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>> Good afternoon.
I'm going to be talking to you today about total impact,
and this is a model that we've recently implemented.
And I'll be giving you a general overview, and you're going
to be looking at this model for two of the projects today.
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So a lot of the members here are new, so I just wanted --
thought it was important to point out the prior practice.
So the prior practice was performed by myself using various
scenarios, and these were entered into an Excel spreadsheet
, basically how much the company would receive, what
percentage, and what that would look like over a term, and
then also the revenue to the city over that same term.
I also used a model from UNT's Center for Economic
Development and Research, and that took into account annual
payroll, discretionary income, and added a multiplier to
come out with the sales tax impact.
And that's a bit antiquated.
This was used -- it came about when Terry Clower was here.
And then also used JobZQ. This is a labor tool that we use
that has a very minor way to calculate indirect and induced
labor.
And that was the prior practice.
And then this is total impact, and this summarizes some of
the things that we can do with total impact.
It's an Austin-based from Impact Data Source tool.
And it's specific to economic development, and it's fully
customizable.
We brought our finest department in, our utility
departments in.
We had it customized to include our turfs.
We did a lot of work to make it unique and customized to
Denton.
And then it's able to perform economic and fiscal impact
analysis as well as incentive analysis.
And it's very inefficient.
I'm not pulling from three different things. It's all in
one.
So now we're going to look at an event.
An event can be an expansion or a contraction.
So that would be a new company or a closure for it.
But for this discussion, we're going to talk about a new or
expansion project.
So economic impact, the direct impact would be the jobs and
the sales output directly created by the event.
So if a company came in with 75 employees, your direct
impact would be 75 employees.
And then we're going to look at the ripple effects.
So under the ripple effects, we have our indirect impact,
the jobs and sales output, companies supplying goods and
services to the new expanded industry.
And this would be in the case of maybe a new construction
firm comes in and they're buying steel from a local
supplier, or they might use a local accounting firm for
services.
And then we go on to the induced impact, the jobs and sales
output created when new employees from the new or expanded
firm spend their wages at local establishments.
An example would be on a restaurant that is caused to hire
more employees because of maybe a new manufacturing plant
or other development.
And then the fiscal impacts, we've got the tax revenue that
's generated by the new or expanded project.
This could include businesses and households.
So you assume that a certain number of workers that are
relocating are going to purchase households, and the model
takes that into account.
And then the demand on government services, so your police,
your fire, your libraries, for example, and then the cost
for providing utility services.
And this is the first time we've been able to capture that.
So we're really excited about getting able to look at that
as well.
Erica, I have a question.
Would you prefer we wait until the end or as you're going
through?
It's fine.
Okay. In looking at this project or this software, it
impresses me that you have to input quite a bit of data in
order to allow for these economic impacts to show the
actual effect.
So can you give us an idea of what kind of data you have to
input into the system before the system becomes relevant?
Sure. We've got a project data page, and you can put a
summary description.
You'll see that on your one page summaries. It'll print out
for you.
You put in if it's in a TURS, if it's not in a TURS, if it
's a new development, a relocation, or if it's an expansion,
if they already exist here in the city.
So there's different forms for that that populate based on
what you check.
You enter the valuation, the estimated valuation.
If they're already locating here, you enter their current
valuation as well.
Property valuation.
So that would be your ad valorem.
It has inputs for the amount of sales, sales taxes spent by
the company.
It also has inputs for the number of out of town guests
that you may have for trainings or just to come in and view
the facility.
So it's trying to do the heads and beds and calculate some
of those impacts for sales tax.
That's where some of the multipliers come in. Jobs, of
course.
You enter the jobs and you're able to do it at 10 year
increments.
So we set up our model for 10 years and you can add the
jobs as they come online.
Same with the value.
So you might have improvements and then BPP.
They might be having an expansion for your business
personal property.
You might see it come on in later years.
So it takes into account a lot more than you can physically
do just with an Excel spreadsheet.
It takes a lot into the model and puts a really good output
.
And then you also have different sheets.
And another one of the sheets is the public investment.
So you can put in your DME revenue.
You can also put in your permit fees, what your estimated
permit fees are.
And we use open counter to estimate that.
And then it calculates all that and inputs it into the
model.
The question I'm having is kind of a fact checker kind of a
deal where some people may come in with a lot of blue sky,
you know, and very optimistic projections.
Sure.
So how do you make sure that we're not just, you know,
drinking blue water?
One of the things that we changed in our application, we
used to have a Word document application.
We now have an Excel application.
We asked for your table.
We have a separate table for your investment and then the
table for your estimated value.
And we do inform our applicants that they will be held to
threshold based on that value.
Now, your investment is where you show your leveraging
because there are certain things that you want to include.
It also includes your soft cost, your engineering, your
grading, some of the other things in there.
But it allows them to explain that.
And while we still are looking at the valuation, what we
think that will be the estimated valuation.
Thank you very much.
John, I also want to let you know, in addition to what
Erica said about letting our applicants know that we need
them to give us their best realistic projections,
because that's going to be the basis for their contract.
And there are thresholds that must be met per the contract.
And if they are not, then incentives are not received.
So it's a communication with the applicants from the
beginning about what the expectation is as we help them get
their application completed.
Thank you very much.
You're welcome.
Now I'd like to talk about the fiscal impacts, the benefits
.
So you have your public tax revenue, your property tax,
your sales tax, your hotel occupancy tax.
And then you also have your other public revenue, your
utility revenue, franchise fees, building permits and fees.
And under the sales tax, you're looking at the business's
taxable sales, the taxable spending by the business, labor
spending, and then your out of town visitor sales that we
mentioned.
And then after the benefits, we look at the physical, the
fiscal impacts of the costs.
So you have your public costs, your cost of providing
municipal services, and then your cost of providing utility
services as well.
And then, of course, the cost of your incentive.
And that can vary and it can be layered.
But property tax abatement, a rebate, meaning chapter 380
on the rebate, a sales tax rebate.
That can be both of your regular retail sales and your
construction sales and use tax using the Texas Direct Pay
Permit.
And then we have a debt municipal electrics economic growth
rider that we can add in.
And that's over a period of five years based on how they
qualify and the cash incentive if we decide to do that,
especially in the case of the investment fund.
And so we've looked at our benefits and we've looked at our
costs and now we're going to talk about the net benefits.
We're going to look at basically less the cost of the
incentive.
And in general, I mean, we can set our own parameters, but
in general, the net benefits should be positive.
I've included the sheet here.
It's a little hard to read, but you see the subtotal
benefits and the subtotal cost.
And at the bottom of that, you see the net.
We definitely want that to be positive.
The rate of return.
I'm going to show you an example in a second.
But the larger the rate of return, the better it is for the
city, the better deal it is.
And then in general, the payback, the shorter the term, the
better it is for the city as well.
Okay. So here you have an example.
This is actually was performed for a prospect.
But you can see that this is also what you have in your
backup for your other ones, but you have your in the first
table here, you're showing your benefits.
Then you're also showing your costs and then you're showing
your net benefit.
The other items I highlighted in my presentation are at the
bottom here.
So you'll see that you have your total incentives and then
you have your incentive per job.
Your rate of return and the payback period.
And so you're looking for this.
This is showing you the nexus of basically where these two
intersect, both the incentive and then the payback period.
Another thing that's important to note here on the top left
is you'll see your jobs, your direct and your spinoff, your
indirect and your induced is your spinoff.
And then your salary and your investment.
And then you can see a little highlight of the residential
impacts as well.
And it's based on how many? 4.4 homes.
It's pretty conservative.
That's one of the things we liked about this model.
We actually looked at three models.
Remy, ImPlan and Impact Data Source when we chose this one.
And I believe that they were the most conservative and more
realistic, less inflated.
If anyone has any questions, I'd be happy to answer them.
On the residential side, it estimates about 15% of the 199
employees would relocate so that the other ones are coming.
I mean, that's hard to know. Are they coming from people
already here and robbing from another company?
Well, we struggled with that.
We actually inputted, both myself, Michelle and Christina,
inputted at least two applications of incentives we've
already done and one of them was Safran Labanol.
And that was a case where it was 700 employees.
So we had to look at two models, both ones that were
because they relocated from the metro area.
So we actually performed two models to look at both.
Erica, I did have a question on this one here.
Under where you put residential investment, excuse me,
development, what does that 4.4 homes means?
That's how many they're thinking from based on the number
of workers that are going to buy a home.
It's very conservative. There may be a lot more.
They also use, but I didn't mention, I mentioned the AIS,
they use Remy multipliers, but they base it on industry
code.
So I select an industry code and they base some of their
outputs based on that as well.
So in this scenario, you have 125 direct jobs created by
this incentive, okay, with an average salary of $76,000,
but you're only producing 4.4 homes purchased?
That's new homes.
New homes?
Yes, sir.
But it doesn't take into the effect building new homes or
just purchasing existing homes.
I'm just trying to get an idea of how many homes are going
to be purchased by these 125 employees that are quote reloc
ating or?
Right.
John, we will find out for you, okay?
Okay, we'll get the definition from the big book of codes.
I'm looking at it right now actually.
If I read this right, the estimate is that 30 workers will
relocate.
So the other 120, other 4.4 homes and 29.9 workers reloc
ating.
I see it.
And that's an estimate based on somebody's numbers.
Okay.
Of those 30 people that are relocating, they're going to
buy a home here.
If you're relocating from Flaremount, you may commute.
That makes sense.
So I guess a lot of this relocating depends on if I'm
moving from Alaska and bringing all my people down here or
I'm coming from Dallas and moving up here.
Right.
And just as a general comment, this company has developed
proprietary formulas based on Department of Commerce data,
the RIMS data.
So there are things that calculate in the background based
on their proprietary research and development.
And I also want to point out that this is a program that's
used by many, many, many communities and economic
development corporations, especially in Texas because it's
a Texas-based company.
But they're very thorough in their development of their
models and they're tested in the marketplace through use by
other EDCs.
Thank you.
We're upgrading our model based on the most recent data
model out there.
Absolutely. Yes.
And we can continue to customize it.
I've got an ongoing list for the next time we update it.
Things I'd like to see.
Anybody have any more questions or comments?
All right. Thank you.
Our next item is an incentive request, an application item
number 18 0 1 0.
Receive a report and hold a discussion regarding an
incentive application from the United States cold storage.
Caroline will present that.
Okay, we do have an incentive request from United States
cold storage and we have a representative from U.S. cold in
the room with us here, Tim Franciscus.
And he's been working on this project from the beginning,
which actually our first contact with U.S. cold storage was
in January of 2017 when chamber staff received a call from
a broker about a project.
And starting at that point, it moved into the economic
development partnership process of collaboration and
helping get questions answered and due diligence done for
the potential location project.
And here we are today.
So I'm going to give you some details about the company
itself and then about their request.
And Tim is available to answer specific questions from the
company's side if that's something that any of you would
like for him to do.
All right. We'll start with the background.
So U.S. cold storage provides their clients with refriger
ated and frozen food warehousing and transportation.
They've got 38 facilities in 13 states and about 2500
employees.
Some of their current customers at their facilities include
well-known brands like Kraft, Kellogg's, Coma, Unilever,
and Butterball among many other types of clients.
They do have four existing facilities in the DFW Metroplex
in Arlington, Dallas, and Fort Worth with a total of 32
million cubic feet.
And these facilities, one thing that I learned in the
process of researching is that these facilities, they build
them and they use them for a long time.
We're talking 30, 40 years in these locations.
The company began in 1899, which is kind of cool, as
American Ice Company and then were renamed to U.S. Cold
Storage in the 1920s and became a wholly owned subsidiary
of John Swyer and Sons in 1982.
The project itself that's being considered for Denton, and
I do want to emphasize at this point that the information
that you have is the best information that the company can
provide to us at this point.
Things are still a little bit preliminary, so we're giving
you the best information that we have at this date and time
.
They're considering 6 million cubic feet of refrigerated
warehouse with 2,500 pallet positions on a 40-acre site on
Jim Crystal Road, which is inside the West Park TURS, and
you'll see a map of that in a minute.
Their land sale did close on February 2nd.
The plan for the facility is to offer several different
types of storage, case picking, repacking, distribution and
transportation solutions for food production facilities in
the U.S. and in Mexico.
Their preliminary plans do provide for rail service at the
site and export services to Mexico, cooler and freezer
storage, of course, and some on-site customer offices.
And their plan right now is to use eco-friendly refriger
ation technology and include industry-leading safeguards for
the environment.
You can see here a picture of one of their existing
facilities in Dallas over there, and then this is their USC
S Denton site on Jim Crystal Road.
Let's see if I can get my mouse there. Jim Crystal Road
right here, Western Boulevard right here, and the railroad
track is right here.
Any questions about that? Everybody know right where that
is?
The pond will be drained.
All right. So the project itself in terms of investment and
jobs, the company is going to be making an approximately $
34 million investment, which is going to add $28 million in
new value.
And for those of y'all on the board who are new and this is
the first time you've seen one of these projects and the
application and the information that we bring to you, the
investment can include soft costs, other things that don't
add additional value.
But we want to communicate to you the complete picture of
how much money the company is going to spend versus what
the additional value is.
They plan to create 44 new jobs in the first year of
operations and then have 67 new jobs by the third year of
operations.
Average salary is a little bit over $36,000, and they do
offer benefits to their full-time employees.
And my understanding is that the vast majority of their
employees are full-time and therefore benefits eligible.
Again, the company is estimating at this point that they
would be a 1.5 megawatt per year power user from Denton
Municipal Electric, and that would put them in the category
of a top 25 customer for DME.
And that would be comparable to the size and power usage of
Aldi as a customer, the Aldi distribution center.
So I forget that there are Aldi stores now to be specific
about that.
Please got a question.
Yes, ma'am.
Yeah, the other side is fine.
There wasn't a breakdown and you said most of the jobs
would be full-time.
Do we have any kind of percentage on that?
I'm going to say above 95% of employees are full-time.
I'm looking at Tim.
Yes, that's correct.
We have no part-time employees that are down.
So they're all full-time.
All of our U.S. clothing companies are full-time employees.
So that means they all qualify for benefits.
Right.
So for everybody out there in TV land, Tim said that almost
all of their employees, except maybe, I don't know, one, no
.
Almost all of them are full-time.
Thank you.
Okay.
So quick pro and con chart on the project here.
You guys had a chance to look at this in your backup.
It's not a target industry.
They are adding a significant amount of new value.
The majority of the jobs will be full-time and benefits
eligible.
The majority of the jobs are not high-skilled.
Average salary is a little over $36,000.
But that's below the Denton County average salary.
They will be, as planned, a significant utility user for
Denton Municipal Electric.
Since this is a project in the TURZ zone, it will kick off
Phase 2 of the TURZ improvements,
which are improvements that run along Jim Crystal Road.
However, if they're offered a tax abatement, that will
reduce revenue that would go into the TURZ fund to
reimburse the developer for those public improvement costs.
Jim?
Where did the $36,000 average salary come from?
Is that market-based or is that?
No, that's something that the applicant provides in their
application.
Oh.
Yeah.
Tim, would you like to come up, please?
We can't.
The folks, all the people watching at home, those hundreds
of people want to hear what you say.
I'm sorry, the only person I do know, my husband, is
watching, so.
Tim, come to the mic.
Timothy Francis, Son with the United States Cold Storage,
for the record.
To answer the question about the salary, as part of the
application, it asks for the hourly rate.
Having said that, it doesn't calculate overtime, so I just
have a $15 an hour rate, but our facility is typically
running between 15% and 20% overtime.
So the warehousement portion of this, it's probably, they
're probably making between $45,000.
But because of the way the application is set up, that's
the number that, the calculation that you're getting.
Did you, were you able to look at the local market to see
what the average is for your type of work?
We did an analysis back in 2016, actually went back to the
end of 2015 for the Dallas-Fort Worth Metroplex, where our
facilities were.
And we currently have a pay scale in place.
So there is a three-year, it's over, it's basically, they
get an hour, $1.50 an hour more, and that's divided up
amongst three years.
So we are constantly analyzing the, you know, what the
going rate is in the area.
We'll do the same thing for Denton.
Any other questions before I hand it back?
I have questions, but it's about the building and energy
use.
So I don't know if there's another slide that addresses
that, or if I should just ask him.
It would probably be a good time to just talk about it
since he's here.
Okay, so in the, is your company building the LEED
certified?
Is that where I read that?
Or is it just vested?
Okay, so, but it does say that you're using eco-friendly
refrigeration technology.
Does that mean demand-side management, energy management
type technology?
We do have energy management technology, depending on the
refrigeration company that we select to run the project.
But we have, it's constantly monitored, and it is basically
to run our refrigeration as efficiently and as eco-friendly
as possible.
Having said that, in Dallas, we do have what's called an
ammonia cascade system,
which cuts down significantly on the amount of ammonia,
and also is just the most eco-friendly refrigeration system
out there in our industry.
So again, those things are all in consideration.
We're still pretty early on in the game to know exactly
what type of system will be in place.
But that's what things that are being looked at.
Do you have any plans to use renewable energy?
I did notice that there was a lot of concrete on the top of
your building.
Actually, it's an insulation. We don't have any concrete on
the top.
So we do have limited, I guess, irrigation landscape that
we use at our facility.
And again, we typically in Dallas, I use Dallas as an
example,
we worked with the industrial park to make sure that
everything fits in line with their restrictions.
Okay. So I was very impressed to see that you've decreased
your greenhouse gas emissions,
and the things that you're saying are the ways that you're
doing that.
Yeah, just Unilever, if you look up Unilever as a worldwide
company,
they are extremely, you know, they require a lot of us at
our facility in Covington, Tennessee.
And so we learned a lot in that project, and we'll be
rolling out some of those things in our new projects
throughout the United States.
Thank you so much.
Sure.
A quick overview about the West Park TURZ, again, since we
have some new members here,
and we've been referencing the West Park TURZ.
It's an approximately 800 acre area north of Airport Road.
And the TURZ itself took effect on January 1 of 2013,
and the city and the county both contribute 40% of the ad
valorem tax revenue into a fund that is then used to
reimburse the developer of infrastructure improvements in
the area.
The current estimate for the TURZ is that it would generate
$14.3 million into that fund over 25 years.
The current fund balance is $230,000, and that is because
the WENCO facility, distribution facility went in, actually
came on partially onto the tax rolls.
It's not fully valued yet, but we are seeing some money
into that fund now.
Speaking of WENCO, they did complete the Phase 1
improvements, which ran along Western Boulevard, included
water, wastewater, drainage, and road improvements.
So those have been finished.
And reimbursement of those expenses out of the TURZ fund is
going to start this year, because, again, there's finally
funds in the TURZ fund that can be used to complete or
start that reimbursement process.
Incentives that are given to companies that locate inside
the TURZ reduce the amount of revenue that goes into the T
URZ fund, which, again, is ultimately to be used to
reimburse the infrastructure improvements that occur.
So these are just the factors that we all need to keep in
mind when we're talking about the TURZ. Questions?
And then a quick touch on our policy for tax abatement and
incentives that's in place currently, and we are discussing
changes to it, but we are operating under the 2016 policy
right now.
Businesses may be considered for a tax abatement of 25% if
at least $5 million in investment or value is met by the
project. The length of the abatement can increase or can go
higher with higher investment, but it may not exceed 10
years, and that's by state law.
Under the policy, the percentage of an abatement can
increase in 5% increments for additional factors that make
the project more desirable.
So the request that we have from U.S. Cold Storage is for
the maximum allowable incentive under the current policy,
and they state in their cover letter that approval of tax
incentives will go a long way in demonstrating community
support to their parent company as they finalize
construction plans for the project.
So we start the analysis by looking at the current
conditions, which is not going to take very long. The
current valuation of the land is a little over $7,000
because it has an agricultural exemption currently, and
that brings in $45 a year in tax revenue to the city.
So what we do next is look at the projected ad valorem
valuation and revenue based on the information that's
provided to us in the application, and we did use the
market value for the estimated valuation of the land.
Again, since it's an ag right now, we've got to have a
different value to put in there.
So you guys can read through that. It was in your backup,
but I'm going to go ahead and kind of take you over to that
far column about the estimated net annual city tax revenue.
The bottom line down there is that we have $103,000
available for incentives on this project, and the reason
why is because we can't use land. We don't use anything
that's generated by land to provide funds for incentives.
So we're just looking at the revenue that's generated by
the business personal property and the improvements.
Questions about this chart?
Ryan? Oh, yes, sir. I'm sorry. What about rollback? Erica,
I'm going to ask you. He's asking about rollback.
Rollback covers a period of five years, and that only goes
to when the TERS was created. So it's not going to go
before the TERS was created, essentially. Does that answer
a question, Jim?
Did we figure any of it into this, Lynn? So there's nothing
, no rollback in it because of the TERS.
Right. No rollback because of the TERS. Okay, so we ran our
25, 30, and 35% tax abatement models. We also ran a model
with construction sales and use tax only, and then we
included the DME economic growth writer in all models.
And I don't know if this is, I don't think this is
something that I've talked with you board members about,
and you may have heard about it in the past, but we're
going to do a little refresher about what the economic
growth writer is.
When Denton Municipal Electric adopts, or when the City
Council adopts the rate schedule for Denton Municipal
Electric, there is a rate called the economic growth writer
that's available to certain customers who meet a certain
level of electric demand and whose load factor is greater
than DME's system load factor.
That just means there's a minimum threshold in a couple of
areas that they have to meet. If they do meet that, their
monthly billing demand is reduced on a sliding fee scale
for five years, starting with 50% in year one and going
down to 10% in year five.
So every month there would be a discount to the bill. So
that can, depending on electric usage, add up to a
significant incentive for a company. And this is available
to new customers and customers, existing customers adding
new demand.
Yes, ma'am.
So is the monthly billing demand reduction, is that applied
to the amount after that threshold or the total amount?
It's the total amount.
Okay, thank you.
Did you have a question, Keel?
Is it 50% off each month?
Yes, in the first year, in year one.
This is a summary chart of our analysis, and we started
with some assumptions that we took from prior information
that you guys saw in the slide presentation.
And what we did was based on the current incentive policy,
the level of investment that's being made, that equates to
a six-year term, and we looked at this 25% abatement across
a six-year term for a total of a little over $154,000 here.
We also considered the construction sales and use tax reb
ate, which is another tool that we have used on a couple of
recent projects in the past, but the way that works is the
company would source their construction and business
personal property materials to Denton so that Denton would
capture the sales tax that's associated with that.
And then we would be able to rebate all or a portion of
that because we captured it locally.
So that equates to $132,000 in our estimate.
And then there's the DME economic growth rider, which rolls
out over five years, and in this case, based on demand
estimates, would come out to about $300,000.
And then, sorry, if we total all those up, that's $586,000
kind of consideration that we have to work with.
And then down there at the bottom, we show the net tax
revenue to the city.
And this is, again, just to the city, not into the TURS
fund over those six years with that incentive scenario in
place.
Questions?
Yes, ma'am.
I do. About the economic growth rider, because I'm just now
really learning about that.
I knew that it was in our policy, but seeing it apply here,
especially with a company who has extremely high use,
I'm assuming that it's been evaluated and estimated that
even with this, that will still cover the cost of our
energy that we have to purchase.
That's a calculation that's done on the DME side, and I don
't want to speak for them.
We have to contact them with the information about the
usage that we get, and they make their calculation.
So I would be glad to facilitate getting you an answer
about that, but I cannot answer that question myself.
So it is, even with the growth rider, are we covering the
cost of provision of the energy?
Okay, yeah, I will find out. Make a note real quick.
Caroline, has U.S. Cold Storage looked at the electric
calculations in agreement with the usage?
They're reviewing all of that right now. Is that correct,
Tim? Yes.
They did their initial estimate when they made the
application, but they're delving in further to that,
and we've connected them with Den Municipal Electric to
make sure they have the right folks to answer their
questions.
Any other questions?
I'm sorry. Do you have a question before I move on?
Yes, I needed some help reconciling the two numbers, please
.
I'm looking at the top incentives and the net revenue at
the bottom, and I'm trying to understand what's going on
there.
Okay, so I had to do a little bit of squeezing onto one
slide.
So the revenue, the column says total, right? But the total
for the net revenue is just that very bottom number,
and then the total of the 25% abatement, the construction
sales and use tax rebate, and the EGR, that totals to the $
5.86.
Is that what your question is? Incentives are benefits
given to the company.
Okay, so benefits given to the company are $5.86 to $9.98.
Collections to the city are $5.48 to $9.40.
It's after the $5.86.
Right, that's the net that we're getting.
So the gross number would be larger?
Yes.
Thank you. That's the missing piece.
Okay.
The gross number would be 700? The $154.998 to $5.48?
It'd be the $5.86 plus the $5.48.
Yeah.
No.
No, it's the $5.48 plus the $155.
Yeah. The other two are immaterial to the city's revenue.
So if they're immaterial, then why are they presented here?
Because they'll be a benefit to the company.
The 25% abatement is revenue we're giving back to them for
ad-horm taxes on the building only, not the land.
Right. So when we're talking about the city, this is
revenue that would go into the general fund. That's general
fund revenue.
The construction sales and use tax rebate, we're
considering that at 100%. So we wouldn't receive any
revenue from that particular.
If we were only considering 50%, there would be revenue
shown there.
But we're really only talking about the ad valorem value
that would go into the general fund.
So for year one, though, the estimated gross revenue to the
city from taxes is $116,000. We're going to give them $26,
000, and then that's $91,000.
That's how that number has arrived. The other two are
coming from the construction rebate and the DME rider.
So help me with the DME rider again, please.
What it is or how it's--
Yes, please.
Okay. So it's a reduction in the company's monthly demand
billing. So they get their electric bill. It's reduced by
half.
The demand billing portion of the bill is reduced by half
in the first year of the incentive.
And then it goes down to being reduced by 40% in the second
year, 30%, 20 and 10 in year five.
Thank you.
Yes.
Yes, ma'am.
Good questions. Anybody else?
I have a question about the utilities again. Not
necessarily electronic. I understand that question is going
to be answered soon.
But on the water usage, it says 7,000, like 722,000 GPM. Is
that gallons per minute or how does--what does GPM mean? I
have no idea.
GPM is per month.
Okay. And so on that, is that typical of an industrial user
? I'm not really sure of the water usage and can our system
handle that?
That is well within our system's ability to handle it and
how it compares to other industrial users that we have on
our system currently.
I can't answer that specifically for you, but that is not
going to be any kind of burden on our system.
That's good. I appreciate it being in the application just
so I have some--
Well, and thank you for mentioning that. That's a part of
the application that we have recently changed and beefed up
so that we can capture that information and share it with
our utilities folks so that there are no surprises for them
or, you know, that we can collaborate on looking at the
project as a whole.
What will the wastewater and the water usage be worth to
the city?
I'll have to get that information for you. We did not
specifically run that for their cost and for the billing on
that side of it because it's not significant enough that we
would have to reach out to them for that, unlike the DME
issue where there's a rider in play.
That's why we asked them specifically. So if that's
something you'd like me to check with our water and
wastewater guys on, I can.
I think we just need to recognize that it's an additional
benefit to the city and revenue because it's a new business
.
Right. And the model, the total impact model, takes all of
that into account. That's part of the reason why we wanted
to have that model because there is a cost to providing
those services, water and wastewater, but there's a benefit
and offsetting billing that we're able to do.
So that's why we like that model because it brings the
whole picture together.
Is the facility heavy water user?
I don't believe that it is, but Tim says no.
Okay. So Jim, Erica, she handed me sort of in the depth of
our model, here's the page where it calculates all that. I
don't know if you really want to see it, but it's here.
And it's what goes into producing that one page summary of
the project's cost and benefits. So the rates are put in
the model and updated when they're changed with the budget
each year.
I think Tom has a question.
Caroline.
After serving on the on the public utility board for eight
years.
I was extremely impressed with how complex our financial
operation as a city is. I think the average citizen doesn't
appreciate what goes on here and what it takes to keep a
city afloat and functioning.
My question is this, and this is not a reflection on this
particular company, but when giving incentives.
Are we able to get a complete idea that we're not putting
ourselves in the hole.
Incentives to bring in new businesses are we satisfied that
that is the result that we're achieving. That's why we
wanted to develop a total impact model of our own that's
fully customized to our city that takes into account all
the municipal utilities that we provide and our franchise
fees and all of that.
That's all in the background. And, you know, that's
important to us as a department to make sure that we're
factoring all those things in so that when we look at the
bottom line. What is the total benefit to the city.
And that is not something that we were doing fully before
we were able to get that model. So we still want to double
check with our other methods. We want to talk to our
departments. But what you're getting at is where we have
moved.
We're moving toward that and this program is a big part of
it. Okay.
So that was basically my question is that it's beautiful. I
like it. It looks nice.
But at the same time, we wouldn't make sure we pay our
bills right.
Absolutely.
Well, that's where the net.
After the incentives are given out in three different ways
the net to us over six years is still $550,000.
But my question was that we're receiving that but does that
make sure that we don't have any deficiencies elsewhere.
We feel confident that I mean, and that's what I wanted to
hear.
Would you like to.
I think it's a great question. And that's really as
Caroline said, where we're really trying to move is that we
understand what is the not only the benefits of a
development and that's frankly what we've looked at in the
past is the benefit analysis.
What are the costs of the development. What's the cost to
serve. I think is maybe the root of your question, john.
It's sometimes difficult to get that on the utility side,
the rates are designed that we charge through our utilities
are designed to recover all of our costs.
So that's a fairly straightforward calculation for us as
long as they're paying that rate, they're going to recover
their costs.
The tax side is a little bit more difficult because
different users.
Some can some can pay for their services and others don't.
As a fact, you know, we've talked about last time as
residential properties typically don't pay their property
taxes they pay as a resident, they don't pay for all their
services they consume commercial entities typically make up
that difference.
So, it's harder to get that in that model, the total impact
model there's a way to try to calculate that and estimate
that it's still a squishy number, it's not an exact science
that we have down just yet but that we're trying to look at
that and bring you back and really analysis that gives you
all those
components that's a technical term squishy.
But, but it's difficult to get that down to an exact
science.
But that's what we've tried to bring you forward today.
Hopefully that answers your question but the utility side
if you're asking about those that's built into the rates
the tax side is a little bit more difficult to assess.
Thank you.
All right, are we good on this one.
I have a question for 10.
We have a lot of really awesome companies in in some of
them that aren't so awesome as far as community involvement
.
Is there an organization encouraged its employees and
managers to be involved in civic clubs, rovers quantities
holding out away campaigns join the Chamber of Commerce.
Because if you answer yes to those I'm going to circle back
around and make sure that you're doing that.
Absolutely.
I'd also like to mention, as he's on the presentation we
store food as a majority of what we do.
We're a huge donator to local food banks.
As you can imagine there's a lot of our customers who
donate product.
Some of them donate their own product and some of them ask
us to do the donations on their behalf so we are a huge don
ator to to food banks in the area.
That's just one of the, you know, civic organizations that
we that we participate in.
Wrap up the presentation with some key points.
US cold storage is a leader in its field and it does make
long term investments in the communities where its
facilities are located.
About 99% or more of its employees in the Denton facility
will be full time and benefits eligible.
Salaries are industry competitive and as we heard Tim say
there's opportunity for overtime which could raise the
average salary.
The project does add significant new value and it is going
to cause the TERS phase two improvements to initiate.
The facility as projected at this point will be a top 25 DM
E customer.
The project is not one of our council designated target
industries.
The majority of the jobs are not high skilled.
The incentive for development already exists in the area
with the West Park TERS and a tax abatement will decrease
the revenue that goes into the TERS fund for those
infrastructure improvements in the area.
You have several options in front of you today.
The first one is to not offer an incentive.
You can offer an abatement per policy guidelines, offer
construction sales and use tax rebate or a combination of
those or something else of your choosing as the EDP board.
Since the area the project is in has already been incentiv
ized via the TERS fund.
Staff does not recommend the use of ad valorem tax
incentives in this case.
We do support the use of the $300,000 DME economic growth
rider as allowed under the current utility policy.
And that is an automatic, if they meet the demand threshold
, that's something that they will automatically receive
under the policy.
And now is the time for board's discussion.
So some of the longer tenure board members remember that we
normally go into a closed session to discuss the incentive
options.
But most of those have been super secret.
Companies that haven't negotiated things.
They're still looking at other communities to move into and
the two that we have today are not under that category.
So we're wide open to get to talk if there's anything that
I guess we feel like we need to go into a closed session
for.
We'll make sure that that meets the criteria before we do
that.
But so we're so this is the time to discuss that and then
we'll come back I guess after our work session to actually
vote or take a recommendation.
So this is just for discussion purposes.
We'll come back in our actual meeting.
We're still in a work session.
We'll come back in the meeting and entertain any motions on
either one of them.
So this is discussion time.
Anybody has any more comments or questions?
For clarification on the options and so then looking back
at staff recommendation.
Staff recommendation is number one.
But with the electric because that's not considered
necessarily an incentive.
Right.
It is an incentive but it's it's an automatic incentive if
the demand billing is is met.
Met.
The threshold is met.
Yes.
Okay.
You said number one.
Right.
Right here.
The incentive that staff is recommending is the.
Staff is recommending number one.
Correct.
I think I should have rephrased number one to say no ad val
orem incentive.
Right.
That's essentially right.
Okay.
Thank you.
So this is a little different because it's in the TURS.
So if we do an ad valorem incentive and take money rebate
that back that money doesn't
go into the to the TURS fund to help repay for the
infrastructure that's been put in
place there.
So that's where we've had some discussions in the past on
other projects that were not
in the TURS.
This we already have an incentive program going into that
land area through the TURS.
So there's already an incentive there that theoretically is
passed on to the.
Right.
And that I think maybe it's important to clarify that that
as Marty said theoretically that
that incentive is passed through to an end user who would
purchase the land in the TURS.
What distinguishes this to be different than WINCO?
It's a similar project.
U.S. cold serves different clients.
WINCO is serving its own grocery stores.
The WINCO project I mean their their footprint is larger
than this footprint would be.
I mean they're over 800,000 square feet.
This project would be two hundred and five.
Phase one.
But it is again because the company hasn't made the final
decisions about how this project
is going to roll out exactly.
There could be phased development and it could be larger.
So phase one is two hundred and five thousand square feet.
What could be the largest potential facility?
Okay.
So he says Dallas is five hundred and twenty thousand
square feet.
So it could be could be larger.
The example that was used here showed a 25 percent abat
ement as the example.
Why was that chosen rather than 30 or 40?
I'm sorry rather than 30 or 35.
Why was that shown as the example?
That's the minimum amount.
I mean that's the amount that they would qualify for based
on their capital investment.
And then just basic without any of the additional factors.
So that's why we showed that one.
So under the information that's been presented they would
not qualify for the 30 percent or the 35 percent?
They did they did check additional factors in their
application.
And they could have significant capital investment is one
of the additional factors.
And then local hiring was one of the other additional
factors that they would qualify for in their application.
And I have the figures per year for 30 and 35 percent like
what what the rebate would be per year.
Ultimately the recommendation was not going to be for ad
valorem incentives.
So in the interest of brevity in the presentation we showed
the 25.
If you would like us to do that differently in the future
we'd be glad to.
I just wanted to know what your mindset was or you know why
show 25 rather than 35.
It's because it's the policy minimum.
Policy minimum and they didn't qualify for the for the
higher ones right?
They could.
They could but they did.
Yes.
But we weren't going to recommend the ad valorem part and I
was trying to get it on the slide.
So we can do it differently next time if that would be
better for you.
Keeley.
So my I'm good with your recommendation.
My my concern still is the utility usage to make sure that
that is going to be we're going to recover our costs.
We have a lot of discussion about energy lately in our city
.
And in making sure that our rates for our customers stay.
Stay affordable.
Affordable.
Yes.
And just making sure that the residential customers aren't
going to be making up for the amount that these people use
but don't pay for.
So I just want to make sure that that's not going to be an
issue.
And also so I'm assuming after the six years because that's
how long it's recommended for right.
The DME incentive will be for five years because that's
what their policy is for the growth rider.
So it's not six.
Okay.
No ma'am.
So after that then everything will.
Yes.
Will be the same.
So Jessica Rogers from DME is here in the room.
If you would like her to come up and address the question
that you have now.
Sure.
That'd be great.
Okay Jessica.
Jessica looks excited to come up on television in front of
our audience.
She's thrilled.
This is new for me to understand.
So going forward if we have it as a recommendation I'd like
to know.
Sure.
So Jessica Rogers now formerly of DME.
I actually now work in the city manager's office again but
I was handling this program until about a month ago.
So Councilmember we do not lose money on this.
So when we actually this is just on the demand side of the
bill.
So the great example that we use on this is when you go to
the mall they have a huge parking lot.
Right.
It's because they have to accommodate for their peak period
.
And so demand is that part of the electric bill.
Making sure that the system can handle their peak demand.
The largest amount that they're going to have to.
The largest amount of electricity that they're going to
consume.
It doesn't affect the consumption charge which is that
energy charge.
They'll be on a regular rate in terms of the energy charge
in terms of their consumption charge.
None of that changes.
It's just on the demand charge.
And this is a significant to put it in perspective to
qualify for to be on a general service large rate.
Your demand that you have to meet is 250 KVA.
To qualify for the economic growth rider it's four times
that.
It's 1000 KVA.
So our largest of the largest customers are in that
economic growth rider perspective.
Thank you.
Anyone else?
Sorry.
Jill has a question.
No I have a comment.
Okay she has a comment.
Just a general comment.
Not for you in particular.
Okay.
Is that okay?
What I'm seeing at this point in time just for the sake of
discussion is on the pro side incentivizing this company
that we would like to capture here in Denton County the
things that stand out to me are because of responsible
energy use.
Because of the full time employees that are going to be
locally sourced with benefits and the community
participation for such a company with their history versus
it taking longer to pay back the abatements for the TURS
improvements.
I mean in my mind at least that's what it's kind of coming
down to.
But I would love to hear being a newer member of this group
.
Because in my mind right now I'm voting for a 25% abatement
.
Because for me how I'm seeing it boiled down to the pros
are outweighing the cons but I'm interested in the
discussion.
I just wanted to where I am.
Everyone's in agreement with me, obviously.
So I'm going to go ahead and make my motion and we can all
go to lunch.
Happy Valentine's Day once again everyone.
Thanks for coming.
I think the difference is that it doesn't mean our target
market and the wages are the kind of wages we're trying to
attract to Denton.
I think my concern is this target market is we gave
incentives to Target, to Aldi and to WENCO and they're all
the same.
Why do we do that and not this and what are we saying with
that?
Those companies, and I'm not arguing with them, I'm just
saying they also fronted the cost of putting in
infrastructure into the city and we're reimbursing them for
that.
They put in roads and utilities.
That's what they're reimbursing for.
So if we didn't have Target...
We would have still had to have done that through the TURS
no matter what.
Well we didn't have the TURS.
We did when we had WENCO.
WENCO, yeah.
Aldi and Target were two different things.
They were going to have the TURS and I'm not sure if they
were in it.
No.
They put in roads and infrastructure and we reimbursed them
for those.
And then Aldi would fall off the face of the earth and
doesn't talk to anybody.
Jim, can I clarify, so is your point being we've already
incentivized these non-Target groups therefore going down
that road or you're saying what message does it send to
then not incentivize this group that is similar to these
that we've done before?
I think there's a couple, in my opinion, there's a couple
of things going on.
We're focusing very hard on what the rate of pay is going
to be and I think the market is going to dictate what the
rate of pay is going to be and it's probably going to end
up being higher than what they're predicting right now.
$15 an hour, then you've got overtime on top of that and
right around the corner we're paying over $30.
I'm sure WENCO is paying more than $15 and I'm sure Target
is as well.
The other thing is, is you're talking about over a six year
period of time, you're talking about a difference of $155,
000.
Which to me is not that big a deal.
For them to lose out on or for the city?
For the city to give up.
I think $155,000 for what you're getting and you get the
infrastructure for Jim Crystal Road as well, which is
another critical piece for that area out there in order to
continue some of the development that needs to be done.
Are they providing infrastructure?
The costs in here don't include any infrastructure to the
public roads.
Okay, so there is an arrangement that is being made between
the engineering department and the company to provide a
drainage improvement in front of their property in lieu of
roadway impact fees.
That they would pay for.
It's an exchange. They'll pay for the drainage project in
lieu of roadway impact fees that would normally be owed.
So it's just kind of...
That's a side deal. I mean, not a side deal, but that's an
arrangement that's been made between the company and the
city, independent of this discussion.
Are we allowed to ask if the company is dependent upon the
25% abatement for coming here?
Sure, and I'm going to let Tim answer that question.
So in terms of are we dependent on that money, at this
point, as was presented, we've closed on the property.
The next thing it has to do is we have to take this entire
project, our P&L, our projected P&L, along with any sort of
incentives to our board of directors or the SWIRE board in
London to get approval for the construction money.
So obviously, if you're familiar with how things work over
there, obviously any sort of community support goes a long
way in terms of them authorizing the construction money.
We have various projects across the United States. We
obviously would love to be here in Denton, and hopefully I
answered your question.
I'm not trying to circle around the bandwagon, but I don't
want to sit here.
Have you, in other communities that you work with, I guess
because we're a municipally-owned utility, we have our own
electrical department, which makes us unique to be able to
provide this rider. Have you had any experience with that
in the past? I think it's pretty significant.
Not with the growth rider, no. We've done projects in other
communities and gotten tax incentives and tax abatement
incentives.
For utility use?
No, aside from utilities.
I have a question, sir, about the actual construction
project. So you hire a construction company, and any way
for some of those dollars to recirculate here?
Yes, we obviously have a general contractor. There's only a
select few general contractors in the United States that do
the type of work for this facility, but then they sub out
the majority of work, all their concrete work, electrical
and things like that to subcontractors.
In the area?
Yes, and I don't know if this is factored into the economic
impact analysis, but they rent hotel rooms and they
basically move here during construction to build the
facility.
So a project of this size is anticipated to take how long?
We would like to shoot for six months, six to eight months.
Which probably means about nine months.
Six to eight months.
No, we have to see, I mean, there's things to, you know,
ways that we can help expedite things, and that's our plan.
I understand.
And I understand your comment as well.
The cost numbers that we're looking at is just for phase
one?
Is that?
That's conservative. That's, yes, that would just be phase
one.
Okay, so there's a chance if business is better or whatever
the circumstances are you add on?
Yes, sir. Yes, sir, that's correct. If you look at the
facility in Dallas, there's three sections. The middle
phase was our phase one in Dallas. We've since built two
additional phases.
That was construction began in 2013. All three phases were
built by the beginning of this past year, beginning of 2017
.
I have a question for Caroline. So if they did come and add
on, could they apply for an incentive for that new growth
project?
Companies can apply for expansion incentives.
Right, okay.
Yes.
Any more discussion?
Our work session. Let's move on to our next applicant.
Okay.
I guess I need to.
EDP number 18-12 received a report and hold a discussion
regarding incentive application for Fisher 59.
All right. So we are going to present information and
facilitate discussion on an incentive request from Fisher
59.
And we do have quite a contingent from the company here in
the room with us. And I appreciate you guys patience
through the prior part of the meeting.
And I'm sure you'll have an opportunity, somebody will have
an opportunity to come up and talk.
Okay. So for those of you who are not familiar with Fisher
59, it distributes Miller Coors beverage brands to about 40
counties in North Texas and southern Oklahoma.
And this is a Denton company. It's family owned and
operated with its headquarters here.
It employs about 148 folks locally and does more than $120
million in business annually.
And as a family business, it was started by Clyde Fisher
and Munster in 1959 and then has expanded across North
Texas and in southern Oklahoma in the early 80s and has
been operating since that time.
They do have a current site in Denton, which many of you
are probably familiar with where this is, on 35.
But their current facility consists of about 85,000 square
feet of warehouse and office between two buildings and
there's a depiction of it there for you.
The project itself is a new 205,000 square foot warehouse
and distribution facility that is going to incorporate some
pretty cool aspects. They're seeking these lead bronze
certification or higher level if practical for the project.
And then they're going to incorporate a crane system to
manage their inventory.
The project itself is looking at a $31 million investment
that will add 16.9 million in new value.
They're going to create 67 new jobs by year 10 of the
project.
And that is something that we ask for that information in
the application to project out 10 years. So that's that's
why they're going out to year 10.
They have an average salary of almost $51,000 plus benefits
.
Jill wants a job.
Is there an application here?
Y'all couldn't see her face, but she went off.
We want to talk about the project's pros and cons quickly.
It is not a target industry.
They are going to be adding $16.9 million of new value. A
verage salary is above Denton County's average salary.
They're not a significant utility user, but from the
environmental standpoint, they are seeking lead
certification for the building.
And it is a headquarters project.
So to what they're considering, the company is looking at a
50 acre site in Denton at University and Mosh Branch Road.
And that's a little depiction of it here.
And then this is a rendering of what the potential new
facility could look like down here.
They're also considering a second site that's outside the
Denton City limits further west on 380 at George Owens Road
.
So on the map, are those gas for the property?
They look like that to me.
The other one is still open. We're not buying that whole
piece.
We're buying, I call it three quarters.
The quarter to the right heading toward Mosh, we're not
buying. We're actually going to run a road through the
middle of it.
Okay. So just I'm going to restate what you said. So there
are a couple of gas wells on the property.
One is closed or not functioning anymore. One is, but you
're not buying the entire 50 acre site.
You're buying about three quarters of it.
Okay. So just for clarification, the one that's not closed
has no intention of buying out and closing for the safety
of the.
Do you all know anything about the operators plans for the
one nearest marshaling that small one?
The lease is I think still got about a year and a half.
Okay. The intention is they may not rely on it.
Do we need to bring him up to the front? Would you like to?
Sure.
Because I'm just going to have to repeat everything if I
save a little time.
Sure.
And this is Tom McElvaney. You are the CEO. Is that correct
? Okay.
Yeah. You can hear me. The one nearest marshaling, which is
on the left hand side, that one's still active.
And I think it has about a year and a half on it, maybe a
little less than that.
The other one is plugged and sealed. So that we're going to
be building over there under those rules.
We won't build on the on the drill site because you can't.
But that will be maybe parking lot at some point in time,
which I guess is allowed.
Question. I'll be back.
You might want to stay over here. Okay.
So there are some definite advantages to Fisher 59 staying
in Denton.
The I-35/380 intersection is centrally located within their
market,
and it allows them to minimize their truck mileage, fuel
costs, and wear and tear on their equipment.
I also understand that access to high speed internet is
going to allow all of the technology in their new facility
to function at its highest potential.
Y'all saw this earlier in the other presentation, but we
want to remind about the policy, the current policy, about
25% abatement if at least $5 million in investment in value
is met,
which can increase with higher investment, and then the
percentage of abatement can increase for additional factors
.
The request from Fisher 59 is for the maximum allowable
incentive under the current policy,
and in particular they are seeking to offset additional
costs that they will incur for the Denton site versus the
out of Denton site.
The cost per square foot for their land in Denton is about
a dollar or a little bit more than a dollar higher per
square foot than the--
So that's about a million and $1.6 million, is that--
You do math in your head faster than I do.
I didn't do my math, I got my calculator out.
Additionally, they're going to have another $1.5 million in
site development costs for the Denton site,
and then because they are within the city limits, there
will be the standard fees, taxes, and after build costs
that are required to comply with city regulations and code.
So this is an interesting project because it is an
expansion, even though it's not an expansion in place, it's
an expansion in a different location,
so please keep that in mind as we're going through this,
but we want to look at the current conditions, their
current valuation,
and the current annual tax revenue that's being produced by
the company at this point in time.
So their current valuation is about $6.4 million, and the
annual tax revenue that that is producing to the city of
Denton is a little bit over $41,000.
The project itself, the ad valorem valuation and revenue,
it's going to produce some new valuation, of course, for
about $16.8 or $16.9 million.
Right here in this column, you can see that, and then we
take that and we generate the estimated tax revenue, land
improvements, and business personal property.
Again, we can only consider the improvements in the
business personal property when we're talking about money
that would be available for an incentive,
so that bottom line number right here is $98,340 available
for incentives.
And in this case, we did look at, again, like we did before
, 25/30 and 35% tax abatement models and the construction
sales and use tax rebate model.
And here is the analysis summary there, got the assumptions
up at the top that we just talked through on the prior
slides.
25% abatement on the incremental increase in value, and
again, since this is an expansion project, we have to take
what's currently on the ground, what the current revenue
and value is,
and look at what the incremental increase is going to be
when we're doing our analysis.
Caroline, before we go on, so you're going to still use the
existing facility and this will just be new, or are you
moving?
We're moving.
Okay. So new facility, the old, is the old one for sale?
Sale of loose store.
Okay, so.
We're getting that analyzed as you speak right now.
So what are we losing from them moving? What are they
paying currently?
We're not going to lose anything from them moving because
the existing facility will be likely purchased or leased by
someone else.
Someone's still going to pay the tax revenue on that
facility.
Unless they have that subject.
Okay.
Unless they have that subject.
Right, unless they.
I think that was enough.
Did you have another question?
I did, but it's about something in the application.
Okay. Do you want me to keep going or would you like to ask
?
We can wait until the end of your presentation.
Okay.
So there you can see we're looking at the 25% abatement for
five years per the policy and the construction sales and
use tax rebate.
Again, this is set up similarly as the prior slide or the
slide in the prior presentation.
So the total there incentive would be a little over $131,
000 if we did a 25% abatement for five years and the
construction sales and use tax rebate.
And then down here, the net revenue to the city is $467,000
.
Questions?
Mike Rondelli, got a question?
Okay.
All right.
So I'm going to wrap this up here with the key points.
Fisher 59 has been a Denton business for 35 years and has
their headquarters here.
The project would increase its ad valorem value.
It's intending to have their new facility be LEED certified
.
The average salary is 12.4% higher than Denton County's
average.
However, the project is not in a target industry.
Basically the same options as we had before.
And then the staff recommendation on this is the
construction sales and use tax rebate five year 25% abat
ement on the incremental value for a total estimated
incentive of a little over $131,000.
And you are welcome to discuss.
Questions or comments?
Kaylee?
So I have a question on the application about the jobs
created.
And I guess you kind of answered my question when you said
you were leaving your old facility and moving over.
So I'm assuming all of those laborers or workers are moving
from one facility to another.
Yes.
There's a couple of things going on.
We're located in three locations.
We're actually up in Wichita Falls.
We're also in Lawton, Oklahoma.
There may be with Lawton.
There certainly is with Wichita Falls.
Because this is going to be a big warehouse and it's a lot
more modern, we may actually move a lot of our receiving
for both those locations down here.
So we will be moving some of those personnel down.
Additionally for us, we have a pretty broad portfolio that
has grown pretty consistently over the last few years.
We anticipate that model to continue.
And that's what we based a lot of.
You know, we're fortunate we also have like the Frisco
market that you've seen how that's exploded.
And with new restaurants and supermarkets, it requires us
to expand and buy more trucks and hire more people.
So my question is about the wages because at your current
facility, it says laborer, there's 57 at $11.86.
Steve, you did that.
Why don't you come up and go through that?
Steve Richards, our CFO.
So, okay.
Yes.
So the go ahead with your question.
So that was the first part, which is more of what I'm
observing here.
And so on the new facility, it has the laborer and I'm
assuming that matching job description, they're now getting
paid $15.38 and you're adding six more of those.
So does that mean that the old wages, they're actually
getting a raise and that $11.86 is not going to be a wage
anymore?
Not necessarily.
It more has to do with there are multiple classes of labor
ers in there where to give a simple example, I'm going to
pay a warehouse worker that has the skill and license to
operate a forklift in my facility more than what I'm going
to pay a laborer that is simply moving boxes type of
situation.
So that you have a kind of a weighted average in that labor
figure and the expected increases in that category are in
the higher wage value because we are going to a more techn
ologically advanced facility and so we're going to require a
little more skill out of those workers.
But also CDL drivers.
Oh, for sure.
That's how it is.
That's a, that's a high percentage of full time positions
you have there that are lower level wages, compared to some
others.
And I don't think I follow your question.
Well, it says the number of full time positions, laborers
at $11.86, there's 57 of those, that's more than any of the
other categories so I'm just looking here.
Sure, so what that might include is, or what it does
include for that matter is, we have some driver assistants
that are included in that number.
We have general warehouse labor included in that number we
have the forklift operators included in that number.
I'm trying to think of a missing.
That hourly wage position wasn't moved down into your new
facility so I was kind of confused by that. That's kind of
where my question lies in there.
Right. And Tom just the other category that is in there is
our merchandisers. Currently we do have some part time
merchandisers that while they are not eligible for benefits
that is the people that are doing the heavy lifting stock
ing the shelves in in the supermarkets and whatnot.
It's always been very good for the city.
The college. Sorry, we're, we're taking minutes on
television or on television right now. We can't hear what
you're saying so if we're going to talk on it, the
microphone to go do just be going exactly where I was
headed with this, the part time labor while it may not be a
benefits
eligible. It does provide a benefit to the community
because it does provide a very good income for many college
students in the area. I think the where she's coming from
if your average was $11 an hour near the average wage is $
24,000 a year, and now the proposal says it's going to $50,
000 a year.
Are you adding that many more technical people to the staff
and it says there's only a six person growth per year. So
those six people making $200,000 a year.
No, sir.
You're combining those I mean that the math doesn't work.
If you're currently if you have 57 people now making $11 or
whatever since an hour.
Yes, $22,000 a year.
I would have to go back in there and we were both as we're
going to have 57 plus six and our average wages $50,000 a
year you're doubling everybody's salary.
Not necessarily.
Because of the weighted average in there, so that if I
increase one person from $15 to $20 an hour in one category
and say there's five of those people, and the other.
That would be a weighted average change that's different.
Excuse me.
What I can do for you is pull that apart, and instead of
classifying it all as a labor position split it out into
the individual labor categories, I lumped it together for
conservation of space on the application form.
But I'd be happy to split that out and provide that to
Caroline to share with all of you.
Under the new jobs created it is split warehouse merchand
ising and route assist, but nine of none of those have the $
11 and 86 cent hourly wage and so that that's where my
question was I thought I was looking for that wage to be
moved to the new facility if that wage was going to stay.
Now I have what you have in front of you in front of me.
A portion of that is due to the fact that some of those are
part time positions, and that is pulling down that hourly
rate to the 1186 in the top section. Our expectation is
that as we grow more of those do convert into full time
roles and the full time roles will provide for a better
hourly rate for the employees.
Jim, how are you going to manage your new technology as far
as maintenance of the facility that doesn't show up
anywhere here. Is that going to be a contract labor or the
maintenance of the new equipment.
Yeah, your automated systems.
Because that's a very low scale, we will yes you're right
and the new piece of equipment from serious tech which is
an automatic loader.
That's pretty smart to run it. It may be more than that and
I get that moving forward but at this point in time, I don
't know if he didn't include it in this but that was that
was something we are planning on having to add.
So, we're hoping it's. They sold me a pretty good bill of
goods it's over $5 million so they're good. Hopefully they
're right.
But also answer your question too and I don't know, and I'm
against we put this together.
But when we look at our average salaries where our cost
really skyrockets is a CDL driver today is approaching $80,
000 our salesmen are well over that 50.
So there's a lot of people making more than that average
and again, the issue with part time and I want you to look
at that that may explain some of the, some of the
difference there.
That's the only thing I can tell you. And I just wanted to
add that I appreciate you going lead certified. Yeah, that
's really, we're excited about that.
In fact, we're leaving next week to be to meet with our
architect and that's a lot of what our discussion is around
.
Go ahead. Go ahead. It does say incorporate green
initiatives, and is that just in the building or is that in
like the machines and again we're going to see a little
more when I get up there.
I mean, one of the things right now that we're considering,
and again it's cost benefit and I got to look at it but one
of the conversations I know I'll have next week it's solar
panels across the top.
From what I've seen, it makes a lot of sense and the pay
back isn't that long.
I need my architects to kind of update me and make sure
they're telling me the truth on that but it sounds like
that's going to be a good idea and it may be something we
can add to this building.
I'm sure it's a perfect idea.
So we're excited about it.
One couple of comments. One thing is, is historically these
guys have bought trucks from us.
So they do buy locally.
The other one is is their community support is pretty broad
.
I think a lot of us recognize that. And as the hours of
service for drivers continues to get scrutinized, and their
area of territory expands, they're going to have to hire
more drivers.
Thank you, Jim. Yeah, you're right.
Mark.
Are most of your employees living in Denton County? Yes,
yes.
Probably 95%.
Maybe 90. I got a few that get in other areas.
Are the technical skills that you need for the new system
that you're putting in, is that able to be achieved here in
town?
Yes, yes, for sure.
We have some pretty complicated systems with how we go to
market, but they're telling me this is easier.
So we'll find out.
Question.
We have you up here. Can you tell me a little bit about the
community involvement that the company has?
Sure.
It's a good question.
Because we've been involved in, you know, we're very
involved, for example, in the rodeo. We've sponsored that
for years.
We've done an awful lot of initiatives around the
university. We sponsor UNT.
We're their lead sponsor. And in fact, next year, I'll be
100% their lead sponsor. I'm going to bring in Dos Equis
with Miller Lite, and we'll be their sole sponsor from an
athletic standpoint.
Listing out all the other events, we've got to, we
literally do something, it seems, every week or twice a
week around our community.
The other side of it that nobody sees from time to time are
all the golf tournaments. They call us for the beer, and we
give them the beer, and you know, we don't get credit for
it, but we just do it.
But we are very, very involved in a lot of different things
. I know we've got a couple of music festivals coming up
this summer that I'm excited about.
One in particular is an expanis, a spanish deal that we
just sponsored with them. I think it happens right after
Jazz Fest.
So we're very involved with them and helping that get off
the ground and giving them the startup money to get it
going. So we try to get back. We really do.
Where it makes sense. Thank you.
Any more questions during our work session?
All right, our work session time is over. We have a long
agenda. We're going to thank you very much.
We're going to take a break. We have lunch provided in the
back. I would like to invite all of our guests to
participate in that as well.
Then we'll come back and start our regular meeting, which
at that time, we will have more discussion and vote or make
recommendations on the incentives and wrap up our meetings.
Then we will go into our TURS board meeting.
And the TURS board meeting should be very short. The agenda
is short.
So grab some food and I don't mind if we want to eat while
we're doing that or if you can eat fast. That's great too.
But we'll take a short break to have some lunch.
Thank you.
The EDP 18-007 consider a recommendation to the city didn't
didn't see council regarding approval of the revised policy
for tax abatement and incentives. We went over that first.
This does not include the PID guidelines.
So it's just the update to the tax abatement and incentive
policy.
The motion by Jill and a second by Carol Anne. Do we have
any discussion or any other comments.
All those in favor say aye.
Any opposed.
Motion carries unanimously.
As a reminder, these are the recommendations to city
council.
Next item, EDP 18-008 consider a recommendation to the didn
't city council regarding the approval of the revised public
improvement district guidelines.
Any comments or questions.
I have a question. So the recommendation as included does
not include residential opportunities. Is that correct.
The proposed revised policy per council direction does not
include residential pits.
I think it would be a good idea to allow residential with a
demonstrated demonstrable.
Is there a way we can further discussion.
Yes, that's an option.
Do we need a motion to table.
If we don't make a recommendation to council that doesn't
prevent them from moving forward.
No, and this this one is not time sensitive like the
incentive policy is. So while we want to keep it moving
forward.
We're not on a hard deadline on this particular PID policy
decision.
Can we make a recommendation to consider the residential
with a an impact and also define demonstrable.
Yes, that's possible.
We need a vote on that.
Well, I think if that's if that's the recommendation that
aside, aside from the change you would like to see the
council consider adding in the consideration of residential
pins and further defining what demonstrable public benefit
looks like.
And that could be the recommendation that you're okay with
everything else but want to add in those things.
Or you could just table it.
I'm nodding. Do we want to make a recommendation to council
that the recommendation couldn't wouldn't include really
something that's finite because it's recommended looking
into that so I would suggest that we table it with the
information to be passed on to council.
If everybody agrees we think it's a good idea to look at
residential as long as it has a demonstrable public value.
If anything, came across industrial commercial whatever was
if we can prove something like that I don't know why we
wouldn't look at it.
I think it's harder if it's residential to prove that you
're going to do that. If something came along. If two or 18
came to town and said we want to do something that might.
Maybe that does maybe that doesn't but that might be a good
example of something like that.
So I'm not do I need to do need to do anything with.
That was a table table. Okay, that's a table. I think you
do need to go ahead and make someone needs to make a motion
to table.
I'm like a motion.
Motion. And a second. Any more discussion.
I think I think the board wants to defer making a
recommendation until the council has its further discussion
so they're they're tabling making a recommendation today.
But then when when I come back to you guys to talk more
about kids I can convey the concerns of the board and then
we'll just bring it back again.
So the vote today is just to table the district. Correct.
All those in favor say aye. Aye. Any opposed.
Motion carries.
All right, we have item number 18.
That's 011 recommendation to the density council regarding
an incentive for United States cold storage.
Anybody want to have any further discussion or make a
recommendation for this application.
I would make a recommendation to approve an incentive at 25
% for five years with the construction sales tax rebate and
the DME energy dollars.
Second.
Five years.
We have a motion and a second.
Any further discussion.
Yes.
So rather than make the recommendation for the six years is
listed your recommendation is for five years.
Yes.
Okay. I'd also like to go on the record to say that even
though the the wages that we're looking at doesn't meet the
target that the that we're supposed to be looking at.
I think overall we would benefit by receiving this company
here rather than turning them away.
And so as you communicate with your board of directors in
London, you can let them know that hopefully the wages will
will continue to increase.
I understand.
We might need to send a delegation.
Any other questions or discussion.
Just a comment.
I will not be voting in favor.
I'm for the staff recommendation and I am glad the company
is coming and I'm in favor of you guys coming.
But I'm glad that you put five years instead of six that
way the energy writer is the same.
So there's not any confusion on that.
It ends at the same time.
But so just with that.
I just wanted to go over any further discussion.
All right.
All those in favor say aye.
Aye.
All those opposed.
We've got six one six to one.
Motion carries.
Appreciate all the comments and feedback.
And I just to tag along to what Caroline said earlier I don
't know if everybody picked up on this.
Adam and remind everybody how things kind of work.
Adam made contact with the commercial real real estate
broker over a year ago.
About this project and has helped with the city coordinate
about four or five site visits over the past year.
So this is a for you new folks and I would say years not
necessarily long in the grand scheme of things.
This is pretty quick one sometimes.
So it started over a year ago.
We're just now at this point.
So good job by the staff city staff and chamber for
bringing this to fruition.
Thank you.
All right.
Consider recommendation to the density council regarding an
incentive for Fisher 59.
Discussion or comments.
No big motion.
Or a motion.
I make a motion to approve the staff recommendation of
construction cells tax rebate 25 percent abatement.
I'll second that motion.
All right.
We've got a motion.
And the 25th.
Yes.
So a total of 131 incentive.
We've got a motion and a second for the staff
recommendation.
Any further discussion or comments.
Yes.
I'd like to go on record again and say that even though the
wages may not meet with the target that we're looking for,
I think the Fisher company has a long history here in our
area.
And it would be hard to go against someone who's made such
a significant investment in our community.
And it's unlike someone just coming to town. They've got a
very strong and I think a very decent history here.
And for that reason, I think I can say that I can be in
favor of this recommendation.
Anybody else.
All those in favor say aye.
Aye.
Any opposed.
And carries unanimously and we are through our regular
meeting except for the staff reports to the board.
So who wants to go first.
Sorry.
Do you want to have all the information.
I think I am of the opinion if Adam agrees with me unless
there are specific questions in the interest of time we can
forgo discussion of staff presentations.
But that's up to you all.
Okay.
So, in case you didn't notice we had a strange person
walking in and sit down at our table here earlier.
I mean, people know Michael is with you and the economic
development is replacing Tom McCoy on board.
So we're happy to have you here.
I don't know.
Do you want to tell everybody what you do because I wouldn
't do it justice.
I'm the AVP of innovation and commercialization.
My job is to protect and commercialize intellectual
property developed by the faculty and staff and other
innovation programs such as developing mentoring students
who are building companies and launching them here in the
region and other projects as needed by the president or the
DPR or anyone else.
Great.
We're happy to have you on board.
Thanks.
Happy to be here.
All right.
Anybody have anything else we need to talk about.
You guys are letting me down.
It's supposed to remind me about the spring break meeting.
Spring break meeting.
I was I was baiting you on that.
We just wanted just everybody to see how all wise and all
knowing you are so we just went to hell.
It's like odds.
Is anybody else, Keely can't be here spring break and
Caroline cannot be here spring break.
Can anybody else out of town?
Maybe.
Looks like we need to postpone that meeting.
So to the following Wednesday.
That's in March.
What day is that Wednesday, March 21 a week later.
We are scheduled to have a wait.
Sorry.
Can we just get staff to double check.
I don't get some mobility committee on my schedule that day
at 1130.
I don't know if that is standing or that is just something
on my calendar that hasn't gotten canceled yet.
Okay.
Because mobility is recorded.
So it's in here.
Okay.
So if we could, I mean, everybody's generally in favor of
finding a different date besides the 13th.
So 14th will not meet on the 14th.
But please keep an eye out for further information about
times and locations for the following.
Alternative dates.
We'll keep we'll shoot for keeping it on the Wednesday, but
it's going to depend on available rooms.
If you have it in a different room, I can run back and
forth.
I can vote for her.
I'm sure it's her proxy.
Well, may determine what kind of we have some staff things
to look at that may not be pressing.
All right. But do you have anything else for the good of
the order?
We will adjourn our economic development partnership board
meeting and we will move into our tours.
Number two board meeting.
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