Board of Directors Meeting - Downtown Houston Books/briefin… · 700 Westgreen Blvd, Katy, TX 77450 1336 Brittmoore Rd, Ste 2408, Houston, TX 77043 1104Rayord Blvd, Spring, TX 77386

Board of Directors Meeting June 20, 2019

Houston Downtown Management District Board of Directors Meeting June 20, 2019 TABLE OF CONTENTS TAB/PAGE Minutes of the May 9, 2019 meeting of the board of directors ........................................................... 1-1 Items pertaining to finance and administrative matters • Interim financial statements ending May 2019 ............................................................................... 2-1 • Check registers for May 2019 ............................................................................................................. 2-8 • Audited Financial Statements for year ending December 31, 2018 ........................................... 2-11 Committee Spotlight

Economic Development - Quarterly Economic Update ............................................................... 3-1 Consent Agenda ......................................................................................................................................... 4-1 • Authorize execution of extension of agreement and expenditure for standby

emergency response contractor ........................................................................................................ 4-2 Program Authorizations • Authorize execution of agreements and expenditures for cleaning of METRO

transit stops ........................................................................................................................................... 5-1 • Authorize termination of 1119 Milam lease agreement and related expenditure .................... 5-2 • Authorize execution of agreement and expenditure for leased emergency back-up

power for Operations Center during 2019 storm season .............................................................. 5-3 • Authorize amendment of Downtown Living Initiative agreement for Block 98 ...................... 5-4

Brief program updates • Marketing & Communications .......................................................................................................... 6-1 • Operations ............................................................................................................................................ 6-4 • Economic Development Program ..................................................................................................... 6-8 • Planning, Design & Capital Projects .............................................................................................. 6-10 • Greenlink ............................................................................................................................................ 6-13

#5939548

MINUTES OF REGULAR MEETING OF

HOUSTON DOWNTOWN MANAGEMENT DISTRICT

May 9, 2019

THE STATE OF TEXAS § § COUNTY OF HARRIS §

The Board of Directors of the Houston Downtown Management District (the “District”) met in regular session, open to the public, on May 9, 2019, at 12:00 p.m., at 2 Houston Center, 909 Fannin Street, Suite 1650, Houston, Texas 77010 inside the boundaries of the District, and the roll was called of the duly appointed members of the Board, to-wit:

BOARD MEMBERS

Leslie G. Ashby Robbi JonesGenora Boykins Roland KennedyGregory A. Brothers Nick Massad, IIIJeremy Brown Sherea A. McKenzieThomas Cheng Kenny MeyerWendy Cloonan John MoozMatt Damborsky Thomas NaulsTerry Demchak Edna RamosDiane Englet Scott RepassIrma Galvan Stewart O. RobinsonMarian Harper Frank StaatsDonald J Henderson Ann TaylorGilbert A. Herrera Richard TorresMilton Howe Valerie M. WilliamsAngus Hughes Ted Zwieg

all of the above were present, with the exception of Gregory Brothers, Jeremy Brown, Terry Demchak, Diane Englet, Irma Galvan, Marian Harper, Gilbert Herrera, Milton Howe, Robbi Jones, Thomas Nauls, Frank Staats, Ann Taylor, and Valerie Williams.

Also present were Bob Eury, Angie Bertinot, Laurette Canizares, Nicole Capelo, Scott Finke, Keith Gould, Lonnie Hoogeboom, James Kennedy, Ryan Leach, Joe Maxwell, Aide Meza, Stefanie Pascacio, and Jackie Traywick of the District; Robert Kramp, Will Matthews and Robert Pieroni, of Central Houston, Inc.; Algenita Davis, consultant to the District; Broderick Butler; and Sandy Rivera-Ramirez and Barron Wallace of Bracewell LLP.

WELCOME

Chair Ashby presided over the meeting and welcomed all directors, consultants and other meeting attendees.

APPROVAL OF MINUTES

The Board considered approving the minutes of May 9, 2019. Upon a motion duly made and seconded, the Board members present voted unanimously to approve the minutes of May 9, 2019, as submitted.

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ITEMS PERTAINING TO FINANCE AND ADMINISTRATIVE MATTERS

Approval of Financial Statements and Ratification of Expenditures

Ms. Traywick presented the interim financial statements and check registers for the period ending April 30, 2019.

Following a brief discussion, upon a motion duly made and seconded, the Board members present voted unanimously to approve the interim financial statements and check registers for the period ending April 30, 2019.

First Quarter DBE report

Mr. Eury presented the First Quarter Disadvantaged Business Report for the period ending March 31, 2019. The Board took no action on the matter.

Authorize Amendment of Signatories

Mr. Eury informed the board of the need to provide an updated roster of eligible check signers to Chase bank. He reminded the board that the District’s Policies and Procedures require 2 signers per transaction and that one signer must be an officer and the other signer may be another officer or Executive Committee member.

Following a brief discussion, upon a motion duly made and seconded, the Board members present voted unanimously to approve instructions to Accounting Personnel to complete the filing of new signature cards with Chase Bank.

COMMITTEE SPOTLIGHT

Office Committee

Mr. Eury called on Robert Pieroni and Stewart Robinson, Chair of the Office Committee, to provide updates on the 2019 Downtown Office Story.

Related to the downtown workforce, Katrina Bayer, Transportation Program Leader for Central Houston provided the Board with brief highlights of the recently completed 2019 Downtown Commute Survey.

PROGRAM AUTHORIZATIONS

Planning, Design & Capital Projects

Mr. Hoogeboom requested Board approval and authorization for expenditures related to the above. Following discussion, upon a motion duly made and seconded, the Board voted unanimously to (i) authorize execution of interlocal agreement and related revenues with the Downtown Redevelopment Authority for capital replacement and 3-years of maintenance for Allen Parkway in an amount not to exceed $750,000 and (ii) authorize execution of amended agreements and related expenditures with current vendors who perform landscape, irrigation, miscellaneous paving, and electrical maintenance within Downtown in an amount not to exceed $750,000 for a 3-year period covering 2019-2021.

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Operations

Mr. DeBord requested Board approval and authorization for expenditures related to the above. Following discussion, upon a motion duly made and seconded, the Board voted unanimously to (i) authorize expenditure to the City of Houston for enhanced street lighting electricity expenses for 2018 in an amount not to exceed $172,000 and (ii) authorize execution of an agreements and related expenditures for the design, procurement and installation of the Operations Center Emergency Generator in an amount not to exceed $300,000.

BRIEF PROGRAM UPDATES

Marketing and Communications Report

Ms. Bertinot presented the marketing and communications report for the month.

Operations

Mr. DeBord reported on operations for the month.

Economic Development Program

Mr. Pieroni reported on economic development matters.

Planning, Design and Capital Projects

Mr. Hoogeboom reported on planning, design and capital projects.

Greenlink Report

Ms. Bayer reported on Greenlink operations for the prior month.

DIRECTORS’ QUESTIONS ON OTHER INITIATIVES There were no questions. PUBLIC COMMENT

There were no public comments.

OTHER BUSINESS

Chair Ashby stated that the next meeting is scheduled for June 20, 2019. There being no further business to come before the Board, the meeting was adjourned.

Ted Zwieg, Secretary

www.tnccpa.com 700 Westgreen Blvd, Katy, TX 77450

1336 Brittmoore Rd, Ste 2408, Houston, TX 77043 1104Rayord Blvd, Spring, TX 77386

9600 Bellaire Blvd #207, Houston, TX 77036

To Management Houston Downtown Management District Management is responsible for the accompanying financial statements of the Houston Downtown Management District (the District), which comprise the governmental fund balance sheets and statements of net position as of May 31, 2019 and 2018, and the related statements of activities for the months then ended, in accordance with accounting principles generally accepted in the United States of America. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the financial statements nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any form of assurance on these financial statements. Management has elected to omit substantially all the disclosures required by accounting principles generally accepted in the United States of America and the required supplementary information that the Government Accounting Standards Board (GASB) requires to be presented to supplement the basic financial statements. If the omitted disclosures, and GASB required supplementary information were included in the financial statements, they might influence the user’s conclusions about the District’s financial position, results of operations, and cash flows. Accordingly, the financial statements are not designed for those who are not informed about such matters. The Variance Analysis on page 7 is presented to supplement the basic financial statements. Such information is presented for purposes of additional analysis and, although not a required part of the basic financial statements. The Variance Analysis is the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The supplementary information was subject to our compilation engagement. We have not audited or reviewed the supplementary information and do not express an opinion, a conclusion, nor provide any assurance on such information.

Houston, Texas June 17, 2019

2-1

Houston Downtown Management District

Governmental Fund Balance Sheets and

Statement of Net Position

May 31, 2019 and May 31, 2018

HDMD Operating HDMD Capital GreenLink Total HDMD Operating HDMD Capital GreenLink Total

Year to Date Year to Date Year to Date (Memo Only) Year to Date Year to Date Year to Date (Memo Only)

Assets

Cash 15,247,031$ 3,809,028$ 1,553,086$ 20,609,145$ 15,647,677$ 3,718,773$ 1,385,401$ 20,751,852$

Assessments Due - - - 2,388 2,062 4,449

Accounts Receivable 1,109,926 - - 1,109,926 437,605 3,015 243,600 684,220

Prepaid Expense 481,985 - - 481,985 115,850 - - 115,850

Inventory - - 80,448 80,448 - - 101,033 101,033

Property & Equipment, Net 782,079 91,012 1,249,702 2,122,793 69,936 124,121 1,499,641 1,693,698

Intercompany Rec/Pay (908) 908 - - (36,299) 36,299 - -

Total Assets 17,620,113$ 3,900,949$ 2,883,236$ 24,404,298$ 16,237,157$ 3,884,270$ 3,229,675$ 23,351,102$

Liabilities

Accounts Payable & Accrued Expenses 1,309,744$ 188,022$ 133,457$ 1,631,223$ 1,223,641$ 187,926$ 137,911$ 1,549,478$

Deferred Revenue & Reserve for Refunds 67,785 8,807 600,000 676,592 47,329 6,150 225,000 278,480

Total Liabilities & Deferred Revenue 1,377,529 196,829 733,457 2,307,815 1,270,970 194,077 362,911 1,827,958

Fund Balances

Unreserved, Undesignated 15,442,583 15,442,583 14,166,186 14,166,186

Unreserved, Designated for Catastrophy 800,000 800,000 800,000 800,000

Reserved for Capital Projects 3,704,120 2,149,779 5,853,899 3,690,194 2,866,764 6,556,958

16,242,583 3,704,120 2,149,779 22,096,482 14,966,186 3,690,194 2,866,764 21,523,144

Total Liabilities, Deferred Revenue &

Fund Balances 17,620,113$ 3,900,949$ 2,883,236$ 24,404,298$ 16,237,157$ 3,884,270$ 3,229,675$ 23,351,102$

2019 2018

6/5/2019 12:12 PM See accountant's report. Page 1 of 6

2-2


Statement of Activities

Five Months Ended May 31, 2019Operating Capital Total Fav (Unfav)

YTD Actual YTD Actual YTD Actual YTD Budget Variance

Revenues

Assessment Revenue (27,786)$ (5,115)$ (32,900)$ -$ (32,900)$

Operations Revenue 194,825 - 194,825 207,333 (12,508)

Project Revenue 26,395 - 26,395 47,500 (21,105)

Salary Reimbursements 27,232 - 27,232 - 27,232

Interest Income 148,058 27,138 175,196 141,667 33,529

Total Revenues 368,725$ 22,023$ 390,748$ 396,500$ (5,752)$

Expenses

Downtown Feels Safe & Comfortable at All Times

Collaboration to Maintain Low Crime Rate 820,402$ -$ 820,402$ 1,124,625$ 304,223$

Reduced Presence of Homeless & Street Persons 157,017 - 157,017 474,167 317,150

Downtown Sidewalks are Comfortably Lighted 43,783 - 43,783 56,458 12,675

Downtown Clean & Well-Kept Appearance 1,324,617 - 1,324,617 1,429,875 105,258

Remove Signs of Disorder in Downtown 15,796 - 15,796 12,500 (3,296)

Prepare for Emergencies 36,997 - 36,997 45,833 8,836

2,398,613 - 2,398,613 3,143,458 744,845

Public Realm is Charming, Inviting, Beautiful &

Celebrates the Life of the City

Key Pedestrian Streets are Inviting 156,122 - 156,122 178,958 22,836

Public Spaces Managed, Programmed, & Delightful 467,998 - 467,998 436,625 (31,373)

Place of Civic Celebration 133,499 - 133,499 252,292 118,792

757,619 - 757,619 867,875 110,256

Accessible to Region & Easy to Get Around

Effective Transit Access More Places, More Hours 4,618 - 4,618 4,583 (34)

Convenient Circulation Without Personal Vehicle 254,938 - 254,938 280,625 25,687

Easy To Find Way Around 15,758 - 15,758 51,250 35,492

Connect Neighbors & Districts Inside/Outside Downtown 14,109 - 14,109 13,958 (151)

Convenient, Understandable & Managed Parking 6,058 - 6,058 6,250 192

295,481 - 295,481 356,667 61,185

Vibrant, Sustainable Mixed-Use Place

Best Place to Work in Region 118,063 - 118,063 118,063 -

Exciting Neighborhoods to Live In 45,877 - 45,877 48,958 3,081

Competitive Shopping Place 19,826 - 19,826 436,667 416,840

Remarkable Destination for Visitors 21,913 - 21,913 27,917 6,004

205,679 - 205,679 631,604 425,925

Downtown's Vision & Offering Understood By All

Market to Region 378,655 - 378,655 457,033 78,379

Promote Downtown's Ease of Use 10,219 - 10,219 10,417 198

Vision/Development Framework Understood By All 409,955 - 409,955 507,917 97,961

Tools to Assist Continued Redevelopment 35,123 - 35,123 35,000 (123)

Develop & Maintain Information to Support Downtown 12,093 - 12,093 15,417 3,324

846,045 - 846,045 1,025,783 179,738

District Governance & Service Known for Excellence

Engage Stakeholders in Decision Making 253,033 - 253,033 274,917 21,884

Communications to Owners, Tenants & Others 7,106 - 7,106 11,875 4,769

Preservation of Districts' Capital Assets 34,175 - 34,175 33,500 (675)

294,313 - 294,313 320,292 25,978

Capital Improvement & Expenditures

Downtown Feels Safe & Comfortable - 252,459 252,459 998,333 745,875

Public Realm is Charming, Inviting, & Beautiful - - - 75,000 75,000

Accessible to Region & Easy to Get Around - 315,060 315,060 882,000 566,940

Vibrant, Sustainable Mixed-Use Place - - - 29,167 29,167

Downtown's Vision & Offering Understood By All - - - - -

Capital Replacement Expenditure - 141,228 141,228 154,000 12,772

- 708,747 708,747 2,138,500 1,429,753

Total Expenses 4,797,752$ 708,747$ 5,506,499$ 8,484,179$ 2,977,680$

Depreciation Expense 19,961 13,795 33,756 49,762 16,006

Excess of Revenue Over Expenses GAAP Basis (4,448,988)$ (700,519)$ (5,149,506)$ (8,137,441)$ 2,987,935$


2-3



Five Months Ended May 31, 2019 and May 31, 20182019 2018

Operating Capital Total Total Fav (Unfav)

YTD Actual YTD Actual YTD Actual YTD Actual Variance

Revenues

Assessment Revenue (27,786)$ (5,115)$ (32,900)$ 19,102$ (52,002)$

Operations Revenue 194,825 - 194,825 203,642 (8,816)

Project Revenue 26,395 - 26,395 25,697 698

Salary Reimbursements 27,232 - 27,232 68,076 (40,844)

Interest Income 148,058 27,138 175,196 131,852 43,343

Total Revenues 368,725$ 22,023$ 390,748$ 448,370$ (57,621)$

Expenses

Downtown Feels Safe & Comfortable at All Times

Collaboration to Maintain Low Crime Rate 820,402$ -$ 820,402$ 697,162$ (123,240)$

Reduced Presence of Homeless & Street Persons 157,017 - 157,017 108,012 (49,005)

Downtown Sidewalks are Comfortably Lighted 43,783 - 43,783 73,751 29,968

Downtown Clean & Well-Kept Appearance 1,324,617 - 1,324,617 1,189,459 (135,159)

Remove Signs of Disorder in Downtown 15,796 - 15,796 11,822 (3,974)

Prepare for Emergencies 36,997 - 36,997 38,333 1,335

2,398,613 - 2,398,613 2,118,538 (280,075)

Public Realm is Charming, Inviting, Beautiful &

Celebrates the Life of the City

Key Pedestrian Streets are Inviting 156,122 - 156,122 168,549 12,426

Public Spaces Managed, Programmed, & Delightful 467,998 - 467,998 292,905 (175,093)

Place of Civic Celebration 133,499 - 133,499 213,120 79,621

757,619 - 757,619 674,573 (83,046)

Accessible to Region & Easy to Get Around

Effective Transit Access More Places, More Hours 4,618 - 4,618 4,524 (94)

Convenient Circulation Without Personal Vehicle 254,938 - 254,938 215,925 (39,013)

Easy To Find Way Around 15,758 - 15,758 71,939 56,181

Connect Neighbors & Districts Inside/Outside Downtown 14,109 - 14,109 19,520 5,411

Convenient, Understandable & Managed Parking 6,058 - 6,058 6,105 47

295,481 - 295,481 318,012 22,531

Vibrant, Sustainable Mixed-Use Place

Best Place to Work in Region 118,063 - 118,063 118,163 101

Exciting Neighborhoods to Live In 45,877 - 45,877 48,582 2,705

Competitive Shopping Place 19,826 - 19,826 19,393 (433)

Remarkable Destination for Visitors 21,913 - 21,913 16,473 (5,440)

205,679 - 205,679 202,612 (3,068)

Downtown's Vision & Offering Understood By All

Market to Region 378,655 - 378,655 223,029 (155,626)

Promote Downtown's Ease of Use 10,219 - 10,219 8,549 (1,670)

Vision/Development Framework Understood By All 409,955 - 409,955 461,894 51,938

Tools to Assist Continued Redevelopment 35,123 - 35,123 33,308 (1,815)

Develop & Maintain Information to Support Downtown 12,093 - 12,093 12,999 906

846,045 - 846,045 739,778 (106,267)

District Governance & Service Known for Excellence

Engage Stakeholders in Decision Making 253,033 - 253,033 244,103 (8,930)

Communications to Owners, Tenants & Others 7,106 - 7,106 7,389 283

Preservation of Districts' Capital Assets 34,175 - 34,175 31,599 (2,575)

294,313 - 294,313 283,091 (11,222)

Capital Improvement & Expenditures

Downtown Feels Safe & Comfortable - 252,459 252,459 9,156 (243,303)

Public Realm is Charming, Inviting, & Beautiful - - - 60,525 60,525

Accessible to Region & Easy to Get Around - 315,060 315,060 89,440 (225,620)

Vibrant, Sustainable Mixed-Use Place - - - - -

Downtown's Vision & Offering Understood By All - - - - -

Capital Replacement Expenditure - 141,228 141,228 47,477 (93,751)

- 708,747 708,747 206,598 (502,149)

Total Expenses 4,797,752$ 708,747$ 5,506,499$ 4,543,203$ (963,296)$

Depreciation Expense 19,961 13,795 33,756 21,725 (12,031)

Excess of Revenue Over Expenses GAAP Basis (4,448,988)$ (700,519)$ (5,149,506)$ (4,116,558)$ (1,032,948)$


2-4

Greenlink-Downtown Circulator Fund


Five Months Ended May 31, 2019

Operating Capital Total Fav (Unfav)

YTD Actual YTD Actual YTD Actual YTD Budget Variance

Revenues

HDMD Operations Sponsorship 225,000$ -$ 225,000$ 250,000$ (25,000)$

Houston First Operations Sponsorship 225,000 225,000 250,000 (25,000)

Corporate Sponsorship - - 200,000 (200,000)

TCEQ Grant Revenue - - - -

Interest Income 14,318 14,318 10,000 4,318

Total Revenues 464,318$ -$ 464,318$ 710,000$ (245,682)$

Expenses

Vehicle Operator Expense 591,630 591,630 645,000 53,370

Fuel Expense 40,656 40,656 43,750 3,094

Marketing Expense 1,380 1,380 5,000 3,620

Operating Administrative Expense 5,270 5,270 5,500 230

Miscellaneous Expense - - - -

638,935 - 638,935 699,250 60,315

Total Expenses 638,935$ -$ 638,935$ 699,250$ 60,315$

Depreciation Expense 104,141 104,141 104,140 (1)

Excess of Revenue Over Expenses GAAP Basis (278,759)$ -$ (278,759)$ (93,390)$ (185,369)$


2-5

Greenlink-Downtown Circulator Fund


Five Months Ended May 31, 2019 and May 31, 20182019 2018

Operating Capital Total Total Fav (Unfav)

YTD Actual YTD Actual YTD Actual YTD Actual Variance

Revenues

HDMD Operations Sponsorship 225,000$ 225,000$ 187,500$ 37,500$

Houston First Operations Sponsorship 225,000 225,000 187,500 37,500

Corporate Sponsorship - - - -

TCEQ Grant Revenue - - 205,706 (205,706)

Interest Income 14,318 14,318 10,319 3,999

Total Revenues 464,318$ -$ 464,318$ 591,025$ (126,707)$

Expenses

Vehicle Operator Expense 591,630 591,630 594,767 3,137

Fuel Expense 40,656 40,656 40,344 (312)

Marketing Expense 1,380 1,380 72,029 70,648

Operating Administrative Expense 5,270 5,270 - (5,270)

Miscellaneous Expense - - - -

638,935 - 638,935 707,139 68,204

Total Expenses 638,935$ -$ 638,935$ 707,139$ 68,204$

Depreciation Expense 104,141 104,141 104,141 -

Excess of Revenue Over Expenses GAAP Basis (278,759)$ -$ (278,759)$ (220,255)$ (58,503)$


2-6


Variance Analysis

Five Months Ended May 31, 2019

Operating Budget

1) Revenue-Assessment revenue ($33K) behind budget due to additional reserve for properties in litigation, operations

revenue ($12K) behind budget, Market Square Park kiosk rent ($10K) behind budget, salary reimbursements $16K ahead of

budget due to reimbursement from a vendor for overpayment on an invoice, $33K ahead of budget in interest income.

2) Goal 1a-Collaboration to Maintain Low Crime Rate-Ahead of budget $228K in Safety Guides, ahead $50K in Off-Duty

program, and ahead $22K in the PIT team due to delay in invoicing.

3) Goal 1b- Reduced Presence of Homeless & Street Persons-Ahead of budget $317K in homeless program support due to

delay in "surge" housing program.

4) Goal 1c-Downtown's Sidewalks Comfortably Lighted-Ahead of budget $12K in lighting maintenance.

5) Goal 1d-Downtown Clean & Well-kept Appearance-Ahead of budget $20K in paver repairs, $92K in landscaping and tree

maintenance, over budget ($14K) in Street Team personnel, over budget ($33K) in office operations due to move-in costs, and

ahead $37K in irrigation repairs.

6) Goal 2a-Key Pedestrian Streets are Inviting-Ahead $23K in floral accent planting.

7) Goal 2b-Key Public Spaces Programmed and Delightful-Ahead of budget in Main Street Square maintenance $17K, over

budget in Market Square Park maintenance of ($5K), and over budget in programming ($43K) due to timing of events.

8) Goal 2c-Place of Civic Celebration-Ahead $46K on banner/pole/pot maintenance, $43K in ArtBlocks, and $30K in

Holiday Décor installation/de-installation.

9) Goal 3b-Accessible to Entire Region-Ahead of budget $25K in Greenlink contributions due to timing of increased

sponsorship.

10) Goal 3c-Maintain Wayfinding System-Ahead of budget $35K in wayfinding maintenance.

11) Goal 4c-Competitive Shopping Place-Ahead of budget $417K in retail/attraction-program not yet developed.

12) Goal 5a-Market to Region-Ahead of budget $78K on media & advertising expenditures.

13) Goal 5c-Vision/Development Framework Understood by All-Ahead of budget $97K in planning expenditures.

14) Goal 6a-Engage Stakeholders in Decision Making-Ahead of budget $22K due to timing of legal and professional fees.

Capital Budget

15) Ahead of budget $521K in street lighting infill due to timing of project start and $225K-downtown signal timing project

on hold.

16) Ahead of budget $75K delay in new art purchase for Market Square Park.

17) Ahead of budget $632K due to delay in SE Sidewalks project, over budget ($110K) in parking lot edge projects due to

phase I budgeted in 2018, and $45K in bike rack projects.

18) Ahead of budget $29K in retail grants.

19) Ahead of budget $12K in capital replacements.

Greenlink Budget

20) Greenlink Vehicle Operator Expense-Over budget ($185K) corporate sponsor not yet secured.


2-7

6/18/19

AP Check Register (Current by Bank)Check Dates: 5/1/2019 to 5/31/2019

Vendor ID Payee Name

* V 1652

* V 0074

* V 8624

* V 9720

* P 1200

P 0094

P 0381

P 0530

P 0490

P 0027

P 1191

P 1225

P 1540

P 1665

P 3285

P 3630

P 3992

P 4011

P 3894

P 4441

P 9918

P 3395

P 5540

P 5700

P 5701

P 5982

P 6312

P 6450

P 6249

P 7400

P 7768

P 7763

P 3400

P 8034

P 8151

P 8355

P 0596

P 8543

P 8552

P 0009

P 8609

P 8767

P 8900

P 0350

P 0490

P 0592

P 9819

P 1540

P 2929

P 3298

P 3548

P 5703

P 6481

P 7060

P 740030136 05/10/19 PFEIFFER & SON, LTD $9,067.00

30134 05/10/19 MUSTANG CAT $446.25

30135 05/10/19 NEON ELECTRIC CORPORATION $2,393.00

30132 05/10/19 HAMILTON PLUMBING SERVICE $368.35

30133 05/10/19 MICHAEL LOESSIN $529.75

30130 05/10/19 FORT BEND BATTERY & GOLF CARTS $212.50

30131 05/10/19 GULF COAST PAVERS,INC. $24,532.00

30128 05/10/19 BRYAN K BENNETT $2,482.33

30129 05/10/19 CITY OF HOUSTON (WATER DEPT) $109.21

30126 05/10/19 ASSOCIATED LANDSCAPE SERVICES $895.00

30127 05/10/19 BETA TECHNOLOGY,INC. $554.09

30124 05/02/19 VERIZON WIRELESS $755.24

30125 05/10/19 ALONTI $115.20

30122 05/02/19 TOUCH & AGREE PROPERTY $3,061.80

30123 05/02/19 UNIVERSITY LAWNMOWER CENTER $397.55

30120 05/02/19 TEXAS OUTHOUSE, INC. $1,050.00

30121 05/02/19 THOMAS PRINTWORKS $799.37

30118 05/02/19 STRIKE MARKETING $31,199.95

30119 05/02/19 TENNANT SALES & SERVICE COMP. $308.93

30116 05/02/19 SEARCH HOMELESS SERVICES $11,966.05

30117 05/02/19 STERLING EXPRESS SERVICES, INC $96.00

30114 05/02/19 RAFFLE PARKING COMPANY,LLC $416.13

30115 05/02/19 RC SOLUTIONS, INC. $900.00

30112 05/02/19 POP SHOP AMERICA, LLC $1,000.00

30113 05/02/19 POTBELLY SANDWICH WORKS $70.84

30110 05/02/19 MOONSTAR CINEMA SERVICES $562.50

30111 05/02/19 PFEIFFER & SON, LTD $8,130.76

30108 05/02/19 MCCONNELL & JONES LLP $20,000.00

30109 05/02/19 MONTALBANO LUMBER $290.09

30106 05/02/19 LONNIE HOOGEBOOM $192.11

30107 05/02/19 MARC GERIN $150.00

30104 05/02/19 LINCOLN COLWELL $2,440.00

30105 05/02/19 LONE STAR FLAGS AND FLAGPOLES $11,200.00

30102 05/02/19 JOSEPH D. ROSS $400.00

30103 05/02/19 LEONARD LOCKETT, JR $160.00

30100 05/02/19 HOUSTONIA $5,500.00

30101 05/02/19 IT EQUIPMENT FINANCING,LLC $304.73

30098 05/02/19 HOUSTON DOWNTOWN MGMT DISTRICT $1,762,517.42

30099 05/02/19 HOUSTON PRESS $1,500.00

30096 05/02/19 GOW MEDIA, LLC $800.00

30097 05/02/19 HOME DEPOT CREDIT SERVICES $8,856.04


30095 05/02/19 COLOR SPECIALISTS LANDSCAPING $69,550.00

30092 05/02/19 CENTERPOINT ENERGY $25.75

30093 05/02/19 CENTRAL HOUSTON CIVIC IMPROVEM $23,612.50

30087

30090 05/02/19 ASSOCIATED LANDSCAPE SERVICES $17,438.67

30091 05/02/19 AT&T $1,819.43

05/02/19 AMBROSE COMMUNICATIONS,LLC $3,300.00

30089 05/02/19 ANGELA S. BERTINOT $1,300.00

05/02/19 ACME PARTY & TENT RENTAL $1,765.46

30088

30036 05/31/19 5/31/19 BRYANT SECURITY AND INVESTMENT ($360.00)

30061 05/01/19 CENTRAL HOUSTON, INC $218,429.68

30013 05/28/19 5/28/19 LUSH PUFF ($350.00)

30029 05/31/19 5/31/19 ALFONSO YANEZ ($640.00)

BANK ID: A - OPERATING ACCT-JPMORGAN

29999 05/28/19 5/28/19 CODE PARK INC ($800.00)


3:05:30 PM

Check No. Date Status Amount

2-8

P 3400

P 8312

P 3948

P 0009

P 8544

P 9045

P 3400

P 3711

P 0094

P 0353

P 0350

P 0490

P 9818

P 0511

P 3288

P 1270

P 1540

P 1544

P 4756

P 1691

P 2795

P 3285

P 3510

P 3550

P 3771

P 3806

P 4011

P 4419

P 4704

P 8896

P 5634

P 5710

P 7400

P 8552

P 8609

P 8591

P 8767

P 9140

P 2278

P 9818

P 1689

P 1550

P 1540

P 1735

P 1846

P 2502

P 0537

P 4510

P 4560

P 9888

P 6085

P 7400

P 7768

P 7712

P 8027

P 3400

P 8066

P 8307

P 2550

P 8355

P 0596

30196 05/24/19 STERLING EXPRESS SERVICES, INC $64.00

30197 05/24/19 STRIKE MARKETING $26,660.53

30194 05/24/19 S&R WATERPROOFING AND ROOFING $1,854.25

30195 05/24/19 SCOTT FINKE $201.81


30193 05/24/19 READYREFRESH $909.55

30190 05/24/19 POWER PEST CORP $7,820.00

30191 05/24/19 RAE SECURITY SOUTHWEST, LLC $235.00

30188 05/24/19 PFEIFFER & SON, LTD $17,003.38

30189 05/24/19 POP SHOP AMERICA, LLC $400.00

30186 05/24/19 MAURICE E. DUHON JR. $150.00

30187 05/24/19 MENDEL CREATIVE SOLUTIONS $5,077.50

30184 05/24/19 J. TYLER SERVICES, INC. $1,990.27

30185 05/24/19 JERDON ENTERPRISE, L.P. $5,530.00

30182 05/24/19 FALLON SAVOIE $150.00

30183 05/24/19 INDUSTRIAL FIRE EQUIPMENT & $931.51

30180 05/24/19 CORE DESIGN STUDIO $11,000.00

30181 05/24/19 CULTURE PILOT $1,600.00

30178 05/24/19 CITY OF HOUSTON $2,915.32


30176 05/24/19 BERI BROWN $150.00

30177 05/24/19 CB CAFES MAIN, LLC $223.00

30174 05/17/19 WEINGARTEN ART GROUP $2,825.00

30175 05/24/19 ANDRE SAM-SIN $250.00

30172 05/17/19 TREEBEARDS, INC. $228.00

30173 05/17/19 UNIVERSITY LAWNMOWER CENTER $655.55

30170 05/17/19 TEXAS OUTHOUSE, INC. $756.00


30168 05/17/19 LVA 4 HOUSTON GREENSTREET LP $10,521.12

30169 05/17/19 PFEIFFER & SON, LTD $4,630.93

30166 05/17/19 LAURETTE CANIZARES $616.03

30167 05/17/19 LESLIE'S SWIMMING POOL SUPPLY $1,349.10

30164 05/17/19 INFINITY LOCK SYSTEMS, LLC $511.75

30165 05/17/19 JOHNSON CONTROLS SECURITY $432.68

30162 05/17/19 HOUSTON CHRONICLE $5,070.00

30163 05/17/19 HOUSTON PRESS $1,700.00

30160 05/17/19 HARDY & HARDY $2,600.00

30161 05/17/19 HOLLY BERETTO $2,857.50

30158 05/17/19 GOW MEDIA, LLC $800.00

30159 05/17/19 H.B.S WAREHOUSE ASSOC. $3,030.00

30156 05/17/19 CORPORATE COMPUTER SOURCE, LTD $17,490.89

30157 05/17/19 FLASH GORDON PARKS $150.00

30154 05/17/19 CITY OF HOUSTON- $171,206.53

30155 05/17/19 CKP COMMUNICATIONS,LLC $6,500.00

30152 05/17/19 CAFE EXPRESS $224.42

30153 05/17/19 CITY OF HOUSTON (WATER DEPT) $11,314.30

30150 05/17/19 BLOCK BY BLOCK $300,318.09

30151 05/17/19 BRACEWELL $2,053.25

30148 05/17/19 ASSOCIATED LANDSCAPE SERVICES $350.00

30149 05/17/19 BERI BROWN $150.00

30146 05/17/19 ALL AMERICAN POLY $8,311.00

30147 05/17/19 ALONTI $182.39

30144 05/17/19 1110 MAIN PARTNERS,LP $5,750.00

30145 05/17/19 ACME PARTY & TENT RENTAL $3,501.65

30142 05/10/19 WESTERN FIRST AID & SAFETY $144.93


30140 05/10/19 THOMAS PRINTWORKS $1,652.46

30141 05/10/19 TML INTERGOVERNMENTAL RISK $787.92

30138 05/10/19 STRUCTURE TONE SOUTHWEST, LLC $528,798.97

30139 05/10/19 THE HARRIS CENTER FOR $10,328.00


2-9

P 8552

P 0843

P 9073

P 0009

P 8591

P 8900

P 9097

P 1652

P 0074

* P 0350

P 0530

P 0490

V 0490

P 1191

P 1549

P 1543

V 1543

P 4210

P 6004

P 5700

P 5710

P 7060

P 7400

P 7763

P 3262

P 8268

P 8609

P 3005

P 6477

P 0490

P 1543

P 6141

P 1198

P 1663

P 9083

P 3298

P 4003

P 4560

P 8326

P 4001

P 4560

P 7203

P 7501

P 7210

P 7501

GRAND TOTAL : $3,781,950.60

* Check Status Types: "P" - Printed ; "M" - Manual ; "V" - Void ( Void Date ); "A" - Application; "E" - EFT** Denotes broken check sequence.


BANK B REGISTER TOTAL: $266,976.60

1231

3800 05/17/19 S&H MANUFACTURING $1,490.95

3801 05/24/19 HUITT~ZOLLARS, INC $1,260.00

3798 05/17/19 HVJ ASSOCIATES, INC. $3,228.13


3796 05/10/19 WHOLESALE ELECTRIC SUPPLY $9,867.00

3797 05/17/19 GULF COAST PAVERS,INC. $9,825.00

3794 05/10/19 CENTERPOINT ENERGY $3,723.00

3795 05/10/19 COLD SPRING GRANITE COMPANY $4,050.00

BANK ID: B - CAPITAL ACCT-JPMORGAN

3793 05/03/19 MILLIS DEVELOPMENT & $149,822.95

30251 05/31/19 CITY OF HOUSTON $911.93

BANK A REGISTER TOTAL: $3,514,974.00

30249 05/31/19 MORRIS MALAKOFF $525.00



30248 05/31/19 MAXGRAY PRODUCTIONS INC $1,650.00

30245 05/31/19 TIM DESILVA $617.78

30246 05/31/19 TNC CPAS $1,500.00

30243 05/31/19 PFEIFFER & SON, LTD $4,372.00

30244 05/31/19 POTBELLY SANDWICH WORKS $95.70

30241 05/31/19 LVA 4 HOUSTON GREENSTREET LP $250.00

30242 05/31/19 NEON ELECTRIC CORPORATION $5,454.00

30239 05/31/19 JOHN MILLS McCOIN $300.00

30240 05/31/19 LONE STAR FLAGS AND FLAGPOLES $4,450.00

30237 05/31/19 5/31/19 CITY OF HOUSTON ($911.93)

30238 05/31/19 IMAGESET DIGITAL $199.21

30236 05/31/19 CITY OF HOUSTON $758.86

30237 05/31/19 CITY OF HOUSTON $911.93

30234 05/31/19 5/31/19 ASSOCIATED LANDSCAPE SERVICES ($18,838.15)

30235 05/31/19 CENTERPOINT ENERGY $25.36

30233 05/31/19 ANGELA S. BERTINOT $514.11


30206 05/28/19 LUSH PUFF $350.00

30232 05/31/19 ALONTI $86.40

30204 05/24/19 WHITE DISTRIBUTION SYSTEMS $950.00

30205 05/28/19 CODE PARK INC $800.00

30202 05/24/19 TREEBEARDS, INC. $602.50

30203 05/24/19 VERIZON WIRELESS $725.25

30200 05/24/19 THE WAXAHOLICS ANONYMOUS,LLC $150.00


30198 05/24/19 TEXAS OUTHOUSE, INC. $677.25

30199 05/24/19 THE BLACK SHEEP AGENCY $14,572.00

BANK ID: GREEN - OPERATING-JPMORGAN1230 05/10/19 THE GOODMAN CORPORATION $5,270.00

05/17/19 METROPOLITAN TRANSIT AUTHORITY $133,306.89


1233 05/31/19 METROPOLITAN TRANSIT AUTHORITY $141,135.96

BANK GREEN REGISTER TOTAL: $281,093.10

GRAND TOTAL : $281,093.10

2-10


Houston, Texas

INDEPENDENT AUDITOR’S REPORT AND FINANCIAL STATEMENTS

DECEMBER 31, 2018


TABLE OF CONTENTS

DECEMBER 31, 2018

INDEPENDENT AUDITOR’S REPORT 1

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 3

BASIC FINANCIAL STATEMENTS:

Statement of Net Position and Governmental Funds Balance Sheet 15

Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 16

Statement of Activities and Governmental Fund Revenues, Expenditures, and Changes in Fund Balances 17

Reconciliation of Fund Revenues, Expenditures, and Changes in Fund Balance – Governmental Funds to the Statement of Activities 19

Notes to the Financial Statements 20

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED):

Schedule of Revenue, Expenditures and Changes in Fund Balances – Budget to Actual 30

1

4828 Loop Central, Suite 1000

Houston, TX 77081

Phone: 713.968.1600

Fax: 713.968.1601

WWW.MCCONNELLJONES.COM

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors Houston Downtown Management District We have audited the accompanying financial statements of the Houston Downtown Management District (the “District”), as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the District’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the District as of December 31, 2018, and the changes in its financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.

2

Other Matter

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Houston, Texas June 13, 2019

HOUSTON DOWNTOWN MANAGEMENT DISTRICT Management’s Discussion and Analysis (Unaudited)

December 31, 2018

3

The following discussion and analysis of Houston Downtown Management District’s (the District or HDMD) financial performance provides an overview of the District’s financial activities for the fiscal year ended December 31, 2018. Please read in conjunction with the District’s financial statements and notes. The Management’s Discussion and Analysis (MD&A) is an element of the reporting model adopted by the Governmental Accounting Standards Board (GASB) in their Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments. Comparative information between the current year and the prior year is included in the MD&A.

Organization Creation The District was created in the regular session of the Texas Legislature in the spring of 1995 by legislation co-sponsored by Senator Rodney Ellis and Representative Garnet Coleman. This legislation created a Municipal Management District under Chapter 375 of the Local Government Code and is currently codified in Chapter 3801 of the Texas Special Districts Code. HDMD became effective on August 2, 1995 and was organized on August 29, 1995. In 1999, the District’s boundaries were expanded by the Texas Legislature to include all of the 1,178 acres that lie primarily within the freeway ring around the City of Houston’s (City) center. Purpose Building on the momentum of the Houston Downtown Public Improvement District created by the City in 1991, the District’s purpose is to continue the pursuit of a plan for downtown’s revitalization to make it a diverse, desirable, accessible and perpetually active core of the Houston region. Board of Directors The board of directors (board) is made up of a 30 member board with additional ex-officio, non-voting, members that include City department heads from the Police, Public Works, Parks & Recreation, Convention and Entertainment Facilities, and Planning departments, METRO's President and certain chairs of other downtown organizations. Board member qualifications are ownership, tenancy or residence of property within the District or an agent or employee thereof. The board shall have experience in energy, commercial banking, real estate, finance, insurance, retail, service, utilities and the general issues that the District addresses. Two thirds of the directors shall be City residents. Board members have staggered four year terms. New appointments and renewals are confirmed by City Council. Unexpired terms with replacements need not be confirmed by City Council. Powers In addition to the rights, powers, privileges, authority and functions of a district created under Chapter 375 of the Local Government Code and the aforementioned Chapter 3801 of the Texas Special Districts Code, to accomplish its purposes the District may employ the rights granted to political subdivisions under Article 16, Section 59, of the Texas Constitution, including those conferred by Chapter 54 of the Texas Water Code, and the powers under Article 3, Section 52, of the Texas Constitution and Chapters


December 31, 2018

4

365 and 441 of the Texas Transportation Code. The District does not have power of eminent domain and cannot finance by assessment services or improvements unless a petition has been filed with the board signed by a requisite number of landowners. As each new service and improvement plan (normally every 5 years) is put in place, a petition is signed by a requisite number of landowners. On November 12, 2015, the District board of directors approved a new service and improvement plan which will be assessed based on 2015 values in installments annually over each of the five years 2016-2020. This is the third year of the service and improvement plan. The District may levy assessments, ad valorem taxes and/or impact fees. Pursuant to Chapter 3801, the District may incur liabilities, borrow, issue bonds, or other obligations, acquire and dispose of property, construct, develop, encourage, and maintain employment, commerce, transportation, housing, tourism, recreation, arts, entertainment, economic development, safety and the public welfare. Specifically, the District was created to provide services and improvements which supplement those presently provided by the City to promote, develop, encourage, and maintain employment, commerce, economic development, and public welfare within the District in downtown Houston. To that end, the District presently provides services in five main areas of operation:

Operations (public safety and maintenance) Capital Projects Economic and Business Development Planning Marketing and Communications

Bonds and Assessments The District may issue bonds payable by assessments or ad valorem taxes. The City must approve the bond issue or any capital improvements budget that is financed from a bond issue. The District must hold an election and obtain voter approval to impose a maintenance tax or to issue bonds payable from ad valorem taxes or assessments. At present, the District has no outstanding bonds. Intergovernmental Agreements The District is a governmental agency and political subdivision of the State of Texas, and may enter into intergovernmental agreements with other units of government at the Federal, state and local level. Policies and Procedures HDMD's board adopted policies and procedures regarding personnel, procurement, contract administration, disadvantaged business enterprise program, budget, accounting, property ownership, insurance, ethics and investments. The District has contracted with Central Houston, Inc., a 501(c)(6) not-for-profit corporation, for the provision of administrative and managerial personnel, thereby realizing certain economies of operation expense. The District will contract out for all other services in accordance with adopted policies and procedures.


December 31, 2018

5

Disadvantaged Business The District attempts to stimulate the growth of disadvantaged businesses within its boundaries by encouraging full participation in all phases of procurement. The District strives to increase participation of disadvantaged businesses in contract awards. The program is reviewed on an annual basis and a quarterly report is made to the board. Torts Claims On December 31, 2018, there were no known claims. Assessment Plan Assessments for 2018 were based on the 2015 certified rolls of the Harris County Appraisal District, as supplemented, for taxable, non-excluded properties within the 1999 expanded boundaries of the Houston Downtown Management District with certain annual revisions pursuant to the Assessment Plan. Financial Highlights for 2018 Assessment Revenues The District’s assessment rate for 2018 was 11.75¢/$100 in valuation based on 2015 certified Harris County Appraisal District rolls, as supplemented, within 1999 boundaries of the District. 10.4¢ was for operations and resulted in net revenues of $13,555,352. 1.35¢ was for capital and resulted in net revenues of $1,759,916. Capital Projects During 2018, the District completed the capital project to add lighting to approximately 30 vehicular wayfinding signs and $214,095 was spent during 2018 for a total project cost of $683,352. Enhanced lighting in Market Square Park was completed during 2018 at a cost of $76,234. Three new capital projects were approved by the board in 2018. The first is a street light infill project to improve the lighting on several blocks on the east side of downtown and the District incurred $102,539 with CenterPoint Energy for equipment and $149,939 for engineering/design. The second is Phase I of parking lot edge landscaping improvements (fencing, Asian Jasmine, irrigation and sidewalk enhancements) and the District incurred $45,496 for design and $416,659 for construction. The third is Phase I of 100 new Forms + Surfaces bike racks installed throughout downtown and the District incurred $149,394 for the cost of the bike racks and $44,752 for installation. In addition, capital replacements included: $31,000 to refurbish the dog park fences at Market Square Park, $22,853 for granite replacements at Main Street Square and $10,019 for a new compressor for the Main Street Fountain. Downtown Living Initiative The District, in conjunction with the City of Houston and the Downtown Redevelopment Authority, created a program in 2012 called the Downtown Living Initiative (DLI) which is designed to incentivize residential development in downtown. Developers are eligible to receive a rebate equal to 75% of the incremental District assessment and City of Houston property taxes generated by the project upon completion for a fifteen-year period up to a maximum of $15,000 per unit. There is an overall cap of units


December 31, 2018

6

available to participate in the program of 5,000. The application deadline for the DLI program was June 30, 2016 and the program is now closed. The District has executed DLI agreements with fifteen developers totaling 4,600 units. Projects opened as of the end of 2018 include: SkyHouse Houston, SkyHouse Main, Block 334, Market Square Tower, the Star, Aris Market Square, Eighteen25, Catalyst, 1414 Texas, 1711 Caroline, and the Marlowe. Estimated completion dates for the additional development projects range from the fourth quarter of 2019 through the end of 2021. The residential projects are geographically dispersed throughout several areas of the District, including the Ballpark District, the Historic District and the southern portion of downtown. Developers are required to meet certain deadlines and follow design guidelines to benefit from the incentive program, although extensions may be granted if approved by the board. District liability for DLI assessment rebates to developers is contingent upon renewal of subsequent service plans beyond 2020. During 2018 a total of $235,493 was paid by the District in assessment rebates under the DLI residential program. Greenlink Circulator Program In 2012, the District received a federal transportation grant in the amount of $2,270,000 to purchase seven CNG-powered vehicles to provide clean energy, convenient transportation, free of charge through the key corridors of downtown. The District partners with Houston First Corporation to fund operations of the Greenlink service. The annual commitment for Greenlink is $450,000 each for the District and Houston First Corporation. The District applied for and was awarded a grant through the Texas Commission on Environmental Quality to provide $299,924 in additional funding. METRO operates the Greenlink vehicles and has an agreement with the District for a four-year term ending June 30, 2020. During 2017, the District and Houston First participated in a series of meetings to discuss modification of the Greenlink routes, new vehicle wraps, signage, and branding to improve visibility of the service and ridership. The partners made the determination to discontinue routes on Avenidas de las Americas due to the frequency of street closures for events and to utilize the South Garage Transit Center for driver layovers/breaks. The Green Route was extended two blocks to the north to run on Capitol Street and the Orange Route was extended to add Monday – Wednesday evenings (seven day a week service). A new branding package was approved, and the new route/branding launched in first quarter of 2018. Grant Programs The District awarded an economic development grant in 2013 to Finger-FSC Crawford, Ltd. for construction of a 397-unit residential development on blocks 50 & 51 in the District. Awarded prior to the creation of the DLI program, this grant is equal to 75% of the incremental District assessment generated by the project for a term of 15 years from the date of completion of the project and its inclusion on the District’s tax assessment roll. This residential project, which includes two street level restaurants on Texas Avenue, was completed in 2016 and the first payment was made in the amount of $44,552 in 2018. The District has a program to support catalytic retail projects. During 2017, a total of $180,000 was award to two grantees. The Tipping Point received a grant of $40,000 for the opening of a lifestyle/fashion store at 214 Travis in the historic district. Bravery Chef Hall received a grant of $140,000 which will activate the street level of the residential project Aris Market Square and feature a food hall concept for rising-star chefs. In 2018, the Tipping Point grant was paid in full and construction was in progress for the Bravery Chef Hall with a scheduled opening in the summer of 2019.


December 31, 2018

7

Downtown Improvements Maintenance Agreement The District is responsible for maintaining improvements (pavers, trees, landscaping, irrigation systems, lighting, etc.) within the public right of way that were installed as part of the various improvement projects (Cotswold, Transit Streets, Dallas Street/Shopping District, Main Street, Market Square Park, and Main Street Square). A signed agreement with the City delineates the maintenance responsibility for the District. During 2018, the District expended $150,000 for paver repair work, $108,242 for street light maintenance, $680,444 for landscaping/irrigation maintenance, $392,128 for floral displays, $171,716 for Main Street Square maintenance, and $193,765 for Market Square Park maintenance. Adjacent property owners reimbursed the District $51,636 for Main Street Square fountain maintenance. Rent and utility reimbursements from the food kiosk vendor generated $54,558 of revenue for Market Square Park. Street Lighting In 1999, the District signed a street lighting agreement with the City. The agreement provided for upgraded street lighting to be installed and for the District to pay for the additional power use for the increased lamp wattage and additional street lights added. During 2018, the District incurred $160,000 for the additional power usage. Litter and Trash Program Maintaining a clean and safe downtown environment is a primary part of the District’s mission. During 2018, the Street Team program was funded in the amount of $2,104,179 to provide litter and trash pick-up on a seven day a week basis, sidewalk pressure washing, graffiti & bird abatement, and a recycle program. The trash subscription program provides $193,243 in offsetting revenues. Also, the District provided METRO bus stop cleaning services and received $272,761 in offsetting revenues for this effort. Downtown Public Safety Guides The Downtown Public Safety Guide program was created to provide a customer service oriented visible presence in downtown. Safety Guides offer assistance to visitors, connect homeless individuals to social services and act as a deterrent to crime. The District spent $1,225,406 for the guide program during 2018. In addition, the District engages Off-Duty Houston Police Officers on a part-time basis to deploy in strategic areas. The District spent $392,746 for the Off-Duty Officer program during 2018. The District is committed to, and funded, programs to reduce homelessness, spending $438,790 during the past year with our outreach partners Search, Harris Center, and Coalition for the Homeless. In addition, the organization contributed $148,665 toward the Public Intoxication Transport Team (PITT) program run by the Houston Recovery Center. Operations Center The District leases office space at 1119 Milam for operations staff, contractor street/safety guide teams, emergency operations and equipment storage. The District also leases additional warehouse storage space


December 31, 2018

8

for equipment and extra stock storage. Annual rent, utilities and supplies for office and warehouse space totaled $229,368 During 2018, the District entered into a 15-year lease agreement with LVA4 Greenstreet, LP to relocate the District Operations Center to 1313 Main in space adjacent to the Greenstreet garage. The District was able to approximately double its square footage to accommodate the growth in operations which has added personnel to meet the needs of the emerging 24/7 environment in the District. Construction was in progress at the end of the year with a scheduled move-in date of April 2019. The District will occupy the first floor of the building at approximately 12,500 sq. ft. and has an option on the second-floor space of approximately 11,000 sq. ft. The District spent $295,134 during 2018 for the in-progress build-out, IT infrastructure, and furnishings for the new operations center. Banner Poles and Holiday Decorations The District provides street banners and holiday decorations for downtown. A new holiday package was installed for the 2018 season which included: 7 refurbished trees, 24 pole décor treatments, 4 new street overheads, and 1 large “NOEL” installation. The new décor is on a three-year lease with Always in Season. During 2018, $562,769 was spent on banner changes, pole/pot maintenance, and installation of holiday decorations. Wayfinding Maintenance The District has made a significant capital investment in the 66 vehicular and 109 pedestrian wayfinding signs in the downtown area over the past three years. A maintenance agreement was established to provide regular cleaning, repairs, and replacement of damaged signs. A total of $111,220 was spent during 2018 on wayfinding signage maintenance. Marketing and Communications Program In 2018, the District continued to publish the downtown magazine, engage the public through social media, and produce a weekly e-blast to communicate a variety of events happening in downtown. A new advertising/creative agency was retained resulting in a new campaign initiative called “Meet Downtown.” Total expenditures for marketing and communications were $714,929 in 2018, with offsetting revenues from the magazine advertising totaling approximately $34,369. The District also continued its initiative, Art Blocks, to bring unique smaller-scale public art to the downtown area. The pieces were selected by a committee of local collectors, curators, and philanthropists and consisted of new marquees at the Main Street Market and an interactive art installation in Sam Houston Park called “Open House.” The District incurred expenditures of $342,982 during 2018 for the ArtBlocks program. Economic Development The District is committed to building relationships with the business community in downtown and acting as a resource for information regarding office market trends, commute solutions for the workforce, and the benefits of locating a business downtown. The District spent $244,579 on its economic development program during 2018, which is conducted in partnership with Central Houston, Inc.


December 31, 2018

9

Planning The planning efforts of the District were largely focused planning for the North Houston Highway Improvement Plan, including traffic studies of specific areas impacted by the highway reconfiguration, opportunities for relocation of the Union Pacific railroad line in the northern portion of downtown and potential new city streets/street closures. A total of $454,968 was spent by the District on the highway planning. Public Space Programming The District uses programming to attract visitors to downtown. Programming is extensive at Market Square Park in the Historic District, offering seasonal events such as concerts, culinary evenings, movie nights, blanket bingo, special markets, and other creative offerings. The District spent $178,817 during 2018 on programming in Market Square Park, drawing visitors not only to the park itself but to the surrounding businesses in the Historic District. The District also received $18,166 in offsetting event revenue at Market Square Park. In 2018, the District continued its regular programming at Main Street Square including: the HeartMade Art Market and painting parties under the canopy of the Trumpet Flower. A total of $93,700 was spent on programming in Main Street Square during 2018. A new event was added in 2018, a Holiday version of “Sunday Streets,” which was promoted jointly with the Mayor’s Office of Special Events. In addition, another new series called “DIY” featured fun project-oriented gatherings located around various showcased locations throughout downtown. The District incurred $50,439 for these “around downtown” new events. Overview of Financial Statements Under GASB Statement No. 34, the District qualifies as a special purpose government with one program—revitalization of the downtown area. Government-wide statements report information about the District as a whole using accounting methods similar to those used in private-sector companies. The statement of net position includes all of the District’s assets and liabilities. All of the current year’s revenues and expenses are accounted for in the statement of activities, regardless of when cash is received or paid. The fund financial statements report information about the District on the modified accrual basis, which only account for revenues that are measurable and available within the current period or soon enough thereafter to pay liabilities of the current period. Adjustments are provided to reconcile the fund statements to the government-wide statements. Explanations for the reconciling items are provided as part of the financial statements. Statement of Net Position The statement of net position reflects the District’s assets and liabilities using the full accrual basis of accounting and represents the financial position as of the conclusion of the fiscal year. Net positions are equal to assets minus liabilities. Unrestricted net positions are available to the District for any lawful purpose. Restricted net positions have constraints on resources, which are imposed by law through contractual provision of enabling legislations.


December 31, 2018

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The following table reflects condensed information on the District’s net positions as of December 31, 2018 and 2017:

2018 2017

Capital assets, net 1,817,835$ 1,806,124$

Other assets:

Cash and cash equivalents 13,600,616 12,402,506 Assessments, net 14,170,220 13,279,717 Accounts receivable and prepaid expenses 219,211 160,342 Inventory 80,448 101,033

Total assets 29,888,330 27,749,722

Total liabilies 2,355,978 1,889,763

Deferred inflows of resources - -

Net position:

Invested in capital assets, net of related debt 1,817,835 1,806,124 Restricted for capital projects 4,258,396 3,748,040 Restricted for Greenlink 1,074,695 1,483,238 Unrestricted 20,381,426 18,822,557 Total net position 27,532,352$ 25,859,959$

Assets As of December 31, 2018, the District’s assets totaled $29,888,330 versus $27,749,722 as of December 31, 2017. At year-end, the District had $9,316,698 of cash on hand for service plan operations, $3,009,323 for capital projects and $1,274,595 for the Greenlink circulator program. Funds not needed for immediate operations are invested in TexPool Prime accounts. Investments are reviewed quarterly by the board of directors. Net capital assets of the District were $1,817,835 as of December 31, 2018, which reflects $315,473 of new asset acquisitions and $303,762 of depreciation expense from the net capital asset balance of $1,806,124 as of December 31, 2017. Net assessment receivable as of December 31, 2018 totaled $14,170,220 versus $13,279,717 as of December 31, 2017. Liabilities At December 31, 2018 and 2017, the District’s liabilities were primarily related to accounts payable and accrued expenses and totaled $2,205,978 and $1,739,763, respectively. In addition, liability balances included unearned revenue of $150,000 in each of the fiscal years 2018 and 2017 related to the Greenlink circulator program.


December 31, 2018

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Net Positions Net positions at year-end 2018 totaled $27,532,352. Net positions in 2018 are classified as invested in capital assets, restricted for capital projects, restricted for Green Link, and unrestricted, which totaled $1,817,835, $4,258,396, $1,074,695 and $20,381,426, respectively. In 2017, net positions totaled $25,859,959 and are classified as invested in capital assets, restricted for capital projects, restricted for Green Link and unrestricted which totaled $1,806,124, $3,748,040, $1,483,238, and $18,822,557 respectively. Net positions for the District increased by $1,672,393. Statement of Activities The following statement of activities identifies operating revenues earned and expenses incurred by the District during the fiscal years ended December 31, 2018 and 2017:

Revenues:2018 2017

Assessments, net - service plan operations 13,555,352$ 14,003,070$ Assessments, net - capital projects 1,759,916 1,816,698 Greenlink sponsor revenues 749,924 877,122 Other 1,053,330 1,757,123

Total 17,118,522$ 18,454,013$

In 2018, revenues totaled $17,118,522 compared to $18,454,013 in 2017. Assessment revenues decreased by $1,182,770 due to an adjustment in the reserve for refunds attributable to property valuations in litigation that was reversed in 2017. Assessment revenues increased by $678,273 as a result of property values added in the supplemental roll for 2018. Operations revenue has increased by $78,372 due to increases in the trash program and METRO rates. Marketing partnership revenue has decreased by $45,631 due to a decrease in advertising revenue from the magazine and Market Square Park rent. Miscellaneous reimbursements decreased by $125,667 because a smaller number of contractors had to make payments to repair irrigation systems damaged in the process of their construction and salary reimbursements decreased by $42,855 due to changes in staff allocations. Project revenue decreased by $550,000 in contributions for Plan Downtown and $232,550 in reimbursements for the Sunset Coffee renovation which were made in 2017 but not required in 2018. Interest income increased by $187,448 due to an increase in interest earnings rates on investments. Greenlink sponsor revenues decreased by $127,198 as a result of decreased grant funding for the project from TCEQ.

Expenditures:2018 2017

Service plan operations 12,179,262$ 11,830,325$ Capital projects 1,383,202 1,632,700 Greenlink expenditures 1,883,665 1,537,858

Total 15,446,129$ 15,000,883$


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In 2018, expenditures totaled $15,446,129 compared to $15,000,883 in 2017. The total increase in service plan operations over 2017 of $445,246 was primarily due to increased budgets for the following programs: $133,712 for additional Street Team personnel, $92,541 in wayfinding maintenance, $115,199 in homeless programs, $69,221 in contributions to the Economic Development program, $199,057 in grant payouts for Downtown Living Initiative programs and $480,041 in new holiday decor, offset by a decrease of $691,792 in planning due to the conclusion of the work on Plan Downtown. There was a reduction of $249,498 in capital primarily because the construction on the Sunset Coffee Building was completed in 2017, and $345,805 in increased expenditures due to the route changes extending the Green Route and adding Monday, Tuesday, and Wednesday service to the Orange Route. Budgetary Highlights

Service plan operations

Actual Budget Actual Budget

Revenues: 14,479,835 13,749,372$ 14,904,346$ 12,899,914$

Expenditures:

Downtown feels safe and comfortable 6,254,723 6,870,000 6,115,353 6,025,500 Public realm is charming, inviting, beautiful 2,316,734 2,162,000 1,743,906 1,887,500 Accessible to region and easy to get around 333,356 310,500 283,346 374,500 Vibrant, sustainable mixed-use place 722,026 1,036,900 448,807 752,000 Downtown's vision understood by all 1,769,052 2,045,700 2,432,997 2,821,000 District governance known for excellence 783,371 874,260 805,916 873,725

Total expenditures 12,179,262 13,299,360 11,830,325 12,734,225

Revenues in excess of expenditures 2,300,573$ 450,012$ 3,074,021$ 165,689$

2018 2017

Overall 2018 service plan operations revenues were ahead of budget by $730,463, of which

$606,881 is attributable to revenue from the supplemental roll and $145,395 attributable to an increase in interest earnings on invested funds.

Service plan operations expenditures for 2018 were less than budget by $1,120,098. Personnel costs were under budget by $149,310 (5%) primarily due to open positions in the Off-Duty Officer program, operations & maintenance expenditures were under budget by $403,569, marketing by $109,741, economic development by $23,421, planning and design by $171,162 and administrative expenses were under budget by $242,075 due to delays in Downtown Living Initiative project reimbursement requests.


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Capital projects


Revenues: 1,863,504 1,706,300$ 2,658,479$ 1,804,399$

Expenditures:

Downtown feels safe and comfortable 252,478 890,000 - 200,000 Public realm is charming, inviting, beautiful 462,155 525,000 439,011 459,729

Accessible to region and easy to get around 491,766 1,705,000 679,000 1,205,000 Vibrant, sustainable mixed-use place 32,175 132,163 188,251 290,365 District governance known for excellence 144,628 399,989 326,438 372,121


Revenues in excess (deficit) of expenditures 480,302$ (1,945,852)$ 1,025,779$ (722,816)$

2018 2017

Capital projects revenues for 2018 were ahead of budget by $154,980, of which $71,392 is

attributable to revenue from the supplemental roll, $41,760 from METRO reimbursements and $41,828 attributable to an increase in interest earnings on invested funds.

Expenditures for 2018 were $2,268,950 less than budget due to delayed parking lot landscaping projects of $300,854, delay in purchasing fencing for Chartres Street of $50,000, delay in the street light infill project of $367,522, sidewalk infill project put on hold of $350,000, illuminated street sign project put on hold of $600,000, savings of $223,766 in Market Square Park lighting, $70,000 in retail grants, $29,988 in Downtown Living Initiative grant reimbursement payments and $225,000 of capital replacement expenditures. In addition, $200,000 budgeted for the purchase of holiday décor was instead spent in operations for the lease of the new holiday package. Offsetting the savings, $161,995 of the vehicular electrification of wayfinding signage payments originally budgeted for 2017 were delayed until 2018.


December 31, 2018

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Greenlink


Revenues: 775,183 760,000$ 891,188$ 804,138$

Expenditures:

Vehicle operator expense 1,453,089 1,350,000 1,173,574 1,285,000 Fuel expense 101,544 107,000 92,350 110,700 Marketing expense 73,823 75,000 11,998 48,000 Operating administrative expense 5,270 10,000 9,997 61,800 Depreciation expense 249,939 249,939 249,939 249,936


Revenues in excess (deficit) of expenditures (1,108,482)$ (1,031,939)$ (646,670)$ (951,298)$

2018 2017

Greenlink revenue exceeded budget by $15,183, attributable to higher than expected interest earnings.

Greenlink expenditures exceeded budget by $91,726. This is due to higher costs associated with the expanded Greenlink service and new routes. An extra bus was required on the Green Route to maintain headway times when we switched to the new routes which was not anticipated during the planning/budgeting process. These extra costs were partially reimbursed by METRO.

*****

This financial report is designed to provide a general overview of the District’s finances for all those with an interest in the government’s finances and to show the District’s accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional information should be addressed to Houston Downtown Management District, 909 Fannin, Suite 1650, Houston, Texas 77010.


Statement of Net Position and Governmental Funds Balance Sheet

Year Ended December 31, 2018

The accompanying notes are an integral part of these financial statements.

15

Service StatementPlan Capital of Net

Operations Projects Greenlink Total Adjustments Position

Assets

Cash and cash equivalents 9,316,698$ 3,009,323$ 1,274,595$ 13,600,616$ -$ 13,600,616$ Accounts receivable 93,659 - - 93,659 - 93,659 Prepaid expenses 125,552 - - 125,552 - 125,552 Assessment due from tax collector, less allowance for delinquent accounts 12,540,516 1,629,704 - 14,170,220 - 14,170,220 Inventory - 80,448 80,448 - 80,448 Interfund receivable (payable) (126,529) 126,529 - - - - Capital assets, net - - - - 1,817,835 1,817,835

Total assets 21,949,896$ 4,765,556$ 1,355,043$ 28,070,495$ 1,817,835$ 29,888,330$

Liabilities

Accounts payable and accrued expenses 1,049,544 507,160 130,348 1,687,052 - 1,687,052 Due to affiliate 419,908 - - 419,908 99,018 518,926 Unearned sponsorship payments - - 150,000 150,000 - 150,000

Total liabilities 1,469,452 507,160 280,348 2,256,960 99,018 2,355,978

Deferred Inflows of Resources

Tax assessments 92,020 13,729 - 105,749 (105,749) - Total deferred inflows of resources 92,020 13,729 - 105,749 (105,749) -

Fund Balances

Fund balances:

Nonspendable-inventories and prepayments 125,552 - 80,448 206,000 (206,000) - Restricted for capital projects - 4,244,667 - 4,244,667 (4,244,667) - Restricted for Greenlink - - 994,247 994,247 (994,247) - Assigned for catastrophy 800,000 - - 800,000 (800,000) - Unassigned 19,462,872 - - 19,462,872 (19,462,872) -

Total fund balances 20,388,424 4,244,667 1,074,695 25,707,786 (25,707,786) -

Total liabilities, deferred inflows of resources and fund balances 21,949,896$ 4,765,556$ 1,355,043$ 28,070,495$

Net position: Invested in capital assets, net of related debt 1,817,835 1,817,835 Restricted for capital projects 4,258,396 4,258,396 Restricted for Greenlink 1,074,695 1,074,695 Unrestricted 20,381,426 20,381,426

Total net position 27,532,352$ 27,532,352$


Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position



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Total fund balances of total governmental funds 25,707,786$

Amounts reported for governmental activities in statement of net position are different because: Capital assets used in governmental activities are not financial resources and therefore not reported in the funds 1,817,835 Compensated absences (99,018) Deferred revenue is not available for current period expenditures and therefore deferred in the funds 105,749

Net position of governmental activities 27,532,352$


Statement of Activities and Governmental Fund Revenues, Expenditures, and Changes in Fund Balances



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Service StatementPlan Capital of

Operations Projects Greenlink Total Adjustments Activities

Revenues:Assessments, net 13,551,895$ 1,757,692$ -$ 15,309,587$ 5,681$ 15,315,268$ Project revenue 659,088 41,760 1,199,924 1,900,772 (450,000) 1,450,772 Interest 265,395 61,828 25,259 352,482 - 352,482

Total revenues 14,476,378 1,861,280 1,225,183 17,562,841 (444,319) 17,118,522

Expenditures:Downtown feels safe & comfortable at all times:Collaboration to maintain low crime rate 1,839,039 - - 1,839,039 - 1,839,039 Reduced presence of homeless & street persons 540,858 - - 540,858 - 540,858 Downtown sidewalks are comfortably lighted 305,510 - - 305,510 - 305,510 Downtown clean & well-kept appearance 3,742,302 - - 3,742,302 (302,033) 3,440,269 Remove signs of disorder in downtown 28,063 - - 28,063 - 28,063 Prepare for emergencies 100,984 - - 100,984 - 100,984

6,556,756 - - 6,556,756 (302,033) 6,254,723 Public realm is charming, inviting, beautiful & Celebrates the life of the city:Key pedestrian streets are inviting 412,600 - - 412,600 - 412,600 Public spaces managed, programmed, & delightful 863,192 - - 863,192 - 863,192 Place of civic celebration 1,040,942 - - 1,040,942 - 1,040,942

2,316,734 - - 2,316,734 - 2,316,734 Accessible to region & easy to get around:Effective transit access more places, more hours 10,800 - - 10,800 - 10,800 Convenient circulation without personal vehicle 524,516 - - 524,516 (450,000) 74,516 Easy to find way around 181,609 - - 181,609 - 181,609 Connect neighbors & districts inside/outside downtown 50,348 - - 50,348 - 50,348 Convenient, understandable & managed parking 16,083 - - 16,083 - 16,083

783,356 - - 783,356 (450,000) 333,356 Vibrant, sustainable mixed-use place:Best place to work in region 244,579 - - 244,579 - 244,579 Exciting neighborhoods to live in 377,579 - - 377,579 - 377,579 Competitive shopping place 49,371 - - 49,371 - 49,371 Remarkable destination for visitors 50,497 - - 50,497 - 50,497

722,026 - - 722,026 - 722,026


Statement of Activities and Governmental Fund Revenues, Expenditures, and Changes in Fund Balances (continued)



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Service Statement

Plan Capital ofOperations Projects Greenlink Total Adjustments Activities

Downtown's vision & offering understood by all:Market to region 885,775 - - 885,775 - 885,775 Promote downtown's ease of use 21,981 - - 21,981 - 21,981 Vision/development framework understood by all 742,729 - - 742,729 - 742,729 Tools to assist continued redevelopment 86,503 - - 86,503 - 86,503 Develop & maintain information to support downtown 32,064 - - 32,064 - 32,064

1,769,052 - - 1,769,052 - 1,769,052 District governance & service known for excellence:Engage stakeholders in decision making 694,324 - - 694,324 11,100 705,424 Communications to owners, tenants & others 23,464 - - 23,464 - 23,464 Preservation of districts' capital assets 32,649 - - 32,649 21,834 54,483

750,437 - - 750,437 32,934 783,371 Capital improvement & expenditures:Downtown feels safe & comfortable - 252,478 - 252,478 - 252,478 Public realm is charming, inviting, & beautiful - 475,595 - 475,595 (13,440) 462,155 Accessible to region & easy to get around - 491,766 - 491,766 - 491,766 Vibrant, sustainable mixed-use place - 32,175 - 32,175 - 32,175 Capital replacement expenditure - 112,639 - 112,639 31,989 144,628

- 1,364,653 - 1,364,653 18,549 1,383,202 Accessible to region and easy to get around:Vehicle operator - - 1,453,089 1,453,089 - 1,453,089 Fuel - - 101,544 101,544 - 101,544 Marketing - - 73,823 73,823 - 73,823 Administrative - - 5,270 5,270 249,939 255,209

- - 1,633,726 1,633,726 249,939 1,883,665

Total expenditures 12,898,361 1,364,653 1,633,726 15,896,740 (450,611) 15,446,129

Excess (deficiency) of revenues over expenditures 1,578,017 496,627 (408,543) 1,666,101 (1,666,101) -

Change in net position 1,672,393 1,672,393

Fund balances/net position: Beginning of year 18,810,407 3,748,040 1,483,238 24,041,685 1,818,274 25,859,959 End of year 20,388,424$ 4,244,667$ 1,074,695$ 25,707,786$ 1,824,566$ 27,532,352$


Reconciliation of Revenue, Expenditures, and Changes in Fund Balance – Governmental Funds to the Statement of Activities



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Net change in total fund balance of governmental funds 1,666,101$

Amounts reported for governmental activities in statement of activities are different because: Governmental funds report capital outlays as expenditures while governmental activities report depreciation expense to allocate those expenditures over the life of the asset: Capital assets are capitalized 315,473 Depreciation expense (303,762) Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds (11,100) Some assessments will not be remitted to the District for several months after fiscal year-end; they are not considered as "available" revenues in governmental funds 5,681

Change in net position of statement of activities 1,672,393$


NOTES TO THE FINANCIAL STATEMENTS December 31, 2018

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Note 1 – Description of Organization Organization Houston Downtown Management District (the District), is a Municipal Management District created under Chapter 375 of the Local Government Code and is currently codified in Chapter 3801 of the Texas Special Districts Code. The District’s boundaries include all of the 1,178 acres that lie primarily within the freeway ring around the City of Houston’s central business district. The District is governed by a 30-member Board of Directors, representing property owners, managers and tenants in downtown. The District’s main areas of operation are geared towards ensuring that downtown always feels safe and comfortable; public realm is charming, inviting, beautiful and celebrates life of the city; accessible to region and easy to get around; vibrant, sustainable mixed-use place; Downtown’s vision and offering understood by all; District governance and service known for excellence; capital projects, and operating the Greenlink transit program. All programs are provided for under a five-year service plan (2016 - 2020) for downtown revitalization. Note 2 – Summary of Significant Accounting Policies Measurement Focus and Basis of Accounting Government-Wide Financial Statements The statement of net positions and the statement of activities display information about the reporting government as a whole. The statement of net positions and the statement of activities were prepared using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred, regardless of the timing of the related cash flow. Government-wide statements distinguish between governmental-type and business-type activities. Governmental activities are those financed through taxes, intergovernmental revenues, and other non-exchange revenues and are usually reported in governmental and internal service funds. Business activities are financed in whole or in part through fees charged for goods or services to the general public and are usually reported in proprietary funds. The District does not have any business-type activities. Under the government-wide financial statements, net position is classified into three components as follows:

Invested in capital assets – This component of net position consists of capital assets, net of accumulated depreciation and reduced by any bonds, notes, or other borrowings. Restricted – This component of net position consists of constraints on use placed on net position through external constraints imposed by creditors, grantors, contributors, or laws or regulations of other governments or constraints imposed by law through contractual provisions or enabling legislation. Unrestricted – This component of net position consists of net position that do not meet the definition of “restricted” or “invested in capital assets”.



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Fund Financial Statements The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus and have been prepared using the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they are “measurable and available”). “Measurable” means the amount of the transaction that can be determined and “available” means collectible within the current period or soon enough thereafter to pay liabilities of the current period. The District considers all revenue available if it is collected within 60 days after the year-end. Expenditures are recorded when the related fund liability is incurred as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Fund Accounting In government, the basic accounting and reporting entity is a “fund.” A fund is defined as an independent fiscal and accounting entity with a self-balancing set of accounts recording financial resources together with all related liabilities, obligations, reserves and equities which are segregated for carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The District’s funds include: Service Plan Operations The Service Plan Operations fund was established to account for an annual assessment of up to 10.4 cents per $100 valuation of taxable real property according to the 2015 tax roll of the Harris County Appraisal District, as supplemented. These funds are to be used for operating expenses including public safety, homelessness initiatives, cleanliness, maintenance, landscaping services, urban planning, economic and business development, marketing and communications necessary to build a constituency of support for a thriving, economical and vital downtown. It accounts for all activities except those required to be accounted for in other funds. Capital Projects The Capital Projects fund was established to account for an assessment set annually not to exceed 1.35 cents per $100 valuation of taxable real property according to the 2015 tax roll of the Harris County Appraisal District, as supplemented. These funds are to be used for major capital improvements to revitalize downtown including lighting, parks, streetscape enhancements, wayfinding signage, and retail and catalytic project grants. Greenlink The Greenlink fund was established to create a downtown circulator transit service. These funds are to be used to operate the clean energy transit service, free of charge, which links various downtown activities and destinations. The Greenlink also promotes increased transit usage in general by the downtown community and provides an alternative to the use of personal vehicles for short trips within downtown.



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Special Assessment The District’s assessment was levied on November 11, 2015 for a five-year period based on assessed values as of January 1, 2015 for all real property located in the District. These assessments are due in five equal annual installments by January 31 of the years 2016 through 2020 and are delinquent if not paid before February 1 of that year. The District’s Board of Directors determines the rate for each year and the combined Service Plan Operations and Capital Projects rate for 2018 was 11.75 cents per $100 valuation. The District contracts with a tax assessor/collector for assessment collection services. Budget and Budgetary Accounting The District’s Board of Directors adopts an annual budget for the Service Plan Operations fund, Capital Projects fund and the Greenlink fund. The budget for the Service Plan Operations fund and the Capital Projects fund is based on projected assessments. The budget for the Greenlink fund is based on program sponsorship revenue. Additionally, after adoption, increases and decreases in the budget may be made only upon Board of Directors’ approval. A review of revenues and expenditures compared to budget is provided monthly to the Board of Directors with the monthly financial statements. In addition to approval of the annual budget, the District’s Board of Directors must authorize an expenditure more than $10,000 in advance of the purchase or contract for services. A copy of the check register is provided monthly to the Board of Directors. Cash and Cash Equivalents Cash consists of demand and time deposits, and funds maintained in public funds investment pools. The District considers all deposits with a maturity of three months of less to be cash equivalents. Inventories Inventories consist of supplies held for the use of the District and are carried at cost using the first-in, first-out method. The costs of inventories are recorded as expenditures when consumed rather than when purchased. Capital Assets In the government-wide financial statements, capital assets are recorded at cost and depreciation of capital assets is computed and recorded by the straight-line method and range from 3 to 10 years. In the fund financial statements, fixed assets used in the governmental funds’ operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Unearned Revenue Unearned sponsorship payments are amounts received in advance for the operation of the Greenlink Circular Program.



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Fund Balance The difference between fund assets and liabilities is “Net Position” on government-wide financial statements and “Fund Balance” on governmental funds financial statements. The District follows Governmental Accounting Standards Board Statement No. 63 Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. This Statement provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources. Deferred outflows represent the consumption of the government’s net positions that is applicable to a future reporting period. A deferred inflow represents the acquisition of net positions that is applicable to a future reporting period. Fund Balance Hierarchy Fund balances of governmental funds are classified as:

Nonspendable – amounts that cannot be spent because they are not in a spendable form (not expected to be converted to cash) or are legally required to be maintained intact. Restricted – amounts where legally enforceable constraints are imposed by an external party such as a creditor, grantor, contributor, or regulations of other governments or constraints imposed by law through contracted provisions or enabling legislation. Committed – amounts that can only be used for specific purposes as a result of constraints imposed by formal action of the Board of Directors, the District’s highest level of decision-making authority. Assigned – amounts where constraints are imposed on the use of resources through the intent of the District for specific purposes but are neither restricted nor committed. Unassigned – the residual amount of the general fund balance more than amounts that are nonspendable or that are restricted, committed, or assigned to specific purposes within the general fund.

In the fund financial statements, the District reserves or designates all or portions of fund balance in the various governmental fund financial statements. The unassigned fund balances for governmental funds represent the amount available for budgeting future operations. The restricted fund balances for governmental funds represent the amount that has been legally identified for specific purposes. The committed fund balances for governmental funds represent balances that have been authorized through formal action by the Board of Directors but not yet spent. Amounts that do not meet the criteria to be classified as restricted or committed but that are intended to be used for a specific purpose may be designated as assigned by authorization of the Board of Directors. When an expenditure is incurred for which both restricted and unrestricted fund balance is available, the District considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the District considers the amount to have been spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the Board of Directors has provided otherwise in its commitment or assignment functions.



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New Accounting Pronouncements Government Accounting Standards Board Statement No. 85, Omnibus 2017 The objective of this Statement is to address practice issues that have been identified during implementation and application of certain GASB Statements. The statement addressed a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits. The Statement was effective for the District’s calendar year 2018 financial statements; however, there were no transactions in 2018 relating to this Statement. Government Accounting Standards Board Statement No. 84, Fiduciary Activities The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. Effective for the District’s calendar year 2019, impact of this Statement will be evaluated by management upon adoption. Government Accounting Standards Board Statement No. 87, Leases The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities. Effective for the District’s calendar year 2020, impact of this Statement will be evaluated by management upon adoption. Federal Grants Federal grants and assistance awards made based on entitlement periods are recorded as receivables and revenues when entitlement occurs. Federal reimbursement type grants are recorded as revenues when the related expenditures are recognized. Use of grant resources is conditioned upon compliance with terms of the grant agreements and applicable federal regulations, which include subjecting grants to financial and compliance audits. Deferred Inflows of Resources Deferred inflows of resources are a liability of the District and represent the collection or billing of the subsequent year’s special assessment not available within the current period or soon enough thereafter to pay liabilities of the current period. At the beginning of the following year, the amount is removed from the deferred inflows of resources and recognized as revenue.



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Federal Income Tax The District is exempt from Federal income taxes under section 501(a) as an organization described in Section 501(c)3 of the Internal Revenue Code. Furthermore, the Internal Revenue Service has ruled that the District is a publicly-supported organization and is not a private foundation. Under the provisions of Internal Revenue Procedure 95-48, the District is not required to file public information returns on Form 990. Use of Estimates The preparation of the District’s financial statements in conformity with accounting principles generally accepted in the United States of America requires the District’s management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. Note 3 – Deposits and Investments Under the Texas Local Government Investment Pool (“TexPool”) Participation Agreement, administrative, and investment services to TexPool are provided by Federated Investors, Inc. through an agreement with the State of Texas Comptroller of Public Accounts. The State Comptroller is the sole officer, director, and shareholder of the Texas Treasury Safekeeping Trust Company authorized to operate TexPool. The reported value of the pool is the same as the fair value of the pool shares. TexPool is subject to annual review by an independent auditor consistent with the Public Fund Investment Act. Audited financial statements of the Pool are available at First Public, 12008 Research Blvd. Austin, Texas 78759. In addition, TexPool is subject to review by the State Auditor’s Office and by the Internal Auditor of the Comptroller Office. Due to its short-term, highly liquid nature, TexPool investments have been reported as cash equivalents. As of December 31, 2018, the District held $11,821,548 in the TexPool Prime fund. The District’s investment in the TexPool Prime fund is rated AAA by Standard & Poor’s and maintains a weighted average maturity of 60 days or less. The District limits its exposure to interest rate risk by investing in securities that assure safety of public funds, maintain liquidity and achieve the highest rate of return. The TexPool Prime fund invests in a combination of commercial paper, repurchase agreements, variable rate notes, and government securities. The Board of Directors has adopted a written investment policy regarding the investment of its funds pursuant to Chapter 2256 of the Texas Government Code and Chapter 49 of the Texas Water Code, effective as of December 11, 2014. The investments of the District follow the Board of Directors’ investment policy. Such investments may include (1) obligations, including letters of credit, of the United States or its agencies and instrumentalities; (2) direct obligations of the State of Texas or its agencies and instrumentalities; (3) TexPool local government investment pools; and (4) various other items that comply with the Public Funds Investment Act and the District’s Investment Policy. Custodian Credit Risk – Deposits: Credit risk for deposits with financial institutions is the risk that in the event of a bank failure, the District’s deposits would no longer be available. The District’s investment policy requires pledging of collateral for all bank balances in excess of Federal Deposit Insurance Corporation (FDIC) limits and the District has entered into a Collateral Pledge Agreement with J. P. Morgan Chase to provide this service.



26

Note 4 – Assessments Due From Tax Assessor/Collector Assessments due from tax assessor/collector as of December 31, 2018 are summarized as follows:

Service Plan Operations

Capital Projects Total

Assessments due from taxassessor/collector 12,540,516$ 1,629,704$ 14,170,220$

Less allowance fordelinquent accounts - - -

12,540,516$ 1,629,704$ 14,170,220$

The District reviews its allowance annually and has determined that no allowance was necessary as of December 31, 2018. Note 5 – Interfund Receivable and Payable Amounts recorded as due to/from each fund are considered temporary loans that will be repaid in less than one year. At December 31, 2018, the Service Plan Operations fund owed the Capital Projects fund $126,529. Note 6 – Capital Assets All property and equipment purchased by the District is the property of the District until the District is terminated. If the infrastructure is integrated in and used as a part of the City’s infrastructure, it may be conveyed to the City of Houston, as is the case with the District’s capital projects. A summary of changes in capital assets during 2018 is as follows:

January 1 Additions Retirements December 31

Banners and banner arms 463,542$ 13,440$ -$ 476,982$ Computer software 5,249 - - 5,249 Forklift 5,500 - - 5,500 Golf carts - street team 49,609 6,899 - 56,508 Holiday decorations 224,576 - - 224,576 Operations center LHI build-out 124,629 295,134 - 419,763 Power lift and generators 75,670 - - 75,670 Street sweeper 9,995 - - 9,995 Safety guide PDA & printers 22,592 - - 22,592 Emergency surveillance equipment 10,000 - - 10,000 Trolley map stands 20,775 - - 20,775 Vehicles - Smart Car 18,693 - - 18,693 Greenlink buses 2,999,269 - - 2,999,269

4,030,099 315,473$ -$ 4,345,572$ Less: accumulated depreciation (2,223,975) (303,762)$ -$ (2,527,737)

1,806,124$ 11,711$ -$ 1,817,835$



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Note 7 – Lease Rental Income In 2010, the District entered into a five-year lease agreement with a local restaurant to sell food and beverage from the Market Square Park kiosk. The District exercised its option to renew the term for an additional five years, through March of 2020. Operating fees are calculated as follows: the restaurant will pay the District 6% of the first $1,000,000 in gross sales and 7% of gross sales in excess of $1,000,000. For the year ended December 31, 2018, total revenue from the Market Square Park kiosk was $54,558 and is included in Project Revenue. Note 8 – Related Party Transactions The District has an administrative contract with Central Houston, Inc., whereby Central Houston, Inc. provides certain administrative and management services to the District. The District and Central Houston, Inc. share executive management, office space, and administrative support. Central Houston, Inc. provided staffing services to the District in the amount of $2,761,400 in 2018. As of December 31, 2018, the District had a due to affiliate of $419,908. In addition, the District paid $441,560 in 2018 to Central Houston Civic Improvement, Inc. for its business development program. Such amounts are included in expenditures in the accompanying financial statements. Note 9 – Commitments Finger-FSC Crawford, Ltd. In February of 2013, the District entered into an economic development agreement with Finger-FSC Crawford, Ltd. to provide a grant equal to 75% of the incremental District assessment generated by the project for a term of 15 years from the date of completion of the project and its inclusion on the District’s tax assessment roll. The project is for development of approximately 397 residential units and 10,000 square feet of retail on blocks 50 and 51 in the District. In addition, the City of Houston provided a Chapter 380 grant to the owner of the project in the amount that the owner would otherwise be required to pay the City for abandoning the right-of-way of the 1500 block of Prairie Street. The residential property was completed in 2016. The first payment was made to Finger-FSC Crawford, Ltd. in the amount of $44,552 in 2018. Downtown Living Initiative The District, in conjunction with the City of Houston and the DRA, created a program in 2012 called the Downtown Living Initiative (DLI) which is designed to incentivize residential development in downtown. Developers are eligible to receive a rebate equal to 75% of the incremental District assessment and City of Houston property taxes generated by the project upon completion for a fifteen-year period up to a maximum of $15,000 per unit. There is an overall cap of units able to participate in this program of 5,000 units. The application deadline for the DLI program was June 30, 2016 and the program is now closed. The District has executed DLI agreements with fifteen developers totaling 4,600 units. Projects opened as of the end of 2018 include: SkyHouse Houston, SkyHouse Main, Block 334, Market Square Tower, the Star, Aris Market Square, Eighteen25, Catalyst, 1414 Texas, 1711 Caroline, and the Marlowe. Estimated completion dates for the additional development projects range from the fourth quarter of 2019 through the end of 2021. The residential projects are geographically dispersed throughout several areas of the District, including the Ballpark District, the Historic District and the southern portion of downtown.



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Developers are required to meet certain deadlines and be in compliance with design guidelines in order to benefit from the incentive program, although extensions may be granted if approved by the board. District liability for DLI assessment rebates to developers is contingent upon renewal of subsequent service plans beyond 2020. The District has a program to support catalytic retail projects. During 2017, a total of $180,000 was award to two grantees. The Tipping Point received a grant of $40,000 for the opening of a lifestyle/fashion store at 214 Travis in the historic district. Bravery Chef Hall received a grant of $140,000 which will activate the street level of the residential project Aris Market Square and feature a food hall concept for rising-star chefs. In 2018, the Tipping Point grant was paid in full and construction was in progress for the Bravery Chef Hall with a scheduled opening in the summer of 2019. Total payments made by the District during 2018 under its economic development, catalytic and DLI grants was $351,438. Assuming the service plan is renewed in its current form, the District’s commitment for future years is as follows:

Years endingDecember 31,

2019 672,747$ 2020 686,159 2021 912,532 2022 903,858 2023 930,974 2024-Beyond 10,295,271 Total 14,401,541$

Service Agreements The District entered into an interlocal agreement with METRO for operation of the Greenlink transit service. The agreement initially covered a four-year term that ended in June of 2016 but since then has been extended for another four years, through June of 2020, with two additional two-year extensions available. Either party may terminate the agreement at any time with 270 days written notice. The 2018 expenditure by the District for this service is $1,554,633. The District entered into an agreement with Block by Block to provide personnel, equipment and supplies for public safety, cleaning and maintenance services for the District beginning on January 1, 2016. The 2018 expenditure by the District under the existing services agreement is $3,238,001. The District has entered into several other smaller service agreements for cleaning, landscaping, engineering, design and various consultants to provide professional services.



29

Note 10 – Lease Agreements The District leases its operations center and warehouse. The operations center’s office lease at 1119 Milam was renewed for a five-year term on May 31, 2016. The operations center office lease contains an early termination right which allows the landlord to terminate the lease at any time with a six-month notice. Lease rental expense amounted to $102,812 for the year ended December 31, 2018. During 2018, the District entered into a 15-year lease with LVA4 Houston Greenstreet, L.P. for a new operations center facility at 1313 Main. The minimum future lease payments under these lease agreements are as follows:

Year endingDecember 31,

2019 291,027$ 2020 332,802 2021 266,775 2022 239,956 2023 244,969 Thereafter 2,925,919 Total 4,301,448$

Note 11 – Risk Management The District is exposed to various risks of loss related to torts, theft, damage, and destruction of assets, errors and omissions, personal injuries, and natural disasters. The risk of loss is covered by the Texas Municipal League Intergovernmental Risk Pool. In addition, a portion of the unrestricted fund balance in the amount of $800,000 has been designated as assigned for catastrophe. There have been no significant reductions in insurance coverage and no settlements. Note 12 – Subsequent Events Management has evaluated subsequent events through June 13, 2019; the date the financial statements were available to be issued. No change to the financial statements is deemed necessary as a result of this evaluation.

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)


Schedule of Revenues, Expenditures and Changes in Funds Balances – Budget to Actual

(Unaudited)

For the Year Ended December 31, 2018

30

ServicePlan Capital

Operations Projects Greenlink Total Budget Variance

Revenues:Assessments, net 13,555,352 1,759,916 -$ 15,315,268$ 14,663,472 651,796$ Project revenue 659,088 41,760 749,924 1,450,772 1,402,200 48,572 Interest 265,395 61,828 25,259 352,482 150,000 202,482

Total revenues 14,479,835 1,863,504 775,183 17,118,522 16,215,672 902,850

Expenditures:Downtown feels safe & comfortable at all times:Collaboration to maintain low crime rate 1,839,039 - - 1,839,039 2,500,000 660,961 Reduced presence of homeless & street persons 540,858 - - 540,858 515,000 (25,858) Downtown sidewalks are comfortably lighted 305,510 - - 305,510 340,000 34,490 Downtown clean & well-kept appearance 3,440,269 - - 3,440,269 3,368,500 (71,769) Remove signs of disorder in downtown 28,063 - - 28,063 36,500 8,437 Prepare for emergencies 100,984 - - 100,984 110,000 9,016

6,254,723 - - 6,254,723 6,870,000 615,277 Public realm is charming, inviting, beautiful & Celebrates the life of the city:Key pedestrian streets are inviting 412,600 - - 412,600 423,500 10,900 Public spaces managed, programmed, & delightful 863,192 - - 863,192 978,500 115,308 Place of civic celebration 1,040,942 - - 1,040,942 760,000 (280,942)

2,316,734 - - 2,316,734 2,162,000 (154,734) Accessible to region & easy to get around:Effective transit access more places, more hours 10,800 - - 10,800 11,000 200 Convenient circulation without personal vehicle 74,516 - - 74,516 69,500 (5,016) Easy to find way around 181,609 - - 181,609 167,500 (14,109) Connect neighbors & districts inside/outside downtown 50,348 - - 50,348 47,500 (2,848) Convenient, understandable & managed parking 16,083 - - 16,083 15,000 (1,083)

333,356 - - 333,356 310,500 (22,856) Vibrant, sustainable mixed-use place:Best place to work in region 244,579 - - 244,579 275,000 30,421 Exciting neighborhoods to live in 377,579 - - 377,579 647,900 270,321 Competitive shopping place 49,371 - - 49,371 47,000 (2,371) Remarkable destination for visitors 50,497 - - 50,497 67,000 16,503

722,026 - - 722,026 1,036,900 314,874 Downtown's vision & offering understood by all:Market to region 885,775 - - 885,775 1,003,700 117,925 Promote downtown's ease of use 21,981 - - 21,981 21,000 (981) Vision/development framework understood by all 742,729 - - 742,729 909,000 166,271 Tools to assist continued redevelopment 86,503 - - 86,503 80,000 (6,503) Develop & maintain information to support downtown 32,064 - - 32,064 32,000 (64)

1,769,052 - - 1,769,052 2,045,700 276,648



(Unaudited)


31

ServicePlan Capital

Operations Projects Greenlink Total Budget Variance

District governance & service known for excellence:Engage stakeholders in decision making 705,424 - - 705,424 770,903 65,479 Communications to owners, tenants & others 23,464 - - 23,464 26,500 3,036 Preservation of districts' capital assets 54,483 - - 54,483 76,857 22,374

783,371 - - 783,371 874,260 90,889 Capital improvement & expenditures:Downtown feels safe & comfortable - 252,478 - 252,478 890,000 637,522 Public realm is charming, inviting, & beautiful - 462,155 - 462,155 525,000 62,845 Accessible to region & easy to get around - 491,766 - 491,766 1,705,000 1,213,234 Vibrant, sustainable mixed-use place - 32,175 - 32,175 132,163 99,988 Capital replacement expenditure - 144,628 - 144,628 399,989 255,361

- 1,383,202 - 1,383,202 3,652,152 2,268,950 Accessible to region and easy to get around:Vehicle operator - - 1,453,089 1,453,089 1,350,000 (103,089) Fuel - - 101,544 101,544 107,000 5,456 Marketing - - 73,823 73,823 75,000 1,177

Operating administrative expense - - - - 10,000 10,000 Administrative - - 255,209 255,209 249,939 (5,270)

- - 1,883,665 1,883,665 1,791,939 (91,726)

Total expenditures 12,179,262 1,383,202 1,883,665 15,446,129 18,743,451 3,297,322

Excess (deficiency) of revenues over expenditures 2,300,573$ 480,302$ (1,108,482)$ 1,672,393$ (2,527,779)$ 4,200,172$



(Unaudited)


32

Reconciliation of Differences Between Budgetary Inflows and GAAP Revenues:

$ 17,118,522

(5,681)

450,000

$ 17,562,841

.

$ 15,446,129

(11,100)

450,000

315,473

(303,762)

$ 15,896,740

Sources/ Inflows of Resources

Differences - budget to GAAP:

The fund balance at the beginning of the year is not a budgetary resource but is a current year revenue for financial reporting purposes.

Interfund transfer

Total revenue as reported on the statement of governmental fund revenues, expenditures, and changes in fund balances

Reconciliation of Differences Between Budgetary O utflows and GAAP Expenditures:

Uses/ O utflows of Resources

Differences - budget to GAAP:

Expenditures budgeted on accrual basis rather than modified accrual basis.

Interfund transfer

Depreciation expense

Total expenditure as reported on the statement of governmental fund revenues, expenditures, and changes in fund balances

Capital outlay


Notes to Required Supplementary Information

(Unaudited)


33

Annual budgets are adopted on a full accrual basis. Reconciliation of budgetary basis to modified accrual is included with the budgetary comparison schedule. The legal level of control is at the fund level. The District follows these procedures in establishing the budgetary data reflected in the financial statements:

a. Prior to December 31, the District’s Board will review and approve the operating and

capital improvement budgets for the succeeding year. Assessment rates for operations and capital improvements are set in the fourth quarter prior to the first year of a new five-year service plan and prior to each succeeding year of a service plan if changes to the initial rates are to be made.

b. Budget preparation also involves the following before adoption:

1. Review of needs and priorities within the District. 2. Review of draft budget by board committees. 3. Review of draft budget by the District’s Board. 4. Receipt of property owner input through Town Hall Meeting or another format.

Prior to December 31, the budget is legally enacted through passage of a Board resolution by the favorable vote of a majority of the members of the Board. No amendments were made to the budget during the year.

Q1 2019Downtown Houston Market Report 1

Q1

KEY HIGHLIGHTS

5new retailers added in Q1

Downtown concluded the first quarter of 2019 with sound fundamentals, and a slew of office leases, renovations, and new construction activity, thanks to improving indus-try trends. Rebounding from its plunge at the end of last year, WTI crude increased steadily throughout the first quarter, settling at $61 per barrel at the end of March (a 40 percent increase over a 3-month period). Despite looming uncertainty as geo-political tensions weigh on global and national demand outlook, the Downtown and Houston economy continue to experience robust labor market and economic growth, albeit lower than initially forecasted. Houston unemployment is at its lowest in two decades (3.7 percent in March 2019), supported by strong manufacturing employ-ment. Stable oil prices are likely to translate to increased production, but less so to energy sector job growth, due to the growing technological efficiencies in the indus-try. In the midst of this, the Downtown market is bustling, as developers and landlords continue to implement innovative offerings and experiences for employees, residents and visitors. Cranes continue to dot the Downtown skyline, as a plethora of new and redevelopment projects are underway in all of Downtown’s major submarkets—office, multifamily, hospitality and retail.

Downtown Houston Market Report

MassChallenge Press Conference

Q1 2019


SUMMARY (CONTINUED)

Q1 2019 in Review

On the office front, according to CBRE, top leasing trans-actions in the region in Q1 2019 were 36 percent more square feet than in Q1 2018; and of this, 31 percent of the leasing activity was concentrated in Downtown.1 Downtown recorded over 774,000-SF in leasing activ-ity, of which 238,000-SF were signed by firms new to Downtown, and three leases were over 100,000-SF (Direct Energy, Calpine, Hunton Andrews Kurth). Absorption in the first quarter was negative (-165,391 SF)1 as most of these leases were firms moving from one Downtown building to another coupled with shrink-ing footprints. Hines commenced construction of Texas Tower, a new 47-story state-of-the-art office building at 845 Texas, slated for completion in late 2021. Renovation projects dominated the first quarter. In response to ten-ants being lured to new state-of-the-art buildings that are full of amenities and services, property owners are injecting significant amounts of capital to reposition their buildings to remain competitive, and to cater to tenants needs for thriving mixed-use, amenitized and collabo-rative environments, in light of the design convergence and blurring of lines between workplace and hospitality designs. Over 12 office buildings are currently under ren-ovation, with at least five more planned.

On the residential front, Downtown’s residential sub-market continues to thrive, as more people choose to live in and enjoy its centralized amenities such as parks, sports and entertainment venues, and its booming culi-nary scene. Downtown’s occupancy rate increased by 2.2 percentage points to 86.8 percent at the end of the first quarter. In line with this, Hines has commenced con-struction on The Preston, Houston’s tallest residential tower, slated for delivery in 2022. This, in addition to two other residential buildings under construction—Camden Downtown and Regalia at the Park—will add 873 units to Downtown’s growing inventory.

On the hospitality and retail fronts, Brookfield is on track to complete its renovation/rebranding of DoubleTree Hotel into C. Baldwin, Curio Collection by Hilton, this summer. Newcrestimage’s AC Hotel by Marriott is also on track to open in late June and Cambria Hotel Houston Downtown will be open for business in August. Downtown had five new retail deliveries this quarter. Complementing its growing national recognition, Downtown’s Finn Hall, placed 4th in the top ten winners for USA TODAY’s Travel Awards’ Best New Food Hall.

Downtown’s emerging tech, innovation and entrepre-neurial ecosystem continues to grow at a solid pace. In the first quarter alone, Downtown’s innovation eco-system gained two new co-working spaces (Life Time Work, Spaces), two new accelerators and one incubator (MassChallenge, Founder Institute, WeWork Labs), and

two notable tech tenants (Ruths.ai and UiPath), further placing Houston on the map as a competitive tech and innovation hub. Venture capital activity has also signifi-cantly increased, with Chevron Technology Ventures new $90 million Fund VII; and new accelerator/investment programs by BBL Ventures and Eunike Ventures.

BUILDING YEAR

Kinder Morgan Tower 2011

601 Travis 2011

919 Milam 2012

Pennzoil Place 2013

811 Louisiana/Two Shell 2015

1001 McKinney 2015

Esperson 2016

1000 Main 2016

1801 Smith (formerly 600 Jefferson) 2017

The Jones on Main-708 Main & 712 Main 2017

One Allen-Motiva Plaza 2017

5 Houston Center 2018

1415 Louisiana 2019

Lyric Center 2019

1010 Lamar (Lamar Plaza) Ongoing

LyondellBasell Tower Ongoing

2 Houston Center Ongoing

Fulbright Tower Ongoing

4 Houston Center Ongoing

717 Texas Ongoing

Bank of America Center (700 Louisiana) Ongoing

GreenStreet-1201 Fannin/NRG Tower Ongoing

Heritage Plaza Ongoing

Two Allen Ongoing

Three Allen Ongoing

TOTAL Plaza Ongoing

1001 Fannin Planned

1100 Louisiana Planned

600 Travis (JP Morgan Chase Tower) Planned

910 Louisiana (One Shell Plaza) Planned

One City Center (1021 Main) Planned

Sources: Berkadia, Bisnow, CBRE, Central Houston, Colvill, Greater Houston Partnership (GHP), Houston Business Journal (HBJ), JLL, InnovationMap, Realty News Report (RNR)

1 Source: CBRE (Marketview, Houston Office, Q1 2019)


Market OverviewRESIDENTIALDowntown’s residential submarket is thriving and con-tinues to attract investment and a growing number of residents, given its track record as one of the fastest growing residential neighborhoods in the region. As the demand for Downtown units has increased, evidenced by an 86.8 percent occupancy rate this quarter, so has the supply. Hines has begun construction on Houston’s tallest residential tower—The Preston—slated for deliv-ery in 2022. This is again indicative of the DLI initiative’s success in kickstarting an organic response to what was evidently a huge demand for Downtown living. The sub-market has grown to close to 6,100 residential units, up from about 2,500 in 2013; Downtown now houses over 9,000 residents.

Coupled with Houston’s consistent population growth driven in part by the city’s lower cost of living, strong job growth and demographic trends are expected to con-tinue to fuel sustained multifamily demand and absorption. Millennials, most of whom are postponing suburban home ownership, are remaining in apartments or pur-chasing condo units in the central city. Baby Boomers are also giving up the empty-nester life and large homes in the suburbs for life in the central city with proximity to parks, cultural and entertainment venues. Investors are responding to Downtown’s evolution into a residential neighborhood by providing quality of life and lifestyle amenities. A case in point is high-end fitness chain, Life Time’s choice to open in GreenStreet next year, but also the growing number of retail offerings in Downtown. Combined with Downtown’s expanding green space, including the new Southern Downtown Park, demand for Downtown housing is only poised to grow.

MARKET HIGHLIGHTS

RESIDENTIAL HIGHLIGHTS

6,086residential units

873under construction

1,179planned

86.8%occupancy rate

OFFICEThe Downtown office market has been extremely active since the year began, with major lease deals, renova-tions, and new construction activity. Key fundamentals indicate that the Downtown’s office market delivered strong performance in the first quarter and continues to show signs of improvement. Between January and March alone, Downtown recorded close to 774,000-SF in leases, close to 50 percent (375,581-SF) were renewals, reiter-ating tenant’s confidence in the submarket; BG Group Place (811 Main) is 93.6 percent leased; most of the sub-lease space in One Shell Plaza (910 Louisiana) has been leased; 609 Main at Texas is over 80 percent leased, after securing several leases this quarter. Co-working trends are also contributing to absorption, with co-working and innovation-related leases accounting for over 100,000-SF of leases in the first quarter alone. Overall vacancy however remains high 20.4 percent in Q1 2019, a slight increase from 19.7 percent in Q4 2018, all of which Class A buildings accounted for. This is underpinned by growing inventory from the two office towers under construction accompanied by footprint shrinkage.

Spurred by this flight to quality, Downtown is seeing a wave of renovations and reinvestments to attract and retain tenants. As tenants upgrade to recently built towers, landlords have had to extensively renovate or redevelop their products with new amenities, given the

Hines has begun construction on Houston’s tallest resi-dential tower, The Preston, a 46-story, 373-unit tower, at 414 Milam in Downtown. Located at the former Houston Chronicle parking garage site, the building’s unique diag-onal positioning will provide panoramic views. Units will range from 580-SF to 2,927-SF; 10 penthouse apartments on levels 44 and 45 will range in size from 1,739-SF to 2,927-SF. The amenity-rich tower will include a state-of-the-art fitness center, bike shop, co-working space, social lounges, 6,804-SF of ground-floor retail and restau-rant space, and a 23,500-SF tenth floor amenity level with resort-style pool and yoga lawn. The project, which com-menced in March, is slated for completion in the third quarter of 2022, with preleasing to begin in October 2021. (Hines, REBusiness, HBJ, Bisnow, Chronicle, Culturemap)

The Star apartments at 1111 Rusk won the “For-Profit-Large” category in the Urban Land Institute (ULI) Houston’s 2019 Development of Distinction Awards for most compelling and innovative real estate projects in Houston. CBRE will manage retail leasing for the prop-erty. The historic 1915 Texaco Building was recently renovated into 286 luxury apartments and 26,000-SF of retail. (Forbes, Bisnow)

The Preston

https://www.hines.com/properties/the-preston-houston

http://rebusinessonline.com/hines-to-develop-46-story-residential-tower-in-downtown-houston/

https://www.bizjournals.com/houston/news/2019/02/04/hines-reveals-more-details-about-46-story.html

https://www.bisnow.com/houston/news/office/going-higher-hines-new-residential-tower-to-be-taller-than-its-othersin-houston-97068

https://www.chron.com/business/real-estate/article/Hines-reveals-designs-for-downtown-apartment-tower-13581222.php

http://houston.culturemap.com/news/real-estate/02-05-19-downtown-hines-the-preston-cresset-wealth-advisors-levy-family-partners-luxury-high-rise/

https://www.forbes.com/sites/cynthialescalleet/2019/02/01/uli-houstons-2019-development-of-distinction-winners-announced/#61923bb029d7

https://www.bisnow.com/houston/news/deal-sheet/this-weeks-houston-deal-sheet-97461


Market Overview

OFFICE (CONTINUED)

more competitive leasing environment.

Renovations have sparked demand; most of the buildings under renovation bagged several major leases in the first quarter.

• Two Houston Center (2HC) inked four major leases totaling over 150,000-SF: Energy and utility com-pany, Direct Energy will relocate its 930 employees from Greenway Plaza into 105,578-SF in its new cor-porate headquarters in 2HC in April 2021, making the company the largest tenant in the building; Gensler will move its 288-person office from Pennzoil Place into 45,000-SF in 2HC in late 2019.

• LyondellBasell Industries N.V., which currently has its U.S. operations headquartered in LyondellBasell Tower, is expanding into 52,000-SF in 2HC; Vorys, Sater, Seymour and Pease, will relocate its 28 employ-ees from Bank of America Center (700 Louisiana St.) into 22,627 SF of office space at 2HC in June 2019, an expansion of 29 percent.

• Fulbright Tower (1301 McKinney St.) inked two leases: oil and gas consulting firm, Netherland, Sewell & Associates renewed its 25,543-SF lease; Enlink Midstream expanded by 15,000-SF.

• Hines is renovating 717 Texas, which inked two major leases totaling 154,000-SF: Calpine, an anchor tenant since 2003, renewed its 126,000-SF lease; Smyser Kaplan & Veselka leased 27,795-SF at 717 Texas, a 24 percent expansion.

• Schiffer Hicks & Johnson PLLC and BMO Capital Markets Corp. renewed and expanded their leases by an additional 74 percent and 23 percent respec-tively in Bank of America Center (700 Louisiana St.), which is undergoing a $20 million renovation.

• The recently completed $15 million capital improve-ment to 1415 Louisiana helped secure 84,000-SF in leases.

• Undergoing extensive renovations, GreenStreet secured over 105,000-SF in office leases from coworking companies, Spaces (63,000-SF) and Life Time Work (38,000-SF), and MassChallenge (5,000-SF).

New buildings are doing just as well. Capitol Tower is now 82 percent leased; Hines’ 801 Texas tower is 33 percent pre-leased. EnVen Energy Corp. signed a new 57,139-SF lease in 609 Main, relocating from Three Allen Center (333 Clay St.). Law firm Womble Bond Dickinson (US) LLP leased new space at 811 Main. Other notable leases include: Hunton Andrews Kurth’s renewal of its 134,763-SF lease at 600 Travis, where it has been a tenant for 38

years, and is undertaking a $3 million renovation to part of its office space. Calgary-based Parkland Fuel Corp., which markets petroleum products, opened a Supply and Trading Floor and its first Houston office Downtown.

Several Downtown companies have a reported a gen-eral upward trend in employment, with some indicating planned headcount increases for the near future.

• Deloitte expanded by approximately 100 employ-ees, following its lease renewal in Heritage Plaza.

• Accenture acquired Enaxis Consulting, expanding its headcount by about 75 employees.

• Motiva Enterprises LLC renovated its headquarters in Allen Center as it prepares to add close to 300 employees by the end of next year.

• Following its acquisition of Coastal Flow Measurement Inc., Quorum Business Solutions Inc. expanded its staff from 425 people to about 500, with plans to further increase to about 600 employ-ees by the end of the year.

• NRG Energy’s president and CEO, Mauricio Gutierrez, announced significant staff growth plans in its Downtown office as it plans to grow its retail business.

• EY (Ernst & Young LLP) acquired CPA firm Linn Thurber LLP, adding more than 20 Linn Thurber employees to its office at 5 Houston Center.

• KBR’s CEO announced double digit percentage growth in KBR’s headcount especially in Downtown, by the end of 2019.

• Software company, Arundo Analytics Inc., plans to add employees to its Downtown headquarters to propel its growth.

One Shell Plaza

OFFICE HIGHLIGHTS

51, 686, 341 SFoffice inventory

1, 881, 581 SFunder construction

3, 700, 000 SFplanned


Market Overview

OFFICE (CONTINUED)

• Haynes and Boone LLP announced plans to grow the firm’s presence Downtown.

• Womble Bond Dickinson (US) LLP plans to hire more attorneys and professionals in its newly opened office.

• RG Energy Inc., Kinder Morgan, AlixPartners LLP, Capco, Robert W. Baird & Co., and Elevate Midstream Partners LLC have also announced 2019 footprint and/or headcount growth plans ranging anywhere from 15 to 50 percent.

Resources are ramping up for Downtown’s thriving entre-preneurial and startup community. The second largest co-working space in Downtown by square footage, inter-national coworking company, Spaces, will be moving into GreenStreet in late 2019. Life Time Inc. is bringing its new coworking concept, Life Time Work, a 38,000-SF coworking space to GreenStreet (1201 Main St.) in 2020. Downtown now has eight co-working companies, an unprecedented expansion a key amenity for cluster growth in Downtown’s dynamic innovation ecosystem.

Downtown also gained new two accelerators and one incubator. Supported by a $2.5 million grant economic development grant from the Downtown Redevelopment Authority (DRA), an affiliate of Central Houston, Inc., global nonprofit startup accelerator, MassChallenge, expanded into Downtown. Headquartered in Boston, and with locations in Israel, Mexico, Rhode Island, Switzerland and Texas, MassChallenge is sure to attract a diverse range of global high-potential startups from all industries. Silicon Valley-based Founder Institute, a global early stage accel-erator program, also launched its second Texas location in Houston, operating out of Station Houston. WeWork launched its global startup incubator program, WeWork

Labs, in 708 Main. Downtown gained two notable tech tenants: oil and gas AI-enabled analytics platform, Ruths.ai, and global robotics company UiPath, which has a pres-ence in 18 countries, moved into the Main&Co (114 Main) historic redevelopment, accounting for 100 percent of the office space in the mixed-use building.

There has also been a significant increase in venture capi-tal activity. Chevron Technology Ventures launched a $90 million fund in March, Fund VII, to find and invest in start-ups to secure access to oil and gas resource optimization technologies. This is in addition to its prior fund, Fund VI (the future energy fund), that focuses on alternative energy technologies. BBL Ventures, a Houston venture capital firm, launched a startup accelerator program, BBL Labs, in February, operating out of Station Houston, to pair energy giants with early-stage technology com-panies that can solve their biggest challenges. Eunike Ventures, a venture capital group with an accelerator for oil and gas startups, has partnered with three large energy firms, including Downtown’s Hess Corp., to find and invest in startup tech breakthroughs in the oil and gas industry.

MARKET HIGHLIGHTS

The 1111 Fannin Downtown office tower has been listed for sale by owner C-III Asset Management. The 17-story, 428,629-SF building is fully leased to JP Morgan Chase until September 2021. (RNR)

A $15 million capital improvement campaign was recently completed at 1415 Louisiana, the 43-story, office tower owned by Wedge Group Inc. Upgrades include a new modern lobby with Italian stone, new entryway, elevator cabs, a conference center and two new restaurants, and a fitness center, and a massive “Sky Dance” mural on the exterior. (Bisnow, RNR, Website)

717 Texas, a 33-story, 700,000-SF office tower, is under-going renovations, which Hines expects to complete this summer. Upgrades include a hospitality-inspired lobby with new furnishings, new wall and elevator finishes, lighting/security console upgrades, street-level acti-vation, numerous day and evening food and beverage concepts. (Hines, Bisnow)

Silicon Valley-based Founder Institute, a global early stage accelerator program, has launched its second Texas location in Downtown Houston, operating out of Station Houston (1301 Fannin). Each cohort consisting of about 30 companies participates in a 14-week course

GreenStreet

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http://realtynewsreport.com/2019/03/06/major-redo-at-1415-louisiana-tower-in-downtown/

http://1415louisiana.com/

https://www.hines.com/news/two-leases-signed-at-717-texas



Market Overview

OFFICE (CONTINUED)

of education, mentorship and business development. (InnovationMap, Founder Institute)

Midway Companies and Lionstone Investments converted more than 130,000-SF of retail space at GreenStreet to office space, most of which has already been leased. Midway is also renovating the former NRG Tower office building (1201 Fannin); including the lobby, to better suit multiple tenants. (Chronicle)

Brookfield Properties broke ground on the full-scale renovation of Houston Center, the 9.2-acre, 4 million-SF mixed-use complex, in February. The transformation, which includes a new central plaza and greenspace, a digital water wall, entertainment space, an iconic stair connection to new landscaped terraces, two-story glass façade, reclad skybridges, a new 10,000-SF fitness center, new dining and retail, coworking space and more, are scheduled to wrap up in late 2020. The 2 Houston Center and LyondellBasell Tower lobbies will be completely rec-reated with a new two-story glass lobby with entry from McKinney or Fannin Streets. Phase II, which will focus on The Shops at Houston Center, will be announced in the future. (HBJ, Houston Center, HC Brochure)

Life Time Inc. will be opening its new coworking concept, Life Time Work, a 38,000-SF space in GreenStreet (1201 Main St.) in 2020. Life Time Work’s slightly more upscale model is geared towards and appeals to older, more established companies. Every membership will come with a membership to the health club. The company’s total lease of 94,000-SF on two floors includes a 56,000-SF athletic, health and wellness facility. (HBJ, Chronicle, REBusiness, RNR)

MassChallenge, a global network of zero-equity startup accelerators, launched Downtown in March, supported by a five-year $2.5 million grant from the Downtown Redevelopment Authority (DRA), an affiliate of Central Houston, Inc. Occupying 5,000-SF at GreenStreet, MassChallenge will nurture and launch inventors and entrepreneurial ventures through a zero-equity, six-week boot camp, using a range of in-person training, mento-ring, community connectivity and virtual classes from the Austin-based program. The inaugural cohort will begin this summer and will support up to 25 startups. (MassChallenge, RNR, Chronicle, RNR, InnovationMap, Bisnow, RNR)

JLL has secured a $52.8 million loan from MetLife Investment Management to refinance the 600,000-SF Niels and Mellie Esperson office buildings on behalf of Contrarian Capital Management and Cameron Management. The loan replaces the building’s maturing

debt. (RNR, Bisnow)

International coworking company, Spaces, will be open-ing a 63,000-SF location in GreenStreet (1201 Fannin) in late 2019, occupying three floors. Spaces GreenStreet will offer collaborative areas, team rooms, coworking space, phone booths, meeting rooms, fully furnished pri-vate offices and a 3,000-SF rooftop patio. (InnovationMap, Bisnow, HBJ)

Hines and Ivanhoé Cambridge have commenced con-struction of Texas Tower, a new 47-story, 1.1-million-SF state-of-the-art office tower at 854 Texas Ave., on the former Houston Chronicle site. Designed by Pelli Clarke Pelli, the diagonally-angled tower will be built to very high standards including LEED Platinum, WiredScore and WELL Building Standards. Scheduled for completion at the end of 2021, Texas Tower is already 33 percent leased. Texas Tower will feature a dramatic lobby; multiple food and beverage offerings; a full-service conference facility; public gardens on level 12; and a high-performance fit-ness center. (Hines, RNR, HBJ, Chronicle)

In addition to recent upgrades—a new fitness center, bike room and destination elevator dispatch in two elevator banks—Brookfield began more renovations to Total Plaza in early 2019. These include renovation of the main lobby, with new floor and wall finishes, new lighting and ceilings; new furniture and security console; modern finishes in the elevator lobbies and cabs; and new signage and graphics on the building’s interior and exterior. (Chronicle)

Brookfield began renovations of Two and Three Allen Centers, the second phase of its “Reimagining of Allen Center” project in April 2019, with an estimated completion in late 2020. Both buildings will receive improvements to activate street-level retail and create more openness and walkability. Renovations at Two Allen Center will include a new two-story lobby, second-floor outdoor terrace and updated retail bays. Three Allen Center will get a renovated lobby and a new shower and locker facility. Both buildings’ elevator lobbies and elevator cabs will be renovated, and a new skybridge will connect the towers. (Bisnow, Chronicle, HBJ, RNR, Allen Center)

WeWork Labs, WeWork’s global startup incubator program, launched in March, housed in WeWork’s Downtown location at 708 Main St. The program will nurture and accelerate up to 30 startups, providing edu-cation, mentorship, and resources to scale their solutions, coordinated by partner organization, Alice, an entrepre-neurial digital resource for innovation. (InnovationMap, HBJ, Chronicle)

https://houston.innovationmap.com/global-early-stage-accelerator-program-launches-second-texas-location-in-houston-2630401168.html

https://fi.co/

https://www.houstonchronicle.com/business/article/Newest-downtown-tenant-Life-Time-fitness-center-13718460.php

https://www.bizjournals.com/houston/news/2019/01/16/brookfields-houston-center-overhaul-to-include.html

http://www.houstoncenter.com/

http://houstoncenter.com/wp-content/uploads/2019/01/HC_brochure-01.19.pdf

https://www.bizjournals.com/houston/news/2018/11/26/newly-launched-coworking-brand-were-planning.html

https://www.houstonchronicle.com/business/article/Newest-downtown-tenant-Life-Time-fitness-center-13718460.php

https://rebusinessonline.com/life-time-to-bring-94000-sf-of-fitness-coworking-space-to-downtown-houston/

https://realtynewsreport.com/2019/03/29/greenstreet-flexes-muscle-with-life-time/

https://masschallenge.org/media/masschallenge-expands-global-network-houston-texas

http://realtynewsreport.com/2019/01/30/from-greenstreet-to-midtowns-old-sears-the-innovation-district-evolving-quickly/

https://www.houstonchronicle.com/techburger/article/MassChallenge-business-accelerator-opening-in-13573843.php

http://realtynewsreport.com/2019/01/30/from-greenstreet-to-midtowns-old-sears-the-innovation-district-evolving-quickly/

https://houston.innovationmap.com/global-early-stage-accelerator-program-launches-second-texas-location-in-houston-2630401168.html

https://www.bisnow.com/houston/news/construction-development/take-that-amazon-new-details-emerge-for-houstons-innovation-district-97257

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http://realtynewsreport.com/2019/01/14/houston-real-estate-briefs-2/

https://www.bisnow.com/houston/news/office/jll-announces-528m-refinancing-of-historic-esperson-in-downtown-houston-96465

https://houston.innovationmap.com/life-time-to-open-new-coworking-space-fitness-club-in-greenstreet-in-downtown-houston-2632875403.html

https://houston.innovationmap.com/life-time-to-open-new-coworking-space-fitness-club-in-greenstreet-in-downtown-houston-2632875403.html

https://www.bizjournals.com/houston/news/2019/02/06/global-coworking-company-to-double-houston.html

https://www.hines.com/properties/texas-tower-houston

http://realtynewsreport.com/2019/03/11/concrete-foundation-poured-for-47-story-office-tower-in-downtown-houston/

https://www.bizjournals.com/houston/news/2019/02/05/name-revealed-for-hines-47-story-office-tower.html

https://www.chron.com/business/real-estate/article/Hines-downtown-office-building-gets-new-name-13591151.php

https://www.chron.com/business/real-estate/article/Total-Plaza-slated-for-more-upgrades-with-anchor-13599086.php

https://www.bisnow.com/houston/news/office/next-steps-in-allen-center-renovation-released-97854

https://www.chron.com/business/real-estate/article/Brookfield-Properties-launching-next-phase-of-13664089.php

https://www.bizjournals.com/houston/news/2019/03/05/more-renovation-plans-for-downtown-houston-s-allen.html

http://realtynewsreport.com/2019/04/03/here-we-go-again-downtown-project-getting-phase-2-redo/

https://allencenterhouston.com/the-project/updates/the-reimagining-of-allen-center-continues

https://houston.innovationmap.com/wework-and-alice-partner-up-to-bring-early-stage-startup-program-to-downtown-houston-2632028994.html

https://www.bizjournals.com/houston/news/2019/03/19/wework-startup-incubator-program-to-launch-in.html

https://www.chron.com/techburger/article/WeWork-Labs-brings-new-business-incubator-to-13699600.php


HOSPITALITYAs with retail, Downtown’s hospitality, cultural and enter-tainment sectors continue to receive national attention. In its February publication “9 Great Reasons To Visit Houston In 2019,” CNN not only points to Downtown as having most of the top travel attractions in Houston, but recommends Downtown as one of the three main neigh-borhoods of choice for accommodation, for travelers to have the best access to the city’s highlights.

MARKET HIGHLIGHTS

Brookfield’s C. Baldwin, Curio Collection by Hilton, the rebranded 354-room independent hotel (formerly DoubleTree Hotel), is on track for its grand-opening on October 10, and will formally adopt its new name on June 2. The renovated hotel will feature ballrooms named after influential Houston women, and a new signature Italian restaurant Rosalie, by celebrity chef, Chris Constantino. (Bisnow, HBJ, Bisnow, RNR, Culturemap, RNR)

Hilton Americas-Houston Hotel, the city’s largest con-vention center hotel at 1600 Lamar, will be undergoing an extensive $37 million renovation. Led by Gensler, each of its 1,200+ rooms will receive $31,000 in upgrades, a new color and design scheme, new artwork from 11 local artists and in-suite technology. Construction will start in the second quarter and be completed in phases throughout the year to limit hotel disruption. (Bisnow, HBJ, Chronicle)

Downtown’s Hotel Alessandra took the number-two spot on Interior Design magazine’s national best design list for “cool and captivating lobbies.” Part of the Valencia brand, Alessandra “pairs traditional glamour with modern sophistication.” (Culturemap)

HOSPITALITY HIGHLIGHTS

7,803hotel rooms

564under construction

400+planned

RETAIL HIGHLIGHTS

415+restaurants, bars & clubs

5new retailers

28+planned (including 3 Food Halls)

Market Overview

RETAILDowntown’s constantly evolving culinary scene contin-ues to grab local and national attention. Narrative around this year’s retail buzzword, ‘Food Halls,’ continues to focus on Downtown, as highlighted in CNN’s February publication, ”9 Great Reasons To Visit Houston In 2019.“ Complementing its growing national recognition, Downtown’s newest food hall, Finn Hall, placed 4th in the top ten winners for 2019 USA Today’s “10 Best Readers Choice Travel Awards’ Best New Food Hall”. However, Downtown’s Finn Hall in The Jones on Main, and its soon-to-be counterparts, Bravery Chef Hall in Hines’ Aris residential towerand Understory at Skanska’s new office tower, Capitol Tower, play a bigger role than meeting the demand for ‘approachable’ culinary offerings; they are also making both the office and residential buildings they are housed in more attractive to tenants, as Downtown emerges as a true live-work-play destination. Downtown had five new retail deliveries in the first quarter; over 28 new retailers are coming soon or planned.

MARKET HIGHLIGHTS

Brasserie du Parc now has Saturday brunch available from 11am to 3 pm, serving everything from crepes to steaks and drink specials. (Brasserie du Parc)

Hotel Alessandra

Brasserie du Parc

https://www.bisnow.com/houston/news/hotel/new-high-end-hotel-to-debut-at-allen-center-in-downtown-houston-96578

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http://realtynewsreport.com/2019/01/10/allen-centers-redone-hotel-christened-with-a-surprising-brand-name/

https://www.bisnow.com/houston/news/hotel/37m-approved-for-renovation-at-downtowns-hilton-americas-96907

https://www.bizjournals.com/houston/news/2019/01/18/37m-update-planned-for-hilton-americas-houston.html

https://www.chron.com/business/article/Hilton-Americas-convention-37-million-makeover-13543036.php

http://houston.culturemap.com/news/real-estate/03-01-19-interior-design-magazine-hotel-alessandra-cavalry-court-rottet-studio/

https://www.brasserieduparc.net/


Market Overview

RETAIL (CONTINUED)

Bandero Tequila Terrace is now open at Toyota Center. The terrace, bar and social space is open to tickethold-ers for home games and other events hosted at Toyota Center. (Houstonia)

Common Grounds, a coffee bar and café is now open in the lobby of the newly renovated 5 Houston Center lobby at 1400 McKinney St. Operated by Blackwater Roasting, a coffee roaster in east downtown, the café is slated to open in the first quarter of 2019. (HBJ)

Ono Poke has opened its second Houston location in Downtown, in the One Allen Center food court, at 500 Dallas St. The restaurant is open for lunch Monday through Friday. (Ono Poke, Culturemap)

Sojourn De Nails, a new nail salon, has opened up at the street level of Skyhouse Main (1625 Main St, Suite A-2). The salon is open daily. (Sojourndenails)

Terra, a new coffee bar operated by Compass, is now open at the lobby-level of 1415 Louisiana, offering coffee, pastries, breakfast and lunch options. (Bisnow)

RETAIL—COMING SOONBritish Chef Richard Knight will lead upscale diner, Atlas, the late-night spot of Bravery Chef Hall (409 Travis). With a classy and old school vibe, the diner will serve “inter-national elevated” items, including late-night breakfast dishes. (HoustonFoodFinder)

Boomtown Coffee will be opening its second Downtown location in Understory food hall. The sole coffee provider at Understory, Boomtown will offer its specialty coffee beverages with locallyroasted beans, pastries and baked goods. (HBJ, Culturemap)

Chefs Matthew Baum and Rakesh Nayak and cake baker Sarah Ono plan to open Common Bond café and bakery on the first floor of Capitol Tower. The café will offer sweet pastries & seasonal savory dishes. (Culturemap, Common Bond)

Flip ‘n Patties, which serves Filipino street food and Filipino-inspired Akaushi burgers, will be the fifth of seven restaurant concepts in Understory culinary market. Flip

’n Patties will serve locally sourced handmade signature burgers, meats, sauces and fries. (Eater, HBJ, Houstonia, Chronicle, FlipnPatties)

Guard + Grace, will be opening in a 13,000-SF bi-level glass-box space in One Allen Center (500 Dallas) this fall. The steakhouse by Troy Guard’s TAG Restaurant Group is slated for late September/early October. The menu will adapt to Houston, with a few new Asian and seafood dishes. It will seat 350, with both outside and upstairs private dining areas, and four bars. (HBJ)

Former Uchi chefs Patrick Pham and Daniel Le will open Kokoro, a new East Asian, Japanese restaurant, in Bravery Chef Hall this summer. The restaurant will serve yakito-ri-style grilled skewers in addition to its sushi menu. (Kokoro, Culturemap, EATER, PaperCity)

Bravery Chef Hall has selected its first bartender, David Cedeno, for its innovative bar incubator program. Cedeno will open a mid-century inspired cocktail and drink spot called Lockwood Station at the food hall for a one-year stint, after which a new owner will move in, while he moves into a permanent home elsewhere. The menu will feature classics like daiquiris along with draft cocktails and drinks inspired by dishes at Bravery’s six restaurants. (Eater, Culturemap)

Brasserie du Parc

https://www.houstoniamag.com/articles/2019/1/15/bandero-tequila-terrace-toyota-center

https://www.bizjournals.com/houston/news/2018/10/08/photos-tour-this-newly-renovated-downtown-houston.html

http://www.onopokehouston.com/

http://houston.culturemap.com/news/restaurants-bars/02-18-19-food-news-roundup-sammys-wild-game-grill-the-counter-kokoro-one-poke-downtown-flower-child-woodlands/#slide=0

http://sojourndenails.com/

https://www.bisnow.com/houston/news/office/1415-louisiana-completes-15m-in-capital-improvements-97609

https://houstonfoodfinder.com/2018/10/12/popular-british-chef-tapped-to-lead-upscale-diner-in-downtown-houston-chef-hall/

https://www.bizjournals.com/houston/news/2018/11/27/popular-heights-coffeeshop-to-open-in-downtown.html

http://houston.culturemap.com/news/restaurants-bars/11-27-18-boomtown-coffee-shop-new-location-understory-downtown-food-hall-capitol-tower/

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https://commonbondcafe.com/

https://houston.eater.com/2019/3/12/18261310/flip-n-patties-downtown-houston-understory-opening

https://www.bizjournals.com/houston/news/2019/03/12/filipino-street-food-burger-concept-coming-to-new.html

https://www.houstoniamag.com/articles/2019/3/18/food-news-understory-flip-n-patties-filipino-j-alexanders

https://www.houstonchronicle.com/business/bizfeed/article/Flip-n-Patties-signs-up-as-5th-tenant-at-13682937.php

http://www.flipnpatties.com/#houston-filipino-food-truck

https://www.bizjournals.com/houston/news/2019/03/26/why-denver-restaurateur-troy-guard-decided-to.html

https://kokorohtx.com/

http://houston.culturemap.com/news/restaurants-bars/02-18-19-food-news-roundup-sammys-wild-game-grill-the-counter-kokoro-one-poke-downtown-flower-child-woodlands/#slide=0

https://houston.eater.com/2019/2/6/18214349/kokoro-sushi-uchi-bravery-chef-hall-handies-douzo-opening-2019

https://www.papercitymag.com/restaurants/bravery-chef-hall-sushi-uchi-chefs-daniel-lee-patrick-pham-kokoro/

https://houston.eater.com/2019/2/22/18236682/bravery-hall-bar-david-cedeno-lockwood-station

http://houston.culturemap.com/news/restaurants-bars/02-22-19-bravery-chef-hall-indie-bar-operator-david-cedeno-lockwood-station-downtown-food-hall/


Market Overview

OTHER DEVELOPMENTSDiscovery Green, Downtown’s vibrant 12-acre urban park, is undergoing a $12 million renovation that includes adding a new playground and redesigned northwest corner. Drawing more than one million visitors each year, the park has been an economic engine for Downtown. Upgrades will include two play areas with seating, 20 play pieces and improved lighting. In the interim, Yuri Suzuki’s “Sonic Playground,” a kid-friendly interactive sculpture from the High Museum in Atlanta, is on view. (Click2Houston, Houstonia, abc13, abc13, Chronicle)

Discovery Green was recognized by the Texas chapter of the American Planning Association as a Great Public Space. This highlights the role planners and planning play in creating a community of lasting value. (Bisnow)

The Downtown District Operations Center has moved from 1119 Milam to 1313 Main. The Downtown Operations team as well as its partners, Block By Block, HPD Downtown Operations, SEAL Security and SEARCH Outreach, will operate out of this new location.

Kelsey-Seybold Clinic is constructing a new, 2,200 SF clinic at 815 Walker, connected to the Niels and Millie Esperson Buildings in the underground tunnels in Downtown Houston. The new facility will feature one medical provider and two virtual health exam rooms. It is slated to open this summer. (Bisnow)

The Downtown District has a new security program with SEAL Security. Two dedicated SEAL officers will patrol Downtown and walk designated high traffic areas daily from 7 pm to 3 am. This guaranteed evening and late-night presence directly supports Downtown’s growing resi-dential population, offices, hotels, entertainment venues, theaters, restaurants and bars. (DowntownDistrict)

RETAIL—COMING SOON (CONTINUED)

Mendocino Farms Sandwich Market, a California upscale, fast-casual restaurant concept, will be opening on the ground-floor of 609 Main at Texas. Slated for this fall, the 3,612-SF concept will serve chef-driven sandwiches and salads, including vegan and gluten-free options and craft beverages. (RNR, Chronicle, Website, Culturemap)

Fast-casual Italian restaurant, MONA Fresh Italian Food, will be opening in Understory. MONA will serve a five-step menu. (Bisnow, Eater, Culturemap)

Astros fans have a new dining option in Minute Maid Park. Austin-based wing joint Pluckers, opened in the ballpark, behind the center field. (Culturemap)

New York-based global burger chain, Shake Shack, will open a new Downtown location at The Jones on Main (712 Main St.), in the space previously occupied by Brown Bag Deli. Slated to open this summer, they will feature the Texas-exclusive Lockhart Link burger and desserts, in addition to its signature menu, and will have seating both inside and on an outdoor patio (Eater, Culturemap, Chronicle)

Strato 550, a restaurant and conference center, will be opening this spring, occupying the entire 43rd floor of 1415 Louisiana. The restaurant will replace the former The 43rd Restaurant & Lounge. Offering a Mediterranean-influenced cuisine, Strato 550 will be open to the public for lunch, weeknight cocktail hour and private events. The conference center will have four meeting rooms and customized menus. (HBJ)

Downtown Public Safety Guides

https://www.click2houston.com/community/construction-underway-for-new-playground-at-discovery-green-in-downtown-houston

https://www.houstoniamag.com/articles/2019/2/8/discovery-green-playground-renovations-2019

https://abc13.com/family/discovery-green-begins-construction/5126427/

https://abc13.com/family/discovery-green-begins-construction/5126427/

https://www.chron.com/news/houston-texas/houston/article/Discovery-Green-launches-12-million-renovation-13597832.php

https://www.bisnow.com/index.php/houston/news/deal-sheet/this-weeks-houston-deal-sheet-98363

https://www.bisnow.com/index.php/houston/news/deal-sheet/this-weeks-houston-deal-sheet-98209

http://www.downtowndistrict.org/programs/operations/

https://realtynewsreport.com/2019/01/31/mendocino-farms-upscale-sandwich-shop-leases-hines-space-downtown-third-in-calif-groups-fast-rollout-in-houston/

https://www.chron.com/business/texas-inc/article/Retail-wrap-Mendocino-Farms-takes-root-downtown-13580320.php

https://www.mendocinofarms.com/downtown-houston/

http://houston.culturemap.com/news/restaurants-bars/01-31-19-mendocino-farms-new-sandwich-restaurant-downtown-609-main/


https://houston.eater.com/2019/1/10/18177171/understory-mona-fresh-italian-food-coming-soon

http://houston.culturemap.com/news/restaurants-bars/01-10-19-mona-fresh-italian-food-new-location-understory-downtown-food-hall/#slide=0

http://houston.culturemap.com/news/restaurants-bars/04-01-19-food-news-roundup-little-liberty-voodoo-doughnut-beef-n-bun-flip-n-patties-creed-italian-big-city-wings-spring/#slide=0

http://houston.culturemap.com/news/restaurants-bars/01-14-19-shake-shack-new-location-downtown-houston-main-street/

http://houston.culturemap.com/news/restaurants-bars/01-14-19-shake-shack-new-location-downtown-houston-main-street/

https://www.chron.com/life/article/Shake-Shack-to-open-Downtown-Houston-2019-13527623.php

https://www.bizjournals.com/houston/news/2019/02/04/new-restaurant-to-open-on-top-floor-of-renovated.html


Q1 2019 Overview

*This report features all public, year-to-date leases Sources: Houston Office—2019 Quarterly Market Reports (Colvill, CBRE, Cushman & Wakefield, HFF, JLL, NAI Partners, Newmark Grubb Knight Frank, PMRG, Transwestern); CoStar; Houston Business Journal (HBJ); Houston Chronicle; Realty News Report; Bisnow; Central Houston, Inc.

MAJOR OFFICE LEASES AND SALES

OFFICE LEASES

TENANT TYPE TO FROM SF

Hunton Andrews Kurth LLP Renewal 600 Travis - 134,763

Calpine Renewal 717 Texas - 126,000

Direct Energy New to Downtown 2 Houston Center (909 Fannin) 12 Greenway Plaza 105,578

Spaces [co-working space] New to Downtown GreenStreet (1201 Main) - 63,000

EnVen Energy Relocation 609 Main at Texas Three Allen Center (333 Clay) 57,139

Gensler Relocation 2 Houston Center (909 Fannin)

Pennzoil Place (711 Louisiana) 45,000

Life Time Work [co-working space]

New to Downtown/Houston GreenStreet (1201 Main) - 38,000

BMO Capital Markets Corp. Renewal/Expansion Bank of America Center (700 Louisiana) - 30,275

(expansion: 7,065)

Smyser Kaplan & Veselka LLP (HQ )

Relocation/Expansion 609 Main at Texas Bank of America Center

(700 Louisiana)27,795

(expansion: 5,407)

Netherland Sewell & Associates, Inc. (NSAI) Renewal Fulbright Tower

(1301 McKinney) n/a 26,000

Vorys, Sater, Seymour and Pease LLP

Relocation/Expansion

2 Houston Center (909 Fannin)

Bank of America Center (700 Louisiana)

22,627 (expansion: 5,028)

Weil, Gotshal & Manges LLP Renewal Bank of America Center (700 Louisiana) - 21,375

Kilpatrick Townsend & Stockton LLP Renewal Bank of America Center

(700 Louisiana) - 17,519

Womble Bond Dickinson (US) LLP

New to Downtown/Houston 811 Main - 17,273

Schiffer Hicks & Johnson, PLLC Renewal/Expansion Bank of America Center

(700 Louisiana) - 10,875 (expansion: 4,627)

Carlson Capital, LP Renewal Bank of America Center (700 Louisiana) - 8,774

Ruths.ai Relocation Main&Co (114 Main) 300 Main 8,457

UiPath New to Downtown/Houston Main&Co (114 Main) - 5,187

MassChallenge New to Downtown/Houston GreenStreet (1201 Main) - 5,000

Paloma Resources LLC (Q4 2018)

New to Downtown 1100 Louisiana - 4,200

Proman Global Development LLC (Q4 2018)

New to Downtown 1100 Louisiana - 3,500

BGN International New 2 Houston Center (909 Fannin) - 2,906

Parkland Fuel Corp. New n/a - n/a


DOWNTOWN INNOVATION SPACES: CO-WORKING, ACCELERATORS, INCUBATORS PROPERTY NAME TYPE ADDRESS

Accenture Innovation Hub Innovation space 1301 Fannin

Bond Collective Co-working Pennzoil Place-ST (711 Louisiana)

Flatiron School (WeWork) Coding School 708 Main

Life Time Work Co-working GreenStreet (1201 Main)

MassChallenge Startup accelerator and competition GreenStreet (1201 Main)

Novel Coworking Co-working 720 Rusk, 405 Main

Regus Co-working 700 Milam, Two Allen Center (1200 Smith), 1001 Texas

Servcorp Co-working 700 Louisiana

Spaces Co-working GreenStreet (1201 Main)

Station Houston Co-working/Accelerator 1301 Fannin

Veterans in Residence (ViR) (WeWork Bunker Labs) Co-working/Accelerator 708 Main

WeWork Co-working 708 Main

WeWork Labs Incubator 708 Main

Sources: Central Houston, Inc.

RETAIL OPENINGSQ4 2018

Bandero Tequila Terrace Toyota Center (1510 Polk)

Common Grounds 5 Houston Center (1400 McKinney)

Ono Poke One Allen Center (500 Dallas)

Sojourn De Nails Skyhouse Main (1625 Main, Suite A-2)

Terra 1415 Louisiana

Q1 2019 Overview

COMING SOON

Guard + Grace 610 Main

Bravery Chef Hall

Atlas Kokoro Lockwood Station

409 Travis St.

Mendocino Farms Sandwich Market 609 Main at Texas

Understory Food Hall

Boomtown Coffee Common Bond Flip ‘n Patties MONA Fresh Italian Food

800 Capitol

Pluckers Minute Maid Park

Shake Shack The Jones on Main (712 Main)

Strato 550 1415 Louisiana

*Based on known projects


January 3, 2019

THE FORMER TEXACO HEADQUARTERS: A CASE STUDY IN MIXED-USE REBIRTH

“Limestone vaulted arcades, Tuscan columns and deep window ledges highlight the historic frame of The Star, a century-old landmark building recently converted into a residential tower in Downtown Houston. Developed by Provident Realty Advisors, the space is all new but brought back in a historic feature—an authentic 12-foot-long TEXACO illuminated sign is a focal point of the space. The game room walls are splashed with other memorabilia from the oil company. The bottom level features a virtual golf simulator, dog spa, theater and poker room. The top floor lounge area, includes an open meeting and kitchen space, an Equinox-inspired fitness center and outdoor rooftop lounge. The final piece of the redevelopment is an 18K SF full-service restaurant on the ground level by popular restaurateur Benjamin Berg of B&B Butchers, slated to open later this year. —Bisnow

January 16, 2019

STREET-LEVEL ACTIVATION: HOUSTON CENTER TO RECEIVE MULTILEVEL MAKEOVER

“Brookfield Properties is tackling a multilevel redevelopment at Houston Center—a 9.2- acre portfolio of three high-rise office buildings and a 16-story tower atop a 196K SF retail center, claiming the title of Downtown’s largest asset. “The capital investment we are making in Houston Center is reflective of the confidence we have in Downtown.” Returning To Glory: The building’s exterior will be modernized with a three-level glass facade, activating the street-level plaza with new food and beverage offerings and infusing new pockets of green space. Construction will wrap up in late 2020. Going Greener: The reimagined plaza will feature a digital water wall, flexible entertainment space and a massive spiral staircase providing connectivity to the enhanced sky bridge. Downtown’s Last Retail Center: The rede-velopment of the The Shops at Houston Center shops is planned for future expansion. Brookfield is actively studying the space, and Gensler is considering design plans. —RNR

January 30, 2019

INTERNATIONAL STARTUP ACCELERATOR RECEIVES $2.5M GRANT TO EXPAND TO DOWNTOWN HOUSTON

“Boston-based nonprofit MassChallenge, the City of Houston and Central Houston Inc. announced the startup accelerators’ expansion into downtown Houston, in a press conference. MassChallenge will run its accelerator out of GreenStreet. The Downtown Redevelopment Authority (DRA), which is affiliated with Central Houston, has approved an economic development grant for MassChallenge to operate its program, not to exceed $2.5 million, paid over a five-year period, and will not be used for MassChallenge’s cash prizes (those come its corporate partners/sponsors). MassChallenge’s first Houston cohort will begin this summer and support up to 25 startups through a zero-equity, six week-long bootcamp. Internationally, MassChallenge has helped 1,900 startups raise more than $4 billion in funding, generate more than $2 billion in revenue and create over 120,000 jobs. —HBJ

February 4, 2019

HOUSTON’S HIGH-RISE SHIP COMES IN WITH UNIQUE NEW HINES’ SUPER TOWER. SURPRISING, UNEXPECTED DESIGN INVOKES VISIONS OF NEW YORK AND BARCELONA—INSIDE THE PRESTON’S DARING DIAGONAL WORLD

“Hines’ new 46-story high-rise dubbed The Preston, its ultra-unique design (and its status as the tallest residential building downtown) will make it a head turner. “If you can imagine the building being in the shape of a ship, a boat, a sailboat at a diagonal; this isn’t just an ordinary high-rise.” The Preston is a tower with the ambitions and daring of a high-rise in Barcelona or New York City. “Hines wanted to get to the leading edge of design … you can see that in the geometry of the tower itself.” The unique skinny, diagonal tower will almost look like its tilted to passersby. The Preston marks another level in the evolu-tion of its best practices, innovation and ambition in the residential market. You certainly haven’t seen anything like it in Houston yet.” —PaperCity

LOCAL MEDIA

Spotlight on Downtown Houston



March 22, 2019

THESE ARE HOUSTON’S 10 BEST RESTAURANTS FOR 2019

“Theodore Rex…We’re truth-tellers here in Texas. Theodore Rex is a better, more satisfying restaurant than Oxheart. Ditching the tasting menu makes dining at chef-owner Justin Yu’s restaurant more cus-tomer friendly, because now people can control their costs and order as much or as little food that suits their appetite. Staple dishes like the tomato toast and Paris-Brest dessert are allowed to earn virtually permanent spots on the menu, but other options change often enough to reflect Yu and his team’s commitment to seasonality. Service at both iterations has always been first rate, but it feels a little more relaxed now, which makes the restaurant more suitable for a weeknight dinner and less relegated to special occasion status.” —HBJ

LOCAL MEDIA (CONTINUED)

January 2019

52 PLACES TO GO IN 2019

“No. 46 Houston. Rebounding bigger and better after a hurricane. After Hurricane Harvey, the city is back on its feet and showing off the everything-is-bigger-in-Texas attitude. Four food halls opened in 2018, including Finn Hall, which features up-and-coming chefs including the James Beard-nominated chef Jianyun Ye with a downtown outpost of his Chinese hot spot Mala Sichuan and a taqueria from the local favorite Goode Company. Finn Hall is one of four food halls that opened in Houston last year.”

January 2019

WHERE TO GO IN 2019 THE 21 DESTINATIONS THAT WILL BE ESPECIALLY HOT THIS YEAR—AND THE DATA YOU NEED TO PLAN YOUR TRIP.

“And since everything is bigger in Texas, the city is welcoming not one, not two, but four jumbo food courts, including the 9,000-square-foot Bravery Chef Hall. Culinary talent here will focus on piloting new concepts, including a wood-oven steakhouse from famed cattle rancher Felix Florez and a pasta joint from Ben McPherson, an expert in the art of fried chicken. Fine lodging options are also taking flight. Joining the city’s recently-renovated Four Seasons is the year-old Post Oak—which has the benefit of not being attached to a convention center—plus an InterContinental and a Thompson..”

January 2019

10 BEST READERS’ CHOICE AWARDS BEST NEW FOOD HALL WINNERS

“The top 10 winners in the Best New Food Hall category are as follows: … 4. FINN HALL-Houston…Located in the historic JPMorgan Chase & Co. building in the heart of downtown Houston, the new Finn Hall features 20,000 square feet of space for 10 chef-driven food concepts, as well as a craft beer and wine bar and an Art Deco cocktail lounge.”

REGIONAL & GLOBAL MEDIA


February 2019

9 GREAT REASONS TO VISIT HOUSTON IN 2019

“There’s so much to see, do and eat! Eating And Drinking: Food halls are all the rage in Houston. Three are opening this year alone in Downtown, while a fourth opened Downtown in December 2018. Houston has never been more ripe for exploration. It wins in the aesthetics department, too: The much-photographed skyline is dotted with skyscrapers in architectural styles, and this city has countless green spaces and parks. Many of the top travel attractions are concentrated in downtown. Tourists can get around this part of town by the efficient Metro Rail system. The Arts…There’s plenty of art on display outside of Houston’s museums, too. Case in point is this large mural in Downtown by graffiti artist GONZO247. Theater District: There are more than a dozen theaters in this 17-block district in downtown Houston. The 12 James Beard Award-nominated restaurants… There’s Xochi, an airy spot in downtown that turns out Oaxacan inspired dishes and was nominated for Best New Restaurant. Pappas Bros. Steakhouse, was nominated in the Outstanding Wine Program category. IF YOU GO: travelers will have the best access to the city’s highlights by choosing accommodations in one of three main neighborhoods, including downtown, home to top restaurants and nightlife.”

February 2019

A DAY IN HOUSTON: 3 MEALS, 3 CULTURES, ONE CITY THE 52 PLACES TRAVELER FOLLOWS HIS STOMACH THROUGH THE CITY OF HOUSTON, FINDING A STAGGERING DIVERSITY ALONG THE WAY.

“Our columnist, Sebastian Modak, is visiting each destination on our 52 Places to Go in 2019 list. He arrived in Houston after stops in Puerto Rico and Panama. Houston is widely considered to be one of the most culturally diverse cities in the world. According to the city’s planning department, 48 percent of residents speak a language other than English—and more than 145 languages are spoken in the city. 29 percent of the population is foreign-born. Diversity wasn’t the main reason Houston was on 2019’s 52 Places to Go list, but food and culture were. There’s the wave of new trendy Downtown food halls... unless you sequester yourself in the chic apartments of Downtown or the mansions of River Oaks, that diversity is everywhere you look—and everywhere you eat.”

February 2019

HOUSTON UNVEILS PLANS TO BECOME A NEW TECH HUB—ARE YOU READY FOR STARTUP CITY? MAJOR PROJECTS TO LINK NEW INNOVATION CORRIDOR, DRAW CUTTING EDGE

“There’s no question about it—Houston is serious about jumpstarting its startup community. The Bayou City’s new innovation district is receiving a major boost thanks to two new developments. Boston-based business accelerator MassChallenge is moving into GreenStreet in Downtown. “Houston is in its early stages of developing a movement where culture and industry collide along a four-mile stretch of Main Street called the Innovation Corridor,” Mayor Sylvester Turner tells the crowd at the announcement. “The corridor offers a converging point for all authentic characteristics necessary to foster a startup commu-nity…We’re here to announce a significant partnership in advancing our strategic plan to make Houston an innovative city at a world-class level. MassChallenge will operate its program in Houston with a grant from the Downtown Redevelopment Authority that will not exceed $2.5 million and will be paid over a five-year period, in partnership with the City of Houston and Central Houston.”

REGIONAL & GLOBAL MEDIA (CONTINUED)




REGIONAL & GLOBAL MEDIA (CONTINUED)

March 2019

ONE DONE, TWO TO GO AS ‘REIMAGINING ALLEN CENTER’ STARTS NEXT RENOVATION PHASE

“When built nearly a half century ago, Allen Center’s trio of office towers reached for the sky. Renovations today are reimagining the complex’s form and function at street level as part of a multi-phased project. Brookfield Properties recently announced Phase II plans to transform the office environment and experience at Two Allen Center (1977, r.1992) and Three Allen Center (1980). The scope for Two Allen Center includes a new, two-story lobby, second-floor outdoor terrace with view of The Acre and updated retail bays. In Three Allen Center, the redesign affects the lobby and adds shower and locker facilities. A new sky bridge will link the two towers. When completed in 2020, the three-tower campus will encompass not just 3.2 square feet of office space, but an assortment of new restaurant and retail options, upgraded lobbies, tenant lounges and collaborative spaces—and the Acre.”

March 2019

HOUSTON IS A FOOD LOVER’S PARADISE TAKE IT FROM A BOSTON EXPAT: THE SPRAWLING TEXAS CITY IS MORE THAN JUST HEAT, HUMIDITY, AND HALLIBURTON. IT’S A CULINARY MELTING POT.

“Over the past few decades, Houston’s population has been defined (and redefined) by waves of immigrants, putting down roots in Texas soil and forming thriving communities. The result of this (literal) melting pot are dishes that reflect a world. The culinary crossovers makes it one of the more accessible foodie vacations you can take. An opulent Mexican brunch spread laid out by James Beard Award-winner Hugo Ortega—the chef behind the Oaxacan-focused treasure Xochi…In the Warehouse District just north of downtown, Theodore Rex is esteemed chef Justin Yu’s follow-up to his adventurous, award-winning Oxheart… And Griselda Barrios and Jodi Wray’s downtown dessert cafe Treacherous Leches. Houston isn’t just about eating—it’s also a perfect getaway for art lovers, music buffs, sports fans, and anyone who just needs a little “me” time.”


Robert PieroniDirector of Economic [email protected]—

Please contact Central Houston or the District with any questions you may have:

Angie BertinotDirector of [email protected]—

Uchenna OnuzoResearch [email protected]—

RESOURCES

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Houston Downtown Management District Board of Directors' Meeting June 20, 2019 Consent Agenda The board of directors hereby authorizes the following items and furthermore hereby authorizes the Executive Director to execute agreements as necessary for same.

1. Authorize execution of extension of agreement and expenditure for standby emergency response contractor

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ACTION ITEM Authorize Executive Director to extend an agreement with Teamwork Construction Services to be the standby contractor for emergency response.

SERVICE PLAN Account Code Budget & Year

2016-2020 925.200 $25,000 2019

REQUEST Not to exceed $5,000 DESCRIPTION Teamwork Construction Services has been the Downtown District’s

standby contractor for cleanup duties as directed in the event of an emergency and/or weather related event since 2011. This action will extend the term of the agreement with Teamwork at the existing rates until May 31, 2020.

DISCUSSION The District is responsible to assist in the cleanup efforts after a storm

event. The District learned from Hurricane Ike that all personnel and equipment resources need to be arranged and staged prior to an event so the contractors will know what role they play and have all their resources in line and ready to respond. The agreement sets the personnel and mobilization rates to perform the work when activated.

DBE Participation Teamwork Construction Services is not a DBE.

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ACTION ITEM Authorize execution of the inter-local agreement with METRO for the District to continue to be the downtown bus stop cleaning contractor.


2016-2020821.800 - $987,500 2019 821.203 - $130,000 2019

REQUEST This is a revenue agreement. DESCRIPTION This action allows the District to be METRO’s prime contractor for

bus stop cleaning in downtown for the next three years.

DISCUSSION This action is contingent on METRO receiving authorization from

their board this month for the District to be the downtown bus stop cleaning contractor. This agreement sets the scope and pricing for cleaning bus stops for the next three years. The District will utilize the Street Teams to perform the task of removing trash and graffiti at the stops daily and a pressure washing sub-contractor to pressure wash all the METRO designated stops on the scheduled nights. The District bills METRO monthly per the contract and the amount is budgeted under revenue to the District. The District will receive approximately $750,000 over the three years.

M/WBE Participation N/A

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ACTION ITEM Authorize 2019 expenditure to 1110 Main Partners, LP to terminate lease at old Operations Center.


2016-2020 822.251 $69,000 2020/ $28,750 2021

REQUEST Not to exceed $97,750 DESCRIPTION The District’s Operations Center has been located at 1119 Milam since

February 2001. The District pays $5,250 per month for the 6,600 sq. ft. space and $500 per month for additional storage space. The lease term runs through May 2021.

DISCUSSION In 2018, the District signed a 15-year lease with LVA4 Houston

Greenstreet, L.P. and began construction on leasehold improvements at its new location at 1313 Main. The Operations Center has more than doubled its staff since moving into the Milam location in 2001 and the board voted to enter into the new lease to expand and improve the facilities for the Operations Center personnel. Construction was completed and the Operations team moved into the new 12,500 sq. ft. facility on April 8th. In the two months since the relocation, we have held a public sale to dispose of the old furnishings & equipment. The facility is ready to be cleaned and turned back over to the property owner so that we can terminate our responsibilities for utilities and insurance. The landlord has offered a 5% discount for paying out the balance of rent payments in a lump sum to terminate the lease.

DBE Participation 1100 Main Partners, LP is not a DBE.

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ACTION ITEM Authorize Executive Director to enter into an agreement and related expenditure for emergency back-up power for the Operations Center during the 2019 storm season.

SERVICE PLAN Account Code Budget

2016-2020925.200 $25,000

REQUEST

$10,000

DESCRIPTION

The authorization will allow the Executive Director to enter into an agreement with an equipment rental company in order to secure a back-up generator during the 2019 storm season.

DISCUSSION Under special circumstances, the Downtown District’s new Operations Center at 1313 Main Street will need to function as an emergency operations center for Downtown. In the event of a power loss, the Operations Center will need to have emergency back-up power. Staff will be issuing an RFQ for design services this month for the new permanent generator with planned completion by the end of 2019. For the 2019 storm season, staff recommends securing a generator with a local equipment rental company should back-up power be needed at the Operations Center. The District learned from Hurricane Ike that all equipment resources need to be arranged and staged prior to an event.

DBE Participation TBD

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ACTION ITEM Authorize President/CEO to execute an amendment to the

agreement with Trammell Crow Company (TCH DT II, LLC) for a Chapter 380 reimbursement grant for residential development at Block 98, per the Downtown Living Initiative.

SERVICE PLAN 2016-2020Account Code (not assigned)Budget Year 2019 Budget Amount $0

REQUEST Amend the agreement for project delivery and adjust the

schedule for future increment and assessment reimbursements by granting an extension for this project, to receive the Temporary Certificate of Occupancy on or before August 26, 2022.

DESCRIPTION The developer has requested a contract extension for an

additional 456 days. DISCUSSION The District Board authorized this Downtown Living

Initiative application on February 13, 2014 with the development funding agreement executed on January 29, 2015. The developer requested this contract extension in writing on May 27, 2019, noting the primary reason as withdrawal of joint venture equity partner from the project. The developer has secured a new capital venture partnership and continues to develop the construction documents for permitting. The developer has satisfactorily met other obligations for continued compliance with the Downtown Living Initiative Design Guidelines and previously submitted a timely application for the construction permit for the project’s foundation

DBE PARTICIPATION The developer provides for MWDBE participation but is

under no obligation, and record of such will be provided to the District.

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MEMORANDUM June 11, 2019 TO: Board of Directors FROM: Angie Bertinot RE: Marketing & Communications

2019 Marketing & Communications Overarching goal: Position Downtown as a place with BIG personality that embraces everything people love about Houston. Provide great info on what to do, where to go and how to get there; build the size of the audience that interacts with downtown; and increase awareness of Downtown through communications, marketing and programming. The following is the status of priority projects. Public Relations For May, stories featuring Downtown totaled $4,280,791 earned PR value with more than 204 media placements and 331,348,680 impressions. Highlights included stories on events at Market Square Park and Main Street Square, design plans for the new Southern Downtown Park, possible expansion plans for METRO and new office buildings and amenities. Media included local and national print and local tv.

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Downtown Magazine We are working on the fall issue which will be out September 1. The feature story is a profile piece on the chef-driven food hall, Bravery Chef Hall, which opens later this month. In addition, we are spotlighting three generations at Hines—Gerald Hines, Jeff Hines and Laura Hines-Pierce. Advertising Our Downtown Dining commercial (below) began running on KRPC Ch. 2 on June 3 as well as in our native advertising and social platforms. After one week, viewership and CTR are some of the highest we’ve seen to date! We are currently working on our family-friendly Staycation video (featuring Four Seasons Hotel, Downtown Aquarium, Prohibition Theatre and Buffalo Bayou Pontoon Boat rides) that will launch in July and Architecture video (featuring 609 Main and Texas, 712 Main, Pennzoil Place and City Hall) that will run in August/September.

NEW! We are testing Connected TV, which is internet enabled television capable of streaming video, for the summer (June through August). We will reach the valuable “cord-cutting generation” by serving digital video ads on internet enabled television, such as Roku and Apple TV and apps such as Hulu, Amazon Prime, Netflix, etc., giving viewers an experience similar to a traditional TV commercial. Viewers can access Connected TV through their TV, tablet, desktop/laptop and smartphone. Benefits include: It’s easy to get ads seen by a target audience faster: Connected TV gives marketers and

advertisers a more accurate route to reaching relevant viewers. Instead of aiming for

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large, general audiences, marketers can narrow their ad campaigns for a more relevant reach.

Ads are shown fewer times on CTV: Instead of a barrage of ads coming in between programming segments on traditional TV, ads on connected TV are fewer in frequency. This results in higher view-completion rates because consumers aren’t overwhelmed by ads; you also can’t fast forward through ads.

Connected TV consumers are in a more receptive, relaxed state of mind: Connected TV viewers see ads when they are ready for entertainment. Advertisers believe this increases the chances a brand’s ad to make a good impression on viewers, compared to other platforms when this may not happen.

Cost effective. Advertisers only pay for actual ad-views/impressions, entirely independent from ratings and projections.

Programming On the second Sunday of every month this summer, we are hosting a new entertainment series at Market Square Park. Second Sunday Revival plays on definitions of “revival” with a different experience each month from May to September. The series begins with “Bloody Brass Brunch” on Mother’s Day, Sunday, May 12, a showcase of some of Downtown’s best Bloody Marys and favorite local brass bands. The series continued with “Right Round Baby” in June, “Sunday School” with Dem Damn Dames in July and “Bring Bowski Back”, a partnership with Saint Arnold Brewing Co., in August before finishing with “Vida Antigua” in September. In addition, sleeper hit, Blanket Bingo, started back up in May and will continue monthly through October. Heartmade Art Market, which was rescheduled from May to June 1 due to inclement weather, enjoyed a wonderful, if not warm, day. This show continues to be a dynamic signature event with a fall market scheduled for November 2.

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MEMORANDUM June 12, 2019 TO: Board of Directors FROM: Brett DeBord, Director of Operations and Capital Projects RE: Operations Update FACILITIES UPDATE: (Scott Finke, Operations Administrator) Street Light Outages: The District reported 93 street light outages to CenterPoint Energy on June 3, 2019. As of June 10th, 75 of those outages have been repaired and 18 are still in progress. The District will continue to follow up with CenterPoint until the remaining lights have been repaired. Standby Emergency Contractor: The District has an agreement with a company to be our standby emergency contractor to be utilized in the event of a storm event or any other event where construction equipment and personnel are necessary to remove debris from the public right of way. The annual contract is up for renewal and Teamwork Services has confirmed they would like to continue to be the District’s standby contractor. (See related action item under the consent agenda for authorizing agreement and expenditure for the emergency contractor.) METRO Bus Stop Cleaning: The District has an interlocal agreement with METRO to perform bus stop cleaning and pressure washing services at downtown bus stops. The agreement expires on June 23, 2019. Staff has provided METRO costs for the District to continue to clean the stops for the next 3 years. A three-year extension is going through the METRO approval process currently. Staff is seeking HDMD Board approval contingent on the METRO Board approving the costs and extension agreement. (See related action item for authorizing agreement and expenditures for bus stop cleaning.) Terminate 1119 Milam Leasehold: The District has relocated its Operations Center from 1119 Milam to 1313 Main, effective April 8. Since relocation, we have held a public sale to dispose of old furnishings & equipment. The lease space is now ready to be cleaned and turned over to the property owner. (See related action item for authorizing early termination of space agreement and related expenditure.)

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MEMORANDUM June 12, 2019 Page 2 of 3

QUALITY CONTROL UPDATE: (Keith Gould, Quality Control Manager) Landscaping: Replacement iris plants have been planted along the 1300-1800 blocks of Main St that has been lost in the past year. Tree trimmings have been completed in the southwest quadrant of the District. Dallas Street and Main Street are scheduled for complete trimming in June. Scope of work for Allen Parkway has been given to landscapers and they will begin maintenance in June. Plant replacements were completed in Market Square Park. Block By Block: Scoring for Block By Block has dipped below a 4.0 for the first time this year, coming in at 3.98. Much of the litter can be contributed to higher foot traffic and homeless congregating in more areas. An evening power washing crew has been added to the schedule, in addition to the two crews that operate during the day. This is to help with bio hazard waste that is becoming more prevalent due to homeless. A new homeless encampment site consisting of approximately 12 tents is now being cleaned weekly on Wednesdays at the Allen Parkway/I-45 on ramp. Homeless encampment clean ups are done in conjunction with the HPD DRT team. Market Square Park & Main Street Square Maintenance: All pop jets and jump jets are working properly at the Main Street fountain. Annual preventive maintenance was completed on the compressor for the fountain. Lauren’s Fountain at Market Square Park is currently disabled due to flooding of the vault. TDI is working with electricians to get the fountains up and running again. Quarterly service for Niko Nikos HVAC and air curtains were completed. CONSTRUCTION AND CAPITAL PROJECTS: (Joe Maxwell, Construction Manager) Downtown Street Light Infill Project: The purpose of this project is to implement street light and traffic signal improvements at multiple locations throughout downtown. New constellation street lights will be installed along nine blocks faces. These new street lights will be tied to CenterPoint’s system and will match the downtown street light aesthetic standard. Also included in this project are traffic signal modifications at two intersections. To date, foundations and associated conduit runs have been installed for 20 new street lights. Intersection pedestrian and traffic signal upgrades at Texas & ADLA have been completed. Work is now underway on the signal upgrades at the Walker & Caroline intersection. Project substantial completion is scheduled for June of this year. Operations Center Emergency Generator: Under special circumstances, the Downtown District’s new Operations Center at 1313 Main Street will need to function as an emergency operations center for Downtown. In the event of a power loss, the operations center will need to have emergency back-up power. Over the past

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several months, staff investigated and evaluated the feasibility and the associated costs for multiple generator configurations. The preferred best long-term solution is to install a new onsite 350KW natural gas generator on level 1 of the GreenStreet garage. This option will require natural gas service to be established by CenterPoint from the mid-lanes of Clay or Fannin Street. Staff have issued an RFQ for design services for the new generator and will be selecting a consultant in mid-July. Because of the plan preparation, City review and sign-off, CenterPoint gas hookup and installation/ electrical construction, this generator will not be in place during the 2019 storm season. (See related action item for the agreement and expenditure for emergency back-up power for the Operations Center during the 2019 storm season.) PUBLIC SAFETY AND EMERGENCY RESPONSE: (James Kennedy, Operations Manager) Public Safety: We are having our first law enforcement collaboration meeting on June 18th. HPD, METRO PD, Precinct One Constables, and our Off Duty HPD officers, SEAL, and representatives of our Public Safety Guide program will all be in attendance. This meeting will allow all partners to share information, and ensure everyone is able to communicate all concerns, issues and effective strategies with one another. SEAL Team: Our SEAL team has been in operation for about a month, and the feedback has been very positive. The officers have been able to assist with issues surrounding aggressive panhandling, the sleeping/laying ordinance, and the noise and sound level ordinance. Throughout the week, they conduct decibel checks while patrolling the areas with clubs and bars. They have worked with HPD to help prevent inebriated patrons from fighting. Downtown Public Safety Guides: The District has increased the amount of guide deployment in the Main Street Square area. There has been an increase in the amount of folks hanging out on Main Street Square, leading to more incidents related of “kush” and alcoholic related issues. The number of yellow civility interactions increased to 5,477 from 5,023 last month. This continues a trend of rising yellow interactions for the last three months. Off Duty HPD Police Program: We have also redeployed our officers working on Main Street, to focus more in the Main Street Square area. Our Off Duty team has seen a rise in yellow interactions this month, increasing from 618 in March, to 880 in May. This is reflective of the increase in the activity on Main Street Square. Our officers have also made more arrests related to kush, and have seen more aggressive behavior from individuals. They have communicated seeing more new faces of street/homeless folks in our Downtown. We typically, see an increase in the summer months, but we are actively looking to keep track of the issue and make adjustments as necessary.

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Positive Interactions Homeless Count Sidewalk Cleaning Garbage Disposed (Tons) Reliability Report

85,049 623 4.15 873 88% Total Average Average Total Average

Safety & Quality Control

‐

100

200

300

400

500

600

‐

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

DPSG Monthly Interaction

Ambassador

Civility‐CompliedBC

Civility‐Non

‐

50

100

150

200

250

300

350

400

450

500

‐

500

1,000

1,500

2,000

2,500

3,000

HPD Monthly Interactions

Ambassador

Civility‐CompliedBC

Civility‐Non

149 130165 150 161

12890

590

243

595

673

593

768808

678

0

100

200

300

400

500

600

700

800

900

Homeless Count

3.89

4.01

4.12

3.97

4.22

4.05

3.9

4.18

4.28

4.184.14

3.98

3.7

3.8

3.9

4

4.1

4.2

4.3

4.4

Sidewalk Cleaning

144.66

171.86

148.74

158.55

164.28

171.72

194.51

163.45

153.14

190.23

179.27

187.08

120

130

140

150

160

170

180

190

200

Garbage Disposed (Tons)

100%

86%

97%

93%

100%

100%

100%

100%

83%

42%

96%

91%

95%

95%

94%

100%

83%

100%

89%

11%

77%

95%

100%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

January

February

March

April

May

Reliability

Surls Fountain Laurens Fountain Equipment Programs Main St.6-7

MEMORANDUM June 13, 2019 TO: Board of Directors FROM: Robert C. Pieroni RE: Downtown Office Market Update May 2019 Office Leasing Activity: Downtown’s vacancy rates remain slightly high at 18.6%, which is consistent with the regional average of 18.5%. Notwithstanding, the downtown market continues to outperform other submarkets indicated by the 21 leases signed in May totaling 252,245-SF. Lease transaction volume rose over April’s 13 signed leases, although the total office square footage was in-line with April’s total of 232,579-SF. The average transaction size in May was approximately 12,012-SF. Market Highlights: Major Leases: Hunton Andrews Kurth LLP signed an expansion of 22,088-SF in the JP Morgan Chase Tower (600 Travis) adding to their Q4 2018 signed renewal of 135,000-SF.

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King & Spalding renewed its 91,264-SF lease at Enterprise Plaza (1100 Louisiana). EnLink Midstream, expanded their operations into Houston signing a lease for 15,498-SF in Fulbright Tower (1301 McKinney) and is expected to occupy the space in May 2021. Building Name Change: On May 22, Capitol Tower’s name was formally changed by Skanska to Bank of America Tower. Residential: Downtown began the second quarter with occupancy of 86.8%, a sharp rise of more than 16 % in the past 12 months when it measured 70%. The gains were mainly driven by stronger leasing velocity in recently completed luxury multifamily rental properties. Downtown rent averages continue to hold steady over the past 12 months at $2.06 per square foot. Downtown’s population continues the positive momentum showing significant gains fueling new Downtown residential development. Hospitality: Downtown remains the largest hospitality market in the region with more than 7,800 rooms housed in 25 Hotels. Downtown’s hotel occupancy rate continues to remain steady at 72.2%. Currently there are three hotels currently under construction: the AC Hotel Houston (194 rooms), Hyatt Place Hotel (150 rooms) and Cambria Hotel by Choice Hotels (220 rooms), each hotel is scheduled to open in 2019. Publications Update: The Q1 2019 Market Update has been completed and disseminated. The Q2 2019 Market Update is in process and will be made available early-July.

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MEMORANDUM June 14, 2019 TO: Board of Directors FROM: Lonnie Hoogeboom, Brett DeBord RE: Planning & Design and Capital Projects Update DLI Application #8 — Block 98: On May 27, 2019, the District received an extension request from Trammell Crow. On May 31, 2019, District staff met with Trammell Crow and their capital joint venture partner to review the project status. The developer requests a 15-month extension for the residential tower development at Block 98, adjacent to the Hess Tower garage in proximity to the Marriott Marquis and Discovery Green. The original DLI authorization for Block 98 was processed on February 13, 2014 setting the project’s 1,095-day Temporary Certificate of Occupancy (TCO) as February 12, 2017. The District Board subsequently approved two extensions on this project:

• Amendment #1 — a 1200-day extension authorized on June 18, 2015, with terms granting a receipt of TCO on May 27, 2020.

• Amendment #2 — a 365-day extension authorized on February 8, 2018, with terms granting a receipt of TCO on May 27, 2021.

• The proposed Amendment #3 — a 456-day extension with proposed terms granting a receipt of TCO on August 26, 2022.

The primary reason for the extension request is that Trammell Crow’s long-term capital partner withdrew their investment commitments in Houston following Hurricane Harvey. In January 2018, Trammel Crow shared with District staff the financial investment documents that have been used to pursue a new joint venture partnership. Trammell Crow has ownership of the development parcel, has continued to make significant investments in the project’s design and engineering documents, and previously met the conditions to apply for building permit (foundation package) within 12 months of the original date of Board Authorization. Pending Board authorization, Trammell Crow will finalize their investment agreement, close the construction loan, proceed with consultants on the necessary updates for permit re-submissions, and initiate a 32-month construction phase. Item reviewed in Committee on May 30, 2019. (See Enclosed Action Item.) Downtown Living Initiative: Eleven DLI projects (3,142 units) are completed, and listed here in completion order: SkyHouse Houston, Block 334, SkyHouse Main, Market Square Tower, The Star, Aris Market Square, Eighteen25, 1414 Texas Avenue, Catalyst, 1711 Caroline, and The Marlowe. One District project is under construction — Camden Downtown (275 units, Phase I). One Authority project, the development planned by Fairfield at Block 387 with 290 units, was granted an extension amendment with permit re-application on April 30, 2019 and construction to commence on or before December 31, 2019. There are sixteen agreements at various stages of project development. District’s DLI Program: 2,371 units under agreement / 275 units under construction

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/ 1,203 units completed / 893 units planned Authority’s DLI Program: 2,188 units under agreement / 0 units under construction / 1,902 units completed / 286 units planned TOTAL DLI Program: 4,559 units under agreement / 275 units under construction / 3,105 units completed / 1,179 units planned Allen Parkway Capital Replacement and Maintenance: Based on District and Authority Board authorizations in May and subsequent “Adopt An Esplanade” agreement with the Houston Parks & Recreation Department on May 28, 2019, the District, serving as Contractor to the Authority, has initiated the capital replacement and maintenance work along Allen Parkway, east of Montrose Blvd. 1119 Commerce Street: On June 4, 2019, District staff attended a public meeting held by the Harris County Flood Control District who presented the scheduled demolition of the existing “Meat Packing Building.” The property, owned by Harris County, has been structurally evaluated as unsafe for use or habitation, and estimated in excess of $10,000,000 as financially prohibitive to renovate. The County will demolish the facility, stabilize the Commerce Street edge with a new foundation, and infill the site as a sloped landscape bank along Buffalo Bayou. The project provides stormwater conveyance improvements for Buffalo Bayou and is one of the 275 HCFCD projects approved in the 2018 $2.5M Bond referendum. Following the County’s building demolition and site work, Houston Parks Board and Buffalo Bayou Partnership will be able to initiate the south bank trails along Buffalo Bayou from the Partnership’s Offices at the Sunset Coffee Building eastward to the CenterPoint substation with connections to the MKT Trail. Central Houston, Inc. (CHI) Update: Staff is currently managing multiple transportation related projects, all as recommendations advanced in Plan Downtown. • North Houston Highway Improvement Project (NHHIP) — Segment 3: District staff

continues participating in agency meetings with TxDOT, plus participation with the Mayor’s Office, City Departments, and central city stakeholders in civic opportunities and urban design meetings. NHHIP continues to advance towards the Final EIS, Record of Decision in early 2020, with contractor procurement to follow. Staff continues to direct the work of HNTB and Walter P Moore for two highway related projects: • the North San Jacinto connections to the highway frontage streets with possible grade-

separated extension to Burnett Street; • and the traffic modeling for the western side of Downtown respective of the proposed

Downtown Connector. Staff continues regular planning and urban design work with the NHHIP consultants, SWA Group. The current design effort is focused on the highway’s aesthetic and technical details that need to be incorporated in TxDOT’s procurement packaged, with a TxDOT review meeting scheduled for July 9, 2019. The next meeting with Mayor Turner’s Steering Committee is in late July with a continued focus on funding sources, lead entities for development of the civic opportunities, and the planning process for Segments 1 & 2 of the NHHIP. TxDOT held a series of four public meetings between June 6th and 13th, and staff

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attended two of these community meetings. The City’s Planning & Development Department with TxDOT will hold two public meetings on June 20th and 26th focused on Segments 1 & 2.

• 2018 Downtown Commute Survey: Central Houston, Inc. conducted an online survey of Downtown employees to determine current workforce commute patterns and to help improve access to Downtown. The 2018 survey garnered over 7,600 responses. Gathering mode split data prior to the construction of the NHHIP provides a meaningful baseline against which to track future impacts. The Commute Survey consultant delivered the final draft of the report, and staff is completing the final document formatting. For the District Board’s reference, the Executive Summary is provided in this month’s Board meeting materials.

• METRO Next Moving Forward Plan: Between March 1st and April 5th, Central Houston’s Transportation Committee vetted the proposed $7.5 billion METRO Moving Forward Plan including Regional Transit Express, Bus Rapid Transit (BRT), Light Rail Transit (LRT), Bus Network Improvements along signature corridors, and overall Service Enhancements. Staff reviewed a draft “Downtown Recommendations” letter with METRO executive staff outlining Central Houston’s position on the priorities and implementation of METRO’s Moving Forward Plan, pending a referendum in the fall of 2019. The final “Downtown Recommendations” letter was advanced to METRO Board members and executive leadership on May 15, 2019.

Downtown Redevelopment Authority / TIRZ 3 Update: Staff is currently managing two capital projects for the Authority, both as recommendations advanced in Plan Downtown. • Bagby Street Improvements: This capital project has been in design since May 2018 with

90% construction documents to be submitted to Houston Public Works (HPW) in late-June 2019. Following that submission, the Stakeholder Advisory Committee will meet over the summer. During May 2019, staff and consultants selected the new oak trees to be installed along the corridor. Permitting is currently scheduled for August-September 2019 which also coincides with contractor procurement. Anticipated Authority Board authorization of the general contractor’s agreement is expected in October. Bagby Street reconstruction is currently estimated at two years in duration, approximately mid-November 2019 through October 2021.

• Southern Downtown Park: This capital project has been in design since November 2018 and is nearing completion of the Design Development Phase. The design team is led by Lauren Griffith Associates (landscape architecture), with Gensler as the architecture sub-consultant. The park site is the ¾ block bounded by Bell, Fannin, Leeland, and San Jacinto Streets; the northeast corner of the block will remain as a surface parking lot owned by South Texas College of Law Houston. During May, construction staff managed the demolition process to remove the Goodyear building and site paving. The design process is slated to run through November 2019 followed by contractor procurement through February 2020, and an estimated construction start in March 2020. The park’s opening is slated for March 2021.

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MEMORANDUM June 20, 2019 TO: Board of Directors FROM: Katrina Bayer RE: Greenlink Update Green Route: Green Route ridership for the 22 days of regular service during April 2019 averaged 761 per day totaling 16,732. Orange Route: Orange Route ridership for the 30 days of regular service during April 2019 averaged 104 per day totaling 3,126. The Greenlink vehicles were involved in one minor accident during the month of April, involving damage to vehicles mirrors.

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Documents

Board of Directors Meeting - Downtown Houston Books/briefin… · 700 Westgreen Blvd, Katy, TX 77450 1336 Brittmoore Rd, Ste 2408, Houston, TX 77043 1104Rayord Blvd, Spring, TX 77386