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12-19-2014 (WEDC) Minutes Minutes Wylie Economic Development Corporation Board of Directors Meeting Friday, December 19, 2014—6:30 A.M. WEDC Offices—Conference Room 250 South Highway 78—Wylie, Texas CALL TOO ' I ER Announce the presence of a Quorum President Marvin Fuller called the meeting to order at 6:30 a.m. Board Members present were John Yeager, Mitch Herzog, Demond Dawkins and Todd Wintters. Ex-officio members Mayor Eric Hogue and City Manager Mindy Manson were also present. WEDC staff present was Executive Director Sam Satterwhite and Sr. Assistant Angel Wygant. CITIZEN PARTICIPATION Lynn Grimes attended and thanked the Board for their continued support of Wylie businesses and the Downtown Merchants Association. ACTION ITEMS ITEM NO. 1 — Consider and act upon approval of the November 18, 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 November 18, 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 November 2014 WEDC Treasurer's Report. MOTION: A motion was made by Todd Wintters and seconded by John Yeager to approve the November 2014 WEDC Treasurer's Report. The WEDC Board voted 5—FOR and 0—AGAINST in favor of the motion. ITEM NO. 3 — {Removed from Table} Consider and act upon issues surrounding an Amendment to the Performance Agreement between the WEDC and The Wedge Corporation. A motion was made by Mitch Herzog to remove Item No. 3 from the Table. The WEDC Board tabled consideration of this issue at the November 19th meeting to receive more information and determine the actual need by The Wedge for an extension for the time WEDC—Minutes December 19, 2014 Page 2 of 9 allotted to receive a certificate of occupancy. On December 8, 2014 The Wedge co-owner, Mr. Jay Gigandet formally requested a 30 day extension in "the interest of caution". While all staff and contractors are still being held to a December 28th grand opening date, Mr. Gigandet did believe that the extension would provide a safety net should other unforeseen delays occur. Under no scenario could Mr. Gigandet conceive that there would be a request for an additional 30 day extension. As reported on November 18th, to qualify for Incentive Payment No. 2 ($137,500), The Wedge Corporation must receive a Certificate of Occupancy and be operational no later than December 31, 2014 and provide documentation verifying Qualified Infrastructure cost of at least $275,000. Staff requested authority from the Board to amend Section II b of the Performance Agreement to allow for "Documentation of receipt of a final CO from the City for the Facility and evidence that the Company is occupying and operating the Facility on or before January 31, 2015". Staff recommended that the WEDC Board of Directors amend Section II b of the Performance Agreement between the WEDC and The Wedge Corporation from December 31, 2014 to January 31, 2015. MOTION: A motion was made by Mitch Herzog and seconded by John Yeager to amend Section II b of the Performance Agreement between the WEDC and The Wedge Corporation from December 31, 2014 to January 31, 2015. The WEDC Board voted 5 —FOR and 0—AGAINST in favor of the motion. ITEM NO. 4 — Consider and act upon issues surrounding WEDC property located at 104 N. Jackson, Wylie,Texas. Staff informed the Board that the property located at 104 N. Jackson has a 3,304 square foot structure which was previously used as a laundromat. Fronting the building is a concrete parking lot with 12 spaces. Based upon the intent to redevelop WEDC properties on Jackson Street, staff requested that the WEDC Board consider demolishing the structure. Staff bases this recommendation upon potential for vandalism and liability for the same on any building that remains vacant for a long period of time. Staff further commented that it would not be cost effective to fmish out the interior and bring the building up to code for a 12-24 month lease period. For a complete remodel along with bathrooms and ale staff estimated the cost to be $30,000 - $50,000. Staff has contacted three demolition companies and solicited the following bids to remove the structure and leave the parking lot: Dallas Demolition: $11,481 L&K Construction 13,350 Intercon Demolition 9,800 The above figures include demolition, mobilization, silt fence, and disposal. The quotes do not include asbestos survey or any specialized disposal that may be required. WEDC —Minutes December 19, 2014 Page 3 of 9 A recommendation was made to the WEDC Board of Directors authorizing staff to enter into a contract with Intercon Demolition in the amount of $9,800 for the demolition of the structure located at 104 N. Jackson. The Board directed staff to negotiate for the removal of trees on site within the existing bid. MOTION: A motion was made by Mitch Herzog and seconded by Demond Dawkins authorizing staff to enter into a contract with Intercon Demolition in the amount of $9,800 for the demolition of the structure located at 104 N. Jackson. The WEDC Board voted 5 — FOR and 0 — AGAINST in favor of the motion. ITEM NO. 5 — Consider and act upon issues surrounding Community Development expenditures within the WEDC 2014-15 Budget. Staff reminded the Board that it currently participates in the Wylie Rotary Club program under which American flags are placed in various locations within the community on 5 separate national holidays or days of remembrance. The current budget is $200 for 3 flags placed in front of the WEDC office on State Highway 78. Staff proposed that the WEDC expand its participation in the Rotary program and have 100 flags placed throughout the community in commercial/industrial locations. The following intersections have been identified as possible locations to place groupings of 10 flags each: F.M. 544 &McCreary Main entrance @ Woodbridge Crossing F.M. 544 & Springwell Woodbridge Parkway &F.M. 544 Sanden& F.M. 544 Westgate &F.M. 544 Hwy 78 & F.M. 544 Spring Creek and Hwy 78 Hensley & Sanden Main entrance to KCS Property For commercial properties the Rotary Club charges $60 annually per flag but is willing to reduce the total rate to $3,000 due to the significant impact the WEDC proposal would have to the overall community. The $3,000 would include the 100 new flags and the 3 existing flags the WEDC currently funds. Within the Community Development budget the WEDC plans for $5,000 in 'General Funds' which funds programs which are not planned for during the budget process. Staff is not suggesting that the overall Community Development budget be increased but the flag program be funded out of General Funds for FY 2014-2015. Staff recommended that the Board approve the expenditure of $3,000 for the Rotary Flag Program. MOTION: A motion was made by John Yeager and seconded by Todd Wintters to approve the expenditure of $3,000 for the Rotary Flag Program. The WEDC Board voted 5 —FOR and 0—AGAINST in favor of the motion. WEDC—Minutes December 19, 2014 Page 4 of 9 ITEM NO. 6 — Consider and act upon a Performance Agreement between the WEDC and ' ' Maguire Management, Inc. Staff requested that this item be tabled until the January 16, 2015 Board Meeting or any Special Called meeting held prior to that date. MOTION: A motion was made by Todd Wintters and seconded by John Yeager to Table this item until the January 16, 2015 Board Meeting or any Special Called meeting held prior to that date. The WEDC Board voted 5 — FOR and 0—AGAINST in favor of the motion. ITEM NO. 7 — Consider and act upon a Performance Agreement between the WEDC and Gardner Regency,LLC. Staff reviewed that the WEDC entered into a Real Estate Note and Performance Agreement with Savage under which 3.87 acres was sold to Gardner Regency in the amount of$421,433. Should there be no Default as identified within Sections 3 and 4 of the Performance Agreement, the WEDC shall forgive all payments associated with the Note over a seven year period in equal amounts beginning on the anniversary date Savage received a certificate of occupancy. No event of Default has been identified as the cumulative appraised value equals $4.49 mm and Savage has in excess of 35 employees as called for in the Agreement. With no event of default existing, staff recommended that the WEDC Board of Directors forgive Payment#6 associated with the Real Estate Lien Note in the amount of$60,206.14. MOTION: A motion was made by John Yeager and seconded by Todd Wintters to forgive Payment #6 of the Gardner Regency, LLC (Savage) Real Estate Lien Note in the amount of$60,206.14. The WEDC Board voted 5 —FOR and 0—AGAINST in favor of the motion. ITEM NO. 8 — Consider and act upon a Budget Amendment in the amount of$722,356 as required for the purchase of property located at 100 W. Oak Street, 108/110 Jackson Avenue and a 6.6328 acre tract on Alanis Blvd. Upon closing of the ANB Loan for the Jackson Street and White real estate purchases, the WEDC received funds in the amount of$722,365 representing 80% of the purchase price. The ANB loan was approved by the WEDC Board of Directors at the 10-24-14 meeting via Resolution No. 2014-01(R). On 11-11-14, the Wylie City Council approved Resolution No. 2014-40(R) authorizing the WEDC to enter into debt and pledge its sales tax receipts to secure said debt. To account for the increase in revenue, it is necessary to amend the budget to reflect receipt of these funds by increasing revenue in Bank Note Proceeds and increasing expenses within the Land budget. Staff recommended that the WEDC Board of Directors approve the Budget Amendment Request to increase revenue in Bank Note Proceeds account and increase expenses within the Land account to properly track the loan proceeds and subsequent expenditures. WEDC—Minutes December 19, 2014 Page 5 of 9 MOTION: A motion was made by Demond Dawkins and seconded by Mitch Herzog to approve the Budget Amendment Request to increase revenue in Bank Note Proceeds and increase expenses within Land in order to account for the purchase of 100 Oak Street & 108/110 Jackson Ave, and the 6.6328 acre Tract located on Alanis Blvd. The WEDC Board voted 5 —FOR and 0 —AGAINST in favor of the motion. ITEM NO. 9 —Consider and act upon issues surrounding the purchase of real estate by the WEDC from Jerry D. Buchanan and Carolyn R. Buchanan as it relates to property taxes paid for 2009-2014. On 8-13-14 the WEDC closed on the purchase of 400 S. Highway 78 from Jerry and Carolyn Buchanan. The original purchase price was $500,000. Per a First Amendment to the Real Estate Contract, Buchanan reduced the purchase price by $25,393 which was an estimation of supplemental property taxes due on the property based upon the Appraisal District not assessing property taxes due to the City of Wylie. The Amendment stated in Section 2 that if the supplemental tax statement is more or less than $25,393 Buchanan will fund the shortfall or the WEDC shall reimburse Buchanan. The WEDC received the supplemental tax statements for 2009, 2010, 2011, 2012, 2013 and 2014 totally $21,402.68 resulting in a difference of$3,990.32 in favor of Buchanan. Staff recommended that the WEDC Board of Directors authorize the reimbursement of $3,990.32 to Jerry D. Buchanan and Carolyn R. Buchanan as per the First Amendment to Real Estate Sale Contract. MOTION: A motion was made by Mitch Herzog and seconded by John Yeager authorizing the reimbursement of $3,990.32 to Jerry D. Buchanan and Carolyn R. Buchanan as per the First Amendment to Real Estate Sale Contract. The WEDC Board voted 5 — FOR and 0 —AGAINST in favor of the motion. ITEM NO. 10 — Consider and act upon issues surrounding an Enrichment Grant between the WEDC and Wylie Flower and Gift Shop. On September 15, 2014 the WEDC Board of Directors approved an Enrichment Grant for Wylie Flower & Gift Shop in the amount of $26,627 based upon a low bid from Better Design Resources of $53,254. Other bidders included Taylor & Son ($59,905) and Select Builders ($129,690). Mrs. Pam Wells chose to hire Taylor & Son and requested that they reevaluate their bid in the interest of reducing expenses and matching the low bid. With the assistance of Taylor & Son and a more thorough evaluation of the bids by Mrs. Wells, it was determined that Better Design did not address exterior painting of brick, pedestrian safety measures, sign removal and replacement, and fabrication of a debris screen for the well which totaled $11,049. More WEDC Minutes December 19, 2014 Page 6 of 9 importantly to Mrs. Wells,the omission skewed Better Design as the low bidder and reduced the potential Enrichment Grant by $3,325. Mrs. Wells approached staff after the November 18th Board Meeting with a request to reconsider the grant amount based upon the above information. Staff commented that had this information been submitted with the initial bid package that an elevated grant amount may well have been awarded. The Board commented with staff in agreement that it is not the responsibility of the WEDC to analyze bids for completeness in scope and to change this decision would set a precedent the Board was not comfortable with. MOTION: A motion was made by Todd Wintters and seconded by Mitch Herzog to deny the request by Mrs. Pam Wells to increase the previous Enrichment Grant to Wylie Flower & Gift in the amount of$3,325. The WEDC Board voted 5 —FOR and 0—AGAINST in favor of the motion. DISCUSSION ITEMS ITEM NO. 11 — Staff report: review issues surrounding Performance Agreements between the WEDC and: Woodbridge Crossing, Ascend Custom Extrusions, CSD Woodbridge, WEDC Enrichment grant to Trendz-n-Traditions, Exco Tooling Solutions, WEDC properties on Jackson Street,sporting events, and regional housing starts. Woodbridge Crossing Attached for the Board's review was the Sales Tax Reimbursement Report which identified all sales taxes received through November 2014 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. Due to the default under the Amended and Restated Performance Agreement, Woodbridge Crossing was only eligible to receive up to $6 million in sales tax reimbursement through September 2021 as opposed to the maximum reimbursement of $12 million originally contemplated. $2,557,635 was eligible for reimbursement through November with net receipts of $1,710,067 after reimbursements. As well, it is estimated that $2.5 mm has been paid in ad valorem taxes to the City of Wylie (excluding the WISD). As shown on the.Sales Tax Reimbursement Report, $117,148.19 was generated in sales tax in September 2014 versus $68,431.50 in September of 2013. This increase represents a 71% gain over 2013 receipts. The Board will recall though that many businesses were not being tracked properly by the Comptroller which was identified and corrected in February 2014. On 11/19/14 a sales tax reimbursement check was processed in the amount of $143,338.63 ($95,559.09 from the City of Wylie and$47,779.54 from the WEDC). WEDC—Minutes December 19, 2014 Page 7 of 9 Ascend Commercial Lease and Performance Agreement Attached for review were the Ascend Custom Extrusion Critical Dates Analysis and Performance Agreement Monitoring Procedures. 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. Also attached for review was the second Performance Agreement associated with an expansion between the WEDC and ACE which was approved in December 2013. 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 is eligible to receive a Y2 cent sales tax reimbursement from the WEDC (City of Wylie not part of sales tax reimbursement agreement). 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, Clark Street is eligible to receive cumulative incentives of $1,100,000 over the life of the Agreement. Along with a summary of the Performance Agreement, a Sales Tax Reimbursement Report was included for the Board's review. The Board noted that the September receipts rose dramatically from $963.59 to $12,843.09 as a result of Kroger's quarterly payment being included within the report. A sales tax reimbursement check in the amount of $14,512.57 was processed on 11/19/14. Trendz-n-Traditions Enrichment Grant The WEDC approved an Enrichment Grant for Trendz-n-Traditions on Ballard Street on September 19, 2014 in the amount of $515 for the replacement of an awning. Trendz was notified on December 2nd that they were in default of their Agreement with the WEDC having not completed their improvements within the specified time frame and was given 30 days to cure. Trendz informed the WEDC that they were unable to secure partial participation from the building owner and therefore will not be moving forward with the improvements. Exco Tooling Solutions Exco will close on the purchase of WEDC property on Hensley and break ground on their expansion in January 2015. The closing is currently set for January 8, 2015. It is estimated that a full set of plans will go out to bid in January with it anticipated that the City of Wylie will approve engineering plans and issue a permit for dirt work prior to a building permit being issued. WEDC—Minutes December 19, 2014 Page 8 of 9 Jackson Street Properties On December 11, 2014 a sales contract and all necessary documentation was executed for the purchase of the Peddicord Center and City parking lot on Jackson Street. The WEDC is currently obligated to lease back the Peddicord Center to the City of Wylie for one year with lease termination options available to the WEDC should redevelopment plans progress rapidly. Staff will be meeting with several developers and architects the first and second weeks of January to develop a preliminary action plan to present to the Board at the WEDC Board Meeting currently scheduled for January 16, 2015. Sporting Events Staff attached a spreadsheet by which the use of sporting tickets is tracked. Regional Housing Starts Twenty homes were permitted in Wylie for November 2014. Sachse, Lavon, and Murphy permitted a combined thirty-three homes over the same period. No action was requested by staff for this item. EXECUTIVE SESSION Recess into Closed Session at 7:04 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). Board Member Herzog left the meeting at 7:39 a.m. due to a conflict of interest relating to project 2014-9b. Board Member Dawkins left the meeting at 7:39. • Project 2014-9b • Project 2014-12a • Project 2014 12b Section 551.072 (Real Estate) of the Local Government Code, Vernon's Texas Code Annotated (Open Meetings Act). • Consider the sale or acquisition of property(s) located near the intersection of Cooper Drive and State Highway 78. Section 551.074 (Personnel Matters) of the Local Government Code, Vernon's Texas Code Annotated (Open Meetings Act). WEDC—Minutes December 19, 2014 Page 9 of 9 Board Member Herzog returned to the meeting at 7:44 a.m. Board Member Dawkins returned to the meeting at 7:57 a.m. • To deliberate the appointment, employment, evaluation, reassignment of duties, discipline, or dismissal of a public officer or employee and or (2) to hear a complaint or charge against an officer or employee. RECONVENE INTO OPEN MEETING The WEDC Board of Directors reconvened into open session at 8:32 a.m. and took no action. • I JOURN NT With no further business, President Fuller adjourned the WEDC Board meeting at 8:32 a.m. Marvin Fuller,President ATTEST: Samuel Satterwhite,Director