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March 28, 1996 SCHERTZ ECONOMIC DEVELOPMENT COMMISSION MEETINGS MINUTES MARCH 28, 1996 SCHERTZ MUNICIPAL COMPLEX The Schertz Economic Development Commission meeting convened at 7:00 p.m., Thursday, March 28, 1996, in the Municipal Complex Conference Room, 1400 Schertz Parkway, Schertz, Texas. THOSE PRESENT: THOSE ABSENT: Harry Richburg Lew Borgfeld Jeff Zunker Juan Thorn Jackie Jones Bob Vallance Tony Moreno Henry Gutierrez Eric White Wanda Jean Sweatt Ben Davis Byron Williams John Sheridan, DSI Dist. STAFF: Kerry Sweatt, City Manager Mark Marquez, ED Coordinator Earleen Ehlers, Recording Secretary CALL TO ORDER: Harry Richburg called the meeting to order at 7:00 p.m. APPROVAL OF MINUTES (02-16-96): We have to forego approval of the minutes, they are not available at this time. REVIEW/DISCUSSION/RECOMMENDATION ON TAX ABATEMENT DSI DISTRIBUTING: In the package is the basic application and the evaluations for DSI Distributing; Mr. John Sheridan, president of DSI, is here representing the company. The Commission asked for Mr. Sheridan comments: Nothing was added. The normal evaluation process was discuss. The basis of the request is for a building (tilt wall building) to be built in the Tri-County Business Park, about a 20,000 sq. ft. Mr. Marquez read from the attachments from the agenda package, including the "Dollar Values of DSI Project," "Evaluation of Tax Abatement Request By DSI, Inc.," and the "Dollar Value of Variance for DSI, Inc." Mr. Marquez covered the acceleration which is in the back of the DSI package and is titled "Dollar Value of Variance for DSI, Inc." Mr. Sheridan and Mr. Marquez had not talked about it in any depth, but this is the fastest acceleration we can do. Mr. Sheridan was asked if he preferred to go with the six year package or the shorter version which is a three year accelerated abatement. Mr. Sheridan stated that given the option, the three years would probably be better for him. Mr. Marquez stated that is why he put it in there, so that capital improvements could be taken as quickly as possible to offset some of the costs, which makes sense. In the package you will also see the site plan location of the property in Tri-County. Again we are looking at a 20,000 sq. ft. building. Are there any comments from any of the members of the committee? Mr. Hammersla commented that the ratio and cost per job is pretty straight forward. It is a good deal for the City. Mr. Richburg asked that Mr. Sheridan tell the Committee a 1,.ittle about his operation. Per Mr. Sheridan, DSI is a wholesale electronics, primarily RCA Digital Satellite Systems distributor. They handle some other products like the Warn off road products, which is a wholesale business too. The main reason for very little sales tax is that most of the business is wholesale. We've been in business since 1984, totally family owned since 1987. I have my wife and two sons in the business, my daughter-in-law as well as other employees. We'd been over on Centergate for maybe eight or nine years and then we temporarily moved to Crownpoint. I'm looking forward to the new construction. Are there any questions I can answer? Mr. Richburg asked if the business was mainly distribution and Mr. Sheridan stated that it was distribution. They sell to TV or satellite dealers. Mr. Richburg asked if there was any manufacturing and Mr. Sheridan stated none whatsoever. Mr. Hammersla asked about distribution area and Mr. Sheridan said South Texas. Basically from a little above Austin down to Victoria and Corpus, all the valley. I do sell some product in Mexico over to Del Rio, Eagle Pass area. Mr. Hammersla asked the method of shipment, and Mr. Sheridan stated UPS and slot in trucking. Mr. Sweatt asked if American Freightways being close to DSI was helpful. Mr. Sheridan stated that they use them when they can which is favorable. He uses Merchants and Central, but they plan to use American quite a bit more. Mr. Richburg asked if there were any more questions for Mr. Sheridan? Mr. Sweatt said Mr. Sheridan indicated that there is very little retail sales, but how does that occur since there is some sales tax collected? Can you walk into the warehouse and buy directly? Mr. Sheridan said no, the tax was probably from their Warn wench. We are high 90~ wholesale. Occasionally we get somebody from Mexico who doesn't have export paperwork and therefore you have sales tax. That's probably where the little bit occurs. He stated that to answer Mr. Sweatt's question, "no, we are not retail, we run everything through our dealers." Mr. Sweatt asked who is the nearest competition and Mr. Sheridan said that actually they do not have competition other than RCA sales to rural coops like Guadalupe Valley, and they have their own separate program. RCA has a separate dealer like BJorns that they sell direct to. We sell to the traditional satellite dealer who's been in the business and who is real familiar with installation. We also sell Toshiba consumer electronics which is a TV. We handle some JVC, Bose sound equipment, some home theater equipment that goes with that system. We handle Uniden, Toshiba and G.E. They will be coming on line the middle of this year and we expect our inventory to increase. So, that's another thing that should help you. Mr. Richburg said that the Commission is looking forward to that. Ms. Jones asked where the site is located and was told that it is by ITM, behind Keebler. Mr. Richburg asked for a motion on the proposal. Mr. Hammersla voted to accept the proposal and Ms. Sweatt seconded the motion. Motion carried unanimously. Mr. Sheridan stated that he would like to accept the three year offer. Motion to accept the three year acceleration was made by Jacki Jones and seconded by Ben Davis. Motion carried unanimously. Mr. Richburg, on behalf of the Committee welcomed Mr. Sheridan to Schertz. Mr. Sheridan expressed his thanks. Mr. Richburg asked the Committee to move onto Item 4. ITEM #4 TAX ABATEMENT ITM, INC. Mr. Marquez said he expected Mr. Weiswurm to be here on behalf of ITM, Inc., but he is not here. After the last meeting Mr. Weiswurm indicated some confusion in that this was just a planning and discussion group as opposed to the guys who were going to do the deal. Mr. Marquez stated that he still did not receive a letter from him requesting an additional variance because that is what he's looking for. There is a copy of a letter in the agenda package that explains what Mr. Weiswurm is looking for. He thought he could get another 5~ if we allowed the full 30~ that he earns under our system for the employment, but there is no other justification, technically, by our rules. He's raised an issue about personal property taxes. Mr. Richburg stated that the encouragement Schertz offers at this time is the abatement. He is concerned about personal property tax. What's the comments from the other members? Mr. Hammersla asked what other small towns like Schertz do? Mr. Marquez stated that New Braunfels has a similar package to Comal County's, in fact it is probably mirror image. They have a fairly liberal tax abatement package. We gave Freightways the best that we had and theirs was better. The Comal County version was better in terms of percentages and New Braunfels does the same thing. Mr. Sweatt stated that their threshold is much higher. For instance, Ecko Construction Company could not qualify for any abatement consideration, whereas they did qualify for some with us. Mr. Hammersla asked what Schertz is looking for. Are we looking for this huge manufacturer that employs 600 people or a lot of little manufacturers that employ 30 people. Mr. Marquez stated that is why it is on the table for discussion. We've got space and distribution is a hot item at the moment and we are right on the path. ITM for example, has a great deal of personal property, more than capital improvements. And, the salary package is very nice. Those are all engineers and designers, but they have some very highly skilled blue collar trades, machinists and like that are very well paid. I think manufacturing as a general rule will pay more than distribution will. Mr. Marquez stated that the Commission's own program will sunset at the end of 1996. The Commission will have to decide as a group to continue it. We also have the option to change what the rules are. Ms. Jones disagreed with the idea of making changes stating that you have to be consistent with what is offered. Mr. Marquez agreed that the Commission's program has been on the table and published from inception and that if any changes are made we need to go through the whole process and make the changes complete. What's happened is that Mr. Weiswurm has requested verbally and in writing a variance to the numbers that we had offered. The value numbers are $2700 more over the six year period than we had authorized and our current procedures allow. He was on the City Council agenda and asked to be taken off for the Commission to reconsider his variance to these higher numbers. Ms. Sweatt asked how the Council reacted knowing that he is coming back asking for something else. Mr. Marquez stated that there were no comments made that would allow or suggest anything unusual. We just took him off the agenda. Mr. Zunker asked exactly which numbers he changed. Mr. Marquez said to look at the "Dollar Value of the Variance for ITM, Inc.," the four tables. The first on the left side shows the current percentages that were approved by the Commission, and the first variance on the upper right corner was also approved by the Commission. His letter in this lower right corner suggests different percentages for each one of those years against that same tax base. The result in any case is a higher abatement. The the page that says *(Variance), I redid with new numbers just to show you how it would change the overall package. The question is, is this a variance we want to talk about. And is he driving this specifically because he has a million dollars of personal property that we're not giving him any credit for. Ms. Jones stated that it's only costing him $2000 according to his calculations? Mr. Richburg answered yes. Ms. Jones does not think it would be a good idea. Mr. Richburg agrees that the Commission presented to the Council one type of variance and now we would have to go and say we've made a mistake. Mr. Marquez says that this has never gone to Council. Mr. Sweatt agreed. They knew it was coming, but it was taken off the agenda prior to being heard. It was just said that ITM was taken off due to the applicant's request while considering some issues. Mr. Hammersla asked about the published abatement package for the City of Schertz if there is any mention of personal property tax. Mr. Marquez said none whatsoever. Mr. Hammersla suggests that the issue not be addressed unless when the sunset comes up at the end of the year, something be written up that is uniform for everybody. Mr. Davis agreed. Mr. Marquez reiterates that it would take some thinking. From an incentive standpoint it is not a bad idea, but there are some difficulties. Mr. Weiswurm has a million dollars today, but what if he sells off some of his equipment tomorrow. Do we cancel out his abatement because he no longer has that personal property tax. So in other words, personal property is sometimes a moving target. It depends on the type of company you are dealing with. This is a potential downside. Mr. Hammersla stated that based on depreciation schedules it is always a moving target. Mr. Sweatt stated this is a good point. Mr. Sweatt and Mr. Hammersla agreed that depreciation of equipment was another consideration to look at. Mr. Hammersla stated that is why he can't see opening up a personal property tax. Mr. Zunker stated that Mr. Weiswurm was here when the Commission had the discussion. It was fairly open. I don't feel good about going back on what we agreed to when he was here. Mr. Richburg asked then if it is the decision of the Commission that they stay with what they presented in the first vote? Mr. Hammersla made a motion that they stick with the first proposal and Mr. Williams seconded the motion. Motion was unanimous. Mr. Davis asked if abatements based on personal property done anywhere else. Mr. Marquez said yes, New Braunfels. I've seen the outcome, especially American Freightways. Kenetec had a huge personal property package and we couldn't go any farther than we did. In any event, it's an interesting problem to think through. Mr.. Hammersla stated that if it is in the published package he is in favor, if it's not in the published package he is opposed. Mr. Sweatt 'stated that is a good rational approach to it. One of the things we continue to say is we're different than some of the people in the area, we do want to create permanent long term jobs. We've got to step up to manufacturing but we have to do this in some sort of clear published way. Mr. Davis stated that he would be more comfortable if the committee established some ground rules. ITEM #5 APPOINTMENTS/REAPPOINTMENTS Mr. Richburg asked that the committee move ahead and talk about appointments and reappointments. Mr. Marquez stated that Mr. Thorn will not likely want to continue because of his library board involvement, however he hadn't reach him to confirm yet. Ms. Jones graciously accepted. Mr. White agreed. Mr. Hammersla stated that he would not physically be in Schertz much longer. Mr. Marquez stated that Mr. Tim Fetter had indicated a willingness to serve and that Ms. Sweatt knows him very well. Mark has had several conversations with him and would like to invite him onto the committee if there are no objections. Ms. Sweatt mentioned that Mr. Fetter is building the new Caldwell Banker Real Estate office on 3009 there at Woodland. Just as soon as they close the deal he will be presented with his plaque. Mr. Marquez stated that Mr. Fetter is also a Schertz resident, he lives in Greenshire. Ms. Sweatt is willing to extend for another two years. Regarding Lou Borgfeld, Mr. Marquez had not gotten a chance to speak with him. He's been unable to reach him. I don't think he will have any objections to serving. Mr. Richburg made a motion that Mr. Zunker be appointed chair, in the event Mr. Borgfeld declines. Before any motions are carried Mr. Marquez stated that everyone should be contacted first. Ms. Sweatt asked how many vacancies the Committee has. Mr. Marquez said one for Mr. Hammersla, possibly one for Mr. Thorn. The rest of the people, he guessed would stay. Mr. Richburg asked if anyone had any names to recommend to the committee. Should additional vacancies occur Mr. Hammersla recommended Mr. Joseph E. Roberts. As~~d about requirements, Mr. Marquez stated that the individual should care about the long term development of Schertz. Either live or work in Schertz and be 21 years of age. The main thing is that they care about the long term goals of the City, someone willing to contribute their time to that goal. He said he would speak with Mr. Roberts. Mr. Richburg asked for any more nominations. Mr. Davis said he would like to ask Walter Vestal who has a development that we previously gave an abatement to. He might be somebody who might be interested, I don't know. Ms. Sweatt agreed that it might be good to get someone like Mr. Vestal involved. Mr. Davis said that he is bringing in other companies to the area. Mr. Richburg said that makes three recommendations, do we have any more? Mr. Marquez asked if there would be a problem with the commission going either larger or smaller? If Mr. Thorn decides to stay and we add three more we will be at fourteen or fifteen. How does the commission feel about that? Mr. Hammersla stated that if the committee planned on having discussions regarding personal property and more complex things, then the more input the better. Mr. Richburg asked for any more comments on appointments or reappointments, other than the three recommendations to the. committee. Mr. Marquez will try to get some information on them so that he can report to the committee at the next meeting and recommendations to the Council can be made after that. ITEM #6 DISCUSSION ON PORTABLE DISPLAY Mr. Richburg asked for discussions on the portable display. Mr. Williams and Mr. Marquez looked into the cost, $2500 for a skylight and a less expensive graphics package which Mr. Williams found available. Total would be between $2000 and $3000, $2500 for the unit and around $500 - $600 for graphics. The graphics would have to change over time to keep up to date. The question now becomes where are we going to fund this thing? Initially it was to be funded by the Foundation. Ms. Jones asked about uses. Mr. Williams said that one of the neighboring towns bought one and let their hotel use it (promotional) just for purchasing some of the graphics or the board itself, he was not exactly sure. Basically they allow the different businesses in the town to utilize the display on a need be basis. I'm sure they would be willing to talk with us about it. Mr. Hammersla asked if there was some business in town that has a board that the City could use once in awhile. Ms. Jones stated that GVEC has one. Mr. Hammersla said that if we could find a source to borrow one that a feel could be obtained for how to use it and how often it would be used; if it would be justifiable or not. Mr. Sweatt said it might be funded through the hotel/motel occupancy tax once it gets up and running. That lends itself for that kind of advertising, either putting it in the lobby out there or using those monies to keep your graphics up to date. Having that or something in the lobby at the hotel or something that could travel from the hotel to the restaurants periodically might be more of a shot that we have of getting someone's attention. Businessmen may find that they want to look into Schertz, it is a possibility. Ms. Sweatt stated she would like to see an updated video. Mr. Marquez suggested CD Roms or Internet; a discussion ensued. Ms. Sweatt said she would like to have a billboard on I-35 which could be done with the hotel/motel tax. Mr. Richburg asked if there were any more comments on the portable display or related items. Mr. Hammersla asked if anyone would contact GVEC to ask them if we could borrow their portable display, we would have to have our own graphics but that way we could get a feel for our own utilization needs. Ms. Sweatt asked if the graphics were interchangeable and was told by Mr. Marquez said that with the Sky line model they are just velcro things that go on. He thought they would be interchangeable. Mr. Richburg said that Mr. Marquez will look into cost for a new video tape, IH-35 billboard, uses for the portable display, CD-ROMs and Internet access. Mr. Richburg asked that the committee move ahead to the next item on the agenda. Mr. Marquez wanted the Commission to know that there is money in the budget to change the Community Profile and the brochure for a little more modern approach. Mr. Marquez introduced the new Recording Secretary, Ms. Earleen Ehlers and Mr. Richburg, on behalf of the Committee welcomed Ms. Ehlers. CLOSING COMMENTS: Mr. Richburg asked the Commission members for comments. Mr. Sweatt relayed that he had an interesting comment from the Squadron Commander and the Wing Commander out at Randolph who were talking about how things were growing in Schertz and how we impact on the base and the base impacts on us. While not a scientific study, the colonel told me that in talking with his officers who live off the base, six out of ten live in Schertz. It.....hasn't been that many years ago when there was a feeling that Schertz was an NCO enlisted and retired and active duty town and Universal City was officer country. That's clearly not true and part of the reason it's not true is because of the immediate $600 a year savings on insurance by coming across the Guadalupe County line and not a corresponding increase on the cost of houses. He said that with the changing emphasis at Randolph there is going to be more civil service work and less military in several areas to the tune of about 400 new civil service jobs that will be more or less permanent residents here as opposed to the air force person who might come and go. Mr. Zunker asked if he was informed of the reduction in military jobs that would correspond to that? Mr. Sweatt said they're going to lose about 600 military jobs that are going to be replaced with about 400 civilian jobs but those are civil service jobs that are generally GS10's or above and replacing sometimes lesser pay military. The real beauty of it is that they are permanent people. Most civil service guys here stay and they will be living outside. And they do not have commissary privileges. There were no additional comments from the Board. ACTING CHAIRMAN'S COMMENTS: Mr. Richburg, the acting chair has no comments at this time. NEXT MEETING SCHEDULED: Mr. Richburg set the next meeting schedule for Thursday, May 16, 1996. ADJOURNMENT: Mr. Richburg asked for a motion to adjourn which was made by Mr. Zunker and seconded by Mr. Davis. Motion carried. ~ti` Lew orgfeld arleen E ers Chairman Recording Secretary SCHERTZ DEVELOPMENT COMMISSION MARCH 28, 1996 7:00 P.M. SIGN-IN SHEET 2. 4. 5 . ~ v ~l-t-~---1 6. 7. g , . ~ 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 2 0 . 21. 22. 23. 24.