ANALYZING THE OPERATIONS & MARKETING AGREEMENT BETWEEN CITY OF BROWNSVILLE AND HERNANDEZ FOUNDATION(MIKE HERNANDEZ III)

Mike Hernandez III,

Hernandez Foundation

Texas Tax Code 351 authorizes the collection of a Hotel Occupancy Tax on rooms rented, an addition of 7% to the room rate.

According to the code, the monies collected can be spent on:

"Revenue from the municipal hotel occupancy tax may be used only to promote tourism and the convention and hotel industry, and that use is limited to the following:

(1) the acquisition of sites for and the construction, improvement, enlarging, equipping, repairing, operation, and maintenance of convention center facilities or visitor information centers, or both;"

That's pretty much the language used in the agreement between the city and the Hernandez Foundation, a 501(c)(3), that his foundation will promote tourism and a conference facility.

The City of Brownsville agrees to convey to the foundation up to 100% of the Hotel Occupancy Tax generated the hotel on the premises up to $6,000,000 over 20 years, called a Hyatt, but the actual agreement specifies simply a "national franchise" including Hyatt, Marriot, Omni or Hilton.

An additional $3,000,000 to the Hernandez Foundation can be "justified" under the agreement, but also $2,000,000 in infrastructure, landscaping, roads, etc. for a grand total of $11,000,000 on an estimated $37,100,000 project.

The anticipated completion date is 12/31/2021.

Article 4 of the document calls for the City of Brownsville to "compensate" the Hernandez Foundation "for Conference Center Operations and marketing."

An intriguing statement in the document is that the city "finds that the Owner(Mike Hernandez III) possesses expertise in the development and operation of hotel conference facilities."(Does anyone know if Hernandez has ever actually developed or managed hotel and/or hotel conference facilities?)

Hernandez, with 90 days notice, can change the franchise of the hotel, but is limited to one of the national franchises mentioned above.

Below, a copy of the Owner Affidavit: