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2023 09 14 WS Minutes MINUTES OF THE REGULAR WORK SESSION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN September 14, 2023 The City Council of the City of Baytown, Texas, met in a Regular Work Session on Thursday, September 14, 2023, at 5:32 P.M. in the Council Chamber of the Baytown City Hall at 2401 Market Street, Baytown, Texas, with the following in attendance: Laura Alvarado Council Member Sarah Graham Council Member Kenrick Griffith Council Member Heather Betancourth Council Member Jacob Powell Council Member Mike Lester Mayor Pro Tern Brandon Capetillo Mayor Jason Reynolds City Manager Scott Lemond City Attorney Angela Jackson City Clerk Mayor Capetillo convened the September 14, 2023, City Council Regular Work Session with a quorum present at 5:32 P.M., and with all members present. 1. CITIZEN COMMENTS Mayor Capetillo announced no citizens had signed up to speak on the Citizens Comments item. 2. DISCUSSIONS a. Discuss City Council guidelines for administering District specific project funding. Mayor Capetillo announced Item 2.a. would be revisited in a future Work Session or meeting. b. Discussion regarding Tax Increment Reinvestment Zones (TIRZ) in the City of Baytown. Finance Director Victor Brownlees opened the item with a refresher on the Tax Increment Rein- vestment Zones (TIRZ). The TIRZ was a financing tool to pay for infrastructure and facilitate future development. Baytown currently had one (1) TIRZ within the City that started in 2001. It had tripled in size in that period and went up six-fold in terms of value. Mr. Brownlees noted there was a proposal to re-expand the TIRZ to reincorporate the land that was once the old San Jacinto Marketplace Mall. It had been taken out for the reason that it was declining in value. Mr. Brown- lees stated it was now at ground-zero in terms of the mall development and it made sense to bring it back in to the TIRZ. With that, they could capture the uplift in value as Fidelis developed it. Mr. Brownlees additionally noted there was a suggestion for a second TIRZ in the south of the City. It would encompass the Evergreen area plus Bayland Island. He strongly suggested that it City Council Regular Work Session Minutes September 14,2023 Page 2 of 5 also include Texas Avenue. For the second TIRZ, Mayor Capetillo questioned what the timeline would be. Mr. Brownlees advised that Council extend TIRZ One(1)before the end of the year so the values in January were captured. For TIRZ Two (2), he believed it would make sense to do that in the same timeline by the end of the calendar year. Mayor Capetillo commented that he agreed to extend the boundaries to include portions of Texas Avenue and maybe even Alexander. MuniCap Representative and the City of Baytown's TIRZ Administrator Abdi Yassin provided an overview of TIRZ financing. He informed Council that TIRZ were governed by Chapter 311 of the Texas Property Tax Code. The most common uses for the zones were presented as follows: to encourage new development,redevelop urban renewal areas, and rebuild public infrastructure.Mr. Yassin summarized a TIRZ was basically banking on future revenue and relieved pressure on the existing tax base and the General Fund. Once the term of the TIRZ ran out,then the entirety of the developed area would roll back in to the General Fund. A typical TIRZ process was presented as follows: Phase 1: Preparation of Documents • Preparation of TIRZ Plan Phase 2: Government Approval • Formal and informal review, negotiation, and brief to City Staff,Council, and other stakeholders • Statutory Creation of TIRZ • Issuance of Debt Obligation(if applicable) • Construction of Public Improvements • Administration of TIRZ Mr. Yassin noted Chapter 311 had an exhaustive list of items that a TIRZ could pay for. The most common items were listed as follows: • Capital Costs • Construction Period Interest • Financing Costs • Operation of TIRZ and Project Facilities • Real Property Assembly Costs Costs • Capital Professional Services Costs • Reimbursement of Constructions from • TIRZ Administrative Costs General Revenue • Relocation Costs • Other Payments of the Governing Body • Organization Costs Aside from the statutory provisions, he noted there were a few things that needed to be looked at: • How much assistance does the project require to be feasible? • How much public investment will the revenues support? • What is the amount of investment justified,based on the benefits of the project? • Were there enough improvement costs on which public funds could be spent pursuant to Internal Revenue Service(IRS)regulations, State law, and public policies? Mr. Yassin then proceeded to present the history of TIRZ One(1) with the following visuals: City Council Regular Work Session Minutes September 14,2023 Page 3 of 5 Projected Captured Appraised Value at Approx.Total Total Current Captured the End of the Term Title Year Approved Acreage Appraised Value(City) (City) Original PFP December 5,2001 350 $52,883,770 First Amendment June 12,2008 585 $54.366390 Second Amendment November 19,2012 704 Applies to County Only Thud Amendment December 11.2014 645 S156.045,107 Fourth Amendment July 14,2015 724 $183,163,746 Fifth Amendment January 26,2017 748 $352.714.221 $1,078,170,458 Sixth Amendment' March 9,2017 897 $353,162,781 $1,078,170,458 Sex euth Amendment December 21.2020 833 $300.476.976 $962,626,202 Eighth Amendment 1,022 $315,173,102 S1.091.782,381 'Increased acreage in.t\tit.Amendment is due to a 228-acre tract added h om Chambers County and not located m the City's corporate luny- County Participation Percentage back to Entity Participation Rate Entity Increments Generated Harris County' 75% 25% $10,521,145.00 Cliambets County= 60°o 40°o S631.216 89 'Actual Increments collected through 2022 'Projected Increments to be collected through 2022 Project Costs Projects Budget Expenses Remaininf` Eastpoint Sections 2.3,4 $1,564,432 $1,467,537 $96,895 Country Club Manor $2.453,537 $2,092.389 $361,148 Baker Road 2008 and 2012 $518,657 $518,659 -$2 Hunt Road $7,000,000 $868,914 $6,131,086 John Martin S3,000,000 $3,000,000 San Jacinto Blvd. $19,000,000 S18.980,106 $19,894 Sjolander Road $6,500,000 $5,599,993 $900,007 Public Roadways $20.100,000 $2,227.779 $17.872,221 Water,Wastewater&Drainage Improvements $11,000,000 $83,019 $10,916,981 Fire.Police and EMS to support residential S4,700,000 $367.000 $4.333,000 Engineering and Legal $8,000,000 $757,335 $7,242,665 Kilgore Park Sanitary Sewer $3,650,000 $3.650,000 Kilgore Park Storm Sewer/Drainage $6,160,000 $6,160,000 Kilgore Parkway/Other Roads $7.500.000 $7,500,000 Kilgore Park Water $820,000 $820,000 Cedai Bayou Lyuchbm-g Road $20,000.000 $20,000,000 John Martin Road(Cedar Bayou Lynchburg to Wallisville) $20,000,000 $20,000,000 Zone Ad.niuustiation and Project Management S2.500,000 $2,500,000 Totals $144,466,626 S32,962,731 S111,503,895 City Council Regular Work Session Minutes September 14,2023 Page 4 of 5 After presenting the history of the TIRZ, Mr. Yassin discussed the proposed eighth amendment about reintegrating the San Jacinto area back in to the TIRZ. As there was a developer that would bring in general commercial and "big box" commercial, MuniCap believed it would bring in a significant amount of new value. At Staffs direction, MuniCap amended the project and finance plan that was reviewed and approved by the TIRZ Board and recommended for Council's consid- eration. Mr.Yassin then displayed images of the San Jacinto Mall Redevelopment Plan to Council and presented MuniCap's projected future valuation of that area as follows: Projected Maximum TIRZ Contribution-2023 Annexation Total Projected Incremental Tax Total Projected Total Projected Total Projected Resenue As ailable for Total Projected Appraised Value Incremental Appraised Incremental Tar Revenue payment of Project Incremental Tax at buildout as of Base Value as of Value at buildout as of during the"term of the Costs(Maximum TIRZ Revenue Retained by Jurisdiction January 1,2045 January 1,2023 January 1,2045 TIRZ Contribution Amount) the Jurisdiction City of Baytown S174.631,541 S45,475,363 S129,156,178 S13,062,615 S13,062,615 SO Hams County 5174,631,541 545,475,363 S129,156,178 55,986,684 S4.490.013 S1,496,671 Total S19,049,299 517,552,628 S1,496,671 Upon comments of concern from Council, Mr. Brownlees clarified that the TIRZ expansion to include San Jacinto Marketplace was not an incentive to that particular developer. He reiterated it was a financing tool to pay for infrastructure. It would give them greater control over the develop- ment because all the roadways would be public roadways.Thus,they would have more opportunity to demand certain standards. He further clarified this was not an incentive nor a gift to Fidelis. Mr. Yassin lastly discussed over the creation of another TIRZ with the following visuals: Proposed TIRZ#2 Description Total Acres approx.3,344 Cunent Appraised Value' _ $178,969,058 'Based on Pt ehuunaty 2023 Values according to the Hams C AD TIRZ#2 Proposed TIRZ Costs Project Cost Transportation $89,744,000 Drainage S16.29-1.971 Water Distribution $10,256,595 Parks.Recreation.Trails and Open Space $125.969,352 Total S242,264,918 In conclusion, Mr. Yassin relayed MuniCap recommended for Council to approve the amendment to the project and the finance plan. As Council engaged in a discussion,Mayor Capetillo suggested they also do the Alexander corridor area or any greenspace close by. Mayor Pro Tern Lester agreed with going west all the way as it would help with the infrastructure issues. City Council Regular Work Session Minutes September 14,2023 Page 5 of 5 3. ADJOURN With there being no further business to discuss, Mayor Capetillo adjourned the September 14, 2023, City Council Regular Work Session at 5:52 P.M. �®t�ni6CU6M '1 1 Angela Ja son, City C k City of Baytown 1 .i @p mpN I