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2021 04 01 MDD MinutesMINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS OF THE BAYTOWN MUNICIPAL DEVELOPMENT DISTRICT April 1, 2021 The Board of Directors of the Baytown Municipal Development District (MDD) met in a Regular Meeting on Thursday, April 1, 2021, at 4:32 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 (Teleconference) Suhey Rios -Alvarez Director Charles Johnson Director Heather Betancourth Director Jacob Powell Director Mike Lester Director David P. Jirrels Director Gary Englert Director (Teleconference) Rick Davis General Manager Karen Horner General Counsel Angela Jackson Acting Assistant Secretary President Brandon Capetillo convened the April 1, 2021, MDD Board Regular Meeting with a quorum present at 4:32 P.M., all members were present with the exception of Director Mary Hernandez who was absent and Vice -President Chris Presley, who arrived at 4:33 P.M. 1. MINUTES a. Consider approving the minutes of the Municipal Development District Regular Meeting held on March 4, 2021. A motion was made by Director Jacob Powell, and seconded by Director Charles Johnson to approve the meeting minutes of the Municipal Development District related to Items 1.a. The vote was as follows: Ayes: President Brandon Capetillo, Secretary Laura Alvarado, Director Suhey Rios - Alvarez, Director Charles Johnson, Director Heather Betancourth, Director Jacob Powell, Director Mike Lester, Director David P. Jirrels, Director Gary Englert Nays: None Other: Director Mary Hernandez (Absent) and Vice -President Chris Presley (Not Present for Vote) MDD Board Regular Meeting Minutes April 1, 2021 Page 2 of 6 Approved 2. PROPOSED RESOLUTIONS a. Consider a resolution authorizing the General Manager to pursue the possible restructuring of the MDD's bond issuance for the purpose of financing the City Facilities, including the Convention Center and related infrastructure, and to make a report of his findings. General Manager Rick Davis presented the item and stated that Mr. David Dawson and Mr. Chris Janning, who were connected via Zoom, would be participating in the presentation as well. Mr. Davis stated that as they began the construction of the financing structure for the Bayland Island Hotel and Convention Center, they did so in an environment where certificates of obligation ("Cos") represented a less expensive and more conventional way to finance the convention center portion of the project. In the current environment, however, the cost differential between certificates of obligation and sales tax revenue bonds has become non -negligible. There are other advantages to consider as they recommend that the City migrate away from certificates of obligation in favor of sales tax revenue bonds to fund our portion of the project. First, it has been their intent to utilize sales tax revenue to support the debt service of the facility and the migration to sales tax revenue bonds will allow it to become a reality. Second, the migration from certificates of obligation to sales tax revenue bonds follows a more conventional methodology that facilitates both the rating and the placement of our bonds. Mr. Davis stated that Mr. Chris Janning with Hilltop would speak on the specific structure and financial aspects of the proposal and Mr. David Dawson with Winstead would speak on the legal elements of this change and how the Attorney General views this initiative. (Via Zoom) Mr. Chris Janning with Hilltop Securities introduced himself as the Financial Advisor for the transaction and went on to discuss the market updates in regards to the hotel project revenue bonds. Mr. Janning goes on to state when the project started they noted there was a difference between Sales Tax Revenue Bonds that the MDD issues versus certificates of obligation with a backstop of the city taxes. The reason the project chose MDD Bonds versus the certificates of obligation was to save the City of Baytown around one percent or more in credit charges annually as there were big interest rate savings. The credit spreads have gone down sharply with the decrease in interest rates through the winter and at the beginning of the year there has been a slight rise the interest rates but they are still at historical lows causing the credit spreads to stay very narrow. Mr. Janning stated that what this means is that if the City chooses to use the MDD as the project sponsor, the cost of doing so is less than one -quarter of one percent versus using the Cos, so that is why they say the cost for the COs has come down significantly. Secondly, as Mr. Davis mentioned in his opening remarks, moving to COs makes the project look more traditional to a municipal hotel and convention center project, even in working with the rating agencies, as it will make the project more marketable to potential investors. Mr. Janning then stated the advantages of the City going with the sales tax revenue bonds to fund the hotel convention project. President Brandon Capetillo stated that he would like to make sure everybody on the MDD committee understands the dynamics of the different financial models, and then introduced Mr. David Dawson to add any legal aspects to the discussion. MDD Board Regular Meeting Minutes April 1, 2021 Page 3 of 6 (Via Zoom) Mr. David Dawson stated that the one thing he would like to make sure of on behalf of the MDD and the City is that the Office of the Attorney General Public Finance Division is comfortable with the MDD issuing additional Sales Tax Bonds to finance the construction of the city facilities such as the convention center and the other infrastructure. They called the Attorney General Public Finance Division earlier this week to make sure they were comfortable with this enhanced structure and they were fine with it. Mr. Dawson proceeded to explain the process that the City will need to take in the construction of the hotel convention center in order to meet the ownership requirement that is required under the tax law. Of course, since the City is not intending to operate it, they will then immediately turn around in providing an operating lease of the Convention Center back to the MDD for operation purposes and the Attorney General is fine with that. President Brandon Capetillo asked the directors if they had any issues or concerns and the committee had none. He stated that it sounded that from a legal standpoint, it is cleaner to go with the sales tax revenue bonds, so it makes the whole project a little bit easier to manage from a financial standpoint. General Manager Rick Davis had a couple of concluding remarks and stated that the resolution before thetas, if they concur, authorizes him to pursue the possible restructuring of the MDD's proposed bond issuance to include the financing of the city facilities and related infrastructure and to prepare a report on the possible migration away from Certificates of Obligation in favor of Sales Tax Revenue Bonds. This report will take the form of two separate initiatives actually, one for the City Council and one MDD. Staff had tentatively slated a rescinding of the notice of intent associated with the COs for the April 8"' Council meeting. The council will need to make that detennination and a separate initiative to issue the Sale Tax Revenue Bonds will then be brought to MDD. A motion was made by Secretary Laura Alvarado, and seconded by Director Jacob Powell to approve Resolution No. 412, related to Item 2.a. The vote was as follows: Ayes: President Brandon Capetillo, Vice -President Chris Presley, Secretary Laura Alvarado, Director Suhey Rios -Alvarez, Director Charles Johnson, Director Mary Hernandez, Director Heather Betancourth, Director Jacob Powell, Director Mike Lester, Director David P. Jirrels, Director Gary Englert Nays: None Other: Director Mary Hernandez was absent Approved MDD Board Regular Meeting Minutes April 1, 2021 Page 4 of 6 RESOLUTION NO. 412 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN MUNICIPAL DEVELOPMENT DISTRICT AUTHORIZING THE GENERAL MANAGER TO PURSUE THE POSSIBLE RESTRUCTURING OF THE DISTRICT'S PROPOSED BOND INSURANCE TO INCLUDE AN ADDITIONAL TWENTY MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($20,500,000.00) FOR THE PURPOSE OF FINANCING THE CITY FACILITIES; DIRECTING THE GENERAL MANAGER TO MAKE A REPORT OF HIS FINDINGS; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. b. Consider a resolution approving the guidelines for the Baytown Revolving Loan Fund. Economic Development Manager Bret Gardella presented the item in regards to the approval of the two programs that they presented to the Board about sixty days ago, which were the Business Improvement Grant and the Revolving Loan Fund. They did alter the programs based on the comments that were provided by the MDD members, including increasing the amount of the Business Improvement Grant from $10,000 to $20,000, allowing some inside structural and code - related items to be taken care of as well, as opposed to just everything on the external part. In regards to the revolving loan side, their goal right now is only to roll out the microloan program to help businesses get started or help some of those that are already in operation to be able to have some financing to take care of additional needs, buy additional product, etc., and help their business to move forward. There were two minor changes to each program and staff certainly recommends approval. President Brandon Capetillo asked for clarification on the funding of item 2.b., and Assistant City Manager Nick Woolery stated that the total amount for both programs is $150,000, as $50,000 is for the Business Improvement Grant, and $100,000 for the Revolving Loan Fund. The comments received at the last meeting were to switch the amounts for each program. If that is still their intention, staff wanted to put those guidelines in place and they can bring back a budget amendment at the next meeting. They are proceeding forward with the intention that $100,000 would be used for the Business Improvement Grant. Mr. Woolery stated that they are working on the budget for next fiscal year, and depending on whether there is a lot of interest in the program, the amount for the program may be increased going forward. President Brandon Capetillo goes on to ask if the application process has begun internally, to which Economic Development Manager Bret Gardella stated he has conversated with several business owners who are interested in both programs, but nothing has been started as the program has not officially begun. A motion was made by Vice -President Chris Presley, and seconded by Director Charles Johnson to approve Resolution No. 413, related to Item 2.b. The vote was as follows: MDD Board Regular Meeting Minutes April 1, 2021 Page 5 of 6 Ayes: President Brandon Capetillo, Vice -President Chris Presley, Secretary Laura Alvarado, Director Suhey Rios -Alvarez, Director Charles Johnson, Director Heather Betancourth, Director Jacob Powell, Director Mike Lester, Director David P. Jirrels, Director Gary Englert Nays: None Other: Director Mary Hernandez (Absent) Approved RESOLUTION NO. 413 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN MUNICIPAL DEVELOPMENT DISTRICT APPROVING THE GUIDELINES FOR THE REVOLVING LOAN PROGRAM; AUTHORIZING PAYMENT OF AN AMOUNT NOT TO EXCEED FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00); AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. Director Charles Johnson inquired on the outreach efforts to inform business owners of the program and Economic Development Manager Bret Gardella stated that a lot of it would occur through street marketing and reaching out to business owners. Director Johnson goes on to ask if it is possible to promote it on the City of Baytown website and Mr. Gardella stated they are currently working on creating a page specifically for economic development. Director Johnson asked if social media would be used and Mr. Gardella answered yes. Secretary Laura Alvarado inquired on the current status of the Facade Improvement Program and Mr. Woolery confinned that although that is a separate program, there is no funding remaining for the fagade program, and the Business Improvement Grant is basically doing the exact same thing for the business owner so that is the tool they are promoting at this time. C. Consider a resolution approving the guidelines for the Business Improvement Grant Program. A motion was made by Director Charles Johnson, and seconded by Vice -President Chris Presley to approve Resolution No. 414, related to Item 2.c. The vote was as follows: Ayes: President Brandon Capetillo, Vice -President Chris Presley, Secretary Laura Alvarado, Director Suhey Rios -Alvarez, Director Charles Johnson, Director Heather Betancourth, Director Jacob Powell, Director Mike Lester, Director David P. Jirrels, Director Gary Englert Nays: None Other: Director Mary Hernandez (Absent) Approved RESOLUTION NO. 414 MDD Board Regular Meeting Minutes April 1, 2021 Page 6 of 6 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN MUNICIPAL DEVELOPMENT DISTRICT APPROVING THE GUIDELINES FOR THE BUSINESS IMPROVEMENT GRANT PROGRAM; AUTHORIZING PAYMENT OF AN AMOUNT NOT TO EXCEED ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00); AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. Vice -President Chris Presley commented that this is another strategy on behalf of the City as they continue to make significant investments in public infrastructure, not only in old Downtown, but now the Market Street Revitalization Market Street, they have a Bayway Plan, and hoping to do some things over on Alexander Drive. In his opinion, it seems like they are doing a lot as far as strategies go in the older areas in particular, and they just need to keep it ongoing and market it to the masses as well. However, Assistant City Manager Nick Woolery did state that they want to be able to focus their attention on certain areas, being the older areas of Baytown first, before they promote it to the other parts of the city. 3. MANAGER'S REPORT a. The next Baytown Municipal Development District meeting is scheduled for Thursday, May 6, 2021, at 4:30 p.m., in the Council Chamber located at City Hall, 2401 Market Street, Baytown, Texas, 77520. General Manager Rick Davis stated that the next MDD meeting date is scheduled for Thursday, May 6, 2021, however, they may need to call a special meeting but will reach out to them in advance if one is needed. 4. ADJOURN With there being no further business to discuss, President Capetillo adjourned the April 1, 2021, MDD Board Regular Meeting at 4:56 P.M. Angela J ckson, Acting Assistant Secretary �. City of Baytown a