2015-09-21 DEVELOPMENT AUTHORITY OF PEARLAND SPECIAL MEETING MINUTES MINUTES OF A SPECIAL MEETING OF THE DEVELOPMENT AUTHORITY OF
PEARLAND, CITY OF PEARLAND TEXAS, HELD ON MONDAY, SEPTEMBER 21,
2015, 3:00 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 4:03 p.m. with the following present:
Chairman Tom Reid
Secretary Ed Baker
Boardmember Tony Carbone
Boardmember Bill Sloan
Boardmember Tom Pool
Others in attendance: Claire Bogard, Finance Director Maria E. Rodriguez, Deputy City
Secretary, Lynne Humphries, Allen Boone Humphries and Robinson LLP, John Robuck
BOSC, Inc. Rick Witte, Andrews Kurth LLP, Drew Pelter Shadow Creek Ranch
Development Company Ltd.
NEW BUSINESS:
Board Action — Discussion and Approval to Proceed with Private Placement Bond Sale
—for Series 2015 Bonds.
Claire Bogard Finance Director stated at the last meeting .the Board requested the
Financial Advisor to go back and look at what the impact fee would'be if the Board fixed
out the Bond Series 2012,for those Bonds that have a variable rate after May 2022, along
with the Bond Sale.
John Robuck BOSC, Inc. stated after looking at the refunding Bonds for 2012 that go to
variable in 2021, it make sense to go ahead and proceed with the Private Placement
Bond Sale for Series 2015 Bonds. He stated not much has changes from last week the
Current Market Conditions are the same. He provided the Board with an overview of the
preliminary$65,995,000 Tax Increment Contract Revenue and Refunding Bonds, Series
2015.
Claire Bogard stated this would result in a total Bond sale of$65,995,000, $45 million to
I be used to refund the series 2012 Bonds, and set the interest rate out. New money
$9,565.000 and about$3,018,000 in issuance costs that make up almost$66 million.
John Robuck, noted the refunding is not a restructuring but savings purely to provide
capacity to the Developer by extending it for savings, and locking in the fixed rates.
Boardmember Carbone stated by doing this it is saving $1.5 million in terms of value plus
getting rid of the tale end interest rate. He stated he appreciates all the scrambling and
work that has been done to provide this information.
Discussion ensued between the Board and John Robuck regarding the 10 year call
provision and the fixed rate.
Boardmember Carbone made the motion, seconded by Boardmember Sloan, to approve
the refunding of$45 million and the new money of$19,500,000 a total of$65,995,000 as
an estimate.
Voting "Aye" Boardmembers Reid, Baker, Carbone, Sloan, and Pool.
Voting "No" None.
Motion Passed 5 to 0.
Board Input and Discussion — Discussion Items - $1.0 million reserve, List of Letter of
Financing Agreements approved for reimbursement; Bank Credit Use.
Claire Bogard stated there are 3 three items for discussion, the first being the Letter of
Financing Agreements that has been Approved for Reimbursement based on actual cost
which is $149 million. The Letter of Finance that was approved by the Board was $173
million this amount is lower by$20 million and under budget. That is only the construction
cost excluding interest. She noted in the Boards packet is a list with the Letter of Finance
Agreements, and they are listed in order of reimbursement. She stated there is still $11
million owed to Shadow Creek Ranch Retail, almost $6.0 million owed to the City, and
the remaining owed to Shadow Creek Ranch. Mrs. Bogard also stated there is still
$21,585,000 left for reimbursements worth of Letter of Finance Agreements.
Discussion ensued between the Board, Lynne Humphries, and Claire Bogard regarding
the order of the Letter of Agreements and the process for reimbursement.
Claire Bogard stated that she has checked with Mark McGrath to see if they can go back
and adjust the annual interest rate for a small fee, if the Board agrees, it is worth it. Since
the compounded interest is calculated based on when the Letter of Agreement is
approved for reimbursement without the interest that is actually being paid at the time of
reimbursement.
Boardmember Reid stated that the records should reflect the actual amounts being
reimbursed.
Claire Bogard stated at the Boards request staff looked into the options to pay the Agent
Fees with the Wells Fargo Bank Credit, but, since they are separate entities Bank Credits
cannot be used for paying agent fees. There are$2,800 in bank credits currently available
which can only be used by the Board for small bank services.
Claire Bogard stated at the previous meeting the Board had a question on whether to hold
the million dollar reserve. In 2012, the Authority's previous bond sales were all refunded
via a private placement which required no reserve and the Bond Reserve was used to
reimburse the Developer. A reserve is used for debt payments if by chance the Authority
could not make its annual debt service payment. Since there is no debt service reserve
requirement, the Board, at staff recommendation, set aside $1.0 million in order to have
some reserve in case of lower taxable value resulting in lower tax increment coming into
the Zone to meet its obligations. Based on a $1 million reserve, that would allow for up
to a 13 percent drop in value in a year or a drop in value over several years. The $1.0
million would only cover one year for a 13 percent drop in value, if values did not rebound
the following year. If we were to assume a 10 percent drop in values in a given year, this
would require $745,000 in reserves, based on current value, based on current debt.
Staff's recommendation is to keep the $1.0 million reserve requirement.
John Robuck stated when Bonds are issued as public debt the$1.0 million is the minimum
requirement in the reserve fund. He stated the $1.0 million dollar reserve fund is a safety
net should the values drop.
Discussion ensued between the Board, John Robuck and Lynne Humphries regarding
private placement reserve requirements and the interest rate.
Boardmember Carbone stated this item should be looked at again around 2018 or 2019
once the full built out is reached.
No action taken on this item at this time.
ADJOURNMENT
Meeting was adjourned at 4:30 p.m.
Minutes approved as submitted and/or corrected this the 26th day of November, A.D.,
2016.
C— �orrl
TOM REID
CHAIR
ATTEST:
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ED BAKER
SECRETARY