Finance Committee FY26 Budget Hearing
Wed, Apr 30, 2025 · Finance Committee Budget Hearing
https://santafeminutes.space/meeting/754

== Executive Summary ==
The Finance Committee held a budget hearing for the Public Utilities Department's (PUD) FY26 budget, which includes Water, Wastewater, Environmental Services, and Utility Billing divisions. A major theme was the significant capital improvement needs, particularly for the aging wastewater treatment plant and water infrastructure, which are driving proposed utility rate increases. The committee discussed the ongoing transition to a new billing system, the launch of an Asset Management Plan for Water and Wastewater, and efforts to ensure compliance and sustainability.

Councilors expressed concerns about potential rate increases for residents, questioning why past funds weren't used for upgrades and emphasizing the need for transparency. The PUD explained that while enterprise funds currently show surpluses, these are insufficient for the extensive capital projects needed, and current rates do not fully cover capital expenses. The importance of maintaining strong bond ratings and healthy cash reserves for future financing was also highlighted. The committee also touched on the Environmental Services budget, the reevaluation of a clean energy program, and the search for a permanent PUD Director.

The Finance Committee ultimately gave preliminary approval to the Public Utilities budget for FY26 in a unanimous roll-call vote. Councilors praised the hard work of the Public Works teams and emphasized the critical nature of their services. Action items included staff providing more detailed information on specific questions, a proposal for restructuring the clean energy program, and continued investigation into improving conditions for Environmental Services vehicle operators.

== Key Decisions ==
- Preliminary approval of the Public Utilities budget for FY26.

== Motions & Votes ==
- Approval of the agenda — Passed unanimously.
- Preliminary approval of the Public Utilities budget for FY26 — Passed unanimously (Councilor Cassid: Yes, Councilor Faulkner: Yes, Councilor Lee Garcia: Yes, Chair Marworth: Yes).

== Public Comment ==
Councilors expressed appreciation for the Public Utilities Department's efforts, particularly regarding staff comfort in vehicles and the importance of timely reevaluation of programs. Concerns were raised about potential utility rate increases, with calls for transparency and justification, especially given existing surpluses in enterprise funds and long-standing infrastructure issues. There was also praise for the work of Keep Santa Fe Beautiful and the quick response of Public Utilities teams to emergencies. The Mayor and other directors acknowledged the complexity of utility management and the need for long-term investment.

== Topics ==
- Water Rate Increases
- Advanced Billing System
- Asset Management Plan
- Wastewater Treatment Plant
- Digital Twin Technology
- Fire Mitigation Strategies
- Backflow Prevention Program
- Personnel Recruitment & Training
- Storm Damage Tree Collection
- Water Conservation & Sustainability

== Full Transcript ==
Okay, we have four or five members of our committee. It is a little after 10. Oh, we have five. Woohoo. We are going to start in just a second. All right. Not sure who's working in the IT back of the house. We appreciate you. Let me know when we can go live.

Madam Chair, we are live.

All right then. Are we ready? Not quite. We'll wait for our director to find her chair because she takes the roll. 1, 2, 3, 4, 5. Okay, I'm calling us to order at 10:05. Can we get a roll call, please?

Certainly, Madam Chair. Councilor Cassid?

I'm here.

Councilor Faulkner?

Here.

Councilor Lindell? Councilor Lee Garcia?

Here.

Chair Maroworth?

I'm here.

Madam Chair, you have a quorum.

Terrific. Can you tell me, do we have any changes to the agenda? Pretty straightforward.

Madam Chair, no changes to the agenda from staff.

Motion to approve. We have a motion, a second to approve the agenda. All those in favor?

Aye.

Anybody opposed? That motion passes. Let me just catch up here. Here we are. This is the day I want. All right. So, just for a roadmap, we have one budget, kind of a big one, Public Utilities Department. We have been taking lunch. We do only go till 2:00 today, I think. So we'll see how it goes. If we need to come back after lunch, we will, and or maybe we'll run a little bit over depending on how we go. But we'll just kind of see. But typically we've been taking lunch around noon, and but we do only have one agenda and then we are breaking at 2:00, and of course, we have a full night ahead. So with that, welcoming the members of the Public Utilities Department. Thank you for being here. Really appreciate it. Director Oster.

Madam Chair, I just have one note regarding the presentation slides. The presentation materials that Director Roach is going to be presenting are slightly different from what you'll see in the packet, and we're working on getting that updated, but I just wanted to flag for you that you will see a little bit of a difference, and we're working on getting the updated presentation slides onto Civic Clerk.

Okay. And is it possible to just email the members of the committee right now or not?

Yes, Madam Chair, we can do that.

Okay, that'd be great. Just so we can, sometimes it's hard to see some of the graphics and stuff. So, okay. With that, I think we're set. Everybody set? All right, Director Roach. Welcome. Thank you for being here. Please, when you, if you need to refer to members of the department or if members of the department come up to answer questions, please introduce yourselves. We, of course, are familiar with you. We work with you, but anybody watching later or now may not always know who you are. So, if you'd just make sure to introduce yourselves as it's appropriate. So, thank you and good morning.

Good morning, Madam Chair, members of the committee. Thank you for your time and attention this morning. I wanted to introduce the operating budget, proposed operating budget for FY26 for the Public Utilities Department. A quick overview of the department. It's divided into four divisions. And three of those are enterprise funds of water, wastewater, and environmental services. Those three enterprise funds collect all the revenues they need to operate, and they also provide the funding for the utility, building, and administrative services division. The division directors are here today, and I wanted to briefly mention them. For the water division, we have Jonathan Montoya here. Thanks, Jonathan. For the wastewater division, we have Michael Doer here. Thanks, Mike. For environmental services, we have Deborah Trujillo. Thanks, Deborah. And for utility billing and administrative services, we have Nancy Jimenez. Thank you. In Public Utilities, we have more than 260 funded positions. And revenues are predicted this year to be nearly $84 million. And this is one of the spots that's slightly different, perhaps from the slide deck that was sent, is I wanted to compare that to the last actual spending numbers we have, the last audited spending numbers we have from the operations budget. And that's on the order of $57 million for FY23 and $66 million for FY24. The difference between the operating budget and the revenues is used to fund CIP, capital improvement needs, and asset management plan needs. And that's where the rubber meets the road for the water and wastewater utilities in terms of the revenue requirements that drive those utilities. And we'll talk a little bit more about those when we get into the division-specific budgets.

A couple of, sort of, priorities I wanted to mention that we'll see as we go through the division-level budget is we're pushing really hard on a project to update an old billing system to a new modern billing system. The name of that billing system is Advanced. This transition has been a long one and a thorn in our side, and we're really pushing hard to try and finalize that. So you will see that that filters through all of the budgets because the enterprise funds do support the billing division efforts. We're also launching a formal asset management plan in water and wastewater. And again, that gets back to the fact that we have large, we have a lot of expensive assets that we have to make sure are being replaced or rehabilitated before they reach the end of their usable service life. So we're going to focus specifically first on the water division. The water division is split into five different sections. There's 110 positions in the water division. Source of supply and Buckman Direct Diversion deliver potable water into our storage tanks and our transmission and distribution system. And then the transmission and distribution section manages all the pipes, valves, hydrants, and meters to deliver that potable water to customers. The engineering section provides technical support to ensure that the system is built properly. And the water resources and conservation section ensures that water is available to meet current and importantly future demands. The predicted revenues this year for the water division are over $41 million. And compared to the last audited spending number we have for $35 million, you see that there's revenues in excess of operating budget. But here's where I want to sort of make the point on the importance of capital spending. So the water division, not even including the Buckman Direct Diversion infrastructure, the water division has about a billion dollars of assets when you look at all the pipes, all the reservoirs, the treatment plant, the wells. And if you imagine that you have a billion dollars of assets and those assets, even if they had a usable lifetime of a hundred years, if you wanted to make sure that they were all being replaced and updated before they reached the end of their life, that would be $10 million a year you would be investing to that capital, the maintenance of critical infrastructure. We have not done that yet. And we do get revenues in excess of operating expenses, but not to the tune of $10 million. So as you're all aware, tonight we will be coming to Governing Body with a presentation showing the revenue needs that we have in both the water and the wastewater utility, and discussing and introducing an ordinance to begin those rate, those proposed rate increases for the wastewater utility specifically. Other things. Let's see. Yeah, that's a good overview on the water division. And then in terms of the water division actual operating budget, I just wanted to sort of call out that the sort of increase in the proposed budget compared to the base budget that we had for FY25 is largely attributable to the increase in needs by utility billing. And again, that's a result of this push to implement Advanced Billing System. The personnel and the money we pay to BDD for water and the money we pay to utility billing together represent almost 60% of the water division's budget. And I would mention again that we're standing up an asset, a formal asset management program that will have schedules of when we need to be replacing every piece of our infrastructure going out several years so that we have the ability to formally keep up with the infrastructure needs and not get, not be, this is to be proactive rather than reactive to infrastructure needs. We're also standing up a backflow prevention program, which is best practice for water utilities. And we have some exciting work on data dashboards and long-range water planning in the works on the wastewater division side of things. There are 69 positions across five sections. Collections does that. That collects and conveys wastewater to the Pojoaque Royale Reclamation Facility. Plant operations ensures treatment to applicable standards at that facility. The engineering section ensures that the collection system and the plant are properly built, and the lab and administration sections support the administrative regulatory needs of the division. The projected or the predicted revenues for the wastewater division this fiscal year are $21 million, and the operations budget spending for the last audited year we had being FY24 was $15 million. So again, you see revenues in excess of operations, but again, this is all about capital improvement and maintaining our critical assets. And in the wastewater division specifically, we're looking at, we're estimating a minimum of $180 million of capital improvement needs at the plant over the next five years. And that's really the driver of proposed rate increases that we'll hear more about tonight. Looking more specifically at the budget breakdown, there's, it's fairly flat year-over-year from the base budget to the proposed budget. And I guess I'll mention here, and I think you all are familiar with this, the base budget doesn't quite match the original budget that show, the original budget for 25 that's in the budget book is different than the base budget. So, our year-over-year changes are a little different than what you might see in the budget book. And that's because we're, it's a little bit of apples to oranges. We're comparing the base budget to the proposed budget here. And the operations budget is, or wastewater didn't really only change 2%. Operations and maintenance and personnel together add up to almost 70% of the wastewater operating budget. And really the focus with the operations budget in addition to the capital budget at wastewater is to maintain compliance at Pojoaque Royale after upsets in 2024. We have made a lot of progress there, and we are compliant with E. coli requirements. We've been compliant since October of 24. The focus really in wastewater is developing information so that the Governing Body can make an informed decision on whether we rehabilitate the existing infrastructure or we build a new plant. And at this point, there's too much uncertainty in both of those numbers for us to, we feel, bring that to the Governing Body for decision. And we're working on improving the uncertainty on both of those numbers so that we can make the best possible decision because it's a large decision, hundreds of millions of dollars at stake. And we, there is a large focus, especially at wastewater, on recruitment, training, and development of personnel. The third enterprise fund is the Environmental Services Division. There's 73 positions spread across four sections. Residential recycling and refuse and the commercial sections all operate and maintain a fleet of trucks to collect trash and recycling from city customers.

And then the administration and customer service section support the internal needs of the division. Keep Santa Fe Beautiful and Sustainability are also currently part of ESD admin and customer service section. But here's a good place to point out that merging water conservation and sustainability into a utility-level group that operates across the utility and beyond is a priority for fiscal year 26. Predicted revenues for this enterprise fund for this fiscal year are $22 million. Compare that to an operations budget actual spending in 24 of $16 million. And you see again that we have revenues in excess of operating budget, but again, capital, capital, capital. That's where the rubber meets the road in these enterprise funds.

In terms of the recommended budget, there's a 4% operating budget increase from the base budget of 25, and that is all attributable to increases in personnel and utility billing. Personnel, landfill fees, and new vehicles together make up almost 60% of the operating budget for ESD. And there is a focus in this fiscal year on completing design for a new administrative and maintenance facility. And again, this would be funded out of CIP. And a big focus in this fiscal year is increasing capacity and public outreach related to recycling drop-off locations.

That brings us to the last of the divisions, and again, this is the division that's supported by transfers from the enterprise funds. There are 41 positions in this division, and they're spread across five sections. Customer service assists with all the user needs associated with receiving and paying for utility services. In addition to receiving service from us, billing and collections ensures accurate and timely billing and collection of overdue bills, and the cashiers receive the actual payments. PUD admin provides internal administrative services to the department as a whole.

In terms of the breakdown of that budget, here it's just broken down into sort of four bins. And what you see is a significant increase related to contractual services. And that really all boils down to two large contracts. There's a $2.5 million contract in place with IT Connect for advanced billing system implementation, and there's a $1.7 million contract in place with Advanced itself for the billing software implementation. So large portions of those are sort of one-time spending as we push hard to make the transition to this new utility billing software. Personnel and these contractual services together add up to 74% of this proposed budget. And with that, I will stand for questions, and I'll probably take any questions that occur at a high level and refer more detailed questions as appropriate to division directors or staff.

Mayor: Thank you, Director Roach. You are the interim Public Utilities Director. I'm curious, just before we go to questions, perhaps the city manager can give us an update on where we are in terms of hiring a permanent replacement.

City Manager: We are under contract with the recruiter who has posted the position, and the flyer is available, and we've started to just started to receive some applications. Shouldn't be too terribly.

Mayor: Great. Thank you. Questions from the committee? I'm guessing Councilor Lindell, you have questions, and I'm going to start on your end.

Councilor Lindell: Still looking at the new packet.

Mayor: Okay. All right. Councilor Faulkner. Councilor Cassid.

Councilor Cassid: You can time me now. Thank you so much for being here. Thank you, everybody. I know this is always a lot. We definitely appreciate it. I will try to be as organized as I can. So, a couple questions. One, I saw in the budget book another $500,000 for a clean energy program. I believe this in the past has been referred to as the Green Bank of the city. Can I get some more information on that?

Director Roach: That's a program that I'm not familiar with. I would defer that question to either the Mayor or Deborah.

Mayor: I can give you a little bit of background on it if you'd like. It actually is not the Green Bank, but it was a holding name for what had been done by our energy conservation team historically to make funds available for Solarize Santa Fe to help lower-income or people who may have housing costs that they can't easily deal with. If they wanted to solarize their residents, we had funds available for making those investments happen. We were working at one point when Neil Denton was with us through the school district in a partnership that extended the program to people in the Santa Fe Public Schools, teachers, and others in the district. And the money has been carried on over the years without really reevaluating its the way to use it most effectively now. So it's under review.

Councilor Cassid: So is that still in the budget? That $500,000? Have we expended any of it ever?

Mayor: Yes, historically. But I think it's still, as I said, there's an opportunity here to reevaluate whether we've gotten what we wanted out of it, whether the partnership with the district is worth continuing to work on, whether there are other ways to promote solarization and energy conservation measures in the city.

Councilor Cassid: Okay. And so with that reevaluation, when will that process? What I would hate to see is us reevaluating a program, putting $500,000 in it, it not being active this year because we're in the process of evaluating whether or not this is actually functional and useful, and then having $500,000 just hanging out.

Mayor: So, it's underway right now. Second thing that, so I think imminently. Second thing I would add is that we're looking at a restructuring that you may have seen referenced in the letter that was in the budget so that we try to create an institutionalized piece of government, a department, a division, call it what you will, that brings together our sustainability and conservation efforts. And as we look at the best use of that money, one option would be to, as we make the implement the reevaluation, the reorganization, that that funding could be kind of seed money for the conservation sustainability division to get itself off the ground and begin to be very active in promoting those two benefits. But I think in the next day or so, we'll have a proposal on this.

Councilor Cassid: Okay. Well, that's a lot sooner than I was hoping. So that's great because I was hoping at least three months. So no, tomorrow sounds better than three months.

Mayor: It's imminent.

Councilor Cassid: Okay. As in today, tomorrow, the next day. Great. Wonderful. Thank you. I appreciate it. Where are my list of questions? So I want to talk about the new vehicles in ESD. We have $3 million for those. Correct?

Deborah Trill: Good morning. My name is Deborah Trill. I'm with the Environmental Services Division. Councilor Cassid, yes, those $3 million is going to go to replace several vehicles. I shouldn't say several, about four vehicles. Probably two side loads, one front load, and I think another support vehicle, could be a special collection truck. What we're trying to do now is we put in the budget every year replacement. We have like a replacement schedule, and so these vehicles will be able to get rid of the old vehicles and replace them with newer vehicles.

Councilor Cassid: Wonderful. That's, I'm glad to hear. We had this conversation, and I think it was buyer or PD, one of them, where it was like we bought all the vehicles at once, and now we're running into that issue.

Deborah Trill: So we're trying to budget for them like I said, yearly so we can get rid of the old, replace with new, and it's been working at this point, so we're going to continue on that process.

Councilor Cassid: Okay. What's the lifespan of most of these vehicles?

Deborah Trill: About four or five years.

Councilor Cassid: Wow. Okay. So they turn over quickly.

Deborah Trill: Yes.

Councilor Cassid: We've now heard a couple years in a row from the union about the comfort of the cabs in these vehicles. Can you speak a bit more to that? I'd like to learn more.

Deborah Trill: Yes. Let me also call up, I'm going to call up Marty Valdez. He is the fleet manager. He can speak probably more directly as to the cabin.

Martin Valdez: Morning.

Mayor: You're going to have to talk right into that mic in order to be heard. We can hear you in the chamber, but people who are watching or listening can't unless you're speaking. So, welcome. Thank you for being here.

Martin Valdez: Morning. My name is Martin Valdez. I just recently stepped into the vacated position of Lawrence Garcia, and I just found out about this situation two days ago. So, I have a firm answer for you, but I have reached out to all my third-party facilities because looking for the best solution, the best that's going to last a good long time, be worth our money. It's going to take, like this ask is something like should be done at the at the facility at where they're manufactured. So, right now, we're looking at the best solution because there's going to be some cutting and hole drilling into these units to facilitate a supplemental AC system.

Deborah Trill: And I'm sorry, I'm sorry. Councilor Cassid, just to let you know, all the air conditioners in the vehicles are working. We did that. We monitored the pre and post trips, and the air conditioners are working. What the union is asking for is supplemental air conditioning because the engine block sits in the cab of the truck, which when these trucks are running 7, 8, 9 hours, it's going to get hot in there. So, after evaluating the pre and post trips, we realized that one truck doesn't have air conditioning. We have some backup vehicles that are being serviced right now that will have air conditioning, but they're asking for supplemental air conditioning is what it is, is what I understand.

Councilor Cassid: Okay, that that's my understanding as well. So, it sounds like this is something that you are you are talking to the manufacturers about this issue with heat in the cab.

Martin Valdez: And they have to understand too, the cabs are pretty small, you know, and for us to put supplemental, we don't want just air conditioners sitting on a passenger seat, you know, they're going to have to be bolted to the top and at that, you know, top of the not top of the line, but we were quoting them just recently, and we're looking anywhere just $3,000 for the base unit for supplemental.

Councilor Cassid: Okay, that doesn't include the installation or anything like that. Okay, thank you. I I appreciate it. And thank you for looking into this, and we do, we definitely want our staff to be comfortable. And again, as long as we're buying new trucks, I don't know if the technology has improved. And if it hasn't, it'd be great to to let the manufacturers know that this is an issue, and we can hopefully work with them as well.

Martin Valdez: Good time because out of respect new trucks, we can we can have them look into that where it's done properly and and not degrading the unit.

Councilor Cassid: Yeah, exactly. Yeah, thank you. I I appreciate that. It's definitely better coming from a manufacturer, I'd imagine, as opposed to us.

Mayor: Councilor, while you're looking at your list of questions, can I just, so are these trash and recycling or or one or the other or both?

Martin Valdez: Both. Both. Okay. We're going to try to accommodate all all the units. We just want to find because they're all different like like you're stating, best approach because of the the debris and the liquid waste that might fall on these units and stuff. We want to, you know, make sure it's going to injure all that.

Mayor: Right. Do they make electric versions of either of these things?

Martin Valdez: They do.

Mayor: But I imagine, I mean, I know that's a capital cost that they do, but more durable units are tied into the vehicle's electric, but I'm just curious where the engine is on an electrical version in terms of and and how on an electrical unit.

Yeah. Oh, that I've never seen. I haven't either. I know they're making electric school buses, but I didn't know if that it's risen to this level yet. We had plans once the City of Albuquerque purchased one or two. We were going to go and look at them and see how they, you know, how they keep up on the road. Yeah. No, it's a that's a whole different kettle of fish. Just curious.

All right. Back to you, Councilor Casset. Thanks for letting me anytime. So, the last three fiscal years, we had some expenditures out of the Community Development Fund, it looks like. And then we don't have that proposed this year, but I'm curious what it was. I don't think this is you guys. Any fine. Thank you. I appreciate it. But I'm curious what this was. It, you know, it seemed to get chopped by $10,000, give or take $1,000, every single year. And so where was this and why is it not there anymore?

Mayor: Councilor Casset, can you point me to where you're seeing this?

Absolutely. Budget book page 90. When we're looking at the last little graph summary by fund, it is the second line. We have Resource Conservation, then Community Development Fund, and then we're I'm looking at the actual expenditures from FY23, FY24, and FY25. And then it's gone now for FY26. This might be an Andy question. I see him dashing down the Oh, Chris. It is. Good question.

Chris, if you'd just introduce yourself again.

Yeah. Chris Parker, Senior Budget Analyst. Thank you for the question. So that grant is not included in this year's budget initially. There's several reasons for that, but we're going to add that when we actually have a better understanding of what exactly the grant is and also to allow it to have project codes to track the funding. So it is a grant that we that you all applied for and received.

Yeah, that's a Santa Fe the Beautiful. That's Keep Santa Fe Beautiful. Yeah. Got it. So that's going to be introduced in probably not through you guys, but probably it's going to be approved by Mark, sorry, City Manager. And that's going to happen during the year. So it's still Where where does this grant come from though? Is it is it a grant that we apply for? Is this the fundraising that they do? Where where are the dollars coming from?

It's been informed that it comes from the New Mexico Tourism Department.

Oh, that's Well, thank you, New Mexico Tourism Department. And so is this maybe this is for Director Branch. Is this a guaranteed? We receive it every year. Is this something that you apply for annually and then we hopefully receive? Welcome, Director Branch. If you just introduce yourself.

Thank you. My name is Carol Branch, and I'm the Environmental Services Program Manager as well as the Director of the nonprofit Keep Santa Fe Beautiful. Madame Chair and Councilor Casset, as an affiliate of Keep America Beautiful, we're pretty much guaranteed to get some of this grant money. Every year it seems that there are more affiliates, so the funding does go down. And so we've gone from $35,000 was what we would normally get to this last year, I think we were granted $16,000. It looks like $12,000 here. Did you have some that gets to that we can carry over or $12,000 was expended? That's what's been spent. Okay. So we still have another four.

Well, as long as I have you here then, you know, the work we've been talking a lot about beautification of Santa Fe, and this has been a hot topic recently as you are well aware. And you all do a lot, and you're completely funded by grants or by philanthropy. Correct.

That is correct.

So what is what does that look like as these as these grants from New Mexico Tourism have come down? You know, what have you all been doing in order to try to make up that revenue? Are there other grants that we can look for and apply for? Find support for application for that, Councilor Casset.

So really what what the majority of the grant that I apply for is for the environmental services side for cleanup supplies, t-shirts, things like that. And then the nonprofit raises money for whatever they have committed to or whatever they'd like to, which is more mostly beautification projects.

Right. So some of those beautiful murals that you all have done and the benches and you did some work over at MLK Park off of Rodeo. You guys have done some really, really incredible work. Really want to recognize that. And again, you know, you're we don't fund you from any of the city funds at all. This is all grant and philanthropic driven. So, thank you for the work that you do because I know there's also a lot of energy that goes into finding that money to do this work. And really, really truly appreciate it, and I know that my constituents have appreciated. I get comments on the trees a lot. So thank you for that. Am I at 10?

You are. We'll come back. And you stole some of my minutes.

I did. I gave you credit for the for the stolen minutes. Thought I tried. All right. Thank you so much. Well, I'll talk to you guys again in a bit. Councilor Lee Garcia, questions.

Yeah, thank you, Madam Chair. I guess I'll start off with Director Roach and walk me through or Interim Director Roach, the kind of going through your presentation in regards to explaining how each enterprise fund, your income, what you're bringing to the table, how it what your expenses and revenues are, what your costs are for each department, then how that funnels back into the utilities department in regards to how you operate there. Can you kind of go over that again, please?

Sure, Madam Chair, Councilor Garcia, thanks for the question. So we do have revenues, and those are mostly rate-based revenues, but there are also development-related revenues that that come into the enterprise funds. And those revenues, you know, for for water, as you see the prediction this year based on previous years is over $40 million of revenues. And that the budget, so the operations budget for water is $38 million, but typically we don't spend the full budget due to vacancies or or or other things. And so the last audited spend number we have is from FY24 that we actually spent $35 million. So, if we're in that range, $35 to $38 million spend, $41 million of revenue, we have a couple million extra, and that that goes into a cash reserve in the case of water. And this is true for the other two enterprise funds as well. And those cash reserves will slowly build up unless we use them for capital spending. And we've gotten to the point now where we have infrastructure needs in both water and wastewater that those cash reserves on their own can't fund. And so we seek a variety of ways to fund those needs, including outside grants and low-interest loans. And ultimately have come to the conclusion that these are necessary improvements. We don't have a choice, and so we need to find additional revenue to support that.

Does and let's see. So that was for water specifically, and let me know if I'm not answering your question, and I can redirect a little bit. On the wastewater side of things, we're predicting revenues of of $21 million this fiscal year. Rate-based revenues largely, and our spending actual spending for the last audited time we have it is $15 million. So again, there's there's a cushion. And there's $6 million of extra funds that could go into the to the cash balance, but we're talking about hundreds of millions of dollars of capital improvement needs there. So adding $4 to $5 million a year to the cash reserves is not going to cover a hundred to $200 million of infrastructure improvement needs at the wastewater treatment plant. On the environmental services side of things, we have projected revenues of $22 million, and the last sort of audited spending number we have is $16 million. So, there's $6 million of extra there that goes into cash reserves, but again, that is used to fund capital spending. In the case of ESD, we have sufficient cash reserves to fund our near-term capital needs. And so a rate increase for ESD is not on the table this year.

Thank you. And so you did say though that a lot of the your excess money gets used to fund also in utilities utility billing. Is that correct?

That's correct. So in the case of water, for example, there's if we look at this pie chart, we've split out the the utility billing. So approximately 19% of that budget is going to support all the administrative and billing services that that that the utility billing division provides for water and the other enterprise funds. So, all three enterprise funds pay for those services internally.

You I guess where I'm headed with this is is that you know, especially when we're coming potentially to the citizens of Santa Fe for a rate increase. I think many of them are going to ask, well, what are you doing with the current money? Why haven't we been upgrading and and fixing? Because obviously the wastewater treatment plant has been a it's been in the news. I mean, we're we're now compliant with E. coli. Are we compliant with PIFAs? I mean, all of these things for the future, and I get it that the a new plant or redoing the new plant, we've already the old plant, we've already had many discussions over that, but how are we going forward with future projections and how we're going to address this? Because, you know, times are clicking on on on on specifically that area, and I guess that's where I'm focusing at right now.

Okay. And I'll let Director Doer jump in if he wants to, but but I will say that that their team is is doing an amazing job of has done an amazing job of bringing that plant into compliance and has experts on site helping us assure that we can stay in compliance there. But I think that there were deferred maintenance and deferred infrastructure needs there that that weren't addressed. And now we're taking a good look, and we're we're going to we're going to address them. And so that's why the the estimated capital needs that we expect for that plant are on the order of $180 million. And that's in a sense, it's it's a bill that's past due. That plant's been in operation since 1964, and and you know, Director Doer can speak to to it better than I can, but there are components of that plant that should have been updated and rehabilitated, you know, years ago, and we should have, you know, and and now we're beginning the process of more formally keeping up with the infrastructure needs at that plant so that we can maintain the compliance. That's is essentially our our mission, and and we understand is important to our community and and all the downstream communities.

Thank you. Did you want to speak to that at all, Director Doer?

Mike Doer, Director of Wastewater. So, one of the big issues I'm hearing what you're asking. I guess the hard part is to explain we're not just stockpiling money and putting it away. We have been using it periodically. The issues that we have now to raise up and even talking the $180 million. If we're going the direction we are now and the builds and working through if we end up taking say like the low-interest loan or something of that nature, the amount that we're saving after our from our revenues, it would cover the payment back for that grant or that loan. So, if you if you have the money there to pay those amounts, that's great, but without a rate increase, you end up not having the amount to actually pay the loan that would come in.

Okay. Thank you. I I guess I'm just wanting to to make certain that as we move forward with with wastewater and and and all the public utilities is that we are providing a service to the community.

We obviously are looking at it as they are our customers. They're paying for a service. And us as a municipality or a city or a division, obviously we're collecting more than what our expenses are by this presentation, and we're utilizing those funds for other areas that don't necessarily bring in income. And so all of our excess, in my opinion, should be going towards the areas that we're most efficient in. And right now, the wastewater treatment seems to be where we need a lot of attention. Obviously, all the other divisions are very, very important to the city.

I keep on going back to my IT department. Nobody cares how the printer works; they just want it to work. People don't understand how their wastewater gets from their house to the treatment plant, and once it's there, it's gone. Well, somebody else has got to deal with it, and we have to be very responsible for that. And so, picking up the trash, these are all the jobs that are very difficult in such a large spectrum of things. And we do have to look at it operationally as how do we operate and look at it from, as a government, we're not in it to make money, but it's got to be solvent. And we also have to look to the future of how we're going to sustain these departments. And so, I think probably my time is getting near the end, so I will yield my questioning for now, but I appreciate the input. Thank you, City Manager.

Scott, did you want to jump in here?

Just a little. Madam Chair, Councilor, just a little bit. One of the difficulties in doing an overview presentation is that we don't really dwell down into the nitty-gritty. And certainly, as we're looking at such issues as rate increases, we're going to have to demonstrate the whole detail to people. As I look at the numbers that Director Roach presented for each of the divisions or each of the enterprise funds, it actually overstates the amount of the surplus, so to speak, that we have because he's comparing the last audited results, which didn't include any of the compensation increases, for instance. So the actual amount is smaller. And then secondly, we're spending that as we go, not only for the funding of the wastewater treatment plant, but all the other parts of the system that have to be upgraded and repaired. And so the funding gets spent on an active basis in a lot of different ways. And then there are transfers out of these enterprise funds or services that are provided by the administrative division and even other departments of the city that provide services to the enterprise funds. So there's a lot there for people to understand. I tried in one of my cities, I tried charting all of this with all of the arrows for all the transfers, and my city council there started referring to it as the spaghetti chart because there were so many lines running to so many different areas. But all of these are the kinds of details that we have to go through anytime we want to talk about rate increases. So this is coming up very soon. You're going to see a lot of this detail provided, and hopefully it'll be understandable.

Yeah. And I just would, I think we have a presentation at tonight's governing body meeting to begin to drill down on this very deeply. I don't want there to be any impression that somehow we are not being responsible or, I think the one thing we haven't done, as I've said a few days ago, is keep up with the deferred maintenance that is required for these very important facilities. And so it's all of this is coming home to roost. And we also haven't raised, and you'll see this tonight in tonight's presentation, we also haven't raised rates in a long time. And I guess what I would like, Director Oster, and I'm putting you on the spot, but we also have bond ratings that are dependent on, you know, our bond rating level is dependent on our reserves and making sure that they're healthy to cover the functioning of these large assets that, as I think Councilor Garcia points out, are very critical to the city's functioning. And they're trash, they're wastewater, they're your ability to turn on the faucet and have water come out of it. So these are critical, critical infrastructure needs. And Director Oster, if you could just touch briefly on the bonding issue. And again, these are, I think to the City Manager's point, these are conversations that, you know, we can just scratch the surface here today. But I don't want to leave the impression somehow that we're not being very careful with the amount of money we have and how it's spent. If anything, we're not keeping up with the infrastructure needs and bringing in the revenue we need to cover it. And so, with that, Director Oster, could you just touch on the bonding piece of this?

Certainly, Madam Chair. Absolutely. That's a very good point. So we do have, we have debt in these enterprise funds, and it is rated and reviewed by S&P and Fitch ratings. And so when we went through the rating review process this fall with Fitch, there was a lot of concern about the imbalance between the revenues that were coming in and the infrastructure needs of the utilities. And there was a lot of focus on that. The bonding agencies use a variety of different metrics to evaluate an organization that has debt, and that's how they determine what rating to provide. There is some public methodology, and then some of it they don't tell us. So we have a general idea of what they're looking at. But things that are very important to them are the relationship between cash on hand to the debt payments. And as we expend the cash balances of these funds to meet infrastructure needs, those numbers are looking less favorable. But with the proposed rate increases that will be discussed later today, that will help bring that into balance. So I think what I would say in regards to bond ratings and debt in general are that when we borrow, we agree to certain conditions, covenants, requirements around minimum cash balances, days cash on hand, you know, there's quite a few different things that we agree to. And then there are things that indicate that we're better than just the minimum. So we have to meet the covenants. We have to meet what we agreed to when we borrowed funds. And then we also want to do better than that. And historically, the utilities have done better, and the ratings are very good. We have a AAA rating in water and a AA+ rating in wastewater, which are great. And we're vigorously defending those ratings. We want to maintain those ratings. And in order to do that, we need to address that imbalance that the rating agencies noticed and that we know is there as well between financing the long-term capital needs of the utilities and the revenues that are coming in today.

Thank you. And just one other question, Director Roach, do we have, there are reserve requirements, right, that are dictated maybe by state law, or by us, or who, or by the bonding agency, or who, somebody clarify that.

Madam Chair, with regard to the debt, there are requirements both in the covenants for specific outstanding debt about minimum levels of cash reserves. And then when the rating agency is reviewing us, they have targets for certain ratings. So in order to retain that double A or AAA rating, you have to have a ratio that's at or above a certain level.

And Madam Chair, I would just add to that that in the last couple of years internally, we have dropped our cash on hand requirement from 360 days to 270 days, partially as a way to try and access some of that cash as we invest in infrastructure. And I think sort of summarizing a lot of these comments, and I may not have done a good job of it, the true cost of running a water utility and a wastewater utility is more than the operating budget. It's operating and capital, and we need to pay the true cost for capital expenses, and at the moment we don't quite have, we don't have the rates to support that.

Yeah. And we'll be, we'll be talking more about that. Director Oster.

Thank you. If I could add that in the last rating review cycle, we actually had concerns from the rating agency about exactly what Director Roach just said, which was that the deferred maintenance and the lack of investment in capital improvements was concerning to them as well, right? So they, you know, they want us to be investing in our infrastructure in a sustainable way. And they want us to do it in a way that we can afford, right? And again, this, I said it a few days ago, the city has not been keeping up with deferred maintenance for decades. This is why we're in the situation we are. This is a prime, these, these funds, these assets are prime example of what I've been, what I was speaking about a couple days ago. So, and Director Roach, I think what I was thinking is that you, the operations, it's 300, what did you say? 365 days. You have to, you have to basically, this is to, this is a reliability standard, right, to make sure that you can provide these services, that you have the, the cushion, I guess.

Madam Chair, I think you're referring to the cash reserve. We maintain 270 days of operating budget on hand as a cash reserve.

Yeah. Yeah. That, that's what I was thinking of. Mayor, I think you wanted to weigh in here as well.

Yeah. I think obviously we're going to deal with or have an opportunity to talk about this at great length tonight with the presentation that'll be in front of us, but it's a nice opportunity to do a little bit of a pregame warm-up, if you will. A couple, a couple of things I think are worth noting. Madam Chair, you've been talking about the past a little bit, what we have or haven't done historically, but I think there's another time frame that the budget doesn't capture. The budget is, as I've said about other issues, a snapshot, not a movie, not a motion picture. What this budget is about and what we'll learn tonight, the increase in rates are about is the future. We're really trying to invest today's residents' dollars for future residents' wastewater and water capabilities and to make sure that we don't run into a problem in the future as new generations step up to take on the responsibility either of being a city council member or a responsible resident of Santa Fe, that the equipment and the output of that equipment is in the best possible working order that we can provide. So we're, we are making challenges today perhaps in terms of rate increases with the promise of future benefits for residents to come for decades. The other thing that's worth pointing out, while we have had findings about not being in compliance, I think it'd be worthwhile, I don't know, Mike, whether you or Jesse want to talk about it, but you all have been doing yeoman work in terms of investments that have brought us into compliance, and the documentation is very compelling about the work and the dollars that have been spent since you all were first made aware of the need for these remedial activities. And you've been filing, I believe, quarterly or more frequent reports with the authorities at the different governmental levels to document exactly how many millions of dollars the city has put toward making improvements in these infrastructure workings. That is really what we're doing in the short term. And when it was first brought to the governing body, you all characterized it then as this is work we have to do right now.

This is not optional. It is imperative that we have an action agenda to address the immediate need. And the governing body supported it. We all voted for it. We acknowledged that it was expensive but needed to happen. Now what we're talking about is the work to go forward so that for generations to come the infrastructure will be there, so that we will not only be in compliance, but our residents will have the certitude that the city government is making wise capital investments for their benefit.

I think you said $36 a year is the average cost, an increase of $3 a month to their bill. I mean, we're talking about a shared, small, incremental increase for a huge capital benefit for the future that will make sure that the city's needs are met and the residents' needs are met, and that they can feel like the things they care most about, which is water quality and compliance with regulations, will be in place.

But I don't know if you have at your fingertips the dollar amount that's already been spent, but it's non-trivial the amount of money you all have put forward on behalf of making sure that in the short term there was an immediate action agenda and we weren't leaving anything to chance. Maybe if you don't have it now, you could share that information with not only the Finance Committee. I think everybody on the governing body would like to know that as we take up this presentation tonight.

Mr. Mayor: Thank you. That's an excellent point, and we should have that number on hand. I think it's in the range of tens of millions of dollars, $8 to $12 million, somewhere in that range that has been spent. I've recently become interim director and have been brought up to speed on a little bit of the work that's been done out there in the last six months to a year. And it's impressive the things that are being brought to bear to ensure that we stay in compliance while we figure out what the long-term solution looks like.

And I think you also recently were the beneficiary of a free evaluation done by an external consultant. And I think sharing that document as well with members of the governing body, again, as we prepare for this conversation tonight and beyond tonight, the individual who went out and did a site visit came back with really a rave review of all the work that has been done, that you all have done, and the work that you've done to address the immediate, short-term critical needs, as well as speaking to some of the things that you were able to address that needed to be taken on sooner rather than waiting for the rate increase to take place. I think that document also ought to go to the members of the governing body because it's a real testimonial from a third party, an outside individual who wasn't even compensated by the city for their work in giving an evaluation, and as I said, basically rave reviews for all the work that you all have been doing. So please share that as well. Maybe the city manager can do that. We can share both of those things with the governing body.

Thank you. And I want to thank Councilor Lee Garcia for getting this conversation going. I think it is an important one. It's the beginning of a number of opportunities we'll have to talk about it. And I, if you have a follow-up or it's an opportunity to respond, and I think that a couple of questions. We're now at 26 minutes in this little conversation, which obviously it's something that we definitely need to address. And I guess from my perspective, what I would like to just notate in current and future budgets is how do we incorporate looking at all the angles, not just rate increases, which I know will be a part of it, but through an enterprise fund and which departments? Obviously, you are solvent in each department. There's a continual maintenance and upgrade cost of doing business for what we're doing, whether it's trucks, whether it's personnel, whether it's upgrading the plant, a new plant, and all that. And how do we incorporate into the budgets, either now or in the future, that cost of continuing maintenance and or future upgrades? And that's just my main, my main, and I think that's probably a question for Director Roach. And I think the formal asset management plan that you referenced at the beginning of your presentation is what you'll be using quite a bit to address the concerns that Councilor Lee Garcia is bringing up.

Madam Chair: Councilor Garcia, that's exactly right. We need a formal asset management program so that we're not just responding to, for example, our dams being downgraded, and we respond and we fix them. And we do, in the Water Division, there is an asset management plan that was developed, but it was a static desktop study, and it said, "What's the age of your infrastructure? What's the criticality of your infrastructure?" And you weigh what's the likelihood of failure versus the consequence of failure. And if something, if the consequence of failure is high and the likelihood of failure is high, those are the things you prioritize. Of course, putting that into a living system that is assessing the condition of the assets as you move forward and having a spend plan that goes out 5, 10, 20, 50 years of, "This is when we have to think about replacing that," is the intent of this asset management program that we're standing up. And we expect, and out of the desktop study came this number: on average, we should be spending $13 million a year in the Water Division on maintaining our infrastructure. We've spent $5 million a year. We haven't been close to that. And that asset management program will be how we build into really reflecting the true costs of running the utility at a level of service that everybody wants into the rate structure.

Councilor Lee Garcia: Okay. Thank you, Director Roach.

Director Oster: Thank you, Madam Chair. If I could add just a little different angle than what Director Roach just talked about, but from my perspective as far as financing for infrastructure needs, I wanted to share that I think the Utilities Department has done an excellent job of looking at alternative methods to finance some of these very substantial expenditures. The Utilities Department applies every year with the State Water Trust Board, and a good portion of the work that's being done at Nichols Dam right now is being funded through NMFA through a Water Trust Board award, which is a combination of grant and loan. And the loan piece of it is at an interest rate that's substantially below market, several percentage points below what we would be able to get on our own if we were to issue GRT-backed bonds, for example. Another good example is the New Mexico Environment Department financing through the Clean Water State Revolving Loan Fund. That is opening up access to $151 million for capital improvements across the three utilities at a rate of 0.01%, which is unheard of. I mean, it's incredibly low. It's almost no interest.

Well, and the possibility that some of it might become a grant at some point. So, that loan is really, really important, and the governing body did, I believe, unanimously support the approval of that loan. So, that's a great example. Thank you. Absolutely, Madam Chair. So, I just wanted to chime in and say that from my perspective, the Utilities Department is doing a really good job of identifying methods at low or no cost to finance some of our infrastructure needs across the three utilities. We also have substantial requests for all three utilities on our ICIP, our Infrastructure Capital Improvement Plan, which is our request to the legislature. So, from my perspective, to the extent that we can get help from others to pay for these or finance these needs at a very low cost, we are absolutely doing that. So, without that effort, we would need much larger rate increases.

Yeah, that's a great point. Thank you. I think again, this is the beginning of this conversation. We'll be hearing a presentation in greater depth tonight. This bill that's being introduced tonight will move through committees. It's an important conversation. There's a lot of information and understanding that needs to be developed around what's happening and why. And so I think this has been a good use of time for us, even if it's 26 minutes or more. Okay. Back to you, Councilor Lindell.

Chair: We throw a lot of numbers around here, and I just think that when I hear us talking about $150 million, and then I hear us talking about $3,000 to maybe put an auxiliary air conditioner in the cab of a vehicle, it's like, can we please get those air conditioners and get them installed? It's minimal money of the kind of money that we're talking about here. Let's talk about the big money. So I think that this division in the last several years has really, very, very, very much professionalized and given us a much clearer picture of what our future is. I think previously we were kind of getting information that I don't know if it was complete, but it seemed like we were kind of kicking the can down the road, and then all of a sudden we started hearing these really big numbers, and that they're a little bit scary.

And I have to say, I want to give kudos to Councilor Romero Worth. I've laughed to myself a lot of times and said, "I don't really know very much about the water policy and Buckman and all of those things." And I'll tell you why: because Carol does, and I didn't need to because I trusted her about it. But somebody's going to need to step up and learn a whole lot about water because Councilor Romero Worth is not going to be here to direct that in the future, and she's been terrific at it. But I think it's a major, major focus, and it's going to need to be a major, major focus of this council. I mean, the amounts of money that we're talking about are staggering. And I think that we have in the past probably not had the information because I don't think that we would have ignored it. But I think in the last two or three years, between Dr. Roach and John Dri, we got a lot more information about what the reality of this situation is, and it needs a lot of focus, and this team does constant, constant work on it, and it's going to be coming more and more and more to the forefront.

I love it when I turn the faucet on and water comes out. It, I can't even tell you how great that is for me. I sometimes even say it when I'm there. I go, "Look, water! This is terrific." You know, have your water turned off for three or four days, and it'll give you a deep appreciation of it. I just, I think that we have the right team right now, and they're doing the hard work, and we need to be extremely supportive of this because we can't do without water. Another part of this is the billing. I think we're on the right track with that at this point. It's been such a pain point for so long that I wish I was going to be here to see the end of that story, but I don't think I will be. It's been long and painful. But I think we're on the right track now. So really, the other thing, I, you know, also having your garbage picked up. I love that. That really works for me. Those guys, correct me if I'm wrong, Deborah, but they have like, each route has like 700 stops a day on it. It's like, how do you do that and remain cheerful and wave at us? And it's terrific.

Those guys do an incredible job. Whenever we get the call or the constituent complaint of, "Well, my garbage didn't get picked up," it's always, "Well, what time did you get it out there?" Well, it was out there. Well, we have a timestamp on it, don't we, Deborah? And it wasn't out there. So, I think the amount of work that this group does, I don't know how you know what you know because a lot of it is so highly technical and hard to know that I'm really respectful of this branch. The work you do with not a lot of resources, it makes a tremendous difference to every one of us. So, I don't have any really hard questions. I just want to acknowledge that the future's tough with this division. It's very, very tough, and providing as much resource as we can is imperative.

I don't want to be the skunk at the picnic again, but we like shiny, nice, fun, new objects. We've got a lot of things to take care of that are deferred maintenance, that are situations that have been building for years and years and years. So, I'm asking the council and the public to think about how we use our resources for taking care of what we have and not always going for the new shiny object. So, that's all I have. I just have a mammoth thank you to this entire division. I think that you're underappreciated because, man, turning on the water, that works. Thank you.

Madam Chair, Councilor Lindell, thank you for all those compliments. We certainly stand on the shoulders of giants, of people before us for the last hundred years and more. And the staff is incredible at what they do. So, thank you for that. And don't get me started on what it'll mean to us to lose a champion that we've had in Council Meth. We know it. Thank you all.

We haven't talked about Buckman at all. Is the Buckman budget in these numbers, or I know some years we've had Buckman's budget brought out or presented separately. Not sure what we're doing this year.

Thank you, Madam Chair. If I could get my slides back up, I'll show the water division budget, just showing the Buckman Direct Diversion budget is paid for by more than just the city, of course. The city pays the lion's share because we receive the lion's share of the benefit there. But the county obviously also pays a significant portion, and Los Alamos County as well. In this recommended budget for the water division, you can see the Buckman Direct Diversion water. It's labeled as a $7.2 million budget request for this fiscal year, which represents 9%... Oh, no, sorry, that's debt service. The colors are different. I apologize. The BDD on the right side is the blue, the 10%. Is it, or is it the... Sorry, it's the 19%. Yeah, that's what I was thinking. So, the BDD water represents 19% of the water division budget, and then that's probably about 60 to 70% of the Buckman Direct Diversion budget, the rest of it being covered by other partners. So, it does show up in here, and it is a significant chunk.

Yeah, and I guess to your point, that facility is governed by a board made up of the county, the city, and Los Alamos, and those are the partners you were speaking of, and they all contribute to that overall budget. So, we are just approving the portion that we provide to that facility in this budget.

Madam Chair, that's correct. And that number lines up with their proposed budget that has all the detail in it and will be also reviewed at some point by the governing body, is my understanding.

Okay. Or by the, well, it's by the board. Yeah, it's already been reviewed by the board, and then it comes back, it goes back to the city and county for approval at those two levels. And then the one thing it didn't contain when it was presented to the board was the increases for staff, which of course are city employees, which we now know to be 3%. So, it'll go back to the board to be approved now that, well, once the city and county approve, and now that we have that other number. I don't know. Mr. Hopkins, did you want to add anything? I see you guys.

Thank you, Madam Chair. I was just going to point out to you, in the handout we gave you on Monday, the other operating costs by department, on page eight of that, on the second line of that spreadsheet, you will see a line that says "Underwater BDD Source of Supply $7.2 million." That represents the figure that Jesse was talking about, the city's contribution to BDD. That does not include the county's or Los Alamos' contributions or the entire BDD budget. That is just the city's, the city water utility's share of those costs. It's my understanding we usually get the BDD's full budget sometime around late May, early June, and then we put it in in the first quarter. The same with SWAM because they have a separate budget process. You don't tend to see them in our budget book. We will be bringing a BAR forward in the first quarter of the year with the entire BDD budget in full, as well as the SWAM budget.

Okay. Thank you. I just think it's important for everybody to understand that budget, those, that facility, and then SAMA, of course, is another example of a regional facility, one that we do in cooperation with the county. Let's see. I think I still have a few more minutes. Can you paint the picture a little bit more on the sustainability division? I think it's called out as a priority in the mayor's letter. I think this is, there's some interesting synergies and work that could be done with this concerted effort. Maybe just give a little bit more detail on that.

Madam Chair, thanks for the question. And Christine Chavez, who's the head of the water conservation section, is here to, she may want to expand on my response, but I think generally, under the leadership of the mayor, and we have, and Christine as well, have seen some synergies between water conservation and sustainability, both in terms of sort of the overall goal of using less of a precious resource, whether it be water, whether it be energy, whether it be landfill space. Those things are synergistic, and the sort of methods that each of those groups uses to reach out to the community and to provide services to, within the department or within the city, there's a lot of synergy there. And so the idea is to combine the water conservation efforts and the sustainability efforts, and perhaps several of the other kind of messaging-focused efforts together into a single group within the department that would have a little bit of a wider, a larger scope. It's hard with big things like sustainability to figure out how to have the focus necessary to achieve something when it can be something, when sustainability can be something different to everybody. But the idea is to give, put that group together and try and align those synergies in a way that we can try and provide services across the department and potentially into other departments within the city. Christine, do you want to add anything to that?

Yeah. I mean, I do think it's hard to know where to draw the line and where to, you know, compartmentalize because it's such a broad topic. And I see potentially the city manager wanting to weigh in, and I know you have experience with other communities in this area. So, it's really a coming attraction because Christine's working on a report right now that will be presented to the mayor, and then we'll be processing that forward. But the idea, of course, is not necessarily to bring everybody into one department, but to do cross-departmental programming. So that, you know, if you think about what they do in public works, there's many of their functions that are environmental in focus or conservation. If you look at land use planning, a great deal of what they do is related. So, and in parks, of course. So, we have, we have real opportunity, we think, to put programmatically all of these functions into such a way that we can educate the public and ourselves and do a better job for the community, and it seems to be something that this community stands for. So, it just seems like a natural, and I think the mayor is excited to bring that forward.

Thank you. I appreciate that. So, I think this is an exciting development and something I think we all should keep an eye on. I know I got a notice today about "What's Up With Water." I know that you all are just starting the advertising on that. Maybe if you could touch on that just because I think the community is concerned about the dry winter we've had. We had conversations yesterday about the fire risk, and, you know, the water coming out of the faucet, of course, I think we all enjoy that, and there's a lot of work that goes on to make sure that we're able to do that and do a checkup on where we are. And maybe Director Roach, you can color that in a little bit more.

Madam Chair, thank you. I'm going to, we'll have to consider a new tagline for our utilities department. When I turn on the water and when I turn on the faucet and water comes out, that works for me. I like that. The "What's Up With Water," thanks for the opportunity to talk about that for a minute. Every year in the spring, we look at what happened in the previous year from a water resources and infrastructure and everything that happened in the division, and we try and roll that up into a nice little story, and we put that in our annual report. And in addition, by April, by the beginning of April, we know what the snowpack we're going to have to work with is. And that influences our overall sort of plan for the year. And so, it's a good time to put those two things together and go out to the community with the opportunity to come listen to what we did last year, what we're planning to do this year, what we're doing for the next several years or decades. There's always a lot of interest amongst the community. We're lucky to live in a place where there are a lot of folks who when they turn on the faucet and the water comes out, they think, "Oh, wow. This is where did this come from?" And so, we're lucky to have a pretty engaged population, and this is our opportunity to sort of get in front of them and give an overview and then let them ask questions. And so, the way that that will work is we will give a sort of executive summary of it to the governing body on May 14th, 15th. And then we'll provide two longer webinars that are scheduled. We've set aside an hour and a half of time to go through a more in-depth presentation. Usually takes 30 to 40 minutes to sort of talk through all the things that we're working on, and then another, you know, 30, 40, 45 minutes to respond to questions. And the questions are often lively, often very informed, and very interesting. And so, we have information, including the link to those, on the website, which you can get to at SantaFeNM.gov. And we encourage everyone to come. There'll be one at 9:00 a.m. on the 16th, Thursday. That's right. 16th. I was right. Okay. So, governing body on the 14th, executive summary sort of. And then on the 15th, there'll be two webinars, one at 9:00 a.m. and one at 6:00 p.m. And links to those webinars are available on the website, SantaFeNM.gov.

Okay. Thank you. My time is up. I'm going back, Councilor Cassid, and we can, I don't know what you guys want to arm wrestle for it, either one. Okay, I'll start. I'll try to be quick. Let me find my questions.

All right, so just a couple things. I was looking at the PowerPoint numbers, and the budget book numbers look different to me, and I'm hoping to get some information here. First, it says the predicted annual revenues for FY26 is $83.8 million. Then we talked about revenues in excess of the operations budget being used for capital improvement needs. But right now, in the utilities proposed budget, we're at $100.7 million. What am I missing in this discrepancy?

Mayor: Counselor Casset, one important thing here is that we're looking at the operations budget for not just the three enterprise funds. We're looking at the operations budget for the billing division, which is entirely supported by lines in the enterprise funds. So, you end up with a double counting there. Does that make sense? So, in the water division budget, there could be $5 million for utility billing. So, that's $5 million in expense. And then over in utility billing, they spend that $5 million. And so there's $10 million there of budget, but it's double counted. I think what you're missing is that the entire budget for the utility billing and administrative services division is a double count. It's been entirely accounted for as lines in the enterprise funds.

Okay, so we're fine then. Is that what you're telling me?

Mayor: For each enterprise fund, we do have revenues that we anticipate to be in excess of the operating budget, but again, that's not the true cost of running the utility.

Okay. And then does that also, is that also part of when I was looking at the actual expenditures for the last couple of years, the PowerPoint has $57 million in FY24 and $66 million in FY25, where we have expenditures in the budget book of $74.8 million and $86 million? Is that part of this?

Mayor: Let me catch up. Those numbers should be on page 90 again, on that fun little chart. Now, I do know, I need to know, there's a little bit more. And when I'm looking at this, it says, "Budget spending by enterprise funds." I don't, and here also does have a couple other things in there, and maybe that's the difference. But...

And so are you looking at the actual expenditures or by summary by fund?

Mayor: Yeah, and well, I was just looking at total public utilities. Yeah. Okay. So, is that, is that the difference? The bottom number, the 65 and 74 and 86 and 100. Yeah. Yeah. Yeah, that one. And now that I'm looking at the same thing, will you repeat your question one more time?

Sure. In the PowerPoint, it says, "PUD operations budget spending by enterprise funds, $57 million in FY23 and $66 million in FY24." Oh, that's my, well, they're still off actually, even though I need to circle them back a year because I was looking at, but regardless. So then, that's, yeah, that's what I'm wondering what the difference is. So it's saying that actual expenditures in '23 was $65 million. PowerPoint says $57 million. FY24 says in the budget book $74.8 million. PowerPoint says $66 million. What am I missing?

Mayor: Yes, and again, I think the difference there is the $7 million, the approximately $7 million of actual expenditures by utilities administration.

Okay.

Mayor: In '22-'23 and $7.7 million in '23-'24.

Okay.

Mayor: That PowerPoint is just for the enterprise funds.

Okay. So it is a different, and to avoid that double count. Okay. All right. Thank you for explaining. But then also the summary by fund includes more than the enterprise funds.

Mayor: That's right. Yeah. The big one is that utility. Oh, yeah. So, the administration is double counted, but then there's some addition there that aren't the enterprise funds themselves. Exactly. So, it's, they're different. Okay. Totals. That's correct. And those three funds, the wastewater, water, and environmental services, those should add up to the number that's reported in the PowerPoint.

Okay. So that we were just looking. Okay. All right. Thank you. Appreciate that. I do want to talk about some of the contracts. I know that utility billing has been a big piece. And so I see the $2.5 million for program manager support for UCS billing system and then $1.7 million for system software upgrade. Is this, this is all about the transition, and I know we've had this question multiple times. Is this the Mount, is it Mountain River? Is that the name? Is this the Mountain River contract? Is what am I, what am I looking at here? And can we put the slides up as well?

Mayor: As Nancy, you want to introduce yourself and take that question? And I think the slides might provide some backup information for you.

Nancy Himenez: Nope. Can you hear, can you hear me now? There we go. So, Director Nancy Himenez, public utilities, and it's a long word, public utility administration, billing and customer service division director. The contracts that you're looking at for this current or this coming up fiscal year is the second portion of a two-year contract for our program management, which is IT Connect, for the utility billing upgrade and the advanced system. So the $1.7 million for the advanced system is the second year next fiscal year for the implementation of the upgrade to the system.

Okay. And how much, how much have we, did we spend last fiscal year on this item? So current fiscal year, yeah, I guess current fiscal year, we're still in it. The right ones for IT Connect. Currently, we have spent, so we started with $1.5 million for this fiscal year, and we have $535,000 left. So, right at a million or a little bit less, $970,000.

Okay. Do we think we're going to expend the rest of that for this year?

Nancy Himenez: I don't believe that we'll do the whole $1.5 million since there's only a month and well, two months left. So, we'll ask for the budgeted money that we didn't use to carry back over for next fiscal year at the end of the year when we do our carry forward, if of course, Emily and finance and everybody agree to that. For the advanced contract, so we opened a purchase order for $1.225 million for this fiscal year, and I still have $900,000 left. And the reason that we haven't expended anything is they bill us in chunks. And so after we're done with like the full training of the new system, since it'll be version five, that's when they'll bill me is once all of the training is done. So we opened a large purchase order, but until we meet those milestones, we actually don't pay for the service. So again, that $900,000, if I don't expend it in two months, I will request that that get carried forward for the rest of the contract.

Okay. More year. But will we eventually need that $1.7 million since it sounds like it's chunked out?

Nancy Himenez: Yeah, we definitely will. We have milestones in both of the contracts, in the IT Connect and in the advanced. So once it's met that milestone, we make the payment. And there's so many milestones that when the system is ready to go, the money should be spent.

Okay. All right. Is this, I mean, are we, do we think this fiscal year this will be the end of this saga?

Nancy Himenez: I believe, so both contracts go through October of 2026. So technically a little bit into a third fiscal year, if you will. I've been saying this for as long as I've been in utilities since 2019. Best case, I can tell you is yes. Worst case, I can tell you is, I don't know. Because of course, things happen, things pop up. Again, we've been actually working for a billing system since 2013, seven years before I even became the director. And there's always kind of been a little bit of hurdles and stoppages and issues. Since we have the IT Connect program management, I will tell you that is a huge benefit that has helped so much. I and my employees still have their normal job to do. And so when I'm taken away from my job to do the advanced project, yes, I need to be involved in it obviously. But then it adds more work or more time for me to do the normal job. And now that the program management part has been allowed to kind of come off of my desk and into a contractor's desk, they're on top of it so that they can say, "Nope, we need you here now," or, "Yes, we've handled it and you can continue to do your job." So, yes, I, I keep teasing my staff and everyone and even Jesse that I want this billing system to be finished before I retire. I tell everybody I can leave in September of this year. I will stay until, and now it's on recording, so everybody's going to hold me to it, but I will make sure that this billing system gets up and running and going. There is no alternative at this point. Our system is currently just at its end.

Yeah. Okay. Well, thank you for that. I do appreciate that dedication. I know this, this has been a gauntlet. Similar to kind of some of the conversations we've had about finance around or just and a lot of departments of how we utilize contracts, especially when we do have these big projects that we really, we need assistance with, we need to get them done. After this, is this going to be a situation where we're going to need a contractor to continue to support this or does it really get to come in-house once this, you know, large implementation process and training is completed?

Nancy Himenez: So, twofold. There's always a maintenance agreement that will need to continue with the advanced system. And that maintenance agreement is also, of course, any upgrades, any program things that they do on their side because they've got so many other businesses that have asked for a different kind of billing aspect or a different little quirk or whatever. So there will still be a maintenance every year that will need to be paid for for the advanced system. It will be in the cloud, so there will be that kind of maintenance agreements that we will have to potentially have. The system itself though should be, as myself as an administrator, should be able to do rate changes or anything like that. If we do a structure change, which we'll hear about a little bit later, depending on if that gets approved, then we will have to do what I call minor contracts with the advanced company so that they can restructure or reprogram the system if we say for instance we go to a three-tier system rather than the two-tier that we have now. Those are the things that I can't, me as a programmer, I can't do, or even IT for that matter can't do it. And it's proprietary for Advance, so they would need to, they would need to do that. So, yes, there will be maintenance. I certainly hope not as much maintenance as our current system had needed for the last 26 years.

Right. Yeah. Software companies are very smart in the way that they do this and making sure that we can't do it ourselves.

Mayor: You're at time.

Okay, we can come back, but I'll be quiet now. Do you, are you done on this topic or?

Yeah, but I mean, if you're not done on this topic, I, I think I'm, well, I don't know. Are the accounting contract support services? Is that through you, Nancy, as well?

Nancy Himenez: Yeah, it is. It, it hits the, it's CLA, I believe, is the main company. And we do have a portion of that in our PUB admin line, not so much the billing funds or lines, or the assistance at the end of the year for the audit and year-end close and all of that, all of that stuff.

So is it only $1 million for CLA? Are there, you said that's the bulk of, is there?

Nancy Himenez: Yeah, the $1 million for CLA in particular for utilities. I'm, I'm sure Emily, and not to put you on the spot, but Emily probably has some more in her funding under finance for whatever they do for them.

Yes, thank you, Madam Chair. So, circling back to the discussion from the finance budget hearing, for this year's proposed budget, we tried to match the users of the CLA services with where the expenditures were being accounted for. In the past, the finance department was covering a lot of it. The Public Utilities Department and BDD did start picking up some of those expenditures, and we really appreciate that. So, in addition to the $1 million that's in the Public Utilities admin budget, there's also an allocation in the BDD budget, and then there's some funds in the finance department budget.

In finance, we have $500,000 of recurring general fund, and then we have $500,000 of one-time general fund as well that we plan to propose a BAR to add to that in FY26.

Madam Chair, if I might just add, CLA has provided essential service for us, especially at BDD, also at billing. But it is the sort of contract that we hope to work our way out of.

Well, thank you for predicting my next question. You frequently do that. I appreciate that. I mean, I know that this has obviously been a big conversation, and I will get off my soapbox because I'm out of time. But, you know, again, how we start to move away with some of these contracts that we really needed to do a lot of catch-up because I know there's been a lot of catch-up that fell on your shoulders, and thank you for taking all of the heat from us about that. But, you know, of course, it is dollars. So, how we are able to move off those, really take some of these in-house and use them to supplement as necessary, is something I'm eager to do.

If I could add to that, we do have two additional financial analysts that we've either reclassed or moved around within the billing and PUB section. It's been a little bit hard trying to advertise, not so much advertise, but get a qualified applicant for what we're asking for. And we hear that throughout the whole city, vacant positions are vacant, and it's hard to get anybody and things like that. So, we are trying to help along with getting rid of certain, I shouldn't say getting rid of, but reducing the costs for outside contractors in-house to employees. You just, unfortunately, in some of these positions, you have to find the right fit.

Yeah, and that takes a little while to find the right fit.

Yeah, and it is important because I think there's also this aspect of if we don't have the right people in place, we don't necessarily have somebody who's always on top of watching these things, and so it snowballs. Then we show up here, then we get behind, find a contractor. So, yeah. Exactly. So, I appreciate that that work is being done. Okay, I will stop talking. Thank you.

No worries. We can come back. Councilor Garcia. Oh, I'm sorry. Before we move on, I just wanted to say that the city's audit is 100% dependent on ensuring that the accounting is caught up for Public Utilities, including BDD. So, this continued investment is essential to ensuring that the city stays on track for audits. So, I really appreciate the partnership with Public Utilities, and I 100% agree. We're all trying to work to bring as much of this as possible in-house, but in particular when there's turnover. I think BDD is a great example. We've had turnover in a key position that really manages a lot of the accounting and administrative work for BDD, and having CLA as a resource to step in there, I don't think it's an overstatement to say that that is going to make it possible to get the FY25 audit done on time because we can't finish the city's audit unless we have BDD's final information. So, I don't want to belabor that point, but I just wanted to say that continuing on that trajectory of on-time audits ensures that all aspects of the city's operations and our component units have the tools and the support that they need as well.

Yeah, it's an excellent point. Thanks for flagging that. And just to be clear, BDD is a component unit of the city, and the audits are reliant on each other to be on time, both for BDD and for the city. And it is true that we did lose a critical employee in the financial aspects of running BDD, and that has been a difficult position to fill. And the person we lost was very knowledgeable. So, having CLA fill that gap as we look to fill the position on a permanent basis, couldn't agree more, has to happen. So, thanks for flagging that. Anything else on this topic? Councilor Garcia.

Thank you, Madam Chair. And I know we're getting close to our lunch break hour, but and I don't want to go down another hour. I think we can, I think we're just about worn this out. So, I don't, I mean, go ahead. I mean, if we need to go a little past 12, just not come back, that's fine as far as I'm concerned.

Yeah, I'm okay with that. But so one of the questions I wrote down during your presentation was, what does replacing the infrastructure look like? And that's when you were alluding to our water infrastructure because you said something in regards to $10 million of investment per year. Is that, is that, that's just a ballpark estimate, or is that something that the department has been looking at? And this is going back to Councilor Lindell's comment about, I turn the water on and we take that for granted. And when we have aging infrastructure and we have, you know, what is that going to take? How long will it take to redo all this old infrastructure that time and time again, we're getting alerts that there's a water main that's busted, and the water department is there at 2:00 in the morning in the winter and doing a great job fixing it. But how long can we sustain just chasing after repairs?

Madam Chair, Councilor Garcia, thanks for the question. And I guess to clarify a little bit, I was just trying to give a sense that because we have a billion dollars in assets, even if we were only refreshing 1/100th of them every year, that would be $10 million a year. That's not out of line. So, this was, this is just sort of high level, back of the envelope. That's not out of line with what our asset management plan said when we inventoried all the pipes and all the valves and all the pumps and all the wells and looked at an overall average spend rate of, and this was five years ago, $13 million a year that we should be investing in the system to keep up with it. And we haven't got there yet. And that's where the asset management plan will be the formalized way of getting there. And it's, and again, it's looking at the likelihood of failure and the consequence of failure and putting those two things together so that you can prioritize what you replace and when you replace it. We are doing big stuff now. The Nicholls rehabilitation that's going on right now, that's a $20 million project on a dam that's 80 years old. And we're going to do it again on McClure, which is a dam that's 100 years old. Those were things that needed to be updated about those dams that will give us another 50, 70, 100-year lifetime on most, on big chunks of the, of that infrastructure. There'll be other things that we'll have to look at in order to keep that infrastructure active. On the other hand, we have pipes that went into the ground in the 1800s, and they were so overbuilt that they're in great shape. We have PVC pipes that went in in the ground 20 years ago, or there's certain pipes that went in in certain areas are not good, and so we have to be replacing those actively. So, figuring out what to replace and when and how much to invest is the key to that asset management program, and we expect that the magnitude just for water will be more on the, in the range of $10 to $15 million a year, not the $3 to $5 million a year that we've been investing so far.

Thank you for that response. And, you know, again, to ensure that we are continuing to serve the public in the way that we are required. Obviously, I'm really intrigued to see what future brings with this asset management plan, how that plan incorporates budgeting from our enterprise funds because obviously we are doing that to not throw the load completely on always going out to bond, always going out to trying to find money because I think if we're a little more responsible in our, in our own areas, is that that can contribute to the overall, how do we continue to keep these, these assets in tip-top shape? And I think that's just the point I wanted to make. And always taking a look at the different areas that we, we can, we can address internally and externally. And that's my final comment. Thank you, Madam Chair.

And Madam Chair and Councilor Garcia, if it's okay, I'll just use this opportunity to mention one of our contractual consultants that is the way you need consultants is when they do something that's so niche that you're not going to bring that expertise in-house. And so we do have a financial consultant that helps us every year, and every year, every enterprise fund looks at what is the five-year plan spend and what are the revenue projections. And that's how we end up with this, we need to look at rate increases before we're out of money. So, right now, the water division and the wastewater division have healthy cash reserves, but we're looking for rate increases because we're projecting out, and that's the help we get from these, these, these really, I'll say excellent consultants. And one of those consultants will be available by Zoom tonight to answer specific questions. But we are looking every year five years out, make sure, and that's where the asset management plan and the capital improvement plan, we have a five-year capital improvement plan. This asset management program is going to make that more robust, and that will be incorporating these are the needs we have for the next 5 to 10 years, these are the revenues we expect, this is the gap, or we're okay.

We're going to go past noon because I think we, if we just spend a little bit more time here, we'll be able to wrap this up and then just be done the staff finance committee until governing body later this afternoon. Councilor Cassett, I'm going to go to you. I think you have a few more questions. I have a few more questions, and then if we jog the thinking of anybody else, we'll entertain that. So, I don't think we'll be much longer. Councilor Cassett, that'll be speedy.

Following up on actually that, that line of questioning, Jesse, correct me if I'm wrong. I feel like at one point you and I had a conversation about how many water main breaks we see and how that compares to other communities. And that, that's when actually I remember you mentioned that really old pipe because I said, is it because we're an older community? And but we are actually, obviously we don't want them to happen, and we want to prevent them, but in terms of what we see for similar cities, we're not, we're not terribly unique in this regard. Am I remembering our conversation correctly? I think it's in a couple years.

Madam Chair, Councilor Cassett, yes, and we, there is a metric, and I don't have the numbers off the top of my head, but the number of breaks per mile of distribution line, and we actually are quite favorable compared to industry standards. So, it's something that we try and stay on top of, but we have to this point, at least in compared to other utilities, been able to do that.

Now, one very interesting thing I'll throw in here, just while we're at it, is we've just taken on a contract with a third party. It's on the order of $60,000 or $70,000, but they incorporate AI and machine learning. We give them a bunch of data: soils, previous breaks, materials, age, all those things. They are so confident in their ability to really use that data to hone in on where we should be replacing pipes that they will tell us to withhold the last year of data, and they'll tell us where the pipes actually broke. So, we'll see how good this really is, but it's an incorporation of the sort of cutting-edge technology that's available to us to help us invest the critically important public ratepayer dollars into the right pipes in the right places before they break.

That's really cool. And please let us know if they are able to meet that challenge because that sounds really interesting. But thank you for exploring that because obviously, as Councilor Lindell said, we like it when water comes out of the faucet. It's kind of not a pleasant experience when it's off for 24 hours. And I do really want to thank you and your team. I know that I've had situations with people not getting their water or there being water on the street on Friday night at 8:00 p.m., and I get a very angry call from a constituent. And then, you know, I reach out to you guys, and somebody's there, and they're actually shocked that it's fixed by Friday at midnight. Sometimes it's not that fast, but somebody's working on it. So, I really, you know, you guys are fast. You understand the importance of this, and I really want to give you guys credit for that and thank you.

Thank you. And again, that's our staff that's on call and working through the night in the winter, fixing breaks or helping people with frozen meters, and they do an amazing job. Both water and wastewater on-call folks are tremendous.

They're pretty amazing, that's for sure. One question. I know that we talked a little bit about the way that some calculations were done for this particular budget. And one thing that I do see a lot at Finance Committee is we get a lot of BARs with public utilities. And it's a lot of kind of supplies and equipment. And I know that this past time we looked at the last three years and what that average is. How do you guys feel about this budget being sufficient to meet those needs and not having to—I know it's a lot of work to pull BARs through. It's a lot of reading for us, but that's okay, that's my job. But do you feel that this budget's going to be sufficient in these arenas based on what you've seen in the past? Why do we see so many BARs coming through? Was there more conservative budgeting in the past?

Madam Chair, Councilor Cassett, I think that's a great question, and I think there's a little bit of a push and pull between trying to budget right to the bone and then having a little bit of space available for unexpected things. And I'm personally going to try and be a little bit more active in, "Why do we need a BAR for this? Why didn't we consider this during the budget process?" I think there's also a little bit of a push and pull between, "We are an enterprise fund, and so we collect revenues, and if we need to increase our budget, we can justify that." But when the rest of the city is being asked to keep a flat budget, we also want to try and keep a flat budget. So, in that way, "Well, yeah, we can keep a flat budget, and then we'll BAR for what we need." That's a little bit of an end-around. And so I think balancing those things is our challenge, and I appreciate the comment that you've noticed a lot of BARs from us, and it makes me feel better about one of the decisions I made yesterday and sent somebody away from a BAR to their dismay.

Well, glad I was able to provide some support there inadvertently. Thank you. Yeah, we definitely—I know it's a push-pull, and I know it's a challenge, and definitely something we see a lot of. So, last question I have. Can you please remind me what the backflow prevention ordinance is?

Madam Chair, Councilor Cassett, thank you for asking about that. Backflow prevention is, as I mentioned before, a water utility best practice whereby in code, it's already required that when you have certain sorts of water services, you include a backflow preventer. The idea there is if the water utility typically is running at a high pressure, 80 to 120 PSI, that's delivered through the meter, and if the water, let's say in a house or in a worst-case scenario, some chemical manufacturing facility, and there's suddenly a main break and we lose pressure in the system, the water within the facility will still be at 80 to 120 PSI. It could flow backwards out of the facility and then get into the overall distribution system, a sort of a cross-contamination, if you will. So, the code is already in place for those backflow prevention devices, but there is no program in place to assure that those devices are being tested every year and the test results are being uploaded into a system. So, this ordinance will give us the teeth to say, "Hey, according to our inventory, you have a backflow prevention device. We need you to prove to us that you have tested it and upload those results into our portal." And so essentially, that's what it's going to provide is for us to inventory all the backflow prevention devices and assure that they're being tested on a regular basis.

Okay. And so that's forthcoming. We haven't passed it.

Imminent in the next couple months. We keep having things that are more important than it, but it's coming.

Wonderful. It sounds important. So, thank you. I appreciate that. Just one thing. The storm damage tree branch collection program. Thank you. That was—I heard a lot of wonderful feedback from that. I know that happened very quickly. So, thank you. That was very much appreciated. And then the last thing I'll say, and then I'll be quiet for the rest of time, is I also want to thank Councilor Marworth for all of your work and mentorship in water. It has been—I think that was the very first meeting that we had was, "Please explain water to me." And I truly am also going to miss your expertise here. I will assure everybody, though, Councilor Marworth has been high on my—my, what is it called? My call list, my auto-dial for the last five years, and so she'll remain there for these situations. So, we won't lose her knowledge completely. So, thank you very much.

Thank you. Thank you for those words. It'll be hard to step away. Yeah, that tree branch collection program, it was awesome. It happened because I ran into a constituent out there on the sidewalk who said, "Hey, could we have some help because there's an awful—we're suddenly dealing with an awful lot of damaged tree debris because of a recent storm." And it was amazing. The staff really just went into high gear very quickly. And it was important, and so kudos on that. May I step in it a little bit? What—there's another way that we monitor our systems there. It's a—and I'm forgetting the technical term. It's a—it's a—and we're doing it, I think, in wastewater and in water, a mapping of—like a model. We have a GIS database of all our pipes and infrastructure in the ground, but that is—yeah, but then there's like—it's like a SCADA. No, this is where—so it's—it creates a—it creates a model, a digital twin. A digital twin. Yes, thank you. I knew that. Yes. So that also helps us, right?

Madam Chair, so the idea of a digital twin is a little different in water and wastewater, and it's very cutting edge. And I would say typically, utilities of our size don't get them. And for a little while, we were really trying to play with the big boys and get one. I will say at the water division level, what a digital twin is, is we do have a model of our pipe network, all the pipes, all the demands, all the sources. And we are looking to gain the flexibility to run that model almost every day. So right now, the way we run it is for long-range planning. We say, "Okay, in 10 years or 20 years, we think there'll be more demand here." And it's sort of a steady state, like if you have this much demand here, do you have the right-sized pipes, the right-sized tanks in the right places? What this model, as it sort of slowly steps towards a digital twin, would be that that model is running almost real-time. And so you can say, "Oh, today Canyon Road's producing this much. These wells are producing this much. We know more or less where the demand is. What do we think the flow or the pressure is in any given pipe?" That's the amazing thing. And then we can go out and start adding sensors. And we already have sensors in parts of the system that tell us pressure, in parts of the system that tell us flow. And you start to compare this real-time model run to actual observations. That's the digital twin. You get to see modeled versus actual, and if something goes—if they spread apart suddenly, it's like, "Something's happening over here that we don't expect. Let's go see what's going on." So it's really the shiny toy that we sort of aspire towards. We've sort of given up that as a high priority in water right now. We're working towards getting our model to run closer to real-time as the next step towards a digital twin.

On the wastewater side, actually, wastewater may be closer to a digital twin than we are. In their case, it's more of a process model of how does the wastewater treatment plant work. There's—this is the amount and the quality of the water coming in. These are the places where different things happen to it. This is what we would expect to see from a water quality perspective of water as it moves through the plant. So that's the model, and then you can look and compare the model results to the actual results and sort of see what is it that we're missing. And in that case, it's a much more complicated process. Like understanding pressure and flow in pipes, we've got that. It's—we might not have the information perfect, but we understand the process. I think, and maybe this is just because I'm new to wastewater, understanding all the chemical and biological processes that are occurring at a wastewater treatment facility all the time, different temperatures, different everything, is harder. And so that's the process model that we're working on a little bit. And that will be the shiny digital twin. And wastewater's closer at this point, I think, than water is of using a process model with actual values to try and understand how we can improve our understanding of what's actually happening in the plant. So I hope that was—

Yeah. Okay. So, I guess I'm confused, and I'm glad I asked the question because I thought we'd approved some funding for some of these things. But you're saying we're not—I mean, you're sort of looking at them, but you're—we're not actively going to pivot to them.

So, water, it's on me. We dropped the ball on a request to actually move that money, and we lost it, or the water digital twin. Now, we're not giving up on that effort entirely, but we did—we missed out on a big chance to get some one-time funding to move it forward. And you want to speak to wastewater?

We are actually working on a company, or with a company, Aqualite, that is actually directing a model to create the parallel path with both of our—like all of our instrumentation at the facility that can get all of the information in.

Once the full amount of information and analyzers are in place, that's the direction that Aqua is going to start creating the digital twin. That won't only just be a comparative of real-time, it'll also have an AI feature that will give operators a direction if something is going wrong and the possible fixes could be going this way. Or from previous data, the product will actually look at it and say, "Hey, it was working great this day in this situation, and we have the same input now, so let's make an adjustment to the way we're running to get it back into a better state."

Okay, thank you. I appreciate that. All right, one last question, and I ask this because I know it's on the mind of the community. Your goals for FY26: complete fire mitigation strategies for critical water infrastructure. We did hear a little bit about this yesterday with the emergency management folks. I understand you're in partnership with them. If you could just speak briefly to what you all are doing. I think it's something the community is concerned about, and this is an opportunity to help people understand that you guys are at the wheel and you're working on things.

Mayor: Thanks for that question. I'm not as close to this as I should be in terms of really providing some strong detail here, but I will say that we have a great partnership with our city wildland fire section of the fire department. They're helping us as we identify treatment plants, storage tanks, pump stations, and also water lines that maybe aren't as deep as they could be, as areas where we really don't want a fire to be close to this infrastructure, and helping us thin that. We're working in some cases with neighborhood associations, working with the state to allow this thinning, this fuels management close to this critical infrastructure. This is the piece that I don't have enough detail on. I know we're also trying to leverage state funds and state fire resources in that effort. So, we are aware of it. We're working to leverage these different resources, and we have done a lot in the last couple of years to really thin the fuels near treatment plants, near storage tanks. Jonathan, I don't know if you want to, if you have any deeper detail on any of that you want to add.

Yeah, and I think we're using technology as well, is what we were hearing yesterday, to help us. Can you hear me? Hello, I'm Jonathan Montoya. I'm the interim Water Division Director, as Jesse said. Yeah, we've partnered with the city urban wildland folks, as well as the Forest Service. We work closely with them taking care of our watershed and things like that. But I think the primary focus has been where there's critical infrastructure, storage tanks, things like that. We're really trying to protect the water infrastructure that could potentially be used to fight a fire if it were to come into town. So, we've identified those. We've worked closely with Portfido with our department to go and survey our properties that have our infrastructure, and they get a rating, and then they go out and they prioritize those. And of course, you can imagine the ones that are closer to the watershed are the ones that got taken care of first. But does that answer your question?

Yeah, thanks. Thanks. I just want people to know you guys are working on it. So, any other questions from the committee? Councilor Garcia.

Councilor Garcia: Thank you, Madam Chair. No more questions. I just want to say thank you to all your teams because it's, you know, when you're talking about picking up trash, you're talking about dealing with the wastewater, even just water, the time that you guys end up having to do extra, it's, you know, what's the TV show, "Dirty Jobs" or something? Nobody wants to do them, right? But you guys are doing it, and you're keeping the city going. So, I just want to say thank you.

Councilor Faulkner: I would like to say thank you to you guys as well. Along the same lines as all of my colleagues have, I was in active listening mode today because I don't even know enough about this subject matter to be dangerous. And so, I made an effort to just listen so I could learn more. And I would like to meet with you, Acting Director, so I can get up to speed. I haven't been on Public Works, and so I'm kind of missing this portion of my skill set and knowledge base. So, I just didn't want you to interpret my silence as anything other than me just being an active listener.

Thank you, Councilor. Anything else? I think this has been a great discussion, and thank you all for plugging past the noon hour. The good news is we'll get out of class early, and we'll just have to come back later tonight for some of us. Councilor Falconer.

Councilor Falconer: I guess we can vote on it. But tonight we're doing a, I think I told you guys about the, is it called, proclamation? We're doing proclamations. There's a couple of proclamations, and I'm not sure what time, 4:30. Hero bags.

Oh, yeah, you mentioned that yesterday, right? Yeah, there's a couple of proclamations just prior to the council meeting. So, yeah. Good. All right. I do need a motion.

Second.

We have a motion, a second to preliminarily approve the Public Utilities budget. Can we get a roll call?

Certainly, Madam Chair. Councilor Cassid, yes. Councilor Faulkner, yes. Councilor Lindell. Councilor Lee Garcia, yes. Chair Marworth, yes. Motion passes. Thank you.

All right. Thanks, everybody. Really appreciate it. Great conversation. And we are adjourned until tomorrow. We come back at 10:00 tomorrow, Madam Chair. 10:00 a.m. And tomorrow we are reviewing Planning and Land Use, Tourism, Film Office, and Arts and Culture. Wow. Okay. Thank you. We're adjourned. Somebody in charge of bringing coffee tomorrow after we're here till 2:00 a.m.