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HomeMy WebLinkAboutMin - Economic Development Corporation - 2009 - 11/18 - RegularL I E ALLEN ECONOMIC DEVELOPMENT CORPORATION (AEDC) BOARD OF DIRECTORS REGULAR MEETING WEDNESDAY, NOVEMER 18, 2009 Board Tim Wood Carl Clemencich Susan Bartlemay Gary Caplinger Maxine Sweet Staff Robert Winningham Daniel Bowman Call to Order and Announce a Quorum Present. Guests Pete Smith Peter Vargas Bo Bass Joey Herald Brandon Davenport Mae Jackson Bo Bass Tyrone Wilson 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 10 p.m. on Wednesday, November 18, 2009 at the AEDC Office. 1 Approval of Minutes of the October 21 2009 Regular Meeting On a motion by Carl Clemencich, seconded by Susan Bartlemay, the Board unanimously approved the Minutes of the October 21. 2009 Regular Meeting as presented. 2. Update on RESQdebt. Inc Robert Winningham introduced Brandon Davenport, CEO of RESQdebt, Inc. Davenport noted that the last time he appeared before the Board, the company had just gone through a significant management change and the future of RESQdebt was uncertain. Since Davenport took over as CEO in July 2009, company revenues have grown significantly The company posted a profit last month. The company now has expenses under control and is in the process of trying to return to an employment level of 160 to 170 over the next 6 to 9 months. Once they reach that employment level, Davenport expects that RESQdebt may attempt to occupy the 60,000-sf building that the company previously vacated. Davenport anticipates that the company could eventually completely fill that 60,000-sf building and grow to an employment level of 400 Under the previous management team, RESQdebt had lower client retention. This was due to poor business practices implemented by the previous CEO. Under Davenport, retention has improved significantly Nm,ember 18, 2009 - Page 2 ' Davenport noted that the lifetime value of a customer is 18 to 24 months. The company currently employs 110 full-time equivalent employees and recently cut three high level employment positions that made over $100,000 per year. They have hired several highly paid production/sales employees. Maxine Sweet inquired about the sources from which RESQdebt receives its sales leads. Davenport indicated that the company previously generated leads primarily through the internet (pay -per -click), but now RESQdebt focuses more on advertising through the radio, community events, local outreach, television, referrals and direct mad. The company also pays other companies to provide them with sales leads. RESQdebt was a sponsor of the 2009 Allen USA Celebration. 3. Consider Approval of Economic Development Agreement with Turrentine-Jackson Morrow Inc Daniel Bowman updated the Board on the status of the Economic Development Agreement with Turrentine-Jackson Morrow, Inc. Turrentine-Jackson-Morrow is the owner of Ridgeview Memorial Park, a cemetery and funeral home located north of the Allen Outlet Mall new the southwest comer of Ridgeview Drive and US 75. In November of 2008, Turrentine-Jackson-Morrow approached the AEDC regarding their plans to expand their existing facility by 16,000-sf, adding retail uses that would include a flower shop, gift shop and a coffee bar. They expected to invest approximately $3 million in the expansion project and employ an additional 8 individuals. At that time, the AEDC approved a $50,000 incentive grant to assist the company with its expansion, stipulating that Turrentine-Jackson-Morrow must invest approximately $3 million in construction, personal property and soft costs related to the project and employ 65 individuals for a period of 10 years. The company is currently under construction on the project and desires to move forward with the Economic Development Agreement. Based on favorable construction bids, the company is currently budgeting approximately $2 5 million for direct construction expenses related to the project. They are planning to maintain their current staff of 78 employees indefinitely. Maxine Sweet inquired if the taxable sales that the company anticipates being consummated in the City of Allen could actually be consummated in another city Robert Winningham indicated that this would not be the case, as the Allen location is the company's main office. Daniel Bowman indicated that state law requires that sales transactions that take place in Allen must produce sales taxes for the City of Allen. On a motion by Gary Caplinger, seconded by Carl Clemencich, the AEDC Board unanimously approved the Economic Development Agreement between the AEDC and Turrentine-Jackson-Morrow, Inc. November 18, 2009 - Page 3 1 4. Consider and Take Appropriate Action Regarding the Purcl Acres of Land Out of the Francis Dosser Survey, Abst. No. Survev, Abst No 321 City of Allen Collin County, Texas Robert Winningham updated the Board on this potential land transaction, indicating that the AEDC is considering the possibility of putting land on SH 121 under option. This option would be primarily for the purpose of ensuring that this land is retained for Project RG. The consultants representing Project RG have indicated that the project is on hold for up to one year, although they anticipate the project may move forward in the next 2 to 6 months. Winningham explained that five projects have expressed interest in purchasing all or a portion of the land under consideration. The proposed 90 -day option on the land has a maximum cost to the AEDC of $1,000. It was also noted that Federal healthcare legislation has been slowing down pharmaceutical projects such as Project RG, and it is anticipated that these projects will move forward once it is clear what impact new federal regulations will have on the industry Winningham stated that several data center projects are interested in the parcel, with the availability of redundant power and the construction of the new Cisco data center drawing attention to the area. Gary Caplinger expressed his concern that potential purchasers may be unwilling to close on the land within 90 days, especially since Project RG is currently on - hold. Cad Clemencich shared similar concerns and also inquired as to why this item was not being considered in closed executive session. Pete Smith indicated that since the contract has 1 been negotiated already, final Board approval must take place in open session. Maxine Sweet supported Winningham's judgment on the issue of putting the land under option. Susan Bartlemay inquired if the AEDC would give the land to Project RG, should the AEDC eventually close on the land. Winningham noted that this is just an option to purchase the land and the AEDC does not intend to purchase the land at this time. Rather, the AEDC would attempt to find an end user to directly acquire the land. It was also noted that the agreement is assignable. Winningham stated that he cannot promise that the land would be purchased within 90 days Vargas mentioned his concern that the AEDC's option may establish a per -square -foot price that other potential land purchasers could cite in the future. Winningham noted that the price in the option contract is actually $.75 per -square -foot cheaper than the price paid by Cisco for land in the area. On a motion by Maxine Sweet, seconded by Susan Bartlemay, the AEDC Board unanimously approved entering into an option agreement to purchase approximately 76.599 acres of land out of the Francis Dosser Survey, Abst. No. 280 and George Fitzhugh Survey, Abst. No. 321, City of Allen, Collin County, Texas 5. Convene into Closed Executive Sessiom 1 The Board convened into closed executive session at 6:45 p.m. to deliberate commercial and financial information and economic incentives for the following: • Consider Incentives for the Retention or Expansion of Local Company November 18.2009 Page 1 Reconvene in Open Session The Board reconvened into regular session 7:06 p.m. 6. Actions Resulting from Executive Session On a motion by Maxine Sweet, seconded by Susan Bartlemay, the AEDC Board unanimously approved a $150,000 incentive grant to be paid to ING Group in 2 installments of $75,000 each The incentive was contingent on the following: • ING Group must execute a 10 -year lease with State Farm Insurance for approximately 63,000 -square feet of space in Allen Station Business Park. The lease agreement may have an option for the State Farm to terminate the lease after 5 years. • If State Farm vacates the property before 5 years has expired, ING Group must repay the AEDC a prorated portion of the grant. 7 Discuss and Possibly Take Action on AEDC Policy for Client Development and Entertainment Robert Winningham explained that AEDC staff would like to have a policy in place for entertaining economic development prospects. This policy would be particularly useful since the AEDC may take clients to the Allen Event Center and pay for various items associated with such client events Carl Clemencich noted that the AFDC is primarily a sales office and should hence be allowed to entertain clients. The AEDC client entertainment policy should ensure that AEDC funds are properly handled in the course of client entertainment. Maxine Sweet indicated that she feels AEDC staff should be personally involved in all client entertainment events that are paid for using AEDC funds. Winningham noted that he was able to obtain a copy of a similar policy used by the City of Cedar Hill. Neither the City of Frisco nor the Frisco Economic Development Corporation have such a policy in place. Winningham noted that the AEDC would only make use of the Allen Event Center as the AEDC marketing budget permits. It was also indicated that City staff, AEDC staff, AEDC Board members and Allen City Council members would be able to accompany economic development prospects. Susan Bartlemay suggested that the AEDC establish a certain number of times each year when the AEDC would plan to use the Event Center for client entertainment. Tim Wood recommended that the AEDC be given room to host unexpected, last-minute prospect visits to the Event Center, since such visits may occur from time -to -time. Peter Vargas mentioned that the AEDC could pay for 3 to 4 longe seats on the upper level of 1 the Event Center. This would give the AEDC flexibility in scheduling client visits without requiring the AEDC to purchase a suite. Clemencich indicated that he would like to have a separate accounting line -item for these expenses. Sweet indicated that the AEDC policy should allow for flexibility, while also safeguarding the AEDC. November 18, 2009 Page 5 1 Gary Caplinger noted that AEDC funds used to host prospects should have a good return on investment. Bartlemay requested that AEDC staff draft a policy and bring it back to the Board for consideration 8. Approval of AEDC Financial Reports Daniel Bowman presented the AEDC Financial Reports. Peter Vargas indicated that sales tax receipts have been positive overall, although the economy has had a negative impact on big ticket items such as certain types of computer software. The City of Allen projects an 8 -percent increase in sales tax revenues for 2010. On a motion by Carl Clemencich, seconded by Gary Caplinger, the Board unanimously approved the AEDC Financial Reports as presented. 9 Discuss AEDC Strategy for Maintaining Cash Reserves for Land Acquisition Maior Business Prospects and Collaborative Projects Robert Winningham indicated that Kevin Hammeke, City of Allen Finance Director, will appear before the Board in the coming months to discuss the AEDC fund balance. Tim Wood requested the Board's feedback regarding the amount of cash that the AEDC should retain on an ongoing basis. Peter Vargas indicated that the charter for the City of Allen requires that the city maintain a minimum 60 -day reserve as fund balance. Vargas recommended that the AEDC maintain a cash cushion and also work to ensure that sufficient funds are on -hand to support large projects that may arise. Vargas also noted that a bond rating agency will want the AEDC to maintain a certain percent of its funds as a reserve The ACDC has built up a fund balance that is used as a reserve. Wood stated that Project RG and the Cisco project indicate the types of large incentive grants that may be required to close future projects. Winningham noted that economic development corporations in other parts of Texas have been criticized in the past for holding too large of a cash reserve. Caplinger agreed that the AEDC should set cash aside for certain types of projects Susan Bartlemay stated that the AEDC should be careful not to save too much money and pass up important opportunities. Bartlemay suggested that the AEDC Board wait for Hammeke to update the Board before making a decision on fund balance. 10. Discuss Administrative and Marketing Activities of the AEDC and Upcoming Local Events Robert Winningham updated the Board on the marketing activities of the AEDC, noting that t Allen will have an ad in the Allen Event Center guide. The AEDC is a sponsor of an upcoming Dallas Morning News real estate event at the Belo Mansion in Downtown Dallas that is also being supported by the North Texas Commercial Association of Realtors. This event should provide the AEDC significant visibility with the brokerage community Now...brr l,S, 2009 - Pqe. 6 The AEDC will be advertising in a publication that the Texas Governor's office is creating. This publication will be sent to national and mtcinalional site selectors A link to the AEDC website will also be placed on the website for the Office of the Governor AEDC staff is in the process of redesigning its website and updating the AEDC logo. Allen High School students are currently undertaking a mock branding campaign for the AEDC. Daniel Bowman updated the Board regarding the renewable energy industry, indicating the AEDC is focused on recruiting velar panel manufacturers to Allen. The AEDC recently sponsored a ienewable energy read estate panel hosted by Area Development Maga: inc Winningham presented the new AEDC binoculars, which will be given to important AEDC prospects as a promotional item. It was noted that the AEDC will host its annual Holiday party on December 101h and the City of Allen Boards and Commissions Dinner will take place on December I Ph Duke Realty is contributing funds to the AEDC holiday party and will be inviting real estate brokers to attend. Pete Smith updated the Board on the lawsuit with Celerity, explaining that the company has submitted a typical general denial of the AEDC allegations The company is required to respond with disclosures by December 2009 I I AEDC Executive Director's Report Regarding Office, Industrial Data Center, and Retail Projects, and Local Partnerships The AEDC Executive Director did not report any additional items to the Board. 12 Scheduhna of Next AEDC Board of Directors Meetin The next Regular Board meeting was scheduled for Wednesday, December 16, 2009 at 6:00 p an. It was noted that the AEDC Board may not meet in December due to the Hohdays. I: Adiourn The meeting was officially adjourned on a motion by Susan Bartlemay, seconded by Maxine Sweet, at 7-55 p.m These minutes approved this 20" day of January 2010 ((-J Tim Wood, President Carl Clemenoch, SecretandTreasurer