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04-25-2014 (WEDC) Minutes Minutes Wylie Economic Development Corporation Board of Directors Meeting Friday, April 25, 2014 6:32 A.M. WEDC Offices—Conference Room 250 South Highway 78 —Wylie, Texas CALL TOO ' 1 ER Announce the presence of a Quorum President Marvin Fuller called the meeting to order 6:32 a.m. Board Members present were John Yeager,Demond Dawkins, Todd Wintters, and Mitch Herzog. Ex-officio members Mayor Eric Hogue and Mindy Manson were present. WEDC staff present was Executive Director Sam Satterwhite. CITIZEN PARTICIPATION With no citizen participation, Mr. Fuller proceeded to Action Items. ACTION ITEMS ITEM NO. 1 — Consider and act upon approval of the April 11, 2014 Minutes of the Wylie Economic Development Corporation (WEDC) Board of Directors Meeting. MOTION: A motion was made by Mitch Herzog and seconded by John Yeager to approve the April 11, 2014 Minutes of the Wylie Economic Development Corporation. The WEDC Board voted 5 —FOR and 0—AGAINST in favor of the motion. ITEM NO. 2 — Consider and act upon approval of the March 2014 WEDC Treasurer's Report. MOTION: A motion was made by John Yeager and seconded by Todd Wintters to approve the March 2014 WEDC Treasurer's Report. The WEDC Board voted 5 —FOR and 0—AGAINST in favor of the motion. ITEM NO. 3 — Consider and act issues surrounding a Performance Agreement, Guaranty Agreements, and a Promissory Note between the WEDC and The Wedge Corporation. Presented for the Board's review was a Performance Agreement, Guaranty Agreements, and Promissory Note between The Wedge Corporation and the WEDC. Staff summarized that the WEDC will be reimbursing the Wedge for $275,000 of Qualified Infrastructure expenditures which can be parking lot, sidewalks, utility improvements, engineering, and design. The Wedge will receive $137,500 at any point prior to Certificate of Occupancy (CO) that they submit documentation supporting the expenditure of the same amount for qualified infrastructure. The WEDC -Minutes April 25,2014 Page 2 of 7 second and final payment of$137,500 will be made following the issuance of a CO. The Loan (incentive) will be forgiven over the following three years in equal amounts so long as there is continuous occupancy and operation of the facility by The Rock Wood Fired Kitchen. "Mr. Jay Gigandet and Mr. Don Bellis (owners) will execute Guaranty Agreements that will be released upon issuance of a CO by the City of Wylie. While this issue was discussed previously and authorized by the Board, staff wanted to be clear that following the release of the Guaranty Agreements after CO, the WEDC's Loan will only be secured by a subordinated Promissory Note and pledged FF&E which will have little value should the project fall into default. As slight as the risk is, the key to this project for the WEDC is that a certificate of occupancy is issued. Staff commented that this is an acceptable level of risk and that all businesses in the area will benefit from this project. Staff requested that the WEDC Board amend the Guaranty Agreements as presented to reflect that only $137,500 be guaranteed (opposed to $275,000 as presented) due to the fact that the Guarantees by Mr. Gigandet and Mr. Bellis will be released at the time a CO is issued and prior to the second and final payment of$137,500. Therefore, it is only necessary for $137,500 to be guaranteed. Staff recommended that the WEDC Board of Directors approve a Performance Agreement, Guaranty Agreements as amended, and a Promissory Note between The Wedge Corporation and the WEDC, further authorizing President Marvin Fuller to execute all documents necessary to effectuate said Agreement. MOTION: A motion was made by Todd Wintters and seconded by Demond Dawkins to-approve a Performance Agreement, Guaranty Agreements as amended, and a Promissory Note between The Wedge Corporation and the WEDC, further authorizing President Marvin Fuller to execute all documents necessary. The WEDC Board voted 5 FOR and 0 —AGAINST in favor of the motion. ITEM NO. 4 Discuss issues surrounding a grant program designed to assist Wylie businesses with exterior renovation/maintenance to commercial structures WEDC Enrichment Grant Program. Within the FY 2013 — 2014 WEDC Budget, the Board of Directors approved funding in the amount of $50,000 for grants designed to assist local businesses improve the structural and exterior appearance of their commercial properties. As staff develops the program guidelines, the following issues were presented for the Board's review and discussion. Program Period The Enrichment Grant Program will begin on October 1st and continue through September 30t". Unexpended monies will not carry over into the next fiscal year unless the Board renews the Program through the Budget process. Qualified Expenses Projects undertaken to enhance, upgrade, or address structural issues creating a severely distressed physical environment restricted to exterior modifications will WEDC —Minutes April 25, 2014 Page 3 of 7 qualify for an Enrichment Grant. Staff does not want to create an interior 'remodeling' program within which the Board attempts to determine whether to fund new bathroom fixtures or paint interior offices for example. Qualified Businesses Only existing commercial businesses will qualify for a WEDC Enrichment Grant. More specifically only office, manufacturing, distribution, warehouse, service industry, retail, and restaurant uses will qualify. Single family, multi-family, or mixed use with any residential component will not qualify for funding. In addressing the requirement that funding be restricted to existing businesses, currently in Wylie there are a large number of older homes that are being converted into offices. Staff originally envisioned this program assisting businesses with an expense that may not necessarily benefit their business operations, but create a more aesthetically appealing exterior environment. The Board has other grant programs for start-up businesses and thus staff recommends restricting the Enrichment Grants to existing businesses. Level of Funding The minimum grant amount will be $5,000. Application Process A formal application will be created by the WEDC and must be completed and submitted by the first of each month for the request to be considered at a Regularly Scheduled WEDC Board of Directors Meeting. A detailed description of the project will be required accompanied by digital photographs of existing conditions. Requests for clarification from the WEDC will be delivered in writing to the applicant by the seventh day of each month with a written response required from the applicant by the fourteenth day of each month. At least three bids will be required for the contemplated work and must be submitted along with the application. The WEDC will not require an applicant to accept a certain bid, but may use the low bid in calculating the total grant amount. The Board will only review applications which meet the intent of the program or comply with program guidelines. Further,the program guidelines will clearly specify that applications will be considered on a case-by-case basis and can be denied by the WEDC Board of Directors for any reason. Approval Process Staff recommended that Projects which participate financially in the identified expenses be given preferential treatment via the approval process. However, the Board did not want to penalize a business which cannot commit the funds being that the program is designed to assist businesses which may be financially incapable of addressing the identified need. The Board did however indicate that Projects which are taking a legally non-conforming structure, per the City of Wylie Zoning Ordinance, and bringing it up to a legally conforming status may receive increased consideration. Funding The Grant will be funded within five days of project completion and must strictly adhere to the project description identified in the application process. Grant payments will be made directly to the applicant. WEDC Minutes April 25,2014 Page 4 of 7 Staff proposed that the above guidelines be formalized into a final document which will be distributed to Wylie businesses targeting industrial areas within Premier Business Park, behind the Post Office, within Century Business Park, and Regency Business Park. The program will also be promoted via The Wylie News, Wylie Chamber of Commerce, and Downtown Merchants Association. Recommendation This item was posted as a discussion item with staff having no recommendation. DISCUSSION ITEMS Item NO. 5 - 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 Real Property to ACE, Performance Agreement between the WEDC and B&B Theatres Operating Company, Performance Agreement between WEDC and CSD Woodbridge, EXCO Tooling_Solutions, Deanan Gourmet Popcorn, Swimcat,-ICSC, WEDC Personnel, and regional housing starts. Woodbridge Crossing The Sales Tax,Reimbursement Report was presented which identified all sales taxes received through April 2014 within Woodbridge Crossing for the City General Fund, the WEDC, and the 4B. As a reminder, the City and WEDC reimbursed 85% of all sales.tax generated within Woodbridge Crossing through September 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. $2,154,904.09 has been reimbursed through February with net receipts of $1,286,683.24 after reimbursements. An additional ±$130,000 will be funded in May. As well, $1.9 mm has been paid in ad valorem taxes to the City of Wylie(excluding the WISD). Staff has presented to Inland officials the concept of the WEDC prepaying the remaining balance of $3.71 mm at a reduced amount. Inland is interested in the concept and indicated the issue could be discussed in detail at a meeting scheduled for 5-19-14 at ICSC Chicken Express had proposed developing a concept in front of Kohl's. The owner (Randy Broyles) contacted staff on 4-21-14 and expressed great concern over a $51,000 thoroughfare impact fee (total fees $72,000). Staff reported that Mr.Broyles had contacted Inland and Direct Development and indicated that he would not be moving forward with the project. 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. WEDC —Minutes April 25,2014 Pages of 7 Sale of Real Property to ACE Lawyers Title funded the American National Bank construction loan payoff on 4-17-14. The WEDC has collected all avoided tax payments from Ascend including the pro-rated April payment. The WEDC April Financial Statements will reflect this transaction including the removal of$441,944 reserved on the Balance Sheet which is equal to 12 month's debt service. The WEDC also presented the final avoided tax payment to the WISD Board of Trustees in the amount of$55,677.80 on 4-21-14 with the City of Wylie payment to be issued the week of 4-28- 14. B &B Theatres Operating Company Performance Agreement The B&B Theatre Performance Obligations were presented, and 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 on or about September 1, 2014. CSD Woodbridge Performance Agreement On July 15,2013 a certificate of occupancy(CO) was issued for Kroger Marketplace. Beginning October 1,2013 and ending October 1, 2023, Clark Street Development is eligible to receive a cent sales tax reimbursement from the WEDC with the City of Wylie not a party to the Agreement. The WEDC has received two Comptroller monthly reports identifying two businesses paying sales tax on a consistent basis. Quarterly payments will be made to Clark Street based upon the data provided by the Comptrollers. In addition to the $100,000 reimbursement incentive paid by the WEDC at CO,Clark Street is eligible to receive cumulative incentives of$1,100,000 over the life of the Agreement. EXCO Tooling Solutions Exco completed their Phase I Environmental Study on 4-18-14. An existing survey was accepted by Lawyers Title and a title commitment has been issued. The Feasibility Period expires on 6-22-14 and Exco has until 9-22-14 to obtain governmental approvals (site plan, building permit, etc.). Closing is to occur no later than 9-27-14. Deanan Gourmet Popcorn Permits have been issued and construction begins on the 5,300 square foot expansion on or about 4-24-14. The Performance Agreement calls for a building permit to be issued with construction cost of at least$600,000 and 2014 property taxes paid no later than 2-1-15 in order for a$15,000 incentive payment to be funded. Deanan will be eligible for an additional $15,000 over the next two years after meeting further performance measures. WEDC—Minutes April 25, 2014 Page 6 of 7 Swimcat Staff reported that Permits for the office project were issued on 4-21-14 with construction to begin the week of April 28th. Completion is estimated for October with the Swimcat Performance Agreement calling for a Certificate of Occupancy to be issued by 11-1-14. /CSC Mayor Hogue, Board Members Fuller, Herzog, and Winners along with staff will be attending the ICSC Annual Conference May 17 — 20. While staff is still setting up appointments with retailers, preliminary meetings are set up with Clark Street, Inland Asset Management, and Edge Realty Partners. Staff is attempting to set up an appointment with Texas Roadhouse through Edge Realty. Edge believes that a pad in front of Kroger will be a good fit after The Rock puts up positive numbers with staff wanting to get in front of them early. WEDC Personnel With Mrs. Harris retiring, the WEDC will post a job opening notice on April 28th through the City of Wylie web site, The Wylie News, and potentially the Dallas Morning News. It is staffs intent to conduct interviews the week of June 16th, make an offer by June 23 , and have a start date of July 14th. Regional Housing Starts Thirty homes were permitted in Wylie for March 2014. Sachse, Lavon and Murphy permitted a combined thirty-eight homes over the same period. The Board noted the pending developments in Wylie that staff has provided at the bottom of the attachment. No action is requested by staff for this item. Mayor Hogue departed from the meeting at 7:16 a.m. EXECUTIVE SESSION The WEDC Board recessed into Closed Session at 7:41 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 2013-9a 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 the intersection of: „.. WEDC—Minutes April 25, 2014 Page 7 of 7 • Oak Street&Jackson Avenue • Cooper Drive & F.M 544 • Steel Road& Hooper Mindy Manson departed from the meeting at 8:09 a.m. RECONVENE INTO OPEN MEETING The WEDC Board of Directors reconvened into open session at 8:37 a.m. and took no action. . 1 JOU' I NT With no further business, President Fuller adjourned the WEDC Board meeting at 8:37 a.m. 7'. 74 \ i Marvin Fuller,President ATTEST: Samuel Satterwhite,Director