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2026 02 12 City Council Joint with MDD Meeting MINUTES OF THE JOINT REGULAR MEETING OF THE CITY COUNCIL AND THE BAYTOWN MUNICIPAL DEVELOPMENT DISTRICT February 12, 2026 The City Council of the City of Baytown, Texas, met in a Regular Meeting on Thursday, January 12, 2026 at 6:30 P.M. in the Council Chamber of the Baytown City Hall at 2401 Market Street, Baytown, Texas, with the following in attendance: Jacob Powell Mayor Pro Tern/Director Laura Alvarado Council Member/Vice President Sarah Graham Council Member/Director Kenrick Griffith Council Member/Director James Franco Council Member/Director Mike Lester Council Member/Director Charles Johnson Mayor/President Jason Reynolds City Manager/General Manager Scott Lemond City Attorney/General Counsel Angela Jackson City Clerk/Assistant Secretary John Stringer Sergeant at Arms Mayor Charles Johnson convened the February 12, 2026 City Council and Municipal Development District(MDD)Joint Meeting with a quorum present at 6:37 P.M.All members were present. The Pledge of Allegiance,Texas Pledge,and Invocation were led by Andy Dixon,Aiden Ramirez, and Rocio Cabello as students of the community. 1. CITIZEN COMMENTS Mayor Charles Johnson announced a citizen signed up to speak. John Isaacs, 5410 Bayou Boulevard, expressed the importance to vote. Acknowledging the redis- tricting changes. Council Member Laura Alvarado confirmed that Sterling Library is the only location where Bay- town residents can vote. 2. MUNICIPAL DEVELOPMENT DISTRICT ITEMS a. Receive the Hyatt Regency Baytown-Houston Annual Audit Report for Fiscal Year 2023 and Fiscal Year 2024. Director of Finance Teresa McKenzie provided an overview regarding the fiscal year 2023 and 2024 report. City Council and MDD Joint Regular Meeting Minutes February 12,2026 Page 2 of 16 Jason Fellows with Rubin Brown presented the annual audit reports. (Exhibit A) City Manager Jason Reynolds stated for the record, "No additional funds for the hotel are coming out,that Council and citizens aren't informed of." Council Members provided their opinions and recommendations regarding the current state of the Hyatt finances. 3. MINUTES a. Consider approving the minutes of the City Council Work Session and Regular Meet- ings held on December 11,2025 and January 8,2026. A motion was made by Council Member Laura Alvarado and seconded by Mayor Pro Tern Jacob Powell to approve the minutes for December 11,2025 and January 8,2026,as submitted.The vote was as follows: Ayes: Mayor Charles Johnson, Mayor Pro Tem Jacob Powell, Council Member Laura Alvarado,Council Member Sarah Graham,Council Member Kenrick Griffith, Council Member James Franco and Council Member Mike Lester Nays: Approved 4. PUBLIC HEARINGS a. Conduct a public hearing concerning a request to amend the official zoning map by rezoning approximately 6.59 acres of land located on the south side of East Freeway/Inter- state 10 East, and west of North State Highway 146, at 9900 East Interstate 10, Baytown, Texas 77523,from the Open Space/Recreation(OR)to the General Commercial(GC)zoning district. At 6:58 P.M., Mayor Charles Johnson opened the public hearing regarding a request to amend the official zoning map. Director of Planning and Development Martin Scribner summarized the subject matter of the hearing. The Planning and Zoning Commission held the required public hearings with no major concerns nor comments.Mr. Scribner relayed the Planning and Zoning Commission and staff recommended approval. At 7:01 P.M., Mayor Charles Johnson closed the public hearing regarding a request to amend the official zoning map. City Council and MDD Joint Regular Meeting Minutes February 12,2026 Page 3 of 16 5. PROPOSED ORDINANCES Mayor Charles Johnson stated Item 5.b., will be taken before Item 5.a. a. Consider an ordinance authorizing a Payment in Lieu of Taxes (PILOT) Agreement between the City of Baytown and Morreale Properties, LLC. Manager of Economic Development Brian Moran provided an overview regarding the PILOT agreement. City Attorney Scott Lemond provided a revised copy of the ordinance at the dias. A motion was made by Mayor Pro Tern Jacob Powell and seconded by Council Member Laura Alvarado to approve Ordinance No. 16,388, as submitted. The vote was as follows: Ayes: Mayor Charles Johnson, Mayor Pro Tern Jacob Powell, Council Member Laura Alvarado,Council Member Sarah Graham,Council Member Kenrick Griffith, Council Member James Franco and Council Member Mike Lester Nays: Approved ORDINANCE NO. 16,388 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN, TEXAS, AUTHORIZING AND DIRECTING THE MAYOR TO EXECUTE AND THE CITY CLERK TO ATTEST TO A PAYMENT IN LIEU OF TAXES AGREEMENT BETWEEN THE CITY OF BAY-. TOWN,TEXAS AND MORREALE PROPERTIES,LLC;AND PROVID- ING FOR THE EFFECTIVE DATE THEREOF. b. Consider an ordinance authorizing a request to amend the official zoning map to re- zone approximately 6.59 acres of land, located on the south side of East Freeway/Interstate 10 East, and west of North State Highway 146, at 9900 East Interstate 10, Baytown, Texas 77523, from the Open Space/Recreation (OR) Zoning District to the General Commercial (GC) Zoning District. This Item was taken before Item 5.a. Council Member Laura Alvarado requested the planning department look into waiving fees if the business was part of annexation during construction. A motion was made by Mayor Pro Tern Jacob Powell and seconded by Council Member Kenrick Griffith to approve Ordinance No. 16,387, as submitted. The vote was as follows: City Council and MDD Joint Regular Meeting Minutes February 12,2026 Page 4 of 16 Ayes: Mayor Charles Johnson, Mayor Pro Tem Jacob Powell, Council Member Laura Alvarado,Council Member Sarah Graham,Council Member Kenrick Griffith, Council Member James Franco and Council Member Mike Lester Nays: Approved ORDINANCE NO. 16,387 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN, TEXAS, AMENDING THE OFFICIAL ZONING MAP OF THE CITY OF BAYTOWN TO REZONE APPROXIMATELY 6.59 ACRES GENERALLY LOCATED ON THE SOUTH SIDE OF EAST FREE- WAY/INTERSTATE 10 EAST AND APPROXIMATELY 0.46 MILES WEST OF NORTH STATE HIGHWAY 146, AT 9900 EAST INTER- STATE 10, BAYTOWN, TEXAS 77523, LEGALLY DESCRIBED AS CHAD&RYAN MINOR PLAT LOT 2 THE TRUX STORE AND CHAD & RYAN MINOR PLAT LOT 1, CHAMBERS COUNTY, TEXAS, FROM OPEN SPACE/RECREATION (OR) TO A GENERAL COM- MERCIAL (GC) ZONING DISTRICT; PRESCRIBING A MAXIMUM PENALTY OF TWO THOUSAND AND NO/100 DOLLARS($2,000.00); PROVIDING A REPEALING CLAUSE; CONTAINING A SAVINGS CLAUSE; AND PROVIDING FOR THE PUBLICATION AND EFFEC- TIVE DATE THEREOF. c. Consider an ordinance amending Chapter 94"Traffic and Vehicles"Article IV"Spe- cific Street Regulations,"Section 94-121"Schedules enumerated"of the Code of Ordinances, to authorize the installation of stop control modifications on Manor Drive at Squire Drive. Interim Director of Public Works and Engineering Sharon Valiante provided an overview regarding the Chapter 94 amendment request. Council Members expressed their opinions and shared recommendations for changes affecting residents in this area. A motion was made by Council Member James Franco and seconded by Council Member Kenrick Griffith to approve Ordinance No. 16,389, as submitted. The vote was as follows: Ayes: Mayor Charles Johnson, Mayor Pro Tem Jacob Powell, Council Member Laura Alvarado,Council Member Sarah Graham,Council Member Kenrick Griffith, Council Member James Franco and Council Member Mike Lester Nays: Approved City Council and MDD Joint Regular Meeting Minutes February 12,2026 Page 5 of 16 ORDINANCE NO. 16,389 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN, TEXAS, AMENDING CHAPTER 94 "TRAFFIC AND VEHI- CLES,"ARTICLE IV"SPECIFIC STREET REGULATIONS,"SECTION 94-121 "SCHEDULES ENUMERATED," OF THE CODE OF ORDI- NANCES OF THE CITY OF BAYTOWN, TEXAS, TO AUTHORIZE THE INSTALLATION OF STOP SIGNS AT THE FOLLOWING INTER- SECTION, MANOR DRIVE AT SQUIRE DRIVE, THEREBY CON- VERTING THE INTERSECTION TO STOP SIGN CONTROL; AUTHORIZING THE POSTING OF PROPER SIGNS; REPEALING CONFLICTING ORDINANCES; CONTAINING A SAVINGS CLAUSE; PRESCRIBING A MAXIMUM PENALTY OF TWO HUNDRED AND NO/100 DOLLARS ($200.00) FOR EACH VIOLATION THEREOF; AND PROVIDING FOR THE PUBLICATION AND EFFECTIVE DATE THEREOF. d. Consider an ordinance amending Chapter 94"Traffic and Vehicles"Article IV"Spe- cific Street Regulations,"Section 94-121"Schedules enumerated"of the Code of Ordinances, to authorize the installation of stop control modifications on North Jones Street at West Mur- rill Avenue, on North Gaillard Street at West Murrill Avenue, West James Avenue, West Jack Avenue,West Lobit Avenue,West Adoue Avenue and Marian Street,on Leavins Street at Marian Street, on Ashbel Court at West Wright Avenue and West Murrill Avenue, on North Ashbel Street at West Wright Avenue, West James Avenue,West Jack Avenue,West Lobit Avenue, West Adoue Avenue and Marian Street, on West Wright Avenue at North Gaillard Street,on West Murrill Avenue at North Ashbel Street,on West Hunnicutt Avenue at North Gaillard Street, on West Commerce Street at West Fayle Avenue and Marian Street. Interim Director of Public Works and Engineering Sharon Valiante introduced Assistant Director of PWE Juan Macias for further details. Mr. Macias provided a summary for the request amending Chapter 94. The Mayor and Council Members expressed their appreciation for ensuring this project was ap- proved and a prime example of the City listening to their residents. A motion was made by Council Member Sarah Graham and seconded by Council Member Laura Alvarado to approve Ordinance No. 16,390, as submitted. The vote was as follows: Ayes: Mayor Charles Johnson, Mayor Pro Tern Jacob Powell, Council Member Laura Alvarado,Council Member Sarah Graham,Council Member Kenrick Griffith, Council Member James Franco and Council Member Mike Lester Nays: Approved City Council and MDD Joint Regular Meeting Minutes February 12,2026 Page 6 of 16 ORDINANCE NO. 16,390 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN, TEXAS, AMENDING CHAPTER 94 "TRAFFIC AND VEHI- CLES,"ARTICLE IV" SPECIFIC STREET REGULATIONS," SECTION 94-121 "SCHEDULES ENUMERATED," OF THE CODE OF ORDI- NANCES OF THE CITY OF BAYTOWN, TEXAS, TO AUTHORIZE THE INSTALLATION OF STOP SIGNS AT THE FOLLOWING INTER- SECTIONS, NORTH JONES STREET AT WEST MURRILL AVENUE, ON NORTH GAILLARD STREET AT WEST MURRILL AVENUE, WEST JAMES AVENUE, WEST JACK AVENUE, WEST LOBIT AVE- NUE,WEST ADOUE AVENUE AND MARIAN STREET,ON LEAVINS STREET AT MARIAN STREET, ON ASHBEL COURT AT WEST WRIGHT AVENUE AND WEST MURRILL AVENUE, ON NORTH ASHBEL STREET AT WEST WRIGHT AVENUE, WEST JAMES AV- ENUE, WEST JACK AVENUE, WEST LOBIT AVENUE, WEST ADOUE AVENUE AND MARIAN STREET, ON WEST WRIGHT AV- ENUE AT NORTH GAILLARD STREET, ON WEST MURRILL AVE- NUE AT NORTH ASHBEL STREET, ON WEST HUNNICUTT AVENUE AT NORTH GAILLARD STREET, ON WEST COMMERCE STREET AT WEST FAYLE AVENUE AND MARIAN STREET, THEREBY CONVERTING THE INTERSECTIONS TO STOP SIGN CONTROL; AUTHORIZING THE POSTING OF PROPER SIGNS; RE- PEALING CONFLICTING ORDINANCES;CONTAINING A SAVINGS CLAUSE; PRESCRIBING A MAXIMUM PENALTY OF TWO HUN- DRED AND NO/100 DOLLARS ($200.00) FOR EACH VIOLATION THEREOF;AND PROVIDING FOR THE PUBLICATION AND EFFEC- TIVE DATE THEREOF. 6. PROPOSED RESOLUTIONS a. Consider a resolution nominating JSW Steel (USA) Inc., to the Governor's Office of Economic Development, for designation as a qualified business and an Enterprise Project under the Texas Enterprise Zone Program. Manager of Economic Development Brian Moran introduced the representative of JSW Steel and overview of the resolution. Vice President of Human Resources with JSW Steel Paul Spicker, shared their appreciation for the City of Baytown. A motion was made by Council Member Sarah Graham and seconded by Council Member Kenrick Griffith to approve Resolution No. 3066, as submitted. The vote was as follows: Ayes: Mayor Charles Johnson, Mayor Pro Tem Jacob Powell, Council Member Laura Alvarado,Council Member Sarah Graham,Council Member Kenrick Griffith, Council Member James Franco and Council Member Mike Lester City Council and MDD Joint Regular Meeting Minutes February 12,2026 Page 7 of 16 Nays: Approved RESOLUTION NO. 3066 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN, TEXAS, NOMINATING JSW STEEL (USA) INC., TO THE TEXAS ECONOMIC DEVELOPMENT AND TOURISM OFFICE WITHIN THE OFFICE OF THE GOVERNOR THROUGH THE TEXAS ECONOMIC DEVELOPMENT BANK FOR DESIGNATION AS A QUALIFIED BUSINESS AND AN ENTERPRISE PROJECT UNDER THE TEXAS ENTERPRISE ZONE PROGRAM UNDER THE TEXAS ENTERPRISE ZONE ACT, CHAPTER 2303, TEXAS GOVERNMENT CODE;PROVIDING A REPEALING CLAUSE;AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. 7. DISCUSSIONS a. Discuss and take possible action regarding the City of Baytown Mayor Pro Tem. Council Members expressed their recommendations regarding the selection and rotation terms for Mayor Pro Term. Mayor Charles Johnson announced this item will be tabled until after the City Council Retreat on February 18, 2026 thru February 19, 2026. 8. CONSENT A motion was made by Council Member Laura Alvarado and seconded by Mayor Pro Tern Jacob Powell to approve Items 8.a., through Item 8.j., with the exception of 8. f., as submitted. The vote was as follows: Ayes: Mayor Charles Johnson, Mayor Pro Tern Jacob Powell, Council Member Laura Alvarado,Council Member Sarah Graham,Council Member Kenrick Griffith, Council Member James Franco and Council Member Mike Lester Nays: Approved a. Consider an ordinance authorizing an Interlocal Agreement between the City of Bay- town and Baytown Crime Control and Prevention District to fund fifteen (15) rental cars from EAN Holdings, LLC d/b/a Enterprise Rent-A-Car. ORDINANCE NO. 16,391 City Council and MDD Joint Regular Meeting Minutes February 12,2026 Page 8 of 16 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN, TEXAS, AUTHORIZING THE CITY MANAGER TO EXE- CUTE AND THE CITY CLERK TO ATTEST TO AN INTERLOCAL AGREEMENT WITH THE BAYTOWN CRIME CONTROL AND PRE- VENTION DISTRICT FOR THE FUNDING OF THE RENTAL OF FIF- TEEN (15) VEHICLES FROM EAN HOLDINGS, LLC D/B/A ENTERPRISE RENT-A-CAR; AND PROVIDING FOR THE EFFEC- TIVE DATE THEREOF. b. Consider an ordinance authorizing payment to Innovative Interfaces, Inc for year five of a Perpetual License Software Agreement for the library's Integrated Library System database software and for the one year renewal for cloud hosting services and the Software as a Service discovery layer for the library's catalog. ORDINANCE NO. 16,392 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN, TEXAS, AUTHORIZING PAYMENT IN AN AMOUNT NOT TO EXCEED SIXTY-FIVE THOUSAND TWO HUNDRED NINETY- EIGHT AND 07/100 DOLLARS($65,298.07)TO INNOVATIVE INTER- FACES, INC. FOR YEAR FIVE OF A FIVE-YEAR PERPETUAL LI- CENSE AGREEMENT IN CONNECTION WITH THE SIERRA INTEGRATED LIBRARY SYSTEM DATABASE SOFTWARE, RE- NEWAL OF THE SOFTWARE-AS-SERVICE SUBSCRIPTION AGREEMENT IN CONNECTION WITH THE VEGA DISCOVERY LAYER FOR THE LIBRARY'S ONLINE CATALOG, AND RENEWAL OF THE CLOUD-HOSTING SERVICES AGREEMENT; MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. c. Consider an ordinance authorizing the purchase of one (1) 2026 Ford F250 from Bill Knight Ford. ORDINANCE NO. 16,393 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN, TEXAS, AUTHORIZING THE PAYMENT OF FIFTY-ONE THOUSAND FIVE HUNDRED TWENTY-TWO AND 25/100 DOL- LARS ($51,522.25) TO UNITED FORD SOUTH, LLC DBA BILL KNIGHT FORD, THROUGH THE HOUSTON-GALVESTON AREA COUNCIL FOR THE PURCHASE OF ONE (1) 2026 FORD F250 TRUCK FOR THE OFFICE OF EMERGENCY MANAGEMENT; MAK- ING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. d. Consider an ordinance authorizing the second renewal of the Annual Fire Hydrant Contract with Ferguson Waterworks. City Council and MDD Joint Regular Meeting Minutes February 12,2026 Page 9 of 16 ORDINANCE NO. 16,394 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN,TEXAS,APPROVING THE SECOND RENEWAL OF THE AN- NUAL FIRE HYDRANT CONTRACT WITH FERGUSON WATERWORKS, FOR THE PUBLIC WORKS/ENGINEERING DE- PARTMENT; AUTHORIZING PAYMENT BY THE CITY OF BAY- TOWN IN AN AMOUNT NOT TO EXCEED SIXTY THOUSAND AND NO/100 DOLLARS ($60,000.00); MAKING OTHER PROVISIONS RE- LATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. e. Consider a resolution amending Resolution No. 3061, approved January 8, 2026, to establish a new public hearing date regarding the advisability of the Bay Creek Public Im- provement District No. 2; and providing an effective date. RESOLUTION NO. 3067 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN, TEXAS, AMENDING RESOLUTION 3061 TO SET A NEW PUBLIC HEARING DATE REGARDING THE ADVISABILITY OF • THE PROPOSED IMPROVEMENTS IN CONNECTION WITH THE ES- TABLISHMENT OF BAY CREEK PUBLIC IMPROVEMENT DIS- TRICT NUMBER 2; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. f. Consider an ordinance amending Ordinance No. 16,335 to change the effective date to ten (10) days after February 12,2026. Mayor Charles Johnson announced a citizen signed up to speak. Marie Drewnowski, 4705 Burning Tree Drive, expressed her concerns and recommenda- tions regarding short term rentals within her neighborhood. Mayor Charles Johnson requested clarification from Ms. Drewnowski and City Manager Jason Reynolds regarding adding her concerns to the Council Retreat agenda items. City Manager Jason Reynolds, provided clarification regarding, potentially adding to the Council Retreat discussion items. City Attorney Scott Lemond provided legal guidance on how to approach addressing the short-term process and procedures. Director of Planning and Development Services Martin Scribner provided the next steps to resolve some concerns of the residents. Mayor and Council Members provided their opinions moving forward on the item. City Council and MDD Joint Regular Meeting Minutes February 12,2026 Page 10 of 16 A motion was made by Council Member Sarah Graham and seconded by Council Member Kenrick Griffith to approve Ordinance No. 16,402 The vote was as follows: Ayes: Mayor Charles Johnson, Mayor Pro Tem Jacob Powell, Council Member Laura Alvarado,Council Member Sarah Graham,Council Member Kenrick Griffith, Council Member James Franco and Council Member Mike Lester Nays: Approved ORDINANCE NO. 16,402 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN, TEXAS, AMENDING ORDINANCE NUMBER 16335 WHICH GRANTED A SPECIAL USE PERMIT(SUP)TO ALLOW FOR SHORT- TERM RENTAL USE IN THE SUBURBAN RESIDENTIAL (SR)ZON- ING DISTRICT, LOCATED AT 5111 ASHWOOD DRIVE, ON AN AP- PROXIMATELY 0.28 ACRE PARCEL, LEGALLY DESCRIBED LOT 5 BLOCK 16 COUNTRY CLUB OAKS SECTION 5, BAYTOWN,TEXAS 77521; TO CHANGE THE EFFECTIVE DATE AND PROVIDE FOR PUBLICATION THEREOF. g. Consider an ordinance to amend Ordinance No. 16,334 to change the effective date of amendments to Divisions 2.21, 2.31, 2.32, 2.33, 3.22, 3.42, 7.210 and 10.2 of Chapter 111, Unified Land Development Code(ULDC),regarding garage offsets,shipping containers,and general corrections in consistency between the previous code and the 2025 code, to ten (10) days after February 12, 2026. ORDINANCE NO. 16,395 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN,TEXAS,AMENDING ORDINANCE NUMBER 16,334 WHICH AMENDED THE CODE OF ORDINANCES, BAYTOWN, TEXAS, CHAPTER 111 "UNIFIED LAND DEVELOPMENT CODE," ARTICLE 2 "ZONING DISTRICTS AND DIMENSIONAL STANDARDS," DIVI- SION 2.2"ZONING DISTRICTS AND DIMENSIONAL STANDARDS," SECTION 2.21 "RESIDENTIAL DISTRICT DIMENSIONAL STAND- ARDS," SUBSECTION 2.21-4 "MIXED RESIDENTIAL (MR);" DIVI- SION 2.3 "USE STANDARDS,"SECTION 2.31 "CONSOLIDATED USE TABLE," SUBSECTION 2.31-1 "LAND USE TABLE;" DIVISION 2.33 "USE-SPECIFIC STANDARDS," SUBSECTION 2.33-6 "INDUSTRIAL USES;" ARTICLE 3 "DEVELOPMENT STANDARDS," DIVISION 3.2 "BUILDING AND SITE DESIGN," SECTION 3.22 "SINGLE-UNIT DWELLING AND DUPLEX DEVELOPMENT;" DIVISION 3.4 "TREE PRESERVATION, LANDSCAPING, AND BUFFERING," SECTION 3.42 "DEVELOPMENT LANDSCAPING;" ARTICLE 7 "DEVELOP- MENT REVIEW PROCEDURES,"DIVISION 7.2"COMMON REVIEW City Council and MDD Joint Regular Meeting Minutes February 12,2026 Page 11 of 16 PROCEDURES," SECTION 7.210 DEVELOPMENT REVIEW SUM- MARY;" ARTICLE 10 "WORD USAGE," DIVISION 10.2 "DEFINI- TIONS"; TO CHANGE THE EFFECTIVE DATE AND PROVIDE FOR PUBLICATION THEREOF. h. Consider an ordinance authorizing payment to Baker Wotring, L.L.P., for legal ser- vices in connection with the United States of America and State of Texas v.City of Baytown; Civil Action No. 4:22-cv-01279, in the United States District Court for the Southern District of Texas, Houston Division. ORDINANCE NO. 16,396 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN, TEXAS, AUTHORIZING PAYMENT TO BAKER WOTRING, L.L.P., FOR LEGAL SERVICES IN CONNECTION WITH UNITED STATES OF AMERICA AND STATE OF TEXAS V. CITY OF BAY- TOWN;CIVIL ACTION NO.4:22-CV-01279,IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS, HOUSTON DIVISION IN AN AMOUNT NOT TO EXCEED ONE MIL- LION DOLLARS ($1,000,000.00); MAKING OTHER PROVISIONS RE- LATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. i. Consider an ordinance authorizing the purchase of one Case 570 Front-End Wheel Loader and one Case 575N EP Backhoe Loader from Associated Supply Company, Inc. via BuyBoard Contract#788-25. ORDINANCE NO. 16,397 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN, TEXAS, AUTHORIZING THE PURCHASE OF ONE CASE 575N EP BACKHOE LOADER AND ONE CASE 575EP 4WD BACK- HOE FROM ASSOCIATED SUPPLY COMPANY,INC THROUGH THE PURCHASING COOPERATIVE BUYBOARD PROGRAM, CON- TRACT #788-25, AND AUTHORIZING PAYMENT NOT TO EXCEED ONE HUNDRED NINETY THOUSAND EIGHT HUNDRED FIFTY- THREE DOLLARS AND 22/100 DOLLARS ($190,853.22); MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. j. Consider a resolution approving the City of Baytown Investment Policy in accordance with the Public Funds Investment Act, Section 2256.005 (e). RESOLUTION NO. 3068 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN, TEXAS, APPROVING THE CITY OF BAYTOWN'S INVEST- MENT POLICY AND INVESTMENT STRATEGIES IN City Council and MDD Joint Regular Meeting Minutes February 12,2026 Page 12 of 16 ACCORDANCE WITH THE PUBLIC FUNDS INVESTMENT ACT; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. k. Consider the appointment of Julie Escalante as the Acting Presiding Judge of the City of Baytown Municipal Court. RESOLUTION NO. 3069 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN,TEXAS,APPOINTING JULIE ESCALANTE ACTING PRESID- ING JUDGE OF THE MUNICIPAL COURT OF RECORD IN THE CITY OF BAYTOWN, TEXAS; AUTHORIZING AND DIRECTING THE CITY MANAGER TO EXECUTE AND THE CITY CLERK TO ATTEST TO A CONTRACT FOR PROFESSIONAL JUDICIAL SERVICES;AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. 1. Consider an ordinance authorizing Alliant Insurance Services,as broker,to place the City's windstorm and hail coverage through the AmRisc Group for City-owned properties and equipment located in Chambers County. ORDINANCE NO.16,398 ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS, AUTHORIZING ALLIANT INSURANCE SERVICES, AS BROKER, TO PLACE THE CITY'S WINDSTORM COVERAGE THROUGH AMRISE GROUP FOR CITY OWNED PROPERTIES AND EQUIPMENT LOCATED IN CHAMBERS COUNTY IN AN AMOUNT NOT TO EXCEED TWO-HUNDRED THOUSAND, FOUR-HUNDRED, SIXTEEN DOLLARS ($200,416.00); MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREO. m. Consider an ordinance authorizing the second renewal of the As-Needed Sludge,Grit & Debris Removal Contract at Treatment Plants and Lift Stations with Magna Flow Envi- ronmental, Inc. ORIDNANCE NO. 16,399 ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS,APPROVING THE SECOND RENEWAL OF THE CONTRACT WITH MAGNA FLOW ENVIRONMENTAL, INC., FOR THE AS- NEEDED SLUDGE, GRIT, AND DEBRIS REMOVAL AT TREAT- MENT PLANTS AND LIFT STATIONS; AUTHORIZING PAYMENT NOT TO EXCEED THE SUM OF NINE HUNDRED TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($925,000.00); MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. City Council and MDD Joint Regular Meeting Minutes February 12,2026 Page 13 of 16 n. Consider an ordinance authorizing the second renewal of the Annual Nuisance Abate- ment Mowing Contract with McLemore Building Maintenance, Inc. and Greenscapes Six, LLC. ORIDNANCE NO. 16,400 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN, TEXAS, RENEWING THE ANNUAL NUISANCE ABATE- MENT MOWING CONTRACTS WITH MCLEMORE BUILDING MAINTENANCE, INC. AND GREENSCAPES SIX, LLC; AUTHORIZ- ING PAYMENT BY THE CITY OF BAYTOWN IN AN AMOUNT NOT TO EXCEED TWO HUNDRED SEVENTY-FIVE THOUSAND AND NO/100 DOLLARS($275,000.00);MAKING OTHER PROVISIONS RE- LATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. o. Consider an ordinance awarding the Annual Uniform and Floor Mat Rental Contract to UniFirst Holdings LLC, through the Texas Local Government Purchasing Cooperative (BuyBoard). ORIDNANCE NO. 16,401 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN,TEXAS,AWARDING THE ANNUAL UNIFORM AND FLOOR MAT RENTAL CONTRACT TO UNIFIRST HOLDINGS LLC, THROUGH THE TEXAS LOCAL GOVERNMENT PURCHASING CO- OPERATIVE (BUYBOARD), FOR THE RENTAL OF ALL FIELD CREW UNIFORMS, FLOOR MATS, DUST MOPS AND MECHANIC WIPES;AUTHORIZING PAYMENT BY THE CITY OF BAYTOWN OF AN AMOUNT NOT TO EXCEED SIXTY-FIVE THOUSAND AND NO/100 DOLLARS ($65,000.00); MAKING OTHER PROVISIONS RE- LATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. 9. APPOINTMENTS a. Consider a resolution authorizing three (3) appointments to the Planning and Zoning Commission. Name Position If Appointed - Term Preet Singh District 3 At-Large 1/1/2025 - 12/31/2026 Vacant District 5 At-Large 1/1/2025 - 12/31/2026 Vacant At-Large ETJ 1/1/2025 - 12/31/2026 A motion was made by Council Member Kenrick Griffith and seconded by Mayor Pro Tern Jacob Powell to approve Resolution No. 3070. The vote was as follows: City Council and MDD Joint Regular Meeting Minutes February 12,2026 Page 14 of 16 Ayes: Mayor Charles Johnson, Mayor Pro Tern Jacob Powell, Council Member Laura Alvarado,Council Member Sarah Graham,Council Member Kenrick Griffith, Council Member James Franco and Council Member Mike Lester Nays: Approved RESOLUTION NO. 3070 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAY- TOWN, TEXAS, APPOINTING PREET SINGH TO THE PLANNING AND ZONING COMMISSION; AND PROVIDING FOR THE EFFEC- TIVE DATE THEREOF. 10. MANAGER'S REPORT CityManager Jason Reynoldspresented the Manager's Report: g Yn g � • Mr. Reynolds began by recognizing the Parks and Recreation Department for several re- cent accomplishments: o I'd like to begin byrecognizing our Parks team for completing five safetytrain- ings � � g P g as part of their efforts to earn the Texas Municipal League(TML) Recognize, Observe, Assess, and Determine(R.O.A.D). Ready certification. This program promotes roadway safety and property protection. Once certified, our Parks team will be one of only two Parks departments currently certified in the state. Thank you for your continued commitment to safety! o Joseph Holmes and Blanca Rubio from PWE were recently traveling to a confer- ence when they witnessed a serious accident. Without hesitation, they relied on their first responder training, and immediately assisted an elderly couple involved in the crash. Joseph climbed onto the damaged vehicle to help the occupants, while Blanca used a fire extinguisher to control smoke and minimize further risk. She also comforted and reassured the passengers until paramedics arrived. Their quick thinking, teamwork, and dedication to helping others reflects the highest standards of professionalism and public service. We are grateful for their courage and preparedness. o PWE also competed in the Texas Annual Public Workshop& Equipment Roadeo (TPWA), earning awards in the following categories: • Mini Excavator/Backhoe: • 5th Place: David Kirkpatrick(KP) • 8th Place: Hector Alvarez • Women's Mini ExcavatorBackhoe: • 1st Place: Ale Moz • 2nd Place: Nikki Swearengin • 3rd Place: Blanca Rubio • Storm Pipe Cutting: City Council and MDD Joint Regular Meeting Minutes February 12,2026 Page 15 of 16 • 9th Place: Gerald Bryce • Zero Turn: • 5th Place: David Kirkpatrick(KP) • Planning Development Service Inspectors Joseph, Alex, and Jose were recently recognized by a resident for their outstanding customer service. Great job and thank you for everything you do! • Gabriella Gonzales from the City Clerk's Office successfully graduated after completing the extensive two-year coursework required to earn her certification from the Texas Municipal Clerks Association(TMCA). Congratulations on this well-earned achievement! • Recognition to the Parks Department Wetlands Center for their awards submitted, also a thank you to Mayor Charles Johnson and Council Member Laura Alvarado for being there. The recognition was received from Houston Galveston Area Council (HGAC). • Detectives from the Special Investigations Division developed actionable intelli- gence and conducted a planned surveillance operation on a suspect connected to three armed robberies. During the operation, the suspect committed another armed robbery and fled in the victim's vehicle. Through the coordinated efforts of detec- tives, Officers Richter and Jackson, and a K9 unit,the suspect was apprehended after attempting to flee on foot. This arrest highlights the outstanding teamwork and dedication of our Police Department. Keep up the great work! Mayor Charles Johnson expressed his appreciation to Mr. Holmes and Ms. Rubio from PWE for representing the City of Baytown in a great way. 10. COUNCIL MEMBER DISTRICT REPORT a. Receive a report from Council Member Sarah Graham regarding projects, programs and events in District No. 2. Council Member Sarah Graham reported the current projects,programs, and events of District 2: • District 2 continues to see new business development, with the following loca- tions under inspection: o Bay Terrace Apartments (1502 Nolan Rd) o Pause and Go Convenience Store(2700 N Main St) o Venue 132 Reception Hall (132 W Texas Ave) o Rental Units Remodel (117 W Pearce Ave) o Lee College Cosmetology Lab and Rundell Hall Remodel (700 W Texas Ave) • Public Works and Engineering(PWE) o West Texas Avenue Drainage Improvements: Phases 1 and 2 have been com- pleted, and roadway demolition is now underway on W. Defee St. to prepare for new drainage inlets and reinforced concrete pipe installation. Work is also progressing at the intersection of W. Texas Ave. and S. Pruett St., where paver City Council and MDD Joint Regular Meeting Minutes February 12,2026 Page 16 of 16 installation is in progress. Substantial completion of the project is expected in Q2 at 2026. o The Traffic Division will be straightening signs, refreshing stop bars on Lee Dr., and updating railroad crossing markings on Market St. o Appreciation was expressed to Council Member James Franco for his dedica- tion to assist. 11. EXECUTIVE SESSION Mayor Charles Johnson announced they would not be having an executive session. a. Recess into and conduct an executive session pursuant to Section 551.074 of the Texas Government Code to discuss personnel matters regarding the Acting Presiding Judge of the City of Baytown Municipal Court. b. Recess into and conduct an executive session pursuant to Texas Government Code Sections 551.071, 551.072 and/or 551.087 to seek the advice of the City's attorneys regard- ing pending or contemplated litigation; deliberate the purchase, exchange, lease, or value of real property; and/or to deliberate regarding economic development negotiations. 11. ADJOURN With there being no further business to discuss, Mayor Charles Johnson adjourned the January 22, 2026 Joint Regular City Council and MDD Meeting at 9:01 P.M. Angela bCitTcTerk s ry 11, City of Baytown , , c,g, y f 2/18/2026 EXHIBIT "A" Introductions 44141i Hyatt Regency Your CPA Firm: Your engagement partner: RUBINBROWN, LLP JASON FELLOWS, CPA Baytown — • National,full service,CPA j • You;engagement portnel firm j • Responsible for supervising your Houston • 1,100 team members j engagement working from 8 offices i • 25 years of experience serving • Practice specialities include j diverse entities,specializing in • Cities,counties and hospitality Audit of the accounts maintained local governments • Based in Denver,serving clients by Hyatt Corp. • Real estate and nationally hospitality 2023 and 2024 � 4411)Vi :' Auditor Communications Auditor Communications 111111 QUALITATIVE ASPECTS OF ACCOUNTING PRACTICES Financial statements consist of the accounts maintained by the COMMENTS Hyatt Corp(2023 and 2024) • Accounts related to hotel operations(revenue,expenses cash and payables.etc). • Management is responsible for the No additional comments • prepared in accordance with Ire Hotel Services Agreement which foflows the Uniform System of application of the accounting Accounts for the Lodging Industry(UM) policies as prescribed by the HS.4. • Significant accounting policiesare described in Note 2 to the Audit was performed In accordance with Generally Accepted consolidatedfinancialstatements. Auditing Standards(U.S. GAAS) • No transactions entered into during the periods which lacked authoritative guidance or consensus. The following are the required communications under U.S. GAAS • No transactions were recorded out of the period they occurred. • No instances where a significant Unmodified opinion (two emphasis paragraphs) accountingptacticeacceptable under the HSA. • Need for financial support • Basis of accounting • NO significant unusual transactions noted /(' WEWP71Nis ,. p 1 2/18/2026 Auditor Communications Auditor Communications 11 QUALITATIVE ASPECTS OF ACCOUNTING PRACTICES(CONTINUED) CORRECTED MISSTATEMENTS UNCORRECTED MISSTATEMENTS SIGNIFICANT ESTIMATES SIGNIFICANT DISCLOSURES (FOOTNOTES) There were no measurements in the We considered the following to be signif;cant • financial statements subject to disclosures: significant estimate. I. The Hotels basis of accounting)Note . - - there were 52.534 rn expenses recorded m 2023 shot 1 _ should hove been recorded rn 2024 2. Tne disclos.re:elafed to hurricane damage and the polentiol for construction arsd 2023 Expenses were too sigh by 5664 e54 design defeCA(Nate 2) 2024 Expenses were too low by 548AJ82 . 3. The need for continued financial support from the BMDD(Note 8) • a . 0 2023 Adjustments 2024 Adjustments 14i Peeled ended September 212022 Year Ended September 90.Ypxx Adbmled ...dimpled Ad looted Ln.diu.led Ludtueted sir {M tut t14 a'Ulna. Total Pxbl Ft-I Teal Unedlu.ted 1e1 241 24-2 fH MIT 1or.l -_ v-I P23-2 Total ...et Statement l..art nobllh comrol contra; Aeon. ~4 error t - t - t I f t %1.6. 3 -- e 11 11 — Aar, e 1 041.21 t — I — t — t --d I.eoo.30l . — t — t — user r m .LW - WA 1.8.90e WTI I6A10 .b t .ss.¢6'f A818 wt. rre.TA _ _ _ I(�.®x) 15640w t Taale. 591.3 I_xr8 rWV. ln.� i.- .11%1 1.2T[.Le Sa.S ts.ma (261( Tor.l 1e• 1�ix41xel pddw 1831e av au xtx,pt ilem..Nl — — — 9urhementofnwau ."1'.4. ar� - — I4211100 — _ Statementa revenues 4xd6861 xpr8 rm4x84 1r111Pn tt 1111t1Y aim lax 4dA Ne..nue — — — — — — — Nooen..,.. (nines Hopes esgem to.'"' ,IT,:.Moo dl4IDe (I,de01Q l0ery 0.Ix t6M n A 31x 1 q1 5110; 1 xxlr x.tv`own... ea �YfIna S011 1 ztw 1 , 13nwm ah 1ab]P Inz1„ aver Summary a.dlu.t m1 re earn.,b.ar.nd.rrbown.r .Kerr. of.dw. x.l pro record M.bore and eobormnne min f«. 432 To correct for Insurance-.Kinnard by Hotel..uvula be Orebirmaenal te.9 Pdt To wren overarmed for overmed utilitin To record xexx borru.lublbte 24.3 ,•neon roe ob.y e.wnar tux To correct PM annexe. tde To record 2024 PP6H re.erom Summary of passed./jrr.tmenroMI To correct accrued bonus Summary of paned edlu.tment. 1.31 To reverse effect of xexe Ironware recorded in Pnxd Pt.'lx To corms for outside laborexpensed in 2023 in mom Ptax Tome.r..effrt of outside labor recorded m.22..bould bow been ptxx 0i * 1 2/18/2026 Auditor Communications Thank you OTHER REQUIRED COMMUNICATIONS A�7 p�v lT c MANAGEMENT LETTER '1r Vies ions? • No circumstances affected the form The management letter communicates internal and content of our independent control weaknesses if any.identified through auditors'report. the audit process. t„m,n i.l9,9,3 r I A • Two emphasis paragraphs 1,3,39112r,iw„ Itl' • No significant matters resulted In consultation outside our We identified a number of material adjustments voo e•sr rl NO engagement team. relating to both 2023 and 2024 which were .e.l e„ • NO significant difficulties in dealing corrected through the audit process. o+3r�.e,a.Amraur,00903 with management in performing or We consider these adjustments give rise to a o„e<I 3o9 vs,vao completing our audit material weakness over the financial close • No disagreements with Process during the periods audited. r'^r°' r°5O°Ia)) °�^�°w^ O1° management related to financial Management is aware of the Issues giving rise to accounting.reporting or auditing the adjustments going forward. matters • Manageme di t lt ith other independent accconsuountawnts. • No other audit findings or issues ! M M • • • • • • • • • HYATT REGENCY BAYTOWN - HOUSTON • • (ACCOUNTS MAINTAINED BY HYATT CORPORATION) • • FINANCIAL STATEMENTS • AS OF SEPTEMBER 30, 2024 AND 2023 • AND FOR THE YEAR AND PERIOD THEN ENDED • • (WITH INDEPENDENT AUDITORS' REPORT THEREON) • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Contents • • Page • Independent Auditors' Report 1 - 3 • • Statement Of Assets, Liabilities And Control 4 • • Statement Of Revenues And Expenses 5 Statement Of Cash Flows 6 • • Notes To Financial Statements 7 - 13 • • • • • • 1900 16'h Street T:303.698.1883 • Suite 1700 E:info@rubinbrown.com • Ru bi n Brown Denver,CO 80202 www.RubinBrown.com • CERTIFIED PUBLIC ACCOUNTANTS&BUSINESS CONSULTANTS • • •• Independent Auditors' Report • • Hyatt Corporation and Board of Directors Baytown Municipal Development District Hyatt Regency Baytown - Houston • Baytown, Texas • • Opinion • We have audited the financial statements of Hyatt Regency Baytown- Houston(the Hotel), which • comprise the statement of assets, liabilities and control maintained by the Hyatt Corporation (as • defined in the Hotel Services Agreement dated August 25, 2021 between the Baytown Municipal • Development District and Hyatt Corporation(the Hotel Services Agreement) as of September 30, 2024 and 2023 and the related statements of revenues and expenses and cash flows (as defined • in the Hotel Services Agreement)for the year ended September 30, 2024 and the period beginning • May 18, 2023 (Opening Date) and ended September 30, 2023 (Period), and the related notes to • the financial statements. • In our opinion, the accompanying financial statements present fairly, in all material respects, the • assets, liabilities and control of the Hotel as of September 30, 2024 and 2023 and its revenues and expenses and cash flows for the year and period then ended, in accordance with the financial • reporting provisions of the Hotel Services Agreement. • Basis For Opinion • We conducted our audits in accordance with auditing standards generally accepted in the United • States of America. Our responsibilities under those standards are further described in the • Auditors' Responsibilities For The Audit Of The Financial Statements section of our report. We are required to be independent of the Hotel and to meet our other ethical responsibilities, in • accordance with the relevant ethical requirements relating to our audits. We believe that the • audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. • • Emphasis Of Matters • Continued Financial Support Required from Owner • As discussed in Note 8 to the financial statements, the Hotel has generated losses and negative • cash flows and is reliant on ownership to provide continued financing for operations and for debt • service. Our opinion is not modified with respect to this matter. • RubinBrown LLP is a member of the global network of Baker Tilly Interrationa,Ltd the members of which are separate and Independent legal entities. . • • • Hyatt Corporation and Board of Directors • Baytown Municipal Development District • Hyatt Regency Baytown - Houston • • Basis Of Accounting • • We draw attention to Note 1 of the financial statements, which describes the basis of accounting. • The financial statements are prepared by the Hotel on the basis of the financial reporting • provisions of the Hotel Services Agreement, which is a basis of accounting other than accounting principles generally accepted in the United States of America, to comply with the financial • reporting provisions of the Hotel Services Agreement referred to above. Our opinion is not • modified with respect to this matter. • Responsibilities Of Management For The Financial Statements • Management is responsible for the preparation and fair presentation of the financial statements • in accordance with the financial reporting provisions of the Hotel Services Agreement, and for • the design, implementation and maintenance of internal control relevant to the preparation and • fair presentation of financial statements that are free from material misstatement, whether due • to fraud or error. • In preparing the financial statements, management is required to evaluate whether there are • conditions or events, considered in the aggregate, that raise substantial doubt about the Hotel's • ability to continue as a going concern for one year after the date that the financial statements are available to be issued. • • Auditors'Responsibilities For The Audit Of The Financial Statements • Our objectives are to obtain reasonable assurance about whether the financial statements as a • whole are free from material misstatement, whether due to fraud or error, and to issue an • auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but • is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in the United States of America will always detect a • material misstatement when it exists. The risk of not detecting a material misstatement • resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the • financial statements. • In performing an audit in accordance with auditing standards generally accepted in the United • States of America, we: • • Exercise professional judgment and maintain professional skepticism throughout the • audit. • • Identify and assess the risks of material misstatement of the financial statements, . whether due to fraud or error, and design and perform audit procedures responsive to • those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • 1111 Page 2 • • • •• Hyatt Corporation and Board of Directors Baytown Municipal Development District Hyatt Regency Baytown - Houston • • • Obtain an understanding of internal control relevant to the audit in order to design audit • procedures that are appropriate in the circumstances,but not for the purpose of expressing • an opinion on the effectiveness of the Hotel's internal control. Accordingly, no such opinion • is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of • significant accounting estimates made by management, as well as evaluate the overall • presentation of the financial statements. • • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Hotel's ability to continue as a going • concern for a reasonable period of time. •• We are required to communicate with those charged with governance regarding, among other matters,the planned scope and timing of the audit, significant audit findings and certain internal • control-related matters that we identified during the audit. • Other Matter • • Restrictions On Use • Our report is intended solely for the information and use of Hyatt Corporation and the board of directors and management of the Baytown Municipal Development District and the Hyatt • Regency Baytown - Houston, and is not intended to be, and should not be, used by anyone other • than these specific parties. • LAP • • February 3, 2026 • • ' • • • • • ' • • • • • Page 3 • • • • • • • • • • • • • • This Page Intentionally Left Blank • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• HYATT REGENCY BAYTOWN - HOUSTON • (ACCOUNTS MAINTAINED BY HYATT CORPORATION) • STATEMENT OF ASSETS, LIABILITIES AND CONTROL • • • • Assets • • September 30, • 2024 2023 Current Assets: • Cash: • House banks $ 5,000 $ 5,000 • Demand deposits 593,041 849,129 Total Cash 598,041 854,129 • • Other Current Assets: • Accounts receivable, less allowance for doubtful accounts of$2,751 and $0 at • September 30, 2024 and 2023, respectively 195,657 84,397 Receivable from related parties 118,931 — • Inventories 46,980 47,688 Prepaid expenses and other 80,782 8,359 • Total Other Current Assets 442,350 140,444 • Total Assets $ 1,040,391 $ 994,573 • • • Liabilities And Control • Current Liabilities: Accounts payable $ 236,531 $ 207,757 • Accrued expenses 620,974 675,413 Advance deposits 358,109 297,210 • Due to related parties - Hyatt and Owner 525,136 81,926 • Total Current Liabilities 1,740,750 1,262,306 • Control (700,359) (267,733) • • Total Liabilities And Control $ 1,040,391 $ 994,573 • • • • • • • Page 4 • • • • HYATT REGENCY BAYTOWN - HOUSTON • (ACCOUNTS MAINTAINED BY HYATT CORPORATION) • STATEMENT OF REVENUE AND EXPENSES • • • For The Year For The Period • Ended Ended • September 30, September 30, 2024 2023 • Operating Revenues: • Rooms $ 4,807,897 $ 824,750 . Food and beverage 3,156,190 629,038 Other operating 4,454 572 • Miscellaneous income 93,150 5,740 • Total Operating Revenues 8,061,691 1,460,100 • Departmental Expenses: • Rooms 1,659,554 530,517 • Food and beverage 2,377,163 867,932 • Total Departmental Expenses 4,036,717 1,398,449 • Departmental Profit 4,024,974 61,651 • Undistributed Operating Expenses: • Administrative and general 1,169,352 474,720 • Information and telecommunication systems 196,808 64,953 • Sales and marketing 1,146,567 320,651 . Property operation and maintenance 521,830 184,593 Utilities 502,004 310,296 • FFE replacement reserves 483,701 58,404 • Total Undistributed Operating Expenses 4,020,262 1,413,617 . Gross Operating Profit 4,712 (1,351,966) • Management fees 356,339 58,404 • Income Before Nonoperating Income And Expenses (351,627) (1,410,370) • • Nonoperating Income (Expenses) • Property and other taxes (4,816) 450 Insurance (31,794) (10,464) • Rent and other expenses (76,034) (19,650) • Total Nonoperating Expenses (112,644) (29,664) • Net Loss $ (464,271) $ (1,440,034) • • • • Page 5 • • • •• HYATT REGENCY BAYTOWN - HOUSTON . (ACCOUNTS MAINTAINED BY HYATT CORPORATION) • STATEMENT OF CASH FLOWS • • • • For The Year For The Period Ended Ended • September 30, September 30, 2024 2023 • Cash Flows From Operating Activities: • Net loss $ (464,271) $ (1,440,034) • Adjustments to reconcile net loss to net cash from operating activities Change in assets and liabilities: Accounts receivable (111,260) (84,397) • Payable to owner (118,931) Inventories 708 (47,688) • Prepaid expenses (72,423) (8,359) • Accounts payable 28,774 207,757 • Accrued expenses (54,439) 675,413 • Advance deposits 60,899 297,210 Due to Hyatt 443,210 81,926 • Net Cash Used In Operating Activities (287,733) (318,172) • Cash Flows From Financing Activities: • Contributions by owner 10,697,865 4,688,633 • Distributions to owner (10,666,220) (3.516,332) • Net Cash Provided By Financing Activities 31,645 1,172,301 • Net Increase (Decrease) In Cash And Cash Equivalents (256,088) 854,129 • • Cash And Cash Equivalents -Beginning Of Year/ Period 854,129 • Cash And Cash Equivalents -End Of Year/Period $ 598,041 $ 854,129 • • • • • • • Page 6 • • • HYATT REGENCY BAYTOWN - HOUSTON (ACCOUNTS MAINTAINED BY HYATT CORPORATION) i NOTES TO FINANCIAL STATEMENTS • September 30, 2024 And 2023 • • • 1. Organization And Operations • • Basis Of Accounting • The accompanying financial statements have been prepared pursuant to the • provisions of the Hotel Services Agreement dated August 25, 2021 (effective date) (the Hotel Services Agreement), between the Hyatt Corporation (Hyatt) • and the Baytown Municipal Development District (BMDD, Owner or the District), the owner of Hyatt Regency Baytown - Houston (the Hotel) for the • year ended September 30, 2024 and the period beginning May 18, 2023 (Opening . Date) and ended September 30, 2023 (Period). • The Hotel is an 208-room convention center hotel located in Baytown, Texas. The • Hotel Services Agreement is for the period that commenced on May 18, 2023 • (opening date), and that expires on December 31, 2053, unless terminated sooner • in accordance with the Hotel Services Agreement. • Under the Hotel Services Agreement, the statement of assets, liabilities and • control does not include the assets and liabilities of the Owner, but only those • assets and liabilities carried on the books and records of the Hotel, which are • maintained by the employees of Hyatt. Assets and liabilities not reflected herein • may include, but are not limited to, property, building, furniture and equipment and bonds payable. In addition, the statement of revenues and expenses does not • include depreciation or interest expense, or any expenses paid directly by the • Owner, except as noted, or any provision for income taxes, since such taxes, if any, • are the liability of the Owner. • • 2. Summary Of Significant Accounting Policies • • Estimates And Assumptions The preparation of financial statements in conformity with the Hotel Services • Agreement requires management to make estimates and assumptions that affect • the reported amounts of assets and liabilities and disclosure of contingent assets • and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.Actual results could differ from those estimates. • • • Page 7 40 • •• HYATT REGENCY BAYTOWN - HOUSTON (ACCOUNTS MAINTAINED BY HYATT CORPORATION) • Notes To Financial Statements (Continued) I . • Cash Cash includes highly liquid investments with initial maturities of three months or • less. • Accounts Receivable • Accounts receivable are uncollateralized customer obligations resulting from the • rental of hotel rooms and the sales of food, beverage, catering and banquet services • due under normal trade terms requiring payment upon receipt of the invoice. • Accounts receivable are stated at the amount billed to the customer and do not accrue interest. • The Hotel provides an allowance for credit losses on its accounts receivable. To • estimate the expected credit losses, receivables have been grouped based on credit risk characteristics including (transient and group revenue). The allowance is determined by applying an expected credit loss percentage to the carrying value of • the assets by categories. The percentages, which are updated at least annually, • are based on historical experience and may be adjusted to the extent that future • results are expected to differ from past experience. Given that the Hotel extends • credit terms on a short-term basis, changes to the credit loss percentages due to future events are expected to be rare. Additionally, the allowance is also adjusted • due to the changes in the collectability assessment of individual customers. • • Inventories • Inventories consist of food, beverages and retail merchandise, and are stated at the • lower of cost or net realizable value. Net realizable value is determined on a first- • in, first-out method. • Advance Deposits Advance deposits are payments made by guests to hold future reservations. • • Revenue Recognition • Revenues are recognized at the time of sale or rendering of service. • • Sales Tax • The Hotel records sales tax collected from customers and remitted to governmental • authorities on a net basis, and therefore, the taxes do not have any effect on the • statement of revenues and expenses. • • Page 8 • • • HYATT REGENCY BAYTOWN - HOUSTON • (ACCOUNTS MAINTAINED BY HYATT CORPORATION) • Notes To Financial Statements (Continued) • • • Concentration Of Credit Risk • From time to time, the Hotel may hold cash on deposit with financial institutions • that are insured by the Federal Deposit Insurance Corporation and which contains • insurance limitations up to $250,000 per institution. At various times during the • year and period ended September 30, 2024 and 2023, the Hotel maintained balances in excess of insured amounts. • • Hurricane Damage • The hotel property suffered damage in July 2024 associated with Hurricane Beryl. • The Owner is currently investigating the potential for construction and design • defects. As of the date of these financial statements, the Owner has not reached a • conclusion or opinion related to those potential defects and no litigation has commenced. • • Subsequent Events . The Hotel has evaluated subsequent events through the date financial statements • are available for issue, which is the date of the Independent Auditors' Report. • • 3. Employee Bonus Pool • • On a monthly basis, the Hotel is required to transfer an amount equal to one- • twelfth of the anticipated eligible employee bonus pool to an account controlled by • the Hyatt, as defined in the Hotel Services Agreement. • • 4. Hotel Management Services • • Management Agreement • Pursuant to the Hotel Services Agreement, the Hotel incurs a base management • fee and subordinate management fee. The Hotel is also required to reimburse • Hyatt for certain expenses incurred in connection with the operation of the Hotel. • • • • • • • Page 9 • • • • •• HYATT REGENCY BAYTOWN - HOUSTON (ACCOUNTS MAINTAINED BY HYATT CORPORATION) • Notes To Financial Statements (Continued) • • Base Management Fee • The Base Management Fee is earned based on a percentage of revenue, as defined • in the Hotel Services Agreement and is payable in arrears on the first business day • of each month. The amount due is computed utilizing a percentage of estimated • revenue for the preceding calendar month. The following table summarizes the computation of the Base Management Fee by operating month: i Operating Month Base • 1st - 12th month 3% of revenue • 13th- 24th month 4% of revenue • 24th month onwards 5% of revenue • During the year and period ended September 30, 2024 and 2023, the Hotel incurred • Base Management Fees of$275,722 and $43,803, respectively. • • Subordinate Management Fee • The Subordinate Management Fee is defined as 1% of revenue as defined in the • Hotel Services Agreement. • During the year and period ended September 30, 2024 and 2023, the Hotel incurred • Subordinated Management Fees of$80,601 and $14,601, respectively.Accrued and • unpaid Subordinated Management Fees accrue interest at 1%. During the year • and period ended September 30, 2024 and 2023, the Hotel incurred interest expense on unpaid subordinated management fees of $5,697 and $295, respectively, which are recorded as a component of subordinated management fees • in the statement of assets, liabilities and control and in administrative expenses • on the statement of revenue and expenses. • Reimbursable Expenses • The Hotel Services Agreement also requires the Hotel to reimburse Hyatt for • expenses it incurs in connection with the operation of the Hotel. Such expenses • typically include human resource services, marketing, advertising, technology services, employee benefits and other related services. The Hotel also reimburses • Hyatt for salary, related benefits and employment costs of Hyatt employees who • work for the Hotel. Included in the related employee benefits are complimentary • rooms provided by Hyatt. Employees that have completed 1 year of employment • with Hyatt are provided an aggregate of 12 complimentary rooms per year (on a space available basis). The maximum number of complimentary room nights per • employee in any 1 hotel is 3 nights per year. Each Hyatt hotel must generally • reserve 1% of its room inventory for employee complimentary rooms. • Page 10 • • • HYATT REGENCY BAYTOWN- HOUSTON (ACCOUNTS MAINTAINED BY HYATT CORPORATION) • Notes To Financial Statements (Continued) • • • Hyatt and its affiliates directly or indirectly own or have interests in certain Hyatt • - branded hotels. These Hyatt-owned hotels are allocated costs on the same basis • as any other Hyatt-branded hotels. • Reimbursable expenses charged to the Hotel by Hyatt for the year and period • ended September 30, 2024 and 2023 are summarized as follows: • For The Year For The Period • Ended Ended • September 30, September 30, • 2024 2023 • Management Fees (1) • Base management fee $ 275,722 $ 43,803 • Subordinate management fee 86,314 14,896 Reimbursable Expenses • Commercial Services Fees(FKA: Chain Allocation) (2) 278,697 80,392 • World of Hyatt Program(FKA Gold Passport Program) (3) 94,914 16,759 Human Resource Services (4) 7,132 3,214 • Other Reservations Services (2) 12,856 1,616 • Insurance (3) 69,418 24,902 • Employee Benefit plans(includes employee contributions) (4) 749,582 137,886 Financial Shared Services Center (5) 119,744 26,290 • Other(2) 99,063 97,942 . $ 1,793,441 $ 447,700 • Notes On Expense Classification Of The Statement Of Revenues And Expenses • (1) Included in management fees • (2) Included in departmental expenses and property operation and maintenance expenses • (3) Included in administrative and general expenses • (4) Included in sales and marketing expenses (5)Included in information and telecommunication systems expenses • • At September 30, 2024 and 2023, amounts due to Hyatt consisted of the following amounts: • 2024 2023 • Reimbursable expenses due to Hyatt $ 42,118 $ 26,487 • FF&E reserve payable 351,669 29,202 • Management fees due to Hyatt 131,349 26,237 • $ 525,136 $ 81,926 • • • • P<igc 11 • • • (• • • HYATT REGENCY BAYTOWN - HOUSTON • (ACCOUNTS MAINTAINED BY HYATT CORPORATION) • Notes To Financial Statements (Continued) • • • 5. Capital Expenditure Replacement Reserve • • The Hotel Services Agreement requires that funds for the replacement and additions to furniture, fixtures, and equipment (FF&E) be established and held by • a trustee in the form of a Senior FF&E Fund and a Subordinate FF&E Reserve • Fund, to be funded as follows: • Senior Subordinate • Operating Year FF&E Fund FF&E Reserve Fund • • 2023 2% of revenue 2% of revenue • 2024 3% of revenue 3% of revenue 2025-2053 4%of revenue 4%of revenue • During the year and period ended September 30, 2024 and 2023, the Hotel incurred • Senior FF&E reserve expenses of $241,851 and $29,202, respectively. At • September 30, 2024 and 2023, the Senior FF&E reserve expense payable to the • Owner was zero. • During the year and period ended September 30, 2024 and 2023, the Hotel incurred • Subordinate FF&E reserve expenses of $241,851 and 29,202, respectively. At • September 30, 2024 and 2023, the Subordinate FF&E reserve expense payable to • the Owner was $241,851 and $29,202, respectively. • • 6. Control Account • Activity in the control account for the for the year and period ended September 30, • 2024 and 2023 is as follows: • For The Year For The Period • Ended Ended • September 31, September 30, 2024 2023 • • Balance, beginning of year/period $ (267,733) $ — • Net loss (464,271) (1,440,034) Contributions from the Owner 10,697,865 3,488,633 • Distributions to the Owner (10,666,220) (2,316,332) • Balance, end of year/period $ (700,359) $ (267,733) • • • • Page 12 • • • HYATT REGENCY BAYTOWN - HOUSTON • (ACCOUNTS MAINTAINED BY HYATT CORPORATION) • Notes To Financial Statements (Continued) • • • 7. Commitments And Contingencies • From time to time, the Hotel is subject to litigation, claims and assessments arising • out of matters occurring in its normal business operations. In the opinion of • management, resolution of these matters will not have a material adverse effect • on the Hotel's financial position or results of operations. • • 8. Continued Financial Support Required From Owner • • The Hotel has generated losses and negative cash flows since Opening Date and • has been reliant on the Owner to provide additional financing. Additionally, the • Owner has issued senior and subordinated bonds to finance the construction of the • Hotel property, and through the date of these financial statements, the financial • performance of the Hotel has not been sufficient to fully service the bonds. In November 2025, a ratings agency downgraded the bonds due to financial • performance of the Hotel and the anticipated need for continued financial support • from the Owner. • The Hotel continues to work to improve operations and cash flow and the Owner • has agreed to provide financial support through September 30, 2026, however this • support is vulnerable to changes in the Owner's willingness or ability to continue • to do so beyond this date. • • • • • • • • • • • • • • • • Page 13 • • • • • • * RubinBrown • • • 1.800.678.3134 • www.RubinBrown.com • @RubinBrown • RubinBrown LLP • • • • • • • • • • • • • • • • • • • • • CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS CONSULTANTS • • \‘'41L • • Ai"li } • • • • • • • • HYATT REGENCY BAYTOWN - HOUSTON • AUDITOR COMMUNICATIONS • • SEPTEMBER 30, 2024 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • a 190016' Street T:303.698.1883 • Rubin Brown Suite 1 700 E:info@rubinbrown.com Denver.CO R0202 www RubinBrown com • • CERTIFIED PUBLIC ACCOUNTANTS&BUSINESS CONSULTANTS • • • Hyatt Corporation and Board of Directors • Baytown Municipal Development District Hyatt Regency Baytown - Houston • Baytown, Texas . • • We have audited the financial statements of Hyatt Regency Baytown - Houston (the • Hotel) as of September 30, 2024 and 2023 and for the year ended September 30, 2024 and the period beginning May 18, 2023 (Opening Date) and ended September 30, 2023 • (Period), and have issued our report thereon dated January 21, 2026. Professional • standards require that we provide you with information about our responsibilities under • auditing standards generally accepted in the United States, as well as certain • information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated September 8, 2025. Professional standards • also require that we communicate to you the following information related to our audit. • • Significant Audit Findings Qualitative Aspects Of Accounting Practices • • Management is responsible for the selection and use of appropriate accounting policies. • The significant accounting policies used by the Hotel are described in Note 2 to the • financial statements. Note that 2023 was the initial period of operations for the Hotel and the accounting policies adopted at that date were consistent with the policies 411 prescribed by the Hotel Services Agreement dated August 25, 2021. No new accounting • policies were adopted and the application of existing policies was not changed during the • year ended September 30, 2024. We noted no transactions entered into during the year • for which there was a lack of authoritative guidance or consensus. There are no • significant transactions that have been recognized in the financial statements in a different period than when the transaction occurred. There are no instances where we • consider a significant accounting practice that is acceptable under the applicable • financial reporting framework not to be most appropriate to the particular circumstances • of the Hotel. • For purposes of this communication, professional standards require us to communicate • to you significant unusual transactions identified during our audit. There were no • significant unusual transactions identified as a result of our audit procedures that were • brought to the attention of management. • • RubinBroNn U_P Is c member of the global network of Baker Ttll,Interra•iono Iso the members of ''Th are separate and independent legal entities • • • • • Hyatt Corporation and Board of Directors Hyatt Regency Baytown - Houston Page 2 • • • There were no significant estimates contained in the financial statements. • The disclosures to the financial statements are neutral, consistent and clear. Certain • financial statement disclosures are particularly sensitive because of their significance to • the financial statement users. The most sensitive disclosures affecting the financial • statements are: • • The disclosure related to the Base and Subordinated Management Fees disclosed in Note 4, which describes the management fees, as prescribed by the Hotel Services • Agreement (HAS) and which were recorded in the financial statements. • • The disclosure related to the Capital Expenditure Replacement Reserve disclosed in • Note 5, which describes the funding requirements of the Senior and Subordinated • Furniture, Fixtures and Equipment Reserve, as prescribed by the HAS and which were recorded in the financial statements. • • The disclosure related to the need for continued financial support from the Owner • disclosed in Note 8, which describes the past financial performance of the Hotel and • the need for going financial support from the Owner to finance operations and for debt service requirements, which is expected to continue for the foreseeable future. • • Circumstances That Affect The Form And Content Of The Auditors'Report • • For purposes of this letter, professional standards require that we communicate any circumstances that affect the form and content of our auditors' report. Our auditors' • report included emphasis of matter paragraphs pertaining to the following, and which • were emphasis paragraphs and not modification paragraphs: • • - The need for continued financial support from the owner. • - The Hotel's basis of accounting, under which the financial statements are prepared • in accordance with the Hotel Services Agreement, which is a basis of accounting • other than accounting principles generally accepted in the United States of • America (U.S. GAAP). • o The primary difference between these financial statements and financial • statements prepared in accordance with U.S. GAAP relates to the omission • of accounts controlled by the owner of the Hotel (such as buildings, furniture • and equipment and debt and equity). • • • Hyatt Corporation and Board of Directors • Hyatt Regency Baytown - Houston Page 3 • • • Our report also included an other paragraph which restricts the use of the financial statements to specified users, due to the non-GAAP presentation of the financial • • statements. • Matters Resulting In Consultation Outside The Engagement Team •• There were no significant matters which resulted in consultation outside of our engagement team. • • Difficulties Encountered In Performing The Audit 411 • We encountered no significant difficulties in dealing with management in performing and • completing our audit, and appreciated management's support, responsiveness and cooperation throughout the audit process. • • Corrected And Uncorrected Misstatements • Professional standards require us to accumulate all misstatements identified during the • audit, other than those that are trivial, and communicate them to the appropriate level • of management. Further, professional standards require us to also communicate the • effect of uncorrected misstatements related to prior periods on the relevant classes of • transactions, account balances or disclosures, and the financial statements as a whole. Uncorrected misstatements could potentially cause future-period financial statements to • be materially misstated, even though the uncorrected misstatements are immaterial to • the financial statements currently under audit. The attached schedule summarizes the • uncorrected misstatements of the financial statements. Management has determined • these uncorrected misstatements are not material to the financial statements, either individually, or in the aggregate. • • In addition, professional standards require us to communicate to you all material, • corrected misstatements that were brought to the attention of management as a result of • our audit procedures. The attached schedule summarizes the corrected misstatements which were recorded through the audit process. • • Disagreements With Management • For purposes of this letter, professional standards define a disagreement with • management as a financial accounting, reporting or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the • auditors' report. We are pleased to report that no such disagreements arose during the • course of our audit. • • • Hyatt Corporation and Board of Directors • Hyatt Regency Baytown - Houston Page 4 • • • Management Representations • We have requested certain representations from management that are included in the • attached management representation letter. • Management Consultations With Other Independent Accountants • • In some cases, management may decide to consult with other accountants about auditing • and accounting matters, similar to obtaining a "second opinion" on certain situations. If • a consultation involves the application of an accounting principle to an entity's financial • statements or a determination of the type of auditors' opinion that may be expressed on • those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, • there were no such consultations with other accountants. • Other Audit Findings Or Issues • • We generally discuss a variety of matters, including the application of accounting • principles and auditing standards, with management each year prior to retention as the • Hotel's auditors. However, these discussions occurred in the normal course of our • professional relationship, and our responses were not a condition to our retention. • This information is intended solely for the use of the Hyatt Corporation and Board of • Directors of Hyatt Regency Baytown— Houston and is not intended to be and should not • be used by anyone other than these specified parties. • Z_LP • • February 3, 2026 • • • • • • • • • • • • • • • • • • • • SCHEDULE OF CORRECTED MISSTATEMENTS • • • Account Description Debit Credit • • Adjusting Journal Entries • Adjusting Journal Entries JE#1 • To record effect of 2023 mgt fees-basic and subordinate. 1.22008110 BASIC MANAGEMENT FEE PAYABLE 2,648 • 1.31300110 EQUITY-PROFIT PREVIOUS BALANCE(CONVERTED 111) 12,248 • 1.22008111 SUBORDINATED FEE PAYABLE 14,896 . Total 14,896 14,896 • Adjusting Journal Entries JE#2 To record effect of 2024 mgt fees-basic and subordinate. • 4901.50503110 MANAGEMENT FEE EXPENSE BASIC BELOW 7,190 • 4901.50503111 MANAGEMENT FEE-SUBORDINATED 86,314 • 1.220081101 BASIC MANAGEMENT FEE PAYABLE 7,190 1.22008111 SUBORDINATED FEE PAYABLE 86,314 • Total 93,504 93,504 lb Adjusting Journal Entries JE#4 • To record prior year entry. • 1.31130230 CONTROL ACCOUNT 3 656,409 • 1,31300110 EQUITY-PROFIT PREVIOUS BALANCE(CONVERTED 111) 656,409 Total 656,409 656,409 • • Adjusting Journal Entries JE#5 To true up accrued incentive bonus liability for incurred amounts applicable to FY24. • 4101.50131110 INCENTIVE BONUS 18,816 • 1.24000410 AE-INCENTIVE BONUS 18,816 Total 18,816 18,816 • • Adjusting Journal Entries JE#7 To true-up utility accrual. • 4601.50330110 ELECTRICITY 50,000 • 1.31300110 EQUITY-PROFIT PREVIOUS BALANCE(CONVERTED 111) 50,000 • Total 50,000 50,000 • Adjusting Journal Entries JE#9 To true-up FFE reserves per HSA• 1.31131310 EQUITY-FFE PROVISION 29,202 • 4901.50601110 FFE REPLACEMENT 322,467 • 1.22081112 FFE RESERVES PAYABLE 351,669 Total 351,669 351,669 • • • • • • • • • • • SCHEDULE OF UNCORRECTED MISSTATEMENTS • • • Increase(Decrease)On Financial Statement Captions • !f the Following Uncorrected Entries Had Been Recorded • IMPACT ON NET FUTURE YEAR • DESCR,PTION ASSETS LIABILITIES EQUITY REVENUES EXPENSES INCOME NET INCOME • PJE 1-To true up incentive bonus liabity incurred as • of 9/30/23 $ — $ — $ — _ -- $ (5,679) $ 5,679 No • PJE 2-To reverse prior year expense over-accrual at • 9/30/23 — — — 8,213 (8,213) No • Effect of uncorrected entries for current year — 2,534 (2,534) • • Effect of uncorrected entries from prior year — — (2,534) 2,534 • Effect of uncorrected entries for current year $ — $ — $ — $ — $ — $ • Description Of Omitted Disclosures Including Amounts • None • • • • • • • • • • • • • • • • • • • • • • • • • • • HYATT REGENCY BAYTOWN — HOUSTON • MANAGEMENT REPRESENTATION LETTER • • • • February 3, 2026 • RubinBrown LLP • 1900 16t Street, Suite 1700 • Denver, CO 80202 • • This representation letter is provided in connection with your audit of the Statement of Assets, Liabilities, and Control of Hyatt Regency Baytown — Houston as of September 30, 2024 and 2023 and the related • Statement of Revenues and Expenses and the Statement of Cash Flows for the year and period ended • September 30, 2024 and 2023(the"financial statements"), and the related notes to the financial statements, for the purpose of expressing an opinion on whether the financial statements are presented fairly, in all material respects, in accordance with the financial reporting provisions of the Hotel Management • Agreement,which is a basis of accounting other than accounting principles generally accepted in the United States of America (U.S. GAAP). • We understand we are responsible for management decisions and functions, for designating a qualified i employee to oversee any nonattest services you provide, for evaluating the adequacy and results of the • services performed and accepting responsibility for such services. • Certain representations in this letter are described as being limited to matters that are material, Items are • considered material, regardless of size, if they involve an omission or misstatement of accounting • information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or • misstatement. We confirm that, to the best of our knowledge and belief, as of the date of this letter, the following • representations made to you during your audit: • Financial Statements • 1. We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter, for the • preparation and fair presentation of the financial statements in accordance with the Hotel Services • Agreement. 2. The financial statements referred to above are fairly presented in conformity with the Hotel • Management Agreement. • 3. We acknowledge our responsibility for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from • material misstatement, whether due to fraud or error. • 4. We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud. • 5, The methods, data, and significant assumptions used by us in making accounting estimates and their related disclosures are appropriate to achieve recognition, measurement, or disclosure that is • reasonable in the context of the applicable financial reporting framework, including those related to • the collectability of accounts receivable. 6. Related party relationships and transactions have been appropriately accounted for and disclosed • in accordance with the requirements of the Hotel Management Agreement. • 7. All events subsequent to the date of the financial statements and for which the Hotel Management Agreement requires adjustment or disclosure have been adjusted or disclosed. • 8. The effects of all known actual or possible litigation and claims have been accounted for and • disclosed in accordance with the Hotel Management Agreement. • • HYATT REGENCY BAYTOWN-HOUSTON • MANAGEMENT REPRESENTATION LETTER • • 9. Significant estimates and material concentrations have been properly disclosed. • 10. There are no guarantees, whether written or oral, under which the Hotel is contingently liable. • 11. We have reviewed the adjustments you have identified through your audits. As it relates to the audit adjustments, they have been correctly recorded to the Hotel's accounts. As it relates to the passed • adjustments identified in the attached schedule, they are immaterial, individually and in aggregate • to the financial statements. Information Provided • • 12. We have provided you with: • -- Access to all information, of which we are aware that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, and other matters; • - Additional information that you have requested from us for the purpose of the audit; and • - Unrestricted access to persons within the entity from whom you determined it necessary to • obtain audit evidence. 13. All transactions have been recorded in the accounting records and are reflected in the financial • statements. 14. We have disclosed to you the results of our assessment of the risk that the financial statements • may be materially misstated as a result of fraud. • 15. We have evaluated the entity's ability to continue as a going concern and have concluded there are no indications the Hotel will not be able to realize assets, satisfy liabilities and to continue to • operate for at least 12 months from the date of this letter. - We have reviewed the disclosures related to the need for the Hotel to receive continued • financial support from the Owner and are satisfied that the facts and circumstances • described are complete and accurate, and do not give rise to a going concern uncertainty. • We are in agreement with the footnote disclosure. 16. We have no knowledge of any fraud or suspected fraud that affects the entity and involves: • -- Management; • - Employees who have significant roles in internal control; or - Others when the fraud could have a material effect on the financial statements. • 17. We have no knowledge of any allegations of fraud, or suspected fraud, affecting the entity's financial statements communicated by employees, former employees, analysts, regulators, or • others. • 18. We have disclosed to you all known instances of noncompliance or suspected noncompliance with laws and regulations whose effects should be considered when preparing financial statements. • 19. We are not aware of any pending or threatened litigation, claims, and assessments whose effects should be considered when preparing the financial statements and we have not consulted legal • counsel concerning litigation, claims, or assessments. • 20. We have disclosed to you the identity of the entity's related parties and all the related party • relationships and transactions of which we are aware. 21. We have no plans or intentions that may materially affect the carrying amounts or classification of • assets and liabilities. • • INIMIlk • di • � 2 3 `Z •� Alex Dantes, General Manager • • • • • • • • • • HYATT REGENCY BAYTOWN — HOUSTON • MANAGEMENT REPRESENTATION LETTER • • Lyndsey Loper, Area Director of Finance • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • HYATT REGENCY BAYTOWN- HOUSTON • SCHEDULE OF UNCORRECTED MISSTATEMENTS • • • Increase(Decrease)On Financial Statement Captions • If the FetIowing Uncorrected Entries Nod Been Receded IMPACT ON • NET FUTURE YEAR DESCRIPTION ASSETS LIABILITIES EQUITY REVENUES EXPENSES INCOME NET INCOME • • PJE I-To true up Incentt a bones lability Incurred os • of 9/30/23 $ — $ — $ — $ — $ (5,679) $ 5,679 No • PJE 2-To reverse prior yeor expense over-accrual at 9/30/23 — — — — 8.213 (8,2I3) No • • Effect of uncorrected entries for current yeor — — — 2534 (2,534) • Effect of uncorrected entries from prior yeor --- — (2,534) 2,534 • Effect of uncorrected entries tor current yeor $ — $ — $ — $ $ — $ — • Description Of Omitted Disclosures Including Amounts • • None • • • • • • • • • • • • • • • • • • • • • • • • • • • • • * RubinBrown • • • 1.800.678.3134 www.RubinBrown.com • @RubinBrown Em RubinBrown LLP • • • • • • • • • • • • • • • • • • CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS CONSULTANTS • • • • • . • ‘11 41111111 • • • • • • • • • • HYATT REGENCY BAYTOWN - HOUSTON • • (ACCOUNTS MAINTAINED BY HYATT CORPORATION) • MANAGEMENT LETTER • SEPTEMBER 30, 2024 • • • • • • • • • • • • • • • • • • • I • • • • • • • • • • _• • • 1900 16- Street T:303.698.1883 • ■ y Suite 1 700 E:info©rubinbrown.com • Rubi l n 1 Bl o vn' Denver,CO 80202 www.RubinBrown.com • CERTIFIED PUBLIC ACCOUNTANTS&BUSINESS CONSULTANTS • • • • • Hyatt Corporation and Board of Directors Baytown Municipal Development District • Hyatt Regency Baytown - Houston • Baytown, Texas • • In planning and performing our audit of the financial statements of Hyatt Regency • Baytown - Houston (Hotel) as of September 30, 2024 and 2023 and for the year ended • September 30, 2024 and the period beginning May 18, 2023 (Opening Date) and ended • September 30, 2023 (Period), in accordance with auditing standards generally accepted • in the United States of America, we considered the Hotel's internal control over financial reporting(internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial • statements, but not for the purpose of expressing an opinion on the effectiveness of the • Hotel's internal control. Accordingly, we do not express an opinion on the effectiveness • of the Hotel's internal control. • Our consideration of internal control was for the limited purpose described in the • preceding paragraph and was not designed to identify all deficiencies in internal control • that might be significant deficiencies or material weaknesses and therefore, significant • deficiencies or material weaknesses may exist that were not identified. However, as discussed below, we identified a deficiency in internal control that we consider to be a• material weakness. • • A deficiency in internal control exists when the design or operation of a control does not • allow management or employees, in the normal course of performing their assigned • functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that • there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. • • • • • • RubinBrown LLP is a member of the global network of Baker Tilly Internationa'.Ltd.the members of.vnlch are separate and ndependent legal enti+ies. • L• • • Hyatt Corporation and Board of Directors • Hyatt Regency Baytown - Houston Page 2 • • • We consider the following deficiency in the Hotel's internal control to be a material • weakness: • Financial Reporting And Close • During the audit, we identified a number of adjusting journal entries which were material • to the financial statement, including related to the calculation of management fees, • accounting for the owner's insurance expense, and the calculation of FF&E reserves. We • understand the Hotel opened in 2023 and had a number of personnel and internal • changes during the financial statement periods. • We recommend the management team review the areas impacted by audit adjustments • and implement a financial close review process that includes regular review of • transactions for proper classification so that the financial statements are prepared and • presented in the Hotel Services Agreement. • Conclusion • • This communication is intended solely for the information and use of Hyatt Corporation • and the Board of Directors of Baytown Municipal Development District and Management, • and is not intended to be and should not be used by anyone other than these specified • parties. • LLP • February 3, 2026 • • • • • • • • • • • • • • • • • • • • * RubinBrown • • • 1.800.678.3134 • www.RubinBrown.com • t sRubinBrown • ® RubinBrown LLP • • • • • • • • • • • • • • • • • • • • • CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS CONSULTANTS \l‘ 1i 4111"