Transportation and Economic Development Corporation - Regular Meeting

Alright. We will call to order the Thursday, 01/23/2025 meeting of the Transportation Economic Development Corporation meeting. Monique, will you do the roll call, please?

President Flores.

Here.

Vice President Thero. Secretary Vialy Rial.

Here.

Board Member Basie?

Here.

Board Member Mossman? Here. Board Member Neely?

Here.

Board Member Sherwood? Here.

You.

Citizen communication, anybody here wishing to address the board? Seeing none. Item D, approval of minutes D1, consider approval of the minutes of the 10/24/2024 Type B meeting. Entertain a motion to adopt the

minutes? So moved. Second. All right.

I have a motion by Board Member Bassey, second by Board Member Mossman. Any other discussion? All All in favor, signal by raising your hand. Any opposed? Passes unanimously.

Takes us to presentations e one, consider presentation of economic development compliance report. Susan.

Good evening, board. What I have in front of you is the annual compliance report that we present to both this board and the council every year because we had a snow day on Tuesday. Council just gets an email this year, so y'all don't get have to walk through the the whole thing. So, let me just kinda walk through and remind you what what this is for and and what we're talking about. So, right now, the city has 26 approved agreements that are both three eighty agreements and also agreements that are five zero one.

Those are the references to the local government code. Five zero one through five zero five local government code is where all of the Type B powers of authority come from. Some of the agreements in here are three eighty agreements. Type B is not a party to them, but we report them in total because they're all part of the total economic development effort. So, not all of these are qualified or part of Type B, but a majority of them are. In the past three years, we've had seven new agreements, incentive agreements, and one extension that would be the Dell agreement that was done this last May. When we're offering incentives, what are we looking for? We want something out of these. We're not just doing them to be nice. We're not just doing them to that.

We want typically, we want taxable value or maybe some other fiscal returns or and we want high quality jobs in our target sector. So we don't we don't want just anything. There are certain things that we're really after and we want. And so if we want those things, then we're gonna set some standards of what they have to meet to get those. The kind of incentives that we offer, we we don't really we don't have any existing property tax through abatements.

We do have a few, three eighty agreements where we incent with sales tax, a little bit of hot tax. Typically, most of our, incentives are paid through type b. There's a handful of things that don't qualify, but the Type B, that's what you're created for us to do those kind of things, so most of those where we can qualify, those are going to come through. But what do we want? When we do that, we want that capital investment. We want taxable property value. We want employees when we're and we want the with agreed upon salary minimum, certain types. Maybe there's some other project reporting. We had one our original agreement with Emerson years ago. We wanted them they had to prove up how many hotel nights they were creating.

There's other reporting requirements. Of course, we want that taxable value, want those investments, want those jobs, we want that they have to report those to us every year. And then, if they don't do that, we have clawback provisions in there. So, we are thrilled with our businesses that come to town, but we expect them to hold up their end of the bargain before we do our incentives. That's what we're looking for.

Even before there's ever a closed agreement, it is a very close it is a very close coordination with the city manager's office, the chamber as our economic development arm, finance, the city attorney. There's a lot of work that goes on. Some of them are pretty straightforward, but you get something like Kalahari. That was about an eighteen month process with lots of going back and forth. So, there's a lot of work ahead of time before it ever comes, before this board or before the city council.

We periodically, we review all of those agreements and making sure they're meeting their deadlines. Some of them, they don't get anything till they get their certificate of occupancy, some other milestones, maybe till they get a certain number of employees. We're always monitoring for those. Generally, most of the reporting requirements are due in that January to March timeframe. This report that I'm giving you is as of September 30.

Honestly, the reason we do this in January is just kind of space out all the different kind of reports that come from finance, so we just do this in January kind of in between budget and or, you know, financial reporting. About May, April or May, we will let the the city manager know if we've got some that are not in compliance. Now, when we do have some that are not in compliance, Zach is here. Zach works his tail off to make sure we keep working working with them, and every once in a while, we have to have Steve send them a letter, a not very nice letter, telling them they've got thirty days to comply or not get their incentive. We have you'll notice now on the hard copy you have, I had one listed as one agreement that was non compliant.

They got their paperwork in on Tuesday, so I had already printed these, but so I wanted to go through and say, you know, Zach between Zach and Steve, it was just several months. We just needed the affidavit, so we got all of that, so we've got that cleared. We have one agreement under discussion with pending non compliance, and we're the city manager and his team are looking at that one. And then, last year, we had two agreements that were non compliance, but both of those are now compliant and meeting all of their standards. So, and that's another that teamwork of working on working on together.

Now, we have had them in the past where they didn't meet their requirements, and we and our response was, Really glad you're in town. Thank you for being here, but we're not paying you any money, because you didn't meet those you didn't meet the proper the capital investments or the employees or something. Happy to have you here, but we're not gonna we're not gonna there's nothing for us to pay you. So, but we but so we do take we do take that seriously and monitor those. The next thing I kind of wanted to show you, what I've also given you is a long this long report.

This will be posted up on our website. This is just a summary of all our outstanding agreements, and kind of give you a little summary of their terms and stuff. So the blue pages show you the ones that are actively going. There's some milestones starting to be met. You'll see some pages that are gray. Those are ones that have been completed in the last few years. You can see those on there. And then we have and then we have some green. Those are ones where there there's not really any milestones that have been hit yet. Those dates haven't hit, so those are still those are still pending.

You'll also notice in that that very far columns, I'm looking at them one by one on what kind of what are we getting from them on revenues, employees, all that kind of stuff. But that sales tax column, sales tax is confidential in Texas. So we can disclose Dell. We can disclose the outlet premium source because there's more than 100 vendors there, but anything else, like, it would be breaking the law, and I would get I would get our city manager in a whole lot of trouble and as well as myself if I disclosed you that information. So we so we don't provide that, but we do provide it in total.

So so you'll notice that. So when you when I look at that when you look at that report, really what you wanna do is here here's the summary. So what have we done in our economic development? So when you look at employees, the two things we generally want, we want taxable value and employees employment. So when you exclude Dell, and I look at it with and without Dell because Dell is so big, it kind of dwarfs everything else.

So but when you look at excluding Dell, all of those requirements, we wanted we wanted 3,300 jobs out of those businesses. We actually have those businesses that provided 7,300 jobs. So that's when you and then when you include Dell, and Dell adds another 12,000 employees, so that that's about 20,000 employees that have that we employ that jobs that are here. If you look at our job base in Round Rock, there's about 80,000 or low 80 about 80,000 jobs in Round Rock. That's 20% of our employment base, 20 to 25% of our employment base as the as a result of economic incentive programs through through the city and Type B.

Now, on taxable property value, excluding Dell, Dell Dell is it's good property value, but their their employment and their sales tax are really what benefits the city. But that that's a total of $2,000,000,000 that we have gotten through incentives. For the same reporting period, the commercial property in Round Rock, not the multifamily, not the single family residential, but typically what you think of as business commercial property is about $7,000,000,000. So that means almost 30% of our commercial taxable value is a result of incentives that companies that we brought through either through the chamber, the city have brought to town and given them an incentive. So why is that so important?

I don't have this chart in here, but y'all have all seen it before. Out of all of our taxable real estate parcels, at 92% of them are single family residential. Residential. Only 8% of them are that commercial. However, 46% of our property taxes come from that 8%.

So that's why we're chasing those two things, and especially and that's why that that commercial taxable value is so important. It's actually really very important to the residents that live here, so we're just we're continually trying to make that make that point, as it really helps us all and benefits us all on the tax rate. Since since we've given you this report to you last year, we've had four agreements that have fulfilled and concluded. We've got several that are either under waiting to start, waiting on milestones. We've got that one that still we've got to do discussion on compliance, but other than that, everything's running along just as we just as we as expected.

So with that, let me one more thing. Let me talk about the return. This is just looking at our taxes, the taxes that we total taxes based on what what we paid out in incentives. So when you look at when you don't when you don't take Dell into account, we've collected a total of a $174,000,000 in taxes, but we paid 53 of it out in incentives. So, we've got a 100 got a $120,000,000 in tax city taxes that we would not have had otherwise over this term.

So, that's a 227% return. When you roll Dell into that, the percentage return goes down a little bit, but look how big those dollars are. So that's been a that's that's been that's been a huge bonus to this city and to our tax base. So and those are the things that we're monitoring on that. I'd be happy to answer any questions. Every one of our economic development agreements agreements is on our website. We do have the economic development transparency star. There's a whole lot of data on there. It's very transparent. That graphic says our sixth and final transparency star is coming soon.

We actually got the notice from the comptroller today. We they told us we had it, but we didn't have the official Star, so that's coming off because we've gotten the official notice, thanks to Milana and Megan, and so that'll that won't say coming soon anymore. We've got all six, so know, I'd be happy to answer any questions on that.

Awesome. Thank you, Susan. Board Member Basie?

Just a couple I wanted to clarify just a couple of things, because this is relevant to some stuff I was talking to somebody about earlier today. On the the summary of 09:30 let's see. If you go back a couple of slides one more one more. That one there. Mhmm. Those numbers, is that just the active agreements today, or is that since inception, all agreements?

That would that would be everything that's on this that would be everything that's on this report.

Including the completed ones on the back end.

Including the completed ones, because they're still here.

Yeah. Sure. Yeah. I just I'm just for clarity,

I confirm.

Yeah. This is all of the everything that's that we're reporting on their

Yes. Yes, sir.

Okay. Just give me one second here. And then you mentioned some statistics about 92% of the parcels are single family, eight are commercial. And then you and I used to know this, but I don't anymore. But the percentage of the total property taxes commercial, what was that amount?

46% of our property tax revenues come from those 8% of commercial part

46 is commercial? Yes, sir. Okay. And then, so the slides later, same question. I think the answer is the same, but that is that is the entirety of all of the deals completed and active.

Yes, sir.

And then the last question. So, what's the sixth star?

The sixth star is it's called the Open Government and Compliance Star. So it means we're doing all of the all of the postings and disclosing everything. We're doing all the mandatory reporting to the comptroller's office. A lot of it has to do with the city clerk's area of responsibility. So we were already doing all those things. This is a new one that just came out this I last

always thought there were five.

Yeah, there were five for a long time. This new one came out this last '24, and so being

You have you have them all now.

We have we we're back to having them all.

Yes. Very cool.

Thank you. Yes.

Appreciate the time.

Alright. Any other questions for Susan? Board secretary of Villarreal.

Thank you. Yeah. Congratulations on the six stars. Just a quick question, just a clarification. I know with the 227% rate of return, we talked about the taxes and the Wood Dale 213, and that doesn't include any of the sales tax, does it not?

That that that is any kind of taxes

to the city. Taxes.

That's sales tax, hot taxes, and property taxes.

Okay. Just wanted clarification of that.

So Yeah. Yeah. That's that's all of those taxes. It does not include what we would call indirect or induced benefits, which would mean good example would be Dell shows up. There's all kinds of other suppliers, restaurants that come as a result of that. That's not included in there. Or the induced benefits, which are what you get from all those employees coming and spending in your economy and stuff. We're we're just looking at what hits the city, what's hitting my general ledger on revenues. So Okay.

And I know in the past in meetings, you've you've had a budget like or projected monies to use a type b. I'm assuming, are we looking at trends that might still be going upward like I think we've seen in the past, the recent past?

Yes. On on and actually, in the my next item, I'll talk about we'll talk about where we are on that. Yes. But what yeah. But so that your type the type b monies are part of the total of the city, so the type b sales taxes that we get on that are in those numbers as well.

All right. Thank you, Susan.

Sure. Good question.

All right. Any other questions?

All right.

Thank you, Susan. That'll take us to E2, consider presentation of the FY twenty twenty four year end financial report and first quarter FY twenty twenty five financial report.

All right. This is just as President Flores related. So, let me talk about our year end. We haven't haven't didn't have the stat and haven't met to talk about how we closed our fiscal year end at $9.30. One thing just your type b in from a financial reporting standpoint is considered a component unit of the city. That's generally accepted accounting principles, so you're considered a component unit of the city. You're a separate legal entity, but you're part of that. So when you look at our audited financial statements, you will see a column that's the Round Rock Transportation Economic Development column. So you're just a fund you're you're a fund within the city's purview. So you you're getting audited actually, you're wrapping up that audit right now getting audited.

You are part of the audited financial statements, the annual comprehensive financial report that will be made available to counsel at the February. So, you're part of all of that. So, just your your books get audited and handled with the city books, internal controls, all that gets monitored and managed all part of that, and that we are expecting a clean opinion that that'll get presented to counsel here at the end of next month. So what did so what happened for '24 as your total sources of funds and revenues that took went into type b during 2024? You got '21 not just shy of $30,000,000 in sales tax.

That's your only source of operating revenues. That was actually $1,300,000 less than what we budgeted because sales tax tax is staying a bit flatter in 2024 than what we expected, but that is not enough for us to have to make any kind of adjustments with this fund. We typically run with a high cash balance. We've got a lot of capital projects. We have almost no ongoing operating costs from this fund, so we do think any anything we've had several years where we've gone we've gotten more than what we expected on that, so we're to have have it be flat is what what we've been seeing.

Same thing happened to the city on that, but that's that's what we plan for, and that's why we have reserves. So you also received $10,160,000 in CO bond proceeds, back in May. That was, the city issues typically, when the city issues road COs, we deposited in type B to do road work. What was unique about this one is the first time you, that this board agreed to make the debt payments on that as well, and we'll be coming back asking that again in the spring. You got $4,000,000 of participation primarily from Williamson County on road projects, and then we are now in an environment where that interest number is pretty pretty exciting.

So, that $8,600,000 of interest and other, $8,100,000 is is interest earnings. So, we're which is a couple years ago, they were, you know, it was rounding errors on what was interest earning. So we're back back enjoying that for as long as it lasts. For what did you pay for during '24? This fund was very busy. You spent $32,700,000 on your transportation projects during the year. I think '25. Michael Thane's here. If you'll hurry up and keep going, we'll spend even more than that in this year because you'll do better than Gary. Right?

So we'll keep spending on those things and keep going. You also made economic $6,000,000 in economic development payments. That left hand column are all the incentives that you paid because they met all their contract requirements like I just talked about. They don't get paid till they meet meet what we need. And then some of the more ongoing things, the chamber agreement, that's a little higher than what their annual contract is because you also paid for their strategic plan that they're they will present to you next month.

The downtown improvements in marketing is there's some general downtown maintenance kind of stuff, but most of that is for the Griffith Paseo Building across the street for your portion of that that you had agreed to fund. A little bit, we had you approved back in August the to pay help pay for a portion of the project big project in Old Settlers Park, so you paid a little bit on that, and you paid the last little bits of that South Maze Corridor improvements projects that Type B was a part of. So, what about our first quarter? Our first quarter ended on December 31. So, just as a reminder, back in July, you adopted a five year funds allocation plan.

We're planning to spend about $487,000,000 in the next five years, and that we're still on track with that. Even with that additional $15,000,000 to Old Settlers Park, we still got we still got $2,500,000 that's not allocated to anything. But if should we ever need money, just remind them we can adopt that plan. We can readjust the timing. Typically, we build roads faster than anywhere I've ever been here, but they still take a long time.

So, typically, we run a little bit ahead of schedule and have a little more cash flow than we expected. So, it's still not anything that I'm concerned from being able to balance should opportunity come along. Sales tax, the type b sales tax is down, over the same, period, the same quarter last year. Now some of that's because we got a onetime payment, a year ago November. It was an amendment by our largest sales taxpayer from earlier in the year, so they kinda bumped up last year's.

However, we did go into this year's budget knowing that sales tax, it's not just Round Rock, it's across the street, has been pretty flat. It's growing at one or 2%. You know, that's three years ago, it was growing at 20%, and we know that's not sustainable. So it's on track, and it's on a track that we're not we're not feeling like there's any any reason to make any adjustments at this point. So and we continue continue to closely monitor that.

You have spent $8,350,000 in on transportation related debt and support and projects, and then $1,490,000 on your chamber contract and some of your downtown work. And most most of that 1,190,000.00 is toward your piece of the Griffith Paseo projects across the street. So on the horizon, the city is planning to issue $20,000,000 in COs in April for the next phase of our driving progress program. Those will be COs with the city's AAA credit. We will come back and ask type b to approve an agreement to make those debt payments as well.

You'll get all the proceeds and make those debt payments. And just as a reminder, what we are asking this board to do is while the city is spending and issuing debt to close to our $274,000,000 of geo debt of hitting our property taxpayers with that, that type B take on the road debt that we need to do during that time with the anticipation at some point in the future, we'll get past those projects and we'll push some of the can push some of those COs back into our property tax base at that point. So but we'll just take that on a year to year basis. So but with that, I think that's everything. That'll come to you in April. Be happy to answer any questions.

Any questions for Susan? Board Member Mosman?

Thank you, Susan. I have a couple questions. One is going to be in regard to the I believe it was the slide that stated about the roads, how much we were spending and what the county and other partners were putting in.

Let me get back to this one. Believe right there. Yes, ma'am.

Yes. On that county participation, are we including anything from TxDOT at this time, or is this just specifically through Williamson County?

I think those are all just through I don't think we have any we didn't have any in TxDOT in this last year. Think those are almost all Williamson County. I'm looking at the list here. That's County Road 112, Old Settlers, and a little bit on Wyoming Springs and University. But those are just county. We do sometimes get tech stock grants and everything. Just didn't have them in this year, Okay.

And then, my second question was in regard to the chamber, the 1.19, I believe it was. Yes, ma'am. I apologize. One point. Is is that including anything? Are we doing anything in regard to the seventy fifth anniversary and doing any dish additional incentives for the city of Round Rock where we can see economic development potentially grow through that? We have they

have not approached us to spend money on that particular initiative. We of that, dollars 185 was for their strategic planning process, but we have not I'm assuming that'll be through the chamber or they'll come and ask we'll ask the city or this board for funding for that if they need it. Thank you.

Any other questions? All right. Susan, thank you. Alright. There's no other items on the agenda. So 05/25, and we are adjourned. Thank you, everybody.

For the fire department,

just