Aug 12, 2020 Economic Development Partnership Board on 2020-08-12 11:00 AM

Good morning this is Marty Rivers chair of the economic development board and I'd like to call this meeting to order at 11 a.m. remind everybody since we're doing this on zoom to one keep your microphones on mute unless you're visiting please and two when we vote on anything I'm going to go around my computer screen and ask for you to say yay or nay with a hand raise and a voice would be great and also I guess we need to do roll call for who is present today once we do that we go ahead and get started with the meeting so and let me know if I miss somebody but I'm going to start with mr. Baines present Tony Clark Steve Edgar present Chris Davis Jill Jester present Councilman Jesse Davis present Jason Tomlinson present and Mark McClellan present did I miss anybody any board members we've got a couple ex officio folks here too all right we've got the quorum so we'll go ahead with our first item which is edp 20 - 0 3 0 consider approval of the minutes from our July 8th meeting take any motions jill jester I move approval of the minutes of the city of Denton Economic Development Partnership board from June 8th 2020 John Baines I second that motion all right we've got a motion and a second any further discussion all those in favor say I gotta go around the horn see I already messed that up all right get ready John Baines hi Tony Clark Steve Edgar hi Chris Davis hi Jill Jester I Jesse Davis hi Jason Tomlinson hi and Mark McClellan all right looks like we have a unanimous approval of the minutes and we'll move on to our next item which is an item edp 20 - 0 1 4 hold discussion receive report hold discussion give staff direction regarding an incentive application from for from the future so we'll let Jessica take it from here right well good morning everyone I will actually be turning it over to Erica Sullivan to do the presentation but I want to take a quick moment to introduce our guests to everyone Mike Christian and Mark Talkington are here from from the future which is a local tech company some of you may be familiar with their operation but they've had some very exciting developments and have been a wonderful partner over the past few months as we have worked with them on an incentive application and we are very excited to present this to you and we'll have plenty of time for everyone to learn about VR at the end of this and it's an exciting very very fun technology that these guys have so we're happy to present this to you and happy that they have chosen to locate and didn't good morning I'm going to be presenting an incentive application from the future now I'm the economic development analyst here at the city so the objective is to present this incentive application provide some background on entrepreneurship tech initiative that we're undergoing right now and then consider possible incentive packages a little bit about the company from the future the software company specializing in customized and immersive virtual reality training some examples of some of this training include industrial safety training as well as medical training for therapists dealing with autism for example they were founded in 2009 they're based in downtown Denton but will soon outgrow their space they compete with high tech centers from across the country but desire to keep the company here in Denton to help attract a Denton talent pool here locally to Denton and they're using existing pipelines for their staffing needs they're currently in their seed round for funding and they're projecting rapid growth and value revenue customers and employees the revenue is projected to grow from 750,000 in 19 to 2.4 million in 2020 employees are expected to grow from 9 in 2019 up to 75 in 2021 and customers are expected to grow from 8 in 2019 to to 96 in 2021 now keep in mind this timeline has been altered a little bit by covid I understand from the applicant it's been altered about six months so that's important to keep in mind I also want to talk about the growth of the industry it's projected to grow to 5.5 billion by 2023 the company's project goals are to reduce funding needed in the seed round to keep more of their company ownership local they want to offset costs needed to relocate offices for their larger facility recruit and add additional staff purchase furniture fixtures and equipment for their new facility and then make any necessary fiber infrastructure upgrades in this case it's typically fiber I want to tell you a little bit about how we got here I'm not going to go over each item but we have done a number of things to develop an entrepreneurial economic development tech-based program around our existing policy and our existing funding mechanism our economic development investment fund since we went over this last month I'm being brief our Senate policy has general position provisions that this project falls under and it creates quality high wage jobs as well as targeted industry sectors information technology R&D which are now more of ecosystems in our draft strategic plan some other priority considerations are presented here you can see that they meet the community investment diversifying the tax base public private partnerships high wage jobs and of course encouraging startup and small business to promote entrepreneurship and innovation the chapter 380 section of our policy also has provisions this meets four of the five provisions policy also has other considerations and this meets three of those other considerations including job-based grants tell you a little bit about the economic development investment fund that you're going to hear about more later today this fund was created in 2016 and it was created to provide a cash grant program so we can be competitive with other cities and so that we could attract high investment high wage jobs in order to be eligible the company must meet two of three criteria so higher wage knowledge-based jobs defined as 55,000 or greater for all an average or 65,000 or greater for 25% of the jobs substantial capital investment in this case 15 million and recruitment of industry sector targets what we previously discussed the R&D tech sector and high wage jobs so the application you can see is here over a three-year period the current employees are 12 you will see it added cumulatively to a total amount of 150 jobs the jobs paying 65,000 or more is 82 and then to give you an idea again of this Tyson 13 of the 100 jobs were making 65,000 or more and 30 of the 52 jobs of the last application we looked at team of defenders were making over 65,000 you can see the payroll the customers is that they grow throughout the years as well as a generated revenue and profit and again this has been slightly adjusted by six months how it's been affected by COVID the wage information you can see again the number of jobs if you look at the third column you can see the total jobs at 150 with a payroll of a little over 10 million again if you make a Tyson comparison their payroll was roughly half that for 50 less jobs for 100 jobs and then you see the weighted average annual wage and the sales and ops as well for one of these categories and the to give you an idea of the county average wage it's 48,277 and then the Denton County median wage is 42,650 our proposal is a performance-based business expansion incentive the expansion grant has the first component is to reimburse relocation costs find additional equipment make necessary site upgrades or a spaceship in the shout and these are based on actual demonstrated costs so this will be done on a reimbursement basis the second component is a stratified job-based incentive and this is divided into four categories and additional consideration is also given to employees that living in Denton as we want to recruit and retained employees here and it requires a chapter 380 agreement the economic development investment fund that we discussed is the source of funding for this and the agreement will include a limit on the term and it will also include a cap you'll see in this table the incentive proposal they proposed three years we're allowing them five years in order to reach that the first component again is the one-time expansion grant in the amount of fifty thousand dollars then we have a job-based grant that's stratified into four categories ranging from five hundred to five thousand reimbursement for jobs making over sixty five thousand and a hundred thousand and that's for those eighty two and then you'll see that total is a hundred and twenty four thousand five hundred for the job-based stratified incentive and then the bonus if all employees were to meet this would be sixty nine thousand for a total incentive value of two hundred and forty three thousand five hundred some of the qualitative impact benefits economic impacts and fiscal impacts I'd like to highlight until last month this job this particular project really represents a break from what we've typically funded they're usually capital intense projects with facilities and high business personal property but this is an investment in human capital and quality jobs which is in line with creating a pipeline for university training programs and reduction of brain drain it keeps a startup in Denton it fosters entrepreneurship it diversifies the tax base and it's a development of an ecosystem that supports entrepreneurship and locally owned business again these ecosystems is what we're moving towards in our draft strategic plan and then there's less demand on utilities services and infrastructure since it's not a capital intense project some of the quantitative benefits that I'll be highlighting are the direct impact jobs and sales output directly created by the event so there's a hundred and thirty eight new jobs with this is an average wage of sixty two thousand so the ripple effects of the induced and indirect is set sixty five point eight jobs with an average wage of twenty nine thousand six sixty one property tax sales tax utility system revenue generated by the projects is also included in this model and the attraction of venture capital and investors and again that's been delayed about six months the fiscal impacts the cost to provide government utility service remains low because this isn't a capital intense with a lot of truck traffic and then the return on investment is seven point three percent for the jobs so our summary and recommendation is a five-year even though they anticipate doing it in three or three and a half years performance-based incentive not to exceed the cap of two hundred and forty-three thousand five hundred and an expansion grant of fifty thousand to reimburse actual demonstrated cost a stratified job-based grant and the four categories for hundred and twenty four thousand five hundred and a residency bonus of five hundred per employee which could equal a total of sixty nine thousand and we will verify the wage and residency based on irs and then we would utilize the chapter three eighty agreement and the investment fund is our funding source so some of the options and recommendations include the staff recommendation that we presented the board can come up with a modified or new incentive recommendation or offer not offer an incentive and i'd be happy to entertain questions do the question um erica yes mr veins hang on a second if anybody has any questions uh raise your hand i'll call on you and make sure we um uh get you on the record and um also i guess we have questions for for our applicants we can do that just let us know that so john thank you marty i apologize for breaking the protocol um let's see um erica when you when you talked about the the criteria set for providing the incentive uh could you go back to that screen in a minute and and i'd like to kind of match up what we're seeing here based on what the criteria was i'm i'm seeing a discrepancy and i want i want to make sure i'm understanding what i'm not seeing all right are you talking about the ed investment fund the two or three criteria are you talking about priority considerations well you talked about you know something in the millions and so um i was just trying to make sure that you know is this something different from what i saw earlier i just wanted to make sure so the criteria in order to use the uh investment fund they need to meet two or three they meet the higher wage or knowledge-based jobs and the recruitment of industry sector targets okay so it's entrepreneurship and tech for the industry sector targets the higher wage knowledge-based jobs are 55 000 or greater which they meet for all and then in 65 000 or greater for 25 and they meet that with 82 of their 150 jobs so the substantial capital investment is not a not a requirement for that's correct it's two of three so we can have another project come in there might be an industry sector target um let's say it's a large scale uh project to come in in the future and it might meet the investment but not have high wage jobs and they could also be eligible under the investment fund thank you for the clarification anybody else have any questions tony yeah thanks marty eric could you just clarify for me on pay i think on page 53 just kind of go over how the funds the 243 would would potentially be advanced to our prospect here they get 50 000 up front and then the rest of it's kind of an earned in top scenario that's correct not not entirely correct so the 50 000 uh could be up front it's based on demonstrated costs so once they had demonstrated the cost we would make a one-time payment so if they were able to demonstrate those upon execution of the contract yes up front but if it if they needed to move and relocate and they wanted to accumulate those costs it would be a one-time payment maybe sometime in year one of the term yes it's a reimbursement and then going forward there would be periodical payments based on the the criteria that you outlined that's correct yes we were our goal is to certify the salaries based on irs documents so the way that we have proposed this to our applicant is that after they file their w-2s for their employees and we can certify the salaries that we would make the payment for that year based on the data provided so it gives them time over that five-year period to meet the thresholds so uh without being uh two negatives so from a from a i guess a risk perspective uh what our risk really comes out to is the first year we're going to in theory advance fifty thousand dollars and uh we know uh obviously that the the percentage of these businesses that survive are you know it's uphill battle for new businesses obviously but but assuming these guys uh next year this doesn't play out it just doesn't work our our exposure at that point really is about 50 grand is that correct yes because it's all performance based so our exposure is pretty limited it's based on demonstrated hiring so none of the job based grants are made prior to us certifying that that person is on the payroll and that they've certified the salary on the threshold that you've seen okay perfect and i would just say i i think this is an exciting uh kind of change of pace for our group to look at you know we've since i've been involved there's been a few of these that have come in that we've done uh whether it's a restaurant or things like that that you know have not worked out i think these type of businesses have a lot of upside obviously there is risk involved these things materialize that it really creates a whole different kind of business for our community so kudos to these guys for getting this going this company was created in 2009 i just wanted to highlight a few things in this table if you'll see the the orange the peach the blue and the green you'll see how the jobs come on each year so for that and per bracket so you have 8 12 47 and 15 coming on so you can see when the number of jobs are actually coming online uh anybody else have any questions or comments steve yeah um i have to tony i think that the structure of this is really exciting i particularly like the residency bonus um didn't know if there was any opportunity in that to scale it to thank you uh to scale that to a uh based on the salaries that of those positions where there's greater reward if a higher salary live in the city it is possible to to stratify it in a similar manner that we did the job wage thresholds right is there a particular range this board would like to see or amount forward for consideration just to have those conversations and with other uh requests and how do we try to bring the folks that are managing and operating the company to the to the city as well thank you erica we can certainly do that that's a good point steve um erica and jessica is that a one time so this is over five years and if we we when do we um like year two i guess they have new employees and those new employees prove they live in denton then they get they get the bonus and they can either pass that on to the employee or do whatever they want with it is that how that works we uh prepared it as a one time okay we did prepare it so that it could apply to any employee so a pull an employee who had their salary may be certified in year one that was brought on board but maybe they moved to denton in year two they would still be eligible in year two they would just certify that employee's residency in the second year instead of the first if that makes sense but we only check one time yes okay so we hope that people come and stay in denton yes but part of the compliance sort of certificate that would be attached to the contract would we would be asking for that information every year so we would be wanting ongoing compliance and ongoing tracking of how many employees are moving to denton and staying in denton okay anybody else have any comments or questions i'm curious uh for mark and mike do you guys work with our universities and our disd or nctc already on any kind of programs i hope i didn't miss that i got you john we're not able to hear you mike oh hi this is mark i guess since we can't hear mike so yes we are already have a strong relationship with the university of north texas both as a hiring pipeline for a new talent and working with a number of the professors on academic research and including a partnership with the christian farmer autism center which is connected with the university of north texas and we have also been we have not worked with i would say the the school district the high school district yet but occasionally our cto has volunteered to provide seminars at the high school level so does that answer your question mr rivers yes sir mikey john had a question uh thank you again marty my question is for both mark and for mike i'd first like to say that i'm a big uh fan of high tech and i'm a big fan of high tech coming to denton the question i have is um this the high tech industry kind of has a poor record when it comes to black and brown uh employees and developing uh people in that uh of that particular um segment demographic can you talk a little bit mark and and mike about how you plan to approach that uh that track record and and and make it a little bit better mike do you want to try go ahead hear me now uh yeah yeah sorry about that early john thank you for your question yeah we're we're uh we're a big supporter of diversity and and you're right it has been a poor track record we've been in tech for more years and i'd like to admit and uh it's really and and whenever we can we were more than happy to be inclusive with with uh you know all all types of diversity you know whether it's uh women or people of color and um we we have been working with you know a variety of people from the university um and we haven't been at that stage in growth recently to where we can hire a lot of people so i mean i mean i am and i am absolutely thrilled anytime i can uh interview someone to bring some diversity because every time we have in the past it's brought uh whole new dimensions that are that are really hard to um articulate but that that point of view especially when it comes to the creative work that we do um you know whether we bring on a on a female or somebody from a different background it brings in a a new and fresh perspective and when you're doing something new in high tech like virtual reality education and training it's really important to have um as many perspectives as you can and i've i've always regretted the fact that you know a lot of uh a lot of us you know are just old white guys for lack of a better better term and i think that really limits our thinking you know and and so i i always welcome a broad range of of of input and if you've got any follow-up questions to be happy to answer but that's probably the best i can articulate it right now my my my uh my concern is that at least there's the consideration now as a guy that's getting close to 70 years old i don't know how much longer i'm going to be in this game so i'm an older black guy so uh but uh i i i do appreciate your response and just wanted to to make the point that you know this is a this is an opportunity uh to to be groundbreaking in a number of areas and i and i hope that that that will be a part of your mission statement as well yeah absolutely absolutely thank you john anybody else have any comments or questions about the incentive application all right keely griggs has joined us i i guess i want to make sure um we also know jimmy joined us and while i'm at that uh i got a personal text from our superintendent to remind me i did not introduce him earlier today either so jamey wilson is also on the call as well so already katie oh raised her hand all right yeah keely go ahead yeah thank you uh are we giving i jumped in a little bit late so i are we all giving direction on on this uh recommendation uh because i i'm in favor and i'm glad to see the uh residency bonus in there and i'd like to echo what mr bain said about um minorities in the tech industry and hopefully um we can uh expand there and grow and see some um some some growth in that area but as far as this uh incentive i am i am in favor of it yeah i was about do you want to put that in the form of a motion uh yes i would i make a motion to to approved based on staff recommendations okay jill jester i'll second that all right we have a motion and a second any further discussion uh yes i'd like to say it's very nice to see dr jamie wilson with us today as a side note uh but no further discussion on this incentive package all right i'm gonna go around the horn and uh please remind me if i leave somebody out the squares are moving every once a while but uh john baines i vote yes all right tony clark yes steve edgar yes and welcome to uh superintendent wilson chris davis is that a yay yes all right jill jester uh in favor aye jason tomlinson aye mark mcclellan all right jimmy maja you're on you're on mute jimmy all right that's an eye and the keely made the motion uh yes yep all right that's a unanimous uh eye so the motion carries thank you so much um mark and mike for being here today we're excited to keep you in denton and look forward to seeing you guys grow thank you so much for being here thank you marty and thanks everybody else really appreciate your time on this absolutely you're welcome to stick around and listen to the rest of our meeting if you don't have anything better to do we're going to go on to our item c edp 20-031 which is um receive a report hold discussion give staff direction on our tip strategies uh strategic plan so i'd like to welcome tom and jacklyn back and and look forward to hearing an update well i will turn it over to tom and jacklyn after one quick second i want to just make sure that everyone knows where we are in process and timeline so this is scheduled to go to the city council on august 18th which is next tuesday so our goal today is to make sure that we capture any of the of this board's final recommendations or changes and make sure that everyone is comfortable with the plan um the matrix as drafted and i believe this agenda item and the next agenda item both relate to this topic so we'll we'll start with the plan itself and then move on to the additional discussion on funding um but just so everyone knows the context in which this item and and what the next steps are as we go forward so if there's a comment you've been holding back on or you haven't sent it to me or tom or jacklyn now is the opportunity to do so and with that i will turn it over to tom and jacklyn to take us through the presentation hey thanks jessica can everybody hear me okay all right good good deal good deal uh as jessica mentioned the next agenda item jessica is going to go over some more details in terms of budget and proposed structure so we look forward to that but without further ado if you don't mind advancing the slide um i'll do a quick recap of our last meeting and you guys gave us a little bit of homework last time and so we're going to share a little data around incentives and some comparisons and you also ask us to start putting some numbers to some things so we're gonna we're gonna do that but also explain some of the rationale for that a little data behind that and then talk about next steps so next slide um i guess i kind of repeat that we're going to share additional information on economic development funds and then as jessica also mentioned the idea today is if you guys have questions or other things that need to be resolved between now and the council meeting we're happy to happy to help do that next slide next slide so as you guys recall you received the economic development plan the overall goals were structured around three items we in a sense we pivoted because covid hit you know right right as we were wrapping up our community input and stakeholder input and so we put right up front strategies around accelerating the recovery and as you guys saw in the plan and also in the the implementation metrics many of these items are marked as already going but we thought that it was important to capture the things that the city and the chamber and others were already initiating around recovery and have that in the plan to make sure that everybody's on the same page there so we thought that was important fostering growth is where a lot of the things that we traditionally think about from an economic development standpoint fit and then we have we put in a third goal around strengthening community inclusion because we we do think that needs to be part of your efforts going forward so next slide and marty feel free to you know if we need to stop somewhere along the way i'll just kind of i'll go through this and there's a couple of key points that i think you know i want to pause on for sure but we last time introduced the idea of there being a a fund that would allow for the city of denton to be more competitive within the dfw marketplace and i really applaud the the approval this morning of the incentive package for from the future i do think we're we're seeing an overall trend of communities being willing to take more risks on what we would consider startups and tech startups and the way that you guys have structured that in terms of the phasing and certification of jobs you're doing it in a very what i'd consider a you know a conservative way a smart way a very prudent way and so i was very impressed with that but the purpose of the catalyst fund is to you know have begin to move denton to a little more competitive footing within the the dfw area and we'll talk about actual numbers here in a moment the next slide in your packet i don't know if you guys have had a chance to review we took the recommendations in the overall strategy document and put it into what we call an implementation matrix where we identify partners timelines potential costs to items in the implementation matrix so that this ultimately would be the document that the edp would come back to in the future and refer to as to to note you know where your progress is on items within the plan next slide please so i i do want to pause here for a moment because it's when we talk about incentives many times that's what you know like in your meeting today a big part of your discussion is around the incentives package for a particular company that's coming in and i think it's important to remind ourselves in economic development that economic development happens in many different ways there are actually programs that support economic development but a big part you know in the upper right hand corner infrastructure investment you know i've spoken with many brokers over the years and for them the incentives that are kind of the cash oriented incentives are really typically icing on the cake or you know might move the needle on two properties or two cities that are relatively equal but many times they're they're up you know they're driven by is the infrastructure in place already is this something we're going to have to pay for and if the city or the you know business park owner whoever has that is already making the infrastructure investments you know that many times will drive an investment over a cash incentive per job in other words they're really looking at is the you know am i going to get my trucks to be able to get my trucks in and out you know is the infrastructure in place is the water wastewater utilities in place that's going to drive investments and so just a reminder that sit the city of dentin and all cities are constantly making investments around infrastructure and that's that's one of the big parts of it obviously marketing is part of what you do data analysis is what you do but this is just a reminder that economic development decisions are made based on you know multiple factors and incentives are from a cash in standpoint are really just one of the drivers of that decision so that's that's my preamble before i talk about the specific recommendations so go ahead with the next slide please so this is just a repeat i think from what you guys may have seen last time we had we had put in information about type a and type b move move forward please um and i i do i think it's important to remind ourselves that type a and type b within the dfw area is makes for a very aggressive economic development uh market and it's not necessarily the intent or for dentin to try to compete with groups that have this you know huge pots of cash and while you know many times the type b facility type t be economic development incentive is is going to projects that we wouldn't necessarily consider traditional economic development there are there's a lot of type a money out there a lot of type a money out there so next slide so we do have a couple of new slides here i i did speak with one of my contacts in the dfw area who keeps a a pretty good database of different incentive projects and they were willing to share some recent projects that they had worked on just as examples of incentive deals i think this is good background as you can see you know they're sort of and these are incentives beyond infrastructure these are incentives that are either jobs based or capital investment based just to give you an idea of some of the current kinds of projects i will say that um and i think you know chris and some of you that are out at the business park you know the activity that you're likely seeing right now was reinforced by the broker that i spoke with which is right now warehouse space is at a premium cold storage at a premium of course there's a lot of folks out there looking right now even in a market where um you know overall jobs are still down sales tax still down but that's the kind of activity that they're seeing right now a lot of their their biggest concerns were in the office market especially you know class a office with companies that right now they mentioned they were working on some large projects across the country that were office projects that had essentially come to a complete stop because not only were they questioning their you know the timing for the market but many of their companies that they were representing were actually questioning how many of their employees were going to actually come back and want you know how much office space were they going to need going forward industrial really strong but some concerns around the future for office in the short to mid term so next slide jacqueline put together a quick little chart that shows the layering of different types of incentives and we did this primarily just to as a way to educate ourselves but also you guys to remind you that denton actually does participate in the number of the types of grants and incentives that are offered in the communities that you compete with your dollar amounts for you know job cash grants may not be as much as some of the others but you do have those categories and i don't know jessica are you erica wanted to add anything to that but that's really this is really more of just a reminder that you know you guys are in the game it's just the numbers may be a little different than what you're competing with right now sure i'll just add that we always get as creative as we can and when an applicant approaches us and we always try and use every tool at our disposal which is what you see here and i'll go over it in my presentation subsequently of how these tools have been used in denton and some members of this board are probably familiar with what erica calls our multi-tax tools it's when we write really complicated agreements where we fold in a number of these tools to get applicants kind of where we want in terms of attracting the type of applicant that we want or company here that will will layer and will build these very complex agreements that that erica really enjoys administering every year hey jessica uh i guess i maybe misunderstood but i thought from prior conversation with city staff that we could were prohibited from waiving impact fees and permit fees that's correct that's why it is white under our area we don't waive impact fees or permit fees is that a city choice i thought that i thought you couldn't do that across the state of texas apparently you can this is mac in the city attorney's office that's that's certainly our interpretation as a city attorney's office that they can't be and that's the prevailing view of impact fee waivers i know there are some cities out there that do it i don't know if they've ever been challenged i know there's no cases that have ever challenged that but um no our position is that impact fees cannot be waived can they be reimbursed yes absolutely yes that was going to be my clarification is that there's other ways to accomplish the same goal thank you minko's example that received a reimbursement because they took on um all of phase one for ters number two but if you guys don't mind we've got one more section and then we can open it up for additional questions um so we'll go to the next slide and jacqueline if you don't mind taking this part um as we we spent some time thinking about well what what would it mean to structure uh to enhance your fund and i felt like jacqueline you do a great job of explaining this i'll let you handle that okay thanks tom um yeah so in response to the board's questions during our our last meeting about kind of potential size for the calisthenics we've been working with jessica and erica over the last couple of weeks to come up with some numbers for you um jessica will go over this in much more detail in her presentation so i'll just kind of set the context and give you some high high level information on this slide um we thought it would be important to talk about a couple of considerations your homework assignment was not as straightforward as i think we thought it was going to be but a couple things to think about um you know the ultimate goal of putting together a fund is to have enough resources to meet the objectives and goals in this plan and so just you know wanted to point that out it's not about increasing resources just to increase resources it's really about um having the resources you need to be strategic and meet kinds of goals that we've laid out and given the uncertain times that we're in it's also important to have some flexibility around what needs to be done and how much um funding you'll need to get there and so the numbers you'll see today are estimates based off of what we know now but of course the environment can change and um we also think it's important to work towards building resources over time so it's probably not realistic to go from where the city is today to something that's super aggressive tomorrow and so we're laying out a progression um similarly related to my point about flexibility the level of resources that you need each year is probably not static you'll see kind of averages but there's definitely a lot more nuance there um and ultimately we hope that the fund coupled with you know all of the different types of incentives and tools that you already have will just support denton with kind of a more sophisticated toolbox and different mechanisms to support economic development so next slide um so we worked with Jessica to get a better understanding of existing costs and project kind of future resources resources needed to implement all the different strategies and actions in the plan this gives you a high level overview of the progression that we're recommending so currently the city invests about four million in economic development which covers both operations and um existing incentives so we think to modernize what you're doing in economic development um on the operation side and increase capacity to a foundational level that's comparable to what other cities are doing the goal would be to start increasing the annual investment to about six million per year and then over a longer horizon the city can work towards a more aggressive investment which would look like seven to nine million per year so next slide and the way this breaks out according to the strategic growth areas and goals is laid out here we left out the first goal focused on economic recovery because most of that work is already happening and is already funded so this slide shows you um we estimated all of the costs for each strategy over five years and came up with annual averages the numbers in the foundational column is 50 percent of that average each year and then the aggressive is the full amount so again showing a progression how to step up from where you are to a foundational level and then move towards aggressive over time but this just gives you a sense of when we added up the numbers for the various strategies recommended and you can see all this detail in the implementation matrix this is how it rolls up and how it aligns to the different areas um and um jessica when she talks about the budget budgeting she'll help you you know help explain where that sort of current four million that we have because we we put that in as a placeholder because we felt like it was you can go back up one i guess um you know what what's currently how much is going toward operations and contracts uh with the chamber and other activities that are currently considered economic development versus how much is actually part of incentives packages that are currently obligated or you know that are being funded at as your as you're operating right now and that came out to a total of about four million and so what we're recommending as foundational is that you guys move up to about six million that would be a combination of increasing your operational programmatic and increasing and creating more of a fund that gives you flexibility so that you have more dollars to offer from an incentive standpoint and then you know the question you guys ask what is it really going to take longer term for dentin to be more competitive and that's where we feel like the seven to nine million and i you know this is one of those areas that we felt confident that if you guys get to that level in the next three to five years that you guys will be you'll change the perception of dentin as a business location within the region and there's some that might argue that well if we're going to compete with somebody like frisco we have to double that yeah that's true but i i think that the types of projects that you are going to be well positioned for that this is a pretty solid number going forward how you get there you know i think that's where there's been a lot of work put in behind the scenes to talk about you know where these funds could come from and how that might be structured and how you would get there over time and but that's really the next the next conversation that jessica's going to help help lead so if you don't mind let's go to the next step slide and then we'll transition whatever way you guys think makes makes sense because it was really the implementation metric that was shared with you guys since we last met and then a little more detail here some of this you know i'm happy to stick around if you want to wait until after jessica you've gone through some of yours and you have questions about however you guys would like to handle it marty i'm happy to we're not going anywhere august 18th is going to be a busy day all right anybody have any questions uh for tom or jacklyn or anybody else i like i think one of the small changes that was in there is we talked about adding somebody from the ed board on that kind of monthly working group i think that's a that's a good um opportunity to have somebody involved from the board level and it might this is small potatoes i guess but you might say chair and or vice chair just to make sure somebody can can be there or somebody from the board but john raised his hand had some questions john yes i do uh can you hear me okay um i guess for the sake of my of my limited capacity i needed a little more clarification um when i think of a fund i guess i want to know how much is sitting there unencumbered and not bothered and not designated for anything else other than let's get some business in so i know there was a four million dollar figure thrown out but how much of that is actually sitting in a fund ready to be directed specifically for attracting new business and then to transition would that nine million be an inclusive of all things or would that be money sitting in a in a category unencumbered so i'd kind of like a little clarification on those numbers please i will be going over that in extensive detail in the next presentation um and we'll kind of walk through what those numbers mean and the various and pretty complex variables that get us to those numbers that jacqueline and tom presented thank you i did also want to mention i'm sorry i just wanted to make sure that the board in your packet you do have the implementation matrix that we filled out and as tom and jacqueline have said before the um the matrix is something that we will revisit over time it's not meant to be static it's meant to track and update as we kind of move through this process and be updated regularly and an addition that you had in your packet this time that you haven't had previously was the public comments that we received as we did our virtual public comments for so i just wanted to make sure that the board was aware that you had that information and and then i'll just turn it over to back to marty and i think jill had a question um jill jester i just want to comment that um i think uh there are lots of different components that has made have made um this report very helpful to not only us but i think the general public as far as um you know everyone kind of has their idea of what economic development might look like but to see the comparables to what some of our surrounding cities and competitors are doing is very helpful so that we level the playing field and can tout some of the unique aspects of denton but we do have to be in the ballpark in order to play the game so i think that this has been very very helpful to see where we need to be again just to be relevant in those conversations of where um some of these businesses want to relocate knowing how important sales tax is to be able to pay for our city and streets and all of and our schools and things like that um i would also want to i want to commend um jessica erica and everyone else that worked on the matrix i think that is the real nuts and bolts of how we make give effect to all of these findings and the pivot that was done tom by you and your group as far as making sure that first we take care of the businesses we have that we work on doing whatever it is that we can to sustain our current businesses if at all possible that that was a very important pivot and we can see in the comments that's very important to the public as well of course but that that is being addressed in the short term but at the same time we have to recognize that um you know this this will not last forever and we do need to be taking action now to be again in the ballpark so i'm very happy on behalf of denton on behalf of the city the chamber and all of the groups associated um who were able to come together and really put how can we make sure we're covering our bases as much as possible who is best able to fulfill certain types of duties and again the emphasis on um you know the the green power sustainability working with the black chamber of commerce hispanic chamber of commerce and working with our existing businesses as well as situating ourselves to be um a real player in the field of getting to pick who comes here um as opposed to you know it being any kind of leftover i think is really important for our city and i'm just uh very excited that um the city manager the city staff the ed staff that everyone has been uh uh recognizing uh the importance of economic development and how we do it and you know it it's not easy and it might hurt in some areas but this is an investment that we demand uh returns on in order to see to the end but um i'm just so very excited for this new chapter in the life of the city of denton and just wanted to say um a big thank you right it seems that we have temporarily lost um marty so john would you like to take over as in your vice chair role i will take over until our our grand leader returns um i think you have your hand uh raised for a comment please yes i do um i have a question about the implementation or about the the chart um the matrix so there are items that have a timeline like 12 to 18 2 to 3 and 3 to 5 years and then there is an ongoing uh section and so my question is does that mean that we are doing it now and we will continue to do it throughout or um so just for example there's highlight businesses owned by women and people of color and marketing materials through digital marketing channels and increase awareness so that says it's ongoing um what exactly does that mean and if it's ongoing can i find that somewhere currently sorry erica can you just take it down so we can see each other and marty's rejoining us and so yes our intention with some of the ongoing elements are not that they're being adopted on a timeline it means that it will be done throughout the five-year period it may not be something that as of august 12th 2020 is in its absolute implementation stage but it is something that we intend to do over the entirety of the five-year horizon there are some elements that are in progress and those elements are both in progress and ongoing and there are some that will be new and ongoing well may i chair some some of these that have ongoing are really critical and i think important so if there's a way to at some point see if they are in progress or what that means ongoing because if i see um i don't know if there's some that are not yet in progress but we think they should be but without a timeline there we don't know when to expect it so um there's just a little bit more clarity on what ongoing means would be helpful sure yeah so any of the elements that are listed as ongoing um i think tom hit on this a little bit but i'll hit on this pretty hard and it'll be part of future presentations and this will come back many times is that we'll regularly report on progress for those items when we look at the ongoing items we may need to prioritize uh based on what is kind of the most critical element of the day i'm not sure that i can commit and say by the end of this next year every element um of year one plus ongoing will be fully implemented but anything that's indicated as an ongoing element or as a first 12 to 18 month element we intend to start the ball rolling in year one so i'm not sure like i said if we would get to full implementation but we'll be regularly reporting on any of these items that are year one and ongoing in this first year as we move to implementation okay so there'll be a way to follow up and uh we can address each one if it's not moving quickly enough or we don't see that it's getting attention absolutely and our intention is to bring this back to the board on a regular basis and and keep you updated and hold ourselves accountable to making sure that we're implementing the strategic plan okay thank you sorry marty are you with us well i'm here our building internet went down and um i think it's back up and i can't see everybody's screen all at once so okay i think i'm we'll help you out anybody has a question to get after it yeah sorry i can see everyone and i think john can is there any additional questions that we can address i'm back no more questions comments i think i think jessica said she was going to cover some of my questions in the next presentation so yes i i'm waiting i'm waiting with bated breath my dear i think the uh key here is this is a fluid document that you don't set it like it is and it gets done this even even in our past tip strategies we've revisited this over the years and and changed things so you know if we had done this a year ago and we couldn't have planned for covid or any of those related events so you got to kind of change so that's a document for the board and city council to keep in mind going forward in the chamber so i guess um we need a motion to make a recommendation to city council to accept this plan as presented or some other kind of motion which would mean somebody on our edp board raised their hand and make a motion or something john i make the motion that we accept the edp proposal economic development plan for the city as presented okay got a motion second and a second from jason any further discussion all right we're going to try to go around the horn here again so john i'm in favor tony hi steve hi jill hi mark hi keely i'm in that this is fluid and we'll get updates i'm an i jason hi and jimmy i think jimmy's logged on he's on mute you remember a couple seconds all right uh motion gary's appreciate the time and all the work that um tom and jacklin have put into this and and uh looking forward to um i guess the discussion at city council level so getting on to our next item which we'll talk about funding and item edp 20-033 uh receiver report whole discussion give staff direction regarding funding for economic development all right well i haven't gotten to do a presentation in a while so i'm excited to to present to the board and go over some of the details and really nuance behind um the funding options and how we got to the numbers that you saw in the strategic plan presentation so next slide so i'm going to break the presentation down into four sections and we can kind of discuss at each point and they build on each other so first i'll take you through how we currently fund economic development and what our budget looks like um i'll take you also through the current tools that we use which uh jacklin summarized for you previously and then i'll walk you through how we got to the estimated cost to implement the strategic plan and i felt a little bit like i was back in calculus class as i was working on that so that was fun um and then we'll talk about what options are are feasible or or that we can explore further to increase economic development program funding so i'll pause after each section and see if there are questions so go to the next slide so this is a current look at our budget and our financials now this isn't totally comprehensive but this is our primary economic development tool so the first uh sort of three rows that you see are our revenue where we get our funding from so economic development is primarily funded by general general fund revenues as well as we have a small contribution from the utility funds those actual those funds help fund our contract with the chamber of commerce so they actually align with um a certain percentage of that contract our expenditures which are our operational expenditures broken out in the first three lines under expenditures so personnel and operations so those are the people and the things that we need to operate our office as well as we have an agreement with hickory and rail ventures for the operation of stoke and so that item that you see there is our ongoing contribution that contract ends in the next fiscal year um and then the next item that you see is the chamber of commerce agreement and that is something that we're still working through so we have a little bit of a placeholder in there in our 2021 budget but that will also be discussed with city council on august 18th and then that last section that you see there is our improved approved incentives and so as you see um to answer uh board member baines's question about how much are the of that four million or our incentive obligations and how much are in the fund you can see those improved approved incentives as we track those over the years as well as the investment fund so that answers i think his questions relates to of the four million what's in the fund versus what are we putting aside uh to fund future incentives and what are we funding currently now i will say it looks like a big decline from the 1920 column to that 2021 column the primary decrease in that is actually we have an incentive that's rolling off in the 1920 fiscal year and that makes up the biggest majority of the decrease otherwise the decrease is associated with some uh our forecasted decline in sales tax revenue uh we do pay for those sales tax incentives out of the general fund as that's where sales tax comes in as a revenue so it's offset in a decreased revenue and a decreased expense and then that last section you see there is our ongoing commitment to the existing investment fund which is about 150 000 a year now if you look at that end of your fund balance it doesn't actually increase by 150 000 per year and that's because that fund gets an investment or excuse me an interest contribution from interest earned as that fund sits um and isn't being used and so are there i'll have erica take down the slide real quick and just make sure there aren't any questions about um our budget it's pretty straightforward um it's it's not a overwhelmingly complicated budget when we kind of break it down uh in those categories but just want to make sure there aren't questions about that or how we how we track that information any comments or questions about the current funding john you jessica for that thank you for that presentation my question is this so when i see the um what was that what was the nomenclature you used um uh for the for the annual spending it's uh i forget the language you used for our operations yes under the expenditure section there was a large amount what did you the approved incentives yes those are our contractually approved agreements that we have today that money is actually going out but it's not being storehouse anywhere no sir okay the only money that you see that's being stored in a fund today is the existing investment fund at the bottom that was about that nine hundred thousand dollars so that's just our current state and we'll talk through how we're um looking at changing that profile going forward that was the point i was looking for thank you very much i appreciate it i will mention that a couple things don't get captured in those numbers that we showed you um we don't budget abatements so we have existing tax abatement agreements those agreements that revenue never comes to the city anyone who has a tax abatement agreement simply doesn't pay the amount of taxes that's abated so we don't budget for those we would only see those reflected in the budget when those revenues start coming on board or increasing going forward if that makes sense so we do have additional incentives that you don't see reflected in budget numbers and so let's bring the presentation back up and go to the next section we're frozen oh there we go okay so the next section um gives you a little bit more detail onto what jacklyn presented to you in the summary of the tools that are available to us and one thing that i i want to make sure that that the board is aware of is that we have a number of tools already uh that we use and that we work with any of our applicants uh on first and foremost is the general fund what do we use that for that's going to be our ongoing staff and operations that's also how we as i mentioned pay for our chapter 380 sales tax and property tax agreement so those were the numbers that you saw reflected in the budget we also can rely on utility funds and i believe we've had projects come forward where an additional or a small utility improvement needs to be made and we've used those utility funds to offset some of those improvements that might be needed for that development one of the biggest tools that we have at our disposal is our tax abatements and those are where we reduce property taxes over a set period of time for developments that meet our certain policy criteria and that's probably the most common tool that we've used here in denton second to that is our chapter 380 agreements those are by our policy based on performance so they're either sales tax property tax or job-based grants that create significant jobs or significant investments in accordance to our policy the next item is our infrastructure development plan line funds these are funds that we set aside for certain developments as they come online or they are getting developed out of our utilities we can make an additional investment to help maybe complete a water line or a wastewater line that needs to get extended or maybe upsized a little bit on a development so we have access to those funds as well we also have access to our investment fund so that was the dollar amount that you saw reflected on the on the budget side we expect to be around nine hundred thousand dollars at the end of the next fiscal year and that doesn't include the uh two incentives that we've just approved the one today and the one in last meeting those will be factored in moving forward if city council approves those and then we have a couple other tools that we use pretty regularly the dme economic growth rider that's the demand reduction charge for our high electric usage and sometimes that's one of the largest incentives that we're able to offer to our big electric users we use to the tax increment reinvestment zones as well to facilitate infrastructure and public improvements we have two we have a downtown tours as well as the west park tours this board of course serves as the board for the west park tours we also have the ability uh to with city council approval um use public improvement districts we currently have one in the city of detton and the razor ranch public improvement district as of today that public improvement district is not levying any additional fees um and may choose not to um as i mentioned we layer these tools on many times so if you think about razor ranch you have to remember that the razor ranch development has a chapter 380 sales tax agreement they also have a public improvement district that they could activate as well as uh o'reilly separately has agreements and so when we talk about what tools are at our disposal and how we're making these match together we're really working with different projects to figure out which tools fit that project best and generate the most roi back to the city of detton and to the citizens of detton and the last two are ones that we don't uh excuse me the next one the neighborhood empowerment zones that's a tool that we haven't used here in detton it's very similar to a um to a tax increment district it's just a smaller usually more residential or mixed use based developments they are used pretty frequently uh throughout the metroplex we haven't activated that tool just yet and then the last one is our hotel occupancy taxes and this committee doesn't see it but we have a large number of organizations in our community that are supported through hotel occupancy taxes and i know in the past we've talked about the ability to use hotel occupancy taxes for for certain types of development that encourage tourism and so we have that tool at our disposal as well and so i just want to make sure that everyone is aware that we have quite a hefty toolbox right now of how we can layer and work with applicants to recruit businesses that we want and really encourage development and that that makes sense for us and really meets our strategic goals and so if there are any questions about the tools i'll let erica take that down because the next part we're going to start getting into um a little bit more details on the financing structures so any questions about the tools that we have in place today all right well we'll move on to the next section sorry we freeze every time the computer's freezing every time i'm having her take the presentation down let's see if we can let's see i'm sorry give us one second we have a little technical difficulty it just freezes every time all right well i'll try and get through the the rest of this since we're we're causing a little bit of technical issue when we're taking it down so so the next section i'm going to walk you through how we got to the investment to implement in the strategic plan so i want to caveat some of the information and similar to what jacqueline said is that we base this off of our known current financial and operational limitations and needs um particularly when it comes to the financial aspect particularly we know that we're in a little bit of a compressed economic environment we know that there's probably going to be some short-term challenges related to the pandemic that we have to take into account the second point is that these estimates are based on assumptions related to known projects and they're applied to future unknown projects which is a complicated concept that we get to and really has us building assumptions based on future decisions and i'll explain what that means and how that factors into our decision in a little bit um but basically we're taking the knowledge that we have today and we're trying to apply it to a project that we may not know exists at this time and then the third bullet point is that again we establish costs based on our current economic environment and pricing things and looking at projects that were done on the past and that changes in the economic environment could impact estimates we don't know the the future of inflation of certain costs we don't know the future investments that businesses may be seeking as they're locating or going through their site selection process and so we just use what we know today and lastly the know that costs that we're going to talk about aren't necessarily an annual expenditure but an estimate of a fund for funding of a program or goal which i think gets to mr baines's point is that we're not always talking about writing a check in a given year we're talking sometimes about establishing a fund and if you go to the next slide i'll walk you through the different variables that we went through so when we looked at the strategic plan we wanted to demonstrate a progression of funding over time and that's how we came up with the foundational and the aggressive concept so in the foundational concept we split costs of the strategic plan in three key areas the first is one-time costs and so those one-time costs represent an investment in something like a marketing plan or some study that might be needed but it's going to be a one-time expenditure in a given year and it's not something that will recur over time the second category that we were quantifying are those recurring costs so these would be additions to an operating expense personnel or a program that we might implement a sponsorship of a program or development of a program over time and that we're going to see those costs increase over time as we adopt more of the tasks and goals in the strategic plan so those are our two traditional expenditure sections the last section is the fund development section and those are the dollars that we would be setting aside every year to build up a fund balance that we could then use those funds to attract projects or to incentivize certain projects over time and so what you see there in the foundational plan is a little bit of a lower level of making an investment over time and sort of how we align this again is that this is a five year horizon and so you see that fund development grow in years one two and three and then decrease back down and the reason for that is that we're aiming to hit the foundational fund level goal in year three and then in years four and five we would be doing a replenishing of the fund to maybe increase it back up to the balance if we are making a future project investment and so that's why you that was my reference to we're basing it on unknown future projects we don't know that a project's going to come in in year four that's going to need this fund but we were estimating based on the number of projects we've seen over time and and what we've seen in our current state that we could project out and so if you go to the next slide this is what it looks like on the aggressive schedule and so again one-time costs staying pretty static recurring costs growing a little bit above what you saw in the foundational costs and in the fund development section you see that grow even more and so what you see is that in the between the aggressive and the fund development section or excuse me the foundational to the aggressive a range of about seven and a half to 15 million dollars of investment over new investment over time and go to one more slide before i'll take this down and take questions so what does this look like so we established goals for various incentive programs as they're described in the implementation matrix and as you know them today those might be for new business recruitment business recruit retention and expansion or maybe a new program like a specific entrepreneurship or job-based program we figured out what those values would be based on achieving an available fund balance to use for various programs so that's that fund development process is getting to a goal in our fund balance whether it's one million or four million that we hit that fund balance and then we move to a replenishing concept where we're just supplementing those payments and keeping that fund balance available over time and that's how those payments get increased or decreased so over the five-year time horizon as i mentioned we would look at somewhere between a seven and a half to 15 million dollar new investment which are layered with other tools so that's not saying that we're only going to spend that amount of money on economic development but that we would be looking to layer those and leverage those dollars to combine with all of those other tools that we have at our disposal to create the most competitive packages that we can and encourages the type of development that we want to see here in Denton let's go that is the end of that section so i'm going to ask Erica to take it down one more time hopefully we won't freeze but see if there are questions about how we got there and again this brought me back to calculus class and variables that had different timelines this is a little bit complicated and a different concept than we've looked at before marty i'm gonna john has a question i'm gonna yes marty i hope this doesn't put anyone on the spot but i was really interested in kind of getting tony clark's and chris davis's perspective on the on the funding amounts i mean we we had some substantive conversations previously and i i would value greatly your input hi this is toey well first off i would say we all know what the definition of insanity is right uh trying you know doing the same thing over and over again expecting different results and it seems like we have as a city we've done that historically so that would be my first comment i think my second comment would be you got to start somewhere and i'm encouraged to see uh that there is you know thought process here and trying to start to build more resources uh that we have available to us the city for economic development i guess my biggest question would be how certain or what are the what are the avenues of these funding sources and how constant or you know are they are they going to be there for the future where does the money come from you know i know going into where we are today with covid we're kind of behind the eight ball so to speak so it's not like we can do this tomorrow but i think having a you know five-year plan getting where we want to be it's a great start so uh john that would be my comments and we will cover that in the next section on some options that we've really explored and we want to continue to explore both with the board and the city council you know john one other comment i would make i think if you know if i went to go back and look at what other cities are doing in our area that was in our previous presentation uh you know obviously we're still uh i think there's still a big gap between what other cities are doing what we're doing once again i think my where i'm encouraged is that we have recognized that we're beginning a plan i mean i never get to where we want to be from our competition the more resources we can make available obviously the more successes we can have when it comes to bringing in other businesses and i'll shut up well good good points tony i think uh jessica's next part of her presentation will help kind of define where some of that those fundings come and kind of talk about limitations ultimately council has to approve any funds that we're doing so but if anybody doesn't have any other questions let's let her get on a couple other slides and she's got some suggestions for how we're funding what we're doing right we'll go back to the presentation one last time and i promise this is the the last time erica will have to take it down and and put it back up for me anyways we can always go back to it make it full screen everything always gets back to money we just had the money sure i think the to sum up i told you all of that so i could tell you this um i think is where we're at so erica can you make that full screen in the presentation mode oh it is on hers so i'm sorry um you guys aren't seeing the full screen are you okay i apologize for our technical difficulties thank you for your patience we can see the slide you're on by the way that's okay so if you may have to presentation it's still i think we can all see which one you're on and there we go all right so again told you all of that so we could get to this point is how do we fund those additional investments so some of you have had the honor of meeting david gains who is our new assistant city manager and cfo and he's here in the meeting with us um but david and i have spent a lot of time over the past few weeks exploring what options we have that we think um are feasible given the environment that we're in and think warrant some additional discussion so the first would be dedicating a percent of utility system our roi and actually the recommended option is the second option not the first option so i apologize for that but the advantage to that is it doesn't create that burden to the general fund i think we're all aware of the economic environment that we're in we are seeing sales taxes lower than expected we're seeing some other revenue sources really challenged right now and so we don't want to burden the general fund of the city with an additional cost and so the disadvantage is that is again it could have an impact to the rate payers because instead of being in the general fund it's in the utility system and so just to give you an idea of what the roi or return of investment on the utility system revenue is is that for about one percent of roi it's about 2.75 million dollars the second option which is the recommended option and that we've come up with is that we do a little bit of a hybrid approach is that we utilize some fund balances that already exist in the utility systems to kick off the fund and then we continue that replenishment process by using a smaller percentage of utility system roi so it mitigates that impact to the rate payers and again helps reduce the burden of the existing funds over time so again we establish the fund with a transfer of existing fund balance at a to-be-determined amount but then over time we have about 1.38 million dollars per year for about half a percentage point of roi the third option is what we call the plano option so this is what plano does similar situated city that doesn't have a 4a or 4b system and that is dedicating a portion of or actually saying we're going to add an additional property tax in plano they do it by ordinance that two cents of their property tax goes directly to their economic development fund the advantages of that of course is that it's a stable revenue source over time property tax is a very stable revenue source for us for a municipality the challenge with that is if we do it out of our existing property tax that it has that funding has to be made up in the general fund and that's one of the hardest things that we would have to do or by adding it it actually directly impacts rate payers or excuse me the property tax payers and that's again a challenge in this sort of economic environment and not something that we want to do to kind of quantify that on what range of funding for every one penny of your property tax rate it actually generates about 1.3 million dollars in revenue for the city so right about the same place as that half a percentage point of the roi the other option that you see below the incentive roll off is something that we've talked about with the board before and that as current incentives roll off we recapture those funds over time in the investment fund the advantages of that is there's no sudden impact to the general fund however the general fund has in its forecast taken into account that those revenues would be coming into that as future funding sources so there is a slight challenge on the on the revenue side of we've already sort of assumed that those dollars are eventually going to come back to the revenue to the general fund and one of the biggest disadvantages is there's not going to be an immediate revenue source for us to have access to those incentives are going to roll off over time some a very long time and that source is going to be variable it's not going to be static over time it's not going to necessarily be consistent right now we would say it's approximately six hundred and thirty thousand dollars per year over time if we started with roll-offs in this fiscal year and again that would be variable based on as incentives are rolling off so it's really hard to forecast that value over time over a long time horizon and the last option is the option that the city of dallas used which was they actually called a bond election for economic development funding first it would have no impact on existing city funds the disadvantage is that it could increase property tax rates again and i think that that's again a very challenging scenario given the economic environment environment that we're in and again the rain the funding is we'd consider it a variable funding source because it's going to be for a set amount over a given set of time but we don't know if there would be future bond elections and it would be really hard to forecast that out over the horizon so those are the options that we really did i won't call them deep dives on but sort of mid-range dives on that we think probably warrant additional discussion and review with our recommended option being that hybrid option of limiting the impact as much as possible given the economic environment that we're in which is using some additional existing fund balance and then replenishing over time with that utility system roi so if we go to one last slide it might be exactly what i just said our recommended option is the hybrid option we're limiting those impacts and then as the last two bullet points say is that we're going to reevaluate the implementation of programs and the timelines as part of our annual budgeting process with this board with the city council and so we want to make sure that we're developing something that's sustainable and makes sense and our ultimate goal no matter what the number is is on innovation best practices and achieving those goals and less focus on a specific dollar amount because we know that's going to be dynamic and so we want to reiterate that we're going to review this as frequently as we need to to develop something that best positions the city to move forward and so with that i will stop talking and turn it back over to marty we can take down the presentation and have a discussion about those items job um i guess just to set things in perspective um as you saw on the earlier slide we're setting aside 150 000 dollars um a year right now so all of those options are significantly higher going forward um my question is i mean council has to do this so if we recommend a council approves the hybrid approach and there's a transfer of money um from the dme fund over immediately and then a half a cent or half a percent transfer over i guess annually is that something that i guess one is that you asked is dme aware of that and two um is that something that gets approved annually so that could be changed to zero or five percent or whatever every year so we've faced it actually off of total utility system roi so it's not even though the electric fund makes up the largest percentage of that so it is total utility system roi and yes you're correct that would be possible to be changed it is subject to approval by the city council both the any of the amounts and the transfers and that it would be something that would be variable or could be variable over time our goal would be to set the percentage amount so we could forecast it and have a little bit of reliability in the future but because it's a percentage as those revenues and that fund might move then certainly that's going to impact the total amount of funding and i like the utility approach because if we're doing our job the utility revenues going up that helps us increase our economic development um so um all right i'll open it up for questions keely i have a few questions um one can someone speak to why our utility um fund balance is is so large sure this is david gaines assistant city manager uh in each as you referenced in each of our utility funds right now we have a significant fund balance and part of that is as we're going through the budget discussions obviously we're looking at rate decreases and we've had rate decreases over the past few years and a number of those funds to that end as well and each one has its own unique reasons one of the kind of overarching reasons that our fund balances have increased so much is just we've had a lot of we had a lot of capital projects that had existing funds that weren't being spent and it's obviously been an initiative over the past three to four years to spend down those existing dollars that were out there so what that's resulted in is we haven't had to send more funds out for capital projects which has helped our performance as we've as we've gone out so that's been a big piece of it and then when you look at the electric fund in particular which obviously has a strong fund balance there's that piece of the capital projects but also last year in the summer we had higher than expected usage which had added to our fund balance and another factors that went into it so i think all those kind of together led to led to this point we're really focused on the fund balances that we have and how we can use them moving forward marty i have another comment and a question keep going okay so i i think that's really it's creative and owning our own utility allows us to be innovative like you said but i do have a concern that a lot of people view our utility as a monopoly and that they don't have a choice and that if something like this is put out it would need to be completely transparent and shown in a way where it would just not be a surprise to anyone so that would just be my my concern that it was transparent and shown in a way where everybody knew what what was going on and there weren't all these strange transfers the next question i have is about the bond elections how often can the city have a bond election and then i know we've had several and have any of those in have we had any tax rate increases because of the bonds that the bonds that were passed in the past there's there's no limitation on how frequently we can have bond elections there is some limitation if a bond a bond proposition fails the amount of time that you can come back with the same proposition but you could have you could have multiple you know in may and november of each year as you move forward as far as the tax rate on the 2012 and 2014 bond elections we anticipated or in the 2014 specifically anticipated a tax rate increase which we haven't realized this is a big a regrowth has has gone higher than we anticipated for the 2019 bond program obviously we anticipated a three and a half cent increase on the debt service side so we just haven't seen those increases just due to av growth being higher than we expected okay all right i'm going back to the transparency part you know it's pretty easy to bake in to the economic development budget it's going to have to be a transfer through the general fund so you basically you would show a transfer in for economic development purposes and right into economic development and it'd be it'd be pretty easy to show that and articulate it but right now we feel comfortable heading making that recommendation to council because we just don't think it's going to have much bearing on the utilities they're all in very strong positions the reason you see such large fund balances is they're highly volatile the weather dependent and and we've got bond covenant restrictions on top of that so we we've analyzed all that and feel that it's uh it's a good way to seed it right now as marty stated he's right that particularly with these large electric users that come in and if they're the right type of users it can significantly benefit the system so there's a there's a direct logic there to to using that keep going keely uh missy said miss is there a way to um track those say with the incentives that um that come in and with the with the chamber or the economic development those um large users is there a way to track that so that it can show a direct relation for um a reason why it's transferring we can we can certainly do that it's not going to be as granular as you want uh because with the with the economics of all the utilities there's always there's always a point with which there's there's an economic benefit to it uh where it benefits all the rest of the customers so it's got a lot of it's going to depend on when they're taking their energy if it especially if it's at night and it's low energy that revenue rolls right back into the system here so it i think we can show um and we do track what you know how they're doing financially um it's not going to be so simple though so just pull it up and say it had this benefit for every user i mean every every um every investment that comes in that generates additional revenue above and beyond what we need for the cost of power in theory benefits all the residents in the city keeps their power prices lower yeah i've just because i know that there's some projects that come through this uh this group that to specifically have that utility tie-in so there's some kind of correlation and i was just curious if that could be shown if somebody you know asked we can we can definitely um report back on the writers for sure and that's going to be a little easier and simpler thank you tony yeah this isn't off the subject but i'd be interesting in your uh your thoughts or comments on the interest rate environment and how that will affect uh you know future bond or existing bond packages that we have well the the interest rate environment right now is crazy low so i mean i think if the mayor had his way we'd be financing the government with it right now but we just issued debt at like one percent the other day um so i i think for a while there's going to be a short-term impact um probably the the bigger issue with us right now is what happens to prolong unemployment rates and what happens in d cad that is our biggest threat right now and why we're trying to stay away from the property taxes is we're heading into a budget this year we're 40 days away from adopting a budget and we still have 40 of the valuation outstanding which is crazy we're typically around two or three percent right now so you know that that is something where i think the unemployment rate the d cad values all that stuff is going to start becoming you know in a year it could really be we could be in a real interesting scenario right now and i'm just not sure that we feel as comfortable predicting um that that rate environment is possible the i'm also not i'm not sure where a bond would necessarily stand with the voters right now uh you know in this environment you want consumer confidence to be a lot stronger in the economy than it is right now you know if you're going to float a bond out there uh a bond proposition quite frankly the only the only other option that we saw that we invested investigated and i know i was expecting this come up is because of the because of the decision years ago to put a half-set sales tax or dcta our options are severely limited and i've had folks ask me about well you know can we repeal that and reassign it and the issue is we've studied that and even if you went down that boat path even if the voters supported it they have so leveraged that half-cent that that we donate it would take years and years and years to untangle that so we've kind of been working in the inner with them right now to develop what's called an elap program which is essentially a capital funding grant program you're getting rebating back our own sales tax dollars which could create some room that things stabilize in the general fund to put towards this issue but right now i think for the immediate future the utilities is the way to grease the skids without impacting our residents our rates our taxes that sort of thing long term if we see unemployment levels decreasing and consumer confidence really being boosted it may be worth a bond election depending on where we are at that time yeah sorry i didn't want to unmute ahead of time i have a a comment and then a question first with a comment i certainly can tell all of the thought that was put into the staff recommendation uh you know unfortunately the world is not our oyster right now and we do have to deal with the facts on the ground and where we are so i think balancing the need to invest in our future while recognizing the current pressure points um you know i'll be honest i don't know if i was completely in favor initially but i certainly have come around to see that this is a great first step to echo mr clark um i would if you don't mind asking me asking um why not throw in the incentive roll off is it because the budgets in the future have already calculated those funds being returned is that and so the the hurt there is too much but i was just curious because the sales tax is it's if it was a if it was a property tax you'd be having a different discussion because that's pretty stable um the sales tax is such a volatile revenue stream um you know it's bouncing up and down and we're basically projecting out future property tax increases based upon what we think the sales tax is going to do so um we've had to use that sales tax um and bake it into the the upcoming years primarily because you know we're not expecting any property tax increases that's how we make that trade-off and and i think right now that's our big concern is if you start seeing right now we're expecting a anywhere from an eight to ten percent decline this year in our sales tax only because we were so far ahead in february before covid hit but it wouldn't take too much uh you know in terms of a prolonged coronavirus uh you know job losses that sort of thing to hit that sales tax even harder and so it's difficult peeling off part of it when you are when you see a negative trend i mean essentially what you what you've essentially done is cause yourself to either cut services reduce you know personnel or raise the property tax levy and that that's the danger with messing around with the sales tax thank you for that explanation that makes sense keely yeah just to follow up on a question because uh the city of manchurian mentioned dcta and um i just want to say i hope that we explore those conversations with them because i know that transit oriented development i mean we all have a common a common goal as far as economic development and all that can go back and so if there's a a partnership opportunity there um with funding i'd like to see that explored more we're pushing it uh in fact we've we've been uh successful at least getting an initial five and a half million dollar uh elat program set up to split between us and lewisville for the most part for the next year so so we'll be using that to offset some capital projects once the budget's finalized they have not formally adopted the budget yet that is exactly the point is to try to provide a little bit of relief to the to the general fund and the taxpayers by using some of those other dollars having them returned into the community cool thanks all right any other comments or questions we have to make a recommendation on this jessica we're probably going to do the same presentation to city council and incorporate the feedback and comments that we got today i don't know that we need an official recommendation the staff recommendation i think is what we'll be taking forward to city council um at this time but certainly taking into account the comments and questions we're hearing today does it help if this board um supports the staff recommendation or one of the other recommend objects out there because that matter it never hurts it doesn't hurt no sir uh i guess that my thoughts are if if our board is inclined to support the staff recommendation we ought to put that in the form of a motion and send that up to city council or one of the other recommendations well marty i'll move that um on behalf of the board that uh we put forward that we are in favor of the city council adopting the staff recommendation regarding uh how to begin a change in our funds for the um fund that has been presented in the strategic plan and so in order to start taking steps towards um meeting that that we are in favor of city council adopting the staff recommendation on funding okay i'll second that motion all right we have a motion and a second uh any further discussion keely um yeah so i am i am in favor of uh a fund and i'm in favor of exploring these more but as far as voting to um the the staff recommendation today without seeing more information that i asked for the city manager i don't i i don't know that i am at 100 because i see other options on the table that i i would like to explore and so i i don't know that if we do this if the other options will still be explored or not they're all ready to go we can talk about any of them and and our intention our intention was just because of timing to take the council through every every one of these as well again so um there's a way i and i think it's important to put this in context you know at a meeting a month or two ago there was a lot of concern about when we saw frisco and some of these other 4a 4b's how will we ever compete and i think the point today is we've got the ability to compete without having to claw back the half cent from dcta um there's all kinds of options there and just to make sure that we we really wanted people calm down that we have the ability to be competitive if we want and there isn't a way to get there um my guess is in two or three years we may end up shifting the strategy a little bit uh because one of the things that we're going to have to deal with in the general fund is whether or not we leave on or turn off this roi that we from the utilities that we turned on in order to avoid service cuts this year but so this is probably a one or two year solution practically and then it'll be revisited again but council is going to be able to see all those options um you're not you're not pinning him down to anything other than just suggesting we'd like to see this fund built somehow so well i i am in favor of seeing the fund built somehow so thanks right anything else all right i'll go go around the horn again uh john i'm in favor of presenting this um idea to council tony all right jill aye steve hi keely yeah i i am in favor of hearing more yes jason jace i think you're on mute helps if you pull the microphone back down hi yes we couldn't hear what you were thinking uh thank you so much i think that's uh i think we lost a couple folks so uh and marty your vote oh and i'm and i also i don't know if i did that for myself on any of them i'm gonna i want all of them marty i'm and i also oh mark oh mark there you go got moved around sorry about that all right motion carries and we'll move on thank you for the uh presentation we got a lot of work done today and a lot of work uh just to get to this point um our not quite last item is to uh edp 20-034 to receive report whole discussion give staff direction regarding nominations for our annual business reports so i'll let staff take it over from here sure so we have a pretty simple item shouldn't take more than a few minutes we're going to continue with we wanted to give one last opportunity for anyone on the board to submit a nomination we'll finalize the nominations today go back complete oh bye tom and jacklyn thank you thank you thank you to everyone we'll finalize those nominations and come back to the board at your september meeting with the scoring sheets so because we weren't on a timeline this year we won't be holding the normal awards breakfast so we wanted to give one last opportunity for nominations so ones that um we've discussed for the large business have included um texas health presbyterian and obviously medical cities in both hospitals have made have had probably a very tough year and have made significant contributions to our community um others that we saw as making significant investments and over the last year included u.s cold storage jostens peter built aldi and fisher 59 for the large business that we would look at so i don't know if the board wants us to narrow down the list at this point if not we can score all of those according to the criteria um but those are the ones we have currently uh jill jester would you mind repeating that list please sure thank you texas health presbyterian and medical city and we did lump those together we know that both hospitals have made significant contributions and have had a challenging year um jostens peter built u.s cold storage aldi and fisher 59 okay so jill i have a question so if if we were to look at hospitals would it be a combined acknowledgement or a singular acknowledgement that's up to the board staff felt that it's hard to recognize one without the other knowing that the challenge that and health commitment that has been made on behalf of both hospitals over over the past few months to make sure i understood your your your communication and the intent so i understand that it's a joint acknowledgement is what it is thank you also a quick question regarding those that have um received awards in the past i see in you know the packet we've not given the award twice to an entity thus far but the thought was an exception for this year or it's just never been discussed we didn't have any limitation on awarding someone again and we did add peter built to the list knowing that they made such a large contribution to the covid relief fund we thought that we couldn't not put them on the list given how much commitment and financial resources that they've made this year it was it was a very difficult year there's been a lot of businesses that have made incredible contributions to our community hey um this is steve uh i would say you know from a health care standpoint that is part of our responsibility regardless of the the environment and i would i appreciate the consideration but i i think jeff would echo that there are others that stepped up and address things in the community that are outside of the norm of their business priority or operation so i would say let's back off on the two hospitals you steve yes are there any other nominees for large business that we need to consider from the board if not i will move on to our ideas for small business and i think we've lost marty again so john you're back on deck as needed willing and willing and ready to serve thank you for the small business we thought one unique one for this year might be united way of denton county they have done an incredible amount of work we know that they are a non-profit but they have done a lot to support the business community and residents of this community during the pandemic and serve pro of denton has also done a significant amount of work to support businesses and and just saudi who has i believe done a lot of work as our main for our main street association as they have been helping a lot of our small local businesses just saudi has been their technical and marketing support and and so that's a unique contribution that they've made the other nominees we received were gulki pools armadillo ale works and bearded monk my question uh jessica is um with this listing are we trying to do something today are we going to come back and finalize things so our goal um if the board wishes we can narrow it down we don't have to if these are the nominees that we want to move forward with staff will go through the process of filling out those uh criteria sheets that you have in your backup for each of these businesses and then selecting the awardees from from these nominees once you have the full criteria sheet filled out but we wanted to give the board an opportunity uh to add any to the list or if we needed to narrow it down today so it's one both or neither and then we'll go to keely thank you i got uh united way of denton county serve pro just saudi gulki pools bearded monk and i know i missed one armadillo air works thank you is there a um is there a pleasure of the board that we need to communicate to jessica we can either um take all under consideration or are we looking to narrow things down today please provide some feedback yes council member briggs uh councilman councilwoman briggs uh yeah i know that uh that's a it's a lot of nominations um and we can narrow some down but for me it's been helpful in the past to see um the box checked and the the contributions it's um and that way you're not really just trying to pick a favorite you're seeing their actual investment in the community we will we we have no issue filling out the form for and doing a little more research on all of these that's that's not an issue we didn't want to deny the board having hearing all of the nominations that we had heard so marty i'm enjoying the power and the authority i'm not sure when to give it back so i'm sorry our our building internet went down something's going on over here um are we still talking about large businesses large and small what we've done marty is i asked the board a question uh did we want to move forward with um the the large slate as presented are we looking to narrow things down today and i will now yield uh the chair back i don't i would uh my opinion is we'll just leave it as it is we can i don't know that we'd have a reason to discount somebody if we don't have the forms filled out would be my personal opinion and we can do that no issue from staff on filling out the criteria form on any of the nominees that we have so the so the task before us then is that the uh staff will go back through all the nominees and then provide us with a chart with the boxes checked for each and from that then we can make our selection and then we communicate that to you uh jessica or who do we communicate i believe in the past we have scored it in the meeting and reviewed it and the board has made a motion on which nominee they want to make the award to um and so we will provide the matrix in your back in your backup for your next meeting and then allow the board to make a motion of who they would like to make the award to and we're going through the same process with the downtown economic development committee as well as the other groups that make awards typically at the awards breakfast but since we're not having an in-person awards breakfast we're we're getting creative and we are going to find a way to continue to acknowledge the significant contributions of businesses to the business community in bedden thank you all right do we have a list of small businesses yes i'm apologize marty while you were off the nominees were united way of denton county surf pro gulkey pools armadillo ale works and bearded monk and we would accept any additional nominations anybody have any additional nominations i would like to add um to that list john williams group of businesses and um 10-1 jeez those have both been doing some pretty extensive community um reinventing themselves and doing some extensive community service yes and i apologize i left off just saudi just saudi was also nominated in the small business category all good groups it's a very difficult decision this year sorry keely well i i just also um i was gonna be recommending or asking for a chestnut tree to be on there there's a lot of other good groups but i just wanted to give a shout out to them for the innovation that they've done for doing the grocery delivery and um all of the different changes that the lunch is to go that they've done i think it's any all of our businesses right now are stressed and have stepped up and so it's going to be very difficult because we have a lot of favorites and they've um they've done really well so i just wanted to say that and mr chair uh yes this is an editorial note bringing in a sports reference sometimes in years you do have a co-rookie of the year or co-defensive player of the year so it's not unprecedented that as we go through the list we may have several people that we're looking to recommend 100 agree so we'll have those lists of businesses to officially visit about at our next meeting is that correct yes any other discussion or questions on that topic all right uh since we're past two hours would it be okay with everyone if we skip the staff reports unless staff has something that we need that we need to inform the group about we've we've got information in our backup i'm sure everybody's been over a few times already so unless jessica or charlie has anything no sir nothing pressing man we got a lot done today i would move for adjournment second and good job everybody thank you yeah thank you for everybody and except for jesse look forward to the conversation and we'll see you guys in a month hi everyone thank you thank you