By CLINT FOSTER
As the Index has reported, Mineral Wells is currently in the thick of a effort to kick-start an unprecedented effort to revive the city’s most iconic and historic structure: the Baker Hotel.
Spearheaded by Southlake businessman Laird Fairchild of Hunter Chase Capital Partners, the Baker Hotel Development team has been creative in gathering the necessary financing for this $56-million project – that has been six years in the making – from a variety of sources. A whopping 84 percent of the budget is made up of federal and state incentive capital in the form of federal and state historic tax credits, federal new market tax credits and an Environmental Protection Agency grant for lead and asbestos abatement, just to name a few.
The Baker Development team has successfully secured all but $4 million of the project’s budget: a sum the City of Mineral Wells has obliged to cover by means of a 4B Economic Development Sales Tax. The City plans to establish what’s called a “Development Corporation” that can issue a $4 million bond, which the City can then pay off over a period of time with a portion of sales tax revenue. But the beauty of this plan, City Manager Lance Howerton explained, is that it won’t cost the citizens of Mineral Wells an extra dime.
“We’re not suggesting an increase in the sales tax rate, but reallocating the sales tax,” he said. “Essentially what you’re looking at is whatever is collected against the sales tax goes to pay those bonds off.
“So your property tax is not used to pay off these bonds.
“You’re not ‘pledging’ that, as they say. It’s a big difference.”
The City of Mineral Wells currently levies a 1.5-percent sales tax and has done so since 1989.
“Last year, this generated $3.7 million in revenue – all of which went to the City’s general fund – from $250 million in taxable transactions. City officials are suggesting merely pulling 1/8th of a cent out of the 1.5 cents of regular sales tax and putting that money toward paying off the investors that purchase the $4 million dollar bond to finance the Baker’s revitalization.
“It’s just financing, that’s all it is,” Howerton said. “It’s like going out and borrowing money for a house or car. It’s just the way that City’s borrow money, basically.”
Based on tax revenue from 2013, Howerton said under this plan the City would only have to make up about $300,000 taken out of the general fund and put toward paying off the bond. With a 1.375-percent sales tax, he said the city would need about $270 million in taxable transactions to close that gap, so, it’s not something he feels is a major concern, especially if the economy continues to grow.
Mayor Mike Allen said this plan will be presented to the public at a regular meeting of City Council, Feb. 18.
The council will then vote the following week, Feb. 25, to approve an ordinance calling for this relocation of tax dollars to be placed on the public ballot for the general election in May. If voters approve the plan, then City officials can move forward with reallocating tax dollars and structuring the bond issuance.
“This is kind of the real linchpin to this whole project,” Howerton said of the 4B sales tax. “It’s a very critical piece of the financing. It brings additional equity money into the project because the sales tax is paying this debt, not so much the project itself.
“It also, from the standpoint of the developers, is important because it speaks to the commitment of the community to want to partner with this project and ensure that this project moves forward.
“For a project of this magnitude, both in scope as well as cost, the developers are pulling financing from every plausible area.
“This is one of those areas were they can get monies to help support the project and it helps make the bottom-line of this project work.
“(The public) is not voting for the bonds. What they’re voting for is to reallocate a portion of the sales tax to 4B with the idea that money would principally be directed toward getting the Baker project off the ground over the next 12 months. Then we work on how we structure a bond issuance after we have the money set aside.”
Mayor Allen also spoke to the importance of the vote and the council’s desire to formulate a plan that causes the smallest possible impact on the taxpayers of Mineral Wells.
“The council’s opinion at this point is if we do this, if the public agrees to do this, then we want the impact to the public to be (either) negligible or basically nothing,” he said. “We’re betting that the economy is going to continue to expand. We know we’ll probably have to tighten our belts a little (until then), but we’ve done it before.
“I think (the 4B Economic Development sales tax) is something we need to do to prove to (the Baker Hotel Development team) that we’re with them.”
Howerton said the 4B plan would not only ensure that the Baker project finally becomes a reality, but it also has the potential to finance further projects to attract business to Mineral Wells and improve the city as a whole.
“We fully believe that if we put this in place, working with the developer, we can make sure the Baker project gets done.
“Assuming the Baker deal gets done and we’re generating more money then what’s needed to pay off the debt for the Baker, then we can begin to generate a war chest for economic development. It could do things such as provide incentives for businesses or industries that are looking to come into Mineral Wells.
“We could also use it for infrastructure improvements, which we do need at this point. So, not only is it the avenue that helps us support the Baker project, but maybe, over time, as well it allows us to generate an ongoing fund to help our industrial solicitation projects.”
On Tuesday evening, the City Council approved appointments to the Tax Increment Reinvestment Zone No. 2 Board of Directors; another important cog in the Baker development machine. The appointees included Palo Pinto County Precinct 4 Commissioner Jeff Fryer, JC Colton of Palo Pinto General Hospital, Lynn Reasoner of Palo Pinto County Emergency Services District, Dr. Ronny Collins of Palo Pinto County Municipal Water District No. 1, Mineral Wells ISD School Board member Scott Elder, Mayor Allen, Clarence Holliman, Richard Ball and Ken Williamson.
In other business, Tuesday, City Council unanimously approved:
• A request from Mineral Wells Women’s Club for renovation assistance to be capped at $3,000.
• Specifications and authorization to advertise for bids for replacement of overhead bay doors for Fire Station No. 2. Four doors need to be replaced because of hail damage and should be covered by insurance. The City also plans to upgrade the other two station doors while they are doing repairs. Each door is expected to cost approximately $8,000.
• A report from Mineral Wells Police Chief Dean Sullivan regarding curfew enforcement. According to the report, juvenile arrests are down 69 percent with no curfew citations being issued in the fourth quarter of 2013.