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08/07/2018 MinutesPARIS ECONOMIC DEVELOPMENT CORPORATION SPECIAL MEETING Board Members Present: Richard Manning, Chairman Shay Bills, Vice -Chairman Tim Hernandez, Secretary/Treasurer Marion Hamill A.J. Hashmi Ex -Officio Members Present: Legal Counsel: Call to Order. Paris City Council Chambers 107 East Kaufman St. Paris, Texas 75460 Tuesdaw Au�ust 7 2018 4:00 O'CLOCK P.M. MINUTES Staff Present: Michael Paris, Executive Director Chris Stout, Economic Development Associate Paula Brownfield, Administrative Assistant Guest(s) Present: Mary Madewell, The Paris News Carol Hufnagel, Citizen Anna Spencer, Citizen City Council Liaison: Paula Portugal Mr. Manning called the special meeting of the Paris Economic Development Corporation to order at 4:00 p.m. on August 7, 2018. Discuss andossibl a rove 2018-2019 Bud yet for the Paris EDC. Mr. Manning asked Mr. Paris and Mr. Hernandez to explain the 2018-2019 budget worksheets. Mr. Paris started by saying that the PEDC was showing next year's budget with the Item Description column listed at the far right of the worksheet. It is being submitted to City Council with the item descriptions because last year the City Council asked to show more detail. This keeps the PEDC transparent in its budget showing the reason along with the line items behind the budget numbers. Starting with the Personnel Section, we are looking into a 2% increase in Salaries and Wages in the upcoming year for the three PEDC employees. Social Security has 2% added. Retirement for the Executive Director stays the same at $10,800.00. The Insurance Benefits line shows an increase of 20% for premiums. Workers' Comp expense will stay the same. Over all the personnel expenses will increase 4%. The worksheet shows that many of the Administration expenses will be staying the same. Postage will be increased. This past year the PEDC sent out Christmas cards to keep building on both local business August 7, 2018 Page 2 of 4 relationships and site selector relationships. The Contract Services — Legal Fees is increasing to $5,000.00. Last year the City Council wanted the amount to be zero, but this year we will suggest the increase due to our need for a real estate attorney. Ms. Harris Who is both the City Attorney and our attorney requested that we have a real estate attorney for our dealings with American Spiral Weld.. The Auditing Services expense, which is a portion of the overall. City audit, increases a little every year. Gene Anderson, City Finance Director, suggested that we increase the amount by at least 3% each year. The Machinery, Tools and Equipment expense is lower this coming year since we will have purchased a new copier. Turning to the second page, Mr. Paris pointed to Marketing & Promotion. The first item is Secure Jobs and Retention which is an emergency fund to visit C -level executives. The $5,000.00 is set aside every year in case it is needed. Lamar County Days takes place every two years, so you do not see an amount in last year's budget. In the 2016-2017 fiscal year, $7,000.00 was budgeted for the event. This year's budget shows the amount increased to $ 10,000.00, which. would be used for the hamburger cook -off and other activities to showcase Lamar County. Marketing the Airport is in the budget and had not been used from last year. We suggest that the money be used to promote the Airport during the annual Fly -In. The IndustrA Attracti year. We would like to see the $75,000.00 in the travel portion of Marketing and Promotion increased to $115,000.00. This increase would allow us to create marketing materials and videos to promote Paris to industries through the travel that is done and through mail campaigns. Mr. Paris asked. if there were any questions about Marketing and Promotion. Dr. Hashmi pointed to a 53% increase in the travel part of Marketing and Promotion as too much of an increase. He suggested that if more money was needed later for marketing that the Board could increase it at that time. Mr. Manning stated he agreed as long as it could be increased later if needed. Mr. Hernandez said that amending the budget later would be more appropriate since there are no line iterns that show how the extra $40,000.00 would be spent. The Board discussed that $90,000.00 would be an appropriate amount. Job Training is the next budget item. Mr. Paris stated that the expense item ACT WorkKeys tests for Campbell's and Kimberly Clark has not been used as often as in the past. He would like to see the budget amount dropped to $500.00. The High Demand Job Training and Recruiting Match Grant done by the Work Force Commission will match their funds and ours to purchase training equipment for Paris Junior College. We set aside the money in anticipation of the match grant. PEDC Board Meeting Minutes August 7, 2018 Page 3 of 4 We went to the budget items under Direct Business Incentives. Mr. Paris stated that we are hoping to hear something soon from American Spiral Weld. The budget shows what we anticipate if American Spiral Weld chooses Paris. The upfront incentive is for $1,500,000.00 immediately after construction begins. Out of this $1.5 million, $500,000.00 would come directly from the PEDC and $1 million would come from the local banks loan. The next line item shows American Spiral Weld Jobs at $1 million. This incentive is for jobs added above a base of sixty (60) jobs with those employees being with the company for at least six months. The money shown for American Spiral Weld is committed, but not spent at this point. Mr. Hernandez asked if the incentive for jobs was on head count or FTEs and if the timing was six months or one year. Dr. Hashmi clarified that the payment would not be on the first sixty employees, but on sixty-one and above. Also, the $25,000.00 per each employee over sixty would only be paid out once per employee. Dr. Hashmi asked about the interest rate we would be getting on the $1 million dollar loan. Mr. Paris answered that most likely it would be at 3.5% or below. Going on to J Skinner, we are committed to $400,000.00 if they meet all their requirements. Mr. Paris stated that it looks like everything is going in the right direction for J Skinner. Paris Lakes shows as being marked through and the reason for this is that they never pursued reimbursement for their sewer. The money set aside for Paris Lakes went back into our reserves. Both Bodyguard and Potters Industries were paid out this year. Campbell's was paid $400,000.00 for the Plum Line. This does not show in the budget because we have not done budget amendments for the end of the 2017-2018 fiscal year. The last line item is Daisy Dairy with an incentive of $94,900.00. They did not meet the requirements for the incentive and no payment was made to them. This coming year the budget shows $113,150.00 set aside for Daisy's incentive. Mr. Paris pointed out under Debt Service that the last payment on the bond will be made before the end of September 2018. The ASWP Local Banks Loan shows a total loan of $1 million dollars, a term of 5 - years, and a 3.5% interest rate. This would make the yearly payment approximately $218,301.00 per year. Mr. Paris stated that he would like to see this loan paid off in five years. Dr. Hashmi said he was opposed to paying off a 3.5% loan early. His reasoning is that the PEDC should keep the extra money in our account so we would be ready for another prospect. Mr. Paris went on to Capital Expenses saying that we have not placed anything in this category. We will wait on American's decision before adding any dollar amounts. Dr. Hashmi asked for the total amount of overhead to run the PEDC. After calculating, it was stated that approximately $450,000.00, which is 30% of the overall total. Mr. Paris voiced that the changes the Board discussed were in Marketing and Promotion, which were taking the line item from $115,000.00 to $90,000.00. Mr. Hernandez stated that we should keep the COLA in place for now and look into an incentive plan later. Dr. Hashmi stated that he would only oppose the COLA portion of the budget, the rest of the budget he approves. Dr. Hashmi made a motion to approve the budget without the COLA adjustment. No one seconded the motion. The motion failed. Mr. Manning asked for a motion to approve the budget with the COLA included and the adjustment of Marketing to $90,000.00. Mr. Hamill made the motion. Ms. Bills seconded the motion. Vote was 4 -ayes to 0 -nays. PEDC Board Meeting Minutes August 7, 2018 Page 4 of 4 A4journ Dr. Hashmi made a motion to adjourn. Mr. Hernandez seconded the motion. Vote was 5 -ayes to 0 -nays. The meeting was adjourned at 4:51 p.m. Respectfully submitted, Paula Brownfield Administrative Assistant Paris Economic Development Corporation