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Home My WebLink About2007-01-08 Regular Meeting,Public Hearing and Workshop Meeting of the La Porte City Council MINUTES OF REGULAR MEETING, PUBLIC HEARING AND WORKSHOP MEETING OF THE LA PORTE CITY COUNCIL January 8, 2007 Items in italics were changed when the minutes were approved at the January 22, 2007 meeting. 1. CALL TO ORDER The meeting was called to order by Mayor Alton Porter at 6:00 p.m. Members of City Council Present: Mayor Alton Porter, Council members Tommy Moser, Mike Clausen, Mike Mosteit, Louis Rigby, Barry Beasley, Peter Griffiths, Howard Ebow, and Chuck Engelken. Members of Council Absent: None Members of City Executive Staff and City Emplovees Present: Interim City Manager John Joerns, City Secretary Martha Gillett, Assistant City Attorney Clark Askins, Planning Director Wayne Sabo, Assistant City Secretary Sharon Harris, Police Chief Richard Reff, Human Resources Manager Robert Swanagan, Interim Finance Director Michael Dolby, Lieutenant Steve Deardorff, Public Works Director Steve Gillett, Planning Director Wayne Sabo, Phyllis Rinehart Finance Department, EMS Chief Ray Nolen, Patrol Officer Sherman Moore, Detective David Huckabee, Utility Billing Supervisor Lori Langelier, Mike Collins, Risk/Safety Officer Bill Rankin, Stan Minor, Building Official Debbie Wilmore, Patrol Sergeant Matt Daeumer, Buyer Cherell Daeumer, Patrol Officer Matt Novosad, GIS Technician Isaac Rodriguez, Downtown Revitalization Coordinator Debra Dye Parks, Marlon Jackson, Leonard Nichols, Nathan Gates, Steve Ermel, Jonathon Arellano, Freddie Doughty, Gay Collins, Planning Department Brian Sterling, Assistant to the City Manager Crystal Scott, Parks Operations Manager Marlene Rigby, Steve Stark, George Mulnar, L. W. Jarvis, and Recreation Director Stephen Barr, Parks Maintenance Supervisor Randy Cernosek, Emergency Management Coordinator Jeff Suggs, Purchasing Manager Susan Kelley, MIS Manager Al Owens, Golf Course Superintendent Dennis Hlavaty, Bonnie Allen, Intern Mike Stokes, and numerous police officers, city staff and firefighters. Others Present: John Handy with the Houston Chronicle, Ken Schick, Wayne Spears, Nina Garza, Rusty Smith, Barbara Norwine, Sue Gail Kooken, Trent Wise, TML Representative Larry Burnside, Nick Barerra, Dave Turnquist, Lauren Barr, Claudia Cox, Sammy Jacobs, Daniella Plaza, Sam Bass, Donna Stark and other citizens. 2. Reverend Wayne Spears delivered the Invocation. 3. Mayor Porter led the Pledge of Allegiance. 4. PRESENTATIONS / PROCLAMATIONS A. PRESENTATION FROM LARRY BURNSIDE - TEXAS MUNICIPAL LEAGUE - R. Swanagan Mr. Burnside informed Council the City of La Porte would be seeing a return in liability insurance premiums. Regular Meeting, Public Hearing and Workshop Meeting -January 8, 2007 Page 2 B. CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE FOR COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) - M. Dolby/Mayor Porter. Interim Finance Director and staff members Shelly W olny, Lori Langelier, Phyllis Rinehart and Gay Collins were present to receive the award. 5. Consent Agenda A. Consider approving Minutes of the Regular Meeting, Public Hearing and Workshop Meeting of La Porte City Council held on December 11, 2006. B. Council to consider approval or other action to award Bid #07007 for Golf Course Specialized Equipment. C. Council to consider approval or other action regarding award of BID # 07006 for for Hot Mix Asphalt Type D. D. Council to consider approval or other action to award Bid #07010 for Street Materials. E. Council to consider approval or other action regarding an ordinance approving an amendment to the budget for the City of La Porte, Texas for the period of October 1, 2005 through September 30,2006. F. Council to consider approval or other action regarding an ordinance amending Chapter 82 of the Code of Ordinances "Building and Building Regulations" by adding new regulations regarding installation of electrical devices. G. Council to consider approval or other action regarding an ordinance authorizing and approving conveyances of easements from 65 La Porte, L TD and Bayforest Ranch L TD: and approving abandonment of water and sewer easements to 65 La Porte, L TD, and Bayforest Ranch LTD. H. Council to consider approval or other action regarding an ordinance approving and authorizing a second amendment to the agreement of lease for fixed base operations at the City of La Porte Municipal Airport between the City of La Porte and D.E. Aviation, Inc. Item H was pulled for Council discussion by Council member Tommy Moser.. Motion was made by Council member Rigby to approve the consent agenda items as presented. Second by Council member Griffiths. Motion carried. Ayes: Mosteit, Moser, Engelken, Ebow, Clausen, Rigby, and Porter. Nays: None Abstain: None. 6. PETITIONS, REMONSTRANCES, COMMUNICATIONS, AND CITIZENS AND TAX PAYERS WISHING TO ADDRESS COUNCIL ON ANY ITEM POSTED ON THE AGENDA. Matt Novosad - Mr. Novasad addressed Council regarding compensation and benefits issues. See attached letter. Regular Meeting, Public Hearing and Workshop Meeting -January 8, 2007 Page 3 Steve Deardorff - Mr. Deardorff addressed Council regarding compensation and benefits issues. See attached letter. 7. Public Hearing - Discuss Planning and Zoning recommendation to approve rezone request #R006-004, for 19.6505 acres ofland out of the Richard Pearsal Survey, abstract 625, La Porte Outlots, Rezoned from High Denisty Residential (R-3) and Large Lot (LL) to General Commercial (GC) (1501-N5/R06-004). Open Public Hearing - Mayor Porter opened the Public Hearing at 6:24 p.m. Director of Planning Wayne Sabo presented summary and recommendation and answered Council's questions. Public Input: Trent Wise - 425 Spencer Landing - spoke on behalf of the homeowner's association and informed Council they were in favor of this matter. Ken Schick - developer for project and he encouraged Council to vote in favor of the zoning change. Recommendation of Planning and Zoning Commission - Planning and Zoning Commission recommended City Council amend the Code of Ordinances of the City of La Porte Chapter 106, by changing the Zoning classification from High Density Residential and Large Lot Residential to General Commercial, as requested for 19.6505 acres ofland more or less, located in the Richard Pearsal Survey, Abstract 625 and further described as all oflots 56, 57,58,63,64 and 65 and approving rezone request R06-004 (Ordinance 1501-N5/R006- 004). The Public Hearing was closed at 6:28 p.m. 8. Council to consider approval or other action regarding Ordinance 1501-N5 Assistant City Attorney Clark Askins read: Ordinance 1501-N5- AN ORDINANCE AMENDING THE CODE OF ORDINANCES OF THE CITY OF LA PORTE, CHAPTER 106, MORE COMMONLY REFERRED TO AS THE ZONING ORDINANCE OF THE CITY OF LA PORTE, BY CHANGING THE ZONING CLASSIFICATION FROM HIGH DENSITY RESIDENTIAL AND LARGE LOT RESIDENTIAL TO GENERAL COMMERCIAL, AS REQUESTED FOR 19,6505 ACRES OF LAND MORE OR LESS, LOCATED IN THE RICHARD PEARSAL SURVEY, ABSTRACT 625 AND FURTHER DESCRIBED AS ALL OF LOTS 56, 57, 58, 63, 64, AND 65, LA PORTE OUTLOTS, LA PORTE, HARRIS COUNTY, HEREIN DESCRIBED; MAKING CERTAIN FINDINGS OF FACT RELATED TO THE SUBJECT; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. Motion was made bv Council member Griffiths to approve Ordinance 1501-N5 as recommended bv Planning and Zoning Commission. Second by Council member Ebow. The motion carried. Ayes: Beasley, Griffiths, Mosteit, Engelken, Moser, Rigby, Ebow, Clausen, and Mayor. Nays: Abstain: None Regular Meeting, Public Hearing and Workshop Meeting -January 8, 2007 Page 4 9. A. Council to consider motion to reconsider or motion to rescind City Council vote on December 11, 2006 to deny amendment to Chapter 106 (Zoning) of the Code of Ordinances of the City of La Porte, by changing the Zoning Classification from medium density residential to general commercial, as requested for TRS 692C, 693B, 706, and 707 La Porte Outlots, located Along Canada Road North of Fairmont Parkway. B. Council to consider approval or other action regarding an ordinance amending Chapter 106 (Zoning) of the Code of Ordinances of the City of La Porte by changing the zoning classification from medium density residential to general commercial, as requested for TRS 692C, 693B, 706, and 707 La Porte Outlots, located along Canada Road North of Fairmont Parkway - (Ord. 1501-LF/R06-003). Assistant City Attorney Clark Askins read: Ordinance 1501-L5 - AN ORDINANCE AMENDING THE CODE OF ORDINANCES OF THE CITY OF LA PORTE, CHAPTER 106, MORE COMMONLY REFERRED TO AS THE ZONING ORDINANCE OF THE CITY OF LA PORTE, BY CHANGING THE ZONING CLASSIFICATION FROM MEDIUM DENSITY RESIDENTIAL TO GENERAL COMMERCIAL, AS REQUESTED FOR TRS 692C, 693B, 706, AND 707, LA PORTE OUTLOTS, LOCATED ALONG CANADA ROAD NORTH OF F AIRMONT P ARKW A Y, HEREIN DESCRIBED; MAKING CERTAIN FINDINGS OF FACT RELATED TO THE SUBJECT; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF; Motion was made by Council member Moser to rescind City Council vote on December 11. 2006 to deny amendment to Chapter 106 (Zoning) of the code of ordinances of the City of La Porte, by changing zoning classification from medium density residential to general commercial. as requested for TRS 692C, 693B. 706, and 707 La Porte outlots, located along Canada Road north of Fairmont Parkwav. Second by Council member Ebow. The motion carried. Ayes: Beasley, Griffiths, Mosteit, Engelken, Moser, Rigby, Ebow, Clausen and Mayor. Nays: Abstain: Motion was made by Council member Moser to reconsider approval or other action regarding an ordinance amending Chapter 106 (Zoning) of the Code of Ordinances of the City of La Porte by changing the zoning classification from medium density residential to general commercial. as requested for TRS 692C, 693B, 706, and 707 La Porte Outlots, located along Canada Road North of Fairmont Parkway. Second by Council member Griffiths. The motion carried. Ayes: Beasley, Griffiths, Mosteit, Engelken, Moser, Rigby, Ebow, Clausen and Mayor. Nays: Abstain: 10. Council to consider approval or other action regarding an ordinance appointing an ad hoc committee for proposed bond referendum. Council deferred this item until the next City Council meeting. Regular Meeting, Public Hearing and Workshop Meeting -January 8, 2007 Page 5 11. Council to consider approval or other action regarding an ordinance appointing members to various boards and providing for City appointment of Zoning Board of Adjustment Chairperson Commissions. Assistant City Attorney Clark Askins read: Ordinance 2782-P - AN ORDINANCE APPOINTING MEMBERS TO VARIOUS BOARDS, COMMISSIONS, AND COMMITTEES, OF THE CITY OF LA PORTE; PROVIDING A SEVERABILITY CLAUSE; CONTAINING A REPEALING CLAUSE; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. Motion was made bv Council member Moser to approve Ordinance appointing members to various boards by placing Sammy Jacobs on the Chapter 172 Board Retiree Participant position. placing Trent Wise on the 4B Development Corporation. providing for City Council appointment of Chairperson of Zoning Board of Adiustment. and appointing Bill Maltsberger of Position 5 as Chairperson of the Zoning Board of Adiustment. Ayes: Mosteit, Ebow, Clausen, Moser, Engelken, Rigby, Griffiths, Beasley and Mayor. Nays: None Abstain: None 12. Council to discuss distribution of funds for compensation of employees and provide staff with direction. Council directed staff to move forward with option 2A, as provided in backup materials by Staff, whereby each full-time budgeted employee is to receive a 3.25% salary increase, retroactive to October 1, 2006. In addition, council directed staff to bring back an item at the January 22,2007 Council meeting providing Council with a schedule of when the benefits/compensation study will be completed. 13. Council to receive report from 4B Development Board Members Clausen, Moser and Engelken. It was not necessary for a report to be provided since all Council members attended the joint City Council/4B meeting. 14. Mayor closed the regular meeting and opened the workshop meeting at 6:55 p.m. 15. Council discussed the following workshop items: A. Council discussed and provided guidance to staff regarding proposed modifications to the notification procedures used for public hearings as outlined in Chapter 106 (Zoning) of the Code of Ordinances, and directed staff to prepare proposed modifications for consideration by the Planning and Zoning Commission, including but not limited to placing signs on the property being considered for zoning changes as a notification process. B, Council discussed and provided guidance to staff to prepare and ordinance to amend Chapter 78 of the Code of Ordinances regarding regulation of tow trucks and provided guidance regarding the base fee for a normal, non-consent tow in the City of La Porte. Council directed staff to move forward. Regular Meeting, Public Hearing and Workshop Meeting -January 8, 2007 Page 6 C. Council and the City Attorney discussed the joint election agreement and directed City Attorney to move forward. D, Council received report from staff on release/sale of surplus City property and directed staff to move forward with surplus property and place the information on the City's website. The properties that were bid before are going back out for bid immediately and the requirement for minimum bid is eliminated. The additional properties on table B are having appraisals and metes and bounds ordered. E. Council discussed potential bond projects for May 12,2007 Bond Referendum Election and directed staff to bring this item back to the January 22,2007 Council meeting to be discussed with the City's financial advisors. 16. Mayor closed the workshop meeting and re-convened the regular meeting at 7:43 p.m. 17. Interim City Manager John Joerns provided Council with the following administrative reports. Port Crossing Groundbreaking January 23, 2007 at 11 :00 a.m. 18. COUNCIL COMMENTS - Griffiths, Ebow, Engelken, Mosteit, Clausen, Rigby, Moser, Beasley and Porter 19. EXECUTIVE SESSION - PURSUANT TO PROVISION OF THE OPEN MEETINGS LAW, CHAPTER 551, SECTIONS 551.071 THROUGH 551.076, AND SECTIONS 551.087, TEXAS GOVERNMENT CODE, (CONSULTATION WITH ATTORNEY, DELIBERATION REGARDING REAL PROPERTY, DELIBERATION REGARDING PROSPECTIVE GIFT OR DONATION, PERSONNEL MATTERS, DELIBERATION REGARDING SECURITY DEVICES, OR EXCLUDING A WITNESS DURING EXAMINA TION OF ANOTHER WITNESS IN AN INVESTIGATION, DELIBERATION REGARDING ECONOMIC DEVELOPMENT NEGOTIATIONS) A. SECTION - 551,087 (ECONOMIC DEVELOPMENT) 8, SEC, 551,072- (PROPERTY OR SALE EXCHANGE) C, SECTION - 551,072 - (PROPERTY SALE OR EXCHANGE) D, SECTION - 551,074- (PERSONNEL MATER) E. SECTION - 551,072 - (PROPERTY LEASE) MEET WITH INTERIM CITY MANAGER REGARDING ECONOMIC DEVELOPMENT (PROJECT AUSTIN POWERS) MEET WITH INTERIM CITY MANAGER REGARDING CITY/COUNCIL HOTEL PROJECT MEET WITH INTERIM CITY MANAGER AND MAIN STREET COORDINATOR REGARDING A PROJECT FOR PROPERTY SALE OR EXCHANGE FOR MAIN STREET DEVELOPMENT MEET TO DISCUSS INTERVIEW OF CITY MANAGER CANDIDATE AND RECRUITING PROCESS FOR POSITION OF CITY MANAGER MEET WITH INTERIM CITY MANAGER, AND CITY ATTORNEY REGARDING A Regular Meeting, Public Hearing and Workshop Meeting -December 11, 2006 Page 7 Council retired to Executive Session at 8:48 p.m. and returned to the Regular Meeting and reconvened at 8:49 p.m. 20, CONSIDERATIONS AND POSSIBLE ACTION ON ITEMS CONSIDERED IN EXECUTIVE SESSION There was no action taken. 21. There being no further business to come before Council, the Regular Meeting was duly adjourned at 8:50 p.m. ~tfully subm~ /A ~~l~t:;~CMC City Secretary Passed and approved on this 22nd day of January 2007. ~L7~ Mayor Alton E. Porter To: City Council From: Steve Deardorff Re: Police Department Pay Date: January 8, 2007 Good evening, my name is Steve Deardorff. I reside at 4222 Arboretum Drive, Pasadena, Texas and have been employed with the City of La Porte for almost 25 years. As you might have guessed, I am here tonight to talk about Police Department pay. Recently, the city spent thousands of dollars on a compensation/classification survey which is now being discarded. I question the need for the survey. Some department employees have not received a raise since 2003. Who would think we wouldn't fall behind? The failure ofthe city to make appropriate adjustments in our salary scale has put the police department employees way behind their counterparts in neighboring cities. We recently lost 3 police officers to the petro/chemical industry and their primary reason for leaving was pay and benefits. The city had a great deal of money and time invested in these officers and we cannot replace them overnight. In addition to their patrol duties, these officers had very specialized training. Jason Wilbanks was a highly trained SWAT operator with numerous training hours in tactical operations and he also served as a Field Training Officer. Shawn Boznango was a highly trained Crime Scene Unit Specialist. One cannot gain the level of expertise either of these former officers had overnight---it takes formal training and many hours of on-the- job training. Plants are actively recruiting our police officers to come to work for them because they know they will be able to employ someone who is a bit more mature, trainable and can pass a drug screen. We have also lost officers to go to work for other police agencies... specifically, 2 to Pasadena PD, 1 to Deer Park PD, and 1 to the Federal Air Marshal's Service. The City of La Porte hired these officers, paid their salary while attending an academy along with the cost of their academy, and all of these officers successfully completed a Field Training program. We trained them and got them to a point to where they could be successful police officers, but then lost them to Pasadena PD and Deer Park PD due to money. Again, we had a great deal of time and money invested in these young officers. One officer reportedly went to Deer Park and received a $6000 annual increase in pay. Can we afford to lose other officers? You can be certain that others are seriously considering this same choice. We expect to lose an officer to Baytown PD in the very near future. We do not want to be the other cities' "farm team". I have been told our pay is not in line with Pasadena and Deer Park because both agencies require some college or prior military/police experience before they can be considered for employment. However, all police officers must meet a minimum standard required by the Texas Commission on Law Enforcement Officers Standards and Education. And the reality is-our officers are expected by our command staff, city officials, the HCDA office, and most importantly the citizens of La Porte to be as ethical, honest, and professional as any officer in the state. Our officers are also expected to conduct their investigations to be on par with any other police agency. We deal with the same criminal element as these other agencies. The HCDA's office even compliments our agency on the quality of our investigations and uses one of our reports as a tool to train these same area agencies. No citizen of La Porte is concerned with our entrance requirements when their home has just been burglarized, or a loved one has been assaulted or killed. We strive to be as good as we can be, but don't feel like we are appreciated or respected by the City Administration. The wages of Patrol officers in Pasadena and Deer Park are comparable to what a Lt. with 10 years in rank makes at La Porte PD-this difference is absurd. How can we expect to attract, hire, train, and retain officers at this rate? What is our attraction? We are anxiously waiting to move into a new facility with much anticipation and expectation, but we must be able to staff our building fully to complete our mission successfully. In closing, I would like to ask the City Council to take a serious look at the PD' s pay and to adjust it quickly and accordingly so that employee recruitment and retention will not remain one of our foremost concerns. Good Evening City Council. My name is Matthew Novosad and I am President of the La Porte Police Officer's Association, Before I discuss the issues regarding salary and benefits, I would like to note the Association separates itself from the anonymous letter that was recently sent to the Bayshore Sun. The Association would never author a document and label it as anonymous, as it is common practice to place a signature on all documents, This anonymous letter represents the view of an individual and not the Association as a whole, No board member including myself had any knowledge of this letter, Now on to the articles in the Bayshore Sun pertaining to pay and benefits, On Dec, 17th Matt Daeumer's letter was printed in the Letters to the Editor section, Mr, Daeumer mentioned information containing communications about the Mercer group providing assistance regarding benefits. Instead of a benefits survey completed by the Mercer group, the City went into litigation delaying a possibility of having a benefits study, I believe having a study later is better than not having one at all, On Dec. 27th there were two articles referencing pay and benefits. One of the articles was the performance of the Mercer group stating it was a bust. I would have to agree that if $40,000 was spent on a study that did not provide the information needed, I too would be upset. We have to ask ourselves this, did the Mercer group proceed with a study with information given to them or was it assumed they would go above and beyond what was placed in the expectations of the City? Ifwe base our decisions on assumptions I do not think I have to explain the disaster that can occur when we assume. I do believe referencing a company doing childish work is a bit harsh, especially when the Mercer Group has a five page client list ranging from Aetna Life Insurance, IBM, TML and many more City, County, State and private agencies, The next article is information presented by Mr. Joerns responding to Mr. Daeumer's letter, Mr. Joerns stated the City has increased contributions for employees since 2003 to current from $5000 to $7400, While this may be true here is some information I have experienced personally, I have increased my contributions over 300% in the last 6 years, This comes out to approx, 4500 dollars more out of my pocket. If you add my increase in contributions over these last six years and factor in no increase in 2007 my contributions will be totaled at approx. 14,000 dollars, This does not include co pays, prescriptions, out of pocket and misc, charges that is not covered by insurance. So it is not just the city contributing to health care, the employees are also. On Dec, 31 st the front page of the Bayshore Sun printed an article referencing Chief Reff's memo to Mr. Joerns regarding pay increases and salaries. I do agree that the Chief s pay is not the highest in the area as that was shown by a survey that I performed on my own internally using seven cities in the area. The article gives information presented by the Chief on percentage increases of salaries, It is true that step raises have gone up since 1999, These increases come from an industry standard that needs to be met so as the PD can be competitive with other agencies, The problem is that by the time the increases are planned and enacted, the other agencies increase their salaries or benefits even more, This always leaves the PD attempting to bring up the rear. These increases since 1999 have brought us up from the very last to just last or at the best second to last. Also these increases affect the lower level personnel more than veteran officers, especially if you take a step out, Taking out a step increment does not constitute a raise, it just gives employees the money they were already guaranteed one year earlier and helps them max out one year faster. If you are maxed out on your step then all you receive is the lump sum which stays the same year after year. This is why percentage increases are more affective long term than lump sum distributions, Education is also mentioned, stating that a degree is not required to become a police officer for La Porte. As a college graduate from Sam Houston State University with a Bachelors of Science in Criminal Justice with a program in Law Enforcement and Police Science, I can personally address this issue, I will not go into detail, but I can say that a person with a degree is trained exactly the same as a person without a degree. As an instructor and Field training Officer I do not train any different than someone who does not have a degree, An officer with a degree will have calls of service the same as one who does not. It also has no bearing on promotion. One of the main differences is other cities compensate employees with college degrees differently than the City of La Porte. The last article written was on Dec, 31st by John Black in the editorial section. Mr. Black makes reference to people with different hourly rates and with different benefit packages. He says the one with the better benefit package may not take home as much money, but is better compensated. This is true except the trend seems to be that the benefits are costing more with the salary trend not able to keep up, This is shown in the cost of living analysis mentioned by Mr. Black. I have already addressed this showing that even though the City's cost has gone up, so has the employees, But as the cost of living in general goes up there are no percentage increases to adjust salaries only step raises. And for those who do not get step raises they suffer worse, So as you can tell we can keep this information ping pong game up for eternity, but it would only slow down progression on a problem that is already at a snails pace, We as professionals and as elected officials need to stop the smoke and mirrors and try to resolve this in the best interest of the City and its employees, The police have an outlet with Meet and Confer which will begin this year. Hopefully the Association can set a standard with Meet and Confer and a plan can be developed that will help every city employee, not just the Police Department. I have elected to stand here before you and present this personally instead of printing this in the paper, I do not want to add to the mud slinging or war of words that has begun as this does not reflect well with the tax payers of this city, I am passionate about coming up with a solution that will benefit everyone, Thank you and God Bless. MINUTES OF THE JOINT SPECIAL CALLED MEETING OF THE LA PORTE DEVELOPMENT CORPORATION BOARD OF DIRECTORS AND LA PORTE CITY COUNCIL January 8, 2007 1. Call to Order President Pat Muston and Mayor Alton E. Porter called the meeting to order at 5:04 p. m. Members Present: 4B Development Board - Bill Love, Chuck Engelken, Tommy Moser, Mike Clausen, Ed Matuszak, Pat Muston City Council- Howard Ebow, Chuck Engelken, Tommy Moser, Mike Clausen, Barry Beasley, Peter Griffiths, Mayor Porter, Mike Mosteit, Louis Rigby. Members Absent: None Staff Present: Interim City Manager John Joerns, City Secretary Martha Gillett and Interim Finance Director Michael Dolby, Intern Mike Stokes. Others Present: Paula DiValerio of Economic Alliance, 2. Motion was made bv Board Member Engelken to approve the Minutes of December 11. 2006 Joint Special Called Regular Meeting of La Porte Development Corporation Board and City Council. Second by Board Member Matuszak. Motion carried unanimously. Ayes: Bill Love, Ed Matuszak, Pat Muston, Mike Clausen, Chuck Engelken and Tommy Moser. Nays: None Abstain: None Motion was made by Councilman Chuck Engelken to approve the Minutes of December 11. 2006 Joint Special Called Regular Meeting of La Porte Development Corporation Board and City Council. Second by Councilman Ebow. Motion carried unanimously, Ayes: Mike Clausen, Barry Beasley, Peter Griffiths, Chuck Engelken, Howard Ebow, Mike Mosteit, Louis Rigby, Tommy Moser and Mayor Porter. Nays: None Abstain: None 3. La Porte Development Corporation to consider setting a Public Hearing Date of January 22, 2007, for the expenditure of funds related to a new manufacturing center to be established near the intersection of Fairmont Parkway and South Sixteenth Street and zoned light industrial. Motion was made by Board Member Love to set the Public Hearing Date of January 22. 2007 as recommended. Second by Board Member Engelken. Motion carried unanimously. La Porte Development Corporation - 110812007 2 Page Ayes: Bill Love, Pat Muston, Ed Matuszak, Mike Clausen, Chuck Engelken and Tommy Moser. Nays: None Abstain: None The board noted they wanted the wording in the public hearing notice expanded to clarify the Public Hearing was for the expenditure of La Porte Development Corporation funds. Staff will make changes to notice prior to publishing. Item 4 was discussed out of order before item 3. 4. Interim Finance Director Michael Dolby provided the board with an overview of current budget and financial report. 5. EXECUTIVE SESSION - PURSUANT TO PROVISION OF THE OPEN MEETINGS LAW, CHAPTER 551.071 THROUGH 551.076, 551-087, TEXAS GOVERNMENT CODE (CONSULTATION WITH ATTORNEY, DELIBERATION REGARDING REAL PROPERTY, DELIBERATION REGARDING PROSPECTIVE GIFT OR DONATION, PERSONNEL MATTERS, DELIBERATION REGARDING SECURITY DEVICES, OR EXCLUDING A WITNESS DURING EXAMINATION OF ANOTHER WITNESS IN AN INVESTIGATION, DELIBERATION REGARDING ECONOMIC DEVELOPMENT NEGOTIATIONS) A. SECTION - 551-087 - (ECONOMIC DEVELOPMENT) MEET WITH INTERIM CITY MANAGER, CITY CONSULTANT/ADVISOR AND CITY ATTORNEY, REGARDING ECONOMIC DEVELOPMENT (PROJECT AUSTIN POWERS) B. SECTION - 551-072 - (PROPERTY SALE OR EXCHANGE) MEET WITH INTERIM CITY MANAGER, CITY CONSULTANT/ADVISOR AND CITY ATTORNEY REGARDING CITY/COUNTY HOTEL PROJECT The La Porte Development Corporation and Council retired to Executive Session at 5:11 p.m. and returned to the Regular Meeting and reconvened at 5:20 p.m. 6. No action was taken on items considered in executive session. 7. Administrative Reports. It was the consensus of the Board to hold monthly meetings and the next meeting to be held February 12,2007. 8. Board Comments The Board will began meeting monthly beginning January 8, 2007 and the next meeting is to be held on January 22, 2007 for public hearing. Then beginning monthly the board will meet the second Monday of each month prior to the Council meetings at 5:00 p.m. 9. Adjournment La Porte Development Corporation - 1/0812007 3 Page The meeting was duly adjourned at 5:35 p.m. Respectfully submitted, , L--jYJ td? #.aa Marthri~tt City Secretary TRMC, CMC La Porte Development Corporation Secretary Passed and approved on this 22nddayof JanuaJ1.lf , 2006. 2007 Af.;ta n E. Pof1..tvz., MayalL Pat Muston, President t2., i.'P.k- 46 Minu.:tu wvz.e. apy.wove.d a;t 46 Me.e.U.ng he..td JanuaJ1.Y z2, at 5:00 p.m. ' 2007 11 A c'- NO BACK UP PROVIDED B ,..- Department: ST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: Appropriation Requested By: John E. J Source of Funds: Acc't Number: Report: -X-Resolution: _Ordinance:_ Amount Budgeted: Exhibits: Current Agreement & Ordinance Amount Requested: Exhibits: Budeeted Item: YES NO SUMMARY & RECOMMENDATION Staffhas received an informal request to review the current Agreement with the La Porte-Bayshore Heritage Society pertaining to operations ofthe Sylvan Beach Depot facility. The Heritage Society owns the actual building and the City of La Porte owns the land it sits on. The Current Agreement calls for specific areas of responsibility, as follows: o City pays for water, sewer, and garbage collection, and maintains property outside (previous) fence boundary. The Heritage Society pays for electricity, natural gas, and other utilities, as well as interior and exterior maintenance of the building, taxes on building and contents. o The Heritage Society pays for insurance for the building, contents, property, & liability coverage. o The Heritage Society agrees to operate the depot building (and any future acquired buildings) as museums. The current agreement does not address the maintenance, etc., of the Original Library Building that was moved onto the property after the agreement was signed in February 2000 (except as noted above), the new fence that was recently installed, or handling of other future buildings that may be added. Due to a shortage of available funding, the Heritage Society is asking the City of La Porte to participate more in the operation of the facility as follows: o The City to consider paying for electricity, natural gas and other utilities for both buildings. o The City to consider paying for liability and property insurance coverage for the buildings including wind and flood insurance, contents, and other property (ie. antique car). o The City to consider paying for janitorial service for the buildings. o The City to consider paying for minor repairs, and interior and exterior maintenance of the buildings. Making these changes will add somewhat to the City's expense of operations for the total facility in the short term, and may result in considerably more expense over the long term life of the agreement (current agreement is for twenty years, of which fourteen years remain). A new agreement, if undertaken, should be written to assure that the Heritage Society does not remove the depot or other buildings from the premises during the term of the agreement Staff is requesting direction from City Council as to the future direction of this cooperative agreement. If we move forward with the requested changes, the agreement will be rewritten by the Legal Department, incorporating the necessary framework for future operations. Then the agreement will be presented to the Heritage Society board for approval, and then to City Council for approval Action Reauired bv Council: Give direction regarding redrafting of the current Agreement with the La Porte-Bay Area Heritage Society pertaining to future operations of the Sylvan Beach Depot. ~/O( ate AGREEMENT OF LEASE STATE OF TEXAS { { COUNTY OF HARRIS { This Agreement of Lease made by and between the CITY OF LA PORTE, a municipal corporation, known herein as LESSOR, and the LA PORTE-BAY AREA HERITAGE SOCIETY, known herein as LESSEE, both of Harris County, Texas, WIT N E SSE T H: LESSOR does, by these presents, lease and demise unto LESSEE the following described property, lying and being situated in the City of La Porte, Harris County, Texas, to-wit: Lots Seven (7) through Fourteen (14), both inclusive, in Block Fifty (50) of SYLVAN BEACH FIRST SUBDIVISION, an addition in Harris County, Texas, according to the map or plat thereof recorded in Volume 3, Page 72 of the Map Records of Harris County, Texas, reference to which is here made for all purposes. upon the terms, conditions, covenants and agreements following: I. The term of this lease shall be for a period of twenty (20) years, beginning on the 1st day of May, 2000, and ending on the 30th day of April 2020. II. As rent for the use and occupancy of the demised premises, LESSEE hereby agrees, obligates and binds itself to pay unto LESSOR the sum of One Dollar ($1.00) per year for the twenty (20) year term hereof, payable in advance, the receipt and sufficiency of . c'- ., .~~;~~ which is hereby acknowledged." III. LESSOR shall pay charges for the use of water, sewer, and garbage collection. LESSEE shall pay all charges for the use of electricity, natural gas, and other utilities, as the same may become due, during the full term of this lease. In addition, LESSEE shall be responsible for all interior and exterior maintenance of buildings, taxes, including both ad valorem taxes on the leasehold and improvements, and LESSEE's personal property therein, and all insurance on the buildings. LESSOR shall continue maintenance of property outside the fence boundary. IV. LESSEE agrees to obtain and maintain at its sole cost and expense, public liability insurance and property damage insurance to protect LESSOR and LESSEE against all loss or damage from the claims of all persons who may be in or on the leased premises by the invitation, consent or sufferance of LESSEE. Such public liability insurance shall have minimum bodily injury limits of $100,000 for each person and $300,000 for each accident, with respect to any accident occurring on the leased premises. LESSEE shall furnish LESSOR certificates of all insurance coverage. LESSEE shall indemnify and save LESSOR harmless from any and all liability, damage, expense, cause of action, suits, claims or judgments arising from injury, to person or property on the demised premises which may arise out of the act, failure to act, or negligence of LESSEE, its agents or employees. V. LESSEE agrees to operate the existing depot building and any future acquired buildings as museums. ~ VI. LESSEE may remove its improvements from the leased premises at the end of the lease term. LESSEE shall leave the premises rake clean. If LESSEE fails to remove its premise within thirty (30) days from the end of the lease term, title thereto shall revert to LESSOR. VII. In case of default of any of the aforesaid covenants, LESSOR may enforce the performance thereof in any modes provided by law, and may declare the lease forfeited at its discretion, and LESSOR, its agents or attorneys, shall have the right, without further notice or demand, to re-enter and remove all persons therefrom without being deemed guilty of any manner of trespass and without prejudice to any remedies for arrears of rent or breach of covenant, or LESSOR, its agents or attorneys, may resume possession of the premises and re-Iet the same for the remainder of the term for the best rental it may obtain, for account of LESSEE, which shall make good any deficiency; and LESSOR shall have a lien as security for the rent aforesaid upon all the improvements, additions, equipment and other personal property which LESSEE may place on the leased premises. VIII. The permitted use of the demised premises is for a site for museums to house historical memorabilia of the La Porte-Bay Area and related activities, and for no other purpose. LESSEE, in the use and occupation of the demised premises and in the prosecution or conduct of any business therein, shall comply with all requirements of all laws, orders, ordinances, rules and regulations d of the Federal, state, County and Municipal authorities. LESSEE covenants that it will not use or permit to be used any part of the demised premises for any dangerous, noxious, or offensive trade or business and will not cause or maintain any nuisance in, at, or on the demised premises. LESSOR, its agent or attorney, shall have the right to enter upon said premises and to inspect the same during all reasonable hours. IX. This lease is not assignable. WITNESS OUR HANDS, this the J.."1JI- day Of'1el3rVI1rY , 2000, effective May 1, 2000. By: ATTEST: ~~4i1~ city Secretary //7 / U/~...~ : ~ /::/ . . . /,/ . .-1'~lY-. .z:.U ~~ Knox W. Askins City Attorney LA PORTE-BAY AREA HERITAGE SOCIETY By: N~e: /J.j~ Tl.tle: . ATTEST: - ~~~/::di;,~t-/ i ~- ORDINANCE NO. 200o-23i~ AN ORDINANCE APPROVING AND AUTHORIZING AN AGREEMENT OF LEASE BETWEEN THE CITY OF LA PORTE AND THE LA PORTE-BAY AREA HERITAGE SOCIETY, FOR A TWENTY YEAR TERM COMMENCING KAY 1, 2000; MAKING VARIOUS FINDINGS AND PROVISIONS RELATING TO THE SUBJECT; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: section 1. The City Council hereby approves and authorizes the contract, agreement, or other undertaking described in the title of this ordinance, in substantially the form as shown in the document which is attached hereto and incorporated herein by this reference. The Mayor is hereby authorized to execute such document and all related documents on behalf of the City of La Porte. The city Secretary is hereby authorized to attest to all such signatures and to affix the seal of the City to all such documents. section 2. The City Council Officially finds, determines, recites, and declares that a sufficient written notice of the date, hour, place and subject of this meeting of the City Council was posted at a place convenient to the public at the City Hall of the City for the time required by law preceding this meeting, as required by the Open Meetings Law, Chapter 551, Texas Government Code; and that this meeting has been open to the public as required by law at all times during which this ordinance and the subject matter thereof has been discussed, considered and formally acted upon. The City council further ratifies, approves and confirms such written notice and the contents and posting thereof. section 3. This Ordinance shall be effective from and after its passage and approval, and it is so ordered. ORDINANCE NO. 2000-~39~ PAGE 2 PASSED AND APPROVED, this 28th day of February, 2000. ATTEST: ~~q~l~ City Secretary // APPROY~ ~>/ ,/ -- '1 .- t/&--,;W M~~~ Knox W. Askins City Attorney OF LA PORTE CITY OF LA PORTE RECEIPT NO. 57430 ~ .&514 )t-c~ co M Q~ /ifJ~ j~ 'lw~~ Le~ P.O. BOX 1115 . LA PORTE, TEXAS 77572-1115 . 281/471-5020 o 0 CHECK I MONEY ORDER NO. MONEY CASHIERS ORDER CHECK o DATE CASH CHECK PAYMENT FOR ~ PQ ID-~ () AMOUNT ---:- $Ao RECEIVED FROM DESCRIPTION GL CODE r CUSTOMER IG:.~ 00' {)()()O q/O olt'n c ,,"'-' Department: ST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: D c Appropriation Requested By: Source of Funds: Account Number: Report: Resolution: Ordinance: Amount Budgeted: Exhibits: Resolution 20M-16fT ,etter Dated 6/12/06 Amount Requested: Exhibits: Letter from Port Crossing Land, L.P. Budgeted Item: YES ~O Exhibits: By TMS: ./ FTZ Tax Analysis - Underwood Business Park ./ FTZ Tax Analysis - Port Crossing ./ FTZ - Analysis (Fictitious Company) Exhibits: Commnnity Tax AnllIY!ii!i Docnment SUMMARY & RECOMMENDATION Council has held a couple of workshops to discuss Foreign Trade Zones (February 27,2006 and May 22,2006) At the June 7, 2006 City Council Meeting Council approved a resolution and letter (attached) supporting the expansion of Foreign Trade Zone to include both Underwood Business Park and Port Crossing. This action paved the way for the formal application and the subsequent "federal benefits and exemptions". Council, however, has not taken any action regarding "local" inventory exemptions. Council needs to determine what local exemptions, if any, they will consider. Council's decision would set the "de facto" local FTZ exemption for future requests. The attachments provided by IMS include a projected revenue stream for both Port Crossing and Underwood Business Park based on certain assumptions; followed by a table that estimates the estimated inventory revenue for various levels of local exemptions. They also provided "Community Tax Analysis" document that includes a list of exemptions offered in surrounding communities. Also included is a table that displays various revenue streams assuming for a fictitious company; ./ In the Industrial District (current conditions - 53% of in City tax revenue) ./ With a Tax Abatement Agreement (6-year of lO-year period) Also, Council will need to determine (if a local exemption is approved) if they wish to allow a company to receive both a Tax Abatement and a "local" Foreign Trade Zone exemption. Action Required bv Council: Give direction on (local) FTZ exemption. If granted, at what level? Also, provide direction on other parameters; . Allow company to receive only one or both o Tax abatement Agreement (10 year) o (Local) FTZ Exemption . (Local) FTZ Exemption only after tax abatement expires or is terminated o Other A r./o rte ' ..- RESOLUTION NO. 2006-~ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA PORTE SUPPORTING THE 2006 HOUSTON FOREIGN TRADE ZONE EXPANSION APPLICATION TO THE FTZ BOARD WHICH INCLUDES TWO TRACTS OF LAND SITUATED IN THE CITY OF LA PORTE 7 FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW 7 AND PROVIDING AN EFFECTIVE DATE HEREOF. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: section 1. The city council of the City of La Porte authorizes the delivery of the letter attached to this Resolution as Exhibit "A", and incorporated by reference herein, addressed to the Foreign Trade Zones Board, u.s. Department of Commerce, Washington, D. C., evidencing the support of the 2006 Houston Foreign Trade Zone expansion application to the FTZ Board, which ,~ includes two tracts of land situated in the City of La Porte. The Mayor of the city of La Porte is authorized to execute and deliver the attached letter. section 2. The City council officially finds, determines, recites, and declares that a sufficient written notice of the date, hour, place and SUbject of this meeting of the city Council was posted at a place convenient to the public at the city Hall of the City for the time required by law preceding this meeting, as required by the Open Meetings Law, Chapter 551, Texas Government Codei and that this meeting has been open to the public as required by law at all times during which this resolution and the subject matter thereof has been discussed, considered and formally acted upon. The City Council further ratifies, approves and confirms such written notice and the contents and posting thereof. section 3. This Resolution shall be effective from and after its passage and approval. PASSED AND APPROVED this 12th day of June, 2006. By: Cf\Y OF U:, ~45E U-l-t-~~. ~~ Alton E. Porter, Mayor ATTEST: L1YJ ()}Jju" a, /4J[Jj Martha A. G1 lett City Secretary AP~Z tV d-J Knox W. Askins City Attorney 2 City of La Porte Established 1892 June 12, 2006 Mr. pierre Duy Acting Executive Secretary Foreign Trade Zones Board U.S. Department of commerce 1401 Construction Ave., NW Room 2814B Washington, DC 20230 Dear Mr. Duy: The City Council of the City of La Porte has voted to support the 2006 Houston FTZ expansion application being submitted to the FTZ Board for several landowners, two of which are located within the City. We have been briefed on the tax issues involved and we have received a commitment from the landowners to execute our tax exemption agreement. We believe that the overall positive economic development that will occur as a result of these two new developments outweighs the potential tax exemption and we encourage the Board to expedite the review process. The City typically will only grant one type of tax incentive per location. Therefore, any other tax incentives sought by users or developers of or within the FTZ may be restricted and shall be subject to approval on a case by case basis. Yours very truly, CITY OF LA PORTE BY:~~~ Alton E. Porter Mayor AEP : sw EXHIBIT DAD PO. Box 1115 · La Porte, Texas 77572-1115 · (281) 471-5020 PORT CROSSING LAND, L.P. 3330 S. Sam Houston Parkway E. Houston, Texas 77047 713-578-1234 December 4, 2006 Mr. John Joerns City Manager City of La Porte 604 W. Fairmont Parkway La Porte, Texas 77571 Re: Proposed Foreign Trade Zone for Port Crossing Dear John, Please include our Foreign Trade Zone topic on the December agenda for City Council. We would like to simplify the discussion, if possible. Instead of discussing the merits of Foreign Trade Zones and how they are used, I'd like to focus simply on the industrial market around La Porte and how competitive it has become. Two years ago, very little activity was present. Granite Properties was building the second building on Barbours Cut Blvd. for Gulf Winds in Morgan's Point and Clay Development was building several buildings at Battleground in Deer Park. In addition, a few smaller buildings were being developed in the area. Since that time, the market has changed substantially due to low cap rates, an unbelievable surge of investment capital available to the market, and the hype surrounding the new Bayport Terminal. Over 6.6 million square feet of industrial space has been built and leased or sold during that two-year time frame. In addition, 1.6 million square feet has been built speculatively and remains available to the market. Another 3.1 million is currently under construction for lease and/or sale. Over 12.7 million square feet of additional industrial space is currently planned by developers that have already purchased property in the area. The total square footages are astounding. The competition is stiff. Developers are already offering reduced lease rates and "no rent" periods for up to 6 months to attract tenants. Some sites have full Foreign Trade Zones, heavy-haul or overweight permit areas, tax abatements, and other financial incentives to attract businesses. Simply put, we need to assemble the best set of financial incentives possible to compete with other developers for prospective tenants. We don't want to construct buildings and watch them sit empty. Major tenants and users sometimes need the benefits that a Foreign Trade Zone has to offer. 1".- Port Crossing has the highest standards of all the new industrial parks being developed. Weare implementing detailed landscaping standards, buffer zones and building setback lines, high quality monumentation, and strict codes, covenants, and restrictions for the park. We also are constructing our buildings to very high construction standards. We plan to own these buildings for years to come and we are searching for national and international companies to utilize the space. We are not attempting to find tenants and then quickly sell. Port Crossing Land, L.P. sincerely appreciates the City's support and we look forward to providing the best possible development in the area. If you have any questions, please call to discuss. Sincerely, Russell D. Plank Vice President Port Crossing Land, L. P. ) FTZ Tax Analysis for the City of La Porte ) - Port Crossing 2007 2008 2009 2010 2011 2012 - -~- Taxable Inventory $1,000,000 $7,500,000 $20,000,000 $25,000,000 $25,000,000 $25,000,000 Total Investment in BuildinQ & Equipment $12,000,000 $52,000,000 $92,000,000 $171,000,000 $171,000,000 $171,000,000 Total Value of Property - F1 $25,600,000 $25,600,000 $25,600,000 $25,600,000 $25,600,000 $25,600,000 6 - Year Projections Additional Assumptions Port Crossina Real Property Tax Rate - City of La Porte 0.710% 295+/- Acres Inventory Percent Qualifying for FTZ 60.000% 1.5 +/- million sf at buildout Inventory Percent not Qualifying for FTZ 40.000% City Revenue from Real Property and Non- FTZ Inventory $269,800 $572,260 $891,760 $1,466,860 $1,466,860 $1,466,860 II 1../>61>> ~)?J Qfji City Revenue from FTZ Inventory with No FTZ Tax Exemption $34,080 $147,680 $261,280 $485,640 $485,640 $485,640 City Revenue from FTZ Inventory with 25% FTZ Tax Exemption $25,560 $110,760 $195,960 $364,230 $364,230 $364,230 City Revenue from FTZ Inventory with 50% FTZ Tax Exemption $17,040 $73,840 $130,640 $242,820 $242,820 $242,820 City Revenue from FTZ Inventory with 75% Exemption $8,520 $36,920 $65,320 $121,410 $121,410 $121,410 City Revenue from FTZ Inventory with Full FTZ Tax Exemption $0 $0 $0 $0 $0 $0 Average Amount of Potential Revenue (Decreasellncrease) Based on 25% Intervals in FTZ Exemption Level $8,520 $36,920 $65,320 $121,410 $121,410 $121,410 ) FTZ Tax Analysis for the City of La Porte - Underwood ) 2007 2008 2009 2010 2011 2012 Taxable Inventory $7,500,000 $10,000,000 $20,000,000 $20,000,000 $20,000,000 $20,000,000 Total Investment in Building & Equipment $120,000,000 $120,000,000 $120,000,000 $120,000,000 $120,000,000 $120,000,000 Total Value of Property - F1 $2,042,700 $2,042,700 $2,042,700 $2,042,700 $2,042,700 $2,042,700 6 - Year Projections Additional Assumptions Real Property Tax Rate - City of La Porte Underwood 0.710% Inventory Percent Qualifying for FTZ 60.000% 164.34 +/- acres Inventory Percent not Qualifying for FTZ 40.000% 1.2+/- million sf at buildout City Revenue from Real Property and Non- FTZ Inventory $887,803 $894,903 $923,303 $923,303 $923,303 $923,303 City Revenue from FTZ Inventory with No FTZ Tax Exemption $31,950 $42,600 $85,200 $85,200 $85,200 $85,200 City Revenue from FTZ Inventory with 25% FTZ Tax Exemption $23,963 $31,950 $63,900 $63,900 $63,900 $63,900 City Revenue from FTZ Inventory with 50% FTZ Tax Exemption $15,975 $21,300 $42,600 $42,600 $42,600 $42,600 City Revenue from FTZ Inventory with 75% Exemption $7,988 $10,650 $21,300 $21,300 $21,300 $21,300 City Revenue from FTZ Inventory with Full FTZ Tax Exemption $0 $0 $0 $0 $0 $0 Average Amount of Potential Revenue (Decrease/Increase) Based on 25% Intervals in FTZ Exemption Level $7,988 $10,650 $21,300 $21,300 $21,300 $21,300 ~' ) F lctl t-h~ a.,s 'loft f'a.vy 6 - Year Projections 2007 2008 2009 2010 2011 2012 Taxable Inventory $1,000,000 $2,500,000 $3,500,000 $5,000,000 $5,000,000 $5,000,000 Total Investment in BuildinQ & Eauipment $10,000,000 $10,000,000 $10,000,000 $10,000,000 $10,000,000 $1 0,000,000 Total Value of Property - F1 $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 ) FTZ Tax Analysis for the City of La Porte ) Additional Assumptions Real Property Tax Rate - City of La Porte Inventory Percent Qualifying for FTZ Inventory Percent not Qualifying for FTZ Industrial District Exemption 0.710% 60.000% 40.000% 53.000% Additional City Revenue from FTZ Inventory Based On No FTZ Tax Exemption $4,260 $10,650 $14,910 $21,300 $21,300 $21,300 Additional City Revenue from FTZ Inventory Based On 25% FTZ Tax Exemption $3,195 $7,988 $11,183 $15,975 $15,975 $15,975 Additional City Revenue from FTZ Inventory Based On 50% FTZ Tax Exemption $2,130 $5,325 $7,455 $10,650 $10,650 $10,650 Additional City Revenue from FTZ Inventory Based On 75% Exemption $1,065 $2,663 $3,728 $5,325 $5,325 $5,325 Additional City Revenue from FTZ Inventory Based On Full FTZ Tax Exemption $0 $0 $0 $0 $0 $0 $48j~1~ LA PORTE'S TAX ABATEMENT POLICY IS NOT BASED ON INVENTORY TaxAbatsmentsOJ1Buildil'11lZUi $7t,OGlO $63,971 $63,971 l{.......O (~7 f,-l ,-0 $71,000 )00'('0 $71,000 )00 oi~ $$6,~00 11:> ot, $42,600 (j) 0J $28,400 111"\ <-'7 '1V Co Community Tax Analysis Document In order for the City of La Porte to attract the right type of industrial development and employment opportunities that come with the establishment of a national distribution center, it will be imperative that the City of La Porte determine a tax incentive that will be competitive with those of the surrounding areas. While some taxing jurisdictions do not offer tax exemptions, others, like Chambers County and Bay town (just across the bridge), are capitalizing by offering a full exemption, and thus, reaping the rewards of landing the largest of the national distribution center activity. As a result of this type of capitalization, Chambers County and Bay town have realized a large increase in their revenue, provided their area residents with job opportunities, and established a strong market reputation as a prime location for distribution center facilities. The federal exemption that is provided under the Foreign-Trade Zone (FTZ) program was designed to provide importers with the ability to retain as much American processing and distribution as possible in order to help retain jobs in the U.S. This is done by providing companies that meet FTZ criteria with the ability to waive inventory taxes on merchat:ldise that enters the U.S. from foreign locations forprocessing and distribution to the U.S. marketplace. Following is a list of the exemptions which are offered in surrounding communities: Harris County, Houston, Deer Park and Deer Park Independent School District (ISD) - 0% Exemption Ho~to~ 1::,5 Q - 0 OZo Harris County, the City of Houston, City of Deer Park and Deer Park ISD provide a 0% exemption on applicable inventory within FTZ facilities. City of Pasadena - 0% Exemption p o.,~ 6-1e-0 tL 'X SQ .^"? r . The City of Pasadena has followed their neighbor, Deer Park, and has also offered no tax exemption incentives for FTZ related projects. Chambers C:ounty an. d Ba~own, Texas -100% Exe~ptj<?n Ii '..r;;' 11.. III \ Go 0 0,5 e.. CR. ee- k x.. S J,J- ) 00 r t> 0 ~ 2. u...c..lL~u~ct f~ C~l-~ l a-q e~Ld. c I Both of these taxing jurisdictions are currently offering FTZ facilities a 100% tax exemption on all applicable inventory. This added benefit has led to a significant movement/relocation of large national distribution centers to the Cedar Crossing Industrial Park, including Home Depot. La Porte Independent School District - 50% Exemption CJ-f Historically, the La Porte ISD has given a 75% exemption, but this year lowered the exemption to 50%. I:\PROJ\Houston Expanion App. 2006\Community Tax Analysis Document.doc FTZ Discussion Combined Effective Tax Rates LocalFTZ Effective FTZ Tax Jurisdiction/Taxing Unit 2006 Tax Rate Exemption Rate (in City) City of La Porte 0.71000 0% 0.71000 LPISD 1.63500 50% 0.81750 Harris County 0.40239 0% 0.40239 Total 1.92989 City of Houston 0.64500 0% 0.64500 Houston ISD 1.4 7570 0% 1.47570 Harris County 0.40239 0% 0.40239 Total 2.52309 City of Pasadena 0.56700 0% 0.56700 Pasadena ISD 1 .69000 0% 1.69000 Harris County 0.40239 0% 0.40239 Total 2.65939 City of Deer Park 0.72000 0% 0.72000 Deer Park ISD 1.80550 0% 1 .80550 Harris County 0.40239 0% 0.40239 Total 2.92789 LCity of Bay town 0.73703 ;hambers County PendinQ Goose Creek ISD 1.59562 FTZ Within Industrial IDA Agreement Districts Tax Rate % - Inventory Pasadena Industrial District 0.56700 ? La Porte Industrial District 0.71000 53% Deer Park Industrial District 0.72000 ? 1/15/2007 City of La Porte, Texas Debt Funding Capacity Analysis J RBe Capital · ~ Markets ~ 00 E-4 ~ ~ z o u ~ o e3 ~ ~ 1111I11 M . ASSUMPTIONS OF THE ANALYSIS ~ Assessed Valuation Growth: 4.25% increase per year ~ I&S Fund Ending Balance: at least 10% of next year's debt service ~ Current I&S Tax Rate: $0.099 ~ I&S Tax Rate increases: $0.05 increments ~ $8,950,000 Series 2007 A issued in June 2007 ~ $2,800,000 Series 2007B issued in November 2007 ~ Assumes Successful Bond Election in May 2008 Totaling $22.2 Million ~ New Authorized Debt Issued Annually in $5MM Increments in 2008, 2009, and 2010 with final $7.2MM in 2011 3 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 C Current G/OTax Supported Debt Service . $8,950,000 Series2007A C $2,800,000 S erie s 2007B . $5,000,000 Series 2008 . $5,000,000 Series2009 . $5,000,000 Series2010 C $7,200,000 Series2011 ~ ...... ~ =' ~ ~ ;.. ~ - - z oJ: t: .- S ~ rJ'J rJ'J < t: - .~ ~ rJ'J '" :: ~ ~ ~ - :... t: c.J o t: w.... . . < .... - - .- :... ~ t: OJ c.J :r;. . It) Scenario I-A: Could the planned 2007 A issue plus the 2007B issue be accolnplished without a tax increase? $8,950,000 Series 2007 A $2,800,000 Series 2007B No new voted (authorized) debt Tax Rate $ Increase 2008 0.099 2009 0.099 2010 0.109 0.010 2011 0.109 2012 0.109 $0.010 Tax Rate Increase 6 ~ ~ t-- .:r, ~ o ..... ~ ~ ;, ot ~ ..... e ~ :r, :r, <t!{ :r, OJ :r, ~ ~ ~ ':oj ~ .... :r, ~ o ..... :r, ~ - ':oj OJ ~~ ,.... ;"'" u=' . . ~ I :0 ...... - ..... ..... ~ ~ ~ OJ ':oj 'f). . t"'- Scenario I-B: What ,,,ould be required to issue 2007 A, 2007B and $5MM? $8,950,000 Series 2007 A $2,800,000 Series 2007B $5,000,000 New voted (authorized) debt Tax Rate Increase 2008 0.099 2009 0.104 0.005 2010 0.119 0.015 2011 0.124 0.005 2012 0.124 $0.025 Tax Rate Increase 8 Scenario l-C: What ,,,ould be required to issue 2007 A, 2007B and $lOMM? $8,950,000 Series 2007 A $2,800,000 Series 2007B $10,000,000 New voted (authorized) debt Tax Rate Increase 2008 0.099 2009 0.119 0.020 2010 0.124 0.005 2011 0.134 0.010 2012 0.134 $0.035 Tax Rate Increase 9 Scenario 1-D: What would be required to issue 2007A, 20078 and $lSMM'? $8,950,000 Series 2007 A $2,800,000 Series 2007B $15,000,000 New voted (authorized) debt Tax Rate Increase 2008 0.099 2009 0.119 0.020 2010 0.134 0.015 2011 0.144 0.010 2012 0.144 $0.045 Tax Rate Increase 10 Scenario l-E: What would be required to issue 2007 A, 2007B and $22.2MM? $8,950,000 Series 2007 A $2,800,000 Series 2007B $22,200,000 New voted (authorized) debt Tax Rate Increase 2008 0.099 2009 0.119 0.020 2010 0.134 0.015 2011 0.159 0.025 2012 0.159 $0.060 Tax Rate Increase 11 Page 1 of 1 These are questions I forwarded to Trey Boring regarding FTZ's " ' I will forward the responses And will have at the council meeting tonight JJ From: Joerns, John Sent: Monday, January 15, 2007 2:07 PM To: 'Trey W. Boring' Cc: 'Kelly Rote' Subject: FW: Community-Ind. Dist. Tax Rates.xls Trey-as of now the FTZ consideration is on the agenda for Jan 22nd-just so you know so is a presentation from the city's Financial Advisor regarding City debt capacity. Attached is a reformatted table on area government entity taxing and FTZ exemptions. Please review for correctness. I will ask for help on Bay town/Chambers County and Goose Creek-I don't know if Bay town city limits go out to Cedar Crossing which is where I presume was your earlier reference on FTZ. Also, two more questions have come up. 1) if city did not grant local exemption now-could they come back and do so at a later date? 2) Other areas in the city have come up-I understand that whatever the city decides-it becomes the de facto level for FTZ exemption. The question is When would this occur. My answer is that the FTZ is a specific geographic area and this would not occur until a sponsor (the Port of Houston) was willing and ready to do an expansion of the Foreign Trade Zone. Then that area (or whatever area the Port as sponsor considers) could be considered for expansion. Is this answer essentially correct? Thanks-you are welcome to call and discuss any/all of this. I should be around all week-just the regular meetings etc. I am trying to wrap up agenda items so I wanted to get this to you John Joerns From: Lanclos, Melisa Sent: Monday, January 15, 2007 11:50 AM To: Joerns, John Subject: Community-Ind. Dist. Tax Rates.xls 1/22/2007 Page 2 of2 Thanks so much for your continued assistance. Kelly A. Rote, PLS IMS Worldwide 309 Henrietta Street Webster, TX 77598 Phone (281) 554-9099 Fax: (281) 554-9506 1/22/2007 FTZ Discussion Combined Effective Tax Rates LocalFTZ Effective FTZ Tax Jurisdiction/Taxing Unit 2006 Tax Rate Exemption Rate (in City) City of La Porte 0.71000 0% 0.71000 LPISD 1.63500 50% 0.81750 Harris County 0.40239 0% 0.40239 Total 1.92989 City of Houston 0.64500 0% 0.64500 Houston ISD 1.47570 0% 1.47570 Harris County 0.40239 0% 0.40239 Total 2.52309 City of Pasadena 0.56700 0% 0.56700 Pasadena ISD 1.69000 0% 1.69000 Harris County 0.40239 0% 0.40239 Total 2.65939 City of Deer Park 0.72000 0% 0.72000 Deer Park ISD 1 .80550 0% 1 .80550 Harris County 0.40239 0% 0.40239 Total 2.92789 lty of Bay town 0.73703 Chambers County Pending Goose Creek ISD 1.59562 FTZ Within Industrial IDA Agreement Districts Tax Rate % - Inventory Pasadena Industrial District 0.56700 94.96% La Porte Industrial District 0.71000 53% Deer Park Industrial District 0.72000 63% Bay town Industrial District 0.73703 50% 55% 60% * Dependent on when contract is signed and additional FTZ exemption in Industrial District is unknown 1/22/2007