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HomeMy WebLinkAbout2006/10/31-Minutes-Fort Worth Local Development Corporation (FWLDC) CITY OF FORT WORTH, TEXAS r FORT WORTH LOCAL DEVELOPMENT CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY, OCTOBER 31, 2006 Present: President Wendy Davis Vice President Chuck Silcox Treasurer Salvador Espino Director Mike Moncrief Director Danny Scarth Director Jungus Jordan Director Carter Burdette (left the meeting at 4:00 p.m.) Director Kathleen Hicks (arrived at 3:29 p.m.) Absent: Director Donavan Wheatfall City staff• Assistant City Manager Dale Fisseler Assistant City Attorney Peter Vaky Assistant Citv Attorney Cvnthia Garcia City Secretary Marty Hendrix Economic and Community Development Director Tom Higgins Assistant Director of Economic and Community Development Jay Chapa Ossana Hermosillo, Economic Development Specialist Henry] Day, Senior Management Analyst Guest: Dwayne Moyers, with American Ironhorse Other Cit r staff in attendance included: City Manager Charles Bos: eii (arrived at 3, P,m. Clay Attorney David Yett Karen Montgomery, Assistant City Mana er. ei 1`lnanci l Officer (arrived at :45 p-m, CITY OF FORT WORTH, TEVkS FORT WORTH LOCAL DEVELOPMENT CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY, OCTOBER 31, 2006 Page 2 Call to Order (Agenda Item I) With a quorum of the Beard Members present, President Davis called the meeting to order for the Board of Directors of the Fort Worth Local Development Corporation (LDC) at 3:26 p.m. on Tuesday, October 31, 2006, in the Pre-Council Chamber of the Fort Worth Municipal Building, 1000 Throckmorton, Fort Worth, Texas. Approval of Minutes of November 8, 2005 Meeting; (Agenda Item H) President Davis opened the floor for a motion on the minutes. MOTION: Upon a motion made by Director Moncrief and seconded by Director Espino, the Corporation Board voted seven (7) "ayes" and zero (0) "nays", with Directors Wheatfall absent and Director Hicks temporarily absent, to approve the Minutes of the November 8, 2005 meeting of the Board of Directors of the Fort Worth Local Development Corporation. The motion carried. Executive Session (Agenda Item HI) In accordance with Chapter 551 of the Texas Government Code, the Fort Worth Local Development Corporation Board convened into Executive Session at 3.27 p.m. in the Pre- Council Chamber of the Fort Worth City Hall, 1000 Throckmorton, in order to deliberate the purchase, sale, lease or value of real property in accordance with Section 551.072 of the Texas Government Code. Deliberation in an open meeting would have a detrimental effect on the position of the LDC in negotiations with a third party. (Director Kathleen Hicks arrived at the meeting.) The Executive Session was adjourned at 3;40 p.m, a President Davis reconvened the called -special pedal etin of the Fort Worth Lo call Development Corporation Board at 3:40 p.m Consideration of Resolution Authorizing the Transfer of Up to 55,000 to the City, of Fort Worth in Order to Fund a Special Trust Fund for FV 06#07 TIF Administration n by the Economic and Community Develop ent � (Agenda Item 1 °-sl All CITY OF FORT WORTH, TEXAS 0- FORT WORTH LOCAL DEVELOPMENT CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY, OCTOBER 31, 2006 Page 3 Director of Economic and Community Development Tom Higgins reviewed for the Board the previous action by the LDC in November of 2004 to approve interim financing to support some of the costs to fund two staff positions, one managerial and one clerical, which support the Corporation and TIF's functions. He stated that they charge the TIF's revenues for these administration charges. He stated that after collecting the available funding, they are short about $5,000 to fund the positions. He then reviewed the contents of the proposed resolution and explained that the $5,000 was needed to maintain the two staff positions in the Economic & Community Development Department. He stated that they will focus on managing the daily operations of the Corporation and the other special districts and entities established by the City for economic development purposes. MOTION: Upon a motion made by Director Hicks and seconded by Director Espino, the Corporation Board voted eight (8) "ayes" and zero (0) "nays" to approve the Resolution dated October 3)1, 2006, authorizing the payment of$5,000 to the City in order to maintain two staff positions in the Economic & Community A Development Department which will focus on managing the daily operations of the Corporation and other special districts and entities established by the City for economic development purposes. The motion carried. Consideration of Lease Amendment with American IronHorse Motorcycle Company, Inc., located at 4600 Blue Mound Road, Pertaining To Rental Provisions. (Agenda Item IV-B) Assistant City Attorney Cynthia Garcia spoke before the Board on the lease amendment with American IronHorse Motorcycle Company, Inc., located at 4600 Blue Mound Road, pertaining to rental provisions. Mrs. Garcia provided the history of the property as follows: Lease began on June 1, 1999 between Fort Worth Industrial Development, Inc,,, and American IronHorse, Primary Terrin olf 5 years and 2 options to renew for additional five year periods, ffi I st Renewal Term rent - $1.25 per square foot Local Development Com,oration receives $24,699.69 per month She then presented the terms of their request as follows- # Six month deli,_rraf otfrc'nt beginniing No,,%ember 1. 2-'0006, CITY OF FORT WORTH, TEXAS FORT WORTH LOCAL DEVELOPMENT CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY, OCTOBER 31, 2006 Page 4 Consideration of Lease Amendment with American IronHorse Motorcycle Company, Inc., located at 4600 Blue Mound Read, Pertaining To Rental Provisions. cont'd) {Agenda Item IV-B} • By May 1, 2007, all deferred rent shall be due and payable. • By April 1, 2007, tenant will have chosen to either pay past due rent or negotiate a lease amendment to construct and complete capital improvements approved by the LDC and cost of environmental assessment. There was discussion by the Directors on the need for collateral and whether the bank would allow for the Local Development Corporation to be the second lien position on their financial holdings just in case they are not able to acquire the financing necessary before the end of the six-month period of time. Director Espino requested that a representative from American lronHorse speak before the Board. Dwayne Moyers, with American lronhorse was present and spoke before the Board in response to their concerns. President Davis spoke about the value of the company to the community and the jobs that they provide for their employees, particularly for employees that are citizens of Fort Worth. She spoke about including a particular number of employees, who are residents of the Cite, in the agreement as is done in other economic development agreements. r Mr. Moyers spoke before the Board regarding the second lien position. He advised that he had spoken to their primary lender, which was Textron Financial, who was the lender on their dealership. He pointed out they are the company that approved their $15,000,000 credit line for the company with the contingency of capital raised by the company. He pointed out that they had indicated that they would not give the second lien position to the LDC. He pointed out that since the LDC is the landowner and a creditor, the LDC would be in a second lien position anyway. He then spoke to the economic development agreement. He stated that they are not going to take their business elsewhere. He stated. that they would be happy to enter into the agreement regarding the employees. He explained that their employee base is dawn to 215 employees based on the do,, nt rn in the economy, He spoke about their future ro h: H spoke about their plans for other dealerships. At the request of Director Moncrief, Mr. Movers advised of their new product line and high end motorcycle called the " larr mer"s which will cost $39,000, He stated that it is a very revolutionary motorcycle in the market. He spoke about a recent article in a magazine featuring the otor y l and the company end thaA t1 ill have e limited s f 00 € n.; He Ik spoke abi ut when the €al.'ota a xcl,. will c_:.=,.fit ff the production line, f x : that there CITY OF FORT 'WORTH, TEXAS f FORT WORTH LOCAL DEVELOPMENT CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY, OCTOBER 31, 2006 Page 5 Consideration of Lease Amendment with American IronHorse Motorcycle Company, Inc., located at 3600 Blue Mound Road, pertaining to rental provisions. (cont'd) (Agenda Item IV•B) had been three prototypes and that the first one came off of the line last week. He added that they would build 90 units between now and January. Director Scarth asked about their demographics, including logistics, the current interest rates and gas prices and how these would affect their motorcycle business. He stated it sounds like they are depending on new and improved inventory and products and a growing dealer network to keep them in the business. Mr. Moyers pointed out that their demographics are males that make over $1 00,000 per year. He stated that typically they are entrepreneurs. He provided further information on their customer base and information on the competition company Harley Davidson. He then spoke Ad z about their strategy for building their company and dealerships. There was discussion on whether their dealerships were exclusive or if Harley Davidson also sold their product. Director Espino spoke about the Board of Directors' concerns and if the market does not turn for the betterment of the company and the Local Development Corporation is out the money for the six-month deferral. He asked about their ability to provide monthly financials and whether this issue should be revisited in three months. He stated the LDC wanted the opportunity to look and revisit the issue. He talked about the fiduciary responsibility of the Local Development Corporation and their interest to protect the jobs provided at the company. He talked about the approval of the rent deferral and the potential of 150 employees being laid off and whether it can be tied to the rent deferral. He questioned whether the rent deferral then needed to be as high as requested or lowered. Mr. Moyers spoke about not being able to trim their business down to 50 employees. He talked about cutting costs in other gays, Director ctor Bu dett stated that he was reluctant to approve the request as there was no collateral. He aided, on the other Band, that he felt the LDS did riot gain anything by not granting this extension, He pointed out that if the LDC has someone that is in arrears, then the LDC will have to do something to get them out of the building. deal with an empty building and find another lessee. He concluded that he fell it was worth the effort bv the LDC. CITY OF FORT WORTH, TEXAS FORT WORTH LOCAL DEVELOPMENT CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY, OCTOBER 31,2006 Page 6 Consideration of Lease Amendment with American IronHorse Motorcycle Company, Inc., located at 4600 Blue Mound Road, Pertaining To Rental Provisions. (cont'd) (Agenda Item IV-B) MOTION: Upon a motion made by Director Burdette and seconded by Director Esping, the Corporation Board voted eight (8) "ayes" and zero (0) .nays". with Director Wheatfall absent, to approve the six month deferral of rent beginning November 1, 2006. The motion carried, President Davis spoke to Mr. Movers about the lien position and pointed out that she can understand the reason they are concerned about the questioning of the lien positions. She requested that the Legal Department prepare legal documents that would place the LDC in the second lien position. She felt the LDC needed to make this attempt in order to fulfill the LDC's fiduciary obligations. Mr. Moyers expressed his concern with that direction as he indicated that the lending company would charge American Ironhorse for an amendment change. He added that the amount could be up to or more than $25,000. Consideration of Renewal and Amendment of the Lease with Wackenhut Corrections Corp., Located at 4700 Blue Mound Road (Agenda Item IV-C) (Director Carter Burdette left the meeting at 4:00 pm.) Assistant City Attorney Cynthia Garcia spoke before the Board of Directors on the history of the property as follows: Lease began on October 1, 1996 between Fort Worth Industrial Development, Inc., and Wackenhut Corrections Corporation. * Primary Term of 5 years and 35 options io reenew for additional five yea.- ea iods, * nd Renewal Term began on October 1, 21006, with rent at $1.5,782.1 per month She reviewed the site plan of the property and described the location. She explained that originally the lease had no legal description and when one was added it showed all 50 acres and thus there is a need to fix the legal description and a renewal of the lease to add the correct legal description. CITY OF FORT WORTH, TEXAS FORT WORTH LOCAL DEVELOPMENT CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY, OCTOBER 31, 2406 Page 7 Consideration of Renewal and Amendment of the Lease with 'Wackenhut Corrections Corp„ located at 4700 Blue Mound Road (Agenda Item IV-C) She advised of the request before the Beard as follows: • Amend the Lease to correctly identify the leased property. • Renew the Lease for the 2nd renewal term Director Moncrief questioned if the lease included all 50 acres. Mrs. Garcia clarified that it was only to be Lot 1 B and not the entire 50 acres. Director Moncrief questioned if this would allow them to build more on the property. Mrs. Garcia clarified that was the concern; however, Wackenhut Corrections Corporation thought that they were only leasing Lot 1 B as well and they are willing to fix the legal description. She pointed out again that the Lease Agreement has the entire 50 acres attached to the lease, which is incorrect and needs to be fixed. AM- 1101- President Davis asked how is their rental rate compare to what is being seen out in that area. Mrs. Garcia stated that the rent just went up 2.5%; however, she does not have the square footage information to provide the exact lease figures. Mrs. Garcia stated that they have an automatic right to renew and the only way the City could terminate the lease would be if they were not paying their rental fees; however, they are paying them and they are not in default. President Davis requested further clarification on the ability to increase the rental rates with the automatic renewal. There was further discussion about the increase in the rental rates and Mrs. Garcia advised that the rental rates were determined for the primary term and the extended term. She clarified that it is suppose to go up 2.5% each year. President Davis asked when the LDC would have the opportunity to review those rates again. Assistant City Attorney Garcia stated that it would not be until 2016. She added that the lease will terminate at 2016. President Davis clarified again that the action before the Board was the renewal of the second lease with the correction of the legal description to the lease agreement, MOTION: 'Upon a motion made by Director Esp no and s cond d by Director 11 s, the Corporation Beard voted see (") a¢ sx and zero (0 'ras s , with Directors Wh a al i and Burde to absent, to amend the Lease with Wackenhut Corrections Corporation, located at 4700 blue Mound Road, to correctly identity the leased property as Lot 1 B and to renew the Lease for the second re newal terra, The motion carried. CITY OF FORT WORTH, TEXAS w-, N, FORT WORTH LOCAL DEVELOPMENT CORPORATION Ig, CALLED—SPECIAL SESSION MINUTES TUESDAY, OCTOBER 31, 2006 Page 8 Authorize Payment of Legal Fees to Kelly, Hart & Hallman for Assistance in Completing Audit of the Corporation of Internal Revenue Service (Agenda Item IV- D) Assistant City Attorney Peter Vaky spoke before the Board of Directors on the authorization of payment of legal fees to Kelly, Hart and Hallman for their assistance in completing the audit of the Corporation for the Internal Revenue Senice, He pointed out that the Corporation is a 501c(3) Corporation and not a private foundation. He talked about the audits of the Local Development Corporation to determine compliance with the Internal Revenue Code. He stated that the most recent audit was undertaken in August and September of 2006 and that the verbal message received from the auditor was that everything was in order. He stated that the firm of Kelly, Hart and Hallman was needed for legal assistant and the necessary payment was $236.95 to them for their services. MOTION: Upon a motion made by Director Moncrief and seconded by Director Scarth, the Corporation Board voted seven (7) "ayes" and zero (0) "nays", with Directors Wheatfall and Burdette absent, to approve the payment of legal fees in the amount of$236.95 to Kelly, Hart & Hallman for their assistance in completing the audit of the Fort Worth Local Development Corporation by the Internal Revenue Service. The motion carried. Adjourn (Agenda Item V) With no further business before the Board, President Davis adjourned the called — special session of the Fort Worth Local Development Corporation at 4:06 p.m. on Tuesday, October 31, 1006. These minutes approved by the Fort Worth Local Development Corporation on the 'rd day ofApril, 2007. APPROVED- x Wendy R, Dav =President CITY OF FORT FORTH, TEXAS FORT WORTH LOCAL DEVELOPMENT CORPORATION CALLED—SPECIAL SESSION MINUTES TUESDAY, OCTOBER 31, 2006 Page 9 ATTEST: Secretary Prepared and respectfully submitted by: Marty Hendrix, RMCIMMC City Secretary r lool fM