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04-16-2010 (WEDC) Minutes Minutes Wylie Economic Development Corporation Board of Directors Meeting Friday, April 16, 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 Wintters, and Chris Seely. WEDC staff-present was Executive Director Sam Satterwhite and Gerry Harris. Ex-Officio Board Members Eric Hogue, Mindy Manson, and Assisted City Manager Jeff Butters were 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 March 19, 2010 Minutes of the WEDC Board of Directors Meeting. MOTION: A motion was made by Mitch Herzog and seconded by John Yeager to approve the March 19, 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 March 2010 WEDC Treasurer's Report. MOTION: A motion was made by John Yeager and seconded by Chris Seely to approve the March 2010 WEDC Treasurer's Report. The WEDC Board voted 5 — FOR and 0 — AGAINST in favor of the motion. ITEM NO. 3 — Consider and act upon issues surrounding an Ad Valorem Tax Abatement and Sales Tax Reimbursement Agreement between the WEDC and Greenway Investment Company. In review, the WEDC and Greenway-Springs, Ltd., Greenway-Columbia, L.P., and Greenway- Wylie, L.P. entered into an Ad Valorem Tax Abatement & Sales Tax Reimbursement Agreement on December 20th, 2007. Greenway-Springs owns the 15 acres south of Tractor supply. Greenway-Wylie owns the two undeveloped pad sites in front of Home Depot. Greenway- WEDC — Minutes April 16, 2010 Page .2 of 5 Columbia owns the property on F.M. 544 on which the Chiloso strip center is located, the Carlisle building, and a vacant retail pad in front of the Carlisle building. The incentive package utilizes a combination of ad valorem tax abatement and sales tax reimbursements to offset costs associated with the environmental remediation of a 15.72 acre site within the 27.83 acre Reinvestment Zone #6. The impacted area, which is owned by Greenway- Springs, Ltd., is the site of a landfill previously utilized to dispose of plastic shavings which encased reclaimed copper wiring. The worst-case scenario cost associated with the clean-up of the site was estimated and capped at 82 million. The site was enrolled in the Texas Commission on Environmental Quality's (TCEQ) Voluntary Cleanup Program (VCP). While the primary goal of the Agreement was create the opportunity for commercial development on the Greenway-Springs site by remediating the same, the zone was expanded to the other Greenway properties to create more opportunity to generate the taxes necessary to compensate Greenway for the remediation. To date there has been approximately S150,000 in expenses attributed to the 'VET and approximately 833,000 in incentives reimbursed/abated. In February 2008 the TCEQ issued a Final Certification of Completion for the Springs site. While it was staffs impression that all of the pits holding the shavings would have to be dug out and taken to an authorized landfill, the Certificate was issued based upon the current cap in place not being disturbed and if the materials beneath the cap are disturbed, those materials will be removed from the site or distributed on-site in a manner acceptable to the TCEQ. The materials were allowed to remain on-site based upon the TCEQ reclassifying the materials from Class I waste to Class III waste which allows for much less stringent disposal requirements. As discussed in the past, it appeared to staff that Greenway withheld the eminent issuance of the Certificate of Completion in February 2008 as the Agreement was being executed in December 2007. At this point in time however, staff does not believe that Greenway intended to deceive or mislead the WEDC/City. Staff summarized the two key issues from this point forward being that remediation costs will be a fraction of the preliminary estimates and Greenway will have issues arise should any of the parcels within the Zone sell to third parties. The difficulty lies in the fact. that any future land owner will be held to the requirements of a third party agreement which has penalties should certain performance measures not be met. Staff reported that Greenway has suggested that the current Agreement be voided should there be funds available to either Greenway or a future developer which would offset any increased costs directly attributable to past or future remediation efforts. Under certain circumstances, Greenway would even consider returning all abated/reimbursed funds. Staff believes that if the current performance measures are maintained, new development occurs within the term of the existing Agreement (2008 — 2017), all abated property taxes and reimbursed sales taxes are returned, and reimbursable events be clearly defined, then there may be an opportunity to discuss an amendment/dissolution of the existing Agreement. Board member Herzog cormnented that while he realizes this may present a problem for Greenway, the WEDC should wait until a specific user is identified prior to amending the WEDC — Minutes April 16, 2010 Page 3 of 5 Agreements in place. Board member Fuller requested that when the Greenway item is placed on a future agenda, a history of the Greenway project to the current date be prepared along with a specific timeline. Staff had no recommendation at this time. ITEM NO. 4 — Staff report: review issues surrounding the lease of WEDC facilities, an Amended and Restated Performance Agreement between the WEDC and Woodbridge Crossing, L.P., a WEDC Business Center within the Rita Sc Truett Smith Public Library, ICSC 2010, and regional housing starts. Analysis As a reminder to Board members, the Board may not discuss an item which is not specifically identified on the agenda. Only those items listed above can be discussed. Should any Board member wish an item to be placed on the agenda at any time prior to a Board meeting, please contact the WEDC President or staff. Lease of WEDC Facilities: The only WEDC facility remaining vacant is 211 Industrial Court. The WEDC' leasing agent has dropped the listed monthly rate from $2,600 to $2,000. Staff was contacted by the tenant at 212 Industrial Court to discuss the status of their business. Ribbit Ribbit, the manufacturer of custom frames, has occupied the building since 2006 at a monthly lease rate of$2,600. Further, Ribbit Ribbit is currently under a month to month lease. It was indicated that their business was in decline and that they would begin looking for a different location in an attempt to reduce their overhead. Based upon the difficulty the WEDC is having leasing the adjacent building and the incentives other property owners are providing to new tenants, staff waived two months rent and entered into a new 12-month lease at S2,000 per month. It was communicated in writing that at the end of the new lease the WEDC may exercise its right to increase the lease rate, Woodbrielme Crossing: Woodbridge Crossing is currently in compliance with all terms of the Amended and Restated Performance Agreement. Attached for your review is the Sales Tax Reimbursement Report which identifies all sales taxes generated and reimbursed through January 2010 within Woodbridge Crossing for the City General Fund, the WEDC, and the 4B Corporation. As a reminder, the City and WEDC will be reimbursing 85% of all sales taxes generated within Woodbridge Crossing through September 2013, 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. For this measure to be met, staff estimates that a second anchor or a combination of junior anchors will need to begin the construction process on or about August 1, 2010. Should this particular performance measure or any future measure not be met, the maximum WEDC -- Minutes April 16, 2010 Page 4 of 5 reimbursement of $12 million will be reduced to S6 million. A 'critical dates analysis' was provided for the Board's review. Staff is aware of significant interest from several junior boxes and restaurants regardless of the location a second anchor to the site. Staff believes that continued interaction with certain retail brokers is showing results. Direct Development has indicated that a pad is to be delivered in July for a potential 68,000 square foot second anchor with a store opening in March 2011. WEDC Business Center: Staff recently received all documentation required from the Library staff to move forward on the preparation of an Interlocal Agreement. Mr. Randy Hullett is reviewing the materials and should have a final draft available by April 30th, ICSC 2010: On May 23 26th, the WEDC will attend the ICSC Global Retail Real Estate Convention (RECON) in Las Vegas. Representing Wylie at the RECON will be Mayor Eric Hogue, Board Members Herzog and Wintters, and the WEDC Executive Director. Staff will be scheduling meetings with regional and national retailers primarily promoting Woodbridge Crossing. Staff has already scheduled a meeting with a second anchor considering Woodbridge Crossing in addition to several junior boxes considering the area. As well, the WEDC will continue its focus on attracting restaurants to the area. Pulliam Properties, L.L.C: IV1r. Pulliam's replat was approved by Council on April 13th and his plans are currently being reviewed by the building department. Mr. Pulliam remains confident that he can complete the project by December 31st as required by the WEDC Performance Agreement. An office layout has been attached for your review. Regional Housing Starts: Strong housing starts continue within the region with Wylie permitting 20 homes in March. The Building Department reports that there have been nine new permits issued to date in April. Staff Recommendation No action is requested by staff for this item. EXECUTIVE SESSION The WEDC Board of Directors convened into Executive Session at 7:15 a.m. I. Consider issues surrounding Project Orange as authorized in Section 551.087 (Economic Development Negotiations) of the Local Government Code, Vernon's Texas Code Annotated (Open Meetings Act). WEDC — Minutes April 16, 2010 Page 5 of 5 II. Consider issues surrounding the purchase of property located near the intersection of Steel Road and Regency Drive as authorized in Section 551.072 (real property) of the Local Government Code, Vernon's Texas Code Annotated (Open Meetings Act). RECONVENE INTO OPEN MEETING The WEDC Board of Directors reconvened into open session at 7:23 a.m. No action was taken as a result of discussions held in Executive Session. ADJOURNMENT With no further business, President Fuller adjourned the WEDC Board meeting at 7:23 a.m. , Marvin Fuller, President ATTEST: Samuel D.R. Satterwhite Executive Director