there a motion to approve the minutes from our previous meeting as written?

So moved.

Second.

All those in favor, please say aye. Aye. Motion carries. All right, we're into the meeting. We're starting with a... I'm actually having trouble pulling it up on my computer. So luckily I have it on my phone. We're starting with our... Fund transfers.

Thank you.

We're starting with FT-1326 for fund transfer for transportation fleet operations. I see we've got Mr. Kwaku in the back. You want to come up and talk about this? Dr. Kwaku? Oh, so this is not just for transportation.

Yeah, this is the general of fourth quarter. It's got a bunch of different pieces. They have the first piece, so.

Sure, yeah, yeah. Okay, thank you. With me is Uriana, our accounting fiscal assistant. For that particular essay, that is within the transportation fund that we did projections to the end of the year, and we realized that we need to move some money around to pay for the bills. So this is based upon projections that we do work out with the finance department.

Are you talking about the fund transfer at 1326 or are you talking about SA 2326? It's the FT 1326, yeah.

That's where we have a bunch of other departments in.

There's, so there are a couple different pieces. Yeah, you're not talking about the supplemental, right? No.

Oh, okay, all right. We want you to talk, yes, okay, all right, got it.

Transportation, maintenance, vehicles, admin.

Thank you. Okay, so let's start with that. Can you guys explain why the budget ended up being different than what we were budgeting?

Are you talking about FT 1326?

I am talking about the FT, yeah, sorry. The way you started off, I thought you were talking about the supplemental, I got confused, I'm sorry, apologies.

No, generally, as we move throughout the year, we look at our expenditures and based upon where the things are trending, we will actually do a projection and adjust our POs accordingly. So our fiscal assistant working with the finance department look at those numbers actually do meet regularly to look at the quarterly projections and based upon that we are projecting that we will need these transfers to meet our obligations at the end of the fiscal year. That's why we have different items listed in there.

So I think the way we'll do this is go one by one. We've got these what is it nine different chunks So I'm hoping we can go one by one and have each department talk about it And if they're not here, we can of course have the city manager talk about it. So At this time I'll just ask if either of my colleagues want to jump in asking questions about the Transportation Department's portion of this Sure so

My overall questions on these deal with not that I have a problem with any of the transfers, but the budget process that got us to this point. So as I see in the transportation part, we're taking $163,000 out of your salaries and benefits, is that right?

Yes, that's correct.

Altogether, yes.

And so that's a fairly large number. How do we have $163,000 to pull out of the salaries and benefits of the maintenance section of transportation?

The maintenance section portion A portion of the expenses are also paid for in grants. So in FY2026, we used about $495,000 as a grant revenue, which a portion of it is used to pay for salaries and benefits. However, when an award was made, we had substantial increases in that. So basically, that means that we do have more revenue in the maintenance division to pay for that compared to in other areas where there was some shortfall. So the increase in the maintenance revenue came as a result of increasing the grant revenues. And we have Suzanne here who can actually elaborate on that.

In terms of where those savings came in from, it's vacancy savings for a position as well as the increase in the PM grant.

Increase in the what?

The M grant? The preventive maintenance grant.

Got it, thank you. So this goes to your point during the budget process about budgeting for vacancies, taking into account vacancies. And then the second thing I would look at, the second big number there, because I'm not going to ask, go line by line, but $75,000 to go into the vehicle section of transportation for salaries and benefits. I'm sorry, go back to the salaries and benefits. $58,000 for salaries and benefits in vehicles. If we over budgeted for personnel in one section, how did we under budget for personnel in another section?

For the personnel, as we did allude to, when we're doing the budget, we assume a different budget grant amount. So that's what we use, and at that time, we were thinking that what we got in the previous year is what we are going to get. However, when the award was made, it was very much substantial. So that actually led to the increase in the revenue side for the salaries and benefits. So that is how that overreach came in. For the supplies and the others, we talk about tiles and other parts and material that we use, we do have price changes over time. So that could explain why we also have that kind of increase. Do you have the details? License, yeah.

Are we waiting for you to find something on your computer? Yeah.

I think fundamentally the thing that we're, oh, sorry, you ready?

Yeah.

I want to start expounding.

I was going to say that salaries are, generally speaking, it's overtime. And for the 74,900, that's for fuel and oil.

That's what?

Fuel.

Okay. All right. Thank you very much. That makes sense.

That makes sense. I think what I was just about to say, and this kind of, I'm going to hazard a guess as I speak for all three of us up here, what I think we don't see reflected in what's before us that we want to know is the why. And so when you say, like, we need more money in supplies than others because fuel prices are higher than we expected, that's exactly the kind of thing we want to know. So folks are coming up and talking like that's what I think we're all trying to get at here. That's all the questions I would have had about transportation. You have the floor.

I'm good, and I would associate myself with the chairman. This is all about the continuing process, the continuing improvement of our budget process, and the fuel, that's a perfect example where when you did this budget, a year ago or a year and a half ago, there's no way for you to know that fuel prices are gonna go through the roof. So thank you very much.

Alderone, any questions for transportation? Okay. I should have planned to have you guys go last and then we could have just done the supplemental and not had to have you jump back and forth. But we'll let you go sit back down. And if there's somebody from DPW, we'll just go right down the list.

If it's okay, I'm actually gonna ask that we do Central Services, because I know Corey has to leave.

Yeah, I appreciate you bringing that up. Yeah, let's do Central Services, go ahead. Thanks for being here, Mr. Bradley.

Good afternoon, Corey Bradley, Risk Management Administrator representing Central Services.

Thanks, Corey. So I think like I was just saying, really what we're trying to get at here is why did we have such a large chunk of money available? It looks like it's mostly in salaries and benefits. And then why do we need the funds going into fleet operations, going into contract services and going into, well, it's really all fleet operations, but different parts of fleet operations.

It should be one to facilities as well for 100,000.

Oh, coming out of facilities, right? Correct. So we have funds coming out of salaries and benefits. Oh, I see. This is under facilities. Yes. So we're also taking some from salaries and benefits for facilities and putting that into contractual services. So you want to start with that? Correct.

Yes. So we're moving money from the salaries into the open positions because we've had those open positions. The work still needs to be done, correct? So we're moving that into contract services. We have aging buildings. We still have to maintain them. HVACs go down when we hit extreme temperatures. So we just need that in order to keep our buildings and our people safe.

The obvious question would be, were we trying to fill that position and we weren't able to? Is that the idea?

I'm going to say yes. At this moment in time, I don't know any differently.

And there's also simply a delay, right? So, for example, You'll see later you've got some salaries and benefits from fleet, right? Fleet manager had retired, right? We just, as of today, didn't have a new fleet manager on board, right? So there's vacancy savings. And there are a couple of positions like that in central services.

Correct. Last budget cycle, they opened up a position for a fleet analyst. That position wasn't posted until earlier this year, and it just got filled. That gentleman started today as well.

Thank you, and I think just to pile on to what the chairman said, as we go through here and we ask these questions, there's various answers, but as specific as we can be based on what happened would be great. We had a position to do this for $100,000, but we didn't fill it.

We didn't fill it for this reason, right?

We didn't fill it for this reason. And by the way, the reason doesn't have to be, the reason could be, whatever the reason is, right? But that gives us, we're looking really at the effectiveness of the budget process here. And so if you budgeted to do something, to hire somebody for $100,000 and you weren't able to hire them, that is what it is and that's the city manager's challenge to continue to work that and you need to move $100,000 to something else. And I say that for everybody in the room so that we have an appreciation for what the finance committee's looking for. We're not doubting you or anything like that. We just wanna make sure that we reinforce the sanctity of the budget process. Okay, thank you.

So, Mr. Bradley, that was a real straightforward part of facilities. We're just moving some from salaries and benefits over to contractual services. Makes sense. We then have this part down here about fleet operations that I started to ask you about beforehand. Could you talk about the why behind that?

All right, so fleet operations, I think the elephant in the room in that will be the cost for fuel. Cost for fuel has gone up significantly. I'll use May 2025 versus May 2026 as an example. Fuel cost last year was $19,400 for that month. This year it's $33,000. 33,000, I mean, that's a 70% increase. Um, and so we're seeing that we need that transfer in order to continue to operate. And then when you look at the bigger scale of how we operated during this winter. We had dump trucks, plow trucks on the roads 24, 7 fueling. So we just want to, we're trying to encumber that money into that account so that we can keep our operations going. The other 150,000 dollars. transfer is going to be to assist with fleet operations obviously in today's climate costs and goods of services has increased and we just need to meet that needs for our fleet so this is essentially like mechanic services correct right i mean we do the best we can in-house but there are things that we have to we have to contract out we have to buy parts from all over

How do we figure out what we, so I take your point that on the fuel side, this is both we used more and it was more expensive. And I don't expect that we would have been able to get that we used more part right, because it's fully dependent on the weather. But in terms of forecasting the cost of fuel, how do we do that in our budgeting process? How do we, are we paying $4 a gallon or $2 a gallon?

If the budget team wants to jump in, feel free. But in general, we generally look at historical trends and do a best estimate based on what we're seeing currently. You know, we've had some international pressures on fuel costs that we would not have contemplated a year and a half ago. And that stuff is now hard to predict moving forward as well. So, you know, other than looking at historical trends, that one is, our crystal ball is particularly dim for fuel costs. And not just us, right? Like everyone struggles with that.

So relative to that, did we budget differently this year based on last year or did we use the historical trends?

I believe that we devoted some additional dollars.

I think we took our projections this year and went up a percentage. I don't know that percentage offhand right now.

Was it the percentage from last year to this year or?

We looked at our historical data for this year and what we're projecting to spend the rest of this year.

So we increased from that?

Yes, ma'am.

If for some reason it goes down, then we'll be ahead next year. Thank you.

Yeah, go ahead.

So it strikes me with the new director of finance that we have an opportunity to rethink the way we do that. In other words, we are the city of Annapolis with 40,000 people and a phenomenally great finance team being put together. It seems to me we just use Maryland State's number or Anne Arundel County's number. Or the feds, right? Or the feds, some number that makes sense that our budget team saves a couple hours and from doing that, unless we have somebody that really loves to do that stuff. But even then, so just a thought as we go forward, that that's an area where we get a lot of pressure from the residents saying, hey, why don't we leverage the county and the state more? That seems to be a good opportunity. And after that, I'm now getting into how you do your business, so I'll stop.

Anything else on this? I think what we heard is, We have the money available in salaries and benefits because we didn't have the folks hired to do the work on city facilities. And so we had to spend that money on contractual services. Similarly, we had more money available in salaries and benefits on sort of on the fleet side of what we were putting into the fleet side, because again, not everybody who we wanted to have hired was hired, but we've more or less rectified that now. So we have additional funds and we need to put those towards both the increasing costs of fuel, and increasing costs of more or less mechanic services. So I feel sufficiently explained. Mr. Bradley, I think you're good. All right, thank you guys. Ms. Buckland, do you have any other suggestions about the order we go, or do you want to just go down the list?

We can just go straight down now. Thank you, Tracy.

I think this one's going to be pretty straightforward, at least in terms of why. So Tracy, did we have a big snowstorm or anything this year? Anything we should know about? Not at all. Why did we decide that contingency was the most appropriate place to pull this from? And that's probably more a question for the budget team or the city manager than for you specifically. And also I totally thought, and just tell me if I'm wrong, that we only had 300,000 in contingency last year. So if you wouldn't mind addressing that, Mr. Johnson, I'd appreciate, or this year rather, FY26.

Darren Johnson, senior budget analyst. So we use contingency because we had touch contingency all year. So we had the pot of funding for contingency. If not, we would have had to pull from different pots to equal up to the amount. So it was easier to just pull from contingency. Now, and as far as the amount, I would have to double check because we couldn't put 541 if we didn't have the 541,000 available.

Maybe a better way for me to ask that would have been, how much did we allocate to contingency in FY26?

While you were talking, I went ahead and pulled that up. The contingency in the FY26 budget was 561. I'm gonna have to go figure out why I thought it was only 300,000, but that's- Because it looks like initially it was, but it also looks like there, I'd have to find out the history of that, but there was a revised, there's a revised budget. The revised budget number is 561. So there was an addition to it at some point.

Okay, at some point we adjusted. All right, I will try and figure out what that was, but we don't have to do it on camera. Anybody have any questions about our snowstorm? This seems like, to me, very much what the contingency fund is there for.

It's actually not as much as I thought.

Not as much as we thought. Could be worse. All right, thank you guys. I appreciate you being here. Oh, Tracy, I have a question. Can I see Director Jakubiak there? Oh, yep, you're behind Chief Migas. You want to come on up for, this is a relatively small one, but basically the question is, how did we have these funds available in salaries and benefits, and why do we need to put them into supplies and other?

This reflects the fact that the department in fiscal year 25 and 26 had an unfilled position and that position has not been filled because I haven't found the right person and I'm allowing staff to adjust to a different way of managing our operations and current planning. I intend to fill it but not right now. It also reflects the fact that there are two other positions that are not filled, and we've had some difficulties filling. HR, under the recent acting director, moved quickly to allow us to fill those positions, which we appreciated. And in both cases, we advertised, but have not found someone to fill that position, and we're gonna have to re-advertise. by just telling me what those three positions you just talked about are? The first one I referenced is the chief of current planning. And the second one is the zoning administrator. It's a principal planning or senior planning position focused on zoning. And the third is an administrative assistant.

So the administrative assistant position is still not filled? Correct. Oh, that's too bad. I can understand why you would want that. I know just for me alone, you get quite a lot of emails. Right. All right, anybody got any other questions?

The only thing I would say is I was trying to quickly find your total salary budget for 26, and the fact that you only are transferring $55,000 shows to me some pretty accurate budgeting. So thank you very much. Thank you.

Director Kubiak, am I remembering correctly that, and maybe this is actually a question for Mr. Johnson, that we do have a vacancy savings built in in planning and zoning, yeah? It's like what, 150?

Like 147, something like that, yeah. Okay, right around there. Not sure off the top, but it's like 150,000.

So, if we were to fill all three of those positions, and assuming we don't have people leaving, If we were to fill all three of those, we would, planning zoning would be a little bit over because of that vacancy savings. Is that fair to say?

I think we should be good. We're not close to going over this year oh i'm sorry i'm talking about for fy 27 yeah oh we would be fine because we plan when we do the budget we budget as if all the positions are filled right so we take into consideration 100 capacity so we would be good with that including that in there okay i i get what you're saying i'm not yeah that's fine we can move on uh i pulled up the

5,684,000. So pretty darn good to only have $50,000 difference. So yeah, seriously. All right, I don't have any other questions. Anybody else? No, we can move on. Thank you very much for being here, Director. Thank you. All right, who we got up next? APD, Chief Miguez, how are you doing today?

Good afternoon, I'm Acting Chief Amy Miguez with the Police Department and?

Craig Medley, Police Administrative Manager.

Thank you guys for being here. I'm not gonna ask you why we're able to transfer money out of salaries and benefits, but can you explain why we need money in contract services, supplies, and other capital outlay?

Yeah. Yes, thank you. I had it up, I don't know where it went. So the few things were, the few big things, 41,000 was for a 2024 po that got closed so that last invoice had to be paid out of this year's funds um so i decreased another 2024 po that we're still waiting for the products to come so this is just to replenish that The $63,000 in contract services, the main thing was a big Oracle project, our old in-pursuit system, our data management system was going down, so we had to get somebody to come in and get it running again so we could get all the data out of it, as well as the contract IT person. So that's really... should you know can come out of salaries anyway for him so that's just to replenish um the other big one is software 18 000 for the visitors uh system when you come in get the card and everything that was a project that was done after the fy 26 budget was all finished and we're asking for 40 000 to be moved to replenish the ammo that we used for the new firearms that we went through. Those are the big.

And that 40,000, that goes under supplies and other, right?

That goes under supplies, yes.

And the software you're talking about is under capital outlay. The purchase order, the PO, PO is purchase order, right? Was that under capital outlay or that was under? That was under capital outlay. Okay, thank you. Anybody got any other questions? Okay, thank you guys, I think that's good.

Thank you.

We already went through transportation and central services, FASF. Ms. Buckland, what's FASF? That was the forfeiture. Oh, forfeiture and seizures. Seizures. There we go. Oh, I'm sorry. So that is also police. I'm sorry, guys. It is.

I always forget what FASF stands for.

There's an acronym in my world of S-A-F-S-F, Sustainable Ag Food System Funders. And so that was all I could think of.

Yeah, no, forfeiture asset seizure fund. There we go. So...

Yeah, could you guys just tell us why behind this one? It's a relatively small one.

This is just mainly to pay cable electric for the off-site. We did have to get a couple more rental vehicles, so that jumped it up, and the cost of everything kind of went up more than I'd budgeted for and expected. Not too much, but a little bit.

And feel free to stop me if I'm asking about something you don't want to talk about. But tell me why was capital outlay much less than we expected it to be?

So we're responsible if something happens to that building, we're responsible for fixing it. Last year, two years ago, there was like an electrical bit that needed to be fixed. So we put money in there as a just in case something happens.

the vast majority of the time we don't use it but it's there just in case some emergency happens so we're liable for like i think hvac like if there was a plumbing issue in the unit so there are certain things that under lease we're responsible for so we budget for some of that and um but then our our um lease was up for renewal and the amount went up. And with the lack of fleet funds citywide, we were supplementing cars we needed with the rentals that we use. We're trying to come up with some more economical way to do that in the future, considering purchasing vehicles rather than leasing them. But it's part of our union contract to supply vehicles, so we're trying to use that as a stopgap method.

It's okay to pay for that out of the for-return asset seizure fund? Isn't that supposed to be pretty self-contained?

No, it is one of the allowable expenses to use. You can't supplant things, but this was some money that wasn't budgeted for, so we needed it.

Got it. I see what you're saying, okay.

Yeah. Chief, this is my education process. Do you pay it out of your budget for leased vehicles, or does that come out of central services in fiscal year 27?

FY27, it comes out of our forfeiture funds.

I mean, in general, like new police vehicles will be in fleet replacement, right? There's... Right, but leased vehicles aren't.

Yeah. And if the city could decide to lease vehicles, marked police vehicles, that could be an option, but... Right now, the vehicles that we lease, we pay for through forfeiture funds.

Are these vehicles marked police cars? Is that what I?

No.

No, they're not marked police. Okay, got it. Got it, thank you.

Were we, for this particular expense, were we to not have the contract saying that we're obligated to provide take-home vehicles? Would it still be your recommendation that we make this expense?

We have other options to fulfill that need, should that have come to pass. We could have had other ways of dealing with it. The vehicle shortage, basically. This was just one of the options, and the forfeiture fund is there for us to use for things like this. That's why we decided to do it that way. We weren't in such a crunch that we needed to do more thinking about how to do it. I mean, the contract allows for, obviously, if we don't have the supply, that we can make other arrangements, we can work it out, things like, not having every officer have a vehicle, but that would require some discussions and a little more work to work out.

Gotcha. Yeah, what I'm trying to disentangle is it seems like there's two reasons why we want to lease these. One is we are required to make sure people have take-home vehicles as part of our union contract, which I hear your point that we have some flexibility on. And the other is we need them for work people are doing on the job. And I'm trying to understand we're A, not a reason, would we still have the reason B, would the reason B be enough that we would do this?

Right, yeah.

Yes, it would, you're telling me, okay. Alderman O'Neill, you look like you maybe had a question, no? Okay.

I'm trying to follow your AB.

I could have been a little more clear on that. Okay, I don't have any further questions on this. Seeing no other ones, I think we can move on. Thanks for going down and then coming back up.

Thank you.

Audubon Thorpe over here thought it was about submarines. All right, Mr. Paquin, how you doing?

Good afternoon, Brian Paquin, ITS Director.

So question to you is just how were we able to spend less in salaries and benefits than what we budgeted for? And why do we need to spend more on supplies and other than what we budgeted for?

We had an unexpected departure from the department. That position has not been filled yet. The transfer into the special project would allow us to take immediate action on some of the initiatives that are being recommended by the plan. We've actually had a meeting just this morning outlining the year one objectives. So putting this funding to use in the special project and continue it forward into 27 would be ideal for us to get a head start on these initiatives.

So I just want to make sure I understand, is this for doing strategic planning or is it for you've done the strategic planning, now you're trying to implement it?

We're implementing year one initiatives.

okay that makes great sense to me uh i i think that's one of the best things we've heard is you have some additional money available and so you want to get a jump on this i like that uh anybody got any other questions so i think this question is directed to the director of finance uh nominee and um i don't need an answer

On the fiscal year 27 budget proposal, the budget for salaries in IT was 1.706 million. The projected 26 expenses were $37,000 more than that, 1.743,000. So when we did the budget, we were briefed that IT was actually gonna spend more money on salaries by $38,000, which by my quick math is about 2%. And now, a month later, we're handed a document that says we can pull $65,000 out. That's what I'm looking to, in the years ahead, to clarify. Projections are projections, and when this projection was done, it was six months ago, things change, and that's why I don't need to get into an answer. But that's the kind of detail that I think our department heads should have that said, well, we thought we were gonna be $65,000 behind budget, or $35,000 behind budget,

this and this happened so now we're going to be 65 000 ahead of budget and we took the opportunity to do strategic planning so again i don't need to get into that but that's really what we should be looking for thank you that's a great point and let me just ask you i understand you don't want a total answer but did the departure you're talking about happen after we did this projection for the city budget is that the answer yeah i'm getting nods All right, thank you. I think that's all we need to hear unless anybody has any other questions. Seeing none, the next one is finance. And I think we all- Thanks folks. Yeah, thank you. I think we know the why behind this. Is it basically just, we ended up having an acting director who is contractual for longer than we expected. So less salaries and benefits, but more, yeah. You don't even need to come up Mr. Johnson. I don't have any questions on this one either, my colleagues. No? All right.

I would offer a motion for a favorable recommendation to the council. Second.

All those in favor of a favorable recommendation on FT-1326, please say aye. Aye. Motion carries. All right, only, or no, we do have two other pieces of business, but our next piece of business is SA 2326, which is our folks from the Transportation Department talking about parking, one of our favorite topics. Long time FC.

Okay. This is a request to move funds from the parking fund to both the parking funds and then the transportation fund. Let me start with the smaller numbers here, $29,000 for fuel. You may recall that just a few moments ago, we talked about the $74,000. inter-fund transfer to help pay for supplies and others, and majority of that amount is going to help pay for the fuel. That is not enough, so we need additional money, and that is where the $29,000 comes from. $46,000 transfer to the transit revenue. We did a projection for the transit revenues. A large portion of the transit revenues actually consists of transfer from the parking fund, which is the subsidy. So based upon the projected revenue, we need additional $46,000 from the parking fund to help with the shortfall in the projected transit revenue accounts. So that is why we are asking for the $46,000 from the parking fund to transit revenue, because we always get some, kind of transfer from the parking fund to the transportation fund. Now, more at the end of the year, but based upon the projection, we want to be kind of take action right now to ensure that you have enough money to pay for that. The larger amount is for the contractual services for Metropolis. mostly due to increase in salaries, increase in overtime, and increase in data processing. Particularly for data processing, I believe the budget was around $50,000. It has changed, dramatically increased, maybe 150-fold, yeah. Because of that, we need additional money to help pay for Metropolis contract. On the other side, what you don't see here, and Suzanne may talk about it, there is also some increase in revenue, also in the parking fund particularly. through the increase in enforcement that we have and all the other improvements that we have implemented in the various parking assets managed by Metropolis. Suzanne if you have any additional details you can add to that.

I think it's important to note that we actually spoke with law as well as upper management, and Yolanda will speak to this, in regards to this contract. Because it is so high, over budgeted, the budget was actually from them for two and a half million, and it's coming over at three million. And most of that is payroll related, 300,000, and some of that is data processing. about $175,000 of that. We do have some increase in our income in the parking fund, maybe about $200,000 is what we're projecting right now, but...

So, yeah, you want to speak on this a little bit? Because, I mean, if we had a contract for $2.5 million and now it's $3 million, I'd love to know why.

Thank you, Chairman. So let me give a little context as to why we're asking, but then also give you some guardrails as to how we're proceeding. So there is a $492,000 overage. When we got the information of the overage, we started to investigate and look into what those costs were. The team has been very thoughtful in shoring up data, also personnel costs, but those were not costs that were necessarily pre-authorized for the city. It was authorized within the company itself. And so at this juncture, what we are doing is taking a deep dive into the actual invoice to sort out what level of responsibility we have and then what amount of funding from the invoice needs to be reconciled. Once that is reconciled, then we'll have a more accurate picture. That said, the current invoice, the current request is to transfer the full amount so that we can address the overage if it needs to be. If, in fact, we reconcile that and it comes to a lower amount, that money will still be available and go back to the original fund.

It would go back to the parking fund?

Well, yes, because it essentially would not be expended on behalf of the city.

Oh, right, okay, because this portion we're not transferring. Yeah, it's staying within the parking fund, sure. Mr. Jai, did you have anything to add? Can you explain some more about why the decision is to have the money? I get what you're saying. They authorized expenses that before asking us, they're now invoicing us for those expenses. It sounds like the decision was made by you guys to say, we're in a better position to have the money while we argue over the invoice. But I'm just curious what the why is behind that. Why do you feel like we're in a better position if we

say yeah so so the invoice came in um at the beginning of june and i think what you're seeing is a reconciliation of kind of the in-year process to shore up all of our invoices that need to be paid so this was one of those um and so in in recent days we have really started to dig into this meet with the company and getting ourselves positioned to reconcile the invoice, that does not mean that we will not owe something. What it means is that I think that we will be in a better position to pay a lower invoice with the right level of context and conversations. and the money will be available for us to kind of pay the bill immediately as opposed to coming back before the committee to ask for the funding. What we will do and commit to do is in the next finance committee meeting, hopefully we'll have this reconciled and we can tell you what portion needs to go back and where we landed with the final invoice.

That works for me. You guys got other questions? I do. Just jump in.

Madam City Manager, I applaud your relationship building. I have a hard time supporting this because I think if you went out on Main Street and asked the citizens for what's the number one thing that frustrates them, it's parking, the garages specifically. And for us to, for the Finance Committee to recommend a 20% overage be approved without more detail? I mean, almost to the point of asking somebody like the Director of Transportation or you or the company to testify 20% overage. I just don't think the City Council should approve that if we're stewards of the residents' money. And I think the burden is on the company. I applaud your customer service, your relationship building and all that, but for them to tell us in June, 30 days before the end of the fiscal year, we're 20% over budget, I don't think they have, unless I'm missing something, a license to jam us. And so I would recommend that we, we withhold our support for this transfer until we hear from you that you have received the details, that you recognize the details, they make sense, and that based on that information you do recommend in order to move forward effectively we transfer it. I think we would be relinquishing our responsibility if we, did it on good faith, which by the way, I'm willing to do on numerous occasions for you all, but not, this one's a tough one.

Okay, Alderman Thorpe, can I just respond if that's okay? So I want to ask finance a question momentarily, but let me address your first point. The team will tell you that I have been extraordinarily adamant to move forward with this at all. My first position was that decisions made on behalf of a company are not the decisions of the city and therefore do not obligate us to address those overages. That said, there are some there is some room for conversation around what was required in order to fulfill the contract and what might be items that should not be part of our invoice. I think for me, it is really, we have the data. We can tell you what they spent the overrun on. If you want to have that data, we certainly can make that available to you. I am comfortable that we will not be in a position to pay 20% overage. Will we have to pay something? Yes. Will it be the amount that we are transferring? Absolutely not. And so, either way, if you approve it today, our commitment is to ensure that we will not, I think, be in a position to have to pay that invoice and we can share how we work that down to a much more reasonable number. If we have to come back, we can do that too, but we can provide you all of that data. I think the question is if it is going to delay anything in the finance office, and I can't answer that, so I'll turn to the finance team and Deputy City Manager Buckland to have any feedback on that piece. But thank you for, we agree.

Hello, Karen Ajayi, the Deputy Finance Director and the nominee for the Finance Director. I don't think it's going to delay anything, to be quite honest with you. I have had discussions with Yolanda regarding this, and I do believe this is the right way to go at the moment. So if you have any other questions for me, I'm happy.

Thank you. And I appreciate, Ms. Buckland, were you going to add something?

Just regarding the timing with respect to year end, right? That's the other consideration is making sure that those flows happen in the correct fiscal year.

So go ahead, please.

We can't go back and appropriate funds. Right. So it's nobody's desire to pay this. And that's why we involved. law as well as the city manager in this because nobody wants to pay it and we haven't paid it yet it's not the plan to pay it until they can provide us with some additional information which would actually show that we requested the extra services that they're billing us for thank you so so now i'm this is starting to become a little more clear

because my intent was perhaps to have a discussion with you later while you were asking us to do this on good faith. The challenge is June 30th. And so, And so today being the 18th, if we don't recommend this and it doesn't go to the City Council on Monday, then you are not able to expend this money. So I would be willing to support this on the good faith, but I would like to have a detailed report and i think it should be public it should be at the at a finance committee meeting where we provide the details that you would have provided had it not had we not been under the gun for a june 30th deadline now i understand and and and i fully understand the good faith request because this wouldn't make sense in february got it okay So I would be in your support.

No, I'm in basically the same place you are. Alderman O'Neill.

So my question is this. As somebody who works in a place where I provide contracts to people and sometimes there's overruns in my contract, it actually says if there is an overrun to the services that I'm providing, I will give adequate notice. Is that something that's in our contract?

It is. It is explicit. We went through the agreement. There is specific language that the company should have notified us at the time or immediately after there was a sighting of overrun. And actually, I think we found it. And the team reached out to provide notice that the invoice did not look like previous year, I mean, previous months. um and so the overrun we not only gave them notice that we saw the overrun they continued to spend to support whatever decision they made and so the the language is there so this will not happen again and with other vendors we can't see a

A waterfall of other people trying to do the same thing if it looks like we are paying out.

No, we are quickly putting in place a whole set of parameters and letters working with the Office of Law to make sure that if you are engaged with the city, that our contracts and our agreements are very clear and that we will adhere to them. And so do we expect our contractors. Thank you.

So I'm, oh, I'm sorry, you got another question? Go ahead. I would just say that I'm being very polite, we're being very polite and all that, but we would empower you to tell the contractor that the Finance Committee of the City Council of the City of Annapolis would not look kindly to paying these bills in the future.

Yes, well put. Duly noted. Where I was gonna go with this is, first of all, I echo what Alderman Thorpe said, not just now, but previously. The issue with this is that we're at the end of the fiscal year. But I'm curious, before we approve it, it's $492,300 is the overage. If you guys are here saying the amount that we're gonna have to pay is somewhere between zero and 492,000, is there some, let's say exclusive, right? It's somewhere between those two. Is there some level lower than 492,000 that you feel like it would be appropriate for us to authorize?

We have not determined that specifically and I think I would get ahead of myself by saying the actual number. What I can tell you is that based on our contractual agreement notice should have been provided and therefore we certainly have standing to be able to say that we wish to have the company absorb this. That said, we realize that there are costs of operating with the city and with the requirements that may have been placed on them as they shifted their business practices. And so I think for us, it is a conversation about what is reasonable. We certainly don't believe that where we are now is reasonable. And I think based on our conversation today, the invoice is actually significantly less than what you see before you. I would just say give us additional time to continue to reconcile it, and I think it will be significantly less than what you see there, if at all.

I think we're going to go ahead and approve this. I would love us, wherever we can, to be able to shrink these, I don't want to say error ranges, but these predictability ranges, uncertainty ranges, that's the word I'm looking for, so that if we're very sure it's not going to be more than $400,000, that we appropriate no more than $400,000. I am willing to move forward with you saying you're not comfortable saying 400 versus 390 versus 370.

Chairman, give me one second. I can tell you that when this was prepared, I reached out to law and they told me to put worst case.

Okay. I think we're ready for a favorable recommendation on this. So moved. All those in favor, please say aye. Aye. Aye. All right, motion carries for a favorable recommendation of essay 2326 with the caveat that we're expecting a report. Is it reasonable to expect that at our next finance meeting on July 1?

We will give you an update even if it's not reconciled.

Thank you very much. Looking forward to it. With that, the last thing, thank you all very much for being here. I appreciate your help. With that, the last thing we have on our agenda is the fees for long-term room rentals. I think what we had left off with, speaking of shrinking uncertainty windows, what we left off with at the end of our last meeting was the idea that colleagues wanted to see a tighter window of how much these would cost us to better understand what the fees should be. Mike. Am I saying that right? Yeah? Okay, I think that's fair. So do we have additional information? Do you shrink that uncertainty window of what licensing a room and a bedroom for the people will be?

I will venture to say that nothing has changed in the impact report nor in the staff report since last time we talked.

I also noticed that.

So, I mean, this is based on basically five households turning into room rentals in private homes into boarding houses. I will go on record as saying I'm not gonna support this legislation because I don't think that it needs to be legislated, but that's just my personal opinion.

I mean, I hear you, but it is legislated already, which is that it's illegal.

Does it say it's illegal?

Yes.

Specifically. And how are we enforcing it? We can't even enforce illegal STRs. Which are very, very vocal and very, very visible. This is very invisible in my opinion. I think that we are spending a lot of time and enforcement hours on something that I would like to see data on what we think how many people are currently doing it. I can tell you four in Admiral Heights. I can tell you that in many cases it's helping somebody already with rooming because they couldn't afford to go to an apartment and they may not have that opportunity if we started licensing it. So I am not going to be in favor of

giving a favorable recommendation to the fees regardless of the fact that it hasn't changed since our last question my only question for my colleague would be a process question in that the legislation city council for a vote with 125 dollars is the fee And that question we're faced with is, is $125 the right amount? So would it be possible to divide the issue into two things? One, do we think it should be legislated or not? And two, if it is legislated, is the right number $125? So, I would ask if we could maybe do the second and mainly also to send a message to the director of finance because as the chairman said, we don't have any edits to the fiscal report and it says here, Granted, we're only talking $625, but I think we need to send a clear message to the finance department that it says while the new license fee revenue is not expected to fully offset the increased costs, Why would the finance department ever recommend that? Because we're looking at other residents saying you have to pay for this. If this is approved, you have to pay for that, which for some people might be a different reason to disapprove the legislation or to submit an amendment to say what we asked at the last meeting of Mr. Doyle, what would the cost The question we asked at the last finance department and realizing we're in a transition period, but the question why we didn't address this was what would the cost be? And if the cost is, You know, if the answer is, well, it would be $137.22 and we think it's easier to do 125, okay, I got it. Or the cost, we amend the cost to be 150. But right now, I don't think we have a recommendation from the finance department that says to cover the fees, to cover the cost of the program should be this. We have a, is not expected to fully offset. So the second part is really what I'm trying to drive through with the finance department stand tall to say if City Council if you approve this this should be the fee.

I'll add to that if you look at the bed and breakfast or the hotel motel or inn and say I have a bed and breakfast that has five bedrooms and I can rent out all five bedrooms of that I don't have to live there and I'm paying $100 well per room versus somebody who might be renting out one room of their house to three rooms or more, they're getting charged the same thing as a standard rental license. Again, doesn't have to live there. It might not cover the cost, but it seems to me an extraordinary difference in how we're looking at the different types of housing available.

I think the logical conclusion of the argument that I heard you make earlier is that the fee on this should be zero dollars, right?

Yeah, it doesn't cover the cost of us doing the inspection. But at the same time, if it was a bed and breakfast, it's $100 for a room. So if I want to rent out the three bedrooms that are empty in my house currently, or the two bedrooms, I should say, perhaps it should be $100 per room instead of $125. Then we'd have a better idea of how many rooms, how many houses are renting how many rooms.

Well, I think you would still have to say, we would know how many, Right, that's in the underlying legislation. But my point is, if your argument is you don't want to legislate this at all, then, which I mostly agree with you, actually, as a matter of policy, except that what we have as legislation is better than the status quo, where it's just 100% illegal, then the logical conclusion of I don't want to legislate this is the fee should be zero dollars. So I would be perfectly happy to move forward with that recommendation.

We have data on how many fines we've given for quote-unquote boarding house violations?

I do not have that data. I think what I know about is at least two people who have come to the Department of Planning and Toning asking how do I do this legally have been told there is no way to do this legally. Or I should say not at least. I know of two people. So... I would certainly be open to an amendment to putting it as zero dollars. then that could work us towards the idea of we how do we reduce the regulatory burden because I mean if the if the underlying legislation that was in front of us was simply allow this and not have it be a whole licensing process I would vote for that in a heartbeat I just don't want to end up in the status quo where it's you're not allowed to do this at all or you're only allowed to do this if we don't try and catch you which I hate where we like wink wink nudge nudge it's okay so Do you want to make that amendment?

Before we move to that point, I guess my, The question is not just should they be licensed, but should they be inspected and licensed? And so I think we all agree that if there's a cost to the city for a program, the cost should be as much as possible put into those people who use the program.

Respectfully, I do not agree with that. I think it's true for some programs, but not for all.

Yeah, and not for all, that's fair. I mean, not everybody uses the roads, right? Not everybody uses a sidewalk. But in a case like this, or short-term rentals, or I was gonna use summer camps, but actually I would like to see no fees for summer camps. But I think this is a case where there is a single digit number or a three digit number of people in the city who use a program, we should look at it, and in this case, it's a revenue generating program for the individual as compared to summer camp. So these people are gonna make money and then, the question is, should we ask the city to subsidize their revenue generation? And my position going into that would be, if they're gonna make money and it costs the city to support that effort, then the city should pay for it, which leads us to the question. So, and if we agree with that, then the next question is, or whichever order, should they be inspected? Should we care, et cetera? So, and I would say that we could have a discussion about whether they should be licensed and inspected, but if they're inspected, I think, and if there's a program for it, I think the cost should be borne by those who generate income by the program.

My philosophy is that we should have a lot more things charged. We should sort of figure out what the best revenue source is, what the most fair revenue source is for government, and then lean heavily on those ones, and minimize the amount to which we, the extent to which we rely on fees, except in cases where we are trying to discourage additional consumption. So water is a perfect example where fees make a lot of sense. We don't want somebody to just sit around running the tap all day. To take a more national example, there are folks who believe that you should get to have as many doctor's visits as you want at zero cost. I don't think that's a good idea because at some point you start having people who go for things that are not worthwhile. Same thing maybe with the bus, although you can argue both ways. I don't think that this is like that. I don't think we want to discourage people from doing too many of these. I don't think people are going to frivolously going to ask for licensure and inspection of these. And so now maybe there's a different argument that it is a more fair way of generating revenue for the city. but I'm not sure that that is on, I'm not sure I agree with that on this particular thing. I would much rather we say this is the most fair way of generating revenue, as best as we can tell. Optimize that and then use fees on the kinds of things where we're trying to make sure people are not consuming them frivolously or half time, frankly. So that's why I'm really pushing back on that idea that we should always make sure that the fees cover all of the cost for it. Yeah, please go ahead. I think I'm seeing some, maybe people want to jump in over here.

Yes, and if we do want to make sure that the fees cover the cost, if we look at the fact that a regular rental is $125, what's going, if we, for a regular rental, if I'm going to rent out my whole space, it's $125. If we raise this fee higher, as we discussed, what's to stop people just from going with a regular rental?

That's an excellent point, yeah.

So, because then they don't have to live there, they could rent, they could, and it happens all the time right now, I sublease to you and you sublet, or I lease to you and you sublet four of their bedrooms and there's nothing illegal about that.

That's a great point. Ms. Buckland, you seem like you want to jump in over there.

Yeah, I just wanted to raise a couple of points. I hear your frustration about the fiscal impact statement. Obviously, as you alluded to, we've got a change in leadership coming. I'm quite certain that Ms. Ajayi will have her own take on how those should be done. And so I'm just going to ask that you guys set that aside. I think the question that Alderman O'Neill raised is in fact the relevant one. So in this particular case, regardless, If the underlying legislation passes, what should be the fee associated with it? The presumption is if the original legislation doesn't pass, Council won't pass the fee either, right? But if it does pass, what should be the fee? And to her point, the alignment with the other standard rental amount, it's more about alignment and incentives And as far as the city's costs go, there's probably not a huge amount of difference in how much staff time is going into that. I think the alignment of intent is more important than some of those other factors.

Wanna jump in? I love the way you just put that. And what I would be looking for is this conversation in a coordinated way with planning and zoning and financing. And if the conversation was, you know, there's only five of these, we'd like to encourage these and we think the fee should be zero because the cost of the program is borne by these five categories. And I'd be fine with that. Looking at the program, I think what you're alluding to is one step higher. And I do like the idea, as you said, as you all have pointed out, that how does it fit with everything else? If I operate a bed and breakfast, this may lead us down a path to question this whole thing. I mean, why am I paying, $400 if I have four bedrooms, it's not taking any more time to inspect it or anything like that. Why aren't I just paying X number of dollars for a unit, whatever. And I'm not the expert on that, but I would love, I love the way you're thinking and we ought to go down that path of what's the most fair and equitable way to look at this and what's the fee for every one in a holistic way. And I don't think the finance committee or the city council should be picking numbers out of the sky, whether it be zero or 125, I think it should be planning and zoning and financing to say, hey, we've looked at it, this is what we believe.

Yeah, and I do believe that the, it wouldn't necessarily be in the fiscal impact note, but I think when it was originally written, it came from planning and zoning. And yes, I know we have a 10 minute warning, I hear you. So, don't want to i don't want this to sound combative i'm trying to get the the answer here but is it fair to say miss buckland or miss lewis that the reason 125 was picked is because that is planning and zoning's recommendation that is my understanding so I think we have a couple options in front of us. We could delay this just until we have a tighter uncertainty window on rooming houses, rooming house costs, I should say. We could delay it and try to make this about updating all of these standards. We just did it for short-term rentals. We could try and start amending the legislation to increase standard rental operating license, bed and breakfast, home rental operating license, hotel, motel, or inn rental operating license, all on the recommendation of the Director of Planning and Zoning, what they tell us those costs actually are. So that's option one, that's option two. We still have the idea that it could be amended to zero dollars if that's the political strategy, which I take, From a staff perspective, I take that's maybe not your recommendation, but that strikes me as the difference between policy and politics, and I would understand if that's Alderman O'Neill's goal. And then the fourth option, that i see is that we approve it as is at 120 or we make a favorable recommendation as is at 125. perhaps the fifth option is that we could as you just said pick a number out of the air and say you know we're going to go with 600 because we know it's somewhere between 125 and 700 but i think those does anyone see any other options in our universe besides those five okay so do we want to start knocking out some of those five options Yeah, Ms. Buckland, you want to jump in?

Yeah, you guys jump in as needed. There are two things that I will discourage. One is I would discourage us potentially being in a situation where the underlying legislation has passed and there is no fee associated with it. I think you do in fact need to land somewhere. I will also discourage trying to boil the ocean on this and revisit it holistically. That's a long-term project of what should all of those fees be. I appreciate the sentiment and I'm not gonna discourage the sentiment, but this is not the time and the place for that.

So I- We're down to three options, right? Both of the delay ones are out.

Yeah, so that would be my personal opinion.

Okay, so the options that I'm seeing on the table now, unless somebody really wants to go against Ms. Buckland's recommendation, are we can knock it down to zero and approve it, we can approve it at 125, or we can approve it at some number between 125 and 700.

I'll take out the third one because I don't think it needs...

I would also vote against that. So if we have two votes against that, we're down to two options. So folks want to, I don't have a strong preference, honestly, between the two, but I think, I'm gonna ask you to guess, Alderman Thorpe, that you would much rather seat at 125 than zero. Is that fair to say?

So I would like to have option 2A, which is go with the Director of Planning and Zoning's recommendation and send a very clear message in support of the leadership, staff leadership, and say, not tomorrow, not next week, but this is the perfect kind of thing where we're looking for the city staff to take holistic looks at these things and come to us. We're not looking to be pains in the neck and make things impossible and work 48 hours a week. But we'll take the recommendation as a sign of good faith. But this is the kind of thing that we're, and I applaud, I also want to send a message clear that I applaud Mr. Doyle's staff financial impact, because it is a step, very much, a couple steps in the right direction. we just sent a verbal message from the Finance Committee that we're looking for some more holistic financial recommendations.

And I just went on my whole philosophy stool about how I think we should fund things, but I totally agree with what I think you're saying here, that we should have a range in these fiscal impact notes of how much is this gonna cost us. So I like 2A from what you just said. Alderman O'Neill, thoughts? We're amending it? Well, I think we're not really amending it. We're approving it with a request for information on... How did you put it? With a request for that holistic look. Is that fair to say?

I mean, I dare say it could be part of the short-term rental. I mean, you know, it would be perfect as planning and zoning is putting all this time into that, that these five categories be

touched on that we have these other four categories and and here ought to be the rates because because actually the short-term rental license is different as of july 1st because we changed it but yeah but yeah i mean perhaps a recommendation from planning antonians boy we really want to encourage short-term rentals to become long-term rentals in which case we're going to for a year say it's a for that conversion it's a zero dollar thing right like just as an idea yeah uh or a one dollar i would say but okay It sounds like there is some consensus to make a favorable recommendation to our 1726 as written with the caveat that we would like to see information of how much each one of these licenses are costing us in that sort of holistic look. Make a motion for that. All those in favor, please say aye. Aye. Motion carries. All right, we got four minutes for an update from the finance department. You want to speed run us, Ms. Ajayi?

Oh, we can hold.

And the TV studio has a hard cut off at four o'clock. So if you let us know what the top, I don't know, three things are that we need to know.

The first topic is that the finance department is going through transition. I believe everyone is aware of that. That is a process. The second thing, and I think we sort of talked about this a little earlier, Yolanda did talk about putting guardrails to prevent these contracts from going over the budget. So I will be visiting some of these departments to find out what guardrails need to be implemented. And then the very next thing is just letting you know that we are getting ready to get into the audit season. um we are currently reviewing uh the engagement letter from uh the auditors and we have provided that information over to our city attorney tony he's reviewing it and i've also been in contact with alderman thorpe about the engagement letter we will be talking more about that at our audit committee meeting next week that's what i have

Beautiful. I woke up in a cold sweat this morning thinking we had an audit committee meeting, but it's next week. I was somehow had in my head that I had overslept it this morning. Okay, anything to add, Ms. Lewis? Nope, beautiful. All right, Alderman O'Neill, did you have a question or something? Alderman Thorpe, you had a question?

Motion to adjourn.

All right, motion to adjourn is on the floor. There's a second. All those in favor, please say aye. Aye. Bam, two minutes. Well done, guys.