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2003-05-21-PEDC MINUTES OF THE SPECIAL MEETING OF THE PARIS ECONOMIC DEVELOPMENT CORPORATION MAY 21, 2003 The Paris Economic Development Corporation met in special session on Wednesday, May 21, 2003, 4:00 P. M., at Paris Junior College, Applied Technology Building, Room 1206, 2400 Clarksville Street. Vice President Don Wall called the meeting to order with the following Directors present: Dick Severson and Mike Dunn. Also present was Executive Director Gary Vest, Ex- officio Member Bobby Walters, City Manager Michael E. Malone, City Attorney Larry W. Schenk, Director of Finance Gene Anderson, and City Clerk Mattie Cunningham. Vice President Wall welcomed Phil Smith, who had been working on some documentation for the Paris Economic Development Corporation and also welcomed Jeff Parish of the Paris News. Vice President Wall announced that the first order of business would be to administer the Oath of Office to the newly appointed Directors. Mattie Cunningham, City Clerk, administered the Oath of Office to Sims Norment and Rodney Bass and they assumed their seats at the meeting. Vice President Wall advised that the next order of business was to fill the two vacancies of the Board. President Jay Guest and Secretary/Treasurer Curtis Fendley have resigned and are now members of the Paris City Council. He said this election will be to fill the unexpired term of these two officers, which will be for a two-month period, and in August, new officers will be elected for the coming year. Vice President Wall announced that at this time he would like to submit his resignation as Vice President of this Board. Mr. Wall called for a motion for officers for the Corporation starting with the President. Director Severson moved that Don Wall be elected President. The motion was seconded by Mike Dunn, and a motion was made that nominations cease by Director Norment and carried unanimously. Don Wall was elected President of the Paris Economic Development Corporation. President Wall called for nominations for Vice President and Director Bass made a motion to elect Mike Dunn as Vice President of the Board by acclamation. The motion was seconded by Director Severson and carried unanimously. President Wall called for nominations for Secretary/Treasury, and a motion was made by Director Bass nominating Dick Severson by acclamation. The motion was seconded by Director Norment and carried unanimously. President Wall called for the approval of the minutes from the previous meetings on April 16, May 5, and May 8, 2003. A motion was made by Director Severson, seconded by Director Dunn, for approval of the minutes as presented. The motion carried unanimously. Director Wall called for the financial report for April. Gene Anderson, Director of Finance for the City of Paris, came forward advising the Board that he had given the Board an updated report on the sales tax collection and the cash flow statement. Mr. Anderson wanted to make a clarification on a question that was raised by one of the members at the last meeting as he had been out of town on that day. Mr. Anderson stated that the official financial statements have been furnished in the Board's packet. He said the financial report is essentially a statement of cash flow for the prior month. Mr. Anderson stated that the cash flow statement he has handed out to the board is exactly that, it is cash flow and it does not involve any other assets or liabilities. He emphasized that it is strictly a cash flow statement. Mr. Anderson said there was some misunderstanding about that even two meetings ago when they were discussing what money was part of restricted cash on the report they were looking at that time. Mr. Anderson explained that restricted cash, by definition, is cash that has been restricted by specific vote of the board, and this board has never voted at any time to restrict any cash except for what they had legally restricted by issuance of the bonds. He said the only restricted cash that has ever shown up on this cash flow statement had to do with the legally required bond reserve or the legally required Interest and Sinking Fund. There was nothing in that restricted cash number that applied to Hearne Street or any other obligation that the board had taken because the board had never voted to restrict the cash even though they entered into an agreement to do those things. He advised that he made a little wording change and instead of calling it restricted cash, he called it exactly what that restricted cash is made up of, and that is Debt Reserve and Debt I&S Cash. Mr. Anderson said that, Director Don Wall had informally requested financial information having to do with the debt capacity of the PEDC in terms of issuing bonded indebtedness, and the financial information reported to the Board was specifically that. Mr. Anderson explained that his previous report was different from the amount that the Board might be able to borrow at the bank because there are very specific types of restrictions in bonded debt that you do not necessarily have when you go to the bank to borrow money. In summation, he said that was his charge and it was an informal one and that was the only information he presented to the board because he was not asked to present any other. Mr. Anderson advised that another issue that he and Mr. Vest discussed was excess funds kept in the reserve account. Mr. Anderson explained that the debt reserve account was pre-funded in 1998 when the debt was issued and that, over time, an excess of funds has accumulated in addition to the amount required to be reserved, one year's debt payment, due to interest accumulation. It does not amount to that much money, not enough that he has had to be in a rush to move it over to the operating account, but any case, it would not affect the ability of the corporation to issue bonded debt. He explained that how much money you have in the bank is not a factor in issuing bonded debt. Mr. Anderson said what affects the Board's ability to issue bonded debt is cash flow income and, specifically, sales tax income. Mr. Anderson advised that the reserve has $40,000.00 more than it should have and the Interest and Sinking Fund has about $100,000.00 more than it should. The excess built up by leaving the interest earned in the I & S Fund and the fact that the annual payment has decreased by a few thousand dollars and he had not reduced the monthly transfer amount of $40,000.00. Mr. Anderson said that he will eliminate that surplus by not making any transfers to that fund until the excess amount is absorbed as you cannot transfer money out of the Interest and Sinking Fund because that is a violation of the law. He said that when the surplus was eliminated, he would then pick back up and match the transfer to that specific year's revenue requirements. He said he can go ahead and transfer that over and will do that. Mr. Anderson reviewed with the Board the sales tax report including April and May collections. He noted that collection's were going up and down. He said that through May, PEDC has collected 4.6% over what was collected at the same point last year. Mr. Anderson reviewed the cash flow statement and that there were no unusual expenditures that were not explained. Mr Anderson asked the Board Members to look at the cash out line item and pointed out that he made a payment on the Business Park Master Plan of $18,580.00, which is an out of the ordinary type expenditure, but other than that, it was pretty much routine expenditures for operating expenses and salaries. Mr. Anderson went over the current commitments of the PEDC for the benefit of the new members. After further discussion, a motion was made by Director Severson, seconded by Director Dunn, for approval of the financial report. The motion carried 5 ayes, 0 nays. President Wall called for the Director's Report. Mr. Vest came forward stating that since the last meeting, the response to advertisements has been very minimal because they are not doing any advertising. interest earned in the I & S Fund and the fact that the annual payment has decreased by a few thousand dollars and he had not reduced the monthly transfer amount of $40,000.00. Mr. Anderson said that he will eliminate that surplus by not making any transfers to that fund until the excess amount is absorbed as you cannot transfer money out of the Interest and Sinking Fund because that is a violation of the law. He said that when the surplus was eliminated, he would then pick back up and match the transfer to that specific year's revenue requirements. He said he can go ahead and transfer that over and will do that. Mr. Anderson reviewed with the Board the sales tax report including April and May collections. He noted that collection's were going up and down. He said that through May, PEDC has collected 4.6% over what was collected at the same point last year. Mr. Anderson reviewed the cash flow statement and that there were no unusual expenditures that were not explained. Mr Anderson asked the Board Members to look at the cash out line item and pointed out that he made a payment on the Business Park Master Plan of $18,580.00, which is an out of the ordinary type expenditure, but other than that, it was pretty much routine expenditures for operating expenses and salaries. Mr. Anderson went over the current commitments of the PEDC for the benefit of the new members. After further discussion, a motion was made by Director Severson, seconded by Director Dunn, for approval of the financial report. The motion carried 5 ayes, 0 nays. President Wall called for the Director's Report. Mr. Vest came forward stating that since the last meeting, the response to advertisements has been very minimal because they are not doing any advertising. Mr. Vest advised that their prospect activity has been excellent. They have had five prospect visits since the last meeting. That number included the company with which the Board is negotiating and they had been here twice recently. Mr. Vest advised that they also had a company called Project Steel that came through the Department of Economic Development and was handled by Oncor. He said this is a company out of Indianapolis, Indiana that rebuilds electric transformers. Mr. Vest advised that they showed them the Oliver Rubber building. Mr. Vest said they also met with Gene Calloway who is in the jewelry business. Mr. Vest advised Mr. Calloway was talking about opening a small manufacturing operation in Paris to manufacture jewelry and they are working with him. They also had a company out of Minnesota that manufactures audio equipment, microphones, and things of that nature. Mr. Vest said they have been contacted by a company that is looking for a distribution center. He said that the company sells tires and wheels to go on trailers such as those being built all around our area. He said they have nine distribution systems throughout the United States, and they are out of Thailand. Mr. Vest said this company has visited twice and have been shown a lot of different properties. He said they were going to build a distribution center to serve a four-state area, which would be a sixty thousand square foot building, or they are going to build a distribution center of about one hundred thousand square feet to serve a larger area. Mr. Vest said they have shown them several pieces of property and he should know something from them soon. They will be meeting with their owners in California concerning Paris. Mr. Vest advised that another prospect that manufactures charcoal grills came to them through their advertisement efforts out of Louisiana. He said that they will continue to work with them and try to get them here for a site visit so they can proceed with that company. Mr. Vest told the Board that they attended the Texas Economic Development Council Conference in Plano on April 23-25, 2003. They have been working on a lot of legislative issues, such as Mark Homer's House Bill 2912. He said that it did get out of the House and passed over to the Senate side and Senator Ratliff is carrying it there. Senator Ratliff is going to present it in the morning at 8:00 A.M. and Gary said he had to be present to testify in favor of it. They have run into a lot of opposition to this bill. Mr. Vest explained for the new members that this is a clean up bill on the 4A and 4B Corporations. Mr. Vest explained that there is a lot of opposition from librarians as they decided they can use the sales tax money to build libraries. President Wall explained that should this bill not go through, they will not eliminate the economic development sales tax this term. He said it will still be in existence, and should they do it the next term, the PEDC remains in existence as long as there is an obligation. President Wall said that PEDC bonded indebtedness extended for the next 17 years, so it is not going to hurt the PEDC very much. At 4:33 P. M., President Wall announced that the Board would go into a closed session in accordance with Sec. 551.086 of the Open Meetings Act, to discuss possible incentives, pending negotiations, and commercial or financial information from business prospects regarding the following: A. Project Holt. At 5:40 P.M., Presented Wall announced that the Board was back in open session. Director Severson made a motion to authorize legal council to continue negotiations with Project Holt regarding the incentive agreement. The motion was seconded by Director Sims and carried 5 ayes, 0 nays. President Wall advised that no action was required on Agenda Item No. 8, discussion of and possible action on establishing incentives to be offered to the prospect Project Holt and to be included in an incentive agreement, and Agenda Item No. 9, a resolution for consideration of and action on a resolution approving and authorizing the executive of an incentive Agreement with Project Holt. President Wall called for discussion of and possible action on acquisition of additional land for the Paris Business Park. Mr. Vest advised that the PEDC has a piece of property that is adjacent to the Industrial Park and this would give access to the Park from Campbell Street. Mr. Vest gave the Board a handout showing the property identified as Lot 7. He said that this property is listed with Century 21 and he had inquired about it before. At that time, there were so many property owners that a clear title was unavailable, but there is one now. He said that this property consists of 6.5 acres at a cost of approximately $18,500.00, and this would give them connection to Campbell Street. Mr. Vest asked if the Board was interested in acquiring this property and if they are, they would put an offer in with the realtor. After discussion, a motion was made by Director Sims authorizing Mr. Vest to put in an offer for this property to open up the Park to Campbell Street. The motion was seconded by Director Severson and carried 5 ayes, 0 nays. There being no further business, the meeting was adjourned. DON WALL, PRESIDENT ATTEST: MATTIE CUNNINGHAM, CITY CLERK