09-17-2010 (WEDC) Minutes Minutes
Wylie Econmic Development Corporation
Board of Directors Meeting
Friday, September 17, 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: Jol-m
Yeager, Mitch Herzog, Todd leVintters, and Chris Seely,
WEDC staff present was Executive Director Sam Satterwhite and Administrative Assistant
Gerry Harris.
Ex-officio member Mayor Eric Hogue was present. Also present was Assistant City Manager
Jeff Butters,
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 August 24, 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 August 24, 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 August 2010 WEDC Treasurer's
Report.
Staff suggested that a representative(s) from the Finance Department should be invited to attend
a Board Meeting in October or November to update the Board on any issues impacting WEDC
financials and answering questions about the same,
MOTION: A motion was made by Mitch Herzog and seconded by Chris Seely to
approve the August 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 a WEDC Budget Transfer for FY
2009 — 2010.
From the Special Services Account, there were unplanned expenses reported for erosion control
(S5,000) relating to bringing in fill dirt for the 19 acre Wells tract near the intersection of F.M.
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September 17, 2010
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544 and Sanden Blvd. There were also unanticipated expenses relating to the Martinez tract for
erosion control. All funds will be transferred from the Advertising Account.
Staff recommended that the WEDC Board of Directors approve the Budget Transfer Request
ED9-17-10 in the amount of$2,500.
MOTION: A motion was made by Mitch Herzog and seconded by John Yeager to
approve the budget transfer of S2,500 from Advertising to Special Services.
The WEDC Board voted 5 — FOR and 0 — AGAINST in favor of the motion.
ITEM NO. 4 — Consider and act upon issues surrounding the receipt of financing proposals
for a construction loan associated with Project 95K.
President Marvin Fuller excused himself from the meeting at 6:41 due to a Conflict of Interest.
Staff reported that on Monday, August 30, 2010, the WEDC distributed Requests for Proposal
(RFP) to American National Bank, Bank of America, Capital One, Chase, Inwood National
Bank, Texans Credit Union, and Viewpoint. The Term Sheet provided a detailed analysis of
WEDC financials and an overview of the project including a ±$4.8 mm loan package for the
construction of a 100,000 square foot industrial facility. Information not provided was a detailed
financial analysis for Project 95K and its equity partner. All financial institutions were provided
with the opportunity to view a 95K pro forma after executing a confidentiality agreement.
Responses from those bidding on the construction loan were due to be received at the WEDC
office no later than 5:00 p.m. on Monday, September 13'11.
Staff commented that while the project is on a fast track, it is realistic to estimate that the
construction loan will not close until November/December due to the requirement of a full set of
plans being complete prior to appraisal, etc. In an attempt to identify ways in which the WEDC
can expedite the process, staff believes it would be of benefit to begin tasks such as excavation
and soil preparation prior to the completion of a full set of plans and thus approval of the
construction loan. Staff reported that it may be possible to get a line of credit for the above
expenses and role those costs into the construction loan upon final approval. Staff indicated that
a discussion will be held regarding funding options with the bank and 95K officials.
Staff presented that American National Bank was the only institution which responded to the
RFP. ANB quoted 5.75% for a 15 year fixed rate or a 5.45% fixed rate for 10 years with a
floating rate for the remaining 5 years based upon the current Wall Street Journal Prime Rate
floating daily. While staff presented cost saving arguments for the 5.45% rate, Board Members
Wintters and Yeager believed a longer term fixed rate would be advantageous should
hyperinflation occur and a double digit interest rate be present at the end of the fixed 10 year
period.
While outside the terms of the Term Sheet, ANB required that the existing loan with Inwood
National Bank be refinanced with ANB (±$454,000). This was a requirement of ANB's terms
based upon ANB not wanting another financial institution to be in a first lien position on the
WEDC sales tax receipts which are proposed as collateral to this project. The rate offered to
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September 17, 2010
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refinance the Inwood debt was 5.25% with no fees for 60 months (identical term remaining on
the existing Inwood Loan).
Staff suggested that the WEDC go out to bid on all remaining WEDC debt ($225,000 — Hughes
and $176,000 — Prime Kuts) or go directly to the debt holders and request a lower interest rate in
the±4% range.
Staff recommended that the WEDC Board of Directors accept the financing terms offered by
American National Bank of 5.75% fixed for 15 years and refinance the existing Inwood loan.
Board members did charge staff with the responsibility of negotiating an interest rate below
5.00% on the refinance. The Board believed that had the WEDC made the refinance part of the
RFQ a lower rate than 5.25% could have been negotiated.
MOTION: A motion was made by Todd Wintters and seconded by John Yeager
authorizing Vice President Herzog to execute all documentation necessary
to effectuate a Loan Agreement with American National Bank for a
±$4,800,000 construction loan with a fixed interest rate of 5.75% for 15
years further authorizing Vice President Herzog to execute all
documentation necessary to refinance existing debt of ±$454,000 currently
held by Inwood National Bank with American National Bank as the lender.
The WEDC Board voted 4 —FOR and 0—AGAINST in favor of the motion.
President Marvin Fuller returned to the meeting at 7:09 a.m.
DISCUSSION ITEMS
Staff report: review issues surrounding an Amended and Restated Performance
Agreement between the WEDC and Woodbridge Crossing, City of Wylie/WEDC Interlocal
Agreement, Collin County Day—Austin, and regional housing starts.
Woodbridge Crossing: Woodbridge Crossing is currently in compliance with all terms of the
Amended and Restated Performance Agreement. Presented to the Board was a Sales Tax
Reimbursement Report which identified all sales taxes generated and reimbursed through August
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. A 'critical dates analysis' was provided for review.
As shown on the Sales Tax Reimbursement Report, the City/WEDC will be funding the third,
quarterly payment per the Sales Tax Reimbursement Agreement in the amount of$78,084.
City of WylieftVEDC Interlocal Agreement: Staff reported the Interlocal Agreement for the
use of WEDC facilities by the City of Wylie has been executed by the City Manager. The City
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September 17, 2010
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will begin renovations on the 544 property on October 1, 2010 and plan to occupy the same by
December
Collin County Day — Austin: Collin County Days was scheduled for March 3 -4 and has been
changed to March 7 — 8, 2010.
Regional Housing Starts: Housing starts are up this month with 24 homes permitted in August.
The strong trend continues with only one month in this year in which less than 20 new homes
were permitted.
Staff requested no action for these items.
EXECUTIVE SESSION
The WEDC Board Recess into Closed Session at 7:25 a.m. in compliance -with Section 551.001,
et.seq, Texas Government Code, to wit:
Section 551.087 (Economic Development Negotiations) of the Local Government Code,
Vernon's Texas Code Annotated (Open Meetings Act).
Deliberate commercial or financial information that the WEDC has received from a business
prospect and deliberate the offer of incentives to a business prospect (Project 95k).
Section 551.072 (Real Property) of the Local Government Code, Vernon's 'Texas Code
Annotated (Open Meetings Act).
liscuss purchase of property generally located near the intersection of State Highway 78 and
Martinez Lane.
Section 551.071 (Consultation with Attorney) of the Local Government Code, Vernon's Texas
Code Annotated (Open Meetings Act).
Discuss a demand letter and potential litigation associated with Project CRI.
RECONVENE INTO OPEN MEETING
The WEDC Board of Directors reconvened into open session at 8:05 a.m.
After a phone consultation with WEDC Counsel Rebecca Brewer, staff recommended to the
WEDC Board of Directors that based upon all information received to date, the Board should
deny a demand letter associated with Project CR1.
MOTION: A motion was made by John Yeager and seconded by Mitch Herzog
authorizing staff to respond by letter to Project CR1 representatives denying
a request for reimbursement of attorney fees in the amount of 828,186.30.
The WEDC Board voted 5 — FOR and 0 AGAINST in favor of the motion.
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September 17, 2010
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ADJOURNMENT
With no further business, President Fuller adjourned the WEDC Board meeting at 8:05 a.m.
7
Marvin Fuller, President
ATTEST:
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Samuel D.R. Satterwhite
Executive Director