Loading...
HomeMy WebLinkAboutMin - Economic Development Corporation - 2009 - 07/15 - Regular2. Approval of Economic Development Incentive Agreement with the City of Allen to Provide Grants to Assist with Infrastructure Expenses Related to the Data Center Beiin Constructed by Cisco Systems Inc John Baumgartner, Director of Engineering for the City of Allen, appeared before the AEDC Board to request approval of an Economic Development Agreement with the City of Allen for the purpose of providing grants to assist with infrastructure expenses related to the data center being constructed by Cisco Systems, Inc. Baumgartner noted that the City hopes to be underway with the construction of road improvements necessary to support the data center by January 1, 2010. The road project is expected to be completed by April or May of 2010 and will cost an estimated $2 million. The proposed Economic Development Agreement would provide a grant of $500,000 to assist with the cost of roads and utilities surrounding the Cisco site. The agreement would also 1 provide an AEDC grant of $600,000 to be paid at the time that Chelsea Boulevard is constructed from the Cisco site to SH 121 and when the City of Allen has incurred costs to place the electrical utilities underground In keeping with the terms of the AEDC Economic Development Agreement with Cisco Systems, the $600,000 grant would be paid no earlier than September 1, 2013. ALLEN ECONOMIC DEVELOPMENT CORPORATION (AEDC) BOARD OF DIRECTORS REGULAR MEETING WEDNESDAY, JULY 15, 2009 Board Staff Guests Tim Wood Robert Winningham Pete Smith Gary Caplinger Jennifer Grimm John Baumgartner Carl Clemencich Daniel Bowman Joey Herald Maxine Sweet Bo Bass Stephen Westurn Eric Buskness Carson Doss Tyrone Wilson 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 Tim Wood at 6:16 p.m. on Wednesday, July 15, 2009 at the AEDC Office. 1 1 Approval of Minutes of the June 17 2009 Reeular Meeting On a motion by Gary Caplinger, seconded by Maxine Sweet, the Board unanimously approved the minutes of the June 17, 2009 Regular Meeting as presented. 2. Approval of Economic Development Incentive Agreement with the City of Allen to Provide Grants to Assist with Infrastructure Expenses Related to the Data Center Beiin Constructed by Cisco Systems Inc John Baumgartner, Director of Engineering for the City of Allen, appeared before the AEDC Board to request approval of an Economic Development Agreement with the City of Allen for the purpose of providing grants to assist with infrastructure expenses related to the data center being constructed by Cisco Systems, Inc. Baumgartner noted that the City hopes to be underway with the construction of road improvements necessary to support the data center by January 1, 2010. The road project is expected to be completed by April or May of 2010 and will cost an estimated $2 million. The proposed Economic Development Agreement would provide a grant of $500,000 to assist with the cost of roads and utilities surrounding the Cisco site. The agreement would also 1 provide an AEDC grant of $600,000 to be paid at the time that Chelsea Boulevard is constructed from the Cisco site to SH 121 and when the City of Allen has incurred costs to place the electrical utilities underground In keeping with the terms of the AEDC Economic Development Agreement with Cisco Systems, the $600,000 grant would be paid no earlier than September 1, 2013. 3. Convene into Closed Executive Session: The Board convened into closed executive session at 6:25 p.m. to deliberate commercial and financial information and economic incentives for the recruitment of Project Remote. Reconvene in Open Session The Board reconvened into regular session at 7:05 p.m. 4. Actions Resulting from Executive Session No actions were taken. AFDC Board of Directors Regular Meeting July 15, 1009 - Page 2 The $500,000 grant for road and utility construction would be paid on the following schedule: • $250,000 paid at the time the bid is awarded for the project • $250,000 paid at the time the road project is 50 -percent complete Baumgartner explained that the bids for construction of many City projects have been approximately 20 -percent below the engineering estimates, due in large part to the recent decrease in the cost of construction materials. He thinks that such costs may be at their lowest points currently, making it beneficial to bid new construction projects as soon as possible. Maxine Sweet stated her appreciation that the City has put an emphasis on placing electric utilities underground. Tim Wood inquired as to whether the payment schedule for the proposed grants would allow the AEDC to maintain a positive cash balance. Daniel Bowman indicated that the current AEDC projections show a positive cash balance once the proposed grants are taken into account. Robert Winningham noted that the AEDC will not be required to pay the $600,000 grant until 2013. Baumgartner stated that the City is currently in the process of acquiring right-of-way for the remaining portion of Chelsea Boulevard, between the Cisco site and SH 121. General Growth Properties has indicated that they may be willing to donate approximately 12 acres of right -of- way to the City. The City would not begin construction on the remaining portion of Chelsea for at least two or three more years, with the project taking about two years to complete. Wood inquired if the AEDC would have to reevaluate the payment schedule if the construction of the remaining portion of Chelsea Boulevard was accelerated. Baumgartner stated that the City and AEDC would have to reevaluate the cash available for road construction as new economic development projects arise. On a motion by Maxine Sweet, seconded by Gary Caplinger, the AEDC Board approved the Economic Development Agreement with the City of Allen for the purpose of providing grants to assist with infrastructure expenses related to the data center being constructed by Cisco Systems, Inc. 3. Convene into Closed Executive Session: The Board convened into closed executive session at 6:25 p.m. to deliberate commercial and financial information and economic incentives for the recruitment of Project Remote. Reconvene in Open Session The Board reconvened into regular session at 7:05 p.m. 4. Actions Resulting from Executive Session No actions were taken. AFDC Board aJ Directors Regular Meeting Jah 15, 2009 - Page 3 S. Consider and Take Action Regarding Company Compliance with AEDC Economic Development Agreements and City of Allen Tax Abatement Agreements Daniel Bowman updated the Board on the status of company compliance with AEDC economic development agreements and City of Allen tax abatement agreements. On an annual basis, AEDC staff reviews all of the Collin County Appraisal District (CCAD) business personal property (BPP) accounts and real property accounts for companies that have economic development and/or tax abatement agreements with the City of Allen and/or the AEDC. This review is done in advance of the certification of the tax rolls, which typically occurs in mid-July each year. Bowman noted that the AEDC compliance review revealed that several Allen companies are potentially in non-compliance with their agreements. Applied Signal Technology is required to have BPP with a total taxable value of $250,000; however, the company currently has $186,843 in taxable BPP value. The company has been notified and is working to correct the problem. If the company is unable to re-establish the $250,000 taxable value for 2009, they would be liable for repaying the AEDC the $60,000 grant they received previously ING Real Estate, the company that owns the two buildings that were developed by Trammell Crow in Allen Station Business Park, is currently not in compliance with the taxable value clause for one of its Economic Development Agreements. Both buildings are required to have a taxable value of S4 million; however, one of the buildings has fallen in value to $3,664,162. The company has been notified and is working to correct the problem. If the company is unable to correct the situation, they are liable for having to repay previously abated taxes and a $380,000 incentive grant. Graphic Converting is required to maintain $5 million in taxable BPP but only has $3.5 million currently. The company has indicated that an economic downturn in their industry has made it impossible for them to meet the $5 million requirement. Graphic Converting plans to approach the Board in August to explain the situation and request that the Board not call the company into default and require repayment of the loan. The company does not plan to request the $200,000 grant that was scheduled to be paid to them in 2009 The company is potentially liable for repaying the AEDC $450.000. Sage Telecom is required to maintain $3.5 million in BPP but only has $1.5 million for 2009 The company has not been in compliance with their Economic Development Agreement for several years. Sage is not in default and is not liable for repaying funds to the AEDC, rather, the company will simply forego their annual grant of $30,000 if they are unable to comply with their taxable value requirement. Sanmina-SCI is required to maintain $18 million in BPP but only has $13 9 million currently Sanmina-SCI will simply forego the second installment of their grant in the amount of $150,000 if they are unable to comply with the taxable value requirement Tim Wood noted that he is glad to see that only a small number of Allen companies are having compliance issues, given the current state of the economy. Pete Smith noted that many companies are defaulting on their economic development agreement in other cities. No action was taken on this item. AEDC Board of Du'eciors Regular Meeting July 15, ?009 - Page 4 1 6. Approval of AFDC Financial Reports Daniel Bowman presented the AEDC Financial Reports and distributed a news article regarding the extent to which sales tax collections have decreased in the State of Texas. The City of Allen has not experienced the same decrease in sales tax that has been experienced statewide. On a motion by Carl Clemencich, seconded by Maxine Sweet, the Board unanimously approved the AEDC Financial Reports as presented 7 Discuss Administrative and Marketing Activities of the AEDC and Upcoming Local Events Jennifer Grimm updated the Board on the marketing activities of the AFDC and described the DFW Marketing Team's Annual Report. Grimm invited the Board to attend the upcoming CoreNet Global Summit that will be held in the Dallas area, as well as a site selector event that the Greater Dallas Chamber is hosting at the Dallas Cowboys Stadium in November. Grimm also reminded the Board of the upcoming Joint Workshop Meeting between the AEDC Board and the Allen City Council, and invited Board members to attend the NTCAR Expo and the Tech Titans Gala. The AFDC is in the process of purchasing new marketing folders that have been professionally redesigned and updated. The previous folders had been used for the past five years. 8. AEDC Executive Director's Report Regarding Office Industrial Data Center, and Retail Projects. and Local Partnerships Robert Winningham updated the Board on the status of various AEDC projects, explaining that Forbes Magazine recently ranked Allen as the 191" best place to live in the United States. Jennifer Grimm noted that Allen's crime statistics were very influential in determining this ranking. Maxine Sweet inquired about the closure of the La Fmca restaurant on Bethany Drive in Allen. Grimm stated that the restaurant has been up for sale for almost 6 years and it is likely the owners were ready to stop pinning the restaurant Sweet noted that La Finca always seemed to be very busy in the past. Winningham stated that Project RG is still actively considering Allen and should provide the AEDC with additional information in the next few weeks. The company's Board of Directors should meet in July to discuss the sites. Allen is the primary Texas city under consideration. Winningham thanked John Baumgartner and Be Bass for their help with the project The AEDC has experienced a great deal of interest from data center developers recently The Halo Group is still working with Duke to negotiate a lease at One Allen Center, although the process has been going slowly Winningham met with MG Herring Group representatives, who indicated that the Village at Allen and the Village at Fairview is collectively the largest retail development in Texas. They also indicated that Allen is doing much better economically than the rest of the country A EDC Board of Directors Regular Meeting Ali 15, 2009 - Page 5 Winningham thanked AEDC staff members for working at the Allen USA Celebration in his absence, since he was busy at the time dealing with a family issue. Carl Clemencich inquired if State Farm is considering moving its operation out of Allen Station Business Park. Winningham confirmed that they are considering that option and the AEDC is working to keep the company in Allen. 9 Scheduling of Next AEDC Board of Directors Meetin The Joint Workshop between the AEDC Board and the Allen City Council will take place on July 28, 2009 at 5:30 p.m. at Allen City Hall. The next Regular Board meeting was scheduled for Wednesday, August 19, 2009 at 6:00 p.m. 10. Convene into Closed Executive Session: Pursuant to Texas Government Code Section 551 074: Personnel Mattern Discussion of Duties and Responsibilities of the AEDC Executive Director/CEO The Board did not convene into closed executive session to discuss the duties and responsibilities of the AEDC Executive Director/CEO. I11. Adiourn The meeting was officially adjourned on a motion by Maxine Sweet, seconded by Gary Caplinger, at 7:38 p.m. These minutes approved this 191h day of August 2009 r7,)-?c,(,� Tim Wood, President Carl Clemencich, Secretary/Treasurer n