[MEETING TO ORDER]
[00:00:05]
PLEASE STAND FOR THE PLEDGE, THE PRAYER, AND THEN JOIN US FOR THE PLEDGE.
GOOD AFTERNOON. IF YOU WOULD ALLOW ME TO READ A SCRIPTURE FIRST CHRONICLES CHAPTER 410.
JABEZ CRIED OUT TO THE GOD OF ISRAEL. OH, THAT YOU WOULD BLESS ME AND ENLARGE MY TERRITORY.
LET YOUR HAND BE WITH ME, AND KEEP ME FROM HARM, SO THAT I WILL.
I WILL BE FREE FROM PAIN. AND AND GOD GRANTED HIS REQUEST.
WE THANK YOU THAT YOUR HAND IS EVER BEFORE US, PROTECTING US AND MOVING BARRIERS IN OUR WAY.
WE PRAY THAT YOU WOULD CONTINUE TO BLESS THE CITY OF FORT PIERCE AND FBR.
AND WE ASK THAT YOU WOULD LEAD US IN ALL THINGS.
WE ASK YOU FOR FOR CONTINUED GUIDANCE AND DIRECTION FOR THIS BOARD AND STAFF.
AND WE PRAY AND ASK THAT YOU WOULD BLESS US AND EXPAND OUR TERRITORIES AND KEEP US FREE FROM PAIN.
WE PRAY ALL THIS IN JESUS NAME. AMEN. AMEN. PLEDGE ALLEGIANCE TO THE FLAG OF THE UNITED STATES OF AMERICA AND TO THE REPUBLIC FOR WHICH IT STANDS. ONE NATION UNDER GOD, INDIVISIBLE, WITH LIBERTY AND JUSTICE FOR ALL.
PLEASE CALL THE ROLL. MRS. BENNETT, PRESENT. MRS. DAVIS. PRESENT. MRS. GIBBONS. PRESENT. MAYOR HUDSON.
PRESENT. MR. MURPHY. PRESENT. MR.. CHESS PRESENT.
MR. CHAIR, I WOULD LIKE TO CONFIRM THAT WE HAVE ACHIEVED A QUORUM FOR TODAY'S MEETING.
PERFECT. AND WE HAVE A MOTION TO SET THE AGENDA.
[A. SET THE AGENDA]
SO MOVE SECOND. LET'S CALL THE ROLL. MRS. BENNET.YES, MA'AM. MRS. DAVIS. YES, MA'AM. MRS. GIBBONS.
YES, MA'AM. MAYOR HUDSON. YES, MA'AM. MR. FEE.
YES, MA'AM. ARE THERE ANY COMMENTS FROM THE PUBLIC? IF SO, PLEASE COME TO THE PODIUM. YOU HAVE TWO MINUTES TO SPEAK.
[C. APPROVAL OF MINUTES]
IF EVERYBODY'S SATISFIED WITH THE MINUTES, CAN I GET A MOTION TO APPROVE THE MINUTES? SECOND. LET'S CALL THE ROLL. MRS. BENNETT. YES, MA'AM.MRS. DAVIS. YES, MA'AM. MRS. GIBBONS. YES, MA'AM.
MAYOR. HUDSON. YES, MA'AM. MR. FEE. YES, MA'AM.
[D. CONSENT AGENDA]
AND IS EVERYBODY SATISFIED WITH THE CONSENT AGENDA? ANYTHING NEED TO BE REMOVED IF WE'RE SATISFIED WITH THE CONSENT AGENDA.CAN I HAVE A MOTION TO APPROVE? PLEASE MOVE. APPROVAL.
SECOND. PLEASE CALL THE ROLL. MRS. BENNETT. YES, MA'AM.
MISS DAVIS. YES, MA'AM. MISS GIBBONS. YES, MA'AM.
MAYOR HUDSON. YES, MA'AM. MR.. YES, MA'AM. ALL RIGHT.
[E.1. Resolution UA 2025-12 for the FY 2026 Annual Budget]
NOW, MOVING ON TO THE REGULAR AGENDA. YES, SIR.MR. CHAIRMAN, THANK YOU. GOOD AFTERNOON TO YOU AND THE BOARD MEMBERS. THE ONLY ITEM TODAY IS A REQUEST TO ADOPT RESOLUTION UA 2025, DASH 12, TO AMEND THE FY 25 BUDGET AND ADOPT THE PROPOSED FY 26 BUDGET.
HISTORICALLY, WE'VE RELIED ON YEAR TO YEAR RATE FUNDED CAPITAL ALLOCATIONS.
WHILE THIS APPROACH HELPED US MANAGE WITHIN FISCAL CONSTRAINTS, IT LIMITED OUR ABILITY TO UNDERTAKE LARGE SCALE STRATEGIC PROJECTS NECESSARY FOR MODERNIZING OUR INFRASTRUCTURE AND PREPARING FOR THE FUTURE.
RATES WILL CONTINUE TO SUPPORT RECURRING ROUTINE CAPITAL NEEDS.
FY. FOR THE FY 26 BUDGET, WE ARE PROPOSING THE ISSUANCE OF A $74 MILLION MUNICIPAL TAX EXEMPT BOND.
IMPORTANTLY, THIS SHIFT WILL POSITION US TO INVEST IN THE MAJOR PROJECTS THAT ARE VITAL IN ENSURING RELIABILITY, EXPANDING SYSTEM CAPACITY, AND MEETING THE NEEDS OF OUR GROWING CUSTOMER BASE.
THESE TYPE OF PROJECTS WILL BE WILL NOT WOULD NOT BE FEASIBLE THROUGH RATES ALONE.
BOND FINANCING IS ESSENTIAL TO BUILDING OUT THE INFRASTRUCTURE OUR COMMUNITY NEEDS, AND THIS INTEGRATED FUNDING STRATEGY REFLECTS THE FORWARD THINKING, DISCIPLINE AND SOLUTION ORIENTED WORK OF THE TEAM, ALL ACHIEVED WITHOUT RAISING RATES ABOVE THE PUBLIC SERVICE COMMISSION INDEX, WHICH IS EXTREMELY SOMETHING THAT WE ARE PROUD OF.
WITHOUT FURTHER ADO. MICHEL HARRIS, CHIEF FINANCIAL OFFICER, WILL PRESENT THIS ITEM TO THE BOARD.
[00:05:11]
THANK YOU, MR. CISNEROS. GOOD AFTERNOON. CHAIRMAN.BOARD MEMBERS. MAYOR HUDSON. WELCOME, MR. CHAIRMAN.
THE AGENDA IS I'LL TALK A LITTLE BIT ABOUT OUR BUDGET PREPARATION PROCESS, HOW WE'VE GOTTEN TO THIS POINT, WHAT WE DO THROUGHOUT THE YEAR FROM BEGINNING TO END OF A BUDGET CYCLE.
I THEN I'D LIKE TO TALK ABOUT HOW WE DEVELOP OUR REVENUES, HOW WE GO AHEAD AND DEVELOP OUR O&M EXPENSES, AS WELL AS OUR CAPITAL FIVE YEAR CAPITAL IMPROVEMENT PLAN.
SO WE START OFF WITH THE BUDGET PREPARATION PROCESS.
THERE'S REALLY NO START IN AN END. IT'S A CONTINUOUS CYCLE.
BUT THIS THIS BUDGET YEAR PRETTY MUCH STARTED IN MARCH.
SO IN MARCH WE HAVE A BUDGET KICKOFF. AND THAT'S WITH A LOT OF EXEMPT STAFF AT THE ESC.
AND FINANCE HOLDS THAT BUDGET KICKOFF. AND WE LET EVERYONE KNOW TO START PREPARING FOR THEIR BUDGET, START THINKING ABOUT THE FUTURE. WE DEVELOPED CALENDARS AND TIMELINES TO GO OVER AND DEADLINES.
IN APRIL, THOSE TEMPLATES ARE DUE BACK TO THE DEPARTMENT OF FINANCE.
AND WE COMPILE ALL THAT DATA. AND THEN WE HOLD BUDGET REVIEW COMMITTEE MEETINGS.
AND THAT IS WITH MANY MEMBERS AND FINANCE DIRECTORS, DEPARTMENT HEADS OF THOSE AREAS.
AND WE DISCUSS THE OPERATIONS AND FINANCIAL THINGS THAT ARE GOING ON IN THEIR AREAS.
THEY DEVELOP THEIR BUDGETS. WE SAY, OKAY, YOU KNOW, WHAT DO YOU NEED TO CONTINUE OPERATIONS? WHAT DO YOU NEED TO GROW? WHERE ARE YOUR BARRIERS? WHAT WHAT COULD FINANCE AND WHAT CAN THE ORGANIZATION DO TO GET YOUR DEPARTMENT WHERE YOU WANT IT TO BE? WE JUST WE COMPILE ALL THAT DATA FROM THE BUDGET REVIEW COMMITTEE MEETINGS, AND WE SEND IT OFF TO OUR RATE CONSULTANT AT THAT POINT, THAT OUR RATE CONSULTANT IS LOOKING AT ALL THAT DATA AND OUR REVENUE PROJECTIONS.
AND OUR CONSULTANT KNOWS THAT OUR PLAN IS TO CONTINUALLY INCREASE RATES JUST WITH THE PSA INDEX.
THAT'S THE GOAL THAT WE HAVE IS TO TRY NOT TO GO BEYOND THAT.
YOU KNOW, YOU CAN DO THESE BUDGETS WITHIN THE RATE STRUCTURE THAT YOU'VE DEVELOPED.
THEN WE HAVE THE BUDGET WORKSHOP IN JUNE. SO WE HAD A PRESENTATION IN JUNE, AND WE TALKED ABOUT REVENUES AND EXPENSES AND A LITTLE BIT OF A GAME PLAN AS TO A FUTURE DEBT ISSUANCE. AND WE DID WALK AWAY WITH SOME TAKEAWAYS FROM FROM THE BOARD.
AND WE'VE SPENT THE TIME IN BETWEEN THEN AND NOW ADDRESSING ALL THOSE CONCERNS.
AND THE CIP DOCUMENTS. SO TODAY WE'RE GOING TO BE HERE FOR BUDGET ADOPTION AND IF ADOPTED, WILL PRESENT TO THE CITY COMMISSION ON ON MONDAY.
AND THEN FROM THE WHOLE YEAR ROUND, WE'RE REVIEWING THE BUDGETS.
WE'RE ALWAYS MAKING SURE THAT DEPARTMENTS ARE ADHERING TO THE BUDGET THAT'S APPROVED.
WE MONITOR BUDGET VERSUS ACTUAL REPORTS. WE'RE PERFORMING BUDGET TRANSFERS, REVIEWING PURCHASE ORDERS TO MAKE SURE THAT THERE ARE NO POS THAT ARE ISSUED OUTSIDE THE DEPARTMENT THAT WOULD EXCEED BUDGET. SO IT'S A YEAR, A YEAR ROUND CYCLE, EVEN THOUGH WE PROBABLY ONLY TALK ABOUT IT ONCE A YEAR.
IT'S WHAT THE DEPARTMENT OF FINANCE DEALS WITH ALL YEAR ROUND. SO WE JUST KIND OF WANTED TO GIVE YOU A HEADS UP AS TO HOW WE MANAGE IT FROM THE TIME THAT YOU GUYS APPROVE IT UNTIL WHEN YOU SEE FINAL BUDGET AMENDMENT, IT'S AN ONGOING PROCESS.
DOES ANYBODY HAVE ANY QUESTIONS ABOUT THE PROCESS? MICHELLE, COULD YOU JUST PUT THAT IN PRESENTATION MODE SO THAT IT'S BIGGER ON THE SCREEN FOR THE AUDIENCE? SORRY ABOUT THAT. YEP.
YOU'RE GOING TO FIND OUT, YOU KNOW WHAT'S THE MONEY COMING IN.
THOSE RATE INCREASES ARE EFFECTIVE MARCH MARCH 1ST OF 2026.
SO THAT HAS BEEN IMPLEMENTED INTO THE REVENUE BUDGETS.
OTHER ASSUMPTIONS THAT GO INTO BUILDING OUR REVENUES, OUR GROWTH.
YOU CAN HAVE GROWTH IN UNIT SALES AND GROWTH IN NUMBER OF CUSTOMERS.
ABOUT AVERAGE. WE'RE SEEING ABOUT A22 PERCENT INCREASE IN UNIT SALES IN ALL OF OUR SYSTEMS. SO WE CONTINUE THOSE ASSUMPTIONS IN DEVELOPING OUR BUDGETS.
WE'VE BEEN SEEING A 2% INCREASE IN CAPITAL IMPROVEMENT CHARGES PROBABLY OVER THE LAST 18 MONTHS.
[00:10:07]
IN THE BUDGET IS ALSO CONTINUING A 2% INCREASE OF CAPITAL IMPROVEMENT CHARGES.GRANTS IS A BIG DRIVER. IT WAS A BIG DRIVER IN DEVELOPING REVENUES THIS YEAR.
AND SO YOU'LL SEE A BIG SPIKE IN GRANT IN THE WASTEWATER AREA.
THE GRANTS TOTAL FOR THE WHOLE ENTIRE COMPANY ARE ABOUT $34 MILLION.
THE MAJORITY OF IT SITTING WITH THE WASTEWATER CONVEYANCE REDIRECTION.
SO THE GROSS REVENUES BY SYSTEM WE YOU'LL BE ABLE TO SEE THEM FROM FISCAL YEAR 22 ON AND YOU'LL SEE THAT IN ACTUAL ACTUAL REVENUES FOR FISCAL YEAR 2024 THE GREEN IS REPRESENTS THE WASTEWATER SYSTEM.
AND SO YOU'LL SEE A BIG A BIG JUMP IN THAT, THAT WASTEWATER.
SO GRANT REVENUE GOES DOWN A LITTLE BIT IN FISCAL YEAR 25.
IT'S STILL A GREAT ACCOMPLISHMENT. BUT A LITTLE OVER 10 MILLION IN FISCAL YEAR 25.
AND THAT'S RECOGNIZING THE 34 MILLION IN THE WASTEWATER SYSTEM NEXT YEAR.
ALL OTHER SYSTEMS HAVE A LITTLE BIT OF GROWTH ABOUT 2%.
SO YOU'RE YOU KNOW, YOU'LL IT'LL LOOK PRETTY PRETTY CONSISTENT.
OUR BUDGET REVENUES ARE. GROSS REVENUES FROM FISCAL YEAR 2026.
AND YOU'LL SEE THE MAJORITY OF THOSE REVENUES WILL COME FROM THE ELECTRIC SYSTEM, ABOUT $81 MILLION.
WE HAVE NATURAL GAS REVENUE OF 7.5 MILLION, FP NET COMMUNICATIONS GROWING AT 2.6 MILLION.
JUST LIKE THE PREVIOUS CHART. THE GROSS REVENUES OF 186 MILLION.
INSTEAD OF BY SYSTEM, THIS IS BY SOURCE. SO WE HAVE MANY REVENUE SOURCES COMING INTO UTILITY.
WE HAVE GENERAL SALES. SO THAT'S OUR COMMERCIAL CUSTOMERS.
RESIDENTIAL. SO COMMERCIAL IS THE LEADING SOURCE OF OUR REVENUE AT 75 MILLION.
RESIDENTIAL SALES AT 57 MILLION. NON-OPERATING OF 37 MILLION.
THAT LINE ITEM AND OTHER OPERATING OF 5 MILLION ITEMS THAT ROLL UP INTO THAT ARE LIKE PENALTY CHARGES, LIEN FEES, SITE REVIEW FEES, OTHER OPERATING, OTHER OPERATING, BUT DOESN'T STEM FROM UNIT SALES.
GALLONS BUILD KILOWATT HOURS, THINGS LIKE THAT, THAT GO THROUGH THE UTILITY BILL.
AND CONTRIBUTED CAPITAL COULD BE IN TWO FORMS OF CASH OR NON-CASH.
ON TO EXPENSES. THE MAIN DRIVER OF OUR O&M BUDGET, YOU'LL SEE LATER ON, BUT 38% OF OUR O&M BUDGET COMES FROM PURCHASES FOR RESALE, AND THAT'S GAS PURCHASES FOR RESALE AND ALSO ELECTRIC.
AND WE'RE TRYING TO MANAGE THAT THE BEST THAT WE CAN THROUGH FPA.
I KNOW THAT MR. CISNEROS IS PART OF THE EXECUTIVE BOARD OF DIRECTORS NOW OVER THERE.
AND SO IT'S PART OF THE, YOU KNOW, THE BRAIN HUB OVER THERE, YOU KNOW, MAKING SURE THAT THEY'RE TRYING TO PROVIDE THE LOWEST COST FOR THE MUNICIPAL UTILITIES. THEY HAVE A GAS STABILITY PROGRAM, WHICH SEEMS TO REALLY YOU'LL SEE LATER ON HOW IT'S REALLY REDUCING OUR ELECTRIC PURCHASES FOR RESALE. AND WE'RE LOOKING TO HAVE THAT PROGRAM LOOKS TO HAVE 75% OF THE PURCHASES HEDGED IN FISCAL YEAR 25, AND THEY'RE CURRENTLY AT 65% NEXT YEAR. IN FISCAL YEAR 26, THE TARGET IS 50%, AND WE'RE CURRENTLY AT 46% THE YEAR AFTER IN 27,
[00:15:04]
THERE'S THE GOAL OF 25%, AND WE'RE AT 10%. AND BECAUSE JUNE AND JULY HAVE ALREADY KIND OF FALLEN OFF FOR THIS YEAR, THEY WERE ABLE TO HEDGE 5% IN FISCAL YEAR 28 SO FAR.BUT BECAUSE THEY'RE LEVEL, THEY'RE JUST THAT THEY'RE EXPECTED.
THERE'S NO FLUCTUATIONS. WE CAN PLAN FOR IT. WE CAN PLAN FOR IT IN OUR REVENUES AND OUR SUFFICIENCY.
SO WE KNOW IT'S GOING TO HAPPEN. SOMETHING NEW TO OUR O&M BUDGET THIS YEAR.
WE ARE PLANNING ON THE NEW WASTEWATER PLANT, IT OPENING UP ON IN DECEMBER.
SO THERE WILL BE TWO PLANTS OPERATE WASTEWATER PLANTS OPERATING AT THE SAME TIME.
SO WE BUDGETED FOR SOME OPERATING COSTS AT THE AT THE NEW SITE FOR NINE MONTHS.
BUT I WOULD EXPECT FOR ABOUT TWO YEARS TO BE SEEING OPERATING COSTS IN BOTH AREAS.
RISING COSTS OF LABOR. I MEAN, EVERYBODY'S EVERYBODY'S, YOU KNOW, YOU KNOW, HAVING TO DEAL WITH THAT COST OF LABOR, INTERNAL PERSONNEL AND BENEFITS AS WELL AS CONTRACTUAL SERVICES, MATERIALS.
THE COSTS ARE INCREASING. WHAT IS INCLUDED IN THIS BUDGET ON THE PERSONNEL SIDE IS A 3.5% ANNUAL PERFORMANCE ADJUSTMENT IN THE AMOUNT OF $709,000 IS INCLUDED IN THE BUDGET. OTHER THINGS THAT WE HAD TO TAKE INTO CONSIDERATION IN BUILDING OUR BUDGET.
SINCE OUR REVENUES. THE AN ASSUMPTION BUILT INTO OUR REVENUES IS A 2.23% INDEX.
WE WANT TO TRY TO KEEP OUR O&M IN LINE WITH THAT TOO.
YOU KNOW, WE DON'T WANT TO BUDGET AN INDEX OF 2.23% ON THE REVENUE SIDE AND THEN HAVE O&M AT 9%.
YOU KNOW, IT'S JUST WE'D BE, YOU KNOW, IN THE RED.
SO THE PSC INDEX WE TRY TO TAKE INTO CONSIDERATION WHEN WE'RE BUILDING OUR O&M BUT ALSO KEEP IN MIND IS AS WE'RE BUILDING A BUDGET BASED OFF THE INDEX, THE CONSUMER PRICE INDEX IS AT 2.4. SO WE'RE PROBABLY ALREADY, YOU KNOW, KIND OF SEEING A BIGGER HIT ON OUR SIDE THAN THE BUDGET.
WE'VE TALKED ABOUT LEAD TIMES BEFORE. THAT WAS SOMETHING THAT'S BEEN AFFECTING BUDGETS.
LEAD TIMES SEEMS TO HAVE NORMALIZED. THE AREAS WHERE LEAD TIMES SEEM TO BE THE MOST PROMINENT IS ON THE ELECTRIC SIDE AS FAR AS BREAKERS, TRANSFORMERS, THINGS LIKE THAT. AND WE HEARD A LOT ABOUT TERRORISTS OVER THE LAST COUPLE OF MONTHS.
A LOT OF THE VENDORS WILL, YOU KNOW, SUBMIT POS OR INVOICES WITH TARIFFS ON IT.
STAFF HAS BEEN INSTRUCTED TO TO GO BACK TO THE VENDOR AND SAY, CAN YOU TELL US THE ITEMS THAT ARE SUBJECT TO THE TARIFFS AND WHERE DID YOU GET THEM FROM? AND IT'S BEEN REALLY SUCCESSFUL. AND THEN THE VENDORS KIND OF BACK DOWN AND THEN ISSUE ORIGINAL COST WHERE WE'RE SEEING TARIFFS TALKING TO THE THE IT DEPARTMENT. THEY'RE SEEING TARIFFS AS FAR AS SERVERS ARE CONCERNED STORAGE STORAGE NETWORKS HARDWARE THAT KIND OF THING.
WE SAW RIGHT AWAY THAT WE WERE ABLE TO REDUCE THE BUDGET FOR A CERTAIN LINE ITEM BY $400,000, WHICH WAS AMAZING. AND IT'S REALLY EARLY BECAUSE IT WAS JUST IMPLEMENTED IN JUNE, SO WE HAVEN'T REALLY HAD A GOOD 2 OR 3 MONTHS INTO THAT PROGRAM YET.
BUT IN THE FIRST MONTH, WE DID SEE 10% OF CUSTOMERS SWITCHING FROM CREDIT CARDS TO ACH.
SO WE SHOULD BE GETTING THE JULY DATA ANY ANY TIME.
THIS IS A PICTURE, A GRAPH OF THE TOTAL EXPENSE BUDGET.
THIS IS O&M AND CAPITAL TOGETHER. SO IN FISCAL YEAR 2022 WE WERE AT 154 MILLION.
AND THEN NOW IN 2026 YOU'RE SEEING WELL LET'S GO TO 200.
FISCAL YEAR 2025 WE'RE AT 241 MILLION. YOU KNOW IT'S A IT'S A BIG JUMP.
BUT HERE THE ORANGE BARS THAT ARE CAPITAL OTHER.
SO AS A REMINDER, WE RECEIVED BOND PROCEEDS IN THE SUMMER OF 2022.
AND WE HAD THREE YEARS TO SPEND 85% OF THOSE BOND PROCEEDS.
IN 2026, YOU'LL SEE THAT WE HAVE ALSO SOME CAPITAL FUNDING FOR FOR.
FOR BOND ISSUANCE. AND WE'LL TALK ABOUT THAT A LITTLE BIT LATER.
THIS GRAPH SHOWS JUST THE RATE FUNDED PORTION OF THE BUDGET.
[00:20:01]
SO THIS IS THE PART THAT THE RATE CONSULTANT REALLY TAKES A LOOK AT.IT'S TAKING ALL THE O&M THAT'S RATE FUNDED AND THE CAPITAL THAT'S RATE FUNDED, AND MAKING SURE THAT WE ARE BRINGING ENOUGH RATE RATE FUNDED REVENUES TO PAY FOR OUR RATE FUNDED CAPITAL AND RATE FUNDED O&M. AND YOU'LL SEE HERE WHERE YOU CAN KIND OF SEE THE PURCHASES FOR RESALE IN THE MIDDLE.
AND ORANGE, YOU'LL SEE IT WAS A LITTLE BIT HIGHER IN 2022.
I THINK WE ALL PROBABLY REMEMBER THE SUMMER OF 2022 WHEN WHEN NATURAL GAS PRICES JUST JUST SPIKED.
SO WE WERE HIT PRETTY HARD ON THE PURCHASES FOR RESALE AND THE O&M, AND THEN THE GAS STABILITY PROGRAM AND FMP STARTED TO REALLY TAKE A HOLD AND GET RUNNING, AND YOU'LL SEE HOW IT WAS REALLY HELPED US OUT IN FISCAL YEAR 2020 FOR FISCAL YEAR 25 AND 26 ARE BUDGETED PRETTY CONSERVATIVELY.
WE ARE REALLY EXPECTING THOSE TO BE COME IN LESS THAN THAN THEY ARE BUDGET.
BUT THIS IS THIS IS A CONSERVATIVE ESTIMATE AND WE'LL ONLY SPEND IT IF WE'RE BUILD.
EVEN THOUGH WE HAVE A BUDGET FROM FEMA, WE'RE ONLY GOING TO PAY WHAT THE COSTS ARE.
THE RATE FUNDED CAPITAL PIECE IN 22, 23 AND 24.
YOU'LL SEE THAT THE RATE FUNDED CAPITAL WAS ANYWHERE BETWEEN 7.8 AND $9.2 MILLION.
WE WERE IN A HEALTHY POSITION TO BE ABLE TO FUND MORE RATE FUNDED CAPITAL IN FISCAL YEAR 25.
SO THE BUDGET, I THINK, WAS INITIALLY ABOUT 25 MILLION IN RATE FUNDED CAPITAL.
BUT FOR RIGHT NOW, WE IN ORDER FOR US TO CONTINUE DOWN THE PATH THAT WE WANT TO NEXT YEAR, IT'S NOW AT 21 OVER EIGHT AND I'M EXPECTING. I LOOKED AT WHAT WE'VE SPENT SO FAR TO DATE.
WE'VE SPENT ABOUT 16 MILLION IN RATE FUNDED CAPITAL THAT WE HAVE RECORDED IN OUR SYSTEM TODAY.
SO I'M EXPECTING US TO PROBABLY FALL BETWEEN 10 TO 15% LOWER THAN THAT 21.8 MILLION.
I WANTED TO TAKE A LOOK AT, YOU KNOW, WHAT DO WE SPEND THAT ON? YOU KNOW, SO FAR, THAT'S 21.8 MILLION. IF WE WERE PRETTY LEVEL FOR 7 TO 8 MILLION IN THE LAST THREE YEARS.
YOU KNOW, YOU ONLY HAVE SO MANY HOURS IN A DAY.
SO YOU'RE GOING TO SPEND THE TIME ON THE EXPANSION PROJECTS AND THINGS LIKE THAT.
SO THE FOCUS WAS ON THE BOND FUNDING, NOT SO MUCH THE STATE FUNDED CAPITAL, BUT IN FISCAL YEAR 25, A LOT OF THAT WAS FOR THE COMPLETION OF THE ARMY ELECTRIC ROLLOUT WAS COMPLETELY DEPLOYED.
WE BOUGHT A BUCKET TRUCK AND SURFICIAL WELL REPLACEMENTS, LIME STRIPPING TOWERS.
THIS IS AN OVERALL VIEW. JUST OF 26 PUT TOGETHER OUR CAPITAL BUDGET OF 103 MILLION FOR 2026, AND OUR O&M BUDGET FOR 143 MILLION COMBINED. SO THE ENTIRE BUDGET FOR FOR FISCAL YEAR 26 IS 246 MILLION.
LET'S SEE, WE HAVE 56, 56% OF THAT ENTIRE BUDGET IS STATE FUNDED.
BUT WHAT I REALLY WANT TO DRAW YOUR ATTENTION TO IS THE GRANT REIMBURSEMENT LINE OF 47 MILLION.
IF YOU TAKE A, YOU KNOW, AN ACCOUNTING LOOK AT THAT, THAT'S 50% OF OUR CAPITAL BUDGET FOR 26 IS GRANT FUNDED AND 20% OF THE ENTIRE BUDGET IS GRANT FUNDED. I KNOW THAT, YOU KNOW, WE'VE BEEN TALKING A LOT ABOUT THE GRANTS AND THE SUCCESS OF THAT PROGRAM.
AND I JUST WANT YOU TO SEE THAT THE NUMBERS THE NUMBERS HERE JUST KIND OF, YOU KNOW, TELL THE IMPACT OF THE HOW HOW IT'S MAKING US FINANCIALLY STABLE TO IT'S ALSO ASSISTING US NOT TO NOT HAVE TO INCREASE RATES BEYOND THE INDEX.
AND I JUST THINK SAYING 50% OF THE CAPITAL BUDGET IN 20% OF THE OVERALL REALLY SHOWS THE TESTAMENT AS TO HOW WELL THE TEAM IS WORKING TOGETHER AND MAKING SURE THAT WE'RE BRINGING IN THOSE FUNDS. THIS CHART IS A FIVE YEAR OLD EXPENSES BY CATEGORY.
DOWN HERE AT THE BOTTOM. SALARIES AND BENEFITS IS ALWAYS IS ALWAYS PRETTY CONSISTENT.
OUR HEADCOUNT DOESN'T VARY. THINGS DON'T VARY TOO MUCH IN THOSE TWO CATEGORIES.
AND WITH THE FUTURE MONTHS FOR FUTURE YEARS. OTHER OPERATING THAT CATEGORY IS BASICALLY MADE UP OF COMMODITIES, CONTRACTUAL SERVICES, FIXED AND SUNDRY THINGS LIKE THAT.
AND THEN WE HAVE THE CITY DISTRIBUTION AND WE HAVE NON OPERATING EXPENSES, WHICH ARE BASICALLY LIKE STORM EXPENSES AND OTHER THINGS THAT FALL BELOW THE LINE. SO THIS CHART FOR FISCAL YEAR 26 IS THE ON EXPENSES.
[00:25:05]
AND THAT'LL BE ABOUT 144 MILLION. AND THIS IS THE THE VISUAL THAT SAYS THIS IS HOW MUCH TELLS YOU PURCHASES FOR RESALE AND HOW MUCH IT AFFECTS OUR O&M BUDGET. SO OUR O&M BUDGET IS MADE UP OF 38% OF PURCHASES FOR RESALE.IT IS BY FAR THE LARGEST DRIVER PERSONNEL SERVICES AND EMPLOYEE BENEFITS OVER HERE TO THE RIGHT.
WE SAW A LITTLE INCREASE IN EMPLOYEE BENEFITS THIS YEAR.
WE HAVE PROBABLY IN THE LAST 5 OR 6 YEARS SINCE I'VE BEEN INVOLVED YOU KNOW, WITH THE BUDGETING PROCESS FOR EMPLOYEE BENEFITS, WE WERE ALWAYS BELOW INDUSTRY TREND. SO INDUSTRY TREND WAS ALWAYS, YOU KNOW, TEN, 15%.
SO MEDICAL CLAIMS ARE COMING IN AND ALIGN WITH TREND.
SO YOU'LL SEE AN INCREASE TO OUR EMPLOYEE BENEFITS FOR THE AMENDED FOR FISCAL YEAR 25 AND 26.
SPEAKING OF PERSONNEL, HERE'S A LIST OF OUR BUDGETED.
OUR CHART FOR OUR BUDGETED NUMBER OF BUDGETED FULL TIME POSITIONS.
IN 22, WE HAD 295, AND IN 2025 AND 26 WERE AT 291 EMPLOYEES.
SO YOU'LL DEFINITELY SEE THAT THAT IS YOU KNOW, PRETTY MUCH THE HEADCOUNT STAYING LEVEL.
IF THE POSITION BECOMES VACANT, WE DON'T JUST AUTOMATICALLY POST IT.
YOU KNOW, WE TAKE A LOOK AT THAT POSITION. WE WE LOOK AT THE JOB DESCRIPTION.
WE LOOK FOR EFFICIENCIES. WE'RE LOOKING FOR THE REQUIREMENTS OF THE POSITION, AND WE'RE JUST WE'RE TRYING TO ALWAYS, YOU KNOW, ALWAYS DO MORE WITH LESS FOR TRYING TO MODERNIZE.
WE'RE TRYING TO IF THERE'S A COMPUTER SYSTEM THAT CAN MAKE SOMETHING A LITTLE QUICKER, A LITTLE FASTER, MAYBE THE POSITION ISN'T BETTER HOUSED IN ONE DEPARTMENT. IT MIGHT. MAYBE THERE'S ANOTHER DEPARTMENT WHO NEEDS IT. MAYBE TWO DEPARTMENTS COULD BE WORKING TOGETHER AT THE SAME TIME.
SO WE'RE ALWAYS, ALWAYS TAKING A LOOK AT THAT.
THE DISTRIBUTION TO THE CITY OF FORT PIERCE. THIS CHART WILL GO BACK QUITE, QUITE A WAYS.
THIS IS DEFINITELY, ABSOLUTELY, 100% RELATIVE TO THE INCREASE IN OUR GROSS REVENUES.
IT'S THE CALCULATION IS A AN ADJUSTED IT'S A CALCULATION OF 6% OFF OF AN ADJUSTED GROSS REVENUE.
SO THERE ARE SOME THINGS THAT COME OFF OF THE, THE GROSS REVENUES.
AND YOU'LL JUST KIND OF SEE THAT AS, AS OUR GROSS REVENUES ARE GROWING.
AND THAT WAS BECAUSE WE HAD THE MULTIPLE RATE INCREASES THAT HAPPENED IN 23.
AND SO ALL OF A SUDDEN IN THE REVENUES AND WE'RE STARTING TO CATCH UP IN 24.
THIS IS OUR FIVE YEAR CAPITAL IMPROVEMENT PLAN.
SO EVEN THOUGH TODAY YOU'LL BE PRESENTED AND ASKED TO APPROVE THE 26 CAPITAL BUDGET.
THERE IS A FIVE YEAR CAPITAL IMPROVEMENT PLAN, SO YOU WON'T BE APPROVING THE 278 MILLION.
JUST THE SMART PART FOR 2026. BUT JUST SO THAT YOU CAN KIND OF SEE WHAT THE FIVE YEAR FUTURE LOOKS LIKE AND WHAT LEADERSHIP WHAT AREAS ARE BEING TARGETED, WHAT THE WHOLE WHAT THE WHOLE SYSTEM LOOKS LIKE.
SO FOR 278 MILLION, 46% OF THAT OF THAT CAPITAL IMPROVEMENT PLAN IS GEARED TOWARDS THE WASTEWATER SYSTEM, AND 31% IS FOR THE ELECTRIC THOSE THE WASTEWATER THE MAJOR PROJECT IS GOING ON IS THAT REDIRECTION OF THE CONVEYANCE SYSTEM THAT WILL BE, YOU KNOW, A MULTI-YEAR PROJECT GOING ON THAT THAT WILL BE IN THE WASTEWATER SYSTEM.
THE ELECTRIC THAT WILL BE FOR HOPEFULLY BUILDING A NEW SUBSTATION.
AND THE ADMIN, THE ADMIN GROUP GREW A LITTLE BIT BECAUSE WE ARE ALSO PART OF THE DEBT ISSUANCE GOING TO STORM HARDIN, THE ESC, OUR EMERGENCY CENTER OVER OUR 37TH. THIS IS A CAPITAL BUDGET TREND BY FUNDING SOURCE. LET'S SEE. SO YOU'LL SEE HERE THAT YES, IT HAS GROWN BY 16,000,022 TO 102 IN 2025. AND THAT, AGAIN, IS JUST BECAUSE WE HAD THOSE BOND PROCEEDS THAT WE RECEIVED IN 22.
AND WE HAD TO SPEND, YOU KNOW, 127 MILLION. EFFECTIVELY, EFFICIENTLY AND CORRECTLY, WE, YOU KNOW, WE DID EVERYTHING THAT WE, WE SET OUT TO DO. AND SO NOW WE'VE, WE'VE SPENT THOSE, WE SPENT THOSE FUNDINGS.
AND THEN YOU'LL SEE HERE ALSO IN GREEN UP TOP THAT IS GRANT FUNDING.
OKAY. SO YOU HAD YOU HAD THE INCREASE IN SPENDING DUE TO BOND PROCEEDS.
[00:30:02]
AND THEN WE HAD THE GRANT THE GRANT FUNDS COMING IN.AND THEN NEXT YEAR FOR THE 103 HOPEFULLY WE'LL HAVE A DEBT ISSUANCE ISSUED NEXT YEAR, AND THEN WE HAVE ADDITIONAL GRANT FUNDING THAT WE'RE GOING TO WE'RE GOING TO SPEND WE'RE GOING TO GET REIMBURSED, AND THEN WE'RE GOING TO PUT THAT RIGHT BACK INTO THE SYSTEM. THIS WILL BE THE SAME NUMBERS, BUT INSTEAD INSTEAD OF BY FUNDING SOURCE IT'S BY SYSTEM.
SO THE 2026 CAPITAL BUDGET BY SYSTEM WILL BE ASKING FOR APPROVAL OF ABOUT 103 MILLION 69 MILLION OF THAT WILL BE FOR THE WASTEWATER SYSTEM, 14 MILLION FOR THE ELECTRIC SYSTEM. 12 MILLION 12 MILLION WILL BE MADE UP OF 1.8 FOR FP NET COMMUNICATIONS, 10 MILLION FOR ADMIN DEPARTMENTS. AND THAT WILL BE MAINLY BECAUSE OF THE EIC BUILDING 500, 500,000 IN CONTINGENCY. JUST A REMINDER, WE CAN'T SPEND CONTINGENCY WITHOUT COMING TO THE BOARD SO THAT MONEY WILL NEVER BE SPENT UNLESS YOU GUYS KNOW ABOUT IT.
A GAS OF A LITTLE UNDER A MILLION AND WATER FOR 5.2 MILLION.
SO HOW ARE WE GOING TO. HOW ARE WE GOING TO FUND ALL THAT? SO I JUST WANTED TO TO KIND OF TALK A LITTLE BIT ABOUT UTILITY REVENUE BONDS.
SO AS A MUNICIPAL UTILITY DEBT IS A VERY COMMON THING.
THEY ANOTHER COMPONENT, THEY ARE BACKED BY REVENUE GENERATED FROM A PROJECT OR SOURCE.
SO WE ARE LUCKY THAT WE ARE AN ESSENTIAL SERVICE.
YOU KNOW, SO WE HAVE CONTINUAL REVENUE, BUT ALSO IT IS BACKED BY REVENUE.
LIKE IF SOME OF THE SOME OF THE PROJECTS ARE GOING TO DO GROWTH OR IT'S GOING TO REDUCE COST.
YOU KNOW, ARE WE GOING TO HAVE A CONSISTENT REVENUE STREAM FROM THE PROJECTS THAT WE'RE GOING TO BE INVESTING IN? AND THEN THE FACT THAT WE HAVE A PLAN IN PLACE TO CONTINUALLY REVIEW AND INCREASE RATES AT THE INDEX THAT THE BOARD LEADERSHIP THAT WE ARE ON THE SAME PAGE HAS REALLY HELPED IN PREVIOUS THAT ISSUANCE, AND IT WILL PROBABLY HELP IN THE FUTURE. ONE, BECAUSE IT SHOWS ALL BUY IN.
YOU KNOW WHEN YOU SPREAD THE COST OVER 30 YEARS, IT'S YOU KNOW, THESE ARE GENERATIONAL ASSETS.
THEY'RE ASSETS THAT BENEFITS NOT JUST TODAY'S RATEPAYER BUT THE FUTURE RATEPAYERS.
AND IT ALSO HELPS, ESPECIALLY US IN FINANCE, TO ALLOW FOR A GRADUAL, PREDICTABLE AND PLANNED RATE ADJUSTMENTS WHERE IF WE'RE WHERE WE HAVE CONTINUAL RATE ADJUSTMENTS AT THE INDEX, AND WE HAVE DEBT LEVEL DEBT SERVICE PAYMENTS.
SO ALL OF THIS HELPS US PLAN AND HELPS US WORK ON THIS FIVE YEAR CIP.
SO THIS CHART MIGHT LOOK A LITTLE FAMILIAR, BUT IT HAS DIFFERENT NUMBERS.
IT WAS ABOUT $128 MILLION. AND WE WERE PROPOSING AT THAT TIME TO DO ONE DEBT ISSUANCE THAT WE WERE THINKING THAT IN 2026 WE WERE GOING TO DO A DEBT ISSUANCE FOR, I THINK IT WAS 128 MILLION. AND LOTS OF GOOD DISCUSSION BETWEEN LEADERSHIP AND THE BOARD MEMBERS.
AND WE, YOU KNOW, YOU GUYS TASKED WITH LEADERSHIP WITH GOING BACK AND TAKING ANOTHER LOOK, YOU KNOW, BECAUSE YOU DON'T WANT TO OVER BORROW. AND CAN YOU GUYS REALLY SPEND THIS MONEY IN THREE YEARS.
AND ARE ALL OF THESE PROJECTS A PRIORITY? CAN WE MAYBE SPREAD IT OUT? AND WE ALL THOUGHT IT WAS A, YOU KNOW, SOMETHING TO TAKE A LOOK AT INSTEAD OF DOING ONE LARGER ONE TO MAYBE POSSIBLY START SPREADING, SPREADING OUT, MAYBE DOING A DEBT ISSUANCE THIS YEAR, ANOTHER ONE IN 3 TO 4 YEARS, YOU KNOW, THINGS LIKE THAT. MAKING IT MORE OF A COMMON DISCUSSION.
AND NOT, YOU KNOW, NOT SOMETHING THAT'S UNEXPECTED.
AND THAT WOULD BE AND WE PRIORITIZE. THE PROJECTS ARE THE ONES THAT WOULD BE THE MOST IMPACTFUL, THE ONES THAT WOULD MAKE THE MOST DIFFERENCE, THE ONES THAT ARE DEFINITELY NEEDED. THEY HAVE TO HAPPEN.
AND WITHOUT DOING A DEBT ISSUANCE, WE WOULD HAVE TO INCREASE RATES BEYOND THE INDEX.
[00:35:08]
SPEND WE CAN TAKE ON ADDITIONAL DEBT OF $90 MILLION WITHOUT INCREASING RATES BEYOND THE INDEX, SO INCREASING RATES AT 2.23%. THAT'S ALL WE'RE GOING TO HAVE TO DO IN ORDER TO TAKE OUT THIS DEBT ISSUANCE.AND THAT WAS AT 90. SO WE'RE ASKING FOR FOR LESS.
BECAUSE YES YOU DO NOT WANT TO OVER BORROW. SO IT'S 70 MILLION.
AND FP NET COMMUNICATIONS WILL NEED 3.8. AND JUST A REMINDER THEY KIND OF HAVE TO BE SEPARATE BECAUSE OF THE TERMS. SO THE SERIES 2026 CAN BE OVER 30 YEARS. BUT COMMUNICATIONS BY FLORIDA STATUTE HAS TO BE OVER 15.
SO THEY CAN'T BE COMBINED. SO WHAT DOES THAT KIND OF LOOK WHAT DOES THAT LOOK LIKE TO OUR TO OUR DEBT, TO OUR DEBT SERVICE? RIGHT NOW WE ARE AT THE BLUE LINE.
SO OUR CURRENT DEBT SERVICE, ANNUAL DEBT SERVICE IS $12 MILLION.
AND IF WE DO THIS DEBT ISSUANCE, IT IS PROPOSED THAT THE FIRST YEAR WILL BE 14 MILLION AND THEN IT WILL JUMP UP TO 16 MILLION, RIGHT. AND SO, YOU KNOW, YOU HAVE THIS AREA IN HERE.
ARE WE GOING TO BE ABLE TO PAY FOR THAT, FOR THAT 14, THAT THAT EXTRA $4 MILLION.
AND SO THAT IS WHAT A LEADERSHIP AND FINANCE HAVE BEEN WORKING TOGETHER ON FOR FOR A WHILE.
SO EVEN AND THAT'S WHY WE BROUGHT DOWN 20 FIVES AS WELL.
SO IT WAS ORIGINALLY BUDGETED THAT WE CAN WE CAN SPEND 25 MILLION IN RATE FUNDED CAPITAL.
BUT KNOWING THAT WE WE WANTED TO PROPOSE THIS GOING FORWARD, WE'RE REDUCING THIS YEAR'S CAPITAL, POTENTIAL CAPITAL SPEND FOR RATE FUNDED, AND WE'RE BRINGING NEXT YEAR'S BACK TO WHERE WE WERE IN PREVIOUS YEARS SO THAT WE CAN INSTEAD OF SPENDING THAT MONEY ON RATE FUNDED CAPITAL, WE'LL BE SPENDING IT ON THE ANNUAL DEBT SERVICE.
AND SO WHAT DOES THAT LOOK LIKE FOR A TIMELINE? YOU KNOW, WHAT'S THE GAME PLAN WITH THAT? WE HAVE BEEN IN DISCUSSIONS WITH FINANCE, WITH THE FINANCING TEAM. THE DEBT ISSUANCE MOST LIKELY, IF APPROVED, WON'T HAPPEN UNTIL THE SPRING OF 26.
AND THAT WON'T HAPPEN UNTIL MARCH UNTIL THE AUDIT IS COMPLETE.
AND SO WHAT WE'RE PROPOSING ALSO IS THE A LINE OF CREDIT BECAUSE THAT SPRING, YOU KNOW, SO WE WANT THESE PROJECTS TO START AS SOON AS THEY CAN IN FISCAL YEAR 26. THERE'S ALREADY SOME PROJECTS THAT, YOU KNOW, YOU KNOW, THEY HAVE TRACTION.
EVEN THOUGH WE HAVE, I THINK WE SIGNED, LIKE, A $28 MILLION AGREEMENT FOR A GRANT.
THAT MONEY IS A REIMBURSEMENT GRANT, IS A REIMBURSABLE GRANT.
SO THE MONEY HAS TO BE SPENT IN ORDER FOR US TO GET REIMBURSED.
SO THIS LINE OF CREDIT WILL HELP US WITH CASH FLOW AND BE ABLE TO HELP US WITH DAYS OF CASH IN BETWEEN GETTING FROM THE TIME WE SPEND IT TO THE TIME WE SUBMIT IT, AND TO THE TIME WE GET IT BACK. SO IT KIND OF IS TWOFOLD.
AFTER DISCUSSION, IF YOU GUYS ARE ON THE SAME PAGE WE'D LIKE TO PUBLISH AN RFP FOR A LINE OF CREDIT TO SEE WHAT KIND OF TERMS THE BANKS ARE OFFERING TO SEE, TO SEE WHAT THE MARKET'S LOOKING LIKE. TO SEE WHAT KIND OF FUNDING IS OUT THERE FOR US.
AND THEN IN AUGUST, WE'D LIKE ALL THE PROPOSALS DO IN A LENDER SELECTED IN SEPTEMBER.
IT MIGHT BE SEPTEMBER, EARLY OCTOBER. WE'D LIKE TO BRING IT TO THE BOARD.
DRAFT RESOLUTIONS, LINES OF CREDIT AGREEMENTS, REIMBURSEMENT RESOLUTIONS, THINGS OF THAT NATURE.
FOR A TENTATIVE CLOSE IN SEPTEMBER OR OCTOBER.
SURE THERE ARE. I'M SURE YOU WOULD LIKE TO GO FIRST.
ANYONE? ANYONE? OKAY. I'LL. I'LL GO FIRST. I MAY HAVE MISUNDERSTOOD YOU, BUT YOU MENTIONED THAT 56% OF THE OVERALL BUDGET IS FUNDED BY OUR RATES. IS THAT CORRECT? YES. OKAY. AND THEN 20% OF OUR OVERALL BUDGET IS BY GRANTS.
CORRECT. SO WHERE DO WE MAKE UP THE 24% THERE.
WELL THAT IS IN C SO YOU HAVE CAPITAL IMPROVEMENT CHARGES CONTRIBUTED CAPITAL.
[00:40:01]
WE HAVE A SETTLEMENT THAT WE'RE GETTING IN. SO IT'S IN ALL THESE OTHER AREAS WHERE IT'S GETTING FUNDED.SO WE GET THAT. SO WE'RE ASSURED WE'RE GOING TO HAVE THAT GAP MADE UP BY THESE OTHER REVENUE LINES, IF YOU WILL. OKAY. SO GOING BACK TO THE CHART WHERE YOU HAD PER YEAR.
AND IT SHOWED 21 MILLION FOR 2025. WAS IT OR 2020.
CORRECT. YOU KNOW JUST CURIOSITY. IF WE BUMPED IT UP TO 21.8 LIKE WE DID THE YEAR BEFORE.
HOW MANY PROJECTS CAN YOU GET DONE THAT'S ON YOUR WISH LIST? SO GOOD QUESTION. THAT WOULD STILL BE DIFFICULT.
MAN REPLACEMENTS, POLE REPLACEMENTS, THINGS THAT WE ARE ESSENTIAL.
SO THE. SO YOU TAKE LET'S SAY 20 MILLION AWAY FROM THE 10 MILLION.
CAN YOU GO TO THE PROJECT LIST THAT SHOWS THE BOND ISSUANCE? SO THAT LET'S JUST SAY IN ONE YEAR THAT $10 MILLION ASSUME THAT WE HAD $12 MILLION, $12 MILLION, RIGHT? YOU WOULD ONLY BE ABLE TO COMPLETE MAYBE TWO OF THESE PROJECTS INSTEAD OF INSTEAD OF ALL OF THESE IN THE TIME FRAME WE NEED.
AND SOME OF THESE ARE YOU KNOW, THEY'RE MULTI-YEAR PROJECTS AND THEY AND, YOU KNOW, WE HAVE TO HAVE A FUNDING SOURCE BEFORE WE APPROVE THE PROJECT, AND WE CAN'T COME TO THE BOARD AND ASK FOR A PROJECT WITHOUT HAVING THE FUNDING SOURCE. SO CAN YOU SHOW ME THE DEBT SERVICE GRAPH AGAIN? ALL RIGHT, SO THE BLUE LINE IS, IS WHERE WE'RE AT RIGHT NOW.
AND MY THOUGHT WAS, WELL, IF WE CAN FINANCE QUITE A FEW OF THESE PROJECTS IN-HOUSE BY USING OUR, YOU KNOW, RATE FUNDED CAPITAL OF IF WE BUMP IT UP TO 21 MILLION THAT MAYBE THAT'LL ALLOW THAT BLUE LINE THE DIP A LITTLE BIT MORE BEFORE WE TAKE ON ADDITIONAL FINANCING. SEE WHERE I'M GOING WITH IT.
RIGHT. RIGHT NOW WE HAVE A GAP AND NATURALLY WE'RE GOING TO BE SLIGHTLY UP.
YOU KNOW, IT LOOKS LIKE MAYBE 12 OR 13 MILLION THERE.
IF, IF, IF WE CONTINUE ON WITH THE FINANCING PLAN THAT YOU'RE SUGGESTING NOW.
BUT IF WE CAN RIDE OUT TO 2030. RIGHT. I THINK OUR, OUR BORROWING POSITION LOOKS A LOT BETTER IF WE'RE ABLE TO STAVE OFF SOME OF THESE PROJECTS. NOW, I KNOW SOME OF THE PROJECTS THAT WE GOT TO GET DONE.
SO THAT WOULD TAKE US OUT TO 2030 AS YOU MENTIONED.
I'M NOT SAYING ALL THE PROJECTS RIGHT. I'M SAYING THE ONES THAT YOU NEED TO GET DONE UNTIL YOU CAN GET TO 2030, THEN TAKE DOWN SOME MORE FINANCING, AND THEN YOUR POSITION FOR DEBT SERVICE LOOKS A LOT BETTER OVER TIME.
AND THIS IS MY OVERALL CONCERN, IS THAT WHAT IF WE TAKE OUT THE 70 MILLION AND GOOD JOB AND GETTING IT DOWN FROM THAT, THAT 120 DOWN TO 70. GREAT WORK THERE. BUT IF WE TAKE OUT 70 MILLION, LET'S SAY, THIS YEAR.
AND WHAT IF WE HAVE A CATASTROPHIC EVENT, I MEAN, A TOTAL CATASTROPHIC EVENT, SOMETHING THAT KNOCKS OUT, THAT TAKES DOWN THE NEW PLANT ALTOGETHER. HOW ARE WE GOING TO COME BACK AND GET FINANCING TO GET THINGS WHERE THEY NEED TO BE? I THINK OUR FINANCIAL SITUATION COULD BE DIRE AT THAT POINT IN TIME.
APPROXIMATELY EIGHT OR SO. AND IN 2030, WE'RE GOING TO BE ABLE TO REDUCE IT BACK UP.
SO WE'RE GOING TO BE ABLE TO ACCOMPLISH I THINK I THINK WHAT YOU'RE TRYING TO TO TO SAY, IF I'M UNDERSTANDING CORRECTLY, IS WITH OUR DEBT ISSUANCE, WE COMPLETE THOSE PROJECTS.
AND IN 2030, WE STILL HAVE ADDITIONAL BORROWING CAPACITY THAT WE COULD EITHER DO ADDITIONAL DEBT FINANCING OR WE COULD INCREASE OUR CAPITAL CAPITAL RATE FUNDED PROJECT LIST. SO RATHER THAN BEING AN APE, WE COULD GO BACK UP TO 12 OR WE COULD TAKE ON SOME ADDITIONAL DEBT.
I'M TRYING TO STEER AWAY FROM ADDITIONAL DEBT. YOU SEE. RIGHT. YEAH, ABSOLUTELY.
I MEAN YOU KNOW, WE WORK PRETTY HARD TO GET THOSE LAST SET OF BONDS PAID OFF AND PAID DOWN.
AND SO WHAT I'M CONCERNED ABOUT IS NATURALLY IF THERE'S ANOTHER CATASTROPHIC EVENT, A BIG RECESSION.
[00:45:09]
NATURALLY, YOU'RE SAYING WE COULD PULL OUT DEBT, BUT IT MAY NOT BE THE WISEST THING TO DO AT THAT POINT IN TIME.YEAH, BECAUSE I COULD LOOK AT SOME OF THOSE PROJECTS AND SAY, OKAY, NEW WINDOWS.
WELL, YEAH, MAYBE WE COULD PUT THAT OFF FOR A COUPLE OF YEARS OR STORM HARDENING.
WELL, GOSH, THE THING THAT'S BEEN THERE FOR HOW LONG? YOU KNOW, UNLESS YOU GET HIT, GETS DIRECTLY HIT BY A TORNADO OR CAT FIVE.
I DON'T THINK THAT BUILDING'S GOING ANYWHERE, BUT THOSE ARE RISKS.
THE QUESTION IS, YOU KNOW, DO WE FEEL CONFIDENT THAT WE CAN RIDE OUT THOSE RISKS? BUT ANYWAYS, I MEAN, JUST TO GET TO THE POINT IS THAT THE ONE PROJECT WE GOT TO GET DONE IS CONVEYANCE SYSTEM, BECAUSE THAT'S INSTRUMENTAL. 27 MILLION. YOU COULD YOU COULD BUMP UP YOUR CAPITAL IMPROVEMENT PLAN THIS YEAR, HAVE HALF THAT MONEY AVAILABLE, THEN BORROW THE FOLLOWING YEAR.
YOU KNOW SEC STORM HARDING. SAME THING. YOU MEAN YOU COULD PROBABLY DO THAT WITHIN 2029.
PERHAPS IF YOU BUMPED UP YOUR CAPITAL IMPROVEMENT FUNDING.
I'M JUST LOOKING AT FROM A DIFFERENT DIRECTION.
SO I AGREE WITH YOU. WE DID LOOK AT WHAT POTENTIALLY 2030 WOULD LOOK LIKE.
WE ACTUALLY TALKED ABOUT THAT SEVERAL TIMES ACTUALLY I THINK WE TALKED ABOUT IT YESTERDAY. YOU KNOW WHAT HAPPENS IF IF THIS DOESN'T YOU KNOW, WE DON'T GO DOWN THIS PATH IN 2030. WE WOULD BE IN A GREAT FINANCIAL POSITION.
WE ARE TAKING A BIG RISK. AND YOUR QUESTION WAS DID WE ANALYZE IT? IN MY OPINION, THIS IS THE BEST PATH FORWARD.
THE CONVEYANCE SYSTEM, THE EQ, STORM HARDENING AND THE NEW SUBSTATION ARE MISSION CRITICAL, RIGHT? WE CANNOT BE WITHOUT POWER AND OUR BUILDING IS OUR COMMAND CENTER AFTER EVERY EVERYDAY OPERATION AND AFTER A STORM.
SO THOSE ARE THINGS WE JUST CANNOT GO WITHOUT.
AND THE CONVEYANCE SYSTEM, THE LONGER WE OPERATE TWO PLANTS, THE MORE EXPENSIVE IT IS.
AN UNKNOWN M SO WE'RE LOOKING AT LONG TERM O&M COSTS THERE.
SO THOSE, IN MY OPINION, ARE VERY TIMELY AND CRITICAL TO TO GET TO GET TO THE FINISH LINE.
NOW, I'M SORRY FOR CUTTING YOU OFF. WHAT TYPE OF DRAWDOWN ARE YOU LOOKING AT? ON THIS LINE OF CREDIT? ALL 70 AT ONCE, MAYBE 30 MILLION FOR THE FIRST THREE YEARS OR SOMETHING OF THAT NATURE, OR VICE VERSA. WHAT ARE YOUR WHAT ARE YOUR BE A $70 MILLION ONE TIME DISTRIBUTION.
AND WE DO HAVE A SPIN DOWN SCHEDULE THAT THE TEAM HAS PUT TOGETHER. THE DRAW WOULD BE ON THE LINE OF CREDIT WHEN YOU CLOSE ON WHEN YOU WELL, WHEN YOU CLOSE ON, THE BOND PROCEEDS. YOU GET THAT ALL AT ONE TIME.
BUT THEN YOU TALK ABOUT THE SPENDING OF THAT. THIS IS A LINE OF CREDIT.
THIS IS NOT. NO NO NO NO, SIR. THIS IS THE BOND.
THE LINE OF CREDIT IS ONLY A TEMPORARY GAP. STOP TILL WE GET TO THE BOND ISSUANCE.
WHAT'S THE LINE OF CREDIT GOING TO BE? THE LINE OF CREDIT? ABOUT TEN, 15 MILLION.
YEAH, 10 TO 15 MILLION. JUST TO GET THE PROJECTS GOING UNTIL WE DO A DEBT ISSUANCE MID-YEAR.
AND ALSO FOR, MORE IMPORTANTLY, FOR THE GRANT REIMBURSEMENTS, BECAUSE SOME OF THESE THINGS, WE DON'T GET REIMBURSED FOR TWO, THREE, SIX MONTHS OR SO, AND WE'RE ABLE TO MAINTAIN OUR DAYS OF CASH AND BE IN COMPLIANCE WITH OUR BOND COVENANT.
SO YOU'RE FACTORING IN THAT THE LINE OF CREDIT WILL BE TAKEN DOWN OR TAKEN OUT BY THE BOND, AND THAT'S GOING TO BE ROLLED INTO THAT 70 MILLION.
YES, SIR. YES. YES. OKAY. ANY OTHER QUESTIONS? I'VE GOT IT. I WANTED TO CHAIRMAN, I'D LIKE TO ASK, WHEN YOU GIVE CONSIDERATION TO ALL THE THINGS I SEE, THE THE GRAPHS EXHIBITING WHAT ARE WHAT WE SHOULD ANTICIPATE BASED UPON YOUR PROPOSALS.
BUT WHAT WOULD THE DEBT SERVICE RATIO BE IF ALL WAS CONSIDERED? I NEVER SAW THAT NUMBER IN YOUR PRESENTATION.
OKAY. OUR MINIMUM IS 1.25 BY BOND COVENANTS, BUT WE WOULD STILL BE AT A HEALTHY ABOVE TWO TIMES.
IS THAT DOES THAT PLAY ANY PART IN YOUR CALCULATIONS OR EXPECTATIONS? WE DO HAVE RESERVES. WE HAVE RESERVES FOR EMERGENCIES.
WE HAVE RESERVES FOR SOME CAPITAL PROJECTS. I DON'T BELIEVE WE'RE TAKING THAT INTO CONSIDERATION.
OKAY. SO YOU'RE AN ACTUAL OKAY? YES. OKAY. THANK YOU.
YES, ACTUALLY. SO LOOKING BACK AT THAT GRAPH WHERE THE ORANGE IS WE HAVE THOSE FOUR YEARS,
[00:50:05]
RIGHT? WHERE IT'S $4 MILLION OVER. SO WE'VE GOT LIKE, 16, $16 MILLION WORTH OF DEBT THERE.CORRECT. SO THAT TO THE WAY I'M UNDERSTANDING IT, FIRST OF ALL, WE WOULDN'T NECESSARILY WANT TO USE OUR RATES CURRENTLY BECAUSE THEN THE CURRENT RATE PAYERS ARE PAYING FOR SOMETHING THAT SHOULD BE SPREAD OUT AMONGST 30 YEARS, RIGHT? THE OTHER THING WITH THAT, THE WAY THAT I'M UNDERSTANDING THIS, IF WE ARE PROPOSING WHERE WE HAVE ONLY 8.2 MILLION THAT WE'RE USING OUT OF THE RATES THIS YEAR, WHEREAS IT WAS 21 AND 2025, RIGHT? WE STILL HAVE THAT $12 MILLION. WE WE WOULD LIKELY STILL HAVE THAT, BUT IT WOULD BE PAYING FOR THIS DEBT AND WE WOULD STILL HAVE MORE CUSHION.
IT GIVES US MORE LONGEVITY. RIGHT. SO IT'S NOT LIKE A BIG PILE OF 12 MILLION RIGHT NOW.
WE'RE TAKING OUT OF OUR DAYS ON HAND TO PAY FOR WHATEVER PROJECTS.
IS THAT CORRECT? CORRECT. SO I THINK THAT MAY ANSWER YOUR QUESTION A LITTLE BIT.
IT ANSWERS A LITTLE BIT A LITTLE BIT. I UNDERSTAND THE THEORY BEHIND IT.
I JUST WANT TO MAKE SURE AND FOLLOW UP WITH MISS PEARL MENTIONED.
WHAT TYPE OF RESERVES DO YOU HAVE OTHER THAN DAYS OF CASH? WELL, WE HAVE THE RATE STABILIZATION FUND, WHICH IS WHICH IS A BIG, BIG DEAL WITH THE PURCHASE POWER.
SO THAT IS VERY HEALTHY PART WITH OUR PART. BUT WE HAVE RESERVES FOR EMERGENCIES.
RESERVES FOR. LET ME LOOK AT IT. WE HAVE $900,000 IN RESERVES FOR, FOR EMERGENCIES.
IF YOU JUST GIVE ME A MOMENT, LET ME PULL UP OUR BUDGETED AND OUR DEBT.
I'M SO SORRY, MR. CHAIR. OUR PURCHASE. WE'RE AT 75%.
WHERE? SO FOR THIS COMING YEAR. FOR THIS, FOR THE CURRENT YEAR.
WE'RE IN, WE'RE IN. WE'RE AT 60, 65%. AND THE GOAL WAS TO GET TO 75%.
BUT ACTUALLY IT WORKS OUT REALLY WELL BECAUSE THE GAS MARKET RIGHT NOW HAS BEEN AT $3.
SO THAT WORKED OUT REALLY WELL. YOU KNOW, THE WAY FPA DOES THEIR, THEIR, THEIR GAS STABILITY PROGRAM IS THEY DON'T TAKE TEN, 20%. THEY TAKE 5% WHEN THE MARKET DIPS AND THEY ONLY TAKE IT IF IT GETS BELOW THE BENCHMARK THAT THEY NEED TO MAINTAIN A ZERO PCA.
AND THE NUMBER LET'S SEE WHEN WE GET DOWN IF WE TAKE OUT THE DEBT.
IT LOOKS LIKE IT'S RIGHT UNDER ABOUT 14 MILLION.
THAT IS ANNUALLY. YES, SIR. YEAH. IT'D BE ABOUT 13 AND SOME CHANGE.
I FORGET THE EXACT NUMBER, BUT. OR JUST UNDER 13.
HOW MUCH ARE WE HOLDING IN DAYS OF CASH? WELL, WE'D LIKE TO.
WILL BE. WILL BE PROBABLY AROUND 60 TO 70 DAYS OF CASH.
WE WANT TO BE AT 90 DAYS OF CASH. WE'VE ALWAYS HOVERED AROUND THE 45 TO 60 DAYS.
BUT BECAUSE WE'RE A COASTAL CITY, WE WANT TO BE CLOSER THAN 90 DAYS OF CASH.
WE ALSO ARE BUILDING A $5 MILLION RESERVE THAT WILL PROBABLY TAKE US 1015 YEARS FOR STORM OR EMERGENCY FUNDS, BECAUSE ALL WE NEED IS TWO STORMS IN ONE SEASON.
TO DEPLETE THAT VERY QUICKLY. SO WE'RE THE DART PROGRAM FOR US IS VERY IMPORTANT TO GET TO THOSE BENCHMARKS, BECAUSE THE LAST THING WE WANT TO DO OR WE WANT TO PREVENT OR MITIGATE ANY KIND OF RATE ADJUSTMENTS THAT THAT YOU TYPICALLY WOULD SEE AFTER A STORM. SO THAT ALLOWS US TO MITIGATE SOME OF THOSE COSTS.
AND THIS IN THIS CURRENT PROPOSED DEBT SERVICE.
THIS IS ALL GOING TO BE FROM RATEPAYER AND GRANTS, CORRECT? NO, THIS DEBT SERVICE WOULD BE JUST FROM RATES.
THIS IS RATES, RIGHT. DEBT SERVICE HAS TO BE PAID THROUGH RATES.
IT CAN'T BE GUARANTEED THROUGH THROUGH GRANTS. BUT THE GRANTS DO REDUCE HOW MUCH WE BORROW.
AND ALSO HELP US FUND PROJECTS THAT WE MAY NOT NEED TO BORROW.
IT ALLOWS US TO FUND THE PROJECT UNTIL WE GET REIMBURSED.
THAT'S RIGHT. YES, SIR. BENEFITS FOR THAT. AND THAT'S EXACTLY WHY WE'RE USING THE LINE OF CREDIT IS TO BE ABLE TO AVOID TAKING DAYS OF CASH OUT OF OUR HANDS AND USING THE LINE OF CREDIT TO MITIGATE. WE'VE HAD SOME QUICK TURNAROUNDS ON THE GRANT REIMBURSEMENTS, BUT, YOU KNOW, I JUST WE JUST DON'T WANT TO COUNT ON IT. NO.
YEAH. I THINK SOMETIMES THESE ARE, WHAT, 1 TO 2 YEAR REIMBURSEMENTS.
[00:55:02]
I MEAN, THEY'VE BEEN THEY'VE BEEN THEY'VE BEEN GOOD.THEY'VE BEEN TURNING AROUND WITHIN 60, 60, 90 DAYS.
SO. BUT CAN WE COUNT ON THAT SIX MONTHS FROM NOW, MISTER CHAIR? JUST I JUST TO REFRESH MY MIND ARE THE DAYS OF CASH.
WE ARE NOT USING THE RATE STABILIZATION FUND IN THOSE FIGURES ANYMORE, EITHER.
RIGHT. WE ARE TRYING TO DO TWO. YES, WE'RE TRYING TO BE COMPLIANT WITH THE BANK COVENANTS.
YEAH. SO THE THE RATE STABILIZATION FUND, WHICH IS ABOUT $10 MILLION BY BOND COVENANTS.
LAST QUESTION. CONSIDERING THIS IS GOING TO BE SOME SORT OF FORM OF SUBORDINATE FINANCING, DOES OUR PRIMARY BONDHOLDER HAVE IS THERE ANY, YOU KNOW, COVENANTS NOT TO TAKE OUT ANY MORE FINANCING? SO WE WOULD WE WOULD BE RATED BY OUR FINANCIAL ADVISOR AND BY OUR BOND COUNSEL AND BY A RATE CONSULTANT.
SO, SO THAT IS BASED ON THE SO THE, THE THE ANSWER TO THAT IS ABSOLUTELY.
AND PART OF THAT IS THE RATE CONSULTANT TELLING US THAT WE CAN'T AFFORD TO.
SO THAT IS PART OF THE PROCESS. ANY OTHER QUESTIONS? THANK YOU, MR. CHAIRMAN. SO I WANT TO THANK YOU FOR THE TIME YOU SPENT IN BRIEFING US, BECAUSE A LOT OF THIS WENT SMOOTHLY, AND AND I ACTUALLY UNDERSTOOD IT. RIGHT. SO THANK YOU VERY MUCH.
AND I APPRECIATE WHAT YOU SAID AND THE PHILOSOPHY OF THE DIRECTOR AND THE OF WHEN YOU HAVE A VACANCY, YOU LOOK AND SEE IF THAT NEEDS TO BE FILLED, IF THAT CAN BE COMBINED WITH SOMETHING ELSE, IF YOU AT LEAST LOOK AT IT AND DON'T THINK YOU AUTOMATICALLY.
I LIKE THAT APPROACH, BECAUSE I THINK THAT SHOWS WE'RE ALL TRYING TO BE WE'RE TRYING TO SPEND THE RATE PAYERS DOLLARS AS, AS EFFICIENTLY AS POSSIBLE. I ALSO I JUST WAS SPARKED SOMETHING THAT DURING THIS CONVERSATION.
AND YOU GOT IT, MAYBE. SO DID YOU FACTOR IN ANYTHING IN TERMS OF WHAT WE'RE PLANNING IN TERMS OF THE FEMA REIMBURSEMENT? NOT SO MUCH WITH FEMA. ODDLY ENOUGH, I THINK WE JUST GOT A CHECK TODAY FOR FROM IRMA, RIGHT? YES, YES. I THINK JUST TODAY. HOW LONG AGO WAS SHE? TEN YEARS. I DON'T KNOW. I KNOW IT WAS A WHILE.
BUT PART OF OUR PROGRAM TO RAISE OUR EMERGENCY FUND IS EXACTLY FOR THAT IS TO NOT DEPEND ON THAT ON THAT FUNDING REIMBURSEMENT SO THAT WE DON'T DEPLETE OUR DAYS OF CASH. SO FIRST WE HAVE THE INITIAL PURPOSE IS TO FUND OURSELVES AND THEN HAVE ENOUGH FUNDING SO WE DON'T HAVE TO BE IN DIRE STRAITS FOR REIMBURSEMENTS BECAUSE, LIKE, LIKE MICHELLE SAID, IT COULD TAKE TEN YEARS.
I KNOW SOME PROJECTS HAVE TAKEN LONGER THAN THAT.
YEAH. SO HOPEFULLY THAT ANSWERS YOUR QUESTION.
YEAH. IT DOES. AND I KNOW I'VE HEARD CERTAIN INSTANCES FEMA CLAUSE TRIES TO CLAW BACK THINGS, ETC. SO I KNOW THAT IT'S NOT SOMETHING THAT WE DEPEND ON, BUT I WANTED TO KNOW IF YOU FACTORED IT IN THIS BUDGET AND SO ON.
THE THE LIST OF PROJECTS THAT ARE GOING TO BE DONE UNDER THE 70 MILLION.
ARE ANY OF THOSE BEYOND CONVEYANCE? ARE THEY FOR EXPANSION OR ARE THEY FOR MOSTLY FOR R&R? WHAT WE'RE DOING ARE. YES, MA'AM. GOOD QUESTION.
[01:00:02]
WE ARE ADDING SOME MORE SPACE. AS YOU CAN SEE SC BUILD OUT, WE'RE ADDING SOME MORE SPACE DOWN DOWNSTAIRS FOR FOR JUST THE WAY WE'RE OPERATING THE BUSINESS A LITTLE BIT DIFFERENTLY. WE'RE ADDING STAFF DOWN THERE AND THERE'S NO ROOM THERE NOW. SO AND SO MY LAST, MAYBE LAST IS YOU'RE COMMITTING TO DOING THESE PROJECTS WITH THIS $70 MILLION IN A CERTAIN TIME FRAME.THREE YEARS. ARE YOU REMEMBERING THAT RIGHT? IT'S BEEN THREE YEARS.
SO THAT'S A LOT TO ACCOMPLISH IN THREE YEARS.
WE KNOW OVER AND ABOVE WHAT WHAT WHAT YOU NORMALLY DO AND IT IS AND YOU KNOW, WE'RE NOT JUST A ONE UTILITY ORGANIZATION, SO I CAN IMAGINE THAT THAT MIGHT BE A LITTLE HARDER IF IT WAS ALL FOR ELECTRIC OR ALL FOR WATER WASTEWATER.
BUT IF YOU KIND OF LOOK AND SAY, OKAY, WATER WASTEWATER HAS A PIECE, ELECTRIC HAS A PIECE ADMIN, YOU HAVE MULTIPLE PEOPLE, MULTIPLE DIVISIONS WORKING ON IT.
SO WE DEFINITELY THINK IT'S ATTAINABLE. GOOD.
BECAUSE I MEAN, BECAUSE I THINK THAT'S I DON'T KNOW ABOUT THE REST OF THE BOARD, BUT I, I WANT TO BE ASSURED IF WE'RE DOING THIS AND BORROWING THIS MONEY, THIS IS GOING TO HAPPEN. OH, YES, MA'AM. AND THIS IS, THIS IS LIKE A THIS IS THE VERY PRELIMINARY OF A CONVERSATION THAT WE'RE HAVING.
THIS IS WHAT WE'VE BUILT INTO OUR BUDGET. AND IF WE GO FOR THE LINE OF CREDIT AND WE TAKE IT BECAUSE WE KNOW WE'RE GOING TO NEED A LINE OF CREDIT FOR THE GRANT TO TIME THE GRANT REIMBURSEMENTS, AND ALSO TO DO SOME OF THIS, THAT'S ALREADY KIND OF HAPPENING RIGHT.
THESE NUMBERS CAN GO DOWN. THEY COULD GO UP. WE CAN HAVE A BETTER GAME PLAN THE CLOSER WE GET, THE MORE CONFIDENT WE'RE DEFINITELY GOING TO HAVE.
WE'RE GOING TO BE IN THESE NUMBERS. MICHELLE, IF I COULD ADD THE LINE OF CREDIT, WHICH I'M NOT SURE THAT YOU MENTIONED IT TODAY, BUT I KNOW WE MENTIONED IT ON OUR ONE ON ONE MEETINGS.
WE CAN. WE HAVE A LITTLE BIT OF FLEXIBILITY THERE WITH A LINE OF CREDIT TO BE ABLE TO TO GET THE TERMS WE WANT, AND WE NEED TO MAKE THE COST AS LOW AS POSSIBLE FOR OUR CUSTOMERS.
AND I THINK IT'S ALSO IMPORTANT THAT WE SAY AGAIN THAT THIS IS DONE ONLY WITH THE THE RATE INCREASES THAT ARE NOT COST OF LIVING. CPI WHAT THE INDEX TO WHAT THOSE WHAT THAT WE PLAN ON AND THAT NOTHING OVER AND ABOVE THAT.
THAT'S RIGHT. YES, MA'AM. YEAH. OKAY. THANK YOU, MISTER CHAIR.
I DID HAVE. YEAH. LET'S MISS GIBBONS, AND WE'LL COME RIGHT BACK TO YOU.
A QUICK AND EASY ONE. I'M NOT SURE. TRY TO KEEP IT IN LINE HERE.
I'M CURIOUS, AND I'M SORRY. I SHOULD HAVE ASKED THIS WHEN WE MET ON OUR ONE ON ONES, TOO.
BECAUSE MAYBE YOU WOULD HAVE MORE TIME. BUT YOU MAY ALREADY KNOW WHEN YOU TOOK OVER THIS ROLE.
WHAT? WHAT DID OUR DEBT LOOK LIKE THEN? WHAT? WHAT HAS OUR CAP BEEN? MAYBE IN THE LAST TEN, 20 YEARS, JUST TO KIND OF GIVE US SOME SORT OF A HISTORIC LOOK AS TO WHERE WE HAVE BEEN.
SO I COULD GIVE YOU. I'D HAVE TO FOLLOW UP ON THAT, BUT I DID.
I DO KNOW THE 2022, WE REFINANCED SOME, SOME OLDER DEBT THAT IS ACTUALLY FRONT LOADED IN THAT CHART THAT YOU SEE, YOU SEE AT 16 BECAUSE YOU CAN'T GO BEYOND YOUR INITIAL TERM OF YOUR DEBT ISSUANCE.
SO THAT'S WHY IT'S THE 16 MILLION. AND THAT'S WHY IT DROPS OFF IN 2030.
AND OTHER THAN THAT, I'D HAVE TO GET BACK TO YOU BECAUSE I DON'T KNOW THE ANSWER TO THAT. I KNOW WE PROBABLY WERE ABOVE, ABOVE THE THE 12 MILLION THAT WE ARE NOW BECAUSE WE HAD SOME STUFF PAID OFF IN.
OFTEN. WE HAD SOME STUFF PAID OFF IN 16 AND 19, BUT THEN WE HAD SOME 16 AND 16 LOANS, SO I'D HAVE TO GET BACK TO YOU, MA'AM. SO YOU'RE LOOKING FOR, LIKE, THE THE MAXIMUM DEBT SERVICE THAT WE'VE BEEN AT.
RIGHT. OKAY. WELL, DID YOU HAVE SOMETHING TO OFFER? YES I DID. LOOKING AT THE VACANCIES, I WAS LOOKING AT THOSE WE HAVE.
THE 29 VACANCIES. AND I KNOW THAT YOU SAID THAT.
YOU LOOK TO SEE IF WE CAN CONDENSE THOSE. SO ONCE WE CONDENSE THOSE, DO WE ACTUALLY ELIMINATE THAT POSITION ALTOGETHER OR WE LEAVE IT AS 29? WE'RE GOING TO LEAVE IT AS 29. SO IF THE POSITION IS IF THE DEPARTMENT DEEMS THAT THE POSITION IS NOT NECESSARY AND THOSE FUNCTIONS CAN GO TO OTHER EMPLOYEES, THAT POSITION IS ELIMINATED.
OKAY. THERE ARE INSTANCES WHERE WE MIGHT PUT A POSITION ON HOLD BECAUSE WE'RE THINKING THAT IN THE FUTURE THERE MIGHT BE A NEED FOR IT, BUT THE MAJORITY OF THEM, IF IT'S DEEMED THAT IT'S NOT NECESSARY, THE POSITION GETS ELIMINATED.
AND THEN AT THAT POINT, IF A COUPLE OF YEARS LATER, THEY WANT TO BRING SOMETHING BACK, IT COMPLETELY GETS A NEW LOOK, A BRAND NEW LOOK, WITHOUT JUST REINSTATING ONE.
WE HAVE TO GO BEFORE A COMPENSATION COMMITTEE MEETING.
WE HAVE TO JUSTIFY THE NEED FOR IT. YOU KNOW, IS IT GOING TO PROVIDE A COST SAVING? IS IT GOING TO BUILD EFFICIENCY? SO IT KIND OF HELPS TO ELIMINATE IT AND THEN HAVE SOMEONE KIND OF PROPOSE AN ENTIRE NEW POSITION WHEN THEY NEED IT BACK.
[01:05:06]
OKAY. THAT'S WHAT I WANTED TO KNOW. MR. CHAIRMAN I WANT TO GO BACK OVER JUST A COUPLE OF THINGS THAT WE BRIEFLY DISCUSSED.WE WERE TALKING ABOUT THE CASH ON HAND. I HEARD THAT AT SOME POINT WE WERE AT 45 DAYS.
HERE RECENTLY, WE'RE AT 60. OUR GOAL IS 90. WHAT IS THE INDUSTRY AVERAGE.
WHAT? WHAT IS RECOMMENDED FROM AN INDUSTRY STANDPOINT? IT'S A VERY GOOD QUESTION. SO THE 45 DAYS IS OUR BOND COVENANT REQUIREMENT.
SO THAT'S A REQUIREMENT THAT WE'RE THAT WE HAVE TO MAINTAIN.
ALL WE HAVE TO DO IS BE ABOVE THAT. OUR GOAL IS TO GET TO 90 DAYS OF CASH.
ACTUALLY, THAT'S PART OF THE DART PROGRAM IS TO GET TO 90 DAYS OF CASH.
BECAUSE THAT WITHOUT THE RATE STABILIZATION FUND THAT GIVES US WHAT I FORGET THE EXACT NUMBER OF MONTHS 5 OR 6 MONTHS OF IF SOMETHING CATASTROPHIC WERE TO HAPPEN, WE WERE ABLE TO, TO HANDLE BUSINESS FOR, FOR, FOR A PERIOD OF TIME UNTIL THINGS STABILIZE.
90 DAYS RIGHT NOW IS KIND OF BECOMING THE NEW MINIMUM IN THE UTILITY INDUSTRY.
FOR YOU TO GO TO THE TO. AND YOU MAY RECALL SOME OF THIS CONVERSATION FROM THE THE ANNUAL CONFERENCE, THE FOR YOU TO GO TO THE NEXT LEVEL OF BOND RATING, YOU KNOW, FOR YOU TO BE EVALUATED TO GET A HIGHER GRADE IN YOUR BOND RATING THAT NEW THAT NUMBER NOW IS LIKE 120 DAYS. THAT FOR US IS NOT SOMETHING THAT WE ARE PROPOSING.
THAT'S PRETTY NOT PROPOSING RIGHT NOW ANYWAY.
BUT THAT'S PRETTY YOU KNOW, THAT WOULD TAKE A LOT OF TIME.
THAT WOULD BE A VERY GOOD LUXURY TO HAVE A GOOD PROBLEM TO HAVE.
BUT 90 DAYS FOR US IS AN APPROPRIATE NUMBER JUST BECAUSE WE'RE A FIVE UTILITY ORGANIZATION.
AND THAT THAT MAKES IT A LITTLE BIT TOUGHER. SO SO HOPEFULLY THAT ANSWERS YOUR QUESTION.
AND RIGHT NOW I THINK WE'RE SITTING AT 70 DAYS OR SO, ABOUT 70 DAYS, AND TO GO FROM 70 TO 90 DAYS, THAT MAY TAKE US 2 OR 3 YEARS. IT MAY TAKE US TIME.
IT TAKES TIME TO GET TO THAT NUMBER. JUST TO PAY BACK MISS DAVIS THE FLORIDA GOVERNMENT FINANCIAL OFFICER FGF OH, A BEST PRACTICES IS 90 DAYS. THANK YOU. YOU'RE WELCOME.
AND SO WE USED TO BE AROUND 90 DAYS AT SOME POINT, BUT WE DID NOT FEEL THAT IT WAS FAIR FOR THOSE FUNDS TO BE UTILIZED FOR SOMETHING THAT IS STRICTLY PAID BY THE CONSUMER TO HAVE AS A BASELINE TO HELP FLUCTUATION WITH THE COST OF THE POWER.
SO WE'VE TAKEN WE MEANING HARVEY AND HIS CREW HAVE TAKEN THAT OUT OF THOSE, WHICH THEN DIPPED IT DOWN, AND NOW WE'RE RAISING IT BACK UP SO THAT THERE ARE TWO SEPARATE POTS.
AND THAT'S A GREAT A GREAT EXAMPLE OF WHAT WE EXPERIENCED IN 2022 WHERE WE WEREN'T ABLE TO REALLY WE, WE DEPEND ON ON THE RATE STABILIZATION FUND. AND THEN AS PART OF THAT, THAT REQUIRED, YOU KNOW, WE HAD TO DO A VERY LARGE PCA ADJUSTMENT IN ONE MONTH.
SO I THINK THAT WE WENT THROUGH CASH, I THINK THE FASTEST LEVEL I'VE EVER SEEN.
YEAH, YEAH. SO WE LEARNED A LOT OF LESSONS. YEAH, WE LEARNED A LOT OF LESSONS FROM 22 THAT WE'VE IMPLEMENTED AS PART OF THIS PROGRAM, WHICH IS PUT IN AS A POSITION TO BE ABLE TO BORROW MONEY AND NOT HAVE TO REACT TO BORROWING MONEY.
WE'RE ACTUALLY PLANNING TO BORROW MONEY ON OUR TERMS. OKAY. THE 10 TO 15 MILLION LINE OF CREDIT THAT YOU'RE REFERENCING.
THAT BORROWING WOULD IS NOT PART OF WHAT YOU ALL WERE DISCUSSING.
DISCUSSING AS IT RELATES TO THE DEBT, THE DEBT SERVICE REQUIREMENT AS A WHOLE.
WAS IT? I THINK IT WAS FACTORED IN WHEN WE GET THE BOND.
SO WHEN THEY PULL OUT THE BOND, THEY'RE GOING TO PAY OFF THE LINE OF CREDIT.
CORRECT. SO IT'S PART OF THE 70, BUT IT'S JUST SITS THERE UNTIL WE DECIDE WE FOUND A BOND AT THE RATE THE RATE OF INTEREST THAT WE'RE COMFORTABLE WITH KIND OF BRIDGE. YEAH. BRIDGE. BRIDGE. YEAH. OKAY.
THE START PROJECTS. AND THEN TO DO WHAT WE NEED TO DO TO WAIT FOR GRANTS TO COME IN AND AT THE SAME TIME, SHOP AROUND FOR A BOND. AM I MISTAKEN IN THAT THEORY? YOU'RE ABSOLUTELY RIGHT. AND PART OF THAT IS THE GRANTS AS WELL. GRANT REIMBURSEMENT. IF WE HAVE A 5 OR $10 MILLION GRANT REIMBURSEMENT, SOME OF THAT ARE FINANCIAL INSTRUMENTS THAT WE THAT WE LOOKED AT BEFORE DOING A LINE OF CREDIT.
THERE'S BOND ANTICIPATION NOTES FOR THIS EXACT PURPOSE.
THERE'S GRANT ANTICIPATION NOTES FOR THIS EXACT PURPOSE.
THE DIFFERENCE BETWEEN THE ANTICIPATION NOTES AND THE LINES OF CREDIT IS A LINE OF CREDIT YOU CAN DRAW, AND YOU'RE ONLY GOING TO HAVE TO PAY, YOU KNOW, PAY WHAT? YOU DRAW AN INTEREST. BUT THE ANTICIPATION NOTES, YOU GET IT ALL AT ONE TIME.
SO IN HIGHER INTEREST RATES. SO THE LINE OF CREDIT IS A BETTER AVENUE FOR US? ABSOLUTELY. ANY OTHER QUESTIONS OR COMMENTS? SO MY COMMENT IS I DO LIKE WITH THE TEAMS DOING
[01:10:10]
A LOT OF THIS MONEY IS GOING TO BE USED FOR EXPANSION.AND THAT IS GOOD FOR THE UA. AND ULTIMATELY THAT IS GOOD FOR THE CITY.
AND IF SOMETHING GOES WRONG, I'LL BE KNOCKING ON ONE OF YOUR DOORS.
BECAUSE IT SEEMS LIKE EVERY TIME I'M A CHAIRMAN BORROWING MONEY.
AND IT'S NOT SMALL BY ANY MEANS. OKAY. SO WITH THAT, I'M GOING TO READ THE RESOLUTION.
SURE. RESOLUTION NUMBER UA 20 2512, A RESOLUTION BY THE FORT PIERCE UTILITIES AUTHORITY, FORT PIERCE, FLORIDA, ADOPTING A BUDGET FOR THE FISCAL YEAR BEGINNING OCTOBER 1ST, 2025 AND ENDING SEPTEMBER 30TH, 2026, AND AMENDING THE BUDGET FOR THE FISCAL YEAR BEGINNING OCTOBER 1ST, 2024 AND ENDING SEPTEMBER 30TH, 2025. PROVIDING FOR SCRIBNER'S EVER SEVERABILITY AND AN EFFECTIVE DATE.
AND WE HAVE A MOTION TO APPROVE RESOLUTION 20 2512.
MOVE APPROVAL. WE HAVE A SECOND. SECOND. PLEASE CALL THE ROLL.
MR. BENNETT. YES, MA'AM. MISSUS DAVIS. YES, MA'AM.
MISSUS. GIBBONS. YES, MA'AM. MAYOR HUDSON. YES, MA'AM.
MR. FEE RELUCTANTLY. YES, MA'AM. NEXT ITEM, WHICH I BELIEVE IS DIRECTOR COMMENTS.
[F. DIRECTOR COMMENTS]
YES, SIR. THANK YOU, MR. CHAIRMAN. I WOULD LIKE TO.YOUR SUPPORT HAS BEEN INSTRUMENTAL. I FIRMLY, FIRMLY BELIEVE WE ARE CHARTING A STRONG AND PROMISING COURSE FOR THE FUTURE OF THIS UTILITY, ONE THAT ENSURES LOW COST AND RELIABLE SERVICES TO OUR CUSTOMERS TODAY AND THE GENERATIONS THAT WILL FOLLOW.
TODAY, WE ARE BUILDING A FOUNDATION THAT WILL SERVE OUR COMMUNITY WELL FOR MANY GENERATIONS TO COME. AND AGAIN, THANK YOU VERY MUCH FOR YOUR TRUST AND CONFIDENCE. TODAY, WITH THE BOARD'S APPROVAL. MICHELLE AND I WILL BE PROUDLY REQUESTING THE APPROVAL OF THE FY 26 BUDGET TO THE CITY COMMISSION NEXT WEEK.
AND I DID NOTICE SEVERAL UTILITY ADVISORY COMMITTEE MEMBERS IN THE AUDIENCE TODAY.
SO I'D LIKE TO THANK THEM FOR COMING, BECAUSE THIS IS THIS IS A BIG DEAL FOR FOR FPO.
AND IT'S GREAT TO SEE THAT THEY WERE HERE TODAY TO TO TO JOIN US ON THIS MISSION.
JUST AS A REMINDER, EVEN THOUGH WE DO HAVE TWO MEETINGS PER MONTH AS REQUIRED BY OUR CHARTER, I MEAN TWO MEETINGS PER MONTH. OUR CHARTER ONLY REQUIRES ONE MEETING PER MONTH.
SO TODAY'S MEETING FULFILLS THAT THAT REQUIREMENT FOR THE MONTH OF AUGUST.
JUST FOR THOSE WHO ARE ASKING WHY WE'RE NOT HAVING ANOTHER MEETING HERE.
WE ONLY REQUIRED TO HAVE ONE PUBLIC MEETING OR PUBLIC BOARD MEETING.
AND THE AUGUST 19TH MEETING IS OPEN TO THE PUBLIC, BUT IT'S FOR A DIFFERENT PURPOSE.
SO AND THAT'S ALL I HAVE FOR THE BOARD, MR. CHAIRMAN.
THANK YOU. AND IT STARTS AT 9 A.M., 9 A.M.. WE'LL HAVE BREAKFAST AND LUNCH PROVIDED.
YEP. AND IT IS A FULL DAY. COMMENTS FROM THE ATTORNEY.
NO, SIR. EXCELLENT. COMMENTS FROM THE BOARD MEMBERS.
THERE BEING NONE, WE ADJOURNED.
* This transcript was compiled from uncorrected Closed Captioning.