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2023 07 06 MDD MinutesMINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS OF THE BAYTOWN MUNICIPAL DEVELOPMENT DISTRICT July 6, 2023 The Board of Directors of the Baytown Municipal Development District (MDD) met in a Regular Meeting on Thursday, July 6, 2023, at 4:31 P.M., in the Council Chamber of the Baytown City Hall, 2401 Market Street, Baytown, Texas, with the following in attendance: Laura Alvarado Vice President David P. Jirrels Secretary Donna Winfrey Director Sarah Graham Director Kenrick Griffith Director Heather Betancourth Director Mike Lester Director Shaunna Bernshausen Director Bandon Capetillo President Jason Reynolds General Manager Scott Lemond General Counsel Angela Jackson Assistant Secretary President Capetillo convened the July 6, 2023, MDD Board Regular Meeting with a quorum present at 4:31 P.M. All members were present with the exception of the absences of Director Gary Englert, Director Suhey Rios -Alvarez, Director Jacob Powell, and Director Donna Winfrey who later arrived at 4:38 P.M. 1. CITIZEN COMMUNICATION a. Mr. Chris Presley has requested to appear before the Municipal Development District regarding a proposal for a new Economic Development Program. Former District Two (2) Council Member and MDD Vice President Chris Presley Mr. Presley was present to speak on behalf of the Green Apple Salon. He informed the MDD Board that the salon was displaced from their location a couple of years ago and wished to return. Thus, they were asking for the MDD to adopt a program or to put a process in place that would allow folks to acquire or to do something productive with the dozens of City -owned surplus lots. Mr. Presley relayed the bottom line was that none of those properties were generating tax revenue. It actually cost the City money because the lots required mowing, upkeep, et cetera. If the lots were offered as an incentive for commercial development or to build homes, they would generate tax revenue. Mr. Presley presented a flow chart, so to speak, of a process with the objective to have all surplus lots producing tax revenue within three (3) or four (4) years. The way the process was pitched was that the lots could go from the City, to the MDD, and to the prospect. MDD Board Regular Meeting Minutes July 6, 2023 Page 2 of 8 In February, Mr. Presley shared that he met and discussed with President and CEO of the Baytown West Chambers County Economic Development Foundation (EDF) BJ Simon and the City of Baytown's Administration. The feedback he received was positive from the City Administration, Finance Director Victor Brownlees, and even a couple of folks from the Planning Department. Based on that and to help advance the process, they submitted a proposal in April. With regard to the lot in question for the salon, Mr. Presley relayed they believed new construction would make a big impact. He also noted that the City had said that they wanted to see new devel- opment there. Thus, they were present to ask for a process to be put in place for anybody and everybody so the lots could be put to good use and taken off of the backs of the taxpayers. General Manager General Manager Jason Reynolds confirmed that he, Mr. Presley, Mr. Simon, and a few City Staff Members had extensive conversations on the properties and projects. He noted that the project Mr. Presley referred to did seem viable for the City. However, as they jumped in to the process flow of selling the properties, they did run in to a few hiccups to legitimately sell those properties. In addition to that, some of properties needed to be brought to the City Council for the strategic holdings of the properties. He explained that had not been done as it had been a lower priority. Furthermore, Mr. Reynolds relayed that the process presented was worth consideration from the MDD Board. However, if the City Council wanted to look at selling properties, that would be a totally different conversation that needed to be had with the Council. He explained that was due to the MDD not being involved with City property at that time. MDD Directors While noting that there may be multiple lien holders on some of the properties, President Capetillo agreed conceptually with what was presented and was interested in pursing that. Vice President Alvarado also made note of the different circumstances certain properties may have. She relayed they had to identify that and then start going in to the flow of how to handle each of the properties. President Capetillo recalled that they had identified which were owned either by the City or other entities. He believed they needed to have more discussions on that either with Council or the MDD. Director Graham shared that she believed they needed to prioritize this matter. Director Griffith echoed the sentiment and asked how soon they could get that on an agenda item. Mr. Reynolds posed the question if it would be okay to move forward with this specific property and come back with the other pieces of the pie. He did note that this specific property had been a strategic hold for the City, but it was probably no longer relevant. He relayed they could see how this one would work and then the process could be set up from there. Or, they could set up the process up first. Director Graham preferred to have a process first and Director Betancourth agreed to do it holisti- cally and to not piecemeal it. While understanding the merit of not piecemealing this matter, Di- rector Bernshausen relayed that it could be a good way to work through some of the kinks so they do not have to go back and keep changing the process. When they would put it out to the public, it would look nice and organized. President Capetillo further questioned if the City Council would visit this first or the MDD. Since it was a Council property, Mr. Reynolds responded with Council. MDD Board Regular Meeting Minutes July 6, 2023 Page 3 of 8 As Director Winfrey entered late and questioned what properties were in question, President Ca- petillo requested Staff to provide that information in some format to the entire MDD Board. 2. BAYTOWN MUNICIPAL DEVELOPMENT DISTRICT'S FY 2023-24 PROPOSED BUDGET a. Conduct a public hearing concerning the Baytown Municipal Development District's Fiscal Year 2023-24 Proposed Budget. At 4:48 P.M., Director Betancourth stepped out of the MDD Board Regular Meeting. At 4:49 P.M., President Capetillo opened the public hearing concerning the Baytown Municipal Development District's Fiscal Year 2023-24 Proposed Budget. General Manager Jason Reynolds summarized the subject of the hearing with the following visual: ACTUAL FY22 ADOPTED BUDGET FY23 PROPOSED BUDGET FY24 Revenues $8,179,021 $8,292,097 $8,824,304 Expenditures Economic Development Projects $2,498,764 $4,138,050 $4,632,400 Infrastructure Projects $1,910,669 $2,062,725 $2,118,718 Parks Projects $2,518,796 $3,130,329 $726,080 Project Administration/Contingency $300,000 $1,042,148 $830,127 Total Expenditures $7,228,229 $10,373,252 $8,307,326 Beginning Working Capital $1,023,298 $1,974,090 ($107,065) Revenues Over (Under) Expenditures $950,792 ($2,081,155) $516,979 Ending Working Capital $1,974,090 ($107,065) $409,914 At 4:52 P.M., President Capetillo closed the public hearing concerning the Baytown Municipal Development District's Fiscal Year 2023-24 Proposed Budget. b. Consider a resolution adopting the Baytown Municipal Development District Fiscal Year 2022-23 Budget. President Capetillo first noted that while Item 2.b. was posted for the "2022-23 Budget," the Item was supposed to read: "Consider a resolution adopting the Baytown Municipal Development District Fiscal Year 2023-24 Budget. " Overview General Manager Jason Reynolds proceeded to introduce the item by describing the exhibits in front of the MDD regarding the budget. The MDD Budget break down was presented as follows: • 34% — Economic Development; • 31 % — Parks and Recreation; and • 25%— Infrastructure; 0 10%— Admin and Contingency. MDD Board Regular Meeting Minutes July 6, 2023 Page 4 of 8 Moreover, Mr. Reynolds relayed that there were multiple options the Board was able to go through for a philosophical stance on how they wanted to look at that money. However, after that was ready, a change happened to the MDD budget. Mr. Reynolds informed the Board that there was an insurance payment for the Hyatt Regency at a number that was not expected. The bill was roughly one million and eight hundred thousand dollars ($1,800,000) which had forced a complete restructure of the projects for the MDD. In addition to thinking about the makeup of the MDD, they also had to consider how to pay for any other hiccups that may come along. Mr. Reynolds relayed that this meant they needed to start focusing on building a healthier reserve. Mr. Reynolds advised the MDD Board on moving to a reserve balance of roughly four million to five million dollars ($4,000,000 — $5,000,000) which would take a few years to get to. In referenc- ing the table from Item 2.a., he relayed the FY23 Budget Working Capital was projected to end in a negative balance of one hundred seven thousand and sixty-five dollars ($107,065). However, with their revenues, they would be at four hundred nine thousand and nine hundred fourteen dollars ($409,914). So, to get to a five million -dollar ($5,000,000) reserve, they would have to move some of the projects that were already adopted by the MDD to the General Fund to ensure that those would be paid for. Mr. Reynolds projected those were most likely to be the Parks projects. With that said, Mr. Reynolds's recommendation was for the Board to not adopt the budget that day. Once they could ensure the projects were funded, they could come back and adopt the budget. After a few questions of clarification from the Directors, they proceeded to give their comments. MDD Directors' Comments Director Graham expressed her frustration as she was unable to understand how they did not pro- ject that insurance bill. She relayed it was a sad day as she felt they had to scrap all of their Parks and Recreation items from the budget in order to pay an insurance bill they did not see coming. At 5:01 P.M., Director Betancourth returned to the MDD Board Regular Meeting. Director Griffith wondered if this would mean the Lakewood Dog Park item was scraped as well. Mr. Reynolds clarified that the Park items were not scrapped. They were being moved to the Gen- eral Fund; however, it did mean they would have to compete with the other projects the General Fund addressed. Nevertheless, Director Griffith echoed Director Graham's sentiments and ex- pressed disappointment with the discrepancy. He wished to see that dog park break ground soon. President Capetillo inquired if there was a reason, or what was the biggest cost driver, for the increase to the insurance. Finance Director Victor Brownlees relayed he initially anticipated the amount to be around three hundred thousand dollars ($300,000). He explained that was based on the advice he received from the people that advised the City on the Hotel. Everyone had been astounded and this had also happened in the City of Conroe, Abilene, and other hotels throughout the State. Mr. Brownlees further explained it was a factor of the insurance industry and the location of their Hotel. However, while it was all of those factors together, there was no easy answer. Vice President Alvarado wondered what would their future insurance policies look like. Mr. Reyn- olds proceeded to discuss the ways in which Staff were working to address that and Mr. Brownlees touched on matters concerning the Hotel/Motel (HOT) Fund. Vice President Alvarado shared that she understood that it would take a couple of years to get that investment back from the Hotel. She MDD Board Regular Meeting Minutes July 6, 2023 Page 5 of 8 expressed that it was just the sticker shock of what they anticipated versus what they were getting. Vice President Alvarado relayed it was a very big shock and was at a loss for words. To conclude the MDD Directors' comments, Director Lester expressed that he was pleased to see them try to roll the Parks issues in to the General Fund. He shared that he had been pushing that for a while because the MDD was supposed to spur municipal and economic development. 3. PROPOSED RESOLUTIONS a. Consider a resolution approving a Business Improvement Grant application not to exceed $60,000.00. Senior Economic Development Analyst Emilio Levario presented the item to the MDD Board. In April of the current year, the MDD Board adopted revisions to the Business Improvement Grant (BIG) Program's policy and guidelines. Mr. Levario reported that this was their first application and project to be processed under those new guidelines. The building was at 2817 North Market Street and various exhibits were presented of the existing conditions and proposed improvements. The total estimated project expenditures were at one hundred thirty-four thousand, four hundred eleven dollars and twenty cents ($134,411.20). The total estimated reimbursement for the eligible improvements were just under sixty thousand dollars ($60,000). Mr. Levario ended on the note that Staff recommended approval. Ms. Leticia Sandoval from the Spirit Real Estate Group also presented herself and relayed she was available in case there were any questions from the MDD. Considering the report they had previously received, Director Betancourth questioned if it was prudent to still be spending money on these other programs. General Manager Jason Reynolds answered yes as the money was already budgeted. Chief Financial Officer Teresa McKenzie fur- ther spoke on matters concerning their budget and the funding of the different projects. Upon ad- ditional questions, Mr. Reynolds expressed that he was confident that the money was there A motion was made by Vice President Laura Alvarado and seconded by Director Sarah Graham to approve Resolution No. 463, related to Item 3.a. The vote was as follows: Ayes: President Brandon Capetillo, Vice President Laura Alvarado, Secretary David P. Jirrels, Director Donna Winfrey, Director Sarah Graham, Director Kenrick Griffith, Director Mike Lester, and Director Shaunna Bernshausen Nays: Director Heather Betancourth Other: Director Suhey Rios -Alvarez (Absent), Director Jacob Powell (Absent), and Director Gary Englert (Absent) Approved RESOLUTION NO.463 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN MU- NICIPAL DEVELOPMENT DISTRICT APPROVING A BUSINESS IMPROVE- MDD Board Regular Meeting Minutes July 6, 2023 Page 6 of S MENT GRANT APPLICATION SUBMITTED BY LETICIA SANDOVAL; AU- THORIZING REIMBURSEMENT FUNDING UNDER THE BUSINESS IM- PROVEMENT GRANT PROGRAM IN AN AMOUNT NOT TO EXCEED SIXTY THOUSAND AND NO/100 DOLLARS ($60,000.00); AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. 4. REPORTS a. Receive the Monthly Construction Status Report for the Baytown Hotel and Convention Center Project. Finance Director Victor Brownlees had nothing to add on the Hotel as it was previously discussed. b. Receive the Baytown Municipal Development District's Quarterly Financial and Investment Reports for the Quarter Ending December 31, 2022. Chief Financial Officer Teresa McKenzie provided the MDD's Quarterly Financial and Investment Reports for the Quarter Ending December 31, 2022, as follows: Revenues Sales Tax Miscellaneous Total Revenues Expenditures Administration Economic Development Parks Streets Sewer Debt Service - Transfers Total Expenditures Net Change Beg. Fund Balance End. Fund Balance Balance $ 8,290,844 $ 2,083,611 $ 6,207,233 1.253 25.843 dI24,590 109,453 6,1 to % PYActual Change$ 25% $ 1,954,272 $ 129,339 486,762 75,000 411,762 15% 75,000 - 4,178,221 953,632 3,224,589 23% 160,988 792,644 2,700,091 998,859 1,701,232 37% 1,021.574 (22,715) 186,124 186,124 1 100% 494,365 (308,242) 500,000 - 500,000 0% - - 2,322,054 1,019,362 1,302,692 44% 187,487 831,875 10.373,252 3,232,976 7,140,275 31% 1,939,414 1,293,562 (2,081,155) (1,123,523) MDD Budget Received '' $8,292,097 / $2,109,453 25% Investments (Book Value) MDD Budget Spent Texpool a$ $10,373,252 / $3,232,976 Balance $3,819,936 31% Earnings $25,843 14,923 Personnel, Services, $32.3 K $343.1 K MDD Board Regular Meeting Minutes July 6, 2023 Page 7 of 8 C. Receive the Baytown Municipal Development District's Quarterly Financial and Investment Reports for the Quarter Ending March 31, 2023. Chief Financial Officer Teresa McKenzie provided the MDD's Quarterly Financial and Investment Reports for the Quarter Ending March 31, 2023, as follows: Revenues Sales Tax Miscellaneous Total Revenues Expenditures Administration Economic Development Parks Streets Sewer Debt Service & Transfers Total Expenditures Net Change Beg. Fund Balance End. Fund Balance -- - - CY to PY Budget CYActual Balance % PYActual Change$ $ 8,290,844 $ 4,174,366 $ 4,116,478 50% $ 4,042,310 $ 132,055 1,253 80,980 (79,727) 6463% 649 80,331 8,292,097 4,255,346 4,036,751 51% 4,042,960 212,386 486,762 216,059 270,703 44% 75,000 141,059 4,178,221 1,794,778 2,383,443 43% 160,988 1,633,791 2,700,091 1,282,104 1,417,987 47% 1,021,574 260,530 186,124 186,124 1 100% 494,365 (308,242) 500,000 500,000 0% - - 2,322,054 1,161,027 1,161,027 50% 187,487 973,540 10,373,252 4,640,092 5,733,160 45% 1,939,414 2,700,678 (2,081,155) (384,746) 2,103,546 2,081,155 1,183,697 (306,373) $ 0 $ 798,951 $ 1,797,173 Personnel, $116.5K Services, MDD Budget Received ;t;�r,F-Ill ..a�rau+.'t.- $790.0 K $8,292,097 / $4,255,346 x) 51 4 r Investments (Book Value) MDD Budget Spent Texpool as $10,373,252 / $4,640,092 Balance $2,904,085 723f 45% Earnings $80,980 2 3 3"K MDD Board Regular Meeting Minutes July 6, 2023 Page 8 of 8 5. MANAGER'S REPORT a. The next Baytown Municipal Development District meeting is scheduled for Thursday, August 3, 2023 at 4:30 p.m., in the Council Chamber located at City Hall, 2401 Market Street, Baytown, Texas, 77520. General Manager Jason Reynolds recited that the next MDD Meeting was scheduled for Thursday, August 3, 2023 at 4:30 P.M., in the Council Chamber. 6. ADJOURN With there being no further business to discuss, President Capetillo adjourned the July 6, 2023, MDD Board Regular Meeting at 5:21 P.M. i Angela Ja kson, Assistant f% eta City of Baytown s