City Council - workshop

Good afternoon. Thank you for joining us here today at this Pflugerville City Council workshop, calling us to order at 5 p.m. on Tuesday, August 25th. The first item on our agenda is public comment. I do have a request. This looks like it's for... the 7 o'clock meeting, and I have Les who is waiting for the item to come forward. Is there anyone wishing to speak during public comment at this time not related to an I'm on the agenda? With that, I'll move forward to item 3A, that is to conduct a presentation on the Pflugerville Community Development Corporation fiscal year 26 third quarter financ

How come that guy gets to sit in the back while she's giving the presentation?

You would expect for us to be below 75% at this point?

The water park revenue is off cycle. The water park expenses, I assume, are those monthly?

So it sounds like quarterly, we're roughly in line, but it's not going to be linear.

Any other questions for this council? All right, Tracy, don't go too far. Item 3B is discussions regarding water and wastewater rate study recommendations. I believe we also have Jessica Lynch with Baker Tilly.

We both looked at each other, to be fair. I assume that's because... Go ahead.

Well, obviously, when you're projecting revenue, you generally tend to be more conservative, but our wastewater master plan that we did approve had closer to an 8% annual growth over the next 10 years. So we're using 3% growth in the next year and 2% growth in the next four fiscal years after that. So just wanted to highlight that, that that is a major reduction in growth projections that we had in our master plan that we just approved.

So, yeah. And as you've conveyed numerous times, we go back and we check. what that actually looks like to make sure that's actually in line. And which goes to a conversation that Melody had, or Council Member Ryan had a while ago too as well. So, cool.

Can you explain that a little bit more on the debt service?

Okay, so we can do that and not affect the WIFIA rate covenant or the revenue requirement.

Okay, and then I had a question that came up with the budget when I was looking at this as well, so I guess I'm going to ask it here. In the budget, we had $10 million in impact fees, I thought, or somewhere mentioned, but here it's $8 million. So I was just wondering what was the determination of how much we put towards?

Okay, so $10 million might be for the entire...

And to me, based on, I know, but I want to give him credit to his point. So he's wondering, okay, what that looks like regarding our wastewater area. And obviously there's CCN, there's much greater than there's our water. If you go out there, even just going on Cameron Road, which pretty much three-fourths of the city doesn't even know exists. I mean, it's insane. Over here as well, you see a significant amount of increase regarding these actual subdivisions coming in. and when they're coming online. What I anticipate and what I understand the staff is working with the developers, seeing when

Let me ask you a question and make sure I understand the impact fee line on this table. The impact fees here, is that what we anticipate collecting from new development, or is that how much we have in, call it reserves in our fund, that we are applying towards the rates?

Okay. When I see $5 million in fiscal year 2029, I mean, that's a projection. That's more than two years out right now. Is that a projection of what we anticipate we will collect or how much we will have that we will apply?

I think that's an important distinction, and I don't think I was hearing that earlier. I appreciate that.

So I found where I saw the $10 million for the impact fees. It's in the utility capital fund. And so based on the explanation you just gave, it looks like we're projecting or proposing that we're going to receive $10 million. So that's revenue? Yes. Yes.

But this is what we just what we just discussed here. That is how much of our impact fees that we have collected that we are going to apply. Yes. Not our revenue projection for how much we would collect.

Right. Correct. So then my question is, how do we determine that of the 10 million we were going to use eight towards the debt? and two for, I guess, projects. Why not use all of them?

And why is it important that you have to identify that?

Okay, so what I'm hearing is you've identified $8 million of debt payments that can be applied towards impact fees for new growth. and the other $2 million that we are expecting, there's not enough debt to use it all towards. There's not enough debt.

But we could borrow debt for those projects and then use – I mean, there's a couple different ways to do that. You said it. I'm just – well, okay. All right. So there's possibly $10 million in debt payments that are related to growth projects that are on our impact fee list, but they're not cleanly in a specific –

Can you clarify if those are congruent? Is this $8 million coming out of that $10 million, or is this $8 million some that has already been collected?

Do we have balances in our impact fees for water and wastewater that We're collecting the past that could also be used.

Okay, so we've used all of our impact fees that have been collected.

All right, thank you. Sorry about that. Where were we?

And when you say minimum what we need, what do you mean by minimum what we need?

This is a very interesting conversation for a lot of people or the two people online and everybody else will look later on on this. So that's why I was saying that I want to make sure they understood what you meant by that, if that makes any sense. And how often do you actually get a council really interested in talking about this?

So on that, because I was surprised when I saw that, has that subsidy been consistent in previous years, the way that it's being allocated, mostly to commercial and not to residential, or was the allocation in this year changed from how we did it before?

So do you see this in other cost of service studies you do?

So how often would you recommend that a city updates their cost of service study?

Okay, so like if you see a large increase in multifamily, that might be a trigger to to look at it again because and here multifamily rate design is being classified as commercial yes thank you

So but previously with the wastewater and how the rates were scheduled, was there a subsidy of commercial from residential? Yes, yeah, and it was quite significant. Yeah, so I wasn't sure because the number in the report was almost 5 million, and I wasn't, you know, but that was based on this year's usage and, you know, and the current rates, but not, I didn't know if it changed a lot from the previous year and if that was similar to what it would have been in the last few years.

increase needed the across the board then it's 4.5 so that's that's pretty large so this change in the rate structure that we're that's being proposed is going to i mean we you know felt it right but now we have some numbers of how much was actually being subsidized by residential and now it's more equitable based on usage based on on the pressures that each class is putting on your system

Or we at least believe that, because remember we had that conversation about what's going to happen with apartment complex.

Yeah, so then this might have been, it might have changed as the housing, or as the mix of customer classes changed with more.

Did anything change from the last, because when I looked at the last one and the cost, there were, it seemed like there might have been some minor changes, or is this the same as what was last? On the what, from when you were here in August?

Let me ask you about that. You mentioned Manville and the pass-through rates. Is there a risk factor built into that? Is there a collection factor built into that?

Are we paying out what we build, or are we paying out what we were supposed to collect, or are we paying out what we actually collected?

Who's in charge of going after the folks who didn't pay their bill?

I did have a couple other questions that I sent in the email that I don't think we've covered in the water cost of service. The net revenue requirements were different than what is in our budget. So it was like $37.5 million, but our budget is $35. So just that the wastewater matched exactly. So I wasn't sure. Obviously, it's better.

I thought the net revenue requirements was what was being used.

Okay. I thought that was the one we had to use or that was being used as saying this is what we need to... Well, I guess from the net revenue requirement. So I thought that's what we were...

Okay, that makes sense. Well, because that was one of my questions was, what is this?

So we're phasing it in the study, but we're not actually collecting higher revenue for that in our budget.

I was unsure of the terminology of what was used in this study and how it related to our budget with franchise fee expense and transfer to general fund. And so I was trying to add them up and compare them to the budget to see if I could understand how this is flowing to our budget.

Okay. And then we have cost allocation in the budget. That's the transfer to general fund. So I was aligning them accurately. Yes. Okay.

All right. Council, what other questions do you have?

I was going to ask the exact same ones, but nobody's been talking about them. Yeah, I know.

She took mine, too. So, James, I do have one question for you. So the way we adopt these rates is through the budget process, and we go into effect October 1st with our annual budget. Is that accurate? Yep. Your master fee schedule is a part of your budget. All right.

All right. And that ordinance will be the master fee ordinance? Yes. Perfect.

So I did have another question on the rate coverage with the WIFIA requirements and the 125% and what we need to collect. Because some of the calculations in there were different than what I was understanding how the calculation worked with talking with staff previously, which is always why I like to see it in the numbers and not just describe it. So in there, it looks like the revenue requirements in this plan are higher than what we need for the rate coverage for WIFIA, because we're at 137% or 148%, which is higher than what we need for 125%. So I'm just wondering, is that an opportunity to

Okay. Even though you're meeting that coverage percentage. So using funds from, or using funds from fund balance, like we're going to be using 2.8, 7 or 2.3, somewhere from fund balance towards that. Does that get calculated in the rate coverage or does that get calculated in the revenue?

The debt service for the 125%. Correct, yeah. Correct. But you can use it for your revenue requirement. Correct. Okay. And we have. Clear as mud. Right. Thank you. There are a lot of moving pieces. Yeah. They're all intermixed. Okay. I have a better understanding now. Thank you. You're welcome.

All right. Thank you, counsel. Any other questions? Appreciate it, Ms. Lynch. Thank you for being here and for that detailed explanation. And, of course, Tracy, always glad to hear finances from you. It seems like we're always doing better when you're up here. that will take us to item 3c this is discussion regarding the resolution of the city of pflugerville texas adopting standards for secure accountable fair and explainable technology use directing the implementation and providing an effective date i think we've got some language from our regular agenda item on there this is discussion duri

Yeah, and let me explain. I want to thank Jonathan early on specifically came to me talking about this idea and this policy and what we're working on. We talked about how staff was looking at these things as a whole in their totality. What should we do? How should we look at this game like a good opportunity to go and do so. Jonathan then went to start talking to David, Councilman Rogers, about it. And as we've heard from Mayor Pro Tem, Kimberly, numerous times, I get a little nervous about when all of us are all discussing, everything else happened from that as well. So I stepped back. They w

Rudy, before you dig real deep into that, I do have one person signed up for public comment on this item. So I wanted to go ahead and call forward Mr. Les Wall. Les, I know you signed up to comment on this item 3C. I'll give you three minutes to address us.

Thank you, Mr. Walts. All right. Yeah, now I was about to say, I think one of the things that he said, which I think is critical in this conversation, but I. I have a slightly different perspective on this is that we're having to do this because nobody else is flat out. Let's just be honest. That's what's happening here is that pretty much this is the wild, wild West and folks don't want to step in. Um, they don't want to have to make decisions. And so consequently citizens, you know, suffer, um, privacy suffers. I, I, I understand. And I hear what you said about, um, chat GBT and, um, anythin

Yeah, I think Rudy, just to talk a little bit about that, I think one of my overarching goals with this was to create a framework so that we don't end up like what a lot of other cities are doing where they've got an ALPR policy, they've got a generative AI policy They've got a drone policy, right, and all of these things. And so I think that the hope of having a framework versus a very specific piece-by-piece definition of these things is that's really the intent, right, is to get something that can be durable and last. We may not know what the technology is that's going to need to be governe

And to that point, that's one of the reasons why, if you look at my document, for example, if you look at Section 2, the definition, you see me specifically denote the difference between AI systems and gender-invasive. because those two things aren't necessarily the same. And you see what I articulated regarding what covered systems are, that means that works for that as well. Some of the things, for example, consequential decision making, Changed some verbiage over there as well. I added meaningful human reviews. These are things that I've looked at regarding what I'm advising our clients are

I do. And what I can do is send the redline version.

Yeah, I think that just skimming over it, what's actually kind of funny is that probably about a month ago when our city attorney and city manager and I started working on the draft that I sent over, I think mine was 19 or 20 pages long. Over the course of the last 30 days or so, as we've been talking about enforceability and how to actually operationalize a policy like this, I was able to sort of simplify it and trim it down, mostly by things that you are adding to yours. So I don't disagree, but there's a balance there that I think we're going to have to strike of having everything truly def

One of the things you'll notice in here is that it's less prescriptive regarding the flexibility for city manager and city staff. Because one of the things is that I don't want to be too prescriptive on what you're actually going to be working for. But anything that's actually citizen-facing, citizen data, I mean, that's... And that's a line. And that's a wall. And so what do we do? What procedures? What other aspects do we put on that?

So, Rudy, is there anything – I mean, I really agree with Councilman Kaufman's assertion that, you know, he's consolidated it quite a bit. And I know, you know, I appreciate all the work you did. Is there anything in your version that you really feel it needs to be in Jonathan's version?

Yeah, so for example, vendor data use, right? Like, what do we have specifically on there for any vendors that we got? Agenic AI, what can it be used to send or go in and contact information? What can generative AI be utilized for employees?

But are those things that we really need now, or are they things that we could add as we're moving forward and it's a work in progress?

I would say that these are things that... Well, I mean, I think you know me well enough, and I've been doing this long enough for it. It's everything that I've been advising... This is probably going about three... This has been an issue for about three and a half years. And actually, I want to give credit. She's not here right now. Mimi Stiles, years ago... We had a conversation and we started talking about it. And let me tell you what the impetus for me was, was that I know all too well in the legal profession that cross-racial identification is a real issue. That is a significant issue that

Yeah, to your point, and you just said it yourself, if you look at page 9, there's a reason why I put so much regarding... vendor data use. Because I think one of the concerns, one of the issues is that the totality of what's being utilized, no outside party receives an independent right to train or improve. The model developed on unrelated product types, et cetera, right there as well. You see that list and talks about the specific contracts, the vendor disclosures, the non-compliance, which I think is a key portion to that and working for that. You also feed right into required vendor contra

is more substantial and covers everything versus, okay, well, we need to do something that's going to take a year to do that. I'd rather wait the two weeks and get it done first and, you know, and then reevaluate it in a year rather.

So I have college football this weekend on Saturday. Otherwise, I don't see why it can't be done. Otherwise, I mean, I don't see why this can't get done seriously over the weekend.

So the other thing that needs to be done is the ordinance for a resident advisory committee as well, which is not included, I think, in either one of these, but we've talked about it.

And we've talked about it and we've agreed to it, so everyone on the council, we're all on the same page.

And I bring that up partially because this topic isn't going away, and we know we have to do the work on that piece of it as well. And so, you know, while I think it's important that we get something in place rather quickly because we're already tripping over ourselves in some of this stuff, you know, I'm open to waiting, but to Melody's point, I think we'd need to figure it out pretty quick, especially because our city attorney and city manager are going to have to get comfortable with a whole new version again real quick, which is going to take time for them beyond just our council input. So

So I would I wouldn't say I disagree with us ripping over ourselves over this. I do agree that we do need to, I think, honestly, I think two weeks is way too long. Like I said, I think this is something that we can go ahead and, I mean, you've done this. We should be able to go ahead and get this done and knocked out. We can't get it approved until the next meeting.

I want to be clear with that. We want to get it drafted, but we need the professional review of our attorney and our city manager to ensure that what Any changes are, in fact, implementable. Because I don't want us to go say, hey, these are all the things we want to do, and then we look at it and we're like, well, that doesn't make any sense in our use case, right? That's something that would require three new headcounts that aren't in the budget, right? So I want to make sure that not only are we getting, if we are getting it updated, that we're getting it reviewed and solid, and that feels l

So if we do it this weekend, Mike, how long would it take for us to build a guy? I mean, since you're my dad.

Can I jump in? How much free time do you have in your schedule to review another version? Sorry. Let's James jump in real quick.

Well, I do want an audit provision, and I would like time to... I don't know if this was delivered electronically and I missed it, or... Oh, yeah.

Oh, this was sent to them. I don't want to send anything to you all in general.

Okay. I mean, some of the things you pointed out I think are important. I guess if they were in a draft before and taken out, then that's one thing. If they were never in the draft originally, you know, like you know, like I think anyone who wants to look at it and have input or whatever, you know, can have time to do so.

I mean, we'll have to use some AI to look at the different versions, right? He says he's got a red line.

He's got a red line. It already did that. I mean, I don't know, but some of the things I think are critical, you know, and if James thinks I just don't know what else besides the audit. I mean, obviously, Rudy, you felt like a number of these things were critical to go ahead and add.

Data privacy and governance. I mean, for example.

High risk only comes to counts. Moderate, though, what we decided on was basically at the city attorney's discretion that what the vendor has proposed is materially the same or covers the same risks. Yeah, fine.

I think it does make sense to memorialize some of those things. I do have one question. I'm not sure if this is attorneys being attorneys. But top of page 5 on the draft watermarked version, existing contract shall be brought into conformity at renewal, extension, material change, or the earliest lawful opportunity. I don't know if earliest lawful opportunity is there intended to mean... Before those things or after those things because it seems like those things, renewal, extension, material change, should all be appropriate times to make changes. I can't imagine any other scenario. So I'm tr

And then what's a lawful attorney? I mean, there's a couple of those things.

That's the only one that really stuck out to me, and I don't know if... Yeah, I thought that, too. It's okay.

But I do want to... Are we waiting five years?

Yeah. I mean, and what lawful, you know, it's... Those are the things that, they have the little things I didn't mention. There's things that can be cleaned up. I'm really concerned about some of the privacy and some of the vendor use and not being prescriptive with that because of what I've seen in my own clients' lawsuits. There's nothing in here, let's put it this way. Like I said, I've had three and a half years to develop this. Nothing is in here that I haven't had experience somewhere down the line.

So you think you can do it in two weeks? I think I can do it.

I'm going to ask, well, first of all, Jonathan, I know you put a lot of time and effort in with city staff. I would ask that we expend no more than and four additional staff hours on it. So if we can get a... I think that... That'd be my limiting factor for you all coming together and meeting and knocking it out and whatever you got at the end is done. Because you know I'm a big fan. A 95% solution that we can actually implement and has buy-in is a whole lot better than a 100% solution that no one wants to do.

I think that I could mitigate... a pretty substantial amount of time because I know how these guys are thinking about it. But that's not going to reduce their time. It's probably still aggressive for them to like really dig into it and understand it. I don't know what a reasonable amount of time is in their opinion, but I do think some of it.

If you had to estimate how many hours would you spend on this already?

Yeah, we're... We're at a substantial amount of staff investment already. Mike, I assume you're probably in that range as well. So I... That was a yes?

Yes. I'm sorry. Just for the city secretary.

I really don't want us to take a huge step back and then our staff has a lot of work to get done. We've got a lot of demands on their time.

I don't think anything in here undercuts what it is. I think what it is is buttresses or adds more concrete enforcement on some of these things. And I think that's what keys that. And then, like, some parts that, like I said, that... I'm telling y'all this. Like, I... It causes me heartache. Like, the suspension and termination clause put in there. Like, I mean, these are things where... I've seen bad stuff. If your contract isn't written well to cover you, then... Well, yeah.

Is this a discussion, Rudy, on our standard template for contracts? Because I know we've got a standard template for PSAs and a standard template for construction, right? I don't know, Mike, what other templates we have, but it sounds like A lot of what I see in there is something that we may just need to adopt as a standard contract template.

I mean, I would hope some of it's just easy to up and lift because, you know, just like when we did... we changed the definition regarding, um, act of God after the pandemic. And that was a huge deal because we just, I mean, no one had defined it the way it should. And after that we had to go.

So Rudy, uh, following up on that same thread, is there anything that you would say is like, material to the policy that council would adopt or that changes the direction of something that is in the current agreement and I asked partially to what the mayor was saying is if we're if there's a Decent number of changes or updates that we need to make to various templates documents policies We probably could come back and either do a separate resolution or just a council directive to implement X Y & Z changes to the contracts outside of passing the governance framework today, potentially.

You make a great point. Yeah, Rudy, are your changes, do you see them as changing the vector or just changing the extent? Is it something that you want to say, well, it's not going the right direction or just needs to go further?

I think it's both because you're looking at things, for example, for what I said about generative AI, what that policy is opposed to genic AI regarding specific employees and the utilization of it. I think the vendor data use, like Y'all, trust me. I mean, yeah, right there as well. Required vendor, some of these things that you talked about, you asked about whether or not some of these things can be uplifted. But I, like I said, I would not be doing my job if I didn't tell you, like, there's nothing in here that I did not think was important, nothing in here that I thought, wasn't something f

Was it everyone's expectations that we were going to see this for the first time and approve it?

I'm seeing it for the first time, so I can say I didn't have that expectation.

I mean, like this draft, because it wasn't... Oh, the draft I proposed. Yeah, because it wasn't included in the agenda last time, and then when I asked about it, there was the desire to... Oh, the mayor did put it on the regular agenda as well, if we...

Yeah, Rudy's draft is brand new, but I'm just saying this. Two weeks ago, I didn't see Jonathan's draft, so this is new in the last few days.

We were still working on it two weeks ago. That's my point. But it was in the packet.

It was in the council packet. It is on the regular agenda this evening. It sounds like we'll have some time to marinate on that over the next little bit. I'm not sure I have clear consensus yet, but we'll see what we get in the regular agenda if we're passing it tonight or if we're postponing it to have some more folks take a pass at it.

What were you trying to say? Well, some of the discussion sounds like it was an expectation that we were going to read this for this meeting and approve it tonight and not have any changes. And I'm just wondering if that's a realistic expectation. Like, I would have expected that we would have conversations and that we would have something to change it and that it would possibly make sense to bring back in two weeks. So coming back in two weeks is not outside of my expectations of what we were going to have. and discussing a policy, especially of this magnitude, which we have been discussing f

It is budget season. And I apologize. I had the same perspective as Melody. I thought we were going to discuss what was presented tonight from Jonathan right there as well. Sorry, y'all. No, we're discussing it.

You're like, what is the deadline that I have to have a draft of something and that's when I'll get it?

I guess I haven't heard much more, Cesar.

I really agree a lot with what Melody said. I'm okay with holding off. That way it gives us an opportunity to be able to really fully read Rudy's draft that we just got today and digest it and see what changes and how and what we want to do. I agree with that. Kimberly? Kimberly?

Thank you for asking. Of course, I am concerned about the number of hours that have already been spent on this. And then I keep thinking about the priorities that we set and how sometimes us going back and forth, and it's very important, how going back and forth is going to take additional time away from some of those priorities we did set. And it is budget season. I am wondering if what has already been worked on could be approved and then we build, right? I'm just wondering if we'll be able to resolve this. I don't think four hours is actually reasonable. City Manager said he's already spent

Oh, because I didn't want to review. Oh, maybe I didn't say that at the beginning. Once you started working with David, I did not want to have to worry about any quorum issues or anything like that. So I was like, let me just wait, get whatever the final version is, and then I'll go ahead and give my thoughts on the final version. I mean, and for the public, that's one of our big issues. And I know Kim brought it up a couple weeks ago. If you don't hear from us on things, it's because we worry about getting sued. It's just to be flat out to tell you right there accordingly. And so we've got to

Open meetings act is a real thing. And so we are very cognizant of, very aware of it. So that's why you don't, we're very particular about how we operate and work. All right. Great point.

Any other comments on this item at this point? It is on a regular agenda. All right. At this time, I'm going to take us to item 3D. We're going to retire to executive session on this one. This is deliberation regarding real property and economic development negotiations pursuant to section 551.087 of the Texas government code related to Project Opera. The time is 6.15.

evening it is 632 we've returned from executive session and no action was taken that concludes the items on our work session agenda for those of you here in anticipation of a regular agenda if you are wishing to speak make sure you fill out a form at the back of the room It does have a checkbox that says whether or not you wish to speak or just register your position. And there is a box for support and oppose as well. Make sure you fill that out. And we will see you at 7 o'clock. At this point, we're adjourned from work session.