Sugar Land 4B Corporation

Agenda Request

Agenda Of:

12-16-09

Agenda Request No:

ii-a

Initiated By:

Nelda McGee,

executive secretary

Responsible Department:

City Secretary

Presented By:

Glenda Gundermann,

City Secretary

Department Head:

Glenda Gundermann,

City Secretary

 

 

Additional Department. Head (s):

N/A

Subject / Proceeding:

minutes Sugar Land 4B Corporation Meeting November 18, 2009

Approve Minutes

Exhibits:

Minutes November 18, 2009

Clearances

Approval

Legal:

N/A

Director:

Regina Morales,

Economic Development

Recommended Action

Approve the minutes of the Sugar Land 4B Corporation meeting November 18, 2009.

Exhibits

 

 

STATE OF TEXAS

 

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COUNTY OF FORT BEND

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CITY OF SUGAR LAND

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CITY OF SUGAR LAND

Sugar Land 4B Corporation MEETING

November 18, 2009

 

REGULAR MEETING

 

The Sugar Land 4B Corporation convened in regular meeting open to the public in Cane Room, 161, of Sugar Land City Hall on Wednesday, November 18, 2009, at 4:00 o'clock P.M. and the roll was called of the members; to wit:

 

Ray Meyer, President

Donald G. Olson

Donald L. Smithers

Robert Pickell

Himesh Gandhi

James Clancy, Jr.

Mary Favre

 

QUORUM PRESENT

 

All of said members were present, with the exception of President Meyer, who was absent.

 

Also present were:

Regina Morales, Director of Economic Development

Jennifer Brown, Budget and Research Director

Nelda McGee, Executive Secretary, and

A Number of staff and visitors

 

CONVENE MEETING

 

Director Olson convened the session, open to the public, to order at 4:15 o’clock P.M.

 

Director Olson welcomed new members and asked the Directors to introduce themselves; Ms. Regina Morales, Director of Economic Development introduced staff members to the Board. 

 

Orientation

 

Director Olson introduced orientation and discussion on members’ role in economic development processes and objectives, use of sales tax funds, and review of projects funded by Sugar Land 4B Corporation.

 

Ms. Regina Morales, Director of Economic Development briefed members on the background and history of the economic development sales tax that funds the 4B Corporation, the purpose of the 4B Corporation and the role of the Directors, the budget process, an overview of eligible projects that can be funded with the 4B sales taxes, and a project update from the previous year.

 

Economic Development Sales Tax

 

Economic Development is defined as the process by which new dollars are infused into a local economy creating capital investment, jobs and thereby increasing quality of life for residents; its underlying foundation is to create new wealth and create primary jobs.

 

Basic strategies for Community Economic Development include:

 

 

The economic development sales tax was created in the 1980s to provide smaller Texas communities the financial resources to attract primary jobs and create wealth; it is now the foundation of economic development programs in more than 500 Texas communities.  The 4B sales tax is approved by the voters of the community; this allows one-half of one percent of the local sales tax limit to be used for economic development activities.  The 4A and 4B share this equally, one quarter percent each.

 

Legislative changes to the economic development sales taxes and Corporations include:

 

 

Director Clancy asked the definition for “primary job”.  Ms. Morales stated that it relates to the type of industry, NAICS Codes, the creation of goods, and transfer of goods throughout the local economy.

 

 

The Attorney General Economic Development Handbook list totals 4A/4B Sales Tax Cities as of May 2008:

 

 

Sixty-two percent of the 4A and 4B cities have a population less than 5,000:

 

 

Since the majority of cities are classified as rural communities, changes in the sales tax legislation may not always be in the best interest of Sugar Land.

 

Purpose of the Sugar Land 4B Corporation

 

The Sugar Land City Council adopted Resolution 06-05 in 2006 to define the role of the Sugar Land 4B Corporation:  to assist in the implementation of the City’s Capital Improvement Program and Economic Development Program by performing procedural acts necessary to provide funding to accomplish identified projects and programs.  CIP Program and/or Economic Development Program projects will be presented to the Board throughout the year for consideration and recommendation, if different from what has been approved in the budget.

 

The Sugar Land 4B Corporation was created in 1995 as a funding source for First Colony Mall infrastructure; the current focus is quality of life initiatives.  The Board was created to have seven Directors appointed for staggered two-year terms with a term limit of three consecutive two-year terms.  The Board authority, bylaws, charter, legal procedures and policy can be found in each Director binder with a list of dates for Fiscal Year 2010 meetings.

 

State statute charges the 4B Corporation with:

 

 

The Sugar Land 4B Corporation budget responsibilities include:

 

 

Budget Process

 

The budget is adopted annually at least 60 days prior to the end of current fiscal year (September 30); staff will conduct a workshop for the Directors prior to budget adoption.  Subjects addressed during the workshop include:

 

 

Funds may be spent on the following:

 

 

Permissible Projects

 

There are eight defined project types that qualify as primary job creators:

 

 

Exceptions include other authorized categories not required to create or retain primary jobs:

 

 

Quality of life projects are separate from primary jobs and include expenditures for land, building, equipment, and improvements:

 

 

The 4A and 4B are permitted to expend sales tax proceeds for promotional expenditures (Sections 504.105 and 505.103).  The Attorney General Opinion GA-86 (2003) states:

 

 

Director Clancy asked if “primary job” means someone who works for one of the eight defined project types, does building one of these type facilities create primary jobs.  Ms. Morales stated it does, but it is not necessary to create the facility; an incentive to the company could be linked to creating a primary job within the industry.

 

Director Favre asked if there was a criteria formula used to make that determination.  Ms. Morales stated staff performs an economic impact analysis on the project to determine the benefit to the community; no incentive or infrastructure assistance is provided unless there is a positive net benefit to the community.  Should the City decide in favor of a project, a performance agreement is used to obligate the company to provide proof primary jobs were created prior to receipt of funds.

 

Project Updates

 

Ms. Morales stated that staff created a business development map that shows the City layout and the development style through zoning; which provides a complete listing of the primary job creating businesses within the community.    Other marketing tools include national and international advertising, press kits, and targeted marketing of brokers and site selectors through an online presence in “Area Development Online,” with possible expansion to “Site Selector.”  

 

“Fast Facility” is an online database that the City uses for fifteen property listing sites; the sites are updated monthly with available corporate offices, industrial, or land sites.

 

“Online GIS Application” launched in October and is linked into the City Economic Development website for easy public access.  The aerial contains layers of information such as appraisal district parcels, reinvestment zones, and infrastructure that can be researched by menu selection, overlay, and zoom-in/zoom-out functions. Site selectors can access information instantly, print PDF reports and email, or request custom demographic reports based on a certain site.

 

Director Favre asked if the site contains available lease spaces.  Mr. Tim Neeley, Economic Development Manager stated the property search feature links directly into “Commercial Gateway;” which tracks available properties; searches can be done by criteria and updates are in real time. 

 

Director Favre asked how often the GIS aerial photos are updated.  Mr. Neeley replied the aerial photos are updated on a yearly basis.

 

Another program partially funded by the 4B Corporation is Shop Sugar Land and the Shop Sugar Land Website; visitors can access a database of over 900 retailers and restaurants through query or interactive map.  Shop Sugar Land is available in a print version, which has been very popular with hotels and business with international visitors. 

 

Other projects include a real estate exposition Trade Show Booth that targets commercial growth and developers and funding for the build out and landscape of the Houston Museum of Natural Science Sugar Land Satellite. 

 

Ms. Kimberly Terrell, Parks Development Manager discussed Sugar Land 4B Corporation funded projects:

 

 

Director Clancy asked for clarification on Master Plan.  Ms. Terrell stated a Master Plan precedes the detail design process and includes a significant amount of citizen input and community involvement; program elements are refined into the project.

 

Director Olson asked for a status update for the Sweetwater Boulevard and U. S. 59 landscaping project.  Ms. Terrell stated that the construction documents were 90 percent complete and staff anticipates going to bid in February 2010; the project is 4A funded.

 

 

Ms. Terrell stated that joint participation projects are brought forward by the community; there are stipulations on what qualifies for matching funds.  Ms. Morales added that the 4B budgets $100,000.00 each year for joint participation requests.

 

 

Ms. Morales commented that this past year both the 4A and 4B Corporations had received the Excellence in Economic Development Recognitions from the Texas Economic Development Council based upon the processes, procedures, and programs implemented by the Corporations.

 

election of officers

 

Director Olson introduced consideration on election of a Corporation President, Vice President, and Secretary/Treasurer for a one year term. 

 

Director Olson stated that the positions of Secretary and Treasurer have been combined for several years; the President serves as Chair for the meetings and the Vice President presides in lieu of the President when absent; all three have signatory approval on checks, staff manages the 4B finances.

 

Following a full and complete discussion, Director Favre, seconded by Director Smithers, nominated Director Olson as President of the Sugar Land 4B Corporation.  The nomination carried unanimously.

 

Following a full and complete discussion, Director Favre, seconded by Director Gandhi, nominated Director Smithers as Vice President of the Sugar Land 4B Corporation.  The nomination carried unanimously.

 

Following a full and complete discussion, Director Pickell, seconded by Director Clancy, nominated Director Favre as Secretary/Treasurer of the Sugar Land 4B Corporation.  The nomination carried unanimously.

 

minutes

 

President Olson introduced consideration on approval of the minutes of the Sugar Land 4B Corporation meeting held on July 15, 2009.

 

Following a full and complete discussion, Director Gandhi, seconded by Director Smithers, made a motion to approve the minutes of the Sugar Land 4B Corporation meeting held on July 15, 2009.  The motion carried unanimously.

 

Contracts and agreements

 

President Olson introduced consideration on a Contract in the amount of $30,000.00 by and between Sugar Land 4B Corporation and Greater Fort Bend Economic Development Council for membership services.

 

Ms. Regina Morales, Director of Economic Development stated the 4B Corporation has participated in the Greater Fort Bend Economic Development Council Contract for fifteen years; the City commitment is for $60,000.00, $30,000.00 each from the 4A and 4B Corporations. The contract is to perform business recruitment, business retention, marketing, and other activities and is in conjunction with the City Economic Development Department.  A change made by staff is to include the Economic Development Director for attendance at the Board of Director Meetings.

 

Mr. Jack Belt, Vice President of Development for Greater Fort Bend Economic Development Council thanked the Board for cooperation and support and stated that the partnership with the City of Sugar Land Economic Development Department has been beneficial to the County; copies of the Greater Fort Bend Economic Development Council Annual Report for Fiscal Year 2009 were distributed to the Directors. 

 

President Olson opened the floor to questions for Mr. Belt or Ms. Morales.

 

Director Clancy asked for detail on how the $30,000.00 is used.  Mr. Belt replied the GFBEDC uses the funds to market and recruit new companies to Fort Bend County; this is done in conjunction with the Sugar Land Economic Development Department, Missouri City, Stafford, Richmond and Rosenberg.  The goal of the combined effort is to brand the County to ensure that the brokers, developers, and anyone involved in the site selection or relocation process know Fort Bend County. 

 

The Greater Fort Bend Economic Development Council represents the County in the tax abatement process and works with the Sugar Land Economic Development Department to make sure the County understands what is being offered and the status of negotiations.  The County follows the City lead, since the City establishes the reinvestment zone.

 

The GFBEDC serves as advocates for anything affecting economic development, outlook, and environment in Fort Bend County; inclusive of involvement in mobility issues, infrastructure, and etcetera.

 

President Olson asked if the City has a seat on the Board of Directors.  Ms. Morales stated the City has two seats filled by the City Manager and the Mayor.

 

Director Smithers asked how many TIRZ were in Fort Bend County.  Ms. Morales and Mr. Belt discussed that there were two in Sugar Land with an additional one currently in the creation process, one in Missouri City for Sienna Plantation, one in Katy, one in Rosenberg, and Aliana, for a total of seven.

 

Following a full and complete discussion, Director Clancy seconded by Director Favre, made a motion to approve the Contract for membership services between Sugar Land 4B Corporation and Greater Fort Bend Economic Development Council.  The motion carried unanimously.

 

Corporate Report

 

Director Olson introduced discussion on Sugar Land 4B Corporation June 2009 Third Quarter Report.

 

Ms. Regina Morales, Director of Economic Development stated the Corporate Report is an overview of the Corporation financial standing and activities, and incorporates local communities’ economic status and national trends.

 

The Executive Summary graphically represents the status of the 4B Corporation Finances, Contracts/Agreements and Projects, City Economic Development Efforts, Local Economy, and National Economy through color coding. 

 

The Sugar Land 4B Corporation June 2009 Financial Report shows increased revenues of 45.82% over last year, excluding bond proceeds; revenues were 90% of Budget by the end of the third quarter.  Sales tax revenues continue to trend up at 2.30% above the year-to-date budget and 3.19% above 2008 year adjusted actual.  Interest income is above budget at $146.49%.

 

Director Clancy asked why expenditures appear to be budgeted 1.5 times the budget.  Ms. Morales stated that some of the items are carryover funds from the previous fiscal year that were not completed.  President Olson added that Ms. Jennifer Brown, Budget and Finance Director will provide a detailed financial report. 

 

Categories of change in expenditures include entertainment up 16.2% and wholesale trade up 36.2% which indicates strong spending habits within the community, averaged out by decreases in construction, manufacturing, and professional services. 

 

Expenditures for the third quarter are $5,512,350 or 31.06% of the budget and 106.58% higher than the previous fiscal year; a bulleted list of expenditures is provided that includes the second land lease payment to the University of Houston, expenses for the Entertainment District, sales tax incentive reimbursements, debt service payments, and contractual services that include reimbursements to the City for support services and capital project management fees.  Sales tax reimbursements are only a portion of the sales tax created through the incentive agreements; the city must receive the funds prior to providing incentive payments to the companies. A chart describes capital projects, the budget for each project, what was spent, and the balance remaining, and investment portfolio information with yields and benchmarks.

 

The financial statement for the period ending June 30, 2009 shows year-to-date actuals for fiscal year 2008, the adjusted budget for fiscal year 2009, the year-to-date actuals for fiscal year 2009, and the percentage of the budget of either revenues or expenditures that were incurred.

 

An overview of securities and a summary of the portfolio is provided.  Greater Fort Bend Economic Development Council reports required pursuant to the annual agreement include prospects/target areas for the Sugar Land area and financials. 

 

A status report on the Countywide Marketing Contract with Greater Fort Bend Economic Development Council is provided.  The City funds $100,000.00 of the program, $50,000.00 from the 4B and $50,000.00 from the 4A; GFBEDC will present an update at the next monthly meeting.  Currently program administration and procedures have been reviewed and approved; brand and identity have been selected; the website has been launched, television spots completed, and print media finalized. 

 

The 4B Corporation provides partial funding for infrastructure serving Sugar Land Town Square TIRZ the report includes a performance overview.  Staff projected $225 in taxable retail sales per square foot, the actual came in at $236.  Occupancy rates were 73% for retail, 82% for Office, and 100% for residential.  Sugar Land Town Square TIRZ revenue and the occupancy rate for the Sugar Land Town Square Marriott is detailed in the report.  The report includes an event activity summary for the Marriott showing how many room nights were rented as a result of specific events, the business mix, and corporate activity.  TIRZ Assignments to 4A and 4B are on target for what was budgeted.

 

Director Clancy asked for clarification on debt service.  Ms. Morales stated the 4B Corporation issued bonds to fund infrastructure improvements, parking spaces, and etcetera; as the TIRZ revenues come in, payments are made to service the debt.  Director Smithers added that approximately one third of the Town Square Debt was paid by the City through the 4B Corporation. 


Ms. Morales stated the Marriott hotel occupancy taxes are provided; the City owns the conference center at the Marriott, leases it back to the hotel, and uses the hotel taxes generated by the Marriott to repay the debt on the conference center.

 

There are 21 active tax abatement agreements which have reporting requirements, performance obligations, and compliancy monitoring requirements; 18 of the 21 agreements were awarded with an average eight-year term.  Minimum requirements for real property, personal property, and inventory within the agreements are tracked by staff; the majority of companies provided incentives have under promised and over delivered in most instances.  Three companies opted not to exercise their exemptions; there were no companies that failed to meet their requirements.

 

Strategic projects assigned to the Economic Development Department include:

 

 

Director Favre questioned if all cities pay $30,000.00 and what the fee is based on.  President Olson stated that Sugar Land is one of the largest members; contribution is based on what the entities are able to pay and what amount of countywide support makes the citywide effort productive.  Ms. Morales added that $60,000.00 was the original membership commitment and has never increased; the $100,000.00 contribution is for the countywide branding and marketing program, the program showcases Sugar Land. 

 

Ms. Morales stated that staff is exploring options for a citywide cultural arts program and convention and visitor services program.   Director Gandhi asked if this was the Entertainment District.  President Olson commented that Entertainment District will come before the Board, but the Cultural Arts Program and Convention and Visitor Services Program strategic projects are different.  The project creates a citywide cultural arts program; Sugar Land Cultural Arts Foundation has a program focused on restoration and use of Lakeview Auditorium.  Director Smithers added that Sugar Land Cultural Arts Foundation hopes to be part of the overall cultural arts program when established.

 

Director Clancy asked if the initiatives will be addressed over the two-year term.  Ms. Morales stated that the Economic Development Department activities will continue forward for several years.  The 4B will not have involvement, unless there is a funding need; staff reports the projects to promote Board awareness.

 

Director Clancy asked for clarification on Board operation; will project review be months in advance or more expedient.

 

Ms. Morales stated it depends on the project; joint participation program projects move fairly quickly and most other programs and projects are budgeted and in progress for the year.  The Board will be involved in developing the budget for next year; staff will bring forward a list of recommended projects based on direction from City Council.

 

President Olson clarified that most of what the Board receives will be action items that have been reviewed by the City Council Economic Development Committee and Finance and Audit Committee; the 4B Corporation is being asked to approve funding; Board discretion is limited because City Council has final authority over the expenditure of funds.

 

Ms. Morales reviewed the recruitment prospects/projects.  Project Shoes was part of a recruitment effort that falls under diversification of sales tax and sales tax enhancement of revenues; the City was able to locate the processing offices for internet sales in the state of Texas for DSW Shoes by offering an incentive.  

 

Companies that were contacted as part of the Economic Development retention and expansion efforts include:

 

 

Charts depict local economy status through monthly sales tax collections and comparative sales tax collections from 2008-2009.  Sales tax collections supplement ad valorem taxes in funding operations of the City. 

 

Because of changes in the economy, staff is monitoring “brick and mortar” retailers more closely; a comparison of the City top sales tax producers’ current sales to the same time last year is shows many are down.  The City has been able to maintain and increase sales tax because retail space continues to expand and diversification of sales tax inclusive of internet sales, other purchasing companies, and call centers.  Town Square retail closings were national decisions and not reflective of local performance; PCD has successfully filled most vacated space.

 

Sugar Land has an incentive agreement with Planned Community Development regarding Lake Pointe Village based on the performance of the build out of facilities, construction, occupancy, and retailers.  Town Square retail leasing low performance by some retailers is being offset by the expansion of others. 

 

Hotel market performance and tax revenues shows some uptick in the average occupancy from 2008 to 2009; the total average occupancy percentage is lower in 2009, but 168 new hotel rooms came online indicating  there is still a demand. 


Hotel tax performance history by calendar year quarter shows a slight dip in 2008 fourth quarter that stabilized during the first and second quarters of 2009.  Hotel tax is currently seven percent, a ballot proposition passed to increase it to nine percent for the entertainment district; action has not been taken to implement any taxes for the entertainment district at this time.  Ms. Morales stated the hotel tax has use restrictions; tourism initiatives, the conference center, and historical preservation projects are examples of allowable uses.

 

Commercial Property Report comparative overview by calendar year quarter shows the type of square footage in the inventory, vacancy rates, average direct rental rates, and net absorption rates. There have been positive net absorptions in all three sectors.

 

Building permit and valuation summary indicates permits issued and valuations are down due to the decline in the economy and related construction; includes new, alteration, build out, remodel, moving, paving, repairs, and demolitions.

 

Residential Home Sales Report shows an increase in the average single-family home sales price as well as the median. 

 

The Consumer Confidence Index and Employment data for June 2009 shows Sugar Land was at 5.8% Unemployment for June 2009, which is lower than the county, state, or national rate. 

 

ADJOURN

 

There, being no further business to come before the Corporation, President Olson adjourned the meeting at 6:05 o'clock P.M.

 

 

 

                                                                       

Donald Olson, President

 

 

 

 (SEAL)