Board of Directors Planning Session Agenda


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Meeting Date: 11/28/2018  

SUBJECT MATTER:
Receive, consider and act upon matters regarding the Incorporation Planning Study (C-2017-0433 & C-2018-0138);
a.     Review of additional Frequently Asked Questions
b.     Presentation of Financial Model developed by the Matrix Consulting Group 
c.     Presentation of Independent Financial Model/Best Practices Analysis by The Novak Consulting Group
d.     Review of Upcoming Schedule
FISCAL IMPACT:
Up to $872,500 funded from the Incorporation Reserve.
BACKGROUND:
The Township has engaged consulting firms to assist with the incorporation planning process and updates from the consultants will be provided at each of the Township Board planning session meetings through 2018.
 
At the November 28 planning session, the Board will receive preliminary presentations on the Financial Models developed independently by the two contracted consulting firms.
 
The Woodlands Township engaged The Matrix Consulting Group as the lead consultant for the Incorporation planning study. As the lead consultant, the Matrix consulting team is managing all aspects of the incorporation planning study including public input opportunities, a financial and benchmarking/best practices analysis, a tax rate study, an assessment of law enforcement needs, a pavement management study, and a review of infrastructure management alternatives (such as the structure of MUD’s and water services).
 
The Novak Consulting Group was retained to provide an independent financial analysis and benchmarking/best practices review. The Novak group will not be doing community outreach, conducting a law enforcement analysis, a pavement management study or infrastructure review but has access to the reports developed by Matrix.
 
Both firms will be using data gathered from the same list of peer cities for their analysis. Based on benchmark data (including information gathered from the peer cities), information provided through Township staff and the Township legal team, feedback from the Township Board and industry knowledge of each of the consulting teams, the Matrix Consulting Group and the Novak Consulting Group will each independently develop and recommend an operational, revenue and financial plan for a new city government operation in The Woodlands.
 
These reports will represent an “independent” analysis from each of the firms. Each of the firms have developed their financial analysis from information gathered from Township staff, from peer city reviews and from other sources. This process has not been driven by Township staff, as Township staff has simply provided budget data and other information gathered from partner agencies that the consulting firms could accept, modify or find from other data sources.
 
The financial analysis reports to be submitted by the consulting firms will utilize data from the Law Enforcement report completed by Matrix, the Street Condition report completed by HR Green and the Infrastructure Analysis (MUDs) completed by HR Green.
 
The presentation of the preliminary financial analysis reports by the consulting teams will provide a range of revenues, costs and service options for consideration by the Township Board of Directors. The broad range of costs and options will also include a menu of operational, revenue and cost options that can be “switched” on or off when final consideration is given by the Township Board of Directors.

It should be recognized that the report data presented on November 28 is preliminary, and does not represent the final report that will be used to establish a maximum initial tax rate for the purpose of calling an incorporation election. The development of a final report may require future amendments when review and validation of the report assumptions and options are completed.
RECOMMENDATION:
Following the November 28 public presentation of the independent reports, staff recommends that the Board direct the Township’s Finance Department to review the preliminary financial reports submitted by the consulting firms and provide an analysis of the major differences between the reports. This analysis would include:
 
  1. Develop a listing of major differences between the preliminary “independent” financial analysis reports developed by the consulting firms
  2. Validate the major differences between the financial analysis reports and the Township’s 2019 base budget and five-year plan
  3. Develop a detailed analysis of the report differences as outlined in 1 & 2 above for presentation to the Township Board
    • Monique Sharp will present a detailed overview of report differences and options for consideration by the Board in January
  4. Following the presentation by Township Finance staff in January, the Township Board of Directors will evaluate and provide direction to the lead consultant for development of the final financial analysis and computation of the maximum initial tax rate for Board consideration.

    

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