Good morning, everyone. My name is John Baines, and I'm happy to chair this meeting of the
City of Denton Economic Development Partnership Board, and we'd like to welcome the viewing
audience to this meeting. And we have several items on our agenda today, the first of which
is EDP 20-056, which is the approval of the minutes of November 11, 2020. And we'll give
everyone a chance to re-familiarize themselves if needed with the minutes, and then we'll
do a roll call to determine whether they pass or fail.
Chair, I move approval of the minutes as submitted.
We have a motion on the floor to approve the minutes as presented. Do I hear a second?
Second.
We have a second by Mark McClellan. Okay. Is there any discussion of the minutes? Seeing
none and hearing none, we will now do a roll call of all of the voting members. John Baines
votes aye. Jill Jester?
Aye.
Let's see. Jesse Davis?
Aye.
Tony Clark?
Aye.
Lee Ramsey?
Aye.
Martin McClellan?
Aye.
And then we have Steve Edgar joining us. I didn't know if Steve heard that conversation
or not. What is the protocol on that, parliamentarian?
I think Steve's still making his way in.
Yeah, it's okay. If we've got his approval by that, it should be acceptable.
He's not logged in yet, but I didn't know if we needed to wait or just go with what
we have.
If you have a majority vote at this point, you can move forward as approved.
Okay. Thank you. And we'd like to welcome Steve Edgar to the meeting. We will acknowledge
that the minutes are approved unanimously. We're now moving on to the next item on the
agenda, EDP 20-058. We're going to receive a report, hold a discussion, and give staff
direction regarding an incentive application for ranch land foods. And Jessica, who will
be leading that discussion?
So I will be doing the presentation this morning. I do want to let the board know that we are
having some internet issues on our end. So if I freeze or for some reason cut out, someone
flag us down or stop me so that we know. I'm able to watch myself, but I can't really see
anything on my own screen right now. So this is going to be an interesting presentation.
But before we get started, I also want to let you know that we have Ken Davis on the
line with us. Ken Davis is the CEO of ranch land foods. And so after I finish my presentation,
Ken will be available to answer questions about this project. And this project also
includes a discussion about the DME Economic Growth Writer. And so we also have Elizabeth
Ruiz from DME on the phone with us. She's going to be able to answer all of those questions
that I wouldn't be able to related to electric. So with that, I'm going to share my screen.
All right. Looks like we've got that working. All right. So for today, the board's consideration
today is an incentive application that we received from ranch land foods. Ranch land
is a food production and brand development company based out of Arizona. They're known
for raising cruelty free cattle and using sustainable ranching practices. They produce
all natural certified grass fed and grass finished Angus beef products, as well as high
quality poultry and pork products. They ship thousands of packages weekly to customers
nationwide, particularly customers that are looking for those all natural healthy meat
products. They also serve as a third party logistics e-commerce fulfillment center for
other companies. They are seeking to relocate their corporate headquarters in distribution
and to north central Texas. Denton is one location that they are considering. And for
this project, we are in direct competition with other cities in the Metroplex. And branch
land is interested in Denton, particularly because of our location and their ability
to expand their regional services. So the site and project itself, again, is a relocation
of a corporate headquarters and distribution center that will be shipping food and meat
products nationwide. It will serve as the centralized hub for their 3PL clients as well
as some of their product lines. The facility that they are looking at is the old Miller
facility as we know it on the right at the split of I-35 E&W right here that you see
on the screen. And the goals that they express to us in their application is that they're
seeking an incentive to reduce the impact of relocation and site improvements costs.
They're making a significant amount of improvements to that facility that we'll talk about later,
but also to encourage high wage job creation through their company's expansion. As we do
with any project, we review this for compliance with our incentive policy. I kept it a little
bit short this time, so the only provisions you'll see on the screen are the ones that
apply specifically to this project. So in terms of our general and priority considerations,
this project does create quality jobs and it is a targeted sector as they are a significant
consumer of municipal utilities. In terms of our priority considerations, they did meet
seven of our priority considerations. In this case, which we'll get into a little bit later,
we look at really increasing jobs with wages above Ditton County's median and a high number
of jobs paying $75,000 or more. For this project, we are proposing a chapter 380 incentive and
with that, we wanted to make sure that we were in compliance with the chapter 380 policy.
So this is a targeted industry cluster as a high user of municipal utilities. This would
also meet the provision that allows us to use cash incentives when we are in direct competition
with another city for a project, and again, increasing the percentage of jobs paying $75,000
or more. In terms of our other considerations, this project does have a net number of new
jobs with wages above Ditton County's median, which I break down further in the presentation.
And we'd also be looking at using the investment fund. They do meet two of the three criteria.
They meet the higher wage or knowledge-based jobs criteria as well as the industry sector
target criteria. So the application that was submitted by Ranchland Foods, again, a relocation
of a corporate headquarters and distribution hub, they are a targeted sector. They are
investing $5.7 million in capital improvements or business personal property at the location.
Because the building is existing, it already has a property value of about $3.9 million,
so they would be investing an additional $5.7 million above that. They are relocating or
creating 140 total jobs with a weighted average of the jobs being $69,893 and total payroll
at year 10, so full kind of growth and build-up of almost $10 million. I'm going to break
down those jobs and job numbers a little bit further. This is something that you guys have
been seeing as we've worked through a number of job grants. This one actually looks a lot
more similar to our job grants that we've been looking at. So here you see the major
categories of jobs and the estimated number. Here in the light blue line, you'll see the
total jobs for each individual year. In this darker blue line, you'll see the cumulative
jobs as we go. So about year eight, they estimate that they'll hit that 140 jobs. And then here's
the growth in the estimated annual payroll. So we're looking at starting around $4.7 million
and then eventually growing to that $9.8 million. Breaking down those average wages by job type,
again, we know that the weighted average is important. So here's the general average wage
by the sort of job category. So you'll see that almost all of the jobs, with the exception
of the administrative and warehouse staff, exceed that $75,000 number. And what we've
broken down here is that means 80 jobs of the 140 or 57% are jobs that are above $75,000.
90 jobs or 64% exceed the Denton County median and 80 jobs or 57% exceed the Denton County
average. So in terms of the proposal that we've developed, again, very similar to the
last proposal that you've seen for us, it includes a chapter 380 component that has
three sub components, a performance based relocation incentive. That is to assist the
company in their relocation expenses and to an incentive on their site upgrades that they're
making. It also includes a stratified job based incentive that includes the residency
bonus as you've seen before for that additional consideration for employees living in Denton.
In total, the chapter 380 portion of this incentive is $218,500. The other components
for this particular project is that because they are a significant user of municipal utilities,
if they meet that one megawatt threshold on demand, they would be eligible for the DME
economic growth rider. We've taken a look at the preliminary economic, excuse me, electric
data that the company has provided. We think they'd be right around that one megawatt demand.
And if they do, the value of that demand growth rider for them would be $197,000. This project
also meets the general criteria of the Texas enterprise zone program. That is a state approval
process. But because they do meet those criteria and we do have eligible nominations, we could
nominate and we do, staff does recommend nominating this company to the Texas enterprise zone
program. I'm going to break it down a little bit further for you in terms of the incentive
versus the ROI. Again, what you'll see up here in this top column or these top rows
here are the incentive numbers. We don't include the Texas enterprise zone program number that's
hard to quantify. And also that being a separate approval process outside of our control, we're
not looking at ROI from that. That also goes straight from the state to the company. So
we're only looking at the city involved portions of this incentive, but we also look at property
taxes that this project would generate over 10 years, sales taxes that this project would
generate over 10 years and then the additional increasing ratio of the demand revenue to
DME netted of the incentive of the economic growth rider. And with that, we have evaluated
an ROI for this project. You'll see the gross and net revenue on your screen. We did both
a five-year and a 10-year analysis. And we have found that this project has an ROI of
about 6.47, which means for about every dollar that we invest in this incentive, we would
see about $6 and 50 cents coming back to the city directly in terms of our fiscal impact.
So I will have one last slide on this project in terms of both qualitative and quantitative
benefits. So in terms of our qualitative benefits, again, this is a quality job creator project.
This company has also indicated a strong desire to work with the universities, particularly
the logistics program at UNT, to have a pipeline, internships, but really strong, indicated
a strong desire to connect with the universities. This is the recruitment and expansion of a
company, so a little bit of a two for the price of one on this project. And with this
particular project, it will occupy a currently vacant building, which is great, especially
a building that is highly visible. In terms of the quantitative benefits, as I mentioned
before, it has an estimated ROI of about 6.47. And then I've broken down the 10-year revenues
there for you. In terms of economic impact, we just finished our model this morning, but
we did find that over a 10-year period, in addition to the direct revenue to the city,
when we're looking at discretionary spending of employees for this company, we would see
an additional $553,000 injected into our local economy over 10 years, which would actually
increase the economic ROI to about 11.67. And with that, just a quick summary before
we start our discussion. This would be a five-year performance-based incentive, very similar
to ones that we've seen before, the relocation grant, stratified job-based grant, and a residency
bonus. All of those would be included in a Chapter 380 agreement. We would also recommend
nominating this company to the Texas Enterprise Zone program, with our staff assisting however
they need us in developing and submitting that application, and then also consideration
of the DME Economic Growth Rider. And with that, I will pause for questions.
Do we have any questions from the floor? I have a few, but I didn't want to be the first.
Okay. Counselor Jester has a question, please.
Hi, thank you. So this question is for Ken Davis. Mr. Davis, can you hear me?
I can. Thank you.
All right. Well, first of all, thank you for being with us today to talk about this project.
Obviously, you've got a really great company, and we think we've got a really great city,
which is why we're all here today. One thing I did not see in the application that typically
we see talked about a little bit is community involvement. That's something that's very
big here in Denton, not only with the Chamber and supporting other businesses, but other
nonprofit. Can you talk a little bit about what your current involvement is, and what
is your intention, or do you have a history of community involvement, and what that might
look like in the future if you end up coming to Denton?
Yeah, very good question. As a matter of fact, that's a point that we actually discussed
with Jessica and her team. We are highly involved in our community in Arizona, mostly with food
bank organizations within the city. Obviously, because we're in the food industry, helping
support not only financially, but also with products and time with our employees and assisting
with community involvement. It's definitely something that we are very strongly involved
with and something we see ourselves involved with in the city of Denton if we happen to
relocate here. We made a point, actually, as a company to bring that up to the group
because we wanted to find out who else was in the city, what organizations that are already
here so that we can be a part of that. That's great, and that's great to hear. Again, I
think obviously the plans that you have for relocation and expansion are very exciting
and what you're going to be doing wherever you end up moving to. We certainly appreciate
your interest here in Denton and think that it seems like a perfect fit for what you have
planned. As a member of the Chamber of Commerce, I hope if you do land here that you will join
the Chamber, and we look forward to your involvement in the community. Thank you, Mr. Davis.
Yes, absolutely. Thank you.
Do we have any other questions from the floor? I see Lee Ramsey, please, and Jamie Wilson.
Mr. Davis, thank you guys. We're excited that you guys are looking at the city of Denton.
Just one quick question. How many square feet is that existing building?
It currently comes in right under 64,000 square feet. However, there is another 11,000 square
feet that we're converting that's in a mezzanine to be the occupied space as well. So I think
it will end up closer to 70,000 by the time it's all said and done.
How much of that will be office and how much will be warehouse?
The office portion of that right now is right at about 10,000 square feet, a little under.
If we utilize the mezzanine space as office space, of course, that would increase that
by another 10,000. Our primary objective obviously with the office space, of course, as COVID
settles back down or whatever that process is, it is to house the majority of our team
in and on site. We do, of course, remotely now, but the purposes of that particular building
is because we do have a large staff that we'll be occupying on site.
Perfect. You answered my next question. So thank you. We're excited you guys are considering
Denton and thank you. I think you guys are a good fit for Denton. So thank you.
Thank you, Mr. Ramsey. We have Superintendent Wilson and then we have Mark McCullin next.
No specific questions, Mr. Baines and Chairman. I just wanted to say we're excited about the
opportunity to see additional resources such as this come to our community and have a great
community and look forward to having future partnerships if this does move forward. So
thank you, Mr. Baines. Thank you, Superintendent. Mr. McCullin?
A quick question about the staff that will be working at this location. Can you give
us a little bit of sense of the nature of that? Is it the type of work they'd be doing,
you know, hands on if you would? Sure. I'll start at our executive level staff.
Most of these positions will not be coming from Arizona. Most of them are being created
here by acquiring other high level executives from other food based companies. So this base
will serve as our corporate operations for nationwide. So we'll have a strong executive
staff that of course will operate the day to day operations as well as expansion of
the business, investment in other farmland within this North Texas region and the possibility
of another facility close to where we would be located if we're in Denton. The other positions
are all mostly in the logistics with our 3PL division as well as our direct to consumer
fulfillment. So we have several positions that will be in the warehouse, whether they're
pulling and packing orders every day. We have a wholesale component where we deliver to
hospitality and food service, restaurants, hotels within the region, also out of state.
So the components of most of the workforce is primarily driven around logistics. At this
facility will be no production of food. It'll mostly be in handling, shipping, delivering
by trucks, that type of thing. Well, Kenny, University of North Texas really
would look forward to an opportunity to partner with you. We certainly have a world class
logistics team here. It's one of the best, certainly in the state, if not the region.
And we have a lot of other technical capabilities too, including some around the food area that
happens to be my personal focus is food science. So anyways, we hope that we can partner with
you in terms of enhancing both operations as well as your search for a workforce.
Absolutely. It's something we very strongly are consuming because of the university. We
work very closely with the university in our city in Arizona and would like to do the same
with UNT as well. Great.
Thank you, Mark. I see Dr. Wilson, you have your hand still up or is that just wanting
to take down? It's still showing as your hand is raised. So, okay. I have four questions,
Mr. Davis. Does anyone else have questions before I ask mine? I didn't want to take too
much, but I did have four. The first one, you don't mind me calling you Kenny, do you?
No, that's fine. No problem.
My first question has to do about being certified as a practicing, how would you say, my family
and I are in the nutrition related lifestyle. And sometimes that certification comes and
goes. Have you ever had any issues with that or has that been a consistent for your company?
Since the very beginning, we sought out to get these designations and certifications
based on our product, what we produce. Initially from our own ranches and then our ranching
partners and farms that we work with. 90% of all of our product that has been certified
from the beginning, whether it's certified grass fed, certified organic or certified
non-gmo, we've held those from day one. We've never lost those certifications. We do obviously,
if you know, have to reapply. And it's third party validated. So, we're tested, our animals
are tested, our ranches are tested, and it's a designation we've never lost.
Thank you, Kenny. My second question has to do with your overall operation. Where you
process your meats, where are those locations? Since this will mainly be an administrative
office, what do you do your processing? Very good question. So, we process depending on
the line of products or the line of protein in three different locations. Most of our
organic and grass fed stuff at this time is produced in Raleigh, California at a facility
called OWB, One World Beef. They have handled the harvesting and further processing or fabrication
of our product and then we move that product. Currently, right now, we'll be moving that
product to Texas after this first quarter to be further processed into cuts for food
service or consumers. We have several ranching partners here in North Texas as well in the
Panhandle in the Amarillo region. We've also are purchasing a large ranch in the North
Texas, Oklahoma region to start running cattle in this area as well because we process in
Fort Worth our Texas animals at the Fort Worth Meat Packers facility. So, we regionally have
been doing that for a while and what has prompted us to want to come to North Central Texas,
obviously to be a little closer to the production of our product and to have access to our warehouse
and distribution for a more centralized location for shipping. I will tell you that we are
in the company already in the discussions of if we land here in Denton or whatever city
we land in, we do know that we will be building a food processing facility close to whatever
distribution facility that we have. That's a necessity that we already know as a company,
an investment that we're already prepared to make, but it would be something we'd be
building out new. Thank you Kenny for such an excellent answer.
The third of my four questions is this, what's your timetable right now for making that decision
and making the move? Yeah, very good question. I think I told Jessica, we are prepared to
begin this move starting in mid-January. We've been making decisions here fairly quickly.
We're down to probably within the next week or so. We understand that the different councils
or groups or boards have to meet, but we plan on being operational as far as having jobs
there and hiring by the first part of February. We'll bring in some of our executive staff
in January. I've already hired several people or they'll be making their transition I should
say from their current employers in January to our company. We hope to be operational
by February. Thank you Kenny. My last question is this.
It's kind of a compound question. How many other suitors do you have for your relocation?
What strikes you as Denton being the best place for you? What attracts you the most
here? Good question. We have currently one other
strong suitor. We initially started looking at the four different site locations. We're
down to just Denton and another city of course in this area. I will say that Denton is favorable
to us because of its unique location for this facility and the ability to be able to expand.
We feel we're a little bit landlocked in the other facility or location. Denton gives us
access to both the east corridor of the Metroplex and of course the west corridor. Being in
that location, being able to go 35 to Dallas and 35 to Fort Worth from our food service
side and our wholesale side that we deliver to restaurants and hotels, etc., makes it
very, very convenient. I'm not sure if Jessica told you, my family
is originally from this area, from the North Texas area. I've had two kids that have gone
to UNT. So Denton holds a special place just because of our family, but also mostly because
of the location of the facility and the ability to be able to expand.
Kenny, thank you for such a wonderful answer and I'll give you personally five stickers.
How about that? Great answer. Did anyone else have questions for Mr. Davis?
Okay, Jessica, we'll give it back to you, ma'am. I will add that if the Economic Development
Partnership Board moves this forward, we do have this scheduled to accommodate Mr. Davis's
very quick timeline for City Council at their first meeting in January. So if the Board
does choose to move it forward, we are making every effort we can to meet his timeline.
But with that, I welcome any questions from the Board regarding the proposal or if any
Board member wants to make a motion. Any Board members? Okay, I see Jill Jester's
hand. Counselor? Thank you, Chair. I would like to give a
shout out to Ms. Rogers and her staff. I thought this was very well laid out. I thought the
combination was very creative in trying to piece together the absolute best proposal
that we can make and present to Council. So I just want to say thank you for all of the
background work and I found it very, very helpful and laid out in a way that was easy
to understand. And so I just want to say really excellent work there. And with that at this
time, I will make a motion that we accept and recommend as the staff has summarized
and presented. So we have a recommendation to accept the
incentive application for ranch land foods. Do we have a second?
I'll second. Lee Ramsey seconds. Any further discussion
from the Partnership Board? Seeing none and hearing none, we will now
do a roll call once again. We'll start with Steve Edgar.
Aye. Thank you. Jimmy Mejia.
I recommend it as well. Thank you, Jimmy. Mark McClellan.
Aye. Lee Ramsey.
Aye. Tony Clark.
Exciting aye. Jesse Davis.
Aye. Gil Jester.
Aye. And John Baines says aye and it looks like
we have a unanimous recommendation to accept the application for ranch land foods.
So concluding items, do we have any concluding items we need to address today, Jessica?
I do not have any. I will say your staff reports are not in here as typical and that's because
we are working on a new report that hopefully you will see for the first time in January.
So we're very excited to have a revamped and refreshed report for you.
Thank you and it's the season to be jolly. We want to wish everyone a happy holiday season
and we'll entertain a motion to adjourn the meeting if there's nothing further.
Move adjournment. Do we have a motion?
Second. Okay. All in favor of adjourning, signify
by saying aye. Aye.
Aye. Okay. Jessica, will that do? We didn't do a roll
call. Is that okay? We're good.
All right. Thank you all for your time and thank you to all the staff and our city manager
and everyone for making this a great proposal and recommendation for our city. Everyone
have a great one. Merry Christmas and happy new year.
Merry Christmas, everybody.