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04/07/2009-4A-Minutes-RegularMINUTES: SANGER TEXAS INDUSTRIAL DEVELOPMENT CORPORATION April 7, 2009 MEMBERS PRESENT: Bill Foller, Vickie Jenkins, Gary Bilyeu, and Carroll McNiell MEMBERS ABSENT: Fred Yeatts OTHERS PRESENT: City Manager Mike Brice, City Secretary/Asst. City Manager Rose Chavez, Steve Watkins with Elk River Investments 1. Call Meeting to Order • . President Fuller called.meeting to order. 2. Approval of Minutes: February 10, 2009 Motion was made by Gary Bilyeu to approve the minutes as presented. Seconded by Carroll McNeill. Motion carried unanimously. 3. Presentation by Elk River Investments on Marketing Options at 103 Bolivar. The City Manager advised that as they have discussed before, in the purchasing of the property at 103 Bolivar, it is important to get some professionals to market and help manage that property. He has met with Elk River Investments several times. They have some good ideas to market this property, re-develop the vacant·property around it, encourage companies to come to Sanger, and create jobs. Mr. Watkins with Elk River Investments will make a presentation concerning marketing options at 103 Bolivar. Steve Watkins with, Elk River Real Estate in Denton addressed the Board and advised his company was founded about four years ago by John Pierson. Mr. Pierson worked 7 years for Wiseman Group and 12 years for Staubauch Company. He discussed Mr. Pierson's involvement and expertise' in acquisitions during his employment with these investment groups. Elk River investment portfolio of properties is worth about $300 million. They are currently involved in a third-party brokerage where they can represent other parties and their properties. Mr. Watkins continued to discuss the marketing of the property located at 103 Bolivar. He presented a Oyer that included a property summary of the warehouse/building as if they were representing the property. He indicated this was an abbreviated version of what they would create in marketing this property. The information was not 100% accurat~ but it is what they could obtain from the property tax rolls and what they could locate. This would give the members an idea of the representation of the marketing capabilities that they have. They would compile a prof"de of this property that would be marketed in the Metroplex and nationwide for potential users to see. They would also use some of the contacts they have on a national level. One of the advantages of this property is the rail access. The potential uses included the warehouse, distribution, and light manufacturing. Another advantage was the improvements to 2nd Street. Be discussed that their focus would be on a single-tenant user with the option to subdivide the property to where it makes economic sense. Mr. Watkins continued to discuss the possibilities for economic development for all of the surrounding property and the excellent opportunity for smaller office warehouse-type properties in this location. Once they have a tenant then they can facilitate the demand for the smaller properties. Discussion continued that Elk River will assist with the purchase of the building, leasing of the building, and assist with potential development. Their capabilities include construction management, management of the property and the tenants, whether it is one or several. Their company will be actively marketing the property at all times. Gary Bilyeu indicated it is important to have someone with their expertise that can provide a service for the City and has the capability to be able to market this property throughout the country. City Manager indicated the City has something to offer that we did not have before. In the past if people called with an inquiry, he would put them in contact with a private property owner. In becoming a property owner, it is important to hire a professional group that can market this property. He is convinced that Elk River can do a great job. They also have other property in Sanger. Discussion continued concerning the property, which consists of 4 acres, and with the lumber yard it totals 5 acres. Mr. Watkins discussed the possibilities for the different types of commercial development. There was discussion concerning the City's ownership of the lumber yard and future development. Mr. Watkins discussed rental rates for commercial structures. Carroll McNiell indicated that when they started this program there were seven vacant properties in downtown Sanger. He is concerned with the number of dollars. The Board does have a reserve and income, but due to the economy, will this have an impact on the market. Mr. Watkins discussed the economy factor and market demands. Discussion continued concerning development of the surrounding properties and the competition with downtown. City Manager indicated some @f things they have talked about have been to sell some of this property, do a long term ground lease on the property, and for private investors to build the buildings. He sees those buildings not as competing with downtown, but bringing more people to downtown to where they could shop or dine in existing businesses. The priority is to get the building leased and creating some jobs. Vickie Jenkins asked if Elk River will assist in the purchase of the building, and is this is why their service fee is 1 ½ percent. Mr. Watkins indicated that they would assist in the purchase and the 1 ½ percent represents their fee. Vickie Jenkins then asked if the building is leased, will there be an additional fee for this. Mr. Watkins indicated this property will be marketed, and most likely there will be a broker who will represent their tenant. The leasing fee for industrial-type properties is 4 ½ percent and this goes to the broker who brings in the deal. The listing broker will be paid a fee of 2 ½ percent. Mr. Watkins discussed how the fee is calculated and that it is paid up front at the lease signing or upon occupancy. Discussion continued regarding the leasing of the property and the fees. President Fuller indicated the Board is not out any money until they bring in the client, the exception would be if there is a convention where they can market the property. At this time, they may come and ask for cost participation for those expenses. City Manager explained that the agreement they have to consider is for Excel Realty to act as their broker in buying their property. There is not an agreement that has been negotiated for the marketing of the property. The presentation was to allow Excel Realty Investments the opportunity to make a presentation to the members. 4. Update on Purchase of 103 Bolivar. The City Manager provided an update concerning the purchase of the property at 103 Bolivar. The contract has been received by their broker; changes were made, and it was faxed back to them on Tuesday. He has contacted him by e-mail and he is still waiting for the contract to get back. He has also met with the bank and has provided all the information that they were requiring for the loan. It is all moving forward. It was discussed that the bank will take the real estate as collateral on the loan. President Fuller asked if the property has had a commercial inspection or has the building inspector looked at the property. The City Manager advised that the Building Inspector and the City Engineer have been through the building on more than one occasion. There was· a Phase I Study done two years ago when another company was looking at purchasing the property. They did find some mold in the building and that was remediated. The building was retested and he has all the documentation. Most of the due diligence stuff has been done. Vickie Jenkins asked if they will require a commercial appraisal. City Manager indicated he did not have an answer from them concerning the appraisal, but they will use the survey that was done a year ago. Vickie Jenkins indicated the cost for the appraisal is about $2500.00. It was discussed that the total cost for the property is $825,000, with 20% down of $165,000 leaving the balance to f"mance for a 15-year loan at 4.6% interest. The monthly estimated payments of $5,084.00. 5. Consider and Approve a Professional Services Agreement Between the Sanger 4A Economic Development Board and Elk River Realty LLC, Authorizing ·Elk River to Act as the City's Broker in the Purchase of Property at 103 Bolivar. Motion was made by Vickie Jenkins to approve the professional service agreement between Sanger 4A Economic Development Board and Elk River Reality LLC, authorizing Elk River to act as the City's broker in the purchase of property at 103 Bolivar. Seconded by Carroll McNiell. Motion carried unanimously. 6. Review Financials. City Secretary gave a brief review of sales tax collections. 7. Adjournment. President Fuller adjourned the meeting.