1996 12 20 CC Minutes, SpecialId
MINUTES OF THE SPECIAL SESSION
OF THE CITY COUNCIL OF THE CITY OF BAYTOWN
December 20, 1996
The City Council of the City of Baytown, Texas, met in special session on
December 20, 1996, at 12:00 noon, in the Council Chamber of the Baytown City
Hall, with the following in attendance:
Manuel Escontrias
E. Frank Hinds, Jr.
Stephen DonCarlos
Rolland J. Pruett
Pete C. Alfaro
Bobby Rountree
Ignacio Ramirez
Myrna Bernier
Absent: Eva Benavides
David Byford
Council Member
Council Member
Council Member
Council Member
Mayor
City Manager
City Attorney
Deputy City Clerk
Council Member
Council Member
The meeting was opened with a quorum present, and Council Member
DonCarlos offered the invocation, after which the following business was
conducted:
Hold a Public Hearing on the Proposed Designation of Approximately 698
Acres of Land Located in the Southeast Portion of the City on Tri City
Beach Road as "Reinvestment Zone No. One, City of Baytown"
Mayor Alfaro called to order the public hearing on the proposed
designation of approximately 698 acres of land located in the southeast portion
of the city on Tri City Beach Road as "Reinvestment Zone No. One, City of
Baytown" at 12:00 noon. He asked those present desiring to speak to register
on the list provided in the lobby as that would provide the speaking order for the
hearing. No one registered to speak. The City Manager said that Joe Fogerty,
President of Arete Real Estate and Development, Inc., and Brad Dill, President
of BD Realty Advisors, L.L.C., were leading an investment group that intends to
purchase and develop approximately 698 acres of land into a residential,
planned community along Cedar Bayou. This property is located in the
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Minutes of the Special Session - December 20,1996
southeast portion of the community bounded on the east by Cedar Bayou, on the
north by the HUP channel, on the west by the Bay Oaks Harbor. The
developers plan to feature water oriented amenities including boat ramps, full
marina slips, club house, recreational areas, swimming pools, tennis courts, and
jogging paths. They are considering a school site, a private gate canal, a
waterfront lot section, and an elderly assisted living center.
The developers have requested that a TIF or reinvestment zone be
created. The TIF can be created within the boundaries of the city by a vote of
City Council. Other taxing entities which include the school district, the college,
and the county, may choose to participate, but they are not required to do so.
The TIF raises tax dollars through the incremental increase in taxable value of
the property. The reinvestment zone statute allows each taxing entity to
determine what percent increase in the tax revenue would be placed in the TIF if
any. Two thirds of the designated tax revenue would go to fund the
improvements needed to create and support the increased value and is
applicable to most improvements necessary to provide adequate services within
the TIF area. Examples are water, sewage, drainage, roads, bridges, parks and
recreational facilities, and schools. The remaining one third would be dedicated
to provide, upgrade, and support low- income housing within the boundaries of
the city. This one -third portion of the tax revenue is controlled by the city. Any
bonds that are issued by the city to fund the TIF improvements are backed only
by the incremental increases in tax revenue and are not general obligation bonds
of the city or any other taxing entity.
Procedurally, the TIF is created by a vote of City Council. The city and
the developer determine the development and reimbursement agreement or the
financing plan. The Board of Directors is appointed by the city with
representatives from all taxing entities. The board is then empowered to
administer all matters of the TIF including the request of the city to issue bonds.
The ordinance on the agenda creates the reinvestment zone but does not
obligate the city to continue its designation. It establishes a termination date of
July 1, 1997, if a financing plan and a development plan are not approved by the
City Council. Prior to this date, the administration will perform its due diligence to
determine if a development financed in this manner would be beneficial to the
City of Baytown. The staff will develop a service plan, determine the service
levels necessary, the cost, and the potential revenues, as well as meet with the
city's financial advisors to learn more about TIF financing and its potential effect
on the city's bond rating if any. Plans are to visit with other cities where TIF's
have been established. There are eleven other cities in Texas that have created
TIFs. If the project appears to be beneficial to the City of Baytown, the staff will
negotiate with the developer and come back to Council with the financing plan.
Council is not obligated until action is taken on a permanent financing plan. This
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Minutes of the Special Session - December 20,1996
is an opportunity for the staff to learn more about this type of financing structure
in order to make a recommendation to Council.
In response to inquiry from council, the City Manager stated that the one -
third, two- thirds split is by statute and the money spent on low- income housing
can be spent in HUD designated areas anywhere in the city. The value of the
property is frozen at the 1996 valuation of $2.3 Million. If the value of the
property next year is $6 Million, the city will get the value of $2.3 Million. Also,
the city will get one -third of TIF taxable revenues for low- income housing
projects. If the value of the property increases, the city can negotiate for
payment on the increased value.
Council Member Pruett expressed his concern of how granting TIF status
to this development would impact growth in other areas of the city and
questioned the payment of improvements in the TIF by having the taxes paid
flow back to the TIF. He also questioned the term of the bonds.
Joe Fogerty responded that once the improvements are paid for, all tax
revenues revert to the city. Upon completion of the project, the developers
expect to create a $300 Million new tax base which, once the bonds are paid,
becomes part of the tax base of the city.
Mr. Fogerty added that the final financing has not been done. In this
case, if the financing plan includes only the improvements within the TIF, then
those could be paid off in less than fifteen years. The financing plan can include
improvements outside the area of the TIP if those improvements are necessary
to support the TIF. The City will have an opportunity to use some of the funds
outside the TIF to improve sewer capacity, sewer lines, or other things that are
necessary to support this infrastructure. Mr. Fogerty emphasized the importance
of negotiation with the other taxing authorities; it will not be only city taxes
involved. In fact, if it were only the City's taxes, those would probably not
support the project. This means that the City gets the benefit of taxes that are
normally paid to other taxing entities. Lee College and the school district must
make the same kind of decision as City Council. The Council will decide the
city's requirements for the financing plan, and the school board will have that
same opportunity. Their representatives will negotiate what their needs and
goals are.
The City Manager explained that Lee College, the school district, and the
county have waived the sixty -day notification requirement in order to hold the
public hearing. The City has given them written information to let them know that
they do not have to participate even if the City decides to do so. They also
understand that the city's only interest at this point is time to study this concept a
little further to see if it is possible. A lot of the questions being asked are
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Minutes of the Special Session - December 20, 11996
questions the staff has too. This entire process is new to the staff; therefore,
more time is needed for evaluation.
Mr. Fogerty indicated that the developers would like to meet with the city
staff as soon as possible in order to answer those questions. The City Manager
noted that the administration will meet with Mr. Fogerty and his staff immediately
after the council meeting.
Council Member Pruett inquired why this piece of property was chosen.
He had understood that a TIF was for depressed property, and this is a choice
piece of property.
Joe Fogerty responded that this piece of property has been there since
God made it, and an opportunity to develop it would have existed at any time. In
the past when developers wanted to develop property, many times, a water
district was created. The water district could then reimburse the developers for
some of their expenses. That is where development has occurred, outside the
city, causing property inside the city such as this parcel to go undeveloped. The
creation of a TIF provides an opportunity to develop property that otherwise
would go undeveloped. The risk and economics are such that without the TIF
the developers would not develop the property.
The City Manager stated that it was his understanding originally, that TIFs
were for blighted areas that may have a mix of commercial and residential, but
the statute does allow for the creation of a TIF in the manner being discussed.
Since no one had registered to speak, the Mayor closed the public
hearing.
Consider Proposed Ordinance No. 961220 -1 Designates and Establishes
"Reinvestment Zone No. One, City of Baytown" and Provides for other
Necessary Provisions in Accordance with the Tax Increment Financing Act
This ordinance designates the area comprising approximately 698 acres
of land located in the southeast portion of the city on Tri City Beach Road as
"Reinvestment Zone No. One, City of Baytown," establishes a board of directors,
sets commencement and termination dates for the zone and establishes a tax
increment fund. The current taxable value in the zone is approximately $2
Million. The development proposed within the zone includes 1,800 residential
lots with a projected average value of land and improvements of $167,000 per lot
resulting in a projected net increase in taxable value of $298 Million. All of the
prerequisites of designating the zone have been satisfied, As such, should
Council determine that (i) the development would not occur solely through
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Minutes of the Special Session - December 20,1996
private investment in the foreseeable future, and (ii) the improvements in the
zone will significantly enhance the value of all taxable real property within the
zone and will be of general benefit to the City Council may designate the zone
as a reinvestment zone pursuant to the Tax Increment Financing Act.
Creation of Reinvestment Zone No. One does not obligate the City to
continue its designation. The attached ordinance establishes a termination date
of July 1, 1997. Prior to this date, the administration will perform its due
diligence to determine if a development financed in this manner will be beneficial
to the City. The staff will (i) develop a service plan for the area( as we do with
new annexations) to determine the service level necessary, costs, and potential
revenues, (ii) meet with our financial advisor to learn more about TIF financing
and its potential effect on the City's bond rating, if any, (iii) visit with other Texas
cities (there are eleven) who have created TIFs to discuss their experiences, and
(iv) if the project appears to be beneficial to the City, negotiate the details of the
TIF with the developer.
The City Manager asked the City Attorney to explain some changes made
to the ordinance in order to more closely follow the statute. The City Attorney
said that there were some changes to allow for staggering of the terms. The odd
number of positions shall be for two terms and the even numbers will be for one
term. After that all positions will be for two terms. The other change is in Section
5 under 5(i).
In response to inquiry from Council, the City Manager said that there must
be one board member from each entity and the statute determines who is to be
appointed to that board. They do not have to be residents of the TIF. The City
Manager said that the Council would be asked to approve a financing plan
before appointing any board members. The financing plan would use TIF funds
and not require any commitment of city money.
Council Member DonCarlos moved to adopt the ordinance. Council
Member Hinds seconded the motion. The vote follows:
Ayes: Council Members Escontrias,
Hinds, and DonCarlos
Mayor Alfaro
Nays: Council Member Pruett
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Minutes of the Special Session - December 20, 1996
ORDINANCE NO. 7868
AN ORDINANCE ESTABLISHING AND DESIGNATING
REINVESTMENT ZONE NO. ONE, CITY OF BAYTOWN
PURSUANT TO THE TAX INCREMENT FINANCING ACT;
MAKING VARIOUS FINDINGS AND PROVISIONS RELATED
THERETO; AND PROVIDING FOR THE EFFECTIVE DATE
THEREOF.
Consider Proposed Ordinance No. 961220 -2 Authorizing Agreement with
Southern Pacific Transportation Company to Upgrade the Crossing on
Airhart Drive
The ordinance authorizes an agreement to upgrade the crossing on
Airhart Drive in the amount of $12,620. The railroad will install all paving
materials for the upgrade where the proposed sidewalk crosses the tracks. The
City will pay the railroad $12,620 for the work. The sidewalk will cross a track
located just south of Oakwood Street.
ORDINANCE NO. 7869
AN ORDINANCE AUTHORIZING AND DIRECTING THE CITY
MANAGER TO EXECUTE AND THE CITY CLERK TO ATTEST
TO AN AGREEMENT WITH SOUTHERN PACIFIC
TRANSPORTATION COMPANY TO UPGRADE THE CROSSING
ON AIRHART DRIVE; AUTHORIZING PAYMENT BY THE CITY
OF BAYTOWN, THE SUM OF TWELVE THOUSAND SIX
HUNDRED TWENTY AND NO1100 DOLLARS ($12,620.00);
MAKING OTHER PROVISIONS RELATED THERETO; AND
PROVIDING FOR THE EFFECTIVE DATE THEREOF.
Consider Proposed Ordinance No. 961220 -3 Authorizing Agreement with
Union Pacific Railroad Company to Upgrade the Crossing on Airhart Drive
Council will consider this item at a future date.
W
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Minutes of the Special Session - December 20,1996
J City Manager Report
Maggie Hinojosa, one of our police officers, has been recognized as
Officer of the Year by the Houston 100 Club. She is the third Baytown officer to
be so recognized.
Mayor Comments
The Police Association did an outstanding job December 19 at the
Christmas program for the Baytown Housing Authority. It was extremely well
attended.
Adjourn
As there was no further business to be transacted, the meeting was
adjourned.
ISEAL)
APPROVED BY:
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Eileen P. Hall, City Clerk
minutes112- 20 -96spc
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WrnWbernier, Deputy City Clerk