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4A Wichita Falls Economic Development Minutes - 04/15/2014MINUTES OF THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION April 15, 2014 1 RECEIVED ,N PRESENT: CITY CLERK'S OFFICE Gary Shores, President § Members DX E: S1.Z1 / '-_ Dick Bundy, Vice President/Sec.- Treasurer § ELY: �_ TIME: Reno Gustafson § Darron Leiker § Glenn Barham, Mayor § City Council Jim Dockery, Assistant City Manager /CFO § Kevin Hugman, Assistant City Manager § City Staff Miles Risley, City Attorney § Linda Merrill, Recording Secretary § Henry Florsheim, President/CEO § Chamber of Commerce & Industry Kevin Pearson, Executive Vice President, § Economic Development § Brent Bluhm § Wichita Clutch Jay Carter § Carter Aviation Jon Tatro § Travis Campsey § Lone Star Milk Producers Brian Williams § Dental Planet Mike Shallenberger § 707 N. Scott, LLC Harry Patterson § ABSENT: Dave Lilley § Member 1. CALL TO ORDER President Gary Shores called the meeting to order at 3:38 p.m. 2. APPROVAL OF MINUTES Dick Bundy moved for approval of the January 21, 2014 minutes. Seconded by Darron Leiker, the motion carried. 3. CONSIDER CHANGES TO THE WICHITA CLUTCH TEST STAND PROJECT Kevin Pearson said Wichita Clutch is seeking a 36 -month extension of its cash - for -jobs performance agreement. The company is nine positions short of the last performance agreement benchmark, but anticipates it will have those additional nine employees hired by the end of 2015. HA legal \4A, 4B, TIFS \4A Corp \4a Minutes \2014\2014.4.15\2014.4.15 4a minutes.doc WFEDC —Minutes of April 15, 2014 2 Brent Bluhm said Wichita Clutch uses its two 1500 hp test stands to test products primarily for oil field and mining industries. Markets are down at present. To offset the downturn, the company is bringing in new products to test and will become a distribution center for a company it owns in England, and is also working with a newly- acquired business in Denmark to manufacture and sell certain of its products in America. 4. CONSIDER CHANGES TO THE CARTER COPTER PROJECT Mr. Pearson said Carter Aviation is requesting a 24 -month extension on the repayment of several outstanding loans. Jay Carter said they have taken the aircraft to air shows, demonstrating it to individuals and companies who may be interested in licensing. They were invited to brief CENTCOM and SOCOM on the aircraft's abilities at MacDill AFB. The company has a $2 million contract with DARPA, the research and development arm of the armed services. Jon Tatro said Phase 1 of that contract expires August 8. They must submit their proposal for Phases 2 and 3 by May 29; the anticipated date of award for Phase 2 is October 1, for $19.25 million. Phase 3 would be awarded after the 12 -month Phase 2, worth $100 million. Mr. Tatro said the company has three fairly substantial opportunities for commercial sale of licenses. One license would be for $10 million, with $6 million of in- kind work for Carter Aviation. That deal could close in the next six months. It is financially critical that Carter wins Phase 2 of the DARPA contract. Mr. Shores asked, if Carter would be able to repay its loans prior to the end of the 24- month extension if it is successful in winning either of the next two contracts. Mr. Carter said they would. Mr. Dockery asked how the awarding of Phases 2 or 3 to Carter would affect the company's employment level. Mr. Tatro said they intended to ramp up to about 40 employees for 20 months. They have 10 -12 employees and would certainly more than double that in Phase 2. 5. LONE STAR MILK PRODUCERS RECRUITMENT Mr. Pearson said the City, County, 4A Board, and Chamber put together an incentive offer to Lone Star Milk Producers. Currently located in Windthorst, the company is looking to move to either Wichita Falls or Fort Worth. Travis Campsey said Lone Star Milk Producers ( "Lone Star ") is a dairy co -op of about 170 members, with two affiliate members. Last year, they marketed more than 3 -1/2 billion pounds of milk. The business is located 12 miles south of Windthorst on one of the co -op farms. They need to get to a more urban environment. Six of their staff reside in this immediate area, so they felt it was worthwhile to look at Wichita Falls. WFEDC — Minutes of April 15, 2014 3 Lone Star has 20 employees; not all of them are local. The jobs are mostly clerical in nature. Mr. Shores asked Mr. Campsey if he foresaw a growth in employment as the co -op's membership increases. Mr. Campsey said the trend in the dairy business is a decrease in the head count at farms, but an increase in the size of the farm. 6. DENTAL PLANET STATUS UPDATE Mr. Pearson introduced Brian Williams of Dental Planet. He noted the 4A Board had entered into a number of agreements with that company's predecessor, Buydental. Dental Planet has been in operation for a while, and Mr. Williams is here to update the Board. Mr. Williams said Moriah Group, a company out of Midland, Texas, purchased the assets of Buydental in 2011. Since that time, they have worked hard and been successful at overcoming negativities associated with Buydental. The company put $250,000 into a warehouse reconstruction to move operations from 900 Indiana to 707 N. Scott. They also created a showroom to display the equipment. They do a very small portion of business locally, over 99% of their sales are generated outside of Wichita County, but the money comes here. Mr. Pearson asked if the former owner is involved in any way. Mr. Williams said he was initially retained as a consultant and did some outside sales. But he is no longer involved with the company. Mr. Leiker asked what the company was requesting from the Board. Mr. Williams said they are not making a request. Mr. Pearson said the former owner gave the City a deed of trust on the property at 707 N. Scott. Two of the members of the group that the owns that property, 707 N. Scott, LLC, Mike Shallenberger and Harry Patterson, are at today's meeting. Harry Patterson said he got involved with J.W. Oliver, the owner of Buydental, on a non -paid consulting basis, trying to help him when he was having a hard time with cash flow. He told Tim Chase that he thought Mr. Oliver had a good niche product but was under - capitalized. An incentive agreement with the 4A Board was executed. About the same time, he and other partners bought interest in 707 N. Scott, and leased it to Mr. Oliver. Sometime later, Dale Brown of the Moriah Group bought Mr. Oliver's assets and eventually the rest of his interest in the real estate. Mr. Patterson had no idea there was a lien attachment on the agreement between Oliver and the 4A Board until last week. He understands there is the possibility of foreclosure since the business only has 30 employees, 15 short of the agreement's requirement. There are still 30 people employed, and it is a good program. He suggested the Board think about reducing the employment criteria and removing the lien off the property. WFEDC — Minutes of April 15, 2014 4 Mr. Pearson said this item will be discussed during executive session, but it was good to have his input. Mr. Patterson pointed out that none of the 4A money received by Buydental went to the owners of the property. Mr. Williams said the $250,000 expansion was done under Dental Plant and the new owner's funds. Had Moriah not come in and taken ownership, there would be zero employees at that location. The owners have taken over old debt, paid off vendors, and spent a substantial amount of money to get where they are today. Dental Planet is a tenant of 707 N. Scott, LLC. The foreclosure does not affect that business, but he does not believe it would be able to take the expense of moving. 7. EXECUTIVE SESSION Mr. Shores adjourned the meeting into executive session at 4:45 p.m. pursuant to TExAs GOVERNMENT CODE § §551.071, 551.072, and 551.087. He closed the executive session and announced the meeting back into regular session at 6:00 p.m. Wichita Clutch Darron Leiker moved, seconded by Dick Bundy, to approve the 36 -month extension, with no interest, for Wichita Clutch. The motion carried unanimously. Carter Copter Darron Leiker urged staff to bring options to the 4A Board regarding Carter Copter's request whereby the 4A can get something in return for that concession. Lone Star Milk Producers Dick Bundy moved to approve this incentive. Seconded by Reno Gustafson, the motion unanimously carried. H. ADJOURN The meeting adjourned at 6:00 p.m. G ry S66res, President