03-11-2018 (WEDC) Agenda Packet C4
N I TILE F MEETING
Wylie Economic Development
CORPORATION
March 11, 2018—2:30 P.M.
WEDC Offices—Conference Room
250 South Highway 78 —Wylie, Texas
Marvin Fu er.,.. ,.. .... .......:. ...... . ... .... Presi ent
Todd intters 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 ygant. 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. lietexas.gov
within the required time frame.
CALL TO 0' I ER
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.
ACTIONI
TEMS
I. Consider and act upon approval of the February 28, 2018 Minutes of the Wylie Economic
Development Corporation(WEDC)Board of Directors Meeting.
II. (Remove from ale) Consider and act upon issues surrounding a Performance Agreement
between Cross Development, LLC and the WEDC.
U MENT
CERTIFICATION
I certibt that this Notice of Meeting was posted on this 8th day of March 2018 at 12::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.
Stephanie Storm,City Secretary Date Notice Removed
mutes
Wylie Economic Development Corporation
Board of Directors Meeting
Wednesday, February 28, 2018—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 6:35 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
Lynn Grimes attended and thanked the Board for their sponsorship and support of the 24th Annual
Taste of Wylie event which will be held on April 23rd at the FBC Events Center. With no further
citizen participation, President Fuller proceeded to Action Items.
ACTION ITEMS
ITEM NO. 1—Consider and act upon approval of the January 17,2018 Minutes of the Wylie
Economic Development Corporation (WEDC) Board of Directors Meeting.
MOTION: A motion was made by Todd Wintters and seconded by
John Yeager to approve the January 17, 2018 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 January 2018 WEDC Treasurer's
Report.
Staff reviewed the items contained in the Treasurers Report including area sales tax trends and
mentioned that he had met with City staff to explore a service that would actively track Sales Tax
revenues. This service would assist with more accurately predicting any trends and corresponding
budget adjustments that might be needed in the future. The cost for the service would be a shared
cost between the City and the WEDC.
Four incentives were paid in January, B&B Theaters Incentive and Sales Tax Reimbursement,
Exco Incentive 3 of 4, Clark Street Quarterly Sales Tax Reimbursement and Von Runnen's final
incentive payment.
MOTION: A motion was made by John Yeager and seconded by
Demond Dawkins to approve the January 2018 Treasurer's Report for the
WEDC—Minutes
February 28, 2018
Page 2 of 9
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 Purchase and Sale Agreement
between SCSD-Finnell,Ltd. and the WEDC.
Staff informed the Board that as directed in Executive Session, staff entered into a Purchase and
Sale Agreement with SCSD-Finnell,Ltd.for the sale of a Highway 78-pad site for the development
of a 10,000 square foot multi-tenant building.
The Agreement calls for the sale of± 1.54 acres on Hwy 78 for $20/sf. The buyer has obtained a
30-day extension on the closing of the property in order to revise the site plan and obtain a new
survey. The revised site plan was needed because the WEDC is requiring SCSD-Finnell to utilize
minimum width on the lot in order to enhance marketability of the adjacent site. With the revised
site plan,the remaining site is optimized for a future user.
It is anticipated that the site plan and elevations will be ready for approval in the next few weeks.
The City is pleased with the submitted design and the buyer has an excellent relationship with their
lender so it is anticipated that there will be no obstacles to closing in the next 60 days.
Staff recommended that the WEDC Board of Directors ratify that Purchase and Sale Agreement
between SCSD-Finnell, Ltd. and the WEDC.
MOTION: A motion was made by Bryan Brokaw and seconded by Todd Winners to
ratify that Purchase and Sale Agreement between SCSD-Finnell, Ltd. and the
WEDC. The WEDC Board voted 5—FOR and 0—AGAINST in favor of the
motion.
ITEM NO.4—Consider and act upon issues surrounding a Performance Agreement between
The Wedge Corporation and the WEDC.
Staff reviewed that The Wedge Corporation was issued a Promissory Note in the amount of
$275,000 on April 20, 2014. Under the terms of the Performance Agreement, the WEDC was
obligated to provide incentives in the form of Performance Credits to be applied over a 3-year
period. The first 2 Performance Credits were qualified for and issued on January 13, 2016 and
January 13, 2017,respectively. The Wedge Corporation qualified for its final Performance Credit
on December 31, 2017.
With no event of default, staff recommended that the final Performance Credit be issued and
Guarantors be released from any further obligation under the Performance Agreements, Guaranty
Agreements and Security Agreement.
MOTION: A motion was made by Demond Dawkins and seconded by Todd Wintters to
issue the final Performance Credit and release Guarantors from any further
obligation under the Performance Agreements, Guaranty Agreements and
Security Agreement. The WEDC Board voted 5 — FOR and 0 — AGAINST
in favor of the motion.
WEDC—Minutes
February 28, 2018
Page 3 of 9
ITEM NO. 5 — Consider and act upon a Commercial Contract between Gallagher
Construction Company, LP and the WEDC.
As directed by the Board in Executive Session, staff entered into a contract to acquire 2.68 acres
from Gallagher Construction Company for the purchase price of $570,320.80. The feasibility
period expires on March 20, 2018 with a 3-day close.
The WEDC contracted with Elm Creek Environmental to perform a Phase I study and a limited
Phase II soil analysis with the findings providing no reason for further investigation.
Staff believes that this property provides options for either a single light industrial user or multiple
businesses similar to the development on Windco Circle.
Staff recommended that the WEDC pay cash for the purchase of this property and provided a cash
flow analysis for the Board's review. The analysis was based on flat revenue estimates and
realistic estimates of anticipated expenses. It is reasonable to expect that the WEDC will close
on at least one Highway 78 property in the next 12-18- months. While not required to maintain a
positive financial position, a sale will net the WEDC approximately $600,000 after transaction
expenses and paying down $600,000 in debt associated with the Buchanan, Edge and Linduff
transactions. The City of Wylie Finance department has reviewed the analysis and did not disagree
with the recommendation to pay cash for the Gallagher property. Further, staff plans to brief
Council on the proposed acquisition on 2-27-2018.
Staff recommended that the WEDC Board of Directors ratify the Gallagher Construction
Company, LP Commercial Contract, authorize President Fuller to execute all documentation
necessary to close the purchase, and authorize the acquisition to be an 'all-cash' transaction.
MOTION: A motion was made by John Yeager and seconded by Bryan Brokaw to ratify
the Gallagher Construction Company, LP Commercial Contract, authorize
President Fuller to execute all documentation necessary to close the purchase,
and authorize the acquisition to be an 'all-cash' transaction. The WEDC
Board voted 5 —FOR and 0—AGAINST in favor of the motion.
ITEM NO. 6 — Consider and act upon issues surrounding Budget Transfer Request for FY
2017-2018.
Staff requested that in order to accommodate unanticipated expenses, the following budget
transfers within the FY 2017 - 2018 Budget be approved:
Special Services-$144,076. This includes fence rental($1,599)and demolition of the 4 buildings
located on the 544 Gateway properties ($142,477). These costs were anticipated to occur in the
FY 2016—2017 and were therefore not budgeted in FY 2017-2018. The monies not spent resulted
in an increased beginning fund balance and will net out.
Utilities - $2,500. The WEDC had previously not budgeted for utilities at 100 Oak Street. $250
per month for the balance of the fiscal year to maintain power and gas.
WEDC—Minutes
February 28, 2018
Page 4 of 9
Land - $539,007. Transfer $539,000 into the Land- Purchase Price budget to fund purchase of
property from Gallagher Construction Company. After the purchase, $200,000 will remain in the
Land budget for future acquisitions.
To offset the budget increases, it is being proposed to reduce Incentives by $685,583 leaving a
remaining budget of$987,069. Future Projects (unassigned project funds) within Incentives will
effectively be reduced from $741,602 to $56,019.
Staff recommended that the WEDC Board of Directors approve Budget Transfer Request EDC-1
increasing Special Services by $144,076, Utilities by $2,500, Land by $539,007, and reducing
Incentives by $685,583.
MOTION: A motion was made by Bryan Brokaw and seconded by John Yeager to
approve Budget Transfer Request EDC-1 increasing Special Services by
$144,076, Utilities by$2,500, Land by $539,007, and reducing Incentives by
$685,583. 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 DCU,Inc.and the
WEDC.
Staff reminded the Board that on September 22, 2017 the WEDC entered into a Performance
Agreement with DCU, Inc. to assist with the relocation and expansion of DCU from the 544
Gateway property to Regency Business Park. The Agreement called for the WEDC to pay up to
$31,534 in Permit Fees to the City of Wylie, $18,466 toward the extension of a gas line, and
$50,000 over two years to assist with construction and moving costs. With a projected $1.2 mm
valuation and a cumulative $100,000 incentive package, the project has experienced significant
cost overruns which are impacting the Agreement.
Mr. Mark Hambleton, DCU Owner, provided the WEDC with line item expenditures totaling
$89,410 representing Mr. Hambleton's unanticipated out-of-pocket expenses. The estimate for
the gas line extension provided by Atmos of$28,000 will actually be $39,885 as reflected in the
lowest of three current bids. Based upon the $101,295 in cost overruns (including the gas line),
Mr. Hambleton inquired as to the potential for additional assistance with the gas line and possibly
restructuring the incentive payments.
Under previous assumptions for the gas line extension,the WEDC was participating at 66%of the
cost. Staff believed an increase in participation was warranted up to an additional $7,858 which
brings WEDC outlay under Incentive No. lb to $26,324. Further, staff proposed that Incentive
Payments No. 2 and No. 3 of $25,000 each be restructured to $12,500 each and fund the
restructured $25,000 at CO to assist with cost overruns.
The rate of return (ROR) for this project was originally 3.4 years with the additional $7,858
increasing the ROR only slightly. Should the Board agree with the recommendations,an amended
Performance Agreement will be presented to the Board in March.
WEDC—Minutes
February 28, 2018
Page 5 of 9
Staff recommended that the WEDC Board of Directors authorize amendments to a Performance
Agreement between DCU, Inc. and the WEDC, increasing total incentives to $107,858 and
restructuring Incentive Payment No. 2 and Incentive Payment No. 3.
MOTION: A motion was made by John Yeager and seconded by Demond Dawkins to
authorize amendments to a Performance Agreement between DCU, Inc. and
the WEDC, increasing total incentives to $107,858 and restructuring
Incentive Payment No. 2 and Incentive Payment No. 3. The WEDC Board
voted 5 —FOR and 0—AGAINST in favor of the motion.
ITEM NO.8—Consider and act upon issues surrounding a Performance Agreement between
Cross Development, LLC and the WEDC.
In June 2017 Cross Development approached the City!WEDC to discuss a mixed-use project to be
located on Westgate Way across from Home Depot. An incentive package was requested to offset
site work required due to the existence of a State registered landfill utilized for the disposal of
Class III polypropylene and plastic shavings generated from the process by which copper wire was
recycled. A local Wylie company, Electro Extraction, Inc., operated the landfill from
approximately 1972 to 1979.
Even though the site was properly registered,the current owner(Greenway Springs) was required
to enroll the property into the Voluntary Cleanup Program via the Texas Council on Environmental
Quality (TCEQ)in 2003 to address soil and groundwater issues created by the Class III materials.
Greenway expended $147,000 to process the site through the VCP with the TCEQ subsequently
issuing a Final Certificate of Completion (COC) on March 31, 2008 under which the materials
were allowed to remain on-site. Even with the COC in place, a majority of the shavings must be
removed and replaced with clean fill at an estimated cost of$816,000 for the entire site.
Cross presented the mixed-use project to Council on 2-13-18 which approved zoning for the 286-
unit multi-family development with commercial uses on the 15.72-acre tract. Project costs will be
in excess of$32,000,000 for the multi-family alone. While Cross would have preferred the request
for financial assistance be considered earlier in the process, staff believed that it would have been
presumptuous to process an incentive request prior to zoning. Now with zoning complete, Cross
is awaiting Council and WEDC Board decisions prior to closing on the property.
As reported to the WEDC Board previously, the premise behind considering financial assistance
is based upon the site being underperforming,excessive site work costs,and the benefit this project
will bring to surrounding commercial properties. Staff To be considered on 2-27-18, WEDC and
City Staff are recommending that Council waive up to $475,000 in development fees out of the
total estimated fees of$800,000 to be imposed by the City. Staff is further recommending to the
WEDC Board via the attached Performance Agreement to provide $250,000 in reimbursements of
qualified infrastructure expenses. Based upon estimated net fees of$325,000 and assuming new
taxable value of$30,000,000 just on the multi-family component of the project, the rate of return
on investment will be approximately 6 months on the entire package with an annual net benefit to
the City of Wylie in the amount of$365,000. Net benefit comprised of sales tax, property tax,
fees, utility revenue, and franchise fees less cost of utility and governmental services.
WEDC—Minutes
February 28, 2018
Page 6 of 9
Performance Measures associated with the project are as follows: (1) projects costs for Phase I of
at least$32,000,000, (2) purchase the land no later than March 20, 2018, (3) break ground on the
multi-family component no later than August 1, 2018, (4) certificates of occupancy issued on all
multi-family no later than September 1, 2020, (5) provide documentation supporting the
expenditure of no less than $500,000 in site work to address the removal/remediation of
polypropylene and shredded plastics and site preparation, and (6) certificates of completion on
2,300 square feet of general retail and 3,200 square feet of restaurant space no later than September
1, 2020.
Should Cross fail to meet any of the above Performance Measures, the contemplated waived
development fees will be due and payable prior to the issuance of any Certificate of Occupancy
and the WEDC will not be required to fund the reimbursement of Qualified Infrastructure.
Staff informed the Board that City Council expressed concerns about the incentives being tied only
to Phase I development with no performance requirements associated with Phase II which
addresses office development. Mayor Hogue clarified that Council was under the impression that
the office buildings were planned in the near term when in actuality the timeline will be determined
by user interest.
The Board reiterated that this property is underperforming and has multiple barriers and challenges
to development. There has been no interest from a developer since 1979. Should this development
not proceed, it is likely that the property will remain unused and off the tax rolls for an extended
period of time.
The Board requested that this item be Tabled until the next meeting of the WEDC Board of
Directors to receive direction from Council and to further negotiate Council's concerns with Cross.
MOTION: A motion was made by Bryan Brokaw and seconded by John Yeager to Table
this item until the next meeting of the WEDC Board of Directors. The WEDC
Board voted 5 —FOR and 0—AGAINST in favor of the motion.
ITEM NO. 9—Consider and act upon issues surrounding the use of WEDC property located
at 100 Oak Street.
Staff informed the board that the WEDC has become aware of a church, Wylie Northeast, that
utilized a WISD facility for six years and is currently utilizing New Hope on Saturday evenings.
Wylie Northeast stopped using WISD facilities due to a policy which discourages the same church
have indefinite use of ISD buildings. Wylie Northeast is proposing renting the building for
between $1,000 - $1,400 per month. The range is variable based upon the unknown amount for
utilities which staff is researching now. Their primary use of the facility would be on Sundays
being that their 'model' is built around the use of members' homes for weekday study groups.
While staff continues to research the issue,there is apparently no conflict with zoning and adequate
parking is available. Wylie Northeast is aware that the building would be leased as-is and there
would be no allowance for remodeling or on-going repairs. Further, Wylie Northeast would
identify the WEDC as an additional insured on a$1 mm policy. Finally, Wylie Northeast is aware
that any lease would include a 4-6 month 'notice to vacate' clause.
Staff supported this proposal for the following reasons:
WEDC—Minutes
February 28, 2018
Page 7 of 9
• While the building will be torn down at some point in the future, staff is hesitant to do so
based upon the slight chance there is some scenario that the facility could be part of the
redevelopment plan;
• Assuming there is agreement on the above, the occupancy of the building reduces
vandalism and ongoing deterioration;
• The use should not disrupt weekly business activities for existing businesses and may
enhance retail/restaurant sales on Sunday mornings;
• The income is equal to approximately 24% of the annual debt service; and
• The nomadic nature of the organization and their lack of need/desire for permanent
facilities will lessen the conflict when required to vacate.
Concerns were raised by the Board surrounding TABC regulations that prohibit businesses within
a certain distance from a church from selling alcohol. A question arose about whether these
regulations apply to the owner of the building or the user and how the distance to local businesses
might impact downtown development. Staff recommended that this item be Tabled to provide
time for staff to research this issue.
MOTION: A motion was made by John Yeager and seconded by Demond Dawkins to
Table this item until the next regular meeting of the WEDC Board of
Directors. The WEDC Board voted 5 —FOR and 0—AGAINST in favor of
the motion.
ITEM NO. 10 — Consider and act upon issues surrounding a Performance Agreement
between All State Fire Equipment,Inc and the WEDC.
Staff reported that the WEDC is in its last year of a Performance Agreement with All State Fire.
Incentive No. 1 called for Project Cost associated with the construction of a 9,300 square foot
building of$788,000. Incentive No. 2 called for appraised value of at least $1.1 mm and sales
taxes paid to the City of no less than$5,000.
Incentive No. 3 calls for minimum value of$900,000 and $5,000 in sales tax payments. All State
has real and personal property valued at $1.51 mm and sales tax paid to the City of$11,477. All
State was also required to pay property taxes no later than January 31' of the year after they are
assessed. All State paid their personal property taxes on December 1, 2017 and their real property
taxes on February 13, 2018, including $1,851 in penalties.
Staff did not believe that this default warrants the non-payment of Incentive Payment No. 3 and
recommended that the WEDC Board of Directors waive the requirement under Section II c (2)
within the All State Performance Agreement and further recommends that the Board authorize the
Executive Director to process Incentive Payment No. 3.
MOTION: A motion was made by John Yeager and seconded by Todd Wintters to waive
the requirement under Section II c (2) within the All State Performance
Agreement and further recommends that the Board authorize the Executive
Director to process Incentive Payment No. 3. The WEDC Board voted 5 —
FOR and 0—AGAINST in favor of the motion.
WEDC—Minutes
February 28, 2018
Page 8 of 9
DISCUSSION ITEMS
ITEM NO. 11 - Staff report: Staff reviewed issues surrounding WEDC Performance
Agreement Summary,Environmental Activity Summary,Highway 78 WEDC Pad Sites,544
Gateway Property, Kansas City Southern, McClure Partners, WEDC Promotional
Activities, and regional housing starts.
Staff updated the Board on the above reference projects and activities,calling the Board's attention
to a new position being established by KCS, Industrial Development Manager. Staff believes this
move indicates more of an emphasis on the part of KCS to n moving forward with development
surrounding the intermodal. Staff met with the Industrial Development Manager in Wylie and is
generating some information about KCS owned properties in Wylie.
The Mayor departed at 8:00 a.m.
ITEM NO. 12 —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.
EXECUTIVE SESSION
Recessed into Closed Session at 8:08 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
• Oak and Ballard
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 2016-lb
• Project 2017-8b
• Project 2018-2a
Board Member Dawkins informed the Board that he had a conflict of interest regarding Project
2017-8b and excused himself from the meeting at 8:32 a.m. He did not return.
City Manager, Mindy Manson, departed the meeting at 8:44 a.m.
WEDC- Minutes
February 28, 2018
Page 9 of 9
' CONVENE INTO OPEN ETING
The WEDC Board of Directors reconvened into open session at 8:47 a.m. and took no action.
ADJOU' ENT
With no er business, President Fuller adjourned the DC Board meeting at 8:47 a.m.
Marvin Fuller,President
ATTEST:
Samuel Satterwhite,Director
•
yhe co a o ic P evelo • ent Cor s oratio
E SA DU
TO: WEDC Board of Directors
FROM: Samuel Satterwhite, Executive Duectoi
SUBJECT: Cross Development, LLC
DATE: March 9, 2018
Issue
(Remove from Table) Consider and act upon issues surrounding a Performance Agreement
between Cross Development, LLC and the WEDC.
Analysis
As reported at the 2-28-18 WEDC Board Meeting, Council directed staff to address several
concerns surrounding the Cross project which were as follows:
• The land south of the Explorer Pipeline Easement may never be developed based upon
multiple development challenges relating to accessibility and potential Contaminants
remaining on-site;
• The unknown timing related to Phase II; and
• The amount of waived fees and WEDC monies recommended by staff may not be
commensurate to the project benefits based upon the unknown timing for Phase II.
Within the Agenda Report distributed for the March 13th Council packet, staff summarized that
in June 2017 Cross Development formally approached the City/WEDC to discuss a mixed-use
project to be located on Westgate Way across from Home Depot. This meeting was a direct
result of discussions held in May of 2017 at ICSC with brokers for Cross and the Seller with
representatives from the Planning Department and WEDC. The meeting at ICSC focused on the
potential for a multi-family development at the location being presented to Council. Being that a
zoning change would be required, it was Planning staffs' direction to the developer that any
request for multi-family would have to include mixed-use components. Also discussed in May
was the well documented landfill which has provided development challenges to this site for the
past 25 years.
To address the development challenges, an incentive package was requested to offset site work
required due to the existence of the State registered landfill utilized for the disposal of Class III
WEDC—Cross Development
March 9, 2018
Page 2 of 3
polypropylene and plastic shavings generated from the process by which copper wire was
recycled. A local Wylie company, Electro Extraction, Inc., operated the landfill from
approximately 1972 to 1979.
Even though the site was properly registered, the current owner was required to enroll the
property into the Voluntary Cleanup Program via the Texas Council on Environmental Quality
(TCEQ) in 2003 to address soil and groundwater issues created by the Class III materials. The
TCEQ subsequently issued a Final Certificate of Completion (COC) on March 31, 2008 under
which the materials were allowed to remain on-site. Even with the COC in place, a majority of
the shavings must be removed and replaced with clean fill at an estimated cost of$816,000 for
the entire site.
Cross presented the mixed-use project to Council on 2-13-18 which approved zoning for the 286-
unit multi-family development with commercial uses on the 15.72-acre tract. Project costs will
be in excess of$32,000,000 for the multi-family alone. While Cross would have preferred the
request for financial assistance be considered earlier in the process, staff believed that without
zoning the point was moot. Now with zoning complete, Cross is awaiting Council and WEDC
Board decisions prior to closing on the property.
As reported to the Board previously, the premise behind considering financial assistance is based
upon the site being underperforming, excessive site work costs, and the significant benefit this
project will bring to surrounding commercial properties. Staff is recommending that in addition
to the potential fee waivers of $475,000 being considered by Council, the WEDC approve
$250,000 in reimbursement of qualified infrastructure. Based upon estimated net development
fees imposed by the City of$325,000 and using an assumption of new taxable value of at least
$30,000,000 on the multi-family component of the project alone, the rate of return on investment
(ROI) will be approximately 6 months on the entire package with an annual net benefit to the
City of Wylie in the amount of$365,000. Net benefit is comprised of sales tax, property tax,
fees, utility revenue, and franchise fees less cost of utility and governmental services. For
clarification, the ROI utilizes property taxes generated by the multi-family component with
partial value generating taxes in 2020.
As summarized in the Agreement and shown on the site plan attached to the same, commercial
development associated with the project is depicted as 2, 3,500 square foot restaurant pads, 2,300
square feet of general retail, and 18,600 square feet of office space within what is identified as
Phase II. Company Obligations (performance measures) associated with the project are as
follows: (1) project cost for Phase I of at least $32,000,000, (2) purchase the 15.72 acres no later
than March 20, 2018, (3) break ground on the multi-family component no later than August 1,
2018, (4) certificates of occupancy issued on all multi-family no later than September 1, 2020,
(5) provide documentation supporting the expenditure of no less than $500,000 in site work to
address the removal/remediation of polypropylene and shredded plastics and site preparation, (6)
certificates of completion on 2,300 square feet of general retail and 3,200 square feet of
restaurant space no later than September 1, 2020.
WEDC—Cross Development
March 9, 2018
Page 3 of 3
Should Cross fail to meet any of the above Obligations, the contemplated waived fees will be due
and payable prior to the issuance of any Certificate of Occupancy and all WEDC assistance will
be void in advance of payment
The City/WEDC designed an incentive package in 2007 to address the property owner's costs
($148,000) to secure the Final Certificate of Completion through the TCEQ Voluntary Cleanup
Program and the estimated site cost to a potential developer to remediate the removal of
shavings. With the shift in retail development further west down F.M. 544 and inability to
identify a buyer for the subject property, the program was terminated in 2011.
After receiving the above input from Council at the February 27th Meeting, staff approached the
developer in an effort to tie a portion of the contemplated fee waivers and WEDC
reimbursements to some portion of Phase II being built. While Cross Development was unable
to commit to the timing of the office product, Council's concern over the 'development'
obstacles can be address within the Agreement as follows.
In addition to the previously presented Company Obligations, Cross must now provide
documentation evidencing that the property south of the Explorer Pipeline Easement is accessible
to vehicular traffic, the property is free from Contaminants caused by Electro Extraction, Inc.
operations, and that the same area is actively being marketed for commercial uses consistent
within the existing PD-MF/CR under Zoning Case 2017-12.
The Board must realize that Council will meet on this item after the Board Meeting on the 1 lth
and that any decision of the Board is subject to Council approval.
Recommendation
Subject to City Council approval of a Chapter 380 Agreement between the City and Cross
Development, staff recommends that the WEDC Board of Directors approve a Performance
Agreement between Cross Development, LLC and the WEDC.
Attachments
Performance Agreement
PERFORMANCE AGREEMENT
Between
Wylie Economic Development Corporation
And
Cross Development, LLC
This Performance Agreement (the "Agreement") is made and entered into by and
between the Wylie Economic Development Corporation ("WEDC"), a Texas corporation
organized and existing under Chapter 501 of the Texas Local Government Code, known as the
Development Corporation Act, as amended from time to time (the "Act") and Cross
Development, LLC, a Texas limited liability company ("Company").
RECITALS
WHEREAS, Company has entered into a contract to acquire 15.7208 acres of property
located in the City of Wylie, Texas (the "City"), which property is more fully described herein
on the attached Exhibit A (the"Property");
WHEREAS, Company proposes to construct on the Property a mixed-use development in
two phases. Phase one shall consist of at least: (i) 286 multifamily units (the "Multifamily
Units"), (ii) 2,300 square feet of general retail space (the "Retail Space"), and (iii) approximately
7,000 square feet of restaurant space which shall be split between two restaurants (the
"Restaurant Space" and together with the Multifamily Units and the Retail Space, "Phase One").
Phase two shall consist of approximately 18,600 square feet of office space split between three
separate buildings, the first containing approximately 3,500 square feet of office space, the
second containing approximately 6,000 square feet of office space, and the third containing
approximately 9,100 square feet of office space (collectively, "Phase Two" and together with
Phase One, the "Development"), such Development being depicted on the attached Exhibit "B".
The total project cost of Phase One shall be not less than Thirty-Two Million Dollars
($32,000,000.00);
WHEREAS, Company agrees to provide documentation to WEDC showing that the total
project cost of Phase One is not less than Thirty-Two Million Dollars ($32,000,000.00);
WHEREAS, Company agrees to purchase and take title to the Property on or before
March 20, 2018 (the "Purchase Deadline");
WHEREAS, Company agrees to commence construction of the Multifamily Units on or
before August 1, 2018 (the "Multifamily Commencement Date") and to complete construction of
the Multifamily Units and to obtain from the City all corresponding Certificates of Occupancy
for the Multifamily Units on or before September 1, 2020 (the "Completion Date");
WHEREAS, Company agrees to complete construction of the Retail Space and at least
3,200 square feet of the Restaurant Space and to obtain from the City all corresponding
Certificates of Completion for the Retail Space and at least 3,200 square feet of the Restaurant
Space on or before the Completion Date;
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WHEREAS, for a number of years beginning in 1972 and ending prior to 1980, the
Property was occupied by Electro Extraction, Inc. which operated a state registered landfill for
the disposal of Class III polypropylene and PVC plastic shredded from aluminum and copper
wire (the "Contaminants"). The Property was required to be enrolled in the TCEQ Voluntary
Cleanup Program in November 2003 and received a Final Certificate of Completion on March
31, 2008. While a Final Certificate of Completion was issued, all or a portion of the
Contaminants were allowed to remain on the Property through the date of this Agreement,
impacting a sizeable portion of the soil on the Property (the "Impacted Soil");
WHEREAS, Company agrees to expend at least $500,000 (the "Minimum Removal
Expenditure") for site work including the removal of the Contaminants from the Property and to
remove or remediate all Impacted Soil (the"Removal/Remediation Process");
WHEREAS, Company shall complete the Removal/Remediation Process on or before the
Completion Date;
WHEREAS, Company shall actively market all property south of the Explorer Pipeline
Easement, as depicted in Exhibit A, for commercial uses authorized within PD-MF/CR under
Zoning Case 2017-12, confirm that the same area is fully accessible to vehicular traffic, and that the
same area is free from Contaminates;
WHEREAS, Company has requested financial and/or economic assistance from the
WEDC to plan and construct certain infrastructure improvements to assist in the development of
the Property, consisting of economic assistance for all hard and soft costs relating to the
construction of public and site improvements on or adjacent to the Property;
WHEREAS, Section 501.103 of the Act states that the WEDC may provide funding for
expenditures that are found by the Board of Directors to be required or suitable for infrastructure
necessary to promote or develop new or expanded business enterprises, limited to streets and
roads, rail spurs, water and sewer utilities, electric utilities, or gas utilities, drainage, site
improvements, and related improvements (the "Qualified Infrastructure");
WHEREAS, Company proposes to use the economic incentive for the construction of the
Qualified Infrastructure which will include approved public infrastructure improvements and site
improvements as may be amended from time to time, necessary for the development of the
Property and which will benefit the surrounding properties, as generally described in the attached
Exhibit C;
WHEREAS, the WEDC has found that the Qualified Infrastructure is necessary to
promote or develop new or expanded business enterprises in the City and the WEDC has
concluded that the Qualified Infrastructure constitutes a "project", as that term is defined in the
Act, and is willing to provide Company with economic assistance as hereinafter set forth on the
terms and subject to the conditions as stated herein and Company is willing to accept the same
subject to all terms and conditions contained in this Agreement;
WHEREAS, the WEDC has determined that it is in the best interest of the public and the
City and promotes the purposes authorized by the voters of the City of Wylie for which the
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WEDC was established to encourage the development and use of commercial properties within
the City; and
WHEREAS, the WEDC is willing to provide the Company with economic assistance
hereinafter set forth on the terms and subject to the conditions as stated herein and Company is
willing to accept the same subject to all terms and conditions contained in this Agreement.
NOW, THEREFORE, for and in consideration of the above recitals and the terms,
conditions and requirements hereinafter set forth, the parties hereto agree as follows:
1. Economic Assistance. Subject to the terms of this Agreement and provided
Company is not in default, the WEDC will provide Company economic assistance in the form of
a performance reimbursement incentive in the sum of Two Hundred Fifty Thousand Dollars
($250,000.00) (the "Reimbursement Incentive") upon completion of the Performance Criteria set
forth below. The total amount of economic assistance and/or incentives to be paid to the
Company, including the Reimbursement Incentive, shall not exceed the cumulative sum of Two
Hundred Fifty Thousand Dollars ($250,000.00).
2. Performance Obligations. The WEDC's obligation to pay Company the
Reimbursement Incentive stipulated above is expressly contingent upon Company completing
the following items (the "Performance Criteria") by the due dates set forth below:
a. Company shall purchase and take title to the Property on or before the
Purchase Deadline;
b. Company shall complete the plans and specifications for the Development
(the "Plans") and submit them to the City for approval prior to commencement of
construction;
c. Company shall commence construction of the Multifamily Units on or
before the Multifamily Commencement Date;
d. Company shall complete construction of the Multifamily Units and obtain
from the City all corresponding Certificates of Occupancy for the Multifamily Units on
or before the Completion Date in substantial accordance with the Plans;
e. Company shall complete construction of the Retail Space and at least
3,200 square feet of the Restaurant Space and obtain from the City all corresponding
Certificates of Completion for the Retail Space and at least 3,200 square feet of the
Restaurant Space on or before the Completion Date in substantial accordance with the
Plans;
f. Company shall supply documentation to the WEDC on or before the
Completion Deadline that the project cost for Phase One was at least Thirty-Two Million
Dollars ($32,000,000.00);
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g. On or before the Completion Date, Company shall provide documentation to
the WEDC evidencing that the property south of the Explorer Pipeline Easement is
accessible to vehicular traffic, that the Company has used all reasonable efforts to confirm
that the same area is free from Contaminants as confirmed by engineering reports, soils
analysis, or historical documents depicting Electro Extraction, Inc. operations, and finally
documentation that Company is actively marketing the area south of the Explorer Pipeline
Easement as evidenced by a contract with a brokerage firm and installation of a real estate
promotional sign.
h. Company shall supply documentation to the WEDC, and subsequently
made part of this Agreement hereto and attached as Exhibit C, that the Qualified
Infrastructure has been completed and that the cost of constructing the Qualified
Infrastructure was at least Two Hundred Fifty Thousand Dollars ($250,000.00) no later
than the Completion Deadline; and
i. Company shall provide to the WEDC on or before the Completion
Deadline documentation confirming that: (i) the Removal/Remediation Process has been
completed, and (ii) the Company expended an amount greater than or equal to the
Minimum Removal Expenditure in completing the Removal/Remediation Process.
3. DC Payment of Reimbursement Incentive. Subject to the terms and
conditions of this Agreement, the Reimbursement Incentive shall be paid by WEDC to the
Company within thirty (30) days after WEDC receives documentation confirming that Company
has satisfied all Performance Criteria set forth herein.
4. Default. The WEDC's obligation to pay any portion of the Reimbursement
Incentive to Company will terminate or be reduced, in WEDC's sole discretion, if Company
defaults by not completing the Performance Criteria as set forth in Section 2 of this Agreement.
5. Termination of Agreement. This Agreement may be terminated by mutual
written consent of the parties or by either party, upon the failure of the other party to fulfill an
obligation as set forth in this Agreement.
6. Economic Assistance Termination. Notwithstanding the terms of this
Agreement, the WEDC's obligation to pay a portion or all of the Reimbursement Incentive to
Company will expire upon the earlier of(i) the full payment of the Reimbursement Incentive, or
(ii) October 1, 2020.
7. Miscellaneous.
a. This Agreement shall be construed according to the laws of the State of
Texas and is subject to all provisions of the Act, which are incorporated herein by
reference for all purposes. In the event any provision of the Agreement is in conflict with
the Act, the Act shall prevail.
b. This Agreement shall be governed by the laws of the State of Texas and is
specifically performable in Collin County, Texas.
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c. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their permitted successors and assigns. This Agreement or any part
thereof shall not be assigned or transferred by any party without the prior written consent
of the other party; provided this Agreement may be assigned (i) by Company to an
affiliate of Company (an "affiliate" being an entity controlled and majority owned by the
Company or its principals) who expressly assumes all of the obligations of Company
arising after the date of such assignment, or (ii) by operation of law in connection with a
merger or consolidation of Company so long as Company provides WEDC the name,
address, phone number, and email address of the successor entity. In the event of an
assignment, the assignment is not effective until written notice is given to the WEDC of
the name, address,phone number, and email address of the assignee.
d. Any notice required or permitted to be given under this Agreement shall
be deemed delivered by hand delivery or depositing the same in the United States mail,
certified with return receipt requested, postage prepaid, addressed to the appropriate party
at the following addresses, or at such other address as any party hereto might specify in
writing:
WEDC: Mr. Samuel D. R. Satterwhite
Executive Director
Wylie Economic Development Corporation
250 South Highway 78
Wylie, TX 75098
With copy to: Abernathy, Roeder, Boyd and Hullett, P.C.
1700 Redbud Blvd., Suite 300
McKinney, Texas 75069
Attention: Mr. G. Randal Hullett
COMPANY: Cross Development, LLC
Attention: Steve Rumsey
4336 Marsh Ridge Road
Dallas, Texas 75010
Telephone: 214-614-8252
Email: srumsey@crossdevelopment.net
Copy to: Byrd Campbell, P.A.
Attention: James S Campbell
180 Park Avenue, Suite 2A
Winter Park, FL 32789
Telephone: 407-392-2285
Email:j campbell@byrdcampbell.com
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e. This Agreement contains the entire agreement of the parties regarding the
within subject matter and may only be amended or revoked by the written agreement
executed by all the parties hereto.
f. This Agreement may be executed in a number of identical counterparts,
each of which shall be deemed an original for all purposes.
g. In case any one or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision thereof, and
this Agreement shall be construed as if such invalid, illegal or unenforceable provision
had never been contained herein.
h. Each signatory represents this Agreement has been read by the party for
which this Agreement is executed and that such party has had an opportunity to confer
with its counsel.
i. Time is of the essence in this Agreement.
j. The parties agree this Agreement has been drafted jointly by the parties
and their legal representatives.
By the execution hereof, each signatory hereto represents and affirms that he is acting on behalf
of the party indicated, that such party has taken all action necessary to authorize the execution
and delivery of the Agreement and that the same is a binding obligation on such party.
[SIGNATURE PAGE FOLLOWS]
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DC Board approved this day of , 2018 (the
"Effective Date").
WEDC:
WYLIE ECONOMIC DEVELOPMENT
CORP°' TION, a Texas Corporation
By:
Sam Satterwhite, Executive Director
COMPANY:
Cross Development, LLC,a Texas limited liability
company
By:
Name:
Title:
Exhibits:
Exhibit A - Legal Description of the Property
Exhibit 13 - Site Plan of the Development
Exhibit C - The Qualified Infrastructure
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EXHIBIT A
Legal of the Propmrtv
BEING m tract of land located in the City of Wylie, Collin County, Texas, being
all of the remainder of Lot 2, Block A/ Replat of Lot 1 , Block Ax Westgate
Center, Phase One, an addition to the City of Wylie according to the plat thereof
as recorded in Cabinet L, Page 859, Map Records, Collin County, Tomom, being all
of that tract of land described in deed to Greenwmy Springs, Ltd. as recorded in
Volume 6013, Page 1066, Deed Records, Collin County, and being more particularly
described by metes and bounds as follows:
BEGINNING at a 1/2" iron rod found for the southeast corner of said Lot 2, being
the intersection of the northerly line of the A.T & S.F. Railroad (150' R.O.VV. )
and the westerly line of Westgate Way (100' R.O.W. at this point) ;
THENCE, along the southerly lino of said Lot Q, Block /k, South 52 degrees 16
minutes 00 seconds West, o distance of 790'00 feet rod a 5/8" iron rod with cap
stamped "8CI" set for the southwest corner of said Lot 2, being the southeast
corner of Lot 1 , Block A, Sanden Addition as recorded in Cabinet L, pmQa 457,
Map Records, Collin County, Texas;
THENCE, departing said Railroad R'O'0/' , along the east line of said Sanden
Addition and the west line of said Lot 2, North OD degrees Og minutes 22 seconds
East, m distance of 1 ^392.97 feet to a 5/8" iron rod with cap stamped
"Probeck'5187" found for the northwest corner of the herein described tract and
the southwest corner of Lot P-A, Block A, Plat of Lot 2A, Block A, West Center
Phase One as recorded in Cabinet M, Page 632, Map Records, Collin County" Texas;
THENCE, departing the mmmt line of said 8mndmn Addition, along the mouth line of
said Lot 2A, South 89 degrees 88 minutes 38 seconds East, a distance of 519.10
feet to o 5/8" iron rod found with cap stamped "Proboot'5187" being the southeast
corner of said Lot 2A" the northeast corner of the herein described tract, being
in the westerly right-of-way line of Westgate Way (65' R.O.W. at this point) ;
'
THENCE" along the westerly line of said Westgate Way and the easterly line of the
herein described tract as follows:
South 44 degrees 56 minutes 38 seconds East, a distance of 7.05 feet to a
1/2" iron rod found, the beginning of a curve to the right; ;
Along said curve to the right through m central angle of 49 degrees 30
minutes 38 seconds, e radius of 292.50 feet, an arc length of 252'76 feet, a
chord bearing of South 20 degrees 11 minutes 19 seconds East and e chord distance
of 244'96 feet to m 1/2" iron rod found;
South 04 degrees 34 minutes 00 seconds West, m distance of 493.90 feet to
a 1/2" iron rod found, the beginning of o curve to the left;
Along said curve to the left through m central angle of 42 degrees 18
minutes 00 seconds, a radius of 282.79 feet, an arc length of 194.01 feet, a
chord bearing of South 16 degrees 36 minutes 00 seconds East and a chord distance
of 189.63 feet to the POINT OF BEGINNING and containing 084.800 square feet or
15.7208 acres of land more or lmmm'
pemponw^uvCE AGREEMENT-Page o
2»nY6xx
EXHIBIT B
Site Plan of the Development
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EXHIBIT C
The Qualified Infrastructure
[TO BE ATTACHED]
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