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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