Good morning. My name is Marty Rivers. I'm the chair of the Economic Development Partnership
Board. It is 1117 and we're going to call our meeting to order. Thank our television
audience for being patient. We're getting off to a late start. I'm sure there's a lot
of people out there that are disappointed we got started late. All eight of them that
are watching. So I've got a kind of a long agenda today so we'll get with it. Our first
item for consideration is EDP 19-009 to receive a report and hold the discussion and make
a recommendation to City Council regarding an ordinance on the expenditure of the fund
balance of the general fund account related to the downtown reinvestment grant program.
Thank you Mr. Chairman. I'm Caroline Booth, Director of Economic Development with the
City of Denton and I have a quick presentation for you about this item which is really housekeeping
related to spending down the remaining funds in the general fund for the downtown reinvestment
grant program. So excuse me prior to fiscal year 2018-19 the program was funded with mixed
beverage, sorry. So before the current fiscal year the program was funded with mixed beverage
tax revenue in the general fund. In September 2018 council approved changing the funding
source for this grant program from that source to the downtown TIF fund and updated the grant
review process so that the expenditures for the program are reviewed by the downtown TIF
board. The council at the same time expressed their desire for us to go ahead and spend
those funds in the general fund account down to zero and so we need to have an ordinance
that gives us a process and a procedure for spending those remaining funds. So this is
really very straightforward. The ordinance up for your consideration it just establishes
that process. The amount in the fund is a little over $108,000 and the way this is going
to go is that those grants will still be subject to final approval by the city council but
they will first be reviewed by the downtown task force and then come here to the economic
development partnership board. So task force, EDP and then final vote by council. When those
funds are spent down to zero the grant approval process will be downtown task force, downtown
TIF board and final approval by council. So it's really straightforward but I'm happy
to answer any questions that you have. Like I said this is really a housekeeping matter
to make sure that we have a stated approval process in place to spend the remaining funds.
Kiwi? You may have touched on this but I know that the requirements and the allowed uses
for the money have changed when it goes over to the other funding mechanism. Will this
ordinance allow those things to be included or is it for the original? We're going to
proceed under the prior ordinance. I think really the only difference is that we added
asbestos abatement and sprinkler fire suppression systems and so we'll just continue without
those things until these funds are spent down. And then start? Yes ma'am then switch it completely
over to the new process and new projects that can be included. One of the things we might
remind everybody the downtown task force is actually a subcommittee of this board. That's
why it's coming up here. It's a downtown economic development task force and we've always had
a representative on this board on that task force. Jill Jester is that person right now.
So it's an economic development task force related to downtown which is one of our original
priorities when the EGP partnership was created. Any other questions for me? So we need to
make a recommendation for that. I would entertain a motion. I'll move approval. We got a motion
for approval. Does anybody have a second? Second. Second Mr. Eames. Anybody have any
further discussion? I did have a question just for the sake of clarification. The $108,000
will go to another fund? It stays where it is and is just spent down to zero as the grants
are approved through the process. It's not moving anywhere. It's just staying right where
it is. So how does that change? What are we changing here? Well when the funding source
changed over to the downtown TIF fund we sort of wiped out the process that existed prior
to that. So this is a clean up of wiping out that process. Any other discussion? All those
in favor say aye. Aye. Any opposed? Motion carries unanimously. And it's a good thing
we passed that because we've got a few downtown grants and I would like to call Julie Glover
up. She will go over EDP 19, 1, 10, and 8. I don't know how we came up with those numbers
but... You've got to be quick to get them in order. We'll look at those individually
and then vote on those, make a recommendation. Thank you. So I am Julie Glover, Economic
Development Program and Administrator for the city, aka Downtown Person. I passed, distributed
these because Marty asked for a little bit of clarification on the scoring process and
how this goes. I don't think you've seen one of these in a while because the old process,
if it was up to $10,000 and under, the city manager could just sign off on it under the
other program. Because of just the way it's working right now and we're kind of in limbo,
we decided it'd be best just to go through the entire process no matter the amount on
these grants. So just to review that these projects are reviewed with the considerations
in mind that they, of course, comply with the building standards, the need for the renovations,
the historical accuracy and design, the compatibility and relationship to the other buildings and
streetscape and downtown development goals. And the new one is interior code improvement
which is asbestos and mold removal and fire suppression. That's the new category. We took
out location if you remember right on that because we used to say proximity to the courthouse
or to the transit center. Since everything is going to be within the TIF because according
to state law, we can only spend the TIF money within the TIF boundaries. The location thing
was kind of redundant. And these are on the back of the sheets that I just gave you. So
these are some definitions about facade rehabilitation, awnings and signs, just kind of making sure
everybody knows. Impact fee reimbursement, utility upgrades. I think the mold and asbestos
abatement and the fire suppression is pretty clear what that involves. So this is the scoring
sheet that I just gave you. I know it's hard to see up here. That's why I went ahead and
passed those out to you. Just how this works is there are these categories and the downtown
task force is the first group to look at it. They score these on zero to five. The economic
impact which would mean is this building creating more property tax? Is it creating sales tax?
That sort of thing. The historic accuracy and design, we did add the design a few years
back because we had some new construction that we're applying for this grant, too. Utility
upgrades and impact fees that includes improvements to water, sewer, electrical improvements.
Increases population sometimes is a little confusing, but that just means are you going
to bring more people down here? That is daytime and nighttime. So if you have mixed use with
apartments, that, you know, that counts with people being down here after work and if you're
a restaurant, you have after hours people coming and going. The interior code improvements
is the new category. Then we added this other category because sometimes the project is
really good and they don't hit all these benchmarks and gives them a little bit of leeway to award
a few extra points for a really good project. So just a little background. We've been doing
this program since 2007. And 2012 we did do some changes to the program. We changed the
name and a few other things at that point. And I think we adapted the scoring system
at that point, too. And then recently the council approved the changes to the program,
including the funding change that Caroline just talked about. And right now we just approved
the draft ordinance that will go to council on February 26th. So no one touched Amy or
Joey because they are sick, but they're here. Julie, can I ask you maybe just a clarification
on the score sheets. Each of the task force members scores that on their own and then
staff adds those up collectively and see where the average comes out in one of those categories.
So staff adds, you know, we're usually doing staff reports or something. Christina and
Michelle add them up. They divide it by the number of people who filled them out, and
we get an average score that way. And some people grade hard and some people grade easy,
so it kind of works out. So 106 North Locust Street. It's hard to believe this was over
a year ago. This is the fire that happened on the east side of the square on the day
after Christmas, actually the early morning the day after Christmas on December 26th.
I don't know who took this picture. I didn't take it, but at this point I heard that the
fire department was putting about 4,000 gallons of water a minute into the site. This is right
before the fire, obviously, since the mini-mall wall is still there. Joey and Amy Hawkins,
who own the business, they do not own the building, they own the business, had remodeled
in 2017 before the fire. The new plans include putting in a full kitchen. They have recently
closed Royals Bagels, so they made bagels and sweet, you know, cinnamon rolls and all
those things up there. So now when Jupiter House reopens, maybe it's something up here
that we're allergic to. So when they reopen, they're going to have a full kitchen. I have
no idea where they can do their baking. They have some really nice plans for the inside
that are going to make it look different, but still kind of feel the same, we think.
So their eligible expenses, thank you, are $100,000 on the facade, $20,000 on awnings,
$10,000 on signage. Still estimating the impact fees at this time was $10,000. Utility upgrades
is $23,247, and we did put the asbestos in here, but even without that, it would still
be above the $50,000 mark, which is $23,500. A total of eligible expenses is $186,747.
We had at this point, when he first filled it out, the total cost of the project was
$500,000, but I think that brings a smirk now. So they're asking for $25,000. So back
in October, the downtown task force looked at this and they recommended a $25,000 grant.
That was a 9 to 0. The average score on this was 27.3. If you'll see up here in the black
part of this sheet, it tells you how that's broken down at 25 to 30. They can recommend
up to 25,000, 20 to 24, up to 10,000, 15 to 19, up to 5,000, and under 14 does not warrant
a grant. So I'd be happy to answer any questions. Like I said, Joey and Amy are here. If you
would like to speak or if you would like to ask some questions.
>> Do you guys got some questions? >> On the scoring sheets, are those ever made
like listed in the backup, or is it just? >> We haven't in the past. You know, I mean,
usually what we do is we just average them. I do have them in all the files. I mean, they're
public record. If anybody wants to see them, they don't have anybody's name on them. You
know, they're anonymous, so. >> And so the process is these bills that
the invoices have already been paid, and so that this is just a reimbursement to the?
>> So the way this works is it is a reimbursement, and they have not submitted these yet because
they don't have a CO yet. Once they get a CO, and then we go through the invoices and
kind of match them up, you know, category to category, and make sure everything's been
done the way they said it was going to be done, it is a reimbursement at that point.
>> But it's actually to the business owners, not the company. I only ask because there
are some companies in there that I may have a conflict with, and so I just wanted to make
sure that it's going to the? >> In this case, the building is owned by
Frank Zangrel. So Mr. Zangrel did some work, and he got some insurance money, but this
grant is specifically to the Hawkins, and the check goes to them. They have to pay for
everything, and they have to prove that they have already paid for everything and had the
work done before the reimbursement check can be issued.
>> Thank you. I was just clarifying. I appreciate it.
And I maybe have been dreaming this. Did you guys add a level or square footage in there?
>> Don't breathe on the microphone. >> Just curious.
>> They applauded, Steve. Chill gesture. Yeah, we added a mezzanine level on there, so square
footage was, if I was guessing, I think it's probably like 15 by 30, and there's the windows
on the top there, so it's just ultimately like a patio or something like that.
>> You recessed the front right. >> Yes. When we do open, you all will be amazed
with what this looks like. It is pretty interesting. Amy and I did remodel the place, I think it
was four months before the fire, so that was like, we thought that was cool, and it's just
very funny when you are being forced to live your dream of what you've always envisioned
Jupiter House to be like. So now we have a grease trap, and we have a full kitchen, and
we have a front patio area. It's kind of like everything that we've ever envisioned that
place to be, it is finally happening, and it's been a struggle for a number of reasons
last year, the fire, and then closing Royals, too, but even a lot of pretty cool things
have happened. A lot of the things that we had at Royals, like some shelving that my
dad had welded up, we took down, and we just even hung them up yesterday. They look like
they were made for Jupiter House, and they were made six years ago, and all the wood
that came from Royals, we chopped it up, and there are all these little wood tiles now,
we did this whole herringbone thing, and it's just, things like that are happening over
and over again. I just, the fire did not actually get into our building, it was all smoke and
water damage, but what we didn't realize is just the effect asbestos has on a building,
so ultimately, it was a shell. The fire could have been inside of our building, too, and
this grant is, it could be huge for us. We kind of started out upside down, because we
still had the debt from the remodel that we did four months before the fire, so, anyway,
sorry, I've just had the flu for like five days, 82, so.
>> Anybody have any other questions for Mr. Hawkins? All right, thanks.
>> Cool, thanks. Thank you.
>> Yeah.
>> Okay. I'm Jill Jester, and I serve as Chair of the Downtown Task Force, which is a cross-section
of those people and community members, as well as business leaders, that are interested
in the downtown and have some kind of stake in the downtown area. As you can see here,
Amy Hawkins and Joey Hawkins came and gave a much more even detailed, because we have
a little more time in the Downtown Task Force being a limited focus group there, of past,
present, and future of Jupiter House. As you can see, we did recommend the $25,000. I'd
like to note that it is not often that this group does recommend on that side of the amount,
because we know there's a finite amount that can be granted in this specific area. Some
of what went into that unanimous vote was the increase in foot traffic to the downtown
area that they felt Jupiter House had had in the past, and that these renovations would
facilitate in the future. The fact that Jupiter House has been a unique place for young and
old, white-collar, blue-collar, a lot of community leaders, it's a hub of where they meet up
and discuss ideas for the future of Denton, and that it is a unique place, and that that
was something worth investing in to have again. As we look at the makeup of the central downtown
area of Denton, while there are coffee shops, I don't think we're overrun with coffee shops
and with the student population as well as the city buildings as well as county buildings
that are all in this area. We thought that it did have a historical significance as well
as potential for the future. I just wanted to note on behalf of the Downtown Task Force
that this was a unanimous vote. In the amount that it was, that is not often given. It's
been a few votes since we've given the, or recommended the max amount for the numbers
that are presented. And just to, if anyone has any questions regarding the decision the
Downtown Task Force made, that they are welcome to ask myself or Julie. Thank you.
- Anybody else? Anybody want to jump out there with a motion?
- I'll motion to approve. - I'll second.
- Motion and a second. Mr. Baines. Any further discussion?
- I just want to make one comment. - Yes.
- That I have been following their story along on Facebook and I know that there's a lot
of people that, in the community, that support you guys and are ready to see you open.
- Open open work. - All right. We got a motion and a second.
All those in favor say aye. - Aye.
- Any opposed? Motion carries. Thank you. Item number 10.
- You want to read it? - No. I think I did all three of them. Let
somebody over here says I have to. - Okay. So 115 South Elm, another long ago beloved
site of Sweetwater. Just a little map in case you've been living in a cave and don't know
where Sweetwater is. It's right there at the corner of Walnut and Elm Street. This is how
it looked prior to the sale a few years ago when it became Agua Dulce for a few years.
So this is the people outside repainting the snake and the murals on the outside. Unfortunately,
some of the work had begun before they turned in the grant so you will not see some of this
exterior work listed as an eligible expense. They needed to turn in the grant prior to
beginning the work. So just to let you know that. So this is just a little picture now
of the signage. The side here. And this building did, when the reeds bought the business, they
received $5,000 for some work they did. And there's a $25,000 cap per building, per address.
So that meant that the building, when they came forward, was eligible for a max of $20,000.
As like I say, some of the exterior and facade work was started prior to the application
process so it was not eligible for the grant. Awnings, $10,815. Signage, $14,105. And utility
upgrades of $9,348 for a total of $34,268 was eligible. The total cost was $100,000.
So half of that $34,000 figure, they requested $17,134. They met, task force met on December
13th and they recommended a grant in the amount of $5,000. That was a big group that day.
So that was 15 to zero. They did score 16 points. And again, this building previously
received $5,000. I will tell you that this body has the right to, as long as it's not
the maximum amount, you have the right to change the amount that you're recommending
to council. Just wanted to put that in there. Some of the discussion that happened with
this as far as the score was, it was a restaurant going to a restaurant. There wasn't a lot
of big changes happening. You know, the reeds had put in some new bathrooms and plumbing
and some electrical stuff that qualified under the last grant. So that was sort of the general
discussion during this. If you have some questions about that, we'd be happy to answer it or
Jill could. Any comments or questions? And Joey is also a partner in that restaurant,
so he is here on their behalf as well. Go ahead. I'll just kind of second what Julie
said as far as the conversation that was had in the prior to the vote where you can see
the average score was 16 out of the available points of, I think, 30 in the downtown task
force. The problem being some of the amount that they couldn't ask for, just like Julie
said, had already been done, so some of it was not eligible. They have made significant
changes. Foot traffic, it seems, has increased since this restaurant has changed format,
changed a lot of the interior. As you can see, the downtown task force recommended the amount
of $5,000 versus the full amount that would be eligible. And just like was noted by Ms.
Glover, that was because a lot of what we look at is is this going to increase who comes
downtown and spends money downtown and is it a good investment? But of course, this
body, this is just a recommendation from the downtown task force to this body, so we are
certainly, you know, there's certainly never any sour grapes as far as not taking up our
recommendations. This is just the recommendation of the, it looks like unanimous 15 downtown
task force members that were available that day. So if anyone has any questions regarding
why that was the amount or from the task force, please feel free to ask any questions. Any
other comments or questions? I did have one question. How many partners are there in this
endeavor? Joey? Excuse me, Mr. Hawkins. This is the only other presentation. You're right.
Let's see. There's Steph and Ron Ranke. There's Jimmy and Karen Meredith. And then there's
Amy and myself. Okay. Very good. Yeah. No, it's been good to bring Jimmy and Karen Meredith
back into the spotlight there. Thank you. Anything else? Anybody else? Did you hire
any local artists to do the work on the outside? Yes. Oh, shoot. Warrant. Yeah. Yes. Awesome.
Thank you. But that was, that was my mistake. I was kind of learning this process. I should
have filled out the paperwork before I gave him the paintbrush. So, but it turns out beautiful.
Yeah. Thank you. Yeah. I would entertain any motions at this time. I just have a question
because I know some of the owners pretty well. Is that a conflict or? Matt, did you hear
her comment? No. Yeah, a couple of them. Any business relationship? No business relationship,
just good friendships. Legal conflict. Not a legal conflict. I just need to make sure
I have an orientation. She needs to be on the mic. So no legal conflict. I don't have,
I just know them very well. I'm just letting you all know that. Thank you. That's it. Mr.
Hawkins, having served on council, I think that most of us are familiar with Mr. And
Mrs. Hawkins. I think it's a very valid question. And my thought is so long as that you're not
part of either of these business endeavors nor represented businesses that they, we should,
anyone that's familiar with the, any of the partners personally should be fine to use
their best discretion in whatever personal relationship might cloud their decision. Is
that right? Okay. Thank you. Oh, I know them so well. I was going to vote no. Just kidding.
You need to recuse. I will say that Sweetwater is a much used venue for community events
in that back room, especially that they have, there are many, many, many community events
that need just that size that is used. So it is a benefit to the community. We didn't
even mention squash enchiladas, did we? So that's a benefit to me. We need a motion.
I move that we approve the and take the recommendation of the downtown task force that $5,000 be
granted out of this fund for the renovations and per the application of the partners at
Sweetwater. Second. We have a motion and a second. Any further discussion? All those
in favor say aye. Aye. Any opposed? Motion carries. Thank you. And next we have item
19008. Okay, so this is 119 West Hickory, the loophole. I think back in the 80s this
was one of the very first renovations that kind of started. It wasn't the loophole at
the time. It was Ellington's. But I think this was one of the first nice kind of not
fast food restaurants that happened in downtown. We did find some historic photos here. It
was La Mode, a ladies clothing store in the 40s and 50s. And they're just in the collegiate
shop prior to that. I will tell you this building has a local designated marker on it, a historic
marker on it. So the Historic Landmark Commission has also approved this prior to going forward
to the task force. This is just some dry and we do have Cliff here who's their contractor.
So he's here to answer questions if you have it. I believe the sign is up at this point.
One of the main concerns here is since the smoking ordinance is passed and a lot of these
buildings are just flush with the sidewalk and don't have an opportunity for a patio
situation like Sweetwater and some of the others do, they are also are going to recess
the opening. On the interior there is a brick wall, an original brick wall back there that
when they recess it, that original brick wall will be visible from the street. They will
have accordion doors that go across this front so it can be closed and inclement weather.
This signage I can say is already up. They were trying to do a little something like
to kind of mimic the Morrison sign, the signage. It's a little Moulin Rouge too if you're
familiar with that maybe. This is just an interior sketch showing how that patio area
in the front would work. And this line across here would be those accordion doors that are
here that could open or close depending on the weather. Just a sketch here showing how
that might look with the doors closed and again with the doors open. Just a couple of
different angles here. Of course the architects never put the other buildings in around it,
they just do blank walls. So on this one, and I will tell you that your numbers that
you have in your backup are different than this slide, so these are updated. The facade
of eligible expenses is $49,000. The awnings are $3,500. The signs are $1,100. Again, the
impact fees are an estimate at this point, $5,000. Utility upgrades $8,000 for a total
of $64,500 of eligible expenses. And the total cost of the project has been updated as well.
Is that right? It's more than $64,500. Right. So I would add this total was just they'd
added up the numbers this way and didn't take into consideration the entire project so it's
more than that. So they did request $25,000. The task force met on October 10th and recommended
a grant in the amount of $5,000, passed 9-0. Their average score on this was 15.9. A lot
of the same discussion happened on this building as happened on Sweetwater that it was a restaurant,
it's remaining a restaurant. The facade had not been updated in a very long time. I want
to say maybe the early 90s was the last time that it had been done. This building also,
I believe, had some fire damage from a fire back in the 1930s. And it does, like I say,
it does have a landmark designation that was given to it, ironically, with the slip, the
inappropriate slip cover on it back in the 80s. But HLC did look at this and approve
all the changes to this. What was the HLC's vote? Do you know on that or did they have
any comments? Just another question. Did this building switch owners or is it the same owner
that's just doing everything? It's the same owner that has had it for probably a decade
or so, am I saying right? Is that right? 23 years. So he bought it from the original,
when it was Ellington's, it became the loophole after that. And then I think Anita Bruno and
her husband had it at that point and then they sold it to Charlie. Just on a personal
note, Ellington's is where I met my in-laws for the first time. A lot of the stark things
that went on in that building. I believe the HLC vote was unanimous, but I don't know it
off the top of my head. I apologize. Okay. I did have a question. Joan? So I was looking
at the packet and it said eligible expenses, but I was looking for the total renovation.
Is it included here? No, that's what I just said. They added up the eligible expenses,
not the total project cost. Do you have an idea, Clint, of what the total project cost
might be? Thanks for having me up. I was just over there this morning meeting with Charlie.
They're always updating things. Nothing to do with construction really, but they spent
so much more money. I'm going to say he's probably going to be about 150,000 there.
And the main reason why, and I'm just finding this out too, is because they want to kind
of change the demeanor of the loophole. So in the front part of the morning, because
they have great food, they want to peel to the families. And then after nine o'clock
at night, then they want to peel back to the bar scene, the nightclub scene. And so they're
making it more user-friendly and hopefully get more foot traffic in in the front part
of the day, early morning part of the day. So they kind of said, "I don't know what the
heck with that budget. We're going to spend this and do this." And it's just mostly interior
stuff. It's not construction. That's very impressive. The designer is great. The questions I had
is, because we've talked about it on the last project, you have to have your application
in before you start work, because you guys have the new sign up already. So work is going
on there, but they had the application in prior to that. So all those expenses are eligible.
I actually think they turned this in in the summer last year, maybe May, because we had
talked to them and made sure everything, they got the papers in before they started.
So can you help me again with the design and what the intention is of the front patio?
And as far as our smoking ordinance, isn't there, you have to be a certain amount of
feet away from the entrance? And does that meet the requirements of the intention of
the ordinance?
Yeah, again, so there's a lot of smokers and they hang out outside now. But the intent
with Charlie and Lynn, the owners of this, is to have a non-smoking patio. Now, you know,
people hang it out in front of smoke and they have the little place to put the butts when
they're done. But it's going to be a non-smoking establishment throughout. And they have their
folks out there go clean up the cigarette butts during the day and night. But again,
they're going for non-smoking.
Okay. Okay. Thank you. I misunderstood the intention of it. I appreciate it.
The main thing was just to get the patio and bring about that, because it was original
patio when it was limoed, right? And so bring back that era. And we got down to the Trazzo
and some of it's just terrible. So we're going to have to recoat that and we'll visit
that with Roman, that HLC fellow again. But as far as everything else goes, it's kind
of on point, bringing back the historic accuracy of that building.
Okay. Thank you.
Any more questions or comments?
But just to kind of reiterate, as far as what Ms. Glover said, it was a lot of the similar
conversation as far as new investment and bringing new people or bringing more people
to the downtown area that this, you know, a lot of a lot of us grew up going to Ellington's.
It is a historical landmark that it was the changes were recommended by the historical
landmark commission here, but that, you know, it is a restaurant to a restaurant. However,
they are expanding their capabilities of seating and the fact that they are allowing the view
into the historical broke from the outside. So all of that was considered in the decision
that the task force recommendation was made at $5,000.
Thank you. Any more comments or questions or emotions? So they want to go out there.
Did most of the points come from the historic? Or I guess, no, that's just five points. Okay.
I think they scored in all the categories, but I don't, I mean, I can start including
this if you're curious to see each one, but like I said, there's no names on it. I like
anonymous better. It looks like just glancing at a few here that it was a score of mainly
three or under on the historic accuracy and design. There was a lot of discussion about
the historic accuracy because we do have some folks on there who are prior HLC people. But
I did tell them, if you decide to make recommendations to change the design, then they're going to
have to go back to the historic landmark commission again and run those back through them. And
so I think some of the people I've got, the first one on top has a one on historic accuracy,
but some of them did do threes to fives. Well, it's not just historical accuracy. It's that
and or is it blend in with what's down there already? The design elements. Something wouldn't
be completely weird, whatever that would be. You don't want a mirrored building in the
middle of all that. So it's not. I just wanted to make sure that we weren't losing points
there because of historic accuracy. If the design quality is very good. I was just curious
to make sure that those points weren't lost somewhere. It's kind of all over the board.
Like I said, some people, I could probably tell you who scored what by looking at the
scores. But some of them score very harder than others. I'll put it that way. Some of
them are some people are traditionally have a very low score for everything. And some
people score higher for everything. But like I said, that average score was almost 16 points.
But you have to get up to 20 to be in the next year. Yeah. And you have to get at least
14 before any money can be recommended. Yes, I move approval of the recommendation. Second
to have a motion and a second. Any further discussion? All those in favor say aye. Aye.
Any opposed? Motion carries unanimously. Thank you. Thanks for going through all that. Thanks
for going through the process since June. I know that's been a long, long time coming.
It looks good. All right, our next item is EDP 19002 to receive a report, roll discussion
and give staff direction regarding the 2017 Economic Development Incentivized Projects
Net Revenue Report for the City of Denton. I will say before Erica gets started, that's
the best report, most entering report I've seen that I've been involved in this process.
It's some really good numbers. We hadn't had a chance to take a look at the prior projects,
the incentives that were given, and where we stand through 2017. It's pretty interesting
reading and I would highly recommend everybody get familiar with that. Did somebody check
your math? I actually did, our finance department did. David Gaines. My name is Erica Sullivan,
I'm the economic development analyst for the city and I'm going to be talking to you today
about our net revenue report, previously called the return on investment report and this will
be a high level overview and we'll move rather quickly. So I'll start by providing the background,
the structure, what makes up the report, and then quickly summarize the 2017 results. Incentives
are an important tool that we use to attract and retain investment here in the City of
Denton. This report measures the fiscal impact of these incentives, evaluates how effective
these are, this public investment, and will guide our future policy decisions. Like most
of you know, we do not have type A, type B here in the City of Denton, so we have to
be a little bit more creative, so we rely on performance tax-based incentives. So preparing
this cost benefit also helps educate and creates transparency. Here we have the background of
how it has evolved over time, so the policy was initially established in '89 to attract
new business and encourage expansions. The intent was to establish public-private partnerships
that would create a diversified tax base. In 2009, the initial return on investment
report was created and that's what it was labeled at that time. State and DCTA sales
tax were added in 2010. In 2013, it was expanded to include the ad valorem revenue for Denton
County, which includes both the incentives the county partnered with and the incentives
the county did not partner with. And then the report comprised all the taxing entities
with the inclusion of the ISD back in 2015. What's not represented here is in 2016, we
did a complete redesign, both myself and Christina Davis, and the report can now be distributed.
It's about a 30-page report that most people would not want to digest, except for me, maybe.
So it can now be distributed depending on audience. So we have a single one-page summary,
we have the meat of the report, and then the entire report with the project descriptions
of all the businesses and with the methodology. So now it can reach, I think, a broader audience.
The structure of the report essentially captures nine points for every incentive presented
here. So we have the date and the term of the agreement, the cumulative property valuation,
and that creates the property tax generated, and then sales tax generated if it's applicable.
And then the cost-benefit percentage and the ratio of return. I'm going to talk about those
in more detail on the next slide. And then the new jobs created by the project. So we
track all of these for 10 years for more apples-to-apples comparison as best we can because all of our
incentives are unique. But, for example, so if you have an incentive that has a term of
six years, we subtract the incentive for those six years and then continue monitoring their
investment and what they generate for the remaining four. If a business is here longer
than that, we still keep it at 10 years, so it goes both ways. And then, finally, expansion
projects are based on new value only, so we subtract the base year. And we'd be remiss
without mentioning jobs as well. So here's a summary basically of our methodology that
we have from the net revenue and cost-benefit. Net revenue is simply the revenue property
only and/or sales tax if applicable less the incentive. And the report carries the calculations
a step further. The cost-benefit percentage is the net revenue above divided by the incentive
times 100 to get the percent. And the rate of return provides the revenue of the taxes
generated relative to the cost of the incentive as a ratio. So the ratio of return is the
net revenue property only and/or sales tax generated minus incentive divided by the incentive.
So the easiest way to put the ratio of return in '17, the example is 3.3. So another way
of putting it is the city received three times the revenue of the incentive foregone. It's
also important to note the report only gathers sales tax for the sales tax entities. It also
captures evaluation. And this would be for our floor developments. And also Christina
Davis created these infographics. So at a very quick look you can see the summary of
all that goes into the report. The city awarded a total of 28 incentives. 18 are represented
in the report and 17. Some were not initiated and then others were terminated so they weren't
included. The slide illustrates benefits to the city only. The city has invested 16.5
million in tax-related incentives since the inception in '99. And the return is benefited
from a net increase in property and sales tax revenues on the far right you'll see
of 62.4 million. So the cost benefit for incentives awarded is 327%, you see with the money bag
in the middle there, and have been a total of 7,536 jobs created or retained by the incentivized
projects. Now you see this in table form. We just went over the city that's in that
first column there. And you'll see on the far left the total of all incentives. So we
have the valuation which is cumulative, the property tax, sales tax, the cumulative of
those two together, less the incentive, and then the net, cost benefit, and the ratio
of return. Denton County, since we covered in the infographics the city, has participated
in six Denton incentives to promote development in our community, and they invested a total
of 1.1 million in tax-related incentives, and they have benefited from a net increase
of 6.5 million since inception. The cost benefit for all the incentives, both joint and city,
is 615%. If you look on the far right, Denton ISD participated in two of our tax abatements.
Texas school districts were not able to participate in tax abatements as it was repealed from
the Texas legislature, but they were early on, so they were two that they participated
in, United Copper and Sally. DISD has invested 622,000 in tax-related incentives and has
benefited from a net increase of 50.5 million since inception. The return investment from
the tax abatements alone was over 5,000, and the cost benefit from all the incentives is
over 8,000. But school finance is pretty complicated, so I would be remiss if I didn't mention that
the different federal, state, and local funding sources and how they're separated. This report
includes both the maintenance operation and the interest in sinking. So the interest in
sinking is the only portion of the tax rate that's not affected by funding from the state.
You have the entire 30-plus page report in your packet. It's also available on the website,
and I'd be happy to entertain any questions.
Eric, on the jobs numbers, do you call Peter Bildt and say how many jobs you have? I mean,
we know what they started with at whatever year, and are we getting that out there?
We start with what they provide in the application. There's several updates that are done periodically.
The Chamber actually calls and does that. They do our annual updates. Karen can speak
to that personally. But also, sometimes I get updates and request updates. We included
some temporary positions for construction in there as well, and that I have to ask for
the developers for that, like at Razor Ranch.
If I have a question, please.
When these companies are asking for these tax abatements, there's usually an inclusion
for employment and other considerations. And I remember I had kind of raised this question
previously about who audits those numbers. You know, if a company says this is what we're
going to do, who goes back and makes sure that there's actual follow-through on what
was proposed. Can you talk about the procedure a little bit and how that results in this
report?
Sure. Since I administer the incentives, I can talk about compliance in general.
We do have a certificate of compliance that we've instituted. We haven't had it historically
for all the incentives, but we have for a lot of our incentives. So that requires them
to verify certain things, to sign the form, obviously, and to provide certain documentation
from the central appraisal or their tax bills. So we do that. We also have now instituted
a federal IRS form that they already supply to the IRS that provides the labor information.
So we keep improving over time, our process we've refined over time. We just now recently
have internal auditors. We've had external auditors in the past.
To assist with that process?
Yes.
Okay.
I'm just going to add something if you don't mind.
Sure.
Go ahead.
Good question about compliance and Erica and partners with our finance staff on some of
that as well, so that we make sure that we're really getting what we need, verifying it.
And I'm sure that most folks in the group recall that we have had to terminate three
incentive agreements in recent years for noncompliance. So we don't want to have to do that, but we
take it very seriously. And if they're not meeting the requirements under the contract
and we're not able to verify that, then we do have to terminate the agreements.
Thank you very much.
Kaylee?
Just a couple of questions. I see that the incentive term for Denton Crossing is expiring
this year, 2019. What month does that fall under? I mean, is that just kind of more towards
the end of the year?
I believe it's in August.
In August? And so then from that point on, what we're seeing here in the sales tax, the
less the sales tax, that $6 million will come straight back to the city rather than going
to them.
That's correct.
That's really good.
Does finance know that?
Yes, I prepare five-year forecasts.
It's already spent.
Actually, I'm the staff liaison. I work very closely with finance. It's like my second
extension of my arm, really. But I prepare five-year forecasts that demonstrate when
they're going to fall off, all the incentives, and what we anticipate the payment to be.
Yeah, so I have a question about Sally, because the incentive there, I think, was for -- part
of it was for the building that we just heard about, that is -- can you kind of explain
what happens in that situation with an incentive?
Sally that's included here is an old Sally agreement. The other one hadn't initiated
-- it was supposed to -- it just initiated this year, tax year '18. In that case, they
get their first year's payment, because they were there as of January 1st of January '18,
but we are in the process of terminating that incentive, because they are no longer operating
on the premises. And that's part of our contract and the compliance. They have to continually
operate in the same manner in which they applied under.
So just to be clear, the Sally project that is on here is for their headquarters building
on Colorado, and it has completed. So, yes, and you'll be getting information in your
council packet about how we are going to proceed with the current situation and the termination.
The new incentive to clarify is for their morse property.
Right. Yeah, okay. Thank you. I just wanted to kind of put that out there, because I saw
it in the -- Was that information on the termination of that project come to this board before it
goes to city council? The council doesn't vote on it. It just happens.
But if you want me to send out the same paragraph that will be in their Friday packet, I'm glad
to email it to the board. We make the recommendation that goes to city
council. They approve it. We ought to be apprised of anything that's changing any of those things.
I think I sent those out to y'all when we had to terminate the other three. So I'll
make sure to do it this time, too. Any other questions or comments on the report?
So for you new folks, it's a really good history lesson on incentives and where we're at.
And also keep in mind, this is through 2017, so it's taking a while to get all this data
gathered. But it's a good place to start and figure out what's happened in the past and
get caught up pretty quickly. Mr. Chairman, do you mind if we give Erica
and her staff a round of applause on this? That would be great.
Thank you. All right. Item 19003, receive a report, hold discussion and give staff direction
regarding the development of the coal ranch and hunter ranch master plan communities in
southwest Denton. I know some of you have probably been following
the discussion about the coal and hunter ranch master plan communities. This is an informational
item for this board. Just going to run through some of the overall basics of the project
and then I'm happy to answer questions if you have them.
So we'll start out here, and I know this is a little bit difficult to see, maybe easier
to look at it in your backup packet. But this is a depiction of coal ranch on the north
here to this boundary and hunter ranch on the south here to this boundary. And to orient
you a little bit, this is Robeson Ranch right here. And then up here is the Denton Enterprise
Airport and this shows the future path of loop 288. And then this is obviously I-35W
here. So the owners of hunter ranch actually have property on both the west and east sides
of 35W. Does anybody have any questions about where we are and what we're talking about
on the map? Again, some of you may remember that in recent years, coal ranch has approached
the city council about establishing a public improvement district or a PID to finance the
required public infrastructure for the development. In the past, council has declined to establish
a PID primarily because of concerns about the debt that would be issued and included
on the city's financials, among other issues. The current iteration of the project is coal
and hunter ranch, both of which represent about 3,000 acres in that southwest quadrant
of Denton. They're both zoned as master plan communities. They've come together to propose
a coordinated 6,000 acre community with a municipal management district over the property
instead of a public improvement district or another type of district.
Summary of the project, as I mentioned, it's about 6,000 acres in total. They're estimating
982 million in total project costs for infrastructure and amenities, 485 of which would be reimbursable
through the MMD. And I want to also note that these are preliminary numbers that were provided
by the developer. The city's financial advisors have not reviewed and verified these yet.
I will tell you more about when that's going to happen a little bit later on in the presentation.
The project is estimated to have a 40 year build out. They're talking about almost 16,000
single family units, a little over 5,000 units of multifamily, about 420 commercial acres
and 101 industrial acres in the project.
The developers gave us some broad outlines for the revised master plan that they plan
to develop. Each of the communities that they have in other places, including in North Texas
around the Austin area, they tell us that they try to develop with character and amenities
that are unique to the area and the communities. They do that through a process of stakeholder
input. They want to preserve the natural open spaces and include a lot of hike and bike
trail connectivity throughout the property. They're proposing diverse neighborhoods with
a range of high quality housing types and prices. They want to have activity focused
programming, which is a big feature of a lot of the newer master plan communities that
are being developed now. Six elementary schools, two middle schools and one high school are
planned for the property. Then there will also be retail and commercial centers.
What a municipal management district does is enable the developers to recapture a part
of the cost of the required public infrastructure. The developer would pay to put in all of the
infrastructure and then be reimbursed for those costs through the bonds that would be
issued by the MMD itself. An MMD is a political subdivision separate from the city that can
collect property taxes from property owners within the districts under limitations that
are set by the city itself. Reimbursement only occurs after the developer paid for and
built the improvements and created the assessed value from homes, commercial and industrial
buildings at a ratio of 10 to 1 before the bond can be issued. They have to create ten
times the value of the amount of bond that's being issued. Again, the revenue from the
property taxes collected from the property owners within the district is what's used
to pay back the debt issued by the MMD. This is just a basic tax rate comparison of
some of the other communities, some of the other master plan communities that have municipal
management districts or special districts. In the immediate area mostly, and you can
see some familiar names on that list there, but I do want to point out that Colon Hunter
Ranch is this column right here. The number that we've been talking about as the maximum
tax rate that the MMD would assess is 55 cents per hundred in valuation. That puts the total
tax rate for that development at $2.93 approximately per hundred dollars in valuation. You can
see that there are a couple of others that would have higher total tax stacks, some that
are very close, and then a couple down here that are significantly less than that. There
are several documents that are required to create the MMD. We did have a vote with the
council last night to approve this resolution of support, which has to go to the Texas legislature
as part of the legislative process because we have to have legislation signed into law
to allow the MMD to be established. Without that, it cannot be established. Last night,
a separate resolution of support was passed for both Cole and Hunter Ranch. That will
then begin working its way through the legislative process. Assuming that that does get signed
by the governor's office, there are three documents that have to be established or passed
by the council then. First, the city consent ordinance, then the MMD operating agreement,
which is between the city and the MMD itself, and then finally the developer agreement,
which is between the city and the developers of the property. All of those documents provide
limitations and parameters around different aspects of the project, and they all will
be voted on together if we get to that point. If one of them doesn't make it through the
process, none of them make it through the process and the district is not established.
There are a lot of opportunities for feedback from the community, from the city council
as this project goes forward, and I think that's something that's very important for
everybody to realize is that what happened last night just enables us to continue through
the discussion and the vetting of whether or not this is the right project for Dutton,
and there are many steps in the process before it reaches its completion. So what I just
said about the council having many opportunities to set expectations and give that direction.
So we moved through bullet number one here. We'll be moving into bullets number two and
three over the months, taking the time that we need to get it done. So this is a little
outdated because we did have that meeting last night. The developers requested the resolutions,
the council passed them. The other thing that the council approved last night is the city's
ability to enter into an escrow agreement that will be funded by the developer, $25,000
apiece for a total of $50,000 that will allow the city to hire a consultant to conduct an
independent fiscal analysis, an independent legal analysis. We're talking about bringing
in professional administrators of municipal management districts to review the project
to get a full and complete view of the costs and the benefits to the city of Dutton for
this project over time. And that is where it stands today. City staff is working to
find the escrow agent, get that fund going and continue moving through the process. So
I'm happy to answer any questions about that. I know it's a lot of information at kind of
a high level. There's plenty more of it in your backup, but I'm glad to take questions
if you all have them. >> So are this is informational purposes
only? >> Correct. This doesn't require a recommendation
from this board. >> Any comments or questions?
>> I have three. Is that within my allotment? >> That's your limit.
>> Firstly, thank you for the presentation. And just from my own perspective, as I'm driving
towards Fort Worth, it's going to be the area to the left?
>> To the right. >> Okay. It's on the same side as Robeson?
>> Yes, sir. >> Okay. Perspective. Thank you.
>> I'm sorry. I'll amend that a little bit. It's mostly to the west. But here I'll go
back to the map. Some of the commercial is on the east side. So here's 35. And here's
the west side. Here's Robeson. And then here is some of the commercial land on the other
side of 35. >> And is that currently city limits or ETJ?
>> All of this is within the city limits. >> Okay. And I guess I'm not much of a roamer.
I don't roam out in the raw land. So I wasn't aware that you had enough land there for six
elementary schools, two middle schools, and one high school all in that area.
>> Yes, sir. >> That's quite a build out. Yeah. Okay. I
think I had one more question. >> You only got permission for three.
>> Was that three? Thank you. Jill. >> I have a couple of just curiosity questions
really. And you may or may not have the answers. First, there's no obligation for our representative
or senator to present this legislation. Is that correct? Or is there an obligation for
one of them to take it up? Because it will have to be sponsored by?
>> Right. The word obligation is I think is what's tripping me up a little bit. So Representative
Stuckey is going to introduce the bill. I don't think he has to. But he has agreed to
do so. >> Okay. The second question is as far as
the schools in these communities, I would assume that DISD would still have to purchase
that property from the developers. >> DISD has purchased one school site. Purchase
or donation is a negotiating point that has not been worked out yet.
>> Okay. Again, just kind of curious. Don't mean to get in the weeds. Thank you.
>> I noticed the taxing graph that you had on the comparable communities that the Canyon
Falls, which is if you haven't driven through there, is really nice. I'm curious if the
part that's in Flyer Mound is not as nice as the part that's in the ETJ because I guess
Flyer Mound did not agree to do that in the part that's within their city limits.
>> Right. I can't speak to the quality differences. >> That's a big development. I will say and
I meant to bring up to think we're looking at maybe having a joint city council and economic
development board meeting down the road. I think I proposed that to council yesterday
and hopefully that will work out. But housing is a -- it's a big life cycle. Housing is
a part of the equation whether we need to do this or not. But it's when you bring people
here and they bring employees and of all wage type earners, housing is a big deal. A lot
of people come here and live in Flyer Mound or Argyle and places like that and need housing
and they need affordable housing too. So it's part of our equation. We're not doing anything
today. But it's a big part of it. It needs to be on our radar.
>> I will just add to the joint meeting. I did request that at the end of the meeting
for council recommendations. So I hope that will be coming soon.
>> We're working on scheduling that now. >> Thank you. Any comments or questions?
All right. Thank you. All right. Moving right along. Our next item is to consider our minutes
from our November 14th, 2018 meeting. That's item 19-004. Any questions, comments, motions?
>> I'll make a -- on page 128, just to clarify, it's correct in the header as far as the chairperson
and vice chairperson. But Briggs nominated John Baines to continue as vice chairperson
at this time. >> Okay. So is that a motion --
>> I move that we accept the minutes as presented with the exception of adding the word vice
to A -- section 1A. >> Somebody like to second that?
>> I'll second. >> We have a motion and a second.
Any more discussion? All those in favor say aye.
Any opposed? The minutes are approved. And as much as I would love to have our staff
report today, is there anything that you guys additionally need to tell us that's not in
the report that we couldn't go find ourselves given that we're behind schedule?
>> I hope that everyone is aware that the city council approved the incentive for Tyson
Foods -- was that last week, I think? And all signs point to that project moving forward
positively and we'll keep you updated on that as more information becomes available.
>> Anybody opposed to skipping the staff reports? We can move on.
I don't want to discount all the work you all do to do that, but it's out there for our
public review and we'll catch up on that. So if that's okay, we will skip item number
five and I'll take a motion to adjourn. >> I'll move.
>> Second. >> All right.
We have --