Transportation and Economic Development Corporation - Regular Meeting

Good evening. We'll call the January 22 of the Transportation Economic Development Corporation meeting to order. And we do the roll call, please.

President Flores.

Here.

Vice President Thuram. Secretary Villarreal?

Here.

Board Member Bassey?

Here.

Board Member Mossman?

Here.

Board Member Lit Yevong?

Here.

Board Member Sherwood? Here.

Thank you. Item C, citizen communication. Anybody here wishing to address the board? Seeing none, we'll move on. Item D1, approval of the minutes. Consider approval of the minutes from the 11/20/2025 Transportation Economic Development Corporation meeting. Are there any questions on the minutes? If not, I'll entertain a motion to adopt the minutes.

So moved.

Is there a second?

Second.

Okay. Have a first from Board Member Basie, second Board Member Sherwood. Any other questions? All in favor, signal by raising your hand. Any opposed? It passes unanimously. Thank you. That will take us to Presentations E1, consider presentation of the economic development compliance report. And Kevin, you all should have received by email a copy of the report in your inbox a day or two ago. So, Kevin?

Good afternoon. Good afternoon. This item before you is our annual report for the compliance of our economic development agreements. We do at this time each year. We present it to the city council this past Tuesday morning at their packet briefing presentation and are presenting to your board tonight because the Type B board is the main board that approves many of these agreements.

So as President Flores said, we emailed out the actual report earlier this week. So I'm going to have some overview slides, then we'll dive into the report. We have 24 active economic development agreements. These include agreements authorized both under Chapter three eighty, as well as Chapter five zero one. As a reminder, Chapters five zero one to five zero four of Texas Government Code authorize the Type B boards and what you all can do as a board.

So the five zero one agreements come to the Type B board. The Chapter three eighty agreements are authorized by the City Council. However, we have included all of our economic development agreements in this evening's report. These economic development incentive agreements, they're all set up to be performance based with particular targets, both in terms of jobs created as well as in terms of capital investment that ends up hitting our property tax rolls. So once businesses meet certain thresholds that are approved by either the Type B board or the city council, then economic incentive payments are distributed to those businesses.

Again, they are performance based. Some of the performance incentives that we have in our toolbox are property tax incentives, sales tax, hotel occupancy tax, and other flat amount economic incentive payments. Which of those tools we reach for just depends on what kind of agreement we are putting together to incentivize different types of businesses to either locate or relocate in Round Rock. The performance requirements I mentioned are capital investment taxable property value that then hits our tax roll, new employees with agreed upon salary minimums, other project specific requirements, etcetera. Compliance monitoring is a big part of our economic development incentive program.

My finance department staff works closely with our city manager, the city attorney, as well as the type B attorney, and the chamber of commerce to regularly check-in with how our businesses are meeting these specific targets in terms of jobs created and capital investment. We have a regular internal review. Monthly, I meet with my team, and we go over all of the compliance. We monitor one time thresholds. For example, many of our agreements, they have to get their certificate of occupancy issued before we issue out any EIPs.

My staff looks for those. We also annually verify taxable value and employment numbers, typically in the January to March timeframe. Each year, we report to the city manager on compliance status. I'm happy to say this evening as part of the annual report, all of our businesses are in compliance for this year. The summary emailed out earlier this week was for as of the end of our last fiscal year, 09/30/2025.

That summary will also be put on our website. The city of Round Rock has all six transparency stars available to the Comptroller of Texas's office. One of those is for economic development. So all of our economic development agreements are available to the public on our website, and this annual report will be published there as well for the public to have access to all their transparent information on economic development. As reported in the report, this is net direct impact to city tax revenue only.

The fee waivers, while we do offer those sometimes, are not included in the incentives paid. Many of our agreements do many of our businesses that we have economic development agreements with do pay sales tax to the city. However, sales tax under state law is confidential, so you'll see on the report in the far right hand column, it just says confidential for that. However, the total sales tax, we have enough businesses in aggregate that we do report a total on the bottom. Few slides just on summary of the programs.

I do want to point out we have, again, 24 active agreements. Those are at the beginning of the report, kind of in the blue color. Then towards the end of the report, in the gray color, we have past agreements. We do report all current, active, and past agreements dating back to about 2005, just so we can get kind of a full sense once a year of the total cumulative impact of these economic development incentive agreements. So this summary is in total.

Total employees, all of the agreements active and past had to meet minimum employment numbers of 3,322. We have far exceeded that with an actual of 8,265. This does exclude Dell. Dell is estimated right now to have about 10,000 employees in Round Rock, so when you add Dell's 10,000 and this actual, it comes to 18,000 employees in Round Rock, are attributed to these economic development programs we've done in the past to bring these employers into town. Currently, we have an estimate of 79,000 jobs in Round Rock, so that's about 23% of our total jobs in Round Rock are attributed to these economic development incentive programs, again, to show the success that we've had through the work done by the Type B Board and the city council.

Looking down at the bottom of this slide, total taxable property value, excluding Dell, we have $1,500,000,000 of taxable property in our tax rolls for these businesses in the report. Once you add Dell into the mix, we're at $2,200,000,000 Similar statistic for the taxable property value. We have about $7,000,000,000 of commercial value in the city as a whole, so $2,200,000,000 works out to be about 30% of our taxable commercial taxable value as attributed to these businesses in the report as being either active or past participants in economic development agreements. One of the things that we highlight in our budget presentation to City Council each year is that commercial properties make up about 8% of our number of parcels here in Round Rock, but they contribute 49% of our taxable value. So again, just to show the importance of our commercial properties in Round Rock, we have a history of these economic development agreements to bring businesses in to invest that taxable value here in Round Rock.

It makes a big difference and lowers the property tax burden on our single family residences. Looking at net return on city taxes through these programs, when we look at all other, excluding Dell in that middle column here, we have $137,000,000 of net taxes received over the life of these agreements. Percent return is 181%. Once we add Del into the mix, both the net tax amount as well as the percent return go up to the amount that you can see on the screen, $660,000,000 with a 211% return. Again, just showing the cumulative impact of these economic development agreements on the city. Happy to answer any questions the Board may have.

Any questions? You must have done a good job. All right. Thank you, sir. Thank you. That will take us to Item E2, consider a presentation of the FY twenty twenty five year end financial report and first quarter FY twenty twenty six financial report.

President and Board members, this item is actually two different financial updates, we're right, and the phase of closing out last fiscal year as we start this new fiscal year. So this will be both the twenty twenty five fiscal year quarter four report as well as quarter one of our new fiscal year 2026. So kicking it off, looking at last year, this is fiscal twenty twenty five Quarter four with actuals through September 30. As a reminder, our Type B corporation is presented in our citywide financial statements. As the classification or terminology is a blended component unit.

So again, the city is right in the middle of our year end audit report. So the details I'll present tonight for quarter four are, as of now, they are subject to change as we are still working with our auditors going through the year end process for the Type B Corporation. We don't anticipate any changes, but just wanted to put that out there. The report will become finalized. We're presenting it to counsel the second meeting in February, and we are anticipating an unmodified or clean opinion from our auditors for the fiscal year 2025.

Looking at some year end totals for revenues and funding sources for the Type B Corporation, we brought in $77,870,000 that's $31,900,000 in sales that's collected. Ended the year $1,900,000 above budgeted projections for sales tax. Had some strong growth throughout the year. That is continuing through the first quarter that you'll see here in a few slides. We issued $20,000,000 in road CO bond proceeds.

We had good county participation for transportation projects, then had $8,400,000 in interest earnings and developer contributions. Looking at some of the major capital paid out in fiscal twenty twenty five, totaling $101,100,000 definitely a ton of projects going on around the city funded through both of us ROADCO bonds we issued as well as just general type B monies. So these all fell in line with anticipated budget expenditures, and these were the amounts outlaid again and TCIP paid out in the fiscal year. Looking at economic development payments, totaled $13,500,000 for the fiscal year. Shown there the breakout of where those went for both projects as well as businesses.

Now moving on to the first quarter twenty twenty six report. This is actual through 12/31/2025. Again, a reminder of what our five year funds allocation plan looks like. No changes since this five year plan was adopted by the Board back in July. Year to date, our sales tax is up 12.7% year to date over the first three months of last fiscal year, fiscal year twenty twenty five.

Again, sales tax continues to come in at double digit percentage increases, which is great. Staff continues to monitor sales tax closely, continues to be very volatile, but we've had a good first quarter of this fiscal year. Things are looking good and on track so far. First quarter expenses. We spent $16,300,000 year to date expenses on transportation.

That includes $15,900,000 for TCIP. Economic development in parks is also trending where it should be through the first quarter at $8,840,000 spent. On the horizon, the city does plan to issue certificates of obligation for type B approved road projects as we showed the board in the current year budget that we brought to you this past summer. Those will be coming later this spring in April, about $30,000,000 estimated. Again, we like to leverage the Type B resources to make those debt payments in lieu of cash funding other projects.

The it allows more road funding and fits in line with both the city's as well as the Type B Corporation's long range financial plans. Happy to answer any questions you have on either of the quarterly reports. Any questions?

All right.

Thank you, sir. Thank you.

All right. Well, if there's no other discussion, then we are adjourned at 05:13. Thank you.