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1998-10-21-Minutes 380 MINUTES OF THE PARIS ECONOMIC DEVELOPMENT CORPORATION REGULAR MEETING October 21, 1998 The Paris Economic Development Corporation met in a regular meeting on Tuesday, October 21, 1998, at 2:00 P.M., in the City Council Chambers, City Hall, Paris, Texas. President Mike Rhodes called the meeting to order with the following boardmembers present: Dick Amis and Melba Harris. Also present were ex-officio boardmembers George Struve, Mayor Charles Neeley, Executive Director Gary Vest, and City Attorney Scott Foster. President Rhodes stated that the next item on the agenda was discussion of bonds by Mr. Dan AImon of Southwest Securities Mr. Vest introduced Mr. Dan Almon of Southwest Securities and Mr. Tom Posharsky of McCall, Parkhurst and Horton, L. L. P., bonding attorneys. Mr. Vest stated that these gentlemen were present to discuss the upcoming bond issue. Mr. Almon presented a revised schedule of events to the boardmembers that he asked the Board to consider for approval in order to proceed with selling the bonds. Mr. Almon stated that this procedure has already begun with the preliminary official statement. Mr. AImon said that they have set up a tentative date to sell the bonds if this meets with the Board's approval. Mr. Almon and Mr. Posharsky passed out copies of recent Official Statements concerning bonds issued for the Ennis Economic Development Corporation and Waxahachie Economic Development Corporation. Mr. Almon asked Mr. Posharsky to discuss the flow of funds in relation to the issuance of the bonds. Mr. Posharsky said that the official statements from the two cities was similar to what this Board was considering since they have an Appendix D. Mr. Almon and Mr. Posharsky discussed what the market wants in terms of security for an economic development corporation with a sales tax backed bond. Mr. Posharsky said the bond holders as their security are going to want first call basically on all of the corporation's sales tax revenues. Mr. Posharsky said if you had a new prospect and the Board was going to make a commitment to make payments over time then the Board would have to note in that arrangement that it is subject to the bonds because the bonds come off the top. He said any other commitment would have to be on a subordinated basis to the bonds unless the Board funds it with bonds. 381 City Attorney Foster asked if any other previous commitments would become subordinate to the bonds? Mr. Posharsky said that it should be stated in the paperwork that they are subject to the bond's availability of funds. Mr. Posharsky said that the Board may have to go back and qualify some commitments stating that the Board has issued bonds and that the commitment will be subordinate to -- the bonds. Mr. Vest stated that this is one of the things that had been done when Mr. Almon looked at the Board's budget. Mr. Posharsky stated that under the documents proposed, the Board is allowed to pledge revenues. He said initially the only thing that the resolution is going to contain would be a pledge of the sales tax, which in the future can be used for leverage purposes and the Board can also pledge payments made under any loans. He said the reason the Board might want to consider this item is that the Board has an additional bond test related to any subsequent issue which would require a certificate from your certified public accountants reflecting that out of the last eighteen months, or the last fiscal year, the Corporation had coverage of its outstanding bond together with any new bonds issued, of 1.5 times. He said that if the Corporation had another project six months to a year from now that required a substantial loan, these other payments could be made out of pledged revenues that would help with the additional bonds test to leverage the Corporation into another bond issue or another loan for another entity coming to town. Mr. Almon stated that the reason that you would not do that now is that you do not need to do it now, and once you do it will preclude you from doing tax exempt things, and there are a few projects out there that you could do tax exempt. The Board discussed the possibility of redeeming the bonds prior to their scheduled redemption date after ten years without penalty. Mr. Almon advised the Board that if funds became available prior to the ten year call date, then the Board would have to commission someone such as Southwest Securities to see if they could get a list from the financial registrar and contact the holders depending on rates. Mr. Almon stated that since this is being done taxable the Board would be in a better position by keeping the money and reinvesting it and possibly making a little arbitrage. Mr. Posharsky stated that the bonds could be diffused if you have the formula in there, and you would have to set up an escrow account like you do with other city bonds when we were refunding. He said that you would inform the paying agent that you are going to call the bonds at the first call date and you would give them enough proceeds which together with investments would produce a revenue stream to pay them off at that time. Boardmember Amis stated that the Board needed to be aware that this is the difference between bond financing and bank financing. President Rhodes asked about the cost of underwriting these bonds and Mr. Almon stated it was a little over one percent. Mr. AImon stated that there would be various fees involved such as their fee, bond counsel fee, Moody's Bond -- Rating Fee, Attorney General's charges, printing the preliminary and final official statement and the notice of sale. President Rhodes stated that the Board had previously been authorized to proceed with the issuance of the bonds earlier in the year. After discussion by the boardmembers, it was their consensus to proceed with the issuance of the bonds. 382 President Rhodes stated that the next item on the agenda was approval of the minutes from the previous meeting of the Paris Economic Development Corporation. He asked if there were any corrections or additions to the minutes of the previous meeting and there were none. Boardmember Dick Amis made a motion, seconded by Boardmember Melba Harris, that the minutes be approved as presented. The motion carried unanimously. President Rhodes asked Boardmember Amis to give the financial report in the absence of Gene Anderson, Director of Finance. Mr. Amis gave the September report. President Rhodes asked if anyone had any questions, and there were none. Boardmember Harris made a motion, seconded by Boardmember Amis, that the financial report be approved as presented. The motion carried unanimously. President Rhodes asked Gary Vest to give the Director's Report. Mr. Vest discussed responses received due to the advertising program and stated that he had attended the Annual T.E.D.C. Conference held in Corpus Christi. He stated that they had received the Community Economic Development Award, and at the last City Council meeting he had presented it to Mayor Neeley for placement in City Hall. Mr. Vest discussed the Texas Air Quality Coalition which is a group of counties along the Red River. He stated that a group of individuals had met with Senator Ratliff. Mr. Vest discussed the action of Mr. Haywood concerning the counties in his district, removal of which had tentatively been agreed upon. Mr. Vest said that he had obtained information this past week that thirty counties have been removed from the original strategy. He said there is a possibility that at a future date, in order to continue to fight, it may become necessary for a new funding request. Mr. Vest stated that he will come back before the Board when it becomes necessary to request another contribution to the Air Quality Coalition. President Rhodes asked Mr. Vest to discuss the next item on the agenda. Mr. Vest said the next item was consideration of and action on authorizing the execution of the Incentive Agreement for International Piping Systems, Inc. He said the Board had authorized him to negotiate an incentive agreement with this company and they are tentatively scheduled to sign the documents. He said that they are waiting for the Board to take official action today and adopt this resolution and agreement. He said that they have requested that it be forwarded to them as quickly as possible. City Attorney Scott Foster read the resolution. Resolution No. 98-012, authorizing the execution of the Incentive Agreement for Turner International Piping Systems, Inc. PARIS ECONOMIC DEVELOPMENT CORPORATION RESOLUTION NO. 98-012 WHEREAS, the Paris Economic Development Corporation is a non-profit corporation governed by the Development Corporation Act of 1979 (the Act) and was established for the purposes of promoting, assisting, and enhancing economic development; and, WHEREAS, the means and measures authorized by the Act and the assistance provided therein with respect to financing are found to be in the public interest and serve a public purpose of the state in promoting the welfare of the citizens of the state economically by the securing and retaining of business enterprises and the resulting maintenance of a higher level of employment, economic activity, and stability; and, 383 WHEREAS, in keeping with the purposes for which the legislature enacted the Development Corporation Act of 1979 and the purposes for which the voters of the City of Paris established the Paris Economic Development Corporation, it is deemed appropriate that an incentive agreement be entered into with Turner International Piping Systems, Inc.; and, WHEREAS, the form of the Incentive Agreement, attached hereto as Exhibit A, should, in all things, be approved, and the President, Michael R. Rhodes, should be authorized to execute the same; NOW, THEREFORE, BE IT RESOLVED BY THE PARIS ECONOMIC DEVELOPMENT CORPORATION, that the form of the Incentive Agreement with Turner International Piping Systems, Inc., attached hereto as Exhibit A, be, and the same is hereby, approved; and, BE IT FURTHER RESOLVED, that the President, Michael R. Rhodes, be, and he is hereby, authorized and directed to execute, on behalf of the Paris Economic Development Corporation, the Incentive Agreement, under the terms and conditions and in the form shown in Exhibit A, attached hereto. PASSED AND ADOPTED this 21st day of October, 1998. Michael Rhodes, President ATTEST: Melba Harris, Secretary-Treasurer APPROVED AS TO FORM: Scott Foster, City Attorney INCENTIVE AGREEMENT STATE OF TEXAS KNOW ALL MEN BY THESE PRESENTS: COUNTY OF LAMAR THAT, the PARIS ECONOMIC DEVELOPMENT CORPORATION, a Texas corporation, acting by and through its President, Michael R. Rhodes, duly authorized by resolution of the Board of Directors, hereinafter called PEDC, and TURNER INTERNATIONAL PIPING SYSTEMS, INC., acting by and through its President, David L. Chapman, duly authorized, hereinafter called TIPS, do hereby contract and agree as follows: 384 1. As a condition precedent tot he obligations of PEDC under this agreement, TIPS shall purchase the Babcock & Wilcox (B&W) facility in Paris, Texas, for the operation of a metal and pipe fabrication shop. 2. PEDC agrees to provide TIPS with a cash incentive of six thousand six hundred and sixty- seven dollars ($6,667.00) per permanent, full-time job created at the Paris, Texas, facility as stated in Paragraphs 3 through 9 below. These annual payments shall not exceed five hundred thousand dollars ($500,000.00), with total cumulative payments not to exceed two million five hundred thousand dollars ($2,500,000.00). 3. On the date of closing of the real property acquisition by TIPS from B&W, PEDC agrees to pay to TIPS an initial payment of five hundred thousand dollars ($500,000.00). 4. PEDC agrees to pay cash incentives to TIPS based upon employment by TIPS, using the following methodology except for the first year: the total number of employees at the end of the first year must be 150 for TIPS to qualify for the second payment of $500,000. The average number of employees in Years 2 through 4 must be increased by 75 employees per year to qualify for the maximum annual payment of $500,000. For example, the average number of employees during Year 2 must be a minimum of 225 to qualify for the full annual payment of $500,000 at the end of Year 2, and the average number of employees during Year 3 must be a minimum of 300 to qualify for a full annual payment of $500,000 at the end of Year 3. 5. Within ten (10) days following the expiration of one (1) year from the date TIPS should make its first shipment of complete pipe fabrication in the Paris facility, PEDC agrees to pay TIPS a second payment of up to an additional five hundred thousand dollars ($500,000.00) based on the job creation credit as described in Paragraph 4 hereof. 6. Within ten (10) days following the expiration of two (2) years from the date TIPS should make its first shipment of complete pipe fabrication in the Paris facility, PEDC agrees to pay TIPS a third payment of up to an additional five hundred thousand dollars ($500,000.00) based on the job creation credit as described in Paragraph 4 hereof. 7. Within ten (10) days following the expiration of three (3) years from the date TIPS should make its first shipment of complete pipe fabrication in the Paris facility, PEDC agrees to pay TIPS a fourth payment of up to an additional five hundred thousand dollars ($500,000.00) based on the job creation credit as described in Paragraph 4 hereof. 8. Within ten (I0) days following the expiration of'four (4) years from the date TIPS should make its first shipment of complete pipe fabrication in the Paris facility, PEDC agrees to pay TIPS a fifth and final payment of up to an additional five hundred thousand dollars ($500,000.00) based on the job creation credit as described in Paragraph 4 hereof. 9. The cash incentive paid to TIPS is based upon the average number of jobs created and maintained during the incentive period as verified by the Employer's Quarterly Employment Reports filed with the Texas Workforce Commission. 10. After the closing of TIPS' acquisition of the B&W facilities, TIPS agrees to proceed with due diligence to make modifications, improvements, and alterations to the existing facilities that TIPS should consider necessary or desirable to operate the fabrication shop. EXECUTED this 21st day of October, 1998. 385 PARIS ECONOMIC DEVELOPMENT CORPORATION By: -- Michael R. Rhodes, President ATTEST: Melba Harris, Secretary-Treasurer APPROVED AS TO FORM: Scott P. Foster, City Attorney TURNER INTERNATIONAL PIPING SYSTEMS, INC. By: David L. Chapman, President ATTEST: , Secretary After discussion by the Board, Boardmember Dick Amis made a motion, seconded by Boardmember Melba Harris that this resolution be adopted, and the Board voted unanimously to adopt the resolution. President Rhodes asked Mr. Vest to discuss the next item on the agenda. Mr. Vest stated that this item concerned the Lone Star City Program which had previously been approved approximately one year ago. He said that the application has never been filed, so they need another resolution at this time. __ City Attorney Scott Foster read the resolution. Resolution No. 98-013, supporting the participation of the City of Paris in the Lone Star City Program and agreeing to cooperate in assisting Paris to achieve designation as a Lone Star City. 386 PARIS ECONOMIC DEVELOPMENT CORPORATION RESOLUTION NO. 98-013 WHEREAS, economic growth through (1) business retention and expansion and (2) industrial recruitment is vital to the prosperity and stability, of the community; and. WHEREAS, it is acknowledged that recruitment efforts by cities throughout the United States for new industrial startups and expansions is becoming increasingly competitive; and, WHEREAS, a planned, well-organized economic development.program is necessary, not only to compete successfully for the recruitment of new industries, but also to assist existing industries with expansion plans; and, WHEREAS, a successful economic development program requires the commitment and cooperation of local government and the business community; and, WHEREAS, the "Lone Star City" program provides a means for cities to enhance their economic development efforts through a formal certification program stressing training and community preparedness and cooperation; NOW, THEREFORE, BE IT RESOLVED BY THE PARIS ECONOMIC DEVELOPMENT CORPORATION, that the Paris Economic Development Corporation does hereby support the participation of the City of Paris in the Lone Star City Program and will cooperate, to the greatest extent possible, in assisting Paris to achieve designation as a Lone Star City. PASSED AND ADOPTED this 21st day of October, 1998. Michael R. Rhodes, President ATTEST: Melba Harris, Secretary-Treasurer APPROVED AS TO FORM: Scott P. Foster, City Attorney Boardmember Dick Amis made a motion, seconded by Boardmember Melba Harris that this resolution be adopted, and the Board voted unanimously to adopt the resolution. After discussion by the Board, it was noted that the next regular meeting is scheduled for Veteran's Day and it was the consensus of the Board that another date be selected. 387 President Rhodes asked if there was any other business and there being none he declared the board meeting adjourned. President Michael Rhodes ATTEST: Assistant City Clerk, Barbara Denny