2015 09 17 MDD Minutes, SpecialMINUTES OF THE SPECIAL MEETING OF THE BOARD OF DIRECTORS
OF THE BAYTOWN MUNICIPAL DEVELOPMENT DISTRICT
September 17, 2015
The Board of Directors of the Baytown Municipal Development District (MDD) met in a Special
Meeting on Thursday, September 17, 2015, at 4:35 P.M., in the Council Chamber of the
Baytown City Hall, 2401 Market Street, Baytown, Texas with the following in attendance:
Stephen DonCarlos
President
Chris Presley
Vice President
Reggie Brewer
Secretary
Brandon Capetillo
Director
Gary Englert
Director
Mary Hernandez
Director
Robert Hoskins
Director
Dave Jirrels
Director
Terry Sain
Director
Rick Davis
General Manager
Mike Garner
General Counsel
Leticia Brysch
Assistant Secretary
President DonCarlos convened the September 17, 2015, Municipal Development District
(MDD) Board Special Meeting with a quorum present at 4:35 P.M., all members were present
with the exception of Director Hernandez who arrived at 4:40 P.M., and Directors McCartney
and Renteria who were both absent.
1. DISCUSSIONS
a. Discuss options and incentives for a Hotel/Convention Center in the City of
Baytown.
Mr. B.J. Simon presented the agenda item to discuss options and incentives for a
Hotel /Convention Center in the City of Baytown. He stated that this discussion includes an
overview of the study done by PKF regarding the development of a Hotel Conference Center
specifically at the Bayland Marina which was presented to MDD back in July. He stated that the
discussion will also include the financial GAP analysis of PKF's findings and the potential
incentives related to the Bayland Marina. He stated that PKF's recommendations regarding the
Bayland Marina were to have a full- service hotel to accommodate 180 -200 people with the total
meeting space of 16,000 - 18,000 square feet. He stated that the economic impact would be
$102,400,000 from construction, $44,400,000 from operations, $6,700,000 for hotel occupancy
tax revenues, and $6,000,000 for potential sales tax revenues. Mr. Simon stated that the project
cost is approximately $45 million with ideal to be privately developed and financed based upon
PKF's findings of the current market investor's return of 25% to 30 %. He stated that the
MDD Board Special Meeting Minutes
September 17, 2015
Page 2 of 3
estimated GAP is $6.5 - $8.5 million based on a $45 million cap expenditure with the rule of
thumb to abstract 20% of the capital investment to allocate for the development of the
conference center. He further stated that there are two (2) federal incentives that this site
qualifies for: 1) NMTC - New Market Tax Cuts and 2) EB -5. He stated that the NMTC was
created in the year 2000 to promote investment in "low- income" census tracts in the U.S. and to
be useful a alternative to minimize loan-to -cost ratio for hotel developments. He stated that the
NMTC is attractive to certain banks and allow investors to receive federal income tax credits
equivalent to 39% of the investment (loan) over a seven (7) year period. Mr. Simon stated that
the EB -5 was enacted in the 1990's to spur foreign direct investment by investors seeking certain
residency status. He stated that the EB -5 requires a minimum investment of $500,000 -
$1,000,000 for projects located in qualified census tracts, job creation, and for projects to be
marketed through Regional Centers. Mr. Simon further stated that the potential municipal
incentives include hotel /motel tax; sales and use tax rebates; ad valorem tax rebates; TIRZ, PID
or other combinations; and other incentives to be determined because developers' responses to
the RFP will dictate ultimate financial arrangements. In conclusion of presented his overview,
Mr. Simon stated that Deputy General Manager Bottoms will provide details regarding options
on how to address the estimated GAP amount.
During further discussion, Deputy General Manager Bottoms stated that there are several options
to addressing the GAP fund with one being the hotel occupancy tax which is a stand -alone fund
that has a fund balance of approximately $2 million. He stated that PKF expects that the
hotel occupancy and sales taxes are estimated to generate $600,000 per year which can be part of
an incentive package. He stated that other incentives options can include selling debt using the
hotel occupancy tax fund, sales tax rebate, and property tax abatement. He stated that he
recommended focusing more on the hotel occupancy tax because those funds are so restricted
and hardly spent. Additionally, Deputy General Manager Bottoms further stated that the GAP
does not include the land.
During further discussion, Mr. Simon stated that the Economic Development Foundation
(EDF) started the development of the RFP/RFQ which will be completed by the end of
September and will do a Beta -Test with the two sub - developers in October. He stated that they
will refine the RFP process in November and have a short list of potential developers by the end
of December. He further stated that the plan is to select a developer in January 2016, have a
development plan in June and start construction in the third quarter of the year 2016.
President DonCarlos inquired for clarity if the $45 million would include the hotel and the
conference center. In response to President DonCarlos's inquiry, Mr. Simon stated that the $45
million would include the hotel and conference center. President DonCarlos further inquired that
theoretically if a private developer is hired to build the hotel than the City could build the
conference center as a separate project and make up the estimated GAP. In response to President
DonCarlos's inquiry regarding the City building the conference center, Deputy General Manager
Bottoms stated that building the conference center could make up the GAP. President DonCarlos
inquired further for clarity if staff was comfortable that the City could handle its portion of this
venture without having to issue any ad valorem tax bonds or issue any bonds that would increase
taxes in any manner. In response to President DonCarlos's inquiry regarding bonds, Deputy
General Manager Bottoms stated that President DonCarlos was correct in his statement.
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September 17, 2015
Page 3 of3
For clarity purposes, Director Brewer inquired if the GAP included the kind and also requested
the value of the. land, Mr. Simon stated in response to Director Brewer's inquiry that the GAP did
not include the land and that an appraisal of the land ol'approxii-nately 10 acres has to be done to
obtain the value of the land,
Mr. Simon introduced the EDF's new employee trained Lacy Schuman \chose effective
employment date was September 09, 2015,
2. MANAGER'S REPORT
a. Reminder that the next Baytovin Municipal Development District meeting is
scheduled for Thursday, October 01, 2015, at 4:30 PAL, in tire City Council Chamber,
2401 Market Street, Baytown, 'rexas, 77520.
Assistant Secretary Leticia Br " ysch stated that the next Municipal Development District irrecting
is scheduled for Thursday, October 01, 2015. at 4 30 P.M., in the City Council Chamber.
1 ADJOURN
A motion ivas made by Secretary Reggie Brewer and seconded by Director Mary Hernandez
adjourning the September 19, 2015, MILD Board Special nreefing-, 'rile vote was as follows:
Ayes: Secretary Reggie Brcover, Director Brandon Capetillo, president Stephen
H. DonCarlos. Director Gary Englert, Director Mary Hernandez. Director
Robert C. Hoskins. Director David P. firrels, Vicc-President Chris
Preslev, Director "Gerry Sam
Nays: None
Other Director David McCartney (Absent), Director Mercedes Renteria III
(Absent)
Approved
With there being no further- business to discuss, President DorrCarlos ad.journed the September
17, 2015, Municipal Development District (MDD) Board Special Meeting at 5:07 P.M.
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Assist , a Brysch.' ssist t Secretary
City ol'Baylown
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