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1985 07 31 CC Minutes, Special50731 -1 MINUTES OF THE SPECIAL MEETING OF THE CITY COUNCIL OF THE CITY OF BAYTOWN July 31, 1985 The City Council of the City of Baytown, Texas, met in special session on Wednesday, July 31, 1985, at 5:00 p.m. in the Council Chamber of the Baytown City Hall with the following attendance: Fred T. Philips Councilman Jimmy Johnson Councilman Perry M. Simmons Councilman Ron Embry Councilman Roy L. Fuller Councilman Gerald Dickens Councilman Emmett O. Hutto Mayor Fritz Lanham City Manager Larry Patterson Asst. City Manager Randy Strong City Attorney Eileen P. Hall City Clerk The meeting was called to order with�a quorum present, and the following business was conducted: Consider Proposed Ordinance, Authorizing an Agreement Between the City of Baytown and Arnold Development Company Councilman Philips stated that in order to allow discus- sion of the item to proceed, he would move to adopt the ordinance which would authorize an agreement between Arnold Development Company and the City of Baytown; Councilman Dickens seconded the motion. Councilman Fuller stated that at this point he was un- decided about the agreement, but basically he would be for anything that would revive Texas Avenue. However, he would like more information concerning the agreement. Council had been presented with copies of letters from Mayor Whitmire, along with several members of the Houston City Council, expressing their optimism concerning the pro- ject of Arnold Development Company in Houston, E1 Mercado del Sol. The City of Houston agreed in 1984 to provide a Community Development Block Grant loan to Arnold Development Company to help finance the E1 Mercado del Sol, a redevelop- ment project on Houston's east end. In late May, 1985, that redevelopment project opened. Councilman Dickens, in response to inquiry from Council- man Fuller, read a list of activities of Arnold Development Company as follows: 50731 -2 Minutes of the Special Meeting - July 31, 1985 1. E1 Mercado del Sol, $20,000,000 project opened May, 1985; 2. Multimillion dollar Courtyard Atrium, Austin, Texas, opened October, 1984; 3. Currently beginning site work for multimillion dollar Mobile, Alabama water front development in conjunction with L &N Railroad Division of the Chesse System; 4. Finishing negotiations currently with the City of Mobile, Alabama for specific plans to develop northern tier of town; 5. Multimillion dollar project with Marriott Corpor- ation and the City of Fort Bend, Indiana for restoration; 6. Multimillion dollar resort development project in Fort Lauderdale, Florida; 7. Countryside Development, a redevelopment of the Hempisfair property in San Antonio. He also emphasized that with regard to financing the project, the City of Baytown will incur no liability. There will not be any tax dollars spent on Texas Avenue. The money will be derived from federal grant money that is targeted in low income areas. Council has an option of what may be done with the money. It can be expended toward roads, streets and sewers which will not put people to work or enhance the economy, or the money can be expended toward economic development. The City of Galveston is currently using this program and is in the middle of a $1,000,000,000 building boom. Mayor Hutto recognized Dr. Pat Mahan, Chairman of the Downtown Action Committee, who expressed concern at the manner in which the agreement came about and the haste in which it had been presented to the general public. He felt that there was no reason to move that quickly. Also, he was very concerned at the manner in which the merchants and owners of property along Texas Avenue would be treated with regard to their property and whether they would be forced to sell the property. Mayor Hutto explained to those in attendance that in a business situation such as this, negotiations cannot be made openly. He had planned to meet with the Chamber of Commerce, the Downtown Action Committee and the Community Development Committee, but due to a leak concerning the negotiations with Arnold Development Company, it became necessary to make a public announcement to quell false rumors. 50731 -3 Minutes of the Special Meeting - July 31, 1985 He also emphasized that the developer had no reason to come to Baytown until an agreement had been signed. Repre- sentatives of the city approached Mr. Arnold concerning the feasibility of a project in Baytown. He did not come to representatives of the city. He stated further that no tax money is to be expended and this is an opportunity to do something constructive with Texas Avenue. Councilman Philips pointed to the fact that in a project of this scope, there is not always 100% agreement, but certainly this developer has the expertise necessary to perform this project and since the study is to be performed in three parts, the City of Baytown may stop at any stage. He mentioned that there are no guarantees, but he could guarantee that he would do his best to protect the interest of the people who own property along Texas Avenue. Councilman Fuller emphasized that he had a real problem with the manner in which the whole proposal was handled and the fact that the various groups had no input into the negotiations. Mayor Hutto reiterated that the negotiations had to be held in confidence and that when rumors developed it became necessary to move rather quickly. Councilman Embry expressed the feeling that the matter could be tabled for a week or ten days in order to give council the opportunity to make a more thorough review of the proposed agreement. Mayor Hutto inquired if there were persons present who would like to make brief nonrepetitous comments concerning the proposed agreement. Dale Calcarone, owner of property on Texas Avenue, stated that he had specifically asked if there were plans for Texas Avenue and had been told that there was nothing being planned during the time that these negotiations were in process. Councilman Dickens clarified that the negoti- ations did not begin until May and that Mr. Calcarone's last appearance before council was before that time. Elsa Blakely, owner of property along Texas Avenue, expressed concern that the property owners may lose their free choice and control of their property. Also, she took exception that council could adequately protect their interest when council did not know what that was. Rocky Rodriguez, owner of property along Texas Avenue, asked what was to become of the free enterprise system, and Mayor Hutto responded that to him this was an example of the free enterprise system and government working together. 50731 -4 Minutes of the Special Meeting - July 31, 1985 Councilman Dickens explained further that $180,000 will be allocated in installments of $60,000 each. The first $60,000 will go toward a market study to determine if any kind of development is economically feasible on Texas Avenue. If that study produces negative results, council will expend no further funds for Texas Avenue. If the city or the developer cancels after the first installment, no money is reimbursed the city; however, if the project reaches completion, the first $60,000 is reimbursed. He went on to emphasize that the main thrust of the agreement is to deal with a blighted area and encourage employment. If this project is successful, then other areas of the city can be considered. The intent is for everyone along Texas Avenue to participa- te, but the terms of participation will be settled between the owners and Mr. Arnold. The developer wants to perform a beginning to end study to determine what has caused the deterioration on Texas Avenue. when that is determined, council will then be able to decide if they wish to pursue the remaining money in the contract. Again, Councilman Dickens emphasized that the developer did not come to representatives of the City of Baytown asking for this project. Representatives of the city went to him to ask for his assistance. Rusty Slay, owner of property along Texas Avenue, stated that he has put a large sum of money into his business along Texas Avenue and he would hate to see the merchants in that area treated unfairly. He feels that one can make money on Texas Avenue, and the reason is that the property on Texas Avenue is not as expensive to own as property in or near the San Jacinto Mall. Councilman Dickens explained that a list of incentives is being prepared that will be made available to all the downtown merchants and owners of property which will consist from allowing free rent at some point to various other possibilities. The developer will have to deal with the individual owners /merchants. Mr. Slay ended his statements by saying that if this project comes to a realization and merchants have to relocate then it could be that it would be very difficult for them to be competitive in another area of the city. Allen Cannon, former Mayor of Baytown, inquired where will the funds for the project come from if the grant money is not granted. Councilman Dickens responded that if after the first phase of the study is completed, funding is not forthcoming from federal grant applications, the 1984 -85 revenue sharing budget would be amended to appropriate $60,000 for the initial payment to Arnold Development Company. Secondly, federal grants would be applied for through such programs as community development, economic development agency, urban development action grants. Should grants from those sources not be available in a timely manner, council would appropriate 50731 -5 Minutes of the Special Meeting - July 31, 1985 1985 -86 revenue sharing funds for the remainder of the contract requirements if revenue sharing is continued beyond the present year. If grants from those sources are not available, council would be faced with a decision as to whether to terminate the study or appropriate funds from other sources. Not one penny of the money will come from community development, but he clarified that what he was saying is that no money will come from community development funds already in hand or already allocated under the HUD program. However, Baytown as an entitlement city will have the ability to apply directly to HUD for additional funding and that would come in the form of an additional community development block grant. Mr. Cannon made the point that if the $60,000 is not obtained through grants, then something could be displaced down the line. Also, the $180,000 will represent about 3/4 of a cent on the tax roll. Councilman Dickens, in response to inquiry from Mr. Cannon, stated that the developer would pay the money back to the city immediately upon receipt of his take out fi- nancing from his private investor. Depending on the developer's negotiations with his private investor, but probably the time frame would be no more than 60 days after negotiation has begun. Mr. Dickens also clarified that the $180,000 is not "front end" money since the city is not allowed to lend its credit, but a payment for a study. The city is paying this man to come in to perform a complete study - architectual, engineering and market study to determine if anything is feasible in the Texas Avenue area. If the developer deter- mines that something can be done with Texas Avenue, he will turn the report over to the city, say he liked what he saw, pay the city $180,000 and begin construction. At that point, the developer would take on the entire responsibility for the project. However, he definitely would at that point be obligated to pay the city the $180,000. Mayor Hutto clarified at this point in response to Mr. Cannon that at no time did the entire council meet in one place with the developer. The council met with the developer in groups of two or three to discuss the various aspects of a study on Texas Avenue. In response to inquiry concerning the city's power of condemnation, Councilman Dickens stated that the city has the right at the present time to acquire property on Texas Avenue through condemnation for park purposes or parking lots. Council could elect to put a park in the middle of a shopping area. Mr. Cannon ended his comments by stating that he felt that the Downtown Action Committee officers and Chamber officers could have been trusted to be involved in the negotiations. 611119jerl Minutes of the Special Meeting - July 31, 1985 Jean Shepherd, resident of Baytown, stated that some of her questions had been answered when Mr. Dickens assured everyone that no community development funds will be used in this project. Councilman Dickens clarified that the money managed by the community development committee would not be utilized which includes the upcoming allocation of $801,000, nor the money that will be allocated to the program after that. None of the monies used for community development projects in the city will be utilized. Only money received through a second grant will be utilized for Texas Avenue. Ms. Shepherd expressed concern with the cost of the study. She stated that she had spent many many months researching Texas Avenue and what could be done for Texas Avenue about five years ago. At that time, the most economically feasible thing to do was industrial development bonds. At that time, the city did not have that option. She emphasized that she would like to see Texas Avenue developed, but she is questioning the costs of the research that will be done and inquired if the city should take bids. The city attorney explained that on professional service contracts, the city was not required to take bids. Another area that Ms. Shepherd expressed concern with was jobs for local people in that no local developer was contacted. Councilman Dickens responded that there is no local developer who specializes in urban redevelopment. This man has a proven track record in this area. Councilman Philips stated that he was satisfied that this is a prudent expenditure. The city has been involved in talking with other cities about a city plan and those plans are in the $200,000 league. Ms. Shepherd stated that she would hope that council had considered every angle and had called some of the main street projects and might have even looked at Lake Charles. Councilman Dickens stated that he, Councilman Johnson * ** and Councilman Philips had attended a conference in Boston on this concept and had gone through the Nathaniel Hall Waterfront, and those guidelines have been followed to the letter. Councilman Philips also attended another conference in Pittsburgh, while Councilman Embry, Mayor Hutto and Councilman Philips went through the same type program in Galveston. This is not something that council has taken lightly. * ** For correction See Page 50813 -1 N 50731 -7 Minutes of the Special Meeting - July 31, 1985 Bitsy Davis, resident of Baytown, stated that he could see both sides of the issue, but he had been working for many years to get a comprehensive plan for the city and had at one time approached council with the concept of covering Texas Avenue with a plastic sky light, close it to vehicular traffic and provide air conditioning with parking on two side streets. More recently, he had worked with the down- town action group to the point that every building in the downtown area has been measured and drawn. That work will be turned over to Arnold Development or whoever needs it at no cost. He ended his comments by stating that he had determined that council will have to make something happen on Texas Avenue, and he feels that it is council's respon- sibility to make something happen there. He felt this is a good step forward and there is great potential to the property owners on Texas Avenue. Councilman Philips commented that he felt that Arnold Development may be the catalyst needed to bring the Texas avenue project to a realization. Mayor Hutto apologized to those that council did not have the opportunity to include in the negotiations, but as prudent business people he was certain that they realized that to involve 10 -15 people in such negotiations would be impossible to keep the negotiations confidential. The intent was to include the Downtown Action Committee, the Community Development Committee and the Chamber of Commerce, but there was no opportunity to do that because the negotia- tions were not kept confidential. He reiterated that the council went to the developer, the developer did not approach council. R. W. Matherne, owner of property in the Texas Avenue area, stated that his family has been doing business in the proximity of Texas Avenue since 1931 and had continued in recent years to make an investment in that area. As a businessman and a life long Baytonian, he is interested in seeing this area revitilized; however, he expressed concern with the haste in which the matter has been conducted and the apparent lack of knowledge on the part of some members of council. He too felt that to postpone action a week to ten days should not create a problem, and that even though Mr. Arnold may be well qualified, he was certain that there are others who are just as qualified. Therefore, he won- dered why there was no consideration given to a second party. He felt that in order for anything to work, it will take a unified effort which is not evident. Councilman Simmons pointed out that in the years of decline on Texas Avenue no resources have been brought forward, nor a plan for revitalization. The council is try- ing to do something that will have a chance at success. Council is sincere in this. No one on council has a finan- cial gain, and to support this could mean risking one's political future. 50731 -8 Minutes of the Regular Meeting - July 31, 1985 Mr. Matherne pointed out that the success of the venture depends on more than the competence of the developer. It depends on public confidence. At this moment whether there is any real cause for concern, the concern is there. If this matter were deliberated a little more and if the public understood more, the project would have a better chance. Councilman Simmons stated that most of the criticism he had heard was the council's attempt to fund the study. The project is a long way from beginning construction, because it may be determined that the project is not worth attempting. Most of the conversation that he has had with people of the city is that if a $20,000,000 bond issue for the development of the Texas Avenue area was offered for vote, it would fail miserably. All council is trying to accomplish is to study the area and try to encourage this private investor to go in there and do something constructive. The City of Baytown is responsible to furnish fire and police protection to this area with little tax revenue from the area. If that fallow field could be turned into a productive area, this would be beneficial to all Baytown citizens. Mr. Matherne responded that he agreed with everything that Councilman Simmons had said, but he still failed to see that only one company in this area could perform this work. Councilman Philips responded that this is not a unique circumstance because council has sought out professional services in other areas and in each case only those persons who are experts in that given area are selected. This is no different, Mr. Arnold is an expert at urban rehabilitation. He has a proven record in this area of outstanding ability, and in selecting Mr. Arnold, council has not performed any differently than in the selection of other professionals. Mayor Hutto stated that council has been honest, upright and truthful in all its dealings and encourage the citizens of Baytown and property owners along Texas Avenue to at least give the idea a try. From what the developer has outlined to council, the property owners will have several options if the project comes to realization. With council's permission, Mayor Hutto requested that the motion be amended to include the following: 1. To amend the 1984 -85 revenue sharing budget to appropriate $60,000 for the initial payment to Arnold Development Company; 2. To seek federal grants through such programs as community development, economic development agency, and urban development action grants; 3. Should grants from the above mentioned sources not be available in a timely manner, council could appropriate 1985 -86 revenue sharing funds for the remainder of the contract requirements if revenue sharing is continued beyond the present year; 50731 -9 Minutes of the Special Meeting - July 31, 1985 4. Should grants from the above mentioned sources not be available and should revenue sharing not be continued beyond the present fiscal year, council would be faced with the decision of whether to terminate the study or appropriate funds from other sources to complete the study. Councilman Philips indicated his desire to amend the motion and Councilman Dickens seconded the amended motion. The vote follows: Ayes: Council members Philips, Johnson, Simmons and Dickens Mayor Hutto Nays: Council Embry Abstained: Council Fuller abstained due to conflict of interest, but stated that he is 100% in favor of the success of the venture. ORDINANCE NO. 4212 AN ORDINANCE AUTHORIZING AND DIRECTING THE MAYOR TO EXECUTE AND THE CITY CLERK TO ATTEST TO AN AGREEMENT WITH THE ARNOLD DEVELOPMENT COMPANY FOR THE PREPARATION OF A MARKET ANALYSIS AND DEVELOPMENT STUDY; AUTHORIZING PAYMENT BY THE CITY OF SIXTY THOUSAND AND N01100 ($60,000.00) DOLLARS; AND PROVIDING FOR THE EFFECTIVE DATE HEREOF. Consider Proposed Ordinance, Authorizing Change Order No. 1 to Contract with Williams Brothers on Tenth Street Park /Detention Pond Excavation Norman Dykes, City Enginer /Director of Public Works, reported that the next step on the project is to construct an earthern berm on the southeast side of the detention pond. Part of the design of the pond is such that if it should ever fill up, it would overflow back to Tenth Street. The berm would prevent the water from overflowing. This was not included in the original contract which was just for the excavation. Also, it is necessary to have the top soil spread. Williams Brothers has agreed to perform both these tasks for the sum of $32,500. This is a good price. He is able to do this because the equipment is on site at this time. According to the engineer's estimates, the original contract was for 140,000 cubic yards of excavation, but it appears that only 130,000 cubic yards will be ex- cavated which results in an underrun of about $8,500. The change order would result in a net increase in the contract of $24,000 bringing the contract from $119,000 to $143,000. This would complete all the dirt work on this project. The city engineer recommended approval of the change order. Councilman Johnson moved to adopt the ordinance; Councilman Embry seconded the motion. The vote follows: 50731 -10 Minutes of the Regular Meeting - July 31, 1985 Ayes: Council members Philips, Johnson, Simmons, Embry, Fuller and Dickens Mayor Hutto Nays: None ORDINANCE NO. 4213 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAYTOWN AUTHOR- IZING CHANGE ORDER NO. 1 TO THE CONTRACT WITH WILLIAMS BROTHERS CONSTRUCTION, INC. FOR THE STORM WATER DETENTION PONDS. Consider Selection of Architects for Fire Department Buildings In connection with land for fire stations, the city has owned the property on Garth Road for several years. An earnest money contract has been signed for the property on Tenth Street. No earnest money contract has been signed on the third parcel, but the administration is certain that an agreement can be reached. Councilman Philips moved that the Garth Road Station be awarded to Lammers, the Fayle Street Station to Davis and the fire administration /maintenance building to Burge. All three of these projects will be in about the same league cost wise. Councilman Dickens seconded the motion. The vote follows: Ayes: Council members Philips, Johnson, Simmons, Embry, Fuller and Dickens Mayor Hutto Nays: None Presentation of 1985 -86 Budget Mr. Lanham informed council that the proposed 1985 -86 Budget had been left at each council place. The adminis- tration would like to have recommended a budget that did not include a proposed tax increase; however, that was not possible. A $ .04 tax increase is being recommended and a $1.00 increase in garbage charge. The summary page in- dicates the total increase of all funds is $1,275,000 which is 3.97% increase. Of that amount, $640,000 must be paid to the Interest and Sinking Fund, to finance the $6,500,000 in bonds that were sold. Mr. Lanham asked council to con- sider the debt that must be paid back while considering the budget. This was one of the factors that dictated the necessity to recommend the tax increase. Council scheduled budget work session for Tuesday, August 13 and Wednesday, August 14 at 7:00 a.m. Adjourn There being no further business to be transacted, the meeting was adjourned. Eileen P. Hall, City Clerk