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01-09-2017 (WEDC) Agenda Packet NOTICE OF MEETING Wylie EconomC io Re DevePoRloApT I o mentN Special Meeting Agenda January 9, 2017 —7:00 A.M. WEDC Offices—Conference Room 250 South Highway 78 —Wylie, Texas Marvin Fuller President Todd Wintters Vice President John Yeager Secretary Demond Dawkins Treasurer Bryan Brokaw Board Member Mayor Eric Hogue Ex-Officio Member Mindy Manson,City Manager Ex-Officio Member Samuel Satterwhite Executive Director Jason Greiner Assistant Director Angel Wygant Senior Assistant In accordance with Section 551.042 of the Texas Government Code, this agenda has been posted at the Wylie Municipal Complex, distributed to the appropriate news media, and posted on the City Website: www.wylietexas.gov within the required time frame. CALL TO ORDER Announce the presence of a Quorum. CITIZEN PARTICIPATION Residents may address the WEDC Board regarding an item that is or is not listed on the agenda. Residents must provide their name and address. The WEDC Board requests that comments be limited to three (3) minutes. In addition, the WEDC Board is not allowed to converse, deliberate or take action on any matter presented during citizen participation. ACTION ITEMS I. Consider and act upon approval of the December 7, 2016 Minutes of the Wylie Economic Development Corporation (WEDC) Board of Directors Meeting. II. Consider and act upon an Amendment to a Performance Agreement between the WEDC and REVA Hospitality Wylie, LLC. DISCUSSION ITEMS III. Discuss issues surrounding the WEDC 2016 Annual Report. IV. Staff report: review issues surrounding Highway 78 WEDC Pad Sites and Promotional Activities. WEDC—Agenda January 9, 2017 Page 2 of 2 EXECUTIVE SESSION Recess into Closed Session in compliance with Section 551.001, et.seq. Texas Government Code, to wit: Section 551.072 (Real Estate) of the Local Government Code, Vernon's Texas Code Annotated (Open Meetings Act). Consider the sale or acquisition of properties located near the intersection of: • Highway 78 & Cooper Section 551.087 (Economic Development) of the Local Government Code, Vernon's Texas Code Annotated(Open Meetings Act). • Project 2015-12a • Project 2017-1a RECONVENE INTO OPEN MEETING ADJOURNMENT CERTIFICATION I certify that this Notice of Meeting was posted on this 5th day of January 2017 at 5:00 p.m.as required by law in accordance with Section 551.042 of the Texas Government Code and that the appropriate news media was contacted. As a courtesy, this agenda is also posted on the City of Wylie website: www.wylietexas.gov. Carole Ehrlich,City Secretary Date Notice Removed Minutes Wylie Economic Development Corporation Board of Directors Meeting Wednesday, December 7, 2016—6:30 A.M. WEDC Offices—Conference Room 250 South Highway 78—Wylie, Texas 1 AI I. TO ORi1F.R Announce the presence of a Quorum President Marvin Fuller called the meeting to order at 6:36 a.m. Board Members present were John Yeager, Todd Wintters and Bryan Brokaw. Ex-officio member Mayor Eric Hogue and City Manager Mindy Manson were present. WEDC staff present was Executive Director Sam Satterwhite, Assistant Director Jason Greiner and Senior Assistant Angel Wygant. CITIZEN PARTICIPATION With no citizen participation, President Fuller proceeded to Action Items. ACTION ITEMS ITEM NO. 1 — Consider and act upon approval of the November 18, 2016 Minutes of the Wylie Economic Development Corporation (WEDC) Board of Directors Meeting. Staff noted a correction to the November 18,2016 Minutes in the Citizen Participation section. The date of the B&B Fun Run was incorrectly stated as November 9, 2016 and corrected to November 19, 2016. MOTION: A motion was made by John Yeager and seconded by Todd Wintters to approve the November 18, 2016 Minutes of the Wylie Economic Development Corporation as amended. The WEDC Board voted 4—FOR and 0— AGAINST in favor of the motion. ITEM NO. 2—Consider and act upon approval of the November 2016 Treasurers Report. Staff reviewed key items within the November 2016 Treasurer's Report and noted that ACG Texas was added to the Treasurers Report in October and inadvertently added again in November. This duplication has been corrected. MOTION: A motion was made by John Yeager and seconded by Bryan Brokaw to approve the November 2016 Treasurers Report for the Wylie Economic Development Corporation as amended. The WEDC Board voted 4 — FOR and 0—AGAINST in favor of the motion. WEDC—Minutes December 7, 2016 Page 2 of 6 ITEM NO.3—Consider and act upon WEDC Resolution 2016-02 (R) approving Loan Documents between the WEDC and Billy R. Jarrard, Jr. in the cumulative amount of $300,000 for the acquisition of Lot 1, Railroad Industrial Park, an Addition of the City of Wylie, Collin County, Texas, as recorded in Volume C, Page 748, of the Map Records of Collin County, pledging as security the sales and use tax receipts the WEDC receives from the City of Wylie for repayment of said Loan, and further authorizing Marvin Fuller to execute all documents necessary to effectuate the Loan Documents. Staff reminded the Board that the WEDC is under contract to purchase a 0.29-acre tract from Mr. Billy Jarrard, Jr. for $300,000. Staff had originally negotiated a purchase price of$325,000 and an owner- financed 10 year note at 4.25%. The survey came in at 2,365 square feet less than had been anticipated with staff negotiating a $25,000 reduction in purchase price while allowing an increase in the interest rate on the note to 4.5%. The only other issue which is out of the ordinary, but required by the Seller, is a pre-payment penalty equal to the amount of the outstanding interest which would be paid over the life of the note. As a review, the acquisition of this tract was pursued by the WEDC so as to prevent haphazard development of the lot located at the corner of Birmingham & 78. The adjacent tract to the Jarrard lot is comprised of a 0.55-acre tract owned by Wylie Industrial Court Development, Ltd. and a 0.2-acre lot owned by TxDOT fronting Hwy 78. Wylie Industrial Court has the sole right to purchase the TxDOT right-of-way as the only adjacent property owner. While a combined tract of 0.75-acre is relatively small, it can be developed and has been under contract in the past. It was staff opinion that by combining the Jarrard lot with the adjacent 0.75-acre, more development options will now exist in terms of the number of developers seeking out lots in excess of one acre, and provide a building pad more efficiently oriented to Hwy 78. Being that Jarrard is taking the sales tax as collateral,the WEDC will be able to sell the property without the lot being encumbered. Closing on the tract is scheduled for December 28th. Prior to closing, the Wylie City Council must approve the project and specifically the pledging of the 1/2 cent sales tax as collateral which is scheduled for consideration on December 13, 2016. Also, required prior to closing will be the execution of the Agreement by Jarrard subordinating his Note to all existing and future loans between the WEDC and American National Bank. Staff recommended that the WEDC Board of Directors approve WEDC Resolution 2016-02 (R) approving Loan Documents between the WEDC and Billy R. Jarrard, Jr. in the cumulative amount of $300,000 for the acquisition of Lot 1, Railroad Industrial Park, an Addition of the City of Wylie, Collin County, Texas, as recorded in Volume C, Page 748 of the Map Records of Collin County, pledging as security the sales and use tax receipts the WEDC receives from the City of Wylie for repayment of said Loan and further authorizing Marvin Fuller to execute all documents necessary to effectuate the Loan Documents. The Board inquired about the status of the tenant in that building and staff explained that the tenant has been informed of the sale of the property and will continue to lease on a month-to-month basis. Staff also informed the Board that the property may close a few days early to accommodate holiday conflicts. WEDC—Minutes December 7, 2016 Page 3 of 6 MOTION: A motion was made by Todd Wintters and seconded by John Yeager to approve WEDC Resolution 2016-02 (R) approving Loan Documents between the WEDC and Billy R. Jarrard, Jr. in the cumulative amount of$300,000 for the acquisition of Lot 1, Railroad Industrial Park, an Addition of the City of Wylie, Collin County, Texas, as recorded in Volume C,Page 748 of the Map Records of Collin County, pledging as security the sales and use tax receipts the WEDC receives from the City of Wylie for repayment of said Loan and further authorizing Marvin Fuller to execute all documents necessary to effectuate the Loan Documents. The WEDC Board voted 4—FOR and 0 —AGAINST in favor of the motion. ITEM NO. 4 — Consider and act upon a Performance Agreement between the WEDC and Reva Hospitality Wylie,LLC. Reva Hospitality Wylie,LLC initially came to the WEDC in an attempt to evaluate options surrounding the construction of a new hotel in Wylie. Following direction from the WEDC Board in Executive Session, and an oral commitment by WEDC staff for assistance, Reva Hospitality Wylie entered into a contract on the property. Reva Hospitality Wylie plans to construct a$9.2 million dollar, four-story, 60,000 square foot, 98-room hotel at the southwest corner of FM 544 and Sanden Blvd. The hotel will either be a Hampton Inn & Suites or a Holiday Inn Express & Suites. Should the project move forward, construction will begin within the first quarter of 2017 with a completion date of December 31, 2017. Reva Hospitality Wylie requested that the WEDC provide economic assistance with qualified infrastructure improvements for the project. The attached Agreement proposes a total maximum incentive of$450,000 which is broken down as follows: Incentive No. 1 $100,000 ➢ Acquisition of title to the property by January 31, 2017 ➢ Certificate of Occupancy by December 31, 2017 ➢ Qualified infrastructure expenditures verified at no less than $450,000 Additional Incentives .._...,#WWY1WNkWeWM ........... . . up to $350,000 ➢ Quarterly Reimbursement Incentives equal to 50% of the Local Hotel Occupancy Taxes paid to the City of Wylie. Should Reva Hospitality Wylie fail to obtain a permanent Certificate of Occupancy by December 31, 2017, but does obtain such Certificate of Occupancy by June 30, 2018, the Reimbursement Incentives will be reduced by$100,000, making the total eligible Reimbursement Incentive $350,000. In the event Company fails to obtain the permanent Certificate of Occupancy for the Improvements by June 30,2018, or fails to meet the balance of the Performance Obligations,none of the Reimbursement Incentives shall be paid to the Company and this Agreement shall terminate. WEDC—Minutes December 7, 2016 Page 4 of 6 Based upon a$4 million appraised valuation using an income approach and conservative sales estimates from Reva Hospitality, the project's estimated return on investment is relatively short (approx. 18 months). As an amendment to the Performance Agreement that was brought to staffs attention by WEDC counsel, a requirement for Separated Building Materials Contracts was presented. As described by staff, these types of contracts are negotiated by the owner/contractor to separate the building materials from the labor within the construction contracts so that sales tax on those materials can be specifically identified and local sales tax paid on the same to the local Wylie jurisdiction. While neither staff or Reva where previously aware of this process, staff requested latitude from the Board to negotiate this language into the final Performance Agreement. President Fuller and Wintters supported this amendment and asked that this language be included in all future WEDC Agreements. Staff recommended that the WEDC Board of Directors approve Performance Agreement as amended between WEDC and Reva Hospitality Wylie, LLC providing for a maximum incentive of$450,000 and further authorizing the WEDC Executive Director to execute said Agreement. MOTION: A motion was made by Todd Wintters and seconded by John Yeager to approve a Performance Agreement between WEDC and Reva Hospitality Wylie,LLC providing for a maximum incentive of$450,000 and further authorizing the WEDC Executive Director to execute said Agreement. The WEDC Board voted 4—FOR and 0—AGAINST in favor of the motion. DISCUSSION ITEMS ITEM NO. 5 — Staff report: review issues surrounding WEDC Performance Agreement Summary, W&M Activity Report,Dallas Whirlpools,Ltd,Performance Agreement with FLM Development,LLC., Highway 78 WEDC Pad Sites, WEDC Annual Report,B&B Theatres Operating Company Performance Agreement, Promotional Activities, and regional housing starts. WEDC Performance Agreement Summary Attached for the Board's review was a summary of all outstanding Performance Agreements including: ACG Texas LP, Ascend Custom Extrusion, All State Fire Equipment, B&B Theatres Operating Company, Clark Street Development, Dank Real Estate, Exco Extrusion Dies, FLM Development, Freudiger Holdings, Getset, KREA Acquisition, McClure Partners, Patna Properties, VIAA Properties, Von Runnen Holdings, Wedge Corporation, Woodbridge Crossing, and Wylie Flower& Gift. Woodbridge Crossi g Attached for the Board's review was the Sales Tax Reimbursement Report which identifies all sales taxes received through November 2016 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 is 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. WEDC—Minutes December 7, 2016 Page 5 of 6 $3,911,460.60 in reimbursement has been earned through November 2016 with net receipts of $3,133,319.57 after reimbursements. As well, it is estimated that $3.5 mm has been paid in ad valorem taxes to the City of Wylie (excluding the WISD). As shown on the Sales Tax Reimbursement Report, $119,713.90 was generated in sales tax in September 2016 versus $108,521.03 in September 2015. This represents 10.31%increase over 2015 receipts. W&MActivity Report Attached for the Board's review was a spreadsheet tracking all activities with W&M Environmental for FY 2014-15 and FY 2015-16. W&M has prepared Phase I&II reports for Mann Made,K&M,Business Way, 111 N. Ballard, 908 Kirby, 201 Industrial Court, is processing the VCP application for the Commerce property, and processing the Municipal Setting Designation through the City. Dallas Whirlpools, Ltd Property Approximately 2 weeks past the original closing date, the WEDC finalized the purchased of 4.7 acres from Dallas Whirlpool, Ltd. The primary delay was a result of an existing tenant and our requirement that they execute an estoppel certificate indicating that there will be no future maintenance of the building through the end of their lease which expires on 4-30-17. To secure the estoppel and subsequent amended lease, the WEDC was required to forgo the collection of three month's rent, or $9,000. Staff will be moving forward with demolition of the structure on the southeast corner of the site in late December/early January along with some general clean-up of the property which will include high weeds, chain-link fences, and various debris. A concept site plan is currently being prepared for the WEDC & City properties which will include 2 pad sites fronting 544 with office/flex space to the north and wrapping around to Commerce Street. Finally,the VCP and MSD applications have been amended to include the 4.7 acre WEDC site. Performance Agreement with FLM Development Staff was contacted by FLM and informed that the 4,200-square foot office building contemplated in the Performance Agreement approved on 11-18-16 was reduced to 3,800 square feet due to unforeseen site restraints. Staff will be bringing the issue back to the WEDC Board in January to either amend the Agreement or void the same in advance. Highway 78 WEDC Pad Sites Staff reported that CFA was nearing the end of their due diligence period which was scheduled to expire on 12-26-16. Following expiration, a 90-day permitting period will begin within which the WEDC will undertake site improvements including deceleration lanes, a mutual access drive, and median improvements. CFA will close on the property approximately 15 days after completion of the improvements which will be approximately 2 years from the date the project was first discussed with CFA representatives at ICSC. WEDC—Minutes December 7, 2016 Page 6 of 6 WEDC Annual Report With the December Board Meeting moved up, consideration of the Annual Report will be moved to January with presenting of the same to the Wylie City Council on 1-24-17. Promotional Activities As reported regularly,the WEDC has a 1/4 interest in Maverick's Season tickets for the 2016-17 Season. A spreadsheet tracking the use of those tickets was attached for the Board's review. Regional Housing Starts Eleven homes were permitted in Wylie for the month of November 2016. Sachse, Lavon, Murphy permitted a combined eighteen over the same period. Monthly Inspiration permits are not reported until the 10th of each month and are therefore not updated within this report. No action was requested by staff for this item. EXECUTIVE SESSION Recessed into Closed Session at 7:41 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 2016-10a • Project 2016-l Ob • Project 2016-11 b RECONVENE INTO OPEN MEETING The WEDC Board of Directors reconvened into open session at 8:09 a.m. and took no action: ADJOURNMENT With no further business, President Fuller adjourned the WEDC Board meeting at 8:09 a.m. Marvin Fuller,President ATTEST: Samuel Satterwhite, Director Wylie Economic Development Corporation MEMORANDUM TO: WEDC Board of Directors FROM: Samuel Satterwhite, Executive Directo/ SUBJECT: Reva Hospitality Performance Agreement DATE: January 6, 2017 Issue Consider and act upon an Amendment to a Performance Agreement between the WEDC and REVA Hospitality Wylie, LLC. Analysis Due to the holidays and the Managing Member of Reva traveling out of the country unexpectedly, the closing date under a Real Estate Contract to purchase 2.4 acres for the development of a Holiday Inn Express & Suites was amended establishing a new closing date of February 1, 2017. The existing Performance Agreement between the WEDC and Reva requires a closing date of January 31, 2017 to qualify for Economic Assistance. While Reva has only requested a one day extension to February 1, 2017, staff is recommending that the date by which Reva must acquire title to the property be amended to February 10, 2017 to allow for other unanticipated issues. A First Amendment to Performance Agreement is attached for the Board's review. Recommendation Staff recommends that the WEDC Board of Directors approve a First Amendment to Performance Agreement extending the date by which Reva Hospitality Wylie, LLC must acquire title to property in Wylie to February 10, 2017. Attachments First Amendment to Performance Agreement FIRST AMENDMENT TO PERFORMANCE AGREEMENT THIS FIRST AMENDMENT TO PERFORMANCE AGREEMENT(this "First Amendment"), is entered into and is effective as of the 9th day of January, 2017 by and between WYLIE ECONOMIC DEVELOPMENT CORPORATION, a Texas economic development corporation("WEDC"), and REVA HOSPITALITY WYLIE LLC, a Texas limited liability company("Company"). WITNESSETH: WHEREAS, WEDC Board of Directors approved that certain Performance Agreement between WEDC and Company on December 17, 2016 to facilitate the development of a hotel located in Wylie containing approximately 60,000 square feet and not less than 98 hotel rooms(the"Project"); and WHEREAS, WEDC and Company desire to modify and amend the Agreement in certain respects,as more particularly set forth in this First Amendment. NOW, THEREFORE, in an effort to address unforeseen circumstances surrounding the purchase of 2.4 acres located in Wylie, Texas required for the development of the Project, the WEDC and Company covenant and agree as follows: 1. Defined Terms. Capitalized terms used but not defined in this First Amendment will have the meanings given to them in the Agreement. 2. Modification to Performance Obligations. Notwithstanding anything to the contrary in the Agreement, the date by which the Company must acquire title to the Property as defined in Section 2(a)is hereby extended until 5:00 p.m., Central Time, on February 10,2017. 3. Ratification. As expressly modified by this First Amendment, the Agreement is hereby ratified and confirmed by WEDC and Company. 4. Counterparts; Transmission. This First Amendment may be executed in multiple counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same agreement. Transmission of an executed signature page of this First Amendment by email will be effective to create a binding agreement. [Signatures appear on next page] IN WITNESS WHEREOF, the parties hereto have executed this First Amendment the day and year first above written. WEDC. Wylie Economic Development Corporation, a Texas Corporation By4�._.. Name: Title: COMPANY: Reva Hospitality Wylie LLC., a Texas Limited Liability Company By: Name: Title: Wylie Economic Development Corporation INIMMINNIONIV MEMORANDUM TO: WEDC Board of Directors FROM: Samuel Satterwhite, Executive Director,,,,,,' SUBJECT: 2016 Annual Report DATE: January 6, 2017 Issue Discuss issues surrounding the WEDC 2016 Annual Report. Analysis Staff had hoped to complete the first draft of the 2016 Annual Report for the Board's review prior to consideration at the WEDC Regular Meeting on January 20th. Unfortunately, staff was not able to complete the first draft in a form that is ready to be distributed. Staff will attempt to fmalize and distribute the draft well before the January 20th Board packet is sent out so that Board Members will have ample time to review. Recommendation n/a Wylie Economic Development Corporation MEMORANDUM TO: WEDC Board of Directors FROM: Samuel Satterwhite, Executive Directo e,cir 00/' SUBJECT: Staff Report DATE: January 6,2017 Issue Staff report: review issues surrounding Highway 78 WEDC Pad Sites and Promotional Activities. Analysis As a reminder to Board members, the Board may not discuss an item which is not specifically identified on the agenda. Only those items listed above can be discussed. Should any Board member want an issue be placed on the agenda at any time prior to a Board meeting,please contact the WEDC President or staff. Highway 78 WEDC Pad Sites On 12-27-16 the 90-day Inspection Period was scheduled to expire on the Chick-fil-a (CFA) Contract. Following the Inspection Period is a 90-day Permitting Period. Within the Permitting Period CFA is required to make its Initial Submittal of plans 30 days after the expiration of the Inspection Period giving the City 60 days to complete its review and issue permits. CFA contacted staff on 12-21-16 and requested an additional 30 days for the Inspection Period due to additional soil sampling recommended by the CFA environmental consultants. Staff agreed to extend the expiration date of the Inspection Period but requested that the Permitting Period begin as was originally agreed upon. CFA subsequently requested that the Initial Submittal be moved from January 27th to February 27th which would require the City to complete approvals in 30 days. The final terms agreed upon are as follows: • Inspection Period Expires 1-26-17 • Initial Submittal of Plans 2-10-17 • Permitting Period expires 3-27-17 Should the project not be fully permitted by 3-27-17 there is an automatic 30-day extension. %, J; I 3 6,2016 te 2 of Promotional Activities As reported regularly, the WEDC has a 1/4 interest :in Maverick's Season tickets for the 201647 Season. A spreadsheet tracking the use of those tickets is attached for the Board's review. No ;1 01'0 0 is r..I 14"led by al 3 this $ Promotional Events Log WEDC Promotional Activities 2016-17 Mavericks Tickets Date Attendees October 3, 2016 W&M Environmental (Pre-season) October 28, 2016 Coventry Reserve -Auction Item (Pre-Season) November 6, 2016 Jim Campbell - Chairman of the Board, Lone Star Circuits November 18, 2016 Wylie Eye Center December 27, 2016 United Commercial Realty