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MARCH 11, 1998 SCHERTZ DEVELOPMENl' FOUNDATION BOARD OF DIRECTORS MEETING MINUTES March 11, 1998 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: 10 a.m. Directors Present: Staff: Jackie Jones, Chairperson Don Jeffreys Ed Harris Kerry R. Sweatt Mark Marquez-Executive Director Margaret Boyd-Recording Secretary ITEM #2 CONVENE ARCHITECTURAL REVIEW COMMITTEE: Mr. Marquez suggested that the board defer convening the Architectural Review Committee until the next cmeeting. He said the guest speaker was unable to attend due to a family emergency. Ms. Jones deferred convening of the Architectural Review Committee. ITEM #3 APPROVAL OF MINUTES: Ms. Jones asked for a motion to defer the minutes until the next meeting seconded by Mr. Harris motion carried unanimously. ITEM #4 RESOLUTION FOR TAXES: Ms. Jones asked for a motion to approve Resolution No. 98-1 for Taxes. Mr. Sweatt made the motion, seconded by Mr. Harris and the motion carried unanimously. ITEM #5 FINANCIAL REPORT/BUDGET: Mr. Harris said going back to 1994 where does the acquisition of the property on Commercial Place show up on these financial reports. Ms. Jones said she read in the back of the report it was based on the initial purchase price of the land. She said they only paid $25,000 for all of it. Mr. Marquez said it worked out to about 2 cents a sq. ft. and were selling it for about 40 cents a sq. ft. He said we paid off our note fairly quickly and that we had to sell about eight or nine lots to payoff the note. -1- Mr. Sweatt asked Mr. Marquez about the maintenance expense. He said if we have arrangements where the city mows the property periodically and sends out a bill. Mr. Marquez said part of the purchase agreement was with the city that when we bought the three lots we allowed a $6,000 difference. He said it was a liability on the city or its reduction of the cost in order for the city to go ahead and mow those lots for a number of years. He said he would have to check on it but believes it was for four or five years. Mr. Sweatt said the city is still mowing those lots at a cost that we're recognizing. Mr. Harris said the cost was almost virtually null now and it was pretty high. Mr. Marquez said it was $1,500 a year for the mowing costs. He said we had a lot more lots then now we're down to only four. Mr. Harris said in 1996 the cost didn't even show up in the statement of revenues. Mr. Marquez said he hasn't gone back and talked with Mr. Timmons. He said Mr. Timmons dropped of the Financial Reports and that he will talk to him about them. He said there is a memo that he and Ms. Jones will need go over and see if the reports are acceptable. He said he needs to go back and review them and get a revision if needed. Ms. Jones aid she has a question on the Property Taxes for 1995. She said in 1995 the property taxes are showing $6,496 and in 1994 it's showing $3,172. She asked why was it less in 1994 then in 1995 and what month did we purchase the lots in. Mr. Marquez said he couldn't remember which month we purchased them in he would have go back and check. He said the number of taxes each year should have been reducing because we've been selling lots all along. He said there was a change in the appraised evaluation that took it up from 40, 50 and this year it should be around 50 or 55 on the empty lots. Mr. Harris said in 1994 and 1995 taxes did go up on the appraisal values. He said he agreed with Ms. Jones it shouldn't have jumped from $3,000 to $6,000. Mr. Marquez said there's something wrong he would have to go back and look at that. Ms. Jones said that unless we purchased those lots in March of 1994 we would have to pay for the whole year. Mr. Marquez said he would check it and he has records on all that. Mr. Harris said in 1996 taxes were $2,500. Mr. Marquez said that this year it was $1,100. Ms Jones said that in 1994 we still had all those lots down there. Mr. Marquez said he has included in the fmancial package on the fmancial side a Proposed Budget of some spending that we maybe looking at his next fiscal year. -2- He said as a matter of information there's $789 in the Schertz Bank. He said we have $77,800 in the Texas Pool where we're drawing a larger interest rate, which is running about 5 or 6% rather than 2 or 3% at Schertz Bank. He said it worked out very nicely. Mr. Marquez said the $77,800 is unencumbered with no restrictions whatsoever. He said the only requirement we have is to pay the taxes on the property. He said that's our only obligation but its not outstanding this year because we're done with this year. Ms. Jones asked if the money was liquid. Mr. Marquez said yes that it's absolutely liquid. He said we're co-mingling with the city funds to obtain higher rate of interest. He said that of course the pools are a much better investment vehicle. He said they are pretty stable that the city has money in there. Mr. Harris asked if we're governed not to be able to put money in riskier ventures. He said such as mutual funds that are drawing higher rates. Mr. Marquez said we could do pretty much what we wanted. He said we don't have necessarily an investment policy but rather a conservative one. Ms. Jones said our objective for the money is to put it back into the community. She said we don't have a long-term investment. Mr. Marquez said with any type of investment your looking at protecting your principle more then anything and with the pool we get to do that and also draw a higher interest rate then we would normally do. Mr. Marquez said there's several things out there that are kind of interesting. He said he was initially looking into a speculative building on two of the lots that we have. He said we have negotiations with GVEC to do a funding. He said at the moment negotiations have broken down temporarily we'll have to see how it works out. Mr. Marquez said what he is going to ask for is something similar to what we would get from the state. He said if he didn't have a lessor in the building we would simply pay the interest on the note. He said that when we had somebody in to lease the building we would pay the full payment whatever that might be. He said that's the kind of deal he was looking for. Mr. Marquez said he would be attending the Texas Capital Fund meeting on March 18, on grant applications to see what they have to say and to see if we could plug into it. He said there's also a piece of property behind us for sale. He said they are asking $200,000. He said there's a possibility of a joint venture. He said there's several possibilities out there on how to use the money. -3- Mr. Marquez said one of the things the city doesn't have is a Chamber and 'we could be an initial funding mechanism. He said he really doesn't know how to approach it he's only throwing out ideas. He said the bottom line we do not have any obligations to the money and that we're limited by only our own imaginations on what to do with the money. Ms. Jones said do we want to do something to generate more revenue to keep the foundation going or do we want to sit here and put our money out here and there and someday were gone. She said we need to look at what we're going to do, where do we want to be ten years from now. Mr. Jeffreys asked how did the Schertz Development Foundation come about. Mr. Sweatt said he believed the City Council encouraged the development of the foundation initially. He said they were looking for a vehicle to do community improvements with the city. Mr. Jeffreys said we should go back to the three founders that were responsible for putting this together and says here's where we are is this still something they want to continue or should some changes be made. Mr. Marquez said his reaction is they would want us to continue for as long as we could. He said we've become sort of a surrogate for the city in some ways. He said we could do something's the city can't do. He said we can step up and take care of several things that occur that the city wouldn't be a party to necessarily because of the use of tax dollars. He said we could spend money if we chose to. Mr. Jeffreys said could we do a mandate to go back to them. Mr. Marquez said we would need to because they would support us. He said keep in mind under the Charter we're a non-profit, IRS recognized non-profit corporation, and state recognized as well. He said our Charter states we are here to do charitable purposes to satisfY IRS requirements. He said we're also here to lessen the burden of government. He said those are the two key elements of our Charter that's approved by the state. Ms. Jones asked how are we going to continue to generate money. Mr. Marquez said we could do a fundraiser or invest in the buildings to draw in revenues. Mr. Harris said we have such a unique opportunity in the fact that every spec building out in Commercial Place is sold. -4- Mr. Jeffreys asked how much money did the foundation make on the sale of the last spec building. Mr. Marquez said we actually lost money on the building but made money on the land. He said when we structured the deal with GVEC we put a $4,000 cap on it and that's our contribution to the project and then we split the cost of a profit after GVEC built the building. He said the lots ran for about $8,000 or $9,000 apiece. He said we got $4,000 back for the land and another $1,900 for the splitting of the profits. Ms. Jones said that on the last one she received $2,000 back. Mr. Marquez said we loose money on those types of spec buildings. Mr. Jeffrey's asked if there were property available in which we could buy to continue on in what we've been doing. Mr. Marquez said there's a piece of property behind us (20 acres). He said the asking price is $10,000 an acre. He said he believes we could get a lower price we would have to look for some fmancing to do that. He said we would also have to look through the development process. Mr. Jeffrey's asked what do we have in our savings. Mr. Marquez said there's $77,000 in the SDF account. Mr. Jeffrey's asked why would we need to borrow money to do this project. Mr. Marquez said that the land itself is 200,000. He said the way we would want to do that is put some streets in there. He said there's some connector and it would be prudent to fmish out the streets and to have nice size lots on both sides it would look somewhat like Commercial Place. Ms. Jones said there's only two lots left in Commercial Place to sell. Mr. Harris said their good lots and the citizens could control the buildings that go in because there are homes right along the sides of those lots. He said you could control the buildings that's there by putting in a natural buffer to protect those citizens. He said there's no doubt the buildings would sell, just raise the stakes a little higher on the profit margin that the foundation will make. He said it's an absolute fantastic opportunity for someone coming out of San Antonio or a newcomer. Mr. Marquez said that was his fIrst thought to build a spec building. He said there's also a drainage issue in which the drainage would have to be extended. Mr. Harris said his concern is how does the foundation raise money. He said that's the first way he could see the foundation raising money that's legitimate and we have experience in doing. He said what the foundation needs to do is raise our bar a little bit, on raising that money. He said the next thing the foundation could do is seek donations from some of the larger firms that we already have here. He said in doing this development it only benefits these fIrms. He said there's land across the street but didn't know what the status was on it. He said it's been platted many years ago and somehow it's in some type of legal situation. He said it's located on the Schertz/Selma side. -5- --~-_._..__.,-- ^".-..--.....-.----...----.. _._._--~.__.._._-_._._- Mr. Sweatt said years ago it was ~~~ d as individual lots the owners have since disbursed and it's been a problem trying to locate all of them. Mr. Harris said the foundation would never be able to locate all of the landowners. He said that if we locate several of the owners and see if they are willing to sell any of the frontage lots. He said if we were able to gain that property and begin building on those frontage lots maybe then some developers might come through and see what we've done and want to build. Mr. Harris said there are a lot of homes going up on Schertz Parkway and there's very little development between Schertz Parkway and IH-35 and no type of convenience service on that side. Mr. Marquez said another good location is the frontage on Wiederstien Road it's a very good piece of property. Mr. Sweatt said the foundation might be asked to do something. Mr. Marquez said part of the problem the landowner is dealing with is the extension of the sewer line although the main is laid out right down the middle of the street. He said it should be fairly easy to put together, it's all down hill and the water runs right along Schertz Parkway. Mr. Marquez said the way you look at these numbers is that you can't have more than $12,000 per acre into a development including the land, streets, water, etc. He said that the owner was right on the edge when doing this. He said that any developer is going to have to deal with this no matter who it is. Mr. Harris said this might spur some development back into that area. He said you could put up a sign that states being developed by Schertz Development Foundation and maybe get a fewer other players on board that are doing this. He said people might start saying let's sell our land to SDF or you may get the realtors who might know who the ghost owners are and start coming forward and letting some names loose. Mr. Marquez said one of the possibilities is if we bought a corner lot and some one built a Tiger Tote or a Conveyance Store, which is needed on that side. He said there's a (TIF) Schertz Parkway Zone may provide some assistance potentially to help them with the sewer lines as a commercial adventure. He said once that sewer line goes in things would start to pop ~p. He said he not sure how he would want things to pop up and thinkSthe foundation should have some control on how things were developed. Mr. Jeffrey's asked the board to consider a Biblical Arts Museum. He said it would be a plus for the City of Schertz. He said he didn't know whether the board would want to spend money on that but it fits within our guidelines of what we're all about. He said if a building or house falls in our lap and we wanted to know what it could be used for then we could consider utilizing it for this purpose. He said if we could keep this concept in mind. -6- Mr. Sweatt said on a similar note a town, center concept at the last Capital Improvement Meeting talked about creating an historical area down around the library refurbishing the fIre station as a bookstore. Mr. Marquez went over some of the highlights of the financial report/budget expenditures, lot sells, marketing expenses, staff overtime, audit dues professional services, legal fees, memberships, Corridor Council dues and taxes. He said that San Antonio is the sponsor this year for the IRDC, which are the Fortune 500 Corporate Real-estate types and they are coming to San Antonio and San Antonio Development Foundation and they are the host city who will be sponsoring them. He said they would be offering us a booth, which is called Allies and will include New Braunfels, Seguin and others that are San Antonio allies they would want us to participate. He said he sent this out and the board can take it out at their convenience. He said he would send them more information. He said IRDC is a very prestigious operation. He said memberships $1,000, Corridor Council dues taxes are estimated at about $800. Ms. Jones asked what did Mr. Marquez do to include Fulbright & Jarwarski. Mr. Harris said we had an expense of over $4,000 last year. Mr. Marquez said that was a different kind of problem last year. Ms. Jones asked that the foundation budget some additional money incase some type of problem occur. Mr. Marquez said we could certainly do that and that he would add $1,000 into the budget. Mr. Harris said it's a good number as long as you have lots to sell that when most of your legal fees occur. Ms. Jones said if we approached Country Side Ceramics to buy their lots back what kind of legal fees would we incur in that. Mr. Marquez said they would probably be minimal because we would try to negotiate it since the two years have already past to try and buy those lots back at what we sold them at and if it's a $1,000 it's too much. Mr. Harris said we've talked about marketing expense and we have $5,000 in the budget for marketing. He asked if the city operate a website. Mr. Sweatt said we're in the process of building one and that the Schertz Development Foundation is included in the website. Mr. Harris said what we might want to look into is a company coming out of San Antonio which cost between $800 to $1,000 dollars will give you four pages. He said you pay $75 dollars a month for the fee for the site but no maintenance fee. He said that as long as they give you the capability to use Internet Publisher, and updating your website you don't have to pay. He said that it's probably something the foundation needs to look into and do something along with city to have away of posting against the city's website for the Schertz Development Foundation website. He said and explain what our criteria is, what we've been doing, and show some -7- pictures of some of the buildings that we've put up this is free marketing for us. He said if we can give $500 for fIreworks why not give $800 - $1,000 to something that's there all the time. Mr. Marquez said that $600 would cover our whole annual operating cost for a whole year. Mr. Harris said if the city already has someone doing a website have Schertz Development Foundation have it's own site. Mr. Marquez said that at last count the city would have least 30 pages. Mr. Marquez said the $5,000 he put in the budget for the IRDC that's not necessarily all for that. He said this could be used for other things. He said he may approach the board later on this year to help assist in the funding of a marketing trip to California with Economic Development Foundation as opposed to the Corridor Council. He said that usually he gets $500 from private industry and $500 from the foundation that's enough to fund the trip. He said foundation may spend a least $5,000 but don't anticipate that but maybe $2,000 - $3,000 may be the maximum. Mr. Harris said that the foundation needs to spend it advertisement money wisely. Mr. Jeffreys motioned to approve the budget, seconded by Mr. Harris, motion carried unanimously. ITEM #6 MEMBERSHIP: Mr. Marquez went over whose membership was coming up for renewal. He said if everyone is in agreement and would like to continue on the Schertz Development Foundation then we can go from there. He said he would check with Mr. Borgfeld to see if he would like to continue on the board. He said Mr. Harris would most likely to be leaving the area so the foundation needs to look at a replacement. Mr. Harris gave notice that he would be leaving the foundation and that the foundation needed to find someone to replace him. He said he would let the foundation know as soon as possible when he would be leaving. Mr. Marquez said the board is appointed by the City Council. He said the foundation is about three months behind schedule in terms of getting that appointment. He said although members can continue on without being re- appointed once appointed you can stay on. He said we could have a reappointment done by City Council if the foundation has no objections. ITEM # 7 COMMENTS FROM BOARD MEMBERS: Ms. Jones asked if the foundation had met in July 1997. She said at that point and time Mr. Boyle was moving forward with his cases. She asked that the foundation check with Mr. Boyle to see where he's at and to let him know -8- the foundation is still on the ball with this property. She said she would like to see him move on it or sell it. Mr. Marquez said we maybe in a situation where the foundation may buy it back. Mr. Harris said he visited Mr. Boyle and no changes have been done since the last meeting. Mr. Sweatt said that Garden Ridge is having a breakfast on March 13, 1998 and has invited the Schertz Development Foundation to attend. ITEM #8 COMMENTS FROM EXECUTIVE DIRECTOR: Mr. Marquez went over the site plans for Serv-Pro. He said Mr. Bremmer who's the owner of Serv-Pro has met all the city requirements in terms of plotting, and planning and zoning, requirements. Ms. Jones asked for a motion to approve the plans for Serv-Pro. Mr. Harris made a motion to approve, seconded by Mr. Jeffreys, motion carried unanimously. ITEM #9 COMMENTS FROM CHAIRMAN: Ms. Jones said let's schedule a meeting for next month so that the foundation can revisit these issues so that we can brainstorm. She said the foundation has gone so long without minutes it's hard to know what's been discussed or passed. She said let's put together some more suggestions of how to generate revenue for the foundation, where we are with Mr. Boyle, and CountrySide. Mr. Harris said the foundation should have a workshop between the other three or four entities. He said we have the same goals. Mr. Sweatt said that's a good idea we're working for the same goal and not working against each other. Mr. Sweatt said it was good having Mr. Harris on the Schertz Development Foundation and that he would surely be missed. ITEM # 1 0 SET NEXT MEETING DATE: Next scheduled meeting will be April 8, 1998. -9- ITEM: # 11 ADJOURN: Meeting was adjourned at 9:30 a.m. Jackie Jones Chairperson -10- Margaret Boyd Recording Secretary