001This is the regular meeting of the tax increment reinvestment zone of January 26 4:30 p.m. at city hall. Uh Mark says, please. Item three, conduct a discussion related to tax increment reinvestment zone number one regarding available tax increment funds and other zone related matters. >> I don't know. >> Mr. Dado, >> it's a council but not council. Mr. the chair, board of directors of the tourist, uh, Lupe Essado, development services director. Um, this item is really just to provide you a brief summary of where the current tourist fund is. It's been a quite a bit of time since our last meeting, as you can tell by the last meeting minutes you're going to approve here in a little bit hopefully. Um, anyway, just wanted to go over just uh share with you there's a print
002out in front of you uh from our current adopted budget that just shows you how it's slowly incrementally grown over the years. Uh obviously there's there's a lot uh I guess in the forecast that's in the tur um you know one of the items on the agenda is regarding that new growth in that side but it's growing slowly. Uh and I think as we as we continue to grow we'll we'll see these numbers jump a lot more. Um but that was really the just a quick summary. We just wanted to provide you this as a reminder of this is where we stand and uh showing you the 2526 projections for that fund. Okay. Would you like to just give a just a very quick summary of what a TUR is just for understanding of from
003the public? >> Yeah, sure. Uh the so the this this particular TUR is a tax increment reinvestment zone. It was created by council in 2022. Uh the base year is January 1st, 2022. And it was a large area of town. It's available on our GIS map on our website. Uh that's really made for and it was created for encouraging development and that undeveloped land. Uh any any value that was established on that January 1st, 2022 date is the base value and anything that grows after that is considered new increment. Um, and a portion of that, in this case, 50% of that tax revenue, property tax revenue from the city's tax portion, uh, gets put into a special tourist bucket, which is that summary page in front of you. Um, and then that is utilized to
004incentivize development, infrastructure projects, and a long list of other items that was in the project, uh, and finance plan. So, um, all of that is, uh, I said, has been in place since 2022. And the next item here is actually our first agreement to consider within that zone since 2022. And so, um, in a nutshell, it's a way to incentivize development, uh, and to get that raw undeveloped land, um, to get some improvements and infrastructure put in place. Do they have any questions or anything? Okay. Item four, consideration possible action on a development agreement between tax reinvestment zone number one, TUR number one, the city of Navasota and Grimes Altameira LLC. Uh Mr. Chair, board, the updated agreement is actually printed in front of you. the digital version if you're using it on your smart
005uh surfaces is also updated in the packet. Uh but there there was some final changes, last minute changes incorporated. We received the final accurate cost estimates for the project and so that is in your packet in front of you. Uh as well as digitally online um just for your reference that that is what you're considering tonight. Um in summary, this is for uh as you as you read it's for Grimes Altameira the tourist board and the city council. uh it is to um consider this ultimate development agreement. In total uh the total amount of improvements or contributions that are being asked for reimbursement will be 9,124,278.38. Um this agreement was reviewed by both the developer city's legal council as well as our TUR consultant which is Haw Hill. Uh and Nicole is actually here tonight
006if y'all have any questions in particular about the agreement. Um, and all in all, we've, this has been a a document in progress since about 2024. Uh, there's been a lot of revisions, a lot of uh back and forth. Uh, but it's finally at a place where both this the the developer as well as our tourist consultant felt that it it finally checked all the boxes. Um, and it is before y'all for consideration. If it's approved tonight, it will then um go to city council for their consideration. Um, and then hopefully in the interim if if it does get approved, we'll get an executed version from the developer uh that's present here tonight. Uh, Mr. Arden and I'll open the floor for any questions. Lupe, uh, when will that 9 million be due? >> It's
007over the course of the TUR, right? So, the TUR is 30 years. Um, I think it expires in January 1st, 202. And so these are going to be um that is how much the developer can be paid up to that amount from the TUR from now until 2022. Right? So if he builds all of the all of the homes and and well there's actually there's actually a lot of milestones in this document that say when the construction should start when the home construction should begin. Um but but it'll be over the course of that entire tur tur zone. So, the creation ordinance of the TUR zone was was a 30-year TURS. So, within that 30-year window, that's where you're going to be able to utilize those funds for eligible projects. And the projects listed here
008do align with the project and finance plan that the council approved. >> What I did not find out u in this uh in this document here is that just said in year three, he's won a million dollars. If there's not a million dollars in the account, where did that come from? >> We we can only reimburse based on available funds, right? So, if if there's not a million dollars collected in the tourist fund at year three, then the developer would have to wait u to get that portion back until we accumulate that amount. Is is is that in this agreement somewhere that I just open up? Think it is. >> Article six. Article six, what number? >> Yeah, >> if you just look at article 6, paragraph B there, councilman, it says at such time
009as funds are available to pay all or any portion of the developer advances and then it lays out the the process. So it it just kind of sets it out right there at the beginning of the paragraph saying whenever the funds are available at such time as And then if you look at that same section, paragraph E, the top of the very next page, it says the zone's obligation to pay the developer is limited to pledged available tax increment. So the obligation to pay them is always limited to the increment that's been generated by the value. And as that money is generated and and accepted been kept in our I guess in our just in in general funds or does it have its own account? >> Tourist has its own fund >> account and then
010um is it >> it just basically just sits there. It's not it's not invested in any way or anything like that. It's just it's >> just like it would be it would be handled with consistent with the city's investment policy. So in almost all cases when money is sitting idle it goes into one of the state investment pools. So there is it does generate and it and that is all tracked. It generates its own uh investment income or interest um and and that does stay there as a >> um >> that does help >> earned income on the on the fund >> helps it grow. >> It does. >> Yeah. And one other clarification I'll offer just to the uh for the boards. This is the first one that's that's really come through and really
011just for the public as well. Um the question earlier was when is the the payment due. The way the TUR operates that there's really two different ways the developer could be refunded. Um the developer sets up the money or puts the money out upfront for eligible projects, most often infrastructure projects. They put all the water lines in, wastewater lines in the streets in the subdivision, all of those infrastructure elements, and they submit those receipts as um eligible expenses that have been incurred. And then as the TURS generates revenue annually the tax bills go out money comes in 50% of the increased value that was generated by this development becomes the TUR increment that's available to pay back for those eligible projects. Um oftent times for large TUR especially um in this case because we have
012created a TUR that's more than just this one development future boards and councils could decide to issue debt so that they can pay off those eligible projects quicker and then the debt gets paid off by the TUR increment over the course of the TUR's value. It doesn't change anyone's tax rate. It just it just stops us incurring interest on the developer expenses. He gets repaid a couple million dollars right up front and then the TUR pays off that $2 million or so of debt over the course of the life of the of the TUR again by the by the increment. Sometimes that saves uh the community money and there will be as this gets down the road those calculations will be done by um by the TUR's administrator and and they they'll be making recommendations
013uh to future councils future boards uh for for those kind of things. But uh if you in the early days it would be it's what's referred to as a cash flow uh TUR where just the annual amount that's generated is used to pay off whatever it can. It's just only it's going to be a a relatively small amount in the early days because you have fewer homes. But as that scale starts to grow and you start generating more, oftent times communities find it advantageous to go ahead and issue TUR bonds uh against the TUR uh increment that will be coming in future years. Go ahead and pay off those debts and um to the developer and pay down that debt over the course of the time. So just kind of wanted to lay out there
014that there there could be it may not always be a cash flow tur there. The option there would be for future to issue uh debt against it. But again uh in no case is that suggesting that uh the tax rate would be changed or anything changes. It's just the manner in which uh your funding the the the infrastructure improvements that that got built. So if I'm following you right, what you just said was that 50% of the improvement will go into this account, >> right? So uh in I'll try to in in the way I understand it, the the you like Lupe said, uh the base value got established in 2022. So, let's just say that was $1 million for this whole TUR property. As developments occur and you know the next year it's worth
015$2 million now because it's got improved homes on it. The increment the incremental value is that additional million dollars. So, you take that incremental value whatever the city's tax rate is half of that goes into the TUR's pot. The other half goes into the general fund to provide services, police, fire protection, and all the other city services that get provided to the neighborhood, the new neighborhood that's been created. >> And this is uh until what year? >> 52. It was a 30-year TUR. It can be ended before that if it's paid off though, can >> it could? Yes, sir. Or the city could choose to to leave it and leave that money in there for for city projects. we may decide we want to build a fire station over there. Once the developers repaid for
016all of that, that money still sits there for eligible projects. And the way you all created the tours that was done before I got here, but uh it's got a lot of eligible public projects. So after those are done, the the city could decide that additional park space is needed to be developed over there. Uh it could be a fire station to serve the neighborhood. It could be any number of public projects that could be you could use then use that uh that tur increment to fund. >> This is this is essentially not using the city's credit. >> Right. Well, if and when TUR's bonds are issued, they they would be under the the reinvestment zone. They they would be issued by the TUR. That that is correct. The the difference is they are secured
017by the city's tax because the city has committed a tax. So there is a there is a direct line there to the city's tax rate and the city's taxes um as opposed to the PID where you you all have considered some public improvement districts slightly different. Those um are not secured by a tax they're uh secured by a a levy an assessment. Um sorry that uh so it's slightly different but in this case uh it would be secured by the by the TURS not necessarily by the by the city's credit. Yeah. >> Mayor I have one question on section 9.4 four where it's got the city attorney's address. I'm wondering if we should put his company title that city of Navasota with his mailing address in groundwork. I don't know if something would get delivered
018like that. That's the only thing I did have and Cochran there. Yeah, it wouldn't hurt to to to reference Bo & Conquer, but I think it still needs to say city of Navasota because they do represent more than one reference Bo and Conquer. I don't know that the post office would deliver it like that, but that's >> and they did review this. So, Carrie and Luke both uh reviewed it. So, And you said someone was here from this particular group, >> the the developer as well as um Hos Hill, the the the >> ter administrator. Sorry. >> Yeah. Can you come up and kind of refreshing a memory on uh the number of homes and everything that was built up there? Cool. Yes sir. So the the development actually itself is 96.6 acres. Uh the
019plan as it's drawn today is about 400 homes. Uh for the purposes of the TUR, we had to come up with an average sale price, I guess, if you will, and that sale price is $290,000. Um, we think that's conservative, but that was we did that on purpose. We think they'll be higher, especially eventually. Um, the first phase, first two phases is what we're planning on doing. Uh, those first two phases, uh, will have a combined total of about 80 lots. Um, and so we anticipate that hopefully, if things go well, the builders will take those down over the course of about two years. Um we're hoping to get going on the project pretty soon. Looking at Lupe for that. Um and so if we do uh we're actually ready to close on a loan
020any moment to start. Um we think we have about uh 9 months or so of construction to do. Um we're taking utilities from the site back to the city which is about a mile. And we've got to do uh sewer and gas initially uh water eventually. Um and then of course build the 80 or so lots. So we think we've got 9 months. That's probably wishful thinking. Should probably add 3 months to that. Um so 9 months to 12 months for construction before we can actually have a builder in there starting a house. And so their construction time would probably be oh four to six months, something like that. So if we pulled the trigger today, which we're still 30 to 60 days probably um away, um we would have houses starting probably in the
021first quarter of 2027 and ready for people to purchase middle to third quarter 2027, I think. That's that's optimistic probably, but that's what we're hoping for. >> So that's what the electric trucks are doing out there now trying to get electric to the place. >> I have not been by there in last week or so, but if if that's uh Midsouth, that could be that could be. Yes, sir. I haven't talked to anybody from Midsouth in a while and they're and they do their kind of own thing. So, if they're if they're out there, that's good news. That'll be my first phone call in the morning. >> There's some trucks out there. I don't know whether they're mids south or or whatever, but there is electric trucks out in the field working. >> Okay, very
022good. Very good. We I think that's uh we have to have a water plant. Um and so the city is as anxious as we are to have that water plant up and running and put water in the water tower and those kind of things. Uh, and Midsouth is our provider over there. >> So, in your first phase, you're saying that you're going to do like 80 homes, >> correct? >> In phase two, you're going to do 80. >> It's uh, well, phase one and two combined, we're doing those and the combined total is 80 lots, 83 or something like that. So what we got on that end it it would the water situation would work. >> Yes. Yeah. Yeah. the um the the current estimates were that that well will serve 200 to two somewhere
023in the low twos low 200s >> of of lots and that gives us couple two or three years to be finding a solution for the rest of the development. I don't know if this helps, but another way to think about that just for round numbers, if we have 80 houses out there in the next four or five years, that's um and if the average price is 300,000, help me with my math. I think that's $2.4 million worth of value on the ground. So then I I can't do that in my head, but half of the the the tax would go into the TUR like you're talking about and then half would go into the I guess general revenue fund. That's not my perview, but >> right. Anyway, I think simple math is $12 million over
024the life of the project, assuming a $300,000 home, which we think, well, it has to. Nothing ever gets cheaper. uh when the the phase one and phase two is finished uh you got any time frame that you want to start the third and fourth phase? >> Uh well I think uh per the agreement we have to keep on moving um to to stay within some of the guidelines that are set. Um, and then once we have kind of a an anticipated takedown from the builders, how they're doing. Um, I think initially we'll at least be starting the engineering uh for phases probably three and four almost as soon as you see houses on the ground out there. We'll be planning for phases three and four. And if we can get any kind of guess on
025how fast cuz those next phases uh to build would probably take 6 months on a good day um 6 to9 months. So we have to kind of project okay when are we going to run out of lots and we need to be have have those lots on the ground um when the builders are ready for them. I don't know if that answers your question, but okay. Other than this table of cost, What were the changes that were made between this copy that we had in our packet and this >> that was the only cost or the only change was the minor difference in the cost and then I did actually catch that uh the base year it said it was 2025 and it should have been 2022 so that today Okay. U another question there
026for the developer there. U what's a detach home? >> Just a single family home, just a regular uh instead of say a duplex where there's two homes basically attached. It's just a single family. >> Okay. Detached home like you're used to seeing on the west side of town. >> Okay. So it's not like a home here and then and then they go garage is detached. >> Correct. Correct. That's right. >> Yeah. >> Just one of the builders you you're familiar with is Stylecraft. They're probably going to do what Stylecraft does and build similar to what you're seeing over on the west side of town. uh Mr. Himmer with this uh has been already in place before you came and everything. Do you feel pretty comfortable with it or any thing that you think that we
027may need to make some changes on or you think it >> No, I I I feel like it's it's in a really good place. So, I've I've I've been in several meetings with the with the developer and and with our team and and we've we've gone through we we have adjusted a few things, but Haw Hill has done a really good job working with our with our legal council to to make sure that uh it's in there in the format that the that the city is looking for and and that we've got got a good plan in place. I feel like that uh this this is not out of line from what my experience tells me for for this number of houses. The amount of infrastructure this property did require some uh some pretty substantial
028off-site improvements and some a lot of infrastructure as you all are aware. Um it had some challenges and and this is allowing us to to capture those through a a TUR increment. uh the developer can put them in and then get reimbursed. And I think it still gives us enough um uh excess or surplus in there in what we're expecting today that if there are in five or eight years from now, there are some uh some city projects that that a a future body sitting here uh wants to endeavor into. there there probably will be available funds in this uh to help do some of those improvements as well. And so uh I don't think we're we're cutting it too close. I don't think we're overextending. I think it's a a good good agreement. If
029there's no more question, I'd like to make a motion. Uh, I move that uh we uh approve the tax reinvestment zone number one, the city of Navasota and Grimes Altameir LLC. >> Second >> motion and a second. And I assume that's inclusive of whatever corrections were made, right? >> Correct. Yes. >> All right. Any further discussion? All in favor say I. >> I. Any opposed? Seeing none, item carries. >> Item five, consideration of possible action on meeting minutes from November 13, 2023. 2023. >> Everyone remembers, right? Chair, I move that we accept the minutes of the September 13th, 2023 meeting. >> Second motion by motion in the second. That's November 13th, correct? 2023. Any further discussion? All in favor say I. I. Any opposite item carries zone board.