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4A Wichita Falls Economic Development Minutes - 06/18/2007MINUTES OF THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION JUNE 18, 2007 Present: Members: Gary Shores, President Bo Stahler, Vice President Bill Altman Dave Lilley City Council: Lanham Lyne, Mayor Charles Elmore, Council Liaison City Staff: Matt Benoit, Assistant City Manager Bill Sullivan, City Attorney Linda Merrill, Recording Secretary BCI: Tim Chase, President - BCI Kevin Pearson, VP of Economic Development Guests: NEW: Ray Zukowski, Senior Vice President, Customer Experience Mitchell Carroll, Senior Director, Operations Planning Midwestern State University: David Wierschem, Ph.D., Special Assistant to the Dean and Assistant Professor of MIS, Dillard College of Business Administration Absent: Dick Bundy CALL TO ORDER The meeting was called to order at 3:05 p.m. The Board then turned its attention to Item VI, below. II. APPROVAL OF MINUTES - APRIL 24, 2007 Dave Lilley noted that his surname is misspelled in the minutes (Lillie). Bill Altman made reference to a motion that was made and seconded (pages 11 and 12), but the actual wording of the motion was omitted. 2 The Board deferred further action on approval of the minutes until the next meeting. III. CONSIDER APPROVAL OF COVENANTS AND RESTRICTIONS FOR THE WICHITA FALLS BUSINESS PARK IV. CONSIDER APPROVAL OF THE WICHITA FALLS BUSINESS PARK By- LAWS V. CONSIDER APPROVAL OF DEVELOPMENT GUIDELINES FOR THE WICHITA FALLS BUSINESS PARK Mr. Chase declared that he mailed out marked -up versions of the Bylaws, Covenants and Restrictions, and Development Guidelines. He noted there are inconsistencies in the Development Guidelines, but he is working with the consultant on those issues. VI. CONSIDER AN ECONOMIC DEVELOPMENT INCENTIVE AGREEMENT WITH NEW CUSTOMER SERVICE, INC. Mitchell Carroll, Director of Operational Planning, introduced Ray Zukowski Senior Vice President of NEW Customer Service, Inc. Mr. Zukowski thanked the Board for meeting with them today. He enjoys making sure that NEW is part of the community. NEW is the nation's leading independent provider of extended service contracts for all types of consumer products, for retailers, home service providers, and manufacturers. The company currently captures about 70% of the retail market in this field, and maintains approximately 140 million consumer contracts on file. The company was founded in 1983; Mr. Zukowski joined it six years ago after being employed by General Electric. He went through GE's Executive Management Training School. A lot of unfavorable events were occurring in the marketplace when he joined the company. He was attracted to NEW because he was asked to help the company grow (as opposed to being asked to help downsize a company, or help to move a company overseas). He became NEW's 600th employee; now there are 3,600 employees. They reached over Two Billion Dollars in incremental sales for their clients this year. The company provides coverage for over 100 million consumers through what are commonly referred to as service plans, protection plans, or extended warranties. NEW offers customized programs in many categories, including electronics, computers, jewelry, and fitness equipment. The company is open 24 hours a day, 7 days a week, 365 days a year. (Only about 10% of their workforce is needed during the 11:00 p.m. to 7:00 a.m. timeframe.) 3 Companies like to do business with NEW because it is a turn -key solution. The company designs a program for their clients. NEW has an in -house actuarial department. It shows its clients how to market, price, and sell the extended coverage plans. A lot of its clients do not pay commissions for this added coverage. NEW designs them for the ease of the consumer. He noted that Consumer Reports states that protection plans can be a good thing (the first favorable rating in 30 years). NEW handles customers' complaints when a problem arises that is covered under the extended warranty. The company provides parts and service; sets up delivery networks; adjudicates claims; and pays the service provider. It reports back to the client and insurance companies that help provide the underwriting (such as AI and AIG). Customer satisfaction is the company's benchmark for success. J.D. Power and Associates has recognized NEW for excellence under its Certified Call Center Program for the past three years. In addition, NEW was the first to score 100% on J.D. Power's internal audit. The firm does not differentiate NEW's business from others, whose calls would also include requests for addresses, or to check the status of a payment. Every call made to NEW is from someone who is unhappy with a product. NEW operates seven communication centers: in Virginia, Florida, Montana, South Dakota, Oregon, Kansas, and the Dominican Republic. Mr. Carroll noted that NEW has only done hiring in four states. Their employees have taken their jobs with them when they relocated. There are 2,500 on -call representatives, as well as 375 work -at -home agents. The company offers good support for the work -at -home employees. Fifty support staff also work from home to assist them. It is an answer to the U.S. sending work overseas. Councilor Elmore noted that he liked the fact that it allows for U.S. citizens to provide service calls. The company handles coverage for a wide variety of goods. It has to be able to repair or replace anything for which it has provided coverage — from diamond rings to weed whackers to electric guitars. It handles claims efficiently, cutting checks twice a week. They have a long list of partners, including Best Buy, Wal -Mart, AAFES, Lowes, and K -Mart. They have received partnership of the year awards from several companies. Informational sessions on working for the company will be conducted at MSU's Clark Student Center on June 20 at 7:00 p.m., followed by two sessions on June 22 at 9:00 a.m. and 11:00 a.m. Applicants will complete an on -line application, take a computer navigation assessment, and undergo a fact - finding phone interview with a company recruiter. Most of the hiring will be done over the Internet and telephone. The company's recruiter is set up in Montana. The company feels that, since the work will be done from the home, the interview should take place in the home, as well. 4 There are certain requirements, such as minimum standards for a PC, and a dedicated phone line, that applicants must be able to meet. In addition, they will be tested for their aptitude at spatial thinking, for the employees must be able to visualize how connections are made into a television, computer, telephone, or DVR. Mr. Zukowski noted that training will be conducted at Midwestern State University. Once training has been completed, the company will hire 20 -40 new employees. Their duties will be handling service calls and troubleshooting. If a technician needs to be dispatched, that will be arranged through a third -party network. NEW offers five weeks of hands -on training, including company orientation, program overview, continuous supervisory support, instant messaging, and coaching sessions. Mayor Lanham Lyne noted that the training will occur in two classrooms in the Dillard building. He then recognized David Wierschem, the Vice Dean at the Dillard College of Business at MSU, avowing that he has been invaluable in coordinating and preparing the classrooms for use in this endeavor. Bo Stahler asked how many agents NEW hoped to gain in Wichita Falls. Mr. Zukowski — stated that they have not yet found a community that has overshot their commitment. Mr. M stated that they hope to get approximately 300 workers. They hired a firm that researched 237 cities. That list was reduced to ten cities. NEW chose two cities out of that list — Wichita Falls and Lawton. Mr. Altman asked if the $9.50 per hour salary is the entry level salary, and if any benefits were given to employees. Mr. Zukowski affirmed that $9.50 is the entry level salary, but noted that no health care benefits are provided. Those employees who work in excess of 30 hours per week are given a free DIRECTV subscription, and there are incentives to make additional money. Agents enjoy six days of paid holidays. Mr. Carroll added that they have the option of taking off more time as unpaid leave. The profile of a NEW Work -At -Home agent is one who would bring to the family a secondary income, yet who cannot work outside the home. Benefits are already furnished by the primary wage earner. Mr. Carroll noted that it could be the spouse of a military member who has children 7 -10 years of age. Children of that age are more capable of taking care of themselves when they get home from school, yet parents may not want them to be home alone. He cautioned, however, that this job is not a substitute for daycare. Councilor Elmore asked how much time an agent spends sitting in front of the telephone. Mr. Zukowski replied approximately 45 minutes per hour. Mr. Carroll added that additional time is spent in online coaching sessions and in online meetings. Most calls run from 10 to 12 minutes. Mr. Altman noted that the MOU is not written quite as thoroughly as usual. He pointed out his areas of concern: (1) there is no maximum number of jobs indicated for 5 budgetary purposes; (2) the MOU references payment for the number of verified positions created, but does not specify how long they have to be in existence; and (3) the phrase "training operations" needs to be clearly defined, as NEW performs not only on- location training, but also continuous training over the Internet. Mr. Chase replied that the training operation is limited to Wichita County. If NEW ceases operations in Wichita County, it would be assumed that they are gone. Mr. Altman noted that for clarity, it would help to specify on -site training. Mr. Altman noted that the Board typically pays for 40 -hour jobs. These are 32- hour jobs. He questioned whether the Board should pay $1,700 instead of the $2,000 typically paid for 40 -hour jobs. Mr. Chase agreed that $2,000 per job created has been paid in the past, but the wages had been in the $7.50 per hour range. Mr. Altman pointed out that those jobs included benefits. Mr. Chase stated the decision was made to keep the per job number at a minimum to offset the reduced hours and lack of health benefits. Mr. Altman asked about the company's turnover rate, and whether employees are paid during the training period. Mr. Zukowski noted that trainees are on the company's payroll. He stated in the beginning, other than the "brick and mortar' employees, there was 100% attrition. They did not do well at either profiling or selecting communities. Attrition will now be well below 100 %. Mr. Altman asked how large an area these agents would serve. Mr. Zukowski replied that they will serve the entire United States. Mr. Chase noted that, assuming a "yes" vote from the Board today, approval of the agreement would be presented to the City Council the following morning. The media will be present, and the information sessions will be publicized. Classes for those hired will begin on August 6; there will be 20 students in morning classes, and 20 students in evening classes. It is important that not everyone apply for a position at one time, but instead to have a fluid, constant number of applicants. Efforts will be made to come up with a strategy to sustain a measured response. Mr. Altman asked if the company was receiving funds from any other EDC, to which Mr. Zukowski replied negatively. Mr. Altman questioned whether there should be language that requires at least a certain percentage of hires should be from Wichita County. President Shores said he and Mr. Chase had discussed this issue, and decided the best option was to try to limit it to the trade territory. Mr. Altman expressed his appreciation to Mr. Zukowski. He noted that he came in with the inclination to not vote for more than $1,700 per job created. However, NEW has made a significant investment in this project, and he appreciated the presentation. President Shores concurred, stating that today's presentation was excellent, and the company's earlier team made a great presentation, as well. R Mr. Zukowski and Mr. Carroll thanked the Board and left the meeting. Mr. Chase commended Dr. Chelte (Dean of the Dillard College of Business Administration at MSU) for his assistance. The NEW officials liked the facility. The classrooms have all the "bells and whistles," with even a satellite on the roof. The company will pay MSU a lease for the two conference rooms for one year, and for one classroom for three years. Bill Altman moved, seconded by Dave Lilley, that the MOU be approved as amended. President Shores noted that an amendment to the MOU has been made and seconded to set the maximum number of jobs at 300; clarify the definition of training operations to specify on -site training; and change the definition of verified positions to include that the positions must be in place for a minimum of six months before payment will be made. The Board voted unanimously to approve the MOU with NEW, as amended. Mr. Lilley asked how the figure of 300 employees was determined. Mr. Chase noted there are a certain number of folks hired who will ultimately leave the community. The $2,000 figure is much lower than the amount that has been used for some time. It is more in line with no benefits and the transient nature of the job. Mr. Lilley noted that these jobs would provide employment opportunity for many military affiliated families that do not have a secondary wage earner. They can work while they are here and contribute dollars back into the community, whether it is for six months or two years. Mr. Altman noted that Wichita Falls and Lawton were undoubtedly chosen due to Fort Sill and Sheppard AFB. Mr. Chase added that Midwestern was also a key factor. In addition, Wichita Falls has a limited call center representation, which indicates there is some mentality in the community that understands customer service. Mr. Shores noted that he is leaving town at the close of this meeting. Discussion was then had regarding the need to obtain his signature on the revised MOU. When it was mentioned that Mr. Stahler could sign in his stead, City Attorney Bill Sullivan noted that the Board's Bylaws require the President to sign all contracts. The Secretary- Treasurer is only authorized to sign and endorse checks and similar items. Mr. Stahler noted he is the Vice - President. Mr. Sullivan noted the Bylaws only call for a President and a Secretary- Treasurer. According to Mr. Benoit, former Board member Jim Berzina is the Board's Secretary- Treasurer. Mr. Chase offered to make the changes to the MOU on his laptop and print the document today for President Shore's signature. 7 Mr. Altman urged the staff to determine what is needed to amend the bylaws to allow the Vice - Chairman to sign documents on behalf of the Board in the Chairman's absence. VII. ADJOURN INTO EXECUTIVE SESSION, AS AUTHORIZED BY SECTION 551.072 OF THE TEXAS GOVERNMENT CODE The Board met in Executive Session from 4:16 p.m. until 4:55 p.m., as authorized by Section 551.072 of the TEXAS GOVERNMENT CODE. VIII. UPDATES AND DISCUSSION ON OTHER ECONOMIC DEVELOPMENT ACTIVITY There was no report. IX. ADJOURN. Mr. Altman moved for adjournment. Seconded by Mr. Gilley, the meeting was adjourned at 5:00 p.m. , � 4 / ary Wores, thairman