4B Sales Tax Corporation Minutes - 09/25/2006MINUTES OF THE 4B SALES TAX CORPORATION
September 25, 2006
Present:
Warren Ayres, President
Leon Mallonee, Vice - President
Darron Leiker
Ray Gonzalez
Bob Seabury
Alan Donaldson
Matt Benoit, Assistant City Manager
Jim Dockery, Director of Finance
Linda Merrill, Recording Secretary
Absent:
Randy Schaffner
1. Call To Order
§ Corporation Board Members
§ City Staff
§ Corporation Board Member
President Warren Ayres called the meeting to order at 8:32 a.m.
2. Approval Of Minutes (July 20, 2006)
Alan Donaldson moved, seconded by Leon Mallonee, for approval of the
minutes. The motion carried.
3. Consider Creating A Temporary Project Account To Pay Expenses
Related To The TIF #2 Improvements And Golf Course Removal In
The Amount Of $1,100,000
Mr. Benoit noted the 4B Board agreed in principle to pay for (1) the TIF #2
Maplewood construction ($3 Million), and (2) the renovation of the Weeks Park Golf
Course ($4.3 Million). At the time of approval, he informed the Board that debt issuance
would most likely be the avenue by which to pay for these projects. There are other
projects for which the City of Wichita Falls wishes to issue debt. It makes sense to have
one issuance, with both the City and the 4B Board paying its respective shares.
Before that debt is issued, however, there are bills that need to be paid now.
Contracts are being awarded. It will be at least December before debt is issued and
proceeds are received from which to pay those bills.
X46 Minutes — September 25, 2006 2
Mr. Benoit proposed a temporary project account be established in the sum of
$1.1 Million, to include payment for right -of -way acquisition, ($454,000); a portion of the
TIF #2 construction ($589,000), and the consultant's fee for third party management
services.
It is highly unlikely the $1.1 Million will be spent between now and December.
However, at some point, we will pay out money for which no budget is set up, which
could be troubling to auditors. When proceeds are received from the debt service, the
4B Board will again be made whole.
Warren Ayres questioned why another vote of approval is necessary, as the
Board has already voted its approval to fund these projects. Mr. Benoit explained that
when the Board approved the public safety projects (training center, radio, and
CAD /RMS), debt was issued in a similar fashion. He requested the City Council amend
the 4B Board's budget for the entire amount of the project. That action caused a $4.5
Million encumbrance on the Board's financial statement. This large encumbrance
impeded other projects. The debt was ultimately issued, and once again Mr. Benoit had
to appear before the Board and the City Council to amend the 4B budget to the debt
service amount. He is attempting today to avoid these consecutive visits to the 4B
Board for a budget amendment that was too large for what was actually needed, and
then a second visit, requesting to amend the budget for the amount related to the debt
service.
Mr. Ayres was of the opinion that the encumbrance already existed, once the
Board obligated itself to that debt. Mr. Benoit replied the Council has to vote to amend
the Board's budget, and he has never presented this issue to them. The budget amount
should be for just the debt service amount. If he amended the Board's budget for the
TIF #2 project at $3 Million, and the golf course renovation at $4.3 Million, the Board
would run out of money. So he held off to see if the Council intended to issue debt, and
if so, in what amount. That has been made clear now, and the process of issuing debt
can begin.
Mr. Mallonee asked if City officials had already decided on a third -party
management of the golf course. Mr. Benoit replied that decision has not been made,
but that it made sense to explore that option. Mr. Mallonee asked for clarification on
when construction begins on the renovation. Mr. Benoit replied that the design process
will begin in October, and construction should start in February 2007.
Mr. Mallonee moved, seconded by Darron Leiker, that the temporary project
account be established (in the sum of $1.1 Million).
46 Minutes — September 25, 2006 3
4. Review Debt Service Scenarios for TIF #2 Improvements and Golf
Course Remodel
Mr. Benoit noted that staff needs to visit with the City's financial advisor and
bond counsel to issue debt. He noted the Board does not need to formally make a
decision today, but he needs to know if it is comfortable with issuing debt for both the
TIF #2 project and for the renovation of the golf course. He referenced the debt service
chart that illustrates the effect of such debt issuance.
The budget has two more years left of the 5/10/15 year public safety project debt
service (for the training center, radio, and CAD /RMS). He noted there are a lot of five -
year assets that were not funded through the 20 -year debt, due to the fact that
technology will change greatly in a much shorter timeframe. There are two more years
remaining on the five -year obligation. The obligation for those two years is $933,000,
and $930,000 for the coming fiscal year 2007 and 2008. Should the Board decide to
issue debt for TIF #2, the debt service is about $210,000. The golf course renovation
debt service would be another $301,000. The estimated debt service obligation would
be $1.5 Million for two years, and then in 2009, it would drop back to almost the current
amount.
The TIF #2 and the golf course renovation are at least 20 -year assets. At some
point, Mr. Benoit continued, staff will approach the Board with a proposal for mobile
data terminals (at a cost of $3.5 to $4 Million). That is one reason the Board should try
to hold onto its cash. In addition, as history shows, the Board will be approached for
other requests totaling $250,000 to $500,000. Again, he noted, the Board is not voting
at this point to issue debt service. Staff will come back at a later date with a project
agreement, which in effect will authorize the City Council to issue debt on the 4B
Board's behalf, and on its behalf. Each entity will be responsible for its own obligations
under this agreement. He then asked for assurance from the Board that they would be
comfortable with issuing such debt service.
Mr. Ayres replied that this matter has been adequately discussed, and the
issuance of debt service was proposed at the time of discussion as the way to go. He
has no objection to such a process. Mr. Mallonee concurred.
Mr. Benoit noted that the debt service will run approximately $1.5 Million for the
next two years. The Board's budget amendment is for $3.3 Million in annual revenue.
Just under half of the Board's funds would go to debt service for the first two years. This
amount would drop to under one -third of the Board's budget, a comfortable amount.
Mr. Mallonee asked who will make the final decision on the design of the golf
course. Mr. Benoit stated that unless there is some deviation from prior discussions, the
design as presented earlier this summer will go forward as planned. If features or
added or removed, such decisions will be discussed at that time. Mr. Mallonee noted
that the golf course committee would like to be in on the final decision. Mr. Benoit
stated that would be no problem.
413 Minutes — September 25, 2006 4
Bob Seabury noted the Board has an income of $3 Million a year, $5 Million in
the bank, and are discussing an obligation of $1.5 Million. He wondered what the goal is
of the Board, to keep a certain amount of funds on hand for safety's sake? Mr. Ayres
stated there is not a restriction on spending the money. If a project came before the
Board, money would be available (such as for the mobile data terminals).
Mr. Leiker added that some projects do not lend themselves to issuing debt. For
instance, it would not be prudent to issue debt service for a large component of the
mobile data terminals project (e.g., laptops). That project will take a large bite out of the
Board's cash.
Alan Donaldson asked about the TIF #2 project, which was bid out in pieces. Mr.
Leiker stated the first phase of that project builds part of Maplewood and accomplishes
part of the Lawrence Road widening that the developer, Paul Blackburn, needs to fulfill
his contractual obligations by this fall. That portion should be finished before the holiday
shopping season. Phases 2 and 3 will begin after the New Year. He does not know the
exact measurement, but it will be from Lawrence Road east about 500 to 1,000 feet, the
Maplewood will be. The Lawrence Road widening will be from the intersection of Trade
and Lawrence to the North in front of Blackburn's property. There was a meeting last
Friday with contractors, developers and TXU. The developer is a bit nervous, as he has
to have the buildings built and ready to move in before the holiday season.
5. Adjourn
The meeting adjourned at 8:54 a.m.
0"—, /.
Warren T. Ayres
President