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2022 02 10 WS Minutes MINUTES OF THE REGULAR WORK SESSION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN February 10, 2022 The City Council of the City of Baytown, Texas met in a Regular Work Session on Thursday, February 10, 2022, at 5.30 P M , in the Hullum Conference Room at the Baytown City Hall, 2401 Market Street, Baytown, Texas with the following in attendance Laura Alvarado Council Member Chris Presley Mayor Pro Tern Charles Johnson Council Member Heather Betancourth Council Member Jacob Powell Council Member Mike Lester Council Member Brandon Capetillo Mayor Rick Davis City Manager Trevor Fanning Interim City Attorney Angela Jackson City Clerk Mayor Capetillo convened the February 10, 2022, City Council Regular Work Session with a quorum present at 5 30 P.M , all members were present. 1. DISCUSSIONS a. Receive and discuss possible development options from Lennar Development as it pertains to the potential acquisition of approximately 300 acres of land stretching from the east side of Garth Road to Hadden Road and north of Wallisville Road. Economic Development Manager Bret Gardella presented the item and noted to Council that two months prior, in December, Fnendswood Development Company had discussed about potentially acquiring the subject property of approximately 300 acres and doing an expansion project into their ETJ MUD The developer had met with several staff members, who have suggested perhaps annexing the property into the city limits of Baytown and forming a Public Improvement District ("PID"), and even potentially a PID with a TIRZ overlay However, the developer wanted to have a further discussion about the ability to keep the property in the ETJ and place it into the MUD Mr Gardella then introduced Mr. Michael Johnson, who provided a presentation on their proposed development option for the subject property. Mr Michael Johnson, Vice President of Land Development with Fnendswood Development Company, indicated that although they have met multiple times with staff, the presentation is being given tonight without their support for the ETJ MUD annexation However, the developers believe that the project that they are proposing at this time is a win-win for everyone in the sense City Council Work Session Minutes February 10,2022 Page 2 of 7 that they can build a better community through the existing ETJ MUD structure for the homeowners, and the City will gain more benefit through this structure than in the PID TIRZ combination Additionally, it would afford them the opportunity to work with the local school district and be more flexible on the structure of a potential new elementary school in the area of Baytown Mr Johnson provided a vicinity map and indicated that the lauded-out portion between Haney Road and Garth Road is the existing Harris County, MUD 213A boundary, and to the right, east of Garth is the expansion track that they are discussing, which is 378 total acres. The current plan consists of a thousand and fifteen home sites, subject to drainage impact analysis on the standard plan submittals through the city process and county process Mr Johnson addressed a list of concerns with proposed solutions for the alternative annexation into their existing ETJ MUD versus city annexation with a PID TIRZ combination for the financing of the project The concerns and solutions presented consisted of the following. 1) Concern: The use of TIRZ for green development instead of the redevelopment of blighted areas, Solution: Annexation into HC MUD 213-A - Established district with existing board of directors - Existing service agreements - Confirmed quality standards 2) Concern: Putting a physical cap on City growth to the north. Solution: 5' City annexation strip along N Main per state statute and MUD willingness to agree to limited purpose annexation(as already completed within existing MUD 213-A) 3) Concern: City providing services with no tax revenue Solution: Terms and conditions of existing development between MUD and City that will not exist in an in-city PID/TIRZ - 25%mark-up on City water and wastewater impact fees* - 25%mark-up on City retail water and wastewater rates** - No City maintenance obligation in HC MUD 213-A • Licensed engineer on hire by MUD to monitor maintenance of water, sewer, and drainage facilities within MUD boundaries • Minimum tax rate clause imbedded in Development Agreement for smooth annexation - City Sales tax benefit through limited purpose annexation - Hams County ESD No 3 participation from MUD residents ($0 10/100) for fire and emergency services *Estimated$1,300,000+base on 1,015 new homes and current base impact fee of$5,125 **Estimated$300 000+per year to City on retail utility rates based on$100 bill/home/month Mr Johnson then discussed some of the expanded projects list that the developer can offer with the HC MUD 213-A. • Regional Drainage and 8' Lit Pedestrian Trail from Pumphrey Elementary to Goose Creek Memorial High School, • 2,000' extension of N Main as 4-Lane Boulevard; and City Council Work Session Minutes February 10,2022 Page 3 of 7 • On-site elementary school with Goose Creek Consolidated ISD In conclusion, Mr Johnson noted that they are requesting for Council's consent or support to move forward with the annexation into Harris County MUD 213-A, and to amend the development agreement, strategic partnership agreement, and utility services agreement to add annexed property and maintain existing quality standards for land planning, landscaping, and architecture Mayor Capetillo opened the floor for questions and/or comments on behalf of Council Mayor Pro Tern Chris Presley commented on the capping of growth and the proposed annexation step, and expressed that he was not overly concerned with the additional annexation and growth as annexation is just not a high pnonty for him Also, in regards to the PID and TIRZ overlay, to his knowledge, there is not another city in the state of Texas that has done this TIRZ combination, so it did not seem like a best practice and he noted he hesitates to enter into a mechanism that is only not a best practice but seems to go against the spent of it With the markups on the utilities and the amenities, he noted it does not seem like they are losing much and with the annexation stnp as well Mr Gardella commented that this proposed development had been presented to the department heads of Public Works, Finance, Planning, and the City's PID consultant, Abdi Yassin, who had looked over this, and there are projects that are built into this that have dnven the cost up, which is why they were presented to them. It made it seem to be untenable to annex into the city and use the PID, and then they talked about a PID TIRZ combination He noted that regional drainage is nothing that they have required of anybody else to do and the other developers on the north side of the City are not asking for However, through the Public works department, he had been told that potentially there would be some issues with the Hams County Drainage service on the east side of the development, and they have drainage mostly to the bayou Additionally, the utility rate is as far as the increase we charge everybody who is out of the city, and the trail systems build connectivity Mr Gardella noted that what they have proposed is nothing that everybody else on the north side of the City is not already doing and they have to consider that it is not just about the 380 acres that they would be bnnging in and building on, as they build a nice product. However, when you get into all the ancillary areas around the city, the roadways the City would have already improved, and already started looking at some Garth and John Martin, for example, where they expanded the TIRZ, fix the roads to widen those roads That is the common area of improvement stuff that the city can do and would do. On this particular side, the internal city had already discussed that that Main Street does need to be widened Basically, they would have to do a Traffic Impact Analysis ("TIA") to figure out what kind of traffic that would be driving that area and that would dictate what would have to happen with those roads Director of Public Works and Engineenng Frank Simoneaux noted that the impact to the road work system had not been addressed, and it does not consist only of the roadway adjacent to their development, but the increased traffic volume of industrial vehicles which leads to an entire working system that would not be contnbuting into sales tax, or a property tax City Council Work Session Minutes February 10,2022 Page 4 of 7 Mr. Gardella indicated that the PID structure that they had been working on for the past two and a half years had been successful for other developers, which they have three in the City now, and have been able to do it within an in-city PID, no TIRZ combination If they were to add a TIRZ overlay, it would be for common area improvements He noted that they would not give up 100% of the increment, and they believe that if the road repair and this regional drainage were taken out of their pro forma, they would not need to be annexed into their ETJ MUD but annexed into the City, work a PID, and be competitive with themselves as well as the rest of the development. Council Member Heather Betancourth noted that she tends to favor PIDs over ETJ MUDs, not to say she could not be convinced otherwise, but that is what she leans towards She also had concerns about that many people being condensed and how that will affect the surrounding roadways Even though she liked the fact that Garth Road and potentially North Main would be expanded, Wallisville is already a great issue, and to her knowledge, Harris County had no plans to expand it or to alleviate the current situation, which could be very impactful to the citizens Also, she noted that by putting in a very compact neighborhood that close to Hadden Road, they are getting very close to Heavy Industrial zoning, as they are in close proximity to a major petrochemical plant that owns all the surrounding land and could potentially expand in the future Mr Johnson addressed some of the issues and noted that the proposed development is above and beyond what is typically required, and the other PIDs that have preceded, are not of this scale of a project He noted that it is common practice for cities to establish a minimum acreage of a project that would be qualified for the financial structure of this type as they see that in other junsdictions, and completely understand that the projects list must be expanded in order to warrant that However, they truly establish a win for the community with better quality Director of Planning and Development Services Martin Scribner addressed the annexation offer for a 5-foot strip that would come up through the property in order to allow for further annexation by the City He expressed concern by noting that was not best practice as that was not the most efficient way for our services to be provided if the City ends up going beyond that point Mayor Capetillo inquired on their proposed timeline to request approval or disapproval on the proposed development and Mr Johnson answered that they are trying to move as quickly as possible and have the agreements drafted and done in a four-week cycle City Manager Rick Davis commented that MUDs do not go away and PIDs do, and PIDs are based on an assessment while MUDS are based on a property annex The City has worked really hard to create a structure to make this work and has a consultant that is perhaps one of the foremost experts in this area, that shows that this is financially viable with the PID option, even without the TIRZ, to make this work There was a brief discussion in regards to the proposed elementary school, and Council Member Betancourth noted that one of her concerns is that Council makes decisions that then force the school district to have to make financial decisions, which in turn raises taxes on the entire community and makes the City's tax reductions useless. Mr Johnson indicated that financially, City Council Work Session Minutes February 10,2022 Page 5 of 7 they are better off without a school, however, it would add benefit to the entire region which is why they continuously partner with the school districts for that added benefit Mr Tim Green, an attorney with Fnendswood Development Company, noted that he has worked with PIDs and MUDs in the past, and they did the analysis with the City, which resulted in that doing the PID on its own was not financially viable The only way to make it financially viable was to do a PID with a TIRZ overlay where 90% of the city's ad valorem taxes could be contnbuted so, when they were doing the subsequent analysis, they believe the City would benefit more by having this property developed as a MUD in the ETJ He further noted that he does not think the option is whether they do an ETJ MUD or PID in the city, since if they do not do something like a 90% TIRZ over the PID, then this project is not going to happen It is not whether it is located in the city, or out of the city. The questions are whether it is going to be a Fnendswood development and an expansion of that project, or will it not be bought by Fnendswood and will sit fallow until somebody else buys it and builds a lower quality development on it Mr Gardella answered that the PID and TIRZ annexation conversation is only going on because of the regional drainage project, which had a pnce tag of six-plus million dollars, which is nothing we require or request anybody to do that dnves the cost up The MUD suggesting that they would go ahead and widen Garth Road, four lanes for a half-mile, or a mile, is again something that the City does not request anybody to do and that cost added to their pro forma is what is dnving the cost up Therefore, when looking at the companson, it is not correct to say the City needs the TIRZ in this area If Council decides to put the TIRZ up in that area, it would come at the recommendation that it would be for common area improvements such as for example, a collector road that may have to go through this development as part of the future transportation plan Additionally, he noted that some properties will not sit fallow for long as there have been several developers who have looked at them, and now that Fnendswood has been able to at least get into a due diligence period with the sellers of the property, it will allow other developers to realize that they can do the same In conclusion, Mr Johnson commented that there is no community in the Baytown area that is performing like this one and it is due to the quality that they have delivered to the market and it is quality that they would like to continue. He expressed appreciation for their consideration, agreed to disagree with staff, and understand how to benefit all parties involved and ultimately build a better community b. Receive a report from the Bring the Battleship to Baytown Committee Representative. Council Member Laura Alvarado, the City's primary representative on the Bring the Battleship to Baytown Committee, presented the item and reminded the Council on what had been discussed at their last retreat in regards to this matter She noted that one of the things that were discussed is what the city would be willing to contribute towards this project if at all, and so what they wanted to do was to ensure that the city would be one of top selected cities If the foundation says Baytown is one of the top three cities that they are going to look at to bring the battleship, then the City would contribute towards the City Council Work Session Minutes February 10,2022 Page 6 of 7 amount that it would cost to bnng in a fundraiser to cover the amount that they need for the drainage or whatever it is that they need In addition, they had stated that they would meet with Mr. Eshbach, who invited Mike Wilson Council Member Alvarado wanted to make sure that Council Member Lester had an opportunity to meet with them because he was new to the committee as the co-chair In summary, at the meeting, they were presented the same data that Council had received in the past in terms of visitation and what that would look like They saw true passions from the groups that they had been talking to for the battleship and Council Member Alvarado has talked to community members and everyone thinks it is great, but really, what are the numbers that they are going to need in order to do this? They are talking $30 to $32 million for the initial dredging to even put the ship there Council Members Alvarado and Lester asked about continued maintenance for the dredging and were told the foundation would take care of that In conclusion, Mr. Eshbach asked if the City would consider doing a bond as they are on a timetable to get the Battleship to its final destination and would like for the City to hold a bond election in May, and if passed, it would still take approximately twelve months to get the process started Council Member Alvarado informed them that they have worked hard to continue to decrease City taxes; however, they would discuss it with the rest of Council to request their input and feedback Council Member Lester provided his interpretation of the meeting with Mr Eshbach and Mr Wilson, and indicated that the information was the same that had been presented to Council in the past He noted that he was very clear in the discussion that Council had worked hard over the last several years to lower the tax rate, and if they went for a $20 or $30 million bond, that would double the rate back to the citizens and did not foresee that passing in the election. He informed them that bnnging the Battleship to Baytown was a beautiful concept, but the catch was the pnce tag associated with it. Council Member Johnson asked how many cities were in the running for bnnging the Battleship because he kept hearing top three, but he believes they are the only ones willing to entertain this idea Council Member Alvarado mentioned she had heard Beaumont was on the list because she read an article and Council Member Presley noted Galveston as well Council Member Johnson noted that by default the City of Baytown was in the top three as it was only three cities on the list. Council Member Alvarado noted that they are waiting on the official notice from the Committee that the City is in the top three selected cities before they decide whether to commit $50,000 towards the fundraiser for the dredging but they would have to do a study to see if it is feasible. Mayor Capetillo indicated that a letter had been sent to the Committee in mid-December to express their intents from the Council retreat and that they hope to pursue more conversation regarding this issue. To his understanding the foundation had not been scheduled. However, he noted that there are two sides to this, one being the feasibility of the fundraising campaign if it ever happens and two being the study that would tell the actual logistics of getting the ship to Baytown, which includes the dredging City Manager Davis indicated that as they have discussed this project for several years and they would be fortunate to have this arrival of a price tag of less than $50 million. He has spoken to all City Council Work Session Minutes February 10,2022 Page 7 of 7 of the Council Member individually and the consensus is that the Battleship is a national treasure that needs to be preserved by the nation through a national fundraising campaign However, if the City is a finalist for this request for the ship, then after the announcement they would do their due diligence and request an analysis to be performed to obtain actual numbers to see what it would cost to move it into place and accommodate it for the long term c. Discuss any or all of the agenda items on the City Council Regular Meeting Agenda for February 10, 2022, which is attached below There was no discussion for this item 2. ADJOURN With there being no further business to discuss, Mayor Brandon Capetillo adjourned the February 10, 2022, City Council Regular Work Session at 6 27 P M „gYTAty�� Angela J kson City Clerk u° J fa City of Baytown 1.' F f