 Hello, everyone. It is five o'clock and I think we'll get started. Now I have, hang on here just a sec. I have Marcus, you're here. Trey, you are here if you could just confirm. Jim, I see you. Can confirm I am here. Good afternoon. Marcus, are you around? I am in You are indeed. All right, excellent. So, I see Todd Wolfe walking around. Are there other members in the audience? Any interesting people, Todd, that we should be aware of or? Yep, I'm here. Thank you, Chair. Just to give you an overview, we have Daniella from Finance, Vicki from HR, David Bebel from DPW, Rick Nye from DPW. We have Matt and Adam from Enterprise that they'll be giving a presentation in a little bit. And then we have Mayor Van der Steen and then Scott and Robert for WSCS. Very good. You wish to join in the Pledge of Allegiance. Please do so at this time. I pledge allegiance to the flag of the United States of America and to the Republic for which it stands, one nation, under God, with liberty and justice for all. I am so sorry. You know what I mean. It isn't as if we don't say that 16,000 times in this chamber. So, my apologies. Roberta, welcome. Glad to have you here. I need a motion to approve the minutes of our February 8th meeting. Second. Any discussion? Hearing none, all in favor, state aye. Aye. Aye. Any opposed? Chair votes aye. All right. This puts me in mind of forgetting when Patty Smith forgot the words of Bob Dylan's song at the Nobel Prize ceremony. Okay. Having put that into context, 3.1 is a summons and complaint in the matter of Roswitha boss versus the plan commission. This is on the agenda again, Chuck? It's valid because you can file the matter has been dismissed with prejudice by the plaintiffs. All right. Very good. Is there a motion to file? Move to file. I understand what prejudice means though. I was just going to ask that. Well, let's get a second and then we'll check wisdom. All right, Chuck, would you explain what with prejudice means? Yeah, when prejudice means they can't bring it back, it's done and over with as if they lost the case because they did. All right. And it was the plaintiff's motion? Yeah, it was the plaintiff's motion. Yeah, in essence, what happened is they called me the day after our brief was filed with the court and asked if you would be okay with them dismissing and dismissing without or with prejudice and obviously the answer that was yes, I'm okay with that. Sure. All right. Any other questions? Hearing none, I am sorry. I am frozen up here yet again. So I am asking for a vote on the motion to file. All in favor, state aye. Aye. Aye. All right. Sorry, I restarted my router and I would be done with this, but apparently not. Can you all understand me? Yes. Was there a motion made, Mary Lynn? Okay. Very good. Mary Lynn, who made the motion? Marcus made the motion. Did you make the motion to file? Yeah. And Roberta seconded. Roberta seconded. Thank you. Two and 3.5. I think we can take together. Todd, I assume that's yours. Mary Lynn. With respect to the long-term financial plan of the city. Yes. We are putting through the same three point on 3.2. We're putting through the 2021 long-term financial plan for the common council and it has the updated dates accordingly. Then Bert, you look frustrated. Well, can you hear me? Yep. Okay. Because I lost the picture. I lost the, yeah, but okay. If you can hear me and can you see me? Yeah. We can see you. I won't worry, but I've got a white screen. All right. All right. We can see your new background. So it's very nice. Yes. Yes. So, I think, check, unless there's an objection, I would ask for a motion to approve the resolution. And then we can discuss the matter. Move to approve. You need to file the RO and approve the resolution is what you're saying? Yeah. All right. Thank you. Todd, do you want to tell us what we're voting on here, please? Are you referencing 3.2 or are you on to 3.3 now? No, 3.2 and 3.5. Well, those are two different items. Yeah, they're different items. I'm sorry. 3.2, if you're just dealing with 3.2, it would be a motion to receive and file the RO. I'm sorry. And is there such a motion? My apologies, everyone. I moved to do just that. All right. And is there a second? Second. All right. And Todd, with respect to the long-term financial, I've been in too many Zoom meetings today, I'm afraid. With respect to the long-term financial plan, do you have comments? Yes, I do. When Carrie and I first started looking at the long-term financial plan, we decided to adopt basically the same plan that we had last year, only because at this time it references our strategic planning and process and goals. And right now, we're pretty much rolling over the strategic plan from 2020 to 2021. So it did not make a difference that we would make any changes at this time because it will reference our strategic planning in 2022 process. So the plan that you have in front of you is basically a rollover from last year. I have Madam Chair. Thank you. Todd, I read this over and you said you may make some changes in 2022. Any anticipation as to what some of those may be? What areas? Basically, when we talk about the long-term financial plan to the Common Council, when I first looked it over, I started finding that there were a lot of areas that I wanted to address, but time of the essence, I don't have the time to do that. Also the fact that we know that in 2022 and 2023 and so forth, we're going to have some strategic opportunities for improvement. I felt that keeping the long-term financial plan as it's stated, because the 2021 budget is in process, it doesn't need to be addressed at this time. In 2022, the financial plan as well as the strategic planning, that'll all be under review and you'll see some additional changes because there's going to be more strategic planning, not just from a roads, but also from a facility and also my number one concern, which is our employees and that'll be wrapped into our long-term planning is how are we going to better provide the resources and planning for CIP and things like that in the future. So the long-term financial plan outline is going to change quite a bit in the future from my perspective. I hope that answers your question. Thanks, Todd. I would add in reviewing the plan, which is similar to previous plans that we've had, the necessity for our council and our city government to continue to lobby the legislature for more realistic number one amounts of shared revenue and two modifications to the tax levy that review or revise the concept of net new construction, I think it continues to be very, very important. The financial constraints placed on the city by the state certainly have a place and makes sense, but at a certain point they don't make sense anymore because it makes the continuing viability and thriving of local municipalities much more difficult. Now, that's just an editorial comment on my part, but I think if you review the long-term financial plan, you see how critical those areas of revenue are for us. And I'm pleased that at least there's an initial plan to increase municipalities share of shared revenue to some extent. What will happen, of course, is unknown at this point, but I just wanted to indicate that I felt that that is quite important. Are there other comments, questions? Just to follow up on what you said, Madam Chair, I saw in the weekly blurb from the League of Municipalities as part of the governor's budget, he was proposing for cities of over 30,000 in populations to have a referendum to raise the sales tax by an extra half percent. But later, having the news on later today, I found that the Republican legislature considers that debt on arrival. I thought it possibly would have been a good idea had it, you know, let the taxpayers decide by going to referendum. I don't think I would have approved it just a law without a referendum. But according to what I heard today, now it's debt on arrival, so it looks like from a sales tax standpoint, we'll be staying where we are unless there's some future compromise this year during the budget process. Very true. Yes, increases in shared revenue and modifications of the tax-leaving limits are probably not real realistic, but you know, we can always hope the voice of the people and so forth. Any other comments? Hearing none, all in favor of the motion, please state aye. Aye. Aye. Aye. Aye. Any opposed? Chair votes, thank you. Okay, let's move on to 3.3, which is an analysis of the motor vehicle division proposal with respect to non-commercial drivers. Chair. And I see that we have folks from DPW, so I will. Chair. Yes. This is Todd. If I can start it, and then I'll hand the baton to David. Sounds great. Thank you. Thank you, Chair. Committee, I'd like to kind of introduce this program. I'm really excited about this. I know that David is and team are very excited about this. If you remember back when I gave the State of the City, my number two area that needs review, obviously number four was roads, number three was facilities, number two was fleet, and number one was our most important asset, and that's our employees. This program, I'm excited to present with David and his team, and the Enterprise Group is really the ticket that we need to move forward and not only save the city money, but also provide an opportunity to provide our employees with new equipment every couple of years. And again, please remember what I said first, save the city money. We are looking that this will actually fold into our motor vehicle program, and it's going to be a really good thing from a safety perspective as well as providing us with savings year over year. So there are multiple cities, not just statewide, but throughout the United States that are using this program, and David and I are proud to present this to you guys for review, and then we're also going to present this to Public Works for review, and we're hoping that both committees will approve this and promote this to actually take it further as far as with Chuck and his team's review of the contract and approve it in council. So from there, David Bebel, would you like to add to that at all? I think what we need, Todd and David, is just a basic explanation of what the program is. I assume that's what David's going to do. Yep. Sure, Madam Chair. Thank you, and I just want to echo and thank City Administrator Wolfe for bringing this to the committees and sharing this information and introducing us to the team that will speak this evening. Mainly, it's going to deal with what we call our light duty portion of the fleet. It's not the entire fleet that we're talking about. It would be our pickup trucks, that would be half ton, three-quarter ton, all the way up to one ton, which is roughly about 58, 54 pieces of equipment of the fleet, which we have probably 300 different types of vehicles as well as small equipment, hand tools, anything that operates with gas engine. Nevertheless, as we mentioned, this deals with that portion of the fleet. What's exciting is that we've been borrowing funding for vehicle acquisition for many years. As a result of the motor vehicle fund several years, almost probably over a decade now, in the past, where that fund was used for another purpose when we had some financial difficulties in terms of budgeting. Nevertheless, where we're at today is roughly about a quarter million is being used as borrowing. With this program, it offers an alternative to lease this portion of the fleet, but provides a quicker turnaround and management of that portion of the fleet. Currently, this portion of our fleet that we have in stock is roughly almost the average age is 12 years old. With Enterprise Fleet Management System, that's going to roughly go down to about three years. It's a much quicker turnaround capturing that higher resale value and using our purchasing power as a government agency in the resale market. There's a market for these types of vehicles at a much higher resale value than we're currently getting. Therefore, this becomes a much more lucrative and financial incentive for us to partner with. You may have heard us talk about leasing fleets in the past. That was more just a financing mechanism where a leasing company would come in and finance your entire fleet and purchase. It was just more of a financial exercise. This is what I would consider as although there's a financial component of it, this is more of a management program as well. I think what you'll see tonight with the presentation is that this is an area of the fleet that, as you can imagine, it gets pushed off with our priorities because we're so focused on our heavy equipment, our meat and potatoes portion of the fleet, our snow plow trucks, our excavators, our unloaders, high ticket type of equipment that we need every day in the city to function properly. I'm excited to have them present this evening. The numbers look great. Rick, our Motor Vehicle Superintendent, has reviewed much of the facts and figures with this presentation and very impressed with the team as their numbers are right on. They're right worth our numbers, so it's coming to fruition, and I'd like to just turn it over and have the presentation. Good evening, everyone. Council Members, City Administrator Todd, thank you for the opportunity here. I'll introduce myself, Matt Joskovac, with Enterprise Fleet Management. I've been with Enterprise for now 10 years. My primary role is to seek and bring on new business from a new business development standpoint, and so that's what Todd and his team and myself have done so far. I have Adam Webber with me today. He's a dedicated account manager. He actually actively manages the City of Manitowoc, City of West Bend, and City of Two Rivers. There's a few examples, so he would be the city's dedicated account management team. He has himself plus a few other representatives that help him and his internal team to manage his book of clients, so very much an expert in the government sector, Fleet Management, obviously, but he would be the dedicated account rep for the city. So what I'd like to do is continue off what Todd and David have already started, just share some of the highlights of what we found, some of the opportunities with Enterprise and what that looks like financially, and then kind of give some of the supporting evidence and then leave it open for questions and answers. So the current state, and I believe most council members should have some of this information already, so I'll just go through and abbreviate most of it. So the current situation is the fleet consists of roughly 59 non-CDL vehicles, so that would be under the 26,000 pound requirement. 64 percent of that light duty fleet is roughly 10 years or older. The average age, like David said, is 12.3 years old. The average cycle for that 60 vehicle fleet is roughly 20 years, so take the city 20 total years to consistently cycle through all 59 vehicles at the current pace, so that's roughly three vehicles or so per year that the city averages to acquire. Out of those 59 vehicles, there are 18 different vehicle types, so myself, Adam, and David and his team will actually sit down and actively build the right spec for the right application, which will minimize that number significantly, hopefully, to actually single digits. So it'll create uniformity, better communication flow, everyone has similar products for the same and different applications, and vehicles can be more recognizable essentially, too. So the objectives were really when we sat down with Todd and his team were to really identify a fleet solution that obviously brought a financial position that bettered the city, operationally supported the staff and administratively helped the flow and the workflow. So basically what we're showing is that we're going to show with supporting data that we're going to move the city from a 20-year average life cycle to a three-year average life cycle. By doing so, we're significantly reducing the cost of maintenance, so downtime, parts and labor, and so on and so forth, about 64 percent. By having the new vehicles on the road at the city of Sheboygan, we're going to see roughly a 20 percent increase in just improving fuel economy, not alone and not referencing anything regards to the carbon footprint improvement as well. Some of the additional benefits are improved safety and risk like City Administrator Todd mentioned, less downtime for city mechanics to really focus on higher priced items and different tasks at hand. Replacing vehicles a little more frequently is the most cost-effective way, so Adam will be dedicated to helping fleet plan year in and year out, showing you different ways to cycle through different types of vehicles at different parts of the year and different parts of each vehicle's life. So it's not just everything happens at the same time of year, it's a little bit different by the vehicle and by the time of year. So when we put all that together and some of the supporting data and evidence here, the highlighted results that we found. So some of the major financial findings is over the next 10 years the city should see a savings of anywhere 800 to a million dollars in savings, so 800,000 to about a million dollars in savings. That variance is there because it just simply depends on the vehicle types. That number includes selling current assets, so the current 59 vehicles that the city has today. Selling leased vehicles through those 10 years, so periodically we're cycling out those leased vehicles as well. The maintenance savings and the fuel savings combined is how we get that variance number. Now within that number, from years 6 through 10 out of that 10 years span, we're going to see a sustainable savings on this program and doing so a roughly 40 to 64,000 dollars every single year compared to what the city is currently actively doing today. So we'll show some significant or we'll show some supporting evidence just below here to show you where that those numbers are coming from. Over those 10 years out of that 800 to a million dollars in savings, 385,000 dollars will be coming from just hard dollar maintenance costs improvements as well as 100,000 dollars in fuel savings. Again these numbers don't reflect anything as far as administrative benefits that Adam and my team and enterprises as a whole will bring to the city or any productivity improvements as well. This is on the screen here you're going to see is a fleet profile. I believe council members should have these numbers and it might look a little small on the screen, but what you're going to see on the left reading it like a book left to right is you're going to see the fleet profile by vehicle type, the number of vehicles per that type, the average age of each vehicle type, and the annual expected mileage by each vehicle type. So we have a total of 59 vehicles, the average age is 12.3 years, so that's where we got some of those figures from before, and on average each vehicle travels about 4,000 miles per year on average. Again attached here is also the city of Sheboygan's fleet list, it's sorted by department, also includes information like event number, year-make model, the current odometer on the vehicles, and a site unseen value of each vehicle assessed from enterprises dedicated fleet strategy manager, that person is Scott Pilzinski, he is solely dedicated on just selling our off-least and client-owned vehicles, so he does this for a living and puts some conservative site unseen values on this entire fleet, so the fleet is roughly worth just over half a million dollars in total. Again going on to some more supportive evidence, this is a 10-year cash flow that Enterprise was able to compile with all the data and information from the city. So again if we read up top to bottom left to right like a book, I'm going to go through some just significant numbers and then we'll just talk more and highlight. So again starting at the top 59 vehicles, the current life cycle is that 20 marks, so 19.67 years. The average maintenance spend on the fleet is roughly $84.50 per month per vehicle, roughly 25 cents a mile is what the math comes to. We're proposing from Enterprise that same 59 number vehicles running out of a 2.8-year pace, so about a three-year life cycle. Our proposed maintenance, and we'll talk a little bit more of that in detail, is roughly $30 per month per vehicle, so we're shaving that down again about 60-some percent. So when we look at this analysis, the dark orange highlighted line is essentially the average spend per year that the city is actively seeing today, so three acquisitions per year, the annual needs is 3.0, the city is spending roughly $115,000 or $113,000 or so dollars on acquisitions, roughly $60,000 per year on maintenance, $47,000 a year in fuel cost, which gives the city a grand total on average per year, about $220,000 of net spend for their fleet on these 59 vehicles. So this analysis, as you see, there's 10 years in total that accumulate lease payments, equity from current owned vehicles and enterprise leased vehicles. It's going to show an overview of maintenance spend each year, fuel spend, and a total fleet budget. So as you see the net cash column on the very far right, that number is showing our figure from Enterprise from years 2021 through 2030 is taking our total number minus the $220,403 number the city established that we establish as the city's average annual budget. So for example, if we took a negative $211,231 and subtract the difference of $220,000 positive dollars, we're getting a net cash difference of $431,000 in comparison to what the city is spending today versus what the city would actually spend cash out cash in in year one with Enterprise. We're looking at replacing all the vehicles right away in year one. So you're going to see a significant cash flow difference in the first few years. And the sustainable savings that you see in the bottom right, which is $39,292, you will see that number is sustainable savings after years six through 10 to show the city that this program is not only financially lucrative in the beginning years, but it also is sustainable. The other column, I'll say real quick before we move forward is the highlighted column in the middle of the screen, the total capital outlay. So if we added up A plus B equals C, so the lease payments minus any equity coming in. So just capital budget, not talking about maintenance or fuel. The next 10 years, the average capital budget for the city will be just just under $82,000 to support this program. In comparison, we're flipping all vehicles right away in year one and constantly every three years on average. And when we compare that $82,000 average capital budget spend to the city's current $113,000 capital spend, we're talking about 50, 59 total vehicles. If you take 10 times three is 30 total vehicles over 10 years. So we're doing this for less per year on double the amount of vehicles compared to what the city's spending today on only 30 vehicles in 10 total years. Below you will see multiple examples of just supporting evidence that illustrate where the figures and dollars and cents are coming from. So we have breakdown of vehicle types. We have a breakdown of lease payments and capitalized price with vehicles and aftermarket costs kept in a certain specific vehicles to really show what would year one look like as far as a starting point. And then also I established and built a fixed budget for the city to adopt financial practices and accounting rules. The government entity would have to assess this process on their own internally. Essentially, it's a way to build an equity reserve fund internally to assess equity to pay off any lease costs for the program. And what you're going to see if you can read it left to right like a book over time is with a fixed $125,000 budget for the city. We will have the budget is fixed so it doesn't go up but doesn't go down. Every year if the city applies the amount of equity needed to get to that specific budget they will actually have a $430,000 surplus at the end of the 10th year still in that reserve to support this program. So there's some method behind the madness on how we get to the 125 and I can explain that in greater detail. But that's a way for the city to not have to pay any more or any less for all straight 10 years. So with that I will yield back and answer any questions anyone has below those more supporting evidence what Adam does with his account management team the technology the city and staff would actually receive which is huge part of what we do. And some other references and clients that we work with with contact information and so on and so forth. So I want to thank you Todd and everyone for their time today and I will certainly answer any questions I can. Questions for the gentleman Marcus. Thank you Madam Chair. I've got a couple of questions about this chart page what would be the 10-year cash flow through your cycle sheet page 6 of this document. I'm having a little bit of trouble understanding the fuel cost and how you're going to keep fuel fixed for the next 10 years. We all know that fuel fluctuates. Where's inflation in this? Where's inflation and let's just start with fuel and then we'll go from there. Great question. So there is no inflation throughout this entire analysis just because it's somewhat unpredictable in some states because the fuel again is it can go up it can go down. So we feel that it's more or less just better to keep it as a constant and then it's the same across the board. So again there's going to be some variability but with increased vehicle cost comes increased resale values. So a lot of times it's just kind of putting inflation in for almost no apparent reason. So what we do is we just keep everything pretty constant. Ideally there's going to be some inflation over the next 10 years but some in some regards unpredictable. Thank you Madam Chair. I've got a couple of follow-up questions. Do you mind if I go off? Thank you. When it comes to the proposed maintenance number of $30.01 how did you arrive at that? Can you give me the background on that one? Yes. So that is a fixed maintenance program. So the idea would be to outsource the maintenance needed for our vehicle program to local vendors and taxpayers which is obviously a great opportunity to support your local constituents. So essentially that number derives from an algorithm that Enterprise generates based on vehicle type. The term that associates with each vehicle so or is it a are we keeping it one years two years three years five years whatever it might be and then the annual mileage associated with that. So it's a fixed algorithm based on many different factors that covers all major minor repairs including oil changes tire rotations engines transmissions wiper blades fuses we have the ability to even cap in brakes and tires if need be just not a very popular item and not needed item on a fleet of that of three years old in a government municipality. So that's an outsource program so that's the only way we could truly give the city a fixed cost so that number is a fixed cost based on the vehicle types given and the milages and the terms associated with each vehicle type. Madam Chair this next question might be best served by the Director of Public Works. If we're having such great savings and then outsourcing this to private citizens how many people are we getting rid of in the maintenance department for vehicles? Actually I'd like to jump in on that also and David can follow up. Marcus I guess one of the things that I would like to point out and Rick Nye can also jump in right now our 60 or 58 to 59 assets are not maintenance because of the present present level of resources that we have. I mean we maintenance them to the best of our ability but as Director Bebel had pointed out earlier a lot of our resources are used on our larger equipments you know like right now our snow plows that are out on the streets or garbage trucks that are out on the streets on a day-to-day basis but when it comes to our lighter utility vehicles they tend to get the you know the short end of the of the schedule if you know what I mean. One of the things I did want to point out though with this program is please remember that the lifespan of these vehicles are going to be between one and three maybe five years on the on the high end depending on value so that means that the only maintenance that's really going to be needed from an outsourced perspective would be either warranty work and or oil changes and tire rotations. Now because of the fact that the lighter duty vehicles don't have that many miles on them I mean even rotating tires would be on the edge of the spectrum versus you know annually so that takes a lot of the maintenance that our team handles right now and allows them to focus on our heavy duty equipment that really needs that focus from a day-to-day perspective. I hope that helps you. David do you have anything to add? Yes I would Miss Madam Chair. Quite frankly we're actually short of person in the in the Department of Public Works Motor Vehicle Division. We've been operating for several years understaffed especially when you factor in that we took on the fire or all the fire department's equipment when their when their mechanic retired that position wasn't transferred to our department and that position was then created into another firefighter instead of a mechanic in the fire department. As City Administrator Wolfe alluded to this area of the fleet is probably the under under maintenance fleet unfortunately and that's why we just hang on to stuff for as long as we do and this significantly will help us focus on as I mentioned earlier I would say our much larger capitalized vehicles and equipment such as our tandem and tri-axles our paver our end loaders you're talking some of that pieces of equipment can reach up to a half a million dollars and our mechanics are focused on that on a daily basis. I also wanted to point out Madam Chair that the safety of the new equipment compared to the older equipment that we have if you look at our 20-year average replacement and then you look at our geodebt we're literally financing equipment at a with a 10-year payback or payoff term but we're not we're not replacing them for 20 years so obviously the the the the care and and technology of the older equipment from a safety perspective is not to the level that it should be for a city thank you Marcus is that it or do you have other questions one simple final question what is the new mpg that we're going to be expected out of this fleet yeah it's all it's a good question and again fuel is going to be the biggest variable because of driver behavior um cost of fuel of course but you know in our analysis we're assuming two to three mile per gallon increase as you can see we're only netting about a ten thousand dollar fuel savings every year so if you think of the magnitude of of cycling out a you know 12-year-old fleet for a brand new fleet day one you know my money is definitely on the newer fleet of improved fuel economy so that's roughly what we see it's a lot of it's predicated on fuel cost per gallon as well as driver behavior mostly so again it's not if we took fuel completely out it wouldn't move this analysis that drastic over 10 years it's still going to be a huge win it's just we want to account for a little bit because the city will see not only fuel savings miles per gallon increase but the other you know big topic is the carbon footprint side of things it's obviously going to improve the amount of carbon footprint that carbon footprint the city has by just having more fuel efficient vehicles even in obviously their gas run powered vehicles but the pounds that they put out is much different than your current fleet today okay Bert um thank you um when when I take my car in for maintenance and I get my bills I see parts and labor and we we talked about the labor portion am I understanding that nobody's going to be laid off and and if we have a transition out we may see we may save a position if somebody retires next will we will we keep our maintenance staff the same will it need to be increased will that position that was replaced in the fire department where are we with maintenance where are we with the maintenance staff if we're going to save that much on maintenance where are we where Bert what I would would be stating at this time is that um as David had had presented we're actually short in the in our maintenance department at DPW but I can say that moving forward that throughout the city will be reviewing all departments um for for the level of of support that we need for resources and that that position these positions right now we're looking at trying to save the money right now and get the appropriate level of resources to our larger assets as David had said David yeah and and roughly what this portion in the maintenance that we're talking about is roughly $700 total so it doesn't even equal a full-time position in terms of the maintenance that's required in this area it just it comes down to where are the priorities and we have far too many priorities and not enough bodies really to assign to manage the entire fleet including the fire fire apparatuses that we've taken on so this will by by shifting this burden from us we're not only do we save financially but it also we gain hours back into areas of the fleet that we're not able to spend today I've got a couple madam chair go ahead thank you uh this is I believe this would be for the gentleman from enterprise I noticed in the uh in the referral you gave of wassa if I read it correctly they're on a four-year replacement schedule is that correct that is correct and you listed a great great number of municipalities that are in this program what percentage are going with the three-year program as you're proposing for us or the four like wasa or any other length of time what is it what are most of the municipalities doing yeah it's good great question it's um it's an evolving sector of our business so it's the fastest growing sector of enterprise over the last three or four years and what we've witnessed the the truth behind the data is exactly what these municipalities are taking advantage of so you can expect municipalities similar size around the area just for reference are on anywhere you know between that three and five-year life cycle so some vehicles are going to be less and some might be a little bit longer you don't operate a one-ton dump body with a plow and seltzer on the back the same way you operate a half-ton pickup truck they're all different they're completely different DNA style vehicles you bought they're they're sold different they're operated different the resale market's different so each vehicle class will have its own length of time or or or a set opportunity of time nothing set in stone but that's what adam will be doing with the city he'll constantly be working with the decision makers here to showcase different ways to cycle out and save money replace vehicles or hold vehicles so you can expect most municipalities that are are buying into the program 100% like the city of sheboygan has thought so far are actively doing what we are showcasing today another question is the majority of the vehicles the non-cdl vehicles that we'll be getting from enterprise what are the factory warranties on those are they similar to a car three-year 36 where then i could see the advantage of a of a three-year program so that the maintenance all would all for the duration would be would be covered by a factory warranty and all we would be responsible for would be the cost of the minor stuff the oil changes etc yep great point so in in the fleet government world most in this case this example showcases all vehicles will still be under factory warranty so usually it's a five-year 60 000 mile powertrain and in some cases it's a five-year 100 000 mile powertrain for fleet vehicles obviously the city is not going to experience any five-year-old 100 000 mile vehicles unless they're traveling significantly differently than what the data shows but you're exactly right the warranties would your local vendors would be able to support the warranty work at hand in turn as well as do the minor preventative non-preventative maintenance repairs as well and one final one what would be the the additional revenue we would get trading in a three-year-old vehicle versus some you know for example wasaw that's keeping them four years is it an additional 10 percent on on on trade in value or can you give us some kind of an idea where the advantage would be there on trade in yeah what you're going to see over probably the next 12 months to 48 months is the city of wasaw's average age will start to slowly go down over the last three or four years they've been with a client for us for almost five or six years and so really the government world in enterprise when it really took off around the country really started more everything on a five-year cycle but what we found in what Adam's experience with some of his government clients is we're seeing a lower cost of ownership on a vehicle as a whole anywhere between one year old to three years old then it would be on four or five so again it just really depends on the vehicle type the time of year the market trends and then Adam if you want to say anything any further on it that's fun too hello everyone my name is Adam Weber nice to meet you thanks for having us i just want to reiterate on the the length of cycle and how that changes especially this year more important than ever um through the pandemic with the manufacturer shutting down for close to four months and the delays of all the vehicles coming in the resale market right now is currently a 15-year high specifically the segment of cargo vans and pickup trucks is the highest return on your resale of any other manufactured vehicle out there today so right now we're in a perfect storm where that resale value is higher than ever and the in the government space the vehicles that come to the secondary market um that is unique inventory when you come across a one-year vehicle at 6 000 miles or a two-year vehicle at 12 000 miles and then a three-year vehicle say at 15 16 000 miles we are selling those vehicles for as much as you bought them for if not in some cases even more so there's examples now where vehicles are being acquired and within 12 months we're selling that vehicle for more than you pay for in the government space so that's where the impact is the resale market continues to stay high this year there will be a slight decline but it's so exaggerated amplified this year that taking advantage of this program this year I think is going to be very impactful to the city um but that's where enterprise really based their business model is selling vehicles they sell all these rental vehicles across the country directly to the dealerships and that's how we return the best return back to our clients so that's really where the magic of the program will work for you folks I have one more question madam chair this one's for uh David Bebel go ahead uh David when you're going out and looking for somebody to do the maintenance whether it be a sheboygan chevrolet or van horn chevrolet if they happen to be a gm vehicle I would imagine one of the things you're going to be asking them is when you bring in these vehicles what the turnaround time is going to be on maintenance because you will not be able to be able to have these things out of service for very long and I and I imagine there's going to be somebody in your department that's going to have to be uh kind of the person that is going to have to be in charge of maintenance and seeing that we they go in and we get them back in a reasonable amount of time and I think we're going to need those assurances from the dealership that you select that's correct we've been talking already internally uh rick with motor vehicle or supervisor and and uh in terms of how that would be managed it would be a partnership with enterprise we track this we'd have that communication we do some of that today uh with some of our vehicles there are newer vehicles for instance uh but but it's manageable and we think again uh that it wouldn't be all we wouldn't have like 10 of these out at this all at the same time there would be a cycle there'd be a process and there'd be a constant ebb and flow of of of vehicles being maintained in this manner thank you uh one more for Todd if I could uh Todd uh are any of the uh police squad cars and the you know the smaller vehicles that type of thing uh is that a possibility to uh uh to get those types of vehicles in this program yes it is and we actually talked about that quite in depth uh in the very beginning when Matt and I first met and talked um it will not include ambulances and things like that but it would and if you remember uh we just received two police squads recently and that was about a seventy four thousand dollar ticket item that we had on our cip so again if we can get these into rotation in the future uh that's going to save us a lot of money and it's also going to free up uh capital improvements um dollars so that we can use those funds for either reduction of borrowing and or um additional projects for the future good question thank you any other questions uh just let me say that um I want to thank you uh Todd uh for and David for your work on this I think this is innovative imaginative and um really a uh a credit to how the city is doing business in uh I guess I guess what I would call the modern world uh but in any event I think it uh I think it is uh an excellent program and with respect to that then I would ask for a motion to um uh recommend that they come from move forward with entering into this lease agreement with enterprise enterprise excuse me fleet management so move forward I get all right moved by Jim seconded by Marcus is there any further discussions hearing none all in favor state aye aye aye any opposed chair votes aye all right very good um moving to uh 3.4 which is a resolution providing for the sale of approximately three million six hundred sixty thousand dollars in taxable general obligations uh refunding bonds uh series 2021 b who would like to take that there's Carol hello good evening Thomas turned on his camera so I thought oh well but in any event go ahead Carol okay thank you all right I just prepare a report for you tonight as well and uh I see I am a presenter here which um I can uh click on the presenter screen and I'm not quite sure what's what's going to happen but um but I will try so we will try it so here we go and we talked about a set field resolution at your left meeting and this is prepared in the exact same format this is for uh three million six sixty of federal obligation refunding bonds and that's driven by the purpose which I will get into with you and this is to be sold at a future date and this date would coincide with the same date as the city would sell its capital improvement program notes so we would do the same thing prepare official notice of sale official statement um and uh come back to the council on March 15th after bids are opened and uh for the adoption of a what's called an award resolution at that time and uh now I would like to get into would be the purpose of the issuance itself and this is a new topic uh it's called advanced refunding and advanced refunding is a type of refinancing the most common type of refinancing that we work with is called the country funding where the city borrows money and pays off the existing debt within a relatively short period of time advanced refunding is a type of refinancing that the city considers when the existing debt is not at its prepayment date the prepayment date is is referred to as the call date federal government has allowed municipalities to use the tool of advanced refunding and what happens in that scenario is the city does borrow the money and purchases investments that are issued through the u.s treasury matter of fact they're called one state and local government series and those investments are matched to the payment of the existing debt so therefore what's happening is holders of your existing debt continue to get their interest payments until that call date because that's what they are promised at the time of the issuance of that existing debt so these u.s treasuries are purchased and put into an escrow agent that then is responsible for paying off the existing debt so the city basically walks away from that existing debt it comes off your legal debt limit as well okay so that's the concept of advanced refunding you are refinancing in advance of the call date but the debt will be called in escrow at that call date so we're only building the escrow to the call date okay so refunding itself is basically used for two different reasons one is to realize savings the other is to restructure your existing debt okay and because interest rates are at historical low levels it does provide insurers the opportunity to accomplish both goals now the city administration and I have been reviewing since 2019 and it's because of the low interest rate environment matter of fact I did a presentation back at a finance committee meeting in 2019 where we did talk about this and about this possibly happening in the future of course we weren't at that time expecting that we were going to be as to smoke interest rates as we are today so that's the reason for us bringing it forward to you today before that we thought we would be coming to you in a couple of years from now so use the general obligation notes and that is restricted to a maximum of 10 years each note typically have a prepayment feature or a call date on the last two payments in that 10-year note okay that's typically a structure that is favorable to the city so that it's not the city's not paying for that call feature so that's the reason why the last two principal maturities have a call feature now reviewing the city's capital improvement plans and the needs as well as projecting all future issues there is the concern came with the impact of the combined annual debt service on the tax levy was significantly increasing and that's why I mentioned back in 2019 we started to do this exercise back then and we looked at what would happen going forward and we said you know something's going to have to happen if we if these combined levels are not acceptable to the city if they're acceptable to the city then you don't need to do this but if this is something that you want to accomplish to bring down that impact then this is a tool that can accomplish that for you so we are looking at three specific issues a 2015 note a portion of 2015 notes and 2017 notes okay to manage the tax levy and the prepayment days for those is the 2015 notes have the prepayment date in october of 22 the 15th notes is october of 23 and the 17th notes is april one of 2025 and the plan that was presented back in 2019 was to wait okay we weren't thinking of doing advanced refunding we were thinking of waiting until we got the current refunding opportunities when they were callable so at that that analysis that if we wait to that call date the present value of the savings or cost of doing that and in this case it would be a cost because you're talking about stretching out the debt and that was on a present value basis about a break even this year okay so that was the analysis done back in 2019 so now that we're in the low interest rate environment that we weren't anticipating we said well what would happen if we considered doing the advanced refunding at this time and take advantage of locking in the low interest rates of course when we did the analysis back in 2019 we weren't sure what the interest rates were going to be in the future but this was giving us an example and opportunities to say we know we're at historic lows we take advantage of it and lock it in so that's kind of set the stage for why we're bringing this to you now of the existing notes that we're refunding so you can see the three issues there you can see the principal amount and you can see the interest rates that they're outstanding and then I total them to the right and keep in mind it's the principal amount and it's the interest to their call date okay because the bondholders are so proud to get their interest on those principal amounts to their prepayment date okay so all right so that those are three issues and the dollar amount associated with them so that that page this page that has the chart below here the schedule below shows you what if we didn't do anything okay so this starts with the existing city purposes debt service and this does not include TIF this is only debt issued for cities all right then moving to the right you'll see the four million 255 of the 2021 CIT notes that we talked about at your last meeting and now we project for financing each for four million dollars and that's in 22 23 and 24 and then there's an estimated combined debt service column and you kind of go look at that column that's the reason why we're talking about this the advanced refunding is because we're going from in 2022 which has the impact of the 2021 CIT notes we're at 4.4 million dollars of tax money the next year we go up to 4.9 that's a 488 thousand dollar increase in tax books the next year is 578 thousand dollar increase in tax money and then it drops down to a five million 271 but it jumped back up to five million six now it's only dropped down to five million two is because there's no principal repayment in that year 2024 which traditionally you would like to have you would not typically want to do an issue for four million dollars and pay back no principal but that was done purposely just to give you an idea of what what's happening with your tax combined tax levy taking into consideration what's already in place what we're doing in 21 and projecting out the next three years so this is the reason for bringing this to your attention as far as action right now rather than waiting into the future for whatever the market will bear in the future that the bottom of this schedule it goes back to now talking about this issue the three million six fifty of taxable general obligation bonds the process of advanced refunding under federal law requires it right now to be done as a taxable this is not a tax exempt eligible purpose it used to be until a few years ago when federal law changed and said any advanced refunding has to be done at taxable interest rates now in this current environment there is very little difference between taxable and tax exempt but in a more traditional market there would be a large difference between the two okay so so that's that's again a factor of current markets so again we're looking at those last 16 and 17 notes and we're replacing it with a stretched out schedule we're actually going to stretch those out between the years 24 and 2033 and right now the estimated true interest rate which which includes all expenses is 1.42 percent and of course the final rate won't be known until bids are taken and locked in which is March 15th and because we're stretching that out we're going to be looking at a cost not a savings okay for the times that we look at savings is when we are matching the same term of the financing but in this case if we're looking for tax levy release we have to stretch it out okay so that's what's going on here so the refunding will lower the annual tax levy requirement for city purpose debt service and I have that example for you on another page so we'll get to that in just a moment so the next page and I won't go through a great deal of detail on here but this is the sources and uses of funds which basically is demonstrating that the there is a portion of the 20 21 bonds attributable to each one of those three notes that we'll be funding they the same thing is with the expenses they're allocated between the three the expenses are estimate at this point and again the final number may impact the issue size we may have lower numbers than what we're showing you uses of funds you'll see if there's total cost of investments for escrow okay we're going to take the money buy investments from the u.s. treasury and put them in escrow the u.s. treasury prices those investments every single day so when we get to March 15th we will know what the bid is from the underwriter on the borrowing side and we also then have to go to the treasury on the same day to find out what are the great u.s. treasury on the investment side acted by two different markets and the borrowing side pulls up there is a usually the correlation to the investment side going up as well excuse me so i just wanted to make you aware of what's going on with the sources and uses of funds of the three million six sixty you'll see the principal starting in 24 in 40 000 years excuse me for the first two years and then it starts to increase to 70 40 and excuse me i'm so on to 33 the rates are taxable but the 200th rate of a 1442 again including all expenses okay now just trying to navigate down here um here we go okay now we're going to look at the results but this is a paragraph that describes the result and it's going to compare the existing debt service on those three notes to this debt service structure now what you're going to find out is there's two numbers one is the future value and then we present value we did the same analysis back in 2019 so in this case the future value is a cost of $321,000 but present value at the cost of money today it's 136 the analysis that we did back in 2019 had a future value of 500 loss of 562,000 but a present value of only 44,000 that was that breakeven scenario we talked about the reason that the future value costs is lower now is because we have lower interest rates now in 21 than what we were projecting what happened in the future when you could call in those funds that's the reason why the future value is lower now the present value is going to be higher now because we're doing it sooner we're going to have that financing done in 2021 instead of in the future years when they were callable so that's what affects the present value number okay so now let's look at here you can see the column starts with the 21 taxable investors that we just looked at on the previous page to the right you can see the debt service combined on those three three notices okay and then you'll see the column to the far right is the cost column so the first several numbers that do not have parentheses on them are savings and then of course the ones with the parentheses below them is where the costs are occurring because we're obviously taking the debt out of the front end and moving the debt down to the the back end okay so that's where the numbers are coming from and if you look at now what that what it all means okay that here is the same schedule that we looked at before that shows but this starts with the city persistence that service after this refunding if we were to do it as you've seen above so this is the new column that starts off with the debt service after refunding and then it includes the next four schedules of debts just the same as we've seen in the before refunding but then you can see how it rolls up on the combined column okay so now your combined number from 22 to 23 right it were at 4,379 in 22 it goes to 4,492 in 23 and then it goes up by 285,000 in 24 and then up by 143,000 in 25 and 26 kind of your highest point so between the two schedules over $700,000 difference in your high point okay so again this would be the whole purpose of doing advanced refunding it's all about where you would like your how to manage your tax study with what's outstanding now as well as into the future now not a tool that you need to refinance anything else going forward to accomplish this you can refinance them if it makes economical sense for you to do so or if your plans change but nothing in this scenario has been projected to do have to do another refinancing so if you do decide that you want to go forward with this we would be mirroring the timeline with the market preparations for the city's capital improvement plan everything would be done in one rating in an official statement and again come back to the council it would be a separate award resolution okay and on the date of closing April 1st what happened is that the money from the bond issue was directly to an escrow agent which is like an associated trust company is an example and that's the date where the city then is no longer responsible for those payments of the debt and the escrow agents then start taking over with making the payments to bond holders from those investments I know that's a lot of information at once so I'd be happy to answer your question I am understanding that interest rates are really low right now so refinancing right now makes a great deal of sense in in refunding bonds makes a great deal of sense the implications of taking our by escrowing some of our debt but does it does it make a difference in our day-to-day bonding is that how how we are day-to-day levy does that our year-to-year levy is is that part of why we're doing this in addition to interest rates are really low right now yes yes what is happening is that by stretching out the debt we are removing the 2015 and 17 notes debt service and the escrow so that we trade debt but by but stretch it out longer so it is definitely impacting your year-to-year levy that is that would be the whole goal of doing an advanced refunding for restructuring okay and then I'm understanding that there is a cost for us to do this and it's 300 plus thousand is that accurate that 300 plus thousand is the cost on a what's called a future value basis so that would be to pay for it at the top where you see in the beginning here okay there's the column that's to the far right it's 35 thousand that's a savings because we're removing the debt from the old issue the next the next three four five numbers are all in the positive that means you're all savings numbers that means we're taking that let's get off your levy and that's why it's a savings but if you look at the numbers below it at all in parentheses that's all we're putting it back on when there is no debt out there right now so we're putting that in those flats so that becomes the cost so we call that that grand total of that column that's the cost of 321 thousand that's called a future value and then what you do is you present value that at the cost of money over time and that is where the present value it says right underneath that net present value loss so that's 136 thousand oh 26th okay that's from that calculation into consideration all right thank you so Carol my question is because I only understood part of this it appears that there is at least for a number of years an advantage to doing this and then after a number of years there's the clear disadvantage is that a fair statement in terms of when you say it's an advantage or disadvantage are you referring to this schedule that at the top right yeah you know savings versus increased costs because we're taking it out here yes that's correct we are we are creating a savings because we're totally you know removing the debt from those years so it looks like a savings but it looks like an artificial savings but in the same sense we're putting in debt where we're creating the cost because there is no debt in there now so that's why we're creating a cost so between the two of them um the whole goal 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 that that only went out 10 years and now we might be going out the 13 or 14 years with that original piece of debt and so I just again so I understand the that interest rate the current interest rate then would be locked in yeah okay yeah 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 Oregon 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 four million dollars over these four years for capital projects and the difference would be the highest point on page four you would look to the 2026 and you're at 4.9 million dollars 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 your 21 CIP then we go back to page two Carol yes this is Todd I guess another another way to help Marcus understand is when you're when you reference the four 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 four million dollars 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 so how how if we were to do this proposed thing of four million dollar 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 but Marcus I guess your question is a little bit different the the issue is what Carol and I are working to do is that we're trying to balance the the cost to the levy which allows us to monitor to manage our operating cost our operating cost our revenue continues to drop and we have to be very careful in the year over year of levy of dollars going to from the levy to pay our operating costs to pay our bonds so when you look at that that's where we're trying to kind of balance it year over year versus having that those spikes that Carol showed you in 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 cost to pay the geo debt year over year when our revenues continue to decrease would that be correct Carol yes that would be correct I don't know the reasons why the existing city purposes that does have that um high of a um of a um annual combined levy is because the city does use 10-year notes to fund it's the IP and the more if you if you did that with a two and a half or three million dollar debt every year um you may not see those kind of spikes develop but when you get into doing four million five million dollars 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 a 250 thousand 270 thousand and then look at where your last years are where the call features are you're 900 and over a million dollars because again you're having it's very heavy on the back end of those two years the only way to not have that happen is to issue something that would go beyond 10 years okay so so that would be the only way that you would keep those last few years from not getting to that point so the money by being your debt within that 10-year amortization all these years is just now it's getting to the point where the amount of debt that you're issuing 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 you know where you how you want to manage that levy if that's an acceptable number to be at that you know five million six with even this type of the structure continuing then then that would be what you would expect to to happen if you do you want to lower that number then the advanced refunding is the tool that allows you to lower that number and either way you're you know you're stretching your debt out if you refund 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 bed 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 um you see what I'm asking I um 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 to increase our operating costs so that we can afford additional debt because we know that year over year and that's where you know the the team and I you know daniella and you know carol um when we when we met we talked about different models if we were to look at three million or four million dollars of cip because it's traditional that the city borrows um 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 some larger projects as we know but we also know that um using the last couple of years as an example that we've lost and put put the pandemic aside we've 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 in 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 four million dollars you saw that it actually softens the year over year of 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 as best economical best stewardship I hope that answers your question yeah and for me it basically comes down to um 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 um 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 it's it's it's not as interesting or as comfortable I guess is the word I would be looking for as as stuff that we've done in the past if you understand what I'm saying well the the decisions in the past were much easier because of the fact that we were looking at just refunding or you know to reduce to reduce our um our you know 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 to 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 we would want to later and and they to roll them in later would be a lower geobond that doesn't make sense to to go through the whole the whole process again the the concept that I need the finance the committee to understand is from carol's presentation we're trying to we're trying to buffer the increase in levy in in levy expense if that makes sense thank you so this question is probably the best answered by Todd um are you trying to hold the 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 um 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 the cost against our operating budget because our 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 our costs so that our operating budgets can can afford it without having to make reductions in service because a reductions in service it is not going to be that's a slippery slide because does that help you I got a follow-up okay thank you um so I was always under the impression that the debt here didn't 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 um comes again goes against our our our operating costs are 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 um we also have the fact that we have our net new construction and our expenditure restraint that the the state and government hold us to um 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 um levy to be able to pay for bills and pay for our overhead costs if we continue to do that obviously our 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 our overhead costs or our wages and benefits and we have to remember respectfully that we are a service industry so the the majority of our cost will be wages and benefits because of this the services that we provide does that help you we're getting into a rabbit hole here okay um so um vert you have a question and then i think we do need to kind of move on okay go ahead i i it's actually two parts i have heard the term operating cost is that day to day expenses that the city has aside from capital improvements is that what you say when you say operating costs and that's that's back to our levy when i look at the when i look at the annual budget i look at operating cost everything that is coming out of our out of the revenues that we have so um we have our wages and benefits yes but if you if you look back at what carol was showing us we have our our geo debt that comes out of our levy so what we don't want to get into and in that and we can sidebar this and and talk about this further later what we don't want to do is give all of our operating costs are the amount that we can that we use from the levy our general fund we don't want it to all be going to to pay our debt because there's wages and benefits there's you know each department has their budgets kind of concept okay let me interrupt when you say operating costs do you include the geo debt yes the payment on the geo debt is included in operating costs when you say operating costs yes thank you and then 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 yep we'll see that your levy or your tax levy going from 4.60 year before to 4.491 okay 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 proven plan of at this point approximately four million dollars a year and stabilize the tax levy so that you have a declining tax tax levy so that is that is a positive thing if you did not do it you go back to page two and you look at that same year right and and that is 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 then you would not need to reach an end okay it really comes down to where 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 four and 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 carol would you agree that our plan the plan the way we have presented it would show moodies that we're actually being very good at our our future endeavors moody's is the fact that the city um is taking on all of this capital improvement borrowings within 10 years and has call features on it for the purpose of making decisions as it goes into its future capital borrowing because at the time you're you're doing your financing like now we could be talking about three million we could be talking about four million or something totally unrelated going forward but having a plan is what's important to the rating 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't 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 you know it's all about what's your plan when it comes to a rating isn't i think that you know we have a very good story okay 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 first 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 i just need to briefly because we have another agenda item that's going to take some time we 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 um i um uh 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 um 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 if this can hold over for additional discussion um i guess you know it's probably potentially partially my fault that we've muddied the waters because i was the one that asked carol to present um more of a model where we looked at four million as a potential spend year over year for the next couple of years trying to show the committee that we are being um you know strategically planning for future um spends in the 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 um i agree that the geo debts that we've been looking at in the past couple of years has been what i call wizzy wig because of the interest rates being uh as they have been where we've been able to save very easily uh year over year so i can only ask that the committee um respect the program that we put forward but if carol if you feel that we can wait several weeks um for them to to go through this again uh i guess i i need your guidance on that carol i would allow us to stay on the same timeline as the city's uh capital improvement borrowing so that everything would be in the same rating process same official statements uh but if we were to uh wait a couple of weeks uh to review this more uh the financing can still take place it would just take place as its own on its own separate timeline um with its own separate official statement uh the rating process would be very short um but um and that's really what would happen between uh looking forward with it on this timeline if we didn't then we would be talking about a separate debt issuance whenever you know that becomes um you know the timeline that is is comfortable and answered all the questions okay so at this point i am willing to um uh move forward uh just uh as a committee member um and i think what i'm going to do is ask for a motion uh to uh authorize the city to issue sale of approximately three million six hundred sixty thousand 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 um my position at this point is that i am comfortable going forward i'm beginning to understand a little bit better um you know exactly what we're looking at here um but uh let me hear from other committee members let me start with you marcus i uh have some concerns with the um with with spending three hundred thousand dollars in the future so we can spend an additional hundred and thirty thousand dollars today so that we can balance the debt for the next ten years it doesn't seem like it's a smart move um and i'm really struggling with 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 cod 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 and 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 department to me though to me by doing this we're taking our work we're i 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 uh i guess i'm trying to say is that it it just gives us uh 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 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 tray is there anything you'd like to add can you hear me yes i'm not particularly comfortable either i share a lot of 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 a hundred percent there yet hi the biggest thing for me is if we could get a clear a to z explanation at the full council meeting if this moves on to that i think exactly what's going to happen what the future implications are what they are if we don't do this i'd be appreciated okay thank you Bert um i am i am in favor of this um my my 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 um 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 um it it appears as if it would not bother our ground uh bond ratings significantly decrease our bond ratings so um i i think the forward planning of this is probably very prudent however i 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 um i would still vote in favor of this um and i guess i question the prudence of taking of discussing this in full council 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 you just got to give us more ramp up time so i'd still vote for it chair all right chair um in the interest of yes 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 um and mary lin you probably remember these and um and jim uh that we took interest we we made interest only so um payments so we borrowed interest ahead of time for different areas that we were you know like tids and things like that so we 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 the ability to look at the next couple of years of cip at the four million dollar 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 i think uh i i'm going to add unless there are any other comments i'm going to ask for um uh did i get a motion all right um and um we can um at this point i'm going to ask for a vote um it can still uh i think on correct check proceed to council even with a negative vote and there might be an opportunity to um uh to slice up the elephant to use the birth analogy in such a way that um it is a little bit more uh comprehensible for all of us so uh with that in mind uh would all those in favor of the motion please state i hi i have two i uh all those opposed me me all right and chair both side so we have a three two vote um and what i would suggest is that and i don't know just how uh chunky our agenda is going to be on on on uh march first but um if we can um have perhaps and todd you and i can work on this um uh perhaps just a clearer presentation of what's going on um because it is a new concept for all of us and um and we'll take it from there how's that everyone okay with that okay very good um so i am going to go back to um three point five which i had mixed up previously but just not a good day for me um this is a resolution approving the investment policy for the city of sheboygan todd you want to go ahead with that thank you thank you madam chair um three point five is brought forward to for the committee to review um in in assisting daniella and the finance department i took over the comptroller uh responsibilities and in doing so it was brought to my attention that the policy that we had in place our investment policy dated back to 1995 and for those of you in um in attendance i think that's a very very very very old program and policy and so the first thing that i did was uh get uh chuck and and thomas involved so that we could update it and in meeting with our investment groups uh 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 is written it gives us the ability to expand if needed again it's an as needed policy but it gives us more uh flexibility to in the market to to find ways to make them make the city some money in a during an economic downturn so i'm hoping to get support in this it has been vetted significantly and it fits um what our our banking organization and our our bonding um association uh feel is needed to be economically viable in in a in a poor situation like we are today if you have questions questions for Todd or thomas or chuck whoever is going to be taking them Marcus thank you madam chair uh 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 um so please understand that when interest rates go down the um 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 um who we're bonding with who we're who we're working with and uh 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 you there is risk that you're tying money up but there's risk um staying in a short market because there's seriously there's no money to be made um in the in a short term market right now and we're talking I mean if if we can borrow money at less than a percent the interest the ability to make money in a in a poor market like this is less than a percent so again this is looking at state statutes it's also looking at um you know where we were in 1995 which is a lot different than where we are in 2021 again it's these it's a policy for us to follow and manage um the investments that we have we cannot buy game stock stock either what we can invest in is uh goes down you know we're basically limited to investing in in bonds from entities that look like us um 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 that's always a possibility you know at any time anytime you don't stick money in your mattress there's a possibility someone doesn't make the payment they're supposed to or the bank folds or you know any of the 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 there's sort of risk regardless of which which direction you go but as state law very much constraints how much risk we can take on even if we wanted to um work I don't see very much reason for us to be more conservative than the state of Wisconsin is so um I am I am quite willing to match their criteria um I also think that um having a poly 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 um I would move that we adopt the investment policy as proposed very good second all right any other discussions I have a question for Thomas Thomas I'm I'm reading here that we're you know that I guess the 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 the other can you go into the statue it's a little bit of exactly what we are allowed to invest in I presume it would be CDs what what else does the state allow I believe FDIC limits are 250 I believe it's $250,000 yeah it's 250 it's 250 what we in the investment portfolio are in the in the investment procedure is we talk about keeping the average balance within that FDIC insurance limit so you know when 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 you know our checks don't bounce when a lot of the things that the city buys as an institution are quite expensive and it's not it's not unheard of for us to be writing a check for more than 250,000 dollars so what we're 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 for those things one thing the finance department has done is they've gone to monthly check runs so again you know when when you're setting up to to process those checks there is more exposure there but you're also limiting the the amount of time that you are so let me pull up the the relevant state statute on we believe you but I mean I would like for my six o'clock basically it's cds of different duration then right it's cds it's other municipal bonds it's things of that sort you can invest in uh in us treasury bonds you can invest in the local government uh Wisconsin local government investment pool um the 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 is enough so balancing that that interest rate return and that risk okay thank you chair any further discussion chair three none all in favor state i i did you want to say something i'm sorry yeah i was just going to add that this policy is for all of our investments presently we we have investments through wisconsin bank and trust where i move money almost daily for for operating costs um as thomas alluded to the 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 shabuagan so again this is one of those urgent items that um i've tripped over that needed to be updated so i appreciate their support there's no further discussion all in favor state i chair both sides 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 um 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 um is not a reflection at all i think i can speak for all committee members here um uh of your uh willingness to really take hard looks and be very energetic about uh representing not only the best financial interests of the city but all the other things that we do which is is pretty complex and extremely important so with that um do we have a motion to adjourn some of the second all in favor i need to chair both sides thank you all um 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 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 final one last tuesday it went pretty well yeah a little run down the next day but otherwise no problem yeah great well we're just excited and i'm ready to book my