2019 10 17 MDD Minutes, SpecialMINUTES OF THE SPECIAL MEETING OF THE BOARD OF DIRECTORS
OF THE BAYTOWN MUNICIPAL DEVELOPMENT DISTRICT
October 17, 2019
The Board of Directors of the Baytown Municipal Development District (MDD) met in a Special
Meeting on Thursday, October 17, 2019, at 4:10 P.M., in the Council Chamber of the Baytown
City Hall, 2401 Market Street, Baytown, Texas with the following in attendance:
Brandon Capetillo
President
Chris Presley
Vice President
Laura Alvarado
Secretary
Suhey Rios -Alvarez
Director
Charles Johnson
Director
Heather Betancourth
Director
David Himsel
Director
David P. Jirrels
Director
Gary Englert
Director
Rick Davis General Manager
Ignacio Ramirez, Sr. General Counsel
Leticia Brysch Assistant Secretary
President Brandon Capetillo convened the October 17, 2019, MDD Board Special Meeting with
a quorum present at 4:10 P.M., all members were present with the exception of Directors Robert
C. Hoskins and Mary Hernandez who were absent.
1. DISCUSSION
a. Discuss the Baytown Hotel/Convention Center Budget.
Representative from Garfield Public/Private gave an overview of the updated hotel design to
include upgraded lobby, food service area, rooms and fixtures and noted that these upgrades are
due to the change in the brand associated with the hotel. These changes have increased the
budget by an estimated $5.259 million for a new total of an estimated $62 million.
Ms. Titiana Renzo, Citigroup, Inc., who is the bond underwriter for this project, stated that she
has been working with this team for over a year in order to structure the bonds, and as previously
noted, the costs of the project did increase; however, it is also important to note that the revenue
projections associated with this project also increased. Ms. Renzo noted that because of this, the
impact to the City and the District did not materially change since their last presentation. Ms.
Renzo stated that her focus for the presentation relates to the Hotel Bonds, which are structured
to be re -paid with hotel revenues and not with tax -payer dollars. She further noted that if their
projections are correct, the hotel will perform at a degree that will result in net -revenue. She
noted that the 2019 C-Bonds and Junior C-Bonds are designed to be paid with hotel revenues,
but they have a back -stop by the MDD. Ms. Renzo stated that the debt service for the bonds has
MDD Board Special Meeting Minutes
October 17, 2019
Page 2 of 3
only increased by $200,000 a year with a coverage of a minimum of $1.2 million, meaning that,
they have designed it to where the hotel revenues cover the costs of those bonds by 120%. MDD
still has the same protections, all of the same reserves, food, equipment and other items that are
necessary to maintain the hotel and to pay debt service. Ms. Renzo noted that the net impact to
the City was an estimated at $41 million and with the changes that net impact is about $42
million at the end of the 30 years. She summarized by saying that the increase in cost for this
project is really offset by the increase in revenues, so the structure remains very much the same;
they are excited about selling these bonds as they are going to be very well received in the
market.
Mr. Chris Jennings, representative from Hilltop Securities noted that he is an investment banker
that has been with the project in its last and current iteration and noted that his job is to show the
MDD where their risks are and if they are reasonable as they take on this debt. Mr. Jennings
noted that in his analysis of the MDD current and projected sales tax revenues, hotel revenues,
debt obligation and operational costs, and other phases that may be included; such as the
convention center and parking garage, that this project is feasible. He noted that the City has a
contribution of $350,000 per year in HOT Rinds and now that the State has committed to allow
for the City to use the state contributions associated with the HOT and sales tax revenue; this
change in the law only helps this project and change the projected MDD payments, so they have
more coverage. Further, Mr. Jennings noted that even with the stress test and worse case
scenarios, the risk to the MDD is reasonable.
President Brandon Capetillo thanked the representatives for the overview and opened the floor
for questions from the Board.
Ms. Renzo, in response to a question from Director Himsel regarding maintenance cost for the
hotel, particularly as it is on the coast, that the maintenance costs for the hotel are included in
their model and while it is not broken down in extreme details, it is included in the budget that
MDD was provided. She further noted that as a part of the net revenues, 40.0 maintenance
reserves have already been set aside to deal specifically with the hotel maintenance issues, which
is standard in the hotel industry and that of the interested brand.
Vice President Chris Presley stated that he was very satisfied with the financial advisor, the
stress test and the modeling that has been done for this project. He noted that the theme of this
project is that it is a higher end product, which results in higher rates and revenues; however,
studies and aspirations on rates do not always line-up with reality, so he is happy that possible
issues and hiccups have been accounted for and considered in their modeling.
Director Heather Betancourth stated that there was a move recently for the convention center to
be owned by the City and the hotel by MDD, who is going to be responsible for the marketing
and public relations of this project. EDF representative, Ron Bottoms stated that the marketing
and promotion of this project would be a combined effort between the brand and the City.
President Capetillo thanked everyone for their comments and noted that he is looking forward to
seeing this project come to Tuition.
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October 17, 2019
Page 3 of 3
2. ADJOURN
With there being no further business to discuss, President Brandon Capetillo adjourned the
October 17, 2019, MDD Board Special Meeting at 4:10 P.M.
Leticia Brysch, E
City of Baytown