01-17-2018 (WEDC) Minutes mutes
Wylie Economic Development Corporation
Board of Directors Meeting
Wednesday, January 17, 2018—6:30 A.M.
WEDC Offices—Conference Room
250 South Highway 78—Wylie, Texas
CALL TO 0 ' I ER
Announce the presence of a Quorum
President Marvin Fuller called the meeting to order at 6:32 a.m. Board Members present were
John Yeager, Bryan Brokaw, 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, Assistant Director Jason Greiner,
and Senior Assistant Angel Wygant.
CITIZEN P• 'TICIPATION
With no citizen participation, President Fuller proceeded to Action Items.
ACTION ITEMS
ITEM NO. 1 — Consider and act upon approval of the December 22, 2017 Minutes of the
Wylie Economic Development Corporation (WEDC) Board of Directors Meeting.
Staff called the Board's attention to the day of the week in the heading of the Minutes and requested
that the Minutes reflect a correction from Wednesday to Friday.
MOTION: A motion was made by Bryan Brokaw and seconded by
Todd Wintters to approve the December 22, 2017 Minutes of the Wylie
Economic Development Corporation as amended. The WEDC Board voted
5 —FOR and 0—AGAINST in favor of the motion.
ITEM NO. 2 — Consider and act upon approval of the December 2017 WEDC Treasurer's
Report.
Staff reviewed the items contained in the Treasurers Report and called the Board's attention to the
2.27% decline in Sales Tax for the month of November 2017. This decline, while minimal is the
third month in a row of declining numbers and staff mentioned that should this continue, the City
may look at possible budget amendments to accommodate this decrease in revenue.
One incentive was paid in December to McClure Partners in the amount of$50,000. This was the
final incentive payable under that related Performance Agreement.
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January 17, 2018
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MOTION: A motion was made by Todd Wintters and seconded by
Bryan Brokaw to approve the December 2017 Treasurer's Report for the
Wylie Economic Development Corporation. The WEDC Board voted 5 —
FOR and 0—AGAINST in favor of the motion.
ITEM NO. 3 — Consider and act upon issues surrounding a Performance Agreement and
Subsequent Amendments between the WEDC and ' A.
Staff reminded the Board that the original Performance Agreement was executed on July 29, 2015
requiring a CO no later than March 31, 2017 and providing a maximum incentive package of
$600,000. At the request of KREA and based upon construction delays, a First Amendment was
approved by the Board and executed January 20, 2017. This Amendment extended the deadline
by which KREA must obtain a Certificate of Occupancy (CO) from March 31, 2017 to May 31,
2017.
As construction delays continued, the Board considered and approved a Second Amendment to
the Performance Agreement that extended the deadline for a CO to November 30, 2017 and
reduced the total eligible incentive from $600,000 to $450,000.
La Quinta obtained their CO on December 12, 2017, twelve (12) days after the deadline stated in
the Amended Performance Agreement and has been declared in default. KREA owner, Mr. Kash
Parbhu, has submitted a letter to the Board requesting any consideration for partial payment of the
incentives. Mr.Parbhu specifically requested payment of the $100,000 incentive with Occupancy
Tax reimbursement forfeited.
Staff reviewed the property tax valuation per the Central Appraisal District for the property which
had risen from $2.2 nun in 2017 to a current value $5.7 mm. Board Members Wintters and
Dawkins felt that the WEDC Board had worked to accommodate KREA and should decline this
request. Board Members Brokaw,Yeager and Fuller expressed support for a partial payment given
the value of the project to the community. Those Board Members in support believed a$500,000
reduction to the incentive package was an adequate penalty and that the anticipated value added to
the community is in place.
MOTION: A motion was made by John Yeager and seconded by Bryan Brokaw to amend
the Second Amendment to a Performance Agreement between the WEDC and
KREA providing for a one-time incentive payment of $100,000 and no
reimbursement of Occupancy Tax. The WEDC Board voted 3 —FOR and 2
— AGAINST in favor of the motion with Board Members Winners and
Dawkins dissenting.
ITEM NO. 4 — Consider and act upon issues surrounding a Real Estate Sales Contract
between the WEDC and The Rocking M, LLC (McClure Partners).
Prior to presentation of this item by Staff, President Fuller informed the Board that the McClures
hold accounts and conduct business at the bank where he is employed. In the interest of full
disclosure and to avoid any appearance of a conflict of interest, President Fuller wanted the Board
to consider this information and determine whether he should be excused from the discussion of
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January 17, 2018
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Item 4. Board Members were polled and no Members felt a conflict existed. President Fuller then
instructed staff to proceed with presentation of the item.
Staff reviewed for the Board the Real Estate Sales Contract between the WEDC and the Rocking
M, LLC, the legal entity created by the McClure family to own the proposed office building. The
WEDC purchased the +0.26-acre tract on Jackson Street from the McMillan family in 2017 for
$89,500 which included $14,000 for the demolition of the family home which existed on the lot.
The WEDC originally placed the property under contract to complement its holdings on Jackson
Street. However, Rocking M's interest in constructing a 5,000 square foot office building that
meets the Downtown Historic District and Historic Review Committee standards provides an
immediate opportunity to enhance the commercial investment by multiple property owners in
existing homes on Ballard and Jackson. The McClure family intends to operate their multiple real
estate investment and development companies out of the two-story office.
Staff recommended that the WEDC Board of Directors approve a Real Estate Sales Contract
between the WEDC and Rocking M,LLC and further authorize WEDC President Fuller to execute
all documentation necessary to effectuate the transaction.
MOTION: A motion was made by Todd Wintters and seconded by John Yeager to
approve a Real Estate Sales Contract between the WEDC and Rocking M,
LLC and further authorize WEDC President Fuller to execute all
documentation necessary to effectuate the transaction. The WEDC Board
voted 5 —FOR and 0—AGAINST in favor of the motion.
ITEM NO.5—Consider and act upon issues surrounding a Performance Agreement between
the WEDC and The Rocking M,LLC (McClure Partners).
President Fuller, reiterated that since this item involves the same party as discussed in Item 4, the
same declaration regarding potential conflict of interest should be considered by Board Members.
Board Members confirmed their position that no conflict existed. President Fuller moved forward
with discussion of this Item.
As an accompaniment to the above item, the WEDC is committing to fund an $89,500
reimbursement incentive should the Rocking M construct the contemplated office project as
evidenced by the issuance of a building permit by June 1, 2018 and documentation supporting
construction costs of not less than$465,000.
Staff has drafted language into the Agreement which allows for a 45-day extension to either the
Permit deadline,the CO deadline, or both. The extension can be requested in writing and obtained
by the Company should it be determined by staff that the Company is making reasonable efforts
to meet the above deadlines but is unable to do so.
Staff recommended that the WEDC Board of Directors approve a Performance Agreement
between the WEDC and the Rocking M, LLC and further to authorize the WEDC Executive
Director to execute the Agreement.
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January 17, 2018
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MOTION: A motion was made by Todd Wintters and seconded by Bryan Brokaw to
approve a Performance Agreement between the WEDC and the Rocking M,
LLC and further to authorize the WEDC Executive Director to execute the
Agreement. The WEDC Board voted 5—FOR and 0—AGAINST in favor of
the motion.
ITEM NO.6—Consider and act upon issues surrounding a First Amendment to Performance
Agreement between the WEDC and SAF-Holland USA.
On March 22, 2017,the WEDC entered into a Performance Agreement with SAF-Holland, Inc.to
assist with an expansion of machinery & equipment and the hiring of additional employees. The
Agreement provides a$1,000 incentive payment for every new job added over a three-year period
(up to a maximum of 45) and a 50% reimbursement for personal property taxes paid over a
threshold value of$14.37 mm. Staff reminded the Board that the Agreement was negotiated at a
time when Holland was closing several Michigan plants and determining whether to relocate those
operations to either Wylie, Texas or Dumas, Arkansas.
The Performance Agreement outlined was a two-fold incentive package for new employees as well
as new taxable investment in business personal property. The new"Employee Incentive" is paid
for every new job added over a threshold of 133 employees as reported on December 31, 2017,
December 31, 2018 and December 31, 2019 up to a cumulative maximum of 45.
The"Tax Incentive"value was established by determining the existing business personal property
value at the time the Agreement was executed which, again, was $14.37 mm. While values are
established by what machinery, equipment and inventory is in place on January 31st of a given
year, the valuation is not available until late March. The threshold value utilized was not an
accurate depiction of what was in place at the time the Agreement was being negotiated or
executed. The current Personal Property value is $12.2 mm which will change again in March of
2018. Unlike the Employee Incentive,the Tax Incentive is not payable until January 2019 to allow
for the new investment to be fully accounted for since it was being installed in 2017 and not taxed
until 2018.
During negotiations Holland confirmed planned capital expenditures of $3.5 mm for 2017.
Holland has now confirmed 2017 expenditures of$4.1 mm and has confirmed approved capital
expenditures of$7 mm for 2018 with$2.5 mm in purchase orders already issued.
Even though the Employee Incentive begins in 2018, Holland must meet the minimum business
personal property tax valuation established per the Agreement in order to be eligible. Both Holland
and WEDC failed to consider thoroughly the impact of older lines being removed from the plant
to allow for new equipment which significantly reduced the value with the new equipment not
being valued for tax purposes until January 2018.
Staff proposed a compromise in the form of a First Amendment to the Performance Agreement
suspending the valuation requirement as a Criteria to Qualify for Economic Assistance for one
year only. Holland will earn the Employee Incentive for jobs in place December 31, 2017 with all
other terms under the Agreement intact. Should the minimum valuation threshold of$14.37 mm
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January 17, 2018
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not be in place as of December 31, 2018, there will be no Tax Incentive or Employee Incentive
payable.
Staff recommended that the WEDC Board of Directors approve a First Amendment to
Performance Agreement between the WEDC and SAF-Holland,Inc.and authorize President Fuller
to execute the same.
MOTION: A motion was made by Todd Wintters and seconded by John Yeager to
approve a First Amendment to Performance Agreement between the WEDC
and SAF-Holland, Inc. and authorize President Fuller to execute the same.
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
T.W. Snider and Associates, LLC.
Staff reminded the Board that Mr. Snider previously completed Phase I & II of his office project
which is located near the intersection of State Highway 78 and Kirby Street behind the Exxon.
Due to soft market conditions, Mr. Snider failed to move forward under the required time frames
for Phase III and was declared in default becoming ineligible for the second incentive payment of
$42,000.
As previously discussed in Executive Session, Snider approached the WEDC inquiring as to the
potential for assistance with Phase III consisting of a 4,800 square foot shell building with the
potential for 4, 1,200 square foot units. Mr. Snider has committed to have the building permit
issued by the City on or before July 1, 2018 and complete construction of the shell as evidenced
by a Certificate of Completion by December 31,2018. Based upon comparable office concepts in
the area and appraised value of the same, Building 3 will create approximately $575,000 in new
value and generate approximately$15,000 in new taxes to the community utilizing a 3-year factor.
Staff proposed a $15,000 incentive package based upon the assumption of a Certificate of
Completion being issued no later than December 31, 2018 and Certificates of Occupancy issued
by the City for a cumulative 4,800 square feet no later than July 1, 2020. The Performance
Agreement provides a$7,500 incentive upon completion of the shell(as evidenced by a Certificate
of Completion issued by the City) and incentive payments of$1,875 for each 1,200 square feet
that is finished out as evidenced by a Certificate of Occupancy issued by the City.
MOTION: A motion was made by John Yeager and seconded by Demond Dawkins to
approve a Performance Agreement between the WEDC and T.W. Snider &
Associates. The WEDC Board voted 5 —FOR and 0—AGAINST in favor of
the motion.
ITEM NO. 8—Consider and act upon issues surrounding the WEDC 2017 Annual Report.
As per the WEDC By-laws, the WEDC must present an annual report to the Wylie City Council
no later than January 31' of each year. Staff reviewed the 2017 Annual Report which will be
presented to the Wylie City Council on January 23, 2018.
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January 17, 2018
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Staff recommended that the WEDC Board of Directors approve the 2017 WEDC Annual Report
as presented by staff and authorize its presentation to the Wylie City Council.
MOTION: A motion was made by Demond Dawkins and seconded by John Yeager to
approve the 2017 WEDC Annual Report as presented by staff and authorize
its presentation to the Wylie City Council. The WEDC Board voted 5—FOR
and 0—AGAINST in favor of the motion.
DISCUSSION ITEMS
ITEM NO. 9 - Staff report: Staff reviewed issues surrounding WEDC Performance
Agreement Summary,Environmental Activity Summary,Highway 78 WEDC Pad Sites,544
Gateway Property, DCU, Inc., Leadership Wylie, WEDC Promotional, Promotional
Activities and regional housing starts.
Staff reported that the REVA project, Holiday Inn & Suites, missed their initial deadline for CO
which was 12/31/17. Therefore,they have been notified that the incentive payment eligibility was
reduced to $350,000.
Staff called the Board's attention to the year-over-year decrease in sales tax for both Woodbridge
Crossing and Woodbridge Center. Staff had no explanation for the decrease but noted it was
reflected in the overall Sales Tax decreases.
At Woodbridge Centre, Pets Supply Plus has broken ground and the Credit Union is expected to
break ground in January.
Staff anticipates the completion of the VCP for the Commerce Street Property in February. Work
continues on the adjacent City property with wells scheduled to be drilled in the near future to
determine any groundwater issues.
The WEDC is under contract with SCSD-Finnell for the Hwy 78 property. Schlotzsky's is
currently the only confirmed tenant.
The materials for the waterline improvements on the WEDC property next to Wylie Printing have
been ordered and installation will be completed in the next few weeks.
The 544 Gateway Property has been cleaned up with the removal of all silt fencing and the brush
and an old chain-link fence along the railroad tracks.
ITEM NO. 10—Discussion of issues to be placed on a future WEDC Board Meeting agenda
(no substantial consideration/discussion allowed).
No Board Member requested any items to be placed on future Agendas.
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January 17, 2018
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EXECUTIVE SESSION
Recessed into Closed Session at 8:03 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:
• Cooper& 544
• Brown&Eubanks
• Steel & Regency
Section 551.087 - (Economic Development) of the Local Government Code, Vernon's Texas
Code Annotated (Open Meetings Act). Deliberation regarding commercial or financial
information that the WEDC has received from a business prospect and to discuss the offer
of incentives for:
• Project 2015-12a
• Project 2017-8a
• Project 2017-11a
• Project 2017-12a
' CONVENE INTO OPEN MEETING
The WEDC Board of Directors reconvened into open session at 8:21 a.m. and took no action.
JOIJRNMENT
With no further business, President Fuller adjourned the WEDC Board meeting at 8:21 a.m.
Marvin Fuller, President
ATTEST:
Samuel Satterwhite,Director