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4A Wichita Falls Economic Development Minutes - 08/15/2024 MINUTES OF THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION AUGUST 15, 2024 PRESENT: Leo Lane, President § WFEDC Members Phyllis Cowling, Secretary-Treasurer § Brent Hillery § Tim Short, Mayor § Mayor& Council Bobby Whiteley, Councilor at Large § Tom Taylor, Councilor, District 5 § Paul Menzies, Assistant City Manager § City Administration Blake Jurecek, Assistant City Manager § Kinley Hegglund, City Attorney § Stephen Calvert, CFO & Dir. of Finance § Russell Schreiber, Dir. of Public Works § Terry Floyd, Dir. of Development Services § Chris Horgen, Public Information Officer § Paige Lessor, Legal Asst/ Recording Secretary § Ron Kitchens, CEO § Wichita Falls Chamber of Commerce Moriah Williams, Partner § Vicki Pratt, Partner § Amy Raymond § Wichita Clutch Torn Sharp § Absent: David Toogood, WFEDC Vice President § Darron Leiker, WFEDC Member § 1. CALL TO ORDER Mr. Leo Lane called the meeting to order at 2:30 p.m. 2. CONSENT AGENDA a. Approval of Minutes (July 18, 2024) b. Financial Report Mr. Menzies addressed the Board and advised that sales tax is running flat, currently about 0.7% below the same period last year. There will be a more detailed discussion on sales tax during the budget review later in the meeting. This month, the unencumbered available funds total approximately $13 million. Mr. Hillary moved to approve the consent agenda as presented. Seconded by Ms. Cowling WFEDC MINUTES 8/15/2024 PAGE 1 OF 4 and with no further discussion or public comment, the motion carried 3-0. 3. DISCUSSION AND POSSIBLE ACTION RELATED TO THE PROPOSED INCENTIVE PACKAGE FOR WARNER ELECTRIC, LLC, DBA WICHITA CLUTCH. Ms. Vicki Pratt introduced the proposed incentive package, mentioning that two Warner Electric representatives were present. Ms. Pratt explained that the company was seeking an incentive of up to $7,500 for each new job created, with an anticipated five new jobs if they secure the production line for Wichita Falls. Mr. Lane stated that the Board heard the proposal presentation at the previous meeting and asked if there were any questions from the Board or Council Members. Mr. Lane indicated that Ms. Cowling was not present at the last meeting but had received all the information regarding the proposal. Mr. Hillery made a motion to authorize a cash-for-lobs incentive for the creation of five new full-time positions in the amount of up to $37,500 at the rate of $7,500 per full-time position created to be paid to Warner Electric after the sixth consecutive month of employment, and upon acceptable documentation of employment, until December 31, 2025. Ms. Cowling seconded the motion but had some follow-up questions. Mr. Lane called for discussion after the motion and the second. Ms. Cowling asked for clarification as to how the $7,500 per job incentive aligned with the Board's established incentive guidelines. Ms. Pratt confirmed that the proposal did fit within the guidelines, referencing the value of the new jobs and equipment. Ms. Pratt offered to provide additional information after the meeting if necessary. Mr. Ron Kitchens pointed out that the economic impact analysis, which ties the incentive back to the guidelines, was handed out at the previous meeting. Ms. Cowling acknowledged the clarification and deferred to those who reviewed the distributed materials. Mr. Lane called for any further discussion and asked for public comment before moving forward with the vote. Mr. Lane then called for the vote. The motion carried 3-0. 4. DISCUSSION AND POSSIBLE ACTION RELATED TO AMENDING THE EXISTING INCENTIVE PACKAGE WITH BH DEVCO. Mrs. Moriah Williams introduced the topic and explained that BH Devco representatives were unavailable due to an emergency but were open to answering questions via phone. Mrs. Williams outlined the bid process involving their contractor, Catamount, and highlighted that a 25% escrow (roughly $736,000) is required for contingency, mainly for unforeseen environmental issues. The estimated project cost is $2.97 million, but the proposal seeks to increase the approved reimbursement from $2.8 million to $3 million to cover potential additional costs. Mr. Lane asked if approval of the escrow was needed, and Mr. Kitchens confirmed that it was. Mr. Kitchens further explained that the escrow is set aside for unexpected environmental issues like buried waste or archaeological finds, not for unforeseen construction costs. Ms. Cowling inquired about the motion, which included $3 million in reimbursement plus an additional $736,855 for escrow. Ms. Cowling then asked for clarification about the incentive for BH Devco to value-engineer the project to keep the costs down. Mr. Russell Schreiber explained that the city's public works staff would ensure the project meets standards before reimbursement is issued. Mr. Kitchens mentioned that value engineering could lower costs, and BH Devco had not finalized agreements with all subcontractors yet. Also, additional surplus funds of $240,000 to $250,000 for materials testing and contingencies were already included. Mr. Menzies confirmed that any unused escrow or reimbursement funds would be WFEDC MINUTES 8/15/2024 PAGE 2 OF 4 refunded to the City's account. If the total cost is less than $3 million, the City won't reimburse the full amount. Ms. Cowling also asked about the sale of 28 acres of land at the Wichita Falls Business Park, priced at just under $2 million. Mr. Kitchens confirmed the land price was set at $70,000 per acre, backed by fair market value assessments. The funds from the land sale and bond money will be used to cover the costs of the roadway extension and related utilities. After clarifying details about the reimbursement process and ensuring adherence to bond purposes, Ms. Cowling made a motion to authorize the sale of 28 acres, more or less referred to as lot 6A — F of the Wichita Falls Economic Business Park, in the amount of $1,966,407. In addition, the City of Wichita Falls Economic Development Corporation will reimburse BHD Land Development, LLC in an amount not to exceed $3 million for the design and construction of the extension of Production Boulevard and related utilities, plus an additional $740,000 (approx. 25%) of project costs to be held in escrow for unforeseen environmental and cultural circumstances as related to the road and utility construction, and authorize Wichita Falls Economic Development Corporation board chair to sign all related documents. Seconded by Mr. Hillery, and with no comments from the public, the motion carried 3-0. 5. DISCUSSION AND POSSIBLE ACTION RELATED TO THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION'S FY 2025 PROPOSED BUDGET. Mr. Menzies began the discussion by quickly reviewing the financial summary on page 17 of the agenda packet. He noted that the proposed budget for FY 2025 included a new column for better clarity. He highlighted several key points: • The balance in the WFEDC bank account. • Sales tax revenue is budgeted flat based on current trends. • Interest revenue is budgeted slightly lower than this year, anticipating potential interest rate cuts by the Federal Reserve. Mr. Menzies further explained that the budget includes funding for annual programs such as the four partner agreements approved in the previous meeting. These agreements are with the Chamber of Commerce, Sheppard Military Affairs Committee, Downtown Wichita Falls Development, and i.d.e.a.WF. There are also funds allocated for business park maintenance and expenses related to electricity for new streetlights in the business park. Mr. Menzies then outlined administrative expenses, including legal services, fiscal agent costs (managed by the city), and audit fees. WFEDC also contributes to the regional airport facility's debt service and has ongoing obligations related to the business park improvement project. Mr. Menzies highlighted a $517,8000 debt payment scheduled for next year, part of the bond funds for previous improvements. He noted that after accounting for all projected expenditures, the estimated balance at the end of the next fiscal year is about $16.2 to $16.3 million, assuming no new expenditures or land sales. Mr. Kitchens emphasized that the estimate does not account for potential land sales, which could further affect the balance. Mr. Menzies then handed the presentation over to Mr. Stephen Calvert, who provided a brief explanation of the reserve fund policy adopted earlier in the year. He explained the calculation method, which subtracts non-spendable and committed funds from the overall balance to determine the unrestricted fund balance. Even at the lowest point (assuming all expenses for the year and no revenue), the unrestricted fund balance will remain healthy: • At the end of 2023, the unrestricted fund balance was $9.9 million, exceeding the target by $8.4 million. • By the end of this fiscal year, the balance is expected to be $7.4 million, which is still $5.9 million over the target. Mr. Calvert then concluded that there were ample funds available, and he encouraged the WFEDC MINUTES 8/15/2024 PAGE 3 OF 4 Board to take advantage of good opportunities to invest in the community. Ms. Cowling asked a question regarding legal fees, seeking clarification on whether they are categorized under professional fees or the city's administrative expenses. Mr. Menzies confirmed that legal fees are part of the city's administrative costs and assured that the budget is sufficient, especially given recent actions related to Carter. Mr. Kitchens added that certain professional services, such as consulting or engineering, are budgeted separately under a specific professional services line item. Ms. Cowling made a motion to approve the WFEDC's FY2025 Budget as presented. Seconded by Mr. Hillery, and with no public comment, the motion carried 3-0. 6. EXECUTIVE SESSION Mr. Lane adjourned the meeting into executive session at 2:54 p.m. pursuant to Texas Government Code §§§ 551.087, 551.071, and 551.074. He announced the meeting back into regular session at 3:06 p.m. The subjects posted in the Notice of Meeting were deliberated, and no votes or further actions were taken on the items in executive session. 7. ADJOURNED. Mr. Lane asked if the public had any questions or comments. Since there were none, he adjourned the meeting at 3:07 p.m. Leo Lane, President WFEDC MINUTES 8/15/2024 PAGE 4 OF 4