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2011 09 08 MDD Joint Work Session MinutesMINUTES OF THE JOINT WORK SESSION OF THE CITY COUNCIL AND THE MUNICIPAL DEVELOPMENT DISTRICT BOARD OF THE CITY OF BAYTOWN September 08,2011 The City Council and the Municipal Development District Board of the City of Baytown, Texas met in a Joint Work Session on Thursday,September 08,2011,at 5:03 P.M.,in the Council Chamber of the Baytown City Hall,2401 Market Street,Baytown,Texas with the following in attendance: Brandon Capetillo Robert Hoskins David McCartney Mercedes Renteria Terry Sain Scott Sheley Stephen DonCarlos Robert D.Leiper Kevin Trailer Ignacio Ramirez Leticia Brysch Keith Dougherty Ruben Linares Reggie Brewer Mary Hernandez Dee Anne Navarre Council Member Council Member Council Member Council Member Council Member Council Member Mayor City Manager Assistant City Manager City Attorney City Clerk Sergeant at Arms Vice President Director Director Director Mayor DonCarlos convened the September 08,2011,City Council and Municipal Development District Board Joint Work Session with a quorum present at 5:03 P.M.,all members were present with the exception of Council Member Hoskins who arrived at 5:30 P.M.and Council Member Renteria who was absent. 1.DISCUSSIONS a.Discuss Retail Recruitment -Administration. City Manager Leiper presented the agenda item to discuss retail recruitment and the Texas Municipal League Region 14 event.Representatives from the Baytown Area/West Chambers County Economic Development Foundation (EDF),CDS Market Research and three (3)Council Members who attended the TML Regional 14 event were all in attendance and able to speak to these items. Mr. Mike Shields, a representative of the Economic Development Foundation (EDF), presented an overview of the EDF and stated that when the EDF was developed, the primary focus was on Industrial but quickly noticed that not only did the white collar managers and engineers not shop in Baytown, but the blue collar worker's were starting to shop elsewhere as well. Mr. Shields stated that the EDF's work program is established each year by the City Manager and Council through the MDD Budget and through the leadership of the Mayor, was instructed to direct its focus on retail development. Mr. Shields stated that because the EDF faced the challenge of lots of misunderstandings and misinformation in regards to retail development, a consultant was hired to look at the City and its demographics to help recruit retail companies. Mr. B.J. Simon, a representative of the EDF, presented an overview of why the switch was made to retail development and their strategic activities with respects to recruitment and stated that CDS would present an overview of their recommendations. Mr. Simon stated that there is some misperception about the Baytown market. He stated that the analysis from CDS shows that Baytown houses several of the country's largest companies and is less than '/z an hour away from downtown Houston and less than a '/2 an hour from other leakage areas. Mr. Simon stated that there is a slow but steady upward trend in growth in jobs and population in Baytown. He also stated that Baytown is very purposeful in the development of the city as evident by the 2025 plan, the bonds for street improvements, parks, aquatics programs, ULDC, MDD, and utility improvements. Mr. Simon stated that Baytown has an enigma and there is the perception that Baytown is a blue collar town with low to moderate income levels with a limited market and no regional appeal, and that there is no municipal support for retail but the reality is that Baytown is a full service City willing to employ creative retail development tools and is retail ready with the retail development strategy as follows: • Access current state: conduct SWOT Analysis; • Identify retail supply opportunities /leakage in the trade areas; • Identify and recruit retailers and retail developers; • Manage marketing efforts to affect the same; • Serve as a liaison between the City and developers to facilitate investment; • Advise and assist the City in real estate transactions, developing incentives, & development opportunities; • Engage development contacts on behalf of the City; and • Introduce City officials to contact to enhance the City's ability to attract targeted retailers Mr. Simon stated that the EDF developed an explicit and comprehensive Request for Proposal (RFP) and identified fifteen providers that fit the profile of what was expected and of the fifteen, six (6) firms were reviewed and CDS Market Research was selected. Mayor DonCarlos inquired of the other firms that responded to the RFP and if the EDF was satisfied with the responses. Mr. Simon stated that other firms that responded were ERA, Retail Coach, Gibbs, RLCO, and a Canadian firm and that they were satisfied with the responses. Mr. Simon introduced Mr. Charlie Savino, Ms. Brenda Persons, Mr. Steve Spillette and Mr. Lawrence Dean as they presented an overview of the work they did back in 2008 that included strategic recommendations and updates. Mr. Savino stated that because the RFP was so detailed, it was easy to respond to it and that they provided three (3) separate reports with the first one being an inventory of everything that was in Baytown to include all retail businesses, the demographics, and things about the community. He stated that the second report was a deeper analysis of the City and included personal interviews, focus groups, and surveys from residents in which was focused on the following four commercial districts: • North Zone — San Jacinto Mall and Garth Road; • Southeast Zone — Old Hwy 146 and North Alexander; • Southwest Zone A — West Main — Market to Carolina and Oklahoma to Oakwood; and • Southwest Zone B — Old Downtown Baytown During discussion, an inquiry was made in regards to I -10 and North Main being considered in the analysis of the commercial districts and a response was made that the I- 10 and North Main portion was included as part of the North Zone. Mr. Savino stated that the third report included conclusions and strategic recommendations that would help improve the City's situation. Mr. Savino stated that the population is on target with the census projection and the statistics shows growth in ethnic diversity, a stable and modest income, and an increase in retail sales. Mr. Savino indicated that some retail categories that stood out in regards to growth over an annual period from 2000 to 2007 were furniture and home furnishing stores, electronic and appliance stores, health and personal care stores, and food services and drinking places. He also indicated that some of the same retail categories were listed as being undersupplied with a deficit in the millions in the leakage area such as the furniture and home furnishing stores, health and personal care stores, clothing and clothing accessories, and sporting goods, hobbies, books, and music. Mr. Savino stated that the Baytown resident characteristic categories varied and Ms. Persons provided definitions of the top six (6) psychographic lifestyle segments (PRIZM) categories that make up 52% of Baytown households as the following: • Family Thrift — young ethnic diverse parents who work entry level service jobs — 13.8 %, • White Picket Fences — young middle class married with children in modest homes in ethnic diversity — 13.09% • Upward Bound - upper -class families with dual incomes, college degrees in newer homes and are heavier purchasers of laptop, computers, and electronic equipment —7.4%, • Sunset City Blues — lower middle class singles and couples who have retired or close to it, empty nesters with modest incomes and educations — 6.6 %, • Middleburg Managers — middle class and over 55 with solid managerial jobs - 5.7 %, and • Boomtown Singles - young single and working class who pursue the active lifestyles - 5.2% Mr. Savino stated that the telephone survey targeted 251 residents which asked questions as to how they felt about Baytown and when asked where they shopped, San Jacinto Mall was on the top of about 58% of the shoppers mind. Mr. Savino indicated that residents rated Baytown retail and restaurants as being average overall and listed some of the observations from real estate professionals as Baytown retail being oversupplied, there needing to be incentives for retail development, that Baytown was not on the retailers' radar, that improvements needed to be made to the San Jacinto Mall, that there needs to be more rooftop - population of at least $100,000, and that there needs to be more people that work in Baytown to live in Baytown to attract upscale retail. Mr. Spillette stated that when dealing with shopping center developers they deal with national or with major regional tenants that have specific criteria and thresholds and Baytown is just below the threshold and reiterated the importance of Baytown's population growth and household incomes increasing. Mr. Savino stated that the challenges that Baytown need to overcome are that Baytown shoppers are value- oriented and has insufficient support for upscale retail, the blue collar image, the existing retail inventory that may discourage new development, and the slow population growth compared to other areas. Mr. Savino indicated that Baytown has some unique opportunities to capitalize on including, Baytown's access to I -10 for a wider market; capturing a greater share of higher -priced housing; translating Baytown market growth into new retail; reusing the San Jacinto Mall space for activity generators; and the Lee College community. Mr. Savino presented a list of some retailers to capture and stated that the following strategic recommendations for action are to strengthen existing businesses by assisting new independent businesses, establish a business retention and expansion team, develop promotional material, and organize a business development team. Mr. Spillette stated to be mindful that Wal -Mart and Target cover other retail basis and captures spending from independent retailers as well and Council Member Sheley stated that internet sales have a huge impact on sales also. Mr. Savino presented data from sources in regards to employees working in the Baytown area and stated that there was an estimated 33,242 for the year of 2010, according to Nielsen/Claritas source, for the year of 2009 according to the Census LEHD source there was 27,531 and in the same year for those with 77520 and 77521 zip codes there was 27,861. Additionally, he stated that according to Nielsen/Claritas in 2010, the number of residents who were employed in Baytown was estimated at 31,593 and these numbers did not reflect employees from the refineries. Mr. Savino stated that he pulled information from the Census before the meeting, and approximately 7,500 of the people who work in Baytown live in Baytown, 24,662 people that live in Baytown work outside of Baytown, and 19,978 that live outside of Baytown work in Baytown. He also indicated that according to the 2009 Census numbers, of the number of workers that work in Baytown approximately 27% live in Baytown, 13% live in Houston and the percentages are less than 5% from other locations. Mr. Simon continued with the discussion of retail recruitment and stated that in reference to the retail /restaurant strategy recommendations included, completing the commercial market analysis which was completed in 2008 by CDS Market Research, obtaining ICSC memberships for the EDF and Council Members and have them to attend the ICSC conferences, have active recruitment, target areas such as the Alexander and 146 corridor, Downtown area, Decker Dr, Market St., provide incentives for recruitment and retention efforts, downtown land assemblage, and provide an up -tier housing project. Mr. Simon presented trade area demographics information from Mr. George Cussion who is the owner of property on Garth Road just south of the Mall and stated that for 2010 the estimated average household income with a 1 to 5 miles radius is $66,000, $68,000, and $69,000. He also indicated that according to a report compiled by the Texas Comptrollers Office there is an estimated 40,000 jobs in the area of Baytown with the average earning per worker at $59,000, and this includes the three (3) primary zip codes but did not include the 77523 zip code. Additionally, Mr. Simon stated that according to the traffic counts, there were approximately 83,000 vehicles driven on I -10 per day and approximately 28,000 on Garth Road. He mentioned that this information needed to be updated as these counts was taken when there was a bottle neck at the Trinity River Bridge. Mr. Simon stated that the recruitment targets and best practices include affecting market awareness and education, allowing the EDF to be the point of contact for the City, relationship building to be done by EDF which focuses on the developers, brokers, land owners, and retailers and of those four groups the weakness is with the land owners. He also presented a list of incentives that was used for projects in the past such as Chapter 380 agreements, low interest loans, land bank in targeted areas, Tax Increment Reinvestment Zones (TIRZ), Infrastructure Improvements, fast track permitting, property tax rebates /abatements, and the Downtown Fagade Improvement Program. Council Member Sheley inquired as to what the role of Council would be in recruitment efforts. Mr. Simon stated that MDD, Council, and the City Manager would be relied on for incentives and being open minded to ideas and projects. Council Member Sheley inquired about how the teen survey helped in retail development. Mr. Simon stated that the EDF used the surveys as a work force development tool. 2. ADJOURN With therc bcliig no further hLISIness to discuss, Mayor Don(",arlos adjOUI-Ile d t September 08, 2011, it COU11CH .10111t Work Session at 6:25 P.M. I � I I I a 10 , I • I " ,