07-15-2011 (WEDC) Minutes Minutes
Wylie Economic Development Corporation
oard of Directors Meeting
Friday, July 15, 2011 — 6:30 A.M.
WEDC Offices — Conference Room
250 South Highway 78 —Wylie, Texas
CALL TO ORDER
Announce the presence of a Quorum
President Marvin Fuller called the meeting to order at 6:30 a.m. Board Members present were:
Mitch Herzog, John Yeager, and Todd Wintters. Board Member Chris Seely arrived at 6:46 a.m.
WEDC staff present was Executive Director Sam Satterwhite and Administrative Assistant
Gerry Han-is.
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 June 27, 2011 Minutes of the VVEDC
Board of Directors Meeting.
MOTION: A motion was made by Mitch Herzog and seconded by John Yeager to
approve the June 27, 2011 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 issues surrounding the construction of a 96,000
square foot industrial facility at 1405 Martinez Lane.
Staff reported that a second walk through to address punch list items took place on Thursday,
July le, The first walk through the previous week identified multiple stress cracks on the
southern fire lane which were caused from the crane adjusting the tilt-wall panels which shifted
slightly. Approximately thirty sections of concrete have been removed and poured again.
Several minor issues within the office and warehouse were addressed.
Staff described a miscommunication between the WEDC and ATMOS surrounding S10,000
being requested by ATMOS for the fabrication of the gas meter. After much discussion and staff
providing documentation to ATMOS detailing conversations and commitments, the ATMOS
Regional Manager waived all costs associated with the meter,
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An ADA inspection of the facility revealed some minor issues that needed to be addressed in the
restroom and the installation of 'non-slip' devices on the front sidewalk. Hill & Wilkinson will
address those issues.
The WEDC's construction manager was present to make a brief presentation of the construction
project.
No action was requested by staff for this item.
ITEM NO. 3 — Consider and act upon approval of the June 2011 WEDC Treasurer's
Report.
Staff reported that the June Treasurer's report included the 4th Draw Request from Hill &
Wilkinson in the amount of$1,312,802, June and July sales tax receipts were reported at 5% and
21% up respectively. Staff reported no irregularities in the June Treasurer's Report,
MOTION: A motion was made by John Yeager and seconded by Mitch Herzog to
approve the June 2011 WEDC Treasurer's Report. The WEDC Board voted
4 — FOR and 0 — AGAINST in favor of the motion.
ITEM NO. 4 — Consider and act upon authorizing the WEDC Executive Director to create
a reserve fund in the amount of$490,272.
The WEDC Board had previously indicated that a reserve fund should be established in an
amount equal to 12 months' debt service for the Ascend construction loan. The Commercial
Lease between the WEDC and Ascend estimates an annual lease payment of$490,272 which is
based upon a total debt of S.4,920,939. While staff budgeted for $490,272 in annual debt service,
the amount will be slightly less based upon applying approximately $90,000 from Ascend
Prepaid Rent to reduce the overall debt,
The Finance Department will create the fund by making a general ledger entry to the WEDC
Unreserved/Undesignated Fund Balance and create a new account entitled Fund Balance —
Reserved, When budgeting in the future, as with the FY2011 — 2012 Budget, the WEDC will
restrict the use of the 'Reserved' funds to potential debt service for the Ascend project. Being
that this restriction is self-imposed; staff cannot identify any drawback to reserving these funds.
Most WEDC incentive packages are multi-year programs with typically no need for a large sum
of cash up-front. Also, the FY 2011 — 2012 WEDC Budget allows for $739,686 for 'Future
Projects' allowing ample funds for incentives or other unanticipated projects which may arise.
In order to create the account and reserve the funds, the Finance Department will need a letter
from the WEDC Executive Director along with WEDC minutes verifying the Board's approval.
Staff requested that an amount `up to' S490,272 be approved by the Board to allow staff the
flexibility to reduce the fund based upon the total amount financed.
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MOTION: A motion was made by Todd Wintters and seconded by Mitch Herzog to
authorize the Executive Director the authority to create a reserve account in
an amount up to S490,272 associated with the Ascend construction loan.
The WEDC Board voted 5 — FOR and 0 — AGAINST in favor of the motion.
ITEM NO, 5 — Consider and act upon issues surrounding the FY 2011 — 2012 WEDC
Budget.
Staff provided a detailed presentation of the FY 2011 — 2012 Budget in relation to the proposed
FY 2010— 2011 Budget.
Changes made following the 6-27-11 presentation included the following:
• A revenue line item had been added to track the Avoided Tax Revenue to be paid by
Ascend for real property taxes;
• An Expense within Special Services (Payment to Taxing Entities) was added to offset the
Avoided Tax Revenue;
• The 12-month reserve of$490,272 was removed from the debt service budget. Typically,
the WEDC presents to Council a zero-based budget which plans for the expenditure of all
revenue, including the beginning fund balance. As long as the Board maintains the
reserve, the WEDC will budget for $490,272 less in expenses than available revenue. To
account for the reserve, the Finance Department will make a notation to the Balance
Sheet indicating the reserved amount; and
• $16,100 was added to Engineering Services in the event the Board approves the Muddy
Creek sewer design (Action Item VII).
Other noted highlights of new or increased expenditures/programs are as follows:
Revenue:
Sales Tax Receipts S1,508,000
Beginning Fund Balance 1,012,077
Ascend Lease 490,272
Expenses:
Woodbridge Crossing Reimbursement 198,250
Ascend Start-Up Assistance (#2 of 5) 76,518
Legal 20,000
Ascend Debt Service 490,272
Ascend Debt Service — 12 month Reserve 490,272
Streets & Alleys 40,000
Furniture & Fixtures (copier) 14,602
Incentives — Future Projects 739,686
Woodbridge Crossing reimbursement was increased from $150,000 for FY 2010 — 2011 to
S198,250 based upon increased sales volumes. Payment #1 of 5 to Ascend for their assistance
package will be made in FY 2010 — 2011. As shown above, payment 42 of 5 will be made 12
months from payment #1 which will be in FY 2011 — 2012. The Ascend revenue is offset by the
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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 S40,000 in the
event the WEDC participates in downtown parking improvements subject to Council direction.
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 the WEDC can budget
for a debt service reserve of 5490,272, 5400,000 for opportunities to purchase land, and have up
to 5739,686 to fund 'Future Projects'.
MOTION: A motion was made by John Yeager and seconded by Chris Seely to
approve the FY 2011 — 2012 Budget. The WEDC Board voted 5 — FOR and
0— AGAINST in favor of the motion.
ITEM NO. 6 — Consider and act upon issues surrounding the WEDC support of a 'no
parking Ordinance on Martinez Lane.
Staff reported that on August 23°'1, the City Engineer will be taking to the Wylie City Council a
No Parking Ordinance for Martinez Lane from State Highway 78 to Alanis. Due to increased
industrial traffic on Martinez and thus increased tractor trailer traffic, any parking on Martinez
whether it is tractor trailer or automobile will restrict maneuverability. Martinez is 30' wide.
There is frequent parking on Hensley in front of Extniders, but the 42' wide section on Hensley
was designed for industrial traffic with Martinez paving at only 30' wide due to limited right-of-
way at the time of reconstruction.
Staff had already secured verbal support from Ascend and Savage. Within the packet to Council
will be written support from Ascend and Savage with staff seeking written support from Holland
Hitch,
President Fuller suggested that enforcement of 'no parking' be limited to the Holland Hitch
property line due to the increased width of the paving fronting Holland„ The Board agreed with
President Fullers' suggestion.
MOTION: A motion was made by Mitch Herzog and seconded by John Yeager to
support a `No Parking' Ordinance on Martinez Lane from the Holland
Hitch property line to Alanis to be presented to Wylie City Council. The
WEDC oard voted 5 — FOR and 0— AGAINST in favor of the motion.
ITEM NO. 7 — Remove From Table: 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.
A motion was made by Chris Seely to remove Item No. 7 from the table.
Staff reported that there had been no further update from American Restoration on plans for an
expanded office warehouse on their property. However, staff believed that the design of the
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July 15, 2011
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sewer is an independent issue. Whether American Restoration expands or not, sewer service will
be required for any property to develop west of Arby's all the way west to Muddy Creek. There
are 4 properties which require sewer from the west:
City of Wylie 19.2 acres
James Blakey 8.5
American Restoration 11.9
Sal Del Ray (Benson) 10.0
Total 49.6 acres
Staff believed that while WEDC participation in construction of the sewer line will be dependent
on future projects, the WEDC can proactively go ahead and design the extension. With an
estimated project cost of 8161,000, the design fee will be between $12,880 and $16,100 (8 —
10%) Even if the plans sat idle for a year or more, at the time a development opportunity
presents itself, the plans will be ready with construction to commence immediately.
Upon completion, the property owners and the WEDC can represent to potential developments
that the plans are ready with that step in the process already completed.
Staff recommended that the WEDC Board of Directors authorize the WEDC Executive Director
to seek out a qualified firm to design a sewer line to serve properties along F.M. 544 from
Muddy Creek to the Sal Del Ray property.
MOTION: A motion was made by Chris Seely and seconded by Mitch Herzog to
authorize funding for the engineering of a sewer line to serve properties
along F.M. 544 from Muddy Creek to the Sal Del Ray property adjacent to
Arby's. The WEDC Board voted 5 — FOR and 0 — AGAINST in favor of
the motion.
DISCUSSION ITEMS
ITEM NO. 8 Staff Report: review issues surrounding an Amended and Restated Performance
Agreement between the WEDC and Woodbridge Crossing, Commercial Lease and Performance
Agreement between the WEDC and Ascend Custom Extrusion, WEDC Lease property located at
211 Industrial Court, Restaurant Recruitment Strategy, parking improvements in downtown
Wylie, 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 April 2011 within Woodbridge Crossing for the City General
Fund, the WEDC, and the 4B. As a reminder, the City and WEDC will be reimbursing 85% of
all sales tax generated within Woodbridge Crossing through September 2013, Beginning
October 2013, 65°/"0 of all sales taxes generated will be reimbursed.
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Direct Development is currently in compliance with all terms under the Performance Agreement
with the next performance measure of a cumulative 385,118 square feet due by September 1,
2013. There is currently 314,652 square feet in place within Woodbridge Crossing, 3,500 square
feet under construction for an AT&T corporate retail store & Eyemaster's. Staff has heard from
a contractor that the construction of Ross and Rack Room are out to bid. Also, Rosa's Café
(7,000 sq.ft.) to be located next to Viewpoint has formally submitted to the City of Wylie
Planning Department for site plan approval from P&Z.
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. Since June, valuations have changed from S49.9 Mal
to $49.4 million with the majority of the reduction coming from improvement value.
Ascend Commercial Lease and Performance Agreement
An updated Project Summary was presented which reported Draw #5 from li&W of$524,312.
ANB funded Draw #5 with payment to be made on July 18th. The retainage of$522,094 is being
held until all outstanding issues are addressed. Also provided were estimates for the remaining
construction management fees (S4,500) and projected interim interest (S13,834). Staff had
reported previously construction management of $6,000 and interest of$7,339. Addressing the
increased interest, staff had anticipated permanent financing to be in place by July 1' with the
new anticipated date of July 22 . Also presented were the Ascend Critical Dates Analysis and
Performance Agreement Monitoring Process.
Staff presented Section 6 of the Commercial Lease Agreement — Taxes and Insurance /Utility
Expenses/Additional Rent, Effective July 1 and included in the August 1 Lease payment, the
WEDC will begin assessing Ascend for the "Avoided Tax Costs" which are defined in the Lease
as an amount equal to the property taxes that would have been assessed and collected only by
the City of Wylie and WISD against the Leased Premises or any portion thereof but for Landlord
being classified by such governmental agencies as a tax-exempt entity exempt from such taxes,
less the amount of taxes actually paid by the Tenant for its leasehold interest in the Leased
Premises. Therefore, assuming a construction cost (value) of $5.44 mm and land value of
$900,000 (see Section 6 (d)), Ascend will pay a monthly assessment based upon 56.33 mm
multiplied by the appropriate tax rate. Staff will work with the Finance Department on how to
track these receipts with staff assuming that "Avoided Tax" payments will be made to the City
and WISD on an annual basis.
Staff reported that Ascend has delivered an original Letter of Credit to the WEDC with the
original kept in the City Secretary's safe.
WEDC lease property located on Industrial Court
Taylor and Sons currently leases a WEDC facility located at 211 Industrial Court. Taylor
receives trash and debris from renovated homes each day and places the materials in a make shift
storage area adjacent to their building abutting the chain link fence on the Mann Made property
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line. As the area becomes full, which is most every day, Taylor sorts through the debris for
reclaimed or recyclable material and takes whatever is remaining to the landfill.
On multiple occasions Mann Made has complained of trash blowing onto their property which
Taylor has promptly cleaned up. However, Mann Made has recently voiced concern that liquid
runoff from the debris is encroaching onto their property and has asked the WEDC to intervene.
Staff informed the Board of the situation only because a final resolution is being sought from
Taylor and if it is not resolved Staff will be seeking avenues for terminating the lease.
Restaurant Recruitment Strafe ry
Staff had no update since the June 271h Board meeting other than the Retail Coach is attempting
to determine alternatives for measuring daytime employment. Staff along with President Fuller
met with Mr. John Evans of the John T. Evans Company on July 13th and toured the Wylie
Market. As reported following ICSC, staff believes Mr. Evans will be a valuable resource in
attracting new restaurant concepts to the Wylie market.
Parking Improvements in Downtown Wylie
The WEDC has received support from both the Parks Board and Downtown Merchants
Association for WEDC funded parking improvements on Ballard Street. Staff will take the issue
to the Wylie City Council on August 9`h,
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 8:05 a.m. in compliance with Section
551.001, et.seq. Texas Government 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. 366-01521-2011 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).
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July 15, 2011
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• Consider issues surrounding Clark Street Development.
• Consider issues surrounding Multi-Machining. Board Member Todd Prlintters announced
he had a conflict of interest and left the room at 8:07 a.m. He returned to the room at
830 a.m. An Affidavit Stating Conflict of Interest will be placed on file with the original
minutes.
• Consider issues surrounding B&B Theatre.
• Consider issues surrounding Medical uses considering a site near the intersection of F.M.
544 and Sanden Blvd.
Section 551.074 (Personnel Matters) of the Local Government Code, Vernon's Texas Code
Annotated (Open Meetings Act).
Performance Evaluation of the WEDC Executive Director.
RECONVENE INTO OPEN MEETING
The WEDC Board of Directors reconvened into open session at 9:40 a.m.
Actions taken from Executive Session:
Section 551.074 (Personnel Matters). The WEDC Board approved a Performance Bonus of
$8,000 to be paid to the Executive Director. The Board directed that the Performance Bonus be
paid immediately and applied to the FY 2010 — 2011 Budget.
MOTION: A motion was made by John Yeager and seconded by Chris Seely to
approve a Performance Bonus. The WEDC Board voted 5 — FOR and 0 —
AGAINST in favor of the motion.
ADJOURNMENT
With no further business, President Fuller adjourned the WEDC Board meeting at 9:42 a.m.
Marvin Fuller, President
ATTEST:
Samuel D.R. Satterwhite
Executive Director