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4A Wichita Falls Economic Development Minutes - 04/11/2008MINUTES OF THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION APRIL 11, 2008 PRESENT: Bo Stahler, Vice Chairman/Sec. /Treasurer § Gary McLendon § Members Dave Lilley § Lanham Lyne, Mayor § City Council Matt Benoit, Assistant City Manager § Dave Clark, Dir. of Community Development § City Staff Linda Merrill, Recording Secretary § Tim Chase, President § Kevin Pearson, VP, Economic Dev. § BCI Mike Bernhardt, YTO USA § Tom Tryer, Tryer Process Equipment § Attendees Jonathan Tryer, Tryer Process Equipment § ABSENT: Gary Shores, Chairman § Dick Bundy § Members I. CALL TO ORDER The meeting was called to order at 1:00 p.m. II. APPROVAL OF MINUTES — FEBRUARY 11, 2008 Gary McLendon moved, seconded by Dave Lilley, that the minutes be approved. The motion unanimously carried. IIl. DISCUSSION AND POSSIBLE ACTION ON AN INCENTIVE AGREEMENT WITH YTO USA Tim Chase expressed his excitement concerning the reuse of the former Delphi facility. Mayor Lanham Lyne, Judge Woody Gossom, Gary Shores, and Warren Ayres signed off on a pledge to help recommend this project to their respective entities. That recommendation is to fund a cash-for-jobs incentive. i WFEDC — Minutes of April 11, 2008 2 Mike Bernhardt stated that the investors in this venture are in Oklahoma City, and they have been pushing hard for him to locate the business there, while he would prefer to stay in Wichita Falls. The investors were pleased with the incentive package created by the BCI, which would allow for the business to remain local. He and his brother have good contacts in China, and have done business there for the past 20 years. This particular undertaking would allow for his company to be the distribution point for YTO tractors for North America. He will be setting up a dealers' network across the United States, for which he is currently advertising in trade publications. The goal is to be pushing 6,000 to 7,000 tractors in the next five years. The Delphi facility is good for his business partly because of the rail spur. The containers come in at Long Beach, California, are railed to Dallas, then brought here. He estimates a shipment to Wichita Falls of 80 to 100 containers per month, which will increase rail traffic. Vice Chairman Stahler asked if there is much assembly involved. Mr. Bernhardt replied that the tractors are assembled and tested in China, then unassembled in part, and shipped to America. Vice Chairman Stahler asked if Phase One called for the use of only a portion of the building. Mr. Bernhardt said that Phase One involves setting up the facility as the base for the tractors. YTO also makes heavy industrial equipment, and buys the engines and transmissions from the U.S. That machinery is shipped to China; the industrial equipment is assembled, and then shipped out. Phase Two would allow this facility to get involved in the actual manufacture of the equipment. The North building would be the tractor facility, while the South building would be the heavy construction facility. He hopes to have that part of the business going in the next six to 12 months; it will involve the purchase of a lot of capital equipment. Vice Chairman Stahler asked if the request today is only regarding Phase One. Mr. Chase replied that the MOU is set up to fund any jobs created as a result of YTO USA over the next 24 months. If there is something else on the horizon, the BCI and the 4A Board would be receptive to providing additional incentives. Vice Chairman Stahler said it is a win/win situation, particularly since it involves getting the former Delphi facility reoccupied. Kevin Pearson asked if the company intends to occupy the entire 350,000 square foot facility. Mr. Bernhardt said they do intend to occupy the entire site within the next 24 -36 months. Mr. Pearson asked if he had any plans to lease part of the space in the meantime. Mr. Bernhardt replied that some interest has been expressed in such a lease; he would be receptive to a 12- to 24 -month lease only. Mr. Lilley moved, seconded by Mr. McLendon, to recommend to the City Council the execution of the economic incentive agreement with YTO USA. The motion unanimously carried. Vice Chairman Stahler declared that he is excited for the community, and looks forward to providing more incentives as this project goes forward. Mr. Ayres stated this company has 30,000 plus employees, with 2,200 of them devoted solely to Research and Development. It is a great opportunity. WFEDC — Minutes of April 11, 2008 Matt Benoit asked Mr. Bernhardt about the size of the tractors. He replied that they are 20 -180 horsepower tractors, suited to the small backyard up to a mid -size farm. Mr. Benoit asked if the tractors will be sold from the facility. Mr. Bernhard replied that he would rather set up dealerships. Mayor Lyne noted that he once had the Wichita Falls Kubota dealership, and demand for that size tractor is pretty high. Mr. Chase asked how it will compete price -wise with companies such as Kubota and John Deere. Mr. Bernhardt replied that they will sell for 30% to 40% less, and still allow for a decent profit. Mr. Chase then asked Mayor Lyne if this item could be addressed by the Council at its special meeting on the 22nd of April. Mayor Lyne replied that the purpose of that meeting is to discuss the downtown diversification plan; he would poll the Council to determine their desires. They could have a quick meeting on this item, or they might call for another special meeting. Something will be worked out. IV. DISCUSSION AND POSSIBLE ACTION ON AN INCENTIVE AGREEMENT WITH TRYER PROCESS EQUIPMENT Mr. Pearson introduced Tom and Jonathan Tryer. Tom is a Professional Engineer with 21 years of experience; Jonathan is an Industrial Engineer with 7 years' experience. Tom recently sold his half - interest in a business in Midland, and he and his son are going into business together. They searched all over Texas for the right building, and found it in the former Piping and Engineering building on Old Iowa Park Road. The 150,000 square foot warehouse is located in the city, but had not been platted. The City regulations require that a cul -de -sac be constructed as part of the platting process. That will add to the overall cost of the project. The BCI made an offer to the Tryers of $112,000 toward that improvement. The Tryers will be constructing pressure vessels for the oil and gas industry. Although only 16 jobs are contemplated at present, they plan to create 50 to 60 jobs over a five -year period. They are conservative in their estimation, but there is real potential for growth because of what is going on in the oil and gas industry. He has done a lot of work with food -grade CO2, so they might do some of that business, as well. However, 80% to 90% of their business will be energy related. At this point, they do not intend to be involved with ethanol production. The bigger jobs will be skid - mounted units shipped to the field. The equipment will be modularized; when it gets to the field, it can be hooked up relatively quickly. He went into business in 1981 when oil prices were high. They drifted downward until the bottom fell out in 1986, when oil prices were down in the single digits. It was at that point he became involved with the industrial gas industry. If oil prices stay up, it would not surprise him to have 60 employees in five years, but should certainly have at least 40 employees. The business is similar to that of National Tank Company ( NATCO) in Electra. However, NATCO builds standard equipment, while this company will build custom equipment. The vessels will be quite large, with diameters up to 10 feet, and weigh as much as 140,000 pounds. WFEDC — Minutes of April 11, 2008 4 They have closed on the purchase of the building, and are in the process of refurbishing the structure. Electrical and plumbing work needs to be performed to upgrade the facility. It is a relatively old building, built by the Red River Grain Company. Jonathan Tryer added that it was built in 1960. Tom Tryer noted the facility also boasts five concreted acres, which will be helpful to the business when it rains. They have hired a man from Holliday, Texas, as their production manager. He is taking bids on equipment. They have also offered employment to a welder who is now in the first class of mechanical engineers from Midwestern State University. They've offered the positions of administrative manager and design manager to former NATCO employees. They have not had trouble finding qualified people to work for the company. The production manager has contacts, and will not have difficulties finding the necessary pipe fitters and welders. Mayor Lyne observed that they are proposing good wages for the positions. Vice Chairman Stahler asked if the Tryers intend to relocate to Wichita Falls. Tom Tryer said that they do intend to move here, and both are in the process of looking at houses for their families. Jonathan Tryer said they had applied for their ASME stamp, and hope to have the State audit completed by mid -June. They would then be licensed in pressure vessel production, and could start working by early July. Vice Chairman Stahler stated he knows nothing about their business, but he likes the idea of jobs for the area, and the occupation of a now -vacant building. Tom Tryer explained that his business will build equipment that will separate certain materials (water, water vapor, CO2, and hydrogen sulfide, among others) from natural gas. Mr. McLendon stated this is a good project for the area, and the 4A Board is here to support them. He welcomed them to Wichita Falls. He moved to recommend to the City Council the execution of the economic incentive agreement with Tryer Process Equipment. Mr. Lilley seconded the motion and the welcome to the city. The motion unanimously carried. V. DISCUSSION AND POSSIBLE ACTION ON THE PURCHASE OF FOUR LOW -FLOOR TRANSIT BUSES John Burrus stated that the request before the Board is for assistance to purchase four low -floor transit buses. Traditionally, the purchase of buses would be outside the scope of the 4A Board, but in 2007, the Legislature approved buses and light rail projects as eligible for 4A economic development funding. The City has $900,000 of Transportation Administration money on the table that it is about to lose. However, if the City comes up with the local match of $268,000, the money will still be available. At a recent Defense Diversification meeting, a consultant said one way to improve the City is to get Sheppard Air Force Base personnel out in the community. At this point, all many WFEDC —Minutes of April 11, 2008 airmen see of Wichita Falls is the bus ride between the base and Sikes Senter Mall. The City needs a circulator route on Friday and Saturday nights, to get them more involved in the community. Mr. Burrus is more than willing to work to identify some initial target businesses to route. If the 4A Board agrees to assist with the purchase of the buses, it would free up City funds to work on developing and providing this route. The City could also filter money toward building a transfer hub in the downtown area (which was also a recommendation from the Defense Diversification discussions). That is an $800,000 to $900,000 program of federal and local money to build a centrally located hub. It would be one of the stops coming from the base to the mall, and could help get military personnel to MPEC and other downtown areas. Mayor Lyne said the City has been working with consultants for the past year and a half, and looking at rerouting the bus routes to better serve those who use the system. In order for the downtown area to be more vibrant, more people need to be coming to the area. Mr. McLendon asked the percentage of bus riders from Sheppard. Mr. Burrus replied that about half of the users of the transit system are Base personnel; the other half are those who use the buses to get to and from work and to go shopping. Vice Chairman Stahler asked if the City was going to put any money toward the project. Mr. Burrus replied that the City typically budgets $75,000 each year for bus replacement. That money, instead, could be used within the next six weeks to start the circulator route. Vice Chairman Stabler said he is not sure how the purchase of buses works toward the 4A goal of economic development, but if it's allowed, then the Board will consider it. Mr. Chase said that it is not uncommon for a high density office project to ask about an area's transportation system, to be assured that it could accommodate picking up and delivering its workforce. While it may not be directly tied to economic development, it is a quality of life issue. Mr. Burrus said the City would absolutely be willing to reroute to accommodate any new businesses. He takes a hard look at this system every year, and will continue to have focus group meetings. The transit system has seen an 8% increase in ridership since last year, with little or no marketing efforts. However, he is now working with City Manager Darron Leiker to get a formal marketing campaign in place. He has also been talking with officials in Burkburnett and Iowa Park. They are willing to look at regional transportation, the demand for which has arisen over the past couple of years. Mr. McLendon said he was recently in Colorado. The buses there were brightly colored, and made a better impression than do Wichita Falls' buses. He realizes it would cost more to paint them, but suggested an advertising campaign for entities such as MSU, River Bend Nature Works, and Vernon College. Mr. Burrus stated that the appearance of the buses was briefly discussed at the last Council meeting. Wichita Falls is one of the remaining 8% nationally who still purchase high - floor buses, which require three steps to navigate. The low -floor buses are only 14" off the ground, which is helpful to the elderly and those with mobility issues. Mayor Lyne stated that during strategic planning meetings, there was talk about advertising wraps on the bus. It will be WFEDC — Minutes of April 11, 2008 Mr. Burrus stated that the appearance of the buses was briefly discussed at the last Council meeting. Wichita Falls is one of the remaining 8% nationally who still purchase high - floor buses, which require three steps to navigate. The low -floor buses are only 14" off the ground, which is helpful to the elderly and those with mobility issues. Mayor Lyne stated that during strategic planning meetings, there was talk about advertising wraps on the bus. It will be essential to sell advertising to a business that would be there for a good period of time. It would make the buses nicer to look at, while at the same time, create revenue for the City. Tom Tryer asked how many buses the City has in operation. Mr. Burrus replied that the City has 12 buses, with 9 on the road at any one time. Mr. Tryer asked what type of fuel the City uses, to which Mr. Burrus replied diesel. He wants to continue running diesel as Wichita Falls is in the heart of an oil production community. Mr. Lilley moved, seconded by Mr. McLendon, to recommend to the City Council the expenditure of $268,000 in 4A funds for the purchase of four low -floor transit buses. The motion unanimously carried. Tom Tryer asked for permission to address the Board, to which Vice Chairman Stahler agreed. Mr. Tryer stated that it would be helpful to those in the oil and gas industry to be able to fly from Wichita Falls to Houston in the early morning, then fly back to Wichita Falls late in the day. Continental Express could make such a flight schedule available to the City. Mr. Burrus explained that Mr. Leiker is currently reviewing a Small Community Airport Development Grant. It is the same tool Lawton used to get Delta Airlines. He noted, however, that Lawton also had to provide $500,000 to back up Delta's operating expenses. Mayor Lyne added that Lawton had to promise Delta that it would not lose any money. Mr. Burrus asked that the Tryers submit a letter to accompany the grant, and asked for a letter of support from the BCI. Mr. Ayres suggested he also contact Alex Mills at Texas Alliance. They have offices in Houston and make constant trips there. Mr. Burrus stated the more documentation, the better. Mr. Burrus agreed that Continental Express would be ideal. He conducted an air service demand study last fall, and Houston was a number one location on the list. He and his Airport Manager are going to Houston to talk with Continental Express There are two subcontractors who operate Continental's express routes. The regional jet service would be great, but he'd be happy to get the turbo prop subcontractor here, just to get the City's foot in the door. VI. ADJOURN The meeting was adjourned at 1:52 p.m. Bo Stahler, Vice Chairman