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4A Wichita Falls Economic Development Minutes - 09/10/2008MINUTES OF THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION SEPTEMBER 10, 2008 PRESENT: Gary Shores, Chairman § Bo Stahler, Vice Chairman/Sec. /Treasurer § Gary McLendon § Members Dick Bundy § Lanham Lyne, Mayor § City Council Darron Leiker, City Manager § Matt Benoit, Assistant City Manager § City Staff Linda Merrill, Recording Secretary § Kevin Pearson, VP, Economic Dev. § BCI Warren Ayres, Chair, 2008 Executive Cmte. § ABSENT: Dave Lilley § Member I. CALL TO ORDER The meeting was called to order at 3:30 p.m. II. APPROVAL OF MINUTES — AUGUST 18, 2008 Bo Stahler moved, seconded by Dick Bundy, that the minutes be approved. The motion unanimously carried. III. CONSIDER APPROVAL OF A FISCAL YEAR 2009 -2010 BUDGET Kevin Pearson distributed a resolution. Warren Ayres explained that this resolution is for the 4A Board to fund 100% of the wages paid to Kevin Pearson, and 50% of those paid to Tim Chase, for economic development efforts pursued by the BCI. There is a 5% wage increase built into this $163,979.86 request. Insurance benefits remains the same as last year. Gary Shores asked if the BCI is also requesting funding of $75,000 toward the workforce development task force. Mr. Ayres confirmed this request for second -year funding. Mr. Shores stated the funding is actually "up to" $75,000; if the BCI raises more than $75,000 from the community, the 4A fund's contribution is then prorated. Mr. Stahler asked if the total requested ($238,979) represented both the salary funding request, and the funding request for the task force. Mr. Ayres confirmed that it did. WFEDC — Minutes of September 10, 2008 2 Mr. Shores asked for details on the $7,000 retirement contribution. Mr. Pearson said those funds go into a 401 K through Principal Financial Group. They, as employees, may match those funds if they elect to do so. Mr. Shores then asked about the tax reimbursement. Mr. Ayres replied that is for FICA contributions. Mr. Shores asked if the retirement funding contribution is based on a salary percentage. Mr. Pearson said he believed so; it was 6% when he started four years ago. Mr. Bundy said it appears it is now 10% of salary. If that is so, Mr. Stahler said, that figure has not been adjusted for 2009. He asked if that is a fixed amount, or whether it is adjusted annually based upon a 10% contribution. Mr. Ayres replied that it is probably a fixed amount. Mr. Stahler noted that it was probably based on a 10% contribution last year, but there is no adjustment for the new salary for 2009. If it is supposed to be a percentage, the figure the Board is asked to approve will not be right. Mr. Bundy said that if the Board approves the requested figures, then the BCI would have to make up the shortfall. Mr. Bundy moved, seconded by Gary Shores that the Board approve the funding contribution to the BCI in the sum of $238,979.86. The motion unanimously carried. Matt Benoit provided the Board with a spreadsheet of its finances. Total revenues for fiscal year 2009 budget are projected at $4,386,210. The Board is up 6.14% on sales tax collections from this point last year. The last sales tax installment for fiscal year 2008 will be credited in December. Expenditures include the O & D liability premium; ad valorem tax payment for the ATCO facility (ATCO reimburses the Board for this payment); and a continuation of professional fees at a cost of $30,000. Mr. Stahler asked why the tax payment for ATCO is budgeted, if the company reimburses the Board. Mr. Benoit replied that it is for accounting purposes. Mr. Benoit also plugged in $100,000 to fund the regional marketing task force, although the BCI is not yet prepared to make that request. The Board can plug in any figure it chooses; he simply made sure that money will be timely available for any marketing expense. He will present the budget to the Council for approval on October 7; that will be the earliest he can write a check for any marketing expense. Mr. Benoit continued through the expenditures, referencing the $75,000 discussed above, as well as a Business Park marketing expense, which is the Board's payment to Park Maintenance for maintenance of the Business Park. He then discussed the Sheppard Military Affairs Committee (SMAC). Mr. Pearson distributed a letter request from Tom Whaylen, President of that committee, requesting funding from the 4A Board for calendar year 2009. Mr. Benoit said he was asked by the 413 Board to make a request regarding this committee's funding. The SMAC was created three years ago. Both the 4A and 4B Boards agreed to carry $50,000 each for the initial five -year investment. However, the 413 Board has a fund balance of just $1.1 Million, and there is great demand on these funds for various projects. The 4B Board approved its budget last week, including its $50,000 share of funding. However, they request that the 4A Board take on the entire funding amount for this committee, to free up that $50,000 in 413 funds for other projects. He only plugged in $50,000 in the proposed budget, so as not to appear presumptuous. Expenditures total WFEDC — Minutes of September 10, 2008 3 $536,348. Should the 4A Board spend absolutely no funds through the next fiscal year, it would have an ending balance of $29,932,713. Mr. Shores wished to first discuss the utility expenses for the Business Park. The spreadsheet indicates the expenditure of $282,000, some of which involved gas lines and electric transmission lines. He wonders about regular utility expenses. Mr. Benoit said he will check into that. There should be charges for lighting and watering. Gary McLendon asked the total amount of the SMAC budget. Mr. Ayres said it is $150,000. Wichita County, Burkburnett; and Iowa Park participate. Mr. Shores asked if the 4B Board is asking the 4A Board to fund only this year, or the remainder of the five -year commitment. Darron Leiker said he had in mind an ongoing commitment. The 4B Board is hit from every angle for funding. Last week, they heard and granted requests from the Wichita Falls Little League, the Wichita Theatre, and Wichita County Heritage Society. His thought was to save at least that $50,000 to help the fund balance. This is a good investment for 4A dollars. He would like to transfer the entire funding over to the 4A Board this year, and have such funding continue as long as the SMAC exists. Mr. Stahler said that is a five -year commitment, but in reality it will be ongoing. Mr. Bundy said it would obligate the 4A Board for the next two years. Mr. Ayres said it will actually be for three years — this year, plus two more. Mr. Stahler said the funds were originally budgeted in 2006; even though no director was hired in that year, the contract should run from 2006. Mr. Leiker said he is probably right. Mr. Shores asked if there was a chance that Burkburnett might increase its contributions. Mr. Leiker believes that Wichita County and Burkburnett pay $25,000 each. Mr. Shores said he thought it was said that Iowa Park contributed to this, as well. Mr. Ayres said he may have been mistaken; Iowa Park is in the regional economic development task force. Mr. Shores would like any motion to approve this funding to include a provision that this grant is subject to an annual review. Gary McLendon moved to approve the entire budget, as modified by the funding for the Sheppard Military Affairs Committee for $100,000. Such appropriation to SMAC will be subject to an annual review. Mr. Bundy seconded the motion. Mr. Benoit noted that with the additional $50,000 funding, the total expenditures would jump to $586,348. Mr. Shores expressed his assumption that the funds in the professional fees account represent a build -up of funds that have not been spent in that line item. Mr. Benoit said that he does not carry forward balances. Any money unspent falls into the cash balance and he budgets again for the $30,000. Mr. Bundy asked if this fund would be used to pay the City if the Board contracts with it to review project drawings. Mr. Benoit replied it would be an eligible expense. The motion unanimously carried. IV. RECESS TO CONDUCT A WICHITA FALLS BUSINESS PARK DEVELOPMENT REVIEW BOARD MEETING The Board recessed at 4:00. WFEDC — Minutes of September 10, 2008 V. RECONVENE TO CONSIDER A REQUEST FROM OLD DOMINION FOR ADDITIONAL CAPITAL EXPENSES The Board reconvened at 4:20 p.m. Mr. Benoit said he just now had a chance to read the MOU prepared to give economic incentives to Old Dominion. He said to suppose the cost of the building is $1 Million, and the tilt wall construction is estimated at $75,000. The bid for the job may come in at $1.1 Million. He questioned how anyone will be able to attribute the difference of $100,000 to construction overruns, or whether Old Dominion simply added additional square footage. The City often bids a base project, and an add alternate. The base project would be the current building. The add alternate would be the tilt wall. The construction costs would then not matter. Mr. Bundy said this sounds like micromanaging. He suggests, rather, that the Board bid it like it wants it — up to $75,000. It could be plugged into the incentive in some way. Mr. Benoit said the rationale is that the Board pays $75,000, whether the difference is $35,000 or $100,000. Mr. Bundy said the architect would then have to bid it through two separate sets of drawings. Mr. Ayres suggested that it be left as up to $75,000. Then Old Dominion would have to come to the Board with its estimates of the difference. The cap for the 4A Board would still be the $75,000. Mr. Bundy said he is pleased with that figure; he thought it would be more than that. Mr. Benoit noted that the Board typically makes payments only after jobs are created. In this instance, whether Old Dominion creates those positions or not, the MOU allows for payment when it gets a Certificate of Occupancy or six months following. Mr. Stahler acknowledged there is an advantage to being first in line when there is an effort to get a project rolling. Mr. Shores suggested an amendment to the MOU by the addition of Subsection H, which would read that if additional jobs are not created within a five -year period, Old Dominion will reimburse the $75,000. Mr. Pearson said he saw no reason why that could not be done. He asked what the company would be asked to reimburse if they created some, but not all, of the jobs required. Mr. Shores said the jobs would be valued at $12,000 each. Mr. Pearson said he would rework the MOU and get it to Mr. Shores the following day. Mr. Stahler moved to grant the $75,000 to Old Dominion, with reimbursement after five years at $12,000 per job for every job not created as required under the MOU. Mr. Bundy seconded, provided the MOU is revised to reference payment of the full $75,000. Updates Mr. Pearson provided updates on various projects. The possibility of the 4A Board building a facility and doing a lease -back to Coca -Cola is still a possibility. He expects to hear something back within a month. The Abourami fiberglass company project is still very much alive; the consultant is still kicking around. They continue to work with Carter Copter, trying to figure out how to make that project happen. WFEDC — Minutes of September 10, 2008 Machining Solutions approached the Board in March 2007. The Board granted funding, but there was concern about the company's long -term viability. He spoke with Mike Thompson of the company today. The company has grown from 5 to 25 employees. Their year -end financials show them to be doing well. Representatives from the Korean steel company were supposed to come to Wichita Falls six weeks ago to look at this area as a location for producing towers that go on wind turbines. They have experienced difficulty in getting the contact to return their calls, but they will continue to pursue this project. Mr. Bundy asked the latest on the refinery. Mr. Pearson said he has not heard much about that; he understands that getting a new permit for a refining operation is tough. Mr. Stahler asked about the Certain -Teed facility. Mr. Pearson said the listing brokers (Fisher Company) are in town today. They have flown in folks from around the country to tour the area. It is listed at $14.9 Million; the Call Field facility is listed at $3 Million. They do not want to parcel off the property; whoever buys it has to buy it all. The broker claims to have a couple of good investors in town now. One is described as a call center that would use the 50,000 square foot office facility. They also have an interest in warehousing and distribution, and would use the 500,000 square feet as a trucking terminal /ware combination. Mr. Bundy said he thought someone was going to salvage the building; take it apart and haul it off. Mr. Pearson said they were going to go in and take out the precious metals from the furnaces; he heard this has already been done. Mr. Pearson said they waited a long time to come up with a price, because they were still working on getting the precious metals out. Mayor Lyne said he and Tim Chase worked on a fairly strong letter to elected officials when the shutdown occurred. The FTC had sent down a decree that Owens - Corning could not buy Vetrotex. He received a response from the FTC, saying in effect that it had not prohibited the purchase, but rather, said that Owens - Corning would have to divest other plants within the United States. Mr. Bundy asked about Technical Fabrics. Mr. Pearson said he has heard there is a potential for expansion. They have two plants across from ATCO, and also warehouse at a number of locations around town. He met with the General Manager a couple of months ago, but Mr. Chase is now running the show on this project, and he is not sure of the latest activities. VI. ADJOURN The meeting adjourned at 4:45 p.m. J_ Gary hores, Chairman