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4A Wichita Falls Economic Development Minutes - 11/27/2006MINUTES OF THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION NOVEMBER 27, 2006 Present. Members: Gary Shores, President Bo Stahler, Vice President Bill Altman Dick Bundy Dave Lilley Charles Elmore City Council: Lanham Lyne, Mayor City Staff: Matt Benoit, Assistant City Manager Bill Sullivan, City Attorney Dave Clark, Director of Community Development Scott Taylor, Director of Public Works Linda Merrill, Recording Secretary BCI: Tim Chase, President Kevin Pearson, VP of Economic Development Kay Yeager, Military Affairs Committee Wichita Power Transmission: Gary Wells, General Manager Texas Transland: James Frank Carter Aviation: Jay Carter I. CALL TO ORDER. Gary Shores called the meeting to order at 4:02 p.m. II. APPROVAL OF MINUTES — AUGUST 14, 2006. Bo Stahler moved, seconded by Bill Altman, that the minutes be approved. The motion carried. Wichita Falls Economic Development Corporation November 27, 2006 Meeting Minutes Page 2 III. CONSIDER AN ECONOMIC DEVELOPMENT INCENTIVE PACKAGE FOR WICHITA POWER TRANSMISSION INC. Wichita Power Transmission (WPT) has outgrown its 7,500 square foot facility on Fisher Road. It desires to acquire the building it currently leases, in addition to a nine - acre plat, on which it would build a 21,000 square foot building. The company will also add 13 new jobs. General Manager Gary Wells noted the company has hired 5 of the 13 employees since October 1. Mr. Shores asked what job categories were represented. Mr. Wells referred him to a handout. One of the three permanent assembly jobs has been filled. The Scheduler /Expediter position, to be filled on December 4, will become permanent in 90 days. The purchasing manager and outside salesman positions are permanent, as well, and have been filled. Mr. Shores asked if the salaries listed in the handout included benefits. Mr. Wells replied the figures are just straight salaries. Dick Bundy is the company's architect. The plans are completed and going out for bids early next month. The six -month construction process should begin in January 2007. Kevin Pearson noted the company originally wanted to find an existing building, but ultimately decided that new construction is the best fit. He added that the company's lack of space is quite evident, as a lot of its inventory has to be moved outside during the working hours, and brought back into the building at night. Mr. Altman moved for approval of the economic development incentive package for Wichita Power Transmission, Inc., subject to the amendment of the MOU to reflect October 1 as the beginning date for employee calculation. Bo Stahler seconded the motion. The motion carried, with Dick Bundy abstaining. IV. CONSIDER AN ECONOMIC DEVELOPMENT INCENTIVE PACKAGE FOR SHARP IRON, INC., LP, BW FABRICATOR, INC., LP, AND /OR TEXAS TRANSLAND, INC., LLC. Mr. Chase remarked that James Frank intends to acquire and relocate a business to Wichita Falls. Communities are stimulating this new trend by the use of 4A monies. Mr. Frank expressed his appreciation to the Board. He gave a brief update on Sharp Iron, noting that the company currently has 57 employees. Pay is up, and they are moving the 401 k from a 15% to a 50% match effective January 1. He then turned to his intent to purchase Transland, a company in California. Sharp Iron and BW Fabricators have tried to do business with Air Tractor, a company in Olney that is the world leader in agricultural aerospace airplanes. But Air Tractor makes their products in- house, with the exception of purchases it makes from Transland. It makes economic sense to have Transland close to Air Tractor rather than across the country. Transland currently has 17 employees. Although it will have fewer employees after relocation, Mr. Frank does intend for the company to grow. Wichita Falls Economic Development Corporation November 27, 2006 Meeting Minutes Page 3 Mr. Stahler asked if there is room at Sharp Iron's location. Mr. Frank said he could make it work, but he is looking for an existing facility. Transland has to be separate from Sharp Iron and BW, from a liability and a marketing standpoint. It is an original equipment manufacturer, not a contract manufacturer. Sharp Iron and BW will do some of the manufacturing. A lot of the parts have to be assembled, which will occur at Transland. The inventory needs to be at Transland's facility. At least 75% of the business will be in after - market parts sales. Mr. Stahler asked if any of Transland's employees would relocate to Wichita Falls. Mr. Frank replied that none of them are relocating. Mr. Shores asked if Transland had other customers. Mr. Frank replied that it had a customer in Georgia, but he would not be doing business with them. Charles Elmore asked how large a facility is needed. Mr. Frank replied a 20,000 square foot facility would work, but he would prefer a 50,000 square foot building to allow for growth. He will lease for a while because the market is very tight right now. Mr. Chase noted that the MOU is written to allow for employees at Sharp Iron and BW Fabricators to be counted in the net new job creation, if those jobs resulted exclusively from the relocation of Texas Transland. Mr. Shores asked if payment will be made to Transland, or to the entity gaining the new employee. Mr. Chase noted that Transland is required to demonstrate that payments requested are for jobs created exclusively for Transland, and Transland would receive the payments. Mr. Chase stated the job total is 25, at Mr. Frank's suggestion. Item 2.b. was added to give the 4A Board the flexibility of reconciliation, and the term "retained jobs" was deleted from the MOU, as that was a holdover from the Sharp Iron MOU. Mr. Altman interpreted the MOU to read that all three entities are part of this MOU, and it does not specify payments go only to Transland. Mr. Chase stated the presentation would have to include pieces from Sharp Iron and BW Fabricators to demonstrate which of those jobs resulted from Transland. He feels Transland should be the sole recipient of the incentive. Mr. Stahler noted that Sharp Iron and BW Fabricators should be removed from Item 2.c., if that is the case. He agrees with Mr. Altman the money could go to the entity that gains the employee. Mr. Shores stated that decision could be made at the time the payment is made. Mr. Altman moved, seconded by Mr. Stahler, that the economic development incentive package for Sharp Iron, Inc., LP, BW Fabricator, Inc., LP, and /or Texas Transland, Inc., LLC., be approved. The motion carried. Wichita Falls Economic Development Corporation November 27, 2006 Meeting Minutes Page 4 V. CONSIDER AN ECONOMIC DEVELOPMENT INCENTIVE PACKAGE FOR CARTER COPTER. Mr. Chase stated that he and Jay Carter had spoken several years about this project. There was never an opportunity to provide assistance, as there was not a history of the Board providing start-up financing for new ventures. Mr. Carter has reached a technology milestone, but a market analysis is necessary. It is proposed that the 4A Board share 80% in the cost of this analysis, not to exceed $10,000. Mr. Carter explained that Carter Copter ( "Carter ") has been working on an experimental airplane for the past seven years. Last June, it was able to slow down the rotor so that the aircraft was flying faster than the speed of the rotor. By doing so, efficiencies were achieved heretofore believed to be impossible. The military has shown an intense interest in this project. Mr. Carter has made 50 trips in the past 9 months to different branches of the military to discuss the aircraft, and is confident he will receive a contract. The challenge comes from competition with major aerospace companies that have vested interests. But a lot of people in the military like that the product comes from a small company, as there can be more flexibility and reduced costs. There is a group of retired military officers who make it their job to make sure the military has the best products available. They took on Carter as a customer on a contingency basis, and are paying the costs themselves to promote the aircraft among the military. Mr. Carter continued, noting that it has been a real education working with the military. The decision makers are facing retirement. They plan to then work for the aerospace companies, so they cater to them. However, a lot of civil service workers do not have vested interests in the major aerospace companies and are strong supporters. He explained that the aircraft is a Personal Air Vehicle, a four -place aircraft that will take off and land vertically, fly at speeds over 200 miles per hour, and have its own built -in parachute. He also has a design that would carry an Abrams tank into battle without have to have a runway. They have 16 patents, with five more pending; the law firm of Bracewell and Giuliani took the first patent on a contingency basis. Mr. Elmore asked if his manufacturing plant is located in Wichita Falls, as he was not familiar with the company. Mr. Carter replied that the company is not a manufacturer; rather, it builds prototypes. He has a hangar at Kickapoo Airport full of tooling, and enjoys a good business relationship with Redding Machine. Blue Mountain Avionics wants to become involved in this airplane. This company builds a very sophisticated autopilot. It will start the plane, ask if the pilot is ready for take -off, fly to the desired destination (avoiding the no -fly zones), and land without the pilot ever touching the stick. Mr. Bundy asked if the aircraft is limited in altitude. Mr. Carter replied that one flies up to 25,000 feet, while another design can fly at 40,000 feet. Mr. Elmore asked the 'Wichita Falls Economic Development Corporation November 27, 2006 Meeting Minutes Page 5 craft's top speed. Mr. Carter replied that a 300 horsepower diesel engine can hit speeds of 250 miles per hour at 25,000 feet. It can fly for 36 hours straight. Mr. Shores asked if there were a big market, would he anticipate the manufacturing being done locally. Mr. Carter replied that he wants to keep the final assembly, but the military will hit them with orders that will be staggering. He expects to have to go to composite shops across the country in order to meet the demand. Redding cannot absorb all of the work that will be generated. Mr. Chase noted that, beyond the military angle, there is an opportunity to commercialize some or all of this in the private sector. The purpose of the analysis is to determine if this is a viable marketplace product. The next step would be a business plan. Mr. Stahler asked if this falls into the criteria of what the Board can fund. Mr. Chase replied affirmatively, as it pertains to primary job creation. Mr. Carter added that part of the reason for a market analysis and business plan is to raise money. Georgia Tech will prepare the business plan and market analysis at a reduced rate of $20,000. This would normally cost $40,000450,000. Mr. Chase stated that feasibility is the clear first step, and then, if successful, a market study. Mr. Carter replied that he needs both done quickly to help raise money. Mr. Stahler moved to approve the funding, as long as it is legal for the Board to expend funds in such a manner. Mr. Altman seconded the motion. The motion carried. VI. APPROVE FINAL PAYMENT TO PPG INDUSTRIES AS AGREED IN AN MOU. Mr. Shores noted there is a delay in getting the information required for this item. Therefore, it was tabled until a future meeting. VII. APPROVAL OF THE DEVELOPMENT GUIDELINES FOR THE WICHITA FALLS BUSINESS PARK. Mr. Chase noted that the Conditions, Covenants and Restrictions, and the Development Guidelines ( "CCRs ") need to be approved before any property in the Business Park can be sold or transferred. There is a sense of urgency to get them approved, but they are complicated. There are three questions that need to be answered: 1. Is the management of the Business Park through the use of an Association the best course of action? 2 If yes, should the 4A Board function as the Board of Directors for that Association? 3 Will the 4A Board perform as the Development Review Board? 'Wichita Falls Economic Development Corporation November 27, 2006 Meeting Minutes Page 6 Bill Sullivan, City Attorney, questioned whether the intent is to annex the land into the City, or operate under non - annexation agreements. Dave Clark, Director of Community Development, stated the CCRs are more restrictive than current City regulations. He cautioned the Board that, should it become the Development Review Board, some of the requirements are quite detailed. The big question is the non - annexation agreement issue. Mr. Elmore asked if annexing the property into the City would solve the problem. Mr. Clark replied that non - annexation agreements can be beneficial to a potential industry. Scott Taylor, Director of Public Works, addressed the Board. Even if the Business Park remains outside the city limits, all public improvements have to be done according to City standards, so that is not a concern. However, there will be public streets in the business park that will have City street names that the City will have no authority to maintain. There is no taxation on that property, so there is no funding mechanism for street, or for landscape, maintenance. Mr. Chase noted that the Association would be created to maintain the continuity of the projects, and to collect assessments from Association members to be used for common area maintenance, such as streets. Mr. Taylor was unaware of a company able to perform such maintenance, but the City could perform the work on a contractual basis. Mr. Chase noted that non - annexation agreements have proven to be very useful in this community, as they have no statutory limitation. However, instead of the non - annexation agreements that last five to seven years, there could be a sunset provision after 20 years. He advocates remaining flexible by not annexing the property. Mr. Stahler also approved of the use of a non - annexation agreement to maintain flexibility. Mr. Bundy noted his concern is to tie the building construction into the latest approved City code. As the City will most likely annex the property at some point, he wants the properties up to code. Mr. Elmore asked if there were potential clients for the business park. Mr. Chase replied no; there were two companies here today that need space, but they faced "sticker shock" when looking at building. One local company needs an additional 100,000 square foot facility, while two other non -local companies are investigating. Mr. Benoit noted that if the 4A Board makes up the Development Review Board, those meetings will have to be posted, as well. If there is a need for private talk, that could be problematic. Mr. Sullivan stated that, if there were a developer lined up and specific plans being discussed, that would not qualify for adjournment to executive session. However, there could be authority for meeting privately if it is the initial discussion with a prospective applicant. Mr. Altman suggested a non - annexation agreement could be executed for the business park, rather than for individual businesses. The City could perform the 'Wichita Falls Economic Development Corporation November 27, 2006 Meeting Minutes Page 7 maintenance, under contract. Mr. Benoit asked if the agreement would be transferred to that particular business, to which Mr. Altman replied any company that comes in would become a party to it. Mr. Sullivan noted the entire property would be subject to the agreement. Any prospective buyer would be subject to that agreement. Mr. Stahler stated that anyone who comes in right now would receive a 20 -year benefit, while those that wait 15 years would only see a five -year benefit. Mr. Altman noted that the agreement could be renewed at a certain point in time. Mr. Chase noted the agreement would not necessarily be renewed for those who had been operating under it since year one. Mr. Stahler noted that it would have to be extended to all of the companies. The attendees agreed more research needs to be done on this issue. Mr. Chase asked the Board if they felt the Association is the right way to proceed, and that the 4A Board should be the Board of Directors as well as the Development Review Board. Mr. Shores stated it could always start out that way and be amended, if necessary. Mr. Altman opined that it would be helpful to know how some of the other business parks have handled this issue. An Association sounds simple, but the Open Meetings Act requirements may make it not the best alternative. Mr. Chase noted that an alternative would be to have the 4A Chairman represent the Board's interest on a separate board, which would not be subject to the Open Meetings Act. Mr. Lilley asked if the Board could appoint itself as a separate and distinct board. Mrs. Yeager replied that action would be circumventing the intent of the law. Mr. Chase stated that this is a unique situation. Other cities have sales tax and economic development, but they do not own a business park and operate as its Association. Mr. Benoit stated that control is either a function of the Chamber of Commerce or the BCI — someone has to own the land. How is it sold and under what circumstances? Mr. Chase replied, for example, the land is owned by the Abilene Foundation. Waco is a Foundation, as well; the park in Tyler is owned by the City, and the BCI owns the land in Wichita Falls They may be using CCRs, but they are not using an Association to guide the development. That is why the Wichita Falls Business Park is unique in the marketplace. Private businesses operate in this way (such as Alliance). Mr. Chase stated he could not think of a scenario that would be detrimental to development, simply because of the open meetings requirements. There is enough flexibility built into these documents to allow deviation. Mr. Shores noted that confidentiality issues could be handled. VIII. CONSIDER DESIGNATING THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION AS THE DEVELOPMENT REVIEW BOARD FOR THE WICHITA FALLS BUSINESS PARK. IX. APPROVAL OF THE ARTICLES OF INCORPORATION AND BYLAWS FOR THE WICHITA FALLS BUSINESS PARK ASSOCIATION. "Wichita Falls Economic Development Corporation November 27, 2006 Meeting Minutes Page 8 X. CONSIDER DESIGNATING THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION AS THE ASSOCIATION FOR THE WICHITA FALLS BUSINESS PARK AND NAMING IT AS THE ASSOCIATION'S BOARD OF DIRECTORS. Mr. Altman moved, seconded by Mr. Stahler, for approval of Items VIII through X. The motion carried. XI. THIRD QUARTER MARKETING ACTIVITY REPORT. Mr. Chase referred to samples of advertising that had been performed. Although the advertising has been exclusively for the Business Park, the logo of the region was used, which has been very well received. Mr. Chase noted the park would take time. The last aerial looked like a war zone due to the scars of irrigation. But between now and springtime, he will have obtained a pictorial representation. Carter Burgess is working on an estimate for charges for feasibility, engineering and construction drawings to put the railroad in. The estimate should be available within 30 days. Then the three landowners from whom right -of -way will be purchased will be approached. He will know the cost per linear foot; the length of time of construction; and will have in writing an agreement from BNSF that it will allow a switch off the main line. Mr. Chase noted they've had one site visit from a potential developer. They were very complimentary, but decided not to build a spec building. They would agree to create a virtual building and fill out as much of the park as would be desired, with graphics on the cost and the time of development. Three more developers are due to come to town. At that point, he would be able to come back to this Board with information on the market. If no action occurs at that point, the 4A will need to decide what role, if any, to play in construction. Mr. Stahler asked, even on a percentage basis, the company had no interest? If it were a build -to -suit scenario, Mr. Chase replied, they would be here in a heartbeat. He is hoping to find a local developer who will take a 20% risk and development can be crafted as a partnership. XII. ADJOURN. The meeting adjourned at 5:45 p.m. Gary Wores, President