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09-20-2013 (WEDC) Minutes Minutes Wylie Economic Development Corporation Board of Directors Meeting Friday, September 20, 2013 6:30 A.M. WEDC Offices—Conference Room 250 South Highway 78—Wylie, Texas CALL TO ORDER Announce the presence of a Quorum President Marvin Fuller called the meeting to order 6:30 a.m. Board Members present were John Yeager, Todd Wintters, and Mitch Herzog. WEDC staff present was Executive Director Sam Satterwhite and Senior Assistant Gerry Harris. Assistant City Manager Jeff Butters arrived at 6:35 a.m. CITIZEN PARTICIPATION With no citizen participation, Mr. Fuller proceeded to Action Items. ACTION ITEMS ITEM NO. 1 — Consider and act upon approval of the August 14, 2013 Minutes of the Wylie Economic Development Corporation (WEDC)Board of Directors Meeting. MOTION: A motion was made by Todd Wintters and seconded by Mitch Herzog to approve the August 14, 2013 Minutes of the Wylie Economic Development Corporation. The WEDC Board voted 4—FOR and 0—AGAINST in favor of the motion. ITEM NO. 2 — Consider and act upon approval of the August 2013 WEDC Treasurer's Report. Staff offered to invite a representative from the Finance Department to attend a WEDC Board meeting in the near future to discuss the WEDC Treasurer's Report and to report on any issues of concern in regards to the upcoming audit. President Fuller believed that would be a productive exercise since it has been some time since Finance attended a Board Meeting. MOTION: A motion was made by Mitch Herzog and seconded by Todd Wintters to approve the August WEDC Treasurer's Report. The WEDC Board voted 4 —FOR and 0—AGAINST in favor of the motion. ITEM NO. 3 — Consider and act upon issues surrounding the WEDC purchase of 1.59 acres from Hobart Investments, Inc., formally known as Hobart Industries, Inc., and i WEDC—Minutes September 20, 2013 Page 2 of 7 authorize WEDC President Marvin Fuller to execute all documentation necessary to effectuate the purchase. Staff reported that the WEDC has under contract 1.59 acres located near the intersection of Commerce and Business Way behind the Wylie Post Office. There are no improvements on the property and the Phase I environmental report came back clean. The purchase price was based upon $2.25 per square foot. A survey was prepared by Boundary Solutions, Inc. which identified 1.59 acres resulting in a purchase price of $155,835.90. Closing costs associated with the survey, escrow fee, and filing fees are $938.50. After crediting the $5,000 earnest money, the total cost at closing for the above referenced property is $151,819.40. There will be no financing associated with this transaction as the WEDC will be paying all cash at closing. Staff recommended that the WEDC Board of Directors approve the purchase of 1.59 acres from Hobart Investments, Inc. in the gross amount of $156,819.40 and further authorize WEDC President Marvin Fuller to execute all documentation necessary to effectuate the purchase. MOTION: A motion was made by John Yeager and seconded by Mitch Herzog to approve the purchase of 1.59 acres from Hobart Investments, Inc. in the amount of $156,819.40 and further authorize WEDC President Marvin Fuller to execute all documentation necessary to effectuate the purchase. The WEDC Board voted 4—FOR and 0—AGAINST in favor of the motion. ITEM NO. 4 — Consider and act upon issues surrounding the WEDC purchase of 1.065 acres from Hobart Investments, Inc., formally known as Hobart Industries,Inc. Staff reported that the WEDC is under contract with Hobart Investments for the purchase of 1.065 acres located near the intersection of Commerce and Business Way in the amount of $400,000. The purchase price will be payable as follows: the WEDC will pay $100,000 in cash at closing with Hobart accepting a written promissory note from the WEDC for $300,000 payable over 60 months at an interest rate of 5%. Located on the property is a 20,000 square foot structure with 2 existing tenants. 10,000 square feet of the building is used as storage for Country Clean Leather Care which stores dry cleaning equipment and a limited amount of chemicals. No dry cleaning operations are taking place on-site. Approximately 2,500 square feet is utilized by Country Clean for offices and the storage of a significant amount of dry cleaning chemicals. The balance of the building is occupied by Wheels Unlimited which is an auto repair shop. All existing leases are month-to-month and will be terminated on or before the closing date. Helmberger Associates has begun the process of performing a Phase I Environmental Assessment. While the 10,000 square feet of storage area is cluttered, the occupant has already begun removing all personal property, including the limited amount of dry cleaning chemicals stored in barrels. However, staff reported that the chemicals stored within the adjacent 2,500 square foot office/warehouse may present a problem. Helmberger is awaiting a Material Safety Data Sheet from Country Clean itemizing the chemicals. As well, staff stated that the Fire Marshall's office would be performing an inspection the week of September 23rd WEDC—Minutes September 20, 2013 Page 3 of 7 Until the chemicals present are identified, the Phase I cannot be completed. As well, an assessment by the Fire Department evaluating safety procedures will be helpful moving forward. While it does not appear that there are significant spills or chemicals have been disposed of improperly, the amount of chemicals stored on-site and the lack of controls may result in the WEDC requiring that the occupant vacate the premises prior to closing. Board Member Herzog commented that the WEDC needs to make sure that all chemicals are removed from the premises prior to closing and that probably Country Clean needs to vacate as well. Staff had no recommendation at the time. ITEM NO. 5 — Consider and act upon issues surrounding a Performance Agreement between the WEDC and Sanden International(U.S.A.),Inc. Staff reported that he had been contacted by Mr. Jimmey Phaup, COO of Sanden International, on September loth to discuss the piston line installation and associated Performance Agreement. Mr. Phaup indicated that while he believed Sanden had spent $24 mm on the new line, he can only identify $20 mm in expenses. Mr. Phaup committed that he would provide all documentation requested by September 17th, even if only $20 mm in new investment could be identified. Staff indicated to Mr. Phaup that if Sanden could only provide documentation identifying $20 mm in expenditures, the Board may believe it necessary to reevaluate the original $500,000 incentive package which was based upon a $24 mm investment. Mr. Phaup understood completely and indicated he expected that to be the case. As of 4:00 p.m. on September 18th staff had yet to receive any documentation from Sanden and was therefore unable to provide the Board with any alternative incentive scenarios assuming the Board would consider the same. The Board directed staff to send a Certified Letter to Mr. Phaup indicating that the requested documentation identifying expenditures associated with the piston line installation and the estimated number of pistons to be manufactured each year must be received by the WEDC no later than 5:00 p.m. CDT on November 1, 2013 or any offering of incentives by the WEDC either oral or written will be void. MOTION: A motion was made by Mitch Herzog and seconded by John Yeager to authorize WEDC staff to notify Sanden International that all requests for information by the WEDC in regards to the installation of the piston line by Sanden in Wylie must be received by the WEDC no later than 5:00 p.m. CDT on November 1, 2013 or all written and oral commitments made by the WEDC to provide incentives to Sanden will be voided. The WEDC Board voted 4—FOR and 0—AGAINST in favor of the motion. WEDC—Minutes September 20, 2013 Page 4 of 7 DISCUSSION ITEMS ITEM NO. 3 — Staff Report: review issues surrounding an Amended and Restated Performance Agreement between the WEDC and Woodbridge Crossing, Performance Agreement between the WEDC and ACE, Sale of WEDC owned Property to ACE, Performance Agreement between the WEDC and B&B Theatres Operating Company, Chemical Recycling, Inc., extension of Woodbridge Parkway, Wal-Mart Neighborhood Market, WEDC Invitational, and regional housing starts. Woodbridge Crossing The Sales Tax Reimbursement Report was presented which identified all sales taxes received through June 2013 within Woodbridge Crossing for the City General Fund, the WEDC, and the 4B. As a reminder, the City and WEDC will be reimbursing 85% of all sales tax generated within Woodbridge Crossing through October 2013 with the reimbursement percentage reduced to 65% thereafter. Woodbridge Crossing is eligible for a maximum $6 million in sales tax reimbursement through September 2021. $1,905,399.47 has been reimbursed to date with net receipts of $1,083,462.45 after reimbursements. As well, $1.4 mm has been paid in ad valorem taxes to the City of Wylie (excluding the WISD). Sales tax receipts within Woodbridge Crossing have increased by 3% over June 2012 with the increase accounting for less than 1% of the city-wide gain in sales tax receipts. Following certification of the tax rolls by the Appraisal District, staff recalculated the real and personal property values within Woodbridge Crossing. Values came in at $58,815,274 or 11% over 2012 figures. The properties primarily contributing to the increase were Rosa's Tortilla Factory(+$1.5 mm) and Rue 21/Ross/Rack Room (+$4 mm). Ascend Commercial Lease and Performance Agreement The Ascend Custom Extrusion Critical Dates Analysis and Performance Agreement Monitoring Procedures were presented. Payment #3 of 5 for the Economic Incentives has been funded with Ascend meeting all Performance Obligations within Sections A and B of the attachment. Ascend has begun their 21,000 square foot expansion in anticipation of a third extrusion press which is being built for Ascend. Sale of WEDC owned Property to ACE Ascend and WEDC staff are preparing the contract and closing documents for the sale of WEDC property and improvements on Martinez to Ascend. It was hoped that the sale could be finalized prior to October 1, 2013 but staff does not think that is realistic at this point. Should there be significant progress prior to October 1st; a Special Called Board Meeting will need to be held to authorize the sale. Staff will keep the Board updated on the progress of closing documents. WEDC—Minutes September 20, 2013 Page 5 of 7 B &B Theatres Operating Company Performance Agreement In June, the WEDC began receiving a Sales Tax Area Report from the Comptroller which tracks taxable sales generated from the Wylie B&B Theatre. As per the B&B Theatre Performance Obligations, the WEDC will fund Incentive No. 2 of $25,000, plus sales tax reimbursements, following the certification by the Central Appraisal District of a minimum appraised value of$10 mm. Chemical Recycling, Inc. Congressman Sessions' office has agreed to assist the Wylie community in transferring jurisdiction for the Chemical Recycling, Inc. environmental clean-up effort from the EPA to the Texas Commission on Environmental Quality (TCEQ). The City of Wylie environmental attorney believes that the State of Texas will be much more responsive to our request for clean- up enforcement. Woodbridge Parkway As reported previously, Council will consider accepting a bid from Mario Sinacola for construction associated with the Woodbridge Parkway extension on September 24th. As part of the City of Wylie match of County funds, the WEDC committed up to $1.4 mm with the City of Wylie committing up to $800,000. Bids for bridge construction and Woodbridge Parkway from Hensley to the bridge came in well below the original project budget. Bridge construction came in $129,965 under budget and road construction from Hensley south to the bridge came in $1,602,874 under budget. Based upon the monies committed by the County ($4,083,698) and funds already spent by the City of Wylie for engineering and right-of-way acquisition ($600,000), the WEDC will fund the outstanding project balance of$550,000 plus any change orders. Engineering staff indicated that change orders for a project of this size could be as much as $100,000. Wal-Mart Neighborhood Market On August 27th the Wylie City Council approved a site plan for a Wal Mart Neighborhood Market for the corner of McMillan and McCreary. While a super majority was required due to P&Z failing to make a recommendation (3 — 3 vote), the Council unanimously approved the item. WEDC Invitational A list of invited guests for the WEDC Invitational on October 24th was presented. Staff asked the Board to review the list and notify staff of any individual or group that may have been left off. WEDC—Minutes September 20, 2013 Page 6 of 7 Regional Housing Starts Nineteen homes were permitted in Wylie for July 2013. Sachse, Lavon, and Murphy permitted a combined twenty-eight homes over the same period. In addition to the pending developments noted at the bottom of the Housing Starts spreadsheet, the Board instructed staff to add the lot count for the Dominion project as well as Kreymer Estates and Woodbridge 16. No action was requested by staff for this item. EXECUTIVE SESSION The WEDC Board recessed into Closed Session at 7:35 a.m. in compliance with Section 551.001 et.seq. Texas Government Code to wit: Section 551.087 (Economic Development) of the Local Government Code, Vernon's Texas Code Annotated(Open Meetings Act). • Project 2013-3 • Project 2013-4a • Project 2013-5c • Project 2013-5d • Project 2013-7a • Project 2013-9a • Project 2013-9b Section 551.072 (Real Estate) of the Local Government Code, Vernon's Texas Code Annotated (Open Meetings Act). Consider the acquisition of property located near: • State Highway 78 & Ballard • Ballard &Alanis Board member Mitch Herzog left the meeting at 8:25. Assistant City Manager Jeff Butters left the meeting at 8:31. RECONVENE INTO OPEN MEETING The WEDC Board of Directors reconvened into open session at 8:53 a.m. and took no action. ADJOURNMENT With no further business, President Fuller adjourned the WEDC Board meeting at 8:53 a.m. WEDC— Minutes September 20, 2013 Page 7 of 7 Marvin Fuller, President ATTEST: Samuel Satterwhite,Director