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20060112 SEDC Board Reg MtgMinutes SCHERTZ ECONOMIC DEVELOPMENT COMMISSION Regular Meeting Thursday, 12 January 2006 at 6 p.m. Bob Andrews Conference Room, 1400 Schertz Parkway, Schertz, TX 78154 ECONOMIC DEVELOPMENT COMMISSION Jackie Jones Carl Douglas, Council Member Marjorie Douglas Robert Statzer Henry Gutierrez Arnold Barrett Harry Richburg Klaus Weiswurm COMMISSIONERS ABSENT Charles Mc Donald Abbie Brown 1. Call to Order: President Robert Statzer CITY STAFF Amy Madison, Economic Development Dir. Erin Matlock, Administrative Assistant OTHERS PRESENT None Chairman Robert Statzer called the meeting to order at 6:02 p.m. 2. Introduction of Guests There were no guest present 3. Public Comment None 4. OLD BUSINESS: a) Discuss and take action on Minutes of the 08 December 2005 Regular Meeting Mr. Weiswurm moved to approve the minutes of the December 8, 2006 Economic Development Commission meeting. Ms. Jones seconded the motion. Motion carried. Vote unanimous. b) Discuss and take action on 2006 Meeting Calendar Ms. Madison stated that the calendar is no different from prior years. Ms. Madison stated that she is submitting the calendar for approval. Schertz Economic Development Commission Minutes Page 1 of 8 Mr. Vallance asked Ms. Madison if her schedule would fit with this calendar. Ms. Madison stated that the cancellations from last year calendar were due to no new business. After discussion with the Chair, it was decided that if there was no new business there is no need to meet. Ms. Jones stated that she did not want to meet just to meet. Mr. Vallance moved to approve the 2006 Meeting Calendar for the Economic Development Commission. Ms. Jones seconded the motion. Motion carried. Vote unanimous. c) Discuss and confirm next meeting date Next meeting date set for February 9, 2006. d) Discuss and take action on reappointments Ms. Madison reviewed reappointments of Jackie Jones, Arnold Barrett, Harry Richburg and Marjorie Douglas. Ms. Madison stated one of the requirements is that the applicants need to live in Schertz or work in Schertz. The expiring Commissioners would have to reapply along with any new applicants received and then forwarded to City Council for appointment. Mr. Vallance moved to send reappointments Jackie Jones, Arnold Barrett, Harry Richburg and Marjorie Douglas forward to City Council for consideration. Ms. Douglas seconded the motion. Motion carried. Vote unanimous. e) Discuss and take action on Election of Chairman, Vice Chairman There were two nominations made for Chairman: Ms. Jones made a motion to nominate Mr. Robert Statzer. Mr. Statzer made a motion to nominate Mr. Bob Vallance. Mr. Vallance declined due to heavy involvement in Crime Stoppers. Ms. Jackie Jones moved to elect Mr. Robert Statzer as Chairman of the Economic Development Commission. Ms. Douglas s seconded the motion. Motion carried. Vote Unanimous. Mr. Weiswurm made a motion to nominate Mr. Henry Gutierrez for Vice - Chairman: Mr. Weiswurm moved to elect Mr. Henry Gutierrez as Vice - Chairman of the Economic Development Commission. Mr. Richburg seconded the motion. Motion carried. Vote Unanimous. f) Discussion of Progress Report Request from TIP Strategies and future meeting with economic development organizations in the City of Schertz Ms. Madison reviewed email she sent to T.I.P Strategies from her home. Ms. Madison stated that immediately she received a memorandum from T.I.P. Strategies future projects for Schertz. Ms. Madison stated that two phone conferences followed the letter and a decision was made to postpone this months meeting until Council has completed their Strategic Plan. This month we will focus on Realignment and Tax Abatement ordinance. The meeting to be Schertz Economic Development Commission Minutes Page 2 of 8 held on January 25, 2006 will include Economic Development Commission, Schertz Economic Development Corporation and Schertz Development Foundation. Ms. Madison reviewed the art symbol with the Commission and stated concern over the art symbol. Ms. Madison stated that she has spoken with Jason Cronkhite of Blue Clover about a revision of the star as the train was viewed as Industrial based and the City did not want to be known as just an industrial Park. Mr. Cronkhite stated that he would have to charge the City an hourly rate of $125.00 per hour. Mr. Cronkhite stated that we would be looking at a timetable of 6 to 8 hours. Ms. Madison stated that would be fine however after talking with Sean of T.I.P. Strategies, and Sean also agreeing that the train was not the logo for Schertz. Discussion between Sean of T.I.P. Strategies and Jason of Blue Clover led to a phone call from Jason to Ms. Madison stating that he would not charge the City the additional fee to revitalize the Star with the logo "Rich in opportunity — Rich in community". Ms. Madison stated that the Schertz City Council is doing a Strategic Plan and that the Commission will have to hold until the Council has completed theirs. The City Council's Strategic Plan will feed back into the ED Strategic Plan. Ms. Madison stated that she is planning on coordinating a meeting with developers who have worked in the City to meet with T.I.P. Strategies. Ms. Madison stated that she has not received evaluation sheet from T.I.P. Strategies as of yet, however she expects soon. Ms. Madison stated that she would meet with Mr. Tom Stellman of T.I.P. Strategies at the TEDC Winter Meeting held in South Padre Island. At that time she would like to discuss a policy for incentives that the City could use. Ms. Madison stated that this is a learning experience for her and she has been dreaming about it for five years. This is her first time to oversee a Strat Plan and stated that some major issues have arisen however with her project management she is able to correct the issues that have occurred. Mr. Vallance stated that Ms. Madison was doing a wonderful job. Mr. Weiswurm stated that if you do not push them in the right direction they would take advantage of you. The Commission stated they would like to review the art symbol. Ms. Madison stated that she is not giving up if we do not get what we requested, she will go back to Blue Clover. Ms. Madison stated she would like to play with the word "Schertz ". Ms. Madison stated she would also like to work with her logo " Schertz is a good fit ". Ms. Jones stated she did not want to go back to the old logo "Inside Schertz". Ms. Jones questioned the ACCD tax and did not want to participate, stating why should a majority pay for a few. Ms. Madison asked Councilmember Douglas if we could even do this? Councilmember Douglas stated no, however if you live in the section of Schertz that is Bexar County you could go without paying out of district tax. Ms. Madison thanked the Commission on all their hard work on the Strategic Plan and stated this would be an outstanding project. The Commission stated that they would like to have the meeting in the new Council Chambers if possible. Ms. Madison stated that she would speak with the City Manager, Mr. Schertz Economic Development Commission Minutes Page 3 of 8 Taylor. Mr. Douglas stated that he would speak with Mr. Taylor also. Ms. Madison advised the Commission if they have anything they would like to add to the January 2511 meeting, please email her. g) Discuss and take appropriate action on Tax Abatement Guidelines and Criteria Revisions Ms. Madison stated that she has replaced the word abatement with phase -in except for the introduction. On page 3 change to minimum of $500,000 Capital Improvements to real property which was discussed at the last meeting also in doing a review of it and reading it I see this 5% approved Capital Improvements under $75,000.00 that doubles in value as well. If we are going to move it up to $500,000 there is really no need for that percent we will just start at the $75,000 of improved Capital Improvements. Ms. Madison stated that it is still meeting the $500,000 minimum so that 1 percent of each additional $50,000. Mr. Statzer asked if Ms. Madison was just eliminating the percent and Ms. Madison stated yes, she was just eliminating the 5 percent. Ms. Madison stated this is for anything under $75,000 if we had a really small project coming in but If we raise it to $500,000 this makes no sense. We were always giving 10 percent for the first $75,000 then for each additional $50,000; she just removed the 5 percent only. Per Ms. Madison this is not accumulative, it's 10 percent then for each additional $50,000 at 1 percent. The next major change is under personal property, under 7a, please note that should be $500,000; Ms. Madison stated she just missed it. Table 2 was taken down to $500,000, we talked about it being $250,000 and the consultant recommended it be $250,000 but we moved it back to $500,000 at the last meeting at least that was the recommendation. Ms. Madison stated that she went back in just for grammatical purposes and for clarity. The tax phase in that was a certain type of personal property, Ms. Madison went back in and made it clear that was what we were talking about in every case. There is a personal property and special tax phase in, an option as well. If there is changes in their personal property you do not want them to come back and renegotiate their contract, we just do not do that. If they're personal property drops out of sight that will be to their benefit, but we will not go back and renegotiate. Once it is done it is done, stated Ms. Madison. Under optional tax phase in, most of those changes are just simply for clarity. Under #1, Ms. Madison stated that she took out any reference to decimals that should not have been in there to begin with. Anytime you put a number in saying one percent or two percent you just spell it out. Under Business Retention Ms. Madison stated that she just cleaned up the paragraph to read better. Under Special Tax Phase -Ins that was one that Ms. Madison stated she made some significant changes in the wording and it is part of one of the policies we want to include. Ms. Madison stated that it reads research conducted for the Comprehensive Economic Development Plan indicates that the City of Schertz has special qualifications for specific types of industries, as well as needs to diversify and expand our commercial tax base. These targeted industries are those we believe to be critical to our future development and as such, should receive special consideration. The targeted industries are listed in the Comprehensive Economic Development Plan, and shall be reviewed annually by the Schertz Economic Development Corporation and Schertz Economic Development Commission for possible revisions. The Comprehensive Economic Development Plan shall be maintained by the Schertz Economic Development Department. In other words we are tying the special tax phase in to what ever comes up, as are targeted industries in the plan and those targeted industries can be reviewed by this Commission and the Corporation, Ms. Madison stated that the Commission and Corporation should merge as one, to make everyone happy. Our department then would maintain the two bodies, in other words the Economic Development Department would be the keeper of the keys. The Commission could make a recommendation to the Corporation if they so concurred even if they were independent. Both bodies need to be Schertz Economic Development Commission Minutes Page 4 of 8 involved when looking at anything with Economic Development, at this point. Ms. Madison stated that on page six 9(b), the change was made to $500,000 capital investment from $75,000, if we are going to change the personal property phase in then the minimum should be $500,000. Hotel Motel was at $500,000; Ms. Madison stated she moved that to $1,000,000. Ms. Madison stated that other than that all changes made were for clarity and clean up. Page 11, under Default and Recapture (e) this was just a mess stated Ms. Madison and reworded it to read: Should a company receiving a Tax Phase -In decides to relocate outside of the designated reinvestment zone, or move outside the City of Schertz and continue to remain in business, the City of Schertz, as authorized by an Ordinance adopted by City Council, shall have the right to recapture taxes abated in all previous years. Ms. Madison stated that this was just clarity again, the previous was not clearly defined. Page 11, under Assignment, Ms. Madison stated the Tax Phase -In agreements may be assignable to a new owner only with City Council approval, which was previously there. All legal fees that the City of Schertz incurs in assigning new ownership or completing a name transfer shall be the responsibility of the new owner or company requesting the name transfer. Ms. Madison stated that was applied when we had all those transfers we had nothing to hold them to it. Ms. Jones stated her question is "Would there be any other reason we would incur legal fees ?" Should there be something in there stating that any legal fees that would occur in conjunction with this abatement are the responsibility of the applicant. Ms. Jones stated: Why should we have to pay? Ms. Jones gave an example of the name change, which the City had to verify with the City Attorney. Mr. Statzer stated he thought we had already talked about this. Mr. Weiswurm stated that this is when someone came in and wanted the abatement for ABC Co. and now they want to be called XYZ instead. Ms. Madison stated that she would change it to read "All legal fees that the City of Schertz incurs in processing new abatements ". Ms. Jones stated that she would like it to read any legal fees instead of all, all sounds like we have legal issues that we normally do not have. Ms. Madison stated that she would change it to read in processing and Tax Phase -In, reassigning new ownership or a name transfer shall be responsible for legal fees. Ms. Jones stated any legal fees for anything. Ms. Madison stated that she would fix it. Ms. Madison stated that the Tax Abatement has sunset as of December 31, 2005, we have not reached the point where it has gone before council. Today is the first time it has been reviewed by the Commission. Ms. Madison stated that it is not a given that the Council will re -adopt the Tax Abatement Program. Council Member Douglas asked Ms. Madison to restate the question. Ms. Madison stated that there is no given that the Council will re -adopt the program. Ms. Madison stated that she is hearing otherwise. Council Member Douglas stated that what you have is Tax Abatement terminology, forget the words tax abatement, do not use it on any documents coming forward to Council. Ms. Madison stated that she would take out the word tax abatement on everything. Council Member Douglas stated tax abatement, NO. Council Member Douglas stated a rose is a rose. Ms. Jones stated that tax abatement was a thorn. Mr. Weiswurm stated it really is a phase -in, you have a company coming in there and you are getting the tax on whatever the dirt is assessed. Now as they come in, sooner or later you are increasing the amount of tax assessed. Council Member Douglas stated it is still the same thing whether you give it to them up front or whether you rebate a percentage back after they pay it during the year. It is still tax abatement but do not call it tax abatement. Mr. Barrett asked Council Member Douglas: Are you saying the City Council is considering this? Council Member Douglas stated no. Ms. Jones stated that is what you said. Council Member Douglas stated it is just heartburn, we have members or we Schertz Economic Development Commission Minutes Page 5 of 8 have a member sometimes plural on the Council that are not in tune, regardless of how often it is explained with the intent purpose and what it is of tax abatement and the good it does. They do not like the term tax abatement. Mr. Richburg stated, give it to them but do not call it tax abatement. Council Member Douglas stated he agreed. Ms. Madison stated that on page one under #2 Definitions if you will read with me a; "Tax Phase -In" means the full or partial exemption from partial exemption from ad valorem taxed of certain real property in a reinvestment zone designated for economic development purposes. Ms. Madison stated that all she did was change the word abatement, Ms. Madison said she thinks it needs to read means the partial and take the word full out totally. Council Member Douglas sited on page one b) The intent of this abatement program, when it should read It is the intent of this program. Per Council Member Douglas you do not need the word abatement, the intent of this program is to provide an incentive. Mr. Statzer stated that Ms. Madison will take the word abatement out entirely. Ms. Madison stated that she will have to leave in the first one on page one a) Under the Authority of the Property Redevelopment and Tax Abatement Act. Council Member Douglas agreed that needs to be left in there. Ms. Madison stated that under the next sentence she could use Phase -In. Ms. Jones asked if Council was given the numbers on what kind of taxes we were getting off that land before when it was just dirt? Council Member Douglas stated that the answer to that is yes. Council Member Douglas stated that like the Field of Dreams "BUILD IT THEY WILL COME" that does not work unless you have an incentive to come. They may choose to come to New Braunfels or Converse or someplace else besides Schertz and they do not want to hear we are going to draw a hundred grand off of that now with the abatement which was not drawing squat before. Well somebody would have come or someone may not come. Council Member Douglas stated that there are sufficient members on Council to override any of that. Ms. Madison stated that she heard three different comments this week from City Administration and/or City Attorney that indicated that they may not renew it. Ms. Madison stated that was her fear because if that happens we have no incentive program for the City. Ms. Madison stated that she would like to have a very strong statement from this Commission on moving forward with recommendation for approval. If that is what you so desire this tax abatement ordinance as rewritten, per our discussion this evening and for the record I want something from this Commission which is moved and seconded and voted on that you support this program or not. Ms. Madison stated If she could get it from them. Mr. Barrett stated that if we did not support this program we would not have given up all these years of our lives. Ms. Jones stated all these nights of stress. Ms. Madison stated she agreed. Mr. Valiance made a motion with the corrections as noted to remove the word abatement through out the document and replace it with Phase -In and the rest of the document be accepted as presented. Ms. Jones seconded the motion. Motion carried. Vote unanimous. Mr. Weiswurm suggested that the document be presented to Council at the earliest possible date because of the sunset. Mr. Weiswurm stated that you could not make any new deals with the ordinance in sunset. Ms. Jones stated that the Commission sees the necessity of a Tax Abatement Program in order to continue to draw "High Quality Businesses" to the City of Schertz and that it is eW recommendation that Council pass the new tax Phase -In document. Mr. Statzer asked the recording secretary if all the information was written down. Ms. Madison addressed the question that the item would be word for word. Schertz Economic Development Commission Minutes Page 6 of 8 Mr, Barrett stated that you could look at other communities that do not have any incentives and see that it is very limited, as Schertz has grown by leaps and bounds. Ms. Jones stated that some people do not want the growth. Council Member Douglas stated there is sufficient support on the Council to pass this. Mr. Statzer asked the recording secretary to make sure everything was on tape. Ms. Madison stated that she did not do anything on payroll as you noted, I do want to clarify that. Mr. Weiswurm because at the last meeting you indicated that $25,000 was below the poverty level, Ms. Madison stated that is not the intent that is not what it really reads and quite frankly it was not until you said that, that I realized the consultant must not have read the ordinance very clearly. Because we do not talk about a minimum wage at all in this entire document. What we talk about is for getting the point awarded as to how many percentage points they get towards a final percentage of an abatement or phase -in. They start at the $25,000 level, not a job making $25,000 but the level. Say someone has a payroll of thirty million dollars and for the first $25,000 they get a point and then they get it in increments depending on the increase. There is no reference at all to a minimum wage; we looked at instead of looking at total dollar amount trying to tie it back to quality of job and regional amount. Ms. Madison stated that she did not get enough information from Consultant to write that in a timely manner, since we were on deadline and had been waiting for them all this time to get this reviewed and it was sun setting. What we can do is next year after the Consultant is thru and we are up and running, we can come back in six months take that on an explore different ordinances from different cities and come back with a modification. Ms. Madison stated that she just could not do it in the turn around time, she did not have time to do research and really come back with something that would really works, this works into the entire formula of it. Ms. Madison stated that she has to be sure the math works at the end of the day. Mr. Weiswurm stated he has concern over this, stating he comes in with two million dollar payroll but has one hundred workers at minimum wage, he has done nothing to support Economic Development and he will get a good abatement. Ms. Madison stated that she would not allow you to come through because you have not put any Capital Improvements in her City and if you are leasing you will not get anything if you have not met the minimum personal property either. Unless you come to Ms. Madison with personal property she will not count that payroll. Ms. Madison stated that she could ask what the minimum wage is and as a Commission you could state you were not paying for this. Ms. Madison stated that the Commission does not have to approve abatement, just because they apply for it or meet all the criteria. Ms. Madison stated that it is very clear in the ordinance it is an option and an incentive. 5. NEW BUSINESS: a) Discussion of Executive Director's 01.10.06 Presentation to City Council on ED Plan Cancelled (Due to an emergency) 6. Executive Director Report a) Written Report Ms. Madison handed out the Executive Report. The Commission had no comments. b) Upcoming Activities: Certification Exam, Certification Letters for Tax Abatements Schertz Economic Development Commission Minutes Page 7 of 8 Ms. Madison stated that she would be taking her Certification Exam in March. Ms. Madison informed the Commission that the certification letters for the Tax Abatements had been mailed out. Ms. Madison stated that she is looking at a much more comprehensive report on the taxes coming in and should have something for the Commission by next meeting. Board Member Items Ms. Jones stated that FM 1518 is still a junkyard and that Public Works should provide a privacy fence. Mr. Douglas stated that it is still a work in progress. Mr. Vallance stated that funding for the Community College looks good. Mr. Douglas stated that the Commission and Corporation would be receiving a package for Soccer Texas USA. The Council would like the City involved, the SEDC would receive information and then forwarded to the Council. Ms. Madison stated that the presentation would be provided in two weeks. Mr. Vallance asked Ms. Madison if the City was advertising in California and Arizona to attract business. Ms. Madison stated that would require a substantial budget for advertising. Mr. Barrett stated that he liked the new format. Adjournment There being no further business, Ms. Jones moved to adjourn the meeting at 7:24 p.m. Ms. Douglas seconded the motion. Motion carried. Vote unanimous Chairman Robert Statzer Recording Secretary Schertz Economic Development Commission Minutes Page 8 of 8