The Honorable Ronald C. Green, City of Houston Controller, presents on "Houston 2012: Back to Normal".

1. CITY OF HOUSTON
Houston 2012: Back to Normal
Houston Association of Realtors’
Texas Realtor Leadership Program
October 4, 2012
Ronald C. Green, Controller

2. City Controller
• Houston is one of the few cities that elects a controller – our
Chief Financial Officer.
• In recession, it has become a very visible office.
Citizens
Mayor Controller Council
• The Controller is independent of City Council and the Mayor
and, thus, serves as a “financial watchdog” over the City’s
finances. That’s good for the City—and good for taxpayers!

3. The Office of the Houston City
Controller superintends the fiscal
affairs of the City:
• Conducts audits;
• manages investments and debt;
• prepares accurate and timely financial statements;
• provides leadership on policy issues pertaining to the City’s
financial health;
• has the independent authority to conduct performance
reviews of the City bureaucracy;
• assesses the City’s future financial condition with accurate
forecasts of projected revenues and expenses and area’s
economic outlook.

4. Divisions of the Controller’s Office
Executive/
Administrative
Financial
Treasury
Reporting
IT/ Operations Audit

5. Recent Bond Issues
Historically low municipal rates have meant big savings—
without lengthening the term of debt.
• August 17, 2010: $212 million Combined
Utility bond sale = $30 million in savings.
• November 16, 2010: General Obligation Debt
Refunding = $19 million in savings.
• June 28, 2011: >$500 M refinancing airport
debt = $36 million savings.
• July 19, 2011: Refund debt for Convention &
Facilities = $9.4 million savings.
Continued…

6. Bond refinancing, continued
• August 23, 2011: $167 million bond sale
(Utility System) = $30.5 million in savings.
• April 5, 2012: $503 million Airport
refinancing = $55.6 million savings.
• May 22, 2012: $307 million General
Obligation Debt = $16.5 million savings.

7. Audits
• FY 2012: the Audit Division engaged in 25 Audits and Special
Projects that produced 12 Audit Reports.
• FY 2012, the audits focused on
compliance, performance, process reviews, ongoing
monitoring, and quality assurance, which resulted in $2.75
million dollars in direct cost-savings.
• Audit continues to develop a specific IT Audit Function by
providing aggressive training and staff development that will
more efficiently analyze data from disparate systems.
• The Audit Division has developed Performance Metrics to be
implemented during the FY2013. These will provide a
framework for continuous improvement that considers all
stakeholder perspectives.

8. Financial Reporting Division
•Responsible for the preparation of
both the Monthly Financial and
Operations Report (MFOR) and the
Comprehensive Annual Financial
Report (CAFR)
•Annual Trends Report
•Forecasting

9. Operations and Technical Division
• Performs certification of funds for
contracts, accounts payables, bank
reconciliation, payroll payments, and record
retention for all City-wide departments
• City's cash disbursements now available on-line:
www.houstontx/gov/controller/evendordisbursem
ent.html

10. Houston’s General Fund
FY 2013: $2.1 Billion in Available Funds
• Taxes = 71% of Funds : $900 Million property
taxes (up 4% from 2012); $577 Million sales taxes
(up 4.5% from 2012).
• Other Sources (Franchise Fees, Fines, Charges
for Services, Beginning Fund Balance, Licenses
and Permits, other) = 29% of Funds.
- Continued -

11. Revenues from other sources—
Enterprises (FY 2013)
•Airport System, $437 Million;
•Convention & Entertainment Facilities, $92
Million;
•Houston Emergency Center, $26 Million;
•Storm Water, $54 Million;
•Building Inspection, $62 Million;
•Parking Management, $19 Million;
•Water and Sewer, $1.4 Billion
•Dedicated Drainage and Street, $235 Million.
Total Available Resources:
$4.5 Billion

12. FY 2013 General Fund Expenditures
Public Safety Departments, $1.2 Billion
Police, Fire, Municipal Courts
Development and Maintenance, $162 Million
Planning, Public Works and Engineering, Solid Waste
Human and Cultural Services, $153 Million
Health and Human Services, Housing and Community Development, Library, Parks
Administrative Services, $99 Million
Mayor, City Secretary, Controller, Legal, HR, IT, Legal, City Council
General Government, $126 Million
Debt Service, $241 Million
Total Expenditures: $1.9 Billion

13. General Fund Expenditures/Other Uses FY2013 Budget
Administrative Svcs.
Debt Svcs.
5%
12%
8% Dev. & Maint. Svcs.
7%
60%
8% General Government
Human & Cultural
Svcs.
Public Safety

14. What we are doing to meet the City’s
budget challenge
• Pension negotiations.
• Consolidation of services (fleet, fuel, payroll, HR, IT).
• Management initiatives (for ex.: Dept. budgets 4-27% less
than FY2011; four Health Centers now managed by Federally
Qualified Health Centers).
• Employee furloughs and layoffs, FY 2011 (745).
• Restructuring debt.
• Self-insured health plan.
• Increased collection efforts.
• Increased 300 fees.
Importantly, Houston has turned the corner…..

15. Houston Macroeconomics
Medium- to Long-Term Economic Prospects
Signs of Houston’s Recovery
• Medium – Long Term Prospects
– Recession in 20 largest metro areas: Houston last
in, first out (after just 16 months of job losses)
– GHP: 118% of lost jobs regained (June 2012);
Boston, 2nd with 75% regained.
– Forecasters: employment growth 2-2.5% through
2012; population growth 2.7% annually next three
years.

16. Benchmarks
• Houston Purchasing Managers Index *(PMI): up
from 39.0 in March 2009 to 60.0 in mid-2012.
• Domestic rotary rigs: up from low of 876 in June
2009 to 1,994 in August 2012.
• 255,000 cars, trucks sold in 2011, up 6.1% over
2010.
• Air traffic continues to grow: domestic up 2%;
freight up 3.7%.
*PMI: a short-term indicator for regional production; a range from 0-100; reading above a neutral 50
indicates likely growth in production over next quarter; based on eight (8) components:
sales, production, employment, purchases, prices paid, lead times, purchased inventory and finished
goods inventory.

17. A Recovery in Real Estate in the MSA
Next decade, 44,000 new households per year
• Through 2020, Houston will need 25,000-28,000
single family units annually; 15,500-16,500 rentals.
• Residential: August 2012: homes selling at greatest
pace since Aug. 2007; Aug. ‘12 up 20% over Aug. ‘11
• Aug. 2012, 15th consecutive positive month.
• Average and median price SFH up 4% from 2011;
highest Aug. ever.
• Houston: A seller’s market—but buyers benefitting
from low mortgage interest rates.

18. Commercial, Industrial, Retail
• Spring 2012:
• Three consecutive quarters of positive absorption,
in CBD, Katy Freeway/Energy Corridor,
West Loop/ Galleria, Woodlands; 2.8 million s.f.,
in 2011 –vs. negative 320,000 in 2010)
• 850,000 s.f. retail space under construction (Dec.
2011), 73 % pre-leased.
• Vacancy and rental rates are stable.

19. Gulf Coast—The Most Dynamic of the
Three Coasts
• 2014 - Opening of the $5.25 Billion Panama
Canal Expansion.
• Cargo ships 2x the size of current ships – as
many as 25% from Far East will pass LA and
Long Beach and come to Gulf ports.
• Port of Houston had 28% jump in foreign
cargo last year – with expanded Panama
Canal, much larger container ships &
continued increase in foreign tonnage.

20. Hire Houston First
Passed by Houston City Council August 31, 2011;
Preference for City contracts based solely on geography
PERSONAL PROPERTY (GOODS):
• If contract value is $100,000 or greater, then contract is
awarded to City Business that is within 3% of lowest bid.
• If contract value is $50,000 - $100,000, then contract is
awarded to City Business that is within 5% of lowest bid.
SERVICES:
• If contract value is $100, 000 or greater, then contract is
awarded to Local Business (eight counties in surrounding
area) that is within 3% of the lowest bid.
• If contract is $50,000 - $100,000, then contract is awarded
to Local Business that is within 5% of the lowest bid.

21. Participating in Hire Houston First
www.houstontx.gov/obo/hirehoustonfirst.html
• Hire Houston First is part of the Office of Business
Opportunity.
• Interested parties must complete the Hire
Houston First Application and Affidavit*
(available at web site, above)
• Phone: 832-292-0954; fax: 832-393-0952
• Applications may be submitted via e-mail:
HHF-MOBO@houstontx.gov
*Affidavit must be notarized, and this may be scheduled at City Hall annex

22. Houston -- No. One Rankings
• Top U.S. City Among Global Metro Monitoring—GDP per capita
Brookings Institute, Jan. 2012
• Best U.S. City, Industrial Manufacturing
Forbes.com, Dec. 2011
• Top 10 Manufacturing Cities
Business Facilities - Jan. 2012
• Fastest Growing Millionaire City in the U.S.
Forbes.com – July 14, 2011
• Fastest Growing Metro Area
Rice University's Kinder Institute for Urban Research–July 2011
• Green Building Initiatives (Large City Category - population over 100,000)
The U.S. Conference of Mayors – June 17, 2011
• Most Affordable City to Do Business - Worldwide
Cities of Opportunities 2011 (as reported by PwC and The Partnership
for New York City) - May 3, 2011
• Top 10 Major Cities FDI Strategy
FDI Magazine – April/May 2011

23. Top Local Government Green Power Purchaser Environmental
Protection Agency - April 2011
Lowest Cost of Living - Large Metros
ACCRA Cost of Living Index – First Quarter 2011
Lowest Estimated Land and Regulation Costs
New Geography - November 2010
Best Cities to Start a New Career
The Daily Beast - October 2010
Largest 5 Year Employment Gain (June 2005 - June 2010)
U.S. Bureau of Labor Statistics
Top Cities for Recent College Grads
Bloomberg Businessweek – July 2010
Best Cities for Young Professionals
Forbes.com – June 2010
Highest Level of Entrepreneurial Activity Among Largest Metro
Areas Kauffman Foundation of Entrepreneurship
Top Destination City
U-Haul International – March 2012

24. Hot Topics
• Red Light Cameras – once and for all, off
• Drainage Fee
• Pension Negotiations
• OPEB (Other Post-employment Benefits)
• Redistricting—two new City Council seats
• Continued budget challenges

25. Fraud Hotline
City Controller is committed to eliminating fraud
and waste in City government.
Fraudulent activities being committed by
government employees or officials, citizens, or
business entities defrauding the City of
Houston, can be reported at:
– www.controller/audit/fraud.html

26. A Collaborative Effort by the City of Houston
Controller’s Office, the National League of
Cities, the Federal Reserve Bank, the FDIC,, area
banking institutions and non-profit financial
education agencies.
“You’ve worked hard for your money—protect it.”
City Controller Ronald C. Green
www.bankonhouston.org

27. For more information about the Controller’s Office, visit
www.houstontx.gov/controller
Audit Reports, Monthly Financial Statements, Annual Financial
Report, Press Releases, Investment Policy, Glossary of Financial
Terms, Photo Gallery, Links to Government, University and
Financial Institutions.
If you would like a copy of this presentation, please e-mail
controllers@houstontx.gov