Loading...
4A Wichita Falls Economic Development Minutes - 06/04/2012MINUTES OF THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION June 4, 2012 PRESENT: Gary Shores, President § Members Dave Lilley § Lanham Lyne § Gary McLendon § Glenn Barham, Mayor § City Council Darron Leiker, City Manager § City Staff Kevin Hugman, Assistant City Manager § Jim Dockery, Asst. City Manager /CFO § Miles Risley, City Attorney § Linda Merrill, Recording Secretary § Tim Chase, President § Chamber of Commerce & Industry Kevin Pearson, Vice President § Jim Johnson § Mark Arciero § Carter Aviation ABSENT: Dick Bundy, Vice President/Sec.- Treasurer § Member 1. CALL TO ORDER President Gary Shores called the meeting to order at 8:00 a.m. 2. APPROVAL OF MINUTES Lanham Lyne moved that the minutes of April 18, 2012 be approved. Seconded by Gary McLendon, the motion unanimously carried. 3. UPDATES AND POSSIBLE ACTION ITEMS RELATED TO CARTER AVIATION Mark Arciero of Carter Aviation said Carter would like to modify its current agreement with the 4A Board from a milestone -based agreement to an asset securitization type loan. He provided a spreadsheet of anticipated income for the next 18 months and a list of the company's assets totaling $2.4 million. They would like to receive $750,000 based upon the value of those assets out of the $937,500 remaining under the current agreement. After that sum is received, they propose to receive a dollar- for - dollar match for all monies raised by any infusion of additional income up to the remaining $187,500, to reach the total $937,500 that is owed under H: \_legal \4A & 4B \4A Corp \Minutes\2012\2012.6.4\2012.6.4 4a minutes.doc WFEDC — Minutes of June 4, 2012 the existing agreement. They would then be able to finish construction of at least one of the aircraft by the end of the year, and possibly both of them. Mr. Arciero then gave a presentation on business opportunities through 2013, including Carter's contracts with AAI, and other potential opportunities, including the Army RIF program, and licensing agreements with China and Kazakhstan, among other programs. Mr. Shores asked if the proposals Carter is considering from China and Kazakhstan would result in more employees being hired. Mr. Arciero said they would have to have more employees, but could not specify how many employees would be needed as it would be predicated on the number of aircraft to be sold. Mr. Pearson asked if there would be any problems from the U.S. Military regarding the sale of these aircraft to other countries. Mr. Arciero said the company has received a Commodity Jurisdiction from the State Department that recognizes their product as commercial. Mr. Chase said this was the first time he had heard from a Carter representative that both aircraft may not get built by December 31. He questioned what would happen with the company if it did not timely finish building both aircraft. Mr. Arciero replied that Carter will definitely finish the first aircraft by the end of the year, with the second one coming right behind. If the RIF program does not happen and they receive no additional investment, they can finish out the year with the 4A funds. Mr. Chase asked when the RIF would be announced. Mr. Arciero said it should come within 90 days of its March 30 submission, give or take. Mr. Shores thanked Mr. Arciero for his presentation. 4. FY 2011 -12 BUDGET AMENDMENT Mr. Shores said this is a housekeeping amendment of the 2011 -12 budget, to provide an additional $30,000 for expenditures for professional services. This is necessary to replenish the fund for the remaining half of the year. Lanham Lyne moved to approve the budget amendment. Seconded by Gary McLendon, the motion unanimously carried. 5. EXECUTIVE SESSION Mr. Shores adjourned the meeting into executive session at 8:30 a.m. pursuant to TEXAS GOVERNMENT CODE § §551.071, 551.072, and 551.087. He announced the meeting back into regular session at 9:27 a.m. The subjects posted in the Notice of Meeting were deliberated, and no action was taken on these items in executive session. Lanham Lyne recused himself and left the meeting at this time. Carter Aviation Gary McLendon moved to authorize the President to execute a modified Performance Agreement and other documents as necessary to provide for a monthly reimbursement on the initial $468,750 that Carter Aviation would otherwise become WFEDC — Minutes of June 4, 2012 3 potentially entitled to under milestone 3(f) subject to the pledge of additional collateral as determined to be appropriate by the President, including the Intellectual Property to secure a pledge supporting the entire amount of funds received under the loan that has been forwarded to the Carter entities; and subject to Carter's agreement to a modified Performance Agreement with respect to that $468,750 and the remainder of the funds potentially available under the Performance Agreement. He further moved that the final amount of funds above the $468,750 must be subject to matching funds to be raised by the Carter entities from capital infusions or net profits from contracts. The motion was seconded by Mr. Lilley. Mr. Lilley expressed concern that the Board has placed triggers on receiving the money that might actually act as a hindrance to Carter moving forward. Mr. Chase said that, given the terms of the current contract, Carter would actually be receiving zero dollars. This modification would give him something, but allows the 4A Board to be good stewards of taxpayer money. Mr. Shores said he understood Mr. Lilley's point, but did not believe the Board was hindering him. Mr. McLendon echoed that sentiment. The motion unanimously carried. Natura Mr. Lilley moved to authorize the President to issue the notice of default presented to the 4A Board, with the blanks completed and other modifications made as approved by the attorney for the 4A Board, and authorize execution of such additional related documents in Canadian bankruptcy court or otherwise as may be necessary to proceed with default declarations; and further to proceed with necessary foreclosure actions subject to the non - receipt of the principal and interest on the $1 million loan on or before July 23, 2012. Seconded by Mr. McLendon, the motion unanimously carried. Mr. Chase said the term of the loan requires a 60 -day notice, so the letter is that notice of default. Any concrete proposals from Natura will be required within 30 days. Jim Dockery questioned the Board's philosophical beliefs for pay for performance versus cash for jobs. The pay for potential model ties up the 4A Board's money while waiting for the job creation. He believes it has been a failure, and it puts the Board in this situation every time it follows that model. Tim Chase said the 4A Board has struck 18 deals in the past 24 months, two of which have struggled to produce results, while others have exceeded expectations. Some have been cash for jobs, others pay for performance, and others a hybrid of the two models (such as WDS Global, Pratt Whitney and Wichita Clutch). Kevin Pearson opined that each opportunity should be considered on a case -by -case basis. Mr. Dockery said he thought the economic development task force was to come up with a policy or some concrete philosophical guidelines. Mr. Chase WFEDC — Minutes of June 4, 2012 4 said he has a nearly completed draft document for all to review. One included recommendation is that every project would have a cost benefit analysis and feasibility study. Mr. Dockery said perhaps the projects for the past two years should be analyzed to determine what was successful. Mr. Chase said those analyses are given to the City Council each time a project is submitted for approval. Mr. Shores said he believes Mr. Dockery's point is well taken, but it needs to be the 4A Board who discusses any anticipated changes. Mr. Dockery countered that the City Council is in charge of 4A funds and there needs to be an agreement on philosophy. Mr. Lilley said the problem is that the two failures were high profile; if they were smaller deals, this conversation might not be happening. When the Board adopted its three- pronged approach four years ago, everyone agreed they needed to have a stomach for some degree of failure. Mr. Dockery replied that he did not know there was a summit on this issue; it appeared that the 4A Board changed its philosophy without City Council involvement. Mr. Shores said the 4A Board will meet to discuss this and come up with a policy. Mr. McLendon said no one anticipated the housing market crash of 2008, thereby plummeting the need for mattresses. There is still potential for Natura's product; all the trade magazines still have high regard for the company and its product. Mr. Lilley asked what the City Council has said. Mayor Barham said that while what Jim Dockery says has merit, he has heard no discussions from the City Council regarding the direction the 4A Board has gone. The Council understands the 4A Board is directly involved in the negotiations and rely on their experience and recommendations. That being said, there probably ought to be an understanding, if not a written policy. Mr. Chase said he has only heard positive comments from the Council. He does realize that (a) money is being looked at in a completely different set of circumstances, and (b) the economy is beginning to right itself and there is not a need to offer the higher level of incentives to close deals. The offer letters reflect that. 7. ADJOURN Mr. Lilley moved, seconded by Mr. McLendon, that the meeting be adjourned. The motion was unanimously approved, and the meeting adjourned at 10:00 a.m. l� Gary Afiores, President f,. RECEIVED IN CITY CLE K'S �FI� � _ 1 DATE: -- l B YIIV