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08-19-2014 (WEDC) Minutes Minutes Wylie Economic Development Corporation Board of Directors Meeting Friday, August 19, 2014 6:30 A.M. WEDC Offices—Conference Room 250 South Highway 78—Wylie, Texas CALL TO 0 ' 1ER Announce the presence of a Quorum President Marvin Fuller called the meeting to order at 6:32 a.m. Board Members present were Mitch Herzog, Demond Dawkins and Todd Wintters. Ex-officio members Mayor Eric Hogue and City Manager Mindy Manson were present. WEDC staff present was Executive Director Sam Satterwhite, Gerry Harris and Angel Wygant CITIZEN PARTICIPATION With no citizen participation, Mr. Fuller acknowledged the presence of Pam Wells, owner of Wylie Flower Shop, and proceeded to Action Items. ACTION ITEMS ITEM NO. 1 —Consider and act upon approval of the August 8, 2014 Minutes of the Wylie Economic Development Corporation (WEDC) Board of Directors Meeting. MOTION: A motion was made by Mitch Herzog and seconded by Todd Wintters to approve the August 8, 2014 Minutes of the Wylie Economic Development Corporation. The WEDC Board voted 4—FOR and 0—AGAINST in favor of the motion. ITEM NO. 2 — Consider and act upon approval of the July 2014 WEDC Treasurer's Report. MOTION: A motion was made by Todd Wintters and seconded by Demond Dawkins to approve the July 2014 WEDC Treasurer's Report. The WEDC Board voted 4—FOR and 0—AGAINST in favor of the motion. ITEM NO. 3 — Consider and act upon a second amendment to the WEDC Enrichment Grant Program guidelines. Staff reminded the Board that at the 7-25-14 Board Meeting there was a great deal of discussion surrounding financial participation by applicants. Board opinions ranged from 50% to no participation required with the Board settling on an amendment to the Program Guidelines stating that applicants committing to participate financially in the contemplated improvements would be given preferential consideration in the approval process. While that amendment WEDC—Minutes August 19, 2014 Page 2 of 9 provided some resolution at the time, staff believed the language vague and too ambiguous to provide direction to the applicant. It was staff s original intent when designing this program to enhance the aesthetic appeal of local commercial properties and achieve the same by financially motivating applicants to undertake the improvements. In the first draft of the Program Guidelines presented to the Board on April 22, 2014 staff suggested that "projects which commit to fund 50% of the cost would receive preferential status in the awarding of grants...and the Board may desire that a minimum level of 25%be required for all projects". Staff believed that based upon the uniqueness of this program, in that it does not generate new value but preserves value, financial participation by the applicant should be a requirement and thus demonstrate to the Board that the applicant is taking ownership of the need for upgrades. Staff also believed that the applicant should be required to provide 50% of the costs for the proposed improvements so that there would be no subjectivity related to the level of participation. Finally staff suggested that while this is a good program in theory, there may be the unintended consequence of staff time being taking away from attracting new business or more important creating an unhealthy competition for dollars among local business that completely takes away from any positive intention in the program design. Therefore, the option of dissolving the program should at least be discussed. Staff recommended that the WEDC Board of Directors approve a Second Amendment to the WEDC Enrichment Grant Program Guidelines requiring that applicant participate in an amount equal to 50% of the cost for contemplated improvements. President Marvin Fuller recognized Pam Wells, who commented that she supports the Enrichment Grant Program, but was concerned about the proposed requirement that the applicant fund 50% of the improvements. She is in the process of acquiring bids for the improvement of her building and expects to submit her application soon. The majority of the Board voiced the opinion that they would prefer that the Guidelines remain the same and make decisions on a case by case basis. Board Member Herzog however stated that while he agrees with leaving the program guidelines as is, he will most likely be looking for applicants to participate financially and without special circumstances he prefers 50% MOTION: A motion was made by Todd Wintters and seconded by Mitch Herzog to leave the program guidelines unchanged and consider applications on a case-by-case basis. The WEDC Board voted 4 —FOR and 0—AGAINST in favor of the motion. The WEDC Board took a short recess at 7:15 a.m. and reconvened into open session at 7:20 a.m. WEDC—Minutes August 19, 2014 Page 3 of 9 ITEM NO. 4 — Consider and act upon issues surrounding a WEDC Enrichment Grant application. Staff presented a Grant application from Bob Heath, for the replacement of six awnings on the building located at 201 North Ballard. Mr. Heath indicated to staff that should the Grant be awarded it would allow him to do other necessary exterior work with the savings from the Grant. Staff had inspected the physical condition of the proposed improvements and believed that this request complies with the Program Guidelines established by the WEDC Board of Directors. With Board approval staff will enter into a Letter of Agreement with Mr. Heath under which the Dallas Tent & Awning bid will be an exhibit and Mr. Heath will be reimbursed for the contemplated work upon payment in full to the contractor and submittal of all paid invoices totaling no less than $4,244. As per the Program Guidelines, the WEDC will not dictate a contractor to utilize but will utilize the low bid in the approval of a Grant amount. Staff recommended that the WEDC Board of Directors approve an Enrichment Grant in the amount of$2,122 to Mr. Bob Heath. MOTION: A motion was made by Mitch Herzog and seconded by Todd Wintters to approve an Enrichment Grant to Mr. Bob Heath in the amount of $2,122 following the expenditure of no less than $4,244 on the improvements specified in the application. The WEDC Board voted 4 — FOR and 0 — AGAINST in favor of the motion. ITEM NO. 5 — Consider and act upon the establishment of a Regular Meeting date and time for WEDC Board of Directors for 2014-15. Staff reported that Section 4.07 of the WEDC By-laws states that on an annual basis and following the selection of WEDC Board Members by the Wylie City Council, the President of the WEDC Board of Directors shall set a Regular Meeting date and time at the beginning of his/her term. With officers elected on July 25th, President Fuller was required to establish the date/time for the coming year. Board Member Herzog asked if any individual or group had commented that a 6:30 a.m. start time is not conducive to attendance to which staff answered no. MOTION: A motion was made by Mitch Herzog and seconded by Todd Wintters to establish the third Friday of each month at 6:30 a.m. as the Regular Meeting date and time for the WEDC Board of Directors. The WEDC Board voted 4—FOR and 0—AGAINST in favor of the motion. WEDC—Minutes August 19, 2014 Page 4 of 9 ITEM NO. 6 — Consider and act upon issues surrounding a Performance Agreement between the WEDC and ' XLeration, Inc. Staff presented a Performance Agreement between WEDC and RK XLeration as directed by the WEDC Board of Directors at the August 8, 2014 WEDC Board Meeting. RK is developing a 4,200 square foot car care center on a 2.2 acre tract behind the Quick Trip on FM 544 across from the Woodbridge Crossing Shopping Center. The structure sits on less than 1 acre with the balance of property divided by a mutual access easement. The draft Performance Agreement requires RK to complete construction of a 4,200 square foot commercial building no later than February 1, 2015 as evidenced by a Certificate of Occupancy issued by the City of Wylie. Further, RK must provide the WEDC with a Building Permit issued by the City of Wylie indicating a construction cost of at least $500,000 and construction documents supporting the same. RK must also provide the WEDC with documentation supporting the purchase and installation of personal property with a cost of no less than $150,000. Upon completion of the above performance requirements, RK will be eligible for a one-time $20,000 incentive payment. Staff recommended that the WEDC Board of Directors approve a Performance Agreement between the WEDC and RK XLeration, Inc. MOTION: A motion was made by Mitch Herzog and seconded by Todd Wintters to approve the Performance Agreement between WEDC and RK XLeration, Inc. The WEDC Board voted 4 — FOR and 0 — AGAINST in favor of the motion. ITEM NO. 7 — Consider and act upon issues surrounding a Performance Agreement between the WEDC and Triple P Property,LLC. Staff presented a Performance Agreement between WEDC and Triple P Property, LLC as directed at the August 8, 2014 WEDC Board Meeting. The improvements are to be located at the corner of Jackson and Calloway upon a 0.38 acre tract. Construction is to begin in September and be complete in January/February 2015. The draft Performance Agreement requires Triple P to complete construction of a 2,700 square foot commercial office building no later than June 1, 2015 as evidenced by a Certificate of Occupancy issued by the City of Wylie. Further, Triple P must provide the WEDC with a Building Permit issued by the City of Wylie indicating a construction cost of at least $250,000 and construction documents supporting the same. Upon completion of the above performance requirements, WEDC will issue a one-time $15,000 incentive payment which will conclude all commitments between the WEDC and Triple P. Staff recommended that the WEDC Board of Directors approve a Performance Agreement between the WEDC and Triple P Property, LLC. WEDC—Minutes August 19, 2014 Page 5 of 9 MOTION: A motion was made by Mitch Herzog and seconded by Todd Wintters to approve the Performance Agreement between WEDC and Triple P Property, LLC. WEDC Board voted 4 — FOR and 0 — AGAINST in favor of the motion. ITEM NO, 8 — Consider and act upon issues surrounding a Performance Agreement between the WEDC and Getset, LLC. Staff presented a Performance Agreement between the WEDC and Getset, LLC as directed at the August 8, 2014 WEDC Board Meeting. Getset is developing an auto parts distribution business within Century Business Park located at 1303 Century Way upon a 0.7 acre tract. Construction will begin in October 2014 and conclude in March of 2015. The draft Performance Agreement requires Getset to complete construction of a 6,700 square foot commercial building no later than May 1, 2015 as evidenced by a Certificate of Occupancy issued by the City of Wylie. Further, Getset must provide the WEDC with a Building Permit issued by the City of Wylie identifying a construction cost of at least $575,000 and construction documents supporting the same. Getset believes the construction costs will be in excess of $600,000 with staff reducing the minimum to provide flexibility in meeting performance requirements. Upon completion of the above performance requirements, Getset will be eligible for a$15,000 incentive payment. Getset will also be eligible for an additional $20,000 in funding based upon a minimum valuation of $1,175,000 ($575,000 real property and $600,000 inventory) in two payments of $10,000 each. Inventory will not be in place until after January 1, 2015, therefore not valued and assessed until the 2016 tax year. Therefore, Getset will not be eligible to receive incentive payment#2 and#3 of$10,000 each until 2016 and 2017. Staff recommended that the WEDC Board of Directors approve a Performance Agreement between the WEDC and Getset, LLC. MOTION: A motion was made by Todd Wintters and seconded by Demond Dawkins to approve the Performance Agreement between WEDC and Getset, LLC. The WEDC Board voted 4—FOR and 0—AGAINST in favor of the motion. DISCUSSION ITEMS ITEM NO. 9 — Staff report: review issues surrounding Performance Agreements between the WEDC and: Woodbridge Crossing, Ascend Custom Extrusions, CSD Woodbridge, The Wedge Corporation, Dank Real Estate, Swimcat, Buchanan real estate purchase, Woodbridge Parkway funding, sporting events, and regional housing starts. Woodbridge Crossing The Sales Tax Reimbursement Report was presented which identified all sales taxes received through August 2014 within Woodbridge Crossing for the City General Fund, the WEDC, and WEDC —Minutes August 19, 2014 Page 6 of 9 the 4B Parks & Recreation Corporation. 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. Due to the default under the Amended and Restated Performance Agreement, Woodbridge Crossing is only eligible to receive up to $6 million in sales tax reimbursement through September 2021 opposed to the maximum reimbursement of$12 million originally contemplated. $2,414,296.37 has been reimbursed through June with net receipts of $1,559,377.68 after reimbursements. As well, it is estimated that the $2.5 mm will have been paid in ad valorem taxes to the City of Wylie (excluding the WISD) following receipt of 2014 taxes. Ascend Commercial Lease and Performance Agreement The Ascend Custom Extrusion (ACE) Critical Dates Analysis and Performance Agreement Monitoring Procedures were presented. Payment #4 of 5 for the Economic Incentives has been funded with Ascend meeting all Performance Obligations within Sections A and B of the attachment. The Performance Agreement between the WEDC and ACE which was approved in December 2013 was also presented. Payment #1 of 4 has been funded with Ascend meeting all Performance Obligations within Section A of the attachment. CSD Woodbridge Performance Agreement On July 15, 2013 a certificate of occupancy(CO) was issued for Kroger Marketplace. Beginning October 1, 2013 and ending October 1, 2023, Clark Street Development (CSD) is eligible to receive a V2 cent sales tax reimbursement from the WEDC (City of Wylie not part of sales tax reimbursement agreement). The WEDC has received the fifth Comptroller monthly report identifying nine businesses paying sales tax on a consistent basis. The second reimbursement was made to CSD Woodbridge LLC in June 2014. Kroger has now been added to this report, which resulted in a CSD tax payment of$51,372.36 - up from $2,949.67 last month. Quarterly payments will be made to Clark Street based upon the data provided by the Comptroller. In addition to the $100,000 reimbursement incentive paid by the WEDC at CO, CSD is eligible to receive cumulative incentives of$1,100,000 over the life of the Agreement. The Wedge Corporation On August 4th the WEDC funded Incentive Payment #1 in the amount of $137,500 to The Wedge Corporation as required within the Performance Agreement. The Wedge owners have indicated that there have been construction delays due to rain and scheduling concrete. The opening date has been pushed back to December 15th. The Wedge is required to receive a Certificate of Occupancy from the City of Wylie and be operational by December 31, 2014. WEDC—Minutes August 19, 2014 Page 7 of 9 Dank Real Estate (Deanan Gourmet Popcorn) Dank has completed the walls, set the roof, and will finish the project by October/November 2014. Upon presenting a Certificate of Occupancy and a building permit identifying a cost of at least $600,000, the WEDC will issue an incentive payment of$15,000. Dank can qualify for an additional $15,000 over the next two years based upon increased personal property valuation. Swimcat (Jarrod Rush State Farm) Swimcat is framing their office building and should not have any issues meeting the requirements within their Performance Agreement. Upon completion, which must be no later than November 1st, the WEDC will issue a single incentive payment of$15,000. Buchanan Real Estate Purchase On August 13th the WEDC closed on the purchase of 1.2 acres from Jerry and Carolyn Buchanan. The closing was greatly complicated by the fact that the property has not been assessed City taxes for the past seven years. Had the WEDC closed on the property without identifying that issue, the WEDC would have been 100% liable for the back taxes. However, to move forward with the closing and protect the WEDC from future tax liability, the purchase price was reduced by $25,000, an amount equal to the tax liability, with the WEDC committing to fund the tax liability following a decision from the Appraisal Review Board on October 24th. The Appraisal Review Board will determine whether or not to go back and assess the taxes. The City tax was removed from the account due to a clerical error on the part of the Appraisal District. Should the Appraisal Review Board determine that the back taxes are not owed, the WEDC will make a$25,000 payment to Buchanan equal to the reduced purchase price. Through this process, the Appraisal District identified at least two other properties on which City taxes have not been assessed. Woodbridge Parkway Funding On August 13th,ANB funded the first and only draw of$976,000 toward roadway improvements associated with the Woodbridge Parkway extension. The funds will remain in the WEDC account until a draw request is presented by the City Engineer. Sports Tickets Staff presented a spreadsheet identifying all Ranger games that have been used to date along with the associated business purpose. The WEDC also purchased a 25% interest in the upcoming Dallas Mavericks tickets which will be noted in the September Staff Report. Regional Housing Starts Twenty-nine homes were permitted in Wylie for July 2014. Sachse, Lavon, and Murphy permitted a combined sixty-six homes over the same period. WEDC—Minutes August 19, 2014 Page 8 of 9 No action was requested by staff for this item. EXECUTIVE SESSION The WEDC Board recessed into Closed Session at 7:43 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 2013-4a Section 551.072 (Real Estate) of the Local Government Code, Vernon's Texas Code Annotated (Open Meetings Act). Consider the acquisition of properties located near the intersection of: • Westgate Way and State Highway 78 • Century Way and State Highway 78 • Martinez and Alanis Section 551.074 (Personnel Matters) of the Local Government Code, Vernon's Texas Code Annotated(Open Meetings Act). • Performance Evaluation- WEDC Executive Director RECONVENE INTO OPEN MEETING The WEDC Board of Directors reconvened into open session at 9:14 a.m. Staff informed the WEDC Board that he was in receipt of a report from W&M Environmental Group, Inc. (W&M), a firm retained by EXCO Tooling Solutions to perform a Phase II environmental study for the property located on Commerce Street in Wylie. The report showed a level of perchloroethylene (PCE), also known as "perc", slightly above acceptable limits in the water table beneath the property. Because of these environmental concerns and the timing by which Exco must identify a site upon which to expand, WEDC Board directed staff to relocate EXCO Tooling Solutions to the 3.2 acre WEDC tract on Hensley. President Fuller requested that staff place the performance evaluation of the WEDC Executive Director on the next WEDC Agenda. WTDC Minutes August 19, 2014 Page 9 of 9 ►JO MENT With no further business, President Fuller adjourned the DC Board meeting at 9:17 a,. , Marvin er,President ATTEST: m,m Samuel it it a c r