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