# Budget, Finance & Economic Development (BFED) Committee - January 27, 2026 > Auto-transcribed civic record · Committee · January 27, 2026 - **Permalink**: https://meetings.lexingtonky.news/meeting/6673 - **Source video**: https://lfucg.granicus.com/player/clip/6673?view_id=14&redirect=true - **Date**: 2026-01-27 - **Body**: Committee - **Last revised**: February 2, 2026 - **Length**: 9,748 words - **Speakers**: Chair, Council Member, Vice Mayor Wu > ⚠️ **Auto-generated content.** Audio from the official Granicus video was auto-transcribed by OpenAI Whisper-1, with speaker labels folded in from Granicus closed-captioning. Structured facts were extracted with GPT-4o; the narrative summary was written by Anthropic Claude Sonnet. Speaker labels and 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 (BFED) Committee met on January 27, 2026, at 1:00 PM in the Council Chamber of the Lexington-Fayette Urban County Government. The committee worked through four agenda items during the session, three of which were informational in nature and one of which resulted in a formal vote. The informational items included a FY26 Quarter 2 Financial Update, an Annual Comprehensive Financial Review (ACFR), and a presentation on an Infrastructure Funding Plan. The committee also conducted an Annual Review of Committee Referrals, which was approved by vote, representing the sole motion and vote taken during the meeting. No public comments were heard during this session. ## Votes and Decisions The committee took the following action during the January 27, 2026 meeting: - **Motion 0083-26 — Approval of October 21, 2025, Committee Summary** [timestamp: 0:03]: The committee voted to approve the summary from the October 21, 2025 committee meeting. The motion passed by voice vote. No individual roll call tallies were recorded, and no conditions were attached to the approval. ## FY26 Quarter 2 Financial Update [timestamp: 03:31] **Agenda Item:** 0084-26 **Type:** Informational Presentation Commissioner Hensley, Director Holbrook, and Director Lugar jointly presented the FY26 Quarter 2 Financial Update to the Committee. The presentation covered the organization's financial position through the second quarter of fiscal year 2026, with discussion focused on revenues, expenses, and variances from projected figures. No further detail on specific revenue totals, expense line items, or variance amounts is available from the meeting record. The item was informational in nature, and no vote or formal action was taken as a result of the presentation. ## Annual Comprehensive Financial Review (ACFR) [timestamp: 36:01] **Agenda Item 0085-26** The Committee received a presentation on the Annual Comprehensive Financial Review (ACFR) covering the results of the FY25 audit. The item was informational in nature, with no vote or formal action required. The presentation was delivered by **John Crossland** and **Garrett Wooten**, who served as the auditors for the review. Key findings from the audit included: - **Unmodified opinion** issued on the financial statements, representing the highest level of assurance auditors can provide and indicating that the financial statements are presented fairly and in accordance with applicable standards. - **No significant deficiencies** were identified during the audit process, reflecting positively on the organization's internal controls and financial reporting practices. The unmodified opinion and absence of significant deficiencies indicate a clean audit result for FY25. The item concluded as informational, with no further action taken by the Committee. ## Infrastructure Funding Plan [timestamp: 56:05] The Committee received a presentation on agenda item 0086-26, focused on strategies for funding infrastructure in urban growth areas. Consultants Anita Morrison and Abby Ferretti of Partners for Economic Solutions delivered the presentation, which centered on recommendations regarding privilege fees as a mechanism for financing infrastructure needs. The item was informational in nature, meaning no formal vote or binding decision was taken by the Committee at this meeting. The presentation outlined the consultants' findings and recommendations, with privilege fees identified as a key funding tool for supporting infrastructure development in areas experiencing urban growth. No additional details on specific fee structures, debate points, or concerns raised during the discussion are available from the provided materials. ## Annual Review of Committee Referrals **Agenda Item 0087-26** [timestamp: 1:39:15] The committee conducted its annual review of outstanding committee referrals, examining items currently on the referral list to determine which should be retained and which could be removed. During the review, the committee removed several items from the referral list, including downtown projects and a city hall feasibility study. No key speakers were identified in the record for this item. The committee approved the updated referral list as part of this annual housekeeping process. --- ## Decisions - **0083-26** — passed (0-0): Approval of October 21, 2025, Committee Summary --- ## Full transcript Here Comes Christmas Hooman, stand up please Hooman stand up Hooman, stand up Hooman, stand up Hooman, stand up Hooman, stand up Alright there was a motion made to approve and second it are there any additions or corrections? Hearing and seeing none I'll call for a vote all those in favor please raise your hand I say I thank you are there any that oppose seeing none that motion passes the next item on our agenda is the FY 26 quarter to financial update we have Commissioner Hensley director Holbrook and director Lugar I'll turn it over to Commissioner Hensley to proceed the floor is yours thank you so much council member director Holbrook is having some trouble with his camera Haley I'm wondering if maybe you could get it turned on for him so while we're working on that thanks everyone for joining us we are here to discuss our second quarter financial update so that is financials through December 31st 2025 so just as we like to always do in our quarterly reviews we like to remind everybody that our revenues and expenses are not budgeted in one twelfth of the year next slide please they're based on the seasonal nature of our collections or our expenditures so you can see that they are very much in line with those high revenue collections months or high expenditure months depending on what is happening during the course of our budget year next slide please thank you so we're going to discuss in detail over the next several slides what's happening or what's happened through the first six months at the end of December 31st we're in a positive position with revenues exceeding expenses that's been helped a little bit by some latent tax collections for our net profits you all had asked us with our net profits regularly being due in April if we were expecting to see a delay we were not based on the actual payments the the payments that we were receiving and then our estimated payments that we were receiving and so that was a bit of surprise a happy surprise for the collections in November and so that was a help in our revenue but Wes will talk a little bit more about those as compared to what they're doing for the overall budget and for the year and then really what we're seeing is a variance pretty healthy variance in our operating accounts we've really been working the last couple of years to recalibrate our operating we're going to continue that work in our budget next year because we're still running variances in those accounts and so Melissa is going to talk about some of those more in depth as well as some personnel as we go through the remainder of these slides with that I'm going to turn it over to Director Holbrook. Thank you my camera was working whenever I started but now it is still keep saying it's failed to start so I apologize so just showing the FY 26 payroll withholding actuals versus budget you can see over the last six months we've in most of the months especially the first two months of the quarter we haven't been able to meet or exceed our budget at the tail end of each quarter we have so that is driving us slightly above budget for that revenue source we're going into what's typically our largest collections quarter of the year and so we'll need to watch this closely to see if we continue to slightly underperform and then have have a pickup at the tail end or if we start to experience maybe some slow down that we've we've heard about in some of the national news but right now things are performing fairly well and above where we had anticipated so far for for the first two months of the quarter next slide net profits is one that we've talked about as underperforming for the last several months for the first six months of this fiscal year we did experience our we talked about the IRS deadline moving to November for for our taxpayers we did experience a pickup in November that we're quantifying is about 1.6 million dollars of of net profits just based on what prior year activity was and what we've seen typical growth so you can see where that bump happened compared with fiscal year 25 actuals and the budget we didn't necessarily see that continue going into December we did see some some growth slightly above where we were prior year but we've we've seen that in other months as well so this is one where that may have decreased the amount we collected in FY 25 with the moving of the tax deadline and move some of that money forward so you're going to see where that shows us slightly above budget but when you start to back that out it really puts us back where we've been which is net profits underperforming what budget was for the year next slide so on our some of our other sources insurance is one we're slightly under budget for that less than five hundred thousand dollars less than around two percent that's one where we've seen continual growth which you'll see as we get to the next slide you'll be able to see where that growth is actually is is running slightly under but in prior years we had seen it move move along with ahead of where our other revenue sources were growing in some instances not too much to worry about in that in that revenue source only because there are other sources where we're seeing budget be exceeded and that's not one where historically we've seen any stagnation or lack of growth when you look over a longer period of time so if history is any indicator this should be just a short-term blip in the growth of this category and we're seeing growth in many of the sub sectors of insurance there's just this catch-all for other types of insurance so that doesn't include home auto health life all the major sectors are growing it's just this other category that is underperforming prior year that's really dragging a lot of this down franchise fees is is one where we've had flat for several years we are continuing to see growth in it this fiscal year over budget and then also prior year and one of the things we always talk about with franchise fees is you know it's really dependent on the weather and given what the weather's been we should see that that revenue source continue to come in higher than budget at least for the next few months as we get into spring and see what that weather looks like but overall in the top four mostly positive with with a couple areas that we just want to watch and see how they perform as we get to the tail end of the fiscal year so overall solid performance in the first six months one area i do want to point out here just to budget on the property taxes account that does show being highly over budget and a large a large variance when you look at the total property taxes accounts budget for the year that actuals collected is pretty close in line with what that number is so we may just have a slight timing difference there for posting some of the some of those accounts next slide please going to the year over year you can see where where we're seeing growth and how we managed to absorb a lot of that as we were doing our budgeting for fy26 payroll is performing well we do have some things that happen in the second half of the fiscal year such as our incentive agreements where we do either accrue or disperse some of that money so that that may go down just naturally assuming the growth stays the same hopefully we continue to see a higher level of growth with net profits you know if you back out that 1.5 million that we anticipate or that we quantified being over from the prior fiscal year net profits that got moved forward that really puts us on track with where we were where we were seeing growth insurance is just slightly under where we were in prior year less than a percent so that's something that could change pretty pretty quickly as we see some premium renewals coming in for the next calendar year and then franchise fees is again where you see a lot of that growth over prior year largely due to some of the weather activity that that's been happening and just on the actual side you can see that that property tax number really is coming in earlier than than it was in prior years so that leads us again to believe that that's that's a timing difference so that as we get into the next couple months some of these variances may shrink just naturally as some of the timing resolves itself especially with property tax accounts that being a fairly large one but overall we're still seeing seeing pretty positive growth slightly above four percent when you when you take some of those numbers into consideration i'm happy to answer any questions council members may have and otherwise i can turn it over to director luker thank you thank you director let's stop right here take a few questions first i see council members of igny thank you chair and thanks so much for the presentation west um just real quick where does the um where does grant income i know grants come from a variety of sources but where does it normally hit this um this report and and then how much of our grant income usually comes into the general fund if you know that versus any of the other funds yeah so you can see this this line intergovernmental revenues um on the slider on it's about two-thirds of the way down not a lot of grant or intergovernmental revenues hitting the general fund those those generally do sit in another fund okay where they're where they're accounted for slightly differently okay thank you great all right thank you thank you council member next we have a council member baxter thank you chair um thank you director for this information do you um are we back to our regular filing deadline for taxes this year or or do we anticipate another delay there as far as we know um you know i i think the the filing deadline change last year was applied to the entire state of kentucky and so there were areas which didn't really experience much of a negative impact from the straight line wins that um that got the benefit of that deadline so if there is some larger whole region or whole state delay like we saw last year we may get that we're still pretty early in the tax filing season and that one came pretty late um i think sometime in march was when we got it last year so as far as we know um april 15th is is the deadline according to the irs and um i don't think we've seen anything different unless it's come out in the last day or two okay um and then on the investment income line is that purely a market-driven deficit or is there something else going on that we should be aware of yeah i think a lot of that's market right now um just because we have seen a decrease in interest rates over um over the last year okay that's all i have thank you thank you council member and then west also have a couple of follow-up questions to the two previous questions so that so that um intergovernmental revenue uh you said uh you said that's probably where grants show up in general fund what type of grants particularly show up in the general fund is that does that public safety grants where other grants are allocated to designated funds i don't think it's so intergovernmental revenue is going to capture a few different things that aren't specifically grants and and someone else um who deals more directly with grants may want to hop in um there there may not actually so that makes up a few separate lines for uh intergovernmental revenue and that may not actually contain the vast majority of it even being grants it could just be payments that we receive from the state or from the federal government for a variety of reasons um but in activity council member lives in the 3 000 funds and so the revenues and expenses are all held over there they're restricted for a specific purpose and so their revenues budgeted and expenses budgeted are all over in those funds and you all approve those either as we apply for them or as they're accepted and then adjusted depending on what award we get um and you all do this individually because they happen most of the time off cycle to our fiscal year um so those all happen individually um the stuff that would come over here in intergovernmental revenue would really be um things like our indirect costs or um where we're charging back for services that are performed for grants or other funds um in an administrative capacity where we're um providing that where the other activities are not large enough to be able to cover those costs themselves and the government as a whole is covering things like that so um there is a small portion there but the vast majority of the grant activity lives in those 3 000 funds okay okay and then going back to the um the tax filing extension did you come to the conclusion that some of that revenue that you saw in the um in late last year was attributed to that because of the way that it was turned into us and that you could delineate it that way or was it because you compared the current year to the prior year and it just it just shook out that it was that it was coming in but that those that that those funds were coming in based off the late filing extension and not real growth well we we saw both so one of the things that we look at is we look at we we have four different net profit forms that come in and we track the number and the dollar amount that comes in with each of those and we saw a pretty marked increase in november compared with prior year that didn't really line up with extension filings that we received in the first in the last fiscal year so that tells us that people did not file extensions but they were still taking advantage of that november filing deadline because otherwise we would have seen one follow the other so we were able to sort of piece it together based on that and and given how close everything's been running compared with prior fiscal year running down a little bit but still you know with within the ballpark of what of what we're collecting in that revenue source what we saw come in over and above shakes out about to that 1.5 million that we referenced okay okay well that makes sense but i was holding out hope that we would see a bump in the next few months based off of that so i'm gonna still hold out hope okay all right so thank you um thank you director so we'll turn it back over to you and director lucre okay so as the commissioner stated early on our budget isn't exactly a 1.12 budget throughout the fiscal year um you'll see personnel's pretty well even except for some big months um those big months are whenever we have three payrolls that hit there's twice twice a year when we have three payrolls so we had that in august this fiscal year and then january and you'll notice january is significantly higher than any other month that we have budgeted um january has a lot going on with personnel we've got um three pay periods this fiscal year in january in addition we have the sick checks that were just issued last friday and we have um this is typically when our police and fire have their payouts when they do their retirements at the end of the year and so we've got a lot more personnel expenses in january so typically when we get through january we've got a better idea of what our personnel variance is year to date because it is just such a large month and there are so many things hitting you can see um with the exception of one month there that we are spending more than we did in the prior fiscal year that's that orange line so you can see our personnel budget has grown as well as our personal expenses there the operating um it's not quite to budget you can see the blue line there is the budget and we're not quite meeting our operating budget and that's something that we're talking about and we're focusing on and we have been focusing on getting that tighter um actuals to budget you can see um we have some months where we've spent more than we did in prior year and then we've got some months where we haven't quite spent um to date so looking at the detail with the numbers here our personnel is within two percent which is great for the first six months of the year we were within two percent of what we had thought we would be with personnel we've got some savings that we're seeing in um vacancies that we have as well as um some other salaries now we have um some overages in our overtime where we have kind of spent ahead of budget in overtime and we're watching those and talking with those divisions as well as our health insurance so we're spending ahead of where we thought we would be in those couple of accounts but the rest of personnel we're doing good to budget they're operating you'll see that's a big variance they're um 25 percent variance that is a lot in public safety we've got some large software contracts um the medical contract at the jail so we've got a lot of big expenses in our public safety divisions that are encumbered on contracts they just haven't been spent down yet and we expect some of those to be spent as we get through the end of the fiscal year we've also got other professional service items in there that you know we know are going to be spent or will be spent by the end of the fiscal year but and they're encumbered but they're just not showing as available budget we also had um about a six hundred thousand dollar variance in salt which after this past week we know that when we'll go um that variance will go down as we are purchasing more salt as we get through um the cleanup efforts here so some of these things that we have it's a large number and some of them will be spent some of them have probably already been spent before um we had this meeting today so we'll see that change um next month the insurance we know we um our expense is a little bit higher than what we had budgeted and so we're aware of that and we're looking for money to move around to cover that our debt service we just um getting ready to go to market for our bonds so we've had our ratings call and we are um looking forward to the next step in that process so we'll see some of our debt service savings as we um issue the new bond for fy 26 partner agencies it's um a couple of different ones the library is in there with the variance um the transit authority with the micro transit dollars that we have provided them through fund balance dollars as part of the variance that's showing um in there as well so we know we've got commitments made for those and we'll see those being spent the capital um we're spending ahead of where we had budgeted and you know capital is kind of harder to predict because it's a one-time um expense typically and so um i'm glad to see people are spending their money and then we had several transfers were budgeted to happen in um november they have not yet happened and so we'll see that um go down as we get those transfers booked how we compare to prior fiscal year you can see um with just about every category with the exception of capital we're spending more than we did the prior fiscal year which goes back to that operating graph that we showed where you know we're spending more than we did prior year we're just not spending to budget so you know our big driver here is personnel you can see we're spending five and a half percent more than we did last year for the first six months so that's about 7.8 million dollars more that we've spent in these first six months of the fiscal year than we did in the calendar year um the fiscal year last year so just wanted to point that out um and then i'll be happy to take any questions if anyone has any thank you director council members are there any questions i'm not seeing any looks like you did a great job of explaining thank you yeah all right commissioner is there anything you want to say to kind of round this this portion out or is that are they covered this is this is the quarterly so you get the other funds update we're not done just yet so because this is a quarterly quarterly we do have the other funds update and i will give you all a teaser we are working on an update as well for the parks fund um but since all of these other funds are different from one another and different from the general fund we're really working on how is best to present that it may look somewhat like arpa um since it'll have one revenue stream and then it'll have many projects um so look forward to that we'll be bringing that to you hopefully in the third quarter but for second quarter we'll start with urban services fund next slide please we just have the reminders of what urban services fund is the fund balance audited fund balance for june 30th of 25 and we have our auditors here so we're excited to be able to present the audit to you today um so our beginning fund balance was 30.3 million that is up slightly from the prior year 29.2 million the majority of that increase is in the street lights um and that's going to be critically important because we all know that we just got through with a rate case adjustment and we will see increased expenses particularly in that activity within this fund um but what is um going really well is the first six months are going well to budget our revenues um versus our budgeted revenues are doing well as far as collections and our expenses are running under our budgeted expenses so overall the performance for the first six months is doing well um and this is heavy collections for revenues in um with property taxes in november and december so we've probably seen the vast majority of what we'll receive and we'll need to run the remainder of the year on those revenues so we're performing well um fund balance slightly higher than prior year primarily in the street lights with um some increase in expenses coming with that rate case next slide please the next fund we're going to talk about is sanitary sewer again this is just a reminder of some of the intricacies of that fund um for your reference next slide please this is a big change in fund balance it's 40 and a half million dollars up from 3.3 million dollars but just as a caveat to that these projects are very expensive this is a um very capital heavy fund uh restricted revenue for restricted expense um for the sanitary sewer operations and these are multi-million dollar projects so while that seems like a dramatic change um that can be gone in the blink of an eye with a project and we've been very very lucky to be able to cash fund a significant number of our large projects as well as get um some really good interest rates with kia loans so we haven't had to go to market and pay market interest for some of those other loans we're doing really well this year as far as our performance we are running just a little bit behind on revenue but our expenses are more than making up for it as far as um our operating savings and so for the first six months um we have positive performance in this fund as well next slide please um notes on the water quality fund again this is another one one of those that has an operating component and a capital component so 40 51 that we're going to talk about works in tandem with 40 52 which is the capital component next slide please it has a beginning fund balance of 4.8 million that's actually down from a prior year beginning fund balance of 5.4 million dollars again that dependent that dependency between the capital fund and the operating fund just really relies on what projects are in place at that time and the amount of funds that are in flux with those projects going on so um to to date we are right on budget as far as revenue goes we are within ten thousand dollars which is awesome um and our expenses are doing well to budget we're a little bit under budget on our operating expenses as well um so good performance for the six months through December 31st next slide please and last but not least the landfill fund we um we will discuss next slide please it has a fund balance of 33.8 million dollars up from 29 million dollars this one does have a major liability against it is that post-closure liability for the EPA requirements and that typically runs around 25 million dollars so just keep in mind that of that fund balance a vast majority of that is encumbered for those post-closure requirements that being said this fund is lagging a little bit and it's um in in what is showing for its actuals versus budgeted revenue we're going to take a look at the actual budget to that because it's performance they're actually um collected revenue higher than it did last year so that may just be a function of what we budgeted for the timing of those revenue collections um actual expenses versus budget we're running a little bit behind so overall we're almost at a net zero for this fund um but again this is kind of a function of us just learning how to report these funds and we're going to continue to watch this and make sure that we're continuing to make adjustments where necessary and track if they're actually not performing the way that we believe that they need to be performing and with that I will take any questions on the other funds all right thank you commissioner uh for that update uh in regards to questions first we have a council member sabigny um thank you thank you yeah um thank you chair and thank you commissioner for your presentation and I do always love the other funds so um so it's exciting could you um could you go up like uh I think it was to the sewer the one you said had a lot of projects um I think it's sanitary sewer and water quality both yeah yeah no yeah go back come back yeah so nope go back again sorry that so and I just I just want to understand this for for myself and maybe for the council to understand it is the debt service on here you like currently actuals is 7.8 million dollars on revenue of 42 million my guess is you said on this one I think is this one the we've gotten the revenue that we're going to get or just this one that was in services okay I saw so this particular one kind of moves on to the future but like this does does this kind of have a high debt to revenue ratio here this one is this one has some debt but this one has those very large projects that are required by the EPA consent decree that we really don't have a whole lot of choice whether we do them or not we're on that 2030 deadline and so the best that we can do is work to get a really good interest rate and so you all may recall that you just signed the documents for the KIA loan I think it was maybe just under two percent and so they do look at our financial statements in our projections and look at our our plans and evaluation of our credit worthiness and for the first time actually our entire sewer model was included in our Moody's rating and so they look at that when they are doing our Moody's rating as well this year they actually asked us about it and so they are really they're they're kind of looking at this both in the recurring revenue as what's going to be coming in and the projections of revenue as well as those large projects and what we're going to have to do to meet those EPA consent decree requirements so I mean it is it is heavy cost and they're you know required they're not optional on a timeline but I think we are as comfortable as we can be that we're getting the best rate possible and they're backed by the revenue that we've got coming in. I just may ask you a question when we do that infrastructure when we do the infrastructure part of this discussion coming up next I might ask you to kind of reflect on like these numbers and and how some of that would impact that so right okay yeah that's about I do appreciate this and that was kind of my big question was that that debt service so yeah really appreciate it thank you thank you council member next we have a council member Baxter thank you chair commissioner just a follow-up question on that debt service is 100 percent of that the EPA consent decree stuff or are there other items in that debt service as well that's a really good question I would have to go back and look at all the projects that are included that in that well that's okay I just am curious you know obviously looking to the future and hopefully having that debt roll off at some point I'm just curious how much of that is those projects so if you could give me some all of these were this was a bond we did the last one we did was in 2019 I believe okay so all of these were consent decree related projects okay good deal thank you all right thank you council member Baxter are there any other questions seeing none I think you're I think you did a good job of covering those other funds commissioner thank you all so much yeah all right committee members we'll go we'll go back to our agenda also in your packet are the ARPA financial updates for information only and then the next item on the agenda is the annual comprehensive financial review the ACFR this next presentation is the annual update of the results of the FY25 audit I want to thank commissioner Hensley her deputy Ashley Simpson and director Phyllis Cooper and the rest of their team for their hard work on another successful audit our auditors are John Crossland and Garrett Wooten and they're joining us today virtually to present the annual comprehensive financial review commissioner before I turn it over to them was there anything that you wanted to add about about this audit no I wanted to thank everybody for their hard work and thank our auditors Crossland they they have been on site this was our second year so a lot smoother than the last year and many many thanks to all of them it it's been a really good good year and I appreciate director Cooper this was her last audit with us she'll be retiring before the next one so thank you to her for her last audit and thanks to all of her team for all their hard work thank you commissioner so Mr. Crossland and Mr. Wooten I'll turn it over to you too okay thank you we're going to share a document share right there okay okay can everyone see it everybody see that pdf yeah okay thank you so we'll get started you know we're not going to focus much on the actual act for numbers since you just heard the six-month ending numbers the more relevant numbers but we're going to focus on presenting certain requirements that we're certain requirements that we're required to communicate to this committee as well as just some of the results through the audit so I'll start kind of looking at the agenda here's some of the items I'm going to go through as I go through feel free to stop and ask us questions and interrupt or raise your hand or what have you would be happy to answer questions as we go but for the sake of time I'll kind of move a little quickly I know you've got a lot of stuff on the agenda next slide so this was our team we had a great team this year Garrett was back and Belle is not on here but she was she's a senior now she was staffing the job so we had continuity on the job we also appreciate the commissioner and the director and their team working through this audit they were they were fantastic and we appreciate all the cooperation this is just a brief synopsis of what our responsibilities are as the auditors as opposed to what management's responsibilities our are ours are our responsibilities to express an opinion about whether the financial statements or the act for prepared by management which is very important I want to emphasize that because you guys prepare your own act for not all city governments do that not all city governments do that and it shows to the level of technical ability and sophistication that you guys have which should give you comfort but the financial statements prepared by management under the oversight of this commission and that our responsibilities to make sure that's fairly presented in all material respects with GAP and we believe it was we also perform a single audit under the uniform guidance that's your audit of your federal grants we have not issued the single audit report yet but we generally we should have that done issued in the next month or so we I will say we have audited those federal grants and we have not found any findings we are also responsible for maintaining independence and an attitude of professional skepticism reporting to the city commission and management but including but not limited significant deficiencies internal control weaknesses non-compliance any fraud so all these items and I'll take a talk a little bit more about that in a minute but we look at all those items and if we do have any material weaknesses or significant deficiencies we're required to report those to you now we did not see any we do not have any this year management on the other hand they are responsible for the attack for they are responsible for adopting the accounting policies of which we audit and establishing internal controls and preventing fraud and disclosing to this council and us if they detect any fraud and and none was reported to us this slide under governmental auditing standards and the AICPA professional conducts rule 101 we consider ourselves independent of the city and county government SAS 99 came out now almost 25 years ago and it dictates to auditors what our responsibilities are under fraud our industry's gone back and forth since it's a financial statement audit not a forensic audit what are our responsibilities really as financial statement auditors is to brainstorm with our team inquire of management investigate anything that's unusual or unexpected whether it be relationships or whether it be come out of analytical procedures we gather all that information and then use it to in an audit standpoint identify those risk and respond to them come up design procedures around those test items around it test for management override and then evaluate all this evidence and if we do find anything that we think could be fraud report back to the you know the appropriate levels of management and to this commission and we have not found or this council and we have not found anything that is reportable deliverables your annual comprehensive financial report or your ACPR we have issued that and it's an unmodified opinion which is the best opinion and as I mentioned the single audit will come out soon but so far we have not found any we don't have any findings this presentation serves as our required communication for the audit committee that's what it's in the language it's called I know that this committee is not called that it's either the audit committee or the committee that serves as the audit committee which is this and then the data collection form is uploading your federal grant information onto a federal website that will be done as soon as we issue the single audit next slide is audit methodology and approach so we're really we divide our audit up into four main sections the audit planning and risk assessment we don't know what what we're going to do how we're going to audit until we can assess risk and we go through that process first we decide what controls can be tested and relied on and then what substantive work we can do and then after that just completion of the reporting process is what we're going through right now the next slide dives a little bit deeper into that some of the areas that we felt that we could test controls and rely on those controls on the right side cash receipts property tax billings employee comp bank correct some of these you would you'd recognize sometimes substantive testing honestly is just the most complete and effective way an efficient way to test so you know if you have large investment balances to send get a confirmation from the bank or same with debt we look at the actuarial reports for your opeth so sometimes with capital assets if there's large additions we'll just pull invoices and look at it so sometimes it's quicker just to do substantive work than control testing and relying and so we do a little bit of both for this audits the single audit as i mentioned although we have not issued a report yet these are the three major programs that we tested this year this you are lfucg is considered a low risk auditee which basically means you haven't had findings in each of the last three years there's a few more caveats to it but that's that's basically what it boils down to so we can we have to cover 20 percent coverage of your total federal expenditures of the 58 million total so we have done that with these three grants accounting pronouncements adopted 102 was just disclosure it did not really have an effect with your act for this year compensated absences 101 did there was a de-recognition of about 10 million dollars in in your opening net position and then the current year compensated absence balance was booked so that did have a material effect but we met with management they came up with a calculation we audited that calculation we pulled sample test files to see all the way down to the individual level so what this is in case you guys just update you gasby 101 changed how you accrue for compensated absences so in the past if you're just accruing what your current year expense and liability are now you have to look at what your policy is so every city's a little every government's a little different what your policy is on sick time it did not cover no no change was made to vacation or pto correct or holiday pay it just had to do with sick time so if you're able to carry forward that sick time in perpetuity until you retire that liability needed to be captured and so it was a big calculation that aaron phillis and team came up with and it looked great we audited we spent a lot of time on it this year and that's what that so that every once in a while you do have a gasby that have a significant impact and that was that case this year next slide is just additional required communications under our auditing standards one you every set of financial statements have estimates we audit those estimates to see that they're in compliance with gap and that we think they're reasonable and as you can imagine you have a lot of estimates and we feel like they were all appropriate and in compliance with gap um unaudited information after we read all the information and noted nothing was inconsistent um other i'll run through the other ones quickly because there's no nothing this gives us an opportunity to tell you basically that we didn't find anything and if we did we would tell you here but no transactions for which there's lack of authoritative guidance was in the financial statements all significant transactions have been recognized in a proper period no alternative accounting policies were used no difficulties in encountering in dealing with management at all they were always available to us we had a conference room to ourselves for i think six or seven straight weeks and we were made comfortable and it went very well no disagreements with management whether it be financial accounting or reporting or any kind of auditing issues which was wonderful management provided appropriate representations to us so we have a management representation letter which management signs to us basically uh disclosing that they anything that we they didn't hold withholding information when we ask for something to try to mislead us in any way and um and we are not aware of any communications by management with other independent accountants you're obviously welcome to go get second opinions on technical matters we just like to be part of the conversation but none of that happened there were no unrecorded audit differences noted so sometimes if there are entries that we deem immaterial and you guys do not want to book the entry we're required to tell you what those are and there were none uh just an up upcoming accounting developments uh gasby for next year gasby 104 and 103 will come out and will be effective for the year um the first one disclosures certain capital assets that's really we'll we'll take a look and make sure um that it is a really applies to the city that it is a really applies to the city but it's just enhanced disclosures on capital assets mostly for capital assets the government wants to sell so it's just a little enhancement of disclosures and then 103 is a financial reporting model improvements we will of course work with commissioner hensley and her crew on um it's a presentation and disclosure uh information issuance and we'll make sure that um these guys are on top of it but honestly we haven't really had to help them so um but we're we're here to we're here to help when we need when they need us and that that's it i know i went through a lot of information pretty quickly um happy to answer any questions or yes sir thank you for the um thank you for the presentation in in in your work with um our team on this audit committee members are there any questions council member savigny i'm just going to ask one thank you uh thank you for presenting this um and it's more um this is for maybe more the commissioner um if there's adjusting journal entries that they provide in the audit do we usually get a sheet of those and do we approve them at a council work session um or or is is us accepting the audit accepting whatever adjusting journal entries there were yeah so you all don't typically approve journal entries ever unless they would do something that would throw out of whack the budget um and typically they would be a prior year adjusting journal entry having to do with the audit so it would not come to council um the reason that it would come to council is if it would be um like in a management letter or something that would rise to the level of needing to inform you all of some major practice change or something like that in which case we would certainly keep you all informed and i'll add we did not have any audit adjustments so um any adjustments that were made were all management so if we had any if we found material adjustments that we felt needed to be made for us to be able to sign an unmodified opinion um we would disclose those to you but we didn't have any right we didn't have any immaterial ones either we didn't have any entries that's great that's great that's pretty hard yeah we didn't pass on you we didn't even have any unrecorded so that's that is a that's a great that's a great uh audit outcome so um i appreciate all your hard work and commissioner just one last thing but at the beginning of every work session work session we have we have we have journal entries that we're approving in general you provide us a list of them at the beginning of every meeting i might yeah for the budget adjustments and yeah and yeah all that we're approving those but am i right or i'm i'm not sure that journal entries are what we're talking talking okay if you can tell me what you're thinking about all right i will yeah it's a ledger statement all right thank you all appreciate all your thank you all right thank you council member are there any other questions for the audit team i'm not seeing any but i i do have a quick question and aaron you might you might answer this so the compensated absences uh change which you know with the amount of employees we have and how many how many of those days get carried forward that could be a pretty pretty tremendous amount how were we accounting for that liability previously before this change yeah we were um i can i can speak to that if that's yeah um so previously it was done by a year viewpoint so looking at you know how sick time was paid out the year before and you base the accrual off of that it's now doing a five-year average um so you're looking back five years and then determining you know this is what we think the accrual should be and really the net change year over year was about 14 million um between you know how it's originally accrued and now how it's accrued going forward so um it's not too drastic of a change from what we've seen but it in your opinion that is it's better to do it on a five-year average than the the prior year just because so much can change year to year correct as you see with you know covid for example is a great a great example where you have you know potentially a spike in a couple years of sick time and sick vacation not being taken or being taken so it kind of helps to account for those a little bit better okay okay all right ashley clarified for me she thinks the schedule does say budget journal entries so i think we may be both thinking about the same thing and i just never noticed the journal entries at the top so thank you sir all right sounds good thank you all for uh the presentation and your work and again uh commissioner thank um it's just as uh this is a uh evidence that you and your team are doing a great job and we appreciate you yeah all right committee members if there's nothing else on this this item we'll move to the next item on our agenda and it's the infrastructure funding plan uh next our consultants from partners for economic solutions anita morrison and abby for ready are joining us virtually to present on the infrastructure funding plan but before i turn it over to them i'm gonna turn it over to uh sean denny and sean if you want to give this item some context and then turn it over to our presenters yeah thank you and thank you to both hayley and lex tv and kelly farley for making this a seamless virtual presentation so you all probably remember back in 2024 we had the urban growth master plan with the the latest expansion and through that process it was recommended that we develop an infrastructure funding plan to determine how to pay for both capital cost and the ongoing operation and maintenance costs for the urban growth areas so on the heels of that vgmp last year we issued an rfb back in the late winter and then made the selection of partners for economic solutions and we've been working with them over the past year to look at the projects for each area what infrastructure would be required in all five of our urban growth areas breaking those down into costs and then today you're going to hear their initial recommendation for how we can pay for those capital costs and i just want to thank them for all the deep diving they've done they've met with all of our teams here in the government and we're very thankful they've been so easy to work with and they're here now to walk you through this initial recommendation and answer any questions you have so i'll turn it over to you thank you sean again i'm abby ferretti with partners for economic solutions i'm joined by my partner anita morrison as well as aaron masterson and matt mcclain from grisham smith so like matt um like we had just sean kind of just mentioned we began our work in the spring of 2025 with an expansion expansive amount of involvement from lfgg staff and an engagement the work began with the infrastructure cost estimates an update date to the market analysis evaluation of financial resources and then research into alternative funding mechanisms and as we work through the detail of those funding mechanisms i think sean briefed the committee of the whole in november of this past year so throughout this whole process we have been meeting every month with the lexington development community this is really important for everybody to know we've done one-on-one meetings zoom calls gone to their offices but also they've come once a month to meetings that we've held to kind of bring them along throughout this process and help us evaluate some of these implementation and alternatives that are really necessary to fund infrastructure so this is just a graphic of where we are now finishing phase two and moving into phase three so it's important to understand that grisham smith used that um ugmp that sean mentioned as the guidance for the future development to identify required infrastructure costs and then estimate what they would be so the developers review these costs and those rezoning will further specify it but what i would like to state and i know you saw this table in november is that all of this is based on the development and the infrastructure all this is based on the ugmp is that guidance but everything is going to be built to the standards that are set by the government those manuals and standards continue to guide the level and the detail for that construction so when we look at the expansion into the urban growth areas this will require two big buckets of money a one-time capital investment and then ongoing operating and maintenance so you see the one-time capital investment in blue and then down here in the green and so what we want to think about is you know our work was really how do we evaluate different ways to fund the mechanisms that we could use for these and what we ended up doing is we looked at a whole bunch of mechanisms we really focused on these top three here impact fees privilege fees and development districts and then ultimately we decided to make a recommendation in conjunction with the development community that we were working so closely with and lfucg staff to recommend privilege fees be used now this recommendation reflects um all of the experience that folks have had in the past and i will mention something you're probably not familiar with which is the outer perimeter sewer study the opss very similar to a privilege fee and so we chose this mechanism because it's really simple and transparent and it's more cost effective and efficient it actually follows the pace of development that's led by the market and what the market wants and it gives the developers kind of construction timing control but it's also really based on actual costs what those costs are for so therefore it accommodates inflation and finally a privileged fee doesn't burden a property owner who chooses not to develop their land if they decide not to develop their land they aren't burdened because of this and so this is sort of the reason we selected it however i think it's important to note that these ongoing operating and maintenance costs are pretty critical and we are continuing to research those and we're speaking we do have a legal advisor on our team and we are working with legal at lfucg to sort of determine what are some options for that and i'll talk about that a little later so now that i've made that recommendation i love to just give you guys a basis for how that's going to work and sort of the basic structure so the basic structure requires the developer of their land to build and install key infrastructure and it'll benefit not only their piece of property but an area beyond that and it allows lfucg to build any infrastructure if they were to have funding as well but the improvements are designed and scaled to serve the larger area involving primarily sewer pump stations force mains boulevards that act as the spine road linking other properties things like that and as the future development proceeds and someone else comes on to develop their property they reimburse that original developer who built that major infrastructure improvement so let's just take a minute and walk through this step by step that's the basics of it but i think walking through the seven step process helps illuminate how the privilege fee works so the mechanics of the privilege fee the developer initiates the process they approach the government and they say these are our designs and these are independent cost estimates and at that point in time they will build it obviously according to the existing plans which in the case of these areas is the ugmp and they will also use lfucg standards and manuals as their guidance and then everyone sort of lfucg steps back and says here's all the other properties that will benefit from this improvement and everyone has an early estimate of what their obligation is they know kind of from the outset the original developer and lfucg enter into a contract and that agreement includes provisions for reimbursement of those costs beyond what they would have spent on their own for their property alone and then that developer goes ahead and builds that it follows the market and the government established growth policies and so it's moving forward in that sense in that way the one that construction's done and the developers built this improvements and the other ones they submit their documented costs and lfucg confirms the costs and establishes the reimbursement rate at that time when a subsequent developer comes on who maybe has an adjacent parcel and they go through the development approval process they have to reimburse the original developer by paying lfucg and they pass it to the developer before they can get their subdivision plan approved so there's a point in the process where they know they have to pay this when they're serious and that reimbursement again is based on those actual costs plus interest there may be you know phasing and variations and build out and the privilege fee kind of allows for that so this is why we selected it all right i'm gonna just talk a little bit about o&m costs because we really think this is very critical the primary operating costs associated with the new development related to waste management street cleaning all the things that you see listed here on this slide but there is no existing mechanism um well there is one existing mechanism the urban services district that commissioner hensley was mentioning that does fund waste management street cleaning and street lights but unfortunately that tax has not kept pace with the increase in costs and you'll need a mechanism to fund other maintenance responsibilities and so when we think about those long-term o&m costs to address the long-term fiscal burdens of expansion and growth the choices are to either do a new fee structure or you could boost the existing fees or funding mechanisms or you could look for private funding but remember that private funding is most likely homeowners association we're going to continue to explore different options within kentucky's legal framework to figure out what could be the best approach but it should be clear that any ongoing costs that is not picked up by new fee or revenue source is something that will be picked up by the general fund and it's going to stretch some pretty thin resources that we already know are a problem so in terms of next steps for our work as we move forward through the spring and summer we'll be developing the tools for implementing the privilege fee and any o&m fees and then we will include draft ordinances which we've already started to draft determine the staffing requirements choosing the software that will track the fees and staffing training staff and the staff levels and any reimbursements so i'm going to pause right here because i think that was a lot of information very quickly and i like to ask if anybody has any specific questions or places like to go back to i'll turn it over to you come on thank you thank you for the presentation um committee members i know there's going to be a lot of questions before we dive right into them sean is there any context you can give about what um uh the planning department's next steps are after this presentation so the the i guess priority number one would be to determine the draft ordinance we law is reviewing that as we speak and once that's ready to come to you we'll we'll let that pass that your way for review but uh an ordinance would be first to implement the privilege fee structure that also comes with a standard agreement that we would imagine would be used for all privilege fee agreements that were entered into so we're working on those two contracts the other piece of this would be a fiscal year with the budget coming up and if there were any software that needed to be considered or or staffing and i'm not saying there will be but if there were that that's another thing that we're looking at because we know it's time critical with the budget coming up so just again ordinance coming up and then are anything we need to implement for next year to get this program operating okay all right i appreciate that first we have a council member reynolds thank you chair and thank you so much for the presentation um i've always found all of this information to be very complex so uh i it was laid out in an easy way to understand i appreciate that um one thing i'm having a hard time wrapping my mind around is so if a developer pays for the infrastructure and then um that kind of benefits the surrounding area but then an adjacent developer goes to develop something can you explain how how you figure out how much they would owe the other developer it just seems kind of so yeah it's it's like a question right how do you do this um and i will just say that privilege fees it's called lots of different names but i'm familiar with it just because here we've used it and my husband's a developer in virginia so he runs into him all the time so basically it's just um it's just because you have the cost from the up front you know the differential between if you were building let's say a sewer pipe at one side you build it to that full standard which would be more than you would need on your site however the ugmp isn't going to allow you to build it at that lower level for just your site so at the onset your growth policy that you've already adopted ugmp is already saying to you hey you can't just build a simple little road through here you have to build a spine road so that these other properties can connect through because there's going to be a lot more traffic and we know that that eventually will happen so when that second developer comes in you know that difference between the two and that is already written into the contract with the first developer and so in that way it's already uh detailed and so it's just based on costs actual hard costs that are spent i don't i'm going to turn it over to anita in case i uh left anything off that she wanted to add so then the allocation of that incremental cost is on a per acre basis right um and that's because we are concerned that we don't know long term exactly what the mix of development will be and if we pegged it to just a particular number of units and then the development was more or less dense it it would impact the reimbursement so the discussions we've had with the developers are that acreage is probably the best way to allocate those those payments to other developers so then they would it based on how many acres they have there would be a percentage that they would owe towards the already existing infrastructure and then the developer that paid um up front more money for that infrastructure would get a reimbursement right right through the city okay yeah lfucg just kind of passes it through but i think it's really important to note that it helps it helps everybody uh be more fair because it's just based on acres and we don't have to do anything more complex okay that's helpful thank you thank you chair thank you council member next we have a council member savigny hey thank you chair and thank you so much for the presentation i've just got a few questions um uh did um how many folks were actually included that you kind of you were bouncing this off developers uh and did anyone feel like they were excluded i hope nobody felt like they were excluded although i'm gonna be honest councilman vigney i'm not sure somebody's gonna raise their hand and say i was excluded you forgot me because then i would just follow up with them but interestingly enough um we opened it up to the entire development community but then what we did and this is something we do all over the nation whenever we go somewhere is once you sort of say hey we're here come talk to us then we did one-on-one interviews with each of them and then you talk to you know one developer or sometimes their lawyer and they would say you should really talk to this person you know and then you know dennis anderson would say well i heard these property owners are interested in getting into the game and so we just kept expanding who we were talking to um so i'm hoping we didn't miss anybody but you never know people can come from outside of lexington and come come over from other places to develop so we'll see but i hope no one was missed councilperson i might add that we began during the urban growth master plan process to hold a friday open house and the first friday of every month and we've continued that throughout this process and it has been a very helpful environment to just process where we are and allow them to have on the spot feedback and create some informal conversations and we've continued those and they've been a great space for for those conversations and i think there's 40 or 50 people on that email list to get invited so i just wanted to be sure we noted that as well we plan to continue right thank you um got another question if um so the concept of basically oversizing you know oversizing and basically paying for the oversize um and um or at least acknowledging that it's oversized and it costs this much um are you just looking are you looking at every place that that could be sewered that is going to run around it are you just looking inside the boundary because the boundary can change and then i don't know how you how you manage that one no it's it's only within the ugmp boundary you want to be really careful whenever you're establishing a growth policy that you're doing the growth policy and then you have the study for the infrastructure uh you know hand in glove i i wouldn't want to assume that that it was going to move and that you would do that then you would have to reevaluate because we don't know what those densities would be and that development and the like and i probably shouldn't say oversizing because really what i think of it as is is sizing it properly for what we expect that build out to be so since we were the consultants who did the initial market analysis we do have a sense of the amount of growth and how that all would lay out so i feel less like we're um trying to figure things out but yeah got another one uh the om fee is it or that like the after fee do you do you suggest that it starts when the builder goes to like if he basically subdivides that property into x lots and it's approved i mean then they all become part of the tax roll anyway at that point don't yeah that's just yeah that's the part where i i mean i may defer to anita but i'm not sure that we know wholly what we're going to recommend there i think that's why it sort of says we're still considering it anita i don't know if you want to yeah the urban services district um property taxes are triggered by um the final site plan and the um subdividing of the property that will um start the start the flow of funds first being paid by the developer and then eventually by the homeowner associated who buy individual lots the um what we're concerned about is that the cost of providing services it often increases more quickly than the property tax revenues do so that's one one issue that we're concerned about and the other is that there are some expenses that fall back to the general fund that have not been compensated in the past by the by the property owners and so we're looking for mechanisms that could be appropriate to try to make sure that those costs are are covered in some way yeah and i think sean were you going to add something there i think she caught that with me without a without a policy change it will come in under current policy so that as that one slide said i think we try to put it into simple summary buckets for where this next part goes either a new fee structure using our existing fee base to make sure that it's you know right size for expenses and then is there some private responsibility so that's that's what we just as we enter this next phase all right um council member i think your your time is up you can sign back in that's perfect all right next we have a council member ale oh yes thanks for the presentation i was just curious if there's um examples of other places where this method has been used oh yeah there's there's a bunch across the nation um i think the most important thing and i sort of slipped it in the presentation is that you guys actually used it when you did the outer perimeter sewer study so you've already used it development community's always been familiar with it and used it um for sewers in the past that was with the expansions in the 1990s so i think there's a um previous to that even so there's there's experience with it all over and i guess um what we find is that it's really much more transparent than other options and legally it's something that's permittable right now without any changes to state legislation or anything um anita anything else to add it's um it's just important that the developers recognize the risks but they also recognize the benefits that when they do the improvements it typically is about 30 less expensive than if the develop the local government does the improvements and that then translates into a lower basis in their land and a lower cost that they have to charge to future home buyers and the other part is the timing um it's really important that you be able to get into the ground and have the land ready when the market is ready so when people are looking for housing you want to have the land available and that doesn't happen when you have to depend on capital budgets from the local government because the all the competing priorities will interfere with the timing of capital improvements that would have to be front-ended by the local government so we um they were pretty unanimous in their support for this approach yeah thank you that's all the questions i have right now thank you council member uh miss morrison i'm gonna ask you to speak up i think folks might be having a hard time hearing hearing you yeah i was wondering that yeah next we have council member baxter thank you chair and thank you all for your work on this i know it's been probably an interesting experience so thank you for all your work um i had a question about the subsequent developer reimbursement structure and if there would be any type of statute of limitations with that i could see like the primary developer going in and you know kind of prepping the land for what could come and then it's sitting for an extended amount of time and what that looks like on the reimbursement schedule because you know it could be 20 years and they wouldn't be getting any reimbursement yeah but we we put the um anita i don't think that's a problem because of the way this structure does work so the fee is is based on the actual expenditures plus interest for the time from when it was originally installed to when they do their their subdivision plan and pay reimburse the original developer and that said that prime plus two so that should help keep them keep them whole in the past the time period was limited to a 10-year um accrual of interest and we were suggesting that should be more like 20 years given so yeah so what i need a thing they're looking at right so what i need is saying there is really because the structure is set up to get that interest in there that interest goes to that developer and um you know we're setting it up based on what prime is plus two percent and we have an administrative fee as well that lfucg will collect on top of that that that's just there for administering that contract and you know being the person to pass the money between the two entities um so i think that alleviates that problem because we did i think you're absolutely right um council member that that was an issue in the past with things not being built for 20 to 30 years we're now anticipating that could be the future here as well okay well and i think miss morrison you said it appropriately the the development community is is gonna have to you know be abundantly aware of what they're getting themselves into as well and and i think us as local leaders are going to have to be equally as aware of what's going on so that's all i've got for right now thank you great all right thank you council member next we have vice mayor thank you chair and thank you all for this presentation um thinking through sort of kind of falling on council member baxter's question um the idea of being the first developer kind of in the door who's going to um you know be responsible for some of these fees with the the hope that the subsequent developers afterwards compensate them in your engagement with developers did folks give you a sense of like thinking about it like incentives like if i'm looking at a piece of land do i want to be the first one in there to kind of bear some of these costs with the hope of getting this compensation or reimbursement down the road or am i better off waiting to be the second one in so that i don't have to kind of do the work but i still have to pay and did folks give you feedback on kind of their thoughts in terms of where they would want to be want to be i think it depends on how sophisticated they are as a developer but let me just say that some people really can't move until the other property goes anyways because they'd have to get an easement and build the road so we did a whole bunch of scenario testing so we said well this guy goes first then he has to build the entire road and everything through a it'd be easier for that person if a went first and then we said well let's flip it on its head and if it went the other way which would be better and kind of walked through the the potential for each of those what i will say is that i think a lot of developers and properties want to be the first one to do it because they want to be the first market that's an advantage in and of itself i think they also want to be in control of their own destiny and they want to feel like they don't have to wait for the guy next to them to build it and i think the second developer is kind of at the mercy of did the first developer do it most efficiently did they do it most cost-beneficially or am i going to be paying because they don't know how to do you know my way of doing it right so i think that a lot of them probably prefer to be the first one none of them said they would object to being the second though i thought that there might be pushback on that or the third they sort of understood that lfucg is pretty tight and and not going to have the capacity to build out every single one of these areas all right away and we realize that too that financially that's not viable for lexington and so i think there is an understanding of that and that okay you know you have to pay for this infrastructure to you know get to the market with your product and so yeah the the financial analysis will probably favor the people with the properties closest to right major thoroughfare that have less road to build to serve their properties and maybe have more valuable property because they're on the major thoroughfare yeah there'll be some that decide not to not to move ahead because of the risks but those who are on the thoroughfare probably most likely to be the first build first yeah that's normal right i think to me the the core of my question is i want to make sure that we're not putting up potential barriers for that first developer because i'm generally more confident that subsequent developers will follow suit once things start moving right it's that first one and you know this is speaking from experience in the past when we've done expansions and then decades later nobody's nothing's done anything with it so um last question um in your engagement with developers did folks bring up any other sort of points or like major concerns that this um this these recommendations haven't addressed were there anything sort of things of interest that people brought up that were um difficulties or challenges i would say the only thing was in the beginning there was a discussion about um moving forward with the development district alternative that they had sort of brought that up to us in the beginning because there was um legislation that would be maybe going forward that the building association had been bringing up and um but that really that that um funding mechanism really shifts things to lfcg and depends on the capital budgeting and after we sort of had spent more time with them talking about that i think they sort of understood that the privilege fee was likely the faster way for them to get their product to to market again so i think again it's like a incentive for them to do that that was the only thing anita was there anything else that you can think of i don't think of anything offhand and i might i might add that they brought up over and over again how you know they could do while we're looking at cost of housing housing affordability sorry the issue comes up in all a lot of the discussions that we're having as a city and they just noted over and over again that they could do some of these items more efficiently than we can and that really was baked into our model that if they can do that then it becomes a high priority because it meets the other priorities of the city so i think that's you know we listened to that but that was another thing that they continue to express throughout the process yeah all right thank you thank you chair all right thank you vice mayor next we have um council member sheehan thank you chair um thank you all for this presentation um and to our planning staff who've been working on this all year um you know there have been times in our past where there have been changes in economics someone who commits to a project couldn't finish that project what happens if someone has committed to develop this infrastructure and then something happens and they can no longer do that how is that built into a contract or a plan um how do we mitigate that risk i believe there are standard provisions in terms of performance bonds and funding um set asides that have to be met before you would enter into that kind of a contract as a protection for the for the government yeah thank you did you have something else to add no no so it's just the standard that you would already have in another instance right for an approval nothing different there right um and then for the long term um costs for operating and maintenance um i am interested in this conversation i'm a little bit wary about um you know we've had conversations about whether our um taxing districts actually cover the costs of those um services we've had those conversations in the past but i am a little bit um wary of imposing an extra fee on one taxing district for the same services that other people might be paying less for um so i i would like to hear where that conversation goes um in the end i'm sure it will come back to us for discussion yeah that's a huge concern for me to look like some people are paying more for the same right right and i think there is some questions if currently right now that isn't actually happening as well right because i know we talked to some people and they're like well my street doesn't get swept but mine does and they're in the same tier um so i think i think that's a current question and a question that we need to wrestle with yeah thank you thank you council member are there any other questions any anybody else signed up before i ask a few i don't see any so i'll just i'll just say i share i share some of those concerns that the vice mayor expressed is that if you know we this this system may be set up for developers to bear the cost and to initiate infrastructure but if we're putting all the onus on them um it it also has the potential to maybe stymie investment or properties taking longer to activate what what can be included in this conversation or in the policy that empowers or gives the government an opportunity to to partner with private investment on making sure that this infrastructure gets to where it needs to go to activate the the land i think always reserves the right to put to make the infrastructure improvements itself so if you have access to funding and the kia funding of sanitary sewer is probably the most obvious source uh where you could bring in lower cost of funding those sewer improvements in that case um the uh you still have that that opportunity that's not precluded by the privilege fee approach council member if the i think that's an important point in terms of this infrastructure funding plan isn't going to be so rigid that the government doesn't have other opportunities to either partner or even build portions of infrastructure if it wants to incentivize or um somehow trigger development in a particular area but the primary method would be the privilege fee agreement through the developers does that help yeah it does but it you know and i know you're still baking the ordinance but i think it just has to be that language has to be built in you know this this expansion was um i supported it for housing and jobs and there's opportunity to help make those happen um and the city can be a part of it and help lead on it i think we just need to you know reserving the right to and kind of feeling and being obligated to are different things sure i don't want to box us in but that that does help uh the other thing i'll say too and i think council member she had made a good point you know charging different you know being in a situation where we're potentially charging folks for the same a different more money for the same services i think maybe getting it started or launching it is is something that we can explore but i think the rate has to be has to be consistent across our community because i think that that sets us up and that could hurt the development that folks think they're paying an additional or an enhanced fee or or an assessment that's that's going to be challenging councilman i think we're we're all thinking the same thing in those regards yeah all right does and there's just one more point too is uh state policy so i heard that these other um potential options may have legislation come or be be um approach this session and i know this item is going to come back to either this committee or to the full council um we're conscious i guess we're going to be conscious about that timing as well because if things change state level then that may change it could potentially change the recommendation right or right or wrong probably not change the recommendation because if you if let's say state legislation came for development districts the development districts like i said shift the burden back to the government and they depend on the capital budgeting so the timing doesn't match market demand um and then you know impact fees are still a question of legality and they're also a question of um the development doesn't move ahead or if the development has fewer units then you don't collect all that you need from the impact fee so you can have a shortfall there and they also require a really complex um analysis so they're ruled out not just because they don't have state legislation they're ruled out for other reasons so they're not quite as beneficial based on your tax structure and fiscally how lfecg is performing today and in the future um and that again the plan won't foreclose the government deciding to use a method that may pass legislatively but as was being said the for example on impact fees the cost of that the burden of the potential cost is usually borne by the government in an impact fee system and what the developer privilege fee agreements do is place that burden basically on the developers to carry forward but that's not to say that there wouldn't be an area or a project if that became a possibility that the government might decide it was willing to do that in a particular area while not applying it to ever all five of the urban growth areas okay all right two more things real quick unless i run out of time so the this process would live primarily in finance finance would would manage the the the fees and the repayments or the reimbursements or the that sort of thing is that is that how i understand it well you may recall that the government hired an infrastructure funding program manager and he's presently working in my office focusing both on this plan and also the current exactions issues i would imagine that that program manager will be the one in charge of that process but there's no doubt that there's a close connection to finance and other divisions of the government as that system starts up okay okay all right i got one more thing but i'm out of time so i'll come back um council members of igny thank you hey um i just think you brought up a kind of an issue that i wanted to kind of um look at does um is there a um instead of the builder holding the difference between what they're building and what is needed um why isn't why wouldn't lfucg be doing that holding like why wouldn't we why wouldn't we be funding the additional capacity that's needed and then basically us deal with um developers that would end up flowing through that system in that instance would would you imagine that lfucg would be building that extra capacity no we're just funding the cost differentiation is that what yeah yeah that's that's my thing yeah that's my that's my thinking if it's a two million dollar project and you know to build it at capacity and it's five hundred thousand dollars um uh you know a bigger than what the person wanted i think if the if lfucg and this sort of echoes what keith the commissioner horn was saying before if lfucg had the two million dollars to assist in a grant or a funding mechanism or had it in capital budget and wanted to incentivize that then they absolutely could participate in a p3 public private partnership to do that additional piece this is just in the event that that isn't available and my understanding is that there's capacity to build out all five areas at once tomorrow so um this is sort of the fix to that i don't know anita if you want to say anything else is that right that's the that's the critical pieces having having available money now and then the um we were always mindful of the mayor's commitment that development would pay for itself and the risk that you run um of the government paying for that upsizing of the sewer pipe for example is that the development might not come the next round of development might not happen and then you would be bearing those costs for some number of years so okay i mean i yeah i just think i i do think it's a real issue that a builder um is not going to want to carry the cost or the other people um for an uncertain amount of time and i mean i think our the builders and then if the builder goes bankrupt then you're going to have a bond and you're not going to get anything out of the builder um because they've gone bankrupt and and it just seems like it would be it's kind of an awkward i don't know how you're going to do that i don't think a lot of developers go forward uh with wet utilities unless they're planning to go forward with the construction of it because it's such a big chunk and i think they know the value of their land um i was there wasn't a lot of pushback on that i mean i hear what you're saying but we didn't hear that from the development community at all so um you know surprisingly in the bond the bond they um the banks and the rest that fund them will have a lot of protections in there that they will complete the complete the construction okay all right and i will just add yeah this may be the broadest statement made today but you know this is so unknown you know we're looking at 30 years of growth and where will it go first and i feel like privilege fees are are going to allow us to get out the gate and provide an option and and both on the capital fees and the ongoing oh and you know we're going to have to be very flexible and and very time sensitive to the data coming in where growth's occurring where shortages are occurring what what financial gaps are preventing people from moving forward so i i think what we've got here is a way to move forward but also keenly aware that that there are things we're going to have to be watching very closely so i just want to make sure even as commissioner horn said you know it's like a patchwork where privilege fees are the first they're the basis and the groundwork but there could be a development district opportunity or another opportunity in another mechanism in the future so i just wanted to say i we we are going to have to be very as a staff mindful of how this development occurs and paying close attention to it okay thank you to that also thank you all thanks again thank you council member and thank you sean for those uh antidotes there at the end um i don't see anybody else signed up for any questions so sean is it safe to say that we'll probably be hearing back on this in the next couple of months yes i will work with you and kelly to find a time where we can maybe bring the ordinance for review and that that would be our next step to to move it forward okay okay all right council members stay tuned all right thanks for the presentation and we'll move to the next item on our agenda and that is the annual review of committee referrals council members do you do you all have any items that you have any updates or removal from this committee before i name off a few all right while you're thinking about it i'll go ahead i would entertain a motion to remove downtown projects update on it was a council member of agrees item that was in committee i'll move to remove second all right there was a motion made to remove that item and second it are there any any questions or comments about that item hearing none all those in favor please raise your hand all right we'll take that item now um are there any that oppose seeing none that that motion passes we'll remove that item um i'll also have city hall feasibility study i'll i'll entertain a motion to remove that item from committee i'll move to remove that as well second or a second all right there was a motion to remove city hall feasibility and second it any questions or comments on that one all right seeing none all those in favor please raise your hand are there any that oppose seeing none that motion passes we'll remove that one um council member um ellinger i'm gonna ask about the disparity study are you are you interested in removing that item from committee i was going to make that motion i i moved to uh remove the disparity study so moved in that and there was a second part of the motion to remove in a second any uh comments any questions seeing none all those in favor all right thank you are there any that oppose seeing none that motion passes any others council member ellinger i was going to ask about a microtransit i was going to make that motion i think we have moved that forward so i'm going to make that motion that we remove microtransportation so moved and and it was seconded all right are there any questions or comments to that seeing none all those in favor please say or please raise your hand all right thank you are there any that oppose seeing none that motion passes all right anybody else vice mayor wool let me ask you about medical debt relief did we need to leave that as a committee item since we're getting updates at work session uh i don't think we do um i will be uh updating folks uh as new waves of relief come in um you'll either see press releases about it or i'll update the council on it i'm happy to do like a one-year review if folks uh want it's it's up to either the council or this committee but i'm okay to remove that item from committee right now okay okay is that a motion as i moved and seconded any um questions or comments seeing none all those in favor please give the hand hand wave all right thank you are there any that oppose seeing none that motion passes uh vice mayor the lex arts finance and equity review do you want to leave that item uh i'll yeah let me discuss it with you at a later date i'm not ready to remove it just yet okay okay all right committee members any other items that need to be addressed any updates all right i'm not seeing any so that brings us to the end of our agenda i just want to thank uh hayley and kelly for getting us set up virtually um along with shantae and then thanks um i'd like to thank commissioner hensley and sean denny for coordinating with today's presenters to make sure they were ready to present so um if there is no other business then consider this meeting adjourned i got a question before you adjourn do we do we stay on this because when i read that email or is this the same or do we get off and then get back on for work you can stay i'm sorry you can say it's the same link okay that's what i thought thank you okay all right good question um i'll go back to saying that now this meeting is adjourned thank you all you