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4A Wichita Falls Economic Development Minutes - 12/15/19974A SALES TAX CORPORATION BOARD MINUTES City Council Conference Room Memorial Auditorium December 15, 1997 Members: City Staff: BCI Representatives: Public /Media: Present: John Gavin, President Ray Clymer Ron Bullock Gary Shores Kay Yeager, Mayor Jim Berzina, City Manager Gregory D. Humbach, City Attorney Linda Wilbur, Recording Secretary Dick Bundy Ron Mertens LeTemplar, Times /Record News The meeting was called to order at 10:05 a.m. by John Gavin, President of the Board. Mr. Ron Mertens, Executive Director of the BCI, informed the Board that Mr. Tim Chase, Executive Director of the Dixon Industrial Development Association in Illinois, has accepted the position of Vice President of Economic Development of the Wichita Falls Board of Commerce and Industry and will be relocating to Wichita Falls the first of 1998. Mr. Gavin asked Mr. Mertens to discuss with the Board the BCI's proposed budget. Mr. Mertens stated that the proposed first year marketing budget of $88,000 breaks down into several categories. The categories are: Information System $12,000 (Hardware, software, updating and modifying the economic development area) Printing Publications $25,000 (Economic Development or the general community) Trade Shows $ 6,000 (Also funds community involvement) Direct Mail $ 5,000 (Mailings to trade show participants, developing stronger allies, site consultants and targeted industries) Advertising /Public Relations $20,000 (Planning and test marketing) Travel Budget $10,000 (New and existing industry recruitment, contacts with existing Wichita Falls employees) Mr. Gavin stated that the draft budget does not include the above issues discussed by Ron Mertens. For the fiscal year of 1997 -98 the board is anticipating total sales receipts revenue of $1,835,000, with an additional interest of approximately $25,000 for a total revenue of $1,862,050. The expenditures include $700 for fidelity bonds for board members, and $87,500 for the BCI's administration contract. $41,000 was allocated for eligible projects to support training programs. $400,000 went to the Blue Cross and Blue Shield Project. Adding in a promotion cost of $88,000 for marketing support would change the total expenditure to date to $617,200 and leave an additional $1,243,050 to be utilized for the remainder of the year for projects. Mr. Mertens stated that they are limited from a statute of 10% for marketing and promotional cost and at $88,000 versus $1,860,000 which is less than 5% of the total. Mr. Mertens noted that the BCI had an active period during the last part of the summer and the beginning of fall, and a number of very quality projects are in process. Mr. Clymer expressed that he would vote for the budgeted $88,000, but that in his opinion those things should be paid for out of the BCI's budget, and money coming in for the 4A Board should be saved and used for incentives to attract industry. He stated that we need to hold on to the money and use it where it will have a direct affect in attracting industry. Promoting and developing these prospects belong to the BCI. Mr. Mertens stated that part of the printing expense would be used to update materials for economic development and part of it was general printing expenses that could be used in other areas such as general brochures used by a number of organizations which would all focused on economic development. Mr. Bullock asked Mr. Mertens if he plans to submit the information to the board in writing. Mr. Mertens stated that he could. Mr. Bullock asked if the board planned to vote on it today. Mr. Gavin stated that the board needed to approve the budget in order to submit it to the City Council by December 16th. However, the board can amend the budget as it would be doing during the year as additional projects are submitted. Mr. Gavin stated that the board did need to spend some funds on marketing because that had not been done and the funds had not been specifically available through the BCI. He suggested that the board make an amendment to the budget, as it is a draft, include the marketing expenses, and submit it to the City Council tomorrow. Mr. Bullock asked if the board would have these expenses if it had decided to hire an executive director. Mr. Gavin stated that he assumed this would be correct. Mr. Bundy stated that if the board sets up its own administration, then he is sure they would need some kind of marketing program. Mr. Clymer stated that he did not think the sales tax was sold to the community on the basis of setting up another BCI, but to attract industry, and that the Board should not throw it away. Mr. Mertens stated that we do need a minimum level of marketing and that some of it is a one time expenditure. Mr. Gavin stated that the board has two choices. One is to address the recommendation of the draft budget as presented in order to take it to the City Council tomorrow, or amend it based on the issues or marketing proposals Mr. Mertens presented. Mr. Gavin called for a motion. Mr. Clymer clarified that the vote is whether we give the BCI the $88,000 or not. Mr. Bullock stated that another choice is that the request should be submitted to the board in writing, then the board could consider it. Mr. Bullock motioned that the unamended budget be approved. Mr. Clymer stated that he supports the BCI, but doesn't want the board to assume the BCI's duties nor does he understand what they have been doing that is wrong. He urged the board to use caution before spending this money. Mr. Bullock stated that he would make a motion to include the $88,000, with the ability to go back and amend it out. Mr. Bullock stated that 4A sales tax money is not just incentive money. Mr. Gavin asked Mr. Mertens if the BCI is asking the board to replace funds from the BCI's budget with 4A sales tax money. Mr. Mertens stated that this is all new activity. Mr. Gavin stated that he had asked Mr. Mertens to present the draft budget to this group with the assumption that the marketing expenses would be conducted as a separate item than what the BCI is already doing and that none of the proposal would require the board to write a check tomorrow. It may be easier to present it as a general item that would be subject to revision by this board or come back later with a more detail one. Mr. Bullock withdrew his prior motion, then motioned that the BCI submit a proposed marketing budget with the information and amount. Mr. Clymer seconded the motion and stated that if the BCI has requests in the meantime, those should be presented to the board. The 4A board members voted unanimously in favor of the motion. The Chairman stated that the board now needs to take the original draft budget, which excluded the marketing dollars, to the City Council for approval tomorrow. Mr. Clymer motioned that the draft budget be submitted to the City Council tomorrow. Mr. Shores seconded the motion and the vote was unanimously approved by the 4A Sales Tax Board Corporation members. There was no old business discussed by. Mr. Powers stated that according to the by -laws of the board the City should maintain the books. Mr. Bullock motioned that the board retain the City to do the board's financial records. The 4A board members unanimously voted in favor of the motion. Mr. Ron Mertens stated that a potential prospect, Apac of Cedar Rapids, Iowa, which is a large teleservice company, is looking at real estate here and possibly within 30 days will make a decision as to whether or not they will start an operation similar to Blue Cross and Blue Shield. Initially, it is anticipated that the facility will spend about 2.7 million dollars on renovation of the facility and tentative improvement cost will be an additional 6 million dollars. Workforce availability here would be anticipated at 600 full time equivalent operation. Mr. Mertens stated that they are looking at a cash equivalency of about $400,000 of state training money, changing the enterprise zone, and the parking issue on the facility as far as landscape. The BCI anticipates a decision some time in early January. Mr. Mertens said that this group will meet with the 4A board some time in January. Mr. Gavin motioned to adjourn the meeting at 11:30 a.m. The motion was seconded by Mr. Clymer and Mr. Bullock and the meeting was adjourned.