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4B Sales Tax Corporation Minutes - 04/25/2016MINUTES THE WICHITA FALLS 413 SALESCORPORATION April , 2016 PRESENT: Jim Ginnln s, President § Members Tony Fidefi Rick liatcher Darron Leikcr Michael Mills Glenn Barham, Mayor Tim Ingle, Councilor, District 4 § City Council Stephen Santellana, Councilor, District l Jim Dockery, Deputy City Manager § City Staff R. Finley Fle glund, Jr., City Attorney Bobby Teague, Asst, Dir, Canal, Dev./Building; Official Linda Merrill, Recording Secretary fleury Florsheim,, CLCD § Chamber of Commerce & Industry Ripley Tate Chuck White Will Relty § City Center Clara Villanueva Samuel Pak § Legacy 92 Dane Rodriguez § Cynthia Doter § 817 Ohio (developer) Jahn Inde § Times Record Nen SENT: Dave Clark § Members Dustin Nimz, Vice President/Sec. Treasurer 1. Call To Order Jim Ginnings called the meeting to order at .Clfl p.m. 2. Approval (March , Rick Hatcher the motion carried. Report of Financial Condition — as presentedby Jim Dockery Jiro Dockery said sales tax revenue receipts are running I ,15% below last year's actual numbers. If that trend continues, revenues at the end of this fiscal year would be at $3.690 million, about $30,000 below the Board's adopted budget. Ifall expenditures and revenues came N;\ _t gat\4A, 4B, `r1FS\4B C"carp\411 Minuta§\2016\2016,4.25\Ntint�tes 4B_2016,4.25xdoe WFEDC — Minutes of April 25, 201 2 in as projected (not including today's requests), the Board would end the year with $3.521 million in reserve. 3. Discussion of and possible funding consideration for a fire suppression system in a residential development at 728 Indiana with City Center Wichita Falls, C. Will Kelty said the request of $560,000 to cover the costs of purchase and installation of the fire suppression system is an estimate, meant to include everything that might be necessary. The developers are spending approximately $60,000 per unit to develop the property, excluding the costs of fire suppression. An additional expense of $500,000 does not make financial sense. That per-unit cost is higher than it would be for apartments in Houston or San Antonio, but they believe in redeveloping Wichita Falls. Mr. Ginnings opined their expectation of occupancy should be higher in Wichita Falls. There is a great need for these residential units here, and there is more competition in Houston. In addition, they would enjoy a higher -class clientele here than in some places. Mr. Kelty said they can buy a 200 -unit complex in Houston at $30,000 a door. That includes the purchase price, maintenance, and residents already in place. While he acknowledged they derive other economic benefits in Wichita Falls, he asserted they need financial help to move forward on this conversion. Mr. Fidefie asked what assurance the 4BSTC would have that this property would continue to operate as residential. Mr. Kelty said they have no issues tying the Board's investment to saying this remain a residential property for 'x' number of years. They have no intention to convert the building to residential and then change it to something else. Michael Mills wants to ensure the 4B Board does not make an investment that would ultimately result in, a personal profit. Mr. Kelty said that in addition to the purchase price, the developers will put in an additional $200,000; beyond that are the carrying costs and brokers' commissions. If the Board invested $600,000 for the fire suppression system, they would have to sell the property for more than $4 million. Mr. Leiker asked the timeline for the project. Mr. Kelly said they would like to have residents in the property by the end of the year. Mr. Dockery said the fire suppression estimates seem high. He asked if the bidders were hedging because they did not know what might be required. Mr. Kelty replied that there are unanswered questions concerning pressure, size of pipes required, and whether a pump will be needed in the basement. They are not tied to these vendors and would be happy to accept a less expensive alternative. Mr. Leiker asked their plan, should the Board elect not to grant their request, Mr. Kelty said they would keep it as commercial property. Mr. Ginnings thanked the developers for their presentation. 4. Discussion of and possible funding consideration for a fire suppression system in a grocery store development at 922 Indiana with Legacy 922, LLC. Sammy Pak provided an updated estimate for fire suppression costs of $114,000. Removal of the dropped ceiling revealed the tin ceiling they will refurbish, which helped reduce the costs. WFEDC — Minutes of April 25, 2016 3 Start-up costs (including fire suppression) total $266,000. They have $200,000 cash on hand. The start-up costs without the fire suppression total $152,000. If the 4BSTC decides not to approve this request, they could not afford to install the fire suppression system. Therefore, they would only be able to open the grocery store side of the business. However, the soda fountain/ice cream shop will bring in the most profits. They can make gains in years two and three with the grocery store if more people are in the downtown area, but without the soda fountain/ice cream shop, they may not still be open by then to realize those profits. Mr. Ginnings worked with the assumption that the build -out, inventory and fire suppression totals $266,000. While the developers have $200,000, another $66,000 would at least get the doors opened (although they would be left with no cash). Dane Rodriguez said they had a line of credit up to $50,000. Mr. Ginnings said the $66,000 might 'move the train.' Mr. Pak agreed. ,Mr. Fidelie asked the timeline of the operation. Mr. Pak said they would like the grand opening to be on 9/22, but if they open before, it would help to cut expenses. Mr. Santellana said he would have liked to see the SBDC business plan calculations based solely on the grocery store. Mr. Pak said it would not be that much different. Labor would not come down that much. They would still be required to have two employees, and two registers. They are considering hiring a Stripes manager to run the More. Mr. Santellana said the wages offset any income from the groceries, which leaves them with nothing to pay the other 22 line items of expenses. Mr. Pak noted that the estimate is very conservative; he tends to underestimate income, and overestimate expenses. Mr. Ginnings, asked if they are providing fire suppression for the second floor. Mr. Pak said all floors have to be covered. They plan to build out in phases, due to their limited capital. Mr. Ginnings thanked the developers for their presentation. 5. Discussion of expenditures related to the Museum of North Texas History related to the Jenny to Jet Exhibit. Mr. Dockery said he had not heard 1"rorn the folks at the Museum of North Texas History for about a year, and thought this was a closed project. However, Charles Campbell and Bob Seabury recently visited him with a request for reimbursement of $28,000 of expenditures. The Airport's Jenny to Jet museum project was originally approved for $336,000, but the total cost was only $220,000. Those costs were split equally between the Museum and the 413sx. There may be a misunderstanding regarding the 4BSTC's intention regarding this project going forward. It does not require a vote from the Board as the project is not closed from an accounting perspective, but he needs direction whether to approve this request for payment of half the funds, and/or any future requests for funds. Mr. Dockery could not find in the minutes that a decision was ever made on subsequent financing, Mr. Ginnings said he does not think anything was said or should be presumed that requests for Funding could go on ad iqfinitum until the entire $336,000 was spent. He suggested approving payment of $14,000 toward this expenditure, or one-half of the bill, and include along with that payment a letter stating that it is a full and final payment and the project is considered WFEDC' — Minutes of April 25, 2016 4 closed, The remaining almost $100,000 from the project should be restored into the 4BSTC's operating budget through a budget amendment. Mr. Dockery said that is a fair proposition. Ile believes the Museum members believed they were going to be able to draw down those funds until they were spent. Stephen Santellana serves on that Board, and agrees that was their intent, Mr. Leiker said that was never discussed. Mayor Glenn Barham added that the City Council's intent was that the Museum would take care of the maintenance of the exhibit once it was operational. Mr. I,eiker asked Mr. Dockery to draft the letter to the Museum. 6. Executive Session Mr. Ginnings aqjourned the meeting into executive session at 3:49 p.m. pursuant to TE As GOVERNMENT CODE §551.087. He announced the meeting back into regular session at 4:49 pm. He declared that the subjects described in the certified agenda were deliberated and no further action was taken, 7. Funding consideration for a fire suppression system in a residential development at 728 Indiana with City Center Wichita Falls, C. Mr. Leiker moved that the 4BSTC contribute rip_to_5250 000 on a reimbursement basis once a Certificate of Ccu anc is issued such sum to be used for firesu ression s stem costs and installation at 728 Indiana for the Cit Center Wichita falls ICC ro`ectw in addition such fiindn shaft be structured under a five- gar firivabfe loo for given ever ear of ccessful qRgrgiggqrgggn_� _at a rate of 20% per ear throe gh the lacement of a lien. Seconded b Mr. Fidelie the motion carried. 8. Funding consideration for a fire suppression system in a grocery store development at 922 Indiana with Legacy 922, LLC. Mr. Hatcher moved for discussion seconded b Mr. Fidelic. Mr. Fidelie said he would be inclined to approve funding in the range of $40,000 to $50,000. Mr. Hatcher said he could approve up to $65,000, a little over half of their request. It requires them to have skin in that part of the game, as well. Mr. Ginnings said he is in favor of that. They had agreed that $66,000 would move the train, and they have a line of credit that would allow them to stock the store and pay operational costs for a period of time. Mr. Leiker asked if the Board would consider asking for a personal guarantee since this is a more high-risk venture. Mr. Fidelie agreed. The Board's obligation is to help with downtown development, but also to protect the money with which it is entrusted. costs and installation at 922 Indiana for the addition, such �fundi �,Ysh�allbe structured on r of success of a lien and 1hrough a e motion was seconded�hM�r, Fidefie. Mr. Hegglund said the developers' personal indebtedness would go down every year, but each would be personally and severally liable for the full amount of the loan. Mr. Hatcher questioned whether the developers could run into difficulties at the bank if their have a personal guarantee against the with the 4BSTC, and moved to amend his motion to strike the roved the amendment. Although the project W ` DCMinutes of"April 25, 2016 5 concerns Mr. Fidelie as it is a high-risk venture, the 4BSTC will have a lien on an upgraded building. T'he amended motion carried. 9. Ajar. Mr. Leiker mov tc� acl°cure. can ed h ills„ the cetin a ' urnecl at S.C} nr. im Cain n s, esident