City Of Muskegon Commissioners - Regular Meeting

Heat. Hey, Heat. folks and welcome to the city of Moskegan city commission work session for this Monday May 11th 2026. six. Um we're going to get started right away with our business and the first item is energy performance contract. Um we're going to be reported out on Good evening, Mayor, Commissioners. Dan Vanderhigh, director of public works for the city. Uh you have seen this item a couple different times before in one form or another. And uh I'll uh let the uh Johnson Controls folks talk about kind of where we are in the process. But uh just a reminder that uh the intent of this project is um a couple a couple things, right? So this is a unique contracting method to take care of uh some infrastructure challenges that we have here at the city, including our public works facility. Um, Johnson Controls is the energy performance contractor uh provider and uh I'll let them describe that better than than I can. Um, and in fact, I'm going to turn it over uh to Chris DS right away and uh he's going to talk through uh the first

half of the presentation and I'll be back to wrap it up. Thank you, Director Van. Good evening and welcome.

Good evening. Chris DS. I'm a business development leader with Johnson Controls. Thank you for having us here this evening. I brought a lot of my team with me. As you can see, we wanted the uh subject matter experts in finance, engineering and development, construction for the project, as well as the guarantee component, uh the validation and the measurement and verification component. So, we brought an entourage and they're they're here to answer any questions you might have. I want to go to the timeline real quick to get us grounded. We were back in front of this uh committee back in October, but even before that this process, this program began and it was um you know public advertisements in a in an RFQ, a selection of Johnson controls in May of 25. Uh we started engineering early in development and then we brought to you in front of you a project development agreement in October of 25 that was approved by the board of commissioners in the amount of $554,000 to proceed and bring back to you a uh totally inclusive project that had financing uh scope of work, guaranteed savings, all those things. And that's where we are now. We are we have bringing this back to you now. We've presented the agreement uh on May 4th to the city and it's under review right now. So there's a lot of things that have been going on to date in development and engineering for this project. A lot of things going simultaneously around how we're going to validate it and guarantee the project. At the same time, under legal and finance, we've been working through financial workshops and um going out and finding lenders who have an appetite for these types of projects that can could be competitive and bring you the best terms for a project like this. A lot of our construction planning has

been going on and we are now at a point on that red line where we are uh presenting this for board of commissioners approval later on this month. Dan mentioned this is under an energy savings performance contract in Michigan. This is a fantastic uh procurement statute that is uh copied in 49 states in the in the uh in the country. Michigan was one of the very f first adapters. This just is such a good procurement strategy because it it allows municipalities to purchase on best life cycle cost on best value. It is not a lowcost necessarily first approach. There's a lot of latitude that the city gets to have on partners and selection and technology and equipment that uh makes this very attractive. The it's under uh public act 625 cost-effective government energy use act and um subject to annual appropriations. We envision a 20-year term. And then I've got some of the language there about what can be encompassed within one of these projects and and everything that's on the scope that we've that we are presenting is eligible under this vehicle. A quick blur that Johnson Controls is this isn't foreign to Johnson Controls. We've done 162 of these projects in Michigan alone. These are outcomebased guaranteed savings projects uh in the public sector and that represents $495 million of critical infrastructure that we've been able to develop and deliver on in the state of Michigan. In the state of Michigan, we have about 1,200 employees. A little bit about Johnson Controls. Um we've been operating in Michigan since 1896. So, we we've been around quite a while.

My pen here says 140 years. We're proud that that we're at our 140 year anniversary last year. I don't know how many companies or corporations can can claim to be around that long. It's important to you because we've got to honor this project. We've got to honor this guarantee for a term of 20 years. And you need a partner you can feel good about that's going to be here to honor that. Uh we have about 9,200 patents around energy and water and smart buildings and healthy communities that are under our uh purview. We are the North America leader in energy services and we're real proud if you've heard of the ethosphere uh certification. We've been recognized like 17 years in a row now as one of the uh world's most ethical corporations. Very proud of that um accreditation. And um that's just a few highlights of the of Johnson Controls and the work we're doing here in in Michigan. This program, I'm going to hit you the highlights and then Dan's going to talk a little bit more about the scope of work. It is $42 million of really representing a whole bunch of projects that we've rolled into this program. These are a bunch of projects that are deferred maintenance needs. They're in your capital plan. if they're not in your capital plan, they're going to be very soon, either under an emergency or or under duress. You're going to have to deal with these projects. So, the the important takeaway from this is these are these are things you're going to have to do. You can do it in a in a very orderly, planned, and orchestrated manner that takes advantage of scale and mobilization and uh efficiencies or you can do them in pieces and and it's going to take you it's going to cost you a lot more. there's going to be much more headache and a lot more fingerpointing and you're not going to get the outcomes that you're looking for. This is really um designed to improve the delivery of coste effective services to your

community and I saw your value statement when I walked in and that reminded me that that seems to be pretty consistent with what Moskegan's leaders are trying to do. Um, our investments are focused on maximizing savings and revenues, looking at total life cycle costs. So, we can help with the debt service being offset by the guaranteed savings of the project. You have one responsible partner to deliver this program um with a guarantee making the city of Moskegan more efficient, automated, uh future centric, future ready, costeffective, sustainable and attractive to economic development. And last, I wanted to mention the funding process. We envision uh a tax exempt lease purchase agreement. These are the majority of all of our projects and we've done about 4,000 of these are done under a telp. It's easy. The rates are attractive. Um there's no bond issuance. There's no cost of of counsel and and bond counsel and that kind of thing. Um it's subject to annual appropriations. It's just an easy way to do this that the timing right now is very good. Rates are very good right now. And um we we've gone out to our network of lenders. There's about 20 that like these projects. We've gone out to them and socialized this project. We have a lot of interest. We think we can drive very good terms on behalf of the city. We don't our clients can run that themselves. It's a service that we offer. Um and it usually helps expedite things and brings best terms. So those offers are we brought back to the city manager when it's appropriate and that the city can decide who they want to work with. We know you do a lot of work with Fifth Third. that we've made an exert uh an effort to to try to bring them on board and encourage them to at least participate. So, with that said, I'm going to turn it over to uh Director Vanderhigh to talk a

little bit more about the scope and get into the details. Thank you, Mr. DS.

Thanks, Chris. So, that was a lot about how we're going to do this project, right? What exactly are we going to do? Uh so this slide kind of divides the scope items or uh you might hear the Johnson Controls team refer to them as FIMS which is a facility improvement measure. So on the left is a list of the things uh that are going to be done sort of citywide including some things here and then on the right is a condensed list of things that are happening at the DPW facility. I'm going to go through that right side in a lot more detail including some renderings and things here later in the presentation. So, I'll just talk through the left side first. Uh, at the filtration plant. Uh, this includes new boilers and some lab air conditioning upgrades to improve the comfort in the lab. Here at city hall, it includes the new chiller. It includes all new windows, which is 169 of them. Uh, it includes all new plumbing fixtures, 45 of them, and a few other things as well, some door seals and other things to help keep the building energy. Uh the plan is to replace all water meters in town, all about 10,000 of them. Uh if they're a commercial meter, they might get repaired instead of replaced depending on uh the state of them. Uh but that is a big component of this uh program on the sewer system. We're going to line about a 100 manholes. Uh if you're not familiar, uh inflow and infiltration is a term we use for uh groundwater and storm water that gets into the sanitary sewer system and we pay for all of that water uh to the county to treat even though it was already clean. So we looked at the worst 100 and we're going to line those with a plastic spray-on liner essentially to try to keep the water out and not have to pay those costs. in the water system. We're going to do some leak detection east of US 31. Uh this is essentially

using listening devices to pinpoint the areas where leaks are occurring and we'll get a list that we can work through and address, find out if they're real leaks, and if so, we can dig them up and repair them. That'll reduce our lost water. So, when we're treating water and we're pumping it out into the system, if it's disappearing into the ground, we've paid to create it, but we don't get to sell it to anyone. in our parks and in uh our largest cemetery by by space rest long. Uh we're going to replace the irrigation controllers. Uh make sure that that we're not watering while it's raining and that it's aware of how much water that uh ground actually needs. And then at the marina uh in the public bathroom component, we'll do a new water heater and then lighting upgrades throughout including at each uh slip. So, a little bit more about the water meters uh before we move on to the public works facility. As I said, about 10,000 meters will be uh replaced or repaired. Uh they will um unless unless they look like that, uh that's the new meter that we've been installing, master meter. You may have heard the term. Unless they look like that, uh they're they're planned to be replaced as a part of this program. Uh that will have uh quite a few benefits to the city. um one system. So, our treasurer's office, who functions as our billing department, will be able to read all of the meters remotely by simply pushing a button on the computer. We won't have to send trucks out into town to drive around and get those reads anymore. We will have all brand new uh meters with a 20-year warranty, um 10 10 full and 10 uh prrated. Uh so, we'll be in and out of those homes a lot less often, and we get savings from that. uh we'll have more accurate billing. We'll need to estimate those reads quite a bit less often. And all of those things are cost to the water system that we can capture. Commercial meters, as I mentioned before, they'll either be replaced if

they're in really bad condition or they'll be repaired if that's possible. Uh if they're just repaired, they'll they'll get the same uh type of communication device so that they work with the new system. And one of the big benefits to the customers will be an online portal with real-time usage, uh, usage history, leak alarms, uh, basically your phone will give you a notification that water's been running through the meter for more than 24 hours straight. Or you can put it in vacation mode where if any water goes through that meter while you're on vacation, you can call someone, your neighbor, the city, and we'll go check it out. Make sure your toilet's not overflowing into the into the house, things like that. So really some modern upgrades and things that will really help both the city water system and the customers. So take a trip with me back to the afternoon of December 8, 1971 to the dedication of our current public works facility. Two of the things on that slide in front of you can actually still be seen in mint condition today at 1350 East Keing. Unfortunately, it's not the pickup truck or the dump truck because those would probably be worth quite a bit of money if those were in mint condition. Our oldest models of both do qualify as classics, though, uh, as Jonathan knows, in the original yellow. Uh, no, the two items on that slide that are in near mint condition are actually the dedication ceremony program that you see in the lower left. I have a a great copy of that, and the building that's pictured on it. In 1994, City Hall underwent a modernization. And to give a sense of the scale of that project, before it, these chambers were part hallway and part human resources department. And the chambers at that time took up most of the second floor. City Hall was built one year before the public works facility in 1970.

Since 1994, most departments in city hall have been renovated at least once and some twice again. Meanwhile, the DPW facility has sold on. Our public works superintendent and parks and recreation director both wipe up particulate from exhaust from their desks each morning, put there by their HVAC systems that pull their fresh air from the garage. Each of our supervisors has their own version of a fly swatter that they use in their office around this time of year in the spring. Uh my favorite is the electrified tennis racket. Uh but due to the volume of flies, we had to install a system, a full system of UV light traps to keep up with the flies. You see there uh in the upper left a picture of our water department kitchen that was just a couple days ago. In the upper right, you see our m our building maintenance department, including the supervisor's office right there. Uh in the lower right, you see the office walls. Uh those are wood paneling original to the building on cinder block which was then covered in wallpaper at some point and then painted sometime after that. All of that you can see is finally peeling off. I believe that might be an original Casablanca movie picture uh poster as well, but I'm not sure. Uh the office carpet was replaced at some point in the past, although based on the pink color, we suspect it was in the early 90s. So, we have been working quite hard over the past five years or so to figure out a different way uh different thing for our public works facility. We looked uh far and wide for a new home for it. Uh is unfortunately or or maybe fortunately if you're in our economic development department, difficult to find uh a large enough piece of property in the city

that isn't used. And so, uh, we are finally, uh, giving up on that process and admitting that our future home or our our forever home is at 1350 East Keading. And if that's going to be the case, if we're going to be there for the next uh, DPW facility life lifespan, which has been about 55 years, uh, we need a facility that will match that and will work for those 55 years. And so a big part of this program is replacement of that building. Um going to go through kind of some renderings that the architects have put together as a part of their preliminary work and I'll talk through the things that are proposed there. Uh it's not just uh paint. Uh I will I will say that. And so the best way really to picture it is that we're going to take it down to the concrete and the steel is what's proposed. new facade, new siding, new insulation, new electrical, a new roof over the garage and back, uh, new HVAC, a new generator. Um, we're going to change the way the fuel pumps work so that we're not nearly crashing into each other each morning as the snow plows try to get gas as the seasonal employees arrive. Uh, there's going to be quite a few public facing improvements. We've got a new uh separate employee entrance, which uh will mean the hallway layout will change. Uh if you've been to the facility lately, you would recognize that that's quite a few more windows than we have, or at least a larger windows. We're going to try to get some of that light into the space. A new public lobby uh at the same location that it is today, but much upgraded, and a new community space entrance, which is shown kind of in the far right and in the rear of this picture. And I'll talk more about that here in just a couple minutes. The offices would get renovated. We'd have an improved reception area, modern workspaces. As I said, we're going to increase the number of windows and then

use glass to try to carry that light into the space. Increased conference rooms. Jonathan will have a place to sit when he comes and works at DPW. He won't have to sit in our one conference room. Additional meeting rooms. uh central refreshment space uh for the public and for employees. Uh it's, as I said, it's throughout the building, so it's modern department spaces as well. This one is actually a a rendering of what the parks department space could look like. Uh but all of the the major departments in the building would receive similar treatment. So, they'd have an upgraded and modern uh break room to eat their lunches at. Uh they'd have efficient workstations and places to take care of the tasks that they need to do uh in our computerized work management system. Uh there'll be viewing monitors on the wall so they can uh talk about GIS and look at the pipes underground that they need to work on that particular day. Improved ventilation in these spaces. new gear locker areas so they can put their uh sewer covered car hearts in a different area than their clean clothes and washing equipment so that when they have what we call a bad day in the sewer department uh they've got a way to take care of that before they head home. So, I mentioned that community space. Uh got a couple different versions of that here to show you. It's a 6,000 ft rentable community space. It's within the existing footprint of the building. A modern uh layout of the other spaces uh allows this to to be created. Uh it's shown here in a a large meeting room layout. It's got modern technology. Uh that's all configurable tables and chairs depending on what's happening there. Left wall in this picture are separate restrooms and a kitchen. So when it's rented, you've got access to those things. Uh this is a view of some recreation programming. We've got an exercise

class. Uh on one side we've got some dividers and then some child care or child activities that are going on on the other side. Um the park parks and recreation department anticipates programming this space not just with rentals but with things that are shown here, classes, uh etc. during the week and perhaps even on the weekends. And to set that up, we've got a reception area with that separate public entrance. We've got portable recreation equipment included, durable flooring, uh, elevated ceilings, so there's no worry of hitting the ceiling tiles and things like that. So, that was a lot. And with a lot, as Chris alluded to before, comes a relatively big number. So, let's talk through that a little bit. So, the total program, as Chris mentioned, is about 43 and change million dollars. uh a large portion of that is at the DPW facility. The water meter replacements are also a large portion of that and then the other components are uh things happening here at city hall at the filtration plant um cemetery and parks. The one of the uh core tenants of the energy performance contract model is that you're able to identify and capture savings that are associated with the improvements that we're making. So on the right side you see there total savings of about $19.5 million. Those are from things like when we replace the chiller here at city hall, it will use significantly less electricity. And using this energy performance contract method, we're able to capture those electric electricity savings and use them to help defay the cost of that improvement. Same is true at the DPW facility, right? Reduced electric, reduced water, reduced gas, exploited maintenance and repair and operational costs are also available to be captured. This isn't actually included in the number, but as I

mentioned, we're converting some underused space at the DPW to a community asset as well. So Chris mentioned the taxexempt lease purchase or the telp. It's effectively a loan with the bank and uh see there the annual payment and then in the center there of the the bar kind of in the middle of the slide that number is that annual payment net of average annual savings. So pay the bank and with Johnson Control's help, we identify all of the ways that that payment has helped us save money in that year and that helps us defay those costs. If those savings, if that $19.5 million worth of savings doesn't appear, Johnson Controls guarantees that it will and they'll cut us a check to make the the difference. But based on my experience with them, I don't think that will happen. They're pretty good at their job. Um, these are really big numbers, right? So, I put that budget context there on the right side of the bar. So, for the proposed uh from the proposed budget from DPW, all of our uh things added up that live at the public works facility for fiscal year 2627 is a little over $60 million. And so that average annual net payment of savings of 2.345 million is just 3.7% of what we spend every year. Although it's a big number, it's actually quite a reasonable number to be spending on our facility, particularly when you look at the condition of it today. Uh, one more little interesting fact at the bottom there. Um, Chris alluded to this earlier as well. If we were to not do all of these things at once, if we were to say replace the chiller this year and the windows in a few years here at city hall and replace a bunch more furnaces at DPW and do the floors and do the walls and buy new furniture and we

were to do all of those things spread out over that same 20-year period. They estimate that it would cost a little over $20 million more to do it that way than to take advantage of this energy performance contract and method and the economies of scale of doing it all in one project at DPW. Um the the public works building is a building as I'm sure it's also a fund. So, because the public works building serves a bunch of different departments, water department, sewer department, highway department, equipment department, parks department, all of those different departments pay rent to the fund, the accounting thing that pays for the building. uh floor plan on the right of this slide is intended to demonstrate it's it's far too uh zoomed out to um to see all of the individual things, but it shows colorized how we're assigning those costs to individual departments that shows up over there on the left uh by fund. Those are the annual obligations that each fund will have to pay in order to come up with that total net average annual payment. You can see some of that lives in the general fund. That's things like parks, cemeteries, forestry, etc. A lot of it lives in the highway department. That's the snow plows. That's the space devoted to house the snow plows, wash the snow plows to hold the salt that we use on the roads, things like that. Water and sewer uh are usually combined, but for the purposes of of fund accounting, we separate them. They're one department, but together uh they pay those amounts for their space within the building, the equipment within the building, the parking areas that they have within the building. Administration that happens at

our building, the marina, that one might seem like an odd one that it's in there, but keep in mind that the building fund, the public service building fund also pays for the administration of all of these things. my time, Todd's time, time, all of the people that work at DPW, if they don't work specifically for one department, then they work for the building effectively and their salaries and so forth are included in the cost. And so in the case of marina uh most of that cost although some is associated with the water heater and the lighting most of that cost is associated with the fact that we administer the administration of the marina. Then engineering same thing and equipment fund that's the mechanics a lot of the garage space things like that. So, just kind of as we're coming to a close here, I know we've we've thrown big numbers at you and talked about fancy contracting methods, but the community uh is getting lots of benefit from this project. Um, throughout the the total savings that we're talking about, if you were to look at that in terms of greenhouse gas savings, almost 4 million tons uh of CO2 equivalent annually. Uh 4,000 metric tons, I'm sorry. 6,000 square foot community space rental available for voting for recreation programming for rentals improved customer service experience at city facilities certainly at DPW but also here uh I think we're all familiar with how warm this room can get sometimes

yes

talking about fixing that um for city departments right for public works and even some others modern productive safe work environment we're removing all of the things that were put in in 1971 that shouldn't be there anymore. The asbestous, things like that, right? All of that stuff is getting abaded and removed from the building. Significant comfort improvements for city hall and filtration plant. And then again, $20 million in savings compared to doing all of this work peace meal over the next 20 years. Then just again with the water, that customer portal, we'll be able to point customers to they can see their individual usage. They can run a load of laundry and see how much water goes through that meter. Um, leak alarms help them to avoid unnecessary expenses, more accurate billing, reduction in estimated meter reads, and new meters, which is a benefit to them and us. So, we don't have to go in the home. Uh, we don't have to drive to their home to read it or to fix it. Uh, it's pretty much guaranteed to exist in its current state for 20 years. And if not, Johnson Controls has uh some obligations to make that right for us under this contract. So, we're going to open it up for questions and discussion. Um to read that little story there, that comes from the brand story that was put together when we switched logos. But, welcome your questions. Uh it'll be kind of a a dance between me and and Johnson Controls.

Excellent. Thank you, Director Vanhey. A lot of good information and great opportunities there. Uh so commissioners, we're going to open up to questions. Commissioner Kilgo.

Thank you. Um good evening um director. Thank you for putting the presentation together. It was very informative and thank you Johnson Controls for your work on this project. Um couple of questions. So, I have been to your building and uh it is definitely nobody can walk in there and say it's not in dire need of some updating, you know. Um and your crew and everyone who works in and out of the DPW building has to go in there every day. Um so I definitely would love to see some modern updates somewhere that they could go to work every day and feel comfortable and want to do their jobs. um with the costs is because that building is also 55 years old. How old is that building?

55. That one is also. So when I came in here today with a with our lovely uh street upgrade that we're having, I came a different way to work. Um and I walked in this side and you see that 1970 on the building. I'm like, "Wow, this building's like 55, 56 years old. That's pretty cool." Um are they doing um asbestous and lead abatement when they do that building at DPW? Is that calculated into the costs of everything? Yes. At DPW the everything that's asbestous would be baited as a part of the project. Yep.

Okay. Awesome. And then um because this building is also 55 years old, other than the chiller and windows, do we see other major items that should be on this list or those are the two that just got chosen because they're more important right now?

Sure. Uh so in terms of abatement uh if since that's how we got here you know much of that would have been done in 1994 here when this building was taken down almost to concrete and steel. Um the as a part of the process that we got to here with Johnson Controls is we did do asbestous testing in all city facilities that are old enough to have had it installed. Um, and we have a report for city hall. Very little was found. Any that was associated with the work that we're doing, chiller, windows, etc. would be abated. The other areas that were found were very minimal. As for why those uh things were chosen to be included, mostly because of the potential to generate savings, which is one of the key components of the energy performance. So, the roof here needs to be done as well, but we don't gain any savings from doing the roof. That's just a cost. So, we elected not to put it into the contract.

Okay. Um and the big number was 43 million if we do um agree, hey, this is a great plan. Let's just do it this way because we'd be saving almost $20 million. um that breaks down over 20 years, the payments on that or it just depends on the financing partner that comes in and and gives us the loans. I'll give you the highlights and if you have specific questions, um we've got a specialist here for that from JCI. But

the city really is in control of how the financing works. It's it's financing directly between the city and the lender. Johnson Controls is not between us in in that fashion. um they're effectively acting as our consultant offering to put that RFP together for us. Um we control what those terms are. They've told us these are very common terms for this kind of contract and they um talking with the manager, they fit well into future budgets and things. So, we did go uh the RFP does include a 20-year term and then the individual rates and things, you know, would be negotiated with the lender.

Okay. Uh and then my last question for now is um um this is escaping me. Um with it's something to do with the building with Oh, timeline. If we did move forward with renovating it looks like the whole building really uh at DPW, what kind of timeline are you looking at to have that completed? So, uh, Johnson Controls moves pretty quick. So, um, in terms of most of the components in the project, they would start, uh, almost immediately. Um, water meters being replaced this summer already. DVW, we still have to finalize. The the drawings are about like a 30 to 40% from what I understand. So, we've got to get the rest of the way there. And they expect that by October, we would start uh the DPW facility. the entire timeline. They've estimated at 18 months. Um that's the whole program, not DPW. That is a little bit shorter window kind of in the middle of it. Um but we would likely be moving into trailers in the parking lot, you know, for hopefully no longer

no longer than you had to. Okay. Sorry, one one last question. If you go back to the the rendering, um I know that we haven't got all the way here yet, but um the proper safety procedures will be in place for the community room because uh on the other rendering that you had, it looked like um mechanical or maintenance or something was right on the back side of that wall on the um the uh architectural drawing that you had pulled up. Yeah. um just to make sure if we do have public in there and we're having a public event, there's walls and locked doors and signs to say, you know, this be over here, not over here kind of thing.

Yep. There's So, there'll be that separate entrance there shown kind of on the left of this rendering and then the only way to get from the space into the other parts of the building is through just one lockable door into the office space. Okay. Thank you. Thank you, Commissioner Keo. Commissioner Coaching.

Yes. Thank you. Um and and thank you again, Director Vanderhead, and your team and Johnson Controls for all your work on putting this together. Um it was obviously a lot of work. Um my aunt worked for the city back when you guys put in that new building and so I'm really happy to see it be replaced uh potentially. Um, one of the things I wanted to ask about was that conference room that we have up on the screen right now. Um, looking at this is the um, this is a different room, but the conference room space was fairly large, but I saw a green like pickle ball court on the bottom. Is it potentially used for like wreck space as well?

Yep. Good question. Yep. So, um, if you were to come to DPW today, you would find some blue tape, uh, in part of the building where our employees do on their lunch break, uh, often engage in pickle ball. So, uh, the architects kind of ran with that and rightfully so. And you can see on the floor here, uh, whatever flooring type we end up with is is demonstrated there in a pickle ball court shape. you know, calling to mind that exercise classes, child care services, or an indoor pickle ball rental perhaps, you know, are all ways that this space could be used.

Okay, I like that. I I really do. Um, the one constructive criticism I would have as a mom, uh, is that those kinds of dividers that work great in offices are not going to work great when you have kids on one side of the wall and people working on workout equipment on the other side. That's going to fall over. So maybe some kind of thing that like slides like they have in the high school gyms might be a better option. Just some constructive criticism there. Yeah.

Um how much are we anticipating renting out this conference and uh utility space for for the public? Yeah, we're still kind of figuring that out, but we anticipate that it on the weekends would likely look a lot like our other rental facilities, the Simray Center, the McGraft community building, rentable, you know, perhaps Friday, although we're still considering what that looks like to have the public renting the facility while uh city operations are still going on, mostly the parking. Um but certainly Saturday and Sunday and then during the week uh it would probably be a combination of DPW uses. So for our trainings, for our large gatherings, right, uh meetings, uh seasonal, uh dispatch might happen from this room. Uh since there's about 20 of them uh and then a mix of recreation programming as well.

Okay. Yeah. And if we had any kind of like emergency crisis, it would be a good space as well. I think it would be um the you had mentioned the the water meter replacements. What was the cost again for the water meter replacements alone? Just a little over 10 million. 10 million. Okay. Um and can you estimate how much because you said you have to replace them every 20 years. How much are our current models like to replace? How much? um like we just stayed with a old-fashioned trucks driving around kind of model.

So, this might be a time when I pivot to JCI, but my understanding is um so there's a $10 million cost associated with those water meter replacements. There's $14 million in savings associated with those water meter. So, all of the things included, we're actually saving money by replacing them. Um, however, part of that, you know, 20 20.6 million there at the bottom of the slide, how much it would cost to do it over the 20 years if we didn't do it all in this program. A a good portion of that is meter replacement. Is the meter replacement.

We do we do right now because of the lead service line program, we're replacing about $600,000 worth of meters a year. Okay. All right. Thank you. Um, and then you want to jump in? Yeah. Can I can I jump in one second? Um, Director Vanderhiden, correct me if I'm wrong here, but one of the um, things that we've been doing with our meters, like you said, that blue one that that you said that you showed, if you had one of those, we would continue with that. That's the meter that we're going towards anyways. And so, our objective over the next 20 years would be to replace these meters with that type of uh, radio read meter, which actually provides a higher level of customer service. Um, and so this would be to get everybody on the same system at the same time.

Okay. get it all get it all done in a year or a year and a half instead of over the course of the course of time. Gotcha. And then um you had mentioned the parks and the irrigation costs with the irrigation controls. Um do you know what parks we're looking at doing that with or is it all of our parks because that would be great. I might have to introduce John from JCI to answer that.

I would love to talk to John. Um I as I recall it was the larger parks um because I know for certain cemeteries it didn't quite make sense to do it. They just didn't use enough water. So it would be larger parks like Reese and Craft I would assume and Cipher parks like that. Whether or not it's those specific parks I don't recall at the moment. Yes. if you'd like to come in yourself and weigh in on that question. Yep. We got my list here. Uh it's the Cyphere Park, the ball field at Marshfield, uh Terrace and Shoreline Park, Hackley Park, and the Martin Shoreline Park.

Okay. So, now what was that last one? Martin Shoreline Parks. Okay. So, the the Martin Shoreline and the Terrace and Shoreline would be the the two systems that uh irrigate shoreline drive. Yeah. Yeah. That that's a very welcomed improvement with that replacement and and sensors and monitoring. It's amazing how much criticism we get about you're watering while it's raining or how many questions we get about that. Yes. Yeah. The watering systems. I see. Okay. Gotcha. That's all the questions I have at this moment. Thank you, Commissioner Kosan. Commissioners, any other questions? Commissioner German.

H yes. Thank you, Mayor. Thank you, Director Vander Hyde. and um to Johnson Control for this presentation. Um he said replacing those water meters. Uh I think last time you were here I kind of spoke out and how my water meter was kind of saving me money. Come to find out there was a defect. So city manager contacted me and now I'm spending more money, you know. So hey, I'm going just kind of keep it to the minimum now. But anyway, um I heard the um word guaranteed quite a bit and um work that um Johnson Controls um provides they guarantee their work, the years of service, um the history about the um company or organization. Um as for the uh dollars amount and the funding of this project, who's going where is this coming from? what budget

scroll through here. So, those are the the budgets that um those costs will come from and they all add up to uh that 2.345 million at the top. Those numbers underneath it are how it's distributed to the different budgets. So, the top line is the general fund budget. That's the one you guys um pay the most attention to. It's the one funded by property taxes, income tax, etc. Highway fund budget is the one funded by gas taxes. We get that money from the state and the federal government. Uh sewer and water funds are funded by the rates and and charges that those systems charge. The marina is funded by the slip fees that folks pay to have their boat at the marina as well as uh the launch ramp fees that we get. engineering actually um gets paid effectively by some of those other funds on a project basis. So if highway uh has a road that needs to be rebuilt, they pay the engineering group to do that. The equipment fund is the fund that um owns and pays for the snow plows, the police cars, things like that. And those are all different budgets that appear in the budget book. Most of them are in the like special funds and enterprise section, you know, behind the general fund, which is the one that's upfront and gets the most attention paid to it.

Okay. And the rest of the funding would come from like from where? A loan or from the bank or? Yeah. Yep. So the financing would be through a bank and then that 2.345 that's the the annual payment to the bank that we would have to make and then those funds listed there would would contribute those amounts to that payment to the bank. Okay. Has there been any consideration for like grants or anything like that? Uh have city looked at grants opportunities?

Yeah. Yeah. Unfortunately for for DPW buildings and water meters and the things that we're doing here, there really aren't good grant sources. Um there are good grant sources for you know water mane replacements and road replacements and things like that but these um the things that go to support those projects are much harder to get grants for.

Okay. um looking at um like risk allocations and responsibility during this um renovation. Uh who would be responsible for equipment and performance and maintenance uh during the repairs um during the contract period like if something happens um who's going to be responsible for that?

Sure. So it would be mostly the city if any repairs did happen. However, if any of those repairs or, you know, problems that cropped up were part of something that Johnson Controls had guaranteed, then they would be obligated to come back and fix it. So, I'll give you an example on a water meter. So, let's say we put in a whole bunch of water meters. One of them has a bad battery that goes bad 5 years into the the contract. Johnson Controls comes in, they work with Master Meter, the company that made the meter, and they either replace the meter or they fix the meter, and they're obligated to do that at no cost to us as a part of the contract. But if it were just a a maintenance item, so changing the furnace filters and, you know, painting a room that that you know, the wall got dented, something like that, those kinds of daily maintenance tasks would still be on the city.

Okay. Thank you. Um, one last question. Um, equity and community impact. Are there opportunities for local workforce development for um, small businesses, local businesses, um, black businesses, uh, those type of opportunities? And looking at the demographics for um, the organization itself, how diverse is um, the organization itself, and are they in EEOC compliance?

Sure. So, I'll say that um as from what I understand, Johnson Controls is pretty agnostic about who they work with and they're they're ready to support, you know, our goals with as far as contracting goes, but I'm going to turn it over to whomever they deem their expert uh on on those kinds of questions to answer that in a better way. Okay. Thank you.

Hello everyone. Uh Bradstat, Johnson Controls area general manager here in the Midwest. Um we've worked through we haven't let any subcontracts yet other than uh a lot of the design work that we've done. And uh we're we uh we think the best way to do this project is with as much local content as we as we can get to support the local community. and that that includes, you know, anyone who's qualified and uh if we need to have a priority around um making sure that there's the right participation, we're very open to that.

Okay. Um because and the reason I ask these questions is because, you know, a lot of businesses and organization come in front of this commission. and I've sat on this commission now almost 15 years and um promises were made or recommendations were made, but um I believe in the facts and and seeing those opportunities um for small business, local businesses, um black businesses and minority businesses. Um, so although we can't tell you who to hire uh a subcontract, but we would like to see that type of diversity and inclusiveness within our city because we have taxpayers who u work hard um try to make a living but and outside business come here, you guys are going to make your money and um if they don't have a equitable opportunity then it defeats the purpose of our mission and what we're trying to strive for as being an inclusive um community. So these are um questions that I ask intentionally to make sure that um these type of opportunities exist for um local contractors and residents here.

I appreciate you you asking that. We're on the same page. I believe these projects work better when we can facilitate, you know, opportunity for local businesses. Yeah. Yeah. Okay. But thank you. I have no more questions.

Thank you. Thank you, Commissioner German, and thank you, Mr. Estat. Um, with regard to the um, bidding process, they're going to facilitate the RFP um, and and helping disseminate that information and attract biders and the like, but ultimately um, you'll be making the recommendations in alignment with what our established city policy is um, our procurement um, and purchasing policy and then that will be coming to city commission and the city commission will be approving each contract. So, because we're entering into an energy performance contract, we're entering into that contract with Johnson Controls. And in May, we did an RFP or RFQ and selected Johnson Controls as our energy performance contractor. So, they are going to bid and and get the best prices that they can, right? Um, and do that in multiple trades and for multiple components of the project. But we're contracting with Johnson Controls.

Okay. So they will be solely responsible for all the um subcontracts then. Okay. So the contract that comes before you in in two weeks, two weeks from tomorrow um for for vote would be the contract for the entire program that is presented tonight.

Okay. This will be coming back to just in two weeks then the contract with Johnson Controls. Um, and then we got to wonder, um, kind of in in the same vein as Commissioner German, I wonder how we might be able to utilize this to partner with our local school district um, for example, um, Mskan Community Education Center um, and the program that they have there, which um, really trying to get more of our youth and our students um, with practical knowledge, practical experience um, and so I'm hopefully we might be able to uh incorporate that into this this project um in some way. And of course, we'd love and happy to hear that you also support local content and and local contractors. We would very much like to see uh to the greatest extent possible local contractors on this job.

Urge them to do the homework on that.

Yes. Um, mayor, getting back to your point about incorporating it in the curriculum in the schools, we have a fantastic program called Pathways where we work with high schools through their vocational programs and we set up labs in the high schools. We teach them HVAC trades, chillers, these these control systems that are very state-of-the-art and very very sophisticated. um we help them get jobs and we there's like 400,000 of these that the market needs that we're going to be short very soon on these skilled trades. So we have a vested interest in pursuing that. That's something I think we ought to talk about a little bit more. We've done it in Philadelphia, Illinois, um Baltimore. We've done it in some smaller cities in Illinois. So I know it's it's an option. So let's keep that on the table for discussion.

Yeah. Thank you. And I appreciate that, Mr. DS. Um I would also before I go to uh uh Commissioner Sinclair, but also just um recognize that yeah, it is sensible that you know, you would be um having control of the subcontracting particularly because you're providing the guarantees. So if it's not performing and we're not realizing those savings, you're going to be on the hook uh for uh paying that shortfall. And so it is sensible that you would want to have that um level of control over your contractors to ensure conformance with expectations. All right, Commissioner Sinclair.

Thank you. Uh I'm wondering if you can talk some about the anticipated environmental impact of this project. Sure. So um let me find the right slide here. So, uh, John from JCI can probably, uh, answer all of the numbers questions, but I can say that, um, the way the energy performance contract is structured, it's to it's to our benefit and to Johnson Control's benefit to find all of those savings that can be found.

Those savings are environmental impact reductions, right? new equipment uses less electricity which requires less. And it sounds like they've got a better answer than I do. So, I'll let I'll step aside and let Chris answer this one, too. Um, but I think, you know, the top line of this slide that 3,900 metric tons of CO2, it it demonstrates that, you know, there are going to be real and measurable reductions in our energy use in our facilities.

Yeah. Sustainability is is at the core. That's the name of our division is sustainable infrastructure. This is how we go to market. This is very important in a in a key uh part of our mission statement. This project will impact the environment in a whole bunch of ways. The 3,800 metric tonses is just the energy that you won't be using that doesn't have to be uh produced through fossil fuels here in Michigan. That's the equivalent of about 900 passenger vehicles that are coming off the road. So that by itself then you look at the water um the water that we're going to save like like the leak detection is going to save you finished water that's not that's being lost into the ground that's being pumped and treated and stored with a lot of energy that that's going to go down significantly. Um we're not rolling trucks for meter reads for rereads for troubleshooting. All that's coming out of the equation as well. And then these new chillers that are going in here in this building and the one that's going in at DPW are state-of-the-art refrigerants. And refrigerants are a really terrible contributor to global warming. The the GWP rating on what you had in there was something like 1,200 times that of CO2. The new ones are like eight. So So we're really excited that you asked that question. We're really excited about this project that it can that it can achieve these uh and have these measurable impacts on on environmental stewardship.

Thank you. And I want to just add a local anecdote um to some of the upgrades that'll happen. The generator at DPW is a uh World War II um Continental Motors generator. Wow. So, um, Dan can probably give a little more. Oh, sorry. Or a tank. I I asked John actually to pull the label on that because I was going to tell that story. Oh. And it, uh, it turns out that may have been exaggerated. Oh, okay.

So, unfortunately not. However, I encourage you to come out and take a look at it if you're interested because it is quite a sight. It's a really old motor in a really old box and I'm sure it's pretty terrible. So, and in our budget that we're going to talk about in a little bit, there is a generator at the Lakes uh Lake Fire or the Lakeside Fire Station that's going to be replaced that is 50 years old. Um, so we we we've got a lot of old generators that we're going to be reinvesting in to make sure that they function the way that they should. So, so not as cool as I thought it was, but oh well. So, any additional questions, Commissioner Sinclair? I have one more question here.

Before I go to follow up, uh, Commissioner Jackson, do you have anything to ask at this time? Um, no. Thank you, Commissioner German. Yeah. Um, um, you know, all this work and and investment we're looking at doing, how would data be shared? Um, will it be um performance data shared like dashboard, annual reports or what? So the public would know um how all of this is working. We are u we have proprietary technology called Open Blue Enterprise Manager and it's a dashboard

and it ties into the meters and the buildings that we touch. Um it ties directly in you can actually pay all your utility bills with with just a touch of a button because all those meters are tied in. So we're constantly monitoring how we're performing, what what the footprint of the building is. um what's the and then you can do scenario modelings. What if I do this? What if I insulate and put in high R value windows? You can do all that with that as well. It'll uh circulate and write a sustainability report. And on that note, I don't know if we've mentioned it or not, but we anticipate uh Energy Star certification for the DPW building because it's been designed with high efficiency lighting and HVAC and controls, etc., etc.

Okay. Okay. And I guess this would be for director Vanhigh. Um for that data and information um that would be public access and all of that stuff too, right? I think it would depend on uh exactly what the data is as far as the energy use the buildings and things like that project. Yeah. Yeah. If it uh initially I thought your your question might be about the water, you know, account data that would be available to each individual person that obviously would be private to their account. So yeah. Okay. Thank you. Thank you, Mr. German. Mr. Manager,

um I don't know if Brad or Chris could refresh your memories on the story, but when you guys first presented to us, you talked about particularly on the uh water meter side in the city of Toledo and how that impacted their customer service side of things uh for the information that their customers had and how that impacted their operations. if you'd kind of introduce yourself once more. I'm sorry. If you'd kindly introduce yourself once more for anyone that's just tuning in.

Sure. Uh Brady Stat, area general manager, Johnson Controls. Um it we did a significant project with the city of Toledo with a much like yours a water meter wholesale water meter uh replacement residential and commercial with a AMI network which eliminated the me the need for for the manual reads and the driveby reads and um what the city of Toledo had shared with me is um obviously a larger group of meters there they had 120,000 but to manage uh customer service, they required a small call center and uh and the measurement they used was the fact that about halfway through the project, halfway through all the meters being replaced, they didn't need the call center anymore. Um, so what Doug Stevens, the director of DP DPW there, always advertised is even if it wasn't for the savings, even if it wasn't for the improved infrastructure, I still would have did this project because what it did was it enhanced the ability of us to serve our customers. Um, no longer did they have, you know, you know, um, an accuracy, uh, challenge that was, uh, you know, very frequent from the customers. And then all the customers had an app where without calling they could just go online and look for themselves and then use some other features on that app that allowed them to you know set alarms on usage and and things like that. So they were uh the city of Toledo was very very impressed with the the enhancement and customer service that they got.

Thanks. Thank you Mr. Any additional questions? No no thank you Commissioner Ko. Thank you. Um, Director Vander, I had just a few last questions for you. Um, kind of a two-part question. The first question is, um, if we move forward with this, DPW gets pretty much a totally brand new building with, um, utilizing some of the unused spaces that we're using now and all the different departments that are in that building. Do you see this creating new jobs with the city of Moskegan in the DPW department?

I don't see this particular project creating new jobs, but I I see us setting ourselves up for success with future new positions. You know, we're the office that we have now is far too small. We have, you know, people shoved in corners literally. uh our admin assistant, we created a little corner for her to live in because we had nowhere else uh for her desk to go. Um so this will help us be successful when we do add those positions in the future. You know, I think um as we've all experienced uh we're we're in a a good time uh for the city of Moskegan right now and that means that we're able to offer additional things. were able to do do more and I think time comes for DPW to need more folks to do that. This sets up the crew rooms to be better suited for those new employees to be better suited for them. And then um kind of on the same topic as Commissioner German, do you happen to know the demographics that DPW that we have? I asked because I've seen some younger folks um uh with some of our events that we have downtown, you know, they're they have they're driving a DPW truck or you know, they have their gear on. Uh and it was good to see um some young new blood cuz I know some of our DPW guys, hey, I've been there 25 years. Time for me to sit down, go fishing kind of thing. as we're filling positions that do come available. Um I I guess just a TLDDR, what is our process in um a young person who has aspirations to to have a good job like their dad, their uncle, their grandfather who I did this

for 20 years and I was proud of it. how would they get involved to look for jobs that may be coming up with our DPW department?

Yeah, great question. Um, so the first and and probably the easiest way to get involved is we hire a lot of uh temporary seasonal labor in the summer and that uh we partner with goodtemps for those employees. So um if someone's specifically interested in working for the city public works department, I would go right down to goodtemps and and tell them that's what you're interested in. and we hire uh although we've hired a good chunk of those folks for the the season already, we do hire consistently throughout the summer as folks drop off for various reasons. The other uh way that we've got I'll give some credit to my predecessor Leo Evans. He created uh a position we call the laborer position and it's a position in DPW that has uh virtually no um you know entrance requirements GED only driver's license. If you've got that, you're qualified for the position. Once in the labor position, the way that our uh internal uh union contract is set up, those laborers have the first opportunity at positions that come open within our our departments. So, if you're interested in working in the city, you can sign up as a laborer. We move those positions around throughout the different departments and get folks acclimated and introduced to different things that we do.

They might be helping the mechanics with tires one day. They might be helping dig in the water department another. They might be helping patch roads with the highway crew. Another they might be mowing with parks another. And those positions become available, they can say, "Hey, I I really liked that mowing. You know, I'm going to apply for that job." And be the way that it's structured, they have the first opportunity at it before we go look at outside candidates. I think that's really good information for people to know. Thank you for sharing. Thank you, Commission.

Any other questions, commissioners? All right. So, a lot of good information um particularly with regard to um the efficiencies are going to be gener operational efficiencies, the reduced carbon output um the cost savings um and and those operational and cost savings could create opportunities for us to hire more um and and fill out our staff more down the road. Um, has there been consideration to incorporating alternative or renewable energy generation as part of this project? Um, is there an opportunity to include that in this project?

So, I I asked specifically if that was, you know, something that would fit within within this. The the answer I got was that the the numbers don't work under the current tax structure, but somebody from Johnson Controls can probably answer that question a lot better than I can.

Yeah. When we uh John Crawford, John's Controls Crawford, you said Crawford, correct? Thank you. Yeah. when that discussion came up, there's a lot of changes going on and in and how federal tax credits and all that stuff would apply and the numbers just weren't panning out to make sense uh financially. So, we didn't uh pursue that anymore. We're trying to find projects that had significant financial impact to the

Okay. Um maybe a question for you. Oh, you have something? I was just going to say so the way the way we ended that discussion was although you know it doesn't fit necessarily under the energy performance contract model because it doesn't there's no savings to capture it's just cost under the current tax structure. So it's not to say something that couldn't be looked at for the public works facility or any other city facility. It just under the current tax structure there's no savings to capture and therefore the energy performance contract wasn't the the right way to go about it I guess.

Yeah. So when you say there's no savings to be captured is the thought that the the current cost installed let's say solar energy for for example the cost installed the solar energy panels um and the the anticipated lifetime um of of those panels um even though we'd be generating our energy wouldn't have to be buying it from the grid that the upfront cost to install and then maintain it is is going to exceed what it would be if we were just to purchase the energy directly. um from consumers energy. Therefore, there's no cost savings. Is that am I understanding that? That's my understanding as well.

Okay. Um Okay. Yes. So, kind of just an anecdote um for that discussion. Um Sitiva out in Moskegan Township, they originally when they built or when they designed their facility, they had solar arrays on their building. um because of the changing tax structure that they're talking about now, they they moved away from that option and they're actually buying into solar generation from consumers energy itself to support their installation of solar arrays or or um wind farms around the state rather than doing it on their building. Um so that this it's not a unique discussion to us. There are other industries that are very um environmentally focused and green energy focused that have actually shifted um away from that too given the current um regulatory structure.

Mhm. Gotcha. So I just learned that like last week. So um and Consumers is doing a a huge uh solar energy generation project out at the county wastewater facility. Just one more thing to add. Uh we did evaluate the wastewater treatment or the water filtration plant uh with the utility rates you're currently paying that added to the financial aspect of it.

Okay. Thank you, Mr. Crawford. Um Director Vanderhid, I I know they've expressed interest in the past. I don't know if it's been revisited um recently or at least with regard to the scope of this project that's been considered. Um but Chart House Energy based in Moskegan here um have you did the project at the arena have expressed interest in doing additional projects in our area. I think they did a project for the DPW in Northern Shores. Um is that an opportunity or is it should be revisiting with them whether or not this is an opportunity for them to be able to finance that um solar energy generation and us be able to both of us being able to share the benefits um of that?

Yeah, I'd be happy to sit down with them. They, as you said, they did the arena, did a great job, and uh I know um whatever the tax structure was at that time, you know, uh we we are saving money at the arena because of it. So, I'd be happy to sit down with Rob and see if it makes sense. Obviously, probably after the DPW facilities complete, um you know, to to look at it there, but there are other buildings uh to John's point, maybe the filtration plant, things like that, and see if see if they have a different uh path forward.

Okay. Thank you. One final question. This is a question for both Mr. Manager as well as uh you, Director Van Hyde. if if you wouldn't mind um engaging with the Mskin County Emergency Manager um management office about whether or not what's being currently envisioned for this, including in the community room and um and the kitchen there and and the bathrooms there. Um whether or not this would have the potential to become Red Cross certified as an emergency shelter. Um so I know that there's supposed to be a kitchen, bathrooms, and showering facilities. We don't necess have community sharing facilities. There's it's for employees, but we could make them potentially available on an emergency basis. Um, so I'm just wondering if there's anything that might be missing in order to get it to be a Red Cross certified emergency shelter.

Yeah, and this is something that the director and I have talked about. We we anticipated that it would probably come up because this is a a new type of space for us. Um, I think one of the um we're perfectly willing to have that conversation with the emergency management office. I think one of the things that would be um missing in our component or in our equation right now would be uh the bedding facilities, you know, that could probably be achieved. Um but then also the the the staffing that would be needed in those regards. So, uh when the uh you know, this past winter when the code blue uh proposal was brought forward, there was a staffing and a um a needs assessment that was brought out. um well thought out for us on the budgeting standpoint for staffing the the sta the budgeted cost for staffing was a little low. Um so we would need to look at how to incorporate that too. Um but it is something that that we anticipated would come up as part of the conversation because this is a new unique space that does have a variety of components that we don't have at McGrath, we don't have at Smith Ryerson, we don't have here at city hall. Um, and really they there's not a lot of other spots around the county that have this. Um, so it does provide a unique opportunity. Um, so not yes, not know, but we'll have the conversation.

Okay. So, uh, and and just to add some some some context or clarification from what what I'm asking is that the um, and I certainly welcome the opportunity of what we did this last winter, be able to provide um, some assistant accommodations during extreme weather events. Um, what I'm thinking of is specifically with a red, if it's Red Cross certified, then that's where the Red Cross can come in and use those facilities and bring resources and so we wouldn't have to be shouldering all of that ourselves. But I know they've got, you know, certain requirements in order to qualify as a as a Red Cross certified facility.

So, just wanting to have that conversation before we get this project done, making it more challenging to try to make modifications later. Um, so, okay. Well, thank you so much, Director Vanderhid. Uh thank you to Johnson Controls for all your work on this project and for being in attendance this evening to uh share information and answer our questions. Uh this really is an exciting project. Um it is many aspects long overdue for our our partners over at DVW um who have been working in some challenging uh conditions. Um and so I think this is going to be exciting not only for our employees at DBW but for our community as well. um having new community space to to utilize um our organization be able to reduce costs, have those operational efficiencies while you being able to reduce that carbon output to um align and and and further our our strategic goal of becoming carbon neutral. Um and so uh and we'll be able to use this uh create a financing model too. Um and so it's much appreciated all the work that you've done and the opportunities you presented to us. Um, and I look forward to the uh contract uh coming to us in a couple weeks.

Thank you for your attention.

Thank you all. Take care. Next item is corridor improvement checklist and give it just a moment. All right. Good evening. Good evening. Uh Mike Franzac, the planning director. Uh I would like to share with you tonight um something we've come up with the in the development services department. It's our corridor improvement checklist. And this is really a tool that we're going to be using to kind of expedite the corridor improvement plan process. Um we've conducted corridor improvement plans throughout different corridors most recently Apple Avenue and Pine Street. Uh but Getty Street, Lakes Lakeside over the years. Uh but one thing we're noticing is they kind of all recommend a lot of the same things. wider sidewalks, uh, street amenities, slowing down traffic, things like that. So, instead of waiting several years for funding to become available for a specific corridor plan, what we can do is visit these different business areas and kind of assess where they are at and where they want to be and um, some things that we can do to get the ball rolling. So, um, the first page just goes over, uh, what exactly the document is, explains what a business corridor is. Um, it's a street or area with a concentration of businesses that serve as an economic and social hub for the community. The goal of the document is

to improve these business districts and help out the businesses to help uh, attain the type of environment they want to see. And we'll do this by handing out these surveys to individual businesses and recommend that they fill these out either by themselves or as a group. If they have a business association already, that would be a great start to uh go over this at one of their monthly meetings. Um so once we receive that as staff, we'll have a meeting with them um and have the input meeting and then staff can come up with um an action plan on how we can address these issues and see some improvements. And uh we also have Isabella Gonzalez here. She'll be coming up the end to talk a little bit how we will roll this out. Uh we just wanted to present this to you tonight to show you uh what's going on in the business community and we'll also be ordering um some folders to put this in into a nice packet to give to the businesses. So we wanted to present this to you before we do that. So if you turn the page um you can see all these different checklists that are in here. Uh the first one uh is an active business association. What you're trying to do is check the box for every single item on here to have a strong businesses a strong business corridor. And one of the most important things that we see is having an active business association. Um engaged businesses tend to succeed. Uh it's a way to form partnerships. Uh oftent times you'll see uh really engaged uh business associations do sidewalk sales or partner on holiday ideas and celebrations like that. Um the Lakeside Business Association has always done a very good job about that. Um so we'd

like to really see a lot of these business areas. Um, we're noticing a lot of them have some cohesiveness and some synergy, uh, but they might not quite be there yet and they haven't really discussed that with the rest of the businesses in the corridor. So, what we can do is, um, we can offer help in u assisting articles of incorporation to make yourself a formal business association. Uh, and give you sample procedures and templates and structural and operational uh, guidance. Another thing we want to see is make sure you have the uh proper zoning designation. That would be on the next page. Thank you. Um here we're looking at what what are your plans for the future? Do you want to have a business expansion? Where would that look like? Would it be do you have room in the front, in the back, and the sides? Is that even possible with the zoning? Uh is your use even allowed in the zoning or are you grandfathered in? So, in meeting with uh these business associations, we can kind of help figure out what their zoning um they want to look like in terms of future development. One area that kind of popped in my mind just in preparing for today was the area on PC Street south of Lakeon, uh the Marshfield area, kind of the marijuana corridorish area. There's a lot of uh vacant buildings, but really nice structure um for a walkable area. And if you look at the zoning, it's actually B4, which if there's any type of catastrophic event in this area, it'd be hard to build that back with the current zoning destination. So, that's an area we probably are going to want to look at soon. Um this area does not have a lot of active businesses, so maybe that's something we'll take the lead on before we talk to them. But that's just a good example of meeting with businesses and

kind of looking towards the future and what their zoning designation should be. Uh the next one is uh supportive streets and sidewalks. Um, so a lot of times we'll talk to business associations and they'll complain about speeding through the corridor and a lot of times the suggestions are more police officers or cameras or things of that nature. But that's really not a feasible option for a long-term solution. Uh, you know, a road diet may be the best solution. Uh some areas it may not be, but uh it'd be good to meet with these businesses and talk about what they want to see. Uh are the sidewalks walkable? Are there enough areas for outdoor seating and things of that nature? A good uh example of that would be the road diet on Third Street a few years ago in Midtown, which created all the extra sidewalk space and landscaping in the area. The next one is desired street amenities. This kind of goes a hand in hand, but with more of the things uh you would see like street lights, banners, trees, um amenities such as that. Another good example, Third Street is an example we gave, but I think another area um probably we might want to see that next is Pine Street. You know, we have a lot of active businesses on Pine Street. Uh not quite as many street amenities though. So, um, we're working with them on creating a business association. There's some momentum picking up with that. So, uh, hopefully that's something we can get done in the near future. Next one is functional parking. Um, that's always a hot topic when meeting with business associations. U, but more parking isn't always the answer. Sometimes it is. Um, sometimes there's other solutions that we can find. So, we want to work with the

businesses and find the best um solution to these. Sometimes it's time parking, you know, maybe adding a two-hour parking if we need to create turnover. Um, sometimes just having a business association and and meeting together, you can come up with shared parking agreements. That's usually the best thing you can do is if you can work with businesses that might not have um, you know, participation at that business at night, but the one next to it may. So there's potential for shared parking agreements which we do see from time to time. And uh also changes to the on- street parking, just extra spaces. You know, we have a parking committee and we meet uh once a month and we a lot of times we're going over where we can amend parking or squeeze some extra street parking in that still meet all the safety guidelines. And uh we worked with Lakeside last year on that. They had some new ideas from for parking. And while we couldn't really address all of them, I think we were able to squeeze in an extra six to eight spaces on the side streets just by doing that. So that's always a good option as well. Uh the next box would be uh for well-maintained properties. And this really talks about, you know, what is what is the, you know, feel of of your business district? Is there any blight um or is there anything we can do to help beautify it? And in this section, we'll be talking more about, you know, are there facade grants available? This way, we can share the information to these businesses and let them know if they're in an area that qualifies for facade grants. It'll also help us know as staff where this is needed and desired the most. So, maybe we could make some potential changes uh in the future to some of these programs. Uh, and you know, we could also, um, share information on some of our CNS programs to help some of the residential housing units that are near these business districts. So, really just helping get the word out on some of these programs could be helpful as well.

Next one is business expansion assistance. And this would be talking about tax incentives and letting them know if you have an idea, if you have plans for expanding your your business, potentially there could be um assistance and that usually comes in the form of tax incentives. Right now, our commercial tax incentive really we're only left with is the OPRA. Uh but there's also NEZ's and sometimes you know we may know of some state or federal grants as well that we can share uh with businesses and the last one is funding options and the first one was the creation of the business association but I think this you know really will help business association or corridors understand uh what they can do to help fund all of these ideas. Uh it's one thing to, you know, request uh decorative lighting and banners and benches and trash cans and things like that. Uh but they have to be paid for uh by some way. And we've seen this in other areas in some of our business districts is the creation of business improvement districts, bids or CIA, uh corridor improvement authorities. And these are funding mechanisms to help bring forth some of the changes that we want to see. And uh the first step is creating the business association. And as I meet more often, I think we'll find that uh we'll have more um of a desire to have more of these funding mechanisms um and bids requested throughout the city. So this document will be given to the businesses. They have places to make comments. We'll have the public input meeting and then staff will go back and present um a plan much shorter than a whole corridor plan, but it'll give action steps. And this is something, you know, they can keep with them over the years, too. They might not be ready to move forward on

certain things, but it's uh something they can have a goals set on. And you know, I like to compliment the Lakeside Business Association because when I first started working here about 19 years ago, there was this plan already developed and it wasn't even a plan. It was just a bunch of pictures. Uh, and at first I didn't really know how to utilize that. And I think one time we applied for a grant from the state and we didn't get it. But although there wasn't a lot of action steps in it, just having that document and those business owners having a vision and always wanting this and always meeting with the city commissioners and coming to these meetings and say this is what we want and they had a vision for that and you know 20 years later now they have an improved business corridor with improved street amenities and a street. So, uh, that's kind of the direction we would like to see with this document is really to get some synergy going between the businesses and help build momentum for corridor improvements.

Excellent. Thank you, Director Franzac. You want to take questions or do we want to hear from uh, talk first if you want to learn about the roll out? Well, okay. Then before we hear the roll out, do you have any questions for what Director Franzac presented um that would be included in in the folder in the packet that would be shared um with businesses? Commissioner Kilg, I do. Sorry about that. Thank you. We'll get to you in just a second.

I do. I do, but I I I think it may be pertinent for us to hear it all together and and hear what um uh analyst Gonzalez has to say. Um, but I mean I do have a few questions for Director Franz. So, however you'd like to do it is fine. Uh, if it's pertaining to the information that we just presented, um, let's get into that right now. Then, uh, Director Franzek, other than the DDA, do you know how many business associations we have in the city? Um, there's Lakeside. Um, there's a quasi one on Third Street. I don't think it's formal, but they they meet quite often.

Yeah. Yep. So, I I'm aware of those, too. Um, so it's it does sound like in our other areas, Getty, Apple, other places where we have, you know, kind of some businesses and associations going to be encouraged. Um, so yeah, that's that line of question sounds like it'd be for uh Analyst Gonzalez. Um, is there content in the what was just presented that you had questions about? Um, no. But okay, that that was that was my one question for director Frantech was how many do we have established um business associations?

Okay, got it. Yeah, because I imagine Gonzalez is going to be delving into how we're going to be approaching and getting more of our businesses involved with associations. Uh, thank you for that, Commissioner Kilo. Does anyone else have questions though with regard to the content that was presented? Yes. You mentioned a B4 zone. Could you explain to me what that is?

Sure. So B4 is more of what you would think of our auto oriented type of business zones like driving down Lake or Sherman or Henry, you see um gas stations, car lots, cell phone stores, places you drive kind of like a one-off and then you hop in your car and go to the next place. whereas downtown you'd see more of a walkable area. Uh, and I brought that up because um, one of the areas I noticed that is owned before is more walkable and we probably should look at um, reszoning that. There just has not been any business development really much other than some of the updating of the marijuana buildings in in a couple decades. So, it really hasn't been brought to our attention. So, uh, meetings like this with some of the business owners will kind of help us talk them through that process and whether or not they would like to do that.

Okay. Thank you. Thank you, Mr. Jackson. Any other questions on the content presented before I go to All right. Thank you. Thank you, Director Franzac, and welcome on up. Hey, kindly introduce yourself.

Absolutely. Isabella Gonzalez, development analyst with the city of Moskegan. Um, so just to dive a little bit into the corridor improvement checklist. It's kind of guiding both myself and Joslyn, the other development analysts, um to I guess helping these businesses empower themselves and form their own business associations to address the things that they really want to see. um you know, you would never would have known, you know, that some businesses on Getty Street actually share the same common problem of snow removal and they're kind of acting as a united front um for for fixing, you know, how do they handle that with the sidewalks, especially in the winter um and when it gets super icy. So, you know, we we're using these this uh checklist to go over exactly what they want to see, how they'd like to see it. Um and you know, it's the development analysts that are facilitating this. So, we're walking out on the street. We're passing out flyers. We're connecting with all sorts of businesses if they need any sort of help, but also mentioning that, you know, there's a real opportunity for them to take advantage of uh their own tax dollars and their own money to invest it into their street. Um, and so this this is just a really awesome form uh that describes kind of all the layers that the city uh interacts with them and how, you know, they can also have their own input into it. Thank you, Anna Gonzalez. And I'm pretty sure don't go anywhere. I'm pretty sure Commissioner Kilo, you have some questions.

Um I think I think you kind of answered it um in the fact that your department, we're aware of some of our um business districts that don't have that association part set up. if we're handing this out like this packet and we can kind of encourage them to start talking with their neighbors cuz it only takes a handful of them. Like not everybody on the block necessarily has to join the association, but if it was, you know, one coffee a month at 6:00 or something, you know, we we're encouraging them to to get together to talk about some of the issues that they see and that they have in their uh neck of the woods and um how the city or themselves or having this association can solve it. Is that kind of like some of the the the things that we're talking about when we are visiting these businesses along with handing them this this package?

Absolutely. That is exactly what it is. Um a lot of these businesses haven't really met their neighbors before. Um so it's kind of unique to get them all around the table. Um coming from, you know, manufacturers to other automotive businesses. I mean right now we're doing it a lot with Getty and we've got some real momentum for them wanting to establish their own board. So, right now they're asking their neighbors. They're actually going out and inviting their neighbors to come to our our roundts. Um, and I'm really happy to see it that we can help facilitate that.

Awesome. Um, because with all the things that we're doing with housing that are great, we also need to encourage new small businesses to come. And if we have strong business associations, I think those kind of things help encourage small business owners to say, "Hey, I'm I'm ready for a brick and mortar because here's an association in this neighborhood that I can lean on for questions or, you know, how did you get started or tax questions or what's the neighborhood like?" Different things like that. So, I appreciate you and uh uh analyst Hines for what you guys are doing. Thank you.

Thank you, Mr. Kgo. and great observations on the potential benefits with the association. Uh, Commissioner Cochen. Yes, thank you. Um, you were mentioning all these different, you know, types of businesses coming together to try to work together. um if they're having like issues, is that something that the city helps with when you know when you're talking about kind of this whole business association process or you know, how do how do you help get all of these different organizations cooperating together continually?

I mean, they ultimately have uh similar goals, so they're able to unite themselves a bit um through their own discussions that we have at these roundts. Um, for Getty Street, we have quarterly meetings at the moment. Um, and they're they're just getting together to talk about the things that they are both all shv having shared problems for. Um, and this is encouraging them to band together to create a business association that'll hopefully head possibly a business improvement district or CIA that are funding tools um for I guess all of their own amenities um and things that they need. Okay. Thank you, Commissioner Goen. Commissioner German or Commissioner. Commissioner German,

just one question. Well, a couple questions. Um, are the meetings open to the public? Um, yes, they are. We do. Uh, we just we have them in city inside city hall. Um, we we post them on our social medias, I think. Um, and then they're at least on the calendar. Okay. But, yeah, open especially for those businesses on those streets. Great. Great. That's good. And, um, echo what U. Commissioner Kilgo was saying, you know, the benefit and opportunity and what you all are doing um gives those uh those communities the opportunity to look at and envision, you know, how they want to see, you know, their business grow in that possible corridor within that neighborhood. So, that's great.

Thank you, Commissioner German. Commissioner Jackson or St. Clair, anything to ask or add at this time?

All right. Thank you. Uh well, thank you Analyst Gonzalez and thanks also to Analyst Hines for the work on this and the outreach that you're doing to um our small businesses around the city. And I'm I'm particularly heartened to hear about uh that work on Getty and um getting the formation, you know, uh those conversations going so that an association or potentially bid or you know, corridor improvement authority will eventually be created there. Um, in in terms of the conversations happening in Getty right now, is that is the focus basically the Getty businesses between Apple and Lake and Getty or is it stretching beyond there or is it just a subsection of of between Getty or between Apple and Lake or

So, right now we're currently identifying where the boundaries could potentially be for Getty Street. Um, we've had a lot of engagement from the Betty from the businesses from Apple to Lake. Um, so that's a little bit of the idea that we're focusing on, but however, it could stress past Lake Lakdon all the way over towards uh a little bit past Keing above Hovi, I think. Hi. Okay.

Excellent. Um, it sounds like there's also effort of foot on on Pine Street um that we heard director talk about earlier and also preliminary conversations or or loose conversations on Third Street. So there's a lot of opportunity for more uh business associations and I really appreciate our development services team taking the lead on this and systematizing um the information that's available how we um you know can facilitate those conversations and support um our small businesses um that exist already that then like commission was saying you have those associations those relations that establish is going to be more um encouraging and inviting of more small businesses uh getting off the ground in our community and uh we very much want to um that entrepreneur ecosystem to support entrepreneurs in our community. So, thank you. All right, next item. Budget revenue presentation.

Whole budget presentation. I updated the title. So, whole budget. Yeah, whole budget. Yeah. Sorry, I just forgot to tell Linda. It is going to take me a minute to put uh change my computer over if um just FYI. Y'all need to get some refreshments right quick.

Yeah, if anyone wants to jump up really quick. Thanks. Thank you.

Even if the or they can reach I mean I know other way trying to think who else we know there Cindy is there she is okay Johnson there who Lorie Johnson

oh maybe she's an officer I don't know I don't know all the people offices there Cindy is a is works there that's what I was thinking awesome Yeah, she works there. Tom Popper just took over as the executive director. Tom Popper. Yeah, I knew that. So, yeah, he took over. Jennifer used to have a business on Third Street. She got married, but she also works there. Yeah, she'll

so I mean she's the one that would be responsible giving them a tour and talking all about, you know, the rents and services and what's available there. All right, for one more commissioner to return, then we'll get started. It's the first time I'm actually cold in here. I know. Yes.

All right. Take it away, Mr. Manager. Yes. Good evening. Jonathan Cipher, city manager for city of Mskegegan. So magnificent city

magnificent city of Mskegegan. Uh so on the agenda you'll see that it said revenue presentation. Um it's I'm going to give the whole budget presentation tonight. Um and then uh after the presentation I'll distribute the draft budget books. Um so I just want to note that the draft budget books are not the really pretty one that you get um in June that Cassie will work on u because some of the editorial stuff will change. I'm sure some of the numbers will get tweaked a little bit as well. Um, so just when you get that it's it's still the word document. Um, I do want to start by thanking the team here. This is I think we're 2 and 1/2 months into this at this point. Um, I'm sure that Ken and Jessica are like u tired of me coming into the office and changing things um from time to time. U but the finance team has been great. Ken and Jessica um Hayden uh who unfortunately no longer works for the city had a great opportunity outside um helped with this as well. All the de the division heads um Jackie uh and DPW worked really hard on the DPW budgets uh which make up a large uh chunk of the budget. We wouldn't have been able to do this without all of the effort of everyone um from our department heads on up working on this budget because this is this is a team effort balancing things out. Um as I like to start with all of my budget presentations, uh I just want to give a quick refresher on understanding budget speak. Um this is uh Commissioner Jackson's first budget with us, so I want to make sure that I'm not um confusing folks. And it's always a good reminder cuz sometimes I have to ask myself what does that three-digit code mean again. Um so when you look at the budget uh there's generally a 9-digit code that we're looking at and uh in the first code is the fund code. So here I just highlighted 101. 101 is our general fund and that's where most of the

general city operations, police, fire, things of that nature uh live. The second three-digit code um is the department code. In this case, the department is revenue. Anytime you see triple zeros, that is a revenue code. Um other departments will have uh their own code. Um the manager's office is 701, I think. Or oh, the commission's 101. Yeah.

Yeah. Oh, sorry. I have gez, I've got a note right here. I should look at my computer. Um the city commission budgets 101. City Managers 172, PD's 301, fires 336. Um, he put these notes up here for a reason. Uh, the third set is the account code. Um, and so what you have in the account code, this this will be the same uh through uh various departments as you look at the account. And occasionally you'll see this additional six-digit code. This is a project code. So when you have a project code, it's breaking down um more specifically from an account code to look at a specific project within um an account. Uh we also have several different um lines here as you move from left to right on the budget. So the first set that we looked at was the numbers, the description, pretty self-explanatory there. The next four sets I want to make sure that we're looking at. So, uh, when you look at activity, um, in this case, what you'll be seeing in your budget would be 2425. Um, so that's the most recently completed budget. Those are audited numbers, um, in that year. Uh, the next one is the amended budget. So, that is our current budget as amended. In this case, it would have been the six-year amend or the six-month amendment that we did this winter. looking for the current fiscal year 2526. Um the activity line is what has been spent through. Um so when you look at your budget books on the top of the line here it says calculations as of um in this case it says April 30th 2025. This is a snapshot from last year. Um it'll give you the date that the activity is through uh which we generally do to the last day of the previous month. And then the last set of numbers over on the far

end of the the far right end is the recommended budget that we will be talking about um in this fiscal year. So those are just uh some quick refreshers for you as we move forward. I also want to uh refresh everyone's memory on Headley and unassigned fund balance. So Headley roll back uh this is a 1978 Michigan constitutional amendment that limits property tax collection. Uh that's a very basic definition of what it does. Overall, the intent here is that cities won't generate additional tax dollars after adjusted for inflation than they would have when the property tax was originally levied. Um in our case, as I get into the budget, you'll see that we did have a roll back this year of about 3/10en of a mill. Um our our charter cap is 10 mills. We are now down to a little over nine. So, we're almost 10% below what our property tax um allows by charter. Um unassigned fund balance. We talk a lot about the unassigned fund balance. The city's unassigned fund balance um is around $7 million right now. The total uh fund balance uh at our last audit was 9.7 million. This is inclusive of the budget stabilization fund at 1.8. Um if you put those two numbers together, that's about a 20 uh% fund balance. Um, and you can see uh the fund balance on page 37 of the audit that was presented this winter, which is through June 30th of 2025. Per commission policy, we must maintain a 13% fund balance or higher. Um, if there's monies above that, we're able to use that for um one-time projects, moving things forward in the city, things of that nature. So, we're now going to dive into the revenue conversation for 2627. Um, we are uh anticipating that uh income taxes will uh continue to

increase. We're projecting to hit about 14 million in FY2627. Um we're on track uh to hit a little over u about 13.5 million this fiscal year as we um continue through uh fiscal year 2526. Um this is about a 3% increase over the current fiscal year. Um and so we're just anticipating some modest growth here. Uh we have seen some businesses opening and closing throughout the city. Um, and the folks in the income tax department do a really good job of working with businesses and working with residents to make sure that those income taxes are um being paid. Uh, property taxes, we are looking to hit a little over $8 million. Um, and this is an increase of about uh $400,000 or about 5% uh, which is where the cap with the Headley would be before the roll back. And just for reference purposes, uh we are subject to the Headley roll back and uh and just to give you the last three years in 2024. Um our mills were 9.6127. Uh rolled back uh a little less than three mills last year to 9.3 916 and now we are to 9.0985. Uh so as I mentioned our charter allows for 10 mills and we are um rapidly approaching nine mills. Uh so that's about uh in our case about $900,000 uh that we're not able to collect in property taxes because of that Headley roll back uh revenue highlights. Um, so this year there there's a variety of factors that are going that that are going through play here that I want to talk about. Overall, we're looking at revenues being fairly flat uh from the current fiscal year that we're in 2526 going into 2627

almost exactly flat. Uh, now I just talked about property taxes and income taxes going up. Um, that's about a million dollars right there. When you look at um some of these other areas that I'm going to talk about, uh there's a number of things that have decreased over this fiscal year that have kind of uh decreased the overall um growth that we've seen in our property and and uh income tax. Uh state revenue, we are looking at about a 5% decrease. This isn't strictly related to the funding formulas, but um the state has changed our funding formula uh for state revenue sharing. However, they are increasing our road dollars over time. Uh so there will be more money for road projects in the future. Uh we are also looking at uh these numbers going down because of some also anticipated changes in uh grants that we get from the state. A number of these are rolled down from the federal government. So, we're looking at a decrease there. Um, transfers in are decreasing. Uh, if you'll recall from last year's budget, we moved some money in from Perpetual Care into the cemetery to do some one-time things there. That is not happening this year. Um, unspent revenues um will be used this year to kind of offset some of those differences. is we're going to bring in about $421,000 um from our uh fund balance to um to move forward with operations for this year. Um so this means uh so this 421,000 another way to say this is that we're operating at a slight deficit of $421,000. Um however, when we're looking at the budget overall, um we think that once we get to the end of fiscal year 26 27 that we're planning for now, this these numbers will likely start to shake out for a couple different reasons. We're anticipating a number of retirements

over the next fiscal year. Um generally the people you hire to replace retirees uh have uh start at a lower wage. Um so that will that will be um helpful in that regard. Also within the budget, we're budgeting for uh full police staffing at 72 officers. Right now, we're in the mid60s as far as staffing goes. So, there would be although not a great reason, there's some savings there as well. Um so, as we look at how um how those expenses will be um distributed over the fiscal year, this $421,000 uh could be lower as we move through the fiscal year. We've also budgeted for um a couple uh costs that um may or may not actually come to fruition um including uh $300,000 for election equipment replacement. Um we still haven't gotten the thumbs up, thumbs down on that one yet. Um but we're planning for it just in case. We want to make sure that we have uh all the election equipment up to date. So um when we look at revenues as a whole, uh this is our revenue picture. This is the pie of where our various um revenue comes from before we look at the uh using some of our fund balance. So uh when you get your budget books, this pie chart is also on page four. You can actually kind of uh you know look at it a little bit more closely. Um in this area we have 12 uh budget categories and then the percentages are broken down. I do want to note other uh we always get questions about well that's you know 3.7 million what's in that other bucket this includes uh pilot payments or payment in lie of taxes um if uh procurement card rebates so we get a rebate from our credit card company every year for using those um special event reimbursement so when there's an event in town and we bill them for public works or police services that's in that line um interest

income is in that line and gains gains on investment are in that line. Um so we you know you could break that up a little bit more but then you get a bunch of little um pie pieces through that. Um fees are anything at 8.3% are anything that uh somebody comes in and pays for a service. Could be a um a zoning permit, could be a building permit, things of that nature. Those are all under the fee category. Um property taxes, income taxes we talked about. So income taxes do make up about 30% of our budget. Property taxes uh 17.5%. Uh the sanitation tax, that's a pass through that we use as a charge for service um at 5.2%. marijuana tax. We are projecting that one is going to be decreasing slightly for a variety of different reasons including uh changes in tax structure for marijuana businesses and the fact that uh one of our larger neighbors to the southeast the state of Ohio um now allows for recreational marijuana sales. So those crossber sales that used to occur when Ohio didn't have uh sales um will likely be going down and the state kind of spreads that out across all uh marijuana uh establishments across the state. uh when we uh move in the unspent revenues, it's a little less than 1% of of what we're looking at for the budget at that 420,953 or $421,000 rounded up. Um so that is to uh allow us to do everything that we want to do that we're recommending be done in the budget for the coming fiscal year. So we're now going to look at expenses. Uh the expenses for this coming fiscal year are very very very similar to what they are for this fiscal year. Um the

police department uh will make up about 29% of the budget. Uh and fire will make up 12%. So altogether um public safety will make up 41% of the budget uh here in the city of Moskegan. That is comparable to what you would find in other cities of our size, maybe a little bit lower. Um, parks and wreck will continue to make up 8% of the budget. Parks and wreck is is uh broken up between several different funds. Those are those uh three-digit codes you see there. That includes um park maintenance, park recreation, McGrath Park, Forestry, and drawing a blank on the fifth one right now. Um but those five make up the uh parks and recreation budget overall. Um sanitation. So that is street sweeping and trash pickup, things of that nature, just over 3 million. Um pension administration, this is something that we talked a lot about last year and I'll talk a little bit more about this year. Our pension administration payments, just payments that we make to MS makes up 11% of our budget. Uh it's just uh a little over $5 million in the general fund. You can see that there in the middle, the 203 line. So, um, all the different departments in the city, uh, pay a pension cost and then we we send a check off to, um, MS. And this is for both, uh, this is for former employees who have now retired or current employees who are still in the pension system, which we have uh, just under 40 of those at this point. Uh, development services makes up about a million dollars. It uh, makes up 880. Uh, general government operations, that's everything else. That's finance administration, clerk, treasurer, manager's office, things of that nature.

Um, 5.4. Um, and then transfer to, um, other funds, 835,000, uh, is the general fund expenses. So, let's dive into the highlights a little bit. Um, police department 29% of the budget. Um, that's actually one percentage point lower than the current fiscal year. that doesn't necessarily uh reflect a reduction in in staffing or anything like that. It actually what it uh really is reflective of is a reduction in our oped, which I'm going to get to in a minute, which is other post-employment benefit payments. So, we have two type of pension payments, OPB and then the straightup pension. Um, so I'll get into that in a minute. Uh, and then the fire department makes up 12% of the general fund. That's the same as last year. Um, I do want to note that in the fire department in last year's budget, we budgeted for an increase in staffing. In March of this year, we realized that increase in staffing by hiring three new firefighters. They are currently going through training. Twothirds of the costs of those three firefighters are covered by um what's called the safer grant, and that will continue through 2029. So, we're paying for one firefighter and getting three. And then in 2030 forward, we'll have to pay for all three of those um as we move forward through our budgets. Um so we had planned on hiring those, which is why the percentage did not change. Um and then that's offset by grant revenue that we're getting from the federal government. Uh looking at uh the next two uh that I pulled out, parks and Rex, which I talked a little bit about. Um but first I'm going to talk about pension cost. Uh pension costs will continue to be a strain not only on the general fund but all budgets. Uh this year the general fund had to absorb a nearly $500,000 increase uh in pension costs. Uh and now as I noted they account for 11% of general fund and we expect that to grow

to 12% before we peak. Uh these expenses are continue are expected to continue to grow um into into either 2029 or 2030. Um there is light at the end of this tunnel and when I get to the pension um graph you'll see how this how this has changed from the previous year and it's actually uh when I was creating that graph it was it was uh cool stunning I don't know I don't know how you want to say it but it it was actually noticeable on how these pension costs are going to be changing over the next couple years. So we are there is light at the end of the tunnel. Um we'll get our 2026 report um which will cover up through December 31st of 25 the middle of this summer and hopefully the trends that we've seen for the past two years will continue to confirm what MS has been estimating for the past couple years about when we'll peak which uh should be the 2829 cycle. I do want to note that is a year earlier than what it was the previous audit. Um the previous audit it was 30 um 30 um sorry 2930 and now it's 2829. So that moved up. Um the parks budget this is 8% of the general fund. This is actually a 1% increase of the overall general fund uh from the past year. This is somewhat driven by the McGrath Park grant or or McGrath Park fund that exists at the community foundation that um helps to fund projects at McGrath Park. So there will be one going on uh there this year. Um and this is also the last year and this is not reflected in this 8% budget. This is just general fund dollars. This is the last year the parks department will benefit from ARPA. All those ARPA dollars have to be spent by December 31st of this year. There's about $1.3 million in parks projects that still need to be spent. Uh that will be

happening through this year. So in the um the next fiscal year budget, the parks budget will just be what we have here in the general fund and then some uh in the 445 fund as well. Uh other uh uh breakdowns that we have here, contractual services make up 12% of the budget. Um and uh the city gets a wide variety of services from contractual services. This includes um contracting with Moskegan County for assessing um for our HR recruitment uh with Safeuilt um legal services and then a variety of smaller contracts for software and consultants and things of that nature. Uh general government operations overall uh make up 15% um of the general fund budget. Uh and this is about $7 million. Like I said earlier, this includes the clerk's office and elections. This includes financial and administrative services, the manager's office, HR, which we're going to partially pull in house in this next fiscal year for the HR director, uh communications, things of that nature. So, a lot of the things that touch um our our community that provide services to our community are housed in that general government operations section. Um it should be noted that last year uh in the budget report uh this these two numbers were chunked together under administration. Um when uh getting feedback from commissioners, there was some desire to see those numbers split out a little bit. So, we did split those out, but I did want to note that those were um broken out differently than they were in the in the past year. We could break that general governmental operations out even further into each department or division, but then you start getting a lot of little pie pieces and it gets a little confusing with the definition. So, that's why we kind of chunk those together. Um, I do want to note uh some projects

that were not included in the general fund this year. Um, replacing the roof here at city hall. This is um I believe the third year that we've kicked that can down the road. We are projecting to include it in the budget next fiscal year. Um, 20 uh 8 27 28. I got to think what shears we're talking about here. um and reconstruction of the city hall parking lot and uh the Trinity Health seating are all projects that uh did not make the cut this year. Um and this is the same for every fiscal year. There's projects that don't make the cut. Um there's things that we we want to be able to do but we're not able to do. Uh some other some other smaller projects that don't make this list. Uh we're redoing the driveway um at the Marquette Fire Station. Uh there's some cracking in that driveway. We wanted to get that replaced. That'll be delayed a bit. Um there's also been some reorder reordering of park maintenance. Uh we've delayed a key card entry system here for the internal doors at city hall. Um and similar small items have come out of the budget once once we started making those reductions uh that I talked about earlier. So we we did about $900,000 of of cuts in the budget uh after we got the requests and to try to get it as uh to take as little out of our fund balance as possible. Uh we also uh cut back on some contractual services, some internal technologies and reduced some professional development budgets to uh help to balance that budget out. Uh like I said at the beginning, this really was a a team effort to try and and uh reduce that deficit as much as possible and make it manageable for what we would be taking out of the fund balance. Um, you may recall that last year when I talked about this page. There were other things that were on this uh on the not funded list, including body camera system for our police officers. That is included in this year's budget in the 445 and the capital improvement budget. Um, and that

uh is going to be paid for over a couple of years. That is a needed upgrade. Uh those uh body cameras have reached the end of their useful life. that is a critical tool that our police officers need and our community members expect our police officers to have. So, we will be um replacing those. We will also be phasing in taser replacements over the next couple of years um as opposed to doing it all at once. Um and we'll also be um phasing in some other equipment purchases in various departments. generally like to do those things particularly in the police department and the fire department all at once because when you have our first responders getting into vehicles or having different equipment you want them all to have the same equipment. Um but there are times when it is okay to phase those things in. So where that's advisable where we are taking that phased in approach talk about uh our enterprise funds a little bit. So outside of the general fund uh which director Vanderhid noted in uh the JCI presentation are are generally funded with property and income tax and state revenue sharing and things like that. Our enterprise funds are uh funded through fees for service such as water and sewer. Um so I do want to note that uh for this coming fiscal year we are projecting adding more money into our water fund balance. We're projecting revenues of 23,745,66 and spending about $23,70 for um um $574,000 uh in surplus in the water fund. And this is great news in the water fund because what we're looking at for our projected fund balance here at the end of 2627 is $1.7 million. Now you will remember uh just a few years ago that

fund balance was negative -2 million. Um and because of the city commission action to um do some non-popular votes with rates uh we're moving in the right direction and um this is uh you know we're not there yet. We do want to try to hit that uh six or not we don't want to try we are aiming to hit 6 months of operational revenue uh which in this case uh would be about 11 million a.5 dollars and that will take several more years to get to that point but that is what our objective is with this and we are on the right track um and that all has to do with uh the tough decisions that you all have made as commissioners to move us in that direction. Um so the I I do want to note that the 2526 projection right here that is a projection of of 1.1 and then that you know the 2627 is a second projection on top of that. Um so we are you know looking to have that fund balance based on the audited numbers that we have. Um the audited numbers for the water uh fund can be found on page 42 of our most recent audit uh that was presented this winter. Um, looking at the sewer funds, uh, this is a smaller budget than our, uh, water fund. It's about 10 million in revenue. We're looking to spend a little less than 12 million this year. Um, so we are looking to have a, a deficit spend here. Uh, director Vanderhire Vanderhyde and I were having a conversation about this fund uh, earlier today actually, and there's a couple projects um, that might get moved around. So, this $1.2 2 million um spend out of the fund balance is likely going to get adjusted a little bit. So, I don't have uh what the projection is going to be for um the end of fiscal year 2627 because we're making some

adjustments um to some um anticipated projects that might get moved back because the need might not be there as much as we thought or um just trying to make sure that we maintain uh the about four and a half to 5 million fund balance that we want in the water in the sewer fund. So, I want to talk about some of our historical revenues to kind of keep things in perspective. This is a this is a conversation that we had last year as well. Um, so when you when you look at our budget, our revenue in the general fund over the past 10 years, you go back to 2015, our revenues were about $25 million. Um, and then as you look year-over-year, um, through 25, there is steady growth. We did have a a rel we we did have a down year in 2019, a flat year in 2020, an up year in 21. A lot of that had to do with uh with uh COVID relief dollars that were coming in from the state and federal governments. Modest growth in 22. Um and then some pretty impressive growth in 23 and in 25. 25 we were about $44.2 million, which actually uh was well over a million dollars past what our projection revenue was for that fiscal year. However, um, so, so that that's $18 million over 10 years. However, when you adjust that for inflation and look at it in constant dollars, so if you adjust those all the 2015, um, what you're looking at is about an annual increase of $700,000 between um between now and or between 2015 and now. uh and we did have some numbers some years 2022 for example where there was actually there would have been a reduction as well as 2019 when you start making those adjustments for inflations. So why is this important to look at revenue um adjustment for inflation? It gives us a more accurate representation of the power of the dollar

year-over-year. Um and obviously this doesn't just impact us. This impacts you know everybody in our community. This impacts everybody everywhere. Inflation is a real thing. Um, but just keeping in perspective in 2016 if we said that we were going to have $45 million in sal in uh in revenues that that would be a pretty big shift. Um, but adjusting it for inflation kind of measures that out a little bit. Um, and looking at how that relates. So, pension obligations, this is the slide that I'm really excited to show you guys. As noted earlier in the pension or in the presentation, pension costs continue to increase and will account for 11% of the general fund in fiscal year 27. Um the general fund here is shown in orange. Our total pension obligation is in blue. So everything above the orange line are things that are being paid by our enterprise funds or other funds outside of the general fund. Um the blue line, oop, sorry, just said that part. pension costs are now slated to peak in 2829 as I noticed. So in this in this slide it's the 29 um the FY 29 bars. Uh that is two fiscal years from what we're planning now. Um as noted before this was in fiscal year 2930. So it got moved up a year. So our plateau is looking to be 20 F FY 29 and FY30 and then starting to see decreases going into 31 and 32. My hope is that when we get the next report uh in the middle of this summer, we'll continue to see that downward trend. So this is the first time that I've created this budget chart that there wasn't uh four more increases in our future and there's now two decreases. really technically three because FY30 is slightly lower uh than what FY29 is. We are moving in the right

direction. There is light at the end of this tunnel. Um I do predict that the the market report that we'll get for for 2025 will continue to hold these trends going forward. Uh 2026 we'll we'll see how those trends hold out. Um but MS estimates are about a 7% return for their best case scenario. So hopefully we can continue that through 2026. Um you'll recall when I was talking about the police budget, it had decreased by a percent overall of the general fund. And one of the reasons is the uh other postemployment benefits. So most uh legacy cities have two types or three, we have two types of uh post-employment benefits or pension benefits. Um and and OPED can be a variety of different things. In our case, OPEB is specifically healthcare for retirees. And we still have a number of uh active employees who have these uh post-employment benefits. Um I believe that one's north like about 45. Um so there's a few more people who have OPED benefits than have pension benefits. There was a window where we had closed the pension but still had the post-employment benefit. So buried within our annual report on page 99, it talks about our OPED liabilities. Um like our MS pension benefits, we also contribute to that. Like I said, you might recall from our January audit report, um our oped obligations were more than 100% funded. The auditor noted that specifically um and it and at that point stood at 117% funded as of June 30th, 2025. staff is projecting that p that percentage to increase during the current fiscal year and it's estimated to end around 120% um by June 30th of this year. Um during

the current fiscal year we've contri we've continued to contribute to OPED as the 2024 audit recommended. In this year's audit on page 101 you will note there's a goose egg. it says we do not have to contribute to OPED. So in this year's audit on that page um since that is indicated we don't have to contribute we will not be contributing to OPED in fiscal year 2627. This saves us about a million dollars in the budget which is amazing considering what revenues are doing right now. It makes this budget much more manageable. Um and it saves money across our other funds, water funds, highway funds, sewer funds, things of that nature. And as staff kind of had this conversation about do we really feel comfortable not contributing to OPED? We've done this forever and we've done you know incremental increases to try to get this to 100% funded. We played through a number of different scenarios and we are comfortable not contributing to OPED going into 2627. And here's why. So, this isn't something that we've talked about a lot. Um, but thanks to the market's help and our shrinking liability pool, so as retirees come off the healthc care plans, um, our actual OPED liability has decreased and the funding level has increased. If you look back just 5 years ago, our oped liability was 32 almost 33 million and what we're sitting at now is closer to 24 to 25 million. Um I do want to note here if you're looking at this slide, you'll notice we go from uh 2022 to 2024. That is because 24 represented an 18-month window um in which we adjusted the OPB from our calendar from a calendar year to a fiscal year. So essentially it was

a 18-month year. Um which is why uh there's no 2023 there. Uh and then 26, 27, and 28. These are all staff estimates based on current contributions, what we know has been paid out year-to- date. So uh the finance department gets reports from MS on how much we've paid out um in these benefits uh which is about $2 million a year. Um and then this uh this 26 number assumes and 27 sorry the 27 number assumes no OPED contributions going forward. Um, so I do want to note that one of the things that we looked at was even if the market saw a negative 6% from June 125 to June, sorry, July 125 to June 3026. Um, we would still end the fiscal year above 100% funded. Uh, we're projecting a 6% growth this year. Um, which would put us at about uh just under 30 million funded. um noted here and highlighted with this arrow 29.9 million um and that 6% is a is a conservative estimate as looking at the market returns on a rolling average from July 1 uh is actually a little north of 10%. So depending on how that goes, we wanted to be a little bit conservative there. And then we estimated that in the following fiscal year there would be a 4% increase in investment. And then factoring in payouts, we would still be $4 million overfunded in our oped at the end of 2027 without making um any contributions. So really the market would be doing the lifting there. This is something that we have to be cognizant of. This is something that we have to keep an eye on because we don't want to get that funding level out of whack where we're having to make big

contributions again. Um, and then as we move into 2028, um, we are estimating uh, restarting our oped contributions at a much lower rate, but we'll see what the audit says this summer to see if they recommend that we that we don't need to continue. If the market does better than the 6% that we were projecting for the past year, likely we can go forward into 28 without having to um add additional contributions. But to be conservative in our 5-year budget projection that we're going to look at now, we do add it back in. So this first column here is fiscal year 2627 where we're estimating that we're going to run about a $420,000 deficit um and end the year uh at about 15.5% in our fund balance. Um in this scenario we assume a 3.5% revenue growth uh 3.5% increase in salary and benefits. This has to do with um what we know are contracted expenses. And then for 2728, no increase in the non-s salary line. You will note that the the non-s salary line does decrease and that's because we have some long-term expenses falling off there and we are projecting another small um deficit uh in 2728. But seeing where things shake out, we think we'll be able to work through that. Um and crucially that uh funding level that we have for remaining above 13% in the fund balance uh without counting the budget stabilization remains above that 13%. Um and in the 2728 budget, this does assume adding in OPED payments uh which are um in this case would be about $700,000. If you take that OPED payment out, you're in a balanced budget um with

a surplus. Uh and then if there were to be other um things that were taken out such as fund transfers to other assets that we subsidize, that that number gets even better. Um and things of that nature. Um so all these budget um estimates assume that we continue to transfer to other funds as we do to today. The arena, the marina, things of that nature. Um we continue to hold off on large capital projects in the general fund. However, we've got a plan for that. Um which would be to start building up our 445 fund because we're going to be creating a housing fund um this coming fiscal year as well. so we can separate out our housing initiatives from our capital projects, which that's a really critical thing for us to do. Um we've had a really big success in our housing um sphere and this has been a priority of the commission to get this fund established and by doing that and moving it out of the 445 fund it allows us to use the 445 which is the capital improvement fund or the um public improvement fund to start planning for things like saving up for fire trucks, replacing the roof at city hall, um doing doing the what what I call the non sexy projects that you have to do every year to make government work um to make sure that we have things moving forward. Um and ultimately what I would like us to do is when we start to run budget surpluses, taking half or 25% of that budget surplus, as I've highlighted here, um and putting that into the 445. So that that's where that surplus to 445 comes from. In this instance, um in a couple fiscal years, we're noting that as 50%. The fiscal year after that, it's a quarter. Um, it just depends on what number we're comfortable with where we want uh the fund balance percent to sit

at. Um, ideally in Jonathan's perfect world, uh, we would get the fund balance up to about 20% over time and then starting that those other dollars into, um, savings for the capital projects or looking at how we make other investments and adjustments in the general fund, whether that's on the non-salary um, or on the staffing side of things. So, that's that's why I've highlighted that here. and then that will flow into the uh capital project fund five-year plan. Now, this is just a projection, an idea that I've had um and wanted to talk to you all about about how to start planning for capital projects more um methodically over time. So, we talk about this 445 fund a lot. It's called public improvement, and historically, like I noted, it was used for large purchases or to complete one-time projects, firet trucks, roofs, things like that. Um over the years it's been used to support the housing projects which is great. We needed that. We needed to show that that project and those plans could work forward. We have shown proof of concept and as director Ekholm presented to you guys several weeks ago, uh that fund can now go stand on its own through uh revenue from Brownfield uh funds and uh also looking at taking loans out and then selling property and really creating a revolving loan fund there and letting a housing fund do what it do what it does. As anybody who's remodeled a house or built a house, built a house knows, the budget that you have at the beginning is generally a little bit different than what you have at the end, which in the 445 made things really difficult to plan for the other things that we needed to do in the city. Um, which is why we started using just the general fund uh for capital projects as well. So for the 2627 year um what we're looking at you can see revenues in the general fund of

432,500. Where does that money come from? 150,000 of that is naming rights um from the arena. Uh and then the balance of that in this case uh is really coming from insurance premium paybacks that we get from uh um

Mr. Thank you. Too many acronyms in my head. Um, so we're looking at revenues of 432,500 and we're looking at doing about a little over a half million dollars in projects. Now, those are three projects in this case. Um, we have uh the Did I write it down? um 150,000 uh for parks maintenance, 210,000 for the roof at the central fire station, and 163,000 for updated body cameras for the police department. Um that would be about a 90,000 more than what what we'll be taking in. There is a fund balance of over a half million sitting in there uh which would leave about $475,000 in that fund balance at the end of uh 2627. And then if you go into 2728 um again uh we see the same revenue number uh from Murma and then from the naming rights projects. In this case uh the 150,000 is parks and then 600,000 is the roof here at city hall. Um one of the reasons that we would be looking at doing the roof in 2728 is from the JCI presentation that you all just had. We'll be getting new chiller here at city hall and new windows here at city hall. should probably replace the roof about that same time as well. Um, we don't want to do all these other improvements and then still have a still have a leaky roof. Uh, we have money in that capital fund project to do that and then that would end the fis that would end that fiscal year at about uh 57,000. Now, I do want to note we did put in for a congressional directed spending on the central fire roof. Uh, we did receive word today that it's it is being recommended. That doesn't mean it's going to get funded, but it's moving on to the next step in the process. So, that uh $210,000 could come out of another um could come out of another uh fund area and then

that would still stay in the capital project. So, fingers crossed on that. Um, one of the reasons that we put forward the central fire roof for that appropriation is obviously that's also where central dispatch is located and uh within central dispatch that is where the majority of the IT equipment for all the other municipalities in the county is located. So, we want to make sure that building has a good roof because that would uh not be fun stuff to have get wet. um this uh $353,000 that I talked about in 2930, which would roughly be half of the fund balance that we would project for that year. Um this is just to illustrate how that would work uh in the 445 fund. So you would have the general revenue, the general fund surplus transfer for the total revenues. um don't know what the projects in that fund would be beyond the 150,000 for parks maintenance that we've uh dedicated out of that fund or that you all have dedicated out of that um revenue. Um and then you can start seeing how that fund would build up over time. Um between 29 and 30 um it would go up uh $440,000. In 3031 it would go up another million dollars. And so then we're we're reaching the $2 million mark in that fund. And we would continue to project that out over time to start really looking at how we're planning our capital projects and knowing that okay, in four years we've got $3 million worth of projects. How do we get to that point? How much do we take from uh budget surpluses and and move it over? Things of that nature. So, um let's talk about challenges and opportunities. Uh this is uh a perennial one for us and for many communities our size is the recruitment and retention of police officers. This is not unique to us. Um it's something that we will continue to work at. It's something that uh Chief Kosal and I talk about

regularly on how we make ourselves more competitive. It's not um just about wages. It's about a variety of different things that that we look at. um we're we're big enough that we've got some of the things that that people desire in a long-term police uh career, but we're not big enough that we have all of the things. And so, how how do we kind of find that that balance uh in there? Tomorrow night, uh as one of the action items, you will see the updated wages for the police department uh that were not included in our current contract. The last two years of the contract, the wages were left blank. um th those were negotiated out and you'll see that tomorrow night. Those numbers are built into this budget. Um so that that is accounted for. Um as we noted last year, this continues to be the case. Uncertainty at the federal level regarding various funding streams could come to a head in this next year. um as our federal funding often runs behind um what the where the federal government is by about a year and after uh January 1 is when a lot of the changes from the the large omnibus budget bill that Congress passed this past year will come into effect. So that's that will continue to be a question about how that impacts things uh here in Moskegan and communities all over the country. Um there is obviously international economic uncertainty around oil and fuel prices. Uh that is something that will weigh on our budgets as well. We do buy gas, we do um plow roads, we do things that require fuel. Um so that will continue to have an impact on us and could have impacts on um businesses here in the city. Um and uh we desire to offer a wider variety of services and keep fees low and manageable for our residents, which is a very admirable thing to do. And it's trying to find that balance for what we can do um with what we want to do. Uh we

do have opportunities. We have a lot more opportunities than what a lot of communities have. And when you talk to people in e even in the metro Grand Rapids area or when you go to the east side of the state and the way they talk about Mskegeegan and then sometimes how we think about the challenges that we have um it's really kind of cool and refreshing to see what people think about our community and how excited they are to come visit us in the summer and to come do things and how envious they are of the projects that we have going on. infill the um the largest, you know, adaptive reuse project in the state of Michigan outside of Metro Detroit going on at Shaw Walker. We have all these really cool things going on here in Moskegan. Um downtown, we've got Lake View, Los phase 2 that's finally underway. Um and moving forward, uh we have uh growth um and the ports uh along Moskegan Lake. We are looking to um have expanded public access. uh these investments will continue to have uh positive impacts on our property taxes and our income taxes as we go forward. One of the reasons that we're seeing this property tax growth and this income tax growth is because of the hard work that's been done years in the past. If if we hadn't made those tough decisions um and those complicated um economic development incentive packages available to people, our revenues or available to developers, our revenues would be lower than what they are now. Those economic development packages really do pay off. And we are seeing that um come to fruition now where we're seeing those property and income taxes go up. Now, as our property taxes go up, the headley kicks in. So there's kind of a balance there, but overall it's a better net position to be in. And when you look at, you know, even going back into the 90s when the income tax was put into place and we and we rolled back our our millage rate slightly, um, you know, we're gearing towards between 13 and 14

million in in uh income tax revenue. Um, and we gave up about $2 million in property tax revenue for that. That's a pretty good trade. Now, that's over decades, 30 plus years, but uh, we're moving in the right direction. We have a lot of things going for us that other communities would love to see in their community. Future recommendations. Um, as noted last year, um, and as staff has continued this year, we've, uh, been educating ourselves on priority based budgeting models. Um, as you as a commission and us as senior staff meet later this month to do the goal setting session, um, that will help inform that priority based budgeting discussion going forward. um as we u move forward into future fiscal years. Um this that type of budgeting process has a longer timeline as you work on it, but um it generally pays off in the long run. Uh and it's also it also can be a lot more uh transparent and flexible um as priorities change and outcomes um are are evaluated um and move forward. So, um, we're going into fiscal year 2627 with a structurally sound general fund budget. Um, although we are looking at using some of our, uh, fund reserve, when you look at where we're transferring money out to, um, if you, if we weren't to be doing that, the general fund would be balanced. I want to make that clear. Um and so general funds, other funds continue to be a strain on the general fund and reduce some of that flexibility. Um because of the tough decisions that you as a commission have made in the past um and commissions before you, our enterprise funds continue to improve with their overall net position. Uh with the sewer fund maintaining its projected six-month operating revenues and with the water fund out of deficit, that is huge. The water fund is out of deficit and moving

in the right direction. As noted last year, we must keep these funds on track as new S&P guidelines consider enterprise fund performance when assessing bond ratings of the general fund. That's why it's so important to make sure that we keep those six-month operating uh lines uh in line or are moving in that direction. Um we've made great strides on OPED funding. uh you know without the decisions and direction that um director Grant and his team have made over time on making sure that we were funding those OPED payments uh the way that we were. We wouldn't be able to back off on those payments now. Um so we'll we'll continue to monitor that going forward. That's not something we want to take our eye off the ball on. And um hopefully uh the conservative estimate that we've taken of adding it back in in 2728 can be uh backed off a little bit. We'll know when we get uh those uh those audited numbers. Um we're projecting uh modest investment growth oped funds like I talked about. Um which hopefully hopefully meets our contribution needs. So once you hit around that 120 to 125% level, that could hopefully be the case. Um, and those do fluctuate over time. Um, they have sort of been coming down and leveling off and then they'll generally come down again. So that was a lot. Um, my clock says 55 minutes. Um, so I'm ready for questions.

All right. Thank you, Mr. Manager. Uh great presentation and thank you to team Moskegan for all your work in uh going into this budget process. Um before we get to questions though, can you please um outline what's to come? So we have to adopt this by the end of June. What are the next steps, meetings, public hearings, presentation, so on and so forth.

Correct. So uh this is the the presentation tonight. Uh we it will be available to be discussed at any of the future meetings. will hold the public hearing um at the second meeting in May. Uh we will have it as a discussion item at the June work session. Um not the whole presentation, but it'll be as a discussion item. And then generally what we aim for is the first meeting in June um for adoption. So that way we have some wiggle room if if we have to go to the second meeting in June. So it'll be talked about at a minimum of four meetings um and uh out there for a little more than a month before adoption.

Right. Thank you, Mr. Manager. Um, hearing all that, commissioners, I'm open up to questions knowing that we will have several additional meetings to dig into this and also be getting the um full budget um and to to review and digest um ahead of those meetings as well. Um, Commissioner Kilgo, thank you. Thank you for that presentation. I was thought I was going to see the tip off of the pistons, but I'll catch it when I get home. I apologize, sir. No, I mean it is it's a lot to digest. So my first question is this um draft we're going to get it tonight or we'll get it this week.

You will get it tonight. Um so it's uh like I said it's not the pretty final document, but you will get the word document tonight. Um because I think that I have to look at it. I do have some questions, but I do think that I have to look at it. I'm just curious. Um, you touched on a couple things like I guess I'm curious as we're building and getting new houses on the tax roll, the headley kicks in so that we're not really like it is making more but it's not making more because we have to adjust and stuff like that.

Yeah. So there's the popup um and then there there's what your overall tax um number would be and then there's an equation that occurs that backs you down uh to a to a to growth within a certain window inflation or 5%. And so the um so th those are the numbers that that we look at. So sometimes we don't know what that um roll back is going to be until that whole equation's done. So that roll back number that we got, um, Treasurer Wilson didn't have that until like two weeks ago. Yeah. So, so we, so we were working through the budget process, not necessarily knowing where that number was going to fall out. Um, so yeah, it's it's a it's a pretty big equation.

Um, in one of your very early slides, why are building permits down the projected?

Yes, great question. Um, so one of the biggest reasons is that most of the permits for Shaw Walker were pulled this fiscal year and so that was going to that was going that's basically kind of an artificial bump in those revenues. So this brings those back in line to with where building permit revenues would be traditionally. Uh there was one section of the building permit revenues plumbing uh that we did uh increase because not all of the plumbing permits have been pulled on Shaw Walker. Um we will continue to see other uh projects going forward. Obviously um Winward Point will start with their uh uh demo houses this summer uh and then we'll start construction moving forward, but it'll be more incremental and not as not on the same scale as Shaw. So, we might be being a little conservative on our building permit numbers, but that's that's the driving reason there is when you go and look at when those permits were pulled for Shaw and what that bump did. Um, we wanted to kind of level that out

cuz it was like 11% or something high. Yeah. Yeah. I can't remember off top of my head, but yeah, that sounds about right. Um, in the draft, is the arena sectioned out by itself or is it in a certain

The arena is in its own fund. Um, so what what you're getting tonight will be the narrative in the general fund. We'll get you the the other funds um distributed probably tomorrow's meeting. uh we just got those uh just before the meeting. So, but yes, the the arena fund is in its own fund. And then when you look at the general fund under transfers to other funds, it notes the 400 and uh just under $450,000 transfer to the arena.

And that and that's to give the arena a zero um a perfectly balanced budget. No extra, no less. So, so my calculation I showed 420,953 that was the balance transfer I'm sorry out of our fund balance was that is that just for the arena or the arena's a separate no so it's um so the the analogy that I always use is is we've got a big bucket of water

and we're d we're we're dumping cups into it and then taking other cups out so um that the $421,000 that we're projecting to use out of our fund balance this year is less than what we're anticipating to transfer to the arena, which I believe is $442,000 or $444,000. It's close. Um but it's uh it's less than what we're transferring to the arena. So if that arena transfer wasn't there, then we would have a balanced budget um from the general fund. So what that means is that the property tax dollars that were receiving, the income tax dollars, estate revenue sharing for the general governmental operations that we're required to do, there's there's just enough funds to be doing that when we're transferring to other areas is when is when we get things out of whack a little bit. And that was also demonstrated in our audit that we got back in January when we ended the fiscal year um you know well in surplus and then when you started subtracting out where we transferred money to to balance out those accounts. There's nothing inherently wrong with that. Um it's it's a decision of of the city to to choose to do that to invest in a community asset. Um but it is something that I think we need to be aware of. um on on where that's going and how um because if it's a very different story if we have a structural deficit in the general fund versus if we're choosing to invest in other areas of the city with our general fund dollars,

right? Um so I think my last question for now, I'll go and review the numbers and stuff. Looking at your first pie and your second pie, revenue um versus expenditures, that was a $420,000 something dollar difference. Yes. The deficit from the arena is calculated in there. So if the if the arena transfer was not in there, then those two pies would be pretty much balanced. Yeah. Thank you.

Thank you. And just uh to in that same vein, just so this budget is reflecting what we consider to be a true um deficit at the arena that we're going to have to fill. Um because I think in many years in the past, we'd have like a standard amount we'd do every year. I think for many years it was like $350,000 um that would be in the budget up front. That's what we're going to, you know, transfer. And then at the end of the year um we realize, oh nope, you know, there's a much bigger deficit at the arena. we've got to transfer $700,000 more. Um, is this number that 400 40

that's a more truer reflection of what we anticipate this year will be the total amount that we'll need to transfer and hopefully not have to do additional transfers.

Hopefully um there you know there could always be uh you know a critical infrastructure thing that occurs that that we have to address. um my first I believe two years here um we had uh construction projects going on at the arena and so there were things that were maybe a little out of the ordinary in that operation but um Jake Lame does a really good job of he's so budget conscious he is very budget conscious um and he does a really good job of of knowing where you know where dollars are going and and one of my directives this year was um when we looked at at the arena fund was that whatever the whatever their deficit was between revenues and expenses that that would be the the exact amount that we would take from the general fund um to try to balance that out. There could be something crazy that happens. I don't know. But that right now for the within the arena fund they have their balance they have zero extra and they have and they're not negative. So

okay thank you. Y commissioners anything else to ask right now?

Yeah thank you mayor and uh thank you uh manager Ciphers and your team. Um you mentioned something also about the pension that's at its peak. Could you elaborate on that just a little bit? Sure. Um so we've for years um and not just us uh communities all over the state have been uh dealing with particularly pension administration costs. And this this is a this is a bigger number than our um than our other post-employment benefit or OPED benefits. So this this graph that I have on the screen um fiscal year uh 2627 or up here FY27 um is what we're planning for right now. This is our known cost numbers. So the general fund in orange uh is what the general fund will be paying which is just a a hair over $5 million. Um when I my first budget, which was the 24 budget on here, it was just under $3 million. So, it's grown pretty substantially over the past couple years. The good news is um that stairst step is we're we're we're almost to the we're almost to the mountaintop. Um if you look at f uh fiscal year 2029 and fiscal year 2030, those two numbers are pretty darn equal. um with about $7.5 million total liability across all our funds and just under $6 million in the general fund 2 years from now. So um and then that next year it slightly lower and then we start seeing actual step downs in fiscal year 31 and 32. So what that means is is that between market returns uh employee and employer contributions our funding level um within

uh our MS retirement system for pension employees this is our pensions been closed since 2006. Yeah 2006 mid mid 2000s. So we're talking 20 years that it's been closed. um we still have just under 40 employees who are on the pension. Um but those numbers adjust every year um based on final average contri uh uh compensation things of that nature. So we do see a plateau here. Um light is at the end of the tunnel. Um as long as these actuarial tables hold

um and that you know it's when you're talking with the market as well there's uncertainty that gets put into that. um you know the the audit that was first presented when I started which was for 2022 um and I started in November of 22 um the market had a horrible year and we had unrealized losses in the millions uh and that reduced um fund balances. It impacted pension administration costs. It impacted a lot of different things. Um so you never know what the market's going to do but we are trending in the right direction. Um and and I'm excited to see where this where this next report comes out in about two months.

Okay. Yeah. Just one last question. Now, if for some unknown reason the market takes a dip, what where would those funds come from to offset that?

Um so, so this is Merge does a couple of different things when when making this estimate. Um so they to account for market losses they take um a number of years and average those losses and gains over over a period of time. It's not just what occurred in the previous fiscal year because um markets are cyclical. There's going to be up and down years. So you don't want to hammer a community just because of one downyear. Um and then as you move move further out it gets weighted in a in a different way. So if there was to be a market downturn um that the impact of that downturn would be spread over um I believe it's 5 years of returns to get an average and what the MS uh folks are looking for is about a 7% average market return over a multi-year period. Um, so when so I remember when we had the the presentation, I don't remember if it was this past summer or the summer before, um, the I think it was 2024, the market was amazing and there were there were really high returns and and our individual return on ours was was high. Um, but the the payment still went up because they were averaging out u a number of different years and the 22-year that was really bad was still weighted in there. So they were kind of balancing each other out. Um so those payments come from us. Uh those u um but it's averaged out over time as opposed to hitting in one year. Um the same thing with the OPED benefits. Um those ones, you know, we we can maybe factor for a little bit better because we're over 100% funded. Um but again, that would come from us.

Okay. Thank you. I guess that gives them somewhat a comfortable sense of mind and you know of a safety net too.

Yeah. And it was you know when when MS changed their assumptions so they actually lowered what their average assumption was a number of years ago and that frustrated a lot of communities because it pushed out that that final year of payments out a number of years. And um and then when they started averaging things in over time, that also frustrated folks cuz they're like, "Well, we had this really great year and we're not seeing the results." Um you know, be critical of merge or or whatever. There is a certain amount of logic there. Um I might be a little more optimistic on it now because I'm seeing the end of the tunnel. Um but I do know at the time it was frustrating. So uh yeah. No worries. Thank you. You're welcome.

Yeah. I remember and you you may as well Commissioner German at the beginning of this decade um we were anticipating peaking like right now like like this year peaking and then it's like oh we're going to be freeing up millions of dollars you know in subsequent years that we can you know spend in programming and services and capital improvements and I'm like um and so it was frustrating to see that getting pushed out pushed out pushed out pushed out and it's like what's going on I know we've had conversations around that and the frustrations so it is relieving to see that that that instead of being pushed out now pushed up one year. Yeah. So, um I'm I'm going to

share your optimism if you just a bit cautious uh that that the light at the end of the tunnel is there. Um and we can see it. So, um it'll be exciting once we get there. Yeah. Um now markets don't screw it up and it's and they are conservative estimates so hopefully and obviously there are always market downturns from time to time. Yeah. But over the long term, that's what we're looking for here is steady growth over the long term. Yeah. All right. Um, thank you, Commissioner German. Thank you, Mr. Manager. Uh, Commissioner Sinclair, Commissioner Jackson, anything to ask or share?

Okay. All right. Well, I look forward to digging into the full budget book, um, draft version right now, and, um, the upcoming public hearings and, uh, further deliberation before we finally adopt our next fiscal year budget. So, thank you again, Mr. manager and thank you to all of our staff um and especially the finance department uh for your work on this budget. That brings us to public comment. Is there anyone in the audience that wishes to give public comment at this time? Seeing no takers, we are going to go to the phones. The phone number is 231-7246721. This is an opportunity for folks to speak directly to the city commission. Uh everyone has up to three minutes to give their remarks. Uh when you're calling, please turn down any audio in the background. State your name. Um and if you're a city of Moss resident, which neighborhood you're calling from. Um and this is a time to to speak directly with the commission, not necessarily back and forth Q&A. Uh we can arrange that uh if desired at another uh time and place. Good job, city manager. It does not look like we have any takers for phone and comments. Uh commissioners I would entertain a motion to adjurnn. So move

we have a motion by commissioner Sinclair supported by commissioner Kilgo. All in favor of adjourning please indicate by saying I. I. All oppose. Same sign. We are adjourned. Thank you. Take care and be well.