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4A Wichita Falls Economic Development Minutes - 08/16/1999MINUTES OF THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION August 16, 1999 Present: Members: Gary Shores, President Ray Clymer, Vice - President Ron Bullock, Secretary- Treasurer Bo Stahler Lou Rodriguez City Staff: Kay Yeager, Mayor Jim Berzina, City Manager Robert Powers, Assistant City Manager Bill Sullivan, First Assistant City Attorney Linda Merrill, Recording Secretary Others Present: Tim Chase, BCI Budget Group, Inc. Tim Straka, Project Leader Mary Lou Johnson, VP, Reservations Support Services Mary Murcott, Worldwide Reservations Prior to the meeting being called to order, the attendees engaged in brief introductions. President Gary Shores called the meeting to order at 4:03. He called for discussion and/or approval of the minutes. Ray Clymer moved the minutes of the July 19, 1999 meeting be approved as written. This motion was seconded by Bo Stahler and unanimously approved. President Shores then invited Tim Chase of the BCI to address the Board. Mr. Chase stated that for the last six months to a year, Wichita Falls has been on the "radar" regarding its available workforce, buildings, and telecommunications infrastructure. Several companies, either through a third -party service or directly, have expressed an interest in Wichita Falls. One of those companies, Mr. Chase continued, is Budget Group, Inc. Representatives of this company are at today's meeting to discuss the distinct possibility of establishing a reservation call center in Wichita Falls. This project is a culmination of the efforts of several entities, including the Texas Department of Economic Development, Vernon Regional Junior College, the City of Wichita Falls, the 4A Board, the Texas Workforce Commission, and Workforce Center, real estate brokers, and Southwestern Bell. • Wichita Falls Economic Development Corporation August 16, 1999 Meeting Minutes Page 2 of 4 The representatives then each gave a presentation concerning their company's financial picture and an overview of the proposed project. Budget Group is involved in car rentals, truck rentals, and car sales. While 1998 was a year of building and acquisitions, their estimated revenue for 1999 is over $3 Billion. Their management team consists of executives recruited from other successful corporations, including Coca -Cola, Hertz, and Pepsi -Co. Budget's proposed business venture for Wichita Falls is an in -bound reservation call center. They have networked call centers in Toronto, Carrolton, Tampa, and they hope to have one in Wichita Falls, and another location "to be determined." They have looked at 10 cities as possible candidates for this endeavor, and narrowed that list down to 4. Wichita Falls is the front runner. Their primary considerations include the labor market and property. Budget Group hopes to reduce their reservation costs by locating in a better labor market, and build a large enough center to justify the investment in telecommunications technology. Wichita Falls has a high enough unemployment rate, a labor pool consisting of both full- and part-time workers, and there is minimal competition from other call center -type businesses in the area. The company is interested in retrofitting an existing building, with at least 24,000 square feet, windows, and 250 parking spots. They were not prepared to identify the property they are considering, but acknowledged Wichita Falls has two or three properties which would fit their criteria. The business would employee 325 employees at the beginning, with plans to expand to a maximum 500 employees. It would be an inbound call center for car and truck reservations. The business would operate 7 days a week, 24 hours a day. It would require a $9 Million commitment (facility build -out and lease; technology; furniture; start-up costs). Management and support personnel hiring would be accomplished in the fourth quarter of 1999. A job fair is planned for December 1999, and first call for work is set for February 7, 2000. While there will be several job classifications at the center, the majority of workers will be employed as Reservation Agents. The compensation paid to these workers would be $8 per hour, with an incentive plan tied to sales. The benefit package would include health, life and dental insurance; a 401(k) plan; vacation, sick and holiday pay; as well as tuition assistance. Bo Stahler questioned whether the management -level positions will be offered to Budget employees at other locations. The representatives acknowledged they would, but did not anticipate that their employees would move, since the other call center locations are quite a distance from this area, with the exception of Carrolton. Ron Bullock said it spoke well of the company that it offers a chance for advancement within the company. Lou Rodriguez questioned what hours the part-time employees would be needed, and the answer was throughout the schedule. The business is seasonal, and the peak demand for part-time workers will be in the summer. Wichita Falls Economic Development Corporation August 16, 1999 Meeting Minutes Page 3 of 4 Tim Straka discussed the "ramp -up" plan to hire agents. Beginning January 24, 2000, 64 agents would be hired, with successive hirings of 64 agents on 2/14/00, 3/6/00, and 3/27/00, and 44 agents on 4/17/00, for a total of 300 agents. President Shores expressed the Board's appreciation to the BGI representatives for their presentation regarding their business and its plans for Wichita Falls. He asserted his desire that the fifth call center, whose location is designated as TBD (to be determined), should be amended to read to be delayed until BGI sees how well the fourth center works in Wichita Falls, and open the fifth center here, as well. The group turned their attention to the Memorandum of Understanding between Budget Group, Inc. and the Wichita Falls Economic Development Corporation. Mr. Chase noted there was a minor cosmetic change, which was clarified to be the inclusion of attestations for both entities. BGI noted the name of the entity which will stand behind the Memorandum may change to Reservation Services, International. President Shores stated what is being agreed to today is that the 4A Board would recommend to the City Council that the Board pay BGI $2,000 per full -time equivalent job (up to $1 Million) in three installments. The first payment would be given at the signing of the lease of property for the center, and the remaining $600,000 paid based upon the number of jobs created within the parameters of this agreement. Mr. Chase stated the City is also agreeing to not offer incentives to any new call centers until 2002. However, this agreement does not prohibit the offering of incentives to an existing call center if it decides to expand, such as Blue Cross/Blue Shield. Mr. Straka said BGI would like to have a conversation in the summer of 2002 about the labor market. President Shores stated the 4A Board and the BCI feel strongly about business retention, and did not foresee a problem helping BGI with retention or expansion issues. The group then engaged in a discussion concerning the formula for the final payment to BGI, and the penalty it would incur for failing to maintain a full -time equivalent (FTE) count of less than 300. Mr. Straka questioned if, after having received $600,000, BGI failed to meet the $8 requirement by July 1, would it be assessed a 20% penalty on the $600,000. Mr. Chase confirmed that there is a 20% penalty provision of whatever incentives had been paid. The group amended the Memorandum of Understanding (MOU) at item 2, to reflect July 31, 2001 (rather than July 1) as the date for final payment. July 1 was amended to July 31 in item 6, as well. BGI expressed concern that the MOU has a "double indemnity" feature, as item 7 assesses a 20% penalty, and item 8 assesses another 50% penalty, in the event that BGI's "FTE count" falls below 225 in August 2001. After discussion, Mr. Chase suggested they amend item 8 to include a "no less than" phrase. President Shores suggested the following: "Should a refund be required, in no event would it reduce the payment from the City of Wichita Falls to BGI to less than $2,000 per full Wichita Falls Economic Development Corporation August 16, 1999 Meeting Minutes Page 4 of 4 time equivalent." Mr. Stahler moved, seconded by Mr. Bullock, that this proposed change to item 8 be approved. The Board unanimously approved the motion. Mr. Stahler then requested to amend the motion, to include that if there are any minor revisions, that President Shores would have the authority to act on behalf of the entire board. Mr. Rodriguez seconded this amended motion, and all approved. Ray Clymer questioned how long before BGI would be willing to make a firm commitment. Ms. Johnson responded they hoped to do so very quickly, pending the positive outcome of choosing a real estate site. They stressed that BGI wishes to do business here, and these discussions are not a negotiating ploy. Mr. Clymer stated he asked the question because any extended length of time would afford a competing town an opportunity top our proposition. Ms. Johnson stressed these discussions are an attempt to gain clarity, and to assure there are no misunderstandings. President Shores addressed the BGI representatives, stating it would be a pleasure to recommend to the City Council the location of BGI's fourth call center in Wichita Falls, and look forward to having the fifth call center located here, too. Robert Powers clarified that the financial report presented to the Board reflects the check that was received this date. Mr. Bullock made note of the fact that revenues are higher than had been anticipated. By a motion made and seconded by Mr. Clymer and Mr. Bullock, respectively, the meeting adjourned at 5:37 p.m. Recording Secretary Secretary- Treasurer