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4A Wichita Falls Economic Development Minutes - 09/09/20091. MINUTES OF THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION PRESENT: Gary Shores, Chairman Gary McLendon Dick Bundy Lanham Lyne Charles Elmore Darron Leiker, City Manager Matt Benoit, Assistant City Manager Miles Risley, City Attorney Linda Merrill, Recording Secretary Tim Chase, President Kevin Pearson, VP, Economic Dev. Warren Ayres, Chairman Jeff Stambaugh Tom Whaylen Cynthia Laney Andy Lee Rowena Jackson, Wichita Theater Dusty Johnston Gary Don Harkey ABSENT: Dave Lilley 1. CALL TO ORDER September 9, 2009 § Members § Council Liaison § City Staff § Chamber of Commerce & Industry § Idea Wichita Falls /Lalani Center § Sheppard Military Affairs Committee § Downtown Wichita Falls Development, Inc. § Vernon College § Member Chairman Gary Shores called the meeting to order at 4:02 p.m. WFEDC — Minutes of September 9, 2009 2 2. APPROVAL OF MINUTES (AUGUST 27, 2009) Item Number 41 was deleted in its entirety. Warren Ayres, a meeting attendee, was incorrectly identified as a member of the Military Affairs Committee, rather than as Chairman of the Chamber of Commerce. Dick Bundy moved, seconded by Gary McLendon, that the minutes as amended be approved. The motion unanimously carried. 3. SELECTION OF OFFICERS AS NECESSARY This item was addressed at the August 27, 2009 meeting. No further action is necessary. 4. BUSINESS PLAN CONTEST (AMENDMENT OF FY 2008 -09 BUDGET) Jeff Stambaugh from MSU spoke regarding the funding request for Idea Wichita Falls, a regional business plan competition. The requested $15,000 would help fund the prize money and the marketing of the campaign. Approximately $50,000 has been raised from the business community ($23,000 in cash pledges and $25,000 worth of in -kind services). Idea Wichita Falls is about economic development. Qualifying businesses must estimate that 75% or more of the revenue from their operations will come from outside Wichita, Archer or Clay counties. Miles Risley said the Board may fund this request from either its 2008 -09, or its 2009 -10, budget year. It would be considered a promotional expense. Matt Benoit added that the 2009 -10 budget year starts October 1, which should be soon enough to provide this funding. Lanham Lyne moved that the 4A Board recommend to the City Council the expenditure of 4A funds in the sum of $15,000 for Idea Wichita Falls, with $3,500 of such expenditure used toward advertising and publicizing the City for the purpose of developing new and expanded business enterprises, and the balance of $11,500 used for administration of the projects that create primary jobs. The motion was seconded by Dick Bundy, and unanimously carried. Mayor Lyne asked the response to this contest. Mr. Stambaugh said 20 people attended the orientation sessions, of which he surmised about 2/3 are serious contenders. In the past 44 hours, they have logged almost 800 hits on the website for this contest, with each visitor staying an average of four minutes. Mr. Stambaugh thanked the Board for its support. 5. DOWNTOWN WICHITA FALLS PROMOTION (AMENDMENT OF FY 2008- 09 BUDGET) Cynthia Laney expressed her appreciation to the Board members for the opportunity to appear before them today. Downtown Wichita Falls Development is seeking funding for its 2010 fiscal year. In the past, they were partially funded by the TIF 1 District. However, that District ' "Carter Copter Construction Project — Proposed Incentives For Carter Aviation Technologies (And Related Entities) Up To An Additional $250,000 Of "Costs" For Land, Buildings, And /Or Equipment For Aircraft Research, Development, And Manufacturing At A Location To Be Determined." WFEDC — Minutes of September 9, 2009 3 expired in December 2008. The organization is now operating on its and the TIF District's reserves. It is the only voice of downtown Wichita Falls, and as such, this funding request falls under the promotional category. They promote not only downtown Wichita Falls, but the city as a whole. They have applied for a grant and are working on sustainability, but at present need gap financing over the next couple of years. Mayor Lyne asked how much is being requested. Ms. Laney replied one year of funding, or $120,000. Chairman Shores asked if all their funding had previously come from the TIF 1 District. Ms. Laney replied about 75% came from TIF; the remaining 25% came from membership dues, at $50 per year, and various events and grant funds. They intend to go back to their members to determine if an increase in membership dues is feasible. They have received $20,000 over the past two years from the Bridwell Foundation, which has provided financial support since 2002. They have applications in to the Priddy, Bridwell, and Bryant Edwards foundations, and have sent a letter to Perkins/Prothro. Their attempt to garner grant funds from Burlington Northern was unsuccessful. Downtown Wichita Falls has 156 members, up from the 86 members it had when she came to Wichita Falls in 2006. At that time, the organization earned $3,000 a year in membership fees; that sum is now $5,200. Mr. McLendon asked the potential for new members. Ms. Laney said that a new database reveals approximately 681 businesses within a half mile radius of 8th and Scott streets. That is their new target area. Chairman Shores asked if this request would be a recurring one. Ms. Laney hoped that this funding, coupled with reserves and grant money, would get the organization through fiscal year 2011. She hopes at that time there will be another TIF district in the downtown area. In addition, she has been talking with property owners about the possibility of creating a Business Improvement District (BID), whereby self - assessed funds would be used to provide enhanced services to the area. Property owners want security, cleanliness, and landscaping. These issues could be addressed through a BID. The entity could help fund the cost of another officer assigned to a downtown beat. It could also take over the maintenance of trees planted by the City. They have looked into the possibility of contracting for the use of a spray wash machine, but that has proved to be quite costly. Mr. Bundy asked the entity's annual operating budget. Ms. Laney replied $120,000. Mr. McLendon asked if the organization gets much cooperation from the owners of vacant buildings. Ms. Laney said there are a lot of absentee property owners who are not interested in their efforts. However, this past July, she received four phone calls, and four site visits, from people interested in downtown. Four new businesses moved into the area in July. She is working with other projects that she is extremely hopeful will be moving forward. Chairman Shores asked if that would include the North Texas Health Consortium, to which she affirmatively replied. Mayor Lyne asked if this funding is identified in the current budget. Mr. Benoit said he put it in the upcoming fiscal year, and the monies would be available October 1. Mayor Lyne stated that Downtown Wichita Falls' operating budget is $120,000, the amount of the request WFEDC — Minutes of September 9, 2009 4 before the Board. This request in effect assumes the organization will receive no other funds; he does not like the idea of the 4A Board funding 100% of anyone's budget. Ms. Laney said that she hopes these funds carry them through the next couple of years, when combined with cash reserves and prospective grants. Mayor Lyne said that he would want to receive periodic updates. Ms. Laney replied absolutely. With that assurance, Mayne moved to recommend that the City Council amend the 4A Budget to award the requested $120,000 to Downtown Wichita Falls Development. Mr. Bundy seconded the motion. Mr. Risley clarified that the $120,000 would come from the 2009 -10 fiscal year budget. Rowena Jackson, a member of the Jackson family who owns the Wichita Theater, said they are investing $350,000 to $450,000 in renovation of the Noble Building. This summer, the Wichita Theater drew in patrons from 60 cities in this general area. Three years ago, the theater's gross income was $95,000; today, it is $351,000. Chairman Shores said that is outstanding, and thanked her for her participation in today's meeting. Andy Lee touched on the various economic opportunities available downtown. The former Sears building is owned by a Dallas developer and is being marketed. At one time, it was almost the site of a bowling equipment manufacturing facility, but that business ultimately went to China. He is personally marketing the former Texas Electric building. The downtown district's boundaries include the medical district, Kell freeway, MPEC, and the Eastside, which encompasses a large number of employees; there are 6,000 medical employees alone in a one -mile radius. The idea of renovating the old Holt Hotel was viewed skeptically at one time, but now Burcamp Steel has moved its office headquarters into the restored building. Most of the Board members either office downtown, or work for businesses who have downtown offices. The organization's marketing budget is slim. They do bring in some money from downtown festivals. Ms. Laney said an average of 12,000 to 15,000 people attend the various festivals per year. Mr. Lee added that festivals are a good way to showcase Wichita Falls. Chairman Shores thanked Mr. Lee for his comments. He called the question, and it was approved unanimously. Ms. Laney thanked the Board and said they would not let them down. 6. ALLOCATION OF $312,269.50 FOR PROMOTIONAL EXPENDITURES (WITH EXPENDITURE DETAILS TO BE DECIDED & APPROVED LATER ) FOR FY 2008- 2009 Mr. Risley said the request is 10% of the total estimated revenues from the 2008 -09 fiscal year budget, or $312,269.50. The details of the promotional expenditures are to be approved at a later date. Chairman Shores expressed concern that the Board was being asked to approve funding prior to the promotional activities being finalized. Mr. Chase said there is an Attorney General ruling that allows funds to be carried forward and spent in subsequent years, provided all WFEDC — Minutes of September 9, 2009 of the potential marketing money in a given year is allocated. Otherwise, those funds are lost. Chairman Shores said the request is "not to exceed" the requested sum. Mr. Chase agreed. Mr. Risley pointed out that the Board typically allocates and authorizes expenditures; this request is simply an allocation. Any expenditures from these funds must have prior approval from the Board. Mr. Benoit said he took 10% of the total estimated revenue, and backed out 75% of the regional market task force, and the $50,000 payment allocated for hck2 (both promotional expenses). That leaves an unencumbered promotional expense of $312,269.50 in this fiscal year (the amount will be less in the next fiscal year). Chairman Shores again expressed reluctance to approve this figure without knowing the details of the promotional program. But he acknowledged that any expenditure request would have to be brought before the Board for prior approval. Mayor Lyne moved that the 4A Board recommend to the City Council that it amend the 4A Board's budget to allocate $312,269.50 for promotional expenditures for a community -wide marketing campaign out of the 2008 -09 fiscal year, provided that prior approval must be obtained from the Board for any expenditure(s). Mr. Bundy seconded the motion. It carried unanimously. 7. FY 2009 -2010 BUDGET APPROVAL Mr. Risley noted that Mr. Benoit had a handout of a slightly modified budget. Mr. Benoit said the last expenditure listed, the City of Wichita Falls administration expense of $10,000, was not on the version previously emailed to the Board. Chairman Shores observed that the same sales tax figures of 2009 were being used for the 2010 budget, when the actual is $1.5 Million less than that. Mr. Benoit noted that the sales tax collection figures always lag by at least two months. The figure on the budget probably only represents about nine months of collections. He does not anticipate the 2009 fiscal year budget estimate of $3,551,795 will be met, but the fiscal year actual of $2,040,911 does not reflect 12 payments. At present, collections are 2.5% less than when compared to the prior year. To prepare the 2010 fiscal year budget, he took 2.5% off the fiscal year 2008 actual of $3,558,983, leaving $3,551,509. Chairman Shores said the 2009 fiscal year actual would be right at about $3 Million. Mr. Benoit said he would estimate essentially the same as what was estimated for the 2009 fiscal year budget. Mr. Bundy asked if Chairman Shores was concerned whether that was a conservative enough estimate. Chairman Shores replied that $3.5 Million is not, and wondered whether they should use instead the actual collections figure. Mr. Benoit said that could be done, but he is using a common formula for all sales tax estimations. However, if the Board thinks the $3,551,509 is too high an estimate, it can be dropped to $3,450,000 or $3,400,000. Mr. Bundy said the actual 2009 is going to be closer to $3 Million. Chairman Shores said that, following the national trend, it would be aggressive to assume the same collections for 2010 as for 2009. Mr. Benoit noted that the budget is dated 8/3/09; therefore, there could be only eight rather than nine payments included. Mayor Lyne said that would still get the collections just to WFEDC — Minutes of September 9, 2009 6 $3 Million. Mr. Bundy said he believes it should be at $3 Million. Chairman Shores said he would be more comfortable with that figure. Darron Leiker said $3 Million is probably on the low side; it will be somewhere in between. Chairman Shores said they could use $3 Million, and if it is more, it would be a happy circumstance. Mayor Lyne moved that the 4A Board recommend to the City Council that it approve the proposed budget as amended reflecting $3 Million in estimated sales tax revenues (as opposed to the presented $3,551,509). Chairman Shores said that everything on the budget from the total expenditures on down would need to be reduced $551,509. Seconded by Mr. Bundy, the motion carried unanimously. Chairman Shores asked if the difference in the CCI contract is the $100,000 for the Military Affairs Committee. Mr. Chase said yes; that money does not go to the CCI; the Military Affairs Committee is a separate and distinct organization with a separate contract. 8. RECEIPT & DISCUSSION OF ANNUAL REVIEW OF VERNON COLLEGE MACHINIST TRAINING PROGRAM In 2004, Kevin Pearson said, Wichita Clutch expressed frustration that it could not find machinists to fill positions. An apprentice -type training program was quickly put together at Vernon College, and an MOU was entered into between Vernon College and the 4A Board. The College did an outstanding job in a short time frame. They are here today to report on that three - year program. Dusty Johnson introduced himself to the Board. He has been president of Vernon College since March. Final enrollment figures are due today; they are right under 3,200 students, with 60% of them in Wichita Falls (either at the Skills Training Center or at Century City). Vernon College is a $17 Million industry. It enjoys a great partnership with MSU. A future goal is to make use of a lot of vacant space at its facilities on Maplewood. Gary Don Harkey of Vernon College said that funding provided by the 4A Board provided the seed money so that this expensive and highly technical program could be started. The funding assistance was used to pay a portion of the instructor salary, for marketing, for technological upgrades, and for the purchase of machinery. In year three of the program, Vernon College exceeded the MOU requirement in terms of money it put into the program. The 4A Board provided $20,457 toward the instructor salary; Vernon College contributed $32,000. The 4A Board contributed $17,000 for marketing; Vernon College, $21,000. The bulk of 4A funding came in year three, but the program took off quicker than anticipated. A lot of the equipment purchases were made in year two. This year, 4A contributed $5,000, while Vernon College added another $26,000 toward equipment purchases. This program has been full since the second year. They started with 11 students in 2006; there were 36 students in the second year. They now have approximately 40 students in the program. The first 20 -25 will graduate in December 2009 with advance certificates in machinery. WFEDC — Minutes of September 9, 2009 7 Councilor Elmore asked if most of those students work for Wichita Clutch. He said some work for Pratt Whitney and other local industries. Most students attend part-time. There are 13 new students coming in the fall, and 27 returning students. Mr. Johnston said 20% to 25% would be classified as dislocated workers. Mr. McLendon asked if there has been a drop in demand for machinists. Mr. Harkey said enrollment is steady; most are upgrading their skills. Mr. Pearson said no action was required. When the MOU was passed, the Board asked Vernon College to make annual reports. Chairman Shores said he was pleased to hear the report. He asked what program was next. Mr. Johnston said they would love to have a physical therapy assistant program. 9. EXECUTIVE SESSIONS2 Chairman Shores adjourned the meeting into executive session at 4:59 pursuant to TEXAS GOVERNMENT CODE sections 551.071, .087, and .072. He announced the meeting back into regular session at 5:33 p.m. He noted that the subjects described in Footnote 1 were deliberated, and no further action was taken on these subjects in executive session. Mr. Risley said the following item could be discussed at today's meeting as it relates in general to items on the budget. Mr. Chase said he and Mr. Pearson had an update on the telecom project. At the moment, the City is out of the running in terms of the incentive package presented. It is competing with 13 other communities (in Arizona, Pennsylvania, South Carolina, Kentucky, North Carolina, and Virginia). Mr. Pearson said the telecom company has been in town and has looked at the former Budget building. It is the best solution for the company out of all the communities. That is why Wichita Falls still has an opportunity. The company looks to hire 600 customer service representatives and 56 management personnel. It intends to open three call centers within the next year. The CSR salary starts at $9.00 per hour; management salaries range from $26,000 to $100,000. Benefits include medical, dental, vision, and a 401K plan. They are permanent, full 2 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 Carter Copter & proposed incentives for creation of primary jobs and retention of primary jobs (as defined by Tex. Local Gov't Code § 501.002 in aviation industry and in durable good manufacturing industry). 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, Carter Copter & proposed incentives for creation and retention of primary jobs (as defined by Tex. Local Gov't Code § 501.002) in aviation, and durable good manufacturing industries). 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 in the vicinity of the business park and/or airport(s) and /or I -44 corridor area). WFEDC — Minutes of September 9, 2009 8 time positions at 37.5 hours a week. Mr. Chase said they are inbound 1 -800 service -type calls, as opposed to telemarketing sales. The company is analyzing the local labor force. Beginning this Sunday, they will be placing blind employment ads for one month in the Times Record News, and will have spots on the internet through Yahoo and Monster.com to see if they can ramp up and sustain this operation in Wichita Falls. The incentive package offered was worth about $3 Million, at $3,000 per job. This offer was presented in a letter signed by Chairman Shores, Mayor Lyne, Warren Ayres, and Judge Woody Gossom. They reviewed the offer and said that, although they like this community and the building, they are getting more from other communities. The incentive package was sweetened to $5,000 per job, with about $4 Million in total incentives for the project. That package puts Wichita Falls close to the second and third competing cities. Mr. Pearson said the company has 50,000 employees worldwide. It represents Fortune 100 companies, and has 17 operations in 20 countries. It is a billion dollar company, and is listed on NASDAQ. Mr. Bundy noted the company is apparently not concerned with accents, considering the geographical area it is contemplating. Mr. Pearson said it is looking for bilingual employees. Mona Statser of the Workforce Center showed the company representatives the area's bilingual rates, and data indicating there are 522 CSRs in her system. That caught their attention. Mr. Chase said they are looking at tertiary markets. They have gone to larger corporations and encouraged them to come back home. They have experimented in India and other locations. If this company can show them a cost competitive solution, those corporations might consider switching. Tentative meeting dates for the next 4A Board meeting are September 17 at 4:00 p.m., or September 18 at 8:00 a.m. The meeting adjourned at 5:50 p.m. r / Z- ary ores, Chairman