4A Wichita Falls Economic Development Minutes - 08/30/2004MINUTES OF THE
WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION
Meeting of August 30, 2004
Present.
Members: Gary Shores, President
Bo Stahler, Vice - President
Jim Berzina, Secretary- Treasurer
Lou Rodriguez, Member
Elected
Officials: Bill Altman, Mayor
City Staff: Matt Benoit, Assistant City Manager
Linda Merrill, Recording Secretary
BCI Staff: Tim Chase, President
Tommy McCulloch, President, Board of Directors
I. Call To Order.
President Gary Shores called the meeting of the Wichita Falls Economic
Development Corporation (WFEDC) to order at 4:05 p.m.
II. Approval of Minutes — March 12, 2004.
Vice - President Bo Stahler noted a correction on page 4; "Interest in picking up"
should be changed to "Interest is picking up." In addition, the minutes were changed to
reflect that Mr. Stahler sign the minutes, rather than Mr. Shores, as Mr. Shores was not
present for the March 12 meeting. With those corrections, Mr. Stahler moved that the
minutes be approved. The motion was seconded by Lou Rodriguez, and unanimously
approved.
III. Consider Budget for FY 2004 -2005.
Tim Chase presented an official letter of request. The BCI's Board of Directors
agreed to ask for the same amount from the Corporation: $135,000 to offset a portion
of its operational costs for economic development. The sum of $30,000 has been in
place for several years as a contingency fund for professional services. He noted the
BCI has never come close to spending that much.
Mr. Stahler asked if that sum starts over each year. Mr. Benoit stated the money
goes into the Corporation's cash balance; it is not cumulative.
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park. Mr. Chase stated that $35,000 is requested to continue to market the business
President Shores noted he had no problem with the budget, as it is the same as
last year's request. He questioned the progress on hiring an economic development
employee for the BCI.' Mr. Chase stated the BCI has received nine resumes. The
deadline for submission is September 15. He is pleased with the broad scope of
experience presented. Most applicants are from Texas; a couple of them are from
Illinois. The position was posted on both the International and Texas Economic
Development websites.
There is a Texas Economic Development Council meeting in Dallas shortly after
the application deadline. He hopes to be able to interview a group of the applicants
there. There is also an International Economic Development Council meeting earlier in
September, but he does not foresee enough applicants attending to warrant his own
attendance. He is fairly well encouraged by the responses received to date.
President Shores asked when it would be anticipated the new employee would
be on board. Mr. Chase hoped to have someone hired and working by the first of
November, perhaps by mid - October.
Tommy McCulloch noted the Executive Committee of the BCI tried to decide how
best to use the new employee. Tim Chase put together various scenarios. The decision
was made to get another person for about the same salary as earned by Todd
McDaniel. At Mr. Chase's request, the Committee agreed that he should spend a higher
percentage of his time on economic development work than he has in the past. Given
that there is a change of command at Sheppard Air Force Base, it seems that less of
Mr. Chase's time will be spent on military matters, as compared to the time spent when
General Rooney was in command at the base.
There was discussion on the amount of time spent on economic development,
as well as the time spent on military affairs. The history of the adopted squadron
program was discussed. Tim Chase noted that this program was created in the last
1950's, and only three people over the course of 40 years had managed it. Before the
BCI took it over, retired Col. Bob Hayley had been the most recent overseer. The BCI
has spent some time in organizing the program, and in finding companies willing to
participate. There are about 53 opportunities for adopted squadrons.
Mr. Stahler asked about General Rooney's comments about the Adopted
Squadron's effectiveness. Mr. McCulloch replied that Brig. General Whitmore wants it
left as it is. Mr. Chase noted General Rooney wanted to move to the Honorary
Commander program. It may be possible to do a combination, picking the best of both.
' Todd McDaniel, former BCI economic development employee, resigned from his position earlier this
summer.
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August 30, 2004
Minutes
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Mr. Stahler asked if it would stay under the umbrella of the BCI, and Mr. Chase replied
affirmatively.
Mr. Chase continued, stating the business side, where SAFB and the community
touch, has taken a lot of time, in part because of BRAC. In order to have everything
covered and done well, it takes a great deal of time. He estimates spending 30 % -35%
of his time on this type of work. On the other hand, SAFB is absolutely the largest
economic development engine this community has. If work in this area keeps the base
here, or influences more jobs and more missions, that is just as powerful an economic
development mission as recruiting a manufacturer.
Mr. McCulloch noted the job duties of the to -be -hired employee would depend
upon their skills set. They may do 100% economic development, or they may have
other duties that will assist Mr. Chase.
Mr. Stahler suggested that the individual on the executive committee who is
assigned to co -chair military functions to run that responsibility during their term.
Mr. Chase stated a volunteer committee would probably be created to be responsible
for the social aspects, as the military affairs committee is responsible for the business
side. It cannot be done exclusively by volunteers, but they will be necessary to pick up
some of the slack.
President Shores asked if the intent was to pay the new employee the salary that
was paid to Todd McDaniel. Mr. Chase stated that is not yet known. Some of the
applicants are currently making $95,000 - $100,000. Wages are increasing in the
business. He supposes that $60,000 will be the minimum salary; Todd McDaniel was
making $70,000. He guesses the salary will be between $60,000 to $80,000, depending
upon qualifications.
Mr. Altman urged the BCI not to think in terms of a minimum, but rather, find
someone good at the job. If it is necessary to pay an extra $10,000 - $15,000 to find
someone to make a difference, then do so.
Mr. Altman questioned Matt Benoit regarding the budget, and whether the
Corporation had authorized the expenditure of marketing money for the business park.
Mr. Benoit stated it is contained in the FY 2003 proposed original business park budget
amendment, within the $1.5 Million. Approximately $22,000 - $24,000 of the $35,000 has
been spent.
Mr. Altman noted that he does not feel the Corporation has been aggressive
enough on economic development. He wants a plan to be proactive, rather than to wait
for people to express interest. He doesn't want to spend money indiscriminately, but the
Corporation has accumulated a huge amount of money, and he would like to spend
more of it to market the community.
Mr. McCulloch stated the BCI would come back to the Corporation in 90 days
with a budget and a plan to make calls where the businesses are. Mr. Chase had
Wichita Falls Economic Development Corporation August 30, 2004 Meanng Minutes Page 4
outlined a starting point, a campaign to advertise Wichita Falls further, and to market
the business park.
Mr. Chase stated the plan would continue marketing the business park. For the
past 6 -8 years, the model for success involved real estate. Businesses would come to
Wichita Falls to make use of vacant buildings. Wichita Falls no longer has the inventory
of vacant buildings. The process needs to be changed; Wichita Falls needs to find
companies that bring their real estate solutions with them.
In order to target that type of company, it is necessary to get to the direct linkage
between the real estate vice presidents for those companies, and determine which of
those companies have under - capacity, or are looking to build capacity. The BCI has
spent $6,000 on new data - finding software. They are about one -third of the way
through the process, and although it's too early to tell, they appear to be making
progress. He also feels Wichita Falls should market a mega site, for projects that need
1,000 -1,500 acre sites. Not too many communities can develop such a one -owner site
with infrastructure and visibility. This could be a competitive advantage for Wichita Falls,
perhaps for warehouse distribution, large assembly facilities, or process manufacturing.
Tennessee is doing that, and is assembling a marketing book of available mega sites
throughout the state.
Mr. Shores asked for clarification that the BCI would come back with a
supplemental budget request. Mr. McCulloch replied affirmatively. Mr. Shores asked if it
was necessary to approve any budget today, or wait for the supplemental budget
request. Mr. Chase stated he would defer to Mr. Benoit, but he is of the opinion that
every time this group meets and takes action, it results in a budget amendment.
Mr. Stahler stated this would reallocate money in the budget, not change the
budget. Mr. McCulloch stated this project would involve new funds. Mr. Stahler stated
that, based on the budget approved at the beginning of the year, it already includes the
$2.5 Million of 4a money that is proposed for the year. During the course of the year, if
some of that is spent for a particular project, it should not call for a revision of the
budget. Mr. Benoit states a revision of the budget is necessary under that scenario. Jim
Berzina stated that the Council is about to adopt 4a and 4b budgets at the same time in
the budgetary process. The Corporation has the sum of $14 Million projected at the end
of this upcoming fiscal year. During the course of the year, if the Corporation needs to
use some of that money, it recommends to the Council that it be spent. That money
then gets appropriated. Mr. Stahler doesn't understand why, if the money is being
appropriated out of the $14 Million projected, a budget revision is necessary. Mr. Benoit
stated that, granted, the $14.2 Million at the end of this year is there to spend. The
budget amendment is the process where the Council gives expenditure authority for the
project. The budget amendment ties together the fact that 4A wants to use the money,
and Council approves that amendment.
President Shores stated the budget supplemental request expected by the BCI
would also go before the Council. Mr. Altman stated the Council would adopt a fiscal
year budget beginning October 1; this proposed amendment will come after that date.
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Mr. Altman asked Mr. Benoit, regarding the proposed income, if the 2.8 is flat
with this year's tax. Mr. Benoit replied affirmatively.
Mr. Altman then noted there is a limitation as to how much money can be spent
on promotion. Mr. Berzina stated it is 10% of the current estimated revenue, not what is
"in the bank." Mr. Altman stated he would like to move the $35,000 for the marketing of
the business park into the 2003 -04 budget. It is allocated for this year, but may not be
spent until next year. That would provide additional money and a desired flexibility.
Mr. Berzina stated that figure is not cumulative; if not spent, it lapses into the fund
balance. It could be encumbered, but it would have to be for a specified project.
Mr. Rodriguez stated this budget has been pretty well reasoned out, and is a
conservative estimate on revenues. He thinks it might be well to approve it, and
evaluate any supplemental budget increase request at the appropriate time.
Mr. Chase stated that he Mr. McCulloch had discussed how to bring together
folks with a vested interest to determine how to market, and any necessary changes
based on the current economic conditions. He envisions having the Corporation
members' involvement in a couple of work sessions.
Mr. Rodriguez moved that the budget be accepted as presented. The motion
was seconded by Mr. Stahler.
President Shores asked Matt Benoit to review the encumbrances in the
$1.6 Million.
Mr. Benoit stated the following are still outstanding:
• Cryovac (Phase 2 and Phase 3)
• ABB Control
• EMD Engineering
• Wichita Clutch
• Pratt Whitney
• Business Park
• Sharp Iron
Of those, Mr. Shores asked Mr. Chase if the funds still going to be needed.
Mr. Chase noted that Blue Cross /Blue Shield is closed out.
He sees nothing on the horizon for Cryovac Sealed Air to need the additional
$380,000. They estimated approximately 80 -85 jobs, and created 50. That probably
won't change unless they develop a new line.
Mr. Chase continued, stating the project for which ABB requested assistance
never materialized. Mr. Stahler noted that they are adding on to their building.
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Mr. Chase noted that EMD's expansion project might still be viable. They
continue to send letters expressing their intention to do that expansion.
Mr. Benoit stated the Wichita Falls Refurbishment project was replaced by Pratt
Whitney, and is not included in the encumbrance. Mr. Chase noted there is a second
reconciliation to take place regarding Pratt Whitney. There has been some talk about
moving of the Wichita Clutch's UK facility. However, it is being purchased by another
company, making this the third ownership change in seven years.
Mr. Chase stated that Cingular has been closed out. He also noted there is a
timeframe on the Corporation's commitment to these companies. When that date gets
close, he contacts the respective companies to determine the status of their progress.
Mr. Benoit stated Sharp Iron is getting close. EMD is not projected to be through
their with expansion until 2006.
Mr. Chase stated an update is easily done, and is usually accomplished in the
course of business.
The budget amendment was unanimously approved.
IV. Consider Election of Officers.
Mr. Rodriguez moved to keep the current slate of officers (Gary Shores,
President; Bo Stahler, Vice - President; Jim Berzina, Secretary- Treasurer). President
Shores called for any other nominations. There were none. Jim Berzina seconded the
motion, and it carried unanimously.
V. Consider Request for Funding from TMAC (Texas Manufacturing
Assistance Center)
Tim Chase noted that TMAC is a federally- funded organization that operates in
all states. Its purpose is to give insights into operational issues to small to mid -size
manufacturers that do not have the financial ability to hire consultants. Federal funds
have been drastically reduced, and these organizations are facing the possibility of
ceasing to exist.
Wichita Falls is within the jurisdiction of the TMAC housed out of Texas Tech,
headed by Waylon Ward. Mr. Chase contacted the companies that TMAC has assisted
in this community. He was very impressed with every response. The companies stated
that TMAC offers an outstanding service and opportunity they might not otherwise be
able to obtain.
President Shores notes that TMAC has requested the following: if a Wichita Falls
industry wants to use TMAC's services, would the WFEDC be willing to offset a portion
of those costs to the manufacturer. Otherwise, Mr. Shores noted, he is sure another
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acceptable option would be a financial commitment directly to TMAC to offset the lost
federal funds.
Mr. Chase noted he had spoken with Mr. Ward, and referenced the proposal in a
letter furnished to the Corporation. The 4A Corporation would be approached to pick up
between 50 % -75% of the project, not to exceed $7,500 per company. TMAC believes
very strongly that the companies must put some cash on the table. It would be handled
on a case -by -case basis. The requesting company would appear before the
Corporation with a proposal. Mr. Chase feels some criteria would have to be developed,
in order to provide for continuity in responses to requests. Such criteria could include
that the outcome would create new jobs, or reduce operating costs and thus make the
company more competitive in the marketplace.
Mr. Benoit stated it appeared they would act as a consultant. Mr. Chase
concurred. He stated that sometimes companies may not know specifically what they
need to do, but are aware they need to develop some cost - cutting measures. Jim
Berzina noted by the informational materials provided, it looks like a training course.
Mr. Chase stated it is not just training, however; TMAC also provides utility impact
analysis, and information on lean manufacturing, including ISO 9000 up to 12000.
Mr. Rodriguez stated he would be agreeable to moving forward to a presentation
by TMAC. The Corporation would have control over the process. One of the big names
of the game today is creating more efficiency in order to survive.
Bill Altman noted he would not mind a presentation, but worries how the
Corporation would say no, once it opened the door to this program. In addition, the
companies would recoup their costs, as the consulting services furnished would have a
cost savings built -in.
President Shores reiterated that there would need to be parameters as to what
the Corporation would be willing to finance. Mr. Chase stated those parameters could
be detailed to TMAC, and they would not pitch something that would not fit within those
parameters. Although the companies would recognize a cost savings afterwards, most
of these companies could not afford to write a check to TMAC for $7,500, but might be
able to write a check for $3,000.
Mr. Berzina asked if TMAC had a staff. Mr. Chase stated they did not have a
huge staff. TMAC would look to local folks to provide training, such as Vernon College
of Midwestern State University. There may also be a group of folks who contract with
TMAC to provide certain training, probably private consultants.
President Shores opined that one of the Corporation's functions is to provide for
companies to be more efficient and competitive.
Mr. Stahler asked if Mr. Chase would come back to the Corporation with
recommendations as to the criteria. Mr. Chase stated the BCI did not mind championing
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lust 30, 2004 M`6=ung Minutes Page 8
this project, but he felt it important to work in conjunction with TMAC. President Shores
felt it was necessary to set out parameters before getting started on the project.
Mr. Altman queried how the Corporation would proceed if other organizations,
such as Jim Lundy, asked for similar assistance. Mr. Lundy charges $5,000, and
Mr. Altman knows of at least one company that says his services have done a world of
good. President Shores stated any project would need to tie into economic
development. Mr. Stahler noted that Jim Lundy provides public relations assistance,
and would not fit within the economic development aspect. Mr. Chase stated the
Corporation would enter into a contract, and pay only TMAC. It is possible that TMAC
could hire Mr. Lundy to provide training, if appropriate, and he could become a vendor
for TMAC.
Mr. Chase reiterated that the cost to the Corporation would not exceed $7,500
per company. Mr. Stahler asked how many manufacturing plants are in Wichita Falls.
Mr. Chase replied 186. Mr. Stahler stated that this project could get rather expensive.
Mr. Berzina suggested the Corporation specify a not to exceed total budget figure.
Mr. Altman stated he would like to see TMAC's budget.
President Shores asked Mr. Chase to draw up a list of criteria, and then a
meeting will be scheduled with Waylon Ward.
VI. Other Business.
Mr. Chase noted the original purpose of this meeting was to include an incentive
package on the table for one of the area's larger industries. He still has hopes this will
happen, possibly in December.
Mr. Rodriguez asked Mr. Chase's opinion on the community's economic climate.
Mr. Chase replied that productivity continues to grow, but with no increase in jobs.
Specific to manufacturing, 76% of the total capacity across the nation was being used.
That leaves a huge amount of underused space. Until that figure reaches 85 %,
companies do not look for new facilities in manufacturing. They go into existing spaces
and retrofit. However, old buildings are functionally obsolete for today's businesses. By
and large, all industries are experiencing increased volumes over this time last year.
From a standpoint of new hires, only Howmet is in the process of adding back.
President Shores asked about business park prospects. Mr. Chase replied there
had been no inquiries in the last 90 days. Two rounds of postcards have been sent; the
next round is to be specific to the aerospace industry, using the number of 100 folks
coming out of SAFB on an annual basis with highly developed aviation maintenance
skills.
Mr. Altman stated that Wichita Falls does not yet have a business park. It only
has the dream of a business park, until there is some infrastructure and something for
people to look at. Companies want to do business in six to nine months.
Wichita Falls Economic Devb,.iment Corporation August 30, 2004 �C.,ng Minutes Page 9
The Coyo Company, which makes rack and pinion steering for 26 % -28% of the
vehicles made in North America, announced the construction of a new plant in Ennis,
Texas, according to Mr. Chase. He reported that the company liked what they saw
here. He cannot say "if this, then that," but he does believe if Wichita Falls had had a
site ready to go, they might have decided on Wichita Falls instead.
Mr. Altman noted that Lamar Advertising had a program in operation while
Johnny Burns was on the Council, where they had unused board space they were
willing to donate to the City. The City would only have to pay for the vinyl. The program
is still available. MSU has a sign under this program, and all they paid was $1,800 for
the vinyl. The Business Park could be advertised in the same way, at a very low cost.
Mr. Chase stated it would be very simple to do. If underwritten by Lamar Advertising,
that would be_great, but it needs to be done regardless.
VII. Adjourn.
The meeting adjourned at 5:05 p.m.
Linda Merrill, Recording Secretary
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Gary S ores, President