02-28-2018 (WEDC) Minutes 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 0' I ER
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 PARTICIPATION
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
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February 28, 2018
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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 Wintters 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 Demand 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.
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February 28, 2018
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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.
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February 28, 2018
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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
DC.
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.
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February 28, 2018
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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 DC.
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.
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February 28, 2018
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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:
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February 28, 2018
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• 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 31st 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
Febru: 28, 2018
Page 9 of 9
RECON TO OPEN MEET G
The DC Board of Directors reconvened into open -- sion at 8:47 a.m d took no action.
JO ' ENT
With no s er btis*• ss,President Fuller adjourned the WEDC Board meeting at 8:4'7 am.
arvizt er,P ident
A EST:
S •••uel Satte 'bite,Director