City Council - Special Meeting

All right, Mary, you ready? You'd start in 321.

Welcome to the city of Pearland City Council special meeting. I'll call this meeting to order at 3pm. At this point, I'll have roll call and certification of quorum. And Madam Secretary looks like council member Patel is the only council member that is not present today. Moving on to the next portion is citizen comments. I'll hand it over to Mayor Potem Chavarria to facilitate this. But before we do, I just want to remind people that as we move to comments, that your comments be kept to three minutes, unless representing a group, which is five minutes. And part of the provisions of the Texas Open Meetings Act is that we are not able to deliberate. on an item that's not listed, but we can listen to public comment. And just ask that you maintain the decorum that we are asking in this body.

Moving on, Mayor Pro Tem.

Thank you, Mayor. So yes, we do have two public comments. Sue Matthews, if you can please proceed to the podium. You have three minutes. State your name. Thank you.

It was, the mic was short, try again. One moment, hold on. I'm gonna try to make sure that we can all hear you. One second. Hold on, hold on, hold on, one second, one second. Do we have another mic or something? Perfect, look behind you, there you go.

For the fifth time, my name is Sue Matthews. We built our home in 1995 when Pearland's population was 19,000. That means for 30 years, I've been paying attention. I first spoke in the spring about the early voting hours closing at 5 p.m. not being user-friendly for working families. You agreed, and you're revising that in December, which I appreciate. So why am I standing here at 3 p.m. on a Monday for a special meeting on raising water rates? A little research showed this meeting was set by the prior mayor. This still doesn't bode well for transparency or the working taxpayer. Online, of course, many people are touting this meeting and rate increase as the work of our new mayor, the Democrat. But at least they're not calling you a communist. In your discussions today, I'd like you to acknowledge the increase is part of City Council's five-year plan from 2022 to raise our water bills 100% over the next five years. I'd also like you to highlight there's another increase scheduled for next year. I'd like to see any proven leaders sitting before me take a pragmatic approach and freeze this increase for a year. Hold the line on spending, give people's home values and income time a chance to catch up, then reevaluate this next year. Retirees like myself are hard hit enough in our current economy. I know we have enough water. What we don't have are enough buyers to handle your debt service. This is going to cause a major mutiny in adjacent areas of post-annexation. The same council who's approached back-to-back projects, kicking the cans down the road, may not even be best equipped to make the best decisions from an accounting standpoint. I know I don't replace my roof, my floors, my AC all at the same time. And that's what's been happening here for years. Constable Buck Stevens made an excellent post yesterday, and I quote, Many of you forget these costs were passed on by councils who did not address the issues they needed to 30 years ago. They just wanted to get re-elected and not be the bad guys. We now pay triple the repair and replace the aging 35 years of bad pipes and pumps, not to mention maintaining compliance. And since I've been watching for 30 years, I know how this happened and who was running Pearland all that time. Thank you.

Thank you so much for your comments. We have Jim Johnson with the Pearland Chamber of Commerce. You'll have five minutes. Please state your name. Thank you.

Good afternoon, Jim Johnson, President and CEO with the Pearland Chamber of Commerce. As City Council considers the proposed water rate adjustment, I encourage you to ensure the calculations fully account for the impact of all customer classes, including our business community. while a 12% increase may seem manageable in isolation for many businesses and represents another significant operating costs laid on top of insurance, labor, and other pressures. I also notice on the table on page 72 identifies examples of business customers, but it appears to meet some of our largest water users and employers, including our medical facilities and education partners. Ensuring those sectors are reflected in the analysis may provide a more complete picture of the overall impact. I understand and appreciate the need to keep the Water Enterprise Fund financially sustainable and to recover the true cost of providing service. My request is simple, that the full impact on businesses be considered and communicated clearly. It is also worth recognizing that many businesses have already finalized their budgets for the coming year, are currently in the middle of their budgeting process, making it difficult to observe an unplanned increase of this size. Finally, the Pearland Chamber has always been willing to help bring the business community to the table. That partnership is one of the reasons the Chamber has been included on special working groups in the past. If additional business input would be valuable as these discussions continue, we stand ready to help convene employers of all sizes so Council can directly hear from those who will be affected. Thank you so much.

Thank you so much. We appreciate your feedback. That's all, Mayor.

Thank you, Mayor Pro Temp, for that. At this particular time, I would like to move it over to new business. And if there's no comments, new business item number one presentation regarding the fiscal year 2027 post budget for enterprise funds. And Mr. Epperson, if you could take that.

Thank you, Mayor. So this is our budget discussion number two, and we will be focused on the enterprise fund tonight. And it is just a discussion this afternoon. Final discussion, final decisions and action will occur as we adopt the budgets and the rates in September. After last year's budget, Council did ask for more details to look at as far as the fund goes, as far as the overall water and sewer system, and metrics related to rates. So we built a lot of that into tonight's presentation. So kind of the three big areas we're gonna cover is the enterprise fund overview, kind of the big picture, and then an operational overview that'll show what it takes to operate and maintain our system and the scope and scale of our system, and then get into the actual budget, the FY27 enterprise fund budget overview, looking at the costs and the revenue drivers and the future rates. So with that, I'm going to hand it over to our Assistant City Manager, Jennifer May, to get us kicked off tonight. Thank you.

Good afternoon, Mayor and City Council. I'm pleased to get to kick off our second budget workshop, which, like Trent mentioned, is the one focused on the utility fund and Pearland Water. Next slide. Before I hand it over to the operational and financial experts though, I just want to step through a few quick introductory slides. The first being, how does the utility fund fit into our strategic priorities? Though we most often talk about all things water as it relates to sustainable infrastructure and even resilient finances, the truth is the utility fund is really closely connected to all six of these priorities. Delivering quality water builds trust and supports our community. When we look at looking to the future and continuing to strengthen our economy, water is a major factor there as well, both in terms of capacity for new development and the ability to support infill, but also is a way to be an incentive for regional partnerships. And really in this area when you consider all of that, the opportunity for Water to be impactful really just multiplies when you consider that that economic development that it can help ultimately spur really does also help provide revenue that then supports the general operations of the city through that new development. Then water and safe water is essential for daily life in emergency responses. And then the Pearly and Water team really is at the front lines of being a connected community, both in terms of public education and outreach. but in truly every customer call that they respond to and every time they're in the public or even sometimes in residence yards. As a reminder, Pearly & Water is an enterprise fund. And so simply put, this just means the fund is self-sustaining, essentially functioning as a separate standalone business unit. With truly all of the cost of the operations fully funded by system-generated revenues, not by property tax or sales tax, This fund can face unique challenges in comparison to the general fund. And so as an example, again, not only does it have to cover the cost of all of the operations and capital investment, but it alone is responsible for managing things like seasonal consumption variances and annual volatility when it comes to weather or even economic pressures like inflation. And then the rate payers, we look at base rates that are paid by all customers and then volumetric rates, which are applied beyond a certain threshold that help really ensure that the largest users are bearing costs that are more proportional to the scale of their consumption. From the acquisition of water rights to regulatory permitting and capital infrastructure, there's a lot that goes into developing and owning a system before we even begin treating or producing water. And so not only are we the developers of that system, we're also the operators from daily operations to routine maintenance. and even forward-looking rehabilitation and recapitalization, as well as billing and collections. And then we also are always and regularly looking to the future to plan for growth and our long-term asset reliability to strengthen the resiliency of the system. Go to the next slide, of course, success depends, not just on the raw water itself, but also the people that make up the pearly and water team their training and development, the many contracts and partnerships with vendors and all the supplies and resources needed. This includes things like electricity, chemicals, and the more than a billion dollars in physical assets that we have from the big things like plants and lift stations to even all of the smallest parts that go into making a main break repair. And then while those system revenues cover the daily operations, capital funding through the issuance of debt is often used to fund major capital projects, helping spread the cost of those improvements out over the life of the assets and in ensuring today's rate payers aren't the only ones who are having to bear the full cost of those improvements, recognizing that they will continue to benefit customers for decades to come. Ratepayers include residents and commercial businesses with separate classifications for irrigation. Additionally, due to our strong position when it comes to water supply, we also have the opportunity to explore opportunities to become a wholesale water provider. And then limited funding is also provided through impact fees to help offset the cost of new capacity for new developments. Then, when you put the cost of the water we provide into perspective on a per gallon basis, both for base rates or for the volumetric rates paid by average customers, the comparative cost is only a fraction of regular purchases that we all make, such as for gas and milk, and especially even a single bottle of water when you look at it on a per gallon basis. Next slide is just the same chart shown on a per 1,000 gallon basis with a message still the same, that at these low prices, we not only acquire and treat and produce all of the water that our community needs, but we also take away that wastewater, clean it, and we're proud to return it to the environment cleaner than it was when we pulled it from the Brazos River. And then just to conclude my introduction and looking at how it all ties together, the financial performance of the utility fund does drive the ability for us to plan for future capital investments and ensure the operational capacity to deliver high quality, reliable services, all ultimately critical to building community trust and strengthening our overall financial resilience. and position as a regional leader. And so with that, I'll hand it over to David Sons and then ultimately Rachel Winslow to do the operational and financial portion of the presentation.

Good afternoon, Mayor and Council. It's a pleasure to be here this afternoon to provide an update, kind of a status, where we're at, what we do. Right there, the slide says who we are and what we do. Kind of give you some updates on where we stand. Before I turn it over to Zach Lilly, Deputy Director, and Julian Kelly, Assistant Director, I want to just introduce the department. and discuss a little bit about our mission and key initiatives. So in 2025, Pearland Water Leadership met to develop our mission. What is it we do and what's our key function within the City of Pearland? We came up with a simple yet powerful mission. Enrich our community and protect our environment through superior delivery of water utility services. Our mission is more than words on paper. It's a foundation and guides everything that we do and how we act and every decision we make. It represents our commitment to our customers, the protection of public health, environmental stewardship, responsible management of public resources, and preparing for the future of our growing community. The mission itself comes to life through the people of Pearland Water. Their professionalism, expertise, and dedication to ensure that every day our residents and businesses receive the safe, reliable, and high-quality services that they depend on. Each year, Pearland Water leadership conducts a comprehensive risk assessment to identify and evaluate risks that could affect our ability to deliver that mission. Once identified, each risk is assessed based on this risk matrix shown here. The likelihood of its occurrence and its consequence should it occur. This allows us to prioritize areas that require the greatest organizational attention. We started out with a list of 13 this year. The remaining seven fall in the yellow quadrant of the risk plot. And the six that we listed as priority one are in the red section. And they are as listed on the slide. So for fiscal year 26, this process identified six priority one risks. Each risk is assigned to a dedicated focus team. Each focus team is led by a member of Pearland Water leadership. These cross-functional teams include staff from across utilities department and, when appropriate, staff from other departments as well. Each team begins by developing a team charter. That defines its objectives, establishes performance measures, and outlines the tactics and action plans needed to mitigate their assigned risk. To ensure alignment and accountability, focus team leaders meet quarterly. We review progress towards team objectives and action plans. We share accomplishments, challenges, and lessons learned. We also coordinate efforts across teams to address potentially interrelated risk. We identify resources and needs to remove barriers to implementation, adjust priorities and strategies based on changing conditions, and report progress to each other on priority one risk mitigation initiatives. This structured risk-based approach enables Pearland Water to proactively manage emerging challenges, improve organizational resilience, and continually strengthen our ability to provide safe, reliable, sustainable utility services. Now, at this time, I'll turn it over to Assistant Director Julian Kelly to discuss the areas that he has direct responsibility for on a day-to-day basis.

Thank you, David. Mayor and Council, I appreciate the opportunity to address you upon this afternoon. For a brief few minutes, I'm just gonna cover over the water production component of Paraland Water Utilities. This is a part of our system that our residents often see, but really I'm gonna dive into the day-to-day functionings of it. Our responsibility is to be able to produce and give out safe drinking water, maintain multiple resources, manage that cost, meet regulatory compliance, and also require that we meet all the goals that we have to make sure there's dependable water supply for our citizens. As we move into water production, I wanna begin with the way we are structured in water production. This slide gives you our breakdown. There's one superintendent, two supervisors, two lead operators, five operator twos, and 11 operator ones. There are employees that are around the clock making sure that our community is safe. Their work includes monitoring our facilities, responding to alarms, adjusting production, performing fuel checks, and supporting emergency response when conditions change. From a budget standpoint, the staff is not simply a headcount. It's an operating capacity required to protect public health, maintain reliable services, and keep the city in compliance with drinking water requirements. Now that we have identified the team, the next slide will explain how that team is organized and what functions they perform. Water production is organized around four core functions. Water operations, water sampling, monitoring, and water quality. Operations focus on the running of those wells. Purchase water facilities and production assets that keep the water moving throughout our system. Sampling verifies that the water meets the regulatory and operational requirements. Water quality focus on what happens after the water enters the distribution system, including water for our customer concerns, flushing, and we trend those for review. Monitoring gives us the ability to see the field visible need to identify the issues early instead of waiting for failures or concerns to happen. Together, all of these functions, they stay safe to make sure our water is given the service that it needs, and they are just not one thing, but everything working together to make sure we provide safe drinking water. This slide here that you see illustrates the greatest strength that I believe Pearland has. It focuses on the water sources that we have, and not just one single source, but multiple. Instead, we have developed three independent water supplies that work together to provide reliable, flexibility, and long-term sustainability. Pearland Water has 12 water production facilities with a combined production of 44.4 million gallons per day. That capacity is supplied from three complete different sources. I want to begin with the groundwater sources. That's 10 groundwater wells located throughout the city. Together they can produce 18.4 million gallons of drinking water every day from the Gulf Coast Aquifer. To put that into perspective, that 18.4 gallons is enough water to fill nearly 28 Olympic-sized swimming pools every single day. It's also enough water to provide an average daily need of over 120,000 residents. Secondly, we have the capability to purchase up to 16 million gallons per day from the city of Houston through two independent connections. Having these interconnects gives us the additional layer of reliability. If one source experience a maintenance issue, goes down in an emergency, or we see some usual high demand, we have another source available to help meet the city's needs. And finally, we have one of Paraland's newest, most significant investments. It's our 10 million gallon per day surface water treatment plant. This facility treats raw water from the Brazos Basin and gives Paraland greater control over its own water future while reducing dependence on groundwater. Having multiple water sources is only valuable if we plan for the future. The next slide will show how Pearland has extended its water supply over the last 25 years. This chart here tells the story of Pearland long-term planning. The blue line represents the city average water demand, while the red or orange, based off your color perspective, line represents the peak demand, while the green line represents peak supply. As Pearland has grown over the past 25 years, our responsibility has been to stay ahead of that demand. While water infrastructure cannot be built overnight, a new well, a transmission line, or a treatment plant often requires years of engineering, permitting, land acquisition, and construction before a single gallon reaches our customers. Because of that, we don't build for today's demand, we build for tomorrow's demand. You'll notice our supply capacity has consistently remained above projected demand. That isn't excess, that's not excess capacity, that's responsibility, that's planning. It provides the operational reserve needed during summer peaks, equipment outages, or emergencies. It provides supply for fire flow demands and continued residential and commercial development. This chart also demonstrates the value of Pearland's master planning. Every major investment you see represented here was identified years in advance, allowing the city to grow without compromising its level of service to the community. You'll also notice a temporary reduction available capacity. That occurred when the Magnolia and the Southeast wells were removed from the service because water quality concerns. Even with those wells offline, Pearland continues serving customers without interruption because previous investments have created enough diversity within our water portfolio. While this chart shows the long-term picture, the next slide brings it into the last three years and shows how our available capacity changes in real life. The graph illustrates something every water utility has to manage every day, because capacity is not static. Unlike customer demand, which generally flows predictably, seasonal trends, available production capacity can change overnight. Every marker on this chart represents an operational event. Some wells were temporarily taken offline for rehabilitation or water quality improvements. Others returned to service after major maintenance. Our surface water plant came online and new production sources were added back into the system. At the same time, customer demand continued to fluctuate with weather conditions. During periods of prolonged heat and drought, outdoor irrigation increased significantly. Water across the city was being utilized. One important takeaway from this graph is narrowed in the margin that exists during 2023. the well outages that occurred in 2024 had happened during the peak demand experience in 2023, our availability, production capacity would have been extremely limited. Fortunately, because Pearland had already invested in the additional supply, including our surface water treatment plant, we were able to maintain reliable service. That's exactly why utilities invest, before crisis occurs, not after it. Having multiple sources is important, but operating them efficiently is equally important. The next slide will show how we manage those water supplies every day. Here you're going to see an analysis comparison of the operating costs required to produce 1,000 gallons of drinking water from each available supply source. The comparison includes the major operating costs associated with water production, which also includes electricity, treatment chemicals, labor, and routine operational expenses. One of Paralan's largest strengths is that we are not dependent on one single source. Instead, we manage three independent supplies that allow us to balance reliability, to balance operating costs, to control contractional obligations, and long-term stability. This happened several years ago. Paralan established a long-term operational goal of increasing our surface water while reducing our dependence upon groundwater. I'm pleased to state upon today that that objective has been achieved. Today, Paralan Water, our system is averaging approximately 60% surface water versus 40% groundwater. That shift is significant because regional water planning across the Gulf Coast encourages communities to diversify away from heavy groundwater usage and dependence and increase in renewable surface water sources. Communities throughout the region have made similar transitions and Pearland is doing the same. This transition positions us alongside the forward-thinking, the forward-moving Gulf Coast communities that are investing in diversifying their water supplies for long-term sustainability. By maintaining this balance, we're providing reliable service today while preserving flexibility for future generations. That long-term strategy depends on securing water needs to operate the surface water treatment. While treatment plants often receive most of the attention, none of them can operate without dependable source raw water. This agreement with the Gulf Coast Water Authority is one of the most important long-term water supply agreements Pearland has executed. Historically, Pearland operated under two separate agreements. One secured 10 million gallons per day of contracted raw water. The second one provided an additional 10 million gallons per day through option water. This year, those agreements were successfully consolidated into one single amended agreement. The amendment extends Pearland's guaranteed 10 million gallon per day raw water supply through 2056, while also securing the additional 10 million gallon option water through 2044. Simply put, this agreement gives Paraland a long time certainty. It protects one of the most valuable assets, our reliability to continue producing drinking water for our community to grow. These agreements are negotiated decades in the future because again, water supply planning occurs decades before demand actually happens. Now let's take a look at how those long-term investments are already producing measurable results. We're gonna take a look at our surface water plant. And the surface water plant is not just another facility. It's a very major strategic investment that allows Paraland to treat water from the Brazos River. The next slide explains the people and processes required to operate that plant safely and continuously. We wanna look at the staffing structure there at this new investment. The surface water plant is ran by a plant manager, an operation coordinator, two lead operators, and four operator two, and two operator ones. The staffing model supports 24 hour operation because the plant uses advanced membrane technology that requires consistent process control. Operators must monitor the raw water, they must control the membrane performance, they must feed the chemicals properly, finish water quality, look at alarms, make sure pumping is going correctly, and also be on top of residuals. They must make sure that that water is transmitted directly to the Kirby and the Shadow Creek plants successfully. From a budget perspective, the staff members support one of the city's most important water reliability investments. The equipment is advanced, but the reliability of the plant depends on the trained operators making good decisions every shift. The next slide will show the daily technical work behind operations. Here you'll see team members doing the highly successful technical process. Staff is making sure maintenance is done, collecting and analyzing operational data. They're completing water quality testing and making sure process adjustments keep the plant stable. Testing through Paralan approved public water system laboratory provides timely verification that the finished water meets all TCQ requirements. This in-house capability matters because it gives the utility direct control over the response time. The budget connection is straightforward. Laboratory capability, operator training, maintenance and data review will help prevent service interruptions. It protects our public health and it preserves the value of the city's investment which is that plant. This slide here represents during the first year of operations the surface water plant fundamentally changed how we operate our water systems. I believe the most measurable result was the 67% reduction in groundwater from on the west end. That reduction represents much more than simply turning off wells. It reflects a successful transition toward a more diversified and sustainable water supply. Every gallon produced by the surface water treatment is one less gallon that must be withdrawn from our aquifers. That helps preserve groundwater resources, support long-term regional water management, provides greater operational flexibility, and allows Paraland to be in a better position for this continued growth. Perhaps most importantly, the facility has given our operators another dependable source. Instead of relying primarily on wells, we now have the ability to balance production amongst those groundwater, amongst purchased water, and amongst surface water. The surface water treatment plant has already become one of the most important assets the Paraland has committed to, and its value will continue to increase as our community grows. That brings us to one of the most important transitions of this presentation. Producing water is one of the first half of our service. Once water is produced, it has to move through a distribution system and waste water to be collected and conveyed safely for treatment. That is where distribution and collection becomes the next part of this story, and I'll turn it over to Zachary, our Deputy Director.

Thank you, Jillian, and good afternoon, Mayor and Council Members. The next slides are going to discuss our distribution and collections team. The Distribution and Collections Division, comprised of 43 dedicated professionals, is responsible for maintaining, operating and repairing Pearland's extensive water distribution and wastewater collection infrastructure. Their work ensures the reliable delivery of drinking water to customers and safe conveyance of wastewater throughout the city. Their expertise and commitment are essential to protecting public health, maintaining regulatory compliance, and delivering reliable utility services that Pearland community depends on every day. Distribution and collection by the numbers. They are responsible for over 41,000 service connections, over 6,000 fire hydrants, over 13,000 water valves, almost 12,000 manholes into over 1,000 miles of distribution and collection lines in the system. To put the distance in perspective, consider for a moment what 1,043 miles of distribution and collections truly looks like. It's far enough to get you to Chicago, Illinois, Phoenix, Arizona, or Guatemala City. Transite Water Line. One of the largest contributors to water loss in Pearland is the use of Transite Pipe. Over time, shifting conditions often influenced by weather changes cause these pipes to crack and break frequently. This results in significant water loss and ongoing maintenance challenges for the City. To address this issue, Pearland Water's goal is to systematically replace all Transite Pipe within the distribution system. Each year, additional neighborhoods with transite pipe are included in the CIP for a full-scale replacement. This year, Pearland Water, in partnership with Engineering and Public Works, the City Manager's Office, and External Affairs, is actively pursuing grant funding made available through the most recent Texas legislative session. The new funding program is focused on improving the resilience of Texas water infrastructure. Our objective is to secure grant funding to support Pearland's comprehensive water and wastewater infrastructure replacement program, reducing the financial burden on ratepayers while accelerating the replacement of aging assets and strengthening the long-term reliability and resiliency of our utility system. Excavation and repairs on water and sewer lines. Excavation. Crews use heavy equipment to access underground water and sewer lines, ensuring minimal disruption to surrounding areas. Safety protocols are observed to protect both workers and residents. Repair work. Once the affected area is exposed, technicians diagnose issues such as leaks, blockages, or damaged pipes. Restoration. After repairs are completed, the team restores the site within a few weeks. This includes replacing concrete driveways, aprons, sidewalks, and even small sections of roadway that were removed during the repair process. The goal is to minimize the inconvenience and return impacted areas to their original condition quickly and professionally. Rapid response. As stated in the slides before, an on-call service is available for after-hours emergencies, ensuring residents receive timely assistance for urgent water and sewer issues. Fire hydrant crew. As part of our fiscal year 26 supplemental request, additional resources were approved to enhance the fire hydrant inspection program. Today, within the distribution and collections division, the dedicated fire hydrant crew is responsible for ensuring the operational reliability, functionality, and safety of Pearland's fire hydrant system. The team has established an ambitious goal to complete annual inspections of all 6,038 fire hydrants throughout the city. This proactive inspection program identifies hydrants that are out of service or require maintenance, allowing repairs to be completed promptly, ensuring the critical fire protection infrastructure remains available when needed. Following inspections, the crew performs additional maintenance activities, including hydrant painting and preservation, replacement of corroded bolts and hardware, repair of damaged gaskets, replacement of leaking main valves and shoe assemblies, Fire Hydrant Inspection Program. As of June 24th, 2026, nine months into fiscal year 26, the hydrant crew has completed more than 5,000 inspections. These inspections have identified and addressed 843 repairs completed and 26 full hydrant replacements completed. This effort represents a significant improvement in both the volume of inspections performed and the number of corrective actions identified and completed within the fire hydrant system. This proactive maintenance approach improves operational reliability, enhances emergency response readiness, and ensures Pearland's fire hydrant infrastructure remains safe, functional, and dependable for the community. The sanitary crew plays a critical role in maintaining the reliability and performance of Pearland's wastewater collection system. The team investigates a wide range of system conditions, including inflow and infiltration sources, sewer line blockages, and other collection system deficiencies. As investigations, routine cleanings, and inspections are completed, the team documents findings and identifies future maintenance needs within City Works. This information supports accurate asset tracking, proactive planning and data-driven decision-making to improve long-term system reliability. Through the manhole rehabilitation program, the crew works with a third-party contractor to apply calcium aluminate cementitious lining materials to the interior surfaces of sanitary sewer manholes. This rehabilitation process provides long-term protection against hydrogen sulfide corrosion, a leading cause of deterioration in wastewater infrastructure. These proactive maintenance and rehabilitation efforts extend asset life, reduce failures, and support a more resilient and reliable wastewater collection system for Pearland. utility cuts and concrete replacement crew. The concrete crew plays an essential role in restoring areas impacted by water and wastewater infrastructure repairs. Following excavation activities, the team replaces concrete removed during necessary utility repairs with a focus on rapid restoration, quality workmanship, and minimizing impacts to residents. The crew restores a variety of surfaces, including driveways, driveway aprons, sidewalks, small sections of roadway. In addition, the team addresses sidewalk trip hazards associated with sanitary sewer manholes, improving pedestrian safety, and maintaining the quality of Pearland's public infrastructure. Through timely and professional restoration efforts, the concrete crew helps ensure repair activity impacts are minimized while supporting reliable utility maintenance operation and a positive customer experience. Now I would like to discuss our wastewater treatment division. Wastewater treatment is staffed by 14 dedicated professional responsible operators for the operation of five reclamation facilities. Wastewater treatment protects public health, the environment, by providing safe, reliable wastewater treatment services for Pearland. Plan Operations operates and maintains the City's wastewater treatment facilities, monitors treatment processes, adjusts operations to meet flow demands in response to equipment issues. Process Monitoring performs routine testing, operational monitoring to ensure treatment performance and compliance with state and federal regulations, Environmental compliance oversees permit compliance, process optimization, and reporting to maintain regulatory standards and protect receiving waters. Annually, Pearland treats approximately 3.2 billion gallons of wastewater each year, ensuring reliable service for the community. Wastewater system overview. The wastewater master plan establishes a long-term strategy to transition the city's wastewater system from five wastewater treatment plants to three regional facilities. This approach will improve operational efficiency, increase system reliability, reduce long-term operating and maintenance costs, and support future growth. When fully implemented, this strategy will allow the city to decommission the three remaining conventional treatment plants that have reached or approaching the end of their useful life. To accomplish this strategy, wastewater flows from the Longwood Basin will be redirected to the expanded Berry Rose Reclamation Facility. Wastewater flows from the Southdown Basin will be redirected to the Reflection Bay Water Reclamation Facility. These regional conveyance improvements will consolidate treatment operations to a larger, more modern facilities, providing greater operational resilience, regulatory compliance, and long-term value for the community. The JHEC water reclamation facility expansion. The JHEC plant recently expanded its treatment capacity from 4 million gallons a day to 6 million gallons a day. As the primary treatment facility in the system, it now receives the majority of the system's flow, averaging approximately 3.1 million gallons per day. One primary factor that drives expansion of a wastewater facility is three months of average flow reaching 75% of permitted capacity per facility. The most recent expansion has allowed for future flows under TCEQ regulatory guidelines. Berry Rose Water Reclamation Facility Expansion. The Berry Rose plant is currently under construction and designed to treat 5 million gallons a day of wastewater from Berry Rose in the Longwood Basins. Upon completion, the plant is expected to process an estimated flow of 3.8 million gallons a day. Construction is progressing as planned and is approximately 52% complete overall, with activity underway work underway at the Berry Rose Water Reclamation Facility, Longwood Lift Station, and the connecting force main. The project remains substantially on schedule with final completion anticipated in April of 2028. Average flow versus permitted capacity for JHEC. As the population of each treatment basin grows, so does the flow entering the facility. Through the years, influent flow reached the point at which the TCEQ required the city to plan and increase permitted capacities. The original facility was constructed in 1998 with the most recent expansion permit in 2024, increasing the capacity to its present day of 6 million gallons per day. AVERAGE FLOW VERSUS PERMITTED CAPACITY REFLECTION BAY. SIMILAR SCENARIO FOR THE REFLECTION BAY WASTEWATER TREATMENT PLANT INCREASING THE FACILITY TO ITS PERMITTED VALUE OF 6 MILLION GALLONS A DAY. THE ORIGINAL CONSTRUCTION FOR THE FACILITY BEGAN IN 2002 AND THE MOST RECENT EXPANSION WAS COMPLETED IN 2019. Average flow versus permitted capacity in Berry Rose. The original Berry Rose was constructed in the early 1980s and is currently permitted at 3.1 million gallons today, million gallons a day. Permitted capacity will increase to five, between five and six million gallons a day once the new facility is commissioned. Permitted capacity, average flow versus permitted capacity at Longwood. Currently, the Longwood Treatment Facility is our oldest plant, originally placed into service in 1965. The Longwood Treatment Facility will have its basin flows transition to the new Berry Rose facility. Once this is complete and Longwood is offline, the City of Pearland will have a total of four treatment basins within the collection system. Average flow versus permitted capacity for Southdown. The smallest of Pearland's wastewater treatment facilities is Southdown Wastewater Treatment Plant built in the early 1980s. This facility is permitted to treat up to 0.95 million gallons a day. The future Wastewater Master Plan recommends decommissioning Southdown and diverting flows to the Reflection Bay Treatment Plant. reducing the total amount of collection basins to three. Now I would like to return this presentation back to Mr. David Sons to discuss the asset reliability team.

Surprise, surprise. I wanted it back for asset reliability. Some of you know it's my passion, so really happy to share the latest, greatest with you. Also newly created, but in FY25, is the asset reliability team. These are not all new staff members. We combined staff from other divisions, and they were quasi-mechanics here and there, created this asset reliability team. But still, there was some funding needed that was approved, again, in FY25. Our goal with this team is to establish an asset reliability program that turns infrastructure maintenance from a reactive cost center into a strategic advantage, an advantage that we can leverage for enhancing safety, sustainability, and economic performance. Slide. Current asset reliability program status is progressing towards good, good practice. We definitely have plans to continue advancing towards best practice through targeted investments in coming years. We're shooting for best in class. A significant foundational milestone was reached in 2026. This milestone expanded our asset registry by almost 3,000 assets that were not listed anywhere other than part of a wastewater plant or water plant or whatever it was a part of. So these nearly 3,000 assets are now being updated into City Works, which is our citywide computerized maintenance management system. provide the foundation for us to build our asset reliability program on. At that point, once those assets are updated and completely within City Works, that we can begin developing preventive maintenance tasks that can be routinely scheduled and automated to send the mechanics to where they need to be when they need to be there. FY, because of all this, FY27 promises to be a landmark year as we begin true asset reliability management. We're excited to see this program grow and develop to its full potential. Asset reliability team, some of the pictures here on the screen, bring together the professionals with diverse technical expertise. from instrumentation and control specialists, skilled mechanics, and maintenance professionals, all led by asset reliability centered management and coordination. This multidisciplinary approach allows the team to proactively maintain critical infrastructure, optimize equipment performance, and improve the reliability of essential utility assets. Our commitment to asset reliability strengthens Pearland's ability to provide resilient water and wastewater services to the community. Also under the umbrella of asset reliability is our lift stations team. They're responsible for operating and maintaining 71 sanitary sewer lift stations and 7 stormwater pump stations. They provide continuous oversight and maintenance to ensure these critical systems operate reliably. Then we have our support roles within the department from environmental services that supports all divisions for regulatory reporting and compliance. They support our programs, industrial treatment, fat, soil, grease, backflow prevention, et cetera. And key to environmental services is they provide educational and outreach programs to the community on issues related to water and wastewater. Our administrative support team, oh, what would we do without them? They ensure the operational and administrative foundation of Pearland Water through coordination of workforce timekeeping, meeting organization, budget preparation, procurement, process, contract management, and compliance activities. You name it, they're there. We just went through the process of hiring a management assistant. She said, what's my job? And I said, to keep David out of trouble. And then we have our health and safety team of one that supports proactive safety culture by developing targeted training programs, analyzing incidents and metrics to identify opportunities for improved and enhanced employee safety. Now slide. Our environmental team also manages the contracts for solid waste. From our Frontier Waste Solutions franchise, Frontier Waste franchise contractor that provides residential and commercial service to our disaster debris management teams that are on contract, ready to be deployed should the need arise following a disaster. At this time, I will turn it over to Jennifer Kiyoga? Close. I call her Jennifer Q. And I said, help me pronounce your name. Kiyoga. So Jennifer is going to discuss water billing and collections.

Thank you, David. Good afternoon, Mayor and City Council. Thank you for the opportunity to provide an overview of the operations the water billing collection team is responsible for. The team is responsible for the review of customers' accounts, collecting payments, generating water and sewer and garbage bills, review of delinquent accounts, managing meter readings, and field services to ensure efficient account management and revenue collection. Currently, we have over 40,500 active accounts, resulting in 41,000 active connections. The number between accounts and connections will differ as each account is counted as one, while multiple meters within an account are counted as an individual connection. Customer service operates with a team of one whose responsibilities to provide in-person customer service assistance, including processing payments, account inquiries, and processing application. In-person payments have decreased since the implementation of the customer portal in May 2024 with additional options to pay online, including new service deposits. Meter service team operates with seven employees whose our responsibility is to provide customer service in the field, read water meters daily and monthly for billing, install water meters, proper maintenance and replacement as needed, and ensure meters are operating properly. The billing and collection teams operate with six employees who are responsible to complete account audits, bill audits during the billing process to ensure accurate monthly billing, including account audits for delinquent accounts prior to the disconnection of process for non-payment. The chart below displays the billing process from generating the bills up to account termination due to nonpayment. The chart to the right displays the operational trends from fiscal 2024 to fiscal 2026 for in-person payments in blue, manual meter readings in green, and billing validations in orange. I'm going to hand it back to David to conclude the presentation. Thank you.

Well, again, in summary, over 100 professionals work every day to deliver Maryland citizens the safe water and effective water reclamation services. Next slide. And I just thought we'd take an opportunity here. We've been going about an hour since Jennifer kicked us off. Before Ms. Rachel gets into number crunching, I just wanted to see if you had any questions. on any of the presentation material you've seen so far. I assume that's okay, Mr. Epperson. Did not.

Yeah, so that was a lot. We know that. But it's a big system, complicated system. Wanted to give a very extensive overview as to what goes into operating, maintaining, and running a system of this nature and this size. So we'll pause here if there's any questions over this part of the presentation, and then we'll jump into the budget when we're ready to.

Keep it light. I appreciate that. All the information, it was a flood of information. I'll pass that on to Mayor Pro Tem. I saw you had a question.

Thank you, Mayor. Thank you so much for the presentation. So the question that I have is if we are awarded the WSIG grant funds, are we able to utilize some of those funds to reduce the water rate?

Just real quick, so let me, Sure, just as a, before we get on to billing and rates, I'll ask if you don't mind to table that when we get to.

Absolutely, it's just they brought it up in this presentation. Sure, absolutely. I'm okay with that.

All right, so if they're not rates related based on the infrastructure and the personnel and the investments that were made, I'd just ask that we keep them to the second portion. So that's it. So, Council Member, Council Member Cade.

I'm curious, What is the date that all transit pipe will be replaced? Do we have a estimated date for that?

Before they jump in and answer, I'm not sure if we have an exact date, because that is a series of projects. We are working through the capital improvement program, and obviously we are very acutely aware of when we do those projects, we have to sell additional debt to do those capital replacement projects. Those Transite water lines, although they help with our water loss, which we need to work on, those are the type of projects we are able to slide around and move out in the CIP as well as we're trying to manage our rates moving forward. If we were to do all the projects as we would like to, do we have kind of a projection of when we would finish? I know we're doing several miles a year. We've got 72 miles left, so.

Right, we still have projects carried out through this next five-year CIP, and that's design and construction. And as Trent said, we could still slide some of those forwards or backwards, depending on how we need to deliver them.

So we can follow up on that if we've got just kind of a general ballpark. But that's going to move in the future.

And it was just the green areas on that one slide that are left?

I believe so. Those are the primary locations. Yes, ma'am.

Okay. And then is there going to ever be a time when we won't have to purchase water?

No.

No. Okay.

So kind of to put that in broader perspective is that the 10 MGD that we purchased from City of Houston out of their Southeast plant, we are a co-participant through Gulf Coast Water Authority. So that means we paid into the capital expansion of Houston's plant. So GCWA is truly a co-owner in that plant that we contract through for that. So in essence, we own a piece of that plant. And so we'll always have that 10 MGD And then, of course, the take point out of the Brazos for our surface water plant. We'll always have to purchase that raw water. And then the 6MGD that has the 1.3, I think, take or pay. The Shadow Creek one, the Shadow Creek connection to Houston, that's the wholesale water rate. That's the one where we've throttled that down to just the take or pay amount. And we could look at, in the future, bringing... what we have to purchase there down further, but I think we would always want to keep that as a connection for use if need be during times of drought or if we have any of our other infrastructure that has to be taken offline for maintenance.

You said we're part owner, so we're buying water from ourself?

So GCWA is technically the part owner. We have a contract with GCWA And so what that means is we provided the capital cost when Houston expanded their plant. So there's 10 million gallons of that plant that we provided the capital cost for when that plant was expanded. And so what we actually pay, and it's much like our surface water treatment plant, after the capital investment, what we pay for is the raw water and the operating cost. And the transmission cost to get it to us.

If I might, got slide 19 back up. You'll see the far left, the least expensive is our groundwater. The Alice plant, that's the one that Trent was just referring to. Because we own the expanded portion of that plant, essentially that cost is just what it costs to produce it. We still have to pay for it. We own a portion of the infrastructure that was required to get that water to us, much like the surface water plant, right about the same price or just pennies higher. That does not include the capital investment. None of these include capital. This is what it costs for O&M to get 1,000 gallons of water to the distribution system. Now, 521... Not so much. We don't own any infrastructure there. We're just a wholesale customer.

Thank you for explaining that. I appreciate it.

Council Member Byrum. Thank you, Mr. Mayor. A couple of questions. One, I didn't hear it mentioned, although I know it's an issue in other cities, is the more groundwater that you take, the more you risk creating subsidence in your community. With us increasing our surface water take and decreasing our groundwater, I think that that's something that's worth mentioning, that we're actually protecting our community and preventing subsidence by doing that. Is that correct? David, you have to answer that one.

I'm if I'm thinking about it wrong let me know but you you are not okay you are not and there's a reason utilities in this region region-wide are focused on reducing the withdrawal from our groundwater table okay I just wanted to make sure I was thinking about that as well or correctly

Two things I realize that the biggest capital improvements that we've ever invested in in our city are the surface water plant, now the Berry Rose plant. With those investments being built the way they're built, do we have any projection? You had these charts that showed capacity versus need, capacity versus demand. We have any projection on how long into the future? I know it's a little bit of a crystal ball before we would ever need to think about expanding any additional capacity for water or wastewater. Essentially with these investments, how far down the road is that getting us? What do you think?

So, yeah, as part of our master planning, I think we can provide more detail on that. From a wastewater standpoint, again, there's the 75% of capacity that triggers the design, and then 90% of capacity that triggers you have to start construction. I think where we are now is we're in a good place for that to be a while. And I think the other good place we've positioned ourself in is with these, the JHEC, the Reflection Bay, and now the Berry Rose, Those were basically full reconstructions, especially at Jayheck and absolutely at Berry Rose. So what we have built is expandable based on our master plans, and the assets that are there should last a long time. So it's not like some of these projects where we've had to basically start from ground up with a new plant like Berry Rose. We're gonna utilize the existing plant that's there, expand it in the future.

As far as...

As water goes, this first 10 MGD of our surface water plant should get us many years into the future. We also built into the capacity of that plant an ability at a relatively cost-effective amount versus the original build of the plant to expand the capacity there. And that's when we'll have to look at that based on our needs. Same thing as wastewater, there's triggers under water peak demand and needing to provide more capacity there. But it also gives us the opportunity to look at being a wholesaler to regional customers in the future.

Right. I guess ultimately what I was trying to get at, and I don't want to talk about rates right now because we're going to, is how long would we think it would be before we would need to be looking at additional debt issuances to expand our system because we are investing so much now. And I know that depends on demand and population increases, but something that Potentially we could look at maybe our next year's conversation on what are we looking at in the future. And then the last one, last question I had is do we offer anything and would it go through our airline experience team, customer experience team? Do we offer any services to the community as far as trying to help them figure out? I hear from time to time people say I've got brown water coming out. Doesn't necessarily mean it's from the supply. There may be something going on in their home. Do we offer any services to help people figure that out if there's something going on internally at their house?

Yes, sir. We often give out FAQs or things that we can give to our experience team to let them know if there's any issues in the home, what to kind of assess first before actually having an inspector come out and look at those things. Even though that is offered, it's not always followed, so our people are always ready and available to go out. But, yeah, there are things out there that we can provide and have given to the experience team that they can use as a guide to talk through those experiences before an operator actually goes out.

We will send an operator. If a resident calls and says, I got a bathtub's filling up with brown water, we'll send somebody by there and help them go through their system and figure out why is this coming out. Is it your water heater? Is it you got old lines? Or if it's coming from us, we'll do that.

Yes, sir. We do do that assessment just for the safety of the resident and ourself. We don't enter homes, but we will walk them through that and take anything that they provide us from inside their home and analyze that as much as we can.

So I think it starts with checking the public system to make sure that the cause of the water quality issue is not within the public system. And then if we can't determine that it's part of that, working with the homeowner in the way that Julian described.

Okay, thank you. Appreciate it. Just to add, in addition, there's a water test that is done, correct? Water quality test.

There is a test that is done that is in the field test that we use instrumentation that is calibrated to make sure we can understand what is going on in the field. Also, there are opportunities when it arises for us to do additional testing through laboratories so that analysis can come back to Give a deeper dive into what we're seeing.

Okay, let me be more specific. I was just trying to add more context to what Councilman Byron was saying. When a resident experiences some sort of current that if they call, City of Pearland will perform a water quality test. Can you confirm that?

Yes, there is a field inspection that takes place to determine what is the source of that issue, and then we take the necessary actions after that to meet or control that situation.

Okay. I just wanted to make sure. And then before I come to this side, I want to wrap up.

I was just going to address, as someone who lives in an older neighborhood and neighbors have had brown water, y'all have come and flushed the lines and tested their water.

Yes, that has happened on occasion. Councilman Fernandez.

Thank you, Mayor. On page 39 of 129, if we can go to the wastewater system overview, when I started looking at this project, I really kind of broke it down to how did we get here, why did we get here, and what options do we have moving forward. It's kind of how I... categorized as I was going through this. And we've gone through a lot of what systems we have in place currently and how we are where we are. One of the things that I wanted to ask, looking at this map, is the age of our facilities. Longwood, is it correct to say that we're 60 plus years old with the Longwood facility? 61, 62, somewhere around there?

Yes, sir, Longwood is 1965.

Okay, and then the Berry Rose was 50, just over 50 years old, is that correct?

Correct. Okay.

And so, you know, the expansions or the decommission of Longwood, looking at this map just as a visual to those that are either here or going to view this online, you know, the idea is to decommission Longwood and put a lift station pushing it over to the Barry Rose, the new facility there. that is going up so berry rose in essence will absorb longwood and pretty much take a a major part of the uh east end is that correct yes sir councilman fernandez you're exactly correct it would absorb that far east um green green area would become the berry rose collection basin Okay, and then looking at JHEC or the John Hargrove Environmental Complex being more of the middle of the city, the center of the city in blue, that was necessary and we've identified that we went from four million gallons per day to six million gallons per day, but then again, And the purpose behind that was because we've identified that a lot of this expense was either because of aging infrastructure, but in addition to the growth of our city. Is that correct?

Yes, sir. Both of those combined. They hit the aging infrastructure, and then we hit the TCQ guidelines for triggering plant expansion and construction.

Okay. And the last question I have on this map is, if I heard correctly, Moving forward, there is plans to something similar like we did Longwood to Berry Rose, south down to Reflection Bay. Is that correct?

Correct.

Okay.

So then Reflection Bay, the purple will turn into red, and then it will just be the red, the blue, and the... orange colors so it will be reduced down to three. Now do we have a timeline on when South Down will be merged over to Reflection Bay?

Not exactly. We have done a preliminary route analysis for the South Down force main and what it will take to decommission the South Down plant to get it back over to Reflection Bay.

Are we hitting capacities at Southdown? I know I don't remember what page that was on, but what's the reasoning of moving Southdown over to Reflection Bay?

Age and condition.

Age and condition?

Yes. It was inherited in an annexation from a MUD, and it wasn't in good condition, I'm told, at that time. And it's in no better condition today. And we're looking at significant investment. Now, the PER, Preliminary Engineering Report, has been done on the feasibility. Reflection Bay can easily handle it. And that was all part of the long-term master plan for wastewater. It wasn't a priority. It's becoming one. Okay.

And the age of Southdown, David?

It was early 80s.

Okay. Thank you.

Council Member Koza.

Thank you, Mayor. Staff, I'd like to tell you thank you. The four years I've been here, this is probably the most detailed report we've had on our water system, so it's really appreciated. On slide 16, it talked about our water sources, and basically we're getting it from the Gulf Coast Aquifer, the Trinity River Basin, and the Brazos River Basin. How many other cities in our state, if you all know, have three water sources? I know of none. Okay. Very few have more than even have two. Okay. And what I wanted to highlight with that comment right there, we've positioned ourselves to not have issues of drought such as Corpus Christi. To me, it'd be kind of scary to... I think that you pray for a hurricane to recharge your surface water. That, to me, is just mind-boggling. But also to have three different sources. We've got two surface areas and one, or I guess ten different locations, but one ground from the aquifer underneath us. And y'all had made a comment somewhere along the way, I think Julian did, that it's 60% surface and 40% ground, is that correct?

Yes, sir, that's what we have been averaging since the surface water plant has been online and operating.

Okay, and with that being said, groundwater is normally cheaper than surface water, correct?

Based off the chart provided, yes, sir.

All right. And as far as pushing towards a surface, is that something state mandated that they're asking to go more surface than ground?

Yeah, for our region that we are currently in, that is something that is being mandated by the subsidence district. As we stated earlier, we're not actually in subsidence in our current area, but everything surrounding us, so that region is. So, yes, sir, that is being mandated.

So it'd probably be a safe assumption to say that if we were 100% groundwater, we'd probably be in that subsidence.

I concur with you, sir.

Okay, so I just want to, for the public to understand that while we are using a 60-40 split, roughly saying, of a little bit slightly more expensive, it is because it's mandated from the state and we're not just doing this to drive costs up or anything along that. We have resiliency in three different water sources, being able to move back and forth between ground and surface water, depending on what our balance is, what our needs are, to be able to not turn into a Corpus Christi, and for that matter, Jackson, Mississippi, that is in horrible shape and roughly same size population as our city is. So I really appreciate what y'all have done there. As far as the slide number 20, kind of went over real quick from the Gulf Coast Water Authority. I don't know if this is for you, Trent, or not, but as far as these agreements right here, To me, that was very forward-thinking on previous councils and administrations to be able to secure this, because where that has led us to today is to be able to have, I don't know at what point we had the southeast water intake for the GCWA agreement, but this allowed us to pull in a third Source and so right now what you're saying is with our current situation We can produce up to 10 million gallons a day out of the American Canal through 56 with our current agreement And then if the city or if we decided to start to sell to regional area Municipalities we would have ability to double that correct.

That's correct. Yes, sir

And as far as our facility, our surface water plant out on the west end of Pearland, is it my understanding that the underground is in place, that if we wanted to increase to the 20 million total capacity, is the underground in place right now?

I'm not sure if 100% of it is, but I think the bulk of what's underground is in place. To ultimately go all the way to 20, we would have to add some additional plate settler capacity, obviously some filtration system capacity, and also some additional ground storage tank capacity. But I think, is it the intake structure as well as the underground stuff, the bulk of that is sized?

The intake structure, the pipelines delivering water, or at least to the north from the plant. We don't have anything to the south. But you would have to duplicate the main structure in the middle between the plant intake point and the operations building. and you'd have to double the amount of membranes within the membrane building. But there's a structure between the membrane building and the intake that would have to be duplicated, and that's the plate settler flocculation and sedimentation.

Okay.

All right.

So basically, you know, in order to do it, and depending on if we ever did decide to do that, who knows what the cost would be for that, but it would be an additional fairly hefty expenditure to double that. whether it be similar or more than what we did, it's still got a fairly large expenditure.

It's a lot less work, but by the time we do it in the future, those costs may increase.

With all that said, as far as being able to take water to another municipality, then you have supply lines between us and wherever they might want to go in addition to that. So those are additional costs that would impact water rates as far as that goes.

And just to speak on that real quick, if we did become a regional provider, you know, there are ways to structure that where it doesn't impact our customers the right way.

I mean, it depends on the agreements between them.

Yeah, all that additional cost burden would be on whoever we're supplying.

Right, just like we participated in the southeast. It was something similar to that. So, yes, I understand that, and I appreciate that. And then, Trent, while you're talking, you mentioned something about – when you hit 75% capacity and 90% capacity. Could you kinda expound on that and what exactly that means by the TCEQ?

Sure, and maybe if we could find the reflection bay slide of when we hit those capacities, then I think we can demonstrate that real easily. Slide 42, Josh. So slide 42, so the black line here is hitting 75% capacity. So if you have three months in a row that you're hitting that 75% capacity, TCUQ requires you to start the planning process for a plant expansion. And the planning process is essentially the engineering design work. And then once you hit the 90% capacity, for that same three months. You have to be starting your construction for that expansion. And so you can see here with the reflection bay, As we grew very rapidly through those 2010 through 2016 years, we actually had to hurry up and get a project online. So these are things we're, because of the difficulty we had here, we're very sensitive to. So you can see on the JHEC when we hit those capacity levels, we went ahead and pulled the trigger on the project and made sure it got done on time.

Okay, I appreciate that explanation. What happens if we said, ah, to hell with it, we're not gonna do that? Is there any penalties?

So yes, I believe TCEQ. So if you take the Longwood Basin, so Longwood Basin's a basin that's also hit those capacities.

You're getting ahead of my next question.

Go ahead. But it doesn't have a lot of growth in there. So you are able to say, hey, if I've got an area that's really reaching build-out, you can push that off a TCQ. But if you don't have that situation, you're continuing to grow and you're hitting those, you can wind up in a situation where you're getting fined by this TCQ.

Okay, and as far as, I remember when I first was elected, it seemed like every time the hard rains came, Longwood was having issues with containing itself, and we'd have small but periodic releases of raw sewage into Clear Creek here and there throughout the first year I was here. So with that being said, the expansion and consolidation between Longwood and Berry Rose. Would it be safe to say that we did that to invest in our community, or it was just something that council set up here and said, hey, we need to spend this just for making something shiny and pretty?

Absolutely, it was a long-term investment, and as you mentioned, the Longwood plant really sits right on the banks of Clear Creek, so when we had significant events with Clear Creek rising, we'd have parts of the plant that flooded and create those unfortunate situations. So consolidating that over to Berry Rose, making sure that that is located out of the floodplain and where it should be, and having the capacity to treat it is very key, and that's why we made that long-term investment. And then I would just add on one other piece. We didn't talk about it extensively in today's presentation, but we also have a I&I program, infiltration and inflow, that's very key, especially in our older basins like Berry Rose and Longwood, that we have a pretty aggressive in our CIP to do those. And that's basically because we can basically prove, I think it's about eight to one, 10 to one, The dollars we spend on I&I means we don't have to make those plants larger than they would have to be for those wet weather flows. And really it's an eight to one, 10 to one savings by investing in those I&I projects, which is manhole rehab, line rehab and all those things.

I remember the first year I was here, you had a cypress root that was probably 18, 20 feet long that went from anywhere from about six inches to about 18 inches. It was growing in one of the pipes somewhere right around here, if my memory serves me correctly. And so with Barry Rose and Longwood, is it a safe assumption to say that we needed to do that?

Yes, sir, absolutely. The capacity of those plants, the condition of those plants, with the 60-plus years, 50-plus years, and especially with the location of Longwood and repeatedly flooding portions of that, we were really looking at mandates to do those.

So comments and questions about we should put off this or put off payments for these type things, that would lead to penalties and further TCEQ issues?

Absolutely could, yes, sir.

All right, that's what I want to make sure there. And then, Zach, you had mentioned something about the grant funding, the $21 million. About what kind of timeline do you think we would start seeing anything if we were rewarded a grant?

Is that Jennifer? I'm trying to see who's probably got the best knowledge on that. Joel? Yeah, I think the turnaround on that should be pretty quick. So October, November?

Oh, so this year. Okay, fair enough. I didn't know. I know they had set it up, but I was just curious. The state did. I was just kind of curious to see what... So the plan is to quickly distribute.

We have that on tonight's agenda. And just a little clarification there. While we do have it on there for the 21, because I believe that's the max we could apply for, we're making sure the projects we do apply for are the ones most likely to get us in the funding and hit some of the bonus points. So in the end, we may not have $21 million to apply for, but any of those dollars that come back obviously help the system overall.

Yeah, you'll maximize what we can get for it. Yes, sir. I appreciate that. On the asset reliability, David, I really appreciate your comments there. You know I'm a strong proponent for maintenance in these facilities that we're building right now. If you'd pull up slide 48. It said that Pearland Water is progressing from a reactive maintenance model towards a proactive data-driven reliability program. Just curious, as far as the maintenance on this, if we maintain our facilities that we're building right now, is it a safe assumption to say that we're going to get more life out of it, more longevity out of it?

Absolutely, definitely for the individual components. When you think about a facility, you think about the concrete structure and then the mechanical equipment. Definitely an extension of the mechanical equipment lifespan. Even the concrete deteriorates over time, the concrete structures in buildings. But where we will realize the most significant improvement is the cost of operation, lifecycle cost. The predictive or the preventive maintenance asset reliability program that we're kicking off and launching into will provide a much more resilient infrastructure that will not be breaking down or break down less and predictable breakdowns whenever possible with some predictive analytics.

All right. Thank you very much. And here again, I really appreciate the presentation you all did today. Thank you.

Council Member Echols. Well, Council Member Koza took all my thunder. First thing, staff, thank you for a great presentation. And in the last year and a half, this is the third time that I've gone through a light presentation. first time was through the Pearland University. And if you're here today in this chamber, or if you're listening online, I was one of the first graduates of Pearland University. And if you want to know more about our city, get involved in our city, the next opening, the next class, I encourage you to present a application. And you will learn more about our city than you ever thought that you even needed to know. And so that's one plug for the city secretary's office. Thank you so very much, city secretary, Ms. Francis. That was a great class. Enjoyed it. Now on the maintenance, we're Councilman Koza did steal my thunder. I do have some comments and questions. And the significance of adding equipment to the registry, the significance of the 6,036 fire hydrants across our city, I would see that significance would be great significance upon each citizen when they get their fire insurance. Insurance, Boards of State of Texas, that's one of the questions that's on the application. Is there a fire hydrant within a certain feat? your location so anytime we pull out transit pipe and put in new pipe i encourage our city keep adding fire hydrants that will save dollars later now on the asset reliability 2026 we added 2 946 pieces of equipment to the registry David, could you expound on that just a little bit more upon what occurs when there is a piece of equipment added to the registry? What involvement does that give the staff an opportunity for checks and balances?

Well, these are all pieces of equipment that existed and have existed for years, as I'm sure you're aware of. capturing them, manufacturer, install date, life expectancy, essentially all the nameplate data, and logging them into our computerized maintenance management system. At that point, we can then apply preventive maintenance tasks to those assets that, I won't say they've been lost, but they've been hidden in the overarching we've got a wastewater plant and with with blowers well now we've got information on those blowers with the prescribed or the recommended maintenance schedule and activities to keep them in as new condition or as close to new as possible so now that we're getting those assets uploaded uploaded and and in the registry we can we can then develop those procedures to to keep keep the maintenance up uh you know back in the day when i just had a truck you know i knew every three thousand miles i had to get the oil change you know anymore we've got the light that comes on and it may be 6,000 miles and maybe 10,000 miles depending upon how hard you drive it. We need that light to come on to make sure that work gets done. Not only that it gets done, it gets documented, particularly on this new equipment where we've got manufacturer warranties. We've got to ensure that we get the new stuff in there as it comes on. So the significance of having that asset registry and all the assets in that registry is is we're then able to effectively run an asset reliability program and give you quick assessment of where we're at.

So what it actually does, it increases the life expectancy of the piece of equipment when you're just waiting for a failure before you do the repair rather than do your preventative maintenance. And I applaud you, David, and your team for that. Now, on your support roles, your one new hire, as a businessman with over 110 employees before I retired and sold, I looked at every one of my employees as an asset. And you mentioned right before your closing that you had one new hire for a support role. There's always cost analysis, but yet there's also an analysis of what that cost is going to bring to you. And when you're looking at an employee as an asset rather than an expense, what you get is you get a team that's buying in the program to work together to save money in the future. Would that be a right assessment?

Oh, absolutely, sir.

Thank you so much, staff. Thank you. Looking forward to getting into the nuts and bolts of the budget and see where we can work together to have a budget we can improve for our enterprise fund. Thank you. Council Member Fernandez.

Thank you, Mayor. I just had a follow-up question. When did the surface water treatment plant go online? Was it October of 24 or thereabouts?

Yes, sir. It was October of 2024. Okay.

And that surface water treatment plant provides water to all of Shadow Creek and what additional, what's the service area for the surface water treatment plant?

It has a transmission, you're correct, to Shadow Creek, or sometimes referred to it as 521, and then Kirby. It has a transmission line that feeds to Kirby pump station.

Okay. Trent, several years ago, obviously before my time here on council, we experienced a drought, and it was before the surface water treatment plant, went online, and if I remember correctly, we went on a level one, level two, and it was because we were piggybacking off of the city of Houston, and we relied more on the city of Houston, whereas today, with the service water treatment plant, we're more self-efficient. Can you go over, just so that, refresh my memory?

Sure, and I think we've got a slide in here that depicts that. Slide 18. Slide 18. So where it says peak demand, at the time we had about, we had 30 million gallons a day available, and we were basically running up to about 28, 29 million gallons a day in that summer of 2023. So obviously the next couple of years in the summers, we've had wetter summers like we are this summer, so we haven't seen that peak demand. But had we had the surface water plant online at that time, we wouldn't have had to go to those water restrictions that we did that summer.

Okay. So clearly, the surface water treatment plant has allowed us to be more self-efficient, and we're not going to have to rely on what the city of Houston does because we have our own water sources now.

That's correct. For the Houston connection out at Shadow Creek Ranch. So that's that six MGD. And that also on that chart that showed the cost per thousand gallons was the one that is much, much higher than our surface water or Alice Street or our surface water treatment plant, because we basically pay a wholesale rate over that. So that's the other thing that bringing on the surface water plant has allowed is we've reduced, In that summer, we were running that at the maximum of six million gallons a day. And so we've been able to reduce that down to its take or pay amount, the 1.3 million gallons a day, and not have to pay the surcharge to take more. And if we wound up in another summer where we were hitting that 30 million gallons a day, we would not be reliant upon that Houston connection as we were that summer.

Okay, thank you.

Can we go back to slide number one? No, the top of the top, top. The overview of the strategic priorities. I think it goes without saying that this is a significant topic for thousands of Pearland residents, many of whom cannot attend this workshop, as was stated before. I will say, because this is my first workshop, this is the standard, and given the information that is taken in, I appreciate staff's work and effort to put into this and create a robust conversation with regard to infrastructure, facilities, maintenance, and the very people that work day in and day out to make it able for us to flush our toilets, to drink our water, and to go about our daily lives. So no doubt, fully appreciative. But that doesn't mean we can't get better, and that's why we're here. So as it was stated earlier, I think when people talk about, especially online or the feedback that we get about trusted government, this is extremely transparent. There's a lot of information that's in here. but it doesn't mean we can't improve the ways in which we convey that to the public and the very people that are paying for the services that we're trying to provide for them. And so, as we move forward, in other means or fashions, we really need to consider moving this meeting from 3 o'clock. There's a lot of information. There's different ways that we can do it. I've always been a proponent of town halls. I think we can take this across the the city of Pearland, maybe have one right across the street, another one on the west end at the library for people to engage and understand what it is that goes into everything that they're paying for, because that will help increase transparency for us and really fit into the strategic priority of a trusted government. It also provides for public listening and feedback. I know we got some in online, but still more. If we could, could we go to slide two, please? Manage risk. As we get to talk about the rates, I think in the past where, our electeds, I'll put it as that, our electeds were short-sighted, is that they were narrow in their focus and only understanding what it seemingly means to take into account the things that are put in front of them. We all know that we have environmental factors that affect everything that we do. And so what is missing to me in this presentation are environmental impacts as the decisions that we all have to make when we're talking about investing in our infrastructure and then delaying certain projects. So I'd just like to see a little bit of that going forward in the slide. I can provide some information because of time. I won't kind of dive into that. The next one is slide 10, please. Mission, I would like us to consider, if possible, this truly is something to work towards as we try to enrich the community, protect our environment through superior delivery of water utility services. But there is a extremely growing trend of our ability to afford this. And I would just like and ask staff to somehow incorporate into or modify the mission that puts it and incorporates residents as well in our ability to pay for the things that we're consuming and using. Because if we can't pay for water, we can't invest in anything. It doesn't matter that we have the best processes and things available. If a resident can't afford the water and they can't pay for it, And what good does that do our community? Slide 13, please. Maybe I missed it. It's the risk, the one with the risk analysis. 12. Thank you. So with this one, excellent. This is great, great information. What I would like to see, if possible, either footnoted, these projects that are one through six, what were the assessments made by the teams? What were the factors that went into ranking and ordering these risk assessments? And then also, what it all comes back to from a resident perspective is, how much is it going to cost us? If one is facility resilience,

What kind of cost impact is that going to look like?

And I don't want to get too much into it, but when we get into the billing, because those are the things that we're going to have to decide if we go out for bond or put out stuff for projects. Residents have to determine, is this feasible for me right now based on the load that I have to face with work and job and everything else and family? So with this risk plot, I just think it's great. we could get better. And so please don't take it any other way than just trying to understand how we can communicate this and be a bridge between what the quality that exists with the staff, the department, and managing our water to the public. Next thing is slide 16, please. It was mentioned, but I'd like to see if possible, really understand where the water would be able to service. Because it was mentioned like the new surface water treatment plant, service is an area of Pearland. And I think for some residents, they may get probably confused a bit or need more information. If we built a multi-million dollar facility, who is that used to service and how is that gonna benefit us? Because for example, some of the areas that are highlighted the one on McLean at point nine. Are those residents in those areas in need of additional water? Do they need capacity? Those are questions that I think would really help us to understand how Pearland is positioning itself to secure water rights, secure water for the future of our residents. Slide 21. Excellent. Excellent. I think Council Member Koza said this. When looking forward, I think what the City of Pearland does is really, they do, you all do a great analysis. in understanding where we are, where we need to be, right? And then the rest of it comes on accountability to the people that are elected to move forward or stop or pause on certain decisions. But securing these rights and, I guess, combining these agreements to a long-term contract, I think, puts us in a really great place. So I do want to say that. Hands down, really, really great work on that. And then slide 19, maybe it was, so securing, Mr. Epperson, when you mentioned thresholds, I know we talked about it for wastewater treatment. Are there any thresholds for water?

I believe is it a gallons per capita per day peak demand that drives what we have to have for supply?

So the TCEQ looks at your peak demand, peak demands of the system, and that's what they want you to design towards. There's lots of gray in that. It's not as clear cut as wastewater. If you have a A 5-NGD plant, at 75% of that capacity, you must start, begin design. And then at 90%, you must begin construction so that you'll be complete.

So there's not anything that straightforward. It's a lot more grave.

in the water production. The biggest rules that they have on that is that you have sufficient storage capacity for firefighting. So I was visiting with the new chief just now about the ISO-1 rating that Pearland currently enjoys and it goes to the insurance rates that the council mentioned earlier. But it's more around the storage capacity that you must have And it is gallons per capita, and it's so that you have reserve and you have firefighting capacity.

Thank you for that clarity. Slide 19. I just want to note that when it comes to demand, There are a lot of factors. One of them we'll get into later. In this presentation, we talk about cost. And I'm not sure how we incorporate it, but in our future either assessments or analysis, I think perhaps if there's a weighted factor in the equation to understand what our model will look like, perhaps put a weighted factor of cost. Because water is a product that we consume. And consumer behavior is triggered by how much I'm going to pay for something. So for example, if eggs go up, people buy less eggs. And there has to be something said about the cost of water in Pearland that will trigger use of either businesses or consumers. So just an adder, maybe in some type of model that we can also incorporate some kind of weighted rate of future use as cost as an impact, if it isn't already. And then I believe it's, I'm looking at page 43. It says of the slide, not this one, it's the reflection bay.

Okay.

So wastewater, we know, is driven by use. Over the course of 2006 to 2020, I would assume that there was developments that were approved. Is that correct? People just didn't show up here and build or decide to live on open land, meaning that councils prior had to plan or major developments in the area for us to be able to get to where we are. People just don't move here without houses or a place to stay or infrastructure to use. So the fact that we continue to rely on mandates or use that as an excuse as to why we arrived here, to me, is self-defeating. And we have to face the facts that we had poor planning to get us to this point, and now we're suffering the consequences. And the residents here are feeling it. They're feeling it. To continue to put up this facade like we had nothing to do with that as a governing body, to me, is self-defeating. And I'd like for us to take responsibility for that as we continue to move forward. Because we're here now. I wasn't here. I didn't cause it. But I'm truly, truly, truly working to help us find a solution. So thank you. Let's move on to the billing. We can move on to the billing. We can ask your questions later. Thank you.

So, maybe I can just go through what happened on that Reflection Bay plant. We were growing rapidly. We did hit the 75. We started the design work, and the design work takes a couple of years. That growth, was really growing, it started to grow even faster. And so we did get that plant done, did not cost us any more for not having that done when we hit the 90. And so yes, we were growing fast, but none of what was reflected there actually cost any more to get the plant done. I think, Rachel, you ready? All right, we'll go through the budget now.

Thank you. Good afternoon, Mayor and Council. We'll be discussing the Enterprise Fund budget here, and then we'll talk through some of the future dates for budget discussion number two. So the Enterprise Fund covers our water and sewer operations, our debt service, and our solid waste fund. This slide indicates our enterprise funds by strategic priority, including resilient finances and sustainable infrastructure, which includes our Pearland Water Department, other requirements for debt service, and a small portion of EPW. Our enterprise fund debt expenditures go towards paying our debt service and our principal and interest payments for debt have increased by 2.8 million from the fiscal year 26 amended budget. So there are several factors that drive the changing rates across the water system. This includes some revenue factors as well as some expense factors. On the revenue side, our rate model is a three to five year average of different factors, including wet and dry seasons. So, This helps smooth out some of that year-to-year volatility. During our wet years, we consume less water and it results in lower volumetric revenue, which leads to the pull-down of the multi-year average. However, in dry years, consumption increases and boosts revenue. Again, but because the model uses multi-year averaging, those are moderated over time. Additional sources of revenue include impact fee revenue, which is influenced by development activity. So we get higher impact fees based on development that occurs. And this can be an inconsistent source of revenue as it does depend on the development. On our expenditure side, rates are driven by operating expenses, including rising costs to purchase and treat water. inflationary impacts on our labor materials and contracted services one of the primary drivers has been our debt payments we have made significant investments in our aging infrastructure over the past couple of years and so that has an impact on those payments over time additionally our system growth demands new lines plant upgrades and lift station rehabilitation In addition to the revenue that we bring in through our fees, we also have offsetting contributions, such as the $30 million contributed by the EDC for 518 and lower Kirby projects. This offsets the amount of debt that the city has to sell and then pay for. This is similar for the grant funds, so if we do receive grant funds, it will offset debt that we need to pay for in future years, probably beginning in FY28. So those infrastructure projects that are impacting our rates include the ongoing projects of the Berry Rose and Longwood, as well as additional lift station rehabilitations. Completed projects that are impacting our rate changes include the JHEC wastewater treatment plant expansion and the surface water plant. Altogether, those equate to over $500 million in investment in our infrastructure within the last five years that we have to pay for going forward. Our rates include a base rate, which include 2,000 gallons of water. It's charged monthly regardless of usage to all of our billing customers. It's based upon their meter size, and it covers a portion of the fixed costs and help keeps rates stable year round. The volumetric rate is based on the amount of water used above 2,000 gallons. It uses tiered pricing to encourage efficient water use, and it does have a different rate structure compared to residential, commercial, and irrigation. And this volumetric rate also helps cover those fixed and variable costs. This slide shows a history of rate increases in Pearland from 2009 through the proposed 2027 12% increase. So the proposed fiscal year 27 revenue changes. We're required to bring in enough money to pay for the debt and operations of the enterprise fund as it is a self-sustaining fund. Increased consumption and new connections can help to some extent But the only other way is rate increases. And so these are the main way that cities bring in the funds necessary to fund enterprise fund. Our policies indicate that when we have issued revenue bond debt and have outstanding revenue bond debt, we are required to have a revenue bond coverage ratio of 1.15%. And our enterprise fund cash equivalent operating reserves must remain at 15% or higher of the total operating expenses. So for fiscal year 27, an average household using approximately 6,000 gallons of water will pay an additional $13.70 more a month for an overall 12% rate increase. This slide shows some sample bills with the proposed 12% rate increase across different types of connection types, residential and commercial, different usage and meter sizes. This is an additional comparison slide which shows a residential five-inch meter which uses 6,000 gallons of water against some of our comparison cities. Included are the last date of the updates for the rates as most cities are going through their budget processes now. So this is the most current information we were able to locate. We have a historical comparison with two of our more local cities, Manville and Alvin, over the past three years, so fiscal year 24 through 26, including their water, sewer, and garbage. And then this slide includes their, sorry, go back one. This includes their base rates across water and sewer for residential and commercial, as well as any volumetric rates up to 6,000 gallons. This is an overall snapshot of the enterprise fund operating income statement for fiscal year 27. It does reflect the 12% proposed increase and the expenditures necessary both to cover debt, which is reflected in any other requirements, and then the operating expenses you just heard about for apparel and water and for utility billing. Revenues do not exceed expenditures and approximately 7.3 million will be utilized from existing cash equivalents. However, the proposed revenue and resulting ending cash equivalents do meet bond coverage minimum as well as 15% policy requirements. For supplementals in fiscal year 27, there are two proposed supplementals, both fall within the sustainable infrastructure strategic priority, and these will be two additional FTEs, a compliance coordinator with vehicle and an inventory coordinator with vehicle. The enterprise fund debt statement is shown here. This is the fund where we make our debt payments. It's funded by a transfer in from the operating fund, shown there, and also has some interest investment revenue. And the only expenses that occur out of here are principal and interest payments, as well as some costs associated with those payments. This slide shows last year's adopted rate model where we adopted a 5.5% rate increase and projected a 16.7% rate increase necessary to meet requirements in fiscal year 27. Last year we revisited our financial policies and made changes to our fund balance minimum and cash equivalency policy in order to reflect savings for our residents and rate payers. And so those changes are reflected here. These next three slides include three different scenarios for rates. All scenarios include similar revenue and expenditure growth based on consistent factors. The revenue changes based on the rate change proposed. All expenditures include anticipated O&M and debt costs related to the five year capital improvement plan presented in June. There can be very There will be variation in future years based on the conditions discussed earlier, such as wet or dry years and changes in the capital improvement plan based on schedule. These scenarios are meant as a forecast for planning purposes only. And so in the recommended scenario of 12% increase, the city continues to meet the policy minimums for all five years. It requires rate increases of up to 13.5%, with the lowest potential rate increase in the future years being 3.2%. The second scenario is the minimum rate scenario where the proposed fiscal year 27 increase is 9.9% and the average resident would see an increase of $11.31 a month. And this reflects the lowest possible rate increase for fiscal year 27 and for the future years. And it does allow for all policy minimums to be met over the five year period. It results in a greater overall cumulative rate increase than the original recommended scenario. The final rate scenario is the descending rate scenario where we do propose a 12% increase for fiscal year 27, but the increase is reduced consistently 2% over time. In this scenario, we do not meet policy minimums in all years. In fiscal year 28 and 29, as well as 30, the policy minimums are not met. This would require a change to our financial policies and would also likely result in a debt downgrade and a ratings downgrade. And so it would cost more for our debt issuances over time. We have modeled those three scenarios here, so those are the three scenarios next to each other. On the left is the annual increase by fiscal year, and the right indicates the cumulative rate increase over the life of the five-year scenario. The recommended rate increase of 12% in green reflects the lowest cumulative rate increases, while the descending scenario results in the largest cumulative rate increase. All scenarios here reflect the ongoing operating and debt expenditures reflected in the five-year CIP. However, even without any additional debt and freezing operating costs where they are, as well as revenue, we're required to increase rates over 20% over the next two years in order to pay for existing capital improvements that have already been made. This slide indicates the projected average monthly bill by scenario both over time and the estimated increase per year. The next two slides show the different scenarios as compared to the fund balance minimum policy. While this slide shows simply that the minimum and recommended scenarios both continue to meet policy across the five years, the descending scenario does not. With that in mind, the second slide shows that the fund balance minimum and the dollar value associated with it, as well as the historical maximum fund balance variance, the variance that can reflect a decrease in revenue as well as unexpected expenditures, and this is an attempt to illustrate potential risk against the model. So these are historical variances, and so you could see that Against the fund balance policy minimum and that's kind of what that cash equivalent or fund balance is meant to protect us against So this just shows some of the potential risk of each of the three proposed plans Finally we have two extreme scenarios that are here for illustration only there is bite the bullet where we are essentially seeking to raise rates to meet the need over immediate need and And so that reflects a 25% increase in 27 and then low increase just to basically match inflation over time and kick the can Where we're anticipating meeting fund balance reserve policies in year five, but not in any other year Neither of these is recommended they're here just to illustrate the different ways that changing rates can impact the model over time and In addition to our enterprise fund, we do have our solid waste fund. This is run in conjunction with Frontier Waste. And so there is a 3.8% rate increase recommended for 10-126 as tied to the consumer price index and the table below. And so this shows the updated residential rates, both for current fiscal year 26 and proposed 27. Finally, we're happy to provide any additional information and make any changes. We will be coming back for our next budget workshop on August 10th for discussion of the general fund and as well as August 24th before returning for budget adoption on September 14th. Enterprise fund rates are adopted with the non-development fee change schedule. With that, I'll turn it back to Mr. Epperson for questions.

Back to you, Mayor and Council, for any questions. Sure. And Mayor Pro Tem, you've been holding your questions.

Thank you so much, Mayor. I appreciate it. Thank you. A great presentation. So I just want to make sure that we've exhausted all our options to reduce the financial burden on our citizens and our businesses. So with that being said, I guess the question goes back to you, Jennifer. If we were awarded the WSIG grant, how would that offset future water rates? I know we may not be the 21 million we may not receive, but I know that we have a strong possibility of receiving some of those funds.

Okay, I know I'm not Jennifer, so nevertheless, probably better that I answer that one. So it's on the agenda later, and we're asking for approval to apply for up to 21 million, which is the maximum allowed under this grant programme. I'd suggest that it's incredibly ambitious for us to assume that we might get 21 million. However, Over the last week or so, we have been identifying a number of projects which are almost ready to go, and that's part of the criteria that they have to be shovel ready. So we're looking at about $9 million worth of projects that we may be able to apply for. That's not even to say we'll get that. However, let's be optimistic and assume we get $9 million. That would avoid $9 million of debt. That won't impact next year, but it will impact later years. And that could be about three quarters of a percent in each of those years if we got the $9 million.

Thank you. So, my other question, and I think, Rachel, you may have answered it on page 21. I was trying to think about can we allocate that increase over, you know, a three- to four-year period so that that burden for that citizen is that they're not increasing that 12 and taking that and allocating it over a three-year period. And what does that mean for our fund balance? How does that affect our policy and our bond rating? So, I don't know, you know, that was one of my questions, and I think you answered it. But also, I think we are looking at hiring two new FTEs, if I'm not mistaken. So, how does that look? Can we postpone that? Can we hold off on that? And if we did, how does that impact the water rate? So, those are some of my questions. Thank you.

I'll let David address if we can postpone it from a logical perspective. But from a financial perspective, it takes about $870,000 to change the rate 1%. So those two positions are 200 something. So that is not going to impact it even half a percent, maybe of a quarter percent. I can say that the minimum scenario, which is 9.9, we could lower it to the 9.9 and continue to meet all of our fund balance reserve policies and things like that. It does increase to $9 million. Our change in net position, we're negative nine million in revenues over expenditures, but that doesn't, we still do meet all of our policy requirements.

So, if we do the scenario of 9.9, basically we're utilizing a majority of our fund balance, is that what I'm understanding? Correct. Okay, thank you.

Council Member Byron, all I ask you to hold it, and so please do continue.

Comment I wanted to make previously was discussing having the workshop at 3 o'clock and discussing these items in reference to transparency and all those conversations, because that is a strategic priority for us. I want to make sure that the general public understands that prior to us making any decisions on these, these rates will be discussed in regular council meetings in the evening, in our 630 meetings. These are workshops. We don't make decisions here. We intake input. We give feedback. We get changes. But this conversation with the water rate, drivers of the water rate, tax rate in the future that will all come up in our in our regular 630 council meeting so i just wanted that to be clear for the general public there's there's no effort by council or staff to try to not be transparent with the information and the content that we're providing but we can't do everything in a 630 council meeting so we have all kinds of workshops three o'clock four o'clock joint sessions with planning and zoning so i just wanted it to be clear, and you pointed it out on slide 31 of this part of the presentation, the next phases of this overall process, that there are dates that these additional conversations will come into play. So again, I wanted the public to know we will discuss this in the evening when you have the opportunity to join us. But I do understand the question to say, why do we do this in the middle of the day? And it is challenging. It's challenging for us to be here as well. But I wanted that to be clear. Questions that I have related to our rates in general. There are fixed drivers, and you put them up there. Slide 16, I think, is what showed some of these rates. And yeah, well, that would work, right? So what happens for the public to understand. If we fail to meet our fund balance policies and we fail to meet our bond coverage ratio, what happens? And one thing that I think would be important for us to see as we have these conversations is there's a trade-off. If we don't set these rates at the responsible levels, And I believe we should set our rates at the lowest responsible level possible. But if we don't set them at the appropriate levels, there's going to be an offset on the bond, the debt service side. Correct me if I'm wrong, staff. So what does that look like? I'll speak to that a little bit.

So it's a bit of an unknown, but we did talk to our financial advisor, and he's pretty confident in the downgrade. We assumed that that would be about half a percent on our future interest rates. And so we ran that as a model through 2061, what that additional interest would be. And through 2061 on our future plan debt issuances, that's about $28 million in additional interest rates. payments just on the water and sewer side. So that ranges anywhere between $300,000 and over a million dollars annually that we estimate that that might cost us all other potential economic influences aside.

So there's a rate of diminishing return that comes in there at some point. If we artificially deflate the rate, then we're going to have a potential credit, I'm summarizing to tell me if I'm thinking about this correctly. We'll have a potential credit downgrade which will result in a interest increase and therefore our rates are gonna have to go up to cover the debt service side. Is that a fair summary?

Yes, that's a very fair summary. The other equally worrying aspect of this is that any downgrade would likely impact all our debt, not just that service by the Water and Sewer Fund. So we would see a consequential impact on the general fund as well with increased debt costs there.

Fair enough. My other question was, I understand that there, we all understand that there were decisions made prior to all of us being here that drove us to where we are today. If prior councils had not chosen to make these capital investments, what were the potential impacts? What can the TCEQ do as far as leveraging penalties against us if we're not meeting their standards?

So I think maybe a good example is what Houston's dealt with many years, many times over, is that they've been under what's called an agreed order with TCEQ, which forces them into spending, now they're larger than us, but spending billions of dollars in their water and wastewater systems for not meeting some of the TCEQ requirements, not having the capacity, not addressing overflows and things like that.

Does the TCEQ have the ability to fine us if we don't meet their requirements?

They can fine us and then force us to go into an agreed order, which we would agree to spend basically the money that we have already planned for and manage to make sure we don't run afoul of the TCEQ. We'd just go into a mandatory agreement with them where we'd have to spend those dollars anyway.

If I could add, in addition to any potential enforcement actions, what we've seen from some of our neighboring municipalities or municipalities in the region, they also have to adopt building moratoriums, which means that any vacant land that you have will continue to be vacant, and you cannot build on that land to reduce your assessed value. So any projects that may be in the works, any property owners, who think that they're gonna be opening up in 18 months may be delayed. So the building moratorium, whether that be because of lack of water or lack of sewer because you're not increasing your capacity, can have a detrimental effect, and that would be one of those additional consequences.

Thank you for that. My last question is on this slide 16 here, and I think Member Chavarria spoke to it a little bit. When you look at... the reserves year over year, essentially the way we were able to get our water rate increase down to 5.5% last year and potentially down to 9.9% this year is we're buying it down with our excess. Is that correct? Okay, so we won't be generating any excess. The more we suppress the rate, the less excess we can generate. Therefore, year over year, the less we can buy the rate down. Is that fair? Okay, and on this bond coverage ratio at the bottom here, FY26 projected versus FY27 budgeted, our minimum is 1.15. So this is showing at 12%, at the proposed 12%, correct? And it's showing a 1.66 bond coverage. If we go to the 9.9, does that take us to 1.15? I know it says it meets our policies, but what does it take us to?

I believe it takes us closer to the 1.15. We're just about there.

Can we jump to that slide that shows the three different ones in relationship to the fund? If I missed that. Keep going.

I apologize.

Keep going. This one. Go back. So this, the black line, is the fund balance policy. So you can see the three different scenarios. The minimum, 9.9. in FY27, which is followed by, I think, a 17 plus and 28, rides the line.

And that line is the 1.15 coverage ratio? That's ultimately what I was asking.

It's actually the 15% of the operating fund is the actual fund balance policy. The other is we have to have at least 1.15 to cover our bonds. But 15% of the operating fund is the one that actually drives it.

So it's two different metrics. This is the one that's driving where we are today.

At 9.9, we barely meet it. We'll meet it, to Member Chavarria's point. Okay.

Thank you. Council Member Cozen.

Thank you, Mayor. So, Lawrence, when you were talking about a building moratorium, is that what's similar that's going on in Comro right now?

I wouldn't limit it to Conroe. I think there are a few municipalities inside Montgomery County that are experiencing that.

It's the only one I'm aware of because I know they had an issue where a school wanted to be built and it got into a pretty ugly back and forth where Where a school got built they owed about four million dollars and it couldn't be built Or it couldn't be opened without having a payment to the city.

I don't know how the Workout was at the end, but I know there was a lot of issue with that And I would just say that that's one that I've heard about I don't know the specifics of their building moratorium, but I do know that that is something that has happened within the region because of lack of water or ability to treat the sewer.

Right, right. And that's one that I'm aware of, so that's why I bring that one up. As far as the 9.9% increase, I think Member Byrum and Member Chavarria pointed out, and I just want to make sure, That puts us at the minimum that we can go to keep our 15% reserve and be okay with the bond ratings so that we're not downgraded or any negative impact.

That would certainly help the argument, but I would warn you that the bond rating agencies who we're talking to next week will query what our plans are And I would be suggesting to them that we may be looking at doing this. I can't guarantee that they won't give us a negative outlook as a result of that. That may not affect the actual debt costs in the long term, but it could put us on a negative outlook. I'm just warning you now that could happen.

So you're saying the 9.9 could put us? Yes. It is a possibility?

It is a possibility.

Okay. But when you say negative, just a negative comment or a downgrade from what is our current rating?

So it may not, as I say, it actually may not drive the rating down, but when they put us on a negative outlook, it just...

Right, it's a comment. It's a comment. It's a comment. That's all it is. I mean, it's a comment. It's not going from... AAA to AA or AA to single A, any of those type.

And I'm just letting you know, bluntly, I could live with a negative comment, but...

Right, right, right. Hopefully you can. That's what I wanted to clarify, that it's not a downgrade from AAA to AA, AA to single A, anything along that line. It could be a negative comment, which... Could that impact? Yes. Could it not? If it does, it's normally minimal because it's not at the essence of what you're doing. You are doing what you need to. It's just you're doing the minimum. And so, with that being said, you know, with Member Chavarria and Member Byrum, I would be in favor of the 9.9 at that rate because as the, I think it was slide 21 showed, that we are meeting our obligation, or no, excuse me, I'm sorry, 22, where it had the black line and what was above and what was below and that we were meeting at each, yeah, there we go. Excuse me, 26. So, with that being said, it does show that we are meeting what we need to at the 9.9. And, you know, go from there, that's what I would be in favor of. Thank you.

Council Member Kaye.

Thank you. Rachel, I'm sure that you addressed this, but if you took all FY27 through FY31 and just gave them all the same rate increase, is that possible?

We didn't actually model that one out here. We have the descending rate, which is just a way to moderate it over time. You can kind of see it in some of our extreme scenarios where we raise the rate severely in fiscal year 27 and then have a steadier rate increase over time. But no, we did not, well, I'm sure we modeled one in an exercise, but we do not have one shown here that is just the same rate increase over time.

I did the math quickly. It's 7.62 if you just added up the numbers and divided by five. I mean, I'm sure that's grossly inaccurate, but... just what I did real quick. And I just was curious if that was even something that would be possible. And you said, because looking at FY28, yikes, that's rough. And then you keep saying policy requirements. Are these the policy requirements we have set ourselves?

The 15% fund balance is it Unbalanced policy is our internal policy, though 1.15 bond covenant ratio is written out in the bond covenants.

Okay, and then one other thing. I mentioned, I asked Trent about mentioning this. Is there some kind of, and I know it would have to be next year, but is there some kind of rate structure we could do differently for seniors? in the future? Is that something we can talk about?

So I think that would be something that we could look at in the future if there's a desire by the body to look at that in a future year. I think where we are this year, that would have to be built into the rate model. We'd have to look at how that impacts. You know, obviously, if you reduce the cost for somebody, then the cost goes up for others. That's what I'm wondering about. Yeah, so I think if we got that direction, we would look at that.

All right, thank you.

Councilman Fernandez.

Thank you, Mayor. I guess my comments is I'm concerned about if we were to tap into the reserve or the fund balance minimums, it's going to affect our rates like it's been mentioned. Do we know... Victor, you mentioned that y'all spoke to the rating agencies and that's just what they, is that what they're saying or that's what we're thinking?

We haven't spoken to them yet. We speak to them next week. And these are the questions they ask. They ask us in detail, what are your plans? Are you continuing to apply your fund balance policy? Are you drawing down your fund balance? That's the sort of thing that they ask us about.

Okay, so I guess there could be a follow-up where we, because like members of council mentioned, I mean, the 9.9 keeps everything flat. I think that's one option. If we were to tap into it over the next three years and then rebuild it, you know, or something like that, what would that look like? Is that going to drop the rating that much more? You know, we're assuming, but these are questions that I guess could be asked. Because again, if our objective is to try to go as low as possible, you guys have stated 9.9. And so I'm just curious if there's a balance. If we were able to go into the reserve, if you will, for a couple years and then build it back up, does that hurt us that much in the rating?

So I think that's the descending scenario on this page. And that is the one. And so, while we haven't talked to the rating agencies, because we haven't had those calls yet, we did have this discussion with our financial advisor, John Roebuck, and what he, looking at these, what he would expect the reaction of the ratings agencies to be. And it was on that descending one where he basically warned that that could impact our ratings, and not just the ratings on the water and sewer side, but across the general fund as well.

Well, if it's going to affect our ratings, then I would be in favor of that 9.9 because I don't want it to affect other things moving forward. Thank you.

Mayor Pro Tempore. Thank you, Mayor. So I also would, I'm in favor of the 9.9, but I also would like staff to revisit the two FTEs. And then how does that impact budget with the 9.9?

So, David, could you walk us through the purpose and need for those two FTEs? Can we jump to that slide?

Absolutely, Mr. Trent. The two FTEs, one is an inventory coordinator, and it'll be aligned with the asset reliability team. And it has mostly, or it was actually initially triggered by our somebody with a group 65 North or 65th North, which is the audit company, and there was a significant finding with our lack of inventory management. And in order to TO GET THAT COMMENT OFF, MOVING FORWARD, WE NEEDED A DESIGNATED PERSON TO WORK WITH OUR CITY WORKS, COMPUTERIZED MAINTENANCE MANAGEMENT SYSTEM TO TRACK OUR INVENTORY OF EVERYTHING FROM PUMPS, MOTORS, SUPPLIES, ANYTHING THAT WE HAVE IN INVENTORY ON HAND There is no method other than maybe some spreadsheets and just what's in the heads of the guys out there doing the work. They know where the clamps are. They know where the pipes are. But there's no official inventory of those items. And so we've got to get that addressed. And so that's what spurred it. and there are other things that support the need of that as well. The second is a compliance coordinator designated strictly for water and wastewater compliance. Currently we have an environmental group that works and supports us with compliance, but they also have backflow, industrial treatment, fog, and the other components And it would be a full-time staff member to work with all the divisions and really primarily the wastewater division. One of the challenges we have in wastewater is it's ever-changing. It's an environment that you must maintain a balanced biomass to effectively treat the wastewater. In order to accomplish that, there are certain analytics that are needed to know where you're at and what needs to be done and adjusted to maintain compliance. Currently, all we have is a contract lab. We do not have an in-house lab to run those process control samples. So we send the samples to a contract lab, and we get the results two weeks later. By then, the horse has left the barn. we would set up a lab and this individual would ensure that we're collecting the process control samples, help ensure that the analysis, analytics are being returned, entered into our new process control software that will then help guide the operators to ensure compliant operations. Now, we've never had one. It's like we've never had an inventory coordinator. But those are the two positions where we, similar to what I discussed in the presentation about our risk analysis, these were two risks identified last year, and they were researched and determined that this was the best solution. So we waited until this coming, or this current budget year, in order to put those supplementals in. Will we survive without them? We've survived without them for... long as we've we've existed is it recommended no and I and I think Rachel pointed out it was the two positions combined would be a quarter percent of the rate increase now it's a so thank you I appreciate it David just go on record when the staff would know I am in

favor of 9.9. However, for future years, is there any way we can look at either some consolidation or lowering our debt ratio percentage of our interest to Bring down the rate increases for the next several years, the next four years.

So every year we have our financial advisor run that analysis to see how much we may be able to save by refunding debt and reprofiling, essentially. Part of the issue is that some of our historic debt was taken on at very, very low interest rates, so it actually harms us to refund it. But we will continue to do that analysis every year, and if we can squeeze anything out of it, we will.

Any other questions? So, I know I don't technically have a vote, but it's been asked that, or said that we're looking at 9.9 increase as opposed to the staff recommended 12%. I would urge my colleagues to really consider holding rates given the nature of where we are in our society. It's as if nothing has happened in the past three to four years outside of how we're operating. We just had major federal legislation and the big, beautiful bill where now taxpayers, especially those, many of them in our communities who are having children go off to college, have more burdens in what they have to pay versus student loans and debt Insurance rates are going up. These are added bills for all of our residents. I really understand how important it is for us to maintain our debt rating. However, I think this is just a delayed... Keep it on that slide, by the way. Thank you. It would... This is just what we're experiencing are the delayed effects of how and why we arrived at this particular situation with our enterprise fund and the assets and the different debt and the structure that we've taken on. I would just ask, Again, it doesn't hurt my feelings, but the terminology used on this particular slide, I would just ask that staff be a little bit more thoughtful for some of the residents as opposed to the terms where it's bite the bullet, kick the can. There are many residents, many of whom I've spoken to directly. We've gotten some feedback that they are running their ACs at 77, 78. working two and three jobs, and then the increase on a water bill can heavily determine which bills they decide to pay. We know that the cost of childcare is going up. So all of these things, I think, really should be taken into consideration when we talk about water, which is something none of us can live without. None of us. It is a required requirement. fee that we have to pay. So, I heard it was mentioned that part, I know these investments came on and the requirements as far as rate increases to maintain our credit rating. I would ask council to not weigh so heavily on our credit rating and our borrowing ability because there are things in the future that we could look to do and expand so that the cost of what we're trying to do isn't fully felt by the residents and can be passed along to future developments, future water users, so that the stress of this rating downgrade, I know it sounds bad because none of us want bad credit, But we just, I think, should really consider, instead of kicking the can, as better assessing where we are today versus where we were yesterday. Every situation changes. Every year, the scenarios and the things that impact our bills and what we pay our water This is what we're deciding when we sit here as a body trying to understand how we should increase rates or make decisions for our residents. So I really just want us to fully understand what I believe residents are telling us, that they are feeling it. And significant increases, 9%, 10%, 12%, It's impactful. I'm not saying that next year we won't have to incur this burden to pay these rates, but what it can do is give us as a community, as a city, an opportunity to communicate that to the people that are utilizing this water and to help them better plan for their own lives. for the next year, we can roll out a campaign of communication to make sure that people really understand so that they can plan accordingly to make adjustments to better understand the decisions we've made to help make their lives better when it comes with water and wastewater treatment. So those are my comments. I just wanted to make sure that they were here. You heard from my fellow colleagues up here about their recommendations for the 9%, but I would just ask, even in the next meeting, if it's possible, to see what the impact would be if we hold our rates. That's all I have. Any other questions or comments, Mayor Pro Tem?

Thank you, Mayor. So can we have the scenario of the 5.5 and then have that discussion with our financial advisor of what that would look like as far as bond ratings?

So say that again? Can we have the scenario? 5.1 as we increased last year, or hold the rates where they are today? So that would be a 0% increase.

We can share that in our memo that we. If we go to zero, we'll have $134,000.

So we will have.

Not only ratings impacts, but we will have next to no cash.

Yeah, so we will have exhausted our fund balance. So if this were a private business, we would be going bankrupt the following year.

Then there was another question. Thank you for saying that. Okay, so would it be possible then to run it as low to no increase as possible? Then the question about the policy, I think the 15 percent, I heard it, but I wanted to make sure it was clear that that policy was self-imposed in addition to another requirement. Was that correct?

you have a policy to have 15% of your operating fund in a fund balance. That's the city council's policy. There's a separate requirement for existing water and sewer revenue bonds. We no longer issue those. So these are for older debt that we still carry to have the 1.15 coverage. But as I said, the controlling factor is the 15% fund balance.

So council could theoretically vote, I think it was in here, to lower the threshold as far as us making that decision. Yes, you could. That is a tool that we have.

That's a tool, but it would impact our bond ratings.

Correct.

I think asking for a minimal increase is really what's shown on the screen here today, or here in the screen in the kick the can. If we ran that down to a 3% for FY27, we're looking at 22, seven and three and 11 and a half over the next four years. And we've basically bankrupted the system to where in 27, we'd have a 5% fund balance and we would have zero fund balance to deal with any emergencies, any contingencies or anything for the next three years before we bring it back to 15% five years from now.

Is there a scenario that shows where I would not go bankrupt, like as little as possible?

I think if we go back to that, to the 12% descending, that's what that is.

There's no model.

Is that the graph?

So go to the graphs for this. One more. One more.

Well, you just had it. Go forward. Right here.

So here, the orange, the descending, would have a 12 percent increase in FY27, and then you can see we dropped below the 15 percent fund balance policy for three years before we get back up to it in year five.

My point is, you showed an extreme in one graph, and this is a more relaxed. How can you get it as close as possible without bankrupting the system? That's the ask.

I would say this is that.

This does not account for increased debt payments. It's not about a credit rating. It's about the interest rates we get charged on our bonds if our credit rating changes. Correct. This doesn't account for what our increased debt payments would be. We don't know that.

Correct.

And we won't know that. At a minimum, we'll know that hypothetically from Robo in your conversation next week. But we don't really know what that impact would be.

Well, that should be brought back when we go to end discussion. I mean, we'll have another shot to be able to talk about it. But I mean, basically, at the 9.9, we have consensus. It shows that's what we're doing that's most fiscally responsible. Going anything beneath that, all we're going to do is be a detriment to what we do.

I think when we use terms as most fiscally responsible, it's all relative. But I do understand that council has made an indication that the majority of people up here want to proceed with a 9.9. I believe so.

Mayor, I wanted to ask just, Rachel, is there any way to look at what it would be like if it was a more balanced rate increase across through FY 31?

So we tried it at 10% a year, and that did not work. So the descending was the compromise where it starts at 12 and it goes down, but we did not find a percentage that would be consistent over all five years and still meet policy requirements. So because of the variable needs of the system, I don't think such a rate exists. But if you do this descending scenario, you do drop below policy, It actually has, I think, one of the higher cumulative rate increases over time. If you do the 9.9 over time, it's only 0.3% higher than the recommended 12. It just has more rate volatility year over year. So going from 9 to potential 17.5 and then dropping down into the 4 and 3 range.

So just for clarity, because we can run more scenarios if that is the wish of the council, is there a consensus, however, for us to look at the fund balance? I haven't heard it yet.

I think the consensus is on the 9.9 and not looking at the fund balance, exposing us from a rating standpoint. And just to address why a kind of a flatter rate over time doesn't really manifest in something that works, is that in FY27 and 28, we're still taking on significant debt. to complete the Barry Rose project. And then after that, our debt sales really moderate and drop significantly. So then in those outer years, we see the smaller rate increases. And I think this is key, the bottom right-hand piece of this showing the cumulative effects of the different scenarios over the five years. The recommended is at 38.1. The minimum, 9.9, is just slightly higher than that. But then, you know, as you do the descending, or really kinda as you push things further into the future by not adopting rate increases that support the minimum fund balance, that just gets higher and higher. So that's at 40.3 over the five years.

That's provided we have no solutions in working to figure out other ways to make this work, correct? That's just current state and information we have today, correct? That's all you can go by, yes.

That's based on current assumptions.

Right, exactly.

And I don't foresee in the next five years that there's any major changes that'll drive our revenues to make any, especially in the first two years of this. Yeah. Where the greatest rate pressure is, there's nothing that's gonna change significantly to move the needle.

Nope, not disagree. Okay, any other questions? Nope. All right. So just want to real quick, keep it there. So if you could just keep that up real quick, because I know we talked about a lot of different things. And staff, just again, just reiterate this before we close out and move on the dates. Just for the general public.

Sure. So on August 4th, we'll have our full proposed budget filed. It'll be available online, and there will be hard copies in libraries and in the city secretary's office. August 10th will be our budget discussion number three, which will primarily be focused on our property tax-backed funds, our general fund and our debt service fund. We'll have budget discussion number four on August 24th, which can cover any fund you would like. We'll be back on September 14th for the first reading of budget adoption, our property tax rate, and any fee changes which include our development and non-development fees where our water rate increases will be.

I appreciate it. Thank you for that. No problem. Okay. And seeing there are no additional new items for new business, I'd like to adjourn the meeting at 5.51.

Hello, how are you? Oh, appreciate it. Thank you so much.