[DECLARATION OF A QUORUM AND CALL TO ORDER]
[00:00:03]
[1. Discussion of Rancho Isabella Municipal Utility District Bond Issuance Process and 2023 Financing Timeline.]
HE WANTS TO TAKE. GO AHEAD.GOOD AFTERNOON. MY NAME IS JEB COLBY.
I REPRESENT THE DEVELOPMENT TEAM FOR THE WINDROSE GREEN COMMUNITY AND WANT TO THANK YOU FOR COMING.
A LITTLE BIT EARLY TO JOIN THIS WORKSHOP.
I THOUGHT WHAT WE WOULD DO IS I WOULD START WITH A BRIEF UPDATE ON HOW THE WINDROSE GREEN DEVELOPMENT IS DOING AND BROUGHT A WHOLE TEAM OF GOOD PEOPLE. SOME CONSULTANTS WILL STAY AFTER WITH ME FOR THE CITY COUNCIL MEETING, TALKING TO CHRIS A COUPLE OF WEEKS AGO.
AND THEN WE ALSO HAVE THE BOND SALE THAT WE'RE PLANNING IN THE FOURTH QUARTER AND WANTED TO GIVE AN UPDATE ON THAT SCHEDULE, THAT TIMELINE, AND WE'LL ROLL RIGHT INTO THAT AFTER THE UPDATE.
AND I KNOW AT THAT TIME THE CITY SAW A LOT OF DEVELOPMENT COMING ITS WAY AND WANTED TO SET THE TEMPO WITH A QUALITY COMMUNITY. AND SO AFTER SEVERAL MONTHS OF DISCUSSIONS AND PLANNING AND WORKING TOGETHER WITH THE CITY, WE ARRIVED AT A MUTUALLY AGREED UPON DEVELOPMENT AGREEMENT THAT WAS UNANIMOUSLY PASSED BY THE CITY.
AND WE'VE BEEN ABIDING BY THAT DEVELOPMENT AGREEMENT EVER SINCE.
AND I'M HAPPY TO REPORT WE ARE NOW TWO YEARS INTO ACTUAL HOME BUILDING ACTIVITY.
I THINK THE LAST COUNT WAS WE WERE AROUND 84 ISH, 85 ISH HOMES EITHER IN EITHER COMPLETED OR OR IN SOME STAGE OF CONSTRUCTION.
THE AVERAGE SALES PRICE OF A HOME WITHIN THE WINDROSE GREEN COMMUNITY IS JUST OVER $350,000.
ON THE 45 FOOT PRODUCT, THE AVERAGE IS 334.
ON THE 50 FOOT PRODUCT, THE AVERAGE HOME IS 364 AND THE PRICE POINTS RANGE EVERYWHERE FROM 250,000 ON THE LOW END AND THE HIGHEST SELLING HOME WAS 540,000.
THE ACTUAL HOME SIZES RANGE FROM 1400 SQUARE FEET ON THE SMALLER SIDE TO 3300FT² ON THE LARGER SIDE AND THEN ON THE LOTS THEMSELVES. THOSE RANGE CURRENTLY FROM 4800FT² ON THE SMALL SIDE AND ALMOST 16,000FT² ON THE LARGE SIDE.
SO BECAUSE OF THAT DEVELOPMENT AGREEMENT, WE'VE BEEN ABLE TO TO BE FLEXIBLE WITH MARKET CONDITIONS AND ALLOW FLEXIBILITY WITH THE HOME BUILDERS TO PROVIDE THAT WIDE RANGE OF LOT SIZES, HOME SIZES AND PRICE POINTS AS WELL.
AS FAR AS ACTIVE CONSTRUCTION GOES, WE HAVE SECTION TWO AND SECTION THREE CURRENTLY WRAPPING UP.
WE HAD CITY AND COUNTY INSPECTIONS LAST WEEK.
CONTRACTORS OUT THERE WRAPPING UP PUNCH LIST ITEMS AND WE'RE ABOUT TO START CONSTRUCTION OF OUR SECOND PARK OUT THERE AND THEN START COORDINATION WITH THE HIGH SCHOOL TO CONNECT THE COMMUNITY WITH THE SIDEWALK.
WE HAVE SECTIONS FOUR AND FIVE, BOTH IN THE PRELIMINARY PLAT STAGE.
SECTION FOUR WAS APPROVED AT THE LAST CITY COUNCIL MEETING.
AND THEN WE SHOULD HAVE TWO MORE SECTIONS AFTER THAT IN THE FUTURE, SECTION SIX, SECTION SEVEN, AND THEN AT FULL BUILD OUT, WE SHOULD BE ABOUT 650 HOMES TOTAL, CLOSE TO 1500 RESIDENTS.
AND. AND IF THE IF THE VALUE STAY WHERE THEY CURRENTLY ARE, WE'LL BE PUSHING OVER $200 MILLION IN TAXABLE EV OUT THERE. THERE'S A STRATEGIC PARTNERSHIP AGREEMENT BETWEEN RANCHO ISABELLA AND THE CITY TO PAVE THE WAY FOR ANNEXATION.
[00:05:06]
SEE THAT WINDROSE GREEN COMMUNITY MADE IT INTO HOUSTON CHRONICLE RECENTLY.IT WAS VOTED AS ONE OF TWO FINALISTS FOR BEST NEW COMMUNITIES IN THE GREATER HOUSTON AREA, WHICH, CONSIDERING ITS SIZE COMPARED TO THE COMMUNITIES IT WAS BEING COMPARED AGAINST, THAT WAS A THAT WAS A GREAT ACCOMPLISHMENT.
AND I THINK THAT'S A TESTIMONY TO THE AMOUNT OF EFFORT AND COORDINATION THE CITY STAFF HAS PUT INTO THIS COMMUNITY AND OUR OUR TEAM OF CONSULTANTS AND THEN OUR DEVELOPMENT TEAM AS WELL.
BUT AT THIS POINT, I THINK I'VE EATEN ENOUGH TIME.
I'LL TURN IT OVER TO EITHER GREG OR DIANA TO TALK ABOUT THE UPCOMING BOND SALE.
IT'S A SIZABLE AMOUNT OF MONEY THAT THE CITY WILL BE RECEIVING.
AND SO THIS WILL BE AN OPPORTUNITY FOR US TO TO TO SHARE THAT WITH CITY COUNCIL AS WELL.
DIANA. OKAY. HI, I'M DIANA MILLER.
I'M WITH THE LAW FIRM OF SCHWARTZ, PAIGE AND HARDING.
AND WE REPRESENT THE MUD, WHICH IN THIS CASE IS NAMED RANCHO ISABELLA MUD.
IT IS AN OLD NAME THAT CARRIED OVER.
AND THAT'S WHAT I'M TALKING ABOUT, IS THAT MUD.
AND I WANT TO JUST TALK TO YOU VERY BRIEFLY, BECAUSE WE'RE CONDENSED ON TIME ABOUT THE MUD FINANCING PROCESS GENERALLY, AND ALSO THEN TURN IT OVER TO GREG SO HE CAN WALK YOU THROUGH HOW WE'RE GOING TO GO THROUGH THIS BOND ISSUANCE PROCESS AS A PARTNER TO THE CITY.
AS JEB EXPLAINED, THEY'VE HAD A LOT OF GREAT SUCCESS WITH THIS DEVELOPMENT, AND THAT'S SOMETHING THAT'S VERY UNIQUE TO THE MUD MODEL WHERE WE CAN'T SELL BONDS AND WE CAN'T MOVE FORWARD WITH ACTUALLY REIMBURSING THEM FOR FACILITIES UNLESS THEY ARE SUCCESSFUL.
SO IN DOING A MUD BOND ISSUE, THERE ARE GENERALLY TWO APPROVAL PROCESSES.
WE'VE GOT TO GET APPROVAL FROM THE TEXAS COMMISSION ON ENVIRONMENTAL QUALITY FOR THE PROJECT PURCHASE, LIKE TO PURCHASE THOSE FACILITIES THAT ARE DESIGNED TO STATE SPEC, CITY, SPEC, COUNTY SPEC.
AND SO AFTER WE GET AND WHILE WE'RE SUBMITTING TO APPROVAL TO THE TCU, WE'LL ALSO BE SUBMITTING BOND, OFFERING DOCUMENTS TO YOUR STAFF AND TO CHRIS SO THAT HE CAN TAKE A LOOK AT OUR OFFERING DOCUMENTS AT THE FINANCING PLAN AND THE PRO FORMA TO MAKE SURE THAT WE ARE IN LINE WITH ALL OF OUR AGREEMENTS WITH YOU, THAT WE HAVE PERFORMED AND DONE OUR JOB AND THAT WE'RE SELLING ONLY WHAT WE CAN AFFORD TO SELL BEFORE WE GO SELL THOSE BONDS. WHEN A MUD GETS READY TO SELL BONDS, IT MEANS THAT A DEVELOPER HAS CREATED ENOUGH VALUE IN THE DISTRICT TO SUPPORT THE DEBT SERVICE BECAUSE THOSE BONDS ARE ONLY AN OBLIGATION OF THE DISTRICT.
THEY ARE. IT'S BASICALLY LETTING GROWTH PAY FOR ITSELF.
THE HOMEOWNERS IN THAT DISTRICT WILL PAY THE DEBT SERVICE THROUGH THEIR TAXES TO SUPPORT THAT DEBT.
AND SO ONCE THAT VALUE IS ESTABLISHED, WE TALK TO OUR FINANCIAL ADVISER AND THEY MONITOR THE STATUS OF WHAT'S GOING ON AND THEN SAY, IT LOOKS LIKE YOU'VE GOT ENOUGH VALUE HERE. AND WE GO TO THE COMMISSION AND WE ASK FOR APPROVAL AND WE SUBMIT WHAT'S CALLED A BOND APPLICATION REPORT.
OUR ENGINEERS WHO ARE WITH COSTELLO AND SOME OF THEM ARE HERE TODAY PUT TOGETHER A BIG FINE ENGINEERING DOCUMENT THAT PROVES UP NOT ONLY THAT THE CONTRACTS AND THE FACILITIES WERE BUILT TO SPEC, BUT ALSO WE'VE GOT REPRESENTATIONS IN THERE WHERE OUR FINANCIAL ADVISOR HAS DONE A LOT OF WORK TO MAKE SURE THAT IT'S FEASIBLY IT'S FEASIBLE FROM A FINANCIAL PERSPECTIVE.
AND I'D LIKE TO HAVE GREG GO THROUGH THAT PROCESS.
[00:10:01]
SO A LITTLE BIT ABOUT THE BOND ISSUANCE PROCESS.THAT APPLICATION IS CURRENTLY SITTING UP AT THE T-C-E-Q UNDER AN 180 DAY REVIEW PROCESS.
ONCE WE GET APPROVAL, THAT TRIGGERS PREPARING ALL YOUR BOND OFFERING DOCUMENTS.
IT'S A PRELIMINARY OFFICIAL STATEMENT.
SO IT'S NOT TOO MUCH DIFFERENT FROM THAT.
SO WE PREPARE A PRELIMINARY OFFICIAL STATEMENT.
A NOTICE OF SALE IS A DOCUMENT FOR YOUR UNDERWRITERS.
IT DESCRIBES WHEN BIDS ARE DUE, WHAT METHODS A, A, A UNDERWRITER CAN DELIVER A BID.
SO THERE'S THAT'S A DISCLOSURE DOCUMENT FOR YOUR UNDERWRITERS.
THERE'S THERE'S OTHER DOCUMENTS, THERE'S BOND ORDERS, THERE'S PAYING AGENT AGREEMENTS AND SO FORTH.
PER THE CITY ORDINANCE, WE'RE REQUIRED TO SUBMIT TO CHRIS 20 DAYS BEFORE OUR BONDS, BEFORE WE PUBLISH OUR NOTICE OF SALE, WE'RE REQUIRED TO SUBMIT ALL THE BOND DOCUMENTS.
SO THAT'S THE PRELIMINARY OFFICIAL STATEMENT.
THAT'S YOUR NOTICE OF SALE, YOUR YOUR BOND ORDER.
WE ALSO SUBMITTED A CASH FLOW SHOWING HOW THE FEASIBILITY OF THE BOND ISSUE WORKS.
SO TEN DAYS BEFORE YOUR TEN DAYS BEFORE YOUR BOND SALE.
THOSE DOCUMENTS ARE REQUIRED TO BE PROVIDED 20 DAYS BEFORE WE PUBLISH.
SO IN ESSENCE, IT'S 30 DAYS BEFORE WE SELL THE BONDS.
THE CHALLENGE ON THE FIRST BOND ISSUE WILL BE IS BECAUSE THE T-C-E-Q IS REVIEWING THE APPLICATION UNDER 180 DAY REVIEW PROCESS AND WE HAVE TO PROVIDE THOSE DOCUMENTS 30 DAYS BEFORE OUR SALE.
IT COULD BE THAT WE CAN GET YOU ALL OF THE DOCUMENTS EXCEPT.
THE STAFF MEMO UNLESS THE TCU WERE TO PROVIDE THAT INFORMATION EARLY ALONG WITH THE TCU ORDER.
THAT'S THE OFFICIAL TCU DOCUMENT THAT ALLOWS US TO ISSUE THE BONDS.
SO WE MAY ASK A LITTLE BIT OF LEEWAY FROM CHRIS AND HIS STAFF TO TO ALLOW US TO GET THE MAJORITY OF THE DOCUMENTS FOR SUBMITTAL, FOR REVIEW, TO APPROVE THE BOND, THE ISSUANCE OF THE BONDS PRIOR TO THE SALE.
AND THEN WE WOULD FOLLOW UP WITH THE TCU STAFF MEMO, YOU KNOW, A WEEK OR TWO LATER.
HOPEFULLY IF THE TCU HONORS THEIR END OF THE BARGAIN A LITTLE BIT ABOUT YOUR BOND SALE BECAUSE YOU'RE BECAUSE RANCHO IS AN EARLY CREDIT, THERE'S FOUR UNDERWRITERS THAT BID ON THAT BID ON THE BONDS.
SO WE WOULD EXPECT FOR BIDDERS ON YOUR ON YOUR BONDS.
THE DISTRICT MEETS TO AWARD THE BONDS BASED UPON THE LOWEST NET EFFECTIVE INTEREST RATE TO THE DISTRICT AFTER AWARDED THE BONDS.
KIND OF RIGHT AFTER THE SALE OF UTILITY BONDS.
WE DO HAVE TO MEET CERTAIN CONSTITUTIONAL TESTS FOR FEASIBILITY TAX RATIO AND TAX RATE TESTS, BUT ROAD BONDS DO NOT GO THROUGH THE TCU. THE SCHEDULE THAT YOU'VE BEEN PROVIDED ON THE ROAD BONDS, THERE'S NEW CHALLENGES THERE.
WE THINK WE CAN MEET THE THE 30 DAY TIMELINE.
THERE'S NO DELAY IN A STAFF MEMO LIKE WITH THE UTILITY BONDS.
SO THE ROAD BONDS WE SEE NO CHALLENGES WITH WITH THE SCHEDULE.
BUT ON BOTH SERIES OF BONDS, THERE'S TRANSCRIPTS THAT GO TO THE ATTORNEY GENERAL.
ONCE WE GET APPROVAL FROM THE ATTORNEY GENERAL, THEN WE MOVE TO CLOSING.
AND THAT'S WHEN FUNDS ARE DISPERSED FROM YOUR UNDERWRITERS TO THE DISTRICT.
PORTION OF THOSE FUNDS WILL BE USED TO REIMBURSE YOUR DEVELOPER.
A PORTION OF THE UTILITY BOND FUNDS INCLUDE IMPACT FEES THAT WILL BE REIMBURSED TO THE CITY.
SO THAT'S A LITTLE BIT ON THE SCHEDULE.
I JUST WANTED TO ADD TO THESE THE UPDATED AMOUNT THAT WE'RE HAVE INCLUDED IN THE BOND ACT THAT FUNDS THAT WOULD COME TO THE CITY ON THE DATE OF CLOSING, WHICH YOU'LL SEE IS WE'RE TARGETING FOR NOVEMBER 16TH, IF MY EYES ARE GOOD ENOUGH, IS 328,000 AND $469.
[00:15:05]
AND SEWER SERVICE THAT THE CITY IS PROVIDING FOR EACH SECTION.YOUR STAFF'S BEEN EXCELLENT, AND IT'S A GREAT EXAMPLE OF HOW A CITY AND A DEVELOPER CAN WORK TOGETHER TO BOTH GET THEIR GOALS MET. AND WE REALLY APPRECIATE THAT AND LOOK FORWARD TO FURTHER DISCUSSION AND COORDINATION ALL THE WAY THROUGH.
SO JEFF, DO ANYTHING TO ADD BEFORE WE ARE SHOOED AWAY FOR REAL BUSINESS? NO, I DON'T THINK SO.
OKAY. DO YOU ALL HAVE ANY QUESTIONS FOR ME, GREG OR JEB AT THIS TIME? WE'VE GOT RAPID FIRE.
GO AHEAD. A GOOD SUMMARY IS ON THE AGENDA.
THERE'S A SCHEDULE ON THE BACK THAT SHOWS DATES AND SHOWS, YOU KNOW, WHAT WE'LL BE DOING ON OUR END.
AND THEN OCTOBER 18TH IS I'M NOT SURE WHAT GENERATED THAT DATE, BUT THAT'S THAT'S WHEN WE'RE, YOU KNOW, WE'LL BE COORDINATING VERY CLOSELY WITH CITY MANAGER AT THAT POINT AND YOU'LL BE HEARING A LOT MORE AND MORE JUST UPDATES AS WE GET CLOSER TO THERE.
IS THAT ENOUGH TIME? TIME TO REVIEW IT.
IT'S GOING TO GO TO OUR FINANCIAL ADVISORS AND ALL THOSE FOLKS.
I DON'T KNOW IF WE'VE TALKED TO HIM YET.
UM, I HAVE A QUESTION ON THE ROAD BOND.
THE PURPOSE OF THE ROAD BOND IS FOR WHAT? TO REIMBURSE YOU FOR THE ROADS THAT YOU PUT IN CURRENTLY.
THAT WAS $2 MILLION FOR ALL THOSE ROADS.
YEAH. BUT IS THE CITY GETTING A PORTION OF THAT BACK? A PORTION OF THE ROADS IS.
3.3 THAT YOU'RE GOING OUT FOR UTILITY.
THAT COVERS THE IMPACT FEES, YES.
FOR THE INSTALLATION AND. THE WATER THAT SERVICES THERE.
THE REASON WHY I'M ASKING YOU ABOUT THE 2 MILLION.
IS BECAUSE OF WITH THE DIRT HAULING THE ISSUES SURROUNDING HENDERSON ROAD AND.
I WAS I'M ASKING ABOUT WAS THERE A PORTION OF THAT COMING BACK? THAT'S WHY I ASKED THAT QUESTION.
THE OTHER THING I WAS GOING TO ASK YOU ABOUT WAS IN RELATION TO.
I GUESS THIS IS REALLY A QUESTION FOR JOE HERE.
SO THE CITY IS TAKING ON IS ISSUING THE DEBT SERVICE, CORRECT? YOU ARE. AND THE ONLY THING IS WE'RE SIGNING OFF ON IT SAYING WE APPROVE IT.
IN THE IN THE CHANCE CASE WHERE DEFAULT HAPPENED.
DON'T FORESEE THAT'S EVER GOING TO HAPPEN.
WHO'S RESPONSIBLE? OR YOU TAKE ALL THE RISK.
AND SO THAT'S PART OF THE TQS PROCESS ON FEASIBILITY.
IF WE HIT A REALLY, REALLY BAD SPOT IN THE ECONOMY AS CAN HAPPEN, THE DISTRICT IS OBLIGATED TO LEVY AN AD VALOREM TAX SUFFICIENT TO PAY THE DEBT SERVICE.
AND AND AFTER THE 80S, JUST FOR A GOOD EXAMPLE HERE, AFTER ALL THOSE TC FEASIBILITY RULES WENT INTO PLAY AFTER THE 80S HAPPENED BECAUSE WE DIDN'T WANT TO SEE THAT IN THE TEXAS DEBT MARKET ANYMORE.
AND SO IF WE WERE TO DEFAULT, IT WOULD NOT BECOME THE CITY'S OBLIGATION.
IT WOULD ONLY STILL BE THE MUD.
THE MUD WOULD STILL EXIST FOR PURPOSES OF LEVYING AN AD VALOREM TAX TO PAY THE DEBT SERVICE.
REFRESH MY MEMORY. AND HOW LONG ARE YOU TRYING TO HOW LONG ARE THE BONDS GOING TO BE ISSUED FOR?
[00:20:04]
USUALLY 25, 25, 25 AT THE END OF THE 25.RIGHT NOW. I BELIEVE THE WHOLE MUD IS OUTSIDE THE CITY.
AND SO THAT WHAT THE STRATEGIC PARTNERSHIP AGREEMENT DOES IS IT PRESERVES YOUR ABILITY TO ANNEX IT BY AGREEMENT WHEN WHEN YOU'RE READY AND AFTER OUR DEVELOPER HAS BEEN REIMBURSED.
MAY HAVE ANY FURTHER QUESTIONS.
ANYTHING YOU WANT TO SAY? NOPE. THANK YOU ALL FOR COMING.
HOPEFULLY THERE'S ANY ACTION ON.
IT'S JUST A WORKSHOP. AND THANKS FOR DINNER.
APPRECIATE IT. YOU'RE VERY WELCOME.
THANK YOU. THANK YOU. THANK YOU.
I GUESS WE CAN ADJOURN THIS SPECIAL MEETING AT 5:59 P.M.
THE RUSSIAN WATER.
* This transcript was compiled from uncorrected Closed Captioning.