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4B Sales Tax Corporation Minutes - 01/06/2022 MINUTES OF THE WICHITA FALLS 4B SALES TAX CORPORATION (4BSTC) January 6, 2022 Present: Tony Fidelie, President § Members Glenn Barham, Vice President § Rick Hatcher, Secretary-Treasurer § Dave Clark § Darron Leiker § Mayor Stephen Santellana § Mayor and Council R. Kinley Hegglund, Jr., City Attorney § City Staff Blake Jurecek, Assistant City Manager § Paul Menzies, Assistant City Manager § Terry Floyd, Dir of Community Development § Paige Lessor, Recording Secretary § Jana Schmader § D WFD Syd Litteken § Picker's Universe Will Kelty § Petroleum Building Wichita Falls LLC (The Kate) Absent: Nick Schreiber § 4B Member Michael Mills § 4B Member 1. Call to Order. Tony Fidelie called the meeting to order at 3:01 p.m. 2. Approval of Minutes of 11/4/2 0 21. Rick Hatcher moved to approve the minutes. Seconded by Glenn Barham, the motion carried 4-0. 3. Financial Report Paul Menzies gave a quick update. Sales tax receipts are in for the first month of the year,and they are up over 12%. The bottom line of 4B's financials is $5,000,000 in unreserved funds for new projects. This amount does consider everything related to the MPEC Conference Center& Hotel Project. No questions were asked, and no other administrative items were addressed with the Board. 4. Public hearing regarding a funding request from Kirk Laney, dba Picker's Universe LLC, to renovate the existing building at 1000 Indiana downtown into a mixed-use retail and restaurant establishment. Mr. Fidelie opened the public hearing at 3.03 p.m. Mr.Barham left the room,and Mr.Hegglund noted that the quorum was lost.Mr.Barham returned, and Mr. Fidelie resumed the hearing at 3:04 p.m. Mr. Menzies explained that this project was approved by the Board and Council in late 2019. Mr. Menzies said that he received a request for an extension shortly after the Board's last meeting, and there had been significant progress made since 2019 when the project was approved.However,the WF4BSTC Minutes Page 1 of 6 01 06 2022 project has been delayed due to COVID19 and supply chain issues. The initial extension request was for six months, but the agreement has expired since the request. Technically, the Board will be approving the extension, but since the first agreement has expired, there must be a new agreement. Mr.Menzies presented a slideshow of photos exhibiting the building progress, stated that six more months would be needed to complete the project, and read the Chief Building Official's update The update noted that construction would continue for several more months—additionally, the third-floor dining room and kitchen area are at the roughing stage. The historical window replacement is still pending, and the dining room and rooftop deck platform's rear fire escape has not started. The second-floor bar is also in the roughing stage, the first floor has progressed to finish out, but no finishes have been installed. The owners and contractors have requested that a portion iof the first floor, where the water massage tables are located, be inspected and allowed to be occupied.Building inspections have provided a path that will lead to the occupancy of the space as requested. Mr. Menzies is satisfied with the pr9gress made. He explained that all permits and inspections are in line. He requested that if the Board approved the extension, it would just continue the$133,000 performance agreement for another six months for the fire suppression system The new appro61 would not impact the budget because this amount is already accounted for in the budget. Mr.Fidelie closed the public hearing at 3:08 p.m. Mr. Syd Litteken with Picker's Universe appeared after the public hearing for this item was closed, so Mr. Fidelie resumed this public hearing at 3:40 p.m. Mr. Litteken gave an update on the progress of the construction. The elevator has been installed, and most of the upstairs restaurant is complete. The metal ceiling being made in Canada is one of the most significant items that has not been delivered.They have ordered the outdoor deck material for the outside portion of the restaurant. The flooring has been installed on the first floor, and the door to the parking lot has been opened. Mr. Litteken went on to describe the establishment. The mediating floor or "half-story" will have a wine bar and a small quiet space for people to discuss business and a special meeting room.The entire top floor will be divided into three or four different quadrants with sliding walls, making it a conference center. There will be a full restaurant with different daily menus.In addition,there will be a private room with an eating facility where people can come and plug in their computers to do their homework or work in a quiet location rather than somewhere noisy. There will be two or three water massage tables and an 8-foot by 6-foot aquarium. Mr. Fidelie asked if the large dining room is intended to hold club meetings, such as the Rotary Club, and Mr. Litteken confirmed that thought process. He explained that it would be like a "new Luby's" with an outside restaurant. Mr Fidelie then asked if there would be a rooftop bar,and Mr. Litteken stated that there would be a rooftop bar and outside dining on the roof.Mr. Fidelie asked if the Picker's Universe antique store would remain on the first floor, where people would walk through it to get to the restaurant. Mr Litteken explained that it would stay that way for the time being. Mr. Litteken thanked the Board for the time extension and said that Covid had been "a killer" for them this year. Mr. Litteken described how much Downtown has grown since the Farmers Market renovation several years ago. He listed some of,the newer establishments that have opened Downtown, including The Karat, the ax bar, Half Pint, and the wine bars. He explained that Wichita Falls natives that have moved away now look forward to visiting home because there are new and exciting things to do Downtown. Mr.Leiker asked if a six-month extension would be enough time, and Mr. Litteken said yes,it sure would. WF4BSTC Minutes Page 2 of 6 01 06 2022 Mr. Fidelie closed the public hearing at 3:48 p.m. 5. Public hearing regarding a funding request from Will Kelty dba Petroleum Building Wichita Falls LLC to assist in fire suppression system upgrades as part of the proposed renovations at the existing building at 726 Scott Ave.downtown and consider the use of the Corporation- owned Lindemann Parking Garage at 714 Indiana Ave,downtown. Mr.Fidelie opened the public hearing at 3:08 p.m. Mr. Menzies reintroduced Mr. Kelty to the Board and described Mr. Kelly's request to the Board. Mr.Kelly's proposal includes renovating floors two through five and then floors six through ten in two phases turning these floors into 160 to 170 residential apartment units. To support this $14 million project, Mr. Kelly has requested funding in the amount of$ po,000 to upgrade the fire suppression system in the building. Mr: Menzies explained that there were three prongs to Mr. Kelty's request. The three prongs were the$1,000,000 assistance with the fire suppression system, the total or partial use of the parking spaces in the Lindemann Parking Garage,and city and county tax abatements Mr. Menzies reviewed with the Board that, at their direction, he worked with Mr. Kelly and the City to clarify some things in regards to the tax abatement. Mr. Menzies explained that he had had multiple conversations with Mr. Kelly and his financing team over the last couple of months. They both understand the City's and County's perspectives on how the tax abatement agreement would work. The City Council is scheduled to start the tax abatement process in a couple of weeks. Mr. Menzies explained again that Mr. Kelty is before the Board to request funding for the fire suppression system and the parking garage. Mr. Fidelie asked Mr. Menzies and Mr. Kelly about the structure of the tax abatement agreement. Mr. Menzies asked Mr. Hegglund to clarify the structure of the agreement. Mr. Hegglund explained that the agreement would be the standard stairstep over ten years. Mr. Kelty stated his name and address to make some additional comments to the Board. The request has not changed since November.He reviewed with the Board that this project is a historic tax credit project that involves many different players. All parties are still on board. Commerce Bank will be the state tax credit purchaser, PNC Bank will be the federal tax credit purchaser, and TransPecos Bank will lead a separate bridge and construction loan. Additionally, Mr. Kelly said he has been working with the financial institutions and Kennedy Sutherland Law Firm to pull everything together. Mr. Kelty went on to give an update on the process. He stated that the appraisals are complete and accepted by all entities,they have asked for an independent company to do the construction draws, and they've already opened escrow. This means that they are waiting for the Board's decision. In anticipation of the Board's decision, he explained he had people in the building cleaning out, getting rid of junk, and he has had a plumber trying to restore the plumbing work on the lower floors. He has also had an elevator repairperson trying to modernize one of the elevators. He explained that his goal is to complete the lower floors within the first 12 months and finish the total project by 20 months. Mr.Fidelie asked if Mr. Kelly's idea was to construct student housing still and collaborate with the university. Mr. Kelly said yes, and after follow-up conversations with the university, he believes the student enrollment will have increased by the time the lower floors are complete,making it an appropriate time to open. Mr. Fidelie asked for Mr. Kelty's thoughts on the time frame to complete the project. He asked if 24 months was still the magic number. Mr. Kelly stated his goal is to have the lower floors complete in 10 months and the entire project finished in 18 months, but the historic tax credits allow you to pick a period of 24 months. The project must be complete within 24 months of when the funding is in place. WF4BSTC Minutes Page 3 of 6 01 06 2022 Mr. Fidelie asked one more question as to whether Mr. Kelty had any conversations with the county judge or commissioners, or their staff about an abatement agreement. Mr. Kelty explained that he spoke with county officials who explained that if the City adopted the agreement, the County would follow suit. Mr. Fidelie then asked Mr. Leiker if that was historically the pattern. Mr. Leiker said that he did not recall a situation in which the County denied an abatement that a company had asked to mirror the City's. Mr. Leiker stated that the County has a formal tax abatement policy and advised Mr. Kelty to check the policy. Mr Menzies spoke up to explain the process. If the Board approves the project,the funding must then be ratified by the City Council, and then the Council would initiate the tax abatement,which is a four to six-week process.Therefore,when the Council considers the tax abatement,they would also consider ratifying this piece of the project. Mr.Hatcher asked Mr. Kelty if he had any backup plan if the Board or City did not approve 100% of what he was asking. He wondered if there was any way to make the financing work if the tax abatement or funding were not 100%. Mr. Kelty explained that there had been some unforeseen challenges that he was able to work out with the bank, but it involved him bringing more money to the table. He explained that it all comes down to the project's viability, and it would not be happening without the historic tax credits. He said that it is incredibly challenging to make the project happen without the concessions that he is asking of the Board and. City. He explained that he tried many different ways to make it happen, including conventional financing,and the creditors got cold feet. They did not want to be in this market. He explained that he has adapted in the past but feels like this is the end of the line. Mr.Barham asked if the$1,000,000 loan for the fire suppression system was for the entire building or just for the first construction phase. Mr. Kelty explained that it would need to be for the whole building, but his goal is to have the suppression system on the lower levels in place first to get a certificate of occupancy on those levels to start renting space. Mr.Kelty explained that the project includes the complete fire suppression system and the booster pump replacement. Dave Clark entered the meeting at 3:27 p.m. Mr. Fidelie asked Mr. Kelty to talk about the many successes he has had Downtown. Mr. Kelty explained that his background is in finding distressed properties, typically apartment complexes, throughout Texas and restoring them. He described a project he completed in Houston, a 542 unit building on 27 acres that was restored and had up to 95% occupancy within 18 months. Then he spoke about a 242 unit building that he restored in Houston. He discussed his work on the Big Blue building in Wichita Falls. He then discussed the City Center project located where the Eight Street Coffee House was previously located. He turned the upper floor vacant offices into loft apartments,typically 100%occupied.These projects have been quite successful in bringing people downtown. He discussed how the Wichita Falls Brewing Company started. The first night he visited Wichita Falls, he went into Iron Horse Pub and asked for a local beer. They told him there was no local beer in Wichita Falls He met with a person on Craigslist who sold brewing equipment, and then he connected with Matt, who is now the brewer of Wichita Falls Brewing Company. Mr. Kelty bought the building that is now the brewing company to have the brewer move into it. Now they make great beer, and they were voted best interior commercial design in all of Texas in a recent publication. Mr. Fidelie talked about the successes and explained that Mr. Kelty had brought many things to Downtown. Mr. Menzies mentioned the significant progress at 713 Indiana Mr. Hegglund asked Mr. Kelty to explain how bringing people downtown will help expand business opportunities in the downtown area. He explained that he thinks what drives people to come to an area is whether they have a thriving downtown. He explained that he met with a 1 1 WF4BSTC Minutes Page 4 of 6 01.06 2022 software developer choosing to open a business in either Wichita Falls or Amarillo. He ultimately did not select Wichita Falls because its Downtown was not thriving. He also explained that he plans to continue reaching out to MSU to collaborate on how to keep MSU students here once they have graduated.His idea is to foster growth and community alongside the university and give MSU graduates a career path locally. He believes bringing students, and more people Downtown will help create a more vibrant downtown, attracting more businesses Downtown. Mr. Fidelie closed the public hearing at 3:40 p.m. 6. Executive Session. Mr. Fidelie adjourned the meeting into executive session at 3:48 p.m. pursuant to Texas Government Code section 551.087. He an-nounced the meeting back into regular session at 4:19 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. 7. Consider a funding request from Kirk Laney, dba Picker's Universe LLC, to renovate the existing building at 1000 Indiana downtown into a mixed-use retail and restaurant establishment. Mr. Leiker motioned to approve the funding request from Kirk Laney dba Picker's Universe LLC, to renovate the existing building at 1000 Indiana downtown into a mixed-use retail and restaurant establishment under the same terms as the prior agreement approved by this Board with an expiration period of six months. Seconded by Mr. Clark,the motion carried 5-0. 8. Consider a funding request from Will Kelly dba Petroleum Building Wichita Falls LLC to assist in fire suppression system upgrades as part of the proposed renovations at the existing building at 726 Scott Ave. downtown and consider the use of the Corporation-owned Lindemann Parking Garage at 714 Indiana Ave,downtown. Mr.Hegglund asked that if the Board decides to go forward,they adopt the following finding: 726 Scott Avenue, also known as The Petroleum Building, is located in the core area of Downtown Wichita Falls, and that the redevelopment of Downtown and specifically this project is likely to promote or develop new or expanded business enterprises in the City, Downtown and the City as a whole. Mr. Fidelie motioned to, first, adopt the finding Mr. Hegglund read into the record, and second, that the Board approve funding of up to$1,017,192 for fire suppression system upgrades. Subject to the following: • The first stipulation is that 60% of those funds will be released when floors two through five are complete, and the Certificate of Occupancy(CO) is issued. • Second,the remaining 40%of those funds will be released when floors six through ten are complete, a CO is issued, and the floors are comprised of at least 150 apartment units. Once the aforementioned projects are complete, and COs are issued prior to April 1, 2024, the WF4BSTC will convey what is known as the Lindemann Parking Garage, located at 714 Indiana, to Mr. Kelty, or a corporation owned by him, with the following stipulations: • First, if Mr. Kelty, or his corporation, sells the garage, WF4BSTC will have the right of) tY p first refusal in that transaction, and the purchase price to buy back the garage from Mr., Kelty, or his corporation, will be $10,000. • Second,the garage will be conveyed to him upon the CO issued for at least 150 apartment units in the building located at 726 Scott Avenue, also known as the Petroleum Building. WF4BSTC Minutes Page 5 of 6 01 06 2022 • Substantive details will be worked out between Mr. Kelty, the Board's legal counsel, Mr. Hegglund. and Mr. Menzies. Mr. I legglund clarified that the transfer of the Lindemann Parking Garage would not be a sale but instead be a no-cost transfer. Mr. Hatcher asked if the parking garage would immediately go on the tax rolls. Mr. Hegglund explained only at the point that the garage was deeded over to Mr. Kelty. Mr. Fidelie explained that the issue would he subject to the appraisal district and Texas Property Tax Code. So it would be either immediate or the following January 1st. Seconded by Mr. Barham. the motion carried 4-1. Adjourn. Mr. Fidel ie adjourned the meeting at 4:27 p.m. • • exul 13ar \\I 111, 1"C Minutes Page 6 of 6 WICHITA FALLS 4B SALES TAX CORPORATION BOARD OF DIRECTORS CERTIFIED AGENDA OF THE EXECUTIVE SESSION January 6, 2022 At the beginning of the session, ! announced a closed meeting began on January 6, 2022, at 3:4 S o'clock p.m., and the sections of Chapter 551 under which this meeting was held were as follows and as otherwise described in the agenda of the Wichita Falls 4B Sales Tax Corporation. Executive Session in accordance with TEXAS GOVERNMENT CODE §551.087, to discuss or deliberate the offer of a financial or other incentive, including modification to an existing agreement, for a business prospect that the 4BSTC seeks to have, locate, stay, or expand in or near the territory of the City of Wichita Falls and with which the 4BSTC is conducting economic development negotiations for creation and retention of primary jobs (as defined by TEX. LOCAL GOVT. CODE §501.002). At the end of the session, I announced the date and time were January 6, 2022, at 14.1q1 o'clock p.m. The subjects described above were deliberated, and no further action or votes were taken on these subjects in executive session. I, Tony Fide le, President of the Wichita Falls 4B Sales Tax Corporation Board of Directors, certify that the above is a certified agenda of the proceedings of the executive session of the Wichita Falls 4B Sales Tax Corporation Board of Directors. GUY A. IDELIE, VICE PRESIDENT WICHITA FAL S 4B SALES TAX CORPORATION