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4A Wichita Falls Economic Development Minutes - 09/19/2019MINUTES OF THE WICffiTA FALLS ECONOMIC DEVELOPMENT CORPORATION September 19, 2019 P-D- CTv NT• Leo Lane, President David Toogood, Vice -President Reno Gustafson, Secretary -Treasurer Phyllis Cowling Stephen Santellana, Mayor Steve Jackson, Councilor, District 5 Paul Menzies, Assistant City Manager Blake Jurecek, Assistant City Manager Amy Shores Gardner, Assistant City Attorney Karen Montgomery -Gagne, Planning Administrator Blane Boswell, City Engineer Linda Merrill, Recording Secretary Henry Florsheim, CEO Travis Haggard, V.P., Business Retention & Expansion Taylor Davis, Director, WF Talent Partnership Ripley Tate, Past -Chair, Board of Directors Martin Bohn ABSENT: Darron Leiker 1. Call to Order Leo Lane called the meeting to order at 3:30 p.m. WFEDC Members City Council City Staff CCI § Cobra Kai § WFEDC Member 2. Approval of Minutes (August 15, 2019) With a change noted on page one (facility to facility(ies)), Phyllis Cowling moved for approval. Seconded by Reno Gustafson, the motion carried. 3. Financial Report Paul Menzies noted that the September sales tax receipts, reflective of July sales, are up 11.74% over the same month last year. This makes for a cumulative 4.5% increase for the year, and a projected $4.15 8 million in revenue. 1 4. Discussion and Possible Action Regarding Adoption of 2019-20 Budget Mr. Menzies said that he and Director of Finance Jessica Williams have prepared a framework for the Board's proposed FY 2019-20 budget. If the Board approves, it would be presented to the City Council for its approval on October 1. Revenues include the projected sales tax figure of $4.158 million, and at least a partial reimbursement from the $1.5 million expenditure for the Sheppard AFB Main Gate Project. Annual Programs, including the Chamber of Commerce and Industry and related economic development marketing, are funded at 25% of their customary amount in order to allow them time to prepare their proposals. SMAC, Downtown Wichita Falls Development, and IdeaWF will make presentations to the Board, likely at its next meeting, at which time the budget can be amended. City's Administrative Expense is proposed to be increased $10,000 to $60,000, based on historical needs and what is anticipated in the coming year. The Board will have an unreserved fund balance just short of $10 million. Ms. Cowling moved for approval of the budget, with the understanding that it will be amended. Seconded by David Toogood, the motion carried unanimously. 5. Presentation by Martin Bohn of Cobra Kai Flight School regarding expansion opportunities Martin Bohn, owner of Cobra Kai Flight Academy and CEO of Joint Pilot Academy Grob (JPAG), returned to again discuss a joint venture with Grob Aircraft (Grob) from Germany. He created JPAG with Grob to produce aproficiency-based pilot training program. It uses artificial intelligence and virtual reality, and produces pilots faster and at a cheaper cost than any other method. It is a competency- versus hourly -based training system, whereby pilot trainees are instructed based upon how they most readily learn. Cobra Kai was founded in 2012, and has trained over 850 students. It has 3 FAA certificates, and he is working to expand into Phoenix. He has a 145 repair station and a flight school in the Lufthansa building in Phoenix. The WFEDC provided funding for a flight simulator for Cobra Kai, and as a result, there has been a $4.9 million direct financial impact to the community through license costs; $680,000 in fuel sales; and an indirect impact of $725,000. He was initially in direct talks with the US Air Force, but those talks are somewhat stalled due to a change in command. However, the Air Force is still looking for additional ways to train pilots, as it is experiencing a shortage of 1,800 pilots at present. Now, however, he has interest from Saudi Arabia, Oman, and Germany. The Saudi government has signed an MOU expressing its interest in the program, and they are sending a delegation to look at his facility. Mr. Bohn said he needs to have a facility in place, large enough to house 50 students and 25 instructors. He could train them at the Lufthansa building in Phoenix, but he would prefer to stay here. 2 He would also need to hire 21 pilots to train the instructor pilots; 15 maintenance technicians, and 6 administrative personnel. The salaries would range from $68,000-$160,000. Ms. Cowling asked how much time the trainees/trainers would spend in the community. Mr. Bohn said the student pilots would spend about 9 months. The pilots here to train his instructor pilots would be here 4-6 months. The instructor pilots would be here on a permanent basis. When he last appeared before the Board on this matter, he asked for $1 million in cash, repayable in 24 months; $500,000 in a forgivable loan to build the facility to house the 50 students per year. He is only seeking the $500,000 today, so that he can show the Saudi delegation a substantial setup. But even if a deal is not struck with the Saudis, Oman is interested, and the US Air Force might still make a deal. He is confident that if he has the facility, it will work. Otherwise, he could still produce airline pilots for the United States. Mayor Santellana asked if he can provide a pro forma. Mr. Bohn said that he will provide his cash flow projections. 6. SAFB Main Gate Security Upgrades Project: Request for Change Order to Address Storm Water Drainage Work Karen Montgomery -Gagne stated that she had received the executed extension from the Governor's office. Of the 10 grantees, there were 7 granted extensions. There can be no additional expenses after November 29. She presented a PowerPoint presentation regarding an issue with the storm drainage at the main gate. There is a small area outside of the City parcel and just outside of the main gate. It contains two 24" storm water drainage pipes that have been there for 50 years or so. These pipes have faulted due to age, truck traffic, and dumpsters. These drainage pipes are the reason for the change order, as this damage was not anticipated when the designs were prepared. Blane Boswell, City Engineer, noted there were sink areas identified when the project was first put together, and five spot repairs were included in the overall project, but the extent of this damage was unknown until they were excavated. Ms. Gagne said she has worked with Benham Design Group and Terra Construction to come up with construction estimates. Terra has yet to submit any estimates. Benham has submitted a 20% contingency with each of the following four estimates: • Earthen channel with concrete base: $64,200 • Earthen channel with concrete bottom, with eastern 50' elliptical pipe: $68,400 • Completely earthen channel: $52,200 • Completely elliptical pipe: $111,600 Another decision is to make is whether to remove or abandon the existing pipe. To remove the pipe would cost an estimated $23,400; to abandon in place would cost $11,500. In addition, there is the design/engineering cost of $15,000. Staff s recommendation is a combination of options C and B — an earthen channel with a sod bottom, with the east 50 feet being pipe that connects to the SAFB headwall. In addition, they also recommend the removal of the faulty RCP pipes in order to avoid future maintenance problems, reduce the land area necessary to accommodate storm water drainage, and avoid additional connections to the SH240 and SAFB headwalls, along with design/engineering fees. That makes the change order total just under $100,000. A 20% contingency is included, but timing is tight, since there can be no additional expenses after November. They could not wait for Terra's estimate; it could be more or be close to this estimate. Staff has added a 10% margin to $110,000 to hopefully compensate for Terra's ultimate costs, if the Board is comfortable with this approach. Ms. Cowling asked how the budget is faring on this project. Ms. Gagne replied that the final tally of expenditures, including this change order, will be close to $1.8 million; there may be questions why the entire $3 million of WFEDC funds was not spent. She is still not paying any concrete -related invoices submitted by Terra, due to the dispute with the concrete work being done by its subcontractor. She is working on another certified letter to the company. 7. Discussion and Possible Action Regarding Sale of Stanley Building Travis Haggard noted there is a company interested in the purchase of the Stanley Building. They have signed a letter of intent to start a new manufacturing company, hiring approximately 200 employees in the beginning, ramping up to 350 within 3-5 years. They look to expand within two years to 220,000 square feet of manufacturing space. The Chamber has sent the company incentive offers. It is a nationwide manufacturing and assembly company that sold to another company five years ago. They have started another company in the same industry. It is also establishing itself in North Carolina and Florida. 8. Discussion Regarding Process for Soliciting and Funding Economic Development Partners Henry Florsheim said this is a discussion for the executive session. 9. Presentation Regarding Employee Relocation Incentive Proposal Mr. Florsheim noted that the 4A Board had provided an incentive to help Sharp Iron recruit enough skilled welders from the Tulsa welding school to fill vacancies within their company. The offer was $3,000 per employee for a total of $24,000. Since then, the Chamber has been approached by other companies seeking that same incentive. Tryer Processing's recent incentive included cash for jobs, and a bonus of $2,500 on top of the $7,500 per employee if an employee was recruited from outside the area. The Chamber wishes to standardize the process and budget for this, and have developed a framework for the process. He introduced Taylor Davis, Director of Wichita Falls Talent Partnership, to explain. Ms. Davis said the Chamber proposes a $200,000 line item in the WFEDC budget, to be managed by the Chamber and Talent Partnership. The money would be dispensed for based upon a minimum salary of $15 per hour at a rate of $4,000 to $8,000, depending upon the salary. Incentives would be paid directly to the company after six months of employment and relocation to Wichita County has been verified. 4 Mr. Lane asked about the pros and cons of a single company getting all of the funds. Mr. Florsheim said if every job happens to go to one company, it is still growing the population and it helps the company. Ms. Cowling said the Tryer Processing incentive was granted for those employees brought in from outside the MSA, as opposed to simply outside Wichita County. That might be something to consider, as bringing an employee in from Clay County into Wichita County probably would not help the local economy that much. Mr. Florsheim said that would be an easy tweak. If this is approved, they would communicate with the industries that meet the criteria that this program is available. If a company indicates their intent, the Chamber would then pursue it with a basic agreement the company would have to complete. After discussion, it was determined that this incentive would be available to new and existing companies, and open to every eligible NAICS code, but the Chamber's focus would be on those three core target industries in the economic development strategic plan: business support services, aerospace related manufacturing, and general manufacturing. 10. Executive Session Mr. Lane adjourned the meeting into executive session at 5:04 p.m. pursuant to Texas Government Code §§551.072 and 551.087. He announced the meeting back into regular session at 5:24 p.m. The subjects posted in the Notice of Meeting were deliberated, and no votes or further action were taken on these items in executive session. SAFB Main Gate Ms. Cowling moved to approve the change order as recommended by the staff, not to exceed $110,000. Seconded by Mr. Gustafson, the motion carried unanimously Stanley Building Mr. Gustafson moved that the WFEDC authorized Leo Lane to negotiate and finalize the sale of the Stanley Building to Rise Capital for not less than $2.5 million. Seconded by Ms. Cowling, the motion carried unanimously. 11. Adjourn The meeting adjourned at 5:27 p.m. LEO LANE, PRESIDENT 5