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2008-05-05 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 MAY 5, 2008 A special meeting of the Board of Directors ("Board") of the Tax Increment Reinvestment Zone Number Two ("Zone"), City of Pearland, Texas, was held on Monday, May 5, 2008 at 4:00 p.m. in the Council Chambers, at Pearland City Hall, 3519 Liberty Drive, Pearland, Texas. The meeting was open to the public. Board Members in attendance: Gary Cook, Vice Chair Mike Pybum, Secretary Gary Davis Jo Knight Lary Loessin Ken Phillips Consultants in attendance: Trey Lary — Allen Boone Humphries Robinson LLP James Ross — LJA Engineering & Surveying, Inc. Sue Darcy — Marsh Darcy Partners, Inc. Mark McGrath — Null-Lairson Tim Ng — AmREIT Steven Gardner - Huitt—Zollars Board Members not in attendance: Nigel Harrison, Chair Donna Coleman Ron Castillo Developer representatives in attendance: Drew Pelter — Shadow Creek Ranch Development Company, Ltd. City of Pearland: Tom Reid — Mayor Bill Eisen — City Manager Claire Manthei — Finance Director Rick Overgaard — Assistant Finance Director Sonia Blair— City Secretary Office Coordinator 1. Call the meeting to order, take attendance and verify that a quorum is present. The meeting was called to order and attendance was taken. The following directors were present: 1. Gary Cook, Vice Chair 2. Mike Pyburn, Secretary 3. Gary Davis 5. Jo Knight 6. Lary Loessin 7. Ken Phillips PAGE 1 of 6 —5/5/2008 TIRZ NO. 2 - MINUTES Those present constituted a quorum. Directors Harrison, Coleman, and Castillo were not in attendance. 2. Discuss and approve minutes of the January 7, 2008 Board meeting. The minutes of the January 7, 2008, meeting were presented. Director Pyburn moved that the Board approve the minutes of the January 7, 2008, meeting without revision. Director Knight seconded the motion. The Board unanimously approved the motion. 3. Discuss and take necessary action regarding TIRZ invoices presented for payment. Claire Manthei, Director of Finance for the City of Pearland, stated this item includes invoices totaling $28,485.43. The invoices for the Board's Consultants are as follows: $6,105.62 for LJA Engineering and Surveying, $6,820.89 for Allen Boone Humphries Robinson, LLP, $2,500 for Huitt-Zollars, $12,963.92 for Marsh Darcy Partners, Inc., and $85.00 for the City of Pearland. The operating budget is $275,000 and with the previously approved invoices and the current invoices, the remaining budget is $215,467.43. Director Davis moved that the Board approve the City's report on the TIRZ invoices and the outstanding administrative invoices to date for payment. Director Pyburn seconded the motion. The Board unanimously approved the motion. 4. Review and approve financial report. Claire Manthei, Director of Finance for the City of Pearland, reviewed the financial report with the Board. She stated the income statement for the TIRZ No. 2 Board through the end of March 2008, shows total revenues of $6,180,814 out of which the tax increment from the participating entities is $6,090,150. Brazoria County will be paying in August pursuant to their agreement and Alvin Independent School District pays quarterly. The expenses to date total $6,711,087 which include fees for engineering fees, consultant fees, payments to the City of Pearland, and payments to the Development Authority. The ending available fund balance is $2,176,437, the debt service payment in August 2008 will be $2,157,000, and the TIRZ No. 2 cash assets total $5,290,652. Director Phillips asked what the $2,157,000 in debt service payments included. Claire Manthei, Director of Finance for the City of Pearland, stated this is an annual debt service cost of principal and interest on all three bond issues. Trey Lary, Allen Boone I Iumphries Robinson, LLP, stated if there is any principal paid, it is paid in September. The Development Authority of Pearland issued bonds in the fall of 2007, and probably has not paid principal. Director Phillips moved that the Board approve the financial report. Director Knight seconded the motion. The Board unanimously approved the motion. PAGE 2 of 6 —5/5/2008 TIRZ NO. 2 - MINUTES 5. Review and discussion of Quarterly Investment Report. Rick Overgaard, Assistant Finance Director for the City of Pearland, reveiwed the March 31, 2008 Quarterly Report. The ending book value was $5,290,652 and the market value is the same. The weighted averaLe maturity is one day with the weighted average yield of the portfolio being 2.81%. The agency discount benchmark is 2.24% and the one year T-bill benchmark is 2.11%. The TIRZ has 41% in cash and 59% in the money market with a total book value of $5,290,651.89. Director Loessin asked if the Board was allowed to purchase Certificates of Deposit Rick Overgaard, Assistant Finance Director for the City of Pearland, responded affirmatively and stated different options are available. Discussion ensued between Boardmembers, Director of Finance for the City of Pearland Claire Manthei, and Assistant Director of Finance Rick Overgaard regarding the Quarterly Investment Report. Following discussion and review-, Director Knight moved that the Board approve the Quarterly Investment Report. Director Phillips seconded the motion. The Board unanimously approved the motion. 6. Review and approve City's Investment Policy, Strategy and Broker/Dealers as the TIRZ's Investment Policy, Strategy, and approved Broker/Dealers. Rick Overgaard, Assistant Finance Director for the City of Pearland, stated the Public Funds Investment Act requires the TIRZ to review and approve its Investment Policy annually. In the past, the TIRZ Boards have adopted the City's policy as its own. The Pearland City Council reviewed and adopted the policy in February. Staff is recommending the TIRZ adopt the same Policy. Director Davis asked if the TIRZ is basically taking the policy for the City of Pearland and changing the names in the policy to reflect the TIRZ. Sue Darcy, Marsh Darcy Partners Inc., stated the TIRZ can adopt the policy for the City of Pearland without making the changes in the name because they are a subset of the City of Pearland. Director Phillips stated he will rely on the recommendation of City of Pearland Staff and vote in support adopting this item. Director Phillips then moved that the Board adopt the City of Pearland Investment Policy as the TIRZ Board's Investment Policy. Director Pyburn seconded the motion. The Board unanimously approved the motion. PAGE 3 of 6 —5/5/2008 TIRZ NO. 2 - MINUTES 7. Discuss, and take necessary action regarding Work Authorization No. 24 — Construction Audit Services Pearland TIRZ No. 2 09-05-001 (Broadway Improvements from Kingsley Drive to F.M. 521) HZ Project No. 02-0709-09. Sue Darcy, Marsh Darcy Partners, Inc., stated the process for reviewing improvements eligible under the plan is that when LJA Engineering is the Design Engineer, a construction audit is performed by Huitt--Zollars. Because Huitt—Zollars provides a letter agreement authorizing the work to be performed. Trey Lary, Allen Boone Humphries Robinson LLP, stated the work has already been performed by Huitt—Zollars, but because of the meeting schedule of the TIRZ Board, the work could not be approved prior to the work being completed. Director Davis moved that the Board approve Work Authorization No. 24. Director Pyburn seconded the motion. The Board unanimously approved the motion. 8. Discuss, and take necessary action regarding Letter of Financing Agreement for Project # 08-05-001, Broadway Improvements from Kingsley Drive to F.M. 521 James Ross, LJA Engineering & Surveying, Inc., stated this item is a new Letter of Financing Agreement. This Letter of Financing does not authorize reimbursement, but is the first step taken in accordance with the Reimbursement Agreement. The LFA is for approximately $9,000,000 for the improvements of Broadway from Kingsley Drive to FM 521. The improvements include water, sewer, drainage, paving facilities, and a traffic signal. Brief discussion ensued between Boardmembers, James Ross, LJA Engineering & Surveying, Inc., and Sue Darcy, Marsh Darcy Partners, Inc. regarding the project. Bill Eisen, City Manager of the City of Pearland, stated the information provided reads FM 518 and the proper name is Broadway. Director Cook stated he will abstain from the vote for this item since his company is involved in the pre -financing and will be reimbursed in the future. Following Discussion, Director Phillips moved that the Board approve the new Letter of Financing Agreement for Project 408-05-001. Director Loessin seconded the motion. The Board unanimously approved the motion, with one abstention. 9. Discuss, and take necessary action regarding Letter of Financing Agreement for Project # 08-05-002, Broadway Landscape (North Side). James Ross, LJA Engineering & Surveying, Inc., stated this Letter of Financing Agreement goes along with the previous item. There is a landscape reserve north of the right-of-way Shadow Creek Ranch provides to buffer this major roadway. PAGE 4 of 6 —5/5/2008 TIRZ NO. 2 - MINUTES Director Phillips stated the landscaping discussed in a previous Letter of Financing Agreement was for the south side of the roadway and asked if this item is for the north side of the roadway. James Ross, LJA Engineering & Surveying, Inc., stated Director Phillips is correct that this item pertains to the landscaping for the north side of the roadway. Discussion ensued between Boardmembers, James Ross, LJA Engineering & Surveying, Inc., Trey Lary, Allen Boone Humphries Robinson LLP, and Sue Darcy, Marsh Darcy Partners, Inc. regarding the Letter of Financing Agreement. Director Cook stated he will abstain from the vote for this item since his company is involved in the pre -financing and will be reimbursed in the future. Following discussion, Director Phillips moved that the Board approve the Letter of Financing Agreement for Project 908-05-002. Director Knight seconded the motion. The Board unanimously approved the motion with one abstention. 10. Discuss, and take necessary action regarding the 2007 Annual Report. Sue Darcy, Marsh Darcy Partners, Inc. reviewed the 2007 Annual Report. Director Cook stated the 2007 value appears to be incorrect because the amount for Brazoria County should be less than the amount for the City of Pearland. He stated the numbers appear to be reversed. Discussion ensued between Boardmembers and Sue Darcy, Marsh Darcy Partners, Inc. regarding the TIRZ No. 2 Annual Report. Following discussion and review, Director Davis moved that the Board approve the Annual Report contingent upon revisions specified by Director Cook. Director Pyburn seconded the motion. The Board unanimously approved the motion. It. Receive and discuss presentation from Sub -Developers and owners of Shadow Creek Town Center. Sue Darcy, Marsh Darcy Partners, Inc. stated, for the past several months, AmREIT has been negotiating with Transwestern Commercial Services for the purchase of the Shadow Creek Ranch Shopping Center. This presentation is to update Boardmembers on the progress of the transaction. Tenel Tayar, AmREIT, presented Boardmembers with a presentation that provided a detailed explanation of the company and completed projects. Drew Pelter, Shadow- Creek Ranch Development Company, Ltd. provided Boardmembers with an update on the progress of the Shadow Creek Ranch Development. PAGE 5 of 6 —5/5/2008 TIRZ NO. 2 - MINUTES After discussion, no action was taken on this item. 12. Discuss continued participation in the Community Redevelopment Coalition (CRC) and authorize payment to CRC for legislative activities. Trey Lary, Allen Boone Humphries Robinson LLP, stated when there is school financing and TIRZ participation in legislature, it can be complicated. The City of Pearland formed TIRZ No. 2 in 1998 to take advantage of the fact that in 1999 the Legislature was going to take away the right of School Districts' to participate in a TIRZ. Each time the Legislature meets, there is the possibility it will take away the School Districts right to participate again. TIRZ representatives have to be proactive each time the Legislature meets and be grandfathered in participation or try to make it work when the Legislature comes up with a new plan. All of the proactive work has been done through the Community Redevelopment Coalition (CRC). The lead lobbyists for the CRC are Jody Richardson of the Akin Gump Law Firm in Austin and John Kuhl of Sanford Kuhl in Houston. The CRC is funded through membership dues and currently owes its consultants $65,000. The Uptown Houston TIRZ has agreed to pay for $20,000 of the debt and has asked that TIRZ No. 2 contribute $15,000. Discussion ensued between the Boardmembers and Trey Lary, Allen Boone Humphries Robinson LLP, and Sue Darcy, Marsh Darcy Partners, Inc. regarding the Community Redevelopment Coalition funding. Trey Lary, Allen Boone Humphries Robinson LLP, stated he will go to the CRC to obtain more information on the fees, what funds are being contributed by different TIRZs in the State, and what has been done in the past. Bill Eisen, City Manager for the City of Pearland, stated, if possible, it would be a good idea for a TIRZ No. 2 Boardmember to serve on the CRC Board to keep them more aware of needed information. After further discussion, no action was taken on this item. 13. Adjournment. Approved Nigel Harrison Chairman Tax Increment Reinvestment Zone Number Two City- of Pearland, Texas PAGE 6 of 6 —5/5/2008 TIRZ NO. 2 - MINUTES