September ceremony for hotel, city says
August 7, 2021
The groundbreaking for the Bayland Island hotel/convention center project is still targeted for September, city officials say.
Rick Davis, city manager, said they are looking into moving the groundbreaking date up a couple of days. He had at the July 1 Baytown Municipal Development District meeting the city was aiming for a Sept. 17 date.
“We have not sent out invitations yet. We are going to reevaluate it this week,” Davis said.The project entails building a 208-room Hyatt Regency luxury hotel with an adjacent convention center on Bayland Island. The city is funding part of the project with $21.1 million, while the rest of the $42 million of the $63 million project will come from institutional investors working through Citi Group, a private investment vendor. Citi Group is expected to invest in the hotel portion of the project. Of the city’s $21.1 million obligation, a total of $17.1 million of the city’s contribution was originally supposed to consist of certificates of obligation, and the other $4 million will come from Hotel Occupancy Tax money in a one-time contribution. In April, the city changed course and decided to use sales tax revenue bonds as a funding mechanism rather than COs. This came after some citizens circulated a petition to force a public vote on the planned issuance of some $20.5 million through CO bonds to help finance costs accumulated due to COVID-19 and the full infrastructural buildout of the island.
The city has been waiting on Standard & Poor’s to rate the bonds, which are in an A, B, and C series. The bonds C Series’ rating of AA- was already received in early June. The A and B Series ratings have now come in, according to Alice Jauregui, city spokeswoman. She said Series A received a BBB- rating, while Series B received a BB rating. A bond rating is a grade given to a bond that indicates its credit quality. The rating takes into consideration a bond issuer’s financial strength or its ability to pay a bond’s principal and interest. Higher-rated bonds carry a lower interest rate.
“We have not sold any bonds yet,” Davis said.
In the meantime, city officials approved related documents to help move the project along with the bond issuance. First, the MDD had to approve the documents before sending them to council. The documents consist of a Preliminary Official Statement, a Ground Lease Agreement, a City Facilities Unit Lease Agreement, a Hotel Services Agreement, an Amended and Restated Development Management Agreement, a Booking Agreement, an Asset Management Agreement, a Marina Site Parking Agreement, a Design-Build Agreement, an Interlocal Agreement, a Condominium Declaration, a City Facilities Deed, and a Continuing Disclosure Agreement.
A Depository and Account Control Agreement was on the list, but City Attorney Karen Horner said it was being offered at the moment.
“It has been removed, and we will bring it back, if necessary,” Horner said.
MDD Vice President Chris Presley was pleased with the approval.
“It is great to get it to this point,” Presley said. “I feel I speak for all MDD board members. We believe in it and believe it will bear fruit. It is something we can all be very proud of.”
Jauregui said approving the documents will allow the city to market and sell the bonds.
“The next step will be to post the Preliminary Offering Statement,” she said. “After that, the next step will be to price the bonds.”
Council met after the MDD and approved some of the same documents but removed the deed restriction documents for the time being.
Mayor pro-tem Laura Alvarado said she could not have been prouder of the work put into the project.
“Especially from my colleagues in pushing this forward,” Alvarado said. “And the impact it will have on the entire city and bringing in additional folks from outside the Baytown area. I thank you all, and I thank those that were in agreement for this project for their patience. It is 20-plus years in the making, so we didn’t rush this. We thought of different avenues because we wanted it to be viable for the City of Baytown, and that gave the citizen approval we needed for this project.”
Davis said they will most likely have to call a special MDD meeting before the next scheduled one on Sept. 2 to “pull the trigger” on issuing bonds for the project.