# Budget, Finance and Economic Development Committee - September 22, 2015 > Auto-transcribed civic record · September 22, 2015 - **Permalink**: https://meetings.lexingtonky.news/meeting/3773 - **Source video**: https://lfucg.granicus.com/player/clip/3773?view_id=14&redirect=true - **Date**: 2015-09-22 - **Last revised**: July 15, 2026 - **Length**: 13,122 words > ⚠️ **Auto-generated content.** Audio from the official Granicus video was auto-transcribed with OpenAI's open-source Whisper large-v3-turbo model, run locally by The Lexington Times. Structured facts were extracted with GPT-4o; the narrative summary was written by Anthropic Claude. Verbatim wording may contain errors. See [methodology](https://meetings.lexingtonky.news/about/methodology) or [report a correction](mailto:editor@lexingtonky.news). --- ## Meeting Overview The Budget, Finance & Economic Development Committee met on September 22, 2015, at 1:00 p.m., with Stinnett presiding. The committee addressed seven agenda items, including approval of the previous meeting's summary, review of financial reports, and discussion of economic development initiatives. The committee took four votes during the meeting and heard two public comments. The committee approved the June 23, 2015 Committee Summary. Several items were presented for informational purposes, including the July Monthly Financials for the General Fund, a Fayette County Workforce Review, the Monthly Budget Report for June and July covering Other Funds, and an update on the Kentucky World Trade Center. The Economic Contingency Fund was deferred for later consideration, and Items Referred were removed from the agenda. ## Attendance The following individuals were present at the meeting on September 22, 2015: * Stinnett * Moloney * Kay * Lamb * Farmer * Scutchfield * Brown * Mossotti * Bledsoe * Hensley No absences or late arrivals were recorded. ## Votes and Decisions The meeting included four motions, all of which passed by voice vote. **Approval of the June 23, 2015 Budget, Finance & Economic Development Committee Summary** [timestamp: 0:11:35] - Motion by: Farmer - Second by: Scutchfield - Outcome: Passed **Motion to remove the Activity-Based Costing/Financial Efficiency item from the agenda** [timestamp: 1:28:03] - Motion by: Brown - Second by: Hansel - Outcome: Passed **Motion to reconsider the funding mechanism for the Economic Contingency Fund and bring back alternative options next month** [timestamp: 0:58:17] - Motion by: Kay - Second by: Farmer - Outcome: Passed **Motion to adjourn the meeting** [timestamp: 1:28:35] - Motion by: Mossotti - Second by: Scutchfield - Outcome: Passed ## Budget and Financial Actions The meeting addressed the following financial matters: **Snow Plan Funding** An appropriation was approved for funding related to the snow plan. Specific dollar amounts and additional details regarding this appropriation were not specified in the meeting materials. **Kentucky World Trade Center Grant** A grant of $100,000 was approved for the Kentucky World Trade Center. This funding was designated to support the operations and activities of the Kentucky World Trade Center. ## Public Comment Two speakers addressed the council during the public comment period. **McConnell Springs Historical Programming** [timestamp: 0:02:40] Council member Siobhan Akers highlighted the historical programming available at McConnell Springs. She noted that the park hosts monthly events for residents, including presentations such as "Treasuries of the SS Central America" and "Mary Todd Lincoln, First Lady of Controversy." Akers encouraged residents to visit the park to take advantage of these educational offerings. **Martine's Pastries Business** [timestamp: 0:03:47] Vice Mayor Steve Kaye discussed Martine's Pastries, a local business specializing in wedding and specialty cakes. Kaye focused on the business's growth and its presence within the Lexington community. ## Contested Items The meeting included two significant areas of disagreement among council members regarding budget allocations and fiscal priorities. **Use of Urban Service Fund Balance for Snow Plan** Council Member Brown questioned whether the $31.4 million restricted fund balance could be appropriately used for snow removal operations. This dispute centered on the legal restrictions governing the fund and the fiscal responsibility implications of drawing down this balance for operational expenses. The question of whether such restricted funds could legally be deployed for snow removal sparked broader debate among council members about the proper use of designated fund balances and their intended purposes. **Funding Mechanism for Economic Contingency Fund** A heated discussion emerged regarding the contingency fund's ongoing financing. Vice Mayor Kay and Council Member Brown argued against maintaining the contingency fund at its current funding levels. Their position emphasized the opportunity cost of the fund, pointing to deferred infrastructure needs that could be addressed with those resources and citing low returns on the contingency fund itself. Other council members countered by defending the contingency fund's importance to the city's financial stability and its role in supporting the city's bonding capacity. This disagreement reflected differing priorities: some members prioritized immediate infrastructure investments, while others stressed the necessity of maintaining financial reserves for stability and creditworthiness in the municipal bond market. ## June 23, 2015 Committee Summary The committee reviewed and approved the summary from the June 23, 2015 meeting [timestamp: 0:11:35]. Farmer moved to approve the summary, and Scutchfield seconded the motion. The summary was approved without dissent. ## July Monthly Financials - General Fund [timestamp: 00:12:06] Rusty Cook and Bill O'Mara presented the monthly financial update for the general fund. The presentation highlighted strong financial performance, with a year-to-date surplus of $2.8 million. The presenters noted particularly strong performance in two key areas: employee withholding and net profit. This was an informational presentation with no formal action required. ## Fayette County Workforce Review Betsy Dexter presented the Fayette County Workforce Review during this agenda item [timestamp: 0:13:10]. The presentation focused on identifying gaps between current educational offerings and the skills required for in-demand jobs within the local economy. **Key Points** The review emphasized the critical need for better alignment between education and employment opportunities in Fayette County. Dexter highlighted that a coordinated approach would help ensure that local workforce development efforts match actual job market demands. **Outcome** The presentation was informational in nature. Dexter outlined a plan to deliver comprehensive recommendations within 90 days, establishing a concrete timeline for addressing the identified workforce alignment issues. ## Monthly Budget Report June & July – Other Funds [timestamp: 0:25:32] Bill O'Mara presented the monthly budget report covering June and July for the committee's other funds. The presentation reviewed financial reports for four funds: Urban Service, Landfill, Water Quality, and Sewer. The discussion focused on fund balance usage and the legal restrictions governing the reallocation of funds between accounts. The committee examined how each fund was managing its financial position during the two-month period and considered the constraints placed on moving resources across different fund categories. This agenda item was presented for informational purposes, with no formal action required from the committee. ## Economic Contingency Fund Tyler Scott presented on the Economic Contingency Fund [timestamp: 0:34:44], covering its growth, investment strategy, and operational considerations. The presentation included discussion of the fund's current status and performance. **Key Topics Discussed** Scott addressed the fund's growth trajectory and reviewed its investment strategy. A significant portion of the discussion focused on the fund's financing mechanism and whether adjustments were needed to how it operates. **Concerns and Considerations** A central issue raised during the presentation was the need to reconsider the fund's funding mechanism. Additionally, the question of whether the fund should have a cap on its size was discussed, suggesting consideration of limits to its growth. **Outcome** The matter was deferred, with a motion made to revisit the Economic Contingency Fund at the next meeting. This allowed for further analysis and discussion before any decisions were finalized. ## Kentucky World Trade Center Ed Webb and Sherry Malkins presented on the Kentucky World Trade Center's mission and activities [timestamp: 1:08:45]. The presentation focused on the organization's role in promoting international trade, job creation, and economic development in Lexington. The presenters highlighted upcoming trade missions as key initiatives. These include planned missions to Cuba and the United Kingdom, which are intended to expand business opportunities and strengthen international connections for Kentucky-based companies. The presentation was informational in nature, providing an overview of the Kentucky World Trade Center's work in facilitating international commerce and supporting economic growth in the region. ## Items Referred The committee addressed the Activity-Based Costing/Financial Efficiency item that had been referred to the agenda. [timestamp: 1:27:32] **Discussion and Concerns** Brown and Hansel led the discussion on this agenda item. The committee identified a lack of background materials as the primary concern regarding the Activity-Based Costing/Financial Efficiency item, which prevented adequate review and informed discussion. **Outcome** A motion was made to remove the Activity-Based Costing/Financial Efficiency item from the agenda. The motion passed, and the item was removed due to insufficient background information being available to the committee. --- ## Decisions - **Motion** — passed: Approval of the June 23, 2015 Budget, Finance & Economic Development Committee Summary - **Motion** — passed: Motion to adjourn the meeting - **Motion** — passed: Motion to reconsider the funding mechanism for the Economic Contingency Fund and bring back alternative options next month - **Motion** — passed: Motion to remove the Activity-Based Costing/Financial Efficiency item from the agenda --- ## Full transcript It's hosted indoors. Okay. And when are those events held? We have those events once a month from June to October. And the next program we have coming up is September 8th. It's called Treasuries of the SS, Treasures of the SS Central America. And that presenter is Jeff Garrett. And he is actually one of the gentlemen that surveyed and appraised the gold that was found off the SS Central America. This was one of the largest tragedies and largest loss of life and gold and money in early settlements in America. And then the following program is October 13th, and that's Mary Todd Lincoln, First Lady of Controversy, and that's presented by Gwen Thompson. And so obviously having the Mary Todd Lincoln house here in town, that's a good tie into Lexington to discuss Mrs. Lincoln and how she lived her life. And so what time of the day are these held? These are in the evening. They start at 6.15 p.m. each evening to give people time to get off work. They can come here, bring their dinner, eat here. We provide drinks, soft drinks, refreshments. Oh, okay. And are they about an hour, two hours? They typically last about an hour to an hour and a half. Okay. What is the crowd like? Do you have a good response? How long have you been doing this program here? We have a great response to this program. Typically, we can expect around 50 people to show up. And this is one of our longest lasting programs that we've had at the park. It's been going on for several years. And this program was actually initiated by the Friends of McConnell Springs. Tell us a little bit about that group. The Friends of McConnell Springs is a 501c3 nonprofit. They were formed to help purchase the property that is now McConnell Springs. And once they purchased the property, they donated it to the city to become a park. And they've been a great partner not only to the park, but the city itself ever since by donating funds to help improve McConnell Springs and improve the quality of programs that we do here. And right, they do lots of fundraisers. I know they do the wine tasting. Is that coming up? That will be coming up early next spring. Okay. Early next spring, the wine barrel tasting. Right. And then they have lots of activities for families. If you haven't visited the park, I urge you to take a drive out Old Frankfurt Pike. For those in the 2nd District, it's just off of Forbes Road between Forbes and New Circle. Take a drive, bring the family, walk the trails, participate in some of the historical programming that's offered here as well as reenactments that you all do every spring also, right? In May. In May, Founders Day. Founders Day is celebrated here as well. So I want to thank you so much for educating us again and letting us know more about McConnell Springs. Do you want to share the website one more time? Yeah, absolutely. That's www.lexingtonky.gov backslash parks. And again, my name is Siobhan Akers, council member for the 2nd District. Thanks for joining us. Thank you. Hello, I'm Vice Mayor Steve Kaye. I'm here with Jim and Martine Holtzman at Martine's Pastries, a little shop on Industry road off of uh winchester road and we're going to talk a little bit about their business and how they ended up in lexington you'll get it pretty quickly you'll understand that they they're not from here i guess i'm not either but we're not from here so i want to start by first of all saying thank you for taking the time i appreciate that you're welcome and just to begin say a little bit about this shop and and what you do uh either one of you can stop then i'll follow sure we're uh well Well, as the Vice Mayor Kay said, we're Martins Pastries. We started out specializing in wedding cakes. We slowly moved into birthdays, anniversary celebrations, et cetera. We've got a daily pastry production, and we're also in about 20 locations throughout town. Fine establishments of the bluegrass. Okay, and you've been doing pastries and... For like 17 years now. The pastries came after the wedding cake started, and it was really by a popular event. And people ask us if we were doing place trees, and we opened the front shop as well. Okay. And you do a lot of your business here in Lexington? We do, yes. I mean, really, we have shipped out of state as well. But mainly Lexington and the surrounding counties, and as far as Cincinnati and Noble. Okay. And if you had to talk especially about the wedding cakes and the specialty cakes, say a little bit about some unusual ones that you've done. Oh, unusual. Yeah. We have one coming up that's pretty unusual, which is a wedding. It's out of town, and they have decided to do an upside-down wedding cake for Halloween. And they're going to pop it up underneath a chandelier, and they will bring it down for the bride and for the couple. ¶¶ The End ¶¶ Music Finance and Economic Development Committee meeting. First on our agenda is approval of committee summary from August 25th meeting. Do I hear any motions? Move approval. Motion by Council Member Farmer, second by Council Member Bledsoe for approval. Any discussion, changes, amendments? Seeing none, all in favor say aye. Aye. Any opposed? All right. Next up we have our monthly financial update of our general fund. Commissioner O'Mara, welcome back. Thank you very much. Appreciate it. It's good to be back. We have a financial update two months into the year. This is as of August 31st of 2015. And we start off with some good news on the unemployment front. We're looking at unemployment rates that are reflected back to 2007 was the last time we had employment rates at this kind of a level. For the month of July, the U.S. rate was 5.3 percent. The state was 5.2. The MSA, 4.2. And Fayette County was at 4.1 percent. We do have USA for August at 5.1, so it actually went down just a little bit from the July level. Again, these are reminiscent of unemployment rates back in 2007. Next slide just shows a three-month rolling average to kind of take out any kind of noise from month to month. And the third slide has a selective comparison of economic indicators. We talked about unemployment. The Fiat County permits issued were relatively flat August over the same period last year. Business license issued are actually up over the same period last year and the previous month, as well as home sales. We do have a slight rise in the number of foreclosures in August as compared to the prior month or the same time of last year. So any questions on those slides? If not, I'll pass the baton to Rusty Cook from Revenue. Welcome, sir, with good news. Thank you. Good afternoon, everyone. I'm going to go through the top four, as Commissioner O'Mara said. In this first slide is a look at just the monthly number. You can see we beat the budget by $3 million in the month of August. I'll go into more detail on the year-to-date, but I wanted to show you that. We had some shortfall last month. Looking at it from a year-to-date perspective, you can see we are up $2.8 million versus the budget, which is only two months in, of course. Employee withholding is the majority of that at $2.7 million. Net profit's up $200,000. Insurance, $400,000. And franchise fee is down $490,000. And as we saw last month, it's not near as much this month. We will continue to see some of that until it's kind of eaten away through the rate increase with one of the utilities. Comparing the current year-to-date through the first two months to the prior year-to-date, we're showing good growth, $4.6 million ahead of the same period prior year. All four categories are up over the prior year with employee withholding up at 3.8. Net profit, $200,000. Insurance, $450,000. And franchise fees, just $150,000 less than, a little less than $150,000 up year over year, which all in all shows good growth. However, we are only two months in, so the one thing I can guarantee is something will change. I don't look at trends for two months. The next month we'll have a quarter to look at and be able to see mostly three months of everyone's payments coming in. The last slide I have is in for information purposes only. Is there any questions on top four? There are none. Hold on one second. Vice Mayor Kay. I can't look. I don't seem to be able to log in. Thank you, Chair. I know that the last slide is only for information only, but can anybody explain why there's been such a drop? Are we looking at comparable figures month to month on the nuisance abatement and lien collections? I can't, but I'll have to get some information on that, and I can get it back to you and everyone on the committee and council. I would appreciate that. Sure. Thank you. Thank you, Chair. No problem. Anyone else? Okay, CNN. Thank you. Thank you. I'll turn it back over to Bill to go over other revenues and expenses. Thank you. Melissa Luker, Director of Budgeting, is under the weather today, so I'm going to pitch hit for her in talking about the other revenues and then the expenses category. Rusty went over the big four where the majority of our activity is. There are small variances starting with other license and permits. That's pretty much due to de-tax and regulated fees. We have a slight positive in the ad valorem, which is explained with motor vehicles. We actually came and you all approved an update of an increase in the motor vehicle ad valorem budget based on more recent information that we got from the office. The services category, there's a slight decrease, and that's mainly related to EMS billings, which again fluctuates from month to month. And then down under other income, we have a positive variance of $102,000, and that's mostly just in miscellaneous income and timing differences between where we've allocated the budgets across the 12 months. So we had the majority of the revenue increase in the four major categories. Total revenue for the general fund is up $3.2 million. And I would echo Rusty's comment of two months does not a trend make. We would love to project that out, but I think it's way too early to make those kind of projections. On the expense side, things are a lot tighter. We have a favorable variance in the personnel category. We're under budget by about $485,000, and we have an operating that's a little over the allocated budget amount for the first two months of $400,000, and then the operating capital shows a timing difference of when those dollars are spent of $233,000. The net effect is showing that our actual expenses were $187,000 more than the allocated amount for the two months of budget, which brings us to a net change in position of $3 million for the two months ending August 31st. I'll pause right there. We have one question. Council Member Brown. Thank you, Chair. The operating capital expenditure, the $266,000, did you have some early capital items that were paid for? I think it is the budget is approved. And if they go and expend their entire budget at the beginning, we have looked at three-year history as to how often that happened, based our monthly budgets on that three-year history, and the spending this year is off from that three-history. Is there any particular item that came out of that general fund? I can follow up and see, but I think it's just not. Because you're $43,000, that's probably, that's what, must be $21,000, $22,000 per month. You're doing that on a 12-month, aren't you, on the budget amount? Well, we actually, it's not an even 112. We looked at a three-year spending average, and in some years the spending is very slow in July and August as things are approved. It looks like the total year budget was already spent from that 266, based on looking at those numbers. I can actually give you the total budget. No, I can't. I stop at operating expense. But I can get back to you. Okay, just email it to me unless some other members would like to have it. Glad to do it. Thank you. Anyone else? Okay, please continue. All right, well, that ends the presentation on the financial update. The other two are just current year to the same period last year. That's just a point of reference. We did increase the budget in both categories as far as revenue and expenses, so we anticipated having more income and more expense. However, you see we do have a favorable expense variance. We have spent less than at the same point of last year. We do have one question. Councilor Maloney. Thank you. Welcome back. My question is on the last page. I guess the expense and variance and all that changing. This time last year, we were looking at negative $937,000, and this year we're at a pace of over $6 million. Is this about what you all budgeted, or are we coming in with surplus like we did last year? we're going to be on a pace of probably having a lot more surplus if we continue at this pace. I know last year we didn't have this kind of money, this dirty and this sage. And this year we got a lot of money, more than we did last year. Is that normal? Is there something unique? Or are we going to look forward the rest of the year probably having a big surplus? us? Well, I'm not prepared to project this as a trend, this first two months, as to a 12-month trend. You could probably tell I was going to answer that way. And that we do have lower unemployment. We have an unemployment rate that is more reminiscent of the 2007 and prior to the 2008 reset. So more revenue is coming in. That's good news. We did budget for more revenue to come in. So whether there will be ups and downs, we have the Federal Reserve, we have China, we have all the interplay of an international market that's pretty volatile and hard to predict right now. And that actually filters down into Lexington, I'll bet a few months later than it would on the national level. So I'm very pleased to be where we are right now, but I'm not prepared to project that we will stay in this favorable position by the end of the year. And I mean, I think it's great that the economy is looking good. I mean, but this kind of a surplus, I just wanted it. Is this unique? Have we ever had a surplus this early in the physical year that we got? I mean, I don't know. I've never noticed it. Is this unique? Is this something considerably higher than we've had this early in the year? I don't have the statistics in front of me, but it varies from month to month quite a bit as revenues are recognized. One of the things that we do look at is we have revenues that are due the last day of the month. So many businesses very wisely postmark payments to us with the last day of the month, and then those revenues show up in the following month. And we have these timing differences that bounce back and forth from month to month. This month it's in our favor. Next month it may come back and kind of zero out. So there's several million dollar play from month to month as to how businesses make those payments and when we receive them and record them. Well, I mean, just compared to what we were last year, we were looking at almost a million dollars in the hole this time last year, and we're already up over $5 million, $6 million. Has there ever been a time this early that we're that high up? I mean, that's my question. And I can research that from you. I feel confident that there has been, but I don't have the dates to quote to you. Okay. Well, I mean, I hope we do have a surplus. I just want to be sure that when we do have a huge surplus, that the administration comes back with a good priority list and that we don't have this council fighting them on each other like we do sometimes or previous council when I've been here. But hopefully we have a good plan ready to the administration give us good direction because it seems like to me we're on a record pace. I hope I'm right, but I just want to make sure that we continue to go on. I appreciate the answer. Thank you. next up we have council member land thank you chair actually this is a question for perhaps you then we at the budget time we spoke about having a discussion about fund balance in October and I'm just curious with that will that take place at this in this meeting and next October in this next meeting yes ma'am okay as soon as the numbers are available okay all right and so all All right, that's what I'd like to know. Thanks. Bye. Anyone else? Okay. Thank you, sir. Thank you very much. Next on our agenda is the monthly budget of other funds report. Are there any questions? They're on pages 21, 22 through 29. These are our urban service fund, the landfill fund, and water quality and sewer funds. Is there any questions from the committee on that? There is one question. I assume Commissioner O'Mara, you'll be answering those. Council Member Brown. Thank you, Chair. Page 22 on the packet that I have has got Urban Services Operating Fund. I guess the amended budget has down there in the second column has $18,952,652. Now that's the fund balance. Is that the amended budgetary fund balance? and then below there I see a restricted for urban services at June 30th, 15th, of $31.4 million. Walk me through that difference there, okay? Sure. The $22.5 was the budgeted fund balance. Yeah. The $31.4 is our estimate of what actual fund balance will be as of June 30th. And how does that relate to the $18,952 that you're showing? Well. Or is that just income and expenses? That's income, expenses, less budgeted fund balance. Okay. I had a question. We talked about it early on when we were dealing with the snow plan of trying to use some of these funds here. I think some of them are used, but I'm not sure to what amount. But certainly we do have a fund balance, and it's restricted. I understand that. But the question was that I had is can we use more money out of that fund for the snow plan? Is that a question to me? Well, I don't know who else to ask. I already got an answer. Right. Yeah, we got an answer from Melissa Luker about what we can and cannot do. I don't know if you got copied on the email while you were out, but you're free to answer now, or we could revisit that email where you got an answer on. I would defer to revisiting that email. I'm not remembering reading that. Yeah. I might have had happy pills if it's gone. Well, I want to put it on your radar because I don't necessarily agree with the memo I got back. Okay. As to what we can do as a council because we can tweak some things that come out of this fund if the wording is done legally. That was my understanding. Separate from wording of what you can and can't do. Right. One of the things that we're working on for presentation is the components of this urban service fund and which ones are dedicated to the streetlights, which ones are dedicated to street cleaning, and then what is also for waste management, which I think is the space that you're speaking of right now, and different assumptions into spend rates and projected fund balance in those three programs. programs. So I think that would be good information to take into context while you're deciding how to spend a current fund balance. Well, and the reason is that this particular fund balance is pretty large, and is there some means of tapping this money over into the general fund? Well, I'm going to leave the last part alone. Well, that's where it would go, perhaps, unless we had a special fund for snow removal or something. Okay. All right. Thanks. Anyone else? I did have a follow-up question on that. $31.4 million, how much of it is in each fund? Street cleaning, street lights, and garbage. Do we know? Well, I need to answer your question carefully and technically. There's only one fund, and that is the urban service. So there is only one fund balance. we then look at the three programs within that fund and project out what their fund balances are. And that's the analysis that I owe to counsel and that we're working on. So from a legal standpoint, can we use, since it's all in one fund balance, money for any of the three from that fund balance? Well, I would defer to law to answer that question. Okay. Maybe we can get it and get it for next meeting because that goes to, you know, why are we taking $2 million out of the general fund to pay for streetlights, and you have a $31 million fund balance that you could probably use or could use legally to pay for them. Well, we did have this conversation several years ago. Oh, yeah. And my recollection of that is that the waste management money was for waste management and not for streetlights. So there were, while there is not a legal difference in components of the fund balance, there was an opinion of how to use the revenues generated from each of those property taxes. I hope I haven't misspoke. No, I just want to see it split out, though, and see what's in each one. Sure. There may not be any in the other two. That's right. And this may be all solid waste. And we're preparing that analysis now. Okay. Thank you. Councilor Massadi. I'm going to follow up with that same question. You said based upon the property taxes, and that was my thinking. I mean, we are somewhat hampered because it's all depending upon what tax rate you are in, correct, as far as the amount of money that's in each one of those funds? That's correct. And the budget package that you all, I believe, received your first meeting back from summer break when you were asked to look at property tax rates, in that packet was a fully loaded what the property tax rate would have to be in order to fully fund the operational things of each program. And we looked at those different options and decided to pretty much stay where we were at this point. So that does make the difference, obviously. Yes, it does within those programs. Correct. Okay. Thank you. Vice Mayor Kay. Thank you, Chair. So this is same topic and not a question for Bill, but and maybe this is implicit in what's been being said, but I'm assuming that when we meet next month, we will get that differentiated list, and we will have law here to talk about what is legal or to have provided us an opinion before to look at so that we can discuss it at the meeting. Is that fair? Yes, sir. We'll go ahead and make that part of the packet next month. Thank you. Thank you, Chair. uh counselor maloney uh just getting some clarification here the reason we had this study done a few years ago because we were taking a lot of money out of the solid waste to pay other department the street lights and the uh street cleaning and we found that it was illegal. We couldn't do that. And that's where we stopped that and we raised the franchise fees to help pay off the streetlights that were really draining these accounts to worse. Now, street cleaning, I heard it will eventually come on soon. But from twisting that money around and used for something else, I thought law said the only thing you can use that money for a solid waste, it has to do something with the taxpayers that are paying in that area for anything that does with garbage. Now, to put this into snow removal or any other use, from what I was defined, it cannot use that. It has to be basically used only for trash. And I assume that would be a lawyer's question to be asked on that, and I assume there's law here today to answer that question. I wonder if there's somebody from law coming up now. I just want to get a clarification that. And, Councilman Maloney, that's what we were talking about for next time. We would have a legal opinion from the law department. And unless you have one now to share. I do not. Andrea Brown from the law department. Dave Barber will be here next meeting, and he will work with Bill O'Mara to go over the restrictions and the legalities that you've all asked for. So I'll get that to you soon. Thank you. Anything else, Councilman Maloney? That's what I need. Anyone else? Okay. Thank you, sir. Thank you. Next on our agenda is an update on the Economic Contingency Fund. Tyler Scott, welcome. Thank you. Thank you for having me. Let's see here. All right, here's our agenda we'll cover today. Just to go all the way back on the original intent of the Contingency Fund, it was designed to cover two main purposes. One is for revenue stabilization. It's our safety cushion, our savings account against any sharp turn, and any one of our major three or all three major revenues that produce over 75% of the revenue in our general fund. It should be our insurance fees, our employee withholdings, and business returns. The second component to that for the main purpose of the fund is an emergency reserve account. essentially is to be our source of funds in response to any kind of countywide emergency event that risks the health and safety of the Fayette County citizens. In 1996, the original ordinance was created. It created a $4 million contribution to start the fund. All interest earned on that $4 million was maintained within the fund to continue to grow it. But at the end of each fiscal year, the council was asked to consider an additional yearly contribution from the general fund fund balance. And they set a goal overall for the fund of 5% of the prior year's general fund revenues. In 2006, there was a revision to the ordinance. It increased the funding level. It added a monthly mechanism for contributions of $50,000 from the general fund, which would be a total of $600,000 total per year. It also changed the requirement from the fund balance contribution to 25% of the unassigned yearly fund balance from the general fund. And it also maintained the contribution from all the interest accrued in that fund. That also changed the 5% goal to now 10% of the prior year's general fund revenue. Now, the accessibility portion of this was originally written to be complex and sort of difficult to access in order to build the fund. That was the, my understanding is the goal of the creators of the ordinance was to build up that fund so that it was a sizable amount so it actually could do some positive use if needed. So there's a complex formula involved for trying to access it based on looking at the prior year's average revenues compared to what would be projected to be a shortfall in coming year or the current year's revenues. this would then be through the calculation would tell you how much you could access and there's really done to make sure budgeting and finance have gone through the process of trying to look at any reasonable way we can we can make cutbacks or adjustments within the current year's budget so we did not have to access the fund and also on that the second component I should have mentioned for the in response to an emergency declaration I think it's intentionally vague on on the uses of that and how it can be accessed, but I think we'd refer to the 96 ordinance, which says it can be initiated by a council member, a director, a commissioner to start the conversation for accessing the fund for that use. So just as you look through the history of funding of this, like I said, 96 was a $4 million deposit. That continued, as I mentioned earlier, how it was funded all the way to 2009 when we hit the economic downturn. The contributions were frozen at that point. The balance was $13.36 million. Fiscal year 2010 and 2011, there was no contribution activity as the city tried to maintain some economic stabilization. 2012, we picked back up again with the $50,000 a year contribution, and we've continued that track today. This is going to show you the actual growth of the balance by year. You can see the overall change, and then if you look at the percentage in the fourth column there, it shows you how close we've gotten to reaching our 10% goal. So the current balance in this fund right now as the printing of this package was $26.5 million. You see that those are in yellow because the contributions from the fund balance will be weighting the CAFRA report and the contribution that we'll discuss here later this year. This is just a, the graph is just I wanted to show you that we're on a steady incline growing this fund. It's just an illustration for that purpose. And this is just an illustration using some kind of conservative assumptions right now. If you looked at assuming a 3% growth rate, over the last couple years we've averaged about a $1.4 million contribution to this fund. There's been a few years in the past that councils decided to go above and beyond the 25% to contribute, so it fluctuates based on that, and just a general interest rate of 2%. Going along those lines, all I really wanted to show you here was that by 2020, we would reach that 10% goal that the 2006 ordinance laid out. Just to get an understanding of how this money is invested right now, we're very strictly bound by KRS statutes for all public investments. and it covers very heavily the investment objectives. Our eligible investments, it's very strict on the bond ratings of those investments as well as what kind of risk we're allowed to take on. And it also has very strict parameters on diversification limits. So you see below that we've got 51% of this fund in money market accounts, which allows us greater accessibility if needed with minimal withdrawal penalties or no withdrawal penalties, and the rest are in multi-year bonds, which allows to generate a little more interest rate. As we've looked through this over the last few months, I just wanted to give you kind of an idea what kind of things our team's been researching. We've been looking at a lot of benchmark comparisons. We looked at university cities, which include Ann Arbor, Chapel Hill, and Raleigh-Durham, and others like that, just to look at cities that are similar to demographics. We've looked at a lot of regional cities like Louisville and Nashville, Indianapolis, Knoxville. We've also looked at distressed cities, which include Detroit, Baltimore, Birmingham, and a few others, to see how their funds may be similar to ours and how they've responded to different economic impacts. With that, we've looked at the fund sizes that these cities have used, their funding mechanisms, their trigger mechanisms, how they've used these funds through the years. We've also looked at how the rating agencies have viewed the size of these funds and these other inputs to see what kind of impact they had on their financial health. And we've also looked at what kind of similar trends and best practices we can pick up on across the landscape. So that's where we are right now on this. Any questions on it? All right. First up, we have Council Member Farmer who actually put this item into committee. Council Member Farmer. Thank you, Mr. Chair. Thank you for the presentation. I wanted to start some sort of a discussion and, you know, bring council members new and old into it because we're reaching a capping point. And I guess just to go to your presentation, your last slide, what have you learned from the other? Well, I think we would want to get input from council when you're ready to hear our recommendations on that. And today was to get everyone up to date on where we are, and we wanted feedback from you to see when you would like to start digging in deeper. Well, you know, we just came through the largest economic downturn of our lifetimes, and we did not use this fund. So I'm wondering about its usefulness in general, its trigger, and its amount. I mean, did we pick 10% as a goal specifically based on outside commentary, or is that just an industry standard? I don't know where the writers of the ordinance came up with 10%. I'll tell you, it's very much online with best practices around the country. Some go much higher. Some go significantly lower. But we're sort of in the middle, I would say, on that number. And then I noticed that 49% of this is in bonds, which strikes me as non-liquid if you were in a position to use this fund. How do you contrast that? Why would you have stuff in bonds if you're going to have to use the money quickly? I can try to help with that. Those are still liquid. We can sell them at any time. All right. We just won't get the full return as if we leave them to maturity. So what we're trying to do is say we have $26 million here, and the idea that we would have to blow through that in 60 days is very, very small. So it's never happened. Well, it has not. But, you know, tornado down Main Street. So we're trying to split the instantaneous access to the money, which is the lowest possible return, close to zero right now. At 50 percent, the other 50 percent in very, very conservative, low interest, but something more than zero. Yeah. So there would be some return that would be then plowed back into the fund. So there would be some growth. Alabet, very, very conservative and small. And then I'll ask either one of you, just back on, it's our page 32, it's your presentation, page 3. You say revenue stabilization and emergency reserve account. would we for any reason want to keep those separately? Are those separate type of things? I mean, I think we're coming to a point where we're going to have an opportunity to do something different because we will have gotten to our 10%. And I still think there's a question about the money we already have under lock and key. But do we want to change what these funds say and what they do or give ourselves a different kind of outlet? I mean... Well, a lot of this research was done while I was off. But let me give you my first impression is that benchmarks and best practices are all over the board. So there doesn't seem to be a glaring, this is what everybody should aspire to do. There are some that have lots of different funds, and so then you have a restriction here and a restriction here and a different restriction there, until it gets quite noisy and quite confusing as to what you can and can't do. Others have, well, we just have a general fund, and we know that we're going to, by promise or policy, do this, but nothing is memorialized. So you have benchmarks from one extreme to the other. And so we found it very difficult to make comparisons and come up with a standard to recommend to the administration or to the council at this point because our research was so disparate with what everyone is doing. You layer onto that the revenue base. A lot of people are property tax based. We're occupational based as far as the lion's share of our revenues and the elasticity of those. and something like the 2008 loss in assessment value was very traumatic to some of these local governments because of their reliance on property taxes that we didn't experience. Right. So it became very difficult for us to see an obvious recommendation. So we feel that we need more time to look at this and dig deeper before we're ready to come back with recommendations. Let me just add one more thing as my time has expired. Does the current legislation contemplate us reaching our goal? I mean, does it have a capping mechanism about it? It does not that I'm aware of. We did not find anything on what to do once we make 10%. Well, then at the very least, we'd want to come back and articulate something about that. And then what we might want to do with our savings pattern in the future, if this money continues to be as well guarded and locked up as it is right now. And I think that would be, I'm very interested in your other cities analysis, even though they're so desperate, as you say. I would just like to see what others are doing so we might use it appropriately for ourselves. But thank you for the opening conversation. I appreciate it very much. Thank you, Mr. Chair. If I could take a minute, going back to 2006, one of the reasons why we chose 10% as a target is because one of our first obligations is debt service. And our debt service goal was 10%. So we would always have enough money in our contingency to pay off our debt payment for that year. And that's some of the thinking behind the 10% goal. But as Mr. O'Meara alluded to, we looked all over the place, and some cities were 20% of their general fund, and some weren't even near 10%. So it's a very moving target. But to your point, I think some feedback we can come back with is a policy change once we do hit our target. And do we still need to do it monthly? And I think that's a conversation we can have maybe even as early as November if we make a large deposit from our fund balance in there, which could be $3 or $4 million. We're very close to our goal. I agree. Next up is Council Member Brown. Thank you, Chair. Thank you, Chair. Going back to 1996, I was on the council when we did establish this fund, and it was long overdue. But we didn't have any visions on where it was going or what we were going to do with it because my understanding is that each council can make an ordinance change to this. And obviously nothing was done until 2006. and the fund balance in 2006 was already up to a certain number. Let's see, where's your... 2006, the fund balance was $8,000,000,200. So it was a slow climb there, obviously. But I've got some reservations like Council Member Farmer. I think it ought to be capped. We are getting the return on this. It's not very much. I don't think. And maybe Mr. O'Mara, Commissioner, can answer this. What are we getting, what are we borrowing money at, and what are we getting an investment money at, percentage-wise? It's costing us more to bond than it is to the return on this contingency fund. Is that not correct? That is correct. As you know, the Fed has the interest rate close to zero, And so when you have a money market, it's point something percent, and you obsess over a hundredth of a percentage point that you got a good rate. Of course, the laws also restrict us from making more money off bond money than we're paying on it. That's a separate issue. But absolutely, our cost of capital in this day and age and in the past five years is always going to be larger than our investment return. Another question. I don't know who can answer this, but what's the insurance accountability here? Because obviously if you have a big fund balance and you get sued and the insurance, you know, if you've got deep pockets, you'll pay out the money out of your fund. And we talked about that as to, you know, how much money do you want in there in case you get sued. Is that a, you know, is that a fair assumption of a fund balance? I'll have to honestly answer. I never looked at it that way. Well. I was looking at coverage ratios and evaluation by debt, you know, the Moody's and the S&P's. Well, that can happen. Yeah, and that can happen just as well as a tornado coming down Main Street. Correct, correct. But if you look at the conversations, a lot of evaluations are what is your monthly running rate, how much does it cost to keep the government open for 60 days, for 30 days, for 90 days, as kind of a benchmark or an evaluation of what your target should be. So it's more of a spend rate in case everything, everything shut down. Yeah, and I'll tend to agree with you on a corporate level but not on a government level. I think there's two different things there on your, you know, we just differ on that. The infrastructure that we need is really under, you know, we've got some real problems on paving. we've got all these all this money here in this particular fund contingency fund and we've got this infrastructure out here that to me is a public nuisance a public safety problem and obviously the only way we're paying for that is we're bonding that so I'm just curious on why this council, and I guess we could by ordinance, cap this at a certain amount and use the other as infrastructure dollars. So I'll just throw that out. Thank you. Next up we have Vice Mayor Kay. Thank you, Chair. Thanks for the presentation. I do have a question about the projection illustration that's on our page 39. I see you've got an assumption of the growth rate and the interest rate that you yield. How do you estimate the fund balance? Or is that included in here, in the projection? So we are also committed to a percentage of the fund balance every year. But, of course, we don't know going forward what that fund balance will be. So is that a part of the assumption in the growth that you've got lined out here? It's the middle assumption. We looked at the average growth in fund balance over the past just few years before council added an addendum amount, and that was around 1.4. So we just used an assumption that it would grow 1.4 million a year, that revenue would grow at 3% a year and that our interest rate return would be 2% on the balance. You can run any assumption you want, and that will make us meet that 10% either sooner or later. We felt those were defendable conservative estimates just to build one assumption for a projection illustration. Okay, so I got a little confused because it looked like the assumptions were tied to the growth rate and the interest rate, but they're not. They're all three different assumptions. We had to pick something, open to criticism as to whether we picked correctly, but it was just to illustrate how many years it might take reasonably or conservatively to reach the 10%. I see. So I guess I need to see the figure. So I'm trying to, in my head, figure out if you take the growth rate of 3%, whatever that would generate, although that's not in the 1.4, and the interest rate of 2% would generate $700,000, $660,000-something, given the projection on the growth rate. So close to half of that would come from the interest earned on the existing funds. And the – is that right? The growth rate is growth in revenue. Right. So that you can calculate your percent of general fund revenue number. So you need your numerator and denominator. So we needed that revenue growth rate. And that's about the target. So if you're talking about what the target is going to be, you have to assume that growth. Correct. Okay. Now we said, okay, how much is principal? Principal is $1.4 million a year. How much interest will you earn on balance? 2% interest on the balance. Okay, that helps me understand this chart. I just want to reinforce what Council Member Brown has been saying. It isn't just that we have money that's not earning much interest. We have deferred maintenance that in the long run costs us money. So that's roads, that's buildings, that's fleet, that's all those things. And so I would actually like this council to consider changing the basis this year. I don't think it's appropriate. If we have a fund balance of, I'll pick a number and make Mr. O'Mara nervous. Fund balance. If we have a fund balance, I'm just going to pick a number. Ten million bucks. That would put two and a half million dollars into this account. in addition to the $600,000, in addition to the interest earned, et cetera. And we've come very close to putting us right at the top of the mark. I would like to see us consider not doing that. I think we have needs that are immediate. We have ways to spend that money that would save us money. And simply putting it into this fund right now does not seem to me fiscally responsible. So I would like to thank you. I would make a motion that we, oh, I don't know. I want to kind of, I don't want to just make a motion to change it at this point, but at least to bring a proposal next month that would alter the present formula for funding the, contingency fund. So there's a motion. You want to restate it, Vice Mayor, so everybody is clear? Yeah, I'm not prepared to make a specific motion about what to change. I didn't think you did. But I think my motion is we want to look at changing it, come back with something that is specific that we can use as a starting point. We can work with finance, et cetera, if that suits the committee. Yeah, that'd be fine. We can keep it in committee and bring back some alternative options. I think that was the purpose of today, to get us down that path. Okay. But I guess my intention is to, if we can, get this done in time for, before we start doing our fund balance deliberation. I think that the timing will work. I don't know what the next meeting of this committee is. October 20-something. So we'll be close. We will not have made final decisions about fund balance by that time, I don't believe. No. Yeah. Okay. So that's the motion. Thank you. All right. There's a motion and a second to bring it back next month. look at alternative options um all in favor say aye any opposed all right we'll do that next month next up we have council member hensley thank you chair um mr omey i have one one question for you or actually i have three questions for you so with this fund 26 million dollars i mean having a asset of cash on the books, when you go out to borrow or bond, I mean, doesn't that affect your debt-to-equity ratio and get you lower interest rates, having that cash on hand, or can we access that in that method? It definitely is part of the equation that the rating agencies look at when they are evaluating the evaluation of our bond rating. it is one of the criteria that they look at is cash solvency. And they're crunching the numbers straight out of our financial reports. And then they want to know, is there a promise or commitment for that money, or is it free and clear and can be used for anything? And so the city of Lexington actually gets extra marks, so to speak, in this one category because there is a standing ordinance with a calculation in it. On the rates that we're getting now, are there benchmarks that we need, like if this fund is capped at $26 million versus $30 million, let's say, would we be coming short of a benchmark to get to the next lower interest rates when you're doing bonding? I mean, part of this homework for the next month may be to come back with that. Well, that's the bond rating committee's closed-door discussion that I'm not in the room with. So we don't know? We know that it is part of what they look at. How much weighting it receives is up to the committee. And quite frankly, suspect that it varies depending on the other factors that the city has. Okay. I was just thinking, you know, while we're talking about the cost of borrowing money, you know, this $26 million fund may actually be saving us money indirectly that we may not be aware of because it's cash on hand basically to the lender. And is the ordinance set up now that it is favorably calculated in that rate? Or are there tethers on the fund that would restrict it? I mean, is it, from your standpoint, is it freely available as it stands, or is it locked up where we can't get to it? I would say it's locked up in a lockbox in the bottom of the Pacific Ocean. Okay. All right. It is in a lockbox. I mean, just as an illustration. Okay. That's pretty well locked up. So maybe a recommendation to come back as we're doing homework on this next month would be how would we remove things that would keep the intent of the fund in place but make it more tasty to the lending market to have access to? Well, actually, that's as tasty as the lending market wants. They want it locked up in the bottom of the Pacific Ocean. Okay. Okay. On the diversification of this, I mean, the 51-49%, is that as diverse as we can get? Do we have any options on that? I mean, because I know the money markets are awful. This is finance policy. It is not driven by counsel or ordinance. This was a conservative approach of 50-50, so that criticism of if you have it in long-term laddered investments that there would be, you couldn't get to it within 24 hours. It might take 48 hours to liquidate. Money market, you can have it in an hour. It can be more conservative. It can be more, I hate to say liberal, with the low interest rate that we can get with these AA-rated bonds, and we can't do anything below AA investments. It's very restrictive. If there is a pool of money that is very dependable, but any investment in that pool of money rated below AA, we can't invest in that pool. So it's pretty restrictive, pretty conservative. I just wondered, as the fund hit a cap that we might be putting on it in these discussions, If it's funded at its max, then if you all would want to look at that and change the mix, if you could, to make it grow, pulling it back out of the money market, maybe, I don't know, just some thoughts on that. We're always open to look at that. In today's environment, chasing yield doesn't really have much of a return. Okay. Now, if we had very high inflation, we may have a different type of conversation, but then we have another whole set of problems if we're in that type of economic environment. Okay. And then the third question I'll save for later. I think it's more germane. I'll return it back to you. Thank you. Thank you, sir. Mr. Councilman Maloney. I want to follow up on the bonding capacity. I mean, I know, well, the original fund and the rating date, I mean, this fund was 1996. And over the years, I've heard many reasons why. But one of the reasons why is the bonding. It helps our bonding. And the percentage, the higher we go up, the better our bonding is. If we get over 10%, will we get more discounts for our bonding? Does it get us in the moody from a B to an A to whatever? That is a great question that I cannot answer. Definitely, the more money you have, it's just like when you go to buy your home. The more you can make a down payment, the more favorable rates and the more banks are willing to talk to you and want to loan the money to you. But if there is a magic mark where you gain an extra point or you gain an extra rating, I can't answer that question. Okay. And that's one reason I don't want to – I know there's some folks that want to try to change this. Before we do anything, I want to be sure, because we just did a $10 million bond for us for Rose, and having this kind of money helped us get the bond and give us good bonding credit for doing this. So any time we bond things, we're doing improved public service. So it is cheaper that way in the long run than just to spend cash out on some things like this. And when you have this kind of money set aside to help us get through some tough times and all that, the last thing I want to do is I like the pace we're going at. My goal is that we eventually get over 10%. I assume that's what I think would be a good number. I mean, I don't know if 20% is great, but if it does come back and show us that we can get better bonding, hopefully somebody will be able to answer that someday. What is a magic number out there for giving us good bonding? When we have this kind of account, that would be good. But the last thing I want to do is just start trying to take this money out. And I know it looks like a lot of money, but, again, go back and look at the budget we had back in 1996 and look where we are now at $341 million, it's a whole different ballgame, and $26 million isn't a lot of money. But to me, if you get 10%, that really is a message across this government that we are being conservative for any time. We can't tell you what's going to happen tomorrow, but if we do have a disaster, we better be prepared to have the funding to get us through those tough times. So I just hope we don't touch any of it. Thank you. Council Member Bledsoe. Thank you, Chair. I really appreciate your presentation, the history, and where we are and where we're going. And I think what I hear is that this is a delicate balance. We want to make sure we protect what we have. We also reinvest. And when I talk to people on the street, normal taxpayers, the three things they care about. Is my street paved? Is my park nice and safe? And is my car getting broken into in public safety? None of those three things have dedicated funding sources. None. and we're behind in infrastructure and certainly two of those things. At some point, we have to catch up, and that's just my thoughts. Thank you, Chair. Anyone else have any questions or comments on this issue? All right, seeing none, thank you, sir. Next item on our agenda today was brought to us by Council Member Bledsoe, the Kentucky World Trade Center. Would you like to say anything in introduction? Yes, sir, thank you. And part of our budget review committees, we talked about putting in, some of our recommendations were to put in our economic development trade partners into the budget committee to have a yearly update. And as part of their PSA, they are required to come before the budget committee and kind of give an update. So, and today we have Ed Webb, who's the director, CEO of the World Trade Center in Kentucky, and Sherry Malkins. And Sherry was just awarded one of the top 20 people to know in economic development in Kentucky, which is a nice recognition. So we're excited to have you both with us, and I'll turn it over to you. And we'll have 15 minutes for presentation, and then we'll open up the questions. So take as long or as short of that time as you need. Well, she's an important person here, apparently, so I just let her talk. Here we go. That's fantastic. Thank you, Paul. I'm welcome. Council folks, thank you very much for your time today, and thank you for your help, obviously, too. What we're going to do is two things for you folks. Basically, a lot of people have never really heard of the World Trade Center outside of New York City. And through this person's recommendation and direction, which is a great idea, kind of start from scratch who we are. And we are from New York City. I'm not personally, but this office is, this facility. But we began in Kentucky and Lexington 26 years ago. So this has been our home base, our headquarters for that many years, promoting trade and exporting for Kentucky. To discuss relevance and who we are for Lexington, we're going to take a sad little trip here real quick. One of our biggest clients we work with here in the city. And we've got a videotape for you to watch really quickly here if you don't mind. Okay. Can I do it? Okay. Oops. Hi, my name is Paul Lardson. I'm a vice president of Big Ass Solutions here in Lexington, Kentucky. and I'm also a board member with the World Trade Center of Kentucky. I'd like to take just a few minutes here to tell you a little bit about how the World Trade Center has helped our company to grow here locally and expand our business internationally. We started as a startup here in Lexington in 1999 with just a few people and have been able to grow to a global company with over 750 employees. Our jobs that we provide here in Lexington range from manufacturing, engineering, to sales and marketing, and just about everything in between. And with the assistance of the World Trade Center of Kentucky, we've expanded our business globally, which has been a big portion of our opportunity to create a robust business, to add jobs here locally and to add to our manufacturing base as well. We've been able to expand to date to five foreign subsidiaries in a number of countries. And we build high-quality products right here in Lexington that have been exported to over 120 countries globally, and that number is growing as we speak. It's a very important part of our business and has been an exceptional opportunity for us to look for new markets and growth opportunities. The World Trade Center in particular has provided us with a number of resources for all types of international business growth. There are a number of different areas that they serve us, ranging from training in international trade and compliance, market research when we're looking at exporting our goods and going into new foreign markets. They help us with contacts and resources for import and export assistance and regulatory issues, putting us in contact with U.S. Commercial Services, do a number of trade missions, let us know about development grants and things that might help our company financially to get more involved in global markets. They also help with networking with other members of the World Trade Center and with other board members in particular for myself, getting to know other contacts in Lexington, other companies in Kentucky that we can speak to, get ideas about how they have approached international markets, how they have expanded their businesses globally, and it's been very helpful just in having a group to network with on that front. So generally speaking, starting from a very small startup to the mid-sized company as we are right now with the global footprint that we have, the World Trade Center has just generally been a good resource for us. And we believe it's a great resource for businesses of all sizes in Lexington and across Kentucky to open up international business opportunities. It really gives them a place to go, even if you know nothing about doing business internationally. It's a great place to start. There's always a path that can be given, resources that can be provided by them in a number of different manners. And these markets just allow Lexington-based businesses to have a broader range of opportunities, both in geography, in markets, in hiring, places to sell product. Importing is another important function of that, being able to broaden the supply chain for manufacturing that's done in the area. So I'd really like to encourage the council to consider the impact that the World Trade Center has on helping Lexington and Kentucky-based businesses to expand, to grow, and ultimately to put and keep Lexington on the map as a hub, a place for businesses to develop on a global basis. Thank you for your time. That company began at a storefront in downtown Lexington with six employees, and now has over 700 employees, and they've used the trade platform to grow that business, as Paul suggested. We'll do a quick presentation here, and I'll move quickly out of respect to your time, and answer any questions on the Trade Center. It gives us a better feel of who we are. This is a video. We're going to make some shots of things we've done in the city with various events, be it World Trade Day, our trade certification program, our very proud program at the University of Kentucky, the Gatton College MBA program we do yearly for that school, one of two trade centers in the world, to have an affiliation with a major college. And, of course, getting back to an event at the very top there with the former governor was being honored for her efforts, along with the Council General of Japan and, of course, our own mayor in the very top left-hand corner there. The mission of the center is pretty cut and dry. We work for Kentucky, in this case Lexington, to accelerate trade and development, economic development in this marketplace. And we look for the key thing here for our efforts is job creation. Grow companies, create jobs, retain jobs, grow revenue. And more importantly, if you look back even to a big-ass solution, to drive innovation. Their platform product changed as they went international to a different size fan, different type of fan, different needs for the different industries, and to move outside the USA to innovate and change that product. If you've not been to the facility here in Lexington, it's amazing. It's a great, cool company, and they're continually changing how they do business and where they do business. A question was asked where a majority of our business takes place. It is here in Lexington. 60% of the business we operate or we manage is now this marketplace. I am headquartered here. We're in the PNC Bank building on the first floor on walk-in traffic. It is a primary market for this organization because of the businesses that are headquartered here. Board leadership, very quickly to get an idea of who we are, the people we work with day in and day out, Ashton Doyle, Keeneland, LBX, Alltech, East Kentucky Power. Those folks serve on our board of directors, and they're powerful people with great names who would not be with us if they didn't believe what we're doing for this community. I mentioned earlier, we're part of the World Trade Center Network out of New York City. We have 300 offices in over 100 countries. There's a trade mission coming up that we've been to with the U.K. Canada and in both those cases we met with those trade centers that were there to help facilitate those meetings and make contacts with the businesses that were attending on those trade missions. Again headquartered in the city proud to be here and we work through a number of programs from trade education being our primary platform. We educate businesses and create awareness on trade and how trade can benefit their companies. Income streams this is mentioned during a discussion we had and as compared to the previous budget you folks just saw we're not in the multi multi-million plan for our area just yet I wish we were and hope to get us there at some point in time but this is where our money comes from we get money from grants both from the membership side of the equation trade education trade missions world trade day and trade consulting what we're trying to do with the World Trade Center and this came from some discussions we had with some of your own so think like a business think like a business and we do just that, and we're trying to find new streams day in and day out to subsidize the organization and to become less reliant upon government money because that's changing day in and day out, and we recognize that. So when you talk to the Trade Center, we don't operate as a nonprofit. We operate like a business day in and day out. We're continually promoting ourselves, our efforts, working with businesses, making sure we can find those products and services they need and can benefit from to help grow. Should we cover this? It can impact. We work with, as Ed said, we have three primary functions that we do, trade missions, trade education, and trade services. So by supplying those to our companies, it opens up other markets for them to go out and expand their business. But part of what we do with the trade missions is we have an FDI portion on all of our trade missions, whether it's governor-led like Canada, and we went to the U.K. last year. We've been to Canada twice. We're getting ready to go to Mexico. We've not been to Mexico before. And a big portion of that is going to be based upon foreign direct investment. Also on World Trade Day, we have not ever had this before until this year, but we are having an entire session in World Trade Day for the economic development officers to talk to them about talking trade and promoting trade and partnering with us in all of the areas of Kentucky. Obviously, Lexington, we work very, very closely with Bob Quick and Jenna Greathouse. I worked with them when I was in the chamber world, so now I'm on a different side of the economic development. So that's a big portion of what the Trade Center is about. As Ed said, it's all about keeping jobs, developing jobs, innovation, and growing the companies and letting people know about Lexington and bringing them here. Outreach today, Dane and Dan, we work with businesses in this marketplace, so for 100 businesses we've talked to, worked with, done trade assessments to figure out where they are. A lot of one-on-one meetings. We want to do more of those. As we grow this organization, we'll do more one-on-one meetings. And, again, what we're looking for with these companies is where are you today in trade? Where are you in terms of actually domestic growth? Are you adding jobs? Are you retaining jobs because of trade? Are you going to expand your facility? Example, Big Ass Solutions. They just bought the facility across the street. I think it was a tire company, Sumitomo, I believe, that big warehouse. They acquired that. And they're growing by leaps and bounds all because of international trade, what it's done for their company itself. But we want to capture that, provide that kind of data to you folks and to Bob Quick and this team and to the state. We work closely with the Kentucky cabinet, with Eric Dunnigan and Larry Hayes for the time being, to help them figure out what's happening internationally that can impact the state, in this case, Lexington. just some metrics for you folks this is very important to us and we measure ourselves daily what gets measured gets managed uh our new chair is from the is the president of um ups a guy named zach scott you'll meet zach a very demanding businessman and every step we make every step we take he wants to know why we're doing it is it being measured but there's an example of where we are to date on our calls and our efforts and as you can see we're um fiscally we're very conservative but in terms of outreaching, getting in front of the clients and talking trade and making things happen, we're there. They know who we are. They know the World Trade Center. Upcoming events, the STEP program is coming out shortly from the federal government. This is the fourth time the state's gotten that money. They got $400,000 this year to give to small and mid-sized businesses. The state recognizes that's our sweet spot in Kentucky is to grow organically, to grow those small and mid-sized companies. As Sherry mentioned, World Trade Day. We can discuss it later. Love to have you folks there. It's a great event. We're honoring the Corvette Stingray, which I can't afford, obviously. But they're made here in Kentucky, and they just put $400 million on that plant. And it's pretty cool stuff. They export those Corvettes across the world. We're going to Cuba. Sherry has more about that information. In fact, we gave a handout about the program we had our first meeting yesterday. We're going there on an exploratory mission. This is not a cultural mission. We've got some, the embassy just opened. And that opening, we're able to do some things a little differently. And we had, I think, on the 20th of October, roughly 20 people are going with us. 20 companies, and several of those are from the Lexington area. Amanda has, Councilman Bledsoe has the list of folks that are coming. With the change in Cuba happening so quickly and the announcement of being able to open an office there and the embassy opening, We are one of the top ten states that have visited Cuba since it's opened up for us to be able to go there. We are actually going on a business visa that hasn't been heard of in however many years. And one of the very first states that are going to be meeting with the Cuban Chamber of Commerce and with the embassy. In a sweet spot for us, too, and I was making a comment earlier about the businesses that stepped up to want to go to Cuba, the majority came from Lexington, from the city. And Alltech is sending Pierce's going along with his wife and Donna Maloney. We've got Electro Dryer going with us also. We've got East Kentucky Power. Ashton Doyle is going with us, as a matter of fact. And they had a big announcement today about the company changing direction somewhat. But my point being, we know the sweet spot for the Trade Center. And we're finding out day in and day out with my being here, I've relocated to Lexington to work here. And the business opportunities do exist here. And I think the Cuban mission exemplifies the interest the city has in trade, international trade. World Trade Day? World Trade Day, as I spoke earlier, is October 9th. It was in Lexington last year. We alternate, so it's in Louisville this year. We're expecting a record-breaking crowd. We're going to have a gubernatorial forum to talk about trade and what the new governor is going to do to continue. Over the last four years, we have had export records broken every year for the last four years since the Kentucky Export Initiative has been in place under Governor Scheer. That's also one of our responsibilities that we facilitate the Kentucky Export Initiative for the governor's office, not only in Lexington and Louisville, but across the state. So we would love to have you. I think each one of you should have received an invitation and also put a postcard there on your desk. As part of the funding, the councilman can come, obviously, as our guest for World Trade Day. We have a VIP reception that we'd love for you to be able to attend. And then we have a dignitary breakfast in the morning that has all of our council generals that will be coming. The cabinet will be doing an update on where trade is. I'm not sure if you actually know the figures for trade, but this year Kentucky exported $28 billion in exports. That represents about 2,500 businesses in Kentucky, most of those manufacturers, and that represents about 130,000 jobs across our state that is directly related to foreign trade. I'll pause you right there. 15 minutes is up. Do I have a motion from committee to extend it? Motion and a second. Actually, that was the last line. I thought you had a couple more, so we're good to go. Thank you all. Council members, if anyone has any questions, please chime in, and we'll go down the list. First up, Council Member Hensley. Thank you, sir. I was just on your postcard. You're missing one of the governor candidates. Thank you. Yes. Yes. We know. So noted. So noted, yes. Council Member Brown. Thank you, Chair. The World Trade Center now is in Lexington. It's the only location in the state of Kentucky. No, sir. We have a satellite office in Louisville, Kentucky. Okay. That was my next sub-question, I guess. Does Louisville contribute any grants or give you all any money like Lexington does? Yes, sir. They do. They give us roughly $72,000 a year, and they also provide office space for us. Where was that on your revenue statement? I saw the grant for $100,000, which I assume came from. It's a service income. It wasn't corrected on this. It's actually the service income that's from Louisville, a service contract that we have. Okay, so Louisville is contributing. Yes, sir. I felt like they should, and I thought that was the original intention to get the two major cities involved in that. So you do have a satellite office there then? Okay. Yes, and that's through the BEAM region, you know, because of the BEAM, the Bluegrass Economic Advancement Movement between Louisville and Lexington. Thank you. Thank you. All right, anyone else have any questions? All right, CNN, thank you all for joining us. We appreciate the update. Thank you, folks. Thank you so much. Invite us back, please. Thank you. All right, last on our agenda, as items referred to committee, are there any changes we need to make to any of the items on our list, council members? Council Member Brown. I've got the item there on the second item. Yes, sir. I stated at our last meeting that I would follow up on that particular item. I talked to the former Council Member Lane's legislative aide, and there really is not a lot of background there. And unless Council Member Hansel would like to do something with this, I would request that we take that off the top of our agenda. All right, there's a motion. Is there a second? Second. All right, a motion and a second to remove the activity-based cost and financial efficiency. If we remove it, we can always put it back in if someone wants to take up a different angle on that. All right, there's a motion on the floor. Any discussion? All right, all in favor say aye. Any opposed? All right. We removed that from committee. Any other changes? All right. Do I hear a motion to adjourn? Motion and second. All in favor say aye. We're adjourned. Thank you all. And I love you better