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JULY 9, 1997 SCHERTZ DEVELOPMENT FOUNDATION BOARD OF DIRECTORS MEETING MINUTES July 8,1997 - 8:00 a.m. Denny's Restaurant ITEM # 1 CALL TO ORDER: Chairperson Jackie Jones called the meeting of the Schertz Development Foundation Board of Directors to order at 8:00 a.m. Those present: StatT Jackie Jones Lew Borgfeld Don Jeffreys Mark Marquez-Executive Director Margaret Boyd-Recording Secretary Invited Guests: Kathleen Boone Stan Boyle (owner of SAC) ITEM #2 APPROVAL OF MINUTES: Ms Jones asked for approval of the minutes: Mr. Borgfeld had questions regarding the minutes prior to the meeting on the Fiber Arts deal. He wasn't sure there was a waiver of the covenant but thought there may have been. He didn't know what the other minutes said. Mr. Borgfeld's understanding was Fiber Art had purchased a lot and built a 4,000 sq. ft building, then built another 5,000 sq. ft building on to that. He said Fiber Art wanted to purchase additional property and we would give them credit for having built and having bought our building. He said those would meet requirements for another lot or two. He said his understanding was giving them credit for putting 9,000 sq. ft buildings on ground and bringing their business to town so they could have future expansion to put in a parking lot or future consideration for a lot or two with those buildings meeting the requirements. He said they were not waiving convenants. Ms. Jones said Fiber Art wanted to build on adjacent lots. She said the convenants states the lots have to be contiguous. Mr. Borgfeld said you don't think we have the latitude to give them credit for what they've done. He said we all kind of agreed on the credit and now everybody is changing their vote on it. Ms. Jones said we didn't agree to it, that's why we had a special meeting. Mr. Borgfeld said his understanding was when all the members were present two of the members couldn't vote, we would have a special meeting and at that time it was pretty much the consensus. -1- ITEM ##3 DISCUSSION WITH MR. BOYLE (SAC BUILDING CORP): Mr. Marquez said the reason for Mr. Boyle's presence is to update us on his difficulties and where he is in the process. Mr. Boyle said they're in the process of going to court. He said they are waiting to find out what the settlements are or what they're willing to offer for settlement. He said they owe them about $500,000 and they are not willing to settle for anything less. He said until we get past that point, which sounds like we might have a court date at the end of July, which will finally bring this to a head. He said if its postponed it might take a little longer. He said he's really in a state of limbo until he finds out what's going on. Mr. Boyle said in the interim they have moved into Schertz. He said he's leasing property until he's able to build. He said he really couldn't do anything until this lawsuit is settled. He said he has actual plans to build a 5,000 sq. ft metal building but can not do anything until he knows the outcome of the lawsuit. He said he closed his offices in Universal City and has leased some city offices, which is about 2,400 sq. ft and remodeled the front of the building. He said he's also leased a building from Foreign Affair. Mr. Boyle said he hates to lease because we're unable to do anything to the property. He said a lot of their property is under canopies. He said what they've done is section off two areas and basically have taken all our material and segregated it to one side. He said the other side is pretty much cleaned out. He said they have also formed another corporation, which is ASC. Ms. Jones asked what type of business is it. Mr. Boyle said we put up metal buildings such as Wal-Mart and HEB. Mr. Boyle said they really got took on this deal. Mr. Jeffreys asked about the lien situation and is the title tied up in this. Mr. Boyle said yes the problem he's having is trying to get this clarified. He said they have filed Chapter 7 Bankruptcy and what happens is part of their records have been shredded it a real mess, it's a real scam. He said what they've had to do is hire a fraud auditor to come in and go over all the accounting records. He said it appears they got us for about $580,000. Mr. Boyle said he has people who are ready to help develop the other lots; can not do anything until he knows the outcome. Mr. Marquez said all we're interested in is getting a feel of how much time is left and what were looking at. Mr. Boyle said we've been going through this for about a year and a half and hopefully its coming to a head. He said we've f1led summary judgments against them unfortunately its eaten most of the money for lawyers. -3- Ms. Boone said they're looking for something more at peace and this area suits their location needs. She said B&B intends to go ahead and constIuct a 3,000 or up to a 4,000 sq. ft building. She said plans are not yet fmalized they're contingent upon completion of title and purchase contract and it being accepted. Ms. Boone said they'd begin constIuction immediately. She said they've been ready to move been ready to move on this for quite sometime. She said B&B basically do sales and refurbishing of bank equipment. She said she wasn't sure if B&B was intending to go ahead and do the fmancing with Schertz Bank and Trust. Mr. Borgfeld said they were. Ms. Boone said it shouldn't take much longer to get the building constIucted. She said the gentlemen that Mr. Davenport leases from would be the contractors on this job. Mr. Marquez reminded Ms. Boone that once the plans were completed to make sure a set was given to the Architectural Committee. She said they were making some minor modifications to the plans then she would bring a copy over. Ms. Jones asked if anyone had any questions. Mr. Marquez said Mr. Sweatt had agreed to ok this and had voted yes to approve the proposal. Mr. Borgfeld said anything other than a straight sell he had no problem with. Ms. Jones asked for a motion to accept the proposal, seconded by Mr. Jeffreys; unanimously approved. Mr. Marquez said he would have Ms. Jones sign original documents when he got back to his office. He said Ms. Boone could come by and pick up the contract. They would be ready. Mr. Borgfeld asked Ms. Boone to provide him with a copy of the contract she said she would fax a copy to him once she had taken it to the Title Company and received it back. ITEM .6 RESOLUTION TO APPROVE DONATIONS TO SCHERTZ BUSINESS ASSOCIATION FOR JULY 4TH FIREWORKS $500: Ms. Jones asked for a motion to accept this resolution, seconded by Mr. Jeffreys. He asked if this was for previous fireworks; Ms. Jones said it was for the fireworks this week. Mr. Jeffreys had some concems about this year's fireworks display. Mr. Sweatts concems were that we have sufficient funding levels now with HEB and other corporate donations its not necessary for the foundation to step up anymore. He said the reason we stepped up early on was to help out and get things started. Ms. Jones said she didn't know what the funds would be used for next year but HEB wanted to fund half for the fireworks display. Mr. Marquez said the city's concern is we're funding $1,500 towards it, HEB is funding part of it and other corporations are funding the rest. -5- Mr. Marquez recommended we approve this one. He said he sits on the Executive Committee of the Greater Austin/San Antonio Corridor Council and is chairman of the Economic Development Committee. Mr. Jeffreys asked who was the actual member the Schertz Development Foundation or the City. Mr. Marquez said the Schertz Development Foundation is the actual member although we act on the behalf of the city in all cases. Mr. Jeffreys made the motion to approve resolution, seconded by Mr. Borgfeld, unanimously approved to pay Austin/San Antonio Corridor Council ($1,000). ITEM *9 RESOLUTION TO APPROVE DONATION TO ASSIST FLOOD VICTIMS THROUGH THE SCHERTZ FLOOD FUND: Mr. Marquez said this is an issue he is putting on the table. He said he was not sure it was appropriate or the right thing to do but it seemed like the right thing to do. Mr. Jeffreys asked who was handling the Flood Fund established at Schertz Band and Trust. He asked how they were handling it. Mr. Borgfeld said Cibolo had questions about who was eligible for the fund. Mr. Marquez said the flood victims must complete an application with Red Cross. He said the city has three people, Ms. Boggess, Mr. Cott and another person who review the applications and look at the immediate needs of the people. Mr. Borgfeld said this brings up the question like the fireworks, is this an area that the Schertz Development Foundation needs to be. He said he knows its worthy cause. Mr. Borgfeld said he had other numbers to call on this disaster relief. He said we've been declared a disaster area as of last Friday. He said he called the SBA earlier they said nothing would happen until a determination had been made. He said he did not know what would be available through SBA, which would probably help someone buy toothpaste. He said he has the numbers if anyone would like to call and see what is coming down. Mr. Marquez said President Clinton did approve disaster relief through FEMA. Mr. Borgfeld said under the SBA loan they would not qualify; but under the Disaster Relief loan they would. Mr. Marquez said the issue is whether we should do anything. He said this fund, as he understands it is intended to help the people; it's not a loan. He said its here to help someone in some type of distress to give them a few dollars which will tie them over until their loan is approved or some other type of aid comes in. Mr. Jeffreys said could we go ahead and approve this and leave it to somebody's discretion to check out whether the bank fund is needed for this purpose; whether these people are getting help they need or if they need more funds. -7- Mr. Jeffreys said he knows Red Cross is helping, we're getting Federal Aid, and we have a group of ministers from the Ministers Alliances from Kirby and the surrounding areas who have stepped up. He said his concem was if someone not getting help. He those are the ones we should be saying are slipping through the cracks and something should be done about that. He said if the funds are needed he's all for it. Ms. Jones asked if the city had established a fund. Mr. Marquez said someone at the bank had called and said they had opened an account for $1,000 for flood victims. He said they provided him with the account information to give to anyone wanting to contribute to the account. Mr. Borgfeld said all he knows is that a memo came around with the information. He said he received one call from the industrial community in Cibolo asking if the fund was for both communities. He said he to them he believed it was for both communities. Ms. Jones asked for a motion to approve the donation, seconded by Mr. Jeffreys unanimously approved. ITEM no RESOLUTION TO APPROVE DONATION TO SUPPORT SCHOOL PROJECT: Mr. Marquez said this is an individual teacher who and his understanding is she took it upon herself to raise money to build this semi athletic thing at one of the schools. Mr. Jeffreys said the school would maintain the equipment as he recalls. Mr. Marquez said he understands she's raised a pretty good amount of money. He said he didn't know where it was at hadn't spoken to the teacher recently. Ms. Jones said they wanted a walking path at the elementary school in Schertz. Mr. Borgfeld said a walking path that you can stop and workout on different types of gymnastic equipment to do (sit-ups, pull-ups, etc) each station would have different exercises. He said it would be built like a track. Ms. Jones called for a motion. Mr. Marquez said he hadn't spoken to the teacher for several months. He asked to be given time to see where she's at in terms of her funding levels and how those funds were being accounted for. He said it's an individual who's doing it. He said he asked her some questions about it when she sent him the package and there were some unknowns in that process. He wanted to check and see how she has it structured, when she'll be doing it, and how far along is she in the process. He asked that the committee defer this until he fmds out what she plans on doing with the project. He said he'll phone the committee members with an update and if comfortable will set a date to proceed. Ms. Jones said the city was installing the black top school. Mr. Marquez said he also wanted to check on that since it is school property. -8- Mr. Jeffreys said it would be a good idea to move towards that for next year. Mr. Marquez said its been an assumption and a commitment we've had for quite along time and I would hesitate to just drop it without making sure the Business Association mows that next year we mayor may not fund it. Mr. Jeffreys said there's two sides to this (1) is this in our rim or priority or purpose; (2) if we are as Ms. Jones commented earlier about Randolph fireworks display that they spent between $1,500 or $15,000 on their fireworks display. He said if we want to continue to attract the people we need to get funds from other sources to improve our fireworks display. He said he wasn't sure we could do that but if that's what it'll take maybe we need to continue to fund it. Mr. Marquez said this is part of our charter at the time. He said that early on we were one of their available sources. He said whether they need as much help or not depends. How we want to measure up against Randolph is another question. Ms. Jones said I don't think we'll ever completely measure up to Randolph. It brings people to the city. Mr. Borgfeld said these are questions, which should be addressed either in February or March. Mr. Jeffreys asked for a motion to approve the resolution, seconded by Mr. BOrgfeld motion carried to donate to Schertz Business Association for July 4th Fireworks ($500.00). ITEM #17 RESOLUTION TO APPROVE PAYMENT OF FULBRIGHT AND JAWORSKI L.L.P. $2,003.88: Mr. Marquez said this is still a continued addition of our prior discussion from SAC building Corporation; should have received a copy of original bill and it ran from November 1, 1996 to April 30, 1997 of this year. He said that's the bulk of the discussion and all the charges thereto. He said he did not go back and its not crossing over from the prior payment. Mr. Jeffreys asked if this was the final bill. Mr. Marquez said it was the final bill for this action and that we had no other bills pending from Fulbright and Jaworski. Ms. Jones made a motion to approve resolution, Mr. Jeffreys seconded, unanimously approve to pay Fulbright and Jaworski ($2,003.88). ITEM #18 RESOLUTION TO APPROVE PAYMENT TO CONTINUE MEMBERSHIP IN THE AUSTIN ISAN ANTONIO CORRIDOR COUNCIL: Mr. Marquez said this obligation was picked up last year; we first funded it last year as lessening the burden of govemment, the city dues would have been $1,500 we simply picked it up at $1,000 and saved $500. -6- Mr. Borgfeld asked Mr. Boyle when would they be going to court. Mr. Boyle said they would be going the end of the month. Mr. Borgfeld asked if Mr. Boyle thought they would make some type of deal; he said he hopes so, he's asking for full release. He said he feels there's no reason it couldn't happen. They've made a lot of headway within the last few months. Mr. Jeffreys said that basically this is a settlement. He asked Mr. Boyle if they would be going to trial. Mr. Boyle said if right prevails then it would be a settlement. He said he thought this was just an in and out deal, he said he was surprised after the initial lawsuit and then trying to get a loan from his bank and finding out everything was tied up in this lawsuit. Ms. Jones asked Mr. Boyle at which time would he be able to build on the lot and if it would be in front or in back of the fence. Mr. Boyle said he has everything stubbed out and that it would be in front about 3,000 sq. ft of office space and one warehouse. Ms. Jones asked if he would be submitting those plans to the Architectural Committee. Mr. Boyle said he had already submitted them. Mr. Marquez said we would review them. Mr. Boyle said he already has the buildings and will keep us informed of all the proceedings and when they get closer to a defmite decision he'll come back and meet with the board. ITEM .4 FINANCIAL REPORT: Mr. Marquez said there's $48,000, about $39,000 is in revolving CD's through the city, and combining some funds together we'll have about $8,000 or $9,000 in cash readily available to pay whatever obligations we have. ITEM IS DISCUSSION! ACTION OF SALE OF LOT 8: Mr. Marquez said he forgot to bring the purchase earnest money contract. He said he'd bring earnest contract to Ms. Jones office for signature. Mr. Marquez introduced Ms. Boone who is representing B&B Technical Services Co., Inc. Ms. Boone asked if Mr. Marquez had passed out the basic information packet. Mr. Marquez said he had sent a copy to each member. Ms. Boone said she is strictly the broker representing Mr. John Baker, Sr., located in Irvine, Texas and Mr. John Davenport located here in San Antonio. She said they are interested in relocating their business; the building John Davenport is currently in is for sale and they want to establish a permanent office here in Schertz; which would be conducive to their work, which extends from the valley and all the way to Dallas. -4- ---------------_,._.__ "'._...______.._______.. .'.n.._'...___.___..._.________...__.M_____..__... _'......______....__.___._._.., ,_~.,___.._.__ __ __ _ __..____..._~______. _______...____..__ Mr. Marquez and Mr. Jeffreys said the lots were not contiguous and the convenants state they have to be contiguous lots. Mr. Marquez said the lots that Fiber Arts wanted to buy was literally across the street. Mr. Borgfeld asked if the board would waive that kind of covenant when company has made that type of investment. He said when you have a company come into town and buy a building the city has built and then add an additional 5,000 sq. ft which gives them a 9,000 sq. ft building on a 'h acre lot with no place to park; no place for future expansion. He said they would like to stay but were kind of closing the door in their face and saying if you like to expand go somewhere else. Mr. Jeffreys said that's exactly what we're doing waiving the convenants so that they will stay here. Ms. Jones said the board offered them an option, which Fiber Art turned down. Mr. Borgfeld said they offered an option back at the meeting he thought everyone was in agreement. He said if we ever wanted to buy the building back we would buy it back at the price they bought it for whether it be one year or ten years. Ms. Jones and Mr. Marquez said they would have to pullout the prior minutes and look them over. They said apparently there has been a misunderstanding about the covenants. Mr. Borgfeld said Fiber Art had no problem building across the street at some point and time. Mr. Marquez said they were not willing to commit to building within of two years. Mr. Borgfeld said that was correct they would not commit because they did not know whether they would need it. He said he hated to jeopardize a big business like that. Ms. Jones said she thought we could not vote on anything because there wasn't a quorum on that day. Mr. Borgfeld said Mr. Harris was unavailable to attend. Ms. Jones said that if Mr. Borgfeld wanted to reopen the issue we would have to have another meeting. Mr. Marquez said we could reopen this in another meeting. Mr. Borgfeld said he didn't know what Fiber Art's plans were at this point. Mr. Marquez said its getting a little close because they're still interested in those lots. He said that in fact we should have earnest money contract coming in on July 20, 1997. Ms. Jones asked if we could get approval of the minutes. Mr. Marquez said there is a prior set which is germane to this discussion and they didn't come out with the package. He said we should review those in combination with this discussion. Ms. Jones said we could defer it to another meeting since Mr. Borgfeld is the one with the questions its up to him. The Board agreed it would be best to defer until next meeting. -2- -.-.---.-------~..--,----.--"----~-----.-.,.--..,-,-.-.-~_.--______,__.,~__.______..__.__...____,_,._______._______.___"___..._.__._."..__ _ .__...__..._._...._____m___._'.._,._....__.____.._____.__._.._