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2004 02 12 WS MinutesMINUTES OF THE WORK SESSION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN February 12, 2004 The City Council of the City of Baytown, Texas, met in work session on February 12, 2004, at 4:45 p.m. in the Council Chamber of Baytown City Hall, 2401 Market Street, Baytown, Texas, with the following in attendance: Ronnie Anderson Coleman Godwin Calvin Mundinger Don Murray Mercedes Renteria III Scott Sheley Pete C. Alfaro Gary Jackson Bob Leiper Ignacio Ramirez, Sr. Gary W. Smith Council Member Council Member Council Member Council Member Council Member Council Member Mayor City Manager Assistant City Manager City Attorney City Clerk The meeting was opened with a quorum present after which the following business was conducted: Discuss implementation of tax freeze for the elderly and disabled. Mr. Jackson related that staff had studied the impact of the implementation of Proposition 13 as it affects the individual and the City. He introduced Donna Sams, Finance Director, and Rhonda Young, Treasurer. Ms. Young made the presentation. Proposition 13 allows local governments to establish a tax limit or freeze on the homestead residences of persons over the age of 65 or for persons who are disabled. Taxes on the property can only increase if new improvements are made. The taxes can decrease with a decrease in the appraised value. The property owner can transfer the tax limitation to a new homestead within the same local government. The limitation will transfer to a surviving spouse, if the surviving spouse is at least 55 years of age. The tax limit or freeze can be established by ordinance or by petition and election. Ms. Young explained how the transfer of the limitation worked by using the example of a person moving from a home valued at $80,000 to a $125,000 home. The limitation percentage is 17.5% and the result with the limitation is that the homeowner would pay $161.23 on the new house, $207.29 less than would be paid by a homeowner without the limitation. In the second example, Ms. Young demonstrated that a homeowner could move from a $62,000 home to a $125,000 home and not pay any taxes, as the tax percentage on the original home was 0 %. Ms. Young explained that the law currently allows persons over the age of 65 to defer payment of taxes on their homestead. The City cannot force them from their homes, however the taxes accrue interest at 12% per annum and will be due and payable when they move from or sell the home. Page 2 of 4 Minutes of the Work Session — February 12, 2004 The increase in the appraised value of residential homesteads has been relatively equal for homesteads of persons under 65, of persons 65 and over, and the disabled. A tax freeze for those over 65 and the disabled projected to reduce the revenue to the City, based on the appraised value growth rate, in fiscal year 2005 -2006 by $152,678. This projected amount is equivalent to the debt service on $1.9 million debt. Mr. Jackson reminded Council that the 2001 bond was estimated to increase the tax rate by 2.5 cents. This increase has been avoided by growth in the taxable property. Enacting a tax freeze would make it more difficult to avoid implementing the tax increase to pay for the 2001 bonds. Ms. Young noted that the projected reduction in revenue is equivalent to .4 of 1% on the tax rate. The projection for reduced revenue cumulatively over 5 years is $1 million and over 10 years is $2.8 million. The tax freeze applicable to Goose Creek Consolidated Independent School District has shown an increase in the amount of reduced revenue each year. Currently, of the persons that are 65 years of age or older or disabled, 38% pay no taxes to the City and 56% pay $100 or less in taxes to the City. Of all tax accounts of the City, 21% are aged 65 or older or disabled. The over 65 population in Baytown is growing. Council Member Murray observed that the item is not time - critical. Ms. Sams stated that the benefit of Proposition 13 would be realized if action is taken before the next tax rate is set. Mayor Alfaro stated that the Council must look at all the information and the impact on all of the homeowners in the City. Council Member Sheley stated that the Texas Municipal League will provide information on the subject after a detailed study. Mr. Jackson noted that once enacted, there is no provision to repeal or amend the freeze. Council Member Mundinger asked that staff provide information related to exemptions in neighboring communities. Review and discuss bids for sale of Bayland Island restaurant building. City Manager, Gary Jackson, related that invitations to bid on Bayland Island, both for the sale of the entire island and for sale of the former restaurant building, had been issued on two occasions. In response to the second invitation to bid, four bids for the purchase of the former restaurant building were received. The highest bidder is Angel Brothers Enterprises, LTD. Mr. Jackson explained that the persons requesting bid packets complained of certain language in the proposed lease. In response, staff prepared addenda to the bid packets. Mr. Jackson explained the changes reflected in the addenda. The changes included revisions related to maintenance of the premises and insurance requirements. The prohibited uses remained as follows: industrial facilities, junk or salvage yard, sexually oriented business, or any use that would affect the ability to sell alcoholic beverages on the island or at Bayland Park. Mr. Jackson told Council that if they did not find the changes acceptable, they should reject the bids. Mr. Jackson stated that the bid did not affect the ships store. There is an item on the agenda to pay off the restaurant building note. Funds will be available to make repairs to the ships store. Additionally, the City has been contacted by one person interested in leasing a pad site for development on the island. Bob Leiper, Assistant City Manager, responded to an inquiry by stating that the restaurant Page 3 of 4 Minutes of the Work Session — February 12, 2004 purchaser will have access and utilization of 50 spaces in the parking lot. The parking lot can be expanded as new uses are created. The ground lease on the former restaurant building is $1 per month and a maintenance fee of $500 per month. The maintenance fee is tied to the consumer price index. The same or very similar terms will be offered for any other ground lease. Council Member Murray noted that the building and all personal property in the building will be taxable. Mr. Leiper informed Council that the A &E Committee approved a firm to do an investigative study on the ships store. The contract has been negotiated and is ready to be signed, if Council approves the sale of the former restaurant building. Discuss downtown redevelopment. Mr. Jackson advised Council that is item is being discussed to seek guidance from the Council. The City lost the services of Pete Brooks, the Downtown Coordinator. The next step in the redevelopment of the downtown is to complete a master plan. A draft for a request for proposals for a master plan has been completed. It is more expedient to have a consultant complete the master plan than to task the Baytown Downtown Association (BDA) or to hire a new coordinator. Gregory Stubbs, Planning Director, reported that he had attended a recent BDA meeting. Grant funds from the Community Development Block Grant are available to pay for the consultant. BDA discussed the direction for downtown and determined that completion of the master plan is the first priority. BDA has started the plan. Mr. Stubbs displayed an example of a master plan from Lewisville, Texas. The master plan should contain the goals, objectives, policies and the long -range plan. It could contain some design elements. The focus will be on Texas Avenue first, then on Market Street and Alexander Drive. The master plan is the beginning document and other documents will follow. Dr. Martha Ellis, President of BDA, credited the progress of the BDA to the funding from the Community Development Block Grant. The master plan is a top priority. The BDA has filed for its non - profit status. After the master plan is finished the next goal will be participation in the Main Street Program. Merchants and members of BDA have provided support. Review and discuss "Conference Center Decision Tree." Mr. Jackson reminded Council of the joint meeting with the Tax Increment Reinvestment Zone Number One Board of Directors concerning the concept of a convention center. In 1998 certificates of obligation were sold for several projects, including $4 million for a convention center. The certificates also included water and sewer projects and the jail and communications project. Crime Control & Prevention District funds were used to pay the indebtedness on the jail and communications project. Several attempts were made to enter into an agreement with a builder /operator of a hotel and convention center on Bayland Island. Then discussions about locating the convention center at or with San Jacinto Mall occurred. Other locations have also been mentioned. The discussion tonight is to explain how the "decision tree" operates. The first question to be answered is whether or not Baytown needs a convention center. The Page 4 of 4 Minutes of the Work Session — February 12, 2004 answer to that question leads to an answer or further questions. If a convention center is needed, f it must be decided whether the convention center should be privately funded or whether it should be fully or partially publicly funded. If the answer is "no" at anytime, then the debt should be "defeased." If the determination is that public funds should be involved in the convention center, then the potential locations should be evaluated based on access, construction costs, operation costs a nd t he a cceptable r isk t o t he C ity. T he v arious 1 ocations c an b e c ompared. After the locations are assessed, the decision must be made whether or not any site is suitable. Bond counsel has rendered advice on the use of the proceeds of the certificates of obligation and on the $1.5 million in interest earnings. The money must be spent to pay the certificates or for one of the purposes stated in the original issuance. The funds can be used for a convention center or for water and sewer improvements as defined in the issuance. Although Hotel Occupancy Tax funds were used to make the scheduled payments on the debt, the character of the funds has changed from Hotel Occupancy Tax funds to bond proceeds. The funds cannot be returned to the Hotel Occupancy Tax fund. Discuss amendment of direction given to the Charter Review Committee. This item was not discussed during the work session and held for discussion during the regular session. Discuss appointments. Appointments to the Baytown Industrial Development Corporation Board and the Baytown Library Board were held for discussion during the regular session. Adjourn. There being no further business, Council Member Mundinger moved adjournment. Council Member Renteria seconded the motion. The vote follows: Aye: Council Members Anderson, Godwin, Mundinger, Murray, Renteria, and Sheley Mayor Alfaro Nay: None. The motion carried and the meeting adjourned at 6:18 p.m. Gap§ W. Stlifth City Clerk