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02-21-2014 (WEDC) Minutes Minutes Wylie Economic Development Corporation Board of Directors Meeting Friday, February 21, 2014 6:30 A.M. WEDC Offices—Conference Room 250 South Highway 78—Wylie, Texas CALL TO ORDER Announce thepresence of a Quorum President Marvin Fuller called the meeting to order 6:31 a.m. Board Members present were John Yeager, Demond Dawkins, Todd Wintters, and Mitch Herzog. WEDC staff present was Executive Director Sam Satterwhite and Senior Assistant Gerry Harris. CITIZEN PARTICIPATION Lynn Grimes reported that Mr. Terrence Rivera with Race Trac has told her that there are plans for at least one additional Race Trac location within the City of Wylie and that they are ready to purchase property at this time. Mr. Fuller thanked her for that report and proceeded to Action Items. ACTION ITEMS ITEM NO. 1 — Consider and act upon approval of the January 17, 2014 Minutes of the Wylie Economic Development Corporation (WEDC) Board of Directors Meeting. MOTION: A motion was made by Mitch Herzog and seconded by John Yeager to approve the January 17, 2014 Minutes of the Wylie Economic Development Corporation. The WEDC Board voted 5 —FOR and 0—AGAINST in favor of the motion. ITEM NO. 2 —Consider and act upon approval of the January WEDC Treasurer's Report. MOTION: A motion was made by John Yeager and seconded by Todd Wintters to approve the January 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 Performance Agreement between the WEDC and Exco Tooling Solutions,Inc. Staff presented the final version of the Performance Agreement and Real Estate Sales Contract between the WEDC and Exco Tooling Solutions, Inc. To summarize, the Performance Agreement states that within 12 months of execution of the Performance Agreement, Exco must commence construction as evidenced by the issuance of a building permit by the City of Wylie and the delivery of a `notice to proceed' to a third party contractor. A certificate of occupancy WEDC—Minutes February 21, 2014 Page 2 of 6 for the improvements must be issued within twelve months of issuance of building permit. Upon issuance of a CO, the WEDC will pay Exco $80,000 and then $48,000 annually for an additional four years so long as Exco is not in default. To qualify for the additional payments of$48,000, Exco must have combined real and personal property value of at least $7 mm. Should the value be less than$7 mm, the annual payment will be reduced by $1,500 for every $100,000 below the threshold unless the combined value is less than$5 mm which would disqualify Exco from the additional payment for that year. The Real Estate Sales Contract stated that a 1.59 acre tract will be conveyed to Exco for $208,000. The WEDC will take back a note financing the purchase over a 5 year period at 6% with annual payments due beginning twelve months following the issuance of a CO. Should Exco finance the improvements to the property, the WEDC will also subordinate its interest in the land to a financial institution. Should Exco not perform under the Agreement, Exco will provide the WEDC with an Option to purchase the 1.59 acres back if Exco does not commence construction of the improvements within twelve months of the closing. Staff recommended an amendment to Option language within Section 9.01(ii) stating that the `purchase price of the Property shall be equal to the Purchase Price which shall be paid either in the form of cash and/or as a credit against Seller's note, less any sums that must be paid to any affiliate or third parties to clear any liens or encumbrances to the Property. The WEDC will provide Exco with a two and four year Option to purchase the adjacent 1.065 acre for $500,000 and $550,000 respectively. A framework for future incentives is also provided should Exco construct at least 15,000 square feet on the 1.065 acres within 2 years of exercising the Option. The future incentives will be governed by a second Performance Agreement executed at closing on the Option property. Staff recommended that the WEDC Board of Directors approve a Performance Agreement and Real Estate Sales Contract between the WEDC and Exco Extrusion Dies (Texas), Inc., further authorizing WEDC President Marvin Fuller to execute all documents necessary to effectuate the Performance Agreement, Real Estate Contract, and subsequent sales documentation. MOTION: A motion was made by Mitch Herzog and seconded by Todd Wintters to approve a Performance Agreement as amended and Real Estate Contract between the WEDC and Exco Extrusion Dies (Texas), Inc. and authorize President Marvin Fuller to execute all necessary documents. The WEDC Board voted 5 —FOR and 0—AGAINST in favor of the motion. ITEM NO. 4—Consider and act upon issues surrounding a WEDC Budget Transfer for FY 2013-2014. Staff reported that after closing on the property at 605 Commerce, the City Purchasing Agent was informed of the purchase for insurance purposes. After adding the property to the insurance WEDC—Minutes February 21, 2014 Page 3 of 6 the WEDC receives through TML-IRP, staff was notified that the WEDC's annual contribution will be $494. Staff proposed reducing Incentives by $494 to offset the increased expenses within Insurance ($494) and recommended that the WEDC Board of Directors approve Budget Transfer Request 2-21-14 in the amount of$494. MOTION: A motion was made by Demond Dawkins and seconded by Todd Winners to approve Budget Transfer Request2-21-14 in the amount of $494. The WEDC Board voted 5 —FOR and 0—AGAINST in favor of the motion. DISCUSSION ITEMS Item NO. 5 - Staff report: review issues surrounding an Amended and Restated Performance Agreement between the WEDC and Woodbridge Crossing, Performance Agreement between the WEDC and ACE, Performance Agreement between the WEDC and B&B Theatres Operating Company, Performance Agreement between WEDC and CSD Woodbridge, WEDC property located at 605 Commerce Drive, ICSC Annual Conference, PBK Architects, WEDC Commercial Properties/Leases on Industrial Court, and regional housing starts. Woodbridge Crossing The Sales Tax Reimbursement Report was presented which identified all sales taxes received through November 2013 within Woodbridge Crossing for the City General Fund, the WEDC, and the 4B. As a reminder, the City and WEDC reimbursed 85% of all sales tax generated within Woodbridge Crossing through September 2013 with the reimbursement percentage reduced to 65% thereafter. Woodbridge Crossing is eligible for a maximum $6 million in sales tax reimbursement through September 2021. $2,096,299.95 has been reimbursed to date with net receipts of $1,225,073.75 after reimbursements. As well, $1.4 mm has been paid in ad valorem taxes to the City of Wylie (excluding the WISD). Staff reported during the January Board meeting that there may be an outstanding liability for prior months' sales tax receipts collected by the Comptroller within Woodbridge Crossing, but not reported properly. The Comptroller has yet to provide the WEDC with the necessary documentation. Staff will continue to pursue resolution to this issue and anticipated the same by the end of February. No payments will be made to Direct Development prior to Board notification in March. Ascend Commercial Lease and Performance Agreement The Ascend Custom Extrusion Critical Dates Analysis and Performance Agreement Monitoring Procedures were presented. Payment#3 of 5 for the Economic Incentives has been funded with Ascend meeting all Performance Obligations. WEDC—Minutes February 21, 2014 Page 4 of 6 Ascend officials have indicated that negotiations pertaining to the purchase of WEDC property on Martinez are ongoing. B &B Theatres Operating Company Performance Agreement Staff presented the B&B Theatre Performance Obligations and the WEDC will fund Incentive No. 2 of $25,000, plus sales tax reimbursements, following the certification by the Central Appraisal District of a minimum appraised value of$10 mm on or about September 1, 2014. Following 7 months of sales tax collections as reported by the Comptroller, B&B is at 53% of revenue projections. CSD Woodbridge Performance Agreement The WEDC is contractually obligated to pay up to $1,100,000 to Clark Street Development (CSD) as infrastructure and sales tax reimbursements. To date, the WEDC funded a $100,000 payment to CSD upon issuance of the CO for Kroger Marketplace. Beginning September 13, 2013 CSD was eligible to begin receiving sales tax reimbursements if and when a group of 5 or more businesses which generate sales tax can be tracked by the Comptroller. As of now there is not a group of 5 or more so therefore the comptroller cannot generate the data. If CSD was able to get Kroger to sign a waiver, the Comptroller would provide those specific figures and the WEDC and City would begin sales tax reimbursements. CSD has not been able to secure the Kroger waiver. Entities within Woodbridge Centre that currently generate sales tax are as follows: Kroger, Subway, Game Trade, and Rice Garden. WEDC Property Located at 605 Commerce Drive After consulting with a third party contractor and meeting with the WEDC contractor, staff caused to be removed all interior improvements in the vacant 10,000 square feet of the recently purchased Hobart building on Commerce. $13,000 has been spent to date on demolition, providing a separate electric meter to the 10,000 square feet, removing and replacing damaged sheet rock, and upgrading wiring and lighting within the vacant space. Staff is currently in discussion with a user for strictly a warehouse use. It is uncertain if a bathroom will be required and a sprinkler system will not be required as long as a less intensive use utilizes the space. ICSC Annual Conference Staff along with Mayor Hogue and Board Members Fuller, Herzog and Wintters will be attending the ICSC Annual Conference May 18-20, 2014. WEDC—Minutes February 21, 2014 Page 5 of 6 PBK Architects Starting in March, staff plans to begin scheduling meetings with the City Council, WEDC Board members, and City staff to begin developing a master-plan for the City-ownedl9 acres on F.M. 544. Board members will be notified of potential dates by the end of February. WEDC Commercial Properties/Leases on Industrial Court Staff had informed the Board that the WEDC tenant located at 212 Industrial Court was getting behind in their lease payments. In an attempt to facilitate the ongoing operation of this business at its current location, staff has renegotiated the lease wherein the previous 2 months lease payments are deferred to being paid over a 12 month period beginning June 2014. Staff also reemphasized the default language within the Lease and the recourse the WEDC will take if there is a future default. Kansas City Southern Railway Company City and WEDC staff met with a potential developer of the KCS owned 250-acre industrial tract adjacent to the soon to be constructed KCS Intermodal facility northeast of Wal-Mart. Staff was encouraged to see the level of expertise and experience brought by the potential KCS development partner. The KCS Executive Committee is evaluating this entity and holding more meetings in Kansas City prior to choosing a firm. Updated Traffic Counts Staff provided a copy of updated traffic counts collected in February 2014. Counts were mostly flat over 2013 with slight increases on F.M. 544. Regional Housing Starts Fourteen homes were permitted in Wylie for January 2014. Sachse, Lavon and Murphy permitted a combined thirty-five homes over the same period. No action is requested by staff for this item. EXECUTIVE SESSION The WEDC Board recessed into Closed Session at 7:20 a.m. in compliance with Section 551.001 et.seq. Texas Government Code to wit: Section 551.087 (Economic Development) of the Local Government Code, Vernon's Texas Code Annotated(Open Meetings Act). • Project 2013-5c • Project 2013-9a WEDC—Minutes February 21, 2014 Page 6 of 6 Section 551.072 (Real Estate) of the Local Government Code, Vernon's Texas Code Annotated (Open Meetings Act). Consider the acquisition of property located near the intersection of: • Stone&Birmingham • State Highway 78 & Ballard • Oak Street & Jackson Avenue • Woodbridge Parkway & Hensley • State Highway& State Highway 78 RECONVENE INTO OPEN MEETING The WEDC Board of Directors reconvened into open session at 8:34 a.m. and took no action. ADJOURNMENT _ With no further business, President Fuller adjourned the WEDC Board meeting at 8:34 a.m. Marvin Fuller,President ATTEST: Samuel Satterwhite,Director