* This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting. [00:00:01] IT'S 5:00 PM I'LL CALL THIS MEETING OF THE COTTONWOOD DEVELOPMENT CORPORATION TO ORDER. UH, FIRST ITEM IS ROLL CALL BOARD. MEMBER CLARK. PRESENT, UH, VICE CHAIR GORDON HERE. AND CHAIRMAN THORNTON IS HERE. OKAY. NEXT ITEM IS PUBLIC COMMENT. UH, IT DOESN'T LOOK LIKE WE HAVE ANYONE HERE FOR PUBLIC COMMENT. MOVE ON TO ITEM 4.1. UH, DISCUSSION AND POSSIBLE ACTION APPROVING MINUTES OF DECEMBER 23RD, 2022, AND MARCH 2ND, 2023. UH, CHAIRMAN, I MAKE A MOTION TO APPROVE, UH, 4.1 AS PRESENTED. SECOND. OKAY. WE HAVE A MOTION BY, UH, VICE CHAIR GORDON, SECOND BY BOARD MEMBER RANDALL CLARK. ANY DISCUSSION? DON'T THINK SO. I'LL CALL THE VOTE. UH, BOARD MEMBER CLARK. AYE, UH, VICE CHAIR GORDON AYE. AND, UH, CHAIRMAN THORNTON. AYE. MOTION PASSES. THREE ZERO. NEXT, UH, DISCUSSION ITEM FOUR, TWO. DISCUSSION AND POSSIBLE ACTION RELATING TO THE COTTONWOOD DEVELOPMENT CORPORATION, UH, FISCAL YEAR 23 FINANCIAL REPORT AND PROPOSED BUDGET FOR FY 2324. WAS THERE A PRESENTATION FOR IT, OR NO? THAT'S ANN. SHE'S ON, SHE'S ON HER WAY IN. IT'S TURNING OUT SOME. ALL RIGHT. UM, WE'LL MOVE ON TO 4.3. UM, AND FOUR THREE. FOUR FOUR. I DIDN'T ACTUALLY REQUEST THESE, BUT I, WE DID HAVE, SO WE CURRENTLY HAVE A VICE CHAIR. WE DON'T HAVE A SECRETARY TREASURER, BUT OBVIOUSLY WE CAN DO WHATEVER WE WANT WITH THESE ITEMS. SO, UH, 4.3, DISCUSS AND POSSIBLE ACTION. APPOINTING A SECRETARY TREASURER FOR THE CONWOOD DEVELOPMENT CORPORATION. I GUESS I'LL MAKE A MOTION FOR MYSELF TO BE MADE. SECRETARY TREASURER. OKAY. SECOND . OKAY. I HAVE A MOTION AND A SECOND. UH, MOTION BY BOARD MEMBER CLARK. SECOND BY VICE CHAIR GORDON. UH, CALL THE VOTE, UH, BOARD MEMBER CLARK. AYE. VICE CHAIR GORDON. AYE. CHAIRMAN THORNTON. AYE. MOTION PASSES THREE ZERO. SO, IS THERE A NEED TO DO FOUR? FOUR? I DON'T THINK SO. OKAY. UNLESS WE HAVE THAT DOESN'T, UNLESS WE HAVE TO HAVE A VOTE. IT PROBABLY DOES. I DON'T, I DON'T THINK THEY DO, THOUGH. WELL, WE CAN CHECK. YEAH, WE SHOULD PROBABLY CHECK THE BYLAWS BEFORE. WELL, WE COULD JUST MAKE, I MAKE A MOTION TO, UH, NOMINATE COUNCIL MEMBER GORDON FOR VICE CHAIR. I'LL SECOND THAT. OH, THANK YOU. OKAY. UM, I'LL CALL THE VOTE, UH, BOARD MEMBER CLERK. AYE, UH, CHAIRMAN THORNTON. AYE, UH, VICE CHAIR GORDON? AYE. MOTION PASSES. THREE ZERO. OKAY. SO WE'LL MOVE BACK TO ITEM 42, UH, ON THE, UH, FINANCIAL REPORT AND PROPOSED BUDGET. GOOD AFTERNOON. GOOD AFTERNOON. FOR THE RECORD IN LAIR IN INTERIM FINANCE DIRECTOR, HAVE YOU ALL SEEN THE FINANCIAL REPORT OR DO YOU HAVE A COPY IN FRONT OF YOU? YOU NOW WE HAVE A COPY IN FRONT OF IT, RIGHT? THAT'S IT. MM-HMM. , NORMALLY I COME TO THE PODIUM AND I TELL YOU THAT EVERYTHING IS ROUTINE, BUT NOT SO THIS EVENING. OKAY. THE COTTONWOOD DEVELOPMENT CORPORATION IS 9.4 MILLION IN THE HOLE. THERE ARE NO ASSETS, UH, AND THERE IS NO WAY TO EARN ANY REVENUE. ACTUALLY, I THOUGHT 2.2 ACRES WAS ACTUALLY KEPT IN. I ASKED THAT OF THE STAFF A FEW MONTHS AGO ABOUT THAT, CUZ WE WERE GONNA, PART OF THE DEAL WITH PRESTON HOLLOW WAS THAT WE HAD TO RESERVE A CERTAIN AMOUNT OF PROPERTY TO COVER SITE, SOME LIKE ADDITIONAL COST, ADDITIONAL LEGAL POTENTIAL. I SEEM TO REMEMBER GEORGE SAYING THAT WASN'T NECESSARY AND WE ENDED UP NOT HOLDING ONTO THAT. OH, IS THAT OKAY? DOES ANYONE KNOW THAT FOR SURE? IF THAT'S, THAT'S, I DO KNOW FOR SURE. SO I HAD AN ALIA MOMENT ON JUNE THE FIRST, BECAUSE I'VE BEEN TRYING TO FIGURE OUT C D C FINANCIALS, BUTLER LOANS, LAND DEALS, AND IT'S TAKEN FIVE AND A HALF MONTHS OR SO. AND THE LAST PIECE OF THE PIE THAT I, I WAS ABLE TO PUT IN PLACE JUNE THE FIRST, I KEPT HEARING THERE WAS LAND IN HERE, BUT CHRISTINA AND I WERE ABLE TO CONFIRM ON, ON JUNE THE FIRST ALL OF THE LAND WAS TRANSFERRED TO THE E D C. HOWEVER, UH, THE LAND IS STILL IN THE NAME OF C C BECAUSE THE DEEDS HAVE NOT BEEN FULLY TRANSACTED YET. GEORGE IS WORKING ON THOSE. HE TELLS ME THERE'S AN ADMINISTRATIVE ERROR, BUT HE'S WORKING ON [00:05:01] WHATEVER THAT IS. DOTTIE, I DON'T KNOW IF YOU KNOW WHAT THE ISSUE ISSUE MIGHT BE. I DON'T KNOW EXACTLY WHAT THE ISSUE IS, BUT IT'S A SCRIBNER'S ERROR, WHICH I BELIEVE THAT, UM, THERE'S A PROCESS TO BE ABLE TO CORRECT THAT DEED BEFORE IT GETS FILED AND THAT'S WHAT HE'S DOING. OKAY. BUT HE HASN'T INFORMED ME EXACTLY WHAT IT IS. SO THERE ARE, UM, HERE, I'LL, I'LL PASS THIS OUT TO Y'ALL. ONE FOR THE CITY SECRETARY. CONTAINED IN THIS DOCUMENT? YEAH. ON OR ABOUT PAGE. UM, 1, 2, 3, 4. PAGE FOUR. THERE ARE SOME PARCELS OF LAND LISTED. IT LOOKS LIKE THIS IN YOUR DOCUMENT. CAN YOU GIMME THE PAGE NUMBER? FOUR? FOUR. FOUR. THOSE ARE THE PARCELS OF THE PERFECT GAME. TWO OF THOSE PARCELS ARE ACTUALLY THE BUTLER PROPERTIES. SO INCLUDED IN THIS 9.4 MILLION DEFICIT IN YOUR FINANCIALS, 6.4 MILLION OF THAT IS RELATED TO THE BUTLER LOAN. SO BEFORE WE GO ON AND, AND MAKE SOME PUBLIC STATEMENTS ABOUT THE BUT BUTLER LOAN, WE DO HAVE AN EXECUTIVE SESSION ON THAT ITEM, RIGHT? YEAH. AND SO IF WE MAKE A STATEMENT SAYING ANYTHING ABOUT THE BUTLER LOAN AND WHAT MAY BE DUE TO THEM, THAT MAY NOT BE ACCURATE. I'M JUST SAYING THAT INSIDE OF THESE FINANCIAL STATEMENTS, THERE IS A LOAN REPRESEN THAT, UH, IS SU IS FOR THAT BUTLER LAND. AND ON THE BOOKS OF THE CITY IT'S 6.4 MILLION AS PART OF THIS 9.4 MILLION FIGURE, I THINK WE NEED TO GO TO EXECUTIVES CHAIR. SO IF YOU TURN TO THE NEXT PAGE, WE WOULD YEAH, CAN WE HOLD UP ON THIS AND RIGHT. IF YOU TURN TO THE LET'S NO, NO, NO, WE'RE GONNA, WE'RE GOING TO RIGHT E EITHER, EITHER WE'RE GONNA SKIP THE LOAN ENTIRELY OR WE'RE GONNA GO TO EXECUTIVE SESSION, THEN DISCUSS THE LOAN THERE. SO I'D LIKE TO GO TO THE SECOND PAGE OF YOUR FINANCIALS, WHICH IS WHICH YOUR INCOME STATEMENT. AND YOU WILL NOTICE THAT FOR THE CURRENT YEAR, UM, THERE'S BEEN, THERE WAS NOTHING BUDGETED FOR THE CURRENT YEAR. MM-HMM. . AND THEN THE YEAR TO DATE ACTIVITY, UH, IS COMPRISED OF, UM, PROFESSIONAL SERVICES, A MILLION DOLLARS THAT IS LEGAL FEES TO DATE, UH, INTEREST, UM, 1.5 MILLION. UH, WHEN THE 21 MILLION OF LAND OR $23 MILLION OF LAND WAS TRANSFERRED TO THE EDC, THERE WAS A 4 MILLION LOSS RECOGNIZED ON THAT 400,000, 400,475,000. OKAY. YOU SAID 4 MILLION SCARED ME. OH, I'M SORRY. . AND, UH, THERE'S ANOTHER LINE FOR ATTORNEY SERVICES, BUT BASICALLY, UH, MOST OF THE PROFESSIONAL SERVICES LINE IS ALSO ATTORNEY SERVICES. SO ONE OF THE THINGS THAT I WANTED TO TALK TO THE BOARD TONIGHT ABOUT WAS BUDGET. MM-HMM. . SO WE'RE IN THE BUDGET PROCESS FOR THE CITY, AND AS PART OF THAT, WE NEED TO BUDGET FOR WHAT YOU THINK YOUR REVENUE AND EXPENSES WILL BE FOR NEXT YEAR. WHAT I KNOW ABOUT THE C D C IS THERE, THERE WILL BE NO REVENUE IN TERMS OF EXPENSES. IF I WAS TO MAKE A RECOMMENDATION TO YOU, UM, THANKS TO DOTTIE, SHE WAS ABLE TO COMMUNICATE WITH, UH, GEORGE HYDE. AND GEORGE SAID HE BELIEVES THAT FOR THE CURRENT LITIGATION, THAT HIS FEES FOR NEXT YEAR WILL BE $695,000. AND THEN IF YOU HAD AN ADDITIONAL LAWSUIT, UM, THAT MIGHT BE ANOTHER FOUR, $500,000. MY RECOMMENDATION IS THAT BASED ON WHAT I KNOW NOW, UH, YOU MIGHT WANNA BUDGET 1.2 MILLION FOR LEGAL FEES FOR FISCAL YEAR 24, AND THEN SOMEBODY HAS TO PAY THOSE LEGAL [00:10:01] FEES. CURRENTLY THERE'S A FUNDING AND REFUNDING AGREEMENT THAT SAYS THAT THE CITY WILL PAY THE DEBTS OF THE CDC IF THE CDC CAN'T. SO WE'VE CONTINUED TO PAY GEORGIA'S LEGAL BILLS, BUT EVERY TIME I PAY THAT BILL, I JU I KNOW THAT IT'S ANOTHER DEBT AGAINST THE CITY THAT THE COUNCIL HAS PREVIOUSLY BEEN BLINDED TO. TONIGHT, I'VE INCLUDED A NEW REPORT IN THE FINANCIAL REPORT SO THAT HERE FORWARD, THE CITY WILL RECEIVE EDC, UH, CDC FINANCIALS EVERY SINGLE MONTH SO THAT THEY CAN SEE WHAT THE DEBT IS. OKAY. AS IT GROWS FROM 9.4 MILLION MORE. OKAY. SO JUST PERSONALLY, GIVEN THAT WE'RE NOT UNDERTAKING NEW PROJECTS, GIVEN THAT WE NO LONGER OWN THE LAND, AND GIVEN THAT WE'VE BEEN INVOLVED IN LAWSUITS WITH BASICALLY EVERY PARTY, I'M NOT ANTICIPATING ANYTHING OTHER THAN APPEALS GOING FORWARD. AND I BELIEVE THAT'S WHAT GEORGE IS, IS REFLECTING. AND SO I'M NOT THINKING THAT WE NEED TO ADD ANOTHER HALF A MILLION ON TOP OF THAT ESTIMATE. OKAY. I'M THINKING THAT IN THE BALLPARK OF HIS ESTIMATE, IT'S PROBABLY WHERE WE'LL END UP. OKAY. SO I, I DON'T THINK THAT IT'S, I THINK THAT IT'S UNLIKELY THAT WE'RE GONNA GO BEYOND THAT. OBVIOUSLY ANYTHING CAN HAPPEN, BUT, OKAY. IT WOULD BE NICE IF THERE WAS A MOTION FROM THE BOARD TONIGHT TO BUDGET, UH, $695,000 IN LEGAL FEES FOR FY 24. SO GEORGE'S ESTIMATE WAS 1 95 FOR THE, UM, PRESTON HOLLOW, OR I'M SORRY, THREE 50 FOR THE PRESTON HOLLOW AND 1 95 FOR THE LONGHORN TITLE. AND THEN THE OTHER ONE 50 GOES TO RIVER CREEK. SO IN GEORGE'S LETTER, WHICH DO YOU HAVE A COPY OF IT? YES. OKAY. SO WHAT GEORGE HAD SAID WAS THAT FOR, UM, THE COTTONWOOD DEVELOPMENT CORPORATION LOAN, UH, LAWSUIT ON PAGE ONE, HE PROJECTED 150,000. OKAY. I'M SORRY. AND THEN ON PAGE TWO HE SAYS IF THERE'S A NEGATIVE OUTCOME, THEN THERE WOULD BE 195,000 FOR ATTORNEY'S FEES FOR OPPOSING COUNSEL. AND THEN LONGHORN TITLE, HE'S, UH, SUGGESTING 350,000 FOR THAT, UH, APPEAL. SO THEN THE ONE 50, THE 1 95, THE THREE 50 IS 695,000. SO THE 1 95, I DON'T KNOW IF HE'S WRITTEN THIS CORRECTLY, BUT THAT WAS THE PARCEL WHEN THEY TRANSFERRED THAT TO THE, UH, HU ECONOMIC DEVELOPMENT CORPORATION, THEY ALLOWED THE PRESTON HOLLOW LIEN FOR ATTORNEY'S FEES. SO I DON'T KNOW IF THAT 1 95 IS IN ADDITION BECAUSE THERE'S ALREADY A LIEN THAT COVERS THAT. CORRECT. OKAY. SO IF WE TOOK OUT THE 1 95, THAT WOULD BE 500,000 BUDGET, THE LIEN FEES. SO THE LIE REMAINED ON THE LAND, BUT WE STILL TRANSFERRED IT CORRECT. RIGHT. TO WE DIDN'T HOLD ONTO IT. RIGHT. OKAY. THEY INSISTED ON HAVING SOMETHING TO BE ABLE TO RECOVER THEIR ATTORNEY'S FEES AND THAT'S THAT LIEN. OKAY. THAT'S WHAT THAT IS. OKAY, GOTCHA. AND I THOUGHT THEY PROJECTED INTO, IF THEY PREVAILED UP TO WINNING OKAY. SO THAT THEY COULD ATTACH THEIR ATTORNEY LIEN YEAH. TO THE PROPERTY THAT, THAT'S, THAT SOUNDS LIKE WHAT I RECALL TOO. YEAH. SO I THINK WHAT GEORGE SAID ABOUT THE 1 95, WE NEED TO EITHER VERIFY THAT OR JUST BUDGET THE ONE, UM, 50 AND THEN COME BACK AND AMEND THE BUDGET. IF, UM, SO THEN AT THIS POINT, IF YOU WANTED TO GO AHEAD AND BUDGET 500,000 FOR LEGAL FEES FOR NEXT YEAR, AND THEN AS THE YEAR PROGRESSES, IF WE NEEDED MORE IN LEGAL FEES, WE COULD COME BACK AND DO A BUDGET AMENDMENT. I THINK THE ESTIMATE OF 500 IS ACCURATE. OKAY. AND THAT WAS ONE 50 PRESTON HOLLOW THREE 50 LONGHORN TITLE? CORRECT. THOSE TWO, YEAH. OKAY. MM-HMM. . SO IF YOU COULD WALK ME THROUGH THE BALANCE SHEET HERE. SO THE CLAIM ON CASH IS THAT, COULD YOU DEFINE THAT FOR ME? THAT'S THE LAND OR THAT'S ALL THE LEGAL FEES THAT HAVEN'T BEEN PAID TO ATTORNEYS. SO IT'S NOT NECESSARILY THE LAND, IT'S NOT NECESSARILY LEGAL FEES. IT IS A COMBINATION OF ITEMS THAT WERE PAID RELATED TO, UM, A PERFECT GAME LAND AND POSSIBLY SOME KIND OF A SPORTS COMPLEX. SO WHEN I LOOK IN THE RECORDS, AND IF YOU WANT, I CAN GIVE YOU A DETAILED LIST, BUT I THINK THERE WAS SOME SURVEYS, THERE WERE SOME GEO [00:15:01] STUDIES DONE, THERE WERE ITEMS THAT WERE INCURRED AND IT LOOKS LIKE THERE WAS, UH, PROJECTIONS THAT THERE WOULD EITHER BE BUILDING ON THE LAND OR SALES OF THE LAND. I'M NOT SURE WHICH. OKAY. SO JUST A COMBINATION OF EVERYTHING. CORRECT. THAT HAD BEEN CORRECT. COMBINATION OF EVERYTHING AND THEN THE CITY PAID THAT. AND UNDER THE ADMINISTRATIVE SERVICE AGREEMENT, IF ANY RECOVERY COMES TO COTTONWOOD, THAT MONEY COMES BACK TO THE CITY IN A REIMBURSEMENT. CORRECT. CITY OR THE CDC. SO IT COMES TO THE CDC D BUT CURRENTLY YOU SEE THE NEGATIVE CASH SO THAT THE CITY HAS FRONTED THAT CASH. OKAY. SO IT'S, AND SO IT WOULD COME TO THE CDC BUT EVENTUALLY END UP IN THE BANK ACCOUNT FOR THAT'S WHAT I WAS ASKING. WOULD IT COME TO THE CDC AND THEN IT WOULD GET TRANSFERRED TO THE CITY OR CORRECT. GO TO THE CITY AND THEN THIS ITEM WOULD BE REDUCED. CORRECT. EITHER WAY IT'S, I GUESS IT'S AFFECTS THE SAME. OKAY. CORRECT. YEAH. I THINK HONESTLY, IF WE WEREN'T IN THE MIDDLE OF THESE CASES TRYING TO, TRYING TO WIN THE APPEALS AND TRYING TO, YOU KNOW, FINISH OFF THE JUDGMENTS AND, AND ALL THAT, IF WE WEREN'T IN THE MIDDLE OF THAT, WE PROBABLY WOULD FOLD COTTONWOOD AND EVERYTHING WOULD JUST GO TO THE CITY. BUT SINCE WE'RE IN THE MIDDLE OF LITIGATION MM-HMM. , WE FINISH IT OUT AND I MADE THAT COMMENT TO, UH, GEORGE HYDE AND, UH, THAT IN MY MIND, COTTONWOOD IS INSOLVENT AND THEREFORE BANKRUPT AND THEREFORE IT SHOULD JUST BE DISSOLVED. AND GEORGE SAID, BUT THERE'S ONGOING LITIGATION. YEAH. AND SO YOU CANNOT, UH, DISSOLVE A CORPORATION THAT CURRENTLY HAS LITIGATION IN, IN IT ACTIVE LITIGATION. WELL, YOU COULD GO INTO BANKRUPTCY, BUT THEN THAT LITIGATION WOULD GO INTO THE BANKRUPTCY. SO IF, SO YOU'D HAVE TO, THAT WOULD BE ANOTHER WAY TO DISSOLVE THE CORPORATION AND GET RID OF THE DEBT. AND THAT'S WHAT PRESTON HOLLOW WAS ALL CONCERNED ABOUT, IS THAT THE CITY WOULD, UM, ESSENTIALLY TAKE ALL THE ASSETS OUT AND THEN GO FILE BANKRUPTCY AND THEY'D BE OUT WITH THEIR, THEIR ATTORNEY'S FEES IN CASE THEY WON. OKAY. ACCOUNTS PAYABLE PENDING, THAT'S, UH, LEGAL BILLS THAT HAVE NOT BEEN PAID YET BY THE CITY OR THE, THE CDC? YES. OKAY. MM-HMM. ACCRUED ACCOUNTS PAYABLE, THAT'S STUFF THAT THE CITY HAS PAID ON OUR BEHALF OR NOT. UM, CHRISTINE, I DON'T REMEMBER THE ACCRUED ACCOUNTS PAYABLE, THAT'S THE, UH, INTEREST THAT HAS NOT BEEN PAID ON AN OUTSTANDING LOAN. OKAY. INTEREST. OKAY. OH, OKAY. YEAH, THAT INTEREST ON A 4.5 MILLION LOAN. OKAY. BUT THAT'S, THAT'S AN ITEM THAT'S THAT WE'LL TALK ABOUT LATER. YEAH. THAT'S LISTED, BUT THERE'S, AND THEN PRINCIPLE O IS THE, THE ONE THAT CORRECT. OKAY. MM-HMM. . VERY GOOD. THAT HELPS. THANK YOU. OKAY. UM, ANY OTHER QUESTIONS OR DOES ANYBODY WANNA MAKE A MOTION OR, UM, SO I'LL GO AHEAD AND MAKE THAT MOTION TO, UM, SET THE BUDGET NEXT YEAR FOR $500,000 TO COVER THE ANTICIPATED LEGAL FEES. UH, THAT WOULD BE THE RESPONSIBILITY OF COTTONWOOD DEVELOPMENT CORPORATION. SECOND THAT. OKAY. AND, OKAY. UM, I'LL CALL THE VOTE, UH, VICE CHAIR GORDON. AYE, UH, CHAIRMAN THORNTON. AYE. UM, SECRETARY, TREASURER CLERK AYE. MOTION PASSES. THREE ZERO. OKAY. SO AT THIS POINT WE WILL MOVE INTO EXECUTIVE SESSION. ITEM 5.1. RECEIVE LEGAL ADVICE PURSUANT TO TEXAS GOVERNMENT CODE SECTION 5 51 0 7 1 CONSULTATION WITH ATTORNEY RELATED TO THE BUTLER LOAN AGREEMENT WITH COTTONWOOD DEVELOPMENT CORPORATION. SO WE WILL. * This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting.