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HomeMy WebLinkAboutMIN NOV 17 1987 REGULAR SESSION CITY COUNCIL - CITY OF BEAUMONT HELD NOVEMBER 17, 1987 - 1: 15 P.M. BE IT REMEMBERED that the City Council of the City of Beaumont, Texas, met in regular session this the 17th day of November, 1987, with the following present: HONORABLE: Mayor Meyers Mayor Councilman Lee Councilman At Large Councilman Cokinos Councilman At Large Councilman Smith Councilman, Ward I Councilman Samuel Councilman, Ward III Councilman Moore Councilman, Ward IV Absent: Councilman Brumley Councilman, Ward II Albert E. Haines City Manager Lane Nichols City Attorney Rosemarie Chiappetta City Clerk -000- The Invocation was given by the Reverend R. E. Campbell, Sr. , pastor of West Beulah Baptist Church. The Pledge of Allegiance was led by Crystal, a student at Oak Forest Elementary School in Vidor. -000- Mayor Meyers called an Executive Session at the close of City Council in accordance with Section IIe of the Open Meetings Act of the State to discuss comtemplative litigation. Mayor Meyers welcomed a Social Studies class from Oak Forest Elementary School in Vidor to City Council. -000- Mayor Meyers introduced Mrs. Maree Calcote, a member of Beautify Beaumont, Inc. a part of the Clean community Commission* Mrs. Calcote explained that Beautify Beaumont, Inc. works with City-owned property that needs improving. They look at an area, come up with a design, receive an okay from the City Planning Dept. , raise the money and materials to complete the project. Mrs. Calcote introduced Mr. Lynn Milam, Chairman of Beautify Beaumont, Inc. who dedicated the second Beautification Project and other members which include: Kirt Anderson, Rex Good, Ann Elwood, Lewis Hiltpold, Rhett Browning. Mrs. Calcote invited other citizens to volunteer their help with projects such as these. MR. MILAM , .Beautify Beaumont has recently completed a project in the little triangle between the downtown post office and the First Baptist Church. As spokesman for Beautify Beaumont, I 'd like to take this opportunity to dedicate the efforts that we have made, the work we've done in this -387- November 17, 1987 regard to Mr. Fred Locke Benckenstein. We do this for a great many reasons. First of all, Mr. Benckenstein is a lifetime resident of Beaumont. He has been foremost and very generous in his efforts, contributions to civic activities. He and his law firm, Benckenstein, Oxford, Radford, and Johnson were very early and generous contributors to the activities of Beautify Beaumont. Also, it' s easy to choose Mr. Benckenstein because he was very much admired and respected by numerous, numerous friends in his business life, his church, and in his community. All this is not hearsay or rumor because I had the very great pleasure of being a friend of Mr. Benckenstein for the last sixteen years, the time that I 've lived here in Beaumont. Now, in addition, I think that this is an apropos moment to publicly thank and recognize those people who made this particular project possible through their support and financial contributions and other contributions. In this regard, I would like to thank Helen and Lee Griffin, Carol Kyle, Dr. Thomas Lombardo, and Whitfield Outlaw with Pyramid Pipe who contributed the pipe in which these plantings are placed. Maree has mentioned that Beautify Beaumont is an ongoing operation. We have a number of projects planned. We need a great deal of help and support in completing these projects, and I would like to repeat her plea, not plea that' s a little bit too strong a word, but to remind everyone all the helps, supports in anyway that can be given to this committee, this group, is more than welcome. I thank you. MAYOR MEYERS Thank you very much. Thank you. Lynn and the rest, we thank you very much for your efforts, and I think those who have seen the great improvement on the other project as well out here on the connector can truly appreciate the difference that these projects will make as you continue them, and we thank you very much. -000 MAYOR MEYERS Next, I think probably everybody here has had the opportunity to be a part of or at least appreciate the significant benefit to our community and all of Southeast Texas by the arrival of the Elissa, and I think Councilman Lee along with assistance from Councilman Moore has some very special presentations that he 'd like to make today. COUNCILMAN LEE As the Mayor mentioned this project was one that certainly brought many folks down to Riverfront Park to experience a meaningful activity, one filled with educational and entertainment activities. The project itself could not even have been a possibility without a lot of tremendous support from people throughout Southeast Texas and in Beaumont, of course. But, before all those volunteers could have had a chance to take part in this wonderful project some very special people had to come forward and agree to provide some underwriting for the Elissa project. It was a very complex activity, and it was one that was -388- November 17, 1987 expensive. It' s wonderful that we in Beaumont and in Southeast Texas have corporate citizens and individuals who are willing to come forward when asked to invest their time and their money in a project like this. There is an individual sitting here in front of me who was the chairman of the underwriting activity for the Elissa project, and I ' ll ask George Irish to come forward first, and if George would like to have a few words we'd certainly welcome them. And, also, George come on up, we have something for you and I ' ll let you read that to him, David. COUNCILMAN MOORE George, it reads "In appreciation for your contribution to the successful voyage of the Elissa to Beaumont. The Beaumont Enterprise, 1987. " (The plaque was presented to Mr. Irish. ) MR. GEORGE IRISH I 'd just like to say just a couple of words. There were a number of individuals, a number of companies that I went to as part of this project and asked for them to join me, to join the City, and get behind this project. I prepared to, to have to put forth my best sales efforts. Let me tell you that the response from each of these individuals, and you' ll see them as they come forward, was very positive. Each of them said that this project is good for the community without. . .They all knew it was going to be successful and indeed it was. So, I 'd like to thank each of them, and again, you' ll see them as they come forward. They're great folks. Thank you. Plaques of acknowledgment and appreciation were presented to Mr. Sonny Sherman of Sherman Lumber Co. , Ms. Chrissa Christopher from Beaumont Medical Surgical Hospital, Mr. Selman Clark for Baptist Hospital of Southeast Texas, Mr. Jerry Nathan of Benckenstein, Norvell, Bernsen, and Nathan Law Firm, Mr. C. W. Conn of Conn Appliances, Inc. Mr. Bill Hansen with Parkdale Mall, Mr. John Simonetti for Entex, Inc. , Sister Carmelita Brett from 5t. Elizabeth Hospital, M.-t. Herb George of Temple Ea.stex and Mr. Rick Warchol of the Americano Motor Inn. Mr. Thompson of Market Basket and Dr. Robert Robinson of Beaumont Eye Associates could not be in attendance for the presentation. COUNCILMAN LEE Again, on behalf of all of Beaumont and Southeast Texas, we appreciate all that you have done to make sure that the Elissa was able to come, and we' re just glad that it was received by some 18,000 people who had an opportunity to visit, tour the Elissa, and the 4, 500 school kids who also had that chance. Without your willingness to cooperate and be involved none of it could have taken place, so we thank you. Let' s give them a big hand. MAYOR MEYERS I extend our thanks and would like to take opportunity to introduce Sister Fatima sitting next to Carmelita who has come to our city from Lake Charles. We' re pleased to have you here, Sister, and it' s good to see you in Beaumont. -389- November 17, 1987 Mayor Meyers announced that following Item B-1 Council would be recessed for a short break. -000- Two proclamations were issued: "Beaumont Arts Week 18711 - November 15- 21, 1987 and "Family Week" - November 22-28, 1987. -000- Citizens were invited to comment on Agenda Items A, B, or C. Mr. Ed Orr, 3830 Evalon, addressed Council on Agenda Item B-1 regarding expenditure of public funds for private development, questioned where the monies would from, asked if the two hundred jobs would be relocated or new jobs, and expressed tl)at priorities need to be considered stated that Calder Avenue needs attention. -000- The following Consent Agenda Items were considered: Approval of the Minutes of the Regular 'City Council Session held November 10, 1987; and Resolution 87-229 appointing Mr. Robert Robertson to the Beaumont Library Commission with a term expiring October 31, 1989. The Consent Agenda was approved on a motion made by Councilman Moore and seconded by Councilman Cokinos. Question: Ayes: All Nayes: None -000- Resolution 87-230 authorizing a development agreement with the Stedman Building Partnership for City participation in a project for renovation of the Stedman Building as a mixed use commercial and retail office building was considered with the following commitments asked of the City: public improvements including relocation of overhead utility lines, and streetscaping improvements of sidewalks, curbs. and gutters, asphaltic concrete-paved streets, lighting, and removal of railroad tracts at a cost not to exceed $430,000, acquire, improve and lease to developer a parking facility, historic tax abatement for a maximum of five years, city assistance in facilitating a $140,000 loan from BUILD, extend Neches Street to the Liberty/Laurel Connector, pursue assurance from State Highway Department for timely completion of M. L. King Parkway, and make reasonable efforts to secure HUD Section 108 loan guarantee for acquisition of Stedman property. The estimated capital costs to the City are approximately 10% of the total cost of the $4 million project which is projected to create 200 permanent jobs. -390- November 17, 1987 Mr. John Flanagan, the developer, stated this project is a historic step in the redevelopment of the downtown area and presented to Council a three-phase project: Phase 1. Renovation of the Stedman Building. Phase 2. Renovation and construction of the properties across Crockett Street from the Stedman Building and restoration of the Giglio Building to create a combination of office and night-time use. Phase 3 . Renovation two blocks down on Crockett Street of the Dixie Hotel and other buildings. Mr. Flanagan said Mr. Marlon Williford, Mr. Lynn Harden and he have worked two years in developing this project concept. Revitalization projects have been successful all over the United States, and in Beaumont Mr. Flanagan sees this as an opportunity, and states that going into the project, it' s a real estate project, it' s in Texas, it' s in Beaumont, it' s in downtown Beaumont--there are many red flags that indicate the good timing of this project. The construction plan, the pre-leasing, and financing is in place and the developers' desire is to leave Council today with an agreement with the City of Beaumont in place. Construction commencement is scheduled for late December or early January. Mr. Haines, City Manager, stated that today' s action is only for Phase 1 renovation of the Stedman Building and. that Staff has had opportunity to review on a confidential basis in negotiations with the developer and are confident they are in a position to proceed, and without the terms of this agreement it would not be a feasible project and expressed thanks to Mr. Flanagan and recommended passage of this agreement. Councilmembers asked several questions concerning completion dates for all three phases (Phase 1 , August or September, 1988; Phase 2 and 3, eight months after start date) , the HUD, Section 108 loan impact on the project and on the CDBG budget, the ten-year term on parking arrangements and future lease agreements, overhead utility lines versus underground and financing obligation of underground lines, funding of City' s portion of project, the total value of the projects-, and use of local labor. MAYOR MEYERS I would make a couple of comments prior, and that' s that I measure sure this project on its merits, and I deem the merits extremely high. It was July of 186, if you're looking back for a timetable, that' s 16 months. I compliment Mr. Flanagan and his associates because I think they come to our city with a confidence in our city, number one, which is encouraging and delightful, and I think a vision of excellence that I would hope shall set a standard for other things to follow, and I think that he is in tune with development of today and will produce results that we would be extremely proud of. I think the project will send a signal to those living here as well as those outside that we are developing our city and that investment today in the Texas economy, I think we will shine like a beacon across the State as people will look at us and really figure what` s going on down there when everybody else is drying up. And, I have to say while we keep saying downtown, this is a benefit that everybody in this community will appreciate and be extremely proud of. I know for one, we all will, I think look upon projects like that as we do perhaps before the fact sometimes question it. The beauty of this project will be, I think, a show place we ' ll all -391- November 17, 1987 be proud of. And, in closing, I would hope that you would be able to keep that date of August, 188, because it could be an extremely exciting month for our city because that' s the planned completion, not in a competitive sense, but in a delightful sense that our new energy museum should be completed, and I could think of nothing more delightful than to see both of those projects come to completion. Our Riverfront Park has shown us that it is not a downtown park. It's a park that just happens to be downtown. And because it was so misunderstood that it was only to supposed to be for people downtown no one was using it. We have clearly shown through all of our efforts and enthusiasm that that is a park that is understood and loved by all in our city, and now thousands of people as recorded by some recent statistics come every Sunday. And even as those children came from Vidor, I was delighted to see them all out there having their lunch on the Park. You inspire me (speaking to Mr. Flanagan)by your futuristic thinking, and you inspire me by your desire to do something, and I compliment you for it, and I 'm pleased that you see fit to consider that kind of investment in our city, and I thank all of you for your efforts. Resolution 87-230 was approved on a motion made by Councilman Cokinos and seconded by Councilman Moore. Question: Ayes: All Nayes: None -000- Mayor Meyers recessed the meeting to give opportunity for the news media to visit with the developers, staff members, and Council. -000- Mayor Meyers reconvened the regular session of City Council after a fifteen minute recess. -000- Ordinance No. 87-87 creating a 21-member Sister City Commission to serve an an advisory capacity regarding Beaumont' s participation in the Sister Cities International Program was considered: ORDINANCE NO. 87-87 ENTITLED AN ORDINANCE ESTABLISHING A SISTER CITY COMMISSION; PROVIDING FOR ITS ADMINISTRATION; PROVIDING ITS DUTIES AND RESPONSIBILITIES; PROVIDING FOR SEVERABILITY AND PROVIDING FOR REPEAL. Councilmembers expressed a desire that consideration be given to the thirty-four members on the previously appointed Sister City Commission. Councilman Cokinos requested that Mrs. Carol Flatten, Economic Developer, poll the previous members to determine if they would be interested in continuing to serve on a permanent commission. Mrs. -392- November 17, 1987 Flatten explained that the size for the commission was determined by comparison of other large commissions. Ordinance No. 87-87 was approved on a motion made by Councilman Lee and seconded by Councilman Cokinos. Question: . Ayes: All Nayes: None -000- Resolution 87-231 authorizing a three-year contract for furnishing security guard service for special events at the Civic Center and for Fair Park on a daily basis with Security Guard Service, Inc. in the amount of $88,260 was approved on a motion made by Councilman Lee and seconded by Councilman Cokinos. Question: Ayes: All Nayes: None -000- Resolution 87-232 authorizing an annual contract with Joe Simon Plumbing, Inc. for plumbing maintenance and repair service at an hourly rate of $37.00 for a plumber, $7.00 per hour for a plumber's helper, minimum service call of $18. 50, with 14. 5% added for material was approved on a motion made by Councilman Moore and seconded by Councilman Lee. Question: Ayes: All Nayes: None -000- Councilman Samuel reported that the "Joke-Off" at "Sunday in the Park" was s,,„xccessful and Councilmembers complimented Mayor Meyers on his joke- telling ability and expressed that the "Sunday in the Park" Program has been very enjoyable and successful. Mayor Meyers reminded Council of an ordinance that charges a fee for bagging the parking meters with no exemption for construction. He feels this is not conducive to development and should be investigated. He stated there are different charges at the Landfill based on estimated size of the load instead of being weighed and are probably inaccurate. Councilman Smith inserted that she has received several telephone calls regarding the general condition of the Landfill. Mayor Meyers expressed his personal opinion that consideration should be given to completely removing parking meters in downtown Beaumont. Councilman Cokinos stated that in the past not having parking meters created a situation where vehicles remained parked in the same spot all day or for several hours and feels there are pros and cons regarding the problem. Mayor Meyers read a letter received from Mr. Robert Gray, 3250 Christopher, in reference to the safety of school children and obeying speed limits in school zone. Mr. Gray requested the letter be passed on to Din Wallach and the Beaumont Enterprise. Councilman Moore reported that a citizen residing at 2515 North 10th Street expressed concerns about the growth of weeds in the city right-of- way in that area; asked that the hole on Dauphine Street that is holding -393- November 17, 1987 unsafe water be reinspected and repaired; stated that on Washington Blvd. east of IH 10 the street is spreading apart and needs immediate attention; requested the documentation for "Adopt a Park" program for an interested group; requested a copy of the sidewalk privatization list, especially dealing with schools listing priorities, because of concern for safety of school children, and invited citizens to the last Ward IV Town Meeting, November 18th, 7:00 p.m. , at Alice Keith Community Center. Councilman Cokinos informed Staff that First Street at Evalon needs litter removal such as furniture and other items that have been deposited there. -000 Mr. Henry Dannenbaum, 3305 Avenue A, addressed Council to thank Mr. John Gorman and the Civic Center staff for setting up the facilities for the Jay Str_ack City-Wide Revival Kick-Off Banquet, requested that the Parks and Recreations Department pick up trash over areas of the city, and thanked the participants in the Veteran' s Day Parade. Mr. Larry Gouthia, 5926 Greenmoor Lane, addressed Council to comment that he would like school speed zones reduced to 10 miles per hour and submitted his idea to let individual home owners read their own utility meters to save car and fuel costs, submit this information to the Railroad Commission and our State Senate to get a bill passed permitting this system of meter reading. -000- There being no further business, the meeting was adjourned to conduct an Executive Session. -000- 2, Rosemarie Chiappetta, City Clerk of the City of Beaumont, Texas, certify that the above is a true copy of the regular City Council session held November 17, 1987. Rosemarie Chiappetta City Clerk -394- November 17, 1987 EXCERPT FROM REGULAR CITi COUNCIL SESSION HELD NOVEMBER 17, 1987 CITY MANAGER: The first item, Item B. 1. , is a resolution that would authorize the execution of a development agreement with the Stedman Building Partnership, providing for City participation in a project for the renovation of the Stedman Building as a mixed-use commercial and retail office building. Copies of the proposed contract were distributed to members of Council last week prior to consideration of the agreement at today' s meeting. According to projections of the developers, the project would represent an investment of something over $4. 0 million and result in the creation of some 200 permanent jobs. Mayor, with your permission, I would like to go down to the podium and perhaps show a couple of graphs. MAYOR MEYERS: Very good. CITY MANAGER: What I would like to do is go over with the Council the specific details of the agreement itself as provided in your agenda, but before I do that, since this is a project that has been involved in some negotiations for at least a year, I would like to provide Council and the public with the chronology of how we've gotten to this point and why we are recommending what we are. Let me first of all recognize the principal developers of the project, Tom Flannagan, Marlen Williford and Lynn Harden, who are here today and I will be calling on them to respond in a moment. MAYOR MEYERS: Mr. Flannagan, Mr. Willoford, will you stand? Thank you. CITY MANAGER: Thank you. I appreciate, first of all, the efforts that they have made relative to looking at a project and having faith in a particular area of town that we believe has a future and has potential. Historically, this particular piece of property known as the Stedman Building has been a subject of some discussion before this Council in the past, in fact, I believe, in two separate occasions. There have been discussion about restoring and rehabilitating that facility and converting it into some kind of use. We believe that the results of the negotiations that we are presenting to you today will result in, if you will, dirt being turned and a project being consummated successfully. I 'd like to show this map here, and I ' ll turn it around for the publice in just a moment, is a map of the downtown and particularly the subject property that' s highlighted in yellow here known as the Stedman Building. I wanted to demonstrate to Council that in fact there is presently underway a major public contribution to this area of downtown - the Crockett, Laurel , Liberty and Bowie and Neches area. EXCERPT FROM REGULAR CI'. COUNCIL SESSION HELD NOVEMBER 17, 1987 Page 2 CITY MANAGER continued: Under contract presently and funded for are three major projects that are underway in this area of town. Those projects are the Martin Luther King, Jr. , Parkway Project, the . . what we are calling as part of the Crockett Connector, the Neches Street Extension Project which will take Neches Street from Crockett and allow a complete access onto Liberty and the Crockett Connector Project that essentially will reconfigure traffic and potential destination traffic into, as well as out of, the downtown in another location. And, as Council recalls as part of the Budget, the Liberty/Laurel Overpass Project was a consideration this past October allowing new limited . . . limited access into downtown from the West. These three projects total about $54.5 million worth of public projects. We think that the Stedman Building, which is essentially at the appex of these major traffic reconfigurations, ought to be considered as a very important part of downtown development or downtown redevelopment and particularly as we focus on that area coming from the west to the east, towards Main Street. When . . . when the developers approached the City on the project, they essentially told us that the project was do-able only if there was public participation, that their feasibility work showed that, because of the location of the property in an area of blight, in an area of unsightliness, would require some participation -on the part of the City and that is where we developed a broad parameter under which we are recommending this proposal to you today. The foundation of that was we felt that their request was justified . . . was justified up to about 10% of the total project. Their project as presented to us was approximately $4. 3 million at the time. We felt that the City' s so-called equity position, if you want to refer to it as that, should approximate 10% and not any more than that. We also agreed with them that we would participate on other elements of the project that did not require a direct infusion of public funds. And, finally, we discussed the benefits of looking at the area and the site particularly as being eligible for historic tax abatement. Once we agreed . cn the parameters, that is a 10% participation limit, .we then began to negotiate the terms - what was important to them and what was acceptable to the City. Essentially, we came up with two . . . two public participation dimensions, one being streetscaping and the other being burial of utility or power lines in that area and other so-called non- equity elements included, 108 loan which I will get into in detail, a parking lease and some other projects. We . I think I ' ll go back up here . If I could ask you, then, to turn to the development agreement, and I 'd like to walk through each of the elements of that agreement with you, to provide some explanation. On page . . . beginning on page 2, paragraph A. "The city agrees to provide various public improvements necessary to completion of the project. Improvements shall include relocation of overhead utility lines and streetscaping improvements on the public streets bordering the Stedman site. The streetscaping will include sidewalks, curbs and gutters, asphaltic concrete paved streets, lighting and removal of railroad tracks. Funds and other related expenses for the construction of these public improvements shall not exceed Two Hundred Fifteen Thousand Dollars ( $215,000)" and also that we agree to relocate utility lines in the area adjacent to the Stedman Building, again at a cost not to exceed $215,000. It would be the responsibility of the City to coordinate with those entities for the relocation of the lines and further to participate with the Stedman Project in the completion of the improvements. EXCERPT FROM REGULAR CI. COUNCIL SESSION HELD NOVEMBER 17, 1987 Page 3 CITY MANAGER continued: The funding source for those two items would be from Community Development Block Grant Funds which are appropriate and have been identified as available for funding. Secondly, the City would acquire and develop a parking facility, and I ' ll get into that in a moment. Item No. 3, the City would provide historic preservation tax abatement to the building site for a maximum of five years. That tax abatement would only apply to the City' s tax on the improvements to the project. It would not be a loss in revenue to the City but there would be a delay or a postponement of those taxes for a period of five years on the improvements or the $4. 0 million. Item No. 4, the City would assist in facilitating $140,000 loan from BUILD. We have had preliminary discussion with BUILD and to proceed with a 0% interest rate for a term of ten years. Those funds would be used basically at the discretion of the developer and negotiated with BUILD, but, as I recall in our discussion, Tom, we talked about either build out on the interior or some facade work as I recall. No. 5, the City would agree to extend Neches Street to the Liberty/Laurel Connector. As I mentioned earlier, Council, that item has been approved and is ready to be underway. And, Item 6 would continue to participate with the State on the timely completion of the Martin Luther King Parkway Project and finally we would participate or make reasonable efforts with the Department of Housing and Urban Development to secure a Section 108 Loan Guarantee. This essentially is a pledge against Block Grant funding on a 6-year low interest rate loan to the developer. This is a very similar issue that we are working on with the Water Park. I 'd like to call your attention to Paragraph B, Sub 2. "Stedman Building Parnership agrees to execute a lease agreement to be negotiated with the City Manager for the lease and operation of a parking facility to be used in conjunction with the office building project. " Essentially what is being proposed here is the City would construct and lease a parking facility to Stedman . . to the Stedman project at a rate equal to the amount of the project over the life of the financing of the project. In other words, if the project . . . the parking facility were estimated at $300, 000 and it were built over . . . it were financed or financed over a 10-year period of time, whatever that debt service would be, would be the obligation of the developer to reimburse the City for that period. They have also agreed as part of that paragraph to provide guarantees beyond_. just simply the agreement to insure its payment. Essentially the advantage here is that the City's favorable rates for financing such projects would be an advantage to the developers. I believe that essentially summarizes the salient features of the development agreement and I think provides background relative to our coming up with a public participation dimension for this project. With that, Mayor, I would like to call on Mr. Flannagan to make a presentation to you as to the nature of the project itself. EXCERPT FROM REGULAR CITY COUNCIL SESSION HELD NOVEMBER 17, 1987 Page 4 MR. TOM FLANNAGAN, DEVELOPER: I 'd like to thank the Council for having me here today. This project, I believe very firmly, is an historic step in the redevelopment of the downtown area. It perhaps will prove to distinguish itself from other projects that have been announced and have fallen by the wayside in the past and as I am here in front of you today, I bring a project to you that has all of the crucial elements to success in place. I have in just a moment Lynn Harden and Marlen Williford with the drawings. I 'd be pleased to walk you through the project, explain a little bit more about it. The mGst important thing that we are here today to talk about is that the project is going into a blighted area and we ask that the City invest nothing more but the same that they've invested in other areas of the downtown and other areas of the City. We have crumbling streets, sidewalks, unslightly neighborhood. When we initiated discussions with City management, and until Al mentioned it, I guess it has been a year, probably longer. When we initiated those discussions, we said that for us to come in and spend the kind of money that we are talking about, the only way to justify that is that the City also has ato improve the neighborhood. I don' t see this as a complicated or complex issue. I see it as a very simple issue. Phase I is the renovation of the Stedman Building itself. It is a three phase project. Phase II, Lynn would you hold it up? are the properties directly across Crockett Street from the Stedman Building. They involve the renovation of three existing buildings and the construction of one that has been torn down and also with the alleyway in between restoration of the Giglio Building to create a combination of office and nighttime use. Phase III is the renovation also two blocks down on Crockett Street of the Dixie Hotel and other buildings. These buildings are on a par with anything we see in the Country. Cities of our size all across the nation have had revitalization efforts and have been successful, not yet in Beaumont. We see this as an opportunity. Going into the project, it is a real estate project. It' s in Texas; it' s in Beaumont; it' s in downtown Beaumont, many, many red flags. We believe very strongly in the project. We've worked two solid, hard years on it. Our construction plan is in place. Our pre-leasing is in place. Our financing is in place and we hope to leave here today with the agreement with the City in place. So, we are coming to you with something that is very real. Our timeframe is 'late December, early January for construction. So, I would be pleased to answer any questions that you have. -MAYOR MEYERS• Thank you, Tom. Al, do you have a comment before Council would want to direct any questions to either you or Tom or his associates? EXCERPT FROM REGULAR CIS COUNCIL SESSION HELD NOVEMBER 17, 1987 Page 5 CITY MANAGER: Just very briefly, I think it appropriate that Mr. Flannagan mentioned that he is, as the developer, is anticipating a three-phase project. We are only dealing with the first phase, being the Stedman Project and secondly that as staff we have had opportunity to review, again in a confidential basis, in our negotiations with the developers, we are confident that they are in a position to proceed, otherwise we would not have brought this agreement to you. We also are confident that without the terms of this agreement in place, it would be difficult if not a do- able project. So, with that, Mayor, the only statement I made is thank you to Tom and we recommend favorably for the passage of this agreement. MAYOR MEYERS: Very good. I ' ll open it for Council questions. David. . .? COUNCILMAN MOORE: Mr. Flannagan, you referenced the fact that this is a three-phase project. What time frame are you looking at for all three phases? MR. FLANNAGAN: Phase I , which is approximately $4. 0 million will begin January the first. Phases II and III sometime thereafter but we expect them to begin, commence in 188. COUNCILMAN MOORE: Completion time frame for all three, do you have a projected time? MR. FLANNAGAN: THe completion time frame for Phase I will be eight months from January which will be August, September. The other two will also take about eight to nine months to complete once they start. COUNCILMAN MOORE: Okay. My other question is in regards to HUD Section 108 loan. In the event that . . . let' s say we are not successful with that . . in getting that for your project, would that have any impact on your starting and completing it? MR. FLANNAGAN: , The- areas of this agreement, the Section 108, and I think the wording properly shows the intent behind the agreement is that the City will make all reasonable efforts. To be more blunt, that particular Item 7, the project is not contingent upon it but it is something that the City had promised to do and we've asked that they do it to help us along. COUNCILMAN MOORE: Well, that was my question. I wanted to know if it was a go with or without it. Thank you. EXCERPT FROM REGULAR C__Y COUNCIL SESSION HELD NOVEMBER 17, 1987 Page 6 MR. FLANNAGAN: That is correct. COUNCILMAN LEE- After the ten-year term on the parking arrangement, what are the terms for that particular . . . what is the situation of that particular piece of property? Will we enter into another ten year lease arrangement? CITY MANAGER: The . . . we have not begun to negotiate all the terms of the parking agreement. At this point, the City would become the owner of the land and the improvements. MR. FLANNAGAN: We have an agreement in principal . . . the term . . .over the term of the lease that the City would be reimbursed on all its upfront expenses. Additionally, we would be willing to furnish sufficient guarantees so that the City' s position is not impaired and that is to be negotiated. It is my position as developer to negotiate a long-term lease simply because I believe in the long term effects of this project and I believe the benefits will be there for a long time. COUNCILMAN COKINOS: I 'd like to address a matter of this overhead utility lines. Is the . . . is GSU going to participate or carry part of the burden or is the City going to carry the complete burden of going underground with this utility lines? MR. FLANNAGAN: That' s a good question, Councilman. We . . . . . . CITY MANAGER: Tom, why don't you let me answer that since that will be . . . The City . . . the work itself will be done by Gulf States and it will .be the responsibility of the City to reimburse Gulf States for the work done. COUNCILMAN COKINOS: This is not what I asked. Go ahead. MR. FLANNAGAN: Will you repeat the question, please? EXCERPT FROM REGULAR C_ .Y COUNCIL SESSION HELD NOVEMBER 17, 1987 Page 7 COUNCILMAN COKINOS: I asked is the City is going to bear the full expense of the underground MAYOR MEYERS: Yes. CITY MANAGER: Yes. COUNCILMAN COKINOS: . . .cables, lines, everything, or is Gulf States going to participate in part of this cost? MR. FLANNAGAN: I simply negotiated with the City on this item. If you take the Stedman and you spend $4.0 million and you make something that' s attractive and on a national level of beauty and if I took a magic marker and drew black lines across, that's what the project would look like with unslightly power lines. So, we knew that going in so I asked the City and we discussed this from the beginning and have reached at least an agreement with the City Management. Where that money comes from I do not know. Who bears the ultimate expense, I could not answer you. COUNCILMAN COKINOS: But Gulf States is not going to bear part of the expense of the lines and the . . . . . . does anybody know the answer to this? MAYOR MEYERS: Yes, he answered it. He said the City. CITY MANAGER: Yes, I just answered it, Councilman. The City has the responsibility for it. Not Gulf States. MR. FLANNAGAN: It' s nothing more than other parts of downtown where power lines were buried and in other parts of the City. COUNCILMAN COKINOS: And what part of the funds of this coming from as far as the City is concerned? EXCERPT FROM REGULAR C_-Y COUNCIL SESSION HELD NOVEMBER 17, 1987 Page 8 CITY MANAGER: Block Grant funding. COUNCILMAN COKINOS: Block Grant funds. MAYOR MEYERS: Audwin, did you have a question earlier? COUNCILMAN SAMUEL: Yes, the initial $430 . . . , that' s coming from Block Grant funds. Okay. What will it mean tc the CDBG budget as far as guaranteeing on the HUD Section 8 . . . 108 loan? How will that impact CDBG budget? CITY MANAGER: It will not impact the budget. The 108 loan will not unless they default after six years; however, condition of . . approval of 108 loan is a letter of credit from an institution or some kind of other document that would underwrite it. COUNCILMAN SAMUEL: So, it does not mean those funds would have to be frozen . . . in order to leverage that? CITY MANAGER: No. No, sir. COUNCILMAN SAMUEL: Okay. And, about how much will be coming from CDBG for the guarantee of the 108 loan? CITY MANAGER: The developer will . . . that will written into the loan agreement between the City and the developer so there' s no outlay at all on the Block Grant itself during the time of the loan nor is there any expense. COUNCILMAN SAMUEL: Okay, and, what' s the projected value of Phase II and Phase III? MR. FLANNAGAN Phase II is approximately $2. 5 million; Phase II is about $3. 5 million. EXCERPT FROM REGULAR C_ _Y COUNCIL SESSION HELD NOVEMBER 17, 1987 Page 9 COUNCILMAN SAMUEL: So it' s about a $10.0 million total project? MR. FLANNAGAN: Yes, sir. It is. COUNCILMAN SAMUEL: And, we've gone into no type of negotiations on Phase II or Phase III , correct? MR. FLANNAGAN: Only it' s basically a gentlemen' s agreement that when we can demonstrate ability to perform on Phases II and III that we negotiate in good faith along the same principals that we've done here and I might add that they've been a very lengthy, sometimes difficult, negotiation of give and take on both sides and I think from that negotiation that the City will realize over time the investment comes back tenfold or more so. COUNCILMAN SAMUEL: Okay, as far as the project of this multitude, what would you say is projected amount of dollars just passing through the City itself. MR. FLANNAGAN: I 'm not aware of the multiplier effect in Beaumont, but I 've heard anywhere from four times to seven times. The construction will be approximately $10 . 0 million for the whole project and I guess more importantly I see it because I 've lived away from this area for some time, I see it as a renewed focal point for this area. From an outsider, when he thinks of Beaumont, other than Spindletop, he doesn' t have something that pops into mind. This project will be a link to oul rough and tumble past, where we came from, and it will also point to our ability to do new things so I think it is an aggressive move in a. down economy and I think it will more than pay off and fairly quickly. CITY MANAGER: Councilman, I wonder if I may add to a statement that Tom made. When we look at the question of public participation in any private project, our position has got to be what is it that has to make it go. No more, no less. We are not talking about subsidy nor are we talking about a giveaway. I think it' s important that during the course of those negotiations that Tom was open with us. We were able to see and review ourselves the feasibility of the project and what it would take to make it go and that is essentially when we came up with that 10% -'factor. Now, I think it is important to note that we have made no committments relative to Phases II and III . Essentially, we have an understanding that the principals will be negotiated the same, but Phases II and III may introduce a whole new set of variables - and a lot of those variables will be drived a great deal behind the success of Phase I and the initiation of Phase I and expression of interest as he proceeds down the corridor along Phases II and III. EXCERPT FROM REGULAR G_.Y COUNCIL SESSION HELD NOVEMBER 17, 1987 Page 10 COUNCILMAN COKINOS: Will you be coming back to us on Phase II and Phase III on a similar proposition? CITY MANAGER: If the developers approach the City for a public participation agreement, whatever those terms may be, yes, then we would come back to Council on each of those two Phases. COUNCILMAN COKINOS: On Phase II and III . It' s my understanding also that the . . . has there been some options executed on Phase II and III? MR. FLANNAGAN: There are options in place for both of those. COUNCILMAN COKINOS: I mean that' s already baen concluded, has it not? MR. FLANNAGAN: When you say concluded, the purchase has not been made but the option agreement is in place. COUNCILMAN COKINOS: Right. For Phase II and III. MR. FLANNAGAN: Yes, sir. All the sites we represent to you are under our control by option agreement. COUNCILMAN COKINOS: Now, you' ll be c.:,ming back to the City for the same . . almost the same package for Phase II and III? MR. FLANNAGAN: Similar. Phase II is in exactly same neighborhood. It' s run down, the sidewalks are crumbling. We have the unslightly power lines. We have a lack of parking. So many of the things that make it a valueless property and actually a negative value for the City because people from I-10 come into downtown right past that property. We see this as the gateway to downtown in a couple of years when Liberty/Laurel Connector is completed and from Willow, the exit off I- 10, we see it as the gateway and we want to turn something that is a negative into a positive and to do that it takes great risk personally and a lot of money personally to do this project. We Just asked the City to help facilitate that. COUNCILMAN COKINOS: But, you' ll be asking probably the same things for the City as far as underground electrical wires and lines, electrical lines, and the sidewalks and so forth almost like the $450,000 you are asking the City to participate on the Stedman? EXCERPT FROM REGULAR C,.,:Y COUNCIL SESSION HELD NOVEMBER 17, 1987 Page 11 MR. FLANNAGAN: That is correct. Yes. COUNCILMAN COKINOS: Okay. Thank you. COUNCILMAN SAMUEL: Am I correct in my understanding that there' s in no way a connection between whatever what the City does for Phase I . . . there' s no connection or obligation in so far as Phase II and III, correct? MR. FLANNAGAN: The only connection and you will be mindful that it' s my first time in negotiating with a governmental entity on something like this. In a business transaction, I would have an agreement in principal, that we would negotiate in good faith once I proved and delivered on Phase I and was prepared to go ahead with Phase II that we would negotiate in good faith. And, that' s the only thing I ask for. COUNCILMAN SAMUEL: Okay, Mr. Manager, do you have any idea what the actual cost would be in the event that we as a City began to look at development of that area in terms of street rehabilitation, in terms of bringing about that property to a pleasurable appearance? CITY MANAGER: You are referring to Phase II? COUNCILMAN SAMUEL: No, I 'm referring to Phase I . -MAYOR MEYERS: Without a project, what would we be looking at? CITY MANAGER: Oh, without a project? COUNCILMAN SAMUEL: Yes, if we wanted to make that a slightly . . . as he said gateway to Beaumont, what would it take from us? I know there would have to be some funds allocated. CITY MANAGER: Well, I would certainly recommend burying the utility lines over there so -that' s a cost that would be borne by the City. l assume your question has to do with what it would take to make an enhancement there for that area to sort of rebound or develop on its own and I would probably have to say it' s very close to the amount we are recommending in this case. I just . . . in looking at other downtown deteriorated areas similar to this, it requires a fairly heavy infusion of public funds to make it go. EXCERPT FROM REGULAR C-.,:Y COUNCIL SESSION HELD NOVEMBER 17, 1987 Page 12 COUNCILMAN SAMUEL: Okay, so some of the same things that we would be having to do now would be some of the same things that we would have to do if we were taking this project on our own. CITY MANAGER: Typically, Councilman, on a redevelopment project which is in fact what this is the municipality would generally have a tool called a redevelopment agency and it would finance these kinds of improvements out of what' s called tax increment funds. We don't have that in this City. And, so, essentially, what we are doing is we are substituting the capacity to finance out of the tax increment or out of the redevelopment area we are substituting that for cash in hand which is Block Grant. But, the project . . . the theory behind it is that the project would return that investment to the City either in the form of real dollars in taxes and/or in the form of improvements to an area, a neighborhood or an economic need and we see that the advantages are there for this one. COUNCILMAN SAMUEL: One last question. In regards to the direction in which we are moving as far as utilities, are most of the new developing areas going to underground utilities or is that . . . what is that part of the plan and what direction are we going? Not only us but the industry itself? CITY MANAGER: I think if you were to take a drive into any downtown City, Austin or Houston, virtually any city that has gone through a renaissance, you won' t find power lines and those are generally buried. They are handled right up front. COUNCILMAN LEE: Didn' t you also say in even a new development, . . . . . . ? CITY MANAGER: New developments don't have them. I would assume that we have the same ordinance requirements here under our franchise that new subdivisions or whatever commercial developments require burial of utilities. So, essentially, what we are doing here is we are entering into a period if you will, a renaissance of downtown, assuming this begins to go, that is not unlike precedence having been established in most cities already going this way. EXCERPT FROM REGULAR C--j`Y COUNCIL SESSION HELD NOVEMBER 17, 1987 Page 13 MR. FLANNAGAN• The exciting thing to me is if you take these buildings and look at them before and you look at shots of other buildings in other areas, like Fort Worth's Sundance Square, they are almost identical. The same steps that we are proposing to make not were made many years ago in cities across the country. Basically, these cities turned their biggest negatives into their biggest assets. It's quite a turn of events and to do it in this day and time is a pretty aggressive move and I think time will show that the investment the City makes now will prove to more than repay itself many, many times over. COUNCILMAN SMITH• I would like to digress a moment. When Bob asked about the parking facility at the end of the 10 years, that property will still belong to the City. This will not go back to the developer? It will remain with the City, you will negotiate a lease for longterm at that time. MAYOR MEYERS: Not go back. It never goes to the developer. COUNCILMAN SMITH• Well, but I didn't know exactly what the . . . it was a little unclear but that was . . . but the original . . . okay. Can we assume that numbers 3b that all of these things are in place at this time. That they will exercise their options for the Stedman . . . . . . CITY MANAGER: Yes . . (tape turned at this point) they are conditioned, you know, meeting those stipulations. COUNCILMAN? SMITH: If we pass this today, then, they would be able to do this within . . . CITY MANAGER: Yes, within 120 days or whatever it is they have to have it done. I know, at least they've rnnresented to us that they have secured financing. COUNCILMAN SMITH: Well, but if we have to do something within 120 days, then it seems like to me there's some . . . the logistics of three and four, you want all this in place, then you want . . . . . . EXCERPT FROM REGULAR l. _2Y COUNCIL SESSION HELD NOVEMBER 17, 1987 Page 14 MAYOR MEYERS- We would not begin anything, if that' s what you mean, sure. COUNCILMAN SMITH: Until they come back. I understand that but so I am wondering. They are . . . you are planning on starting now or by January the first. MR. FLANNAGAN• Councilman, I might say this is not an overnight thing. We've worked almost full time on this project for two years. We could have come to you much earlier but we also knew that in the past the things probably have come to the public limelight before their time, before they were ready. We have deliberately held back doing that until we are confident and have everything in place. We do have those things in place. So, I would think in a relatively short period of time within 45 days, we should turn dirt. MAYOR MEYERS: Do you have another question? COUNCILMAN MOORE: I have a comment and a question. Mr. Flannagan, many of us have seen projects throughout the country similar to what you want to do with the Stedman project, you know, be it Sundance Square in Fort Worth, the post office in D.C. , the Harbor Place, things like that where you've taken old buildings and renovated them and I think it's a good project and it seems like you all are well prepared. My only question since we are using some public dollars in this to help along with the project would be . . . my concern would be dealing with the contractors and employment practices of your operation. Would you be using basically people within our region to do this work or . . . . . . ? MR. FLANNAGAN• It' s our intention. It' s also our intention to do it 100% union. COUNCILMAN MOORE: So, I guess when you say 100% union, we don' t have to concern ourselves with the representative factors or our population being included inside of that, so that answers a lot of questions for me. Okay. Without having to hammer the fact of affirmative action and having participation on those levels, if you are doing it union, then we feel confident that that will happen. Okay. EXCERPT FROM REGULAR C_ <Y COUNCIL SESSION HELD NOVEMBER 17, 1987 Page 15 MR. FLANNAGAN: That's our intention. COUNCILMAN COKINOS: Have you got a breakdown on the cost of the overhead utilities to go underground? It just seems to me that I don't know why the City should bear that expense of the overhead utility lines. . . Every where around you there' s overhead utility lines, Texas Commerce Bank down the street, the Stock Market, so forth. I mean, why is . . . why is this so important, underground? MR. FLANNAGAN: We wanted to make a project that would be on a level with anything in the country and we wanted to make it as good - certainly not any worse than anywhere else and we felt to do that, cities make very, very substantial investments in other parts of the city. It would be different if you decided that you have a priority to redevelop a certain area downtown and you decided that it was worth it for you to invest to improve the area with nobody on the line to come in and spend their own money so that you could benefit. Cities have done that. Many, many cities have done that . . . have gone in and spent the money up front to invest to make something attractive eventually. It' s a little bit different in that you've already got us on the line. We are ready to go. All we ask is that . . . let' s improve the area and then we' ll put our money up front. I think the concept has been kicked around for the last ten years since downtown revitalization has been an issue. So, I really don't see it as that complicated of an issue. COUNCILMAN COKINOS: Well, I 'm seeing it in the perspective of that money that for overhead utility lines . . that money could be applied to another area of this project and I can' t quite understand why it's so important to have underground cables or underground utility lines and . . . you know. MR. FLANNAGAN: I understand. I understand. What I am saying . . . can you see this from where you are sitting? I ' ll just bring it a little closer. If you took this building and we did all the things that we talked about doing and we took a magic marker and drew black streaks across it, you know, it would make it unslightly. So, it is one of the simplest, cost efficient ways. If we did nothing to the buildings and buried the power lines, we've improved it 100% already. So, we think for those same dollars, we could not put them anywhere else and get the same benefit. Does that answer your question, Councilman? COUNCILMAN COKINOS: Thank you, Mr. Flannagan. EXCERPT FROM REGULAR Ci.rY COUNCIL SESSION HELD NOVEMBER 17, 1987 Page 16 MAYOR MEYERS• Are there any other questions? Does Council have any other questions? I would make a couple of comments prior and that's that I measure this project on its merits and I deem the merits extremely high. It was July, 186, if you are looking back for a time table. That' s 16 months. I compliment Mr. Flannagan and his associates because I think they come to our City with a confidence in our City, number one, which is encouraging and delightful and I think a vision of excellence that I would hope shall set a standard for other things to follow and I think he is in tune with development of today and will produce results that we would be extremely proud of. I think the project will send a signal to those living here as well as those outside that we are developing our City and that investment today in the Texas economy I think we will shine like a beacon across the state as people will look at us and really figure "what's going on down there?" when everybody else is drying up. And, I have to say while we keep saying downtown, this is a benefit that everybody in this community will appreciate and be extremely proud of. I know for one we all will I think look upon projects like that as we do perhaps before the fact sometimes question it. The beauty of this project will be I think a showplace we' ll all be proud of. And, in closing, I would hope that you would be able to keep that date of August, 188, because it could be an extremely exciting month for our City because that' s the planned completion - not in a competitive sense, but in a delightful sense, that our new Energy Museum should be completed and I can think of nothing more delightful than to see both of those projects come to completion. Our Riverfront Park has shown us that it is not a downtown park. It' s a park that just happens to be downtown and because it was so misunderstood that it was only supposed to be for people downtown, no one was using it. We have clearly shown through all of our efforts and enthusiasm that that is a park that is understood and loved by all in our City and now thousands of people as recorded by some recent statistics come every Sunday and even as those children came from Vidor I was delighted to see all out there having their lunch on the park. You inspire me by your futuristic thinking and you inspire me by your desire to do something and I compliment you for it and I am pleased that you see fit to consider that kind of investment in our City and I thank all of you for your efforts. And, I would ask if Council would care to make a motion on . . . . . . EXCERPT FROM REGULAR CITY COUNCIL SESSION HELD NOVEMBER 17, 1987 Page 17 COUNCILMAN COKINOS: I so move. MAYOR MEYERS: Is there a second? COUNCILMAN MOORE: Second. MAYOR MEYERS: Any further question or comment? Those in favor, signify by saying Aye. (All) Opposed? (None) Thank you-. Al, thank you and all that worked so diligently to bring this project to this point of fruition and we are excited and we will break now so that the media can have opportunity, Tom, to visit with you and your associates and Lynn Harden and anyone else they would care to and we will reconvene in about 15 minutes . . . . . . END OF EXCERPT.