City Council - Regular Meeting

All right. Good evening, everybody. We're now live.

Good evening, everybody. Welcome to the Gallup City Council regular meeting. It's Tuesday, July 28 at 6 PM in the city council chambers. And if anybody, to provide comments on non-agenda items, please register in person with the city clerk prior to the scheduled start of the meeting. So if anybody wants to comment or anything, make sure you sign in with Al. With that, Al, registrations may also be submitted by calling 505-863-1254 by email prior to the start of the meeting. With that, Al, can we have the roll call?

Councilor Garcia? Here. Councilor Yazzie? Here. Councilor Piano? Here. Councilor Molina?

Here.

Mayor DePauley?

Here. Join me in the Pledge of Allegiance.

I pledge allegiance to the flag of the United States of America.

I'd like to welcome the Indigenous Civic Leadership Program. If you guys want to stand up, we'll wave at you. These are youth in the city and the county in the area that are interested in civic leadership. That's awesome. The next item will be comments by the public on non-agenda items.

Mr. Mayor, we have one speaker this evening, Joe Schaller.

Oh, thank you, Joe.

Hello, City Council and Mayor. I'm Joe Schaller, citizen watchdog and a food market environmentalist for about 50 years. It was nice to Meet and greet some of you at the Del Moro Center. I enjoyed that. And Gallup is the most government-dependent region in the nation and also the most energy and economically impoverished with thousands of households off the grid in McKinley County. We rank as the third most shrinking city We have one of the lowest labor force participation rates. We are last on the economic freedom fence. We have major public school issues. We are dysfunctional. And it seems to be in denial at times. It seems we have a lot of opposition from local progressive activists regarding any industry seeking to occupy our new industrial park. Most of these progressive activists NGOs are financed and organized by foreign interests, such as China. The latest industrial proposal is from Convolt Energy, a solar energy manufacturing company. Progressives are infatuated with anything associated with supposedly clean, green, renewable energy. Yet even a solar manufacturing campus is drawing opposition and public backlash. There is no track record, we are told. Yet, since the Inflation Reduction Act of 2022, several solar manufacturing companies have scaled into massive industrial operations. And numerous small towns across the country have prospered from this manufacturing boom. Now, here's an example of a progressive alarmist misinformation that we hear. I'm not sure if that's what drove TerraPlex away or what. But with the data center proposal, there was concern of carbon emissions from a natural gas power plant. Now, carbon emissions are black soot particulate matter that creates smog. Sorry alarmists, natural gas emits zero carbon. Carbon dioxide, a clear odorless gas, which we exhale and which plants survive on, is the actual emission they are referring to. Environmental alarmists consider carbon dioxide to be a toxin, since it is just one of many greenhouse gases. The land footprint of a natural gas power plant is five times smaller than a data center. Yet the acreage footprint of a solar farm supplying the data center is a good 50 times larger than the center. So what we have is a great deal of misinformation out there regarding industrial development of all kinds. Much of it, like anti-fracking in 2014, is financed by foreign interests seeking to compete with the US. You need to ask who has credibility and who doesn't. I've been studying and writing about environmentalism and alarmism for 50 years. I have established credibility. And I have offered myself as a resource to our progressive media numerous times. Many other small towns have cashed in big time on the new technologies. You cannot allow the alarmists to control the narrative. And you can't pass up opportunities for industrial development after we've already invested so much in the public-private coalition infrastructure of the Gallup Energy Logistics Park, located five miles northwest of the Gallup city limits. Now, at the meet and greet, I just learned that TerraPlex, I didn't even know that TerraPlex had backed out. And so now it's the ConVault solar manufacturing, which is in play. apparently mostly with Gallup land partners. So.

Joe, thank you so much. Appreciate it.

Yeah.

Thanks for the comments.

Thank you.

With that, the next item is going to be the presentation and information items. And the first item is the annual work program report for fiscal year 2026. And Brandon Howe with the Northwestern New Mexico Council of Governments will be our presenter.

Good evening, Mayor, Council. Again, my name is Brandon Howe, Deputy Director at the Northwest New Mexico Council of Governments. Appreciate the opportunity to present our annual report. Before I get started, I wanted to introduce our new staff person, Esteban. Come on.

Good evening. I'm the news planner at COG. I just graduated a few months ago in Urban Planning and Community Development, School for Environment at the University of Massachusetts, Boston. And I look forward to work for this community and Fort Winters region. Thank you.

Welcome.

Great. Thank you, Mr. Bond.

Mr. Bond had had a couple of opportunities to present. and interact with a couple of counselors. Again, he's eager to support the city and their initiatives. So moving on with the presentation, I think you guys all have this handout in your packets. Again, what we like to do with the Council of Governments is provide two presentations a year, kind of a six-month or nine-month report, and then an annual report. uh as you guys are all aware the city of gallup is into the council of government so membership due an annual uh due and in return we provide direct services uh to the city uh the the report is structured similarly to years past again what we do is we take a portion of the membership meetings uh supply apply a member rate billing rate and then we turn and budget the select number of hours dedicated to the city of gallup On the report you'll see that there are unused hours. That's direct billing to City of Gallup member fund codes. However, there's a little red box on that right hand side. The City of Gallup was supported by NMDOT funding, US EPA funding, DFA funding, and then New Mexico Economic Development Department, outdoor rec division funding. So we have a bunch of other sources at the Council of Governments, and I'm going to try to tap into those sources first. The other thing is we've been a little short-staffed, and so some of us have been filling those funds first, but what we've done with the city funds. And so in transparency, there's the kind of the member rate funds, and then also an additional 244 hours dedicated to Gallup projects. Some of those things include TPF applications, Safe Streets for All funding for roads, the Trade Port Initiative, Land and Water Conservation Fund, Trails Plus programs like that. So moving on.

Can I stop you for a minute? I apologize. I don't think the mic is working properly. It feels very quiet.

Is it working? Thank you. Better?

Closer. Yes. I just feel like maybe people couldn't hear as well. Thank you.

So, moving on to the highlights, we like to categorize our highlights into planning programs and projects. For our planning highlights, the cause was able to help the city secure $108,000 of free technical assistance from the New Mexico Department of Transportation to conduct a comprehensive safety action plan. That safety action plan is what we'll use to apply for safety improvements in the city of Gallup. We have already utilized that plan to apply for Safe Streets for All funding for safety improvements on 66 to help the DOT finish their design of phases C and D, and also to support the construction of safety enhancements at the second and third street rail crossing project. The interchange planning. I know Wilson and Company and BHI have been presenting to the city on some of the interchange planning. Again, we have the east and west interchanges. Preliminary planning work is what we were targeting. The program was set up through the legislature. There was an opportunity to secure funding. I think the Northwest region, McKinley County and Cibola County secured about 90% of that funding from the legislative special appropriation. And so we thought it would be best to kind of take a look at some preliminary improvements to potentially large scale interstate projects in the city. Moving on, we had updated our comprehensive economic development strategy plan for the Northwest region that includes San Juan and Cibola counties as well. So that plan establishes our kind of moonshot goal for the region in terms of economic development. We heard a little bit about some potential projects in the region and all those kind of feed into the economic development strategy of the Northwestern Mexico Council of Governments. Program highlights early in fiscal year 26, the COG continued to support the Gallup Main Street program as an ex officio of the board, providing technical assistance to the director, to the board, helping them through things like the Main Street Capital Outlay Program. uh helping them uh identify potential projects for investment in the downtown district uh additionally the council of governments was asked to support the mckinley county trade port gallup mckinley county trade port partnership group To serve on the technical committee, the Council of Governments also kind of took the lead on the designation application, which includes sites like the Gallup airport, the carbon coal development zone and additional zones throughout the county. Uh, additionally, uh, Evan kind of remains involved, uh, in the affordable housing realm. I know the city is starting to build up their housing program internally. Uh, so the council of governments has been kind of closely monitoring that and trying to make the connections and connect the dots, uh, to state programs, funding opportunities, and affordable housing programs set up within the city and within the county. Next, we have our project tiering highlights. Again, the Council of Government supports the city during the legislative season. This past year, we have the legislative forum. In addition to that, we've met with management to identify priority projects for the legislative session, develop the capital request, get those submitted, produce materials, and then work closely with Charlie Marquez, who is the city lobbyist And so we supported the legislative front on that end. The railroad crossing elimination program, it's an ongoing program. The county had submitted an application to study preliminarily potential improvements to eliminate aggregate crossings. One of those sites is within the city of Gallup, and that's the Mentmore Crossing. So we're looking at alternatives to improve safety, to reduce conflict between the vehicles, pedestrians, and the train. And so we're identifying preliminary alternatives now that we could use for future project progression Transportation funding is an annual program set up by the New Mexico DOT through the state legislature. The city has been pretty successful in securing funding. In fiscal year 26, Gallup was awarded $2.6 million for West Aztec Avenue drainage project and also an additional $617,000 for the Hassel Valley Road rehab project. We also supported the application process for next fiscal year. And again, we're targeting Mentmore Road design and then also Mariana Avenue reconstruction project. Another annual activity for the Council of Governments is a collaborative effort on the Water Trust Board projects. The city was mightily successful this year with help from the mayor, Kurt Spola from DES, a collaborative effort to help secure roughly $21 million from Water Trust Board. Again, $16 million of that is for the water treatment plant, and then we have a couple smaller awards for water and wastewater line replacement. Gareth J. Matter of fact, right now there's a call for design projects. And so we'll try to huddle up within the next week or so to identify our next round of design projects to ready those projects for future construction requests. The Council of Governments also supports Joss Bizzilli and Vince on the annual YCC program application. Again, the recurring program, the city has been continuously successful with that program. Last year, they were awarded $218,000, which is the largest award in city history. So it keeps going and going and going. And so Josh and Vince have built that program pretty well. It's mightily successful. And we look forward to continue to support Josh and YCC efforts. Capital Development Program Fund was a new program set up by the legislature last year. The program was announced this year. We worked closely with Keegan on identifying projects that meet the program requirements. The city was successful in securing funding for the wastewater treatment plant in the amount of $1 million and to complete the Coal Avenue alley behind City Hall. This program is really set up for gap funding type of projects. So finishing projects off. They had really strict requirements. So it didn't allow us to pick any project. We found the projects that met the requirement and we were successful. A new program that the Council of Governments has kind of tapped into for the city, not a new program for the city. Historically, many of the city parks are funded through land and water conservation fund. We were introduced to that program again through John Decker's work at the Council of Governments, and we were able to successfully secure a million dollars. or the replacement of playground equipment at the Playground of Dreams. So that'll come in hopefully later in the spring. And it's a program that we can continuously tap into. And additionally to this program, we were successful in securing $500,000 from the DFA Match Fund program. So $500,000 from the DFA Match Fund, $500,000 from the Land and Water to get us a million dollars in new park equipment. The next section is really regional initiatives. Again, the Council of Governments is a regional organization. We continue to work through the US Economic Development Administration on economic development projects. We have also been asked to serve as the lead entity, the accountable entity for the Regional Behavioral Health Program. The plan is written. The plan is scheduled to be reviewed in the next month or so. Again, we have applied for and were awarded early access funding in the amount of $2 million. We have preliminary targets for regional behavioral health programs in the city. We're working closely with Frank on getting those applications secured and the funding secured. PB, Harmon Zuckerman, The next thing I'll skip a few items, but is the water planning development program Angelina Gray's been working closely with the small water systems surrounding the city of Gallup PB, Harmon Zuckerman, The intent of that is to get those entities up and in compliance so that they can receive money build out their systems and try to identify a path for long term water supply. Some of that could be connection to the Gallup regional system. Some of that could be individual water systems maintaining autonomous water supply control. But we have worked closely with that group there. We have also supported the regionalization effort of Comerco and Yauta Hay to combine groups and start sharing resources and services to create a better economies of scale for small water systems in the county. Outdoor Recreation, again, John Decker has kind of taken the lead on that program for us. The big highlight here is we had our kickoff meeting today for our Regional Outdoor Recreation Master Plan covering McKinley and Cedula counties. So there's already been a lot of planning and a lot of projects have already been identified through other planning efforts. So what we're trying to do is get everything into one plan for both counties. And we also have asked for funding to support a regional outdoor rec coordinator to implement the projects that will get identified in the plan. And so we kind of are establishing an internal model that could potentially be replicated throughout the state at other council of governments. Lastly, we supported the conservation side again through John Decker. He's worked closely with the McKinley soil and water conservation district. Has helped them secure a number of grants, has helped with the strategic planning process, and is continuing to support their group to implement their priority projects. Lastly, the return on investment for the region. Again, we do a regional report. As I mentioned, I think at the last council meeting, our annual return on investment for the region, this is all of our members combined, was $80,782,000 and some change. Specifically for the city of Gallup, we are about $29 million. Again, water transport, transportation, parks, YCC programming, Capital LA legislative, that type of work. And so with that, I can stand for any questions.

Brandon, thank you so much. You know, it's wonderful what Northwest and Mexico Council of Governments does for us. You know, I had a question about one item. Is Keegan here too? Yeah. Can you, just the Cole Avenue between 1st and 2nd Street. Yes. Is that money going to be available for it to go to bid on the project or whatever happened with that Cole Avenue?

Yeah, I think we've done it in limbo on that project. But yes. Oh, you know, the issue is we don't have a grant agreement yet. Okay. I think that's the issue.

Who's that? Servicing.

Yeah.

I don't know. It was DFA money.

You know what? We kind of went back and forth about thinking that we got it. We didn't really see anything. It showed up in the FAR system. We don't have a grant agreement yet.

So you don't have the brain is like this, you always wonder what happened to those drainage projects, you know. So anyway, we'll check it out.

Yeah. So long process before we actually get Okay, thank you.

Yeah. Parsons. Sarah, if you have any questions.

Sarah, Sarah.

Go ahead.

I was looking at Sarah.

Thank you, Brandon. Yeah, I've had the joy of participating in some of the SB3 meetings and feedback sessions. And given that Housing was one of the main priorities identified by our region for behavioral health needs is that going to connect it all to the work already being done on affordable housing and the projects that the city is. there's not a lot of detail under that section, but are there any things that can kind of come together yeah from some of these different areas to to address that.

Absolutely. So, you know, there are a number of priorities identified in that behavioral health plan. And housing is one that sticks out to the Council of Governments. That's something that we might be able to do, right? So the Council of Governments, we're not experts in behavioral health by any means, but we can support the housing initiatives that come out of that plan. And so one of the things that Evan Williams, our executive director, is thinking about is keeping that housing component within the regional behavioral health implementation plan within the COG so we can help support build out of some of the structures. Again, one of the things with the city's internal affordable housing program is it's still getting built up. Programs are still getting set up. The trust fund is set up, but we still don't have a real mechanism to kind of deploy some funds. The city has a housing study and the council of governments is also wrapping up the McKinley County affordable housing plan. And so we're setting up the frameworks to build programs. Now we just need to huddle up and structure the programs and figure out a mechanism to attract the money and distribute the money for housing. The other thing is we also have some legislative funding from the city that we're looking at targeting some potential preliminary planning. or a couple of housing opportunities. Keegan's working on that in her department, but that's probably going to be another program that is kind of going to be pushed again in future legislative sessions. They pumped a lot of money into housing. I know the Workforce Solutions Program has a ton of money for housing. It's just a matter of establishing the internal programs to get that money out to the people to build homes, to renovate homes, to plan homes and whatnot. So We're hoping that we can continue to support the housing initiatives inside the regional behavioral health plan.

Thank you so much.

Mayor, I have a quick question. Yeah, thank you so much, Brendan. You guys have done a considerable amount of work. I was just wondering if there was any specific project that you feel like was, I know a lot of them might have been new, but was new to some are continual, some are new. something that we're specifically kind of new. And then also on the paper, it says that you guys have remaining 172 hours. So I was just confused as that. I don't understand where that falls.

Yeah, so again, the way the Council of Governments is structured is we have a number of fund codes that we bill to. And again, we lost a planner, Aaron Hill, and then we lost a RTPO program manager in Maria. And so what had happened was I had to feel kind of the transportation role and Aaron's role as well. And so we're targeting, though, is we've got specific one time grants for some of these initiatives. And what we wanted to do is draw every single penny down prior to hitting the member funds. And so that remaining balance, again, is just a matter of being transparent with the city. This is kind of what you paid for. But again, there are 244 hours of time dedicated to the city or city initiatives that weren't built directly to the member. They were just built to federal or state programs and what services were provided.

Okay. Oh, that makes sense. So it's still, you kind of still took the hour. I mean, you still got us the funding, but the hours were kind of like reallocated depending on the project.

And then the other part of your question was if there was a specific project that stood out. I mean, the playground of dreams has been something that Vincent and I have been talking about for a number of years. We've been trying to figure out a way to get the playground equipment replaced. And so one of the things with the program that we tapped into is there's an opportunity to continue to build the playground. and build it out a little more than what it is now. The unfortunate thing is playground equipment is pretty expensive. So we're doing the best that we can with the money that we were awarded. We can go back to the same pot of funds for the same location for more enhancements to the park. But again, we're looking at a number of alternative quality of life projects in the city. We're looking at turf replacement projects. We're looking at sports complex projects. There's a number of different things that we could do that we just need to coordinate with the management team. And Frisbee golf is another one that we're going to be approaching in the next couple of months. Um, yeah, obviously there's critical infrastructure projects and then there's quality of life projects and we feel like we have to do both obviously to, to, to. To support the city and so we appreciate the opportunity to. Work on both.

Yep. Awesome. Thank you. So, Brandon, on that playground of dreams, do we, do we go to our, our representatives, the senators to ask also to come and help us to maybe. Get to speak on agenda to.

We haven't specifically made any large requests. I know Representative Wanda Johnson had supported Capital LA projects in the past, but we haven't made a real big push for Playground of Dreams, but we were identifying this program for that specific use. But it doesn't mean that we can't go make that request in the future. Again, there's still a lot of potential enhancements that can be made at the park. And so I wouldn't shut the door on playground and dreams for the future. But we have received some funding from legislative legislators for playground and dreams in the past.

Okay, Ron, any?

No, I just want to make a comment. Thank you for everything you do for the city of Gallup and all the other communities that you guys work for. Pass that on to your guys that work for you. We really appreciate all the hard work. How many grant writers do you have?

We have a staff of eight and I believe six. All our planners are required to write a grant. We know how to write a grant or we put them in the deep end. Stevan, we all won on this first week. So everyone on our planning team is capable of supporting that activity. Tell them to get to work. Thank you. Thank you. One last note, Mr. Mayor, the Council of Governments is hosting our annual luncheon in Farmington at McGee Park on August 19th. You guys are all welcome to join. Again, it's our one day where we kind of celebrate the COG, and so appreciate it if you guys would attend. Thank you. What date was that?

August 19th, Farmington. Brandon, thank you so much for all the wonderful news. Excuse me. Our next item is a presentation of a water rate study prepared by Financial Consulting Solutions. And our presenter is going to be John Ghilarducci. Did I say that right, John? Yes. And he's with Financial Consulting Solutions. They've been working on this for a couple of years, going back and forth. And with him is Satya Genneson. And Brian Yaz is here also to answer questions. So you can go ahead and start, and then we'll bring Brian up.

Good evening Mayor, City Council Members, City Manager, staff and members of the public. Thank you for all being here this evening. Before we begin, I'd like to provide a brief background on today's presentation. The City of Gallup's last comprehensive water rate study was completed in 2012. Since then, our community has experienced changes in operating costs, regulatory requirements, maintenance needs, and the overall condition of our water infrastructure. Over the past 14 years, these factors have made it necessary to take a fresh look at our water utilities' financial health and long-term sustainability. This new water rate study is an important planning tool. Its purpose is to ensure that our water utility generates sufficient revenue to continue to provide safe, reliable, and high quality water service while allowing the city to maintain, repair, and improve our water infrastructure. Investing in our infrastructure today will help us continue serving our residents effectively and reduce the risk of more costly repairs in the future. To assist us with this effort, the city retained FCS, a Bowman company, a nationally recognized utility financial consulting firm with extensive experience in water and wastewater rate studies. FCS conducted a detailed analysis of the city's water utility, including its revenues, operating expenses, capital improvement needs, and future financial requirements. This evening, Mr. John Girabdilji, President and Principal of FCS, will present the study's findings, explain the recommendation, water rate structure, and discuss how those recommendations support the long-term financial stability of the city water system. At this time, it's my pleasure to introduce Mr. John. Thank you for being with us today. Thank you, Satya.

Thank you, Satya. Thank you, Mayor and Council. As a preface, I came to the study, as you mentioned, it's been going on for a few years. I came to the study a little bit late. Our project manager is on maternity leave. So I'm joined by Caleb Hansen, who did the analytical work for us. But we may not have every answer to your questions tonight. We will certainly get back and answer them if we don't have things to answer. PowerPoint slide, please. So the way that we've set this up, I'll talk a little bit about the rate setting process, what we do when we do a comprehensive rate study like this one. I'll go through our rate recommendations. We have some bill impacts to show you how these changes could impact different types of customers. And we have some regional information to show you how these impacts would compare in the region. Slide, please. So there are a couple of major landmarks in a rate study. That first one, which we're answering the question, how much? This is the, it's called the revenue requirement analysis. And what we're doing here is looking at all the financial obligations of the water service and determining a, financial plan that will meet those obligations. So this would be a multi-year plan. We're focusing on the five years beginning in fiscal year 2027. So that's all the revenue requirement is. It's a series of rate adjustments and a financial plan that's needed to meet all the obligations of the water service. The next step, which is called the cost of service analysis, we're answering the question, who pays? So we look, if the revenue requirement tells us the size of the pie and how much money we need from rates, the cost of service analysis tells us how we have to slice the pie based on the different demands of the customer classes in Gallup. Some slices need to get bigger, some slices need to get a little bit smaller among the customer types based on their specific demands and how the city has changed over many years, as Satya mentioned. So that's what the cost of service tells us. It creates interclass shifts in cost recovery that you'll see, hopefully you'll understand from the graphics. And then the final piece is the rate design. That's how we actually price the water to individual customers. We're not proposing a change in the rate structure. So different classes will go up and down differently based on our recommendations, but the structure of the rates will remain the same. HAB-Jacques Juilland. : Slash HAB-Jacques Juilland. : Over arching goal in in designing rates and in the rate study process itself is to meet all the financial obligations of the water service on a multi year basis. and then try to accomplish as many of the city's other objectives as possible. And these objectives could include revenue sufficiency, making sure we have enough money. That's obviously a critical thing. Fairness and equity, are we imposing the rates in a way that's fair, that's based on how people are demanding water service? Economic efficiency, we don't want to incentivize wasteful use of water. We want to promote careful use of water, efficient use of water. Sustainability and predictability, we want people to understand what their water costs are going to be. on an ongoing basis and be able to plan into the future. We want people's clarity. We want people to understand the rate structure. Cost allocation, that gets back to the fairness and equity piece. If the rate structure is successful, people should be paying based on their demands for water services, their specific demands for water services. And then finally, to the extent that we can keep the rates affordable, we're always trying to do this at the least cost to the customer. Slide, please. So moving into the financial plan, proposed financial plan, projected water revenue requirements. This shows from year to year what the needs are for the water service. Obviously fiscal year 2026 has already happened. It showed about $8 million in needs. the water service generates about 7 million in rate revenue right now. So the city drew down on fund balance. And part of what you don't see here is in addition to rates, the financial plan carefully draws down on the fund balance, not going below reasonable minimums, but trying to make use of the money that you already have in the bank to reduce impacts on rates. Slide, please. So this slide shows the rate adjustments that are needed over that period in order to meet the financial obligations of the water service, the rate portion of those financial obligations. So 2027 would be the first year where a rate increase could be ADOPTED, AND WE'RE PROPOSING A 12.5% INCREASE FOR FISCAL YEAR 2027, FOLLOWED BY A 10% INCREASE, AND THEN A SERIES OF THREE 8% INCREASES. YOU'LL SEE IN THAT MIDDLE COLUMN ON THE RIGHT THE TOTAL CUMULATIVE PERCENTAGE INCREASE OVER THAT PERIOD, AND THEN THE REVENUE THAT THOSE INCREASES WILL GENERATE IN ADDITION TO CASUALTY'S EXISTING RATE REVENUE. So if you accept that financial plan and those revenue requirement needs, now we move into the cost of service results. And I'll show you these results two different ways. The first is the table of numbers. And what we're trying to show here, if you focus on the revenue and existing rates column and the cost of service column, those two. If you'll notice at the bottom of those two columns, they both generate $7.67 million in rate revenue. That's the projected revenue requirement for fiscal year 2027. But the left-hand column shows where the revenue would come from under the existing rate structure rates. And I'll point out a couple of important ones. Residential inside customers would generate about 2.1 million under the current rate approach. Commercial inside city would generate just shy of $4.5 million under the existing rate approach. What the cost of service analysis indicated is that Residential Insights should actually be paying more. So their share should be more like $2.82 million And commercial inside city rates should be paying less, more like $3.63 million under the cost of service results. And you see many similar shifts among customer classes, none as big as those two. Those are the two largest customer types in the city of Gallup. On the far right, you see on a percentage basis, Hal Hallstein, What those rates those those rates per class should do in order to catch up to the cost of service analysis, you see residential inside should go up 34% commercial down 19 and you see similar ups and downs throughout if if the city were to. move immediately to a cost of service based rate structure, in addition to that 12.5% increase, you'd see Mayor Mrakas, Major swings and rate shot among these customer classes, so what i'll show you in a minute is a phasing schedule that would move toward cost of service over five years to try and. Mayor Mrakas, minimize the the rate shock if the city decides to go forward with that cost of service that question there um.

So, I mean, I have two questions on this slide. So Navajo tribe inside Navajo tribe outside. What is that referring to? That's the large percentage. Is that outside the city? Because I mean, is that.

I believe so. I believe that's inside city and outside city. But how do we control what the outside of the city charges? I don't think you control in that case, either one.

If they use our water, if they're using our city water.

Yes, but they are their waters price by contract. So the city doesn't actually have the flexibility to do to do those changes independently. So there's really this information.

Excuse me. Do you have an example of that Frank

I can help you with that. Larry wins here, too. So the City of Gallup has an exchange contract with NTUA. And what that contract says is up to 500 acre feet of water a year or annually to be traded or exchanged between the Navajo Nation and the City of Gallup. And the price was set at like $3 per thousand. So what we so and correct me if I'm wrong, Jackie, but I think we are. So NTUA has three connections right now. Most of them are in Boardman. And we're charging that rate that was agreed to in 2011. How long is the contract for? Forever. But remember, the Navajo Gallup water was supposed to be here in December of 2024, and then that contract would have expired then. um because it was basically a groundwater supplemental agreement the city would provide groundwater and then in exchange we would get surface water at the same price up to the amount that we gave for groundwater so um that was being sarcastic sorry it's not going to be forever it's going to be when the uh the navajo gallup surface water gets here you scared me those are that's so that's the what's going on with those waters renegotiate potentially this contract to a higher rate so it's not it's not per individual it's more

With an entity, essentially. With an entity, yes. Okay, and then the TAN... So that's my same question with TANR inside, TANR outside. That's an entity that we're having a contract with that we feel that we would want to increase the contract rate.

Am I getting that right? This actually shows that you're getting a... Oh, we're doing that better.

We should have reduced their rate in that case. I see.

Okay.

HAB-Masyn Moyer- Where is that yeah I don't know what that is.

HAB-Masyn Moyer- To our market. HAB-Masyn Moyer- 91 do we have any other contracts, yes, we have other contracts that are in place with. HAB-Masyn Moyer- places that haven't developed, but they were years old and we have settlement agreements, also with like America and you have to hey and other ones that were supposed to provide water for. HAB-Masyn Moyer- Very good, thank you, but there's such a minimum percentage, you know the amount of water it's I mean it doesn't add up too much.

I mean, these are pretty off numbers, right? Because we're saying technically, if we evened out, we'd want negative 18.8 for one and positive 312.9% for another. And it's all kind of relative. I mean, this is a study, I understand, but it's all kind of relative because we could bring that to them and they could say, yeah, we're not going to do that.

No, this is at the cost of water, correct? Correct. This isn't the cost of water we're looking at.

It is the actual result in the price of water.

It is the price of water.

Yeah.

And it says cost of service.

So this shows how the rates for each of these classes should be changed if you were to be immediately consistent with the cost of service analysis. But you don't have to do that immediately. You can choose to do that over a period of years. You can choose to ignore those results and move forward as you are. This is you know it's actually not that unusual. If the last cost of service analysis was done 14 years ago customer base has changed the water, you know water demands have changed and so things get a little. Well, they get in need of adjustment and then you've got you know the contract rates that you really have no control over so it's. yeah not not too surprising actually. Very good.

Excellent.

So another way to look at this, the cost of service analysis shows, this shows where the revenue is coming from under current rates for that same $7.67 million revenue target for FY2027. And then what the cost of service analysis shows on the right. So you see the big, this I like because it shows the relative size of the revenue largest customer classes, residential and commercial, but it shows that residential's slice of the pie should go up and commercial's slice of the pie should go down.

A lot of commercial people like that.

Next slide, please. So I mentioned that what it would do to go immediately to a cost of service result like that would cause significant rate shock for individual customer types. So what we're proposing here is a phasing schedule in which we don't reduce any of the rates, but we significantly reduce the percentage increases for those types that need to go down. So residential and classes tied to residential would go up at 15% per year for the study period to try and correct that. Underpayment, commercial would go up much less. City water, unfortunately, would go up significantly in the first couple of years. Then you see sub-metered and irrigation rates. As well, these adjustments would be equivalent to the system wide increases you see in that lower right corner, which were which were the recommended increases for the financial plan without revenue requirements.

John, you know too, it's probably good to point out to the Council, having been involved with this for years. You know, the City of Gallup, our rates were based on projected water demands. And like all other cities, we implemented conservation and instead of selling three and a half million gallons of water per day like we should be at a dollar a gallon. We're only selling 2.5. So, you know, when we projected this years ago, we're down a million dollars because we're not selling the water we thought we'd be selling. So there's always that gap. And my question, and to make sure with this, did you guys implement a increase in the water demand or did you just leave it flat?

We left it relatively flat for exactly that reason. We're seeing that all over the country. It's amazing where you'll see population go up and water demand stay flat.

And when you're basing your charges on the gallons, you know. All right. Thank you. That's good news.

One more question. Explain what city water is compared to commercial.

The city water is water purchased for parks, irrigation. For the city use. Gotcha. Okay. Slide, please. So just in case. um you haven't seen enough about the uh um impacts on different customer types this this this takes a little bit of explaining i know but if you start at that top the top two lines residential inside city the dark blue shows how far off from cost of service The that customer type is right now so almost 670,000 and then in Gray right below it how close it will be to cost of service in 2031 at the end of that phasing so you're seeing all those blue bars get closer to cost of service as shown by the Gray bars. So yes. And then here we're showing cumulative impact on those different customer types of the phasing program over that five year period. So obviously residential will about double as will city water and the others not as much. So this is what the actual rate schedule would look like if the city were to move forward with this is the residential rates. single-family residential. These show the 15% increase recommended for 2027. The fixed rates shown in that table on the left would go for a 5.8-inch meter, which is a typical single-family residence, from $11.40 a month to $13.11. And then you see the usage rates on the right. which go up depending on the amount of usage. So from zero to 500 cubic feet, a little less than three and a half cents per cubic foot. And then you see that would go up to almost four cents per cubic foot and so on with each of those thresholds called an inverted block rate structure. The prices go up as the usage goes up.

And don't point out to that. I don't believe we have any residential two inch meters. Not that would all be commercial. Yeah, good point.

Probably, probably not meaning more than one inch. slide please. And this slide shows the impacts of a 9% increase on commercial rates, the volume rates on the left, commercial meter rates in the middle, and then the other classes on the right, city water, that one going up 46%, separate irrigation, and sub-metered by 12.5%. So this one, this looks kind of scary, but I think I can reassure you it shows what the bills would be for a single family residence at different levels of usage. Luckily, 95% of your single family bills are less than 1,100 cubic feet in a month. And if you look out at 59 CCF, that is 0.05% of the customer base. So very, very few bills going out at that level, but we wanted to give you a sense of the whole spectrum of water bills. As I mentioned, 95% would be at that 11 CCF or less in those sample bills. So at 11 CCF, we went up about $9.45 a month. And then, although everybody's needs are different systems are different. We did want to show you. Give you a sense of what's going on in the region. So this is a single family residential bill comparisons. With the 15% increase supply, that's the. Gallup proposed rate, we're assuming a 5.8-inch meter. As I mentioned, that's a typical single-family meter size and 550 cubic feet of usage. That's a reasonably average level of usage in a month. So under the existing rates, that bill would be $31.28. Under the proposed rate for FY2027, $35.97. per month with the 15% increase. And you see how that compares in the region.

Perhaps this is a ignorant question, but how is the city of Farmington and Las Cruces keeping their water rates down so low as such big cities?

I can help them answer that. They have to drill $6 million wells.

It's been wells.

Our wells cost much, much more.

So like Farmington, they just get the water out of the Lake Farmington.

It's been there for a hundred years. And Las Cruces is shallow off. Our wells is what costs are. It runs our place up.

yeah because i think people are going to look at that and go well dang i can move to a larger and how might it probably be way lower i mean well it's it's you know these are all apples and oranges that's a perfect example of of why you know obviously we don't know what their other utility rates are but yeah interesting yeah

Well, we're lower than grants currently, which is interesting.

So this, we did the same thing for, and there's really no way to devise a typical commercial bill. So the assumption here is a two-inch meter, 4,000 cubic feet of water used per month. That is a pretty large, pretty sizable commercial customer. And you see Gallup, unfortunately, already at the top of that list would go up a little bit more. That's crazy. Maybe... Lending a little bit of weight to the cost of service findings, which showed us that that burden should shift a little bit between single family and commercial.

And this line item is the shifted amount, right? This is the cost of service projection amount.

Yes. So this includes a 9% increase for commercial, so less than the 15% of family.

Yeah, that's really high for commercial.

And most of our commercial is on time.

Am I right in saying Los Lunas, Santa Fe, Aztec, Farmington, and Cruces? Actually, Cruces, Los Lunas, and Santa Fe, do they run off the river? Are they getting surface water from the river?

Santa Fe was until the Rio Grande dried up. Until it dried up. Yeah. I'm not too sure. I know Aztec does.

I think Los Lunas does.

I don't know about the lot, but they're shallower aquifers anyway.

Yes. Yes, that's right.

The other thing we're not shutting on is that we don't know which of these cities rates will go up for 2027. We look at what the current rates are. And that's all my prepared material.

I have a question, Mayor. Thank you. First of all, this is very interesting. I think very helpful. No one wants their water bills to go up, obviously. But we also understand that we have some serious infrastructure needs. My question is more not specific to the study. And this may not even be a question for you. It might be a question for the mayor. But over the last several years, the council also approved incremental increases, right? And so I was confused earlier when we had our meet and greet because I saw that You know, our rates are going to be changed for everything, water, electric, as of August 1st, which is this Saturday. And so that's going to go into effect. So we're already, because we're in an incremental increase that we approved for everything, for water, wastewater. So I guess my, as a statement, and then the question is, how would this, if we were to approve another increase? So we're increasing, there's already a rate increasing going this Saturday. And then this is a proposal for more increase. So how does that affect like that total? Like we're doing double increase.

Yeah, I'm not saying the incremental increases right now are electric.

No, we do have 2.6 and that was in the 2012. The way I understand it, this will replace that.

This would replace that. So we wouldn't have both. We wouldn't have double. We would have.

No, we wouldn't have that incremental rate, but we would have 15% a year to meet. So yeah, so this would replace any previous water rate increases in studies.

Patty, do you know what our, or does anyone know, does anyone actually know what our incremental rate is currently for water specifically that we have implemented?

2.68. Is that right, Larry? Or is it five?

Five. Okay. So five.

Okay.

So this would be- It was CPI. I mean, I'm not trying to be difficult.

This would be worse.

And what was the increase? Was it CPI based on the increase?

Electric.

And electric right now is CPI based. Wastewater has a set increase according to the origins. And solid waste, I...

HAB-Masyn Moyer- Just every piece and the rates and they have set for you. HAB-Masyn Moyer- Thank you, Jackie.

HAB-Masyn Moyer- Yeah, because I don't want to be clear that HAB-Masyn Moyer- I'm not going to pile on. HAB-Masyn Moyer- Yeah, I don't want to have a set rate increased. I mean, I realize it's for everything water, wastewater, electric, but we're just talking about water specifically so water specifically because we're having that conversation now. I don't want it to be like a set increase of 5%, and then we're not voting on this tonight anyway, but I just want to say for future, I don't want it to be 5%, and then we're adding another 12.3%. This would replace that other incremental increase.

When we come back, Satya can get that information, and so can Jackie, of what those increases have been, those annual increases. You can actually see them, and then compare them.

I have a question on the... Rejected revenue requirements. It looks like kind of a steady increase from year to year, but this is looking to the future. So I'm curious about looking to the past. Is that been Pattern as well. Like, say, over the last 10 years have we have me. I'm asking somebody in the city. If that's if that's typical that just is it just kind of due to inflation in general or why What are the primary factors in calculating the revenue requirement going up?

Capital is the big driver. Capital, like pipes. So we need a financial expenditures model. But Patty, go ahead and answer.

So fast because we've been struggling to get the water rates up to now sufficient to what this is reflecting for what we need to invest in our infrastructure. And the last two weeks are a really good example of that. the results of us not doing that. So it's really not a good base to use our past spending to make that inflated because we had held that significantly on our capital needs just based on cash flows. So we met our spending just based on what we were bringing out of cash. This one took the CIP and what we need, and that was based on all the different experts and everybody contributing to the CIP listing. This is taking what we need and what the city infrastructure needs. And then this firm, they put everything together to help say, here's what it's gonna take to meet those needs. So this is trying to get the really neglected and dilapidated infrastructure back in good shape. It does take time. That's why we recommended his work with these guys to come up with a tiered increase over multiple years. But this isn't taking historical and just inflating it. This is taking what is estimated to be needed and working with the tuition.

So I have a follow-up question while you're here, Patty. So given that the council recently approved for the Navajo Gallup surcharge that people have been paying to go toward infrastructure improvements, was that considered in this process?

It is a part of this process, but a lot of that also has to pay the debt surcharge. So it's not necessarily considered to be operational money specifically contributed for this need. It still has to also be part of the debt service. So as much as we could, we carved that money out.

But that money will go away soon, right? Because we're almost at our cap. So once we're at our cap, will that go off people's bills or they're still going to pay it even though we're at our cap?

No, we've still got it. cheating, but we're still negotiating when the system starts running water. So that money is still going to be necessary and so will the GRT that we're utilizing on that side of the house. And the debt's going to run another 20 years. It doesn't just go away because we're even with projects. It's like you build your house, you're going to pay off for the next 20 years. We're going to pay on our new house for 20 more years once we complete this.

Well, I do think it's important for the community to understand because I do hear a lot of rumblings on social media about, you know, well, yeah, shocking. I know it's shocking, you know, but about, well, Gallup, get your infrastructure and you've had failing infrastructure for 20 years and they're not wrong, but we can't have it both ways. And we want to be cognizant of people have fixed incomes and people, we have to be careful, but we can't keep pushing it off because you want, we all want better infrastructure. We don't want to have bad infrastructure for mass flash flooding and all this stuff, but we all pay for that too. It's not, it's not, we get better infrastructure and nobody pays for that. That's not how it works. I do think it's important for us to have these candid conversations with the community to understand like, Failing infrastructure gets better when we all pay into it, so.

You have a nice operating car. You don't want to pay for the oil change because it's about $100. So if you go long enough without paying that $100, now you're going to need a few thousand dollars.

And you need a new car.

Maybe. So it's best to invest in and do what we can now. Yes, we have some of the oil change standard of what it needs. But we're working on it. It's supposed to address that. It is not something we like proposing to make these rate changes. But also keep in mind that all the work that these gentlemen put into this, they're assuming that this rate increase would have been effective July 1, which the rate we have right now, 5%, roughly 5%, it was effective July 1. I'll start seeing it on the bills August 1. So if we take a while to do this, we're already going to be behind curveball if we're not able to get to the agreement in order to submit next couple months. So that is something to consider. If you guys want more time to study and go back and look at different scenarios, it's probably going to bring the recommendation up just a little bit to catch up.

We've been talking about rate increases for three years that I know. And nobody wants to raise the rates, but I like what I'm saying here because we're raising a lot more to our commercial users than our residential is very minute. That was important to me.

This this actually the percentage goes more to the residential residential or work with their significant underpaying. But we are taking, in the recommendation, we are taking the city rate once we realize how much we are underpaying ourselves. And we're bringing it up to par, I think, because I don't feel that it's fair to not do it that way.

I think we need to look at that in two ways. We can charge the city rate more and then give our citizens less park equipment and other stuff because now we're paying for the water. at a higher rate, there needs to be a trade-off there. And I'm going to propose we don't go as high on that because then that's just taking resources away from infrastructure and other stuff that we're looking at putting in for the citizens.

Yeah. Patty, one thing. Well, with that, you know, with let's say the lights are on at the stadium tonight, who pays that bill, the power bill?

The tax bill. risk management fund that pays all of that, but it's not the utility's point of base.

But it is paid by somebody.

So that comes out of our operational money. He's right. So there is a trade-off for that, that amount of money available for what we put in seniors, what we put in the parks, what we put in just about anything we do.

So it's a balance.

Well, you know, thanks. It's nice to see it's only 15% actually, you know, because when you don't drill a well in 20 years and you were drilling one every three years at millions of dollars and not spending that money and we're able to catch up with this, it's kind of exciting. It makes me happy. I was anticipating a lot more, Joan. Thank you.

Well, it's under 15, right?

Well, they're just 15 on that table there, 15 across the residential area.

I'm curious, what is the reason for loading it heavy on the front end in the first two years and then having the three years at the same rate versus doing five years of an even rate every year?

Their operating costs are increasing. You have debt service, which is a fixed cost, and there's the additional capital, which we are stepping up to. So it takes an initial jump to kind of get to right the ship and then begin a more steady a series of increases. We actually looked at, there's another scenario in the report in which I would call a riff the band-aid approach, which is an initial 30% increase and then inflationary after that. So this was actually a step back from a more severe initial increase, I guess, to meet HAB-Jacques Juilland, Immediate obligations and then start on the path. So that's, that's what there's not a lot of flexibility to smooth them out with lower increases initially because of the initial costs.

Thank you.

HAB-Jacques Juilland, Anywhere. You guys ask questions now because john go back to Colorado.

HAB-Jacques Juilland, I gotta, I gotta more of a budget question, I guess, how, and it's probably in here. I didn't see it. What is our annual budget for our water default? We're talking about just water, right? And how close are we to becoming not profitable, but at a dead even? How close are we to that? What's the magic number? We're short, right? Drastically short?

As far as in operations and the rest of the capital? We really held back this year on it, there is no magic number, but with this proposal and what came up on the CIP with the engineer estimates and experts in the field is we're going to be investing, I believe it's about $7.2 million in capital a year. That's a big piece of getting to understand this is finally getting enough money in the capital to take care of the real needs. And again, a much better operating position than we are now. I don't know what the total number's gonna be. I'm just gonna bring up a specific number. But it does take the basic operations with the limited inflation that we do have. And the major thing is we're finally dedicating a pretty precise amount into capital. And we use what cash we can. And then in the overall model, it would show where we're going to be doing additional debt to do that. Just through the debt, because it's really hard to manage the cash with capital investment When we do it just like based on passions it's up and down it's up and down, then you have any months we throw that in there and it's just not it's too chaotic for us to really succeed. In managing system and getting the work done, giving the all the support system need for contractors for parts materials every this is going to allow us to. Do a better job. To succeed in improving system.

Good enough. Thank you.

So follow up question on that. So approximately how many projects are we talking? I mean, we have like 30 million plus in pipes that we need to fix. Right. So I assume this will not take care of that in one full swoop. But I mean, are there like do we have an idea of like how many projects that are in the waiting or no, we don't have an idea of that.

So seven years.

OK.

But that CRP plan was presented to you a few months ago. That was the basis for the start of this. Okay. And we tweeted a couple of times with these guys to do updates. And so it's based on that. They're not going to correlate exactly because this is a very dynamic situation and what our needs are. Even the last two weeks, I'm sure there's public budgets changing. Sure. Today, the change, what we thought we had planned. Okay. So from the financial side, I can just tell you dollar wise, we kind of got it covered for a few years. Exactly which project for how many are in that it's it's. Changing.

Okay, we also need to show that we have the funding to take on additional debt when we apply to water trust board and other agencies. So this rate increase will help us show that with the added revenue, we have the ability to take on more debt to do more infrastructure improvements sooner than just sticking to that revenue each year that we're allocating. We can actually start borrowing and doing more up front.

Just to make sure, this table that you presented us, the way it's put together, so it's residential and tied classes. Yeah, this was 27 is 15%. It's 15% all the way across. Yes. Is that what the recommendation is then?

Yes.

And then so commercial will be 9% initially, 7% down to 5, 3, and then 3. Exactly.

When it says annual system-wide increases under 2027, it says 12.5. Is that just like an average?

Yeah. So the combined effect of the increases in the table there to the left for each individual class would result in 12.5% more rate revenue in total. Oh, what you need for the expectations. Yeah.

Oh, okay.

So that's 12 and a half percent is the increase in the pie that's needed. That's how the individual slices need to change. And it will generate the 12 and a half percent increase.

I see. I see. Okay. That's why it's different. Okay. Thank you for that explanation.

Okay. Any other questions? Thank you. Thank you so much. Thank you. This was helpful.

Thank you for a wonderful presentation.

That's great. Bad news. The news is coming. Our next item is consent agenda. These items are placed on the consent agenda. So city council can designate by unanimous consent Those routine items they wish to be approved are acknowledged by one motion. If any one item does not meet the approval of all council members or if a citizen so requests, it will be heard as a separate item.

If someone has, I think someone's supposed to think.

Oh, I'm sorry, Larry. You're going to allow comments on the presentation?

Yeah, if you want to come up, Larry, feel free.

Sorry about that. You got two minutes, Larry. Believe it or not, I'm sure. First of all, I want to tell you all how happy I am to see the care that you are taking with this issue, especially you, Sarah. That's very good. I'm just very proud to see you taking that care with all these details.

Oh, my gosh, thank you.

Really. I mean, but whatever you decide to do, Because ultimately, obviously, this is a report that the city's paid for and you're going to take it into consideration and there will later be some proposal based on, right? So, anyway, whatever you decide to do about the details, really what my comment is about is don't lowball this thing. Don't lowball this because the amount of increases in cost associated with everything associated with water, especially in the West, is going to go up more than people expect it to. You know that, Mark.

This is a certainty. It's an absolute certainty.

It's not going to be a trivial change. And so what we want is we want to have water that is high quality. that has proper pressure, that has backup, and that we have enough money in the bank here to actually make other arrangements that may be, so far, only partially foreseen. For instance, water for Navajo Delta. That's just this one example. And so anyway, I... 16 years ago, when I was chairman of the Water Board, we worked with the city on a rating. Okay. And although I don't want to compare apples and oranges without acknowledging that there are apples and oranges, just a reminder of something that you may know, you may remember, is that when the federal law went into effect that approved the Navajo Water Rights Settlement and therefore at the same time authorizing Navajo Gallup, the official stated cost of that project, although some thought it too small at the time, was $900 million. It is now two and a quarter billion dollars. In other words, if you do that quick math, that's 150 percent increase in 16 years. OK, so this is only a five year deal. And I have no argument with the with the work that these folks have done. And they've done it, I know, with constant back and forth with city personnel. So they are using what you all or the employees have said are the figures that they should basically work with in terms of what the city's planned expenditures are. And so I just want to say this, in my opinion, should be considered their proposal overall not not the details but overall a minimal accepted figure a minimal accepted figure and the fact that it's just a five-year plan may reflect the understanding that we're going to have to go back and do it again in five years uh but anyway I applaud your seriousness and your interest in this. And it makes me feel confident in you all. And thank you very much for the care you're giving this topic. Thank you, Larry.

Anybody else? All right. With that, then, we'll go on to the consent agenda. Again, these items replace a consent agenda so the council can designate by unanimous consent those routine items they wish to approve or acknowledge by one motion. If any item does not meet the approval of all council members or if a citizen so requests, it will be heard as a separate item. And with that, Al, if you could read the items.

Consent agenda, item number one, request for approval of contract between the city of Gallup and on behalf of its municipal court and county of McKinley County. for services related to the DWI program. Consent agenda item number two, resolution number R2026-29, approval of the New Mexico Tourism Department Clean and Beautiful Grant Agreement and related budget adjustments and expenditures.

Make a motion to approve the two consent agenda items as listed.

Second. Council Melina? Yes. Council Piano? Yes. Council Garcia? Yes. Council Yazi? Yes. Mayor DePauley?

Yes. The next item for the discussion action items. Item number one is resolution number R2026-30, fourth quarter fiscal year 226 budget adjustments and reports of actuals. And our speaker is going to be Patty Holler.

Good evening, Mayor and Council. So this is the fun part of what I do is I take all of our $260 million in budgets and I compile it to format DFA wants to see, and then I bring it to you for approval. The only real thing to note on here is that we do still have some loans for some items out for reimbursement through some grant funds. So right now, our library fund, we had to loan $30,000. Our intergovernmental grants is at $200,000. Senior citizens is at 3.5 million. Wastewater is 100,000. Airport improvements, 125. Legislative funding, 250. And the airport is almost 2.6 million. I've been working with keeping this department. We're trying to get the list compiled to look at all that to make sure we know where all those funds are and that we're getting them timely requested and identified. We do know there's a little bit in there that is not going to come in due to different issues. So we'll be bringing those back to you for cleanup work. But for now, that's where we're at to end the year. We do that because DFA will not let us report a fund in the negative, even though overall we have spent more than we take in because we have spent it before we can receive it on most funds. It's not unusual. It's not expected. That's just the way that the business works. You spend the money, then you submit everything and they'll send it to you. We're hoping to work on processes and her meetings have been working on that and trying to get everybody more timely and timely. Quicker turnaround. But when you're building a huge senior citizen center, that's reached for us. You're going to have a large cash outlay just pending. That's just part of what's going on there. So it's not anything that we're alarmed about at this point. It's just how we were as of June 30th. The other reports, they give you all the basic details, but because these funds don't correlate well with what we have in Navaline, it's really hard to understand them. When we get our new ERP system, we're going to map them so that they make a lot more sense to you, and you can see how these roll up. Because some of these funds on the DFA side, they have multiple funds rolling into them. Some of them, like the very top two or three, those correlate one for one, pretty much with just the first three digits. I didn't have any unusual items for budget or actuals that needed your attention. We did not complete everything we had budgeted because many of them are multi-year projects. So they'll continue in the new year. And you'll see that in quarter one, you'll see the amount of projects that we did roll forward. And it was significant. We're hoping to complete a few of them this year. So it's less work next year to roll them. And with that, I'll stand for questions.

Questions.

Sarah, good question. What's the wastewater capital project? Which one is that?

That's it. That's our capital spending fund that they have. A lot of that is is some of that is tied up into the loans. So that one's reimbursement based as well. So we do the work and then we get the money from NMFA. So there's just a lag in there getting those drawn down.

Grants, not loans, grants.

Most of them are loan and grant, but I don't know which specific ones we have in here. Okay. Yeah.

It's reimbursement.

It's reimbursement grant. Okay. I didn't know if that was like a specific project that we had or if that, okay. All right. That was my question.

Mayor Mrakas, yeah okay the the senior citizen that's for construction, of course, correct yes now how about the airport here it's a 2.57 they've got a couple things there that the big one is that there's multiple pieces in there, related to the trade port related to the design of the. Mayor Mrakas, terminal it's also some of the raise grant, which is the air service money. So they've got several large things going on in there. And those as well as which of this is designed, you know, I do not know specifically, but I could get that number for you.

Very good. Thank you.

One quick question.

I seen the separate report on the lodgers tax fund. There was a question last month on whether we needed to have a cash reserve in the lodgers tax. Did we clear that up?

That is a cash policy that's in place, that we do have a cash reserve in there because, again, we're spending it as we collect it typically. That is a council action item. If you guys want to change that, I could bring that forward and change it to what you wanted at. And then we can proceed from there. Right now, because it is a policy that's council approved, the minimum balance is $500,000. Okay, thank you.

Any more questions? Anybody?

I'd like to make a motion to approve the resolution number R2026-30, fourth quarter fiscal year 2026, budget adjustment and report of actions.

Councilor Molina? Yes. Councilor Garcia? Yes. Councilor Piano? Yes. Councilor Yauzy? Yes. Mayor DePauley?

Yes.

Thank you.

Our next item is resolution number 2026-31, McKinley County Multi-Jurisdictional Hazard Mitigation Plan Adoption. And our speaker is John Parrott.

Good evening, Mayor and Council. I have a presentation for you today. So while we're getting the presentation up, so McKinley County has a multi-jurisdictional hazard mitigation plan, and there's really three agencies that are involved in this. McKinley County Office of Emergency Management, or McKinley County, the City of Gallup, and the Gallup McKinley County Schools. So we've actually been working on this. Our last plan was from 2021. We've been working on this since 2024. And kind of the process that goes with this is once we met with citizens on this, we've had several public outreach meetings. A lot of the city departments have worked in this, not just the fire department, but the police department, all of our utility infrastructure, and a lot of different departments have worked on this. How this plan works is once we put the plan together, it gets sent to the New Mexico State Department of Homeland Security and Emergency Management. Once they approve it, then they send it to FEMA. Once FEMA approves it, then we get a letter from FEMA saying, you guys are good to go, but now all the agencies or the jurisdictions inside the plans have to adopt it. Then we notify FEMA that we've adopted it. And then the plan kind of comes in place. So that's kind of the process that we're going through now. So we'll go to the next slide. So basically, a lot of people ask, well, what is a hazard mitigation plan? Basically, what we're trying to do is reduce injuries and property damage from natural disasters. And this is an important thing about the hazard mitigation plan. It's for natural disasters, not man-made disasters. Those are different plans that we have. We're also trying to reduce the impact of natural disasters by protection, preventive activities, or mitigation. If we know that there's hazards in place, what mitigation efforts can we do to try to lessen the impact of these disasters that happen? So like with the recent flooding, there's some potential mitigation projects we could do with some of our drainages or culverts. That's part of the hazard mitigation plan. It's putting this plan together and figuring out what we need to do to reduce the impact of these natural hazards. And so when we look at the very bottom, you're going to see preparedness. Preparedness is kind of how we prepare for natural disasters. Our goal is to never have a natural disaster, but we can't control Mother Nature, so we're you know, we are going to have natural disasters. But we look at what type of natural disasters do we have? Like we don't plan for tsunamis. Right. We could put that in a hazard mitigation plan if we were impacted by a tsunami. We have a lot of problems that other problems that we're going to have to figure out. And then becomes the disaster. Then there's a short term response. There's recovery and then there's long term recovery, which could take years to years and years. And mitigation happens on both sides of that. Mitigation is how do we prepare for those natural disasters? The other part of the mitigation is we've had these natural disasters happen. What have we found out and what do we need to prevent them from having any guests? That's where mitigation comes through. You want to go to the next slide? So the hazard mitigation plan is a five-year plan. So basically it identifies the hazards that impact our community. And the thing about Gallup and McKinley County, if you look at Gallup, we have different, I mean, we're all impacted by the same hazards, but we have different impacts from those hazards from the city of Gallup to McKinley County. I mean, we go from an urban area to a very rural area. So that's why the different organizations are involved in this because what works for the city of Gallup isn't going to work for McKendon County. What works for them isn't going to work for us. So that's why we work on this together. So we look at the different types of hazards. We analyze the risks and we do a lot of research on this. Like how many times have these disasters happened? And when these disasters have happened, what has been the actual impact on the community? You know, so we look at that not over just the last five years. We go back 10 years, 15 years, 20 years. We look at the historical data to figure out our hazards changing in our community as just everything changes. All right. So once we go through this process, you know, we try to, we get this approved through the state, through FEMA. And basically what this does is having this multi-jurisdictional hazard mitigation plan in place, it allows us for federal funding through certain grants from FEMA, like the hazard mitigation grant program, the building resilient infrastructure and communities program, the flood mitigation assistance. To be even eligible for those grants, you have to have a multi-jurisdictional hazard mitigation plan in place. So having this plan opens us up to a lot of grants. But before we apply to those grants, we have to figure out what projects are the priority for our community, for McKinley County, because there's only a certain pot of money that is available for communities across the country for these. So we have to figure out what are our priorities for our community. Next slide. So again, we've already talked. Yes.

I don't mean to put you on the spot. Just about everything that has wheels on it. And they are looking at building.

That was so cute. So I'm going to be there and just, you know, come out with the family. It's really just easygoing. I'm so encouraged. That's, again, this weekend at Sports Complex, starting at 9 and registrations at 730. And then this weekend is also... Tax-free weekend. So in case any of you forgot, it's tax-free weekend. So if you want to go crazy on your shopping, this is the weekend to do it. It's tax-free. I'm sure I missed something, but a lot going on in the community. And I, again, with this past weekend, when I was out, I saw so many people out and I went back to see the band in the evening and there was tons of people there. So I just was so thankful. And people seemed really... thankful to have lots of things going on in our own community not having to leave they were here they could stay here and i i think that's a great thing that we're a great service that we're providing for our community that we're continually having activities and things that people can come to and they don't have to they don't have to leave they don't have to go to albuquerque they can stay here and bring their friends here so i really appreciate those efforts um And then I think that's it, but I just want to also do like a plug because I haven't done one in a while. And I saw a lot of the departments today at our meet and greet and appreciate Keegan and her efforts and all the departments that were there. I know it's a lot of work for the departments to come after they've worked a long day, but all the departments were there. But because I have a soft spot for animals, I went to their booth and I saw the animals and I'm like, everybody adopt animals. That's my last plug or tell all your friends. because they do have quite a bit of animals that are there. And I don't know, my husband won't let me adopt anymore. I have two and we don't have a big enough land space. So I think in Mossman, there's like a limit. So, but I guess I was sad. So just so you know, if you're looking at your friends, the shopped adopt, don't shop because there's some great animals at our local animal shelter. All right, that's it.

Thank you, Councilor Piano. Councilor Lassen, what would you have?

Thank you. Yeah. So I just want to send my well wishes out to everybody recovering from the floods. It definitely was a scary event. It's scary to see, you know, the videos and vehicles, especially our neighbors down in Zuni. And I know there'll be recovery efforts there for a long time. So encourage people as much as possible to support friends and family down in Zuni. HAB-Masyn Moyer- And please do reach out to continue to reach out to me if you're my district, you know if you have damage in your homes and we want to, we want to know where these are and as we get a system up to track and to get out to assess I think it's. HAB-Masyn Moyer- I think we're definitely going to meet that threshold. HAB-Masyn Moyer- And so, and thank you to the water department as well for everything that you guys have been doing, especially all those PSAs. Mr. Yaza, those are helpful. I know you guys have had a lot of work lately. Thank you for being here tonight as well and to share about the rate study that was done. I am really grateful to have had a successful constituent meeting last night in the west side of my district is mostly mobile home parks and we hosted a know your rights session with an attorney from the Center on Law and Poverty came out from Albuquerque and did that session. We had really good turnout and just encouraging to kind of get neighbors together and talking to each other about what are the concerns that they have for their communities. I will additionally be hosting another community meeting in my district on Thursday, August 13th at 6 p.m. at Indian Hills Elementary School Gym. So we've just kind of solidified that and wanted to put it out early and let people know anyone on the east side there is welcome to come out and we'll talk about some of the things in our community. Looking ahead again to events before our next meeting, which I think is August 9th, I wanted to invite everyone to come out to an open house for the Hojo Center for Personal Enhancement and the Recovery Home. They have a new office here on West Cole, 233 West Cole, that has been open during the day for walk-in support. They are doing talking circles. They're doing peer-based recovery support. And then they have their peer-led recovery home up in Gamarco. So I know this is right during all the events of ceremonial, but hopefully people can come see this as well August 7th 10 to 12 will be the Cole Avenue office open house and then 1 to 3 in the afternoon will be the recovery home open house in Gemerco if you haven't been out there they did just complete a new hogan for ceremonial support of the residents out there and that's kind of part of my and my other work life as a professional I'm doing some work with them so that's I wanted to extend the invitation. Thank you.

Thank you. Yes. That's what we need.

Thank you work. They did speak earlier to. But earlier this week to keep air and then pass down the information to his guys. We appreciate the hard work they did the hours the danger. This evening I had the opportunity to approach Chief Pablo to pass that same information down. However, I have not had the opportunity to speak to the other directors to pass the same information down. So all you directors, please disseminate that information down. We really appreciate all the employees, all the work they did during the flooding period, the danger, the frustration, the work. So When I say thank you to all the hardworking employees like I do every week, that was a lot more this week. So keep it up. Thank you. Appreciate it. To all our citizens out there in Gallup, C-click.

C-click fix.

C-click fix. C-click fix. That's the part on the city's website where you can go to report all your problems with flooding, all that. I've got a few of my constituents that called me, and I'll put those in there. But anybody that needs some help with it in my district, call me. But also, neighborhood meetings meant more. We're having a very important meeting that meant more on August 10th. We're going to discuss the railroad crossing. Very important meeting. We're also going to discuss some infringements on some of the back fences there in Gallup. Very important meeting. That's on August 10th. On August 12th, we'll have a meeting in Stagecoach with the Stagecoach people. And also on the 13th, we'll have a separate neighborhood meeting for the people in Chihuahua. Anybody have any questions? Give me a call. Again, thank you to all the city employees for everything you do. I'm going home.

Thank you, Councillor Lino. Now we'll have comments by City Manager Frank Gepetti.

Thank you, sir. Very fortunate this morning to go out and meet with the Patriot flag that was coming through Gallup. They came in yesterday to the Veterans Center, handed it off. We took it to Winder Rock to hand it off to the Navajo Hopi Honor Riders. Got to meet with their organizers. They usually went through a local club here in Gallup. That club said they're not doing it this year. So we scrambled and didn't have the best showing, but I told them next year, gave them our card and said, you know, we want to be bigger, better next year and be happy to. And speaking of bigger, better, the great race named Gallup as the best lunch stop on the route. So that shows how good our groups can do. We also impressed some, People that are hard to impress. Farm Truck and Asian were here for our Route 66 rides. A lot of people didn't know who Farm Truck and Asian are. You could tell a lot of people in Gallup follow them. They were down there checking out the truck, getting merchandise, getting autographs and signs. They said they've never been to any type of event like this, and it was great to see. I want to expand on people thanking. ExxonMobil was our premier sponsor. I have to do a big shout out to ExxonMobil. Gallup Propane. They were our fuel sponsor, donated all the fuel. Those two were just one of the biggest sponsors. Jerry's Cafe sponsored our trophies for the car show. Wonderful metal, cut metal, Route 66 signs said Gallup, New Mexico. Wonderful As we said, Grandpa's Grill did all the cooking, pilots, crews, classic car people, bikes, all of them that were there. And then we had a big team that put this on. This wasn't a small group. This was a big team. Vince and Jake with the parks coming weekly to the meetings. Captain Collins helping with our, and Chief Parrott putting our incident command center and our OEM plans together. together for the safety. Matt Robinson. Couldn't have done it without him. Bill and Bill. Bill no and Bill yes with the balloons. Gallup Chamber. Ted Gonzalez doing the classic cars. Really like to thank my daughter. She put together the s'mores. Only place in the U.S. so far that is doing s'mores in a balloon burner. Yeah, that was cute. That was cool. Kids loved it. Have to do a special thanks to all the launch directors. Great group of launch directors that come out for the safety of the balloons every year. Ben Welch limping along, doing the best he could. Hope he has a good recovery on that. Mr. Hugh Banks and his security company keeping everybody safe. It was just a streets department, parks department, all the departments blocking off downtown. It was great. A couple on this more sad note, August 2nd at 10 a.m. at Raleigh's will be the funeral for George Suhu. long time Gallup resident, second generation, him and his family, with the motel business, laundromats, and Avalon, definitely. Fellow Aggie. I didn't know that till reading his obituary. Fellow Aggie. So, okay. CPA, you know, just was a great businessman. So those that would like to pay the respects. And then on a big note, real personal also, former city manager, longtime family friend, Paul McCollum passed away today. Oh, he did. And just a great, great man, good family. related in marriage to the Murphys and others here in town. So just a long time. Gallupian and insurance, not insurance, real estate. Just a great family. As I hear of his services, I will get that out. And since we don't have a newspaper, folks, if you will email me when you hear about these type of things, this is one way we can at least share without the newspaper of how to pay our respects. I know a lot of us subscribe to the newspaper for the sole purpose of obituaries. It's the only way we can keep up, unfortunately. And without the paper now, I would be happy to pass that along each meeting on these type. I know I'm missing a lot, but just the ones I know of, I'll be happy to share.

Thank you, sir.

Thank you, Frank, Betty, City Manager.

Appreciate it.

All your help, you've always done for all of us. It's amazing the work Frank does to put these events together. Route 66 was probably one of the best events ever, according to a lot of people in Gallup. And when you have, only in Gallup would you have blazing balloon fires and cars underneath them. Not the fires, but the burners. Anyway, with that, thank you very much. One last thing?

Yeah, sure. I would like to really recognize Gallup Fire. We had lightning hit a building downtown, a beautiful store. Their quick response was, without a quick response, we could have lost half of a block or more with our old structures and buildings. To only lose the second floor to fire and smoke damage just shows how good the training, response, and dedication our fire department has. So, Chief, thank you, sir, for working with your women and men. Just say men. They were all down there giving it all. And in the middle of it, it was the flood. So you had some people out there wading through water, rescuing people from cars, while others were fighting a fire. So all hands on deck type day and great dedication.

All right, with that, thank you, Frank. And I move them to adjourn.

Councilor Molina? Yes. Councilor Garcia? Yes. Councilor Beano?

Yes.

Councilor Yazzie?

Yes.

Mayor DeFaule?

Yes.

Before everyone leaves, if you'll sign