Public Works and Utilities Committee Meeting
Mon, May 5, 2025 · Public Works and Utilities Committee
https://santafeminutes.space/meeting/75

== Executive Summary ==
The Public Works and Utilities Committee meeting focused heavily on affordable housing initiatives and the budgets for the Office of Economic Development (OED) and the Santa Fe Regional Airport. For affordable housing, discussions centered on the mission of the Affordable Housing Office, the use and funding of the Affordable Housing Trust Fund (AHTF), and strategies to increase the production of affordable units. A key point of debate was the 'fee-in-lieu' policy for developers, with concerns raised about its effectiveness and the need for a policy pivot towards prioritizing new unit construction.

The Office of Economic Development presented its mission, accomplishments, and future goals, emphasizing workforce development, business support, and strategic planning. The committee preliminarily approved the OED budget. The Santa Fe Regional Airport's budget proposal, driven by increased revenue streams, was also discussed, with a focus on interdepartmental cost allocations and ongoing infrastructure projects like the terminal expansion and a new access road. The airport budget was also preliminarily approved.

== Key Decisions ==
- Preliminary approval of the Office of Economic Development budget.
- Preliminary approval of the Santa Fe Regional Airport budget.

== Motions & Votes ==
- Approval of the agenda for the meeting — Passed unanimously.
- Motion to preliminarily approve the Office of Economic Development budget — Passed (Councilor Cassid: Yes, Councilor Lindell: Yes, Councilor Falner: Yes, Councilor Lee Garcia: Yes, Chair Merworth: Yes).
- Motion to preliminarily approve the Santa Fe Regional Airport budget — Passed unanimously (Counselor Cassid: Yes, Counselor Lindell: Yes, Counselor Faulkner: Yes, Counselor Lee Garcia: Yes, Chair Murworth: Yes).

== Public Comment ==
No public comment period was noted in the provided summaries. Discussions were primarily between committee members and staff.

== Topics ==
- Affordable Housing Office Budget
- Airport Operations & Budget
- Affordable Housing Supply
- Vulnerable Populations Housing
- Airport Infrastructure Projects
- Airport Staffing & Management
- Affordable Housing Office Staffing
- Airport Safety & Compliance
- Airport Parking Issues
- Budget Approval Process

== Full Transcript ==
Okay. We're getting ourselves organized this morning. Thanks for your patience. Are can we go live? I'm not sure who's in the back today.

**Madam Chair:** I spoke with Michael, and we are live.

We are live. Oh, wow. Fantastic. Okay. So, then at whatever time it is, 10:06, feels like 8, we are called to order. And if we could get a roll call, please.

**Certainly, Madame Chair:** Councilor Cassett, here. Councilor Falconer, here. Councilor Lee Garcia, here. Chair Romero Worth, I am here. And Madam Chair, I don't see Councilor Lindell on Zoom yet, but we will keep an eye out for her.

Yeah, she'll either be in the chamber or on Zoom here in a minute. So, hold on. I'm just pulling up the correct agenda, which that one is not. So, do we have any changes to our agenda today?

No changes from staff, Madam Chair. We will be updating the materials in Civic Clerk to add a presentation for the airport.

Okay. Terrific. So, we are going to hear the Affordable Housing Trust, or the Affordable Housing Office, the Economic Development Office, and the airport budget. So, if there aren't any other changes from the committee, is there a motion to approve?

Second.

We have a motion and a second to approve the agenda for today. All those in favor, aye. Anybody opposed? That motion passes. So, we'll jump right in. Director, the way we've been doing this is if you have others who you want to introduce, great. I just ask that when you speak, introduce yourselves just so we know who you are. Of course, we know who you are, but people watching now or later might not. So, I'll start with Director Montoya. She'll give the kind of the preamble, and then we'll go from there.

Thank you, Madame Chair and members of the Finance Committee. My name is Elisa Montoya, and I am the Community Development Director for the City of Santa Fe. And I would like to ask Johanna Nelson, the Interim Director of the Office of Affordable Housing, to present on behalf of the division. Johanna brings nearly 10 years of professional economic development experience with both the City of Santa Fe and the State of New Mexico. In addition, she's a member of the International Economic Development Council Sustainability Committee. She's also a small business owner and launched Apple House Books 15 years ago with an intention to get books into the hands of kids and teachers. In addition, Johanna served as a City Council representative in the town of Alpine, Texas. Thank you for your service, Johanna. The Office of Affordable Housing managed and deployed housing funds to increase affordable housing supply, preserved existing homes, and expanded access to homeownership and rental assistance through strategic investments, partnerships, and support programs. They also supported housing for vulnerable populations by funding programs that focus on homelessness prevention, senior housing, and workforce housing to advance stability for all residents. They worked to streamline development processes and support zoning changes that facilitate affordable housing construction. They also partnered with the Office of Economic Development to align on housing policies with workforce needs and economic mobility initiatives. Johanna Nelson, the Interim Director of Affordable Housing, will provide you with additional detail about their 2025 accomplishments and fiscal year 2026 goals. Thank you.

Great. Thank you, Director. Counselors.

Thank you. Thank you so much for the opportunity to be here today. Madam Chair, may I go ahead and continue?

Absolutely.

Okay. Wonderful. Welcome. Good morning.

Thank you. Good morning.

I'd also like to introduce two staff members that we have in the audience. So, Loretta Oline, who's our Business Operations Manager and serves multiple divisions in the Community Development Department, including Affordable Housing. And then we've also got Noah, who is sitting right there. And Noah actually is new to our team, and actually his position is funded by an ARPA grant to help our offices collectively with grant and contracts administration. So, we're really excited to have them both in the audience. I'd love to give you an update if we go to the next slide and a reminder about the mission for the Affordable Housing Office. And as Director Montoya mentioned, our role with the office is really to support and build the conditions to cultivate more opportunity for access to affordable housing. As we all know, access to affordable housing is one of the top issues and needs of our community. And the mission is strongly entrenched to increase these opportunities for Santa Fe's low and moderate-income residents. This is about addressing the needs of all residents, from homeless to the homeowner. The office is set up to focus on three priority areas, and that is growing supply, anti-displacement, and serving populations at high risk of homelessness. If you go to the next slide, this is a reminder of how the team is structured. So, you have the Director. It's a very, very small team. We have a Program Manager that we recently hired who is responsible for overseeing HUD funding, CDBG, as well as the Affordable Housing Trust Fund. We also have a Planner that oversees the Santa Fe Homes Program. This position has been vacant for some time, for several years. We're hopeful to have this position fully staffed very soon. And then we also have two positions that serve in an administrative role, Contracts Administrator and a Project Specialist, whose full-time job is the administrative work to support CDBG, Affordable Housing Trust Fund, as well as the Santa Fe Homes Program. Significant workload there. All right, if we can move along to the next slide, I'd like to share with you some major accomplishments in the last year. As you know, the city lost its long-standing Director over the summer. So, my role has really been focused on keeping the ball in play, making sure our reports are turned in in a timely manner, making sure our contracts are moving forward with those two funding programs that I mentioned, and looking a little bit at how can we improve some organizational efficiencies. So, we did successfully add some projects that are addressing the affordable housing supply. Another accomplishment was preserving existing homes, and these are all projects that were supported through these funding programs, CDBG and Affordable Housing Trust Fund, expanded access and assistance through rental help, down payment assistance, and homebuyer education. We also supported vulnerable residents by funding housing programs for seniors and those facing housing insecurity and advanced many partnerships. I believe if you go to the next slide, might be, here we go, there are our goals, and this is what I'm really excited about to share. I mentioned filling in in an interim capacity, but I want to highlight how we are still progressing and very much improving the standing of the Affordable Housing Office as well as the city's role in moving these goals forward. So, very hopeful to hire a Housing Planner, someone that can come in and not only manage the Santa Fe Homes Program, but really build key relationships with our developers in the community, cultivate the communications with our development community, establish dedicated leadership for the Office of Affordable Housing. Hopefully, when we find a new Director, things are really organized and in place for them to really hit the ground and run. We are working on an organizational efficiency commission. I mentioned the office, the CDBG funding through HUD. As many people are aware, that is a very administratively strenuous program, if not one of the most challenging programs nationally to administer. And we are really looking at how we can make some immediate improvements just internally of how we track information and how we navigate the processes to not only release those funding application cycles, but also track them all the way to a contract and having the contract be fully encumbered and expensed. And that includes number four, improving the management of those housing funds. We're really excited that we have the new Program Administrator to help us and build capacity and be able to successfully manage the housing funds. I also feel like the current ability to collaborate with the Office of Economic Development has allowed us to increase communications with the office through the Office of Affordable Housing. We have started a newsletter which we are putting out somewhat regularly to get information and news out to the housing community. We are tracking and developing an ecosystem map to increase communications with that community. We've hosted a couple of meetups. So, I would be hopeful that in the upcoming year we can really build on that foundation and increase communication and community engagement. Also, increase the efficiency in deploying capital. Number seven, expand partnerships with our developers, nonprofits, public agencies. We're really eager to develop capacity in these maybe nascent or new organizations that are wanting to get more involved in supplying affordable housing. We also are really eager to work with our Land Use Division to advance policy and zoning changes and continue to work with the Community Service Department to support housing for vulnerable populations. We have a really strong relationship with Director Hammond Paul's team. And then, of course, an element that I'm really excited about to continue working with the Economic Development Office to align housing strategies with economic opportunities and support. I believe that concludes this really short presentation and highlight of the office.

Great. Thank you. Appreciate that. I want to just ask a quick couple, two questions to start us off, and I know the counselors on the committee have questions as well. It's come up a couple times. The Affordable Housing Trust Fund, we have been funding each budget cycle at about $3 million. I believe that was an initiative started by the Mayor three years ago, I want to say, and we've consistently done that. In the budget books, there isn't $3 million in this budget because we funded it out of one-time money, money from the FY24, and I'm sorry, Emily's not here. The FY24 unanticipated revenue, which the governing body, that money became apparent that we had it available. It was unbudgeted, and we funded the $3 million from that money, and the governing body approved that about a month ago, I want to say. So, I think it's really important for the community to know that the commitment to the Affordable Housing Trust Fund has not waned and that that money is in fact there for expenditure. So, and I see our, we have a budget analyst at the podium. So, I'll turn it over to you to confirm that what I'm saying is true, and please correct me if any part of that was inaccurate.

Good morning again. My name is Christina Martinez, Senior Budget Analyst. If you could all please just go to page 25 of the budget book. And if you look at the proposed budget line for 2025-2026 in that first table there, the very last line, "Transfers out to other funds," you'll see the $3 million right there. It was included in a transfer.

Ah, okay. Terrific. So, it's already there. So, wait, tell me page 25.

Page 25. It's this first table here, the very bottom, "Transfers out to other funds." Under the proposed budget for 2025-2026, you'll see the very last line there. Right above the $8.623 million is the $3 million transfer out.

Except it doesn't, it's not, it's in a, what's, which line item is it in?

The general fund or the community development transfers? Ah, there it is. Got it. Wasn't looking high enough. Okay, perfect. So, I'm glad you pointed that out and I'm glad we talked about it. So, that's terrific. And then just one other quick question, and I think this is for the city manager. Where are we in hiring a permanent director for this office? Not that Director Nelson has been doing a fabulous job with all her hats, but I'm sure she could use a friend with this work.

Mayor: Madam Chair, we are working with an executive search firm, and they are several weeks now into the effort to find candidates. We should hear something very shortly.

Okay, terrific. All right. So, with that, I'll have more questions later, but I want to allow the committee, and I'll start. Councilor Garcia, did you want to kick us off, and we'll just go down the row and start?

Councilor Garcia: Thank you, Madam Chair. You know, there's always a lot of talk about affordable housing, and we'll start with affordable housing because I think it is something that merits the discussion of what is affordable housing. Because is it attainable housing for people? And I know many, many programs, not just city programs, but there's county programs, there's the trust, there's the Housing Authority, there's the affordable housing trust. People, I mean, you name it, it just goes on and on. And there's many that actually go through those programs. And I think that's for our young people that are looking to buy or to get into housing, they're finding successes in there.

So, what is affordable? And I know that's always the question that we get as elected officials, "Well, nothing's affordable." And how do we make it so people are understanding that there's more to it than just a house for $100,000? You can buy a car for $100,000 these days. And so, I think I want to go into the line item where it says contractuals and utilities. What is that? What's in that budget for this department, for the affordable housing? It's four point, almost $5 million.

Madam Chair, councilors, thank you so much, Councilor Garcia, for that question. You're hitting on a question, as you mentioned, continually gets brought up of what is affordable housing. There are many more definitions than even you just broached here currently. And to that point and that answer, there are just as many answers and approaches to solving the questions at hand. So, what you're seeing in the contracts and utilities line item, this is where the expenses are accounted for for those contracts through the funding award cycles. So, Affordable Housing Trust Fund and CDBG, those projects that are awarded end up in contracts that are administratively managed through our office.

Thank you. The recipients of these, and I think what's the percentage of this that is CDBG funding?

Councilor, Madam Chair, this is a really great question. CDBG is a small fraction of this funding. We roughly receive about $600,000 each year in CDBG funds.

Okay. Thank you. Because I know with CDBG monies, there's, I mean, there's rules to all of this stuff, and I think until you start diving into the details of what each of these grant funding is and what you can do with it, I think that therein lies a lot of our obstacles in regards to what we are able to fund or purchase and who can actually be the recipients of the services or monies that are coming out. I think that it would be great, and I know this isn't part of, well, it's obviously part of our budget. We're getting grant money in, and so the remainder of that, I would assume, is going to organizations and such as Homewise or the Housing Trust or things of that. Is that what we're doing?

Madam Chair, Councilor Garcia, you're exactly correct. And I would add that currently on the website, you can look at the previous funding cycle, and you can see what projects exactly have contracts and were awarded. This is also an exercise I would really hope in the next couple of months that we can, due to capacity issues and filling in, that we can also update that list to reflect the contracts that were made recently in this fiscal year.

Okay. Thank you for pointing that out. And then lastly, I'll just refer to the $3 million. I know since I've been on council, there's always been that commitment to fund it with the $3 million. And I do, and I saw it here in the book. So, where I think, as Councilor Romero Worth said, is that this last year it came from one-time funding, or is the $3 million that is today came from our one-time funding?

Madam Chair and councilors, I'm happy to address that. I think it's a common question. So, this $3 million that we're proposing in the FY26 budget was set aside as part of the one-time funding from FY24, the package that was approved back in February. In the past, we have funded this contribution in a variety of different ways, including recurring general fund, but this year, we are so tight on recurring general fund dollars that we recommended, staff recommended, using one-time funds to make this $3 million contribution. The other factor that we considered in making this recommendation is that we are hopeful that the implementation of the excise tax on high-end homes will occur at some point during FY26, and that will create a recurring revenue source specifically for the Affordable Housing Trust Fund. Of course, we don't know the status of that litigation, but that's another reason why we felt comfortable recommending this contribution be funded with one-time.

Thank you. And you know, that was going to be my question: how are we going to look into the future on how to continue to fund this? What would be other ways to fund this item if, in fact, playing the devil's advocate, we don't get the 3%? I mean, what are we looking at? How do we continue to do this?

Well, there's, first of all, we hope we get that successful court challenge, and our team is working very hard to carry the day on that. The other option, if that doesn't work, would be to get a change in the state in legislation through the state legislature that would alter the terms under which the lawsuit was brought. So, we could do a workaround that way, and then we'd have to revote on the 3%, take it to the voters, but since it passed so overwhelmingly, I suspect voters would still support it. Short of that, we're looking at general fund dollars one way or another. There really isn't another source available to us that I'm aware of.

Thank you. That's what I was looking for. Straight up. Thank you, Madam Chair. No further questions.

Thank you, Councilor. Councilor Cassid.

Councilor Cassid: Thank you so much, Madam Chair. And yes, I'm glad we're having a conversation on the funding for the Affordable Housing Trust Fund. This is, I know we've been using recurring general fund dollars for the last few years, but in truth, we've been talking about this as a placeholder for finding a different revenue source. And, you know, if the excise tax is not able to go into effect this year, then we're going to have to figure that out next year. But what I do feel confident about is, you know, I know that we will, we have elections coming up, but affordable housing has been an area that everybody has been so dedicated to, and that we really do have at the top of our priority list. And so, it may take some creativity, and I appreciate the budget staff coming up with the one-time funding for this year because we do have so many needs in the general fund. It is an uncertain year. It is a really tight year. And I know people have some concerns about that. I've heard a lot of this, you know, "Well, you're not prioritizing it because it's not coming from the general fund." Does the quote-unquote color of the money change our ability to utilize it in the same way that we have been?

Madam Chair, Councilor Cassid, this is a really excellent question, and from my understanding, this is legally bound to the Affordable Housing Trust Fund ordinance that states in law how the funds have to be used regardless of where the funds are actually being channeled from. So, once it's in the Affordable Housing Trust Fund, we have a strict rule around how we can use them.

Madam Chair and Councilor Casset, that's correct. Director Nelson referred to the ordinance that governs the use of the Affordable Housing Trust Fund. So, if the budget were approved with this contribution to the Affordable Housing Trust Fund, this $3 million would become subject to those requirements.

Okay. Thank you so much. Appreciate that. And then, you know, back to Councilor Garcia's question on, you know, how else would we fund this? There was a white paper, gosh, five years ago, from the Housing Action Coalition on different ways to fund the Affordable Housing Trust Fund. And this, you know, the excise tax really rose to the top in terms of what are the ways that we can find a dedicated revenue stream that was not impacting a lot of the individuals that we are trying to keep in this market. And so that, you know, there are other tax structures that we could look at that we'd have to send to the voters. But for me, really, you know, how do we continue to fund this without, you know, we're trying to prevent displacement, and if we make it harder for people to live here, well, then we are going to displace them further. So, anyway, fingers crossed that this, we're able to find some type of pathway, whether it's through litigation or through the legislature, and continue to move that forward.

So, Director Nelson, I know that we hopefully have a presentation coming to Quality of Life soon. And we wanted to do a retrospective funding on the Affordable Housing Trust Fund to really understand where the funds are going, what's been encumbered, how do they get out the door, who are they going to, what does that look like, and being able to take a look at what we've done over the past couple of years. I don't know if you have a preview of that, but just to let the public know and anybody else who's interested, we will be having that presentation and a deep dive at Quality of Life at some point, whenever it's scheduled. I'm not sure when that is anymore.

So, Madam Chair and Councilor Casset, thank you so much for raising the question and allowing for the opportunity to highlight this for the public. You're exactly correct that we currently are working with the consultant, Roots Policy, who wrote the Housing Strategy Action Plan, and they are just now wrapping updated housing stats as well as the funding retro picture, and they also are helping us put together from the plan that they helped generate over a year and a half ago, an implementation plan. So, I'm hopeful whether I'm still in the interim role or we have that new director, again, they'll be able to hit the ground running with updated data stats, understanding of where the funding is going, and ideas of how to implement the plan that was put in place that we're currently using as an operating guide. And that'll all be at Quality of Life, date TBD. Maybe while you're addressing your next question, I'll be able to find that date.

Thank you. So, I mean, I think that'll be important just understanding what's happening with the spending.

I mean, at this point, I believe all of the funds that we put in for FY25 have been encumbered. Have they been spent yet? Are they out to the contractors?

Madam Chair, Councilor Casset, again, a really great question. Currently, they have all been encumbered, and we are in the process of managing those contracts and making sure they get out the door. Let me pull up a percentage. If I go off the top of my head, we're roughly maybe at about 50% of expended funds. We have received a lot of great confidence from our partners that they feel that they can achieve expending their total contract amount by June 30th of this fiscal year.

Do you happen to know the average time from when a contract is executed and the dollars actually get out the door, from when the funds are encumbered to actually getting it into the community? I know that's a hard process.

That is, Madam Chair, Councilor Casset, this is a really fantastic question, and I know it depends on capacity with our various divisions. What would you say, Director Oster?

Madam Chair and Councilor Casset, it is an excellent question. I don't think that we currently have metrics that track that in a broad sense. Is your question specific to affordable housing?

Affordable housing, yeah, for the affordable housing trust fund. And if this is something to make note of and have at the presentation, if we can get that, that's completely fine. I know that was an out-of-left-field question.

Councilor Casset and Director Oster, I'd love to look at that and get you a solid number. If I were to make an estimate, this could be anywhere from three to six months of when that award is made. So, if you look at last year, the notifications went out by May. And so when you think about when the contract actually is finalized, we're looking at a good several months. So, I think this is a fantastic question that we can get you a solid average.

Madam Chair and Councilor Casset, yeah, I agree with Director Nelson. We can dive into that and look. And I would also add that I think it depends very much on the deliverables in the contract, whether it's rental assistance or home or down payment assistance as opposed to new build. There are very, very different processes that occur there. So, I would absolutely love to get that information.

And if, sir, if we can, Mayor, just a quick aside, I think you're going to discover that it is entirely situational. That there are projects that get awarded dollars that involve acquisition of land, which then takes additional time, or zoning changes, which takes additional time, or are more affected by interest rates than some others. It might be instructive. I don't think you'll end up with a meaningful statistic that says the mean is X or the average time is Y. I think what you'll see is just how complicated the housing development market and application of these funds really is. And that in itself is a useful learning opportunity. But my guess is that given the variables in each award, what you'll see is that it's entirely dependent upon each project's specific circumstances.

Yeah. Yeah, I'm not surprised by that. And what I think it really comes down to, what I'm curious about is, of course, how do we get people into homes? Which brings me to two more questions on kind of this policy. And I'll be counselor.

Can I just interject right here? I also think these contracts are not single year. So, while you have the ability to, I think the staff works very quickly to get the contract, the awards made, the contract signed, so that then the responsibility shifts to the awardee. But I think the Mayor's correct in the sense that it depends on the project whether the money is spent, how quickly, depending on what it is. And things that I think we've seen that there are things that happen that are outside of the control of the awardee. And so sometimes these things take longer, and the contracts, some of these contracts are multi-year. I don't know if all of them are.

Madam Chair and Councilor Casset, if I could just expand on Councilor Romero Worth's comment and the Mayor's comment, there are two variables. One is administrative, of that award being made and going through our process to actually get that contract executed and in the hands of the recipient. And that was the variable I was referring to about a three to six-month period that it takes from award to that point. And then exactly to the points that have been made, situational, especially, I'm just going to underscore, our projects that are construction-focused right now are experiencing several delays due to increases in price, etc. So, two different variables that we could look at and get you some information.

Well, and then the other one that I was leaning, getting to, is the lack of availability in the market. So, this goes to the comment around the goal of increasing production of affordable homes, which, as we know, this gets complicated. So, the official definition of dollars that we can use from the affordable housing trust fund is up to 100 homes for up to 120% of the area median income, which, as we know, there are a lot of people who do not qualify for the official affordable housing term and still find Santa Fe unaffordable to live in. And that's a, we're going to have to deal with that. That's a lot of the land use issues. But in terms of the affordable housing trust fund and in terms of the Office of Affordable Housing, what are the strategies that you're really looking at to create more affordable units on the ground? And the follow-up question, because I know I'm running out of time.

You are out of time.

Oh, you guys took a little bit. Last question. And so then, but that also has to do with our inclusionary zoning ordinance and the changes that have been made, which is over the last five years we've been increasing it. So now there's been a, whatever, 100% increase in the last five years, and what that's looking like in terms of some of the analysis on how we actually get more homes built. So that's a very broad question, and then I will let you answer and stop.

It's a very big question too, and I have some things to add here, but we'll start with Director Nelson.

Madam Chair and Councilor Casset, this again is a really great question to provide an opportunity to talk about this very broad, important topic. And I will take a moment to highlight that many folks are aware that we did pull back our recent affordable housing trust fund application process, that RFP, because we did receive some comments around the method of procurement. And so we pulled that back, and we are in the process of working with Councilor Romero Worth, as well as the Mayor's team, as well as the CDC, to look at what are ways that we not only can make it user-friendly for our organizations to apply, but also is there a way that we perhaps can be, weigh some of the criteria that it focuses more on the supply and production, and all, of course, within the means of the ordinance. But very much in the throes of that currently and hoping to release it soon.

Yeah. So, and I just want to clarify a little about that. So, the CDC is the Community Development Commission. It's a group of community members who sit and make, go through the process, hear the grants that the community brings in response to our RFPs. And there are two. There's one for the CDBG money, the $600,000 that we get from the federal government. And then there is the affordable housing trust fund, $3 million that we've been funding over the years. They sit and evaluate the grants that are given to, or that are submitted for both the applications that are supported, that are brought forward to be considered for funding. So, the CDBG money, it's interesting that the Community Development Commission has made those awards. I'm not sure if we've made those public yet, but they did sit and make decisions about that. There is still, I think, and it would be helpful, Director Nelson, I don't know whether you know, we met and went through that process with the assumption that we would be getting that $600,000 as we usually do, but I don't know that we've been notified yet that we actually have it. So maybe you can clarify that, and then let me continue here.

Sure. Madam Chair, we have not been officially notified. In fact, we received information from HUD very recently that they were actually extending their deadline due to federal current conditions.

Right. And so I think that's, yeah, I think that's really important to know is, so that's $600,000. The Community Development Commission has responded to the grant application, has made awards. I don't think we have, we haven't notified the nonprofits yet. Correct.

Madam Chair, we have notified them that they were selected, but it's not public yet, right? And those all, and as you know, Councilor, all of those, once they are public, will come before the governing body for approval. So there's like a multi-step process. But I think, and I don't know what our timing is, because we don't know yet that we even have the money to be approving. So, I don't know. Are we going to wait for that, and then it comes to the governing body?

Madam Chair, great question. My understanding is that we would go ahead and move forward with the award and the assumption that the funding is coming.

Okay. But I think it's important to recognize that, you know, given the uncertainty of, and the things that are happening at the federal level, we don't know for sure that we have this money. We're going through our usual process as though we do. So then to go back to the process that Director Nelson alluded to, the $3 million that is in the budget, the RFP will be coming out very soon, and the idea is to, we, it was pulled back, and it's been rewritten to really emphasize the production of units. And I, and I want to say that I think this is a really important emphasis because I think it's important that we begin to pivot with this money towards production, especially as we potentially move into a space where we have more money if we have access to the excise tax funds, because that will be significant dollars, and this is a really important source of funding for getting units. And so to begin to make the shift now with the $3 million we have, and to, you know, kind of iron out our processes and our language, and, you know, also kind of train the community for submitting applications that fit into this segment, I think, is really important. So, Councilor Casset, I'm glad you asked the question. If you hadn't asked the question, I was going to dive into all of this because I think this is an important area. Obviously, we're all concerned about it, and how our funds are available, and how we choose to use them, and the environment that we're operating in. All really important that everybody have a better understanding of the nuances that are going on. So, hopefully that's helpful. I'm going to let you take that one. Well, we'll, let's come back because that's another big one. We're not done. All right. Mayor, I know this has been very important to you too, in terms of the RFP shift to emphasize the units and using that money more directly for building. So, yeah, let me just add a little more context because you and you and I and Councilor Casset so far are all on the same page.

I want to first of all give a great round of applause to Florence Frank, our Bloomberg Fellow, and the value of really good staff analysis. If you have not yet seen what is now, in my mind, the legendary Venn diagram that she did of the way in which we've been allocating our Affordable Housing Trust Fund dollars, it's worth it. Maybe that could be distributed to everybody. Yeah, maybe we can get that sent out to the governing body. That'd be great because once you see it, you can't forget it. What it does is to display vividly a couple of things. Number one is just where we have been allocating our dollars historically and then where there are vendors in each of the categories within which we've been allocating those dollars. And this is not a criticism, but it is a description of how our process has worked in recent years as we've consistently allocated the $3 million to the Affordable Housing Trust Fund. Where those dollars have been spent is indicative of what was the most significant felt need at the time, which had to do with keeping people from becoming homeless. One big circle: people who are precariously housed. Another big circle is people who are already experiencing homelessness and need support and efforts to get them out of homelessness. And then the third is the category that we've been speaking about just now, which is the production of more units. And the last circle, the production of more units, has been the one that's received the least direct dollar allocation.

And I think we've all arrived at a point in time where we believe that we're spending other dollars on addressing precariously housed individuals or homeless individuals. We've got a major effort going underway right now, consistently under Director Hammond Paul's leadership, around the homelessness and precariously housed category. What we desperately need is more units. And so I think the graphic representation of that need is in that diagram that Florence produced for us. And it really does drive a policy pivot toward the felt need of more units using the $3 million and hopefully even more with the 3% excise tax to get more affordable units into the market. And so that can become a priority in the way we do the requests for proposals. We can weigh the RFPs toward that priority legally and give notice to the people in the community who are in the production side of the housing market that we really want them to step up and bid for those dollars. So, I'm very excited about it.

I do want to acknowledge, though, that this comes when you've got good staff doing good work. Without that analysis and that assessment, I don't know that it would have been so vividly portrayed and captured the issue so clearly. So, a lot of kudos to Florence for doing that work on her own. Yeah, I think that was very important. And then when you can see the problem clearly, then you can work towards finding the solutions. And I would just underscore how important that excise tax funding is to this pivot in how we invest in more units. So it was a great question: what do we do if we don't win the litigation and we don't have access to this? It's a significant problem that we're going to have to find another path. But it's also, if we do get it, I think this work that's going on right now will position us and train the community that this is funding available and these are the kinds of things we want to see it spent on, and this is the reason and the policy goals that we're trying to get to, which is developing more units, which we all recognize and hear is very much needed. And I think the other piece of this to the "what's affordable" is that we need a, and Director Lad, if she were here, used to say, "We need a spectrum of housing." We need, it's not just one type, but we need to be building a variety of types to address this very, very important issue for the health of our community. So, great conversation. Really appreciate Councilor Cassid and the questions that Councilor Garcia has asked around all of this. And so, not to monopolize, I'm sure we still have two councilors who want to weigh in here.

Councilor Faulkner: Pressure Jamie, says the freshman councilor. I have some broader questions around affordability. How much of the funding are we dependent on the federal government for? Like, how much do we get from the federal government and in what programs?

Madame Chair and Councilor Faulkner: Currently, through HUD's CDBG program, we roughly receive $600,000. And I think also another level to add to that is around 20% goes to administrative support to pay for staff. So really, we're looking at a bucket roughly of $400,000 that actually goes back into programs and projects.

Councilor Faulkner: Yeah. I was aware of HUD. I just didn't know if there were other buckets that you were getting from the federal government.

Not with consistency.

Councilor Faulkner: So, the next question I have, and everyone knows this is my "fee in lieu of" is a huge challenge for me. I understand why we have it, and I get that it does help, but what I struggle with is I don't think the city's getting the best deal in the situation. And I always tell this story, but on the planning commission, we asked the developer, "How much did you pay to get out of how many units?" And he said, "Well, we paid, I don't know how, $400,000 roughly and got out of 33 units." And when I asked the city staff, "How many units did we get and for how long?" We got 13 units for one year. And so that formula is not a good formula. I think that we could rework the formula. And I think Carol and me, who else went to that training? Carol Alma. And I understand now why fee in lieu of makes sense. I just don't think we have the best formula in place. Yeah, Jamie's there. And so what are your thoughts on revisiting fee in lieu of and trying to get a better formula in place?

Madame Chair and Councilor Faulkner, thanks for raising this question. I do have to make an estimate that by hiring a program manager, it will do a lot to help manage the Santa Fe Homes program to be able to look at and analyze the fee in lieu. Our developers are navigating the fee in lieu question to be able to work with leadership, hopefully a new director. I think currently, I'm open to discussions around ways to improve it. In the interim, I would love to just hire that position, and that would help a lot and go a long way because it is complicated.

Councilor Faulkner: I know in the community what the community sees is the community sees all these apartments going up and none of them are affordable. And so the community doesn't care for fee in lieu. They're blaming fee in lieu of for why we don't have affordability. But I also think the community doesn't understand the complexities around fee in lieu of and that it is, it can be a useful tool. It's just the formula has to be right. Are there, are there any, the housing issue is a national problem. Santa Fe is not unique. In this, we're the city different in a lot of ways, but in this, we are not. I think we're managing a little better than some cities. But are there, are there lessons we can learn from other cities so we don't have to reinvent the wheel? Like there's got to be other cities doing things that we're not doing that are also successful.

Madam Chair and Councilor Faulkner, you're right on point. In fact, thank you all for allowing me to meet with you today. I was actually participating in a fellowship last week in Chicago, meeting with colleagues from all over the country, addressing the topic that Councilor Garcia brought up: how do we look at other ways of funding subsidies for supporting access to affordable housing? And there's, in fact, Director Montoya and I were just discussing all of the great ideas and inspiration that are right at our fingertips. We don't have to look far. Colorado with Chaffa is doing some really exciting things. Director Lamboy has some really great ideas. So, versus just sharing a really long list of some exciting ideas, I will say that we're right in the thick of it, especially through this fellowship with Lincoln Institute of Land Policy, to get some direct assistance to be creative and come up with some innovative ideas. I'd also like to shout out Director Hernandez at the MRA, who also is really informed about creative ideas too.

Councilor Faulkner: Awesome. And then my last question is, oh, I guess I don't have a last question. I asked them all. Oh, no. I remember now. A part of what I think is making us hard to get supply out there is our land use, getting through the land use department. And this is not their fault, by the way. They have, they're just the messenger, I feel like, in the situation. But it has to do with land, how we're managing permitting and how we're managing how projects are staged out and how we're managing how the community gets to be plugged in, and it gets to be pretty cumbersome. And so I just want to highlight that, like, and we are trying to address it, and I understand that, but I do, I do feel like that's one of, one of the pieces of the puzzle that we really need to become more proactive with. Like the land use department should be much bigger than it, it should have way more staff than it does. And so, I think coming our next budget cycle, if we do our budgets differently, that will be something that I will fight for is the land use department and the affordable housing department get funded a little more because we, a lot of times in government, we say things are a priority, but we don't fund like they are. And so, I'd like to see funding follow what we say are priorities.

Thank you, Councilor Faulkner. I know Councilor Cassid has more things. I think I have more things. Councilor Garcia. Okay. Councilor Lindell, she's listening but can't ask questions at the moment. So, we'll see if that changes while we're talking. So, yeah. All right. This conversation around the Santa Fe Homes program, which is where fee in lieu comes from, this is a very important conversation, and I want to spend a little bit of time here to straighten some things out. The money from what developers pay goes into the Affordable Housing Trust Fund. Correct, Madam Chair?

That's correct.

Okay. And do you have a characterization of how that money has been spent?

Madame Chair, from my understanding, when it hits the Affordable Housing Trust Fund, that is the bucket through which the projects are funded and awarded via the CDC and governing body. Correct.

So, I just think it would be helpful for people to be able to see what it's buying us in this conversation of feeling like developers are not building the units, but the money that they're putting in is helping us with other goals. And again, there are a range of things we're trying to do, back to the Venn diagram that the mayor was describing. And these monies do help us with the other goals. And it would be great if we could also use those monies towards building units. So I think that's, that's an important piece. Also, I don't know, because you're the interim director, I don't know how in-depth you've gotten into this. And I don't know if we have, if Florence isn't here, she may know. But in terms of the, and maybe Councilor, Councilor Cassida, I should just turn this over to Councilor Cassid because she's really the councilor who's the expert on this, on the disc here, but the amount of money that developers have to pay has increased pretty steeply, I believe.

Mayor: And I don't know if you're versed in all of this, but we made some changes in 2018, 2019, I believe, and there's been a tiered approach. We are in the last year of the increases that were made over time. If you look at the amount that developers now have to pay, it is considerably more than they were paying when I was first elected. And we made these changes. So, I don't know who wants to speak to this, but I feel like there's a lot here to unpack to help people understand this issue. I'm happy to, and it may take a variety of us making a variety of points. So, I'll be happy to. Okay, great. I'm happy to do my part, and then we can pass the baton to those who are more technically versed on it.

I think you've made a number of correct observations. First, when we think about the adjustments that were made by our late, lamented Affordable Housing Trust Fund leader, Alexandra Ladd, now six years ago or more, it really was a monumental improvement in the Santa Fe Homes program. What she did was a substantial engagement effort to go out and talk to the developers, the builders, the neighborhoods, all of the individuals and organizations that are required to get affordable housing approved and built. What she learned was that our existing program was too restrictive, that we were losing units because people were unwilling to participate under our terms and conditions. As a consequence, we were seeing projects go by the boards. You can demand, you can arguably have very high and restrictive standards, but you can't require homebuilders to lose money. They simply won't do it. It is a matter of whether or not the projects pencil out and also a matter of whether or not, because we're talking about affordable housing that is not affordable in the generic sense but in the HUD sense, there are requirements for the management of those units going forward that homebuilders did not want to undertake as part of the ongoing managerial responsibility for subsidized units.

Now, I think Councilor Lindell, if she were here, would be holding up her hand right now saying we've got to change our language. What we're really talking about when we say affordable when it comes to HUD dollars is subsidized housing. It is not affordable in market terms. It's subsidized according to HUD's standards. So what Alexandra Ladd did that I think still bears an enormous amount of gratitude from us was to construct three or four different doors that developers could go through in developing homes under the Santa Fe program, including a fourth option that would give them the right to sit down with us and simply work out a deal, an arrangement, part fee, part units, whatever it would take to get the units built. If you remember, I read into our record last week the housing numbers from the past five or six years that really demonstrate a marked increase in our inventory. As Madam Chair, you mentioned, it's a spectrum, and what the data show nationally is that more units, wherever they are in the spectrum, helps reduce, if not the actual absolute dollar cost of housing, it reduces the rate of increase in the cost of housing. So we're making progress against the market by virtue of supply.

The fee-in-lieu program is an option that developers can take. It has escalated every year, year-over-year. I think it's tapped out now. So the suggestion that has been made that it's time to do another update is absolutely correct, not only in terms of whether that number of years that units are held under the affordable requirement but also whether it's time to change the formula. I think it's very timely because the escalation that Alexandra Ladd put into our program has now reached the end of its escalator. The escalator has arrived at the top of the next floor. So looking at that and doing what she did, outreach with all the builders, the developers, the users, the neighborhoods, everybody engaged, I think would be a really important, timely thing to do.

The other point that's worth being made about the fee-in-lieu dollars going into the Affordable Housing Trust Fund is that when they come out of the Affordable Housing Trust Fund, they're matched 3x. So, if you put $500,000 into the Affordable Housing Trust Fund in the form of a fee payment, the community gets three times that when that grant money goes out onto the street to some of the groups that Councilor Garcia mentioned as the likely recipients. So what appears to be a $500,000 allocation becomes a $1.5 million allocation or more depending on how it's actually applied on the streets. I think without the fee-in-lieu, whether it's well understood or not, because it does take an appreciation for how housing production takes place and what the requirements are for managing the units after they're built, I think the truth is that without it, we would be where we were before Alexandra Ladd reconfigured our program, and that is we'd be losing out on units. Absolutely. There would be people who would simply walk rather than building something that is uneconomic. So we get the units. In some cases, we get a hybrid. In some cases, units plus fee. We get fee in some cases, which amounts to a 3x allocation. And we really get a way to interact with the developers and the builders so we know what's going on in their world. And they're talking to us and giving us feedback about what we could do better as we attempt to really speak to what is a national crisis, and that is affordable housing and also workforce housing, the people who are working for a living, and they don't qualify for subsidized housing, but market rate is more than they can afford. We need to fill that hole very, very specifically.

Thank you, Mayor. I think the fact that the Affordable Housing Trust Fund money is leveraged three times is so important, and I think sometimes gets lost in this. Also, can you speak to where you can use fee-in-lieu? I know, or Councilor Casset, do you want to? Why don't you jump in because you haven't had an opportunity yet, because I think people misunderstand who can use it and how it's used. So if you could jump in there, that'd be great.

Councilor Casset: Absolutely. So, I think one of the important aspects of this, and I'm actually looking at the ordinance that increased our fees, it's really complex. When you look at the calculations, it's why you can't—people often say, "Well, how much are they paying?" You actually can't quite get that because it's based on certain tiers of affordability. This goes for also developments that can't pay in fee-in-lieu. For that question, you can only pay a fee-in-lieu if you are building rental units, not units for sale. And this has to do with the viability of a development if somebody is taking a loss one time when they sell that house, as opposed to every single month. It does make some challenges with the calculations.

That said, when you look at best practices in this work, if your fee is too low, you're going to see developers choose to pay a fee every single time. Whereas, if your fee is just about right, you should see some balance in the market. We tend to see people pay the fee. It is very rare that we see a development come forward with, I think, the units actually built, at least as far as what comes up to the governing body. Now, given Planning Commission sees most of it, and we have seen some—we've seen some use the hybrid model, like Zia Station, and then of course with Midtown, that was negotiated as part of the ENAs, which is a benefit for us owning land. But if you are renting units, or if you are selling, there are different tiers of affordability that have to be met. The fee-in-lieu, and this is one of our issues, is based off of the delta between the fair market rent that is established by HUD, which is going to be less than what you would see as a market rate rental in the city of Santa Fe because we're so much—the delta between that and how much somebody would pay at these different tiers of affordability. So below 40% Area Median Income, below 60, below 65, below 80. I'm getting the exact numbers wrong, but what we have done over the last few years is we have slowly increased them. So we multiplied the total number of units, and then we multiplied it by 15%, 20%, 30%, regardless, we're at 100%. We've doubled it over the last five years, which is why, as to the Mayor's point, this is a really good time to take a look at this in terms of how this calculation is now bearing fruit into creating affordable units. This came into effect July of 2024. So, we've almost had a full year at being at the max that we are moving with it. So, it is really complicated. It's really, I mean, and when you look at the different models, one thing that we don't do well is we don't hold our units at a required affordability for long enough. It's only 10 years. Other cities, you see 30 to 50 years. We definitely have a fee that is too low. We were supposed to come forward with incentives for affordable housing. That then COVID actually got in the way of it. The team started this work, 2020 hit. Fortunately, with the land use code updates, that phase one, we are going to see some of those recommended incentives hopefully coming into play that has to do with, as Councilor Faulkner was discussing, all of the complications that go into making a development more expensive. I answered your question, then I said a whole bunch of other things, but I think it was some of the stuff that we wanted to cover.

And if you had other questions, or if I, Director Nelson, if you wanted to jump in here, and then Councilor Casset, I know you had possibly other questions or other points to make. So, Director Nelson, why don't I go to you?

Director Nelson: Madam Chair, I'd love to add just a statement to provide awareness that we are working on some updated communication pieces that help explain and communicate this program that, as has been mentioned a few times, is complicated. That was one of the first things that's kind of filling in the role of, "Oh my gosh, this, we're fielding a lot of questions from developers and public constantly. How can we communicate the process better? How can we communicate the results better?" So, that is in the works. In fact, Noah, sitting right back here, is helping us lead that and working with our staff and working with land use to make that really, really crystal clear. So, thank you for raising that.

Wonderful. I'm glad to hear that. And also, just the lessons learned over this program. Taking a look at, you know, what are some of the other models that we're seeing in other parts of the country? Is there anything that can be simplified both for staff and for developers that is still going to bring us the desired effect at this moment in time?

Councilor Casset: And I would also say comparing markets that are similar to ours because again, one of our big issues as we're doing this, at one point this fair market rent was $1,200. Well, an average unit in the city of Santa Fe at that point in time was $1,950. And so, we're losing a lot of money there when we're actually taking a look at what our rental market can withstand.

Noted. Yes, great question. I love the part about as we do the analysis in similar markets as well as programs, looking at how we can simplify the administrative process because it is, really, outside of just how the program is written. The administrative side is very, very complicated, too, of the development and land use portion, as well as when it's at affordable housing. This creates delays. Again, it creates a lot of communication hoops that we have to jump through to work with the developers, and those delays have a negative impact on the affordability of developers as well. I think the County of Santa Fe recently did an affordable housing plan, and there was a statistic that for every six months of delay, the increase in the price of development goes up 5%, which is going to be passed on again to the residents eventually, which goes back to this idea of we just, the City of Santa Fe does not have a healthy housing market. And because of this, we have this huge gap from affordable to market rate that's missing this quote-unquote workforce housing or accessible housing, whatever you want to call it, the missing middle housing. It has a variety of names for people to try to categorize it, but it's essentially people who don't qualify for affordable and can't afford the Santa Fe market, and we don't have much for them at this moment in time. So, there's, it's a heavy lift at this point, and it is complex, and I know that it's both an opportunity that it's happening at the same time as our land development code because these things are interconnected in a way that we can't really pull these things apart.

And if I can just really quick, I mean, I think this point about how it's administered is one to emphasize. If you wanted to provide the affordability and the administration of that affordability or these rental units, another important point, is cumbersome, complicated, time-consuming. Of course, you're going to pay the fee in lieu. So, I think looking at that is absolutely paramount. Also, this idea of it is true that the affordability only has to be kept for 10 years, which does seem extraordinarily short time period. And I think this is to the Mayor's point about the work that Alexandra Lad did in meeting with developers. I'd be curious if there's some adjustment that can be made there that lengthens that time. And if you lengthened the time and made the administrative process of providing the affordable units, rental units, if you wouldn't get more buy-in. And so, I think those are policy areas for people to look at for sure. I had one other point.

Yeah, no, you, well, and maybe Councilor Cassid has another point, but I think it's really important to understand why this fee in lieu is an important tool. I think there is, it concerns me that there is conversation in the community that we should just get rid of fee in lieu and that it is something that we're basically handing the store to developers. And I think that is short-sighted and not accurate. And I'd be interested in having any of you lean in on why fee in lieu is an important tool. We need to, we clearly, we've already talked about some areas that we could make some tweaks, but I don't think we want to throw the whole thing out. So, I don't know, Councilor Cassid, I know you have thoughts on this.

Yeah, I mean, I, well, I think it goes back, well, what we saw in the City of Santa Fe first and foremost is that when we first had an inclusionary zoning policy, there was no fee in lieu option for rentals. Market crashed. That absolutely happened. And so, we saw a lack of development happening across the board. However, as development started to come back, and this is where Director Lad did such incredible work, we started to see our for-sale units come back. We started to see more developments, but we did not see rentals. And when Alexandra did all this work speaking with developers, and they basically said, "Santa Fe's too expensive. The market's out. We're moving to Albuquerque or wherever it is that we can go." And this again, when you look at some of the recommendations for fee in lieu, this is one of the prime reasons is that you often will kill the rental market if you don't provide a fee in lieu option, which will then exacerbate the overall housing crisis that we're dealing with. The one point I actually wanted to make is because these issues are so complex, we're not going to be able to explain all of it or solve all of it right now, is Councilor Romero Worth and I worked very closely with Homewise a few years ago to establish the Livability Series, which they, it's taken off. The Livability Series really came from the realization that land use and housing is such a complex topic. I believe that Councilor was meeting with Michael Lofton when this conversation came up. She pulled me in for obvious reasons, as we can see here today. But there's a series of talks about all these different things, and I highly, highly, highly recommend anybody that is interested in learning more to find these. You can find them online. But there was one on inclusionary zoning from Rick Jacobus, who is seen as one of the grandmasters of inclusionary zoning in the country. And he really talks about why fee is necessary in inclusionary zoning policies, but also how, you know, when you have it right and when you have it wrong, which we have some indications, as we have mentioned, that we have some work to do in this arena. Definitely some of the components that he's brought out. But he does speak to it in terms of both an overall healthy housing market, why fee in lieu is going to be necessary just based on the overall economics of housing development for developers even to be able to get their loans in order to build. And he does have a book that you can download online as a PDF, and I did, and it's great. Most people probably would not find it interesting, but if it is something that people want to learn more about, I just highly recommend this because it is something that it is complicated. And when I first heard of the fee in lieu, too, I was like, "That's awful. We need to get rid of this immediately," until learning more. So, and the Livability Series will cover a whole bunch of other things. There's, you know, why homelessness is a housing problem. There, I can't even think of all the other ones. There's one on architecture and it, so highly recommend to go take a look at that. And water and water. They're all, yeah, they're all recorded and available, I think, through the Homewise website. And Homewise has now moved this series to Albuquerque this year to continue the conversation because it is so important. So, back to you. So, that's my last soapbox moment.

Did you have something more for the soapbox?

No, I think, I think we've covered this. But it is important. Do you know the title of the Rick Jacobus book?

The title, I will find it. It's on my computer. So, give me.

Yeah, why don't you find that? I think Councilor Faulkner had wanted to make some comments on not necessarily this topic, but go ahead, Councilor.

This is an awesome conversation. This is again why I would like departments to report quarterly because we could have these conversations year-round and learn all kinds of amazing things. One thing that not exactly related to affordable housing, but how we manage affordable housing can have an impact on how communities are built. I, we're finding on the south side that we have lots and lots of houses being put up and lots of apartments being put up, but no amenities. We've got food deserts happening in a city. And so, just, I guess, commenting that as we look towards getting more and more product out there, we don't just do house, house. We do community building because you create a whole another set of problems when there's no amenities in an area, and it then, those are long-lasting and very difficult to fix. So, thank you.

Yeah, important point, and I think that's where the general plan work will be important for making sure that there are amenities and that we have a balance of all the things that we want to be hitting. I just want to, I want to allow, I don't know, City Manager, you're looking at me like, "Okay." Director Nelson, we've been doing a lot of talking from up here. It's just, this is, you know, obviously an important area that we're all concerned about. We're all invested in, and we're all trying to figure out the right paths and understand all the things we are doing and where we need to be doing more. And so, I don't know if you have any closing thoughts. We've been talking a lot, but this is really one of the many hats you wear.

I'll take the opportunity to share some remarks. Thank you, Madam Chair, and thank you, Councilors. I have to say, filling in in an interim role in a field that isn't necessarily 100% my background and training has been such an opportunity to address and be involved and learn in this sector that is intrinsically a part of economic development and economic mobility. And so, I have to say, not only the leadership from Council, but the Mayor's office, the City Manager, as well as our partners have been so phenomenal. Everyone has been supportive and communicative, really coming together to address the challenges, and that feels really good in this interim world that I can feel a little shaky in sometimes. And I would have to say that I have a lot of confidence in the community and in really looking at this opportunity as we find a director or we understand how we're going to organize, how do we change it so it is addressing these challenges that we know we can change right now? So, how can we be creative and look to what's working? So, thank you all.

Thank you, and thank you for stepping into this important role and filling big shoes. I have the name of the book. PDF. Yep. It's "Inclusionary Housing: Creating and Maintaining Equitable Communities." It's by Rick Jacobus, and that last name is spelled J-A-C-O-B-U-S. And it's, it's really, it's a, for people that like to read about land use, it's a very interesting book. So, enjoy.

Thank you for that. All right. Anything else from the Councilors? Anything else for the Mayor, City Manager, Director? All right. Do we have a motion?

Motion to approve.

Second.

We have a motion, a second to preliminarily approve this budget. Madam Chair, ready for the roll call?

Yes. Thank you. Councilor Cassid?

Yes.

Councilor Lindell is, I believe, on Zoom.

You can try, Madam Chair. I believe she's excused.

Okay, great. Councilor Faulkner? Yes. Councilor Lee Garcia? Yes. Chair Maroworth? Yes. Motion passed. Thank you. All right, it's 11:30. We have two more budgets. We have Economic Development, and we have the airport. We're probably not going to get to the airport till after lunch, which will be about 1:00. I see Director Harris in the background there. I, if the committee is willing, we could dive into Economic Development. We may have to come back, you know, we'll break for lunch at noon, and we may have to come back for questions after, but we could at least get the present. I think that's Councilor Faulkner's whispering in my ear here. I think what, I think that's a good way to divide it is let's get the presentation and then we'll break for lunch.

We'll come back and do questions, and then we'll move from there to the airport budget. So, whenever you're ready, Director Nelson, we will. Yes, Director Montoya, that sounded all right to you?

Director Montoya: That sounds wonderful, Madam Chair and members of the Finance Committee. So, this past year, the Office of Economic Development launched the economic development strategic plan to guide long-term growth and resilience. They deployed over $3 million in ARPA funds to support workforce development, Wi-Fi access, and small businesses. They expanded the business retention and expansion program, engaging over 150 businesses and enhancing economic impact tracking through the department's partnership with SourceLink. So, Johanna Nelson, our Director of the Office of Economic Development, will provide you with additional detail about their 2025 accomplishments and Fiscal Year 26 goals.

Director Nelson: Right. Thank you so much, Director Montoya. Madam Chair, members of the committee, Mayor, City Manager, Director Oster, if we could go to the next slide, I'd love to remind you about OED's mission. And I feel like this is quite a lofty mission in the PowerPoint, if we can go back to that. But really, the purpose and the mission of our office is to create the conditions that our community can allow for our residents to have economic opportunity to thrive, not only personally, but our businesses as well. And really, I see those as two different tracks where we're focused on supporting the business community, making sure that folks can start a business, grow a business, expand a business, hire folks, but also our residents have the opportunity and the tools that they need to make a better economic life for themselves. Two different tracks. And then we do that. Oh, that's OAH. If we could go back to the original PowerPoint that was up there. Okay. You had, there was an updated one that went out, and I think you had said, or many of you, for example, that you received it, but I can move on too. It's just we had a little error, a typo on that first page that goes into our priorities, but I'm happy to run through those priorities. If you go back to that, we have the correct slide in Civic Clerk.

Chair: Okay. Yeah. Just hold on. Can, let's just pause here a second. Can we get the right thing back? I'm hearing a thumbs up, nodding affirmatively. Just, I mean, we have it up here on the dais, and it is, I guess, in the packets, but just in case people who are following along, I think this is it. Okay. Terrific.

Director Nelson: And thank you for the patience because filling in in two roles, there's a typo in the presentation. So, we got it. The eight priorities, this is how do we deliver the mission of economic development, creating economic opportunity in the community, and I'll read these because to me, these are close to our team's heart: Business development, economic mobility, workforce development, organizational development. This is very much focused on internally, how are we operating efficiently, strategic planning, Wi-Fi and broadband access, strategic asset development, and number eight, finally, ecosystem development and support. These are the priorities of how we deliver our mission. And so if we go, I also provided our mission before we go to the next slide, but think about what our community looks like when we are delivering the mission. Again, our residents have the opportunities in front of them to thrive economically and career-wise. So if we go to the next slide, you can see how our team is structured currently. And again, I'd like to recognize Loretta Oline, who is still patiently in the audience, and then Noah, who is filling in as our contracts administrator. And I know we've got our team online watching, but the way that our office is set up, myself as director, we have Loretta as business operations, then we have our business development team. This is made up currently of three positions that are focused on providing direct support and assistance to our businesses. And we have a person that is focused on growth management. That's Casey Dalbbor. We also have Eric Rens Whitmore focused on making sure our ecosystem and smaller businesses are supported. We also just hired Lee Nelson, who is focused on downtown coordination, and then we're hopeful to fill the Southside position very, very soon and launch that. So that is a solid team currently focused on making sure we're making those face-to-face connections with our business development team. We also have Lizzie Portillo, who is focused on workforce development. And then asset development management is also housed in our office currently, and that is managed by Terry Lease with Nina Yen working with him. And just as a reminder, the reason why asset development is in the Office of Economic Development is because any sale of property or the lease of that property, the funds go back to the economic development fund. So that operation and management currently lives in our office.

If we go to the next slide, I'd like to highlight for you some issues that we consistently see in our community that our businesses are facing. Obviously, due to some of the current federal tariff issues, there is quite a bit of uncertainty economically and in sourcing product and supply, as well as just knowing what is next. So we are hearing some unsettled sentiment that has come up in the recent couple of months, and the eight items that you see in front of you are more generally speaking. Number one, limited awareness and navigation of resources. I like to talk about there are plenty of opportunities and resources and tools, including capital, that exist in our community. One of the biggest challenges that our businesses face is knowing that they exist or knowing how to access them. This is consistently a problem not only in Santa Fe but statewide. And then when they do know about them, it's how to apply or having a successful interface with those resources. Access to capital can be a barrier as well, knowing how to apply for a small business loan or where to go, how to finance the next stage of growth. Number three is workforce shortages and housing. I mentioned the overlap regarding a barrier to some of our employers as well as their employees. Housing is an issue. How do we attract a company if their employers can't afford to live here? The high cost. This also translates obviously not only in residential facilities but commercial space as well. I know Councilor Cassutt and I have had conversations about access to affordable commercial space. The affordability translates into commercial leases and purchases as well. Permitting and licensing processes. These were brought up, this topic was brought up in the affordable housing discussion, but many of our developers and/or new businesses seeking licensing or permitting experience a desire to be able to navigate those processes more easily. Also, coordination amongst stakeholders. Although we do a really good job at working with many of our partners, oftentimes communication and coordination amongst stakeholders can be fragmented. Retail saturation and market constraints. We generate a significant portion of our GRT through the retail sector. It is quite saturated. If you recall the analysis we did on retail leakage, we lose very little retail sales because we are so oversubscribed in retail establishments. And so we consistently are looking to address that. And then number eight, finally, one of the challenges that our companies experience is scale-up support. So having a company that is ready to scale, looking for that next round of funding, how are they connecting with the administrative supports as well as capital too? So, level setting some of the common barriers that our businesses are facing.

If we go to the next slide, we'll get into some of the ways that we are addressing these barriers that we see. So, Director Montoya mentioned that we successfully encumbered $3 million in ARPA funds. And because this is a budget discussion, as we're looking at the next fiscal year, I can't help but to acknowledge that we have done quite a bit of program building and supports in these fields due to this incredible, what I've heard termed as once-in-a-lifetime funding that we have in front of us. So, we're really, really, I'm really excited to see the returns on that. But I have to acknowledge that those funds do end in 2026. Business support and expansion, we have done significant building, an organization system of how we are in an organized way communicating with our businesses and tracking their key projects. Creating a pipeline of projects that our businesses are working on that allows us to understand where they're at in their needs. This also allows us to analyze the current conditions that our businesses are facing. So we can see what are the top reasons preventing our businesses from going on to the next stage. Is it workforce? Is it regulations? Is it capital? For example, access to capital. We've launched what we're calling the Business Finance Fairs. Quarterly, we are going out to the community and hosting resource fairs, bringing together lenders, bringing together grant funders, equity finance folks to get in front of our businesses and make those connections face-to-face. We've also, because we have increased our BR&E efforts, we're also really pushing the on-the-ground engagement. So, we have hosted, we've created office hours so focused on the Cerrillos corridor. We're there once a month. We are also on the Southside once a month, hopeful to kick off a downtown office hours. These are open times that businesses can come and meet with staff and address questions, ideas, and get connections for help of their business. Additionally, we have created quarterly industry convenings. So these are happening regularly in the outdoor rec, film and media, bioscience, creative industries. This is a way that we are also establishing pipelines of projects and increasing networking and connections in those fields. Workforce development, we are hosting quarterly workforce meetups and increasing the understanding of the ecosystem and increasing communications there so our local employers can address their workforce needs. Regarding ecosystem and network building, we've held over four what we call Coffee and Collabs to address this issue of siloed approaches within a very large ecosystem. There are many organizations in our community that provide some type of economic mobility or economic development support. It's very important that we work together, we coordinate, we can have some coffee and get out from email. So this is a great way for us to align and develop those relationships and entrepreneur education because we hear from the community that the permitting and/or business license process can be a challenge of knowing how to navigate or receiving assistance. We've worked with our great team at Land Use to develop a series called Santa Fe Business 101. So we host these workshops quarterly. They are bilingual, and we bring the Land Use team to the libraries, and folks are able to be walked through the process of how do you get a business license and asking basic questions regarding permitting issues. We also do Santa Fe Open for Business, which promotes new businesses and trying to promote the messaging around go local and supporting our local economy. And finally, communication and outreach is very important to us.

I mentioned that one of the top issues that our community faces is being aware of the resources that are available to them. So we have done, we put out two business resource newsletters every month. In fact, one came out today. This is a really extensive list of the grants, the events, the workshops that are available to our business community. We also have increased communication with workforce field, and then we put out a general community newsletter once a month. So we also are doing a regular radio show with K Suave. So getting information out is really integral to our success of being a, getting information out to our community. All right, next slide, please.

So what are we looking forward to in the new fiscal year? We're really looking to see these programs that we did invest in with ARPA funding to start bearing fruit. So launching and implementing the strategic plan that Director Montoya mentioned has been really important to us. I think everybody is well aware that currently our plan that we are governed by was created in 2004, updated in 2008. So we're really eager to work with community to have a new comprehensive economic development plan. We are just finalizing the first phase of that initiative, hopeful to launch an RFP and get the second phase of the writing and community engagement piece moving and completed within this fiscal year.

Continuing our BRE and business support. So I mentioned, our Director Montoya mentioned the work that we are doing for the BR&E work. This is a huge system that we're building in unison with New Mexico State University's Arrowhead program. This is helping to bring those organizations that are somewhat siloed and putting the organizations in one place, tracking those projects, being able to collaboratively address the issues that our businesses are facing in one place. We're calling that the Small Business Navigator Program. Really excited to see that gain traction. I do want to take a moment to mention that not only with your support, we were able to hire the Downtown Coordinator, Southside Coordinator. We also, we also included, we're working with UNM Rainforest Innovation, their Tribal Entrepreneurship Program. So have brought on a Tribal Entrepreneurship Coordinator as well. So we're really eager to work with them through this program.

Also a goal of ours is to align workforce and industry needs. We are in the process of developing a workforce development strategic plan. Number four, increasing access to capital. So we're really looking at how to utilize the economic development fund and exploring how we can generate some subsidies for small businesses, whether through our economic development fund, and a significant amount was invested into our Arrowhead plan to be used as small business grants. There's about $250,000 in conjunction with $250,000 from the county to be deployed in small business grants.

Number five, build industry and ecosystem connections. This is really important for us in economic development is to make sure we are continually aware of our industry needs and talking to those leaders that are with our key sectors like bioscience, like film and media, like hospitality and tourism. So continuing to convene those sectors, understand their needs, understand where there are gaps in which we can be supportive. And number six, boost infrastructure and digital equity. As you saw, one of our priority areas is Wi-Fi access. This is integral to economic mobility as well as development. So we're deploying a Wi-Fi accessibility and infrastructure plan that is almost complete. I'm looking at Counselor Cassid because this plan, we had to move it back, but that'll be coming to Quality of Life very soon. And seven goal, strengthen outreach and presence, continuing to be an information organization and get communications out through our newsletters and any means necessary.

All right, next slide, and I'm wrapping up some of the significant upcoming projects that I'm really excited to share about. Again, a lot of our work ends up just being a list that I'm reading out. So I hope you're hanging in there. We got a lot going on. But our Small Business Navigator Program is really a foundation on which many of our activities are going to be housed and organized. So from our Small Business Navigator Program that Arrowhead, New Mexico State University, Arrowhead's program is helping us manage and run, hopeful to see our Go Local messaging and campaign to come out where we are able to message and hopefully motivate folks to really think about where they're spending their dollars and supporting independent businesses.

We have a creative industries project that is just kicking off. We received a grant from the State Creative Industries Department, and so we're working with creative startups to launch an initiative that will support our creative industry sector. We also have an exciting program called Libraries as Launchpads, working with our libraries program to utilize the city asset and city location to connect with populations that aren't necessarily reading our newsletter. So this will be a business center that has business books, that has laptops. We also just kicked off the first of a book club series called Books Beyond the Business. Again, a community opportunity to come together and network. And then through the Navigator Program, we're also reinstating the Entrepreneurial Map. If you recall, this was an initiative through LAN to identify all of the localized and regional resources for our community. Again, I don't think that there's a scarcity in resources that are available to our businesses. It's being able to navigate them and be aware of them.

Number two, I'll move through these really quickly. We were successful to have a contract with Santa Fe Community College. Thank you to your leadership and your approval. And we were able to support them hiring a coordinator to market their trades and certifications programming. This is in our workforce bucket. We're really excited to continue working with them. Not only will they help promote the trades and certifications programming, but they'll also work with students to identify where are their social barriers that they're confronting that prevent them from getting their certifications or connecting with jobs, whether it's fees or transportation, childcare, et cetera.

I mentioned the small business grants. We're really excited to keep pushing this. Hopefully, these will come online in the next couple of months. Spur is what we're, just working title, calling our small business grant that will be available to the community through working with the county and RDC. And then crime mitigation grant, we are supporting the Community Services Department and working with Director Hammond Paul's team to make sure that those grants are online and can support businesses mitigating issues around safety and security. We also, number four, just, we're really excited because again, thanks to your leadership, we passed the contract to support University of New Mexico Center for Responsible Entrepreneurship. So hopeful to continue that programming. And then number five, continuing to build our business development team. And then number six, looking at ways to creatively work with our organizations, continuing, for example, continuing support for our small business incubator program too. All right, next slide. I think I'm wrapping up. Okay, great. Big long list, and that's just the tip of the iceberg. Reminder of how you can sign up for those communications. Great. And we will go to questions after lunch.

I thought that presentation actually is one of the best I've heard from your office. Oh. So while you may have been concerned about the laundry list, I think it was a great 30,000-foot view of all the things. I get your emails and stuff, and but it's nice to be able to, you know, get kind of the bird's eye look of all the things you're touching and planning and working on, and so really, really great. Really appreciate it. We'll go to questions after lunch. We'll regroup at 1:00 to continue this conversation and then hear the airport budget. Thanks, everyone. Thank you.

Okay. Are we live? Can we go live?

Madam Chair, we are live.

Thank you. All right. So, it's a little bit after 1:00. It's about 1:05 according to my watch. And this is our afternoon session. We have the rest of the economic development budget and the airport budget. And then I think we've done all the departments of city government, and what's that taken? Five, six, seven, eight days. So that's pretty good. Just again, Director Nelson and Director Montoya, thank you for the overview, that bird's eye view, really great. I started my career in economic development as did my master's degree with the Lyndon Johnson School of Public Affairs at the University of Texas, and I spent a summer in working for the Cabinet Secretary, the State Cabinet Secretary at the time, who was charged with putting together the governor's five-year plan for economic development in New Mexico. So always fun to, you know, jump back into these concepts and and the different layers of work that you do. And then, of course, it's the Angelou report that we did. When what what was the date of that thing, Madam Chair?

Drafted, published in 2004, and amended in 2008.

Right. And I think I participated just as a community member in that process. So, you know, interesting that here we are. Part of your work is to update that plan from 20 years ago or so, 21 years ago, it sounds like. So anyway, questions from the committee. We have one. Okay. Counselor Falconer, for right now, I just have one question. I know that you guys received the revenue from the sale of land in the Tier Contenta development, and what would it take to use some of those funding, some of those funds back, put them back into Tier Contenta, like helping do amenity infrastructure? Because I know a lot, some of the developers would like to do commercial, but what we're finding is no one can afford to rent the spaces because the infrastructure is so expensive. And so one of the things I was thinking about trying is if we can get some of that money back in for infrastructure, but I know we'd have to change an ordinance and some other things, but I'm just curious about what that might look like.

Madam Chair, Counselor Faulkner, this is a really important question. I'm glad you're raising it. I might look to the budget team to confirm my understanding, but there is protection for the Tier Contenta sales to go back into Tier Contenta. It's actually excluded specifically in the economic development fund, if I'm recalling correctly, that sales from that property do not go back generally to the economic development fund, and there are some clauses protecting that. And I'd love, I know we're missing our legal counsel, but we've we've looked at this a few times, so I'm happy to confirm, get you the exact, I know Andy is back there too. We've addressed this a few times.

Yeah, I just, I've heard something different. That's why I wanted to ask the question.

I would love to follow up and get you confirmation on that.

Counselor, are you talking about past or prospective?

The last time I spoke to anyone at Tier Contenta, which was, I, in fairness, like a year or two ago about this issue, I think Counselor Abeta was the city council at the time.

We were told that the revenues generated from the sale of land in Tier Contenta went back to the Economic Development Department, but there could have been some kind of debt owed, and then once it was owed, that stopped. I'm just curious about it.

I can tell you, I believe this is correct, I'd have to double-check it. My recollection is that under the arrangement made between the Tara Contenta Corporation and Homewise, there is a fund set aside by Homewise to provide specific dollars for phases one and two. So that as it has aged, it's needed more attention and maintenance. And I believe Homewise committed to create a special, in effect, an HOA-type fund for phases one and two that they would use. They would specifically dedicate going forward now that they're the master developer of TC3. So there should be dollars in a set aside that would make that happen.

Okay, thank you for that. I will track that for sure. And we have Mr. Hopkins joining us at the podium. Did you have something to add to that?

Mayor: Madam Chair, I was just going to read the ordinance from the City Code. It's City Code Chapter 26, Section 3.6. The following shall be dedicated to the Affordable Housing Trust Fund: A. Tiara Contenta, Subsection 1. All payments received from the sale of property in Ti Contenta that has been reserved for affordable housing as of the date of the passage of the ordinance from which this section is derived. Section 2. 35% of all payments received from the sale of property in Ti Contenta received after the date of the passage of this section. And 3. All interest earned from the above.

So, Madam Chair, if I could jump in there and add that the mortgage was fully satisfied in November. The city's mortgage on the Tiara Contenta property was extinguished when Homewise purchased the property from the Tiara Contenta Corporation. So, that language relating to the payoff of the mortgage, I think, is no longer relevant because the mortgage has been paid in full.

Yeah, I'm a little worried about diving in here. I feel like maybe we need the City Attorney's Office because I know there have been some things going on. I'm not sure we have the right players in the room to do anything but add to the rumor mill.

So, Madam Chair, I will just say this: this is the subject of not only Ti Contenta but the distribution of land sales throughout the city because there are so many exceptions written into the ordinance. It is very confusing to staff. You ask one person, they say, "Oh, it should be done this way." Another person, "It should be done another." So, I think it would be really helpful if the City Attorney's Office could give us kind of like a maybe a little bit of a guidebook on how Treasury should post these payments because they ask me and I say, "Well, here's the text of the ordinance, but I don't know what that means."

Well, and then in addition to the text of the ordinance, to Director Oster's point, you know, there are certain, there have been events and circumstances, and I don't want to call them deals, but purchases and agreements and all kinds of other things that have to be factored into all that. So, point well taken. We'll leave it here. And this is something for further conversations going forward. Okay.

I'm sorry, Director Nelson, did you have something to add?

Madam Chair and Councilor Faulkner, I did find the clause in the Economic Development Fund ordinance that specifies the amount. So, to your point, happy to follow up on that. And I just forwarded it to you.

Yeah, let's, this is a conversation that needs other actors to be better informed. Okay. Councilor Lee Garcia.

Thank you, Madam Chair. Thank you, Director Nelson. Currently, how many people are in this department? Full-time employees, or I guess full-time would be...

Madam Chair, Councilor Garcia, let me get you that exact number. And do you, this is a little bit nuanced, but 100% funded by the Economic Development Fund.

Sure. Yeah, the reason why I ask is, for example, Loretta O'Dean, who is here, is housed within our division but also serves not only us but Affordable Housing. So, there's a little bit of shared services.

Yeah, I can see that. I mean, General Fund, you have $2,800,000, and Economic Development is $2,400,000. Then the Community Development at 100.

Councilor Garcia, there are nine, including myself, and there's a vacant position funded with one-time funding approved by the Governing Body for the Southside Coordinator. And I'd also like to note that on the org chart, you can see the positions that we've created funded by grants as well. So, the Downtown Coordinator is funded by ARPA, and our Contracts Administrator is funded by ARPA as well.

Okay. So, those are temporary positions. Okay. And they're, yeah. Those positions will expire when the grant money is gone. Correct. Okay. Under contracts and utilities, it looks like you had a negative jump on that. What would be the reason for that one?

Correct. Madam Chair and Councilor Garcia, thanks for asking this question. We are not, we did go through our budget and are looking to reduce our activity in grants and services, which traditionally identified projections for LIDA projects, which is an acronym, Local Economic Development Act funds. And so, currently, we're not projecting any LIDA projects to come online that we're aware of in the upcoming fiscal year.

Okay. And then I guess the last one, I mean, the next line item, which is supplies, you jumped up quite a lot. What would that be due to?

Madam Chair and Councilor Garcia, can you confirm, are you referring to the supplies? Yeah, supplies line where you jump from an original budget of $8,000 to $50,000.

Thank you for the question. This is due to the fact that Economic Development often purchases supplies for other divisions within the Community Development Department. And as well, we moved office spaces. We're also rehabbing a little bit of spaces to make sure that staff can be accommodated in that area. This also includes printing costs that have gone up. And that's the reason for that increase.

Okay. So, you're upgrading a lot of your maybe technology, and through the move, you're going to be purchasing desks. I'm assuming just retrofitting. Correct.

Correct. Okay. And your last question is your transfers to other funds. You're at $1.8 million. Where are those funds going?

With that, and Councilor Garcia, I'd love to turn it over to Director Oster, who has a really well-spoken explanation.

Sure. Thank you, Councilor. So, circling back to the City Manager's comments at the beginning of the process, we changed the methodology for transfers when we started building this budget for FY26. So, those numbers reflect something different than what you've seen in the past. They reflect the movement of transfers in a different way through the General Fund. So, those transfers, we can have the budget team come up and give you more detail, but the reason that that number is different than it's been in the past is because of that change in methodology for how we're accounting for transfers.

Yeah, I don't, I don't need the budget team. I just, again, and I think this is somewhat kind of been shown throughout the whole process here, is, you know, we do see a number, and then it's hard to know where it's going, where is it coming from. And I'll save my comments for our final when we do completely vote on the budget overall, or at least a recommendation on the full budget. But that's it. Thank you for, thank you.

Go ahead, Director Nelson.

Madam Chair and Councilor Garcia, thanks again for raising the point. I do want to mention, in addition to contracts and utilities, we are reducing our budget about $1.3 million when you look comparatively to last year. However, when you look at this visualization, it shows an increase of 42.9%. But I want to flag that that's pending how Director Oster explained it. Just want to make that explanation. Operationally, our budget is reduced compared to the increase you see. Can I explain the reason we're not projecting as much LIDA projects, etc.?

Yeah. And yeah, and again, that's kind of misleading because you can't see a reduction in your budget. You do see a 42.9% increase. So, a little bit more explanation on that, hopefully coming down the pipe. Thank you, Councilor Kel.

Thank you, Madam Chair. Actually, can we follow up on that last comment that you made? Maybe I missed something. So, we see in the budget book a 42.9% increase. However, there's actually a $1.3 million decrease in your operating budget. Can you go over that again? What's going on here?

Sure. And I might need to get Director Oster to add a little bit of explanation, but the transfer increases are, maybe you want to take over this. We also have Andy coming down.

Yes, I think Andy will, as always, answer this question. Thanks, Andy.

Madam Chair, Councilor, the first, just kind of wanted to note that, yes, the Economic Development budget did go up in the current year quite a bit from the original budget to the mid-year budget. So, she's correct that Johanna is correct that it was a reduction from the mid-year budget. However, that increase was all one-time funding. So, you know, in terms of ongoing operating funding, it is a reduction in several areas, although overall it's an increase because of the transfer, which I'll explain in a second, and of course, the increase to salaries throughout the city for class and comp, the 3%, and so on and so forth. The transfer, the reason there's a large transfer there is, again, we are subsidizing this fund. This is one of the many funds that the city General Fund has to subsidize quite extensively. Again, in the past, that was done from the GRT Fund 216, which is considered non-departmental. This year, again, for clarity and for a better following of the ordinance, all that money was collected from the other fund, put into the General Fund, and the General Fund is providing a subsidy. And because the subsidy for the Economic Development Fund is provided from the General Fund account for Economic Development, that's why the transfer shows in Economic Development, but it's actually a transfer from the General Fund to the Economic Development Fund.

Does that also explain why we're seeing a 216% increase in the summary by fund from the General Fund?

Madam Chair, Councilor, that is correct.

Thank you. That helps. Where do the dollars from the Economic Development Fund go to? We've been, we've actually been having this conversation recently because we have, we have a resolution going through that's taking, extending the plan where 50% of the land sale revenues go. Normally, they would all go into Economic Development. We're splitting them half into Affordable Housing, half into Economic Development. Are there any other revenue sources for the Economic Development Fund?

Madam Chair, Councilor Cassidy, the lease revenue from city properties that are leased out and rented out does go to the Economic Development Fund. There has, we've been a little bit spotty in our enforcement of those leases. It's my understanding that the city is going to be purchasing some software that will help us track, in the Asset Management Office, help us track those leases a little bit better and make sure that we're collecting on them all. That is, that is one of the areas where we can, you know, at least try to accentuate our revenue collection efforts.

Thank you. That was on my question list as well, so I appreciate you already answering it. Thank you. I'd love to add, and thank you so much, the local options gross receipt tax, the 1.2% in addition to the leases and the 50% of the sales.

Madam Chair: That's correct. That amounts to 1% of the state-shared gross receipts tax, so not the locally imposed tax, but the state-shared amount that used to go 100% to the general fund by council ordinance. I think it was about 10 years ago or so. Now, of that state-shared amount that used to go 100% to the general fund, now 3% goes to children and youth, 2% goes to human services, and 1% goes to economic development.

Okay, so that's a good point. That is a good part of, definitely an important part of the road district as well. Wonderful. So we have three funding sources that are dedicated. Correct? Am I going through that correctly?

Madam Chair: That is correct, although it should be noted that the land sales revenue is really not an, could not be considered an ongoing revenue source. There are several years go by where we have no land sales, so that is not exactly what I would call a dependable revenue source.

Okay. All right. Thank you. Thank you. I appreciate it, and thank you for for seeing some of my questions. And if just the GRT amount, it's 1.2 or or just 1%?

Madam Chair: It's 1% of the state-shared amount. If you'll give me just a moment, I...

Okay, because I heard 1.2 at some point in this back and forth.

Yeah, that is not correct. Okay. 1% of the GR, the state-shared amount of GRT.

Madam Chair: That's correct. And as far as the amount goes, let me get the... it's set by ordinance. I know, Madam Chair, in the FY26 budget, that GRT increment amounts to $675,176.

$675,176. Thank you. Okay. Sorry, Councilor Cassid.

No problem. So, following up on a couple things that were mentioned. One, LITA grants. You mentioned that you don't foresee any coming online this year. I'm curious as to why. I know that that's an opportunity for us to really pull down state dollars into the city. So, is this just there's nothing coming? Are we not seeking them? What's going on with LITA right now?

Madam Chair: Councilor Casset, thank you for the question. Currently, we have our LETA pipeline of projects that we're administering and managing, and do not have active projects that we think would close within the fiscal year because we didn't project the funding. It doesn't mean that we are not open to entertaining projects or potential LETA projects as we are out meeting with businesses. And I will add as well that because we work with the county, they are also able to be a fiscal agent for LETA projects as well. So businesses have opportunities to work with us or the county to still obtain a LETA grant. I will say that it's, as you know, it's a long process to receive those funds actually to the business. It could be 6 to 12 months, right?

And so you're so, just to clarify, there is an opportunity for, if there is a business that's opening within city limits, they could also use the county as a fiscal agent, which means the county would provide that matching fund as well. Correct?

Well, that's nice. As we've been talking about city-county sharing, so does that happen? We see that happening. I believe it's in Bernalillo County as an example.

Oh, sorry. Currently, no.

Oh, no. Okay. And again, we're not adverse to being the fiscal agent, right? I think you look at duration of processing those contracts and what the best fit is for the business. Okay. But to clarify, we do have LITA projects in the pipeline. We just do not foresee any of these needing payouts this fiscal year. Correct. So in the future. Correct. Okay. Wonderful. Thank you.

And then you mentioned Marcy Street, and well, you mentioned workspaces, which I imagine refers to as Marcy Street. Correct me if I'm wrong. When we moved to Marcy Street, did that, that was completely funded out of the economic development fund? Am I remembering that correctly, or am I misremembering things?

Madam Chair: And Councilor Casset, a portion of that, and maybe Director Oster or the budget team can help clarify, a portion was covered by economic development, but also facilities as well, right? And you're correct, currently, the, and to Councilor Garcia's point, the increase in supplies is requesting additional workspaces, etc., to outfit that office.

Okay. And so I know that that community development lives there, and community health and safety lives there too. Correct. Correct. In another office suite. Okay. And so are those different departments, or large umbrella departments, are those all sharing in the cost of keeping up Marcy?

Madam Chair: And Councilor Casset, to confirm, my understanding is that we are covering a cost of Community Services Department from General Fund for the rent. However, with one-time funding, Governing Body approved supporting that expense. Okay. Upcoming fiscal year. Okay. All right. Thank you.

We covered that. We covered that. We covered that. Yep. We're good. Well, I'm done. Wow. Yeah. Councilor Lindell, are you able to unmute?

Yes, I am. Thank you.

Okay. Thank you. Questions. Do I have the floor, Chair?

Yes, you do.

Okay. Thank you. Hats off to other counselors. The questions have been excellent, and many of the things that I wanted to ask. I think in trying to put some of that together, it would be really helpful if we could get a quick memo of where the funding for economic development is coming from to clarify the land sales, the, all of those kinds of things, to get a clarification of where this funding does come from. Because if counselors, myself probably, are a little confused about this, I'm sure others are. So I think that would be a good thing to get a little memo on how economic development is funded. Specific question I did have because I've forgotten, what is the rent that we are paying on Marcy Street at this point in time? Do you know off the top of your head?

Madam Chair: Councilor Lindell, we pay annually about $200,000 for both spaces, economic development and community services.

Okay. Are we maxed out in that space?

Madam Chair: Councilor Lindell, yes, for both spaces.

Okay. All right. I think, Chair, mostly what I wanted to ask was a clarification for everybody, a little memo on how all of this funding comes to economic development. So, I'll yield the floor, and thank you for your patience with me today.

Thank you for joining in, Councilor. Appreciate it. So is that possible, Director Oster and City Manager, to get a memo specifying the amount of funding in the economic development fund and where it's coming from and where by, or like, where by law it is directed?

Sure, Madam Chair. Okay. Absolutely. We'll work on that.

Okay. And I, I don't think it needs to happen by tomorrow, but probably by Governing Body on the 14th would be helpful. Okay. Where are you on the strategic plan update? What's happening with that?

Madam Chair: Thanks for the question. We are just completing phase one, which has been focused on updating the data collection of the data portion of the strategic plan. I'm hopeful to get an RFP together and launch that within the next two months. And that will be the actual community engagement portion, analyzing the data, conducting, as you mentioned, you were a part of that earlier exercise in 2004. They interviewed, I think, a thousand different people. So beginning that process to engage public. So within the next two months, hopefully to get that RFP rolling and select a consultant to do that work.

And who's been doing the update on the statistics? Has that been an in-house thing or a contracted thing?

Madam Chair: That's been a contractor, and that contractor is Ernst & Young.

Okay. And will, will we, will that be released separate on its own, or is that just being incorporated into the next phase?

Madam Chair: You're correct. That'll be published separately. We've had a few updates in committees, EDAC and Quality of Life, and that will be incorporated into the analysis that will come in writing the plan in the second piece.

Okay. Maybe if it's been released to Quality of Life, it should be sent to all the counselors. I'm, I'm getting the feeling, Madam Chair, I should be attending your committee hearings.

You really should be. There's a lot of fun things happening. But yeah, and I guess, you know, to the extent there's stuff that appears there, and I know Councilor Cassid has been in matters from the council at the Governing Body meetings, has been sort of flagging some of these presentations. It's just sometimes hard to keep up with stuff. So if there's, if there are reports and things, I think Mr. City Manager and others, you know, we should be making sure that the whole Governing Body gets the, the stuff that you're releasing when you release it.

Yes. And Madam, if I, if I may add in agreement, the information that was shared at Quality of Life and EDAC was a presentation.

Okay. So, not the final report yet.

Exactly. It was more so a teaser. In fact, I want to take the moment to remind you that you all have invitations from the consultant to do an interview and and give them some feedback, too. That's in your inboxes.

I did see that, but I was confused what I was going to be comment. So, it's on that presentation.

It's on the, the, on this data collection phase in which we're in. So maybe you better send us the presentation because I didn't know what I was commenting on, and I was like, I...

And Madam Chair, if I may, it's not commenting on the presentation. It's, it's just information gathering to get your input on the current state of economics in Santa Fe.

Okay. All right. But I will send you the present. I did see it. I think you sent it in the middle of the night. I was struck by the hour. You should really sleep. Okay. Let's see. Can you take a little deeper dive into the Wi-Fi and the broadband work? I know certainly that was really important work. I mean, it's, it's obviously critical. We're so much of life now happens on, on the internet. I know we did a lot of work during COVID to expand access. And I'm just curious where we are on, on, maybe you can give like a broad brush deeper. Sure. Thank you. Comment on that.

Thank you, Madam Chair. Thank you, counselors. If I'm understanding your comment correctly, I just want to acknowledge the work that was done during the pandemic through a series of presentations to invest ARPA funding into solving or helping to solve access to Wi-Fi. And if you recall, there was a series of locations identified by then Director Rich Brown, locating low-income populations to place Wi-Fi towers. And some funding was used to build a tower. And I think it, I'm killing the name. Ocate there. There was one location starts with an O. I'll get confirmation. I'm sorry, I'm forgetting that. Then second, when I came on board, we built a Wi-Fi tower in the Trailer Ranch on Cerrillos, which is providing Wi-Fi services there. So now we are in the phase of further identifying some locations to deploy Wi-Fi towers to continue on with that work. The exciting thing that that I'm really thrilled to announce is that Lizzie Portillo, who is watching on YouTube, Wi-Fi accessibility and broadband infrastructure fall in her portfolio. So, we've been working with staff along with a consultant that we brought on to identify a Wi-Fi or develop a Wi-Fi accessibility implementation plan.

And so what we're in the process of doing is looking at available funding sources, looking at these key areas, and figuring out where we are going to get the most bang for our buck, whether it's these Wi-Fi towers. What are other ways that we're increasing accessibility for Wi-Fi? One of them is the Libraries as Launchpads program that I mentioned. So we're working with the libraries. We utilized ARPA funding to purchase hotspots as well as laptops. So that's one way that we're increasing access. We're also providing communications and awareness about the availability of those hotspots. And then also within this implementation plan, it's also identifying funding sources, which if you've halfway read email threads going back and forth, there has been so much funding that has come through in the last year that's available to communities and public organizations for infrastructure. It's a little bit overwhelming. So this has helped us filter our strategy and awareness of where our best investment or project is going to be. The plan, as I mentioned earlier, we were prepared to update quality of life this month, but we're actually moving that back. And to your point, we'll get that information, that presentation out to you. And it's really exciting to continue that work of Wi-Fi accessibility and broadband infrastructure. So, we're right on the verge of having really solid deployment ideas.

**Councilor:** Great. That's something I've been interested in in my years as a councilor. I think it's obviously critical infrastructure, and so happy to see that you are going to have a strategy to follow to continue that work. And, you know, kudos on the Libraries as Launchpads when you mentioned that in your original presentation. That sounds very innovative. Makes complete sense. And just, you know, congratulations. That sounds great. I don't think I have too much else. Any other councilors? Councilor Cassett.

**Councilor Cassett:** Thank you, Madam Chair. I just wanted to make a comment as obviously I do get to work with Director Nelson and her team very closely, both with Quality of Life and also chairing the Economic Development Advisory Committee. And I do appreciate you giving this, I would say, 30,000-foot view. And also just want to state that this is, I mean, for me, I feel like this scratches the surface of the incredible work that this team does. Small team, very small team. But I have always really appreciated the innovation, the creativity, the problem-solving nature of this group. And I know I mentioned it during land use, but just the partnership between business licensing and economic development and how we get support for business licensing. And that came from a presentation. And Director Nelson, you know, seeing the benefit to the community in this area as opposed to being like, "Well, these are my dollars," offered up funding a navigator out of economic development to assist with that. And that is just the type of attitude I constantly see out of this group. And so I just wanted to give you guys the accolades that you deserve. Really, really, really enjoy working with you all and learning about all the wonderful things that you're doing. So, thank you.

**Speaker:** Likewise. Thank you.

**Chair:** Okay. Anything else? We have a motion.

**Speaker:** Motion to approve.

**Speaker:** Second.

**Chair:** We have a motion and a second to preliminarily approve the Economic Development budget. Could we get a roll call, please?

**Speaker:** Certainly. Councilor Cassett, yes. Councilor Lindell, yes. Councilor Falner, yes. Councilor Lee Garcia. Yes. Chair Merworth. Yes. Motion passed.

**Chair:** Thank you. Thanks for being here. Appreciate it. All right. We have one more. Last but certainly not least, we have the airport budget. As we change presenters. Okay. So, we have with us Director Harris, and if you'll introduce who is with you, that'd be great. And I think you have the floor. Welcome.

**Director Harris:** Thank you, Madam Chair. So, I'd like to introduce the Airport Security Manager, Jimmy Gunn. He's here for moral support. No. He's here kind of like my sidekick today just to get introduced to the processes. Am I ready to start the presentation? Yes. Sorry. Well, so I created this budget presentation for you all. Hopefully you like it. So, we have a new mission at the airport: is to connect people and communities while honoring the unique heritage and natural beauty of Northern New Mexico and provide a safe, efficient, and sustainable travel option that enhances the passenger experience and supports local businesses. So the budget presentation is going to focus on our fiscal year 26 budget proposal. We're proposing a budget of $5,381,879. The big takeaway is it's an increase of our budget by about $723,55. I put together an executive summary that outlines this stuff. So our budget for the upcoming fiscal year, as I said, is increased significantly. The increase comes from increased revenues. The increase will help address some staffing needs and further improve the facility. The proposed budget ensures continued success and strategic growth. Just to take a look at the current year's budget. Our original budget was for $4,659,342, with the expected revenue of $3,832,630, and total grant funding we expected was $3,941,243. Key categories of our expenses this year is salaries. We created a lot of new positions. So we have a lot of manpower now and our operating budget. So the proposed budget overview. So our total proposed budget expenditures, we're looking at $4,658,342, with a proposed revenue of $5,002,630. Key changes to that is implementation of aircraft landing fees. Our anticipated revenue is $1,332,630. Increased passenger parking fees. Our anticipated revenue is $700,000. Increased fuel flowage fees. Our anticipated revenue is $470,000. And we've increased the airport concession fees. We're expecting to reach somewhere around $1,120,000 on that. These numbers are extremely conservative. A lot of these fees are new fees that were based off of previous years with the increases added on them, but I wanted to be a little more conservative because I didn't want to have to tap into the general very conservative. So, the expected impact. We're going to continue to improve the facility and safety of flight. We're going to increase revenue and capacity, better staff morale retention, and enhance community and customer satisfaction. Conclusion: The airport has seen extreme growth through planning, partnerships, and marketing. Approval of our budget will ensure the airport continues to be sustainable, safe, and an economic engine for the region. And with that, I'll stand for questions, I imagine.

**Chair:** Yes. Sit for questions. Questions from the committee. Councilor Lee Garcia.

**Councilor Lee Garcia:** Thank you, Madam Chair. We've got all day. Finish up till 4:00 today, huh? Thanks for the quick, let's go. What is in the other operating costs? I know we you had that in this. I don't see that in all the budgets, but what's in your other operating costs?

**Director Harris:** So operating costs include other operating costs, maintenance of vehicles, equipment. We have a big airport painting project coming up where they'll restripe the lines on the runways, kind of like they do on the highways. Staffing, new equipment purchases, things like that. Nothing, no big real big purchases coming up with this budget.

**Councilor Lee Garcia:** Okay. But that would seem like that should go under repairs and maintenance. I don't know what the reason for other operating cost is.

**Chris Parker:** You'd reintroduce yourself. Oh, yeah. No, I'm my name is Chris Parker. I'm a Senior Budget Analyst. This isn't my department, but I'll be more than happy to answer any questions about what's in other operating costs for this year. The big one is going to be services to other departments. That's primarily going to be in this case for an IT allocation. I believe might be some general fund, a general fund allocation that I'm missing. Excuse me. In addition, there's $20,000 for equipment and machine rental. There's $100 for print and publishing expenditures and $950, not thousands, $950 for dues. And then lastly, there's a gross receipt admin fee that's built into that as well, or $4,520.

**Councilor Lee Garcia:** Okay. But that, does that get us close to $700,000 that we're budgeting?

**Chris Parker:** That would be at $600, sorry, $652,000. The services other department allocation, excuse me for excluding that, is $625,000.

**Councilor Lee Garcia:** Okay, so if you can explain to me the services to other departments or from other departments. So what is that?

**Chris Parker:** It's, it's basically that, that line is a, it's an allocation that we use to kind of build in, it's basically how our fleet function is funded, which you guys don't do because you guys function your own fleet. But it's mostly how we pay for the IT, we basically the IT department has a certain number of expenditures for their budget. We split that up amongst the departments based off of a driver. In this case, it would be user accounts.

**Councilor Lee Garcia:** It would seem like that should be under IT's budget though, not airport budget, right?

**Chris Parker:** But this is, this is a way that we account for it. It's a really kind of a complicated system that we use to do this so that we're not using transfers. Basically what we do is we do, let's like from my understanding, and excuse me, I've been here for a couple years, but it's a double entry system where we track the expenditures on one side and then we track the revenue piece on the other side.

**Councilor Lee Garcia:** Give him a second to catch his breath. Yeah. And that's okay. I mean, I'm not going to beat you guys up down over this. So just again, just for clarity, you know, it's in your budget, and so if it's for it, then this is where I think coming down in future budgets, how we identify actual costs and actual budgeting per department, because, you know, I think in, in from your perspective, obviously you, you're not an enterprise fund, correct? Or you are. Yes, you are an enterprise. So, you bring in a certain amount of income, and your budget may reflect what your expenditures are based upon that income, but you also have a lot of other things that you're getting money from, whether it's grants or things of that nature. GRT, and how we fund the airport itself. And the airport is a very important part of the puzzle, especially for Northern New Mexico and tourism, and even us that live here love that amenity to be able to fly in and out of this place. And so, just questioning in regards to operations, and, and, uh, some shed some light over that. And I don't know if you want to respond to, to that. And I have the city manager's leaning into his mic. Maybe he can provide some clarity on the nature of airport operations and funding and what's happening here.

**City Manager:** Madam Chair, Councilor, sure your mic's on, Mr. There you go. Now I can hear you. The, um, yeah, this is as any enterprise fund, um, they will record, um, payments to the organization, um, for services, just like a private business would pay for outside services. The, the enterprise fund is paying for the services from other city departments. And, um, and it's T, I don't know what other overhead charges we lump into that. I'm sure Andy can give us more detail, but, um, they become payments out from the enterprise fund to those other departments of the city who are providing those services. So it's, it's really just like running a private business where you have those kinds of costs that you're paying for.

So that's what is included in those kinds of charges. Andy can probably tell you a little bit more about what other kinds of overheads we charge.

Madam Chair, Councilor Garcia, for most departments, it also includes a charge for fleet. During budget development, I believe it was budget development time last year, the airport withdrew from fleet servicing. So the fleet no longer services any of their vehicles nor charges them anything. But that pays mainly for IT services and also services provided by some general fund internal service type entities such as HR and payroll that are providing services to the other departments. The way I look at it is every city department has a set of customers. For some city entities, such as IT, fleet, payroll, HR, their customers are only other city departments. They don't necessarily, for the most part, provide services generally directly to the public. They support services to the public that are provided in other departments by providing those departments with computers, software, network services, payroll, such things as that.

Mr. City Manager: If there's anything that I've picked up in the last two weeks, it's the understanding that we need to provide more detail than we're providing in these summary budget pages. So, we'll make sure that going forward that we're able to do that, both other operating costs, the contractual and utilities line, the transfers out, and the transfers in. All of that we can provide additional information in the future and make it a lot easier for you all to understand what we're talking about. Thank you.

I think that is something even as of last year we've been asking for, because how do we vote on something if we really truly don't understand? And in this case, it's evident, yes, we're using services from another department. And so the value of the, I mean, we don't have a charge, it doesn't have a schedule of what they charge for services as if we were going to a contractor to utilize IT services, but we're using city IT for that. So there's a value to that, and I think that's, is that what we're doing?

Madam Chair, Councilor Garcia: Yes, that's correct.

Okay. So, and again, I don't know how we come up with the value of that, because we are providing it from our own department, so to speak.

Madam Chair, Councilor Garcia: It depends on the assessment. In the case of IT, their budget basically has two parts to it. There are the parts in late fall, usually around November, December, IT will contact all of the departments and say, "What are your anticipated hardware and software needs for the upcoming fiscal year?" They will also charge them a share of things like broadband internet costs, Verizon network costs, something called managed print services where IT manages their printers and copiers and charges each department based on their usage of printers and copiers a portion of that. And so that's one portion of their budget.

It also has a part of its budget that is not necessarily specifically applicable to any user department. So, say in the aforementioned part, you might have, "Okay, we have $100,000 for transit, say, or for airport for computers that they anticipate they'll need, software they anticipate they'll need," and so on and so forth. But then IT also has the rest of its budget, which I call "keeping the lights on money." Basically, their salaries, their utilities, their supplies, their general supplies, stuff that's not applicable to say, "Okay, I'm using this pen right now in IT, I'm going to charge that to planning and land use." You can't do that. So that portion of their budget, which is probably about two-thirds of their budget, is apportioned to all city departments based on their number of network accounts. So, the more people that, say, fire would probably end up paying quite a bit more than say economic development for their IT costs because they have more people, more accounts, and therefore IT spends more time and effort maintaining their services.

Mr. City Manager: One other thing that I was thinking, just asked the director, we could ask our internal audit consultant to take a look at how we do these allocations. I know that when you're looking at this, to the world it looks like a black box. All these numbers go in and somebody calculates how they get distributed, and it's all very formulaic and it's all very open and auditable. It's just very difficult to understand because it's lots and lots of numbers divided in lots of different ways. But it's probably a good thing every so often to have someone like an internal auditor take a look at it just to validate for you all and for the public that the allocations are being done on a logical basis. From an accounting standpoint, this is very normal accounting. It's done in enterprise funds everywhere. I mean, it's just a very standard thing. But it's hard to understand sometimes where the allocations come from and who sets them. For instance, when you allocate the costs of salary, overhead positions, salaries and benefits, and you allocate them out to the various departments, there are assumptions that go into that, and the assumptions aren't created by a computer. They're created by human beings who are making assumptions, and so you do need to validate those from time to time, and we can do that just to give everyone comfort.

Garcia: Thank you. Yeah, I think that's just, and especially with this, it is the last one we're reviewing, but to tie everything together, I get that there are services that each department provides to each other, and how do we value that? Whether it being a, I guess, a soft cost, but it's internal, but how do you translate that into a hard cost and this is what it is actually costing us? And so how that's built into these budgets? And, you know, again, taking a good look and a deeper dive into how each department's actual, what their actual costs are, their income versus their revenue, and their, I, did I say that right? Their income versus their expenses, and however expenses are looked at. You know, I think that gives you a better picture as to how to identify, are we, is each department holding its own, so to speak, and how are they working with each other overall as a complete city? And with that, I'll, I'll, I'll cede the floor. Thank you.

You, Councilor.

Madam Chair, can I just add to that point? This is one of the things that I kind of took on when I started with budget quite a long time ago. And the idea was because we weren't really effectively capturing these costs. They were just kind of buried in the general fund. And the idea of this is that if you don't assess these costs out on a fair basis, of course, for IT, payroll, also insurance, our risk in risk insurance, the cost of running our benefits program for all city employees is also done on an assessment basis. The idea being that if you don't assess those costs out, you don't have, we're not giving you an accurate picture of how much does it take to fund a police department, how much does it fund take to fund the airport. If those costs are hidden, then you have an unrealistic picture of what it actually costs to run this operation.

Thank you. That, I think that's an important point. So, thank you for making that. Councilor, well, hold on. Councilor Faulkner, you had a comment or question on this.

Actually, I'm good. It got answered.

Okay. Sorry. Can go on for a half hour if you would like. We'll go down the line here. Councilor Casset.

Thank you so much, Madam Chair. Thank you both for being here. Quick, quick question. What did you say that your total proposed revenues are going to be this year, or expected revenues are going to be?

Madam Chair, Councilor Casset: So our expected revenues, it's looking like 5 million, 2,630.

5,2630.

Yes, Councilor.

Okay. And then last year we had total revenue original was 17 million. What?

That number includes a ton of grants that we got last year.

Okay. Thank you. I was like, I'm sorry, what happened? I thought we were expanding. Okay. Thank you for clarifying that with me. And then I imagine what's making up the difference is either grants being carried over, grants that we're hoping to receive. This is one of those areas where I know the federal government shakeup is a little bit of a concern for us. So, how does that look for operations at the airport, both with FAA, who I know is very involved, as well as any federal grants we may be getting?

Madam Chair, Councilor Casset: So that's an actual revenue number. That doesn't include any grants or anything.

Oh, yeah. I'm, I'm, I'm asking about potential grants. How much of our, you know, how, I'm not, I don't quite know how much of the, how regularly we're getting grants from the federal government as well as, you know, how operations in conjunction with FAA work and what things might be of concern for this year.

Yes. So, Councilor Casset, so what we're getting from the FAA is business as usual. Our grants are currently not in jeopardy, and there's no future concern of them being in jeopardy. I've mentioned before, aviation pays for itself. So all the fuel sales and other, other revenues that the FAA gets in the form of taxes from the airlines, from pilots, aircraft sales, that all goes into a big fund, and that's, it's all of, all of our grants are allocated from that fund.

Okay. Okay. Well, that's positive news then. Positive in the right direction. I haven't been out to the airport in a long time. I need to get out there because I do want to see what's happening with, with parking. I know that there's been a lot of conversation around, you know, the dark parking lot and whether or not there's, is there currently a lit path or a, what's the word that you use for shuttle that would take somebody from, you know, the dark, the dark parking lot over here to the, from the darkness to light?

Thank you, Madam Chair and Councilor Casset. So, we just got in six brand new light carts. Before we were renting light carts, and they were very expensive, so we only had four. Now we have six, and they're airport-owned. So we got a little more light out there. It's a lot more lumens than before. And we still currently have a shuttle. Right now we have one shuttle driver. We interviewed a couple shuttle drivers a few weeks ago, and they're in the hiring process now. So, we have four shuttle positions. One's filled, we got three that we're trying to get in boarded now.

Okay. And so that would increase the, the amount of shuttles that are going back and forth. I, I know that I've had somebody report that they have a shuttle, they weren't going, it wasn't going to work for them timing-wise, so they just walked. So will that increase the frequency of the shuttles to get those hired, or is this just to fill all of the time frames to make sure there's one going at all times?

It wouldn't feel, we only have one shuttle, so we can have them go back and forth more often. We try to capture as many as we can and then go to the parking lots and capture as many. But this, this is just to fill the slots that we have open.

Okay. All right. Thank you. Well, I know that that's something that you're continuing to work on is to get this renovation done.

I see that the airport parking lot expansion is on the FY26 goals. There's also this conversation or this line item, or bullet point rather, "Update the airport master plan." Can you give me some more information there because we have accomplished 75% of phases two and three for the airport terminal design project. How do these things interact with each other? What is involved in an airport master plan? Is it just the structure, or is there more to it that I am unaware of because I'm not as familiar with airport operations?

Mayor: Counselor Cassid, an airport master plan is, how can I put it? It's kind of like your city's overall plan, but for the airport. The FAA requires an updated master plan. Our last master plan was done in 2018, I believe, but it's outdated for where we are in terms of growth. So the FAA is paying for us to redo the master plan. What goes into it? It's the airport as a whole. It identifies aeronautical spaces, non-aeronautical spaces, places we can develop for commercial use, an overall general plan of how we want to lay out the terminal, the runways, do we want to extend, do we want to create new areas? It's a whole plan for the entire airport. The FAA likes to look out 10 years, so it's a 10-year plan for the airport.

Okay, thank you. I appreciate that clarification. I do not believe I have any further... Yeah, well, yeah, we'll have to come back to me. Thank you so much. I appreciate it.

Thank you, Counselor. Counselor Faulkner.

So, first of all, I'd like to say that I am so sad that you are leaving, Director. I think you've been doing an incredible job at the airport, and I think given all the challenges of getting the airport where it is, you do an incredible job. So, it's disappointing that you're leaving. Couple of questions. How are the fire inspections coming? And I know, didn't the airport just get a big fire truck for the airport, right?

Mayor: Madam Chair, Counselor Faulkner. Yes. So, we have the fire inspector's office. They do all of our fire inspections for the hangars, fuel farms, the commercial use spaces. They've been going great. We've had some issues with one of the self-serve fueling stations, but that's been mitigated. And yes, we just got a brand new, humongous fire truck. It's bigger than your normal structural fire truck. It's made to put out big aircraft fires, fuel fires, things like that. So, we got our first one in last week, and the second one should be in at the end of this month.

Okay, cool. I really want to come see those fire trucks. They sound insane.

Mayor: No, they're massive. The fire departments, they're planning a, what does he call it? A wet down. So, that'll be held at the airport. It'll either be June 2nd or June 3rd. We're trying to focus on a date, but we'll send that out.

Okay. And then the other question I have is I've been getting complaints that people are parking in one of the rental car lots, but the rental car company's claiming it has all these spaces, but they don't really, and they've had people towed. Has that been resolved? I don't know if that's a rumor, if that's actually happening.

Mayor: Madam Chair, Counselor Faulkner, that actually did happen. Previously, the rental car agency, they had 20 spots in the long-term lot. They weren't marked. We offered to mark them for them when we moved them there. They neglected to allow us to do that. So, their spaces were generally unmarked. There were signs there, but then they moved the signs, so it looked like regular parking spaces. So, they towed about 15 cars that day. When we got word that that happened, the airport, I don't know if I can say this, but we took care of, I think, about nine cars that were still left in the lot that morning. So, we took care of that. People just had to go to the tow lot and pick up their cars.

Okay. Thank you so much. That's all I had. Counselor Lindell.

Thank you, Chair. And thank you, Mr. Harris, for all that you've accomplished with the airport. It's been impressive. We've come an awfully long way in the last couple of years, and I am personally very, very grateful to you. I do hear about the progress from the airport because I sit on that committee. Getting the parking straightened out has been just kind of an ongoing issue, and I think we're there now. I hope so, because when that goes wrong, it really goes wrong for people. So, let's continue to pay attention to that. I'm not sure that it's really a budgetary item, but it's something that really, really can make us heroes or zeros within the community. So, thank you. Thank you, Chair.

Thank you, Counselor. I'm going to ask a couple questions, and we can go back around. So, in your proposed goals for FY26, and I know you'll be handing the baton to others, but I'm curious, "accomplish 75% of phases two and three." Can you speak briefly to what's in those phases?

Mayor: Thank you, Madam Chair. So, that's design for the further expansion of the passenger terminal. I think it's more cost-efficient to do. It was supposed to be a three-phase expansion. We're complete with phase one, and then phase two, and then phase three. I think it's more cost-effective, and it lines up more with our growth, to just do phases two and three together. We may save close to $10 million doing it all at once. And again, that's design for the expansion of passenger terminals. Yes, ma'am. Both phases. Just design.

Okay. And I know, to Counselor Lindell's point, I know that we've come a long way under your leadership. We had had some problems with FAA and with TSA and around runways and security and just, you know, kind of raising the level of how we conduct business out there. Are we pretty much in good standing now, or are there still some things that are being worked on?

Mayor: Yes, Madam Chair. All of the issues with the FAA are all but taken care of. There were some issues with the runways. Those all got fixed. We're now in compliance with our Part 139 requirements. We have our annual inspection coming up in July. So, they'll just come around, do an inspection, and if they find something, they'll write it in a letter and give us a cure period, maybe 30 days, 90 days, depending on what it is. But last year, we only had two discrepancies, which were small. Those were complete before the guy even left. With TSA, we are finalizing our, they call it a global settlement. So, that's being finalized now, and we should have resolution on that hopefully by July.

Okay. And the airport access road project, you have in your goals to complete the design phase. Have you begun the design phase?

Mayor: Madam Chair, we just got the scope of work from Mosin last Friday. I'm currently looking over that. I need to send it over to Public Works for their input, and then we'll sign that as a task order, and they'll start the, it's a lot of environmental, it's a lot that'll go in before they can even actually start designing the road.

And is that fully funded, or is it only partially funded, or maybe you don't even know because you don't have a, until you have a design, you don't, if I base it off of what I know from Public Works, you may not even know the cost.

Mayor: Madam Chair, so originally, our, the airport engineers, they gave us an estimate of $4.5 million to complete the road. That's what we requested from the legislature, and that's what they gave us. Talking with Public Works, Regina at Public Works, and State DOT, we have to, we have to build the road to DOT specs. So, that may put additional funds on the project, maybe a million or two. We don't know yet. We'll know once we get all the environmental stuff back.

And why to do DOT specs? Is it state?

Mayor: Because it connects to 599, which is a state road.

Okay. Interesting. Let's see. Similarly, so the, so similar to the economic development fund, we have an airport fund. That's where all the fees that we were talking about feed into. What else feeds in there? Is that also federal grants?

Mayor: Madam Chair, I'll have to ask budget. I'm not sure where they put our grants. I'm not sure if it goes into that fund or...

All right. I don't know if we've got budget people listening. Yeah, maybe. Thanks. I won't, I won't. Hi, Andy. The airport fund, is that where, that's where all these fees, landing fees, passenger fees, fuel flowage fees, car rental receipts, do they go in the airport fund, or do they go somewhere else?

Mayor: Madam Chair, no, they go into the airport fund.

Is, and is anything else go in there besides fees? Is that where, where do our federal grants go?

Mayor: Madam Chair, they go into the airport fund as well.

Okay. Anything else feed in there?

Mayor: Madam Chair, other than interest, not really. It's interest fund interest.

In other words, and why did capital purchases go down? Because just because we bought whatever we needed to buy, and now we're not buying it this year.

Mayor: Yes, Madam Chair. So, we've, we've bought maybe 20 vehicles. We're buying snow removal equipment, plows, salt spreaders, radios. We've, we've purchased most of it. We're working on a budget transfer from our cash balance to further improve the airport with plows and everything.

Okay. All right. Great. That's all I have. Any other questions from counselors? Counselor Cassid.

Thank you, Madam Chair. And Andy, you may want to stay there. Did I hear you correctly that our internal fleet does not take care of airport maintenance costs?

Mayor: Madam Chair, yes, as of earlier this year, that is correct.

Okay. So, and who do you, we have that on site? Are we, do we have a private contract?

Mayor: Madam Chair, Counselor Cassid. So, we hired a heavy equipment mechanic who takes care of our fleet. We partner with the fleet department for the software that they're going to transition to. Our heavy equipment mechanic went to the training, and he voted on the, on the process. But my justification for taking us from under fleet is we have mission-critical equipment like plows and other things that can't wait on fleet. It actually, we save a little bit of money as well because we buy fuel filters just like fleet. We buy all our equipment in bulk now. We just had about $280,000 worth of equipment, tools, lifts installed in the shop. So, we can take care of everything, including tire changes, tire repairs, all in-house.

Okay. So, that one mechanic services everything at the airport. That's impressive. Okay. All right. Okay, that's all. Thank you.

Okay. If there aren't any other questions, we have a motion, a second to preliminarily approve this budget. Can we get a roll call, please?

Absolutely. Counselor Cassid, yes. Counselor Lindell, yes. Counselor Faulkner, yep. Counselor Lee Garcia, yes. Chair Murworth, yes. Motion passes. Thank you.

All right. Just a little roadmap for the committee. This concludes, thank you for being here. Thank you for all the work you've done. I appreciate it. For the committee, we have, so tonight at the Public Works Public Utilities Committee meeting, the budget resolution, or the formal vehicle by which we approve the budget, will be introduced at committee tonight at Public Works Public Utilities. It'll be here tomorrow morning for us to vote on, and our approving that recommendation basically would be the recommendation of the Finance Committee to approve the budget, and then that, of course, moves to the governing body for final approval on May 14th.

So, just so you know, we will meet tomorrow morning to approve that resolution, and from there it'll go to the governing body for final approval on the 14th. And I believe that night all of our directors will be in attendance to answer questions from the entire governing body prior to the passage of that resolution. So, I just wanted to kind of outline where we go from here.

Thank you all for the work you've put in over the last eight days. It's a considerable time commitment and attention commitment, and I think you all have asked great questions to better understand the different work that's going on across the city, and I just want to thank you for the time and dedication that you've put into this process.

So, with that, we will meet tomorrow morning. I believe it's at 10, correct?

Yes, Madam Chair. 10:00 a.m. tomorrow.

Okay. And I think that budget resolution is in your packets. It's in the Public Works packet for tonight for introduction, and it's also in your packet for tomorrow's meeting. So, if you want to take a look at that, that's where it is. And that's what I have. And with that, we're adjourned. Thank you all.