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Home My WebLink About07/07/2025 - Special Minutes - City CouncilMINUTES OF THE CITY COUNCIL SPECIAL MEETING IN -PERSON WITH TELECONFERENCE PARTICIPATION CITY OF COLLEGE STATION JULY 7, 2025 STATE OF TEXAS COUNTY OF BRAZOS Present: John P. Nichols, Mayor Council: Mark Smith, Mayor ProTem William Wright David White Melissa McIlhaney Bob Yancy Scott Shafer Citv Staff: Bryan Woods, City Manager Jeff Capps, Deputy City Manager Leslie Whitten, Deputy City Attorney John Haislet, Assistant City Attorney Tanya Smith, City Secretary Ian Whittenton, Deputy City Secretary 1. Call to Order and Announce a Ouorum is Present. With a quorum present, the Special Meeting of the College Station City Council was called to order by Mayor Nichols via In -Person and Teleconference at 4:00 p.m. on Monday, July 7, 2025, in the Council Chambers of the City of College Station City Hall, 1101 Texas Avenue, College Station, Texas 77840. 2. SPECIAL ITEMS 2.1. Presentation, discussion, and possible action on the FY 2025-2026 Proposed Budget. Mary Ellen Leonard, Director of Finance, discussed the FY26 budget, addressing federal legislative changes, state funding changes, Texas A&M growth slowdown, consumer confidence shifts, increased cooperation from Texas A&M for public safety, and moderate regional development. The budget also considers service expectations in public safety, water resources, quality of life, and infrastructure. Additionally, the Five -Year Forecasting Model evaluates the fiscal impact of recurring costs, capital investment, revenue changes, and general fund balance management. Mrs. Leonard presented an overview of the proposed FY 2025-2026 budget, noting that a budget workshop meeting is scheduled for July 16th to review the proposed budget of $474,225,698. This amount includes $390,078,560 for the operations and maintenance budget and $84,147,138 for the capital budget. Compared to FY25, the operating and maintenance budget increased by approximately 6.26%, while the capital budget increased by 51.74% and the total net budget decreased by 12.42%. SPM070725 Minutes Page 1 Fund Type Governmental Funds Enterprise Funds Special Revenue Funds Subtotal O&M Subtotal Capital Proposed Net Budget $165, 545, 044 195,015,464 29,518,052 $390,078,560 $84,147,138 Mrs. Leonard provided a summary of the preliminary taxable values, tax rate calculations, and factors influencing no -new revenue and voter approval rates. Preliminary Taxable Values • Net Taxable Value up 15% • New Value contributed 3.0% • Year over Year (YoY) category increases: ✓ Single Family Residential — 4.5% ✓ Multi Family — 31.0% ✓ Commercial — 21.9% • Average Taxable Residence value went from $397,019 to $421,798 or an increase of 6.24% • The taxable increase on a homesteaded residence is limited by law to 10% Tax Rate Calculations Property Values from Last year get adjusted for continued hearings etc. at BCAD Allowable rate is adjusted for: • 3.5% cap • Reduced for Sales tax % Amount is set to meet principal and interest payments due that fiscal year. Combines M&O Rate, Debt Rate and any unused increment. Factors Affectiniz No -New Revenue & Voter Approval Rates Freeze Assessed Value 2,500,000 Sales Tax Credit on Property Tax Rate $012 — m t 2,000,000 $011 — $0.1 1 1,500,000 $0 10 1,000,000 $0 10 $0.09 500,000 $0 09 _ $0 08 2020 2021 2022 2023 2024 2025 2026 2020 2021 2022 ')023 2024 2025 2026 SPM070725 Minutes Page 2 • Assessed frozen valuations have increased • Credit on Voter Approval Rate for a portion of by 100.5% since 2020. sales tax collected has decreased since 2023 • Frozen valuations are not considered in by 17.5%. NNR Calculation. • Less of a credit raises the voter approval rate. Mrs. Leonard noted a proposed 5.0% tax rate decrease to $0.487430. The O&M rate would drop by $0.0168832 and the debt rate by $0.0087730. Despite these drops, O&M revenue is expected to increase by approximately $3.0 million due to growth in valuations and new additions to the tax rate. Each cent on the property tax rate equals about $1.2 million in recurring revenue. Since 2017, sales tax revenue has nominally risen by 47.1%, with a real increase in purchasing power of 12.1% over eight years (1.5% per year). Debt Service Fund 21.1441 (0.8773) General Fund 30.1645 (1.6883) Total Estimated No New Revenue Rate Estimated Voter Approval Rate 20.2668 28.4762 51.3086 (2.5656) 48.7430 52.1442 46.7434 W; ;•I1 The FY25 year-end sales tax estimate shows a 0.67% YoY rise, factoring in a sales tax audit and a football game. The budget -to -actual sales tax increase for FY25 is roughly 2%. The FY26 budget projects a 1% rise or $417,000 more than the FY25 estimate, excluding one-time events. Constant Dollar of Sales Tax $43,000.000 $44,000,000 $37,000,000 $34,000,000 $31,000,000 $28,000.000 $29.561,762 $25,000.000 2017 201a 2019 2020 2021 2022 —Nominal Sal es Tax —Inflation Adjusted Sales Tax 2023 $42FOa0,ss4 13,434 She went on to state that under the proposed rates, the average utility bill for a single-family home will increase by $2.97. Fee Ordinance: • No rate increases for Electric, Water, or Wastewater. SPM070725 Minutes Page 3 ✓ Decreases in the Transmission Delivery Adjustment (TDA) fee as well as a slight solar credit change reflected in Electric. • Increase of 3.0% for fees tied to the Consumer Price Index —All Urban Consumers (CPI-U). ✓ Fees tied to the CPI-U include Planning, Drainage and Roadway Maintenance. • Changes in CPI Index for Solid Waste from the CPI-U to the CPI-Water/Sewer/Trash: ✓ The CPI-WST increased by 5.0% ✓ Certain specific Solid Waste fees proposed to increase an additional 5.0% • Tourism revised the deposit for the use of 1207 Event Space. • Parks revised summer camp fees from per session to per week. The Hotel Occupancy Tax for FY25 is estimated to increase by 5.6%, with a 3% increase in the budget. For FY26, a 0.5% growth in Hotel Tax is assumed to be due to not including major football opponents. Mrs. Leonard presented the compensation and benefits strategies, interim staffing additions, proposed future staffing plans, and FY25 Vacancy Rates and FY Hiring Strategy. The FY26 Base Changes will include restructuring Community Services following the retirement of both the Director and Assistant Director. Personnel have been reassigned by the General Government to the Planning and Fire departments, with their positions remaining at Northgate. Pay & Benefits Strategy • 3% across -board pay scale increase for all employees plus a 1% market adjustment for existing non -step employees. • 3% across-the-board pay scale increase for public safety. • Annual step increases for eligible public safety personnel. • Merit / other pay pool for top -performing non -step employees and specific adjustments. • Employee healthcare premiums remain flat for the sixth consecutive year. • No increase in City -paid healthcare premiums. FY25 Interim StaffinLy Additions General Fund Police 236.00 2.00 238.00 Fire 174.00 12.00 186.00 All Other Governmental Staff 339.00 - 339.00 TOTAL General Fund 749.00 14.00 763.00 Solid Waste Fund 47.00 1.00 48.00 Northgate Fund 8.00 1.00 9.00 All Other Utility or Special Fund Staff 267.50 - 267.50 TOTAL Utility / Special Fund Staff 322.50 2.00 324.50 GRAND TOTALALL FUNDS 1,071.50 16.00 1,087.50 SPM070725 Minutes Page 4 FY26 Proposed Staffing Additions General Fund Police 238.00 238.00 6.00 244.00 Fire 186.00 8.00 194.00 12.00 206.00 Planning and Development Services 46.00 1.50 47.50 1.00 48.50 Fiscal Services 54.25 0.50 54.75 - 54.75 General Government 69.00 (10.50) 58.50 1.00 59.50 All other Governmental Staff 169.75 169.75 - 169.75 TOTAL General Fund 763.00 (0.50) 762.50 20.00 782.50 Solid Waste Fund 48,00 48.00 1.00 49,00 Community Development Fund 3.50 (1,00) 2.50 - 2.50 Drainage Fund 20.00 20.00 2.00 22.00 Court Security Fund 0.50 (0.50) - - - AII Other Utility or Special Fund Staff 252.50 251.00 - 251.00 TOTAL Utility/Special Fund Staff 324.50 (1.50) 3.00 326.00 GRAND TOTAL ALL FUNDS 1,087.50 (2.00) 7,085.50 23.00 1,108.50 FY25 Vacancy Rates & FY26 Hiring Strate2v • Vacancy Rate Definition: The percentage of approved (budgeted) positions that are currently Oct-24 unfilled at a given point in time. • Fiscal and Budgetary Policy Statements Revisions: Nov-24 ✓ Clarifying the Operating Budget vacancy policy Dec-24 of 3.0% Jan-25 ✓ Adding language to the appropriations section Feb-25 defining an over hire process ✓ Over hire process intended for additional Police Mar-25 Officers in FY26 if existing departmental Apr-25 vacancy rate meets policy. May-25 ✓ Departmental vacancy rates will be continuously Jun-25 reviewed in FY26. FY25 VACANCY RATE TO DATE 9.87% 10.57% 11,26% Mrs. Leonard explained that FY26 Operational Cost Management reductions include $200K in fixed/contractual savings and $400K in departmental savings. The chart presented compares per capita budgeted expenditure on the general funds of 26 comparable cities. Most cities have similar revenue sources, with ad valorem, sales tax, and fees comparable to College Station. Typically, College Station falls below average in this measure, while Bryan is above it. The FY2021 decline reflects budget cuts due to the COVID pandemic. $1,500 $1,653 $1,044 $1,000 S890 $923 S891 $884 $967 5981 $056 $690 $660 $500 FY2020 F12:•21 FY2022 FY2023 $1,116$1,346 $1,101 $1,0731,1d5� $927 ■ Average ■ College Station ■ Bryan FY2024 FY2025 SPM070725 Minutes Page 5 She went on to present the General Fund Five Year Forecast, noting that one cent on the tax rate provides $1.1 million and the following known factors and assumptions: • One SAFER grant ends out in FY28. • Sales tax growth was assumed to be 2% to 2.7%. • *FY26 includes a reserve for future recurring expenses of $1,100,000 that is released in FY27. General Fund Five Year Forecast Beginning Fund Balance $96,690 $92,310 $93,390 $94,250 $95,840 Total Recurring Revenues 125,480 128,790 132,060 134,190 137,350 Total Recurring Expenses* 125,180 128,770 132,480 133,690 135,960 Out of the $92.3 million General Fund Balance, approximately 78% is allocated according to policy, staff recommendations, or discretionary assignments by the Council, amounting to $72 million. Reauired/Policv • Required 20% Reserve (Fiscal Policy): $25,647 • Federal Opioid Abatement: $168 Staff Recommendation • Future Operational Reserve (Public Safety): $1,100 • Additional reserve for Bond Rating: $6,964 • State Highway 6 Relocation Costs: $550 • Matching Grant Dollars Allocation: $1,000 • Additional Economic Incentives: $2,000 • Special Elections: $100 • Parks TPWD Grant: $750 • Grant Uncertainty: $5,000 Discretionary • Future Vehicles: $1,500 • Baseball Field Capital Reserve: $10,000 • Future Projects: $17,200 • Local music statue, depending upon unassigned. the amount, would come from Council requests or Mrs. Leonard concluded the presentation with an overview of the FY26 Capital Strategy, Future Debt Issuances Forecast, estimation of Governmental Debt Capacity, and Five -Year O&M Forecasts for the Electric, Water, Wastewater, and HOT Funds. Funded capital projects are detailed in the capital project schedules within the proposed book. All future debt issuances and capital projects for governmental purposes can be completed without increasing the existing tax rate. Utility projects are prioritized based on infrastructure needs. She also noted the following: SPM070725 Minutes Page 6 • The Electric Fund does not have a planned rate increase. • The Water and Wastewater Funds may require future rate increases depending on debt service requirements. • Debt capacity is carefully managed and reviewed multiple times annually. • General Government debt is structured to maintain approximately $20 million of debt capacity annually through FY31. • The city has reserved $9.7 million from real estate gains for future capital infrastructure. • The next General Obligation (GO) Bond issuance process will commence in FY27. Transfers and Payments Electric Transfers (Sources) Uses • Cash for Capital • Interdepartmental utility billing/fixed costs • Shared services such as HR, IT, Finance, Legal • Debt Service • Risk Mitigation Fund — targeted at $35 million for events like Uri; FY25 Balance is $14 million • General Fund payment for ownership of $10 million (8.3 cents on the tax rate) Water Transfers (Sources) Uses • Debt Service — increasing from $7 million in FY26 to $11 million in FY27 and $13 million in FY28 due to new water wells • Cash for Capital decreases as debt service increases • Potential rates increase in FY28 due to debt service and capital requirements • Shared services such as HR, IT, Finance, Legal, utility billing, fixed costs • Risk Mitigation Fund — targeted at $2.6 million, with no additional transfers in FY26; fund target is $3 million Wastewater Transfers (Sources) Uses • Cash for Capital of $8.5 million decreases as debt service increases • Debt Service— increasing from $6 million, net of impact fees, in FY26 to $10 million in FY28 • Shared services such as HR, IT, Finance, Legal, utility billing, fixed costs • Risk Mitigation Fund —starting at $400K and increasing $100K per year up to $3 million Additional Information • The revenue forecast varies based on the proposed home Aggie Football schedule. • Non -Operating Expenditures & Transfers includes capital improvements for Veterans in FY26. • Revised transfer amounts for baseball fields from HOT are now more accurate. In summary, the city's financial strategies and forecasts are designed to ensure sustainable growth and infrastructure development while maintaining fiscal responsibility. 5.2. Presentation, discussion, and possible action on calling a public hearing on the Citv of College Station FY 2025-2026 Proposed Budget for Thursdav, Julv 24, 2025 at 6:00 PM in the Citv Hall Council Chambers. SPM070725 Minutes Page 7 Mary Ellen Leonard, Director of Finance, informed the Council that state law requires a public hearing notice on the budget at least 10 days before the meeting. After the hearing, the Council can adjust items without increasing the total budget. Staff recommend scheduling a public hearing on the City of College Station FY 2025-2026 Proposed Budget for Thursday, July 24, 2025, at 6:00 PM in the City Hall Council Chambers. MOTION: Upon a motion made by Councilmember White and a second by Councilmember Yancy, the City Council voted seven (7) for and none (0) opposed, to set a Public Hearing on the proposed FY25 budget for the City of College Station at a regular council meeting on Thursday July 24, 2025, at 6:00 pm in the City Council Chambers. The motion carried unanimously. 6. Adiournment. There being no further business, Mayor Nichols adjourned the Special Meeting of the City Council at 5:36 p.m. on Monday, July 7, 2025. John P. Nichols, Mayor ATTE, a : Tanya Smith, City Secretary SPM070725 Minutes Page 8