Consider/Discuss/Act on a Project Grant Application Submitted by the City of McKinney, Texas (4B 25-06) in the Amount of Thirty Million and NO/100 Dollars ($30,000,000.00) for the Construction of Eastside Airport Infrastructure and Passenger Terminal Elements Including Taxiways, Aprons, and other Airport Facilities, at McKinney National Airport, 1508 Industrial Blvd, McKinney, TX 75069

[Consider/Discuss/Act on a Project Grant Application Submitted by the City of McKinney, Texas (4B 25-06) in the Amount of Thirty Million and NO/100 Dollars ($30,000,000.00) for the Construction of Eastside Airport Infrastructure and Passenger Terminal Elements Including Taxiways, Aprons, and other Airport Facilities, at McKinney National Airport, 1508 Industrial Blvd, McKinney, TX 75069]

CONSIDER AND ACT ON A PROJECT GRANT APPLICATION SUBMITTED BY THE CITY OF MCKINNEY FOR B2506, IN THE AMOUNT OF $30 MILLION FOR THE CONSTRUCTION OF EASTSIDE AIRPORT INFRASTRUCTURE AND PASSENGER TERMINAL ELEMENTS, INCLUDING TAXIWAYS, APRONS AND OTHER AIRPORT FACILITIES AT MCKINNEY NATIONAL AIRPORT. 1508 INDUSTRIAL BOULEVARD IN THE CITY OF MCKINNEY. MR. SHELTON. ALL RIGHT. SO WE'VE WE'VE BEEN WORKING THROUGH THE LOGISTICS OF TONIGHT'S MEETING. SO THIS FIRST ITEM IS A MCKINNEY COMMUNITY DEVELOPMENT CORPORATION BOARD ITEM. BUT I'M GOING TO GIVE A PRESENTATION DURING THIS ITEM THAT REALLY TALKS ABOUT THE PROJECT IN GENERAL. AND THEN THE LAST SLIDE WE'LL TALK ABOUT IS ACTUALLY KIND OF THE RUN OF THE MEETING TONIGHT. WHICH BOARD'S ACTING ON WHICH ITEMS. SO TYPICALLY YOU WOULD HAVE EACH BOARD HAVE THEIR MEETING AND APPROVE THEIR ITEM, AND THEN IT WOULD BE FORWARDED TO THE CITY COUNCIL FOR THEIR ACTION AND AUTHORIZATION. TONIGHT WE HAVE EVERYONE TOGETHER SO WE CAN WE CAN TAKE CARE OF ALL THOSE THINGS AT ONCE. SO. THERE WE GO. MANY OF THESE SLIDES YOU'VE SEEN BEFORE JUST WANTED TO REITERATE A FEW THINGS BEFORE WE JUMP INTO THINGS TONIGHT. WHERE WE ARE WITH THE SCHEDULE, YOU CAN SEE WHERE THE RED DASHED LINE IS. WE'RE COMPLETING CONSTRUCTION, PRICING AND CONTRACT EXECUTION.

ON THE CONSTRUCTION SIDE OF THIS, WE ARE TONIGHT TALKING ABOUT FUNDING OF THE PROJECT. A COUPLE OF MILESTONE DATES. ON THE LEFT HAND SIDE, YOU HAVE THE E PUBLIC MEETING AND THE CLOSURE OF THE PUBLIC HEARING BACK IN JANUARY. WE DID WORKING WITH OUR SUBCONTRACTORS OR OUR CONTRACTORS ON THIS SELECTED A MARKETING FIRM. THE WE'RE ANTICIPATING THE FONSI THE FINDING OF NO SIGNIFICANT IMPACT FOR THE E TO BE ISSUED IN APRIL. WE ACTUALLY HEARD TODAY THAT WE ARE LIKELY TO RECEIVE THAT BY THE END OF THIS WEEK. SO WE'RE EXCITED ABOUT THAT. WE'VE GONE THROUGH THAT PROCESS AND WE ARE MOVING FORWARD, ASSUMING FUNDING IS APPROVED TONIGHT WITH THE

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GROUNDBREAKING OF THE AIRPORT IN MAY. EVERYONE IN THIS ROOM IS PROBABLY SEEN THIS IMAGE HERE.

THIS IS THE PROJECT AS WE KNOW IT TODAY. INFRASTRUCTURE ON THE EAST SIDE, PRIMARILY TAXIWAY CHARLIE IN THE DARK BLUE. THE 546 IMPROVEMENTS, THE ROUNDABOUT IN THE LIGHT BLUE, AND THEN THE TERMINAL PROJECT ITSELF IN THE RED. WE HAVE A WAY OF GOING TO GO PAST THAT. WE HAVE A WAY OF BREAKING THESE PROJECTS OUT INTO FOUR SEPARATE PROJECTS. WE PULLED THE FUEL FARM OUT AS PROJECT NUMBER FOUR, BUT YOU CAN LOOK AT KIND OF THE ANTICIPATED COST OF THOSE AND THE FUNDING SOURCES FOR THOSE VARIOUS PROJECTS. THE REASON THE TWO ON THE LEFT SIDE THERE, PROJECT NUMBER ONE TERMINAL AND NUMBER TWO ROUNDABOUT ARE SHOWN IN GREEN BECAUSE THOSE AFTER TONIGHT WE'RE GOING TO HAVE THE FUNDING IN PLACE READY TO ISSUE CONTRACTS ON THOSE TWO PROJECTS.

THE OTHER TWO PROJECTS WE'RE HOLDING OFF, WE ARE STILL HOPEFUL THAT WE WILL HAVE FAA AND TXDOT MONEY THAT WOULD GO INTO THOSE PROJECTS. WE'RE HOLDING OFF ON STARTING CONSTRUCTION ON THOSE PROJECTS UNTIL PROBABLY ABOUT OCTOBER OF THIS YEAR, SO THAT WE CAN ACHIEVE SOME OF THAT FUNDING, SOME ON THE LEFT HAND SIDE. TO DATE, 5.3 MILLION HAS ALREADY BEEN AWARDED BY THE EDC AND CDC THROUGH GRANTS FOR DESIGN. TONIGHT, THE CDC IS BEING ASKED FOR APPROVAL OF $30 MILLION IN SALES TAX REVENUE BONDS. THOSE WOULD BE USED AS INTERIM FINANCING UNTIL THE TIFIA LOAN PROGRAM IS APPROVED THROUGH THE BUILD AMERICA BUREAU, WHICH IS PART OF THE DEPARTMENT OF TRANSPORTATION. AT THAT TIME, THE CDC WOULD TAKE ON THE PRINCIPAL AND INTEREST OF THE TIFIA LOAN AND ESSENTIALLY BUY OUT THE INTERIM FINANCING SO THAT $30 MILLION WOULD BE REPLACED WITH THE NEW $30 MILLION AT A MUCH LOWER INTEREST RATE AT A COST SAVINGS, A SIGNIFICANT COST SAVINGS FOR THE CDC AS THEY MOVE FORWARD. AND THEN TONIGHT, THE EDC IS BEING ASKED FOR APPROVAL OF $22.4 MILLION FOR THIS PROJECT IN SALES TAX REVENUE BONDS AS WELL. A COUPLE OF SLIDES THAT ARE COMING FROM OUR RECENTLY COMPLETED ECONOMIC IMPACT STUDY. ON THIS PROJECT. WE UPDATED THIS STUDY JUST RECENTLY. WE HAD CONDUCTED THIS STUDY PREVIOUSLY UNDER THE OLD PROGRAM IN 2022 AND 2023. THE LARGER TERMINAL PROGRAM WITH MORE ENPLANEMENTS. SO WE HAVE REWORKED THE ECONOMIC IMPACT STUDY. JUST THE CONSTRUCTION PHASE HAS AN ECONOMIC OUTPUT OF $122 MILLION. THAT'S A ONE TIME ECONOMIC OUTPUT, UP TO 610 DIRECT, INDIRECT AND INDUCED JOBS FROM THE CONSTRUCTION PROJECT. AND THEN YEARS ONE AND THREE. SO THE REASON WE USE YEARS ONE AND THREE IS BECAUSE THE AIRLINE THAT WE'RE WORKING WITH RIGHT NOW HAS A PROJECTION FOR THEIR FIRST YEAR EMPLOYMENT NUMBERS AND THEIR THIRD YEAR EMPLOYMENT NUMBERS. AND SO WE WANTED TO MIRROR THAT WITH THE ECONOMIC IMPACT STUDY. THE FIRST YEAR, ONLY 130,000 EMPLOYMENTS. THAT'S 3 TO 5 AVERAGE DEPARTURES. AND YOU CAN SEE IT'S A IT'S A RELATIVELY MODEST $73 MILLION THAT FIRST YEAR. BUT AS THEY RAMP UP AND THEY ADD BASED AIRCRAFT AND MORE FLIGHTS AND THEY PROJECT BY YEAR THREE TO BE AT 430 OR 450,000 ENPLANEMENTS. AND AT THAT LEVEL, WE'RE GENERATING AN ECONOMIC IMPACT OF $394 MILLION ANNUALLY BY YEAR THREE OF THIS PROJECT. SO A LITTLE DIFFERENT THAN THE ORIGINAL PROJECT, THE LARGER TERMINAL WHERE WE WERE PROJECTING OVER 700,000 ENPLANEMENTS YEAR ONE, THIS ONE HAS A SLOWER, SLOWER BURN RATE, SLOWER RAMP UP BECAUSE WE'RE WE'RE BUILDING THAT SMALLER TERMINAL AND JUMPING INTO IT THAT WAY FROM THAT ECONOMIC IMPACT ANALYSIS, THEY ALSO ANALYZE THE POTENTIAL TAX IMPACT OF THIS SERVICE. AND YOU CAN SEE HERE YOU HAVE THE CAPITAL INVESTMENT YEAR ONE AND YEAR THREE AND THE DIFFERENT ROWS. BY YEAR THREE. WE ANTICIPATE $10.4 MILLION IN LOCAL TAX REVENUE COLLECTIONS FROM THIS PROJECT DIRECT, INDIRECT AND INDUCED. SO THAT WOULD BE SPLIT, OF COURSE, AMONGST THE TAXING ENTITIES HERE, THE CITY, THE SCHOOL DISTRICT, THE COMMUNITY COLLEGE AND THE COUNTY, A GOOD PORTION OF THOSE WILL COME TO THE CITY AND THE EDC AND CDC, AS A GOOD PORTION OF THOSE WILL BE SALES TAX DOLLARS REALIZED, AND THEN THE PROPERTY TAX WOULD BE SPLIT, OF COURSE, BETWEEN THOSE FOUR ENTITIES. A VERY QUICK PRO FORMA. AND THIS IS A PRO FORMA THAT'S LOOKING AT THE OPERATING EXPENSES AND REVENUES FOR THE PROPOSED AIRPORT OVER THE FIRST TEN YEARS. JUST TO BE CLEAR, THIS ONLY INCLUDES THE OPERATING REVENUES. SO IT DOES NOT HAVE THE DEBT SERVICE ASSOCIATED WITH THE DEBT BEING ISSUED TONIGHT. THOSE ARE BEING BORNE BY THE EDC AND CDC. IT ALSO DOES NOT INCLUDE SOME OF THE CITY SERVICES, SOME POLICE AND FIREFIGHTERS THAT WOULD BE HIRED FOR THE PROJECT. BUT AS YOU'RE LOOKING THROUGH THIS FORECAST, YOU SEE THE OPERATING REVENUES

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FOR THE NEW TERMINAL WOULD START FAIRLY MODESTLY, AND YOU CAN SEE THE BREAK IN YEAR ONE BETWEEN AIRLINE REVENUES AND PARKING REVENUES. AND YOU CAN SEE THAT PARKING, CAR RENTAL AND CONCESSION REVENUES ACTUALLY PRETTY SIGNIFICANTLY OUTPACED THE ACTUAL AIRLINE REVENUES. SO YOU CAN SEE HOW THAT CARRIES THROUGH OVER TIME. BUT YOU CAN SEE ON THIS THE OPERATING REVENUES AT THE TERMINAL WOULD START IN THE RED FOR TWO YEARS, AND THEN IT WOULD GO TO THE BLACK OR POSITIVE. WHEN YOU GET TO YEAR SIX, YOU SEE THE GROWTH THERE. WE'RE STARTING TO LEVEL OFF THE GROWTH. SO WE WENT WITH YEAR ONE AND THREE ARE THE ANTICIPATED, ROUGHLY ANTICIPATED ENPLANEMENTS FROM THE AIRLINE. AND WE DIDN'T WANT TO CONTINUE THAT EXPONENTIAL GROWTH INTO THE FUTURE. WE WANTED TO MAKE SURE THAT WE LEVELED THAT OFF SO WE WEREN'T GIVING TOO ROSY OF A PICTURE. SO YOU CAN SEE THE RATE OF GROWTH IS SLOWED. BUT IF WE WERE TO HAVE THE OTHER AIRLINES WHO WERE TALKING WITH JOIN US AT THE AIRPORT, THOSE NUMBERS COULD BE EXCEEDED FAIRLY SOON. BARRY, WHO EATS THE LOSS IN YEARS ONE AND TWO, AND WHERE AND WHO BENEFITS FROM THE GAIN IN THE FUTURE YEARS? SO THE REVENUES GENERATED FROM THE AIRPORT HAVE TO REMAIN ON THE AIRPORT. WE CANNOT DIVERT THOSE REVENUES. SO IT WOULD BE THE AIRPORT OPERATION OPERATING FUND THAT WOULD EAT THOSE LOSSES IN THE FIRST TWO YEARS, AND THEY WOULD REAP THOSE BENEFITS IN THE IN THE FUTURE YEARS. ON THE OPERATING SIDE, DO THEY HAVE THE WHEREWITHAL TO EAT THOSE LOSSES, AS WE'RE LOOKING AT IT RIGHT NOW? YES, SIR. WE AS WE GO FORWARD AND WE TALK ABOUT SOME OTHER THINGS ON THE REVENUE SIDE, THESE ARE THE NUMBERS ON THE CAPITAL SIDE WHERE WE'VE TALKED ABOUT FCS AND ENTITLEMENT FUNDS FROM THE FAA. THOSE WOULD GO STRICTLY TOWARDS THE CAPITAL.

SO AS WE COLLECT FCS, THOSE COULD BE USED TO REIMBURSE THE TWO ENTITIES SITTING BEHIND ME NOW FOR SOME OF THEIR DEBT SERVICE. IN FACT, WE ARE LOOKING AT UP TO YEAR BY YEAR THREE, PROBABLY COLLECTING AROUND $1.7 MILLION OF FCS THAT WOULD GO TO OFFSET THEIR DEBT SERVICE AT THAT TIME. BUT ON THE OPERATING SIDE, IT'S WHAT'S SHOWN ON THE SCREEN TODAY. THANK YOU. BARRY, IS IT ALSO ACCURATE THAT GRANTS THAT WE RECEIVE AIRPORT GRANTS CAN ALSO BASED ON I KNOW NOT EVERYTHING, BUT ON THE ASPECTS OF THE PROJECT THAT QUALIFY ALSO COULD BE USED TO REIMBURSE. SO YES. SO WE ANTICIPATE CONTINUING TO GO AFTER GRANTS BOTH THIS YEAR AND IN FUTURE YEARS. AND WE'RE GOING TO TRY TO MAXIMIZE THE AMOUNT OF MONEY WE BRING IN FROM TXDOT OR THE STATE, AS WELL AS THE FEDERAL GOVERNMENT WITH THE FAA. SO WE ARE PURSUING THOSE. AND THOSE WOULD OFFSET THE CAPITAL COSTS AS WELL. SO, BARRY, JUST CAN YOU GO BACK TO IT FOR A SECOND? CAN YOU GO BACK TO THE. SO JUST TO BE CLEAR, EDC AND CDC, DESPITE THE KIND OF NET OPERATING REVENUES THAT BREAK EVEN IN YEAR THREE, EDC AND CDC ARE STILL COVERING THEIR PART, WHICH CAN BE SUPPLEMENTED WITH THE FCS OR THE ENTITLEMENT GRANTS. YES, SIR. AND THEN WE'RE ALSO SUPPLEMENTING PUBLIC SAFETY DOLLARS INTO THAT AT A PRETTY, I GUESS, AN UNDETERMINED BUT POTENTIALLY PRETTY HEFTY. YES, SIR. THERE WILL BE ADDITIONAL POLICE AND FIRE THAT WILL BE HIRED. WE DON'T ANTICIPATE HAVING A STANDALONE POLICE FORCE. THEY WILL BE PART OF MCKINNEY PD, AND WE DON'T ANTICIPATE HAVING A STANDALONE FIRE DEPARTMENT. THEY WILL BE PART OF THE MCKINNEY FIRE DEPARTMENT, BUT THERE WILL BE SOME COSTS OF HIRING TRAINING. SO SALARIES, TRAINING AND EQUIPMENT WOULD ALSO BE GENERAL FUND COSTS. SO EVEN THOUGH WE'RE SHOWING A NET PRESENT VALUE OF THE TEN YEARS OF OPERATING REVENUES AT 15 MILLION, IT DOESN'T INCLUDE A BUNCH OF OTHER COSTS THAT ARE GOING TO COME IN AND COME OUT OF THAT. AND THIS DOESN'T NECESSARILY THESE DOLLARS CAN'T GO TO SUPPLEMENT THOSE OTHER COSTS OR COULD. SO THE OPERATING EXPENSES CAN GO TO SUPPLEMENT OPERATING COSTS. SO FOR INSTANCE, THE POLICE AND FIRE THESE DOLLARS COULD GO TOWARDS THOSE BECAUSE THEY'RE AIRPORT OPERATIONS. THEY COULD NOT GO TOWARDS DEBT SERVICE OKAY. SO BUT WE'RE STILL GOING TO ALTER OUR BUDGET NEXT YEAR FOR GENERAL FUND INCREASE TO POLICE AND FIRE. WE WILL GO THROUGH THE BUDGET PROCESS THIS YEAR. THE SUPPLEMENTAL REQUESTS FROM BOTH OF THOSE DEPARTMENTS WILL INCLUDE ADDITIONAL PERSONNEL FOR THE AIRPORT. BUT WHY WOULDN'T WE TAKE IT OUT OF THIS NUMBER? LIKE, WHY WOULD WE LAY THAT ON THE GENERAL FUND AND NOT WHEN WE HAVE 15 MILLION AND NET PRESENT VALUE OF NET OPERATING INCOME. SO ONE OF THE THINGS WITH FOR INSTANCE, LET'S USE THE FIRE DEPARTMENT FIRE STATION FOUR AT THE AIRPORT WILL

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WILL SERVE THE AIRPORT. SO THEY'LL THE OUR TRUCK IS BASED THERE. THE PERSONNEL ARE BASED THERE. THE ARFF SERVICES AT THE AIRPORT ARE A PORTION OF THOSE OF THAT PERSONNEL'S TIME ON THE JOB. STATION FOUR ALSO SERVES THE EAST SIDE OF MCKINNEY, SO A LARGE MAJORITY OF THEIR CALLS COULD BE PARAMEDIC, EMT, OR FIRE CALLS WITHIN THE COMMUNITY. SO THEY'RE NOT WHOLLY OWNED BY THE AIRPORT, AND THEY DON'T SPEND THEIR ENTIRE I KNOW IT'S NOT 40 HOURS, BUT THEIR THEIR FULL WORKWEEK DOING AIRPORT THINGS. SO IT'S SPLIT BETWEEN THE GENERAL FUND AND THE AIRPORT.

THE AIRPORT WILL PAY A PORTION OF THAT. BUT THE COST ASSOCIATED WITH THAT IS ALSO ASSOCIATED WITH THE SERVICE TO THE COMMUNITY AS A WHOLE. BUT BUT VERY TO HIS POINT, CERTAINLY AN ALLOCATION THAT'S DETERMINED TO BE AIRPORT RELATED, THAT FIRE STATION AND POLICE, THERE'S NOTHING THIS IS THIS IS GENERAL INFORMATION. IT'S NOT STATING THAT WE WON'T USE THESE FUNDS FOR THOSE OPERATING EXPENSES. CORRECT. THAT'S CERTAINLY THAT THAT WILL BE AT THE DISCRETION, I GUESS, OF COUNCIL ULTIMATELY IN THE BUDGET PLANNING, BECAUSE I AGREE THAT THAT THOSE THINGS SHOULD BE PAID OUT OF OUT OF THE REVENUES AT THE AIRPORT, THOUGH I WON'T BE HERE TO VOTE ON THAT.

BUT ULTIMATELY, THE GOAL IS FOR THE AIRPORT REVENUES TO FULLY FUND THE SERVICES AT THE AIRPORT. SO THE PORTION OF THOSE PEOPLE AND THAT EQUIPMENT AND THAT TRAINING THAT IS ATTRIBUTED TO THE AIRPORT, THE GOAL OVER TIME, AS THE AIRPORT GENERATES MORE REVENUE. YES. THE GOAL IS FOR THE AIRPORT TO FULLY FUND THOSE SERVICES. OKAY. DO YOU HAVE AN ESTIMATE OF WHAT THAT WOULD BE OVER TEN YEARS? THE PUBLIC SAFETY I KNOW WE ARE RAMPING UP AND WE'VE BEEN WE'VE BEEN TALKING ABOUT THE NUMBER OF PERSONNEL AND WHAT EQUIPMENT IS NECESSARY AND WHAT TRAINING IS NECESSARY, BUT THAT NUMBER COULD GROW FROM 2 MILLION TO 4 MILLION PER YEAR. SO IT WIPES AWAY THE NET PRESENT VALUE OF THE NET OPERATING REVENUES THAT ARE SHOWN HERE. POTENTIALLY. YES, SIR. BUT AGAIN, WE HAVE OTHER REVENUES THAT WE'RE NOT INCLUDING TO I'M NOT TRYING TO SAY THAT WE'RE SHORT SELLING WHAT WE'RE SHOWING HERE, BUT WE'VE GOT OPERATING EXPENSES THAT AREN'T INCLUDED ON HERE. THERE ARE OPERATING EXPENSES THAT ARE NOT INCLUDED ON THE POLICE AND FIRE SIDE. BUT LIKE YOU SAID, THERE ARE REVENUES FROM THE ECONOMIC IMPACT THAT ARE HOPEFULLY OFFSETTING SOME OF THAT IN THE GENERAL FUND. YEAH, I MEANT MORE THE FEES AND THE RIGHT HAND SIDE, WE DIDN'T INCLUDE THOSE REVENUES. THIS WAS A SIMPLE AIRPORT OPERATIONS, AIRPORT REVENUES OR I'M SORRY, AIRPORT REVENUES AND AIRPORT EXPENDITURES FOR DIRECT AIRPORT OPERATIONS. BUT THAT WOULD REQUIRE A SUBSIDY FROM THE CITY OF UP TO 2 TO $4 MILLION A YEAR, DEPENDING ON THE YEAR, AND DEPENDING ON AT WHAT LEVEL WE FUND THOSE SERVICES. OKAY. SO MY LAST SLIDE HERE IS REALLY ABOUT THE MEETING TONIGHT. SO THE FIRST ITEM THAT YOU'VE ALREADY READ THE HEADING FOR IS A MCKINNEY COMMUNITY DEVELOPMENT CORPORATION ACTION ON THE PROJECT GRANT APPLICATION. SO AFTER THEY TAKE ACTION ON THAT ITEM, THE VERY NEXT ITEM WILL BE ANOTHER MCDC BOARD ACTION ON THE RESOLUTION AUTHORIZING THE ISSUANCE OF THE MCDC SALES TAX REVENUE BONDS. FOLLOWING THAT ITEM, IT GOES BACK TO THE CITY COUNCIL, WHO WILL ACT ON A RESOLUTION AUTHORIZING THOSE SAME BONDS. SO THE KIND OF THE RUN OF THE MEETING IS THE BOARD ACTS TO AUTHORIZE. AND THEN THE CITY COUNCIL ALSO AUTHORIZES THAT DEBT BEFORE IT CAN BE ISSUED. FOLLOWING THAT ITEM, WE SWITCH OVER TO THE MEDICI SIDE, WHERE THEY WILL ACT ON THEIR $22.4 MILLION. ACTUALLY, THEIRS INCLUDES SOME SOME DOLLARS FOR OTHER PROJECTS AS WELL, BUT THEY WILL ACT ON THEIR SALES TAX REVENUE BONDS, FOLLOWED BY A CITY COUNCIL AUTHORIZATION OF THOSE BONDS AS WELL. SO WITH ALL OF THAT SAID, THAT IS MY LAST SLIDE. I'LL LEAVE A PRETTY PICTURE ON THE BOARD AND ANSWER ANY QUESTIONS FROM THE COUNCIL OR EITHER OF THE BOARD'S. BARRY, WHAT IS THE WHAT'S THE POTENTIAL THAT THE TIFIA LOAN ISN'T APPROVED AND THAT WE HAVE TO PAY FOR A HIGHER COST? SO WE JUST LAST WEEK HAD A MEETING WITH THE DEPARTMENT OF TRANSPORTATION. WE WERE ABLE TO ASK THAT QUESTION DIRECTLY. OUR PROJECT, GIVEN ITS GEOGRAPHIC LOCATION, IS. IS CATEGORIZED AS A RURAL TRANSPORTATION PROJECT. JUST THE CENSUS TRACK THAT IT FALLS IN.

THE DEPARTMENT OF TRANSPORTATION ACTUALLY SETS ASIDE CERTAIN DOLLARS FOR THOSE RURAL PROJECTS. AND THEY SAID THAT THE FUNDS ARE AVAILABLE. OUR PROJECT IS QUALIFYING AND TO CONTINUE THROUGH THE PROCESS, THEY FEEL THAT THERE IS I CAN'T GIVE IT A PERCENTAGE, BUT A VERY HIGH

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LIKELIHOOD THAT THIS WILL BE FUNDED. THE DIFFERENCE BETWEEN THE SALES REVENUE BONDS AND THE TIFIA LOAN, IS IT PRIMARILY INTEREST RATE? THAT IS CORRECT. SO THE INTEREST RATE ON THE TIFIA LOAN IS HALF OF THE 30 YEAR US TREASURY RATE. SO AS OF LAST WEEK THAT WOULD GIVE US A, A AN INTEREST RATE OF ABOUT 2.33%, AS OPPOSED TO IF WE WERE TO FINANCE DIRECTLY WITH SALES TAX, REVENUE BONDS, IT WOULD PROBABLY. AND I'VE GOT A LOT SMARTER PEOPLE ON THE FINANCE SIDE HERE, BUT I WOULD SAY BETWEEN 4 AND 5%, THEY'RE GOING TO COME UP LATER AND THEY CAN THEY CAN. CORRECT. BUT THE TERMS ARE GOING TO BE THE SAME. THE AMORTIZATIONS ARE GOING TO BE THE 30 YEAR AMORTIZATION. THE OTHER BENEFIT OF THE SALES TAX REVENUE, I'M SORRY, OF THE TIFIA LOAN BECAUSE IT'S A RURAL PROJECT. THEY WAIVE A LOT OF THE PROCESSING FEES THAT WOULD OTHERWISE BE PART OF THE TIFIA PROCESS. IF WE WERE AN URBAN PROJECT OR A PROJECT THAT STRETCHES BETWEEN URBAN AND RURAL, LIKE A TOLLWAY OR SOMETHING ELSE, THEN A LOT OF THOSE BENEFITS FALL OFF. WE WOULDN'T GET THE HALF RATE AND WE WOULDN'T GET THE WAIVER OF FEES. SO THAT'S THE BENEFIT OF THE TIFIA. IF, FOR INSTANCE, THE TIFIA DID NOT COME THROUGH, FOR WHATEVER REASON, WE WOULD REFINANCE THE DEBT BEING AUTHORIZED TODAY INTO A 30 YEAR SALES TAX REVENUE, WE KIND OF TAKE AWAY THE BENEFIT OF WAIVING THE FEES SINCE WE'RE CLOSING IT TWICE, BUT WITH A WITH THIS. BUT YES. UNDERSTOOD. OTHER QUESTIONS. BEFORE EACH OF THE SUBSEQUENT ITEMS, MARK HOLLOWAY WILL COME UP AND INTRODUCE THE TEAM WHO'S HERE TO TALK TO YOU AND TALK YOU THROUGH THE DEBT SCHEDULES AND THINGS LIKE THAT. WE'LL TRY TO KEEP IT STRAIGHT ON WHO IS EXPECTED TO VOTE ON EACH ITEM, BUT THIS FIRST ONE IS THE COMMUNITY DEVELOPMENT CORPORATION BOARD. ALL RIGHT. THANK YOU. GOOD AFTERNOON. I WOULD LIKE TO ACKNOWLEDGE AND RECOGNIZE THAT ITEM 25 2552 HAS ALREADY BEEN READ BY MAYOR FULLER, AND I WILL NOT REREAD THAT ITEM, BUT AT THIS TIME WE'LL ENTERTAIN. IS THERE ANY DISCUSSION ON THIS ITEM? OKAY.

THANK YOU. MAYOR, I JUST WANTED TO CLARIFY. YOU HAD A SLIDE WHERE YOU SHOWED THE DISTRIBUTION OF THE REVENUE GENERATED THROUGH THE SALES TAX, AND YOU MENTIONED SOMETHING ABOUT IT GOING TO THE SCHOOL DISTRICT. WILL THAT ALLOCATION TO THE SCHOOL DISTRICT BE SEPARATE AND APART FROM THE FUNDS THAT ARE CAPTURED BY THE STATE? IN OTHER WORDS, WILL THAT IS THAT GUARANTEED TO STAY IN MCKINNEY? SO THE SLIDE YOU'RE TALKING ABOUT IS THIS SLIDE RIGHT HERE. SO LET'S USE THE YEAR THREE OPERATIONS LOCAL TAX DOLLARS THE 10.4 MILLION. SO TAXABLE PROPERTY ON THE AIRPORT FOR INSTANCE THE AIRCRAFT THAT ARE BASED HERE IS AN AD VALOREM TAX RATE ISSUE. SO THE I DON'T KNOW THE SCHOOL DISTRICT'S CURRENT RATE OFF THE TOP OF MY HEAD, BUT THEY WOULD BE TAXED AND THEY WOULD COLLECT THOSE DOLLARS. SO PROPERTY TAXES WOULD GO TO THE SCHOOL DISTRICT, THE COLLEGE, THE COUNTY AND THE CITY. A PORTION OF THOSE ARE GOING TO BE SALES TAX DOLLARS. THE SALES TAX DOLLARS WILL GO TO THE CITY, TO THE CDC AND THE EDC, AS THE OTHER TAXING ENTITIES DO NOT COLLECT SALES TAX. SO IT'S THE SAME IDEA AS THE TYPICAL TAX COLLECTED. THEN IT'S SUBJECT TO CAPTURE. SO IT'S NOT GOING TO STAY IN THOSE. DO NOT THOSE DO NOT STAY. SO WHEN WE TALK ABOUT WE CAN'T DIVERT REVENUES. THOSE ARE FEES AND CHARGES TO THE AIRLINES. THOSE HAVE TO STAY ON THE AIRPORT. BUT THE TAXES COLLECTED WOULD GO TO THE TAXING ENTITIES AS THEY NORMALLY WOULD. AND BARRY, THOSE ARE DIRECT, INDIRECT AND INDUCED TAXES. SO THOSE COULD BE FOR THE HOTEL THAT'S ACROSS THE STREET. YEAH. THESE WOULD BE TAXES CREATED BY THIS PROJECT. SO IF THIS PROJECT IS BUILT AND A HOTEL IS BUILT NEXT TO IT, THAT WOULD BE AN INDUCED JOB FOR THE PERSON WORKING AT THE HOTEL AND INDUCED PROPERTY TAXES, SO THAT THAT'S WHERE THE BENEFIT WOULD GO TO THE SCHOOL DISTRICT. OKAY. BUT SO I'M JUST TRYING TO CLARIFY IN MY MIND, BECAUSE THERE'S A BIG DEBATE RIGHT NOW ABOUT SCHOOL FUNDING. HOW DOES IT STAY HERE IN MCKINNEY? IT GETS BROUGHT BACK UP TO THE STATE AND THEN IT IT IS DISTRIBUTED FOR ENROLLMENT. SO WHAT'S TAXED HERE DOESN'T STAY HERE. SO THAT'S WHAT I'M ASKING.

IS THIS SEGMENT OF FUNDING THAT'S GOING TO THE SCHOOLS GOING TO STAY IN MCKINNEY. OR WILL IT BE PART OF THE PARCEL THAT GOES BACK UP TO THE STATE. SO SOMEONE WHO KNOWS MORE ABOUT THE SCHOOL TAXING, I BELIEVE THEIR PROPERTY TAXES ARE COLLECTED LOCALLY AND THEY STAY LOCAL. AND THEN ADDITIONAL FUNDING IS COMING FROM THE STATE AND ALLOCATED, WHICH IS FROM THE STATE'S SIX AND A QUARTER SALES TAX AND OTHER FEES AND CHARGES. I DON'T BELIEVE AND I DON'T

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THINK THAT'S RIGHT, BUT I'M NOT A SCHOOL FINANCE PERSON. BUT I THINK SALES TAX IS DIFFERENT THAN THE AD VALOREM. THE AD VALOREM TAX IS THE ONE. THAT'S THE ROBIN HOOD EFFECT, IF YOU WILL, WHERE SOME OF IT GOES BACK TO THE STATE. BUT WHATEVER THAT REQUIREMENT IS, IS GOING TO BE REALLY UP TO THE SCHOOLS. THEY'RE GOING TO GET ABOUT OF $10.4 MILLION IN LOCAL TAXES.

THEY'RE PROBABLY GOING TO GET ABOUT 60% OF THAT. THAT'S THEY'RE ABOUT 60% OF THE LOCAL TAX BILL. SO THEY'LL GET THE LION'S SHARE OF IT. AND THEN THE REST IS DISTRIBUTED AMONG THE CITY WOULD BE NEXT, I THINK. AND THEN COLLIN COLLEGE. AND WHAT WAS THE OTHER ONE? WELL, I WOULD THAT'S THE PERCENTAGE OF THE PROPERTY TAX. WELL THAT'S RIGHT, THAT'S RIGHT. SO THERE'S THE SALES TAX WOULD BE DISTRIBUTED BETWEEN THESE THREE BODIES. YEAH. THE SCHOOL DISTRICT OF THE PROPERTY TAXES, THEY ARE ABOUT 60 SOME PERCENT. RIGHT. OKAY. AND I APOLOGIZE I JUST DON'T KNOW HOW THEY KNOW. AND I'M SORRY TO PUT YOU ON THE SPOT. IT'S JUST IT'S A IT'S AN ASSET THAT WILL BENEFIT THE SCHOOL DISTRICT. IF WE CAN MAKE THE CLAIM THAT IT STAYS HERE AND WE'RE CONFIDENT OF THAT, I THINK THAT IS A BONUS THAT MANY PEOPLE MIGHT NOT RECOGNIZE, ESPECIALLY GIVEN THE CONDITIONS RIGHT NOW AROUND SCHOOL FUNDING AND SOME OF THE CUTS THAT MCKINNEY ISD IS MAKING BECAUSE OF IT. SO JUST, YOU KNOW, SOMETHING A TALKING POINT, PERHAPS. SO, I MEAN, THE AIRPORT ASSET DOESN'T PAY A PROPERTY TAX. SO THE MOST OF THE PROPERTY TAX COMES FROM INDIRECT OR INDUCED. YEAH. SO YOU'RE INDIRECT OR INDUCED. THE AIRCRAFT THAT ARE BASED THERE ARE TAXED. BUT THERE'S A FORMULA. WE WERE LOOKING AT IT I THINK THE FIRST YEAR THAT IF THEY WERE TO BASE TWO AIRCRAFT HERE, IT WOULD GENERATE ABOUT $100,000 IN REVENUE TO THE CITY FOR PROPERTY TAXES. AND IT'S NOT A LOT BECAUSE IT'S A BIG COMMERCIAL AIRCRAFT. AND THEY HAVE A FORMULA BASED ON WHERE IT'S BASED AND HOW MUCH IT'S IN TEXAS VERSUS OTHER STATES.

THAT'S NOT THAT GREAT OF AN ASSET IN TERMS OF TAXABLE VALUE FOR ANY OF THE TAXING ENTITIES.

BUT IT DOES HAVE A TAX ASSOCIATED WITH IT OKAY. BARRY, I HAVE A QUESTION. CAN WE GO TO YOUR REVENUE SLIDE I THINK NEXT THE LAST ONE. SO COULD A FUTURE COUNCIL CHOOSE TO USE REVENUE.

THE REVENUES GENERATED BY THE AIRPORT TO TAKE THE BURDEN OFF OF THESE BOARDS AND ASSUME THE TIFIA LOAN PAYMENTS, OR PAY OFF THE LOAN WITH SIGNIFICANT REVENUES? AND IS THAT SOMETHING THIS COUNCIL COULD DO, OR IS THAT UP TO FUTURE COUNCILS? AND WHAT HOW COULD FUTURE REVENUES AT THE AIRPORT USED BE USED TO LESSEN THE BURDEN ON THESE BOARDS? I'M GOING TO TALK ABOUT TWO SEPARATE THINGS. FIRST, ONE ARE THE PASSENGER FACILITY CHARGES. PASSENGER FACILITY CHARGE IS A $4 AND 50 CENT TYPICALLY FEE FOR EVERY ENPLANED PASSENGER. SO THAT'S COLLECTED AS OF YEAR THREE WHEN WE HAVE 450,000 ENPLANEMENTS, WE ANTICIPATE THAT NUMBER TO BE ABOUT $1.7 MILLION. COMING BACK TO THE AIRPORT, THAT HAS TO BE SPENT ON CAPITAL, HAS TO BE SPENT ON ELIGIBLE CAPITAL PROJECT COSTS. SO THERE ARE SOME NON-ELIGIBLE PROJECT PIECES, BUT THE MAJORITY OF WHAT WE'RE BUILDING ARE ELIGIBLE. THE CALCULATION THAT I'VE RUN IS TO SPLIT THE PFC DOLLARS BASED ON THE PERCENTAGE OF THE FUNDING THAT GOES IN. SO IF THE CDC IS PUTTING IN, LET'S CALL IT, 65% OF THE MONEY ON ELIGIBLE COSTS, THEN 65% OF THE ELIGIBLE OR 65% OF THE PFC WOULD GO BACK TOWARDS HELPING THE CDC PAY THEIR DEBT SERVICE, FOR INSTANCE, YOUR DEBT SERVICE. THEY'RE GOING TO TALK TONIGHT. LET'S SAY IT'S $1.5 MILLION. AND MAYBE IT'S THAT AND IT'S LEVEL FOR 30 YEARS. WELL, BY YEAR THREE, IF WE'RE GENERATING $1.7 MILLION IN PFC, 60% OF WHICH GOES TO THE CDC BOARD, AND THAT RAISES EVERY YEAR AS ENPLANEMENTS INCREASE, THERE COULD BE A TIME IN THE NEAR FUTURE WHERE YOUR ENTIRE DEBT SERVICE IS BEING PAID FOR BY THE PFC. SO THAT'S THAT'S ON THE PFC SIDE. ON THE OPERATING REVENUE SIDE, IF THERE ARE OPERATING REVENUES. AND THIS IS TO MR. BELLER'S POINT EARLIER, THERE ARE SOME CITY EXPENSES, POLICE AND FIRE THAT COULD BE CARRIED BY THOSE OPERATING EXPENSES. AND IF THERE ARE REVENUES ABOVE AND BEYOND WHAT THE EXPENSES ARE AT THE AIRPORT, THERE'S PROBABLY SOME PROGRAMS AND SOME THINGS AT THE AIRPORT THAT WE'RE NOT BUILDING IN THE FIRST PHASE THAT MAYBE WE ROLL INTO FUTURE PHASES SO OPERATING EXPENSES COULD GO UP AS REVENUES GO UP. BUT LET'S SAY AT SOME POINT IN THE FUTURE THERE ARE EXCESS OPERATING REVENUES. YES, THOSE COULD GO TO ALSO OFFSET THE CAPITAL COSTS. OKAY. THAT WOULD BE A CHOICE OF A FUTURE BUDGET COUNCIL DURING THE

[00:30:04]

BUDGET. BUT YES, THAT IS SOMETHING THAT COULD HAPPEN. SO JUST THAT OPERATING REVENUE PIECE IS A CHOICE OF FUTURE COUNCIL OR THE PFC PORTION AS WELL. SO THE PFC IS RESTRICTED TO ELIGIBLE CAPITAL COSTS. SO THE DEFINITION, THE SPLIT, FOR INSTANCE, TODAY THE COUNCIL COULD SAY WE'RE GOING TO SPLIT IT 50 OVER 50. AND COUNCIL IN FOUR YEARS COULD SAY, YOU KNOW, LET'S ACTUALLY THEY'RE THEY'RE BEARING A HEAVIER LOAD ON THIS. SO LET'S SPLIT IT BASED ON THE PERCENT. YES. THAT COULD BE A CHANGE IN FUTURE COUNCILS. BUT HOW IS THAT CURRENT AGREEMENT ESSENTIALLY CODIFIED NOW WHEN THESE REVENUES BEGIN TO COME IN? IS THAT THROUGH THE BUDGET PROCESS, OR IS THAT AS PART OF THESE AGREEMENTS THAT WE'RE DOING TODAY, OR I GUESS WHAT YOU'RE SAYING IS THAT THOSE REVENUES CAN'T BE USED OTHER PLACES, AND SO THERE'S NO REASON OR NO ABILITY TO TAKE THEM OUT AND USE THEM FOR OTHER THINGS. AND SO THE INTENT OR EXPECTATION IS THAT THEY WILL COME BACK. THE SPLIT ISN'T EXACTLY CLEAR, BUT AT THIS POINT, THAT'S WHAT THEY CAN BE USED FOR. AND THAT'S THE INTENT OF WHAT THEY WILL BE. THAT'S WHERE WE ARE TODAY. THEY COULD NOT BE DIVERTED TO SOMETHING ELSE. THEY COULD NOT GO TO OPERATIONS. THEY COULD NOT GO OFF OF THE AIRPORT, OF COURSE. SO YEAH, OUR OPTIONS ARE LIMITED. BUT THE REASON WE CHARGE THAT FEE IS TO OFFSET THE COST OF CAPITAL. RIGHT? OKAY. SO BASICALLY THESE BOARDS CAN TODAY COUNT ON AT LEAST THAT THE PFC PORTION OF THE REVENUE BASED ON A PERCENTAGE PROPOSAL TO ASSIST WITH TO MAKE THE DECISION. BUT THAT WOULD BE MY PROPOSAL. OKAY. I GUESS MY QUESTION IS, HOW IS THAT DECISION MADE? I DON'T. YEAH. THROUGH THE BUDGET PROCESS THIS YEAR, WE WILL SET THE SPLIT. OKAY. OKAY. GOOD QUESTION. THANK YOU. ANY ADDITIONAL QUESTIONS FROM CDC MEMBERS? I'LL MAKE ONE. ONE QUESTION. SO FOLLOW UP QUESTION. CHRIS WILKES I'LL MAKE ONE FOLLOW ON TO THAT. THE PFC CAN BE USED FOR DEBT SERVICE, AND WE HAVE DEBT SERVICE THAT WE'RE ESTABLISHING TODAY. OVER THE COURSE OF THE TIFIA LOAN, WHICH IS 30 YEARS, AND THAT'S DEBT SERVICE. THERE'S GOING TO BE A LOT MORE PFC. THERE MAY ALSO BE FUTURE DEBT ACCUMULATED SO THAT PERCENTAGE CAN CHANGE, MAY ISSUE MORE BONDS. WE CAN ASSUME THAT DURING THE TEN YEAR SPAN HERE, THERE MIGHT BE OTHER THINGS BUILT AT THE AIRPORT THAT DO REQUIRE CAPITAL. SO ALL OF THAT CAN CHANGE BASED ON. THAT'S WHY I DON'T THINK IT CAN BE CODIFIED IN ANYTHING NOW, BECAUSE THE AIRPORT CAPITAL NEEDS WILL CHANGE OVER TIME. IS THAT CORRECT, BARRY? THAT IS CORRECT. AND AS YOU HAVE A HISTORY OF PFC COLLECTIONS, AS WE MOVE FORWARD, SAY, IN 15 YEARS, WE DECIDE TO ADD THREE GATES TO THE TERMINAL WE'RE BUILDING TODAY BECAUSE WE HAVE A PFC COLLECTION HISTORY, THAT THOSE ARE ACTUALLY REVENUES THAT WE COULD POTENTIALLY ISSUE DEBT OFF OF IN THE FUTURE OR COVER THOSE ADDITIONAL COSTS. SO TO YOUR POINT, THE SPLIT TODAY MAY BE A DIFFERENT SPLIT TOMORROW DEPENDING ON WHAT FUTURE CAPITAL IMPROVEMENTS ARE MADE. ANY ADDITIONAL QUESTIONS? SO I DO APPRECIATE YOU ANSWERING THE QUESTIONS BECAUSE, YOU KNOW, THIS IS A HUGE OBLIGATION THAT WE ARE WILLING TO TAKE TO SUPPORT OUR CITY. SO WE HAVE A LOT OF QUESTIONS. SO I THANK YOU TO MY BOARD MEMBERS FOR YOUR ENGAGEMENT ON THIS PROCESS.

THERE ARE NO MORE QUESTIONS. CAN I GET A MOTION ON THIS AGENDA ITEM? I'LL MAKE A MOTION TO APPROVE AGENDA ITEM. 25 2552. AS WRITTEN. I'LL SECOND THAT MOTION. MOVED BY CHRIS WILKES, SECONDED BY AJ IN FOR THE SAKE OF SECRETARY. CITY SECRETARY, WE WILL RAISE OUR HANDS FOR A VOTE.

WE'RE GOING TO TAKE A VOTE. MOTION PASSED. THANK YOU. NEXT ITEM WE HAVE IS ITEM 252553.

[Consider/Discuss/Act on All Matters Incident and Related to the Issuance and Sale of McKinney Community Development Corporation Sales Tax Revenue Bonds, Taxable Series 2025, Including the Adoption of a Resolution Authorizing the Issuance of Such Bonds, Establishing Parameters for the Sale and Issuance of Such Bonds and Delegating Certain Matters to an Authorized Officer(s) of the Corporation]

CONSIDER, DISCUSS, ACT ON ALL MATTERS INCIDENTS AND RELATED TO THE ISSUANCE OF THE SALE OF MCKINNEY COMMUNITY DEVELOPMENT CORPORATION. SALES TAX REVENUE. BONDS TAXABLE SERIES 2025, INCLUDING THE ADOPTION OF A RESOLUTION AUTHORIZING THE ISSUANCE OF SUCH BONDS, ESTABLISHING PARAMETERS FOR THE SALE AND THE ISSUANCE OF SUCH BONDS, AND DELEGATING CERTAIN

[00:35:03]

MATTERS TO AN AUTHORIZED AUTHORIZED OFFICIALS OF THE CORPORATION. GOOD AFTERNOON.

MARK HOLLOWAY, CHIEF FINANCIAL OFFICER FOR THE CITY. TODAY WE HAVE TWO ITEMS BEFORE THE BOTH BOARDS, TWO DEBT ISSUANCES. THEY'RE BOTH A LITTLE BIT DIFFERENT. SO I'VE ASKED DAVE GORDON, WHO IS THE SENIOR MANAGING DIRECTOR FOR ESTRADA HINOJOSA, WHO IS THE FINANCIAL ADVISOR, MUNICIPAL ADVISOR FOR THE CITY, TO BE HERE TO GIVE A SHORT PRESENTATION TO BOTH BOARDS AND THE COUNCIL REGARDING THESE DEBT ISSUANCES. THE FIRST ONE, AS WE MENTIONED, IS THE CDC. AND WITH THAT, I WILL LET DAVE COME UP. GIVE GIVE YOU GUYS A SHORT PRESENTATION OF HOW THESE HOW THESE NOTES WILL WORK. AND THEN WITH THAT AFTER AFTER IF YOU IF YOU APPROVE THAT THE THAT NOTE THEN THE CITY COUNCIL WILL THEN ACT ON THAT. SO WE'RE ALSO WE ALSO HAVE SEVERAL OTHER PEOPLE HERE. IF YOU GUYS HAVE ANY QUESTIONS AFTER THAT. AND WITH THAT I'LL LET DAVE COME ON UP. THANK YOU. MARK AGAIN DAVE GORDON WITH ESTRADA HINOJOSA. I'M HERE WITH MY PARTNER JACKIE MESA, AND AS WELL AS BOB DRANSFIELD AND PAUL BRADEN FROM FULBRIGHT, WHICH IS YOUR BOND COUNCIL. SO THANK YOU AGAIN FOR HAVING US TODAY. AS MARK MENTIONED AND AS BARRY DISCUSSED, OBVIOUSLY WE'RE HERE TO DO SOME SALES TAX REVENUE BONDS FOR THE CDC FIRST, AND THEN WE'LL TAKE UP THE EDC AFTERWARDS. THIS PARTICULAR TRANSACTION IS GOING TO BE DONE AS A PRIVATE PLACEMENT. SO UNLIKE THE EDC THAT WOULD BE DONE AS A AS A PUBLIC OPEN MARKET SALE. THIS IS PROPOSED TO BE DONE AS A PRIVATE PLACEMENT. REALLY BECAUSE WE BECAUSE OF THE PARTICULAR PURPOSE OF THOSE OBLIGATIONS, WHICH IS TO PROVIDE AN INTERIM FINANCING IN ANTICIPATION OF THE TIFIA LOAN FROM THE FEDERAL GOVERNMENT THAT WAS DISCUSSED. SO YOU CAN SEE A BRIEF SCHEDULE OF THE TOP. BASICALLY, WE PREPARED AN RFP WORKING WITH THE CDC AND THE CITY. THAT WAS SENT OUT BY THE CITY TO PROSPECTIVE BIDDERS. ULTIMATELY WE RECEIVED BACK TEN FROM TEN DIFFERENT BANKS, 34 PROPOSALS. THE REASON FOR THE DIFFERENT PROPOSALS, THAT LARGE NUMBER WAS JUST BECAUSE WE HAD A NUMBER OF POSSIBLE STRUCTURES, DEPENDING UPON THE SPECIFIC BANK APPETITE. SO WE WANTED TO KEEP THAT AS BROAD AS POSSIBLE. ULTIMATELY, THE WINNING BIDDER WAS A BANK CALLED TRUIST BANK, WITH A SEVEN YEAR STRUCTURE THAT I'LL SHOW YOU IN JUST A MINUTE.

THE DEBT IS CALLABLE AT ANY TIME WITH A MACRO CALL THAT WOULD PROVIDE A CALCULATION YOU HAVE TO GO THROUGH. SO THERE, DEPENDING UPON WHERE RATES GO, THERE COULD BE SOME SLIGHT PENALTY OR THERE COULD BE CALLED AT PAR. AND AGAIN, AS WAS DISCUSSED, IF FOR SOME REASON THE TIFIA LOAN DID NOT COME THROUGH, THEN THAT DEBT COULD BE CALLED WITH A PUBLIC SALE OF LONG TERM DEBT. SO HERE'S A PRO FORMA THAT BASICALLY KIND OF SHOWS YOU HOW THE DEBT WOULD BE STRUCTURED. THIS IS AGAIN, YOU'VE GOT PLEDGED REVENUES OF JUST SHY OF 24 MILLION. LOOKING AT 2024 REVENUES, YOU CAN SEE THE EXISTING DEBT SERVICE THAT THE CDC HAS AND THEN THE STRUCTURE OF THE DEBT. AS WAS DISCUSSED EARLIER, THIS IS GOING TO BE INTEREST ONLY FOR THE FIRST NUMBER OF YEARS WITH THE IDEA THAT YOU WOULD NEVER ACTUALLY PAY THE PRINCIPAL ON THESE OBLIGATIONS, THAT YOU WOULD REFINANCE AT SOME TIME, LET'S SAY, IN THE NEXT YEAR OR YEAR TO TWO YEARS. YOU CAN SEE THEN YOU HAVE SIGNIFICANT COVERAGE IN TERMS OF YOUR ABILITY TO ACTUALLY PAY FOR THIS DEBT. EVEN IF YOU DIDN'T CALL THE DEBT, YOU WOULD STILL HAVE AMPLE REVENUES TO DO THAT. BUT AGAIN, IDEALLY YOU'RE GOING TO CALL THAT AT SOME POINT. ONE THING THAT HAS CHANGED ON THIS PARTICULAR SLIDE IS THAT WITH YOUR WITH THE CDC'S EXISTING DEBT, YOU HAVE A DEBT SERVICE RESERVE FUND THAT FOR YOUR OTHER OBLIGATIONS, THE FIFTEENS THAT'S FUNDED WITH WITH A SURETY POLICY. IN THIS PARTICULAR CASE WE WERE WORKING WITH THE BANK, AND THERE'S NOT GOING TO BE A NEED FOR A RESERVE FUND. SO THAT WILL BE HELPFUL. BUT OTHERWISE THIS IS THE FINAL RATES FOR THIS PARTICULAR OBLIGATION, WHICH IS 4.27%. AFTER THE ISSUANCE OF THE DEBT, THIS IS WHAT IT WILL LOOK LIKE. AGAIN YOU HAVE THE ONE SERIES OF BONDS FROM THE 2015.

AND THEN YOU HAVE INTEREST ONLY FOR SEVERAL YEARS AND THEN PRINCIPAL AND INTEREST, IF INDEED YOU EVER PAID THAT. BUT AGAIN, THE GOAL WOULD BE TO REFINANCE IT. SO THIS THESE ARE THE FINANCE PARTNERS AGAIN. STRADA. HINOJOSA. FULBRIGHT. MR. BANK COUNCIL YOUR BOND COUNCIL.

THEN WE'VE GOT THE TRUIST BANK WILL ACT AS BOTH THE LENDER AS WELL AS THEIR OWN PAYING AGENT

[00:40:06]

AND A FIRM CALLED JACKSON WALKER REPRESENTS TRUIST BANK. SO THAT'S A SHORT PRESENTATION ABOUT THE ISSUANCE FOR THE CDC. SO IF THERE'S ANY QUESTIONS I'M HAPPY TO TAKE THOSE AT THIS TIME. IS THERE ANY DISCUSSION ON THIS ITEM. AN ITEM FOR DISCUSSION. CAN YOU GO BACK TO THE BAR GRAPH THERE? JUST BECAUSE THIS IS PRETTY EYE CATCHING WITH THE PRINCIPAL PAYMENTS LATER, THE IDEA IS EVEN IF FOR SOME REASON TIFIA ALONE DOES NOT OCCUR, WE WOULD STILL BE REFINANCING THIS TO A MORE TRADITIONAL 30 YEAR LOAN OR BOND. RIGHT. SO THIS IS NOT A LIKELY SCENARIO. IT WOULD EITHER BE TIFIA OR A REFINANCE WITH TRADITIONAL BOND METHOD.

EXACTLY. AND THIS IS PART OF THE REASON THE DEBT WAS STRUCTURED LIKE IT IS RIGHT HERE, VERSUS, FOR EXAMPLE, A SINGLE BULLET BECAUSE YOU ACTUALLY COULD AFFORD THIS DEBT IF YOU HAD TO, WHICH AGAIN, IS NOT THE SPECIFIC GOAL. YOU CAN SEE OVER IN COLUMN G ON THE RIGHT HAND SIDE THAT EVEN WITH WITH 2024 REVENUES, YOU HAVE ABOUT 2.4 TIMES THE AMOUNT OF REVENUE TO DEBT SERVICE, EVEN IF YOU HAD TO DO THAT. SO AGAIN, THE GOAL IS THAT YOU WOULD NEVER DO THAT. YOU WILL REFINANCE IT WITH WITH EITHER A LONG TERM TIFIA LOAN OR A LONG TERM DEBT ISSUANCE IN THE PUBLIC BOND MARKETS. THE TWO YEAR LOAN, AS BARRY MENTIONED EARLIER, IS ABOUT IN TODAY'S MARKET, ASSUMING THE HALF. THE HALF TREASURY RATE, BASICALLY THE HALF TIFIA RATE BECAUSE OF IT'S A RURAL PROJECT WOULD BE ABOUT 2.3% IN THE PUBLIC DEBT MARKETS. THOSE WOULD IT WOULD BE MORE LIKE 5%. IT WOULD BE MORE LIKELY THAT THAT THAT DEBT WOULD BE SUBJECT TO AMT, FOR ONE THING, WHICH IS BECAUSE YOU'RE FUNDING A TERMINAL. SO IT WOULD BE TAX EXEMPT BUT SUBJECT TO AMT. SO WE'RE A PRETTY SIGNIFICANT DIFFERENCE. AND YOU KNOW, OBVIOUSLY SOMETHING WORTH STRIVING FOR. AND I KNOW THAT THE CDC HAS SPENT A LOT OF TIME TALKING WITH THE BUILD AMERICA BUREAU ABOUT THE TRANSACTIONS. SO HOPEFULLY THAT COMES TO FRUITION. THANK YOU. THANK YOU CHRIS. ANY ADDITIONAL QUESTIONS FROM MCDC BOARD ON THIS ITEM? CAN I GET A MOTION? I'LL ENTERTAIN A MOTION FOR THIS AGENDA ITEM ITEM. I READ IT. I DO. IT'S OKAY. CAN I GET A MOTION TO APPROVE THIS AGENDA ITEM? I'LL MAKE A MOTION TO APPROVE THE AGENDA ITEM. MOTION APPROVED BY DAVID REACH. I SECOND THE MOTION. SECOND BY DEBORAH BRADFORD. BY SHOW OF HANDS. MOTION PASSES. THANK YOU. NEXT ITEM IS 252554. CONSIDERED ACT ON ALL MATTERS RELATED TO

[Consider/Discuss/Act on All Matters Incident and Related to Approving the Resolution of the McKinney Community Development Corporation Board Action Authorizing the Issuance of the McKinney Community Development Corporation Sales Tax Revenue Bonds and the Corporation’s Delegation to a Pricing Officer to Carry Out the Procedures of the Resolution and Relating to the Deposit of Sales Tax Revenues for Such Bonds, Including the Adoption of a Resolution Pertaining Thereto]

APPROVING THE RESOLUTION OF THE MCKINNEY COMMUNITY DEVELOPMENT CORPORATION BOARD ACTION AUTHORIZING THE ISSUANCE OF THE MCKINNEY COMMUNITY DEVELOPMENT CORPORATION SALES TAX, REVENUE BONDS, AND THE CORPORATION'S DELEGATION TO A PRICING OFFER TO CARRY OUT THE PROCEDURES OF THE RESOLUTION AND RELATING TO THE DEPOSIT OF SALES TAX REVENUES FOR SUCH BONDS, INCLUDING THE ADOPTION OF A RESOLUTION PERTAINING THERETO. THANK YOU, MR. MAYOR. MARK HOLLOWAY CHIEF FINANCIAL OFFICER AGAIN. THIS IS TO THE CITY COUNCIL WILL NOW NEED TO APPROVE THE CDC'S LAST ACTION. YES. SIR. A MOTION FOR THIS ITEM. I'LL MAKE A MOTION THAT WE APPROVE THIS ITEM. I'LL SECOND. PLEASE CAST YOUR VOTES. AND LET'S HAVE A BUTTON.

RIGHT. NEXT ITEM. I NEVER GOT TO VOTE. WHAT'S THAT? I NEVER. MY SCREEN NEVER SHOWED ANYTHING TO VOTE. I'M A NO IF YOU WANT TO DO THAT. YEAH. MOTION CARRIES. THE NEXT ITEM IS YOUR ITEM 4 TO 3. THANK YOU. NEXT AGENDA ITEM IS 25 2555. CONSIDER. DISCUSS. ACT ON

[Consider/Discuss/Act on All Matters Incident and Related to the Issuance of McKinney Economic Development Corporation Sales Tax Revenue Bonds, Including the Adoption of a Resolution Authorizing the Issuance of Such Bonds, Establishing Parameters for the Sale and Issuance of Such Bonds and Delegating Certain Matters to an Authorized Officer(s) of the Corporation]

[00:45:06]

ALL MATTERS INCIDENT RELATED TO THE ISSUANCE OF MCKINNEY ECONOMIC DEVELOPMENT CORPORATION. SALES TAX REVENUE BONDS, INCLUDING THE ADOPTION OF A RESOLUTION AUTHORIZING THE ISSUANCE OF SUCH BONDS. ESTABLISHING PARAMETERS FOR THE SALE AND ISSUANCE OF SUCH BONDS, AND DELEGATING CERTAIN MATTERS TO AN AUTHORIZED OFFICER OF THE CORPORATION. THANK YOU. I'M GOING TO HAVE DAVE GORDON COME UP ONCE AGAIN, WALK THROUGH THIS FINANCING, WHICH IS DIFFERENT FROM THE CDC'S FINANCING. THIS WILL BE TWO PARTS, TWO DIFFERENT SERIES, ONE TAXABLE ONE NONTAXABLE. AND WITH THAT, DAVE, I'M HAPPY TO WALK YOU THROUGH THAT. OKAY. THANK YOU MARK.

AGAIN DAVE GORDON WITH ESTRADA HINOJOSA. SO AS MARK MENTIONED THIS IS A DIFFERENT TYPE OF FINANCING. THIS IS A PROPOSED AS A PUBLIC SALE. IN GENERAL FOR LONG TERM DEBT, PARTICULARLY BEYOND SAY TEN YEARS, THE PUBLIC BOND MARKETS ARE MUCH MORE EFFICIENT AT COMPLETING THOSE TRANSACTIONS THAN A PRIVATE PLACEMENT WITH A BANK. SO THIS WOULD BE COMPLETED AS, AGAIN, A PUBLIC SALE IN THE BOND MARKETS. AS MARK MENTIONED, THERE'S TWO PARTS THAT GO INTO THAT IN JUST A SECOND. BUT FIRST LET ME JUST KIND OF GO INTO THE THIS IS THE EXISTING DEBT. IT'S RATED AA BY S&P. SO VERY STRONG INVESTMENT GRADE CREDIT RATING. SO YOU ALL CAN BE VERY PROUD OF THAT. IT HAS A MACRO CALL. AND AGAIN THE SINGLE SERIES IS OUTSTANDING. ONE OF THE THINGS THAT BARRY MENTIONED EARLIER IS THAT THERE ARE TWO DIFFERENT PIECES REALLY TO THIS PARTICULAR FINANCING.

THERE'S THE PORTION THAT'S FOR THE AIRPORT AND THERE'S THE PORTION THAT'S REALLY FOR A LAND PURCHASE. SO WE ALSO HAVE TWO DIFFERENT TAX STATUSES THAT WE'RE DEALING WITH HERE. AND THE TAX STATUS THAT I'M TALKING ABOUT HERE HAS TO DO WITH THE PURCHASER OF THE BOND. WHETHER THAT INTEREST ON THAT IS TAX EXEMPT OR NOT. AND THE DESIGNATION OF WHAT IT COULD BE CONSIDERED TAXABLE OR TAX EXEMPT GETS TO BE VERY COMPLICATED. IF WE WANT TO GO INTO THOSE DETAILS IN, YOU KNOW, IN GREAT DETAIL, WE CAN. BUT BASICALLY YOU CAN SEE THAT THE LAND PURCHASE IS GOING TO BE TAXABLE. THAT WILL ALLOW THE EDC THE MOST FLEXIBILITY TO DO THINGS GOING FORWARD. AND THEN FOR THE AIRPORT PORTION OF THE PROJECT, WHICH INCLUDES THE ROUNDABOUT AS WELL AS THE PARKING FACILITIES, THE PARKING FACILITIES WOULD BE TAXABLE, AGAIN, BECAUSE OF SOME FLEXIBILITY THAT ALLOWS THE EDC AND THE AIRPORT TO DO IN TERMS OF CONTRACTING AND SOME OTHER THINGS. AND THEN THE ROUNDABOUT, WHICH IS CERTAINLY A PUBLIC FACILITY THAT WOULD BE OPEN TO EVERYBODY THAT GOES THROUGH THERE, WOULD BE TAX EXEMPT. SO YOU CAN SEE THE TOTAL ISSUANCE IS APPROXIMATELY 62.4 MILLION. THIS IS THE PROJECT FUND AMOUNTS. WHEN YOU LOOK AT ULTIMATELY HOW MUCH IS ISSUED, IT WILL BE A LITTLE BIT DIFFERENT THAN THAT, PARTICULARLY ON THE TAX EXEMPT SIDE WHICH WILL BE SOLD AT A PREMIUM. I KNOW THIS IS A COMPLICATED PRO FORMA THAT BASICALLY SHOWS BOTH ISSUANCES. WE'VE KIND OF TAKEN OUT THE MIDDLE OF THIS SECTION JUST TO MAKE IT SO IT FITS ON THE SLIDE A LITTLE BIT MORE EASILY. BUT AGAIN, THE EDC HAS A SINGLE SERIES OF OBLIGATIONS OUTSTANDING THAT THE 2021. AS YOU CAN SEE, ON THE LEFT HAND SIDE, THE REVENUES ARE THE SAME AS THE CDCS. AND THEN YOU CAN SEE THE APPROXIMATE AMOUNTS FOR EACH OF THE TWO DIFFERENT TRANSACTIONS. WE'VE STRUCTURED THE DEBT TO BASICALLY WRAP AROUND THE EXISTING DEBT SERVICE, JUST TO MAKE IT MORE EASILY SERVICED. AND THEN YOU CAN SEE THE TAXABLE TRANSACTION ON THE LEFT, THE 2025 A BONDS, AND THEN THE TAX EXEMPT TRANSACTION ON THE RIGHT THE 2025 B BONDS. THE RATE ON THE TAXABLE TRANSACTION THIS THIS HAS ABOUT 25 BASIS POINTS OF CUSHION IN THE. WHAT WOULD BE A PUBLIC RATE TODAY. IT'S ABOUT 5.8% IN HERE. AND THE TAX EXEMPT ABOUT 4.7%. AND THEN YOU CAN SEE AGAIN A PRETTY SIGNIFICANT COVERAGE IN TERMS OF ABILITY TO ACTUALLY SERVICE THIS DEBT GOING FORWARD. SO THIS IS WHAT THE EDC'S DEBT PROFILE WOULD LOOK LIKE AFTER THE TRANSACTIONS ARE DONE. YOU CAN SEE THERE'S INTEREST ONLY ON THESE NEW TRANSACTIONS FOR THE FIRST THROUGH TO 2031. AND THEN THERE'S INTEREST IN PRINCIPAL AFTER THAT. SO HERE'S THE SCHEDULE FOR THIS PARTICULAR OBLIGATION. AGAIN WHAT WE'RE ACTUALLY ASKING THE EDC AND THE CITY COUNCIL TO DO TODAY IS TO DELEGATE AUTHORITY TO CERTAIN OFFICIALS WITHIN THE EDC AND THE CITY TO BASICALLY COMPLETE THE SALE. WHAT WE'VE DONE SO FAR IS WE'VE GONE THROUGH THE PROCESS OF ACTUALLY PREPARING AN OFFERING DOCUMENT CALLED THE PRELIMINARY OFFICIAL STATEMENT.

THAT'S STILL IN DRAFT FORM. WE'RE WORKING THROUGH THAT RIGHT NOW. WE HAVE A CONFERENCE CALL WITH S&P THAT IS SET UP. WHO'S THE RATING AGENCY ON YOUR PARTICULAR DEBT. WE HAVE THAT

[00:50:01]

COMING UP ON MARCH 14TH OR WE HAD THAT I'M SORRY WE HAD THAT ON MARCH 14TH. OBVIOUSLY IF YOU WERE HERE TONIGHT, IF YOU APPROVED THE SALE, THEN WE WILL GO FORWARD WITH THE REST OF THE STEPS NECESSARY TO COMPLETE THE TRANSACTIONS. WE EXPECT THE RATING ON MARCH 26TH. WE HAVE UNDERWRITERS THAT HAVE ALREADY BEEN SELECTED. I'LL GO INTO THAT IN THE NEXT SLIDE. WE'LL HOLD A DUE DILIGENCE CALL WITH THEM. AND THEN ULTIMATELY WE'LL PRICE THE OBLIGATIONS ON APRIL 8TH. AT THAT PARTICULAR POINT, WE WOULD KNOW THE FINAL RATES. SO EVERYTHING I SHOWED YOU SO FAR IS PRO FORMA. AND HOPEFULLY WE'LL COME UP WITH RATES THAT ARE BETTER THAN I'VE SHOWN TO YOU. AND THEN FINALLY WE WILL CLOSE THE TRANSACTION ON APRIL 30TH. AGAIN, HERE'S THE PARTIES INVOLVED HERE. THE ONLY DIFFERENCE REALLY HERE IS THAT THE WE HAVE UNDERWRITERS, THREE DIFFERENT UNDERWRITERS. BOC WOULD BE THE SENIOR MANAGER BAIRD AND RAYMOND JAMES. THESE ARE ENTITIES THE CITY HAS DEALT WITH IN MANY CASES. AND THEIR UNDERWRITERS COUNSEL IS MICHAEL PARKINSON. HORTON. AND THEN BANK OF TEXAS WOULD BE THE PAYING AGENT. SO ARE THERE ANY QUESTIONS ON THESE PARTICULAR TRANSACTIONS? QUESTIONS FROM THE BOARD? NO. THANK YOU. THANK YOU.

HAVE A SEAT. ANY COMMENTS FROM THE BOARD? QUESTIONS? COMMENTS? OKAY, I HAVE A COUPLE, BELIEVE IT OR NOT. JUST. AND REALLY, IT'S THIS MORE FOR PUBLIC CONSUMPTION THAN ANYTHING AS IT RELATES TO THE PROFORMA THAT WAS PUT UP THERE, THAT SHOWS A 0% GROWTH RATE. I MEAN, THAT'S THAT'S HOW THEY HAVE TO DO IT FROM A PRODUCTION STANDPOINT. BUT WE JUST HAD A MEETING AT 2:00. AND FOR EXAMPLE, IN THE MONTH OF DECEMBER, OUR TAX SALES TAX RATE GREW EIGHT, ALMOST OVER 8%. AND WE TYPICALLY BUDGET AT THE EDC BASED ON THE CONSERVATIVE RATE OF ABOUT 4% PER YEAR. AND THAT'S BASICALLY ON SALES TAX GENERATED NOT FROM AIRPORT PROPERTIES BUT FROM ALL OVER THE CITY. SO. THESE NUMBERS DON'T TAKE INTO CONSIDERATION THE FACT THAT WE DO HAVE GROWTH IN SALES TAX. AND SO I JUST WANTED TO MAKE THAT COMMENT. AND THEN OBVIOUSLY, AS IT RELATES TO, AGAIN, FOR THE PUBLIC, WHEN THEY TALK ABOUT TAXABLE VERSUS NONTAXABLE, WHAT THEY'RE REALLY TALKING ABOUT IS THE ABILITY TO GENERATE PROJECTS THAT WILL RESULT IN CREATION OF AD VALOREM TAX TO THE CITY OF MCKINNEY. NOT IT'S NOT A TAX DEBT TO THE PUBLIC. SO UNLESS SOMEBODY ELSE HAS ANYTHING, ANYTHING, I'D ENTERTAIN A MOTION ON 25 POINT OR 20 5-2555. I'LL MAKE A MOTION TO APPROVE. SECOND. MOTION BY THAD. SECOND BY MATT. ALL IN FAVOR? RAISE YOUR HAND. MOTION PASSES. ALL RIGHT. ITEM NUMBER 252556. CONSIDER ACT ON ALL MATTERS

[Consider/Discuss/Act on All Matters Incident and Related to Approving the Resolution of the McKinney Economic Development Corporation Board Action Authorizing the Issuance of the McKinney Economic Development Corporation Sales Tax Revenue Bonds and the Corporation’s Delegation to a Pricing Officer to Carry Out the Procedures of the Resolution and Relating to the Deposit of Sales Tax Revenues for Such Bonds, Including the Adoption of a Resolution Pertaining Thereto]

THIS IS A MANIFESTLY REGIONAL PROBLEM. I'VE HAD CONVERSATIONS WITH POLITICIANS ALL OVER THIS COUNTY. THEY WANT THIS DONE. IF I WERE THEM, I'D WANT THIS DONE RIGHT. I'M LOOKING FOR WE HAVE THERE'S NOT GOING TO BE ANOTHER AIRPORT IN COLLIN COUNTY LIKE THIS. THIS IS A REMARKABLE THING FOR THE COUNTY. AND WHAT I WANT TO BE IS I WANT TO BE A SQUEAKY WHEEL. WE'RE ALREADY A SQUEAKY WHEEL. IT TOOK ME AN HOUR AND 46 MINUTES LAST WEEK TO DROP MY WIFE OFF AT TERMINAL C AT DFW.

THERE WAS A WRECK ON 121, BUT I WAS READY TO PUT A KNIFE IN MY FEMUR. JUST. I WAS JUST

[00:55:01]