Quarterly

We'll call to order the September 15th fourth quarterly meeting of the Kerry Town Council and staff. And I'll turn it over to our interim manager, Russ Over.

Thank you, Mayor and Council. Thanks everybody for being here today on the uh Tuesday edition I guess of the quarterly feels a little unique and then we were recounting there's been uh for this quarter the fourth quarter report if you will um we've had storms we've had hurricanes or um tropical depressions I guess um it has been a uh an unfortunate cancelling of some of these meetings as a result of some various events. So we're glad to be with you today in the September edition of the meeting. I'm going to go through the agenda pretty quickly and then have a few slides to go over some introductions and then we'll get going. Um, everybody saw the news today, I believe, about the 5way 55 water main break and the update. Uh, so it seems appropriate to bring Jamie and maybe hear some from some of the team that worked on that little update. We'll do a finance update for you, go over Q4 financials, and then have a debt discussion with um, Davenport and the team is back here. specifically mentioned Tai is back in the corner. We'll do an introduction in a little while and his team uh to do that for us. Then we're going to do a council work plan prioritization, which in my opinion probably hasn't been done in a while, but with where we are right now and planning our workload for the remainder of the year and especially getting to the um ultimate retreat or annual meeting, this will be very helpful for us to make sure we're working on the most important things to council. Lisa is going to do a legislative update. Um, which is very fun. Very fun. Uh, Lisa said it was fun earlier. [laughter] Um, uh, that is in between your work plan partization because we need a little time to tally your results and have you uh come back and talk about this. This will be a group exercise and we'll pair you up with some staff around the room and um, have fun with that exercise.

Then something that um I know some of you have had wished to talk about for a while, but there's some real estate discussions and opportunities and then specifically a council initiated item with that. I don't believe there's a close session tonight. So um so let me hit just a couple of slides as far as what's going on um and where we are. And I think there's a lot in the backdrop of today's quarterly meeting and one thing that resonated with me, there was a couple of us there, mayor, you were there, but at the chamber of leadership conference this year was Dr. S Sarah Glover um who I believe uh is a professor at Duke and she had a couple of slides and I'm using a few of them and one of it was just um if you had a crystal ball and you were looking you know 10 years ago and you were looking 10 10 years ahead would you have predicted we would be here? I think the answer is no. And then it it just it just was food for thought for me to then think what has changed in local government in the last 10 years. Unfortunately we have a resource for that. Um and ICMA, the International City Council, uh city county managers association group, uh kind of put together a list of uh what has changed in local government in the last 10 years. This is a world word cloud of that. Um showed this to staff earlier. Uh we talked about maybe some things that we thought were missing. Uh but I think everyone pretty much agreed with there have been a lot of changes. Greater expectations obviously being one of the larger fonted items certainly seems appropriate and uh lots of changing. Public trust is up there. Transparency and accountability, emergency preparedness certainly um in light of the past two days. Hybrid work is something we never had to deal with in the last 10 years. digital services evolving expectations kind of lands with greater expectations but certainly dealing with public trust. So I just share that in the some of the backdrop of all the change that we've had because I think we're in the midst of change and so this slide back to um a Dr. Sarah

Glover slide was um we navigate the change we lead the transition and it hit me that um you change kind of happens to us um and what we're not really in control sometimes of the change that happens to us and we certainly what we are in control of of how we lead in a time of transition out of that change and I think that's where we're at. Uh this was a slide from that but just how you navigate change um kind of having three parts. You have to end the last thing before you can begin something new. And uh the neutral zone as they called it was the messy middle. Again this is a slide at the chamber planning conference and this really spoke to me in that moment as we were dealing with various reports that were coming out around those same times. Um but this doesn't happen on a scheduled date. It happens when people are ready and everyone um is at a different stage at a different time and I think I've talked to the directors about this. I've done it at an all hands at least kind of introduce this as a topic and uh I think that kind of some people are closer to the end of the last thing than they are the new beginning. Some are stuck in the messy middle, but we're we're all over it. And then what that really leads me to think we're at and I've used this analogy with staff. Uh we are in the TSA line. This is a TSA line. Everybody's been through a TSA line. Do you know understand all the rules in the TSA line? Um, sometimes it feels like the rules are being made up on the fly in the TSA line. Uh, but you get through it. You navigate the line and the clunkiness that it is and some of the clunkiness of even today might be that. Um, I I said um some of us are dressed a little differently than you may have seen in the past. Um, Chris and I were talking about that. Uh, so you know there's old rules of suits and ties and new rules. Um, you know, quarter zips. I did say I'm not sure what the quarter zip equivalent for ladies [laughter] are, but talk amongst

it's called a quarter zip.

Ah, it's a quarter zip. That makes so much sense. It's a quarter zip. Ah,

now I know. Um but anyway, we are in the midst of our own TSA line of sorts and um this is just something that I think you can point to a lot of analogy to our um time and our transition and change. So you know what's next um and what's next for us? Why we may not be able to predict what's happening in the next 10 years. I'm certain it's going to be a lot of change and certainly there's lots of articles about how much change and the pace of change is rapidly expanding. But I do know this at least for this moment right now. We're all moving forward. We're moving forward together. We've got a lot of work to do and that's what we'll do today as part of our moving forward exercise with you all and uh I think we're all looking forward to that. So, that's what excites me. So, back to the agenda. Um let's bring up Jamie and he's going to talk about the uh water man break.

All right. Well, good afternoon council. Um Rusty, you have the clicker?

Um sure. I have a clicker.

Yeah. Okay. Thank you, sir. So, we obviously uh had a very difficult water mane break um this week that we've been responding to. And um I'll just jump right into a quick summary. Part of the reason this water main break was so challenging is because it was one of our big transmission mains. This was a 30-in diameter transmission main. It's one of the biggest transmission mains we have in the water system. And this is one of the lines. The bigger they are, the closer they are to the water plant. and obviously the more citizens and the bigger coverage area they serve. So I got the call from our water plant manager Sunday night actually in Monday morning a little after 12 midnight and uh he told me that something was going on. We knew we had a main break and the tanks the tank levels were going down. That's how we tell what's going on. when we when we're in the control room, we can monitor these water tank levels and if we see those levels going down, we know something's going on. So, when uh a combined team of public works

and utility staff went out and found out what was going on, we knew right away this is a 30-in transmission mine and um and the tanks were declining at a rapid rate. So, long story short, um the the tanks lost a lot of water very quickly. Um, it all happened so quickly we couldn't even mobilize our staff to the site fast enough to try to remedy the situation before the tanks were at a low enough level that we had essentially lost pressure in the central zone. That's how fast it happened. All with under an hour. So, um, so we knew right away that, um, with with us getting below 20 PSI, that is our threshold for the regulatory standard, um, we were going to have to do a system pressure advisory. And that means we would just have to notify the public that we lost pressure and that we were going to, very much in a precautionary state of mind, um, recommend that, um, citizens boil the water or use alternate sources. And um again, very precautionary. It's not a do not drink order. It's a system pressure advisory. So um so I knew that I was going to need a lot of help. So the first two calls I made was I called Chief Cooper and I knew we were going to have to activate the emergency operations center. And so Chief Cooper got up and and went right over to uh fire station number nine and got the EOC started. And I also called Jimmy Simpson uh because I knew that we were going to need public works support on site. And so between me and Jimmy and Chief Cooper, we pretty much divided it up. I went to the water plant because I can see what's happening with the water system at the plant in the control room. Um, Chief Cooper activated the EOC and Jimmy went to the job site where the where the pipeline was damaged and start started leading the efforts to clean up the mess and try to see what we could do to get this pipeline repaired. Um, as soon as we were able to, we um,

we started putting together our comm's materials. We knew that we were going to have to reach out to the state. This was going to be a regulatory item that we would have to report. We knew we had a lot of comms that we had to issue. So, we started working on those right away. Meanwhile, at the job site, they started working on isolating. We wanted to isolate this area and get the water going back into the system so that we could reressurize as fast as we could. [sighs] One advantage and disadvantage all at the same time was it was the middle of the night. Hard to see things in the middle of the night, but um but it does give you a time when there's not very much water demand. So, we could our goal was to try to get the water pressure reestablished before the morning rush. and we were able to do that. Um, aside from that, Highway 55, there was an embankment. I'll show you some pictures in a moment. There was a lot of mud. There was a lot of debris all over Highway 55. And in the initial assessment, we thought there may have been more damage to Highway 55 than it ended up being. A lot of times when you're dealing with an emergency, the first reports, the first information you get, they're all over the place. It takes a while to get really good information to size up the situation as they say in the fire department. Um and so um and so we were working through all of that. And of course over the last couple of days we've worked on the repair. We've done lots of communications. We've done lots of water sampling and testing. Everything's pretty much back to normal today for our citizens. And um this afternoon they're looking to put that water pipe back in service. the one that had been having uh the one that had the break. So, they're really really close to getting that repair wrapped up today. [sighs] So, one of the questions we got asked a lot was, well, with the central pressure zone, why the central pressure zone, and how many customers are impacted? And so I didn't have all of these numbers right at my right at the top of my memory when when we were going through the uh the planning for this the other night, but we've compiled all of this and um and so we were pretty close about 50,000 customers in the central

pressure zone. It is the largest single area uh that we provide water service to within Kerry system. And so um this particular pipeline provided a transmission artery to provide water to the central zone. And that's why the central pressure zone tanks declined at a rapid rate and we lost pressure in the system. But on the positive side, we didn't have any problems in the western zone, didn't have any problems in the southern zone, and we didn't have any problems with Apex. So everything was good in those three areas. And then another question we get asked is, well, how many water tanks do we have? And so we've got we've got these water tanks in the central zone, and it is the biggest zone, and it's the area where we have the most tanks. Um, and of course, you know, just looking through the list there, the kill main tank is our newest um, elevated water storage tank in the central zone, and it's it's a very large 2 million gallon tank. Um, this was the tank that it took the longest to fill back up when we were recharging the system. And then, of course, the old Apex tank. Everybody's kind of seen that tank. It's on the ground over there by Kerry Garden Center. And um that tank is very helpful in situations like this because it has three million gallons of storage is just to be able to supplement the water demand in the central pressure zone. It's not elevated. All the water moves in and out by pumps. And so um having that water on hand helped us a lot in responding and reressurizing the water system. So these are a couple of the photos from the area where the break occurred. Um, that manhole is for a um an air vacuum relief valve that um supports the 30-in diameter pipeline. This embankment um just really got washed out during the event. This is where a lot of the mud came from that ended up on the road and caused a lot of issues with Highway 55. These are this picture on the left here. This is what the broken pipeline looks like when you get it all dug up. And you

can see there was a stress factor and a split right in the side of the pipe. And then that picture on the right, that's that gives you some idea of just how much dirt and debris and mud was on the road that all had to be cleaned up. And so that was a really big job. Took a lot just to get Highway 55 back open for traffic. But our public works staff did an amazing job. They got it all cleaned up uh the next morning and um and got traffic back flowing on Highway 55. At the same time, we were working on doing the repair, and that's why we have that lane separated off on the right is so we'd have room to go in and do that repair, which is being finished this afternoon. So, this is um this is from last night. I think this is from like 9 or 10:00 last night. They've been we're working on this repair non-stop and uh so they've got the pipe all put back together. And so we had to cut out the bad piece of pipe, put in a new piece of pipe, leave it all back together, and um and today they're working on making a couple of final connections, and then they're going to start recharging the pipe and putting it back into service. And so that's where we are now. So we're getting close. We're getting close to wrapping this up and putting everything back into service. So um you know, working through the communications, it's really really hard to explain. Hey, if you're in the central pressure zone, you're under a system pressure advisory. But if you're in the western zone, you're okay. If you're in the southern zone, you're okay. And Apex is just fine. So, um, so our staff put together this application through GIS where you could type in your address and um, and it would tell you exactly which pressure zone you're in. And so, the little box on the lefth hand side here, we just type in Maryland Circle, even just typed in a street name without an address. And boom, it pops up and tells you exactly where you are. Maryland Circle is in the central pressure zone, which we know is right across the road almost from the old Apex water storage tank.

So, communications was a very important part of the job. Um, I can't say enough great things about our 311 staff and our marketing team and utility billing staff. they all work together to get the word out and um and getting the word out quickly is so important because once we lost pressure in the system in order to provide water service and get the system reressurized we had to get that system pressure advisory out to the residents as fast as we could. So it's not like you have days and days to plan this. You got an hour, you got two hours, you've got to get the word out to the public. It has to be done quickly. And so, um, that obviously created a lot of additional calls and texts and messages and web traffic on Monday. Um, and that really all of the all of the combination of the communications media really helped get the word out. Um, I mentioned we did do a formal activation of the emergency operations center. Um, that was incredibly helpful. When I went to the emergency operations center, uh, Chief Cooper had the whole team mobilized. We had IT support. We had all of the different people there who could get things done. And most importantly, we had communication staff who could who could field questions, who could answer um these inquiries and could get information out through all the social channels and the web updates and all of those different things that have to be updated in real time. We also had a lot of important communications with our neighbors. Um obviously, um our neighbors over in Morrisville, they depend on Carrie for utility service. It was really important that we stayed in close contact with them as well as Wake County and RDU airport. Can't say enough great things about Wake County Emergency Management. Uh they are such a great partner when you're going through one of these types of emergencies. They helped us get messages out to the schools and um and that was very important. They helped us um in just so many ways with

um Wake County Environmental Services, Wake County School System, you name it. there. They are truly a great partner as well as with the um the Ready Wake uh the Ready Wake Communications platform. We have some very important critical customers in Kerry. You know, we're very concerned about Wake Med just making sure we're getting good information to them. We uh we actually did some special water quality sampling at Wake Med just to just to provide enhanced information to help them make the best decisions. We mentioned the Wake County schools. Obviously that was a a very critical customer for us and there was multiple locations all throughout the central pressure zone. Uh the SAS campus we've uh we work very closely with them. And then of course we got graded facilities. Graded facilities are restaurants and daycare centers. And that's where Wake County is a great partner because they provide the permits for those graded facilities. And so working through Wake County, they helped us helped us manage how we get information out to those types of facilities. We mentioned all the platforms, press releases, TV news, websites, social media, readywake. We communicated on just about every forum we possibly could um early and often. And um we think that really helped us get the word out. And so with that, that's pretty much where we are. It has been a it's been a very busy few days to say the least. Um, on a personal note, I'm just so pleased with the support of this organization and how everybody just came together to help us get this job done. It was very, very impressive. Be glad to take any questions.

First of all, I want to thank you and the team. That was amazing. When I saw pictures, I was stunned how big it was.

Um, the questions I've been getting is what caused it, how old was the pipe, is it going to happen again, kind of stuff. And then I want to talk about communications. And I know Li has a lot to say about communications. So

yeah, so the pipe um the pipe is one of the original pipelines that goes back to when the uh the water plant started operating. Um which means it's probably about 33 34 years old, somewhere in that ballpark. It is a very heavyduty, heavy constructed pipe. Um you know, really really tremendous thickness class, pressure rating, all of that. Um, in many ways they built pipes better back then than they do now. So, uh, so all of those original pipes, I I say they're built like tanks and I really believe they are.

Dr. has a lifespan of 100 years.

Yeah. Has a lifespan of 50 to 100 years for sure.

So, well within it like lifespan and jam Jamie can answer and I'll give you mine. Um, yes, you're going to have emergencies and more waterline breaks because every community experiences waterline breaks,

right? Yes, absolutely. Um, I've had a number of people now that we're kind of wrapping up the repair and we've been able to get the damage section out. I've a lot of people crawling through it, looking at it this morning trying to see what we can assess. Um, there's a number of reasons why pipes fail, age, it could be a water hammer issue, it could be a corrosion, it could be a number of things. Um, in this particular location where there was um there was an air vacuum valve that could have had a little something to do with it. So that's something we're going to look more into to see if we had any what's called transient impacts in that area that would have caused water hammer in that isolated part of the pipeline. And talking with the staff who were working the job, the area that we tied the pipe on to on both ends was in great shape. Looked almost brand new from what I understand. So we think that that gives us an indication it may have been something to do with how that pipe was taking in air and releasing air and it was at a low spot in the pipeline. So that's something we're going to look more into. and um and see see if we can uh gain any more information that way. But overall, it's a really good pipe. It's in great condition. We think there may be something related to that one location that uh warrants further investigation.

So, on the communication side, I will

say I wasn't even here. I was on the coast and I I found out first [clears throat] thing in the morning when I got up.

However, I've been bombarded by people. one asked me to resign because of it.

Um, and I said, "We did all the social media and TV, printed news, everything we had, we blasted it out there." So every So tell me how we can communicate with you better. And they couldn't. So that's I'm perplexed with what do we do about that? and Lori brought it to ISAB last night and I would love to hear some of that conversation

just to get you in the loop of where we are. My personal opinion, you guys did an outstanding job getting the message out because like I said, I wasn't even here and I got the message and nobody Well, Russ called me later, but but I'd already gotten the message. So,

Mhm.

Um, well, yeah, first off, I'm sure we'll all give you all thanks and congratulations for um reacting so quickly and and and really I didn't lose I don't know about anyone else. I didn't lose access to water. If I wanted to drink it, I had to

I didn't have to boil it, but I should boil it. Um, it was uh an appropriate time last night. We had the information services advisory board meeting and so um we asked them how many of you knew, how did you find out? What did you think of the messages you received? And what would you recommend to do better? And just for a reminder for anybody listening that information services advisory board is a volunteer board and commission that gives uh council and staff feedback on the best ways to communicate with our residents. Um I would say one thing that was very interesting was about half these are people who know how to connect with the town right they're but I you know civically engaged very engaged and only

half of them had ready wake

so all of the ones who had ready wake knew it

immediately either had a text or phone call if you get a phone call and if you don't res confirm right it keeps going um so about half of them knew I would say the other half um out of them, two of them had the town email s signups, which was great because the town did a great email. Um, but then there were a few who were outside of the loop. Um, a couple of them who are younger don't have Facebook. They had Instagram. Um, and so they didn't receive anything until 930 when they, you know, when I think the Instagram post went out, 9 or 9:30. Um, already on their way to daycare. um their feedback was that their daycarees didn't know uh several of them who and I I'm understanding now the connection. Um it would have been nice uh from a feedback perspective if daycarees and restaurants there were some comments about people going through the Starbucks line and finding out after they left, you know, by the way these are first world problems [laughter] that maybe they shouldn't drink their Starbucks cup. um and then actually went back into Starbucks and said, "Hey, do you know there's a boil wire advisory and Starbucks [clears throat] didn't know?" So, there were some of those business related even one of the business owners who provide a uh a service didn't know um and they were you know making drinks and didn't know. So maybe some sort their feedback was that some sort of additional connection maybe through Wake County on how we better let businesses know. Um also there were some concerns of people who heard [clears throat] about people who work in Kerry but were on ready wake and the ready wake goes to where you live

your residential right so where you live. So they didn't get they were talking with people they were on their way to carry but they didn't get the ready wake emergency notification and didn't know it was a problem. Again another opportunity challenge for thinking out of how [snorts] we do communication.

Right.

Um the last one was the the was with respect to understanding what a central pressure zone is. Mhm.

Um the first picture was uh from the feedback was kind of fuzzy so you couldn't see where the street names were

and so they would hit the GIS app um and it would on a phone um it would hang for three to five minutes and so they they felt a little bit of anxiety about I don't know what zone I'm in. Um, and to be honest, I didn't know what zone I was in. I never thought about asking that question before. So, um, their suggestion was in the future creating a little, you know, web web app that might already have, you don't need the whole map to come up on your phone. You just need to be able to put in a a name of your city and um, then, you know, or sorry, name of your street and it should tell you what pressure zone you're in. Um, so that was just some feedback and not that we've none of these were um [clears throat] I would say negative just opportunities for doing it better. Overall, everybody was

quite impressed with once they saw some of the pictures online and they saw the impacted area of 50,000 people, they were really really impressed with the continual update. That was really helpful. So just some feedback from that team.

Thank you. And um one thing I'll mention that we're looking at for the future, especially with the new utility billing system, is having more interactive communications features that go into the customer portal. So that's one thing

that we're we're believing is going to be a big improvement for us going forward with the new Aquaar that comes out with the new utility billing system.

Great.

Yeah.

And publicizing 311. I mean, it was impressive. um staff will got staff to the office very early in the morning and stood up 311 way earlier. Um, just as another plug since we're um, live and on video today, but you know, to call when in doubt, you know, call 311 is another way folks can at least get in touch with us. And since this is early, I know Jamie, Jimmy, uh, Cooper and team, uh, you'll be doing an afteraction, I'm certain. [clears throat] We always do seen it happen. So, we're getting feedback. There's probably, uh, more time and more space for even more feedback as you do that exercise. Um, and the only thing that I'd add to it, if you haven't been to the EOC or you haven't seen the teams in action, and some of you have seen it for snowstorms or past um, hurricanes and other um, weather issues. I tried not to say events, but I couldn't. Um, is just how [clears throat] um, how well the team works during an emergency. And I think it's a defining moment of carry. Something that I've been impressed by in uh, my almost three decades of working here. Jamie team chiefs um how just now you've got some of the marketing and communications kind of came together as we've talked about we don't even have a uh communications director yet which was an emphasis in the budget so we'll keep working on that but it's a defining moment from Carrie um even with all the feedback and with regards to some of the some of the criticisms I even knew folks were calling in about the team did an amazing job under a lot of pressure in the middle of the night and to get everybody back in service within you really 24 hours is just amazing when you can stop and kind of stand back and look at it. So, and I think some of that's um a testament to the council and past this council and past councils. That's kind of the vision and values and the culture that you you instill in us to want to have those services. And I think John and I are debriefing a little bit, but

having, you know, it might be sometimes if you saw the debris, it's having back trucks that maybe you wouldn't have, having the resources, having the availability of crews, um, dump trucks, backhos, and just the ability to mobilize those types of things that a lot of municipalities don't have and folks can take for granted that you funded those things through the years that we are ready for emergencies when they hit and they will hit again and we'll be prepared and I think it's a hallmark of the town of Kerry. are very proud of the entire team.

Awesome.

Yeah. By the way, well [applause] done.

Thank you very much.

I would like to offer a counterpoint. Jamie and Jimmy, I need to let you both know how angry my children are that you fixed this so promptly that they [laughter] were actively rooting against you. And so I hope you can both sleep tonight knowing that your competence and hard work has disappointed the school children of Perry [laughter] and they didn't get a second snow day today.

On behalf of the parents, thank you. Thank you. Thank you for your very prompt work. Uh I think it is remarkable that it was fixed in essentially 24 hours. I know that is an indication of the roundthe-clock work that your teams did, that our chiefs did. Um, and uh, for all the folks that we don't get to meet that we don't get to see, please extend them our gratitude as well. And I know that is our leadership team, too. I got your email this morning at 5:00 a.m. Russ, I got yours yesterday at 5:00 a.m. So, thank you for the communal sacrifice for our residents.

I'll follow up with that and say, "My 16-year-old went as far as to work up a plan for the Wake County Public School Superintendent. should he want to trade today for the work day that was supposed to be on Monday for traditional calendar. So, he had already figured that out. Um, in addition to that, I thank you so much. It's been just so impressive how everyone worked together. I learned that in addition to signing up

for a Ready Wake account, if you get distracted in the middle of it and you don't check the boxes, you don't get emails and phone calls. because I checked and I have a readywake account but I didn't get the emails and phone calls etc because I didn't finish the process.

So I made made sure to make a post about that and to remind people that you have to do all the things [laughter] to get the things back. So that was

a very important

thing that I learned to share. Also

can I share a a communications observation? Um, and this is, you know, first thing I said when I saw we'll call you Mr. Rebels. I feel like we need to be

formal, [laughter]

you know, like a little bit more formal since you're just such a big deal to me right now. But one of the first things I said was, "Hey, I got immediately got texts. Um, I didn't answer the I didn't open the text. The second text I got quickly and it was followed up by an email each asking me to affirm that I got the communication. Obviously, that made them stop trying, I'm assuming, so they didn't have to keep trying to communicate with me. But it would make sense, I would, to perhaps suggest

to our county um commissioners that they consider graded facilities um as somebody to be automatically and without an option subscribed to Ready Wake. Um that would probably solve for the exact communication problem that was described here. I I was very well communicated with and I don't have a daycare or you know a restaurant or anything like that. And I think even further to a nonwater emergency, there's a lot of other emergencies that we want to make absolutely certain are communicated to places like a daycare um especially when there's you know any kind of public safety threat or something like that. So just a you know I I'm in marketing and we have two kinds of emails and te texts we can send people. one is um basically

just a a you know marketing please here's your marketing flippity floop please buy our thing um and that you can opt out of but what you can't opt out of and you probably get it from your bank and other organizations there are communications that just by being a customer you get those those transactional communications and I think probably as a water utility we have the right to that transactional communication so just something to consider that are maybe take something like e emergency communications out of the I'm a a a customer citizen resident and I have to actively do something and instead just opt them in.

Um I I I really think that would be appropriate. But I wanted to ask the one question that wasn't asked before that I've gotten frequently. Why generally does a loss of pressure create concerns that would lead to a a boil advisory that I think that's something that nobody really understands.

So um real straightforward answer to that having pressure inside the pipeline is one of the best protections of the pipeline there can possibly be. So if there's not pressure actively on the pipeline, it introduces the possibility that something could leak in through one of the joints that could have bacteria in it that could have contamination, that kind of thing. So pressure protects pipes from anything coming inside the pipe, through a leak, through a crack in the joint, through anything like that. And so having pressure is like the best protection there is to make sure a pipeline stays sanitary.

That makes sense. I should have thought of that on my own. Thank you.

Thank you. Thanks, council. I just want to say something. Yes, ma'am. Um I don't have any feedback. I did see some um of the comments online and I think Michelle was doing an excellent job uh pushing message across the board. So I was watching that too. So thank you for doing that Michelle. But um I think what

um I would say today is that this is what car makes Kerry great. This is our staff. This is the leadership and this is exactly what we strive for even in future. uh to the to do the best and the best commitment that the staff brings. And I want to thank you and Chief Cooper and you said um

Jimmy

Jamie

um for your leadership. I want to thank all the staff for you know coming together and helping you

um in u getting us back on our feet. But you know thank you for everything.

I'm going to call him Mr. Simpson. [laughter] Just don't

I just want to say that you have a good rest. You have two busy so busy days. So have a good night today. [laughter]

Yeah. I'll sleep well tonight.

Yeah.

Thank you.

All right. Thank you.

Thanks, Shane.

Yeah,

Rebels, [laughter]

Mr. All right, we're gonna transition to our financial updates and assistant manager Dana Whitmar is gonna come up and introduce the topic.

And I'm going to try to speak fast and voluntarily yield some of my time to Jamie.

Okay.

And we will not judge you, Jamie, if you have to take a desk nap here. [laughter]

Um, so today I think this is a great um you're I think you're going to enjoy this topic a lot. I really enjoy this information and uh and really there's just a few things I want you to think about as you're running through today's presentation. Number one, Car's um strong financial health. You're going to hear a lot about that here today. Um you are going to see the unudited fiscal year 26 um Q4 year-to-date um results. So that was in the the printed document that you got uh a little bit ago. Um there are also as part of that this is was also in that printed document um fund balance projections that would have

been effective or that will be effective for the end of um fiscal year 26 and they are just projections that were in place at the time of the printing of that which was essentially July 1st. So we hadn't got into period 13 we hadn't received all of our revenues etc. But, you know, something to kind of get gauge where things are going. Um, the second part that that I'd like you to walk away from here today is um this is really about another kind of layer of growing financial knowledge. Uh, that's why I find it so interesting. I love learning this stuff. You're going to meet some folks here today that um provide excellent information and that information is going to be related to our rating agencies, the three rating agencies that have rated Kerry AAA. Um you're also going to see some long-term trends and municipal comparisons. Uh so I I point out the policies that are related to the general fund results. Uh and then the policy 17. So 175 is the general fund fund balance. You're already thinking about that. Everything you're going to see today relates to the current fund balance which is about total uh at 33.33% of expenditures. Uh and then the debt policy is policy 176. If you look that up, it's got some pretty good information in there. It's um I don't believe it's that old. I don't think it I think it was uh relatively recently updated and consistent with the operations that we have now. Uh and then I think probably most importantly this part is we want you to spend today thinking and asking questions. So you don't actually have to do anything here today. So think ask questions. uh there will be future doing associated with this and then future choices associated

with this but this is just adding another layer to your knowledge base of all the things that you might want to consider as you make decisions about policies. So uh today you're going to of course hear from Kimberly Branch uh who always presents the quarterly um results for you. But then I also want to introduce a few other folks. And if you don't mind standing up when I say your name, it would be helpful. So Ty Welfford and uh Ty is going to um be speaking after Kimberly. And uh and he is such a great resource. We get to have him scheduled automatically quarterly and then all kinds of kinds of time in between. And uh we ask him a million questions and I encourage you to do the same thing to them. [laughter] Also from Tai's team is Clay Latell and then Robert Rosales and they're all here from Davenport. Um the last person I'd like to just introduce some of you may have met at work sessions before is um Hussein Shafari and and I got that back words after we practiced so hard. [laughter] Sharafi Um, [laughter] so Hussein is has been with us just a few months. He is our debt and investment manager. Uh, if you can imagine, we've got lots of uh dollars that we invest, lots of debt that we issue and uh and so Hussein makes sure that we are meeting all regulations, that everything is on time, all of the things. And uh and he is a part of Kimberly's team. Dana, could you tell the public who Davenport is?

Yes. Uh Davenport um provides us with both debt and investment um consulting and uh and they service a lot of

municipalities um a lot many in North Carolina. So for us, it provides really helpful information because they're very they understand a lot of what's going on in the marketplace. So for example uh when I speak of so investments of course um when we do investing we we first look at safety then we look at um liquidity and then we look at yield. So they provide us advice on amounts that go into different um into different uh investment. But then also on the debt end of things. So for debt um our rating agencies uh you're going to learn a little bit of this tonight but our rating agencies we typically when we issue um bonds which is essentially us someone buying our debt um so that we can do projects etc. uh the team at Dav Davenport helps make sure that we are following all processes that we are aware of everything that that we are making contacts with excellent um other agencies that might be interested. So it's really a a mutual relationship where we get um a lot of advice and and benefits from their work. So the media, some of the media wants to portray us as having financial problems. And we're doing this today to fix financial problems when I see it just the opposite. We're financially strong, have been financially strong, and continue to be financially strong. And this is going to help us be even stronger. Mhm. You are going to see when Kimberly does some of hers as and when Ty does some of his um pay closely close attention to the lines uh because you're going to see that um a lot of the things that people are talking about are things from two years ago. And so so two years ago there was a lower fund balance um

and and we have recovered that since then so gained it back up again. Um, but when you see all these results, it's really helpful because you can compare, particularly with ties, you can compare today to five years ago to 10 years ago. And um, and then Kimberly's gives more granular information for every year in between.

Thank you, Dana.

All right. Good afternoon, Mayor and Council. I'm here before you again. As Dana mentioned, I I won't keep you long because I know the meat and potatoes is with Tai, but um I am going to provide a summary of the quarterly report that you all get every quarter. I'm just pulling pieces out of it that we think should be highlighted. Um what's important as we transition to TAI is that all of the information that goes into our financials, that is what the rating agencies look at. So the information today is kind of feeding up um to that. Um, just a reminder, the numbers I'm presenting is really as that snapshot as of June 30 that was in our financial system. What that means is they are unodudited year-end results, which is one of our takeaways. Um, and unodudited means just that we are um, as you may be reminded from the other night, I mentioned we are currently going through our audit now with our partner audit partner Cherry Beckard. So, we're doing all that work. So, hopefully in November, you'll get more um, actual um, results um, at that time. The second takeaway I would like for you to take away with you is the revenue performance is favorable. Um favorable are you know my like accounting terms that means they're positive. Um as of June 30, our preliminary numbers at June 30, but we should remain disciplined about the future. And what I mean here is you may recall from the other night we talked a little bit about we could have the um potential for revenue volatility. Um sales tax this year we have favorable results because we're up 5%. When I say this year, in 2026, we were up 5%, but

if you recall the year previous prior to that, we really didn't know what sales tax was going to do. So, we also h we always have to be mindful of that. Lisa, a little bit later in her legislation um update, she's going to talk a little bit about what's out there on property tax. That's another area of volatility depending on how people vote in November. So, those are things we just need to consider as we go into our future. The third result is we are preserving capacity. um which for me capacity is fund balance. Um if you recall we were talking about the safety nets and building capacity um in our reserves and because we are um projecting a positive ad to fund balance as of um fiscal year 2026. That's our effort when we're adding to fund balance. We're building that capacity for carrie's future which includes car uh capital andor unforeseen things that could happen. All right. So, let's get Did I hear somebody say let's get into the number? Oh, it's a drink. Let's get into the [laughter] Let's get in let's get into the um the numbers. Um snapshot fiscal year 2026. Again, unodudited. We showed revenues as of um that came in for the general fund about $283 million. We received about 95% of our budget at that u for the year. the expenditures, we spent about 275.2 million and um which is a good thing. We spent 92% of our um budget being under the budget spending. That's a statutory requirement. So that's that's a good a good look there. When you compare revenues to expenditures, our net results as of June 30, early June 30 is 7.9 million. That's revenues over expenditures. In short, um, looking at that as a percentage, revenues were up for the general fund 8%, expenditures were up 5%. So, it's good that revenues increase at a higher rate than expenditures. All right, this may this is um a picture that you are familiar

with. I do try to pull this out every time I do a quarterly update. This is a five-year history for as of June 30th um for the last five years. Just a reminder, these are year-to-ATE numbers. So, it's for the whole fiscal the whole 12 months of the year. White bar revenues, orange bar expenditures. You can see um when paying close attention to the 2026 columns again, the 283 that we spoke of and the 275 for expenditures that we spoke of. And you can see nicely how our trends have increased um year-over-year. in particular on the um revenue side. Just a reminder, we did have a property tax reval last fiscal year. That's something to take into consideration as well.

Excuse me, Kim. Does unodudited um mean preliminary?

Yes, they're one and the same. Yeah, I use them interchangeably.

So, the unodudited numbers could change um as that month 13 information comes in. Yeah, we usually we clo I mean we close at the end of each month, right? But because items like sales tax, we have not received all of sales tax. We have about two and a half more months after that that fiscal year that we have to capture back. There are some payments that we make after the year end that we say the word acrew back so we can make sure everything is properly accounted for in the fiscal year that they should be in. So all of that work that we're doing after that June 30th is to make sure and that that is you know a statutory requirement as well for us to do that work.

Is it um is there projected amount projected revenue and expenditures included in those un so much unknown in those months. So to keep it safe, I will say this is apples to apples though because none of these include like that period 13 or the acrruels. You all will see closer

actuals when I come back in November. Okay. Because Yep.

I appreciate it.

Yep.

Just a question. I noticing I'm a trend noticer. This quarter we had higher than um expected compared to Q4 uh 2026. And you mentioned that it was likely because of the property.

No, I was just saying it's important to note we had that during this 5-year period. That increase from 25 to 26 is really the growth and what we um estimated during our budget time about about the the 5%.

So it's the first time I guess I'm noticing that revenues came in higher than expenditures in Q4. Do you have a like a reason for that?

The last five years. uh last five year. Every year is different because a lot some of it could be contingent on timing of capital because we do transfers out of funds. Um we make

the [clears throat] sales tax.

Yep. [snorts] Sales tax in was it 24 the bad the bad year? Um as you can see yes 24 you can see revenues is under expenditures. We you know they came in when we So it depend is

our answer a lot of times it depends on a given year.

Okay.

Yeah. And these are just for quarter four for those people wa watching. It's not the entire years that we're looking at.

It's not a

just comparing the quarters. So we didn't lose money

for five years.

So what this is showing is June 30th year to date from July 1 of a fiscal year to June 30 in our financial system. These are all apples to apples. Now if you want audit results that is reflected in our annual comprehensive financial report which is online and you all will see those final full year of activity all acrruels everything to closer to November because that gives us time to finish our audit.

Make sure you answer the mayor's question since it is Q4.

You're saying it's the full fiscal this

slide.

It's it it's it's representing 12 months. Yes. From July to June

which is just to make sure you know that.

Yes it is. Yep. We just have some things we have to catch up with that because of timing to how they come in. They don't come in.

It's a fiscal year year to date.

It's a fiscal year year to date

with the same year to date being compared.

Yes.

Thank you.

Is it fair to say it's an accounting year?

Um,

what is an accounting year for us?

So, it it's a it's an account it's an accounting year, a fiscal year, but with you know, and it's not just us. Um there are some things that there's some things that happen right after that accounting year or that fiscal year that we have to make sure is captured in the correct year.

We're paying it subsequent to the year but we have to pull it back.

So the Q4 does that mean we are looking at this in Q4 is last time the similar time maybe in Q3.

Yep. So this Q4 we're looking at as of June 30th.

Mhm. um 26. However, when I come to you in November, I'm still going to be looking at it as of June 30th, 2026 because of things that I had to pull back

until the appropriate year. Does that make sense?

Yes. So, that number

I mean, we could have a whole accounting less in one day. You know, if you really

2026 numbers are subject to change as plus or minus Absolutely. Final numbers come in.

That's right.

I think that's the key. The numbers that you see here today will not be the exact same. Is there a simple example you can give about something that you have to pull back as you keep saying?

Sales tax. Sales tax is one which is why we don't um do like monthly July reports or um August reports because we're not receiving sales tax which is 21. That's a significant part of general fund. So what's happening in those first couple of months is really we're just spending reason fund balance for that just so y'all know. um we're spending um during

that time. So, it's not really telling us a fair um a fair assessment, but yes, we have to pull those so we can have 12 full months of activity of sales tax. We have to capture those sales tax that we're getting in July and August because they revert to when um people actually

as there's a lag in receiving the funds.

Yes. Yep. Um payments happen the same way. We get several invoices after June 30th that have invoice dates May June of the previous year. So we have to pull those back as well.

Yep.

So I'm trying to simplify it for everybody watching because the misinformation is just running rampant.

Sure.

About the financial problem. So which don't exist. Um, so revenues are basically 60some percent property tax, 20 something sales tax. So that's over 80% of our revenues. Expenditures are money we expend including operations and capital.

Yep.

Okay.

That's why you see the volat in my mind that's why you see the volatility in expenditures and revenues are more steady. If you drew a line

y

that's why that is

just stating that for those that are watching like oh that was the out of control excessive spending that they were doing you know no

yeah know um what I think is you know is important and when we look at variances year-over-year and we're saying we're comparing periods apples to apples what are the variations of change if you're not seeing significant change you know things are okay If you see swings, we will bring that to you, of course, but right now we're not seeing significant swings um when you look at these um comparisons. Like I mentioned, revenues up eight, expenditures was up five.

Yep.

And there more data shared including

when we get a ties presentation will fill in maybe some of that picture. Mayor Y.

Thanks.

All right. This is our fund balance financial position that we are projecting. Again, these are early numbers. Um if you recall our policy statement 33.33% of expenditures our minimum requirement for fiscal year 2026 was about 96.3 million dollar. We are projecting to be at 19 119 um.3 as of um that June number. That projection that we are projecting does include let's just estimate some other things that we might get you know in that in those audit seasons. And so if you compare the um to actually what we had we have we had in at the end of fiscal year 2025 was about 106. That's about $13 million that we are projecting to um at least add to our fund balance at the end of the year.

Could a lot of that be attributed [clears throat] to our conservative estimate of sales tax and and that being exceeded?

That's good. That's part of it. Yes. Yep. Yep.

I wanted to get one thing right there.

I love that. You got a a on that, Michelle. [laughter] Um, just in looking at this year's budget that you all recently adopted, fiscal year 2027, it says that our policy minimum should be around 103 um million. Again, this just a reminder, this is on total fund balance. As we continue to talk about fund balance and transition, we'll have some different com um comparables, but this is where we are now. the projected fund balance. It does support our financial stability, future capital needs, and the flexibility if something is to um occur. All right, these are just quick snapshots, some of what I've already mentioned. Revenues, we received about 95% of our budget. Total revenue growth was about 8%. Property tax here, we're

outlining those significant revenue sources, 59%, that was up 7%. We collect we collected most of our um property tax as of that June 30th point. Sales tax revenue um is the second largest is 21% and as of June we were up 5% same point in time. So um percentages may vary a little bit once I come back with the final numbers.

Just to jump on to Michelle's [snorts] point, Council Member Kra's point, 5% over our conservative estimate. Is that right? We

Oh, yes. Yes. Yeah. Yeah. No, no, no, no, no, no. 5%.

The 5% is over the previous year. Yeah.

Over the previous year. Conservative effort effort. The estimate was like 1%.

I think we estimate, Stacey, do you recall about 1 to 2% of sales tax for 26? I mean 26. Yes.

Okay.

Yeah.

I just wanted to make sure.

So, we're still favorable there, but

we're still conservative and the numbers came in higher than we expected or

than expected. Then we budgeted

than we budgeted. And this is after we lost 300 million I believe with in the uh property tax revenue for affordable housing due to state legislator change. Right.

Okay, that's fair. Stacey,

you're nodding your head on that one.

The loss the loss is not that high, but there are some loss due to the um exclusion for apartments.

Oh, for the nonprofit. Yeah. Yeah. Yeah. Okay. Yep. Nothing to add, Stacy? Okay. All right. Utility fund. So this is our other major fund. Jamie is um my helper um with this fund, but this is just a um reflection of their numbers as of June 30th. Revenue 100 about $107.8 million. We actually received a little bit more than we budgeted. Um there expenditures we spent 63% of budget representing $63.4 million. The net there that we're experiencing is about 44.4 4 million um which was a significant increase over the previous year. I'm going to try to

do a deeper dive into some of why the variance is um the way it is. I do want to pause for a second because when I look at the the net so utilities fund also has a net position fund balance just like the general fund and so the health of that fund has allowed you know when things emergency like what happened yesterday we were definitely in a great position because of the results that the utility fund is in. So here's a five-year um history as well. White bar represents revenues, orange bar represents expenditures. You can see here the 108 that I just mentioned. Um that um was an increase over the previous years as well as the um $63 million in um direct expenditures that we have here.

I'm sorry that went right over my head. Where did the 108 come from?

That is revenues for the utility fund.

Right. Right. But we are going at a steady pace and we jumped.

Yes. Let's talk about it.

Okay. Utility trends. Let's just um talk about this a little bit. We show here again that increase from year-over-year was 19%. We as a reminder we do rate smoothing every year and there's a 4% usually in the utility fund that we increase our water and sewer rates. That's an adjustment that we make annually. That rate smoothing is in preparation of capital projects that our um utilities group is mapping out and so that we're able to fund those in the um future. We also received started receiving money from our PAS settlement. We mentioned it in third quarter as of June 30 we had received about 70 not 707.3 million um in receipts there. So that's the revenue that explains your increase.

That's the bump.

Yes. Can I um check uh an assumption I have with you to see if it's accurate? We do not spend money on utility infrastructure projects then retroactively

bill to replace the money via revenues be via utility bill. We do it the reverse. We collect the revenues and then we spend it on

projects and you know capital investments.

That's usually what happens like we're building. It was the premise of rate smoothing in general of maybe wild mood swings with regards to large scale utility projects like plant expansions.

Thank you. As an example,

I just wanted to make sure if somebody's looking at this, they're going to go, "Well, why'd you ch raise our our water rates? You didn't need the money." when in fact because I think in the past probably people weren't paying a lot of attention and when we we let folks know that we are not allowed to make a profit

okay

on our water utility that that is not the case of what's happening here these monies will be solely spent on utility expenditures I just thought it I wanted to make sure that yes

I am not u misinforming people when I when I talk to them

and as part of the budget um and Stacy could probably give us the page numbers but there is say make sure it's a 15-year plan. Capital plan.

Yes, it's 20 budget 20 the budget plus folks who are watching want to go see what our needs are anticipated to be. Again, not a budget year, but what uh we are are planning for in future years and why you need either cash or ultimately bond funding or other funding mechanisms is to pay for all of that. That's in the back some page. Stacy can probably tell us what page number it is, but you can see all of what we say our needs are in the next 20 years for both utility fund capital as well as general fund capital.

And to be clear, these revenues aren't just carry taxpayers. These are surrounding municipalities. The anybody who's got a utility account in Apex, you know, that they're also contributing to that revenue amount. Correct.

Yeah. Gently Jamie wants to add Apex is different.

So Carrie and Morrisville are merged. So we're we're all one utility customer so

to speak base.

Apex is their own customer base and they reimburse us for the expenses required to run their part of the utility operation. So it's it's a different financial arrangement.

Okay. But it ultimately comingles um and so they are paying their fair share for capital infrastructure

cost. Paying their fair share. They're just they're just a part owner. So the the financial the way that we recover the funds is different.

Okay. I'll get that right next time.

Yeah.

Yeah. Thank you.

And just a little history and I don't have the numbers right on the rate smoothing question. I think we were presented with some big number like it'd be a 20% increase. More or less. I can't remember.

If you waited.

Yeah. If we waited or we could smooth it out and as as we've seen with tax increases, you know, big numbers, people don't like that. So

yeah, yeah.

One of the other things if folks are watching, they say, "Oh, you've got all this extra money here. You should use it to, you know, fix the roads." The requirement for utility funding is that it be used on utilities. That's correct. Right. So, um, one other thing I guess just to remember is I think the water reclamation plant way back when, the Western Wake Reclamation Plant was like $300 million. So these are these are really big capital projects that need require us to save up the money as well as find other methodologies to do things like bonds etc so that we can expand or build another one. So they're they're very expensive projects which again hence the need for rate smoothing. But I know that if I looked at that and said oh I have money over here can't I use it over here? If only if only we could.

Only you could.

Thank you for that.

All right. So on the expenditure side, um we we spent 63% of the budget and that shows um comparing to the previous year about a 20% decline. The usually

the expenditure change in particular with the utility funds is driven on the timing of capital projects. Um, and so what you will notice this year is that some of those projects were deferred and this year in 27 you're going to probably see per Jamie a pickup in that because of the timing of um those capital projects. All right, these are some additional items that we just wanted to pull out of those quarterly reports just for awareness. We are actively managing about 297 capital projects across the organization with a budget. I meant to um identify this as budget. That 847 million is actually the budgeted funds that you all authorize for those 297 active projects. Um another item that we went into, just as a reminder, we did issue about 5.2 borrow. We borrowed about $5.2 million in vehicle financing in June. You all approved it. And that is a way for us to extend the payments for some of the vehicles that we purchase just to go along with some of the lifespan of those um vehicles. We started to operationalize this type of um financing because you may some of you may remember we did it in 24 and 25 um so that we are starting you know a ca a regular cadence on that. One fun thing that we were able to go back to in um the fourth quarter as well with the help of Hussein Sharafi is that we have been able to some of our um liquid available funds trying to capture some return on th those. So he was able to invest about $60 million in some US treasuries just to get us some yield on those. Um so with that next steps we are as you know we are completing our year in annual audit hopefully in November. We'll come back to you with some more um finalized numbers for the fiscal year 2026 and we will do a formal presentation in December which is usually when we come to you all in December with final Cherry

Beckard will come with their um annual presentation at that at that time as well to give you your fiscal year final 2026 numbers

and that is as you said an annual audit that we've done and will do.

We are required to do every Yes. every municipal local government is required

because of the state audit.

That's right.

Okay. I was just going to pipe up and say perhaps we can add a descriptor in front of the annual audit that that everyone does every year that is not you know so we'll know

it's not you know what people are thinking of as audit even if you wrote Cherry Becker audit audit in front of it or something just so that all the materials are really clear to folks that are

you know paying a lot more attention and and sort of trying to absorb this information.

Got it. I know it's so hard because it's the language. It's just the language, right?

Yeah,

that's the easy button. We got it.

Um I have a question.

Yes.

So when we renewed um the contract with Sherry Becker, maybe Ross, you might be able to answer this question. You do. Um so um I believe that last time there was a miss and we all did not understand the scope of the auditor um agreement that we had with cherrypicker or we the requirements were very limited. So this time the requirements will also require them to um check the information against our policies. Right. U that was some of the extra services and Kim may want to speak about it that we were bring we'll bring back to you on what they um we want them to do into addition to just normal um external audit services.

That's right. Um to Russ's point, we um recently met with um Cherry Backer to see what some of those additional services could be. We are waiting on a response just so we can have a comprehensive um list of options that we can um bring back to you for the future for those additional services. In regards to the direct question policy

maybe around fund balance, we did talk about too as a reminder the other night we are inserting a um an expansion of what we include in our annual comprehensive report so everyone can know do we meet the poss. This is a calculation that is what we're including.

And that's a good reminder just to make sure we bring it back to you all so that it's crystal clear and to the public watching. Yeah.

Um of what services are and aren't with Cherry Beckard. and we did do a request for proposals um to to get their services and look at others that that do [snorts] that type of work um when we renewed that contract this year.

But Kim, you also mentioned um that you know the during [snorts] our last session where we did an extensive um um 101 course on fund balance and it's a deep dive. Um you mentioned that you know fund balance could be calculated in any way and you know so will this um future recommendation or whatever you may want to call it that will uh or when you when you present the actual fund balance in November um which will be as of the closing

of the audit cycle um

you would you also provide provided with the information on how it was calculated and was it in alignment with our existing best practices.

What you will receive in November will be as of your existing policy which is a 33.33%. As you all decide um when we continue the training and conversations to transition to a new um methodology that's when you know you'll start seeing different um calculations. Um, we'll give you some thing things to think about in November as well, but it will be based on your existing policy of total fund balance.

Consultants look at that tie some of Tai's presentation and maybe your questions to that speak to what changes it might be and what the rules are

around it or considerations for the rules you want to make around it. I just want to make sure that we make this as our best practice that you know we understand how it is calculated and every time we could have those data points to compare against um because if the calculation can change and you know somebody is changing the numbers

um how will council know about that right so I think this could be a good checkpoint for everybody

and I'd say we we don't want to change our numbers un um of the policy of how it's calculated unless you agree to adopt a new polic

um and then also O make sure Cherry Becker just as they did last year is um includes it in their presentation as well as to what their audited numbers are

and that's a good idea

but good point so that we don't and as you saw at the last work session seeing how many different mun municipalities do it different ways and uh folks also have their different opinion of what the right way is.

Um but it seems like everyone has a different version of a way to do it and as we change it y'all will be fully involved in that before any decisions are made. It's just a good checkpoint and God will drill to have, you know.

Yep.

And if we choose to change that calculation,

would we make the adoption for fiscal year 2028? Would that be when it

you would want I would you'd want to do it with the budget.

I mean, we wouldn't do it like midcycle, would we?

Not that would be really midcycle. You'd say for the subsequent year.

Okay.

Yes.

Yeah.

And I just wanted to add some clarification. um to make sure um when we're talking about different changing the way you calculate something that relates specifically to the policy versus the audit is the audit. The numbers are the numbers that are shown in the ACT for um for each fiscal year. It's just simply how you uh calculate um whether or not there is funds in excess of policy. Would would it also help as

once we get there to talk more about the nomenclature we we use because we've been using we weren't using all the very specific ones you use. We we didn't use it, you know, un unaddressed, right? Restricted. We were just talking about available and

well, total. Where is

total? Thank you. Total and not available, restricted.

Um,

it seems to me that part of the problem was understanding uh what exactly was included included

in the total. That's right. So maybe we'll use more specific language so that we we actually do it maybe similar to some of the other municipalities that call out

restricted or unrestricted.

That's what I was trying to say, but you said it's so much better.

Oh, okay. [laughter]

Okay. Any more questions? Thank you.

Thank you.

Ties up.

How do I just hit the green button?

Yeah, just the green.

Great. take a break.

Good afternoon.

Thank you all for having me, mayor and council members. Um, my name is Ty Welfford. I'm with Davenport and Company. Um, I'm a senior vice president. I've been working for Davenport for 20 years and as Dana eloquently said we advise primarily local governments and our focus is I would call it as a capital advisor and so before I get into the topic today help set the stage a little bit we really help our local government clients with capital planning right and so [clears throat] you all do a tremendous job as a sophisticated local government with capital planning. Not everybody has a dedicated capital plan. Not everybody has a plan that goes out 20 years. They don't necessarily have funding sources identified with their capital plan. So, we'll help assist with that. you know, what's the right mix of cash and debt,

um, those types of things where grant dollars might not be available. Where we really, um, I'd say carry the torch with our clients is when there are projects that need debt financing, we'll help figure out the best way to do it, right? Because there are different avenues you can borrow. You can borrow from a bank. You can borrow from a state or federal program. You can borrow from the public markets if it's a large enough borrowing. And if you're a creditworthy entity, which Carrie certainly is. And so we are here today to talk about credit ratings, which is something we help our clients with, help facilitate getting credit ratings when there is a public bond issuance, right? And so it's a dense topic. Uh we are going to try and keep it high level today um and start with some of the basics. What is a credit rating? Why would you get one? Why do you care? What it is? What it helps you do? And then with that background, help arm you with at least the key pillars that the rating agencies look at, what they care about. Uh it's not rocket science at a high level, right? They want to make sure you have the wherewithal to repay your debt. That's the that's the essence of the conversation, but they're looking at very specific things. So, we're going to focus on that at a high level and we're going to we're going to talk about them as pillars and then we're going to give you some perspective on where Carrie stands with some of those pillars. Uh not only where you are today, but where you've been in the past uh and compare you to some of your North Carolina AAA rated peers. So, um, our first slide here is what is a credit rating, right? I'm going to compare it to if you are going to get a mortgage or a loan from a bank. The first thing the bank's going to do is they're going to pull your credit score. It's the exact same concept, right? And what they care about is [clears throat] not only your

financial standing right now, but what is your ability to service this loan or payment over the long term. So, you'll see some words jump off the page here. Um, you know, they're looking at the relative risk of financial obligations in North Carolina local government's case that those are debt obligations. They can come in different forms or fashions that we'll talk about. It's rated through a economic cycle or long-term focus. It makes sense, right? Because when we take out debt, it's usually over a long period of time, oftentimes 20 plus years, matching the asset with the liability. As Kim alluded to, credit ratings are assigned to specific securities, and the common ones we see in North Carolina are general obligation bonds, limited obligation bonds, and then on the utility side, water and sewer revenue bonds. Car's issued all of those types of bonds. General obligation bonds tend to have the highest credit ratings. Although we'll see you all have the highest ratings for both your go or general obligation bonds as well as water sewer, which is very rare. We'll talk about that a little bit. U but general obligation bonds tend to have the highest rating because it's a full pledge of your taxing power. You're going to do everything in in your legal ability to repay the debt and that's that's the security of the people buying the bonds. And so that's what the credit rating agencies are looking at when they evaluate that. And ultimately it's looking at your ability to repay, right? Your your expectation of repayment uh of a potential default. So high level that's what a credit rating is. So the WHO who who are the credit rating agencies? There are three major ones. Moody's, Standard and Pors, and Fitch. You've probably heard of some of them. There are certainly other credit rating agencies out there, but these are the three main ones. uh and we're going to focus on those today. Carrie has credit ratings on both its GO general obligation bonds and water sewer bonds from all three of these agencies.

To orient you to their rating scale, their scorecard, um this is a little table that outlines from top to bottom, best to worst, the rating scale and their columns for each of the three rating agencies, Moody's, S&P, and Fetch. I should mention my colleague did pass out hard copies because there's some small print on here especially as we get to the back probably easier to see on the paper but um all three of them have the same highest score and that's AAA or three A's. Moody's has a little bit different. They like being a little bit different. They have little A's. As you [clears throat] go down the table the double A category is the next best you know double A plus double A flat double A minus. Moody's does one two three. Same concept. They're all equivalent. And then all the way to the bottom, there's a dotted line near the bottom. Anything below tripleB minus or BA3 is called non-investment grade or junk ratings. Um, so in the local government world, you know, nine times out of 10 or probably 99 times out of 100, uh, local governments are going to be in the investment grade category because just of your ability to generate taxes, pay your bills, and the the setup of your organization. So, what are some of the benefits of a credit rating? We'll put a little bit more specificity to this, but just [clears throat] broad brush market access even during economically volatile periods, right? If you are a well-rated organization, by definition, it really means you're a financially healthy organization, especially if you have AAA ratings like Carrie has, that's highlighted across the top. You have the highest credit ratings you can get. uh it gives you access to broad investor base when you do issue bonds like in the public market because individuals and institutions buy those bonds and they expect you to repay. If you're going to a bank for a smaller financing, you tend to get broad participation from banks because they want your business. Ultimately, it results in a lower

interest rate to you and that's how we're going to quantify it. You know, what's the value of a AAA? Unfortunately, the answer is it's complicated, but we'll try and give you some perspective on that. And then lastly, an intangible, right, public recognition. A lot of people take pride. I think historically Kerry as an entity has very much prided itself on its AAA credit ratings. And certainly that uh is a value in and of itself. It's a third party kind of independently evaluating you and giving you a financial scorecard. So this next page is to give you some perspective of some of the broad pillars we're going to talk about. It's a busy slide, but on the left side we've outlined our four main pillars. And they all all three of the rating agencies are looking at the same basic categories. They're looking at your economy. They're looking at your financials. They're looking at how much debt or leverage you have. And they're looking at management factors. and that doesn't necessarily have the the same thing that comes to mind. They're not grading people per se, but they're grading the structure of an organization in certain ways. So, let me talk a little bit about it just to give a flavor for it. So, when we're talking about that first pillar, economy, they're looking at certain things like the health and strength of both the local and regional economy that you're situated in. They're looking at certain demographic things like population size, population growth, employment, wealth levels. They're looking at the size, structure, diversity of your tax base. If you have any certain concentrations or areas of risk, right? If you have a singular company that is your number one employer and that company leaves, that is risky for a small place. Right? That just gives you a little perspective of some of the things they're looking at. On the second pillar, financial performance. They're really looking at two key areas. Your operations, right? Revenue and expenditure structure and patterns.

Concentration risk or the stability of those revenues and expenses. You all heard a little bit about that. Your operating performance, which goes into your budgeting process, right? Are you consistently meeting or exceeding your budget or is your budget a stab in the dark and you don't know how you're going to end the year until you get there? Right? I'm just illustrating kind of some bookends here. Financial leverage and fund balance. So fund balance is critically important. It's your savings account. So we're going to look at that. All these things kind of play together. Not every not any individual one uh is the singular thing. They're looking at debt. Uh we're going to talk about so the amount of debt you have as well as your annual burden. And when we talk about debt, the rating agencies have evolved on this uh especially in the pro probably past 10 years. They're not only looking at debt, they're looking at pension and OPED liabilities as well. So, we're going to talk about that and they look at it relative to your tax base, right? The size of your assessed value as well as it relative to your total budget, right? Because 10 million of debt could be a lot or it could be a little relative to who you are, right? 10 million of debt might not be a huge number for Wake County, but it could be an extremely large amount for a town of a thousand people. Right? Once again, just kind of pulling out extremes there. Lastly, oh, sorry, [clears throat] also with that, they're looking at the affordability and that's the second main bullet, fixed cost burden. So, they're looking at how much your payment is both debt service and pension contribution and OPB contribution is as a percentage of your budget, right? So in in their view the lower the better. Uh but if debt payments, OPED and pension payments become too large a share of your budget, it can become unmanageable. And then lastly, management is more of a qualitative factor. Um they are very specific in how they look at management in order to be apples to

apples. Instead of judging people, they try and judge processes that are in place. And with the rating agencies, we note on this page, things like long-term plans, long-term financial operating plans. Are you looking over a multi-year period? Capital, same thing I talked about. Are you looking over a multi-year period? Do you have sources and uses identified? Things like that. They do look at financial policies. Financial policies is probably too broad a term. What they care about are having policies in place related to debt. for example, how much debt you're willing to take on, how much your debt service payment might be relative to your budget. Same thing you all have. They also want to have a fund balance policy, which we've been talking about as well. And also things like investment policies. So, they care about those specific things. And then they want you to be in compliance with those things that you've set out, right? So, they want to make sure you're following the the long-term plans you set out. They want to make sure you're staying on top of your policies, debt and investment and fund balance policies. You're monitoring those types of things.

Remind us what OPED stands for.

Other postemployment benefits.

Yes.

Yes. Good question. The right side of the page just gives a little flavor and it actually looks kind of funky on the screen here, but um this is Moody's and S&P's methodology. Same broad categories. You can see they all have they both have different slightly different weightings to it because ultimately they put all your financial metrics into what they call a scorecard. It spits out a grade or a score and then they have the ability to notch you up or down for that from there from other qualitative factors. But we've noted some of these things all of them are technically within your control, right? Some of them are more in your short-term control versus longer term control, right? economy is something that's harder to change in the near term. That usually takes a dedicated focus, a

redevelopment, what have you. Things like your operating budget performance is something you might be able to change year-toear, for example. So, that's a broad brush. We're going to look at those individual categories later on for Carrie as well as comparing you to your peers. [clears throat] So, this chart is one way to look at the value of a AAA credit rating. And what we're showing here is since 2003, the credit spread or the different in interest rate on a daily basis of a AAA rated municipal taxexempt bond versus a single A rated taxexempt bond. So, it's two broad categories apart. It's a 30-year maturity. That's just the the data we have access to. And what you can see is it evolves. It changes every day. Um but on average it has been about 0.57% since 2008 which in my mind post financial crisis is kind of the the more recent history but it's been as high as 1.25% it's been as low as 0.15%. So it it depends. But just to put it in context, let's take that average about 0.57%. If you were to quantify that on a hundred million borrowing over a 20-year term, it would translate to about 5.9 million of interest rate savings. So having a AAA rating does provide real tangible value in terms of a lower interest rate. It's about $300,000 a year.

Can you say that again?

Sure. So that

maybe use an use an example like a fire truck or something that costs $10 million, right?

Yeah. So $10 million a new fire station is more expensive than $10 million. Let's round it. [clears throat] So on $10 million, uh the interest you would save by being AAA versus single A um is about 590,000

over the life of a loan if you did it over 20 years. It'd be about $30,000 a year. So I was saying it on a 100 million it's a bigger rounder number on a 100 million it's 5.9 million of interest rate savings or about 300,000 a year.

Thank you.

Uhhuh. So this slide is a little bit more for reference but just wanted to level set. Each of the rating agencies has reviewed you all relatively recently. uh S&P's data lags the most, but this is a snapshot of their most recent report. So, when they update your credit rating, they'll do that when you go seek a new rating. They also are obligated to review you regularly, which usually means within a two-year window. When they do that, they'll put out a report, and these reports are out there. You sometimes need to subscribe for them, but they put out a report so investors know, you know, what the review entailed. And what we've put here are three broad categories. All the reports are set up fairly similarly. There's an outlook. They then identify kind of the strengths of the credit, especially for a AAA credit. And then they all have to say what could lead to a downgrade. What could lower you from AAA to something lower? And so that's what we've put here as the three main categories. The outlook is there. There are three possible outlooks. Stable, positive, or negative. As a AAA, you can't have a positive outlook because there's no way to go higher than AAA. So for you all, stable or negative are your only two options. It's usually their assessment of what direction you might be moving in the next couple years. In all of these cases, they noted a stable outlook for carry, which is good. Um, you'll note the S&P report was from 2024. The other two were from this calendar year, noted at the top under their logos. credit strengths all fairly similar in their takeaways. Strong economy, manageable

leverage, which is kind of interesting. We'll see a little bit more about that. And then the factors that could lead to a downgrade a little bit nuanced, but the general common takeaway is a reduction in fund balance, usually resulting from budgetary imbalance is what they use a lot, which just means expenses higher than revenues, right? So if you have a sustained trend of expenses higher than revenues, which how would you plug that with fund balance, right? With that sustained trend and a reduction in fund balance, that could lead to a downgrade. Once again, they all have to say it in the report. They're not saying that's inevitable. All right, so this last section, we're going to get into some peer comparatives, which hopefully you all find interesting. This is a setup page to show on the left all of the North Carolina municipalities which are cities and towns that have at least one AAA rating from the three rating Moody's S&P and Fetch. They're a total of 24. We've also noted who have at least two AAA ratings, which it's a smaller universe. It's 19. That's the universe we're going to use on the following slides for peer comps. those municipalities that have at least two AAA ratings. And then the last group, which you all are part of, is those with triple AAA ratings. In North Carolina, there are only seven. Used to be a longer list. There are three cities and towns or a couple counties who uh recently dropped their Fitch ratings. Fitch came up with a new methodology a couple years ago, very focused on economy. Those with uh weaker economy metrics did not score well under their new methodology. They're put on review. A number of them got downgraded, not heavily, but from AAA to double A plus. They no longer saw the value in having a FH rating. And so they removed it. And so this list used to be 10. Now it's now it's seven. Also worth noting uh those

that have AAA ratings, not on this slide, on both GEO bonds and water sewer bonds, you're one of three in North Carolina. You, Raleigh, and Charlotte are the only three that have that distinction. Ty on that slide, just in fairness to our peer communities,

these check marks don't necessarily indicate that they have less than a AAA, but perhaps that they have elected not to seek a rating altogether.

Correct. That is certainly the case for some. Thank you for that clarification. It could be it could be either. It could be that they're they do have the rating and it's lower than AAA or they just did not seek having a AAA rating. Thank you for that. So will that affect their bond interest rate if like double A or AAA what's the differences?

It's a good question. That's so having two versus three AAA ratings. Um you know I think you need to talk to some investment banks about it specifically. But I think it would be no real difference, no meaningful difference in your interest rate. Um, if you had a double A plus or a double A flat rating, we could get you some more data on it. That's kind of the concept I was trying to get to earlier. You know, AAA versus single A, that credit spread evolves every day and it kind of depends on the market that day at that time. In that case, it was about 0.57% or a little more than half of a percent uh overtime on average. Okay. We also noted on the right um we have access to to information from Moody's but give you some perspective from Moody's rated universe of cities and towns how their national across the country credits they rate almost 2,000 cities and towns of those there are 258 that have a Moody's AAA rating about 13% the vast majority fall in that double A category and about 22% in the single A category.

All right. So, now we're gonna get into a series of peer comps. Let me orient you to it. And this once again might be easier to see on the hard copies. There's some big foldout pages. Um, but we're we've organized these by the same pillars. So, this first page is an economy what I'll call dashboard. This is not everything that they're looking at, but I want to give you a flavor for some of the things that they do look at. And what we show on each of these graphs is three metrics for Carrie. 2025 is in the dark blue. That's the most recent available data that's on their website. Um, and they update it regularly annually. So 26 when that finishes up, it'll probably be posted end of the year or early in the spring. We then show five years ago in the medium color blue and 10 years ago in the light blue. Right? So just give you some perspective on how these metrics have evolved. The next section, the lime green colors are showing the national and North Carolina AAA medians.

Back to school median is the middle number. I don't know what mode is, but I know what median is.

And then the dark green bars are all of your peers. The 19 cities and towns in North Carolina that have at least two AAA ratings. Okay. So, assess value in the rating agency's mind. All of these charts for economy, the higher the better. in their mind. Okay. So the the larger your tax base, I think the concept is you have a broader taxing base versus it being concentrated. So you can see for carry your assessed value has grown pretty dramatically over the past 10 years. It's more than doubled. So we've gone from 22 billion to north of 52 billion in that 10-year horizon.

You are well above both the North Carolina and national AAA medians. And so you compare very favorably on this metric. In North Carolina as of 2025, you were the third largest tax base of all these municipalities. Now reval all

I mean you all get this right timing of rebal and you know if these others had but that that was a point in time. So this is 2025. So good takeaway. I'm going to go through the rest of them more quickly. Population size also important as well as population growth. This has been a more manageable growth for Carrie than than tax base. But your population has grown from about 150,000 to north of 185,000 over this time period. About a 24% growth rate. You compare very favorably. You're on the larger size of your North Carolina peers here as well. Put those two metrics together and you get assessed value per capita in the bottom left. It's a wealth metric. Um in in the rating agency's view, higher is better. You can see Kerry has grown dramatically really as a result of the growth of the tax base. Uh and you are the second highest assessed value per capita interestingly behind Morrisville in the peer group. And then lastly, this is a wealth metric median household income as a percentage of the US. So if you had a 100% metric for this, you'd be right on average with the US. In this case, Carrie is around 150%. You've held very steady over the past 10 years. You compare favorably to your North Carolina peers. Well, in the top third there as well. That all make sense? So, that's economy. Those are some of the things they're looking at, right? So, they talk about your strong economy. You get a flavor for some of those. All right. Next pillar, we're going to talk about financials. This case, we're going to talk about fund balance. this chart, we need to kind of bifurcate the top from the bottom. And I'll tell you why. I didn't even notice this down here. This is nice. Sorry. Um [laughter] the I was wondering why Kim was looking down. The top shows general fund. The bottom two show carrywide, so governmental and business type

activities. So water, sewer as well. The reason we're showing both is because SNP in their review looks at just general fund for this.

Moody's looks at carrywide everything in your audit. So I wanted to give some perspective on both views. So the top left is showing on a nominal VA basis your available fund balance. That's not an accounting term. So throw in another layer to your education. Last week I think it was available in their mind means unassigned and assigned. the two most flexible buckets, unassigned and assigned. And in this case, you can see Car's trend has been generally downward over the last decade. You've gone from 76 million in 2015 to 94 million [clears throat] down to 65 million in 2025. In general, on a nominal basis, you still compare favorably with your peers. However, the rating agencies look at it on a relative basis. So, we're going to go to the right and look at it relative to your revenues, which think of it as a percentage of your budget, similar to how a policy would fall. This is available. This is not total. So, unassigned and assigned. You can see Car's metric, you've dropped from basically 50% of your budget to 23% of your budget in 2025. So, this has come down. This starts to bring back some of the commentary we saw from the rating agencies. What could lead to a downgrade? They were clearly looking at fund balance. Further deterioration of that could potentially be one thing that could lead to a downgrade.

Are they looking at the trend or the raw number?

They look at both. Uh so the trend comes in through the financial performance and we don't have a pure comp for it, but they're looking at like your operating results. So if they saw a multi-year trend of operating deficits that resulted in fund balance draws that

would be a red flag. Now they do distinguish capital versus operating. So capital transfers they might see that might draw down your fund balance and then the absolute level of fund balance becomes a problem but it might not actually be a operating pro I shouldn't use these problem terms but hopefully the concept makes sense an operating red flag

and is there a floor because we're at 20

3% so for SNP for example 15% is a key threshold for them once again that's not the answer to your policy question, but for them where we're talking about general fund 15 is a key threshold for them to to [clears throat] get full credit for this specific metric.

Okay.

Down below, we're looking at all available fund balance, which pulls in your utility funds. It pulls in your capital funds. Uh once again, it's unassigned and assigned. In the business world, it's a current net assets calculation. But same concept in this case similar takeaway. Car's total available fund balances have declined from about 390 million to about 350 million. But on a relative basis, it has come down fairly dramatically from about 160% down to about 77% of overall all operating revenues. And so you still compare online with the medians for the the bottom right corner graphic. It's not quite as stark as the top right. Um but you started as you know one of the best. We're not showing how everybody else looked in 2015, but you can see relatively you were uh at the top of the chart uh comparing that to their 2025. Okay.

Does that does that also have a floor like you said with

little bit more complicated with

Moody's? they they're they don't have quite as defined a bucket. Um but we can get you some more info on that.

That'd be great.

It's a dense topic. We're trying to they're great questions, but the more specific you get, it kind of has a lot of twists and turns along the way.

Without going too deep, sir. In the bottom right, I see the triple AAA town like Wake Forest like 50%. Does it depend on their trends or does it I know you tried to answer that while ago, but

No, no. I mean, it's a great question. The reality of any you take any one of these metrics and you you can't look at it in a vacuum to deduce what their rating is. They all have their individual strengths and weaknesses. It's a full picture view. And it's also not just the numbers. They take into the qualitative factors that may also not tell the whole story. So that's kind of our job when we do go to the rating agencies with you is to tell your full story to make sure we're representing the full picture, but it's hard to know specific nuances for some of them.

Ty, I'm sorry. I have one more question on balance. Mayor Prom has talked about floors, but what about ceilings? Uh, the lens that the rating agencies use is not the same lens that a taxpayer might use, but we have talked about using that lens, a notion of having fund balance that's too high, right?

Why would you have such generous savings when we have expenses? Yeah.

For the rating agencies though, like the previous page, is there no such thing as too high?

[laughter]

That's an interesting way to to [clears throat] look at it. Um they're once again they all use a rating scorecard, right? So it's just absolute [clears throat] they're looking at very specific metrics

and some of them are not even shown here. There are certainly points where you get capped out for no longer getting credit within the confines of the scorecard, right? you get AAA marks for that ratio,

but then it'll tie back in on the qualitative view, especially if it's needed to offset an extenduating circumstance. So, you might have off thecharts, not the best term, off the charts fund balance, but you also might be off the charts in terms of high debt, right? And so that might help offset that perceived weakness with a really strong strength that you have and they balance each other out. So

So this is a singular data point in isolation is not as informative as its context.

That's right. It's a good way to put it. Thank you.

Can can I make sure I'm understanding this in this is you know we we got a lot of clarity from Kim on what those available funds really are. We can be spending money, right? We have projects. It's the the the money is earmarked for something. I don't want to use the wrong accounting term

authorized and funded,

right? But as long as it's part of this bucket and our in our fund balance, it would show favorably even though say we're we're spending it next year, it's it's

correct.

Right. So, it's it's really what they're examining in this available fund balance in the the percent of re revenues in the general fund. What they're really looking at is that bucket of money that we were talking about that has flexibility.

Correct.

That's right. Especially general fund, right? Because you're taking out some of the noise of capital funds that in y'all's case, you might transfer money over there and it's going to eb and flow as the timing of the project spend or get authorized. But in the general fund,

there are certain restrictions that you have to have by state statute. I'm sure you've got all of the education from Kim. But right, they're looking at those true flexible unrestricted available, which is in their mind unassigned and assigned fund balance, the two most flexible buckets.

Okay.

Yeah.

And realistically, and I I think this might be a a don't answer this if I'm asking it incorrectly. I look at that especially in terms of what we see when we look at the fund balance over the last several years. Had we not increased property taxes, would that those two top graphs that fiscal year 2025 bar be even lower and put us in an uncomfortable position the next time we're critically reviewed? What I'm trying to understand is generally what our current tax rate and the decisions we've made in the last two years as far as our tax rate, how that affects um this overall picture that the rating agencies are looking at because I see that number shrinking, right?

I think probably the answer to your question is if you looked at this metric in 2023, [clears throat] it was lower. And so, um, I don't want to speculate, but my understanding of part of the strategy was to help build your fund balance back up because it had fallen below maybe uh, level that you all

were comfortable with. And so even though you can see from this chart 25 is much lower than 5 or 10 years ago um it reached an even lower point pre-reval.

Yeah. Two years ago. Okay. I I I in my head I was trying to figure out where you know were we at or near that 15%

floor prior to increasing

property taxes and re-evaluating you know the budget spends.

And and I'll clarify that statement too. the 15% for SNP, that's to get um in their highest uh range for that one specific metric. Falling below it does not mean you would get downgraded in and of itself. There's a lot of moving pieces and nuance to it. So,

you were you were clear. I just unfortunately

as I am not a CPA or an accountant, I do have to think kind of in broadly applied

um approaches to the budget and just want to make sure

I'm not connecting things that are in fact not connected because I keep going back

to what we just reviewed about the fund and what I understood at the time that we made the tax rate decisions we have over the last couple years

and just sort of looking forward I know I'm already thinking about what is next year going to look like, right? And I know we don't want to talk about it probably right now, but that's that's the lens to to steal Britney's term. That's the lens that I'm looking at at this through and just trying to get I I almost want to know ahead of time um how stressful Q1 and Q2 are going to be next year for me. One other question I was by looking at this at first I was thinking like looking at the available fund balance as a percent of re revenues I was thinking oh well that that's easy if you have a small city you know you have a greater percent likely a greater percentage except Raleigh is the outlier but Indian Trail Morrisville Davidson Huntersville they're smaller towns and cities is is there some alignment or um with the city size versus

it's a tough one. Um I would I mean

yeah I I I don't want to speculate on it. I I would I would venture a guess that um if you are a smaller municipality, uh you need strengths elsewhere to get to a AAA rating such as higher fund balance or lower debt levels or other types of things because economy and having a smaller tax base weighs negatively from the rating agency's view on your credit rating. So as our population increases, is it is it natural to shift some of these numbers?

I think the reality is the absolute value of a dollar, right? The bigger your budget is. It's it maybe could be more challenging to accumulate the same critical mass of dollars to get to the same percentage you see with smaller places.

I see. Okay, makes sense.

Okay. We good? Keep going. All right. Last section is debt. Um, some interesting takeaways here, but to orient you again, [clears throat] top is governmental in this case. Bottom is all carry-wide governmental and business. Top is S&P's view. Bottom is Moody's view. Just for example, in all of these instances, in the rating agency's mind, lower is better, right? Although if you had no debt, they'd have nothing to rate, but uh lower amount of leverage uh would signify uh you know higher higher credit strength. In their mind, at the top left, it's an absolute measure, right? The absolute amount of debt. Carrie has seen an increase in governmental debt over the last 10 years from about 135 million to north of 215 million. You are a little bit above average on a absolute

level but once again you got to look at it on a relative basis which is the top right. As a percent of revenue you have come down quite a bit from about 83% of revenues to 63% of revenue. So although the debt amount has increased since your budget has grown more, the relative basis has come down. You compare very favorably with your North Carolina peers and you're right on line with the national AAA median in that metric. Down below, we're looking at governmental and business type. Also kind of an interesting story here. You've been fairly flat on an absolute basis. On the bottom right, relative to your revenues, you have dropped from 285% down to 138%. Now, in 2015, you have to remember it came up earlier. Western Wake had just come online. There was all of the debt associated with it. It was a generational project. And so, on the utility side, the business side of the operations, there was a lot of debt. There's also a lot of cash uh to offset some of that, but your overall leverage measures have come down and you are in line with your North Carolina peers on the total in the bottom right. Right. I think you are the median for that metric. And so once again, going back to the rating agency's commentary, manageable debt. Well, that certainly has evolved and become more manageable on a relative basis over the last decade. And then there are a couple other charts in the back. Last perspective just on debt. Debt relative to your tax base and then debt service as a percentage of your general fund budget. Um once again, Carrie compares favorably here. I think the trends are fairly self-explanatory. Uh but just a couple other metrics there to note.

It's very complicated like

it is

and th this is the this is kind of trying to keep it high level too. It is a it is a very complex topic. So um hopefully I was able to to instill a little bit of knowledge on it. Uh but certainly happy to answer any other questions you all might have. Does it mean from the debt uh comparatives here shows in 2015 2020 uh percentage Carrie has more percentage in debt that that mean we borrowed more money in the past and over the years we pay back and that makes us currently the uh the fund balance or the uh the fund balance like general fund or a percentage of revenue lower than past 10 years.

So let me let me point to this slide 11. The top left is just an absolute level of debt that's outstanding. So in 2025 in the general fund, for example, it was $218 million. that amount of debt relative as a percentage of total revenues was 63%. So these really go hand in hand. We're not showing what the total revenue number is here. If you look at 2015, you had 135 million of debt outstanding. That was 83% of your budget at the time. So your budget was much smaller in 2015 in order for it to be a higher percentage. So the number was smaller, the amount of debt you had, but relative to your budget, it was a bigger ratio than where you are now.

Okay.

Does that make sense?

Multi-year total amount owed versus one year of revenue.

Correct. Okay.

Which is kind of an interesting We grappled with this when they came out with this methodology. Why are you

comparing it to one-year budget? It's just a way for them to measure it on an applesto apples basis relative to your budget. Similarly, they measure it relative to your tax base, which is the percentage of your assessed value. It just gives an order of magnitude.

That makes sense.

Even though you're not going to pay it back in one year,

I look at my budget and the amount I owe versus what I make very similarly. Um, and I made that assumption, so I just want to make sure I made the accurate.

Good question. So, I'm I'm trying to think in relation to my budget, debt as opposed to debt service.

Why would the debt matter if I know the debt service? I guess because

yeah,

debt means there's going to be more or less debt service based on the total and that's why we look at that.

Good question. they are really checking because not in North Carolina you can't do this but in some places you can stretch your debt service payments over a very long period of time or you could have a bullet right where it's interest only for some period of time. So they're looking at them both. So you might have a very low debt service payment if you stretch your debt out really long

but you have a lot of debt still and so they want to look at both.

Okay.

So some governments could make minimum payments on their credit cards like I did on my good way to say it. [laughter] It's not advised.

No,

for anyone.

For anyone, actually.

Learned that the hard way in my 20s.

Yeah.

You were still paying for it in your 30s.

It's really fascinating. I mean, if you had to bubble up um some like key takeaways from looking at the data for us besides the kind of outliers that are quite large like the Charlottes and Raleighs,

the rest kind of fit in the middle from a population. Are there key takeaways that you think we should be aware of besides the ones you said, hey, keep track of these kinds of things that they look at? I think going back to the commentary um

that was on a earlier page I think it's just interesting to see there is a lot of uniformity between all three of them. They're noting your strengths economy manageable debt burden. They are also noting fund balance as a potential one potential trigger that could cause rating pressure if they saw that trending downward. So,

I don't want to oversimplify it because it's a very complex topic, but I think those are kind of some of the takeaways from from what we've seen.

So, sort of kind of following up on that, I've been thinking and I guess some of us have been thinking, do we have an excessive amount of general fund reserves, which is a concern, especially when we have so many capital needs? And it sounds to me like the rating agencies really want to look at what I think we need to change our policy to is available and unrestricted. Um, and if we change our policy there, then we could probably help ourselves answer that question. U, but based on what you know, do you, and this is strictly an opinion, I know.

No, I understand. We're trying to figure out are we going into dangerous territory if we revisit our fund balance policy fund balance reserve policy.

Yeah.

So I'm going to stick to the rating perspective too. They [clears throat] encourage you to revisit policies regularly. Right. That's a good process, right?

Um they are also not going to give you guidance as to what the right level of policy is.

There's no answer key.

There is no answer key. you do know what you know some of the ratios are looking at where you stand and that's some perspective that Kim has [clears throat] provided and that we've been looking at. Um but the you know from where I sit and what we see with other municipalities there's no right or wrong. I will say in terms of unassigned versus unassigned and assigned which is available those

are your tools you can really plan around right you can't plan around restricted fund balance it's just you can't spend it right so um from a you know purely philosophical standpoint moving to an available metric versus a total makes good sense I think you'll see that's more common place in in the local government Mhm.

With all due respect, it does sound like there is a wrong answer here, though.

There are multiple right answers, right? There's no prescriptive

and you're available to advise us as we reconsider or consider.

Absolutely. Yeah, we can policy

bring some perspective on what others do.

Support staff isn't

Yep.

the only one trying to keep us.

He does. Yeah. So in the background when we give him things you

Yeah. Yes. [laughter] We'll give him things. We'll give him your feedback. When we talked about how what your the questions you ask, the things you talk about are very very helpful. And um and we relay them to him. He gives us feedback. He gives us things to think about. when we talk about how we change um or might change policies, he will look at specifically some of the things that um that we are talking about.

Excellent. Thank you.

I have a very specific question about OPEB

just because as we get bigger that and we get more retirees

Yep.

the the number of the pay as you go for those benefits increases. Um, I guess I'm curious what your thoughts are on the need for or for an OPB trust fund or whatever that looks like. Money set aside that

is that what does that look like from your perspective and is it based on population revenue like what are the considerations for moving forward on that?

So, no specific guidance on what you

should or shouldn't do. Um, but I will say the [clears throat] rating agencies look at OPED, they treat it like debt, as a liability. So in your case, your OPED liability is about 20% of your overall leverage burden, right? Just in terms of dollars. So you know, from the rating perspective, it's viewed just as if it were issued as debt. And so if you were to do something to reduce it, that would be viewed favorably on the debt metrics, right? Leverage metrics. If you're using fund balance, this is just purely theoretical to reduce it and you're reducing fund balance to do it, then they're going to look at that as well.

Um, so I don't I don't know if that's helpful to address the question, but it's in in their mind, it's treated like any other debt obligation. And in your

the increase because of the silver tsunami of those of us retired or retiring along with the increase in health care costs is their guidance in that because that could be

that's been for people who pay healthare we've seen and just at the grocery store we've seen increased cost

and now you know additional retirees you know coming on board yeah I don't not reducing any of the retirees if anybody wants benefits but maybe looking at it more forward

thinking that you know maybe new hires

shouldn't get 100% healthcare benefits. I mean are there

any recommendations?

No recommendations. [laughter] Be careful. No the I I appreciate the question. I think what we have

commonly seen across our footprint are people tapering back OPED benefits to try and wrangle in the growing liability. future.

That's just That's right. By either cutting it off or taper. I'm not recommending that. Please be clear about that. But I think that's fairly common

to what we see as a way to combat a growing balance sheet liability issue.

And can I just add something really quick um Lori to your point about OPED? We actually partner with an actuary as well who can give us those types of recommendations, benchmarks, options, and things like that as we look into our future. Just letting you know that. Yeah,

thank you.

And Ty, I have another question about uh the fund balance policy because um as we change the policy and we might thinking about issue more bonds in the future, right?

So can we do any predictions of the future like property tax prediction because like I would love to know if we change the fund balance and we issue the bond.

Yeah. Do we have pressure on the property tax income revenue because that's the main

revenue we have now.

And that's a great question and that's what [clears throat] we really help coordinate with your staff on is looking at some of those whatifs. So before you're issuing debt, what's the impact? What's the payment going to be? How are you going to pay for it? Right? Because all of this is theory in general, right? It's looking at capacity levels and metrics versus peers. It's not looking at the reality of how you budget for it, how you pay for it. We also do have the ability, you know, once it's determined what the affordability impact might be, revisiting some of these key metrics, right? Well, if you did issue this amount of debt or you change fund balance to this, how might it change your rating scorecard outcomes? And that's something that we'll help evaluate. We have models set up to to mimic that and look at those sorts of things. so we can give some real guidance on some of those key decisions before you know so that you're not going into them blindly.

Okay. Thanks.

Thank you.

Anything else?

Thanks, Ty.

Yeah, whenever time. I'm sorry. Informative.

Nice to be with you. Thank you again.

How far off of schedule are we?

A little off schedule. Maybe we can take a shorten [laughter]

a little bit of a shortened break. That was an important topic obviously. So, great questions. Hey, can I just say as we go to break and I probably should have this done this from the be beginning. We have several first time guests. Uh, one is Chris Coltic. I'm our new IT director over here. And we've got Ashley Ladigan who you folks should know, but she's in the role of interim HR director.

And then I was going to I think Christy Buchanan's been at a quarterly and other things. Um, and I was going to let Lisa introduce some faces as well.

Well, we brought several people with us today. So, of course, Matt Pence is here that you all know. Martha Bordona is kind of behind council member Bush over there. She's our newest attorney. And then over behind Jenny, we have our two um fall semester externs, Chase and Lauren. So

it's just as you see faces during the break. Um and maybe we take a seven and a half minute break instead of 15.

Yes, let's do it.

317. [laughter]

We're back from break and turn it over to

Russ this year. Um, we're going to do a council party authorization exercise. Um, I'll walk you through a list a little bit of um, priorities that these are things that we need to bring back to you. Step three have a time component to them. Staff did this earlier today, so I kind of want to share some results and we'll see where um, alignment or gaps exist in this exercise. All right. Um, I'm gonna channel my council member Richards in this because she and I and Bella and uh, Sera, Council Member Wong and Fansel also saw this at the same time, but it resonated with me. There's lots of different um, documentation about how elected officials and staff work together and which place is where on this continuum. U, we were given this at a UNCC school of government uh, class and they used a flight analogy and you know it's like kind of where are we going? Where are we going together? Starting with vision and purpose on one side leads its way to where elected officials um do more work. Staff does a little bit of work all the way down to the runway um to where the day-to-day work is done by uh staff. And to break that down further to some degree today where we're going to spend our effort because this is where we are in this period of time. Uh certainly has talked about the transitions that we are under. Um there's probably a different way of going about this, but we need some party action on some of the uh just some of the items that we're doing that are day-to-day work or just party or planning oversight. So, we'll bring that to you at a different moment in time. And I think this is a good conversation at annual meetings or retreats as we get back to strategic goals, visions, and purpose conversations at retreats. Um

that is not to say that we aren't using our time wisely. And if you look back at this year's retreat, obviously we were going undergoing a lot of transition and our budget was the biggest topic of that moment in time. To give you a few items of kind of things that you can think about this is where different roles and items are. But on the one side is um you know the 50,000 footer vision and purpose is setting community vision establishing values and protecting legacy. And I think it's ironic if you think about that especially protecting legacy where the values of this community are is to have the tools um equipment materials etc that then you can play this out that give the opportunity for Jamie Jimmy and team to have what they need when emergencies occur so that we can do the day-to-day operations or emergency response as you see over there [clears throat] that happens on that end of the spectrum lots of in between having strategic goals obviously our imaginary community plan is one of those adopted in 2017 readopted more recently, but we do master planning and then revenue strategy is something that I think we took up a little bit um you know over the past year and something we'll be talking more about. Kind of where we're at right now with some of the items that we need to talk about as priorities is um we've got moving forward items, act items, annual budget adoption. Uh CIP was mentioned in the finance presentation. Planning and oversight is annual financial audit policy ordinance and resolution adoption. Make sure I'm out of your way. Um, quarterly reports, getting down to projects, day-to-day work, monitoring high level spending, repaving. Um, we've got Walnut Street stabilization, prioritizing community projects and efforts. Already mentioned utility uh emergency response core services and utility billing as just a um minor part of the day-to-day work. And then we put this bar on the bottom. Fiduciary responsibility should span across any of these areas and something that we're talking more about. It's a little bit of a capacity reality check for where we are in time, if you will, um with the amount of work sessions that we have and and time that we have together, but these, you know,

staff and council's uh uh capacity is finite. Um time is mostly committed to non-negotiables. I'll tell you what those things are. And every item that's added to the work plan comes at the cost of something else. So I think it would be um this is kind of teeing up a new muscle memory or exercise such that um the list can grow and eb and flow and we should bring you back what your priorities are u possibly at quarter meeting quarterly meetings and these priorities your priorities for us can change and then it allows us to also think tell you things that are going on in the organization that we believe are a priority for you. [snorts] So scheduling meetings, scheduled meetings remaining for the end of the year. This is just um uh this is necessary to know how much time we have together much like today. How many items can we fit into a meeting and what are we thinking of to get use our time most um strategically and uh and bring you things that are timely to these meetings knowing that when we get into 2027 as you've seen with this year kind of think that uh retreat or annual meeting time through budget adoption most of those meetings are used uh for budget conversations. So, I think you could roughly estimate anywhere from a quarter to a third of your um work sessions are really planned around the budget. And I would not expect that to change for the upcoming year. We did just add three meetings um to this the rest of the calendar year. So, we actually have nine work sessions to use these um to to do some of the work from this instead of the six that we were talking about prior. We have one quarterly meeting left in November. All right. So, we're going to break you up into an exercise. Um we've done this a couple of times of a similar nature at um council staff retreats. This time it just happens to be around some priorities. So let's talk about that. What you've got in front of you and I guess I should look at my copy somewhere. Um actually you do you still have a copy?

All right.

I have a copy. It's probably just under a stack of papers because what I want to

share with you is there's a list on the front that we've referred to as non-negotiables. Thank you, Carrie. Um, so that is pages one and two, I believe, on your handouts. Um, that we are not asking you to prioritize. We're saying they're non-negotiables because specifically there are the 39 recommendations from the various investigations that we have that are taking a lot of um staffs and this team's work time to prioritize and work through those recommendations. And then quite frankly, you all had a meeting last night where you were doing the same thing. So, as you've seen more recently, our a lot of our work session time is now programmed to talking about those things. We believe that they're non-negotiables and don't wish to touch them and um so therefore, we're not asking you to rank them. Um the other thing that are similar that we added to, but uh the temporary data moratorum um not that you couldn't undo it, but we've under a moratorum. Um we've got an 18-month moratorium. Heather and team and I know it's bigger than that is working on that. So over the next probably uh 17 months at this point in time the team will continue to work on that and another non-negotiable is budget creation and priorities of which we've already said you've dedicating up to a third of your meeting time towards that. So non-negotiable items are items obtained to address um uh regardless of council or other priorities driven by legal requirements. Um, I mean, I don't have financial audits, office estate audits and attorney recommendations. I think it's pretty self-explanatory. Happy to answer any questions about those. And as we go through the exercise, if you believe something else is a non-negotiable, I'd expect you tell us through your work. Uh, just a plug for our dashboard. Obviously, the 39 items are on the moving forward dashboard on our website and we'll continue to devote um a lot of our work session time to updating the results of that and uh where we stand with the status of recommendations. All right, so the list today to prioritize is um you have it, this was the evolution of this list. You have um the real list in front of you with all

of these items and we're going to talk about how did we get to this list. They're largely externally driven items. Um there's a picture of if anyone remembers it. This was just some fun topics looking really out in the future, but a lot of folks put you know what should we or might we be working on in the future. So we cap we said that was a vision board. We captured that at the annual meeting and those are uh topics on here. We had staff inputs items for awareness future decisions probably the poster child to that. I think Jamie actually mentioned one earlier, but it was a um utility billing uh project um or possibly even the Holly Springs wastewater study, joint wastewater study. So, we know we have actionable items that have to come to you in a timely uh manner thinking over the next uh four quarters or year. Um so, staff input and then there's a lot of council input in here. You probably see your name next to items. We've um received these through 3x4 meetings and other meetings throughout the year. So, those are on for your consideration. And again, these are items that need to get to council in this fiscal year. Um, in general, we just need to prioritize them. Um, I want to make it clear, these are not all the items that we're working on. Uh, quite frankly, as we've done this exercise today, we we took some off and we talked about adding some more. Um, this is a snapshot in time. This is the best guest of items, if you will, that we have at this moment in time. Uh, so we'll go with that. And as you go through your exercise, if you want to add something, we're giving room for that. So, let me get to your instructions and then the small groups that will split out and do some hopefully fun work. Um, you're going to give given. We're going old school here. I know we did quadratic voting um at the last meeting. Um, we just decided to go back to sticky dots at this point in time and see how that works and we'll keep trying new things. Um uh there uh let me So there you get six dots for most important items to council and then six dots um to not. So think of it as your most important things, your least important things. And earlier when we

tried it, we actually had a middle item, which maybe I'll say Matt or Ashley or somewhere over here said, well, what happens with all the other items that were stuck in the middle? Well, they're just in the middle. So we'll leave in the middle. Um they might be fun topics that we um we'll take it to if there's time we can get to some of those. But to understand where the energy is at the most important t things is great. Uh we had add some rules. So no h half dots. I don't know we had some half dot people in here earlier. Um and then um you can start on page three. We're not asking you to review non-negotiables. Um and there is a write in. If you would like to write in something um we're asking that if you're writing it in it must be important to you. So then put a dot next to it. um you know if there's something that if there's um commentary to the list um we'll take that. I think these are your folks but let me just give some other instructions because we'll collect these at the end Jenny as a reminder these will go into the minutes as you do them.

Yes. So just remember we'll collect these at the end. And we'll also as we come back out of the exercise, we're going to allow you to tell to debrief on what your items were and then we're going to collect all this and give it to Carrie and she's going to summarize it and we'll also then compare that to kind of some results from staff. All right. So, group exercise, these are your teammates, if you will, that'll be happy to answer any questions and uh help you along this way. We are going to break up into an area and um teammates, do you know where your council members are supposed to go and let me ask you if you have any questions as we go into this?

I do.

Yes.

So, do you want us to review or need the council initiated items or do you want us to review everything like topic and

um they're top

sorry the non-negotiables too?

You do not have to do the non-negotiables. You're really starting on page three. And that's a great question. and do everything else past that page. Um so page three and beyond it um we categorize them to some degree

just to maybe help in terms of a cate category but

but then there are things like multi model master planning which is in the budget and it is also we know that we are so far off that we cannot stop the work on that

correct

but you know not everybody might have the same level of understanding I mean I know about this but I might not know about 10 other projects

correct Then what what are we gonna do?

And this is that's why the is hard. Uh multi multimodal may need to come to you anyway. Um because it gets into the timing of that project, but this will help us know well what are other priorities that you believe should also be coming to you. Um it's again it's not an exhaustive list. Uh but we we grappled with those things as well knowing when it could come to you or not. um knowing that there is room to stop anything to be perfectly honest. If it's not a priority to you, we can slow it down. If it is a priority to you, we can speed it up. Um

so let me be clear. So for example, if I say senior center expansion 2026 annual meeting timeline input, I put a green dot here. Let's just assume which means that this is going to be an important item for me and I would like to this to move forward. On the next line, Renaway card art center, I would put red dot. And on the third line, PRCR venues, education on operations, I don't put any dot. Then is that important or is that not important?

It's in the middle.

Okay.

But what you're going to find out is what if it was important to Michelle and then everything will be tallied. So we'll tally the results as a group of y'all. So then you'll know what were the most important things as a council body. Um, you'll also then know whether your individual items made it or not.

That said, we won't know any of those results until you at least try. And this is our first time trying. So, we're going to add um in our TSA line analogy, this might be a little clunky and we'll figure it out as we go. And you might

may wish to revisit this. Um, but at least it's a step to maybe understand what your priorities are. Um, collectively

the worst situation for you is we have uh 7* 6 42 priorities

which will still be less than this whole list. [laughter]

Yes.

If you use your red dots.

Correct. Correct.

So would it be fair to say you're more interested in what we are willing to let go than what we are willing to prioritize? I don't know yet. That that's a good hypothesis.

Okay.

Yes.

And then the other one is if we feel and it goes I guess it's basically taking from SA's question. Um I think is some of these we know have are likely going to happen like the South Hills Municipal District or things that are already funded. We know they're going to happen. We might not want to waste a green dollar.

Exactly.

I'll say that's why anything can be stopped. anything

anything can be stopped and that is the hard thing that I don't want you to assume just because you put it didn't put a dot on it that it would happen but this is a difficult exercise

wake regional water reclamation facility expansion that's

it can be stopped

it's a

nah not going to be stopped

I mean it's [laughter] super important

and stop is stopped is not going to be stopped

it's not going to be stopped is slowed in the commiserate

um realm of what are your then then priorities and here's what we'll say whatever we learn from this exercise today maybe we re revisit at the next meeting like this is going to be a hard I mean it's a hard it was hard for staff earlier um you'll see and we did it with three times your group um so it's actually inherently harder and you'll also see where you have alignment on dots and where you have one item on dots and where you have red dots negating green dots to some degree this will also be a exercise to you learning about

yourselves.

For example, election science. Come on, Ross. We cannot uh say that that's not that's important or it's not important. It's something we have to do.

So, election science is about doing it differently, not doing what you have to do.

What are we doing different about it?

And we haven't discussed it yet.

We have to vote on whether or not to talk about it.

Okay.

This is where your rumors and your

You want to know or you don't,

folks? Get to help get to help you out. Yes.

Is it a one dot per line?

Yes.

Limit?

No half. No half.

No half dots.

I think I think Michelle is asking though if like in our quadratic voting, could you put two dots on the same line and try to boost?

I I get I don't want to get If you do, you do put all five on. That's why I asked the question. [laughter]

That's why I asked the question.

Yes. I I we will allow it. But

if you end up doing that is to cancel the activity, you're getting very close.

Can we discuss before

Let's give you some spaces where [laughter] you're staying.

Do we go somewhere?

Yes, we're going to let you go somewhere. Belly, you're staying. Britney. Britney.

And we're back.

All right. How'd that go?

This is just a Everybody get through it.

I'm very anxious.

It was very um a lot of discussion as I was walking around and listening. Can't wait to see what your results are. All right. Which brings

just about how we feel right now.

Sure. for this period of time

until until the next period of time where you talk about this again

and it it's all about to me was about scheduling

which I would say

and that schedule window the red dots mean eh not necessarily doesn't mean I want that away

but there's a Heather stand Heather do you mind since you're looking at it

um we would we would and this is a slide later I'm going to ask you a question first but help us populate our work plan to get our your priorities back to you in the remainder of this fiscal year.

Yeah. So, so when this is public record and people see a red dot on something that a colleague of mine had, I don't want them coming after me and

why don't you like their project? That's not what it was about at all.

Fitting it in a schedule.

No, on all mine.

All yours. Yeah. [laughter]

All right. Which leads us to how you want to finish the day. Um, we are behind. Um,

no, [laughter]

you you asked great questions earlier and yes, not Jaime's fault, but we had an emergency that warranted um additional discussion about that project and you asked great questions about that as well. Um, didn't know how long this would take. We programmed time um because I think it's just something to work into how we do quarterly meetings in the future and talk about your priorities at quarterly meetings. Um so you have if you look at the agenda uh we can either finish uh do the legislative uh update which is fairly quick by Lisa and then come back to and debrief on the work uh priorities and Carrie's working to tally your results and we'll and share those with you and give you your papers back so that you can share your thoughts as well and end the day there or we can go straight to real estate and finish the day on real estate.

Option one.

Okay. And just does everybody because if we don't do real estate today, what we'll do is push it to um next Tuesday's work session and make that our topic along with um uh a dashboard update and any any updates that you have that I think the committee wanted to do uh from last night if that's fair and that'll likely be our two items. So option one, everybody good? All right. So if it's option one, we're going to mic Lisa up and do a legislative update. And sorry I didn't get you miked up. and then we'll come back to your results to finish the day.

Thank you.

I do want to share my perspective on the red dots.

Okay.

I use probably half of my red dots on things I think we've talked about enough

and

I thought about that too

that we I feel as though we've discussed it. we everybody understands and if we were brought for example a sample ordinance to approve I feel like we have what we need to just move forward

that's that's sort of where I prioritize the red

and then I asked the questions about what if it's not red or green what does that mean it's in the middle

it's in the middle

that's why I didn't waste red dots on that like okay if it's stuck in the middle

I choose

let's talk about that as you um debrief in just a few minutes cuz I

we were killing time.

I think [laughter] cave this will be a great discussion.

All right. And this is the uplifting part of the day where I give you all the great news about what the legislature did this [laughter] past session.

Okay,

that was a joke.

That was the media. All right.

Sorry to not be clear. Okay. Um, three key takeaways about this past legislative session. Local authority continues to be restricted um and not just restricted but often supplanted u in land use and other spheres. Local government litigation exposure has been increased by recent legislation. Um and in the coming months um and again this

was not on your prioritization list because we're going to just have to do it. It's a non-negotiable really. Um ordinance amendments to implement the changes that are coming out of this legislative session. Um, a few quick hits. So, I'll just boom boom boom through a few things and then I'll spend at the end a little more time on a couple of land use items for everybody. Uh, so some finance and budget quick hits. You've all heard about the property tax um language that will be on your ballot on November the 3. It's a constitutional amendment that would direct the general assembly to limit the amount by which property taxes can increase. Now, the general assembly, if that passes, would have to come back into session and enact some kind of legislation, and they would have to decide um how to, you know, what would that be? Would it be a percentage limit? Would it be a, you know, you can't go more than.5 cents? You know, whatever it would be. Um, so, um, we'll have to wait and see what happens with that. But, fun fact, the general assembly right now could pass legislation to limit the amount by which property taxes can increase from local governments. They don't need a constitutional amendment to do this

political cover.

Yes. Um so that Yep. fun fact. [laughter] Um on the procurement side of things, again, like I said, I'm going to try to go fast. On the procurement side of things, the legislature eliminated the hub office, which is the historically underutilized business office. that was a state government office and also eliminated uh the requirement for minority or womenowned participation goals in building construction procurement. Um they have switched that to an increased emphasis on what they call small business enterprises. And so they are kind of beefing up a small business enterprise office and eliminating the historically underutilized business office. Um, on the economic development side of things, any economic development dispersement over $25,000 must be reported to the state auditor. Um, and

is that incentives? Is that what you mean [clears throat] by that?

It is incentives for sure, but it could be other things. The extent of what it means is not entirely clear. We are working through that. And we will get guidance from the state auditor's office at least on how to report. That hasn't come out yet. And then the auditor is required to forward those reports to the local government commission [cough] and then also to the joint legislative commission on governmental operations which you've also probably heard called gov ops the legislative committee. So more reporting requirements and paperwork for staff to have to do. Um again kind of a grabag here. Uh, in positive news, the general assembly funded at a state level a bonus for every sworn local law enforcement officer that was employed by local agencies on June 30th, 2026. This money has not been paid yet. [laughter] Um, but it is funded at the state level. It will flow through our HR folks whenever they get their act together at the state level. Um, and go to again just sworn officers who were employed as of June 30th. Um on ebikes, another kind of positive change. Um the definition of ebike has changed. If you remember from some of our past work sessions, they had kind of a weird definition of ebike and is it a moped and all those things. They've kind of now come around and they're using the class 123 um designation that you all are more familiar with and that most people are more familiar with. and they explicitly give local governments the authority to regulate the class of ebikes and the speed of ebikes on our greenways multi-use path sidewalks. Um, and as you know, we have an ordinance amendment um that's been in the works and so we will incorporate this new change as we bring that forward over to Jaime's side of the house. Um, two things. Um, as you know, we have some customers on the Kerry water system who are not car in car's corporate limits. So, they get charged a different utility water and sewer rate than others. Um, for our next budget that we

adopt, if the outside utility rate exceeds the inside the corporate limit rate by 25%, then a public hearing has to be held on that item. And so we expect that we may be having a public hearing on that at some point in the budget cycle. Um on the positive side, water and sewer contracts now, um most formal construction contract, so anything that's not just a small project, you have to have three bids before you can award a contract just for water and sewer contracts. They lowered that to two bids. And I kind of asked Jamie if he could speculate as to why that happened this year. Yeah, we had learned through some of our professional associations that um that came up through Holly Springs and their representatives in the legislature because they were letting some big projects during the time where it was hard to get construction contractors on board. And so reducing it from three bids to two bids helped out. And so I think that's something that came up through Holly Springs. And that can definitely be helpful when you're dealing with a more specialized utility contract as we handle quite a number of those ourselves. That is a timelmited provision. So, they put a sunset date on it for let it be in place for a couple of years and then I guess we'll see how it plays out. Um, all right. A little break before we get into land use. Who can tell me and not staff because we've already had this quiz. There are two things in this picture I need you to identify. What What are they?

Moravian cookies.

Yes.

And what's the big silver thing?

It's called a Moravian star. Oh my goodness.

And so maybe you didn't know this, but in this year's budget bill, the legislature adopted an official North Carolina star.

Oh my gosh.

And an official North Carolina cookie.

And I do have some official cookies here, which I will go out in the cookie break room um after I talk. Um so that kind of stuff was also in the budget. You can see why the budget was over 600 pages.

Um all right, now we'll move to land use. Um, and really most of this is all

not good news for local government. This is where most of the restrictions and things are coming in. We'll go through a few of them quickly and then spend a few more minutes on some bigger things. Um, I think you've all heard about the parking legislation. This one goes into effect January 1st. So, as of January 1st, can no longer require any kind of minimum number of parking spaces for residential, commercial, any kind of development. U, we will need to do an ordinance amendment to recognize that. um accessory dwellings. Um you know, as you know, we adopted an ADU ordinance a year or so ago, and ours largely meets the requirements of what is now in place. Um we are going to have to tweak it because we did require minimum amount of parking, and we're going to have to take that out. We also need to take a close look at um the size limitations we put in and make sure it matches up with what the legislature did. So, we'll be looking at that. Um, as for building design, our community appearance manual, and Heather confirmed all this for me. If I get it wrong, correct me. Um, on the ground floor of commercial buildings, we currently require 50% transparency for retail uses and restaurants. Transparency is essentially, I think of it, Windows. Thank you. [laughter] It's more complicated than that, but think of it as Windows. Um, so we are now can no longer require 50% for retail and restaurant. We can only require 35% of the front be windows. Um, for things that are not retail and restaurant. So if you have like a ground floor medical office facility or something like that. Um, we require that to be at least 35% transparency. The legislature has now limited that to 20%. So again, we'll have to update the community appearance manual to match that. Interestingly, the legislature specified that no one can offer as a voluntary zoning condition to put in more transparency. Now, they can turn in a development plan that has 100% transparency, I guess, if it would meet the building code. Um, but they can't it can't be a zoning condition.

Interesting.

Yes.

Why does it save the money or something or

the why the limit on transparency? Yes.

Punish the window lobby.

It kind of forces I mean reszoning goes with the land. So they could probably resone it and sell or leave and somebody else has to.

But why are they doing this at all? Why why do they care? That's a good question. Trying to think logically. [laughter]

Is it cheap? It's cheaper.

It would be cheaper to not put in as many windows.

Put in windows.

So expensive.

All right, a few more fun ones. Um vesting and permit choice. So this is how long u and what regulations someone's project are judged by. Um, now when you submit a resoning application, it appears that that essentially locks in the LDO for your project, even if you don't build it for years, but the LDO on the date of your submitting your resoning application may be the LDO that you get to build under five years from now. It's unclear what they're trying to do with that one. Um, there's a a category of things called sight specific vesting plans. You all haven't seen very many of those, although there is one coming. Jason Baron has one. Um, and so currently or before the statute said someone could lock in the LDO for that sight specific vesting plan for a two-year period. Now that minimum is five years. Um, and storm water permits also now vest at time of application. So again, trying to trying to lock in local government regulations as early in the development process as possible for developers so that when our regulations change in the future, they don't apply to anything that's already kind of come in the door. And when we're talking about development regulations, we're talking about the building itself or are we talking

not building code, right? But we're talking about our setback height, storm water. Yes. Okay.

Building code. Although they made a lot I didn't even put this in here. There were a lot of changes made to building code.

Uh things including changing who regulates building code. They moved it out of one agency into another. And then they put in a lot of requirements of

different things where they've said we're overriding the building code on this, this, and this. Um, we can get more into that if anyone has questions. I didn't put any of that in here for today because it's very weedy.

Is that like the single stair requirement for D triplexes? Is that

Yes. Did that one pass, Chief Cooper?

Yes.

Okay. Okay.

So, examples, things like that where they pick a particular thing out of the building code and say, "Ah, we want it to be different." So we are the legislature going to change the building code on that point. So there was some of that this time too. Um storm water they um are changing it seems like every year they decide either gravel is pvious or it's impervious one year and it's pvious the next and they're constantly changing. Um this year they talked about existing builtupon area. Um Dana thinks our regulations already match this but we're just going to have to take a look to make sure. So a lot of these things too, just thinking about the staff time that it takes to figure out does our regulation comply or not? Do we need to change it? What do we need to do differently? We are just starting those conversations. And a lot of these laws came into effect immediately upon signing, meaning we don't have any lead time to actually implement. They were effective immediately as we'll talk about with some of these at the end. Um, in the in [clears throat] the Lawyer Employment Act of 2026, as Matt and I are referring to it, um, they have made it a lot easier to sue local governments. They've increased the time frame in which people have to file lawsuits against local governments. And they have increased the um, people who can sue and broadened out what we call standing, which is who can sue you over something to um, trade organizations as an example. um so that that may have members who may be impacted by a regulation that is passed by a local government. They've also increased the uh types of cases for which fee awards can be issued against the local government.

Lawyer Employment Act. I just got that. [laughter] Sorry.

All right. Now, the deeper dive into

some more fun things. Um no impact homebased businesses was the title of this legislation. Um, in our LDO, we go through a list of type one and type two homebased businesses and these kind need a permit and these kind have different requirements and we're going to have to redo that whole thing. Um, because they have essentially said in homebased businesses which in their view have no impact. Um, cities cannot prohibit them and also cannot require folks to get a permit. So, this is going to really change the way we do um home occupation things. Um, this is Stacy's house. So, when Stacy retires to become a pet sitter or, you know, something else, um really we're gonna have a lot less authority to even look at what people are doing, homebased businesses in inside their home, and the effect that that could have on neighbors. They're trying to say these really don't affect neighbors, but we have some requirements in place today that are much stronger than this. So, it effectively will have an impact on neighbors greater than what is there today.

So, does HOA can u regulate?

Yes, HOA can still regulate. Yes. Um the development fee transparency provisions. Again, this is one that was effective immediately um and that we are trying to catch up to. Um we have to post our fee schedule online. We already do. It's part of the budget. This is um a little snippet from the budget. Um but what's new is um we have to give a fee estimate to everyone who turns in an application for development within 10 business days of their completed application. um if they change their plan through the review process, we have to give them an updated estimate. And whatever the estimate was, the last estimate was that we gave them before they finished the process, that's the fee they pay. We can't charge them anything higher. So, we really need to nail that estimate when we do it, and we have to do it within 10 business days. Um, as I understand it from Scott and Heather and Cassie, um, right now not everyone even

asks or wants a fee estimate, but we are going to have to give everybody one kind of whether they want it or not at this point. So again, think about increased staff time and all that. Um, we also have to do an annual report on our fees and collections and send it to the local government commission. Now, this is in addition to we already have to report on our inspection and permits like building fees. There's already a reporting requirement for that. This is a separate and different reporting requirement. And we are going to have to bring you some fee schedule amendments um in the coming weeks because you also have to talk in your fee schedule about how you came up with the fees. And so we're adding that language in. And finally, uh residential byite. Again, this is effective already today. Uh you've probably heard a little bit about it. This completely overrides existing zoning um to allow by detached dwellings, town homes and multifamily um and mixed use with residential and other uses um up to 60 ft in height um potentially higher on any redevelopment parcel that is commercial, business or light industrial zoning that's being redeveloped. So think about some of our office parks that have perhaps empty or underused office buildings. You might think of one in particular that's already in for resoning. um that project no longer needs a reasonzoning to move forward.

So we won't have a decision in this process any longer.

You will not unless they choose to come to you for some reason.

But otherwise in a redevelopment site, no, you won't hear it. So, so if we were talking about a particular office park that had a reasonzoning,

they don't and they decide they want to turn an office building into

um an apartment building.

Well, they already don't have to look at parking because of the previous one.

Right.

They get residential by Right. Do they have to do [clears throat] transportation, you know, studies or anything like that?

No.

So, they don't have to do anything. So,

so anyone who lives by a defunct

um office park.

Yeah. Good luck.

In the cities of Charlotte, Raleigh, and Kerry only. That legislation only applies to those three cities.

Wait, really?

It's only in Say it again.

Charlotte, Raleigh, and Kerry. The way they phrase the legislation is the only cities that it applies to. [laughter]

Sorry. Well, yeah. Unfortunately, it still applies to Carrie, but just Charlotte, Raleigh, and Carrie.

Is this by uh population, size of the Yeah, it it was it's a weird it is

bigger.

Well, it's weird because they did it by county and city population. So, you have to be a county of a certain size and a city of a certain size within that county. So, the only two counties that triggered it were Meckllinburgg and Wake and the only cities that were large enough Charlotte Raleigh car

had all Democratic council.

So, and council member Bush you may

just to make sure it's reiterated enough you may even want to restate what you said

where this could happen. So for in well let me use an old one. Uh Weston.

Yes.

If Weston came today,

we would not have had the entire long conversation and zoning and requirements and you know all the conditions they put for the neighbors. They could have just come in and put whatever they wanted with respect to a multifamily.

Can they change the footprint though?

Absolutely. Yes. Yeah. And in fact, let me say to you, I hate to keep giving you worse and worse news.

Um, but the one that was just reszoned, they could come in tomorrow.

Oh my god.

And ignore that zoning.

Oh, yeah.

And ignore their zoning conditions.

Yes.

And build according to the zoning. Can you tell me um c can they build anywhere up to 60 feet? Like five that's five or six stories depending on how tall the ceilings are. that any com currently commercial property they can build a five or six story

apartment building

apartments condos whatever it is

town houses anywhere

it it has to be a redevelopment site so something that's already developed with uh in a commercial business or light industrial zone um so so it can't be a green field of course Carrie doesn't have a lot of that left.

Um, but redevelopment sites as defined in the statute.

You pick good one. Office parks,

office parks is the easiest. So, as an example, since we've already had it, we have a regency reasonzoning that's come to us. [clears throat]

Um, that was talked about at the utterly

drive community meeting. I think Spectrum was

Yes.

that one that will not likely not come back to us because they can do everything they want by right.

Yes. It does not have to come back to you under this legislation most likely. Now, we have to look at each individual one as it comes through and make sure it fits the requirements of the statute, but broadly,

would you like some information? Possibly, maybe we could get you a report or something on what's in system. Yes.

That could be affected by so that we can at least get you some information on what's

in asking for Well, you would might want to ask us for that.

Yeah.

When you have commercial and light industrial though, I'm sorry.

No, go ahead. Are you talking about I if I have a gas station, I can now build a five-story apartment building on that lot.

I was thinking more like think like grocery stores, you know, think we have a lot [clears throat] of not a lot. Think of the areas in town that are zone general commercial like I think that's red on our map, general commercial. Um like the food line shopping center, you know, down Kilder Farm.

Think of, you know, areas like that would fit. So there's a lot of areas where it could potentially. So, it's not really just some place where there's business use. It's specific types of commercial zoning.

No, it's any kind of commercial zoning.

I was just giving that as another example.

Yeah. Okay.

Wow. Can we also get an update then on what Weston what Kane's plan is for

Weston so that we can let the um I mean are they planning on just building whatever they want now and not coming back or are they going to

I have not heard that so I don't want to to put that out there I'm just as a worst case

scenario

that's what I don't want to say I'm into the micro

what are the other developments we have

yeah that's what would be helpful to know got [laughter] as we talk about prioritizing staff time, we'll just uh heap on some more. But, you know, if we if we did have some kind of report, I think what would be helpful to know is how many other Westons are there, right, that were already approved resonings that this would apply to retroactively. And then how many are in the pipeline that we did not yet see like Regency, but this would apply to. And then I mean we could all go on to our development our zoning map and look up these zones. Um so I mean we we could do that on our own, but if we're compiling this information, I think that would be helpful too to know then how many parcels in Kerry this could apply to in the future. And we need to get that information to residents ahead of them being shocked and awed

and possibly who they should be talking to,

right,

to make changes.

Is not XYZ.

There's a lot of them. I mean, there was a gas station taken down on Maynard, right?

That's what I was thinking. There's a lot of them that were

that were getting ready for redevelopment of some kind and maybe a resoning that

could just now come in by right and build.

Do we have any regulation of like the number of units?

Unclear.

Okay.

Um we don't currently have regulations because they sprung this on us in a last minute regulatory reform bill which no one had any chance to look at the provisions and give any input into. Um,

and so, um, and we as staff are beginning to meet to try to figure out how to incorporate this into the LDO, but as you've seen all the list of priorities and the 39 non-negotiables, we are doing our best to fit it into the work plan as quickly as we can, but it's taking time.

So, I don't want to dig too far in the weeds, but I do. Um, let's say you had 80 feet. Can I make the first 60 residential and leave the top two floors for something? Uh so what the what they're saying here is we could choose to limit their height at 60 ft to whatever they build. Uh they could build

an existing building that's 80 ft

or 75 ft.

They could take the first 60 and do and make it residential

and then they don't have to care about the

if the building code would allow it.

If the building code would allow it's probably it's probably cheaper and they're probably just it's tear downs.

Yeah. Okay.

It's going to be tearowns. What if they go down go down to the ground?

They could go below ground if they wanted to spend that money [laughter]

and it would just be 60 ft in height from ground level that we could we could cap it at

and they wouldn't require any parking.

No, no parking.

I just thought I

No, the mark the market will

the market will drive them and financing will drive them to actually have parking.

I agree. U they most likely can't get financing for a project if they provide zero parking.

That's a good point.

Um but we won't be able to control the amount of parking

and the law that we can't downzone without the parcel owner's approval applies to commercial and residential. Correct.

Yes. And that yes that the legislature made no movement on changing that law this session.

So Lisa, do you know when did this bill pass and how long had this bill been discussed?

Um it was not discussed.

Oh. Um it was passed um at the end of the session and the um Governor Stein signed it on August 11th I believe.

Wow.

Anybody want a cookie? [laughter]

Is that why you brought the cookies?

Is that the only good news?

That's why you brought the cookies.

That's why I brought the cookies. And also I should remind everyone that um Lisa is doing um this task for legislative agenda. Not that you don't like it in general and we're a partner to former assistant manager but um it's in addition to Lisa's duties that um she's already doing to do legislative updates for you right now. So just

thank you. And that's one of my concerns. Do you have the bandwidth to do all this?

Well, it's not just me, but it's you know in terms of the staff that are going to have to implement all these changes. It's a lot of Heather's primarily Heather's staff

um that we're going to have to work with to try to implement all these changes and it's uh it's a lot.

How about keeping up with all the changes? You have the bandwidth to do that.

Yes, because I really like that. So, that's the part of my job I really like. So, I I like to keep up with that kind of thing, but the keeping up with it is the easy part. The implementing it is what takes a lot of time.

Okay.

Yeah.

Just going back for the transportation. So, there's no transportation. I I just I'm thinking about the [clears throat] fact that a grocery store or

the only thing would be um if they need a new driveway permit from either us or NC DOT, but that would mean they're putting in a new driveway cut. If they're not putting in a new driveway cut, then they probably don't even need a new permit. I don't know. It depends on DOT's rules about what needs what would need a driveway permit. If they're really increasing a use, DOT might require them to do a little bit of work to get a driveway permit on a DOT street. That would be the only thing I can think of that would require any transportation work.

I am thinking we are going to mold this over and have a lot of questions and hypotheticals. Uh

and we'll when we do a staff report to bring forth the ordinance amendments that we think we need to do, we can incorporate a lot of this whatifs, the data you've asked about, we can incorporate that into the staff report

as we try to gauge what the impact might be. Yeah, Heather, I'm thinking we could probably use this as a standalone agenda item to really understand all of the implications because I'm thinking too now understanding this, you know, are there any opportunities to in addition [clears throat] to changing our LDO to match the law, are there ways we want to proactively change our LDO? understanding that the way Kerry develops now looks different. You know, we have transitions. Do we want to reexamine our transitions knowing we're not going to have the opportunity to condition them at a resoning? Um, so planting the seed that I think council would appreciate

some dedicated time to talk about this,

put it on the list, rep. [laughter]

Yeah. And I would say we discussing this, you know, bringing it to us and discussing it in a work session is excellent, but as soon as we can, getting this on a regular council meeting agenda is going to be important for media coverage and for general understanding with residents because they're they're going to be so surprised by this

as the projects come in. And if we don't the the truth is they pay attention to our council meetings and for whatever reason not as much attention to our work sessions and I don't think the media is paying as much attention to the work sessions as well. So the more we talk about this in regular council meetings, the more socialization.

And Carissa, one of the things to keep in mind is it's only going to be happening like it's not going to be happening really with our neighbors,

right? Other than Raleigh

Raleigh, right, and Charlotte. And so when residents hear about this, [clears throat]

first of all, if it gets any coverage, but secondly, when they hear about it, it's not going to make sense to them because it's something that's so isolated.

Right. Very good point.

Yeah. I think I really like what um Council Member Johnson

Cararissa

Cararissa [laughter] I'll I'll use my veto power there. Carissa said um that we may want to be ahead on this one because I know that a lot of residents get really really you know I I don't think angry is the right word. may be disappointed that you know the council I think cannot work

especially Bella in Regency

the that the council cannot enforce and negotiate something with the builder reducing the number of stories you know density and whatnot but it looks like in this case the council might not even have that power anymore

so it's better to get ahead and start rolling that news

good or bad I don't know

yeah especially share with them the power we have and um

power that we don't have.

Yeah. Power

especially we don't have and especially the residents uh in regency they complain to the local government but local government could hear [clears throat] them anytime but if they go higher

um like say the the state or federal level it's hard to hear their voices even they are still upset with that. let them know there's an election this year for

but I think this might impact um

Michelle and Bella's district more or maybe yours too a little bit

already thinking of at least

and South Hale

I know I was worried about that one

everything on West

and I would say the the bill that passed

I'm some Weston

the the bill that passed had bipartisan support so it wasn't just you know it wasn't just one side of the aisle or the other there were folks on all sides that voted for the bill. Um because part as with the budget bill that was 600 pages, the regulatory reform bill was

50 or something. It had a lot of different things in it. So, you know, that had nothing to do with each other. So, um

maybe somebody voted for the cookie

that somebody voted for the cookie. Exactly. If it sounds like if I gave you

all on the fly as we transition into the party exercise, if you all got one extra dot

possibly this would be what you land your

and we could add it to our not that we won't add it but just

there was a

there's a lot of agreement on this issue it would seem like to getting something back in front of you or

um communicating about it

when you bring it back. I'd also be really interested in what sort of infrastructure change requirements there are. Does it does an office building require more water, sewer, road improvement? Um, obviously school capacity was is going to be different, but you know, traffic, storm water, all of those things I think are can be quite different depending on the use of

which I think I mean I'll let get her to say it. They still have to do a development plan.

Yes.

Okay.

Technically.

Okay. they won't have to do off-site improvements that you would get as part of a reasonzoning process.

So, if a development plan there's not water or sewer capacity or whatever, what did they do?

Well, there's already lines to location. So, I I would doubt there isn't water capacity.

It doesn't change their application to the LEO application to their site. So they still do have to go through a development plan process and we will evaluate how they're meeting the the requirements of our land development ordinance. So that that still applies.

So let me ask a crazy question. Back in the day, didn't council used to approve development plans

maybe a lot maybe before any of our time

some of them in certain.

No, I'm just say I'm just going out the audience.

I I'll say it's it's unclear the extent of the legis legislation. Um, as you know, our board of adjustment does approve some development plans today that are of a certain size. Um, we have to work through how and to what extent that applies to this specific category that they've created. It's unclear at this time.

Uh, properties up to 60. [laughter]

Yes. So, more information.

It's unclear if we can do that. I I really think this also has a big impact on Wake County Public Schools because

we give them land use planning and our vision plan that shows

that shows where different types of development so that they can plan how many schools they need in certain areas. Now

they don't know, you know, commercial they could at least say, well, there's not going to be any kids here and now they're going to be like, oh, well, there could be a lot of kids.

What if you could put an elementary school at Airport Boulevard, it'll be awesome. Yeah, [laughter] exactly.

I mean, it is

mayhem.

It it is going to be quite a difference and it makes it really difficult for them to plan

because now they have to think that a commercial property

could be residential and it could either be single, it could be multifamily at some huge amount or it could [snorts] be town homes. They won't be able to figure out the number of kids.

The kids need to go to Apex or Hollis Spring to

Wake County Public School System. They could because the school system will just um

red distribute

but even though it's I guess my point is even though it's only hitting Kerry and Raleigh,

it's hitting the entire Wake County school district.

It could

potentially

it could.

I wonder if they know.

I don't know.

Not sure.

Know how our delegation voted.

Um who would have thought that the legislative agenda would have been one of the more robust topics of the day? I know it was kind of okay until you last one.

Hand out those Moravian cookies. [laughter] Come on.

All right. Do you want to do your result? Obviously, it's late in the day. We allocated 15 minutes. I'm going to share your results. I think you got passed back out what you put. So, we'll just weave that into some of the conversation as I share the totality of results and we'll see if they're surprising or not. Um, you actually I have it in my hand so it's paired more interestingly than I would have thought. All right. So, the results the um y'all are going to switch. There we go. And

y'all can scroll. Let me make sure I'm out of the way. And you'll just see kind of generally where dots landed. There are totals. And the um you all had three on three items where the um largest. Ignore the red for right now. Right. Yes. There's also a red tally. We can ignore that for right now. Somewhere we're going to get to the twos and threes.

They were there.

Obviously, this makes sense.

There's a three. Stormwater utility fee. That's great news because we have some information to share and a lot of work to implement. There's another three. Senior center expansion, which is interesting because I don't know that you've ever collectively talked about it, but it was something that someone put on the um chart from the

Wow. Three. Okay.

And multimodal master planning, which is probably a little different. I mean, not not that you're not doing it, but to see what your ideas would be around what it is or isn't with regards to um um mixed use development

historic preservation master plan update.

Yep. So, I have so just um maybe you Yes, we finished scrolling through all of them. public safety. Apparently, you're all Well, let's see what you all say, but there's some sort of unity [clears throat]

about painting Car's logo on a tank.

Not necessary. It's not that not a priority.

It just means it's not a priority. Exactly. and unity on for not right now probably to use that language of uh meeting with other jurisdictions currently.

Who added that last one

where

which one? [laughter]

I have a guess.

Huh?

But you only use [laughter]

You can talk amongst yourselves as to who you think added that last one.

Russ who's doing our scrolling for us. Our IT team back there. Yep. Tech team,

I'm curious if we could scroll again. I think there was at least one category that had some red and some green.

Oh, yes. Let's see.

Few. Okay. Wait, we just passed one.

Oh, lighting standards.

I I'll spoiler alert. I'm the one in green. [laughter]

I just ran out of dots.

Understood.

Uh community center. So that there you know the ruron land

mine is green new community gets center

downtown park budget

downtown park

for me I thought some just from discussion of how each of us did this exercise for instance I thought that the multimotal transportation might then fall into some of the other transportation items would come from that. Yeah.

So I tried to think of a couple things. one what need is needed now before some of the others

right which ones will probably get done anyway on their own and which ones weren't that important to do right away from a not to do but to discuss kind of your question is do we need to talk about that again like I don't think we need to talk about the ruran park land again I you know I put that as a red

well and I put like I put a red on ebike or ordinance amendment If if I I was telling my group if the chief came to us with a proposed ornament or um or ordinance that wasn't bananas, I'd say cool and we could just approve it and go about I feel like we've we've talked about that plenty the smoking ordinance.

We just go ahead and change it.

I think the way um

I just want to share what Russ shared with me.

Let's see what I said. Uhoh.

That changed my perspective a little bit. Um what he said was that if you put red here that work could potentially stop.

Yes.

Yes. Red is not a priority right now.

Mhm.

Yeah. So that stops and that you know so I understand where you're coming from because I did the same thing. I do not know where to put the reds but um uh that so that's the least priorities. just not bring it before the council next year, next uh

would not you're probably getting to the gray area where you're almost saying the same thing. But yes, not a priority right now. Doesn't mean we won't revisit these and they could resurface as parties in the future or as we heard with um state law changes. You have things that trump other parties during the year. Um and this is at least let me ground it in a start of having party discussions with you as the first time we've done it. let's leave some room that it's imperfect and we can hone in on a system as we go. and uh as several conversations of uh you led including CIA um the mayor said this and I know many of you have um especially if you've been on council for a while is getting back to um I'm not in it anymore but it would be getting to the um strategic goals conversation earlier in the year and then seeing where we land your priorities in those goals throughout the year possibly budget year or possibly thinking longer term. Um, I think that's where we want to get with having more robust conversations at least once a year. And, uh, I think Sria, you mentioned the pillars conversation that we had to kind of guide our budget process. The budget process is a way to implement your goals in a year's time, not necessarily a strategic visioning or strategic goals um, strategy session.

Yeah. It was also somewhat difficult to

weigh some of the different priorities with each other. For instance, the storm water utility is going to be a massive effort. The master

Yes.

planning and transportation is a master effort. Compare that to the fact that the I'll just pick one. The smoke-free ordinance is already on our agenda.

Correct. Correct.

924. I mean there one is a vote and a quick discussion. The other one's months and months of months of work.

Right. All while to some degree if you took this you're really giving us your um 42nd through whatever number parties cuz we're working on 39 um items to begin with that we would say are most important items right now plus the budget plus moratorum probably plus some other things again start to a conversation not the ending of one

um any I mean any other you know you've got the stuff in front of you any other observations oh and let me

show you what staffs were as a top six results. Um, public safety utility billing project. Let's see if that was Did you have that on yours?

Not these are not analogous to what was on our list. [laughter] I'm not sure I understand.

Um, these these are the same. Uh, I think we condensed the topic. Public safety was an item, utility billing project, class and pay.

These were the same. We did the same exercise earlier. It might be some shorthand to it.

Oh,

multimotal planning, debt planning, um, showing up on both charts.

But that's another example of the fact that you guys picked the great big, you know, extra extra large t-shirt items, right, that are all planning that are

Yes. studies and big picture ones and it makes perfect sense

why you did that. what we did um different from y'all public safety I

will add we split public safety into two c categories after we did it because it was unclear I think it was one of the top vote getters um but it's operations and then capital projects and the two aren't necessarily in the same um you all put votes on both of those so

so can we get copy of these results

um in to yes and it will also be in the minutes but we can share

before the minutes

I want to blog Yeah,

we're going to have all the exhibits up today and I'll need to collect these back.

Oh,

but in in case there's anything because this is the last let's see we aren't taking a break. This was your discussion. It gave you the results and our next steps are to you know finalize this as a party for the for the fiscal year work this this year's work and then building institutional capacity for more work at at the annual meeting specifically around this type of conversation or build this into our muscle memory of conversations in general so that we can ensure we're all working on the most important thing organizationally.

Use the doctor I move my

Jenny's Jenny's collecting a cheater.

And with that

already been tallied. [laughter]

You should have ordered for your

dot move my dots

was where we will end. [laughter]

Did you buy dots from somebody?

No, but I wanted to

I heard them for sale [laughter]

for the day knowing that we did not get to the real estate topics. Our plan would be is to move that to the work session next week. Um and let that be a topic there for those that may have expected today. They can see it at the next meeting. Uh Matt and team will mainly Matt will be giving Suzanne's here. But

can I chime in on that? Yes.

Ahead of that. Sometimes these discussions I feel would be more fruitful if we had the materials ahead of the discussion.

I agree 100%. And I'm not saying necessarily this is one of those topics. But if there would be some value in us having the material

ahead of time.

Yeah.

As opposed to it being not good. There's also I'm sure topics where it would not be good for us to have the material and make assumptions. But the the real estate one in particular, I know I'm going into that.

We can get you before Tuesday. I don't think we had uh I don't know if you had it prepared or printed for real estate or not. We can push it to you is what I'm saying. Yeah.

The slides is what I think you're saying

because especially real estate. I want to go and like read about the

the property and map and all

except the first couple of slides because it's spoiler alert for his trivia he's going to do.

Oh yeah.

Yes. Maybe we'll take those out.

And Russ just to the setup for this discussion was more to have you all talk. So there is not a lot of detailed information. Correct. Okay.

Smart just like here's a piece of land. And here's some information about the land. Here's how you could sell land.

It's really to get your thoughts if you want.

Okay. Thank you.

Y

um

you can just give me

All right. Unless y'all have anything else you would like to discuss, I'd like to give some thank yous and get us out of here on time if that's okay.

But if y'all have any burning questions or thoughts, take five minutes and ask them. But just what I'm going to do, what you're going to do is thank everyone for doing this. I know it's for those that are watching. This isn't something trivial. It takes a lot of staff time and effort to put this together and it's very valuable for us uh to make these decisions and it helps us move forward. So

anyway, thank you Russ and the team

in this room and and others.

Yes. And kudos back to y'all for taking the time out to do this. I know it's hard to get everyone together, especially for an entire half a day. Um, and it kind of goes the same with staff. So, thanks all for all the staff of being here. Um, some special thanks, I guess, to our tech team. And you see what goes to put this on, but uh, Kayn, Jeremy, Brandon, Sean, and Jack. Thank you [applause] very much.

Good to see everybody. The clerk's office team obviously, um, Jenny and Sarah um, do a lot of work in preparations for this. Um, you know, my team and the manager's office is obviously Dana, Scott, Stacy, Susan, and Carrie. Um, with the consultants who it looks like have already left, but it's good good for y'all to see um Davenport and the Davenport team, which we mostly catch up with them quarterly, maybe a little bit more for Kim and team, but um virtually a lot of times and they have a lot of good information. Anyone watching online, thank you for watching online. It's great that everyone can see this now and go back to the record of what was talked about. Um, all the presenters, thank you. I know, yes, it does take some time. We typically form groups and there's a lot of work, as you mentioned, mayor, that goes on behind the scenes to get us to this point. And then parks and wreck, obviously, we've taken up, you know, most of Herb Young for the day to do this. And that's no small feat with um what John and team have to do kind of organizationally, operationally. Um, but and you can see how this is then different. This room setup is different than a work session. And I think this works better when when we're all here. So, uh, I think our next quarterly is also here, um, in November. And, uh, that's really all I had to say other than thank you for everything you do every day and thank you for what you were, um, as the mayor said with misinformation and information that's going out there. As even, we talked about from the emergency response event, how just how hard it is to communicate to everyone on the same topic and the same issue with, there's just so many distractions that are going on, not only in Carrie, but probably in life. Um, so I hope folks will watch this video and see what happened today. So, thank you very much. And with that, Mayor, I'll turn it back over to you for any closing remarks.

Anybody else has anything? We are

I just hope to see everybody um dressed more casually at the next quarterly.

Make it so

pajamas.

I I [laughter] need to go straight pajamas, but I I'm not going suit next time. So, if any of the staff wants to join me,

order zip for you, girl. [laughter]

I'm going to buy a quarter zip.

I was just thinking we should all buy them.

We should all buy quarter zip.

Carry gear. Come on. Car team carry.

All right. Thanks everyone. We are journ.

Thank you.