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4A Wichita Falls Economic Development Minutes - 03/08/2013 Ll� ._ MINUTES OF THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION March 8, 2013 �.1 m y. PRESENT: ' ' ,c:i M r,.`. Gary Shores, President § Members z m Dick Bundy, Vice President/Sec.-Treasurer § '; 1711. Reno Gustafson Dave Lilley § rn 1 Gary McLendon ' � sT, Glen Barham, Mayor § City Council 1 Brian Hooker, Councilor District 3 § Darron Leiker, City Manager § City Staff Kevin Hugman, Assistant City Manager § Miles Risley, City Attorney § Linda Merrill, Recording Secretary § Kevin Pearson, Vice President § Chamber of Commerce & Industry Jim Johnson § Michael Paris § Ted Baker, Ulm Corporation § Attendees Lauren San Miguel, Russo Miller& Assoc. § Jack Kozeny, WDS Global § Randy Funston, Excalibur Paint § Alyssa Johnston, Times Record News § 1. CALL TO ORDER President Gary Shores called the meeting to order at 4:00 p.m. 2. APPROVAL OF MINUTES/REPORT OF FINANCIAL CONDITION Dave Lilley moved for approval of the January 31, 2013 minutes. Seconded by Gary McLendon, the motion carried. 3. ULM CORPORATION RECRUITMENT PROJECT Ted Baker, General Manager for Ulm Corporation, addressed the Board on behalf of Ulm Corporation. Solely owned by Billy Ulm, the company is in the business of transporting water, salt water and crude oil. The company also has construction and Mr. Gustafson monitored part of the open session of the meeting via cell phone. H:\_legal\4A&4B\4A CorpWinutes\2013\2013.4.8 4a minutes\2013.4.8 4a minutes.doc WFEDC—Minutes of March 8,2013 2 environmental clean-up divisions. Its corporate headquarters are in Bismarck, North Dakota, and the company has locations in three other cities in that state. Mr. Ulm felt Texas could better attract skilled labor. They are in negotiations for the purchase of a local building, and expect to be under contract by the end of next week. The company will not be using Wichita Falls water; the oil companies are responsible for securing fresh water sources. They plan to hire 372 people, 360 of whom would be drivers. They will hire as many drivers as possible from Wichita Falls, but it is unrealistic to expect all drivers will be found here. Mr. Baker anticipates that most of them would locate in this area, as the regional office and shop will be in Wichita Falls. The drivers will bridge the gap between two pipelines. All runs would leave from Wichita Falls, and they will run two shifts per day. The company has between 20-40 master service agreements with oil companies. Some of those same North Dakota customers operate in Texas, and they intend to replicate those contracts here. Mr. Shores questioned why the drivers would be based in Wichita Falls rather than closer to production areas. Mr. Baker said the core of the business will be here. They will have other regional satellite offices, but the majority of the employees would be here. Mr. Shores thanked Mr. Baker for the presentation. 4. POSSIBLE EXTENSION OF OBLIGATIONS (WDS GLOBAL) Kevin Pearson said WDS Global had been in Wichita Falls for three years. The performance agreement with the WFEDC expired on February 10, 2013. The agreement committed $3,300 per job for 750 employees, and $1.5 million for building improvements. Incentives totaled $3,675,000. To date, the WFEDC had paid $1,593,900 in cash for jobs; it also extended $1.2 million for equipment, leaving a balance that was available (prior to agreement expiration) of $881,000. The performance agreement allowed for the company to petition for another 36 months. Jack Kozeny said WDS runs in the top 5-10% performance rating with the company. Morale is great, but it is difficult to hire community-service-oriented employees from within the community. They do provide 8-10 weeks of training. Salaries average $9 per hour, with performance-based incentives up to $11 per hour. WDS was recently bought out by Xerox Corporation. Kevin Pearson asked if 750 employees is still a viable number for the company. The employee total is currently 432. Mr. Kozeny said the company hires as directed by their client. The number increases in the summer and around the holidays. Mr. Shores thanked Mr. Kozeny for his presentation. WFEDC—Minutes of March 8,2013 3 5. POSSIBLE EXTENSION OF OBLIGATIONS (EXCALIBUR PAINT & COATINGS) Kevin Pearson said the performance agreement for Excalibur Paint was three- phased, each at $500,000. The first phase was the gear-up for production of the new polyurethane water-based paint. Before moving to Phase 2, Excalibur needed to have 25 employees. The current employee total is 12. Mr. Pearson said Phase 3 requires 50 new jobs, for a total of 75 employees. Randy Funston requests an 18-month extension to reach Phase 2. Mr. Funston said the first phase has involved a very deliberate effort to hire quality employees. He only recently hired a sales manager. However, last year's earnings reflect sales are up 136%, profits are up 85%, and employment has doubled. He is working hard to grow the company, but it is difficult to find quality employees. He has openings for two salesmen, a chemist, and for employees to work in the plant. His current sales manager runs a territory that does not have strict VOC regulations, so there is no motivation to pay more for the new product. Once he gets sales people in the environmentally strict parts of the country, sales will increase for the water-based paint. He expects to hire a very qualified salesman within the next few days who will extend his company's sales territory. Mr. Funston noted that he did not use all of the $500,000 from Phase 1; about $100,000 was unused. Also, the WFEDC has collateral on a local building worth $650,000. Mr. Shores thanked him for his presentation. 6. EXECUTIVE SESSION Mr. Shores adjourned the meeting into executive session at 4:55 p.m. pursuant to TEXAS GOVERNMENT CODE §§551.071, 551.072, and 551.087. Miles Risley informed Mr. Gustafson that he would have to now be disconnected from the meeting pursuant to the requirements of the Open Meetings Law, which does not provide for anyone to be included in executive sessions via the telephone. Mr. Gustafson asked to reconvene to open session. Mr. Shores then closed the executive session and announced the meeting back into regular session at 4:57 p.m. Mr. Gustafson urged the Board to consider very carefully the request from Ulm Corporation. If the company comes to town and pays the projected salaries, all companies (including the City) who employ CDL drivers will have a hard time retaining those employees. Mr. Pearson noted the Texas Workforce Commission database reflects 160 CDL drivers, and 500 Class A, B and C drivers — some of whom could pass the rigorous standards and be retrained for CDL licensure. Mr. Shores again adjourned the meeting into executive session at 4:59 p.m. pursuant to TEXAS GOVERNMENT CODE §§551.071, 551.072, and 551.087. Mr. Shores then closed the executive session and announced the meeting back into regular session at 5:33 p.m. WFEDC—Minutes of March 8,2013 4 Ulm Corporation. Dick Bundy moved to recommend to the City Council the approval of an MOU with Ulm Corporation with a seven-year term, as opposed to the five-year term as currently proposed. Seconded by Gary McLendon, the motion carried. WDS Global. Gary Shores noted the only problem he could see with the performance agreement extensions is that the money has to be set aside and cannot be used for other projects that may arise. Kevin Pearson said the WDS extension is valued at $881,100; however, the company would have to hire 100 employees before it would receive any more money. Dave Lilley moved for the approval of an 18-month extension of the performance agreement with WDS Global. Seconded by Mr. McLendon, the motion carried. Excalibur. Kevin Pearson noted there is still $115,722 remaining from Phase 1 of the performance agreement with Excalibur Paint; the total outstanding is $1,115,722. The company is required to meet sales objectives and hire up to 25 employees. Mr. Funston has requested an 18-month extension. Mr. Shores suggested shortening the extension to one year, and discuss at a later date the possibility of drafting contracts to allow the 4A Board, after the initial term, to terminate the agreement should another project come forward in need of those funds. Mr. Risley clarified that the extension also extends the repayment obligation under the notes. Mr. Pearson noted that Funston has agreed to pay the attorney's fees to redraw the notes to extend them. Dick Bundy moved for approval of a 12-month extension of the performance agreement with Excalibur Paint and Coatings. Seconded by Mr. McLendon, the motion carried. Mr. Pearson noted he has been working with a local manufacturing company. The company is looking to consolidate its Wichita Falls operation with another, either here or at the other company location. In order for Wichita Falls to be competitive, the company requires $21 million. The City Council has discussed this in executive session, and are very reluctant to proceed. It would save 200 jobs, and bring in another 200 jobs with the consolidation, but at a cost of $54,000 per job. If the company does decide to move, there should be an announcement within the next 2-3 weeks. 7. ADJOURN Mr. Lilley moved to adjourn the meeting. The meeti journe 5:50 p.m. Gary S ores, President DOCUMENTS OF RECORD RETENTION INFO. DEPARTMENT TYPE OF DOCUMENT RETENTION RETENTION SCHEDULE NO. PERIOD LEGAL 3.8.13 MINUTES OF 1000-03 PERMANENT WF ECONOMIC DEV. CORP. (4A SALES TAX BOARD RECEIVED IN OiTy OLE ' FFICE DATE: c"S -13 B TIME: � ,