05-17-2017 (WEDC) Minutes Minutes
Wylie Economic Development Corporation
Board of Directors Meeting
Wednesday, May 17, 2017—6:30 A.M.
WEDC Offices—Conference Room
250 South Highway 78 —Wylie, Texas
CALL TO ORDER
Announce the presence of a Quorum
President Marvin Fuller called the meeting to order at 6:33 a.m. Board Members present were John
Yeager, Todd Wintters and Bryan Brokaw.
Ex-officio members 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
President Fuller welcomed citizen guest Lynn Grimes. Ms. Grimes thanked the Board for their support
of the Taste of Wylie which was a successful fundraiser for the Christian Care Center.
With no further citizen participation, President Fuller proceeded to Action Items.
ACTION ITEMS
ITEM NO. 1 — Consider and act upon approval of the April 19, 2017 Minutes of the Wylie
Economic Development Corporation (WEDC) Board of Directors Meeting.
Staff called the Board's attention to a typographical error on the item number associated with the Staff
Report in the Minutes. Item No. 9 should have read Item No. 6.
MOTION: A motion was made by John Yeager and seconded by
Bryan Brokaw to approve the April 19, 2017 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 April 2017 WEDC Treasurers Report.
MOTION: A motion was made by Todd Wintters and seconded by
John Yeager to approve the April 2017 Treasurers Report for the Wylie Economic
Development Corporation. The WEDC Board voted 4 — FOR and 0 — AGAINST
in favor of the motion.
WEDC—Minutes
May 17, 2017
Page 2 of 6
ITEM NO. 3 — Consider and act upon a Performance Agreement between Metalbilia and the
WEDC.
Mr. Greiner presented a Performance Agreement between Metalbilia and the WEDC for consideration
by the Board explaining that Mr. Patrick Payton initially came to the WEDC in an attempt to evaluate
his options for a new facility in Wylie, TX. Mr. Payton planned to lease an existing structure to help
with immediate production needs,but also knows his production capacity is limited by the size of facility.
Future plans call for larger manufacturing or production space and a possible retail store front. Following
direction from the WEDC Board in Executive Session and an oral commitment by the WEDC staff for
assistance, Mr. Payton started renovation at 108 S. Jackson Ave., Ste. 201.
Mr. Payton expects to hire at least one new full-time employee and his projected expenses for new
equipment are expected to exceed $12,000 this first year. Although this is a smaller project, the WEDC
Board recognizes the need for small business development and assisting our local entrepreneurs as they
grow and expand. The Performance Agreement proposed totals a maximum incentive of$4,800 which
is paid in $1,600 increments within the 10th, 1 lth, and 12th months of the lease following verification of
expenditures and employment.
Should Metalbilia fail to meet the identified Performance Measures, the entire Performance Agreement
is voided in advance. Further, no partial incentive payments will be provided.
Staff recommended that the WEDC Board of Directors approve a Performance Agreement between
WEDC and Metalbilia providing for a maximum incentive of$4,800 and further authorizing the WEDC
Executive Director to execute said Agreement.
Board Member Fuller inquired about the confidence level of the equipment purchases meeting the
$12,000 requirement. Mr. Greiner explained that the equipment is state of the art and extremely
expensive. The likelihood of obtaining even a minor discount is extremely remote and would not impact
the proposed incentive.
Staff called the Board's attention to a correction needed in the Performance Agreement in that the
$12,000 required equipment purchase is associated with Incentive No. 1 rather than Incentive No. 3.
The correction was made in the body of the text but not in the Table and will be corrected prior to
execution of the Performance Agreement.
MOTION: A motion was made by Todd Wintters and seconded by
Bryan Brokaw to approve a Performance Agreement, as amended,between WEDC
and Metalbilia providing for a maximum incentive of$4,800 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.
WEDC—Minutes
May 17, 2017
Page 3 of 6
ITEM NO. 4- Consider and act upon a Second Amendment to a Performance Agreement between
KREA Acquisition,LLC and the WEDC.
Staff reviewed that on July 29, 2015, the WEDC entered into a Performance Agreement with KREA
Acquisitions to provide assistance with the construction of Qualified Infrastructure in the amount of
$600,000. On January 20, 2017, the WEDC approved an extension requiring a Certificate of Occupancy
(CO) for the project from March 31, 2017 to May 31, 2017. Due to continuing delays, KREA has
indicated that a CO will not be issued sooner than September 30, 2017. Further, the Board amended the
Start Date to 4 months from CO from the original 6-month time period. The Start Date is defined as the
date upon which the WEDC will provide incentive payments equal to Occupancy Tax generated from
the project.
Based upon continual delays, the project has changed in terms of the cost/benefit along with significant
concern with continual defaults. The `loss' to the community are those Occupancy Taxes that would
have been generated had the project been completed originally in March and then amended to May.
Further,while the property has been assessed at 3.1 mm,it was the WEDC's original understanding from
the CCCAD that hotels were valued on an Income Basis. Therefore, this value may well be contested
with the property not in production.
While staff firmly believes that every project is evaluated on its own merits, there have been previous
incentive programs that have been reduced as the result of multiple Defaults. For example, the Direct
Development(Target)project was reduced from$12 mm in cumulative incentives to $6 mm based upon
several events of default.
Staff proposed a Second Amendment to Performance Agreement which details a recommended response
to multiple events of default by KREA as follows: (a) reduction in potential cumulative incentives from
$600,000 to $450,000, (b) Start Date begins upon issuance of CO, and(c) should a CO not be issued by
November 30, 2017, the WEDC obligation to pay any portion of the Reimbursement Incentive is
terminated.
Staff recommended that the WEDC Board of Directors approve a Second Amendment to the
Performance Agreement extending the date by which KREA Acquisitions, LLC must complete
improvements associated with the La Quinta Inn & Suites to November 30, 2017, amending the Start
Date to the Date upon which the City issues a CO, and terminating WEDC's obligation to fund
Reimbursement Incentives should KREA be in default of Section 2 of the Agreement and subsequent
First Amendment to the Agreement.
MOTION: A motion was made by Todd Wintters and seconded by
John Yeager to approve a Second Amendment to the Performance Agreement
extending the date by which KREA Acquisitions, LLC must complete
improvements associated with the La Quinta Inn & Suites to November 30, 2017,
amending the Start Date to the Date upon which the City issues a CO, and
terminating WEDC's obligation to fund Reimbursement Incentives should KREA
be in default of Section 2 of the Agreement and subsequent First Amendment to the
WEDC —Minutes
May 17, 2017
Page 4 of 6
Agreement. The WEDC Board voted 4—FOR and 0—AGAINST in favor of the
motion.
ITEM NO.5—Consider and act upon issues surrounding a Purchase and Sale Agreement between
the WEDC and Chick-Fi1-A, Inc.
In the Purchase and Sale Agreement (PSA) the WEDC committed to "assist CFA to attempt to cause
the City to apply all or a portion of the Lane Contribution as a credit against the Development Fees".
The Lane Contribution is a previously negotiated amount($41,000) which CFA is to pay the WEDC at
closing, compensating the WEDC for a portion of the deceleration lane improvements being constructed
by the WEDC. The Development Fees are equal to $88,108 and must be paid to the City prior to the
issuance of a building permit.
The original thought was that the City would provide a credit against Thoroughfare Impact Fees for
roadway improvements being funded by CFA. However, costs attributed to deceleration lanes do not
qualify for credits under a Development Agreement process the City uses to provide benefits to
developers who make improvements to roadways specifically identified within the City Thoroughfare
Plan.
Rather than have the City enter into a 380 Agreement with CFA to provide the $41,000 benefit, staff is
proposing that it would be more expeditious for the WEDC to forego the collection of the Lane
Contribution from CFA achieving the same result as the previously discussed credits.
Staff recommended that the WEDC Board of Directors authorize the Executive Director to notify the
Title Company that CFA is not required to pay the Lane Contribution called for within the PSA.
MOTION: A motion was made by Bryan Brokaw and seconded by John Yeager to authorize
the Executive Director to notify the Title Company that CFA is not required to pay
the Lane Contribution called for within the PSA. The WEDC Board voted 4—FOR
and 0—AGAINST in favor of the motion.
ITEM NO. 6—Consider and act upon issues surrounding the marketing of WEDC pad sites.
Staff held an open discussion on the merits of engaging a real estate brokerage firm to market WEDC
pad sites on Highway 78 and F.M. 544. With the pending sale of a 1.5 acre pad next to Starbucks to
CFA on or about June 19th and the availability of approximately 3 acres for pad development on F.M.
544 property owned by the City and WEDC, the need for professional assistance at least warrants a
discussion.
All things being equal, the WEDC will be paying 6% fee regardless whether its 3% to our broker and
3% to the buyers' broker, or whether it is the entire 6% to the buyers' broker if we represent ourselves.
Even though we have the Retail Coach seeking out users in addition to staffs efforts, a broker would
add that much more activity to our site.
WEDC—Minutes
May 17, 2017
Page 5 of 6
The Board agreed with staffs' assessment and directed staff to identify multiple commercial brokers in
the Metroplex and bring back a recommendation at a future date.
No action was requested by staff for this item.
DISCUSSION ITEMS
ITEM NO. 7 — Staff report: Staff reviewed issues surrounding a WEDC Performance Agreement
Summary, Woodbridge Crossing, Environmental Activity Summary, ICSC 2017, WEDC Pad Sites, 100
Oak Street, and regional housing starts.
Staff noted for the Board that Woodbridge Crossing tax receipts were up 20% over February 2016 and
we are on track to meet our$6 mm incentive obligation by October 2019, 2 years earlier than originally
anticipated. In addition, the development continues to grow with McAlister's Deli submitting plans for
a location adjacent to and east of Cotton Patch within Woodbridge Crossing.
For ICSC, staff has scheduled 16 confirmed appointments with Brokers and Retailers and identified 13
key sessions relevant to economic development in Wylie. At least one person will attend each of these
sessions.
No action was requested by staff for this item.
EXECUTIVE SESSION
Recessed into Closed Session at 7:29 a.m. 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:
• Brown& Ballard
• Birmingham& Hwy 78
Section 551.087 (Economic Development) of the Local Government Code, Vernon's Texas Code
Annotated (Open Meetings Act).
• Project 2017-3b
• Project 2017-5a
RECONVENE INTO OPEN MEETING
The WEDC Board of Directors reconvened into open session at 7:49 a.m. and took no action.
ADJOURNMENT
With no further business, President Fuller adjourned the WEDC Board meeting at 7:49 a.m.
WEDC Minates
Ma) 17. 2017
Page 6 of 6
7'71410014
Marvin Fuller,President
AT'r EST:
Samuel Satterwhite,Director