Nov 16, 2021 Commission Meetings

[1. Welcome.]

[00:00:12]

AND THOSE HAVE A REGULAR CITY MEETING.

THE CITY OF SAN BENITO AND CITY COMMISSION IS TUESDAY, NOVEMBER SIXTEEN, TWENTY ONE.

I LIKE TO CALL THIS ONE TO ORDER.

THE TIME IS FIVE 30 AND WE HAVE A QUORUM.

I REMEMBER TO PLEDGE OF ALLEGIANCE AND TO USE BLACK IN THE TEXAS FLAG.

AND PLEASE REMAIN STANDING FOR THE INVOCATION BY MR. .

THINK THAT THE STATES OF AMERICA AND THROUGH THE REPUBLIC FOR WHICH IT STANDS ONE NATION UNDER GOD, INDIVISIBLE WITH LIBERTY AND JUSTICE FOR ALL ON THE TEXAS FLY, TEXAS WEDNESDAY, LET US PRAY.

LORD, AS WE WORK TOGETHER TO BUILD YOUR EMPIRE, LET US BE THE LIGHT THAT LEADS THE WORLD TO YOU, TEACH US TO BE GOOD ROLE MODELS TO THE PEOPLE AROUND US, SO THAT WHEN THEY SEE YOU AND YOUR LOVE WITHIN US, THEY WILL WANT TO KNOW MORE AND MORE ABOUT YOU.

WE THANK YOU FOR YOUR MANY BLESSINGS AND WE PRAY THAT YOU CONTINUE TO BLESS US WITH GOOD HEALTH.

MAY YOU GRANT THIS PATIENCE, COURAGE, UNDERSTANDING, AND DETERMINATION TO MEET AND OVERCOME ALL DIFFICULTIES AND PROBLEMS. AND MAY YOU BRING US ALL TOGETHER AS A FAMILY UNITED TO HELP OTHERS IN YOUR NAME? WE PRAY.

AMEN.

[4. Announcements: Items of Community Interest.]

I DON'T REMEMBER FOUR.

AND THAT'S WHAT THE, UH, ITEMS HAVE A COMMUNITY INTEREST IN THE COMMISSIONER HAVE ANYTHING? NOPE.

OKAY.

UM, I GOT THIS ONE ON THE ITEM FOUR.

PLEASE JOIN HER FOR UPCOMING.

UH, HOW THE EVENTS, COMMUNITY CHRISTMAS AND THE TREE LIGHTING AND THE CHRISTMAS AT THE TOILET PARADE COMMUNITY CHRISTMAS, THE CHRISTMAS TREE LIGHTING WILL BE HELD AT 5:00 PM ON SATURDAY, DECEMBER 4TH AT THE W H HAVEN MEMORIAL PARK.

AND THE CHRISTMAS IN TOYLAND PARADE WILL TAKE PLACE ALONG DOWNTOWN SEVEN SAM HOUSTON BOULEVARD ON SATURDAY, DECEMBER 11TH AT 6:00 PM, WHICH STATION FOR BOTH EVENTS ARE, IS NOW OPEN.

PLEASE CONTACT THE PARKS AND REC DEPARTMENT AT 3 6, 1 3800 FOR MORE INFORMATION, UH, LIKE TO TAKE, UH, ALSO THE, UH, THANKS TO THE VETERANS, YOU KNOW, LITTLE IT'S BOARD THAT TOOK THE INITIATIVE, BUT AS FAR AS FOR HONORING OUR VETERANS THIS PAST, UH, ON THIRSTY AND ALSO ON SATURDAY, UM, IT WAS NICE.

UM, THERE WAS, UH, SOME PEOPLE, THERE WAS A LOT OF PEOPLE I BELIEVE, AND I THINK IT WAS A HUGE SUCCESS.

AND I LIKE TO, UH, YOU KNOW, UH, I DON'T SEE ONE OF THE BOARD MEMBERS ON IT, BUT, UH, I LIKE TO ALSO, LIKE I SAID, UH, THANK THE VETERANS AND, UM, YOU KNOW, FOR, UH, FOR TAKING THIS A CELEBRATION OF OUR VETERANS HONORING THEM.

OKAY.

COMMISSURES ANYTHING THEN ALONG THE LINES, I WANT TO THANK THE STAFF.

AND OF COURSE, THE FIRE DEPARTMENT FOR LINING SAM HOUSTON WITH THE, UH, THE AMERICAN FLAGS, UH, THAT LOOK REALLY NICE.

UH, WE HAD AN, UH, I HEARD A LOT OF COMPLIMENTS OUT THERE.

PEOPLE REALLY APPRECIATE IT.

IN FACT, PEOPLE, EVEN, UH, WE HAVE A NEW BUSINESS JUST OPENED UP, UH, THIS PAST MONTH AND, UH, THEY'VE POSTED IT ON FACEBOOK AND THEY SAID THEY WERE REALLY SURPRISED, SURPRISED THEY WERE PLEASANTLY SURPRISED.

SO THANK YOU FOR, FOR JOB.

WELL DONE.

YES.

OKAY.

I DON'T REMEMBER FIVE PUBLIC COMMENT.

UH, RUTH, DO WE HAVE ANYBODY FOR PUBLIC COMMENT? NO.

OKAY.

NONE.

[6. Consideration and possible action to approve the Minutes of the August 17, 2021 Regular City Commission Meeting.]

I REMEMBER SIX CONSIDERATION POSSIBLE ACTION TO APPROVE THE MINUTES OF AUGUST 17TH, 2021, REGULAR CITY COMMISSION MEETING.

ANY COMMENTS? DO I HAVE MOTION? WALSENBURG MAYOR PRO TEM CENTERS.

THAT'S SECOND TAKEN BY COMMISSIONER GARCIA.

ONLY FAVOR MAYOR.

I'M GOING TO ABSTAIN.

I WAS ABSENT THAT MEETING.

I HAD COVID.

OKAY.

SO, UM, WE'VE GOT THE COMMISSIONER GOT GONE UP STAINING DUE TO BEING, UH, ABSENT AND UH, SO ALL IN FAVOR, ANY NAYS MOTION PASSES

[7. Presentation and approval of the City of San Benito Investment Reports for the fourth quarter ended September 30, 2021.]

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I DON'T REMEMBER SEVEN PRESENTATION AND APPROVAL OF THE CITY OR SOMEBODY THROUGH INVESTMENT REPORTS FOR THE FOURTH QUARTER ENDING SEPTEMBER 30TH, 2021.

AND MS. SUSAN ANDERSON DELI VIEW CONSULTANT, OR PRESENTED THIS AT ALL.

GOOD EVENING.

I CAN'T TELL YOU HOW GOOD IT IS TO BE BACK.

IT'S BEEN A COUPLE OF YEARS AND A COUPLE OF DIFFICULT YEARS FOR ALL OF US, INCLUDING THE INVESTMENT SIDE OF THE EQUATION.

UH, YOU HIRED ME FOR MY INVESTMENT SKILLS, NOT NECESSARILY MY TECHNICAL SKILLS, SO LET'S SEE HOW WE CAN DO HERE ON THE SIDE, PLEASE.

OKAY.

IT'S NOT DOING ANYTHING OKAY.

SO IT WASN'T TURNED OFF.

OKAY.

ALL RIGHT.

AGAIN, I'M SUSAN ANDERSON WITH VALLEY VIEW CONSULTING YOUR INVESTMENT ADVISOR UNDER CONTRACT.

UM, THIS IS YOUR PORTFOLIO REPORT FOR THE PERIOD ENDING SEPTEMBER 30TH OF THIS YEAR.

IT IS ALSO, UH, COINCIDES WITH THE END OF YOUR FISCAL YEAR.

SO INSERT A SEPARATE PAGE FOR YOUR, UH, OVERALL OUTLOOK FOR THE YEAR.

UH, IF YOU LOOK AT WHERE YOUR BALANCES WERE THIS TIME, LAST YEAR, YOU WERE AT 26 MILLION, YOU'VE, UH, GROWN ABOUT 15.6 MILLION UP TO 41.6 MILLION.

NOW THERE, THERE'S A FEW THINGS THAT HAVE COME IN DURING THE YEAR.

YOU HAD SOME CEO MONEY THAT CAME IN, YOU ALSO HAD SOME OF THE CARE ACT AND THE, UM, UM, THE ARPA FUNDS THAT ALSO CAME IN.

SO THAT REALLY ACCOUNTS FOR THE BULK OF THE CHANGE.

I ALWAYS LOOK LIKE TO LOOK BACK AT THE PREVIOUS FISCAL YEAR, LAST FISCAL YEAR, YOU WERE UP 2.1 MILLION FOR THE ENTIRE YEAR.

SO THIS, THIS YEAR BEING UP 15.6 MILLION IS A, UH, A BANNER YEAR.

UH, THE FOURTH QUARTER YEAR END.

YOU HAD A 0.26, UH, AS THE YIELD THAT HAS DROPPED TO A 0.09.

AND JUST TO GIVE YOU A LITTLE BIT OF HISTORY, I KNOW YOU ALL KNOW THE COVID HAPPENED AND ALL OF THE STIMULUS THAT THE GOVERNMENT INSERTED INTO THE, UH, THE MARKETS AT THE VERY ONSET OF THE, UH, THE VIRUS.

WE HAD RATES THAT WERE UP AT THE ONE 50 TO 1 75 RATE FOR THE SHORT-TERM END OF THE TREASURY SPECTRUM THAT YOU DEAL IN.

AND THEY DROPPED ALL THE WAY DOWN TO ZERO TO 0.2, FIVE BY EARLY MARCH.

THAT'S A SIGNIFICANT MOVE FROM THE FED.

AND THE REASON THEY DID THAT WAS JUST TO KEEP LIFE GOING, UH, AND THE ECONOMIC SPECTRUM AFTER THE EXTREME SHUTDOWN THAT WE HAD, UNFORTUNATELY, THAT TRANSLATES TO A BIG DECREASE IN YIELD FOR YOUR PORTFOLIO, BECAUSE YOU CAN INVEST REALLY LONGTERM.

AND WHEN EVERYTHING, THE TOUR'S, OBVIOUSLY YOU'RE INVESTING IN A MUCH LOWER END OF THE MARKET.

THE GOOD NEWS IS I THINK WE'RE COMING TO THE END OF THAT.

WE'RE STARTING TO SEE INTEREST RATES INCREASE, UH, CD RATES, WHICH IS WHERE WE WERE PREDOMINANTLY BECAUSE OF THE, UM, THE YIELD BENEFIT THAT THEY WERE GIVING US HAVE, UH, KIND OF STAGNATED HERE.

AND WE'RE STARTING TO SEE THE SECURITY RATES TREASURIES, AND THE AGENCIES THAT YOU CAN INVEST IN, START TO INCREASE AS YOU GET AT ABOUT THE 15 MONTH AND LONGER MATURITY RANGE.

A ANTICIPATE THAT THAT TREND WILL CONTINUE AS WE GET CLOSER TO THE DATE.

WHEN WE THINK THAT THE FED IS GOING TO RAISE THAT SHORT-TERM FED FUNDS RATE, WHICH WE'RE LOOKING AT MAYBE A SUMMER TO SUMMER OF NEXT YEAR, UH, RAISING 25 BASIS POINTS.

AND THEN BY THE END OF NEXT YEAR, ANOTHER 25 BASIS POINTS.

SO WE'RE RATES ARE ABOUT 0.25.

NOW THEY SHOULD BE ABOUT 0.75 BY THE END OF NEXT YEAR.

UM, THE TREASURY RATES HAVE ANTICIPATED THAT AS I MENTIONED AT THE 15 MONTH AND LONGER, A TWO YEAR TREASURY JUST RECENTLY WENT FROM THE BEGINNING OF SEPTEMBER AT A POINT 0.25, THEY'RE UP TO 0.53 RIGHT NOW.

SO THEY'VE DOUBLED, UH, IN THEIR, THEIR RATES, WHICH IS REALLY GOOD NEWS FOR YOU.

UH, OVERALL THE FISCAL YEAR TO DATE EARNINGS, YOU BROUGHT IN 262,000.

UM, LAST YEAR, THIS YEAR, IT WAS 50,000 AND THAT'S, UH, INDICATIVE OF WHAT WE SAW IN THE EARNINGS POWER OF YOUR DOLLARS OVER THIS, UH, THIS YEAR,

[00:10:01]

YOU PURCHASE CDS PREDOMINANTLY, AND THEN YOU HAVE SOME MONEY MARKET ACCOUNTS, MARKET VALUE, AND FACE VALUE, OR EXACTLY THE SAME FOR THOSE TYPES OF SECURITIES.

WE'RE MOVING NOW INTO THE QUARTER OVER QUARTER RESULTS.

UH, THIS QUARTER YOU WENT FROM 37.9 MILLION TO 41.6 MILLION, WHICH WAS AN INCREASE OF 3.756 MILLION.

NOW THAT'S AGAIN, A VERY GOOD NUMBER.

I ALWAYS LIKE TO LOOK BACK AT THE SAME PORTER FOR THE PREVIOUS FISCAL YEAR.

LAST QUARTER, YOU WERE ONLY UP 454,000.

SO MOST OF THAT CAME IN AND SOME OF THE ARPA FUNDS, UH, RIGHT AT THE END OF THE QUARTER.

SO WE'VE GOT THAT NOW TO WORK WITH TOTAL PORTFOLIO, AS I MENTIONED WAS 0.09.

IT ONLY DROPPED ONE BASIS POINT DURING THIS QUARTER, AS YOU HAD SOME MATURITY ROLL OFFS, QUARTERLY INTEREST INCOME WAS 11,000, THIS QUARTER, 13,000, THE PREVIOUS QUARTER, UH, THIS IS THE MARKET OVERVIEW.

I ALSO HANDED OUT OUR LATEST MARKET OUTLOOK.

THIS IS WHERE WE LOOK AT ALL SECTORS OF THE ECONOMY TO SHOW WHAT'S DOING WELL AND NOT, WHAT'S NOT DOING SO WELL, QUITE FRANKLY, WE'RE, UM, DOING WELL ON ALL CYLINDERS RIGHT NOW, AS FAR AS THE ECONOMY AND THE MARKET AND THE SECTORS ARE CONCERNED, WE'RE PRODUCING MORE, WE'RE CONSUMING MORE.

THE HOUSING MARKET IS JUST GOING THROUGH THE ROOF.

UH, HOW LONG THAT CONTINUE IS PROBABLY ANYBODY'S GUESTS.

THE PROBLEM WITH ALL OF THAT IS, UM, AS ALL OF THAT MONEY IS FLOWING THROUGH.

PEOPLE ARE SPENDING MORE AND MORE OF THAT, AND WE'VE GOT SIGNIFICANT INFLATION THAT HAS CREPT INTO THE SYSTEM BECAUSE OF ALL THAT BUYING AND CONSUMING THAT'S GOING ON.

THE SUPPLY CHAIN BREAKDOWNS ARE CAUSING PROBLEMS IN GETTING THE PRODUCTS MOVED THROUGH THE SYSTEM AND THAT'S CAUSING A PRICE INCREASE.

I ALWAYS LIKE TO FOCUS YOU ON THAT UPPER LEFT-HAND GRAPH THAT SHOWS HOW THE, THE TREASURY YIELD CURVE HAS CHANGED YEAR OVER YEAR AND QUARTER OVER QUARTER, YEAR OVER YEAR, IS THAT, THAT DOTTED RED LINE THIS TIME LAST YEAR, IT WAS ESSENTIALLY A FLAT LINE ECONOMY.

WHAT YOU WANT TO SEE IN A GROWING ECONOMY IS AN UPWARD SLOPING, UH, GRAPH LINE CHART.

THAT MEANS THE ECONOMY IS GROWING.

THE ECONOMY IS HEALTHY LAST YEAR.

IT WAS ANYTHING, BUT IT WAS FLAT LINE, UH, ALL THE WAY OUT TO 10 YEARS PRACTICALLY, WE STARTED SEEING IMPROVEMENT OVER THE PAST YEAR OR SO THAT GREEN LINE IS WHERE WE WERE LAST QUARTER.

THE BLUE LINE IS WHERE WE WERE AT THE END OF THIS QUARTER.

AND AS I MENTIONED, WE'VE SEEN A SURGE IN RATES FROM ABOUT 15 MONTHS AND ON OUT.

SO IF YOU, THE PIECE THAT I GAVE YOU HAS A MORE UPDATED GRAPH, AND YOU CAN SEE THAT IT'S STARTING TO REALLY BULGE, UH, AS YOU GET CLOSER AND CLOSER TO THAT OVERNIGHT RATE.

SO ABOUT ONE TO TWO YEAR, YOU START TO SEE A BULGE GOING UPWARD.

THAT'S A GOOD SIGN FOR THE ECONOMY, UH, THAT THINGS ARE OFF TO A PRETTY GOOD START LOOKING AT PAGE FOUR, WHICH I JUST ELIMINATED.

OKAY.

PAGE FOUR IS THE LIST OF INVESTMENT HOLDINGS.

UH, FOR THOSE OF YOU WHO HAVEN'T BEEN HERE.

WHEN I PRESENTED BEFORE EVERYTHING ABOVE THAT BLANK ROW IS CASH EQUIVALENTS, MONEY THAT'S INVESTED, BUT YOU CAN GET TO VERY QUICKLY IF YOU NEED IT.

I'LL ALSO REMIND YOU YOU'RE GOING THROUGH A BANKING TRANSITION RIGHT NOW.

SO YOU'RE A LITTLE BIT MORE LIQUID THAN YOU GENERALLY ARE.

AS YOU'RE MOVING ALL OF THOSE ASSETS FROM ONE BANK TO THE NEXT, WE'LL START INVESTING THOSE FUNDS MORE.

AS YOU START TO GET YOUR TAX PROCEEDS COMING IN AND YOU GET YOUR BANKING ALL TRANSITIONED OVER, BUT YOU STILL HAVE SOME FAIRLY, UM, YIELDING IN THIS ENVIRONMENT, UH, POSITIONS.

YOU'VE GOT A MONEY MARKET ACCOUNT NOW AT TEXAS REGIONAL THAT'S EARNING EIGHT BASIS POINTS AND COMPARE THAT TO WHAT TEX POOL, THE INVESTMENT POOL IS EARNING AT THREE BASIS POINTS.

I HAVE SOME OTHER BANKS THAT, THAT I'M GOING TO TRY TO GET INTRODUCED TO YOUR FUND, UH, THEIR BANKS THAT WE'VE DEALT WITH FOR A LONG TIME, BUT THEY HAVEN'T DONE A LOT OF BUSINESS IN THE VALLEY.

SO THERE'S ONE OF THEM THAT HAS A MONEY MARKET ACCOUNT YIELDING 15 BASIS POINTS.

SO IF I CAN GET THEM TO ACCEPT SOME OF YOUR FUNDS, THAT MIGHT BE A GOOD OPTION FOR YOU.

AND THEN AS I MENTIONED WITH THE TRANSITIONING MARKET, WE MAY BE MOVING AWAY FROM CDS AND INTO TREASURIES AND AGENCIES.

UH, WHAT THAT MEANS THOUGH, IS WE'LL HAVE TO SET UP A S INFRASTRUCTURE FOR US TO BUY SECURITIES AND HAVE A HOLDING, UM, SILO, UH, SAFETY KEEPING ACCOUNT FOR YOU TO ANYTHING THAT YOU BUY WOULD GO INTO.

SO THAT'S KIND OF ON THE HORIZON

[00:15:01]

UH, THE NEXT GRAPH IS DEPICTS, UM, THE STRUCTURE OF THE PORTFOLIO.

THERE HAS NOT BEEN JUST AN AWFUL LOT OF CHANGE, UH, IN THE CDS AND SECURITIES.

YOU HAD 28% OF THE PORTFOLIO IN CDS AND SECURITIES CDS, OBVIOUSLY.

AND THEN 26% OF IT.

NOW YOU'VE HAD A BIG MIGRATION INTO A MONEY MARKET ACCOUNTS AND THE POOLS THAT GOES ALONG HAND IN HAND WITH YOUR TRANSITION TO TEXAS REGIONAL BANK, YOU'RE PLACING A LOT OF YOUR CASH EQUIVALENTS RIGHT NOW INTO THEIR MONEY MARKET CAMPAIGN, EIGHT BASIS POINTS.

UH, THIS IS THE, THE, THE STRUCTURE, THE GRAPH THAT WE LOOK AT, THE CHART THAT SHOWS TRANSACTIONS, UH, FOR YOUR BENEFIT, UH, THIS PAGE AND THE PAGE PREVIOUS IS, IS INTERESTING AND VERY IMPORTANT INFORMATION FOR YOU TO PAY ATTENTION TO EACH QUARTER.

AS YOU GET THESE REPORTS, THE INCREASES IN DECREASES COLUMN IS ESSENTIALLY THE PURCHASES AND THE MATURITY FOR YOUR PORTFOLIO.

SO THIS PARTICULAR QUARTER, YOU DIDN'T HAVE ANY PURCHASES, THOSE SMALL AMOUNTS, THERE ARE INTERESTS THAT BECOMES PART OF PRINCIPAL.

SO THEY BECOME PART OF THE, UM, THE PURCHASES, THE DECREASES.

UH, YOU ALSO DIDN'T HAVE ANY MATURITIES.

YOU HAD SOME MIGRATION, UH, USED SOME OF THE MONEY AT THE, UH, FCB BANK ACCOUNT AND ALSO AT TECH POOL.

AND THEN FINALLY THIS PAGE IS IMPORTANT TO STAFF AN EYE.

WE LIKE TO LOOK AT HOW YOUR PORTFOLIO IS ALLOCATED BY FUND.

THIS GIVES US A GOOD ROADMAP OF WHICH FUNDS ARE AVAILABLE TO INVEST.

EACH OF THESE FUNDS HAVE DIFFERENT PAYOUT STRUCTURES.

SO STAFF, UM, PLAYS ABSOLUTELY AN IMPORTANT ROLE IN GIVING US AN IDEA OF WHEN THEY'RE GOING TO NEED TO HAVE THESE FUNDS MATURING WHEN THEY'RE GOING TO SPEND THEM.

UH, AS I MENTIONED RIGHT NOW, YOU'RE HEAVILY LIQUID RIGHT NOW WITH ALL OF THE TRANSITION GOING ON, BUT WHEN YOUR, UM, TAX PROCEEDS START ROLLING IN, I EXPECT THAT WE'LL BE DOING MORE OF WHAT WE CALL LADDERING OF THE PORTFOLIO AND BUYING MATERIALS OUT BEYOND THE CASH EQUIVALENT.

AND THEN FINALLY, THE LAST PAGE JUST GIVES YOU A COMPARATIVE, UH, AS REQUIRED BY STATE LAW OF WHERE EACH OF THESE FUNDS STOOD AT THE END OF THE PREVIOUS QUARTER.

SO THAT'S A QUICK RUN THROUGH OF THE, UM, PORTFOLIO REPORT.

I'D BE GLAD TO ANSWER ANY QUESTIONS.

I DON'T KNOW, SIR.

ANY QUESTIONS? YEAH.

I DO HAVE A FEW QUESTIONS.

FIRST OF ALL, THE, THE TREND SEEMS TO IT'S GOING TO THE RIGHT DIRECTION.

YES, YOU DIDN'T QUITE GIVE ME MORE OR LESS A, AN IDEA OF, UH, DO YOU EXPECT THIS TO CONTINUE GROWING OR TELL ME A LITTLE BIT NOW I EXPECT TO CONTINUE AND LISTEN TO OTHER SHOE DROPS.

UH, IF COVID SURGES AGAIN AND WE HAVE TO GO THROUGH ANOTHER SHUTDOWN, THAT IS REALLY WHAT HAS BEEN HOLDING BACK THE ECONOMY.

UH, PEOPLE HAVEN'T BEEN ABLE TO GO TO WORK.

THE SERVICE SECTOR HAS BEEN DEVASTATED BY ALL THIS, AND THERE'S STILL, PEOPLE ARE NOT SPENDING MONEY IN THE SERVICE SECTOR LIKE THEY ONCE WERE, BUT YOU'RE STARTING TO SEE GLIMMERS OF HOPE OUT THERE.

AND YOU'RE STARTING TO SEE MORE AND MORE BUSINESSES, UH, RAMP UP AND YOU'RE SEEING MORE AND MORE PRODUCTION RAMP UP.

WE'VE GOT A REALLY GOOD NUMBER THIS MORNING FOR INDUSTRIAL PRODUCTION.

IT WAS UP MUCH MORE THAN WHAT THEY EXPECTED.

NOW.

THE CAVEAT THERE IS IF THE HEALTH SITUATION IS UNDER CONTROL AND WE DON'T HAVE TO WORRY ABOUT THINGS SHUTTING DOWN ONCE AGAIN, THEN WE WOULD EXPECT THE GROWTH TO CONTINUE.

NOW, INFLATION IS GOING TO BE OUT THERE FOR SOME TIME.

INFLATION IS MOSTLY BEING DRIVEN RIGHT NOW, THE LACK OF PRODUCED GOODS.

AND ONCE YOU GET PEOPLE WORKING AGAIN AND GET THE PRODUCTION OUT THERE AND GET THE TRANSPORTATION SYSTEM UP AND RUNNING AGAIN FOR THEIR TRUCK DRIVERS, ET CETERA, THEN YOU'RE GOING TO SEE EVERYTHING FLOW BACK TO NORMAL.

NOW, DOES THAT MEAN THAT PRICES ARE GOING TO GO DOWN WHEN THEY GO UP? PRICES GET AWFUL STICKY.

SO I CAN'T GUARANTEE ANYTHING ABOUT THAT, BUT THE ECONOMY IS MOVING THE RIGHT DIRECTION.

IT SHOULD KEEP GOING THAT DIRECTION UNLESS WE HAVE ANOTHER SURGE.

AND ALSO ON THE PORTFOLIO COMPOSITION, UH, YOU DID MENTION THE CD SECURITIES RIGHT NOW WHERE AT A 26%.

YES.

CAN YOU TELL ME WHAT YOU MEANT BY WERE LOOKING AT GOING MORE TO SECURITIES AND TELL ME WHY GENERALLY YOUR PORTFOLIO IS MORE ALLOCATION TO SOMETHING OTHER THAN AN OVERNIGHT TYPE INVESTMENT, BUT BECAUSE YOU'VE

[00:20:01]

WHAT WE LIKE TO HAVE IS MUCH MORE OF AN ALLOCATION TO CDS, AND NOW IT LOOKS LIKE SECURITIES.

NOW WHY SECURITY SUDDENLY, UH, BELIEVE IT OR NOT, ANY OF YOU WHO'VE BEEN AROUND AS LONG AS I HAVE WORKING IN THE MARKET PRIOR TO 2008, TREASURIES AND AGENCIES YIELDED MUCH MORE THAN CDS.

AND THAT WAS THE NORM FOR DECADES BEFORE.

AND WHY ALL OF A SUDDEN DID IT CHANGE? YOU'LL REMEMBER THE NAME OF THE LEHMAN BROTHERS, THE BIG PRIMARY FIRM THAT WENT DOWN BECAUSE OF SUBPRIME MORTGAGES.

AND THEN A LOT OF OTHERS WENT DOWN ALONG WITH IT.

THAT WAS THE ONSET OF THE GREAT DUE TO THE SUBPRIME MORTGAGE SITUATION.

THAT WAS THE FIRST TIME THAT THE FED CAME IN WITH MASSIVE STIMULUS.

AND WHAT THEY ENDED UP DOING WAS SQUASHING TREASURY RATES.

SO BEFORE TREASURY RATES WERE UP HERE, CD RATES WERE DOWN HERE WHEN THEY MADE THEIR MOVE, THEY TOOK TREASURY RATES WAY DOWN TO THE BOTTOM CD RATES.

THEIR BANK SAID, EACH BANK KIND OF ASSESSES WHAT THEIR NEEDS ARE AND WHAT THEY'RE WILLING TO PAY FOR DEPOSITS.

SO THEY DIDN'T, THEY WENT DOWN, BUT THEY DIDN'T GO DOWN NEARLY AS MUCH AS TREASURIES.

SO SINCE 2008, WE'VE BEEN TRYING TO SPINE NORMALCY.

AGAIN, WE GOT REALLY CLOSE BEFORE THIS LAST SURGE OF DELTA.

AND THEN IT WENT BACK DOWN BECAUSE OF THE SPED STIMULUS.

NOW THE FED IS UNWINDING THAT, SO WE'RE ALREADY LIKE A SAID, WE'RE SEEING THE TREASURY RATES REACH BACK UP.

SO THAT'S A NORMAL SITUATION THAT YOU WOULD EXPECT YOUR PORTFOLIO TO HAVE A LARGE, LARGE PERCENTAGE IN SECURITIES RATHER THAN CDS, BUT WE'VE JUST NOT BEEN IN NORMAL LAND FOR A LONG TIME.

DOES THAT ANSWER YOUR QUESTION BEFORE? I WAS JUST INTERESTED IN HOW THE TREASURY, BECAUSE LIKE YOU SAID, TREASURY FOR A WHILE HAS BEEN DOWN THERE AND, UH, I'M, I'M GUESSING IT MIGHT BE A TREND THAT WE'RE STARTING TO COME UP AND YOU SAY MAYBE CATCH UP ON MAYBE THE SURPRISE.

ABSOLUTELY.

IT SHOULD.

THAT'S THAT'S NORMAL.

IT SHOULD.

GREAT.

OKAY.

UH, IS, IS THIS, UH, IS THIS PORTFOLIO WELL, THANKS FOR THE PRESENTATION, FIRST OF ALL RIGHT, BUT IS THIS PORTFOLIO MANAGED BY YOUR FIRM? DO YOU GUYS MOVE SECURITIES AS YOU SEE FIT OR CDS? OKAY.

WHAT DOES THAT HAVE TO COME BACK FOR APPROVAL? WE ARE WHAT YOU CALL A NON-DISCRETIONARY INVESTMENT ADVISOR.

WHAT THAT MEANS IS WE HAVE TO GET YOUR PERMISSION TO SHOOT A BULLET.

WE CAN'T BUY ANYTHING WITHOUT YOUR PERMISSION.

SO UNLIKE A FULLY DISCRETIONARY WHERE YOU ESSENTIALLY JUST HAND US MONEY AND WE INVEST IT, UM, WITHOUT YOUR PERMISSION ON EACH TRADE, UM, MOST, I THINK ALL FUNDS LIKE THIS IN THE PUBLIC SECTOR ARE NON DISCRETION MANAGEMENT RATHER THAN FULLY DISCRETION, FULLY DISCRETION WOULD BE SOMETHING LIKE A PENSION FUND.

I KNOW EARLY ON IN MY TENURE HERE, WE, WE DISCUSS, WE ADDED, UM, CREDIT UNIONS BECAUSE THEY HAD BETTER RETURN RATES.

AND I DON'T SEE THEM HERE.

WOULD IT BE, WOULD IT BE YOUR RESPONSIBILITY TO BRING THOSE BACK TO US? AND LIKE YOU MENTIONED ANOTHER BANK THAT WAS PAYING A BETTER RATE, YOU WOULD EVENTUALLY DO THAT.

RIGHT.

AND SUGGEST OPTIONS, BRING IT TO FINANCE AND FINANCE BRINGS IT TO US.

RIGHT.

WHAT ACTUALLY HAPPENS IS, UH, BETWEEN, UH, OUR STAFF AND YOUR STAFF, WE DECIDE WHEN IT'S TIME OR WHEN THEY HAVE FUNDS AVAILABLE TO INVEST.

WELL, THEN WE ISSUE A SOLICITATION OUT TO A NUMBER OF BANKS AND CREDIT UNIONS ACROSS THE STATE, AND THEN THEY COME BACK WITH THEIR RIGHT.

AND SO IT'S GETTING FEWER AND FEWER BANKS ARE GIVING US OFFERS RIGHT NOW BECAUSE THEY'RE FLUSH WITH CASH AND DON'T REALLY WANT ANYMORE.

BUT, UH, WE THAT'S BEEN THE PROCESS.

AND THEN WE SHARE THOSE RATES WITH STAFF AND THEY ULTIMATELY SAY, YES, LET'S DO THIS WITH THIS BANK AT THIS RATE.

OKAY.

DO YOU SEE SOME CITIES TAKING THE APPROACH OF USING REAL ESTATE AS IT, AS AN INVESTMENT? NO.

THE UN IS THAT UNFORTUNATELY, OR FORTUNATELY WHICHEVER WAY YOU WANT TO LOOK AT IT.

UM, THE STATE IS VERY RESTRICTIVE ON WHAT YOU CAN BUY WITH CITY FUNDS.

UH, SO THE MENU IS VERY SHORT AND DOES NOT INCLUDE THE MORE ESOTERIC, WHAT YOU MAY NOT CONSIDER ESOTERIC, BUT CITIES CAN'T AFFORD TO TAKE ANY KIND OF A HINT OF A LOSS AND YOU DON'T WANT A LOT OF VOLATILITY, SO YOU CAN'T BUY THINGS AND THAT'S BY STATE LAW.

SO NO OPTIONS THERE.

OKAY.

THAT IT PUSHES NOBODY ELSE.

NOPE.

THANK

[00:25:01]

I'M UP NEXT TO YOU.

SO I'LL JUST STAY HERE.

OH, OKAY.

SORRY.

UM, THERE WAS, UH, SO I DON'T NUMBER EIGHT CONSIDERATION PASSWORD.

YOU'LL NEED A MOTION ON SEVEN.

OH, OKAY.

OKAY.

THEN A MOTION TO APPROVE OUR MOTION.

MOTION BY COMMISSIONER GARCIA.

SECOND, SECOND BY A MIRACLE, TIM.

ALL IN FAVOR.

ANY NAYS MOTION PASSES.

[8. Consideration and possible action to approve Resolution Number 2021-1116- 000l(R) amending and approving the City of San Benito Public Investment Policy.]

WELL, I DID NUMBER EIGHT CONSIDERATION AND POSSIBLE ACTION TO APPROVE RESOLUTION NUMBER 2021 DASH 1, 1, 1 6 ARE AMENDING AND APPROVING THE CITY OF SAN BENITO PUBLIC INVESTMENT POLICY.

AND, UH, SO IT'S GOING TO BE YOU MA'AM.

YES.

OKAY.

SO MS. SUSAN ANDERSON PRESENTING THE CENTER, RIGHT.

UH, AND WE JUST GOT THROUGH TALKING ABOUT WHAT THE STATE LAW SAYS THAT YOU CAN DO.

THAT'S ALL COVERED UNDER THE PUBLIC FUNDS, INVESTMENT ACT, TEXAS GOVERNMENT CODE CHAPTER 2256, WHICH GIVES YOU A LISTING.

THAT ACT REQUIRES THAT ONCE A YEAR, THE GOVERNING BODY REVIEWS AND APPROVES THE INVESTMENT POLICY, UM, THE STATE LAW GIVES YOU A LARGER MENU OF THINGS THAT CAN BE INVESTED.

HOWEVER, THERE'S ONLY CERTAIN ONES THAT WOULD APPLY TO A CITY LIKE YOURS.

SO, UH, THE STRUCTURE OF THE INVESTMENT POLICY LOOKS AT THOSE TYPES OF THINGS THAT ARE APPROPRIATE FOR A CITY OF YOUR SIZE.

AND, UH, WE GO THROUGH THIS EACH YEAR WITH THE GOVERNING BODY.

UM, NORMALLY THIS BEING A LEGISLATIVE YEAR, YOU WOULD HAVE A LOT OF CHANGES BECAUSE TYPICALLY THEY, THEY DO MAKE A LOT OF AMENDMENTS TO THE PUBLIC FUNDS INVESTMENT ACT.

THIS YEAR, THEY WERE FOCUSED ELSEWHERE AND THEY MADE NO CHANGES WHATSOEVER.

SO WE DIDN'T MAKE ANY CHANGES TO THE POLICY.

I KNOW THAT IN THE PREVIOUS YEAR WE HAD LISTED THE ASSISTANT FINANCE DIRECTOR AS ONE OF YOUR INVESTMENT OFFICERS.

YOU DON'T HAVE THAT POSITION.

SO WE TOOK THAT OUT.

YOUR INVESTMENT OFFICERS ARE THE CITY MANAGER AND THE FINANCE DIRECTOR, AND THAT'S THE ONLY CHANGE REALLY THAT HAPPENED IN THIS POLICY.

OKAY.

ANY QUESTIONS? NOPE.

OKAY.

DO I HAVE A MOTION? SECOND BY COMMISSIONER GARCIA.

ALL IN FAVOR.

ANY NAYS MOTION PASSES.

THANK YOU.

THANK YOU VERY MUCH.

OKAY.

I REMEMBER ATTENDING CONSIDERATION POSSIBLE ACTION TO EXTEND AN EXIT

[9. Presentation by Mr. Eric Holz, representative with TXU Energy, on electricity pricing proposal.]

OKAY.

OKAY.

THANK YOU.

OKAY.

PRESENTATION BY MR. ERIC HOLT, UH, REPRESENT, UH, FOR TXU ENERGY AND ELECTRICITY PRINCIPAL PROPOSAL AND MR. HOLT, MR. MAYOR.

GOOD EVENING, LADIES AND GENTLEMEN, AND THE COMMISSION.

GOOD EVENING.

THANK YOU FOR THE OPPORTUNITY TO VISIT WITH Y'ALL TONIGHT.

WE'VE, UH, HAD SOME CONVERSATION WITH, UH, BAILIN AND, UH, FERNANDO IN PURCHASING, UH, REGARDING THE CURRENT ENERGY AGREEMENT BETWEEN THE CITY AND TXU ENERGY, WHICH IS ACTUALLY NEARING EXPIRATION NEXT, UH, NOVEMBER 30TH, 2022.

HOWEVER, GIVEN THE RECENT DYNAMICS IN THE MARKET, WHICH WE WERE GOING TO DISCUSS WITH YOU ALL THIS EVENING, UM, REALLY WANT TO EXAMINE THE POSSIBILITY OF LOCKING IN THAT FORWARD CONTRACT.

NOW YOU CAN, UH, ADVANCE TO THE NEXT SLIDE PLEASE.

OH, GOT IT RIGHT HERE.

SO A LITTLE BIT ABOUT TXU ENERGY.

WE'RE ACTUALLY UNDER THE VISTRA FAMILY OF COMPANIES, THAT'S OUR PARENT ORGANIZATION.

WE OPERATE IN ALL OF THE STATES THAT YOU SEE HIGHLIGHTED HERE.

UH, PREDOMINANTLY OUR TXU ENERGY BRAND IS THE, UH, RETAIL DIVISION, UM, HERE IN TEXAS.

SO WE'RE ACTUALLY THE LARGEST AND OLDEST POWER PROVIDER IN THE STATE NATIONWIDE.

WE'RE THE LARGEST VERTICALLY INTEGRATED POWER COMPANY.

AND THEN OUR SISTER COMPANY LUMINANT ACTUALLY OWNS AND OPERATES ABOUT 25% OF ALL OF THE GENERATION HERE IN TEXAS.

UM, THAT'S A DIVERSIFIED FLEET OF GENERATION THAT WE HOLD.

SO IT'S NUCLEAR, IT'S NOT GAS, IT'S COAL.

IT IS UTILITY SCALE SOLAR, AND ONE OF THE LARGEST PURCHASERS OF, UH, WIND ENERGY.

[00:30:02]

THERE IS, IF YOU LOOK AT YOUR POWER BILL, ESPECIALLY ON THE COMMERCIAL SIDE, WHICH IS THE WAY THE CITY HAS CONTRACTED, UM, EFFECTIVELY, THERE'S TWO DIFFERENT CHARGES THAT YOU'LL SAY, ONE'S THE COMMODITY CHARGE.

THAT'S THE PRICE THAT YOU PAY PER KILOWATT HOUR.

THAT'S THE NEGOTIATED PORTION OF THE AGREEMENT.

AND THEN THERE'S THE, WHAT WE CALL THE TDU TRANSMISSION, DISTRIBUTION AND UTILITY SIDE.

THINK OF IT AS THE POLES AND WIRES.

THAT'S THE AEP SIDE.

SO WHAT GOES INTO THE PRICE OF POWER ON THE KILOWATT HOUR SIDE? WELL, IT'S THE COST TO PRODUCE ELECTRICITY QUITE SIMPLY.

THERE'S TWO COMPONENTS TO THAT.

THERE'S A HEAT RATE, WHICH IS A NON-DENOMINATIONAL FACTOR TOWARDS THE ENERGY EFFICIENCY OF THE POWER PLANTS.

AND THEN IT'S MULTIPLIED AGAINST NATURAL GAS.

WE'LL GET INTO NATURAL GAS IN A MOMENT, BUT A QUITE A HOT TOPIC AS OF LATE.

AND THEN YOU HAVE ALL OF YOUR ANCILLARY COSTS THAT THE SUPPLIERS MUST CHARGE, RIGHT? SO THOSE ARE BROKEN DOWN ON THE BELL AND QUITE EXTENSIVELY.

SO LINE LOSSES, METERING FEES, OR COD FEES, CONGESTION MANAGEMENT, ANY OTHER SUPPLIER COSTS TO SERVE THE, UH, THE ENTITY.

UM, YOU ALL WERE VERY FORTUNATE WITH WHAT TRANSPIRED IN FEBRUARY WITH THE WINTER STORM, BECAUSE THE CONTRACT THAT WE DID WITH THE CITY SEVERAL YEARS AGO HAD ALL OF THOSE AND CILIARY COSTS HEDGED YOU'VE PROBABLY READ IN THE NEWS ABOUT SOME OF YOUR NEIGHBORS HERE WHO WERE NOT AS FORTUNATE AND SO AWESOME.

VERY I'D CALL THEM UNDESIRABLE, UH, WINTER STORE MURIE INVOICES, WHICH EXCEEDED A MILLION DOLLARS AND JUST THOSE ANCILLARY COMPONENTS.

BUT, UH, WHEN I SPOKE TO BAYLIN, SHE, UH, EXPRESSED SOME CONCERN.

I SAID, DON'T WORRY ABOUT IT.

Y'ALL ARE COVERED UP THERE.

SO, UH, CITY OF SAN BENITO CAME OUT LIKE ROSES ON THAT.

UM, OTHER THINGS TO CONSIDER WOULD BE ANY THIRD PARTY MEMBERS, BROKERS, AGGREGATORS, ET CETERA.

UM, BUT AGAIN, WE TRY TO LOOK AT THAT AT LEAST FROM A TXU PERSPECTIVE, THAT THAT COST IS FULLY FIXED AND TRANSPARENT.

THE TDU SIDE, AGAIN, THAT'S JUST PASSED THROUGH FROM AEP.

UM, THAT'S BASED ON YOUR DEMAND, BUT WE PASS THAT CHARGE THROUGH WITH NO PRICE INCREASE OR MARKUP, AND THEN WE ACTUALLY HAVE SOME TOOLS TO HELP YOU LOWER THAT SIDE OF THE INVOICE AS WELL.

SO WHAT'S HAPPENING IN, ARCOT OBVIOUSLY A LOT OF QUESTIONS, UH, STEMMING FROM THE EVENTS THAT TRANSPIRED IN FEBRUARY, A LOT OF, UH, POINTING FINGERS AND BLAME GAME.

SOME PEOPLE WERE SAYING IT WAS WIND.

IT WAS ALSO NATURAL GAS SUPPLY THAT WAS INTERRUPTED, WHICH DISRUPTED THE POWER PRODUCING, UH, NAT GAS FIRED PLANTS, SOLAR WASN'T WORKING BECAUSE THE SUN WASN'T OUT IN A SNOW STORM, UH, EVEN COAL GENERATION, WHICH IS VIEWED AS A BASE LINE, FOSSIL FUEL LOAD, UH, SOME OF THE PILES OF COAL WORK, FROZEN SOLID, AND, UH, YOU CAN'T NECESSARILY FOLLOW THAT WITH A BLOWTORCH WITHOUT CREATING AN EVEN BIGGER PROBLEMS. SO, UH, REALLY ACROSS THE WHOLE BOARD, BUT WE'RE LOOKING AT 36% APPROXIMATELY OF ALL OF THE GENERATION IN TEXAS IS NOW WHAT WE'D CALL RENEWABLE, WHETHER IT'S SOLAR OR WIND.

UM, SO WE CONTINUE TO SEE THAT THOSE TWO COMPONENTS BUILD OUT WHILE COAL GENERATION ACROSS THE STATE CONTINUES TO BE RETIRED.

THAT'S COMING FROM TWO DIFFERENT PRESSURE POINTS.

THAT'S BOTH ECONOMICAL BECAUSE FOR THE LONGEST TIME OVER THE LAST CALL, IT SIX TO EIGHT YEARS, IT HASN'T BEEN ABLE TO COMPETE WITH THE LOW COST OF NATURAL GAS.

UM, AND THEN THERE'S THE ENVIRONMENTAL PRESSURE.

OBVIOUSLY EVERYBODY VIEWS COAL PLANTS IS, UH, YOU KNOW, DIRTY OR PLUTONS.

SO, UH, KIND OF BOTH SIDES OF THE SPECTRUM COMING DOWN HOLE.

WHAT WE'VE SEEN RECENTLY IS SOME RTS TSPP, WHICH IS THE REAL-TIME SETTLEMENT PRICE POINTS, THAT MARKET CHARGES A DIFFERENT PRICE EVERY 15 MINUTES.

UM, AND SOME OF THOSE, UH, INTERVALS HAVE STARTED TO BUMP UP WHEN WE SEE WIND PRODUCTION FALLING SHORT OF, UM, FORECASTS.

SO IF WE LOOK AT THE SOUTH ZONE PRICING, THIS IS BASICALLY OVER THE LAST 11 YEARS, YOU CAN SEE SOME OF THE BLIPS THAT WE'VE, UH, EXPERIENCED, UH, WITH REGARDS TO REAL-TIME PRICING FOR THE MOST PART, ALL DRIVEN BY WEATHER.

UM, WHETHER WE'RE LOOKING BACK IN FEBRUARY OF 2011, THE, UH, SUPER BOWL ICE STORM THAT WE HAD IN DALLAS, AUGUST OF 2019, WE HAD A HEAT WAVE AND SOME WIND GENERATION THAT FELL SHORT.

AND THEN OBVIOUSLY MOST RECENTLY IN FEBRUARY, I DID NOT INCLUDE FEBRUARY IN THAT GRAPH BECAUSE IT WOULD PRETTY MUCH LOOK LIKE A FLAT LINE AND THEN A, A STRAIGHT LINE AT A 90 DEGREE ANGLE, UH, BECAUSE OF THE SEVERITY OF THAT EVENT, HITTING $9,000 A MEGAWATT HOUR OVER THE COURSE OF A WHOLE WEEK.

[00:35:02]

IT MAKES THOSE, UH, PREVIOUS PEAKS ALMOST, UM, FLAT IN COMPARISON.

UM, BUT THAT REALLY ILLUSTRATES JUST HOW SEVERE, HOW RARE THE FEBRUARY WINTER STORM EVENT WAS.

UM, WHEN WE LOOK AT IT FROM A HISTORICAL PERSPECTIVE NOW, WHAT'S THAT, WHAT IS THAT DONE? IT'S REALLY DRIVEN, UM, POWER PRICES UP QUITE A BIT.

AND THEN MOST RECENTLY, AND THE WOMAN THAT HAD JUST PRESENTED MAY SPOKE TO A VOLATILITY AND SUPPLY CHAIN DISRUPTION.

THAT'S WHAT WE'RE SEEING WITH NATURAL GAS RIGHT NOW, UH, FOR THE LAST 10 YEARS EVER SINCE WE HAD THE, THE FRACKING AND THE EAGLEFORD AND THE PERMIAN BASIN, SHALE REVOLUTION, NATURAL GAS PRICES HAVE COME DOWN, THEY'VE TUMBLED TO DOWN.

UM, AND THEY'VE BEEN SITTING AT THESE VERY LOW $2 OR $3 PER MILLION BTU PRICES FOR THE LAST 5, 6, 7, 8 YEARS.

THAT'S KEPT POWER PRICES IN TEXAS STEADILY ON THE DECLINE.

SO YEAR OVER YEAR, OVER THE PAST FIVE, SIX YEARS, WHETHER IT'S CITIES, MUNICIPALITIES, UM, SCHOOL DISTRICTS HAVE TAKEN ADVANTAGE OF THAT AND DONE LONG-TERM CONTRACTS BECAUSE THE PRICE HAS REALLY BOTTOMED OUT TO A LEVELS THAT WE HAVEN'T SEEN BEFORE.

WELL, NOW GAS HAD JUST RECENTLY, UH, ABOUT THREE OR FOUR WEEKS AGO HIT AS HIGH AS $6 PER MILLION BTU, UM, WHICH FAILED PERILS IN COMPARISON TO WHAT THEY WERE EXPERIENCING IN EUROPE, WHERE IT WAS $30, UH, PER M BTU.

SO A LOT OF THAT IS AGAIN, GLOBAL SUPPLY CHAIN DISRUPTION.

UM, THERE'S INCREASED DEMAND FOR TEXAS LNG EXPORTS.

THAT'S WHY ALL OF THESE LNG TERMINALS ARE, UH, MATERIALIZING UP AND DOWN THE GULF COAST.

BUT WHAT IT'S DOING IS IT'S PUTTING PRESSURE ON OUR TEXAS ELECTRICITY PRICES DOMESTICALLY BECAUSE OF THIS GLOBAL GLOBAL PHENOMENON.

SO WHEN WE LOOK TOWARDS, UM, PRICING, WE ALWAYS WANT TO TRY TO PRESENT AN OFFER THAT'S THE SAME OR LOWER THAN WHAT YOUR CURRENT PRICE IS.

AND THE CITY'S CURRENT PRICE IS 38.9750 PER MEGAWATT HOUR.

Y'ALL ARE LOOKING AT THIS AT THE RIGHT TIME, BECAUSE A LOT OF WHETHER IT'S CITIES OR PRIVATE INDUSTRY, UM, THAT HAVE DELAYED DECISIONS THAT ARE LOOKING AT CONTRACT STARTING AS, AS SOON AS JANUARY, 2022 OR JUNE OF 2022 ARE BASICALLY LOOKING AT PRICES THAT ARE NORTH OF FIVE OR EVEN 6 CENTS PER KILOWATT HOUR.

SO IF WE THINK OF THAT, YOU'RE CURRENTLY BELOW FOUR, RIGHT? THAT'S A PRETTY BIG EYE-OPENER FROM A BUDGETARY PERSPECTIVE.

SO WE'RE TRYING TO, UH, HELP YOU ALL GET AHEAD OF THAT.

I'LL GET INTO PRICING IN A MOMENT, BUT, UH, SOME OF THE OTHER THINGS THAT WE'D LIKE TO DO WITHIN THE COMMUNITY IS REALLY PARTNER WITH OUR CUSTOMERS.

WE WRITE INTO OUR ELECTRICITY CONTRACTS AND ALLOCATION OF WHAT WE CALL GREENBACK DOLLARS.

THOSE ARE FUNDS THAT WE MAKE AVAILABLE, THAT YOU CAN USE TO OFFSET THINGS THAT YOU'RE ALREADY SPENDING MONEY ON.

UM, MOST COMMONLY IT'S HVAC OR LED LIGHTING UPGRADES, BUT, UH, REALLY IT'S ANYTHING THAT COULD BE DEEMED MORE ENERGY EFFICIENT AND, UH, THE SIMPLEST WAY TO REDEEM THOSE THAT JUST SEND US A W NINE AND A RECEIPT FOR THE SPEND.

WE CUT A CHECK BACK TO Y'ALL, UM, TREES FOR TEXAS.

WE HAVE A GREAT PARTNERSHIP WITH THAT ORGANIZATION.

UM, SOMETHING WE REALLY LIKE TO PARTNER WITH OUR, UH, OUR CUSTOMERS WITH, IF THERE'S A NEED FOR ANY TREES, FOR A CITY PARKS, MOST COMMONLY, WHERE WE SEE THOSE PLANTED, JUST LET US KNOW, AND, UH, WE CAN HAVE A DISCUSSION AND SEE IF THERE'S SOMETHING WE CAN COME UP WITH AND, UH, GET SOME TREES SET UP FOR Y'ALL AND THEN, UH, ENERGY AID.

UM, THAT'S A PROGRAM THAT TXU ENERGY HAS TO ESSENTIALLY HELP, UH, LOW INCOME RESIDENTS WITH BILL ASSISTANCE.

AND, UM, JUST HERE IN THE, UH, THE COUNTY ALONE, WE'VE GIVEN $25,000 OF FUNDS SINCE THE YEAR 2019, SOMETHINGS THAT THE TOOLS THAT WE MAKE AVAILABLE, WE HAVE AN ENERGY MANAGEMENT PORTAL.

YOU'LL BE ABLE TO, UH, PULL CURRENT INVOICES OUT OF THIS, BUT YOU CAN ALSO ANALYZE YOUR ENERGY CONSUMPTION BY ESI ID OR LOCATION.

UH, YOU ACTUALLY HAVE THE ABILITY TO CUSTOM NAME EACH LOCATION, WHETHER IT'S, YOU KNOW, A FIRE STATION, NUMBER ONE OR TWO WHERE POLICE HEADQUARTERS, ET CETERA.

AND THEN YOU CAN USE THOSE AS BENCHMARKS TO COMPARE USAGE AND, UH, LOOK FOR ANY SHORTFALLS WHERE YOU MAY NEED, UM, ADDITIONAL ENERGY EFFICIENCY.

WE ALSO PROVIDE A FOR CP NOTIFICATION SERVICE.

GOING BACK TO THAT SECOND SLIDE.

I HAD MENTIONED WE HAVE PROGRAMS TO HELP THE CITY SAVE MONEY ON THOSE AEP CHARGES.

UH, THAT'S A FORK COINCIDENT PEAK NOTIFICATION COMES IN JUNE, JULY, SEPTEMBER, AND OCTOBER.

[00:40:01]

SO A LOT OF MUNICIPALITIES LIKE TO TAKE ADVANTAGE OF THAT, UH, WITH THE NOTIFICATION SERVICE, YOU CAN JUST SHUT OFF SOME NON-ESSENTIAL LIGHTING OR RAISE SOME OF THE THERMOSTATS IN, UH, UNOCCUPIED BUILDINGS OR OFFICES, AND, UH, ESSENTIALLY DROP YOUR FOR CP LEVEL AND SAVE SOME MONEY ON THAT SIDE OF THE BILL AS WELL.

THIS JUST GOES A LITTLE BIT INTO THE GREENBACK DOLLARS.

AGAIN, FOR ANY ENERGY EFFICIENCY UPGRADES YOU MAKE, WHETHER IT'S LED LIGHTING OR HVAC, NOT ONLY ARE YOU GETTING THE MONEY TOWARDS THAT INVESTMENT THROUGH OUR REBATE PROGRAM, BUT YOU'RE ALSO GOING TO LOWER YOUR CONSUMPTION, UM, BY INSTALLING MORE ENERGY EFFICIENT FIXTURES, AND THIS JUST, UH, RECAPS THE FORK COINCIDENCE PINK, UH, TXU REDUCTION REWARDS IS ANOTHER PROGRAM.

WHEN WE HAVE INCIDENTS WHERE THERE'S A LOT OF, UH, SCARCITY ON THE GRID, I E A WINTER STORM YURI, WE CAN SET UP A NOTIFICATION TO GET Y'ALL ENROLLED, TO CURTAIL AND ACTUALLY CREATE A REVENUE STREAM BASED ON THE ENERGY THAT YOU CUT BACK ON.

SO THESE ARE JUST SOME OF THE, UH, CONCEPTS THAT WE HAVE OUT HERE, AS FAR AS OUR PARTNERSHIPS WITH THE COMMUNITY.

UM, AGAIN, RANCHES COUNTY ISD.

WE DONATED TREES AND, UH, PROVIDED FUNDS FOR SOME HVAC UNITS AFTER HURRICANE RV, UM, GAVE AWAY SOME TREE SEEDLINGS FOR CYPRESS-FAIRBANKS ISD, UM, DIRECT CASH DONATIONS TO EDINBURG ANGLETON, AND IRVING SCHOOL DISTRICTS FOR THEIR EDUCATION FOUNDATIONS.

UM, RIGHT HERE LOCALLY, WE DID A LOT OF TREE PLANTINGS FOR EDINBURG CISD, GAVE THEM SOME TREE SEEDLINGS TO GIVE AWAY AT THEIR POOL CITY EVENT.

UM, MOST RECENTLY HERE, WE MADE A DONATION FOR THE SOUTH TEXAS MUSIC FESTIVAL A COUPLE OF WEEKS AGO.

SO AGAIN, THOSE ARE THINGS THAT IF YOU HAVE ANY NEEDS OR CONCERNS APPROACH US, RIGHT, WE WANT TO HAVE THAT CONVERSATION AND SUPPORT OUR, UH, CUSTOMERS IN THE COMMUNITY.

SO HE USED TO A GOOD CONTRACT.

TIMING IS EVERYTHING.

A LOT OF FOLKS LOOK AT THEIR CURRENT BELL AND SAY, ALL RIGHT, IT EXPIRES DECEMBER 31ST, 2023.

WE'RE NOT LOOKING AT THIS FOR ANOTHER YEAR.

THOSE ARE TYPICALLY THE SITUATIONS THAT, UH, GET THEMSELVES INTO A CORNER WHERE WE SEE A RISING ELECTRICITY MARKET AND A NARROWING WINDOW BETWEEN THAT POINT IN TIME AND THE ACTUAL CONTRACT START DATE.

UM, SO AGAIN, BY LOOKING AT THIS, NOW, YOU ALL ARE DEFINITELY IN THE DRIVER'S SEAT AS OPPOSED TO BEING MORE REACTIVE WITH A SHORTER TIME SPAN BETWEEN THE DECISION AND THE START DATE ON THE CONTRACT.

THOSE ARE THE FOLKS OUT THERE THAT ARE LOOKING AT FIVE OR 6 CENT PRICES ON THEIR 2022 CONTRACTS RIGHT NOW, COMPETITIVENESS.

THE PRICING THAT WE PUT TOGETHER IS THROUGH TIPS, WHICH IS THE PURCHASING INTER LOCAL SYSTEM.

Y'ALL ARE MEMBERS OF THAT, UH, INTER LOCAL THEY'VE AWARDED TXU ENERGY WITH THAT INTER LOCAL AS WELL.

SO THERE'S ABOUT FOUR OR FIVE ENERGY COMPANIES WITHIN THAT PURCHASING COOPERATIVE.

SO WHAT THEY'VE DONE IS ALL OF THE HEAVY LIFTING, AS OPPOSED TO THE CITY GOING OUT TO CREATE AN RFP, AND THEN THE COMPREHENSIVE ANALYSIS OF SET RFP TO MAKE SURE THAT EVERYTHING YOU'RE RECEIVING IS APPLES AND APPLES.

UM, THEY'VE ALREADY DONE ALL OF THAT ON YOUR BEHALF.

THE CONTRACT HAS ALREADY BEEN NEGOTIATED THROUGH, UH, THEIR ATTORNEYS, UM, WHICH ARE COMPRISED OF A LOT OF FORMER SCHOOL BOARD MEMBERS.

SO FROM A GOVERNMENTAL PERSPECTIVE IS EXTREMELY FAVORABLE, UH, TO GOVERNMENTAL ENTITIES.

AND THEN BEYOND THAT, IT HAS THE, UH, GOVERNMENTAL CONTRACT THAT THEN THEM, UM, AGAIN, BUDGET CERTAINTY IS LOCKING IN THAT FULLY FIXED RATE TO ENSURE CERTAINTY AND, UH, THE PRICING THAT I'M GOING TO REVIEW WITH YOU MOMENTARILY.

WE'LL, WE'LL SPEAK TO THAT.

UM, CUSTOMIZED CONTRACT, SOMETHING THAT'S TAILORED TO SAN BENITO'S NEEDS, UM, BASED ON NOT ONLY TERM, BUT PRICE AND OR SUSTAINABILITY GOALS, AND THEN, UH, A PARTNER IN THE COMMUNITY.

UH, AND THOSE ARE THINGS THAT TXU REALLY EXCELS AT WHETHER IT'S PLANTING SOME TREES FOR Y'ALL OR SUPPORTING THE SOUTH TEXAS MUSIC, UH, FESTIVAL OR GIVING THOSE REBATE DOLLARS WITHIN THE AGREEMENT ITSELF.

SO THE PRICING THAT I HAD PUT TOGETHER, I HAD SENT OVER TO BAYLIN PRICING DOES EXPIRE TECHNICALLY TWICE A DAY.

UM, SO I'VE REFRESHED EVERYTHING HERE, BUT THE TERMS THAT WE'RE LOOKING AT HERE, WHAT I PRICED THAT WAS ESSENTIALLY BETWEEN A ONE YEAR AND A 10 YEAR CONTRACT PRICE.

[00:45:01]

THE LAST PRICING THAT I HAD SENT OVER TO BAYLIN, IT WAS 39, 68 ON A FIVE-YEAR THAT'S ACTUALLY MOVED UP TO $40, JUST UNDER 3 CENTS 0.0376.

SO THERE'S A BOUT ABOUT 40 CENTS OF UPWARD MARKET MOVEMENT, WHICH IS NEGLIGIBLE.

IF YOU DID A HISTORIC COMPARISON, I WOULD SUSPECT THAT THIS PRICE THAT Y'ALL CURRENTLY HAVE WITH TXU IS THE LOWEST THAT YOU'VE SEEN SINCE THE MARKET WENT DEREGULATED IN 2002.

JUST TO GIVE YOU AN IDEA OF HOW MUCH VOLATILITY THERE IS OUT THERE IN THE MARKET.

IF WE LOOKED AT JUST A 12 MONTH OFFER, WHICH THE START DATE IS DECEMBER 1ST OF NEXT YEAR, THAT PRICE IS 0.0 4 6 2 3 9 3.

IF WE GO ALL THE WAY OUT TO A 10 YEAR, BOY DROPS ALL THE WAY DOWN TO 0.0 3 7 8 7 4 6.

SO THAT DELTA IS ABOUT $9 A MEGAWATT HOUR.

WHAT DOES THAT MEAN TO THE CITY? I'LL USE ABOUT 10,000 ANNUAL MEGAWATT HOURS.

THAT $9 DIFFERENCE PER MEGAWATT HOUR IS ABOUT $90,000 PER YEAR IN EITHER ADDITIONAL OR, OR LESS SPEND.

IF WE LOOK AT THAT FIVE-YEAR PRICE WHERE IT STANDS RIGHT NOW, IT'S, UH, JUST OVER A DOLLAR NORTH OF WHERE YOUR CURRENT PRICE IS.

SO YOU'D BE LOOKING AT AN ADDITIONAL SPEND OF, UH, JUST UNDER A THOUSAND DOLLARS A MONTH.

IF WE GO ALL THE WAY OUT TO A EIGHT YEAR IS WHERE WE START TO SEE THAT PRICE DROP BELOW WHAT YOUR CURRENT RATE IS.

AND THAT'S A REALLY UNIQUE OPPORTUNITY BECAUSE QUITE FRANKLY, THERE ARE VERY FEW CITIES THROUGHOUT TEXAS RIGHT NOW THAT ARE DOING A FORWARD CONTRACT ON A PRICE THAT IS LOWER THAN THEIR CURRENT RATE.

SO IT'S, IT'S KIND OF A UNIQUE POSITION THAT THE CITY IS IN, BUT THAT ONE COMES DOWN TO 0.0 3 8 5 7 8 0 A.