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46. Regular Meeting November 8, 2004 Page 14 2.361(d) needs clarification. Mr. Mihalkanin moved to amend Section (d) (2) to read... may make recommendations to the City Council for permanent display art independently of any such applications, and Mr. Guerrero seconded the motion, which passed unanimously. Mr. Mihalkanin inquired as to whether the Arts Commission would still be allowed to provide funding to groups for non-permanent art. Mr. Mark Taylor stated yes, the Arts Commission will be allowed to provide funding for art. The Council then voted unanimously for approval of the Ordinance on second reading. I Mayor Narvaiz introduced for consideration Item 31, removed from the consent agenda, removal from table and adoption of a Resolution, the caption which was read as follows: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN MARCOS, TEXAS, APPROVING A PAYMENT IN LIEU OF TAXES AGREEMENT BETWEEN THE CITY AND EOP SAN MARCOS EXCHANGE, LLC; AUTHORIZING THE CITY MANAGER TO EXECUTE THIS AGREEMENT ON BEHALF OF THE CITY; AND DECLARING AN EFFECTIVE DATE. Mr. Mihalkanin moved to remove the Resolution from the table, and Mr. Guerrero seconded the motion, which passed unanimously. Mr. Guerrero moved for adoption of the Resolution, and Mr. Diaz seconded the motion. Mr. O'Leary stated American Housing Foundation is a charitable institution and State Law provides for a property tax exemption for their property. He stated American Housing Foundation is also seeking bond financing for this acquisition that is tax-exempt under federal income tax laws. He stated the City would approve the tax-exempt financing and American Housing would provide: 1) an annual payment would be made to the City equivalent to the City property taxes owed on the complex for 2004, 2) an annual payment would be made to Hays County equivalent to the Special Road District property tax for 2004, 3) an annual payment would be made to SMCISD equivalent to the SMCISD interest or sinking tax levy for 2004, 4) a $100,000.00 payment would be made to the San Marcos Educational Foundation upon closing,S) all net cash flow after debt service, required reserves and PILOT payments would be used by the LLC for the education of Hays County students, 6) the City could request the LLC to sell the property after 10 years, with the net proceeds of the sale to be used for the education of Hays County students, 7) an annual audit would be prepared to verify compliance with payment obligations, 8) the LLC would be governed by a 5-member board of managers, four of whom would be appointed by the City Council. Mr. O'Leary also stated American Housing Foundation has advised the Staff that, in the absence of City approval for the tax-exempt financing, American Housing Foundation is prepared to proceed with taxable financing for the apartments and the removal from the tax rolls without providing the PILOT payments to any local taxing entities. The Council then voted unanimously for adoption of the Resolution. I I