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4B Sales Tax Corporation Minutes - 06/06/2018MINUTES OF THE WICHITA FALLS 4B SALES TAX CORPORA)N (4BSTC) June 6, 2018 PRESENT: Tony 1'.;idelie, President Rick Hatcher, Secretary -Treasurer Dave Clark. Darron Lciker Michael Milis Stephen L. Santellana, Mayor Bobby Whiteley Jim Dockery, Deputy City Manager Paul Menzies, Assistant City Manager R.. Kinley Hegglund, jr., City Attorney Linda Merrill, Recording Secretary Jana Schrnader Jeanette (Maros Becky Raek.e John Dickinson Danny Ahern Andy Lee, on behalf of Penn Collins Karen McGahen Colin McDonald Simon .Harris Will Kelty Ed Stein ABSENT: Glenn Barham, Vice -President Derik Schneider Members Mayor Councilor at Large City Staff Downtown .WF .Development Upstate Ireland, LLC Gatehouse Capital. UEB § Big Blue § WF Tea Party Members 1 Call to Order. Tony called the meeting to order at 8:15 a.m.. 2. Approval of Minutes of 3/5/18. Dave Clark moved, seconded by Rick Hatcher, to approve the minutes. The motion carried 5-0. N:\iegaMA, 413, DDSC, TIFSAB CorpAB Minutes \20I8 8.6.61Minutes_413_2018.6.6.doc WFTDC — Minutes of tine 6, 2018 2 3 Financial Report. Jim Dockery said the report shows the Board's financial position as of May 31, and the amended budget as approved through this .fiscal year. Revenues - $4,096,050 in expected revenues, primarily through sales tax receipts; also through interest earnings and repayment from Til' from debt service obligations .for the Call Field/Rhea Road and Maplewood projects. Expenditures — Expenditures stand at $3.885 million, and include annual programs that are approved during the fiscal year. The Board continues to pay debt service on previous projects that required bond financing; CVB incentive funding, and for public safety projects. Open projects include the second and final year of the Buxton contract, and with Freese & Nichols, nearing completion oftheir professional services regarding downtown revitalization. The Board began with a cash balance of $3.8 million, but $1.254 million was encumbered for existing projects, leaving an unencumbered fund balance of $2.738 million. available for future projects. The sales tax. receipts received through the first six months of this fiscal year are at $1,916,700, or 4.74% ahead of this time last year. If this pace continues, that revenue source would exceed the budgeted estimate by $200,000. 4. Public Hearing to consider contract terms for accepting 710 Seventh Street from Wichita County to be used as a parking garage in 48 related projects. Mr. Fidelie opened the public hearing at 8:24 a.m. Mr. Dockery reminded the Board that it discussed accepting this parking garage at its March 5 meeting. Two 413 projects have parking requirements the City Center (30-35 spaces) and the Petroleum Building (90 spaces). Wichita County still owes $90,000 on its $600,000 note on the garage. It has been using it for storage and parking (and allowing the North Texas Historical Museum to use 30 spaces). The City had the garage inspected, and the structure is sound. Water stands in the lower level. after heavy rains, but it can be pumped out. A Phase 1 environmental review shows no issues. The title will be clear once the County pays off the note. The County wants to retain some parking for itself and the Museum. In addition, it wants a revenue sharing agreement should the 4B Board ever decide to sell it. There is an .immediate need for electrical improvements of $60,000. The elevator would be a $300,000 investment, and the Board might want to install a front gate. The hope today is to give Mr. Fidelie the authority to work out the final details on the Board's behalf. Mr. Fidelie called .for further comments on this issue. Hearing none, he closed the public hearing at 8:32 a.m. 5. Public Hearing to consider a funding request from the o n Wichita Falls Development, Inc. for repairs & upgrades to the Wichita Falls Farmers Market Mr. Fidelie opened the public hearing on this .item at 8:32 a.m. Jana Schmader, 4212 Scottsdale Lane, is the Executive Director of Downtown Wichita 1alls Development. '1hey are requesting funds to .upgrade/repair the Farmers Market, including: WITDC — Minutes oftune 6. 2018 3 Lighting - 54,613 (replace existingfluorescent bulbs/fixtures with LED lightinOixtures) Electrical - 56,299 (installation plj an; repair plugs and Jixture,$) Bathroom - 53,500 (replace toilet seats', mirrors: install mirrors': epoxyllooring) Plumbing - 54,003.94 (in.siall hot water heater,' replace bathroom faucets, etc.) Irrigation - 52,N00 (repair/upgrade existing system) Wireless Service - 52,052.55 (installation of'wireless interne! for a 4 -block radius) EIVAC - 52,500 (service existing hearing air conditioning: install electric heaters) Total Request: $25, 768.49 Ms. Schmader then addressed the number of citizen.s who .visited the .Market in 2017: Tuesday/Thursday Market — 2,500 visitors Saturday Markets — 11,865 Special Saturday Markets 26,000 visitors In addition, the Farmers' Market acts as a business incubator. Odd Duck Coffee started at the Market before opening its own storefront in 2017, as did Flook & Ladder Coffee. Many local restaurants utilize the produce found at the Market Mr. Clark remarked that 'Downtown Development has done a fantastic job with the Market, recalling the low attendance a few .years ago. Mr. Fidelie agreed, noting the crowd was shoulder -to -shoulder this weekend. Mr. Fidelie called for further comments on this issue. Hearing none, he closed the public hearing at 8:41 a.m. 6. Public 'Hearing to consider a funding request from Upstate Ire and, for historical preservation and restoration of the property at 614 Seventh Street. Mr. Fidelie opened the public hearing at 8:41 a.m.. Andy 1,ee, 1410 Grant Street, is the consultant making application for the owners, John Dickinson and 'Danny Ahem. Fhis property, built in 1882, is .next to the Hook and Ladder building. It is a brick building that has been plastered. It is deteriorating, and they are looking at how to repair it. It is essential that they receive .incentives to rehabilitate this property. "lhe major cost is the storefront Syd Litteken is the architect, and John Dickinson is the general contractor. 71 -hey drew up a plan and forwarded it to the Texas Historical Commission. Even before they can submit for national register tax credits or state tax credits, they have to do compliances within the application, but it appears they will be able to meet those. The developers of this project have the experience and expertise to get. it done. They estimate a renovation cost of $212,000. They are seeking 20% National Register tax credits and 25% State tax credits. All contracts are audited by the Texas Historical Commission, and it is a long process. It took over a year to hear back on the Maskat Temple project. They have hired the same preservation group that worked on that project's historical tax credits to work on this one. WFEDC — Minutes of June 6, 2018 4 They are requesting $22,000 from the 4BSIC .for infrastructure costs. Mr. Dockery said. the $22,000 would represent approximately 10% of the project; and asked if the remaining 45% of the estimate is to be generated from the owners. Mr. Lee said yes, through a bank loan. Mr. Dockery asked if the owners are anticipating finding a tenant to renovate the property for the $47,000 figure. Mr. Lee said it is similar to a shopping center development. A white box shell is put together — the outside is finished, and the inside is equipped with mechanical HVAC, and electrical. Danny Ahern, 5007 Blue Mesa, said they will have to decide whether to spend money on the renovation and increase the rent, or keep the rent lower and let the tenant pull permits and do the work under their guidance. Mr. Fidelie called for further comments on this issue. Hearing none, he closed the public hearing at 9:01 a.m. 7. Public Hearing on a Progress Report from Gatehouse Capital Corp. on the Planned Hotel and Conference Center Project. Mr. Fidelie opened the public hearing at 9:01 a.m. Mr. 'Dockery said this project has a long history. It is a $30 million hotel and $8 million conference center space. Gatehouse will spend $20 million and partner with the City in a revenue-sharing approach. -lhe 4BSTC would provide $11 million to Gatehouse to finish the capital for the hotel portion. The Citywould issue certificates of obligation for the conference center. The difficulty has been in finding capital financing for Gatehouse in terms that balance everyone's interest. It has been close a couple of times, but has never materialized. However, there is now a good financial offer in place, and both sides think this can be agreed upon. Today, there are two action items for the Board to consider -- (1) approval of additional. funding for pre -development services to allow Gatehouse to release BOKA./Powell. Architects to move the design of the hotel/conference center closer to final design so that UEB Contractors can take bids and set a Guaranteed Maximum Price (GMP) Ibr the project; and (2) approval of a resolution directing that notice be issued on the Board's intent to issue 4B Revenue Bonds for the Mezzanine Loan and setting a date for a public hearing, Colin McDonald of Gatehouse Capital spoke on the tragic passing of Gatehouse CEO Marty Collins in April, and introduced the new CEO, Penn Collins. Penn is Marty's son. lie is confident in the future of the company and excited to move forward. Mr. Fidelie expressed the Board's condolences to Mr. Collins on the loss of his father. Mr. Collins thanked the Board. Fle did not foresee any large change in the structure of the relationship between the City and Gatehouse. The term sheet demonstrates a substantially similar structure. Mr. Fidelie noted there have been hurdles related to financing and getting a flag; he asked the status of these matters. Mr. McDonald said the .flag is cleared for the Marriott Delta. The financing is very close. Hardy Capital, an Asian -based investment house in Canada, is offering competitive terms. The main change is that Hardy will participate with Gatehouse on the revenue sharing. This will not impact the revenue sharing partnership between Gatehouse and the City. Mr. 'Dockery added that there are two loans — .the major first lien loan from Hardy Capital of $20 million plus, and the second from the City. After the first note and the interest is paid, the WFEDC Minutes of June 6, 2018 revenue sharing kicks i.n with a 50/50 distribution. The 50% distribution for Gatehouse will be shared with Hardy, with 85% going to Gatehouse, and 15% going to 'Hardy Capital. He asked Mr. McDonald to discuss the advanced funding request. Mr. McDonald said the hotel will be contracted with tiEB, with Gatehouse as the developer. It will be developed on a design -build basis. 'LjEB will be engaged under a construction management agreement for the conference center. This is not a request for new or additional money to the budget, but rather is a. request to advance funds in order to catch up on time that has been lost on the project. Mr. Fidelie stated that neither the City nor the 4BSTC will own the hotel; the 4BSTC will be providing bridge financing. The City will own the conference center. Mr. McDonald added. that the partnership between Gatehouse and the City is not a legal partnership, but one in attitude and approach. Michael Mills noted that not all financing has been confirmed. Mr. Dockery agreed, but noted it would be lined up 'before any of the S300,000 was spent. Mr. Mills noted there have been a number of changes. Ile has reservations if things are not in order; how things stand now is not what was promised. Mr. Dockery acknowledged there have been delays, but the framework is very close to what was embarked upon initially. The is a different lending institution involved. Aimbridge will still manage both facilities. The hotel flag has changed from Hilton Doubletree to Marriott Delta, but the major pieces are still intact. Mr. 'I„,eiker asked Mr. McDonald to discuss the new CBRE market study. Mr. McDonald said it is the third time they have been in the Wichita Falls market to evaluate a specific hotel project. The market study proved there is a need for a full-service anchor hotel to support MPEC. Mr. Fidelie said no money would be advanced until all the financing is finalized. Mr. Dockery said they are within 10 days of fleshing out all issues. Mr. Fidelie noted that other financing terms have been offered, but they have been refused. This is a more traditional financing term. Simon Harris of Ul...43 spoke to the Board. He is ready to zero in on the cost for the conference center. As construction manager agent for the City, he understands the need to be laser sharp with that number to deliver the GMP. Ile believes he can come hack by September 21. to present that GMP to move forward. Mr. Fidelie called for further comments on this issue. Head.' g none, he closed the public hearing at 9:36 a.m. 8. Executive Session Mr. Fidelie adjourned the meeting into executive session at 9:36 a.m. pursuant to TEXAS (.10VERNMENT CODE section 551.087. He announced the meeting back into regular session at 11:22 a.m. The subjects posted in the Notice of Meeting were deliberated, and no votes or further action was taken on these items in executive session. 9. Consider approving contract terms for accepting a donation of property at 710 Seventh Street from Wichita County to he used as a parking garage in 4B related projects, and other legal matters related thereto. Mr. Fidelie moved to accept the donation ofTroperty at 710 Seventh Street from. Wichita Count be used as a arkinara e for4B-related projects, pursuant to an agreement between. WYEDC --- Minutes of June 6, 2018 6 the 4BSTC and Wichita County and approved by the Legal staff. Seconded by Mr. Leiker, the motion carried 5-0. 10. Consider action approving funding for repairs/upgrades to the Farmers Market Mr. Fidelie moved to approve up to $20,915.94 for water, gas, and electrical infrastructure upgrades and repairs to the Wichita Falls Farmers Market. Seconded by Rick 1.3.atcher, the motion carried 5-0. 11. Funding for historical preservation and restoration of the property at 614 Seventh Street Mr. Clark moved that $22,000 be awarded to Upstate Ireland, LLC for construction. improvements at 614 Seventh Street related to gas, water, electricity, and other eligible infrastructure items. Mr. Dockery noted that this is to be under a five-year forgivable loan with no funding until the Certificate of Occupancy is received on the improvements to the facility. Seconded by Mr. Fiatcher, the motion carried 5-0. 12. Extension to the Development Agreement with Gatehouse Capital Corp. and Additional Pre -Development Funding Mr. Leiker moved to extend the development contract with Gatehouse Capital Corporation for the planned hotel and conference center contract, and extend up to $300,000 contingent .upon approval of the final term sheet agreement with the senior lender. Seconded by Mr. Clark, the motion carried 5-0. 13. Consider and Adopt a Resolution and Notice of Public Hearing ting Publication of Notice oject Mr. Dockery said this item expresses the Board's intent to issue 4B revenue bonds for the mezzanine loan. The Board needs to indicate the date and time of the public hearing in the motion, as well as the amount to he issued (not to exceed $12,765,000). That sum would result in a 20 -year term of a little over $1 million annually in debt service obligations. Mr. Felker .moved to adopt the resolution directing publication of the notice of the notice of the project and notice of public hearing for June 25 at 4:00 p.m. in the Council Chambers to consider the intent to issue 413 revenue bonds in an amount not to exceed $12,765,000. Seconded by Mr. Fidelie, the motion carried 5-0. 14. Adjourn. The meeting adjourned at 11:32 a.m. Guy A. "'. .Fidelie, Jr., President