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2004-04-26 TAX INCREMENT REINVESTMENT ZONE NO. 2 BOARD MEETING MINUTESMINUTES OF THE BOARD OF DIRECTORS MEETING Tax Increment Reinvestment Zone Number Two CITY OF PEARLAND, TEXAS April 26, 2004 A regular meeting of the Board of Directors ("Board") of the Tax Increment Reinvestment Zone Number Two ("Zone"), City of Pearland, Texas, was held in the Council Chambers of City Hall, located at 3519 Liberty Drive, Pearland, Texas, on Monday, April 26, 2004, at 4:00 p.m. The meeting was open to the public. Board Members in Attendance: Nigel Harrison Gary Cook Jo Knight Mike Pyburn Larry Loessin Donna Coleman Ron Castillo Developers in Attendance: Drew Pelter — Shadow Creek Ranch Dev. Co. City of Pearland Representatives in Attendance: Hon. Tom Reid 1. Introduction; Board Members Not in Attendance: Gary Davis James McFeron Consultants in Attendance: David Tinney — LJA Engineering Mark McGrath — Null-Lairson Lynne Humphries — Allen Boone Humphries, LLP Trey Lary — Allen Boone Humphries, LLP Sue Darcy — Knudson & Associates John Havenstrite — Knudson & Associates Frank Ildebrando — RBC Dain Rauscher Ryan O'Hara — RBC Dain Rauscher Mark McGrath — Null-Lairsson Board Chair, Nigel Harrison, welcomed those in attendance and introduced the Board Members. 2. Call the meeting to order, take attendance and verify that a quorum is present. Mr. Cook called the meeting to order at 4:07 p.m. and took attendance. The following Board Members were present: 1. Nigel Harrison 2. Gary Cook 3. Jo Knight 4. Mike Pyburn 5. Larry Loessin 6. Donna Coleman 7. Ron Castillo Board Members Gary Davis and James McFeron were not in attendance. 3. Discuss and approve minutes of October 7, 2003 Board meeting. Board Member Cook noted that the last paragraph under item 5, the text should read, "Mr. Pelter also reported that the actual cost of development completed to date..." Board Member Pybum also noted that the minutes incorrectly cite Board Member Davis as being absent, although he was in attendance. Board Member Castillo moved that the Board approve the minutes of the October 7, 2003, subject to these changes. Board Member Coleman seconded the motion. Following discussion, the Board unanimously approved the motion. 4. Project report from the Developer and PowerPoint Presentation; take appropriate action. Drew Pelter of Shadow Creek Ranch Development Company L.P. and David Tinney of UA Engineering reported on the current development. Mr. Pelter reported that approximately $14.8 million worth infrastructure improvements have been completed. In 2003, the development saw 777 lots completed. In 2004, there have been 416 lots completed to date. Currently, approximately 2,700 acres are under development and the total project is 44% under budget. There are presently 13 home builders working within the development. To date, approximately 852 homes have been sold, making Shadow Creek Ranch the fastest selling residential community in the history of the Houston area, with an average of 15 homes being sold per week, and approximately 458 homes have been constructed to date. Alvin ISD is nearing completion of the elementary school construction, and Phase 1 of a 10,000 square foot commercial building for lease has been completed with Phase lI to begin soon. David Tinney of LJA Engineering and Surveying reported on engineering and construction activities to date. The Board took no action on the report. 5. Quarterly financial report from City. The Board agreed to defer action on this item. 6. Report on current TIRZ lobbying activities in Governor's special legislative session. Trey Lary, with Allen Boone & Humphries, Attorney's for the Zone, reported on school finance reform and its impact on the Zone. Mr. Lary stated that a major component of this proposed reform is the removal of commercial property from the school district tax roll, which would reduce the total tax bill, as well as the resultant tax increment revenue to the Zone. A proposed solution would use state taxes to honor school district contracts, thereby making school districts whole for any obligation previously incurred, in essence "grandfathering" existing TIRZs. Mr. Lary explained that the Community Redevelopment Coalition (CRC) was formed to lobby the Special Legislative Session with the goal of protecting school district tax increment revenue. 2 Mr. Lary then distributed a Memorandum of Understanding (MOU), which outlined the CRC's lobbying effort. The initial lobbying effort is estimated to cost $150,000, and Jody Richardson of the law firm Aiken, Gump, Straus, Hauer & Feld in Austin is coordinating this effort. Should the Zone elect to participate in these lobbying efforts, such invoices for the costs associates with this effort would come through the Zone's general counsel, Allen Boone Humphries, LLP. Mr. Lary distributed to the Board a legislative update memorandum, dated April 24, 2004, from the CRC. Board Member Castillo moved that Board participate in this lobbying effort by funding up to $10,000, which would be funded through administration portion of the Reinvestment Zone Financing Plan Budget. Board Member Pyburn seconded the motion. Following further discussion, the Board approved the motion with Board Member Coleman abstaining and Board Member Loessin opposing. 7. Discuss and take necessary action regarding Auditor's Report on TIRZ Invoices presented for payment and approval of outstanding administrative invoices to date. Mark McGrath of Null-Lairson, Zone Auditor, summarized the Report on Invoices Presented for Services Rendered from September 2003 through March 2004. Board Member Pyburn moved to accept and approve the submitted invoices for payment out of the City's Tax Increment Revenue Fund. Board Member Castillo seconded the motion. Following discussion, the Board unanimously approved the motion. 8. Discuss and recommend 2003 Annual Report be presented to City Council for approval. Sue Darcy presented the Annual Report to the Board, in accordance with state statute. Ms. Darcy distributed a revised Table C to the Board, and reviewed the revisions with the Board. Frank Ildebrando with RBC Dain Rauscher, financial advisors to the City, discussed the City's creation of local government corporation than could be used to issue debt for developer reimbursement. A bond issue is expected to take place in September or October of 2004. Board Member Castillo moved that the Board approve the 2003 Annual Report and recommend to City Council approval of same. Board Member Cook seconded the motion. Following discussion, the Board unanimously approved the motion. Board Member Pyburn asked that future annual reports illustrate the shared MUD costs in Table D, to which Ms. Darcy agreed. 9. New Business. No new business was brought before the Board. 3 10. Any other matters which may properly come before the Board. No other matters were brought before the Board. 11. Adjournment. Following discussion, the meeting was adjourned by unanimous consent at 5:16 p.m. Approved: Ulu Mike yburn Board Secretary Tax Increment Reinvestment Zone Number Two City of Pearland, Texas