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4A Wichita Falls Economic Development Minutes - 02/14/2003MINUTES OF THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION Meeting of February 14, 2003 Present: Absent: Members: Bo Stahler, Vice - President Ray Clymer, Member Jim Berzina, Secretary- Treasurer Gary Shores, President Lou Rodriguez, Member City Staff: Matt Benoit, Assistant City Manager Linda Merrill, Recording Secretary BCI Staff: Todd McDaniel, Vice President of Economic Development Guests: Bill Eyster, Pratt - Whitney Debbie Wilson, Pratt - Whitney I. Call To Order. Vice - President Bo Stahler called the meeting to order at 1:05 p.m. II. Consider A Presentation By The Wichita Falls Board Of Commerce And Industry Regarding The Expansion Of A Local Industry And The Use Of Sales Tax Revenues As Defined In A Memorandum Of Understanding. Vice - President Stahler gave the floor to Todd McDaniel, who in turn offered Bill Eyster of Pratt - Whitney the opportunity to address the Corporation. Mr. Eyster stated there were a couple of issues to discuss, the first being the SD5 program. Pratt Whitney came to the 4A Corporation approximately a year and a half ago with this program. Initial investments were reviewed, but Pratt Whitney encountered technical problems and subsequently canceled the project. However, that program is being replaced with this new opportunity, which involves relocating work from another facility in San Diego, California. Mr. Eyster stated this relocation shows the Pratt - Whitney Corporation's sizable vote of confidence in its local employees, as well as an appreciation of the City's incentives to entice businesses to the community. Mr. McDaniel concurred, stating that when the initial Memorandum of Understanding was negotiated, it was understood there was a risk the program would not come to pass, but the potential reward outweighed the risks. This new program easily replaces that initial plan, and will have three times the economic impact upon the community. It has been investigated with the State relative to the enterprise zone program, and it fits in nicely. There are a couple of other community - related support Wichita Falls Economic Development Corporation February 14, 2003 Meeting Minutes Page 2 activities that are being worked towards, as well. This was a competitive situation, and positions the City well to continue to work in partnership to grow the company locally. Vice - President Stahler stated that as he understood it, the Corporation needed to vote to pull out the old Memorandum of Understanding. Mr. Benoit stated that it was his recommendation to leave it in. It will essentially serve the same purpose on the financial statement that the veteran's home and an element of the Cingular deal did at one time. Although it stays on the financial statement, it is not counted in terms of financial obligations. It will serve as a record of a past possible transaction, but will vanish at some future date. Mr. McDaniel stated the only action today is consideration of the new Memorandum of Understanding. He stated it is self explanatory, involving the creation of at least 30 jobs paying a minimum of $14.50 per hour, with the average salary at $19.00 per hour. This is the type of company and type of jobs Wichita Falls desires in the community. He stated the folks at the San Diego facility that are currently making $50,000 can make $20,000 here and have three times the standard of living, and Wichita Falls has that in its favor. Mr. Stahler questioned whether job offers have been made to employees in that community. Mr. Eyster stated yes, but he did not believe there would be very many who would be willing to make the transfer. The relocation of the operations was announced this past Wednesday. Louis Rodriguez questioned the necessary skill level to perform the job functions. Mr. Eyster said the positions will call for fairly skilled individuals. The jobs are very complimentary to what the company does now, all nickel based alloy. Mr. McDaniel stated that Debbie Wilson of Pratt Whitney noted a necessary correction to the MOU under 4.C. The word "average" was omitted from the sentence which reads: "Upon completion of this presentation, a payment will be made to PWC in the amount of $3,000 for every new job created paying a minimum average hourly wage of $14.50 before benefits." Jim Berzina questioned whether the word "presentation" in the sentence referred to the presentation made today to the 4A Corporation. Mr. McDaniel stated no, it meant six months after the jobs have been in place. Mr. Berzina stated that the word presentation was misleading as used in that context, and Vice - President Stahler concurred. Mr. McDaniel stated it is at a date to be determined by Pratt Whitney Corporation (PWC) not to exceed 24 months from the date of this understanding, a presentation will be made by PWC evidencing the creation of these full time jobs. Mr. Berzina stated perhaps the word "requirement" could be used rather than presentation. Vice - President Stahler stated it does make one think of today's presentation. Mr. McDaniel stated that requirement would be fine. Wichita Falls Economic Development Corporation February 14, 2003 Meeting Minutes Page 3 Mr. Berzina asked for clarification on the amount of money paid for the job creations — for 30 jobs, there is a possibility of $90,000, and for 50 jobs, a maximum payment of $100,000, for a total of as much as $500,000. Mr. Benoit stated he took a conservative route with $300,000. In the event significantly more jobs are created resulting in a needed payment in excess of $300,000, the same exercise will be performed again — the City will approach the Corporation, ask it to expend the additional funds, and the Council would then be asked to amend the Corporation's budget so that payment could be made. It would not be a difficult issue. Mr. McDaniel stated he worked with Mr. Benoit on arriving at the $300,000 figure. Mr. Rodriguez questioned the 10% figure. Mr. McDaniel stated it relates to the entire project. Mr. Rodriguez stated it did not read as such. Mr. Berzina agreed, adding that it almost reads like 80 possible jobs. Ms. Wilson stated it is a minimum of 30 jobs, and a maximum of 50 jobs. Mr. McDaniel stated the intent would be for it to apply to all 50 jobs, and 50 would be the maximum. Had all jobs been at the $14.50 per hour range, and none at the $50,000 range or higher, the incentive would be $150,000. Mr. McDaniel stated he could work on cleaning that language for the next MOU, and added that although this language is consistent with prior documents, he agreed it could be more clearly written. He suggested moving the maximum incentive language to paragraph A, where it probably belongs, to establish a minimum and a maximum. Vice - President Stahler asked if this agreement needed to be revised before the Corporation voted on it and before it goes to Council. Mr. McDaniel suggested that the Corporation recommend approval with the changes as recommended. After further discussion, Mr. Stahler read an amendment to 4.c. of the MOU as he understood the desired changes: At a date to be determined by PWC, not to exceed 24 months from the date of this Understanding, a presentation will be made to the WFEDC evidencing the creation of the new full -time jobs. The maximum number of new full -time jobs eligible for this incentive is 50. Upon completion of this hiring provision, a payment will be made to PWC in the amount of $3,000 for every new job created paying a minimum average hourly wage of $14.50 before benefits. Additionally, a premium of 10% of annual salary will be paid for each new job that pays a base salary of at least $50,000 but not more than $100,000. Mr. McDaniel indicated that Mr. Benoit had left the room to make those changes. He also assured the Board that future MOU's will incorporate this language change. Mr. Berzina acknowledged it is difficult to write these types of documents. Lou Rodriguez moved that the WFEDC accept the MOU, as amended at today's meeting. Jim Berzina seconded the motion, and the motion carried. Wichita Falls Economic Development Corporation February 14, 2003 Meeting Minutes Page 4 III. Consider A Resolution Authorizing The Sale Of Land. Mr. McDaniel stated the next item before the Board is a resolution authorizing Gary Shores, or Bo Stahler in his absence, to sign the necessary paperwork to sell the old Levi Strauss building to Covercraft. This action is taken pursuant to a lease - purchase agreement the Board acted on in 2000. The terms of that agreement allow Covercraft to exercise its option to purchase the property at any time during a 10 -year period. Covercraft will purchase the building for approximately $610,000. The WFEDC purchased the building for $607,000, and have received approximately $90,000 in rental revenue. That is approximately a 5.75% return on investment. Vice - President Stahler pointed out that the trigger date is the first of March. Covercraft cannot have this transaction finalized until the latter part of March. It would not be fair to charge them a full year of carrying charges for what amounts to two to three weeks. So the parties have agreed to a pro rata, or annualizing of the numbers. Mr. McDaniel concurred, and indicated that the terms are spelled out in the resolution. Vice - President Stahler stated that it made sense for the company to lease for the first three years, and now is the right time for them to make this purchase. Mr. McDaniel stated that every so often, a plan comes together. Covercraft is very busy, and the Board should be pleased with that activity. The company is now in a good position to purchase the building. Jim Berzina moved to pass the resolution authorizing the sale of the old Levi Strauss building to Covercraft under the terms and conditions of the lease purchase agreement entered into in 2000. Mr. Rodriguez seconded, and the motion carried. Mr. Rodriguez pointed out to Mr. McDaniel that the word "additionally" was not included in the latest draft of the MOU with Pratt Whitney. Mr. McDaniel stated that before Mr. Stahler signs the agreement, an amendment should be made to the agreement, as that is what the Board desired. Mr. Rodriguez stated it clarifies the agreement. Mr. Benoit made the additional change. IV. Adjourn. There being no further business, the meeting adjourned at 1:37 p.m. I L\' � Linda Merrill, Recording Secretary 0 oh B. Stahler, Vice - President