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08-11-1992 (WEDC) Agenda Packet DATE POSTED: 08/07/92 TIME POSTED: 3 .`30 rh. MEETING DEVELOPMENT CORPORATION OF WYLIE, INC. TUESDAY, AUGUST 11 , 1992 4:00 PM 2000 HIGHWAY 78 NORTH, WYLIE, TEXAS CALL TO ORDER ORDER OF PAGE BUSINESS NUMBER BUSINESS 1 Discuss and Consider Approval of Minutes of July 14, 1992 Regular Meeting of the Development Corporation of Wylie, Inc. 2 Discuss and Consider Treasurer's Report 3 Oath of Office for New Member 4 Report from Executive Director a. Update on Physician's Regional Hospital b. Update on Master Brake Service, Inc. c. Update on Development of New Industrial Site 5 Recess Open Meeting 6 Convene to Workshop to Discuss Goals and Objectives 7 Reconvene Regular Meeting 8 Citizen Participation .9 In Accordance With the Open Meeting Act, the Development Corporation will hear comments of Public Interest From Residents of the City of Wylie. Any discussion must be limited to placing the item on a future agenda for further Consideration. 10 Wylie Residents Wishing to Speak Should Limit Remarks to a Maximum of Five (5) Minutes 11 Adjourn NOTICE OF MEETING Notice is hereby given that the Economic Development Corporation Board of Wylie will meet at 4:00 P.M. on the //e-le-' day of ae_A-5(_A___<.1E , 1992 at 2000 Highway 78, North, in the City of Wylie, Texas, for the purpose of considering the above agenda. _fr_Aat_4(9card77Jor/s,)city Secretary POSTED THIS THE 7e( DAY OF 4A-eitcae , 1992, AT3:30,M. IL( Aof pv/A..t ric,e/ :77 1/4111‘ D-41-74-(41 1-e ,„ / , JkLot.„ 2,t 7 /uta,} )6,, aca.. /pa , ?A.6tAlit Liu - 1)4 - SL-to,G,au.1-C' s7t1 <zit it"k*k — —1' ) o 0 --- I IA iCA-QA,, ll'AA') Y -A/O'Yl/ < DIRECTORS OF DEVELOPMENT CORPORATION OF WYLIE, INC. MINUTES July 14 , 1992 The Directors of the Development Corporation of Wylie, Inc. met in regular session at 4 :00 P.M. on Tuesday, July 14, 1992 in the Development Corporation's office at the Municipal Complex. A quorum was present and notice of the meeting had been posted in the time and manner required by law. Those present were Jim Smith, President; James Blakey, Vice President and member John Tobin. Executive Director Charlie Womack, Mayor John Akin and City Manager Steve Norwood were also present. In attendance from the City Staff was Anita Collins. Jim Smith called the meeting to order. DISCUSS AND CONSIDER APPROVAL OF MINUTES OF JUNE 14, 1992 REGULAR MEETING : James Blakey made a motion that the minutes be approved without any corrections. John Tobin seconded the motion. The motion carried with all in favor. DISCUSS AND CONSIDER APPROVAL OF TREASURER'S REPORT: Jim Smith read the treasurer's report as prepared by Bart Peddicord, former Secretary-Treasurer and member of the board. The report stated the expenditures and revenues of the Development Corporation of Wylie, Inc. for the month of June. Mr. Smith reported the current balance to be $325,357.71 , sales tax received in June was $13 ,529.42, interest received was $873 .65 and expenditures in the amount of $4,097.04 . The expenditures were as follows: Rent - $50.00, C. C. Womack - $849.50 for salary, $174. 79 - Oak Ridge Country Club reception, $22.75 for office supplies and $3 ,000 to the Chamber of Commerce for advertising. A motion was made by John Tobin to approve the report and was seconded by John Yeager. The motion carried with all in favor. OATH OF OFFICE FOR NEW MEMBER: This item not carried out as new member was not present. DISCUSS AND CONSIDER APPOINTMENT OF SECRETARY/TREASURER: John Tobin nominated John Yeager to be the new Secretary/Treasurer, James Blakey seconded the nomination. The vote carried with all in favor. DISCUSS AND CONSIDER PROPOSAL FROM MASTER BRAKE SERVICE: The Executive Director presented a proposal from Master Brake Systems, Inc. (copy of proposal attached at end of minutes) . Master Brake proposes that the Development Corporation purchase the vacant Tarrant plumbing building in Wylie at a price not to exceed $150,000 and advance their company a "cash grant" of $30 ,000 to be spent for renovation purposes. Master Brake would then execute a five year lease with an option to purchase the property at a pre-arranged or negotiated sales price. A motion was made by James Blakey authorizing the Executive Director to proceed with an appraisal of the property. The motion was seconded by John Tobin. The motion carried with all in favor. DISCUSS AND CONSIDER PROPOSAL FROM PHYSICIANS REGIONAL HOSPITAL: Physicians Regional Hospital has requested assistance (copy of request attached) from the Development Corporation. They are asking the Development Corporation to place a $120,000 CD into Provident Bank Wylie to collateralize a $120,000 loan to the Hospital to fund the development of a new Geriatric Psychiatric Unit at the Hospital and working capital deficits during development of this Unit. REPORT FROM EXECUTIVE DIRECTOR: Charlie Womack gave his monthly report (copy attached) and an update on the prospects pending at this time. They are Metrocast, Inc, Perma Tune, Inc, Golden Pickle, and Master Brake Systems, Inc. FINALIZE SEMI-ANNUAL REPORT TO CITY COUNCIL: The board members were given a draft of the report (copy attached to minutes) prepared by Jim Smith. A motion was made by James Blakey to approve the report for presentation to the City Council RECESS OPEN MEETING: CONVENE TO WORKSHOP TO DISCUSS GOALS AND OBJECTIVES: No discussion was held on this item. RECONVENE REGULAR MEETING: CITIZEN PARTICIPATION: No citizen participation ADJOURN: There being no other matters of business for discussion, a motion was made by James Blakey and seconded by John Tobin to adjourn this meeting. The motion carried with all in favor. Minutes of the July 14 , 1992, regular meeting approved by the Board of Directors at its meeting on August 11, 1992 . Jim Smith, President PREPARED BY : l Anita Collins Master Brake Systems, Inc. P.O. BOX 29789 2343 N RRELL RD.SUITE 305 DALLAS,TX 75229 214/2410164 Board of Directors Development Corporation of Wylie, Inc. P.O. Box 428 Wylie, Texas 75098 Ref.: Master Brake Systems, Inc. Gentlemen, The above referenced company is a Texas Corporation domiciled in Dallas. Outstanding common stock is owned by Bill Barnett, Don Lewis and Charles Chessier. Lewis and Chessier own and operate Accurate Automatic Manufacturing Corp. 703 Business Way, Wylie,Texas. The company generates sales in excess of$2,000,000.00 and has a payroll of some forty-one (41) employees. Some three years ago, Mr. Barnett developed a revolutionary vacuum over hydraulic brake system for heavy duty trailers that are used in the trucking industry. The three investors decided to organize the above referenced company to manufacture and market the product nationwide through established distributors. Sales have exceeded all projections and management continues to be optimistic that this trend will continue as efforts are increased to penetrate an additional share of this market. The first year sales,in 1989-1990, were$600,000.00 with an employee work force of five (5). The 1990-1991 year sales increased to $1,500,000.00 with an increase in work force to eleven (11) employees. The 1991-1992 fiscal year ended in June 1992 yielding sales of$1,900,000.00 and an increase of work force to fifteen (15). Sales forecasts for the 1992-1993 year are$2,250,000.00. When the company was organized, a decision was made to rent a 7000 sq. ft. industrial building in Dallas. As sales increase we have been required to increase our current work force to fifteen (15) full or part time employees. -This increase has taxed our ability to meet expanded sales growth and our location will not permit acquiring or enlarging our facilities to meet future sales projections. For this reason, we have decided a move to larger facilities would be in our best interest. We believe the vacant Tarrant Plumbing building in Wylie, with a few modifications, would be adequate to meet our immediate and future needs. The brick and metal building, located on a two(2) acre site,contains 2000 sq. ft. of office space and the remaining 8000 sq. ft. is non-partitioned open work area. A wooden decked storage area has been constructed over the office area. A large concrete paved parking area is provided in front of the building. The remainder of the property is enclosed by a four foot chain link fence. Jane Henry Realtors, Inc. has the property listed for $210,000.00,but we believe an offer of approximately $150,00.00 may receive a favorable response from the current owner. The office space needs a new coat of paint. Two additional offices can be added by partitioning a former showroom. A new electrical service must be installed to operate heavy duty machines and equipment. An air-conditioned assembly area of 1800 sq. ft. must be constructed within the open space. We have received an initial bid from a local contractor to complete the improvements for a total cost of$33,000.00. We request the Development Corporation to consider the purchase of the Tarrant Plumbing building for a price not to exceed$150,000.00 and then advance our company a "cash grant" of$30,000.00 to be spent for renovation purposes. Our corporation would then execute a five year lease with an option to purchase the property at a pre-arranged or negotiated sales price. Your consideration of our request will be appreciated and we shall be happy to furnish financial or other required information,should our application receive a favorable response. Sincerely, Bill Barnett- President 111 1likiNt° PH YSICIANS REGIONAL HOSPITAL 801 SOUTH HWY. 78 • P.O. BOX 1500 • WYLIE, TEXAS 75098 • (214) 442-5414 June 23, 1992 HAND DELIVERED Charlie Womack Wylie Economic Development Corporation 201 N. Ballard Wylie, Texas 75098 RE: HOSPITAL LOAN REQUEST Dear Charlie: As promised, I have enclosed a copy of the loan guarantee proposal for Physicians Regional Hospital as you requested in our last meeting. Again, time is of the essence on this loan request. _ If you have any questions- and/or need any additional information, please give me or Larry a call at 442-5414, ext. 300 or 214. Your consideration of this request is greatly appreciated. Respectfully yours, Mark W. Liston Executive Vice President & C.F.O. Enclosure cc: Larry Wedekind Peggy McCollum Steve Miller PHYSICIANS REGIONAL HOSPITAL LOAN GUARANTEE PROPOSAL TO WYLIE ECONO DEVELOPMENT CORPORATION REQUEST: The Economic Development Corporation to place a $120, 000 CD into Provident Bank Wylie to collateralize a $120, 000 Loan to the Hospital to fund the development of a new Geriatric Psychiatric Unit at the Hospital and working capital deficits during development of this Unit. This Unit provides 21 new jobs to the area and allows the Hospital to continue its financial viability and delivery of emergency care to all citizens of the area, regardless of ability to pay. BACKGROUND AND HISTORY: Physicians Regional Hospital ("Hospital") was originally constructed and opened by American Healthcare Management, Inc. (AHM) in July 1983 as a 37 bed acute-care medical and surgical hospital . As a result of poor management and a negative community image, the Hospital experienced significant financial losses through 1986. Finally i. `tovember 1986, in an attempt to stem these losses, AHM asked Mr. awrence J. Wedekind, a noted local hospital turnaround specialist, to consult and advise AHM ?: elative to the Hospital. After approximately six (6) months of consultation, AHM entered into a 5-year management contract with Mr. Wedekind and his company, Paragon Healthcare Systems, Inc. (Paragon) to operate and manage the hospital . Paragon successfully recruited topnotch physicians in several specialties, developed new services needed in the area, implemented cost controls and quality assurance programs, and forged cooperative relationships with the existing physicians and community organizations and businesses. The Hospital began to experience positive cash flow as a result, most of which accrued to the benefit of its owner, AHM, instead of the Hospital itself. Despite the financial improvement at the Hospital in late 1987 AHM filed Chapter 11 bankruptcy reorganization due to other problems in their hospital network. This further eroded investment by AHM of positive cash back into the Hospital. Frustrated with AHM' s drain on positive cash flow, Mr. Wedekind then successfully negotiated a Lease Purchase of the Hospital. This lease purchase includes an exclusive purchase option, a ten (10) year lease of the land, building and major equipment and the purchase . of the Accounts Receivable (A/R) , supplies, minor equipment, good will, and cash- on-hand at the time of such purchase. This Lease Purchase was consummated on May 1, 1989 . As a result, Paragon has a 55% ownership position in the Hospital and is the General controlling Partner. Mr. Wedekind owns the majority interest in Paragon and other minority interests are held by the following individuals: Mark Liston, Peggy McCollum, Stuart Kalb, Kathie Sukkar. The 45% remaining Limited Partnership interests are held by three (3) couple of national adolescent psychiatric providers . Over five (5) freestanding Psych hospitals have closed in the Dallas area alone in the first 6 months of this year. 4 . The Emergency Department has grown steadily over the last 3 years due to quality of care enhancements put in place between 1987 and 1989 and the improved image that has occurred. 5 . The Surgery Department is now equipped with state of the art orthopedic, endoscopic, gynecological, ophthalmic and general/vascular instrumentation as the result of the recruitment of several extremely capable surgeons from Plano in these specialties and continued investment of positive cash in these areas. Surgical volume has grown steadily as a result. 6 . Last, but not least, our patients consistently receive personalized loving care from the staff and word of mouth advertising has been very strong as a result, particularly in the last 1 1/2 years. Due to the harmonious working environment, our employee turnover remains very low. Unfortunately, as mentioned in #3 above, in January 1992 the census in the adolescent psychiatric unit stared to decline. It became apparent that the future demand and reimbursement for inpatient psychiatry would be tenuous at best due to the industry troubles spawned by a couple unscrupulous national companies. However, Paragon fortunately had been planning the development of geriatric psychiatry services since early 1991 to replace adolescent psychiatry due to the growing need for such services in our service area. The closure of the adolescent unit was therefore planned very carefully to coincide as closely as possible with the opening of the Geriatric unit, although it was closed one (1) month earlier than expected due to the industry problems that occurred. As stated earlier, initial conception of the Geriatric Psychiatry unit occurred in early 1991 due to the recurring demand for such a unit. Development of the Geriatric Psychiatry unit was started formally in October 1991 and was finished in May 1992 . After several mandated state licensing and clinical quality oriented surveys, the unit was opened on June 8, 1992 , despite not having sufficient capital to fully pay for the expansion or the working capital needed during the first 3 months of operations of the Unit. Relative to this capital need, Paragon had hoped to obtain an expansion and working capital loan from Equitable Bank Dallas to finance the Geriatric Psychiatry unit and applied for such a loan in early 1991. Equitable Bank approved the hospital ' s loan request conditioned upon a loan guarantee from either SBA or FMHA government loan guarantee programs . After initial research and application to the SBA, it was determined conclusively that the Hospital didn't quality for an SBA loan guarantee since its gross revenue was too high. Therefore, a loan guarantee from FMHA was applied for by Equitable and the Hospital. Initial application to FMHA was made in January 1991. Equitable and FMHA officials believed and represented to Paragon that the loan would be approved and funded well before the end of 1991. It seemed that there was no question that the Hospital would qualify for the FMHA loan guarantee program. Much to our dismay, this $650 , 000 loan has still not received formal approval from FMHA, despite approvals from Equitable, the regional FMHA office, OSHA, and the North Texas Board of Governors. Approval and funding is still expected,- but will probably not occur in time to solve the Hospital ' s immediate working capital needs. The local banks are also unable to lend any additional monies to the Hospital without additional collateral in the form of cash or equivalents. Therefore, the Hospital is now in a position where it has been forced to use operational cash flow to fund the Geriatric Psychiatry expansion and renovation project. This, combined with the overall Hospital negative cash flows that have occurred since April 1992 because of the closure of Adolescent Psychiatry Unit has placed the Hospital in temporary dire financial straits. It is expected that negative cash flows will continue through July 31, 1992 due to the fact that the adolescent psychiatry service was ceased in March 1992 and collections from the geriatric unit will not start until the first part of August 1992 . In summary, the Hospital has already experienced 2 1/2 months of negative cash flow and will experience another 1 1/2 - 2 months until the geriatric unit revenues make up the difference. As shown in the attached Forecasted Cash Flow analysis (Exhibit B) , the hospital started the month of June with a negative $28 , 000 account balance due to the last 2 1/2 months of negative cash flow and this situation will worsen to approximately a negative $145, 000 by the end of July. Beginning in August, cash flows will again become positive due to the geriatric psychiatric unit collections and this negative account balance will be whittled down until it again becomes positive in November 1992 . NEED: The Hospital therefore needs a short-term cash infusion immediately of at least $120, 000 in order to fund the negative cash flows that have already occurred and the continuing working capital needs through July 1992 . As seen by the Forecasted Cash Flow analysis, a $120, 000 loan can easily be repaid with interest by December 1992 . Such a loan can also be paid back early if the Equitable Bank/FMHA loan materializes prior to December 1992 . ALTERNATIVE IMPACT: The alternative to not obtaining the $120, 000 expansion and working capital is to close the geriatric unit immediately. This would cause the immediate loss of approximately 21 new employees (jobs) relating to the new geriatric unit and would place the entire Hospital in immediate jeopardy due to the amount of cash ($45, 000) already expended on the renovation project necessary to make the unit operational. The Hospital's medical and surgical operations alone are simply not strong enough at this time to support the high levels of unreimbursed care and overhead necessary to provide unrestricted access to Hospital/Emergency care in our community. In other words, in addition to geriatric unit closure, closure of the Hospital ' s Emergency department is also quite likely if the Hospital does not receive these monies soon. Since closure of the emergency department is often tantamount to closing the hospital and will definitely increase morbidity and mortality in our area, this is not a viable alternative for the area. The loss of approximately 110 jobs are ultimately at stake for the community and the loss of ad valorem taxes and sales tax revenues are also at state. This equates to a direct economic loss to the area of approximately $3 . 5 million per year. PROPOSED SOLUTION: Provident Bank Wylie will provide the additional $120, 000 as an extension of our existing loan or simply a new loan on the condition that a CD be placed as collateral. The Hospital proposes that the Economic Development Corporation place $120, 000 of its funds in a 6 month CD collateralizing the $120, 000 loan needed by the Hospital. This loan will be a six month fully amortizing loan so that the collateralized portion of the CD decreases each month until the loan is fully paid off by the end of the 6th month. Timing is critical . Closing of this transaction is requested by June 30, 1992 . Provident Bank Wylie has already approved several large checks that posted to the Hospital ' s account without the account balance to fund these checks. The bank' s patience is limited. Your immediate consideration is appreciated. Sincerely, - - Lawrence J. Wedekind Chief Executive Officer LJW/sa Physicians Regional Hospital Community Support - 89,90,91 Cost to Schools: • PRH Wylie Independent School District Elementary Schools Birmingham: Annual Health Fair in Auditorium Health Screenings and Handouts 89, 90,91 $750 Halloween safety bags 1989, 90,91 $420 Special Students Tour of Hospital $50 Hartman: Career Day 90 Provide nurse, lab tech, physical therapist $480 Hospital Day 1990 (supplies) $100 Halloween safety bags 1989,90,91 $345 Drug Awareness Week- psychologists and therapists 90,91 $400 Akin Halloween safety bags 1989,90,91 $140 Middle School Medical Explorers Program $100 Highschool Project Care Drug Testing 90, 91 $6,650 Medical Explorers Program 90,91 $1,700 Purchased Grand Champion Steer(FFA) 1990 $2,475 Purchased Steer and Lamb (FFA) 1991 $1,900 Purchased Lamb (FFA) 1992 $170 Health Program Scholarship-S600/yr Wylie Band Boosters -donations, 89,90,91 $45 Wylie Football Team -cups donated;91_ $190 Wylie Football Programs- ads, 90,91 - $315 • Comunity Independent School District-yearbook ad, 91 • $50 Wylie Christian Academy Year Book ads -89,90,91 . $150 Auction donations - 89,90,91 $1,750 Preschools Free Continuing Education Courses for Teachers 1991 $350 Halloween Safety Bags 1989,90,91 $315 Wylie Chamber of Commerce and area Businesses Chamber Annual Dues - 89.90.91 $900 Support of other Chamber Functions 89,90,91 $1,965 • TI Health Fair- 90, Nurse, giveaways $200. " Chamber Parade 89,90,91 - Floats $3,000 Hillcrest Nursing Home Pagent Donation -91 $50 Business Expo at Birmingham Elementary School-91 $300 Chamber Board Member-92 Provide Physical Therapist to area businesses for education S500 Employee Time to attend Chamber Ribbon Cuttings, etc.-89,90,91 53,000 Wylie News and Wylie Sentinel Advertising-89,90,91 $3,300 Member of Economic Development Committee 90,91 51,000 Member of Partnership in Development-92 Community Organizations Girl Scouts, Camp Fire Girls, tours, etc. 89,90,91 S1,000 Wylie Womens League 89,90.91.92 Baked Food Sales $80 Easter Egg Hunt (Cabbage Patch) $300 Member since 89 PRH Auxiliary provided refrestments at Tour of Homes,91 S 100 Wylie Rotary Club Charter Member and financial supporter, 89,90,91 S2,160 Christian Care Center Donate Space 89,90,91 $18,000 Provide garage sale space and signs $200 Discounted Mammograms for those recommended via CCCC $1,000 Promote Health and Wellness in the Community Annual Health Fairs, at PRH 90,91 $4,000 Provide Meeting Space for TOPS &WT Watchers 89,90,91 S 1,200 AARP Lectures and support, Wylie, Copeville-92 $300 Wylie Volunteer Fire Dept. 1) 2 employees are volunteer firefighters and are paid when fighting fires during working hours, 89,90,91,92 $5,000 2) ads in annual function program 89,90 $200 Parker Volunteer Fire Department- ads in publications $100 Brochures to educate public about gallbladder disease, mammograms, and availability of physicians, 90,91 S20,000 Newsletter- with health education articles 90.91 $15,500 First Aid Station at McKinney's Forever Free -91 $1,400 - Coordinate Wadley Blood Drives 4 times/yr, 90.91 $1,000 - $104,600 Physician Recruitment Includes Recruitment Fee, Guarantee, Renovation, Free Rent $368,500 Gilbard IHN Birdsong Adams 'nt Dental Clinic Haskell Texas Heart Group Texas Surgery Group Schacherer& Frazee Kay, et. al Derbonne • • Total $473,100 PHYSICIANS REGIONAL HOSPITAL PHYSICIAN RECRUITMENT 05/31/89 - 05/31/92 • Recruitment Free/Disc. Office Office Moving Physician Fee Guarantee Rent Renovation Staffing Advertising Expenses T- Or. Propst 8,000 4.800 2.000 6,000 500 21 Dr. Gilbard 18.000 9.600 2,000 2,000 3,000 34 IHH 4.000 7,000 11 Or. Birdsong 18.000 70.800 * 14.248 9.400 6,000 118 Or. Adams 24,000 10.580 17,116 300 51 Dr. Naini 6.700 1 .000 7.000 300 15 Or. Scriefer 1 ,100 3,000 4 Dr. Frazee 7.800 5,000 1 ,000 13 Dr. Derbonne 18,000 58.345 * 10.500 1 .500 4.000 92 Multi-Specialty Suite 3.000 400 3 Dr. Kay 2.500 2 Total S54.000 S143.845 572.048 S41 ,480 530,11.6 S17,000 S10,000 S368 * Includes moving expenses 4 .. f FILE REF: \CASH\92PROJOS Page CF-1 PHYSICIANS REGIONAL HOSPITAL Forecasted Cash Flow 1992 6/92 7/92 8/92 9/92 10/92 11/92 12/92 TOTAL CASH BALANCE AT BEGINNING OF MONTH - ($28,052) ($91,733) ($144,863) ($99,159) ($63,759) ($24,045) $14,125 ($28,052) FORECASTED CASH RECEIPTS: Med/Surg I/P and 0/P and Other Income (a) - 556,000 539,206 648,305 549,201 546,555 547,011 553,002 3,843,260 Geriatric Psych Program Receipts (b) 0 0 122,670 122,670 122,670 122,870 122,670 614,350 TOTAL FORECASTED CASH RECEIPTS 556,000 539,206 671,175 672,071 671,425 669,881 675,872 4,457,630 FORECASTED CASH DISBURSEMENTS: Hospital Payroll (including taxes) (c) 312,440 249,960 224,960 .224,960 220,000 220.000 220,000 1,672,320 Accounts Payable 197,000 204,000 216,000 230,000 230,000 230,000 230,000 1,539,000 Geriatric Psych Capital/Renovation Costs (b) 6,000 ,0 0 0 0 0 0 6,000 Geriatric Psych Operating Costs (b) 0 , 28,935 57,870 57,670 57,670 57,670 57,070 316,286 Capital Purchases 4,000 4,000 4,000 3,000 3,000 3,000 3,000 24,000 Debt/Lease Payments (d) 100,241 105,241 120,841 120,841 120,641 120,641 98,241 787,087 TOTAL CASH DISBURSEMENTS 621,661 592,136 625,671 636,671 631,711 631,711 609,111 4,346,092 CASH BALANCE AT END OF MONTH - ($91,733) ($144,663) ($99,159) (363,759) ($24,045) $14,125 $60,666 900,866 CASH BALANCE AT END OF MONTH (with $120,000 loan) $28,267 ($24,663) $20,641 $56,241 $95,955 $134,125 3200,686 $200,686 • ASSUMPTIONS - i (a) - Med/surg average daily census is 12.5 for the forecast period with historical patient mix and net revenue trends. (b) - 12-bed geriatric pysh unit becomes exempted by Medicare on 7/1/92 with reimbursement beginning in 0/92. Total costs to renovate unit approximate■ $45,000. The majority of these costs were funded in April and May of the current year out of operational cash flow. (o) - Three (3) payroll periods occur during the month 6/92. (d) - Refer to page CF-2 for detail of debt/lease payments. FILE REF: \CASH\82PROJ05 Page CF-2 PHYSICIANS REGIONAL HOSPITAL Forecasted Dobt/Leas. Service 1992 Description 6/92 7/92 8/92 9/92 10/92 11/92 12/92 TOTAL American Nat. Bank - Term Loans (vans) $1,163 $1,163 $1.163 $1,163 91.163 $1,163 $1,163 $6,141 Provident Bank - Equipment Loan 950 950 950 950 950 950 950 6.650 Provident Bank - Term Loan ($450,000) 9,800 9,800 9,800 9,800 9,600 9,800 9,600 68,600. HCH, Inc. - Lease (.) 55,795 60,795 00,795 60,795 60,795 60,785 00,795 420,565 NCH, Inc. - Purchase Note 5,390 5,390 5,390 5,390 5,390 5,390 5,390 37,730 Equitable Bank - Term Loan 7,000 7,000 7,000 7.000 7,000 7.000 0 42,000 Property Taxes 20,143 20,143 20,143 , 20,143 20,143 20,143 20,143 141,001 Medicare Cost Report Repayment 0 0 15,600 15,600 15,600 15,000 0 62,400 TOTALS $100,241 $105,241 $120,841 8120,841 9120,641 9120,541 $96,241 $787,087 s sees ex-msssssse srsasscasss sssssasaaas cares (a) - HCH, Inc. is the lessor on the hospital and related assets. , i • SUMMARY OF JUNE ACTIVITIES The summer business doldrums were active during June because only one prospect indicated any interest in locating a business in Wylie. Some of the previous prospects are still interested in a move but negotiations continue to be erratic due to vacations and other summer time detractions. Final preparations to end my tenure with my former employer consumed more time than I had anticipated. This delay prevented some of my business development plans and activities. Most previous prospect leads were generated through the Wylie Chamber of Commerce office. Not one prospect was referred to this office during June. This may be due to the Chamber's economy move to reduce the director's hours to a three day work week. I did attend an all-day training session conducted by the Economic Development Training Division of the Texas A & M University System. The meeting was arranged by the City of Garland/Economic Development Group and was restricted to twenty participants. Several cities in the Metroplex and surrounding area were represented by someone interested in business development within their area. It appears that the current main focus with most cities is the retention of jobs instead of trying to create new ones. Competition for new business has become so intense that many cities are questioning the profitability of what is required to attract a major employer. Two local small businesses contacted the office about financial assistance. Visits were made to each business and a discussion was conducted with each owner. Both companies are experiencing the same problem. Slow accounts receivable repayments have liquidated their available working capital and they can no longer purchase sufficient inventory to meet their production needs. Successful loan negotiations with a local bank provided sufficient funds for one of the companies, but the remaining business has a very difficult Federal Income Tax problem. Dialogue with the owner and local bank will continue in an attempt to find a satisfactory solution to this very serious financial problem. THe owners of three vacant properties were visited to discuss a telephone inquiry from a company that might consider a move to Wylie provided a suitable building could be leased. The individuals visited were: Don Hughes, Bill Green and Michael Fornero, owner of the Johnston Building. Each building would need extensive renovations to meet the needs of the prospect. There has been no strong indication from either the owners or the prospect to continue negotiations. On June 14th we visited with Gary B. Pittard and Bill Johnson. Pittard is Senior Territory Manager, Southwest Distribution District Office for Exxon Oil in Tyler and Johnson owns and operates an Exxon Oil Distributorship in Corsicana. They were interested in the possible population growth of Wylie and the possible date when construction will be completed on Highways 78 and 544 . They also asked about land values near the intersection of 78 and 544. They asked for the name of the owner of the land adjacent to the Eckerd Building and this information was supplied as requested. Jim Smith and I traveled to Arlington to view and discuss the video being produced by Michael Brown Productions. Some changes were recommended in the audio verbiage and a request was made for some additional footage to the visual portion of the film. Management agreed to consider our recommendations and would attempt to make as many changes as possible. . The finished product should be available for showing by the end of July. PROSPECT REPORT Metrocast, Inc. Very little progress to report on the relocation of this company from Garland to Wylie. Mr. John Bennett, TU Electric, has been interested in moving this company out of Garland. He has driven the principals of the company to Wylie to inspect the Cordova Marble Building. Management was impressed with the building and made an appointment with the realtor to discuss a possible sales contract. The interested party failed to keep the appointment. Attempts have been made to reschedule the appointment. In the meanwhile the local bank has made an inquiry regarding the loan status with the lender. Apparently there has been no recent negotiations between the interested parties. If there is no evidence of any progress being made, by the end of the month, I will attempt to visit with the owner to evaluate the possibility of moving this company to Wylie. Perma Tune . Inc. No progress or correspondence has been received from this company since we declined a cash grant request for R & D Aeronautical Engineering Co. Mr. Harold Smith owner of R & D Company was very upset and vocal when informed of his request being denied. From current reports he continues to be very vocal with the decision and very little help is expected from Smith in our attempts to move this company to Wylie. Golden Pickle We continue to visit with Mr. Steve Collett regarding his negotiations with the City of Garland. He has offered to make some changes in his building plans but has received no response from the City authorities. He promised to keep Wylie in his plans should he receive no favorable response from Garland. Master Brake Systems . Inc. Negotiations have continued most of this month. A personal visit with Mr. Don Lewis was made to inspect the Tarrant Plumbing Building as a possible relocation site. A subsequent visit by the owners of the company was beneficial because they decided, that with a few renovations, the building would meet their immediate and future needs. They are drafting a formal request to be submitted to the Development Corporation for financial assistance in their possible move to Wylie. MEMORANDUM DATE: July 14 , 1992 TO: City Council FROM: Development Corporation of Wylie, Inc. Jim Smith, President RE: Semi-Annual Report In the last six months the Development Corporation of Wylie has received a total of $96,408.50, of which $90,892.38 was sales tax revenue and $5,516.12 was interest. There has been expenditures as follows: Rent $ 300.00 Printing 172. 60 Promotions 1,661 .75 Office Remodeling 2, 305.00 Audit 625.00 Furniture 1 ,304 . 95 Training 95 . 00 Salaries 2,550.50 Video 5,375.00 P. I .D. Expenditures 76.58 $14,466. 38 This leaves a balance on deposit with Provident Bank Wylie of $315,051 .68. In addition to the expenditures the Corporation has the following liabilities: Holland Hitch $28,000. 00 Income Tax/Fica 679.00 $28,679.00 Leaving $286,372 .68 available for use as of 5-31-92. In addition to the six monthly meetings, three special called meetings have been held. Several formal requests for financial assistance have been received. Only one of these has resulted in a grant. We are actively involved with four companies who have expressed an interest in moving to Wylie. One of these looks very promising and the other three are somewhat marginal . We are also working with one company that is going to leave Wylie because of financial reasons. The Corporation has employed a full time Director as of July 1 , 1992. We believe this to be a positive move and expect to see much more activity in the area of business solicitation. We have contracted with Michael Brown Productions for the creation of an eight minute video to publicize Wylie. We expect to use this video to recruit new business. We are looking forward to an exciting and busy year ahead. Respectfully