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12-09-2011 (WEDC) Minutes Minutes Wylie Economic Development Corporation Board of Directors Meeting Friday, December 9, 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, Chris Seely, Todd Wintters, and John Yeager. WEDC staff present was Executive Director Sam Satterwhite and Senior 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 December 2, 2011 Minutes of the WEDC Board of Directors Meeting. Board Member Todd Wintters reminded staff that he was not present at the December 2"a meeting as stated in the Minutes. He asked that the minutes be amended. MOTION: A motion was made by John Yeager and seconded by Mitch Herzog to approve the December 2, 2011 Minutes of the WEDC Board of Directors Meeting as amended. The WEDC Board voted 5 —FOR and 0—AGAINST in favor of the motion. ITEM NO. 2 — Consider and act upon approval of the November 2011 WEDC Treasurer's Report. MOTION: A motion was made by Mitch Herzog and seconded by John Yeager to approve the November 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 the disposition of 1.43 acres owned by the WEDC located near the intersection of F. M. 544 and Regency Drive. Staff reviewed the WEDC ownership of a 1.433 acre tract located near the intersection of Regency and F.M. 544 which is bounded to the east and south by Central Self Storage. The tract was purchased from two separate owners with an acre purchased from Ferrell Construction and WEDC—Minutes December 9, 2011 Page 2 of 10 0.43 acre purchased from Central Self Storage. The City of Wylie Parks Department currently occupies the existing structure on the property and plans on vacating the same in approximately 18 months. Between the WEDC tract and Regency to the west is 2.35 acres with 0.67 acre owned by the Jacobs Family Trust and 1.66 acres owned by Scott Goldenberg. Total acreage including the WEDC tract is 3.8 acres with all three properties having almost identical depth from 544. Since the Regency median break was closed and moved to Springwell, access has been impacted and there will be little to no chance of getting a median break directly in front of the WEDC tract due to an existing median break just to the east. Staff had been in discussion with Mr. Tommy Pulliam to purchase the WEDC tract for an office building concept. While his concept plan depicted 6,500 square feet, Mr. Pulliam had indicated that the final design would be closer to 7,000 square feet. Staffs concern with the proposal was that there would be a significant amount of 'dead space' at the rear of the property and staff could not contemplate a marketable use for that area with an office building at the north end of the tract. Further, the primary goal of the WEDC in purchasing the Ferrell tract was redevelopment. If the WEDC tract were to develop independent of the corner tracts, an opportunity for a master planned area offering more than just a 7,000 square foot office would be lost. The WEDC purchased the tracts for $390,000 ($6.26 psf). Mr. Pulliam indicated his pro forma would support a purchase price of$2.50 per square foot or $156,053. With an estimated project value of$1 million, property taxes generated from the new development for the City and WISD would be approximately $13,689 annually. Board member Mitch Herzog was not inclined to sell the 1.433 acres to Mr. Pulliam for the purpose of building an office building, but would be interested in.assisting Mr. Pulliam in a project in a different location. MOTION: A motion was made by Mitch Herzog and seconded by Chris Seely to deny the offer from Mr. Pulliam to purchase 1.433 acres located near the intersection of F.M. 544 and Regency Drive. The WEDC Board voted 5 — FOR and 0—AGAINST in favor of the motion. ITEM NO. 4 — Consider and act upon funding issues surrounding the extension of Wood bridge Parkway. Staff reported that for the past six months, the City Engineer has been involved in negotiations between the cities of Sachse and Wylie, Herzog Development Corporation, and Collin County for the extension of Woodbridge Parkway from Hensley Lane in Wylie to State Highway 78 in Sachse. The contemplated 4-lane design also includes the construction of a bridge adjacent to North Texas Municipal Water District (NTMWD) property. Several commercial projects in Wylie and Sachse have accelerated the need for the extension and have prompted Collin County officials to take a more active role in the project. WEDC—Minutes December 9, 2011 Page 3 of 10 The bridge over Maxwell Creek (Hooper Road) was originally included in the 2003 Collin County Bond program. The bridge was estimated to be 150' long and the project was estimated at $1,138,500 with the County funding half of the project ($569,500) and the Cities of Sachse and Wylie funding 25% of the project ($284,625 each). The City of Wylie contracted with Kimley-Horn and Associates for the design of the project which was funded by Collin County. Various alignments for the bridge and roadway were considered before the current alignment was recommended. The factors considered in determining the alignment were the location with respect to adjacent property owners, the location of the NTMWD landfill, approval from the National Resource Conservation Service, approval from FEMA, and approval from the Army Corps of Engineers. City staff is still waiting on final approval from the Corps but expect it within the next 60 days. While in 2003 it was originally estimated that the contemplated bridge improvements were 50% in Wylie and 50% in Sachse, the above factors caused the bridge to be located 27% in Wylie and 73% in Sachse. Multiple phases of the project have been identified and are outlined below: Woodbridge Parkway at SH 78 Crossing - $357,749.37. Sachse responsibility and funded by Developer's Agreement. KCS Grade Crossing Warning Devices - $399,492.88. Sachse responsibility and funded by Developer's Agreement. KCS Concrete Crossing and Subgrade - $185,013. Sachse responsibility and funded by Developer's Agreement. Woodbridge Parkway Phase 1 — $931,763. Sachse responsibility and funded by Developer's Agreement. Woodbridge Parkway Phase 2 - $1,246,711. Sachse responsibility. No funding in place at this time. Bridge Construction Cost - $1,020,977. Sachse and Wylie responsibility. 27.3% of the bridge is located in the City Limits of Wylie which equals $278,727. Bridge Soft Cost - $1,190,160. Sachse and Wylie responsibility. Cost include engineering fees, geotechnical, wetlands mitigation, testing, franchise utility relocation, right of way acquisition, TCEQ fee, and cost for retail land lost due to compensatory grading. 27.3% of the bridge is located in the City limits of Wylie which equals $324,914. North Woodbridge Parkway - $3,372,643. Wylie responsibility. Construction of 4-lanes of Woodbridge Parkway from Hensley Road south to the bridge. Wylie's share for the project totals $3,976,284 and at this time no funding has been identified. As indicated earlier, Collin County has taken an interest in this project with Commissioner Williams proposing an increased role from its commitment in 2003. Prior to any formal request WEDC—Minutes December 9, 2011 Page 4 of 10 to the Commissioners Court, the County has requested that the cities of Sachse and Wylie represent their funding source for at least 50% of the improvements within their jurisdiction. WEDC staff proposed joint funding of the Wylie improvements with the WEDC taking the lead in financing the project and the City of Wylie contributing as thoroughfare impact fees are accumulated in the west zone. Assuming the County's participation at 50%, the WEDC could finance $2 million over 10 years. With an estimated $700,000 collected in thoroughfare impact fees for two active projects on Woodbridge Parkway, the City Council could so choose to commit $350,000 initially to the construction project and immediately reduce the proposed WEDC debt. Staff referenced only 50% of the anticipated thoroughfare impact fees because the balance is committed to Herzog Development Corporation via a previous Reimbursement Agreement. Further, staff only mentioned the two active projects and their impact fees because if the City was not pursuing these projects, the road funding would not be as urgent an issue. Staff also proposed that all future thoroughfare impact fees generated along Woodbridge Parkway be dedicated to WEDC debt reduction. Staff has discussed this potential scenario with American National Bank (ANB). Due to any other lending institution having to subordinate their debt to the Ascend loan, ANB is the obvious choice at this time for conventional financing. Further, while sales tax revenue bonds may provide a longer term, the fee is $75,000 with comparable interest rates for conventional financing. ANB has estimated a 3.54% rate fixed for 10 years with no origination fee. If the WEDC was interested in a floating rate, 2.6% was estimated. Based upon fixed rate financing of $1.65 million, annual debt service would equal $196,164. Staff produced a cash flow analysis assuming debt service beginning immediately which reduced WEDC cash on hand in December 2011 from $823,000 to $424,000 in November 2012. Staff noted that the cash flow figures do not reflect the Ascend debt service reserve account of$488,000. Staff recommended that the WEDC Board of Directors authorize staff to represent to the City of Wylie and Collin County the WEDC's intent to fund up to $2 million in infrastructure improvements for the extension of Woodbridge Parkway and further authorize staff to negotiate an Interlocal Agreement with the City of Wylie for the shared funding of Woodbridge Parkway improvements. MOTION: A motion was made by Todd Winners and seconded by Mitch Herzog to authorize staff to represent to the City of Wylie and Collin County the WEDC's intent to fund up to $2 million in infrastructure improvement for the extension of Woodbridge Parkway and further authorize staff to negotiate an Interlocal Agreement with the City of Wylie for the shared funding of Woodbridge Parkway improvements. The WEDC Board voted 5 —FOR and 0—AGAINST in favor of the motion. ITEM NO. 5 — {Remove from Table) Consider and act upon approval of a Performance Agreement between the WEDC and PM Realty Group. WEDC—Minutes December 9, 2011 Page 5 of 10 A motion was made by John Yeager to remove consideration of Item No. 5 from the table. Staff presented a Performance Agreement between PM Realty and the WEDC. While there are several unknowns pertaining to the overhead utilities, staff believed that the Board was in a position to move forward. Upon receipt of documentation of PM's closing on the site, issuance of a building permit, and confirmation of financing, the WEDC would begin construction of off- site improvements consisting of burying of overhead utilities and creating a median break fronting the PM site on F.M. 544. Staff had a 'not to exceed' figure for the median improvements via estimates provided by J. Volk Consulting. Engineering has been quoted at $14,000 with construction estimated at $109,835. At the 11-17-11 Board Meeting, the Board directed staff to pursue the construction of a west bound turn bay as well as an east bound turn bay to benefit the City of Wylie 19-acre tract. Oncor has yet to commit to funding assistance or payment options. However, staff anticipated at a minimum the WEDC will be allowed to pay out the burial over a 2 or 3 year period. The most recent estimate is $289,000 from Sanden to Muddy Creek. Time Warner has yet to provide a cost estimate. However, based upon the materials required to bury cable versus electric lines, staff estimated the cost to be approximately $75,000 which was independently verified by PM Realty and Oncor. For protection from increasing expenses, staff directed Randy Hullett to change the language within the Performance Agreement from burying the utilities from Sanden Boulevard to Muddy Creek to burying all overhead utilities "from the eastern boundary of the PM Realty tract to Muddy Creek". This will reduce the WEDC commitment from ±1,500 linear feet to ±1,000 linear feet. However, should Oncor present the WEDC with favorable financing terms and/or cost participation and Time Warner costs come in as expected, it will still be staffs goal to bury as much overhead utilities as financially possible Council will be considering an Impact Fee Agreement at the 12-13-11 Council Meeting. President Fuller asked that the agreement be clarified that the burial of lines should go from the overhead crossing of the creek to the eastern boundary of the PM Realty tract. Staff recommended that the WEDC Board of Directors approve a Performance Agreement between the WEDC and PM Realty Group, LP and further authorize President Marvin Fuller to execute the same. MOTION: A motion was made by Chris Seely and seconded by John Yeager to approve a Performance Agreement as amended between the WEDC and PM Realty Group, LP, and authorize President Marvin Fuller to execute the same. The WEDC Board voted 4 —FOR and 0 —AGAINST in favor of the motion. Board Member Mitch Herzog abstained from the vote due to his relationship with Richard Parker Real Estate. WEDC—Minutes December 9, 2011 Page 6 of 10 ITEM NO. 6 — {Remove from Table} Consider and act upon a formal recommendation to the Wylie City Council regarding an Impact Fee Agreement between the City of Wylie and PM Realty Group. A motion was made by John Yeager to remove consideration of Item No. 6 from the table. Staff presented an Impact Fee Agreement between the City of Wylie and PM Realty which will formalize the City's commitment to reduce Thoroughfare Impact Fees from $234,147.80 to $40,000. Staff will be presenting this Agreement to Council on 12-13-11 for their consideration. Staff will also be presenting the terms of the Performance Agreement so that Council will have a global perspective of the project prior to approving the Impact Fee Agreement. On 12-6-11, the Planning & Zoning Commission approved a Planned Development Zoning District providing for tilt wall construction, changes to signage requirements, restricting certain uses, and allowing for 9 x 18 parking spaces. The Commission spent 90 minutes on the issue and approved the request with the most discussed issue being parking. The Council will consider the PD at the 12-13-11 Council meeting. Sometime in the future, the Board asked staff to formally request that parking space regulations be changed to allow for 9 x 18 parking spaces at all times. Staff recommended that the WEDC Board of Directors formally recommend to the Wylie City Council approval of an Impact Fee Agreement between the City of Wylie and PM Realty Group. MOTION: A motion was made by John Yeager and seconded by Chris Seely to recommend to the Wylie City Council approval of an Impact Fee Agreement between the City of Wylie and PM Realty Group. The WEDC Board voted 4 — FOR and 0 — AGAINST in favor of the motion. Board Member Mitch Herzog abstained from the vote due to his relationship with Richard Parker Real Estate. ITEM NO. 7 — {Remove from Table} Consider and act upon approval of a Performance Agreement between the WEDC and B & B Theatres Operating Company, Inc. A motion was made by Mitch Herzog to remove consideration of Item No. 7 from the table, Staff presented a Performance Agreement between B & B Theatres Operating Company, Inc. and the WEDC. The agreement addressed previous concerns of B & B regarding valuation. To summarize the project: B & B Commits to: • Purchase a 10.8 acre tract purchased from Herzog Development Corporation by March 31, 2012; • Construct a 57,787 square foot, 12 screen, 2,002 seat, all digital theatre no later than December 31, 2014; WEDC—Minutes December 9, 2011 Page 7 of 10 • Provide confirmation of a $10 million investment in land, real property improvements, and FF&E; • Maintain a minimum $10 million assessed valuation for real and personal property during the first full tax year but in no event later than December 31, 2014 as certified by the Central Appraisal District; • Maintain a minimum $9.5 million in assessed valuation for real and personal property during the second full tax year but in no event later than December 31, 2015 as certified by the Central Appraisal District; • Maintain a minimum 5 full time and 20 part time employees during the 3rd, 4th, and 5th year of the Agreement; and • Authorize the Comptroller to release sales tax figures to the WEDC. WEDC Commits to: • Fund a$100,000 economic incentive upon issuance of a fmal certificate of occupancy; • Fund five (5) annual $25,000 economic incentives; and • Reimburse B & B annually an amount equal to a % cent sales tax generated by the Theatre based upon total taxable sales during the preceding 12 month period. Along with an additional '/2 cent from the City of Wylie over the same 5 year period, the cumulative economic incentives ($225,000) and sales tax reimbursements will not exceed $600,000. While the original closing date of 12-31-11 and certificate of occupancy of 12-31-12 was indicated, B&B's last possible closing date with Herzog Development Corporation (Mr. Don Herzog) is 3-20-12 and B&B requested additional time for certificate of occupancy to allow for delays. Should B&B hypothetically complete the building in March of 2013, they will obviously not have a $10 million valuation in September 2013 with the facility only partially complete that year. For that reason, the $10 million valuation requirement was pushed back to 2014, but the sales tax reimbursement was also pushed back until which time the $10 million is in place. In staff s opinion, this scenario only benefits B & B because it allows their sales to mature, thus receiving more reimbursements. Staff withdrew the valuation requirements for years 3 — 5 of the Agreement and put in its place employment requirements. While 5 full time and 20 part time is the benchmark, B & B anticipates 6 and 30. B&B has been uncomfortable with the valuation requirement all along and staff is comfortable in removing it after two full years based upon the only significant change coming in depreciating equipment which we estimate at$2 million initially. President Fuller noted that on the second bullet point under B & B Theatre's commitment, that the construction date should be no later than December 31, 2013. Board member Mitch Herzog stated that he believed the square footage of the building should be changed to 56,000 to allow for any engineering changes. WEDC—Minutes December 9, 2011 Page 8 of 10 Staff recommended that the WEDC Board of Directors approve the amended Performance Agreement between the WEDC and B & B Operating Theatres, Inc. and further authorize President Marvin Fuller to execute the same. MOTION: A motion was made by Todd Wintters and seconded by John Yeager to approve the amended Performance Agreement between the WEDC and B & B Operating Theatres, Inc. and authorize President Marvin Fuller to execute the same. The WEDC Board voted 5 —FOR and 0 —AGAINST in favor of the motion. ITEM NO. 8 — {Remove from Table) Consider and act upon a formal recommendation to the Wylie City Council regarding a Retail Development Agreement between the City of Wylie and B & B Theatres Operating Company, Inc. A motion was made by Mitch Herzog to remove consideration of Item No. 7 from the table. Staff presented a Retail Development Agreement between the City of Wylie and B & B Theatres Operating Company which mirrored the WEDC Performance Agreement on all performance measures. The City of Wylie will be reimbursing B & B over the same 5 year period on a Y2 cent tax out of the 1 cent collected for general fund activities. Board Member Mitch Herzog asked that the agreement be amended with the 56,000 square foot requirement as requested in Item 7. Staff recommended that the WEDC Board of Directors formally recommend to the Wylie City Council approval of a Retail Development Agreement between the City of Wylie and B & B Theatres Operating Company, Inc. MOTION: A motion was made by Todd Wintters and seconded by John Yeager to recommend to the Wylie City Council approval of an amended Retail Development Agreement between the City of Wylie and B & B Theatres Operation Company, Inc. 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, Commercial Lease/Performance Agreement between the WEDC and ACE, Multi Machine, Glenn Brothers, City of Wylie 19-acre tract/sewer line extension, 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 WEDC—Minutes December 9, 2011 Page 9 of 10 sales taxes generated through September 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% of all sales taxes generated will be reimbursed. 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 318,152 square feet in place within Woodbridge Crossing. A summary of Direct Developments' Performance Obligations was presented for the Board's review. Ascend Commercial Lease and Performance Agreement An Ascend Custom Extrusion Critical Dates Analysis and Performance Agreement Monitoring Procedures was presented. Payment #1 of the Economic Incentives has been funded with Ascend meeting all Performance Obligations within Section A of the attachment. A final Certificate of Occupancy was issued on September 23, 2011. Ascend has purchased its second press, anticipating it departing South Korea on 12-17-11, arriving in Wylie on 1-31-12, and fully operational in June 2012. Staff will be presenting ACE's avoided tax payments to the City of Wylie and WISD in January. Multi Machine Staff detailed in November Mr. Linduff s reassessment of the project on Hensley. Mr. Linduff has indicated that it is his intent to make a decision as to proceed or not by the end of February 2012. Glenn Brothers Mr. Randy Glenn contacted staff and indicated that his partners divorce is almost final and at that time Mr. Glenn will be buying out his interest. At that time, Mr. Glenn will discuss with us our continued interest in his property on Industrial Court. City of Wylie 19-acre Tract/Sewer Line Extension An opinion letter was presented from Mr. Robert Dransfield detailing his opinion that the future sale of the 19 acres will not impact the tax exempt status of the Certificates of Obligation issued to purchase the Wells tract. The Planning Department will be taking a Corridor Commercial request for zoning change to the Planning and Zoning Commission in January and City Council in February. Once the zoning change is approved by the City Council, the WEDC will begin construction of the sewer line. Anticipating its approval, staff will begin gathering the bid documents and distributing the same in January. Staff will also approach the impacted property owners for right-of-way acquisition in January. WEDC—Minutes December 9, 2011 Page 10 of 10 Regional Housing Starts Five homes were permitted in Wylie for November 2011. Sachse and Lavon permitted a combined fourteen homes. No action is requested by staff for this item. EXECUTIVE SESSION The WEDC Board recessed into Closed Session at 8:15 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. Sanden International (U.S.A.), Inc. Section 551.087 (Economic Development) of the Local Government Code, Vernon's Texas Code Annotated(Open Meetings Act). • Consider issues surrounding Clark Street Development. RECONVENE INTO OPEN MEETING The WEDC Board of Directors reconvened into open session at 8:40 a.m. ADJOURNMENT With no further business, President Fuller adjourned the WEDC Board meeting at 8:41 a.m. Marvin Fuller, President ATTEST: Samuel Satterwhite Executive Director