TIF #3 Board of Directors Minutes - 01/31/2012 RECEIVED 9N REINVESTMENT ZONE #3
CITY CLERK'S OFFICE TAX INCREMENT FINANCING BOARD
DATE: ,3/.Z.///* MINUTES
BY: Jib' TIME: .oiA�1 January 31, 2012
Present:
Kenneth Haney, Chairman •Members
Andy Lee •
Barry Mahler •
Rick Orr •
Lindsey Walker •
Arthur Bea Williams •
Kevin Hugman, Assistant City Manager •City Stan
Miles Risley, City Attorney •
Karen Montgomery-Gagne, Planning Administrator •
Leo Bethge, Planner II •
Absent:
Dorothy Roberts-Burns •Council liaison
Betty Humphrey Sanders •Member
1. CALL TO ORDER, INTRODUCTIONS & OATH OF OFFICE
Chairman Haney called the meeting to order at 3:08 pm and provided a welcome to all
members. After the introduction, Ms. Gagne requested Wichita County Commissioner
Barry Mahler recite the City's Oath of Office and sign the paperwork. Chairman
Haney stated he was glad to have Mr. Mahler serve on the Board.
2. REVIEW& APPROVAL OF JUNE 28, 2010 MINUTES
Chairman Haney requested all members review the minutes of the last meeting on
June 28, 2010 and for a motion to approve. Mr. Lee motioned and Mr. Orr seconded
the motion to approve the minutes. No discussion followed. The minutes were
unanimously approved.
3. UPDATE OF FINANCIAL STATUS
Chairman Haney requested an update from Ms. Gagne. After staffs presentation, Mr.
Haney further commented that any interest accrued is better than none. Mr. Orr
stated the projections are better than originally forecasted. Ms. Gagne agreed. She
stated in May the City will receive the increment for the TIF#3 District, but as of
today's meeting, the total is over $73,000, which is $5,000 more than originally
projected for this point in the life of the TIF #3 zone. Currently there are no
encumbrances. Mr. Mahler asked if we're in line with 2010 and 2011. Ms. Gagne
stated the increment is mostly based on the two main projects, which include
Washington Village Apartments and the additional houses built in the Habitat for
Humanity Subdivision. Chairman Haney questioned if there was a slight devaluation
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of properties. Ms. Gagne agreed, though she reassured the Board that TIF#3 is still a
relatively new zone — within its initial 5-years, there is plenty of time for more
development activity.
4. REVIEW, DISCUSSION & ACTION TO CONSIDER THE TIF#3 APPLICATION
FOR PROJECT FUNDING ASSISTANCE
Chairman Haney wanted to thank city staff for putting together the new application.
He stated that applicants might think it's "over kill,"though he appreciates the inclusion
of a check-list for applicants and the consultation with the Small Business
Development Center (SBDC). Their services will assist in helping applicants be
prepared when applying for TIF funds. Mr. Walker raised concerns about newer
businesses, as compared to an established business, that the requested information
on the application might be too hard to obtain. He asked what kind of flexibility an
applicant would have regarding what is considered by staff/Board as a 'complete'
application. Chairman Haney stated the application may look intimidating when
starting this process but the information requested was important for the Board's
review.
Ms. Gagne stated the City is serving in a similar role as a bank with regard to TIF fund
allocation. The City has a responsibility to ensure tax dollars are allocated in a
responsible manner since applicants often request significant funds. The City does
not want to have financial losses. Chairman Haney stated, in speaking for American
National Bank and not for the larger banks such as Bank of America, Chase, etc., this
application reflects the same information that is necessary for a bank loan — the
application is like a road map to help guide people and provide the necessary
information for the Board to make an informed recommendation to City Council. Mr.
Orr asked if new businesses will be given direction with the application paperwork.
Ms. Gagne stated new business owners/applicants will be routed to SBDC since they
can provide full business counseling to assist them. Chairman Haney stated their
services are free of charge. We don't want to "squelch" new businesses, we want to
encourage and support, and to help TIF#3 applicants get businesses developed on
the Eastside. These businesses will need to look into specifics, including income and
demographics. A TIF subcommittee worked closely with a potential project owner, Mr.
Hayes, as a start-up — we still have this option available. Mr. Walker stated new
businesses just don't know this information and might be intimidated and walk away -
comparing this process to the Small Business Administration (SBA). Mr. Mahler
stated we need someone that's familiar, to walk them through the process at SBDC;
perhaps someone from TIF #3 can attend an initial meeting with the applicant at
SBDC so the process is not so intimidating. Mr. Orr stated Mr. Hayes didn't know
about profits and losses for his business. He further stated it's helpful to connect
applicants with SBDC, to discuss finances "in layman terms? Ms. Williams stated
applicants' need a mentor since (financial) terms/paperwork get in the way of what
they are actually trying to accomplish — get a business up and running. Applicants
need to understand the basics and the financial process to move forward with their
business venture.
Ms. Gagne stated what might be helpful is a series of information sessions, such as
through SBDC for groups on the Eastside, in providing a basic introduction session on
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how to run a business, legal ramifications for business owners, basic
accounting/financing, human resource/labor issues, etc. Ms. Williams recommended
using United Way as a "go-to" lead for implementing this idea. Chairman Haney and
Mr. Orr stated they would consider themselves as a buffer to provide basic assistance
to a potential applicant before they proceed to SBDC.
Mr. Lee stated start-up businesses in the first three years usually don't succeed, and
businesses that hit five years are lucky. He asked of what projects the City anticipates
for rehabilitation work since many historic facades need rehabilitation and repair, or
the need to fix and repair infrastructure — which in itself may take an entire budget.
With TIF#1, stewardship was not always maintained because of a lacking application
which only consisted of two-pages. He estimated that 8-12% of the project value
needs to rate 95-100% for lending, and the City could then provide incentives to
assist. Ms. Williams added these businesses need more than to just survive, unless
they are from an outside area. TIF funds can't substitute for a company's money,
capital investment or bank loan — such as the case for some other projects that were
initiated but never came before the Board for consideration and continue to struggle.
She further questioned if these small businesses can survive after the owner passes
on as most are sole-operators or only have a couple of employees. The business
must also be designed to keep running — a succession plan should be part of their
overall plan.
Ms. Gagne asked if the Board wanted changes to the TIF #3 application. Ms. Williams
stated she is concerned if a business defaults and if they will stay open long enough to
make a difference in the community/contribute back to the TIF increment. Mr. Lee
agreed, what's the recourse for default. Mr. Risley, City Attorney, stated the TIF
agreement/contract, as part of the new application, is designed around the issue of
bankruptcy or default. Mr. Lee stated some borrowers request 50% for a $250 million
project. Ms. Williams stated that she is aware of two potential projects but they do not
have the funds available for long-term focus and ability to make a project a reality —
they just need to get started but often don't worry about paying back the debt. Mr. Lee
continued, stating the new application is a "boilerplate" format — an ideal solution for
both large and small businesses. Mr. Orr questioned how the City feels about that.
Mr. Risley stated it's based on the Board's judgment when funds are recommended
for allocation — will the Board require a deed of trust to secure the loan; holding a
second lien for security is not likely to help in obtaining repayment of funds in a default
situation. Mr. Lee inquired about a façade easement protection. Mr. Risley stated
generally the bank is the primary lien holder; the bank will have priority for property
and funds before the TIF Board/City of Wichita Falls.
Mr. Orr stated this can be an issue with competing applications for limited TIF funding
- there is a need for a detailed application with a solid overview which also explains
the positive impact the business/project will have in the zone. Mr. Walker questioned
how do you connect the community to this process; people don't understand the TIF
or even Community Development Block Grant (CDBG) programs. How do we get the
residents to realize the resources available to them and steer them in the right
.° direction. Mr. Walker stated there is a gap with lack of knowledge but there must be a
sense of trust built so people feel they can work with someone through the entire
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application process from start-up through staying in business. He noted he is trying to
bring in an economic developer (Mr. Don Willis) from Dallas to connect with
entrepreneurs from the Eastside community.
5. REVIEW, DISCUSSION & ACTION TO CONSIDER THE TIF#3
CONTRACT/AGREEMENT FORM
Planning staff explained they worked with the Legal Department in drafting the
contract/agreement form, to address protection measures for the City which was
lacking with the former TIF #1 agreement. Referencing the document, light gray text
are the changes incorporated from the original source. Mr. Risley addressed Item # 3
and #7, which addressed events of default which were added and expanded to also
include a personal guarantee; deed of trust which allows easier foreclosure. Mr. Risley
explained the note and deed of trust follow state bar forms which are standard legal
language.
Chairman Haney asked all members to review the application again and make a
determination of whether they approved of the TIF #3 Application and
Contract/Agreement Form or to reconvene on this matter at a later time. Mr. Lee
motioned to adopt the documents prepared by City of Wichita Falls staff; the TIF #3
Application and the TIF #3 Contract/Agreement Form in its entirety. Ms. Williams
seconded the motion. The motion was unanimously approved.
6. REVIEW, DISCUSSION & ACTION REGARDING DETERMINATION OF
BOARD POLICY FOR ADDRESSING PRIVATE PROJECT ASSISTANCE
Ms. Gagne referenced the memo included in the meeting packets which outlined
points for the Board to consider when setting a standardized policy for addressing
private funding requests. Staff referenced how some of the private funding requests
were addressed in former TIF Zone #1 downtown. Ms. Gagne noted the City had a
general guideline that TIF funds would only cover a maximum of 10% of the total
project cost; but not all cases could adhere to that rule; exceptions were sometimes
considered by the Board based on a unique situation. If, for example, a project costs
$100,000, not all projects on the list were granted up to 10% (or $10,000) for TIF
assistance. For example the MPEC project, additional assistance was granted since it
was a major public project and specifically noted in the project plan. Also, the Iron
Horse Pub's allocation was at 50% ($7,000) because it was a very minor request and
only referenced the façade portion of the project not the previous phases of
renovation/restoration on the building's interior. Ms. Williams asked how to handle this
in TIF #3. Ms. Gagne stated the criteria is based on properties that are income
producing - taxable. Chairman Haney stated projects need to be "for-profit", and not
"not-for-profit" organizations or other institutions which are classified as exempt and do
not contribute tax dollars to the fund.
Ms. Gagne then discussed the Board Policy for Addressing Private Project
Assistance. She further discussed an example from the City of Grand Prairie which
enforces a reimbursable TIF application fee of $1,500. If Council authorizes TIF
project funding the application fee is reimbursed. This reduced the amount of frivolous
requests. Ms. Williams felt this was important. Mr. Walker requested if staff recently
received any frivolous requests. Ms. Gagne explained an application was submitted
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by the Deuces Wild Restaurant, at 200 E. Scott. Mr. Lee stated the applicant will need
to resubmit his request as part of the new application and process.
7. OTHER BUSINESS
a) Southeast Ft. Worth: Renaissance Project
Staff provided information about this revitalization project—discussion only; no action.
b) Community Gardens Potential
Chairman Haney stated this project is a good idea and should be pursued. He stated
the community garden in Burkbumett is a good model. Ms. Williams questioned if the
use of the garden would be for-profit. She stated she is part of the Master Gardner's
Association, and that getting water to the site is always a concern. Mr. Walker stated
planning staff should review the Weed and Seed Program, if ifs similar to creating a
community garden project. Ms. Williams stated the Weed and Seed Program is
defunct since staffing was always a problem. She further stated the Master
Gardener's would take on this as a group project. Planning staff indicated Mr. Jack
Murphy, Parks Director, is coordinating this project along with Mr. Larry Nash, MLK
Center Manager.
c) Next Generation of Leadership—The Church Connection
Chairman Haney reviewed the 2012 list of Eastside churches, provided by Ms. Gagne,
with Mr. Walker and Ms. Williams. Ms. Williams stated she'll update the list with
correct addresses, phone numbers and pastor names. She further discussed the
need to coordinate efforts with United Way — The Hub satellite office now located in
the Eastside community to assist residents with tax preparations and in the review of
start-up businesses, credit counseling, etc. Chairman Haney and Mr. Orr further stated
they can both assist with client questions. They just need to know what time, when
and location—for eastside churches or United Way.
Ms. Gagne stated planning staff is working with a survey committee, in conjunction
with the community garden project, to assist in seeking the next generation of
leadership through the Eastside churches.
d) Other—Deuces Wild Restaurant—200 E. Scott funding assistance
Ms. Gagne stated the future applicant did not provide a sufficient amount of
information on the prior application. She stated additional documentation is required,
as part of the new application.
8. ADJOURNMENT
Chairman Haney motioned to adjourn the meeting at 4:40 pm. Ms. Williams seconded
the motion. The motion was unanimously approved.
-11 ell L.- t 2 /
Kenneth Haney, Chairman � Date
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