01-21-2011 (WEDC) Minutes Minutes
Wylie Economic Development Corporation
Board of Directors Meeting
Friday, January 21, 2011 6:30 A.M.
WEDC Offices— Conference Room
250 South Highway 78 — Wylie, Texas
CALL TO ORDER
Announce the presence of u Quorum
President Fuller called the meeting to order at 6:30 a.m. Board Members present were: John
Yeager, Mitch Herzog, Chris Seely, and Todd Winners.
WEDC staff present was Executive Director Sam Satterwhite and Administrative Assistant
Gerry Harris.
Ex-officio members Eric Hogue and Mindy Manson were present. Assistant City Manager Jeff
Butters also attended the meeting.
CITIZEN PARTICIPATION
There being no citizen participation, President Fuller proceeded to Action Items.
ACTION ITEMS
ITEM NO. 1 — Consider and act upon approval of the December 17, 2010 Minutes of the
WEDC 1 oard of Directors Meeting.
MOTION: A motion was made by Mitch Herzog and seconded by John Yeager to
approve the December 17, 2010 Minutes of the WEDC Board of Directors
Meeting. The WEDC Board voted 5— FOR and 0 — AGAINST in favor of
the motion.
ITEM NO. 2 — Consider and act upon approval of the December 2010 WEDC Treasurer's
Report.
Mr. Fuller directed staff to contact the City auditors and confirm that the property purchased
from SAF-Holland is booked correctly in light of Ascend funding 50% of the purchase price.
MOTION: A motion was made by John Yeager and seconded by Chris Seely to
approve the December 2010 WEDC Treasurer's Report. The WEDC Board
Voted 5 — FOR and 0 — AGAINST in favor of the motion.
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ITEM NO. 3 —Consider and act upon a Modification Agreement between James L. Hughes
and Mary Genene Hughes and the WEDC.
Staff reported that on July 25, 2006 the WEDC entered into a note with the Hughes in the
amount of $340,000 to purchase two lots and improvements on Industrial Court. The interest
rate associated with the loan was 69/0. After direction from the Board and after requesting a rate
reduction from Mr. Hughes, staff presented a Modification of Note and Deed of Trust Agreement
for the Board's approvaL
The term of the original note did not change with the interest rate being reduced to 5%.
Staff recommended that the WEDC Board of Directors approve the Modification of Note and
Deed of Trust Agreement and further authorize President Fuller to execute the Modification
Agreem ent.
MOTION: A motion was made by Chris Seely and seconded by Mitch Herzog to
authorize Mr. Fuller to execute the loan modification to Mr. Hughes' note.
The WEDC Board voted 5 — FOR and 0 —AGAINST in favor of the motion.
ITEM NO 4 — Consider and act upon issues surrounding a WEDC Budget Amendment for
FY2010 —2011.
On November 22, 2010 WEDC staff received confirmation that funds had been wired to
ANBTX from Ascend Custom Extrusions, LLC for the benefit of the WEDC. The fund amounts
were $500,0'00 and $139,250 which were then deposited into the General Fund for the City of
Wylie.
The $1.39,250 is to pay 50% of the Holland acquisition cost ($225,000), relocating Holland
Improvements ($50,000), and estimated closing costs ($3„000), The $500,000 per the
Commercial Lease Agreement is to fund interim interest on the construction loan, loan closing
costs, payment of the construction manager, and other expenses associated with the construction
of the Building. The Commercial Lease calls for no less than $300,000 to be paid down on the
construction loan.
To properly account for these funds, a Budget Amendment must be approved to increase revenue
in an amount equal to the wire deposits ($639,250).
The second Budget Amendment will then deposit funds back into the Land account for 50% of
the Holland acquisition with the remainder being placed into the newly created 'Building
Account'. This Budget Amendment also takes into consideration the loan from American
National Bank in the amount of$4,920,939. While this will be an expense for the WEDC, it will
not be considered revenue, but instead funds from other sources (loan).
Staff recommended that the WEDC Board of Directors approve a Budget Amendment increasing
revenues by $639,250 and increasing expenditures by $5,560,189.
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January 21, 2011
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MOTION: A motion was made by Mitch Herzog and seconded by John Yeager to
approve a budget amendment increasing revenue in the amount of$639,250
and increasing, expenditures in the amount of$5,560,189. The WEDC Board
voted 5 — FOR and 0 — AGAINST in favor of the motion.
ITEM NO. 5 — Consider and act upon issues surrounding a WEDC Budget Transfer for FY
2010 —2011.
Staff reported that due to the payoff of the note between the WEDC and Prime Kuts, the Debt
Service Account must be increased by $170,770 to prevent a budget shortfall by years end.
Monies will be transferred from the Land Account to fund the transfer.
Staff recommended that the WEDC Board of Directors approve Budget Transfer Request EDC1-
6-11 in the amount of$170,770.
MOTION: A motion was made by Chris Seely and seconded by John Yeager to
approve budget transfer requests in the amount of $170,770. The WEDC
Board voted 5 — FOR and 0 -- AGAINST in favor of the motion,
ITEM NO. 6— Consider and act upon issues surrounding the 2011 WEDC Annual Report.
Staff reported that per the WEDC By-laws, the WEDC must present an annual report to the
Wylie City Council no later than January 31s1 of each year. The report must include, but is not
limited to, a review of all expenditures made by the Board, a review of accomplishments, and a
review of other than direct economic development. Staff presented the Report which is believed
to meet the intent of the requirement of the By-laws with the same to be presented to the Wylie
City Council on January 25, 2011.
President Fuller asked that more details about negotiations with Applebee's be added to the
report under Retail Activity. He also asked the total value of the Ascend project be described in
more detail.
Staff recommended that the WEDC Board of Directors approve the 2010 WEDC Annual Report
with the noted changes and recommended that it be presented to the Wylie City Council.
MOTION: A motion was made by John Yeager and seconded by Mitch Herzog to
approve the 2010 WEDC Annual Report. The WEDC Board voted 5 — FOR
and 0 — AGAINST in favor of the motion.
ITEM NO. 7 — Consider and act upon issues surrounding a Performance Agreement
between the WEDC and Gardner Regency, LLC.
According to a Performance Agreement between the WEDC and Gardner Regency, LLC, the
WEDC is obligated to reimburse Savage (Gardner Regency, LILC) for moving expenses in the
amount of $254,357. The grant is payable in five equal and annual payments of $50,871,40.
The first installment was paid at the issuance of the certificate of occupancy on 1-9-09; the
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January 21, 2011
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second payment was paid on 1-15-10; with the third payment now submitted to the Board for
approval.
Per the agreement, Savage must maintain a minimum of$4,051,443 in real and personal property
value and maintain at least 35 full-time employees. Savage was appraised at $4,331,737 in 2010
and employed between 42 and 44 employees for the first three quarters of 2010.
The WEDC holds a note on the 3.87 acres sold to Gardner Regency in the amount of $421,443.
Should there be no Default as identified within Sections 3 and 4 of the Performance Agreement,
the WEDC shall forgive all payments associated with the Note over a seven year period in equal
amounts beginning on the anniversary date Savage received a certificate of occupancy.
With no event of Default identified, Payment #2 of 7 associated with the Note in the amount of
$60,206.14 was recommended to be forgiven along with funding Payment #3 of 5 associated
with the moving expenses in the amount of$50,871.40.
MOTION: A motion was made by Mitch Herzog and seconded by John Yeager to
approve Payment #3 of 5 in the amount of$50,871.40 and forgive Payment
#2 of 7 in the amount of$60,206.14 to Gardner Regency LLC. The WEDC
Board voted 5 — FOR and 0 — AGAINST in favor of the motion.
DISCUSSION ITEMS
ITEM NO. 8 — Staff report: review issues surrounding an Amended and Restated
Performance Agreement between the WEDC and Woodbridge Crossing, Collin County
Day, Taylor & Son, and regional housing starts.
The Board members were reminded by staff that the Board may not discuss an item which is not
specifically identified on the agenda. Only those items listed on the agenda can be discussed.
Woodbridge Crossing
Staff reported that Woodbridge Crossing is currently in compliance with all terms of the
Amended and Restated Performance Agreement. A Sales Tax Reimbursement Report was
presented which identifies all sales taxes generated and reimbursed through October 2010 within
Woodbridge Crossing for the City General Fund, the WEDC, and the 4B Corporation. Staff also
reviewed that the City and WEDC will be reimbursing 85% of all sales taxes generated within
Woodbridge Crossing through September 2013 and beginning October 2013, 65% of all sales
taxes generated will be reimbursed.
The next performance measure of 64.000 square feet of lease space constructed on the in-line
lots adjacent to Target between McCreary and Springwell shall be completed no later than
1, 2011. There is currently 81.000 square feet under construction slated to be completed by
March, 2011. A 'critical dates analysis' was also presented for the Board's review.
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January 21, 2011
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Collin Count',Day
Staff reported that at the present time, Mr. Herzog and Mr. Satterwhite have made plans to attend
Collin County Day which is March 7 — 8, 2011.
Taylor& Son
Staff was contacted by Taylor & Son who currently lease a WEDC-owned 5,000 square foot
building at 211 Industrial Court. Only months after occupying the facility, Taylor negotiated
with the tenant at 212 Industrial Court to occupy a portion of the adjacent parking lot for
additional storage space. Taylor's business is growing so rapidly that they are searching for a
10,000 square foot facility to lease or property to support new construction. Staff toured the
WEDC-owned Steel Road site and looked at several other properties in Wylie which would
support their needs.
Rezional Housin Starts
Staff reported 264 new homes were constructed in Wylie in 2010 resulting in an increase of 7
homes. Staff also reported that Lavon was up 10 homes for the year, Murphy up 29, with Sachse
down by 18 homes.
Staff'Recommendation
No action was requested by staff.
ITEM NO. 9 — Review issues surrounding the construction of a 96,000 square foot
industrial facility at 1405 Martinez Lane.
Staff reported that excavation for the 96,000 square foot industrial facility had begun on
December 18, 2010 and that a final set of plans was now ready to be submitted to the City of
Wylie. Following a final Design Team Meeting on January 21 staff will have more information
prior to plan submittal as well as an updated budget.
WEDC Construction Manager Tommy Pulliam was also present reporting that the process has
been delayed by design changes initiated by the tenant. Also reported was the consistent
emphasis by the entire team to reduce costs.
Staff had no recommendation at the time.
EXECUTIVE SESSION
The WEDC Board recessed into Closed Session at 7:37 a.m. in compliance with Section
551.001, et.seq. Texas Government Code, to wit:
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Section 551.071 (Consultation with Attorney) of the Local Government Code, Vernon's Texas
Code Annotated (Open Meetings Act).
• Deliberate a pending or contemplated litigation surrounding Project Re-tool.
Section 551.087 (Economic Development Negotiations) of the Local Government Code,
Vernon's Texas Code Annotated (Open Meetings Act).
• Deliberate economic development negotiations surrounding Project Re-tool.
Section 551.074 (Personnel Matters) of the Local Government Code, Vernon's Texas Code
Annotated (Open Meetings Act).
• Deliberate personnel issues.
RECONVENE INTO OPEN MEETING
The WEDC Board of Directors reconvened into open session at 8:02 a.m.
After review by the WEDC Board of Directors, the Performance Agreement between the WEDC
and Sanden International USA was declared to be in default.
Staff reported to the Board that a letter would be sent to Sanden on January 21, 2011 notifying
them that that they had failed to provide documentation of taxable real and personal property
with a certified value as determined by the Collin County Central Appraisal District ("CCAD")
of not less than Fifty-Eight Million Dollars ($58,000,000). Under the terms of the Amended and
Restated Performance Agreement between the WEDC and Sanden which was executed February
26, 2010, Sanden would be requested to pay to the WEDC as a refund the total amount of the
Reimbursement Incentive ($300,000) within thirty (30) days from the date of the letter.
The Board stressed that should Sanden International USA not cure the default they would be
required to refund the incentive payment of$300,000. However, staff was directed to negotiate
\vith Sanden for the opportunity to earn the incentive back if the 2011 certified value met the
Fifty-Eight Million Dollars ($58,000,000) minimum requirement contemplated in the Amended
and Restated Performance Agreement.
MOTION: A motion was made by John Yeager and seconded by Mitch Herzog to
approve action to secure a refund of $300,000 from Sanden International
USA per the Performance Agreement. The WEDC Board voted 5 — FOR
and 0 — AGAINST in favor of the motion.
ADJOURNMENT
With no further business. President Fuller adjourned the WEDC Board meeting at 8:02 a.m.
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Marvin Fuller, President
ATTEST:
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Samuel D.R. Satterwhite
Executive Director