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August 8, 1996 SCHERTZ ECONOMIC DEVELOPMENT COMMISSION MINUTES AUGUST 8, 1996 SCHERTZ MUNICIPAL COMPLEX ITEM #1 CALL TO ORDER: The meeting was called to order at 7:00 p.m. by Chairman Lew Borgfeld. THOSE PRESENT: THOSE ABSENT: Lew Borgfeld Ben Davis Jackie Jones Henry Gutierrez Robert Vallance, Sr. Tony Moreno Wanda Jean Sweatt Tim Fetter Harry Richburg Eric White Byron Williams Jeff Zunker Patrick Brewer - Security Capital STAFF PRESENT: Kerry R. Sweatt, City Manager Mark Marquez, Coordinator Earleen Ehlers, Recording Secretary ITEM #2 WELCOME GUESTS: Welcome Patrick Brewer, Security Capital. The Mayors from Macedonia were not able to attend. ITEM #3 APPROVAL OF MINUTES: Mrs. Sweat - Made a motion to approve the minutes as they stand, Mr. Jeff Zunker - seconded the motion. Motion carried unanimously. ITEM #4 REVIEW/DISCUSSION/RECOMMENDATIONS OF TAX ABATEMENT FOR SECURITY CAPITAL: There was a discussion led by Mark Marquez regarding Security Capital's revised package on employees and personal property which was not available at the time of the writing. The addendum given lays out the additional pieces of information. The effect was .that some of the numbers changed. Security Capital is based out of Denver and builds buildings and leases space to companies. One of the companies already contracted with is AmStand which will relocate in Schertz from Los Angeles. Location will be across from Keebler with high visibility from IH-35. Based on guidelines and criteria this abatement is no different from any other abatements we have given. Mark made a recommendation that the Board grant Security Captial a 90% abatement for a ten year period. Mr. Marquez went over the Dollar Values of the Security Capital Project showing that net revenues to the City would increase by a ratio of 15.70 to 1 and that the cost per job is $1099. Mr. Brewer added that this represents one half of the building as far as personal property and payroll taxes. We still have over 100,000 square feet to lease to third parties. Basically the City of Schertz Tri-County will have inventory space available for the first time ever for Mark's recruiting efforts, for companies that may want to be in tomorrow, unfortunately we can't accommodate that, but we would be underwriting the risk. Mr. Marquez added that it would be his guess that the building will be fully leased by the time that it opens. Mr. Richburg asked if they were abating personal property tax and Mr. Marquez said no, they are not. They would only be abating the six million dollar capital improvement, nothing more. Mr. Vallance asked if there were any figures to show additional costs to the City in providing police, fire, or emergency services? Mr. Marquez said that the City provides those services to the area regardless of whether there is a building or not. Security Capital and any other industrial user is going to do what needs to be done for their insurance rates for fire and police. Mr. Richburg added that bigger companies usually hire their own security people. Mr. Marquez agreed stating that part is offset to some degree by the building permit fees and all the other fees that go along with that process, which could be substantial. Mr. Zunker agreed with Mr. Vallance stating that he too tried to weigh the costs vs. the initial revenues to the City because there were more substantial numbers here. Even though we will provide services to that area whether there is a building there or not, obviously they are going to be used more when there is a structure there. Mr. Brewer interjected that Security Capital uses the state of the art fire systems referenced as an ESFR (early suppression fire retention) response and instead of controlling the fire, this system puts it out. This building will also be equipped with automatic smoke and heat vents that serve as a skylight and in case of a fire the firefighter can manage the fire by utilizing this type system. Mr. Marquez discussed the table used to compute abatements explaining that he is not recommending anything on behalf of Security Capital that is unusual in terms of variances. This is just how the numbers crunched. We've always followed how they crunched in the past. We are not going to change our rules for any specific company. If we revise the rules, we should revise them for everybody. Mr. Brewer discussed Tri-County growth over the years and how he's watched that growth. He wanted to let the Commission know that there are alot of people watching what is being done now. He wanted to stress that his company is there for the long term and that in this program the lessee will be offered an option to buy in the third, fifth or seventh year. They know they can grow roots here because they can buy their own building. Mr. Borgfeld stated that he felt an abatement was warranted but asked for comments regarding the amount of the tax abatement and if it is fair to the community to give an abatement of 90~ over a ten year time period. Mr. Richburg said he felt that this is an opportunity for the City to move ahead and that guidelines used in the past are the same guidelines given Security Capital. He made a motion to give the abatement to Security Capital on these guidelines. Mr. Borgfeld asked if anyone else will be giving a tax abatement? Mr. Marquez said that the schools will not, but that the county's guidelines are basically the same and that they will be following suit. Mr. Vallance asked if the ten year period for the abatement is critical to Security Capital. Mr. Brewer said yes, that if they are trying to attract a customer and we have a six year program and we are in the sixth year and they can get an abatement from Austin or San Antonio it could have a major impact. It's bottom line to the customer. Ms. Jones said that when we look at the guidelines and criteria in the future we may want to rewrite with different lengths for the abatements. She also asked how long would it be for Security Capital before completion once ground is broken. Mr. Brewer said that they have to have American Standard in by February 15th. He explained that they are a NAFTA tenant and that they have some options for expansion. They have put some parameters on Security Capital to hurry. Mr. Williams asked how the City could control the individuals that Security Capital leases to. Mr. Marquez answered that the City cannot control what someone does with their own property. Mr. Brewer added that Security Capital follows all the City's codes. Certificates of Occupancy will be needed for each tenant. Our company does an enviromental survey when the customer moves in and we do a spot check every year. It's too big a liability exposure for us since we own the building. Mr. Richburg asked if a medical waste facility would go into one of Security Capital's building. Mr. Brewer said that whoever comes in will meet all City codes and have to obtain the Certificate of Occupancy which is approved by the City. Mr. Borgfeld reiterated Mr. Richburg's motion to approve the abatement for Security Capital. Mr. Zunker seconded the motion which was unanimously approved. Mr. Brewer left the meeting stating that if there were any questions to please give him a call. Mr. Sweatt said he would like the Commission to be involved with the Security Capital abatement project when it goes to City Council. Mr. Richburg commented on Ms. Jones' proposal regarding making a change to the guidelines and criteria. He felt that the Commission should get going on changing the policies soon. Discussion ensued on guidelines and criteria. Mr. Marquez stated that since meetings are now set on a monthly basis he will be able to keep everyone abreast on what is going on. Mr. Williams agreed that monthly meetings are needed. Mr. Borgfeld added that had the Commission been talking about this deal over several months there might have been more flexibility on what was offered. Mr. Marquez said that the next abatement coming up may be a company from Norway which makes presswood furniture. ITEM #5 - OPEN DISCUSSION OF ECONOMIC DEVELOPMENT ISSUES: Mr. Marquez stated that this item was intended for the Macedonian Mayors who were unable to attend. ITEM #6 - STAFF COMMENTS: Mr. Sweatt said that he would like to let the Commission know that Mr. Ben Davis is not at the meeting because he just became the proud father of a new daughter. The Commission expressed their congratulations. Mr. Sweatt also urged the Commission to attend the City Council meetings which address the Security Capital abatement. Mr. Marquez handed out the "Talk of the Town" booklet asking for any changed, updates the Commission might find to be given to the recording. secretary. This will be reprinted in time to be given out at-the Business Appreciation Dinner. Mr. Marquez added that the economic development books requested some time ago have been ordered. As soon as they arrive the Commission will be informed. ITEM #7 - COMMISSION MEMBER COMMENTS: Mr. Vallance wanted everyone to know that the doctors are in their temporary building and they plan on being in their permanent building the first of December. Mr. Williams commented on promotion packages now available. He added that you could have things put on CD ROM and that it may be something the City wants to look into. ITEM #8 - CHAIRMANS COMMENTS: None. ITEM #9 - SET NEXT MEETING DATE: Next meeting set for the third Thursday in September, which is September 19th. ITEM #10 - ADJOURN: Mr. Borgfeld asked for a motion to adjourn which was made by Mr. Vallance and seconded by Ms. Jones, motion carried. Lew Borgfeld Earleen hlers Chairman Recording Secretary SCHERTZ DEVELOPMENT COMMISSION AUGUST 8, 1996, 7:00 P.M. SIGN-IN SHEET 1. 2. 3. 5. ~ 7. 8. y 11. G (i2,/~/ 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24.