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Min - Economic Development Corporation - 2005 - 09/21 - RegularALLEN ECONOMIC DEVELOPMENT CORPORATION (AFDC) BOARD OF DIRECTORS REGULAR MEETING September 21, 2005 Board Kurt Kizer Tim Wood Ken Fulk Maxine Sweet Carl Clemencich - Absent Staff Charisse Bodisch Jennifer Grimm Dan Bowman Call to Order and Announce a Ouomm Present Guests Curt Hefner Jeff Turner Bruce Barclay Sabrina Krishnan Blair Oden Casey Townsend Jud Heflin Fred Gans Mark Stahl Mark Walker With a quorum of the Board present, the Regular Meeting of the Allen Economic Development Corporation (AFDC) was called to order by President Kurt Kizer at 6:10 p.m. on Wednesday, September 21, 2005 at the AEDC Office. The following items were discussed: Approve Minutes of the August 11. 2005 Special Called and August 17, 2005 Regular Meeting of the AEDC Board of Directors. The minutes of the August 11, 2005 Special Called and August 17, 2005 Regular Meeting of the AEDC Board of Directors were approved as submitted on a motion Maxine Sweet, seconded by Ken Fulk. Convene into Closed Executive Session. The Board convened into closed executive session at 6:11 p.m. to deliberate the sale of property owned by the AEDC in Millennium Corporate Center and related incentives supporting the construction of an office building and to deliberate the sale of property owned by the AEDC at the southeast corner of Ridgemont Drive and US 75 to support the development of an office building and also to discuss the financial points of a draft contract between Blue Star Allen Land L.P and Allen Economic Development Corporation. Reconvene into Regular Session. The Board reconvened into regular session at 8:09 p.m. Allen Economic Development Corporation Regular Meeting, September 21, 2005 Page 2 Consider and take Action for the Sale of Prosy Owned by the AEDC in Millennium Corporate Center and the Approval of Incentives Supporting Office Development. The AEDC owns approximately 30 acres at the northwest corner of US 75 and Bethany Drive known as Millennium Corporate Center. Duke Realty previously presented a plan for developing a business park on the property that closely followed the original architectural and site plan developed by the AEDC with Don Powell, BOKA Powell. Duke Realty representatives appeared before the Board to request incentives to help with the development of a speculative office development in Millennium Corporate Center. They presented a completely redesigned master plan for the business park, which included the following features: • Sloped, terraced central water feature and park area that is visible from US 75. • Approximately 4.2:1,000 parking ratio. • Approximately 25% structured parking. • Two symmetrical 6 -story, class A office buildings fronting US 75, located across the central water feature from one another. • Two 8 -story, class A office buildings located near the west side of the park which are still visible from US 75. • One 4 -story, class A office building located at the southwest comer of the business park. Jeff Turner, Duke Realty, explained that this master plan is a work in progress and is subject to change based upon the needs of tenants and input from the AEDC Board. It is possible that the two buildings located on the west side of the park (buildings C and D) could be combined into a larger, single building with a common lobby. The master plan included connecting walkways between all the buildings and walking trails. Duke proposed the construction of an initial 6 -story, 141,674 square -foot office building on the southeast comer of Venture Drive and US 75 on 7.74 acres. The building would be constructed primarily of glass and have an outdoor patio with stairs leading down to the central park located along the southern side of the building. They would also construct a parking garage that would be built into the natural landscape of the site so that it does not obscure the view of the business park from US 75. Jeff explained that the cost of constructing the parking garage makes this project non-competitive in the market. Duke is requesting incentives to cover the cost of the parking garage and allow for the construction of a speculative, class A office building with lease rates that will be competitive in the market. Duke informed the Board that they are willing to change the building design. The Board agreed that the cap on the building was not preferable. The Board along with Duke would be willing to work with tenants interested in locating into the business park. On a motion by Ken Fulk, seconded by Maxine Sweet, the Board approved offering the following incentives to support the construction of the initial building in the business park: • An offer of up to 7.74 acres of AEDC-owned land at the southeast comer of US 75 and Venture Drive for sale to Duke Realty at a basis of $0.00 per square foot. • AEDC master lease of 50% of the building at $15.00 per rentable square foot for up to a maximum of 18 months. When new tenant leases are signed, the square footage of each lease will be deducted from the AEDC's master lease obligation. Allen Economic Development Corporation Regular Meeting, September 21, 2005 Page 3 • Infrastructure grant equal to the lesser of $1,250,000 or the actual infrastructure costs to be paid based on invoices for construction of the puking garage submitted for reimbursement, payable at completion of the project. • The lesser of either $250,000 or half the actual cost of constructing Phase I of the central park area, payable upon completion of the project and Phase I of the central park area. • Recommendation to the City of Allen, Collin County and Collin County Community College for consideration of a 50% tax abatement for 10 years on the building. • Right of Fust Refusal Agreement with Duke Realty on all other Millennium Corporate Center sites for future development. • AEDC option on the 7.74 acres if Duke Realty does not proceed within a reasonable time period. Consider and take Action for the Sale of Property Owned by the AEDC at the Southeast Comer of Rideemont Drive and US 75 and the Approval of Incentives Supporting Office Development Fred Gans, Cornerstone Development, purchased the southern portion of the AEDC-owned Ridgemont tract at the southeast comer of US 75 and Ridgemont Drive and is currently under construction on a two-story, 50,000 SF office building. The building is almost completely leased and they have received numerous other requests for more space. Fred Gans appeared before the Board to request that the AEDC sell Cornerstone Development the remaining 4.552 acres (net of the Right of Way portion) of the Ridgemont tract. He also requested consideration of other incentives to help offset the cost of the tree mitigation and in lieu of tax abatement. Gans plans to construct a two-story office building with approximately 60,000 SF. He informed the Board that in order to fulfill the requirement for tree mitigation on both the southern and northern portions of the Ridgemont Tract, 390 inches of trees need to be replaced (at a cost of approximately $78,000). Gans suggested that, in lieu of providing an incentive to cover the cost of tree mitigation, the Bound instead agree not to charge back the cost of the back drive (approximately $75,000) into the sales price of the remaining acreage on the Ridgemont Tract. On a motion by Ken Fulk, seconded by Maxine Sweet, the Board approved offering the remaining 4.552 acres (net of the Right of Way portion) of the AEDC-owned Ridgemont tract for sale to Cornerstone Development at $3.00 per square foot. The Board also informed Gans that the Board will consider giving incentives to qualifying tenants to occupy space in the building in the future. Consider and take Action for the Approval of a Draft Contract between Blue Star Allen Land L P and Allen Economic Development Corporation Blue Star is in the process of developing StarCreek, a 529 -acre multi -use development. The project includes approximately 870 single family residences and 169 acres for commercial development along SH 121. Phase I of the commercial development consists of approximately 80 acres (net of the floodplain and roads). Allen Economic Development Corporation Regular Meeting, September 21, 2005 Page 4 The AEDC Board previously approved providing a maximum of $4 million to support the commercial portion of the project. The incentive offering represents the City of Allen's entire contribution from the community and did not require the City to provide sales tax rebate or the formation of a TIF An incentive contract with Blue Star has been developed that provides specific benchmarks for performance and also provides a mechanism to prorate the incentives for any given payment period. Jud Heflin, Blue Star, appeared before the Board to request the approval of the Incentive Agreement between Blue Star Allen Land, L.P and the Allen Economic Development Corporation. He presented the final Special Amenity drawings. The only two changes made to the special amenities since the Board originally approved incentives are the following: • Increasing the width of the water feature from 126 feet to 160 feet. • Disseminating the greenspace between the central water feature and the buildings, creating multiple greenspaces and allowing for more parking. Heflin informed the Board that the central feature could not be expanded beyond the new expanded area since Cinemark owns the surrounding property On a motion by Maxine Sweet, seconded by Tim Wood, the Board approved the incentive agreement between Blue Star Allen Land, L.P and the Allen Economic Development Corporation with the renderings of the Special Amenities attached. Consider and take Action Reeardme the Compliance Status of Comemoorary Title Solutions In 2004, the AEDC offered an economic development incentive grant in an amount not to exceed $54,467 to help support the location of Contemporary Title Solutions into the Xtem building at 500 W Bethany Drive. As a condition of the incentive, Contemporary Title committed to lease 19,832 square feet of space in the building for its regional corporate office for a period of 5 years, create and maintain 40 employment positions within 12 months from the date of the certificate of occupancy, and have a capital investment of $100,000 in the premises within 12 calendar months from the date of the certificate of occupancy. The company completed the retrofit of the space and collected $44,787 of the incentive grant, which included all qualified receipts. The company experienced some difficulties in obtaining their licensing, which impacted them reaching their employment requirement The Board previously approved lowering the required number of employees to 36 and extending the deadline for compliance to May 7, 2006. The revised contract has not been signed by any of the parties. Contemporary Title has reduced its size and is considering vacating the space in the Xtem building and occupying approximately 6,000 square feet elsewhere in Allen. There are several tenants interested in subleasing the company's space in the Xtera building. Mark Walker, Contemporary Title, appeared before the Board to request that they take no further action regarding the non-compliance status of Contemporary Title until May 7, 2006. Mark Walker gave the following five reasons to support this course of action: Allen Economic Development Corporation Regular Meeting, September 21, 2005 Page 5 • Contemporary Title is still guaranteeing the lease on the 19,832 square feet of space at 500 W Bethany Drive. • Contemporary Title will maintain $100,000 in personal property value in Allen after the move. • Contemporary Title will still be able to create and maintain 36 employment positions in Allen after the move. • Current Contemporary Title employees have a high average gross salary and spend money in Allen. • Requiring Contemporary Title to pay back the incentive would cause immediate economic harts to the company. Walker also informed the Board that the company will accrue funds to pay back the incentive during the next 8 months should the Board call them into default at the May 7, 2006 review. On a motion by Maxine Sweet, seconded by Tim Wood, the Board approved deferring the decision to call Contemporary Title into default on their incentive agreement until May 7, 2006. Consider and take Action for the Approval of Incentives Supporting Commercial Development in the Montgomery Farm Garden District The Montgomery Farm Garden District is the commercial portion of the Montgomery Fami Development located at the southwest comer of Bethany Drive and US 75. The Garden District consists of approximately 64 acres (exclusive of greenbelts) and contains space for retail, office, hotel and a wellness center. The AEDC previously approved an infrastructure grant to support the commercial development and approved a recommendation to the Allen City Council for the approval of the formation of a Tax Increment Financing District. The AEDC incentive has the following guidelines: • Based on 50% of the sales tax collected by the AEDC over 15 years. • Based on paid receipts for the infrastructure costs for the Market Street area. May include on and off-site infrastructure that benefit the retail/commercial portion. • Tied to the Garden District reaching specific performance benchmarks and starting construction by a specific date. • The incentive is limited to $4,635,000 or 15 years, whichever occurs first. • Trademark must be a participant in the retail development component. Pete Smith, AEDC Attorney, has developed a draft contract based on these guidelines for consideration by the AEDC Board. The Board agreed with the changes in wording suggested by Pete Smith. The number of employees required of Montgomery Farm is zero. The general consensus of the Board was that the contract was acceptable with the recommended changes and is ready to forward to Montgomery Farm for review Allen Economic Development Corporation Regular Meeting, September 21, 2005 Page 6 Approval of AEDC Financial Reports Dan Bowman presented the AEDC financial reports. The Board suggested that the incentive grant sheet be reformatted to include a separate section for those grants that are "self -funding." On a motion by Tim Wood, seconded by Maxine Sweet, the Board approved the AEDC financial reports as presented. Discuss Administrative and Marketing Activities of the AFDC. Jennifer Grimm announced that the 2005 AEDC Millennium Business Awards Luncheon was a complete success with 165 people attending. She distributed the new Allen aerial map and informed the Board that another aerial map will be created in January 2006. The groundbreaking for the Corporate Center at Twin Creeks is tentatively planned to take place in November. Charisse and Jennifer expressed concern with the amount of space that has currently been pre -leased in the building. Charisse updated the Board on the stains of the General Growth development and explained that Belz may want to start working with the AEDC Board to develop the property at US 75 and SH 121 in the future. Charisse also informed the Board that the City of Allen is working with a user that has interest in purchasing a piece of City -owned land on Main Street to construct an indoor soccer facility. The City has interest m selling the property via the AFDC. Also, Velocity Sports has been "locked out' of their building for the second time for non-payment of rent and their assets have been seized. The approximately 20,000 square feet of space is being marketed by the building owner. Scheduling of Next AEDC Board of Directors Meeting. The next Regular Board meeting was scheduled for October W at 6:00 p.m. Adioum On a motion by Maxine Sweet, seconded by Tim Wood, the meeting was officially adjourned at 9:35 p.m. These minutes approved this 19' day of October, 2005. E "K Kurt Kizer, President Ken Fulk, Secretary