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10/20/2017 MINUTESParis City Council Chambers 107 East Kaufman St. Paris, Texas 75460 Board Members Present: Richard Manning, Chairman Marion Hamill, Vice -Chairman Tim Hernandez, Secretary/Treasurer Ray Banks Derrick Hughes (came in at 9:45 a.m.) Ex -Officio Members Present: Steve Clifford, Mayor, City of Paris Ken Higdon, Lamar County Chamber Legal Counsel: Stephanie Harris, City Attorney Staff Present: Michael Paris, Executive Director Chris Stout, Economic Development Associate Paula Brownfield, Administrative Assistant Guest(s) Present: Mary Madewell, The Paris News Deanna Manning, Citizen Brett Dunson, Campbell's Soup Shelia Coursey, Campbell's Soup Shawn Bushouse, J. Skinner Baking Dick Amis, First Federal Community Bank Glen Bawcum, Citizen Chase Coleman, Liberty National Bank Carl Cecil, Liberty National Bank John Brockman, First Federal Community Bank Pat Bassano, First Federal Community Bank Dave Johnson, East Texas Broadcasting Renee Harvey, Century 21 Harvey Properties Chad Lindsey, Vision Media Group Dillon Hared, I" Street Media City Council Liaison: Paula Portugal Mr. Manning called the meeting of the Paris Economic Development Corporation to order at 9:30 a.m. on October 20, 2017. Citizens' lout Mr. Manning invited those present to speak during Citizens' Input. No one came forward and the Citizens' Input was closed. PEDCBoard Meeting Minutes October 2O,2O17 Page 2 of 5 Mc Manning asked if there were any corrections to the nzizu1oa. No one from the Board had any changes. Mc. Banks nuudo unuotion to approve the minutes from September 22, 2017. Mc l{ocnundoz seconded the motion. Vote was 4 -ayes to 0 -nays. Mc. Hernandez said that the [uah Out atu1onzon1 showed that the orponaoa were normal. $25,000 was aid to Bodyguard for exceeding their nn»oyooa by an or1m/ five. The PED[ also paid the vc»rl, bond payment of$339,000. Mr. Banks asked ifthe insurance payment made kzPierson Fondloywas u new policy. The answer to the question; it is uconovvul ofthe business policy. Mc Banks then asked if other quotes were received before the policy was conovvod. Mc Paris stated that no other quotes were required because it was under the threshold of $1,500. Mc Paris also highlighted an orponao for the TED[ auloa 1mr workshop that u City Councilor would be attending. He pointed out the orponao of $840 to the l.unzuz County [hunzboc of Commerce for two 1ubloa at the [hunzboc Celebration. And the amount paid 10 Rocking EMoving was for shredding both the Industrial Puck and the Build -to -Suit site. On the [uah Flow Report interest earned is shown at $10,099.20, this is the yearly in1ocoat for the two investments pools we have. Mc Banks nuudo umotion 10 approve the September financials. Mc Hamill seconded the motion. Vote was 4-uyoa1o0-nuya. Ullignalmilml for Campbell's Soup. Mr. Paris opened by saying thatCampbell's Soup approached the PEI}[ about developing u now product line. This transition is cue to nuurko1 force changes happening in the food industry. Bco1 I}unaon, f4un1 Manager, is hoco to give us u pcoaon1u1on on this transition. Mc. I}unaon introduced Shelia [oucaey, Plant Controller, at the Paris plant. He then thanked the PEI}[ for the continued support nfCampbell's inthe community. Mr. I}unaonstated that howas u1the meeting kzmake utwo- part coguoa1 ofsupport. The fica1 pmt of the request is related to the Single Socro Bovocugo ugcoonzon1 we currently have in place with the PEDC. The second part is a new capital investment awarded to the Paris plant. Mc Dunaon explained that nuogu |zonda in the food industry are changing because of consumer food preferences are changing to fresh and organic. This is u shift away from packaged foods. For Campbell's the shelf staple beverage industry iudeclining. The l7-0line ofproducts has u big market ahuzo of this industry, but this segment of the food industry is still declining. In 2013 the Single Serve Bovocugo lino was installed at the Paris plant with an invoahoon1 of $23 million and the creation of fifty jobs. A decision has been made 10close this line which will impact forty-one jobs. This also impacts the 2013 incentive Campbell's received from the f»EDC. Mc I}unaonnoted that u new opportunity, the Plum Organics lino, with $20.5 to $33 million in capital investment and the creation of 40-49 positions is being put into place. This new lino is projecting upward growth and the Paris plant will boproviding 55%-80% of the current Plum volume. We are asking for forgiveness on the Single Serve Beverage ugcoonuon1; amending the ugroonuon1 and then terminating the ugroonuon1. At the aunzo time the Paris plant is requesting financial uaaia1unco with the Plum investment. Mc Paris questioned the consumer buying changes. Mc I}unaon stated that the consumer is looking for fresh foods and they do not want food with preservatives in it or food from cans. Mc 8onoundoz asked about the onuployooa projected for the lino. Mc I}unaon said the operation will be five days uweek which PEDCBoard Meeting Minutes October 2O,2O17 Page 3 of 5 gives them u20% or1cu capacity if they went to aovon_-v« uwook. Mr. Hamill asked about the shelf life of fresher products and if that will inccouao the volume to co1uiloca. Mc I}unaon said the Plum lino has ushelf life often 10twelve months, where canned soup has ushelf life oftwo years. Mc Banks asked the number ofemployees that work u1the Paris plant. Mr. I}unaonreplied that currently there are seven hundred and seventy employees. Mc Banks spoke about the Single Serve Beverage ugcoonuon1 and whether i1would cut 4| jobs. He also questioned if they were defaulting on the ugcoonuon1 and if they were asking forgiveness on the ugroonuon1. And he went on to question if Campbell's was requesting $400,000for the Plum line and how that amount was derived. Mr. Dunaonstated that i1was the capital support to purchase the equipment und the PEI}[ capabilities. Mc Banks replied with another question; was keeping the amount at $400,000 or less so that the City Council would not need to approve. Mc I}unaon unavvocod that it was not. Mc Hughes asked if this was u net inccouao of eight 10nine employees. Mr. Paris explained that amending the Single Serve Beverage Line agreement is the first i1onu that needs to be done. Item 48 is 10terminate the Single Serve Beverage Line ugcoonuon1. Ma. l{ucria stated that on 11onu 45, the unzondod Single Serve Beverage Line ugcoonuon1, the job number of fifty needs to be forty-one unthat Campbell's iunot in default. buno #6 iuterminating the Single Serve Bovocugo Line ugroonuon1. 11onu 47 would be moving forward with Plum. Mc Banks questioned the Single Serve Bovocugo Line unzondnzon1 saying that since the contract was for $500,000 would it also need 1oboapproved byCity Council. Ms. Harris said that bringing i1kzCity Council might bothe best course ofaction. Mr. Hughes asked about the fifth year ofthe agreement and whether that needed 1obo amended. Ma. l{ucria answered that i1would not need 1obo unzondod since the agreement was being terminated. Mr. Manning wanted everyone to know what u good cnrpnndu neighbor Campbell's Soup is to Paris. Mc Banks nuudo umotion 10 approve the amendment to the Single Serve Bovocugo lino agreement with the approval of City Council. Mc Hughes seconded the motion. Vote was 5 -ayes to 0 - nays. incentive agreement. Mr. Banks made a motion to approve to terminate the Single Serve Beverage Line agreement with the approval ofCity Council. Mc Hughesseconded the motion. Vote was 5-uyoakz0-nuya. Soup new Plum Organics Line. Ma. l{moria conznzon1od on the working draft for the Plum Lino, stating dhu1thia was to co1uin jobs and possibly add jobs. Mc. Hughes asked about the timeline for keeping the jobs. Mc I}unaonunawocod that some might bo off the line for six to seven months. Mr. Banks asked when the $400,000 will be paid. Mc. Paris said it could be in u few weeks. Mc. Banks nuudo u motion to approve the $400,000 forgivable loan tied to un/pinyn/unt lcvc]u to Cun/obull`u Soup new f»lun/ Organics Line with the approval ofCity Council since i1iau1the very top ofwhat the PEI}[can approve. Mr. Manning asked for second on the motion and no one seconded it. Mc. Manning nuudo u motion to approve the $400,000 forgivable loan tied to un/pinyn/unt levels to Cun/nhc]l`u Soup new Plum Organics Line. Mc Hughes seconded the motion. Vote was 4 -ayes to |-nays. Mc Banks was the nay vote. PEDC Board Meeting Minutes October 20, 2017 Page 4 of 5 Multam creation of fifty-five jobs. Mr. Paris introduced Shawn Bushouse, Executive Vice President for J. Skinner Bakery, to talk about opening a new product line at J. Skinner. Mr. Bushouse presented a business update for the Board. Two of six production lines are being used to make three core products in seventy stock keeping units. The products, cinnamon rolls and Danish pastries, from this facility go to several different outlets including grocery and convenience stores. The company is planning for future growth at the Paris facility and making capital investments to fuel long-term growth. J. Skinner has potential opportunities with two customers that would add to that growth. Right now the facility is going through quality audits, supplier audits, and is close to completing the audit checklist for both companies. The proposal J. Skinner is presenting consists of a $400,000 of total investment that will be to create a transition incentive and invest in a bulk ingredient plan to drive variable cost margins. This investment will be tied to the creation of fifty-five new jobs and the retention of these jobs with payout only done on proof of performance. Mr. Bushouse commented on how J. Skinner purchased the Paris facility with no business in it knowing that this would allow for business expansion. The new opportunities would add an entire second shift at the facility. Mr. Bushouse opened it up for questions. Mr. Manning asked if this change with the two customers would turn things around for the J. Skinner Paris facility. Mr. Bushouse said that it would increase revenue to 150% of current revenue. For the facility, bringing in these two customers is just the beginning, since both customers have other products that could be produced in the Paris facility. Mr. Hamill asked how much of the facility is being used at the moment. Mr. Bushouse estimated approximately 40%. Mr. Manning wanted to know if the plan was to keep bringing more jobs to Paris. Mr. Bushouse said they absolutely would. Mr. Paris let everyone know that the portion of the jobs created below fifty-five would be pro -rated so everyone is sharing the risk and sharing the growth. The timeline on ramping up jobs is by the ending of the fourth quarter of 2017. Mr. Bushouse said the two potential customers already have suppliers so they don't need to change, but the $400,000 is the transition incentive that will be used to help these companies make the change. Mr. Paris asked about the transportation needed and if J. Skinner would be using rail. Mr. Bushouse replied that they would because it is ideal for bulk ingredients. Mr. Hamill inquired about the training required for employees and whether or not they would be trained here or in Omaha. Mr. Bushouse stated that they already use PJC for training and they have internal trainers from Omaha that come to the Paris facility to train employees. Mr. Hughes made a motion to approve $400,000 for a new product line at J. Skinner Bakery and the creation of fifty-five jobs. Mr. Hamill seconded the motion. Vote was 5 -ayes to 0 -nays. 111213IMMIURUAM MINMIJK112= Mr. Paris pointed out that the City Council made a flyer with facts about the upcoming election. The election is November the 7th with early voting starting next week. He asked that citizens' vote their conscience. Voting "For" is voting for the repair and maintenance of City streets; voting "Against" keeps the revenue going toward the Paris Economic Development. Mr. Banks interjected that the maintenance and repair of streets is only for the streets that were in existence on the day the vote was taken. No new streets or new sidewalks can be built with that money. Mr. Paris explained the differences between 4A Sales Tax and Chapter 380. The City of Paris has used Chapter 380 in the past. The 4A Sales Tax has 1/4 Ih of one percent for economic development and these funds are to be used on job creation and job retention. The guidelines are very specific for what can and what cannot be done with these funds. With Chapter 380 you can do any kind of economic development, but you do not PEDCBoard Meeting Minutes October 2O,2O17 Page 5 of 5 have udedicated sales tax. Mr. Hernandez asked about Chapter 300and if there is any guarantee the money would be used on economic development. Mc Paris stated that there ia no guarantee on the amount of money that would be in the budget each year for economic development. • Atthe last meeting woshowed kzhave ularge electric bill, which wothink iabecause wo are paying for both the Caddo Museum and Genealogy. We are setting up unuoeting with the other two entities about the expenses. • The job creation survey is complete with about 402 coaponaoa. We will put out an orocu1vo aunznuucy and share the findings with our Board and City Council. The Paris citizens vvun1 both industrial and co1oil economic development. The aucroy is showing weakness inufew areas: cleanliness ofthe City, quality oflife, activities 1odo. • The FubToch conference is in Chicago, November 8 m through 91h , and the PEI}[ is participating with Oncor and about twelve area economic development groups. • YVohave received ulead from the European American Investment Council (EAI[). Also, � the E/�l[has uconference r�ovonuboc|8-|/ 1h that vvowill boattending. Convene into Executive Session: ») Section 551.007; I}olibocu1on of Economic Development Negotiations to dolibocu10 [onznzocciul and Financial Information and Economic Incentives relating to the following: Commercial real-estate development. |\ Project Orange Fire Chairman Manning convened the Board into executive session at 10:45 a.m. [huicnzun Manning reconvened the Board into open session at 11:07 a.m. No action was taken on items discussed inExecutive Session. No future agenda items were discussed. Mc. Banks nzudo umotion kz adjourn. Mc Hughes seconded the motion. Vote was 5 -ayes to 0 -nays. The meeting was adjourned at 11:08 a.m. Respectfully submitted, Paula Brownfield Administrative Assistant