2014-09-29 DEVELOPMENT AUTHORITY OF PEARLAND SPECIAL MEETING MINUTESMINUTES OF A SPECIAL MEETING OF THE DEVELOPMENT AUTHORITY OF PEARLAND,
CITY OF PEARLAND TEXAS, HELD ON MONDAY, SEPTEMBER 29,2014,4:00 P.M., IN THE
FIRST FLOOR CONFERENCE ROOM AT PEARLAND CITY HALL, 3519 LIBERTY DRIVE,
PEARLAND, TEXAS.
Mayor Reid called the meeting to order at 4:00 p.m. with the following present:
Chairman
Secretary
Boardmember
Boardmember
Boardmember
Tom Reid
Ed Baker
Bill Sloan
Tom Pool
Anthony Carbone
Others in attendance: Clay Pearson City of Pearland City Manager; Claire Bogard City of
Pearland Director of Finance; Rick Overgaard, Assistant Finance Director, Maria E.
Rodriguez City of Pearland Deputy City Secretary; Ryan O'Hara BOSC Inc.; Tim Austin
Allen Boone Humphries Robinson; Rick Witte, Andrews Kurth LLP, Gary Cook Shadow
Creek Ranch, Development Company, Drew Pelter Shadow Creek Ranch Development
Company.
NEW BUSINESS:
Board Action — Approval of the Development Authority of Pearland Board of Directors
Meeting Minutes for November 11, 2013, Special Meeting held at 4:00 P.M. DAP Board of
Directors.
Boardmember Reid made the motion, seconded by Boardmember Pool, to approve the
Minutes of the November 11, 2013, Development Authority of Pearland Meeting.
Boardmember Carbone joins the meeting at 4:05.
Voting "Aye" Boardmembers Reid, Baker, Sloan, Pool, and Carbone.
Voting "No" None.
Motion Passed 5 to 0.
Board Action — Resolution No. RDAP-2014-02 — A Resolution of the Development
Authority of Pearland (DAP), Accepting the 2013 Annual Financial Report for the Fiscal
Year Ending September 30, 2013.
Boardmember Baker made the motion, seconded by Boardmember Pool, to approve
Resolution No. RDAP-2014-02.
Rick Overgaard City of Pearland Assistant Director of Finance stated this is the 2013,
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Annual Financial Report for Fiscal Year ending September 30, 2013. The report has been
provided by Grant Thorton LLP. The audit was a good clean unqualified audit. He
provided the Board with a brief overview of the Financial Audit Report.
Brief discussion ensued between Boardmembers and City of Pearland Director of Finance
Claire Bogard, regarding Statement of Revenue and Expenditures.
Voting "Aye" Boardmembers Reid, Baker, Sloan, Pool, and Carbone.
Voting "No" None.
Motion Passed 5 to 0.
Board Action — Resolution No. RDAP-2014-03 — A Resolution of the Development
Authority of Pearland (DAP), Accepting the Financial Report for the Period Ending August
31, 2014.
Boardmember Reid made the motion, seconded by Boardmember Sloan, to approve
Resolution No. RDAP-2014-03.
Rick Overgaard Assistant Finance Director, stated there is assets in cash and cash
equivalents of $6,130,000 for development reimbursements, and $4,342,000 to be used for
debt service. He stated the money is in interest bearing accounts, one being Wells Fargo,
and the other is Regions Bank. There is a small accounts payable of $600.00 leaving a
total equity of $10,500,000. On the revenue and expenditures there are transfers in the
schedule in the amount of $10,160.000 for debt service and reimbursements to the
Developer. The bond proceeds are $9,150,000 the expenditures are almost $9,000,000
for professional Services reimbursement to the developer. Bond payment interest of
$1,054,263 principal $430,000 along with some bond issuance cost of $10,600,000 net
change in fund balance of $8,700,000 leaving and ending fund balance of $10,472.000.
There was a bond payment on September 1, of $3,600.000 which will be on the September
financial statement.
Voting "Aye" Boardmembers Reid, Baker, Sloan, Pool, and Carbone.
Voting "No" None.
Motion Passed 5 to 0.
Board Action — Resolution No. RDAP-2014-04 — A Resolution of the Development
Authority of Pearland (DAP), Ratifying Checks 1116 through 1125.
Rick Overgaard Assistant Finance Director stated this item is for the Board to ratify checks
1116 through No. 1125 for services provided to the Board. These checks were reviewed
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and have been approved by the Invoice Review Committee.
Boardmember Reid explained the policy for the Invoice Review Committee which consists
of himself, and Boardmember Baker. The Invoice Review Committee signs the checks
prior to the meeting making payments in a timely manner and the Board ratifies the checks
at the meeting.
Boardmember Pool made the motion, seconded by Boardmember Carbone, to approve
Resolution No. RDAP-2014-04.
Voting "Aye" Boardmembers Reid, Baker, Sloan, Pool, and Carbone.
Voting "No" None.
Motion Passed 5 to.
Board Action — Resolution No. RDAP- 2014-05 — A Resolution of the Development
Authority of Pearland (DAP), accepting the Investment Report for the quarters ending
December 2013, March 2014, and June 2014.
Boardmember Baker made the motion, seconded by Boardmember Carbone, to approve
Resolution No. RDAP-2014-05.
Rick Overgaard City of Pearland Assistant Director of Finance provided the Board with
details of the Investment Reports for the quarters ending December 2013, March 2014,
and June 2014.
Voting "Aye" Boardmembers Reid, Baker, Sloan, Pool, and Carbone.
Voting "No" None.
Motion Passed 5 to 0.
Board Action — Resolution No. RDAP-2014-06 — A Resolution of the Development
Authority of Pearland (DAP), adopting an Amended Investment Policy, Investment Strategy
and approved brokers in accordance with Chapter 2256 of the Government Code ("Public
Funds Investment Act").
Boardmember Sloan made the motion, seconded by Boardmember Pool, to approve
Resolution No. RDAP-2014-06.
Rick Overgaard Assistant Director of Finance stated each year the Board is required to
approve any changes to the Investment Policy, Investment Strategy. The investment policy
contains only one minor correction and no proposed changes. Under the definition for
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Federal Deposit Insurance Corporation (FDIC), the amount of insurance changed from
$100,000 to $250,000.
Voting "Aye" Boardmembers Reid, Baker, Sloan, Pool, and Carbone.
Voting "No" None.
Motion Passed 5 to 0.
Board Action — Resolution No. RDAP-2014-07 — A Resolution of the Development
Authority of Pearland (DAP), Texas approving a contract with Arbitrage Compliance
Specialists, Inc. for Arbitrage Compliance Services.
Boardmember Baker made the motion, seconded by Boardmember Carbone, to approve
Resolution No. RDAP-2014-07.
Rick Overgaard Assistant Finance Director stated the IRS does not allow the City to earn
more interest than the City is paying on debt. This is a contract to renew services with
Arbitrage Compliance Specialist, Inc. for the fiscal year 2015. The Arbitrage calculations is
in the amount not to exceed $7,535.00.
Brief discussion ensued between Boardmembers and City of Pearland Finance Director
Claire Bogard and Assistant Finance Director Rick Overgaard regarding the Letter for
Arbitrage Compliance Services Exhibit "A" needing to reflect the corrected total amount.
Voting "Aye" Boardmembers Reid, Baker, Sloan, Pool, and Carbone.
Voting "No" None.
Motion Passed 5 to 0.
Board Action — Resolution No. RDAP- 2014-08 — A Resolution of the Development
Authority of Pearland (DAP), Texas authorizing a developer reimbursement to Shadow
Creek Ranch Development Company LTD to reimburse for TIRZ infrastructure
improvements in the amount of $6,285,000.
Boardmember Pool made the motion, seconded by Boardmember Baker, to approve
Resolution No. RDAP-2014-08.
Claire Bogard City of Pearland Director of Finance stated every year at this time the Board
is presented with a request for approval of cash reimbursement to the developer. One of
the main function of the Board is to issue debt and or use the cash to reimburse the
Developers for infrastructure improvements for the TIRZ also known as Shadow Creek
Ranch. The reimbursements are based on Letters of Finance Agreements approved by
the TIRZ at their meetings. To date there is approximately $182.5 million dollars of audited
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approved Letters of Financing Agreements which have been audited improvements for
reimbursement by the TIRZ Board, of which $97.6 million which has yet to be reimbursed.
The amount excludes accrued interest from the principal for construction. To date the
Board has issued $66. million in debt reimbursement to the developer pursuant to the
financing plan including interest of which $38.million has been made in cash. In August,
pursuant to the Tri -Party Agreement, a release of 2013 Alvin ISD suspense funds and all
monies from the TIRZ, less operating costs were transferred to Regions Bank, the trustee
of the bonds. Regions Bank retained the amount required for annual debt service
payments ($4.5 million) and returned the remaining monies, considered surplus and
available for developer reimbursement. The TIRZ also received $1.3 million in September
from the Texas Education Supplemental payment (TEA) for 2013 supplemental taxes. Ms.
Bogard continued to provide an overview of the latest cash analysis for the Development
Authority of Pearland, and stated after retaining $15,500 for operating costs and $1.0
million for reserve, there is $6,285,000 available for reimbursement.
Brief discussion ensued between the Board, Rick Witte, Andrews Kurth LLP, and City of
Pearland Finance Director Claire Bogard regarding the accrued interest rate amount
calculations.
Voting "Aye" Boardmembers Reid, Baker, Sloan, Pool, and Carbone.
Voting "No" None.
Motion Passed 5 to 0.
Council Possible Action — Discussion on Bond Sale- Series 2014 in the Estimated
amount of $7,770,000.
Ryan O'Hara BOSC, Inc., provided an overview of the bond market. The current Bond
Buyer index is at 4.17 percent, the Revenue index is at 4.9 percent. This is a 20 and 25
year index corresponding to double-A and an A -plus market. The last couple of sales have
been made to Private Placements. The Private Placement means a qualified bank, or
financial institution. The Private Placement is provided the financial documents along with
a bid sheet and a term package. The Private Placement expenses are less, giving a much
better rate, and do not require a reserve amount. A public sale requires a bond insurance,
the preparation of documents, getting ratings and having a reserve deposit, roughly about
$815,000 in this case. It is estimated for all cost rate at the Private Placement to be a little
over 3.5 percent. We are looking to sell these bonds with the Board's approval on the
afternoon of November 10th and then presenting them to Council that evening for approval.
In anticipation of the amortization of these bonds. The TIRZ goes away, and in 2028,
money comes around we make a payment in 2029. That is basically a 15 year
amortization. These scenarios are based on a 3.25 interest rate in today's market. As
part of the Alvin Independent School District agreement we do not bond against them and
they have the option to exit the TIRZ. We do bond against Pearland, Brazoria County, and
Fort Bend County, and that is how we determine the sizing. Provided to us by assessments
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of the Southwest. The schedule we are trying to adhere to is to get the term sheet and the
bid sheet out into the market on October 14, 2014. We will come back to the Board and to
City Council on November 10, 2014 for approval of the sale, so that we may close on
December 9, 2014.
Boardmember Carbone asked if the 7.7 was based on the 3.25 rating, and at which point
will the Board issue the proceeds to the Developer.
Claire Bogard City of Pearland Finance Director stated that it is typically wired -out after
closing possibly in December.
Ryan O'Hara BOC, Inc., stated for clarification, at this time we are requesting the Board's
approval to move forward to distribute the term sheet and get the best rate from all the
bidders. The actual bid result will be provided to the Board at the next meeting.
Rick Witte, Andrews Kurth LLP, stated they will provide all the legal documents before the
next meeting. They will be similar to the last two transactions in the past with Private
Placement Banks.
Boardmember Carbone made a motion second by Boardmember Sloan to express the
intent to move forward with the bond issue as described.
Voting "Aye" Boardmembers Reid, Baker, Sloan, Pool, and Carbone.
Voting "No" None.
Motion Passed 5 to 0.
ADJOURNMENT
Meeting was adjourned at 4:47 p.m.
Minutes approved as submitted and/or corrected this the 10th day of November, A.D., 2014.
ATTEST:
Ed Baker
Secretary
Tom Reid
Chair
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