Muni outlook from the leaders in public finance - A roadmap for the year

Join our market leaders as they present their viewpoints on the macroeconomic picture and prospects for the U.S. muni market.

Transcription:

Lloyd Pepperl: (00:08)

So we'll kick off with our first panel on behalf of Moody's investor service in host in company and the bond buyer. Our first panel is uni-outlook from the leaders in public finance, a road in app for the year. And I'll turn it over to you, Michael as moderator.

Michael Scarchilli: (00:25)

Thank you. Alright, welcome. Welcome to our Texas public finance conference. We're happy to be here, after doing this virtually last year, this panel, is gonna be, you know, we're gonna treat this as essentially a preview of a lot of the topics and themes you're gonna, hear about over the course of the rest of the conference. Got a great panel of leaders, in a number of different areas of public finance, that have unique perspectives on, the industry and where it is right now and where we're going. Excuse me. So introduce the panelists real quick. To my left, we have, the CFO the city of Dallas. We have Rob Dailey, managing director and executive vice president at PNC. We have David Madanich, the executive managing director and co-head of public finance at Hill Top Securities and Robin Redford, the senior managing director of mirror's income. So, we'll start broad here, with our state of the market topic, which will take up a good chunk of this panel. And I wanna start by just sort of going around the, going down the line on the table and asking each panel is to talk about one issue, that is of significant importance to them. And then we'll have other other panelists kind of popping in and contributing as we go through. And we'll just like, let that thread through, this first, topic. So Elizabeth, why don't we start with you, as we approach the end of, Q1 here, what's, you know, what's, what's at the top of your mind right now.

Elizabeth Reich: (02:08)

Thank you. And thanks for having me, it's good to be here and a beautiful day. I think the thing I need to address, most, because I, it's incredibly important and the comptroller mentioned it as well is the influx of federal dollars. And in Dallas, we have received over 800 million, of COVID relief funds. And that has been a game changer in the last couple of years. And so it is certainly always top of my mind when, the job is doubled. All of a sudden, you know, you have a normal budget and then you have $800 million coming in. And so got to manage all of that as well. With 36 different funding sources, meaning 36 different sets of regulations around it and deadlines to spend it. And so, you're familiar with a lot of this money, 234 million of cares act money, and then 355 million of American rescue plan. And then there is other money for airports and HUD grants and things like that. And so that has been really our focus in the last couple of years and, what we're looking at and doing now. And what's top of mind for me, particularly with the American rescue plan act money is we're focused on game changers. That cares act money was immediate response. It was masks, it was vaccines. It was testing, it was, first responder pay. It was those sorts of things. Here we go. And with the American rescue plan, we're focused on how do you make some big swings? What is, is it you do to make this last in the community? We are focused on partnering with other entities in the community to, solve homelessness. For example, a 72 million partnership of with the city of Dallas is contributing 25 million. And on realtime, rapid rehousing, we're focused on bringing water and sewer structure to unserved areas. Yeah, the paper's glowing. It's kinda amazing. So, we're focused on, the bringing water and sewer. If you didn't know it, there are 46 areas in the city of Dallas that are occupied. People live there and they do not have water and sewer infrastructure. So we're, we're doing that with our federal money. We're working on digital divide, 40 million toward a partnership with the school district, the county, others on solving that digital divide and then affordable housing, 20 million to incentivize affordable housing in the city of Dallas, by paying for water and sewer infrastructure for affordable units. And those are just a few of the things we're doing with this federal money. So we're really looking forward. And that's coming at a time when the economy is doing really, really well. And the comptroller talked about sales taxes, and I would tell you the same story. I've been 3 million over budget every month in sales taxes. So far this fiscal year, I'm about to reforecast. And, then we'll see what the city council, says about my proposal for how to use those dollars, which, because I'm a CFO, I tend to propose things that are boring and onetime expenses, things that don't last. I tell people my superpower as a CFO is a wet blanket. And, so we'll see what the policymaker say when they want some shiny new bubble, but, we are gonna reforecast sales tax and it is going to be a significant reforecast. And so with this federal money as well, then you bring in infrastructure and I'm sorry to take so much time, but there's just so much happening in terms of federal assistance. And so, a lot of people have asked what infrastructure money are you going to get? And the answer is, I don't know, most of it's flowing through the state. We have to apply for it. We think we have really good projects to put forward for the city of Dallas. And frankly, we should receive a significant chunk of infrastructure funds because we are a significant chunk of the state economy and population. And, we certainly have needs, but one of the concerns for this audience might be, does that mean that, at least for the city of Dallas will at low or supply, will I issue less? The answer is no, I'm not. I have an inventory. That goes far beyond the dollars that I will receive in infrastructure funding for some other issuers that may be, for particularly for transit systems or transportation, where much more of that money is going, perhaps it changes their plans or for the city of Dallas. We are full steam ahead in terms of bond programs, et cetera. And so then that brings into my mind, the market volatility and interest rates. And that's certainly something that, I'm concerned about and thinking about as we deploy all of this federal money, but the answer is we gotta do what we gotta do. I'm not holding off. I'm not gonna not issue as I'm, worried about all of those things. I really have to keep working. So what I do, I rely on you all, my financial advisors, my banks, my underwriters, counsel, all of you to advise on how best do we work in that market? And that's what I'm focused on is it is what it is. I've gotta keep moving and at how do I do the best that I can for the people of Dallas while, while going through it.

Michael Scarchilli: (07:24)

Thanks, Elizabeth. So, yeah, Rob, why don't we move, onto you? what's, one thing that's been, on your mind?

Rob Dailey: (07:32)

Well, I think just picking up on where Elizabeth, was going, I think it's in my mind, it's the market for, debt issuance. And I think about it, given our platform across both bank lending and commercial bus, commercial banking business, as well as the, bond market, we've hit a situation where we got a number of issues that we're all facing that we haven't had to worry about for a couple of years rising rates a flat out our yield curve, coming out of the box, outta the blocks this year, we've had lower issuance than expected in the bond market. And I think that some of the cross currents that have come out in terms of the way people are going to market, trying to borrow have played out differently in the bank market versus as a bond market. So in the case of the bond market, we've had less issuance, in the bank market and spreads backing up some in the bond market. Some dislocation in the bank market, we're seeing, continued tight pricing, kind of broadening of the range of, bank structures that can get done or structures that the bank market will, accept. And so it's kind of story of two markets kind of going different directions while we're down probably 12% in, in bond issuance volume. I think we're probably at least running at the same pace without we don't have enough data really to know this, but it feels like we're running at least as much activity in the bank market as we have been in previous years. Couple other things I think as the, change in yield curve, the change in how we have to manage it rising rates, it introduces a number of other issues. One is a, just a greater variety of debt structures that people are gonna be looking at. So we're now gonna find in a at least from top to bottom, highly, sloped yield curve environment, it's gonna make, floating rate notes, VRDB's, relatively more attractive than they have been. I think it's gonna open up the toolbox for problem solving in debt finance. you see, now we've got a very flat curve from two years out to 30, which argues for, getting, as an issuer coming inside of that. I think that's likely to be, very fluid. We're seeing, you know, a lot of changes this the past couple of months. One other issue I'd put on the table is the LIBOR transition, people with LIBOR in their portfolios, whether that's debt or derivatives or other instruments, we're gonna be moving out of LIBOR as an index. The kind of last step of this is in July of 23, but what will be happening over the course of the next several months is a kind of, they call it a hard wire approach to say, well, we're gonna simply substitute out, LIBOR for some other index and typically it's, or most frequently been sofa, but, Bibi's also been an important index. We've had a lot of success with we've done, alternative indices with CIFMA, with effective fed funds with OBFR. So I think that's a part of the debt management that issuers are gonna be in a position to be exploring. And I think that the way the, develops over the course of the next several months through this year, I think is gonna actually talk, is gonna tell us a lot about what the new structures are gonna be, that the issuers have available to them. I think some are gonna become much more popular others, not as much. And maybe just throw one other point in, in terms of the difference between the market in the bank market. We continue to see in the bank market, tighter credit spreads, and we've obviously seen the first several weeks here, the of this year, backing up of credit spreads. And so I think, how you execute, financing when it comes to doing something a little bit tougher, a little bit more complicated, little bit more hair on it. It's gonna be, it's just more of a challenge. You're gonna have to really take a look at all of the options.

Michael Scarchilli: (11:46)

Thanks, Rob, David what's, on your mind.

David Medanich: (11:51)

Not a lot on my mind, but, you know, it's interesting. I have a little bit different viewpoint and I guess maybe cuz I, I date myself, but you know, as far as the state of the market we look at it and we go, oh my God, we were at, we went to 25 basis points and they were thinking 50, and maybe we're gonna go up. And we were thinking that was gonna go up to like 80 basis points total. And now we're thinking it's gonna be two 40. and like I say, this dates me, but I recall and this seems actually very normal to me. It was hard for me to believe that we hadn't had a rate increase in fed funds since 2018. I remember when I was at the Mac starting off in 1981, and very young prodigy there and that every it started off, we, we had interest rates where 10% was the max and then it started moving up to a point where we had to raise the user to 15%. And we're talking about inverted yield curve. It something different. Well, we had inverted yield curves, I mean really inverted, well, I was trying to get it and I left my phone over there. So it's probably right there on my phone. But yesterday the, we had on the three and four year, we were, I gotta cheat a little bit cause I can't remember exactly, but I think we're like 2.5%, 2.54, and then the 30 year was 2.5. And so we're already in an inverted yield, position. And it is just, it starts to get a little bit more exciting now it was, it was a little boring. I mean the interest rates were low. The one thing that, would be nice, if we were talking about the infrastructure bill and, 500 billions, 500 billion, it's a lot of money, but that's over nine years. And I think that we were there talking about doing 37 million or excuse me, billion this year. And like you said, that really doesn't affect what's going on in Texas because we had such a great demand for it. What would've really been nice had we been able to get, the refunding, the tax exempt refunding back, cuz when you look at what the let's see the bond rate or the bond market is down, it's down about 20%, so far this year, and guess what, what percentage of the bonds last year was, refunding about 20%? The taxable, is down 55%, of course we're. And now that's about all we do is taxable refundings. And so year over year, and then also on the fund flows, we've had about 11 billion going of the muni fund flows and last year we had 170 something going in. So as far as, you know, as the market's concerned, it's another market it's and like you said, it allows you to be a little bit more creative and there's other things that have come available to you. But as I tell our, the young folks at the firm and also just anybody is that, this is normal. Don't get excited, you have the opportunity to do other things and take advantage of it, use your brains. We've got some smart people, you're smart people. And you know what I'm gonna tell you. I have no idea if they're gonna go 25 or 50 or 75 or the next six times they come up. I have no idea. Well, I do have an idea. They're not about to come back and allow tax exempt refundings again, I'm pretty certain. So you take what you got and use your brains and start thinking again and not again, but thinking a little bit harder and that, what it makes things kind of fun. It makes it a little bit more exciting. So, from my viewpoint, it's the same thing all over again. We've got a market that's kind going up. We have different opportunities and additional, and there's a lot of things can do. And, let's try to remember what you forgot about and see what we can do to make it better.

Michael Scarchilli: (15:58)

Thanks, David, Robin what are you seeing out there?

Robin Redford: (16:03)

Well, you know, we're talking about volume and just as important, as volume as the pacing of that volume, and, you know, you mentioned David, slowing down and missing out on some, refunds that we might have otherwise have had because of our taxable advance fundings. But, we all took a look at where our various firms are in kind of projecting out where volume is. I think you probably always all saw everybody's projections back in November. We know people are maybe altering those down now, pretty significantly, our firm has kind of a bullish, view. They think, you know, we're still in like a four 50 billion range, which is a medium high forecast. But again, as we all kind of dial it back based on the macro factors, we may see those coming down. None of us have crystal balls if we did, we would be in the money. But, every year is unique. I agree with David. I mean, it's exciting, in the macro environment, but how are having this many rate hikes on the horizon? definitely presents challenges in the context of, as controller Hager says these inflationary pressures caused by the pandemic and exacerbated by Russian invasion of Ukraine. I think we, you know, I feel very, like this is a moment that, you know, it's, it's so valuable to be very close with your client, to talk to them about exactly what's happening on that day in the market. You know, as Elizabeth said, we all still have to serve and give advice and exactly how should you come to market and what, elements of your strategy should be, paramount. I think that's really exciting, difficult, and has, all of us in this room, we were talking about it. This is a very tight knit community. We all communicate all time, even a, you know, on a friendly competitor basis, I would say. And I think we see what our cities need, and we're all pretty, creative when it comes to that. We're in a difficult place, we gotta get through it. And you know, Elizabeth, if that's making t-shirts for your, budget,

Elizabeth Reich: (18:29)

Best budget ever.

Robin Redford: (18:30)

She made a t-shirt that said best budget ever, when she went ahead.

Elizabeth Reich: (18:34)

When you get to put out 300 million of infrastructure type stuff that you didn't have before, that is the best budget ever.

Robin Redford: (18:41)

It's a fact, I love that. And, our market is strange and we have later on a panel on the buy side, I think it's not today, but another day, everyone knows these outflows are, our market's super sensitive to these, muni outflows, it res havoc for a few weeks. And we, and it goes on too long and liquidity dries up and spreads widen, and it's a buyer's market, no better time to really help our issuers navigate that. What kind of things can we do to make a big deal, look small and that kind of thing. But usually in June, July, August, we have very strong reinvest, you know, meaning investors holdings are subject to maturity or redemption. So hopefully we could see some evening out of our supply and demand balance this summer. Maybe that helps us. And in preparing for this panel, also, we talked about what's unique about Texas Hagar spoke to a lot of those things. But you know, we're growing ninth, largest, economy in the world. We know we're robust, but all our cities are growing. Even our small towns are growing. There's just so much growth going on. People coming here every day, moving from other places. So seeing that combined with the supply chain problems, global supply chain and just, I'm also in the housing bond field, and all of the projects are delayed. You know, we're doing extension after extension to, you know, deal with these construction delays. So as strong as we are, and as big as we are, we're subject to, you know, these supply chain problems, that can be very frustrating. And if you, as a corporation or as a developer, don't have the capital to maintain, you know, throughout this, this long construction period, it can be extremely challenging financially, obviously. So it's a difficult time, no better time to, I agree, be in this field, public finance, public policy. And that is something that we are focused, on here. I think we're very creative in our field. The other thing about Texas, we have lots of highly rated issuers, with a very conservative approach to financing debt, yes, we would probably see more available rate. We don't have a lot of swaps in the state. We don't, our boards are very conservative. I think that state is this in great stead in terms of, the ratings are happy with us, it creates a lot of stability over time. And so the creativity comes in, how do we structure this, transaction for the city of Dallas or whoever else to really meet the buyers where they are and get the, you know, lowest cost of funds. So those are a few thoughts and turn it back over to you all.

Michael Scarchilli: (21:32)

Thank you, Robin. So before we move on from the general state of the market topic, we talk about, supply and demand, talk about supply, Muni volume projections. We are talking about a roadmap for the year. Maybe we want to go down the line, just, your firm's, projections for where we end up at the end of the year.

Robin Redford: (21:53)

I am not a firm.

Rob Dailey: (21:54)

So our projection is we come in a little bit lower than last year, all in, and I think that's just a result of obviously activity to date, but, also continued strong flows of federal of money, that, you know, that's operating in capital, obviously. So our sense is we're down further from here.

David Medanich: (22:19)

I think what was it last year, 486, 476 billion. It's we're thinking that it's probably more like 425 to 435 billion, and if it's gonna get as well as do it did last year, you're gonna have to have months that outperformed last year, the rest of the year, which I think is kind of unlikely. I guess it could, but, I'd love to see another 485 or 500, but I, think realistically you're we're probably in that range given where we are at this point.

Robin Redford: (22:55)

Yeah. I think I mentioned ours, you know, is in the more like 460 right now, maybe revising down. I know we're all of our analysts are kind of looking at again.

Michael Scarchilli: (23:08)

All right. Thank you. So we're gonna move on now out to, COVID recovery, and not, not just the recovery, of an organization, an issue or a company, but also, the workplace dynamics, how they've sort of shifted, after sort of this return to the new normal, and things like staffing and retention issues shifting of culture. so I want to kind of open up the floor. We'll start with Elizabeth, see what you've been seeing in that regard.

Elizabeth Reich: (23:44)

Thank you, you know, the city of Dallas, as I'm sure many cities and towns are, was very much a, you have to be here in person workplace. We have open meetings, the public had to be able to access us. We were there in person, certainly. So the pandemic was completely, different of operating for us. And of course we had to do everything you have to do. I mean, we had a hundred VPN possibilities before the pandemic and having to then add thousands of, of access points. And so, expanding VPN, expanding our website, doing all of those kinds of things, laptops, all of that. And so now we're set up for it. And so the question is, you know, are we back at work we're back as of March 1st, but not a hundred percent meaning, for office workers, who were able to work from home during the pandemic, we have a new telework policy and we are allowing, managers to approve telework. And, city council meetings are back. They are in person, some committee meetings are in person. However, the public loved virtual meetings. They didn't have to come down to speak. And so, and to sit there waiting for their zoning case to come up. And so all of our meetings are still hybrid and we are allowing members of the public to comment, from that perspect or in that way. And we have council members who if they're not able to be there in person, we are allowing them to be, on virtually and they have to be on camera the whole time, however, to comply with Texas open meetings. And so that's what we're doing now for staff. We, are probably to doing every meeting, a little bit hybrid, lots are still virtual, but as we're in person, we always have a hybrid option, for those and who might not be there that day. We recently, however, had an issue where we set up a meeting and it was probably with some firm in this room and they wanted to have a courtesy meeting and didn't realize that they were flying in and we were virtual. And so I would just encourage you with your issuers to be really clear. Are we meeting in person, are we not meeting in person? It was embarrassing to me. I felt terrible about it. It was what it was, but that's the kind of environment we're in now.

Michael Scarchilli: (26:05)

Thank you.

Rob Dailey: (26:06)

That's a tough situation. That? It wasn't me.

Rob Dailey: (26:12)

I guess a couple of things I'd note, we have not, we're not expecting to have a hard kind of everybody back in the office we've while that might have been the expectation through most of 21 that we would do that it's pretty clear that we're going to more or less gradually go back to the office. Sometime this spring, we will have a date by which, in the office, arrangements are to be set. And I think ultimately we'll get back to a three day a week thing, to be set more or less locally, organically. We're trying to make sure that we're responsive to individual, circumstances and the people on the ground. It seems that, we've demonstrated pretty good productivity with people working from home when it makes sense for them. And so we wanna make sure that we pay attention to that balanced against the need to be in the office and have people, actually interact with each other in a way that, that is particularly valuable for junior people, for people new in the firm or new in the role. And so there's that dynamic of simply picking up by getting to know your colleagues is, immensely valuable. I guess the third point I'd make is that, It did bring a lot of focus past couple of years, brought a lot of focus to how we do business, how we operate. And I think that that's not just, we kind of learned that there's a value to having some degree of interaction with, with others on video, instead of in person you don't need, you know, as much in person. You might argue Elizabeth, that meeting went just as well, right on zoom, right? So it's, there's a lot of value there, but I think also just asking questions around what, what are the processes, we've put a lot of attention on decision making processes and how information flows and who actually needs to see it versus who sees it. And, kind of looking a little bit internally about how do we streamline things, has brought a lot of value. So I think going forward, we will look for some permanent changes and the way we both just sort of continue doing the way we're doing it now that we've had COVID. But also, so we'll be more open to looking at changes and processes.

David Medanich: (28:31)

I don't wanna repeat everything you just said, because we looked at it very similarly, is that what we came out first is you're gonna be here or we're gonna fire you. We kind of wanted to say that we didn't, we did, and then we kind of got to the three day and we kind of move in and out. And honestly, for my investment bankers that are out chasing deals, I'd rather them not be in the office at all. I'd rather them be out changing. What's really surprising. And which may surprise you, cuz all you hear on the TV and everything is that well, you know, the younger people don't want to come in baloney, the younger people that just got out college, they want to be in, they want to be seen, they want to use your mind and help you train them. They don't wanna be home that, I mean, and by themselves they wanna be around people and that's how they're gonna develop in this job. And so we're trying to accommodate that and I use this and remember we're, we're on the prospecting part of the business. This is a relationship type business. Now you have good relationships because you're pretty smart. I would surely hope so, but you've got this relationship with them. And so and I've said this to the kids when I was talking to them. I said, so you're in love and you're gonna ask somebody to marry you. Are you gonna go do it by zoom? Or are you gonna do it in person? And, in almost every case is like, well maybe we ought be there in person. And it's kind of the same way, I can call you all day. I can call Elizabeth all day long, but Elizabeth, I want to front of you and I want you to see me. And so, from that vantage point, I my belief in is, like I said, a minute ago ,never say never, never say it'll never be the same again. It will be. And, it'll change. It'll be something else. I think, and I kind of actually, it's kind of nice every once in all to be able to sleep in a little bit longer and then take some meetings from the home and then go to the office. But I still like going to the office and I noticed that some of the younger employees, really thrive for that. And it's, it helps in the development of it.

Robin Redford: (30:39)

Yeah. I would add, you know, we talked about this in getting ready for the panel in Texas. What we see is as all of you who work in Texas know that, you know, the state agencies for the most part are in person board, the boards, the city councils, like Elizabeth said, they are, you know, open meetings where in person where it varies is staff to staff and every single issue is different. And so it's our challenge as service providers do, what's comfortable for the client and, it's different for everybody, you know? And so it's kind of make sure are we showing up in person or not? And at our firm, we have, it's smaller firm. We are based in New York with, you know, regional offices in various places about 150 people in New York. And they are three days now, just recently back to three days in New York city, Tuesday, Wednesday, Thursday with a desk, probably more like, you know, more than that, depending on if you're pricing. I still think there's a difference about, traveling to pricings. That's something, you know, people wanna get back to perhaps going to New York for your pricing, things like that, that hasn't or just about there. We weren't there back in January, but we might be there now, but it is a very, feels very personal to talk to the client about what are you comfortable doing? So that's different. I think we're gotten to know each other, every meet every call, every meeting starts with how are you doing? And, so that's a good thing. And I think, people are more open to a creative work workplace and we have new people, coming in all the time and this may segue into our next topic, but all of us have been talking about how many job openings there are and how difficult it is to find candidates. So that is another thing that's going on. It's, I don't know if we've ever seen this many advantage for analysts and associates and not just in banks, but also at the government level. So that's another thing that we're all thinking happen.

Elizabeth Reich: (32:53)

I'm hiring for a procurement director, procurement director.

Robin Redford: (32:58)

Look on the Mac website, they're all posted. And, the pay is, you know comparable, you know, it's maybe pay is rising for these entry level jobs because there's so much demand. So anyway, that's kidding a little bit ahead of ourselves, but that's, we shoot it back over to you.

Michael Scarchilli: (33:18)

Yeah, I think we can get into that now. Right. Like what I think sort of the common thread with all this is, as we come out of this, you know, in the post COVID workplace, it seems like it's kind of left to each individual business to figure out what works for them, what works best for them. And that's gonna look different. As many companies are in this room and might have as many answers as to what this should look like for, for your business. But yeah. As Robin, as you pointed out, right. There's a lot of open positions out there and a lot of people looking for jobs, we've had across all industries, the great resignation, people being more open to new opportunities. And, yeah. So I mean, does anyone wanna kind of weigh in, like on a personal perspective on, from your firm on how hiring has been, in this in this environment?

Elizabeth Reich: (34:14)

Well certainly we've increased wages, quite a bit. And that's what we see is that pressure on compensation. We don't have, we're not at the point where, I was at a forum listening, yesterday to a panel and they were doing things like paying for someone's toll tag and making sure they had a dry cleaner in the lobby and those kinds of things to make people's lives easier. As perks, the city of course, is not doing those things, but we have implemented, or at least past the policy for a mental health leave policy. If someone has an incident at work that causes them distress. And then, we also have a new parental paid leave policy of six weeks. And so those are some things our city council is doing to improve, the environment for our workers.

Rob Dailey: (35:02)

Yeah. we're seeing the same thing, across the industry. We just last year closed on an acquisition of a big bank here in Texas and took us out west. So we're, we're hiring in Texas, Arizona, California. And what we're finding generally is that it's not hard to get people engaged in the kind conversation, but a lot of times those conversations can be pretty wide open. They raise issues that that two years ago they might not have been really focused on. And I think one of the things that we went through, I think we all did, but following the George Floyd murder year and a half ago, we really began to focus on, personal engagement in diversity and equity inclusion issues. And that tended to be something that people could do even, through zoom. And we were able to keep the morale and kind of engagement and the spirit level relatively high, because we were all kind of collectively going through this together. And I think that made a huge difference to how people felt getting through what was a really weird time. It's Robin, a little, what you were saying that you start conversations now with a real question, how's it going? Right. And that's a real part of the, dialogue now that you know, is a little bit flatter, before, but people really are kind of personally experienced it in their own unique way. And these issues now get talked about in a way that didn't before, which I think makes for a your, work, environment, trying to, keep up really is the way I describe it.

David Medanich: (36:47)

It's been a challenge. I mean, we've, we've been trying to expand all over the country and we've had some success and, but still like I said and I, wasn't joking about, people are very proud of themselves and you have to, and so you've got a job that now you're gonna be paying significantly more than what you did before to get them in here. But what that also does to you is the people that are there. You've gotta deal with that too. And kind of jokingly, but I still haven't gotten used to the fact that no, you can't bring your dog with you to the office. And no, we don't have an exercise room that you can go ride the bike, you know, at lunch, we don't have that yet. And maybe some of y'all do, but we don't you know, I think that given that we've been able to be as success as we have been proves that you can operate a little bit more Le be a little bit more lenient on things and maybe that's a good thing. And like I said, I think it'll get a little bit more formal as things go on, but, it's not a bad thing. And, to some of the things it and Hagar had said is that, you know, people have a life and if people are a little bit happy and you do care about them and like you said, really, how are you? Because we really do care how, how you're doing. And if you feel that way, then maybe we have a little bit more success with you. And in the, company's not the cold outside, it's somebody that's part of the family, which is what we want our culture to be that you do feel like you're part of something that, you're just not another number.

Robin Redford: (38:31)

I think, I mentioned some of ours, but in our firm, we have a New York, based internship. That's in a partnership with New York state housing finance agency, and it's usually three or four banks that get together. and they jointly sponsor this, this program and it puts the, candidate. Who's a grad college graduate, you know, the agency for six months and then at the investment bank for six months. And it's a minority internship programs going on for 20 something years. And in the pandemic, we all thought, oh, no, what are we gonna do? You know, are we all gonna keep doing it? And, very proud to say that, our firm absolutely give us two interns, you know, like that, because we thought this is what we're here for. This is what we're trying to do. This is like in our DNA, and programs like that, I just think are wonderful. They get you, you know, to see the issuer, they get you to see the service provide. It's also a perfect portal to a new job. If that person ends up being a really great candidate they're here they might get poached by the agency though. So you have to and then what do you do? But it is a wonderful program. But anyway, that's just to say that I think these pipelines is, or what my team and I have been figuring out is that it's, the pipelines have changed. The, the connection with the career services has changed, finding the people has just completely changed. So you have to be a lot more proactive about finding those pipelines of, new high just putting something out there on your regular website, you know, they've already, these candidates already have jobs, some, some other place by the time they, you know, find it on your website. So I think it's, it's brought that to the fore it's and that is part and parcel of, you know, diversity, is diversifying your places that you're looking. So I would say that would be my additional comment. Go ahead.

Michael Scarchilli: (40:41)

All right. Oh, thanks everyone. So we have about 10 minutes left. I wanna give an opportunity for, questions from the audience, now, so if anybody's got questions for any of our panelists, how about it?

Audience member(Curtis Harris): (40:58)

Well, that was convenient. Curtis Harris from, rice financial products company. I have been in the business for, you know, almost, I would like to say dinosaur, but over 35 years in fact, Rob and I were colleagues at a firm that no longer exists, but during that period of time, we've seen a lot of crazy things happen. We've been in a rate environment where rates for, I wanna say, just above investment grade level issuers peaked at around 20, 21%, we were issuing debt at that point. And we never imagined that we'd be in an environment where the 30 year M&D, you know, is around 3%. That just wasn't even fathomable. So my question to each of you, but primarily the banker Elizabeth, I'll give you a break. What do you think is gonna be the next aha moment in the next five years for the industry?

Rob Dailey: (42:03)

Can you repeat that? Wait, what I didn't hear it the next aha moment. The aha moment.

Audience member(Curtis Harris): (42:12)

One of when I say moment, I mean, oh, I should have figured that one coming out.

Rob Dailey: (42:18)

Yeah that's you can make a lot of money this way, right. If I knew that your crystal, there is an aha moment. I'm not saying it's the next one, but there is one that is, a streamlining of the processes we go through to you and sell that using technology. And we're kind of not well positioned to take advantage of that. But looking forward that to me is a revelation, of COVID how quickly we reacted to not being able to be in play together, tells me that the ability to change, processes is, there so we have the capacity to do it. I think that, that we need a model to get there and that it'll take some time to figure out what that model is. But I do think that's gonna be an aha moment. Don't know if it's the next one.

Robin Redford: (43:17)

I would say I was thinking the exact same thing. I was thinking, maybe that's aha moment that happened, that we're still dealing with more. So, which is, we went from everybody in the office pricing, large transaction to no one in the office. And it went very, very well. So we know that we can, do this. It's, it's still getting on the phone and selling bonds. You know, it's still, people talking to people, if you're at home, the dogs need to be outside or whatever, but you you're still selling the bonds that way. And that was kind of surprising cuz, I worked for a firm where it's been in business 50 year and the man who started it started in 1971, he's, 70 something now. And he was worried. He's like, I don't know what an office looks like that doesn't have people in it. And, but it worked well. So in terms of the future of that, certainly our pricings have changed the dynamics. We still, know, do like to get together. Maybe we're not in New York, maybe we're just in the issuers office. Maybe we're just in the FA's office, something like that. But, it's definitely processes can be, can be streamlined, can be streamlined further,

David Medanich: (44:33)

You know, as far as aha. I mean, I agree with what you guys have said. I think one of the aha moments to me and I don't, and I think that in, like I said, being that I've been around for more than a couple of years and you don't really appreciate, or you get an aha, you don't really appreciate technology. And when I say technology, I mean the hacking part of it. And, then when you're communicating everything now, anything that you touch, if it's electronic, it comes back. I at you. And I think a lot of people have figured out have had big aha moments like that are going, oh crap. You know, when they go back and then they go back and everything that you've discussed, whether it's on a text and whether it's on an email, no matter what it is, it's recoverable. And I think that, we have to be very mindful that, and what it, what the cost can be is, just almost staggering. So I mean, I agree. I don't know that that's a big ad, but I agree with everything that both you guys were saying, but from our vantage point, we spend so much money all the time on just that one thing. And I forgot who said it on, well, just making a click on something, what that can do. It can destroy your entire system, that you have millions of dollars in. It can also destroy your career very quickly on something that you just meant as a joke. And it was a text or something stupid. But, my aha is that trying to be very mindful, that, and think very clearly what I'm gonna say and what and where I am.

Rob Dailey: (46:22)

Hey, I have one more thing to add. It just occurred to me. I traveled recently to the United Arab Emirates and, there was an American there that was running a museum and he talked about what the differences were and I'll leave you just the one exam he said to get a driver's license in the UAE. He said, I timed it. It took three minutes, 21 seconds. And then I lost it a couple months later and I replaced it at a vending machine. So like, do we have the capacity here in the states to do that? Of course. Right.

Michael Scarchilli: (46:58)

All right. So we've got about two minutes left. We probably take like one more question. Any other questions out there?

Audience member(Eric): (47:10)

Thank you. Hi, Eric Eberth with Amer event securities. I know it was mentioned earlier by the, controller about the new normal. And I wanna see if, maybe Madam CFO, Elizabeth, you could talk about the, the new normal with the federal funds being part of our budget. You mentioned it was a good problem to have, but going forward, what do we see as the new normal, when the federal funds start to pull back a little bit?

Elizabeth Reich: (47:37)

Well, from my perspective, we're still gonna be moving forward on bond issuances and things like that. So when the federal funds pull back, the concern that I have is how much of inflation has been driven by that stimulus. And will I keep waiting? Is sales tax gonna fall off at some point? And it hasn't. And so, I don't know how much of this that we're seeing is because of those federal funds. And at what point is that gonna level off and be the new normal. And so that's really what I'm watching and paying attention to in my sales tax forecast is, you know, is there an end to this and working with our economists on that, and right now we're not really seeing an end to it. And so I guess, people saved and they're now spending and go for it, you know, but if you could drive about three hours north and do your spending there that'd be great. But from my perspective, so just a couple of final thoughts, and I do have an aha moment, is we're gonna be doing an election in November, for an extra 2% hotel occupancy tax. And so the, folks in Dallas won't be paying it, but if you stay in a hotel in, as you would, to finance a new convention center, and also part of that money will finance improvements at fair park, which is a municipally owned park and just a jewel of the city. And so I'm really excited for that. And that's gonna lead about a year later to a very large bond issue, a couple billion dollars. And so that's coming up. And, then of course I had my first meeting at today with the city manager about planning the next bond program. We're not sure exactly on timing when we'll take that to the voters, but we are looking to do that. And so we're full steam ahead on investing in infrastructure and making sure we lay out long term plans for getting to a state of good repair on city assets. And that is a goal of the city council. And so even if we can't do it all in one year or one on program, we're gonna be looking for strategies of how we're going to get there and really pay down some of our, maintenance debt and some things like that. And so my focus right now is on investor outreach, new website, just a week or so ago, city of Dallas bonds.com. We're gonna have an investor conference this summer, probably no details, no date yet. But think about that. Focusing on ESG, you're gonna hear from my chief information security officer later this week on cyber, we're really focused on those and other ESG issue issues and letting letting folks know about that. And then my aha is I'm sharpening my focus right now on the diversity of the teams that my deals. And so I'm wearing my women in public finance pin today. And, I'm active in that organization. And I really believe that we have got to do that. And I'm talking about every part of it, from legal counsel to financial advisory, to investment, to banks, to every, every part of it, because that's how we're going to make progress. And so I'm looking at all of that very closely and just wanting to let you all know that I don't have any concrete plans of what that's going to mean. So, just thinking about it, if you have ideas about how others are doing that successfully, I'm happy to have a conversation, thanks for letting me plug things.

Michael Scarchilli: (50:53)

Thanks, Elizabeth. So while we're on that theme, why don't we go just down the line with some final thoughts real quick, before we break off here and yeah, so Rob, do you have any final thoughts?

Rob Dailey: (51:04)

I Would only, maybe just ran for, or something that we've talked about, which is, I think this is a year where there's gonna be some unexpected stuff. It's you gotta be dynamic it's things are gonna look a lot different, I think in three months than they, than they do now.

David Medanich: (51:19)

I my own closing part is that it really is. And it was said earlier, it's, it's really a pleasure to see people in the live as opposed to on the screen and again, I would suggest everybody don't forget that how important that is.

Robin Redford: (51:40)

Well, this has just been a pleasure. I agree completely. And I think the other thing that I think was maybe implied too, by you David, that even if we get to that rate in December and it's, above it's in the two 50 range, you can still look back and say, the issuer is going to, have bonds outstanding that are still, lower in rate than some of the highest rates in history. So we, we, that, there's still solutions out there there's still affordable, debt. And, it we've just been spoiled, we've been quite spoiled and so we need to put our heads down and, get to work.

Michael Scarchilli: (52:26)

Okay, So that'll wrap us up here. Yeah. Thank you. To Robin and David and Rob and Elizabeth for a great panel, please stick around. We have the Texas legislative and regulatory update coming up next, right before cocktails and, I'll see you around. Bye.