Okay, we're going to go ahead and call to order April 10th, 2025, budget finance and taxation committee. Can we do a roll call please? Go ahead, is here. Handle it. Here. Big Sanders. Gabard. Harding. Here. Okay, thank you. We've got an agenda in front of us. I'll entertain a motion for approval. Moves the approval. All in favor. Aye. Any opposed? Motion carries. We've got minutes from March 27th, 2025. Entertain a motion for approval. All in favor. Aye. Any opposed? Okay. We're going to rock and roll right into our new business item. And we've got a discussion on the city of St. Petersburg disaster short-term financing. I'm gonna turn it over to Tom Green, just kick us off. Well, thanks. our new business item and we've got a discussion on the city of St. Petersburg disaster short term financing. I'm going to turn it over to Tom Green to kick us off. Well thank you Mr. Chair and good morning committee members. I'm just going to turn right over to Aaron. Oh I like it. And Fritz and Liz McCovsky as well as I just wanted to point out Jake Lover from P.F.M. is here and Dwayne Draper from Bryant all of us is also here. So to the extent that the committee has any questions with respect to the legal side and or the finance side, we've got our complete team. And I should mention McCall Dyer, who is the city's point guard when it comes to the legal side of all the debt and financing. So we always appreciate McCall being here. So with that, Mr. Chair, I'll just turn it over to Erica and to Ann. Okay, thanks. Welcome, Eric. Thank you for having us this morning. So we're gonna start our discussion today on some disaster short-term financing. We're gonna bring forward, and then we have another debt item after that. The disaster short-term financing in your packet, We have an update to fiscal policies. The update. I don't know if, and you want to start with the fiscal policy? Sure, let's do it. We'll start with the fiscal policy, and then we'll go into the proposed line of credit for disaster short-term financing we're bringing forward. Sure. As you know, everything that we do in here is governed by our fiscal policies from our financing to our budgetary. In this circumstance, we have an area in the debt policy that, upon review, is actually by our financial advisor and with the debt team, it was pretty outdated. it was for a reason at the time because we created that fiscal policy, right after I got here, you know, 2010, and you know, a couple of years later, I think we formalized it within the fiscal policies, but we certainly weren't, the market was not in a condition at that time, the issue variable rate type of debt. The only, what we did is we created a section in the fiscal policies that would allow the city to do a commercial paper program, but we had very restrictive language in there on terms of the percentage and the methodology. So as we're looking at the short term financing options for our hurricane financing, the market has obviously corrected itself after many, many years. And we have various options that could actually be in the best interest of the city relating to the timing and how the expected drawdowns will go for the addition for the last, hopefully the last piece of hurricane cost. And these are specifically, again, we're looking at the hurricane financing cost, specifically relating to the remainder of the debris removal as well as for the cost relating to the repair of Tropicana field, which are the two largest items. But it certainly could include other items that may need financing on a tax exempt basis. So we have in the package the actual change in the requirements, okay, for the fiscal policies, where we are recommending that we allow tax exempt that, including, but not limited to commercial paper, lines of credit, or very direct demand notes, and that we can issue those. At the same time, we also, and we do have Jake over here who can discuss this further on his review on why we should have increased that is, Jay, if you want to talk about the next item relating to the, rating to the 10% total debt outstanding. Sure, is my microphone on here? Yep. Okay. Council members, Chair, good to be here. Jake Lover from PFM. We are the city's financial advisor on debt-related matters. And as Ann mentioned, when we started talking about this disaster financing, we looked at the policy and determined it was overly restrictive to give you the flexibility you needed to deal with certain situations. So we discussed a potential amendment to the policy as Anne discussed, allowing one for a line of credit to be issued, but also to increase the threshold from 5% variable rate debt to 10% variable rate debt as your max. But for me, more importantly, we also put in a caveat that would allow you to go above that 10% threshold in the event of unforeseen circumstances, disaster relief, hurricane recovery, or other things that you might need to do with on a very short-term basis. So the percent was really there for sort of longer-term variable rate debt. It would be in place for on a permanent basis, as opposed to shorter or a term loans term basis. The percent was really there for sort of longer term variable rate debt that would be in place for on a permanent basis as opposed to shorter term loans like this. So we did add the caveat to allow you to exceed that 10% in the event of emergency to deal with that emergency. I will point out that even with this 85 million of variable rate debt, we are right under 10% in terms of variable rate debt. So I think we're still under that 10% mark with this financing, but I think you will have the flexibility moving forward if something else comes up to go above that threshold if you desire to do so. It's also very important to point out that any type of debt that the city does comes before you as a committee here and ultimately gets approved by the city council. So anytime if you're uncomfortable with increased exposure to Vibrary Debt, you can always say no and not approve it. So it's not as if this policy allows your staff to go out and do things without your approval. So really from our perspective, the current policy is overly restrictive and gives you no flexibility to deal with unforeseen circumstances. So what we're tempted to do here is just slightly increase the Vibrary percentage and also give you flexibility to deal with unforeseen circumstances. So what we're trying to do here is just slightly increase the variable rate percentage and also give you flexibility to deal with unforeseen circumstances. And this will fit within the line of credit discussion that we talk about as the next item. And I'm happy to address any questions you all might have, but this policy does not put you out of line with what other issues are in the state. We'll take a quick question. Council member, Robert. Thank you. So, thank you all. I no longer call them one-on-ones because they're not really. One-on-five. One-on-five. Our group discussion that we had earlier this week, thank you for entertaining all of my incessant questions and just kind of trying to really understand all the implications around, you know, anytime we're looking at our fiscal policies, we as a council need to be very prudent and we know that you are as well. So I really appreciate the conversation that we had. As I shared with all of you, kind of in real time and I've thought about it again since that conversation, I feel like the path here is prudent. You know, we've got a lot of lessons that we've learned from having to back-to-back hurricanes. And still recovering from another storm not long before that, right? So this is to me another example of kind of pivoting our policies and our procedures based upon those lessons learned. So I am very much in support. The one place where I have the challenge, and I'd share this with you all, was E3 on the language that changes it from twice per year to annually. I am not comfortable with that. I would love to hear how my colleagues feel, but for me, understanding, I don't want to get too into the next conversation, but even in your explanation of how this sofa rate works and the fact that you are continuously monitoring that. You're watching that in real time. For me, I don't think there's any reason for us to have less analysis of these, you know, recognizing that you are doing this continuously anyway. So legal, I wanted to ask because the annually is actually in the title of the resolution. I would like that to stay the twice per year and remove the two annually piece. So how would we need a separate motion to remove that part or could we approve it amended? You could approve it either or you could, you know, you could, I could revise the resolution and just remove remnant three. We could be in separate motion or you could, you know, basically, you know, request that the resolution be presented upstairs with the amendment, moving the biennally from biennally to annually back to just remove that. Just remove that. Okay. Basically it would be reminat 3 in the title and the action and in a whereas clause. It was kind of, I did a couple of times in the documents, not an issue to take care of. Okay, so for the sake of conversation, just to get us started, I'd like to kind of hone in on this and hear from my colleagues. So I'm gonna make a motion that we approve the resolution for the fiscal policies and remove the annually clause from all places and remain that section at the twice per year analysis. Does that work? That works. Okay. Thank you, Chair. Thank you. By sure, Hannah West. Thank you, Chair. Well, thank you. It's good to see you all again. We just had one- ones on this and I'm sure just like a council member, Gavard mentioned. Obviously we had similar discussions on things. But I want to first start to talk a little bit about we're changing the policy here now and why and really have a discussion of that because when we had the discussion on our one-on-ones I brought up the fact when I brought up and we were going to borrow money for the drop and I was told and we were asked well if hurricanes happen what is our city's plan and I was told we rely on our fiscal policies and we have good fiscal policies and we have our balances. And then here, storms happen, and then there changes to policies. And so because that was in a public meeting, and here we are in a public meeting, I want the public to kind of understand clearly why this is happening now. Why wasn't this something that was either foreseen or thought about? We were gonna take out bond monies back then, for the drop and gonna borrow a ton of money. And so why now are we thinking about this and how is it that we plan for hurricanes in the future? What is our plan? Because at this point, we're borrowing $85 million to cover that. We borrowed $50 million. We don't know if we're going to, what we're going to get from FI. I know we're bullish on getting the debris part of it. Because that's, that was what your position is and you feel very confident we're going to get that money. But we, I think the public needs to understand how we plan for these things and how we pay for these things. And so kind of, if you can kind of talk a little bit about that, so we can have the discussion as to the policy, you know, the policy changes and all that. And I would like to hear both from Tom and Jay obviously, because came from the outside advisor too. Well, thank you council member. And there's a lot to unpack there that could take an entire hour to just answer that question. But first and foremost, philosophically and having been through the storms, obviously there are lessons learned. And it's not only in the finance side, it's across our organization. So you're gonna see improvements made and changes in policy across our organization. So it's not just here. So, I mean, and I think that's important. It's important to learn from your experiences that you haven't had before. So I think it's the right time to be taking a look at this. Now, when you talk about, and I'm going to get a little philosophical about finance, so we have always been kind of risk adverse on variable rate debt, quite candidly we have. But understanding the fiscal position we're in and the potential benefits that we could derive in this current market condition from doing this loan on a variable rate basis it makes sense. So I think you know an evolution for us collectively as a finance team you know to say okay we're open to doing this. And on a totally different subject, but when we made a change in investment policy, it took a long time to get us to a point where we were interested in taking some of that water cost stabilization fund and investing in inequities. That took a long time. So sometimes our organization, because we're conservative by definition and by you know that's just you know how governments operate, it takes a while to warm up to some other things. Now the other thing I want to mention on variable rate debt is there's all kinds of really fancy things that cities and counties do. They can do a variable rate swap it it to fix to do a a synthetic fix rate. We're never gonna do those fancy things. There's just too much risk associated with those types of financing structures. Certainly organizations have done well by their organizations. At the same time, certain organizations have gotten upside down and gotten a lot of trouble with those. We're never gonna be that group that's out there chasing the flavor of the day of financing structure, but we do wanna have the ability, when it makes sense to take advantage of financing structures that are available and common in the marketplace. So I know there's a lot more to your question, but Jay, do you wanna add any? Yeah, I mean, I can maybe just add a little bit there. I mean, one of the reasons I think we're doing this now and not say when we were talking about the, you know, St. Pete, the raised stadium or other financing that the city does is we never contemplated anything other than traditional fixed rate debt for financing options, whether it's been for, you know, a new baseball stadium or in the public utility system for their debt or any other of the financing needs. We've always been very conservative and looked at fixed rate debt. And I think we will continue to only do that when we're looking at longer term needs, longer term capital projects that are being financed. This is a unique circumstance whereby we think this line of credit is the best tool for the city to use. And we can talk about why when we get into the next agenda item. And we realize that in order to maintain your fiscal policies consistent with the ability to do line of credits like this, we need to amend those policies. So to me, it really hasn't happened before, because we haven't been faced with a situation where this type of product was the best product to be used for the city quite frankly, is sort of the way I look at it. So when you talk about these are unique circumstances, what does that mean? Unique circumstances and what, and the product, why is the product now different? You know, explain that, because you understand this, talk to the layperson out there who doesn't. It's hard to explain this in layman's terms, but I will do my best. There was an interest rate environment for many, many years where issuers could lock in fixed rates over a long period of time that absolutely historically low rates, two and three percent interest rates. And in that environment when this policy was put in place and this policy has been used for many years, nobody was doing variable rate debt because you don't want to lock in floating rate debt in the lowest interest rate environment possible. At that point you want to lock in fixed rate. So all we did was fix rate dead. And if you look at your overall debt portfolio, we've locked in some tremendously attractive long-term fixed interest rates. As interest rates have increased really over the last probably two years, variable rate products, like lines of credits, like commercial paper have been more prevalent. And the reason is, you don't necessarily want to lock lock in longer term fixed rates in a higher interest rate environment when you expect future rates to be lower. So we're getting into the next discussion, but we're still fully expecting the Federal Reserve to continue to cut interest rates over this year and into the future. And that will give the city the benefit of what we call riding the yield curve down essentially. So there's some major potential financial benefits to doing variable rate debt in the market we're in today that didn't exist probably five or 10 years ago. Because you're not gonna lock in a floating rate in a 2% rate environment. Because that floating rate could go to four. You wanna lock in variable rate in a 4 and 4 and a half percent environment and be able to take advantage of a declining interest rate environment. And keep in mind, all variable rate debt, whether it's a variable rate demand bond, a commercial paper, a line of credit, all the things that we discussed in this policy, they're all subject to prepayment without penalty. So that's one of the benefits of while we're doing it now. So if you do lock in variable rate, and then you see something happening that makes that less attractive, we can immediately fix that out with a fixed rate. So it gives you a lot of flexibility. That was probably a long rambling explanation, as simply as possible. But we are always looking at the market and the circumstances that our clients are in and trying to figure out what the best product is, not just for today, but for moving into the future as well. We think this product is where we need to be in the current market. We can have long rambling conversations when we're going to borrow 85 million. I think that that is our, we have to do our due diligence. And not just when I'm asking questions or just like other committee members or other council members that are here asking questions. The reality is the public needs to understand what we're doing because this does involve that we're taking on to repay what happened from the storm. And so I think the public is interested in this. And so I think it's important to get into the details. So what happens if we get another storm, okay? And again, we have debris costs or whatever. And we already know the last time it was 125 million in the debris, and let's say we get something like that again. What is the plan? What do you normally see happen in those type of situations? Because last time when we had a discussion about if a storm happens, what's the city's plan? Well now I think it's clear we borrow money and repay that back and see if we get FEMA money or other money to pay that but somehow we we have to pay those costs. So I just want to talk a little bit about that. So people understand this is what normally happens in these situations or emergency situations and what is normal for governments to do. Yeah, well, I mean, yeah. I want to hit on the plan for hurricane. Yeah. I don't know if we can have a generic. We have this much damage or debris removal. We are going to issue debt. I don't know if we can have a definitive answer other than we are able and Jay can go into that to issue debt and have that availability in the market. So people are very happy to issue a step because we have a very high credit rating. You get that high credit rating by having high fund balances as well. So that's a discussion we have when we're going through. Do we issue debt or do we use fund balance? Right now, the interest rates are so low. It's more attractive to issue the debt with these lower interest rates and maintain that fund balance. So our interest rate stays low. It's a circle, right? We, and it's a healthy amount of debt we have on the books when we are looking at the credit agencies and what banking is willing to offer us. So we want to keep those fund balances high. But if we are in an environment next year or two years from now, we have high debris costs. Maybe it is best to use a little bit of our fund balance if the interest bar and costs are too high. So we do that analysis at that time with what's happening across the city and other projects. So it's hard direct answer, right? We are going to take a conservative approach long-term. I don't want to hit our fund balance and we need it for another storm because I'm very conservative. I get that, but my point is you said we're used some fund balance. The point is part of the plan is to borrow money. It could be, yes. I think over a hundred million dollars, let's say. Yeah, I mean, I think to the extent you have damage like you had right now with another storm, most places just don't have the reserves to deal with that. I'll give you a real life example. And I think it was Hurricane Michael potentially that kind of went through Bay County. Maybe, I don't know if the years run together at this point. But several years ago we represent them. They had like two or three hundred million dollars worth of debris clean up alone. And they were able to access the markets for essentially most of that. And it's taken them years and years to get the FEMA reimbursements back and get those loans paid off. So I don't want to suggest that just turn into the debt markets as a solution to everything, but there are always willing lenders to provide money in circumstances like this for very highly rated credits. The city is a double A plus credit on the verge of AAA, and I think we have a good chance of being a AAA rated credit at city here in the relatively near future if I'm being candid with you all. So I think Eric is right on point. Right now your reserves are earning more money than we're paying on this note. So spending down money that's earning 4.5% when you can borrow 4%. Those are the things that we work with as a group. So if we come back next year, and I go back to the Fed's cut rates, and now you're only earning 3% on your investments, maybe it's better to use some of that fun balance instead of borrowing at 4% at that point in time. So it's always a discussion depending on sort of the circumstances of the city and what the financial markets have within them. And I appreciate that, Now you know what, the picture is a little clearer. I've told you personally, I enjoy these conversations in person. markets have within them. And I appreciate that because now you know what? The picture is a little clearer. I've told you personally, I enjoy these conversations in person and I love them public. This is what I do. This excites me. It's kind of, you know, boring. So going back to Councilmember Gabbard's motion, and we have a discussion about this because at their meeting the same thing, I'm like, so let me get this right. you're increasing the amount that we can draw. You're increasing all these things, but then, then we'm like, so let me get this straight, you're increasing the amount that we can borrow, you're increasing all these things, but then we get less reports. Well, let's just put that one to bed, because we have talked about that, what I think both of you are. I'm in America and in work on the debt, at least quarterly to this committee. So we are fine with leaving it twice a year. as I've told both of you and I've told others, we monitor this on a daily basis, and we will come to the city if there's something we need to... We are fine with leaving it twice a year. As I've told both of you and I've told others, we monitor this on a daily basis. And we will come to the city if there's something we need to do. So we are okay putting that back to twice a year. Right. I just want to make sure. And I don't, I'm not the person to speak for the city, but we've had those conversations. Right. No. And I just want, because we're here in the sunshine, obviously we had those discussions, and the message, obviously, is less reporting. And to me, when I ask these questions, it's about transparency. I frankly think it's our duty to make it clear to people out there whether it's scary for them or not. We deal with hurricanes every year, six months a year. And the idea that we are not going to get hit again, or we're not going to get hit next year, because we got hit last week or whatever it is. It's just something that we have to plan for. And to me, it's not a scary subject. It is a reality. And so when we have to make budget decisions, and we have to understand, well, if a hurricane comes in, this is stuff that we have to do, and we have to think about. So I do think it's important. This is not, you know, to cause any issues in terms of, I'm not gonna, of course I'm gonna vote for this. I just wanna make sure that our residents are clear that if emergencies happen, this is what the city's gonna have to do. And a lot of times it's because it makes financial sense because it's cheaper to borrow the money. You don't have the $100 million sitting there to take care of this because you have to use your money in more effective ways. So that's kind of where I'm at with this. So I appreciate the explanation. Chair, could I just chime in with a couple of things? First of all, yeah. When we were editing these policies, I don't think we had your hat on reading that one section or perfectly fine with, because like we talked about, if I can't believe we come every quarter and we'll have an update on the debt. The other thing I want to mention is just that, certainly we've had storms in the past where we were able to, you know, Ian and, what's the other one? Anyway, but where, Adele, where we were just able to manage the impacts internally without having access, any type of borrowing. So I mean, it's kind of comes and goes and so hopefully we'll get those type of storms going forward that we can just manage internally and the public. It doesn't really see that we've done that work and with this team, so to speak. Right. And we have that other storms to your point, Tom, that's right. And we also, this storm did not hit us directly. And they could have been a lot worse. So what we got, although was bad for a fact, for a fact, if we would have gotten hit directly, that number and these numbers and these conversations would be much higher. So yes, to your point, it could be a lot less, it could be a lot more, and I get that. I think we all understand that. And so I'm happy we're at that we can manage this, and I'm, you know, and we're in a good place. But so with that, that's all my questions regarding this part. Thank you, Chair. Thank you. Council member Floyd. Thank you Councilmember Floyd. Thank you I'll start by saying thank you to councilmember Gabbard for the amended motion. I agree as well and Although I'm not on the committee, so I was just gonna come here and advocate for that. I'll also say my disposition when it comes to a variable rate that is incredibly conservative as well. And so I understand the impetus for this and the plan that's been laid out. I'll get into that more later, but in my multiple onon-one meeting, we talked about a potential cost saving from this from doing fix-rate, and I think you'll be talking about bringing something here today to that that happened. Yeah, we have, I had done just some scenarios. Okay. As you know, I convinced myself, and then I go five different ways to do some sensitive issues. I appreciate it. Yeah. And I know Jay reviewed this as well. Yeah. And so maybe Jay, do you want to kind of? Yeah, I mean, I can, I can, I can, and I don't know if this is appropriate for this agenda. I remember the actual line of credit that we'll talk about next. We're kind of melding those two together. But I think we can kind of get into this. But you know, I want to caveat all this by saying that there's not an exact dollar amount because with a line of credit, it's going to be a terminal. When you draw the funds down, when you get your reimbursements to pay back, and also the rate's going to move up and down. So we did do some sensitivity analysis on that. And we assumed, and I don't want to go into the weeds as much, but the rates have been very volatile recently and it's actually impacted. on that and we assumed and I don't want to go into the weeds as much but the rates have been very volatile recently and it's actually impacted longer term interest rates and is not impacted so for which is what your verboride is based off of. It's been very stable in the market. So we assumed if you were to borrow on a fixed rate basis today you'd be prying about 4.5% in terms of your fixed interest rate. And we estimated based on that that you would pay about $4.7 million worth of interest on this fixed rate loan. And again, we can go into the weeds of this, but that's a periodic drawdown of the funds over time is needed and then some estimate of the repayment. So about $4.7 million and that takes into account that if you fully fund a loan down you're also investing those proceeds so that's the net interest cost that you would pay. If you compare that to the line of credit that we're talking about here we're estimating with the same drawdown assumptions and the same repayment assumptions in terms of reimbursement that you'd be about three and a half million dollars worth of interest. And that assumes, I think we assumed a 3.94% static variable rate, which what it is today. So you're saving what's that over a million dollars based on these estimates. And honestly, if the variable rate does come down as the Federal Reserve cuts rates, that interest-call savings is going to be even greater. And the reason that savings is there is one, variable short term rates are lower than long term rates. And the line of credit we're talking about here has an unutilized fee, but it goes away when you draw it on 50% of the funds on this loan. So we expect to draw them down this pretty quickly. So the unutilized fee will go away. So it is a good product for a lot of reasons. But based on, and we did some sensitivity analysis, what if the borrowing fix rate is four, or what if the variable rate goes up or down, you're still saving money on this variable rate product, with the one caveat being if variable rates do dramatically increase, obviously that's an issue. But again, we have the ability to fix this out at any time, and quite honestly, given all the things that are going on in the world, this sofa is really driven by the Federal Reserve interest rate and I don't really see many circumstances where the Federal Reserve is going to be increasing that rate anytime soon. It's either going to remain the same or probably come down actually and probably more so come down given all the thermal we're facing right now. So that's just kind of the analysis that we do to give you a sense of kind of how we infuse the potential savings from this product. I appreciate that and I appreciate a pretty simple and direct comparison. You know, it sounded like about $1.2 million in projected savings, but like I need people to understand that are listening like that that is speculative and you know rates could go up and so in that situation I'll give you an opportunity to talk about it. I was told there could be a perspective of like refinancing or locking in rates what does that look like? Do we want to go to the next item? I'm sorry. We want to interview this so we can talk about all the opportunities. Well let me say one Let's, yeah, go ahead. Just about this is that I would prefer the, right now, there's a cap and it's 5%, we're talking about moving to 10%, okay, that's not unreasonable. And I know that there might be some difference in the philosophy around the storm borrowing on Yalls Park, but there's no mention of cap or anything there. I hear that Council is going to be brought this so we get to approve it, but that's the case for anything at all. I still feel like there's an argument to be made that like, actually let me say this, I just would be more comfortable if there was some amount of limitation even when it came to storm that it would just make me a little more comfortable. So I wanted that to be out there as well. I don't know what that looks like. I just wanted that to be like out for everyone because I do have a conservative disposition towards us using variable rate products. So, anyway, that was the only other thing I wanted to say, but we can go on to the next thing because I see that we've- Okay. I see what I've been up to. We've got a motion on the floor for the amended fiscal policies. Council members, any other questions on the amended policies? All right. All right. Let's we've got a motion all in favor of the motion. I opposed motion carries. Okay Now we'll we'll go back now to the All right, so the next one is bringing a resolution forward authorizing the issuance of not to exceed 85 million and non-advolorm revenue note, series 2025 to finance or reimburse the cost of capital repairs and debris removal from the recent hurricane damage than the city and pay associated transactional costs. The delivery, sorry, approving the form and authorizing the execution and delivery of the non-revolving credit agreement with Bank of America, appointing the registrar for the note, authorizing certain officials of the city to execute any document, undertake any action required, and connection with the issuance of the note, and providing for severability and an effective date. So along with this resolution, we brought forward with you the PFM recommendation and summary proposals so we can go over those proposals and the specifics of this line of credit we are proposing. We also have estimated sources and uses of funds and the proposed authorizing nonadverellable revenue know itself. Okay, before I go back to Councilor Floyd, committee members, any comments or questions on the bond resolution? Councilmember Floyd, we'll go back to you. All right. I think my question was what does- That fix that look like? Yeah, yeah, I mean fixing it. Yeah, what does fixing it look like? Yeah, I mean, like I said, this line of credit is prepayable at any time, you know, with I think three or five business day notice to the bank. So essentially, you would be taking out a separate loan to pay off the outstanding balance. So let's just give a hypothetical. So you have an $85 million dollar line of credit. You've drawn down 40 million of that line of of credit and that's what's outstanding. If we see a circumstance where we think the variable rate is not economical anymore, you would be able to take out a, essentially, a $40 million loan to fix that out over a 10, 12, 15 year period, whatever the useful life of the projects that are being financed are. So it's, it's essentially just like, you know, in many ways refinancing your house. You're taking out a new loan to pay off this existing loan, but with a fixed rate. I guess my question is a little bit more logistics, because I'm just trying to think about like, you know, what a fiscal impact would look like if we did have to do something like that. Is that something that happens quickly? Is that going out to bond market that requires a lot of cost? Well, it doesn't happen overnight, obviously. It would have to come back to the city council for approval So it would have to go through the committee process just like it's going through here So it's probably I would say a 45 to 60 day process to actually get that done I mean that's very quick for the amount of debt. Yeah, no. I mean, a bank loan like this that we would be discussing or to take out that scenario that Jay was talking about. It would take some work on our side. We would do all the work and then bring it to you and it moves very quickly. But we don't have like a fiscal impact for going out to market when we do with other things. No, see, because these are being done direct placements with banks that are competitively procured so that's not we're not going out to the public capital markets Which is a much longer more expensive process to get rating agencies, draft offering documents, do a whole bunch of things. Okay. So that leads me to like how, I guess, I'll just say it, how does that, how is it different from us getting a fixed rate one and then redoing it later on? Like, because I think the concern is locking in fixed rate debt and then things go down and it's just the flip side of the exact same conversation. Yeah. The issue with fixed rate debt is it does not have the prepayment like- Okay. That's what I was- I was very worried about that. Yeah. person. So if the bank gives you money for 4% or 4.5% in rates go down to 3%. The bank doesn't want to pay you to pay that off because now they have to relin that at 3%. So there's a cost to that. So you would pay a penalty to refinance fixed rate debt for a period of time. Generally, there is a call period at some point. So if you issue a fixed rate debt like in 10 years, it's prepayable at par. But in the circumstance like we're in today where we're expecting femory embersments and from a tax perspective, and I'm not a lawyer, we're gonna be required to pay that debt back once we get those tax proceeds. So we need to do that variable rate debt. Okay. All right. Okay. That makes sense. So that leads me to like being more comfortable because especially the tax proceeds and being required to pre-pay the debt. That does make me more comfortable in this instance and makes sense. And I feel like I have wrapped my head around it better. I mentioned my issues with the overall policy before but I appreciate you taking your time to explain it to me. I also enjoy this as well. Sorry I missed your 101 meeting so I didn't get the chance to talk to you. That's okay. You've done a great job today so I appreciate appreciate that. All right, thank you, Chair. Thank you. Committee members, any other comments? Vice Chair Hanolies. Thank you, Chair. I just want to cover something that we talked about in our one-on-one that I asked you about in terms of things that you think are important for us now based in this environment. And what are the things that we need to worry about? Right? And you said, well, I don't know what keeps time up at night. But in terms of, like for us, council members making these decisions, seeing what's happening in the markets, everybody's nervous about everything that's going on in the world. And what are some of the things that you think are important for us to focus on when we are making decisions? I know you mentioned flexibility, having healthy reserves. What are the things as council members, we need to keep an eye on when we're obviously we're listening to you and hearing the experts, but we need to understand what are some of the basics that we need to make sure that we keep in mind mind like flexibility and healthy reserves and all these other things. Well, I mean, I honestly think you've answered your own question in many ways. I mean, the one thing that I will tell any local government when they ask me, so what should I be most focused on from a financial perspective within a city or a county or a school district? It is fund balance levels and making sure that you maintain strong fund balance because that does give you flexibility to deal with unforeseen circumstances like you're in today potentially. But it also drives more so than any other ratio or the amount of debt you have outstanding or your economic demographic characteristics. It drives your credit ratings and having a strong credit rating gives you a lot of flexibility and a lot of leverage when you need to rely on the capital market. So, there's a lot of things that keep me up at night, including the current market we're in, because rates have been, you know, whipsawing back and forth. But issuers that have good fund balances and strong credit ratings are prepared to deal with unforeseen circumstances. Issuers that don't have that, that don't have good financial reporting and don't have, you know, staff that are doing these types of things, they don't have access to the capital markets like you do to deal with things like this. I have a client and I'm not going to name any names that hasn't completed their FY23 audit yet. And they need to borrow money for projects and they don't have access to the market right now essentially. And that's a draconian situation. But I mean, I think if there's one thing you all can focus on as you're making all the decisions you make related to your finances and your millage levy and your priorities is making sure that your fund balance is healthy. And if you are going to spin your fund balance, you're spinning it on one time needs, one time capital projects, and not to fund recurring expenses. That's the first thing that's going to get you into trouble is when you're using one-time revenues to pay recurring expenses. So that's sort of just in general what I would tell any of my clients when they're focused on their finances. And in terms of the credit rating, how do we know when we start borrowing money, when we get to that point, like where, it made a factor right in, for instance, if we would have taken out $300 million of bonds before, and here we are borrowing more. How do we know you're saying, well, now we could go to a different level. Well, maybe because we didn't borrow the $300 million for. I mean, we can all, you know, I'll see baseball, but y'all know that. No, yeah, you know, the interesting thing, as I just mentioned, the amount of debt you have outstanding is counterintuitive as it sounds. It doesn't drive your credit ratings. It's such a small percentage if you look at their matrix. It's like 10% of the overall credit score is how much debt you have outstanding. So of course there is a limit where you have too much debt, but it doesn't really drive, you know, of credit score that much. So when people ask me how much debt can I afford, what's my debt capacity? I put the question back on Eric and Ann is how much can you afford to repay? How much within your annual budget do you have recurring revenues that you can repay debt worth? And obviously, I don want to renegotiate the baseball or redebate the baseball thing, but obviously that was going to be a significant amount of debt that likely is not going to be issued now. So you do have capacity to do other things. And I will say we had the rating agencies do surveillance on the city's credit with the assumption baseball debt was going to be put on the books. and they reirmed your double a plus credit rating. Right. So we were very comfortable with that amount of debt. Obviously, things happen. You have more flexibility now. Again. Right. But yeah, so we're very comfortable with where the city's at and you have substantial capacity to add additional debt. And just to be clear, obviously, if we're paying debt, that's money, that's not paying other things. So we have priorities, and we never have enough money for everything. So to be clear, yes, we have capacity as a city, but just remember when we're paying bonds, we're not using that money to pay other city needs. So keep in mind, and we look at it differently when we're talking about general fund versus enterprise funds as well. Because enterprise funds you have rates that in capability, so you'll continue to adjust your water and sewer rates, or your storm water rates, or other enterprise fund rates to sort of service the debt you need. The general funds a little bit different. I mean, you could move your milledrate up and down, which no one necessarily wants to do. But those are the types of things that we look at. And can you do general obligation bonds? And this is the debates that we have, or the conversations we have a lot. Well, I appreciate you kind of giving us some of the things that we should be thinking about when we're having these discussions. Thank you, Jay. Thank you, Chair. Thank you. Jay, I'll be quick. And I love when you're here because I don't have to talk nearly as much. Mm-hmm. Thank you, Jay. Thank you, Chair. Thank you. Jay, I'll be quick. And I love when you're here because I don't have to talk nearly as much. And so I think one of the things we haven't talked about is how this line of credit is different than a traditional revolving line. And I just thought that was important to touch on. Yeah, so the distinction here is this is a non revolving line of credit. So what that means is it's an $85 million line of credit. So you can draw down up to $85 million. So your total draws can never exceed $85 million. The contrast to that would be what we call a revolving line of credit. And that means it's $85 million. But if you draw down 10 and pay 10 back, you get the $85 million back. So you could technically draw down much more than that. I can use it for something different. Yeah, rest assured this is an $85 million line of credit. You can draw down $85 million and once you pay all the $85 million back, this is gone. Yeah. All right. Thank you very much. and we don't need to get like in the weeds, weeds of it. But I think it's important just based on some of the questions from other committee members to talk about. The correlation or actually the lack of correlation between short term. Essentially the fed rate coming down and long-term rates coming down with it. And how we've seen that not take place. And one more reason why the variable variable rate would come down if that continues to happen even though chances are fixed rates probably will not. Yeah, it's a great question. And it's something that if you don't live and breed the financial markets, you just assume interest rates move up and down sort of in sync with each other. And that is, you think treasuries and munisables and everything move sort of in line with each other. And that's not the case. And it's a very good point. And what I was trying to get at is, And I'll give you an example over the last five days. We have seen municipal tax exempt longer term rates, 10 and 30 year rates, and U.S. Treasury rates, whips all up and down, like 90 basis points. I mean, it's been amazing. Amazing, I guess, is a good way to describe it. Outside looking at it. Yeah, so, you know, and I'm not going to try to get political here, but when the tariff announcements were hit, obviously the market, the stock market was spooked. And actually, there was a fight to quality. Treasury rates went down. Fast forward to Monday, the rest of the world reacted, the stock market continued to trade off and treasuries also tank because people were keeping cash and not investing in anything. So in the midst of all that, so far, which is what this variable rate is based off of, the secured overnight financing rate, replacement for LIBOR that went away, has stayed within probably a 10 basis point band because it's really tied to the Federal Reserve and what the Federal Reserve is doing with interest rates, which isn't changing right now. So that's again another reason why we think it's beneficial in this current market to use this product that's based off of SOFIR because it is really not fluctuated in spite of all the chaos that we've just mentioned. Whereas if we were sitting here today seeking your approval for a fixed rate loan we would have seen dramatic swings in the interest rate on a day-to-day basis and would still be seeing them until you approve the loan because we cannot lock a fixed rate until this gets approved. So I hope that he's talking to bases about yeah awesome thank you. Thank you. Talking about basis points, just to put it like in, my colleagues have made fun of me, put it in care garden. Like 10 basis points is like a two or three percent swing. I'm the sofa, right? If I'm doing that math correctly, somewhere, I mean. It bounces only moving like that. But when I say, you know, the market move, let's just say the market moved 100 basis points, That's one percent right that went from four to five but overall percentage are you talking about loss gain right somewhere I think it's somewhere in that realm. A 90% basis point on fixed mortgage rates is like a 20% swing. Yeah. I don't do math in my head, on the record but it's a lot. So thank you very much for bringing up both of those. I think those were important to stinctions on again. Why is this the right view? We haven't hit on this but I just want to be clear. This line of credit is based off of SOFR. You take 80% of that and you add 46 basis points to it. So that is traded in like a 390 to 4% range for the last month. OK. All right. That's all I had. Colleagues, I'll entertain a motion for approval. Newly approval. All in favor? Hi. Any opposed? Motion carries. OK. We'll move on to the last item of the day talking about the public utility All right the last item so we brought forward of preparations for payments of the May 1st 2025 payment for the public utilities Subordinate lean bond anticipation note series. So we in our packet have our memo addressing the cost and funding of the note and the resolution. So this note is split between water resources and storm water. So you're going to see funding sources coming from both water resources and storm water to make this May 1st principal and interest payment. We've done some analysis over the last year looking at public utility bond spend down and went to go to market for refunding this. Originally when we issued this back in May 2024 we intended to come to the markets to do a refunder for the whole 53 million. And we have it a two-year spend payoff because of our subordination with SRF above below the bonds. So we're coming for word with appropriations. We have available cash from Pego and investment income earned in both of these funds to pay this May 1st payment along with a rescission of a project in stormwater, that is not going forward at this time, will be in a 2026 CIP project, so we had that cash available. So we thought at this time, it was the best interest to pay this payment, and not do a refund or at the moment. We are going to be coming in May with a refunding option for the other half of this ban, along with a possible refunding of the 2014 revenue bond and some new money for the public utility system. So this is kind of the opposite of what Vice Chair Hannah did, she was talking about earlier where it's using cash compared to a vehicle. We're timing and market matters. Yeah, we're looking to pay some cash and hopefully wait to a better day in the long-term, big, straight markets to take out long-term debt. So again, we, you know, we, we, based on market conditions and the needs, we change strategies. Yeah. Love that. Okay, committee members, any questions? Move up, Principal. All in favor? Hi. Any opposed? All right, motion carries. So just as an update, I think do I need a request to take them off the referral list? Just like the statements of that would happen. Okay. And so these don't need to stay on at this point. So I'm just giving everybody a heads up on that. And then looking forward to seeing everybody in a couple of weeks at April 24th, where we'll do a grants report in the external audit and May 8th for all of our second quarter stuff and a public utility revenue bond, which you'll see an NBI coming from that, coming from me on that soon. There's nothing else for the good of the order. Thanks to everybody, awesome job. BFNT is a germ. Thank you, everybody. you . you