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2000-01-13 City of Southlake, Texas MINUTES TIF Meeting Tuesday, August 10, 1999 Meeting Minutes Members Present: Rick Stacy, Ralph Evans, Ronnie Kendall, Ted Gillum, Larry Darlage, Drenda Witt, Jane Sanford Members Absent: Wayne Moffat, Debra Edmondson, Gary Fawks, Staff Present: City Manager Billy Campbell, Public Works Director Ron Harper, Assistant to the City Manager, Shelli Siemer, City Attorney Deborah Drayovitch, Financial Advisor, Dan Roseveare, First Southwest Company Agenda Item No. 1 Call to Order. The meeting was called to order at 4:45pm. Agenda Item No. 2 - Consideration: Temporary Appointment of Vice Chairperson. The board needs to appoint a temporary Vice Chairperson to run today's meeting. Motion for Rick Stacy to be the temporary vice chairperson and seconded. No other nominations were received. The motion was unanimously approved. Agenda Item No. 3 - Consideration: Amendments to the Project Plan and Financing Plan. The written portion of the revised project and financing plan were distributed to the board and staff explained some of the project costs in the plan. The TIRZ Board is asked to reconsider some of the project costs included in the revised plan. The highlights of the revised project costs include the following: • $1.139 million for educational facilities which includes the initial capital expenditures related to the library facility for resource materials, library automation system and furnishings. • Another addition is the $1.9 million for capital maintenance, site work costs associated with the construction of Town Hall facility, and FFE (Furniture, Fixtures, and Equipment). • Educational infrastructure projects were included in the last project and financing plan, but the costs have been revised to reflect changes in the costs of providing infrastructure to the school facilities. TIF Board . Meeting Minutes 8/10/99 Page 2 • School Improvement Projects have also been revised since the last project and financing plan. Dr. Gillum explained the revisions regarding the school facilities in which the $61.7 million reflects the actual costs of the five facilities (three schools, transportation facility, and stadium site) in the TIRZ boundaries that was included in the school district's recent bond proposal. • Additionally the $51.5 million represents the increase in cost of operating expenses of the five school facilities. Dan Roseveare with First Southwest explained the proposed financing plan to the board first discussing the financing plan which affects the city. Item B -1 focuses on the town square project itself. The cumulative real property values that are part of the plan were discussed. The property within the town square and secondary incremental real property outside the town square but within the TIF give the projections for the total value captured within the TIF. These projected values captured within the TIF will be used to base the funding capacity of the TIF for the projects included in the plan. Dan also detailed the different participating entities (Item B -2) assumed tax rates but stated that changes were anticipated especially from the school district in the future. This change is expected because their financial plan has a rate of $1.43 instead of $1.50 for the school. Based on the tax rates and how they are contributed to the plan, a cumulative can be seen of how many funds they are contributing to the overall financing costs of the plan. The total TIF without the school district is $60 million and with Carroll ISD participation at the agreed rate of 30 % shows an additional $28 million. Page B -3 of the financing plays shows the illustration of the projects that the city is funding and the debt schedule in the scenario without CISD. The pledged real property of TIF revenues without Carroll ISD is $60.929 million. The city has already funded $3.61 million of capital improvements through the C.O. just issued. The remaining projects will include an additional $34 million of debt to be issued over the next several years. This spreadsheet illustrates to the city, that the projects the city is concerned with, this plan provides enough funding in a cumulative cash flow balance to fund all the projects in the plan and have $187,000 remaining if all assumptions go forth as projected. Some years have an actual negative annual cash flow from the incremental values, but its important to understand to keep the cumulative balance moving forward. If there are delays in the construction process that would not increase the assessed value, there is the buffer to operate against. TIF Board . Meeting Minutes 8/10/99 Page 3 Now looking at the financing with the school district's full participation on B -4. The school district's agreement includes the funding to aid them at $15.855 million. The total project costs of $50.429 million with funding $53.6 million worth of bonds. This includes the CISD at full participation in the TIF including CISD's rate of 30% contributed to city projects. This 30% contribution by the CISD includes a contribution of $28.015 million with a debt service of $26.8 million, which shows the participation barely covers the impact of the capital improvements for school projects in the TIF. Additionally, this shows the cumulative cash flow is positive, which illustrates on a cumulative basis that you can fund the projects with just real property values if projections hold true. Dan explained that the school district will also be issuing their own bonds for funding their own TIF projects which will explain their cash flows from the 70% they get from participating in the TIRZ. Their debt schedule is not included in this presentation. Dan asked the board if there are any have questions. One question dealt with how the plan dealt with any negative cash flows. In response Dan answered that the cumulative balance off -sets them and it acts much like a reserve fund. Another question dealt with a discrepancy in the junior college tax rate. It was pointed out that the board approved a change last year and it went up to .106. Dan answered that the number would be researched and the appropriate changes would be made. It was asked if the hospital rate was the same and it was answered that it was. Dr. Gillam stated that the school district and city had been working with their attorney's to create language for an agreement that was beneficial for both the school district and the city. The legislature had recently instituted changes that made it more favorable for the district to participate. As of today there will be a participation agreement that the School Board of Trustees and the City Council will be happy with. The district's participation in the TIF will be at 100% of the M &O tax rate, which is up from the 0% it is at now. The participation agreement includes 100% of the money (from the school district) that comes to the TIF stays in the TIF, and then the school district will calculate any negative financial impact from participating in the TIF. If there is a negative impact then that amount of money would first be spent of the TIF projects related to the school district. For example, if we contribute one million on M &O tax rate and we have a negative impact of $200,000, then the $200,000 would be channeled over to the school district projects within the TIF. The additional money that does not represent a negative impact ($800,000) would then would be recaptured money by Robin Hood and would normally go to TEA. That money would then be split 70% for the school district and 30% for the city projects. Using the TEA spreadsheets as they look today we would be able to substantially reduce the CISD debt service tax rate because the school district would be able to recapture TIF dollars. The TIF Board . Meeting Minutes 8/10/99 Page 4 five projects will be paid through the TIF dollars to pay for the debt service and the recent bond proposal monies to retire the debt service. This mechanism will allow both entities to recapture a significant amount of robin hood money to help pay the debt for TIF projects. The participation agreement is under consideration tonight by the City Council on the first reading and then the School Board and City Council both have a meeting on the August 17"'. Approval has to be given before the August 31, 1999. A question was raised on the issue of repayment regarding how much more rapidly can the debt be repaid with the 30% coming from the school district to pay for projects. Dan stated that by using the cumulative cash flow for projects being invested for the project plan. If you look at the cumulative cash flow at any given point they may opt to pay off debt early. However, I'm not suggesting they do that because this is based on assumptions of that captured value growth. If in any one particular year, any one of those developments slide you may put off issuing the bonds because you do not have the value to support them. What we tried to do was to build a plan that had as much flexibility as possible because what you don't want to do is run into a negative cash position. The question remained regarding, paying the remaining debt. At some point in time we're going to get the money to pay back the bonds. Originally, the TIF plan projected paying them back in 20 years without the school district's participation. With the additional 30% of the school's participation, can the TIF debt be retired early? There are additional projects identified in the revised project and financing plan. The school district's 70% would go towards financing school projects. But on the city side, the library was added as well as the FF &E and that allows you to spend the 30% on those projects. It isn't like starting with the original project list and adding 30 %. Some projects were added and the net is still probably going to be a 20 year payback. A question was raised about whether the 30 % was set aside for educational infrastructure. It is but it isn't restricted to only educational infrastructure. The projects have grown and in the original program we set up a buffer amount. We've assumed a higher escalation of growth in the secondary or surrounding area of the proposal. As for the obligation of the county, hospital district, their agreements cap their obligation so adding projects does not increase their obligation of any of these entities. We discussed in our meetings that we didn't want to do anything that would increase the obligation of the other entities. Motion to approve plan as amended was made by Mr. Darlage and seconded by Ms. Kendall. It was unanimously approved 7 -0. TIF Board . Meeting Minutes 8/10/99 Page 5 Agenda Item No. 4 - Consideration: Authorize the City of Southlake to take actions necessary to construct a joint City /County facility. The board is asked to authorize city staff to take actions necessary to construct the joint City /County facility. A motion was made by Mr. Evans and seconded by Ms. Sanford. The motion passed 7 -0. Agenda Item No. 5 - Consideration: Approval of Minutes from the December 12, 1997 meeting, and Decemeber 15, 1998 meeting. A motion was made to approve the minutes of the first two meetings. The motion was seconded. The motion passed 6 -0, with one abstention. City Manager Billy Campbell stated for informational purposes that the city and school have set benchmarks that we will all be happy with. As soon as we get through this process we will begin having regular meetings of the TIF board. We will make our appointments and then the board can have its elections and things will begin to run smoother. The TIF Board will make recommendations on the TIF projects and the City Council is the final authority. Currently, City has issued debt for the Town Hall project and has been paid for the projects, but these will be reimbursed by TIF funds. Agenda Item No. 6: Adjourn. The meeting was adjourned at 5:30 p.m. Submitted by: Shelli Siemer, City of Southlake Approved: Rick Stacy, Acting Vice - Chairperson