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4A Wichita Falls Economic Development Minutes - 11/30/2012MINUTES OF THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION November 30, 2012 PRESENT: Gary Shores, President Dick Bundy, Vice President /Sec.- Treasurer Dave Lilley Gary McLendon Brian Hooker, Councilor District 3 Dorothy Roberts - Burns, Councilor At -Large Darron Leiker, City Manager Jim Dockery, Assistant City Manager /CFO Kevin Hugman, Assistant City Manager Miles Risley, City Attorney Linda Merrill, Recording Secretary Tim Chase, President Kevin Pearson, Vice President Al Trotter Melissa Munoz Sharon Welhouse Dan Tobol ABSENT: Reno Gustafson 1. CALL TO ORDER § Members § City Council pL��� !pr let 3 § City Staff § J v § Q� ) § 6 § Chamber of Commerce & Industry § Blue Cross Blue Shield § Tobol Industries § Member President Gary Shores called the meeting to order at 3:00 p.m. 2. APPROVAL OF MINUTES/REVIEW OF FINANCIAL STATEMENT Gary McLendon moved for approval of the October 5, 2012 minutes. Seconded by Dick Bundy, the motion carried. H: \_legal\4A & 4B \4A Corp\Minutes \2012\2012.11.30\2012.11.30 4a minutes.doc WFEDC— Minutes of November 30, 2012 2 3. HEALTH CARE SERVICES CORPORATION RETENTION PROJECT Al Trotter, Director of Corporate Tax Compliance for Blue Cross Blue Shield of Texas (BCBS), addressed the Board. BCBS has a full- service unit on Southwest Parkway that handles claims processing, customer service, and other administrative services. It employs 335 individuals. The lease on the building is up for renewal in March or April of 2013. They are in discussions to sign a six -year lease, but BCBS is in the process of determining its long -term employment goals for Wichita Falls. Any incentive would sway the decision. BCBS needs to make $1.3 million in capital improvements to the facility, as well as invest $500,000 in work stations over the next couple of years, not including software updates. Kevin Pearson explained the incentive proposal presented to BCBS. The 4A Board would pay BCBS $2,000 per job for the 335 existing positions, and $3,000 for 50 new jobs, for a total commitment of $820,000. BCBS has six other full- service units in the State, located in Marshall, Abilene, Waco, San Angelo, Amarillo, and Richardson. The largest unit is in Abilene, with 1,100 employees. There are, on average, 300 to 400 employees at the other units. Should consolidation occur as a result of closure of any of those units, Wichita Falls could be in a position for additional jobs, and a financial incentive would allow for growth to over 400 positions. The wage for base level positions range from $22,000 to $27,000. The average wage, including management, is over $30,000. Mr. Shores thanked the representatives for the presentation. 4. RECYCLING AND WAREHOUSING CENTER RECRUITMENT PROJECT Dan Tobol has been working in Wichita Falls for about a year and a half. He got involved through Sherman Wyman and Randy Wachsman, who bought the St. Gobain plant. He has a 35% interest in net proceeds plus a management contract to take down the plant, process it, and ship it out. His stepson's family has long been involved with recycling in Houston. He sees a huge potential for that type of business here. He has 25 acres next to the cogeneration plant available for this purpose. It is 200 yards from Southwest Parkway and has a buffer of deciduous trees. He worked with BNSF to activate the rail spur, which is critical to this type of business. They would recycle oil field products, industrial products, peddler scrap, manufacturing residuals, new construction, shavings, and scrap material. Rail availability allows for an extra $20 to $30 pricing point. The material can be shipped directly to Houston, which would not be cost effective by truck. Kevin Pearson mentioned there have been rumblings from citizens about noise, and asked whether dust would be an issue. Mr. Tobol said the noise level is well below that of a WFEDC — Minutes of November 30, 2012 3 cogeneration plant. They will do a good job of keeping down the dust. Hours of operation would typically be 7 a.m. to 6 p.m. Mr. Tobol said if the business takes off as anticipated, they will employ more than the 24 employees referenced in the offer letter. Mr. Pearson asked if there is danger of environmental contamination. Mr. Tobol said no. The material would be brought in, cut, and shipped out as quickly as possible. Mr. Chase asked about the company's effect on the City's landfill. Mr. Tobol does not think the company would use the landfill. Tim Chase asked if citizens could bring glass or paper for recycling to the plant. Mr. Tobol said they will only accept peddler's scrap, such as old tractors. Mr. Bundy asked if they would buy roll -off containers of scrap. Mr. Tobol replied affirmatively, estimating there are probably 200 -300 roll -off containers available in this area. Dave Lilley asked if they would recycle masonry, concrete, or asphalt. Mr. Tobol said no; it is a hard, expensive business, and not that profitable. Mr. Shores thanked him for his presentation. Blue Cross Blue Shield Mr. Pearson said this is an opportunity to keep 335 jobs for six years. The cash - for -jobs figure is significantly lower than what would be paid if a new company was coming into town. Mr. Chase added this is a loan, forgiven over six years on the basis of 335 employees. BCBS has been asked to be prepared to sign a promissory note and security agreement. The Board discussed possible security assets of the company. In the end, they agreed to proceed with an unsecured loan. Mr. Bundy moved to recommend to the City Council the expenditure of 4A funds to finance the incentive to Health Care Services Corporation (HCSC) and related entities in an amount of up to $820,000 of costs for expenditures for the retention of primary fobs at HCSC's Information and Telephone Call Center in Wichita Falls. Seconded by Mr. McLendon, the motion carried. Tobol Industries Mr. Bundy questioned whether this business would be competition for any existing Wichita Falls business. Mr. Shores replied Bell Processing, but that company might end up being a supplier to Tobol. Mr. McLendon expressed concern over the close proximity of this type of business to subdivisions, expressing concern over the appearance and noise. Mr. Pearson said there would not be large stacks of scrap, as they intend to cut it up and get it out quickly. Mr. McLendon asked if they would be doing car crushing. Mr. Chase replied he believed that will happen. It is WFEDC— Minutes of November 30, 2012 4 in a heavy industrial zone. Mr. Dockery said the business would be less intrusive than Certain - Teed had been. Mr. Lilley moved to recommend to the City Council the expenditure of 4A funds to finance incentives for Tobol Industries and related entities in the amount of up to $196,750 of costs for expenditures for the recruitment of primary lobs at a proposed recycled goods and warehousing center at /near 4515 Allendale Road. Seconded by Mr. McLendon, the motion carried. Land O'Lakes Mr. Chase provided an update. He said there has been little to no communication with the company since they were asked to provide a set of financials. Mr. Pearson said this is a very small project. A small warehouse was renegotiating its lease. They are going to retain five jobs and create two jobs. He told them if they signed the lease, it would prove they intended to stay in Wichita Falls. He talked to a company representative, who did not know if the lease had been signed, but it had been drafted and there was no contingency included regarding receipt of 4A funds. He thinks the lease may have already been signed or is in the works to be signed. He did tell them that if they signed the lease, there would be no money coming from the 4A fund. 7. EXECUTIVE SESSION Mr. Shores adjourned the meeting into executive session at 4:10 p.m. pursuant to TEXAS GOVERNMENT CODE § §551.071, 551.072, and 551.087. He announced the meeting back into regular session at 4:36 p.m. The subjects posted in the Notice of Meeting were deliberated, and no action was taken on these items in executive session. 8. ADJOURN Mr. Lilley moved to adjourn the meeting. Seconded by Mr. Bundy, the motion carried. The meeting adjourned at 4:37 p.m. JV Ga hores, President