06-27-2011 (WEDC) Minutes Minutes
Wylie Economic Development Corporation
Board of Directors Meeting
Monday, June 27, 2011 — II:30 A.M.
WEDC Offices — Conference Room
250 South Highway 78 — Wylie, Texas
CALL TO ORDER
Announce the presence of a Ouorum
President Marvin Fuller called the meeting to order at 11:30 a.m. Board Members present were:
Chris Seely, John Yeager, and Todd Winners.
WEDC staff present was Executive Director Sam Satterwhite and Administrative Assistant
Gerry Harris,
Ex-officio member Mindy Manson 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, 2011 Minutes of the WEDC
Board of Directors Meeting.
MOTION: A motion was made by Mitch Herzog and seconded by John Yeager to
approve the May 20, 2011 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 May 2011 WEDC Treasurer's
Report.
Staff informed the Board that there was still no final clarification from the Auditors as to whether
the Holland acquisition and associated improvements funded by Ascend (S131,028) should
constitute a contingent liability. The Auditors have indicated that as the project is completed and
the construction loan moves from interim to permanent, all expenses and liabilities will be
properly classified.
President Fuller commented that should the Holland liability not be formally classified as a
contingent liability, a footnote on the financials must be added so that future Board of Directors
are aware of the issue.
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June 27, 2011
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The Board had previously inquired as to how the interim financing with ANB was being tracked
on the financial statements with staff reporting that as of May 31, 2011, the WEDC is carrying
42,561,731 as a liability within its Long Term Debt account.
MOTION: A motion was made by John Yeager and seconded by Chris Seely to
approve the May 2011 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
2010 — 2011.
Due to increased legal expenses attributed to negotiations with Sanden, Hill & Wilkinson,
Greenway, Impact Fee Agreement, Ascend, and anticipated fees for the balance of the year, the
Audit/Legal account requires an S8,300 budget transfer.
In addition, due to several potential projects for this fiscal year requiring research and site
planning, the Engineering/Architecture Account is currently over budget with staff requesting a
55,000 budget transfer. Further, staff underestimated the cost of FIOS service and new phones
for office requiring a S1,200 budget transfer within the Communications account.
All funds will be transferred from the Incentives Account with a total reduction of S14,500.
Staff recommended that the WEDC Board of Directors approve Budget Transfer Request EDC6-
27-11 in the amount of S14,500.
MOTION: A motion was made by Todd Wintters and seconded by Chris Seely to
approve the WEDC Budget Transfer for FY 2010-2011 in the amount of
514,500. The WEDC Board voted 5 — FOR and 0— AGAINST in favor of
the motion.
ITEM NO, 4 — Consider and act upon issues surrounding the FY 2011 — 2012 WEDC
Budget.
Staff provided a detailed presentation of the proposed FY 2011 — 2012 Budget with the
following highlights of new or increased expenditures/programs:
Revenue:
Sales Tax Receipts 51,508,000
Beginning Fund Balance 1,011,257
Ascend Lease 490,272
Expenses:
Woodbridge Crossing Reimbursement 198,250
Ascend Start-Up Assistance (. 2. of 5) 76,518
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June 27, 2011
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Legal 20,000
Ascend Debt Service 490,272
Ascend Debt Service— 12 month Reserve 490,272
Streets & Alleys 40,000
Furniture & Fixtures 14,602
Incentives — Future Projects 739,686
Staff clarified that the Beginning Fund Balance of S1,011,257 does reflect the reduction of the
current Claim on Cash from construction and debt reduction expenses. Woodbridge Crossing
reimbursement was increased from 5150,000 for FY 2010 — 2011 to S198,250 based upon
increased sales volumes.
Payment #1 of 5 to Ascend for their assistance package will made in FY 2010 — 2011. As shown
above, payment #2 of 5 will be made 12 months from payment #1 which will be in FY 2011 —
2012. The Ascend revenue is offset by the Ascend Debt Service. Staff did however budget for
an additional 12-month reserve for Ascend debt service in the event Ascend fails as an on-going
business. Staff budgeted $40,000 in the event the WEDC participates in downtown parking
improvements. Finally, staff is proposing the purchase of a new copier at a cost of S14,602.
Staff indicated that the WEDC is in a very strong cash position being that WEDC can budget for
a debt service reserve of$490,272, $400,000 for opportunities to purchase land, and have up to
S739,686 to fund 'Future Projects'.
Staff will present an amended version of the budget at the July meeting in anticipation of
presenting the same to Council in August.
Staff had no recommendation for this item.
ITEM NO. 5 — Consider and act upon issues surrounding the construction of a 96,000
square foot industrial facility at 1405 Martinez Lane.
Staff reported that a temporary certificate of Occupancy (CO) was issued for the offices of
Ascend Custom Extrusion located at 1405 Martinez Lane. A Final CO is anticipated to be issued
in August following the instillation of all Ascend equipment.
A walk through was scheduled for Tuesday, June 28 at 8:30 a.m. to develop the first punch list.
All Board members were invited to attend.
Staff presented for review the Performance Agreement Monitoring Procedures for the Ascend
project. With the issuance of a Temporary CO, Ascend has been notified that the first lease
payment is clue. Being that the lease payment is equal to debt service on the permanent financing
which will not be in place until approximately mid-July to early August; Ascend has been further
notified that the first lease payment amount will be the estimated amount contemplated in the
Lease Agreement which is $40,856. After permanent financing is in place and a final payment
amount is established, the August or September lease payment will be adjusted accordingly.
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June 27, 2011
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Staff anticipated the original letter of credit will be delivered to the WEDC on or before July 1 .
Hill & Wilkinson anticipated finalizing all invoices due and providing the WEDC with the Final
Draw Request during the week of July 4th. By that week, all outstanding expenses related to
interim interest, construction management, and overages related to construction will be in hand
and all remaining funds provided to the WEDC by Ascend as 'Prepaid Rent' will be used to
reduce the debt of the project. It is estimated at this time that there will be $90,000 remaining
from the Prepaid Rent funds. Staff estimated that the permanent financing would be based upon
a final construction loan amount of S4,830,93,9 with total estimated expenses of $5,592,994
which include construction costs, interim interest, construction management, bank inspection
fees, Holland land purchase and relocating Holland improvements. A.final accounting of project
expenses will be provided at the July or August Board Meeting depending on the receipt of the
Final Draw Request.
The WEDC's construction manager was present to make a brief presentation of the construction
schedule.
No action was requested by staff for this item.
ITEM NO. 6 — Consider and act upon issues surrounding the dispersal of excess funds
associated with the Holland Hitch Escrow Account.
Staff reviewed that on December 20, 2010 the WEDC and Ascend placed in escrow $50,550 in
equal parts with Lawyer's Title Company to fund the Construction Escrow Agreement between
the WEDC, Holland, and Lawyers Title Company. Pursuant to the terms of the Agreement, the
WEDC agreed to be responsible for the relocation of the fence and storage area more specifically
defined in the Agreement. To date Lawyers Title has paid a single and final invoice associated
with the above WEDC commitments in the amount of$36,541.
Ascend wired $139,250 to the WEDC for 50% of all expenses related to Holland. Ascend's wire
amount was based upon the following estimates:
Land $112,500
Relocation Of Improvements 25,275
Closing costs, misc. 1,475
The Escrow Account has a current balance of $14,009 (S7,004,50 attributed to Ascend) and
within the WEDC 'Construction Account' there are $1,217.67 of Ascend funds attributed to
overestimated Holland closing costs and other expenses. The Escrow Agreement indicates that
"in the event that any portion of the Deposit remains undisbursed upon the payment in full of all
costs required to complete the Improvement, and the disbursement by Escrow Agent of the final
disbursement pursuant to Paragraph 6 above, such remaining funds shall be refunded to WEDC."
Therefore, there is a total of S8,222.17 remaining of funds deposited by Ascend which will not
be used for its intended purpose.
Staff had originally concluded that the above funds be returned to Ascend based upon the belief
that there was not enough thought put into the use of excess Ascend funds attributed to Holland.
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June 27, 2011
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However, the improvement contemplated within the Escrow Agreement included the relocation
of the Holland fence, which was riot paid for out of the escrow account, but out of the
construction budget. This was a decision made by staff several months ago. To go back now
and determine how much of the fence was attributed to Holland and how much to the balance of
the project is pointless in staffs opinion. The point is that there should have been some
increased amount paid out of the escrow account toward Holland improvements. To remedy that
the itemized dollar amount could be determined or we could take all excess Holland funds paid
by Ascend and reduce the construction loan.
Staff discussed this issue with Ascend and they accept that the WEDC will be utilizing the above
referenced SS,222,17 to reduce the debt on the construction loan. Staff will direct Lawyers Title
to refund the remaining funds within the escrow account following final release from Holland
which is expected the week of June 27th. Staff will also secure Ascend's written
acknowledgement of the above.
MOTION: A motion was made by Mitch Herzog and seconded by John Yeager to
authorize the Executive Director to inform Ascend Custom Extrusion in
writing that the WEDC will be requesting reimbursement of all
undispersed funds held in the Escrow Agreement between Holland,
WEDC, and Lawyers Title, and further inform Ascend that S8,222.17 of
Ascend funds originally wired to the WEDC for Holland improvements
will be utilized to reduce the debt associated with the construction loan
between the WEDC and American National Bank. The WEDC Board
voted 5 — FOR and 0 — AGAINST in favor of the motion.
ITEM NO. 7 — Consider and act upon issues surrounding the disposition of WEDC
property (3.2 acres) located on Hensley Lane.
Staff reported recent interest in the WEDC 3.2 acres on Hensley and requested clarification on
the Board's vision for this property. Helmberger Associates provided the WEDC with a concept
site plan which shows the maximum building size to be 59,665 square feet with approximately
90 parking spaces.
Staff noted that currently there are two users interested in the site. The first user is interested in
constructing a ±60,000 square foot building but only occupying 25,000 square feet with 30,000
square feet remaining square feet remaining to be leased to a single or multiple users. The
second user is contemplating a ±60,000 square foot facility to be 100% owner occupied. Both
users are looking for direction from staff as to the WEDC's interest in their project. The second
user is staffs first choice based upon beim!, 100% owner occupied. However, this same user is
concerned that there is no room for expansion with staff anticipating that the project will not
make due to the lack of room for expansion.
Staffs question to the Board was whether it would be acceptable to the Board to participate in a
project where less than half of the facility was owner occupied or would the Board participate in
a project that was 100°/0 speculative and had no tenant prior to construction.
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June 27, 2011
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The consensus of the Board was that while it is preferred to have a facility 100% occupied by a
single owner/tenant to reduce turnover, they would entertain either as long as the use of the
property is maximized.
There was no action on the item.
ITEM NO. 8 — Consider and act upon issues surrounding the extension of a sewer line to
serve commercial property located near the intersection of Westgate Way and F.M. 544.
MOTION: A motion was made by Todd Wintters and seconded by Mitch Herzog to
table the item until the July 15'11 WEDC Board Meeting. The WEDC Board
voted 5 — FOR and 0 — AGAINST in favor of the motion.
DISCUSSION ITEMS
ITEM NO. 9 — Staff Report: review issues surrounding an Amended and Restated Performance
Agreement between the WEDC and Woodbridge Crossing, ICSC 2011, Performance Evaluation
for WEDC Executive Director, 19 acre commercial tract owned by the City of Wylie (formerly
the Wells tract), Restaurant Recruitment Strategy, parking improvements in downtown Wylie,
extension of Woodbridge Parkway, and regional housing starts.
Woodbridge Crossing
Woodbridge Crossing is currently in compliance with all terms of the Amended and Restated
Performance Agreement. A Sales Tax Reimbursement Report was presented which identified all
sales taxes generated through February 2011 within Woodbridge Crossing for the City General
Fund, the WEDC, and the 4B Corporation. The City and WEDC will be reimbursing 85% of all
sales taxes generated within Woodbridge Crossing through September 2013. Beginning October
2013, 65°/0 of all sales taxes generated will be reimbursed.
The next performance measure due requires a cumulative 385,118 square feet to be constructed
by September 1, 2013. There is currently 314,652 square feet in place within Woodbridge
Crossing, 3,500 square feet under construction, with Ross and Rack Room Concepts planned for
in-line space next to Kohl's along with Rosa's Cafe (7,000 sq.) next to Viewpoint.
A summary of Direct Developments' Performance Obligations was presented for the Board's
review. Also presented was a Valuation Tracking Analysis which identified the appraised value
of the land and improvements since 2005. An updated version of this report will provided in
July and again in ±September when the appraised values are certified.
ICSC 2011
Staff believed ICSC 2011 was a successful venture for the City of Wylie. Highlights include
meetings with Eyemaster's and Clark Street Development to confirm projects in Wylie along
with 13 other retailers.
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June 27, 2011
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Performance Evaluation
On or about each year in July, the WEDC Board completes a performance evaluation of the
Executive Director for the prior year's work and provides goals and objectives for the upcoming
year. President Fuller requested that each Board member complete the attached Performance
Evaluation Report and return a copy to his attention no later than July
19 Acre Commercial Tract Owned by the ON of Wylie (Wells Propern)
Staff has been in contact with a user which is attempting to identify a 5 — 6 acre tract in Wylie to
support a 60,000 square foot facility with additional acreage for expansion. Since the user is not
a candidate for the KCS property, the WEDC is limited in its options for light industrial
development. However, development options for the I 9 acre Wells tract have been uncertain for
some time and would provide the WEDC options for this prospect.
The question is would the Wells tract be suitable for commercial development (LI specifically)
and would the Council allow it. The entire Wells tract was purchased as open space for public
purposes and there is still a perception that the 19 acres must remain as open space. Staff plans
on presenting the issue to Council seeking guidance and begin the process of exploring the
legalities of developing the property in a commercial manner. Assuming Council and the City
attorney considers commercial development an option, the next discussion would be whether
light industrial development would be allowed via a Planned Development zoning district. A PD
would be required to address concerns regarding outside storage and other issues which may not
be acceptable on one of our two primary corridors.
Restaurant Recruitment Strategy
The Retail Coach was extremely helpful at ICSC in the promotion of Wylie to the concepts
identified within our Restaurant Recruitment Strategy. The consistent theme heard from the
restaurant representatives that we met with was low daytime employment. To address this
perception (specifically with Freebird's at ICSC) the Retail Coach prepared a comparison of
concepts in other communities with similar demographics as Wylie. While this approach was of
interest with the representatives, it does not address the markets which concepts are comparing
Wylie to at this point in time. Wylie will support many of the concepts which have been
approached but our projected sales figures do not compare with other sites being considered..
The above information is not to say we are not continuing to aggressively pursue concepts, it is
just an assessment of the environment we are operating within. The Retail Coach has had
positive feedback from Texas Roadhouse and Fuzzy's Taco and has a meeting scheduled with
Huddle House on June 29th ICSC was not the end of our Restaurant Recruitment Strategy hut
just the beginning for The Retail Coach.
Parking Improvements in Downtown Wi;lie
Attached for the Board's review was a memo delivered to the Parks and Recreation Board for
their consideration at the upcoming Parks Board meeting on June 271' at 6:30 p.m. The WEDC
had also requested to be placed on the Merchants Association agenda for July 5"11, S:30
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June 27, 2011
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With staff out of town on this date, Board member Winners will be representing the WEDC in
front of the Merchants.
As indicated previously, staff believes that prior to expending a great deal of time and effort on
this project, the WEDC must first get support from all interested parties including the Parks
Board, Downtown Merchants, and most importantly the Wylie City Council. Due to the
potential expenditure of public funds on private property, the Board must clearly define and
prove that a public purpose is being served.
Extension of Woodbridge Parkway
Staff continues to reach out to Sachse for their intention to fund the extension of Woodbridge
Parkway within Sachse City limits. Kimley Horn, representing Wal Mart, has delivered a letter
to Sachse indicating that in order for their due diligence to be completed they must know the
status of funding and construction for Woodbridge Parkway. Ms. Manson has attempted to
schedule a meeting with her counterpart in Sachse to determine Sachse's position. Wylie's
participation within its City limits obviously wili be impacted by the project Clark Street
Development has proposed.
Regional Housing Starts
Nineteen homes were permitted in Wylie for May 2011.. Sachse, Lavon and Murphy permitted a
combined twenty-three homes over the same period.
No action was requested by staff for this item.
EXECUTIVE SESSION
The WEDC Board recessed into Closed Session at 12:50 p.m. in compliance with Section
551.001, et.seq. Texas Government Code, to wit:
Recess into Closed Session in compliance with Section 551001, ct.seq. Texas GOVe111711Ctit Code,
to wit:
Section 551.071 (Consultation with Attorney) of the Local Government Code, Vernon's. Texas
Code Annotated (Open Meetings Act).
• Receive legal advice concerning Cause No. 366-01.521-2011 in the 366th Judicial District
in the case styled Wylie Economic Development Corporation vs. Sandell International
(U.S.A.), Inc.
Section 551.087 (Economic Development) of the Local Government Code, Vernon's Texas
Code Annotated (Open Meetings Act).
• Consider a request for assistance from Texas Timber Wolfe,
• Consider issues surrounding Clark Street Development.
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June 27, 2011
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• Consider issues surrounding Medical uses considering a site near the intersection of F.M.
544 and Sanden Blvd. (Board member Mitch Herzog announced he had a conflict of
interest and left the room at 1:05 p.m. He did not return to the meeting, An Affidavit
Stating Conflict of Interest will be placed offile with the original minutes).
RECONVENE INTO OPEN MEETING
The WEDC Board of Directors reconvened into open session at 1:12 p.m.
ADJOURNMENT
With no further business, President Fuller adjourned the WEDC Board meeting at 1:13 p.m.
/)
( 4).
Marvin Fuller, President
ATTEST:
Samuel D.R. Satterwhite
Executive Director