001June 8th. My name is Emma Yord and I'm the chair of the budget and finance committee. Tonight we have two items on the agenda. The first is the Golden Triangle Reinvestment Fund downtown TRID discussion presented by Chief Development Officer of the Urban Redevelopment Authority, Tom Link, and then we will move into our budget workshop. At this point, I will turn the meeting over to Tom Link for his presentation. Thank you very much. Um I have two of my colleagues here just for the the record. My colleague Shantaa Matthews, Leia Matthews, and uh and Katherine Murray is here as well from the URA. Um if it's possible, can Leia share her screen because she has a she has our presentation and it would be helpful if she if Leia is able to present her share her
002screen and I could present from that. Is that okay? >> Yeah, absolutely. Great. >> Thank you very much. >> I also wanted to note that Joe Heftley is joined us from the mayor's office. >> Oh, hi Joe. Sorry about that. Thanks for being here. >> Yeah, thank you very much. Yeah, I'll just get started while Leia pulls up the screener, but first, thank you very much. I mean, we thank you and in the Pittsburgh public schools um for your time this evening, for your partnership and your consideration um of the uh the potential request that we have in front of you. Um again, my name is Thomas Link. I'm the uh chief development officer here at the URRA and I'll be presenting on the Golden Triangle uh reinvestment fund in downtown TRID. And Leia, are
003you able to share your screen? Oh, >> okay. I just put message in that it's disabled. >> Oh, >> yeah. Brad or Stephanie, can we open up sharing for uh Leia? >> Oh, Leia, you're a co-host now, so you should be able to share. >> Terrific. Thank you. Thank you very much. I could share myself, but it gets sort of confusing sometimes to share my screen. It's hard to present off of it. So, I apologize. >> Totally understood. One of the downsides of the Zoom world. >> Yeah. Sorry. So, I I thank you for a minute here. Thank you, Leia. There we go. Can everybody see it? >> You know what's funny? I do not see it. That's okay. >> I see that you're sharing, but it looks like we're looking at a black screen
004right now. >> Okay. It did that for me for a second and then it popped up. Maybe it'll >> There we go. >> There it is. >> Okay. Thank you. Okay, we're good. Uh, yeah. Thanks so much. We appreciate your time, your partnership, and this cons the consideration for this item that um that we're discussing here today. You can go to the next slide. There may be a delay. >> Yeah, delay. Okay, it's okay. >> It still didn't pop up yet. >> A lot of long delay. >> H Okay, >> it's really strange. Hold on. >> Can you see that? I got out of presenter mode. >> There we go. Yeah, just from an agenda, we have a brief presentation that we'll make on this on the uh the downtown trade gold and triangle reinvestment
005fund. We'll we'll talk briefly about our turn tax diversion portfolio. I think it's important for the board and the public to understand kind of the URA's role in this work on behalf of the city of Pittsburgh. We'll talk about the reinvestment fund of the downtown TRID itself and talk a bit about its uh the TRID's uh potential proposed debt structure, the diversion rate, and then we'll get into sort of the why of why we're doing this, the goals and expected outcomes of the TRID. And then of course we'll touch briefly on um at least what's right now sort of a work in progress, but give you you know where we are with our legislative schedule, next steps, and then certainly open it up there for for questions and answers. You can go to the next
006slide. Next to the next skip three, go to four. >> All right. >> Yeah. >> Here we go. So, this is the uh current active uh portfolio of TIFFs and TRIDs. And just a you know, not use acronyms of much. So, TIFFs is TIFF is an acronym for tax increment financing. TRID is an acronym for transit revitalization in investment districts. Both are tax value tools. Um just kind of step back for one second. What is a tax value tool? value capture tool. Essentially, what tax value capture tools such as Tiffen should allow for is for um legislative bodies and and their and their partners to borrow against um future uh incremental uh generally speaking real estate taxes to invest in project related investments to support those those those specific value captures. So, um the RA
007has been administering these portfolio of investments um on behalf of the city and the taxing bodies. I think it's for well over it's almost 40 years at this point. Um our portfolio today is what you look what you see in front of you. We I was did some quick math here. In the last 10 years uh we've actually retired 13 individual tiffs. Um so our portfolio has been shrinking uh quite substantially over the last decade. Uh and at the same time we've approved uh or at least had financings for three new uh tiffs during the same 10-year period. And so, you know, that we've been in a process over the last decade or so of really having this portfolio um shrink. I'll say a couple quick things on the portfolio. We have a 0% default
008rate. Um every tiff when trade we've ever done when we do borrowings, we you know, the the uh debt payments are always made current. Um we have a outstanding track record in my opinion of sort of the the the assessed value that's created through these tiffs and trs has been substantial compared to the base before the tiffs and trids. And I would say that you know the projects themselves are actual projects that prompt that when when delivered and and sort of brought conceptually uh to folks have in fact delivered the projects that they um that were presented and we're proud to show that. So just want to give you an active a view of the active portfolio here and then we can go to the next slide Leia if that's okay. Um, in addition to
009the within that active portfolio, I just want to point out that there are three specific tax increment financings that are due to retire and will retire uh in the near term. So, within the next 12 to 18 months or so. So, two of them this year, 2026. The fifth and market, which is the PNC, TIFF, and PTC, which is a pit acronym for PO uh Pittsburgh Technology Center TIFF, both are retiring in 2026. And the Bakery Square tax increment financing u is also is due to will retire in 2027. And we just wanted to show those here uh that these are coming up in the near term. Again, similarly to our overall portfolio, these projects have uh had sub you experienced substantial increases and uh their assessed value over the base value at the time
010of the creation of the districts and and um and um substantial increase in the uh the taxes delivered. And I see there's a hand raised though. Can't can't tell who. >> Oh, it's um I had a quick question for you on the >> um the three like current taxes >> or the increase uh after retirement. Is that per taxing body or is that that like 1 million for the fifth and market PNC? Is that increase after retirement in tax revenue spread across the three taxing? >> I believe that's across the three taxing bodies. >> Okay. But I will double check that and make sure that we get that correct view if that's not correct. But I believe that's across the three taxing bodies. >> Okay. Yeah, clarification on that would be helpful just so the
011school board knows. Thank you. >> For sure. Thank you very much. >> Yeah. So to that end, we wanted to show this just to give a sense of what's coming up in terms of uh retirements and and the um what that means in terms of um again deliver you returning these taxes in full uh to the taxing bodies and the successful completion of those tiffs to further frankly uh shrinking of our overall portfolio. You can go to the next slide and you can probably skip over the introduction slide to the so we'll talk about the Golden Tri Triangle Reinvestment Fund in the downtown street. So this is a highle map of what's being proposed. So the golden triangle reinvestment fund is essentially a fund that would be created using a downtown trade value capture. So
012TRID of course as I mentioned before is an acronym for a transit revitalization investment district. Um this map shows two things. One is a value capture area which is uh outlined uh roughly in the in sort of the dark line. Uh it would encompass of course downtown, our central business district, a portion of the northshore and then um all of the strip district as a value capture area creating a uh investment fund area of the golden triangle which in this map is um shown as a you know sort of a gold or yellow. Um that's the basic of the geography. I'll notice note a couple things on the geography just because these things come up from time to time. it does not overlap with the existing Manchester Chateau trade. Um, and there are some existing
013tiffs, tax increment financing districts that are within this boundary that would not be included. Um, I mentioned fifth and market uh PNC tower would not be included because that's an active tiff. Um, what the the uh what I call the guards at market square tiff, although I think it officially has a different name, is also within this district and the Smallman Street or produce terminal tiff is within this dis within this geography as well. So those would not be included uh within this geography. Um you can go to the well let me just a couple things here. You can go to the next slide. Go ahead. >> Yeah, sorry about that. Thank you. So what we're what we're modeling today is a value capture district that we would uh allow us to allow us to
014collectively, right? So the URA would be a borrower um allow us to borrow over the full life of the trade up to uh $200 million and that's that assumes a full a full buildout based on projections of the entire value capture area over a you know multi-deade process. In the near term what we're modeling is is an initial borrowing that we call tranchan of approximately up to $50 million. The plan allows for additional borrowings over time. you know, generally speaking, up to four at about $50 million per borrowing over the term of the TRID. Uh that would total up to 200 million. Uh but the the near-term borrowing that we're underwriting right now is about up to $50 million based on uh uh existing development activity that we're that we that was in the value
015capture area that we believe we can borrow against to create an initial uh uh funding of a pool. So the initial borrowing is modeled today at approximately up to $50 million. The way we're structuring this is that it would be uh $40 million taxable, $10 million would be tax exempt. >> Oh, somebody have a question? Sorry. Um and the uses of those funds would be twofold. one would be an investment tool that would essentially provide gap financing directly into real estate development projects um of about 40 million of of the borrowing and then 10 million would be directly into public infrastructure projects such as uh public rightways, transit related projects etc. that would be public infrastructure projects. So that that's how we're modeling our our borrowing uh currently and you know want to want to
016outline this here and the next next slide I get in some more detail on to how we're modeling that and then some of the terms of the trade that we can go to >> skip to the next slide. >> There you go. >> Yeah, thank you. So couple the length of the TRID term would be 40 years. So the implementation plan describes a value capture area um that that I showed before in the investment district that would have a term of 40 years. Um individual borrowings within the term of the trade cannot exceed 20 years. So the way the implementation reads and how it's being described here is that there can be up to you know we're we're showing four maybe five but no more than a total of $200 million individual borrowings that can
017be no more than 20 years within each of within the term of the overall TRID. Uh the way this this the debt would be structured is that uh the URA would be the borrower. So we would issue debt. The RA would issue debt. Um they would be fully amvertised you know again taxable and combination of taxable and taxexempt fixed rate revenue bonds. Um, the way we're currently thinking of structuring them, and just to be clear, we're going through an underwriting process now as we would move toward an actual borrowing, is that the borrowings themselves themselves would include a 2-year um capitalized interest andor debt service reserve, and then the city of Pittsburgh would stand behind the debt. Um, so the city of Pittsburgh would be a guarantor uh to the individual bond issuances. Um, in
018the case of the tax exempt uh a tax taxable bond, excuse me, uh the city the city of Pittsburgh would be a full guarantor on tax exempt bond. It's essentially a guarantor to maintain a u a debt service reserve fund that's necessary and keep in place to be able to ensure that the debt service is in fact paid. Um the diversion a couple things on the bond structure and how these would be issued. So um and you assuming this plan you we're working through a legislative process and we understand there's much work to be done but if this plan were to be put in place a second phase of this process would be the issuance of individual debt. Um those borrowings would go both to the URA board as well as the city council given
019their role as a guarantor to issue each of those uh each individual debt. Um the way we are structuring the implementation plan in in any legislation would um would mirror this is have the taxing bodies participate uh together with the URA as to the structure of not the structure in this way but the uh the debt the debt themselves and then the structure of the funding plans um to that in turn would you know that would be consistent with the implementation plans themselves um the implementation plan itself um but I I'll pause here because this is what we're we're we're structuring ing um in terms of our modeling of individual borrowings against the uh against the against the trade and le you can go to the next slide actually I think is instructive so the
020diversion rate that the plan calls for is 7525 so 75% of incremental real estate taxes would be dedicated to support trade activities which really which largely means support of a you know pay debt service on trade borrowings 25% of incremental taxes and of course plus base tax, real estate taxes would be um retained by the taxing bodies. Um the initial $50 million borrowing that we're that we're modeling today would have approximately this type of breakdown um in terms of uh how those taxes would be uh incremental taxes would be uh scaled and then the diversion rate across each taxing body. um what we are modeling, you'll see it in the plan, there's there's actually an initial bar would be against some eight specific development projects that are in a phase of planning and and we
021have a high degree of confidence will um you know be available to uh create well not not available to but would you create the uh increase in assessment necessary to create this uh incremental real estate taxes and then in turn uh you know create the opportunity for the borrowing. Um the next slide shows us at full buildout. Um again we're we're modeling today an an initial borrowing of 50. At full buildout the maximum potential you know tax taxes that could be created and then diverted for the purposes of up to you know $200 million in borrowing would break down like this. But again just to be clear the we're we're currently underwriting a specific initial borrowing. um you know future borrowings uh would be underwritten and could be underwritten to the extent that there is
022incremental real estate taxes available to actually support debt issuances and in turn there are uses of funds ne that could that are um in place that would be required to borrow for to implement those projects. Um, you can go to the next slide. So, I just wanted to spend a moment here because I think it's kind of I think it's important to talk about kind of like why why we're doing this. Um, what's what's the point of this trade uh beyond individual projects and sort of the you know indiv borrowings and diversion rates to create the capital improvements. So you know the expected outcomes of of the trade are to really say top line is really to strengthen our downtown tax base you know grow support housing growth and affordability and create uh generate economic
023activity. So you know the downtown trade will invest in job creation housing small businesses uh the infrastructure necessary to sort of improve the overall experience for downtown living working uh playing etc and really work towards stabilizing our tax base. I'll get some some data. We've done some analysis uh to help you know what what downtown's t tax base means uh for our city and for our region and how this trend helps to address that. uh you know stable and growing downtown town tax base uh you know in shorts really at some basic level our full portfolio of tax barriers uh you know is is limits the the the the um burden frankly on those who are not downtown to pick up the destabilization of a shrinking downtown tax base. You know, at some very basic
024level, a healthy downtown attracts investment in people. So, people living, working, visitors, which of course fill buildings, and pay taxes, which helps stabilize our tax base. Um, you know, last week, I believe the county controller put out the 2025 uh uh county controllers report for the region, for the county, I should say. You know, in the in the report, there's I think it's page 18 specifically, it speaks to the the effect of of the the decrease in assessed value uh in the county's uh effect on uh the the revenue, real estate tax revenues and specifically the um you know the the decrease in assessed values downtown in particular and how that had a significant impact in the drop in local real estate taxes. We've been doing URA in support of doing analysis uh as to
025kind of the impact of this of the tax base and what growing the tax base t stabiliz stabilizing the tax base and what a decrease in this tax base can mean for overall taxes. So based on our modeling, we created sort of a pro proxy analysis using the 28 largest buildings downtown just to create sort of a proxy which we think is fair for the impact on downtown real estate taxes that for every 20% increase or decrease either way uh in downtown's assessed value. Uh that equates to approximately a $6.6 million again increase or decrease depending whether it's increasing or decreasing in real estate taxes to the three taxing bodies. Um the development project pipeline that we're working on that the TRID could help pay for fill gaps in is about total of about $585
026million in new development costs that you know our modeling suggests that would create over 5,000 new construction jobs in those projects alone. Um I important to note here probably that you know TRID funds when put into development projects or construction projects of any kind trigger prevailing wages, state prevailing wages I should say. Um, so the TRID does require this and that development cost and the TRID funding of such creates uh uh state prevailing wage funded construction jobs. Our current downtown development pipeline, you know, we're tracking right now north of about 1,700 new housing units that could be delivered for downtown. We've done some modeling on what that equates to an earned income tax for the taxing bodies. Um we've made some assumptions that uh for every you know new housing unit delivered downtown about 40%
027of them we think would be filled by new to pit city of Pittsburgh residences and based using that model and methodology for every 500 new housing units downtown we you the school district would earn an additional $400,000 in an income tax and the in and uh for each resident. So, if we were able to deliver 2,000 new uh housing units downtown, you know, that would translate into approximately $1.6 million in annual earned income tax from the delivery of those housing units. Another function, I just think it's important to say this because we talk about affordability a lot and why that's important. um you know the downtown uh development pipeline that we're tracking and trying to unlock in full and it's and of course grow that pipeline about 27% of that current uh project pipeline units
028are affordable units are as per the current modeling that's that's almost 10% nine or 10% higher than the current mix of affordable units downtown. So our the project pipeline we're trying to unlock um you know an aggregate is a higher percentage of affordability than what currently exists downtown and of course in turn would increase the mix of affordable units downtown to uh just north of 20% which we think is a um you know it gets to be a pretty healthy number in terms of a mixed income community. Um the current pipeline we're working on would remove about 2 million square feet of office. So some of one of the things we talk about generally in terms of downtown is this the idea that downtown is is is overbuilt for office. So there's a variety of
029data that we can get into and it gets a little wonky, but downtown Pittsburgh was is is largely built to be is largely a built environment for offices. So we know that with the you know with the the downturn and the demand and need demand for office occupancy, you know, particularly hurt downtown. Um, you know, with that, we think the downtown right now is overbuilt. There's about 24 million total square feet of uh built environment downtown. Um, we think that's overbuilt by about uh well, 24 million square feet of office uh built environment that's office downtown. We think that's overbuilt by at least probably 6 million square feet right now based on the current sort of um demand for and where we see sort of office stabilizing you know by for every thousand units or
030so of housing we can deliver we we would remove about a million square feet. So our current develop of office. So our current development pipeline it could remove about 2 million square feet of office which of course has the effect of not only create delivering a housing unit but it also you know increases and supports the um uh the assessment and valuation of B buildings that should be office buildings right by decreasing uh inventory and thus those buildings that are office buildings sort of helps their the those buildings in terms of their ability to attract offices demand and incur stabili incur excuse me and in turn stabilize uh existing value and of course small businesses. So part of the plan allows for direct investment in small businesses but I would in I would I would
031suggest that in the macro um you know small businesses supported by are supported by people um it's a very basic level we need more people living downtown we need more people working downtown to support small businesses to the extent small businesses are supported and are able to grow that also has the effect of filling vacant storefronts downtown which has the additional effect of stabilizing those buildings that have street level retail and and are reliant on their street level retail for their the stabilization of their value. Um, so that's sort of a big why, but I just wanted to you I think it's important to kind of say these things in the slides and um have this spelled out and there's different ways we can look at that. And I'm going to leave you with one
032anecdote and I I thought about this and it it's uh sort of coincidental, but um long before I was scheduled to be here, I I was invited to speak to a um a 10th grade class at a at one of the Pittsburgh public schools at Pittsburgh Scitec. and I promised the teacher I would use your name. So, Miss Diaz's 10th grade class at Pittsburgh Scitec and my son happens to be a student at Scitec. And you know, I was there kind of just talking about what I do and everything. And I decided while I was there, without prompting them for any particular response or even what I was specifically working on, I I asked the students, there's maybe 20 students in this class like, "What would you like to see downtown?" Um, and you know,
033a number of I know a number of the public school students and I know in particular Scitec a number of their students commute through downtown, right? They connect through buses and downtown's a place where they spent a lot of time. And the the things that they told me frankly were things that we spent a lot of time studying, but to some degree it may seem obvious to to the these kids who use downtown every day. And they things that they told me were jobs. A number of kids said it'd be nice to be able to get a job downtown. Um folks talked about, boy, it'd be cool if more people live downtown. There's a lot of vacant buildings. Um a number of the students said they wanted to have more shopping opportunities. One kid in
034particular said, "Why do I have to go to Monroeville Mall to do my shopping? I'd like to do it downtown. I'm there all the time." Um, they talked about public spaces that are interactive to students, better bus stops, transit improvements, these types of things. And one particular student who I I deem must be a future planner referenced more third places, which seems to me they must be lead reading lots of Urban Land Institute and these types of things. And third places generally being these places where one can congregate, spend time with friends, etc. that are outside of your house and outside of your work. Um, so I'll leave it there and certainly there's many many questions, but just wanted to leave that uh as an anecdote to something I heard with uh from school students
035that I spoke to and of course at the macro the data that we're tracking um and the opportunity here. Oh, I want to go to legislative schedule. Excuse me before I stop talking because I think that's important. If you could skip down, Leia. So, this is draft and in process. The dates that have already passed us have actually happened within this legislative process, but I wanted to level set where we are with the taxing body. So, um, today's our first sort of official legislative, you know, opportunity brief with the Pittsburgh public schools. Um, the city of Pittsburgh, we, um, introduce legislation to the city of Pittsburgh city council. Um, it is, it was um, it will be at a committee, city council, uh, standing committee on Wednesday. I I suspect and I don't know for
036sure, but I suspect there's a chance they will the city of Pittsburgh um and I I think this probably will happen. The city of Pittsburgh city council will hold a public hearing specifically related to the downtown shred and then once they have the public hearing it would come back to city council and then um you know for their legislative consideration and vote. Just just for those of you around this is that that mirrors what uh occurred with the Manchester Chateau TRID. Um you'll see dates here for you public schools and for Alageney County. Um being very very clear, these are other than today's date, which is June 8th, um we recognize these are draft dates. Um the county um we're we're working with them. We hope to receive some guidance on potential legislative uh uh
037calendar for Alageney County. Um I would say for for for you for the Pittsburgh public schools, um you know, while we have dates here that seem that that show us going to agenda review in two days, um I think we would that that should be pushed back. Um I would I would allow the city council process to play out and then once you understand um you know once we see where city council is I think it's then more appropriate to bring it to the other taxing bodies. Just a kind of a reminder you know from an implementation plan perspective the implementation plan is essentially adopted by the local municipality first or the city city of Pittsburgh and then invites the um the other taxing bodies to consider and legislate whether or not they want to
038participate in such implementation plans. So having the city of Pittsburgh's legislation go first is probably important. Um not probably it is important. Um the other thing I'll note is on the borrowings themselves and I alluded to this earlier in the presentation. A second sort of legislative piece to this would be the would be the actual borrowing. So if the implementation plans approved and we're able to and we're you know we we're going to be we'll be involved in underwriting uh potential debt against that implementation plan. um that would that that those specific borrowings would have two specific legislative processes. One is at the URA the URA board would have to authorize borrowings and again because the city of Pittsburgh would be guaranteeing the debt city council would further have to take action to uh approve
039individual borrowings uh both in terms of the guarantee and the funding plan. uh the way the legislation and the implementation plan reads is that you know as taxing body partners would participate in conversations with each other and with the RA as to the um the use of uh TRID revenues and the uh which which of course flows to the individual borrowings and funding plans. So those actions uh would occur uh separately. We have in the draft here that that could happen again perhaps uh for the sometime this fall. Uh but you will we'll have to continue to track that depending on the pace of our legislative schedule. And it's also important to reminder that um you know for trades transit revitalization investment districts the uh pit Pittsburgh regional transit our our transit authority uh would
040also uh let uh require legislation to participate u in the trade as the local transit authority and that would come um probably at the end of the legislative process sometime later this summer assuming it went through the other taxing bodies. I've said a lot and there's probably many questions, but I wanted to provide as robust an overview as I could and kind of what we're what we're working on, what the plan says, and why we're why we're thinking about this. And I'm certainly happy to um to answer any questions. So, thank you very much. >> Thank you, Tom. Appreciate it. And you did answer my question, which was about the timeline and the status of approval. So, um yeah, I agree. Punting this to to our July agenda or later, depending on the other approvals
041um makes sense for the timeline. I'll open the floor to any other questions that other board members might have. I'm not seeing any questions. Um Oh, Director Walker, please go ahead. >> Thanks. I'm on my iPad and I didn't know where the react button was. Uh >> I think you're gonna give me an applause. No, I'm just kidding. Um, I mean, I don't really have any questions. I mean, I we've done these before. Uh, and I have a fairly good feel for it. I mean, this one, um, is a little tougher, I think, for a couple of reasons. Um, you know, the first, uh, is one that you, Tom, I mentioned last time we spoke, right? We're we're talking about setting um setting property tax revenue values based off of a common level ratio that
042is is what like 42 44%. Uh since our county refuses uh to do an assessment and even though they're talking about it they're still not they still wouldn't do anything for two more years. Right. So, we're we're talking about an outdated, you know, these properties had they had a proper assessment would be uh potentially bringing in much more revenue than they are today, which would allow us to then lock freeze that revenue at its current levels at a much higher base than we are today. Uh so that's my first issue. The second I think uh is is equal uh in that you know organizations like PNC Bank are uh the largest organizations in our cities and the ones that are asking for the largest refunds on these properties that they own uh in the downtown
043region. And so, uh, to think that, um, you know, PNC has a TRID that's, uh, or a TIFF that's expiring this year, um, what stops them after getting 20 years of of this, um, benefit from us to what stops them from then going back and asking for some more money back from us? um which I believe will continue to happen uh until the until the county does um their work. Uh and then my third and this is and I'll stop. You know, normally uh when I when I'm in favor of these uh types of ideas, uh it's because we're taking non-revenue generating properties and turning them into revenue generating properties. And it's like in that case we're we're incentivizing development where it doesn't already exist uh to to get a benefit down the road. Uh
044with this uh what we're doing is you know we're not doing that right. We already have all of these properties are already producing revenue. Uh if we did a tax assessment they would produce more revenue. Uh, and it's just a little bit tougher for me to go revenue producing to revenue producing without seeing that benefit for 40 years. Uh, so I'm just putting that out there. I think overall, like I'm I'm a fan um and a believer in development. I think it's good for our city. I think it's good for our region. Um, but I'm struggling with our other taxing bodies, one of whom we give $26 million to annually from our current budget and one who refuses to do their job for the last 15 years. It's just really hard for me right now
045to um to be on board. Um, so we'll see. But those are my comments. I just wanted to put it out there. Those are the concerns that I have currently. Um, and um, yeah, it's a tough ask this one. >> Thanks, Director Walker. I appreciate that. I do want to highlight that um, the county is in the process of passing their own reassessment legislation. Um, that would mandate that reassessments have to happen every 3 years. They're going through the public hearing process for that legislation right now. Um, but that legislation does exist. So hopefully that helps to move the needle and get us back to a more equitable um property tax uh level. >> Well, no, I know that. But it's still even the legislation they're presenting doesn't do the doesn't start the process until
0462028. So, we're still two years away, which is two more years of >> um the largest and richest property owners in our city >> getting refunds from Pittsburgh public schools when they should be doing the reverse and that's where the the struggle is. >> Yeah, understood. Other questions or comments from other board members? All right, it seems that we have none for the rest for the URA. Uh Tom, if I could ask you or one of your colleagues to please send a copy of the presentation to um Stephanie. Um and then Stephanie can send it out to the board. And then if you can also follow up on that question about that I asked about the um tax revenues, that would be helpful as well. And then once we get this on the agenda, um
047Stephanie can coordinate with you guys on the date for the agenda review because I think it would be helpful to have you either either you Tom or a member of your team on the line or in person at that meeting so that um you can answer any last minute questions that folks have before we vote on it. >> Yeah, absolutely. Yeah. And if there's and in the meantime if there's you know and I'm happy to come it sounds like you don't meet this doesn't meet this committee doesn't meet monthly. It would be it's >> we do meet monthly. We are not meeting in the month of July though. >> Got it. Okay. >> In the Yeah, certainly provide all that information. We'll make ourselves available at any time to anyone really if if anyone here
048was wishes to have separate briefings or any re for any reason. Um I will take these comments back because I they that I you know we do appreciate um appreciate those and think on those and if you know if there's ways in which we can help address that we will. Um and um yeah, we I appreciate your we appreciate your time and you know your engagement on this uh on this effort. >> Awesome. Thank you for being here. Appreciate you guys as well. >> Yeah, of course. Thank you very much. >> Thanks for your time. >> Thanks. >> All right. And with that, we'll turn to the second item on our agenda, which will be our budget workshop uh with Chief Financial Officer Ron Joseph. Ron, I will turn it over to you. Thank you.
049So, tonight we'll have the second of our three mandated budget workshops. So, just to get into uh the agenda. So, we'll have a brief review of our year-to- date financials. Then, we'll go into one of the primary in priority investments that we're proposing to that the administration is proposing to make for the 2027 budget. And then next steps. So these are year-to- date financials when compared to actually that should be as of 20 uh 26 as of as opposed to 2025 it is comparing it to uh year-to date to 2025. So if we look at our revenues and expenditures both are slightly behind our revenues and expenditures for 2024 but at this point a year as we typically see our revenues are significantly higher uh than our expenditures at this point in time. and that's
050largely due to us receiving the bulk of our real estate uh taxes prior to uh the first half of the year. When we take a closer look at our local revenues, we see that our current earned income tax is lagging behind its 2025 counterpart. While the prior earned income taxes are uh are slightly higher than last year's, our real estate taxes are higher than last year's, but they're not as high as we would expect them to be considering that we do have we did raise taxes by uh 2%. And right now, they're only about.9% uh higher, so less than half of where we half of the increase that we expect to see at this point in time. our prior real estate is slightly higher and our real lead transfer is uh slightly ahead of last
051year's. We see that state funding is relatively flat with the exception of transportation but this is just uh likely a timing issue of when the revenue was recorded and received from the state. When we look at our expenditures, uh we see that uh charter charter reform is uh due is uh the cause of that substantial decrease and cyber charter reform uh and uh particularly as the result is the main driver of that decrease in our charter expenditures compared to last year. So we see that we're looking at being about $1 million lower. We see that salary and benefits are also slightly lower, but a lot of this has to do with the shifting of our largest work group to the bi-weekly schedule. So that uh changes the amount of uh salaries that have been recorded
052as of that point in time. And when we look at our uh special education, there is a large jump, but that's because we're changing we changed the way that we're recording it. So instead of doing periodic transfers quarterly, we're uh doing transfers on a monthly basis to have a better indication of where those expenditures lie. So when we look at our fund balance compared to uh the 4month period last year, we see that we're sitting at uh $85.8 million. Compared to last year, that's 110.2. It was $10.2 $2 million, but we did have a close the year with a $26 million deficit. So, that is part of it. And we see the main two components are for future expenditures and uh uh committed uh specific uses. Uh we went over this before with the uh
053differences in our actual revenues and right now we're looking at our revenues being about $32 million higher than our expenditures at this point in time. To just recap some of the items about the revenues, we saw a decrease in earn income. Uh part of that might be timing, part of that might be uh the job record, but when we look at actual collections, uh we see that the collections are higher. Just the amount that's attributable to the current year is uh lower. Uh real estate is slightly higher than last year, but I said it's lower than what we would expected with a 2% increase. uh we saw increase in transportation subsidy and our basic education funding was relatively flat. In terms of expenditures, I touched on the u touched on the increases uh decreases due
054to our uh charter cyber charter reform. Uh touch on special education increases as well. And in terms of uh tax refunds, we saw a slight decrease compared to last year. So, this may be an indication of reduced property tax uh property assessment appeals or it could just be that there are still a lot of appeals that are still uh pending and we haven't seen the impact of that. But the fact that it's not higher than last year's is encouraging. When we look at our current forecast, I just wanted to highlight that asterisk that these projections were as of uh May 25th. So that was prior to the uh vote on the future ready facilities plan and uh which will have an impact on the projections and those updates will be made in future uh future
055presentations to the board. But just to highlight uh the red box around the surplus in 2028 and 2028 we're projected to have a surplus of uh $21.5 million. The thing to point out is that unassigned fund balance being negative. That means that when you take into account the projected deficit for 2029 that we can't use our fund balance balance the uh budget for 2029. So at as currently constituted we still we will need to make more reductions in order to be able to continue in 2029. Uh this chart uh reiterates that point. Uh for this graph, we want to have all of the both the uh total fund balance and the unassigned fund balance in any given year above uh the above zero. And we see that at the end of 2028 that while we
056will have fund balance remaining at the end of the year about uh $9 million that that unassigned fund balance is will go negative when you take into account future commitments. So now uh shifting to a discussion our priority investments. So this chart might uh this graphic might seem uh very familiar. We used it last time. Uh uh when we look at our alignment of our budget, our goal is to have our budget aligned with our our goals. So when we look at our student focused uh uh student outcomes focused governance and the district goals, we want to make sure that our investments are aligned to our our district goals and that we are adhering to the guardrails that are set forth by the board. So when we revisit the goals, uh the goals have now
057been approved with indicate with uh uh specific metrics with the exception of the uh graduation goal which is still in progress. We have uh goals around early literacy, early reading, early uh mathematics, career uh based credentials as well as graduation. And just to reiterate our guard rails around safety, student access, student need and uh resource allocation impact. So want to be mindful of these uh guardrails as we're uh making budgetary decisions. this graph. Uh so when we have discussion about our goals, we want to focus on two goals particularly uh third early reading and early mathematics. And this uh chart should look familiar from our progress monitoring uh progress monitoring presentations for the current year. We had the three strategies around improving ELA as part of our continuous improvement model with strategy one being science
058of reading uh teacher knowledge and practice. Strategy two being strength strengthen return on investment and partnerships and strategy three being establish uh explicit accountability and support structures. When we shift to third grade math we see that uh there are three strategies as well. uh strategy uh one sustaining and deepening curriculum based uh professional learning. Strategy two strengthening family partnerships for math support and strategy three uh implementing high leverage and equitable assessments. So when we look at uh these strategies they're uh strate we'd like to focus on strategy one for both uh third grade math and third grade ELA. And for for these strategies, we see that a key lever is the coaching model that we currently have implemented. So when we look at uh sustaining uh sustaining and deepening curriculum based professional learning for mathematics
059uh for early math, we see that coaches have a critical role in strengthening tier one mathematics instruction across the district and that coaches have a pivotal role in helping teachers move professional learning into the daily practice uh through the through co-planning uh modeling, co-eing, data analysis and uh instructional feedback. And we do have some data to show the impact of of coaching via the alignment's grade level standards focus on rigor and curriculum line instruction. Uh not going to read all these uh but you know one of the things we can see is that coaches are helping teachers strengthen problem solve uh strengthen problem based instruction student discourse and the use of uh instructional routines aligned to district expectations. And when we go to strategy one for ELA, science of reading and teacher uh knowledge and
060practice, we see that literacy coaches also have a pivotal role. Whether it be um the district implementation of the science of reading and structured literacy programs, whether it be uh the coaching focus on strengthening foundational reading instruction including phonics, fluency, vocabulary and comprehension and literacy coaches uh have uh helped create consistency across classrooms so that students receive strong evidence-based literacy instruction and everyday uh literacy instruction every day. So we see that coaches are a key lever for these strategies that we'd like to invest in. So in order to do that, we need more coaches to support academic coaches support our goals. So currently right now at the district level, we have 10 math coaches and 18 literacy coaches that are budgeted. So if we wanted to get to a onetoone model of every school having
061a math and literacy coach, we would need 56 additional coaches. And uh this would be forwardlooking for uh the number of schools that we would have after the implementation of the plan that we would need to have 56 additional coaches and that would be an additional cost of $9.5 million and not feasible given the financial finance that I uh proposed. So our proposal is to gradually increase that numbers to those numbers to increase the support. So that would be an additional 21 uh 21 academic coaches broken down at 13 literacy academic coaches and eight math uh math academic coaches. And that would have an anticipated cost of annual cost of $3.5 million. The proposed coaching support model and the use of these uh coaches would be as follows. for the 18 m uh math academic
062coaches. We would have 12 of those coaches supporting uh K through fives, four of those coaches supporting 6 through 12 and two supporting high schools. And for the literacy academic coaches, we would have 22 uh coaches uh supporting grades 6 through five uh K through five, four supporting grades six through eight, and three supporting high schools. But these investments will require some reductions elsewhere. And as part of our uh look at our budget, we have to be mindful of the fact that we did close our year 2025 with deficit and we're below the fund balance threshold. We do have uh deficits that are projected for 27 and 28 of uh 14.8 and 21.5 million respectively. I did touch on the point of not being able to use our reserves to balance our budget in 2029.
063U in part as part of the RA's presentation. I've touched on this in previous uh presentations as well that we do have a decreasing real estate base and we have a limited ability to increase our tax revenue as you can see from the slides that I presented before even though we increased uh taxes by 2% we're seeing less than that in return of the current year revenue and we do have a problem of our of our budgeted uh expenditures are increasing much faster than our bud budgeted revenue which is remaining stagnant and based on. I know last year we endured a very lengthy budget impass where at the state level we're hopeful we don't have to do that uh have to endure that again this year but then there's the added uncertainty of the certain
064funding at the federal levels with some proposals calling for the elimination of some major programs such as title two and title three and also which would be a large uh reduction for our budget. So, we're monitoring those, but that's the uncertainty uncertainty that uh undergurs our budget work. So, as for next steps, besides the these aren't the only next steps, but we're uh scheduled to have our third budget workshop that will occur September 8th. Uh there's a lot of work that will occur during then such as, you know, the departmental budget process, reviewing our uh budgets, reviewing our expenditures, and trying to come up with some more uh reductions because we know that we still have some work ahead. So, Director Yard, I will turn it back over to you for uh questions. Thank you.
065>> Thank you, uh, Chief Joseph. Um, while other board directors are formulating their questions, one key question I had is, you know, I know we're projecting that we'll be in the negative and out of our fund balance by the end of of 2028. what measures and you mentioned in your presentation the need to make strategic reductions um in our budget. What reductions is the school district looking at making in order to help get this budget back into a more balanced place? >> So one where uh there were some reductions that were identified in the future ready facilities plan. So once those come fruition, those will have some impact in terms of the overall cost of school budgets as well as uh reductions to transportation. So once those are folded into our projections that will have
066a have an impact on our cost going forward. But then also, you know, everything's on the table. We need to look at any review all of our you know contracts, our staffing, look at any programs that we have to see uh what is not essential, what is uh not required. Uh not going to say unnecessary but something that we could potentially evaluate as something that we could potentially do without as we try to uh aggressively reduce our cost. >> Yeah, absolutely. Um have you considered at all? I know last year one item that stood out to the number of board members was the um number of empty positions in the school district. Some of which have been empty for four years that totaled a large a large sum of money. Is there consideration in looking
067at any of those and maybe closing out some of those positions that have been empty for four years? >> So that is something that we will look at. Uh, one thing that we did do in as part of the budget process last year as we got down toward the end, if there were positions that were that were vacant that weren't immediately going to be filled during the course of the year, we did uh reduce those positions. So, effectively zero fund those positions. So, the budgetary impact was was lessened. So, we uh were able to lower the budgetary impact of this position. So, they weren't actually carried forward. So we didn't carry the full amount, but if there were things that we knew that there wasn't a plan to staff staff immediately in the in the
068next in the in the current year uh that we went through and we red we basically effectively zero funded those positions while they were still on the books uh because there wasn't the immediate position uh decision made to uh close them out. But uh that's something as well that we'll be looking at as well. >> Okay, thanks. Um and then one other question, are we looking at any um alternative methods for um raising additional revenue? Are there other methods of revenue raising at our disposal levers that we haven't pulled uh that we can potentially pull on? So, we've explored tax increases and I don't think the uh we feel that we should go back to that as immediately uh as something to do since we just raised taxes last year. Uh the one thing as
069a district is that we're very concerned when it comes to what we can do in terms of additional revenue. So if we uh anything that we would need to do would to be revenue generating would need to probably have some cost uh tied to it. Um you know we could look at additional like if we look at building rental fees uh different types of fees that could be levied uh whether we're increasing any type of usage fees for those. But ultimately those would uh fall back on the constituents to generate sodas and u revenue that we uh would be able to generate that would be coming from someone that wouldn't feel feel the additional added burden of that. >> Okay. Thank you. Um any other questions from board directors on the line? Director Sulk, >>
070thank you. I just heard my boys acknowledge that I was in a meeting, so my door might open, of course, in this moment. Um, so I I I wanted to uh follow up on on the the question that Director Yord asked about about cost-saving measures. Uh, Mr. Joseph, you named kind of a number of things that you're looking at. I'm wondering just for a little bit more specificity are is there um are there kind of formal um systems or functions like a formal process for identifying systems or functions uh to put under review for efficiencies and also um I'm curious about what criteria um we're using to do that >> so via the departmental budget process we will be you know having all departments look at their budgets to evaluate their costs. So that's one
071form of process that we'll be using when it comes to program if there's a discussion of whether programs continue or not. Uh those programs if they do if there are any change to those programs that would be effective for the 2728 school year not the immediate school year because of how the budget works. >> But we would look at information such as you know the effectiveness of that program. We would have to develop those indicators to to determine whether something should be continued or not. Uh so those are some of the structures that we're looking at. Um you know, one of the things we like to do is to look as far away from the student as possible. So starting with uh spending that's outside of the school, whether it be uh looking at departmental
072budget, central office spend, anything before we start looking at programs that directly touch schools. So that's the approach that we're going to use. >> I appreciate that. And I' I I'd be really curious for the the the the next workshop in in that vein. Um not not even necessarily cuts, but where are their opportunities uh to build in greater efficiencies? Um is is certainly a great interest of mine. Um, going back to the property taxes, uh, I appreciate, uh, I appreciated hearing that that that it's at least at this point in the year, uh, it seems like, uh, the appeals process had leveled off a little bit. Um, but we but we're, my understand, if I'm understanding correctly, we're we we don't have access to what might be coming up. like we don't we don't
073we don't see that data until the appeal is made. Is that correct? So we do have some. So at the end of last year, we're able to see what appeals were filed and we did know that number was less than than the years before. But there also large appeals that do span multiple years and attorney Weiss can uh speak to that uh if necessary. But we do have some large property appeals that uh date back to 2022 if not 2021. So those are a lot of years in question. So, um, even though there are lower appeals, if some of those appeals get settled that are span multiple years and don't go in our favor, then that can have a large budgetary impact. So, that number can quickly go up. So, right now, even though it's
074relatively level with last year, we did see a reduction from like last year was lower than the $13 million that we paid out uh in prior year tax appeals. uh uh than it uh that was in 2024. We're still uh kind of have a whole bunch of things that are in the process, not just the ones that were filed for 2026. There are ones that are larger ones that encompass multiple years. >> Okay. So total number of appeals that we're that that are on on the books lower, but a number of them are are um much higher in value in terms of in terms of dollars that still have not um come through yet. So we're anticipating those >> well in terms of total number being lower total number for the for the current year.
075So 2026 >> but there's still and I see that uh attorney Weiss uh has come off mute. So I will let him interject >> please. >> I think Joseph has explained it. I mean the number of appeals u filed this year are down but the way real estate tax appeals work until they're resolved each year is another year. And we still have a large number of major property in the strip and downtown. understood >> that are in play. There are several that uh are going to have refunds involved in the near future. So >> I would say that >> while they may not be as high as the highest years in the past, I don't think the refunds will appreciably go down this year. >> I think it would be a mistake. >> I just
076want to interject. I just want to interject for a quick moment because we're using the words high and low and we're use like in in lots of different ways. So there's the total number like one measure is how many what is the total number of appeals in in a given year and then there's for each one of these appeals like what is the what is the what is the um like the maximum dollar value for those. >> Uh I think what we can do is is provide the board an analysis of that. Uh that would be great. >> I'll have uh >> my office put that together so the board can see what's involved >> and uh tomorrow morning I will request that be put together and I'll distribute through Stephanie. >> Okay. So, because
077on on the one hand, we are still we're still we're still dealing with um the the cost of these appeals from the 23 um litigation and and now on the the revenue side, I would appreciate a little bit more of of an update understanding that there is that there is some movement on the county side and um we already discussed that that that would not I believe go into effect until 28. Um, but also we had initiated um, uh, a lawsuit and I'm I'm wondering is that still progressing and is there is there a possibility of any movement prior to 20 to 28? Well, um the case that's currently in the common police court where a taxpayer sued and we're joining in that case will likely be tried in the fall. Uh it is on
078a schedule to move that way. All all expert reports have been filed. Uh there's going to be a conference with the trial judge this month. In fact, I'm meeting with Attorney Delicer later this week to get an update on that. But I think it's reasonable to assume that there may be some directive to conduct a reassessment before the uh county council enacts this legislation and uh I will keep the board a prize of that as well. >> Okay. Thank you so much. So, I mean, I'm I'm glad that there's that there's two paths here, and I'm glad there is movement on the county level. I wish it was faster. Um, and uh look forward to getting updates about the um um what what happens in the fall. Um going back to expenditures, Mr. Joseph, um
079I I I heard you explain the the changes in in kind of coding for special education. Um and so it it was just fast. So I just want to make sure that I I got it. It was a Can you say a little bit more about the why of the change? It sounds like we used to do some kind of quarterly reporting and now we're doing that more. So the way our trans our special education budget works is our general fund uh funds our special education budget in addition to the state revenue to the special education uh core special education fund and that's done via uh transfers of revenue. So record your expenditures transfer the revenue. So typically we would do that more quarterly and so you'd have right now the you probably have whenever
080we get the revenue in from the state we would transfer that but then toward the end of that program year we do a larger transfer to reflect the costs that were for that year that were attributable to the general fund and we do a couple of those larger ones once or twice a year just so we can have do better in estimating that we're doing those transfer of cost and funding on a monthly basis. So that that's why there's a higher cost because we're doing those transfers and re and recognizing those costs on more of regular basis. >> Understood. And when did we make that change? >> For sure. >> Okay. Thank you. Uh my last questions are about the academic coaches and just kind of keeping track of the various timelines and and realities.
081The projection of for 56 additional coaches needed was that based on 2627 or 2728 needs meaning like uh pre future ready or future ready implementation. >> So I believe that was based on 2728 post future ready implementation. >> Okay. Um and so my final question is um and this is probably not a you question Mr. Joseph, but what criteria will be used to assign uh the limited number the you know the the the phased increase um which is not the full number needed. So what criteria will be used to assign the the limited coaches while we phase in adding this staffing role. >> It'll be based on need student school need um based on the data from their outcomes and we'll move from that. So right now we've done support in that way but we've
082stretched it and so we get more additional coaches will be able to have more latitude um to support students >> and so specifically in that need so meaning that schools with a higher percentage of students per you know performing more poorly. >> Well I wouldn't always say higher percentage because if you have a small school and you have a higher percentage that number may be even smaller. So for instance, if I have a school of 100 students and I have 50% need, that may be 50 students. But if I have a school of 100, I mean 400 students and you say it's 50% of the students, then you have 200. So it may seem like a lower percentage in some or even I'll use 40%. But the number of students may be more significant. So
083I wouldn't just use it on percentage. I'll use it on the number of students in need. >> Okay. So thank you. So number of students in need at school will will determine kind of will determine staffing assignments and and and and a number of these would then likely be shared roles meaning a a coach would be going to multiple schools. >> Yes. And until we're able to stabilize that. >> All right. Thank you so much. Those are my questions. Director Yord. Thank you Director Silk. Are there other questions from other uh school board directors about the information that's been shared tonight? No other questions despite massive budget deficit projections in less than two years. Okay. Well, I will let everybody absorb this. I'm sure more questions will come up overnight for folks. Thank you to
084uh Chief Joseph for your presentation. I want to remind folks that uh this committee will not be meeting in July uh but we will likely be meeting in August and I look forward to future discussions about how we help the school district balance the budget. With that, this meeting is concluded. Everybody have a lovely evening and I will see you soon. Thank you.