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06-18-2010 (WEDC) Minutes Minutes Wylie Economic Development Corporation Board of Directors Meeting Friday, June 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, and Chris Seely. WEDC staff present was Executive Director Sam Satterwhite and Gerry Harris, Assistant City Manager Jeff Butters 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 May 20, 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 May 20, 2010 Minutes of the WEDC Board of Directors Meeting. The WEDC Board voted 4 - FOR and 0 - AGAINST in favor of the motion. ITEM NO. 2 - Consider and act upon approval of the May 2010 WEDC Treasurer's Report. MOTION: A motion was made by Mitch Herzog and seconded by Chris Seely to approve the May 2010 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 a Promissory Note between the WEDC and Martin Anderson and wife, Susan M. Anderson and Gary Bowland and wife, Charlotte A. owland. AS directed by the Board, staff presented its recommendation for further reducing the indebtedness of the WEDC following the payoff of the Capitol One note. Of the three notes with a 6% interest rate, staff recommended the Bowland/Anderson note based upon its $41,655 balance opposed to the Hughes and Prime Kuts notes with balances of$233,000 and $182,000 WEDC —Minutes June 18, 2010 Page 2 of 6 respectively. The only other note is held by Inwood National has a balance of$483,000 balance making it unrealistic to utilize that much cash. Staff reported that should the Board approve the payoff of the BowlandiAnderson note; the WEDC would have cash reserves of $586,395 as of 6-30-10 and $712,000 as of 10-1-10. The early payoff was also estimated to save the WEDC $3,197 in interest. MOTION: A motion was made by John Yeager and seconded by Mitch Herzog to authorize the prepayment of a loan between the WEDC and Martin Anderson and wife, Susan M. Anderson and Gary Bowland and wife Charlotte A. Bowland in the amount of $41,863.55. The WEDC Board voted 4 — FOR and 0 — AGAINST in favor of the motion. ITEM NO. 4 — Consider and act upon issues surrounding a WEDC Budget Transfer for FY 2009 2010. Staff requested a budget transfer in the amount of $195,272.73 based upon the following unanticipated expenditures: Account Description Amount Special Services Erosion control S13,600 Commission — 211 Ind. Court Computer Hardware/Software Replace Director's computer 1,000 Debt Service Payoff Capitol One note 178,273 Payoff Bowland/Anderson Rental Increased copier expense 2,000 Communications Web site maintenance 400 Land Fund above overages <195,273> MOTION: A motion was made by Mitch Herzog and seconded by Chris Seely to authorize a WEDC Budget Transfer for FY 2009 — 2010 in the amount of $195,272.73. The WEDC Board voted 4 — FOR and 0 — AGAINST in favor of the motion. Item NO. 5. — Consider and act upon issues surrounding the FY 2010 — 2011 WEDC Budget. Staff estimated year-end sales tax receipts for FY 2009 — 2010 at $1,343,943 or 3.26% over FY 2008 — 2009. Also, staff has estimated a fund balance as of 9-30-10 of $712,000, Combined WEDC — Minutes June 18, 2010 Page 3 of 6 with Rental Income of $96,800 and Interest Income of S3,000, the WEDC has available Revenues of$2,155,743. In addressing compensation, staff reported that the City of Wylie is estimating that a 1% salary reduction will be instituted for emergency personnel with a 1.9% reduction for all other personnel. Staff commented that although the WEDC is a separate entity with a separate funding mechanism, salary increases cannot be recommended based upon salary reductions for municipal personnel. Staff did comment that while its salary recommendation stands, the Administrative Assistant's salary will absolutely need to be addressed in FY 2011 — 2012. For all other expenses, staff only highlighted new programs or new expenses to the FY 2010 — 2011 Budget. The following new initiatives were proposed: Aerial Photography - $8,500 for new fold-up maps; Leasehold Improvements - $5,000 for property maintenance; Incentives - S150,000 for Woodbridge Crossing sales tax reimbursements; Transfer to General Fund - $20,000 for the creation for the WEDC Small Business Center; Advertising - $5,000 supporting a 'downtown Wylie' ad campaign and $15,000 for a targeted marketing campaign for industrial development; including ICSC expenses in WEDC Budget for the Wylie Mayor; and Travel & Recruitment - $10,000 for an industrial trade shows (Industrial Development Promotion Campaign). Staff reported that the maximum allowable expenditure for advertising/promotion is $132,965 (10% of revenues) with a proposed budget of $118,555. Further, staff proposed a 'Future Projects' budget for unanticipated relocation/expansion projects of $661,973. Further, the budget is structured in a way that if a capital intensive project presented itself, an additional $500,000 could be reallocated from within the budget. Finally, staff presented the concept of the WEDC's need for additional office space. After identifying several suitable location and scenarios the Board discussed the potential for the WEDC to occupy available office space at City Hall. It was unanimous that while this scenario would be financially advantageous, a distinct separation should exist between the WEDC City offices. President Fuller commented that being it is the WEDC charge to represent business interests, that role is facilitated by separateness from municipal offices. The WEDC Board also recognized the need for privacy which is lacking in shared offices with the Chamber of Commerce. While the Board values the Chamber relationship, a larger office with separate suites would be required if the partnership continues. Finally, indicated that an on-site conference room to accommodate WEDC Board Meetings would be a definite convenience. The Board requested further detail on any potential change to office space in addition to the targeted marketing effort for industrial development. Staff reported that the WEDC should be prepared to present a final budget to the Wylie City Council no later than July 271 . No action was requested on this item. WEDC — Minutes June 18, 2010 Page 4 of 6 Item NO. 6 — Consider and act upon issues surrounding a Development Agreement between the WEDC and Bayco Products, Ltd, Staff reported that Bayco officials have informed the WEDC that Bayco will fall short by $3,327 in meeting a 'cumulative taxes paid' benchmark called for in the Development Agreement executed between Bayco and the WEDC in 2004. As per Section 2(g) of the Development Agreement, Bayco "shall have paid property taxes for the previous five (5) years of the Agreement to the Wylie Independent School District and the City of Wylie in an amount of not less than $657,000. . ." Staff indicated that the five year period began on January 1, 2006 and ends on February 28, 2011. Section 2(g) of the Development Agreement also states that "the five year period above shall be extended at the sole discretion and approval of the WEDC [Board] in the event the State legislatively lowers the cap on the tax rate which Wylie and/or WISD may assess. . . ." In 2006 the WISD tax rate was S1.7025. In 2007 the State of Texas restructured school finance resulting in the lowering of the tax rate imposed by the WISD to $1.39. The 31 cent change resulted in a reduction of taxes paid by Bayco in that given year by $19,840. Staff further reported that Bayco has met all other terms of the Development Agreement including a minimum annual assessed valuation for real and personal property of$6,400,000. Assuming that the proposed real and personal property values for Bayco are certified at the current $6.76 million and that the resulting taxes are paid no later than January 31, 2011, Bayco will be in default for a $3,327 shortfall for cumulative taxes paid as per Section 2(g) of the Agreement. Staff presented several options for the Board to consider: 1. Bayco is declared in Default of Section 2(g) and required to pay the WEDC $122,768.60 as called for in Section 4(a) of the Development Agreement; 2. The term of the Development Agreement is extended by one year based upon language within Section 2(g) referencing latitude by the Board should the "State legislatively lower the cap"; or 3. Based upon extenuating circumstances and the amount of the shortfall, the Board declares that Bayco has met the intent of the Agreement and further releases Bayco from all requirements under the Agreement. Staff recommends that the WEDC Board of Directors authorize the WEDC Executive Director to verify a certified valuation for real and personal property for Bayco Products in the amount of $6,764,659, that property taxes for Bayco are paid no later than January 31,, 2011, and to declare Bayco Products, Ltd. in compliance with all terms under the Development Agreement. The Board was in support of staffs recommendation. MOTION: A motion was made by John Yeager and seconded by Chris Seely to authorize the WEDC Executive Director to verify a certified valuation for real and personal property for Bayco Products in the amount of$6,764,659, applicable property taxes are paid no later than January 31, 2011, and WEDC — Minutes June 18, 2010 Page 5 of 6 declare Bayco Products, Ltd. in compliance with all terms under the Development Agreement. The WEDC Board voted 4 — FOR and 0 — AGAINST in favor of the motion. Item NO. 7 — Staff report: review issues surrounding the lease of WEDC facilities, an Amended and Restated Performance Agreement between the WEDC and Woodbridge Crossing, L.P., Savage Precision Fabrication, ICSC 2010, Sanden International, Pulliam Properties L.L.C., industrial development prospects, and regional housing starts. Staff reported that 211 Industrial Court had been lease bringing all WEDC lease holding to 100% occupancy. Staff also reported that the second quarterly sales tax reimbursement payment has been made to Direct Development in the amount of $74,961. Additionally, staff reported that preliminary appraised values for Woodbridge Crossing indicate that new construction and current market conditions of the shopping center have caused the property value to increase by 140%. Staff announced that Savage Precision not only was awarded the Region VI winner of SBA Subcontractor of the Year, but also won the National Subcontractor of the Year and was honored at a recognition ceremony by President Obama in Rose Garden at the White [-louse. Staff provided a detailed description of Wylie's participation in the ICSC Annual Conference in Las Vegas, NV. The WEDC made contact with AT&T, Christian Brothers, Dollar Tree, Focus Brands, Panda Express, DQ Chiller, Genghis Grill, Regis, Firehouse Subs, and Direct Development representatives. Staff was most pleased with contact made with PetsMart and their feedback of Wylie's cooperative and eager attitude to assist PetsMart achieve on opening date of January 2011. The WEDC also met with Kohl's which confirmed their opening date even though final contracts had not been executed. Board member Herzog commented on the low attendance for 2010, but followed up with the eagerness of those retailers attending to identify good locations to open new concepts. Mr. Herzog also commented on the preparedness of staff for the event in terms of setting up appointments and the importance of having the Mayor attend. Staff closed with a report on a 60,000 square foot prospect looking at the WEDC Hensley property as well as increased housing starts in Wylie for the second consecutive month. Staff Recommendation No action was requested by staff for this item. EXECUTIVE SESSION The WEDC Board of Directors convened into Executive Session at 8:19 a.m. WEDC — Minutes June 18, 2010 Page 6 of 6 1. 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). II. Consider issues surrounding Project BB as authorized in Section 551.087 (Economic Development Negotiations) of the Local Government Code, Vernon's Texas Code Annotated (Open Meetings Act). IV. Consider issues surrounding Project CRI as authorized in Section 551.087 (Economic Development Negotiations) of the Local Government Code, Vernon's Texas Code Annotated (Open Meetings Act). V. Consider issues surrounding the potential offering of incentives to a commercial project located near the intersection of Sate Highway 78 and F.M. 544 as authorized in Section 551.087 (Economic Development Negotiations) 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 9:17 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 9:18 a.m. Marvin Fuller, President ATTEST: te_ Samuel D.R. Satterwhite Executive Director