11-18-2010 (WEDC) Minutes Minutes
Wylie Economic Development Corporation
Board of Directors Meeting
Thursday, November 18, 2010 — 6:30 A.M.
Inwood National Bank — Conference Room
200 South Highway 78 — Wylie, Texas
CALL TO ORDER
Announce the presence of a Quorum
President Fuller called the meeting to order at 6:30 a.m. Board Members present were: John
Yeager, Mitch Herzog, Todd Winners, and Chris Seely. Mr. Fuller left the meeting at 8:00 a.m.
WEDC staff present was Executive Director Sam Satterwhite and Administrative Assistant
Gerry Harris.
Ex-officio member Mindy Manson was present.
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 November 9, 2010 Minutes of the
WEDC Board of Directors Meeting.
MOTION: A motion was made by Chris Seely and seconded by John Yeager to
approve the November 9, 2010 Minutes of the WEDC oard 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 October 2010 WEDC Treasurer's
Report.
Mr. Fuller asked that the minutes reflect that the expense shown as the 'Yellow & Black Tie
Gala' was a benefit for the Methodist Richardson Medical Center Foundation, Inc. at which staff,
Mayor Hogue, and City Manager Manson was in attendance.
MOTION: A motion was made by John Yeager and seconded by Chris Seely to
approve the October 2010 WEDC Treasurer's Report. The WEDC Board
voted 5 — FOR and 0 — AGAINST in favor of the motion.
DISCUSSION ITEMS
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.
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November 18, 2010
Page 2 of 5
Illoodbride 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 August 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 May
1, 2011. There is currently $1,000 square feet under construction slated to be completed by
March, 2011. A 'critical dates analysis' was also presented for the Board's review.
Refinancinf, WEDC Debt
Staff indicated that Mr. Don liughes and Mr. Marty Anderson were contacted requesting that an
interest rate reduction be implemented on WEDC notes held by the two individuals. The payoff
for Mr. Hughes was reported at S217,140 and $172,173 for Mr. Anderson. The interest rate on
both notes is 6% with 67 and 82 payments remaining respectively. The 4.5')/0 rate being
requested by staff will save the WEDC approximately $2,500 annually. Staff reported that both
Hughes and Anderson are contemplating stafrs request and will provide a response within a
week.
WEDC Office Relocation
Staff reported that the office relocation which has been contemplated for several months will
take place on December 6th.
WEDC/Holland USA Purchase Agreement
The WEDC has yet to receive a partial release from Holland USA which is required prior to
closing on the 1.33 acre purchase. Holland's attorney has very little impact on the timing as he is
awaiting the release from the International Bank of Luxembourg which has a $90 mm lien
against Holland's business operations. Holland's attorney assured staff that the release is
forthcoming.
Regional Housing Starts
Housing starts were reported as up this month in Wylie, Lavon, and Murphy. Staff indicated that
Wylie is on pace to permit approximately 290 new homes in 2010.
Staff Recommendation
No action was requested by staff.
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November 18, 2010
Page 3 of 5
EXECUTIVE SESSION
The WEDC Board recessed into Closed Session at 7:00 a.m. in compliance with Section
551.001, et.seq. Texas Government Code, to wit:
Section 551.087 (Economic Development Negotiations) of the I.ocal Government Code,
Vernon's Texas Code Annotated (Open Meetings Act).
• Deliberate a Performance Agreement between the WEDC and Project 95k.
• Deliberate a Commercial Lease Agreement between the WEDC and Project 95k.
RECONVENE INTO OPEN MEETING
The WEDC Board of Directors reconvened into open session at 8:10 a.m,
Staff indicated that after months of negotiations with Ascend Custom Extrusions and Highlander
Partners, staff was prepared to make final recommendations surrounding a Performance
Agreement and Commercial Lease for the construction and occupancy of a 96,000 square foot
industrial facility to house Ascend operations.
Staff began by summarizing the Performance Agreement between the WEDC and Ascend. In
order to accommodate the initial 96,000 square feet and the Phase II expansion of ±35,000
square feet, 1.33 acres is required to be purchased from Holland Hitch, which is adjacent and to
the north of the WEDC site (21 acres), for the purchase price of 8225,000. In addition to the
land acquisition, the WEDC/Ascend will be relocating a fence and a concrete storage area which
has a projected cost of S50,550. The Performance Agreement requires that Ascend fund 50% of
the Holland expenses up to S150,000. Also within the Performance Agreement, Ascend commits
to maintaining a personal property valuation ranging from 54.7 million in year one to 57.1
million in year five. If all performance measures are met within the Agreement, the WEDC will
fund S76,518 per year for 5, years. Staff reiterated that the City of Wylie has no financial
commitment within this Agreement. Total cash incentives over a 5 year term of the Agreement
equal S382,590. Staff did point out that the Agreement allows for Ascend to assign the benefits
to an affiliate as further defined in the Commercial Lease which is an exhibit to the Performance
Agreement.
MOTION: A motion was made by John Yeager and seconded by Chris Seely
authorizing Marvin Fuller to execute a Performance Agreement between the
WEDC and Ascend Custom Extrusions. The WEDC Board voted 4 — FOR
and 0 — AGAINST in favor of the motion.
Staff continued its summary with the Commercial Lease between the WEDC and Ascend. With
an estimated construction cost of 55.22 million, the WEDC is committing to construct and
maintain ownership of the 96,000 square foot facility for the term of the lease (15 years).
Ascend however has the option to purchase the facility in an amount equal to the outstanding
WEDC— Minutes
November 1.8, 2010
Page 4 of 5
debt associated with construction between year three and year ten. Staff anticipates
construction beginning on or about January 1, 2011. Should Ascend choose to not exercise its
purchase 01)nm:1,, the WEDC will be obligated in no way to sell the facility to Ascend at the end
of the Lease. Staff did clarify that should Ascend lease the facility for the full term of the lease
and not exercise its purchase option, the WEDC will reimburse Ascend for all costs associated
with the Holland Property Consideration referenced with the Performance Agreement (up to
$150,000).
Classified as 'Prepaid Rent', Ascend commits to wire $500,000 to the WEDC which will be used
to reduce the debt associated with construction, fund interim interest, closing costs, and fees
associated with a WEDC-hired construction manager. No less than $300,000 will be applied to
construction costs with $200,000 attributed to interest, closing costs, and construction
management. Combined with the Holland costs and development fees, Ascend will have
contributed in excess of 5700,000 to the construction process in addition to the $13.4 million in.
plant and equipment purchases.
While staff has yet to receive a Gross Maximum Price from Rill &i Wilkinson, it is anticipated.
that the WEDC will have a maximum construction loan of $4.9 million which will equate to
S490,274 debt service/lease payments.
Staff continued that per the Lease, Ascend is responsible for obtaining and carrying property
insurance for this property with the Economic Development Corporation as the named insured
and Ascend being responsible for all premiums and deductibles with policy limits no less than
construction cost. It was also requested by the Board that staff negotiate within the Lease for
'Rental Loss' insurance to cover the WEDC should there be an event of casualty requiring
repairs over a 120 clay period.
Staff reiterated that similar to the Performance Agreement, the WEDC allows assignment of the
Lease to an affiliate with the definition of an affiliate being an entity that owns Tenant or is
owned by or is under common control with Tenant. The WEDC can assign its rights under the
Lease to the City of Wylie or any governmental entity that replaces the WEDC at any time in the
future.
In addition to all Board members, Board Member Herzog specifically requested that the record
reflect that the principals for Ascend are comprised of ex-employees of Extruders Division of
Atrium Company which recently resigned their positions with Atrium. Further, the Board is
aware that Ascend will be a direct competitor of Extruders. However, the WEDC Board stood
firm in the fact that Ascend would absolutely be operating in a neighboring community,
continuing to compete with Extruders, with no benefit from the additional tax base and jobs
created.
MOTION: A motion was made by John Yeager and seconded by Chris Seely
authorizing Marvin Fuller to execute a Performance Agreement between the
WEDC and Ascend Custom Extrusions. The WEDC Board voted 4 — FOR
and 0 AGAINST in favor of the motion.
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November 18, 2010
Page 5 of 5
ADJOURNMENT
With no further business, Vice President Herzog adjourned the WEDC Board meeting at 8:20
a.m.
v (/tfiltiir(7/
Marvin Fuller, President
ATTEST:
Samuel D. . Satterwhite
Executive Director