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4B Sales Tax Corporation Minutes - 06/03/2021 MINUTES OF THE WICHITA FALLS 4B SALES TAX CORPORATION (4BSTC) June 3, 2021 Present: Tony Fidelie, President § Members Glenn Barham, Vice-President § Rick Hatcher, Secretary-Treasurer § Dave Clark § Darron Leiker § Michael Mills § Nick Schreiber § Stephen Santeliana, Mayor § Mayor and Council Jeff Browning, Councilor District 3 § Bobby Whiteley, Councilor at-Large § Lindsay Barker, Dir., Communication& Marketing § Terry Floyd, Director, Development Services § R. Kinley Hegglund, Jr., City Attorney § Blake Jurecek, Assistant City Manager § Paul Menzies, Assistant City Manager § Wayne Smith, Chief Building Official § Jessica Williams, Director of Finance/CFO § Jacob Whiteman, Senior Budget Analyst § Linda Merrill, Recording Secretary § Henry Florsheim, President'CEO § Chamber of Commerce & Industry Darleen VanWinkle § CVB Will Kelty § 713 Indiana, LLC Chelsey Pirkle § Gary McLendon § Maurice Gauthier § 1. Call to Order. Tony Fidelie called the meeting to order at 3:00 p.m. 2. Approval of Minutes of 4/29/21. Rick Hatcher moved to approve the minutes. Seconded by Darron Leiker, the motion carried 7-0. 3. Financial report. Paul Menzies said the Board has an unreserved fund balance of$6.5 million. Sales tax revenues for May (March receipts) are 50% higher than the same month last year. As last year's receipts were affected by the Covid 19 pandemic, he compared the receipts to the same time in 2019, and there is a 37.7%revenue increase. This is largely due to the stimulus payments and the increased cost of construction materials. 1 4. Discussion and possible action to ratify the 4B Sales Tax Corporation's Bylaws, as amended. Kinley Hegglund explained the bylaws had been amended twice over the years. Those amendments have been approved by the 4BSTC and the City Council, but never combined into one amended set of bylaws. The 4BSTC is being asked today to ratify these changes. Glenn Barham moved to ratify the amended bylaws of the 4B Sales Tax Corporation. Seconded by Dave Clark,the motion carried 7-0. 5. Update on the MPEC Hotel/Conference Center Project. Blake Jurecek reminded the Board that in 2019, a three-way agreement was executed between the City, O'Reilly Hospitality and the 4BSTC in order to determine the feasibility of a 200-room hotel/convention center. The 4B authorized an agreement with an architect for $456,000 in December 2019 for the convention center portion of the project. O'Reilly's portion of this preconstruction agreement was $727,000. In March 2020, the Council reestablished the investment zone for MPEC and the surrounding area. Covid 19 hit, and the project was put on hold until December 2020. In April 2021, the 4BSTC adopted resolutions for the bonds and the performance agreement, and set today's public hearing. He showed a rendering of the proposed full-service Delta by Marriott hotel. The convention center would be across from and between the Exhibit Hall and Coliseum. The improvements will take away some existing parking spaces, so the City is adding two lots: on the west side of Barnett and behind the Hotter'n Hell area. The City hired CBRE, a nationally recognized consulting firm for the hotel industry. They have provided an updated economic impact study and a market analysis. The total construction cost for the convention center and the hotel is estimated at $61 million. The local impact through 18-24 months of construction is estimated at $39 million, with 295 jobs created for this construction phase. The estimated 10-year operations economic impact would be $44 million. Jobs for the operation of the hotel are estimated at 116. The potential hotel, venue, sales and property taxes for the first 10 years of operation are at$19 million(although some of those taxes will be abated). The City will not own or operate the hotel. It would be a $48 million private investment by O'Reilly Hospitality Management, LLC. The 4B sales tax was established in 1997 pursuant to an affirmative vote by the public to improve quality of life and encourage economic development. This project is 4B eligible. The annual revenue from this sales tax will pay for the financing; no additional tax burden on the public will occur. The Board anticipates borrowing up to$19 million for 30 years of sales tax revenue bonds. Lindsay Barker addressed the market study analysis.A few years ago,an initial marketing study showed Wichita Falls could support a full-service hotel.This analysis was recently updated, and shows the city could still support such a venture. The City uses six hotels in the area as comparison hotels that would compete against the proposed Delta by Marriott. The average occupancy rate for that group was 81% annually, with an average daily rate of$109, and $89 revenue per room. During the Covid 19 pandemic, there was a 43% decline nationwide in room demand. In Wichita Falls,that demand only dipped 16%. The average daily rate declined 20%nationwide; in Wichita Falls, only 14.4%. The market performed well, evidencing the need for this property. 2 There is an increasing industry expectation that convention meeting space and the convention hotel be at the same location. When the City bids on an event, it is competing not only with its peer cities but cities statewide. The vast majority of the City's 14 peer cities have a hotel on site with the meeting space, or at least within walking distance. Mr. Jurecek said the project is going out for bid next week. By the end of June, staff will be able to evaluate the bids and have an exact cost. At its next meeting, the Board will adopt the parameter orders and those exact costs will be included. Michael Mills said he keeps hearing two things about this proposed project, and would like the staff to comment on them. First, there is the thought there are too many hotels and they won't be able to keep this one full. Ms. Barker said the data shows that is not the case. It is a common misconception that the city's hotels are only used for the Hotter'n Hell 100 and the Ranch Roundup. Actually, occupancy rates in this area exceed industry standards. Mr. Mills noted another argument against the project is that Wichita Falls does not have an airport to support competition for conventions. Ms. Barker said the city is losing conventions to peer cities, such as Midland, Mesquite, or Amarillo. The trend in the industry is affordability. There is an event for just about anything you can imagine. Mr.Fidelie pointed out that O'Reilly Hospitality has made a business decision that funding this hotel 100%is a good investment. If they make a profit or lose money,it is there profit to keep or their money to lose. The City is not backstopping the investment. Mr. Jurecek agreed, adding that O'Reilly has other successful facilities in Texas. They seek conventions for these hotels. For example, they will sign a three-year contract with a convention group, with the plan to get them to stay at the Denton location one year, the Fort Worth location the next, and the Wichita Falls location the next year. Mr. Barham asked how many times CBRE has updated this study. Mr. Jurecek said this is the third update, and the numbers keep improving. The average daily rate has increased, and that helps to justify the rate of the full-service hotel. Mr. Leiker added that the City hired CBRE, as it wanted an independent analysis performed. He added that this hotel will pay school taxes, which in theory lessens the burden on all who pay school taxes. Lastly, Mr. Jurecek said construction would begin in September, with the hotel opening anticipated in the spring of 2023. 6. Conduct a Public Hearing in connection with the provision of a loan by the Wichita Falls 4BSTC to a private developer to provide for the acquisition, construction and equipment by the Developer of a hotel in a new full-service convention center hotel facility in the City, related parking improvements and other permitted purposes. Mr. Fidelie opened the public hearing for public comment for or against the 4B Loan Project for the Hotel at 3:40 p.m. Henry Florsheim, President and CEO of the Chamber of Commerce and Industry, 900 8th Street, spoke. He stated that the 4BSTC and the WFEDC agreed to share the cost of development of a comprehensive community-wide strategy. A diverse steering committee met for nine months to develop ideas on how to move Wichita Falls forward. Action items included modern schools, a bike friendly community, and downtown revitalization. One aspect of downtown revitalization was the development of a full-service hotel at MPEC. There is not a full-service hotel in Wichita Falls, and will provide a much-needed service. It would elevate Wichita Falls in the eyes of 3 visiting corporate executives. It is a quality of life asset as well as an economic development asset. On behalf of the referenced steering committee and the Chamber, Mr. Florsheim recommended the 4BSTC move forward with this project. There being no one else who wished to comment on this matter, Mr. Fidelie announced the public hearing for the 4B Loan Project for the Hotel closed at 3:43 p.m. 7. Conduct a Public Hearing in connection with the issuance of sales tax revenue bonds by the Wichita Falls 4B Sales Tax Corporation to provide for acquiring, installing, constructing and equipping a new convention center facility in the City, related parking and infrastructure and other purposes permitted by law. Mr. Fidelie opened the public hearing for public comment for or against the 4B Bond Project for the Convention Center at 3:44 p.m. There being no one who wished to comment on this matter, Mr. Fidelie announced the public hearing closed at 3:44 p.m. S. Conduct a Public Hearing regarding a request from Will Kelty, dba 713 Indiana LLC, for funding related to the planned demolition of the dilapidated structure at 713 Indiana Street downtown. Mr. Fidelie opened the public hearing at 3:44 p.m. Will Kelty, resident of California but frequent visitor to Wichita Falls,addressed the Board. He is here today to talk about revitalization of downtown and in particular, 713 Indiana. He acquired it two years ago, as he understood HUD funding was available to tear it down. Unfortunately, the HUD funds dried up. The structure is an eyesore and poses a threat to the neighboring buildings and passersby. He's been told it is not insurable. The cost to demolish the structure is extraordinarily high at $500,000 to $600,000. The CDBG fund maxes out at $250,000. To use that money toward the cost of demolition would deplete the fund's entire budget. The cost of demolition is too much for one person to absorb, and the value of the neighboring properties is less than the cost to demolish this one. The building is actually two structures. The one in front was built in 1905 (the red iron structure). The iron is holding everything up. The building in the back has a wood beam structure which is sagging and pulling down the rest. There is a crack running across 711 Indiana. He is worried about that because that building is on the historic register. Another issue with this demolition is the presence of asbestos. His request is that the Board commit to $250,000 of the demolition cost. He believes any liability the 4B Board might be concerned about would be alleviated if he has insurance for this demolition, and the Board is providing the money based on results. He anticipates the structure could be demolished within the next 45 days. After it is taken down, he would like to see if the original facade is still intact. He would like to rebuild it as a two- story building. If the wall with the crack on it cannot be saved,and the façade is still good,he will support the facade and take it down to a one-story building. A business wants to move into that structure, particularly if it can remain a two-story building. Taking the structure down to just a parking lot would look like a missing tooth on that beautify street. The business,residential,and entertainment districts are continuing to evolve, and Indiana is part of that entertainment district. It can be a big draw and will result in more people enjoying their experience here and perhaps even relocating to the area. 4 Mr. Fidelie noted this was not Mr. KeIty's first project downtown. Mr. Kelty said the 4B Board was generous in its assistance with the fire suppression system at the City Center Apartments. The 31 units are 100% occupied. He believes downtown would support a lot more residential units. Mr. Fidelie asked the ownership of the property in question. Mr. Kelty said it is owned by 713 Indiana, LLC. Mr. Fidelie said that, being an LLC, it would not have the assets to get this demolition done without assistance. Mr. Kelty confirmed this is so. Mr. Schreiber said he would prefer a structure at that address, but asked if a parking lot is out of the question. Mr. Kelty said it could be done, but there is a post coming down the middle of the red iron that is supporting the shared walls. It would make for an awkward configuration. Mr. Hatcher wondered if the demolition companies have increased their bid estimates, assuming the 4B Board was likely to fund a portion of the costs. Mr. Kelty said the estimates are quite high, but they have all come back in the same range. There being no further discussion, Mr. Fidelie closed the public hearing at 4:09 p.m. 9. Executive Session. Mr. Fidelie adjourned the meeting into executive session at 4:10 p.m. pursuant to Texas Government Code section 551.087. He announced the meeting back into regular session at 5:05 p.m. The subjects posted in the Notice of Meeting were deliberated, and no votes or further action were taken on these items in executive session. 10. Consider a funding request from Will Kelty, dba 713 Indiana LLC, for funding related to the planned demolition of the dilapidated structure at 713 Indiana Street downtown. Mr. Fidelie moved to provide the referenced funding up to one-half of the demolition cost, not to exceed $250,000, to be paid in three equal installments: 1. First installment to be paid upon completion of the final inspection of demolition, to take place no later than 90 days after execution of a performance a_greement; 2. Second installment to be paid upon issuance of a full building permit, to take place no later than 180 days after the completion of the final inspection of demolition; 3. Third installment to be paid upon issuance of a Certificate of Occupancy for retail or like establishment, to be issued no later than one year from the date of the issuance of the full building permit. Seconded by Mr. Barham, the motion carried 7-0. 11. Adjourn. The meeting adjourned at 5:06 p.m. rf-4P" Guy A. " `w'1 y"Fidelie,Jr., President 5