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HomeMy WebLinkAboutMin - Economic Development Corporation - 2008 - 08/20 - RegularALLEN ECONOMIC DEVELOPMENT CORPORATION (AEDC) BOARD OF DIRECTORS REGULAR MEETING WEDNESDAY, AUGUST 20, 2008 Board Staff Guests Kurt Kizer Robert Winningham Pete Smith Tim Wood Jennifer Grimm Peter Vargas Carl Clemencich Daniel Bowman Joey Herald Gary Caplinger Tracey Cline Lee Battle Maxine Sweet Bo Bass Nadeem Ahmed Matthew Shoemake Thomas Acevedo Larry Calton Call to Order and Announce a Quorum Present. With a quorum of the Board present, the Regular Meeting of the Allen Economic Development Corporation (AEDC) was called to order by President Kurt Kizer at 6:10 p.m. on Wednesday, August 20, 2008 at the AEDC Office. 1 1. Approval of Minutes of the July 16, 2008 Resular Meetine On a motion by Carl Clemencich, seconded by Gary Caplinger, the Board unanimously approved the minutes of the July 16, 2008 Regular Meeting as presented. 2. Presentation on the Retention and Expansion of Ari -Tex Robert Winningham and Daniel Bowman presented information pertaining to Ari -Tex, an electrical contracting firm currently located at Rowlett Creek Plaza in Allen. The company recently informed AEDC staff that they are planning to construct a new 20,000 -square foot facility that would serve as their corporate headquarters and service center. They would like to commence construction as soon as possible. The company plans to vacate their existing space and take occupancy of the new facility within 12 months. Ari -Tex is currently considering locating the facility in Frisco, Plano or Allen. The company owns approximately 5 acres of land in Allen at the southwest corner of Allentown Parkway and Greenville Avenue and is in the process of purchasing land in Frisco near the North Dallas Tollway The company has not informed the AEDC of where their land in Plano is located. Peter Vargas noted that the City of Allen purchased the land for the Allen Public Library from the principal of Ari -Tex. If they proceed with the development of the proposed facility in Allen, the company would only develop half the acreage they currently own (or approximately 2.5 acres). Ari -Tex would invest approximately $2 million initially in combined business personal property and building improvement value and would employ 120 fulltime employees. The company would also employ about 100 contractors. AEDC Board q'Directors Regular Meeting August 10. 1008 - Page 2 1 3. Convene into Closed Executive Session: The Board convened into closed executive session at 6:11 p.m. to deliberate commercial and financial information and economic incentives for the following: • Consider Incentives for the Recruitment of WHAM! • Consider Incentives for the Retention and Expansion of Ari -Tex • Consider Incentives for the Recruitment of Project Stalled Reconvene in Oven Session The Board reconvened into regular session at 7:05 p.m. 4. Actions Resulting from Executive Session There were no actions resulting from executive session. 5. Consider and Take Action Regarding the Economic Development Agreement with Greenstreet Properties of Texas. LLC Thomas Acevedo, Greenstreet Properties, appeared before the Board to request early payment of a portion of the economic development grant to be provided to Greenstreet Properties per the Economic Development Agreement between the AEDC and Greenstreet Properties of Texas, LLC. This agreement was assigned to Greenstreet by Blue Star, the previous developer of the commercial property located at SH 121 and Watters Road. Acevedo explained that Greenstreet is currently working to construct all of the frontage retail located east of Watters Road. This second phase of retail development will have a high-quality architectural design and contain 77,000 square feet The development will be "dressed up" because of Strikz, an upscale family entertainment venue that is planned for the site. At the AEDC's urging, Greenstreet recently sold land to Strikz for the construction of their facility The land transaction with Strikz was outside Greenstreet's business model, which provides for the company to construct and maintain ownership of buildings within their developments. Acevedo explained that he championed the Strikz deal and ensured that it was completed. Given this effort on his part, he is requesting that the AEDC Board split the final payment that would be due once 75,000 square feet of retail is delivered in Spring of 2009, providing Greenstreet with half of the grant immediately and half in Spring 2009 when the retail construction is complete. Several tenants have signed leases to occupy space in the new retail center constructed by Greenstreet at Watters Road & SH 121, including two salons, an Italian restaurant and a Japanese steak restaurant. Overall, 25,000 square feet of deals we leased or close to being leased in the first phase of the development. Acevedo explained that leasing occurred as soon as the tilt -wall panels went up for the retail development. The space was constructed on a speculative basis. Greenstreet has spent $1,000,000 so far on their plans for Phase lI of the retail development Acevedo explained that Greenstreet must construct 75,000 square feet of retail space in order to receive the $750,000 grant from the AEDC. Currently, 77,000 square feet of retail is planned to roll out within the next year, along with the 55,000 -square foot Strikz facility. Strikz has verbally committed to complete construction of their facility by Spring 2009. Acevedo mentioned that Strikz is likely to begin construction within one month. Acevedo thanked Peter Vargas and Lee Battle for their help in closing the Strikz deal. AFDC Board of Directors Regular Meeting August 20, 2008 -Page 3 Maxine Sweet stated that she supports providing half of the grant early. Gary Caplinger agreed, stating that Greenstreet worked hard to land the Strkz deal and deserves the early payment. Sweet mentioned that Greenstreet bailed out Blue Star and has done a great job. Robert Winningham noted that Greenstreet typically leases to tenants, but was willing to sell the land to Stnkz in order to close the deal. Carl Clemencich stated his opposition to early payment of the grant, noting that the company will receive the full grant payment by next Spring anyway Tim Wood expressed concern that Greenstreet's deal for the construction of the remaining retail space could possibly fall apart between now and next Spring. Lee Battle noted that the Strikz facility has been approved by the City of Allen, but the plans for the additional Phase II retail development have not been submitted to the Planning Department. Peter Vargas mentioned that Greenstreet never completed a Master Parking Agreement to allow Strikz customers to share offsite parking with the adjacent Cinemark Theater. Vargas stated that he believes such an agreement should be in place before the Board considers providing early payment of the grant While shared parking between the Cinemark and Strikz facilities should not be a problem, the company needs to have an executed puking agreement. Lee Battle noted that Cinemark may not he a willing participant. The City of Allen recently had difficulty obtaining the company's permission to construct a fire lane across their property The general consensus of the Board was to delay consideration of approval of early payment of half the remaining grant due to Greenstreet until the following occurs: • Site plan for Greenstreet's Phase II retail development is approved by City of Allen • Master Parking Agreement for shared parking between Strikz and Cinemark is executed • Greenstreet commences construction on the Phase II retail development of at least 75,000 square feet • The Economic Development Agreement between the AEDC and Strikz is fully executed Gary Caplinger expressed disappointment that the executive summary, written by AEDC staff, stated that the parking for the Strikz facility had been approved by city staff, a contradiction to what city staff was reporting. 6. Consider and Take Action Regarding the Economic Development Agreement with Celerity Inc. Celerity Inc, a semiconductor company that specializes in microelectronic and gas technology, currently occupies space in Allen at 915 Enterprise Boulevard. The AEDC previously provided the company with a $250,000 incentive grant to assist with their relocation to Allen. AEDC staff discovered that as of July 2008, Celerity's employment level and 2008 taxable value were below the benchmark amounts required by the Economic Development Agreement. As a result, the AEDC Board now has the option to call the company into default on the agreement and require repayment of the grant. The company recently requested that the AEDC Board delay their decision on whether to call the company into default until after the company reports to the AEDC Board in a subsequent meeting. Pete Smith, AEDC Attorney, provided a letter that could be sent to the company if the AEDC Board was willing to delay the decision. The general consensus of the Board was to delay the decision and wait to see what the company presents to the Board in September or October. AFDC Board ojDrectors Regular Meeting August 20, 2008 - Page 4 1 7 Discussion of Business Incubator Daniel Bowman presented information on the proposed business incubator. Bowman noted that much of the data included within his presentation came from the National Business Incubator Association (NBIA). A business incubator is a facility with space available for lease to start-up companies. An incubator nurtures the development of entrepreneurial companies, helps companies survive and grow during the start-up period, and provides business support services and resources tailored to young firms. Some common goals of incubation programs include creatingjobs, enhancing a community's entrepreneurial climate, retaining businesses in a community, building or accelerating growth in a local industry and diversifying local economies. Bowman explained that there are a variety of types of incubators, including mixed-use, technology and manufacturing incubators. There are 1,400 incubators in North America, with 1,1115 of those being located in the United States, 191 in Mexico and 120 in Canada. There are only a few located in North Texas. Overall, 5,000 business incubators exist worldwide. Different incubators serve different purposes, with some fostering commercialization of university technologies, some increasing employment in communities, and some simply serving as investment vehicles. Bowman explained that over half of the existing incubators are sponsored by government entities, with an additional 20% being sponsored by academic institutions. Only 4% of incubators are sponsored solely by for-profit organizations. Bowman described several ways that incubators can receive funding, including in-house funds, revolving -loan funds, microloan funds, angel investors, venture capital investors, traditional loans and other giant sources (such as the Emerging Technology Fund). The staff of an incubator can help connect start-up companies with these resources. A business incubator would provide benefits to the local Allen economy. Business incubator graduates can commercialize new technologies, which in tum create additional revenue streams and local taxes. Incubators also reduce the risk of small business failures. The NBIA estimates that $1 of estimated public operating assistance will yield $30 in local tax revenue in the long run. NBIA studies have also shown that 84% of incubator graduates stay in their communities. It was noted that incubator facilities do not compete unfairly with local landlords. Incubators actually contribute to the long-tenn viability of the local real estate market, creating low-risk tenants that would later relocate into local buildings. They also provide leases that are appropriate to the beginning stage of a company's growth. Bowman described the two main steps required to establish an incubator. First, an Incubator Feasibility Study must be performed. The expected cost of such a study is $40,000 - 50,000. This study would determine if the incubator project has a solid market, a sound financial base and strong community support. Second, a business model for the incubator must be established This business model must be structured for financial sustainability and include provisions for recruiting and hiring qualified management It must also provide the mechanisms to build a knowledgeable board of directors and effectively assist clients. Bowman noted that the AEDC would need to seek additional partners in order to make this project successful. Such partners could include local companies such as Saamina-SCI, Finisar, Mustang Technology, Jack Henry & Associates, Experian, Xtera, Photronics, and Fiber Systems International. Other partners could include the Metmplex Technology Business Council, local banks, local universities, Collin College and the Allen Independent School District. AFDC Board of Directors Regular Meeting August 20, 1008 - Page 5 11 was also noted that the AEDC must identify a location for the incubator. An existing building, such as 505 Millennium Drive or the HIT Entertainment building could be used, or a new facility could be constructed on land owned by the AFDC. To address all of these concerns, it was requested that the Board consider funding a feasibility study that would provide information on the type of facility to be used, the type of programming to be undertaken, the type of tenants to be targeted and the source of financial support. Larry Calton, CEO of the North Texas Enterprise Center for Medical Technology, appeared before the Board to answer questions regarding incubators. Calton has been involved with the medical technology incubator in Frisco since its very beginning and was part of the team that performed the initial feasibility study for that incubator. Calton described the issues involved with establishing an incubator, explaining that such an endeavor requires a significant up -front investment. In addition, it typically takes years for an incubator to begin graduating profitable companies. Bowman mentioned that Calton is willing to be involved in the feasibility study for the Allen facility if needed. Calton recommended Mark Long to perform the feasibility study Long has a great deal of experience with incubators, and most recently served as the President of the Indiana University Emerging Technology Center. Calton is an Allen resident and has an interest in assisting Allen with the development of a successful business incubator. Kurt Kizer noted that the Board appreciated the information and would take it into consideration. The general consensus of the Board was to have the business incubator considered as part of the 1 Allen City Council's strategic planning process. Kizer noted that the incubator would be a creative way to encourage economic development in Allen. 8. Approval of Economic Development Agreement with Piedmont Stacy Partners, L.P. Piedmont Stacy Partners, L.P previously purchased approximately 20 acres of land on Stacy Road, between US 75 and State Highway 5, for the purpose of developing retail and restaurant pad sites. The AEDC Board previously approved an incentive grant in the amount of $150,000 to assist with placing electrical and fiber infrastructure related to the development underground. Since the time that the AEDC Board took action on this item, the City of Allen has also approved $150,000 to assist with placing electrical and fiber infrastructure related to the development underground. It is being requested that the AEDC modify the terms of their proposed Economic Development Agreement to match the terms of the City of Allen Agreement. Pete Smith, AEDC Attorney, noted the following requested changes: • Company is allowed to use the Economic Development Agreement as collateral for their construction loan • $150,000 grant is paid based on the completion of undergrounding utilities • Company must commence construction on retail development no later than December 2009 • Company must commence undergrounding of utilities no later than March 2009 and complete construction within 6 months • Company must provide invoices verifying $150,000 in expenses were incurred to place utilities underground Smith noted that there is no required completion date for the retail project. AFDC Board q'Directors Regular Meeting August 10, 2008 - Page 6 1 On a motion by Maxine Sweet, seconded by Gary Caplinger, the AEDC Board unanimously approved the amended terms of the Economic Development Agreement with Piedmont Stacy Partners, L.P 9 Aooroval of AEDC Financial Reports Daniel Bowman presented the AEDC Financial Reports. Carl Clemencich noted that the AEDC recently made a payment to Graphic Converting, despite the fact that the company had not met their required employment benchmark by a small margin. The Board agreed that the payment to Graphic Converting was reasonable, but also agreed with Clemencich that future requests that do not meet minimum requirements be reviewed and approved by the entire Board. Pete Smith recommended that the Board ratify the Graphic Converting payment at the next Board meeting. Jennifer Grimm mentioned that she would like to see the sales tax revenues associated with the Trademark development and the MG Herring development separated out on the monthly sales tax report. Peter Vargas noted that Trademark and MG Herring each must have $50,000 accumulated in their respective funds before payments begin. Vargas also noted that the City of Allen and AEDC payments to the Allen Premium Outlets will be finished by 2011. On a motion by Tim Wood, seconded by Gary Caplinger, the Board unanimously approved the Financial Reports as submitted. 10. Administrative and Marketing Activities of the AEDC /Executive Director's Report Jennifer Grimm updated the Board on the marketing activities of the AEDC and distributed the AEDC water bill inserts that will be sent out to Allen residents in September. Invitations were recently sent out for the Duke Realty broker event that will occur on September 4' Grimm is working with Trademark to schedule a broker event for October. The AFDC will have a booth at the upcoming North Texas Commercial Real Estate Association (NTCAR) Expo, which is expected to attract over 1,500 area brokers. The AEDC is a co-sponsor of the Commercial Real Estate Women (CREW) Classic Golf Tournament on September 22"a The AEDC has two golf slots available at the CREW Classic and Board members are invited to attend. Grimm noted that there will be no Millennium Awards Luncheon for 2008 because there is not a clear award winner at the current time. Instead, the ceremony has been postponed until Spring 2009 It was also noted that the City of Allen is now overseeing the Allen Hotel/Motel application review process and has created a committee to review the applications for Hotel/Motel funds. Maxine Sweet mentioned that the McKinney Independent School District and the McKinney Chamber are planning to fund a fulltime lobbyist work in Austin on their behalf. Peter Vargas noted that the Texas Legislature has been reducing the authority of municipalities over the last couple of sessions, which has spurred some local organizations to hire lobbyists for self-defense. The City of Allen has a dedicated staff person that follows legislative issues. It was asked whether the expanded Star Center in Frisco will negatively impact the Allen Event Center. Robert Winningham noted that Global Entertainment has indicated that they do not expect a negative impact. Vargas noted that the Star Center is expanding from 3,000 to 5,000 seats at a fairly high cost per seat. The City of Allen is already receiving calls from parents who are considering changing their hockey time in Frisco to Allen. It was noted that the annual AEDC update to the Allen City Council will occur on September 9ih AFDC Board of Directors Regular Meeting August 20, 2008 - Page 7 11. Scheduling of Next AEDC Board of Directors Meeting The next Board meeting was scheduled for Wednesday, September 17, 2008 at 6:00 p.m. Maxine Sweet said that she will miss the November Board meeting. Kurt Kizer mentioned that he has an upcoming interview with a subcommittee of the City Council regarding his reappointment to the AEDC Board. 12. Convene into Closed Executive Session: Pursuant to Texas Government Code, Section 551.074, the Board convened into closed executive session at 9:55 p.m. for the annual performance review of the Executive Director/CEO. Reconvene in Oven Session The Board reconvened into regular session at 10:09 p.m. 13. Consider and Take Action Relating to the Annual Performance Review of the Executive Director/CEO No action was taken. 14. Adjourn On a motion by Maxine Sweet, seconded by Tim Wood, the meeting was officially adjourned at 10:10 P.M. These minutes approved this 17' day of September 2008. Kurt Kizer, Presi tit Carl Clemencich, Secretary A