Music Commissioner O'Meara, welcome. Thank you, Chair. Okay. I need my props. Okay. This is the update of the finances through October of this year. That would be four months into the fiscal year. And as we usually do, we go straight into a graph of comparative unemployment, and this shows a positive trend where it is going down from the peaks during the recession. We are a little unusual here that we don't have an extra month of data. I think that has to do with the shutdown of the government. So I will be giving you August information for all of this rather than September. But for the first line there, the yellow line, that is the Kentucky unemployment, and it dropped to 7.8 in August, and that's compared to 8.5% in the preceding month of July. The green line is the national unemployment rate, and July was 7.4. It went down to 7.3 in August, and we have September at 7.2, but then a slight tick to 7.3 in October. The red line is the Lexington MSA, and it is following closely the bottom line of Fayette County. In August, it was 6.2, and that's down from July of 6.6. And Fayette County alone is at 6.1 in August, and that's compared to 6.4. So as you can see, except for that slight tick in October with the USA, we're getting month-over-month improvements. Next slide is just a smoothing of a three-month average of those to show you a trend line. And then we go into our economic indicators, and we have favorable things to say to each one of them. I already spoke the first one being unemployment going down from 6.4 to 6.1 in Fayette County. The Kentucky County permits issued were $12.95 for the month of October, and that's slightly more than same month last year as well as the preceding month. So that's trending in the right direction. We go to new business license, and we have the same comparisons, 285 in October. That's compared to 254 the same month last year and above the 183 the preceding month. And finally, we're into the home sales and foreclosures. Home sales are $829 for the month of September. That is better than the $676 from the same time last month, but it is a slowdown from the two preceding months, which were in excess of $1,000. And then again, on foreclosures, we're in the $40s range. We're at $47 compared to $92 the same time last year, slightly more than the 41 from the previous month. Here are the four major categories of revenue, the employee withholdings, the net profit, the insurance, and the franchise fees. Comparing for just the month of October compared to our month of October budget, and we do have some erosion in the first one being employee withholdings, I do feel that the year-to-date is a better evaluation than one month alone. So let me go to the next slide, which shows you the four months ending, October 31st, compared to the four months of budget for the same period. And we show soft comparisons on both employee withholdings, our largest revenue source, as well as net profits. We continue to show good year-over-year and year-over-budget insurance. And the franchise fee has a negative variance, but that is mostly a timing difference that washes out in the first week of November. If you look at the same comparisons to same month last year, you pretty much see similar results. And then if you look at year-to-date actual to the same four months a year ago, We again show softness in employee withholdings and net profits with positive gains in insurance and franchise fees for a total year-over-year of 3.9%. We expect it to be better than last year. We do have a watch on the employee withholdings especially. That is our bellwether revenue source. It is only four months into the year, but we will be watching that. Questions at this point? I see none. All right. The next slide is the nuisance abatement and lien collections, just a comparison of preceding year that has been requested by the committee, and it's there for reference. I'll then ask Melissa Luker to come up and talk about total revenues and total expenses. Thank you. Director. Good afternoon. Commissioner O'Meara has already spoken about the top four revenues, so I'll move on to the other revenue categories we have. There's a positive variance in other licenses and permits. This is due to the D-tax fee, as Bill was showing home sales are up, so it makes sense that our D-tax fee would be up as well. And regulated license fees are up. This directly relates to the new businesses that we have. The ad valorem, it's about a $180,000 variance. This is due mostly to motor vehicle registrations. We're up over last year in that category. The services category, where you see the biggest variance, once again this month, it's related to the detention center fees. This is bed fees, other fees that they collect, and medical reimbursements. They're doing a better job of getting the reimbursements back from the state. The other income down at the bottom, which is about a $660,000 variance, that's due to penalties or interest. The majority of it is due to penalty and interest on license fee collection. We've had some large collections the past month, and so that's part of it. And then also code enforcement fees are up over last year, And if you saw the slide before this one, you saw that we were up year over year on code enforcement fees. So those are the variances, explanations, and the other categories of revenue. So total revenue taken into consideration in the big four in our other revenue accounts for about $750,000 ahead of where we had expected to be at this time. Next is the expense side of this. On personnel, we have about a $350,000 variance. We're just right at budget there. Operating, you see a larger variance of about $2.8 million. This is due to savings of professional services, utilities, phone, vehicle equipment. It's basically a large gamut of things across government that we are not spending at the rate we had budgeted to be spent at this point in time in the year. partner agencies. That's just a timing issue of when their purchase of service agreements lay out the payments, so that will wash by the end of the year. The operating capital expenditures, that's people are just spending purchasing capital sooner in the fiscal year than what we had anticipated. So we have a variance, about $3.1 million in expense. It's about a 3.6% variance to budget, So we're tracking pretty well. If you take into consideration the revenue and the expenses, we're at a favorable variance of about $4.2 million at this point in time in the year. And then the next two slides are for reference. They're showing current year to prior year, the revenue and then the expense. Are there any questions? Any questions, counsel? I see none. Thank you. Mr. Mayor, did you have any further comments, or is that... Or can we move on? I just have an informational. I would like to introduce a new addition to our staff. We have a director of revenue. It's Rusty Cook. I'd just like to introduce Rusty. We gave him a pass and did not ask for him to make a presentation to the committee his second day on the job, but we're glad to have him and look forward to working with him and you as well. Thank you very much. Welcome. The next item on the agenda is the outsourcing internal audit functions, and this was brought forward by the general government links, And I think we'll go ahead and start with a memo that Glenda, I think you prepared, which kind of sets the tone of this. Good afternoon, everyone. In your packet, there's a memo drafted by the Department of Law concerning outsourcing the Division of Internal Audit. And for those of you who were not here when we initially created that division, we started out by giving you all a little background about how we got to where we are in terms of internal audit being its own office. As to the question of whether or not it could be outsourced, if we were to outsource, and this would apply to any department or division or any division of the government, If we were to outsource a particular division, we would be laying off those employees. So our rules relating to laying off civil service employees would apply. And the only way to do that, if you're going to lay off employees, it would be for economic necessity or there is no longer a need for the job. So if you're outsourcing it, someone else is doing it. so we know that the need for the job still exists. So then the only other option is economic necessity, and you would have to be able to prove with support that it's cheaper to outsource it rather than to keep it in-house, and you can't just say, oh, I think it'll be cheaper. We have to have some concrete data to show that it would be cheaper to outsource those services, and that's the memo in a nutshell. Thank you. Anybody have any questions for Ms. George? I see none. Thank you very much for that. Now I'll ask Paul Schoeniger. He gave us a memo that talks about the outsourcing of internal audit functions, and I think he just gave us a little brief history and some ideas. So if you would kind of give us some overview of that, I would appreciate it. Thank you, Member Councilman. As Lyndon said, it's going to be difficult, if not impossible, but you have limited options to outsource this division. And what I had tried to identify any communities that had outsourced their internal audit function. The only community I found that was able to outsource internal audit was Stockton, California. And please do not use those as a comparison. As you know, they're going through a bankruptcy. and one of their decisions was to create an internal audit function, and they, for whatever reason, decided to outsource that internal audit function. But I wasn't able to find any other communities that had outsourced their internal audit function. Numerous private sector companies outsourced internal audit, but I couldn't find any other public sector examples. But I also contacted, in addition to contacting Mr. Sally about getting their business practices and an idea of what they do, I contacted an organization called the Association of Local Government Auditors. It's based here in Lexington. It's a trade association of, just as it says, local government auditors. And they assigned two auditors to work with me, one Bill Green, who's out of Phoenix, Arizona, who's the auditor for the city of Phoenix, and the other, Jay Poole, who's the auditor in Chesapeake, Virginia. And Mr. Poole had taken some time and looked at some of the audits that the internal audit staff had prepared, looked at their self-assessment, and has offered some opinion. And I think Bruce would agree that Mr. Poole was concerned that the standards used by the office are from the Institute of Internal Auditors, which is a very reputable national organization of, I think, 17,000 auditors. And at least Mr. Poole felt that the standards would be much more appropriate if there were standards from the local government auditors association. He felt that they'd be stronger and a little more breadth and a little more effective and a little more efficient in terms of their recommendations. He also was concerned that in their annual report there was very little discussion about a cost-benefit analysis, that we know that the division costs $600,000 roughly to operate, and is it bringing $600,000 of value to the organization. Mr. Poole was pretty confident that it was, but he didn't find anything apparent that would lead to that conclusion. So he also indicated that while the self-assessment that Bruce and his staff go through every five years or so is very valuable, that a peer review would be much more appropriate. And so he's made those three suggestions to us. And again, the Association of Local Government Auditors is probably trying to sell their services. but I think Bruce would acknowledge that they use the Institute of Internal Auditors rather than the Association of Local Government Auditors standards as their basis. Thank you, Mr. Schoeniger. Is there anybody, any questions for Mr. Schoeniger? With that, I will invite Mr. Sallee. I see you have a PowerPoint, and first of all, I want to say I think this has been a good function for the government to have an internal audit function, And I guess in your presentation, could you address the issues that Mr. Schoeniger raised with the differences on the two different bodies that look at the one, I think the one looks more of a private sector, the other one looks at local government, and also the peer review, those two would be issues. The presentation does not address that specifically, but I would be happy to address that before I start my presentation. The Institute of Internal Auditors is actually an international organization. Mr. Schoeniger said he thought they had about 17,000 members. They actually have more than 180,000 members worldwide. The Institute of Internal Auditors is an international professional association, and it is the internal audit profession's global voice, recognized authority, acknowledged leader, chief advocate, and principal educator for the practice of internal audit worldwide. We follow what the Institute of Internal Auditor Standards are often called the Red Book Standards. So Red Book is followed in both government auditing and in the private sector. It's true the private sector follows them very closely, and when you consider what private sector internal auditors have to deal with, Sarbanes-Oxley, Security and Exchange Commission rules. You have to have very robust standards to make sure that you are following the rules and the laws that affect public companies. Some government agencies also do use Yellow Book. Some use them interchangeably. The best example that I can give you is Louisville. Louisville, in 2011, went through a quality assessment. and in that quality assessment, Louisville primarily uses Red Book, the Institute of Internal Auditor Standards. They asked the company that did their quality assessment, while you're doing it, look at both Red Book and Yellow Book. Let's just see that we're in compliance with both. But they used the Red Book process, the Institute of Internal Auditors process. And in the quality assessment that was done by an outside CPA firm, They told them, you're in compliance with both. The only way that the red book, different from the yellow book, and the only place where Louisville was out of compliance, was the yellow book says you've got to have a quality assessment every three years, and IA standards say every five years. And that's basically the difference. A lot of the yellow book standard is written for financial statement audits done on government entities. So, for example, our public accountants would need to refer to Yellow Book. The state auditor doing county audits and sheriff's department's audits would need to refer to Yellow Book. But otherwise, the standards are very, very, very similar. And, in fact, I talked to the Louisville Audit Director just today, and he told me, he said, I never refer to my Yellow Book. I go to the Red Book, the IA standards. And you feel free to call the man and ask him yourself. He'll tell you. Thank you. And I guess the other issue was the peer review. Yes. And I think you talk about that in your... I do a little bit, and I don't want to go over. I know you've got a lot on your agenda, but I'd like to address that. I don't really agree that the peer review is better. Let me explain quickly what we do. And if I need to stop my presentation short, it's up to the committee here. But the Institute of Internal Auditors says every five years you must do a quality assessment. You have two options. You can do a full assessment where you bring in outside parties, or you can do your own internal assessment, and then you bring someone in, an independent validator, a CPA, a CIA, which is a certified internal auditor, and they will validate your results. We have gone the route of doing our own assessment and letting it be validated by an outside party, an independent outside party, because it's a lot more cost effective. It cost us $5,000 to have our assessment done in 2012. Louisville did theirs in 2011 using an outside firm, and it cost $25,000. Both are completely acceptable under the Institute of Internal Auditor Standards. So that is the only, that is, I mean, and you're getting the same result. You're getting the same look at the process. Thank you. Anybody have questions up to this point? Seeing none, if you would, go ahead with your presentation. Thank you. Well, thank you very much for the opportunity to give this presentation. I do appreciate it. I'm happy to talk to the council about the Office of Internal Audit and the value that it adds to the urban county government. The Office of Internal Audit was formed in 2002 by the Urban County Council. It's my understanding that it was recommended three straight years by the external auditors that this office be established. The director of internal audit, myself, I report to the Internal Audit Board and also administratively to the chief administrative officer. Now, this reporting arrangement ensures independence of the Office of Internal Audit in selecting and conducting audits and in communicating the results. Independence is very, very important, and I'll touch on that a little more in just a couple more slides. The Internal Audit Board is a highly professional board. Our chair is Jennifer Burke. She's a partner with Crow Horwath. Crow Horath is one of the largest accounting firms in the United States of America. She's a CPA. She's a certified risk professional. She's a certified fraud specialist. She's AICPA certified in financial forensics. Gary Ludwig, who is here today, is the vice chair. He's a retired FBI supervisory special agent and a CPA. Fred Brown, who is a former 8th District Council member, and who is also here, is a practicing CPA with the firm of Brown and Doherty. Gwen Pinson is an attorney with Stoll, Keenan, Ogden, and a former general counsel of the Finance and Administration cabinet. There are two council members who serve on the board and provide council representation, Ed Lane and Julian Beard. And the mayor's designee is Bill O'Meara, Commissioner of Finance and Administration, who is also a certified management accountant. Our non-voting members are Sally Hamilton, the CEO, and Stacey Maynard, the council administrator. I mentioned that in 2011, Louisville had a quality assessment performed. This was done by Honkamp Kruger & Company, CPAs and business consultants. When they performed their quality assessment, they actually told the Louisville auditors, you need to look at the process they have in Lexington, because the Internal Audit Board that Lexington has in place is a best practice, an innovative practice, for how you can develop independence in the internal audit function for a government entity. And that is mentioned in their report to the Louisville auditors. Who is the Office of Internal Audit? There are five employees there, myself, my Deputy Director, Chris Enslin, and three auditors, Teresa Gibson, James Quinn, and Alicia Boyd. Now you'll see from the slide here that all five of us have professional certifications that are relevant to the practice of internal audit. And four of the five have MBAs as well. I mentioned the quality assessments. I won't go back into that again, but the slide just talks a little bit about how we have the independent validation. And we did receive the highest possible compliance ratings for compliance with Institute of Internal Auditor Standards in both of the assessments. So what services do we provide Lexington and the citizens? We conduct our audits using a risk assessment process, which is required by the Institute of Internal Auditors. We also take special requests from the administration and the council. We also conduct periodic follow-up reviews, on-site reviews, to make sure that management has implemented the action plans they said they would put in place. Since October 2006, and that's when I started tracking this, so that's why I have the number, we've issued 68 audit reports with 385 findings with recommendations for management. Some best practices. We use ACL audit software for data mining and to identify potentially inappropriate transactions. With ACL, you don't have to just do random sampling or discovery sampling. and you can look at an entire population of transactions within an account or accounts. Now, an example of how that works was actually given to you coincidentally last week. We completed a review of looking for ghost employees within the payroll system. We did not find any. I'm happy to say that. But we were able to look through the whole system and identify anomalies that we then drilled down on to make sure that we did not have ghost employee situation. Ghost employee meaning that the employees on the books, but they do not actually work for your organization. Just to follow up with that, I think the email you sent out, there was 200-plus that were working full-time or part-time, or thereabouts, I think, when you sent that out. There were 26. I'm sorry, I meant 26. Yeah, 26. And you found out that they weren't ghost employees. They were just doing different jobs. Right, right. Some of them, for example, were police officers, but they would also do the school, I guess you'd call it the school beat, where they would make sure, you know, that the crossings were safe. So they were in the system as two different employees. You had two Social Security numbers. You had duplicate Social Security numbers, which is always a red flag in the payroll system. And so as an example, you know, we saw those and went out and we verified these people exist. and that's one of the basic steps you have to do is go out and make sure that they actually work for the organization. There were some in Parks and Rec as well. They just had two different duties, but again, no concern about there being a false employee in the system. Thank you. We also developed the ethics tip line. This was based on a recommendation from the state auditor, and we are responsible for the tip line administration. Dipline was approved by the Internal Audit Board and founded by the Urban County Council and is also a best practice. I'll try to go through these kind of quickly because I know you have a lot on your agenda, but just a few examples of some big hits that we've had through the years. In 2004, we identified 106 deposits at Parks and Recreation, totaling $106,000, that were never deposited. The money was never found. The missing deposits never did show up. But the missing deposit activity stopped the very day it was announced that internal audit was coming out to audit the golf courses. In 2005, we identified a practice in waste management where employees were paid significant amounts of overtime that they did not actually work. And this audit resulted in significant reduction of future waste management overtime costs. In 2009, we identified $1.2 million held in a community corrections discretionary account that was unknown to both the administration and the council. These funds were subsequently transferred to the general fund, and now all future revenue from that discretionary account flows into the general fund. In 2009, we did the audit of the Lexington Public Library, where we identified expenditure issues, appearance of a conflict of interest, improper use of a library laptop and significant IT control issues. Moving forward to 2013, we did an audit of inventory where we identified the need for a CAO policy to address government-wide inventory control issues to prevent losses or theft. And we also identified PeopleSoft as a significant potential risk to urban counties' objectives and operations. and in 2013 we co-sourced with Protivity to conduct a comprehensive audit of PeopleSoft. Now what can go wrong if you don't have an internal audit function? This is just one example. In 2013, August 2013, the Cincinnati Inquirer reported the city of Covington, Kentucky, has suffered a $600,000 embezzlement perpetrated by their former finance director. The city commission, which is the equivalent of the council, is now in the process of hiring an internal auditor. It's interesting to note that the city commission had pursued the internal audit function previously, and their finance director had sought to block it. Now we know why. The Office of Internal Audit routinely audits for incompatible duties and a lack of sufficient controls which could prevent or detect an incident such as the one that was experienced in Covington. The next four slides I'll go through very quickly for your time. These bar charts are provided by the Association of Certified Fraud Examiners. The first one, and they're all about reducing fraud risk. The first one shows how a fraud was detected in the percent of cases. You'll notice that 43% were detected through a TIP, and we have implemented the TIP line and we administer it. 14% management review, 14% internal audit. Way down the list, external audits, 3.3% because they do a good job. It's just because we look at things differently. We go deeper than an external audit because we have a different focus than they do. Next slide, how bad can it be? if you have a fraud. In only 3% of the cases was the fraud revealed because someone notified police. But the cost, the median loss, the average loss was $1 million. When the external auditors found it 3.3% of the time, the average cost $370,000, the average loss. Under the tip line, which was 43% of the time, the loss was still $144,000. When the fraud was identified by internal audit, which occurred 14.4% of the time, the losses were $81,000, the lowest median loss according to the Association of Certified Fraud Examiners. How did the frauds occur? What were the most important contributing factors? If you will focus on the top three lines there on the bar chart, lack of internal controls, override of existing controls, lack of management review. Collectively, that's about 72% of the contributing factors that allowed a fraud to occur. When we do our internal audits, we routinely look at internal controls, are they in place, are there situations where the controls can be overridden, like a segregation of duty issue, and is there proper management review. So we routinely look at those areas when we do our audits. as well as some of the other areas there. Finally, very quickly, how much can be recovered if a fraud does occur? In 48% of the cases, according to the Association of Certified Fraud Examiners, no recovery. Nothing got back. In 15% of the cases, anywhere from 1% to 25% recovered. In only 15.8% was 100% recovered. And you can imagine not just the financial loss, but the reputational loss to an organization, especially one like the government where it has to be reported and has to be transparent. So the Office of Internal Audit works hard to protect both the financial and reputational risk of the urban county government. We audit all urban county funds when the risk assessment process or special requests or the tip line allegations justify it. We're not just limited to the general fund. Our cost is very economical. Uncle, our 2014 budget, which is not $600,000, our 2014 budget, well, maybe you're right, I think it is $590,000. You're correct, Paul. Thank you. It's one-tenth of one percent, one-tenth of one percent of the urban county government's total annual budget. I'd be happy to take any questions. Thank you, Mr. Salley. Are there any questions? Council Member Henson. Thank you, Chair. Thank you, Bruce. I was curious when you do an internal audit how you determine if you don't get something through the tip line or whatever and it's just randomly chosen? No, it is not randomly chosen. The process we go through, and this process is required by the Red Book standards that we follow, we must do at least an annual risk assessment of the urban county government. We look at both the revenue and the expenditure coming in and out of divisions. We evaluate the processes and the functions they're responsible for. We look at prior audits and if there have been significant issues in prior audits. We send out questionnaires to key personnel within the urban county government seeking their input into areas where they think that an internal audit might be useful. Those include the chair of the Budget and Finance Committee, the commissioners, accounting director, revenue director, purchasing director, the CAO, and I also talked with the mayor about this this year as well. And the board then, once we put together a preliminary recommended audit plan, we then bring that to the Internal Audit Board, who again under the Internal Audit Red Book Standards is required to review and approve that plan. The board looks at it, they can add or take away from the plan as they see fit. They approve it and then that's the plan we work on for the year. A special request from administration or council or tip line is something, tip line allegation is something that would interject something into that audit plan. And the only thing that we do with that, if there's a special request, is that we ask that it go through the board because the board is charged with managing how we conduct the audits and making sure that we use our resources wisely. So the board will look at the special request, and almost without fail, they will say, yes, we should do it. And we move forward with it. That helps me to have a better understanding of the flow a little bit. Thank you. You're welcome. Any other council members have questions for Mr. Saleh? Seeing none, I would just like to ask, since I was on the general government and council member Lawless was, but she wasn't able to be here, and I think this was kind of a big issue for her. And we talked about this, and unfortunately it wasn't in the packet, but I think one of the issues, and I think this is a positive function that we have for government, I think it was a good thing we did, we added. The one thing that we looked at, though, is we started doing comparisons with other cities with budgets and size. And I think this is one thing that Council Member Lawless brought up was our staff size and our budget compared to other cities our size. And I don't have that email of those in front of me, but I was trying to, if you could, if you don't have it, you could send it to us again. But just how we compare to other cities our size and the budgets, if you would. Could I speak to that? Certainly. Okay. When I went to the links committee and they asked for that additional information, I had about 24 hours or so to put that together. The only thing that I could find was a report from ALGA, which Paula talked to, that had a sampling of cities. One thing, two things were very, it was not a good, it was not an apples-to-apples comparison, but it was all I could come up with to try to help the council. Because my understanding at the time was that the Lynx was interested in maybe adding some positions, not taking away. Right. And as I said, I think it's been a positive function for government, and I think it's... But the apples and ors comparison was this. You were looking at my 2013 proposed budget, which included, among other things, $150,000 for the productivity audit. the information I gave you was 2010 numbers from the other cities because it's all I could get my hands on. So, you know, their costs are two or three years behind where ours were. And if you take the protivity audit out of that package, you would have seen us go way much further down that list, if that helps any. Could you possibly send that to the committee here now that you have more time and it doesn't have to be done in 24 hours? Okay, I'd be happy to. And there are some updated numbers that I can give you, too, that I think will help a lot. And there was, when I was reading, I think it was Mr. Schoeninger's memo in here, it talked about Mr. Green had suggested an attempt to merge the functions of internal audit and risk management. Is that something that's a common practice, or is that something that has been talked about, or what's your ideas, thoughts on that? Well, again, there's a big difference between what our risk management group does and what a risk management function in a corporation would do. Our risk management function is really it's insurance and safety. That's what they look, that's what they manage. But a risk management function in a corporation is more about identifying internal control risks, identifying risk appetite for the whole organization, running an enterprise risk management program that addresses internal control, operational controls, financial controls, compliance controls. Insurance and safety is really not part of a typical corporation's risk management process. If it is, it's a small part of it. So again, that's an apple an orange comparison there. Well, thank you. I don't have any further questions from Council Members. Thank you, Mr. Sally, for coming and for all you do for the government. You're welcome. Thank you. Welcome, Council Member, former Council Member Fred Brown back there. Good to see you again. The next item is our debt management policy review. Council Member Stenet, would you like to start this out for us? Yes, sir, Mr. Chair. Basically, the reason why I brought this back up is this was a draft document that the council has never approved officially. We stopped our approval process in order to work on an additional parallel policy, which was the capital management policy. Obviously, with things going on in the economy, we haven't had time to do that yet. But I thought it was important to go ahead and bring this forward since we're already implementing a lot of the policies in there already, to go ahead and formally approve it, kind of go through it today, refresh our memories, what it says, especially for the new people, and then go through it and formally accept it and approve it and move it on instead of sitting on the shelf as a draft document. So that's where we're at. Do we want to go through the presentation here? Yeah, I thought we would, just to kind of refresh the highlights as to what it means. Are you going to lead the presentation? Mr. O'Meara is. Mr. O'Meara? Okay, good. Thank you, Chair, and thank you, Council Member Stenet, for the opportunity to go over this. Council Member Stenet is correct. We brought this policy to Council, I think, in 2012, and I thought that I would just go over why you would have a debt policy, what we're trying to accomplish, and how we put this debt policy together, and then go over the components that are in it. So that's basically the agenda items to go over those things. The first thing is, what is a debt management policy? and it's basically a guide to follow on how debt could be issued, the types of acceptable debt, and the level of debt that is our target. It's intended to establish the purpose, the type, the structure, the method of the sale, the usage of the money, and how to maintain that debt. The goals are to improve the quality of the decision-making when there's a debt issue, give us those guidelines for the structure, make a commitment for long-term financial planning and assure rating in the capital markets that we're exercising good government. So what we went about doing back in the 11th and 12th era, we went to the best practice paper on debt management policy put out by the Government Finance Officers Association. They are considered good guidance for governmental issues, especially in the financial area. We were working off of the one issued in 2003. They issued an update in 2012, which we have gone through and made sure that our debt policy was in compliance with that new position paper. We also had an intern from the Gatton School from the University of Kentucky Business College, and he did a whole lot of the research and work both on best practices as well as the next bullet, looking at what other cities had published their debt policy to be. And we looked at those that did have something published. Some of the examples, they're not necessarily peers, but they were the ones that we were able to reach out and find in order to look and see what other people had done. Ann Arbor, Michigan, Charlotte, North Carolina, Chicago, Illinois, Louisville, Kentucky, Orlando, Florida, Pasadena, Richmond, Virginia, Miami, Florida are some of the ones that we looked at, trying to see what people had done and how they had addressed the issues. So what is in our debt policy? What is the purpose of it? Well, it's to maintain or improve our AA rating that we currently have in the market. And what is the purpose of issuing a debt? It's primarily for the acquisition or construction of capital projects, those things that have a long-term useful life. And the types of debt that it says that we're permitted, we have general obligation, that the pledge of the full faith of urban county government, that is your best debt, that is your lowest rate, because they're going after our first dollar. If you look at our obligations, when we issue that debt, we have to pay our debtors first before we pay payroll or anything else. They have the first position as far as dollars coming into our coffers. The other type of debt is one that's pledging revenues. An example of that would be sewer debt, where we're pledging that sewer revenue stream to this particular debt stream. And then there's what's called special assessments. We haven't done one yet, but an example of that is tax incremental financing. We're dedicating those incremental tax revenues that would come from a new development to help pay back a debt issue to support a special project. Other components is what kind of debt structure do we want? well the terms. We want to match the terms with the useful life of what we're financing. Front loading and back loading is something that people do. We've allowed ourselves to do it, although we're saying we're trying to have even debt, kind of an even mortgage payment, although in some cases we might want to structure the front and loading debt to match debt that's rolling off of our books that's expiring. It's a comment on variable debt. Our stated purpose is to have fixed debt wherever possible, but if there comes a time we would want to come to council and ask, we may look at a variable debt, as well as what's called synthetic debt. That's a new term for me, but I was trying to figure out what they were talking about, and it's basically looking at derivatives. I really don't think if I'm standing here that we'll be talking about that as something that would be suggested to council. But we do go through what we have to do, the analysis that the Commissioner of Finance has to do in order to evaluate and maybe recommend any kind of derivatives. And then we're committed, as required, to competitive sale. We don't do personal, private negotiations with a single lender. Whatever we do, we're doing in an open, competitive process. And then finally, we talk about refunding of debt. Our target is a 3% savings before we look at the additional cost of doing another debt, although we will look at gross savings to make sure that 2% of a large debt service may be worth our wait to look into it versus 3% of a smaller. And we also always try to not extend the terms of the original bond that we're issuing. So if it's a 20-year bond and it has 17 years to go, then if we're looking at refunding, and we want to make sure we don't go out further than those 17 years remaining on the debt. We also quote the legal debt limits, although it's kind of a non-starter. KRS 66.041 says we can't go into debt more than our taxable property. That's $2.7 billion. There's no way this city can afford anything close to what our legal maximum debt limit is. Now, there is no subject KRS for revenue debt, So that would be the general obligation. But again, that's a nonstarter. We're not talking about any kind of debt that's that kind of level. So instead, we talk about what kind of affordability or capacity targets do we want to have. This council, for many years, has talked about having a target of a 10% debt service as a percent of either operating expenditures or recurring revenue. In the 2007, 2008, 2009, 2010 period, we balanced our budget on nonrecurring revenues, And we're saying that if we're looking at this 10% debt target, we need to look at those revenues that are ongoing, that are going to occur year after year, which should support your operating expenditures. That is our target, our stated target. That is something we want to work toward, but I think we are acknowledging, and you all are all aware, that we are not there yet. This is an illustration of where that target would be. That's your black line going out to 2020, I believe, assuming a 3% year-over-year revenue growth. And we're now 11.5, somewhere below 12% right now. It's actually going to go up before it goes down. And if you'll parse out the three colors on each one of the bars, the gray is existing project debt. Those are the things that are for capital. That middle ground, that yellow, is the bonding we did to try to address the underfunding of the pensions. And then the red is our modeling. That would be assuming that we had a $15 million capital project debt each year going forward. And so if we model, if actual turns out to be what we're modeling here, it would be 2020 before we met our 10% debt limit target. Of the $34.4 million debt service, 10.8 of it is related to those pension bonds. So if we had not issued and needed to issue those pension bonds, we would have project capacity within our 10% target. So we're having to work our way out of those pension bond obligations that has a suppressing effect of where we can be if we continue with that target of 10% debt service. Thank you. We do welcome this discussion and would also welcome acceptance of it. This is a policy. It's not a law. It's not a resolution. But we do welcome requested amendments, discussion, or an acceptance as this is what we're following right now. Thank you, Mr. Mayor. Mr. Stenet, did you want to? I'll go ahead and make the motion to formally accept the debt management policy as presented today. So move. Second. We have a motion and a second by Council Member Massadi. Now we're open for discussion. Council members, do we have any discussion? Seeing none, I'll take a vote. All those in favor of the motion say aye. Aye. All those opposed? That passes. Thank you, Mr. Mayor. Thank you, Mr. Stenet. Thank you, Chair. And if I could just add another closing comment. We've also been working on an investment policy, and we hope to have that for a presentation the first of the year, whether January or February has the capacity. But we have worked on that and want to formally have an investment policy to bring port to our council. Look forward to it. Thank you. The next item is the urban services refund policy, and this, too, was put in by Council Member Stenet. And I'm not sure, are you going to be bringing this, or is Charlie Martin or are you all going to tag team together here? Mr. Martin, I believe, is going to start off and begin the discussion. As we know, this centered around the streetlight refunds, but when I put it into committee, I asked for a lot more than streetlights. Also take a look at other two urban service funds, the street cleaning refund policy and the garbage tax refund policy as it pertains to those two as well. I'm not sure we'll get to that today based on what I read in the packet, but I'll let Charlie start and we'll move from there. And I wasn't entirely clear as far as what you were looking for as well. And so what we tried to do that you see on pages 56 and 57 is what I was able to determine as a statement of fact. Since I'm not normally involved in the Urban Service Fund, I had to do a little bit of catch-up from when you first brought this up. This is what I understand to be the fact, is that in the streetlight end of things is that, well, first of all, is that we initiate full urban services for new development, at a certain time at the beginning of the year because that's when you have to introduce things into the tax rolls in order for it to show up on the tax bill. Typically that's done when a new development or a section or a plat within a new development has been platted, the plat has been signed, because typically that means structures are in the process of being built or getting ready to be built, and they will be turned around fairly quickly. One of the risks with that is because you can only introduce the tax once a year, is that you've got all of this stuff that's going on through the next 365 days. And so, for example, when it comes to waste management, obviously we can't just wait until the next year rolls around to start picking up people's trash if they build houses and get a certificate of occupancy and move in. And so I think that's one of the things that led to this, well, we're going to do the whole thing at one time, put all of these in place, and then let the home building process catch up using the residential as an example. The outcome of that has been is that we, I think what brought this discussion up was that now we're, that Mr. Romero's shop is in the process of issuing refunds for streetlights. and the reason for that is because we are charging an ad valorem tax for a service that we are not offering in some cases because the whole streetlight installation is behind. That's my understanding. It has been behind for a while. The way the statute reads is that you can request a refund. There's nothing on urban county government's responsibility to initiate the refund on their own, but apparently that's been a long-standing policy to do so. It's very clear and very apparent who's paying for street lights and are not receiving the service. It's not being made available to them. So then to talk about street sweeping, a similar event happens in new development as well because we cannot initiate street sweeping until the final surface is put on the street because the manholes, the curbs, all that is still sticking up, and that's a danger to our equipment in the fact that it will be at risk for urban county government. So let's take the three of them. The way I see this, I guess, is that for waste management, at the point in time where we introduce the ad valorem tax is that at any time it's available for pickup. It's a matter of you calling us and saying, deliver me a Herbie. So even though there may be one house on the entire street, the service is available to everybody because that truck has to drive down that street and pick up whatever Herbie or Lenny or anything else is out there. So we feel like that there is no position or no necessity of providing refunds for waste management service because the service is available to everyone. Now, let's bring in the context of streetlights. That's not the case because if street lights haven't been installed yet because Kentucky Utilities, our contractor, is behind or urban county government behind, it's very clear that an entire block does not have access to street lights. Thus, the service is not available. They are entitled to a refund. Now, in street sweeping, a very similar case is that even though it's no fault to urban county government why that final surface isn't on there, because we're not the ones that put it on there. It's the developer's responsibility to put that final surface in place, and we're holding a bond in which for them to do that. We're not going to provide the street sweeping. If we were going to be consistent with the way that we're doing streetlights, we should be providing a refund for that one as well. It hasn't been an issue in the past, and I can't explain to you why it hasn't been in the past, But my recommendation, and after spending two weeks in trying to analyze this, is that we've got to see if we can find a mechanism in which that we get out of the refund business and instead introduce the appropriate level of taxing when the service is available, not later on. The challenge, I think, is going to be is that you're going to have the opposite effect. Again, remember, you can only add this to the tax bill once a year. Right now we're adding it in early, which means that there's a period of time potentially that someone is not having a service available to them before they're paying for it before it's available to them. You'll have the opposite effect in this case, is that if we don't put it on the tax bill, let's say the 1st of January, and then somebody gets their streetlights put in on the 2nd of February, they're going to get free streetlights for a whole year, basically. So it presents some challenges, but I think that Commissioner O'Mara and I have talked about this, is that we think if there's a way to do this, if there's an appropriate trigger to put this in place, is that we shouldn't be in the business of executing refunds under the street light or street sweeping program. We should be adding the bill when the service is being provided. So that pretty much concludes my comments. Thank you, Mr. Martin. Mr. Stinnett, do you have anything you want to follow up, or do you want me to go to Councilmembers? Council Member Rosati. Thank you, Chair. Thank you, Charlie. I agree wholeheartedly with your analogy of how we, the system and how it operates. I guess, is it more of an accounting issue with the refunding, or, because I would assume that the other utility companies, when someone moves into a house and they have to have gas put in or electric or whatever and they're moving or whatever, they have some kind of a process. Would we not also fall into that same type of procedure? It's a little bit different, you know, with the utility and even with the sanitary sewer. I'll use the sanitary sewer as an example. The pipes are there and available to them, but they don't begin to pay a bill until they have a water meter set, which then that gives the indication that they have the ability to utilize that sanitary sewer. But the fact whether they use it or not is not part of the equation. We have a minimum bill for sanitary sewer service, so if you don't put a drop into the sanitary sewer system, you are still paying a minimum bill because you're paying for the availability of that service. You know, with the streak sweeping and stuff like that, You just don't have the ability to be able to serve individual houses. It's very inefficient economically to provide a cafeteria-styled type of thing. You can't go clean in front of somebody else's house and then drive by everybody else's house and not clean. It's the same thing with the streetlights. It was, you know, it's clear that you can have one block that doesn't have them in yet, and you've got someone who's entitled to a refund because the service isn't provided to them. But you can't put a few lights up in front of a couple houses and not have lights strung up in front of the whole street. It's not efficient. I understand. It sounds like it's very difficult in order to provide this in a timely fashion and not have to go through the refund process. I'm just trying to think out loud here what alternatives that we have looked at in order to not have to go through this. Yeah. Well, I mean, I'm open to all suggestions. And that was something we talked about even this morning internally within Public Works is what's the appropriate trigger which allows us to then begin to apply the appropriate tax relative to the appropriate service? And what always keeps tripping you up is that you only get one shot a year to do it. I understand. Well, hopefully we can come up with some kind of alternative, because I can imagine it can't be very easy accounting-wise to have to do this as well. Thank you. The question, and I'm going to have to put a little bit more time into this, is that I don't know how much it costs us to go through this refund process in the first place. You know, for street sweeping or street lights is that to have to eat it at worst 364 days out of the year is maybe less than it costs us to go through all of this because, I mean, it's challenging. That's a good question. Can somebody answer that, Bill? Do you have those numbers offhand or have any insight into that? I would answer it two ways. The dollar amount is not a lot. The effort is tremendous. The refund effort. Yes. I would think so. Right. And so what we're trying to do is, as Charlie said, look at the trigger. You know, this is governed by LFUCG and what the taxing district is. That's an ordinance level. That's put into your all's docket October, November at the latest in order to be on the books for January 1. That's the assessment date, whether we want it to be or not. That's the state statute assessment date. So we've got to figure out a way to, in the October timeframe, to bring forward who we think needs to be added in for these additional services and who we wait another year before we add them in instead of putting everybody in and then just refunding until they get the service. So we're trying to come up with those triggers and assess what the challenges are from that approach rather than the one we've had in the last two decades. Well, I wish you a lot of luck because I know it's, like you said, time-wise and effort-wise, it's probably exponential. But hopefully we can work out something that we can figure out so it will benefit all parties. Thank you. Thank you. I think Mr. Schoeniger might have had something he wanted to follow up with. Council Member Massadia, the first question you asked was very similar to what Council Member Stenet asked me last Thursday. Just for streetlights, there was 1,154 refunds, accounts issued. with a total of $32,000. So, and it looked like the average or the mean, the mode or the median was about $8 an account, a refund. Thank you. Mr. Stenet, did you want to go ahead or do you want to wait to the bottom? I'm ready. Mr. Stenet. And follow up on Paul's, the average is $28.40 refund. Yes, sir. So you're right. I mean, as Councilman Rosati said, you know, what is our time worth? How long does it take to mail out W-9s, get them back from individuals with their Social Security numbers and other information? And I think the solution is very simple. I think we're making it way too hard. I don't think you change the tax district back to the district without street lights, without street cleaning, until they get it. If we have to wait eight, nine months, so be it, because they're already paying the franchise fee, so they are paying some of it. And what they're paying, that doesn't even pay for installation anyway. That cost that they're paying from your property doesn't cover the cost of installation. So it only covers the turning light on, basically. And I think it's a much simpler process, especially for the homeowners not having to do W-9s, and for our own department. I mean, if Kevin Winty was here, he would tell you how frustrating it's been. And in the past, as Charlie alluded to, our policies have been very inconsistent about when we do them, how often we do them. And it's a nightmare having to receive calls from 600 different residences trying to figure it out. I know Council Member Scutchfield is going through it right now as well in the new area. I know Council Member Acres probably has some along Leastown Road. So I think it's very easy to clean up this issue and to just take them, remove them out of the district, and the council can put them back once those services are placed into that street or community or however we determine when they're done. The bigger issue with street cleaning is when do you do that one? It's when the final surface is put down and our street cleaners can service the area. That's when that happens. But right now we're not, Charlie, you're sure we're not refunding street cleaning? I know that we're not doing it at our own volition, as we are in this case, where we are initiating all of the refunds for street cleaning. We are not doing, I mean, for street lights. We are not doing that for street cleaning. I can't say for certain whether we have never issued one for sweeping, because the way the statute reads is you have to request it. It doesn't say anything about we're just going to give it to you. You have to request it. So there may have been someone who has done so in history, and I'm not aware of it. I know that in the past there have been requests for them. You're right. It does. It seems very crystal clear, and that was kind of what we arrived at at the point in time we finished this, is that there's a simple choice at which to make. The only reason I'm a little hesitant about the trigger thing is that how do we know when final coat goes on? It really has to do, or final surface, that has to do with the street sweeping thing, because I'm not so sure there is a crystal clear notification process on that. Surely we're inspecting it. We're headed that way. That's not in my shop, so I can't. I'm a little hesitant. I would hope we'd be out there inspecting that final surface. I'm a little hesitant to confirm that. And then the other part of it, I mean, that's been an issue with me, is that in some cases how long it takes to get that final surface on in the first place. And I'm sure each one of you have probably dealt with that in some new development areas. It seems like I know of one street where I used to bank, it seems like it did not have final surface on it for nearly 10 years. So I think there's some of those other issues. Because when we make this change, I don't want to be back here making the change again because we didn't anticipate something. I think we can work through those. and since we're sticking to streetlights and cleaning right now, I'll get the garbage, but on streetlights, if a neighborhood has private streetlights, are they still paying the public streetlight tax? Yes. And why is that? Because from what I read in my research here, that was a policy that was adopted by this council, several previous councils, your predecessors. That was my understanding of what I read in some of the research of memos that were done by law departments previously. is that those folks elected to have an ornamental or some type of uniqueness character of their streetlights. Again, it's that issue about it's available to you. If you choose not to use it, that's fine. But the analogy I use is private school. I pay Fayette County school taxes, but I don't send my daughter to Fayette County schools. They're fine schools, but I don't. I believe it's the case on the private lights I'm aware of that what's going on is they're paying the difference between the regular light and the fancier light. That's the case in a couple different neighborhoods that I'm aware of. I'm not aware of a situation where they're paying all of the cost of the light on top. Can we verify that? Because I'm not sure that may be true in a couple spots. If we can just verify what they're actually paying. If you could let us know if you're aware of a couple spots. that we could look at. Well, obviously, I've taken care of the one in my district, and we put public lights back in and took the private ones out because they were paying the double tax. But I think there's, Councilman Lane has Heartland that's paying double, and there's a couple other neighborhoods, Palomar. We need to make sure. We ought to be able to. For paying the difference, that's one thing. But if they're paying double taxes for the same light, it doesn't make a lot of sense. Again, in absence of, like I said, I didn't find myself in the street light business until a couple of weeks ago, but I will try to get to the hand I am here now, as she reminds me. I would have to think that we have some type of list or some type of query at which we can determine who all does have unique streetlights and then backtrack it through there. Okay. But we'll do our best with that. I'll yield and circle back. My time is up for now. Thank you. Council Member Sketchfield. Thank you, Chair. Obviously, there are neighborhoods in my district, a 900-house neighborhood, that is still paying for their streetlights, and I've had lots of these phone calls come in. So I apologize for the work that has entailed, but I think we've gotten a lot of good information from taking a look at this. And obviously, the 1099 issue was not discovered that we needed those until we started, Bill, you and I talked about this, until you started looking into this. And I know that that's an added step, and I know it adds more work, but we have to do, if they're paying for it, they need to get refunds. So hopefully we do have our residents return those in order to get their refunds. I think taking a look at this moving forward, I'm not sure what the council or what we had determined in years past, why we started taxing these districts differently or adding them before the services were available. Maybe we thought the streetlights were going to go up a lot faster. Well, from what I understand from the historical people, and this was even prior to Kevin Wente, is that at one time things were being turned around pretty quickly. And I think when the pedal really hit the floor as far as new development, mid-2000s, where things were going way faster than KU could stay up with, and that's when things kind of left the tracks. They started getting really behind. and we may have worn some of the responsibility for that as well as far as internal mechanisms. But developments were going in faster than they could get streetlights in, and we're still kind of paying for that. I guess one of the things that I ask is obviously for the people that have paid their taxes, their property taxes that are currently owed refunds, I hope that we push forward to make sure that they do get their refunds. And then further, as we're taking it, I mean, we shouldn't be adding these to the tax rolls until the streetlights are up. I think if we're concerned about taxing, needing to get back taxes if they've been installed, I think we can work with the electric company, whoever is putting the streetlights in, to ask them for a foreseeable install for that calendar year. They should be able to give us an idea. Right now we're able to look at summer 2014 and know who's going to get installed for summer of 2014. I don't think that's too much to ask for the electric company to provide us. Number two, is it possible for us to add taxes for a partial year for the next year? That might be a legal question that I don't know whether we could have that answered or not. Bill, are we able to know? I think Mr. Barbary had stepped up here, so he might have some input for us. Are you asking whether you can give a partial refund? No, what I'm asking is if we have an area that we remove from the taxable district and they end up getting the street lights or they get the street cleaning halfway through that calendar year that they've paid the taxes for, can we add post-taxes? No, the only time you can add the taxes is the once a year. That's what's driving the problem. And I think part of what drove the streetlight issue is we had a moratorium where we didn't install them. So I think before you all do anything, we'd like to catch up to where the list is on the streetlights because you shouldn't monkey around with your tax districts until you're clear they're not going to get the service. Is that a legal term? Because I think there's going to be some of these that are getting installed, hopefully in the next six months because the moratorium got lifted. I think Charlie's shop is working on a list of which ones would go in first. And I think that we would much rather be in the position of giving a refund than in the situation where we've provided the service for six months of the year and we're unable to tax them at that point for that service. And as I was saying that, I had something from law school go through my head that I go, no, that doesn't happen. But I think what we do need to move forward with, work with the electric company to have them give us their estimated installs and not put them into this district until they have the services. Thank you. Thank you. Vice Mayor Gorton. Thank you, Mr. Chair. My question is along the lines of Councilmember Skutchfield. And is there any provision? I guess this would be a David Barbary question again. Is there any provision when we put them into the tax district to do a graduated tax? The first six months it will be zero, and the second six months it will be what they've gone into. There's not, and I think that would be difficult to defend. I think what Charlie's talking about is maybe what needs to be done is explore when you do the new development. Maybe you only bring the garbage part in. you bring it in as, I don't remember the numbers, but it's like you bring it in as number two or whatever instead of full urban services, you wouldn't bring the other two urban services in until later on in the process. So plan to bring them all in, but on a fixed basis. Right, but it would be probably on a staggered basis with the garbage taking place first because that's the first service that would be provided during that time frame. And that would be, and you know, I don't want you all to go down this road, But, you know, you've had a policy with this new development, and maybe you all want to be looking at that stuff, too. I don't know. But your policy on new development has been you bring them in at full urban services. Now, there's other issues that come up if you kind of deviate away from that with the sizes of the streets, if they're private streets, that kind of stuff. But it has been the case that all of the full urban services, or all new developments, full urban services, that's been the case, I think, for probably 25 years or so. So, and that, I believe, is what's driving most of this process with the refunds and stuff, is the new development. It's not as much the case where you have existing properties coming to you and asking to be brought into the tax district. So, Charlie, if I could ask you, David mentioned that we're going to be doing some catching up. So, do you know about what percentage of lights that aren't in are going to get put in? I haven't been able to get into it that deeply. Like I said, I was trying to make sure I understood what the problem was and what our potential solutions are, and then kind of go from there. I noticed that Kevin's back here now. I don't know if Kevin Wente has any ideas of that, because he's the one who is more involved in on a day-to-day basis. Okay, thank you. Thank you, Mr. Chair. Welcome, Mr. Wente. Thank you. And at this point, actually, Traffic Engineering monitors that installation and actually hosts a database jointly with Kentucky Utilities to monitor installation. We can get that information and have a better assessment as to what is required for installation and what a general timeline is, and we can have that in relatively short order, but we did not prepare that, or I didn't prepare that information for today's discussion. Thank you. Council Member Farmer. Mr. Martin, mine goes to part of the earlier conversation about I have a part of a neighborhood that wants kind of the more expensive street light, and we're trying to find a way to provide them with that without having to pay twice. I mean, they want something nicer for the neighborhood, And I think the idea that they would pay the difference between what the basic is and what they want is would be something that I think I would find favor with, and I think that the constituents would, too. So I would look forward to having a conversation with you about the potential logistics of that. Yeah, I'm going to have to peel back the layers on that aspect. Because I know that the private streetlights has been, or the ornamental ones, has been an ongoing issue. Everybody's got different tastes for the character of their neighborhood. You know, when I was reading over the background materials, I saw it mentioned in there, but it wasn't. I was still focused on why do we do refunds and in what cases do we do refunds. So I kind of need to backtrack on that and get a little bit more on it before I stood here and went on record about it. Some of the numbers we've gotten from KU are rather scary in relation to what I think would be something that's relatively simple. But as you said, it's part of peeling back different layers of the issue. I look forward to exploring it with you along the way. Thank you. Thank you, Chair. Thank you. Council Member Henson. Thank you, Chair. Does KU, I want to make sure I'm understanding correctly, KU bears the cost for installation? I believe that they bear the cost of installation and we pay them. They are our contractor, correct? Yes. That was confirmed to me. I wanted to make sure that I understood it correctly. So basically we're paying them to install these lights for us, and then we pay kind of a flat rate type of thing. That's one of the big issues about getting people to call in about street lights that are out. We're paying for that, whether that street light is on or not, and that's a real annoyance to me personally. Well, and do we know what that cost is? Well, I think it probably varies from location to location depending on the circumstances at which they have to put these things in. You know, one of the things that I'm going to look at as far as getting caught up is that we need these things in sooner than later because the cost of installation is going to go up on a finished neighborhood more so than it's going to go in on one that's partially finished because you're bearing a lot of restoration costs. But I'm going to bet there's also a sweet spot that you don't install them too soon. and that way you don't have dump trucks and everything else backing into them while they finish building houses. It all sounds really easy, but sometimes in the dynamics of a neighborhood that's getting built out, I know this from my erosion and sediment control experience, is that you'd think it's really easy to put a silt fence up and it would stay there, but it doesn't, so I can imagine what a street light would be like. Right. But I just, you know, there's got to be a way to work this out. Well, I think there is. I think that to me is that the most direct thing is to look at the schedule, where they are, and try to make an intelligent decision based on what KU or anybody else is telling you. These are the ones that are going to go in this year. But you need to be conservative of it because speaking to you, both of your points, we shouldn't be collecting money from people and not providing the service. That's got to be the number one. That's the benchmark at which we base everything else on. I agree with that, and I think, I know we did have the moratorium, which caused problems, but I think it should be in the development plan or something so that they would have street lights as quickly as possible. But I know that it's an animal when you look at, you know, if you have two houses here and two houses here, and it's just. It's not even so much that. I mean, you think about what we went through coming out of a tough economy is that in some of those cases, we had streetlights up where there weren't even houses built yet because, you know, the builders developed a lot, subdivided them, and then they couldn't build on them because the market wouldn't bear it. Hopefully those days are behind us and stuff. We need to put more effort into predicting what's going to happen and making sure that it happens and we're collecting the appropriate fees to justify it. And I have a solution for street sweeping, is put in the water quality fee and let everyone get it. If a street's not developed, they're not paying a water quality fee until the home is built, right? When the home gets built, when it has a water service, now they are paying the water quality management fee. Like I said, I have to consult with lawyers here. That's a different story, but I just thought I'd throw that. Okay. Thank you. Thank you. Council Member Akers? I think it may have already been answered, but is there a list of impending streetlights to be installed? I'm asked almost weekly if they're going to go on this street or that street. I think Kevin committed to getting that list together, and we'll circulate that. Since we're getting close to the Christmas break, we'll just circulate that directly to the individual offices. And I think the last update we received, my office received from KU, was that they won't start installing anymore until the spring. Is that? Well, I have not talked to KU. Okay. That will be my next step is, okay, where are we? Because it's winter. But what can be done legitimately in calendar year 2014, which cannot be? I mean, we're at that tax year this year. I think this is what David Barbary was saying is that, okay, we're going to make a change to where we're not going to charge people for these things and then turn around and refund them. So there's going to be a change with what we send in for, unless we've sent it in already, for this year's tax rolls. Do you think we have? we're going to have to make an adjustment on that already because I guess that's already left us. But we'll give you a list, and I'm expecting that it will be a realistic one, not an overly optimistic one of what's going to get installed in 2014 and what's not. And I agree. I think that the refunds are inefficient and that we should be doing something differently. I was also going to ask, is there a way that we could try to predict who should be included in which tax district based on building permits or developer permits or occupancy permits or whatever all of those permits are that are involved in new construction and new building and somehow predict that this many houses will be built by this time so they would need trash by this date? I mean, if it's not finished today, that doesn't mean it's not going to be finished January 5th. And if they're not on the roll on the 1st, like you mentioned, if they're not on the roll on the 1st, they don't pay for the next year, correct? Except for trash and those kinds of things. I would imagine the cost associated with providing free garbage collection is considerably more than providing a street light for somebody who's not using it. I think that would be a little bit more problematic. I'd be a lot more concerned about that. You know, the street sweeping and street light component of our urban service fund, like I said, I'm hardly an expert, but I think those are the smaller components of the overall cost. But, you know, that is almost a public safety and a public health issue thing as well is that, you know, we need to be providing some way for people to dispose of their refuse because if we don't, they will. Yes, I'm not saying not to provide it. I know you're not. I just meant to find a way that we can get paid for it, you know, instead of waiting later. I mean, so trying to find a better way of predicting the number of customers. Well, somebody may cringe, you know, because I found this whole thing interesting, is that the last time I was in the acting role here, there was a lot of discussion about pay as you throw. Oh, I would support that. I mean, this was seven years ago it was talked about, and that decision still lurks around. Because we're using it the way that we are, I don't know what the details of it and where that stands right now, but if you were going to look at that, that would have to be the way you'd have to evaluate it. Okay, thank you. Thank you. Council Member Stinnett. Thank you, Chair. So, Charlie, we're going to get a list of all the streetlights that need to be installed, the waiting list, so to speak? What I'm going to be getting is the list of everything that's outstanding and try to cull that list a little bit to give you a realistic projection of what I think is going to go in in 2014. And also, I'm supposed to do some more research on decorative street lighting and who's paying what and what their proportion of their share is. It's not like we've covered streetlights. Yes. It's like we've covered the issue with streetlights then. And then the only other thing I would ask, I know there were some that are way better, that were supposed to be done this summer that still haven't been done. Have we talked to KU about ramping up and getting more than one crew out there? I haven't had any conversation. Can we have that conversation and get some assurity that they're going to be able to meet our demand? Because I'm not sure it has been met this summer. Yeah. Like I said, figuring out where the backlog is and trying to project it, I think this year will be a good idea of what the probably the next couple of years of the amount that's going to be added on top of that, because I think last year will be a better benchmark than the previous four years would be, is that you catch up now, but also that your staff to stay up with it for the foreseeable future. Okay. And I think we've covered street cleaning. The last one is the garbage tax. Do we have individuals, property owners, paying the property tax for garbage and not getting garbage service? To my knowledge, the service is available to everybody. And that, to me, is the litmus test of whether or not that you pay the tax. I think that, and this is where David maybe comes up and starts, because I'm starting to play lawyer here, but is that if the service is made available to you, is the way I believe that it reads, is that you're subject to the tax. And when I was up here earlier, I used school taxes as an example. If folks elect to do something else, that's of their own volition, not that it wasn't provided to them as opposed to the streetlights. There are no streetlights on your street. We didn't provide them to you. We owe you a refund. I don't believe that's the case in solid ways. So using your words, so if we provide the service, are there any property owners where we have provided the service of garbage to, but they have elected to use a private company and they're still paying the public tax? That's my understanding, yes. Do we have a list of those individuals or properties? You know, I don't. Obviously, I don't have the streetlights. Can we get that list? I would assume that we probably can. I think Solid Waste might have some idea, but they don't have a list of who has private. They may have the general idea, but I don't think they're going to have an exact list because whether you use a private company is not necessarily public information. They'd probably have a pretty good idea, but they're not going to have an exact list. Well, yeah, they do. I mean, if you're paying a property tax, but they're not servicing that property. They're not going to have a list of who all is using the private. Some people use private service to supplement the public service. Some people use it in lieu of it. They're not necessarily going to have a list of everyone that's paying the tax that also has a private service. I don't believe. Now, you can ask Steve that directly. Well, I'm saying, but we can cross-reference the people who are paying the tax, but they do not pick it up. They would know if they service an address, and we would know if that address is. Yes, they may be able to take the information that way, yes. So you're saying, and what Charlie said under law, that if we provide the service, but we don't pick up the service based on the property owner's choice, we don't have to refund that. Yes, we have not. We have not traditionally, nor do we feel legally, that we have to provide a refund if you choose not to avail yourself of the service. We make the service available, you decide to use a different type of service. Classic example might be the compactor situation. Right now, we don't currently provide compactor service generally to the public. So that's a service that I believe there's quite a few people in the public that use compactor service. But that's not something we're making readily available to the public. So if they choose to use that instead of the regular dumpster or Herbie-type service, that's not something we're currently providing. So then how on the streetlights, then, do we allow someone to only pay the difference between the public cost and the private cost? Why wouldn't we do the same for garbage? If they want to use a private car patroller, just pay the difference. I think in the streetlight context, and I'm not saying you had to do it this way, I think they want, and I could be wrong about this because it's been so long since I don't know that we use these contracts you're talking about currently anyway, but my understanding was there was a typical base amount for the light, and if you wanted to have something from an enhanced standpoint, the idea was it wasn't fair to everybody else that you got the nicer light, so your neighborhood pays the difference on the lights. I think that was the original concept of that. Yeah, but I would like to see how many people are paying our tax and not getting the service. I think that's a big issue, and I think something that we'll need to address on the future going down the road. So thank you all for getting the rest of the information. My time's up with three seconds, but I'd like to keep this in committee because I think there's still some questions that we need to follow back up on on all three of the taxes since they're all property taxes. We'll put it on the December agenda. Thank you. Council Member Akers. Follow-up on Councilmember's dinner. Oh, I'm sorry. Councilmember, sorry to demote you there. I'm filling a lot of roles, but I don't want to have that one. Commissioner? Yes. You said you were going to put it on the December agenda. I was just cautious that I don't know if we'll be able to pull all the things together that you might expect by a December meeting. So I was going to ask some consideration of whether or not we could try to target this for a January meeting. So it could give you a more full. Let's put it on the January agenda if that works better for you. That would be very helpful. Thank you. Councilmember Akers. I just wanted to ask if anyone knows why we don't actually have trucks that pick up compacted trash, or have we thought about getting those kinds of trucks? You know, I think there's been some discussion about that, is that the waste management thing, I guess, is an evolving process. As I mentioned before, when I was in this role seven years ago, we were talking about doing a lot of different things and turning the way that we're doing our waste management pickup and stuff. I think it's a matter of about trying to get your arms around what it is you want to be and what you don't want to be and making a decision and moving forward with it. I know that's not a very good answer because I really don't know the answer to it. But what I've tried to emphasize in a couple of weeks I've been back here is that I think a lot of times we need to focus on doing what we do and what we're supposed to do and do it well. And in some cases, maybe not being branching out into providing every service that everybody wants. I emphasize this back in water quality a lot is that we're supposed to be treating sewage, collecting sewage. Same thing with solid waste. I'd rather them focus on making sure we don't miss streets than when we are out providing ancillary services that are provided by the private sector. I think the question is, really here, is who pays for what and what is an equitable thing, and I think that's going to be a worthwhile discussion. I don't know whether we do compactors. I don't know if we're looking at doing those. My point is that my concern is, I guess, is that if we start looking at those things, we keep adding on to the complexity of what we're doing, and sometimes we lose sight of what's most important for that operational group, which is picking up residential trash. My two cents. We also do commercial, though. Well, yeah. If the demand is there, or if we've, I mean, I don't know if an analysis has been done or a survey has been done of commercial businesses, how many used compactors, how many would use them if the service was available, you know, what could we charge differently, and all of that. I mean, I think that there's an obvious problem downtown, for instance, in the amount of trash and Herbies on the streets. And so if we could just think about a different way of doing things and how that would change all the way down the line. And I realize it's a bigger conversation. It is. It is. And like I said, we'll look at it. But I'm of the opinion that we need to look at a lot of things in that area in a very broad brush approach to what we're doing and what we're not doing and what we need to be doing. Sure. Thanks, Charlie. Thank you. Thank you, Charlie. The next item on the agenda is the council links discussion, and we have a list of the links in here and also of the agencies and different divisions that each link falls under. I know we've had a discussion about keeping the same people on, and I've also requested if you have any suggestions as we go forward to make these better. And I did receive an email from Mr. Schoeniger, and I think he had four suggestions, and if you would just kind of go over those with us briefly. And I'd like to get this kind of prepared here so when we start the new year before the budget process gets going, we'll be ready for the links. Mr. Schoeniger. Thank you, Council Member. I did take advantage of your offer to send in suggestions, and I had four of them. One, create a link dealing with planning and development functions, doing that by merging general services and general government, and then moving the planning and development elements out of general service into this new link. Second, and I'm happy to discuss this or go into more detail, but second encourage each of the links to have a pre-meeting i think this does a couple things it allows you to focus the link members to focus on what you think is important what you don't think is important and it might be an opportunity to hear from staff that would possibly been able to analyze the budget requests so for the budget request that does provide that does mean you'd have to allocate a little more time to to your to your to your function but I think that would be really useful and third right now we the the staff of the link is the chair the chairs aid and then the core staff and what I'm suggesting is that rather than pounce on just one person the the aid to the chair that all three members all through all three of your aides participate as staff along with the along with the core staff I think this just evens out the work a little bit and fourth formalize the reporting process if you remember last year we had reports that went into great detail and others that were a paragraph and if I was a council member I'd wonder to what extent that that link analyze their budget. But those are my suggestions. Thank you. I think those are good suggestions. Council members, you have any comments? Council Member Kaye. Thank you, Chair. Paul, I'm going to... Merging general government and general services. Yes, sir. On the surface of it, that strikes me as putting an awful lot into one committee. General government already has, if I recall correctly, I get them backwards, general parks and fleet management and facilities. Yeah, so they're all listed here. It just looks like an awful lot. And I don't disagree. I think one of the reasons they initially established the links and how they were organized was to follow along with the administration. And it does, you would be moving some things, primarily partner agencies that are development-related, but you're adding to the general government link quite a bit. And, again, it was just my suggestion. It doesn't mean you have to follow it clearly. It already has a lot. I guess, if you would, just to help us out, what would you say would be the changes then, looking at the list? Well, general services, everything under general services would move from general services to general government. Planning and development, and then the partner agencies, economic development, commerce Lexington, downtown Lexington downtown Arts Center downtown Lexington Corp Kentucky World Trade Center score lyric bluegrass ad Lexington Center Corp downtown development Authority election and conventions Visitor Bureau would all be part of this planning and planning and planning and development link in addition to anything else that's in the planning area under Commissioner Paulson, historic preservation, engineering now, and PDR. Could you put together a draft for maybe the next council meeting so we can look at it and look at the two and see if there's... And after I look at that, I might then agree with Councilmember Kay. Exactly. I don't bring too much to general government. But I think if we had a draft that we could look at and see compared to what we have, and I agree with you, and I'm sorry, Councilman Carey, are you through? I'm sorry. I actually had one other thought. Okay, Councilman Carey. And this is not a well-thought-out thought. This is kind of off the top of my head, but it strikes me that it might be useful for us not to change at this juncture but to finish out this cycle and to look at greater length at changing the alignment. Because I agree about the alignment. I think the alignment would be very important. And if only the administration would stop changing things around, we'd be in great shape. But, yeah, so that's just a thought. and, you know, for continuity's sake, one more round like we are and then consider this at greater length. Thank you. Thank you. Anybody else have comment on this? We can look at this, and if you can bring the draft, but we can see if we want to make any changes or if we want to just keep the continuity. I'd say the one thing that we want to also talk about is with chairs and see in each one is if we want to change up the chairs because it is a lot of responsibility for that individual and let everybody have the excitement of being a chair. And we can discuss that next committee. That's something else I wanted to do. I've been asked by the council staff and administrator if we could move the meeting from 1 o'clock to 2 o'clock because of the Christmas potluck, which I told them that we would. So we'll be meeting at 2 o'clock for our next meeting instead of 1 o'clock. And the last one is looking at items in committee. It looks like they're Council Member Farmer. I was just going to make a couple of motions to remove. Okay, great. Council Member Farmer. First, I think we've disposed of the fund balance discussion. I was going to make a motion to remove the discussion of fund balance. We have a motion and a second by Council Member Ford. Any discussion on that? All those in favor say aye. Aye. All those opposed, we'll remove the discussion fund balance. And I had one more. We had the discussion today about outsourcing internal audit functions. I didn't really hear any follow-up questions or follow-up, so I would move to leave well enough alone and remove this item from committee. Second. We have a motion and a second. Any discussion? Seeing none, all those in favor say aye. Aye. All those opposed, we'll remove that one. Thank you, sir. And the risk management, I think we have dealt with that one, too. Does anyone want to make a motion for that one? Move to remove. We have a motion and a second. Any discussion? All those in favor, say aye. Aye. All those opposed, we'll remove that. Now, the debt management policy review, we have had a motion to move that one forward. Do we want to take that one out of committee? Mr. Chair, isn't there another piece of it coming to us? That is true. We can keep this one in committee, and we'll keep the... I think all the others will keep in committee. Do I have a motion to adjourn? So moved. Second. We have a motion to second. All those in favor, say aye. Aye. All those opposed, we stand adjourned. Thank you.