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4A Wichita Falls Economic Development Minutes - 05/27/2003MINUTES OF THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION Meeting of May 27, 2003 Present: Absent: Members: Gary Shores, President Bo Stahler, Vice - President Jim Berzina, Secretary- Treasurer Lou Rodriguez, Member Ray Clymer, Member City Staff: Matt Benoit, Assistant City Manager Linda Merrill, Recording Secretary Bill Altman, Mayor BCI Staff: Tim Chase, President Todd McDaniel, Vice President of Economic Development Guests: Tommy McCulloch, Board of Commerce and Industry I. Call To Order. President Gary Shores called the meeting to order at 10:05 a.m. II. Approval of Minutes: February 3, 2003, and February 14, 2003. Matt Benoit noted that the minutes of February 14, 2003, had been amended to reflect Mr. Stahler as the signatory, rather than Gary Shores (as President Shores did not attend the February 14 meeting). Ray Clymer moved, seconded by Lou Rodriguez, that both sets of minutes be approved. The motion carried unanimously. V. Consider an amendment to the Economic Development Incentive Agreement with Pratt & Whitney Canada, dated February 14, 2003, as authorized by City Council Resolution #12 -2003. VI' Consider an amendment to the Economic Development Incentive Agreement with Warner Electric and its parent company, Colfax Corporation, dated December 17, 2002, as authorized by City Council Resolution #133 -2002. Items V and VI were discussed jointly, as they were similar in nature. Wichita Falrs Economic Development Corporation May 27, 2003 Meeting Minutes Page 2 Tim Chase reminded the Board they approved use of 4A money to locate these businesses in Wichita Falls. As part of the total incentive package, the BCI also asked the State for training money. Mr. Chase noted a success rate of 100% in obtaining this grant money over the past 7 -8 years. However, there is no more money available from the State for the rest of the biennium. The grant was amended and resubmitted with no success. He stated the Board is being asked to consider increasing the grant of money to Pratt Whitney and Wichita Clutch to cover training costs incurred through this biennium. He stated the BCI will re -apply for the grant, and it is possible the State may feel a sense of priority due to its original denial. The amount of money involved amounts to $41,393 for Pratt Whitney, and $35,233 for Wichita Clutch (a subsidiary of Colfax Corporation). Vice - President Stahler asked how much money the Board had committed per job. Mr. Chase replied that there were several other monies allocated to underwrite the costs of moving equipment and improvements. Mr. Benoit estimated approximately $1 million for Clutch, $300,000 for Pratt Whitney. Mr. Chase added the figures were dependent upon how many employees are actually hired. Jim Berzina questioned whether the companies asked for this additional money. Mr. Chase replied affirmatively, stating that both Pratt Whitney and Clutch are disappointed that money from the State is unavailable. He notes, however, that past correspondence with these companies does not guarantee the availability of this money. Mr. Berzina continued, asking if the Board was obligating itself to pay for training in the future, in the event the State does not come through with funding. Mr. Chase acknowledged that 4A funding would probably be looked to in the future. In the last legislative session, a change was made to allow 4A funds to be utilized in such manner. The rules and regulations now mirror that of grant procedures. President Shores asked where Pratt Whitney and Wichita Clutch are at the present time in their commitment level towards the creation of new jobs. Mr. Chase replied they are both moving along very rapidly, Clutch a bit faster than Pratt Whitney. Last week, Clutch made its final move of equipment here to Wichita Falls. It has three - fourths of the job commitments created, while Pratt Whitney is at one - third. Mr. Clymer wondered if the Board would be obligated to provide any additional funds, if it agrees to these requests, to which Mr. Chase responded no. Mr. Clymer then questioned whether it would be possible to ask the State to refund any monies the Board expends. Mr. Chase stated that was a good question, but he did not think so. Vice - President Stahler stated that he was concerned about the precedent this funding might set when dealing with other companies. Wichita Falls Economic Development Corporation May 27, 2003 Meeting Minutes Page 3 President Shores declared that the training grant was to be payable in two separate installments. Mr. Chase stated that the grant was broken into two phases when the original grant was unsuccessful. President Shores replied, if the Board pays the funding this year, there is a good chance it will be expected to pay it again next year. Mr. Chase replied it would be his suggestion that the Board make it clear that it is paying only for this year's training. The Board is in control of this expenditure. President Shores acknowledged that the companies are only asking for this year's payment, and questioned the total amount of the request. Mr. Chase stated Pratt Whitney's total request was for $52,336, while Wichita Clutch had requested $72,355. President Shores noted that Pratt Whitney's request is approximately 80% of its total request, Wichita Clutch approximately one -half of its request. Yet Pratt Whitney is further behind in its hiring than is Clutch. Mr. Chase acknowledged this, but noted that Pratt Whitney got started later. Mr. Berzina asked if companies view this training funding as a big incentive. Mr. Chase stated they do; in fact, he is amazed at what states are paying in recent projects around the country — as much as $15,000 to $17,000 per employee for training. San Antonio built a new school to train employees for the Toyota plant. He believes training will become an even greater incentive in the future. Mr. Berzina questioned whether Mr. Chase envisioned an established company in Wichita Falls, such as CertainTeed, approaching the City with a demand for financial assistance for training in order to keep the company in Wichita Falls. Mr. Chase stated that could be a possibility, as it is a very definable, manageable expense. Vice - President Stahler wondered what the chances are the State will put money back into this grant program, if there is no money available now. Mr. Chase stated that he had not seen anything to indicate the State will not fund the program in the next biennium. Mr. Berzina asked if he envisioned it would be at the same level of funding, and Mr. Chase replied affirmatively. Mr. Clymer stated the Board has $10 million in reserve. He moved that the Board fund it, and further added that the publicity will be favorable for the Board. President Shores stated he agreed, but was concerned that 80% was being given to Pratt Whitney, when they are only at 30% of their commitment level for jobs creation, Wichita Clutch is only asking for 30 %, while they are at 80% of their commitment. Mr. Chase pointed out that the companies will come back with the actual financial request when the projects are significantly completed. There is no action being requested of the Board today. ti I Wichita Falls•Economic Development Corporation May 27, 2003 Meeting Minutes Page 4 President Shores then asked why approval of payment of the total amount of money was not being requested. Mr. Chase replied the thought was to ask the least amount of money from the Board. However, the Board could certainly choose to fund the entire amount. President Shores then suggested the Board fund the entire amount, with a cap. Mr. Chase stated there is a definable number from the grant. President Shores asked whether the training grant was predicated upon creation of a certain number of jobs, and Mr. Chase replied, yes. President Shores then suggested the Board use that formula; at a date certain, for whatever percentage of jobs has been created, the Board will pay that percentage of the training grant. He then asked if Mr. Clymer would amend his motion to include the entire amount, and Mr. Clymer concurred. Lou Rodriguez stated at the very least, the City will have a trained labor force. Mr. Chase stated he will contact Dr. Susan Couch of Vernon College, to make sure the formula the grant uses is available for the Board to use in the same manner. Mr. Benoit stated the companies will come back and visit with the Board at a later date to specifically request this money, at which time the Board will consider amended Memorandums of Understanding. Ill. Executive Session: Consider Real Estate Acquisition Matters, as Authorized by Section 551.072 of the Texas Government Code. President Shores announced the executive session began at 10:24. The Board adjourned out of executive session at 11:50. IV. Consider Action Related To The Acquisition Of Real Estate, Consulting Fees And /Or Construction Fees For The Development Of A Business Park In Wichita Falls. No action was taken by the Board. VI. Consider reimbursing certain expenses incurred by the Wichita Falls Board of Commerce and Industry for the due diligence effort associated with the development of a business park in Wichita Falls. Vice - President Stahler moved that the BCI be reimbursed up to $10,000.00 for its due diligence effort associated with the development of a business park in Wichita Falls. The motion, seconded by Mr. Clymer, carried unanimously. VIII. Adjourn. There being no further business, the meeting adjourned at 11:50 a.m. Wichita Falls Economic Development Corporation May 27, 2003 Meeting Minutes Page 5 C Linda Merrill, Recording Secretary J h B. Stahler, Vice Chairman MINUTES OF THE RECEIVED IN CITY CLERK'S OFFICE Date C/o By WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION Meeting of May 27, 2003 Present: Absent: Members: Gary Shores, President Bo Stahler, Vice - President Jim Berzina, Secretary- Treasurer Lou Rodriguez, Member Ray Clymer, Member City Staff: Matt Benoit, Assistant City Manager Linda Merrill, Recording Secretary Bill Altman, Mayor BCI Staff: Tim Chase, President Todd McDaniel, Vice President of Economic Development Guests: Tommy McCulloch, Board of Commerce and Industry I. Call To Order. President Gary Shores called the meeting to order at 10:05 a.m. II. Approval of Minutes: February 3, 2003, and February 14, 2003. Matt Benoit noted that the minutes of February 14, 2003, had been amended to reflect Mr. Stahler as the signatory, rathe, than Gary Shores (as President Shores did not attend the February 14 meeting). Ray Clymer moved, seconded by Lou Rodriguez, that both sets of minutes be approved. The motion carried unanimously. V. Consider an amendment to the Economic Development Incentive Agreement with Pratt & Whitney Canada, dated February 14, 2003, as authorized by City Council Resolution #12 -2003. VI' Consider an amendment to the Economic Development Incentive Agreement with Warner Electric and its parent company, Colfax Corporation, dated December 17, 2002, as authorized by City Council Resolution #133 -2002. Items V and VI were discussed jointly, as they were similar in nature. Wichita Falls Economic Development Corporation May 27, 2003 Meeting Minutes Page 2 Tim Chase reminded the Board they approved use of 4A money to locate these businesses in Wichita Falls. As part of the total incentive package, the BCI also asked the State for training money. Mr. Chase noted a success rate of 100% in obtaining this grant money over the past 7 -8 years. However, there is no more money available from the State for the rest of the biennium. The grant was amended and resubmitted with no success. He stated the Board is being asked to consider increasing the grant of money to Pratt Whitney and Wichita Clutch to cover training costs incurred through this biennium. He stated the BCI will re -apply for the grant, and it is possible the State may feel a sense of priority due to its original denial. The amount of money involved amounts to 341,393 for Pratt Whitney, and 335,233 for Wichita Clutch (a subsidiary of Colfax Corporation). Vice- President Stahler asked how much money the Board had committed per job. Mr. Chase replied that there were several other monies allocated to underwrite the costs of moving equipment and improvements. Mr. Benoit estimated approximately $1 million for Clutch, $300,000 for Pratt Whitney. Mr. Chase added the figures were dependent upon how many employees are actually hired. Jim Berzina questioned whether the companies asked for this additional money. Mr. Chase replied affirmatively, stating that both Pratt Whitney and Clutch are disappointed that money from the State is unavailable. He notes, however, that past correspondence with these companies does not guarantee the availability of this money. Mr. Berzina continued, asking if the Board was obligating itself to pay for training in the future, in the event the State does not come through with funding. Mr. Chase acknowledged that 4A funding would probably be looked to in the future. In the last legislative session, a change was made to allow 4A funds to be utilized in such manner. The rules and regulations now mirror that of grant procedures. President Shores asked where Pratt Whitney and Wichita Clutch are at the present time in their commitment level towards the creation of new jobs. Mr. Chase replied they are both moving along very rapidly, Clutch a bit faster than Pratt Whitney. Last week, Clutch made its final move of equipment here to Wichita Falls. It has three - fourths of the job commitments created, while Pratt Whitney is at one - third. Mr. Clymer wondered if the Board would be obligated to provide any additional funds, if it agrees to these requests, to which Mr. Chase responded no. Mr. Clymer then questioned whether it would be possible to ask the State to refund any monies the Board expends. Mr. Chase stated that was a good question, but he did not think so. Vice - President Stahler stated that he was concerned about the precedent this funding might set when dealing with other companies. Wichita Falls Economic Development Corporation May 27, 2003 Meeting Minutes Page 3 President Shores declared that the training grant was to be payable in two separate installments. Mr. Chase stated that the grant was broken into two phases when the original grant was unsuccessful. President Shores replied, if the Board pays the funding this year, there is a good chance it will be expected to pay it again next year. Mr. Chase replied it would be his suggestion that the Board make it clear that it is paying only for this year's training. The Board is in control of this expenditure. President Shores acknowledged that the companies are only asking for this year's payment, and questioned the total amount of the request. Mr. Chase stated Pratt Whitney's total request was for $52,336, while Wichita Clutch had requested $72,355. President Shores noted that Pratt Whitney's request is apprcximately 80% of its total request, Wichita Clutch approximately one -half of its request. Yet Pratt Whitney is further behind in its hiring than is Clutch. Mr. Chase acknowledged this, but noted that Pratt Whitney got started later. Mr. Berzina asked if companies view this training funding as a big incentive. Mr. Chase stated they do; in fact, he is amazed at what states are paying in recent projects around the country — as much as $15,000 to $17,000 per employee for training. San Antonio built a new school to train employees for the Toyota plant. He believes training will become an even greater incentive in the future. Mr. Berzina questioned whether Mr. Chase envisioned an established company in Wichita Falls, such as CertainTeed, approaching the City with a demand for financial assistance for training in order to keep the company in Wichita Falls. Mr. Chase stated that could be a possibility, as it is a very definable, manageable expense. Vice - President Stahler wondered what the chances are the State will put money back into this grant program, if there is no money available now. Mr. Chase stated that he had not seen anything to indicate the State will not fund the program in the next biennium. Mr. Berzina asked if he envisioned it would be at the same level of funding, and Mr. Chase replied affirmatively. Mr. Clymer stated the Board has $10 million in reserve. He moved that the Board fund it, and further added that the publicity will be favorable for the Board. President Shores stated he agreed, but was concerned that 80 0/o was being given to Pratt Whitney, when they are only at 30% of their commitment level for jobs creation, Wichita Clutch is only asking for 30 %, while they are at 80% of their commitment. Mr. Chase pointed out that the companies will come back with the actual financial request when the projects are significantly completed. There is no action being requested of the Board today. Wichita Falls Economic Development Corporation May 27, 2003 Meeting Minutes Page 4 President Shores then asked why approval of payment of the total amount of money was not being requested. Mr. Chase replied the thought was to ask the least amount of money from the Board. However, the Board could certainly choose to fund the entire amount. President Shores then suggested the Board fund the entire amount, with a cap. Mr. Chase stated there is a definable number from the grant. President Shores asked whether the training grant was predicated upon creation of a certain number of jobs, and Mr. Chase replied, yes. President Shores then suggested the Board use that formula, at a date certain, for whatever percentage of jobs has been created, the Board will pay that percentage of the training grant. He then asked if Mr. Clymer would amend his motion to include the entire amount, and Mr. Clymer concurred. Lou Rodriguez stated at the very least, the City will have a trained labor force. Mr. Chase stated he will contact Dr. Susan Couch of Vernon College, to make sure the formula the grant uses is available for the Board to use in the same manner. Mr. Benoit stated the companies will come back and visit with the Board at a later date to specifically request this money, at which time the Board will consider amended Memorandums of Understanding. 111. Executive Session: Consider Real Estate Acquisition Matters, as Authorized by Section 551.072 of the Texas Government Code. President Shores announced the executive session began at 10:24. The Board adjourned out of executive session at 11:50. IV. Consider Action Related To The Acquisition Of Real Estate, Consulting Fees And /Or Construction Fees For The Development Of A Business Park In Wichita Falls. No action was taken by the Board. VI. Consider reimbursing certain expenses incurred by the Wichita Falls Board of Commerce and Industry for the due diligence effort associated with the development of a business park in Wichita Falls. Vice- President Stahler moved that the BCI be reimbursed up to $10,000.00 for its due diligence effort associated with the development of a business park in Wichita Falls. The motion, seconded by Mr. Clymer, carried unanimously. VIII. Adjourn. There being no further business, the meeting adjourned at 11:50 a.m. ' Wichita Falls Economic Development Corporation May 27, 2003 Meeting Minutes Page 5 c Linda Merrill, Recording Secretary J h B. Stahler, Vice Chairman