Running a City Like a Business: A City Manager’s Perspective with David Dillner | Ep10

Go for it. What's up? So we're recording, but we can stop anytime if I like. No, no, no. Is this live? Yeah, yeah, yeah. Hello, fine followers. Welcome, everyone. Okay, now that you'll have to produce that out. Okay. No, we don't edit anything. This is a terrible podcast. I can't believe you agreed to be on it. It's very poorly produced. What's up, guys? Samuel here with Killer Growth. I'm your host, and I've got David Dilner here, the city manager of El Dorado, Kansas. And thanks for hanging out. Yeah, no problem. Thanks for having me. Yeah, of course. So we start off easy, soft serve question. I like to start from college to what brought you to the position you're in today. So let's start with that. Give us that story, how you ended up here and what you did in college. Okay, well, I went to college at Benedictine College in Atchison, Kansas. Got a degree in history. Didn't really know what I was gonna do with a history degree. I thought about going to law school, but for whatever reason, decided not to pursue that. Is that a common transition from history major to law? Well, I feel like it's either law or teaching, yeah, which I didn't wanna teach. So I actually took a class at Benedictine that was kind of focused on local governments. We toured city hall, did some stuff. And so one of my professors was like, well, why don't you apply to graduate school? And I thought, well, might as well, that'll buy me some time. And so I applied and got accepted to the University of Kansas and they have a very robust city management program. You actually do one year of academic work and the second year is an internship, full-time internship. And by the way, the first year you do a part-time internship so it's very practical experience heavy, which I really liked. And got into the city of Ottawa with my internship, Ottawa, Kansas, just up the road here, and really enjoyed it. Got some really good experience and really saw that that was an opportunity to get into a community and make a difference where you could see it. And so from there, shortly after graduation, I took a job in Winchester, Virginia. My wife and I freshly married. We moved about a week after our marriage to Virginia and got another great experience in another city, East Coast city. So a little bit different vibe, but pretty good community. I feel like you fit right in on the East Coast. Oh, thanks. So it was pretty good. We were there for almost two years and then we decided to look to coming back to the Midwest because we were having twins and I happened to get a job in Edgerton, Kansas as their first city administrator. They'd never had one before? They'd never had one before. And so kind of a unique experience where I was fairly new in the profession, had never been an administrator at that point in time by myself and thought, what the heck, might as well roll the dice and see what happens. Did that, got that job and had a pretty good experience. At one point in time was managing the largest economic development project in the state of Kansas. So that was fun. What was that project? BNSF put an intermodal facility in and then around that was over a thousand acres of warehousing and logistics space. So it was actually kind of funny how it came about. It was actually supposed to be in Gardner, Kansas. And at the time, the two cities were separated by about six miles, but Gardner had annexed the site. And so as a result of that, they physically touched the boundaries of Edgerton. Well, in Gardner, the project was very controversial. About 50% of the community wanted the project and the other 50% didn't. And the folks that didn't were able to get an election and they changed the dynamics of the commission and de-annexed the project to which Edgerton and myself were able to swoop in and annex the project. And so now the property is in Edgerton and Edgerton city limits touch Gardner's. A huge opportunity for them because it was a 1200 population community, basically still is to this day. I mean, I think they've had some, a little bit of growth population-wise, but their taxable valuation is volumes larger than what it was then. I think one warehouse exceeds the taxable valuation of the entire residential community and they've gotten numerous more others built between now and then. So that was a really interesting- Do they like put gold in their roads now? What do they do with that surplus? Well, they're building some new facilities, investing in some park ground. They reduced their property taxes by a lot. And so, and they just keep growing industrial warehousing. So it's a good opportunity. I decided to, however, leave that opportunity because I felt that the opportunity was really gonna be building warehouses and I wanted kind of a more full scale city, full service city. And so we moved to Abilene, Kansas, just up the road from here. I was there for about six years. And then I came here after that and I've been here for almost nine years. That's crazy. What's Abilene, Kansas known for? Abilene, Kansas is known for really two things. Well, maybe three actually. They're known for the, not the birthplace, but the home childhood of Eisenhower. So they've got the Presidential Library and Museum there. And if you haven't been there, you should check it out because it is kind of a hidden treasure in Kansas. They've made a lot of investments over the last couple of years to enhance that museum. Secondly, they're known for greyhound racing. So they used to have a huge greyhound industry. That's kind of reduced over the years because greyhound racing is not as big as it once was. And so that's, but you can go to the Greyhound Museum right across the street from the Eisenhower Museum and check that out. And then the- It's just like dog skeletons? What's in the- No, they've got, it's more of a, you know, pictures and different things like that. But yeah, no dog skeletons. But they used to have dog farms around. In fact, they have two sales, a fall and a spring sale in Abilene. And once upon a time, they actually sold a million dollar dog. What? Yeah. Like auctioned it off? Auctioned it off. That's a fast dog. So yeah, it's kind of, greyhound racing was very interesting in that it was very similar to thoroughbred horse racing, where if you had a dog that was very successful, it would sire dogs and those dogs would be worth more, not necessarily based on their track record because they haven't raced yet, but based upon their father or grandfather. Heritage. And then the third thing that Abilene's known for is the Chisholm Trail. It was the end of the Chisholm Trail. And so a lot of cattle drives went to Abilene. And so there's a lot of historic houses and a lot of history in Abilene. Awesome. Then you came to Eldorado nine years ago. Then I came to Eldorado, yep. I can't believe it's been nine years. It's crazy. All right, so let's go into, the reason I wanted to have you on the podcast, obviously this is, most people we interview, it's about business related things. And I thought it'd be really interesting to understand how a city works. You know, what's the relationship of a city to local businesses? What should businesses know about their city, right? Just being aware of it. And I think a lot of people, the more I've gotten to know you and we live a block from each other, so we're essentially neighbors, just understanding how city funding works, all of that. So let's break it down. Every city, right, has a, you've got a city manager, so you're essentially like CEO of the city, right? As far as like everybody here. So you're the top dog. Then every city manager reports to a mayor and commissioners. And I think a lot of, I confuse a long time, like what a mayor actually does versus what a city manager does. But break that down. Like what's the difference between city manager's position and responsibilities versus like commissioners and the mayor? So you're exactly right. The city manager is, for all intents and purposes, the CEO of the municipal corporation. And a corporation has a board of directors. And so the equivalent to that in the municipal world is the city commission, or in some communities, it's the city council. Now in Kansas, there's some nuance between a city council and a city commission. So I'll talk explicitly about El Dorado's form of government and then if there's additional questions you have, we can answer those as well. So in El Dorado's case, a commission form of government in Kansas, the mayor is, for all intents and purposes, the chair of the board and has no other authority outside of that. So in other words, the mayor is the first among equals. The mayor has no veto power. The mayor does not necessarily even generate the agenda as they may in a council form of government. So the mayor opens and closes the meeting, makes sure there's order, but casts one vote and that vote is equal to the other four members of the commission. Which that in itself surprises me. I would have always assumed a mayor has more. Yeah, so if you took the mayor and you just changed the name to chair and you think about it like that, that's in essence what the mayor in El Dorado, their power, what they have. So the power structure in the commission is there's five members, they each have a vote, and that's where the power is really held by the people. They elect the commission who represents power on behalf of the community. And then they appoint a city manager to oversee the municipal operations and implement policy that they approve and delegate the authority for the municipal operations to the manager who then make sure that, again, those policies are implemented according to the way the commission wants. So running for city commission or mayor in this context, there's really no difference other than a little more responsibility on facilitating the meeting. But when you're voting for a mayor or a commissioner, the weight's similar. As far as like their influence on what could affect your city. Yeah, there's one other difference. It's not really a big difference, but the mayor gets a two-year term and the rest of the commissioners get a four-year term. Oh, so mayor's term is shorter. Why is that? That's just the way it is. I can tell you that each city is uniquely different. So for example, in Abilene, you didn't actually vote for the mayor. You voted for members of the city commission. And then the commission decides who the mayor is. Now, in Abilene's case and many communities like this, they have a tradition where the top vote getter in the election is the next in line for mayor. The second vote getter is the next one after that. And then you just repeat the cycle. Some communities, they do it slightly different where you don't elect a mayor, you elect the commission. And then the commission annually votes for who the mayor is. Because again, in a commission form of government, they are just the chair. So you're just basically, who's gonna be the chair this year and then who's gonna be the vice chair. And then in a council administrator form of government, like Andover, for example, you vote for the mayor and the mayor has veto rights and they have, so it's a different power structure than commission manager form of governments. So you see like the mayor of New York City, that big election that just happened. Obviously a mayor is compensated differently than a traditional commissioner, right? Or the commissioner seat. Part of that is marketing responsibility. What other responsibility comes with that in a larger city? Because I feel like a mayor's, you see them all over the place. Yeah, so mayors of larger cities are gonna be more akin to like a governor or the president, right? So they are going to be the executive authority in that city and they're gonna be full-time elected officials. So they're gonna set the agenda. They're going to be the top influencer. They're going to, basically, they're gonna be the city manager and the top elected official. So they're gonna carry a whole lot more authority. They're going to have a lot more power in those communities. And so that's why they get paid more money. So in larger city, those are synonymous. City manager and mayor is synonymous. Is that what you're saying? Some larger cities may have an administrator or a chief of staff, but the power or the authority is going to be in the mayor. Got it. And we can talk about why there's pros and cons to that if you want, but in essence, those are, that's kind of how that works. Yeah. So they still have a commission. Or a council, yeah. Or a council. And so do they have more weight on a vote at that level? So like, if you look at like a Wichita, for example, each council member has a ward. So they're going to represent a specific geographic area of the city. There's pros to that because that means that that area gets, they get representation as opposed to at large where it's, they may not receive as much representation at times or it may not feel that they do as they do if they have a specific ward or a specific geographic area. But in a bigger city where you have wards or precincts, a council member is also not going to advocate necessarily for something that's outside of their ward. Makes sense. Unless, I mean, there's obviously going to be issues that are of citywide importance, but they're also going to jockey for dollars or jockey for things that are going to be of value to their district. And so that's some of the pros and also some of the cons. Whereas in a city like Eldorado where everyone's at large, the task of the commission is really to see things from a community-wide perspective. And so they have to take the whole community into the calculation. You just mentioned the pros and cons. Is that a good example of one of the major differences? What are some other differences as far as pros and cons of that set up on a larger scale versus a small rural town? So again, the mayor in a city that where you have a strong mayor form of government, they get to dictate the agenda. So if the mayor is like, well, I think that we need to do something about X, but the rest of the council's like, no, we think economic development or homelessness or whatever topic is of community importance is more important. The mayor gets to kind of dictate that. Now the council has a check in terms of budget approval and things like that, but the mayor can largely go outside of that realm. And once the budget's approved can kind of dictate how those dollars are allocated and what they're spent on. And in fact, that is in large part why the council or the city manager position was even created in the first place. So we go back to the early 1900s, there was a lot of corruption in big cities. And what was happening is mayors had these very strong political machines. So it really became, oh, if you need a job, I can hook you up, you give me votes and I'll give you a job in the municipal government. Or if you want your pothole fixed, you got to contribute to my political campaign. So there was a lot of corruption. And what that did is it created a lot of inefficiencies. As you can imagine, neighborhoods that could contribute to political campaigns got things done and neighborhoods that were poor or that were not on the radar of elected officials, just they just had deterioration or they had degradation and it became a problem. And so business leaders throughout the country decided that these cities were falling behind and they weren't being competitive because of this graft and this corruption. Kansas City was actually one of them. It was a very significant reform, part of the reform movement. And these business leaders came in and they said, we would like our local governments to be ran more like businesses because they need to be efficient, they need to address the interests of all citizens. And so they got the city manager form of government. That's why it looks so much like a corporation. You've got your board of directors, you've got your CEO, and they're supposed to represent the interests of all the entire community. And that's where we're at. That makes sense. And also from an elected perspective, this person could be completely unqualified to do that job versus when you're appointed and you're applying for a job, like you applied for Eldorado, you were interviewed by the council, by the commissioners, and then they decided to go with you based on your experience, your knowledge, and your ability to run a city. So I would imagine if someone just getting elected, they could pad their own pockets and they could have an agenda that's completely opposed to the city as a whole, but benefits them and their supporters. That makes sense. So talk about your authority. What authority do you have? So do you set the agenda for the commission meetings? So I would say that it's more of a collaborative structure. The commission generally looks to me for guidance and leadership in that because I'm going to have the pulse of what's going on in the community and the city organization. But then as issues may come up, they may hear about it from constituents or they may want to try to accomplish something themselves or as a group. And so then we figure out how we can plug that into the agenda, either in terms of timing or does it fit better on a work session or does it need to be on a regular agenda or how is that item going to be moved forward? So I would say that it's a collaborative process. What's the difference between a commission meeting and a work session? So a commission meeting or what we also call as a regular meeting happens on the first and third Mondays of the month in El Dorado at 5.30. And that's where the commission takes action on items that are before them. So for example, if they need to pass an ordinance, changing a law, or if they need to do a rezoning action or they need to approve a policy, those actions take place during regular meetings. A work session is going to be a meeting where we review the agenda items or we review just topics of discussion. And it gives the commission an informal opportunity to first of all, receive information about the issue and then discuss it among themselves and receive information from the, ask questions of staff about that issue in an informal environment where they're not necessarily in the hot seat, so to speak. And so a lot of our dialogue and conversation takes place in those work sessions. When you flip on the meetings on Mondays, we have very short meetings in El Dorado. I mean, generally, if we have a 45 minute meeting, that's a long meeting. Our meetings usually are about 30 minutes long, give or take. And some of the people in the public might say, they're not doing anything or they're not, how's this happening? Or they're making decisions behind closed doors. And to address that real briefly, the work sessions are where the bulk of those conversations happen. It's where the meat and potatoes get cooked, so to speak. And those meetings can last anywhere from two hours to maybe three hours on a long meeting. Those meetings are also open to the public. And so you might say, well, why would I have those meetings in a regular meeting or those discussions in a regular meeting? And I think it's just an opportunity. It's more of a laid back approach that allows the commission to kind of ask questions and get those answers so they can deliberate the decision. Community can sit in on a work session. Absolutely. But they can't participate. Well, it depends on, the commission can allow conversation and dialogue. Do they just like raise their hand or? Yeah, there's not really a formal process. Is it premeditated? No, I would say that what's happened in the past is that members of the community would say, do we have an opportunity to speak? And the commission generally allows them to provide input and provide comment. It's just at their discretion. And they can say no if they want to. Yeah, yeah, that's interesting. That seems like that could be difficult to orchestrate if you had some difficult people showing up to work sessions. Has that ever been difficult? I would say that in the time that I've been here, we haven't really had a problem with it. Generally, people are respectful and wait their turn. And then the commission, I would say that if the public is respectful and they're waiting their turn, the commission is generally amenable to providing them an opportunity to provide commentary on items. Yeah. So if you had to explain the city revenue sources, like on a P&L, what are the major drivers? Like the city has revenue, it's an entity. What are the major drivers? So if I see all these revenue lines, what would I be looking at? Where does the revenue come for the city? So the top revenue items in the city are going to be property taxes, sales tax, utility fees, franchise fees, and then what we would consider to be miscellaneous general revenues. So I think we all know what property tax is, sales tax makes sense. What are franchise fees? So franchise fees are, so a utility company, for example, natural gas, electric, even fiber companies, they locate their infrastructure within the public right-of-way. And so we negotiate right-of-way agreements and as part of that concession, they pay the city a franchise fee of up to, in some cases, 6% of their gross revenues to the city for use of the public right-of-way. So they're basically compensating the city for use of that right-of-way. I couldn't tell you the exact dollar amount that we get from franchise fees, but in the general fund, it's one of our largest revenue sources. So in essence, utility customers, excuse me. Trash, water. No, not trash, because trash- You're talking about the franchise side. Trash does pay a utility, I'm sorry, a franchise fee, but it's not because of, we just basically assess that on our own revenues from the trash revenues. But your private utilities like Evergy and your, well, your electric and your natural gas, for example, you're going to have a franchise fee that's assessed on your bill, based on your bill. And then the electric company, for example, you'll pay the electric company and then they remit that to us. Gotcha. That's baked in there. Interesting. So what you say, it's a large portion. So your direct utility sales, I don't know if that's the right word, but I'm thinking of trash, water, waste. What percent of revenue ballpark is that? Because you guys are doing all of that, right? That's not outsourced. You own the water, you sell the water, you clean the water and you dispose of the trash. I think that's what's on my city bill. Yeah, so in the city of El Dorado, water, wastewater and trash, you also have a stormwater fee on there. So each of those revenue sources, and this is where it kind of gets confusing. So your water bill and your sewer bill and your trash bill, those revenues go into those utilities and they do not go into the general fund except for what we would call our franchise fee. So whenever the city, we charge, I think 5% or 6% of, much like electric or gas, and then that goes into the general fund. The rest of those dollars, the vast majority of those dollars stay in those funds so that your water bill pays for water infrastructure, pays for water treatment, pays for sewer collection and sewer treatment, pays for replacing water or trash trucks. And so those utilities basically operate like businesses, separate from general government. So from what I researched, do you call those enterprise accounts? Yes. Okay, so the general fund is like the center. So yeah, explain that. How many enterprise funds exist within the city? Enterprise funds are going to be the water fund, the sewer fund, the refuse fund, and the stormwater fund is another one. And then we also have a compressed natural gas fund, which is like a $20,000 fund where we sell natural gas. We don't sell much of it, so all of those operate as enterprise funds. Gotcha. And then those have their own P&Ls, their own budgets. They're essentially like classes. They're not like separate entity, right? It's still under the same- Right, they're still under the same umbrella. Employees of those departments are employees of the city, but for accounting purposes, they're wholly separate. Got it, that makes sense. So within the general fund, so you're taking a fee. That's actually really interesting across those. So your net essentially for admin costs is not much off of the water waste trash. It's, you're pulling, as far as the general fund, the rest of it is just covering expenses. Right. And then you're pulling 6%. What is that 6% you're pulling into the general fund of your own service? What does that go into? So really when we think about transfers into the general fund, those are going, you can consider it like mill levy reduction. You can consider it, I mean, basically it's just revenue that we use for general government services. So general government services would be defined as services of the city that really don't make a profit per se. So like, for example, the police department, they may issue you a ticket and you pay that ticket, but the aggregate number of tickets and the revenue that's generated from tickets is grossly less than the amount that we need to run the police department. So the police department is not an enterprise. It's under the general fund. Yeah. Yeah. Because it doesn't, the department itself does not generate enough revenue to pay for itself. So it takes about $2.3 million to operate the police department 24, 7, 3, 6, 5. And we probably bring in about $300,000 in fines a year. And those are going to be, and you got to understand that fines also go to pay for municipal court. And so it's not just for the police department. So a lot of people are like- The fire department fall under that too? Yeah, so the fire department's in the general fund and the police department, parks and recreation, the engineering department, administration, the city commission, those are going to be the primary things that do that. What about paved roads? What does that fall under? So streets are also what we consider general government. They are not in the general fund because we actually have a separate fund for them. And the reason for that is because we receive state gas tax. So you go fill up your pump, you pay a tax, that tax comes back to the city for specifically street maintenance. And we put in a separate fund so that those funds go straight to streets. They don't get intertwined and we pay for a fire department and other things. We pay for streets with those dollars. We also in Eldorado have a street sales tax. And so that's a separate fund as well, again, to account for those dollars going to streets and not for other things. So that's baked into the city's portion of sales tax. A percentage of your portion goes towards streets. Yeah, so the- As far as like the sales tax budget, if you will. Yeah, so I can break that down real quickly. So in the city of Eldorado, we receive about three to $3.2 million a year in sales tax. And that's from a one cent sales tax on retail sales. Of that 3%, or let's just use $3 million. Of that $3 million, the first $1.65 million goes to the general fund for general government services, or what we also call mill levy reduction. And that's equal to about 14 mills. So what that means is if we didn't have that money going to the general fund, we would need 14 mills on the property taxes to provide the same level of services. Break down what a mill is and associate that to actual like my costs on my property. So a mill is the, it's an input on a formula that's used to calculate property taxes. So you have your assessed valuation of your property, and then you multiply that by the percentage that the state assesses it at, and then you divide that by the mill levy, and that's the rate you're actually taxed at. And then you multiply that by the number of mills, and then you have the amount of taxes that you pay. So generally, I mean, in the city of El Dorado, the aggregate mill levy is about 158 mills, I believe, and that varies because of the school district that you're in. The city of El Dorado receives about 58 mills of that, and then you have the school district, the county, the community college receives the rest of it. And so when you get your mill levy tax statement, it's gonna have all of those on there. And then so depending on the value of your property, whether it's commercial or residential, and the mill levy, it's gonna determine what your property taxes are. So I think, for example, in my house, it's about $2,100 in property taxes. And so a mill levy of about 158 mills equates to approximately $2,100 in total taxes that get collected, and then of that, the city receives a portion of that. And I couldn't tell you what exactly that looks like for the city specifically, but that gives you an idea. Yeah, it's essentially just a tax formula. Tyler? Yeah, what does mill stand for? Great question, Tyler. Putting you on the spot. It stands for something, I couldn't tell you exactly where it comes from. A mill is actually, I can't tell you, it actually stands, so a mill, M, is, if you look at a Roman numeral, it's a thousandth. So a mill is the value of a thousandth. So it's what is assessed on a thousandth of your assessed valuation. That makes sense. We don't make it easy in Kansas. You have to have kind of like a degree in calculus to calculate your property tax bill. I think that's somewhat of why people are irritated about property taxes. First of all, they don't understand, like, who's actually responsible for increasing your taxes? Who is it? Everybody can point to everybody else. We think it's you. I know, everybody can point to everybody else. So let me give you an example. The city didn't increase your taxes because, let's say, if we keep our mill-a-vie flat, which, by the way, we haven't, but even if we did that, we could say, well, the mill-a-vie's flat, but if the valuation of your property went up, well, that's the assessor's fault because they appraise your house more. Because it's just a formula. And the assessor will say, well, no, we are just appraising your house based on the market. So maybe the market's to blame. And then the market's kind of a silent voice. So the appraiser can point to somebody, and then somebody can point to the governing body, and they can say, well, they raised, or didn't raise, or whatever, and everybody kind of points their finger at everybody else. The fact of the matter is, is that the appraiser, the governing body, everybody's responsible for the end result. And I think the other point that I'd make is it's really complicated, and it's very difficult for citizens to understand how it all breaks out. Because from what you're saying, how it's divvied up, you could decide to raise your mill side like a school district could too. Does that go to a vote? No. So autonomously, you guys could all raise. Yeah, that's a good point. That's terrifying. The city could go up, the school district could go up, the college could go up, and the county could go up all in the same year. Do you guys talk to each other so that doesn't happen? Probably not as much as we should. I mean, I'm not gonna lie. Unfortunately, what we do is we look at what our organization needs, or what we think it needs, and then we build our budget that way. And then, I mean, in some cases we do coordinate, but in a lot of cases, this is what we need to get to provide the same level of service, and that's what we move forward with. So walk me through, this is a lot. How do you even start building a budget? Like, what does that look like? What goes into that? Who's involved? Do you do a budget every year? Do you do, I don't know what your calendar year is for the city. So our calendar year is January to December, so calendar year. We start our budget process really in April, kind of with some preliminary conversations. We start talking about, you know, what is the commission's, actually we're gonna start, we started talking about the commission's priorities like a week ago, and so we'll start developing strategies for, you know, okay, what are we gonna do to address these priority areas, and then how are we gonna allocate resources to do that? Because if you don't allocate resources, you're not gonna get a whole lot done. So we'll start those conversations internally as the city government, and then we'll present those ideas to the commission first quarter of next year, and then as we begin to work through that process, we start taking in new information. And this is all for 2027. That's correct. Right. That's correct. So we're building a budget 18 months in advance of when it's gonna be effective, which is really difficult because we don't know what the economy's gonna look like. We don't know. You don't know what sales tax is gonna look like. Exactly. We don't know what appraisals are gonna look like. So it's kind of a guessing game through most of this process. But as new information comes available, as we learn, we monitor sales tax trends, we monitor different revenue sources and the macro environment, and we start building that into our system. And then we'll talk to department directors about what they're seeing in their department, the needs they're seeing in the community. If we go from service level X, what do we need to do to go to service level Y, to improve our service delivery? What enhancements would you wanna see in your department? So we start ironing those things out so that we can present options to the commission so that they can weigh those. So if the fire department thinks they need three more firefighters, we wanna take that to the commission so they understand this is what we think we need to provide the best level of service to the community. And then this is what's gonna cost in terms of property taxes or in terms of sales tax or whatever. Then the commission ultimately decides what's included in the budget or what's not included. So those deliberations come down in June and July. July, I think it's June, we get the appraisal from the county. So we kind of bake that in and we have to get our revenue neutral rate, which is a process that the state has. It basically says if you're going to exceed the amount of revenue from property taxes that you did, if you're gonna exceed the amount of revenue that you brought in last year from property taxes, then you need to notify the public of your intent to exceed and give them an opportunity to provide comments on that. So we begin that process in July so that we can have a hearing in September. And then we have two hearings in September, the revenue neutral rate hearing and the budget hearing. And then we adopt that. And that ultimately just goes to a vote to the commission, right? Hear the public, but the commission votes. That's correct. The only thing that is required for a citizen vote is a sales tax. Sales tax, yeah. Yeah. So on a balance sheet, like what's a healthy city balance sheet? The city has, cities have debt, correct? Then you also probably have to have some reserve in place. How do you even, I'm thinking from a business perspective, but with the city, how do you look at a reserve? You're taking into account what could happen in the economy, sales tax change, valuations change, right? So reserve is probably based on what you project revenue issues could be, or how much of a reserve is set up for building new things versus, you know, maintaining continued operations. Yeah, so it's a great question. What we do is we use a formula that looks at the last three years of expenses. And we take the average of that and we are going to reserve a percentage of that. And the rationale for that is that if a, the reserve is in essence, a risk mitigation tool. If we have a downturn in the economy, or if we have a natural disaster, we may not be able to collect revenue for a period of time, but we still have to provide basic services like we may have to remove debris, or we may have to provide, you know, we're still gonna have to provide water and sewer, and we're still gonna have to provide police protection and fire protection. So we want to provide, we want to have a reserve that provides generally about three months of cash to meet those operational expenses. So that's the way we look at it. There's different rules of thumb. Some communities look at revenues and they kind of use the same metric, but we look at expenses and go that way. How do you decide when you're building a budget to maintain versus build new, right? Like advance the city on something that hasn't been here, like versus just be better at what you do. Yeah, so I think this is the age old question that cities throughout the country are dealing with. We have infrastructure, much of the country's infrastructure was built after World War II. And a lot of it's 50 years or older, you know, streets, water lines. I mean, we have water lines in the ground that are over a hundred years old. And maintenance is something that has to happen every single day of every single year, because the system is always getting weaker and it always needs to be fixed. But to your question about new, so internally we've been having a lot of conversation about, you know, maintenance versus transformational change. And this is one of the things that we have to balance because we always have to do maintenance. We're always gonna have to fix streets and we're gonna have to fix water lines and sewer lines. But the community also demands things that move the community and the quality of life forward, whether that be new pools, new parks, new facilities. And so we're always looking at what do we need to do to do that as well. And it can be difficult to balance those things because we have a lot of maintenance needs. I think to give you an illustration of this, we allocate $700,000 a year in our annual street maintenance program. We should be allocating upwards of $2 million a year to maintain our streets. To what standard? So that would be based upon, if we were to hit your street about every 20 years. Oh, wow. That would take 2 million. That would take $2 million a year. Gotcha. So if we hit your street, and this is a major mill and overlay, for example, if we do that, we're not gonna come back to your street for over 20 years. I mean, in some cases it could be 30 or more years. So we're gonna do things like minor maintenance. We're gonna do puddle patching, we're gonna do crack sealing and we're also experimenting with some new preventative maintenance programs as well. But the big maintenance items that people see, I mean, like new sheet of asphalt, that's fewer and far between because there's just not enough resources to do that. And that's just one example, that's just streets. So now if you look at water lines, sewer lines, stormwater systems, and a lot of these things are things you don't see, they're under the ground. It's a big expense. It's a big deferred liability that's in the ground that people don't realize. And then that's not even including, for example, our water plant, wastewater plant. Wastewater plant was built, I think in 2008 and a lot of the pumps, a lot of the infrastructure inside of that plant comes due and we have to replace that. And if you don't do that, you have major problems like sewage backups and things like that. So it's definitely something we have to stay attuned to but we also know we have to do things that are transformative. Like how do we continue to reinvest in downtown and make it a place where entrepreneurs wanna go and start businesses or business owners want to go and start an enterprise or people in the community wanna go and just hang out. Those are challenging conversations to have. How do you weigh that for yourself? Do you feel like you put more weight on the maintenance and the long-term things that we don't understand? Do you feel like that's at your core of your job and maybe it's the community and the commission's job to think more about the transformational side? Do you feel like they're equal? Just from your position, being a CEO of a city, that'd be tough to figure out how to balance but for you personally, where do you feel like you lean that is priority at the, let's just say this current state, not forever, that's not a fair question. Yeah, I would say right now, my focus is probably on 40% maintenance and 60% transformational generally. And one of the things that I'm trying to do is I think a lot of, so there's a lot of conversation about property taxes being too high in the community and what we need to do as a city is demonstrate some real investments so people can see where those dollars are going. People, I think, understand what the- Because you don't see the sewer lines replaced. You don't see the new road if it's not where you drive. Exactly, and people, I think, understand what a police department does and what a fire department does but if you don't call them, then yeah, I mean, it's happening, yeah, you're paying cops but so we're trying to figure out plans. We're trying to figure out some strategies that we can implement for example, well, let me say this, the commission's strategies, their priority areas are economic development, housing, downtown and infrastructure. And so we're gonna be coming up with some strategies that we can implement to facilitate transformational change within those categories. So how can we get more housing built that people can see, for example, and afford? How do we get more investment in downtown, both public and private, that people can physically see? How do we get more economic development that people can physically see? Because we spend a lot of money on things that are doing things but that in many cases, people can't necessarily see. Yeah, and it's a tough balance because you want the community to be excited about where they live. They're not gonna obviously appreciate that other stuff as much. It is important when it finally breaks or doesn't work, you really want the sewage to work. Yeah, our goal is actually to prevent that from happening. Right. So we wanna replace the water line or the sewer line before we have a major problem. That's the right way to do it, especially in this setting. But yeah, there's also the community aspect of legacy of why would people wanna be here in the first place? Do they feel safe? Cops play into that, fire department. Do we have good school systems, good housing, safe neighborhoods? That's part of it. But then it's also to your point of like where to hang out, which I think small rural communities, it's a struggle everywhere. Downtowns are a struggle. Yeah, finding like that's not a big city, figuring out how to build an attraction that people enjoy being at is tough. A tough in a town of 12,000 people. Is there any, like if you could, yeah, if you could take one whack at one thing you wish you could change as far as just the city as a whole like take a system or process. If you could reinvent the water treatment plant or waste or how you do roads or like is there anything that's like such a big budget item if you guys could figure out how to do that better or do it a different way where it's gonna help with the mill levy in the future? Is there anything on the maintenance side and efficiencies to be gained on a bigger project? So I would say probably not. Our plants, our treatment plants operate pretty efficiently. Probably their biggest cost is energy, but that's just because the treatment process in and of itself takes a lot of energy to do. It's not to say they couldn't be a little more efficient, but you're just throwing, you have to have a lot of energy to run those pumps and do those chemical processes. So I don't know that there's a lot of opportunity there. I think from my standpoint, what we need to do is we need to focus on figuring out ways to grow the tax base. And in a lot of cases, that's gonna require patience and perhaps not in the way you may be thinking. So economic development and revitalization is in and of itself a difficult task and it can take years to see any success in that. But what I'm talking about is if you're successful in recruiting a business or talking in a property owner into redeveloping their building, they're gonna want tax incentives, which is fine. But those tax incentives generally are gonna take 10 years. And so the city is not gonna see any benefit from that for 10 years, like on our balance sheet. So we have to be patient and it's the long game. So if we're gonna work on expanding the tax base today, we're not gonna see the benefit of that for 10, 11 years. And then we'll be able to reap those benefits. But in the meantime, during that decade of tax abatement, we're still gonna incur maintenance responsibilities that we still need to do. And so it's difficult because we need to expand the tax base, but it takes so long. I mean, think about it, if you're a business, you're like, we're gonna have a new product, but we're not gonna see the revenue for 10 years. Would you make that investment? Maybe you do, maybe you don't. That's the game we have to play. And I think that's something that the citizens don't necessarily understand when they're like, well, we would like a tax abatement to move this forward. I definitely understand the need for investment and it costs a lot of money, but the service level, we can't reduce the mill level. Yeah, I never thought about that. Yeah, your service, I mean, your maintenance side increases, costs incur, more cops. You add some massive industry with 1,000 jobs here and housing blows up, but whatever their area is, if you're putting in roads and you're maintaining services over there and they're not paying for it, then yeah, you've got effect to that end of the budget. So you're saying the opportunity is not efficiencies as much as it is revenue growth, which is expanding the tax base. Right. And then, which is hard, easier said than done. Talk about on that subject of efficiencies, with technology, AI, do you see anything coming down the pipeline that can make a city more efficient with the direction technology is heading? Yeah, AI is gonna be very interesting. I don't think that it's quite in a place yet where it can really be a game changer, but there's definitely, I mean, I think staff is using AI to do staff reports much more efficiently. So instead of taking an hour to write a report, it takes 20 to 30 minutes. Yeah. And so that's a savings in time where now you can focus on other things, but that's not necessarily a savings, a cost savings, if you will. Well, I mean, in the long run, it ends up being that, if they can do more for less. Yeah, and I think at some point, perhaps the technology will be advanced enough that maybe we scrutinize positions where maybe this position doesn't get replaced because we can replace that with technology that's automated now or different things like that. At some point in the future, the front window at City Hall may not be available for people to pay their water bill. Now, is that five years, 10 years? I don't know, but that could be a reality. And so maybe there's some savings there, but again, there's not a lot of savings. We're not gonna automate the police department, for example. Sure. I don't think people are gonna want RoboCop patrolling their streets. But there's things like- Too many movies, too many doomsday situations. Right, right. But there's definitely things that, evidence maintenance, we do a lot of reporting, a lot of those kinds of things that could benefit from that. I think it's yet to be determined, but there's definitely some experimentation going on. What's the city's responsibility to be easy to work with a business versus enforcing permits, regulations, protecting infrastructure, right? You've got the inspection side of your deal, the permitting side, what is that balance of? You wanna be easy to work with and encourage business growth, but you also have to have some rules. Yeah, it's a very good question because people have to understand the rules that are in place are in place for the most part because something happened in the past, right? So somebody got burned and then folks were like, the city needs to do something to prevent that from happening again. And so we have regulations in place. And in some cases, the thing that happened may not have even happened in El Dorado. It may not have even happened in Kansas. Sure, that makes sense. So like the international building code is assembled by folks throughout the United States. And if you have a nightclub that catches fire in the 1980s, that's gonna have an impact on fire codes throughout the nation everywhere. And so those are things that people have to understand is that a lot of our codes are in place, not because bureaucrats in an office think it's really fun to make people's lives hard, but because people's lives were lost or something happened and the community said, we don't want that to happen again. So what we try to do in the city is we try to make it, again, like you said, we try to make it as easy as we can for developers and builders to do their thing because we understand that they're creating jobs, they're creating investment, they're creating tax base, but we also have rules to enforce on behalf of the community to make sure that it's done safely and it's done in a way that balances the community's interests with the private interests. And so it's a difficult thing because the folks that are doing the work, the builders, the developers, they always think they're getting the raw end of the deal. And in some cases, maybe there are some things we can do to improve our processes. But in many respects, we're trying to do the best we can to balance community at large interests versus private interests. Yeah, yeah, that's tough. What's the best way for, because I think, and you're good at this, collaboration is always invited. I think a good city invites collaborators. It wants pushback in the right way, but what's the right way to, I come to you and you're saying, I can't do this thing here. And I'm like, well, that's silly. I understand where you're coming from, but I'm like, we should be able to do this here. What does that process look like if somebody's being told no, or they're wanting to do some business venture in a zone or an area that city's saying, no, you can't? What's the best way for a business, for an opportunity or a business owner to push back on the city that a city would appreciate and maybe they both grow from it, or the city learned something they didn't know? What's the best way to do that? Yeah, so I think the first thing is having a consultation meeting with staff. So understand the regulation, and then it also helps us understand the other perspective. So don't go to a commission meeting first, and yeah. Come in, talk to staff, and we can definitely walk you through that process because at the end of the day, policies and regulations can be changed. Like they're not etched in stone. They're written down and we can change those. It takes a process, and that process can take a little bit of time, but it is a process that you can go through to get something changed. So if you need to change a zoning of a property, or if you need to change the actual zoning text to allow a use in a zoning district, we can walk you through that process and guide you through that. And then obviously we can also get that information to the commission and kind of give them kind of a heads up on maybe what those are so that they can kind of begin thinking about it. And we understand that the public definitely thinks that our process are long and cumbersome, but it's because again, we have to balance the community's interest with the private interest. So that means there may have to be a process where we have to notice up the community and we have to provide them an opportunity to provide comments. So you may want to make a change, but then the community comes in and says, no, we actually like it the way it is. And so you may not get what you want, but we can work you through that process so we can at least have the conversation. And I've seen that play out so many times with the homeless shelter conversation we've had in this town of like, here's the location, here's the opportunity. This organization wants to buy a building, but then all the neighbors are like showing up. I don't want that around here. So that's the community interest part where you're also having to balance that when there's expansion, if I want to put in a, yeah, a recycling plant in an abandoned building, but there's a house next door. That's, you have to take into account both of those things as far as neighborhood goes, or at least give them a chance to talk about it if you think it's okay. Cause I feel like I've seen that too, where you're like, yeah, we should rezone this. This makes sense. But the people, the neighboring community doesn't want it still. Yeah. And sometimes the planning commission and the city commission are going to look at things and they're going to say, we think the community's interest is to do this. And that may be counter to the neighborhood. So democracy is an interesting, it's an interesting thing. What's your responsibility as a city? What's your responsibility for city or a business growth for encouraging business growth, expansion, new business? What is the city's responsibility versus other organizations? So the city primarily leans on Eldorado Inc. to do a lot of that work. And then we also lean on Main Street, Eldorado Main Street as well. Excuse me. And then the chamber also has a role to play in that process. So they all, I think most people know what a chamber does or a Main Street organization, if they're there promoting that. Eldorado Inc., who we just had on, they're trying to bring in enterprise. What's your responsibility outside of what their services are? Is it services to these other organizations? Is it being a good partner to them? Or is there anything directly that you guys are also responsible for? So the first part of that is the city is going to be a collaborative partner with all of those. We're going to try to work through any barriers that they may have realized or may have received feedback from. Or if there's a problem, for example, in downtown, let's say there's a need for better lighting or different parking or whatever, the city's obviously going to be a part of that conversation. We're going to try to work through that with those stakeholders. And so some of that's direct and some of that's indirect. And then we can also have more of a direct role where we're providing grants or we're providing loan assistance or we're applying for loans or grants from different organizations. We also administer the city's incentives. So if you want a tax abatement or a neighborhood revitalization program, things like that, they go through the city. So I would say it's definitely a collaborative role. And sometimes that can be confusing to the public because it seems like, well, it's a lot of duplication or who's doing what. But for the most part, it works like it should. Yeah, makes sense. Talk about incentives a little bit. What opportunities are you looking for in the future? What are incentives you think that the city should implement from a funding perspective, grants, opportunities? What do you see in the next 10 years that you're hoping, as you guys are thinking transformationally, what are things you want to put in place that make us a city that's great to work with for our business? So we have talked internally and we're going to be releasing some new grants here. Now, are these grants like directly from the city or are these grants outside grants that you're applying for to then redistribute? These are local grants. So the city dollars are going to be distributed based on a grant process. And so we've got a mural grant program, we've got a facade grant program as two things that we have committed to in the downtown district specifically. And then to your point, we also will support private enterprise for grants that they either find or that we know of. So whether that's through the Kansas Housing Resource Corporation or through the CDBG program or through other grants that may be available. Now, new grants or incentives that may be coming up. We have been talking internally about some new grants, but we don't have specifics on what those might look like yet. But there may be some stuff that may be coming from that. And then another thing that we, the city has had in the past a speculative building program. It has recently expired. So speculative building program would be like a group of investors want to build a building without a tenant. And so they're building it kind of at risk. And what the spec building program would allow is for them to do that without incurring property tax liabilities. So it would basically be a way of foregoing property taxes for a period of time or until they get a tenant in that building. We've had that before. We've had that in the past. And they have been successful in building a building and getting a tenant in there. And then it kind of went away for a number of years and then it came back. And we had it on the books for about five years and then it sunset and it wasn't reauthorized. But we're getting ready to kind of roll that back out and with maybe some other things for our business park. So folks that may be interested in either expanding or maybe looking at a new building and are interested in our business park, that may be coming out here very soon. Yeah. What are you most proud of in your nine years of being, and that's a long time to be at one city, the turnover rate of city managers is what on average? I would say nationally, it's between five to six years. Depending on the state, it could be less than that. You beat the average. Yeah. Well done. So in Kansas, it's a little more stable. A lot of cities, particularly Eldorado size have managers that have been there for a while or they have very stable governments. So it's a good place to be a manager. But yeah, I'm going on nine years in March. So it's pretty good. I would say one of the things that- Yeah, what do you, of the nine years personally, what you've done to help the city of Eldorado, what are you most proud of? I would say that, I mean, there's a lot of things that I could go into, but one of the things that I'm most proud of putting my thumbprint on is renegotiating the city's Lake Debt contract. So the city's Lake Debt contract was, it compounds annually from an interest standpoint. So annual accrual of interest at a compound interest rate of 3.5%. What that means is that by 2081, if nothing would have happened, the city would have owed about $400 million, which is a big number for a population of 12,500. Now that number would have been spread out through, I mean, we have a lot of water customers, but it's still, it's a big number even for all of our water customers. And so we were able to renegotiate that to a simple interest. And so now instead of $400 million in 2021, 2081, that number will be about $57 million, which is still a big number, but substantially less than 400. Substantially lower. Now our goal is to find ways to get that water used or sold. So whether that's through a regional water supply district or through industrial water customers or both, we're trying to work on those strategies to further reduce the liability to the city. So that's interesting. I've never heard much about how the debt structure works because we own water at the lake that we resell. Why is it growing? Are we not using enough of it? So therefore we're only paying down on it. What we use, like, why is this growing? Like, what do we owe today? I guess I should say. So on that water. Right now the city of El Dorado owes about 30 to $40 million in like debt. So why was it going to get to 200 million if we're just not paying on it? Okay, so like that, it works like this. When the lake was built, El Dorado Lake already existed. There was already a lake there. So the Corps of Engineers gave El Dorado credit for that lake. So if we think about the lake in like a big water tower and we divide it up into four layers, if you will. Layer one, we got credit for because we had the lake. So layer one's paid for, free and clear. Layer two and three was based on the use that the city had. So as the city draws water from, actually the whole thing is based on the city's use of that water supply. So the city was, we were using all of water, all of storage level one. We were using storage level two. And then eventually as we grew, we were using part of stage level three. Well, now present day, we're using all of stage level three. And in the time I've been here, we were able to pay off all of stage two and all of stage three with money that we had saved up over the years. So now we have stage four, or really what we call future stages. Because in essence, the water that we sell to all of our water customers, so that's, for example, El Dorado, Augusta, Holly Frontier, or H.F. Sinclair Refinery, in numerous rural water districts. All of that water, which equates to, well, we sell, it's about four billion gallons of water a year. That amount of water makes up stages one, two, and three. So if that future stage, that future stage has not been tapped at all. So the way the contract works is that as long as it hasn't been tapped, you accrue interest on the principal amount. And so that is where you have that accrual. And then once you begin, and so we can call, or basically call in any amount that we need as we grow. So if we need a million gallons of water a day tomorrow, we can call the Corps and they can activate it. And so that gets amortized over a 50 year schedule. So then we begin paying debt on that amount of water. And so it locks in the accrual, and then we just pay that debt service schedule. So it is kind of an interesting contract, kind of a little weird, but that's how the Corps did it back in the 80s. And so we were able to stop the compound interest on the future amounts and turn that to simple interest. And now we need to find someone that can use that future use so we can pay for it. So the interest on the future use is just you secured it. That's why it's worth it, right? Yep. For expansion. Yeah, that's fascinating. Never heard that before. Yeah, dude, thank you. This is awesome. Really appreciate you coming out. I've learned a ton. And that's a complicated job. Good work. That sounds, running a city sounds harder than running a business, I'll be honest. It sounds a little more complicated. And there's politics, probably more politics than a small business has. Probably similar politics to a large corporation. Sure. Enterprise level, right? But yeah, appreciate you hanging out. Yeah, no problem. It's been great. Thank you.