The Baker Hotel Development Group and City of Mineral Wells agreed to publicly release Tuesday a memorandum of understanding previously withheld under a non-disclosure agreement between the two parties.
The non-binding document is tantamount to a formal handshake agreement surrounded by four corners of a document. It contains essentially nothing about the project that hasn't been discussed for the last five years and longer.
"MOUs are not binding, but they are agreements on how the parties are going to work with each other and have an understanding going forward," said Baker Hotel Development Group principal Chad Patton. "We were bound by the NDA to not disclose this agreement. We asked the city to release us from the NDA and the city has agreed."
Patton said the decision to release the MOU publicly is for transparency for the historic $65 million property restoration. The MOU contains no confidential information related to the investors or other potentially sensitive project information.
"This is a really big deal for the city," Patton said. "Nothing really changes. There is literally nothing in there that we haven't talked about for the last 11 years. We have been completely transparent about this from the beginning."
Mineral Wells City Manager Randy Criswell agreed and hopes the MOU's release will ease concerns some have about the project and the process.
"I don't think there needs to be undue and unjustified secrecy over the project," Criswell said. "This makes me happy. This is what I consider to be a very positive move by the Baker group and the city moving toward hopefully alleviating some of the concerns and misconceptions concerning this project."
Patton said while the city requested the non-disclosure agreement – signed by all involved parties except Mayor Christopher Perricone – to protect confidential information, he said the Baker team asked the city for the memorandum of understanding to "memorialize" agreements that have been discussed over the years. Patton and his partner, Laird Fairchild, have worked on the Baker Hotel project for the past decade.
On June 20, they announced on the property's front steps the acquisition of the hotel and the immediate commencement of construction.
"We just wanted to memorialize what we have always talked about," Patton said. "We had a new city manager and a new mayor. We were just looking to have some of that ironed out. That's a normal course of business activity. The NDA and MOU are causing problems because people don't understand."
Patton said he understands there may still be concerns from some about the project going forward.
"We are not trying to make everyone happy," he said. "We are trying to get a project done."
The MOU is dated June 18 – two days before the major announcement of acquisition and beginning of construction – and is signed by Criswell. In it, the developers agree:
• Acquisition of the Baker Hotel will occur on June 20, 2019.
• Rehabilitation will begin on or before June 24 and is expected to take 36 months to completion.
• The hotel will include a minimum of 157 premium suites at affordable rates; 23,570 square feet of meeting space; and 8,400 square feet of retail space.
• An understanding that the development team's studies support the long-term economic viability of the Baker Hotel in this region.
• All applicable city ordinances will apply to the project unless otherwise stated.
The city agrees in the memorandum:
• To provide $4 million from Mineral Wells' Type B Sales Tax receipts.
• That the costs of permitting and inspection fees will cost an estimated $200,000 and the city will waive all fees up to that amount. If those fees exceed $200,000 the parties will negotiate a mutually agreeable arrangement at that time.
• To upgrade water and wastewater systems "as necessary to support the long-term viability of the hotel."
• Infrastructure improvements such as signage, striping, curb, sidewalk improvements, etc. are not defined in the MOU. The city and developers agree the city "will make reasonable efforts to provide systems of this type necessary for the success and viability of the hotel."
• A 10-year extension of the tax-increment finance district has been discussed. "The city of Mineral Wells is supportive of this concept and will fully pursue any and all reasonable methods to gain the extension."
• A TIRZ agreement with the Baker Hotel will be recommended that is anticipated to provide 100 percent of the increment property tax revenue contributed by the redevelopment of the Baker Hotel and the hotel's existing parking garage.
The TIRZ overlay district was put in place before Patton and Fairchild became involved with the hotel. There were no viable developers looking at the property when in 2008 then-Mayor Clarence Holliman and city council approved the district with the long-term vision that it one day would help a viable redevelopment effort.
For those who question the public financial participation in the project, Patton at last week's Mineral Wells Area Chamber of Commerce banquet note the hotel will generate $620,000 in new annual sales taxes during the three-year construction; $780,000 in new annual property and sales taxes once it opens; and will carry a $13.5 million net present value to the city.
He said where as today local sales tax dollars are likely generated almost exclusively from people living in and around Mineral Wells, he expects in a few years a majority of local sales tax dollars will come from people visiting Mineral Wells.
"There are going to be fresh dollars spent in Mineral Wells and it is going to be flipped from people living around Mineral Wells to people not living in and around Mineral Wells," Patton said.
He also said use of the 4B sales tax dollars – a redirection of one-eighth of a cent of sales tax collections – and the TIRZ district funds are not new taxes but dollars set aside for use specifically on economic development projects. Those dollars have been accumulating and sitting idle and will soon be put to use to help revitalize downtown, increase tourism and grow the city's tax base.
"There is no tax dollar loss there," Patton said.
"The whole purpose of the NDA was to allow for the protection of any confidential information resulting from the negotiations," Criswell stated. "Ultimately, I think the concern that Laird and his team had is there are allegations, accusations, whatever the word is, that things are being hidden from the public and arrangements and commitments have made that have been inappropriately have been hidden from the public."
Criswell called releasing the MOU "very appropriate" and "a good thing for Mineral Wells."
"I do not believe in secrecy for the sake of secrecy," the city manager said. "I don't believe anybody else does either."
He said the non-disclosure agreement remains in place for all other aspects of the project.
"I have never lived anywhere where $65 million was spent on one building," Criswell said. "This is a big deal."