Town Council - Special Meeting

Excellent. Hello everyone. Uh welcome to all those that are here in person and online. Uh before we start the meeting, I always start with some uh general um uh meeting announcements. The first is just to ask you to please silence your cell phones. Um, just take a second, look at your cell phone. Sometimes we forget that it's not really on silent. Um, it's always just helpful and respectful to one another's time and each speaker speaking when phones are on fully silent. Uh, we ask for your patience and understanding as council deliberates on the agenda items tonight. Um we will have open public comment at the meeting and the signups are at the front here and we want to acknowledge the staff's work and also Davenport's work tonight in preparation. Their insights are invaluable to each topic of our town business. We appreciate our town manager uh as we operate under the council manager form of government. Natasha Tucker sits over here who handles daily operations in department administration while the council provides direction and authorizes policy in accordance with the laws of the Commonwealth of Virginia and our town charter. While each council member has the ultimate responsibility to contribute and um responsibly and ethically the citizens of Clintu Beach, they do vote uh uniquely. However, the entire council does work as a whole body. Participation of each member contributes to effective leadership and collaboration is key to productivity in local government. Let's engage in constructive discussion, remain open to different perspectives and work together for effective resolutions. And finally, I remind us that the proceedings of the

town council are formal and are thus recorded. And with that, we will call to order the uh special meeting tonight. October 29th, 2025. I got 6:01 p.m. Um, we're going to start out with roll call of members and all members are present. Um, do we have an approval of the agenda? Is there a second to that? Second. Okay. All in favor? You didn't ask for any discussion. Oh, do you want discussion or approval of the agenda?

Yeah. Um, I just had a question. I've had several constituents reach out to me asking if we were going to be taking a vote tonight and I wasn't even clear from our agenda if we'd be voting on anything. Um, and um, one of the items on here is, you know, pretty big item. I was going to see if there's any way we could make a determination up front if we could postpone the vote until our regular meeting next month. I think we that will be discussed within that item. I don't think that would be a change to the agenda as presented. Okay. I just thought it would be nice for the people speaking tonight to know if they had to uh take that into consideration when they were discussing, but if we need to hold off on that, I understand.

Okay. I think that will be probably a part of that discussion during that time period, but it would not change the agenda as written is my understanding. Is there further discussion on that or any other topic? All right. All in favor of the agenda as written? I I I I Any opposed?

Okay. All right. Next, we have public comment. Uh this is general public comment and during all public comments, uh we ask that certain guidelines be followed. We do ask that you come up and stand at the podium and for the record, please state your name and address. If you'd like to be contacted, please provide your contact information to the clerk. Um you can either do that on the paper or after you speak. Make your comments to the council as a whole. Be brief, state your position, and provide facts. You may provide written statements or supporting materials, and you can give those to the clerk for distribution to the council and the town manager. Uh, debate is prohibited. We do follow up on comments provided by the town manager and speak clearly as we want to hear what you have to say. The council will hear everyone who wishes to speak on any subject. Comments are limited to five minutes. Time cannot be transferred to another speaker. If you represent a group, you uh may wish to identify the other members of the group who are in attendance. And after public comment is closed, I really encourage you to stay as the council engages in dialogue and deliberation on the agenda items. And with that, we'll open public comment.

Not just Nigel, it is Nigel. Especially, especially Nigel, welcome, Mr. Long. Please state your name and address for them.

Well, I guess my name is just Nigel Long [laughter] from 115 Lyn Haven Court. Madame Mayor Town Counselors, um four uh hopefully quick things. Um the first is um first couple are not really on this uh specific agenda. Um town utility bills are due by the end of this week. We uh I am sure in town have both government workers and perhaps even more importantly government contractors who may not be getting paid, may not even get paid in the future. I know how efficient the town is, at least I've heard from uh uh some of the members of the HOA I'm part of, uh how efficient the town is at cutting off water uh if bills are not paid. And I was just hoping that either that there is already a policy in place or that there could be a policy in place and direction given to our finance department um to enable support particularly not cutting off water um for people who may not be able to pay their bills at the end of this week. and that if you're making a policy at some point that you also consider the awful eventuality of um this continuing on until real estate taxes are due. Um secondly, I've heard some I've seen read some comments by town council members about uh the changes in the Commonwealth's law regarding um the role of the planning commission against the role of planning staff. I would really encourage everybody to make sure they understand the law. Come to the meeting on November the 13th where there will be a public hearing on the subject and I'm sure a presentation uh from the planning staff to explain uh what the options are and why we might want to consider one

option versus another. So uh here in town hall t [clears throat] at November the 13th at 5:30. Thirdly, um I think the presentation that you'll be getting from Dar and I was delighted to be able to read it online prior to the meeting um actually illustrates some strength and some success that you and staff have had in building up uh reserves and even um you know, you have at least one and a half million in unencumbered funds available to spend. Um so you're to be congratulated on that. I do think that it is the town's responsibility to spend the funds they have and to access funds where necessary by borrowing to improve the quality of life here in the town to maintain uh the services and uh the repairs that are quite obviously needed um in a town of our age. Um and obviously you're all aware that um some of the CIP projects which are focused on in the report are I'm not suggesting more minor but are the less financially challenging than what you've already heard about in terms of um utilities and so on. uh and that you'll take a holistic approach to it as you decide where to aortion funds, which elements of the CIP you're going to fund through the uh routes that you will have presented to you available. And the final thing may well be considered by good news by the town council members. As I examined my calendar and made sure that I would be available at all the planning commission meetings for this year, I realized that this will be the last u town council meeting that I'll be able to attend in person due to other travel commitments. So that's good news for two reasons. One is it'll mean you

can add some additional things to the future agendas without having to worry about me talking for five minutes and taking up your time. And secondly, it means that I can be the first to wish you very happy holidays since I may well not be here to do that in future this year. Thank you. Thank you, Mr. Long.

Is there anybody else that would like to come up? If you didn't sign up, we can add your name if you'd like to come up. All right, I'm going to keep moving forward then and close public comment at 6:10 p.m. and we're going to move into our business items tonight. The first one and really the bulk I think of uh this work session is uh the next steps in a series of funding um reports by Davenport. And I want to welcome Mr. Ted Cole and uh thank you for um the continued uh scenarios and working the numbers and all the things that we um keep requesting of you. So, welcome and go ahead and come up and give us a little synopsis. We've had the report obviously and the council members have had it to review and we've had opportunity to ask questions and things of that nature. So, um we'll go from there.

All right. Well, I appreciate the opportunity to be here. I'll There we go. Right, that's it. Um, I think we're going to start with the water and sewer. Um, and this presentation is very similar to what we presented the last time we were here. Um, really what we've updated is a the slides that look at some different scenarios and the the capital improvement program. So, I'm going to go through a good bit of this relatively quickly. There are page numbers in the bottom right corner. Um, and if you were to go to page two of this presentation, um, you're going to see the one. No, go backwards one. I'm sorry. There we go. We've got it broken into a discussion on water fund and sewer fund. And within each of those, there's a summary of the existing debt for each water and sewer separately. That is the debt that's already been committed to. We've got the financial performance of each fund, looking at revenues and expenditures, some of the key financial ratios. We've got a discussion on what the capital improvement plan for for each fund is water and sewer separately. And then we have some cases that we call pro-forma analysis that is forward looking um at what the fund performance might look like in funding capital projects. So, a couple things very quickly. Page three, we covered this. This just gets into how what key factors are important when looking at the financial strength or the creditworthiness of a water and sewer system. This was covered in pretty good detail um at the last meeting. But what I would point you to is sort of financial strength is 40% of the the credit work or the rating profile. um and something where you all have some real control over what sort of financial

performance looks like. Um you know you your system characteristics are more about the size of the customer base, the growth rate of the customer base. You have a little less control over that. But financial performance and management management's getting into rate setting, capital planning, policies and such. So, we're we're going to focus on those things where you can really have some some influence as an elected body. Uh let's go to page five. The key takeaway here and as you look at the top, we've got audited financials through FY24 and then we've got the budgeted 25 and 26 numbers. So you all are very close to having actual audited FY25 numbers. That's going to be very helpful to everybody going into your next budget. And at that time you'll also probably have a better sense of how FY26 is expected to be. So, we're looking forward, you all are looking forward as you're getting into your 27 budget, the next budget, having the benefit of the 25 audited results and a better feel for how FY26 is trending. But probably the most important thing we can look at on this slide is over on the right hand side and we look at the um operating revenues over about a six-year period. the growth rate compound annual growth rate that's caggr has been at 2%. So what is the annual growth rate that gets you from revenue in 2020 through 26? It's about 2%. Whereas on line 13, the operating expenses have been growing at a multiple of that. And and that's really going to be a theme we talk about. The water capital needs are relatively modest going forward compared

to sewer. Most of the capital needs are on the sewer side, but on the water side, we do have this trend of expenditures growth outpacing revenue growth. And as the speaker said, if you go down, uh despite that in the blue section of this page, you'll see like under FY24, unrestricted cash in the water fund is a little over $2 million. That's almost 300% of the budget. So that is strong in terms of cash position. Um we measure cash as a percent of budget on line 33 or we measure it in what we call days cash on hand on line 34. That is how many days of operating expenses could you cover. So while expenditures have been outpacing revenue you do have good cash position. And on line 29, this is an important utility concept called debt service coverage. Um, through FY24, you've had you've had solid debt service coverage. And what that's measuring is how many times over can you cover your debt service in any given year. So when you look at FY24, right, you look at line 15, that is your net revenue available for debt service. And in FY24, that was $520,000. That was what's left over after paying your operating expenses, $520,000. Your actual debt payment was $418,000. So your debt coverage that year was 1.24 times. What that means is for every dollar of debt service you had to pay, you had a $1.24 available to pay it. Right? So that cushion is positive, right? It insulates you from an unexpected drop in revenues or increase in expenditures. So that line 29 is an

important concept for utilities. We want that to be over one times clearly and ideally higher is better. It creates more cushion in your budget. Um and it also allows more dollars to be um spent on either funding reserves or payo capital. your coverage in 26 and 20, excuse me, 25 and 26 is below one. That's on a budgetary basis. And that's why I said earlier it's going to be very important to see how the 25 number comes in. We would expect that you would probably outperform that budget. Revenues might come in stronger, expenditures might come in a little lower. That would be the goal to get that coverage from 0.81 above one times. And the same in 26. Uh it's not uncommon with if you're conservative in budgeting to see your budgeting performance be lag a little bit over actual performance, but we we need to see how 25 in particular ended up uh to have a better idea of how 26 and beyond is going to look. Okay, I'm going to skip over uh six that just shows the trends that are all in good shape. Seven is your existing water debt. very, you know, very straightforward debt profile. There's about $3.6 million outstanding of water debt. And you can see by fiscal year it's relatively flat, meaning there's no big decline in the water debt service until you get out to 2036 or 37. You're paying, you know, 400 375,000 to 400,000 a year in water debt service every year for the next roughly the next decade. But again, as I said earlier, not a lot of capital needs on the water side. So that the absence of a big drop doesn't really give us a great concern here

because you don't have a lot coming on behind it for water. Our modeling um we covered this in pretty good detail um at the last uh the last discussion. Actually, I want I should I should have jumped in here. Capital improvement plan. This is water over a 5year period. It's about a $200,000. Um the communication system for water meters is a priority project. Uh I think in our modeling, we're assuming all of this is cash funded. All right. No, no debt necessary for capital of this sort. And again, the water fund has a pretty good cash position to be able to cash fund these projects. Um pages nine and 10 just cover some of our basic assumptions in the modeling. Um they have not changed from when we last spoke. We are targeting in our model water and sewer separately that we want to be able to demonstrate that we have cash that's at least 50% of the budget. You're well above that now. And we want to be able to demonstrate that we have a debt service coverage of 1.25 times. Historically, you've been there. 24 it was very close, but before that, you were well above 1.25 times. Um, so our two sort of key assumptions in the models are to be able to demonstrate financial projections that meet the 50% cash as a percent of budget and the 1.25 times coverage. And for the water fund, if you go to page 11, this is the last slide on water. Um, what you're going to see at the top under scenario one is has no CIP running through it. It's just

projected operations. And again, this is where that growth of operating expenses outpacing revenue expenses really kind of hits home, right? because we're showing in order to meet those two key assumptions on under column F and G, the 1.25 times coverage and the unrestricted cash is a percent of budget at at least 50%. Um, column D there is what we have solved for in terms of revenue growth needed in the water fund. It's about 15% in 27, 7 to 8% for the following three years. That revenue growth can come from a few different places, right? Just customers using more water than they did the year before. It can come from new connections or it can come from rate increases. And that's what I think one of for the water fund in my opinion, our opinion, going to be maybe where most of your conversation revolves around in your FY27 budget. How did 25 finish, right? You'll have the benefit of the 25 audit at that point. You'll have a a better handle on how FY26 is trending and a pretty modest CIP that won't require debt, be cash funded. If you have the cash in reserves to make those investments, I think the rate setting discussion for water in 27 will really be focused on how are things trending operationally.

We stop there.

I want to pause there. Yeah. Okay. So, because the water fund and the sewer fund and then the general fund are all separate funds and have to be balanced and um their state law and policy and also our audit related to that. I want to take that in one chunk. Is that okay? And then we'll go to the next one. That way we don't start confusing three completely different. Okay. All right. So just to recap on the water fund uh right now and this discussion is related to capital improvement projects and funding capital improvement projects. Uh the water fund capital improvement projects for FY26. We have already committed uh ARPA money to which is uh is that also reimburseable? That one is not a reimburseable fund. Okay. But we've already committed that from the ARPA funds and the FY27 off of the reserve fund is the financial analysis of this report which we have and is well above the next um the threshold the policy threshold in that. Okay. So just want to make sure everybody understands water funds and the CIP. Are there questions on the water fund and CIP items from council members?

Okay. Yes. Go ahead. I just just want to make sure I got this correct. So, basically this diagram on page 11 is just um projecting where you feel based on history where we're trending as far as increases in operating expenses anywhere from 7.8 8 to 15.5%. Is that correct?

Um that that is the revenue we've projected revenue growth needed to meet the minimum coverage and cash requirements. So it it is taking into account growth in expenditures that are um commensurate with the historical growth you've seen in expenditures. So pretty healthy growth rate in in annual expenditure growth. If if the if expenditures slow down, the growth rate slows down, these numbers will come down in a commensurate way. Okay. Thank you.

All right. related to page 11. Um, and just for anybody who's following along out there, uh, that is the actual operating budget, not capital improvement projects. So, capital improvement projects in that discussion. We have the reserve fund to commit to those projects. FY26 is already committed. FY27 is good to go in cash flow for reserve funds. There will be a discussion in the FY27 budgeting process related to page 11. And so is there any direction from council on what we expect from staff? I just want to make sure we give staff good direction on this. There has been talk in the past of um creating uh policy related to the water and sewer funds that extends beyond just looking at one year at a time, but rather uh creates a policy of best practices that follow these kinds of financial models. Um so that there is incremental expectation in that and that's kind of what we've been given in this page. So as we go into FY27 budget process, I don't know if there was any interest in taking and applying the data that we're given here to the future budget process for to give staff any direction on that.

So are what we talking about is creating a policy so that if this happens that's the corresponding

Yeah. And I think the key point about that is in the Davenport um point in the beginning of this, the liquidity on uh page six. So you see that bar graph on page six, you see how it drops down in 2026. Um and that is really um partially because we moved some unrestricted cash funds over to the sewer fund to balance that budget. But then when we get to the actual expenditures and revenues on what where's that big chart of all of the line items is that page five.

Yeah, page five. So this debt service coverage ratio line 2829 on page five.

I what I'm hearing you say I just want to confirm this is that the good financial policy is to stay above that 1 point something in that line item 1.5 1.59 2.89 I mean, we've been above it. We got close to it. We still don't have audit numbers. We're going to be pretty much on target, we think, this year. But should we have a policy in place where that should be forecasted to always maintain a good financial practice within this? So specifically what policy would we be looking to enact that any um water fund?

We have addressed that on page 22. Okay. There is at the end of the sewer section there is a recommendation to consider a policy about that. Correct. Because when when you're looking at this page five sorry I'm bouncing you around. I know Heather's doing a good job keeping up that co Yeah. that coverage on line 29 that's just a result of how the year finished.

It is not the historically been we're budgeting for an outcome there. Right? And now historically you've done very well right the results have been good. What we're going to be recommending on page 22 is to consider in your budgeting process budgeting for a minimum level of coverage of 1.25 rather than just waiting to see what the result is. Got it. Right. And to do to do that that looking back at page 11, scenario three, which I think is what we're all kind of talking about here.

If we're in the budgeting process and we say we want to stay above 1.25, then we have to generate an increase in revenue of 15.5% or uh take a decide whether we want to uh fund that 115k. No, the 115 is from reserve funding. The 115 can come from cash in any of the scenarios. you are comfortably above the cash minimum. All right. Got it. But but you are you are right. But it does imply, you know, if we make that commitment, then it implies likely rate adjustments.

And and keep in mind that you you're correct. But also keep in mind, we're assuming a 10% per year operating expense growth rate, which is not too far off based on historicals, but it may not be the long-term trajectory. And and that's where I think an FY25 audit's going to be very helpful. A 26 estimate that should, you know, we'll be midyear 26 at the end of December. Have a better feel for how 26 is. And I think it will allow you all or us collectively to make a better informed assumption about operating expenses. And if that 10% were to come down, it would take would have a commensurate reduction in that revenue growth needed. But what I'm sorry, but what we're trying to determine now is not a funding mechanism because we don't know what we need, but the fact that a policy should exist so that we're all always providing clean water,

right? I think what we're requesting is not the it's not a commitment to the 1588 because we don't know those numbers yet. Um, but what it is a commitment to is that we will maintain a debt service coverage ratio of 1.25, which is best practice in our financial policy. And in in that spirit, I would like to make a motion that we uh create that policy to uh have the debt at 1.25.

Okay. Is there a second to that? And that would be a motion to creating policy. It's just direction to staff to create policy. We not voting on the actual policy yet. They'll have to write it up. But the that is in conformance with the Davenport proposed recommendation. Is there a second to that? I'll second that.

All right. Let's have a discussion. Is there any questions on that? So page 22, at the bottom of page 22, there's a little blue box down there. That is Davenport's recommendation. We're just talking about water fund right now. And so it would be taking the proposed recommendation from Davenport um and integrating to the current policy. And again, what we're doing tonight, right, is is if we do this is asking TA staff to create the policy for our review and later vote. Correct.

To have this 1.25 debt service coverage. that we're just talking about. Let's codify some sound financial management for the waterfront in this case and sewer. I think you explain that better than anybody. Well, maybe not. I'm getting laz looks from others. Yes, M. Yeah, I'm not quite sure I'm understand what we're being asked to vote for here. Are we are you saying that uh depending on how well we budget we're we may or may not raise rates each year depending on like the rates will fluctuate like what I don't understand what this policy actually means. Can maybe can you explain a little better?

Sure. So, so if you're on page 22, the the top section in green um is your um is your reserve policy for water and sewer. And you will notice down towards the bottom of that green box, there's a bracketed number. It said or wording that says includes excludes. I think that was a hold over from a draft. Our suggested adjustment for the policy that you have is to rework that bracketed number so that it says operating expenses excludes debt service and transfers. That is tied to your liquidity policy for water and sewer. You already have one. This is just a cleanup to the wording. And the proposed addition is

and the addition at the very bottom is considering drafting an amendment to the policy that adds this concept of debt service coverage which does not exist in the policy today. And it says that we will maintain a minimum debt service coverage in the water fund and the sewer fund separate and distinct from each other of 1.25 25 times um and that we will review this annually and if we're not able to to maintain it one year, we've got to address it in the following budget. So, it's it's it's building into your budgeting process um a a more explicit rate setting discussion to manage to an outcome of having that coverage of 1.25 rather than waiting to see if that's how it occurs. and and and that will help ensure that the fund is self-supporting without any outside financial assistance. It will insulate you if if expend expenses in any given year pop up or revenues are lower than you expect, you can still meet your debt payment. Um and if you meet that 1.25 25 coverage. What it allows for there's a little extra money running through the budget that you can use to fund reserves or use to fund cash funded pro uh projects. So the first one is just a wording change adjustment. The second one is adding this concept of debt service coverage of a minimum of 1.25 times each year.

Okay. So there's there's then no impact on rates or is this a no? This will this this will have this will hold your you know all things being equal if you're striving to meet 1.25 times coverage rather than one times coverage it will have more put more pressure on revenues than than one times coverage. Right? because we're we're looking for a higher level of surpluses each year than we would if you were just looking to budget to meet your debt payment one time, dollar for dollar.

Okay? So basically, if we vote to do this, um, we don't meet it next year, we tell the citizens, we we voted to create a new policy that basically requires us to vote for a water rate increase as part of meeting that policy going forward.

Okay. Thank you. And the same would hold true if with the cash policy you already have. If you weren't to meet that cash policy one year, you would have to take that or you should take that into account in the next budget to uh adopt a budget that will allow you to meet that year's requirements plus get the reserve up to the policy level. It's a guard rail for line 28, right? line 20 or 29. I mean 28 is the is the title of it. It's a guard rail for the fact that we are very close to not meeting

a financial recommendation. Correct. And on a budget basis it's not there. It's not meeting it. And if we do not put the guard rail in, then we are on a trajectory of a deficit in water utilities,

right? So I think it's important to understand too, it's not necessarily rate increases, it's revenue increases. So that can come from having new neighbors here in Columbia Beach with new buildings, so forth and so on. But what it is is a way to have sound financial management. And one of the things that I personally am impressed with, and I hope everybody else is too, when you take a look at how well the town is managed financially,

the amount of cash that we have on hand, the reserves that we have, staying a good sound financial policy is is just a good idea.

Yeah. the the historical performance there on page five um looks excellent. I mean it it the coverage has gotten a little tighter, but the it's met a minimum level that we're recommending and the cash has been above that which gives you flexibility for projects. You can pay for projects without debt. You can also carry projects, right? Many projects require an investment um up to the fact up leading up to bidding the project. Having that cash there to do that gives you a lot of flexibility. And the, as the mayor said, when you look at the budget basis, however, we're not budgeted to meet even one time's coverage. And this policy would um require that you budget in a way that does demonstrate you're meeting that minimum coverage. And and it would come from like you're exactly right, revenue growth, however that revenue growth might come, new customers, new flow, rate increases. But it also could be managed in part by expenditure controls.

Okay. So right now the motion on the floor is to take the Dav imports proposed adjustments and additions on page 22 and ask staff to create a policy or I would say amend the current policy to include those. That's the current motion. That's a first and a second. Is there further discussion on that direction? Yes, Mr. Yeah, I'd like to make a motion that we postpone this vote until our regular meeting next month. Is there a second to the amendment or an acceptance of the amendment to the motion? Who made the original motion? Okay. All right. So, we're going to vote on this motion and if it fails, we can have an different motion. Oh, he has to accept the motion.

We have to He has to accept an amendment to his motion. His motion is on the floor right now. Okay. Right. Well, I'm not comfortable this being sprung on us last second like this. So, I'm gonna have to say I can't support it tonight. Not saying that it's not a potentially good policy, but I'd like to do more research on it and was kind of spur of the moment. Yes, Mr. Larson. So, just you may already know this, but just so you know, we're asking staff to create something to bring to us to vote on later, right? So we're just the vote is just to say please create this policy for our consideration and vote at a future meeting. So you're not we're not implementing the policy by voting for it tonight. I understand that.

Okay. All right. I have one question. So just to clarify to pick up on what you said, Tom, it is a policy, but in the event we will come back to vote because as you said, it could potentially have rate increases in here. one of the three because you said rate increase, more consumption or new hookups. Correct. So, we are not ruling out that rate increases can be a part. What we are doing right now is requesting staff to bring us a amended version of the current policy. We are not voting on actual rate setting or FY27's budget at this time.

Okay. So, when the time comes for the voting then we can always at that time offer up our objections. Yep. And having or don't go. There'll be a whole big process between January, February, and March on all of that. Okay. I just wanted the clarity. Thank you for that. Any other questions? All right. Okay. So, on the um policy adjustment staff direction, uh I'm just going to do it all in favor. We're not voting for the actual policy right now. All in favor say I. I. I. I. Any opposed? Nay.

All right. Okay. From that point, I think we're going to move to sewer. Is there any further discussion or questions on the water? We know water CIP we've already funded this year. Next year's in reserves, ready to go. Staff, you guys good? All right. Let's move it to sewer.

Okay. So very similar setup. If you go to page 13, this is the historicals. That's it right there. Thank you. This is the historicals for sewer. Same setup. Audited financials through 24. 25 and 26 are budgeted. You can see off to the right how revenues have been growing on average about 9.7%. um expenditures 19.7%. Um you can see down on line 29 that debt service coverage concept. Same calculation. Um how many times over can you cover your debt service after you pay your operating expenses? And historically the the lowest number there is 1.10 times. So, you've been able to demonstrate historically that for at least for every dollar of debt service you have to pay, the sewer fund has a$110 available to pay it, if not more. Um 25 budget was budgeted with a 1.6 times coverage, which is great. 26 budget was budgeted just under one time. So, it's somewhat similar to sewer um excuse me, to water. the the bottom blue section is tracking cash. Um the cash has been a little bit tighter in the sewer fund. The mayor alluded that in the 26 budget you all did transfer some money from water to sewer to shore up the sewer reserves to get back into compliance with that policy. And you're sitting on 2026 cash line 32 u based on the budget a little over $3 million in the sewer fund. That's about 89% of the budget. The policy that is already in place is you want to be at 50%. So you're you're above that. You're fine.

Your historical coverage has been fine, but we do have this 26 budget that is showing technically coverage falling below one times. So some similarities to water. Skip page 14. That's just showing the graphics of those ratios. 15 is the existing debt of the sewer. It's about $4 million outstanding. You can see, however, in this case, you've got a a pretty, you know, significant step down in your annual payment going from fiscal year 29 to 30. It's, you know, a little over $100,000. You're paying about $350,000 a year in sewer debt. steps down to about 200,000 um in the next few years. That is already debt that's on the books. You've committed to that. Page 16 shows what we're calling the nearterm CIP. Uh very similar to what we presented last time. This is for fiscal years 26, 27, and 28. Anything with an asterisk by it is considered a priority project. You can see the total CIP on line 10 for sewer over these three years is $2.8 million. The priority projects within that on line 12 are $2.4 million. So the majority are priority projects. And you will also see at the very bottom that there are projects in the sewer fund that can be uh reimbur you can be reimbured for from DEEQ. Okay. So we're we're dealing first with a three-year FY 26 2728 CIP for sewer at about $2.8 million.

Any questions on that? All right. We'll go we'll go to the next slide. This is hard to see. I apologize. But um this is taking the CIP all the way out to 2039. At our last presentation, you might remember we had been talking about a consent order that was a very large number. It had gotten worked down to a much more reasonable number. But there was a lot of discussion about, yeah, but those projects are still out there, right? What are we going to do? They may not be part of the consent order, but there's still projects that need to be considered. So what you've got here on 17 on line one is what you just saw 26 27 28 the same dollars that are in the uh the near-term CIP. And then you can see the order of magnitude for dollars in the capital plan from 29 to 39. And we've broken it into three major categories. Wastewater treatment plant on line two. uh wastewater pump station on line three and I ini u you know water um infiltration in thank you water coming in and out of old pipes um INI and so you can see what those dollars are in any given year and I'm sure there's a lot of detail underneath each of those as projects but the grand total here gets to about 23 million over this entire entire CIP period. So a more significant list of capital projects on the sewer side. Okay. Um our modeling we go about it the same way we've been discussing at our last meeting and with the water. Um the two biggies that we're we're sort of driving much of the the results are we want to be able to demonstrate that we're covering our operating expenses. We want

to demonstrate we can fund that capital program and we'd like to be able to demonstrate that in any given year we meet those minimum targets of the 1.25 coverage which would be a new policy if it's adopted and the 50% cash as a percent of budget which is a policy you already have. Okay. If we're issuing debt, we're looking at 5% rates, 25-year debt. So, if you go to page 20, what you're going to see is just the nearterm CIP, right? This doesn't go all the way out to 2039 at this point. You will see that in a moment. And it's a very similar story. Scenario one is just the operating expenses. What does it take to be able to meet the operating expenses that we're projecting? And we're also assuming that operating expenses here grow by 10% a year. Not an insignificant growth rate, not all that different from what they've been historically, but they may not continue at that level. If they grow more slowly, these numbers will look a little better or the revenue growth we're solving for won't need to be as much. And again, I hate to sort of beat the strum. But having the 25 audit, a better sense of 26 will give you a lot more insights as you go into your 27 budget. But operating alone, we're talking about 13.8, 12.1, 11.8, 7.9% revenue growth, wherever that might come from, flow, customers, rates. Um, the CIP over these three years is $2.8 million. And you'll notice uh it's really cash funded in our scenario. And you can you can do that because you are

here with sewer also in a pretty strong cash position. I I think in scenario three we we technically show like $200,000 that could be debt funded. It's unlikely you would do that. So I think you can consider the the nearterm sewer 26 27 and 28 at those dollar amounts um work as cashf funded projects. No new debt necessary. The revenue growth rates that we're showing here as being needed are largely driven by the operating expense growth that we're using right now. So pretty similar to the to the water fund. Go one more page. This is where we took a shot at going all the way out uh to 2039, the full term of the CIP. Remember that goes out uh it's about 23 million. In this case, as you're looking at from left to right, we've got the fiscal year, the CIP projects by year. That just mirrors the CIP and they sum up to the 23 million at the bottom. And our current model assumes that there would be some debt needed to fund that level of capital. It's it's beyond the uh ability of cash funding at that point. But you'll notice there's no debt assumed until we get out to 29 and 30. So again, the nearterm sewer CIP can be cash funded based on what we see, but as you get into the longer term CIP, the cash is not going to be there based on our projections. So we're assuming some debt. Um, you can see on the far right, we're we're able to demonstrate we're meeting that 1.25 25 times coverage and we're able to demonstrate

that the system has 50% cash and the revenue growth needed there under column D is what we solve for. What does it take in revenue growth to meet the operating expenses, manage the CIP, and be able to demonstrate we hit those two financial targets? ready to stop there. That that's the final slide and then we get to the policy document we've talked about.

All right. So, uh just to recap on sewer on page 13 um is the historical numbers. Uh same deal. Line 29 has been uh within the recommendation of Davenport, but is getting scathingly close to not being in the recommendation of Davenport. Uh if you look on page 14, that is evident by the bottom left corner where we want to be in the green, but you see FY26 is in the word insufficient. [snorts]

Um, so the proposed uh policy changes here are the same as the water so that we stay out of that. I like how you put it a blue box instead of a red box, but I feel like red would be more appropriate. Understand? Uhhuh.

Um, and cash funding the CIP items for FY26 and FY27. Looking possible debt scenarios by 2029, which is why our legislative agenda must be successful and we will continue to look for funding there and that's been a priority um for us and continues to be. So in this side we had already funded C and I just want to continue to bring it back to the capital improvement projects because that's really what the whole focus of this is. Um the on the water side we'd already committed funding the FY26. On the sewer side, we have committed to funding all of the things that are reimburseable, but we have not necessarily yet committed to the remainder of the 2026 funds. Is that correct? Uh the 2026 projects, which would be the 234 number at the bottom of page 16. I'm on page 16. FY26. The DEQ reimburseable eligible projects have already been we're already on track because they're consent order requirements and the 234 we can cash fund out of reserves. Okay. So my question is do we want to ask staff direction to commit to FY26 with the cash reserve funds per Davenport's recommendation to cash fund those with existing funds? Yes.

Okay. So, moved. Okay. Is there a second to that? All right. Now, we Let's talk about that. Any questions? Does anybody have any questions about what we're just um asking staff to do? Can you tell me what the exact motion is because I'm vague on what Sure. The motion is um if you look on page 16, it is to commit to the remainder of the unfunded FY26 capital improvement plan projects with reserve funds from sewer. It's line 17 is the difference, right? Correct.

We have the cash to finish off the things that were planned for 2026 that are not reimburseable. So the motion is to go ahead and direct staff to launch those projects as well. Which specific projects are not? The ones that say no but have a number. So, uh number one, the generator upgrade at Third Street. Number two, the crew vehicle. And number seven, the um these I don't know which it doesn't have I don't I have the whole CIP I can pull up one of these other things, but number is 33k the pump station and you're directing them to commit to these projects.

I'm asking we're asking staff to uh bring a resolution at the November meeting that we will commit to the FY26 projects with the reserve funds that we have the money for in reserves to do CIP with. Okay. So we have those funds already in reserve, right? which is Davenport's recommendation in the analysis that they have done. And for clarification, the projects are number one. You said the generator upgrade on Third Street, line seven, 33,000. What was the third? Line two,

the ones that have a no. See the eligible for D reimbursement, they have a no there, but they do have a figure in FY26, right? The 121, the 80, and the 33. And that sums up to line 17, nondeq reimburseable eligible projects slated for FY26. Okay. And that's what we have the cash already for. Yes. Okay. All right. That's the motion that's on the floor and second. I want to make sure is there's any more questions. Let's Anybody else have more questions? All right. All in favor of that? I I

I I Any opposed? All right. So staff, you have direction for that your tracking. Yes. Okay. Now, the next one is like we did with water, the proposed adjustment and addition to the policy. the same guard rails that will keep us out of the very nice blue instead of red box that says we should not be there.

Yes. Page 22. The same conversation we had. We would work with staff to come back with a supplement to your current policy that um brings in this concept of debt service coverage for the sewer fund like we did for the water fund. All right. Is there a motion to put that on the floor? So moved. Is there a second to that? Second. Okay. All right. So, this is the same policy for sewer as we just did for water per Davenport's recommendations. Are there questions on that? I feel like we talked about it a lot in the water side, but if there's additional questions on sewer side.

All right. All in favor of that? I I oppose. Okay, we got one. Nay. Heather, you got that mark. Awesome. All right, staff, you have direction on that. All right, do you have questions, Ted? No questions. Okay, I'm going to take a 10-minute recess and then we're going to go into the next section. Okay. Great. Great. Let's do it. 10 minutes, everybody.

Right, we will reconvene. I got 7:07 p.m. And Mr. Cole, if you'd like to come back up and we will go over CIP in general fund, water and sewer. I'm now setting that aside.

Correct. Yep. Water, sewer set aside. This is general fund tax supported, if you will. um very very similar to what we presented the last time we were here. Really the only change in this book is a couple of projects on the CIP that were in parks and wreck um have have been moved out. So just a quick refresher on page two how the book is set up. We talk a little bit about general fund credit rating overviews. We've got a few slides on general fund fund balance and then the rest of the book is about debt. And we start with existing tax supported debt. Everything that's already been issued and committed to uh show a few key debt ratios and some of your policies. Uh there's a slide in here about what the town's legal debt limit is. And then really the discussion is about debt affordability. When we talk about debt in the general fund, we talk about debt capacity. That is your ability to borrow money if you need to within certain policies or best practices. And then we also talk about debt affordability, right? And oftent times the local government has debt capacity. They're not overleveraged. They can qualify for a loan. They can go and borrow money. they can do that and still show they're in compliance with their policies, but it doesn't always mean it's affordable. It doesn't always mean the money's in the budget to repay it. Um and and so we'll we'll cover that. Um I'm going to go page three is ratings. Page four is ratings. Nothing has changed since we spoke last. Page five, I think, is worth looking at. This is your general fund fund balance and Uh

looking at that table in the upper left, audited financials 2020 through 24, the first two lines are simply restating the general fund revenues and expenditures. Those are numbers that we use in calculating the policy. They're the the denominator. The policy that you have is tied to the unassigned fund balance which is on line eight for each year. That fund balance has grown over these five years from 2.4 million to a little over five million. Unassigned fund balance is a categorization of fund balance that is following the accounting practices and it's the category of fund balance over which you all have the most control the least amount of restrictions from any outside party sort of your your savings or checking account. So, $5.1 million in FY24 of unassigned fund balance. And you can see on lines 11 or 12, whether you measure it as a percent of your operating expenditures, which is your policy, or your operating revenues, you're 39 to 42%. Right? So, it's it's a it's a significant dollar amount at five million, but it's also a significant percentage of your budget. And you look at the upper right, the policy that you all have adopted says that we would like the unassigned fund balance to be at least 15% of our budget. Right? That's the red line at 15%. Um and that you all have the ability to allocate um funds um minimum threshold. Sorry, I got to reread this. CIP surplus fund allocation

the CIP. This is this is a newer part of your policy. the CIP surplus fund allocation that you will maintain a minimum reserve threshold of 30% of the annual operating u before they are used for other purposes. So minimum of 15% once that policy gets above 30% you have the ability to move those excess dollars out for other purposes. You're sitting at 40% 42%. So you're you're meeting both of those policies, right? The minimum of 15, the surplus fund allocation that once you get to 30, you can move some dollars out. And what you see there on line 15 of the table is that under that policy, there's about a million498 that could be considered for some use and still be able to show compliance with that policy. So very strong position in terms of reserves meeting all of your policies with as of FY24 with about a million and a half dollars that could be considered in this case for capital funding if you chose to use that. you're going to see here in a moment. In the near term, the capital needs of the general fund um for priority projects um can be funded with that cash without the need for debt. Non-priority projects um we may we may find there's going to be debt necessary in the future. So, good policies, you're in compliance, there are dollars above your policy that you could consider deploying um particularly for capital projects. Page six, um, your existing debt. It's about $8.3 million of debt outstanding. You can see

in the graph or in the table, you're paying a little over $600,000 a year for uh for debt service. And it's relatively flat. No big drops in the debt um in any one year. Final payout payoff in 2046. Page seven. some uh typical policy ranges. We look at here three different ratios without getting this is the same as what we've presented. I think the the important thing here is for each of these policies or excuse me each of these ratios you are managing your debt in a way that's consistent with ex you know normally accepted or or um implemented policy ranges. and the town has debt capacity, meaning it's a very reasonable conversation to be having based on your CIP if it's beyond your means to cash fund. It issuing debt for projects that you decide are a priority is a very reasonable conversation. Now, the capacity is there. Doesn't mean it's affordable, right? doesn't mean the money's in your budget, but you're not overleveraged. And having a conversation about potentially issuing debt um is is as I said, it's reasonable. This the town has debt capacity. So, with that, what I'd like to look at, um, page eight just demonstrates you have even within your legal debt limit as established by state statutes, you have ample room to issue additional debt under that measurement as well. Page nine, this is important. This is where we get to the affordability of the general fund for additional debt if that's something you all would want

to pursue. And what you got to look at here starting on the left um we have fiscal year starting with 26 column B is in boy is the existing debt. We know those payments to the penny. That's commitments you've already made for tax supported debt 600,000 give or take. CD, C and D are placeholders for new projects. Nothing there for the time being. So column E is just simply saying these are the payments we've got to make. Column F is saying is where we have reviewed the 26 budget and you've got $662,990 budgeted for debt in FY26, which is exactly equal to what your payment is. Right? So the year we're in FY26, you owe 662 and there's 662 budgeted from current year revenues. Column F is making an assumption, it's an important assumption that you can continue making that amount of money available each year going forward. 662,990. And if you do that, column H is showing you the incremental surpluses that would be created because of the declines in your debt. And remember, the debt doesn't drop off significantly. It's a little more of a gradual drop. So if you can continue budgeting the 662 every year, when you look at column H, you would have a 20,000, 21,000, 49, 64, and so on. Those are dollars that could be redeployed to your capital program, whether it's paying cash for a project or helping to pay for new debt service if you decide you need a new debt service. So you are balanced in 26. And if you can keep budgeting in a similar fashion going forward, there are some incremental

dollars that are freed up to help fund your CIP. So, we've now identified two sources of funding. Some excess fund balance in the general fund if you choose to use some of that and um some dollars that will be freed up year-over-year. Granted, not big dollars at first, 20,000, but growing to more significant dollars um as you go forward because your existing debt steps down slightly. So, with that, we talk about the CIP on page 10. This CIP covers fiscal years 26 through 30. Um it's broken up into public works. Uh the grand total there on line um under line six is uh 2.4 million. Parks and recrecks about 300,000 admin technology 50,000 public safety 927 um and then resilience and sustainability 559. So the grand total here um on line 14 dark green is $4.3 million of projects. Anything with an asterisk by it is deemed to be a priority project and that's 545,000 in total. Call it 130 to 160,000 a year. So the priority projects in gold are pretty manageable within the grand scheme of things. And and basically it's the um the sidewalk repairs on line six that that make up the clarify for anybody who wasn't at the work session a few months ago. This all these things have been are related to another priority project just means legally obligated.

It doesn't mean our favorite. Okay, understood. Thank you. I appreciate that. So, this is the CIP and we've broken it into priority and or mandated maybe is a better term versus non-mandated. I like that term better. Okay. Yep.

Use that going forward. So page 11, this is this is no change from our last presentation. Um we start with three scenarios on the left. Scenario one being let's fund the priority or mandated projects just with cash. Scenario two is you fund the priority projects or mandated projects with debt. um maybe you fall somewhere in between ultimately. Scenario three is you fund the entire CIP, the 4.3 million, right? And so if if we're issuing any debt for these projects, we're assuming it's relatively short-term debt at 10 years um versus going utilities where we went longer term debt. And so the results of this are on page 12. Um, pay scenario one, the 545,000, remember that's about 130 a year. Um, we're showing what it would take to do that and and we're showing that there's a tax equivalent impact to doing that, but the reality is you have those dollars in reserves. So it it would not require that you raise taxes to fund those priority projects. It's simply saying that funding those projects would be using the equivalent of two pennies on the tax rate to do it. But it doesn't mean you need to raise new taxes to raise new revenue. You have those kind of dollars um in your excess reserves if you so choose to use it that way. Um, debt funding is certainly possible. I don't think it's necessary at this point to consider that certainly going into FY27 where you're talking about 130,000. I

wouldn't recommend you move forward with a borrowing of that amount. But we have run a scenario where you debt fund it. Um, you know, it it would preserve your cash if that's important, but it would also mean you've got issuance costs and you've got to pay interest on that loan. Um, I suspect as you get into the throws of your FY27 budget that um, I think you can, our recommendation would be you consider cash funding the the priority projects. When you get out to scenario three, we're talking larger dollars, not necessarily mandated projects beyond the scope of what your cash reserves can fund. I think at that point, debt will play a role, not necessarily for everything, right? Scenario three is kind of bookend. We just said fund it all with debt. The likelihood is if you move forward with all of these projects or some combination of them, there's going to be a debt funded component and a cash funded component. Um, and really in order to model that more specifically for you, just need to have a better understanding of what projects uh you all might want to pursue. But for just the priority projects certainly within the means of your cash funded cash funding capabilities we stop there.

Yeah.

Okay. All right. So to recap on that the uh page five shows us that we have 1.498 498 above our policy to move to the capital uh improvement fund. Um page nine shows the debt capacity at a flat funding rate of what we currently pay for debt. Uh page 10 is the list of CIP projects. Uh I will say I know uh we had discussed and the reason you took out some of the other projects on the CIP is because they are already funded with grant funds. The bottom two 11 and 12 under resiliency is sustainability are also completely grant funded. So 11 we do not have yet but that is a VIMS project and if that project were to move forward would be VIMS funded. 12 is a state um fund from the governor that we have already been awarded. Now I do think we have to have the cash flow to float the fund and be reimbursed for it. But as far as financing that we would not be interested in doing that because we know the reimbursements already allocated. So I just want to make a little bit of an edit to page 10 that lines 11 and 12 I think are not really what we're would be

funded by outside sources but you may need to cash flow it which we have reimburse that other policy of between the 15 and 30% to cash flow those kinds of things. So that's not really a

you know that's why that policy exists. Right. So then on page 12, you sort of have these very far in book scenarios I would say of the absolute complete minimum to the absolute complete maximum. And what you're looking from us is to better understand the um pursuit of the in between in order to u model that more appropriately. Did I recap that? Fairly good. Yep. Very good.

Okay. All right. So to to start the discussion about that, I think um uh I'd like to kind of narrow it to just FY26 for the moment, which is uh so if you're looking at page 10, you're looking at just that very first column, just FY26 because we are currently in FY26 and these are projects that are come due um gone through the CIP process with our planning commission and adopted by council and they are due now. So, um just focusing on that to start us out with. Uh is there is that okay to move forward with that as a discussion to just narrow the discussion to that for right now?

Okay. All right. I just kind of want to see. All right. Everybody's tracking. All right. So within the FY 26 numbers, if we take out those two at the bottom, which we would expect to be grant funded for, um, we are really looking at whatever the 1.4 is minus the 559750. Yeah. Okay. Can somebody do that math for me? 9 something. 840.

Oh, there we go. 841250. Okay. Um All right. So, to tackle the 841250, I think one of the first things is is are we going to enact the policy that we've already set in place? I'm not saying to fund the whole 841 with that, but do we want to give staff direction to move the surplus funds from page five? Right. Page five, number 15. That's the 1.498 164. It's the green dot that's way, way above the dotted blue line in the graph. And uh move those funds to what's called our CIP fund, capital improvement fund. Do we want to direct staff to create a resolution related to following through with the financial policy we have in place currently?

I just have a question. Wasn't that automatic when you set up the fund? We set up the policy so that we would have to actually do the move. Okay. So, we're gonna So, we haven't done the move yet. We're not doing the move today. We're saying do would we like to direct staff to do the move that is in the policy where they would come back with a resolution in November to the effect of the policy? Are we tracking on that questions? We are and I would move that we do so. All right. Is there a second to that? Second.

Okay. All right. Are there questions about this? So this is on page five, that bottom bullet point. The town CIP surplus fund allocation policy requires that the town utilize surplus funds to maintain a minimum reserve threshold of 30% before they're used for other purposes. It would now be taking that above the 30% threshold to the CIP fund. That's what we're asking staff to come back to us with in November. Any other questions on that? I have one. So if we move that money over, is there is that sort of council oversight of spending of that money? No.

And the reason why I ask is because we were talking about using some of that money to uh to front end the grants. And so, you know, if we spend it all on CIP projects ahead of some of the grant work that requires us to fund it up front, we could fox ourselves into the corner. Just want to make sure we have some continue to have some oversight. We do still continue to have oversight. We still will have to allocate which CIP projects to fund, but also the cash flow to fund the grants is between the blue line and the red line on the graph, not the money that we're moving currently. Interesting. Okay. Do you understand? Like it's unassigned. Yeah.

And so this direction to staff is just to move the money into that CIP fund and then council will direct them on future projects to fund with that money. Not they're not going to come to us one at a time, handpick certain projects and say, "Would council approve these?" We're we're actually going to sit down as a council and agree on which ones at some point get doing right now. Okay. Yep. Because unfortunately in the in the past, we've had situations where we randomly get projects and we're asked to vote on them without really council providing any priority. So that's why I want to make sure we're not giving up that ability.

Right now we're asking for C for the staff to come back with a resolution of the funds moving within the policy range to the CIP fund. Okay. That's all that this particular motion is related to. Any other questions on this side? I don't mean to not look to the left as much you guys. Okay. Okay. All right. All in favor of that say I. I.

I. Any opposed? All right. staff, are you still tracking? Okay. Uh, all right. So, the next thing is, so they're going to bring back a resolution for the 1.4 to BNCIP. One of the next things is um related to the policy maybe about the flat funding. So, page nine, this is Davenport has recommended this before. We have not added this into our policy yet. Um but that would be that budget for debt service staying flat at the 662990 to create the capital reserve that is in column M. You guys tracking me on that? Ted, you with me on that?

That's correct. Yes. And that is your recommendation as well? Uh yes. if for for CIP planning to continue budgeting according to F would be a recommendation so that those reserves can be accumulated for future capital needs. All right. So, is there interest in staff creating a policy that is in alignment with that Davenport recommendation? Yeah, I'll always move to pay ourselves. Yes.

Okay. All right. So, that's a motion. Is there a second to that? Okay. All right. Are there questions related to the policy that we would then be reviewing at a later date for holding the Mline? Yep. Mr. Alson. So will this fund be in addition to any additional wasn't the original thing where if we take in whatever money anything extra of the 30% automatically goes to the CIP right well we have to move it but yeah

but I'm saying if we get more revenue that equals to be higher then that is one avenue of switching money over right and this would be a second avenue of continuing that um capital reserve to ensure that, you know, 10, 15, 20 years down the road, we have funds that can support CIP, whether it be anything on this list or whatever things pop up along the way. That's correct. Okay. Just want to make sure everybody understands that we're actually funding a CIP that never happened before. I see we have planning commission members. Are you guys do we have a little bit of shake hands? We'll make sure that we've we've not had capital improvement funds. We're making that happen.

All right. And just to clarify, our capital improvement funds have come from land sale. Okay? So all the stuff that has developed from land sale, that's where we that's how the town funded capital improvements. Land sales are at a minimum these days as we have sold a lot of that land. We have to find financial policies to continue to fund capital improvements that are not solely dependent on land sale. just to give that context. Yes, I I believe I understand what we're what we're talking about here, but I just wanted to clarify.

So, currently right now on page nine, uh we are spending $662,990 a year on debt service. So paying any loans and leases and so that amount I guess is going down because of what we're reducing our total payments or just the way the that that debt is made up of several loans and some of them drop each year. So it's it's just the way the debt is being

okay. So, and just for the public because you all probably can't see all this, but um I guess in 27 it goes down by 20,000 and then the next year 21 and then 49,000 less. And so it keeps going down to uh like 2039 through 2046 it's like 175 180,000. So that what we're talking about is take instead of reducing our annual uh payments, we're going to keep them the same and then take the extra money and put it into the CIP. Am I understanding that correctly? Yep. Plat fund debt service at its current rate. Okay. To fund the CIP.

So I mean I'm all in favor of us building the CIB fund. This feels a little bit squirly to me because we're a couple of things that I worry about. One is we're setting a policy about what somebody's going to budget 10 years from now. A different likely a different council. Other councils can change these policies.

And and we're saying, you know, we want to have flat uh debt service budgeting, right? We want to have the same number for for debt service for the next 15 years or 20 years of budget or whatever it is. But that's not really what it's for, right? The the the we're sort of budgeting. It seems like a little bit of a we're budgeting to fund capital improvement projects, right? So, how else would them as a line item for capital improvement? Yeah. Instead of create a separate line in the budget and then raise taxes each time that they have to do that.

No, no, it's the same amount of money. Just call it what it is. But in the budget, we can create a separate line. So the debt service will be the what it should be, but then we will also have a line in there of a transfer to capital improvements. Oh, that makes sense. Is that what you're asking for? Yeah. I mean, we're saying, hey, we're going to flat fund debt service even though we know we don't need that much for debt service. It just it feels a little bit No, I agree. We should be clear about it in the budget process. That's all I'm getting.

I don't think we're trying to hide that. I think we're just creating If we do not incrementally find a way to incorporate it in a budget process, the capital funds go to zero and the only way to fund capital funds is debt and a tax raise. Plus, we all Yeah. Right. Because what we we hear all the time is we need to plan further in the future. Well, we're finally actually planning further into the future. So, we can call it the super special. So, So this

so basically this goes down to zero. Say one of the big trucks, you know, goes up or something major happens and we need to borrow more money like we did with our jet truck or a trash truck or something. We could actually be going upside down in this.

Yeah. All this policy is saying is there's going to be at least six or if it's adopted, there's going to be at least $662,000 budgeted for debt. your debt might go up to 700,000 or 800,000. It's just ensuring that there's a baseline of 662 budgeted every year so that you don't lose those 20 30 60 to some other part of the budget. So your your debt is likely your actual debt payments in the future are likely to go up. This is just saying we want to make sure there's at least what we have in this year's budget available every year going forward, which is that 662. Doesn't mean you won't have to find new revenue in the future, but that 66 662 isn't going down.

And a policy can always be changed. Absolutely. So, you know, just because yeah, we're going to put a hundred bucks in the bank every month and we're not going to spend it, but all of a sudden we find out we've got a $400 debt. we need to go into it. Um

part of the reason of putting this policy in place at this time too is that we are well below all these thresholds. So this is a very conservative policy on having an allocation for level debt funding because to your point the reality is the town will probably not be at this level um for the most part. So, it's just kind of creating a a low level, you know, um guard rail that if you were to get below this, you would use any remainder funds in to capital projects.

Yeah. I mean, when I look at column B, it you you could say, look, we budgeted 662 this year. Next year, we only need to budget 642. We just saved 20 grand, right? But so that 20 grand goes somewhere else in the budget. I don't know where. This is just saying, look, we don't need 662 this year. We only need 642. But if we budget 662, we got 20 grand to put over in this reserve and that's going to be a resource we can use to fund the next capital project, whatever it is. So it just preserves flat at least flat funding into your debt and capital program of 662 and keeps it from being reduced which will it doesn't preclude you from red. You can change the policy, but it, you know, it it uh it's acknowledging that we want to budget flat so that we have while our payments are a little lower, it creates some dollars that we can use for other projects, whether it's that year or the next year, the following year.

Mr. Larson, I see you wanted to jump in. Yeah, I don't have any issue with with the end goal, right? Let's make sure that we fully fund our debt service. Let's have surplus to use for whatever getting some more debt to to fund some more CIP projects or putting it in the capital reser down with all of that saying we want flat budgeting for debt service knowing that the debt service is not going to be that number next year it's going to be smaller just feels a little bit like we're calling it the wrong thing. It may just be a naming problem in my mind. I mean I

So what what in order to and I agree with you anything that gives people more of a comfort level that's fine and so what verbiage would you recommend because I'd be happy to amend uh my motion to make sure that it's verbiage that everybody's comfortable with because we're all pretty much on the same concept. I brought this up because Davenport has recommended we do this as a best financial practice for multiple years now [snorts] and I've been listening to you and we haven't done it and so I don't know if Davenport has recommendation that staff would work with that when they bring the policy back to us. We're not acting on this policy right this second. All we're asking that staff kind of flushes maybe those kinds of things out.

Okay. Yeah, working with finance to what the right budgeting term to use so that it ends up in the right fund that the auditors would be happy with and maybe transfer to a debt service fund as well. That's that's all I'm asking. Thank you. Yeah.

Does Okay. Is that that gets to your point, right? Yes, M. Williams. I'm just Yeah, I I understand Tom's okay now, but I I agree that it's just it's a funny way to try to fund the CIP when we could just as easily create a budget line item that says, you know, 20,000 next year and then just increase it by 5% a year or something and would reach the same goal without having this policy where we keep our debt service amount the same. Would you like staff to um policy to that point? I would say a second option considering that as well.

Okay, I'm fine with that. So the alternative option would be one would be tying it to a debt service gap at this threshold and the other one would be adding a CIP line item within the annual budget that has an rate increase at 5% a year or tracks yeah tracks the debt service is going down you're still tying to the dead schedule but I don't think David is is that right David

well I I think if your end goal is to create a a CIP budget um tying it to the debt when the debt may go up by triple one day depending on if we borrow a bunch of money for sewer or something happens. Um but if you have a line I mean if your end goal is really to have a CIP budget then separating it out of here would be a guarantee versus a pie in the sky or or hope maybe. I I don't see it as a pie in the sky. is getting started again with the idea in mind that and I'm sorry honestly we we got on detour here because but it it's verbiage.

Uh let me ask you sir how many municipalities use this particular device to fund it? It's pretty pretty prevalent. Um, now how they budget for it to make it end up where they want it may vary from place to place, but the concept of don't budget those declines in your debt and and lose that money in the capital is a pretty common budgeting. So, Madame Mayor, I would respectfully suggest we do have a seconded motion on the floor. Um, we can always change names of things later,

but as far as the concept, I think we all understand the concept. All right. So, well, the motion on the floor is just for right now the uh proposal of a an um of the flat funded right debt service. Okay. And then we can have a second. We can we can vote on this and then we can discuss an alternative motion uh to Mr. Williams. We can be provided both policies and we can still make these decisions. Okay. All right. Are there more questions on this particular motion? All right. All in favor of seeing staff bring us back something on this. I I I

All right. Any nays? Okay. Staff still tracking on task points. You got to have a lot of homework. Um okay. So, the next one I think I'll go right to you, David. Yeah. Is is do you also want staff to bring us back a policy on Yeah. I'd like to make a motion that we have an alternate policy that like I described earlier where it would be a budget line item versus a debt service surplus line with a uh with an in a percentage increase to to step into it. Right. Part of this whole idea of debt service using it this way is that we're maybe stepping into it,

right? Because it only starts out at 20,000, but at some point it come becomes $175,00. Yeah. Well, at some point it comes a million dollars. Can Can we get some clarification on that? Where would you like us to start with the $20,000 and then grow it a percentage every year? Yeah, that seems I mean Okay. start at 20K and grow it by uh this grows by 100% each year. It goes from it's 20 well 20 to 22 and then 50 almost 50 and 65. So it's kind of all over. So maybe you can

It does. So that's why I'm looking for some more clarity so we can write this resolution. Average out the percentage of this policy over the next 10 years average of what's on average percentage growth over the next 10 years. Got it. Is that good? Are you good with that? I don't know what that's going to be 10% or 14% or something. We'll at least be get to see what that's like. We could always change percentage too. All right. So, that's a motion. Is there a second to this policy presentation? Second.

Okay. All right. Further questions before we vote on this directive to town. So, there's not a hard definitive percentage, just average is what we're going with. uh she is going to average the 10-year percentages of the debt schedule and then use that hard percentage in the policy and if we decide to go with that we can discuss and actually yeah we could change it. Okay. Yeah. And but that's the model right? Is that my understand that's the model we'll use.

Would we agree that we want to recommend that be conservative as in small increase because as as we go through the budget process we always make it bigger and stay aligned with the policy. But if you make it too aggressive, I think we need a number to start with. And so we use the average of the 10 10 years. If it's too high and we all have heart palpitations. I think we're just making this over complicated. Yep. Yeah.

I mean, we know this is like we know what those figures are. We know what the outcome's going to be. Yeah. We're making a hypothetical 5% 10% whatever change and then that could be way more than we want to save when we actually know the actual figures in the other one.

We we we would like to avoid ever having a year where you have to budget more than 662, right? 662 is what's in your budget. Now, this is saying you don't ever have to budget more than that. just budget that and these these surpluses will result. If we find an average rate over 10 years, that's fine. But it doesn't guarantee, I don't think, that there wouldn't be a year where you got to come up with 670 or 680. I understand that. We can see the policies and compare them, make that decision. At the risk of frustrating the vice mayor one more time,

how about if we just say the uh the two line items should add up to 662 yearover-year. The new CIP line item and the debt service line item. No, you're still tying it to the debt service and that is the difference of this policy and the other policy. Right. I'm sorry, Tom. [laughter] But David, I mean, am I understanding that right that the difference is one's not tied to the other? Correct. One is an actual line item in the budget that will always guarantee CIP funding, whereas the other will depend on if we have more or less debt. Yeah. Okay.

Payments. Yep. All right. So, is there a second to that motion? Because I know I got a motion, but I want to make sure I have it. Oh, wait. Yeah, you seconded it. Okay. All right. All in favor of seeing that policy as an alternative say I. I. I. Any oppose? Nay. All right. Heather, you got that? All right. Okay. So, um, moving forward. Quick question. Quick question before we move on. Yeah. Yeah. Yeah. If we do a 5 10 15 whatever the thing is and we set that policy at any point would it mean that we would have to raise taxes to fulfill that policy? Possibly.

No. Come on now. That's silly. That is very possible. Oh, so a extra couple hundred bucks or a thousand bucks in a year would mean that we'd have to raise stuff goes up all the time. I'm just saying that's a possibility. Um that if you're going to tie yourself to this policy of adding that percent every year to the prior year's CIP line item that you could run into the possibility that you need to raise taxes in order to make this policy.

Okay. But when you write the policy, you can give us a little cast out chart, right? Like because we have the debt schedule chart. So, we have those numbers, right? But we could see the potential impact, which is I think what we would like to see. Does that make sense? Right. Comparison. I didn't even say I'd vote for it. Yeah. But it would still be you still Kenny's right. You still could run the risk that you would have to raise taxes in order to meet that either of these policies. Really, we're just going to take a look at it. Everybody, either could put you in that position. the first version. If you say, "Well, I only need 600 this year, but I'm budgeting 660." Right?

That might put pressure somewhere else in the budget to raise taxes. So, either policy could put you in that position, Ted. I'm aware that there's pressure every day of my life to have to do that, but a policy is like pirate law. It's more of a guideline.

All right. We'll get to look at them both and we'll have some forecasts and we'll be able to make some decisions on it. I like the idea of having choices. Okay. Um All right. Next is uh I'm on page 10. Okay. Focusing on FY26. If we add up all of FY26, which is the current fiscal year we're in right now, but we take out the resiliency and sustainability items because those would be grant funded. We're at 841250. Um, I think that staff does need to know whether we're going to do these things or not. And so I wonder, and this is a question really for you, Ted. You've talked about combining debt service and cash flows. I want to make sure we don't spend all the CIP cash in one fiscal year, right? Because we've worked so hard to have saved this money and over time and and be able to get some things done with it. Um the trash truck, the beach rake, and the utility plow, I'm looking at lines two, three, and four. Um those are the kind of items in which we have typically borrowed for. Was there an advantage or what is your recommendation on combining? And I know one of those items is in 2027, but doesn't really make sense to not combine all three into a debt service um for those three items and run in a um to borrow for those together in maybe a sevenyear or a fiveyear payout versus a 10y year. which um we have done that kind of in other scenarios with those kinds of particular CIP items. The rest cash funding.

Yeah, I think that makes sense. And the rest like uh beach and rip wrap, sidewalk, pier, those are look to me like things that's got to be done every year, right? You get them. Ideally, you get them programmed in. They can be cash funded and they're there every year because it looks like they're needed every year. Whereas the trucks, the tractor, the plow, discrete equipment purchases that are easily financed, like you said, whether it's a fiveyear term, seven-year term, that would make some sense if you're looking for a a balance between cash funding and debt funding. I say that because I know you need direction from us. So by our next meeting if we narrowed this down to your request was a better understanding of the projects to pursue. But your actual timeline here is there's a spring pool for VRA and you need to know if we want to go for a financing option

and and keep in mind that's what that would be. you you could get to a place where you direct staff to move forward with a borrowing or purchasing of vehicles and you know it may be that a a bank financing is just as easy and you can do that in the month of December or January and not necessarily wait until the spring if that's I want to know the cheapest way. No, yeah, understand. You want to know the cheapest want the lowest rate. That's right. And and with VRA, which is a good program, we cannot get into the market until the spring. That's because they have certain right

pools. But with a bank financing, we can choose to do that anytime we want. We're not beholden to somebody else's schedule. And there may be value to getting, you know, getting a loan in place sooner than later. We just don't know what rates will do. But we can compare that for you at the time that you make some decisions about what is it that you'd like to fund.

Well, so that's what I'm kind of saying is we if we want to see what that looks like if we cash fund FY26 and finance those three as a joint unit, which is a very typical way to purchase those items. Uh what does that look like? And I guess so I have some interest in maybe seeing a motion where we see that scenario because we've given these bookends. One is really over here and one is really over here and we still haven't really seen the middle. I'm looking for council input on this kind of option and looking at

So, so why do you not include the police vehicle in there? Because we would cash fund it because it's just like the town pier refurbishment. um in sidewalk repairs where we have a replacement vehicle every year. They're not like the big equipment. Got it. Yeah, we still get the PD vehicle. Okay. Not cut out. And and any of these are I believe eligible to be borrowed, right?

But it may be that you know the the remember what we've modeled so far is just the the mandated projects or everything. We could certainly rerun this along of what you're saying is look, there are select things in here we think are appropriate to debt fund and everything else we want to show as cash funded and show the results of that.

Well, because what we'd be saying is we would take out we would really be obligating or you know potentially saying of the 1.4 and then maybe this other policy. So maybe there's 20 grand next year or something in that. um about 500 would complete our FY26 CIP items along with the debt for those vehicle p the and when I say vehicle we're talking big utility vehicle we're not talking about a car right um but it another kind of nice math that works out is on page tw 12 your scenario two is at 545 which was really that whole sidewalk project which you really say we should cash fund anyway but that those three together the trash truck the beach rake and tractor and the utility plow are all three together 570 so I'm looking at it as a comparison that 545 is pretty close as a guesstimate of expectations and in that case you're talking about 0.05 05 cents 0.05 cents impact to the budget and that's why it's an interesting scenario.

Okay. Okay. You looking at me? Am I crazy? No. I just think where we're evolving is is to really do this properly. I I would I would be concerned about making decisions about 26 in a vacuum,

right? Because we can show 26 works with this much debt and this much cash, but I think there's going to be better information for you all if we try to model the five years. And so we need we would need to make some decisions about are the not that we would borrow it all at once or fund it all at once, but would we you know would we cash fund every year of the beach and rip wrap? Would we cash fund the sidewalks? And I think that's where you're going to get better information because you can you could cash fund everything for 26 and 27, but you that would limit your options for 28 beyond. So I I would like to be able to model this whole thing kind of like we did with scenario three but in rather than debt funding everything look at some scenario some certain projects that are cash funded.

So part of my concern with going too far out is that we have about $3.1 million in reimburseable funds that will be coming back to CIP in the next two to three years. Is that general fund or utility? Well, it's to ARPA which is not obligated.

Okay. So, there will be future decisions in that funds of 27 and 28. They're going to have to have again analysis and I don't know that the town is in a good position today to make a decision on the next five years until we see the impact in that. And we have a opportunity to complete the things that we know we need to do this year and not run us dry and still be in a good position and still meet all our policies and hold off on the bigger decision in that because we have a lot of moving parts in that way.

Yeah. And that and that's that's completely fine. So, we're talking about debt funding the three pieces of equipment, two of them in 26, one in 27, and cash funding the balance. Okay, that's that's easy. That's one scenario. And if other,

you know, so and I just want to kind of open that scenario up to council for input debate. Do we want to see that scenario? Are there other example scenarios we'd like to see back? Because we need to be a little bit more specific, I think, on what we want to see back in order to start making decisions about that stuff. I'm seeing a lot on this side. On this side, David, you want to go first? I saw you first. Just uh I've got a question. Like we had um that plan strategic meeting, I guess you call it, where we all discussed CIP and all of our priorities and stuff. And I'm not sure if this is reflected on here because this, I guess, is coming off of last year's CIP.

This is our current CIP.

Yeah, this is our current CIP. Um voted on last year prior to I think any of the new members being on here at all. Um, I know we recently had a meeting and where we discussed, for example, uh, our priorities and and I do not recall the Dwight Avenue Extension being uh, voted as anybody's top priority or maybe one or two out of the seven of us. Um, I know there were other things that were high high priorities. I'm not sure that are even included in here. So, I'm not really comfortable making too long a term decisions without bringing in all that information because is that included in here? Did you guys get any of our priorities from our strategic meeting where we discussed the CIP projects and our priorities as a council as a new body of

council projects? Yes, Davenport was given a list of the projects. So for the general fund, the only priority project for the general fund are the sidewalks. And so these other projects um are included as projects that need to be funded. And so with the sidewalks, it is indicated by the asterisk that shows that that's the only priority project, which again means it's mandated. Mhm. But it it but this doesn't include any of the discussions that we had in our meeting except for the sidewalks. Uh when you say discussions, discussions in terms of what? Because the projects are listed.

We had all these things laid out around the board and we all had discussions sewer, right? Which are in the wastewater which are in the waist the other water and sewer packets which we just reviewed. This only accounts for the general fund projects. Well, that meeting had general fund projects, too. It wasn't just water sewer. Correct. All of the projects are accounted for in the two books that you have before you. Everything that was up on the wall

is in these two except the things that are grant funded already. So, we're just talking about this whole discussion is funding capital improvement projects. There is no preference to the projects. These are all projects that have made it through the CIP process, through the public process. There's no there's no two members wanted this and three members wanted that or any of that kind of stuff. It is every single project is on this list that made it through the CIP that has not yet had obligated funding to it. And two of them do have obligated funding to it but made it on the list, you know, which are the resiliency things. The rest of the things on this list are CIP items that just aren't funded unless we make a decision.

Okay. So I am I remembering correctly that the the Dwight Avenue extension didn't make the top list for when we all met. It had two dots on it. Okay. So not top of the list. I think that was more dots than four or five other projects. Okay. I don't know how that's relevant to the FY26 because I think we're we're talking about making decisions tonight and I'm just a little concerned that we're jumping a little bit. Actually, I think there's a misperception of what the mayor said, what the mayor is talking about 2026 projects. Okay. The Dwight Eisen or the

Dwightens. Thank you. I'm getting mixed up. Uh but anyway, that is something that's listed under 2027 even as we speak. So that's not under the perview of what the mayor has offered. So what you're looking at, if I understood you correctly, mayor, is the police vehicles, uh the public works truck, and was there another item on that? It's it's everything that's under FY26 except I I'm adding the beach rake tractor from 27 to the to the potential for the debt service on the other two utilities because it doesn't really make sense to buy two and not the third when they need it six months later.

Right. And the preponderance of it, we're going to sell fund with the idea in mind of um getting a loan for the vehicles. Correct. And the rest cash off the CIP,

right? That's a potential scenario and I'm open to other scenarios if there's another scenario. I just that would be something to come back with us that is more specific on how to fund current year capital needs. We're in this current year right now. This is not tomorrow. This is today. And the the the the nuance that will be helpful that we'll talk to staff about is for those projects that are cash funded, are they cash funded from reserves or are we looking to cash fund them from current year revenues from the CIP fund

fund? Honestly, I would be happy with just that option at the moment. Okay. All right. So, I'm gonna take that as a motion for seeing that option come back to us. Is there a second to seeing that option come back to us? Second. Are you talking about cash fund option with from CIP funds? It is the cash fund option with the finance of the three public works utility equipments. You guys tracking? Are you tracking over there? you check in. Okay. I want to make sure loans for the vehicles we pay for everything else.

So that would be funding everything in FY26. Everything that is in the CIP and FY26 with a combo which is that middle ground of cash fund. Everything except those three utility vehicles lumpsum those and we can wait for the spring pool if Chris can hold off to spring and try to get the lowest possible rate in the best terms. possible, Chris. Okay. Because you're the one over there duct taping this stuff.

Okay. All right. So, does that need to be moved then or how does that work? So, this is just a motion for them to come back with this as an option so we can see it more specifically, but it won't be a FY26 outlay of fun. Correct. Because we're talking

you're going to have to have those funds there to do a letter of obligation to the manufacturer so we can get the purchase of that truck started because we're going to have to when we order it. It'll be two years before we see that. If time frames get better, it could be less. We could find one in stock somewhere. But right now, the most lead time on them is between one and a half and two and a half years. So, you're still going to have to have those funds available and obligated to that truck purchase. So you can show the manufacturer that you have those funds for that. They won't produce it unless they know we have the money to do it. Okay.

And we have that letter like you said um to offer them. Do those will those figures stay the same? But we know in a couple years or so it could go up, but we just want to show a letter of intent that we have the funds as of right now. No. At that point you would lock in the cost at that with that letter. It would be the same as purchasing and putting a down payment on something. Okay. It just you have to have a letter of intent to start to process or they won't even start to manufacture. Okay. Because that was my concern. I just wanted to make sure with the letter of intent and the dollar figure that's in there once they have that they can't come back in two years and say, "Okay, we're adding 30,000 more." Because

no, you would lock in the price at that point with the letter. Okay. All right. That bit gives more comfort. Okay. All right. So, that's a motion and it's been seconded. Did somebody second it? You did. Kenny did. Okay. Um All right. Are there any other questions on seeing that scenario? All right. So, they're just going to bring us actual numbers and figures and then we can vote whether we want to approve correct those expenditures or Yeah. Okay. All right. So all in favor of seeing that scenario say I

I. Any opposed? Okay. Are there any alternative scenarios to funding FY26? Anything else anybody wants to see come back? I will ask about um the trash fund since that was the original intent was to to purchase a truck out of that. Um, so is there is there a way to get any other alternative purchase of the truck through the trash fund or we still

the trash fund? Um, we've discussed this a few times. Um, based on the one year we had, there's not enough surplus of their revenue over expenditures to do anything with um, fiscal 25. I can run those numbers and show you too at this point unless we consider raising the rates for trash service. It we're not going to be able to turn that into a capital or or a per um an enterprise fund. Um not with the small surplus that we're we're making each year. Okay. So we we're not even able to buy a truck out of that. So it's going to stay in the general fund at this point. Okay.

Thank you. All right. Is there any uh Anything else for the scenario for funding FY26? All right, I got one last thing and this should make Lisa happy. No, that's not true. I have two things. One is our current CIP process is uh funding, like I said, was land sales. There is a uh there's a policy in place right now that when we have a land sale, 10% goes to the school, 5% goes to fire department, 5% goes to rescue squad. We know some changes in rescue squad have happened. Do we want to see that policy come back to us to revise?

Yes. Yes. Okay. Is there a motion and a second to that? Is there a second to that? Okay. All in favor? I wait. Yes. More discussion. I'm sorry. Yeah, I it sounded like everybody already wanted to do it. So, I'm I'm sorry if I moved too fast. So, you're bringing the policy back to um because the rescue squad's no longer right active. Correct. Correct.

Well, I guess they're active, but right now we're using a West Morland EMS in that facility. So, I think we need to really be looking at if we're going to give if we sell if we sell land. The current policy is to give cash over. Do you want to see the policy back? And so the 5% would be the discussion piece of it. Okay. Yeah. All right. Thanks for clarifying. Okay. So to be clear, you just wanted to take the rescue squad off of the current land sale policy. I think uh let's start 10% to the school, 5% to the fire department. Bring that back and then let's have a discussion about that.

Sound good? Because can we also if we had to do we have leeway to adjust what we give to the school as well? Yeah. Okay. Yeah. I would bring it back for something to talk about then. Thank you.

Okay. All right. And then the next thing and this was the thing I thought Lisa would make is um we have the ARPA funds. We know we've been calling them ARPA. ARPA is sort of done. It's really not ARPA anymore. We don't know what to call the thing. It doesn't have any money in it anyway because we've already obligated all the money to it. Do we want to just merge that with the CIP fund so that it is all just one and stop having this thing that is not ARPA but we don't know what to call it but we've already obligated it. I like it.

Can we legally do that? like we have to spend money by 26 and all that. Is is there it doesn't change that. No, we don't have any obligation to spend those funds at all anymore. Okay. Um we have obligations now with DEEQ to do projects, but when it comes to those ARPA funds that those ARPA funds are at council's discretion and you have directed us to use them to do these projects. So, I don't know about um I would really like to run that past Aaron um because we have been accounting for that separately in the audit

um and to kind of get his feel of what we would do if we decided to move that into like a capital improvement reserve fund. Okay. um just to to run it through him because it has been being accounted for under the general fund as a component part of that because of the way where the funds came from originally. Yeah. Okay. So, you want to just bring us back some research on that? Yeah.

Yes. Because I my thoughts were just we may not want to um just lock those funds into specifically CIP projects. we may want to allocate them to the general fund um as we look at different budgetary items as we're going into the budget season so we can come back with some up with all this so we can call it formerly known as ARPA formerly known as just ARPA

okay Uh, okay. All right. Well, I guess that's just a discussion point that maybe we need more information on. I was just trying to clean this up with all the CIP talk and everything else. And we've obligated those two CIP projects. So, I just didn't want to. Uh, you keep asking for it to call something else, Lisa. But not that. All right. Are there any other discussion points on this for tonight?

So, yeah, just a question. Um, so at this point, we're just we're deciding on 26 and the rest we're going to try to come up with a holistic plan for the CIP going forward. I think that's great.

Is that am I understanding correctly? Okay. Thank you. All right. Uh we'll move forward to resolution 3325. Uh that we have this we did this. We're going to cancel the November 5th work session and we will have a lot our staff I just remind you has now a ton of homework to bring back in the regular November meeting. So we'll give them a little bit of time and space and work to do that. All in favor or wait, do I I need a motion for resolution 3325? So moved. Is there a second? Second. All in favor or any discussion? All right. All in favor? I

I I. Any opposed? All right. With that, we adjourn. 8:19 p.m. Great work, everybody.