2025 02 27 CC WS MinutesCity Council Work Session Minutes
February 27, 2025
Page l of 3
MINUTES OF THE WORK SESSION OF THE
CITY COUNCIL OF THE CITY OF BAYTOWN
February 27, 2025
The City Council of the City of Baytown, Texas, met in a Work Session on Thursday, February
27, 2025, at 5:30 P.M. in the Council Chamber of Baytown City Hall, 2401 Market Street,
Baytown, Texas, with the following in attendance:
Jacob Powell
Laura Alvarado
Sarah Graham
Kenrick Griffith
James Franco
Mike Lester
Charles Johnson
Jason Reynolds
Scott Lemond
Angela Jackson
John Stringer
Mayor Pro Tern
Council Member
Council Member
Council Member
Council Member
Council Member
Mayor
City Manager
City Attorney
City Clerk
Sergeant at Arms
Mayor Charles Johnson convened the February 27, 2025 City Council Work Session with a
quorum present at 5:32 P.M. All members were present.
1. CITIZEN COMMENTS
Mayor Charles Johnson announced no citizens signed up to speak.
2. DISCUSSIONS
a. Discuss the Fiscal Year 2025 Certificate of Obligation bond issuance & Fiscal Year
2026 General Obligation bond issuance.
City Manager Jason Reynolds, provided an overview of the Fiscal Year 2025 Certificate of
Obligation and 2026 General Obligation (Exhibit A).
Public Works and Engineering Director Frank Simoneaux provided clarification for the required
funding to cover the upcoming projects and projected timelines that would follow depending on
the City Council's decision related to Item 2.a.
Council Member James Franco entered the meeting at 5:42 P.M.
City Council Work Session Minutes
February 27, 2025
Page 2 of 3
Council Members, expressed their concerns and recommendations on voting for the General
Obligation Bond vs. Certificate of Obligation Bond and the best option to move forward
concerning the Fire Station No. 2 and the Russell Park Drainage Projects.
Mr. Reynolds provided clarification on the Drainage of Russell Park and build -out joint venture
with a mutual agreement with Harris County within a year. The drainage project would require an
amount of five million dollars to complete.
Council Members provided their feedback regarding the needs and wants pertaining to the Russell
Park Drainage project. Without a level of urgency to tend to the drainage project the City Council
anticipates holding off on adding this to the current General Obligation being discussed.
Mr. Reynolds stated, "Let me explain the General Obligation (GO) Bond, so people understand.
No matter what the number is, if it's 343 million, 100 million, 150 million, 200 million. Basically,
the GO bond works like a credit card limit. The number that you as a Council would give to the
citizens to vote on would be our max credit card limit. Then, you would draw that down over the
years. That's why we have five years versus ten years. I'm going to curtail this a little bit, we ran
multiple scenarios on what it looks like for the City at 5 years, 10 years or 15 years. I will tell you
our financial advisor has recommended we only do 7 years, because when you start going out
beyond 10 years you have to ask yourself if it's really a need if it's beyond 10 years. Then we'd
need to do another GO in a few years just to catch up to what the need is. This goes towards Mr.
Lester's question of the CIP Committee and how much work can actually be done per year. Those
are all the things that we have to consider with our issuances being geared around. Now, what's in
front of you are charts combined as one. We'll start on the left-hand side, I'm trying to demonstrate
here for everyone the impact on revenue. On the left-hand side of the five year, you have the years
going across in a row of 26, 27, 28, 29, and then on the left-hand side going down is the tax rate.
.70 cents is our current tax rate and if you go into 2026 with $150 million debt issuance on the GO
Bond and you stay at our current tax rate of .70 cents above the no new revenue rate. Assuming it
would be above the no new revenue rate. It would likely bring $1.7 million extra a year with the
value growth showing our taxable values growing by 9%. I've talked ad nauseum about how little
our stuff actually grows. With the $150 million debt issuance, the general fund would only grow
by $1.7 million if you stayed at the .70 cents. Based on your feedback on sticking with a no new
revenue rate, the next number down is .68 cents. If you went to the no new revenue rate of .68
cents, the general fund revenue would only grow by $500,000. Moving into 2027, the reason that
those go all the way across on each number is that if we stayed at .70 cents all the way through
next year it would go $1.7 and by 2027 it would grow by $2.8 and by 2028 it would grow by $4.8.
If you keep decreasing, you go to no new revenue in 2026, and then you go to the no new revenue
in 2027, it would grow $500,000 next year, and in 2027, it would grow $1.3 million. You can see
what it looks like on the tenure bubble as well, it works the same. The pointing out of things here
is what happens in 2028 you'll see a very large increase in revenue in 2028 and that's when 1 would
ask you to go back to this presentation. The reason that you're seeing a large increase in revenue
in 2028 is that our debt starts rolling off and you can see a pretty significant debt roll off in 2027.
That debt roll off is going to bring the additional $2 to $3 million dollars added to the revenue.
Now, this is what's happened with the City when we had these large pieces of revenue growth.
Some of it goes with the tax rate issue that we talked about last year during the budget process
City Council Work Session Minutes
February 27, 2025
Page 3 of 3
where Goose Creek had missed out on the tax rate. The other portion of that is that debt kept rolling
off and because debt kept rolling off, it looked like we had additional cash. Remember that the tax
rate is made of the Maintenance and Operations (M&O) and the Interest and Sinking (I&S). The
M&O and I&S is your debt service. As the debt service decreases, it looks like your M&O has
additional cash. As a Council we will have to consider the future debt. If you go into this GO Bond
process and let's say we cap out at $150 million and we choose the 10 year route in 2028, even
going down to the no new revenue rate of .66 cents we're going to have an additional $5.7 million
dollars in revenue based on a standard growth and that looks fantastic. The issue is, I would tell
you don't spend any of it. It's actually a false front this is where balancing debt with M&O is an
art for all of us to work together with. That additional revenue may be helpful to offset some M&O
growth, but you need to understand that as soon as you issue debt again, it's going to eat that back
up. That additional $3 to $4 million dollars roughly translates into another $30 million dollar
issuance that money would go towards. We just have to plan that out carefully. When we're laying
out our parameters that's when I would tell you, if you did the full $300 million right now it roughly
looks exactly the same as the 10 year. $300 million at 15 years, roughly looks exactly what the
tenure rate looks like right there on your screen. That's where we have to weigh some of those
parameters and how it looks. This doesn't have to be decided right now. What you will work on
next month is where you want that limit to be and then we will start building models like this for
you. To help make better decisions of how long you want that credit card limit draw. You can draw
from your credit card limit how many years you want to be able to use it for. It just gives you an
insight to what's going to be happening with the money. It's going to look like extra cash is there,
we just need to understand that the extra cash is actually not there. We just have debt rolling off
and we're going to have to issue more debt if we want to keep it stable. Are there questions around
that? Starting next month, we will discuss the withdraw process and procedures, my preference on
timeframe to be next month."
Council Member Kenrick Griffith asked for clarification on the methods the Bond Committee will
meet in reference to the Open Meetings Act.
City Attorney Scott Lemond provided clarification on the Bond Committee not being required to
follow the Open Meetings Act, unless otherwise implemented by the City Council.
3. ADJOURN
With there being no further business to discuss, Mayor Charles Johnson adjourned the February
27, 2025, City Council Work Session at 6:05 P.M.
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