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4A Wichita Falls Economic Development Minutes - 08/09/2010MINUTES OF THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION August 9, 2010 Present: Gary Shores, President § Members Lanham Lyne § Dick Bundy § Gary McLendon § Dave Lilley § Glenn Barham, Mayor § City Council Linda Ammons, Councilor at Large § Darron Leiker, City Manager § Jim Dockery, Assistant City Manager /CFO § Kevin Hugman, Assistant City Manager § City Staff Miles Risley, City Attorney § Linda Merrill, Recording Secretary § Tim Chase, President Kevin Pearson, Vice President 1. CALL TO ORDER § Chamber of Commerce & Industry President Gary Shores called the meeting to order at 4:02 p.m. 2. APPROVAL OF MINUTES (JULY 20, 2010) Lanham Lyne moved, seconded by McLendon, that the minutes of July 20, 2010 be approved. The motion unanimously carried. 3. EXCALIBUR PAINT & COATINGS RETENTION & EXPANSION PROJECT 1 Miles Risley explained the intent was for the WFEDC to vote on whether to approve the Memorandum of Understanding, and also empower the President to execute a Performance Agreement. Mr. Shores asked that Kevin Pearson highlight the changes. Mr. Pearson complied. • The negotiation team deleted the requirement that Funston repay the $1.5 Million at the end of the 5t1i year of operations if he had earned $92 Million. This term had not been discussed with Mr. Funston until the end of the negotiations, and the negotiation team felt that was not fair to him. In the future, this will be discussed at the start of negotiations. • Mr. Funston will submit receipts to Kevin Hugman for reimbursement. ' Proposed incentives for Excalibur Paint & Coatings, Ltd. and related entities, in an amount of up to $1,500,000 in working capital to provide funds for the "costs" for land, buildings, equipment, facilities, expenditures, and improvements of Excalibur's paint manufacturing facility at 1116 E. Scott Ave. and other locations in Wichita County, including making the attached Findings and Allocations and Authorizations relating to said project, authorizing the President of the WFEDC to execute a Memorandum of Understanding and Performance Agreement with said entity and documents related thereto, including notes, leases, and /or security agreements, and amending the 4A budget to account for the allocation of said funds. • The WFEDC will not make the additional $500,000 loan in Phase 3 if sales hit $12.6 Million. • The required number of employees was increased to 18 new positions in the first 12 months. • Mr. Funston will not be allowed to move production to another community. • Mr. Funston will not be allowed to license the technology to another manufacturer. Dick Bundy asked the identity of Funston's partners. Mr. Chase noted there is `belt and suspenders' language in the agreement in the event there are any partners. Linda Ammons stated that Randy Funston's wife is named Deanna, rather than Lana, as listed in the paperwork. Mr. Dockery questioned how long Funston is require to keep the created jobs. Mr. Pearson said the original MOU required immediate repayment of the loan should Excalibur fail to maintain the level of employment after one full year after the Performance Agreement. Tim Chase added that there is no repayment if the jobs are kept for one year. Mr. Dockery asked whether Funston has to pay back the money if employment drops below 18 and he never its to Phase 2. Mr. Chase noted that Funston has to make installment payments beginning in the 25 month. If he has not created a significant number of jobs by then, he will not get credit for that employment and would have to pay back the money. Mr. Risley noted that Funston has to repay the full amount of the incentive if he reduces employment by more than 50% within 60 days. Mr. Leiker asked if he had decided to stay in his current location. Mr. Chase said that he had, and he has seven acres behind the plant if he needs to expand. Dick Bundy moved to empower the President of the WFEDC to approve the Memorandum of Understandings and authorizing the President to execute a Performance Agreement in a form to be gpproved b by im (which will be substantially presented to the Board today). Seconded by Lyne, the motion unanimously carried. 4. EXECUTIVE SESSION 2 President Shores adjourned the meeting into executive session at 4:27 p.m. pursuant to TEXAS GOVERNMENT CODE § §551.071, 551.072, and 551.087. He announced the meeting back into regular Executive Session in accordance with Texas Government Code § 551.071, consultation with attorney on matter involving pending or contemplated litigation or other matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with the Texas Open Meetings Act (including, but not limited to, legal issues related to potential projects for the development, retention, or expansion of bedding manufacturing, clutch manufacturing, aircraft manufacturing, washing machine manufacturing, medical device refurbishment, teleservice operations, coating manufacturing & distribution, gas compressor equipment manufacturing, latex -foam manufacturing, biodiesel manufacturing, and projects with other entities named in this agenda for creation and retention of primary jobs (as defined by Tex. Local Gov't Code § 501.002)). Executive Session in accordance with Texas Government Code § 551.072, to deliberate the purchase, exchange, lease, or value of real property interests due to the fact that deliberation in an open meeting would have a detrimental effect on the position of the City in negotiations with a third party (including, but not limited to, the purchase and /or value of various real property interests to be used for the development, retention, or expansion of bedding manufacturing, clutch manufacturing, aircraft manufacturing, washing machine manufacturing, medical device refurbishment, teleservice operations, coating manufacturing & distribution, gas compressor equipment manufacturing, latex -foam manufacturing, biodiesel manufacturing, and projects with other entities named in this agenda for creation and retention of primary jobs (as defined by Tex. Local Gov't Code § 501.002)). Executive Session in accordance with Texas Government Code § 551.087, to discuss or deliberate the offer of a financial or other incentive to a business prospect that the WFEDC seeks to have, locate, stay, or expand in or near the territory of the City of Wichita Falls and with which the WFEDC is conducting economic development negotiations (including, but not limited to potential projects for the development, retention, or expansion of bedding manufacturing, clutch manufacturing, aircraft manufacturing, washing machine manufacturing, medical device refurbishment, teleservice operations, coating manufacturing & distribution, gas compressor equipment manufacturing, latex -foam manufacturing, biodiesel manufacturing, and projects with other entities named in this agenda for creation and retention of primary jobs (as defined by Tex. Local Gov't Code § 501.002)). session at 4:02 p.m. He noted that the subjects described in Footnote 2 were deliberated, and no action was taken on these subjects in executive session. 5. BEDDING MANUFACTURER PROJECT 3 Mr. Lyne moved to approve the proposed modifications to the bedding manufacturing project to authorize subordination of selected liens thereunder (not including any subordination to additional funds to be received from third parties, but not prohibiting such subordination to lease agreements) and other amendments to Performance Agreement obligations to enable the bedding manufacturer to receive additional funds from private entities, and making the findings and allocations and authorizations as provided in the agenda. Seconded by McLendon, the motion unanimouslv carried. 6. BUDGET DISCUSSIONS Mr. Chase gave an overview of the proposed budget requests for WFEDC funding: Program Amount Explanation Salaries of the Chamber's 100% Vice - President's salary Increased President's salary President and VP of Economic 50% President's salary contribution from 40% Development Total: $172,901 Regional Marketing Initiative Historically: $101,802 Increased request by $17,000 for Economic Development Wichita County: $20,000 Workforce Development and $113,163 for both initiatives Reduced both to reflect actual Community Wide Marketing costs for salary and benefits TOTAL REQUEST $393,540 Reduced from last year's request of $399,000 Mr. Dockery asked whether this proposal would go above the 10% annual revenue that can be allocated toward promotional expenses. Mr. Chase said the only portion out of that pot that would have to be watched would be the $118,000 request for the Regional Marketing Initiative. Mr. Chase also advocated last year's expenditure of $10,000 be again budgeted to offset some of the time spent by employees at City Hall on these economic development issues. 6. ADJOURN The meeting was adjourned at 5:17 p.m. Ax� / c2 (jARYS46RES, PRESIDENT 3 Proposed modifications to Bedding Manufacturer Project to authorize subordination of selected liens thereunder and other amendments to Performance Agreement obligations to enable bedding manufacturer to receive additional funds from private entities - -- including making the attached Findings and Allocations and Authorizations relating to said project, and authorizing the President of the WFEDC to execute subordination agreements and all other documents necessary to provide for additional private investments to be received for said project. Findings: The proposed Projects are found by the Board of Directors to be in full compliance with the Bylaws and Articles of Incorporation of the Wichita Falls Economic Development Corporation and the Texas Development Corporation Act of 1979 and Chapters 501 through 504 of the Texas Local Government Code and are land, buildings, equipment, facilities, expenditures, targeted infrastructure, and improvements (or "costs " thereof) that: (1) are for the creation or retention of primary jobs and are required or suitable for the development, retentirn, or expansion of: (A) manufacturing and industrial facilities; (B) research and development facilities; (C) military facilities, including closed or realigned military bases; (D) transportation facilities, including airports, ports, mass commuting facilities, and parking facilities; (E) sewage or solid waste disposal facilities; (F) recycling facilities; (G) air or water pollution control facilities; (H) facilities for furnishing water to the public; (I) distribution centers; (J) small warehouse facilities capable of serving as decentralized storage and distribution centers; (K) primary job training facilities for use by institutions of higher education; or (L) regional or national corporate headquarters facilities. or (2) are job training required or suitable for the promotion of development and expansion of business enterprises and other enterprises described by this subtitle, as provided by Texas Local Gov't Code § 501.162 or (3) are promotional expenditures that advertise and publicize the City of Wichita Falls for the purpose of developing new and expanded business enterprises Allocations and Authorizations: With respect to the approved Project, the Board of Directors: 1. allocates the funds authorized herein, which shall constitute notice and publication of the Project for purposes of applicable notice provisions of the Texas Development Corporation Act of 1979, 2. authorizes the President of this corporation to execute all documents necessary to expend the funds allocated pursuant hereto, including, but not limited to, documents securing the corporation's interest in loans to business entities funded hereunder, closing documents, and a performance agreement with the business enterprise funded pursuant to this Project, in a form to be approved by the City Attorney of the City of Wichita Falls and /or attorney for this corporation, containing, at a minimum: (1) a schedule of additional payroll or jobs to be created or retained; (2) the capital investment to be made by the business enterprise; (3) the terms under which repayment must be made by the business enterprise to the Section 4A corporation should the business fail to meet the performance requirements specified in the agreement; and (4) the terms provided in any attached performance agreement and other terms as approved by the City Attorney, including modifications to said attached agreement. 3. appoints the City of Wichita Falls as agent for the Wichita Falls Economic Development Corporation to expend and administer funds on behalf of this corporation as requested by the President of the corporation, and authorizes the City Manager and Finance Director of the City of Wichita Falls to expend and administer the funds allocated herein. 4. amends the budget of this fiscal year to provide for this expenditure, subject to approval by the City Council of Wichita Falls.