 of this financing is only restructuring, I guess to the extent that you're stretching out existing debt and trying to minimize the cost of it, you want to do that in as low an interest rate environment as you can get, because there will be a cost of stretching out of debt that only went out 10 years and now we might be going out 13 or 14 years with that original piece of debt. And so just again so I understand that interest rate, the current interest rate then would be locked in. Yeah. Okay. Yeah. Thank you. Marcus? So I guess my question is a little bit more plain English. It sounds like we're paying $136,000 and today dollars to do exactly what for the citizens of Sheboygan. Okay. What you're doing is you're managing the difference of where the combined tax levy is going to go. If you were in need to issue $4 million over these four years for capital projects and the difference would be the highest point on page four where you would look to the 2026 and you're at $4.9 million. Every year your levy goes up when you issue debt. If we did absolutely, if we didn't do anything at this point and we just went forward with the 21 CIP, then we'd go back to page two. Carol? Yes. This is Todd. I guess another way to help Marcus understand is when you referenced the $4 million, that was a model that you and I put together basically looking at the next couple of years in CIP. If we estimated at a $4 million spend in CIP year over year, this is what it's going to look like respectfully. Am I correct? I think you can add some clarity to my question then. If we were to do this proposed thing of $4 million borrowing over the next three years in 22 through 24 and our debt service goes up to the highest of $5.6 million in 2026, what would that look like to the average taxpayer in Sheboygan versus with this new plan? Marcus, I guess your question is a little bit different. The issue is what Carol and I are working to do is that we're trying to balance the cost to the levy, which allows us to manage our operating cost. Our operating cost, our revenue continues to drop. We have to be very careful in the year over year of dollars going from the levy to pay our operating cost to pay our bonds. When you look at that, that's where we're trying to kind of balance it year over year versus having those spikes that Carol showed you in some of those pages where it went up to like 5.9 and things like that. The city can't continue to have increases in CIP and increases in operating costs to pay the GEO debt year over year when our revenues continue to decrease. Would that be correct, Carol? Yes, that would be correct. One of the reasons why the existing city purposes debt does have that high of an annual combined levy is because the city does use 10-year notes to fund its CIP and if you did that with a two-and-a-half or $3 million debt every year, you may not see those kind of spikes develop, but when you get into doing $4 million, $5 million each year, it becomes more and more difficult to keep that debt within a 10-year amortization without that happening. I mean, your debt becomes a little bit heavy with that much issuance, and as you can see, even from the schedule that's up here in 22 and 23, you see how it starts off, your issue in 22, you're in the $250,000, $270,000, and then look at where your last few years are, where the call features are. You're in $900 and over in a million dollars. See, because again, your heavy is very heavy on the back end. You can keep doing that. It's just going to put more pressure on that tax levy number. That tax levy requirement to tax forward is going to be greater and greater every year, so it really comes down to how you want to manage that levy if that's an acceptable number to be up at, you know, $5 million six, with even this type of a structure continuing, then that would be what you would expect to happen. If you do want to lower that number, then the advanced refunding is the tool that allows you to lower that number. And either way, you're stretching your get out if you refund with advanced refunding or if you wait in the future and you do it with current refunding, the whole goal of the refunding would be to stretch it out if you do want to bring down that combined debt service number. Except, and Todd, so what I'm trying to understand in 2028, when our borrowing costs just on, and I'm looking at page four, down a bit. So what would be your plan for, thank you, 2028 all of a sudden now we're losing quite a bit of money instead of saving it. Would that affect borrowing capabilities in 2028? Or would you just be kind of waiting to see what would happen? Do you see what I'm asking? Chair, I believe I understand what you're, what you're asking. I believe that what to answer that question is what we are planning on doing is having a better balanced balance sheet by that time. Right now we're focusing on being able to increase our operating costs so that we can afford additional debt because we know that year over year, and that's where the team and I, Daniella and Carol, when we met, we talked about different models if we were to look at $3 million or $4 million of CIP because it's traditional that the city borrows, you know, in that range and we wanted to know how is that going to affect us moving forward because we did take on some larger projects as we know. But we also know that using the last couple of years as an example that we've lost and put the pandemic aside, our operating costs continue to rise year over year. So obviously we can't keep increasing debt and have our revenues continue to decrease. So we're trying to balance it and then come up with a better plan moving forward and how we're going to be able to control that. So by doing what we're doing by advancing some payments to pay some of this off, as Carol had talked about, looking at a model of $4 million, you saw that it actually softens the year over year of payments. And that's what we're recommending at this time to allow us to better review the years coming because we do know from a facilities management and obviously our roads and just internal operations, there's some investment that the city is going to need to review. And we're trying to set the stage to be able to do this as best economical, best stewardship. I hope that answers your question. Yeah. And for me, it basically comes down to this just intuitively doesn't make a great deal of sense to me, but I think it's because I don't really have a sense of the full picture and the forward looking picture. So from my perspective, my trust is in you and your analysis and Carol's analysis. And so I'm comfortable with this. It's just it's not as interesting or as comfortable, I guess, is the word I would be looking for as stuff that we've done in the past. If you understand what I'm saying. Well, the decisions in the past were much easier because of the fact that we were looking at just refunding or to reduce our interest percentage. That's an easy win. Looking at this when Carol and I first were looking at it, we were looking at these were items that we wanted to roll in in the future, but it didn't make sense to wait for the future for the call feature. So that's why we decided to go with the taxable because the interest rates are so low, the taxable or non taxable didn't make a difference. But it made sense to roll them in now because ultimately we would want to later and they to roll them in later would be a lower geo bond that doesn't make sense to go through the whole process. Again, the concept that I need the finance committee to understand is from Carol's presentation, we're trying to buffer the increase in levy expense, if that makes sense. Yep. Marcus and then Birch. Thank you. So this question is probably the best answered by Todd. Are you trying to hold our ability to not raise taxes anymore while still getting all of the operational expenses through and paying this additional debt and that's why you want to spend $136,000 today to spread that out over the next couple of years? I think that's a two part question. Am I trying to hold taxes? I think the city always tries to hold taxes, but we also have to be realistic that taxes are going to continue to go up because if we don't raise taxes, we're not going to be able to cover operating costs year over year. And I think our tax, our constituents understand that costs do go up. What I'm trying to do is I'm trying to minimize the cost against our operating budget because our costs are going up faster than our taxes are if that would be a better way for you to understand. Our revenues are not going up as fast as our costs are. So what I'm trying to do is I'm trying to balance our costs so that our operating budgets can afford it without having to make reductions in service because a reductions in service is not going to be, that's a slippery slide. Does that help you? I got a follow-up. Okay. Thank you. So I was always under the impression that the debt here didn't apply to the amount that we could raise taxes if we needed to according to the state statute. Is that correct or not correct? It's not correct. There's a difference between the two subject matters that we're talking about. We have our debt that goes against our operating costs, our levy, but then there's our operating costs. So we have to be careful with that. But we have our revenue. Revenue is a little bit different. We also have the fact that we have our net new construction and our expenditure restraint that the state and government hold us to. As an example, when we did our net new construction last year, we should have gone up 26 cents to the per thousand versus 15 cents. The problem that you have is because we only went up 15 cents, our operating income only went up that much. So that means that we gave up some of the levy to be able to pay for bills and pay for our overhead costs. If we continue to do that, obviously our costs continue to go up, and that means that we're not going to be able to borrow money for capital improvements or road construction or facilities, and it also means that we're not going to have money to pay for our overhead costs, our wages and benefits. And we have to remember respectfully that we are a service industry, so the majority of our cost will be wages and benefits because of the services that we provide. Does that help you? We're getting into a rabbit hole here. Okay. So, Burt, you have a question, and then I think we do need to kind of move on. Go ahead. It's actually two parts. I have heard the term operating costs. Is that day-to-day expenses that the city has as a side from capital improvements? Is that what you say when you say operating costs? And that's back to our levy. When I look at the annual budget, I look at operating costs, everything that is coming out of the revenues that we have. So we have our wages and benefits, yes, but if you look back at what Carol was showing us, we have our geodebt that comes out of our levy. So what we don't want to get into, and we can sidebar this and talk about this further later, what we don't want to do is give all of our operating costs, the amount that we use from the levy, our general fund, we don't want it to all be going to pay our debt because there's wages and benefits, each department has their budgets, kind of concept. Okay, let me interrupt. When you say operating costs, do you include the geodebt? Yes. The payment on the geodebt is included in operating costs when you say operating costs. Yes. Thank you. My second question is when we get to the parentheses on this table, does that affect our bond rating? Will this affect our bond rating? The parentheses that you're seeing in those years, if you look at what the effect of that is, okay, that this schedule tells you the effect of those parentheses. So in the year 2028, you look at the year 2028 on this schedule and you go to the far right-hand side. Yes. We'll see that your levy, your tax levy is going from 4.6 a year before to 4.49 a month. Right. So what this demonstrates to the rating agency is the city's ability to issue debt as it has in the past as 10-year notes on a capital improvement plan of at this point approximately $4 million a year and stabilize the tax levy so that you have a declining tax levy. So that is a positive thing. If you did not do it, you go back to page 2 and you look at that same year, right? And that year is a 4.1, which is favorable. But look at what's happening in the years above it. If the levels above it are acceptable in terms of a levy, then you would not need to refinance. It really comes down to how you want to manage your levy and what is acceptable in terms of a tax levy for your debt. But in terms of through the rating agency, they would look at the page 4. And in the years where you see the negatives, because that's where you're now filling in debt that you didn't have filled in there before. And this would be the impact of all of that exercise of putting debt in there and adding it to a future CIP. So Carol, would you agree that the plan, the way we have presented it, would show Moody's that we're actually being very good at our future endeavors? I think what we would be showing to Moody's is the fact that the city is taking on all of its capital improvement borrowings within 10 years and has call features on it for the purpose of making decisions as it goes into future capital borrowings. Because at the time you're doing your financing like now, we could be talking about $3 million, we could be talking about $4 million or something totally unrelated going forward. But having a plan is what's important to the rating agency is how are you planning for your future. And the fact that you've been doing all of your advertising, all of your borrowings within 10 years, it's not unreasonable to say at some point that the project that you're borrowing for certainly can be advertised over a longer period of time in terms of useful life. But this is just a one-time approach to manage that levy and having a plan to manage your levy. So I think that it's all about what's your plan when it comes to a rating agency. I think that we have a very good story. Thank you. I think we really need to move along. I see that we have two possibilities here. One is that we can bring forth a motion to bring this forward to the council at our March 1st meeting. The second thing we can do is explore whether or not we want to talk about this more. My sense is that we'll interfere with the plan that Cheryl has put together here. So I think I just need to briefly, because we have another agenda item that's going to take some time. Quite frankly, I think that this is a new concept for us. And Carol, I always appreciate your explanation. But I think that the material is quite dense and is kind of intuitive. So I, committee members and Todd, let me ask you first, what harm do you see in us perhaps getting a more simplified description of what this is and taking a little bit more time, or is time of the essence and we really need to move forward? I believe I'd have to ask Carol if this can hold over for additional discussion. I guess it's potentially partially my fault that we've muddied the waters because I was the one that asked Carol to present more of a model where we looked at 4 million as a potential spend year over year for the next couple of years trying to show the committee that we are being strategically planning for future spends in the upcoming years and how this would be affecting us. Because I think that that's something that we all need to better understand. I agree that the GEO debts that we've been looking at in the past couple of years has been what I call WYSIWYG because of the interest rates being as they have been where we've been able to save very easily year over year. So I can only ask that the committee respect the program that we put forward, but if Carol, if you feel that we can wait several weeks for them to go through this again, I guess I need your guidance on that, Carol. Sure. Well, if we were to wait, the presentation tonight would allow us to stay on the same timeline as the city's capital improvement borrowing so that everything would be in the same rating process, same official statement. But if we were to wait a couple of weeks to review this more, the financing can still take place. It would just take place on its own separate timeline with its own separate official statement. The rating process would be very short, but that's really what would happen between looking forward with it on this timeline. If we didn't, then we would be talking about a separate debt issuance, whatever, you know, that becomes, you know, the timeline that is comfortable and answered all the questions. Okay. So at this point, I am willing to move forward just as a committee member. And I think what I'm going to do is ask for a motion to authorize the city to issue sale of approximately 3,660,000 in taxable bonds. And let's see if there is someone willing to make that motion. And a second, and then we can further discuss it or just see where we're going. So do I have such a motion? I'd make the motion. And is there a second? I'll second that. All right. Thank you. My position at this point is that I am comfortable going forward. I'm beginning to understand a little bit better. You know, exactly what we're looking at here. But let me hear from other committee members. Let me start with you, Marcus. I have some concerns with the, with spending $300,000 in the future so we can spend an additional $130,000 today so that we can balance the debt for the next 10 years. It doesn't seem like it's a smart move. And I'm really struggling with the explanation I got tonight. So I don't think I can support this. Jim? Jim, you have to unmute yourself. Sorry about that. I was having a cough before. Todd, I'm not going to make my remarks as anything derogatory towards you. You've only been on this job now since last July. And I know over the next year or two, you're going to look for every possible efficiency of a better way of doing things for all of the departments. To me, though, to me, by doing this, we're taking our, I guess we're excusing ourselves for additional, you know, we're saving, we're saving on, you know, these costs. But, you know, I guess where it gives us, I guess I'm trying to say is that it just gives us another excuse to continue spending money the way we have been in all the various departments. And I'm uncomfortable with that. And again, you're new to this job, and I know your evaluation of all of the departments going forward, you're going to look for every last dollar in efficiencies in a different way of doing things. But I'm somewhat uncomfortable with this for that reason. Trey, is there anything you'd like to add? Not particularly comfortable either. I share a lot of the thoughts that have been communicated by the other council members. That's why I've been rather quiet. I'm trying to absorb all the information in front of me and make sure it makes perfect sense, which there is a picture being painted, but it's perhaps not 100% there yet. The biggest thing for me is if we could get an A to Z explanation at the full council meeting, if this moves on to that, of exactly what's going to happen, what the future implications are, what they are, if we don't do this, that would be appreciated. Okay, thank you. Bert? I am in favor of this. My caveat is this is a whole big elephant to swallow, and we never got small pieces along the way, and I don't like that no matter where I am. However, I understand the concept of advanced refunding. The fact that interest rates are so low right now makes a lot of things very palatable because of the interest rates. Among them are the differential in the taxable and the non-taxable. I also appreciate leveling out the operational expenses against the tax levy versus the geo debt. It appears as if it would not bother our ground bond ratings, significantly decrease our bond ratings. So I think the forward planning of this is probably very prudent. However, I think the lesson to be learned here is you can't just bring an elephant on a committee. You just can't keep doing it. So I would still vote in favor of this, and I guess I question the prudence of taking, of discussing this in full counsel if we can't digest it as a committee. My other concern is it does make sense to wrap this with the other debt because it's less expensive if we go to market once for all the bonding. But again, if this was in process, you just got to give us more ramp up time. So I'd still vote for it. Chair? Chair? I just wanted to make one real quick question just to help everybody. Please understand that there were several geo debts in the past couple of years, and Mary Lynn, you probably remember these and Jim, that we took interest, we made interest only payments. So we borrowed interest ahead of time for different areas like tids and things like that. So we borrowed money just to make interest only. So if that was palatable, I don't quite understand and maybe I need to work on our presentation moving forward. But the rabbit hole that we kind of fell in is the fact that what I asked Carol to present was the ability to look at the next couple of years of CIP at the $4 million amount and how it would affect us. It's just a model. That's why we're doing what we're doing is to allow us to better level our costs for the city so that we have a better ability to afford it year over year. We're going into some troubled times and I'm asking the committee to support this because it's balancing and leveling our debt going forward. Thank you. So I think I'm going to add, unless there are any other comments, I'm going to ask for... Did I get a motion? All right. And we can... At this point, I'm going to ask for a vote. It can still, I think I incorrect check, proceed to council even with a negative vote. And there might be an opportunity to slice up the elephant to use Bert's analogy in such a way that it is a little bit more comprehensible for all of us. So with that in mind, would all those in favor of the motion please state aye? Aye. I have two ayes. All those opposed? Nay. All right. And the chair votes aye. So we have a three to vote. And what I would suggest is that, and I don't know just how chunky our agenda is going to be on March 1st, but if we can have perhaps, and Todd, you and I can work on this, perhaps just a clearer presentation of what's going on, because it is a new concept for all of us. And we'll take it from there. How's that? Everyone okay with that? Okay. Very good. So I am going to go back to 3.5, which I had mixed up previously, but just not a good day for me. This is a resolution approving the investment policy for the city of Chicago. Todd, you want to go ahead with that? Thank you. Thank you, Madam Chair. 3.5 is brought forward for the committee to review. In assisting Daniella and the finance department, I took over the comptroller responsibilities. And in doing so, it was brought to my attention that the policy that we had in the first place, our investment policy, dated back to 1995. And for those of you in attendance, I think that's a very, very, very, very old program and policy. And so the first thing that I did was get Chuck and Thomas involved so that we could update it. And in meeting with our investment groups, we started to look at what do we need to do as far as with the economy the way it is. And I'm asking that we follow state statutes. And as the policy's written, it gives us the ability to expand if needed. Again, it's an as needed policy, but it gives us more flexibility in the market to find ways to make the city some money during an economic downturn. So I'm hoping to get support in this. It has been vetted significantly, and it fits what our banking organization and our bonding association feel is needed to be economically viable in a poor situation like we are today. If you have questions, let me know. Okay, questions for Todd or Thomas or Chuck, whoever is going to be taking them. Marcus. Thank you, Madam Chair. I just want to know, is there any risk of us losing money with any of these programs? We've been losing money since the economy went down. So please understand that when interest rates go down, the ability to make money in the market goes down. So again, they can call it when the interest rates drop. They can call it and cause us to lose investment, but we need the ability to be flexible with whom we, who we're bonding with, who we're working with, and the length of term that we can go out. So obviously right now in the market, as you guys probably know, if you can go out further, there is risk that you're tying money up, but there's risk staying in a short market because seriously, there's no money to be made in a short term market right now. And we're talking, I mean, if we can borrow money at less than a percent, the interest, the ability to make money in a poor market like this is less than a percent. So again, this is looking at state statutes. It's also looking at, you know, where we were in 1995, which is a lot different than where we are in 2021. Again, it's a policy for us to follow and manage the investments that we have. You know, we are so constrained in state law in what we can invest in in the first place. We cannot buy game stock stock, whether we want to or not. So, you know, is there the possibility that what we can invest in goes down? You know, we're basically limited to investing in bonds from entities that look like us. Is there the possibility that we invest in a bond holder that doesn't pay what, you know, doesn't make their payment? I mean, that's always a possibility. Any time you don't stick money in your mattress, there's the possibility someone doesn't make the payment they're supposed to or the bank folds or, you know, any of the things that can theoretically happen. And if you stick your money in your mattress, it's possible your house burns down. So, you know, there's sort of risk, state law, very much constraints, how much risk we can take on even if we wanted to be very, very... I don't see very much reason for us to be more conservative than the state of Wisconsin is. So, I am quite willing to match their criteria. I also think that having an investment policy from 1995 is very offensive. So, we should do something about it because we should review it every five years, minimally. So, I would move that we adopt the investment policy as proposed. Very good. Is there a second? Second. All right. Any other discussions? I have a question for Thomas. Thomas, I'm reading here that we're, you know, I guess the maximum we can have at a bank is FDIC. So, that would be what? 225,000 would be the max per financial institution. 250. And then the other... Can you go into the statutes a little bit of exactly what we are allowed to invest in? I presume it would be CDs. What else does the state allow? Absolutely. So, I believe FDIC limits are 250. I believe it's $250,000. Yeah, it's 250. And what we've done in the investment portfolio or in the investment procedure is we talk about keeping the average balance within that FDIC insurance limit. So, you know, when we're making payroll, you can end up with a lot of money moving in and out as we're trying to make sure that our checks don't bounce. A lot of the things that the city buys as an institution are quite expensive. And it's not unheard of for us to be writing a check for more than $250,000. So, what we're trying to talk about is the average, sort of the average daily balance, keeping it within that insurance limit, recognizing there's going to be a day or two here or there. I mean, we're significantly higher than that as we've got to set up for those things. One thing the finance department has done is they've gone to monthly check runs. So, again, you know, when you're setting up to batch process those checks, there is more exposure there. But you're also limiting the amount of time. Let me pull off the relevant statement. We believe you. Unless somebody else doesn't. But, I mean, I want my six o'clock. Basically, it's CDs of different duration, right? It's CDs. It's other municipal bonds. It's things of that sort. You can invest in U.S. Treasury bonds. You can invest in the local government, Wisconsin's local government investment pool. The one restriction that we've put on ourselves, which is, I suppose, more conservative than the state, the state will let you invest in municipal bonds that are the highest or second highest rating category. And we've said we think the highest is enough so balancing that interest rate return and that risk. Okay. Thank you. Chair. Any further discussion? Chair. Are you not all in favor, State Ayes? Aye. Did you want to say something? I'm sorry. I was just going to add that this policy is for all of our investments. Presently, we have investments through Wisconsin Bank & Trust where I move money almost daily for operating costs. As Thomas alluded to, we do have one other investment firm that we use. And I just wanted the committee to understand that that firm did not have an actual investment policy from the city of Sheboygan. So again, this is one of those urgent items that I've tripped over that needed to be updated. So I appreciate their support. There's no further discussion. All in favor, State Ayes? Aye. Chair votes aye. Before there's a motion to adjourn, I just want to extend, and I think I can do this on behalf of the committee, Todd, our deep gratitude for the energy and the imagination is not exactly the word I would use, the innovation and the innovation perspective that you are bringing to the job to solve and address problems that probably haven't been solved and addressed maybe even before 1995. So our action tonight is not a reflection at all. I think I can speak for all committee members here of your willingness to really take hard looks and be very energetic about representing not only the best financial interest in the city, but all the other things that we do, which is pretty complex and extremely important. So with that, do we have a motion to adjourn? So moved. Second. All in favor? Aye. Chair votes aye. Thank you all. What a meeting. Stand up now and walk around before you get into your next meeting. Thanks all. Good night. Good night. I see you got your vaccination badge first. Yeah, we got our second one last Tuesday. Did you get your second or first? This is my first and I'm so excited. Oh yeah, we got our first.