City Council - Regular Meeting

We are on YouTube right now and just saying don't say anything.

All right. Uh it is 6:07. So I call this meeting quarterly financial review session to order this Wednesday, April 15, 2026 at 6:07 p.m. We don't need to call roll. Is that correct? Okay. We have one item on the uh agenda tonight. It is first quarter 2026 finance review. So Mr. Marsh, it's all yours. First thing I want to do is I want to start with a uh I'm going to do this in sections. You do have some reports in front of you. I will be referencing those. That's just reports copies for you to peruse. You can see there's one that's listed there that is the five-year comparative revenues and expenditures. It is comparing the first quarter of each of the years 2022 to 2026. So you can see the first quarter of this year compared to previous compared to the expenses comparative also gave you an income statement income statement report that every line and it compares the January to March actual and it says to budget but that's you know it's an annual budget we don't budget by month and therefore it doesn't make a quarter and even though it's saying it's a comparative to January through March that's the annual budget and the way that you would read that is you would look to see from an expense perspective what 312 of the looking what the normal average would be

saying that consistently wise you would think that you would get somewhere in the neighborhood of your number 75 anything above or below that is retirement. No, retirement.

Not sure. and the expense percent Well, for now look at the revenue line for granted revenue. You'll see that there was revenue in the first quarter. also gave you a couple other reports. expendit fund balance headed and most of their projects testing. There we go. And then in the columns the far right, you'll see the surplus budget that they

budgeted to have for the year and their ending. explanation and we're going to be also talking about question. It is red.

I did a analysis of engineering fees forward from the last time I did it from 2020 all the way up to 2026. So you'll be I'll show you where that's going mostly as it relates to the street department because of projects that they have in the works and the engineering piece that drove this one

liberty liberty liberty liberty liberty liberty Liberty. Liberty everybody.

Or whatever it is. And and and and what? Doug. Doug. Doug. Yes. Thank you very much. That's right. That was for you. For the folks at home. All right. You don't know. You wait. You just wait. Okay. Yeah, this will be the top seller.

So, this would be mostly for AC's U benefit because you did see this at the presentation that we made at the city council meeting. You were not here. So, I'm going to give you a quick update of where we are city sales and use tax. This is a reminder to the rest of you. So, when you start seeing the budget presentation, you'll start you'll be able to relate this to where we are on the sales tax side. Um it did take a drop down cumulative went from 4.46 to 1519. That's because the February numbers were well below the rebate numbers that we incurred back in 25 which made this way dip. But you're now seeing that uh we're normalizing and we're down to a 10.12% uh cumulative increase in our city sales and use tax. I don't think that's going to be that for going forward and that would end the year there. But it is refreshing to see that we went from at this point last year 10.33% down to 10.12% up. I do have the numbers that we I showed them as far as what that how that equates to what additional gain each of the departments that benefit off the tax. So, you know, there's a 1% tax that's dedicated to the water sewer department. And that 2025 number was 827,000. 2026 is 911 095, which is an $83,000 pickup on this one and 3/4% tax. Well, the 1% pickup for water, sewer was a gain of just under $50,000 to them. the gain that each of the park street and fire for the three quarter percent tax was just under 12,000 each for them in their coffers right now. Now, you got to be cautious to say, well, we can go out and spend that money because this is only the first quarter and we could have

it go the other way in the next quarter in the next few months. So, that's nice to have. It's there. It is a cushion for them if they need it, but I think they should still be held to their budgets that they have and not go off and try to spend that right away. Specifically because we're watching the contingency funds and contingency funds have a lot to do with what the general fund can supplement as far as the 2026 distribution for the additional quarter. So there's your 2% one three quarter and one quarter. This goes solely to our bond and the bond picked up an additional $12,000 uh into it. So, anything that it gains above 3%, which is the benchmark that we use for um where we're trying to say the bond will pay off sooner, this bond will um actually benefit by anything greater than 3% uh enormously. We we're hoping that if it continues to be at the rate it's been over the last three four years that we actually will pay this bond off saving an incredible amount of interest before the police station bond would have been retired in 2039 I think it or whatever I think it should be around 2038. So that's good news. Now the rebates I was showing was the fact that 115,000 was 2025 38,000 was what we incurred in 26 but then we were worried I was a little bit cautious because I thought well maybe they were late in filing like they did this year and it didn't really happen. It's more normalized now. So um this we equated we had a discussion while amongst the council members that were present that there were five bridges

that needed to be built. Four of which are already built. The fifth one is yet to be built but four bridges with the steel and the concrete probably is what made this happen. And right now we're anticipating that when that bridge starts here right outside that there will be some bump up in the rebates for the steel and the concrete but not anywhere near this. So um when you look at the graph this is what happened in February came back down to a more normal little bit of a bump here in 2024. a little bit of a increase due to the June reporting. People that have a fiscal year end June 30th. Um, this is where we ended up in 2026 right now. And we normalized. So, I'm anticipating it to stay right in this level and not to be way up or way down. And so, I'm that that's that's a little bit favorable right now as far what we're getting is what we get to keep, not what we'll have to pay back or get they will recoup. As far as the city of Greenwood is concerned, I did show them that this 63 is what our distribution of city sales and use tax was to us in 2026 for January sales. So when you go back and equate that to the January sales and you add back the rebates to because the rebates are based on sales, um our amount would have increased for January sales 26 over 25 by 183,000. That's a 1.11% increase in taxable sales. On the surface, that sounds like it's a good thing. Uh the distributions, however, when you look at the adback of the rebates, this 1.82 is where the actual uh amount for taxable sales comes in.

Just slightly under a million dollars. That is I'm not going to say that's not good. That's actually good. But is it the result of more purchases or is it the result of less purchases that are more costly? So what we have to factor in that is the inflation rate. And what I explained to the council at the meeting was that if this number were greater than the rate of inflation for this year, then I would say there is still a robust purchasing and it's not being uh drained by the fact that the whatever they're purchasing, the volume of purchases is lower, but it's higher cost. And so when you look at the 12-month ending February 2026's rate of inflation, nationwide, it's 2.41%. 41%. So if this number were greater than that, I would be comforted in knowing that the rate of inflation is negated in that taxable sales increase and that's a positive to me. Right? Sales tax very well. It's um we're up 3.53%. Now this is the distributable amount which means that's our portion of the distribution from the the the pool of money or the pot of money coming to us on a per capita basis. So uh while we fare fairly well so did the rest of the county and that's good for 2026. And I wanted to show you how that relates to the departments that benefit from this. That's a $23,000 uh increase from 2025 over 2026. that is distributable. It's not part of this. It's it's an increase amount. So when you look at the percentage for each of the departments that benefit from that, the police department would have benefited by in their operations by 11,76.6,000

to the fire and you see the rest of the distributions to animal control, parks, and planning. So again, the caution would be maintain your current budget and don't spend that money because we're still early in the year and a lot can happen. Chief, pardon? Who you looking at? I said chief. Both or one? Yeah, both of them may. They're both of us. No, I'm just No, not you guys. He He was just barely. Yes.

Yes. So, uh the advertising and promotion which By the way, it's been mentioned a couple of times. That's our earliest precursor of what's happening in the sales areas for the localized sales and the advertising and promotion increased 6.23%. There's still a lot of catch-ups that have been have happening in here to where now people are starting to uh be more timely in their remittances. So, that 6.23% is good. But when you look at the average monthly ammp collections for the year 2026 right now, the average for the first three months is 17,644 per month. Whereas the yearly averages for each of the years from 2018 up. Uh last year it was 184 and it was 189 almost 19 in the year preceding that. So you had a steady increase up until 24 and then the last two years it seems to be dropping and again inflation has a lot to do with that. Um are they going and buying at the same level or is the amount of being remitted adversely impacted by inflation? And so what I wanted to show was that this is the year-over-year sales growth percentages. These are real up to 2025. Last year it was down 2.65%. 65% and that's in line with what the AMP commission said, they had a bad year. Um, so when you look at the average monthly collections and the actual average monthly sales, there was a drop. But if we say that the average this year right now for the first quarter remains constant for the rest of the year, we would end up at 4.53% down from the year over the previous year. So that we're hoping increases and there's a lot of discussion and I didn't mention this about Brahms opening up but

the amount of the yes bronze will generate revenue but to some extent initially it will have a neutral impact on the AM because those people that would have gone to McDonald's are running out to Browns and they got to see what's out there. Well, where the increase comes is for the people that would not normally go into Greenwood and purchase. Those are the ones traveling down 71 that on their way home will go in there to the market. And remember items they buy buy at the market that city sales and use tax they would be spending in county. Um but the it's food items in the market and I don't know where that tax lies. It's not as much as what city would be. Not a lot, not all of what they sell is prepared food. So just keep that in mind. So if you're looking for a major change in that, it's initially it's going to be a change, but I don't know to what extent. And then the cash flow that I shared was uh we started at the year at 12196 and as of the end of the current fund balance as of 331 was 114 we're down 5.91%. Our budget is to be down 60% which is why we implemented the issue regarding each of the major funding funds which is water sewer street and general unrestricted with a contingency fund. As far as the capital expenditures I showed, 15.31% is what's been spent from the city as a whole. The water sewer is 17.42% of the number that was spent. They have 1.1 1.5 million against an 8.8 million budget and the rest of the city is 2.4 of the 11 and they've spent 185. So

there's 7.5 7.95 just under 8% for the city as a whole. 17% for water sewer cumulative for the whole city with water sewer added is 15.31 and one of the things we do add in this calculation is the street resurface projects even though that's accounted for outside of capital projects and capital expenditures it is a capital expenditure it's a capital project as far as the calculation for the contingency I did share this with them too you know your contingency fund was set This is the floor. You were asking about a floor in the in the contingency fund. That is your floor. That's the number you don't want to go below because the automatic triggers will come in to the point to bolster it back. And the ceiling is greater than 25%. That's where if it goes above that, now you have discretionary spend, but at your per uh your purview. the um way it's calculated and this is what I showed. I want to wait for him because he didn't see this. Um February of February 28th's number uh in the unrestricted fund was 850,000. There's your reserve balance that you said at 15. So we were 14% higher at 104 uh 104,000 as of March 31st. And you'll get these numbers in your packet every single month. this 331. It was 828. It did drop. So, we only have now uh an unrestricted balance of 82. That's an 11% increase that we're sitting at. Still very favorable and well above where we need to worry. The worry comes in if this number 746 is um we're if the 828 drops to 671,000,

that's your 10% reduction. So anywhere between uh zero, meaning it this number here is $746,000 and $74,000 lower or 671. You do not have the 10% kick in, but you have to be cautious because you're teetering on an automatic trigger. You can set a trigger if you want, but the ordinance requires that trigger event at this number. The second one of 25% is a reduction of your uh general fund reserve balance below this number by 186,000 or 559. You hit this number, the trigger at 25% kicks in automatic. And then 50% would be three and then 75 would be 559 or these numbers. So this is these are your trigger number points. The above 25% says that if the number goes up by 186,000 or 932. Anything above 932, you have discretion to consider projects for this current budget year to be spent on, not for future projects down the line. It has to be in this current budget that you pushed off or you're not going to do. You can use the money greater than the 25% to do that. So the number would have to be a well above let's say if the if the number went to 1.1 million the difference between 1.1 million meaning this number here would be greater than the 932 your discretionary spend would be the difference between 1.1 million and 932. That's the number you'd have to decide how you want to use it. And you can say we're not we're going to leave it in there. Let it ride. That's fine. And then next year you'll consider it in your budget when you set the contingency fund percentage then.

So does that give a better explanation as to how this works? Yeah. Okay. Great. Appreciate that. Thank you. And you did ask me about that slide, didn't you? And I didn't send it to you yet. Could you could you go back? Yeah. I want to get a shot of that real quick. All right. Thank you. Which one? What you said? go back to the this slide. Um I I just wanted all those trigger points and I got it. Got them. Yeah. Cool. Thank you.

All right. Welcome back. I just gave an update on what you missed at the city council meeting. I think the only one that's really important is the contingency thing that we were talking about that there was a a little bit of a banter on about what a floor should be and what the ceiling should be. Should it be 5%, doesn't drop below five? I'm going to show this to you right here on that screen. You do have a um copy in your packet from last uh city council meeting. You set the uh contingency fund from the budgeted general operating fund at 746,000 or 15%. So I showed that February's number was up 104,000. That's a 14% increase. So you're not anywhere in danger of being below this number at or below. And you did establish trigger points at 10, 25,50 and 75. So in the balance of 331, the unrestricted fund at that point was 828,000. That is 11% above at as of the first quarter end. So you're $82,000 ahead. had this number 828 dropped to 671. That's your 10% reduction number, that would automatically trigger the contingency um reaction for that balance dropping to that level. So, anything between 671 and 746 doesn't trigger it, but you have you have to be cautious on where we are. And the reason that there's this buffer is because this didn't say at the end of a quarter. It said that balance cannot drop below that contingency number to the point where a trigger is automatically calculated. Well, you know, during the month this number will drop below be due to a payroll being processed or something. There will be a period of time that that number is

lower, but it won't end that way for the month. So that's why that buffer is there. If this number hits at the end of any month below 671, trigger one kicks in. The 25% trigger, if the number drops below down to between 671 and 559. It hits 559, you're at 25% trigger. 50% is if the number drops to 373. If it drops to 186, and here the actual reductions that you're taking out of the fund, that's what that's here for. It's the illustration. That's what 10% is of the contingency. And if it's greater than 25%, meaning it's higher than 932, what dollar amount is higher is your discretion to how you want to spend that in the current budget year, not for future budget years, unless you roll it over and reaportion it next year, in your next year's budget. I will tell you that what you should consider the floor is the current 15%. This is your floor. You do not want to go below that number. The ceiling would be this 25%. Anything above the ceiling is discretionary for you in the current budget year. That's how the ordinance is written with one exception and that is the 15. We're doing two months. I think the way the ordinance was now been revised by the um codification committee and by the city attorney and group that looks at those is that the 15 the we're not doing the 15% we're saying it has to be it has to equate to two months of the current operating budget current operating budgets for this two months as you know for this year was 15.8 8. So you were right in that ballpark. So we didn't adjust this.

Hey Tom, just looking at the rate of change there between those two months. I mean it it does appear that at some point this year at least the 10% trigger may be coming into effect. Is that fair to say?

Depends on how the revenues come in. I can tell you what would make that happen in is if there is a disruption in or dramatic decrease in the revenue stream or it could be um a for the operating department not city sales and use tax that has nothing to do with this. um which you could say well parks department has to on that grant they have to fund upfront and get reimbursed their portion from the grant then there's a cash flow issue and that may cause this but it won't because that funds come out of those funds don't come out of parks and m this contingency is only the on and it's their operating departments so in essence the the 14 to 11 doesn't represent a trend of any It's just every month has expenditures that that vary and some expenditures occur one month.

So we don't have an even uh expenditure each month. So it's not a trend. It's just some expenses came in and some expenses won't come in the next month and it might be higher and correct. Well, I I think if the if the fuel prices still stay up there, you know, it could have affect us. Excellent. You're absolutely right because those weren't anticipated or budgeted and now they're almost How about the hiring of new positions?

Unless they kept it budgeted neutral, new position would uh impact that, but they are looking to keep that budget neutral by the reduction if you're referring to what just happened, which I think you are. Yeah.

Yeah. that was discussed and that new position is not planned to be hired until Juneish and then um the other new position was budgeted which is the planning the the code endorsement. So but this this is a budget neutral for 26. I can't say what's going to happen in 27 and that's all up to you. But I know where you were, right? That's where you were going. Yeah. Salaries, uh, supplies, anything that is used in the operating of the department will impact that. So, what I wanted to show you here in that report, which you have a copy of, it is the colored one. You have a So, if you can't see it on there, you can see it on the screen. The bold numbers are legitimate bank accounts. They are actual funds. The green represents virtual funds and I just wanted to share with you what our accounts are doing. The GFS are the general unrestricted funds. This is what makes up the general unrestricted amounts. So there is no fund balance for that here. It's all done in the general. But I wanted to break these out by what departments contribute to that. So there's been a animal services had a three-month revenue for instance the way you'd read this 24,000 and they expended 21. They have picked up 2,704. They're budgeted at the end of the year to end with a surplus of 7,04. So you can look at they're they're they're making progress. Um I would be weary or leerary of and sort of challenge some of the negatives that have happened in the first quarter because the what would influence that would be an expense occurred which was

budgeted earlier than when the revenue stream would catch up. So we have to monitor this to make sure that this is where they'll end up in the end of the year. That's their target. That's where they're they're shooting for. So when you look at the report on income, the income statement one that compares actual to budgets, you can look for instance in the planning department for their uh permits and look at what generates revenue for them in addition to the county sales tax which right now is favorable. So that's you can't just go, oh my gosh, you're going to have to cut expenses. There's reasons why right now it could be showing a negative based on the timing as Steve pointed out of an expensive being occurred that was well ahead of the revenue stream that would be coming behind it because we don't our revenues are not static. They are highly volatile monthto month. I just wanted to give you this in the first because you'll see this every budget every it's not really a budget review. This is a financial overview, financial review of where we are operating wise in the first uh quarter. As we go to the second quarter, these numbers will become a little more significant because time's running out now. You're halfway point. So, you should be seeing changes in these numbers here. So, this is the column you look at. And where is our fund balance sitting right now? So you can see that the DTF control fund had some expenditures but the DTF control fund will generate revenues that will come in. So they have money as you see in the DTF control fund to spend. That should be that shouldn't be red. That should be black. Um they started the year 20,000. It's not there to save and hoard. It's there for them to use and they they use it. Um,

usually it says zero budget because whatever we budget them to bring in, we budget them to spend. If they don't, it adds to their coffers. If they do, it could have a negative impact based on what they anticipate that reduction to be, but it's there to use. The reason that you see a big LPY decrease is because Lafy started the year at 63,000. Their ending balance right now is 73, but their surplus that they're looking for is really a deficit of 34,000. If you remember, you granted me the authority to take and reduce the percentage that we're pulling from Lapy's actual fund in the virtuals because they were they're sitting that 63,000 isn't doing uh fire or police any favors to their operating expense. So, we're bringing it down to about 30 just under 30,000 and that's where we anticipate it'll reside. So this negative amount was what we added back to the general unrestricted. That's what happened there. As far as the sewer operations and the water operations is concerned um you see the very healthy sewer operating fund balance of million31. I can remember when that was 150,000 and we were funding it with city sales and use tax because their rates were woefully underfunded and now their new rates are kicked in. So we've had three month revenue of 827,000 three-month expense of 572. There's a actual surplus of a quarter of a million. They're up to$1.2 million right now. They're budgeted a surplus of half a million. So they're doing fairly decent in their operating side. The um

ending balance uh fund is 1.6 budgeted. So they're they're sitting pretty. They're sitting right where they need to be. Uh water and m distribution office and plant. The water on&m generated 2.6 million so far. The operating accounts at 2,88,000. This takes out the uh the impact of the city sales and use tax capital is out of this. So it's merely they're sitting at 1.2 million in their fund balance right now and they're budgeted to be at 633. So what's in this number though is contingency. Uh the replacement reserve for their assets are factored in this uh rate increase. and the debt service is in both of those. So when you look at the water sewer combined, they are surplus of almost uh a little over threequarters of a million dollars right now for the first quarter. They're sitting at 2.5 million. That is not capital. They could use that money for capital if they needed to. But let me show you where the caution is. It's in this real account here called city sells and use tax water sewer. That's the capital. This is where we're watching very closely because you're looking at this balance of 3.4 to start the year. We started the year before at 6 million. They've already depleted half of that and now they're down 1.6 in the first quarter. Now there is uh one point a little over a million probably a million and a half coming from the um relocation of the utilities for the traffic. really that money has not come in yet, but when it comes in that'll add to this coffer. So, their ending balance right now as of March 31st in the city sales and use tax

side is 1.8 million. Now, they're budgeted to have a deficit of three million, which means they're going to spend the 3 million plus another three million to end with a deficit of six million. So now you know why we're looking at if they do and they're on the way to do that. We're going to need some financing and whether we do it through a long-term bond for betterments and improvements at this point or whether there's some thought about using it just as an operating loan from a local lender. So I had a a bond company come out and we talk about financing and I have their report. I just got it last uh I got it Monday and the amount that if we go right now with uh the quotes we got back from banks, lending institutions and that's thought that was it. Yeah, that's it. We get to some of the numbers here. should have this open. Here it is right there. All right. So, when you do the comparative, they went through the RWFA, which is the rural water uh association. and they went through public offerings which is just a normal typical bond and it's collateralized by the uh water systems revenue or the sale of water and sewer services which does not require a vote. We don't have to put this out for a public vote. So the collateralization is in their rates basically and the rates budgeted public debt. They we budgeted for this

in the rate that there would be some debt service fees. So, the amendment um 78, which is a a five-year operating loan for we did a $ three.5 million loan to cover the what we anticipate would be based on their budget a shortfall so they don't have to try to fund it through other means. the debt service would be somewhere in the neighborhood for five years of about $750,000 per year that we would have to make sure that cash flow-wise we could pay back that loan. That's the amount through the payback in the principal and interest. So we budgeted or calculated in the rate increase 800 it's either 884 or $844,000 for the debt service. So that is well under where we anticipated the debt service to be. This has not been proposed or not been shown to the water departments commission water commission yet. But I will be looking at it. We'll be talking about where they anticipate being because if it's just a loan you're getting from the bank, that's a very shortterm, very quick turnaround. We can get that happened really quickly when we need it. Good news is that temporarily they could help fund it back from the operating side's revenues because the debt service has already built in those rates which we haven't been spending. All right. And this is the second year of that rate in effect. So I just wanted you to know that's on our radar. We are watching that and I am making sure that we have an avenue that if we needed it, we can go get pretty quickly. and and without that is five years

fivey year loan anything beyond that would have to be approved by the citizens no in that

the citizen is whether you use tax dollars whether you use taxpayers dollars we're not the collateralization for a public offering meaning a bond to the to the investors that want to buy it if we were to go and collateralize it with the the rates that we charge then we're the burden is placed solely on the people who utilize our water system and our sewers. It has nothing to do with the sales tax which is anybody that comes into the city and buys something pays for that service. So it is heavily burdened on the customers of the water sewer department but it's collateralized and it is already in the rate. So it's not going to be an extra burden to them. They're already paying it. So we we foresee that coming down the road. It all depends on which way the commission wants to go. Do they want to look longterm and do something that would allow them to do uh growth opportunities down the line? I do understand the we talked about this that if you were going to fund through a betterment and improvement bond but refurbish current existing infrastructure with that you don't get a return on that especially as quickly as you would if it's growth oriented and you bring in new businesses then you get some return on that cost so there's there's an I could see this both sides of the coin

the better the lack of betterment and improvement might make you fort Smith at some point. Yeah, we'll just let that Yes. I feel okay with all of us. We don't live here. I do. I feel your pain. I understand where you're coming from. So, that's the water side. I wanted to at least give you side, not slide.

Well, he brought up Fort Smith. All right. So as far as the street department is concerned, I wanted to bring that up. Now um we did make the split between the street and&m, the sidewalk department, the street turnback funds and the city sales and use tax street. Now while the they have four accounts with money on our accounting system split, there really is only one street account. So all the money is in the bank at beginning of the year $2.6 million. Right now they have taken and deficited that down in the first quarter by 22,000 and so it's 2.64 instead of 2.66. Um so that it looks pretty good but you got to look at where the money is and where the money is uh being amassed versus being spent. Street ON&M M is solely that. It's the operating side of their department and their operating side which normally was up around $2 million has been split out amongst the turnback funds so we can easily account for the usage and the spend and the appropriate spend so we don't have to try to go figure it out. We've already done that work and so these are being used solely for the restrictions placed on it by the turnback uh fund law. As far as city sales use tax street, it's the taxing document. Money is being spent according to the taxing document. We can very quickly and easily show you exactly how it's spent. Was a wise decision to do that. And the last is the sidewalk department which is the most minor of the costs in there. As far as the street is concerned though they've they had a significant deficit of 174,000 on the street and M side. Some of the things that are still in there that we talked about at I think

the last fourth quarters uh and the budget review was things like whether you want to supply a a cabinet of medical supplies through um cents. That's you know there's little things lowanging fruit that could be gone after. It might come down to that. They're looking to bring their this is their budgeted reduction of 495,000. So they're not bad compared to where they you've approved their budget to be, but this ending balance is significantly low for an O andM. So, just something to look at. Um, turn back. Yeah, everything looks pretty healthy from that from the operations side. Um, from the capital side, the general unrestricted, which is where your contingency comes in, that 828,000, which you just saw uh as your March 31st fund balance, you had revenues of a million4 and expenses of a million two. You're down 156,000. But then again, we can go in and look at exactly what expenses made that up. I can tell you right away what one of those expenses are or is and that is the uh amount that we pay for the uh computer and IT stuff. Those renewals come in and they hit right away and that doesn't allow for the catchup. So, a lot of that is in those types of things. the uh fees that we pay to AML, the fees that we pay for uh our software centerpoint, uh the customer service fees, the fees to Redwing, those all come in and they hit right away in the first two or three months,

workers comp, yes, also hits. So, there's a lot of big expenses in the first quarter that will far it out as the revenue stream comes in. They're a one-time hit. Okay. So that's something you'll see every quarter unless you want to tweak it and see something different. You know, you're talking about low your words lowanging fruit. Are they managing that?

Are they are they working on that? I mean, do we still have a a cents agreement for the very expensive, you know, first aid cabinet and all these other lowhanging fruit problems? Are they managing that?

I can't answer that. I can tell you that they still have we are still processing bills for that. Yes. Now, what I'm saying is directors are respon responsible to be directors. I have this speech all the time. We can't catch everything. We do a darn good job between the three of us. three being um Shannon and myself and Charlotte. We catch things that we just saw come in. For instance, that I think I didn't even share with you. I wasn't here. That bill got a check got cut because there was a submission for for instance a signal light box that got hit by lightning and it fried. And so they had to spend six grand to have it repaired and replaced. So the first thing that When Charlotte saw it, she puts a note on it and it was on my desk when I got back today that said, "Shouldn't this be something that could be claimed against insurance?" And the answer is yes. We insure our signal lights and being struck by lightning if there's bonafideed and verifiably done. We have had claims. So the question is,

did they think about doing that? Right. You're you're you're managing by a second line of defense. I mean, first line of defense would be the department head reviewing all this stuff, catching it and saying this is possibly insurance reimbured. Well, I do appreciate your your diligence, your diligence.

So, so a lot of that is we we need to have us sit down kind of go over the expectations that we have for them when they're reviewing. We need to tell them a little bit more about how to utilize our systems. We got a little bit of a of a training issue with them to say, "Look, stop using us as your first line of defense. You're the first line of defense." And what our expectations are when it's turned into us when we look at it. Sure, there's mistakes that'll be made. There's oversightes. And I'm not just picking on street. This happens in all departments. So, um, this was just one that happened while I was gone and it was on my desk and the question was, "Is this" and the answer is yes, absolutely. It be no different than if your car got hit or you ran off the road or something. You turned it into insurance. That's just something you think to do because you're paying a lot for insurance. You might as well use it,

right? Now, there's a downside to that. if you continually use the insurance. So, you know, sometimes it's like better to weigh the options and say, "Look, we can we can cover this. We have the money in the budget if if this is something that would significantly influence our rates." But that's where you have counsel with your insurance uh agent who could tell you what the impacted would be if you filed a claim. you're filing a claim for $100 over your deductible and your insurance is going to go up. So maybe just pay the hundred bucks, right? You drive on down the road.

That's kind of where I was going. Yes. I'm not saying that they would do something nefarious. I'm just saying they would advise you as to whether you really might want to consider not filing the claim, but that's where the agent comes in. All right. Yes. seems to be on. Yes.

Yes. And that's what she's there for. he's our agent. So that um I can go through a little bit one line by line on the two reports that I gave you, but I' I'd give you the option to look over those and then get in touch with me if you want to know or send me an email and I'll respond back, you know, why did this happen? uh or what's going on with this account and I can give you my take on it and give you the detail and and answer your questions and then we could address it again at the next city council meeting at the council forum if there's something you want to bring out or specifically talk about to the director.

I appreciate the the color coding. It makes it easier to follow and everything. I have to print those individually. I'll have you Yeah, because we don't have a color cop here. That would have costed cost way too much for us to have. that kira Christ whatever that kiraos um color printer was astronomically and the ink alone everybody would print that

but you're that's fine thank you so now I want to go and turn my attention to two things um some additional information for you to put on the radar a question was asked by Ralph at the last city council meeting that you two were not necessarily privy to unless you discussed it and that was out of the blue he wanted to know about the solar and how are we fairing with the solar. So, I did a deep dive into that and I'm going to share the results with you. But the reason he was asking is because we're getting close to where we have to make a decision in the sixth year. And I do have the contracts here. And it does mention the the period of which we have to look at whether we want to purchase it or not. And I'm going to share what that will do with with this. um the sixth year and it begins at the end of this year. 2027 is our where we have to make the the decision but it's really I think October is when we started September October when the first um AEX grid came on because we had some in November and some in December where we sold um electricity to the AVC. So, I'm believing that by summer of this year, they're going to come back and and ask what we choose to do as far as our option is concerned. And just so you know, the way the contract is written, it is they have a schedule in here of the what's called in these contracts early termination amounts. Meaning if we were to pay it off and buy it and in sixth year for the amount that's listed here, let's say for SWECCO is 1.16 million,

but it's the it is the greater of that number or the fair market value, the greater of it. So this is your worst case scenario. So, I'm going to use the worst case scenario in my illustration for you and say that the appraisals on the fair market value will come in less. And if we we have a right in these contracts to go and get our own independent appraisal and if the numbers vary significantly, then they will arbitrate it. That's in your contract. So, there's probably no way the fair market value is going to be greater. It's going to be less. You think I don't know

because you realize that the contract's written to be the greater of the fair market value or this number. Okay. Okay. So, I would think that they're banking on the fair market value number might be a little higher. I don't know. How does it appreciate? I don't know enough about the solar industry to know. Hey Tom, have we reached out to any of the other entities that have used this company to see what they're thinking whether or not they're going to purchase or they're just going to Haven't done it to this company, but we have talked to several that have solar went into the solar panel business and they don't have favorable things to say. But let me just show you what we have.

All right. So when you look at the sale they you know what savings are we going to get from Abeck and what savings are we going to get from SWECCO once the solar comes on board. So in 2022 it actually came on in 2021 in a couple of months but it wasn't significant to adjust the u or change the trajectory of the average uh expense. So the first thing we did or I did was take AEX actual bills to us. AX direct billing to us for utilities. They also bill us for street lights. Street lights are not covered by solar. And if I left street lights in there and just use the total AVAC billing to us inclusive of street lights, any increase or decrease in the street lights would give you a a skewed look at whether you're getting a savings from the solar side. So I took the street light costs out. It is being accounted for on our system separately. I did shock you at the end of the year when we did the budget review saying, "Do you know that the city pays $94,000 for street lights on average per month, per year, rather?" $94,000. Significant. So, you might want to push to see if they would uh consider going LED. Some cities are actually trying to get them to do that because that would give you some savings. Okay. Okay, as far as this is concerned, the first four years 18 to 21, our average billing that we had per year uh was $130,000 for 2022 through 2025. This does not include 2026. Our average is $105,000. So AVAC is billing us less based on the credits that are being

given to them of electricity being sold through Scenic Hills Solar. That's a 19.4% reduction. But one of the kickers is in this number, it's probably more than that if you didn't have to pay and AVC is billing us 41,205 over this period of time for a meter. meter.

A meter. $896 roughly on average per month we pay for a meter for AVC to meter what's going to them from scenic solar. That's the cost that they bill us for. Well, it's in there because it is a cost that we get because we're on solar. So that I I needed to reflect that in here. And same thing for SWEPCO. SWEPCO builds us a meter. So on the SWEPCO side, we had an average billing of 115,000 and the average billing after solar is 119,000. So we're up 3.04% and you do have the meter cost in here of 8,114.

Why Why is swep so much lower than Arkansas valleys as far as the meter cost? I I don't know. Man, their their meter cost is about $300 a month. That's a lot different.

Yeah. I will tell you though, this alarmed me more because we see we saw this trend happen. We saw it not getting us what AEX was. So, we contacted Scenic Hill Solar because we didn't believe that they had negotiated a net metering contract with them correctly. They assured us, they went and looked and they assured us that SWCO is net metering, but we're not seeing the actual reduction like we should be. And in essence, either it astronomically increased based on rate increases and the the net credits are not offsetting it enough. We don't know. So, the mayor had a conversation with uh their representative and he they're coming Thursday,

next this I think it's tomorrow. Yeah, they're coming tomorrow. We're going to have a talk and you're having a talk with swept. Okay. Yeah, because we should be seeing something in along the lines of about 6 to 8% right here. Negative. It looks like it's almost better just just to put both arrays on on Arkansas Valley Electric and just pay the swip go bill straight. I mean, you'd be saving much more doing it that way. Okay. All right. Let's let's look at something. Well, that's too late now. That what's out of the barn? What is that saying? That the horse is out of the barn.

Yeah. So let's go to and those are real numbers just so you know. So now what I want to do is I want to show you what it is really what our utilities did as a result of the arrangement we have which is a 30-year agreement with them. So the solar charge see we didn't factor that in. I just factored in the 94,000 plus the 41 and showed you that AVAC side is a reduction. But what did our city utility cost do? Well, every kilowatt hour that's being generated by Scenic Hills Solar cost us 269,000 over that four-year period. That's what we had to pay Scenic Hills because they incurred all of the capital cost in order to build that. And that's their way of recouping it. So they're selling us at a lower rate than what AVEC sells us kilowatt hour cost for. But it still factors into what do we what do we pay when you factor solar bills plus AVC and you don't just look at AVC. So our utility bills because solar's in them went from what you saw earlier to 1.2 million and that's an average of 172,000 for these four years. per year versus 130,000 previous. Now realize this does not factor in kilowatt hour rate increases and I I'm going to say that would have a maybe a 3% overtime minimal impact. But if you don't if you just look at what numbers you have go right now this 130,000 if it were kept consistent without any increase over eight years you'd have spent a million47 or somewhere under that. So instead of saving 10 which is what you saw 19

rather for you're actually our costs are up 13.81%. Thank you solar. Did we have any awareness of I mean when they they could have basically plotted this out for us. They did. They did. Not like this. No. I'm I I shocked you in that for a reason. Because what does this drive you to do? Yeah. It drives you to buy the plant. Buy the grids. Because if you buy the grids, what do you lose? You don't pay yourself. this goes away, right?

And what does that happen? Then what happens is you go back to this supposedly. You follow what I'm saying there? It's designed to make you own it. So they get out of they take all the incentives they take the and then whatever the capital cost remaining that they need to recover andor the fair market value which is higher if they are assuming that you have to bear and now you have to pay that debt service over the period of time unless you just happen to have about $ 1.5 million laying around

and and then you have to factor in the insurance now and we're maintaining it now and smart. And I do want to tell you it's in here. So, let's go on one more. You're having way too much fun.

You're I'm having fun. So So if we bought it day one, we did not enter into a contract where they're selling it to us. They built it, we paid them, and we own it. So we wouldn't have these solar charges, but what you would still have is the meter charge because Abeck built sends that to you. So we would have a um 1.79 that's the amount that was day one what it they said it would cost. So 1.79 million, let's just assume at a 4% I just pulled that out of what average current rates would be if we did that as a five-year loan operating loan. The debt service on there or the interest cost would be 150,000 in because that's what we would have spent over four years. That's the interest cost over four years on a five-year loan. And then you would have the inflation that you'd probably have to factor in. I just use a simple 3%. But management support agreement in this contract. It says if you buy it out, they will enter back into an agreement with you to maintain it because we don't know how to run it. We don't know if something's wrong with it. I'm sure somebody's going to go there and go, "What do you do here?"

They know. And they're going to have their people manage it for a cost. I don't know what that cost is. It's not stipulated in the contract. That will be a separate contract you'd enter into, but it does give you the option for that. Then you'd have the insurance cost. Exactly. Because we'd have to insure it. Right now it's that burden's on them. And then the site maintenance cost. We'd have to maintain that property that we own to. So these costs are not even factored in. Just take these two alone and that's another 178,000. That brings your average from 946 up to 1 million1. if we'd had done it from day one and we're not saving still anything on it until the fifth year is over and we pay off the debt. Now you'll start saving money. So you got a fiveyear before you get any really significant returns on this. When they pitched this to us, did they they provided uh didn't they provide a cost analysis or they're not close?

I don't think so. Well, can you and right now we we still don't know the management and the insurance. So, we would need to know that in addition I mean even five years where we start making potentially some savings all that could be not because of the cost of insurance and maintenance. So we really have to know that

after five years the um 150 divided by four times five which maybe slightly under 200,000 that goes away. So you wouldn't have that but you would have all those other costs in there. So, at what point do you start seeing the positive numbers come in? Could be a while.

Well, what about hail damage? It's like any other technology. I mean the the solar voltaic panels I mean that the technology changes like computers and everything else. So, we don't have to change it all out.

I recently talked to a solar person. I'll leave it at that for now because that's a whole different story to go to later on if we have the opportunity and I hope we get to who says that technology has already changed. his offer to me if we continue with this, you know, whatever whatever that looks like in the future is that you can have somebody take a look at what you've got now in existence and see what that looks like in the future. I mean, of course, he's also some everybody's trying to say you something.

You don't talk to anybody that's not trying to sell you something. So, there's that. I' I'd be and I'm not, you know, Tom and I talk about this quite often and I'm obviously disappointed with what we're looking at now compared to what we thought we could be looking at five years ago because we all heard the spill uh from Scenic Solar and it sounded wonderful. Alma was getting ready to do the same thing, not with Scenic but another company. Uh I've not talked to them. There's a new mayor and all that good stuff. So, and I I don't want to sound like I'm got my head in the sand or in the clouds either, but the one down that we finally decided where it was, we had to make sure we were on the same page. The huge array down at

I passed it today. Did you line schools, but it's OG&? Yeah. Which is for Fort Smith, believe it or not, down there. I think it's huge.

So, It's weird. Maybe it doesn't make sense or smart to say, "Well, if they why do they keep building them?" You know, something's got to be good. I don't think ours is correct. I'm not saying yours your calculations aren't correct. I think there's something to miss with what we've got going. I'm anxious to hear from SWEPCO because as I brought it up, Brad was at that meeting we had with SWEPCO and as I brought it to to her, she will come in and talk to you. So the metering thing is the metering thing is what kills us if you will or shoots it in the foot. So but yeah, we obviously got to know the insurance and that's that's an easy thing to find out. I say easy, I'm sure.

Right. They own it. So they own it. They don't they bought it. Oh, the one outside of Booneville. Who? Who? That's an elementary in Fateville. Yeah, there's an elementary school in Fateville owns the one outside of Boomville. Okay. Is that right? Yeah, because they're on that's Arkansas Valley and and Fateville's on Arkansas Valley, right? It's a heck of a long way to run the core. Sure is. They had to purchase the land though, didn't they? From Boomville or whatever. Are they leasing? It's owned by Pville Elementary. Correct. Exactly. And Fort Smith just built one in Alma, didn't he?

I said Fort Smith just built a solar farm in Alma, didn't they? No, it's um Fort Smith built the one or has it out by County Line Road. Yeah, I think he's talking about different.

Yeah, I don't It may be Alma doing another one. So this is not what I'm trying to show you here is that the way we did it because of cash. We didn't have it lying around was not to our advantage because of the length of time that you get any significant return. the better idea would be to buy it right away and then you control everything else. You control the whole grid. Um you're in the position to where you can also negotiate with Abeck and with SWCO. As far as this meter cost is concerned that I don't understand that when we talked to Scenicill Solar, they said you're at the mercy of Abeck. They can charge you whatever they want for that meter. So I'm wondering if there's a room for negotiation on that, but eventually you will get to the point where most likely you'll get to a satisfactory what you consider to be return on your investment in that. But we've already gone five years getting there, meaning Scenic Hills gets the incentive because we're not eligible for any of those incentives of being a municipality. So we wouldn't have benefited from that from the get-go. So that was one of the other selling points to them and let them run it. But hindsight's 2020. We see what it's doing and we see it's kind of driving us to are we going to be looking at 2027 budget year coming up with money to buy the AIC and then a year later doing the same thing for SWECGO. I think too the you know that the the metering part is is a fixed cost you know so uh I think they're again that you know the utility companies are are

kind of protecting themselves too and stuff you know and saying that uh you know typically utilities think long range you know I mean they're talking you know 20 30 50 years you know over a power plant or something like that you know and so trying to recoup uh their cost and stuff and here I think If what is the life of solar panels you know I mean right you know we are going to have to replace them and like you say your unknowns there you know uh we did have to probably enter in some type of uh appreciation replacement replacement reserve. Yes, absolutely. And then for them them to to maintain it, you know, for us and stuff, you know, how we know how much, you know, do we rely on their expertise at

some point you got to figure out when the price of aluminum and copper is skyhigh and then get out of the business. Yeah. Sell it off. Yeah. Grab it.

Well, that you just saw Abeck. So, let's just look at SWEPCO. What if we bought them in 2023 and did the same thing? So, right now it's 5 61% when you add back in the what we've paid scenic hills. So that's part of our utility cost. If I were to isolate that and say that's just a cost to doing business for solar and eventually 30 years from now we don't want to call that utility fee. Well that's not really what it is. It is utility fee. You're paying that for generation of utility. So we're 5.61% up. Thus the reason why we have them coming in to talk to us about this. Now, there's an administrative burden to us as well. They can't get their act together. They can't do billing correctly when they SWECO, we're being told, does not monthly give us credits on each individual account because they just get a bunch of electricity. They don't know how to break it out. Scenic Hills doesn't know how to break it out either, even though we have 62 accounts with Abeck, for instance. So we do an allocation based on what we see is the cost of the solar charge from scenic hills to the departments based on their kilowatt hour usage. So we get the kilowatt hours to total. That's a percentage and that's we charge them that percentage of this 10,4818 for instance. That's how we do the allocation schedule. The only way we knew how to do it to be fair. those that use more kilowatt hours pays more of the scenic hill solar generated fee except now they um are giving us lump sums helter skelter every every now and then we'll get a big huge credit well how do we apply that so if they'll what they do is they pick one account and they throw it all on there and we have a big credit

and they you don't get a you have to pay a bill and we pay these bills online So, is that fair to the water department who is not getting any of the credits? So, now we're in discussions with them about their billing and that'll be something else we'll be talking to about. Abeck's the same way to a lesser extent. But we have some billing challenges. So, we have to look and see what's fair and how it's should be disseminated to all the departments. So, not only is the electric bill based on the way they apply the credits an an issue to us, but the allocation method that the Cena kills is also a method because right now we just got bills from Abeck that uh no usage, no kilowatt hour usage, but we had a bill X dollar amount and it wasn't the minimum fee either because we knew the pavilion had their lights on. So, why is it why is the bills show no kilowatt hours? Why can't they? I don't have any problem with my home build ever doing that. Why are they screwing up our accounts? So, these are I I have an opinion, but I'm not going to render it.

They're coming in tomorrow. Scenic uh scenco is. So, let's just look at taking the solar out of SWEPCO and buying the plant. That's 1.84 million. Explain to me how SWEPCO, which is a third of the size of AEX initial purchase, is so much higher. Not only that, on the contract they gave an exhibit,

last exhibit for each that says estimated electricity production, the production from Scenic Hills for each of the years. And then they also did it for um AVC. So in year six, well year five, they said 1.1 million uh kilowatt hours generated. And they're saying swbco in year five was 1.15. Coco's a third of the size. A third of the size. I don't understand that.

I think when they get here, they're going to say, "Darn it. This is another one of those towns where the services are split. Now there's something to compare it to."

Oh, if you take that out, add add in the meters, you're looking at the averages changing. And so you're you're at instead of a savings, which you should be at if you didn't pay the scenic hills side, you're still at a 1.14% instead of a 5.61% overage. And then you add in three years of the debt service for the 23 through five period and the inflation discounting the fact that there's additional cost including replacement reserve that's not factored in here. 1 million is 14.3%. It doesn't look like a good deal. I'm like, "What you talking about, Willis?"

I think there were a couple good points made. One is if we can't ensure it, but I mean that that's a valid question to bring up and the other one was the the life expectancy of the panels. Well, those questions promise you somebody will it'll be the cost. Yes. And and the deal is we don't have to worry about that if we don't buy it, right? Yeah. That's a that's a consideration you have to say because if that panel catch that whole farm catches on fire, it's on them and they have a contract to go fix it and put it back.

Or the neighbor with the red router BB gun. Exactly. Yeah. target practice. All right. So, good news. There's your solar. Target dates are this year and next year.

There's a word that I put out that fence was Is there you'd be surprised the number of don't get get research projects across the nation that they're looking at how those affect different species especially amphibians. Oh, I'm sure. Especially in what fish? Amphibians. Amphibians.

Yeah, reptiles and amphibians. So, switching gears. Well, to me, I uh when you say our our street light bill is, you know, 94,000 a year or stuff, you know, sometimes I look at something like that would be a a thing that I think maybe over time we could get cost savings because you're, you know, you're not uh going to be having to replace broad scale them. you know, maybe you face out have to phase out some of them this year and some of them next year, you know, but but also you're not really that worried about if hey, there's no nobody's going to really notice so much, you know, if if that only gives you six hours of light that night or whatever or whatever, you know, whereas you're kind of depending on this electricity, you know, and uh

you would think that during daylight saving time, your number of dark hours would be a lower cost versus the winter time. But here's something you can do. You can help the street department. The street department can help the city. That is when you're driving around and it's daylight and you see a freaking street light on. You're paying for that. And that's where you need to alert AEC. We need to go fix that because that should be off. That photo sense isn't working. So we need to notify the street department when we see all these lights on. We really need to go to

and they should do the when they're picking up limbs, look up at the street lights and if they're on and it's broad daylight, not a not a solar eclipse. So they they make the rounds of every street in town on on limb pickup, that should be on their list. was interesting that you swept for commercial and residential customers that were offering an incentive plan to go, you know, from your old uh fluoresence to to the new efficient, you know, LEDs, you know, but never saw a a thing like that for the street lighting. Yeah. LED and some homeowners.

I'm I'm referring to whether it is they automatically. And if they stay on, there's a problem. You know, you'd be quick to tell them, "Hey, street lights out. This one's out. You need to you fix it. Put the bulb in. We need a new bulb." And so they and they come out and do it because it's not casting light. But in the daytime, it's if it's on, you're paying for that. Why? You need more light. What are the are there any uh reasons that we can't move in mass to LED. I'll ask SWCO tomorrow because that would that would change the picture too,

right? I I'll ask them what's the deal with that and can can we uh can we initiate that to happen within the city? Great great thing to do. We never got a good answer. We'll see what they say tomorrow. No, absolutely. Ask once, ask twice.

And even if it was like a, you know, four or five year phase out, you know, it still would be, you know, in the long run be beneficial. We're not Gosh,

maybe we should have them in tomorrow. Why do you think we have them coming in? We have them coming in to answer that question.

Right. But the issue we have isn't with scenic hills.

So the problem isn't scenic hills. The problem is isco and ack that's the problem. We don't see any credits. Apex.

What's the last time we had a conversation with Senior Hills Kills? What? How did And we did exactly what you said. Hey guys, this is wrong. You there's something wrong with this. and they come back with um oh no you're getting exactly everything's fine everything's good they even sent us documentation to show that oh yeah you're getting everything that swipe goes yeah it's being done you're net metered I can't speak for them

I can't I can't speak with them and I'm not having an argument about this I'm just showing you the numbers if you're not happy with the numbers then somebody needs to investigate it with them all I'm telling you is right now I'm not seeing the return you saw the numbers members, you're not seeing the return. There's something wrong. And we're going to start with SWCO. We I agree with you.

Well, that's good. But you just want to have the thing that they're saying that we're we're green, you know, and and there's a you know, there's bragging rights to say that we're green. a break even deal. It's not a break even deal. Right. Absolutely. I agree. We are looking in or checking with the people that we deal with. I mean, I know what you're saying, Sunny, but we've talked we've had many conversations with with Bill Solar. Never, in my opinion, never really got a good

answer to be honest with you. To my satisfaction, I know not to Tom's. So, we'll begin this again. And then I'm sure we'll have the same conversation with Aback and and I want and I know Tom has reached out to some of these other places and I'm going to do the same thing not to because he didn't but some other place I mean for Smith I don't know if you actually have time conver but but maybe starting another pot but I want to know what their thoughts are and what their situation is because after all that is a huge I know there's bigger arrays than that one down We're just kind of getting into it now. Not just

just Oh, I know. We We knew immediately. We knew immediately when we started talking And then we started having conversations with AAC and Sweepco about solar. There was this push back. That's not what you want to do. Now I will say I think it's they may both have they both one or the other or both has their own solar. I think it's Arkansas Valley. They do they have some solar. So which is an interesting concept. And again Yeah.

And and we knew I mean I knew I know y'all knew. We all this thing got passed by council. I'm not saying we're all even voted the same. I don't remember. It doesn't matter now. But we we did it. And we all knew that Sen Solar was not here to to just be nice to us and provide this green initiative. They were here to make money. So, and they are Well, I'm fine with that. I'm fine with it making money, but we don't need to go in the hole. That's right. If if they sold it that you're going to be saving this much of money over over period of time and the the numbers aren't adding up, then we were sold a bad product, per se, or or or there is something a miss.

Yes. Between us, Scenic, Scenic, Swepos, you know, I don't know. But we're we're definitely diving into it because you have to make a decision or you don't have to. Next year. Yeah. To buy it if you want to buy it or not. Oh, end code the next.

So, we got like eight months. But really quickly, the three things that were missing is Tom pointed out that insurance, that maintenance, whatever those three things are, management, support agreement, insurance, and site management. I can tell you real quick, site management, I can't tell you how much it is, but that's somebody we eating and mowing underneath those panels. That's what that is. Yeah. I mean, it'd be cool if you put a couple of goats, but they're probably this be green green way or whatever.

Yeah. But, you know, the support agreement and that's different. I mean, we got the easiest, I think, is the site maintenance cost to figure and then the insurance is a call to our local insurance and say, would you can you and how much would you? Well, yeah, there's there's no doubt. So, It's a kind of a hard pill to swallow, but but to me, Tom, that has those not even factored in there and it still is uh not dollaring out to me. Right. Recovering after the debt service. Yeah. That Yeah. You take that 150 off,

you'll be and that and those three just for fun, just for negativity, those three could be the 15. Right.

Also, there's that that money there that you're spending for debt service that, you know, could the city use that for other things, you know, that Well, sure. and then we don't have to worry about maintenance cost and upkeep or storms or anything like that. But I think the key is that we find out what we're supposed to getting you're here, huh? Then you're here because that debt service will only come into play if we bought it. Yeah. If we bought it, right? We got we got figure out what we're not getting and why we're not getting and what we're supposed to be getting and then make and then make an educated decision. Maybe there's a problem on their end is what accurately is being captured by them is

I mean to me what would sell me on it is that if they're saying oh we're seeing roughly almost 20% savings every year you say what cost then it would kind of pay for itself in five years roughly right so anyway that's the uh that's the good bad and the ugly sorry about that thank you well I'm glad we looked at you I'm glad that Ralph brought it up and you did all hard work calculating stuff because it's an eye openener to me. All right, so let's go to the last thing I wanted to show. We'll have we'll have another heated debate and there's more.

And there's more. The last thing I wanted to show you, we did this uh analysis or I did this analysis on um engineering costs from 2016 to 20. And now I've rolled it for uh 41 of 2016 to June 30th of 2026. It should be five. No. Yes. Five. But because I'm in the current year, um this is the total street department's engineering fees by all of the um I should have had one other screen in here and I don't. Okay, so this is the engineering firms that have been used since 2016 to end of last year or currently on our books through now. We've spent in engineering fees $1.5 million for street department projects that they've had and engineering work that they have done for drainage studies and so forth. the percentage of street engineering fees to the total cities because this is the total city's engineering fees for these companies for the same period of time. It's 4 million. They're 37.29% of the city's engineering fees. If you were to go back and look at what I did in 2020, which is the last time we brought this up or I showed it to you, they were about 24% 25% of the cost and the majority of it was in water sewer, which is kind of where you would expect it to be because there's a lot more engineering in their work than a drainage study or a road. But that's the cost. So when you go down, whoops, I didn't want to do that. I wanted move this down. When you go down to the street department's capital projects, you say, "Well, what is that

as a percentage of what we've spent in capital projects, street um resurfacing, sidewalk projects, capital improvement projects, straight street drainage costs. So, here's the total cost of the projects, 4.7 million. That's the total. However, in this when you go look at the actual capital projects, some of the engineering fees that are up here, because this is by vendor what we paid them. This is the extraction of the engineering fees that went into the project number. So I pulled them out to get to just the project number taking out what was added into capital projects and capital expenditure line items that were engineering fees that should have been in professional fees or or segregated. So this is the total. This is exactly what we paid all those vendors. This is the amount of money that were in these projects that are in this number. So I pulled it out and I said the total projects that we've done from 2016 to now is four 4,ion357. The amount that we have in engineering fees is 1,ion506 which is this and that's 30 right at 34 and a half% of our projects. That's high.

It's very high. And I mean to me that Olsson's really stands out. I mean it looks looks like whoever did the sidewalks pulls it down and Olsen pulls it back up.

So these three right here, the the ones that were in here before 2000 before I did this new one. The last ones that came in were last year and a half to two years. Craft and Tall was new. Olsson's new and Griffin Wagner. That's same company split up. But so these are the three newest ones and you can see what costs have gone and Olsson is huge. So consider this. You take we used to be all Hawkins.

It was all Hawkins and we didn't there was issues. So I suggested to all department heads, all of them heard this, let's think outside the box. Let's go shop around and let's find the best deal you can. And I don't know that this is a fact, but I would I would assume that that top number up there under Hawkins and if you didn't have Olen or whoever else wagon Coleman, you may see the same thing. You may your end result may be the same. It's just under a different name. I don't have anything to back that up with, but I do know that the spreading of it around and I'm not saying Olsson's cheap because they're not obviously, but uh and the cost of engineering is up. You guys know this. We can't do anything without engineer. I'm not saying this is good. This is a good place to be. We're doing our best to shop around and make sure that we try to get the best deal we can on these. I would, Tom, ask you to do the same chart on water, sewer, fire. I get all of them at some point. So, we can look at that and see because I'm not trying to defend the street as much.

You have that. Huh? I do have that. I just they're not out of whack. They're in about the 20% range. So, I did just for kicks.

When we first did this, whenever they were budgeting projects when they first came here, probably about four years ago, they were that when you do a project usually you estimate the engineering fees to be around 10%. We know that's caught up. So it's then it jumped to 15%. That's what they're usually budgeting for these engineering on the projects because that's a static thing. However, um I just used a number of 25%. Let's just say it's gone up to 25%. As your good benchmark for a project. So any project that's well over that you would probably to go look at why did the engineering fees go up so high and as long as you have an explanation for it I'm cool with it

but then again we know when you do that project again the engineering costs are going to be outside of what's normal and customary. So when you look at that number that 4.3 million and you look at 25% it's a million8 a million 89,000 a million 89,000 so that's still 15% above what a 25% would be in engineering cost. And I I don't know if it would make a a big difference, but if you look at this in terms of the number of projects because there's certain fixed costs that are going to go into a smaller project and a big project and you might end up with a higher percentage on if a department does a lot of smaller projects, you might end up with more engineering costs.

Well, then you can look at the other way, too. There's probably a lot of projects in here that didn't require engineering at all. and that would I can tell you that the sidewalk projects which is always street and working with our dot we love our dot state that officially but that goes back and forth Hunter's not here to attest to this but I watched these emails constantly in fact I have talked to Hunter today about where we are now finally we're finally this close to getting our green notice to proceed with the sidewalk phase two we're calling it good

finally because that has gone back and forth so many times

and again Art has their restrictions and you don't you don't divert from that you have to follow their gut now things are changing a little bit for us because some of that is not a highway anymore but it's too late on phase one because it was a highway And so as as as this section from Bass Street to here or 96 becomes ours after all this is done and they overlay for us and they walk away that'll be ours. So the next sidewalk phase three, four, five, whatever it is coming this way will be different. We don't have to we don't have to go by all their restrictions when you got those bridges to I'm telling you I've just watched this go back ping pong and those bridges that were having to deal with what on what was a state highway and some still is that cost a lot of money and and Hunter did a great thing today I hate we keep you know he's the golden boy right he's a golden so he did a thing. He We got a final bill, if you will, or estimate of this of this project, and it was, I don't know, 60. It was not a lot of money compared to $6,000, $7,000, whatever it was. And I he said, "You," he just told me, he said, "I'm going to check and make sure that we're not that's not redundant to something because it had gone back and forth and all these things." And sure enough, we came back at less than 4,000 after doing some due diligence with with them. So, I just said all that to say that's been more expensive than not what it should have been, but what you think you have to pay because of those changes.

Yeah. You probably It's a It's a constant battle for everybody to stay on.

Yeah. everybody to stay on their toes too. You have to take into consideration though too since I mean 2020 COVID and now it's just been a weird time with the amount of influx of you know federal dollars into these large projects the fluctuation of concrete steel the bottleneck of labors I mean I mean look at the bridge project I mean there's probably only a handful of people in the United States that build huge bridges.

So, I mean, when there's an influx and so you you can see where some of these companies may be, you know, inflating their cost because they know they can get it. Uh, so, you know, time equals money. If you can get somebody who's a very good engineer and and can, you know, draw something quickly and very few change orders, then it's going to save you on, you know, materials. So, I mean, it's I think it's just it's just a weird time.

And I can see where a change order you saying with with Osen, I can see where, you know, oh, it's going to be additional uh materials, you know, that that's going to add to the cost, but boy, their their engineering fee for the change order was just unbelievable. It would be interesting, you know, another five, 10 years to see if it goes back down to, you know, 20%.

Working for the contractor that did up to the splash pad and he told me it's pretty well known now. in the area that if you see the one you mentioned he said he said 30% everybody's like we're all we're all adding 30%. Now, that's kind of antirust stuff, you know, but it's antirust stuff because of one engineering company, but they all have an agreement, you know, that 30%. You do it, I do. Yep.

I'll share with you the statistic on Veterans Way. We did the analysis on that. They were 42% engineered. Wow. Contractor We see their name, we're adding 30%. Because they have to end up dealing with all the inepness.

I know we used to talk about just, you know, architectural, you know, fees where just going to run, you know, around, you know, 6%, you know, you said no matter if it was, you always had that where if it's like, oh, it's over 100,000. Well, you always have to have you know 6% you know architectural fees but you know now the engineering fees have just surpassed you know you know MHG is you know small potatoes in some way compared to but it is back you know to what Ralph said it's just a weird time and you know it's just there's a extreme demand.

Yeah. I mean you wonder if it five 10 years from now if it if it'll all just kind of you know settle back out. It's I know in residential it's starting to come out, you know, because up until this point everybody was busy e even the clowns were busy and now you you're starting to see the clowns are starting up for work. So I mean

it may and we've discussed this before. I mean you look at those numbers I mean if you had a good I mean and I realize I mean there's a lot of different disciplines here but I mean if you had a good you know, engineer on on staff that could handle a bunch of this if if we would have been able to save money. Oh, I mean, if you find one, yes, I think it would be Yeah. I mean, I'm I'm moving one to Waco, Texas here in a few weeks and it's just incredible when would he work for like 75,000? No.

And I mean, this is this is doesn't know anything. I guarantee you. There may be a couple on that list right there. I mean, I have to go up there and change flat tires and and put on lug nuts and you know, all this other stuff. And and you know what he's offered? I'm like, you're kidding me. And I'm You're buying your own U-Haul. I'll help you. Yeah. You're buying lunch. Yeah. And lunch. Yeah. Well, I mean, is there is there a way that you know when you have to

negotiate contracts nowadays to say, oh, there's a certain extent to what change orders we have? Because I know you always dread the the change order because you think, oh, even the lowest bidder, you know, oh, is that really the lowest bid or is he going to come back with change orders, you know, and you think, oh, well, we could have gone with a Being in the group, you always look for stuff that's written very quickly, very ambiguous with a very short bid time. And you know, I'll go in there and throw a cut rate price because I'm going to make it up on change orders because this doesn't match, the specs doesn't match the plan, and all this is going to come out in the wash. And it's because everybody was hurrying. And that is the cha-ching moment. You make all your money off the change orders. when you're dealing with people that are uh not diligent in what they're doing, you know, people the engineering's off, architects off thing, the specifications don't match the drawings specifications were were were cut and pasted and you're like that a match the job. Just go in there and just bid something just to get the job. You'll make it up on change orders. Yeah.

Let's see. What's your project cost and what's your percentage of engineering? That's that's good. That's 5%. You didn't hear Can we talk about a

Sally court?

Yeah. Don't get an engineer. Well, and you who doesn't know we're between a rock and a hard place, pardon the pun, when it comes to having to have engineer. I mean, I just in wrap it up, right? Yes, sir. What I wanted to let you know is that I will do this for each department. So, you'll see that

and I'll do that one either council meeting or the next review. Um the two items that I thought were of interest was the solar and this solar's timely obviously because we have a contract that is given us an option to buy purchase option and then the um as far as the first quarter budget is concerned I don't see anything that jumps out as major alarming by any of the departments with the exception of water sewer and I already told you we're working on getting something to propose to the the commission to decide on how they want to finance the rest so they make sure that it's everything they have in the budget is done. So other than that report

well I was just thinking you know u as a we have a right to refusal the lowest bid I'm thinking you know well we need to always observe uh when a person comes in if they're connected with Olsen to say well that may not really be the lowest bid you know be plenty of change orders tacked on to that and we just refuse that bid.

Okay. thing I uh before I adjourn I do want to say if you don't know and I know probably everybody in this room knows of John Bailey's mother passing this week 96 years old I sent a message to John condolences and obviously his dad his mom his dad for sure was an icon in Greenwood and I think his mom was too fact that she lived to be 96 years old was incredible but you remember those that family and John and Joan and all of them in your prayers. Don't I don't have any information on funeral or anything like that yet. So anyway, and one more. Nope. These guys dealt with whoever several of you if not half of you in this room dealt with a horrible horrible tragedy uh this week in our town again. And uh so You guys check on each other. So, I appreciate what you do. It's

Oh, 10. Thank you for taking care of our citiz. You you'll let us know what swipe says at the next council.

All right. You're a motion to adjourn. Make a motion. Second. Second. Thank you all. I appreciate you. I like I like that contract coming up trash. Twitter. is a shepherd.