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4A Wichita Falls Economic Development Minutes - 08/18/2022 MINUTES OF THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION August 18, 2022 Present: Leo Lane,President § WFEDC Members Phyllis Cowling, Secretary-Treasurer § Darron Leiker § Brent Hillery § Stephen Santellana, Mayor § Mayor& Council Paul Menzies, Assistant City Manager § City Administration Blake Jurecek,Assistant City Manager § R. Kinley Hegglund, Jr., City Attorney § John Burrus, Director of AT&T § Terry Floyd, Director of Development Svcs § Jon Waltjen, Airport Administrator § Chris Horgen, Public Information Officer § Paige Lessor, Recording Secretary § Richard Gordon, Interim President/CEO § WFCCI Taylor Davis, Dir of Bus Retention&Expansion § Katie Britt, VP of Marketing § Ryan McGowan, Director of Bus Intelligence § Karen Bivona, Office Manager § Matt Anderson, Esquire § Sherrill &Gibson, Attorneys at Law Gerek Foote, Founder § Compass Container Works Corporation Glenn Barham § Lynn Walker, Writer § Times Record News Absent: David Toogood, Vice President § WFEDC Member 1. Call to Order Mr. Leo Lane called the meeting to order at 2:31 p.m. 2. Consent Agenda a. Approval of Minutes (July 21,2022) Ms. Cowling moved to approve the consent agenda. Seconded by Mr. Lane, the motion carried 4-0. WFEDC Minutes 08/18/2022 Page 1 of 5 b. Financial Report Mr. Menzies stated that sales tax is doing well and running ahead. If the current trend line continues, year-end revenue will be approximately S5 million. The unencumbered fund balance has increased significantly since the last report. Several projects have expired, and those projects are listed in the financial report. 3. Discussion and possible action related to authorizing board president to execute a contract with Panda Biotech,LLC regarding contract term date: Ms. Taylor Davis addressed the Board and stated that Panda Biotech is requesting an extension on its current contract term. The Company continues to make progress on its Central Freeway facility, including building renovation and equipment purchases. The Company is also moving forward in its bond process. The term date on the contract is September 1 of this year, and they would like to extend it until November 1, 2022, which would be a two-month extension. During the extra time, Panda Biotech can continue to pursue the bonds for funding through two different avenues that it feels are very promising. The Company is currently up to date on the obligations set forth by the Board and is willing to continue to make those payments and provide timely updates to the Board about the progress on their facility and their bond process. Ms. Cowling clarified that the extension date was November, not October. Ms. Davis confirmed that November was the correct date. Ms. Cowling also ensured that everything in the agreement would stay the same and only the date would change.Ms.Davis agreed that was correct. Mr.Lane stated that he and Mr.Toogood met with the Panda folks and discussed the bonds and the progress. He explained that the Company had decided to go the municipal bond route,and now they are going the private equity route. His impression is that they may be able to meet the October date, but they didn't want to get locked in on that date. Mr. Lane stated that he and Mr. Toogood were pretty encouraged to hear that they have many years of product sold. Ms. Cowling noted that she gets the impression that this may be the process of a startup. It has starts and stops and is not a smooth path. It seems like the relationship will be ongoing since the agreement has been restructured, and the Board is receiving payments with interest. 4. Discussion and possible action on a request by the City of Wichita Falls for local match funding related to various airfield projects and equipment for use by Sheppard Air Force Base Mr.John Burrus addressed the Board and stated that Sheppard Air Force Base had reached out to the City, and discussions have been ongoing for about eight months. The total project cost is approximately$1,034,000. The Federal Aviation Administration indicated they would help with two of the requested projects: snow removal equipment and channel bags equipment. Since the last meeting, media converters have been added and have not been discussed with the Board. Media converters convert an analog signal to a digital signal on the wing sensor equipment. The City is asking for $133,979 to support these projects. These projects will help Sheppard's long- term viability as a training base, and they will also help our commercial aviation system by assisting with snow removal. It is a win-win for Sheppard,the City, and the public. Ms. Cowling asked if this project would get bid out. Mr. Burrus said yes, and Sheppard has already been working on these items. The channel banks are the only sole source item. Once the Board and Council approve the project, the City will move forward with the purchases in WFEDC Minutes 08;18:2022 Page 2 of 5 September. Mr. Burrus has instructed Sheppard and the FAA that the project will start in October due to specifications and BioAmerica requirements. Mr. Leiker asked Mr. Burrus when delivery of the equipment might be expected. Mr. Burrus stated that it would probably be next spring. Mr. Burrus said this is an excellent project because it supports Sheppard Air Force Base and illustrates how well the City and the airport work together with Sheppard. It makes Sheppard a safer airfield. 5. Discussion and possible action on a request by the City of Wichita Falls related to hangar modifications at Wichita Falls Regional Airport Mr. Burrus reminded the Board about a company that has been looking to bring a repair and maintenance company into the region. One of the requests that the Company made was to modify the Hangar 2 door to accommodate the high tail assembly seen on the Embraer 145. This Company works on regional jets, which is what services Wichita Falls right now. The Company also requested a 480-volt modification in the hangar to accommodate the APU systems that power these aircraft.They also asked for an air compressor to run their air tools. If the City is unsuccessful in attracting this Company, there are a lot of other companies out there that would be interested in this as well. If approved by WFEDC today, construction on these projects will start right after the city council meeting in September. Local companies will be doing the work. This type of work can be kept in the local community so that the money will stay in the community. Mr. Lane asked if there was a tenant for the airport yet. Mr. Burrus said there is not one under contract. Then, Mr. Lane asked if they were getting close on a contract. Mr. Burrus stated that the Company would not sign a contract unless the modifications were made. The Company informed us that once the modifications were complete,they would check to ensure they met their needs and then sign the contract that day. He said it is highly likely that this Company will enter into a lease agreement with the City and eventually request assistance from the WFEDC committee. And on the very slight chance this deal doesn't work out, the department will work with the Chamber to bring in another company. 6. Discussion and possible action related to a loan incentive for Compass Container Works Corporation DBA Proforma Corporation Ms. Davis addressed the Board and introduced a metal container manufacturing startup company, Compass Container Works. This Company is interested in pursuing Wichita Falls as the location of its plan for production. Should they choose Wichita Falls, the Company is looking for a 30,000 to 50,000 square foot facility and are expected to employ 35 employees within their first 120 days, with up to 70 employees within their first year after receiving its assembly certification. The Company is looking to meet the demand of this market by being able to pursue metal container manufacturing in which our current market does not have as much supply as is needed. They plan to have production start around the first quarter of 2023, and the total capital expenditure for the plant is expected to be approximately $6 million. Ms. Davis introduced one of the founders and partners of the project, Mr. Gerek Foote. Mr. Foote addressed the Board and explained what the Company would manufacture. He stated they want to be a premiere supplier of beer kegs and chemical containers to the US market. He said that he currently imports a large number of metal containers from Europe and Asia. There is just no manufacturing for these products here in the US. The goal of the Company is to provide these containers locally. They would like Texoma to be the Company's home because there is a lot of ASME and welding experience in the area. The territory is a very cost-effective region to WFEDC Minutes 08/18/2022 Page 3 of 5 distribute the products. Mr. Foote stated that they work with customers from Denver to California and New York City to Houston. They are nationally geared but need to find the right location and feel like this area really fits the bill. He discussed the transportation and supply chain issues from Europe and Asia that have occurred over the last year and a half. They think now is the right time to bring this manufacturing back to the US. They also feel that American chemicals and American beer should be placed in American containers. Mr.Foote stated that roughly 1.5 million kegs are imported into the US annually.They feel that this project fits in with the state of the US, creating jobs and trying to bring manufacturing back home. He said there is a significant need, and they already have the market for it. He also discussed the freight problems and high steel prices. He said the freight from Europe to the US went from $2,000 per container to $15,000 per container. He described the port congestion issues, and the way to alleviate these problems is by utilizing American labor. He explained that the first phase of the project would focus on kegs. He stated that the keg would be their base container. He said that they could move hundreds of thousands of kegs reasonably quickly, and it would help employ people and create jobs quickly. Their sales goal for the first year is roughly$10 million. They already have preorders for over$18 million for the first year. He said they are looking at 30,000 to 50,000 square feet, and they are looking at multiple locations in the Texoma region. There will be many simple jobs for the beer keg line, such as shipping clerks and typical factory jobs that pay well and have benefits. They already have their HR person on payroll and researching health insurance. He discussed capital and stated that roughly $4 million would be spent on equipment. He discussed the type of equipment that would be used. They would use weld-in cells, automated welding to where the person sets everything in the cell, and it is automatically welded. He stated that they want their product to be inspected at every step of every process. Some of the imported kegs are pretty inferior; whether they come from Spain, Germany, or Asia, they all have quality issues. Phase two of the project would involve chemical containers. Mr. Foote stated that they are already in touch with Bureau Veritas to get the process moving for the ASME certification. The chemical containers will involve more technically skilled labor, and when they will need genuine welders and draftsmen. The containers are custom containers used for hauling hazardous chemicals.The certification costs a lot of money,and they have already been in touch with schools in Lawton and Vernon College to build those relationships so they could pull welders as they graduate. His partner in this project is Eddie Hilliary, who owns Hilliary Communications based in Lawton, and they have a group of local investors chomping at the bit to see things progress. The investors are all local businessmen and are probably well known to the Board. He stated that they have a solid team and a very solid plan. Ms. Cowling asked Mr. Foote to go over the timeline of the beverage line and chemical lines. Mr. Foote stated they want to be operational on the beverage line by January 1, 2023. The first press is on order already, and their goal is to be in production by January 1. The second line will come four to six months after that. It takes roughly five months to achieve an ASME certificate. It is a lot of work dealing with inspectors and Bureau Veritas,and it is expensive. Once that is complete, they will be moving into the industrial lines. Mr. Lane asked if they were looking for an existing facility or building one. Mr. Foote stated that they are looking for an existing facility. They have been looking in Wichita Falls, Lawton, and Elgin. They want to find the right fit, so they approached the Chamber. They want to WFEDC Minutes 08/18/2022 Page 4 of 5 move forward as fast as possible. They don't want to waste their chance by finding a press earlier than anticipated. 7. Executive Session Mr. Lane adjourned the meeting into executive session at 2:53 p.m. pursuant to Texas Government Code §§ 551.087 and 551.071. He announced the meeting back into regular session at 3:32 p.m.The subjects posted in the Notice of Meeting were deliberated,and no votes or further actions were taken on the items in executive session. 8. Motions Panda Biotech Extension Request Mr. Hillery made an amended motion to allow WFEDC President to engage,sign and ratify a two-month maturity date extension between Panda Biotech, LLC and WFEDC. Seconded by Ms. Cowling,the motion carried 4-0. City of Wichita Falls request for local match funding related to various airfield projects and equipment for use by Sheppard Air Force Base Mr. Leiker moved to approve the local 10% match funding in the amount of$133,979 related to various airfield projects and equipment for use at Sheppard Air Force Base. Seconded by Mr. Hillery, motion carried 4-0. City of Wichita Falls Hangar Modification Funding Request Mr.Leiker moved to approve$118,220 for hangar modifications at Wichita Falls Regional Airport. Seconded by Ms. Cowling,the motion carried 4-0. Loan Incentive for Compass Container Works Corporation DBA Proforma Corporation Ms. Cowling moved to provide a forgivable loan not to exceed and for a total maximum obligation of$1.5 million to Compass Container Works Corporation dba Proforma Corporation. as presented. The loan funds will be distributed in two equal installments, with the first immediately payable upon execution of the performance agreement and promissory note and the second after gaining ASME certification and expansion of the second industrial line, estimated to take place by the end of 2023. The loan will be forgiven at a rate of 20%of the annual payroll per year. not to exceed six years. and will be secured by an irrevocable letter of credit. Seconded by Mr. Leiker, the motion carried 4-0. 7. Adjourned. The meeting adjourned at 3:36 p.m. Leo Lane, President WFEDC Minutes 08/18/2022 Page 5 of 5