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03-B PEDC (04/16/03)MINUTES OF THE REGULAR MEETING OF THE PARIS ECONOMIC DEVELOPMENT CORPORATION April 16, 2003 The Paris Economic Development Corporation met in regular session on Wednesday, April 16, 2003, 4:00 P. M. at Paris Junior College, Applied Technology Building, Room 1206, 2400 Clarksville Street. President Jay Guest called the meeting to order with the following Directors present: Curtis Fendley, Don Wall, and Richard L. Severson. Also present were Ex-officio Member Bobby Walters, Executive Director Gary Vest, City Manager Michael E. Malone, City Attorney Larry W. Schenk, and City Clerk Mattie Cunningham. President Guest called for approval of the minutes from a previous meeting. A motion was made by Director Fendley, seconded by Director Severson, for approval of the minutes as presented. The motion carried unanimously. President Guest called for the financial report for February and March, 2003. Gene Anderson, Director of Finance for the City of Paris, came forward advising the Board that they had been given information on the sales tax payment summary. He pointed out that $535,835.00 of sales tax had been collected this year through April (sales tax through February, 2003) as compared to last year's amount of $512,278.00. Mr. Anderson gave the Board the February and March tax flow statements. He said they did not write any more checks than what they had to write. They did write the checks to Paris Business Park Master payment and they paid for the audit that was done by McClanahan and Holmes. Mr. Anderson pointed out that in March they could see the expenditures there. Under new INdustrial Projects, there were a couple of things paid, one was a payment to Chemical Analysis, INc., for evaluation of the plant size and necessary environmental testing, and the balance of that payment had to do with running fiber optic cable to the Santa Fe - Frisco Depot building. There was a payment for membership. Other than those mentioned, they were all routine expenditures. Mr. Anderson advised the Board that he did open up another account and PEDC April 16, 2003 Page 2 transfer excess balances from Liberty National Bank, which was account. a pool A motion was made by Director Severson, seconded by Director Wall, for approval of the financial report. The motion carried unanimously. President Guest called for the Director's Report. Gary Vest came forward advising that since January they have received 41 inquiries to their advertisement campaign. He said they did not have a response from Project Winter; but that company has not made a decision and he knew that Sherman was having problems with a building. He was hopeful that they would make a decision soon. Mr. Vest said they had a real good visit with a prospect the previous Friday, Project Hope, and advised that he will discuss that later in the meeting. Mr. Vest told the Board that Erik has been on the go. In March, Erik went to the North American Manufacturing Show in Chicago. He also went to the Economic Development Institute at the University of Oklahoma. They also attended the PEDC Legislative Conference in Austin. Mr. Vest said there has been a lot of legislative activity going on. He said that on the last day for filing there were 18 bills filed that affect the sales tax for Economic Development. That does not include the good bill introduced by Mark Homer, House Bill No. 29025. Mr. Vest said he has worked with Mr. Homer on this bill. Mr. Vest advised that he will be in Austin Monday to discuss the bill with Mark Homer because it is going to be debated on the House floor Monday. He hoped that it will pass the House and be sent over to the Senate. Mr. Wall attended the committee hearing where the bill was discussed and it passed out of the committee. They came back with a committee substitute and that is what will be going to the floor on Monday. Resolution No. 2003-003, authorizing and approving the renewal and extension PEDC April 16, 2003 Page 3 of the current promissory note and first addendum to security agreement from Paris Packaging, Inc., to extend the term of said note and said security agreement co-extensive with the term of the PEDC Taxable Sales Tax Revenue Bonds, Series 1998, was presented by City Attorney Schenk. City Attorney Schenk advised that he had passed out a copy of the City Council' s Resolution which is being conservative as far as part of this approval process. The City Council's resolution was adopted by the City Council last Monday night to follow a similar approval by the City Council when the note was originally written. City Attorney Schenk said he had a few questions that needed to be answered by the bond attorney in regard to the documents associated with renewal of the note. It had to do with whether or not prior owners had been satisfied and it would require a change to the documents if that were the case. The City Attorney said they wrote them as if they had not been. The question of the development agreement, which was part of the original package, will be the next item for their consideration. City Attorney advised that if the PEDC adopts this resolution he felt this note will satisfy the goals, which was to have the indebtedness paid out coextensive with the terms of the bond. Mr. Schenk told the Board that the document was prepared by McCall, Parkhurst & Horton, who was the bond council for the original transaction. After further discussion, Director Severson, for unanimously. a motion was made by Director Fendley, seconded by approval of the resolution. The motion carried Resolution No. 2003-004, approving and authorizing the execution of a development contract with Paris Packaging, Inc., extending the terms and conditions of the original development contract dated July 15, 1998; making other findings and provisions related to the subject, was presented. A motion was made by Director Wall, seconded by Director Severson, for approval of the resolution. The motion carried unanimously. PEDC April 16, 2003 Page 4 Director Guest announced that the next item on the agenda was accepting a proposal for engineering services for the Paris Business Park and approving and authorizing the execution of an engineering services agreement. Mr. Vest advised that two proposals were received for the engineering services for the Paris Business Park. Both Hayter Engineering and Adams Consulting Engineering proposals cover the same scope of work which includes all of the engineering design, streets, water, sewer, and all of the infrastructure needed including the hydraulics for water runoff and those type of things. Mr. Vest said the survey has already been completed by Hayter Engineering and a contour map of the Industrial District has already been done. Hayter came back with a proposed contract with a total cost for Hayter to do all of these things for $124,900.00. Mr. Vest received this proposal on February 25, 2003. He thought it was excessive, so he contacted Adams Consulting Engineering and he received a proposal from them in the amount of $57,000.00 for doing the same scope of work. A motion was made by Director Wall, seconded by Director Severson, to accept the proposal of Adams Consulting Engineering. The motion carried 4 ayes, 0 nays. Resolution No. 2003-005, accepting a proposal from Adams Consulting Engineering for engineering services related to the Paris Business Park; authorizing a professional services agreement in accordance with said proposal; making other findings and provisions related to the subject, was presented. A motion was made by Director Wall, seconded by Director Severson, for approving the resolution. The motion carried unanimously. Resolution No. 2003-006, approving and adopting Development Standards for the Paris Business Park, making other findings and provisions related to the subject, was presented by City Attorney Schenk. Mr .Vest gave the Board a handout of the executive summary for the Paris PEDC April 16, 2003 Page 5 Business Park and discussed the development standards with the Board. Also included was a memorandum from Steve Methven, Building Official for the City of Paris, stating that he has reviewed the development standards of the Paris Development Park as written for the PEDC and it appears that the standards meet and are in compliance with the City of Paris Code of Ordinances. After discussion, a motion was made by Director Fendley, seconded by Director Severson, for approval of the resolution. The motion carried 4 ayes, 0 nays. President Guest called for consideration of and action on a resolution approving and adopting Development Covenants for the Paris Business Park. Mr. Vest explained that these covenants would govern the Industrial Park. City Attorney Schenk has looked at them and has prepared a twelve page summary of his suggested changes. Mr. Vest said these covenants call for a property owners association. Mr. Vest said that the City Attorney is leaning more towards a corporation entity that would govern the Park. City Attorney schenk said that the only reason that he did that was under Article 1, Definition, it states that '~the Association will mean or refer to Paris Business Partners Property Owners Association, Inc.". That is the reason he made reference to those issues of an incorporation entity. Mr. Vest said he did not think it would make a whole lot of difference either way they go. Mr. Vest said he has visited with the architect who has done this for dozens of developments, and his recommendation is for an association. Mr. Vest said it was the architect's recommendation to keep it as simple as possible. He said that the second thing they should keep in mind is for the association or the corporation to accomplish what they wanted to do. Mr. Vest felt they should look through this covenant and decide what they wanted to do, but for his money, all common areas are properly maintained and the development standards are adhered to, and to remove PEDC as the PEDC April 16, 2003 Page 6 perpetual caretaker once a percentage of the park is sold. PEDC has a very minimum role in this association and it will not be eliminated but it will have a lesser role. Director Fendley wanted to know if there was an association, if he was a member of that group and had a business in the park, would he assume some liability as an individual, more so than he would if it was an incorporated entity? City Attorney Schenk said he thought that was true, by law they will assess liability to someone or some entity. City Attorney Schenk said he was not making a recommendation either way and a number of his comments do not have to do with whether it is a corporation or not. It was just things he saw in the document. The City Attorney said he thought that the question of liability could be a very real issue. He said he was more familiar with dealing with an association in residential areas in Houston and all of those have been incorporated. They can be an insured entity. They can require others to have insurance. Director Wall stated that this should be an association because most of the companies will be incorporated so they are going to have that shield between them. Mr. Vest advised that Jim Shackleford has established many of these associations and he felt that an association was the easier of the two ways of dealing with this matter. Mr. Vest felt that the covenants and by-laws of the association or corporation, whatever they setup, should be whatever is deemed necessary by the majority of the membership. After a considerable amount of discussion, a motion was made by Director Wall, seconded by Director Fendley, to table action on Agenda Item No. 5E, approving a resolution adopting Development Covenants for the Paris Business Park, and Agenda No. 5F, a resolution approving and adopting the By-Laws for the Paris Business Park Property Owners' Association, and place these items on the next agenda. The motion carried 4 ayes, 0 nays. Chairman Guest announced that the next item on the agenda was to receive information, discuss, and take possible action on providing incentives for Project Holt. PEDC April 16, 2003 Page 7 Mr. Vest advised the Board that Project Holt is a prospect that he met with last Friday. Erik Roddy passed out information regarding this project. Mr. Vest said that this prospect came to the PEDC through the Texas Department of Economic Development. The Company is called C-Tech, Inc., and is out of Minnetonka, Minnesota. He said they use a company to help them do their site search called ECODEV represented by Dana Olson, who was the PEDC's first contact. Mr. Vest discussed a visit the past Friday with Mike Meshbesher, the CEO of C-Tech. Information has been furnished to the Board showing the company' s web page and the address. There were also several articles that Erik placed in the packet about Mike Meshbesher and his company. There is a business journal article that he received from Minnesota between cities and areas where they were identified as one of the top 50 private companies in the area, and C-Tech was rated as number six. It has gone from sales in 1999 of 4.7 million to 14.8 million in sales 2003. Mr. Vest advised that what this company does is they have contracts with Dell, Hewlett Packard, and Compaq and they purchase large quantities of computers and computer parts and put together computer systems for corporations using these computers that they get from other computer manufacturers. It is a somewhat high tech business. They have been growing by leaps and bounds. Mike Meshbesher lived in Plano for a number of years and that is why he was looking at Texas. Mr. Vest said they looked at several cities in Texas and Paris did not have a good existing facility for them, but through Erik's follow up work, they were able to get in contact with them and convince them to come and take a look at Paris. Mr. Vest advised that there is a letter from Dana Olson that he asked the Board to look at, which spells out their request and what they are looking for and he summarized their request as follows: A $1.5 million, 0% interest loan with a 15 year term, payable in 1/15 installments each calendar year. A credit will be provided against the payment due of $1 for every $10 that C-TECH has paid to all new PEDC April 16, 2003 Page 8 employees in the Paris office. Your assistance finding a temporary location suitable for operating up to 12 months. The lease rate should not exceed $2/sq. ft. o A parcel of land in the Northwest Industrial Park, sufficient to house C- TECH's expanded operation, including room for expansion, delivery and parking. C-TECH will then on its own with a developer in Paris, or one of its choosing, build a permanent facility for their operation. This will give Paris an anchor business in its new park, and the property will be owned by the corporation. Mr. Vest said they were looking for a temporary place where they can set up shop and start operating while they build a building in the Northwest Industrial Park, but they need about a 50 thousand square foot building. They are looking for a one year lease. They looked at the K-Mart Building and the lease on it was $300,000.00, which was too much. They also looked at the Foxworth Building. They have found a building that they think will work and is owned by Chip Harper and it is located behind Rocking W BBQ. Mr. Vest said it has about 30 Thousand square feet and they felt it could work and the cost would be $60,000.00 for a year's lease. Mr. Vest informed the Board that Mr. Meshbesher has a national sales force and they go out and sell these systems to companies and he hopes to have 200 employees by the first of the second year. Director Fendley questioned why Mr. Meshbesher needed $1.5 million on hand. Mr. Roddy advised that is because of the large amount of inventory that is needed to be kept on hand. Director Fendley asked if the PEDC could take out a lien on the inventory, and it was the general consensus of the Board that they could. Mr. Vest said he called Mr. Meshbesher about some of the Board Members who might go up to Minnesota and look at his operation. They posed that question to him and they will pick them up and it will only be about 15 minutes PEDC April 16, 2003 Page 9 to their plant, spend the day or night whatever they wished to do. Mr. Vest felt that it is something they should do before they take action. It was the Board's consensus to check out his current operation in Minnesota. Mr. Walters advised that he had talked with Mr. Meshbesher and they were expecting some of the PEDC Board Members to visit his operations. Mr. Walters stated that he thought Paris Junior College could get the money from the state to help them do the training. Mr. Walters said you are going to have people at different levels. He also told Mr. Meshbesher about the MHMR and stated that MHMR clients could do packaging for that company. Mr. Walters said Mr. Meshbesher was very high on the City of Paris and he had talked to Campbell Soup and Kimberly-Clark and they were very complimentary of the workforce that the community has. After further discussion, a motion was made by Director Fendley, seconded by Director Severson, to go with Mr. Vest's proposal that all the Board Members that can go travel to Minnesota and visit C-Tech and directed Mr. Roddy to make the arrangements. The motion carried unanimously. There being no further business the meeting was adjourned. JAY GUEST, PRESIDENT ATTEST: MATTIE CUNNINGHAM, CITY CLERK